STRI STR Holdings Inc (CE)

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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 (Amendment No.          )

 

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April 11, 2012

Dear Stockholder:

        It is my pleasure to invite you to STR Holdings, Inc.'s 2012 annual meeting of stockholders to be held on Tuesday, May 22, 2012 at 2:00 p.m., Eastern Time at the Hartford/Windsor Marriott Airport Hotel, 28 Day Hill Road, Windsor, Connecticut 06095. Additional details regarding admission to the meeting and the business to be conducted are described in the Notice of Annual Meeting of Stockholders and Proxy Statement following this letter.

        This year, as part of our ongoing commitment to reduce costs and modernize the way we communicate with our stockholders, we have chosen to provide access to our Proxy Statement and Annual Report over the Internet instead of mailing paper copies to our stockholders. This method saves paper and reduces our printing and mailing costs. Additionally, we believe that this e-proxy process expedites your receipt of our proxy materials.

        As always, the board of directors and I feel that it is important to provide you with information about STR Holdings, Inc. in a way that is easy to understand. This year, you will see several enhancements to the presentation of information about our board of director nominees, corporate governance practices and executive compensation policies.

        First, we have included a Proxy Summary starting on page 1 that provides highlights of the detailed information included elsewhere in the Proxy Statement.

        Second, we enhanced the Compensation Discussion and Analysis that begins on page 29 in order to illustrate how our executives' pay is linked to performance and to clearly explain our compensation philosophy and practices.

        We encourage you to access and review all the information contained in the proxy materials before voting.

        Whether or not you plan to attend the meeting, your vote is very important to us. Prior to the meeting, you may vote your shares over the Internet, via a toll-free telephone number or by mail. Instructions on how to vote were contained in the notice, e-mail or proxy card you received. They can also be found in this proxy statement beginning on page 6.

        Thank you for supporting STR Holdings, Inc. We look forward to seeing you at our annual meeting.

Sincerely,





Dennis L. Jilot
Executive Chairman

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STR HOLDINGS, INC.
1699 King Street, Suite 400
Enfield, Connecticut 06082

NOTICE OF 2012 ANNUAL MEETING OF STOCKHOLDERS

 

The Company's proxy materials for the 2012 annual meeting of stockholders and Form 10-K are
available on the Investor Relations section of our website at www.strholdings.com.

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PROXY STATEMENT SUMMARY

        The following is a summary of certain key disclosures in our proxy statement. This is only a summary, and it may not contain all of the information that is important to you. For more complete information, please review this proxy statement as well as our 2011 Annual Report on Form 10-K.

Annual Meeting of Stockholders

Proposals to be Voted on and Board Voting Recommendations

Director Nominees (page 22)

        The following table provides summary information about each director nominee as of March 28, 2012. Each director stands for election annually.

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Ratification of Auditors

        We are asking our stockholders to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year 2012. Set forth below is a summary of PricewaterhouseCoopers LLP's fees for services provided in fiscal 2011 and 2010:

        During 2011, the Company incurred $252,000 of audit fees and $148,000 of tax fees associated with the strategic divestiture of our former Quality Assurance business.

Executive Compensation Highlights

        Set forth below is the 2011 compensation for each Named Executive Officer as determined under Securities and Exchange Commission ("SEC") rules. See the notes accompanying the 2011 Summary Compensation Table beginning on page 39 for more information.

Important Dates for 2013 Annual Meeting of Stockholders (pages 9-10)

        Stockholder proposals submitted for inclusion in our 2013 proxy statement pursuant to SEC Rule 14a-8 must be received by us by December 12, 2012.

        Notice of Stockholder proposals to be raised from the floor of the 2013 annual meeting of stockholders outside of SEC Rule 14a-8 must be received by February 21, 2013.

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STR HOLDINGS, INC.
1699 King Street, Suite 400
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") has made these materials available to you on the Internet in connection with STR's annual meeting of stockholders, which will take place on Tuesday, May 22, 2012. As a stockholder, you are invited to attend the annual meeting and vote on the items of business described in this proxy statement. This proxy statement includes information that we are required to provide to you under rules of the Securities and Exchange Commission and that is designed to assist you in voting your shares.

        What is included in the proxy materials?     The proxy materials include our proxy statement for the annual meeting of stockholders and our 2011 Annual Report. Included in the 2011 Annual Report is our Form 10-K for the fiscal year ended December 31, 2011.

        If you receive a paper copy of these materials by mail, the proxy materials also will include a proxy card or a voting instruction card for the annual meeting.

        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 named executive officers, corporate governance and information about our board of directors, and certain other required information.

        Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a paper copy of the proxy materials?     This year, due to our commitment to reducing our costs, and to save paper, we are utilizing the SEC "e-proxy" rule that allows companies to deliver their proxy materials over the Internet. On April 11, 2012, we mailed a one page notice to our stockholders informing them that our proxy materials are available online. The notice contains instructions on how you may request a paper copy of our proxy materials by mail on an ongoing basis.

        Why didn't I receive a notice in the mail about the Internet availability of the proxy materials?     We are providing some of our stockholders, including stockholders who have previously requested to receive paper copies of the proxy materials and some of our stockholders who are living outside the United States, with paper copies of the proxy materials instead of a notice about the Internet availability of the proxy materials.

        In addition, we are providing notice of the availability of proxy materials by e-mail to those stockholders who have previously elected the delivery of the proxy materials electronically. Those stockholders should have received an e-mail containing a link to the website where those materials are available and a link to the proxy voting website.

        How do I access the proxy materials over the Internet?     Your notice about the Internet availability of the proxy materials, proxy card or voting instruction card will contain instructions on how to:

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View our proxy materials for the annual meeting on the Internet; and



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Instruct us to send our future proxy materials to you electronically by e-mail.

        Our proxy materials are available on the Investor Relations section of our website at www.strholdings.com.

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        Your notice of Internet availability of proxy materials, proxy card or voting instruction card will contain instructions on how you may request to access proxy materials electronically on an ongoing basis. Choosing to access your future proxy materials electronically will help us reduce the costs of printing and distributing our proxy materials. If you choose to access future proxy materials electronically, you will receive an e-mail with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to access proxy materials by e-mail will remain in effect until you terminate it.

        How may I obtain a paper copy of the proxy materials?     Stockholders receiving a notice about the Internet availability of the proxy materials will find instructions about how to obtain a paper copy of the proxy materials. Stockholders receiving a notice of the availability of the proxy materials by e-mail will find instructions in the e-mail regarding how to obtain a paper copy of the proxy materials. All stockholders who do not receive a notice or an e-mail will receive a paper copy of the proxy materials by mail.

        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 SEC has approved. Under this procedure, we are delivering a single set of the proxy materials 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 promptly deliver a separate set of proxy materials to any stockholder at a shared address to which we delivered a single set of any of these documents. To receive a separate set of these proxy materials, stockholders may write, e-mail or call us at the following address:

Investor Relations
STR Holdings, Inc.
1699 King Street, Suite 400
Enfield, CT 06082
E-mail: investorinfo@strholdings.com
(860) 758-7339

        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.

        What should I do if I receive more than one notice or e-mail about the Internet availability of the proxy materials or more than one paper copy of the proxy materials?     You may receive more than one notice, more than one e-mail or more than one paper copy of the proxy materials, including multiple paper copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate notice, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive and vote over the Internet the shares represented by each notice and e-mail that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more of those notices or e-mails).

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        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, Robert M. Chiste, John A. Janitz, Uwe Krueger, Andrew M. Leitch, Dominick J. Schiano, Susan C. Schnabel and Robert S. Yorgensen as directors; and



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The ratification of the appointment of PricewaterhouseCoopers LLP as STR's independent registered public accounting firm for the fiscal year ending December 31, 2012.

        We will also consider any other business that may properly come before the 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 the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2012.

        What shares may I vote?     Each share of STR common stock issued and outstanding as of the close of business on the record date (March 28, 2012) for the 2012 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 41,618,093 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 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?"

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        How may I attend the annual meeting?     You are entitled to attend the annual meeting only if you were an 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 demonstrating ownership as of March 28, 2012, 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 indicating your plans when prompted if you vote by Internet or telephone, or marking the appropriate box on the enclosed proxy card.

        The meeting will begin promptly at 2:00 p.m., Eastern Time. Check-in will begin at 1:00 p.m. and you should allow ample time for the check-in procedures.

        How may 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 may 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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By Internet:   Stockholders who have received a notice of the availability of the proxy materials by mail or e-mail may submit proxies over the Internet www.proxyvote.com and by following the instructions on the notice or e-mail. Stockholders who have received a paper copy of the proxy card or voting instruction card by mail may submit proxies over the Internet by following the instructions on the proxy card or voting instruction card.



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By Telephone:   Stockholders of record who live in the United States or Canada may submit their proxies by telephone by calling (1-800-690-6903) and following the instructions. Stockholders of record who have received a notice of the Internet availability of the proxy materials by mail or e-mail must have the control number that appears on their notice or e-mail available when voting.



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By Mail:   Complete, sign, date and mail your proxy card in the enclosed postage-prepaid envelope. Your proxy card must be received by Broadridge, STR's mailing agent and tabulator, prior to the commencement of the annual meeting at 2:00 p.m. Eastern Time, on May 22, 2012, 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 the Internet or by telephone, please do not return your proxy card.

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

What is the deadline for voting my shares?

        If you hold shares as the stockholder of record, or through the STR Holdings, Inc. 2010 Employee Stock Purchase Plan (the "ESPP"), your vote by proxy must be received before the polls close at the annual meeting.

        If you are the beneficial owner of shares held through a broker, trustee or other nominee, please follow the voting instructions provided by your broker, trustee or nominee.

        May 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 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 Senior Vice President, General Counsel and Secretary at STR Holdings, Inc., 1699 King Street, Suite 400, 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 written comments on their proxy card, 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 ratification of the independent registered public accounting firm, 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 a broker non-vote?     A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that matter and has not received voting instructions from the beneficial owner.

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        How are shares held by a broker or nominee voted?     Under New York Stock Exchange ("NYSE") rules, the ratification of the selection of an independent registered public accounting firm (Proposal No. 2), is considered a "routine" matter, and brokers generally may vote on behalf of beneficial owners who have not furnished voting instructions, subject to the rules of the NYSE concerning transmission of proxy materials to beneficial owners, and subject to any proxy voting policies and procedures of those brokerage firms. However, brokers may not vote on the other proposal contained in this proxy statement which are considered "non-routine" proposals, unless they have received voting instructions from the beneficial owner. To the extent that they have not received voting instructions, brokers report such number of shares as "non-votes".

What is the voting requirement to approve each of the proposals?

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With respect to Proposal No. 1 , the election of directors, under our Bylaws, we have adopted a "majority voting" standard for the election of directors. Under this standard, each of the nine 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—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). Broker non-votes are not counted in the determination of votes cast, and, thus, do not have a direct effect on the outcome of voting for directors.

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With respect to Proposal No. 2 , to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter will be required to ratify the proposal. Abstentions will, therefore, have the same effect as negative votes.

        NYSE rules do not allow brokers discretionary authority to vote in the election of directors. Therefore, if you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted in the election of directors. We urge you to promptly provide voting instructions to your broker to ensure that your shares are voted in these matters.

        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 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, Robert S. Yorgensen 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 an independent firm, Broadridge.

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        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 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 Broadridge 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 following the date of 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?     If a stockholder intends to present any proposal for inclusion in the Company's proxy statement in accordance with Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, for consideration at the Company's 2013 annual meeting of stockholders, the proposal must be received by the Senior Vice President, General Counsel and Secretary of the Company by December 12, 2012. Such proposal must also meet the other requirements of the rules of the SEC relating to stockholder proposals.

        The Company's Bylaws contain an advance notice of stockholder business and nominations requirement (Article II, Sections 9 and 10 of the Bylaws), which generally prescribes the procedures that a stockholder of the Company must follow if the stockholder intends, at an annual or special meeting of stockholders, to nominate a person for election to the Company's board of directors or to propose other business to be considered by stockholders. These procedures include, among other things, that the stockholder give timely notice to the Senior Vice President, General Counsel and Secretary of the Company of the nomination or other proposed business, that the notice contain specified information, and that the stockholder comply with certain other requirements. Generally, in the case of an annual meeting of stockholders, a stockholder's notice in order to be timely must be delivered in writing to the Senior Vice President, General Counsel and Secretary of the Company, at its principal executive offices, not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the date of the immediately preceding year's annual meeting. As specified in the Bylaws, different notice deadlines apply in the case of a special meeting, or when the date of an annual meeting is more than 30 days prior to or delayed 60 days after the first anniversary of the preceding year's meeting. If a stockholder's nomination or proposal is not in compliance with the procedures set forth in the Bylaws, the Company may disregard such nomination or proposal.

        Accordingly, if a stockholder of the Company intends, at the Company's 2013 annual meeting of stockholders, to nominate a person for election to the Company's board of directors or to propose other business, the stockholder must deliver a notice of such nomination or proposal to the Company's Senior Vice President, General Counsel and Secretary not later than the close of business on February 21, 2013, and not earlier than the close of business on January 22, 2013, and comply with the requirements of the Bylaws.

        Notices should be addressed in writing to:

STR Holdings, Inc.
Attn: Senior Vice President, General Counsel and Secretary
1699 King Street, Suite 400
Enfield, Connecticut 06082

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not earlier than the close of business on January 22, 2013, and

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not later than the close of business on February 21, 2013.

        In the event that we hold our 2013 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary date of the 2012 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.

        May 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 Senior Vice President, General Counsel and Secretary of STR at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see "Corporate Governance" and "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 Senior Vice President, General Counsel and Secretary in accordance with our Bylaws, which, in general, require that the notice be received by our Senior Vice President, General Counsel and Secretary within the time periods described above under "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?" 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 Senior Vice President, General Counsel and 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 websites is not deemed to be a part of this proxy statement.

         The Company is subject to the reporting requirements of the Securities Exchange Act of 1934 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 2011 Annual Report on Form 10-K filed by the Company, including the financial statements and schedule, 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 may request this information by phone at 860-758-7339, by e-mail to investorinfo@strholdings.com, or by mail to Yujia Zhai, Investor Relations, STR Holdings, Inc., 1699 King Street, Suite 400, Enfield, CT 06082.

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CORPORATE GOVERNANCE

Overview

        STR is 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 are available at www.strholdings.com on the "Investor Relations" page under the link "Corporate Governance". Any amendments to the code, or any waivers of its requirements, will be disclosed on our website.

Board Leadership Structure

        The Company's corporate governance documents provide our board of directors (the "Board") with flexibility to select the appropriate leadership structure for the Company. In making leadership structure determinations, the Board considers many factors, including specific needs of the business and what is in the best interest of the Company's stockholders.

        Commencing on January 1, 2012, our leadership structure changed. Dennis L. Jilot, our Chairman, President and Chief Executive Officer (CEO) became our Executive Chairman, and Robert S. Yorgensen, our President, STR Solar, became our President and CEO and a member of our Board. Commencing in July, Mr. Jilot will no longer be an executive officer of the Company, but will continue to serve as our Chairman. As a result, we will separate the Chairman and CEO positions. We believe that the separation of the Chairman and CEO roles is preferred by many investors.

        STR's leadership structure also includes an independent director serving as the Lead Director and strong, active, independent directors. Each of the standing committees of the Board is chaired by an independent director and each of our standing committees is comprised entirely of independent directors under NYSE rules. The audit committee is comprised of three directors, all of whom are independent in accordance with the NYSE and SEC rules applicable to audit committee members. The Board believes this structure provides very well-functioning and effective balance between strong Company leadership and appropriate safeguards and oversight by independent directors.

Board Structure and Committee Composition

        Composition.     Our business and affairs are managed under the direction of our Board. Our Bylaws provide that our Board will consist of between three and fifteen directors. Our Board is composed of nine 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, Chiste, Krueger, Leitch, Janitz, Schiano and Ms. Schnabel are independent directors under the applicable rules of the NYSE and that Messrs. Brown, Leitch and Schiano are also independent directors as such term is defined in Rule 10A-3(b)(1) under the Exchange Act.

        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:

•

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



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

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•

serve as Chair of the Board's meetings at which the Executive Chairman is not in attendance;



•

serve as a liaison between each of the Executive Chairman and 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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oversee the Board's annual self-evaluation;



•

consult with each committee with respect to its annual evaluations;



•

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



•

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. Stockholders may also nominate directors in accordance with the Company's Bylaws. The nominating and governance committee considers recommendations for Board candidates submitted by stockholders using the same criteria it applies to recommendations from the committee, directors or members of management. Stockholders may submit recommendations by providing the person's name and appropriate background and biographical information in writing to the Senior Vice President, General Counsel and Secretary of STR at: 1699 King Street, Suite 400, Enfield, Connecticut 06082.

        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 each of the Executive Chairman and 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 nominating and corporate governance committee is responsible for reviewing with the Board, on an annual basis, the appropriate criterion that directors are required to fulfill, including the specific experience, qualifications, attributes and skills in light of the Company's business and structure. The Board seeks directors with diverse business and relevant professional backgrounds, 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, and such other skills and experience as will enhance the Board's ability to serve the best interests of STR and its stockholders. The nominating and corporate governance committee also may consider the extent to which the candidate would fill a present need on the Board. The invitation to join the Board is extended by the Board via the Executive Chairman of the Board and the Chairman of the nominating and corporate governance committee. 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 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,

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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 consider these criteria each year as they determine the slate of directors to recommend to the Board for election at our annual meeting and also consider 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. Each of our Board members possesses the appropriate skills in general finance, strategic planning, corporate governance and leadership. The following table lists the specialized talents that each of our directors provides to the Board as a whole.

        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:

•

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.



•

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.



•

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

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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.

•

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 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: Senior Vice President, General Counsel and Secretary, who will forward the communication to the intended recipient. Communications may also be sent via electronic mail to the following e-mail address: STR.Board@strholdings.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 Senior Vice President, General Counsel and Secretary. The Senior Vice President, General Counsel and Secretary will deliver the envelope unopened (1) if addressed to a director, to the director, (2) if addressed to the Board, to the Executive 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 Chairman and CEO 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. However, it is anticipated that following the end of the term of Mr. Jilot's employment agreement on July 18, 2012, he will serve as the Chairman of the Board and will no longer be an executive officer of the Company.

        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.

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        The following table shows the membership of these committees since July 2011:

        The composition of each committee is reviewed annually by the nominating and corporate governance committee and it may rotate our directors' committee seats as applicable to ensure appropriate skill sets and obtain diverse perspectives. Prior to July 2011, our audit committee consisted of Mr. Chiste, instead of Mr. Schiano. Our compensation committee consisted of Mr. Metakis, instead of Mr. Janitz and our nominating and corporate governance committee consisted of Mr. Sprott, instead of Mr. Chiste. The changes were made to the composition of committees to optimize applicable skill sets.

        Audit Committee.     Our audit committee consists of Messrs. Leitch, Brown, and Schiano, with Mr. Leitch serving as Chair of the audit committee. In July 2011, Mr. Schiano replaced Mr. Chiste on the audit committee. The audit committee has responsibility for, among other things:

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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;



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



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



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



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



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

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



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



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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.

        Our board of directors affirmatively determined that Messrs. Leitch, Brown, and Schiano meet the definition of "independent directors" for purposes of serving on an audit committee under applicable SEC and NYSE rules. 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". Mr. Leitch currently serves on the audit committee of three public companies (including us).

        Compensation Committee.     Our compensation committee consists of Messrs. Janitz, Sprott and Ms. Schnabel, with Mr. Sprott serving as Chair of the compensation committee. The compensation committee has responsibility for, among other things:

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reviewing and approving the engagement of compensation consultants to provide advice on executive or director compensation and review the nature of other services provided;



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



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monitoring and reviewing our compensation and benefit plans;



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



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recommending to our Board with respect to the frequency of say-on-pay;



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reviewing risks relating to the Company's compensation policies and practices;



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



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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 of directors 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.     Our nominating and corporate governance committee consists of Ms. Schnabel and Messrs. Chiste and Krueger, with Ms. Schnabel serving as Chair. In July 2011, Mr. Chiste replaced Mr. Metakis as a member of the nominating and corporate

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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;



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



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



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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.

        Director Attendance.     In 2011, the full Board met twelve (12) times; the audit committee met seven (7) times, the compensation committee met four (4) times and the nominating and corporate governance committee met six (6) times. Directors are strongly encouraged, but not required, to attend the annual meeting of stockholders. At our 2011 annual meeting of stockholders, all directors serving at the time were present. 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 2011.

        Nomination of Director Candidates.     The Board is responsible for selecting director candidates and 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 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.

Board's Role in Risk Oversight

        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 established to monitor, manage and communicate such exposures.

        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, Chief Compliance and Internal Audit Director and the independent registered public accounting firm in executive sessions at least quarterly. The nominating and corporate governance committee discusses 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 Board reviews the primary operational and regulatory risks facing the Company, their relative magnitude and

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management's plan for mitigating these risks. In addition, the Board discusses risks related to the Company's business strategy at periodic strategic planning meetings and at other meetings as appropriate.

        In particular, the Company has begun a formal implementation of enterprise risk management. During each quarterly Board meeting, the CEO presents STR's corporate strategy to the Board. Each element of the corporate strategy includes a risk assessment related to the successful obtainment of such objectives, both on an inherent risk and residual risk basis along with management controls covering such risks and identified recent and future management actions to turn identified risks into opportunities. The Board assesses such risks and provides insight and feedback to management in relation to its process for identifying, monitoring and addressing risks as well as on its progression on reaching corporate objectives.

        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:

•

We have separated the Chairman and CEO positions. The Executive Chairman's role allows for productive meetings given his previous tenure serving as President and Chief Executive Officer and provides continuity through the transition in our leadership structure. His prior experience with the Company's operations and continued service on the Board 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.

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DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES

Director Compensation

        It is STR's policy to set the compensation of directors for their service on the Board and its Committees (which may include equity awards under the Company's 2009 Equity Incentive Plan) in a manner that is designed to attract, retain and motivate highly-qualified candidates for director, and to be broadly comparable with those companies which STR considers to be its peers in the industries in which it operates. Directors who are also employees of STR do not receive any compensation for their service as directors of STR. Director compensation, including compensation for committee service, is reviewed annually by the compensation committee, which makes such recommendations to the Board with respect thereto as it deems appropriate.

        On December 21, 2011, the Board elected Robert S. Yorgensen to serve as a member of the Board effective January 1, 2012. Mr. Yorgensen was also appointed President and CEO at the time of his election and will continue to be STR's President and CEO going forward. Mr. Yorgensen will not serve on any committees of the Board and he will not receive any compensation for his service as a director of STR.

Retainer and Meeting Fees

        Directors who are our employees or employees of our subsidiaries or affiliated with DLJMB will not receive compensation for their service as members of either our Board or Board committees. All other non-employee directors not affiliated with DLJMB will be paid quarterly in arrears:

•

a base annual retainer of $50,000 in cash;



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$25,000 in cash to the Chair of our audit committee and an additional annual retainer of $10,000 in cash to each director who is the Chair of a committee other than our audit committee; and



•

a fee of $2,000 for each regularly scheduled quarterly Board and committee meeting attended.

        We will also reimburse all directors for reasonable expenses incurred to attend meetings of our Board or committees.

        Commencing on July 19, 2012, Mr. Jilot will no longer be an executive officer of the Company, but he shall receive an annual retainer of $50,000 and the continuation of medical benefits currently being provided for serving as the Chairman of the Board.

Stock Ownership Guidelines for Directors

        The Company's stock ownership guidelines for its non-employee directors set a target in the amount of six times his or her annual cash retainer. This stock ownership target is intended to be met within five years from the date the guideline was adopted in 2010.

        In connection with our initial public offering, each of Messrs. Brown, Janitz, Leitch and Schiano received 10,000 shares of restricted stock with a fair value equal to $100,000, and such stock vests annually in equal installments over four years. Mr. Chiste and Dr. Krueger joined our Board in August 2010 and were granted 4,109 shares of restricted stock with a fair value equal to $100,000, and such stock vests annually in equal installments over four years. In June 2011, Mr. Sprott received an annual grant of restricted stock with a fair value of $45,000, which will vest annually in equal installments over three years. For each year of continued service thereafter, each of the non-employee directors (other than Ms. Schnabel) will receive an annual grant of restricted stock equal to $45,000 divided by the closing price of our common stock on the date of such grant, which will vest on the day that is immediately before the day of the next annual meeting of stockholders, or the first anniversary of the

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date of grant, whichever is sooner. See "—Securities Ownership of Certain Beneficial Owners and Management".

Director Compensation Table

        The following table sets forth all director compensation information for the year ended December 31, 2011.

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PROPOSALS TO BE VOTED ON

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Directors Elected Annually

        STR's directors are elected each year by the stockholders at the annual meeting. On the recommendation of the nominating and corporate governance committee, the Board has nominated the nine directors named below for election as directors this year. Each director's term will last until the 2013 annual meeting of stockholders or until he or she is succeeded by another director who has been elected.

Director Nominee Experience and Qualifications

        The Board annually reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board, our operating requirements and the long-term interests of our stockholders. The Board believes that its members should possess a variety of skills, professional experience and background in order to effectively oversee our business. In addition, the Board believes that each director should possess certain attributes, as reflected in the Board's membership criteria described below.

        STR's Corporate Governance Guidelines contain the current Board membership criteria under the headings "Director Qualification Standards" and "Board Diversity" that apply to nominees recommended for a position on the Board. Under those criteria, members of the Board should have the highest professional and personal ethics and values, consistent with the longstanding STR values and standards. They should have broad experience at the policy-making level in business, government, education, technology or public service. They should be committed to enhancing stockholder value and have sufficient time to carry out their duties and provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform all director duties responsibly. Each director must represent the interest of all stockholders of STR. Although the Board uses these and other criteria as appropriate to evaluate potential nominees, it has no stated minimum criteria for nominees.

        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 Senior Vice President, General Counsel and Secretary at the address set forth in the Questions and Answers section of this proxy statement.

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 March 28, 2012.

        The Board believes that all the nominees named below are highly qualified and have the skills and experience required for effective service on the Board. The biographies of each of the nominees and continuing directors below contain 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 2012.

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Recommendation

         Our Board recommends a vote "FOR" the nine nominees for the Board of Directors.

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PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

        The audit committee of the Board has appointed PricewaterhouseCoopers LLP as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2012. Since February 22, 2008, PricewaterhouseCoopers LLP has served as our independent registered public accounting firm and also provided certain tax and other audit-related services. See "Principal Accountant Fees and Services" below.

        Representatives of PricewaterhouseCoopers LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.

Vote Required

        Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2012 requires the affirmative votes of a majority of the shares of our common stock present at the annual meeting in person or by proxy and entitled to vote in the proposal. Unless marked to the contrary, proxies received will be voted "FOR" ratification of the appointment of PricewaterhouseCoopers LLP.

        Appointment of the Company's independent auditors is not required to be submitted to a vote of the stockholders of the Company for ratification. However, the audit committee has recommended that the Board submit this matter to the stockholders as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the audit committee will reconsider whether to retain PricewaterhouseCoopers LLP and may retain that firm, or another, without resubmitting the matter to the Company's stockholders. Even if the appointment is ratified, the audit committee may, in its discretion, direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and the stockholders.

Recommendation

         Our Board recommends a vote "FOR" the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2012.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Named Executive Officers

        For 2011, our named executive officers were:

•

Dennis L. Jilot, Chairman, President and Chief Executive Officer (Executive Chairman effective January 1, 2012);



•

Robert S. Yorgensen, Vice President and President, STR Solar (President and CEO, effective January 1, 2012);



•

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



•

Alan N. Forman, Senior Vice President, General Counsel and Secretary.

Overview and Process

        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.

        Actions taken in 2011 to better align our compensation program to our stockholders' interests include:

•

The compensation committee engaged Mercer LLC as compensation consultants to benchmark our executive compensation program against a peer group consisting of solar, specialty chemicals and materials companies. They assessed our executive compensation and executive performance measures and recommended changes to our annual performance incentive targets and long-term incentive vehicles. Based on their study and recommendations, the Company aligned executive base salaries generally between the market median and 75 ^th  percentile. Based upon the attainment of annual performance goals, we have targeted total cash compensation and total direct compensation under our management incentive plan to be between the median to the 75 ^th  percentile of pay for comparable positions at our peer group companies. Accordingly, we increased our annual target performance thresholds to assure that maximum incentive attainment is more difficult to achieve to motivate and encourage executives to drive performance. Conversely, we lowered our minimum annual target threshold to provide more opportunity for all non-executive participants in STR's annual incentive plan to attain an incentive reward.



•

STR had its first non-binding vote on our executive pay programs for our named executive officers ("say-on-pay"). The vote was overwhelmingly positive, with 91% of the stockholders voting in support of our executive compensation programs. Additionally, STR had its first non-binding vote on the frequency of stockholder say-on-pay votes. Say-on-pay votes will be held every three years, in response to the 58% of the stockholders voting in favor of the Company's recommendation that the vote be held every three years.

We did not make any changes to our executive compensation program in light of stockholder support of our executive compensation program, the fact that we benchmarked our program against our peer group with the aid of a compensation consultant, and that we believe our compensation program is aligned with our stockholders' interests. For example, due to weak solar industry demand in 2011, we did not meet our fully diluted non-GAAP EPS or Solar

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Adjusted EBITDA targets for 2011 and the market price of our common stock declined. Accordingly, none of our executive officers received any compensation under our management incentive plan in 2011.

•

STR's 2010 ESPP plan became effective after approval at our 2011 stockholders' meeting. Under the 2010 ESPP, eligible employees may use payroll withholdings to purchase shares of the Company's common stock at a 10% discount. The Company has established four offering periods in which eligible employees may participate. The Company will purchase the number of required shares each period based upon the employees' contribution plus the 10% discount. We believe our 2010 ESPP provides all of our employees the opportunity to own stock and be more aligned with the interests of our stockholders.

        We are committed to having an open dialogue surrounding our executive compensation practices with our stockholders. To date, the Company has not received any unfavorable feedback surrounding its compensation practices from its stockholders.

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 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 industry;



•

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-term objectives.

        Our compensation committee meets outside the presence of all of our executive officers, including the named executive officers, to consider appropriate compensation for each of our Executive Chairman and CEO. For all other named executive officers, the compensation committee meets outside the presence of all executive officers except each of our Executive Chairman and CEO. Our Executive Chairman and CEO review annually with the compensation committee each other named executive officer's performance 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 each of our Executive Chairman and 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 each of our Executive Chairman and CEO. The compensation committee also annually analyzes each of our Executive Chairman and CEO's performance and determines their base salary, cash performance awards and grants of long-term equity incentive awards based on its assessment of their performance with input from any consultants engaged by the compensation committee.

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        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 we consider appropriate in assessing a particular individual's performance.



•

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. The total compensation program should be comparable to practices employed by our peer group. Our long-term target is to ensure total compensation to our executive officer and other key personnel are to be between the median and 75 ^th  percentile of pay for comparable positions at our peer group companies.

Our Peer Group:

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        In addition to the above named peer companies, Mercer benchmarked our compensation against data from the plastics and rubber industry, paper and allied products, chemical and durable goods, manufacturing from enterprises, divisions, or groups similarly sized to STR's revenues.

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, stock options and performance-based shares;



•

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.

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        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 2011 base salary was $515,000, which included an increase of 3% to his 2010 base salary based on merit and cost-of-living adjustments.

        Mr. Morris's 2011 base salary was $300,000, which included an increase of 15% to his 2010 base salary based on merit and cost-of-living adjustments.

        Mr. Yorgensen's 2011 base salary was $350,000, which included an increase of 34% to his 2010 base salary based on merit and cost-of-living adjustments.

        Mr. Forman's 2011 base salary was $250,000, which included an increase of 6% to his 2010 base salary based on merit and cost-of-living adjustments.

        For 2012, Mr. Jilot's annual base salary remained $515,000, of which he will receive the pro-rata amount of approximately $283,000 if he remains in his current capacity as Executive Chairman until the expiration of his amended employment agreement on July 18, 2012. At that point, Mr. Jilot will become Chairman of STR's board of directors and he will be entitled to the payment of fees as a non-employee director, plus an annual retainer of $50,000 as Chairman of the Board. Mr. Yorgensen's annual base salary in connection with his new role as President and CEO was increased to $475,000. Mr. Morris's base salary was increased to $365,000 annually and Mr. Forman's base salary was increased to $276,000 for 2012 based on merit, and cost-of-living adjustments.

        The base salaries of Messrs. Yorgensen, Morris and Forman were initially established in their respective employment agreements. 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 former Chairman, President and Chief Executive Officer, based upon:

•

his background and circumstances, including his experience and skills;



•

our knowledge of the competitive factors within the industry 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.

        The base salaries paid to our named executive officers in 2011, 2010 and 2009 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 2011, our cash incentive awards for our named executive officers were tied to the achievement of STR's fully diluted non-GAAP EPS 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 150% of his base salary as of January 1, 2011, and each of Messrs. Morris and Yorgensen were eligible to receive a bonus payment of up to 100% of such officer's base salary as of January 1, 2011. Mr. Forman was eligible to receive a bonus payment of up to 80% of his base salary as of January 1, 2011. In 2012, each of Messrs. Jilot, Morris, Yorgensen and Forman will be eligible to receive a bonus payment up to 150%, 100%, 100% and 80% respectively of such officer's base salary as of January 1, 2012.

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        The financial performance criteria established for the named executive officers in connection with the management incentive plan for 2011 were as follows:

Dennis L. Jilot

Barry A. Morris

Robert S. Yorgensen

Alan N. Forman

        We calculated our 2011 cash incentive awards as follows:

•

If a Threshold performance amount is not met, no cash award is granted to the executive officer for that performance objective.



•

If a performance objective meets or exceeds our Threshold performance amount but does not meet our Target performance amount, such officer would be entitled to an award equal to the product of (i) his Base Salary, (ii) the Target Bonus Percentage for such performance objective and (iii) a Bonus Multiplier for such performance objective. The Bonus Multiplier is calculated as follows:

 

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•

If a performance objective meets our Target performance amount, such officer would be entitled to an award equal to the product of (i) his Base Salary and (ii) the Target Bonus Percentage for such performance objective.



•

If a performance objective exceeds our Target performance amount but does not meet our Maximum performance amount, such officer would be entitled to an award equal to the product of (i) his Base Salary, (ii) the Target Bonus Percentage for such performance objective and (iii) a Bonus Multiplier for such performance objective, up to the Maximum Bonus Percentage. Such Bonus Multiplier is calculated as follows:

 

•

If a performance objective exceeds our Maximum performance amount, such officer would be entitled to an award equal to the product of (i) his Base Salary and (ii) the Maximum Bonus Percentage for such performance objective.

        The specific 2011 amounts associated with the Threshold, Target and Maximum performance amounts for Messrs. Jilot, Morris and Forman are set forth in the table below.

        The fully-diluted non-GAAP EPS and EBITDA target was adjusted during 2011 to reflect the Company's strategic divestiture of its former Quality Assurance business. Due to a decrease in earnings as a result of recording the former Quality Assurance business's earnings in discontinued operations, STR's fully diluted non-GAAP EPS and EBITDA targets were reduced by $0.05 and $8.5 million, respectively.

        The specific 2011 amounts associated with the Threshold, Target and Maximum performance amounts for Mr. Yorgensen are set forth in the table below (EBITDA's dollars in thousands).

        The actual amount of the annual cash performance bonus paid or awarded to a named executive is subject to the discretion of our compensation committee, and the amount can be impacted by significant external events, individual employment status and unusual business events. As a result, our Board may from time to time exercise its discretion and award annual cash performance bonuses in excess of the performance achieved by named executives or reduce or eliminate annual cash performance bonuses to named executives who had achieved their performance goals. In 2009, Messrs. Morris and Yorgensen were given a transaction bonus for work related to our initial public offering, as set forth in the "Bonus" column in the Summary Compensation Table. The actual management incentive plan bonuses paid for each named executive are reflected in the column entitled "Non-Equity Incentive Plan Compensation" of the Summary Compensation Table set forth herein. The

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tables below reflect the actual performance achieved in 2011 for the above-mentioned performance metrics (EBITDA dollars in thousands).

        In 2011, our actual fully diluted non-GAAP EPS from continuing operations was $0.80 and our Adjusted EBITDA was $62,754. These results did not meet any of our performance targets for 2011. Accordingly, none of the executive officers received payments under our management incentive plan in 2011.

Long-Term Equity-Based Compensation.

        We believe that our long-term performance is fostered by a compensation methodology that compensates executive officers through the use of equity-based awards, such as stock options, restricted stock awards and other rights to receive compensation based on the value of our common stock. We also believe that when our executive officers possess an ownership interest in us, they have a continuing stake in our long-term success that aligns with stockholder value creation.

        In connection with our initial public offering on November 6, 2009, our Board adopted a new equity benefit plan pursuant to which a total of 4,750,000 shares of our common stock were authorized for issuance. In connection with our initial public offering and under the 2009 Equity Incentive Plan, we granted certain employees and directors options to purchase a total of 2,721,073 shares of our common stock at an exercise price equal to the initial public offering price, including option grants to Messrs. Jilot, Morris, and Yorgensen to purchase 402,812, 379,758 and 441,010 shares of our common stock, respectively. In addition, in connection with our initial public offering and under the 2009 Equity Incentive Plan, we granted certain employees options to purchase 774,612 shares of our common stock at exercise prices ranging from $12.81 to $21.50, including option grants at an exercise price of $12.81 to Messrs. Jilot, Morris and Yorgensen to purchase 209,505, 122,211 and 200,775 shares of our common stock, respectively. In order to maintain the economic incentives set forth in the original units granted to our current executive officers, directors and employees, our compensation committee decided to grant options to such individuals in connection with our initial public offering and our corporate reorganization. The options granted in connection with our initial public offering to Messrs. Jilot, Morris and Yorgensen, as well as to other employees that held Class C, D, and E units, began to vest on January 31, 2010 and vest proportionately and on the same schedule as their Class C, D and E units that converted into our common stock (including restricted common stock) in connection with our corporate reorganization. The options received by Messrs. Morris and Yorgensen in respect of their Class B units vested in full on January 31, 2010. The compensation committee of our Board will determine, subject to the employment agreements, any future equity awards that each named executive officer will be granted pursuant to the 2009 Equity Incentive Plan. Shares subject to awards that expire or are cancelled or forfeited, or that are repurchased by us pursuant to the terms of the agreements, will again become available for issuance under the plan.

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        In 2011, Mr. Forman was granted 50,000 shares of our restricted common stock. The restricted common stock vests monthly over four years from the grant date after October, beginning on November 1, 2011.

        In 2010, Mr. Forman, pursuant to his employment agreement, was granted an option to purchase 125,000 shares of our common stock at an exercise price equal to the fair market value on the date of grant, which was $23.06. The options vest monthly over four years from the grant date after May 2010, beginning June 30, 2010.

        Restricted Common Stock.     Shares of restricted common stock are awards of our common stock that vest in accordance with the terms and conditions established in the applicable governing document. Holders of restricted common stock have all rights with respect to voting and dividends as holders of our common stock.

        Other Executive Benefits and Perquisites.     We provide the following benefits to our executive officers on the same basis as other eligible employees:

•

health and dental insurance;



•

life insurance;



•

long-term and short-term disability;



•

a 401(k) and profit sharing plan; and



•

a Section 125 cafeteria plan.

        We provide a qualified matching contribution of up to 2.5% to eligible employees, including our executive officers, who participate in our 401(k) and profit sharing plan.

        Employment Agreements and Termination and Change of Control Benefits.     We have employment agreements with each of our named executive officers. We entered into a new employment agreement with Mr. Yorgensen on December 7, 2011 in connection with his appointment as the Company's President and CEO, effective January 1, 2012. We entered into an amendment to Mr. Jilot's Employment Agreement to update it for the change in his role with the Company on the same date. We entered into an employment agreement with Mr. Morris, in connection with our acquisition by DLJMB and its co-investors in 2007. We entered into an employment agreement with Mr. Forman in May 2010.

        The primary purpose of the agreements is to establish the terms of employment and to protect both us and the executive. We are provided with reasonable protections that the executive will perform at acceptable levels and will not compete with or recruit employees from us during or after the termination of employment. The executive is provided financial protection in the event of certain reasons for termination of employment in recognition of the executive's professional career and a forgoing of present and future career options. The employment agreements provide for severance payments in the event of certain categories of termination. See "Potential Payments Upon Termination or Change of Control" and "Employment Agreements".

Use of a Compensation Consultant

        To enhance the compensation committee's ability to perform its responsibilities, the committee has in recent years retained the services of an independent compensation consultant. The compensation committee retained Mercer in 2011 and 2010 to consult and advise on executive compensation issues. In considering the selection of Mercer, the compensation committee considered Mercer's service to the Company and certain safeguards that Mercer implements to assure that the consultant acts independently. As an advisor to the compensation committee, Mercer reviewed the total compensation

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and pay levels of the Company's named executive officers, examined all aspects of the Company's executive compensation programs to ensure their ongoing support of the Company's business strategy, informed the compensation committee of developing legal and regulatory considerations affecting executive compensation and benefit programs and provided general advice to the compensation committee with respect to compensation decisions pertaining to the Executive Chairman, President and Chief Executive Officer and other senior executives.

        In addition to executive compensation consulting services provided to the compensation committee, Mercer provided consulting services to the Company relative to the administration of their U.S. benefits programs, especially in the administration of the Company's U.S. self-insured medical plans. The Company paid Mercer approximately $128,000 for all the services provided in 2011. Of that amount, approximately $30,000 related to executive compensation consulting services and the balance provided in connection to the administration of the Company's U.S. benefit programs. The decision to engage Mercer for these other services was made by management and the Compensation Committee was informed of this decision.

Stock Ownership Guidelines for Executive Officers

        The Company's stock ownership guidelines for its executive officers ensure that the interests of executive officers are aligned with the interests of stockholders. These guidelines set a target for our Chief Executive Officer to own stock in the Company in the amount of six times his or her base salary and other executive officers in the amount of three times his or her base. These stock ownership targets are intended to be met within five years from the guideline adoption.

Risk Assessment of Compensation Policies and Practices

        The Company has assessed whether its compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company and has determined that the Company's compensation practices and policies do not create such risks. Our conclusion was based on the following risk mitigating factors:

•

the Company uses a blend of compensation that balances short-term/long-term and base/incentive rewards for performance. The Company's short-term compensation is comprised of base salary and potential cash bonus under our management incentive plan. Base salaries are determined with the aid of an independent compensation consultant with the objective of targeting annual salaries to the 50th to 75th percentile of our peer group. Based on this practice, employees are paid competitively for services rendered. The base salary is supplemented with an annual incentive bonus opportunity that provides participants with the opportunity to earn a threshold, target and maximum bonus amount that is contingent on achieving performance objectives. The use of a range of potential payouts mitigates pressures to obtain an absolute target, yet motivates employees to maximize performance. These short-term awards are supplemented with long-term equity incentive grants. The equity grants vest over a longer period of time, typically four years, and align recipients' interests with those of the Company's stockholders and make it unlikely that recipients will pursue behaviors that expose the Company to any material adverse risks. We believe this compensation mix rewards performance that generates stockholder value, while maintaining an appropriate balance between profitability and stability.



•

the board of directors review performance measures including the annual budget to ensure such targets are consistent with stockholder value creation and are not unrealistic based on its understanding of the Company's competitive position, industry dynamics and overall economic conditions. Realistic goal setting reduces aggressive risk taking associated with trying to achieve stretch targets.



•

the Company has minimum stock ownership guidelines for executive officers and its directors that ensure senior management is setting the proper tone at the top for long-term stockholder value creation.

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Compensation Committee Report

        We, the compensation committee of the Board of STR Holdings, Inc. (the "Company"), have reviewed and discussed the Compensation Discussion and Analysis set forth above with management of the Company, and based upon such review and discussion, the compensation committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

        Compensation Committee:

Ryan M. Sprott, Chairperson
John A. Janitz
Susan C. Schnabel

Summary Compensation Table

        The following table sets forth certain information with respect to compensation for the years ended December 31, 2011, 2010 and 2009 earned by or paid to our named executive officers.

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2011 Grants of Plan-Based Awards

        The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 2011, with respect to the named executive officers.

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Outstanding Equity Awards

        The following table sets forth certain information with respect to outstanding equity awards of our named executive officers as of December 31, 2011.

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Option Exercises and Stock Vested

        The following table sets forth certain information with respect to shares vesting during the year ended December 31, 2011 with respect to the named executive officers. No named executive officers exercised any options during the year ended December 31, 2011.

Pension Benefits

        In the year ended December 31, 2011, our named executive officers received no pension benefits and had no accumulated pension benefits.

Nonqualified Deferred Compensation

        In the year ended December 31, 2011, our named executive officers received no nonqualified deferred compensation and had no deferred compensation balances.

Potential Payments upon Termination or Change of Control

        The information below describes and quantifies certain compensation that would become payable under each named executive officer's employment agreement if, as of December 31, 2011, his employment had been terminated, there was a change of control or if the DLJMB investors transferred or sold 50% or more of their original beneficial ownership in us to third parties. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event.

        Each of our named executive officers is entitled to payments upon termination pursuant to their respective employment agreements. Mr. Jilot and Mr. Yorgensen's potential payments upon termination or change of control have been calculated pursuant to their amended and new employment agreements, effective January 1, 2012, respectively.

        Dennis L. Jilot.     If terminated for any reason, Mr. Jilot, or his estate, will be entitled to receive a lump sum comprised of (i) his annual base salary through the date of termination; (ii) any expenses owed to him pursuant to his employment agreement; (iii) any accrued vacation pay owed to him pursuant to his employment agreement; (iv) any amounts arising from his participation in, or benefits under, any employee benefit plans, programs or arrangements; and (v) any amounts which may be due

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to him under his restricted stock agreements with us. Mr. Jilot is also entitled to receive a pro-rata portion of a bonus payment he would have been eligible to receive for the applicable period of the calendar year ending on the termination date.

        If Mr. Jilot is terminated without cause (including pursuant to his death or disability) or if he terminates his employment with good reason, he (or his estate) will be entitled to receive, in addition to the payments described above, his then current base salary for 27 months from the date of termination, a pro rata portion of any bonus payment he would have been eligible to receive, continued coverage for Mr. Jilot under our health, life insurance and retirement plans for 27 months and continued paid coverage for Mr. Jilot, his wife and any eligible dependents under all group health benefit plans for 27 months. In addition, any unvested shares that would have vested within the 12 months following such termination will vest immediately. Also as of December 31, 2011, Mr. Jilot holds 206,105 unvested shares that will vest in full if he is still employed as our Executive Chairman on July 18, 2012.

        Upon a change of control, Mr. Jilot is not entitled to any severance benefit and all unvested restricted stock and options held by him will vest in full.

        Robert S. Yorgensen.     If terminated for any reason, Mr. Yorgensen, or his estate, will be entitled to receive a lump sum comprised of (i) his annual base salary through the date of termination; (ii) any expenses owed to him pursuant to his employment agreement; (iii) any accrued vacation pay owed to him pursuant to his employment agreement; (iv) any amounts arising from his participation in, or benefits under, any employee benefit plans, programs or arrangements; and (v) any amounts which may be due to him under his restricted stock agreements with us.

        If Mr. Yorgensen is terminated without cause (including pursuant to his death or disability) or if he terminates his employment with good reason, he (or his estate) will be entitled to receive in addition to the payments described above, his then current base salary for 24 months from the date of termination, a pro rata portion of any bonus payment he would have been eligible to receive, continued coverage for Mr. Yorgensen under our health, life insurance and retirement plans for 24 months and continued paid coverage for Mr. Yorgensen, his wife and any eligible dependents under all group health benefit plans for 24 months. In addition, any unvested shares that would have vested within the 12 months following such termination will vest immediately.

        Upon a change of control, Mr. Yorgensen is not entitled to any severance benefit and all unvested restricted stock and options held by him will vest in full. If within 12 month's following a change of control, Mr. Yorgensen's employment is terminated by him for good reason, by the Company without cause, or the Company does not renew the employment agreement in accordance with its terms, he will be entitled to the same benefits as described in the previous paragraph, except Mr. Yorgensen will be entitled to two times his target bonus (of 75% of his annual base salary) instead of the pro-rata portion of the management incentive plan bonus. However, Mr. Yorgensen will only be entitled to such payments if he signs a release of all legal claims against STR and certain related parties and he does not violate his agreement not to compete. See "Non-Competition and Non-Solicitation".

        Furthermore, upon the earlier to occur of December 31, 2015, the sale of our Company or termination of Mr. Yorgensen's employment for any reason, Mr. Yorgensen will be entitled to bonus payments based upon a formula that is tied to distribution amounts he would have received with respect to his units in our predecessor Company if our assets were sold at their fair market value. Based on such formula, the maximum bonus amount Mr. Yorgensen could receive is $549,860. Such amount is included in the Other column in the table located below and could be less depending upon the Company's fair market value at such payment date.

        Barry A. Morris.     If terminated for any reason, Mr. Morris, or his estate, will be entitled to receive a lump sum comprised of (i) his annual base salary through the date of termination; (ii) any

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expenses owed to him pursuant to his employment agreement; (iii) any accrued vacation pay owed to him pursuant to his employment agreement; (iv) any amounts arising from his participation in, or benefits under, any employee benefit plans, programs or arrangements; and (v) any amounts which may be due to him under his restricted stock agreements with us.

        If Mr. Morris is terminated without cause (including pursuant to his death or disability) or if he terminates his employment with good reason, he (or his estate) will be entitled to receive in addition to the payments described above, his then current base salary for 12 months from the date of termination, a pro rata portion of any bonus payment he would have been eligible to receive, continued coverage for Mr. Morris under our health, life insurance and retirement plans for 12 months and continued paid coverage for Mr. Morris, his wife and any eligible dependents under all group health benefit plans for 12 months. In addition, any unvested shares that would have vested within the 12 months following such termination will vest immediately.

        Upon a change of control, Mr. Morris is not entitled to any severance benefit and all unvested restricted stock and options held by him will vest in full.

        Furthermore, upon the earlier to occur of December 31, 2015, the sale of our Company or termination of Mr. Morris' employment for any reason, Mr. Morris will be entitled to bonus payments based upon a formula that is tied to distribution amounts he would have received with respect to his units in our predecessor Company if our assets were sold at their fair market value. Based on such formula, the maximum bonus amount Mr. Morris could receive is $1,447,843. Such amount is included in the Other column in the table located below and could be less depending upon the Company's fair market value at such payment date.

        Alan N. Forman.     If terminated for any reason, Mr. Forman, or his estate, will be entitled to receive a lump sum comprised of (i) his annual base salary through the date of termination; (ii) any expenses owed to him pursuant to his employment agreement; (iii) any accrued vacation pay owed to him pursuant to his employment agreement; (iv) any amounts arising from his participation in, or benefits under, any employee benefit plans, programs or arrangements; and (v) any amounts which may be due to him under his restricted stock agreements with us.

        If Mr. Forman is terminated without cause (including pursuant to his death or disability) or if he terminates his employment with good reason, he (or his estate) will be entitled to receive in addition to the payments described above, his then current base salary for 9 months from the date of termination, a pro rata portion of any bonus payment he would have been eligible to receive, continued coverage for Mr. Forman under our health, life insurance and retirement plans for 9 months and continued paid coverage for Mr. Forman, his wife and any eligible dependents under all group health benefit plans for 9 months.

        Upon a change of control, Mr. Forman is not entitled to any severance benefits and all unvested restricted stock and options held by him will vest in full.

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        The following table summarizes the potential payments to Messrs. Jilot, Yorgensen, Morris and Forman assuming that such events occurred as of December 31, 2011 based on each executive's current employment agreement.

Employment Agreements

        Dennis L. Jilot.     We entered into an employment agreement with Mr. Jilot, our Chairman, President and Chief Executive Officer on July 18, 2008 and an amendment to that employment agreement on September 3, 2009. We entered into amendment No. 2 to that employment agreement on December 7, 2011, in connection with the change in Mr. Jilot's role to Executive Chairman from President and Chief Executive Officer. This amended employment agreement became effective on January 1, 2012 and will expire on July 18, 2012. Pursuant to Mr. Jilot's updated employment agreement, his annual base salary is $515,000, of which he will receive the pro-rated portion for the

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period of the calendar year ending on July 18, 2012. He is eligible to participate in the Company's (i) management incentive plan with an annual performance bonus target of up to 75% of his annual base salary and (ii) the long-term incentive plan with an annual performance bonus of up to 105% of his annual base salary based upon performance goals set by the Company's Board of Directors for a particular fiscal year. The bonus compensation will be pro-rated for the period of the calendar year ending on July 18, 2012. In addition, under the amendment, Mr. Jilot is entitled to a transitional bonus for the period commencing July 19, 2012 through December 31, 2012, which includes (i) payment of $315,000 per annum payable over such period in accordance with the Company's normal payroll practices, (ii) the issuance of a restricted stock award on December 31, 2012 that has a fair market value equal to $46,000 with such shares vesting on the first anniversary date of the issuance and (iii) continued participation in the Company's medical benefits plan, programs and arrangements that are applicable to senior management of the Company.

        For the purposes of the 2011 fiscal year, as of January 1, 2011, Mr. Jilot's annual base salary was $515,000 and he was eligible to receive a bonus equal to 150% of his base salary. See "Base Salary" and "Cash Incentive Awards". Pursuant to his amended employment agreement, effective January 1, 2012, Mr. Jilot's base salary was $515,000 and this amount was used for the purposes of calculating his potential payments upon termination or change of control. See "Potential Payments Upon Termination or Change of Control".

        Robert S. Yorgensen.     We entered into an employment agreement with Mr. Yorgensen, our Vice President and President of STR Solar in connection with our acquisition by DLJMB and its co-investors on June 15, 2007. On December 7, 2011, we entered into a new employment agreement with Mr. Yorgensen effective January 1, 2012 in connection with his appointment as the Company's President and Chief Executive Officer. Pursuant to the new agreement, January 1, 2012, his annual base salary was $475,000, subject to annual discretionary increases, and he will be eligible to participate in the Company's (i) management incentive plan with an annual performance bonus target of up to 75% of his annual base salary and (ii) long-term incentive plan with the annual performance bonus target of up to 100% of his annual base salary, in each case based upon performance goals set by the Company's board of directors for a particular fiscal year.

        For the purposes of the 2011 fiscal year, as of January 1, 2011, Mr. Yorgensen's annual base salary was $350,000 and he was eligible to receive a bonus equal to 100% of his base salary. See "Base Salary" and "Cash Incentive Awards". Pursuant to his new employment agreement, effective January 1, 2012, Mr. Yorgensen's base salary was $475,000 and this amount was used for the purposes of calculating his potential payments upon termination or change of control. See "Potential Payments Upon Termination or Change of Control".

        Barry A. Morris.     We entered into an employment agreement with Mr. Morris, our Executive Vice President and Chief Financial Officer in connection with our acquisition by DLJMB and its co-investors on June 15, 2007. Pursuant to Mr. Morris' employment agreement, he is paid a base salary subject to annual increases and is eligible to receive an annual performance bonus in an amount based upon performance goals set by our Board for a particular fiscal year.

        For the purposes of the 2011 fiscal year, as of January 1, 2011, Mr. Morris' annual base salary was $300,000 and he was eligible to receive a bonus equal to 100% of his base salary. See "Base Salary" and "Cash Incentive Awards". As of December 31, 2011, Mr. Morris' base salary was $300,000 and this amount was used for the purposes of calculating his potential payments upon termination or change of control. See "Potential Payments Upon Termination or Change of Control".

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        Alan N. Forman.     We entered into an employment agreement with Mr. Forman, our Senior Vice President, General Counsel and Secretary on May 3, 2010. Pursuant to Mr. Forman's employment agreement, he is paid a base salary subject to annual increases and is eligible to receive an annual performance bonus based upon performance goals set by our Board for a particular fiscal year. For the purposes of the 2011 fiscal year, as of January 1, 2011, Mr. Forman's annual base salary was $250,000 and he was eligible to receive a bonus equal to 80% of his base salary. See "Base Salary" and "Cash Incentive Awards". As of December 31, 2011, Mr. Forman's base salary was $250,000 and this amount was used for the purposes of calculating his potential payments upon termination or change of control. See "Potential Payments Upon Termination or Change of Control".

Non-Competition and Non-Solicitation

        Each of our named executive officers has entered into non-competition and non-solicitation agreements with us. Pursuant to such agreements, each named executive officer has agreed not to compete with us for a specified period of time following such executive's date of termination. In addition, each named executive officer may not solicit any of our employees during the term of his non-competition period. The non-competition and non-solicitation period is 27 months for Mr. Jilot, 24 months for Mr. Yorgensen and 12 months for each of Mr. Morris and Mr. Forman. We have the option to extend each executive's non-competition and non-solicitation period for an additional year. If we extend Mr. Jilot's term, we must provide six months' prior notice to Mr. Jilot and pay him severance under his employment agreement during that year as if he had been terminated by us without cause. However, we are not required to continue any of Mr. Jilot's medical or health benefits during such period if they are substantially duplicative of benefits provided to him during the year by another employer. If we extend the non-competition and non-solicitation period of Messrs. Morris, Yorgensen or Forman, we must provide six months' notice to the executive, pay such executive his annual base salary, payable over 12 months, and extend his participation in our health, life insurance and retirement plans through the extended period.

Indemnification of Officers and Directors

        Our Bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware General Corporation Law, or DGCL. We have established directors' and officers' liability insurance that insures such persons against the costs of defense, settlement or payment of a judgment under certain circumstances.

        In addition, our certificate of incorporation provides our directors will not be liable for monetary damages for breach of fiduciary duty, except for liability relating to any breach of the director's duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, violations under Section 174 of the DGCL or any transaction from which the director derived an improper personal benefit.

        In addition, prior to the completion of our initial public offering, we entered into indemnification agreements with each of our executive officers and directors. We also entered into indemnification agreements with each of our officers and directors that joined the Company after the initial public offering. The indemnification agreements provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement to the fullest extent permitted under the DGCL.

        There is no pending litigation or proceeding naming any of our directors or officers for which indemnification is being sought, and we are not aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Beneficial ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote, and subject to community property laws where applicable, we believe based upon the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Percentage of beneficial ownership is based upon 41,618,093 shares of common stock outstanding as of March 28, 2012. Shares of common stock subject to options currently exercisable or exercisable within 60 days of March 28, 2012, ("presently exercisable stock options") are deemed to be outstanding and beneficially owned by the person holding the options for the purposes of computing the percentage of beneficial ownership of that person and any group of which that person is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person. Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all shares of common stock held by them. Unless otherwise indicated, the address for each holder listed below is STR Holdings, Inc., 1699 King Street, Suite 400, Enfield, CT 06082.

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EQUITY COMPENSATION PLAN

        The following table summarizes common stock that may be issued under our existing equity compensation plan as of December 31, 2011.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors and holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Such persons are required by regulations of the SEC to furnish us with copies of all such filings. To our knowledge, based solely on our review of the copies of such filings received by us and the written representations of our officers and directors, with

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respect to the fiscal year ended December 31, 2011, all applicable Section 16(a) filing requirements were timely met.

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

        Set forth below is a description of certain relationships and related person transactions between us and our directors, executive officers and holders of more than 5% of our voting securities since January 1, 2011. We believe that all of the following transactions were entered into with terms as favorable as could have been obtained from unaffiliated third parties.

Board Compensation

        Directors who are our employees or employees of our subsidiaries or affiliated with DLJMB receive no compensation for their service as members of either our board or board committees. All non-employee members of our Board not affiliated with DLJMB are compensated as set forth under "Director Compensation and Stock Ownership Guidelines—Director Compensation".

Employment Agreements

        We have entered into employment agreements with each of Messrs. Jilot, Morris, Yorgensen and Forman. For more information regarding these agreements, see "Executive Compensation—Employment Agreements" and "Potential Payments Upon Termination or Change of Control".

Indemnification Agreements

        We entered into indemnification agreements with each of our directors and executive officers in connection with our initial public offering in November 2009 and Mr. Forman in May 2010. We also entered into indemnification agreements with each of our directors that joined the Company after the initial public offering. These agreements, among other things, require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys' fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person's services as a director or executive officer.

Policies for Approval of Related Person Transactions

        On November 6, 2009, our Board adopted a written related person transactions policy which is administered by our audit committee. Our audit committee reviews and approves or ratifies all relationships and related person transactions between us and (i) our directors, director nominees, executive officers or their immediate family members, (ii) any 5% record or beneficial owner of our common stock or (iii) any immediate family member of any person specified in (i) and (ii) above. Our Senior Vice President, General Counsel and Secretary is primarily responsible for the development and implementation of processes and controls to obtain information from our directors and executive officers with respect to related party transactions and for determining, based upon the facts and circumstances, whether we or a related person have a direct or indirect material interest in the transaction.

        As set forth in the related person transaction policy, in the course of its review and approval or ratification of a related party transaction, the audit committee will consider:

•

our relationship with the related person;



•

the nature of the related person's interest in the transaction;



•

the availability of other sources of comparable products or services;

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•

the material terms of the transaction to the related person and to us, including, without limitation, the amount and type of transaction;



•

Whether the transaction was in the ordinary course of our business and was proposed and considered in the ordinary course of our business; and



•

The importance of the transaction to us.

        Any member of the audit committee who is a related person with respect to a transaction under review will not be permitted to participate in the discussions or approval or ratification of the transaction. However, such member of the audit committee will provide all material information concerning the transaction to the audit committee.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

        The following table sets forth the aggregate fees billed to us for the audit and other services provided by PricewaterhouseCoopers LLP during the fiscal years ended December 31, 2011 and December 31, 2010:

Audit Committee's Pre-Approval Policies and Procedures

        The audit committee has policies and procedures that require the pre-approval by the audit committee of all fees paid to, and all services performed by, the Company's independent auditor, subject to de minimis exceptions for non-audit services set forth in the applicable rules of the Commission. Each year, the audit committee approves the proposed services, including the nature, type and scope of services to be performed by the independent auditor during the fiscal year and the related fees. Audit committee pre-approval is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the audit committee.

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        The services related to Audit-Related Fees, Tax Fees, Secondary Offering-Related Fees and All Other Fees presented in the above table were approved by the audit committee pursuant to pre-approval provisions set forth in the applicable rules of the Commission without resort to a waiver of such pre-approval provisions.

Audit Committee Report

        Pursuant to authority delegated by the Board, the audit committee is responsible for assisting the Board in its oversight of the integrity of our consolidated financial statements, the qualifications and independence of our independent registered public accounting firm, and our internal financial and accounting controls.

        Management is responsible for our Company's financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Our independent registered public accounting firm is responsible for auditing those financial statements and expressing an opinion as to their conformity with GAAP. The audit committee's responsibility is to oversee and review these processes. The audit committee is not, however, engaged in the practice of accounting or auditing and does not provide any expert or other special assurance as to such financial statements concerning compliance with laws, regulations or GAAP or as to the independence of the independent registered public accounting firm. The audit committee relies, without independent verification, on the information provided to it and on the representations made by management and the independent registered public accounting firm. The audit committee's responsibilities are described in a written charter that was revised and approved by the Board on November 6, 2009. A copy of the audit committee's current charter is publicly available on the Company's website at www.strholdings.com.

        The audit committee met seven (7) times during fiscal 2011. The meetings were designed, among other things, to facilitate and encourage communication among the audit committee, management, the Company's internal audit function and our independent registered public accounting firm, PricewaterhouseCoopers LLP. The audit committee discussed with PricewaterhouseCoopers LLP the overall scope and plans for its audits and the audit committee regularly met with PricewaterhouseCoopers LLP without the presence of management. PricewaterhouseCoopers LLP has unrestricted access to the audit committee.

        The audit committee reviewed our audited financial statements for the fiscal year ended December 31, 2011, and discussed them with both management and PricewaterhouseCoopers LLP. The audit committee also discussed with management the process used to support certifications by our President and CEO and our Executive Vice President and Chief Financial Officer, which are required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany our periodic filings with the SEC.

        The audit committee also discussed with PricewaterhouseCoopers LLP the matters required to be discussed with audit committees under generally accepted auditing standards, including, among other things, the matters required to be discussed by Statement on Auditing Standards No. 114 (The Auditor's Communication With Those Charged With Governance) and the Public Company Accounting Oversight Board rules and regulations, as currently in effect. PricewaterhouseCoopers LLP provided the audit committee with written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board (Independence Discussions with audit committees), as currently in effect, and the audit committee discussed with PricewaterhouseCoopers LLP its independence from our Company.

        When considering PricewaterhouseCoopers LLP's independence, the audit committee considered whether its provision of services to our Company beyond those rendered in connection with its audit of our consolidated financial statements and review of our condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q was compatible with PricewaterhouseCoopers LLP

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maintaining their independence. The audit committee also reviewed, among other things, the audit, tax and other services performed by PricewaterhouseCoopers LLP, and approved the amount of all fees paid for such services.

        Based upon the review and discussions described above, and subject to the limitations on the audit committee's role and responsibilities referred to above and in the Audit Committee Charter, the audit committee recommended to the Board that the audited consolidated financial statements be included in our annual report on Form 10-K for the fiscal year ended December 31, 2011. The audit committee has also approved the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2012.

Respectfully submitted by the
Audit Committee:

Andrew M. Leitch, Chairperson
Scott S. Brown
Dominick J. Schiano

POLITICAL CONTRIBUTIONS

        STR recognizes the increasing interest of U.S. public company stockholders in obtaining greater transparency about corporate political contributions. During the past three years, we have not made any political contributions and do not anticipate making any in the foreseeable future.

INCORPORATION BY REFERENCE

        To the extent that this proxy statement has been or will be specifically incorporated by reference into any filing made by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the sections of the proxy statement entitled "Compensation Committee Report" and "Audit Committee Report" shall not be deemed to be so incorporated, unless specifically provided in any such filing.

OTHER MATTERS

        If any other matters are properly presented to stockholders for a vote at the annual meeting, the persons named as proxies on the proxy card will have discretionary authority, to the extent permitted by law, to vote on such matters in accordance with their best judgment. The Board knows of no other matters which will be presented to stockholders for consideration at the annual meeting other than the matters referred to in Proposals No. 1 and No. 2.

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