STRI STR Holdings Inc (CE)

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March 31, 2015

Dear Stockholder:

It is my pleasure to invite you to STR Holdings, Inc.’s 2015 annual meeting of stockholders to be held on Wednesday, May 13, 2015 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.

Consistent with prior years, 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. On or about April 3, 2015, we will mail to our stockholders of record as of March 18, 2015 (other than those who previously requested electronic or paper delivery on an ongoing basis) a Notice of Meeting and Important Notice Regarding the Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and our 2014 Annual Report.

As always, the board of directors feels that it is important to provide you with information about STR Holdings, Inc. in a way that is easy to understand. 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 3.

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

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STR HOLDINGS, INC.

10 Water Street

Enfield, Connecticut 06082

NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS

The Company’s proxy materials for the 2015 annual meeting of stockholders and its Annual Report on Form 10-K for the year ended December 31, 2014 are available on the Investor Relations section of our website at www.strsolar.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 Annual Report on Form 10-K for the year ended December 31, 2014.

Annual Meeting of Stockholders

Proposals to be Voted on and Board Voting Recommendations

Director Nominees

The following table provides summary information about each director nominee as of March 19, 2015. Each director stands for election annually:

Ratification of Auditors

We are asking our stockholders to ratify the selection of UHY LLP as our independent registered public accounting firm for the fiscal year 2015.

Set forth below is a summary of UHY LLP’s fees for services provided in fiscal 2014:

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For further information regarding these fees, please see “Ratification of Appointment of Independent Registered Accounting Firm—Principal Accountant Fees and Services” below.

Executive Compensation Highlights

Set forth below is the 2014 compensation for each Named Executive Officer as determined under SEC rules. See the notes accompanying the 2014 Summary Compensation Table, beginning on page 34, for more information.

Important Dates for 2015 Annual Meeting of Stockholders

Stockholder proposals submitted for inclusion in our 2016 proxy statement pursuant to Rule 14a-8 under the Securities and Exchange Act, as amended (the “Exchange Act”) must be received by us by December 2, 2015.

Notice of stockholder proposals to be raised from the floor of the 2016 annual meeting of stockholders outside of Rule 14a-8, under the Exchange Act, must be received by February 12, 2016.

Note: All share amounts and per share amounts set forth in this Proxy Statement have been adjusted to reflect the one-for-three reverse stock split effected as of January 30, 2015.

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STR HOLDINGS, INC.

10 Water Street

Enfield, CT 06082

PROXY STATEMENT

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

General Information

Why am I receiving these materials?  We have made these materials available to you on the Internet in connection with STR’s annual meeting of stockholders, which will take place on Wednesday, May 13, 2015. 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 in accordance with the requirements of Section 14A of the Exchange Act and the related rules of the Securities and Exchange Commission (the “SEC”) 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 2014 Annual Report. Included in the 2014 Annual Report is our Form 10-K for the fiscal year ended December 31, 2014.

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?  Consistent with last 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 or about April 3, 2015, we will mail to our stockholders of record as of March 18, 2015 (other than those who previously requested electronic or paper delivery on an ongoing basis) a Notice of Meeting and Important Notice Regarding the Internet Availability of Proxy Materials informing them that our proxy materials are available online and containing instructions on how to access our proxy materials, including our proxy statement and our 2014 Annual Report.

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:

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

·                  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.strsolar.com. Your Important Notice Regarding the 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

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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.

10 Water Street

Enfield, CT 06082

E-mail: investorinfo@strsolar.com

(860) 265-1247

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).

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:

·                  The election as directors: Andrew D. Africk, Eugene C. Cha, Qu Chao, John A. Janitz, Andrew M. Leitch, Xi (Cindy) Lin and Robert S. Yorgensen.

·                  The ratification of the appointment of UHY LLP as STR’s independent registered public accounting firm for the fiscal year ending December 31, 2015.

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 UHY LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015.

Who may vote at the annual meeting?  Each share of STR common stock has one vote on each matter. Only stockholders of record as of the close of business on March 18, 2015, the record date for the 2015 annual meeting of stockholders, are entitled to receive notice of, to attend, and to vote 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

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you as the beneficial owner in street name through a broker, bank, trustee or other nominee. On the record date, we had 18,082,014 shares of common stock issued and 18,080,774 outstanding, held by 9 holders of record.

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, Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”), 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 may I vote my shares without attending the annual meeting?”

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 18, 2015, 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 the 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 1:30 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:

·                  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 at 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.

·                  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 13, 2015, 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.

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., 10 Water Street, Enfield, CT 06082, prior to your shares being voted, or (3) attending the annual meeting and voting in person. Attendance at the meeting will not cause your previously-granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee following the instructions they provided, or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the annual meeting and voting in person.

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 our 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. To the extent that they have not received voting instructions, brokers report such number of shares as “non-votes.”

How are shares held by a broker or nominee voted?  Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote such shares on routine matters but not on non-routine matters. Under New York Stock Exchange (“NYSE”) rules, one of the proposals before the annual meeting is deemed a “routine” matters, namely the ratification of the selection of an independent registered public accounting firm (Proposal No. 2), which means that if your shares are held in street name your bank, broker or other nominee can vote your shares on the proposal if you do not provide timely instructions for voting your shares. The election of directors (Proposal No. 1) is not considered a “routine” matter. As a result, if you do not instruct your bank, broker or nominee how to vote with respect to these matters, your bank, broker or nominee may not vote on these proposals and a broker “non-vote” will occur. We urge you to promptly provide voting instructions to your broker to ensure that your shares are voted in these matters.

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

·                  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 seven nominees for election as a

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                        director shall be elected to the Board if the votes cast for each nominee’s election exceed the votes cast (which includes votes cast as “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 will follow if one or more nominee fails to receive the required vote in an uncontested director election. See “Corporate Governance—Director Elections.” Proxies’ marked “WITHHOLD” 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.

·                  With respect to Proposal No. 2, to ratify the appointment of UHY LLP as our independent registered public accounting firm for the year ending December 31, 2015, 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.

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 Joseph C. Radziewicz, 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.

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 Exchange Act for consideration at the Company’s 2016 annual meeting of stockholders, the proposal must be received by the Senior Vice President, General Counsel and Secretary of the Company by December 2, 2015. 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 office, 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

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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 2016 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 12, 2016, and not earlier than the close of business on January 13, 2016, 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

10 Water Street

Enfield, Connecticut 06082

·                  not earlier than the close of business on January 13, 2016, and

·                  not later than the close of business on February 12, 2016.

In the event that we hold our 2016 annual meeting of stockholders more than 30 days before or more than 60 days after the one-year anniversary date of the 2015 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:

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

·                  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.

Available Information

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

·                  Charter of the Audit Committee

·                  Charter of the Compensation Committee

·                  Charter of the Nominating and Corporate Governance Committee

·                  Charter of the Special Committee of Continuing Directors

·                  Certificate of Incorporation

·                  Bylaws

·                  Corporate Governance Guidelines

·                  Code of Business Conduct and Ethics

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

·                  Regulation FD Policy

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·                  Related Person Transaction Policy

·                  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 2014 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) 265-1247, by e-mail to investorinfo@strholdings.com, or by mail to Joseph C. Radziewicz, Investor Relations, STR Holdings, Inc., 10 Water Street, Enfield, CT 06082.

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.strsolar.com on the “Investor Relations” page under the link “Corporate Governance”. Any amendments to the STR Code of Business Conduct and Ethics, 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 (“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.

Pursuant to an offer to purchase dated January 31, 2014, as amended, the Company commenced a modified “Dutch auction” tender offer for the repurchase of up to $30 million of its shares of common stock from our stockholders (the “Offer”). On March 7, 2014, the Company closed on the Offer and purchased a total of 5,203,986 shares for an aggregate purchase price of $24.0 million. In connection with such share repurchase, certain affiliates of Susan C. Schnabel, our then Lead Director and our then Chairman of the Nominating and Corporate Governance Committee, sold a total of 3,359,903 (representing all of such stockholders’ shares) shares to us. As a result of such sales, John A Janitz, the Chairman of our Compensation Committee, and Dominick J. Schiano, a former member of our Audit Committee, each received approximately $200,000 resulting from their pecuniary interest in 36,835 shares previously held by such affiliates of Ms. Schnabel. On March 10, 2014, Ms. Schnabel resigned as a member of our Board. On March 18, 2014, each of Scott S. Brown and Dominick J. Schiano decided to not seek re-election to our Board and Bryant R. Riley was elected by our Board to serve as a member of our Board to fill the vacancy resulting from Ms. Schnabel’s resignation. Neither Ms. Schnabel’s resignation nor Messrs. Brown or Schiano’s decision not to seek re-election involved a disagreement with the Company or any matter relating to the Company’s operations, policies and/or practices. The Company’s Nominating and Corporate Governance Committee recommended to the Board that each such directorship not be filled due to the recent reduction in the size of the Company’s business.

On December 15, 2014 (the “Closing Date”), the Company completed its sale of 9,210,710 shares (the “Purchased Shares”) of  its common stock, par value $0.01 per share (the “Common Stock”), to Zhen Fa New Energy (U.S.) Co., Ltd. (the “Purchaser”), a Nevada corporation and indirect subsidiary of Zhenfa Energy Group Co., Ltd., a Chinese limited liability company (“Zhenfa”), for an aggregate purchase price of approximately $21.7 million (the “Zhenfa Transaction”), pursuant to a Stock Purchase Agreement, dated as of August 11, 2014 (the “Purchase Agreement”), by and between the Company and the Purchaser. The issuance and sale of the Purchased Shares was a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Effective as of the Closing Date, each of Robert M. Chiste and Dennis L. Jilot resigned as members of the Board of Directors and any committee of which they were a member. These resignations were as a result of the Closing and pursuant

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to the terms of the Purchase Agreement and were not a result of any disagreements with the Company on any matter relating to the Company’s operations, policies or practices.

Effective as of the Closing Date, and pursuant to the terms of the Purchase Agreement, the Company appointed Andrew D. Africk, Eugene C. Cha, Qu Chao and Xin (Cindy) Lin to the Board. Each of Messrs. Africk, Cha, Chao and Ms. Lin were nominated by the Purchaser. Messrs. Africk and Cha are independent directors (in accordance with the rules of the New York Stock Exchange) and have each been named to the Audit Committee and the Nominating and Corporate Governance Committee of the Board. Mr. Africk has also been named to the Compensation Committee of the Board.

Effective as of the Closing Date, John A. Janitz and Andrew M. Leitch were each named to the newly formed  Special Committee of Continuing Directors.

No Purchaser Director has a family relationship with any other director or executive officer on the Board. There are no arrangements or understandings, other than the Purchase Agreement, pursuant to which the Purchaser Directors were selected. There are no related party transactions between the Company and the Purchaser Directors reportable under Item 404(a) of Regulation S-K.

In connection with the Zhenfa Transaction, the Compensation Committee recommended to the Board, and the Board, with the consent of the Purchaser, approved a new board compensation policy, effective upon the Closing Date. This compensation policy is applicable to all of the Company’s independent directors. Directors who are employees of the Company or employees of, or affiliated with the Purchaser or Zhenfa, will not receive compensation for their service as members of either the Board or any committee thereof. Robert S. Yorgensen, as the Company’s Chairman, President and Chief Executive Officer, and Ms. Lin and Mr. Qu, as employees of the Purchaser and Zhenfa, respectively, will not receive any compensation for their service on the Board or any committee thereof. All other non-employee directors will receive compensation as described below in the “Director Compensation and Stock Ownership” section.

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 currently composed of seven directors.

Subject in each case to all fiduciary duties of the Board, pursuant to the terms of the Purchase Agreement, the Board following the Closing Date has been and will be comprised of: (i) four directors who will have been designated by the Purchaser and are reasonably acceptable to the Board (the “Purchaser Directors”), at least two of whom will be independent, as defined under applicable NYSE listing standards, and shall be eligible and qualified to serve on the Audit Committee of the Board and Compensation Committee of the Board, as determined in accordance with the rules and regulations of the SEC and applicable NYSE listing standards, (ii) one director who is also the President or Chief Executive Officer of the Company, and (iii) two directors who are independent directors of the Company as of the date of the Purchase Agreement (include any successors to any such directors who take office after the Closing Date who are nominated, or proposed to the Nominating and Corporate Governance Committee for nomination, by the Special Committee of Continuing Directors, the “Continuing Directors”).

The Company and the Purchaser have agreed that, from the Closing Date until immediately prior to the 2017 annual meeting of stockholders (the “2017 Annual Meeting”), all vacancies on the Board created by the cessation of service of a Continuing Director or a Purchaser Director, as the case may be, shall be filled by a nominee proposed to the Nominating and Corporate Governance Committee, the Special Committee of Continuing Directors or by the remaining Purchaser Directors or the Purchaser, as the case may be. Any director so nominated and approved shall be considered a Continuing Director or Purchaser Director, as applicable. Until the 2017 Annual Meeting, the Nominating and Corporate Governance Committee will nominate all Continuing Directors and Purchaser Directors then serving as director for election as directors at any stockholder meeting called for the election of directors. If, prior to the 2017 Annual Meeting, there is no Continuing Director then serving on the Board, the Purchaser and the President or Chief Executive of the Company will cooperate to identify and elect two new independent directors, who shall be considered Continuing Directors. Additionally, the Purchaser has agreed to take all action necessary to vote any shares of common stock then held by it in favor of any nominee for director made pursuant to the terms of the Purchase Agreement.

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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.  Pursuant to the NYSE listing standards, the Company is required to have a majority of “independent directors” on its Board. In addition, the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee must be composed solely of independent directors. The NYSE listing standards define specific relationships that would disqualify a director from being independent and further require that for a director to qualify as “independent,” the board of directors must affirmatively determine that the director has no material relationship with the Company.

The Board, with the assistance of the Nominating and Corporate Governance Committee, conducted an evaluation of director independence, based primarily on a review of the responses of the directors and executive officers to questions regarding employment and compensation history, affiliations and family and other relationships with the Company, including those relationships described under “Compensation Committee Interlocks and Insider Participation” and “Certain Relationships” of this proxy statement, and on discussions with the Board.

Our Board affirmatively determined that Messrs. Africk, Cha, Janitz and Leitch are independent directors, under the applicable rules of the NYSE. In addition, Messrs. Africk, Cha and Leitch, as current members of our Audit Committee, are also independent directors as such term is defined in Rule 10A-3(b)(1) under the Exchange Act.

Lead Director.  Until March 10, 2014, Susan C. Schnabel served as our Lead Director and commencing on January 13, 2015, John A. Janitz has served as our Lead Director. From March 10, 2014 until January 13, 2015, we did not have a Lead Director. The Lead Director performs the following roles and functions:

·                  served as a member of the Nominating and Corporate Governance Committee;

·                  served as Chair of the Board’s executive sessions of independent directors;

·                  oversaw the Board’s annual self-evaluation;

·                  consulted with each committee with respect to its annual evaluations;

·                  provided counsel to the Chairman, President 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 delegated 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.

Director Qualification Standards.  Subject to the terms and conditions regarding the nomination of directors set forth in the Purchase Agreement and described in this proxy statement, 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, appropriate background and biographical information in writing to the Senior Vice President, General Counsel and Secretary of STR at: 10 Water Street, Enfield, Connecticut 06082.

The Board delegates the screening process involved to the Nominating and Corporate Governance Committee or the Special Committee of Continuing Directors, as the case may be, which considers candidates to fill newly created directorships or vacancies on the Board, and then consults with the Chairman, President 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. Subject to the terms and conditions regarding the nomination of directors set forth in the Purchase Agreement, 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

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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 that 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 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, 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.  Subject to the terms and conditions of the Purchase Agreement, 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,

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the director’s past and expected future considerations to the Company, the overall composition of the Board and whether accepting the tender resignation would cause the Company to fail to meet any applicable rule or regulation (including securities exchange listing requirements and federal securities laws). The Board will act on the tender resignation, and publicly disclose its decision and rationale, within 90 days following certification of the stockholder vote, in a press release and through the filing of a Form 8-K with the SEC.

·                  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 Chairman of the Board who will report thereon to the Board, or (3) if addressed to the non-employee directors, to the Chair of the Nominating and Corporate Governance Committee, 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. Mr. Jilot retired as our Executive Chairman on July 18, 2012 and was appointed to serve the Company as Chairman of the Board. Effective December 15, 2014, our President and Chief Executive Officer, Robert S. Yorgensen, was appointed Chairman.  Prior to Mr. Yorgensen’s appointment, the Company has operated with separate Chairman and Chief Executive Officer roles.

Committees of the Board.  Our Board has the authority to appoint committees to perform certain management and administration functions. Our Board currently has, and pursuant to the terms and conditions of the Purchase Agreement, will maintain through the 2017 Annual Meeting, four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Special Committee of Continuing Directors. 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.strsolar.com on the “Corporate Governance” page, under the respective committee charter links.

The following table shows the membership of these committees as of December 31, 2014:

(1)         There is no chair of the Special Committee of Continuing Directors.

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In accordance with the terms of the Purchase Agreement, any additional committee established by the Board will be comprised of at least one Continuing Director.

Pursuant to the terms and conditions of the Purchase Agreement, each of the Audit Committee and Nominating and Corporate Governance Committee shall be comprised of three members, one of whom shall be a Continuing Director, and two of whom shall be independent Purchaser Directors. The Compensation Committee shall be comprised of two members, at least one of whom shall be a Continuing Director and one of whom shall be an independent Purchaser Director. In the event there is not a sufficient number of independent Purchaser Directors or Continuing Directors to effect the composition of the committees as described herein, the Board will exercise its discretion to make the appropriate appointment. The Special Committee of Continuing Directors is comprised of the Continuing Directors.

Audit Committee.  Our Audit Committee currently consists of Messrs. Africk, Cha and Leitch, with Mr. Leitch serving as Chair of the Audit Committee. The Audit Committee has responsibility for, among other things:

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

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

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

·                  engaging independent counsel and other advisers as the Audit Committee deems necessary;

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

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

·                  preparing the Audit Committee report required by SEC rules to be included in our annual report;

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

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

·                  handling such other matters that are specifically delegated to the Audit Committee by our Board from time to time.

Our Board affirmatively determined that Messrs. Leitch, Africk, and Cha 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 currently consists of Messrs. Africk and Janitz, with Mr. Janitz serving as the Chair of the Compensation Committee. The Compensation Committee has responsibility for, among other things:

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

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

·                  monitoring and reviewing our compensation and benefit plans;

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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;

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

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

·                  preparing the Compensation Committee report required by SEC rules to be included in our annual report;

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

·                  handling such other matters that are specifically delegated to the Compensation Committee by our Board from time to time.

Compensation Committee Interlocks and Insider Participation.  None of our executive officers serves, or in the past year has served, as a member of the board 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 currently consists of Messrs. Africk, Cha and Janitz, with Mr. Janitz serving as the Chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has responsibility for, among other things:

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

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

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

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

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

·                  handling such other matters that are specifically delegated to the Nominating and Corporate Governance Committee by our Board from time to time.

Special Committee of Continuing Directors.  Our Special Committee of Continuing Directors currently consists of Messrs. Janitz and Leitch. The Special Committee of Continuing Directors has responsibility for, among other things:

·                  enforcing all matters under the Purchase Agreement, and the related transaction agreements, including without limitation the power and authority to appoint any and all representatives of the Company to serve on the Coordination Committee (as defined and set forth in that certain Sales Service Agreement dated as of August 11, 2014 between Zhenfa and our wholly owned subsidiary, Specialized Technology Resources, Inc.) and to take all other actions required or permitted under the terms of the Purchase Agreement and the related transaction agreements with respect to the interests and rights of the Company;

·                  reviewing and evaluating compliance by the Purchaser and any other person that is an affiliate or related party of Zhenfa or the Purchaser other than a person that would be deemed an affiliate or related party of the Purchaser or Zhenfa solely as a result of the Purchaser’s or Zhenfa’s direct or indirect control of the Company or any of its subsidiaries (collectively,  the “Zhenfa Related Parties”) with the terms and conditions to the Purchase Agreement and the related transaction agreements;

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·                  subject to certain conditions, review, evaluate and approve, on behalf of the Company (or any of its subsidiaries), the enforcement or waiver of any of the terms and conditions of the Purchase Agreement or any related transaction agreements;

·                  review, evaluate and approve, on behalf of the Company (or any of its subsidiaries), any proposed waivers to the standstill provision applicable to the Zhenfa Related Parties, as set forth in the Purchase Agreement;

·                  until the 2017 Annual Meeting, to review, evaluate and approve, on behalf of the Company (or any of its subsidiaries), any other proposed transaction(s), arrangement(s) or contract(s), and any amendment, modification or waiver, between the Company or any of its subsidiaries and any Zhenfa Related Party, including the Purchaser Agreement and the related transaction agreements; and

·                  to authorize, by and on behalf of the Company, the taking of any action or the execution and delivery of any documents in connection with any of the foregoing.

Director Attendance.  In 2014, the full Board met 14 times; the Audit Committee met 7 times, the Compensation Committee met 3 times, and the Nominating and Corporate Governance committee met 4 times. Directors are strongly encouraged, but not required, to attend the annual meeting of stockholders. At our 2014 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 2014.

Nomination of Director Candidates.  Subject to the terms and conditions of the Purchase Agreement, 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.

Subject in each case to all fiduciary duties of the Board, pursuant to the terms of the Purchase Agreement, the Board has been and will be comprised of: (i) four Purchaser Directors, at least two of whom will be independent, as defined under applicable NYSE listing standards, and shall be eligible and qualified to serve on the Audit Committee of the Board of Directors and Compensation Committee of the Board, as determined in accordance with the rules and regulations of the SEC and applicable NYSE listing standards, (ii) one director who is also the President or Chief Executive Officer of the Company, and (iii) two Continuing Directors.

The Company and the Purchaser have agreed that, from the Closing Date until immediately prior to the 2017 Annual Meeting, all vacancies on the Board created by the cessation of service of a Continuing Director or a Purchaser Director, as the case may be, shall be filled by a nominee proposed to the Nominating and Corporate Governance Committee by the Special Committee of Continuing Directors or by the remaining Purchaser Directors or the Purchaser, as the case may be. Any director so nominated and approved shall be considered a Continuing Director or Purchaser Director, as applicable. Until the 2017 Annual Meeting, the Nominating and Corporate Governance Committee will nominate all Continuing Directors and Purchaser Directors then serving as director for election as directors at any stockholder meeting called for the election of directors. If, prior to the 2017 Annual Meeting, there is no Continuing Director then serving on the Board, the Purchaser and the President or Chief Executive of the Company will cooperate to identify and elect two new independent directors, who shall be considered Continuing Directors. Additionally, the Purchaser has agreed to take all action necessary to vote any shares of common stock then held by it in favor of any nominee for director made pursuant to the terms of the Purchase Agreement.

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 including its enterprise risk management program. 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

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meets with the Vice President, Chief Financial Officer and Chief Accounting Officer, the Controller and Chief Compliance 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 our General Counsel and other officers of the Company during such meetings. The Compensation Committee oversees our compensation programs to mitigate individuals taking unreasonable risks that could result in having a materially adverse effect on the Company and its stockholders. The Board reviews the primary operational and regulatory risks facing the Company, their relative magnitude and 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.

We determined our current Board leadership structure is appropriate and helps ensure proper risk oversight for the Company. Currently, our Chairman and CEO positions are combined. Robert S. Yorgensen, our current President and CEO serves as our Chairman. His prior experience with the Company’s operations and continued service on the Board makes him best positioned to lead productive board meetings and determine the time allocated to each agenda item during discussions of the Company’s short- and long-term objectives.

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 or affiliates of Zhenfa 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.

Retainer and Meeting Fees

Directors who are or were our employees or employees of our subsidiaries or affiliated with either Zhenfa or DLJ Merchant Banking Partners (“DLJMB”) did not, and will not, receive compensation for their service as members of either our Board or Board committees.

Until October 15, 2014, all other non-employee directors not affiliated with Zhenfa or DLJMB were paid:

·                  a base annual retainer (the “Annual Retainer”) of $52,500 in shares of our common stock issued quarterly, in arrears, which shares vest immediately upon issuance;

·                  an annual payment of $50,000 in cash to the Chairman of the Board, $25,000 in cash to the Chair of our Audit Committee, and $10,000 in cash to the Chair of the Compensation Committee (collectively, the “Chair Fees”);

·                  shares of our common stock having a fair market value of $45,000 (the “Annual Share Issuance”) (such shares are issued annually following the annual meeting of stockholders and vest upon the earlier of (i) the first anniversary of the date of issuance or (ii) the day before the date of the next annual meeting of stockholders, assuming continued service by such director); and

·                  a fee of $2,000 in cash for each regularly scheduled quarterly Board and committee meeting attended (the “Meeting Attendance Fees”).

Commencing on October 15, 2014, each of the Annual Retainer, Chair Fees, Annual Share Issuance and Meeting Attendance Fees were reduced by forty percent.

In connection with the closing of the Zhenfa Transaction, the Compensation Committee of the Board of Directors recommended to the Board, and the Board approved with the consent of the Purchaser, a new compensation policy, effective upon the Closing Date. The new compensation policy is applicable to all of the Company’s independent directors. Directors who are employees of the Company or employees of or affiliated with the Purchaser or Zhenfa do not receive compensation for their service as members of either our Board or any committee thereof. Mr. Yorgensen, as the Company’s Chairman, President and Chief Executive Officer, and Ms. Lin and Mr. Qu, as employees of the Purchaser and Zhenfa, respectively, do not receive any compensation for their service on the Board or any committee thereof.

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Compensation for all independent directors of the Company is as follows:

·                  a base annual retainer of $31,500 in shares of the Company’s common stock, issued quarterly, in arrears, which shares vest immediately upon issuance and will be pro-rated for any partial quarter;

·                  shares of the Company’s common stock having a fair market value of $27,000; the first such award was made immediately following the payment of the Company’s payment to its stockholders, other than the Purchaser, of a special dividend (the “Special Dividend”) on January 2, 2015, and thereafter to be issued annually following the Company’s annual meeting of stockholders and vest upon the earlier of (i) in the case of (x) the first grant made following the payment of the Special Dividend, the first anniversary of the Company’s 2014 annual meeting of stockholders, and (y) subsequent grants, the first anniversary of the date of issuance or (ii) the day before the date of the next annual meeting of stockholders, assuming continued service by such director, pro-rated for any partial quarter;

·                  an annual payment of $25,000 in cash to the chair of the Audit Committee of the Board; $12,500 in cash to the Chair of each of the Compensation Committee of the Board and Nominating and Corporate Governance Committee of the Board; and $10,000 to each member of the Special Committee of Continuing Directors, each payable quarterly in arrears and pro-rated for any partial quarter;

·                  a fee of $1,200 in cash for each meeting of the Board and any committee thereof attended (up to eight Board of Directors meetings and eight meetings of each committee per year); and

·                  a one-time grant of an option to purchase 133,333 shares of the Company’s common stock, which was issued on February 6, 2015.

The Company also reimburses all directors for reasonable expenses incurred to attend meetings of our Board or committees.

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 retainer. This stock ownership target is intended to be met within five years from the date the guideline was adopted in 2010. However, in light of the Company’s financial performance and the recent decline in the price of the Company’s shares of common stock, the Board may reassess the stock ownership target in the near future.

Pledging and Hedging Shares Policy

The Company prohibits directors from entering into hedging transactions related to the Company’s common stock. In addition, pledging of the Company’s securities in connection with a loan is restricted unless an exception is granted to a person who clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. The Company has not previously granted an exception to this prohibition nor does it expect to in the future.

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Director Compensation Table

The following table sets forth all director compensation information for the year ended December 31, 2014:

(1)                                 Represents the aggregate grant date fair value of restricted stock awards computed in accordance with FASB ASC Topic 718 as of the grant date. For purposes of the table above, the effects of estimated forfeitures are excluded.

(2)                                 The number of shares issued and their grant date fair values were as follows: Mr. Africk, 3,688.67 shares and 333.33 shares at $3.66 and $4.11 per share on the date of issuance, respectively; Mr. Brown, 2,751.67 shares and 1,531.33 shares at $4.77 and $4.05 per share on the date of issuance, respectively; Mr. Cha, 3,688.67 shares and 333.33 shares at $3.66 and $4.11 per share on the date of issuance respectively; Mr. Chiste, 2,751.67 shares, 8,211.67 shares, 3,240.67 shares, 3,017.33 shares and 1,531.33 shares at $4.77, $4.11, $4.05, $4.35 and $4.11 per share on the date of issuance, respectively; Mr. Janitz, 2,751.67 shares, 8,211.67 shares, 3,240.67 shares, 3,017.33 shares and 1,916 shares at $4.77, $4.11, $4.05, $4.35 and $4.11 per share on the date of issuance, respectively; Mr. Jilot, 2,751.67 shares, 8,211.67 shares, 3,240.67 shares, 3,017.33 shares and 1,531.33 shares at $4.77, $4.11, $4.05, $4.35 and $4.11 per share on the date of issuance, respectively; Mr. Leitch, 2,751.67 shares, 8,211.67 shares, 3,240.67 shares, 3,017.33 shares and 1,916 shares at $4.77, $4.11, $4.05, $4.35 and $4.11 per share on the date of issuance, respectively; Mr. Riley, 8,211.67 shares, 1,709.33 shares and 1,410.33 shares at $4.11, $4.05 and $4.35 per share on the date of issuance respectively; and Mr. Schiano, 2,751.67 and 1,531.33 shares at $4.77 and $4.05 per share, respectively.

(3)                                 Mr. Brown and Mr. Schiano did not seek re-election at the Company’s Annual Meeting of Stockholders held on May 14, 2014.

(4)                                 Mr. Jilot and Mr. Chiste resigned effective December 15, 2014.

(5)                                 Includes Section 125 cafeteria plan of $9,340 and insurance premiums of $2,219.

(6)                                 Mr. Riley resigned from the Board effective August 12, 2014.

(7)                                 Ms. Schnabel resigned from the Board effective March 7, 2014.

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PROPOSALS TO BE VOTED ON

PROPOSAL NO. 1

ELECTION OF DIRECTORS

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 seven directors named below for election as directors this year. Each director’s term will last until the 2016 annual meeting of stockholders or until he or she is succeeded by another director who has been elected.

Subject in each case to all fiduciary duties of the Board, pursuant to the terms of the Purchase Agreement, the Company has agreed that following the Closing Date, the Board will be comprised of: (i) four Purchaser Directors, at least two of whom will be independent, as defined under applicable NYSE listing standards, and shall be eligible and qualified to serve on the Audit Committee of the Board and Compensation Committee of the Board, as determined in accordance with the rules and regulations of the SEC and applicable NYSE listing standards, (ii) one director who is also the President or Chief Executive Officer of the Company, and (iii) two Continuing Directors.

On the Closing Date, John A. Janitz and Andrew M. Leitch continued as Continuing Directors, Robert S. Yorgensen, as the Chairman, President and Chief Executive Officer, continued as a director, and Andrew D. Africk, Eugene Cha, Qu Chao and Xin (Cindy) Lin were appointed as Purchaser Directors. Until immediately prior to the 2017 Annual Meeting, all vacancies on the Board created by the cessation of service of a Continuing Director or a Purchaser Director, as the case may be, shall be filled by a nominee proposed to the Nominating and Corporate Governance Committee by the Special Committee of Continuing Directors or by the remaining Purchaser Directors or the Purchaser, as the case may be. Any director so nominated and approved shall be considered a Continuing Director or Purchaser Director, as applicable. Until the 2017 Annual Meeting, the Nominating and Corporate Governance Committee will nominate all Continuing Directors and Purchaser Directors then serving as director for election as directors at any stockholder meeting called for the election of directors. If, prior to the 2017 Annual Meeting, there is no Continuing Director then serving on the Board of Directors, the Purchaser and the President or Chief Executive of the Company will cooperate to identify and elect two new independent directors, who shall be considered Continuing Directors. Additionally, the Purchaser has agreed to take all action necessary to vote any shares of common stock then held by it in favor of any nominee for director made pursuant to the terms of the Purchase Agreement.

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. Each nominee has consented to serving as director if elected.  The ages of the nominees are as of March 19, 2015.

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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 2015.

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Recommendation

Our Board recommends a vote “FOR” the seven 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 UHY LLP as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2015. Since March 21, 2013, UHY LLP 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 UHY 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 UHY LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015 requires the affirmative vote 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 UHY 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 UHY 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 UHY LLP as our independent registered public accounting firm for the year ending December 31, 2015.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Named Executive Officers

For 2014, our named executive officers were:

·                  Robert S. Yorgensen, Chairman, President and Chief Executive Officer;

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

·                  Joseph C. Radziewicz, Vice President, Chief Financial Officer and Chief Accounting Officer.

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. We expect that the specific direction and company-specific emphasis and components of our executive compensation program will continue to evolve in light of industry challenges and the Company’s reduction in size to maintain alignment of our compensation program with the interests of our stockholders.

Actions taken to better align our compensation program to our stockholders’ interests include:

·                  In 2014, the Company modified its annual management incentive plan (“MIP”) for its named executive officers, each of whom would have received shares of the Company’s common stock rather than cash upon the Company’s achievement of an EBITDA target for 2014. The purpose of this modification was to conserve the Company’s cash while aligning the named executive officers’ performance with enhanced stockholder value. The Compensation Committee believes that the issuance of equity compensation for performance is common among organizations that execute a turnaround strategy.  Since the Company did not achieve the target EBITDA, no bonuses were paid under the MIP for 2014.

·                  We adjusted our financial targets for 2015 and added personal performance objectives for participants in our MIP. Such objectives are designed to reward employees for exemplary performance with respect to clearly defined and measurable personal goals that were communicated to each participant and have the effect of creating long-term stockholder value instead of a focus on short-term results which could foster aggressive risk taking. In addition, the Compensation Committee and/or the Board of Directors have the discretion to award a bonus to MIP participants. However, the achievement of the personal performance objectives is limited to 20% of a participant’s target MIP percentage and the discretionary award by the Compensation Committee and/or the Board of Directors is limited to 10% of a participant’s target MIP percentage.

·                  At our 2014 annual meeting of stockholders, we conducted an advisory vote on executive compensation of our named executive officers (“say-on-pay”). The vote on say-on-pay was overwhelmingly positive, with 89% of the votes cast voting in support of our executive compensation programs.

·                  In July 2014, the Company amended the Retention Agreements (as defined below) for Messrs. Forman and Radziewicz to (i) extend the termination dates of such agreements from June 30, 2014 to December 31, 2014, and (ii) delete the award of a bonus in the event of a dissolution or liquidation of the Company. Since the Zhenfa Transaction (which closed on December 15, 2014) qualified as a Change of Control Transaction (as defined in the Retention Agreements), Messrs. Forman and Radziewicz were paid bonuses equal to $229,000 and $180,000, respectively.  Mr. Yorgensen’s Retention Agreement was not amended to extend the termination date and no retention bonus was paid to him. In connection with the closing of the Zhenfa Transaction, Mr. Yorgensen qualified to receive payment of deferred compensation in an amount equal to $203,636, which was paid to him in February 2015.

·                  In 2014, the Compensation Committee, along with assistance from Mercer (USA) Inc. (“Mercer”), compensation consultants to the Compensation Committee, updated the Company’s peer group to better reflect the Company’s smaller size and the repositioning of its business in China. As such, a new peer group was selected based upon similar market capitalizations and sales with a focus on publicly-traded companies in the plastic extrusion, renewable energy, and specialty chemical industries. Annual sales of the peer group ranged

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from $8 million to $443 million, with a median of $140 million. Market capitalization of the peer group ranged from $6 million to $747 million, with a median of $77 million. During the last few years, the Company’s sales have decreased and the risks associated with executing its business model have increased. The Compensation Committee believes the revised peer group serves as an improved benchmark for executive compensation. See “Peer Group”.

·                  Due to our financial performance, we did not increase the compensation of our senior management team, including the named executive officers, over the compensation paid to such employees during 2013 or 2014.

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 and avoid excessive risk taking to improve short term results.

Our Compensation Committee meets outside the presence of all of our executive officers, including the named executive officers, to consider appropriate compensation for our Chairman, President and CEO. For all other named executive officers, the Compensation Committee meets outside the presence of all executive officers except our Chairman, President and CEO. On an annual basis, our Chairman, President and CEO reviews 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 the recommendations from our Chairman, President and CEO, and in consideration of the objectives described above and the principles described below, the Compensation Committee approves, and recommends that the Board approve, the annual compensation packages of our executive officers. The Compensation Committee also annually analyzes our Chairman, President and CEO’s performance and determines his base salary, cash performance awards and grants of long-term equity incentive awards based on its assessment of his performance with input from any consultants engaged by the Compensation Committee.

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

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

·                  Competition.  Compensation should reflect the competitive marketplace, so we can attract, retain 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

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as performance of the business and responsibility areas that an individual oversees, and we weigh these factors as we consider appropriate in assessing a particular individual’s performance.

·                  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 design should be informed by practices employed by our Industry Peers. Our Industry Peers are shown below. Our long-term target is to position total compensation levels for our executive officers and other key personnel between the median and 75th percentile of pay for comparable positions in the Compensation Survey.

Our Peer Group

In the first quarter of 2014, we, in conjunction with oversight from the Compensation Committee, updated the Company’s peer group to better reflect the Company’s smaller size and the repositioning of its business in China. As such, a peer group was selected based upon similar market capitalizations and sales with a focus on publicly-traded companies in the plastic extrusion, renewable energy, and specialty chemical industries.  We felt it necessary to update our peer group to better align our peer group to the Company’s current size and risk profile in executing its turnaround strategy.

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Components of Our Executive Compensation Program

Our executive compensation program currently consists of:

·                  base salary;

·                  annual incentive awards linked to business performance. For 2015, we have re-introduced the achievement of certain personal performance objectives under our MIP. In addition, the Compensation Committee and/or the Board has the discretion to award a bonus to MIP participants in an amount of up to 10% of a participant’s target MIP percentage;

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

·                  other executive benefits and perquisites; and

·                  employment, severance and retention 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 key personnel with those of our stockholders.

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

Mr. Yorgensen’s 2014 base salary was $475,000, which was the same as his 2013 base salary.

Mr. Forman’s 2014 base salary was $305,250, which was the same as his 2013 base salary.

Mr. Radziewicz’s 2014 base salary was $241,100, which was the same as his 2013 base salary.

The base salaries of Messrs. Yorgensen 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. Yorgensen, our 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. Yorgensen and our judgment as to his potential future value to us.

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The base salaries paid to our named executive officers in 2014, 2013 and 2012 are set forth below in the Summary Compensation Table. Commencing on October 1, 2015, the base salaries of our named execuative officiers are expected to increase by 4%.

Annual Incentive Awards.  We believe that annual incentive awards focus our executive officers’ efforts and reward executive officers for annual results of operations that help create value for our stockholders.

In 2014, each of Messrs. Yorgensen, Forman, and Radziewicz was eligible to receive a bonus payment up to 80%, 45%, and 45%, respectively, of such officer’s base salary as of January 1, 2014, assuming the Company achieved its EBITDA target. Such bonus amounts would have been paid in shares of the Company’s common stock to such executives rather than a cash payment. Since the Company did not achieve the target EBITDA, no bonuses were paid under the MIP for 2014. In 2015, executives were provided with both Company financial targets as well as specific personal performance objectives for which bonuses may be paid.

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 the 2009 Equity Incentive Plan, pursuant to which the Company has granted certain employees and directors with shares of common stock and/or options to purchase shares of common stock.

In April 2014, Messrs. Yorgensen, Forman, and Radziewicz were granted options to purchase 350,000, 190,000, and 150,000 shares of our common stock, respectively, at an exercise price equal to the fair market value on the date of grant, which was $1.59 per share. One third of the options were scheduled to vest on each of the first, second and third anniversaries of the grant date, subject to acceleration in certain circumstances. These stock options (and all other stock options) were terminated effective November 14, 2014.

Due to the closing of the transaction with Zhenfa, which constituted a change of control transaction under the Company’s equity incentive plan, the Board of Director selected, as permitted under such plan, to cancel all outstanding options effective as of the closing of that transaction. The Company cancelled the options due to material changes in its business and capital structure which would significantly impact its previous issued options. These changes included the issuance of the Purchased Shares, which represented a change in control and approximately doubled the Company’s share count, payment of the Special Dividend and the completion of a one-for-three reverse stock split effected January 30, 2015 (the “Reverse Stock Split”). All of these items represented material changes to its capital structure and market capitalization and could materially impact the trading price of its common stock. Due to the uncertainty, the Company cancelled the options prior to the transaction with Zhenfa. In total, options to purchase 3,405,389 shares were cancelled of which options to purchase 2,100,389 shares had been fully vested.

Further, in connection with the closing of the Zhenfa Transaction and the Reverse Stock Split, the number of shares reserved for issuance under the 2009 Equity Incentive Plan was reduced from 6,200,000 to 4,133,333.

In February 2015, the Company granted stock options to certain employees and the independent directors to purchase a total of 1,964,667 shares of common stock at an exercise price of $1.52 per share. One third of the options vest on each of the first, second and third anniversaries of the grant date, assuming the recipient continues in the employment or service of the Company and subject to acceleration in certain circumstances. Messrs. Yorgensen, Forman, and Radziewicz were included in this grant of stock options and were awarded the right to purchase 656,667, 210,000, and 166,667 shares of our common stock, respectively.

The Compensation Committee of our Board will determine, subject to any 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 2009 Equity Incentive Plan.

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

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stock have all rights with respect to voting and dividends as holders of our common stock. As of December 31, 2014, there are no unvested shares or options held by our Executive Officers.

Holding Periods for Vested Options or Shares.  The Company does not require employees to hold vested options or vested shares of common stock. All equity awards issued to our employees have vesting periods that encompass at least three years for the awards to fully vest, subject to acceleration in certain events. The purpose of the long-term vesting period is to foster employee retention and to link long-term valuation creation for our stockholders. Based upon its vesting requirements, the Company does not believe establishing holding periods would provide additional benefits to stockholders.

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 Chairman, President and CEO 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. However, in light of the Company’s financial performance and the recent decline in the price of the Company’s shares of common stock, the Board may reassess the stock ownership target in the near future. As of December 31, 2014 we have not satisfied this target.

Pledging and Hedging Shares Policy.  The Company prohibits its directors and executive officers from entering into hedging transactions related to the Company’s common stock. In addition, pledging of the Company’s securities in connection with a loan is restricted unless an exception is granted to a person who clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. The Company has not previously granted an exception nor does it expect to grant an exception in the future.

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 certain 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 employment agreement with Mr. Forman in May 2010. Mr. Radziewicz presently does not have an employment agreement with the Company.

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 and upon Termination following a Change of Control” and “Employment Agreements”.

Use of a Compensation Consultant

To enhance the Compensation Committee’s ability to perform its responsibilities, the Compensation Committee has in recent years retained the services of an independent compensation consultant. The Compensation Committee retained Mercer in 2014, 2013, 2012, and 2011 to consult and advise on certain executive compensation issues. In considering the

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selection of Mercer, the Compensation Committee considered Mercer’s independence to the Company. In particular, the following factors were assessed:

·                  whether personal or business relationship of the advisor or Mercer exists with an executive officer of the Company;

·                  whether personal or business relationship of the advisor exists with any members of the Compensation Committee;

·                  other services that Mercer provided to the Company;

·                  the amount of fees paid to Mercer compared to the total sales of Mercer;

·                  whether Mercer’s policies and procedures are designed to prevent conflicts of interest; and

·                  whether any shares of STR stock are owned by the advisor.

As an advisor to the Compensation Committee, Mercer has reviewed the total compensation and pay levels of the Company’s named executive officers, examined 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 Chairman, President and Chief Executive Officer and other senior executives. In addition, during 2011 through 2014, Mercer provided the Company with consulting services relative to the administration of its U.S. benefits programs, primarily in the administration of the Company’s U.S. self-insured medical plans. Mercer did not provide executive compensation services to the Company in 2014.

The Compensation Committee assessed the independence of Mercer pursuant to SEC rules and concluded that no conflict of interest exists that would prevent Mercer from independently representing the Compensation Committee during 2014. In carrying out its responsibilities, Mercer may collaborate with management to obtain data, provide background on program history and operation, and clarify pertinent information. Nevertheless, the Compensation Committee has the sole authority to engage and/or terminate Mercer’s services.

The Company paid Mercer approximately $42,067 for all the services provided in 2014. Of that amount, approximately $28,011 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.

Severance Agreements

The Company entered into severance agreements, dated as of October 1, 2012 (the “Severance Agreements”), with certain members of management, including each of Robert S. Yorgensen, Alan N. Forman and Joseph C. Radziewicz, setting forth certain payments and benefits in the event of termination of employment. The Severance Agreements will remain in effect until October 1, 2017 and will automatically renew for one year periods unless the Company or the executive provides notice of termination as provided for in the Severance Agreement. However, the term of each Severance Agreement will not expire before a date that is 18 months after a Change of Control that occurs during the term of the Severance Agreements. To the extent applicable, the Severance Agreements supersede and replace the severance provisions set forth in any executive’s employment agreement with the Company.

The Severance Agreements provide, among other things, that, if the executive is terminated for any reason, the executive is entitled to his full base salary through the date of termination at the rate in effect immediately prior to such termination date, as well as all compensation and benefits due to the executive under the terms of the Company’s benefit plans, programs and arrangements in effect immediately prior to the termination date.

If an executive (other than Mr. Yorgensen) is terminated by the Company without “cause” (as such term is defined in the Severance Agreement) or if he terminates his employment with “good reason” (as such term is defined in the Severance Agreement), other than during a “change in control severance period” (as such term is defined in the Severance Agreement), the executive is entitled to receive the payments described above plus (i) the sum of 1.0 times his base salary; (ii) a pro rata portion of any bonus payment he would have been eligible to receive for the performance year during which the termination date occurs; (iii) up to 12 months of payments in the amount required for continuation of COBRA plans and

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other benefits; (iv) prepayment of all life insurance premiums for 12 months plus the transfer of ownership of all rights of ownership of such arrangements; (v) payments for reasonable outplacement services for up to 12 months; and (vi) the reimbursement of reasonable legal fees and expenses incurred by the executive in disputing in good faith issues relating to the termination of employment or obtaining or enforcing any benefit provided under the Severance Agreement. Mr. Yorgensen is entitled to the same benefits described above, except he is eligible to receive a sum of 2.0 times his base salary in such event and the continuation of COBRA benefits, life insurance benefits and outplacement services for up to 24 months.

If an executive (other than Mr. Yorgensen) is terminated by the Company without cause or if he terminates his employment with good reason during a change in control severance period, he is entitled to (i) the sum of 1.25 times his base salary; (ii) his target bonus for the performance year during which the termination date occurs; and (iii) the continued COBRA benefits, life insurance benefits, and outplacement services for up to 15 months and legal fees described above. Mr. Yorgensen is entitled to the same benefits described above for the other executives, except he is eligible to receive a sum of 2.0 times his base salary and target bonus in such event and the continuation of COBRA benefits, life insurance benefits and outplacement services for up to 24 months. The change of control severance period is the period commencing 90 days prior to a change in control (as such term is defined in the Severance Agreement) and ending one year following a change in control.

Performance-Based Retention Awards

In connection with the Company’s exploration of strategic alternatives during 2013, the Company entered into retention agreements, dated as of July 18, 2013 (the “Retention Agreements”), with certain members of senior management, including each of Robert S. Yorgensen, Alan N. Forman, and Joseph C. Radziewicz. Subject to certain conditions regarding employment, the Retention Agreements provided for the payment of a bonus (the “Retention Bonus”) upon the closing of a change of control transaction (as defined) or upon the Company’s achievement of certain financial performance targets. On July 7, 2014, the Company amended the Retention Agreements with Alan N. Forman and Joseph C. Radziewicz to extend the termination dates of such agreements from June 30, 2014 to December 31, 2014, and delete the award of a bonus in the event of a dissolution or liquidation of the Company. Since the Zhenfa Transaction (which closed on December 15, 2014) qualified as a change of control transaction, Messrs. Forman and Radziewicz were paid bonuses equal to $229,000 and $180,000, respectively. Mr. Yorgensen’s Retention Agreement was not amended to extend the termination date, and therefore no retention bonus was paid to him. In connection with the closing of the Zhenfa Transaction, Mr. Yorgensen qualified to receive payment of deferred compensation in an amount equal to $203,636 which was paid to him in February 2015.

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. The Company’s 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 annual 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 upon 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 Company financial targets and personal 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 that occur occasionally. The equity grants vest over a longer period of time, typically three 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 reviews 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.

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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:

John A. Janitz, Chairperson

Andrew D. Africk

Summary Compensation Table

The following table sets forth certain information with respect to compensation for the years ended December 31, 2014, 2013 and 2012 earned by or paid to our named executive officers.

(1)                                 The amounts reported in this column reflect the amounts paid in 2014 pursuant to each executive’s employment agreement, except for Mr. Radziewicz who does not presently have an employment agreement, and take into account salary increases. For more information regarding these arrangements, see “Employment Agreements”.

(2)                                 The amounts reported in this column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718. The effects of estimated forfeitures are excluded.

(3)                                 The amounts reported in this column represent the aggregate grant date fair value of option awards computed in accordance with FASB ASC Topic 718 as of the grant date. For purposes of the table above, the effects of estimated forfeitures are excluded.

(4)                                 The amounts reported in this column reflect annual performance bonuses earned by the named executive officers pursuant to their employment agreements and the management incentive plan and based upon the named executive officers’ respective base salaries as of January 1, 2014. Such amounts are payable in the following year once the respective year’s financial statements have been audited. These annual performance bonuses are defined as non- equity incentive plan compensation by the rules and regulations of the SEC.

(5)                                 The amounts reported in this column represent 401(k) and profit sharing contributions to eligible employees, our Section 125 cafeteria plan, term life insurance, disability insurance, long-term care insurance and other personal benefits. The amounts included in that column are included in the table below. In connection with the closing of the Zhenfa Transaction, (i) Mr. Yorgensen qualified to receive payment of deferred compensation in an amount equal to $203,636 and (ii) Messrs. Forman and Radziewicz were paid bonuses in 2014 pursuant to the Retention Agreements, as amended, equal to $229,000 and $180,000, respectively.

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All other Compensation