SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the registrant [X] Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement [ ] Confidential, for Use of the Commission [X] Definitive proxy statement Only (as permitted by Rule 14a-6(e)(2) [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 SUN HYDRAULICS CORPORATION ------------------------------------------------- (Name of Registrant as Specified in Its Charter) ------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of filing fee (Check the appropriate box): [X] No filing fee required [ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ---------------------------------------- (2) Aggregate number of securities to which transaction applies: ---------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ---------------------------------------- (4) Proposed maximum aggregate value of transaction: ---------------------------------------- (5) Total fee paid: ---------------------------------------- [ ] Fee paid previously with preliminary materials [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: ---------------------------------------- (2) Form, Schedule or Registration Statement No.: ---------------------------------------- (3) Filing party: ---------------------------------------- (4) Date filed: ---------------------------------------- April 27, 2000 Dear Shareholder: You are cordially invited to attend the 2000 Annual Meeting of Shareholders of Sun Hydraulics Corporation. The meeting will be held Saturday, May 13, 2000, at 10:00 a.m., Eastern Daylight Savings Time, at the Company's manufacturing facility located at 701 Tallevast Road, Sarasota, Florida 34243. A tour of the plant and refreshments will follow the meeting. The Notice of the meeting and the Proxy Statement on the following pages cover the formal business of the meeting, which includes the election of Directors and a proposal to ratify the appointment of the Company's independent certified public accountants. We also will report on the progress of the Company and comment on matters of current interest. It is important that your shares be represented at the meeting. We ask that you promptly sign, date and return the enclosed proxy card in the envelope provided, even if you plan to attend the meeting. Returning your proxy card to us will not prevent you from voting in person at the meeting if you are present and choose to do so. If your shares are held in street name by a bank, brokerage or other nominee, it will supply you with a proxy to be returned to it. It is important that you return the form to the nominee as quickly as possible so that the nominee may vote your shares. You may not vote your shares in person at the Meeting unless you obtain a power of attorney or legal proxy from your nominee authorizing you to vote the shares, and you present this power of attorney or proxy at the Meeting. The Board of Directors and management look forward to greeting you personally at the meeting. Sincerely, /s/ Robert E. Koski -------------------------------------------- ROBERT E. KOSKI Chairman of the Board NOTICE OF ANNUAL MEETING OF SHAREHOLDERS SATURDAY, MAY 13, 2000 Notice hereby is given that the Annual Meeting of Shareholders of Sun Hydraulics Corporation, a Florida corporation, will be held on Saturday, May 13, 2000, at 10:00 a.m., Eastern Daylight Savings Time, at the Company's manufacturing facility, located at 701 Tallevast Road, Sarasota, Florida, 34243, for the following purposes: 1. To elect three Directors to serve until the Annual Meeting in 2003 and one Director to serve until the Annual Meeting in 2002, and until their successors are elected and qualified or until their earlier resignation, removal from office or death; 2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent certified public accountants for the year 2000; and 3. To transact such other business as properly may come before the Meeting or any adjournment thereof. Your attention is directed to the Proxy Statement accompanying this Notice for a more complete description of the matters to be acted upon at the Meeting. The 1999 Annual Report of the Company is enclosed. Shareholders of record at the close of business on March 31, 2000, are entitled to receive notice of and to vote at the Meeting and any adjournment thereof. All shareholders are cordially invited to attend the Meeting. Whether or not you expect to attend, please sign and return the enclosed Proxy promptly in the envelope provided to assure the presence of a quorum. You may revoke your Proxy and vote in person at the Meeting if you desire. If your shares are held in street name by a brokerage, your broker will supply you with a proxy to be returned to the brokerage. It is important that you return the form to the brokerage as quickly as possible so that the brokerage may vote your shares. You may not vote your shares in person at the Meeting unless you obtain a power of attorney or legal proxy from your broker authorizing you to vote the shares, and you present this power of attorney or proxy at the Meeting. By order of the Board of Directors, /s/ Gregory C. Yadley ------------------------------------- GREGORY C. YADLEY Secretary Sarasota, Florida April 27, 2000 SUN HYDRAULICS CORPORATION 1500 WEST UNIVERSITY PARKWAY SARASOTA, FLORIDA 34243 PROXY STATEMENT This Proxy Statement is furnished by the Board of Directors and Management of Sun Hydraulics Corporation (the "Company") in connection with the solicitation of proxies to be voted at the Company's 2000 Annual Meeting of Shareholders, which will be held on Saturday, May 13, 2000, at 10:00 a.m., Eastern Daylight Savings Time, at the Company's manufacturing facility, located at 701 Tallevast Road, Sarasota, Florida 34243 (the "Meeting"). Any proxy delivered pursuant to this solicitation may be revoked, at the option of the person executing the proxy, at any time before it is exercised by delivering a signed revocation to the Company, by submitting a later-dated proxy, or by attending the Meeting in person and casting a ballot. If proxies are signed and returned without voting instructions, the shares represented by the proxies will be voted as recommended by the Board of Directors. The cost of soliciting proxies will be borne by the Company. In addition to the use of the mails, proxies may be solicited personally or by telephone by regular employees of the Company. The Company does not expect to pay any compensation for the solicitation of proxies, but may reimburse brokers and other persons holding stock in their names, or in the names of nominees, for their expense in sending proxy materials to their principals and obtaining their proxies. The approximate date on which this Proxy Statement and enclosed form of proxy first has been mailed to shareholders is April 27, 2000. The close of business on March 31, 2000, has been designated as the record date for the determination of shareholders entitled to receive notice of and to vote at the Meeting. As of March 31, 2000, 6,384,948 shares of the Company's Common Stock, par value $.001 per share, were issued and outstanding. Each shareholder will be entitled to one vote for each share of Common Stock registered in his or her name on the books of the Company on the close of business on March 31, 2000, on all matters that come before the Meeting. Directors shall be elected by a plurality of the shares represented, in person or by proxy, and voting at the Meeting. For all other matters, the affirmative vote of the holders of a majority of the shares represented, in person or by proxy, and voting at the Meeting will be required to take action at the Meeting. Abstentions will be counted toward the number of shares represented at the Meeting. Broker non-votes will be disregarded. ELECTION OF DIRECTORS The Board of Directors of the Company currently consists of seven members. The Board is divided into three classes of Directors serving staggered three-year terms. Directors hold their positions until the annual meeting of shareholders in the year in which their term expires, and until their respective successors are elected and qualified or until their earlier resignation, removal from office or death. The term of office of three of the Company's current seven Directors, Messrs. Robert E. Koski, John S. Kahler and James G. March, will expire at the 2000 Annual Meeting. The Board of Directors unanimously recommends that you vote "FOR" the reelection of Robert E. Koski and John S. Kahler to serve until the Company's annual meeting in 2003, and until their respective successors shall be duly elected and qualified or until their earlier resignation, removal from office or death. Dr. March has informed the Board that he does not wish to be nominated for another term. To replace Dr. March, the Board of Directors unanimously recommends that you vote "FOR" the election of Allen J. Carlson to serve until the Company's annual meeting in 2003, and until his successor shall be duly elected and qualified or until his earlier resignation, removal from office or death. The Board of Directors has also determined that the number of seats on the Board of Directors shall be increased to eight and unanimously recommends that you vote "FOR" the election of Christine L. Koski to fill the newly-created Board seat and serve until the Company's annual meeting in 2002, and until her successor shall be duly elected and qualified or until her earlier resignation, removal from office or death. See "Management-Directors and Executive Officers" and "Certain Transactions" for further information on Mr. Carlson and Ms. Koski. Shareholders may vote for up to four nominees. The affirmative vote of a majority of the shares represented at the Meeting and entitled to vote thereon will be required for the election of Directors. Shareholders may not vote cumulatively in the election of Directors. Broker non-votes will be disregarded. In the event any of the nominees should be unable to serve, which is not anticipated, the proxy committee, which consists of Taco van Tijn and Clyde G. Nixon, will vote for such other person or persons for the office of Director as the Board of Directors may recommend. MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the names and ages of the Company's Directors, nominees for Director, and executive officers and the positions they hold with the Company. Executive officers serve at the pleasure of the Board of Directors. See "Anticipated Changes in Executive Management" below for a discussion of certain changes in the Company's executive management that are expected to occur prior to the Meeting. NAME AGE POSITION Robert E. Koski 71 Chairman of the Board of Directors (term expiring in 2000), Nominee for Director (term expiring in 2003) and a member of the Compensation Committee Allen J. Carlson 49 Vice President, Nominee for Director (term expiring in 2003) Jeffrey Cooper 59 Engineering Manager Richard J. Dobbyn 56 Chief Financial Officer Peter G. Robson 55 General Manager, Sun Hydraulics Limited John S. Kahler 60 Director (term expiring in 2000), Nominee for Director (term expiring in 2003) and a member of the Audit Committee Christine L. Koski 42 Nominee for Director (term expiring in 2002) Ferdinand E. Megerlin 61 Director (term expiring in 2001) and a member of the Compensation Committee - 2 - NAME AGE POSITION Clyde G. Nixon 64 President, Chief Executive Officer and Director (term expiring in 2001) Taco van Tijn 76 Director (term expiring in 2002) and a member of the Audit Committee David N. Wormley 60 Director (term expiring in 2002) and a member of the Compensation Committee ROBERT E. KOSKI is a co-founder of the Company and has served as its Chairman of the Board since it began operations in 1970. He was also its President and Chief Executive Officer from that time until November 1988. He is a graduate of Dartmouth College and past Chairman of the Board of the National Fluid Power Association. Mr. Koski has over 38 years experience in the fluid power industry, and has served as Chairman of the Fluid Power Systems and Technology Division of the American Society of Mechanical Engineers, and as a member of the Board of Directors of the National Association of Manufacturers. ALLEN J. CARLSON joined the Company in March 1996, and was named Vice President in January 2000. From October 1977 to March 1996, Mr. Carlson held various engineering, marketing and management positions for Vickers Incorporated, a wholly-owned subsidiary of Trinova Corporation. He is a graduate of the Milwaukee School of Engineering and the Advanced Management Program at the Harvard Business School. Mr. Carlson has over 29 years experience in the fluid power industry. JEFFREY COOPER joined the Company in December 1990, as an engineer and has been Engineering Manager since September 1991. From August 1987, to December 1990, he was Engineering Manager, Mobile Valves, of Vickers, Incorporated, a wholly-owned subsidiary of Trinova Corporation, and from September 1979 to August 1986, he served as Vice President of Engineering for Double A Products Company. Mr. Cooper is an engineering graduate of Willesden College of Technology, London, England. Mr. Cooper has over 31 years experience in the fluid power industry. RICHARD J. DOBBYN joined the Company in October 1995, and was named Chief Financial Officer in July 1996. From June 1995 to October 1995, Mr. Dobbyn served as the Controller of Protek Electronics. From July 1994 to June 1995, he served as the Fiscal Director of a non-profit child care agency. From September 1984 to July 1994, Mr. Dobbyn was Senior Vice President-Finance and Administration for Loral Data Systems, formerly Fairchild Weston Systems, a Schlumberger company. Mr. Dobbyn is a Certified Public Accountant and a graduate of Boston College. JOHN S. KAHLER is the President, CEO, and a Director of Cincinnati Incorporated. Mr. Kahler has served in various management positions with Cincinnati Incorporated since 1989. He is a graduate of Carnegie-Mellon University and the Harvard Business School. CHRISTINE L. KOSKI since 1980 held various positions in sales, product management, purchasing, sales management and international marketing with Celanese Ltd. or its former affiliates, including Hoechst AG and Hoechst Celanese Chemical Group Ltd. From April 1996 through March 2000, Ms. Koski was Global Marketing Manager - Acrylates of Celanese Ltd.; from April 1995 through April 1996, she was Marketing Manager - Acetaldehyde & NPG of Hoechst AG. Ms. Koski currently is pursuing an MBA degree from Southern Methodist University. FERDINAND E. MEGERLIN is Chairman and Joint Managing Director of Linde Lift Truck Corporation's Industrial Trucks and Hydraulics Division in Aschaffenburg, Germany. He is also - 3 - Chairman of Linde's U.S. subsidiaries Linde Hydraulics Corp., Canfield, Ohio, and Linde Lift Truck Corp., Sommerville, South Carolina. Within VDMA, Germany's association for mechanical and plant engineering, Dr. Megerlin serves as Vice Chairman of the German Fluid Power Association. He is a mechanical engineer and received his Dr.-Ing. degree from the Technical University of Karlsruhe, Germany, and his PhD from TH Aachen, Germany. Dr. Megerlin has over 28 years of experience in the fluid power industry. CLYDE G. NIXON joined the Company in January 1988, and was named its President and Chief Executive Officer in November 1988. From September 1985, to January 1988, he served as Vice President of Cross & Trecker Corporation and was President of Warner & Swasey Company, its wholly-owned subsidiary. From 1964 to 1985, he served in various management capacities with Brown & Sharpe Manufacturing Corporation, most recently as Vice President of its fluid power division and President of Double A Products Company, its wholly-owned subsidiary. Mr. Nixon is a graduate of Cornell University and the Harvard Business School, and is past Chairman of the Board of the National Fluid Power Association. Mr. Nixon has over 32 years experience in the fluid power industry. PETER G. ROBSON has served as a Director of Sun Hydraulics Limited, Coventry, England, since May 1993, and has been employed by the Company as the General Manager of its United Kingdom operations since 1982. Mr. Robson is a Chartered Engineer and a graduate of Coventry University. Mr. Robson has over 33 years experience in the fluid power industry. TACO VAN TIJN is an attorney (solicitor), who has practiced law in London, England, since May 1977. Since June 1998, he has been a consultant with Rooks Rider. Mr. van Tijn has been a Director of the Company since February 1989, and the principal statutory officer of Sun Hydraulik Holdings Limited since January 1991. DAVID N. WORMLEY is the Dean of the Engineering School at Pennsylvania State University, where he has taught since 1992. He previously was a member of the engineering faculty at the Massachusetts Institute of Technology. Dr. Wormley has served as a Director of the Company since December 1992. He is an engineer and earned his Ph.D. from the Massachusetts Institute of Technology. No family relationships exist between any of the Company's Directors and executive officers, except that Mr. Koski and Dr. March, who is retiring from the Board following the Meeting, are step-brothers. Further, Ms. Koski, a nominee for Director, is the daughter of Robert E. Koski. The Board of Directors has Audit and Compensation Committees. The Company does not have a Nominating Committee; instead, the entire Board of Directors functions as a Nominating Committee. The Audit Committee was appointed in February 1997 and held two meetings in 1999. The functions of the Audit Committee are to recommend annually to the Board of Directors the appointment of the independent public accountants of the Company, to discuss and review the scope of and the fees for the prospective annual audit with the independent public accountants, to review the results thereof with the independent public accountants, to review and approve non-audit services of the independent public accountants, to review compliance with existing major accounting and financial policies of the Company, to review the adequacy of the financial organization of the Company, to review management's procedures and policies relative to the adequacy of the Company's internal accounting controls, to review compliance with federal and state laws relating to accounting practices and to review and approve (with the concurrence of a majority of the disinterested Directors of the Company) transactions, if any, with affiliated parties. - 4 - A Compensation Committee was formed in December 1996 to review, approve and recommend to the Board of Directors the terms and conditions of all employee benefit plans or changes thereto, to administer the Company's stock option plans and carry out the responsibilities required by the rules of the Securities and Exchange Commission. The full Board of Directors carried out the responsibilities of the Compensation Committee directly during 1999. The Board of Directors held four meetings during 1999. Each Director attended all of the meetings of the Board and of each committee of which he was a member in 1999. Directors who are not officers of the Company are paid $2,500 for attendance at each meeting of the Board of Directors, as well as each meeting of each Board committee on which they serve when the committee meeting is not held within one day of a meeting of the Board of Directors. Directors also are reimbursed for their expenses incurred in connection with their attendance at such meetings. ANTICIPATED CHANGES IN EXECUTIVE MANAGEMENT The next meeting of the Board of Directors will be held on May 12, 2000, the day prior to the Meeting. At that time, it is anticipated that Robert E. Koski, co-founder of the Company, will resign as Chairman and become Chairman Emeritus of the Company, with no executive responsibilities. Further, it is contemplated that the Board of Directors will elect Clyde G. Nixon, the Company's current President and Chief Executive Officer, as Chairman, and that Mr. Nixon will step down as President and Chief Executive Officer. Finally, it is anticipated that Allen J. Carlson, the Company's Vice President, will be elected by the Board of Directors as President and Chief Executive Officer. The Board of Directors previously has discussed these changes and the Directors informally have agreed to take action at the May 12 meeting to implement the executive management transition. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of March 31, 2000, information as to the beneficial ownership of the Company's Common Stock by (i) each person or entity known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each Director, (iii) Each Named Executive Officer of the Company, and (iv) all Directors and executive officers of the Company as a group.