TABLE OF CONTENTS

		2019 Proxy Statement|    i

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SUN HYDRAULICS CORPORATION

1500 West University Parkway

Sarasota, Florida 34243

PROXY STATEMENT

This Proxy Statementproxy overview is furnished bya summary of information that you will find throughout this proxy statement. As this is only an overview, we encourage you to read the Board of Directors of Sun Hydraulics Corporation (the “Company”) in connection with the solicitation of proxiesentire proxy statement, which was first distributed to be voted at the Company’s 2017 Annual Meeting of Shareholders, which will be heldour stockholders on Monday, June 5, 2017, at 10:00 a.m., Eastern Daylight Time, at the Company’s manufacturing facility located at 803 Tallevast Road, Sarasota, Florida  34243 (the “Meeting”).or about April 26, 2019.

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 mail, 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 or made available over the Internet to shareholders isas of April 24, 2017.26, 2019.

The close of business on March 31, 2017,April 4, 2019, 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, 2017, 26,962,890April 4, 2019, 32,011,375 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, 2017,April 4, 2019, on all matters that come before the Meeting. Abstentions will be counted as shares that are present and entitled to vote for purposes of determining whether a quorum is present. Shares held by nominees for beneficial owners will also be counted for purposes of determining whether a quorum is present if the nominee has the discretion to vote on at least one of the matters presented, even though the nominee may not exercise discretionary voting power with respect to other matters and even though voting instructions have not been received from the beneficial owner (a “brokernon-vote”). Abstentions and brokernon-votes are not counted in determining whether a proposal has been approved.

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Marc Bertoneche is an Emeritus Professor in Business Administration at the University of Bordeaux in France, and was on the Faculty of INSEAD, the European Institute of Business Administration in Fontainebleau, France, for more than 20 years.  He was a Visiting Professor of Finance at the Harvard Business School.  He is an Associate Fellow at the University of Oxford and a Distinguished Visiting Professor at HEC Paris.  He is a graduate of University of Paris and earned his MBA and PhD from Northwestern University.  He has served as a Director of the Company since August 2001.  As an academic and a consultant to universities and businesses throughout the world, Dr. Bertoneche is exposed to diverse business leaders and brings a global perspective and depth of experience in the finance area.  

Doug Britt has been a Director of the Company since December 2016.  Mr. Britt is President of Industrial and Emerging Industries at Flex (NASDAQ: FLEX), a leading sketch-to-scale™ solutions company that provides innovative design, engineering, manufacturing, real-time supply chain insight, and logistics services to companies of all sizes in various industries and end-markets.  From May 2009 to November 2012, Mr. Britt served as Corporate Vice President and Managing Director of Americas for Future Electronics, and from November 2007 to May 2009, he was Senior Vice President of Worldwide Sales, Marketing, and Operations for Silicon Graphics. From January 2000 to October 2007, Mr. Britt held positions of increasing responsibility at Solectron Corporation, culminating his career there as Executive Vice President, and was responsible for Solectron’s customer business segments including sales, marketing and account and program management functions. Mr. Britt earned a bachelor’s degree in business administration from California State University, Chico, and attended executive education programs throughout Europe, including at the University of London.  As an executive at multi-national companies, Mr. Britt has extensive global M&A experience and a deep understanding of customer relationships and supply chain networks.  Mr. Britt came to our attention as a potential director candidate through a representative of Flex, whose CEO is an acquaintance of our Chairman.

Allen Carlson joined the Company in March 1996 and served as Vice President from January 2000 until May 2000, when he was named President and Chief Executive Officer, serving in those roles until his retirement on March 31, 2016.  He currently serves as director of the University of Florida’s Sarasota Innovation Station.  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 is past chair and a member of the executive committee of the board of directors of the National Fluid Power Association, and he serves on the board of regents of the Milwaukee School of Engineering.  He also is a director of Tervis Tumbler Company and Mayville Engineering Company, Inc.  With over 40 years’ experience in the fluid power industry and 20 years with the Company, nearly 16 as President and Chief Executive Officer, Mr. Carlson has deep institutional knowledge and perspective regarding the Company’s strengths, challenges and opportunities.  

Dave Grzelak has been a director of the Company since June 2015.  He served as Chairman and Chief Executive Officer of Komatsu America Corporation from April 2002 until his retirement as Chief Executive Officer in April 2012 and as Chairman in July 2013.  He then served as a consultant to Komatsu Ltd., Tokyo, Japan, until August 2015.  With more than four decades of experience working in the industrial manufacturing sector and extensive experience in Asia, Mr. Grzelak brings a wealth of knowledge regarding the customers and markets in which the Company’s products are sold.  Mr. Grzelak brings to the Board valuable insights on distribution, marketing and sales of the Company’s products as well as operational and financial expertise.  Mr. Grzelak also serves as a director of Alamo Group Inc. (NYSE: ALG).

Chris Koski joined the executive team of nMetric, LLC as head of marketing in July 2006 and has served as its President and Chief Executive Officer since January 2011.  Prior to joining nMetric, Ms. Koski founded Koski Consulting Group, Inc. in June 2001 to work with start-up companies in the area of business strategy and marketing.  From 1980 through 2000, Ms. Koski held various positions in sales, product management, purchasing, sales management, and international marketing management with Celanese A.G. or its former affiliates, including Celanese Ltd., Hoechst AG and Hoechst Celanese Chemical Group Ltd.  In June 2016 Ms. Koski purchased the probiotic business unit from Oragenics and is now the CEO of ProBiora Health LLC.  Simultaneous to the acquisition, Ms. Koski resigned from the board of directors of Oragenics, Inc. (OGEN).  Ms. Koski is also a member of the National Association of Corporate Directors, Dallas Chapter, and is an alumnus of Harvard’s Corporate Board Effectiveness Program led by Professor Jay Lorsch.  Ms. Koski has served as a Director of the Company since May 2000.  As the daughter of the Company’s founder, Ms. Koski has a unique understanding of the Company’s culture.  Her international sales and marketing background contribute to the Board’s overall level of experience in these areas.  Ms. Koski graduated from St. Lawrence University with a BS degree in chemistry and received an Executive MBA degree from Southern Methodist University.  

Philippe Lemaitre retired in November 2006 as Chairman, President and Chief Executive Officer of Woodhead Industries, Inc., a publicly-held automation and electrical products manufacturer, upon its sale to Molex.  Before joining Woodhead in 1999, Mr. Lemaitre was Corporate Vice President and Chief Technology Officer of AMP, Inc. and was also in charge of AMP Computer and Telecom Business Group Worldwide.  Prior to joining AMP, Mr. Lemaitre was an Executive Vice President of TRW, Inc. and also General Manager of TRW Automotive Electronics Group Worldwide.  He previously held various management and research engineering positions with TRW, Inc., International Technegroup, Inc., General Electric Company and Engineering Systems International.  Mr. Lemaitre also served as Chairman of the Board of Directors of Multi-Fineline Electronix, Inc. from March 2011 until the sale of the company in July, 2016.  He holds a Master of Civil Engineering degree from Ecole Spéciale des Travaux Publics, Paris, France, and a Master of Science degree from the University of California at Berkeley, California.  Mr. Lemaitre has served as a Director of the Company since June 2007, and as Chairman of the Board since June 2013.  Mr. Lemaitre’s more than 32 years’ experience in the development of technology and technology-driven businesses, his track record of successfully managing global business functions including sales, engineering, research and manufacturing operations, and his role as Chairman of another public company provide a wealth of experience in key areas of the Company’s business and governance.

Alexander Schuetz serves as CEO of Knauf Engineering GmbH, an engineering company in the gypsum based construction materials industry.  Prior to joining Knauf in February 2009, Dr. Schuetz held various management positions for more than 10 years in Finance, Business Development, Mergers & Acquisitions, Project Management and General Management in the fluid power industry at Mannesmann and Bosch Rexroth, including as CEO of Rexroth Mexico and Central America from August 2000 to August 2007. From 1998 to 2000, he was based in Beijing, China and was responsible for the Finance, Tax and Legal division at Mannesmann (China) Ltd., the holding company for a number of affiliated companies of the Mannesmann Group, including Rexroth, Demag, Sachs and VDO.  Dr. Schuetz holds a Ph.D. in international commercial law from the University of Muenster, Germany.  In 2003, Dr. Schuetz completed the Robert Bosch North America International General Management Program at Carnegie Mellon University.  Dr. Schuetz has served as a Director of the Company since June 2014.  With more than 10 years working in the fluid power industry and extensive experience in major growth regions of the world, including Asia and Latin America, Dr. Schuetz brings global insights into markets and customers to Sun.

David Wormley, after nearly 25 years of service to the Company, will retire from the Board at the Meeting.  He served as the Dean of the Engineering College at the Pennsylvania State University from June 1992 until he was named Dean Emeritus on January 1, 2014.  Dr. Wormley previously served as Associate Dean of Engineering at the Massachusetts Institute of Technology (MIT) from 1991 to 1992, and Head of MIT’s Department of Mechanical Engineering from 1982 to 1991.  He is past president of the American Society for Engineering Education and is a fellow in the American Society of Mechanical Engineers.  Dr. Wormley has served as a Director of the Company since December 1992.  He also served as a director of Michael Baker Corporation from May 2008 until October 2013.  He is an engineer and earned his Ph.D. from the Massachusetts Institute of Technology.  Highly regarded in the engineering community, domestically and internationally, Dr. Wormley brings to the Board strong administrative and leadership skills developed as the dean of one of the nation’s premier engineering colleges.  As the Company’s longest-serving Director, he also has an institutional knowledge that contributes to the Company’s ability to exploit its historical strengths as it explores future opportunities.

Name/Age				Executive     Officer     Since		Biographies
		Melanie M. Nealis, 44 Chief Legal and Compliance Officer and  Assistant Secretary		July 2018		Melanie Nealis joined the Company in July 2018 and brings over 20 years of experience in legal and human resources to the Company. She currently serves as the Chief Legal and Compliance Officer & Assistant Secretary for the organization and its subsidiaries. She is responsible for managing the legal and compliance activities of the enterprise on a global basis. Prior to joining the Company, Ms. Nealis was the Deputy General Counsel of Roper Technologies, Inc. (NYSE:ROP) from 2012 to 2018 and senior corporate counsel to Nordson Corporation (NASDAQ:NDSN) from 2005 to 2012. In both of her previousin-house roles, Ms. Nealis was responsible for managing legal services and compliance programs globally. Her responsibilities included: mergers & acquisitions, litigation management, developing and administering compliance programs, labor & employment, commercial contracts, global trade advice and compliance, and other regulatory and compliance activities. Ms. Nealis graduated with a BSBA, summa cum laude, from Xavier University and has a Juris Doctorate degree from the Ohio State University Moritz College of Law, where she graduated with honors in law. Prior to herin-house roles, Ms. Nealis was in private practice in Cleveland, Ohio, beginning her career at the national law firm of Baker & Hostetler LLP. Before becoming an attorney, Ms. Nealis worked as a human resource professional at the Timken Company in Canton, Ohio.
		Craig Roser, 61 Global Lead, CVT Sales and Business Development		August 2009		Craig Roser joined the Company in August 2009 and had regional leadership responsibilities in marketing, sales and business development in the Americas before becoming Global Lead, CVT Sales and Business Development Lead in August of 2016. Mr. Roser graduated from the University of South Florida in 1979 with a mechanical engineering degree and worked in the textile and tire making industries until 1983, when he joined Gulf Controls Company LLC, a Sun Hydraulics Distributor. Mr. Roser last served as Vice President Engineering of Gulf Controls before being selected in 2001 as President of Hydro Air LLC, another fluid power component and systems distributor who then had the same owner as Gulf Controls. Mr. Roser is a licensed professional engineer and participates in committee activities of the National Fluid Power Association and the American Society of Mechanical Engineers. Mr. Roser also earned a law degree from The Florida State College of Law and is a member of The Florida Bar.

Board Leadership Structure and the Board’s Role in Risk Oversight

The Board of Directors acts as a collaborative body that encourages broad participation of each of the Directors at Board meetings and in the committees, described below, on which they serve. The Board believes that a majority of Directors should be independent. Prior to each Board meeting the independent directors meet informally, and they also meet in regular executive sessions of the Board of Directors. The Company currently separates the functions of Chairman of the Board and Chief Executive Officer. The Chairman of the Board, who is anon-management, independent Directordirector chairs the meetings of the Board and also serves as a nonvotingex officio member of each of the Board committees. He setsapproves the agenda for each meeting, after soliciting suggestions from management and the other Directors. Given the size of the Company, its international operations and its culture of individual initiative and responsibility, the Board believes that its leadership structure is appropriate. The Board believes that a governing body comprised of a relatively small number of individuals with diverse backgrounds in terms of geographic, cultural and subject matter experience, strong leadership and collaborative skills, is best equipped to oversee the Company and its management.

The Company’s culture emphasizes individual integrity, initiative and responsibility, and employs a horizontal leadershipresponsibility. The Company’s compensation structure in which there aredoes not rigid reporting requirements.  Compensation is not based on financial or productivity metrics or on other objective criteria that would encourage individuals undertakingto undertake undue risk for personal financial gain. The Board has delegated to the Audit Committee the responsibility for financial risk and fraud oversight, to consider for approval all transactions involving conflicts of interest and to monitor compliance with the Company’s Code of Ethics.  Business Conduct and Ethics (“Code”).

The Governance and Nominating Committee addressesnon-financial risks, including political and economic risks, risks relating to the Company’s growth strategy, and current business risks on a quarterly basis, and makes recommendations to the Board has determined that a separate risk oversight committee is not necessarywith respect to monitorthose and other risks.  Instead,risks, including leadership development and succession. To supplement the reports of the Governance and Nominating Committee, the Chief Executive Officer reports to the full Board, at least annually, regarding material risks facing the Company, risks it may face in the future, measures that management has employed to address those risks and other information regarding how risk analysis is incorporated into the Company’s corporate strategy andday-to-day business operations.  The Governance

As part of its risk oversight and Nominating Committee also addresses non-financial risks, including development and succession of leadership, and makes recommendations tocompliance responsibilities, the Board with respectof Directors, in December 2018, adopted a new Code that serves as an overarching document to thosesupplement similar policies adopted by its subsidiaries. The Code has been

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translated into five languages, and other risks facingtraining programs are held to ensure the code is understood and observed throughout the Company. In July 2018, the Board appointed a Chief Legal and Compliance Officer (“CLCO”) who oversees and manages the legal and compliance functions of the Company on a global basis.

Independence and Committees of the Board of Directors

Independence of Directors.  At its meeting in March 2017,8, 2019, the Board undertook a review of Director independence.Independence. It determined that there were no transactions or relationships between any of the Directors or any member of the Director’s immediate family and the Company and its subsidiaries and affiliates. The purpose of this review was to determine the independence of each of the Directors under the rules of the Nasdaq Stock Market and, for audit committee members, also under the rules of the Securities and Exchange Commission. The Board determined that, other than the current and the recently-retired CEO, all of the Company’s Directors, (Messrs.Messrs. Bertoneche, Britt, Grzelak, Lemaitre, Schuetz and Wormley,Schuetz, and Ms. Koski, except with respect to the audit committee,) qualify as independent.

The Board of Directors has the three standing committees listed below.  In addition to the standing committees, in November 2012 the Board established an ad hoc Strategy Committee to facilitate collaboration between the Board and management with respect to the Company’s strategy review.  This committee was chaired by Mr. Dangel and also included Mr. Carlson, Ms. Koski and Dr. Schuetz.  With a framework for the Company’s future growth established, the Committee recommended, and the other Directors agreed, in March 2016 that the work of the Committee was concluded, that the projects would be integrated into the general operational flow of the Company, and that the full Board would resume its strategy oversight role.

Audit Committee.Committee

The Audit Committee, comprised of Marc Bertoneche, (Chair), Doug Britt, David W. Grzelak (Chair), and Alexander Schuetz, held nine meetings in 2016.2018. The Board of Directors determined, under applicable SEC and NASDAQ rules, that all of the members of the Audit Committee are independent and that Dr. Bertoneche meets the qualifications as an Audit Committee Financial Expert, and he has been so designated. The functions of the Audit Committee are to select the independent public accountants who will prepare and issue an audit report on the annual financial statements of the Company and a report on the Company’s internal controls over financial reporting, to establish 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 approvenon-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 areas of financial risk and provide fraud oversight, to review compliance with federal and state laws relating to accounting practices and to review and approve transactions, if any, with affiliated parties. It also invites and investigates reports regarding accounting, internal accounting controls or auditing irregularities or other matters.

The Audit Committee is responsible for review of management’s monitoring of the Company’s compliance with its Code, of Ethicsincluding its confidential ethics reporting hotline and the periodic review and update of the code. No waivers of the Company’s Code of Ethics were requested or granted during the year ended December 31, 2016.29, 2018. The Code of Ethics is available on the Investor RelationsInvestors page of our Web sitewww.sunhydraulics.comwww.heliostechnologies.com and from the Company upon written request sent to Corporate Secretary, 1500 West University Parkway, Sarasota, Florida 34243.

The Audit Committee is governed by a written charter approved by the Board of Directors. The charter was revised in March 2012 and is available on the Investor RelationsInvestors page of our Web sitewww.sunhydraulics.com www.heliostechnologies.comand from the Company upon written request sent to the Corporate Secretary, 1500 West University Parkway, Sarasota, Florida 34243.

Compensation Committee.Committee

The Compensation Committee, comprised of Marc Bertoneche, DougDouglas M. Britt (Chair), and Christine L. Koski, (Chair) and David Wormley, oversees the Company’s compensation program, including executive compensation and the review, approval and recommendation to the Board of Directors of the terms and conditions of all employee benefit plans or changes thereto. The Committee administers the Company’s restricted stockequity incentive and stock optionnon-employee director fees plans and carries out the responsibilities required by the rules of the Securities and Exchange Commission. The Committee met foursix times during 2016.2018.

The Compensation Committee is governed by a written charter approved by the Board of Directors. The charter was revised in May 2013 and is available on the Investor RelationsInvestors page of our Web sitewww.sunhydraulics.com www.heliostechnologies.comand from the Company upon written request sent to the Corporate Secretary, 1500 West University Parkway, Sarasota, Florida 34243.

Governance and Nominating Committee.Committee

The Governance and Nominating Committee, comprised of David W. Grzelak, Christine L. Koski, and Alexander Schuetz and David Wormley (Chair), held four meetings in 2016.2018. The primary purpose of the Committee is to identify and recommend to the Board individuals qualified to become members of the Board of Directors, consistent with criteria approved by the Board, develop

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and recommend to the Board corporate governance guidelines and policies for the Company, and monitor the Company’s compliance with good corporate governance standards. The Committee also addressesnon-financial risks, including development and succession of leadership, and makes recommendations to the Board with respect to those and other risks facing the Company.

The Governance and Nominating Committee is governed by a written charter approved by the Board of Directors. The charter was revised in March 2012 and is available on the Investor RelationsInvestors page of our Web site www.sunhydraulics.com websitewww.heliostechnologies.comand from the Company upon written request sent to the Corporate Secretary, 1500 West University Parkway, Sarasota, Florida 34243.  The Committee met four times during 2016.

The Board has adopted a Statement of Policy Regarding Director Nominations, setting forth qualifications of Directors, procedures for identification and evaluation of candidates for nomination, and procedures for recommendation of candidates by shareholders.

As set forth in the Statement of Policy, a candidate for Director should meet the following criteria:

must, above all, be of proven integrity with a record of substantial achievement;

•

must, above all, be of proven integrity with a record of substantial achievement;

must have demonstrated ability and sound judgment that usually will be based on broad experience;

•

must have demonstrated ability and sound judgment that usually will be based on broad experience;

must be able and willing to devote the required amount of time to the Company’s affairs, including attendance at Board and committee meetings and the annual shareholders’ meeting;

•

must be able and willing to devote the required amount of time to the Company’s affairs, including attendance at Board and committee meetings and the annual shareholders’ meeting;

must possess a judicious and somewhat critical temperament that will enable objective appraisal of management’s plans and programs; and

•

must possess a judicious and somewhat critical temperament that will enable objective appraisal of management’s plans and programs; and

must be committed to building sound, long-term Company growth.

•

must be committed to building sound, long-term Company growth.

Other than the foregoing, the Board does not believe there is any single set of qualities or skills that an individual must possess to be an effective Director or that it is appropriate to establish any specific, minimum qualifications for a candidate for election as a Director. Rather, the Committee will consider each candidate in light of the strengths of the other members of the Board of Directors and the needs of the Board and the Company at the time of the election.

The Company does not have a formal policy with regardAs discussed below under “Oversight of Environmental, Social and Governance (ESG) Matters,” the Board of Directors formally memorialized the Company’s commitment to fundamental ethical principles, including diversity and respect for the considerationdignity of diversity in identifying Director nominees, but theevery individual. The Governance and Nominating Committee striveswill continue to nominate Directors with diverse backgrounds in terms of geographic, cultural and subject matter experience that are complementary to those of the other Directors so that, as a group, the Board will possess the appropriate talent, skills and expertise to oversee the Company’s business.

The Committee will take whatever actions it deems necessary under the circumstances to identify qualified candidates for nomination for election as a member of the Board of Directors, including the use of professional search firms, recommendations from Directors, members of senior management and security holders. All such candidates for any particular seat on the Board shall be evaluated based upon the same criteria, including those set forth above and such other criteria as the Committee deems suitable under the circumstances existing at the time of the election.

Shareholder recommendationsRecommendations for Nomination as a Director.In order for the Committee to consider a candidate recommended by a shareholder, the shareholder must provide to the Corporate Secretary, at least 120, but not more than 150, days prior to the date of the shareholders’ meeting at which the election of Directors is to occur, a written notice of suchsuch security holder’s desire that such person be nominated for election at the upcoming shareholders meeting; provided, however, that in the event that less than 120 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be received not later than the close of business on the tenth business day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs.

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Board. Directors may at any time review a log of all correspondence received by the Company that is addressed to the Board or any member of the Board and request copies of any such correspondence. Additionally, correspondence that, in the opinion of the Chairman, relates to concerns or complaints regarding accounting, internal accounting controls and auditing matters is forwarded to the Chair of the Audit Committee.

Environmental, Social and Governance (ESG) Matters

Corporate responsibility and sustainability are reflected in the Company’s business strategy. The Board of Directors recently reviewed the Company’s historical commitment to principles of corporate and social responsibility. The Company is committed to reducing emissions, recycling, and minimizing its environmental footprint and has implemented several strategies to achieve these goals. The Company is also fully committed to the safety of its employees and the safety of those who use its products. Additionally, the Company actively seeks to support diversity initiatives in its hiring and employment practices. The Board and its committees will continue to assist the Company in its oversight of corporate social responsibilities, significant public policy issues, health and safety, and climate-change related trends. Below is a summary of the Company’s ESG activities for 2018.

We are committed to conducting our business with ethics and integrity. This expectation is memorialized in the policies and procedures applicable to our employees, vendors, and partners across the globe. All of our operating companies maintain their own individual ethics and code of conduct policies, the collective policies of which are also incorporated into our corporate policy, the Code. In addition, the Helios companies maintain ethical and conduct standards for their suppliers across the globe.

Helios maintains a confidential ethics and reporting hotline that can be accessed by employees all over the globe (heliostechnologies.ethicspoint.com). Both the Audit and Governance Committees of the Board of Directors oversee the ethics and compliance programs of the Company. As noted above, in 2018 Helios hired a Chief Legal and Compliance Officer, who oversees our ethics and compliance programs and provides advice and counsel on a regular basis to Helios and its employees on these topics.

Across the globe, Helios companies are committed to leading in their industries to minimize the impact of their activities on the environment. The Company is committed to reducing emissions, recycling, and minimizing its environmental footprint. The key points of Helios’s strategy to achieve these goals are:

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The Company and its employees have a long history of caring for our communities around the world and the people we employ. The Company supports social welfare programs around the globe through financial efforts and employee engagement. The Company is fully committed to the safety of its employees and the safety of those who use our products. Additionally, the Company actively seeks to support diversity initiatives in its hiring and employment practices. Below are some highlights of some of these efforts made by our companies in 2018.

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AUDIT COMMITTEE REPORT

The following report shall not be deemed to be incorporated by reference into any filings made by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934,, except to the extent that the Company specifically incorporates it by reference, or to be “soliciting“soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934.

Management is responsible for the Company’s internal controls, financial reporting process, compliance with laws and regulations and ethical business standards. The independent accountants are responsible for performing an independent audit of the Company’s consolidated financial statements and internal controls over financial reporting based on criteria established in the 2013Internal Control –— Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The primary purpose of the Audit Committee is to oversee the Company’s financial reporting activities. The Audit Committee selects the Company’s independent accountants and meets regularly with them to review and approve the scope of their audit, report, recommendations and fees.

The Audit Committee has reviewed and discussed the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2016,29, 2018, with the Company’s management and with Grant Thornton LLP (“Grant Thornton”). Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee also reviewed and discussed with the Company’s management and Grant Thornton their respective reports on the effectiveness of the Company’s internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act as of December 31,  2016.29, 2018. The Audit Committee has discussed with Grant Thornton the matters required to be discussed by PCAOB Auditing Standard No. 16 (Communication With Audit Committees).

The Audit Committee has received from Grant Thornton written disclosures and the letter required by the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Committee concerning independence, and has discussed with Grant Thornton its independence. The Audit Committee has considered the provision of allnon-audit services by Grant Thornton and has determined that such services are compatible with the firm maintaining its independence from the Company.

Based on its review and discussions noted above, the Audit Committee recommended to the Board of Directors, and the Board has approved, the inclusion of the audited financial statements in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2016,29, 2018, for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE

Marc Bertoneche, Chair

Doug Britt

David W. Grzelak, Chair

Marc Bertoneche

Douglas M. Britt

Alexander Schuetz

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Salaries are no pre-arranged annual increases or established ranges for salary increases.reviewed annually by the Compensation Committee. The chief executive officer, after seeking input from other key managers and reviewing selected market data, recommendshas recommended increases for the other executive officers based upon his analysis of the individual executive’s experience and past and potential contributions to the Company. Based on the foregoing factors, the compensation for the NEOs was increased in 2018, as set forth in the following table:

		2017 Salary				Salary Increase				2018 Salary
Wolfgang H. Dangel		$	515,000			$	14,856			$	529,856
Tricia L. Fulton		$	262,000			$	60,817			$	322,817
Jinger McPeak		$	209,077			$	31,586			$	240,663
Gary A. Gotting		$	200,000			$	24,038			$	224,038
Craig Roser		$	205,000			$	33,654			$	238,654

Bonuses historically were granted for superior performance on an individual basis or as part of a company-wide bonus award. Enovation has a formula-driven, short-term cash bonus plan for its employees, including NEO Jinger McPeak.

Equity Compensation. We utilize equity awards as long-term compensation incentives for executive officers and other key managers. The Committee determined that the long-term compensation program would be related to Company performance but, thathistorically, it woulddid not move automatically in lock-step with such performance. The Committee has recognized that, at different periods in the economic cycle, long-term compensation might have greater or lesser importance in relationship to salary adjustments. Each year,Through 2018, the Committee establishesestablished annually a pool of shares to be used for long-term compensation. The level of the pool variesvaried with our performance, although the Committee believes thathas believed it is important to reward and incentivize employees even in difficult times. The chief executive officer recommends awards for executive officers and other key employees. The Committee reviews those recommendations, approves or revises them, and determines long-term compensation for the chief executive officer and the other named executive officers.

The principal element of our long-term compensation program isthrough 2018 has been the use of restricted shares of Company common stock, granted under a written plan approved by our shareholders. The Committee believesdetermined that this form of long-term compensation, tied to value creation for the Company, best alignsaligned the interests of key employees with those of shareholders. TheThe objectives of the program are to award the high achievers, to identify key employees within the Company (including those who demonstrate leadership) and, because it is long-term, to promote equity ownership in the Company. Criteria used by the Committee in these awards includehave included individual responsibilities and performance results and the individual’s years of experience in the industry, with the emphasis on subjective measures such as sustained contributions to the Company, initiative, the effect of the individual on the attitudes and performance of others, and the amount of management required for the individual. NoHistorically, no specific weight iswas given to any specific criterion although leadership and performance arewere of particular importance.

Equity awards are “time based” so that, in order to earn the full award, an employee must remain in our employ for a specified period of time, typically one to three years. The Committee in the past has granted stock options, vesting over a specified period of time, under a Company stock option plan. Since 2005, in part due to stock compensation accounting rules, no stock options have primarily been awarded.  

Equity awards are primarily made under the Company’s 2011 Equity Incentive Plan (the “2011 Equity Plan”), an omnibus plan designed to provide great flexibility in making a variety of equity or equity-based awards. The 2011 Equity Plan was approved by the Company’s shareholders at the 2012 Annual Meeting. The purpose of the 2011 Equity Plan is to attract and retain officers, employees and directors of outstanding competence and to provide additional incentives to achieve long-term corporate objectives by giving them direct or indirect equity interestsIn March 2018, as set forth in the Company.table of Grants of Plan-Based Awards of page 29, the Committee awarded shares of restricted stock to our NEOs. These equity awards, as has been the case historically, were “time-based” so that, in order to earn the full award, the NEO must remain employed for three years.

BecauseAs described below, beginning in 2019, specific key performance indicators will be used in making long-term compensation awards, and restricted stock units will be used rather than restricted shares of Company stock. Performance-based, as well as time-based, awards will be used. The Committee in the differences in tax treatment for employeespast has granted stock options, vesting over a specified period of our foreign subsidiaries,time, but since 2005 no stock appreciation rights (referred to in our plan document as performance shares) sometimesoptions have been used for long-term compensation purposes for non-US employees, including executive officers.awarded.

Retirement Plan and ESOP.ESOP. All of ourthe U.S. executives, along with allbased employees of our other U.S. employees,Sun Hydraulics Corporation and Sun Hydraulics LLC, including executive officers, are eligible to participate in the Sun Hydraulics Corporation 401(k) and ESOP Retirement Plan (the “Plan”). Under thetax-qualified Plan, all U.S. basedsuch employees are able to contribute the lesser of up to 100% of their annual salary or the limit prescribed by the Internal Revenue Service to the Plan on abefore-tax basis. Based on years of service, we match 100% of up to the first 6% of pay that is contributed to the Plan. All employee contributions are fully vested upon contribution. Our

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matching contributions vest over a five year period –— 20% after one year, 40% after two years, 60% after three years, 80% after four years and 100% after five years. Each year, the Board of Directors determines, based on the Company’s performance and other factors it deems relevant, whether to make an additional contribution, and if so, in what amount. Since 2004, when an employee stock ownership plan (“ESOP”) was incorporated into the Plan, these additional contributions have been made in shares of Company common stock and all eligible employees, regardless of whether they make voluntary contributions to the Plan, participate pro rata, based upon their pay as a percentage of total pay for all U.S. employees. Effective January 1, 2019, the ESOP feature was replaced by the inclusion of Company common stock as an investment option under the 401(k) Plan. Our executive officers who are employed by Enovation Controls participate in a separate 401(k) plan with generally similar provisions, except that Enovation Controls matches 100% of the first 2% contributed by the employee and 50% of the next 5%. Employer matching contributions and any profit-sharing contributions by the employer, which are discretionary, vest over a three year period — 33% after one year, 67% after two years, and 100% after three years.

Special Shared Distribution.  DistributionAs part of. Between 2008 and 2016, on a discretionary basis, the Company’s culture andCompany employed a “shared distribution” as a means of maintaining a highly productive workforce to sustain its growth and profitability, the Company believes it is important to share its success with both employees and shareholders.  In furtherance of this philosophy, in May 2008, the Company declared its first “shared distribution,” comprised ofprofitability. To accompany a special cash dividend to shareholders, and concurrent contributions for employees equal to a percentage of their wages.  Similar specialwages were made, primarily into subsidiary-level retirement plans. In the first and fourth quarters of 2018,across-the-board, profit-sharing cash bonuses were paid to all hydraulics employees, including executive officers. In March 2018, the Board concluded that, at this stage in the Company’s evolution, there no longer was a need for the shared distribution dividends were paid in each subsequent year, based upon prior year financial results, except for 2010, because of the poor economy and its impact on the Company’s 2009 financial performance.  In February 2017, based on its 2016 revenues and profitability, the Company declared a special cash dividend of $0.02 per share towith shareholders and made contributions for employees worldwide (primarily in the form of Company stock into qualified retirement accounts) equal to 2.0% of their 2016 wages.  as historically employed.

Other Compensation. We do not use other forms of compensation on a regular basis. Cash and equity bonuses have been used periodically to reward significant and unusual contributions. Because of the broad responsibilities given to employees and the encouragement of individual initiative, we have educational assistance policies for all employees, including executive officers. Educational assistance has been given to executive officers in the past for graduate study leading to masters and other degrees, and more specialized training, including management training at the Harvard Business School. Senior management participates in our benefit plans on the same terms as other employees. These plans include medical and dental insurance, group life insurance, and charitable gift matching. Under our employee stock purchase

plan, approved by the shareholders in 2001, U.S. employees including executive officers may purchase shares of Company common stock at a discount of 15% from market price on the first or last day of the quarterly purchase period, whichever is lower, on atax-favored basis under Section 423 of the Internal Revenue Code. Along with the Sun Hydraulics global workforce, each of the NEOs (except Ms. McPeak), in March 2018, received a cash bonus in a net amount of $600 (plus applicable taxes) and, in December of 2018, received a payment equal to 1.5% of his or her 401(k) eligible earnings in cash, plus applicable taxes. The Board also determined that in recognition of strong performance in 2018, Sun Hydraulics’ domestic and foreign employees, including NEOs, would be eligible for a 3% bonus into their retirement plans. This bonus was paid in March 2019.

We provide only limited perquisites and other personal benefits.

Risks Arising from Compensation Policies and Practices. We dohave not frequently useused cash bonuses or includeincluded short-term incentives in our compensation program. Therefore, the Board has determined that its compensation policy and practices do not motivate imprudent risk-taking or encourage Company leaders to make decisions that might be beneficial in the short term at the expense of creating long-term Company value. The Company’s long-term compensation program, as described above, relies on general criteria that are not primarily focused on the achievement of short-term objectives but, rather, what is in the long-term best interest of the Company. The equity awards granted under the program are generally determined towards the end of the year, although for 2016 theyyear. For 2018, awards were granted at the first compensation committeea special Compensation Committee meeting held for that purpose after the end of the fiscal year. MostHistorically, awards arehave been “time based” so that, to earn the full award, an employee must remain in our employ for one or more years. The shared distribution dividend introduced in 2008 is entirely discretionary with the Board of Directors and, when declared, is by its nature long-term because it rewards most employees through a contribution into their retirement accounts rather than through cash bonuses.

We had a 89.78%91.82% favorable advisory vote on our executive compensation program at our 20162018 Annual Meeting. The Committee reviewed these results and intends to continue following the above principles and practices.

2016 Executive CompensationOur Confidentiality and Insider Trading Policy prohibits our directors, officers and employees and their designees from entering into hedging transactions or other financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or offset any decrease in the market value of the Company’s securities.

At its September 2016 meeting,

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Shareholder Engagement and Say on Pay

In 2018, we enhanced our shareholder engagement process, proactively reaching out during over five hundred meetings with investors throughout the year. During these interactions, we discussed our executive compensation programs, corporate governance and other issues. We gathered feedback from our investors and also shared the feedback with management and the full Board.

Shareholders have demonstrated strong support for oursay-on-pay proposals in recent years, but we continue to seek shareholder feedback on our compensation program to ensure it aligns with shareholder interests and supports the long-term strategy of the Company. As a result, the Compensation Committee reviewedelected to perform a comprehensive review of our compensation program in 2018. As discussed more fully below, the compensation study and financialrecommendations for changes to our 2019 compensation practices are intended to more fully align shareholder expectations with respect to executive compensation and company performance. These changes were effective as of the beginning of our 2019 fiscal year.

2019 Compensation Philosophy and Compensation Program Changes

In 2018, the Compensation Committee engaged Mercer as an independent compensation consultant to conduct a review of our compensation philosophy and the competitiveness of the named executive officers’ current compensation levels. The review was focused on strengthening the Company’s executive pay philosophy to provide market competitive pay and to link compensation to performance, including the contribution each executive makes to the overall business objectives and corporate success. Thus, the Company’s compensation program seeks to align executive pay with the market median (50^th percentile), executive and Company performance and business objectives in order to retain key talent and reward high-performing executives to maintain a strong management team.

The review also assessed the methodology we use to set executive pay, and to ensure that our pay levels are consistent with the market. The review included a detailed evaluation of the compensation program, including base salary, short-term incentive (“STI”) opportunity, long-term incentive (“LTI”) opportunity, target total cash compensation, and target total direct compensation for the named executive officers. The review found that base salaries, short-term incentives and target total cash compensation were below the 50^th percentile for the CEO, CFO and other named executive officers. Long-term incentives were slightly above market, which improves overall positioning of target total direct compensation compared to market. Based on this review, the Company will be moving to align executive pay more closely with the 50^th percentile of its market peers over the past several years. Atnext few years, both in the Committee’s request, the chieflevel and structure of its compensation.

Mercer’s review compared our executive officer, who assumed his position in April 2016, presented his views and proposal for a modified approach to long-term compensation to further align the leaders of the Company with its strategic vision and its financial performance.  Following discussion with senior operational and human resources leaders, he cameprogram to the conclusionmarket using Mercer’s proprietary survey database as well as public company proxy data, including publicly-traded, similarly sized companies in our industry. Mercer evaluated peer company appropriateness by auditing the ISS peer group, companies provided by Helios, and S&P CapIQ’s database of publicly-traded U.S. Companies, based on their revenue size, industry, other financial and organizational measures, and business model/footprint to determine if they accurately describe the Company’s market for executive talent. A peer group was compiled of companies with revenue between .5x to 2x that for many (particularly younger) employees, cash is more meaningful than stock awards due to debt repayment, medical, education and other family obligations.  Recognizing this, the chief executive officer proposed a compensation approach to better align compensation with the different segments of the Company’s global leadership structure.revenue, representing a similar industry or related industry that offer similar products, have a similar value chain, or operate within a similar geographic footprint. Data from these sources was individually matched to each executive based on title, job, functional responsibility, and business line scope where possible. The size of eachpeer group will varybe used to assess executive pay competitiveness, inform subsequent pay decisions, and shape the future design of the STI and LTI plans.

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The peer group identified in late 2018 to set 2019 compensation included the following companies:

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In addition, for 2019, we have made several significant changes to our short- and long-term incentive plans and pay mix to enhance thepay-for-performance link and align with market practices, as noted in the following table and discussed in more detail below:

2019 Incentive Plan Changes

Beginning in 2019, the STI and LTI plans will strive to align with market practice and enhance thepay-for-performance link. On February 22, 2019, the Compensation Committee of the Board approved a new Executive Compensation Plan (“ECP”). The ECP sets forth the elements of executive compensation to be base salary, STI, LTI, and benefits. As described more fully below, the STI and LTI elements of the program are specifically designed to align pay directly to Company performance.

Short Term Incentive

Beginning in 2019, our STI program will aim to harmonize the bonus structure across corporate and subsidiaries as well as enhance ourpay-for-performance relationship by increasing the program’s alignment with our communicated financial goals and improving the clarity of our plan’s objectives for our employees and shareholders. Cash bonuses under the 2019 STI will

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be based on objective measures that are designed to drive our overall Company and subsidiary financial results. The STI payouts will be based on an objective formula with preset financial targets. For 2019, the primary financial performance goals are adjusted EBITDA, adjusted free cash flow (FCF) and revenue. These measures were selected because we believe they are the principal financial drivers to achieving our objectives under Vision 2025. In addition to these financial targets, the 2019 STI also has an overall Company net income level target that must be met for our executives to receive a payout. No awards will be granted if the Company does not achieve thepre-established minimum net income level. Also, to improve the clarity of the plan’s objectives, the Committee will determine payouts based on an objective formula with threshold, target and maximum performance levels. Under the 2019 STI, Compensation Committee discretion will be limited to eliminating the financial impact of certain items that do not reflect the underlying operating performance of the business. We believe the ability of the Compensation Committee to make adjustments for these items is appropriate because we believe NEO short-term incentive compensation should not be impacted by events that do not reflect the underlying operating performance of the business. In March 2019, the Compensation Committee set STI targets for each of the NEOs consistent with the recommendations set forth by the Mercer study.

Long Term Incentive

The Compensation Committee modified the 2019 LTI to include performance-based awards to align management interests with those of shareholders and with the Company’s Vision 2025. To better align with long-term value creation and market practices, the Committee decided to reduce the weighting on time-vested restricted stock units that vest pro rata over time,three years from 100% to 50% of the equity awards. The remaining 50% of the awards will be in the form of performance-based restricted stock units which cliff vest after three years based upon performance achievement against threshold, target and maximum performance levels achieved over a three year performance period. For 2019, the Company’s needsmeasures are adjusted EBITDA margin (40%), adjusted EPS (40%) and individual contributions, rather than by reference to any hieratical structure or organizational chart.  

revenue compound annual growth rate (20%). For executive officers employed within a subsidiary, the key global leadership group, currently less than 10, restricted stock awards, as in the past,LTI measures will continue to be the primary source of long-term compensation.  For the Company’s key employees, approximately 30 currently, some discretion is providedtied to the individual whether to receive an award in stock or in cash.  As partsame metrics but for subsidiary level performance.

In March 2019, the Board of the implementationDirectors adopted a new comprehensive equity incentive plan. The purpose of the new program, for several dozen upcoming and future leaders, salaries will be increased in an amount equal to 25% of their 2015 long-term compensation awards.  This provides an immediate salary increase and also a continuing benefit in that future cost-of-living and performance increases,plan, as well as 401(k) matching contributions and shared dividend distributions, are based on the increased salary amount.  

In December 2016, the Committee again met with the chief executive officer2011 Equity Plan, is to review his recommendations for salary adjustments for the executive officers other than himselfattract, retain, and special bonuses for a broader group of key leaders for their hard work, diligence and contributions to the acquisition of Enovation Controls and other strategic initiatives.  After discussionmotivate excellent employees, in alignment with the chief executive officer, the Committee approved a $30,000 bonus for CFO Tricia L. FultonCompany’s long-term strategy, and the following salary increases for the executive officers, other than the chief executive officer:

At its December 2016 meeting, the Committee also continued its prior discussions regarding the benefits of using restricted stock as part of the incentive and long-term compensation (“LTC”) program.  While the benefits include quarterly dividends and long-term gain through share price appreciation, thereby aligning to align more fully the interests of employees, consultants, officers and Directors with those of the Company’s other stakeholders, the use of restricted shares has also presented challenges, includingshareholders by giving them a lack of transparency, up-front tax payment and the inflexibility of a “one size fits all” approach.  The Committee discussed further with the chief executive officer his restructured approach for more effective use of equity awards to achieve the Company’s strategic objectives.  There was agreement that, aspersonal interest in the past, the key global leaders would be eligible to receive restricted stock grants (“RSGs”) that would be awarded to reflect achievements in meeting the Company’s financial goals and strategic objectives.  The chief executive officer emphasized the importance of transparency in the program, including who was eligible to receive RSGs and a process for notification of awards, including the recipients themselves, their supervisors and the entire organization.  For the Company’s key employees, a cash option will be offered at a reduced valuation and discounted according to the time of payment.  Approximately 30 individuals who received LTC awards in 2015 but would not receive them going forward will receive a one-time cash payment equivalent to approximately 25% of their prior awards.  Following the departure of the chief executive officer from the meeting, the Committee discussed further the size of the long-term compensation pool and timing of awards, which would be deferred until early 2017.

At meetings in February and March 2017, the Committee further discussed and, on March 3, 2017, finalized, its incentive and long-term compensation awards, including grants of restricted shares of Company stock to the current executive officers and those who served as executive officers in 2016, as follows:

The value of the share awards represents the aggregate grant date fair market valueCompany’s Common Stock. Please see Proposal 4 – “Approval of the restricted stock, based on the closing market price as2019 Equity Incentive Plan” at page 36.

Deductibility of the date of grant.  The shares are subject to divestiture ratably over three years.Compensation

Tax and Accounting Implications

Section 162(m) of the U.S. Internal Revenue Code limits(the “Code”) places a limit on the tax deduction to $1.0deductibility of compensation in excess of $1 million for compensation paid to certain “covered employees” of a publicly held corporation (generally, the corporation’s keyprincipal executive officer, principal financial officer and its next three most highly compensated executive officers unless certain requirements are met, includingin the year that the compensation qualify asis paid). Prior to the adoption of the Tax Cuts and Jobs Act (the “Tax Reform”), this limitation only applied to compensation that was not considered performance-based under the Section 162(m) rules. The Tax Reform repealed this exception for performance-based compensation. WhileWe generally structure our compensation programs, where feasible, to minimize or eliminate the Compensation Committeeimpact of the limitations of Section 162(m) of the Code when we believe such payments are appropriate, after taking into consideration changing business conditions or the officer’s performance. However, nondeductible compensation in excess of this limitation may from time to time approve awards which would vest upon the passage of time or other compensation which would not result in qualification of those awards as performance-based compensation, it is not anticipated that compensation realized by any executive officer under any of our plans now in effect will result in a material loss of tax deductions.be paid.

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

COMPENSATION COMMITTEE

Douglas M. Britt, Chair

Marc Bertoneche

Christine L. Koski

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