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 Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
EMERSON RADIO CORP.
------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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
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[ ] 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:
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EMERSON RADIO CORP.
NINE ENTIN ROAD
P.O. BOX 430
PARSIPPANY, NEW JERSEY 07054-0430
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 4, 2003
Dear Stockholder:
As a stockholder of Emerson Radio Corp. ("we", "our" or "Emerson"), you
are hereby given notice of and invited to attend in person or by proxy Emerson's
2003 Annual Meeting of Stockholders to be held at the LaCima Club, The Tower at
Williams Square, Suite 2600, 5215 North O'Connor Road, Irving, Texas 75039 on
Thursday, September 4, 2003 at 1:00 p.m. (local time).
At this year's stockholders' meeting, you will be asked to elect five
directors to serve for a one-year term and to transact such other business as
may properly come before the meeting and any adjournment(s) thereof. The Board
of Directors unanimously recommends that you vote FOR the directors nominated.
Accordingly, please give careful attention to these proxy materials.
Only stockholders of record of Emerson's common stock as of the close
of business on July 29, 2003 (the "Record Date") are entitled to notice of and
to vote at such meeting and any adjournment(s) thereof. Emerson's transfer books
will not be closed.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, WE WANT TO HAVE THE MAXIMUM REPRESENTATION
AT THE ANNUAL MEETING AND RESPECTFULLY REQUEST THAT YOU DATE, EXECUTE AND MAIL
PROMPTLY THE ENCLOSED PROXY CARD IN THE ENCLOSED STAMPED ENVELOPE FOR WHICH NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. You may revoke
your proxy at any time prior to its use as specified in the enclosed proxy
statement.
By Order of the Board of Directors
ELIZABETH J. CALIANESE
Senior Vice President-Human Resources,
General Counsel and Secretary
Parsippany, New Jersey
July 29, 2003
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED HEREIN.
2
EMERSON RADIO CORP.
NINE ENTIN ROAD
P.O. BOX 430
PARSIPPANY, NEW JERSEY 07054-0430
---------------------
PROXY STATEMENT
---------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 4, 2003
---------------------
TO OUR STOCKHOLDERS:
This Proxy Statement is furnished to our stockholders for use at our
Annual Meeting of Stockholders to be held at the LaCima Club, The Tower at
Williams Square, Suite 2600, 5215 North O'Connor Road, Irving, Texas 75039, on
September 4, 2003 at 1:00 p.m. (local time), or at any adjournment or
adjournments thereof (the "Annual Meeting"). Emerson's stockholders of record as
of the close of business on July 29, 2003 (the "Record Date") are entitled to
vote at the Annual Meeting. We expect to begin mailing this Proxy Statement and
the enclosed proxy card to our stockholders on or about August 1, 2003.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The accompanying proxy card is designed to permit each of our
stockholders as of the Record Date to vote on each of the proposals properly
brought before the Annual Meeting. As of the Record Date, there were
27,562,860 shares of our common stock, par value $.01 per share, issued and
outstanding and entitled to vote at the Annual Meeting. Each outstanding share
of our common stock is entitled to one vote.
The holders of a majority of our outstanding shares of common stock,
present in person or by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. If a quorum is not present, the Annual Meeting
may be adjourned from time to time until a quorum is obtained. Shares as to
which authority to vote has been withheld with respect to the election of any
nominee for director will not be counted as a vote for such nominee. Abstentions
and broker non-votes are counted as stockholders who are present and entitled to
vote and they count toward a quorum but are not taken into account in
determining, and have no effect on, the outcome of the election of directors. A
broker non-vote occurs when a 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 proposal and has not received
instructions from the beneficial owner (despite voting on at least one other
proposal for which the nominee does have discretionary authority or for which it
has received instructions). Brokers holding shares
3
of record for customers generally are not entitled to vote on certain
"non-routine" matters unless they receive voting instructions from their
customers.
The accompanying proxy card provides space for you to vote in favor of,
or to withhold voting for, the nominees for the Board of Directors. The members
of our Board of Directors are elected by plurality and the five nominees who
receive the most votes will be elected. The Board of Directors urges you to
complete, sign, date and return the proxy card in the accompanying envelope,
which is postage prepaid for mailing in the United States.
When a signed proxy card is returned with choices specified with
respect to voting matters, the proxies designated on the proxy card vote the
shares in accordance with the stockholder's instructions. The proxies we have
designated for the stockholders are Geoffrey P. Jurick and Kenneth A. Corby. If
you desire to name another person as your proxy, you may do so by crossing out
the names of the designated proxies and inserting the names of the other persons
to act as your proxies. In that case, it will be necessary for you to sign the
proxy card and deliver it to the person named as your proxy and for the named
proxy to be present and vote at the Annual Meeting. Proxy cards so marked should
not be mailed to us.
If you sign your proxy card and return it to us and you have made no
specifications with respect to voting matters, your shares will be voted for the
election of the five nominees for director and, at the discretion of the proxies
designated by us, on any other matter that may properly come before the Annual
Meeting or any adjournment(s).
You have the unconditional right to revoke your proxy at any time prior
to the voting of the proxy by taking any act inconsistent with the proxy. Acts
inconsistent with the proxy include notifying Emerson's Secretary in writing of
your revocation, executing a subsequent proxy, or personally appearing at the
Annual Meeting and casting a contrary vote. However, no revocation shall be
effective unless at or prior to the Annual Meeting we have received notice of
such revocation.
ELECTION OF DIRECTORS
Five directors are proposed to be elected at the Annual Meeting. If
elected, each director will hold office until the next Annual Meeting of our
stockholders or until his successor is elected and qualified. The election of
directors will be decided by a plurality vote.
All nominees named in this proxy statement are members of our present
Board of Directors and have consented to serve if elected. We have no reason to
believe that any of the nominees named will be unable to serve. If any nominee
becomes unable to serve, (i) the shares represented by the designated proxies
will be voted for the election of a substitute as the Board of Directors may
recommend, (ii) the Board of Directors may reduce the number of directors to
eliminate the vacancy, or (iii) the Board of Directors may fill the vacancy at a
later date after selecting an appropriate nominee.
4
Nominations for election to the Board of Directors may be made by the
Board of Directors, a nominating committee appointed by the Board of Directors
or by any stockholder entitled to vote for the election of directors.
Nominations, other than those made by or on behalf of the Board, shall be in
writing and shall be delivered to our President or Chairman of the Board not
less than 20 days prior to the applicable meeting, and must set forth as to each
proposed nominee, to the extent known by the notifying stockholder: (a) the name
and address of each nominee proposed in such notice; (b) the principal
occupation or employment of each such nominee; (c) the total number of shares of
our common stock that will be voted for each such nominee; (d) the name and
residence address of the notifying stockholder; (e) the number of shares of our
common stock owned by the notifying shareholder; and (f) all other information
concerning the nominee that must be disclosed of nominees in proxy solicitations
pursuant to Rule 14(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Any such recommendation must be accompanied by a written
statement from the individual nominee giving his or her consent to be named as a
candidate and, if nominated and elected, to serve as a director.
The current Board of Directors nominated the individuals named below
for election to our Board of Directors and background information on each of the
nominees (as of July 25, 2003) is set forth below. See "Security Ownership of
Certain Beneficial Owners and Management" for additional information about the
nominees, including their ownership of securities issued by the Company.
Year
First
Became
Name Age Director Principal Occupation or Employment
---- --- -------- -----------------------------------------
Robert H. Brown, Jr. 49 1992 Since September, 2002, Managing Partner of
Crosswind Partners LLC, a merchant banking
firm; from January 1999 to August, 2002,
President and Chief Executive Officer of
Frost Securities, Inc., an investment
banking firm; from July 1998 to January
1999, President of RHB Capital, LLC; from
January 1990 to July 1998, held a variety of
positions with Dain Rauscher, formerly
Rauscher Pierce Refsnes, Inc., including
Senior Vice President and Director of the
Corporate Finance Department and Executive
Vice President of Capital Markets; from
April 1996 to March 2003, a Director of
Claimsnet.com, which is traded on the Nasdaq
Stock Market.
Peter G. Bunger 62 1992 Since 1990, a consultant with Savarina AG,
an entity engaged in the business of
portfolio management monitoring in Zurich,
Switzerland; since October 1992, a Director
of Savarina AG; since December 1996, a
Director of Sport Supply Group, Inc.
("SSG"), which is quoted on the over the
counter bulletin board (OTC: SSPY); and,
since 2002, an independent consultant for
Emerson's
5
manufacturing efforts in Europe.
As of July 29, 2003, Emerson beneficially
owned approximately 53.2% of the issued and
outstanding common shares of SSG. See
"Certain Relationships and Related
Transactions - Relationship with Sport
Supply Group, Inc".
Jerome H. Farnum 67 1992 Since July 1994, an independent consultant.
Stephen H. Goodman 59 1999 Since September 2000, Chairman, President,
Chief Executive Officer and a Director of
Singer, N.V. ("Singer"); from January 1998
to September 2000 was President, Chief
Executive Officer and a Director of The
Singer Company, N.V. ("Old Singer"); is also
a director and officer of a number of
Singer's affiliates and subsidiaries; from
March 1986 to December 1997, held a variety
of positions with Bankers Trust Company,
including Managing Director, Corporate
Strategy, New York and Managing Director,
Strategic Advisory and Mergers &
Acquisitions Business, Asia. On September 6,
1999, GM Pfaff A.G., then a subsidiary of
Old Singer, filed a voluntary petition for
relief under the reorganization provisions
of the German Bankruptcy Code, in the lower
court of Kaiserslautern, Germany. On
September 12 and 13, 1999, Old Singer and
its U.S. subsidiaries and the holding
companies for its foreign businesses, and a
number of Old Singer's foreign operating
subsidiaries, filed voluntary petitions for
relief under the reorganization provisions
of the United States Bankruptcy Code, in the
United States District Court for the
Southern District of New York. Singer
emerged from bankruptcy on September 14,
2000.
Geoffrey P. Jurick 62 1990 Since July 1992, Chief Executive Officer of
Emerson; since December 1993, Chairman;
since April 1997, President; since December
1996, Director and Chairman of the Board of
Directors of SSG and, since January 1997,
Chief Executive Officer of SSG. See "Certain
Relationships and Related Transactions".
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of July 29, 2003, the beneficial
ownership of (i) each current director; (ii) each of our executive officers
named in the Summary Compensation Table ("executive officers"); (iii) our
directors and executive officers as a group and (iv) each stockholder known by
us to own beneficially more than 5% of our outstanding shares of common stock.
The address of each of the following beneficial owners is c/o Emerson Radio
Corp., 9 Entin Road, Parsippany, New Jersey 07054.
Amount and Nature of
Name and Address of Beneficial Owners Beneficial Ownership (1) Percent of Class (1)
------------------------------------- ------------------------ ---------------------
Geoffrey P. Jurick (2)* 10,475,100 36.8%
Robert H. Brown, Jr. (3)* 50,000 **
Peter G. Bunger (3)* 50,000 **
Jerome H. Farnum (3)* 20,000 **
Stephen H. Goodman (3)* 25,000 **
John J. Raab (4) -0- -0-
Kenneth A. Corby (4) 131,766 **
Patrick Murray -0- -0-
Elizabeth J. Calianese (4). 50,000 **
All Directors and Executive 10,801,866 38.0%
Officers as a Group (9 persons) (5)
-----------------------------
(*) Director (all current directors are nominees for director).
(**) Less than one percent.
(1) Based on 27,562,860 shares of common stock outstanding as of July
29, 2003. Each beneficial owner's percentage ownership of common stock is
determined by assuming that options and other convertible securities that are
held by such person (but not those held by any other person) and that are
exercisable or convertible within 60 days of July 29, 2003 have been exercised
or converted. Except as otherwise indicated, the beneficial ownership table does
not include common stock issuable upon exercise of outstanding options, which
are not currently exercisable within 60 days of July 29, 2003. Except as
otherwise indicated and based upon our review of information as filed with the
U.S. Securities and Exchange Commission ("SEC"), we believe that the beneficial
owners of the securities listed have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
(2) Mr. Jurick's beneficial ownership consists of 9,875,100 shares of
common stock directly owned by him, of which 4,188,975 shares of common stock
are beneficially held by Mr. Jurick pursuant to the Order and Opinion, both
dated March 27, 2003. See "Certain Relationships and Related Transactions -
7
Certain Outstanding Common Stock". Also includes options held by Mr. Jurick to
purchase 600,000 shares of common stock that are exercisable within 60 days of
July 29, 2003.
(3) Comprised of options issued pursuant to Emerson's 1994 Non-Employee
Director Stock Option Plan that are exercisable within 60 days of July 29, 2003
and 11,667 shares of common stock held by Mr. Farnum as a result of his
exercise of stock options on October 16, 2002 pursuant to such Plan.
(4) Comprised of options issued pursuant to Emerson's 1994 Stock
Compensation Program that are exercisable within 60 days of July 29, 2003. Also
includes 40,100 shares owned by Mr. Corby.
(5) Includes 874,999 shares of common stock issuable upon exercise of
options that are exercisable within 60 days of July 29, 2003. Excludes options
to purchase an aggregate of 8,334 shares of common stock that are not
exercisable within 60 days of July 29, 2003.
BOARD OF DIRECTORS AND COMMITTEES
Our business is managed under the direction of our Board of Directors.
The Board of Directors meets periodically during our fiscal year to review
significant developments affecting Emerson and to act on matters requiring Board
of Director approval. The Board of Directors held nine (9) formal meetings
during the fiscal year ended March 31, 2003 ("Fiscal 2003") and acted by
unanimous written consent two (2) times. During Fiscal 2003, each member of the
Board of Directors participated in at least 75% of all Board of Director
meetings and all committee meetings held during the period.
During Fiscal 2003, our Board of Directors had an Audit Committee,
Compensation and Personnel Committee and Executive Committee to devote attention
to specific subjects and to assist the Board of Directors in the discharge of
its responsibilities. The functions of these committees and their current
members are described below.
Audit Committee. During Fiscal 2003, our Audit Committee was comprised
of Messrs. Farnum (Chairman), Brown and Goodman. The Audit Committee is
empowered by the Board of Directors to, among other things: serve as an
independent and objective party to monitor the Company's financial reporting
process, internal control system and disclosure control system; review and
appraise the audit efforts of the Company's independent accountants; assume
direct responsibility for the appointment, compensation, retention and oversight
of the work of the outside auditors and for the resolution of disputes between
the outside auditors and the Company's management regarding financial reporting
issues; and provide the opportunity for direct communication among the
independent accountants, financial and senior management, and the Board. During
Fiscal 2003, the Audit Committee formally met five (5) times and acted by
unanimous written consent one (1) time. For additional information concerning
our Audit Committee, see "Report of Audit Committee".
Compensation and Personnel Committee. Our Compensation and Personnel
Committee is presently comprised of Messrs. Brown (Chairman), Bunger and Farnum.
The Committee (i) makes recommendations to the Board of Directors concerning
remuneration arrangements for senior executive management; (ii) administers our
1994 Stock Compensation Program; and (iii) makes such reports and
recommendations, from
8
time to time, to the Board of Directors upon such matters as the committee may
deem appropriate or as may be requested by the Board of Directors. During Fiscal
2003, the Compensation Committee did not meet, but met in April 2003. See
"Executive Compensation and Other Information--Report of Compensation and
Personnel Committee".
Executive Committee. Our Executive Committee is presently comprised of
Messrs. Brown, Bunger, Farnum and Jurick (Chairman). Mr. Goodman is an alternate
Committee member. Subject to the provisions of our By-Laws, the Executive
Committee has all of the power and authority of the Board of Directors with
certain exceptions. During Fiscal 2003, the Executive Committee did not meet.
The Board of Directors did not have a standing nominating committee, or
any other committee performing similar functions during Fiscal 2003. Our Board
of Directors, as a whole, performed the functions customarily attributable to a
nominating committee.
COMPENSATION OF DIRECTORS
In Fiscal 2003, our directors who were not employees were entitled to
be paid annual director's fees up to $12,500; members of the Compensation and
Personnel Committee were entitled to be paid an additional $5,000; members of
the Executive Committee, who were not employees, were entitled to be paid an
additional $5,000; and members of the Audit Committee were entitled to be paid
an additional $7,500. Accordingly, during Fiscal 2003, Messrs. Brown, Bunger,
Farnum and Goodman received $30,000, $20,000, $27,500 and $25,000, respectively.
All compensation paid to our Directors is paid in quarterly installments.
Directors who are our employees are not paid for their services as a director.
Additionally, each director, who is not an employee, is eligible to participate
in our 1994 Non-Employee Director Stock Option Plan. Directors of the Company
are reimbursed their expenses for attendance at meetings. In Fiscal 2003, Mr.
Bunger also received $28,000 in fees for the European manufacturing consulting
services he rendered to Emerson.
OFFICERS
The following table sets forth certain information regarding the
current officers of the Company:
9
Name Age Position Fiscal Year Became Officer
---- --- -------- --------------------------
Geoffrey P. Jurick 62 Chairman of the Board, Chief 1992
Executive Officer and
President, Director
John J. Raab 67 Senior Executive Vice 1995
President and Chief
Operating Officer
Kenneth A. Corby 42 Executive Vice President - 2000
Finance and Chief Financial
Officer
Patrick Murray 52 President, Emerson Radio 2001
Consumer Products Corporation
Elizabeth J. Calianese 45 Senior Vice President - 1995
Human Resources, General
Counsel and Corporate
Secretary
Paul R. Gullett 64 Senior Vice President - 2000
International; President -
Emerson Radio (Hong Kong)
Limited
GEOFFREY P. JURICK has served as Director since September 1990, President since
April 1997, Chief Executive Officer since July 1992, and Chairman since December
1993. Since December 1996, Mr. Jurick has served as a Director and Chairman of
the Board of SSG and, since January 1997, Chief Executive Officer of SSG. See
"Election of Directors."
JOHN J. RAAB has served as Chief Operating Officer and Senior Executive Vice
President - International since May 2003, Executive Vice President -
International from June 2000 to May 2003, Senior Vice President - International
from October 1997 to June 2000 and Senior Vice President-Operations from October
1995 to October 1997.
KENNETH A. CORBY has served as Executive Vice President - Finance and Chief
Financial Officer since April 2001, as Senior Vice President - Finance from June
2000 to April 2001, as Assistant Chief Financial Officer from March 1997 to
March 2000 and as Manager - Finance from May 1996 to March 1997. Since September
1997, Mr. Corby has served as Vice President - Corporate Development of SSG.
PATRICK MURRAY has served as President of Emerson Radio Consumer Products
Corporation since November 2002 and Senior Vice President - Sales, Emerson Radio
Consumer Products Corporation from May 2001 to November 2002. Mr. Murray served
as Executive Vice President of Motion Systems (Betesh Group) from 1997 to May
2001. Prior thereto, Mr. Murray served as Vice President - Sales and Marketing
of Emerson Radio Corp. from 1996 to 1997.
ELIZABETH J. CALIANESE has served as General Counsel and Senior Vice President -
Human Resources since June 2000 and as Secretary since January 1996. Ms.
Calianese served as Vice President-Human Resources and Deputy General Counsel
from May 1995 to June 2000.
10
PAUL R. GULLETT has served as Senior Vice President of Emerson and President -
Emerson Radio (Hong Kong) Limited since June 2000 and as a Director of Emerson
Radio (Hong Kong) Limited since 1995. Mr. Gullett also served as Managing
Director/Vice President of Emerson Radio (Hong Kong) Limited from June 1995 to
June 2000.
All officers of the Company hold office until the meeting of the directors
following the Annual Meeting of Stockholders or until their respective
successors are duly elected and qualified or their earlier resignation or
removal.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)") requires our officers and directors, and persons who own more
than 10% of a registered class of our equity securities to file reports of
ownership and changes in ownership with the SEC and the American Stock Exchange.
Officers, directors and greater than 10% stockholders are required by certain
regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by us,
we believe that, during Fiscal 2003, our officers, directors and greater than
10% beneficial owners have complied with all applicable filing requirements with
respect to our equity securities.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding
compensation paid to our Chief Executive Officer and each of our other four most
highly compensated executive officers (based on salary and bonus earned during
Fiscal 2003) for services rendered in all capacities to us during the 2003, 2002
and 2001 fiscal years:
11
SUMMARY COMPENSATION TABLE
SECURI-
OTHER TIES ALL
ANNUAL UNDER- OTHER
NAME AND PRINCIPAL FISCAL COMPEN- LYING COMPEN-
POSITION(S) YEAR SALARY BONUS SATION(1) OPTIONS SATION(2)
----------- ---- ---------- --------- --------- ------- ---------
GEOFFREY P. JURICK 2003 $ 411,600 $ 313,000 $ 60,821 --- $ 3,352
CHAIRMAN OF THE 2002 411,600 88,000 61,291 --- 3,905
BOARD, CHIEF 2001 411,600 88,000 61,463 --- ---
EXECUTIVE OFFICER
AND PRESIDENT (1)
JOHN J. RAAB 2003 257,500 150,000 --- --- 17,744
SENIOR EXECUTIVE VICE 2002 250,000 100,000 --- --- 17,728
PRESIDENT AND CHIEF OPERATING 2001 210,000 100,000 --- 50,000 13,659
OFFICER (3)
KENNETH A. CORBY 2003 236,900 175,000 --- --- 22,733
EXECUTIVE VICE PRESIDENT, CHIEF 2002 230,000 125,000 --- 25,000 24,895
FINANCIAL OFFICER (1) (3) 2001 175,000 125,000 --- --- 22,965
PATRICK MURRAY 2003 360,000 75,000 --- --- 23,897
PRESIDENT - EMERSON 2002 276,923 50,000 --- --- 16,017
RADIO CONSUMER 2001 --- --- --- --- ---
PRODUCTS
CORPORATION
ELIZABETH J. CALIANESE 2003 206,000 95,000 --- --- 23,930
SENIOR VICE PRESIDENT, GENERAL 2002 200,000 65,000 --- --- 16,803
COUNSEL AND CORPORATE SECRETARY 2001 175,000 65,000 --- --- 14,567
(1) Other annual compensation consists of temporary lodging expenses. In
Fiscal 2003, Mr. Jurick also received $275,000 in salary for the
services he rendered to SSG. Pursuant to the management services
agreement between Emerson and SSG as described below, in Fiscal 2001,
Fiscal 2002 and Fiscal 2003, Emerson charged SSG $96,250, $100,000 and
$100,000, respectively, for the services Mr. Corby provided to SSG.
(2) All other compensation consists of Emerson's contribution to our 401(k)
employee savings plan, group health, life insurance, disability
insurance, auto allowances and country club fees.
(3) In July 2000, our Board of Directors granted stock options to Mr. Raab
to purchase an additional 50,000 shares of common stock, at an exercise
price of $1.00 per share. In April 2001, Mr. Corby was granted stock
options to purchase additional 25,000 shares of common stock at an
exercise price of $1.50 per share. Pursuant to our Stock Compensation
Plan, these options vest in equal installments over 3 years, commencing
one year from the date of grant, and their exercise is contingent on
continued employment with Emerson.
OPTION GRANTS DURING 2003 FISCAL YEAR
There were no options granted in Fiscal 2003 to the named executives identified
in the Summary Compensation Table.
12
OPTION EXERCISES DURING FISCAL 2003 AND FISCAL 2003 YEAR END VALUES
The following table provides information related to options exercised
by our executive officers during Fiscal 2003 and the number and value of options
held at the end of Fiscal 2003 by our executive officers. We do not have any
outstanding stock appreciation rights.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END AT FY-END
ACQUIRED VALUE (#) ($)(1)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
------------------------- ----------- -------- --------------- ----------------
Geoffrey P. Jurick --- --- 600,000/0 $ 3,468,000/$ 0
John J. Raab --- --- 83,333/16,667 $489,998/$98,002
Kenneth A. Corby --- --- 83,333/16,667 $485,832/$89,668
Patrick Murray --- --- --- ---
Elizabeth J. Calianese --- --- 43,333/6,667 $254,798/$39,202
(1) The closing price for our common stock as reported by the American Stock
Exchange on March 31, 2003 was $6.88. Value is calculated on the basis of the
difference between $6.88 and the option exercise price of "in the money"
options, multiplied by the number of shares of our common stock underlying the
option.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about our common stock that may
be issued upon the exercise of options and rights under our 1994 Stock
Compensation Program and 1994 Non-Employee Director Stock Option Plan and
exercise of warrants, as of March 31, 2003 (the "Plans"). The Plans are the only
equity compensation plans in existence as of March 31, 2003.
NUMBER OF SECURITIES TO BE WEIGHTED AVERAGE EXERCISE NUMBER OF SECURITIES
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING REMAINING AVAILABLE FOR
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND FUTURE ISSUANCE UNDER
WARRANTS AND RIGHTS RIGHTS EQUITY COMPENSATION PLANS
(a) (b) (c)
Equity compensation plans
approved by security holders 1,229,603 $1.06 629,000
--------------------------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by security holders 100,000 2.20 -0-
--------------------------------------------------------------------------------------------------------------------------
TOTAL 1,329,603 $1.15 629,000
--------------------------------------------------------------------------------------------------------------------------
CERTAIN EMPLOYMENT AGREEMENTS
Effective as of September 1, 2001, Geoffrey P. Jurick, our Chairman,
Chief Executive Officer and President, entered into three-year employment
agreements (the "Jurick Employment Agreements") with us and two of our
wholly-owned subsidiaries,
13
Emerson Radio (Hong Kong) Limited and Emerson Radio International Ltd. (formerly
Emerson Radio (B.V.I.) Ltd.) (hereinafter, collectively the "Companies"),
providing for an aggregate annual compensation of $411,600, which was increased
to $440,000 effective April 1, 2003, subject to adjustment in the event that Mr.
Jurick's employment with SSG is terminated. In the event Mr. Jurick's employment
with SSG is terminated, the salary he receives under the Jurick Employment
Agreement shall be increased by that amount of salary he was receiving from SSG
at the time his employment was terminated. In addition to his base salary, Mr.
Jurick is entitled to an annual bonus upon recommendation by the Compensation
and Personnel Committee of our Board of Directors, subject to the final approval
of our Board of Directors.
Each of the Jurick Employment Agreements grants to Mr. Jurick severance
benefits, through expiration of the respective terms of each of such agreements,
commensurate with Mr. Jurick's base salary, on the condition that his employment
is terminated due to permanent disability, without cause or as a result of
constructive discharge (as defined therein). In the event that Mr. Jurick's
employment terminates due to termination for "cause", because Mr. Jurick
unilaterally terminates the agreements or for reasons other than constructive
discharge or permanent disability, Mr. Jurick shall only be entitled to base
salary earned through the applicable date of termination. The Jurick Employment
Agreements also contain non-competition provisions which require that, during
his employment and through the end of any period in which he receives severance,
Mr. Jurick (i) shall not be employed by, have any proprietary interest in or
receive any remuneration from any entity in competition with Emerson, and (ii)
shall not solicit any of Emerson's customers or clients on behalf of any of
Emerson's competitors. Similar provisions are set forth in policies that are
incorporated into each of the contracts described below.
Effective September 1, 2001, John J. Raab, Chief Operating Officer and
Senior Executive Vice President, entered into a three-year employment agreement
(the "Raab Employment Agreement") with us, providing for an annual compensation
of $250,000, which was increased to $257,500, effective April 1, 2002, and
$275,000, effective April 1, 2003. In addition to his base salary, Mr. Raab may
also receive an additional annual performance bonus to be recommended by the
Compensation and Personnel Committee of our Board of Directors, subject to the
final approval of our Board of Directors.
Effective September 1, 2001, Kenneth A. Corby, Chief Financial Officer
and Executive Vice President, entered into a three-year employment agreement
(the "Corby Employment Agreement") with us, providing for an annual compensation
of $230,000, which was increased to $236,900, effective April 1, 2002, and
$275,000, effective April 1, 2003. In addition to his base salary, Mr. Corby may
also receive an additional annual performance bonus to be recommended by the
Compensation and Personnel Committee of our Board of Directors, subject to the
final approval of our Board of Directors.
Effective September 1, 2001, Elizabeth J. Calianese, General Counsel,
Senior Vice President - Human Resources and Secretary, entered into a three-year
employment agreement (the "Calianese Employment Agreement") with us providing
for an annual
14
compensation of $200,000, which was increased to $206,000, effective April 1,
2002, and $220,000 effective April 1, 2003. In addition to her base salary, Ms.
Calianese is entitled to an annual performance bonus to be recommended by the
Compensation and Personnel Committee of our Board of Directors, subject to the
final approval of our Board of Directors. We have also agreed for the term of
the Calianese Employment Agreement and three years thereafter, to pay for and
maintain legal malpractice insurance covering Ms. Calianese for occurrences and
actions taken by her at any time prior to or during the term of such agreement
on behalf of our employees or us. We have also agreed to pay all sums, which may
be deductible amounts, not otherwise paid by such insurer.
In the event that Messrs. Jurick, Raab and Corby and Ms. Calianese,
were to be terminated due to permanent disability, without cause or as a result
of constructive discharge, the estimated dollar amount to be paid after March
31, 2003 to each such individual, based on the terms of their respective
contracts, would be $623,333, $389,583 $389,583 and $311,667, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Geoffrey P. Jurick serves as Chairman of the Board and Chief Executive
Officer of Emerson and SSG and participated in deliberations concerning senior
executive officer compensation for both companies. In Fiscal 2003, Mr. Jurick
also received $275,000 in salary for the services he rendered to SSG. Mr.
Bunger, who is a Director of Emerson and SSG, serves on the Compensation
Committees of both companies. Kenneth A. Corby serves as our Executive Vice
President and Chief Financial Officer and as Vice President - Corporate
Development of SSG. During Fiscal 2003, John P. Walker, Emerson's Executive Vice
President - Global Management, served as SSG's Director and President.
REPORT OF COMPENSATION AND PERSONNEL COMMITTEE
The Compensation and Personnel Committee of our Board of Directors (the
"Compensation Committee") oversees our senior executive compensation strategy.
The strategy is implemented through policies designed to support the achievement
of our business objectives and the enhancement of stockholder value. Our
Compensation Committee reviews, on an ongoing basis, all aspects of senior
executive compensation and its policies support the following objectives:
- The reinforcement of management's concern for enhancing
stockholder value.
- The attraction, hiring and retention of qualified executives.
- The provision of competitive compensation opportunities for
exceptional performance.
The basic elements of our senior executive compensation strategy are:
BASE SALARY. Base salaries for our senior executive
managers represent
15
compensation for the performance of defined functions and assumption of
defined responsibilities. The Compensation Committee reviews each
senior executive's base salary on an annual basis. In determining
salary adjustments, the Compensation Committee considers our growth in
earnings and revenues and the executive's performance level, as well as
other factors relating to the executive's specific responsibilities.
Also considered are the executive's position, experience, skills,
potential for advancement, responsibility, and current salary in
relation to the expected level of pay for the position. Our
Compensation Committee exercises its judgment based upon the above
criteria and does not apply a specific formula or assign a weight to
each factor considered.
ANNUAL INCENTIVE COMPENSATION. At the beginning of each year,
our Board of Directors establishes our performance goals for that year,
which may include target increases in sales, net income and earnings
per share, as well as more subjective goals with respect to marketing,
product introduction and expansion of customer base. Bonuses awarded to
executive officers are discretionary based primarily upon individual
achievement, with the exception of Mr. Murray for Fiscal 2003 who was
compensated based upon an incentive formula.
LONG-TERM INCENTIVE COMPENSATION. Our long-term incentive
compensation for management and employees consists of stock options
awarded under the 1994 Stock Compensation Program.
Our Compensation Committee views the granting of stock options as a
significant method of aligning management's long-term interests with those of
the stockholders and determines awards to executives based on its evaluation of
criteria that include responsibilities, compensation, past and expected
contributions to the achievement of our long-term performance goals. Stock
options are designed to focus executives on our long-term performance by
enabling them to share in any increases in value of our stock.
Our Compensation Committee encourages executives, individually and
collectively, to maintain a long-term ownership position in our stock. The
Compensation Committee believes this ownership, combined with a significant
performance-based incentive compensation opportunity, forges a strong link
between our executives and stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Geoffrey P. Jurick is our Chief Executive Officer, Chairman of the
Board of Directors and President. The Compensation Committee considered the
results in all aspects of our business, and Mr. Jurick's performance during
Fiscal 2003.
Mr. Jurick's annual compensation for Fiscal 2003, comprised of an
annual base salary of $411,600 and a performance bonus of $313,000, is
consistent with our Committee's targeted annual compensation level. In Fiscal
2003, Mr. Jurick also
16
received $275,000 in salary for the services he rendered to SSG. See "Summary
Compensation Table".
POLICY ON QUALIFYING COMPENSATION
Our Board of Directors has considered the potential impact of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). Section
162(m) generally provides that a publicly held company's deduction for
compensation paid to its covered employees is limited to $1 million per year,
subject to certain exceptions. Our policy is to qualify, to the extent
reasonable, our executive officers' compensation for deductibility under
applicable tax laws. However, the Board of Directors believes that its primary
responsibility is to provide a compensation program that will attract, retain
and reward the executive talent necessary to our success. Consequently, the
Board of Directors recognizes that the loss of a tax deduction could be
necessary in some circumstances.
This report is submitted by the members of the Board of Directors and
the Compensation and Personnel Committee that were in existence at the end of
Fiscal 2003.
Board of Directors Compensation and Personnel Committee
------------------ ------------------------------------
Geoffrey P. Jurick, Chairman Robert H. Brown, Jr., Chairman
Robert H. Brown, Jr. Peter G. Bunger
Peter G. Bunger Jerome H. Farnum
Jerome H. Farnum
Stephen H. Goodman
This report shall not be deemed "soliciting material" or incorporated
by reference in any filing by us under the Securities Act of 1933, as amended
(the "Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act") except to the extent that we specifically incorporate this
information by reference, and shall not otherwise be deemed filed under either
act.
REPORT OF AUDIT COMMITTEE
The Audit Committee performed its duties during Fiscal 2003 under a
written charter approved by the Board of Directors on June 9, 2000 and reviewed,
reassessed and ratified on June 22, 2001 and July 11, 2002. The Audit Committee
has reviewed the relevant requirements of the Sarbanes-Oxley Act of 2002, the
proposed rules of the SEC and the proposed new listing standards of the American
Stock Exchange regarding audit committee policies. Although some of these rules
and standards have not been finalized, the Board of Directors has adopted an
amended charter to voluntarily implement certain of the proposed rules and
standards. The Board of Directors and the Audit Committee intend to further
amend this charter, if necessary, as rules and standards are finalized by the
SEC and the American Stock Exchange to reflect changes in the proposals or
additional requirements. The amended Audit Committee Charter is attached hereto
as Annex A to this Proxy Statement.
Our common stock is listed on the American Stock Exchange and we are
governed by the listing standards of such exchange. All of the members of our
Audit
17
Committee have been determined to be "independent directors" under the listing
standards of the American Stock Exchange.
In this context, the Audit Committee has reviewed the audited
consolidated financial statements and have met and held discussions with
management and Ernst & Young, LLP, Emerson's independent auditors ("Ernst &
Young"). Management has represented to the Audit Committee that Emerson's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles. Our independent auditors are responsible for
performing an independent audit of the Company's financial statements in
accordance with auditing standards generally accepted in the United States and
for issuing a report on those financial statements. The Audit Committee is
responsible for monitoring and overseeing these processes. The Audit Committee
also discussed with the independent auditors matters required to be discussed by
Statement on Auditing Standards No. 61, which includes, among other items,
matters related to the conduct of the audit of Emerson's financial statements
among other items:
- methods to account for significant unusual transactions;
- the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and
- disagreements, if any, with management over the application of
accounting principles, the basis for which management's accounting
estimates and the disclosures in the financial statements (there were
no such disagreements).
The independent auditors also provided the Audit Committee with written
disclosures and the letter required by Independence Standards Board Standard No.
1, which relates to the auditor's independence from Emerson and its related
entities, and the Audit Committee discussed with the independent auditors their
independence. This standard further requires the auditors to disclose annually
in writing all relationships that in the auditors professional opinion may
reasonably be thought to bear on the independence, confirm their perceived
independence and engage in the discussion of independence.
Based on the Audit Committee's discussions with management and the
independent auditors, as well as the Audit Committee's review of the
representations of management and the report of the independent auditors to the
Audit Committee, the Audit Committee recommended to the Board of Directors that
Emerson's audited consolidated financial statements be included in the Annual
Report on Form 10-K for the fiscal year ended March 31, 2003 and filed with the
SEC.
The Audit Committee has selected Ernst & Young to be retained as
Emerson's independent certified public accountants to conduct the annual audit
and to report on, as may be required, the consolidated financial statements that
may be filed by Emerson with the SEC during the ensuing year.
18
AUDIT FEES AND RELATED MATTERS
Audit Fees
During Fiscal 2003, Emerson was billed approximately $253,000 by Ernst & Young
for the audit of Emerson's annual financial statements for Fiscal 2003 and for
the review of the financial statements included in Emerson's quarterly reports
on Form 10-Q filed during Fiscal 2003.
Financial Information Systems Design Implementation Fees
We were not billed for and did not receive any professional services described
in Paragraph (c)(4)(ii) of Rule 2-01 of the SEC's Regulation S-X (in general,
information technology services) from Ernst & Young during Fiscal 2003.
All Other Fees
We were billed $30,000 for non-audit services (other than non-audit services
described above) from Ernst & Young during Fiscal 2003.
OTHER MATTERS
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit services is compatible with maintaining Ernst & Young's
independence.
Of the time expended by Ernst & Young to audit Emerson's financial statement for
Fiscal 2003, less than 50% of such time involved work performed by persons other
than Ernst & Young's full-time, permanent employees.
This report is submitted by the members of the Audit Committee that were in
existence at the end of Fiscal 2003.
Members of the Audit Committee
Robert H. Brown, Jr.
Jerome H. Farnum
Stephen H. Goodman
This report shall not be deemed "soliciting material" or incorporated
by reference in any filing by us under the Securities Act or the Exchange Act
except to the extent that we specifically incorporate this information by
reference, and shall not otherwise be deemed filed under either act.
19
COMPARISON OF CUMULATIVE TOTAL RETURN
SHARE PRICE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns on
our common stock for the period April 1, 1998 to March 31, 2003, with the
cumulative total return over the same period for the American Stock Exchange and
a peer group of companies. Companies used for the peer group are Boston
Acoustics, Inc., Cobra Electronics Corp., Concord Camera Corp., Koss Corp. and
Pioneer Corporation. Cobra Electronics was added to the chart this year as
Recoton Corp. was removed due to bankruptcy filing by Recoton. In selecting
companies to be part of the peer group, we focus on publicly traded companies
that design and/or distribute consumer electronic products, which have
characteristics similar to ours in terms of one or more of the following: type
of product, distribution channels, sourcing or sales volume. The comparison
assumes the investment of $100 in our common stock on April 1, 1998 and
reinvestment of all dividends. The information in the graph was provided by
Media General Financial Services.
COMPARISON OF CUMULATIVE TOTAL RETURN OF
EMERSON RADIO CORP., PEER GROUP INDEX AND BROAD MARKET
INDEX
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 1998 1999 2000 2001 2002 2003
EMERSON RADIO CORP. 100.00 171.43 171.43 297.14 294.86 1,572.57
PEER GROUP INDEX 100.00 113.14 192.25 161.42 123.19 132.03
AMEX MARKET INDEX 100.00 94.63 133.82 112.89 111.97 106.93
THE PEER GROUP INDEX IS MADE UP OF THE FOLLOWING SECURITIES:
BOSTON ACOUSTICS, INC.
COBRA ELECTRONICS CORP.
CONCORD CAMERA CORP.
KOSS CORP.
PIONEER CORPORATION
THE STOCK PRICE PERFORMANCE DEPICTED IN THE ABOVE GRAPH IS NOT NECESSARILY
INDICATIVE OF FUTURE PRICE PERFORMANCE. THE SHARE PRICE PERFORMANCE GRAPH WILL
NOT BE DEEMED "SOLICITING MATERIAL" OR TO BE INCORPORATED BY REFERENCE IN ANY
FILING BY US UNDER THE SECURITIES ACT OR THE EXCHANGE ACT EXCEPT TO THE EXTENT
THAT WE SPECIFICALLY INCORPORATE THE GRAPH BY REFERENCE.
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH SPORT SUPPLY GROUP, INC.
As of July 29, 2003, we and Emerson Radio (Hong Kong) Limited ("Emerson
HK"), our wholly owned subsidiary, owned 4,746,023 shares, or approximately
53.2%, of the issued and outstanding shares of SSG common stock.
Our Board of Directors includes the following people that are
associated with SSG: Geoffrey P. Jurick, our Chairman, Chief Executive Officer
and President and Chairman and Chief Executive Officer of SSG, and Peter G.
Bunger, a Director of both companies and member of the Compensation Committee of
each company. Kenneth A. Corby serves as our Executive Vice President and Chief
Financial Officer and as Vice President - Corporate Development of SSG. John P.
Walker, our Executive Vice President - Global Management also serves as a
Director and President of SSG.
During 1997, we entered into a management services agreement with SSG
in an effort to share certain administrative and logistic functions and to
enable SSG and Emerson to reduce certain costs. The management services
agreement may be terminated by either SSG or us on sixty (60) days' prior
notice. We incurred net fees of $307,000, $263,000 and $237,000 for services
provided pursuant to this agreement during Fiscal 2003, 2002 and 2001,
respectively.
CERTAIN OUTSTANDING COMMON STOCK
On May 25, 2000, we entered into an Option Agreement among us, the
Fidenas Liquidator, Barclays and Mr. Jurick and various of his affiliates,
pursuant to which we had the right to repurchase 4.1 million shares of our
common stock for an aggregate purchase price of $5.5 million, or $1.34 per share
from the Fidenas Liquidator and Barclays. The Option Agreement arose as a result
of a decision of the United States District Court for the District of New Jersey
which terminated the Settlement Agreement between Mr. Jurick, the Fidenas
Liquidator, the Stellings and Barclays. In May 2001, we paid $550,000 and we
exercised our right to extend the option to purchase such shares of common stock
for an additional one year period. In May 2002, we exercised the option, and on
June 10, 2002, we purchased the 4.1 million shares of common stock using cash
generated from operations.
As to the Stellings, by Order and Opinion, both dated March 27, 2003,
the United States District Court for the District of New Jersey held, among
other things, that (i) a judgment would be entered against Geoffrey P. Jurick
and in favor of Petra Stelling for the sum of $13,905,990.12 with interest
granted in accordance with the rates set forth in the New Jersey Rules, (ii) the
common shares of the Company presently held in the Court were to be released to
Mr. Jurick's counsel to be held in escrow for the benefit of the parties, and
(iii) Mrs. Stelling's counsel submit a proposed form of order calculating the
21
amount of interest. On April 29, 2003, the Court did enter a judgment in favor
of Mrs. Stelling for the sum of $13,905,990.12 plus prejudgment interest in the
sum of $2,430,691 and postjudgment interest from April 1, 2003 at the applicable
statutory rate.
FUTURE TRANSACTIONS
We have adopted a policy that all future affiliated transactions will
be made or entered into on terms no less favorable to us than those that can be
obtained from unaffiliated third parties. In addition, all future affiliated
transactions, must be approved by a majority of the independent outside members
of our Board of Directors who do not have an interest in the transactions.
STOCKHOLDER PROPOSALS
A proper proposal submitted by one of our stockholders in accordance
with applicable rules and regulations of the SEC and our by-laws then in effect
for presentation at our next annual meeting that is received at our principal
executive office by April 1, 2004 will be included in our Proxy Statement and
form of proxy for that meeting. If you desire to bring a proposal before the
next annual meeting and such proposal is not timely submitted for inclusion in
Emerson's Proxy Statement, you can still submit the proposal if it is received
by Emerson no later than June 15, 2004.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of our Board of Directors. We
will pay the cost of soliciting proxies in the accompanying form. Our officers
may solicit proxies by mail, telephone, telegraph or fax. Upon request, we will
reimburse brokers, dealers, banks and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of our shares of common stock. We have retained the services of American
Stock Transfer & Trust Company to solicit proxies by mail, telephone, telegraph
or personal contact.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, independent certified public accountants, has been
selected by the Audit Committee of our Board of Directors as our independent
auditor for the current year. A representative of Ernst & Young LLP is expected
to be present at the Annual Meeting, will have an opportunity to make a
statement if he/she desires to do so and is expected to be available to respond
to appropriate questions.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any other
matter requiring a vote of stockholders arise, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in accordance with their
best judgment in the interest of Emerson.
22
FINANCIAL STATEMENTS
A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
MARCH 31, 2003, INCLUDING FINANCIAL STATEMENTS, ACCOMPANIES THIS PROXY
STATEMENT. THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL
OR AS A COMMUNICATION BY MEANS OF WHICH ANY SOLICITATION IS TO BE MADE.
A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
MARCH 31, 2003, FILED WITH THE SEC, IS AVAILABLE (EXCLUDING EXHIBITS) WITHOUT
COST TO STOCKHOLDERS UPON WRITTEN REQUEST MADE TO ELIZABETH J. CALIANESE, SENIOR
VICE PRESIDENT - HUMAN RESOURCES, GENERAL COUNSEL AND CORPORATE SECRETARY,
EMERSON RADIO CORP., NINE ENTIN ROAD, PARSIPPANY, NEW JERSEY 07054-0430.
By Order of the Board of Directors,
ELIZABETH J. CALIANESE
Senior Vice President-Human Resources,
General Counsel and Secretary
July 29, 2003
23
ANNEX A
EMERSON RADIO CORP.
AUDIT COMMITTEE CHARTER
I. STATEMENT OF POLICY
The Audit Committee shall assist the Board of Directors (the "Board")
of Emerson Radio Corp. ("Emerson") in fulfilling its oversight responsibility by
reviewing the accounting and financial reporting processes of Emerson and its
subsidiaries (collectively, the "Company"), the Company's system of internal
controls regarding finance, accounting, legal compliance and ethics, and the
audits of the Company's financial statements. In so doing, it is the
responsibility of the Audit Committee to maintain free and open means of
communications among the Company's Board of Directors, outside auditors and
senior management. The Audit Committee's primary responsibilities and duties
are:
- Serve as an independent and objective party to monitor the
Company's financial reporting process, internal control
system and disclosure control system.
- Review and appraise the audit efforts of the Company's
independent accountants.
- Assume direct responsibility for the appointment,
compensation, retention and oversight of the work of the
outside auditors and for the resolution of disputes between
the outside auditors and the Company's management regarding
financial reporting issues.
- Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities identified in Section IV of this Charter.
The Company shall be responsible for providing the Audit Committee with
appropriate funding, as determined by the Audit Committee, in order to
compensate the outside auditors and advisors engaged by or employed by the Audit
Committee.
II. COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall consist of at least three "independent"
Directors of Emerson and shall serve at the pleasure of the Board. An
"independent" Director is defined as an individual who (a) is not an officer or
salaried employee or an affiliate of the Company, (b) does not have any
relationship that, in the opinion of the Board, would interfere with his or her
exercise of independent judgment as an Audit Committee member, (c) meets the
independence requirements of the Securities and Exchange
24
Commission (the "SEC") and the American Stock Exchange or such other securities
exchange or market on which Emerson's securities are traded and (d) except as
permitted by the SEC and the American Stock Exchange or such other securities
exchange or market on which Emerson's securities are traded, does not accept any
consulting, advisory or other compensatory fee from the Company.
Emerson shall use its best efforts to ensure that at least one member
of the Audit Committee shall be a "financial expert" as defined by the SEC and
the American Stock Exchange or such other securities exchange or market on which
Emerson's securities are traded. Each Audit Committee member must be able to
read and understand financial statements, including a balance sheet, income
statement, and cash flow statement.
The members of the Audit Committee shall be designated by the full
Board from time to time. The Board shall designate one member of the Audit
Committee to serve as chairperson of the committee.
III. MEETINGS AND MINUTES
The Audit Committee shall meet at least quarterly, with additional
meetings if circumstances require, for the purpose of satisfying its
responsibilities. The Audit Committee shall maintain minutes of each meeting of
the Audit Committee and shall report the actions of the Audit Committee to the
Board, with such recommendations as the Audit Committee deems appropriate.
IV. RESPONSIBILITIES AND DUTIES OF THE AUDIT COMMITTEE
The Audit Committee shall oversee and monitor the Company's accounting
and financial reporting process, internal control system and disclosure control
system, review the audits of the Company's financial statements and review and
evaluate the performance of the Company's outside auditors. In fulfilling these
duties and responsibilities, the Audit Committee shall take the following
actions, in addition to performing such functions as may be assigned by law, the
Company's certificate of incorporation, the Company's bylaws or the Board.
1. The Audit Committee shall assume direct responsibility for the
appointment, retention and oversight of the work of the outside
auditors and, when appropriate, the replacement of the outside
auditors. As part of the audit process, the Audit Committee shall meet
with the outside auditors to discuss and decide the audit's scope. The
Audit Committee shall determine that the outside audit team engaged to
perform the external audit consists of competent, experienced, auditing
professionals. The Audit Committee shall also review and approve the
compensation to be paid to the outside auditors and shall be authorized
to compensate the outside auditors.
2. The Audit Committee shall take, or recommend that the full Board take,
appropriate action to ensure the independence of the outside auditors.
The Audit Committee shall require the outside auditors to advise the
Company of any fact or circumstances that might adversely affect the
outside auditors' independence or
25
judgment with respect to the Company under applicable auditing
standards. The Audit Committee shall require the outside auditors to
submit, on an annual basis, a formal written statement setting forth
all relationships between the outside auditors and the Company that may
affect the objectivity and independence of the outside auditors. Such
statement shall confirm that the outside auditors are not aware of any
conflict of interest prohibited by Section 10A(l) of the Securities
Exchange Act of 1934 (the "Exchange Act"). The Audit Committee shall
actively engage in a dialogue with the outside auditors with respect to
any disclosed relationships or services that may impact the objectivity
and independence of the outside auditors.
3. The Audit Committee shall require the outside auditors to advise the
Audit Committee, or a member of the Audit Committee who has the
authority to pre-approve services ("Approving Member") and obtain full
committee approval at the next Audit Committee Meeting, in advance in
the event that the outside auditors intend to provide any professional
services to the Company other than services provided in connection with
an audit or a review of the Company's financial statements ("non-audit
services"); provided that such non-audit services are not listed in
Section 10A(g) of the Exchange Act ("prohibited services"). The Audit
Committee or the Approving Member shall approve, in advance, any
non-audit services to be provided to the Company by the Company's
outside auditing firm.
4. The Audit Committee shall obtain confirmations from time to time from
the Company's outside auditing firm that such firm is not providing to
the Company (i) any prohibited services, or (ii) any other non-audit
service or any auditing service that has not been approved in advance
by the Audit Committee. The Audit Committee shall have the authority to
approve the provision of non-audit services that have not been
pre-approved by the Audit Committee, but only to the extent that such
non-audit services qualify under the de minimus exception set forth in
Section 10A(i)(1)(B) of the Exchange Act. The Audit Committee shall
record in its minutes and report to the Board all approvals of
non-audit services granted by the Audit Committee.
5. The Audit Committee shall meet with the outside auditors, with no
management in attendance, to openly discuss the quality of the
Company's accounting principles as applied in its financial reporting,
including issues such as (a) the appropriateness, not just the
acceptability, of the accounting principles and financial disclosure
practices used or proposed to be used by the Company, (b) the clarity
of the Company's financial disclosures and (c) the degree of
aggressiveness or conservatism that exists in the Company's accounting
principles and underlying estimates and other significant decisions
made by the Company's management in preparing the Company's financial
disclosures. The Audit Committee shall then meet, without operating
management or the outside auditors being present, to discuss the
information presented to it.
26
6. The Audit Committee shall meet with the outside auditors and management
to review the Company's quarterly reports on Form 10-Q and annual
report on Form 10-K and discuss any significant adjustments, management
judgments and accounting estimates and any significant new accounting
policies before such forms are filed with the SEC. The Audit Committee
shall require the outside auditors to report to the Audit Committee all
critical accounting policies and practices to be used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with the Company's
management, ramifications of the use of such alternative disclosures
and treatments, the treatments preferred by the outside auditors and
other material written communications between the outside auditors and
the Company's management, including management's letters and schedules
of unadjusted differences.
7. Upon the completion of the annual audit, the Audit Committee shall
review the audit findings reported to it by the outside auditors,
including any comments or recommendations of the outside auditors, with
the entire Board.
8. The Audit Committee shall review all reports received from the federal
and state regulatory authorities and assure that the Board is aware of
the findings and results. In addition, it will meet with the
appropriate members of senior management designated by the Audit
Committee to review the responses to the respective regulatory reports.
9. The Audit Committee shall consider and review with management: (a)
significant findings during the year and management's responses
thereto, including the status of previous audit recommendations and (b)
any difficulties encountered in the course of their audits, including
any restrictions on the scope of activities or access to required
information.
10. The Audit Committee shall consider and approve, if appropriate, changes
to the Company's auditing and accounting principles and practices, as
suggested by the outside auditors or management, and the Audit
Committee shall review with the outside auditors and management the
extent to which such changes have been implemented (to be done at an
appropriate amount of time prior to the implementation of such changes
as decided by the Audit Committee).
11. The Audit Committee shall prepare a letter for inclusion in the
Company's proxy statement describing the discharge of the Audit
Committee's responsibilities.
12. The Audit Committee will review and update this Charter periodically,
at least annually, and as conditions may dictate. The Audit Committee
Charter shall be presented to the full Board for its approval of any
changes.
13. Commencing on such date as Section 102(a) of the Sarbanes-Oxley Act of
2002 (the "Act") becomes effective, the Audit Committee shall obtain
confirmation
27
from the outside auditors at the commencement of each audit that such
firm is a "registered public accounting firm" as such term is defined
under the Act.
14. The Audit Committee shall have the authority to engage independent
counsel and other advisers as it determines necessary to perform its
duties.
15. The Audit Committee shall establish procedures for (i) the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters and (ii)
the confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
16. The Audit Committee shall investigate or consider such other matters
within the scope of its responsibilities and duties as the Audit
Committee may, in its discretion, determine to be advisable.
28
EMERSON RADIO CORP.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING
OF STOCKHOLDERS AT 1:00 P.M. (LOCAL TIME), THURSDAY, SEPTEMBER 4, 2003
LACIMA CLUB
THE TOWER AT WILLIAMS SQUARE, SUITE 2600
5215 NORTH O'CONNOR ROAD
IRVING, TEXAS 75039
THE UNDERSIGNED STOCKHOLDER OF EMERSON RADIO CORP. (THE "COMPANY")
HEREBY APPOINTS GEOFFREY P. JURICK AND KENNETH A. CORBY, OR EITHER OF THEM, AS
PROXIES, EACH WITH FULL POWERS OF SUBSTITUTION, TO VOTE THE SHARES OF THE
UNDERSIGNED AT THE ABOVE STATED ANNUAL MEETING AND AT ANY ADJOURNMENT(S)
THEREOF.
(Continued on reverse side)
29
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
EMERSON RADIO CORP.
SEPTEMBER 4, 2003
- Please Detach and Mail in the Envelope Provided -
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees listed WITHHOLD AUTHORITY
at right (except as provided to vote for all nominees
to the contrary below) at right
1. To elect five [ ] [ ] NOMINEES:
directors for a Geoffrey P. Jurick
one-year term Robert H. Brown, Jr.
Peter G. Bunger
Jerome H. Farnum
Stephen H. Goodman
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:
2. To transact such other business as may properly come before the meeting
and any adjournment(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE HEREON. IF A CHOICE IS NOT INDICATED
WITH RESPECT TO ITEM (1), THIS PROXY WILL BE VOTED "FOR" SUCH ITEM. THE PROXIES
WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM (2).
THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
Receipt herewith of the Company's 2003 Annual Report and Notice of Meeting and
Proxy Statement, dated July 29, 2003, is hereby acknowledged.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.
PLEASE SIGN, DATE AND MAIL TODAY.
SIGNATURE__________________________________ DATE_____________________________
SIGNATURE__________________________________ DATE_____________________________
IF HELD JOINTLY
NOTE: (Joint owners must EACH sign. Please sign EXACTLY as your name(s)
appear(s) on this card. When signing as attorney, trustee, executor,
administrator, guardian or corporate officer, please give your FULL title.)
30