| | | | (1) | | Corporate Governance, Nominating and Compensation Committee | | | | (2) | | Member of the Audit Committee | | | (3) | | Member of the Related Party Transaction Review Committee |
Family Relationships There are no family relationships among the nominees for director, the officers and key employees of the Company. Vote Required Directors will be elected by a plurality of the votes cast by the holders of ourEmerson common stock voting in person or by proxy at the annual meeting. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum, but will have no effect on the vote for election of directors. THE BOARD OF DIRECTORS URGES YOU TO VOTE “FOR”
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT The following table sets forth, as of October 8, 2009,14, 2011, the beneficial ownership of (i) each current director; (ii) each of the Company’s Named Executive Officers; (iii) the Company’s current directors and executive officers as a group; and (iv) each stockholder known by the Company to own beneficially more than 5% of the Company’s outstanding shares of common stock. Common stock beneficially owned and percentage ownership as of October 8, 200914, 2011 was based on 27,129,832 shares outstanding. Except as otherwise noted, the address of each of the following beneficial owners isc/o Emerson Radio Corp., Nine Entin Road, Parsippany,85 Oxford Drive, Moonachie, New Jersey 07054.07074. | | | | | | | | | | | | | Amount and Nature of
| | | Name and Address of Beneficial Owners | | Beneficial Ownership(1) | | Percent of Class(1) | | | | Christopher Ho(2) | | | 15,634,482 | | | | 57.6 | % | | Adrian Ma | | | 0 | | | | 0 | % | | Greenfield Pitts(3) | | | 50,000 | | | | * | | | John Spielberger | | | 0 | | | | 0 | % | | Duncan Hon | | | 0 | | | | 0 | | | Eduard Will(4) | | | 50,000 | | | | * | | | Mirzan Mahathir | | | 0 | | | | 0 | % | | Kareem E. Sethi | | | 0 | | | | 0 | % | | Terence A. Snellings | | | 0 | | | | 0 | % | | Lloyd I. Miller, III(5) | | | 2,071,870 | | | | 7.6 | % | | All Directors and Executive Officers as a Group (9 persons)(6) | | | 15,734,482 | | | | 58.0 | % |
| | | | | | | | | | | | | Amount and Nature of | | | | | | Name and Address of Beneficial Owners | | Beneficial Ownership (1) | | | Percent of Class (1) | | | Christopher Ho (2) | | | 15,243,283 | | | | 56.2 | % | | Eduard Will (3) | | | 50,000 | | | | * | | | Duncan Hon | | | 0 | | | | 0 | % | | Vincent Fok (4) | | | 15,243,283 | | | | 56.2 | % | | Mirzan Mahathir | | | 0 | | | | 0 | % | | Kareem E. Sethi | | | 0 | | | | 0 | % | | Terence A. Snellings | | | 0 | | | | 0 | % | | Andrew L. Davis | | | 0 | | | | 0 | % | | Deutsche Bank AG (5) | | | 3,391,967 | | | | 12.5 | % | | All Directors and Executive Officers as a Group (8 persons) (6) | | | 15,293,283 | | | | 56.2 | % |
| | | | (*) | | Less than one percent. | | | | (1) | | Based on 27,129,832 shares of common stock outstanding as of October 8, 2009.14, 2011. Each beneficial owner’s percentage ownership of common stock is determined by assuming that options that are held by such person (but not those held by any other person) and that are exercisable or convertible within 60 days of October 8,, 200914, 2011 have been exercised. 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 October 8, 2009.14, 2011. Except as otherwise indicated and based upon the Company’s review of information as filed with the U.S. Securities and Exchange Commission (“SEC”),SEC, the Company believes 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) | | Grande has advised the Company that, as of October 14, 2011, one of its indirect subsidiaries, S&T International Distribution Ltd. (“S&T”) is, held beneficially 15,243,283 shares, or approximately 56.2% of the record owneroutstanding common stock of 15,634,482 shares of common stockEmerson (the “Shares”). As the sole stockholder of S&T, Grande N.A.K.S. Ltd. (“N.A.K.S.”) may be deemed to own beneficially the Shares. As the sole stockholder of N.A.K.S., Grande Holdings may be deemed to own beneficially the Shares. Mr. Ho is one of the beneficiaries under a discretionary trust which indirectly owns approximately 67%70% of the capital stock of Grande Holdings.Grande. Information with respect to the ownership of these shares was obtained from disclosures contained within a Schedule 13D/A filed on November 5, 2007October 19, 2009 by Grande and information obtained from Mr. Ho.Grande. The Shares include the 3,391,967 Pledged Shares which, according to public filings made by Deutsche Bank in March 2010 had previously been pledged to Deutsche Bank to secure indebtedness owed to it. In February 2011, Deutsche Bank filed a Schedule 13G with the SEC stating that Deutsche Bank had sole voting and sole dispositive power over the Pledged Shares (which represent approximately 12.5% of the Company’s outstanding common stock) — see also footnote (5) below. The Company believes that both Grande and Deutsche Bank have claimed beneficial ownership of the Pledged Shares. As of October 14, 2011, the Company has not been advised that an updated Schedule 13D/A will be filed by Mr. Hoable to reflectverify independently the current information.beneficial ownership of the Pledged Shares. | | | | (3) | | Mr. Pitts’ ownership consists of 25,000 shares of common stock directly owned by him and options to purchase 25,000 shares of the Company’s common stock issued pursuant to Emerson’s 2004 Non-Employee Director Stock Option Plan that are exercisable within 60 days of October 8, 2009. | | (4) | | Mr. Will’s ownership consists of options to purchase 50,000 shares of the Company’s common stock pursuant to Emerson’s 2004 Non-Employee Director Stock Option Plan that are exercisable within 60 days of October 8, 2009. |
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| | 14, 2011. | (5) | | (4) | | Lloyd I. Miller, IIIGrande has sole voting and dispositive power with respect to 744,597advised the Company that, as of October 14, 2011, one of its indirect subsidiaries, S&T, held beneficially 15,243,283 shares, or approximately 56.2% of the reported securities as (i) a manageroutstanding common stock of a limited liability company that isEmerson (the “Shares”). As the general partnersole stockholder of a certain limited partnership and (ii) an individual. Lloyd I. Miller, III has shared voting and dispositive power with respectS&T, N.A.K.S. may be deemed to 1,327,273own beneficially the Shares. As the sole stockholder of N.A.K.S., Grande may be deemed to own beneficially the reported securities as an investment advisor to the trustee of certain family trusts. The address of Lloyd I. Miller, III is 4550 Gordon Drive, Naples, Florida 34102.Shares. Information with respect to the ownership of these shares was obtained from disclosures contained within a Schedule 13D/A filed on October 19, 2009 by Grande and information obtained from Grande. Mr. Fok is one of two Joint and Several Liquidators over Grande appointed by the High Court of Hong Kong on May 31, 2011. The Shares include the 3,391,967 Pledged Shares which, according to public filings made by Deutsche Bank in March 2010 had previously been pledged to Deutsche Bank to secure indebtedness owed to it. In February 2011, Deutsche Bank filed a Schedule 13G with the SEC stating that Deutsche Bank had sole voting and sole dispositive power over the Pledged Shares (which represent approximately 12.5% of the Company’s outstanding common stock) — see also footnote (5) below. The Company believes that both Grande and Deutsche Bank have claimed beneficial ownership of the Pledged Shares. As of October 14, 2011, the Company has not been able to verify independently the beneficial ownership of the Pledged Shares. | | | (5) | | Deutsche Bank has stated in a Schedule 13G filed with the SEC on February 12, 2009.11, 2011 that it has sole voting and dispositive power with respect to 3,391,967 shares of the Company’s common stock; specifically, that Deutsche Bank AG, London Branch, a subsidiary of Deutsche Bank AG, has sole voting and dispositive power over 3,389,401 shares of the Company’s common stock and Deutsche Bank Securities Inc., a subsidiary of Deutsche Bank AG, has sole voting and dispositive power over 2,566 shares of the Company’s common stock. The address for Deutsche Bank AG is Theodor-Heuss-Allee 70, 60468 Frankfurt am Main, Federal Republic of Germany — see also footnotes (2) and (4) above. | | | | (6) | | See footnotes (2) through, (3) and (4). |
BOARD OF DIRECTORS AND COMMITTEES Board of Directors and Committees As of October 8, 2009,14, 2011, Grande had advised the Company that one of its indirect subsidiaries held beneficially owned an aggregate15,243,283 shares or approximately 56.2% of 15,634,482the outstanding common stock of Emerson. That number of shares includes the 3,391,967 Pledged Shares which, according to public filings made by Deutsche Bank in March 2010 had previously been pledged to Deutsche Bank to secure indebtedness owed to it. In February 2011, Deutsche Bank filed a Schedule 13G with the SEC stating that Deutsche Bank had sole voting and sole dispositive power over the Pledged Shares (which represent approximately 12.5% of the Company’s outstanding common stock, which represents approximately 57.6%stock). The Company believes that both Grande and Deutsche Bank have claimed beneficial ownership of the sharesPledged Shares. As of common stock currently outstanding.October 14, 2011, the Company has not been able to verify independently the beneficial ownership of the Pledged Shares. Accordingly, the Company ismay be a “controlled company”, as such term is defined in Section 801(a) of the NYSE Amex Company Guide (the “Company Guide”) and is a “controlled company”, as such term is defined in Rule 405 under Regulation C of the Securities Act of 1933, as amended (the “Securities Act”), which defines “control” more broadly as the ability to cause the direction of a company’s management and policies (“Controlled Company”). BecauseSo long as Grande holds beneficially more than 50% of the Companyoutstanding common stock of Emerson, Emerson is a Controlled Company itas defined by the Company Guide, and therefore is exempt from (i) the requirement that at least a majority of the directors on its Board of Directors be “independent” as defined under the NYSE Amex listing standards, (ii) the requirement to have the compensation of the Company’s executives determined by a compensation committee comprised solely of independent directors or by a majority of the board’sBoard of Directors’ independent directors and (iii) from the requirement to have director nominees selected by a nominating committee comprised entirely of independent directors or by a majority of the independent directors.
The Company’s Board of Directors presently consists of eightseven directors — Messrs. Ho, Ma, Pitts,Will, Hon, Will,Fok, Mahathir, Sethi and Snellings. ThreeThe Board of Directors has determined that four of the eightseven current directors, Messrs. Will, Mahathir, Sethi and Snellings, meet the definition of independence as established by the NYSE Amex listing standards and SEC rules. Until their respective resignations during Fiscal 2009, the following individuals also served on the Company’s Board of Directors — Messrs. Michael A.B. Binney, W. Michael Driscoll, David R. Peterson and Norbert Wirsching. The Company’s Board of Directors determined that W. Michael Driscoll and Norbert R. Wirsching, each of whom served as a member of our Board of Directors during Fiscal 2009, were “independent” as defined under the NYSE Amex listing standards. The Board of Directors is responsible for the management and direction of our companythe Company and for establishing broad corporate policies. The Board of Directors meets periodically during ourthe Company’s fiscal year to review significant developments affecting usthe Company and to act on matters requiring Board of Director approval. The Board of Directors held ninetwo formal meetings during the fiscal year ended March 31, 2011 (“Fiscal 20092011”), and also acted by unanimous written consent. During Fiscal 2009,2011, each member of the Board of Directors participated in at least 75% of the aggregate of all meetings of the Board of Directors and the aggregate of all meetings of committees on which such member served, that were held during the period in which such director served during Fiscal 2009,2011, except Mr. Ho, whoMessrs. Mahathir and Sethi, neither of whom attended fiveeither of the two meetings of the Board of Directors. We have a policyDirectors that were held during Fiscal 2011. The Company encourages, but does not require, members of encouraging, but not requiring, ourthe Board membersof Directors to attend annual meetings of stockholders. Last year, fiveone of ourthe Company’s directors who werewas nominated for re-election attended our 2008the Company’s 2010 Annual Meeting. The Company’s Board of Directors has twothree standing committees, the Audit Committee, which is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act andof 1934, as amended (the “Exchange Act”), the Corporate Governance, Nominating and Compensation Committee and the Related Party Transaction Review Committee. Audit Committee.The Company’s Audit Committee currently consists of Mr. Sethi and Mr. Snellings, eachboth of whom meetsthe Board of Directors has determined meet the definition of independence as established by the NYSE Amex listing rules and SEC rules.rules and its composition is unchanged since the beginning of Fiscal 2011. Mr. Sethi is currently the Chairman of the Audit Committee and the “audit committee financial expert.” Pursuant to Section 803(B)(2)(c) of the NYSE Amex Company Guide, (the “Company Guide”),as a smaller reporting company, the Company is required to have an audit committee of at least two independent members, as defined by the listing standards of the NYSE Amex. During a portion of Fiscal 2009, the Audit Committee consisted of Mr. Sethi, Mr. Driscoll and Mr. Wirsching, each of whom meets the definition of independence as established by the NYSE Amex and SEC rules. For a brief period following the resignations of Mr. Driscoll and Mr. Wirsching
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in July 2008 and until the appointment of Mr. Snellings to the Company’s Board of Directors and Audit Committee on August 12, 2008, the Company’s Audit Committee consisted of only one independent director and therefore during this brief period the Company was not in compliance with Section 803(B)(2)(c) of the Company Guide. Following the appointment of Mr. Snellings to the Audit Committee on August 12, 2008, the Company regained compliance with the applicable NYSE Amex listing standards set forth in Section 803(B)(2)(c) of the Company Guide.
The Audit Committee is empowered by the Board of Directors, among other things, to: (i) serve as an independent and objective party to monitor the Company’s financial reporting process, internal control system and disclosure control system; (ii) review and appraise the audit efforts of the Company’s independent accountants; (iii) 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 (iv) provide the opportunity for direct communication among the independent accountants, financial and senior management and the Board of Directors. During Fiscal 2009,2011, the Audit Committee performed its duties under a written charter approved by the Board of Directors and formally met threefour times. A copy of the Company’s Audit Committee Charter is posted on the Company’s website: www.emersonradio.com on the Investor Relations page. Report of the Audit Committee This report shall not be deemed “soliciting material” or incorporated by reference in any filing by usthe Company under the Securities Act or the Exchange Act except to the extent that wethe Company specifically incorporateincorporates this information by reference, and shall not otherwise be deemed filed under either act. During a portion of Fiscal 2009, the Audit Committee consisted of Mr. Sethi, Mr. Driscoll and Mr. Wirsching, each of whom meets the definition of independence as established by the NYSE Amex and SEC rules. For a brief period following the resignations of Mr. Driscoll and Mr. Wirsching in July 2008 and until the appointment of Mr. Snellings to the Company’s Board of Directors and Audit Committee on August 12, 2008, the Company’s Audit Committee consisted of only one independent director, Mr. Sethi. On August 12, 2008, our Board of Directors appointed Terence A. Snellings to serve on the Audit Committee, and appointed Mr. Sethi to serve as the Chairman of our Audit Committee. Our Board of Directors has determined that each of Messrs. Sethi and Snellings is independent as defined by the listing standards of the NYSE Amex and applicable SEC rules.
In this context, theThe Audit Committee has (i) reviewed theand discussed The Company’s audited consolidated financial statements and has met and held discussionsfor the year ended March 31, 2011 with the Company’s management and MSPC, Emerson’swith the Company’s independent auditors. Management has represented to the Audit Committee that Emerson’s consolidated financial statements were prepared in accordance with generally accepted accounting principles. Emerson’s independent auditors are responsible for performing an independent audit of Emerson’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 alsoauditor, MSPC; (ii) discussed with MSPCthe Company’s independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61, as amended,amended; and as adopted(iii) received the written disclosures and the letter from the Company’s independent accountants required by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T, which includes, among other items, matters relatedregarding the independent accountants’ communications with the Audit Committee concerning independence and discussed with the Company’s independent auditor the independent auditors’ independence.
The Audit Committee also considered whether the provision to the conductrelevant entity by the independent auditor of non-audit services was compatible with maintaining the independence of the audit of Emerson’s financial statements:independent auditor. | | | | • | 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 MSPC’s conclusions regarding the reasonableness of those estimates; and | | | • | disagreements, if any, with management over the application of accounting principles, the basis for management’s accounting estimates and the disclosures in the financial statements (there were no such disagreements). |
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MSPC also provided the Audit Committee with written disclosures and the letter required by applicable standards of the PCAOB which relate to the independent registered Public Accounting firm’s independence. In addition, the Audit Committee discussed with MSPC its independence from the Company. The standards further require the independent registered Public Accounting firm to disclose annually in writing all relationships that, in their professional opinion, may reasonably be thought to bear on their independence, confirm their perceived independence and engage in the discussion of independence.
Based on the Audit Committee’sreviews and discussions with management and MSPC, as well asdescribed above, the Audit Committee’s review of the representations of management and the report of MSPC to the Audit Committee, the Audit CommitteeCommittees recommended to the Board of Directors that Emerson’sthe audited consolidated financial statements of the Company be included in ourthe Company’s Annual Report onForm 10-K for the fiscal year ended March 31, 2009,2011 for filing with the Securities and Exchange Commission. The Audit Committee has selected MSPC 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.
SEC. Members of the Audit Committee
Kareem E. Sethi (Chairman)
Terence A. Snellings
Corporate Governance, Nominating and Compensation Committee. UnderSo long as Grande holds beneficially more than 50% of the outstanding common stock of Emerson, Emerson is a Controlled Company under Sections 804 and 805 of the Company Guide, the Company isand therefore exempt from the requirementrequirements to have (i) the compensation of its executives determined by a compensation committee comprised solely of independent directors or by a majority of the board’sBoard of Directors’ independent directors and from the requirement to have(ii) director nominees selected by a nominating committee comprised entirely of independent directors or by a majority of the independent directorsdirectors. Even so, Emerson satisfies the requirements of Sections 804 and 805 of the Company Guide because the Company is a Controlled Company. In April 2008, the Company’s Board of Directors established a Corporate Governance, Nominating and Compensation Committee which was to be comprisedconsists of three members, at least twoindependent directors and only one director who is not independent, but who was appointed by the Board of whom were to be “independent” asDirectors after a determination that such term is definedappointment was in Section 803Athe best interest of the Company Guide. On June 24, 2008, ourand the stockholders. From the beginning of Fiscal 2011 until November 10, 2010, the Corporate Governance, Nominating and Compensation Committee was fully constituted with three directors,consisted of Messrs. Ma, PetersonHo, Will and Sethi, two of whom the Board had determined were independent as such term is defined in Section 803A of the Company Guide. Following Mr. Peterson’s resignation as a director on July 15, 2008, theMahathir. The Board of Directors resolved on September 19, 2008November 10, 2010 to reconstitute the Corporate Governance, Nominating and Compensation Committee as being comprised of Messrs. Ma,Ho, Will, Mahathir and Mahathir, oneSnellings, three of whom the Board hadof Directors determined, wasas of November 10, 2010, were “independent” as(as defined under the NYSE Amex listing standards.standards and SEC rules), and one of whom, Mr. Ho, was not “independent”. Mr. Ho was appointed to the Corporate Governance, Nominating and Compensation Committee after a determination by the Board of Directors that his experience was exceptionally valuable to the committee, and that his appointment was in the best interest of the Company and its stockholders. Mr. Ho has served as the Company’s Chairman since July 2006, and is presently the Chairman of Grande, a Hong Kong based group of companies which indirectly, through a wholly-owned subsidiary, owns the controlling interest in the Company’s outstanding common stock. The Corporate Governance, Nominating and Compensation Committee met formally three times during Fiscal 2009.2011. The Company’s Board of Directors currently is considering the adoption of a charterMembers of the Corporate Governance, Nominating and Compensation Committee
Mirzan Mahathir (Chairman)
Christopher Ho
Eduard Will
Terence A. Snellings
Related Party Transaction Review Committee.The Company’s Related Party Transaction Review Committee currently consists of Messrs. Mahathir, Will and Sethi, each of whom the Board of Directors has determined meets the definition of independence as established by the NYSE Amex listing rules and SEC rules and its composition is unchanged since the beginning of Fiscal 2011. Mr. Mahathir is currently the Chairman of the Related Party Transaction Review Committee. The Company expectsRelated Party Transaction Review Committee met formally four times during Fiscal 2011. In March 2011, after final court approval and associated appeal and implementation periods of the settlement agreement that the charter,Company entered into to bring to a close a shareholder derivative lawsuit, the Company updated its policy regarding the review and approval of transactions with related parties to require that all proposed transactions between the Company and related parties, as finally adopted, will provide thatdefined by the Corporate Governance, NominatingFinancial Accounting Standard Board’s Accounting Standards Codification Topic 850 (ASC 850), which are greater than $100,000 (“Covered RPT Transactions”) be pre-approved by a majority of those directors of the Company who are independent within the meaning of Section 803(A)(2) of the Company Guide, as may be amended from time to time. In reviewing and Compensation Committee will be responsible for, among other things (i)approving transactions between the developmentCompany and implementation of a set of corporate governance principles applicablerelated parties, the independent directors are to determine whether the proposed transaction is entirely fair to the Company; (ii)Company and in the determinationCompany’s best interest. For purposes of the slatepolicy, related parties means (i) an officer or director of director nominees for election to the Company’s Board and recommendation toCompany or the Board individuals to fill vacancies occurring between annual meetingsmember of shareholders; and (iii) the recommendation to the Board for compensation arrangementsimmediate family of any of them or (ii) any other corporation, partnership, association, limited liability company, limited liability partnership, trust or other entity or organization in which one or more of the Company’s officers or directors and executive officers.are (a) directors, officers, trustees or other fiduciaries or (b) have a financial interest. Prior to this change, the Company’s policy had required that all Covered RPT Transactions be pre-approved by the Related Party Transaction Review Committee of the Board of Directors, in accordance with the Related Party Transaction Review Committee charter. All other components of the former policy were substantially the same as the current policy.
Members of the Related Party Transaction Review Committee
Mirzan Mahathir (Chairman)
Eduard Will
Kareem Sethi Procedures for Considering Nominations Made by Stockholders.Nominations for election to the Board of Directors may be made by ourthe Company’s Board of Directors or by any stockholder of any outstanding class of ourthe Company’s capital stock entitled to vote for the election of directors. The following procedures shall be utilized in considering any candidate for election to the Board of Directors at an annual meeting, other than candidates who have previously served on the Board of Directors or who are recommended by the Board of Directors. A nomination must be delivered to ourthe Company’s Secretary at ourits principal executive offices not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting;provided, however, that if the date of
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the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice to be timely must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by us.the Company. The public announcement of an adjournment or postponement of an annual meeting will not commence a new time period (or extend any time period) for the giving of a notice as described above. A nomination notice must set forth as to each person whom the proponent proposes to nominate for election as a director: (a) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (b) information that will enable ourthe Company’s Board of Directors to determine whether the candidate satisfies the minimum criteria and any additional criteria established by ourthe Company’s Board of Directors. Qualifications. OurThe Company’s Board of Directors has adopted guidelines describing the minimum qualifications for nominees and the qualities or skills that are necessary for directors to possess. Each nominee (i) must satisfy any legal requirements applicable to members of the Board of Directors; (ii) must have business, professional or other experience that will enable such nominee to provide useful input to the Board of Directors in its deliberations; and (iii) must have knowledge of the types of responsibilities expected of members of the board of directors of a public company. Identification and Evaluation of Candidates for the Board.Candidates to serve on the Board of Directors will be identified from all available sources, including recommendations made by stockholders, members of ourthe Company’s management and members of ourthe Company’s Board of Directors. OurThe Company’s Board of Directors has a policy that there will be no differences in the manner in which ourits Board of Directors evaluates nominees recommended by stockholders and nominees recommended by it or management, except that no specific process shall be mandated with respect to the nomination of any individuals who have previously served on the Board of Directors. The evaluation process for individuals other than existing members of the Board of Directors will include a review of the information provided to the Board of Directors by the proponent and a review of such other information as the Board of Directors shall determine to be relevant. Third Party Recommendations.In connection with the Annual Meeting, the Board of Directors did not receive any nominations from any stockholder or group of stockholders which owned more than 5% of ourthe Company’s common stock for at least one year. Diversity Considerations in Director Nominations The Company does not have a formal diversity policy. The Company believes its Board of Directors represents a collection of individuals with a variety of complementary skills which, as a group, possess the appropriate skills and experience to oversee the Company’s business. The Company’s Corporate Governance, Nominating and Compensation Committee considers a wide variety of qualifications, attributes and other factors and recognizes that a diversity of viewpoints and practical experiences can enhance the effectiveness of the Company’s Board.
Board Leadership Structure The Company does not have a formal policy regarding whether the roles of the Chairman of the Board and Chief Executive Officer should be combined or separated. The Board of Directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board of Directors understands that there is no single, generally accepted approach to providing Board leadership and that given the dynamic and competitive environment in which the Company operates, the right Board leadership structure may vary as circumstances warrant. Currently, the roles of Chief Executive Officer and Chairman of the Board are separate; however, representatives of the Company’s controlling stockholder serve in each role. Mr. Hon, a director of Grande, serves as the Company’s Chief Executive Officer. Mr. Ho, Chairman of Grande, serves as the Company’s Chairman of the Board. Role in Risk Oversight Although the Company’s management is responsible for implementing systems and processes to identify and manage risks, the Company’s Board has oversight responsibility for the Company’s risk management processes. In carrying out its oversight responsibility, the Board of Directors has delegated to individual committees certain elements of its risk oversight function. This oversight is administered primarily through the following: | • | | The Board of Directors’ review and approval of the Company’s annual budget (prepared and presented to the Board of Directors by the management team), including discussion of the opportunities and challenges facing its business; | | | • | | The Audit Committee’s oversight of the Company’s internal control over financial reporting and its discussions with management and the independent accountants regarding the quality and adequacy of the Company’s internal controls and financial reporting; and | | | • | | The Corporate Governance, Nominating and Compensation Committee’s review and recommendations to the Board of Directors regarding executive officer compensation and its relationship to the Company’s business plans. |
Process for Sending Communications to the Board of Directors The Board of Directors has established a procedure that enables stockholders to communicate in writing with members of the Board of Directors. Any such communication should be addressed to the Company’s Secretary and should be sent to such individual atc/o Emerson Radio Corp., Nine Entin Road, Parsippany,85 Oxford Drive, Moonachie, New Jersey 07054.07074. Any such communication must state, in a conspicuous manner, that it is intended for distribution to the entire Board of Directors. Under the procedures established by the Board of Directors, upon the Secretary’s receipt of such a communication, the Company’s Secretary will send a copy of such communication to each member of the Board of Directors, identifying it as a communication received from a stockholder. Absent unusual circumstances, at the next regularly scheduled meeting of the Board of Directors held more than two days after such communication has been distributed, the Board of Directors will consider the substance of any such communication. Codes of Ethics The Company has adopted a Code of Ethics for Senior Financial Officers (“Code of Ethics”) that applies to its Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller and Treasurer. This Code of Ethics was established with the intention of focusing Senior Financial Officers on areas of ethical risk, providing guidance to help them recognize and deal with ethical issues, providing mechanisms to
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report unethical conduct, fostering a culture of honesty and accountability, deterring wrongdoing and promoting fair and accurate disclosure and financial reporting. The Company has also adopted a Code of Conduct for Officers, Directors and Employees of Emerson Radio Corp. and Its Subsidiaries (“Code of Conduct”). We prepared this Code of Conduct to help all officers, directors and employees understand and comply with its policies and procedures. Overall, the purpose of the Company’s Code of Conduct is to deter wrongdoing and promote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the SEC and in other public communications made by the Company; (iii) compliance with applicable governmental laws, rules and regulations; (iv) prompt internal reporting of code violations to an appropriate person or persons identified in the Code of Conduct; and (v) accountability for adherence to the Code of Conduct.
The Code of Ethics and the Code of Conduct are posted on the Company’s website: www.emersonradio.com on the Investor Relations page. If the Company makes any substantive amendments to, or grant any waiver (including any implicit waiver) from a provision of the Code of Ethics or the Code of Conduct, and that relates to any element of the Code of Ethics definition enumerated in Item 406 (b) ofRegulation S-K, the Company will disclose the nature of such amendment or waiver on its website or in a current report onForm 8-K.
EXECUTIVE OFFICERS The following table sets forth certain information regarding the current executive officers (1) of Emerson: | | | | | | | | | | | | | | | | | | | Year
| Name | | Age | | Position | | Became Officer | | | | Adrian Ma | | | 64 | | | Chief Executive Officer and Director | | | 2006 | | | Greenfield Pitts | | | 59 | | | Chief Financial Officer and Director | | | 2007 | | | John Spielberger | | | 46 | | | President-North American Operations | | | 2007 | |
| | | | | | | | | | | | | | | | | | | | | Year | | Name | | Age | | Position | | Became Officer | | Duncan Hon | | 50 | | Chief Executive Officer and Director | | | 2009 | | | | | | | | | | | | | | | Andrew L. Davis | | 44 | | Executive Vice President and Chief
Financial Officer | | | 2010 | |
| | | (1) | | One of our directors, Duncan Hon is currently serving as acting Deputy CEO of Emerson, and the Company currently contemplates appointing Mr. Hon to the position of Deputy CEO in the near future. |
Adrian Mahas served as the Company’s Chief Executive Officer since March 30, 2006August 31, 2011 and a director since February 2009. Prior to being promoted to Chief Executive Officer, Mr. Hon served as the Company’s Chairman of the Board of Directors from March 30, 2006 through July 26, 2006. Mr. Ma continues to serve as a director.Deputy Chief Executive Officer since November 2009. See Mr. Ma’sHon’s biographical information above.
Greenfield PittsAndrew L. Davishas served as the Company’s Executive Vice President and Chief Financial Officer since February 2007September 3, 2010 and a director since March 2006. See Mr. Pitts’ biographical information above.
John Spielbergerhas served as the Company’s President-North American OperationsSecretary since OctoberNovember 2007. From 1995 until 2007,Previously, Mr. SpielbergerDavis served as a Senior Vice President, with Sony BMG Music Entertainment Sales Co., an entertainment software salesFinance and marketing distribution company.Corporate Controller of the Company since joining the Company in August 2007. Prior to this,joining the Company, Mr. SpielbergerDavis held various executive and managerial positions in accounting and finance with RCA Records Label,several companies, most recently CA, Inc., and prior to that, ce Global Sourcing AG. Mr. Davis is a music company. Mr. SpielbergerC.P.A., holds a Bachelor of Science degreeB.B.A. in Business Management and MarketingAccounting from CornellIowa State University and a Masters of Business Administrationan M.B.A. from the University of Michigan.Connecticut.
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EXECUTIVE COMPENSATION EXECUTIVE COMPENSATION
Summary Compensation Table The following Summary Compensation Table sets forth information concerning compensation for services rendered in all capacities to usthe Company and ourits subsidiaries for Fiscal 20092011 and for the fiscal year ended March 31, 2010 (“Fiscal 20082010”) which was awarded to, earned by or paid to each person who served as ourthe Company’s principal executive officer at any time during Fiscal 2009 and2011, the two most highly compensated executive officers other than the principal executive officer who were serving as executive officers as of March 31, 20092011 and up to two additional individuals for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer of the smaller reporting company as of March 31, 2011 (collectively, the “Named Executive Officers”). | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other
| | | | | Name and
| | | | | | | | | | | Option
| | | Compensation
| | | | | Principal Position | | Fiscal Year | | | Salary ($) | | | Bonus ($)(2) | | | Awards ($)(1) | | | ($)(3) | | | Total ($) | | | | | Adrian Ma(4) | | | 2009 | | | $ | 350,000 | | | | — | | | | — | | | | — | | | $ | 350,000 | | | President and Chief Executive Officer | | | 2008 | | | | | | | $ | 50,000 | | | | — | | | | — | | | $ | 50,000 | | | Greenfield Pitts(5) | | | 2009 | | | $ | 250,000 | | | | — | | | $ | 9,500 | | | $ | 23,459 | | | $ | 282,959 | | | Chief Financial Officer | | | 2008 | | | $ | 250,000 | | | $ | 100,000 | | | | 9,500 | | | $ | 22,841 | | | $ | 382,341 | | | John Spielberger(6) | | | 2009 | | | $ | 250,000 | | | | — | | | | — | | | $ | 23,461 | | | $ | 273,461 | | | President-North American Operations | | | 2008 | | | $ | 105,769 | | | $ | 60,000 | | | | — | | | $ | 9,437 | | | $ | 175,206 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other | | | | | | Name and | | Fiscal | | | | | | | | | | | Compensation | | | | | | Principal Position | | Year | | | Salary($) | | | Bonus($)(1) | | | ($) | | | Total ($) | | | Duncan Hon (2) | | | 2011 | | | $ | 375,000 | | | | — | | | $ | 65,031 | (3) | | $ | 440,031 | | | President and Chief Executive Officer | | | 2010 | | | $ | 150,000 | (2) | | $ | 100,000 | | | $ | 87,404 | (3) | | $ | 337,404 | | | | | | | | | | | | | | | | | | | | | | | | | Andrew L. Davis (4) | | | 2011 | | | $ | 258,333 | | | | — | | | $ | 12,751 | (5) | | $ | 271,084 | | | Chief Financial Officer | | | 2010 | | | $ | 229,349 | | | | — | | | $ | 13,490 | (5) | | $ | 242,839 | | | | | | | | | | | | | | | | | | | | | | | | | Adrian Ma (6) | | | 2011 | | | $ | 350,000 | | | | — | | | | — | | | $ | 350,000 | | | Former President and Chief Executive Officer | | | 2010 | | | $ | 350,000 | | | | — | | | | — | | | $ | 350,000 | | | | | | | | | | | | | | | | | | | | | | | | | Greenfield Pitts (7) | | | 2011 | | | $ | 108,974 | | | | — | | | $ | 86,382 | (5)(8) | | $ | 195,356 | | | Former Chief Financial Officer | | | 2010 | | | $ | 250,000 | | | | — | | | $ | 20,153 | (5) | | $ | 270,153 | |
| | | (1) | | Represents the expense to the Company pursuant to applicable accounting standards for the respective year for stock options granted as long-term incentives pursuant to the Company’s 2004 Non-Employee Outside Director Stock Option Plan or its 2004 Employee Stock Option Plan. All options received by Mr. Pitts in the table above were received by him as a non-employee director and prior to his being named as an executive officer. Immediately following the adoption by the Company’s stockholders of an amendment to the Company’s 2004 Non-Employee Outside Director Stock Option Plan (the “Non-Employee Director Plan”) to increase the number of shares available for issuance thereunder from 250,000 to 500,000 shares in November 2006, Mr. Pitts received an option to purchase up to 25,000 shares of the Company’s common stock. Mr. Pitts began to serve as a director at a time when he was not an employee of the Company and no additional shares were available under the Non-Employee Director Plan. See Notes to the Company’s financial statements for the fiscal years ended March 31, 2009 and 2008 for the assumptions used for valuing the expense. | | | (2)(1) | | Represents bonus paid for such fiscal year. | | | | (2) | | Mr. Hon was appointed as the Company’s President and Chief Executive Officer effective August 31, 2011. He was originally appointed Deputy Chief Executive Officer on November 10, 2009 and began receiving a salary effective October 1, 2009. | | | (3) | | Represents $58,704 and $85,000 paid by the Company on behalf of Mr. Hon to settle Mr. Hon’s U.S. federal and state income tax liabilities related to U.S. sourced income earned by him from all sources in Fiscal 2011 and Fiscal 2010, respectively, and $6,327 and $2,404 paid by the Company for medical insurance for Mr. Hon during Fiscal 2011 and Fiscal 2010, respectively. |
| | | | (4) | | Mr. Davis was appointed as the Company’s Executive Vice President and Chief Financial Officer effective September 3, 2010. | | | (5) | | Represents the incremental cost to the Company of all personnel benefits, including medical and dental insurance and the Company’s match for its 401(K) plan, provided to our Named Executive Officers. Such personnel benefits are available to all employees of the Company in accordance with the Company’s standard employment practices. | | | (4)(6) | | Mr. Ma commenced employmentresigned from his position as the Company’sPresident and Chief Executive Officer, on March 30, 2006 and began receivingas a salarydirector, of Emerson, effective April 2008.August 8, 2011. Mr. Ma entered into a consulting agreement with the Company for a period of one year, beginning August 1, 2011, for a fee of approximately $221,000. | | | (5)(7) | | Mr. Pitts commenced employmentresigned from his position as the Company’sExecutive Vice President and Chief Financial Officer, on February 19, 2007.and as a director, of Emerson effective September 3, 2010. Mr. Pitts entered into a consulting agreement with the Company for a period of one year, beginning September 4, 2010, for a fee of $125,000. During Fiscal 2011, the Company paid Mr. Pitts $71,875 per the terms of this agreement. | | | (6)(8) | | Includes consulting fees of $71,875 paid to Mr. Spielberger commenced employment asPitts by the Company’s President-North American Operations on October 29, 2007.Company under the terms of the consulting agreement referred to in footnote (7) above. |
Employment Agreements. During Fiscal 2009,2011, the Company had employment agreements with certain of its Named Executive Officers, each of which is described below. Greenfield Pitts.Duncan Hon. Greenfield Pitts,Duncan Hon, our Chief FinancialExecutive Officer, entered into an employment agreement with the Company on April 3, 2007,Emerson effective as of October 1, 2009, which setsset forth the terms and conditions pursuant to which Mr. Pitts shallHon would serve as the Company’s Deputy Chief FinancialExecutive Officer. The agreement providesprovided for an annual base salary of $250,000$300,000 and a discretionary bonus at the end of the Company’s fiscal year as recommended by the Board of Directors. The term expired on September 30, 2010. On September 8, 2010, the Company’s Board of Directors approved an increase in Mr. Hon’s annual base salary to $375,000. Such salary increase was made effective retroactive to April 1, 2010. On March 24, 2011, Mr. Hon and Emerson agreed that the employment agreement would be terminated and be of no further force and effect effective at the close of business on March 31, 2011. Effective April 1, 2011, Mr. Hon entered into an employment agreement with a wholly-owned, indirect subsidiary of the Company. Such agreement sets forth the terms and conditions pursuant to which Mr. Hon would serve as the Company’s Deputy Chief Executive Officer. The agreement provides for an annual base salary of 2,925,000 Hong Kong Dollars (“HKD”) and an annual discretionary bonus payable at any time as recommended by the Board of Directors. The contract extends until the earlier of the retirement of Mr. Hon on the first day of the following month immediately after his 60th birthday, or the termination of the agreement by either the Company or Mr. Hon upon the delivery from one to the other of one month prior written notice.
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Andrew L. Davis. Andrew L. Davis, our Executive Vice President and Chief Financial Officer, entered into an employment agreement with the Company on August 1, 2007, which provided that Mr. Davis shall serve as the Company’s Vice President Finance and Corporate Controller. The agreement provides for an annual base salary of $225,000 and a discretionary bonus at the end of the Company’s fiscal year as recommended by the Board of Directors. The initial term expired on MarchJuly 31, 2008. During the term extensions, the Company has the right to terminate the agreement upon 90 days prior written notice and Mr. PittsDavis has the right to terminate the agreement upon 90 days prior written notice. In connection with his appointment as Executive Vice President and Chief Financial Officer, the Company entered into an amendment to the existing employment agreement with Mr. Davis dated September 3, 2010 pursuant to which Mr. Davis’s base salary was increased to $275,000 effective as of September 3, 2010. John Spielberger.Adrian Ma. John Spielberger,Adrian Ma, our former President and Chief Executive Officer, resigned from these positions, and as a director, of Emerson, effective August 8, 2011. Mr. Ma entered into a consulting agreement with the Company’s President-North American Operations,Company for a period of one year, beginning August 1, 2011, for a fee of approximately $221,000.
Greenfield Pitts.Greenfield Pitts, our former Chief Financial Officer, entered into an employment agreement with the Company on October 15,April 3, 2007, which provides thatset forth the terms and conditions pursuant to which Mr. Spielberger shallPitts would serve as the Company’s President-North American Operations.Chief Financial Officer. The agreement providesprovided for an annual base salary of $250,000 and a discretionary bonus at the end of the Company’s fiscal year as recommended by the Board of Directors. The initial term expired on OctoberMarch 31, 2008. During the term extensions, the Company hashad the right to terminate the agreement upon 90 days prior written notice and Mr. Spielberger hasPitts had the right to terminate the agreement upon 90 days prior written notice. On September 3, 2010, Mr. Pitts and the Company agreed that this employment agreement would be terminated and of no further force and effect effective at the close of business on September 3, 2010. Mr. Pitts entered into a consulting agreement with the Company for a period of one year, beginning September 4, 2010, for a fee of $125,000. This consulting agreement was not renewed after its expiration date of September 3, 2011.
Outstanding Equity Awards at Fiscal Year End The following table provides certain information concerningNone of the Company’s Named Executive Officers held any outstanding equity awards held by each of our Named Executive Officers at March 31, 2009.
| | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | Number of Securities
| | Number of Securities
| | | | | | | | Underlying
| | Underlying
| | | | | | | | Unexercised Options
| | Unexercised Options
| | Option Exercise
| | Option Expiration
| Name | | (#) Exercisable | | (#) Unexercisable | | Price ($) | | Date | | | | Adrian Ma | | | 0 | | | | 0 | | | | — | | | | — | | | Greenfield Pitts | | | 16,667 | | | | 8,333 | | | $ | 3.19 | | | | 11/21/2016 | | | John Spielberger | | | 0 | | | | 0 | | | | — | | | | — | |
2011. Compensation of Directors During Fiscal 2009,2011, our directors who were not employees (“Outside Directors”), specifically Messrs. Binney, Driscoll, Ho, Hon, Mahathir, Peterson, Sethi, Snellings Will and WirschingWill were paid $33,750, $17,500, $120,625, $5,875, $52,958, $13,125, $60,514, $36,667, $52,597$78,458, $80,000, $80,000, $70,870 and $18,333,$80,000, respectively, for serving on the Board of Directors and on our various committees during the period. The Company does not compensate directors who are employees of the Company for their services as directors. Outside Directors are each paid an annual director’s fee of $45,000. Beginning October 15, 2008,$50,000. The Outside Director serving as the Chairman of the Board receives an additional annual fee of Directors resolved that each$20,000. Each Outside Director serving on a committee of the Board of Directors would receivereceives an additional fee of $15,000 per annum with no additional fee paid an Outside Directorfor serving as chairman of a committee. The Company does not pay any additional fees for attendance at meetings of the Board of Directors or the committees, but the Company’s directors are reimbursed their expenses for attendance at meetings.committees. All directors’ fees are paid in four equal quarterly installments per annum and are pro-rated in situations where an Outside Director serves less than a full one year term. On September 5, 2008, the Board of Directors resolved that Mr. Ho would begin receiving a director fee as anAdditionally, each Outside Director effective April 1, 2008 and that Mr. Ho would receive a retroactive director fee as an Outside Director dating from the time he joined the Board of Directors of the Company on July 26, 2006. As a result of this resolution, Mr. Ho was paid an aggregate amount of director’s fees in fiscal 2009 of $120,625.
Additionally, each director who is not an employee of the Company is eligible to participate in the Company’s 2004 Non-Employee Outside Director Stock Option Plan. No awards under this plan were made during Fiscal 2011. The Company’s directors are reimbursed their expenses for attendance at meetings.
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The following table provides certain information with respect to the compensation earned or paid to the Company’s Outside Directors during Fiscal 2009.2011.
Directors Compensation | | | | | | | | | | | | | | | | | | | | | Fees Earned or Paid
| | | | All Other
| | | Name | | in Cash ($) | | Option Awards ($)(1) | | Compensation ($) | | Total ($) | | | | Michael A.B. Binney(2) | | $ | 33,750 | | | $ | 0 | | | $ | 0 | | | $ | 33,750 | | | W. Michael Driscoll(3) | | $ | 17,500 | | | $ | 0 | | | $ | 0 | | | $ | 17,500 | | | Christopher Ho(4) | | $ | 120,625 | | | $ | 0 | | | $ | 0 | | | $ | 120,625 | | | Duncan Hon(5) | | $ | 5,875 | | | $ | 0 | | | $ | 0 | | | $ | 5,875 | | | Mirzan Mahathir | | $ | 52,958 | | | $ | 0 | | | $ | 0 | | | $ | 52,958 | | | David R. Peterson(6) | | $ | 13,125 | | | $ | 0 | | | $ | 0 | | | $ | 13,125 | | | Kareem E. Sethi | | $ | 60,514 | | | $ | 0 | | | $ | 0 | | | $ | 60,514 | | | Terence A. Snellings(7) | | $ | 36,667 | | | $ | 0 | | | $ | 0 | | | $ | 36,667 | | | Eduard Will | | $ | 52,597 | | | $ | 19,772 | | | $ | 0 | | | $ | 72,369 | | | Norbert Wirsching(8) | | $ | 18,333 | | | $ | 0 | | | $ | 0 | | | $ | 18,333 | |
| | | | | | | | | | | | | | | | | Fees | | | | | | | | | | | Earned | | | All Other | | | | | | | | or Paid in | | | Compensation | | | | | | Name | | Cash ($) | | | ($) | | | Total ($) | | | Christopher Ho | | $ | 78,458 | | | $ | 0 | | | $ | 78,458 | | | Mirzan Mahathir | | $ | 80,000 | | | $ | 0 | | | $ | 80,000 | | | Kareem E. Sethi | | $ | 80,000 | | | $ | 0 | | | $ | 80,000 | | | Terence A. Snellings | | $ | 70,870 | | | $ | 0 | | | $ | 70,870 | | | Eduard Will | | $ | 80,000 | | | $ | 113,547 | (1)(2) | | $ | 193,547 | |
| | | | | | (1) | | Represents the expensePrior to Fiscal 2010, the Company for stock options granted as long-term incentives pursuanthad a policy of offering to provide health care insurance to each of its Outside Directors. Mr. Will is the Company’s 2004 Non-Employeeonly current Outside Director Stock Option Plan. See noteswho elected to receive health care insurance through the Company’s financial statementsCompany. During Fiscal 2010, the Company decided to reverse this policy with retroactive effect and to recover the monies paid for such health care insurance from the fiscal years endedapplicable Outside Directors by offsetting such monies against future board fees over a thirty month period. Accordingly and as agreed between the Company and Mr. Will, the Company has been recovering, over a thirty month period, commencing June 2009, the $28,177 it paid for Mr. Will’s health insurance premiums after the date on which Mr. Will became an Outside Director and through March 31, 20092010. Furthermore, the Company paid $16,233 for cell phone charges for Mr. Will after the date on which Mr. Will became an Outside Director and 2008 for the assumptions used for valuing the expense. Atthrough March 31, 2009,2010, and, as agreed between the Company and Mr. Will, had options to purchase an aggregate of 50,000 sharesthe Company has been recovering such monies by offsetting against future board fees over a thirty month period, commencing June 2009. During Fiscal 2011, the Company recovered $11,970 from Mr. Will in accordance with terms of the Company’s common stock.above arrangement. | | | | (2) | | Mr. Binney served as the Company’s President-International Operations until he resigned from this position on May 7, 2008, at which time he began receiving a director’s fee as an Outside Director. Mr. Binney resigned from the Board of Directors ofDuring Fiscal 2011, the Company paid $113,547 to Mr. Will for work performed by Mr. Will related to a shareholder derivative lawsuit that the Company settled in January 2009. | | (3) | | Mr. Driscoll resigned as a director on July 14, 2008. | | (4) | | On September 5, 2008, the Board of Directors resolved that Mr. Ho would begin receiving a director fee as an Outside Director effective April 1, 2008 and that Mr. Ho would receive a retroactive director fee as an Outside Director dating from the time he joined the Board of Directors of the Company on July 26, 2006. As a result of this resolution, Mr. Ho was paid an aggregate amount of director’s fees in fiscal 2009 of $120,625. | | (5) | | Mr. Hon began to serve as a director on February 12, 2009. | | (6) | | Mr. Peterson resigned as a director on July 15, 2008. | | (7) | | Mr. Snellings began to serve as a director on August 12, 2008. | | (8) | | Mr. Wirsching resigned as a director on July 28, 2008.2011. |
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Equity Compensation Plan Information The following table gives information about the Company’s common stock that may be issued upon the exercise of options and rights under our 1994 Stock Compensation Program, 1994 Non-Employee Director Stock Option Plan,the Emerson Radio Corp. 2004 Employee Stock Incentive Plan and 2004 Non-Employee Outside Director Stock Option Plan, and exercise of warrants, as of March 31, 20092011 (the “Plans”). The 1994 Plans expired in July 2004 and the remaining Plans are the only equity compensation plans in existence as of March 31, 2009. | | | | | | | | | | | | | | | | | | | | | | | Number of Securities
| | | | | Number of Securities to
| | | Weighted Average
| | | Remaining Available
| | | | | be Issued Upon Exercise
| | | Exercise Price of
| | | for Future Issuance
| | | | | of Outstanding Options,
| | | Outstanding Options,
| | | Under Equity
| | | | | Warrants and Rights
| | | Warrants and Rights
| | | Compensation Plans
| | | | | (a) | | | (b) | | | (c) | | | | | Equity compensation plans approved by security holders | | | 134,000 | | | $ | 2.99 | | | | 2,878,334 | | | | | | | | | | | | | | | | | Equity compensation plans not approved by security holders | | | 100,000 | | | | 4.00 | | | | — | | | | | | | | | | | | | | | | Total | | | 234,000 | | | $ | 3.42 | | | | 2,878,334 | |
| | | | | | | | | | | | | | | | | 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 | | | Equity compensation plans approved by security holders | | | 50,000 | | | $ | 3.13 | | | | 2,950,000 | |
Certain Relationships and Related Transactions From time to time, the CompanyEmerson engages in business transactions with its controlling shareholder, Grande, Holdings. Asand one or more of October 8, 2009, Grande Holdings beneficially owned approximately 57.6% of the Company’s outstanding common stock. Mr. Ho, the Chairman of the Board of Directors of the Company, also serves as Chairman of Grande Holdings.Grande’s direct and indirect subsidiaries. Set forth below is a summary of such transactions.
MajorityControlling Shareholder
Grande Holding’sGrande’s Ownership Interest in Emerson.Emerso At October 8, 2009,n. Grande has advised the Company that, as of March 31, 2011, one of its indirect subsidiaries held beneficially 15,243,283 shares or approximately 57.6%56.2% of the outstanding common stock of Emerson. That number of shares includes the 3,391,967 Pledged Shares which, according to public filings made by Deutsche Bank in March 2010 had previously been pledged to Deutsche Bank to secure indebtedness owed to it. In February 2011, Deutsche Bank filed a Schedule 13G with the SEC stating that Deutsche Bank had sole voting and sole dispositive power over the Pledged Shares (which represent approximately 12.5% of the Company’s outstanding common stock was owned by direct or indirect subsidiariesstock). The Company believes that both Grande and Deutsche Bank have claimed beneficial ownership of the Grande Holdings.
Pledged Shares. As of October 14, 2011, the Company has not been able to verify independently the beneficial ownership of the Pledged Shares. Related Party Transactions Product Sourcing Transactions. Since August 2006, Emerson has been providing to Sansui Sales PTE Ltd (“Sansui Sales”) and Akai Sales PTE Ltd (“Akai Sales”), both of which are subsidiaries of Grande, assistance with acquiring certain products for sale. Emerson issues purchase orders to third-party suppliers who manufacture these products, and Emerson issues sales invoices to Sansui Sales’ and Akai Sales’ at gross amounts for these products. Financing is provided by Sansui Sales’ and Akai Sales’ customers in the form of transfer letters of credit to the suppliers, and goods are shipped directly from the suppliers to Sansui Sales’ and Akai Sales’ customers. Emerson recorded income totaling $10,000 and $102,000 for providing this service in fiscal 2009 and 2008, respectively. As of March 31, 2009 and March 31, 2008, Sansui Sales and Akai Sales collectively owed Emerson $7,600 and $134,000, respectively, relating to this activity.
Sales of goods. In addition to the product sourcing transactions described in the preceding paragraph, Emerson has also purchased products on behalf of Sansui Sales and Akai Sales from third-party suppliers and sold these goods to Sansui Sales and Akai Sales. These transactions, the latest of which occurred in February 2008, were similar to the transactions described in the preceding paragraph; however, instead of utilizing transfer letters of credit provided by Sansui Sales’ and Akai Sales’ customers, Emerson used its own cash to pay Sansui Sales’ and Akai Sales’ suppliers. Emerson invoices Sansui Sales and Akai Sales an amount that is marked up between two and three percent from the cost of the product. As a result of this arrangement, Emerson recorded sales to Sansui Sales and Akai Sales, collectively, of $0 and $242,000 in fiscal 2009 and 2008, respectively. Sansui Sales and Akai Sales collectively owed Emerson $1,500 and $5,000 relating to these activities, at March 31, 2009 and March 31, 2008, respectively. Akai Sales deducted $9,600 for storage charges from its June 30, 2008 settlement payment to Emerson for this activity, which was deemed to be in error by Emerson, which resulted in an outstanding balance owed to Emerson of $9,600 at March 31, 2009. At
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March 31, 2009 and March 31, 2008, Emerson had outstanding liabilities to suppliers of product invoiced to Sansui Sales and Akai Sales totaling $0 and $3,000, respectively.
Leases and Other Real Estate Transactions. Rented Space in Hong Kong Effective May 15, 2009,January 1, 2010, Emerson entered into an amendeda lease agreement with Lafe Properties (Hong Kong) Limited (“Lafe”), a related party of Grande at that time, pursuant to which the spaceEmerson rented from Grande was increased from 18,47636,540 square feet from Lafe for the purpose of housing its Hong Kong based office personnel and for its use to 19,484 square feet.refurbish certain returned products. This amendedlease agreement by itsexpired on December 31, 2010 and was renewed for a one year period on substantially the same terms during December 2010, and therefore now expires on December 31, 2009. 2011. Per information obtained from Grande, on December 31, 2010, Lafe was sold by its immediate holding company to an independent third party. As such, the Company is no longer considering Lafe to be a related party to the Company beginning December 31, 2010. Rent expense and related service charges associated with Grandethis lease agreement totaled $414,000 and $270,000approximately $552,000 for fiscal 2009 and fiscal 2008, respectively. Rentthe twelve months ended March 31, 2011. The rent expense and related service charges described inassociated with this activity arelease agreement is included in the Consolidated Statements of Operations as a component of selling, general, and administrative expenses. Emerson owed a subsidiary of Grande $41,600 and $0approximately $1,700 pertaining to rental related to this activityservice charges at March 31, 2009 and March 31, 2008, respectively. A security deposit2011. Rented Space in the People’s Republic of $81,900 on the leased property is held by Grande as of March 31, 2009. Emerson is also due an $11,500 refund from Grande for previously paid warehouse charges. Emerson utilizes the services of Grande employees for certain administrative and executive functions. Grande pays Emerson’s quality assurance personnel in Renminbi in China on Emerson’s behalf for which Emerson subsequently pays a reimbursement to Grande. Payroll and travel expenses, including utilization of Grande employees as well as payroll and travel expenses paid on Emerson’s behalf and reimbursed to Grande, were $85,000 and $515,000 for fiscal 2009 and fiscal 2008, respectively. Emerson owed Grande $0 at March 31, 2009 and $70,000 related to this activity at March 31, 2008.
In December 2008, Emerson signed a lease agreement with Akai Electric (China) Co., Ltd. (“Akai China”), a subsidiary of Grande prior to its disposal on December 24, 2010, concerning the rental of office space, office equipment, and lab equipment for Emerson’s quality assurance personnel in Zhong Shan,Zhongshan, People’s Republic of China. The initial lease term began in July 2007 and ended by its terms in June 2009, andat which time the agreement renewsrenewed automatically at the end of the termon a month-by-month basis unless canceled by either party. The agreement was cancelled in May 2011. On December 24, 2010, Grande announced that it sold Capetronic Group Ltd. (“Capetronic”) to a purchaser who, along with its beneficial owner, are third parties independent of Grande and its connected persons, as defined in the Listing Rules to the best of Grande’s and its directors’ knowledge, information and belief, having made all reasonable enquiries (the “Sale”). As Akai China was a subsidiary of Capetronic at the time of the Sale, and was disposed of along with Capetronic by Grande, the Company is no longer considering Akai China to be a related party to the Company beginning December 24, 2010.
Rent charges with Akai Electric (China) Ltd.China totaled $264,000approximately $85,000 for fiscal 2009.the twelve months ending March 31, 2011. Other. During the twelve months ending March 31, 2011, Emerson owed Grande $9,500paid consulting fees and related expense reimbursements of approximately $114,000 and approximately $23,000, respectively, to Mr. Eduard Will, a director of Emerson, for work performed by Mr. Will related to a shareholder derivative lawsuit that the Company settled in January 2011. In May 2010, Emerson signed an agreement with Mr. Will, which formalized the arrangement and commits Emerson to paying a consulting fee of a minimum of $12,500 per quarter to Mr. Will relating to this lawsuit. During the three months ending June 30, 2011. Emerson paid consulting fees and related expense reimbursements of approximately $3,400 and approximately $2,900, respectively, to Mr. Will for work performed by Mr. Will related to the agreement at March 31, 2009. A security deposit of $31,600 on the leased property is held by Akai Electric (China) Ltd. as of March 31, 2009. From May to October 2007, Emerson occupied office space in Shenzhen, China under a lease agreement with Akai AV Multimedia (Zhongshan) Co Ltd, an affiliate of Grande. Rent expense and related charges totaled $12,000 for the three months ended December 31, 2007 and $108,000 for the nine months ended December 31, 2007. The agreement was not renewed after its termination in October 2007.
aforementioned lawsuit. In May 20072011, Emerson paid a $10,000 commissiontravel advance of $15,500 to Vigers Hong Kong Ltd,Mr. Will for anticipated Emerson-related business travel to occur in a property agent and a subsidiary of Grande, related to the sale of a building owned by Emerson to an unaffiliated buyer. Also, Emerson received a deposit of approximately $300,000 from the buyer on this date. The sale was concluded on September 27, 2007, on which date Emerson received the balance of the purchase price of approximately $1,700,000 and paid an additional $10,000 commission to Vigers. Toy Musical Instruments. In May 2007, Emerson entered into an agreement with Goldmen Electronic Co. Ltd. (“Goldmen”), pursuant to which the Company agreed to pay $1,682,220 in exchange for Goldmen’s manufacture and delivery to Emerson of musical instruments in order for it to meet its delivery requirements of these instruments in the first week of September 2007.
future period. In July 2007,2011, Emerson paid a consulting fee of $3,300 to Mr. Will for work performed by Mr. Will during the Company learned that Goldmen had filed for bankruptcymonths of April through June 2011 on mergers and was unable to manufactureacquisitions matters. During the ordered musical instruments. Promptly thereafter, Capetronic Displays Limitedtwelve months ending March 31, 2011, Akai Sales Pte Ltd. (“Capetronic”Akai Sales”), a subsidiary of Grande, agreed to manufacture the musical instruments at the same price and on substantially the same terms and conditions. Accordingly, on July 12, 2007, Emerson paid Tomei Shoji Limited, an affiliate of Grande, $125,000 to acquire from Goldmen and deliver to Capetronic the molds and equipment necessary for Capetronic to manufacture the musical instruments. In July 2007, Emerson made two upfront payments to Capetronic totaling $546,000. On July 20, 2007, Capetronic advised Emerson that it was unable to manufacture the musical instruments because it did not have the requisite governmental licenses to do so. In June 2008, Capetronic repaid the $546,000 advance it received from Emerson in July 2007.
In August 2008, Capetronic requested that Emerson reimburse it for the costs it had incurred to purchase the production materials required to produce the musical instruments. After a review of the facts, the material
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purchase orders, the physical material at the Capetronic premises, and deducting an agreed upon scrap value of the material, Emerson paid $313,000 to Capetronic on September 30, 2008. These materials are the property of Capetronic.
Capetronic is currently in physical possession of Emerson’s molds originally required to produce the musical instruments, which Emerson wrote off in fiscal 2008.
Freight Forwarding Services. In June 2007, Emerson and Capetronic signed an agreement for Emerson to provide freight forwarding services to Capetronic. Under this agreement, which contains no specified termination date, Emerson will pay the costs of importation into the United States of Capetronic’s inventory on Capetronic’s behalf, and to arrange for the inventory to be received at a port of entry, cleared through the United States Customs Service using Emerson’s regularly engaged broker, and transfer the inventory to a common carrier as arranged by Capetronic’s customer. If Capetronic’s customer failed to make such arrangements with a common carrier, Emerson agreed to transfer the inventory to Emerson’s warehouse for storage or make other arrangements with a public warehouse. Following the transfer of Capetronic’s inventory, Emerson is required to provide Next Day delivery of all importation documents and bills of lading to Capetronic’s customer. Capetronic agreed to reimburse Emerson for all costs incurred by Emerson in connection with the activity just described within thirty days of demand by Emerson, after which interest accrues. As compensation, Capetronic agreed to pay Emerson a service fee of 12% of the importation costs. Emerson billed Capetronic for the reimbursement of importation costs totaling $246,000 and a commission of $29,000 for the nine month period of December 31, 2007. Capetronic paid Emerson the full amount due of $275,000 on November 14, 2007.
Hong Kong Electronics Fairs (“HKEF’). Emerson incurred costs totaling $152,633 for its participation in the 2008 HKEF. The total includes $5,138 billed by Grande to Emerson for services rendered in connection with the event, and, as of March 31, 2009, Emerson owes Lafe Technology (Hong Kong) Ltd $4,396 for storage and delivery charges. In addition, Emerson has billed $33,823 to its affiliates for expenses incurred on their behalf for the 2008 HKEF; and as of March 31, 2009, $19,657 from Nakamichi Corporation Ltd, $8,222 from Akai Sales PTE Ltd, and $5,944 from Sansui Sales PTE Ltd is due to Emerson.
Between August and December 2007, Emerson paid invoices and incurred charges for goods and services relating to the 2007 HKEF of $153,069. Portions of these charges, totaling $87,353, have been allocated and invoiced to affiliates of Grande in proportion to their respective share of space occupied and services rendered during the 2007 HKEF as follows: Nakamichi Corporation Ltd. $17,143, Akai Sales PTE Ltd $44,495 and Sansui Sales PTE Ltd $25,715. Akai Sales and Sansui Sales collectively owed Emerson $6,437 and $70,210 in connection with the 2007 HKEF as of March 31, 2009 and March 31, 2008, respectively.
Also related to the 2006 and 2007 annual Hong Kong Electronics Fairs, Capetronic incurred charges and paid invoices on behalf of Emerson in the amount of $76,000 for which Emerson reimbursed Capetronic $48,000 for the 2007 Hong Kong Electronics Fair in March 2008. Emerson paid Capetronic the remaining balance due of $28,000 for the 2006 Hong Kong Electronics Fair on September 30, 2008.
Other. In June 2007 Emerson paid a one-time sales commission in an amount of $14,000 to a Director of Grande who, at the time, was also a Director of Emerson. The commission was 50% of the net margin on a sale by Emerson to an unaffiliated customer.
In January and February 2008, Emerson invoiced The GEL Engineering Corp. Ltd (“GEL”), an affiliate of Grande, for a portion of $7,900 travel expenses paid by Emerson, of which 70% pertained to travel for the benefit of GEL and 30% pertained to travel for Emerson. As of March 31, 2009 and March 31, 2008, GEL owed Emerson $5,500 as a result of this activity.
In June 2008, Emerson paid Capetronic $160,000 for reimbursement of payroll and travel expenses that Capetronic paid on behalf of Emerson from October 2007 through May 2008 for expenses related to Emerson employees located in mainland China.
In September 2008, Akai Sales invoiced Emerson for travel expenses and courier fees which Akai Sales paid on Emerson’s behalf. As of March 31, 2009 Emerson owed Akai Sales $2,700 as a result of this invoice.
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In September 2008, the Emerson Board of Directors resolved that, effective as of April 1, 2008, the annual base salary of the Chief Executive Officer of the Company shall be $350,000, and, that because all members of the Board are to be compensated according to a schedule approved by the Board, and because no such fees had been paid to the Chairman of the Board from July 2006 through March 31, 2008, the Chairman of the Board shall be paid compensation in full for his services for that period of time, to be calculated using the standard annual fee structure in place for board members then currently in effect. As a result of these resolutions, in September 2008 the Company began paying the Chief Executive Officer the stated annual salary, made a one time retroactive salary payment to the Chief Executive Officer of $145,833 covering the period April 1, 2008 through August 31, 2008, and made a one time cash payment of $75,625 to the Chairman of the Board covering the period July 2006 through March 31, 2008.
In October 2008, the Emerson Board of Directors resolved that those remaining directors currently serving on the Board who, from the date of joining the Board, had received no compensation as either a Board member or as an employee of the Company, receive a cash payment covering such periods of time, to be calculated using the standard annual fee structure in place for board members then currently in effect. As a result of this resolution, in October 2008 the Company made onetime cash payments of $90,000 and $37,500 to two members of the Board of Directors.
In November 2008, Emerson determined that it needed to temporarily maintain access to a material amount of Renminbi to ensure an uninterrupted supply of factory product in mainland China, due to the tightening of the local credit and exchange markets. Emerson does not have independent access to Renminbi because it does not maintain a physical presence in Mainland China. Emerson advanced to Zhongshan Tomei Audio & Video Products Company Ltd. (Zhongshan Tomei) an amount of HK$20,705,300 — approximately US$2,655,000 — for which Zhongshan Tomei was prepared to disburse, as may be needed, an equivalent amount of Renminbi to Emerson’s factory suppliers upon Emerson’s direction. Once the need to transact in Renminbi passed, US $2,670,922 was repaid to Emerson by Soshin Onkyo International Ltd in December 2008, resulting in a foreign exchange gain to Emerson of $16,000 in December 2008. This transaction was executed without the proper approvals per the Company’s internal policies governing related party transactions and led management to conclude that a material weakness over related party transactions existed as of March 31, 2009.
In February 2009, Akai Sales invoiced Emerson$7,300 for travel expenses which Akai Sales paid on Emerson’s behalf. As of March 31, 2009behalf and Emerson owedreimbursed to Akai Sales $3,100during Fiscal 2011.
On April 7, 2010, upon a request made to the Company by its foreign controlling stockholder, S&T, the Company entered into an agreement with S&T whereby the Company returned to S&T on April 7, 2010 that portion of the taxes that the Company had withheld from the dividend paid on March 24, 2010 to S&T, which the Company believes is not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits (the “Agreement”). The Company believes this transaction results in an off-balance sheet arrangement, which is comprised of a possible contingent tax liability of the Company, which, if recognized, would be offset by the calling by the Company on S&T of the indemnification provisions of the Agreement. Per the terms of the Agreement, Emerson invoiced S&T in June 2010 approximately $42,000 for reimbursement of legal fees incurred by Emerson with regard to the Agreement and approximately $33,000 as a resulttransaction fee for having entered into the Agreement. In January 2011, Emerson agreed, upon the request of S&T, to waive approximately $5,000 of the legal charges that had been invoiced to S&T in June 2010. S&T paid the full amount owed to Emerson of approximately $70,000 in February 2011. In February 2011, upon the request of S&T to the Company, the Company and S&T agreed the collateral pledged as a part of the Agreement would no longer be required and this invoice. collateral was returned by the Company to S&T in March 2011. Review and Approval of Transactions with Related Parties It is the policyIn March 2011, after final court approval and associated appeal and implementation periods of the settlement agreement that the Company entered into to bring to a close a shareholder derivative lawsuit, the Company updated its policy regarding the review and approval of transactions with related parties to require that all proposed transactions between the Company and related parties, as defined by applicable accounting standards,the Financial Accounting Standard Board’s Accounting Standards Codification Topic 850 (ASC 850), which are (1) less than $500,000 but greater than $100,000 (“Covered RPT Transactions”) be pre-approved by a majority of those directors of the Company who are independent within the meaning of Section 803(A)(2) of the Company Guide, as may be amended from time to time. In reviewing and approving transactions between the Company and related parties, the independent directors are to determine whether the proposed transaction is entirely fair to the Company and in the Company’s best interest. For purposes of the policy, related parties means (i) an officer or director of the Company or the member of the immediate family of any of them or (ii) any other corporation, partnership, association, limited liability company, limited liability partnership, trust or other entity or organization in which one or more of the Company’s officers or directors are (a) directors, officers, trustees or other fiduciaries or (b) have a financial interest.
Prior to this change, the Company’s policy had required that all Covered RPT Transactions be pre-approved by the Company’s Chief Executive Officer, Chief Financial Officer and President-North American Operations and (2) greater than $500,000 be pre-approved by the Company’s Chief Executive Officer, Chief Financial Officer, President-North American Operations and AuditRelated Party Transaction Review Committee of the Board of Directors. ManagementDirectors, in accordance with the Related Party Transaction Review Committee charter. All other components of the Company concluded during its fiscal 2009 assessment of internal controls over financial reporting thatpolicy were substantially the Company’s policy is not effective to prevent related party transactions which give rise to potential conflicts of interest. As a result,same as the Company entered into a material transaction in which a subsidiary advanced funds to a related party without proper approval. The transaction was noted immediately as an unapproved transaction, and all the advanced funds were repaid to the Company on a timely basis.
Legal Proceedings
In re: Emerson Radio Shareholder Derivative Litigation. In late 2008, the plaintiffs in two previously filed derivative actions (the Berkowitz and Pinchuk actions) filed a consolidated amended complaint naming as defendants two current and one former director of the Company and alleging that the named defendants violated their fiduciary duties to the Company in connection with a number of related party transactions with affiliates of Grande Holdings, the Company’s controlling shareholder. In January 2009, the individual defendants filed an answer denying the material allegations of the complaint and the litigation currently is in the discovery stage. The recovery, if any, in this action will inure to the Company’s benefit.policy.
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Legal Proceedings In re: Kayne Litigation.On July 7, 2011, the Company was served with an amended complaint (the “Complaint”) filed in the United States District Court for the Central District of California alleging, among other things, that the Company, certain of its present and former directors and other entities or individuals now or previously associated with Grande, intentionally interfered with the ability of the plaintiffs to collect on a judgment (now approximately $47 million) they had against Grande by engaging in transactions (such as the dividend paid to all shareholders in March 2010) which transferred assets out of the United States. The Complaint also asserts claims under the civil RICO statute and for alter ego liability. In the Company’s opinion, based on an initial review, the claims appear to be devoid of merit. Accordingly, on September 27, 2011, Emerson moved to dismiss the action for failure to state claim (the “Motion”). The Court has scheduled oral argument for the Motion for December 19, 2011. In the interim, and in the event that the Motion is denied, Emerson intends to defend the action vigorously. PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF
MSPC AS INDEPENDENT AUDITORS OF EMERSON
FOR THE FISCAL YEAR ENDING 20102012 The Audit Committee has appointed MSPC as ourthe Company’s independent registered accountants to audit ourthe Company’s financial statements for the fiscal year ending March 31, 2010,2012, and has further directed that management submit the selection of independent registered accountants for ratification by ourthe Company’s stockholders at the annual meeting. Stockholder ratification of the selection of MSPC is not required by our by-laws or otherwise. However, we arethe Company is submitting the selection of MSPC to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain MSPC. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent accounting firm at any time during the year if it is determined that such a change would be in the best interests of Emerson and its stockholders. Representatives of the firm of MSPC are expected to be present at ourthe Company’s annual meeting and will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions. In accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the Audit Committee’s charter, all audit and audit-related work and all non-audit work performed by the Company’s independent accountants, MSPC, is approved in advance by the Audit Committee, including the proposed fees for such work. The Audit Committee is informed of each service actually rendered. oAudit Fees.Audit fees billed to the Company by MSPC for the audit of the financial statements included in the Company’s Annual Reports on Form 10-K, and reviews by MSPC of the financial statements included in the Company’s Quarterly Reports on Form 10-Q, for the fiscal years ended March 31, 2011 and 2010 totaled approximately $255,300 and $283,500, respectively. oAudit-Related Fees. The Company was billed approximately $118,000 and $131,250 by MSPC for the fiscal years ended March 31, 2011 and 2010, respectively, for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under the captionAudit Fees. Audit fees billed to the Company by MSPC for the audit of the financial statements included in the Company’s Annual Reports onForm 10-K, and reviews by MSPC of the financial statements included in the Company’s Quarterly Reports onForm 10-Q, for the fiscal years ended March 31, 2008 and 2009 totaled approximately $247,400 and $270,000, respectively. oAudit-Related Fees. The Company was billed $117,200 and $125,000 by MSPC for the fiscal years ended March 31, 2008 and 2009, respectively, for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under the caption Audit Fees above. Audit-related fees were principally related to procedures in connection with the audit of the Company’s majoritycontrolling shareholder’s consolidated financial statement for its fiscal years ended December 31, 20072010 and December 31, 2008,2009, portions of which were credited to ourthe Company’s audit fees for the audit of ourits financial statements for our fiscal years ended March 31, 2008 and March 31, 2009.
oTax Fees. SPC billed the Company an aggregate of $98,600 and $70,000 for the fiscal years ended March 31, 20082011 and 2009,March 31, 2010.
oTax Fees.MSPC billed the Company an aggregate of $66,600 and $73,500 for the fiscal years ended March 31, 2011 and 2010, respectively, for tax services, principally related to the preparation of income tax returns and related consultation. oAll Other FeesFees.. The Company was not billed by MSPC for the fiscal years ended March 31, 20082011 and 2009,2010, respectively, for any permitted non-audit services. Applicable law and regulations provide an exemption that permits certain services to be provided by the Company’s outside auditors even if they are not pre-approved. We have not relied on this exemption at any time since the Sarbanes-Oxley Act was enacted. Vote Required The affirmative vote of a majority of the votes cast at the meeting at which a quorum representing a majority of all outstanding shares of ourthe Company’s common stock is present and voting, either in person or by proxy, is required for the ratification of ourthe Company’s independent registered accountants.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
MSPC AS INDEPENDENT AUDITORS OF EMERSON FOR THE FISCAL YEAR ENDING MARCH 31, 2010.2012. SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s directors, officers, and stockholders who beneficially own more than 10% of any class of its equity securities registered pursuant to Section 12 of the Exchange Act, to file initial reports of ownership and reports of changes in ownership with respect to the Company’s equity securities with the Securities and Exchange CommissionSEC and the NYSE Amex. All reporting persons are required to furnish the Company with copies of all reports that such reporting persons file with the Securities and Exchange CommissionSEC pursuant to Section 16(a) of the Exchange Act. BasedExcept as set forth below, based solely upon a review of Forms 3, 4 and 45, and amendments to these forms furnished to the Company, all parties subject to the reporting requirements of Section 16(a) filed all such required reports during and with respect to Fiscal 2009.2011.
Deutsche Bank AG filed a Form 4 on February 9, 2011 reporting a purchase of 2,552 shares of the Company’s common stock which it made on December 17, 2010. STOCKHOLDER COMMUNICATIONS AND PROPOSALS OurThe Company’s Board of Directors has established a procedure that enables stockholders to communicate in writing with members of ourthe Company’s Board of Directors. Any such communication should be addressed to ourthe Company’s Secretary and should be sent to such individualc/o Emerson Radio Corp., 9 Entin Road, Parsippany,85 Oxford Drive, Moonachie, New Jersey 07054.07074. Any such communication must state, in a conspicuous manner, that it is intended for distribution to the entire Board of Directors. Under the procedures established by the Board of Directors, upon the Secretary’s receipt of such a communication, ourthe Company’s Secretary will send a copy of such communication to each member of the Board of Directors, identifying it as a communication received from a stockholder. Absent unusual circumstances, at the next regularly scheduled meeting of the Board of Directors held more than two days after such communication has been distributed, the Board of Directors will consider the substance of any such communication.
Stockholder proposals to be presented at ourthe Company’s Annual Meeting of Stockholders to be held in 2010,2012, for inclusion in ourthe Company’s proxy statement and form of proxy relating to that meeting, must be received by usthe Company at ourits offices located at 9 Entin Road, Parsippany,85 Oxford Drive, Moonachie, New Jersey 07054,07074, addressed to the Secretary, on or before April 23, 2010.June 18, 2012. If, however, our 2010the date of the Company’s 2012 Annual Meeting of Stockholders is changed by more than thirty (30) days from the date of ourits 2011 annual meeting, the deadline is a reasonable time before we beginthe Company begins to print and mail ourits proxy materials for the 20102012 Annual Meeting of Stockholders. Such stockholder proposals must comply with ourthe Company’s bylaws and the requirements of Regulation 14A of the Exchange Act. See “Election of Directors” for information on stockholder submissions of nominations for election to the Board of Directors. Rule 14a-4 of the Exchange Act governs ourthe Company’s use of discretionary proxy voting authority with respect to a stockholder proposal that is not addressed in the proxy statement. With respect to our 2010the Company’s 2012 Annual Meeting of Stockholders, if we arethe Company is not provided notice of a stockholder proposal prior to July 7, 2010, weSeptember 1, 2012, the Company will be permitted to use ourits discretionary voting authority when the proposal is raised at the meeting, without any discussion of the matter in the proxy statement.
PERSONS MAKING THE SOLICITATION The enclosed proxy is solicited on behalf of ourthe Company’s Board of Directors. WeThe Company will pay the cost of soliciting proxies in the accompanying form. OurThe Company’s officers may solicit proxies by mail, telephone, telegraph or fax. Upon request, wethe Company will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy material to beneficial owners of ourthe Company’s 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.
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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. FINANCIAL STATEMENTS A copy of ourthe Company’s Annual Report onForm 10-K for the fiscal year ended March 31, 2009,2011, 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. WeThe Company filed an amendment to ourits Annual Report onForm 10-K in July 20092011 in order to include certain information regarding our management, compensation and other matters. All of the information included in such amendment has been updated and is included in this proxy statement. A copy of ourthe Company’s Annual Report onForm 10-K andForm 10-K/A for the fiscal year ended March 31, 2009,2011, filed with the SEC, is available (excluding exhibits) without cost to stockholders upon written request made to Investor Relations, Emerson Radio Corp., Nine Entin Road, Parsippany,85 Oxford Drive, Moonachie, New Jersey07054-0430 07074 or on-line at ourthe Company’s web site: www.emersonradio.com. By Order of the Board of Directors,
ANDREW L. DAVIS
Secretary
October 19, 2009
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 EMERSON RADIO CORP.PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERSTO BE HELD ON NOVEMBER 10, 2009The undersigned hereby appoints Greenfield Pitts and | | | | | | By Order of the Board of Directors,
| | | /s/ Andrew L. Davis and each of them, as attorneys and proxies of the undersigned, with full power of substitution, to vote all of the shares of stock of Emerson Radio Corp. which the undersigned may be entitled to vote at the Annual Meeting of Stockholders of Emerson Radio Corp. to be held at the offices of our counsel, Lowenstein Sandler PC, located at 65 Livingston Avenue, Roseland, New Jersey 07068 on Tuesday, November 10, 2009, at 9:00 a.m. (local time), and at any and all postponements, continuations and adjournments thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the meeting.UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES LISTED IN PROPOSAL NO. 1 AND “FOR” PROPOSAL NO. 2, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.(Continued and to be signed on the reverse side.)14475 | | | ANDREW L. DAVIS | | | Secretary | | |
October 20, 2011
 EMERSON RADIO CORP. November 9, 2011 NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement, Proxy Card
are available at http://www.amstock.com/proxyservices/viewmaterial.asp?CoNumber=02008 Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible. â Please detach along perforated line and mail in the envelope provided. â  20730000000000000000 5 110911ANNUAL MEETING OF STOCKHOLDERS OFEMERSON RADIO CORP.November 10, 2009NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, Proxy Statement, Proxy Card are available at http://www.amstock.com/proxyservices/viewmaterial.asp?CoNumber=02008Please sign, date and mail your proxy card in the envelope provided as soon as possible.Please detach along perforated line and mail in the envelope provided.20830000000000000000 4111009THE | | | | | | | | | | | | | | | | | | | | |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE NOMINEES LISTED BELOW AND A VOTE “FOR” PROPOSAL 2.PLEASE2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE xFOR ý
| | | | | | | | | | | | | | | | | FOR | | AGAINST ABSTAIN1.To | | ABSTAIN | 1. To elect eightseven directors: | |
NOMINEES: | | | | | 2. | | To ratify the appointment of MSPC Certified Public Accountants and Advisors, A Professional Corporation as NOMINEES:the independent registered public accounting firm of Emerson FOR ALL NOMINEESO Christopher HoRadioRadio Corp. for the fiscal year ending March 31, 2010.O Adrian MaWITHHOLD2012. | | o | | o | | o | | o | | FOR ALL NOMINEES | | ¡ | | Christopher Ho | | | | | | | | | | | | | | | ¡ | | Eduard Will | | | | | | | | | | | | | | o | | WITHHOLD AUTHORITY O Greenfield PittsTHIS
FOR ALL NOMINEES | | ¡
¡ | | Duncan Hon
Vincent Fok | | | | | | | | | | | | | | o | | FOR ALL EXCEPT
(See Instructions below) | | ¡
¡
¡ | | Mirzan Mahathir
Kareem E. Sethi
Terence A. Snellings | | | | |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.FOR ALL NOMINEESO Eduard WillITDIRECTORS. IT MAY BE REVOKED PRIOR TO ITS EXERCISE.O Duncan Hon FOR ALL EXCEPTO Mirzan Mahathir(See instructions below)EXERCISE.
RECEIPT OF NOTICE OF THE ANNUAL MEETING AND PROXY STATEMENTO Kareem E. SethiISSTATEMENT IS HEREBY ACKNOWLEDGED, AND THE TERMS OF THE NOTICE AND O Terence A. SnellingsPROXYPROXY STATEMENT ARE HEREBY INCORPORATED BY REFERENCE INTOTHISINTO THIS PROXY. THE UNDERSIGNED HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN FOR SAID MEETING OR ANY AND ALL ADJOURNMENTS, POSTPONEMENTS AND CONTINUATIONS THEREOF.PLEASETHEREOF.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED ININSTRUCTIONS:IN THE UNITED STATES. | | | | | | | | | | | | | | | | | | | | | | INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” THE UNITED STATES. and fill in the circle next to each nominee you wish to withhold, as shown here:= | | | | | | | | | | | | | | | | | To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.Signature of ShareholderDate:method. | | o | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Signature of ShareholderDate:Stockholder | | Date: | | Signature of Stockholder | | Date: | |
| | | | | Note: | | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
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EMERSON RADIO CORP. PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 9, 2011 The undersigned hereby appoints Andrew L. Davis and Barry Smith, and each of them, as attorneys and proxies of the undersigned, with full power of substitution, to vote all of the shares of stock of Emerson Radio Corp. which the undersigned may be entitled to vote at the Annual Meeting of Stockholders of Emerson Radio Corp. to be held at our offices located at 85 Oxford Drive, Moonachie, New Jersey 07074 on Wednesday, November 9, 2011, at 9:00 a.m. (local time), and at any and all postponements, continuations and adjournments thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the meeting. UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES LISTED IN PROPOSAL NO. 1 AND “FOR” PROPOSAL NO. 2, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH. (Continued and to be signed on the reverse side.) |