<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
CHECK THE APPROPRIATE BOX:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
KOSS CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
RICHARD W. SILVERTHORN, ESQ.
WHYTE HIRSCHBOECK DUDEK S.C.
---------------------------------------
(Name of Person Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
____________________________________________________________
2) Aggregate number of securities to which transaction applies:
____________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1)
____________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: _______________________________________
2) Form, Schedule or Registration Statement No.: ___________________
3) Filing Party: _____________________________________________
4) Date Filed: _____________________________________________
<PAGE> 2
KOSS CORPORATION
4129 NORTH PORT WASHINGTON AVENUE
MILWAUKEE, WISCONSIN 53212
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
OCTOBER 22, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Koss Corporation will be held at the offices of the Company at
4129 North Port Washington Avenue, Milwaukee, Wisconsin, on Thursday, October
22, 1998, at 9:00 a.m. local time to consider and act on the following
proposals:
1. The election of seven (7) directors;
2. The ratification of the appointment of PricewaterhouseCoopers
LLP, independent accountants, as auditors of the Company
for the fiscal year ending June 30, 1999; and
3. Such other business as may properly be brought before the
Meeting.
The transfer books of the Company will not be closed for the Meeting.
Only stockholders of record at the close of business on August 24, 1998 will be
entitled to notice of and to vote at the Meeting. Information regarding the
matters to be considered and voted upon at the Meeting is set forth in the Proxy
Statement accompanying this Notice.
You are cordially invited to attend the Meeting in person, if possible.
In order to assist us in preparing for the Meeting, all stockholders are urged
to promptly sign and date the enclosed proxy and return it in the enclosed
envelope which requires no postage. If you attend the Meeting, you may vote your
shares in person even if you previously submitted a proxy.
By Order of the Board of Directors
/s/ Richard W. Silverthorn
---------------------------------
Richard W. Silverthorn, Secretary
Milwaukee, Wisconsin
September 24, 1998
<PAGE> 3
NOTE TO PRINTER: LEAVE THIS PAGE (INSIDE FRONT COVER) BLANK
<PAGE> 4
KOSS CORPORATION
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 22, 1998
INTRODUCTION
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION
OF PROXIES BY THE BOARD OF DIRECTORS OF KOSS CORPORATION (the "Company") for use
at the Company's 1998 Annual Meeting of Stockholders (the "Meeting") and any
adjournment thereof, for the purposes set forth in the foregoing Notice of
Annual Meeting of Stockholders.
DATE, TIME AND LOCATION. The Meeting will be held at the offices of the
Company, 4129 North Port Washington Avenue, Milwaukee, Wisconsin, 53212, on
Thursday, October 22, 1998, at 9:00 a.m. local time.
PURPOSES OF THE MEETING. At the Meeting, stockholders will consider and
vote upon two matters: (i) the election of seven (7) directors for one-year
terms; and (ii) a proposal to ratify the appointment of PricewaterhouseCoopers
LLP ("PricewaterhouseCoopers"), independent accountants, as independent
auditors for the fiscal year ending June 30, 1999.
PROXY SOLICITATION. The cost of soliciting proxies will be borne by the
Company. Proxies will be solicited primarily by mail and may be made by
directors, officers and employees personally or by telephone or telegraph. The
Company will reimburse brokerage firms, custodians and nominees for their
out-of-pocket expenses incurred in forwarding proxy materials to beneficial
owners. Proxy Statements and proxies will be mailed to stockholders on
approximately September 24, 1998.
QUORUM AND VOTING INFORMATION. Only stockholders of record of the
Company's $.01 par value common stock ("Common Stock") at the close of business
on August 24, 1998 (the "Record Date"), are entitled to vote at the Meeting. As
of the Record Date, there were 3,177,269 shares of Common Stock outstanding and
entitled to vote. A quorum of stockholders is necessary to take action at the
Meeting. A majority of the outstanding shares of Common Stock, represented in
person or by proxy, will constitute a quorum of stockholders at the Meeting.
Votes cast by proxy or in person at the Meeting will be tabulated by the
inspector of elections appointed for the Meeting. The inspector of elections
will determine whether or not a quorum is present at the Meeting. The inspector
of elections will treat abstentions as shares of Common Stock that are present
and entitled to vote for purposes of determining the presence of a quorum. If a
broker indicates on the proxy that it does not have discretionary authority to
vote certain shares of Common Stock on a particular matter (a "broker
non-vote"), those shares will not be considered as present and entitled to vote
with respect to that matter.
The seven nominees receiving the greatest number of votes cast in
person or by proxy at the Meeting shall be elected directors of the Company. The
vote required for the ratification of the appointment of PricewaterhouseCoopers
as independent accountants for the year ending June 30, 1999, and the vote
required to approve any other matter to be presented to the Meeting, is the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy at the Meeting. For purposes of determining the
approval of any matter submitted to the stockholders for a vote, abstentions
and broker non-votes will be treated as
<PAGE> 5
shares of Common Stock that have been withheld for the purpose of electing
directors and as voted "against" the ratification of PricewaterhouseCoopers as
the Company's auditors for the year ending June 30, 1999.
PROXIES AND REVOCATION OF PROXIES. A proxy in the accompanying form,
which is properly executed, duly returned to the Company and not revoked, will
be voted in accordance with instructions contained therein. In the event that
any matter which is not described in this Proxy Statement properly comes before
the Meeting, the accompanying form of proxy authorizes the persons appointed as
proxies thereby ("Proxyholders") to vote on such matter in their sole
discretion. At the present time, management knows of no other matters which are
to come before the Meeting. See "ITEM 3. TRANSACTION OF OTHER BUSINESS." If no
instructions are given with respect to any particular matter to be acted upon, a
proxy will be voted "FOR" the election of all nominees for director named herein
and "FOR" the ratification of PricewaterhouseCoopers as the Company's auditors
for the year ending June 30, 1999. If matters other than those mentioned herein
properly come before the Meeting, a proxy will be voted in accordance with the
best judgment of a majority of the Proxyholders named therein.
Each such proxy granted may be revoked at any time before it is voted
by filing with the Secretary of the Company a written notice of revocation, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Meeting and voting in person.
STOCKHOLDER PROPOSALS. There are no stockholder proposals on the agenda
for the Meeting. In order to be considered for inclusion in the agenda for the
1999 annual meeting, a stockholder proposal must have been received by the
Company no later than May 29, 1999. Stockholder proposals should be sent to the
Company's principal offices, 4129 North Port Washington Avenue, Milwaukee,
Wisconsin, 53212, by certified mail, return receipt requested, and should be
addressed to the Secretary of the Company.
ANNUAL REPORT. The Company's Annual Report to Stockholders, including
audited financial statements for the year ended June 30, 1998, although not a
part of this Proxy Statement, is delivered herewith.
2
<PAGE> 6
ITEM 1. ELECTION OF DIRECTORS
The By-Laws of the Company provide that the number of Directors on the
Board shall be no fewer than six and no greater than twelve. In accordance with
the By-Laws, the Board of Directors has by resolution fixed the number of
Directors at seven. Given the varied experience of the current nominees and
their contribution to the governing of the Company, the current size of the
Board has been determined to be advantageous for both the Company and its
stockholders. Shares cannot be voted for a greater number of persons than seven
vacant positions. Each director so elected shall serve until the next Annual
Meeting of Stockholders and until his successor is duly elected, or until his
prior death, resignation or removal.
INFORMATION AS TO NOMINEES.
The following identifies the nominees for the seven director positions
and provides information as to their business experience for the past five
years. Each nominee is presently a director of the Company:
JOHN C. KOSS, 68, has served continuously as Chairman of the
Board of the Company or its predecessors since 1958. Previously, he
served as Chief Executive Officer from 1958 until 1991. He is the
father of Michael J. Koss (who is the Company's President, Chief
Executive Officer, Chief Financial Officer, and Chief Operating
Officer, and a nominee for director of the Company), and the father of
John Koss, Jr. (the Company's Vice President - Sales).
THOMAS L. DOERR, 54, has been a director of the Company since
1987. Mr. Doerr co-founded Leeson Electric Corporation in 1972 and
served as its President and Chief Executive Officer until 1982. The
company manufactures industrial electric motors. In 1983, Mr. Doerr
incorporated Doerr Corporation as a holding company for the purpose of
acquiring established companies involved in distributing products to
industrial and commercial markets. Currently, Mr. Doerr serves as
President and Chief Executive Officer of Doerr Corporation.
VICTOR L. HUNTER, 51, has been a director of the Company since
1987. Mr. Hunter is the President of Hunter Business Direct, a service
company specializing in business-to-business direct marketing. Mr.
Hunter holds an MBA from the Harvard Business School.
MICHAEL J. KOSS, 44, has held various positions at the Company
since 1976, and has been a director of the Company since 1985. He was
elected President, Chief Operating Officer and Chief Financial Officer
of Koss Corporation on July 22, 1987. On August 9, 1991, he was elected
Chief Executive Officer. He is the son of John C. Koss and the brother
of John Koss, Jr.
LAWRENCE S. MATTSON, 66, has been a director of the Company
since 1978. Mr. Mattson is the retired President of Oster Company, a
division of Sunbeam Corporation, which manufactures and sells portable
household appliances.
MARTIN F. STEIN, 61, is the Chairman of Eyecare One, Inc.,
which includes Stein Optical and Eye Q. Stein Optical operates optical
centers and a manufacturing lab in Milwaukee, Wisconsin. Eye Q operates
optical centers in Chicago, Illinois. Prior to this, Mr. Stein was the
Chairman and Chief Executive Officer of Stein Health Services. Mr.
Stein has been a director of the Company since 1987.
JOHN J. STOLLENWERK, 58, has been a director of the Company
since 1986. Mr. Stollenwerk is the President of the Allen-Edmonds Shoe
Corporation, an international manufacturer and retailer of high quality
footwear.
3
<PAGE> 7
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF
DIRECTORS.
BOARD COMMITTEES.
The Board of Directors of the Company has the following standing
committees:
AUDIT COMMITTEE. The Audit Committee, which is composed of Mr.
Mattson, Mr. Doerr, and Mr. Stein, reviews and evaluates the effectiveness of
the Company's financial and accounting functions, including reviewing the scope
and results of the audit work performed by the independent accountants and by
the Company's internal accounting staff. The Audit Committee met twice during
the fiscal year ended June 30, 1998. The independent accountants were present at
both of these meetings to discuss their audit scope and the results of their
audit.
COMPENSATION COMMITTEE. The Compensation Committee, which is
composed of John C. Koss, Mr. Mattson, Mr. Stollenwerk, and Mr. Hunter, has
responsibility for reviewing and recommending adjustment of all employee annual
salaries in excess of $45,000 as well as all bonus and compensation programs.
The Compensation Committee met once during the fiscal year ended June 30, 1998.
See "Executive Compensation and Related Matters -- Compensation Committee Report
on Executive Compensation." The Company's 1990 Flexible Incentive Plan (the
"Plan") is administered by the Compensation Committee. Subject to the express
provisions of the Plan, the Committee has complete authority to (i) determine
when and to whom benefits are granted; (ii) determine the terms and provisions
of benefits granted; (iii) interpret the Plan; (iv) prescribe, amend and rescind
rules and regulations relating to the Plan; (v) accelerate, purchase, adjust or
remove restrictions from benefits; and (vi) take any other action which it
considers necessary or appropriate for the administration of the Plan.
NOMINATING COMMITTEE. The Board of Directors has no nominating
committee and the Company has no established procedure for the nomination of
persons to serve on the Board of Directors.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS. During the fiscal
year ended June 30, 1998, the Board held four meetings. Every incumbent director
attended 75% or more of the total of (i) all meetings of the Board, plus (ii)
all meetings of the committees on which they served during their respective
terms of office.
EXECUTIVE OFFICERS.
Information is provided below with respect to the executive officers of
the Company who are not directors. Each executive officer is elected annually by
the Board of Directors and serves for one year or until his or her successor is
appointed.
<TABLE>
<CAPTION>
Current Position
Name Age Positions Held Held Since
- -------------- ----- -------------- -----------
<S> <C> <C> <C>
John Koss, Jr. 41 Vice President - Sales 1988
Sujata Sachdeva 34 Vice President - Finance 1992
Richard W. Silverthorn* 43 Secretary, General Counsel 1993
</TABLE>
- ---------------------------
* Mr. Silverthorn is an attorney and shareholder with the law firm of Whyte
Hirschboeck Dudek S.C., Milwaukee, Wisconsin, which law firm serves as legal
counsel to the Company.
4
<PAGE> 8
BENEFICIAL OWNERSHIP OF COMPANY SECURITIES.
SECURITY OWNERSHIP BY NOMINEES AND MANAGEMENT. The following table sets
forth, as of September 1, 1998, the number of shares of Common Stock
"beneficially owned" (as defined under applicable Securities and Exchange
Commission regulations) and the percentage of such shares to the total number of
shares outstanding for all nominees, for each executive officer named in the
Summary Compensation Table (see "Executive Compensation and Related Matters --
Summary Compensation Table"), for all directors and executive officers as a
group, and for each person and each group of persons who, to the knowledge of
the Company as of September 1, 1998, based solely on the review of Schedule 13D
or 13G information statements of such beneficial owner filed with the Securities
and Exchange Commission, were the beneficial owners of more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Percent of
Number of Shares Outstanding
Name and Business Address (1) Beneficially Owned (2) Common Stock (3)
------------------------------ ----------------------- ----------------
<S> <C> <C>
John C. Koss (4).................................................. 1,028,749 32.4%
Michael J. Koss (5) .............................................. 558,166 17.4%
John Koss, Jr. (6) ............................................... 138,810 4.4%
Thomas L. Doerr................................................... 0 *
Victor L. Hunter.................................................. 1 *
Lawrence S. Mattson............................................... 0 *
Martin F. Stein................................................... 4,500 *
John J. Stollenwerk............................................... 4,500 *
All directors and executive 1,529,777 47.6%
officers as a group (10 persons) (7).............................
Koss Family Voting Trust, John C. Koss, Trustee (8)............... 587,431 18.5%
Koss Employee Stock Ownership Trust ("KESOT") (9)................. 358,277 11.3%
FMR Corp. (10).................................................... 326,500 10.3%
Dimensional Fund Advisors Inc. (11)............................... 189,400 6.0%
- ----------------------------------------------------------------------
</TABLE>
(1) Unless otherwise noted, the business address of all persons named in
the above table is c/o Koss Corporation, 4129 North Port Washington
Avenue, Milwaukee, WI 53212.
(2) Unless otherwise noted, amounts indicated reflect shares as to which
the beneficial owner possesses sole voting and dispositive powers.
Also included are shares subject to stock options if such options are
exercisable within 60 days of September 1, 1998.
(3) Based on 3,177,269 shares outstanding on September 1, 1998. Asterisk
(*) denotes beneficial ownership of less than 1%. Percentage
calculation assumes, for each individual owning options and for
directors and executive officers as a group, the exercise of that
number of options which are included in the total number of shares.
5
<PAGE> 9
(4) Includes the following shares which are deemed to be "beneficially
owned" by John C. Koss: (i) 275,280 shares owned directly or by his
spouse; (ii) 59,517 shares as a result of his position as an officer
of Koss Foundation; (iii) 587,431 shares as a result of his position
as trustee of the Koss Family Voting Trust; (iv) 28,125 shares as a
result of his position as co-trustee of the John C. and Nancy Koss
Revocable Trust; and (v) 78,396 shares by reason of the allocation of
those shares to his account under the Koss Employee Stock Ownership
Trust ("KESOT") and his ability to vote such shares pursuant to the
terms of the KESOT -- see "Executive Compensation and Related Matters
-- Other Compensation Arrangements -- Employee Stock Ownership Plan
and Trust."
(5) Includes the following shares deemed to be "beneficially owned" by
Michael J. Koss: (i) 123,389 shares owned directly or by reason of
family relationships; (ii) 54,000 shares as a result of his beneficial
interest in the Koss Family Voting Trust; (iii) 28,051 shares by
reason of the allocation of those shares to his account under the
KESOT and his ability to vote such shares; (iv) 22,500 shares with
respect to which he holds options which are exercisable within 60 days
of September 1, 1998; and (v) 358,277 shares which are held by the
KESOT (see Note (9), below). The 28,051 shares allocated to Michael J.
Koss' KESOT account, over which he holds voting power, are included
within the aforementioned 358,277 shares but are counted only once in
his individual total.
(6) Includes the following shares deemed to be "beneficially owned" by
John Koss, Jr.: (i) 45,007 shares owned directly or by his daughter;
(ii) 54,000 shares as a result of his beneficial interest in the Koss
Family Voting Trust; (iii) 11,250 shares with respect to which he
holds options which are exercisable within 60 days of September 1,
1998; and (iv) 18,553 shares by reason of the allocation of those
shares to his account under the KESOT and his ability to vote such
shares.
(7) To avoid double-counting: (i) the 358,277 total shares held by the
KESOT and deemed to be beneficially owned by Michael J. Koss as result
of his position as a KESOT Trustee (see Note (5), above) include
124,567 shares allocated to the KESOT accounts of John C. Koss,
Michael J. Koss, and John C. Koss, Jr. in the above table but are
included only once in the total; and (ii) the 587,431 shares deemed to
be beneficially owned by John C. Koss as a result of his position as
trustee of the Koss Family Voting Trust (see Note (4), above) include
108,000 shares beneficially owned by Michael J. Koss and John Koss,
Jr. (54,000 shares each) by reason of their beneficial interest in the
Koss Family Voting Trust (see Notes (5) and (6), above) but are
included only once in the total.
(8) The Koss Family Voting Trust was established by John C. Koss. The sole
Trustee is John C. Koss, 4129 North Port Washington Avenue, Milwaukee,
WI 53212. The term of the Koss Family Voting Trust is indefinite.
Under the Trust Agreement, John C. Koss, as Trustee, holds full voting
and dispositive power over the shares held by the Koss Family Voting
Trust. All of the 587,431 shares are included in the number of shares
shown as beneficially owned by John C. Koss (see Note (4), above).
(9) The KESOT holds 358,277 shares. Authority to vote these shares is
vested in KESOT participants to the extent shares have been allocated
to individual KESOT accounts. 124,567 shares have been allocated to
the accounts of John C. Koss, Michael J. Koss, and John C. Koss, Jr.
in the above table. 78,396 of these KESOT shares are also included in
the number of shares shown as beneficially owned by John C. Koss (see
Note (4), above) and 18,553 shares are also included in the number of
shares shown as beneficially owned by John Koss, Jr. All 358,277 of
these shares are also included in the number of shares shown as
beneficially owned by Michael J. Koss (see Note (5), above). Michael
J. Koss and Cheryl Mike (the Company's Director of Human Resources)
serve as Trustees of the KESOT and, as such, they share dispositive
power with respect to (and are therefore each deemed to beneficially
own) all 358,277 KESOT shares.
6
<PAGE> 10
(10) 82 Devonshire Street, Boston, MA 02109.
(11) 1299 Ocean Ave., 11th Floor, Santa Monica, CA 90401. The following is
qualified in its entirety by reference to a Schedule 13G statement
dated February 9, 1998 by Dimensional Fund Advisors (the "Schedule
13G"): Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 189,400
shares of KOSS CORPORATION stock as of December 31, 1997, all of which
shares are held in portfolios of DFA Investment Dimensions Group Inc.,
a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
EXECUTIVE COMPENSATION AND RELATED MATTERS.
SUMMARY COMPENSATION TABLE. The following table presents certain
summary information concerning compensation paid or accrued by the Company for
services rendered in all capacities during the fiscal years ended June 30, 1998,
1997, and 1996 for (i) the Chief Executive Officer ("CEO") of the Company, and
(ii) each of the other two executive officers of the Company (determined as of
the end of the last fiscal year) whose total annual salary and bonus exceeded
$100,000 (collectively, including the CEO, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
(1)
---------------------------
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ---------------------------
SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND YEAR COMPENSATION RESTRICTED OPTIONS/ COMPEN-
PRINCIPAL ENDED SALARY BONUS (2) STOCK AWARDS SARs (3) SATION (4)
POSITION JUNE 30, ($) ($) ($) ($) (#) ($)
------------ ----------- ------------ --------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
John C. 1998 $150,000 $262,547 $ 0 0 0 $135,458
Koss
Chairman of 1997 150,000 182,414 0 0 0 144,219
the Board
1996 150,000 120,520 0 0 0 125,512
- -------------------------------------------------------------------------------------------------------------------
Michael J. 1998 $165,000 $367,565 $1,632,813 0 10,000 $16,683
Koss,
Chief Executive 1997 150,000 255,379 0 0 10,000 26,156
Officer
1996 145,000 168,727 69,550 0 25,000 21,210
- -------------------------------------------------------------------------------------------------------------------
John Koss, Jr., 1998 $120,000 $ 47,000 $343,750 0 10,000 $12,117
Vice President -
Sales 1997 110,000 44,577 0 0 7,500 20,987
1996 100,000 65,049 94,550 0 7,500 21,124
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The above table omits information concerning Long Term Incentive Plans
("LTIPs") (plans, other than restricted stock, stock option, or SAR
plans, which provide for the payment of incentive compensation for
performance expected to occur over more than one fiscal year) because
the Company has no LTIPs.
7
<PAGE> 11
(2) Includes the value realized upon the exercise of stock options (see
"Aggregate Stock Option Exercises During the Fiscal Year"). In all
cases, the value of perquisites and other benefits in any fiscal year
did not exceed the lesser of $50,000 or 10% of the total salary and
bonus reported and, under applicable compensation disclosure rules of
the Securities and Exchange Commission, are not required to be included
in this column.
(3) Consists of Incentive Stock Options granted to executive officers. For
additional information, see "Stock Options Granted During Fiscal Year"
and "Other Compensation Arrangements -- Stock Option Plans."
(4) "All Other Compensation" consists of the following: (i) Company
matching contributions under the Company's 401k Plan for the accounts
of John C. Koss ($7,625 in 1998, $12,080 in 1997, and $4,620 in 1996),
Michael J. Koss ($10,000 in 1998, $14,080 in 1997, and $9,240 in 1996),
and John Koss, Jr. ($7,255 in 1998, $9,330 in 1997, and $9,684 in
1996); (ii) Company contributions to the KESOT for the accounts of John
C. Koss ($4,239 in 1998, $11,247 in 1997, and $11,170 in 1996), Michael
J. Koss ($4,239 in 1998, $11,243 in 1997, and $11,170 in 1996), and
John Koss, Jr. ($3,728 in 1998, $11,243 in 1997, and $11,170 in 1996);
(iii) premiums paid by the Company for life insurance for John C. Koss
($8,514 in 1998, $5,805 in 1997, and $5,805 in 1996), Michael J. Koss
($2,444 in 1998, $828 in 1997, and $800 in 1996), and John Koss, Jr.
($1,134 in 1998, $414 in 1997, and $270 in 1996); and (iv) an annual
accrued expense of $115,080 in connection with the Company's agreement
to continue to pay John C. Koss his current base salary in the event he
becomes disabled prior to age 70 (he is currently 68 years old) and,
after age 70, to continue to pay John C. Koss his current base salary
for the remainder of his life, whether or not he becomes disabled.
STOCK OPTIONS GRANTED DURING FISCAL YEAR. The following table provides
certain information concerning stock options granted to Named Executive Officers
during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
SECURITIES PERCENT OF ASSUMED ANNUAL RATES OF STOCK
UNDER TOTAL PRICE APPRECIATION FOR
LYING OPTIONS/ OPTION TERM*
OPTIONS/ SARs EXERCISE OR --------------------------------
SARs GRANTED TO BASE PRICE
GRANTED EMPLOYEES
IN FISCAL ($ PER EXPIRATION
NAME (NUMBER) YEAR SHARE DATE 0% 5% 10%
- ---------------- ---------- ---------- ----------- ---------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
0% 5% 10%
Michael J. Koss 10,000 18.2% $ 11.91 April 22, 2003 $(10,800) $ 32,905 $72,712
John C. Koss, Jr. 10,000 18.2% $ 11.91 April 22, 2003 (10,800) 32,905 72,712
</TABLE>
* Based on the "fair market value" as determined under the Company's 1990
Flexible Incentive Plan (which provides that the "fair market value" for
purposes thereof is the average of the closing prices on the five trading
days immediately preceding the grant of such option) of $10.83 per share
on April 22, 1998, the date such options were granted. The Exercise Price
for Michael J. Koss and John Koss, Jr. is equal to 110% of the "fair
market value," as so determined, on the date of grant.
8
<PAGE> 12
AGGREGATE STOCK OPTION EXERCISES DURING THE FISCAL YEAR. The
following table provides certain information about stock option exercises by the
Named Executive Officers during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING THE-MONEY OPTIONS AT
SHARES UNEXERCISED FISCAL YEAR END (1)
ACQUIRED OPTIONS/SARs AT
ON VALUE FISCAL YEAR END (DOLLARS)
EXERCISE REALIZED --------------------- ------------------------
EXERCIS- UNEXER- UNEXER-
NAME (NUMBER) DOLLARS ABLE(1) CISABLE EXERCISABLE CISABLE
---- -------- ------- --------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Koss 287,500 $1,632,813 22,500 32,500 $68,775 $ 58,550
John C. Koss, Jr. 60,000 $ 343,750 11,250 5,625 27,534 19,866
</TABLE>
(1) Based on the $10.125 per share market value of the Company's Common
Stock on June 30, 1998, determined with reference to the closing
price of the Company's Common Stock on June 30, 1998, as reported on
The Nasdaq Stock Market. Options are "in-the-money" if the fair
market value of the stock on June 30, 1998 exceeds the exercise
price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. John C.
Koss, who is the Chairman of the Board and an executive officer of the Company,
serves on the Compensation Committee.
DIRECTOR COMPENSATION. Directors who are not also employees of the
Company receive an annual retainer of $5,000, plus $1,250 per director for each
board meeting and $500 per director for each committee meeting.
OTHER COMPENSATION ARRANGEMENTS. The Company has certain other
compensation plans and arrangements which are available to the CEO and certain
of the Named Executive Officers including the following:
SUPPLEMENTAL MEDICAL CARE REIMBURSEMENT PLAN. Each officer of
the Company is covered by a medical care reimbursement plan
for all medical expenses incurred which are not covered under
group health insurance up to an annual maximum of 10% of
salary. Amounts reimbursed under this Plan are included under
the column headed "All Other Compensation" in the summary
compensation table.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. In December 1975, the
Company adopted the KESOT, which is a form of employee benefit
plan designed to invest primarily in employer securities. The
KESOT is qualified under Section 401(a) of the Internal
Revenue Code. All full-time employees with at least six
months' uninterrupted service with the Company are eligible to
participate in the KESOT. Contributions to the KESOT are
allocated to the accounts of participants in proportion to the
ratio that a participant's compensation bears to total
compensation of all participants. Accounts are adjusted each
year to reflect the investment experience of the trust and
forfeitures from accounts of non-vested terminated
participants. All unallocated shares will be voted by the
KESOT Trustees as directed by the KESOT Committee. Michael J.
Koss and Cheryl Mike currently serve as KESOT Trustees and as
the members of the KESOT Committee. Voting rights for all
allocated shares are passed through to the participant for
whose account such shares are allocated, and must be voted by
the Trustees in accordance with the participants' direction.
As of August 24, 1998, the KESOT held 358,277 shares of Common
Stock of the Company (approximately 11.3% of the total number
of shares outstanding).
9
<PAGE> 13
OFFICER LOAN POLICY. On January 31, 1980, the Board adopted an
Officer Loan Policy. The significant provisions of the policy
are: (i) the maximum amount to be loaned is limited to
one-half of the officer's annual base salary; (ii) the first
$10,000 bears no interest; (iii) in the event the loan balance
exceeds $10,000, interest is charged on the entire amount at
the minimum rate provided by Section 483 of the Internal
Revenue Code; and (iv) the loan will be repaid in installments
or in full upon termination of employment. During the fiscal
year ended June 30, 1998, no officer had an officer loan that
exceeded $60,000.
DEATH BENEFIT AGREEMENT. In 1980, the Company entered into an
agreement with John C. Koss that provides that if he dies
prior to attaining 70 years of age, the Company will pay to
his spouse or other designated beneficiary the sum of $50,000
every six months until the total benefit paid equals $700,000.
The agreement is null and void if John C. Koss reaches age 70.
Life insurance policies designating the Company as beneficiary
are maintained to fund this contingent liability.
RETIREMENT AGREEMENT. The Board of Directors has by resolution
agreed to continue to pay to John C. Koss his current base
salary in the event he becomes disabled prior to age 70. After
age 70, Mr. Koss shall be eligible to receive his current base
salary for the remainder of his life, whether he becomes
disabled or not. The Company is currently recognizing an
annual accrued expense of $115,080 in connection with this
Agreement. Mr. Koss is currently 68 years old and his current
base salary is $150,000 per year.
STOCK OPTION PLANS. In 1990, the Board of Directors created,
and the stockholders approved, a Flexible Incentive Plan (the
"Plan"). This Plan is administered by the Compensation
Committee and vests the Compensation Committee with
discretionary powers to choose from a variety of incentive
compensation alternatives to make annual stock-based awards to
officers, key employees and other members of the Company's
management team. The Board of Directors recommended, and the
stockholders approved, the reservation of 225,000 shares of
Company Common Stock for issuance pursuant to the Plan in its
first year. At the Company's 1992 Annual Meeting, the
stockholders approved an amendment to the Plan authorizing the
reservation of an additional 250,000 shares of Company Common
Stock for issuance to Plan participants. At the Company's 1993
Annual Meeting, the stockholders approved an amendment to the
Plan authorizing the reservation of an additional 300,000
shares of Company Common Stock for issuance to Plan
participants. At the Company's 1997 Annual Meeting, the
stockholders approved an amendment to the Plan authorizing the
reservation of an additional 300,000 shares of Company Common
Stock for issuance to Plan participants. John C. Koss is not
eligible for any grants since he is a member of the
Compensation Committee.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Board of Directors
has by resolution entered into a Supplemental Executive
Retirement Plan with Michael J. Koss which calls for Mr. Koss
to receive annual cash compensation following his retirement
from the Company ("Retirement Payments") in an amount equal to
2% of the base salary of Mr. Koss, multiplied by his number of
years of service to the Company (example 2% multiplied by 25
years is 50% of base salary). The base salary shall be
calculated using the average base salary of Mr. Koss during
the three years preceding his retirement. The Retirement
Payments are to be paid to Mr. Koss monthly until his death,
and after his death shall continue to be paid monthly to his
surviving spouse until her death
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
Under Securities and Exchange Commission ("SEC") rules, the Company is
required to provide certain information concerning compensation provided to the
Company's Chief Executive Officer and the Named Executive Officers. The
disclosure requirements for these individuals include the use of tables and
10
<PAGE> 14
a report of the Committee responsible for compensation decisions for these
individuals, explaining the rationale and considerations that led to those
compensation decisions. Therefore, the Compensation Committee of the Board of
Directors has prepared the following report for inclusion in this Proxy
Statement:
The Compensation Committee of the Board of Directors
("Compensation Committee") is composed of Mr. Stollenwerk, Mr. Mattson,
Mr. Hunter and the Chairman of the Board, John C. Koss. The
Compensation Committee is responsible for the review of all employee
salaries in excess of $45,000. The Compensation Committee also reviews
all bonus, commission and stock option programs. The Compensation
Committee meets as a group each spring and reviews its report with the
full board prior to the end of the fiscal year. This system enables
management to plan the following year more appropriately.
The Company employs a compensation program linked to
company-wide performance and individual achievement. All executive
officers are reviewed twice each year. Raises in base salaries are made
in July when necessary or when promotions are announced. In addition,
the Company has a Flexible Incentive Plan, Employee Stock Ownership
Plan and Trust and a 401(k) Plan. The Company also has a cafeteria
benefits plan to provide flexibility to employees to choose their own
health care and associated benefits package from an array of offerings.
The Company shares the cost of medical insurance with its employees.
The Company's executive officers are paid base salaries
commensurate with their responsibilities, after comparison with base
salaries of executive officers of other light assembly or manufacturing
companies taken from data in an annual national survey.
Executive officers are also eligible for annual bonuses based
upon individual performance and overall Company performance. Factors
relevant to determining such bonuses include attainment of corporate
revenue and earnings goals and the development of new accounts. The
Company's Chairman is eligible to receive a bonus calculated as a
percentage of the Company's earnings before interest and taxes. The
Company's Vice President-Sales is entitled to receive a bonus based
upon increases in sales over the prior year, and a bonus for obtaining
new accounts from a predetermined list of potential new accounts and
for adding new product lines to current accounts. The Company's Vice
President - Europe is entitled to receive a bonus based upon the
Company's Sales in export markets.
The Compensation Committee annually reviews and determines the
compensation of Michael J. Koss, President and Chief Executive Officer.
Michael J. Koss' salary is based on his experience, responsibilities,
historical salary levels for himself and other executive officers of
the Company, and the salaries of Chief Executive Officers of other
light assembly or manufacturing companies. Michael J. Koss is also
eligible to receive a bonus calculated as a percentage of the Company's
earnings before interest and taxes. He also participates in the
Company's Flexible Incentive Plan.
COMPENSATION COMMITTEE
JOHN C. KOSS
LAWRENCE S. MATTSON
JOHN J. STOLLENWERK
VICTOR L. HUNTER
11
<PAGE> 15
THE REPORT OF THE COMPENSATION COMMITTEE SHALL NOT BE DEEMED
INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY
REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT
OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF 1934 (TOGETHER, THE
"ACTS"), EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE
DEEMED FILED UNDER SUCH ACTS.
STOCK PRICE PERFORMANCE INFORMATION.
The graph and table on the next page set forth information comparing
the yearly cumulative total return on the Company's Common Stock over the past
five years with the yearly cumulative total return on (i) stocks included in the
NASDAQ Stock Market (US Companies) Index, and (ii) a group of peer companies
("Peer Group"). The Peer Group, which was selected by the Company, consists of
Boston Acoustics, Inc., Carver Corporation, Polk Audio, Inc., and Recoton
Corporation. For purposes of the graph and table, it is assumed that on June 30,
1993, $100 was invested in the stock of each of (i) the Company, (ii) the
companies on the NASDAQ Stock Market (US Companies) Index, and (iii) the
companies in the Peer Group (the cumulative return for the investment in the
stock of companies in the Peer Group is weighted according to the relative
market capitalization of each company as adjusted at the end of each fiscal year
shown on the table). The graph and table also assume that all dividends paid
were reinvested in the stock of the issuing companies. THE STOCK PRICE
PERFORMANCE INFORMATION SHOWN IN THE GRAPH AND TABLE BELOW SHOULD NOT BE
CONSIDERED INDICATIVE OF FUTURE PERFORMANCE.
[LINE GRAPH]
<TABLE>
<CAPTION>
KOSS CORPORATION
TOTAL CUMULATIVE SHAREHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING JUNE 30, 1998
JUNE 30... 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
KOSS CORPORATION $100.00 $125.58 $ 56.98 $ 62.79 $ 81.40 $ 94.19
NASDAQ 100.00 100.96 134.77 173.03 210.38 277.61
PEER GROUP 100.00 167.68 171.68 173.23 144.44 306.69
</TABLE>
12
<PAGE> 16
RELATED TRANSACTIONS.
BUILDING LEASE. The Company leases its main plant and offices in
Milwaukee, Wisconsin from its Chairman, John C. Koss. As of June 25, 1993, the
lease was renewed for a period of ten years, and is being accounted for as an
operating lease. The new lease extension increases the rent from $280,000 per
year (plus a Consumer Price Index increase in 1994) to a fixed rate of $350,000
per year for three years and $380,000 for the seven years thereafter. The
Company is responsible for all property maintenance, insurance, taxes and other
normal expenses related to ownership. The lease is on terms no less favorable to
the Company than those that could be obtained from unaffiliated parties.
STOCK REPURCHASES. The Company has previously announced its intention
to repurchase shares of Common Stock in the open market or in private
transactions as such shares become available from time to time, because the
Company believes that its stock is undervalued in the current market and that
such repurchases enhance the value to stockholders. Consistent with this policy,
the Board of Directors approved the repurchase of 547,772 shares for the fiscal
year ended June 30, 1998. These 547,772 shares were automatically cancelled. The
Company believes that purchases of Common Stock enhance stockholder value and
will continue from time to time to engage in such transactions either on the
open market or in private transactions.
As reported in last year's Proxy Statement, on September 10, 1997, the
Company purchased 250,000 shares of Common Stock from Michael J. Koss at a price
of $13.75 per share (the "closing" price reported on The Nasdaq Stock Market on
September 9, 1997), and purchased 50,000 shares of Common Stock from John C.
Koss, Jr., also at a price of $13.75 per share. The value realized by Michael J.
Koss and John C. Koss, Jr., in these transactions was $1,375,000 and $275,000,
respectively. These 300,000 shares were automatically retired.
The Company has an agreement with its Chairman, John C. Koss, to
repurchase stock from his estate in the event of his death. The repurchase price
is 95% of the fair market value of the common stock on the date that notice to
repurchase is provided to the Company. The total number of shares to be
repurchased shall be sufficient to provide proceeds which are the lesser of
$2,500,000 or the amount of estate taxes and administrative expenses incurred by
his estate. The Company is obligated to pay in cash 25% of the total amount due
and to execute a promissory note at the prime rate of interest for the balance.
The Company maintains a $1,150,000 life insurance policy to fund a substantial
portion of this obligation. At June 30, 1998, $1,490,000 has been classified as
a Contingently Redeemable Equity Interest reflecting the estimated obligation in
the event of execution of the agreement.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the company's equity security, to file with the Securities
and Exchange Commission and with The Nasdaq Stock Market reports of ownership
and changes in ownership of Common Stock and other equity securities of the
company. Officers, directors and greater than 10% shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of such reports furnished to the Company or
representations that no other reports were required, the Company believes that,
during the 1997 fiscal year, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were satisfied except that the
Koss Family Voting Trust filed one late report covering the transfer of stock to
certain beneficiaries of said trust, and John C. Koss, as trustee of the Koss
Family Voting Trust, filed one late report with respect to the same transaction.
13
<PAGE> 17
ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, following the recommendation of its Audit
Committee, has retained PricewaterhouseCoopers as independent accountants to
audit the consolidated financial statements of the Company and its subsidiaries
for the fiscal year ending June 30, 1999. PricewaterhouseCoopers has served the
Company as its independent auditors since September 1992. Representatives of
PricewaterhouseCoopers are expected to be present at the Meeting, and will have
the opportunity to make a statement if they desire to do so. The
PricewaterhouseCoopers representatives are expected to be available to respond
to appropriate questions at the Meeting.
Although this appointment is not required to be submitted to a vote by
stockholders, the Board believes it appropriate, as a matter of policy, to
request that the stockholders ratify the appointment. If stockholder
ratification (by the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the Meeting) is not received,
the Board will reconsider the appointment. Unless otherwise directed, the proxy
will be voted in favor of the ratification of such appointment.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" RATIFICATION OF PRICEWATERHOUSECOOPERS
AS INDEPENDENT ACCOUNTANTS FOR THE YEAR ENDING JUNE 30, 1999
ITEM 3. TRANSACTION OF OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters
that may come before the meeting. If any other matters are properly presented to
the meeting for action, it is the intention of the persons named as proxies in
the enclosed form of proxy to vote such proxies in accordance with their best
judgment on such matters.
By Order of the Board of Directors
Richard W. Silverthorn
---------------------------------
Richard W. Silverthorn, Secretary
Milwaukee, Wisconsin
September 24, 1998
14
<PAGE> 18
<TABLE>
<S><C>
KOSS(R) CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
4129 North Port Washington Avenue The undersigned hereby appoints John C. Koss and Lawrence S. Mattson as Proxies, each with
Milwaukee, Wisconsin 53212 full power of substitution for himself, and hereby authorizes them to represent and to
vote, as designated below, all the shares of common stock of Koss Corporation held as of
the record date and which the undersigned is entitled to vote at the Annual Meeting of
PROXY Stockholders to be held on October 22, 1998 and any or all adjournments thereof, with
like effect as if the undersigned were personally present and voting.
Properly executed proxies received by the Company will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the election of all seven nominees listed for director and FOR Proposal 2. If any
other matters properly come before the meeting, this proxy will be voted in accordance
with the best judgment of the Proxies appointed.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
and the Proxy Statement furnished therewith.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
\/ DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED \/
KOSS CORPORATION 1998 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1 - John C. Koss 2 - Thomas L. Doerr 3 - Victor L. Hunter [ ] FOR all [ ] WITHHOLD AUTHORITY
4 - Michael J. Koss 5 - Lawrence S. Mattson nominees listed to vote for all
6 - Martin F. Stein 7 - John J. Stollenwerk to the left nominees listed
(except as to the left.
specified below).
(Instructions: To withhold authority to vote for any indicated nominee, write the number(s) --> [ ]
of the nominee(s) in the box provided to the right).
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS [ ] FOR [ ] AGAINST [ ] ABSTAIN
AUDITORS OF THE CORPORATION FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Check appropriate box Date____________________, 1998 NO. OF SHARES
Indicate changes below:
Address Change? [ ] Name Change? [ ]
[ ]
[ ]
SIGNATURE(S) IN BOX
Please sign exactly as name appears hereon. When
units are held by joint tenants, both should sign.
When signing as an attorney, executor, administrator,
trustee or guardian, please give full title of such.
If a corporation, please sign name by President or
other authorized officer. If a partnership, please
sign in partnership name by authorized person.
</TABLE>
<PAGE> 19
<TABLE>
<S><C>
KOSS(R) CORPORATION I, the undersigned participant in the Koss Corporation Employee Stock Ownership Plan and Trust
KESOT PARTICIPANTS ("KESOT"), having received the Notice of Annual Meeting of Stockholders of Koss Corporation
4129 NORTH PORT WASHINGTON AVENUE ("Company") and the Proxy Statement furnished therewith ("Proxy Statement"), hereby instruct
MILWAUKEE, WISCONSIN 53212 Michael J. Koss and Cheryl Mike, as Trustees of the Trust created pursuant to the KESOT, to
vote the shares of Common Stock of the Company allocated to my account under the KESOT as of
the record date, on the following proposals to be presented at the Annual Meeting of
Stockholders of the Company to be held on October 22, 1998, and at any adjournment thereof, in
accordance with the following instructions below.
PROXY
YOUR VOTE IS BEING SOLICITED BY THE COMPANY IN ACCORDANCE WITH THE PROVISIONS OF THE KESOT.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR DIRECTOR AND IN FAVOR
OF PROPOSAL 2.
IF YOU RETURN THIS CARD PROPERLY SIGNED BUT DO NOT OTHERWISE SPECIFY, SHARES ALLOCATED TO
YOUR KESOT ACCOUNT WILL BE VOTED FOR ALL NOMINEES LISTED FOR DIRECTOR AND IN FAVOR OF
PROPOSAL 2. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING, SHARES ALLOCATED TO YOUR
KESOT ACCOUNT WILL BE VOTED BY THE TRUSTEES AS DIRECTED BY THE KESOT COMMITTEE. IF YOU DO NOT
RETURN THIS CARD, SHARES ALLOCATED TO YOUR KESOT ACCOUNT WILL BE VOTED BY THE TRUSTEES AS
DIRECTED BY THE KESOT COMMITTEE.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
\/ DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED \/
KOSS CORPORATION 1998 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1 - John C. Koss 2 - Thomas L. Doerr 3 - Victor L. Hunter [ ] FOR all [ ] WITHHOLD AUTHORITY
4 - Michael J. Koss 5 - Lawrence S. Mattson nominees listed to vote for all
6 - Martin F. Stein 7 - John J. Stollenwerk to the left nominees listed
(except as to the left.
specified below).
(Instructions: To withhold authority to vote for any indicated nominee, write the number(s) --> [ ]
of the nominee(s) in the box provided to the right).
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS INDEPENDENT [ ] FOR [ ] AGAINST [ ] ABSTAIN
AUDITORS OF THE CORPORATION FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
Check appropriate box Date____________________, 1998 NO. OF SHARES
Indicate changes below:
Address Change? [ ] Name Change? [ ]
[ ]
[ ]
SIGNATURE(S) IN BOX
Please sign exactly as name appears herein. When
shares are held by joint tenants, both should sign.
When signing as attorney, executors, administrators,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
</TABLE>
