SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
SOUND ADVICE, INC.
................................................................................
(Name of Registrant as Specified In Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
................................................................................
2) Aggregate number of securities to which transaction applies:
................................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
................................................................................
4) Proposed maximum aggregate value of transaction:
................................................................................
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SOUND ADVICE, INC.
1901 TIGERTAIL BOULEVARD
DANIA, FLORIDA 33004
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Notice of Annual Meeting Of Shareholders
to be held January 21, 1997
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To Our Shareholders:
The 1996 Annual Meeting of Shareholders of Sound Advice, Inc. (the
"Company") will be held on Tuesday, January 21, 1997, at 10:00 a.m., local time,
at The Wyndham Hotel (formerly The Sheraton Ft. Lauderdale Airport Hotel), 1825
Griffin Road, Dania, Florida 33004, for the following purposes:
1. To elect directors; and
2. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
The Board of Directors has fixed Thursday, December 12, 1996, as the
record date for the determination of shareholders entitled to vote at the 1996
Annual Meeting of Shareholders. Only shareholders of record at the close of
business on that date will be entitled to notice of, and to vote at, the meeting
or any postponement or adjournment thereof.
Copies of the Company's Proxy Statement and annual report for the year
ended June 30, 1996 accompany this notice.
You are cordially invited to attend the meeting in person. Whether or
not you expect to attend the meeting in person, you are urged to sign and date
the enclosed proxy and return it promptly in the envelope provided for that
purpose.
By Order of the Board of Directors
/s/ MICHAEL BLUMBERG
Michael Blumberg
Secretary
Dania, Florida
December 23, 1996
<PAGE>
SOUND ADVICE, INC.
1901 TIGERTAIL BOULEVARD
DANIA, FLORIDA 33004
PROXY STATEMENT
-----------------------------------
INTRODUCTION
GENERAL
- -------
This proxy statement, which together with the accompanying proxy card is
first being mailed to shareholders on or about December 23, 1996, is furnished
to the shareholders of the Company in connection with the solicitation of
proxies by the Board of Directors of the Company for use in voting at the 1996
Annual Meeting of Shareholders, including any adjournment or postponement
thereof.
Proxies in the form enclosed, if properly executed and received in time
for voting, and not revoked, will be voted as directed in accordance with the
instructions thereon. In voting by proxy in regard to the election of six
directors to serve until the 1997 annual meeting of shareholders, shareholders
may vote in favor of all nominees or withhold their votes as to all or as to any
specific nominees. Any properly executed and timely received proxy not so
directing or instructing to the contrary will be voted FOR each of the Company's
nominees as directors. See "ELECTION OF DIRECTORS." Sending in a signed proxy
will not affect a shareholder's right to attend the meeting and vote in person
since the proxy is revocable. Any shareholder giving a proxy may revoke it at
any time before it is voted at the meeting by, among other methods, giving
notice of such revocation to the Secretary of the Company, attending the meeting
and voting in person or by duly executing and returning a proxy bearing a later
date.
The cost of this solicitation will be borne by the Company. In addition
to solicitation by mail, proxies may be solicited in person or by telephone,
telegraph or other means by officers and/or regular employees of the Company
without additional compensation or remuneration therefor. Arrangements have also
been made with brokers, dealers, banks, voting trustees and other custodians,
nominees and fiduciaries to forward proxy materials and annual reports to the
beneficial owners of the shares held of record by such persons, and the Company
will, upon request, reimburse them for their reasonable expenses in so doing.
The management knows of no other matters to be presented for action at
the meeting other than as mentioned herein. However, if any other matters come
before the meeting, it is intended that the holders of the proxies will vote
thereon in their sole discretion.
A copy of the Company's annual report for the fiscal year ended June 30,
1996 (which has included therein audited consolidated financial statements for
the Company for the fiscal years ended June 30, 1994, 1995 and 1996) is being
mailed to the Company's shareholders together with this Proxy Statement. Such
annual report is not, however, incorporated into this Proxy Statement nor is it
to be deemed a part of the proxy soliciting material.
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VOTING SECURITIES
- -----------------
At the close of business on Thursday, December 12, 1996, the record date
for the determination of shareholders entitled to receive notice of and to vote
at the meeting, the Company's outstanding voting securities consisted of
3,728,894 shares of Common Stock, par value $0.01 per share. Holders of Common
Stock are entitled to one vote per share.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock, as of December 12, 1996, by
(i) each person who is known by the Company to own beneficially more than 5% of
the Company's Common Stock; (ii) each of the Company's directors and nominees
for director who own shares of the Company's Common Stock; (iii) the Company's
Chief Executive Officer ("CEO") and its four most highly compensated executive
officers other than the CEO who were serving as executive officers at the end of
fiscal year 1996; and (iv) all directors and executive officers of the Company
as a group. Except as noted in the footnotes to the table, the persons named in
the table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY OWNED
OF -------------------------
BENEFICIAL OWNER NUMBER PERCENTAGE
---------------- ------ ----------
<S> <C> <C>
FMR Corp. (1)(2) .......................... 382,308.0 (2) 10.25% (2)
Peter Beshouri (3) ........................ 341,007.5 (4)(5) 9.15% (4)(5)
Michael Blumberg (3) ...................... 341,007.5 (4)(5) 9.15% (4)(5)
U.S. Bancorp (1)(6) ....................... 319,600.0 (6) 8.57% (6)
Dimensional Fund Advisors
Inc. (1)(7) .............................. 217,500.0 (7) 5.83% (7)
Joseph Piccirilli (3) ..................... 210,467.5 (4) 5.64% (4)
Gregory Sturgis (3) ....................... 150,467.5 (4) 4.04% (4)
Kenneth L. Danielson (3) .................. 87,000.0 (8) 2.30% (8)
Christopher O'Neil (3)..................... 49,339.1 (5)(8) 1.31% (5)(8)
G. Kay Griffith (3)........................ 36,000.0 (8) .96% (8)
Richard W. McEwen (9)...................... 6,000.0 .16%
Herbert A. Leeds (10)...................... - -
All directors and executive officers
as a group (eight persons including
certain of those listed above) (4)(5)(8).. 1,010,821.6 26.21%
</TABLE>
- --------------------------
(1) The information set forth herein with respect to each such person(s) is
based solely upon a Schedule(s) 13G (and any amendments thereto) filed
with the SEC by such person(s) with respect to the calendar year ended
December 31, 1995 and, accordingly, may not reflect their respective
holdings as of the date of this report.
(2) FMR Corp., 82 Devonshire Street, Boston, Massachusetts 02109, through
the ownership of its wholly-owned subsidiary, Fidelity Management &
Research Company, a registered investment advisor located at the same
address as FMR Corp., is deemed to be the beneficial owner of 382,308
shares of Common Stock, with respect to which shares it has sole
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dispositive power, as a result of acting as an investment advisor to
several registered investment companies. The number of shares of Common
Stock owned by such investment companies includes 11,408 shares
resulting from the assumed conversion of certain of the Company's
warrants. In addition, Edward C. Johnson 3d, the Chairman of FMR Corp.
and who with various Johnson family members and trusts for the benefit
of Johnson family members form a control group with respect to FMR
Corp., indirectly would also be deemed the beneficial owner of such
382,308 shares by reasoning of having sole dispositive power over such
shares. Fidelity Low-Priced Stock Fund, one of the registered investment
companies as to which Fidelity Management & Research Company acts as an
investment advisor and located at the same address as FMR Corp., may
also be deemed a beneficial owner of 382,105 of such 382,308 shares as a
result of its right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, such 382,105 shares.
The number of shares of Common Stock owned by Fidelity Low-Priced Stock
Fund includes 11,205 shares resulting from the assumed conversion of
certain of the Company's warrants.
(3) The address of each such person is care of the Company, 1901 Tigertail
Boulevard, Dania, Florida 33004. Messrs. Beshouri, Blumberg, Piccirilli
and Sturgis collectively are herein referred to as the "Principal
Shareholders."
(4) See "Right of First Refusal and Voting Trust Agreement" hereinbelow.
(5) Includes such person's or members' of the group vested interest (if any)
in shares of Common Stock of the Company resulting from such person's or
members' of the group participation in the Company's Employee Stock
Ownership Plan ("ESOP") based upon the latest available annual report of
the ESOP for the fiscal year ended June 30, 1995. Based on such annual
report, Mr. Beshouri had 539.998 vested shares, Mr. Blumberg had 539.999
vested shares and Mr. O'Neil had 339.136 vested shares, and all current
directors and executive officers as a group had 1,419.133 vested shares.
(6) U.S. Bancorp, 111 S.W. Fifth Avenue, Portland, Oregon, 97204, as a
result of the Trust Group of the United States National Bank of Oregon
(a national banking association located at the same address and owned by
U.S. Bancorp) holding the sole voting power over 162,500 shares of
Common Stock, is deemed, together with United States National Bank of
Oregon, to be the beneficial owner of such 162,500 shares. In addition,
Qualivest Capital Management, Inc. (a registered investment adviser
located at the same address and owned by United States National Bank of
Oregon) holds the sole voting power over 157,100 shares of Common Stock
and is deemed the beneficial owner of such additional 157,100 shares, as
a result of acting as an investment adviser to The Qualivest Funds, a
registered investment company.
(7) Dimensional Fund Advisors Inc. ("Dimensional"), 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401, which is a registered investment
advisor, is deemed to have beneficial ownership of 217,500 shares of
Common Stock, with respect to which shares it has sole voting power over
133,900 and sole dispositive power over 217,500. All of such shares are
held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end management 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, with respect to all of which
Dimensional serves as investment manager. In addition, persons who are
officers of Dimensional also serve as officers of DFA Investment
Dimensions Group Inc. and The DFA
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Investment Trust Company and, in their capacities as officers of DFA
Investment Dimensions Group Inc. and The DFA Investment Trust Company,
such persons have sole voting power over the balance (83,600 shares) of
the 217,500 shares not voted by Dimensional. Dimensional disclaims
beneficial ownership of all such shares.
(8) Includes (as applicable) immediately exercisable stock options held by:
(i) Mr. Danielson for 20,000 shares of Common Stock at an exercise price
of $6.29 per share, for 15,000 shares at an exercise price of $1.77 per
share and for 15,000 shares at an exercise price of $1.70 per share;
(ii) Mr. O'Neil for 2,000 shares of Common Stock at an exercise price of
$5.45 per share, for 11,000 shares at an exercise price of $6.29 per
share, for 15,000 shares at an exercise price of $1.77 per share and for
15,000 shares at an exercise price of $1.70 per share; and (iii) Ms.
Griffith for 20,000 shares of Common Stock at an exercise price of $6.29
per share and for 15,000 shares at an exercise price of $5.96 per share.
See "EXECUTIVE COMPENSATION. - Executive Compensation Tables."
(9) The address of Richard W. McEwen is 3752 Bobbin Brook West, Tallahassee,
Florida 32312.
(10) The address of Herbert A. Leeds is 1110 Brickell Avenue, Suite 508,
Miami, Florida 33131.
RIGHT OF FIRST REFUSAL AND VOTING TRUST AGREEMENT
- -------------------------------------------------
On June 30, 1986, the Principal Shareholders entered into a right of
first refusal and voting trust agreement. The voting trust arrangement under
such agreement expired on June 30, 1996, while the right of first refusal
arrangement continues. Pursuant to such agreement, each Principal Shareholder,
for himself and on behalf of his heirs, beneficiaries, legal representatives and
permitted assigns, has agreed not to sell, transfer, assign, pledge, encumber or
otherwise dispose of any of his shares of Common Stock except (a) by will or the
laws of intestate succession, (b) to a trust in which such Principal Shareholder
or his immediate family are the sole beneficiaries, (c) with the written consent
of all of the other Principal Shareholders or (d) pursuant to the right of first
refusal granted to the other Principal Shareholders. Under such right of first
refusal, in the event a Principal Shareholder or his heirs, beneficiaries, legal
representative or permitted assigns desires to sell any shares of Common Stock
pursuant to a bona fide offer or otherwise, such other Principal Shareholders
shall have the right and option to purchase such shares at a price equal to the
bona fide offer price per share (if any) or the average of the closing bid and
ask prices for the Common Stock over the four full weeks preceding the date the
notice of intent to sell is given.
ELECTION OF DIRECTORS
Six directors are to be elected at the 1996 Annual Meeting of
Shareholders to hold office until the annual meeting of shareholders next
succeeding their election and until their respective successors are elected and
qualified or as otherwise provided in the by-laws of the Company. The nominees
for directors who receive a plurality of the votes cast by the holders of
outstanding shares of Common Stock entitled to vote at the 1996 Annual Meeting
of Shareholders will be elected. Abstentions (withheld authority) and broker
non-votes are not counted in determining the number of shares voted for or
against any nominee for director.
The Board of Directors has designated the persons listed below to be
nominees for election as directors. Each is currently serving as a director of
the Company and has consented to being named in the Proxy Statement and to serve
if elected. The Company has no reason to believe that
4
<PAGE>
any of the nominees will be unavailable for election; however, should any
nominee become unavailable for any reason, the Board of Directors may designate
a substitute nominee or the number of authorized directors may be reduced. Each
proxy will be voted for the election to the Board of Directors of all of the
Board of Director's nominees unless authority is withheld to vote for all or any
of said nominees.
The following information regarding the Company's nominees for election
as directors is based, in part, on information furnished by these individuals.
Director
Name Age Position(s) with the Company Since
- ---- --- ---------------------------- --------
Peter Beshouri 42 Chairman of the Board, President 1982
and Chief Executive Officer
Michael Blumberg 48 Director, Senior Vice President 1974
and Secretary
Gregory Sturgis 2 44 Director 1974
G. Kay Griffith 1 52 Director 1992
Richard W. McEwen 1,2 76 Director 1994
Herbert A. Leeds 1 79 Director 1996
- ----------------------
1 Member of the Audit Committee of the Company's Board of Directors.
2 Member of the Stock Option Committee of the Company's Board of Directors.
PETER BESHOURI, who has been an employee of the Company since 1974, has
served as Chairman of the Board and Chief Executive Officer of the Company since
August 1982. Prior thereto he was the general sales manager of the Company, as
well as having served as a showroom manager and district manager. He was elected
President of the Company in May 1985. Mr. Beshouri currently serves as a
director of Progressive Retailers Organization, Inc., a buying group comprised
of approximately 14 retailers (including the Company) of home entertainment and
consumer electronic products located throughout the country. In August 1995, Mr.
Beshouri, together with the Company and a former chief financial officer of the
Company, voluntarily agreed with the Securities and Exchange Commission ("SEC"),
without admitting or denying any wrongdoing, to the entry of a cease and desist
order by the SEC concerning the Company's Form 10- K for fiscal year 1991 and
Forms 10-Q for the quarters ended September 30 and December 31, 1991, which the
SEC found in such order had been materially misstated. The cease and desist
order with respect to Mr. Beshouri related to his supervisory responsibility in
connection with the Company violating certain provisions of the securities laws
that require public companies to keep accurate books and records, to maintain
appropriate internal accounting controls and to file accurate annual and
quarterly reports. No censure, fine or penalty was imposed by the SEC on Mr.
Beshouri.
MICHAEL BLUMBERG, a founder of the Company, was elected a Vice President
in August 1982, Vice President-Purchasing and Finance in May 1986, Vice
President-Purchasing and Marketing in December 1987, and Senior Vice
President in May 1989. From the Company's inception until February 1995, Mr.
Blumberg served as Treasurer of the Company and, since October 13, 1989, he
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has also been serving as Secretary of the Company. His responsibilities include
overall supervision of all purchasing and selecting new product categories and
lines for the Company, as well as consulting with certain of the Company's
manufacturers in connection with product design.
GREGORY STURGIS, a founder of the Company, had been an executive officer
of the Company from its inception until June 30, 1989, including holding the
position of Vice President-Planning and Development. Effective June 30, 1989, he
resigned as an officer and employee of the Company, but is continuing as a
director. Since leaving the Company, Mr. Sturgis has provided consulting
services to companies in the marine industry, as well as performing consulting
services for the Company. Mr. Sturgis is also currently the President of the
Serpentine Group, which is in the yacht sales business. See "CERTAIN
TRANSACTIONS."
G. KAY GRIFFITH, was elected a director of the Company and a member of
the Audit Committee of its Board of Directors in July 1992, joined the Company
as an employee in May 1993 and served as Executive Vice President and Chief
Administrative Officer of the Company from September 1993 until February 1996.
In February 1996, Ms. Griffith formed Corporate Growth Consultants, Inc., a
management consulting firm that specializes in finance, strategic planning and
training. Since forming such firm, Ms. Griffith has performed consulting
services for the Company. Prior to May 1993, Ms. Griffith was Chairman and
President/Chief Executive Officer of Admiralty Bank, headquartered in Palm Beach
Gardens, Florida. From September 1983 to June 1991, she held a variety of
officer positions with NationsBank of Florida, N.A., the last of which was
Senior Vice President/Regional Banking Executive. Among her career highlights,
Ms. Griffith was presented the Women in Business and Industry Award by the Dade
County YWCA in 1986. She was also awarded the American Free Enterprise Medal by
the Palm Beach Atlantic College in 1988. See "CERTAIN TRANSACTIONS."
RICHARD W. MCEWEN was elected a director of the Company at its annual
meeting of shareholders held in January 1994 and was also appointed a member of
the Audit Committee and Stock Option Committee of its Board of Directors at such
time. From 1977 until his retirement in 1984, he was Chairman of the Board of
Burdines, a chain of Florida department stores then owned by Federated Stores,
Inc. He is currently a director of Supreme International Corp., a Florida based
designer and importer of men's and boys' sportswear, having been elected as such
in 1994. He also currently serves as a director of two privately held companies.
Mr. McEwen had served as a director of Lennar Corporation, a Florida based home
builder, for approximately nine years until April 1996 when he retired from such
company's board of directors.
HERBERT A. LEEDS was elected a director of the Company in April 1996 and
was also appointed a member of its Audit Committee in May 1996. Since 1975, Mr.
Leeds has been President and Chief Executive Officer of Leeds Business
Counseling, Inc., a consulting firm owned by him which has provided consulting
services mainly to companies in the retail industry and developers of retail
malls. Prior to launching his company, Mr. Leeds served as the President and
Chief Executive Officer and held other senior executive positions with major
department store chains.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
- ------------------------------------------
The Board of Directors held two meetings (excluding actions by the Board
of Directors taken by unanimous written consent in lieu of a meeting, of which
there were 9 such unanimous written consents) during the fiscal year ended June
30, 1996. Each director attended 75% or more of the
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aggregate number of meetings of the Board of Directors and committees of the
Board of Directors on which he or she served during the 1996 fiscal year.
The Board of Directors has an Audit Committee comprised of a majority of
directors who are not officers or employees of the Company. The duties and
responsibilities of such Audit Committee include meeting independently with
representatives of the Company's independent public accountants and
representatives of the Company's senior management, reviewing the general scope
of the Company's annual audit, the fee charged by the independent public
accountants and other matters relating to internal accounting controls and
financial procedures and reporting, reviewing and monitoring the performance of
non-audit services by the Company's auditors, recommending the engagement or
discharge of the Company's independent public accountants and conducting an
appropriate review of all related party transactions and conflict of interest
situations where appropriate. Such Audit Committee held one formal meeting
during the fiscal year ended June 30, 1996, although members of such Audit
Committee on an informal basis and in their capacity as members of the Board of
Directors kept informed throughout fiscal year 1996 of the financial condition
of the Company and its internal accounting controls and financial reporting.
The Board of Directors does not currently have a nominating committee or
a compensation committee or committees performing similar functions. However, a
Stock Option Committee of the Board of Directors administers the Company's Stock
Option Plan adopted in May 1986 as subsequently amended and restated (the "Stock
Option Plan"). Although the Stock Option Committee had no formal meetings during
fiscal year 1996, the Stock Option Committee took action on 3 occasions by
unanimous written consent in lieu of a meeting during fiscal year 1996.
DIRECTORS COMPENSATION
- ----------------------
Directors who are also officers or employees of the Company are not paid
additional compensation for acting as a director of the Company. The Company has
established a standard arrangement for compensating directors who are not
officers or employees of the Company for any services provided in such person's
capacity as a director. Each such outside director receives a fee of $1,500 on a
quarterly basis for serving as a director of the Company plus an additional fee
of $500 for each meeting of the Board of Directors or any committee thereof such
director attends, as well as reimbursement of any out-of-pocket expenses
incurred for travel, lodging and meals in connection with attendance at any such
meeting. In addition, as of May 1996 each outside director who is also a member
of the Audit Committee receives an additional fee of $1,500 on a quarterly basis
for serving on the Audit Committee. See also "CERTAIN TRANSACTIONS."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the National Association of
Securities Dealers, Inc. Officers, directors and greater than ten percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company and written representations that no Form 5's were required when
applicable, the Company believes that during the fiscal year ended June 30, 1996
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
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EXECUTIVE COMPENSATION
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
- ---------------------------------------------------
During the fiscal year ended June 30, 1995, the Board of Directors of
the Company in conjunction with the Stock Option Committee of the Board adopted
specific compensation policies applicable to the Company's executive officers
(including the CEO and the other four most highly compensated executive
officers) as well as other senior management personnel, including the specific
relationship of corporate performance to executive compensation.
Such compensation policies adopted were based upon the information and
recommendations provided in the Executive Compensation Review prepared during
fiscal year 1994 by the Employees Benefit Services division of KPMG Peat Marwick
LLP ("Peat Marwick"), the Company's independent public accountants who were
retained by the Board of Directors to undertake an executive compensation review
on behalf of the Company. The Executive Compensation Review contained an
assessment of the Company's then compensation practices for senior executives,
which included a comparison of the Company's recent financial performance with
its public company peer group and a competitive analysis of total compensation
(base salary, bonuses and long term incentives) of the top five highest paid
executives of the Company compared to such public company peer group, a
competitive compensation analysis of senior and middle management positions
compared to a broader retail industry norm, a proposed annual incentive bonus
plan and proposed competitive long term incentive award guidelines. The
Executive Compensation Review indicated that, although the Company's total cash
compensation (base salary plus annual bonuses) to executive officers generally
approximated median levels overall of total cash compensation paid by its peer
group, the Company's annual bonus and long term incentive programs were each
generally below the market norms and, as a result, total compensation (all cash
compensation plus long term incentives) fell below competitive ranges. After
review and discussion of the Executive Compensation Review, the Board of
Directors unanimously determined to adopt an overall compensation program that
would over time shift a higher percentage of total compensation to annual bonus
and long term incentive programs in order to strengthen the link between the
Company's performance and compensation and to more effectively reward
individuals for corporate performance and individual achievement. Accordingly,
in December 1994 the Board of Directors in conjunction with the Stock Option
Committee of the Board determined to implement commencing for fiscal year 1995
such programs. The Company's Board of Directors, based upon the recommendations
of Peat Marwick, adopted an annual incentive bonus plan for four categories of
the Company's employees (two of which categories were the CEO and other
executive officers) based upon the annual operating performance of the Company.
The percentage of the targeted bonus award to be earned by the different
employee categories is directly tied to a percentage of the Company's projected
operating performance (after taking into account accruals for the annual
incentive bonus plan) to be approved each year by the Company's Board of
Directors. Achievement of 100% of the projected operating performance will
result in the award of a targeted bonus ranging from approximately 10% to up to
25% of base salary (with the CEO at 25% and other executive officers at 20%),
with the percentage of the targeted bonus award earned increasing or decreasing
based upon the percentage (ranging from 70% to 130%) of projected operating
performance achieved. The Executive Compensation Review indicated that such
range around the projected operating performance was consistent with the
approach typically taken by smaller companies in industries like the Company. As
part of this program and to increase the percentage of total annual compensation
of executive officers to be based upon the operating performance of the Company,
the Board of Directors contemplates in the short term maintaining the CEO's and
certain other executive officers' base salaries at or near their current levels.
Consistent with the foregoing, the Board
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authorized during fiscal years 1995, 1996 and 1997 the renewal on substantially
the same terms and conditions as the 1992 fiscal year of the CEO's and Senior
Vice President's employment agreements for one additional year at the time of
their expiration on each of June 30, 1994, 1995 and 1996. See "Employment
Agreements" hereinbelow.
The Stock Option Committee, after also considering the Executive
Compensation Review and the recommendations therein, determined to implement
commencing at some point over the next several years a structured and more
formal long term incentive program in order to more effectively take advantage
of the benefits to the Company derived from the granting of stock options and to
remain competitive with companies in the Company's peer group who have
previously used such form of compensation to a much greater extent than the
Company. Based upon the recommendations of Peat Marwick, the Stock Option
Committee determined to implement commencing at some point over the next several
fiscal years a stock option program for the same four categories of the
Company's employees that will be covered by the annual incentive bonus plan.
Under the program the Stock Option Committee currently contemplates granting
non-qualified stock options under the Stock Option Plan exercisable at 85% of
fair market value on date of grant, vesting in three equal annual installments
commencing one year from date of grant and having an exercise period of up to
ten years. The Stock Option Committee believes that the use of a vesting period
(which in the past has not been used) will provide a greater long term incentive
and motivation to the Company's employees and the ten year exercise period, and
the inclusion in options granted of provisions covering acceleration of vesting
on death or disability and up to two years after termination to exercise such
options under certain circumstances, will create additional value to the options
and make the options a more attractive form of compensation available to the
Company. The number of non-qualified stock options expected to be awarded each
fiscal year under this program will be based upon a percentage of base salary
ranging from approximately 5% to 45%, with the CEO at 45% and other executive
officers at 30%. No options have as yet been awarded under the program. However,
as part of the consideration for and inducement to two individuals to become
executive officers of the Company in September 1993, and to seek to retain such
individuals as well as another qualified executive and give all of them
incentive for future performance, the Stock Option Committee, when it issued in
September 1993 each of Kenneth L. Danielson (the Chief Financial and Accounting
Officer) and G. Kay Griffith (the former Executive Vice President and Chief
Administrative Officer) incentive stock options covering 20,000 shares of Common
Stock and Christopher O'Neil (the Executive Vice President and Chief Operating
Officer) incentive stock options covering 11,000 shares of Common Stock at an
exercise price of $6.29, contemplated issuing each of such three executive
officers additional stock options covering 15,000 shares of Common Stock
approximately about the time of each of the first and second anniversary dates
of the foregoing issuances (or an aggregate of stock options covering 30,000
shares of Common Stock to each of them) at the then fair market value of the
Company's Common Stock at the time of each issuance thereof. Accordingly, the
Stock Option Committee authorized (a) in December 1994 the granting to each of
Messrs. Danielson and O'Neil and Ms. Griffith the first installment of such
additional incentive stock options covering 15,000 shares of Common Stock at an
exercise price of $5.96 per share, all of which incentive stock options
originally expired no later than December 13, 1999 (collectively the "1995
Options"), and (b) in March 1996 the granting to each of Messrs. Danielson and
O'Neil (Ms. Griffith was at such time no longer an officer or employee of the
Company) the second installment of such additional incentive stock options
covering 15,000 shares of Common Stock at an exercise price of $1.70 per share,
all of which incentive stock options expire no later than March 28, 2001. In
addition, as a result of the trading price of the Company's Common Stock and in
order to provide a meaningful incentive for future performance, the Stock Option
Committee in fiscal year 1996 granted to each of Messrs. Danielson and O'Neil
incentive stock options covering 15,000 shares of Common Stock at exercise price
of $1.77 per share and expiring no later than
9
<PAGE>
February 21, 2001, in replacement and in exchange for cancellation of the 1995
Options. See "OPTION GRANTS IN 1996 FISCAL YEAR" hereinbelow and footnote (8) to
the table under the heading "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."
The Board of Directors
EXECUTIVE COMPENSATION TABLES
- -----------------------------
The following tables provide information about executive compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of the
Company's CEO and each of the other four most highly compensated executive
officers of the Company during the fiscal year ended June 30, 1996 for services
in all capacities.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG TERM COMPENSATION
----------------------- ----------------------
NAME AND PRINCIPAL FISCAL SECURITIES ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(2) UNDERLYING OPTIONS (#)(3) COMPENSATION ($)(4)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Peter Beshouri 1996 324,008 0 0 0
Chairman, President 1995 324,008 0 0 0
and CEO 1994 324,008 48,000 0 0
Michael Blumberg 1996 294,008 0 0 0
Senior Vice 1995 294,008 0 0 0
President 1994 294,008 23,000 0 0
G. Kay Griffith 1996 160,000(5) 0 35,000(6) 0
Executive Vice President 1995 160,000 0 15,000(6) 0
and Chief Administrative 1994 160,000 23,000 20,000(6) 0
Officer
Christopher O'Neil 1996 150,000 0 30,000(7) 8,268(8)
Executive Vice 1995 150,000 0 15,000(7) 8,268(8)
President and Chief 1994 150,000 23,000 11,000 8,268(8)
Operating Officer
Kenneth L. Danielson 1996 160,000 0 30,000(7) 0
Chief Financial and 1995 160,000 0 15,000(7) 0
Accounting Officer 1994 133,333(9) 23,000 20,000 0
and Treasurer
</TABLE>
- -------------------
(1) Does not include any amounts for perquisites and other personal
benefits, securities or property extended to such executive officers of
the Company, such as life insurance and disability insurance, because
the Company does not believe that in any individual case the dollar
value of such other annual compensation would equal or exceed the lesser
of either $50,000 or 10% of such individual's total annual compensation
shown above.
(2) The bonuses accrued by the Company during the fiscal year ended June 30,
1994, were part of a performance bonus pool established by the Company
for its senior executives and corporate department heads. The percentage
of the accrued performance bonus pool that was actually paid out was
based upon the achievement of a certain level of pre-tax earnings by the
Company in fiscal year 1994. The bonuses were awarded and paid to such
executive officers in September 1994. In
10
<PAGE>
fiscal year 1995, the Company's Board of Directors adopted an annual
incentive bonus plan for four categories of the Company's employees (two
of which categories were the CEO and other executive officers) based
upon the annual operating performance of the Company. No bonuses were
paid under such plan in fiscal years 1995 or 1996. See "Board of
Directors Report on Executive Compensation" hereinabove.
(3) These currently represent immediately exercisable incentive stock
options or non-qualified stock options issued pursuant to the Company's
Stock Option Plan. See footnote (8) to the table in "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT." But also see footnotes (6)
and (7) hereinbelow.
(4) The Company has an Employee Stock Ownership Plan ("ESOP") for all of its
employees. In fiscal year ended June 30, 1994, the Company contributed
$50,000 in cash to the ESOP, although no additional shares of Common
Stock have been purchased by the ESOP with such funds. With respect to
the fiscal year ended June 30, 1994, as a result of reallocations to
employee accounts of the ESOP caused by employee terminations and pay
outs of vested interests of former employees, Mr. Beshouri was allocated
29.210 additional shares, Mr. Blumberg was allocated 29.211 additional
shares and Mr. O'Neil was allocated 18.604 additional shares. The
Company made no contribution to the ESOP during the fiscal years ended
June 30, 1995 and 1996. However, with respect to the fiscal year ended
June 30, 1995, as a result of reallocations to employee accounts of the
ESOP caused by employee terminations and pay outs of vested interests of
former employees, Mr. Beshouri was allocated 1.691 additional shares,
Mr. Blumberg was allocated 1.690 additional shares and Mr. O'Neil was
allocated 1.077 additional shares. Reallocations, if any, to employee
accounts for fiscal year 1996 have not as yet been determined. See
footnote (5) to the table in "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT." for the number of vested shares of the ESOP
owned by each of such individuals based upon the latest available annual
report of the ESOP.
(5) Represents compensation in all capacities paid to G. Kay Griffith by the
Company during fiscal year 1996, although Ms. Griffith only served as
Executive Vice President and Chief Administrative Officer of the Company
until February 1996. See "CERTAIN TRANSACTIONS."
(6) On February 22, 1996, the Company issued to Ms. Griffith non-qualified
stock options covering an aggregate of 35,000 shares of the Company's
Common Stock in her capacity as a director of the Company in exchange
for the cancellation of the incentive stock options covering an
aggregate of 35,000 shares of Company's Common Stock that had been
granted to her as an officer and employee in fiscal years 1994 and 1995.
The non-qualified stock options had the same exercise price and term as
well as other provisions as the incentive stock options that were
cancelled.
(7) 15,000 of the aggregate 30,000 incentive stock options issued to such
officer in fiscal year 1996 were issued in exchange for the cancellation
of the 15,000 incentive stock options granted to such officer in fiscal
year 1995 which had an exercise price of $5.96 per share and expired on
December 13, 1999. The 15,000 incentive stock
11
<PAGE>
options which replaced the cancelled options have an exercise price of
$1.77 per share and expire on February 21, 2001.
(8) This sum represents the aggregate amount of a monthly automobile
allowance paid during fiscal years 1994, 1995 and 1996.
(9) Represents salary paid to Kenneth L. Danielson from September 1, 1993
(the commencement date of his employment), although Mr. Danielson was
elected to succeed the former Chief Financial and Accounting Officer of
the Company effective as of October 1, 1993. Mr. Danielson's salary for
fiscal year 1994 would have been $160,000 on an annualized basis.
OPTION GRANTS IN 1996 FISCAL YEAR
The following table shows all grants of options to the named executive
officers of the Company during the fiscal year ended June 30, 1996. Pursuant to
SEC rules, the table also shows the value of the options granted at the end of
the option terms (generally five years) if the price of the Company's stock was
to appreciate annually by 5% and 10%, respectively. There is no assurance that
such stock price will appreciate at the rates shown in the table. The table also
indicates that, if the stock price does not appreciate, there will be no
increase in the potential realizable value of the options granted above the
difference (if any) between the market price of the Company's Common Stock as of
the date of grant and the exercise price per share. All of the options set forth
in the table were issued pursuant to the Company's Stock Option Plan and are
incentive stock options except for those granted to Ms. Griffith which are
non-qualified stock options. The Company does not have a plan whereby tandem
stock appreciation rights ("SARS") are granted.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ------------------------------------------------------------------------------------- -----------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS CLOSING MARKET
UNDERLYING GRANTED TO EXERCISE PRICE ON DATE
OPTIONS EMPLOYEES PRICE OF GRANT EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SHARE) ($/SHARE)((1) DATE 0%($)(1) 5%($) 10%($)
- ---- ----------- -------------- --------- -------------- ---------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Beshouri 0 N/A 0.00 N/A N/A 0 0 0
Michael Blumberg 0 N/A 0.00 N/A N/A 0 0 0
G. Kay Griffith 20,000(2) 13.6% 6.29 1.63 9/21/98 0 0 0
15,000(2) 10.2% 5.96 1.63 12/13/99 0 0 0
Christopher O'Neil 15,000(3) 10.2% 1.77 1.63 2/21/01 0 4,655 12,827
15,000 10.2% 1.70 1.63 3/28/01 0 5,705 13,877
Kenneth L. Danielson 15,000(3) 10.2% 1.77 1.63 2/21/01 0 4,655 12,827
15,000 10.2% 1.70 1.63 3/28/01 0 5,705 13,877
</TABLE>
- -------------------
(1) For purposes of the Stock Option Plan, "fair market value" on the date
of grant of any option is the average of the "market price" of a share
of Common Stock for each of the seven (7) consecutive business days
preceding such day. The "market price" on each such day is the closing
sales price on the NASDAQ National Market on such day. The Stock Option
Committee of the Company believes this calculation more accurately
reflects "fair market value" of the Company's Common Stock on any given
day as compared to simply using the closing market price on the date of
grant. As a result, the closing market price on the date of grant at
times may be different than the exercise price per share.
12
<PAGE>
(2) See footnote (6) to Summary Compensation Table hereinabove.
(3) See footnote (7) to Summary Compensation Table hereinabove.
AGGREGATE OPTION EXERCISES IN 1996 FISCAL YEAR
AND 1996 FISCAL YEAR END OPTION VALUES
The following table provides information as to options exercised by each
of the named executive officers of the Company during the fiscal year ended June
30, 1996, and the value of options held by such executive officers at the
Company's fiscal year-end measured in terms of the closing market price of the
Company's stock on June 28, 1996 (the last business day of fiscal year 1996).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME ON EXERCISE (#) VALUE REALIZED ($) OPTIONS AT FY-END (#)(1) AT FY-END ($)(1)(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter Beshouri 0 0 0 0
Michael Blumberg 0 0 0 0
G. Kay Griffith 0 0 35,000 0
Christopher O'Neil 0 0 43,000 11,700
Kenneth L. Danielson 0 0 50,000 11,700
</TABLE>
- ----------------------
(1) All of the unexercised options held by such individuals were immediately
exercisable.
(2) The closing market price of the Company's Common Stock on the NASDAQ
National Market on June 28, 1996 (the last business day of the Company's
fiscal year-end) was $2.125.
TEN-YEAR OPTION/SAR REPRICINGS
The following table provides information as to all adjustments or
amendments during the 1996 fiscal year by the Company of the exercise price of
stock options previously awarded to any of the named executive officers for
fiscal year 1996, whether through amendment, cancellation or replacement grants,
or any other means ("repricing"). The repricing as described in the following
table was authorized by the Company's Stock Option Committee as a result of the
trading price of the Company's Common Stock and in order to provide a meaningful
incentive for future
13
<PAGE>
performance. The repricing was done at "fair market value" as determined under
the Stock Option Plan. See "Board of Directors Report on Executive Compensation"
and "OPTION GRANTS IN 1996 FISCAL YEAR" hereinabove.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET PRICE EXERCISE ORIGINAL
SECURITIES OF STOCK AT PRICE AT OPTION TERM
UNDERLYING TIME OF TIME OF REMAINING AT
OPTIONS REPRICING OR REPRICING OR NEW DATE OF
REPRICED OR AMENDMENT AMENDMENT EXERCISE REPRICING OR
NAME DATE AMENDED (#) ($) ($) PRICE ($) AMENDMENT
- ---- ---- ----------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Christopher O'Neil 2/22/96 15,000 1.63 5.96 1.77 46 months
Executive Vice President and
Chief Operating Officer
Kenneth L. Danielson 2/22/96 15,000 1.63 5.96 1.77 46 months
Chief Financial and
Accounting Officer and
Treasurer
</TABLE>
EMPLOYMENT AGREEMENTS
- ---------------------
During the 1996 fiscal year Peter Beshouri and Michael Blumberg each had
an employment agreement with the Company which provided for an annual base
salary for fiscal year 1996 of $320,650 for Peter Beshouri and $290,400 for
Michael Blumberg. The term of each such employment agreement was originally for
a three year period expiring June 30, 1992, and had been extended each fiscal
year thereafter for an additional one year period. Effective as of July 1, 1996,
such employment agreements were again extended for an additional one year term
(currently until June 30, 1997) on the same terms and conditions as in effect
under their respective employment agreements during the previous fiscal year,
including, without limitation, that the annual base salary payable to each of
them for the Company's current fiscal year will be the same as they were
entitled to receive for the fiscal year ended June 30, 1996. Under the latest
one-year extension of the employment agreements, each of Messrs. Beshouri and
Blumberg will be entitled to participate in the Company's annual incentive bonus
plan and long term incentive stock option program. See "Board of Directors
Report on Executive Compensation" hereinabove. The Company is also required to
furnish each of Messrs. Beshouri and Blumberg with, among other things, family
health, life and disability insurance coverage.
Such employment agreements with Messrs. Beshouri and Blumberg also
provide that, in the event of a change in control of the Company, each of them
can terminate his full-time employment thereunder. A change in control under
such employment agreements occurs when Messrs. Beshouri and Blumberg and/or
other individuals or designees voted for or approved by them no longer
collectively comprise at least a majority of the members of the Board of
Directors of the Company or if Messrs. Beshouri or Blumberg is forced by a
merger, consolidation, reorganization or otherwise by operation of law or other
form of transaction to sell his shares of voting capital stock in the Company or
if 50% or more of the consolidated assets, properties and businesses of the
Company is sold or otherwise transferred to a third-party or if an individual
(other than either Messrs. Beshouri and Blumberg) or another company or entity
or a group acting in concert becomes the beneficial owner of 25% or more of the
outstanding voting capital stock of the Company as a result of acquisitions made
from other than Messrs. Beshouri and/or Blumberg or the Company, assuming
14
<PAGE>
such acquisitions from the Company were approved by Messrs. Beshouri and
Blumberg. In the event such change in control was resisted by either Messrs.
Beshouri or Blumberg as evidenced by his failure to approve of such change in
control either in his capacity as a director or shareholder of the Company,
unless (i) he accepts a new employment agreement with the Company or any
successor or (ii) such change in control was supported by the Board of Directors
of the Company at a time when Messrs. Beshouri and Blumberg and/or other
individuals or designees voted for or approved by them collectively comprise at
least a majority of the members of the Board of Directors of the Company and he
was offered a new contract at least as favorable as his current employment
agreement, he would be entitled to his compensation (both annual salary and any
bonus) and the other benefits provided for in his employment agreement for the
greater of three years or the remaining term of his employment agreement. The
Company is not aware of any contemplated change in control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
Since during the fiscal year ended June 30, 1996, the Company did not
have a compensation committee of its Board of Directors (or Board committee
performing equivalent functions), Peter Beshouri and Michael Blumberg, in their
capacities as members of the Company's Board of Directors, participated in
deliberations of the Board concerning the authorization of the one-year renewals
of the employment agreements of Messrs. Beshouri and Blumberg on the terms as
discussed in "Employment Agreements" hereinabove.
15
<PAGE>
PERFORMANCE GRAPH
- -----------------
The following graph shows a comparison of five year-cumulative total
returns to shareholders for the Company, Center for Research in Security Prices
("CRSP") Index for NASDAQ Stock Market (U.S. Companies) and CRSP Index for
NASDAQ Stocks (SIC 5730-5739 U.S. Companies) of U.S. Companies operating radio,
television, consumer electronics and/or music stores.
[PERFORMANCE GRAPH]
The following table presents in tabular form the data set forth in the
performance graph to be included in the Proxy Statement:
<TABLE>
<CAPTION>
CRSP TOTAL RETURNS INDEX FOR: 06/28/91 06/30/92 06/30/93 06/30/94 06/30/95 06/28/96
- ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sound Advice, Inc. 100.0 50.0 76.7 78.3 43.3 28.3
Nasdaq Stock Market (US Companies) 100.0 120.1 151.1 152.5 203.6 261.4
NASDAQ Stocks (SIC 5730-5739 US Companies) 100.0 113.3 120.3 86.4 91.7 69.0
Radio, Television, Consumer Electronics,
and Music Stores
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 6/28/91.
16
<PAGE>
CERTAIN TRANSACTIONS
In January 1993, the Company entered into a one year consulting
arrangement with Gregory Sturgis, a director of the Company, pursuant to which
Mr. Sturgis provided his consulting services to the Company for up to 35 full
days during such calendar year. The term of such arrangement had been previously
extended through calendar year 1995. For providing such services, Mr. Sturgis
received an annual fee of $25,000, payable in twelve equal monthly installments
on the first day of each month, and reimbursement for out-of-pocket expenses
incurred by him for travel, lodging and meals in connection with the performance
of his consulting services. During fiscal year 1996, Mr. Sturgis received
consulting fees aggregating $14,583.31, including $2,083.33 for services
rendered by Mr. Sturgis after such consulting arrangement expired on December
31, 1995. See also "ELECTION OF DIRECTORS - Directors Compensation."
G. Kay Griffith, a director and until February 1996 the Executive Vice
President and Chief Administrative Officer of the Company, has been providing
consulting services to the Company since February 1996. For providing such
services, Ms. Griffith receives compensation of $13,333 per month. The
compensation received by Ms. Griffith during fiscal year 1996 in this capacity
has been included in the "SUMMARY COMPENSATION TABLE" in "EXECUTIVE COMPENSATION
- - Executive Compensation Tables." Ms. Griffith's services had been retained
through November 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG Peat Marwick LLP ("Peat Marwick") acted as
the Company's independent public accountants for the Company's fiscal year ended
June 30, 1996. This firm has acted as the independent public accountants for the
Company since fiscal year 1993. It is anticipated that the Audit Committee of
the Board of Directors of the Company will recommend to the Board for its
approval the selection of Peat Marwick to serve as the Company's independent
public accountants for the fiscal year ending June 30, 1997, after the Audit
Committee has undertaken the appropriate review, including reviewing the terms
of engagement of Peat Marwick for fiscal year 1997. Such independent public
accountants, if selected by the Board of Directors, will continue to serve at
the pleasure of the Board. The selection of independent public accountant is not
being submitted to shareholders for approval because there is no legal
requirement to do so. A representative of Peat Marwick is expected to be present
at the 1996 Annual Meeting of Shareholders in order to have the opportunity to
make a statement, if such representative desires to do so, and to be available
to respond to appropriate questions relating to the examination by Peat Marwick
of the Company's 1996 consolidated financial statements.
17
<PAGE>
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1997 annual
shareholders' meeting must be submitted to the Secretary of the Company, at the
principal executive offices of the Company, 1901 Tigertail Boulevard, Dania,
Florida 33004, no later than August 25, 1997, in order to receive consideration
for inclusion in the Company's 1997 proxy materials. Any such shareholder
proposal must comply with the requirements of Rule 14a-8 promulgated under the
Securities Exchange Act of 1934.
OTHER MATTERS
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN, WITHOUT CHARGE, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITH EXHIBITS) FOR THE COMPANY'S
FISCAL YEAR ENDED JUNE 30, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, BY SENDING A WRITTEN REQUEST TO KENNETH L. DANIELSON, THE CHIEF
FINANCIAL AND ACCOUNTING OFFICER OF THE COMPANY, AT THE COMPANY'S EXECUTIVE
OFFICES LOCATED AT 1901 TIGERTAIL BOULEVARD, DANIA, FLORIDA 33004.
By Order of the Board of Directors
/s/ MICHAEL BLUMBERG
Michael Blumberg
Secretary
December 23, 1996
18
<PAGE>
SOUND ADVICE, INC.
1996 ANNUAL MEETING OF SHAREHOLDERS--JANUARY 21, 1997
PROXY SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Peter Beshouri and Michael
Blumberg, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution for and in the name, place and stead of the
undersigned, to appear at the annual meeting of shareholders of Sound Advice,
Inc. to be held on the 21st day of January, 1997, and at any postponement or
adjournment thereof, and to vote all of the shares of Sound Advice, Inc.
which the undersigned is entitled to vote, with all the powers and authority
the undersigned would possess if personally present. The undersigned hereby
directs that this proxy be voted as follows:
1. Election of Directors for the ensuing year.
[ ] FOR the election of all nominees: Peter Beshouri, Michael Blumberg,
Gregory Sturgis, G. Kay Griffith, Richard W. McEwen and Herbert A.
Leeds as directors.
[ ] To WITHHOLD AUTHORITY to vote for all nominees.
To WITHHOLD AUTHORITY to vote for any individual, write that nominee's
name on the space provided below.
- -------------------------------------------------------------------------------
2. Upon such other business as may properly come before the annual meeting.
This proxy, when properly executed, will be voted in the manner directed
by the undersigned shareholder. IF NO DIRECTIONS TO THE CONTRARY ARE
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE
AFOREMENTIONED NOMINEES LISTED IN PROPOSAL NO. 1 AS DIRECTORS.
(CONTINUED, AND TO BE SIGNED, ON OTHER SIDE)
1
<PAGE>
A majority of said proxies present and acting in person or by their
substitutes (or if only one is present and acting, then that one) may
exercise all the powers conferred hereby. DISCRETIONARY AUTHORITY IS
CONFERRED HEREBY AS TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING.
Receipt of the Company's 1996 Annual Report to Shareholders and the Notice
of Annual Meeting of Shareholders to be held January 21, 1997, and the Proxy
Statement relating thereto is hereby acknowledged.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED,
POSTAGE PAID ENVELOPE.
Dated:_________________________ , 199___
(Please date this Proxy)
----------------------------------------
Signature(s)
----------------------------------------
If Held Jointly
Note: It would be helpful if you signed
your name exactly as it appears
hereon, indicating any official
position or representative
capacity. If shares are registered
in more than one name, all owners
must sign.
2
