Directors
Information with respect to the Company’s current directors is set forth below.
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Name
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Age as of
March 10, 2017
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Position with InfoSonics
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Initial Date
as Director
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Joseph Ram
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54
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President, Chief Executive Officer and Director
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1994
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Randall P. Marx (1)(2)(3)(4)
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64
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Director
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2003
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Robert S. Picow (1)(2)(3)
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61
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Director
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2003
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Kirk A. Waldron (1)(2)(3)(5)
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54
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Director
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2005
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______________
(1)
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Member of the Audit Committee of our Board.
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(2)
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Member of the Compensation Committee of our Board.
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(3)
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Member of the Nominating and Corporate Governance Committee of our Board.
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(4)
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Compensation Committee Chairman.
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(5)
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Audit Committee Chairman.
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Biographical Information
Joseph Ram, Director, Founder, President and Chief Executive Officer
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In 1994, Mr. Ram founded InfoSonics Corporation as a distribution center for telecommunications and business systems. Previously, between 1989 and 1993, as sales director for ProCom Supply, Mr. Ram was in charge of worldwide purchasing and oversaw all international sales. Mr. Ram’s position as President and Chief Executive Officer of the Company since the Company’s inception provides the Board with unique insight and direct access to strategic and operational information about the Company.
Randall P. Marx, Director
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Mr. Marx has served as a Director of InfoSonics since December 2003, and is currently an independent consultant. Mr. Marx served as a Director of ARC Wireless Solutions, Inc., a publicly traded company, a division of which was engaged in antenna and cable design and manufacturing, from February 1990 until November 2008, as Chief Executive Officer from December 1994 until June 2000, as Treasurer and Principal Financial Officer from December 1994 until June 2000, as Director of Acquisitions from July 2000 until February 2001 and as Chairman and Chief Executive Officer from February 2001 until November 2008. From 1983 until 1989, Mr. Marx served as President of THT Lloyd’s Inc., Lloyd’s Electronics Corp. and Lloyd’s Electronics Hong Kong Ltd., international consumer electronics companies. Mr. Marx also served until October 2015 as Director and Chief Executive Officer of International Development Group Ltd., a privately held holding company with holdings of Asia Pacific Materials, Hong Kong Ltd., which was engaged in the design and contract manufacturing of various electronic products, Group Mobile, an eCommerce distributor of ruggedized computer equipment and Flicharge International LTD, which was engaged in the design, manufacturing and marketing of wireless charging equipment. Mr. Marx’s background as a director and CEO of companies engaged in the manufacturing and sales of consumer electronics, along with his general experience gained from a career in related industries, provide the Board with financial and operational expertise and analytical skills directly relevant to the Company’s industry.
Robert S. Picow, Director
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Mr. Picow has served as a Director of InfoSonics since December 2003. Since March 2001, Mr. Picow has served as a Director of SMF Energy Corporation (formerly known as Streicher Mobile Fueling, Inc.), a public company that provides petroleum product distribution services, transportation logistics and emergency response services to the trucking, manufacturing, construction, shipping, utility, energy, chemical, telecommunications and government services industries. From March 2008 through March 2011, Mr. Picow served as Vice Chairman of the Eezinet Corporation, a community aware internet service and communications provider. From May 2005 through September 2007, Mr. Picow served as a Director of Ascendia Brands, Inc., a public company that manufactured, marketed and distributed a portfolio of branded products in the health and beauty care categories. Ascendia Brands was previously known as Cenuco, Inc. prior to a name change in May 2006. From April 2004 to May 2005, Mr. Picow served as Chairman of Cenuco, Inc., a public company engaged in wireless application development and software solutions. From July 2003 to May 2005, Mr. Picow served as a Director of Cenuco. From May 2006 to September 2008, Mr. Picow served as a Director and Audit Committee Member of American Telecom Services, Inc., a public telecommunications services company. From 1996 to 1997, Mr. Picow served as Vice Chairman and a Director of BrightPoint, Inc., a public company that distributes wireless devices and accessories and provides customized logistic services to the wireless industry. From its formation in
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1986 until its merger with BrightPoint in 1996, Mr. Picow was Chief
Executive Officer of Allied Communications, Inc., a cellular telephone and accessory distribution company. Mr. Picow’s extensive board leadership experience with companies in the wireless telecommunications industry, together with his experience in the di
stribution of wireless devices as a director, owner and executive officer of companies in this line of business, provide the Board with significant expertise and skills relevant to the Company’s business.
Kirk A. Waldron, Director
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Mr. Waldron has served as a Director of InfoSonics since January 2005. Since January 2014, Mr. Waldron has served as Chief Financial Officer of Qual-Pro Corporation, a privately held electronics manufacturing services provider offering a wide range of services and expertise from printed circuit board assemblies to full box-builds. From May 2014 to January 2015, Mr. Waldron served as a Director of State Fish Co., Inc., a privately held fish processor that also provides high pressure pasteurization and cold press juicing and bottling services. From October 2012 to December 2013, Mr. Waldron was an independent consultant. From May 2005 to September 2012, Mr. Waldron served as the Chief Financial Officer of Event Rentals, Inc. (doing business as Classic Party Rentals), the largest full-service event rental provider in the United States. From July 2005 to May 2006, Mr. Waldron served as a Director of Reptron Electronics Inc., a public company that provided engineering services, display and systems integration services and electronic manufacturing services. From September 2004 to January 2005, Mr. Waldron served as Interim President of SMTEK International Inc., a public company that provided electronics manufacturing services to original equipment manufacturers in the medical, industrial instrumentation, telecommunications, security, financial services automation and aerospace and defense industries. From April 2001 to January 2005, Mr. Waldron also served as SMTEK’s Chief Financial Officer and Treasurer, and from May 2002 to January 2005 as SMTEK’s Senior Vice President. From February 1999 to February 2001, Mr. Waldron was a Director, President and Chief Executive Officer of AML Communications, Inc., a public company that designs, manufactures, and markets radio frequency and microwave, low noise, medium and high power amplifiers and subsystems serving primarily the defense electronic warfare market. From 1996 to February 1999, Mr. Waldron served as AML’s Chief Financial Officer. From 1994 to 1996, Mr. Waldron was Chief Financial Officer at Dynamotion/ATI Corp., a public company that developed, manufactured, and marketed computer numerical control drilling and routing machines used in the production of high-density, multi-layered printed circuit boards and semiconductor packages. Mr. Waldron is a non-practicing Certified Public Accountant and holds a Bachelor of Science in Business Administration from the University of Southern California. Mr. Waldron’s career as a financial executive in the electronics manufacturing and telecommunications industries provides the Board with significant financial and operational experience and analytical skills relating to the Company’s business.
Executive Officer
Information for our only other current executive officer not otherwise discussed above as of March 10, 2017 is as follows:
Vernon A. LoForti, Vice President, Chief Financial Officer and Corporate Secretary, 63 years old.
Mr. LoForti has served as Vice President and Chief Financial Officer of InfoSonics since July 2010 and Corporate Secretary since April 2011. Prior to InfoSonics, Mr. LoForti served in a number of executive positions at Overland Storage, Inc., a global supplier of data protection appliances. Mr. LoForti joined Overland in 1995 and served as the company’s Vice President, Chief Financial Officer and Secretary from 1995 to August 2007, including leading its initial public offering in 1997. From August 2007 to January 2009, LoForti served as President, Chief Executive Officer and a member of Overland’s Board of Directors. From February 2009 to September 2009, he served as Overland’s President. From August 1992 to December 1995, Mr. LoForti was the Chief Financial Officer for Priority Pharmacy, a privately-held pharmacy company. From 1981 to 1992, Mr. LoForti was Vice President of Finance for Intermark, Inc., a publicly-held conglomerate. Mr. LoForti began his career in public accounting with Price Waterhouse and holds a Bachelor of Science in Accounting from Brigham Young University.
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Director Compensation
The following table sets forth information regarding the annual compensation of InfoSonics’ nonemployee directors for 2016, which consisted of annual retainer fees, including amounts associated with serving as Chairman of the Audit Committee. The nonemployee director compensation program is more particularly described below. Mr. Ram, President and Chief Executive Officer of the Company, receives no separate compensation for his Board service.
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Name
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Fees Earned or
Paid in Cash
($)
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Option
Awards
($)(1)(2)
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Total
($)
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Kirk A. Waldron
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$43,000(3)
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−
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$43,000
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Randall P. Marx
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$40,000
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−
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$40,000
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Robert S. Picow
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$40,000
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−
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$40,000
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_____________________
(1)
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No stock options were granted during 2016.
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(2)
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Our nonemployee directors had the following number of outstanding stock options at 2016 fiscal year end: Mr. Waldron, 78,000 shares; Mr. Marx, 78,000 shares; and Mr. Picow, 78,000 shares.
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(3)
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Includes payment of $3,000 for service as Audit Committee Chairman.
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Nonemployee Director Compensation Program for 2016
. Nonemployee directors were compensated by an annual cash retainer fee of $40,000. The Audit Committee Chairman was paid an additional annual cash retainer of $3,000. Payments are made to directors on a quarterly basis. Board members are also reimbursed for out-of-pocket costs related to their attendance at Board and Committee meetings.
Board Committees and Meetings
The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The Board of Directors annually reviews the Nasdaq Stock Market Rules’ definitions of independence for members of each of the committees and has determined that members of each of the committees are independent pursuant to applicable rules of the Nasdaq Stock Market Rules and the SEC.
Copies of our committee charters may be viewed at the Company’s website at
http://www.infosonics.com/index.php/investors/ corporate-governance.
Directors serving on our committees are set forth below:
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Name
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Audit Committee
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Compensation
Committee
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Nominating and Corporate
Governance Committee(1)
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Kirk A. Waldron
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**
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*
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*
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Randall P. Marx
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*
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**
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*
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Robert S. Picow
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*
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*
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*
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__________________
(1)
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The Nominating and Corporate Governance Committee currently has no chairman.
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Audit Committee
Our Audit Committee performs, among other things, the following functions:
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determines the independent registered public accounting firm to be employed;
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discusses the scope of the independent registered public accounting firm’s examination;
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•
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reviews the financial statements and the independent registered public accounting firm’s report;
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•
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solicits recommendations from the independent registered public accounting firm regarding internal controls and other matters;
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•
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reviews related-party transactions for conflicts of interest;
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makes recommendations to the Board regarding audit-related, accounting and certain other matters; and
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•
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performs other related tasks as requested by the Board.
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Messrs. Waldron, Marx and Picow are the members of the Audit Committee. Mr. Waldron is the Chairman of the Audit Committee. Our Board of Directors has determined that Messrs. Marx and Waldron, each an independent director, are Audit Committee financial experts.
Compensation Committee
Our Compensation Committee performs, among other things, the following functions:
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•
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develops executive compensation philosophies and establishes and annually reviews and approves policies regarding executive compensation programs and practices;
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•
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reviews and approves corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of those goals and objectives and sets the Chief Executive Officer’s compensation based on this evaluation;
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•
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reviews the Chief Executive Officer’s recommendations with respect to, and approves annual compensation for, InfoSonics’ other executive officers;
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establishes and administers annual and long-term incentive compensation plans for key executives;
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reviews and approves, if appropriate, or recommends to the Board for its approval and, where appropriate, submission to InfoSonics’ stockholders, incentive compensation plans and equity–based plans;
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recommends to the Board for its approval changes to executive compensation policies and programs;
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•
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oversees and annually reviews the non-employee director compensation program; and
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•
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reviews and approves special executive employment, compensation and retirement arrangements.
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The members of our Compensation Committee are Messrs. Waldron, Marx and Picow. Mr. Marx is the Chairman of the Compensation Committee.
The Compensation Committee may invite to its meetings any member of management, including the Chief Executive Officer, and such other persons as it deems appropriate to carry out its duties and responsibilities. Our management assists the Compensation Committee by providing various support, including:
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providing the Compensation Committee with perspectives of the business and people needs of the Company;
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having the Chief Executive Officer make compensation recommendations to the Compensation Committee for the other executive officers (although the Compensation Committee ultimately determines compensation for the Chief Executive Officer and the other executive officers); and
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developing recommendations for the design of pay programs applicable to the executive officers.
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In addition, the Compensation Committee may from time to time engage an outside compensation consultant to:
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assist the Compensation Committee in reviewing recommendations prepared by management in light of the Company’s objectives and market practices; and
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provide the Compensation Committee with an outside perspective regarding compensation.
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In June 2015, the Compensation Committee engaged Compensation & Benefit Solutions to review compensation levels for our Named Executive Officers, including a bench marking analysis against the following 13 peer companies:
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ADDvantage Technologies Group, Inc.
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Ikanos Communications, Inc.
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Blonder Tongue Laboratories Inc.
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Iteris Inc.
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Clearfield, Inc.
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RELM Wireless Corp.
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ClearOne Incorporated
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Westell Technologies, Inc.
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Envivio Inc.
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Wireless Telecom Group Inc.
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Franklin Wireless Corp.
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Zhone Technologies, Inc.
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ID Systems Inc.
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Based on the report of the consultant, the Compensation Committee accepted the consultant’s findings that the compensation of our Named Executive Officers is appropriate. In the future, the Compensation Committee may consider alternative performance recommendations for future cash bonus programs and other long-term incentive programs.
Compensation & Benefit Solutions did not provide any other services to InfoSonics during 2015 and only received fees from InfoSonics on behalf of the Compensation Committee. The Compensation Committee reviewed the independence of the consultant based on the criteria established by the SEC and determined there were no conflicts of interest. The Compensation Committee did not use the services of a compensation consultant during 2016.
Nominating and Corporate Governance Committee
We also have a Nominating and Corporate Governance Committee, which, pursuant to its written charter, is responsible for recommending potential directors, for considering nominations for potential directors submitted by our stockholders and for certain matters related to corporate governance. Messrs. Marx, Picow and Waldron serve on this committee.
There have been no material changes to the procedures (as described below) by which security holders may recommend nominees to our Board of Directors in the last fiscal year.
Director Candidates
The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications and have a high standard of personal and professional ethics, integrity and values. Candidates for director nominees are reviewed in the context of the current composition of our Board of Directors, our operating requirements and the long-term interests of our stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee considers independence, professional background and experience, other board experience, industry knowledge, skills and expertise, and such other factors as it deems appropriate given the current needs of the Board and InfoSonics, to maintain a balance of knowledge, experience and capabilities. Other factors considered may include diversity (including age, geography, professional and other experience), although the Company does not have a formal policy regarding diversity.
In the case of incumbent directors, the Nominating and Corporate Governance Committee reviews such directors’ overall service to us during their term, including the number of meetings attended, level of participation, quality of performance, and any other relevant considerations. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee must be independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations, and the advice of counsel, if necessary.
The Nominating and Corporate Governance Committee uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our Board of Directors. The Nominating and Corporate Governance Committee meets to discuss and consider such candidates’ qualifications and then selects nominees for recommendation to the Board by majority vote.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder or not. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board at an annual meeting of stockholders must do so by delivering, at least 120 days prior to the anniversary date of the mailing of the proxy statement for our last annual meeting of stockholders, a written recommendation to the Nominating and Corporate Governance Committee at the following address: c/o Corporate Secretary, 3636 Nobel Drive, Suite 325, San Diego, California 92122. Each submission must set forth, among other things: the name and address of the stockholder on whose behalf the submission is made; the number of our shares that are owned beneficially by such stockholder as of the date of the submission; the full name of the proposed candidate; a description of the proposed candidate’s business experience for at least the previous five years;
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complete biographical information for the proposed candidate; and a description of the p
roposed candidate’s qualifications as a director. For additional information, see our Director Selection Guidelines attached to the Nominating and Corporate Governance Committee’s Charter, which can be found on our website at
http://infosonics.com/index.ph
p/investors/corporate-governance/nominating-and-corporate-governance-committee-charter/
.
Meetings of the Board of Directors and Committee Member Attendance
During fiscal year 2016, our Board of Directors met fourteen times, our Audit Committee met four times, our Compensation Committee met twice, and our Nominating and Corporate Governance Committee met once. All directors attended at least 75% of the meetings of the Board and of the committees on which they served in fiscal year 2016 that were held while they were a director or committee member. InfoSonics does not have a specific policy requiring director attendance at the Annual Meeting of Stockholders; however, we encourage our directors to be present at the Annual Meeting and available to answer any stockholder questions. No shareholders or directors attended our 2016 Annual Meeting.
Board Leadership Structure and Role in Risk Oversight
At the present time, in light of the small size of the Company and its Board of Directors, the Board believes that InfoSonics and its stockholders are best served by not having a Chairman of the Board or lead director. Mr. Ram, InfoSonics’ President and Chief Executive Officer, is also a director of the Company. Mr. Ram oversees the management team, which is responsible for identifying, assessing and managing the material risks facing the Company. The other three members of the Board are independent directors, each of whom is a strong, seasoned business executive with expertise in areas critical to the Company, including wireless technology and distribution, China-based manufacturing and financial controls. Each director takes a leadership role in his area of expertise.
The Board of Directors has historically performed an important role in the review and oversight of risks, and generally oversees the Company’s risk management practices and processes, including entity level and financial controls. In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed and implemented by the Company’s management are adequate and functioning as designed. The Board also oversees organizational structure, policies and procedures, such as the Code of Conduct and the Code of Ethics and other internal policies and guidelines designed to support the Company’s corporate governance and to comply with the laws, rules and regulations that apply to the Company’s business operations.
Although the Board of Directors is ultimately responsible for risk oversight at the Company, it has delegated primary oversight of the management of (i) financial reporting, internal controls, accounting and compliance risks to the Audit Committee, (ii) compensation risk to the Compensation Committee, and (iii) corporate governance risk to the Nominating and Corporate Governance Committee. Each of these committees routinely reports to the Board on the management of these specific risk areas.
To permit the Board of Directors and its committees to perform their respective risk oversight roles, members of management report directly to the Board or the relevant committee of the Board responsible for overseeing the management of specific risks, as applicable. The President and Chief Executive Officer reports directly to the Board. The Chief Financial Officer reports to the President and Chief Executive Officer, the Board and the Audit Committee. Members of the management team have a high degree of access and communication with the independent directors of the Board and the various Board committees. Members of the Company’s management regularly attend Board and committee meetings and are available to address any questions or concerns raised on matters related to risk management. Because three of the four Board members are independent directors and each committee of the Board consists solely of independent directors, InfoSonics’ risk oversight structure conforms to the Company’s belief that having a strong, independent group of directors is important for quality governance.
Additional Corporate Governance Information
Stockholder Communications
Stockholders wishing to send communications to the Board may contact Vernon A. LoForti, our Vice President, Chief Financial Officer and Corporate Secretary, at InfoSonics’ principal executive offices address. All such communications will be shared with the members of the Board, or if applicable, a specified committee or director.
Code of Business Conduct and Ethics and Reporting of Accounting Concerns
We have adopted a Code of Business Conduct and Ethics (the “Code of Conduct”). We require all employees to adhere to the Code of Conduct in addressing legal and ethical issues encountered in conducting their work. The Code of Conduct requires that our employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in our best interest.
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We have also adopted a Code of Ethics (the “Code of Ethics”) for our Chief Executive Officer, our Chief Financial Officer and our Controlle
r. The Code of Ethics supplements our Code of Conduct and is intended to promote honest and ethical conduct, full and accurate reporting, and compliance with laws as well as other matters.
The Code of Conduct and Code of Ethics can be found on our website at
http://www.infosonics.com/index.php/investors/corporate-governance
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We have established “whistle-blower procedures” that provide a process for the confidential and anonymous submission, receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters. These procedures provide protections to employees who report company misconduct.
If we make changes to our Code of Ethics or Code of Business Conduct and Ethics in any material respect or waive any provision of either such Code for our board members or certain management persons covered by either such Code, we expect to provide the public with appropriate notice of any such change or waiver by publishing a description of such event on our corporate website,
www.infosonics.com
, or by other appropriate means as required by applicable rules of the SEC.
Section 16(A) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 5 furnished to us, we are not aware of any person who at any time during the fiscal year ended December 31, 2016, was a director, officer or beneficial owner of more than ten percent of our common stock, who failed to file, on a timely basis, reports required by Section 16(a) of the Securities Exchange Act for transactions occurring during such fiscal year.
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