DEF 14A: Koss Corp. Sets 2025 Annual Meeting, Board Changes

Koss Corporation announces its 2025 Annual Meeting of Stockholders to elect directors, approve executive compensation, and ratify auditors, alongside board and executive changes.

Summary

• The Annual Meeting of Stockholders will be held virtually on October 15, 2025, at 8:00 a.m. Central Time.
• Stockholders will vote on the election of five directors, a non-binding advisory resolution on Named Executive Officer (NEO) compensation, and the ratification of WIPFLI, LLP as the independent registered public accounting firm for the fiscal year ending June 30, 2026.
• The record date for voting eligibility is August 25, 2025, with 9,456,438 shares of Common Stock outstanding.
• Steven A. Leveen is retiring from the Board of Directors, and Michael J. Koss, Jr. has been nominated as a new director.
• John C. Koss, Jr., Vice President Sales, plans to retire no sooner than June 30, 2026.
• The company reported a net loss of $874,831 for the fiscal year ended June 30, 2025, following a net loss of $950,911 in fiscal year 2024, a significant decline from the net income of $8,319,212 in fiscal year 2023.
• Total Shareholder Return (TSR) for a $100 investment starting June 30, 2022, increased from $51.7 in fiscal year 2023 to $73.4 in fiscal year 2025, though it remains below the initial investment.
• Audit fees paid to WIPFLI, LLP were $189,217 in fiscal year 2025, an increase from $173,398 in fiscal year 2024.

Sentiment

Score: 3

Explanation: The company reported significant net losses for two consecutive fiscal years, a sharp decline from a substantial profit in FY2023. While Total Shareholder Return showed a slight recovery, it remains below the initial investment. The unexercised expiration of a large block of executive stock options and minor compliance issues with late filings contribute to a negative sentiment.

Positives

• All directors maintained 100% attendance at Board and committee meetings during the fiscal year ended June 30, 2025.
• The company maintains a Code of Ethics and an Insider Trading and Tipping Policy that prohibits officers and directors from engaging in hedging transactions, aligning executive interests with long-term shareholder value.
• The 2023 Equity Incentive Plan has 2,000,000 shares authorized for issuance, plus any shares from the Prior Plan that expire or are forfeited, providing substantial capacity for future employee and director incentives.
• Total Shareholder Return (TSR) for a $100 investment, while still below the initial investment, showed an upward trend from $51.7 in fiscal year 2023 to $73.4 in fiscal year 2025.

Negatives

• The company reported a net loss of $874,831 in fiscal year 2025, following a $950,911 net loss in fiscal year 2024, a significant reversal from the $8,319,212 net income in fiscal year 2023.
• Two executive officers, John C. Koss, Jr. and Michael J. Koss, Jr., had late Section 16(a) filings for stock transactions due to administrative oversight.
• Michael J. Koss's 160,000 stock options, granted in 2020, expired unexercised on July 22, 2025, potentially indicating a lack of perceived value or opportunity to exercise.
• No stock-based awards have been granted under the 2023 Equity Incentive Plan as of June 30, 2025, despite its approval by shareholders in 2023.
• The Audit Committee will reduce from four to three members following Mr. Leveen's retirement, with no immediate appointment of another independent director to fill the vacancy.

Risks

• The Board actively oversees operational, financial, legal and regulatory, strategic, and reputational risks facing the company.
• The Nominating Committee reviews risks associated with potential conflicts of interest affecting directors and executive officers.
• The company's primary facility is leased from Koss Holdings, LLC, a related party controlled by trusts of former Chairman's beneficiaries, which could present potential conflicts of interest.
• The reduction in the number of independent directors on the Audit Committee from four to three, without immediate replacement, could potentially impact the committee's oversight capacity and diversity of perspectives.

Future Outlook

The company's 2023 Equity Incentive Plan is designed to attract and retain highly-competent employees, consultants, and directors, motivating them to improve business results. The company plans to continue its 401(k) matching contributions in 2026 at a rate of $0.25 per dollar deferred. John C. Koss, Jr. has announced his plan to retire no sooner than June 30, 2026.

Management Comments

• The Board believes combining the roles of Chairman and Chief Executive Officer enhances alignment between the Board and management, avoids confusion over roles, and streamlines board processes.
• The executive compensation program is designed to attract and retain highly qualified leaders, reward performance, and align executives' interests with long-term stockholder interests, incorporating a pay-for-performance relationship without guaranteed bonuses or stock options.

Industry Context

This filing does not provide specific analysis of how this announcement relates to broader industry trends or competitors.

Comparison to Industry Standards

• No specific comparisons to global benchmarks or comparable companies or projects are provided in this filing.

Management Changes

Corporate Governance

Related Party Transactions

• The company leases its facility in Milwaukee, Wisconsin from Koss Holdings, LLC, which is controlled by five equal ownership interests in trusts held by the five beneficiaries of the former Chairman's revocable trust and includes current stockholders of the company. The lease was renewed on May 24, 2022, extending the expiration to June 30, 2028, with a second extension to June 30, 2033. The rent is fixed at $380,000 per year for the Extended Term, increasing to $397,000 per year for the Second Extended Term.

Stakeholder Impact

• Shareholders: Will participate in key governance decisions at the Annual Meeting, including director elections, executive compensation, and auditor ratification. Affected by the company's financial performance, including consecutive net losses.
• Employees: Eligible to participate in the KESOT and 401(k) Plan, with the company planning to continue 401(k) matching contributions. Most employees (excluding NEOs) are eligible for a quarterly profit-sharing plan.
• Management: Executive compensation is subject to an advisory vote. Michael J. Koss, Jr. is nominated to the Board, while John C. Koss, Jr. plans to retire, indicating changes in leadership structure.
• Auditors (WIPFLI, LLP): Their appointment for the fiscal year ending June 30, 2026, is subject to stockholder ratification.

Next Steps

• Stockholders will vote on the election of directors, advisory executive compensation, and auditor ratification at the Annual Meeting on October 15, 2025.
• John C. Koss, Jr. plans to retire from his role as Vice President Sales no sooner than June 30, 2026.
• The company plans to continue matching employee 401(k) deferrals with a $0.25 per dollar match in 2026.
• Stockholder proposals for the 2026 annual meeting must be received by May 8, 2026, to be eligible for inclusion in proxy materials.
• Stockholders intending to solicit proxies for director nominees under universal proxy rules must provide notice by August 16, 2026, for the 2026 annual meeting.

Key Dates

Recommendation

The company has reported substantial net losses for two consecutive fiscal years, a sharp reversal from a significant profit in FY2023. This indicates deteriorating financial performance and potential operational challenges. While Total Shareholder Return has shown a slight positive trend from its low point, it remains below the initial investment value. The unexercised expiration of a large block of CEO stock options further suggests a lack of perceived value or growth potential. These factors, combined with minor compliance issues, point to underlying operational or market challenges that make the stock a high-risk investment with negative momentum, warranting a 'sell' recommendation.

Keywords

Koss Corporation, KOSS, Proxy Statement, Annual Meeting, Corporate Governance, Executive Compensation, Board of Directors, Financial Performance, Shareholder Return, Audit, Risk Management, Stock Options, Related Party Transactions