¨	Preliminary Proxy Statement

¨	Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e) (2)

þ	Definitive Proxy Statement

¨	Definitive Additional Materials

¨	Soliciting Material Pursuant to §240.14a-12

SED INTERNATIONAL HOLDINGS, INC.

(Name of Registrant as Specified in its Charter)

þ	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:

(4)	Proposed maximum aggregate value of transaction:

(5)	Total fee paid:

¨	Fee paid previously with preliminary materials.

 

(1)	Amount Previously Paid:

(2)	Form, Schedule or Registration Statement No.:

(3)	Filing Party:

(4)	Date Filed:

 

1.

Election of five directors;

2.

Advisory approval of the appointment of J.H. Cohn LLP as the independent registered public accounting firm of the Company for the fiscal year ending June 30, 2012; and

3.

Transaction of such other business as may properly come before the meeting or any adjournments thereof.

October 28, 2011	By order of the Board of Directors,
	Lyle Dickler
	Secretary

 

  

Name		Age		Positions, Offices and other Information
Jonathan Elster		39		Jonathan Elster has been a director since February 2010 and with the Company since 1995. Mr. Elster has been serving as our President and Chief Executive Officer since December 2009. He was promoted to President and Chief Operating Officer on June 2, 2009 and remained the Chief Operating Officer until December 2009. Elster began his career with the Company as a sales representative in 1995. He has served as a Sales Manager from 1997 to 1999 and as Vice President-Sales from 1999 to 2000. In 2000, Mr. Elster was promoted to Senior Vice-President of Sales and Marketing and in 2004, Executive Vice President. He is responsible for sales and marketing operations of the Company. Jonathan Elster is Jean Diamond’s son-in-law. Mr. Elster was selected as a director because of his in-depth knowledge of our operations, financial condition and business strategy from his current position as our CEO, as well as his extensive prior experience with us. We believe that as CEO he provides a critical link between management and the Board, which would help enable the Board to provide its oversight function with the benefit of management’s perspective of our business.
Arthur Goldberg		72		Arthur Goldberg has been a director since May 2008. He is the Chief Financial Officer of Clear Skies Solar, Inc. (OTCBB: CSKH) holding that position since January 2008. Prior to that he served as interim CFO of Milestone Scientific, Inc. (OTCBB: MLSS) from August 2007 to January 2008. From July 2006 to June 2007, Mr. Goldberg served as CAO and CFO of St. Luke’s School, a non-sectarian college prep school. From December 2005 to July 2006, Mr. Goldberg was a private accounting and business consultant. From February 1999 to November 2005, Mr. Goldberg was a partner in the firm of Tatum CFO Partners LLP, serving as an interim CFO for both public and private companies. Prior to 1999, Mr. Goldberg held several senior executive positions, including CFO and COO of a number of public companies. Mr. Goldberg earned his B.B.A. from the City College of New York, his M.B.A. from the University of Chicago and his J.D. and LL.M. from the New York University School of Law. Mr. Goldberg is also a Certified Public Accountant. Mr. Goldberg was selected as a director because of his hands-on experience as the CFO of public companies and extensive prior experience as a public company senior financial officer. We believe that his background and experience provides the Board with a perspective on corporate finance matters. Given his financial experience, Mr. Goldberg has been determined by our Board to be the Audit Committee financial expert.

Stephen Greenspan		70		Stephen Greenspan has been a director since May 2008. He was the Founder, Chairman, President and Chief Executive Officer of K&G Men’s Center, Inc. a formerly publicly traded men’s apparel retailer. Mr. Greenspan retired in 2002. He also works with a number of charities both personally as well as through his family foundation and charitable trust. Mr. Greenspan was selected a director in 2008 because of his prior experience as a CEO of a public company which provides the Board with valuable leadership skills and insight into our business.
J. K Hage III		60		J.K. Hage III joined the Board in January 2009. He is the Managing Member of the law firm of Hage & Hage LLC., where he has practiced law since 1978. Mr. Hage advises public and private utility, energy, communications, business and technology clients, and others, in the areas of business organizations, new ventures, strategic planning, capital formation, information security, sustainability, mergers and acquisitions, negotiation of transactions, succession and estate planning. Mr. Hage is of counsel to Lukas, Nace, Guitierrez and Sachs, a Washington, D.C. communications law and engineering firm. Mr. Hage has initiated numerous business ventures including Independent Wireless One Corporation (aka U.S. Unwired), a national Sprint PCS affiliate and was the organizer and the first Executive Director of the Griffiss Institute, a market driven national collaboration of industry, the academy and government dedicated to applied research, training, and services in information security. From November 2004 to May 2006, he served as General Counsel, and from February 2003 to November 2004, he served as first Executive Director, to the Griffiss Institute. Mr. Hage has extensive business experience in the private and public equity markets, communications, energy, real estate development and many other enterprises. Mr. Hage, his family and their family charitable foundation are active in numerous civic, arts and other charitable organizations. Mr. Hage earned a B.A. from Hamilton College and a J.D. from Albany Law School and is admitted to both the New York and the Alaska Bars. Mr. Hage studied and lived for a number of years in Latin America (Peru, Mexico), in England (Oxford University) and in Spain (University of Madrid), and New York University (Ph. D ABD in Spanish). Mr. Hage was selected as a director because of his background in law, business and investing throughout the Americas. He provides the Board with valuable expertise, management and leadership skills.
Samuel A. Kidston		36		Samuel A. Kidston has been a director since January 2009. He was elected Chairman of the Board in December 2009. He is the founder and Chief Investment Officer of North & Webster, LLC, an investment management and advisory firm. Mr. Kidston is the non-executive Chairman of the Board of Sport-Haley, Inc. (Pink Sheets: SPOR) and the non-executive Chairman of the Board of EZENIA, Inc. (Pink Sheets: EZEN). Prior to founding North & Webster, LLC, Mr. Kidston served as an equity analyst at BlackRock, Inc., from December 2001 to March 2006. Mr. Kidston earned a B.A. from Wesleyan University and received the designation Chartered Financial Analyst from the CFA Institute. Mr. Kidston was selected a director because of his experience in managing equity investments and financial analysis which provides the Board with the perspective of an active investor and fund manager with a deep understanding of the financial markets.

 

 

Name		Age		Position with the Company
Jonathan Elster		39		President and Chief Executive Officer
J. Stanley Baumgartner, Jr.		62		Senior Vice President and Chief Financial Officer
Eduardo Lageyre		41		Senior Vice President, U.S. Purchasing
Ronell Rivera		48		Senior Vice President of Latin America
David Burroughs		52		Vice President of U.S. Sales
Barry Diamond		69		Vice President of Product Management
Lyle Dickler		42		Vice President of Finance, Treasurer & Secretary
Robbie Kalman		47		Vice President of U.S. & Corporate Marketing
James Overwyk		56		Vice President of Operations
Thomas Roper, Jr.		57		Vice President of Consumer Electronics Purchasing, U.S.

     

·

met with the Company’s independent auditors, with and without management present, to discuss the overall scope and plans for their respective audits, the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting;

·

reviewed and discussed the Company’s audited financial statements with management of the Company;

·

reviewed and discussed with the Company’s independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 61, as it may be amended or supplemented; and

·

received the written disclosures and the letter from the independent accountants, as required by Independent Standards Board Standard No. 1 (“Independence Discussions with Audit Committee”) as may be modified or supplemented, and has discussed with the independent accountants the independent accountants’ independence.

     

 

 

·

the name and address of the Shareholder submitting the recommendation, the beneficial owner, if any, on whose behalf the recommendation is made and the director candidate;

·

the class and number of shares of our Common Stock the Shareholder owns beneficially and of record and, in the case where the Shareholder is the record owner but not the beneficial owner, the name of the beneficial owner, including the holding period for such shares;

·

full biographical information concerning the director candidate, including a statement about the candidate’s qualifications; and

·

a written consent of the candidate (1) to be named in the Company’s proxy statement and stand for election if nominated by the Board and (2) to serve if appointed by the Shareholders.

 

  

 

  

 

 

 

 

		2011				2010
Audit Fees
J. H. Cohn LLP (1)		$	215,000			$	291,000

 

(1)

J. H. Cohn LLP fees for fiscal 2011 are estimated.

		Fiscal						Cash				Stock				All Other
		Year		Salary				Bonus				Awards				Compensation				Total
Name and Principal Position				$				$					$(3)				$(2)				$
Jonathan Elster		2011			340,000				34,000	(1)			35,500				-				409,500
Chief Executive Officer and		2010			296,000				66,000				35,500				11,233				408,733
President
Barry Diamond		2011			205,379				14,870	(1)			35,500			–					255,754
Vice President -		2010			214,988			–					35,500			–					250,488
Product Management
Lyle D. Dickler		2011			145,000				7,250	(1)			21,300			–					173,550
Vice President Finance		2010			145,000			–					21,300			–					166,300
Secretary and Treasurer

(1)

For Mr. Elster $34,000 was earned in fiscal 2011 and paid in fiscal 2012. For Mr. Diamond this includes $9,875 earned in fiscal 2011 and paid in fiscal 2012. For Mr. Dickler $7,250 was earned in fiscal 2011 and paid in fiscal 2012.

(2)

Auto expense reimbursement or auto use benefit.

(3)

Reflects the value of the restricted stock that was charged to income in the reported period as reported on the Company’s financial statements. For a description of the assumptions made in the valuation, see the Share-Based Compensation section under Note 2, and the Restricted Stock section under Note 7, to the Company’s Financial Statements included with the Company’s Annual Report enclosed with this proxy statement.

    

   

Plan Category		Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted-average exercise price of outstanding options, warrants and rights (b)				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c)
Equity compensation plans approved by security holders			102,500			$	1.96				236,230
Equity compensation plans not approved by security holders			57,500			$	0.52				—
Total			160,000			$	1.44				—

		Option Awards									Stock Awards
		Number of
		Securities
		Underlying									Number of				Market Value of
		Unexercised									Shares or				Shares or Units
		Options (#)				Option			Option		Units of Stock				Of Stock that
		Exercisable				Exercise			Expiration		that have not				have not vested
Name		(1)				Price ($)			Date		vested (#) (2)				($)(3)
Jonathan Elster			62,500				1.96		10/15/2011			33,333			$	169,998
Total			62,500
Barry  Diamond			40,000				1.96		10/15/2011			33,333			$	169,998
			50,000				0.44		01/15/2013
Total			90,000
Lyle Dickler			—				—		—			20,000			$	102,000
Total			—

---

(1)

Represents stock option grants at fair market value on the date of grant.

(2)

The restricted shares of common stock are subject to forfeiture prior to vesting and begin vesting in equal amounts over a two to five year vesting period of the grant date pursuant to the provisions of a restricted stock agreement.

(3)

Based on the closing price per share of $5.10 as reported on the AMEX on June 30, 2011.

·

An annual fee of $70,000 of which 50% shall be paid in quarterly installments in cash and 50% shall be paid in  restricted shares of common stock which shall immediately vest upon issuance;

·

The Chairman of the Board is paid an additional annual fee of $25,000 paid in quarterly installments.

·

The Chairman of the Audit Committee is paid an additional annual fee of $25,000 paid in quarterly installments and each committee member is paid an additional annual fee of $5,000 for their services paid in quarterly installments;

·

The Chairman of the Compensation Committee is paid an additional annual fee of $10,000 paid in quarterly installments and each committee member is paid an additional annual fee of $2,500 for services paid in quarterly installments;

·

The Chairman of the Latin America Affairs Committee is paid an additional annual fee of $25,000 paid in quarterly installments and each committee member receives an additional annual fee of $2,500 for services paid in quarterly installments;

·

The Chairman of the Nominating and Corporate Governance Committee is paid an annual fee of $25,000 paid in quarterly installments and each committee member receives an additional annual fee of $2,500 for services paid in quarterly installments.

  

Name		Fees Earned or Paid in Cash ($)				Stock Awards  ($) (1)				Total ($)
Stewart I. Aaron (2)		$	73,500				−			$	73,500
Jean Diamond		$	33,500				32,500			$	66,000
Arthur L. Goldberg		$	69,750				32,500			$	102,250
Stephen Greenspan		$	53,250				32,500			$	85,750
J. K. Hage, III		$	70,500				42,500			$	113,000
Samuel Kidston		$	80,000				42,500			$	122,500
Joseph Segal (2)		$	73,500				−			$	73,500

---

 

(1)

Reflects the value of the restricted stock that was charged to income in the reported period as included in the Company’s financial statements. For a description of the assumption made in the valuation of restricted stock, see the Share-Based Compensation under Note 2, and the Restricted Stock Section under Note 7, to the Company’s Financial Statements included with the Company’s Annual Report enclosed with this proxy statement.

(2)

In connection with Messrs. Segal’s and Aaron’s decision not to run for re-election, the Company granted them each a one-time stipend in the amount of $25,000 each and $34,000 in lieu of stock that was earned. Effective as of December 8, 2010, both of Messrs. Segal and Aaron ceased to be members of the Board.

 

     

Name of Beneficial Owner		Amount and Nature of Beneficial Ownership				Percent of Class
Barry Diamond			169,938	(1)			3.4	%
Jean Diamond			532,969	(2)			10.8	%
Lyle Dickler			21,422	(3)			*
Jonathan Elster			136,741	(4)			2.8	%
Arthur Goldberg			54,620				1.1	%
Stephen Greenspan			52,620				1.1	%
J. K. Hage, III			184,385	(5)			3.7	%
Samuel Kidston			424,858	(6)			8.6	%
All current directors and executive
Officers as a group (15) persons			1,665,450	(7)			33.1	%
5% Shareholders:
FMR Corp			475,000	(8)			9.6	%
Allen R. Earl			458,408	(9)			9.3	%
Paul D. Sonkin			616,463	(10)			12.4	%

---

*

Represents less than one percent of our outstanding common stock.

(1)

The shares include 50,000 options and 956 restricted shares of common stock granted on September 22, 2011 which are subject to vesting and forfeiture over a three year period pursuant to the provisions of a restricted stock agreement with Mr. Diamond. The shares will be fully vested in September 2014.

(2)

The shares include 271,426 shares held by a trust for the benefit of Ms. Diamond

(3)

The shares include 1,422 restricted shares of common stock granted on September 22, 2011 which are subject to vesting and forfeiture over a three year period pursuant to the provisions of a restricted stock agreement with Mr. Dickler. The shares will be fully vested in September 2014.

(4)

The shares include 6,667 restricted shares of common stock granted on September 22, 2011 which are subject to vesting and forfeiture over a three year period pursuant to the provisions of a restricted stock agreement with Mr. Elster. The shares will be fully vested in September 2014.

(5)

The shares include (i) 18,700 shares of common stock owned by Adirondack Capital LLC (“Adirondack”); (ii) 94,500 shares of common stock beneficially owned by Hedy A. Hyde, his wife; and (iii) 14,577 restricted shares of common stock granted on September 22, 2011, which are subject to vesting and forfeiture over a twelve month period pursuant to the provisions of a restricted stock agreement with Mr. Hage. Mr. Hage is a Managing Member of Adirondack. Mr. Hage disclaims beneficial ownership of the shares beneficially owned by Adirondack and his wife except to the extent of his pecuniary interest therein. The principal business address of Mr. Hage is c/o Hage & Hage LLC, 283 Genesee Street, Utica, New York 13501.

 

 

(7)

Includes 50,000 shares underlying outstanding options and 44,430 restricted shares of common stock granted on September 22, 2011.

(8)

All of the shares indicated are deemed beneficially owned by Fidelity Management & Research Company, a wholly-owned subsidiary of FMR Corp., as a result of its serving as investment adviser to Fidelity Low-Priced Stock Fund, the owner of the 475,000 shares. FMR Corp.’s address is 82 Devonshire Street, Boston, Massachusetts 02109.

(9)

All of the shares indicated are deemed beneficially owned by Allyn R. Earl. Mr. Earl’s address is 38 Dwight Avenue, Clinton, New York 13323-1600.

(10)

Sole power to vote and dispose of all 616,463 shares of common stock are vested with Paul D. Sonkin ("Mr. Sonkin"), in accordance with a Schedule 13D filed on 4/22/10 by a group, which members include Tarsier Nanocap Value Fund, L.P., a Delaware limited partnership ("Tarsier"), Hummingbird Value Fund, L.P., a Delaware limited partnership ("Hummingbird Value"), Hummingbird Management, LLC, a Delaware limited liability company and the investment manager of each of Hummingbird Value and Tarsier ("Hummingbird Management"), Hummingbird Capital, LLC, a Delaware limited liability company and the general partner of each of Hummingbird Value and Tarsier ("Hummingbird Capital") and Mr. Sonkin. Mr. Sonkin serves as the managing member of each of Hummingbird Management and Hummingbird Capital and as the investment manager to certain managed accounts. The address of the principal office of Mr. Sonkin is 145 East 57th Street, 8th Floor, New York, New York 10022.

  

    

   

•	do not relate to the business or affairs of the Company or the functioning or constitution of the Board or any of its committees;

•	relate to routine or insignificant matters that do not warrant the attention of the Board;

•	are advertisements or other commercial solicitations;

•	are frivolous or offensive; or

•	are otherwise not appropriate for delivery to directors.

 

 

 

HOUSEHOLDING

  

 

•	writing to:

•	telephoning the Company at:

(770) 491-8962

     

    

  

 

 

 

  

	By Order of the Board of Directors,
	Lyle Dickler
	Secretary

Dated:

October 28, 2011

  

 

 

 

Jonathan Elster

Arthur Goldberg

Stephen Greenspan

J.K. Hage III

Sam Kidston

¨ FOR

¨ AGAINST

¨ ABSTAIN

---

 

  

 

	Dated:	, 2011
	Signature of Shareholder
	Signature of Shareholder