WALBRO CORP, DEF 14A, 1999-03-23

WALBRO CORP
DEF 14A, 1999-03-23
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [ ]

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 Rule 14a-11(c) or Rule 14a-12
WALBRO CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
WALBRO CORPORATION
- --------------------------------------------------------------------------------
(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:

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(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):

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(4) Proposed maximum aggregate value of transaction:

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(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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<PAGE> 2
[WALBRO CORPORATION LOGO]

WALBRO CORPORATION
1227 CENTRE ROAD
AUBURN HILLS, MICHIGAN 48326
(248) 377-1800

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT

MARCH 23, 1999

To the Stockholders of
Walbro Corporation

The Annual Meeting of the stockholders of Walbro Corporation, a
Delaware corporation, will be held in Chicago, Illinois at the offices of Katten
Muchin & Zavis, 525 West Monroe Street, on May 4, 1999 at 10:00 a.m. for the
following purposes:

(1) To elect three Directors to serve for a term of three years or
until their successors have been elected and qualified;

(2) To approve the amendment to the Walbro Corporation Equity
Based Long Term Incentive Plan; and

(3) To transact such other business as may properly be brought
before the meeting or any adjournment thereof.

The Board of Directors of the Company (the "Board of Directors" or
"Board") has fixed the close of business on March 8, 1999 as the record date for
the determination of stockholders entitled to notice of, and to vote at, the
meeting. The transfer books of the Company will not be closed. It is anticipated
that this Notice and Proxy Statement and the enclosed form of proxy will first
be sent to the stockholders on or about March 23, 1999.

The Board of Directors would like to have all stockholders represented
at the meeting. Whether or not you plan to attend the meeting, you are urged to
fill in, date and sign your proxy, and return it in the accompanying envelope.
You have the power to revoke your proxy at any time before it is voted by
written notice to the Secretary of the Company, and the giving of a proxy will
not affect your right

<PAGE> 3
to vote in person if you attend the meeting. Your proxy is being solicited
by the Board of Directors on behalf of the Company, and the cost of
solicitation will be paid by the Company. Proxies may be solicited by personal
interview, telephone or telegram by the officers, employees or directors of the
Company, none of whom will receive any compensation therefor in addition to his
or her regular compensation. In addition, the Company has engaged Morrow & Co.,
Inc. to solicit proxies by telephone, mail or personal contact from brokers,
bank nominees, other institutional holders and the 100 individual stockholders
of record holding the greatest number of shares of the Company's common stock,
par value $.50 per share ("Common Stock"). The Company will pay Morrow & Co. a
fee of $4,000 for its services.

On March 8, 1999, there were 8,688,294 shares of Common Stock
outstanding, each of which is entitled to one vote. An Annual Report for the
fiscal year 1998 containing financial and other information pertaining to the
Company is being mailed to the stockholders together with this Notice and Proxy
Statement.

The vote of a majority of the shares present in person or by proxy at
the meeting will be required to elect the candidates for Director and to approve
the amendment to the Walbro Corporation Equity Based Long Term Incentive Plan.

Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and will also count abstentions for
purposes of voting on any proposal presented at the meeting or any adjournment
thereof. Abstentions will have the same effect as a vote against a proposal. If
a broker indicates on the proxy that it does not have discretionary authority as
to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.

PROPOSAL 1

ELECTION OF DIRECTORS
Pursuant to the power vested in it under Article VI of the Company's
Restated Certificate of Incorporation, as amended (the "Restated Certificate"),
the Board of Directors has fixed the number of Directors which shall constitute
the whole Board at seven. Article VI of the Restated Certificate also provides
that the Board members shall be classified with respect to the time for which
they shall hold office by dividing them into three classes, the members of each
class to hold office for a term of three years. Three Class III Directors are to
be elected at the Annual Meeting of Stockholders on May 4, 1999 for a term of
three years expiring at the Annual Meeting of Stockholders in 2002.

If for any reason a nominee should become unavailable for election, the
proxy will be voted for a replacement nominee selected by the Board of
Directors. At this time the Company knows of no reason why the nominee would not
be available for election.

<PAGE> 4

to vote in person if you attend the meeting. Your proxy is being solicited by
the Board of Directors on behalf of the Company, and the cost of solicitation
will be paid by the Company. Proxies may be solicited by personal interview,
telephone or telegram by the officers, employees or directors of the Company,
none of whom will receive any compensation therefor in addition to his or her
regular compensation. In addition, the Company has engaged Morrow & Co., Inc. to
solicit proxies by telephone, mail or personal contact from brokers, bank
nominees, other institutional holders and the 100 individual stockholders of
record holding the greatest number of shares of the Company's common stock, par
value $.50 per share ("Common Stock"). The Company will pay Morrow & Co. a fee
of $4,000 for its services.

PROPOSAL 1

ELECTION OF DIRECTORS

Pursuant to the power vested in it under Article VI of the Company's
Restated Certificate of Incorporation, as amended (the "Restated Certificate"),
the Board of Directors has fixed the number of Directors which shall constitute
the whole Board at seven. Article VI of the Restated Certificate also provides
that the Board members shall be classified with respect to the time for which
they shall hold office by dividing them into three classes, the members of each
class to hold office for a term of three years. Three Class III Directors are to
be elected at the Annual Meeting of Stockholders on May 4, 1999 for a term of
three years expiring at the Annual Meeting of Stockholders in 2002.

<PAGE> 5

INFORMATION AS TO THE NOMINEES

The name of the nominees for the office of Director, together with
certain information concerning such nominees, is set forth below:

SERVED AS
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DIRECTOR
DIRECTOR AGE DURING THE PAST FIVE YEARS SINCE
- ------------------------ ----- ------------------------------------------------------------------ ----------
CLASS III
TERM EXPIRES IN 2002:
<S> <C> <C> <C>
William T. Bacon, Jr. 76 Associate, ABN AMRO since 1994. ABN 1972
* AMRO is a banking services corporation
** with its headquarters in The
Netherlands. Honorary Director, Stifel
Financial Corp. 1984-1994. Stifel
Financial is an investment banking
services corporation. Prior thereto,
Managing Partner of Bacon Whipple &
Co., Inc. Bacon Whipple was an
investment banking services corporation
which merged with Stifel Financial.

Frank E. Bauchiero 64 Chief Executive Officer since April 17, 1990
* 1998, President since August 1996 and
**** Chief Operating Officer from August
1996 to April 1998. President,
Industrial Group, Dana Corporation
North American Operations, Dana
Corporation from 1989 to 1996, Dana
Group Vice-President, 1987-1990. Dana
Corporation manufactures automotive
product systems, mobile off-highway
equipment and industrial equipment.
Also a director of Regal Beloit Corp.
and Rockford Products Corp.

Vernon E. Oechsle 56 President, Chief Executive Officer and 1994
*** Director of Quanex Corporation since
**** 1996; Chief Operating Officer of Quanex
Corporation, 1993-1995. Quanex is a
manufacturer of specialty steel and
aluminum products. Director of
Precision Castparts Corp. since 1996.
From 1990 to 1992, Chief Executive
Officer of Allied Signal Automotive;
prior thereto Group Executive,
Automotive and Truck for Dana
Corporation and President of
Hayes-Dana, Dana's Canadian subsidiary.
</TABLE>

INFORMATION AS TO DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE
MEETING

The name of, and certain information with respect to, the remaining
four Directors of the Company are as follows:

- ------------------
* Member of the Executive/Directors Committee
** Member of the Compensation Committee
*** Member of the Audit Committee
**** Member of the Human Resource Planning Committee

SERVED AS
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DIRECTOR
DIRECTORS AGE DURING THE PAST FIVE YEARS SINCE
- -------------------------- ---- ------------------------------------------------------------------ ----------

CLASS II
TERM EXPIRES IN 2001:

<S> <C> <C> <C>
John E. Utley 58 Deputy President and Senior Vice 1993
* President, Sales and Marketing of Lucas
** Varity Automotive since 1998. Senior
*** Vice President of Lucas Varity PLC from
1996 to 1998. Senior Vice President of
Varity Corporation from 1994 to 1996.
Chairman of the Board of Kelsey-Hayes
Company from 1992 to 1996 and Vice
Chairman and Vice President from 1989
to 1992. Lucas Varity Automotive is a
supplier of automotive braking systems,
electrical systems and diesel systems.

CLASS I
TERM EXPIRES IN 2000:

J. Dwane Baumgardner 58 Chairman, President and Chief Executive 1997
*** Officer of Donnelley Corporation since
1986. Donnelley Corporation is a
manufacturer of automotive vision
systems, modular window systems and
coated glass products. From 1982 to
1986, Chief Executive Officer,
President and Chief Operating Officer
of Donnelley Corporation, prior thereto
Vice President, Technology of Donnelley
Corporation. Also a director of SL
Industries, Inc. and Wescast
Industries.

Robert D. Tuttle 73 A Director of Woodhead Industries, Inc. 1981
** From 1980 to 1991, Chairman, CEO and
**** Director of SPX Corporation which
produces specialty tools and equipment
and distributes automotive components.

Robert H. Walpole 59 Vice President of Planning since 1983
October 1998. President, 1983 Asia
Pacific Region from January 1997 to
October 1998. From 1991 to 1996,
President of Walbro Engine Management
Corporation. Vice President of the
Company since 1983.
</TABLE>

BOARD MEETINGS AND COMMITTEES

The Company has an Audit Committee, a Compensation Committee, an
Executive/Directors Committee and a Human Resource Planning Committee.

The Audit Committee, consisting of Messrs. Vernon E. Oechsle
(Chairman), J. Dwane Baumgardner and John E. Utley, met twice in 1998 and
recommended to the Board of Directors the selection of the Company's independent
public accountants and reviewed the plan, scope and results of such independent
public accountants' audit. The primary purpose and function of the Audit
Committee

- -------------
* Member of the Executive/Directors Committee
** Member of the Compensation Committee
*** Member of the Audit Committee
**** Member of the Human Resource Planning Committee

<PAGE> 7

is to provide an opportunity for direct communication with the Board of
Directors by the Company's independent public accountants.

The Compensation Committee of the Board of Directors met four times in
1998. Mr. William T. Bacon, Jr. served as Chairman assisted by two other outside
directors, Mr. Robert D. Tuttle and Mr. John E. Utley. The Compensation
Committee awards stock options under the Company's stock option plans,
determines the compensation of the Company's executive officers and reviews, and
sets the policies for, the compensation payable to approximately the next 25
most highly compensated employees of the Company. See "Compensation Committee
Report on Executive Compensation."

The Executive/Directors Committee of the Board did not meet in 1998.
Messrs. Bauchiero (Chairman), Bacon and Utley serve on this committee. The
Executive/Directors Committee is vested with the powers of the Board, except
those powers specifically reserved by Delaware law to the full Board. The
Executive/Directors Committee exists to give the Board the flexibility to make
decisions during intervals between regular meetings of the full Board. In
addition, the Executive/Directors Committee (i) conducts a continuing study of
the size, structure, and composition of the Board; (ii) seeks out and interviews
possible candidates and reports its recommendations to the Board; (iii)
periodically reviews the Board's tenure policy; and (iv) determines the criteria
for selection and retention of Board members. Although the Committee has its own
procedures for selecting nominees for Board membership, it will give due
consideration to nominees recommended by stockholders. A stockholder desiring to
recommend a person for nomination to the Board should submit a complete resume
of the proposed nominee's qualifications and background together with a
statement setting forth the reasons why such person should be considered for
membership. Such information should be addressed to the Secretary of the
Company.

The Human Resources Planning Committee of the Board met once in 1998.
The members of this committee are Messrs. Tuttle (Chairman), Bauchiero and
Oechsle. The Human Resource Planning Committee reviews the short and long range
human resource needs of the Company and advises management of its assessment.
Also, the Human Resource Planning Committee evaluates strategic human resource
needs including senior executive succession.

The Board of Directors held six regular meetings and five special
meetings in 1998. During 1998, all of the elected directors attended at least
75% of the aggregate of the total number of meetings of the Board of Directors
(held during the period for which a director served) and the total number of
meetings held by all committees of the Board on which they individually served
(during such period for which such director served).

COMPENSATION OF THE BOARD OF DIRECTORS

Employee-officers who are also Directors do not receive compensation
for their service as Directors. The non-employee Directors of the Company
receive an attendance fee of $1,200 for each Directors' meeting attended, $750
for each committee meeting attended and $350 for each telephone meeting of the
full Board or a Committee. Additionally, non-employee Directors of the Company
receive an annual retainer of $20,000.

In addition, effective April 1, 1998, John E. Utley was awarded a
consulting contract related to his duties as Chairman of the Board. The contract
provides payment of $30,000 per year for services not to exceed 25 hours per
month. Mr. Utley was elected Chairman of the Board effective May 20, 1998.

THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE NOMINEES NAMED ABOVE
AND YOUR PROXY WILL BE SO VOTED UNLESS AUTHORITY IS WITHHELD.

<PAGE> 8

PROPOSAL 2

APPROVAL OF THE
AMENDMENT TO THE AMENDED AND RESTATED WALBRO CORPORATION
EQUITY BASED LONG TERM INCENTIVE PLAN

The stockholders are asked to consider and vote upon a proposal to
amend the Amended and Restated Walbro Corporation Equity Based Long Term
Incentive Plan ("Equity Plan"). The text of the Amendment is set out in its
entirety in the attached Appendix A.

The Board of Directors adopted the Equity Plan to give officers and key
employees the opportunity to receive stock option grants in lieu of certain cash
compensation, to increase the proportion of compensation tied to stock ownership
and to reduce the proportion payable in cash. Consistent with this intention,
the stockholders of the Company approved the Equity Plan to permit the Company
to grant options and other equity based awards to selected persons. The Board of
Directors continues to believe that the ability of the Company to make such
awards will be effective in aligning the interests of the Company's key
employees, officers and non-employee directors with its stockholders and will
help motivate and focus the Company's employees, officers and directors in the
creation and improvement of stockholder value. The Equity Plan is a flexible
plan that permits the Company broad discretion to fashion the terms of the
awards to provide eligible participants with appropriate stock-based incentives.

Stockholder approval of the amendment to the Equity Plan is sought (i)
to comply with the corporate governance requirements of the Nasdaq National
Market, (ii) to qualify the Equity Plan under Section 162(m) of the Internal
Revenue Code, and thereby allow the Company to deduct for Federal income tax
purposes certain stock option and stock appreciation right awards to the Chief
Executive Officer and the four most highly compensated Executive Officers other
than the CEO under the Equity Plan and (iii) to increase the number of shares
authorized for issuance under the Equity Plan.

If the amendment is approved, an aggregate number of shares of Common
Stock equal to an additional 5% of the number of shares of Common Stock
outstanding on March 8, 1999, will be reserved for issuance pursuant to the
Equity Plan. Based upon the number of shares outstanding on such date, there
will be 434,415 additional shares available for issuance under the Plan. It is
not possible to determine the number of shares of Common Stock that will in the
future be issued under the Equity Plan to any particular individual, other than
Frank E. Bauchiero. Of such additional shares, 350,000 shares of Common Stock
will be granted to Mr. Bauchiero, pursuant to his employment agreement, upon
approval of the amendment. The dollar value of such a grant is indeterminable
because the grant has not yet been made. In the discretion of the Equity Plan
Committee (identified more fully herein), shares of Common Stock subject to an
award under the Equity Plan that are forfeited, otherwise remain unissued upon
termination of an award or are received by the Company in connection with the
exercise of an award shall become available for additional awards under the
Equity Plan.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO
APPROVE THE EQUITY PLAN AS AMENDED AND RESTATED.

<PAGE> 9

IDENTIFICATION OF OTHER EXECUTIVE OFFICERS

A description of the Company's other executive officers, excepting
those officers who are also Directors, is set forth below:
<TABLE>
<CAPTION>

NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS
- --------------------------------- ------ -----------------------------------------------------------------------

<S> <C> <C>
Daniel L. Hittler 63 Secretary of the Company since 1993. Chief Administrative Officer
of the Company from 1994 to present. Director of Administration
from 1992 to 1993.

Michael A. Shope 54 Chief Financial Officer of the Company since December 1993.
Treasurer of the Company since April 1994. Treasurer of Libbey-
Owens-Ford Co., a manufacturer of glass for automotive and
industrial applications, from 1986 to 1993.

Richard H. Whitehead, III 54 President, Europe and South America Region since January 1997.
Vice-President of the Company from 1988 to 1996. Vice-
President/General Manager, of the Automotive Division-Whitehead,
from 1988 to 1990.

Thomas J. DeJong 45 President, North America since October 1998. Vice President -
Sales and Marketing for the North American Region since 1998.
Executive Director, Sealing Systems Group of Magna Corporation, a
manufacturer of automotive components and systems, from 1996 to
1998. Vice President, Sales/Marketing/Design Engineering of
Gencorp Vehicle Sealing Systems, a manufacturer of sealing systems
and trim for the automotive industry, from 1992 to 1996.
</TABLE>

For a description of those executive officers who are also Directors,
see the Classes I, II and III Director charts. Each executive officer shall
serve in the capacity described above until such time as his successor is duly
elected and qualified.

INDEBTEDNESS OF MANAGEMENT

Lambert E. Althaver, the Company's former Chief Executive Offer, as of
the effective date of his retirement, April 17, 1998, owed $100,000 to the
Company which is the maximum amount of indebtedness Mr. Althaver has had to the
Company since January 1, 1997. The indebtedness relates to loans made by the
Company to Mr. Althaver and to approximately 24 other employees (collectively
the "Borrowers") to permit them to repay individual bank loans that came due.
The bank loans originated approximately nine years ago to enable the Borrowers
collectively to acquire approximately 84,500 shares of the Common Stock from
UIS, Inc. which had acquired the shares in 1987 as part of an unsuccessful
tender offer strategy. The loans carried interest at prime. The loan was repaid
on June 8, 1998.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16 of the Exchange Act requires the Company's officers,
directors and persons who own greater than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Commission. Based solely on a review of the forms it has
received and on written representations from certain reporting persons that no
such forms were required for them, the Company believes that, except as set
forth below, during 1998 all Section 16 filing requirements applicable to its
officers, directors and 10% beneficial owners were complied with by such
persons.

Dr. J. Dwane Baumgardner did not timely file on a Form 3 during 1997;
however, the information required was subsequently filed in 1998 on a Form 5.

<PAGE> 10

EXECUTIVE COMPENSATION

The table below provides information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years ended December 31, 1998, 1997 and 1996 of the following persons:
(i) the Chief Executive Officer at December 31, 1998, (ii) the Company's former
Chief Executive Officer who retired effective April 17, 1998, and (iii) the four
other most highly compensated (based upon combined salary and bonus) executive
officers of the Company (collectively, the "Named Officers").

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG TERM COMPENSATION
LONG
OTHER RESTRICTED TERM
ANNUAL STOCK INCENTIVE STOCK
NAME AND SALARY BONUS COMPEN- AWARDS PAYOUTS OPTIONS SAR OTHER
PRINCIPAL POSITION YEAR ($) ($) SATION ($) ($) ($) (#) (#) ($)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Frank E. Bauchiero 1998 428,125 137,500 160,000 193,131(1)(2)
Chief Executive Officer 1997 375,000 180,000 4,500 (1)
and President 1996 141,173(3) 19,607

Lambert E. Althaver 1998 281,125(8) 51,562 11,080 60,000 9,600 (1)
Former Chief Executive 1997 450,000 1,862 9,000 (1)
Officer 1996 375,000 204,379 8,870 (1)
17,647

Robert H. Walpole 1998 265,000 407,116(5) 30,000 29,349(1)(4)
Vice President 1997 265,000 386,338(5) 9,000 (1)
1996 265,000 280,070(5) 9,717 (1)

Richard H. Whitehead, III 1998 200,000 42,000 (6) 30,000 21,220(1)(7)
Vice President 1997 200,000 42,000 (6) 929 (7)
1996 200,000 42,000 (6) 7,843

Daniel L. Hittler 1998 160,000 742 16,000 11,189(1)(7)
Secretary and Chief 1997 160,000 9,150 (1)
Administrative Officer 1996 150,000 5,882 8,325 (1)

Michael J. Shope 1998 165,000 16,000 13,921(1)(7)
Treasurer and Chief 1997 165,000 22,500 9,090 (1)
Financial Officer 1996 150,000 27,000 3,529 10,035 (1)

</TABLE>

- ------------------

(1) These amounts represent matching and retirement contributions made by the
Company pursuant to its salary savings plan, entitled the "Advantage Plan."
(2) Includes imputed income for personal use of Company leased aircraft and
automobile.
(3) Salary for the period August 16, 1996 to December 31, 1996; executive began
employment on August 16, 1996.
(4) Includes reimbursed relocation expenses and imputed income for personal use
of Company leased automobile.
(5) First, second and third of four cash payments earned under the Company's
Engine Management Incentive Compensation Plan covering the period July 1,
1991 to June 30, 1996.
(6) $42,000 was paid in each 1998, 1997 and 1996, to adjust for cost of living
and expatriate status.
(7) Imputed income for personal use of Company leased automobile.
(8) Mr. Althaver retired effective April 17, 1998.

<PAGE> 11

INCENTIVE COMPENSATION

Beginning with fiscal year 1997, the executive officers became eligible
for a restructured incentive compensation program. The program is comprised of
both a short term and a long term incentive component. Short term incentive
awards are based solely on the financial performance of the Company for each
fiscal year. Long term incentive awards are based in part on corporate financial
performance. Accordingly, audited financials must be used to determine these
awards. Since audited financials are not available until February following the
close of any fiscal year, the annual award cycle was moved from December of the
fiscal year to the following February. Grants to the executive officers of the
Company of stock options under the Company's long term incentive plan for fiscal
year 1997 were made in February 1998.

The following table provides information for the Named Officers'
unexercised options at December 31, 1998. These options were granted under the
Company's Equity Based Long Term Incentive Plan (the "Equity Plan").

AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END 1998 OPTION VALUES
<TABLE>
<CAPTION>

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT DECEMBER 31, 1998(#) DECEMBER 31, 1998 ($)(1)
---------------------------------- --------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- -------------- -------------- ---------------

<S> <C> <C> <C> <C>
Frank E. Bauchiero............................ 192,514 0 0 0
Lambert E. Althaver........................... 148,621 0 0 0
Robert H. Walpole............................. 30,000 0 0 0
Richard H. Whitehead, III..................... 61,426 0 0 0
Daniel L Hittler.............................. 42,551 0 0 0
Michael A. Shope.............................. 27,338 0 0 0
</TABLE>

- ------------------
(1) Based upon the difference between the exercise price and the $6-3/8 closing
price of the Company's Common Stock on the Nasdaq National Market on
December 31, 1998.
(2) Mr. Althaver retired effective April 17, 1998.

OPTION GRANTS IN 1998
<TABLE>
<CAPTION>

INDIVIDUAL GRANTS
-----------------
NUMBER % OF TOTAL POTENTIAL REALIZABLE VALUE
OF SECURITIES OPTIONS AT ASSUMED ANNUAL RATES
UNDERLYING GRANTED TO OF STOCK APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERMS (1)
GRANTED IN 1998 PRICE EXPIRATION ----------------
(#) (%) ($/SH) DATE 5% ($) 10% ($)
----------- --------- -------- ---------- ------ -------

<S> <C> <C> <C> <C> <C> <C>
Frank E. Bauchiero 60,000 33.5 13.25 2/18/08 564,719 1,473,222
100,000 9.25 8/25/08 657,063 1,714,127
Lambert E. Althaver 60,000 12.5 13.25 2/18/04 564,719 1,473,322
Robert H. Walpole 30,000 6.3 13.25 2/18/08 282,360 736,611
Richard H. Whitehead, III 30,000 6.3 13.25 2/18/08 282,360 736,611
Daniel L. Hittler 16,000 3.3 13.25 2/18/08 150,584 392,859
Michael A. Shope 16,000 3.3 13.25 2/18/08 150,584 392,859
</TABLE>

- ------------------

(1) Gains are reported net of option exercise price but before taxes associated
with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercise are
dependent on future performance of Common Stock. The amounts reflected in
the Table may not necessarily be achieved.

<PAGE> 12

EMPLOYMENT AND SEVERANCE AGREEMENTS

The Company has entered into employment agreements with Messrs.
Hittler, Shope, Whitehead and Walpole which have terms expiring on August 16,
1999 and provides them minimum base salaries of $150,000, $150,000, $200,000 and
$265,000, respectively, subject to review and increase by the Board of Directors
Compensation Committee (the "Compensation Committee"). Each employment agreement
is renewable automatically for twelve months, subject to cancellation by the
Company prior to the anniversary date. The Company also entered into an
employment agreement with Mr. Bauchiero which expires on December 31, 2001 and
provides a base salary of $450,000, subject to review and increase by the
Compensation Committee. Mr. Bauchiero, pursuant to his employment agreement,
will also be granted options to purchase 350,000 shares of Common Stock upon the
approval by the stockholders of the Amendment to the Equity Based Long Term
Incentive Plan.

For each of the executive officers, an employment agreement is linked
to a Termination and Change of Control Agreement ("COC Agreements"). In
combination, these agreements provide a severance provision under the terms of
which the employee is entitled to severance pay if during the initial term of
the agreement or a renewal term, his employment (i) is terminated (including
nonrenewal of his employment agreement) by the Company other than for cause or
(ii) is terminated voluntarily by him for good reason. The severance pay payable
under the agreements is an amount equal to the annual base compensation being
paid to the Named Officer at the date of termination.

The employment agreements and the COC Agreements were the result of a
determination by the Board of Directors that it was important to, and in the
best interests of the Company and its stockholders, to ensure that in the event
of a possible change in control of the Company, the stability and continuity of
management will continue unimpaired, free of distraction incident to any such
change in control.

The COC Agreements provide that if during a three-year period following
a Change in Control of the Company, an employee's employment is terminated by
the Company without cause or if the employee terminates employment for good
reason, the employee will receive (1) a single sum payment equal to three times
the employee's average compensation of the prior three calendar years (including
incentive bonus), (2) 36 months of additional medical, dental, life, disability
and accident insurance, (3) an amount equal to the actuarial equivalent of the
benefit under a SERP which the employee would receive if employment would have
continued for three years, (4) acceleration of any performance awards granted
prior to the extension date equal to the cash amount payable plus the value of
any shares of Common Stock payable upon achievement of maximum performance, (5)
a cash amount equal to the value of any phantom shares of Common Stock credited
to employee's deferral account, (6) stock options will be fully exercisable and
restricted stock will be vested, (7) outplacement services at the sole
discretion of employee and (8) other perquisites substantially similar to those
in effect for the employee at the time of the Change of Control of the Company.
In the event the present value of these payments and benefits exceed an amount
which would render them "parachute payments" under Section 280G of the Internal
Revenue Code, the Company will pay a gross up amount to the employee to
compensate him for the additional excise tax assessed thereon. Each employee
agrees that following his termination of employment with the Company, he will
cooperate with the Company in any litigation involving the Company, not disclose
Company trade secrets, and for a one-year period following the date of such
employee's termination, not compete with the Company. "Change in Control" of the
Company is defined to include certain reorganizations, consolidations or mergers
of the Company, certain sales or transfers of substantially all the assets of
the Company, approval by the stockholders of the Company of its liquidation or
dissolution, a change in the composition of the Company's Board of Directors
such that it is comprised of directors, a majority of whom are not "Continuing
Directors" as defined in the agreements, or the acquisition by certain persons
of twenty percent or more of the combined voting power of the Company's
outstanding securities.

<PAGE> 13

On January 5, 1999, subsequent to the reporting year, the Board amended
the COC Agreements such that in the event of a Change of Control during the
calendar year 1999, (i) the single sum payment mentioned under (1) in the
previous paragraph is replaced by an amount equal to three times the sum of (x)
the employee's annual base salary and (y) a bonus of 75% (100% for Frank E.
Bauchiero) of such employee's annual base salary, (ii) each employee is granted
a 30-day period commencing six months following consummation of a Change of
Control, during which the employee will be entitled to voluntarily terminate
employment with the Company and be deemed to have terminated employment for good
reason, and (iii) Mr. Bauchiero will receive $2,000,000 in exchange for the
cancellation of, or failure to grant, the option to purchase 350,000 shares of
Common Stock scheduled to be granted to him under his employment agreement which
is subject to stockholders' approval.

In addition, each executive officer is entitled to participate in the
Equity Plan. Upon Mr. Althaver's retirement on April 17, 1998, other than
payments which he received through participation in the Company's Supplemental
Employee Retirement Plan, Mr. Althaver received base salary through August 15,
1998, a pro rata incentive bonus of $51,562 for the period January to August 15,
1998, and reimbursement for the lease cost for a Company car provided through
August 15, 1999.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

OVERVIEW

Recognizing that an organization's long term success is in large part
determined by the quality of leadership provided by its executive officers, the
Company has designed its executive compensation program to attract, motivate and
retain the highest level of executive talent and to align these executives'
interests with the long term interests of the stockholders. The program is
comprised of base salary, incentive compensation (Short Term Incentive and Long
Term Incentive) and benefits typically offered to executives by comparably sized
manufacturing companies.

The Compensation Committee, which is comprised solely of outside
Directors, determines the compensation of the executive officers of the Company,
including the Named Officers, and sets the policies for, and reviews the
compensation awarded to, the approximately next 25 most highly compensated
employees. In reviewing the individual performances of such officers (other than
the CEO), the Compensation Committee considered the recommendations of Mr.
Bauchiero.

The Compensation Committee currently intends for all compensation paid
to the Named Officers to qualify as a tax deductible expense pursuant to Section
162(m) of the Internal Revenue Code. In the future, however, if in the judgment
of the Compensation Committee the benefits to the Company of failing to so
qualify outweigh any costs to the Company, then the Compensation Committee may
revise such policy.

BASE SALARY

The Committee reviewed market based surveys of comparative salaries in
job classifications which correlate with positions of the six officers existing
as of December 1997.

The Committee concluded that the salaries of three of the Named
Officers were approximately 50th percentile of the market data base provided,
one such officer was below market rate and one officer was above market rate.
The remaining officer, Lambert E. Althaver, retired effective April 17, 1998.
The Committee decided to maintain the 1997 salaries of the Named Officers. Mr.
Bauchiero was appointed Chief Executive Officer effective April 17, 1998, and
his salary was increased from $375,000 to $450,000 in keeping with his position.

<PAGE> 14

INCENTIVE COMPENSATION

Beginning with fiscal year 1997, the Company's executive officers
became eligible for a restructured incentive compensation program. The plan is
composed of a Short Term Incentive component and a Long Term Incentive
component.

Short Term awards are based solely on the financial performance of the
Company for each fiscal year. Accordingly, audited financials must be used to
determine such awards. Since audited financials are not available until February
following the close of any fiscal year, the annual award cycle has been moved
from December of the fiscal year, to the following February. No awards were made
in 1998 (related to 1997 fiscal year performance).

Calculation of Short Term awards is based equally on three economic
factors which are compared to the Company's annual business plan as approved by
the Board of Directors. The three factors are: (1) EBIT Margin, (2) Cash Flow
From Operations, and (3) Return On Invested Capital. Officers may receive cash
awards from zero to 75% of base salary, depending on the relative financial
performance to the annual business plan. Additionally, such officers have the
option to defer their award for three years. However, once deferral is elected,
payout can be made only after a three year waiting period, except as defined by
the Change of Control Agreement.

Long Term awards are based on achievement of personal objectives, the
individual's performance for the fiscal year and corporate financial
performance. Long Term awards are stock options issued at the fair market value
determined by the closing price on the Nasdaq on the day of the Compensation
Committee meeting (February 18, 1998). Officers may receive awards from zero to
three times their base salary (where number of options is determined by dividing
base salary by fair market value of the Common Stock on the date of grant).
Award of such Long Term options is made by the Compensation Committee of the
Board through the Long Term Equity Based Incentive Plan, as approved by the
stockholders on April 19, 1995. Options granted in 1998 to the Named Officers
are listed in the table OPTION GRANTS IN 1998.

ENGINE MANAGEMENT INCENTIVE COMPENSATION PLAN

Incentive compensation for executive officers assigned to the Walbro
Engine Management Corporation subsidiary ("EMC"), including Mr. Walpole, was
based on EMC's financial performance measured against the five year plan ending
June 30, 1996. Although this plan is no longer operative, the awards earned were
deferred for payment over four years (1996 through 1999). Accordingly, Mr.
Walpole was paid $407,116 in 1998.

COMPENSATION COMMITTEE
William T. Bacon, Jr., Chairman
John E. Utley Robert D. Tuttle

12
<PAGE> 15

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of February 11, 1999 the total number
of shares of Common Stock of the Company beneficially owned, and the percentage
so owned, by (i) each director of the Company, (ii) each person known to the
Company to be the beneficial owner of more than five percent of the outstanding
Common Stock of the Company, (iii) each of the Company's executive officers, and
(iv) all directors and executive officers as a group. The number of shares owned
are those "beneficially owned," as determined under the rules of the Commission,
and such information is not necessarily indicative of beneficial ownership for
any other purpose.

<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME OWNERSHIP(1) OF CLASS
- ---------------------------------------------------------------------- ------------------------- -----------------

<S> <C> <C> <C>
David L. Babson & Co., Inc............................................ 731,500 (2) 8.4%
Franklin Resources.................................................... 694,500 (3) 8.0%
Merrill Lynch Asset Management Group.................................. 647,900 (4) 7.5%
Dimensional Fund Advisors............................................. 471,802 (5) 5.4%
American Express...................................................... 435,650 (6) 5.0%
Lambert E. Althaver................................................... 301,288 (7) 3.5%
William T. Bacon, Jr.................................................. 67,775 (8) *
Frank E. Bauchiero.................................................... 245,184 (9) 2.8%
J. Dwane Baumgardner.................................................. 13,741 (10) *
Daniel L. Hittler..................................................... 50,763 (11) *
Vernon E. Oechsle..................................................... 17,591 (12) *
Michael A. Shope...................................................... 29,538 (13) *
Robert D. Tuttle...................................................... 25,000 (14) *
John E. Utley......................................................... 21,153 (15) *
Robert H. Walpole..................................................... 228,415 (16) 2.6%
Richard H. Whitehead, III............................................. 166,649 (17) 1.9%
All Directors and Executive Officers as a Group
(11 persons)........................................................ 865,809 (18) 13.4%
</TABLE>

- ------------------
* Indicates that the percentage beneficially owned does not exceed one
percent.

(1) The named stockholders have sole voting and dispositive power over all
shares except as otherwise noted and except as to those shares over which
beneficial ownership is disclaimed.

(2) As reported on a Schedule 13G dated February 1, 1999 filed with the
Commission by David L. Babson & Co., Inc., David L. Babson & Co., Inc. has
sole voting power and sole dispositive power with respect to all 731,500 of
these shares. The address of this stockholder is One Memorial Drive,
Cambridge, Massachusetts 02142-1300.

(3) As reported on a Schedule 13G dated February 10, 1999 filed with the
Commission by Franklin Resources, Inc., Charles B. Johnson and Rupert H.
Johnson, Jr., the securities reported therein are beneficially owned by one
or more open or closed-end investment companies or other managed accounts
which are advised by direct and indirect investment advisory subsidiaries
of Franklin Resources, Inc. ("FRI"). According to such Schedule 13G,
neither FRI, Charles B. Johnson nor Rupert H. Johnson, Jr. have any power
to dispose or to direct the disposition of any of the 694,500 shares;
Templeton Investment Counsel, Inc. has sole voting and dispositive power
with respect to 103,700 shares; Templeton Management Limited has sole
voting and dispositive power with respect to 353,100 shares; Templeton
Global Advisors Limited has sole voting power with respect to 190,200
shares and sole dispositive power with respect to 218,600 shares; and
Templeton Investment Management Limited has sole voting and dispositive
power with respect to 19,100 shares. The address of FRI is 777 Mariners
Island Boulevard, San Mateo, California 94404.

(4) As reported on a Schedule 13G dated February 1, 1999 filed with the
Commission by Merrill Lynch & Co., Inc., Merrill Lynch Asset Management,
L.P. and Fund Asset Management, L.P. share voting and dispositive power
with respect to 647,900 shares. Merrill Lynch Asset Management, L.P. and
Fund Asset Management, L.P. are two of several legal entities

<PAGE> 16

comprising Merrill Lynch Asset Management Group of Merrill Lynch & Co.,
Inc. The address of Merrill Lynch & Co., Inc. is World Financial Center,
North Tower, 250 Vesey Street, New York, New York, 10381.
(5) As reported on a Schedule 13G dated February 11, 1999 filed with the
Commission by Dimensional Fund Advisors, Dimensional Fund Advisors has sole
voting and dispositive power with respect to 471,802 shares. The address of
Dimensional Fund Advisors is 1299 Ocean Avenue, 11th Floor, Santa Monica,
California 90401.
(6) As reported on a Schedule 13G dated January 22, 1999 filed with the
Commission by American Express Financial Corporation, American Express
Company and American Express Financial Corporation share voting power with
respect to 411,250 shares and share dispositive power with respect to
435,650 shares. The address of American Express Company is American Express
Tower, 200 Vesey Street, New York, New York 10285. The address of American
Express Financial Corporation is IDS Tower 10, Minneapolis, Minnesota
55440.
(7) Includes 74,643 shares owned by Mr. Althaver's wife. Mr. Althaver disclaims
ownership of these shares. Also includes 148,621 shares which are covered
by presently exercisable options granted under the Equity Plan.
(8) Includes 3,300 shares owned by the Margaret Hoyt Bacon Trust and 5,025
shares owned by Mr. Bacon's son. Mr. Bacon disclaims beneficial ownership
of these shares. Also includes 10,000 shares over which Mr. Bacon shares
voting power as co-trustee of two trusts for the benefit of the
beneficiaries of the estate of his deceased mother. Includes 10,000 shares
which are covered by presently exercisable options granted under the Equity
Plan.
(9) Includes 192,514 shares which are covered by presently exercisable options
granted under the Equity Plan and 9,976 shares which represent shares
convertible from the Convertible Trust Preferred Securities.
(10) Includes 13,741 shares which are covered by presently exercisable options
granted under the Equity Plan.
(11) Includes 4,600 shares owned by Mr. Hittler's wife. Mr. Hittler disclaims
beneficial ownership of these shares. Also includes 42,551 shares which are
covered by presently exercisable options granted under the Equity Plan and
1,238 shares held for the account of Mr. Hittler by the trustee of the
Company's Employee Stock Ownership Plan, plus 821 shares which represent
shares convertible from the Convertible Trust Preferred Securities.
(12) Includes 16,591 shares which are covered by presently exercisable options
granted under the Equity Plan.
(13) Includes 27,338 shares which are covered by presently exercisable options
granted under the Equity Plan.
(14) Includes 15,000 shares over which Mr. Tuttle shares voting power as
co-trustee with his wife. Includes 10,000 shares which are covered by
presently exercisable options granted under the Equity Plan.
(15) Includes 1,500 shares over which Mr. Utley has voting power as trustee of a
trust and 21,153 shares which are covered by presently exercisable options
granted under the Equity Plan.
(16) Includes 79,385 shares over which Mr. Walpole shares voting power as
co-trustee of a trust for the benefit of the beneficiaries of the estate of
his deceased father. Includes 13,325 shares owned by Mr. Walpole's wife.
Mr. Walpole disclaims beneficial ownership of these shares. Also includes
4,680 shares held for the account of Mr. Walpole by the trustee of the
Advantage Plan.
(17) Includes 61,426 shares which are covered by presently exercisable options
granted under the Equity Plan. Also includes 5,223 shares held for the
account of Mr. Whitehead by the trustee of the Advantage Plan.
(18) Includes 572,435 shares which are covered by presently exercisable options
granted under the Equity Plan, 10,797 shares which represent shares
convertible from the Convertible Trust Preferred Securities. Also includes
10,199 shares held for the account of three officers of the Company by the
trustee of the Advantage Plan and includes 1,238 shares held for one
officer of the Company by the Trustee of the Company's Employee Stock
Ownership Plan.

<PAGE> 17

SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN (SERP)

On February 18, 1998, the Board of Directors approved a SERP for
officers of the Company. The following table provides a summary of expected
benefits.
<TABLE>
<CAPTION>

PENSION PLAN TABLE

YEARS OF SERVICE
----------------

REMUNERATION 15 20 25 30 35
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
125,000 28,125 37,500 46,875 56,250 65,625

150,000 33,750 45,000 56,250 67,500 78,750

175,000 39,375 52,500 65,625 78,750 91,875

200,000 45,000 60,000 75,000 90,000 105,000

225,000 50,625 67,500 84,375 101,250 118,125

250,000 56,250 75,000 93,750 112,500 131,250

300,000 67,500 90,000 112,500 135,000 157,500

400,000 90,000 120,000 150,000 180,000 210,000

450,000 101,250 135,000 168,750 202,500 236,250

500,000 112,500 150,000 187,500 225,000 262,500
</TABLE>

In general the SERP provides for an annual benefit of 1 1/2% of the
Final Average Earnings ("FAE") (generally defined as the average of the
executive's base salary for the three highest consecutive years of Company
employment) times the number of years of credited service. As of the end of the
reporting year, Frank E. Bauchiero is credited with 16.2 years of service;
Robert H. Walpole is credited with 28 years of service; Richard H. Whitehead,
III is credited with 18 years of service; Michael A. Shope is credited with 5
years of service; and Daniel L. Hittler is credited with 13 years of service.
The annual benefit under the SERP is payable for a fixed period of ten years
(except for Frank E. Bauchiero whose SERP benefit is distributed in the form of
a single life annuity), beginning at age 65 if the executive previously retired
with a vested benefit, or at retirement (if the executive retires after age 65);
provided, however, that SERP benefits may be distributed as a lump sum based on
an interest rate discount assumption of 9.2% per annum (except for Frank E.
Bauchiero who would have a 7.2% interest rate discount assumption). In the event
the executive dies before benefit distribution under the SERP commences, the
SERP provides for a spousal benefit equal to 50% of the amount of the retirement
benefit which would have been paid to the deceased executive had the benefit
commenced to be paid the day before the executive died. In the event the
executive dies after benefit distribution under the SERP commences, the SERP
provides for a spousal benefit equal to 50% of the balance of the deceased
executive's retirement benefit, if any. Vesting occurs after 5 years of service
and attainment of age 60, upon Change of Control, or upon such earlier date as
provided in a specific employment agreement. At the end of the reporting year,
only Frank E. Bauchiero and Daniel L. Hittler have a vested benefit under the
SERP. Benefits listed in the Pension Plan Table above are not subject to any
deduction for Social Security or other offset amounts.

On January 5, 1999, subsequent to the reporting year, the Board
conditionally amended the SERP such that in the event of a Change of Control
during the calendar year 1999, (i) the executive's FAE under the SERP will also
include a bonus equal to 75% of the executive's base salary (except for Frank

<PAGE> 18

E. Bauchiero who will receive a bonus equal to 100% of his base salary), (ii)
actuarial equivalency shall be based on an interest rate discount assumption of
7.2% per annum (except for Frank E. Bauchiero who would have a 4.0% interest
rate discount assumption), and (iii) the lump sum payment determined on the
basis of such interest rate discount assumption shall be equal to the present
value of a single life annuity if the executive is not married, or a life and
50% surviving spouse annuity if the executive is married, based on the 1983
Group Annuity Mortality Tables.

Pursuant to the Plan and coincident with his retirement from the
Company, Mr. Althaver was awarded an annual payment of $196,695 for ten years to
be paid beginning September 1, 1998.

PERFORMANCE GRAPH

The following graph shows a five year comparison of cumulative total
returns for the Company, the S&P 500 composite index and a peer group of
companies selected by the Company (the "Peer Group").

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN

[GRAPHIC OMITTED]

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
WALBRO CORPORATION 100.00 72.31 69.99 72.43 54.55 25.88
STANDARD AND POOR'S 500 INDEX 100.00 101.32 139.40 171.40 228.59 293.91
PEER GROUP 100.00 73.85 69.51 94.50 114.35 115.14
</TABLE>

The comparison assumes $100 was invested on December 31, 1993 in the
Common Stock, the S&P 500 Index, and in the Peer Group.

<PAGE> 19

The companies in the Peer Group, all of which are in the automotive
industry, are as follows:

Arvin Industries, Inc. Mascotech, Inc.
Borg Warner Automotive, Inc. Shiloh Industries Inc.
Breed Technologies Inc. Simpson Industries, Inc.
Collins & Aikman Products Co. A.O. Smith Corporation
Donnelly Corporation The Standard Products Company
Excel Industries, Inc. Superior Industries International, Inc.
Gentex Corporation Tower Automotive
Hayes Lemmerg International, Inc. Walbro Corporation
Intermet Corporation

Harvard Industries, Inc. filed for bankruptcy protection on May 8, 1997. As a
result of this filing, Harvard Industries, Inc. has been deleted from the Peer
Group.

INDEPENDENT PUBLIC ACCOUNTANT

The Board of Directors, upon recommendation of the Audit Committee, has
appointed Arthur Andersen LLP to audit the financial statements of the Company
and its subsidiaries for the year ending December 31, 1999. Arthur Andersen LLP
has been the Company's independent public accountant for thirteen years. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement, if he or she desires, and is
expected to be available to respond to appropriate questions with respect to
that firm's examination of the Company's Consolidated Financial Statements.

PROPOSALS OF SECURITY HOLDERS

Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders must be received by the Secretary of the Company, 1227
Centre Road, Auburn Hills, Michigan 48326, no later than November 24, 1999. Any
stockholder proposal for consideration at the next Annual Meeting of
Stockholders will be considered untimely if received by the Company later than
February 7, 2000. The Company form of proxy for the next Annual Meeting of
Stockholders will confer discretionary authority upon the persons named as
proxies to vote on any untimely stockholder proposals.

FORM 10-K

The Company will furnish without charge a copy of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1998, including the financial
statements and the schedules thereto, upon the written request of any security
holder as of the record date, and will provide copies of the exhibits to such
Annual Report upon payment of a reasonable fee which shall not exceed the
Company's reasonable expenses incurred in connection therewith. Requests for
such materials should be directed to Secretary, Walbro Corporation, 1227 Centre
Road, Auburn Hills, Michigan, 48326.

<PAGE> 20

OTHER BUSINESS

It is not anticipated that any matters will be presented to the
stockholders other than those mentioned in this Notice. However, if other
matters are brought before the meeting, it is intended that the persons named in
the Proxy will vote as the Board of Directors directs.

By order of the Board of Directors

/s/ Daniel L. Hittler
-----------------------------------
Daniel L. Hittler, Secretary

ALL STOCKHOLDERS ARE URGENTLY REQUESTED

TO SIGN AND MAIL THEIR PROXIES PROMPTLY

<PAGE> 21

APPENDIX A

FIRST AMENDMENT
TO THE
WALBRO CORPORATION
EQUITY BASED LONG TERM INCENTIVE PLAN

WHEREAS, Walbro Corporation (the "Company") has previously established
the Walbro Corporation Equity Based Long Term Incentive Plan (the "Plan"), which
was approved, as amended and restated, by the stockholders of the Company on
April 19, 1995; and

WHEREAS, the Company has determined that it is in the interest of the
Company and its stockholders to expand the availability of options under the
Plan to Company employees in order to further identify the interest of employees
with the interests of the Company and its stockholders; and

WHEREAS, the Company has determined that the best method of achieving
the purposes of the Plan is to expand the number of shares available for option
under the Plan.

NOW, THEREFORE, in consideration of the foregoing recitals, the Company
has determined to amend the Plan as follows:

1. The first paragraph of Section 4 is amended in its entirety to read as
follows:

"The total number of shares of Common Stock reserved and
available for distribution pursuant to Awards under the Plan shall be
1,290,871 shares of Common Stock. Shares of Common Stock to be
delivered by the Company with respect to any particular Award hereunder
may consist, in whole or in part, of authorized and unissued shares or
treasury shares."

2. This amendment will be effective upon approval by a majority of
stockholders present at the Annual Meeting of the Company, to be held
on May 4, 1999.

3. In all other respects the Plan shall remain in full force and effect.

IN WITNESS WHEREOF, this amendment is hereby executed this 17th day of
March, 1999.

WALBRO CORPORATION

/s/ Daniel L. Hittler
---------------------------------------
By: Daniel L. Hittler
Title: Secretary and Chief Administrative
Officer

19
<PAGE> 22
<TABLE>
<S><C>

PROXY PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR PROXY

ANNUAL MEETING OF STOCKHOLDERS OF

WALBRO CORPORATION

TO BE HELD ON MAY 4, 1999

The undersigned hereby appoints Frank E. Bauchiero and Daniel L. Hittler, and each or either of them, with power of substitution, as
attorneys and proxies for and in the name and place of the undersigned, to vote the number of shares that the undersigned would be
entitled to vote if then personally present at the Annual Meeting of Stockholders of Walbro Corporation to be held at the offices of
Katten, Muchin & Zavis, 525 West Monroe Street, Chicago, Illinois on May 4, 1999 at 10:00 a.m. local time, or at any adjournment
thereof, upon the matters set forth in the Notice of Annual Meeting of Stockholders and Proxy Statement, receipt of which is hereby
acknowledged.

IF NOT MARKED TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN PROPOSAL 1.

IF NOT MARKED TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR THE PROPOSAL TO AMEND THE WALBRO CORPORATION EQUITY
BASED LONG TERM INCENTIVE PLAN AS SET OUT IN PROPOSAL 2.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO THE WALBRO CORPORATION EQUITY BASED LONG TERM
INCENTIVE PLAN AS SET OUT IN PROPOSAL 2.

IMPORTANT: THIS PROXY IS CONTINUED AND MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 23
WALBRO CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
[ ]

<TABLE>
<CAPTION>
<S><C>
For All
For Withheld Except Vote Withheld for the Nominee(s) For Withheld

1. ELECTION OF CLASS III DIRECTORS: / / / / / / 2. TO APPROVE THE AMENDMENT TO / / / /
William T. Bacon Jr. ------------------ THE WALBRO CORPORATION
Frank E. Bauchiero EQUITY BASED LONG TERM
Vernon E. Oeschle INCENTIVE PLAN.

3. IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE
THE MEETING.

----------------------------------------------
Signature

----------------------------------------------
Signature (if held jointly)

Date: , 1999
-----------------
Signature(s) of holders of common stock should
agree with the name(s) shown on this Proxy.
For joint account, both owners should sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give title as such. When signing as a
corporation, please sign in full corporate
name by President or other authorized officer.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING When signing as a partnership, please sign in
THE ENCLOSED ENVELOPE. partnership name by an authorized person.

- ------------------------------------------------------------------------------------------------------------------------------------
| FOLD AND DETACH HERE |
</TABLE>