WELLS-GARDNER
Electronics Corporation
2701 North Kildare Avenue
Chicago, Illinois 60639
March 20, 1998
To Our Shareholders:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of Wells-Gardner Electronics Corporation which will be held
at the General Offices of the Company, 2701 North Kildare Avenue,
Chicago, Illinois, April 28, 1998, at 2:00 P.M. Central Daylight Savings
Time. All holders of common shares of the Company as of the close of
business on March 13, 1998, are entitled to vote at the Annual Meeting.
Time will be set aside for discussion of each item of business
described in the accompanying Notice of Annual Meeting and Proxy
Statement. A current report on the business operations of the Company
will be presented at the meeting and shareholders will have an
opportunity to ask questions. We plan to adjourn the meeting at
approximately 3:00 P.M., but members of senior management will remain to
answer any additional questions you may have.
We hope you will be able to attend the Annual Meeting. Whether or
not you expect to attend, you are urged to complete, sign, date and
return the proxy card in the enclosed envelope in order to make certain
that your shares will be represented at the Annual Meeting.
Sincerely,
ANTHONY SPIER
Anthony Spier
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
WELLS-GARDNER ELECTRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS - APRIL 28, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Wells-Gardner Electronics Corporation will be held on Tuesday, April 28,
1998, at 2:00 P.M., Central Daylight Savings Time, at the general
offices of the Company, 2701 North Kildare Avenue, Chicago, Illinois,
for the following purposes:
1. To elect eight directors;
2. To consider and vote upon a proposal to adopt the Company's
1998 Incentive Stock Plan;
3. To consider and vote upon a proposal to ratify the appointment
of KPMG Peat Marwick LLP, as independent public accountants of
the Company for the current fiscal year;
4. To act upon any other business which may properly be brought
before the meeting.
The close of business on March 13, 1998, has been fixed as the record
date for determining the shareholders entitled to notice of and to vote
at the Annual Meeting.
By Order of the Board of Directors,
GENE AHNER
Gene Ahner
Secretary
March 20, 1998
<PAGE>
WELLS-GARDNER ELECTRONICS CORPORATION
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 28, 1998
This Proxy Statement is being sent on or about March 20, 1998, to all
holders of common shares, $1.00 par value ("Common Stock"), the only
class of stock outstanding, of Wells-Gardner Electronics Corporation,
2701 North Kildare Avenue, Chicago, IL 60639 (the "Company"), entitled
to vote at the Annual Meeting of Shareholders on April 28, 1998 (the
"Meeting"), in order to furnish information relating to the business to
be transacted.
Voting Procedures
Shareholders of record at the close of business on March 13, 1998, are
entitled to vote at the Meeting. As of that date, there were 4,230,858
shares of Common Stock outstanding. Shareholders are entitled to one
vote per share owned on the record date, and with respect to the
election of directors, shareholders have cumulative voting rights.
Under cumulative voting, each shareholder is entitled to a number of
votes equal to the number of directors to be elected multiplied by the
number of shares owned by such shareholder, and such shareholder may
cast such votes for one nominee or distribute them in any manner among
any number of nominees.
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS TO SIGN, DATE AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, which is postage-paid if mailed in the United
States.
You may revoke your proxy at any time before it is actually voted at
the Meeting by delivering written notice of revocation to the Secretary
of the Company, by submitting a subsequently dated proxy, or by
attending the Meeting and withdrawing the proxy. You may also be
represented by another person present at the Meeting by executing a
proxy designating such person to act on your behalf. Each unrevoked
proxy card properly executed and received prior to the close of the
Meeting will be voted as indicated.
<PAGE>
Unless otherwise indicated on the proxy card, votes represented by all
properly executed proxies will be distributed equally among the nominees
for director named herein, except that if additional persons are
nominated, the proxies will have discretionary authority to cumulate
votes among the nominees named herein. The withholding of authority to
vote for any individual nominee or nominees will permit the proxies to
distribute the withheld votes in their discretion among the remaining
nominees. In addition, where specific instructions are not indicated,
the proxy will be voted FOR the adoption of the 1998 Incentive Stock
Plan and the FOR the ratification of appointment of the selection of
KPMG Peat Marwick as independent auditors. Assuming the presence of a
quorum, the affirmative vote of the holders of a plurality of the shares
represented at the meeting and entitled to vote is required for the
election of directors and the affirmative vote of the holders of a
majority of the shares represented at the meeting and entitled to vote
is required for the adoption of the Company's 1998 Incentive Stock Plan
and ratification of appointment of KPMG Peat Marwick LLP and for any
other matters which may be submitted for consideration. Abstentions are
included in the determination of the number of shares present for
purposes of determining if a quorum is present. Shares represented by
proxies which are marked "abstain" or to deny discretionary authority on
any matter will be treated as shares present and entitled to vote, which
will have the same effect as a vote against any such matters. Broker
"non-votes" will be treated as not represented at the Meeting as to
matters for which a non-vote is indicated on the broker's proxy and will
not affect the determination of the outcome of the vote on any proposal
to be decided at the Meeting. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote a particular
proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the
beneficial owner.
The cost of soliciting proxies will be borne by the Company. The
Company will solicit shareholders by mail through its regular employees
and will request banks and brokers, and other custodians, nominees and
fiduciaries, to solicit their customers who have stock of the Company
registered in the names of such persons and will reimburse them for
their reasonable, out-of-pocket costs. The Company also may use the
services of its officers, directors, and others to solicit proxies,
personally or by telephone, without additional compensation. In
addition, the Company has engaged the services of MacKenzie Partners,
Inc. ("MacKenzie Partners"), a proxy solicitation firm. The Company
will pay a fee for such services, which it reasonably expects to be no
more that $3,000 and will reimburse out-of-pocket expenses of MacKenzie
Partners.
A copy of the 1997 Annual Report to Shareholders, which includes the
consolidated financial statements of the Company for 1997, was mailed to
the shareholders on or about March 20, 1998.
<PAGE>
ELECTION OF DIRECTORS
The bylaws of the Company provide that the number of directors of the
Company shall be from five to nine, as fixed from time to time by the
Board of Directors. The size of the Board is currently set at eight
members. Shareholders are entitled to cumulative voting in the election
of directors. See "Voting Procedures" herein. Directors will hold
office until the next Annual Meeting and until their successors are duly
elected and qualified, or until their earlier death or resignation. The
Board of Directors has inquired of each nominee and has ascertained that
each will serve if elected. In the event that any of these nominees
should become unavailable for election, the Board of Directors may
designate substitute nominees, in which event the shares represented by
the proxy cards returned will be voted for such substitute nominees
unless an instruction to the contrary is indicated on the proxy card.
Information Concerning Nominees
ANTHONY SPIER Director since April, 1990
Anthony Spier, age 54, has been Chairman of the Board, President and
Chief Executive Officer since April 1994. Before joining the Company,
Mr. Spier was President of Bruning Corporation, a manufacturer of
drafting equipment and supplies, from 1989 to 1994. Prior thereto, he
was Vice President of AM International, and President of the
International Division of AM International. He is a member of the
Executive and Acquisition Committee.
JOHN R. BLOUIN Director since April, 1989
John R. Blouin, age 51, has been President of James Industries, Inc.
since 1982. James Industries, a sales representative organization
serving the electronics and computer industries, has served the Company
as a sales representative since 1979. See "Compensation Committee
Interlocks and Insider Participation" for additional disclosure
regarding James Industries, Inc. Prior to joining James Industries in
1980, Mr. Blouin served in a variety of sales management and marketing
positions with General Electric Corporation. Mr. Blouin also serves as
a director of American Manufacturing and Technologies Inc. He is
chairman of the Compensation Committee.
H. WAYNE HARRIS Director since April, 1995
H. Wayne Harris, age 63, is the President of Wayne Harris Company, a
Dallas-based appliance wholesaler, a position he has held since 1988.
Prior thereto, Mr. Harris was Corporate Vice President of Roper
Corporation, a manufacturer of home appliances and outdoor power
equipment, from 1981 to 1988. He is a member of the Compensation
Committee.
IRA J. KAUFMAN Director since February, 1997
Ira J. Kaufman, age 70, is Senior Managing Director of Mesirow Financial
since 1995. Prior thereto, Mr. Kaufman was Chairman of the Board and
Chief Executive Officer of Rodman & Renshaw Inc. Mr. Kaufman was also
Chairman of the Board and Chief Executive Officer of Exchange National
Bank of Chicago. He is member of the New York Stock Exchange, American
Stock Exchange, Chicago Board of Trade, Chicago Board Options Exchange
and National Association of Securities Dealers. Mr. Kaufman also serves
as a director of Anicom, Inc. and First Eagle National Bank. He is a
member of the Audit and Acquisition Committees.
<PAGE>
FRANK R. MARTIN Director since August, 1997
Frank R. Martin, age 51, is Senior Partner of the law firm Righeimer,
Martin and Cinquino, P.C. Mr. Martin has been associated with this firm
since 1974.
JAMES J. ROBERTS, JR. Director since April, 1982
James J. Roberts, Jr., age 53, has been Chairman of the Board and Chief
Executive Officer of James Industries, Inc. since its incorporation in
1977. James Industries, a sales representative organization serving the
electronics and computer industries, has served the Company as a sales
representative since 1979. See "Compensation Committee Interlocks and
Insider Participation" for additional disclosure regarding James
Industries, Inc. He is chairman of the Executive Committee and a member
of the Acquisition Committee.
RANDALL S. WELLS Director since April, 1996
Randall S. Wells, age 46, has been Executive Vice President and General
Manager of the Company since 1987. Mr. Wells has been employed by the
Company since 1971 in various positions. He is a member of the Executive
Committee.
ERNEST R. WISH Director since August, 1995
Ernest R. Wish, age 66, is Chairman of the Board of WRM, Inc. a
residential real estate management firm. Mr. Wish also held the position
as the Director of Revenue from 1995 to 1996, and was City Clerk from
1993 to 1995, for the City of Chicago. Prior thereto, Mr. Wish was
Managing Partner of the Chicago and Midwest Regional offices of Coopers
& Lybrand LLP, a public accounting firm. Mr. Wish also serves as a
director of Evans, Inc. He is chairman of the Audit Committee and a
member of the Compensation and Acquisition Committees.
The shares represented by the proxy cards returned will be voted FOR
the election of these nominees, as specified under "Voting Procedures"
herein, unless specified otherwise.
Voting Rights Agreement
The Company, Anthony Spier, John R. Blouin, James J. Roberts, Jr.,
Randall S. Wells and James Industries, Inc. are parties to a voting
rights agreement (the "Voting Rights Agreement") dated February 29,
1996, governing the voting of Common Stock for directors of the Company.
Pursuant to the Voting Rights Agreement, the parties have agreed to
vote their shares of Common Stock at each election of directors for such
slate of nominees as the Executive Committee of the Board designates,
provided that such slate shall always include Anthony Spier, John R.
Blouin, James J. Roberts, Jr., Randall S. Wells and or any of them as
are willing and able to serve as directors (collectively, the
"Designated Directors"). In any election of directors of the Company in
which the number of nominees exceeds the number of directors to be
elected, the agreement provides that the parties will vote in a manner
to assure the election of the greatest number of Designated Directors or
their successors. The Voting Rights Agreement terminates on the earlier
of the termination of the Sales Representative Agreement between the
Company, James Industries, Inc. and James J. Roberts, Jr. (see
"Compensation Committee Interlocks and Insider Participation" herein) or
December 31, 2000.
<PAGE>
Board Compensation
Employee directors do not receive additional compensation for serving
on the Board of Directors. At the 1996 Annual Meeting, shareholders
approved the Nonemployee Director Stock Plan. The Nonemployee Director
Stock Plan provides for awards to each nonemployee director of 800
shares of Common Stock each year, an attendance fee of 200 shares of
Common Stock for each Board and committee meeting attended, and a cash
payment in an amount sufficient to offset tax liability incurred in
connection with such stock awards and expenses of attendance, as well as
stock options for a number of shares of Common Stock equal to one
percent of the number of shares of Common Stock outstanding on the date
of grant divided by the number of eligible directors, to be granted to
nonemployee directors in office upon final adjournment of an annual
meeting of shareholders. The Company also pays the premiums for
directors' and officers' liability insurance policies. The Board of
Directors met four times in 1997 and the non-employee directors were
paid for the four meetings. All directors attended at least 96 percent
of the aggregate number of Board and committee meetings on which they
served in 1997.
Committees of the Board
The Board of Directors has a standing Audit Committee, Executive
Committee, Compensation Committee and Acquisition Committee. Although
the Board has no nominating committee, the Executive Committee deals
with matters relating to nominations to the Board.
Audit Committee
The Audit Committee consists of Ira J. Kaufman and Ernest R. Wish.
The Audit Committee met four times during 1997. It also meets
separately with representatives of the Company's independent auditors
and with representatives of senior management. The Audit Committee
reviews and makes recommendations to the Board regarding a number of
operating matters including: (i) the general scope of audit coverage;
(ii) the fees charged by the independent auditors; and (iii) matters
relating to the Company's internal control systems.
Executive Committee
The Executive Committee consists of James J. Roberts, Jr., Anthony
Spier and Randall S. Wells. The Executive Committee, which met once
during 1997, has the authority to take all actions that could be taken
by the Board of Directors, except as provided by statute. It may meet
between regularly scheduled Board meetings to take such action as is
necessary for the efficient operation of the Company.
The Executive Committee's duties relating to nominations to the Board
include proposing a slate of directors for election by the shareholders
at each Annual Meeting and proposing candidates to fill vacancies on the
Board. It conducts research to identify suitable candidates for Board
membership, and seeks individuals who will make a substantial
contribution to the Company. It will consider candidates proposed by
shareholders. Generally, candidates must be highly qualified and
affirmatively desirous of serving on the Board. They should represent
the interests of all shareholders and not those of a special interest
group. Any shareholder wishing to propose a candidate for consideration
should forward the candidate's name and a detailed background of the
candidate's qualifications to the Secretary of the Company.
<PAGE>
Compensation Committee
The Compensation Committee consists of John R. Blouin, H. Wayne Harris
and Ernest R. Wish. The Compensation Committee met twice during 1997.
The Compensation Committee administers the Company's Amended and
Restated Incentive Stock Plan. See "Report of the Compensation
Committee" herein. The Compensation Committee also makes
recommendations to the Board with respect to the compensation paid to
the Chief Executive Officer and other executive officers. See "Report
of Board of Directors on Compensation" herein.
Acquisition Committee
The Acquisition Committee consists of Ira J. Kaufman, James J.
Roberts, Jr., Anthony Spier and Ernest R. Wish. The Acquisition
Committee met five times during 1997. The Acquisition Committee
identifies and makes recommendations to the Board regarding possible
acquisitions and other investment opportunities of the Company.
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings on
December 31, 1997, of each person known by the Company to own
beneficially more than five percent of its outstanding common stock,
directors and nominees, the Chief Executive Officer, the Executive Vice
President and General Manager and all executive officers and directors
as a group.
<PAGE>
<TABLE>
Shares
Beneficially
Owned % of
(a) (b) (c) Class
<S> <C> <C>
Voting Rights Agreement............ 866,654(f) 19.3%
James J. Roberts, Jr. ............. 563,162(d) 12.6%
Individual and as Trustee of
the James J. Roberts Trust
dated January 23, 1991
1619 Colonial Parkway Inverness,
Illinois 60067
The Killen Group, Inc. ............ 245,400(e) 5.8%
1199 Lancaster Avenue
Berwyn, Pennsylvania 19312
Dimensional Fund Advisors, Inc..... 231,700(e) 5.5%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
Anthony Spier...................... 171,358 3.8%
Randall S. Wells................... 107,508 2.4%
Ernest R. Wish..................... 25,126 *
John R. Blouin..................... 24,626 *
H. Wayne Harris.................... 11,326 *
Ira J. Kaufman..................... 9,457 *
Frank Martin....................... 2,200 *
Officers & Directors as a group
(15 persons)....................... 1,134,009 25.3%
*Represent holdings of less than one percent.
</TABLE>
(a) The amounts shown include the following shares that may be
acquired within 60 days pursuant to outstanding stock options:
Mr. Spier, 54,175 shares; Mr. Wells, 23,200 shares; and all
executive officers and directors as a group, 272,522 shares.
(b) Excludes shares owned in joint tenancy as follows: Mr. Spier,(b)
21,383 shares; Mr. Blouin, 1,000 and Mr. Martin, 1,000 shares. In
each case, beneficial ownership of such shares is disclaimed.
<PAGE>
(c) The amounts shown include performance-based restricted stock
awards that could vest in accordance with their terms as follows:
Mr. Spier, 14,000 shares; Mr. Wells, 4,000 shares; and all
executive officers and directors as a group, 46,000 shares. These
performance-based restricted stock awards were amended in
February 1996. See "Report of the Compensation Committee" for a
description of the performance-based restricted stock awards.
(d) According to Schedule 13D filed with the Securities and Exchange
Commission by Mr. Roberts and other information furnished by him,
Mr. Roberts has sole voting power over all shares beneficially
owned by him. According to such information, all of these shares
are owned by Mr. Roberts as trustee of a trust of which he is sole
beneficiary.
(e) According to Schedule 13G filed with the Securities and Exchange
Commission, The Killen Group, Inc., a registered investment
advisor, is deemed to have beneficial ownership of 245,400 shares
of Wells-Gardner Electronics stock as of December 31, 1997.
According to Schedule 13G filed with the Securities and Exchange
Commission, Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, is deemed to have beneficial
ownership of 231,700 shares of Wells-Gardner Electronics stock as
of December 31, 1997, all of which shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified
benefit plans, all of which Dimensional Fund Advisors Inc. serves
as investment manager. Dimensional disclaims beneficial ownership
of all such shares.
(f) According to the Voting Rights Agreement dated February 29,
1996, Mr. Spier, Mr. Blouin, Mr. Roberts and Mr. Wells have agreed
to vote 866,654 shares as a block on certain matters. See "Voting
Rights Agreement" for additional disclosure.
REPORT OF BOARD OF DIRECTORS ON COMPENSATION
This report of the Board of Directors shall not be deemed to be
incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, and shall not otherwise
be deemed filed under such acts.
Overview of Executive Compensation Policies
The Board of Directors' policy with respect to compensation of the
Company's executive officers includes the following objectives:
* Maintain a level of compensation that will attract and
retain highly qualified individuals.
* Match the compensation goals of the executive officers with
the short-term and long-term operational goals of the
Company.
* Align the interests of the executive officers and
shareholders.
<PAGE>
* Reward significant performance by individual executive
officers, which performance contributes to the success of
the Company.
To achieve these objectives, the overall compensation of the Company's
executive officers was comprised in 1997 of salaries and stock options
granted under the Company's Amended and Restated Incentive Stock Plan.
The Board of Directors determines the annual salary of each executive
officer, based upon recommendations of the Executive Committee. The
Amended and Restated Incentive Stock Plan is administered by the
Compensation Committee. See "Report of the Compensation Committee"
herein.
Certain executive officers are parties to employment contracts which
specify minimum salaries. Any compensation exceeding such minimum
levels is set relative to executive compensation at comparable companies
in the electronics industries and companies of comparable size.
Chief Executive Officer Compensation
Mr. Spier is employed under a contract originally entered into in
connection with his joining the Company and being elected as Chairman
of the Board, President and Chief Executive Officer of the Company in
April 1994 (the "1994 Contract"). In February 1996, Mr. Spier's contract
was amended (the "Amended Contract"). The Amended Contract, which
expires December 31, 2000, but can be extended for additional one-year
terms thereafter, provides for minimum annual compensation of $200,000
until December 31, 1996, and $225 ,000 thereafter. Mr. Spier may
terminate the Amended Contract in the event of a "change in control" of
the Company. If, upon a "change of control" of the Company, Mr. Spier
terminates the Amended Contract and does not, within five days of
termination, enter into a new contract with a term of at least two years
with the Company or the Company's successor, the Amended Contract
provides that Mr. Spier is entitled to a lump sum payment in an amount
equal to the greater of the compensation Mr. Spier would have been
entitled to but for such termination during the remaining term of the
agreement and twice his total compensation from the Company for the
twelve calendar months preceding termination. In addition, in case of a
"change of control," the Amended Contract provides for payment of the
value of any unvested stock options or stock awards, and a payment to
offset any excise tax liability (pursuant to section 4999 of the
Internal Revenue Code) incurred. In addition, Mr. Spier is to be
reimbursed for legal fees and expenses incurred by Mr. Spier as a result
of such termination. Mr. Spier also received stock options in 1997.
See "Report of the Compensation Committee" and "Summary Compensation
Table" herein.
BOARD OF DIRECTORS
Anthony Spier Frank R. Martin
John R. Blouin James J. Roberts, Jr.
Ira J. Kaufman Randall S. Wells
H. Wayne Harris Ernest R. Wish
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Company believes that significant stock ownership by executive
officers is a major incentive in building shareholder value and aligning
the interests of executives and shareholders. Under the Company's
Amended and Restated Incentive Stock Plan, which is administered by the
Compensation Committee, nonqualified stock options, incentive stock
options, stock appreciation rights and stock awards may be granted to
officers and other key employees of the Company. In 1997, 125,000 stock
options were granted to nine executive officers.
Chief Executive Officer Awards
In 1994, in connection with Mr. Spier joining the Company and being
elected Chairman of the Board, President and Chief Executive Officer,
and as a part of his overall compensation, Mr. Spier received a
performance-based restricted stock award of 30,000 shares and received
an additional restricted stock award of 9,000 shares in connection with
the grant of performance-based restricted stock awards to all executive
officers (the terms of which are set forth in footnote (c) to the
"Summary Compensation Table" herein). In 1997, Mr. Spier was also
granted an option to purchase 30,000 shares of Common Stock at an
exercise price of $3.75, the fair market value on the date of the grant.
See "Option Grants in 1997" for further information with respect to the
specific terms of such grant. The Compensation Committee believes the
stock awards make a significant portion of Mr. Spier's overall
compensation dependent on Company performance and the option grant helps
to align Mr. Spier's long term compensation directly with shareholder
value since the potential value of the grant is tied directly to
increases in the fair market value of the Company's Common Stock during
the term of the option.
COMPENSATION COMMITTEE
John R. Blouin
H. Wayne Harris
Ernest R. Wish
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Set forth on the following table are, for the years indicated, each
component of compensation paid to the Chief Executive Officer, Vice
President and General Manager of Business Services, Vice President of
Marketing and Engineering and Executive Vice President and General
Manager.
Annual Compensation Long-Term Compensation
Other Restricted Securities Long-Term All
Name and Annual Stock Underlying Incentive Other
Principal Fiscal Salary (a) Bonus Compensation (b) Awards (c) Options Payouts (c) Compensation(d)
Position Year ($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony Spier 1997 227,529 39,998 12,524 --- 30,000 42,000 33,116
Chairman of the 1996 202,066 --- 13,800 --- 30,000 --- 6,766
Board, President 1995 151,428 --- 16,435 --- 26,700 --- 6,460
and Chief Executive
Officer
Mark Komorowski 1997 100,817 4,376 8,400 --- 15,000 7,000 3,447
Vice President 1996 100,692 --- 5,508 --- 10,000 --- 2,751
and General 1995 79,642 --- --- --- 13,300 --- 2,527
Manager of
Business Services
John Pircon 1997 88,222 13,198 8,400 --- 15,000 7,000 3,136
Vice President 1996 90,113 --- 6,474 --- 15,000 --- 2,945
of Marketing and 1995 81,031 --- 8,008 --- 13,300 --- 2,277
Engineering
Randall Wells 1997 79,805 13,010 8,400 --- 15,000 7,000 3,001
Executive Vice 1996 79,599 --- 8,400 --- 15,000 --- 3,052
President and 1995 82,112 --- 9,205 --- 17,800 --- 2,708
General Manager
</TABLE>
(a) Includes all pre-tax employee contributions to the Employee
Retirement 401(k) Plan.
(b) Includes benefits associated with the use of a Company
automobile or monthly allowance for 1997, 1996 and 1995.
<PAGE>
(c) In 1994, Mr. Spier received performance-based restricted stock
awards aggregating 39,000 shares, which awards were amended in
February 1996, and, as amended, are subject to vesting or
forfeiture as follows: 12,000, 13,000 and 14,000 of Mr. Spier's
shares will vest in each of 1996, 1997 and 1998, respectively, if
the Company's earnings from continuing operations before interest
and tax (EBIT) for that year equal or exceed the target amount for
that year. Shares for any year which do not vest because of
failure to attain that year's performance goal may vest on the
basis of the attainment of cumulative performance goals during the
three-year period. The performance goal set for these awards was
reached for the period ended December 31, 1997 and subsequently
paid in 1998. Any awards that have not vested as specified above
will be forfeited. These restricted shares will be forfeited in
case of the termination of Mr. Spier's employment with the Company,
except if Mr. Spier is terminated by the Company without cause.
Any dividends declared on the Common Stock will be paid on the
restricted shares. As of December 31, 1997, Mr. Spier owned a
total of 14,000 shares of restricted stock with a fair market value
of $83,125.
In 1994, Mr. Komorowski, Mr. Pircon and Mr. Wells received
performance-based restricted stock awards of 9,000 shares each,
which awards were amended in February 1996, and, as amended, are
subject to vesting or forfeiture as follows: 2,000, 3,000 and 4,000
shares will vest in each of 1996, 1997 and 1998, respectively, if
the Company's earnings from continuing operations before interest
and tax (EBIT) for that year equal or exceed the target amount for
that year. Shares for any year which do not vest because of
failure to attain that year's performance goal may vest on the
basis of the attainment of cumulative performance goals during the
three-year period. The performance goal set for these awards was
reached for the period ended December 31, 1997 and subsequently
paid in 1998. Any awards that have not vested as specified above
will be forfeited. Any dividends declared on the Common Stock will
be paid on the restricted shares. As of December 31, 1997,
Mr. Komorowski, Mr. Pircon and Mr. Wells each owned a total of
4,000 shares of restricted stock each with a fair market value of
$23,750.
(d) Includes 1997 automobile purchase of $26,350, premiums paid
on life insurance for the benefit of Mr. Spier for 1997, 1996 and
1995 of $2,016, $2,016 and $2,016, respectively and the Company's
contributions to the Employee Retirement 401(k) Plan in 1997, 1996
and 1995 of $4,750, $4,750 and $4,444, respectively.
Includes premiums paid on life insurance for the benefit of Mr.
Komorowski for 1997, 1996 and 1995 of $97, 115, and $86,
respectively and the Company's contributions to the Employee
Retirement 401(k) Plan in 1997, 1996 and 1995 of $3,350, $2,636 and
$2,441, respectively.
Includes premiums paid on life insurance for the benefit of Mr.
Pircon for 1997, 1996 and 1995 of $171, 193, and $166, respectively
and the Company's contributions to the Employee Retirement 401(k)
Plan in 1997, 1996 and 1995 of $2,965, $2,752 and $2,111,
respectively.
<PAGE>
Includes premiums paid on life insurance for the benefit of Mr.
Wells for 1997, 1996 and 1995 of $383, 441, and $234, respectively
and the Company's contributions to the Employee Retirement 401(k)
Plan in 1997, 1996 and 1995 of $2,618, $2,611 and $2,474,
respectively.
<TABLE>
OPTION GRANTS IN 1997
Set forth is certain information concerning grants of options to the
Chief Executive Officer, Vice President and General Manager of Business
Services, Vice President of Marketing and Engineering and Executive Vice
President and General Manager.
Individual Grants Potential
Realized Value
Percentage at Assumed
Number of of Total Annual Rates
Securities Options of Stock Price
Underlying Granted to Appreciation
Options Employee Exercice of for Option Term
Granted in 1997 Base Price Expiration 5% 10%
Name (#) (%) ($/share) Date ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Anthony Spier 30,000 (a) 10.50 3.750 3/1/2007 53,714 128,654
Mark Komorowski 15,000 (a) 5.25 3.750 3/1/2007 26,857 64,327
John Pircon 15,000 (a) 5.25 3.750 3/1/2007 26,857 64,327
Randall Wells 15,000 (a) 5.25 3.750 3/1/2007 26,857 64,327
</TABLE>
(a) The options become exercisable in 25% installments in August 1997,
February 1998, February 1999 and February 2000.
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1997 AND
OPTION VALUES AT DECEMBER 31, 1997
Set forth on the following table is information relating to the number
of shares of Common Stock subject to options held at December 31, 1997,
by the Chief Executive Officer, Vice President and General Manager of
Business Services, Vice President of Marketing and Engineering and
Executive Vice President and General Manager. Unexercised options for
193,611 shares of Common Stock were in-the-money at December 31, 1997.
Shares
Acquired Number of Securities Value of Unexercised
on Value Underlying Unexercised Options In-the-Money Options at
Name Exercise Realized at Fiscal Year-End (#) at Fiscal Year End (a) ($)
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Anthony Spier 13,350 36,713 32,500 44,175 80,469 112,683
Mark Komorowski 4,000 11,000 12,900 19,575 31,556 49,270
John Pircon 0 0 27,936 22,075 71,542 56,302
Randall Wells 16,400 47,913 11,250 23,200 12,422 59,888
(a) Based on a per share value, at December 31, 1997, of $5.9375.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Anthony Spier, James J. Roberts, Jr. and Randall S. Wells serve on the
Executive Committee, which deals with certain matters related to
compensation of executive officers. Mr. Spier does not participate in
any decisions relating to his compensation. The Compensation Committee,
which administers the Company's Amended and Restated Incentive Stock
Plan, consists of John R. Blouin, H. Wayne Harris and Ernest R. Wish.
Mr. Roberts is Chairman of the Board and Chief Executive Officer of
James Industries, Inc. and Mr. Blouin is President of James Industries,
Inc., a sales representative organization, acts as a sales
representative for, and as a distributor of, the Company's products.
James Industries, Inc. has been an independent sales representative for
the Company since 1979 and is compensated therefor on a commission basis
pursuant to the Amended and Restated Sales Representation Agreement
dated August 15, 1997 (the "Representation Agreement"). Commissions
paid pursuant to the Representation Agreement to James Industries, Inc.
in 1997, totaled approximately $1,541,000. The agreement expires
December 31, 2000, but can be extended for additional one-year terms
thereafter. James Industries, Inc. also acts as a distributor,
purchasing the Company's products for sale to third parties. For 1997,
the Company's sales to James Industries, Inc. totaled approximately
$406,000.
<PAGE>
COMMON STOCK PRICE PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the
cumulative total shareholder return of the Company's Common Stock with
the cumulative total return of the S&P Midcap 400 Index and the S&P
Electronics-Instrumentation Index during the years 1992 through 1997,
assuming the investment of $100 on December 31, 1992, and the
reinvestment of dividends.
<TABLE>
Base
Company/Index Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
<S> <C> <C> <C> <C> <C> <C>
Wells-Gardner Electronics 100.00 60.38 40.56 48.11 66.04 89.62
S&P Midcap 400 Index 100.00 113.95 109.87 143.86 171.49 226.80
Electronics
(Instrument) - Mid 100.00 127.08 141.57 190.65 206.22 196.86
</TABLE>
PROPOSAL FOR APPROVAL OF THE ADOPTION OF THE WELLS-GARDNER
ELECTRONICS CORPORATION 1998 INCENTIVE STOCK PLAN
The Company's Amended and Restated Incentive Stock Plan (the "Prior
Plan") was originally adopted by the Board of Directors on March 4,
1992, and was approved by the Company's shareholders on April 28, 1992.
The Board of Directors has adopted a new 1998 Incentive Stock Plan (the
"Option Plan") on February 19, 1998, subject to shareholder approval,
under which (i) 600,000 Common Shares are available for benefits, and
(ii) benefits may be granted until December 31, 2008. The Option Plan
allows awards to be made to substantially all Company employees and
consultants. The Option Plan should therefore allow the Company to
attract, motivate and retain outstanding management personnel by
providing such individuals with long-term financial incentives.
The Option Plan is a flexible plan which will provide the Board with
discretion to grant stock-based or cash incentives to eligible
employees, directors and consultants as the Board deems appropriate. It
will permit the issuance of awards in a variety of forms, including:
(i) non-qualified and incentive stock options for the purchase of common
stock, (ii) stock appreciation rights, (iii) restricted stock, (iv)
deferred stock and (v) other stock or cash awards. Grants of awards
under the Option Plan will comply with, and shall be subject to, all
applicable provisions of Rule 16b-3 under the Exchange Act. THE BOARD
OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE ADOPTION
OF THE OPTION PLAN.
The following summary of certain features of the Option Plan is
qualified in its entirety by reference to the full text of the Option
Plan, which will be filed with the Securities and Exchange Commission.
<PAGE>
General
The purpose of the Option Plan is to promote the overall financial
objectives of the Company and its stockholders by (i) motivating those
persons selected to participate in the Option Plan to achieve long-term
growth in stockholder value and (ii) by retaining the association of
those individuals who are instrumental in achieving this growth. The
Option Plan is administered by the Compensation Committee of two or more
non-employee directors, appointed by the Board of Directors (the
"Committee"). All decisions regarding awards under the Option Plan will
be made by such Committee.
The Option Plan provides for the grant of up to 600,000 shares of
common stock. In the discretion of the Committee, shares of common
stock subject to an award under the Option Plan that are forfeited,
otherwise remain unissued upon termination of an award or are received
by the Company in connection with exercise of an award shall become
available for additional awards under the Option Plan. In the event of
a stock dividend, stock split, recapitalization, sale of substantially
all of the assets of the Company, reorganization or other similar event,
the Committee will adjust the aggregate number of shares of common stock
subject to the Option Plan and the number, class and price of such
shares subject to outstanding awards to reflect equitably the effects of
such change. The Company is obligated to and intends to register shares
of common stock issues under the Option Plan on a Form S-8.
The Board of Directors may amend, modify or discontinue the Option
Plan at any time, unless such amendment impairs the rights of a
participant, without the participant's consent. Certain amendments are
subject to stockholder approval, including, without limitation, any
increase in the number of shares that can be granted under the Option
Plan. The Committee may amend the terms of any award granted under the
Option Plan, subject to the consent of a participant if such amendment
impairs the rights of such participant.
Awards Under the Option Plan
Stock Options. The Committee shall determine the number of shares of
common stock subject to the options to be granted to each participant
which may be non-qualified stock options, incentive stock options or a
combination thereof to the participants. Only persons who on the date
of the grant are employees of the Company or any subsidiary of the
Company may be granted options which qualify (under Code section 422) as
incentive stock options. Options granted under the Option Plan will
provide for the purchase of common stock at prices determined by the
Committee, but in no event less than the par value of a share of Common
Stock on the date of grant and 100% of the fair market value if an
option is an incentive stock option. No incentive stock option shall be
exercisable later than the tenth anniversary date after its grant. No
incentive stock option shall be granted later than the tenth anniversary
date of the adoption of the Option Plan.
<PAGE>
Options granted under the Option Plan shall be exercisable at such
times and subject to such terms and conditions as set forth in the
Option Plan and as the Committee shall determine or provide in an option
agreement. Except as otherwise provided in any option agreement,
options may only be transferred by will or under the laws of descent and
distribution, and all options shall be exercisable during the
participant's lifetime. The option exercise price is payable by the
participant (i) in cash, (ii) in shares of common stock, (iii) by the
execution and delivery of a promissory note, (iv) by delivery of
irrevocable instructions to a broker to promptly deliver to the Company
the amount necessary to pay for all common stock acquired, (v) in shares
of common stock issuable upon any exercise of the option having a total
fair market value on the date of delivery equal to such Option Price,
(vi) by constructive delivery ("attestation") of shares of common stock,
equal to the Option Price, or (vii) by a combination of such methods.
Upon termination of a participant's employment with the Company due to
death or disability, all of such participant's options shall be fully
exercisable for one year. Upon termination of a participant's
employment with the Company due to retirement or involuntary termination
of employment (other than for cause), all of such participant's options
shall be fully exercisable for ninety days. If a participant
voluntarily ceases to be an employee of the Company (other than due to
cause), all of his outstanding options shall be fully exercisable for
sixty days. If a participant ceases to be an employee of the Company
for cause, all of his outstanding options shall terminate immediately.
Options granted to Named Officers may not be fully deductible, if and
to the extent the income recognized on the exercise of the options or
with respect to other compensation in the same calendar year exceeds
$1,000,000.
Stock Appreciation Rights. The Committee in its discretion shall
determine the persons, if any, to whom Stock Appreciation Rights shall
be granted, the number of Stock Appreciation Rights to be granted to
each participant, the periods for which Stock Appreciation Rights are
granted, and the grant price thereof. Upon exercise of Stock
Appreciation Rights, the holder thereof is entitled to receive the
excess of the fair market value of the shares for which the Stock
Appreciation Rights are exercised over the grant price of such Stock
Appreciation Rights. Stock Appreciation Rights may be granted in
conjunction with options or independently.
The terms and conditions of the Stock Appreciation Rights shall be
confirmed in and subject to an agreement between the Company and the
participant. Unless otherwise provided in an agreement, Stock
Appreciation Rights (i) are transferable to the extent Stock Options
would be transferable under the Option Plan, and (ii) terminate when
Stock Options would terminate under the Option Plan.
<PAGE>
Restricted Stock. The Committee in its discretion shall determine the
persons, if any, to whom Restricted Stock shall be granted, the number
of shares of Restricted Stock to be granted to each participant, the
periods for which Restricted Stock is restricted, and any other
restrictions to which Restricted Stock is subject, conditioned on such
performance goals and other criteria as it may determine. The terms and
conditions of the Restricted Stock shall be confirmed in and subject to
an agreement between the Company and the participant. During the
restriction period, the Committee may require that the certificates
evidencing the Restricted Stock be held by the Company. During the
restriction period, the Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered. Other than the foregoing
restrictions imposed by the Committee, the participant shall have all
the rights of a holder of common stock. If a participant's employment
terminates during the restriction period due to death or disability, the
restrictions on the Restricted Stock shall lapse.
Deferred Stock. The Committee in its discretion shall determine the
persons, if any, to whom Deferred Stock shall be granted, the number of
shares of Deferred Stock to be granted to each participant, the period
prior to which the Common Stock is delivered (the "Deferral Period"),
and any other conditions to which Deferred Stock is subject, conditioned
on such performance goals and other criteria as it may determine. The
terms and conditions of the Deferred Stock shall be confirmed in and
subject to an agreement between the Company and the participant. During
the Deferral Period, the Deferred Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered. Unless otherwise provided
in the agreement, cash dividends shall be deferred and reinvested in
Deferred Stock. If a participant's employment terminates during the
Deferral Period due to death or disability, the restrictions on the
Deferred Stock shall lapse.
Performance Awards. From time to time, the Committee may select a
period during which one or more performance criteria designated by the
Committee are measured for the purpose of determining the extent to
which a performance award has been earned. The performance criteria
which the Committee may designate are (1) total shareholder return; (2)
such total shareholder return as compared to total return (on a
comparable basis) of a publicly available index; (3) net income; (4)
pre-tax earnings; (5) EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization); (6) pre-tax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or
special terms; (7) operating margin; (8) earnings per share; (9) return
on equity; (10) return on capital; (11) return on investment; (12)
operating income, excluding the effect of charges for acquired in-
process technology and before payment of executive bonuses; and (13)
working capital.
Performance awards may be in the form of performance shares (valued by
reference to shares of stock), or cash incentives. Performance awards
may be paid in cash, stock, other property or a combination thereof.
Recipients of performance awards are not required to provide
consideration other than the rendering of services and any minimum
exercise price required by applicable law.
<PAGE>
Stock Awards. Stock Awards can be awarded to a grantee without cost
and without restrictions as a bonus or as additional compensation for
services to the Company. Stock Awards allow the Committee (i) to sell
shares at prices below fair market value, or (ii) to issue shares
without other payment.
Changes in Control
Upon the occurrence of a Change in Control (as defined in the Option
Plan), the following shall occur: (i) all unexercised stock options
shall become immediately exercisable, (ii) all restrictions and deferral
limitations on the Restricted Stock, Deferred Stock or other Award shall
lapse, and (iii) Performance Awards and cash incentive Awards shall be
fully distributable. In addition, unless the Committee provides
otherwise in an option agreement, after the Change in Control a
participant shall have the right to surrender all or part of the
outstanding awards and receive in cash from the Company the following
amount for each award: (i) the excess of the Change in Control Price
over the exercise price of the award, multiplied by (ii) the number of
shares of common stock subject to the award.
<TABLE>
NEW PLAN BENEFITS
1998 INCENTIVE STOCK PLAN
Name and Dollar Number of
Principal Position Value ($) (a) Units (b)
<S> <C> <C>
Anthony Spier --- ---
Chairman of the
Board, President and
Chief Executive Officer
Mark Komorowski --- ---
Vice President and
General Manager of
Business Services
John Pircon --- ---
Vice President of
Marketing and
Engineering
Randall Wells --- ---
Executive Vice
President and
General Manager
Executive Group --- ---
Non-Employee Director Group --- ---
Non-Executive Officer --- ---
Employee Group
</TABLE>
<PAGE>
(a) The dollar value is indeterminable because no grants have been
made under this Plan.
(b) No units have been granted under this Plan.
Discussion of Federal Income Tax Consequences
The following summary of tax consequences with respect to the awards
under the Option Plan is not comprehensive and is based upon laws and
regulations in effect on March 20, 1998. Such laws and regulations are
subject to change.
Stock Options and Stock Appreciation Rights. There are generally no
Federal income tax consequences either to the optionee or to the Company
upon the grant of a stock option or stock appreciation right. On
exercise of an incentive stock option the optionee will not recognize
any income and the Company will not be entitled to a deduction for tax
purposes, although such exercise may give rise to liability for the
optionee under the alternative minimum tax provisions of the Code.
Generally, if the optionee disposes of shares acquired upon exercise of
an incentive stock option within two years of the date of grant or one
year of the date of exercise, the optionee will recognize compensation
income and the Company will be entitled to a deduction for tax purposes
in the amount of the excess of the fair market value of the shares on
the date of exercise over the option exercise price (or the gain on
sale, if less). Otherwise, the Company will not be entitled to any
deduction for tax purposes upon disposition of such shares, and the
entire gain for the optionee will be treated as a capital gain. On
exercise of a non-qualified stock option or a stock appreciation right,
the amount by which the fair market value of the shares on the date of
exercise exceeds the option exercise price will generally be taxable to
the optionee as compensation income and will generally be deductible for
tax purposes by the Company, subject to the Section 162(m) limitation on
the deductibility of non-performance based compensation in excess of
$1,000,000 to the Named Officers. The disposition of shares acquired
upon exercise of a non-qualified stock option will generally result in a
capital gain or loss for the optionee, but will have no tax consequences
for the Company.
Restricted Stock. A participant who is granted Restricted Stock may
make a Section 83(b) Election to have the grant taxed as compensation
income at the date of receipt, with the result that any future
appreciation (or depreciation) in the value of the shares granted shall
be taxed as capital gains (or loss) upon a subsequent sale of the
shares. However, if the participant does not make a Section 83(b)
Election, then the grant shall be taxed as compensation income at the
full fair market value on the date that the restrictions imposed on the
shares expire, except in the case of a 16(b) Person, in which case the
fair market value will be determined at the later of (i) six months
after the date on which the Restricted Stock was granted or (ii) the
date of the expiration of the restrictions. Unless a participant makes
a Section 83(b) Election, any dividends paid on stock subject to the
restrictions are compensation income to the participant and compensation
expense to the Company. The Company is entitled to an income deduction
for any compensation income taxed to the participant, subject to the
Section 162(m) limitation on the deductibility of non-performance based
compensation in excess of $1,000,000 to the Named Officers.
<PAGE>
Other Awards. With respect to other Awards granted under the Option
Plan that are settled either in cash or in stock or other property that
is either transferable or not subject to substantial risk of forfeiture,
the participant must recognize ordinary income equal to the cash or the
fair market value of shares or other property received and the Company
will be entitled to a deduction for the same amount. With respect to
Awards that are settled in stock or other property that is restricted as
to transferability and subject to substantial risk of forfeiture, the
participant must recognize ordinary income equal to the fair market
value of the shares or other property received at the first time the
shares or other property become transferable or not subject to
substantial risk of forfeiture, whichever occurs earlier, and the
Company will be entitled to a deduction for the same amount, subject to
possible limitation under Section 162(m).
In the event any payments or rights accruing to a participant upon a
Change in Control, or any other payments awarded under the Option Plan,
constitute "parachute payments" under Section 280G of the Code,
depending upon the amount of such payments accruing and the other income
of the participant from the Company, the participant may be subject to
an excise tax (in addition to ordinary income tax) and the Company may
be disallowed a deduction for the amount of the actual payment.
PROPOSAL FOR RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of KPMG
Peat Marwick LLP to serve as independent public accountants of the
Company for the fiscal year ending December 31, 1998. Although
shareholder ratification is not required, the Board of Directors
believes that the shareholders should be afforded the opportunity to
ratify the appointment and has directed that such appointment be
submitted to the shareholders of the Company for ratification at the
Annual Meeting. KPMG Peat Marwick LLP has served as independent public
accountants of the Company with respect to the Company's financial
statements for fiscal years 1995, 1996 and 1997, and is considered by
the Board of Directors of the Company to be well qualified. If the
shareholders do not ratify the appointment of KPMG Peat Marwick LLP, the
Board of Directors may reconsider the appointment. During fiscal 1997,
KPMG Peat Marwick LLP provided the Company with audit and tax services
totaling approximately $74,400.
A representative of KPMG Peat Marwick LLP will be present at the
Annual Meeting and may have the opportunity to make a statement. The
representative will also be available to respond to appropriate
questions from the shareholders.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's
directors, its executive (and certain other) officers, and any person
holding more than ten percent of the Company's Common Stock are required
to report their ownership of Common Stock and any changes in that
ownership to the Securities and Exchange Commission and any exchange or
quotation system on which the Common Stock is listed or quoted. Specific
due dates for these reports have been established and the Company is
required to report in this proxy statement any failure to file by these
dates. All of these filing requirements were satisfied by its directors
and officers and ten percent holders. In making these statements, the
Company has relied on the representations of its directors and officers
and its ten percent holders and copies of the reports that they have
filed with the Securities and Exchange Commission.
PROPOSALS OF SECURITY HOLDERS
Any shareholder proposal intended to be presented at the 1999 Annual
Meeting of Shareholders must be received at the Company's executive
offices, 2701 North Kildare Avenue, Chicago, Illinois 60639, by no later
than November 20, 1998, in order to be considered for inclusion in the
Company's proxy statement materials relating to such meeting.
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the
Meeting other than that which is described in this Proxy Statement. In
the event that other business calling for a vote of the shareholders is
properly presented at the Meeting, the holders of the proxies will vote
your shares in accordance with their best judgment.
Chicago, Illinois
March 20, 1998
<PAGE>
Wells-Gardner Electronics Corporation
2701 North Kildare Avenue
Chicago, Illinois 60639
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony Spier, Randall S. Wells and
James J. Roberts, Jr. and each of them, as Proxies, each with power
of substitution, and hereby authorizes them to vote, as designated
below, all common shares of Wells-Gardner Electronics Corporation
held of record by the undersigned on March 13, 1998, at the annual
meeting of shareholders to be held on April 28, 1998, and any
adjournment thereof. A majority of the Proxies present at the
meeting, and if only one is present, then that one, may exercise
the power of all the Proxies hereunder.
1. ELECTION OF DIRECTORS
o FOR all nominees listed below
o WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
Anthony Spier, John R. Blouin, H. Wayne Harris, Ira J. Kaufman,
Frank R. Martin, James J. Roberts, Jr., Randall S. Wells,
Ernest R. Wish
If additional persons are nominated, the named Proxies may cumulate
the votes represented by this proxy in their discretion among the
above named nominees. The withholding of authority to vote for any
individual nominee or nominees will permit the Proxies to
distribute the withheld votes among the remaining nominees.
(INSTRUCTION: to withhold authority to vote for any individual
nominee, write that nominee's name in the space below).
______________________________________________________________________
2. ADOPTION OF THE COMPANY'S 1998 INCENTIVE STOCK PLAN. To
consider and vote upon a proposal to adopt the Company's 1998
Incentive Stock Plan.
o FOR o AGAINST o ABSTAIN
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
To consider and vote upon a proposal to ratify the appointment of
KPMG Peat Marwick LLP, as independent public accountants of the
Company for the current fiscal year.
o FOR o AGAINST o ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL LISTED
DIRECTORS AND FOR PROPOSAL 2 AND 3.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED__________________________________________, 1998
_____________________________________________________
Signature
_____________________________________________________
Signature if held jointly
Please mark, sign, date and return the proxy card promptly
using the enclosed envelope.
