<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
Wells Gardner Electronics Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] 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:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[WELLS-GARDNER LOGO]
2701 North Kildare Avenue
Chicago, Illinois 60639
March 19, 1999
To Our Shareholders:
You are cordially invited to attend the 1999 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, Tuesday,
April 27, 1999, at 2:00 P.M. Central Daylight Savings Time. All holders of
common shares of the Company as of the close of business on Friday, March 12,
1999, 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,
/s/ Anthony Spier
Anthony Spier
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
WELLS-GARDNER ELECTRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS -- APRIL 27, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Wells-Gardner
Electronics Corporation will be held on Tuesday, April 27, 1999, 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 nine directors;
2. To consider and vote upon a proposal to adopt the Company's 1999 Stock
Purchase Plan;
3. To consider and vote upon a proposal to ratify the appointment of KPMG
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 12, 1999, 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
Corporate Secretary
March 19, 1999
<PAGE> 4
WELLS-GARDNER ELECTRONICS CORPORATION
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 27, 1999
This Proxy Statement is being sent on or about March 19, 1999, 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, Illinois 60639 (the "Company"), entitled to vote at the Annual
Meeting of Shareholders on Tuesday, April 27, 1999 (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 12, 1999, are
entitled to vote at the Meeting. As of that date, there were approximately
4,293,547 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.
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
1999 Stock Purchase Plan and the FOR the ratification of appointment of the
selection of KPMG LLP as independent auditors for the current fiscal year.
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 1999 Stock Purchase Plan and
ratification of appointment of KPMG 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
<PAGE> 5
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.
A copy of the 1998 Annual Report to Shareholders, which includes the
consolidated financial statements of the Company for 1998, was mailed to the
shareholders on or about March 19, 1999.
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 nine 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 55, 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 52, 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
2
<PAGE> 6
Manufacturing and Technology Inc., an electronic design and manufacturing
company. He is chairman of the Compensation Committee.
MARSHALL L. BURMAN DIRECTOR SINCE AUGUST, 1998
Marshall L. Burman, age 69, is of Counsel to Wildman, Harrold, Allen & Dixon.
Prior to 1992, Mr. Burman was Managing Partner of Arvey, Hodes, Costello &
Burman. Mr. Burman is a current member and former chairman of the Illinois State
Board of Investments. He is a member of the Compensation Committee.
JERRY KALOV DIRECTOR SINCE FEBRUARY, 1999
Jerry Kalov, age 63, is Vice Chairman of the Board of Cobra Electronics
Corporation (NASDAQ: COBR). Prior thereto, Mr. Kalov was President and Chief
Executive Officer of Cobra Electronics Corporation, retired January 1, 1998. Mr.
Kalov also serves as a director of Quion Inc., an OEM supplier to the automotive
industry. Mr. Kalov is also a Governor and a member of the Executive Committee
of the Electronic Industries Alliance.
IRA J. KAUFMAN DIRECTOR SINCE FEBRUARY, 1997
Ira J. Kaufman, age 71, 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 a member of
the New York Stock Exchange, American Stock Exchange, Chicago Board of Trade,
Chicago Board Options Exchange and National Association of Securities Dealers.
He is a member of the Acquisition Committee.
FRANK R. MARTIN DIRECTOR SINCE AUGUST, 1997
Frank R. Martin, age 52, is Senior Partner of the law firm Righeimer, Martin and
Cinquino, P.C. Mr. Martin has been associated with this firm since 1974. He is a
chairman of the Audit Committee and a member of the Executive Committee.
JAMES J. ROBERTS, JR. DIRECTOR SINCE APRIL, 1982
James J. Roberts, Jr., age 54, 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 47, 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.
3
<PAGE> 7
ERNEST R. WISH DIRECTOR SINCE AUGUST, 1995
Ernest R. Wish, age 67, 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 Acquisition
Committee and a member of the Audit and Compensation 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 December 9, 1998, 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., James J.
Roberts, Jr. and John R. Blouin (see "Compensation Committee Interlocks and
Insider Participation" herein) or December 31, 2003.
BOARD COMPENSATION
Employee directors do not receive additional compensation for serving on
the Board of Directors. At the 1996 Annual Meeting, the shareholders approved
the Nonemployee Director Stock Plan. The Nonemployee Director Stock Plan, as
amended by the Board in February, 1999, provides that for each quarter the
director is a Board member and each Board or Committee meeting attended, each
nonemployee director will receive $1,500 in value either as: (i) fair market
value of Common Stock, or (ii) a combination of Common Stock and a cash payment
in the amount sufficient to offset the tax liability incurred in connection with
the receipt of such stock. The closing Common Stock price on the day of each
meeting will set the basis price for such payment. The Nonemployee Director
Stock Plan, as amended, also provides that nonemployee directors will receive
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 seven times in 1998. All directors attended at least 95
percent of the aggregate number of Board and Committee meetings on which they
served in 1998.
4
<PAGE> 8
COMMITTEES OF THE BOARD
The Board of Directors has a standing Audit, Executive, Compensation 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 Frank R. Martin and Ernest R. Wish. The
Audit Committee met four times during 1998. 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., Frank R. Martin
and Anthony Spier. The Executive Committee, which met two times during 1998, 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.
COMPENSATION COMMITTEE
The Compensation Committee consists of John R. Blouin, Marshall L. Burman
and Ernest R. Wish. The Compensation Committee met five times during 1998. 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 Ernest R. Wish, Ira J. Kaufman, James
J. Roberts, Jr. and Anthony Spier. The Acquisition Committee met three times
during 1998. The Acquisition Committee identifies and makes recommendations to
the Board regarding possible acquisitions and other investment opportunities of
the Company.
5
<PAGE> 9
SECURITIES BENEFICIALLY OWNED BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Set forth in the following table are the beneficial holdings on December
31, 1998, 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.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY % OF
OWNED CLASS
------------ -----
<S> <C> <C>
Voting Rights Agreement.......................... 917,856(a) 19.9%
James J. Roberts, Jr............................. 575,983(a)(b)(d) 12.5%
Individual and as Trustee of the James J.
Roberts Trust dated January 23, 1991
1619 Colonial Parkway
Inverness, Illinois 60067
The Killen Group, Inc............................ 357,900(c) 8.4%
1199 Lancaster Avenue
Berwyn, Pennsylvania 19312
Dimensional Fund Advisors, Inc................... 243,600(c) 5.7%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
Anthony Spier.................................... 177,568(a)(d)(e) 3.9%
Randall S. Wells................................. 135,058(a)(d)(e) 2.9%
Ernest R. Wish................................... 34,797(d) *
John R. Blouin................................... 29,247(a)(d)(f) *
Ira J. Kaufman................................... 14,078(d) *
Frank R. Martin.................................. 5,964(d)(f) *
Marshall L. Burman............................... 1,400 *
Jerry Kalov...................................... 1,000 *
Officers & Directors as a group (17 persons)..... 1,267,974(d)(e) 27.5%
</TABLE>
- ---------------
* Represent holdings of less than one percent.
(a) According to the Voting Rights Agreement dated December 9, 1998, Mr. Spier,
Mr. Blouin, Mr. Roberts and Mr. Wells have agreed to vote 917,856 shares as
a block on certain matters. See "Voting Rights Agreement" for additional
disclosure.
(b) 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.
(c) 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 357,900 shares of Wells-Gardner
Electronics as of December 31, 1998.
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 243,600
shares of Wells-Gardner Electronics as of
6
<PAGE> 10
December 31, 1998. All securities reported are owned by advisory clients of
Dimensional, no one of which, to the knowledge of Dimensional, owns more than 5%
of the class. Dimensional disclaims beneficial ownership of all such securities.
(d) The amounts shown include the following shares that may be acquired within
60 days pursuant to outstanding stock options: Mr. Spier, 47,250 shares;
Mr. Wells, 34,450 shares, Mr. Roberts, 9,747 shares, Mr. Wish, 9,747
shares, Mr. Blouin, 9,747 shares, Mr. Kaufman, 4,678 shares, Mr. Martin,
1,764 shares; and all executive officers and directors as a group, 329,582
shares.
(e) 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.
(f) Excludes shares owned in joint tenancy as follows: Mr. Blouin, 1,000 and
Mr. Martin, 1,000 shares. In each case, beneficial ownership of such shares
is disclaimed.
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.
- 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 1998 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 Compensation 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
industry and companies of comparable size.
7
<PAGE> 11
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 1999, Mr. Spier's contract was amended (the
"Amended Contract"). The Amended Contract, which expires December 31, 2002, but
can be extended for additional one-year terms thereafter, provides for minimum
annual compensation of $232,000. 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 1998. See "Report of the
Compensation Committee" and "Summary Compensation Table" herein.
BOARD OF DIRECTORS
<TABLE>
<S> <C>
Anthony Spier John R. Blouin
Marshall L. Burman Jerry Kalov
Ira J. Kaufman Frank R. Martin
James J. Roberts, Jr. Randall S. Wells
Ernest R. Wish
</TABLE>
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
1998, 145,000 stock options were granted to ten 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 1998, Mr. Spier was
also granted an option to purchase 30,000 shares of Common Stock at an exercise
price of $4.625, the fair market value on the date of the grant. See "Option
Grants in 1998" for further information with
8
<PAGE> 12
respect to the specific terms of such grant. The Compensation Committee believes
the stock awards make a significant portion of Mr. Spier's overall compensation
dependent on Company performance and the option grant helps to align Mr. Spier's
long term compensation directly with shareholder value since the potential value
of the grant is tied directly to increases in the fair market value of the
Company's Common Stock during the term of the option.
COMPENSATION COMMITTEE
John R. Blouin
Marshall L. Burman
Ernest R. Wish
SUMMARY COMPENSATION TABLE
Set forth on the following table are, for the years indicated, each
component of compensation paid to the Chief Executive Officer, Vice President of
Service and Coin and Vice President of Marketing.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------- -----------------------------------
OTHER SECURITIES LONG- ALL
ANNUAL RESTRICTED UNDER- TERM OTHER
COMPEN- STOCK LYING INCENTIVE COMPEN-
NAME AND FISCAL SALARY(A) BONUS SATION AWARDS OPTIONS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) (B)($) (C)($) (#) (C)($) (D)($)
------------------ ------ --------- ------ ------- ---------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anthony Spier.............. 1998 226,435 32,176 11,279 -- 30,000 45,500 7,016
Chairman of the Board, 1997 224,134 39,998 15,919 -- 30,000 42,000 33,116
President and Chief 1996 202,066 -- 13,800 -- 30,000 -- 6,766
Executive Officer
Mark Komorowski............ 1998 115,718 5,052 8,400 -- 15,000 10,500 3,995
Vice President 1997 100,817 4,376 8,400 -- 15,000 7,000 3,447
of Service and Coin 1996 100,692 -- 5,508 -- 10,000 -- 2,751
John Pircon................ 1998 91,565 13,027 8,400 -- 15,000 10,500 3,259
Vice President 1997 88,222 13,198 8,400 -- 15,000 7,000 3,136
of Marketing 1996 90,113 -- 6,474 -- 15,000 -- 2,945
</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 1998, 1997 and 1996.
(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 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, 1998 and subsequently paid in 1999. As of December 31, 1998,
Mr. Spier owned a total of 14,000 shares of restricted stock with a fair
market value of $37,625.
In 1994, Mr. Komorowski and Mr. Pircon 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 equal or exceed the target
9
<PAGE> 13
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, 1998 and subsequently paid in 1999. As of December 31, 1998,
Mr. Komorowski and Mr. Pircon each owned a total of 4,000 shares of
restricted stock each with a fair market value of $10,750.
(d) Includes premiums paid on life insurance for the benefit of Mr. Spier for
1998, 1997 and 1996 of $2,016, $2,016 and $2,016, respectively and the
Company's contributions to the Employee Retirement 401(k) Plan in 1998, 1997
and 1996 of $5,000, $4,750 and $4,750, respectively. Included in 1997 was
$26,350 for an automobile purchase.
Includes premiums paid on life insurance for the benefit of Mr. Komorowski
for 1998, 1997 and 1996 of $143, $97 and $115, respectively and the
Company's contributions to the Employee Retirement 401(k) Plan in 1998,
1997 and 1996 of $3,852, $3,350 and $2,636, respectively.
Includes premiums paid on life insurance for the benefit of Mr. Pircon for
1998, 1997 and 1996 of $158, $171, and $193, respectively and the Company's
contributions to the Employee Retirement 401(k) Plan in 1998, 1997 and 1996
of $3,101, $2,965 and $2,752, respectively.
OPTION GRANTS IN 1998
Set forth is certain information concerning grants of options to the Chief
Executive Officer, Vice President of Service and Coin and Vice President of
Marketing.
<TABLE>
<CAPTION>
POTENTIAL
REALIZED VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
---------------------------------------------------------- RATES OF STOCK
PERCENTAGE OF PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERM
UNDERLYING EMPLOYEE EXERCISE OF ------------------
OPTIONS GRANTED IN 1998 BASE PRICE EXPIRATION 5% 10%
NAME (#) (%) ($/SHARE) DATE ($) ($)
---- --------------- ------------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Anthony Spier............... 30,000(a) 9.60 4.625 6/16/2008 66,247 158,673
Mark Komorowski............. 15,000(a) 4.80 4.625 6/16/2008 33,123 79,336
John Pircon................. 15,000(a) 4.80 4.625 6/16/2008 33,123 79,336
</TABLE>
- ---------------
(a) The options become exercisable in 25% installments in December 1998, June
1999, June 2000 and June 2001.
10
<PAGE> 14
AGGREGATED OPTION EXERCISES IN 1998 AND
OPTION VALUES AT DECEMBER 31, 1998
Set forth on the following table is information relating to the number of
shares of Common Stock subject to options held at December 31, 1998, by the
Chief Executive Officer, Vice President of Service and Coin and Vice President
of Marketing. No unexercised options for shares of Common Stock were
in-the-money at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END (#) FISCAL YEAR-END(A)($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Anthony Spier.......... 29,425 89,450 39,750 37,500 0 0
Mark Komorowski........ 11,637 34,125 14,588 21,250 0 0
John Pircon............ 0 0 42,511 22,500 0 0
</TABLE>
- ---------------
(a) Based on a per share value, at December 31, 1998, of $2.6875.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Anthony Spier, James J. Roberts, Jr. and Frank R. Martin 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, Marshall
L. Burman 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 December 9, 1998 (the
"Representation Agreement"). Commissions paid or due pursuant to the
Representation Agreement to James Industries, Inc. in 1998, totaled
approximately $1,386,000. The agreement expires December 31, 2003, 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 1998, the Company's sales to James Industries, Inc. totaled
approximately $258,000.
11
<PAGE> 15
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 1993 through 1998, assuming the investment of $100 on December
31, 1993, and the reinvestment of dividends.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------------------------------
12/93 12/94 12/95 12/96 12/97 12/98
<S> <C> <C> <C> <C> <C> <C>
Wells-Gardner Electronics Corporation 100.00 67.19 79.69 109.38 148.44 67.19
S&P Midcap 400 Index 100.00 96.42 126.25 150.49 199.03 227.74
S&P Electronics (Instrumentation) Index 100.00 124.28 192.35 241.05 283.08 337.42
</TABLE>
*$100 Invested on 12/31/93 in Stock or Index
(Includes Reinvestment of Dividends)
PROPOSAL FOR APPROVAL OF THE ADOPTION OF THE WELLS-GARDNER
ELECTRONICS CORPORATION 1999 STOCK PURCHASE PLAN
Subject to the approval of the Company's stockholders at the Annual
Meeting, the Board of Directors has adopted the Wells-Gardner Electronics
Corporation 1999 Stock Purchase Plan (the "Stock Purchase Plan"), effective as
of January 1, 1999. The Company wishes to provide a stock purchase plan within
the meaning of Section 423 of the Code to encourage its employees to hold a
proprietary interest in the Company and provide them with an additional
incentive to work for the long-term success of the Company. Stockholders are
being asked to approve the adoption of the Stock Purchase Plan (i) to qualify
the Stock Purchase Plan under Section 423 of the Code and (ii) to qualify the
Stock Purchase Plan pursuant to Rule 16b-3 under the Act and thereby render
certain transactions under the Stock Purchase Plan exempt from Section 16 of the
Act.
The Stock Purchase Plan is administered by a committee of the Board of
Directors made up of directors who are not eligible to participate in the Stock
Purchase Plan and have not been so eligible. At present, that committee is the
Compensation Committee of the Board of Directors (the "Stock Purchase Plan
Committee"). The Stock Purchase Plan Committee has plenary discretion and
control respecting the administration of the Stock Purchase Plan. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO APPROVE THE ADOPTION OF THE 1999
STOCK PURCHASE PLAN.
The following brief summary of certain features of the Stock Purchase Plan
is qualified in its entirety by reference to the full text of the Stock Purchase
Plan, which has been filed with the Securities and Exchange Commission.
12
<PAGE> 16
TERMS OF THE STOCK PURCHASE PLAN
Employees eligible to participate in the Stock Purchase Plan ("Eligible
Employees") consist of all persons employed by the Company and any subsidiaries
which have adopted the Stock Purchase Plan with the consent of the Board of
Directors. The Stock Purchase Plan allows the Stock Purchase Plan Committee to
exclude from participation any employee (i) who has accrued less than a minimum
period of service with the Company as established by the Stock Purchase Plan
Committee (but not to exceed 2 years), (ii) whose customary employment is for 20
hours or less per week, or (iii) whose customary employment is for not more than
five months during a calendar year.
The Stock Purchase Plan will operate on an annual basis from January 1 to
the last day of the next following December (such period to be known as a "Plan
Year"). In order to be eligible to participate during a Plan Year, an Eligible
Employee must file the required enrollment and payroll deduction authorization
forms prior to a specified due date known as the "Grant Date." The Stock
Purchase Plan Committee currently anticipates that Grant Dates occurred or will
occur on the first day of each calendar month; however, the determination of
Grant Dates is in the complete discretion of the Stock Purchase Plan Committee.
Eligible Employees participate by electing payroll deductions, with all
such deductions credited to an account, but the Company will not segregate any
assets relating to the account and all assets may be used for any lawful
corporate purpose of the Company, and all Eligible Employees will be unsecured
creditors of the Company. Payroll deductions held by the Company will be held
without interest for participants. The Stock Purchase Plan Committee may
determine what elements of compensation will be eligible for payroll deductions
but such elements will generally include base salary, commissions and overtime
pay.
There generally will be one monthly purchase date on the last day of each
calendar month (to be known as the "Exercise Date"); however, the Stock Purchase
Plan Committee is authorized to determine alternate dates. Any period between
the dates the shares will be purchased is known as the "Option Period." This is
the period during which the amounts (not to exceed $2,083 per participant for
any Option Period) will be deducted from payroll before being applied to
purchase the Common Stock. The Option Period will be determined by the Stock
Purchase Plan Committee and generally will be for a period of one month, but
Option Periods may be as long as 27 months. On each Exercise Date, participants'
payroll deductions credited to their accounts will be applied automatically to
the purchase of Common Stock at a price per share which is the lesser of
eighty-five percent (85%) of the average months closing price of the Common
Stock. The number of shares actually purchasable per participant for the period
will be the number of shares obtained by dividing the amount in such
participant's account by the purchase price rounded to the third decimal.
No participant may purchase shares of Common Stock in any calendar year
under the Stock Purchase Plan with an aggregate fair market value (determined as
of the Grant Date) in excess of $25,000. As of each Grant Date, the Stock
Purchase Plan Committee may further set a maximum number of shares of Common
Stock available for purchase by any one participant or in the aggregate by all
participants. As of any Grant Date, the Stock Purchase Plan Committee will
determine the maximum number of shares of Common Stock that may be purchased as
of the Grant Date, and absent any such other determination by the Stock Purchase
Plan Committee, the maximum number shall be $25,000 divided by the lowest
closing price reported on the American Stock Exchange during the 12 consecutive
month period ending immediately preceding the Grant
13
<PAGE> 17
Date. There is also a maximum number of 500,000 shares of Common Stock available
under the Stock Purchase Plan. If participant contributions are such that the
total number of shares of Common Stock to be purchased would exceed the Stock
Purchase Plan maximum, then the number of shares to be purchased by any
participant shall be reduced in the proportion that the participant's payroll
deductions bear to the total of all payroll deductions (and any excess payroll
deductions will be credited to the participant for the next succeeding period).
If a participant dies, no further payroll deductions may be made under the
Stock Purchase Plan; however, a participant's representative may make a single
sum payment (the amount of which will be determined by the Stock Purchase Plan
Committee) equal to what would have been deducted had the participant continued
in employment through the conclusion of the then current Option Period.
Alternatively, the participant's representative may withdraw the participant's
contributions to the Stock Purchase Plan by notifying the Stock Purchase Plan
Committee, in writing, prior to the next Exercise Date, in which case no shares
of Common Stock will be purchased. If the participant's representative does not
withdraw the participant's previous contributions, then such contributions will
be used to purchase Common Stock.
If a participant's employment with the Company terminates as a result of
disability or retirement, no further payroll deductions may be made under the
Stock Purchase Plan; however, such participant may make a single sum payment
(the amount of which will be determined by the Stock Purchase Plan Committee)
equal to what would have been deducted had the participant continued in
employment through the next Exercise Date. Alternatively, the participant may
withdraw his or her contributions to the Plan prior to the next Exercise Date,
in which case no shares of Common Stock will be purchased. If the participant
does not withdraw the previous contributions, then such contributions will be
used to purchase Common Stock.
If a participant terminates his or her employment with the Company (other
than as a result of death, disability or retirement), then the amount previously
withheld from the participant's pay will be returned to the participant and no
shares of Common Stock will be purchased for the participant.
A Change in Control of the Company will generally be treated as an Exercise
Date. A "Change in Control" is deemed to occur in the event of certain
acquisitions of 25% or more of (the combined voting power of) the Company's
outstanding Common Stock, certain changes of a majority of the Board of
Directors, or certain qualifying reorganizations, mergers, consolidations or
sales of the Company's assets.
At any time during an Option Period, a participant may cancel his or her
payroll deductions and receive a refund of the amounts previously deducted. A
participant may also suspend payroll deductions, but prior payroll deductions
shall not be distributed.
The shares of Common Stock to be offered shall be authorized but unissued
shares. In the event there is any change in the shares of the Company by reason
of stock dividends, stock split-ups, recapitalizations, or combinations or
exchanges of shares, or otherwise, appropriate adjustments in the number of
shares available for purchase, as well as the shares subject to purchase rights
and the purchase price thereof, shall be made, but no fractional shares shall be
subject to purchase and, upon any adjustment, each purchase right shall be
adjusted down to the nearest full share.
No person will be able to purchase stock under the Stock Purchase Plan, if
such person, immediately after the purchase, would own stock possessing 5% or
more of the total combined
14
<PAGE> 18
voting power or value of all classes of stock of the Company. Participants do
not have the right to assign or transfer their rights to purchase the Common
Stock under the Stock Purchase Plan.
The Board has authority to amend the Stock Purchase Plan, subject to the
limitation that no amendment may be made without stockholder approval to the
extent such approval is required by law (including Section 423 of the Code). The
Board may at any time suspend or terminate the Stock Purchase Plan, but no such
action may adversely affect the participants' rights and obligations with
respect to purchase rights at that time outstanding under the Stock Purchase
Plan.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The following summary of tax consequences with respect to awards under the
Stock Purchase Plan is not comprehensive and is based upon laws and regulations
in effect on January 1, 1999. Such laws and regulations are subject to change.
The Stock Purchase Plan is intended to qualify as an employee stock
purchase plan under Section 423 of the Code. Under present law, a participant
will not be deemed to have received any compensation for Federal income tax
purposes on either a Grant Date or Exercise Date.
If a participant's account is applied to purchase Common Stock while the
participant is an employee and the participant disposes (for example, by a sale,
exchange, gift or transfer of legal title, subject to narrow exceptions) of the
Common Stock purchased under the Stock Purchase Plan either within two years
after the Grant Date or within one year after the Exercise Date (a
"disqualifying disposition"), the excess of the fair market value of the Common
Stock on the Exercise Date over the exercise price of the Common Stock under the
Stock Purchase Plan will be taxable as ordinary income (even if there is no gain
realized at the time of the disposition) and, for purposes of computing gain or
loss on the disposition, the participant's cost basis will be increased by the
amount of the ordinary income recognized. Any additional gain or loss to be
recognized upon disposition will be a capital gain or loss.
If a participant's account is applied to purchase Common Stock while the
participant is an employee and the employee disposes of Common Stock purchased
under the Stock Purchase Plan two years or more after the Grant Date and one
year or more after the Exercise Date (a "qualifying disposition"), the tax
treatment will be different. The participant must recognize as ordinary income
the lesser of (a) any excess of the fair market value of the Common Stock on the
Grant Date over the exercise price on the Grant Date; and (b) any excess of the
fair market value of the Common Stock on the date the stock is disposed of over
the amount paid for the stock. The participant's basis in the Common Stock is
increased by the amount of ordinary income recognized. The difference between
the fair market value on the date of disposition and the adjusted basis (i.e.,
basis increased by ordinary income recognized) will be taxable as a capital
gain. If the Common Stock is sold at a price below the exercise price, the loss
will be treated as a capital loss.
The Company will not be entitled to a deduction for any difference between
the fair market value of the Common Stock and the purchase price for the Common
Stock under the Stock Purchase Plan, except to the extent it is taxed to the
participant as ordinary income upon a disqualifying disposition and the Company
makes any necessary and appropriate tax withholding arrangements. Different
dates for recognizing gain may apply to participants who are subject to Section
16(b) of the Securities and Exchange Act.
15
<PAGE> 19
STOCK PURCHASE PLAN BENEFITS
It is not possible to determine the number of shares of Common Stock that
will in the future be purchased under the Stock Purchase Plan by any particular
individual.
PROPOSAL FOR RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of KPMG LLP to
serve as independent public accountants of the Company for the fiscal year
ending December 31, 1999. 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 Meeting.
KPMG LLP has served as independent public accountants of the Company with
respect to the Company's financial statements for fiscal years 1996, 1997 and
1998, 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 LLP, the
Board of Directors may reconsider the appointment. During fiscal 1998, KPMG LLP
provided the Company with audit and tax services totaling approximately $76,600.
A representative of KPMG 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. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF APPOINTMENT OF KPMG LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
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 (the "SEC") 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. 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 all of these filing
requirements were satisfied by its directors and officers and ten percent
holders during 1998. 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
Pursuant to the proxy solicitation regulations of the SEC, any shareholder
proposal intended to be presented at the 2000 Annual Meeting of Shareholders
(the "2000 Meeting") must be received at the Company's executive offices, 2701
North Kildare Avenue, Chicago, Illinois 60639, by no later than November 12,
1999, in order to be considered for inclusion in the Company's proxy statement
materials relating to such meeting. Nothing in this paragraph shall be deemed to
16
<PAGE> 20
require the Company to include in its proxy statement and form of proxy any
shareholder proposal which does not meet the requirements of the SEC in effect
at that time. The Company form of proxy for the 2000 Meeting will confer
discretionary authority upon the persons named as proxies to vote on any
untimely stockholder proposals.
NOTICE OF BUSINESS TO BE CONDUCTED AT
A SPECIAL OR ANNUAL MEETING
The bylaws of the Company set forth the procedures by which a shareholder
may properly bring business before a meeting of shareholders. The bylaws of the
Company provide an advance notice procedure for a shareholder to properly bring
notice to the Secretary of the Corporation not less than twenty (20) days prior
to such meeting. The advance notice by shareholders must include (i) a brief
description of the business to be brought before the meeting, (ii) the name,
age, business and residence address of the shareholder submitting the proposal,
(iii) the principal occupation or employment of such shareholder, (iv) the
number of shares of the Company which are beneficially owned by such
shareholder, and (v) any material interest of the shareholder in such business.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement or proxy relating to any annual meeting any shareholder
proposal which does not meet all of the requirements for inclusion established
by the SEC in effect at that time such proposal is received.
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. The enclosed proxy
does, however, confer discretionary authority upon the persons named therein, or
their substitutes, to take action with respect to any other matter that may
properly be brought before the Meeting. 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 19, 1999
17
<PAGE> 21
[PROXY CARD]
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 12, 1999, at the annual meeting of shareholders to be held on April 27,
1999, 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
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(except as marked to the contrary below)
</TABLE>
Anthony Spier, John R. Blouin, Marshall L. Burman, Jerry Kalov, 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 1999 STOCK PURCHASE PLAN. To consider and vote
upon a proposal to adopt the Company's 1999 Stock Purchase Plan.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To consider
and vote upon a proposal to ratify the appointment of KPMG LLP, as independent
public accountants of the Company for the current fiscal year.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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 PROPOSALS 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 , 1999
-------------------------
- ------------------------------------
Signature
- ------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
