SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
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 Section 240.14a-11(c) or
Section 240.14a-12
<PAGE>
WPI Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box)
/x/ No Fee Required
/ / Fee computed on table below per Exchange Act Rules 14a-
6(i) (1) and 0-11
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transaction
applies:
(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>
WPI Group, Inc.
Annual Meeting of Shareholders to be held February 9, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF
DIRECTORS
The undersigned hereby appoints Michael Foster and Dennis Deegan,
and each of them, with power of substitution, as proxies, to vote
the Common Stock of the undersigned at the Annual Meeting of
Shareholders of the Company to be held on February 9, 1999, and
at any adjournment thereof. The matters listed on the back of
this card are described in the proxy statement.
The proxies will vote: (1) as you specify on the reverse side,
(2) as the Board of Directors recommends if you do not specify a
choice on the matters listed on the reverse side, and (3)
according to their best judgment upon any other business which
may properly come before the meeting or any adjournment thereof.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE
Please sign this proxy exactly as your name appears on the books
of the Company. Joint owners should sign personally. Trustee
and
other fiduciaries should indicate the capacity in which they
sign, and where more than one name appears, a majority must sign.
If a
corporation, this signature should be that of an authorized
officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- - ----------------------------- ---------------------------
- - ----------------------------- ---------------------------
- - ----------------------------- ---------------------------
<PAGE>
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
With - For All
WPI GROUP, INC. For hold Except
1. Election of Directors. [ ] [ ] [ ]
Michael Foster, Dennis Deegan,
John Allard, Stephen Carlotti,
Paul Giovacchini, Irving Gutin,
Steven Shulman and Bernard
Tenenbaum.
If you do not wish your shares
voted "For" a particular nominee, mark the
"For All Except" box and strike a
line through that nominees name.
Your shares will be voted for the
remaining nominee(s).
For Against Abstain
2. The approval of adoption of an [ ] [ ] [ ]
an amendment to the Company's
Bylaws, increasing the maximum
number of directors that may
serve on the Company's board.
For Against Abstain
3. In their discretion, the [ ] [ ] [ ]
proxies are authorized to vote
upon any other business which
may properly come before the meeting.
Please be sure to sign and date this Proxy. Date
Mark box at right if
comments address change
Shareholder sign here Co-owner sign here have been noted on the
reverse side of this
card.
DETACH CARD
WPI GROUP, INC.
Dear Shareholder:
Please take note of the important information enclosed with this
Proxy Ballot. There are a number of issued related to the
management and operation of your Company that require your
immediate attention and approval. These are discussed in detail
in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise
your right to vote your stock.
Please mark the boxes on the proxy card to indicate how your
stock shall be voted. Then sign the card, detach it and return
your proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of
Shareholders, February 9, 1999.
Thank you in advance for your prompt consideration of these
matters.
Sincerely,
WPI Group, Inc.
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held February 9, 1999
TO THE SHAREHOLDERS:
The annual meeting of shareholders of WPI Group, Inc. will be
held at the Company's corporate headquarters at 1155 Elm Street,
Manchester, New Hampshire, on Tuesday, February 9, 1999 at 10:00
a.m., local time, for the following purposes:
1. To elect eight directors to the Board of
Directors.
2. To approve an amendment to the Company's Bylaws,
increasing the maximum number of directors that
may serve on the Company's board.
3. To transact such other business as may properly
come before the Annual Meeting and adjournment
thereof.
The Board of Directors has fixed December 7, 1998 as the record
date for determining the holders of Common Stock entitled to
notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Michael Tule, Vice President,
General Counsel and Secretary
January 15, 1999
YOUR VOTE IS IMPORTANT
On behalf of the Board of Directors we urge you to promptly mark,
sign, date and return the accompanying proxy in the enclosed
envelope even if you plan to attend the Meeting. This will not
prevent you from voting in person, but will assure that your vote
is counted if you are unable to attend the Meeting.
<PAGE>
WPI GROUP, INC.
PROXY STATEMENT
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors of
WPI Group, Inc., 1155 Elm Street, Manchester, New Hampshire 03101
(the "Company"). Copies of this Proxy Statement and the
accompanying proxy are being mailed on or about January 15, 1999
to the holders of record of the Common Stock on December 7, 1998
(the "Record Date"). The proxy may be revoked by a shareholder
at any time prior to its use by giving notice of such revocation
to the Secretary of the Company, by appearing at the meeting and
voting in person or by returning a later dated proxy. The expense
of this solicitation shall be paid by the Company. Some of the
officers and regular employees of the Company may solicit proxies
personally and by telephone.
Proxies will be voted in accordance with stockholders'
directions. If no directions are given, proxies will be voted in
favor of the eight persons named as nominees under the caption
"Election of Directors". There is no reason to believe that any
nominee for director will not be a candidate or unwilling to
serve, but if either event occurs it is intended that the shares
represented by the proxies will be voted for any substitute
nominee designated by the Board of Directors.
The Company will treat abstentions and broker non-votes as present
at the Annual Meeting solely for the purpose of determining whether
or not a quorum exists. Abstentions and broker non-votes will have
no effect on the outcome of the election of directors or to the proposal
to amend the Company's bylaws.
The affirmative vote of a majority of the votes cast at the Annual
Meeting is required for the election of directors and for the
approval of the proposed amendment to the Company's bylaws.
At the meeting, each stockholder will be entitled to one vote for
each share of stock standing in his or her name on the books of
the Company at the close of business on the Record Date.
The Company had 6,031,404 shares of Common Stock outstanding on
the Record Date. The presence at the meeting in person or by
proxy of the holders of a majority of the shares of Common Stock
outstanding on the Record Date will constitute a quorum.
BOARD OF DIRECTORS
The Board of Directors held seven meetings during the last fiscal
year. Each of the directors attended 75% or more of the
aggregate total number of Board meetings and total number of
meetings of Committees on which the director served. There are
two committees of the Board, the Audit Committee and the Stock
Option/Compensation Committee. The Audit Committee, consisting
of Paul Giovacchini, Peter Danforth and Stephen Carlotti held
four meeting during the last fiscal year. The Audit Committee
reviews the scope of and the results of the audit by the
independent public accountants, makes recommendations to the
Board as to the selection of independent public accountants for
each fiscal year, and reviews the adequacy of the Company's
internal accounting and financial controls. The Stock
Option/Compensation Committee, consisting of Irving Gutin, Steven
Shulman and Bernard Tenenbaum held one meeting during the last
fiscal year. The Stock Option/Compensation Committee is
responsible for reviewing and making recommendations to the Board
on matters concerning the administration of the employee
incentive plans and the compensation of executive officers of the
Company. The Company does not have a nominating committee.
Directors serve for one year and thereafter until their
successors are duly elected and qualified. Directors who are not
employees of the Company receive an annual fee of $14,000 and
$250 for each committee meeting attended; committee chairmen
receive an additional $500 annual fee for each committee they
chair. Directors may elect to take all or a portion of their
annual retainer in shares of Company common stock. Officers serve
at the discretion of the Board of Directors. Mr. Foster, Mr.
Deegan and Mr. Allard do not receive any directors' fees.
- 2 -
<PAGE>
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding
beneficial ownership of the Common Stock as of December 7, 1998
by (i) each person who is known by the Company to beneficially
own more than 5% of the outstanding shares of Common Stock; (ii)
each of the Company's directors; and (iii) all directors and
officers of the Company as a group:
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percentage Beneficially Owned
- - ---------------- ------------------ ------------------------------
<S> <C> <C>
Michael Foster (1) 707,937 11.7%
1155 Elm Street
Manchester, NH 03101
Dennis Deegan (2) 113,666 1.9%
1155 Elm Street
Manchester, NH 03101
John Allard 40,400 *
1155 Elm Street
Manchester, NH 03101
Stephen Carlotti (3) 3,334 *
1500 Fleet Center
Providence, RI 02903
Peter Danforth (4) 16,667 *
21 Old Coach Road
New London, NH 03257
Paul Giovacchini (5) 6,667 *
55 Ferncroft Road
Danvers, MA 01923
Irving Gutin (6) 17,037 *
One Tyco Park
Exeter, NH 03833-1108
Steven Shulman (7) 19,834 *
Liberty Lane
Hampton, NH 03842
Bernard Tenenbaum (8) 9,762 *
767 5th Avenue
48th Floor
New York, NY 10053
Pilgrim Baxter and 384,200 6.37%
Associates (9)
1255 Drummers Lane,
Suite 300
Wayne, PA 19067
Hathaway & 352,100 5.83%
Associates, Ltd. (10)
119 Rowayton Avenue
Rowayton, CT 06853
All executive 984,969 16.3%
officers and
directors
as a group (11)
(14 persons)
</TABLE>
- 3 -
<PAGE>
* Less than one percent
(1) Includes 99,280 shares of the Company's common stock which Mr.
Foster has the right to acquire within 60 days of the date
hereof pursuant to the exercise of stock options.
(2) Includes 94,666 shares of the Company's common stock which Mr.
Deegan has the right to acquire within 60 days of the date
hereof pursuant to the exercise of stock options.
(3) Includes 3,334 shares of the Company's common stock which Mr. Carlotti
has the right to acquire pursuant to exercise of stock options.
(4) Includes 6,667 shares of the Company's common stock which Mr.
Danforth has the right to acquire pursuant to exercise of stock
options.
(5) Includes 6,667 shares of the Company's common stock which Mr.
Giovacchini has the right to acquire pursuant to the exercise of
stock options.
(6) Includes 6,667 shares of the Company's common stock which Mr.
Gutin has the right to acquire pursuant to the exercise of stock
options.
(7) Includes 3,334 shares of the Company's common stock which Mr.
Shulman has the right to acquire pursuant to the exercise of stock
options.
(8) Includes 6,667 shares of the Company's common stock which Mr.
Tenenbaum has the right to acquire pursuant to the exercise of
stock options.
(9) According to a Schedule 13G filed with the Securities and
Exchange Commission (the "Commission") on February 17, 1998,
Pilgrim Baxter & Associates, a Commission-registered investment
adviser with its principal place of business at 1255
Drummers Lane, Suite 300, Wayne, Pennsylvania 19067, has shared
voting power with Harold Baxter and Gary Pilgrim but sole
dispositive power with respect to the 384,200 shares of Common Stock.
(10) According to a Schedule 13G filed with the Commission for the
period ending September 30, 1998, Hathaway & Associates, Ltd., a
Commission-registered investment adviser located at 119 Rowayton
Avenue, Rowayton, Connecticut 06853, has sole voting and
dispositive power with respect to the 352,100 shares of Common
Stock.
(11) Includes 275,782 shares of the Company's Common Stock which
certain officers and directors have a right to acquire within 60
days of the date hereof pursuant to the exercise of stock
options which are deemed to be outstanding for the purpose
of computing the percentage ownership of officers and directors
as a group.
ELECTION OF DIRECTORS
(Item 1 on Proxy)
Eight directors are to be elected at the Meeting to serve one-year
terms until the 2000 annual meeting of shareholders and until
their respective successors are elected and shall qualify. The
persons named in the accompanying proxy intend to vote for the
election of Michael Foster, Dennis Deegan, John Allard, Stephen
Carlotti, Paul Giovacchini, Irving Gutin, Steven Shulman and
Bernard Tenenbaum, unless authority to vote for one or more of
such nominees is specifically withheld in the proxy. The Board
of Directors is informed that all nominees are willing to serve as
directors, but if any of them should decline to serve or become
unavailable for election as a director at the meeting, the persons
named in the proxy will vote for such nominee or nominees as may
be designated by the Board of Directors, unless the Board of
Directors reduces the number of directors accordingly.
- 4 -
<PAGE>
<TABLE>
The following table sets forth, as of December 7, 1998,
information as to the nominees, including their recent
employment, positions with the Company, other directorships and
age.
<CAPTION>
Officer or
Name Age Director Since Position with the Company
<S> <C> <C> <S>
Michael Foster 63 1988 Chairman of the Board
of Directors and Chief
Executive Officer
Dennis Deegan 54 1988 Director, President and
Chief Operating Officer
John Allard 33 1998 Director, Senior Vice
President, Business
Development
Stephen Carlotti 56 1997 Director
Paul Giovacchini 41 1990 Director
Irving Gutin 66 1994 Director
Steven Shulman 57 1997 Director
Bernard Tenenbaum 43 1994 Director
</TABLE>
Michael Foster, Chairman of the Board of Directors and Chief
Executive Officer of the Company since 1988, led the management
buy-out of the Company from Walker Magnetics Group, Inc. in
October 1988. Since 1997, he has been a director of Foilmark,
Inc., a Massachusetts-based manufacturer of metallic foils and
foil stamping machinery.
Dennis Deegan has been a Director of the Company, and has been
President and Chief Operating Officer since June 1996. Mr.
Deegan served as Executive Vice President, Treasurer and Chief
Financial Officer of the Company from 1988 to June 1996.
John Allard has been a Director of the Company and Senior Vice
President, Business Development since August, 1998. From December
1992 to August 1998, Mr. Allard served as President, Chief
Executive Officer and Director of Allard Nazarian Group, Inc.
which included Jewell Electrical Instruments, a
manufacturer of avionics components, subsystems, and panel
meters, and Granite State Manufacturing, a contract
manufacturing service. From December 1992 to December 1996,
Mr. Allard also served as a Director of The Aerospace Displays
Systems Group located in Hatfield, Pennsylvania.
Stephen Carlotti has been a director of WPI since September 1997.
He has been a partner of the law firm of Hinckley, Allen & Snyder
since 1992. From February 1996 to November 1996, he served as a
Vice Chairman of AMTROL, Inc. He has been a director of Fleet
National Bank since 1986.
Paul Giovacchini has been a Director of the Company since
September 1990. Mr. Giovacchini has been a Senior Investment
Manager for Signal Capital Corporation, a Massachusetts-based
investment firm, since August 1990. Since 1995, Mr. Giovacchini
has also been a partner of Seacoast Capital Partners, L.P., a
federal licensee under the Small Business Investment Act of 1958.
Irving Gutin has been a Director of the Company since February
1994. Mr. Gutin has been Senior Vice President of Tyco
International (U.S.), Inc., formerly Tyco International, Ltd. a
New Hampshire-based international manufacturer of fire protection
and flow control products, electronic and electrical components
and packaging materials since 1988.
- 5 -
<PAGE>
Steven Shulman has been a Director of WPI since September 1997.
He has been Managing Director of Latona Associates, Inc. since
1995 and a principal of the Hampton Group, an investment banking
firm, since 1984. He has served as a director of Beacon
Properties Corporation since 1995, Ermanco Incorporated since
1987 and Corinthian Directories, Inc. since 1995. He has been a
director and Chairman of Terrace Holdings, Inc. since 1997. In
addition, he serves as Vice Chairman of the Board of Stevens
Institute of Technology.
Bernard Tenenbaum has been a Director of the Company since July
1994. Since April 1997, Mr. Tenenbaum has been President of the
Children's Leisure Products Group of The Jordan Company, a
leveraged buyout firm based in New York. From 1993 to 1997, Mr.
Tenenbaum was Vice President, Corporate Development, of Russ
Berrie & Company, a New Jersey-based gift company. He was also
President and CEO of R.B.T. Company, a division of Russ Berrie &
Company. From 1988 to 1992, he was a Founding Director and
Professor of Entrepreneurial Studies at the George Rothman
Institute of Entrepreneurial Studies, Fairleigh Dickinson
University.
- 6 -
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation for services in all capacities to the Company for
the fiscal years ended September 27, 1998, September 28, 1997 and
September 29, 1996 of those persons who were at September 27,
1998 (i) the Chief Executive Officer and (ii) each of the four
most highly compensated executive officers of the Company other
than the Chief Executive Officer, (with the Chief Executive
Officer, collectively, the "Named Officers").
Summary Compensation Table
<CAPTION>
<S> <C> <C> <C> <C> <S>
Annual Compensation (1)
----------------------- All Other
-------------
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($)
- - --------------------------- ---- ---------- --------- ----------------
Michael Foster 1998 400,036 - 23,855 (3)
Chairman and CEO
1997 325,000 - 25,028
1996 280,317 213,000 18,050
Dennis Deegan 1998 250,016 - 6,685 (4)
President and COO
1997 200,044 - 16,654
1996 153,257 84,000 14,230
John Allen (2) 1998 175,032 - 11,378 (5)
Vice President
Industrial Technology 1997 150,020 - 11,271
1996 123,380 20,000 10,025
Timothy Jones 1998 175,032 - 11,378 (6)
Vice President
Information Solutions 1997 150,020 - 11,616
1996 124,738 20,000 8,913
John Powers 1998 135,522 - 10,848 (7)
Vice President and CFO
1997 - - -
1996 - - -
</TABLE>
(1) Excludes perquisites and other personal benefits, the
aggregate annual amount of which was less than the
lesser of $50,000 or 10% of the total of annual salary
and bonus reported.
(2) Mr. Allen resigned his position with the Company as of
June 19, 1998.
(3) Includes $20,000 life insurance premium paid by the Company,
$3,200 contribution to the Company's 401(k) plan and $655 for
group term life coverage.
(4) Includes $2,380 life insurance premium paid by the Company, $3,200
contribution to the Company's 401(k) plan and $655 for group
term life coverage.
(5) Includes $7,800 auto allowance, $3,029 contribution to the Company's
401(k) plan and $549 group term life insurance coverage.
(6) Includes $7,800 auto allowance, $3,029 contribution to the Company's
401(k) plan and $549 group term life insurance coverage.
(7) Includes $7,800 auto allowance, $2,650 contribution to the Company's
401(k) plan and $398 group term life insurance coverage.
- 7 -
<PAGE>
Option Grants in Last Fiscal Year (Individual Grants)
<TABLE>
The following table contains information concerning the grant of
stock options under the Company's 1995 Stock Option Plan and the
1997 Equity Incentive Plan to the Named Officers during the
Company's last fiscal year.
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C><S>
Number of % of Total
Securities Options Granted
Underlying to Employees Exercise Expiration Grant Date
Name Options Granted In Fiscal 1998 Price ($) Date Present Value
---- --------------- -------------- --------- ---- -------------
Michael Foster 86,000 (1) 29.0% $8.56 02/10/08 $363,780 (3)
Chairman, CEO
Dennis Deegan 25,000 (2) 8.44% $11.125 10/31/07 $135,250 (3)
President, COO
John Allen (4) 15,000 (2) 5.06% $11.125 10/31/07 $ 81,150 (3)
Vice President
Industrial Technology
Timothy Jones 15,000 (2) 5.06% $11.125 10/31/07 $ 81,150 (3)
Vice President
Information Solutions
John Powers 5,000 (2) 1.69% $11.125 10/31/07 $ 27,050 (3)
Vice President, CFO
</TABLE>
(1) Options granted under the WPI Group, Inc. 1997 Equity
Incentive Plan at an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant.
The options vest in 1/4 increments on 2/10/99, 2/10/00, 2/10/01
and 2/10/02.
(2) Options granted under the WPI Group, Inc. 1995 Stock Option
Plan at an exercise price equal to the fair market value of
the Company's common stock on the date of grant. The
options vest in 1/3 increments on 10/1/98, 10/1/99 and
10/1/00.
(3) The weighted average fair value of options granted to Mr.
Foster was $4.23 and the weighted average fair value of the
options granted to the remaining named officers was $5.41.
The values were estimated on the date of grant using the
Black-Sholes option pricing model with the following
weighted average assumptions used: Risk free interest rates
ranging from 5.49% to 5.72%, expected dividend yield of 0%,
expected option lives of 5 years and expected volatilities
ranging from 46.94% to 48.54%.
(4) Mr. Allen resigned his position with the Company as of
June 19, 1998.
- 8 -
<PAGE>
Option Exercises And Fiscal Year End Values
<TABLE>
The following table contains information with respect to
aggregate stock options exercised by the Named Officers during
fiscal 1998 as well as unexercised options to purchase the
Company's Common Stock granted through September 27, 1998 under
the Company's 1995 Stock Option Plan or 1997 Equity Incentive
Plan to the Named Officers and held by them at that date.
Aggregated Options/SAR Exercises In Last Fiscal Year And Fiscal
- - ---------------------------------------------------------------
Year End Option Value
---------------------
<CAPTION>
<S> <S> <S> <C> <C> <C> <C> <S>
Number of Unexercised Value of Unexercised In-the-Money
Options at September 27, 1998 at September 27, 1998 ($) (1)
Shares Acquired Value Common Stock Common Stock
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- - ---- ---------------- ------------ ----------- ------------- ----------- -------------
Michael Foster - - 84,870 132,410 $ 47,044 $ 17,006
Dennis Deegan - - 75,667 46,333 239,667 5,333
John Allen - - 6,667 28,333 1,666 3,333
Timothy Jones - - 11,667 28,333 19,792 3,333
John Powers - - 2,500 7,500 - -
</TABLE>
(1) Based on the difference between the exercise price of each
grant and the closing price of the Company's Common Stock as
quoted on the NASDAQ/NMS on September 28, 1997, which was
$6.625.
The foregoing options were granted under either the 1995 Stock
Option Plan (the "1995 Plan") or the 1997 Equity Incentive Plan
(the "1997 Plan"). Both plans are administered by the Stock
Option/Compensation Committee, which consists of not less than
three outside directors. The Committee determines the key employees
to whom, and the time or times at which, options will be granted,
the number of shares subject to each option and the terms upon
which each option may be granted. An aggregate of 550,000 shares
of common stock are reserved for issuance under the 1995 Plan and
an aggregate of 750,000 shares of common stock are reserved for
issuance under the 1997 Plan. Since the adoption of the 1995
Plan on June 6, 1995, options for a total of 550,000 shares of
common stock (or all of the shares reserved for issuance) have
been granted to selected officers and key employees of the
Company. Since the adoption of the 1997 Plan on June 10, 1997,
options for a total of 222,500 shares of common stock have been
granted to selected officers and key employees of the Company.
Change In Control Plan and Severance Agreements
The Board of Directors has adopted a Change in Control Plan
covering nine officers and key employees, including the Named
Executive Officers. The provisions of the Change in Control Plan
only become effective upon the occurrence of an event
constituting a change in control of the Company. Under the
Change in Control Plan, a "Change in Control" shall be deemed to
have occurred if any of the following events occur: (i) any
"person" (as such term is defined in Section 13 and 14 under the
Exchange Act) except for Michael Foster, directly or indirectly,
is or becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 under the Exchange Act) of 25% or more of the
Company's Common Stock; (ii) any change occurs in the composition
of WPI's Board of Directors resulting in a majority of the
present directors not constituting a majority two years from such
date, provided that directors who were elected by or on the
recommendation of such present majority shall be excluded; or
(iii) any other event that would be required to be reported under
Item 1 of Form 8-K pursuant to Section 13 or Section 15(d) of the
Exchange Act. A change in control shall not be deemed to have
occurred if such change in control results from a distressed sale
of WPI due to the Company's material default with respect to any
applicable debt covenants with its lender.
The Change in Control Plan provides that if, within one (1) year
after a change of control of WPI, a Named Executive Officer is
discharged without Cause (as defined below) or has resigned for
reasons relating to a diminution of responsibilities,
compensation or benefits or relocation of place of employment,
WPI shall pay to such individual a lump sum severance benefit.
For purposes of the Change in Control Plan, "Cause" shall mean
- 9 -
<PAGE>
conviction of certain crimes, willful misconduct or conduct that
caused WPI to suffer a substantial loss or damage. Currently,
each Named Executive Officer would receive between nine and
eighteen months of base salary, plus bonus, depending upon the
Named Executive Officer's years of service and status with the
Company. At the discretion of the Board of Directors, the
vesting of options may be accelerated in the event of a Change in
Control. A Named Executive Officer may resign at any time and for
any reason within one year of a Change in Control and receive
the base salary component only of the lump sum benefit.
In addition to being covered by the Change In Control Plan, Mr.
Allard has a Severance Agreement with the Company which provides,
in relevant part, that if the Company terminates his employment
for any reason other than cause, or in connection with a change-
in-control, the Company will continue to pay him at his then
present salary rate for a period of twelve months.
Report of the Compensation Committee
During fiscal 1998, the Compensation Committee established the
compensation of the Chairman and Chief Executive Officer and the
President and Chief Operating Officer of the Company. The
criteria for bonus awards of the Chief Executive Officer and Chief
Operating Officer in respect of the 1998 fiscal year were
determined at a meeting of the Compensation Committee as
constituted on August 19, 1997. See "Board of Directors."
In determining the individual elements of compensation, the
Compensation Committee strives to enable the Company to attract
and retain key executives critical to the long-term success of the
Company, provide compensation opportunities which are comparable
to those offered by similar companies, reward long-term
strategic management and the enhancement of stockholder value and
create a performance-oriented environment.
In order to meet the foregoing objectives, the Compensation
Committee has attempted to design and choose components of
compensation. The Compensation Committee consulted with outside
compensation consultants to assist in this process and provide
competitive information, advice and recommendations relating to
compensation issues. Compensation packages consist of cash,
certain benefits and equity-based compensation. The Company's
compensation provides for competitive base salaries which
reflect individual performance and level of responsibility.
Annual bonuses, when given, are linked to the financial
performance of the Company and its subsidiaries as a whole,
job performance and the meeting of specific goals. Also
included are plans which reward the enhancement of long-term
value to the Company's stockholders.
The compensation of the above officers for fiscal 1998 was based
on the policies described above. Bonus awards are determined on the
basis of a formula in which a weighted performance factor is
applied to a target award established for each of the above
officer's respective salary levels. The weighted performance
factor is derived as a result of the achievement of certain
Company performance targets, including the achievement of a
certain level of earnings per share. No bonuses were paid to the
above officers in fiscal 1998.
Annually, the Compensation Committee reviews with the Chief Executive
Officer the individual performance of each of the other executive
officers and his recommendations with respect to the appropriate
compensation awards. The Stock Option/Compensation Committee also
reviews with the Company's Chief Executive Officer the financial and
other objectives for each of the executive officers for the following
year.
The Compensation Committee has not formally addressed the
restrictions under Section 162(m) of the Internal Revenue Code
because the Compensation Committee does not anticipate paying
compensation to its executive officers in an amount to which
Section 162(m) would apply.
Irving Gutin (Chairman)
Steven Shulman
Bernard Tenenbaum
- 10 -
<PAGE>
Performance Graph
Set forth below is a line graph comparing the yearly percentage
change in the total stockholder return on the Company's Common
Stock against the total return of the NASDAQ Market Index and a
peer group index consisting of companies which manufacture and
sell handheld computers and terminals and associated software,
electrical equipment products and instrumentation. The peer
group was selected with the assistance of the Company's
investment bankers and includes the following issuers: Aura
Systems, Inc., Applied Cellular Technology, Inc., BEI
Technologies, Inc., Fieldworks, Inc., Itron, Inc., Magnetek,
Inc., Metrologic Instruments, Inc., Miltope Group, Inc., NAI
Technologies, Inc., Percon, Inc., Symbol Technologies, Inc.,
ScanSource, Inc., Telxon Corp., Unova, Inc. and Woodhead
Industries, Inc. The current peer group has been changed from
the peer group used last year. Management believes that the
current peer group provides a broader cross section of companies
in lines of business that are more similar to the Company's line
of business.
Also set forth below is a line graph showing the above
information using last year's peer group.
Comparison of Five-Year cumulative Total Returns Performance Report
Company Index: CUSIP - 92930K10
Ticker - WPIC
SIC - 3620
Exchange - NASDAQ
Fiscal year end is 9/30/98
Market Index: NASDAQ Stock Market (US Companies)
Peer Index: Companies in self-determined group - 11
AURA AURA SYSTEMS, INC.
FWRX FIELDWORKS INCORPORATED
ITRI ITRON INC.
MAG MAGNETEK INC.
MILT MILTOPE GROUP INC.
NATL N A I TECHNOLOGIES INC.
PRCN PERCON ACQUISITION INC.
SCSC SCANSOURCE, INC.
SCSCU SCANSOURCE, INC.
SBL SYMBOL TECHNOLOGIES, INC.
TLXN TELXON CORP.
Date Company Index Market Index Peer Index
09/30/93 100.000 100.000 100.000
10/29/93 91.667 102.247 117.892
11/30/93 102.083 99.201 119.905
12/31/93 127.083 101.966 118.838
01/31/94 141.667 105.061 122.474
02/28/94 112.500 104.080 122.326
03/31/94 108.333 97.681 121.780
04/29/94 104.167 96.412 138.957
05/31/94 100.000 96.649 141.403
06/30/94 108.333 93.114 140.842
07/29/94 91.667 95.025 136.906
08/31/94 91.667 101.084 146.438
09/30/94 95.833 100.826 138.722
10/31/94 100.000 102.806 146.583
11/30/94 91.667 99.396 135.929
12/30/94 95.833 99.674 136.492
01/31/95 83.333 100.243 124.468
02/28/95 83.333 105.544 130.294
03/31/95 91.667 108.674 137.820
04/28/95 89.583 112.098 148.689
05/31/95 83.333 114.989 160.366
06/30/95 87.500 124.308 172.382
07/31/95 104.167 133.446 162.844
08/31/95 95.833 136.151 156.249
09/29/95 100.000 139.281 166.498
10/31/95 89.583 138.477 159.113
11/30/95 104.167 141.729 164.984
12/29/95 125.000 140.974 171.139
01/31/96 158.333 141.667 158.791
02/29/96 218.750 147.059 175.597
03/29/96 212.500 147.544 167.790
04/30/96 333.334 159.781 207.592
05/31/96 350.000 167.118 168.825
06/28/96 325.000 159.585 157.321
07/31/96 225.000 145.354 155.117
08/30/96 300.000 153.498 161.102
09/30/96 270.833 165.238 159.927
10/31/96 216.667 163.412 144.172
11/29/96 275.000 173.514 152.852
12/31/96 254.167 173.358 146.392
01/31/97 279.167 185.678 176.579
02/28/97 233.333 175.408 170.437
03/31/97 208.333 163.954 162.150
04/30/97 225.000 169.080 164.263
05/30/97 275.000 188.242 172.894
06/30/97 291.667 194.007 174.471
07/31/97 308.333 214.484 180.723
08/29/97 293.750 214.157 196.629
09/30/97 404.167 226.814 221.677
10/31/97 370.833 215.072 206.613
11/28/97 252.083 216.150 205.522
12/31/97 245.833 212.688 196.024
01/30/98 295.833 219.357 203.529
02/27/98 327.083 239.944 226.227
03/31/98 275.000 248.789 226.433
04/30/98 300.000 253.005 250.322
05/29/98 258.333 239.120 230.377
06/30/98 243.750 255.976 228.403
07/31/98 225.000 253.184 226.279
08/31/98 191.667 203.694 210.140
09/30/98 220.833 231.786 244.931
The index level for all series was set to 100.0 on 09/30/93
Perm# Date Range Company Name TICK CL EX F SIC
12122 09/30/93 - 09/30/98 AURA SYSTEMS INC. AURA NQ 3660
84612 03/20/97 - 09/30/98 FIELDWORKS INC FWRX NQ 3570
79839 11/05/93 - 09/30/98 ITRON INC. ITRI NQ 3570
75596 09/30/93 - 09/30/98 MAGNETEK INC. MAG NY 3612
90211 09/30/93 - 09/30/98 MILTOPE GROUP INC. MILT NQ 3573
57999 03/30/93 - 09/30/98 N A I TECHNOLOGIES NATL NQ 3570
81891 07/28/95 - 09/30/98 PERCON ACQUISITION PRCN NQ 3570
80362 03/18/94 - 09/30/98 SCANSOURCE, INC. SCSC NQ 5040
98394 03/18/94 - 09/18/95 SCANSOURCE, INC. SCSCU NQ 5040
73940 09/30/93 - 09/30/98 SYMBOL TECHNOLOGIES SBL NY 3662
75273 09/30/93 - 09/30/98 TELXON CORP. TLXN NQ 7370
Exchange labels: NY - New York, AM - American, NQ -NASDAQ
Comparison of Five-Year cumulative Total Returns Performance Report
Company Index: CUSIP - 92930K10
Ticker - WPIC
SIC - 3620
Exchange - NASDAQ
Fiscal year end is 9/30/98
Market Index: NASDAQ Stock Market (US Companies)
Peer Index: Companies in self-determined group - 11
ADLT ADVANCED LIGHTING TECHS INC.
ACTC APPLIED CELLULAR TECHNOLOGY INC.
AURA AURA SYSTEMS, INC.
BEIQ B E I TECHNOLOGIES INC.
FWRX FIELDWORKS INCORPORATED
ITRI ITRON INC.
MAG MAGNETEK INC.
MTLG METROLOGIC INSTRUMENTS INC.
MILT MILTOPE GROUP INC.
NATL N A I TECHNOLOGIES INC.
PSCX P S C INC.
PRCN PERCON ACQUISITION INC.
SCSC SCANSOURCE, INC.
SCSCU SCANSOURCE, INC.
SBL SYMBOL TECHNOLOGIES, INC.
TLXN TELXON CORP.
UNA UNOVA INC.
WDHD WOODHEAD INDUSTRIES INC.
Date Company Index Market Index Peer Index
09/30/93 100.000 100.000 100.000
10/29/93 91.667 102.247 115.362
11/30/93 102.083 99.201 116.015
12/31/93 127.083 101.966 114.256
01/31/94 141.667 105.061 119.921
02/28/94 112.500 104.080 119.424
03/31/94 108.333 97.681 119.154
04/29/94 104.167 96.412 134.908
05/31/94 100.000 96.649 136.339
06/30/94 108.333 93.114 136.098
07/29/94 91.667 95.025 132.679
08/31/94 91.667 101.084 141.150
09/30/94 95.833 100.826 134.717
10/31/94 100.000 102.806 141.369
11/30/94 91.667 99.396 133.252
12/30/94 95.833 99.674 136.344
01/31/95 83.333 100.243 128.005
02/28/95 83.333 105.544 131.847
03/31/95 91.667 108.674 138.907
04/28/95 89.583 112.098 149.996
05/31/95 83.333 114.989 157.909
06/30/95 87.500 124.308 168.054
07/31/95 104.167 133.446 159.659
08/31/95 95.833 136.151 153.989
09/29/95 100.000 139.281 162.384
10/31/95 89.583 138.477 154.836
11/30/95 104.167 141.729 160.687
12/29/95 125.000 140.974 163.860
01/31/96 158.333 141.667 153.766
02/29/96 218.750 147.059 168.411
03/29/96 212.500 147.544 163.890
04/30/96 333.334 159.781 197.821
05/31/96 350.000 167.118 168.495
06/28/96 325.000 159.585 156.965
07/31/96 225.000 145.354 151.206
08/30/96 300.000 153.498 159.363
09/30/96 270.833 165.238 160.200
10/31/96 216.667 163.412 148.446
11/29/96 275.000 173.514 156.548
12/31/96 254.167 173.358 153.662
01/31/97 279.167 185.678 178.658
02/28/97 233.333 175.408 173.090
03/31/97 208.333 163.954 165.386
04/30/97 225.000 169.080 163.266
05/30/97 275.000 188.242 178.069
06/30/97 291.667 194.007 179.632
07/31/97 308.333 214.484 183.793
08/29/97 293.750 214.157 196.470
09/30/97 404.167 226.814 222.538
10/31/97 370.833 215.072 205.421
11/28/97 252.083 216.150 201.389
12/31/97 245.833 212.688 192.045
01/30/98 295.833 219.357 199.816
02/27/98 327.083 239.944 222.494
03/31/98 275.000 248.789 225.036
04/30/98 300.000 253.005 248.435
05/29/98 258.333 239.120 229.955
06/30/98 243.750 255.976 224.486
07/31/98 225.000 253.184 218.706
08/31/98 191.667 203.694 188.964
09/30/98 220.833 231.786 205.768
The index level for all series was set to 100.0 on 09/30/93
Perm# Date Range Company Name TICK CL EX F SIC
82663 12/12/95 - 09/30/98 ADVANCED LIGHTING ADLT NQ 3640
82248 09/01/95 - 09/30/98 ADVANCED CELLULAR ACTC NQ 7370
12122 09/30/93 - 09/30/98 AURA SYSTEMS INC. AURA NQ 3660
85358 09/29/97 - 09/30/98 B E I TECHNOLOGIES BEIQ NQ 3820
84612 03/20/97 - 09/30/98 FIELDWORKS INC FWRX NQ 3570
79839 11/05/93 - 09/30/98 ITRON INC. ITRI NQ 3570
75596 09/30/93 - 09/30/98 MAGNETEK INC. MAG NY 3612
80942 09/29/94 - 09/30/98 METROLOGIC INSTRUM MTLG NQ 3570
90211 09/30/93 - 09/30/98 MILTOPE GROUP INC. MILT NQ 3573
57999 03/30/93 - 09/30/98 N A I TECHNOLOGIES NATL NQ 3570
62790 09/30/93 - 09/30/98 P S C INC. PSCX NQ 3860
81891 07/28/95 - 09/30/98 PERCON ACQUISITION PRCN NQ 3570
80362 03/18/94 - 09/30/98 SCANSOURCE, INC. SCSC NQ 5040
98394 03/18/94 - 09/18/95 SCANSOURCE, INC. SCSCU NQ 5040
73940 09/30/93 - 09/30/98 SYMBOL TECHNOLOGIES SBL NY 3662
75273 09/30/93 - 09/30/98 TELXON CORP. TLXN NQ 7370
85445 10/22/97 - 09/30/98 UNOVA INC. UNA NY 3599
83433 09/30/93 - 09/30/98 WOODHEAD INDUSTRIES WDHD NQ 3610
Exchange labels: NY - New York, AM - American, NQ -NASDAQ
Certain Relationships and Related Transactions
The Company is currently leasing and occupying a building at 850
Perimeter Road, Manchester, New Hampshire (the "Perimeter Road
Facility") from 850 Perimeter Road Associates NA, LLC, a New
Hampshire limited liability company in which Mr. Allard is a
member. The yearly base rental for the Perimeter Road facility,
which houses the operations of WPI Instruments, Inc., is
$402,408. The lease term expires on December 31, 2002, and may be
renewed by the Company for an extended term to December 31, 2007.
In management's opinion, the lease rate for this facility is not
in excess of the range of fair market rentals in the relevant
area.
Hinckley, Allen & Snyder, a law firm of which Stephen Carlotti, a
director, is a member, provided legal services to the Company
during its 1998 fiscal year.
- 11 -
<PAGE>
APPROVAL OF AMENDMENT TO BYLAWS
(Item 2 on Proxy)
The Board of Directors believes it is in the best interests of
the Company and the shareholders to adopt an amendment to the
bylaws of the Company to increase the range of the number of
directors that may serve on the Company's board. Currently, the
Company's bylaws provide that the board shall consist of not less
than three and not more than nine directors. The Board of
Directors believes it is advisable to increase the maximum to
fifteen directors in order to give the Company the flexibility in
the future to add directors with experience that may be critical
to the Company's ability to achieve its long-term strategic
goals. Accordingly, the Board of Directors has approved an
amendment to the bylaws, subject to approval by shareholders of
common stock of the Company that the Board of Directors will
consist of not less than three nor more than fifteen directors.
The proposed text of the amendment to the bylaws is set forth
below:
Section 3.2. Number, Tenure and Qualifications. The
number of directors of the corporation shall be not
fewer than three (3) and not more than fifteen (15), as
the board of directors shall determine. Each director
shall hold office until the next annual meeting of
shareholders and until his successors shall have been
elected and qualified. Directors need not be residents
of the State of New Hampshire or shareholders of the
corporation.
The Directors recommend a vote FOR the approval of the adoption
to an amendment to the Bylaws of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
that each director and certain officers of the Company file
reports of initial beneficial ownership and changes in beneficial
ownership of the Company's Common Stock with the Securities and
Exchange Commission. To the Company's knowledge, during 1998 all
directors and officers filed such required notices.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit
Committee, has selected the firm of Arthur Andersen LLP,
independent public accountants, to audit the financial statements
of the Company for the fiscal year ending September 26, 1999.
Arthur Andersen LLP acted as the Company's independent public
accountants for the fiscal year ended September 27, 1998.
Representatives of Arthur Andersen LLP will attend the Annual
Meeting, will have an opportunity to make a statement if desiring
to do so and will be available to answer any pertinent questions.
DEADLINE FOR SHAREHOLDERS' PROPOSALS
Stockholders may submit proposals to be considered for stockholder
action at the 2000 Annual Meeting if they do so in accordance with
appropriate regulations of the Securities and Exchange Commission.
The deadline for submitting a stockholder proposal for inclusion in
the Company's proxy materials for the 2000 Annual Meeting is September
13, 1999. With respect to any stockholder proposal that a stockholder
does not seek to have included in the Company's proxy materials, the
proxyholders named in management's proxy for that annual meeting will
be entitled to exercise their discretionary authority on that proposal
if the Company does not receive proper notice of the matter proposed
before November 29, 1999. If proper notice is timely received, the
proxyholders named in management's proxy may nevertheless exercise
discretionary authority to the extent permitted by appropriate
regulations of the Securities and Exchange Commission. In any event,
the Company may have no obligation to include such proposals submitted
after September 13, 1999 on the agenda of the 2000 Annual Meeting.
- 12 -
<PAGE>
OTHER MATTERS
Management knows of no matters to be presented at the meeting
other than those set forth in the accompanying proxy. However,
if other matters are properly presented for action, it is the
intention of the persons named in the proxy to vote upon such
matters in accordance with their best judgment.
AVAILABILITY OF FORM 10-K
A copy of the Company's Annual Report for the last fiscal year
filed on Form 10-K with the Securities and Exchange Commission
will be furnished to stockholders without charge upon written
request to Michele M. Normandin, Investor Relations, WPI Group,
Inc., 1155 Elm Street, Manchester, New Hampshire 03101.
BY ORDER OF THE BOARD OF
DIRECTORS
Michael Tule, Vice President,
General Counsel and Secretary
- 13 -
<PAGE>
