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 ss.240.14a-11(c) or ss.240.14a-12
WADE COOK FINANCIAL CORPORATION
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<PAGE>
WADE COOK FINANCIAL CORPORATION
Seattle, Washington
May 12, 2000
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Wade Cook Financial Corporation to be held on June 8, 2000 at 7:00 p.m. at
the Double Tree Hotel, 18740 Pacific Highway South, Seattle/Tacoma, Washington,
98188.
In addition to the items set forth in the accompanying Notice of Annual
Meeting of the Stockholders and Proxy Statement, we will report on current
activities of the Company and will provide an opportunity to discuss matters of
interest to you as a stockholder.
We sincerely hope you will be able to attend our Annual Meeting. However,
whether you plan to attend, please sign, date and promptly return the enclosed
proxy to ensure that your shares are represented.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of Wade Cook Financial
Corporation.
Very truly yours,
Wade B. Cook
President and Chief Executive Officer
<PAGE>
WADE COOK FINANCIAL CORPORATION
--------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 12, 2000
--------------------------------------------
To the Stockholders:
The Annual Meeting of Stockholders of Wade Cook Financial Corporation will
be held on Tuesday, June 8, 2000 at 7:00 p.m. at the Double Tree Hotel, 18740
Pacific Highway South, Seattle/Tacoma, Washington, 98188 for the following
purposes:
1. To elect four Class 3 directors, each to a three year term.
2. To ratify the appointment of Gene Stevens as a Class 2 director, with
a term set to expire in 2002 at the Annual Meeting of the
Stockholders.
3. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 10, 2000 are
entitled to notice of, and to vote at, the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Laura M. Cook
Corporate Secretary
May 12, 2000
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IMPORTANT
Whether you plan to attend the meeting, please sign, date and return promptly
the enclosed proxy in the enclosed envelope, which requires no postage if mailed
within the United States. Promptly signing, dating, and returning the proxy will
save the Company the additional expense of further solicitation.
- --------------------------------------------------------------------------------
<PAGE>
WADE COOK FINANCIAL CORPORATION
14675 Interurban Avenue South
Seattle, Washington 98168-4664
--------------------------------------------
PROXY STATEMENT
--------------------------------------------
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Wade Cook Financial Corporation ("WCFC" or the
"Company") to be voted at the 2000 Annual Meeting of the Stockholders of the
Company to be held on Tuesday, June 8, 2000 at the Double Tree Hotel, 18740
Pacific Highway South, Seattle/Tacoma, Washington. Stockholders who execute
proxies may revoke them at any time prior to their exercise, by delivering a
written revocation to the Secretary of the Company, by submission of a proxy
with a later date or by voting in person at the meeting. These proxy materials,
together with the Company's annual report to stockholders, are being mailed to
stockholders on or about May 12, 2000.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors consists of eleven positions and is divided into
three classes. Directors in each class are elected for a three year term. This
year Robin Anderson, Joel Black, Robert Hondel, and Dan Wagner have been
nominated for election as the Company's Class 3 directors with terms expiring at
the Annual Meeting of the Stockholders in 2003. Unless the stockholder indicates
otherwise, each signed proxy will be voted for the election of these nominees.
Management expects that each of the nominees will be available for
election, but if any of them is not a candidate at the time the election occurs,
it is intended that the proxies will be voted for the election of another
nominee to be designated to fill any such vacancy by the Board of Directors.
The Candidates elected are those receiving the largest number of votes cast
by the shares entitled to vote in the election, up to the number of directors to
be elected. Shares held by persons who abstain from voting on the election and
broker "non-votes" will not be counted in the election.
Nominees for election (Class 3 directorships)
Robin Anderson, 36, has been a Director since 1997 and is currently an Assistant
to the President Over Sales, and assists the other Executive Officers with
marketing efforts. Ms. Anderson serves at the pleasure of the Board of Directors
in her capacity as an executive officer. Ms. Anderson's term as a director
expires in 2000 at the Annual Meeting of the Stockholders. Ms. Anderson has been
with the Company since 1993 and is the niece of Robert Hondel. Prior to becoming
Assistant to the President, Ms. Anderson occupied many other positions with the
Company including the Director of SMIL's Sales Department. In December of 1997,
the Bankruptcy court dismissed an action filed by Ms. Anderson under Chapter 13
of the United States Bankruptcy Code with all outstanding claims satisfied in
full.
Joel Black, 45, accepted appointment to the Company's Board of Directors in
March 1999. Mr. Black's term as a director expires in 2000 at the Annual Meeting
of the Stockholders. From 1995 to the present, Mr. Black has served as the Chief
Executive Officer for Education Leadership Dynamics, Inc., a privately held
corporation that provides speaker and consulting services, operates a wilderness
exploration program, and runs a private high school. Since 1986, Mr. Black has
also been employed as a teacher in the Enumclaw, Washington School District, and
provided his services as an educational consultant nationwide. Mr. Black
received dual bachelor degrees from Brigham Young University in 1979 and 1980, a
Masters of Outdoor Management and Recreation from Brigham Young in 1981 and a
Doctorate in Educational Engineering from Pacific Western University in 1999.
Robert T. Hondel, 57, has been a director of the Company since 1997, and is
currently the Director of the Sales Department at SMIL. Mr. Hondel also served
as President of both Quantum Marketing, Inc. and Wade Cook Financial Education
Centers, Inc., wholly-owned subsidiaries of the Company until the first quarter
of 1999. Mr.
<PAGE>
Hondel's term as a director expires in 2000 at the Annual Meeting of the
Stockholders. Prior to working for the Company, Mr. Hondel spent 18 years as the
Director and President of the Knapp College of Business in Tacoma, Washington.
Mr. Hondel is the uncle of Robin Anderson.
Daniel Wagner, 39, was appointed to the Company's Board of Directors in April
1999. Mr. Wagner's term as a director expires in 2000 at the Annual Meeting of
the Stockholders. From 1995 through 1998, Mr. Wagner served as a seminar speaker
for T.P. Management, Inc, a private corporation which provides speaking services
for the Company. During July of 1999, the Company hired Mr. Wagner as an
independent consultant to coordinate activities between the Company and its
various speaker corporations. Additionally, the Company has hired Mr. Wagner to
provide independent consulting services with respect to Wade Cook Financial
Education Centers, Inc. ("WCFEC"), a wholly owned subsidiary of the Company.
The Board of Directors recommends a vote FOR each of the nominees as a director.
PROPOSAL 2: RATIFICATION OF GENE STEVENS
The Board of Directors consists of eleven positions and is divided into
three classes. Directors in each class are elected for a three year term. During
the fourth quarter of 1999, two vacancies opened up among the Company's Class 2
directors. The Board appointed Gene Stevens to fill one of these vacancies
during the first quarter of 2000. This year Gene Steven's appointment comes
before the Company's stockholders for ratification. If ratified, Mr. Stevens
will continue to serve as a Director for the Company until the Annual Meeting of
the Stockholders in 2002. Unless the stockholder indicates otherwise, each
signed proxy will be voted for the election of this nominee.
Currently, one Class 2 directorship remains vacant awaiting the appointment
of a nominee by the Board of Directors. Because the Board of Directors has been
unable to locate a suitable candidate for appointment to the Class 2
directorship, there will fewer nominees named than there are Class 2
directorships fixed in the Company's governing instruments. Regardless of the
remaining vacancy in the Class 2 directorship, your proxy(s) may only be voted
for the number nominees named herein.
Management expects that the appointee will be available for election, but
if he is not available at the time the election occurs, it is intended that the
proxies will be voted for the election of another nominee to be designated to
fill any such vacancy by the Board of Directors.
The Candidates elected are those receiving the largest number of votes cast
by the shares entitled to vote in the election, up to the number of directors to
be elected. Shares held by persons who abstain from voting on the election and
broker "non-votes" will not be counted in the election.
Nominee for Ratification (Class 2 directorship)
Gene Stevens, 56, accepted appointment to the Board of Directors on March 16,
2000. Mr. Stevens fills a vacancy in the Board of Directors left by the
resignation of Greg Maxwell (Mr. Maxwell's term was set to expire in 2002). Mr.
Stevens has been the proprietor of the Stevens Family Market since 1972. Prior
to operating the Stevens Family Market, Mr. Stevens was an active member of the
Washington State Air National Guard (from 1964-1970). Mr. Stevens graduated from
Central Washington University in 1970 with a Bachelor of Arts in Business
Administration.
The Board of Directors recommends a vote FOR the ratification of the
appointee as a director.
Continuing Directors - Class 1 (Term Expires 2001)
Laura M. Cook, 47, is the Corporate Secretary of the Company, a consultant to
executive management, and has been a member of the Board of Directors of the
Company since 1995. Mrs. Cook serves as an officer of the Company at the
pleasure of the Board of Directors, and her term as a director expires in 2001
at the Annual Meeting of the Stockholders. Additionally, Mrs. Cook serves as the
Corporate Secretary for the majority of the Company's wholly-owned subsidiaries
and is the operational manager for various affiliates of the Company. Mrs. Cook
is the
<PAGE>
spouse of Wade B. Cook, the Company's CEO, President, and Chairman of the
Company's Board of Directors. Mrs. Cook's expertise over the past 15 years has
been concentrated in managing accounting systems.
Wade B. Cook, 50, is the Chairman of the Board, CEO, and President of the
Company and has occupied at least one of those positions since June 1995. Mr.
Cook serves as an officer of the Company at the pleasure of the Board of
Directors, and his term as a director expires in 2001 at the Annual Meeting of
the Stockholders. Since 1989, Mr. Cook also has served as Treasurer and
President of the Stock Market Institute of Learning, Inc., a wholly-owned
subsidiary of the Company. Since the end of 1998, Mr. Cook has also served as
the President and Treasurer of the majority of the Company's wholly-owned
subsidiaries. Mr. Cook has authored numerous books, tapes, and videos relating
to finance, real estate, the stock market and asset protection. Furthermore, Mr.
Cook actively participates in the activities of the Company, often providing his
services as a speaker or trainer, or guiding the development of educational
products on investing and personal wealth management. Mr. Cook is the spouse of
Laura M. Cook, the Corporate Secretary and a Director of the Company.
Janice Leysath, 44, accepted appointment to the Company's Board of Directors in
March 1999. Mrs. Leysath's term as a director expires in 2001 at the Annual
Meeting of the Stockholders. Mrs. Leysath has previously served on numerous
civic and charitable boards and committees in Las Vegas, Nevada, including the
American Heart Association Board, the Elementary Education Committee and the
Heritage Museum Committee. From 1993 to 1995, Mrs. Leysath served as the Public
Relations/Marketing Director for the Heart Institute of Nevada and as the
Business Manager for Desert Cardiology. Currently, Mrs. Leysath is an active
home trader in the securities market.
Continuing Directors - Class 2 (Term Expires 2002)
Nick Dettman, 56, has been a director of the Company since 1997. Mr. Dettman's
term as a director will expire at the Company's 2002 Annual Meeting of
Stockholders. He has been a pilot for Delta Airlines over 33 years and is also
the owner and operator of Kalawai Plantation, a tropical flower farm in Hawaii.
Angela Pirtle, 38, was elected to the Company's Board of Directors in June of
1999. Ms. Pirtle's term will expire in the year 2002 at the Annual Meeting of
the Stockholders. Since 1985, Ms. Pirtle has worked as a licensed real estate
broker in San Diego, California. In addition, Ms. Pirtle volunteers substantial
time to her community, including acting as a youth ministry teacher, Girl Scout
leader, and Chairperson for several theatrical groups. Ms. Pirtle also has
worked for American Airlines since 1992.
Board Meetings and Committees
Board Meetings
During 1999, the Board of Directors held 9 meetings.
Committees
The Executive Committee was established with the authority to approve
acquisitions, financing, and disposition of investments for the Company and
execute certain contracts and agreements, including those related to borrowing
money by the Company. Laura Cook (Chair), Wade Cook, Angela Pirtle, Robert
Hondel, and Robin Anderson (Vice-Chair, and Secretary) served on the Executive
Committee during 1999. The Executive Committee did not meet in 1999.
The Audit Committee consisted of directors who were not employees of the Company
and other persons selected by the Board who were, in the opinion of the Board of
Directors, free from any relationship that would interfere with their exercise
of independent judgment as Audit Committee members. The Audit Committee was
established with the authority to make recommendations concerning the engagement
of independent public accountants, review with the independent public
accountants the plans and results of audit engagements, approve professional
services provided by such accountants, review the independence of the public
accountants retained, and review the adequacy of the Company's internal
accounting controls. Nick Dettman (Chair), John Lang, Angela Pirtle, and Janice
Leysath (Vice-Chair and Secretary) served on the Audit Committee during 1999.
The Audit Committee met once in 1999.
<PAGE>
The Compensations Committee consisted of directors who were not employees of the
Company. The Compensation Committee was established to review the Company's
general compensation policy, establish the salaries of, and review the benefit
programs for, the Chairman, the President, and other Executive Officers, and for
those persons reporting directly to such persons, as well as to approve certain
other significant positions. Greg Maxwell (Chair), Janice Leysath, Joel Black
(Vice-Chair and Secretary) served on the Compensation Committee during 1999. The
Audit met once in 1999.
On November 14, 1999, the Board of Directors met and amended the Company's
Bylaws abolishing the Executive and Compensation committees as stand alone
committees. Under the amended Bylaws, the Board of Directors established one
standing committee called the Audit/Executive Committee.
The Audit/Executive Committee consists of directors who are not employees of the
Company and other persons selected by the Board who are, in the opinion of the
Board of Directors, free from any relationship that would interfere with their
exercise of independent judgment as Audit Committee Members. The Audit/Executive
Committee possesses the same authority and responsibilities as the Audit,
Executive and Compensation Committees had retained under the prior Bylaws. The
members of the Audit/Executive Committee are as follows: Janice Leysath
(Chairperson), Nick Dettman, Angela Pirtle, Gene Stevens, and Joel Black. The
Audit/Executive Committee held its first meeting on March 15, 2000.
Compensation of Directors
The members of the Board of Directors are compensated for their services as
follows:
<TABLE>
<S> <C>
Annual retainer as a director..................................................... $ 10,000
Annual retainer for membership on a standing committee............................ $ 1,000
Annual retainer as Chair of a standing committee.................................. $ 500
Reimbursement for all reasonable expenses incurred in
attending Board or committee meetings........................................... $ 100 per
diem, plus
variable
expenses.
</TABLE>
In addition, each director is eligible to participate in the Company's 1997
Incentive Stock Plan. See "--1997 Stock Incentive Plan."
Executive Officers
In addition to the directors who also serve as executive officers, the
following persons currently serve as executive officers.
Cynthia Britten, 35, the Company's Chief Financial Officer, who serves at the
pleasure of the Board, joined WCFC in July of 1997 as the Assistant Controller.
In December of 1997, Mrs. Britten was promoted to Controller of the Company's
subsidiaries, and then later in January of 1999 became the Accounting and
Finance Manager. Prior to working for WCFC, Mrs. Britten served as the on-site
Controller for Trucktown, Inc., and was a Certified Public Accountant for
Martin/Grambush P.C. In 1988, Mrs. Britten graduated from Washington State
University with a Bachelor of Arts Degree in Business Administration. Mrs.
Britten was certified as a public accountant in April of 1993.
Deborah Losse, 46, joined the Company in June of 1998 and has been an Assistant
to the President Over Seminars and Product Development since August of 1999.
Mrs. Losse also assists the other Executive Officers in the Company's marketing
efforts. Mrs. Losse serves at the pleasure of the Board of Directors. Mrs. Losse
was the Director of the Fortify Your Income seminars and the Director of
Distribution from June of 1998 to October of 1998, and then Director of Product
Development from October of 1998 to June of 1999. Additionally, from November
1997 to June of 1998, Mrs. Losse worked for a company that provided speaking
services for SMIL. Prior
<PAGE>
to working for the Company, Mrs. Losse took approximately one year off from
working, preceded by five years of employment at the Boeing Company.
Carl Sanders, 56, joined the Company in November 1997 and has been the Executive
Assistant to the President since August of 1999. Before becoming Executive
Assistant, Mr. Sanders was a Vice President of Business Development (February
1998 to August of 1999), and prior to that the Director of Corporate Security
(November 1997 to February 1998). Mr. Sanders serves in his current position at
the pleasure of the Board of Directors. For the past 26 years, Mr. Sanders has
worked in the field of personal and corporate security, most notably as the
Manager of Corporate Security at Alaska Airlines, Inc. in Seattle, Washington
and as a U.S. Secret Service Agent in Los Angeles, California. Mr. Sanders
attended California State University at Long Beach where he received a Bachelor
of Arts degree in Sociology.
Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth information, as of April 30, 2000, regarding the
beneficial ownership of the Company's common stock by any person known to the
Company to be the beneficial owner of more than five percent of the outstanding
common stock, by directors, and by all directors and executive officers of the
Company as a group.
<TABLE>
Amount and Nature of
Beneficial Ownership of Percent of
Name and Address (1) Common Stock(2) Class
- ------------------------------------------------------- ---------------------------- -------------
<S> <C> <C>
Robin Anderson (7).................................. 20,190 *
Joel Black (5)...................................... 75 *
Laura M. Cook (3)................................... 41,351,185 64.5%
Wade B. Cook (3).................................... 41,351,185 64.5%
Nick Dettman (4).................................... 180,000 *
Robert Hondel (8)................................... 201,310
Janice Leysath (9).................................. 1,000 *
Angela Pirtle (10).................................. *
Gene Stevens........................................ 5,000
Daniel Wagner (6)................................... 3,885 *
All current directors and executive officers as a 41,779,340(11) 65.2%
group (13 persons)
- -------------------------
* Represents less than 1%.
</TABLE>
(1) Unless otherwise indicated, the address for each beneficial owner is c/o
Wade Cook Financial Corporation, 14675 Interurban Avenue South, Seattle,
Washington 98168-4664.
(2) Based on an aggregate of 64,058,948 shares outstanding as of April 30,
2000.
(3) Includes (a) 8,517,745 shares of Common Stock owned of record by Mr. Cook
directly; (b) 266,100 shares of Common Stock held in the name of Mr. Cook's
individual retirement account; (c) 800,000 shares held by the Wade Cook
Family Trust; (d) 1,775,200 shares held by corporations controlled by Mr.
Cook; (e) 295,000 shares held by a trust for Wade and Laura Cook's minor
children and (f) 29,697,140 shares owned by Wade B. Cook and Laura M. Cook
Family Trust.
(4) Represents 180,000 shares held by a company controlled by Mr. Dettman.
(5) Represents 75 shares held by a company controlled by Mr. Black. Mr. Black
also has the vested but unexercised option to purchase 22,500 shares of the
Company's common stock at $0.50 per share.
(6) Represents 3,885 shares held by company controlled by Mr. Wagner. Mr.
Wagner also has the vested but unexercised option to purchase 22,500 shares
of the Company's common stock at $0.50 per share.
(7) Ms. Anderson has the vested but unexercised option to purchase 42,500
shares of the Company's common stock at $0.50 per share.
(8) Mr. Hondel has the vested but unexercised option to purchase 42,500 shares
of the Company's common stock at $0.50 per share.
(9) Ms. Leysath has the vested but unexercised option to purchase 20,000 shares
of the Company's common stock at $0.50 per share.
<PAGE>
(10) Ms. Pirtle has the vested but unexercised option to purchase 20,000 shares
of the Company's common stock at $0.50 per share.
(11) Includes 7,995 shares of the Company's common stock held by executive
officers. Additionally, the Company's executive officers collectively have
vested options to purchase 76,500 shares of the Company's common stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Not applicable.
Executive Compensation Summary of Cash and Certain Other Compensation
Summary Compensation Table
The table below shows, for the last three fiscal years, compensation paid to the
Company's Chief Executive Officer and the two most highly paid other executive
officers serving at fiscal year end whose total compensation exceeded $100,000.
We refer to all these officers as the "Named Executive Officers."
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
- ------------------- -------- ------------- ---------------- ----------- -------- ----------- ------- -----------------
Other
Annual Restr Option/ LTIP Other Annual
Name and Salary Compen- icted SARs Compensation
Principal Position Year ($) Bonus sation Stock ($)
- ------------------- -------- ------------- ---------------- ----------- -------- ----------- ------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wade B. Cook 1999 299,376 3,937,214(1) - - - -
Chairman, 1998 245,000 7,489,000(1) - - - - 75(4)
President and 1997 238,000 10,004,500(1) - - - - 75
Chief Executive 75
Officer
- ------------------- -------- ------------- ---------------- ----------- -------- ----------- ------- -----------------
Robin Anderson 1999 60,000 81,355(2) - - 42,500 -
Assistant to the 1998 59,000 81,500 - - - - 75(4)
President Over 1997 91,000 - - - - 75
Sales and 75
Marketing and
Director
- ------------------- -------- ------------- ---------------- ----------- -------- ----------- ------- -----------------
Robert Hondel 1999 99,152 10,000(3) - - 42,500 -
Director of Sales 1998 110,000 11,000 - - - - 75(4)
for the Stock 1997 112,000 81,000 - - - - 75
Market Institute 75
of Learning, Inc.
and Director
- ------------------- -------- ------------- ---------------- ----------- -------- ----------- ------- -----------------
</TABLE>
(1) Represents royalties accrued by Mr. Cook for the licensing of certain
intellectual property rights to the Company. See "Certain Relationships and
Related Transactions."
(2) Represents amounts paid to Ms. Anderson for commissions, director fees,
vacation pay, holiday pay and other employee benefits.
(3) Represents amounts paid to Robert Hondel as director fees.
(4) Represents the dollar value of annual insurance premiums paid by the
Company for term life insurance.
1997 Stock Incentive Plan
The Company's 1997 Stock Incentive Plan (the "Plan") provides for the granting
of stock bonuses, stock options, stock appreciation rights, phantom stock and
other stock-based awards. The Plan is administered by the Board of
<PAGE>
Directors which has the right to grant awards to eligible participants and to
determine the terms and conditions of such grants, including, but not limited
to, the vesting schedule and exercise price of the awards. All directors,
officers, consultants and other employees are eligible to receive awards under
the Plan. The Company filed the Plan on the Form S-8 to register the shares with
the Securities and Exchange Commission in August of 1999.
Option Grants In the Last Fiscal Year
The succeeding table lists options granted the Executive Officers and Directors
as a incentive bonus. The grants were issued under the Company's 1997 Stock
Incentive Plan filed with the Securities and Exchange Commission on the Form S-8
and are as follows:
<TABLE>
Number of Percent of
Securities Total Options Alternative to
Name Underlying Granted to Exercise of Expiration (f) and (g)
Option Granted Employees and Base Price Grant date
(#) Independent value ($)(13)
Contractors in
Fiscal Year(12)
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Robin Anderson 2,5001 0.3% $0.50 December 15, 187
2001
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Robin Anderson 40,0002 5% $0.50 December 15, 4,128
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Joel Black 2,5003 0.3% $0.50 December 15, 187
2001
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Joel Black 20,0004 2.5% $0.50 December 15, 2,064
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Cynthia Britten 2,5001 0.3% $0.50 December 15, 187
2001
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Cynthia Britten 40,0005 5% $0.50 December 15, 4,128
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Robert Hondel 2,5001 0.3% $0.50 December 15, 187
2001
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Robert Hondel 40,0006 5% $0.50 December 15, 4,128
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Janice Leysath 20,0007 2.5% $0.50 December 15, 2,064
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Deborah Losse 2,5001 0.3% $0.50 December 15, 2,064
2001
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Deborah Losse 20,00011 2.5% $0.50 December 15, 2,064
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Angela Pirtle 20,0008 2.5% $0.50 December 15, 2,064
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Carl Sanders 2,5001 0.3% $0.50 December 15, 187
2001
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Carl Sanders 20,0001 2.5% $0.50 December 15, 2,064
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Daniel Wagner 2,5009 0.3% $0.50 December 15, 187
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Daniel Wagner 20,00010 2.5% $0.50 December 15, 2,064
2002
- ------------------- ----------------- ----------------- ----------------- ----------------- -----------------
</TABLE>
<PAGE>
1. Represents options issued to the named party in his/her capacity as a
Company employee.
2. Represents an option to purchase 20,000 shares in Ms. Anderson's capacity
as Director of the Company, and an option to purchase 20,000 shares in Ms.
Anderson's capacity as a member of the Company's Management.
3. Represent options issued to the named party in his/her capacity as an
independent contractor.
4. Represents an option to purchase 20,000 shares in Mr. Black's capacity as
Director of the Company.
5. Represents an option to purchase 20,000 shares in Mrs. Britten's capacity
as Chief Financial Officer of the Company, and an option to purchase 20,000
shares in Ms. Britten's capacity as a member of the Company's Management.
6. Represents an option to purchase 20,000 shares in Mr. Hondel's capacity as
Director of the Company, and an option to purchase 20,000 shares in Mr.
Hondel's capacity as a member of the Company's Management.
7. Represents an option to purchase 20,000 shares in Mrs. Leysath's capacity
as Director of the Company.
8. Represents an option to purchase 20,000 shares in Mrs. Pirtle's capacity as
Director of the Company.
9. Represent options issued to the named party in his/her capacity as an
independent contractor.
10. Represents an option to purchase 20,000 shares in Mr. Wagner's capacity as
Director of the Company.
11. Represents an option to purchase 20,000 shares in Mrs. Losse's capacity as
a member of the Company's Management.
12. This column has been amended from the Company's Annual Report on the Form
10-K to avoid potential confusion associated with the presentation of this
information.
13. The Values assigned to each reported option on this table are computed
using the Black-Scholes option pricing model. The calculations for options
assume a risk-free rate of return of 6.1%, which represents the yield of
United States Treasury Notes on the option grant date. The calculation for
the above grant date also assumes a 98% volatility; however, there can be
no assurance as to the actual volatility of the Company's common stock in
the future. The calculations also assume no dividend pay-out, a
straight-line, and an average expected life of 2.71 years. In assessing
these option values, it should be kept in mind that no matter what
theoretical value is placed on the stock option on the date of grant, its
ultimate value will depend on the market value of the Company's common
stock at a future date. The fair-market value of the common stock assumed
in these calculations is $0.2188.
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year-End Option
Values
No option contracts were signed during the year ended December 31, 1999, and as
a result none of the parties had a vested interest in the options until the year
2000.
Board Compensation Committee Report on Executive Compensation.
The Board of Directors in conjunction with the Compensation Committee was
responsible for establishing compensation policy and administering the
compensation programs of the Company's executive officers. In November 1999,
these responsibilities were assumed by a new Executive Audit Committee. During
1999, the Company maintained its existing policies on compensation with regard
to employees, directors, and executive officers. Generally, the compensation of
employees, directors, and executive officers and the terms of employment have
been set solely by Mr. Cook.
Mr. Cook, the Company's CEO, currently has an employment agreement with the
Company which began in 1997 and set to expire in June of the year 2000.
Consequently, neither the Company's Compensation Committee nor has the Board of
Directors met to review Mr. Cook's annual compensation.
Report of the Board of Directors on Executive Compensation
Employment Agreements
The compensation and benefits for 1999 for the majority of Named Executive
Officers were determined by oral employment agreements (except as otherwise
noted below). No executive officer, other than Wade B. Cook, named in the
Executive Compensation section of this Proxy Statement had written employment
contracts. The terms of employment agreements for all executive officers,
whether oral or written, were negotiated by Mr. Cook.
<PAGE>
Mr. Cook's employment agreement for 1997 through 2000 was negotiated by the
Company's General Counsel. The terms of the agreement were determined by
considering the compensation of similarly-situated Chief Executive Officers in
the Pacific Northwest region of the United States. In 1999, the Compensation
Committee reviewed Mr. Cook's employment agreement and found it to be
reasonable. In 1999, the Compensation Committee also reviewed Mr. Cook's royalty
agreement, but did not have enough information to determine its reasonableness.
Compensation Of Chief Executive Officer
Pursuant to an Employment Agreement effective as of July 1, 1997, Mr. Cook
serves as the Company's Chief Executive Officer and President. The agreement
provides for a three-year term in which Mr. Cook will receive an annual base
salary of $240,000 for the year ended June 30, 1998, $265,000 for the year ended
June 30, 1999 and $299,000 in for the year ended June 30, 2000. Under the terms
of the agreement, Mr. Cook may receive additional bonuses for work as approved
by the Board of Directors. To date, no such bonuses have been requested or
approved. In addition, Mr. Cook is entitled to reimbursement for reasonable
travel and business entertainment expenses authorized by the Company, as well as
certain fringe benefits.
In addition to a base salary, Mr. Cook currently receives from the Company a ten
percent (10%) royalty on net revenues derived from books authored by Mr. Cook
and sold by the Company. Mr. Cook also is entitled to a royalty of the lesser of
5% or $5,000,000 on the Company's gross sales of all other products licensed by
him.
Members of the Board of Directors: Robin Anderson Robert T. Hondel
Joel Black Janice Leysath
Wade B. Cook Angela Pirtle
Laura M. Cook Gene Stevens
Nick Dettman Dan Wagner
Compensation Committee Interlocks and Insider Participation
None.
Certain Relationships And Related Transactions
On March 2, 1999, Mr. Cook and the Company entered into a Publishing Agreement,
effective February 1, 1996, which gives the Company certain rights to promote
and sell materials authored by Mr. Cook. Under the terms of the Publishing
Agreement, Mr. Cook is entitled to receive a ten percent (10%) royalty on the
net revenues attributable to the sale of published materials. In 1999,
$93,027.32 was paid under the contract.
The Company has an Open-ended Product Agreement with Mr. Cook, most recently
amended on March 15, 2000, that gives the Company a non-exclusive license to use
Mr. Cook's products, intellectual property, name, image, identity, trademarks
and trade symbols. Under the terms of the Open-ended Product Agreement, Mr. Cook
is entitled to receive the lesser of $5,000,000 or 5% of gross sales. In 1999,
Mr. Cook had accrued approximately $3 million in royalties under the Agreement.
On December 15, 1999, the Company entered into an Assignment Agreement with
Never Ending Wealth, L.P., a corporation controlled by Mr. Cook, in which Mr.
Cook was assigned all right, title, and interest in Certain Promissory Notes
held by several of the Company's wholly owned subsidiaries. The Promissory Notes
have an aggregate value determined to be $786,337.67. The Promissory Notes were
assigned in satisfaction of $786,337.67 in royalties owed to Mr. Cook by the
Company. The obligator on the Promissory Notes is Newstart Auto Centres, Inc.,
an automotive leasing Company in which Mr. Cook presently owns a 50% interest.
During 1999, the Company paid an aggregate of $62,415.40 to companies controlled
by Scott Scheuerman, Mr. Cook's brother-in-law, primarily as vendors of
business, office support and registered agent services provided to the Company's
customers. Of the monies paid to companies controlled by Mr. Scheuerman, $33,000
represents the transfer of a Company owned automobile.
<PAGE>
During 1999, the Company paid salaries and other compensation to its executive
officers as set forth under "Executive Compensation."
Performance Graph
COMPARISON OF 30 MONTH CUMULATIVE TOTAL RETURN*
AMONG WADE COOK FINANCIAL CORP.,
THE NASDAQ FINANCIAL INDEX AND THE RUSSELL 2000 INDEX
[PERFORMANCE GRAPH]
<TABLE>
Cumulative Total Return
-----------------------
6/97 12/97 12/98 12/99
<S> <C> <C> <C> <C>
WADE COOK FINANCIAL CORP 100.00 685.31 71.67 30.27
RUSSELL 2000 100.00 114.79 107.38 105.78
NASDAQ FINANCIAL 100.00 125.94 122.25 120.89
</TABLE>
* $100 invested on 6/30/97 in stock or index - including reinvestment of
dividends - fiscal year ending December 31
The preceding graph compares the Company's cumulative total stockholder return
on its common stock for a period beginning on June 30, 1997 and ending on
December 31, 1999, with the cumulative total return of the Russell 2000 Index
and the Nasdaq Financial Index. The graph assumes that $100 was invested on June
30, 1997 in the Company's common stock and in the stated indices. The comparison
assumes that all dividends are reinvested.
SHAREHOLDER PROPOSALS
Under Rule 14a-8(3) of the Securities and Exchange Commission, stockholder
proposals intended for inclusion in next year's proxy statement must be directed
to the Corporate Secretary at Wade Cook Financial Corporation, 14675 Interurban
Avenue South, Seattle, Washington 98168-4464, and must be received by February
1, 2001. Any stockholder proposal for next year's annual meeting submitted after
February 1, 2001 will not be considered as filed on a timely basis with the
Company under SEC Rule 14a-4(c)(1). For proposals that are not timely filed, the
Company retains discretion to vote the proxies it receives. For proposals that
are timely filed, the Company retains discretion to vote proxies it receives
provided (1) the Company includes in its proxy statement advice on the nature of
the proposal and how it intends to exercise its voting discretion and (2) the
proponent does not issue a proxy statement.
INDEPENDENT AUDITORS
Miller & Company LLP, Certified Public Accountants, served as the Company's
independent auditors for the fiscal year ended December 31, 1999. The
appointment of independent public accountants is made annually by the Board of
Directors. The Board has chosen to reappoint Miller & Company LLP as its
independent public auditors for the fiscal year 2000. Miller & Company LLP is
not expected to be present at the year 2000 Annual Stockholders' Meeting, and
consequently will not be available to make statements or answer questions.
SOLICITATION OF PROXIES
The proxy card accompanying this proxy statement is solicited by the Board of
Directors. Proxies may be solicited by officers, directors and other employees
of the Company, none of whom will receive any additional compensation for their
services. Solicitations of proxies may be made personally, or by mail,
telephone, telegraph, facsimile or messenger. The Company will pay persons
holding shares of common stock in their names or in the names of nominees, but
not owning such shares beneficially, such as brokerage houses, banks and other
fiduciaries, for the
<PAGE>
expense of forwarding soliciting materials to their principals. All costs of
soliciting proxies will be paid by the Company.
OTHER MATTERS
The Company is not aware of any other business to be acted upon at the meeting.
If other business requiring a vote of the stockholders should come before the
meeting, the holders of the proxies will vote in accordance with their best
judgment.
May 12, 2000
A copy of the Company's Annual Report on Form 10-K for fiscal year 1999,
containing information on operations, filed with the Securities and Exchange
Commission is available at the Company's web-site www.wadecook.com or upon oral
or written request. For all written and oral requests the contact information is
as follows: Investor Relations, Wade Cook Financial Corporation, 14675
Interurban Avenue South, Seattle, Washington 98168-4664, (206) 901-3136.
<PAGE>
PROXY
For the Annual Meeting of the Stockholders of
WADE COOK FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Wade B. Cook and Troy Romero, and each of
them, with full power of substitution, as proxies to vote the shares which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on June 8, 2000 and at any adjournment thereof.
(Continued and to be signed on the reverse side)
<PAGE>
WADE COOK
FINANCIAL CORPORATION
P.O. BOX 9079
FARMINGDALE, NY 11735 IMPORTANT - PLEASE SIGN AND RETURN THIS
PROXY PROMPTLY. When shares are held by
joint tenants, both should sign. When
signing as an 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 an
authorized person.
TO VOTE, MARK BLOCKS BELOW IN BLUE
OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
WADE COOK FINANCIAL CORPORATION
<TABLE>
I plan to attend the meeting. [ ]
Vote On Directors FOR WITHH0LD FOR ALL Except vote withheld from
ALL ALL EXCEPT following nominee(s) listed
in space below
<S> <C> <C> <C> <C>
1. Election of Directors:
01) Robin Anderson, 02) Joel Black [ ] [ ] [ ] ---------------------------------
03) Robert Hondel, and 04) Dan Wagner
Vote On Proposals
FOR AGAINST ABSTAIN
2. Ratification of Director Gene Stevens [ ] [ ] [ ]
</TABLE>
This proxy, when properly signed will be voted in the manner directed herein by
the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2.
- ---------------------------------
- --------------------------------- ---- ------------------------- ----
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
