WELLCO ENTERPRISES, INC.
150 Westwood Circle
P.O. Box 188
Waynesville, North Carolina 28786
October 14, 2005
NOTICE OF ANNUAL MEETING
OF
STOCKHOLDERS
The annual meeting of stockholders of Wellco Enterprises, Inc. will be held in
the cafeteria of the Company's Waynesville, North Carolina, plant, located at
150 Westwood Circle, on Tuesday, November 15, 2005, at 3:00 P.M., EST, for the
purpose of considering and taking action upon the following:
1. The election of directors as more particularly described in the
accompanying Proxy Statement; and
2. Such other matters as may properly come before the meeting.
Only stockholders of record at the close of business on October 14, 2005, will
be entitled to vote at the meeting. This Notice and the accompanying Proxy
Statement are being mailed to stockholders on approximately October 21, 2005.
By Order of the Board of Directors
RICHARD A. WOOD, JR.
SECRETARY
YOUR VOTE IS IMPORTANT. EVEN IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE
RETURN YOUR SIGNED PROXY!
Please complete and promptly return your Proxy in the postpaid envelope
provided. This will not prevent you from voting in person at the meeting. It
will, however, help to assure a quorum and avoid added proxy solicitation costs.
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Wellco Enterprises, Inc.
150 Westwood Circle
P.O. Box 188
Waynesville, North Carolina 28786
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Wellco
Enterprises, Inc. (the "Company") for use at the 2005 Annual Stockholders
Meeting of the Company, to be held on November 15, 2005, and at any adjournment
thereof. The cost of solicitation will be borne by the Company. Mellon
Shareholder Services LLP, the transfer agent for the Company, has been retained
to assist in obtaining proxies, including proxies from brokerage houses and
others with respect to shares registered in their names but beneficially owned
by others, by such means, as Mellon Shareholder Services LLP deems appropriate,
at a cost to the Company presently estimated at $5,000. Such brokerage houses
and others will be reimbursed for their out-of-pocket expenses incurred. Proxies
may also be solicited by some directors, officers or employees of the Company,
in person or by mail, telephone or telefax, without extra compensation to them.
The shares represented by the proxies received will be voted at the meeting, or
any adjournment thereof. On matters coming before the meeting as to which a
choice has been specified by the stockholder by means of the ballot on the
proxy, the shares represented will be voted accordingly. If no choice is so
specified, the shares will be voted in favor of the matters set forth in the
foregoing notice of meeting. The accompanying proxy appoints as proxy holders
Claude S. Abernethy, Jr., William M. Cousins, Jr. and Fred K. Webb, Jr. (and
each of them with full power of substitution, or any one or more of them acting
in the absence of the others) to vote at the Annual Meeting all shares covered
by the proxy. Management does not know of any other matters which will be
presented for action at the meeting, but the appointed proxy holders intend to
vote or act with respect to any other proposal which may be presented for
action, and matters incident to the conduct of the meeting, according to their
judgment in light of conditions then prevailing except as to election of
substitute nominees for director, as to which proxies will be voted for nominees
designated as hereinafter stated. Executed proxies may be revoked by written
revocation or later dated proxy delivered to the Secretary prior to or at the
meeting. Also, stockholders who are present at the meeting may withdraw their
proxies and vote in person if they so desire.
Stockholders of record at the close of business on October 14, 2005, will be
entitled to vote at the meeting. On that date, there were outstanding 1,270,746
shares of the Company's common stock. Each stockholder is entitled to one vote
for each share of stock on all matters to be presented at the meeting. A
plurality vote of the shares represented at the meeting, in person or by proxy,
is necessary for the election of each director. Cumulative voting is not
available at the meeting.
Stockholders having questions concerning the matters to be considered at the
meeting are invited to telephone the Company at (828) 456-3545, extension 102.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITS NOMINEES FOR DIRECTORS.
At the Company's 2003 Annual Meeting the Company's Articles of Incorporation and
Bylaws were amended by its stockholders to eliminate staggered terms of three
(3) Classes of Directors by the Company's 2005 Annual Meeting. Accordingly, your
Board of Directors unanimously recommends that Directors Claude S. Abernethy,
Jr., William M. Cousins, Jr., Katherine J. Emerson, Rolf Kaufman, John D.
Lovelace, Sarah E. Lovelace, David Lutz and Fred Webb, Jr. be re-elected at the
2005 Annual Meeting and that George Henson be elected as a Director for one (1)
year terms expiring at the 2006 Annual Meeting or until their respective
successors are duly elected and qualified. Each of said nominees has consented
in writing to serve in said capacity if elected.
Period of service as a director, age and principal occupation for at least the
past five years of each nominee for director and each person whose term of
office as a director will continue after the meeting are as follows:
NOMINEES FOR ELECTION:
Claude S. Abernethy, Jr. has been a Director of the Company since 1997 and
previously served as a Director from 1976 until 1994 and is 78 years of age. He
is Senior Vice President of Wachovia Securities (a securities brokerage firm),
and a Director of Air T Inc., Carolina Mills, Inc. and Director Emeritus of
Wachovia Securities, a subsidiary of Wachovia Bank, N.A.
William M. Cousins, Jr. has been a Director of the Company since 1990 and is 81
years of age. He is President (since 1974) of William M. Cousins, Jr., Inc.
(management consultants), a Director (from 1991 through 1999) of
Alba-Waldensian, Inc. (an apparel manufacturing company) and a director of
Biosphere Medical, Inc. (since 1994).
Katherine J. Emerson has been a Director of the Company since 2001 and is 50
years of age. She is the information systems controller and accountant for
Master Gauge and Tool Company (since 1994), a wholesale distributor of precision
measuring and gauging equipment and supplies. She is a certified public
accountant. Ms. Emerson is married to the nephew of Director Sarah E. Lovelace.
Her husband is also a cousin of Director/Vice President Fred K. Webb, Jr. and a
cousin of Director John D. Lovelace.
George Henson, director nominee is 62 years of age. Mr. Henson was Operations
Senior Vice President at Blue Ridge Paper Products, Inc. from 1999 until 2000.
From 2000 until his retirement in 2002, he was President and Chief Executive
Officer of Blue Ridge Paper Products, Inc. From 1969 through 1999, he was
employed with Weyerhaeuser Company in various engineering and corporate
management positions.
Rolf Kaufman has been a Director of the Company since 1962 and is 75 years of
age. He was President of the Company and joint Chief Executive Officer from 1968
until October 1996. Upon his retirement from the position of President on
September 30, 1996, Mr. Kaufman was elected by the Board of Directors to the
position of Vice Chairman, Board of Directors. As Vice Chairman, Mr. Kaufman is
retired from full time employment, while still being significantly involved in
several areas of the Company's business affairs.
-3-
John D. Lovelace has been a Director of the Company since 1999 and is 56 years
of age. He is the Vice-President (since 1987) of Credit/Collections for United
Leasing Corporation, a company primarily engaged in the leasing of equipment.
Prior to joining United Leasing, he served as Assistant Vice President of Retail
Banking for United Virginia Bank. He is the son of Director Sarah E. Lovelace
and a cousin of Director/Vice President Fred K. Webb, Jr. Director Katherine J.
Emerson is married to a cousin of John D. Lovelace.
Sarah E. Lovelace has been a Director of the company since August 2005. She is
the Executrix of the estate of James T. Emerson, which owns 54.93% of the
Company's outstanding stock, and is 76 years of age. She was a Licensed
Practical Nurse (retired since 1992). She is the mother of Director John D.
Lovelace and the aunt of Director/Vice President Fred Webb, Jr. Director
Katherine J. Emerson is married to a nephew of Sarah E. Lovelace.
David Lutz has been a Director of the Company since January, 1996 and previously
served as a Director from 1984 until 1992. As of January 1, 2002, he is Chief
Executive Officer, President and Chief Operating Officer of the Company and is
60 years of age. Since October 1996, he served as President and Chief Operating
Officer and Treasurer of the Company. He served as Executive Vice President and
Treasurer of the Company from May until October 1996, as Secretary/Treasurer
from 1986 until May 1996 and as Controller from 1974 until 1986.
Fred K. Webb, Jr. has been a Director of the Company since January 1996. He is
Vice President of Marketing of the Company (since February 1999) and is 45 years
of age. He previously held the position of Special Projects Manager with the
Company (August 1998 until February 1999). Before joining the Company, he was
employed as an Accounting Team Leader (since 1995) and Senior Staff Accountant
(since 1989) for United Guaranty Corporation (an insurance holding company). He
is the nephew of Director Sarah E. Lovelace and the cousin of Director John D.
Lovelace. Director Katherine J. Emerson is married to the cousin of Fred K.
Webb, Jr.
It is intended that shares represented by the accompanying Proxy will be voted
for election of the above nominees unless authority for such vote is withheld.
In the event that any nominees should become unable to serve or for good cause
will not serve, it is intended that such shares will be voted for substitute
nominees designated by the present Board of Directors of the Company.
CORPORATE GOVERNANCE MATTERS
The Board of Directors held four meetings during fiscal year 2005. Each of the
Directors attended more than 75% of the total number of meetings of the Board of
Directors and any committee on which they served. All members of the Board of
Directors attended the 2005 Annual Meeting of Shareholders. In addition, the
Company has for a number of years followed the practice, permissible under North
Carolina corporation law, of approving corporate resolutions by unanimous
written consent without meeting. The Board of Directors adopted two of such
resolutions during the Company's last full fiscal year.
-4-
Your Board of Directors has taken actions with reference to the structuring of
the various Committees of the Board of Directors so as to be in compliance with
the Sarbanes-Oxley Act of 2002 and the resulting revised listing requirements of
the American Stock Exchange ("the AMEX"). Since over 50% of the voting power of
the Company's common stock is held by the Estate of James T. Emerson, the
Company, under AMEX regulations is a "controlled company". As a controlled
company, the Board of Directors does not have to be made up of a majority of
independent directors.
The Company has a standing Audit Committee of the Board of Directors. On May 16,
2000 the Company's Board of Directors approved the Audit Committee's initial
Charter. The Board of Directors approved revisions to the Charter on November
19, 2002, February 17, 2004 and June 24, 2004.
All directors not otherwise associated with the Company as an officer, employee
or consultant and whom the Board of Directors, under regulations of the AMEX,
has determined to be independent are members of the Audit Committee. The Board
of Directors has determined that all Audit Committee members have the ability to
read and understand fundamental financial statements and that Audit Committee
Chairman William M. Cousins, Jr. is a financial expert, all as required by
regulations of the AMEX. Accordingly, Directors Cousins, Katherine Emerson and
Abernethy are currently the members of such Committee, with Director Cousins
serving as Chairman of the Committee. It is anticipated that, if elected, Mr.
Henson will be appointed by the Board of Directors after the 2005 Stockholders
Meeting, replacing Director Katherine Emerson, to be in continuing compliance
with AMEX regulations.
The Audit Committee held four quarterly meetings and one special meeting during
the Company's last fiscal year at which representatives of the Company's
independent auditors, Dixon Hughes PLLC, were present. The Audit Committee
selects the firm to be the Company's auditors, and performs other functions as
stated in its Charter and in the Audit Committee Report set forth below.
As a "controlled company" the Company is not required to and does not have a
standing Nominating Committee. Nominees to serve on the Board of Directors are
determined by a vote of the entire Board of Directors.
Though not required or prohibited by the AMEX Company Guide, the Board has had
for a number of years and continues to have a standing Compensation Committee,
with Directors Cousins, James T. Emerson (deceased, June 2005), Katherine
Emerson, and Abernethy being the members of such Committee for the 2005 fiscal
year with Director James T. Emerson (deceased, June 2005) serving as Chairman.
The Compensation Committee did not meet during the 2005 fiscal year.
-5-
The Company is also required by the AMEX Company Guide to have certain codes of
conduct for its officers, employees and directors. Copies of said Code of
Conduct were filed as Exhibit 14 to the Company's Form 10-K filed with the
Securities and Exchange Commission for the Company's 2004 fiscal year.
Audit Committee Report
In accordance with its written charter adopted May 16, 2000, as amended November
19, 2002, February 17, 2004 and June 24, 2004 by the Board of Directors (Board),
the Audit Committee of the Board (Committee) assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. During fiscal year
2005, the Committee or the Chairman thereof, held four quarterly meetings and
one special meeting to discuss with management and the independent auditor the
financial information contained in the Securities and Exchange Commission Form
10-Q filing for the three fiscal quarters and the annual Form 10-K. There was
one other phone meeting to discuss audit fees.
In discharging its oversight responsibility as to the audit process and
consistent with Independence Standards Board Standard No. 1 ("Independence
Discussions with Audit Committees") the Audit Committee obtained from the
independent auditors a formal written statement describing all relationships
between the auditors and the Company that might bear on the auditors'
independence. The Committee also discussed with the auditors any relationships
that may impact their objectivity and independence and satisfied itself as to
the auditors' independence. The Committee also discussed with management and the
independent auditors the quality and adequacy of the Company's internal
controls. The Committee reviewed with the independent auditors their audit
plans, audit scope, and identification of audit risks.
The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees".
The Audit Committee reviewed with the independent auditors and management the
audited financial statements of the Company for the fiscal year ended July 2,
2005. Management has the responsibility for the preparation and content of those
statements. Based on the above-mentioned review and discussions with management
and the independent auditors, the Audit Committee recommended to the Board that
the Company's audited financial statements be included in its Annual Report on
Form 10-K for the fiscal year ended July 2, 2005, for filing with the Securities
and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors
Claude S. Abernethy, Jr. William M. Cousins, Jr., Chairman Katherine Emerson
-6-
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the Committee) of the Board of Directors submits
recommendations to the Board of Directors as to the type and amount of
compensation for two executive officers of the Company (Mr. Lutz, Chief
Executive Officer and President and Mr. Webb, Vice President of Marketing). The
Committee consists of all directors not otherwise associated with the Company
and, in the 2005 fiscal year, consisted of five members until the death of
Committee Chairman James T. Emerson in August 2005.
The Committee did not meet during the year to consider and make recommendations
to the Board of Directors. In the 2005 fiscal year, the Board of Directors did
not modify or reject any action or recommendation of the Compensation Committee.
The Committee does not use any compensation consultants in making its decisions
and recommendations, and does not relate compensation of the above named
executive officers to that of any other entity or industry grouping.
Each of the named executive officers received an annual cash bonus for said
fiscal year, which is based on a specified percentage of consolidated net
income, as defined. Each executive officer's percentage has remained constant
for the past several years. No one of the above named executive officers has a
guaranteed or minimum amount of bonus. Although not a frequent occurrence, the
Committee from time to time may give discretionary additional bonuses for
extraordinary achievement.
Beginning with the Company's 2006 fiscal year, the Compensation Committee will
also approve all base salaries and bonuses of all officers of the Company.
All officers of the Company participate in fringe benefit plans (group health
insurance, group life insurance and long-term disability) to the same extent and
under the same terms as all other salaried employees of the Company. Mr. Lutz
receives perquisites whose value aggregates less than 10% of his total annual
salary and bonus.
Submitted by the Compensation Committee of the Board of Directors
William M. Cousins, Jr. Claude S. Abernethy, Jr.
Katherine Emerson John D. Lovelace
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee has ever served as an officer or
employee of the Company or had any relationship requiring disclosure by the
Company under any paragraph of Item 404 of Regulation S-K of the Securities and
Exchange Commission. No executive officer of the Company has ever served as a
director or member of the compensation committee of any other entity whose
executive officers has ever been a member to the Company's Compensation
Committee or Board of Directors.
-7-
COMPENSATION OF DIRECTORS
Directors' fees are $4,250 per year; $1,000 per meeting for each Board meeting
attended in person; $1,000 per meeting for each committee meeting attended in
person that is held apart from the day of a Board meeting; and $500 for each
committee and Board phone meeting. The Chairman of the Audit Committee receives
$1,000 quarterly in addition to other director fees. Directors who are employees
of the Company do not receive any directors' fees. The Company reimburses travel
expenses of directors who incurred traveling to and from meetings.
INDEPENDENT AUDITORS
At a meeting held on March 4, 2004,the Audit Committee of the Board of Directors
of the Company selected Dixon Hughes PLLC, the successor in the merger of its
independent auditors, Crisp Hughes Evans LLP, and the firm of Dixon Odom PLLC as
its independent auditors effective with the successful merger of the two firms.
On March 1, 2004, the Audit Committee of the Board of Directors was notified
that the merger of the two firms was completed and that the firm of Crisp Hughes
Evans LLP would resign as independent auditors. Dixon Hughes PLLC served as the
Company's independent auditors for the fiscal years ended July 2, 2005 and July
3, 20 04. Crisp Hughes Evans LLP served as the Company's independent auditors
for the fiscal year ended June 28, 2003.
The Audit Committee has not selected independent auditors for the fiscal year
beginning July 3, 2005. The Audit Committee has a policy of selecting and
engaging independent auditors a few months prior to the end of the Company's
fiscal year. A representative of Dixon Hughes PLLC has been requested and is
expected to be present at the stockholders meeting. Such representative will
have the opportunity to make a statement if he or she desires to do so and will
be available to respond to appropriate questions.
INDEPENDENT AUDITORS FEES AND SERVICES
The following table shows the aggregate fees billed (excluding travel and out of
pocket expenses) to the Company by its independent auditors, Dixon Hughes PLLC
for professional services rendered during the fiscal years ended July 2, 2005
and July 3, 2004:
--------------------------------------------------------------
July 2, 2005 July 3, 2004
Description of Fees
--------------------------------------------------------------
Audit Fees (1) $60,550 $58,000
--------------------------------------------------------------
Audit-Related Fees (2) 5,000 5,000
--------------------------------------------------------------
Tax Fees (3) 10,500 10,000
--------------------------------------------------------------
All Other Fees $0 $0
--------------------------------------------------------------
-8-
(1) Includes fees for audits of the July 2, 2005 and July 3, 2004
consolidated financial statements of the Company and its subsidiaries,
and reviews of the related quarterly financial statements included in
quarter reports on Form 10-Q for the 2005 and 2004 fiscal years and
direct engagement expenses.
(2) Includes fees for the audits of the June 30, 2005 and June 30, 2004 for
one of the Company's defined benefit pension plans. The Audit Committee
of the Company's Board of Directors has considered whether the
rendering of such non-audit services by Dixon Hughes PLLC is compatible
with maintaining the principal accountant's independence.
(3) Includes fees for services rendered for tax compliance including
federal and state income tax returns.
Before any accountant is engaged by the Company or its subsidiaries to render
audit or non-audit services, the Company's Audit Committee approves the
engagement. The Audit Committee approved all of the services described herein.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's common stock to the Standard & Poor's 500 Stock Index and an index of
peer companies that produce non-athletic footwear. The Standard & Poor's 500
Stock Index is a broad equity market index published by Standard & Poor's. The
index of peer companies was constructed by the Company and includes the Company
and R. G. Barry; Brown Shoe, Inc.; Genesco, Inc.; Phoenix Footwear Group, Inc.;
Justin Industries; McRae Industries; Rocky Shoes & Boots, Inc.; Stride Rite
Corp.; Timberland Co.; Weyco Group, Inc; and Wolverine World Wide. In
constructing the peer index, the return of each component company was weighted
according to its respective stock market capitalization. The graph assumes the
investment of $100 in the Company's common stock, the Standard and Poor's 500
Stock Index and the peer index at the end of the Company's 2005 fiscal year.
- --------------------------------------------------------------------------------
Total Stockholder Return
- --------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005
- --------------------------------------------------------------------------------
WELLCO $100 $96 $153 $113 $205 $162
- --------------------------------------------------------------------------------
S & P 500 $100 $85 $70 $70 $82 $89
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PEER GROUP $100 $142 $139 $162 $209 $264
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
Compensation Summary
The following Summary Compensation Table shows certain information concerning
the compensation of each of the Company's highly compensated executive officers
whose total annual salary and bonus exceeded $100,000 during the last fiscal
year:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
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LONG TERM
OTHER COMPENSA-
ANNUAL TION-STOCK ALL
NAME AND PRINICIPAL COMPEN- OPTION OTHER
POSITIONl: YEAR SALARY BONUS SATION GRANTS COMPEN-
(1) SATION
- --------------------------------------------------------------------------------
David Lutz, Chief
Executive Officer,
President, and
Chairman of the
Board (2) 2005 $131,664 $29,519 $0
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2004 $122,472 $38,298 $1,900
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2003 $121,636 $15,789 $952
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Chris Castleberry,
Executive
Vice President (3) 2005 $90,714 $19,680
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2004 $87,100 $25,532
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2003 $82,758 $13,526
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(1) Amounts represent reimbursement for income taxes.
(2) Chief Executive Officer since January 1, 2002.
(3) Elected to office of Executive Vice President on November 18, 2003
Stock Options
There were no individual grants of stock options to the named executive officers
during the fiscal year ended July 2, 2005.
-10-
The following table shows, on an aggregated basis, for executive officers named
in the Summary Compensation Table each exercise of stock options during the 2005
fiscal year and the fiscal year-end value of unexercised options.
- --------------------------------------------------------------------------------
NUMBER OF VALUE OF
SHARES UNEXERCISED UNEXERCISED IN-
ACQUIRED OPTION SHARES THE-MONEY OPTIONS
ON VALUE EXERCISABLE/ EXERCISABLE
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE (1)
- --------------------------------------------------------------------------------
David Lutz 45,000 / 0 $196,750 / $0
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Chris 3,500 $38,500 0 / 0 0 / 0
Castleberry
- --------------------------------------------------------------------------------
(1) Excess of the total market value at July 2, 2005 of the shares over the
total exercise price.
Employment Contracts and Termination of Employment and Change-in-Control
Agreements
The Company does not have employment contracts with any executive officer. There
are no compensation plans or arrangements that will result from the resignation,
retirement or termination of any executive officer, or that will result from a
change-in-control of the Company or a change in any executive officer's
responsibilities following a change-in-control.
Long-Term Incentive Plans
The Company does not have any type of long-term incentive plans for any
executive officer or other employee.
Pension Plan
The Company's executive officers and all other salaried employees participate in
an Administrative Employee Pension Plan (the Plan). Benefits under the Plan are
based on years of service and average annual earnings. The following table
illustrates the amount of annual pension benefits based on the years of service
and average annual compensation levels shown:
PENSION PLAN TABLE
YEARS OF SERVICE
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AVERAGE
ANNUAL
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- --------------------------------------------------------------------------------
$125,000 $14,625 $19,500 $24,375 $27,250 $34,125
- --------------------------------------------------------------------------------
$150,000 18,000 24,000 30,000 36,000 42,000
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$175,000 21,375 28,500 35,625 42,750 49,875
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$200,000 24,750 33,000 41,250 49,500 57,750
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-11-
The Plan provides benefits based on final average compensation, defined in the
Plan as the average of the consecutive five highest of the last ten years
compensation, and on years of service. Compensation under the Plan is
essentially equivalent to the aggregate amounts reported as annual salary and
bonus compensation in the Summary Compensation Table above. Total years of
service are limited to 35 and benefits are computed on a straight life annuity
basis. Mr. Lutz and Mr. Castleberry will have more than 35 years of service
under the plan, assuming employment to age 65 by each.
SECURITY OWNERSHIP
The number of shares of common stock (the Company's only voting security)
beneficially owned or held under option by (a) all executive officers, directors
and nominees for director and (b) each person or entity owning more than 5% of
the outstanding shares of common stock (including persons or entities who may be
deemed a group for purposes of the federal securities laws), as known by
management of the Company, based upon information furnished to the Company by or
on behalf of such person or entity, as "beneficial ownership" is defined under
Rule 13d-3 under the Securities Exchange Act of 1934, is set forth in the
following table:
-12-
SOLE
VOTING SHARED
AND VOTING AND TOTAL PERCENT
DISPOSITIVE DISPOSITIVE STOCK BENEFICIAL OF
POWER POWER (1) OPTIONS OWNERSHIP CLASS (2)
- --------------------------------------------------------------------------------
Officers and
Directors:
- --------------------------------------------------------------------------------
Horace Auberry 116,398 1,540 44,000 161,938 11.72%
- --------------------------------------------------------------------------------
David Lutz 45,000 45,000 3.26%
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Fred K. Webb, Jr. 5,000 7,000 12,000 0.87%
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Directors:
- --------------------------------------------------------------------------------
Sarah E. Lovelace* 759,284 759,284 54.93%
- --------------------------------------------------------------------------------
Rolf Kaufman 47,292 47,292 3.42%
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Claude S. Abernethy, Jr. 2,000 2,000 4,000 0.29%
- --------------------------------------------------------------------------------
William M. Cousins, Jr. 0.00%
- --------------------------------------------------------------------------------
John D. Lovelace 2,000 2,000 0.14%
- --------------------------------------------------------------------------------
Katherine J. Emerson 300 3,600 3,900 0.28%
- --------------------------------------------------------------------------------
Officers:
- --------------------------------------------------------------------------------
Tammy Francis 2,000 11,500 13,500 0.98%
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Chris Castleberry 3,500 3,500 0.25%
- --------------------------------------------------------------------------------
Richard A. Wood, Jr. 1,900 1,900 0.14%
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All Officers and
Directors as a
Group (12) 937,674 5,140 111,500 1,054,314 76.28%
- --------------------------------------------------------------------------------
* Ms. Lovelace is the Executrix of the Estate of James T. Emerson, which holds
747,084 shares of the Company's stock. She also owns individually 12,200 shares
of the Company's stock.
- --------------------------------------------------------------------------------
Owners of More Than 5% of the Company's Common Shares:
- --------------------------------------------------------------------------------
Other than Officer/Director Auberry and Director Sarah E. Lovelace shown above,
the Company is not aware of any other beneficial owner of more than five percent
of its Common Shares.
- --------------------------------------------------------------------------------
(1) Shares owned jointly with spouse and shares held by spouse and children
over whom the listed person may have substantial influence by reason of
the relationship are shown as shared voting and dispositive power.
(2) Percent of total shares outstanding (1,270,546) and shares issuable
under options exercisable within 60 days (111,500).
-13-
STOCKHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING AND COMMUNICATIONS WITH
DIRECTORS
Proposals of qualified stockholders intended to be presented at the Company's
2006 Annual Stockholders Meeting must be received by the Secretary at the
address stated herein no later than June 30, 2006, in order to be considered for
inclusion in the Company's Proxy Statement and Proxy for that meeting.
Any security holder who wishes to send a communication to either the entire
Board of Directors or any member(s) thereof can send such communication to the
Company's general counsel (email dwood@mwbavl.com, or by calling 828-254-8800).
Any and all communications will be forwarded to the Board members designated in
such communication.
By Order of the Board of Directors
RICHARD A. WOOD, JR.
Secretary
Waynesville, North Carolina
October 14, 2005
A copy of the Company's 2005 Form 10-K (Annual Report filed with the Securities
and Exchange Commission) is available at no charge to any stockholder requesting
it. Requests should be made in writing and addressed to the Secretary, Wellco
Enterprises, P. O. Box 188, Waynesville, NC 28786.
-14-
WELLCO ENTERPRISES, INC.
P. O. Box 188, Waynesville, North Carolina 28786
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL STOCKHOLDERS MEETING, TUESDAY, NOVEMBER 15, 2005
The undersigned hereby acknowledges receipt of Notice of Meeting and Proxy
Statement each dated October 14, 2005, of the 2005 annual stockholders meeting
of Wellco Enterprises, Inc., and hereby revokes all proxies heretofore given for
said meeting and appoints Claude S. Abernethy, Jr., William M. Cousins, Jr. and
Fred K. Webb, Jr. (and each of them with full power of substitution, or any one
or more of them acting in the absence of the others) as attorneys and proxies of
the undersigned to represent, vote and act for the undersigned as designated on
the back of this proxy with respect to all shares of the stock of said Company
which the undersigned is entitled to vote at the annual meeting of stockholders
of the Company to be held in the cafeteria of the Company's plant at 150
Westwood Circle, Waynesville, North Carolina, at 3:00 P.M., EST, on Tuesday,
November 15, 2005 or at any adjournment thereof.
(Continued, and to be marked, dated and signed on other side)
FOLD AND DETACH HERE. RETURN THIS PORTION
ITEM 1: Your Board of Directors recommends a vote FOR the election of Claude S.
Abernethy, Jr., William M. Cousins, Jr., Katherine J. Emerson, George Henson,
Rolf Kaufman, John D. Lovelace, Sarah E. Lovelace, David Lutz and Fred K. Webb,
Jr. as Directors of the Company, as follows:
To serve for a one-year term expiring at the 2006 Annual Stockholders Meeting.
FOR ALL NOMINEES, except as marked below
WITHHOLD AUTHORITY to vote for all nominees
To withhold authority to vote for any Director nominee(s), print
the name(s) below:
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IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ABOVE AS SET FORTH
IN THE PROXY STATEMENT AND THE HOLDERS HEREOF WILL EXERCISE THEIR DISCRETION AS
TO ALL OTHER ITEMS OF BUSINESS WHICH MAY COME BEFORE THE MEETING.
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Signature of Stockholder(s)
Date , 2005
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NOTE: SIGN NAME EXACTLY AS IT APPEARS HEREON AND DATE. Co-owners must all sign.
Attorneys, executors, administrators, trustees, guardians, etc. should sign in
official capacity and give title.
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WELLCO ENTERPRISES, INC.
P. O. Box 188, Waynesville, North Carolina 28786
The annual meeting will be held on November 15, 2005 at 3:00 P.M. in the
cafeteria of the Company's plant at 150 Westwood Circle, Waynesville, North
Carolina.
YOUR VOTE IS VERY IMPORTANT. PLEASE MARK, SIGN, AND DATE THE ABOVE, AND RETURN
IT IN THE ENVELOPE PROVIDED.