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 240.14a-11(c) or 240.14a-12

BELL INDUSTRIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

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BELL INDUSTRIES LOGO
2201 E. EL SEGUNDO BOULEVARD
EL SEGUNDO, CALIFORNIA 90245-4608

Dear Shareholder:

This year's Annual Meeting of Shareholders will be held on Tuesday, May 5,
1998, at 10:00 A.M., at the Company's National Service Center and Corporate
Office, 2201 E. El Segundo Boulevard, El Segundo, California. Management hopes
that you will come to the meeting and give us an opportunity to meet you and
discuss any questions you may have.

The formal notice of meeting and the Proxy Statement follow. The only
formal action to be taken at the meeting is the election of the Board of
Directors for the ensuing year. I urge you to review the Proxy Statement
carefully and, at your earliest convenience, sign, date and mail the enclosed
proxy card so that your shares will be represented at the meeting. A prepaid
return envelope is provided for this purpose.

Sincerely yours,

GORDON GRAHAM
President

March 20, 1998
3

BELL INDUSTRIES, INC.
2201 E. EL SEGUNDO BOULEVARD
EL SEGUNDO, CALIFORNIA 90245-4608

------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

MAY 5, 1998

The Annual Meeting of Shareholders of Bell Industries, Inc., a California
corporation, will be held at the Company's National Service Center and Corporate
Office, 2201 E. El Segundo Boulevard, El Segundo, California, on Tuesday, May 5,
1998 at 10:00 A.M.

The purpose of the meeting is to elect six directors to hold office until
the next Annual Meeting of Shareholders and thereafter until their successors
are elected and to transact any other business that may properly come before the
meeting or any adjournments thereof.

The Board of Directors has fixed the close of business on Friday, March 20,
1998 as the record date for the determination of shareholders entitled to
receive notice of, and to vote at, said meeting and any adjournment or
adjournments thereof.

By Order of the Board of Directors

JOHN J. COST
Secretary

March 20, 1998

YOUR VOTE IS IMPORTANT. IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL MEETING
OF SHAREHOLDERS, OR IF YOU DO PLAN TO ATTEND AND WISH TO VOTE BY PROXY, PLEASE
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD, FOR WHICH A RETURN,
STAMPED ENVELOPE IS PROVIDED. YOUR PROMPT RETURN OF THE PROXY CARD WILL HELP THE
COMPANY AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION TO ASSURE A QUORUM
AT THE MEETING.
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PROXY STATEMENT
------------------------

ANNUAL MEETING OF SHAREHOLDERS
OF BELL INDUSTRIES, INC.

MAY 5, 1998
------------------------

INTRODUCTION

This Proxy Statement is being mailed on or about March 20, 1998 to
shareholders of Bell Industries, Inc. (the "Company") in connection with the
solicitation of Proxies by the Company's Board of Directors for use at the
Company's Annual Meeting of Shareholders to be held on May 5, 1998, or any
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Shareholders. Expenses relating to the proxy
statement, the proxy and the solicitation thereof will be paid by the Company.

The persons named in the accompanying proxy have advised the Company that
they intend to vote the proxies received by them in their discretion for as many
director nominees as the votes represented by such proxies are entitled to elect
(see "Election of Directors"). Any shareholder may revoke his or her proxy at
any time prior to its use by filing with the Secretary of the Company a written
notice of revocation or a duly executed proxy bearing a later date.

Only shareholders of record at the close of business on Friday, March 20,
1998, will be entitled to notice of, and to vote at, the meeting or any
adjournments thereof. At such record date, there were outstanding and entitled
to vote approximately 9,334,000 shares of common stock. Each of the foregoing
shares is entitled to one vote on all matters other than the election of
directors. In connection with the election of directors, each shareholder is
entitled to cumulate votes.

A quorum must be present to take any action on a voting matter at the
meeting. The presence in person or represented by proxy of the persons entitled
to vote a majority of the shares constitutes a quorum. For purposes of
determining the number of shares present in person or represented by proxy on
voting matters, all votes cast "for," "against" or "abstain" are included.
"Broker non-votes," which occur when brokers or other nominees are prohibited
from exercising discretionary voting authority for beneficial owners who have
not provided voting instructions, are not counted for the purpose of determining
the number of shares present in person or represented by proxy on a voting
matter.

ELECTION OF DIRECTORS

In voting for directors of the Company, each shareholder has the right to
cumulate votes and give one candidate a number of votes equal to the number of
directors to be elected, multiplied by the number of votes to which the shares
are entitled, or to distribute the votes on the same principle among as many
candidates as the shareholder chooses. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
For a shareholder to exercise cumulative voting rights, such shareholder must
give notice of intent to cumulate votes prior to the vote at the meeting.

The Company's Board of Directors presently consists of six directors. The
persons who are elected directors will hold office until the next Annual Meeting
of Shareholders and thereafter until their successors are elected. All of the
six director nominees are currently directors of the Company. The names and
principal
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occupations of the nominees for election as directors, and the respective
numbers of shares of voting stock of the Company beneficially owned, directly or
indirectly, by each nominee are set forth below.

YEAR SHARES BENEFICIALLY
FIRST OWNED AS OF PERCENT
NAME AND PRINCIPAL OCCUPATION AGE ELECTED MARCH 1, 1998 OF CLASS
----------------------------- --- ------- ------------------- --------

John J. Cost (1)(2)(3)(4) 63 1971 16,506(6) (5)
Of Counsel
Irell & Manella LLP, Attorneys
Anthony L. Craig (2) 52 1993 13,938(6) (5)
President, Global Knowledge Network
Herbert S. Davidson (1)(2) 76 1997 1,000 (5)
Vice Chairman
Gordon Graham (3) 63 1994 32,595(7) (5)
President and Chief Executive Officer
Milton Rosenberg (1)(2)(3)(4) 75 1975 19,000(6) (5)
Private investor and consultant to high
technology companies
Theodore Williams (3)(4) 77 1969 341,085(7) 3.7%
Chairman

- ---------------

(1) Member of Audit Committee.

(2) Member of Compensation Committee.

(3) Member of Long-Range Planning Committee.

(4) Member of Nominating Committee.

(5) Less 1% of total outstanding shares.

(6) Includes 13,800 shares with respect to Messrs. Cost, Rosenberg and Craig
issuable pursuant to currently exercisable stock options issued under Bell's
Non-employees Directors' Stock Option Plan.

(7) Includes 7,512 shares with respect to Mr. Graham and 9,000 shares with
respect to Mr. Williams issuable pursuant to currently exercisable stock
options.

Mr. Williams had been Chairman, President and Chief Executive Officer of
the Company since 1970. In December 1996 Mr. Graham was elected President and
Chief Operating Officer and effective January 1, 1998, Mr. Graham assumed the
additional office of Chief Executive Officer. For more than the past five years
prior to his election as President, Mr. Graham was employed by the Company in
other executive capacities. Mr. Cost was a partner in the law firm of Irell &
Manella LLP, Los Angeles, California, from 1969 through December 1994. Effective
January 1, 1995, Mr. Cost retired as a partner of that firm and now acts "of
counsel." He was elected Secretary in 1987. Irell & Manella LLP acts as general
counsel to the Company. For more than the past five years, Mr. Rosenberg has
been self-employed as an investor in, and consultant to, high technology
companies. Mr. Rosenberg also serves as a director of M.R.V. Communications, a
laser communications firm, based in Woodland Hills, California.

In February 1996, Mr. Craig became the President and Chief Executive
Officer of Global Knowledge Network, a privately held company engaged in
providing learning services for information technology in over 40 countries.
From November 1993 through January 1996, he was a Vice President of Digital
Equipment Corporation, a New York Stock Exchange company. From June 1992 until
July 1993, Mr. Craig was a Senior Vice President of Oracle Systems Corp., a
publicly traded data base and consulting company. Mr. Craig is also a director
of Iomega Corporation, a computer disc storage firm located in Roy, Utah.

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Mr. Davidson became Vice Chairman of the Board upon the consummation of the
acquisition of Milgray Electronics in January 1997. For more than five years
prior to that time, Mr. Davidson was the President and Chief Executive Officer
of Milgray Electronics. In connection with the acquisition, Mr. Davidson
received approximately $55 million for his equity interest in Milgray on the
same basis per share as all other Milgray shareholders. Mr. Davidson is
currently employed as Vice Chairman of the Board and an Assistant Secretary at a
salary of $50,000 per year.

If for any reason one or more of the nominees named above should not be
available as a candidate for director, an event that the Board of Directors does
not anticipate, the persons named in the enclosed proxy will vote for such other
candidate or candidates as may be nominated by the Board and discretionary
authority to do so is included in the Proxy.

Directors who are employees receive no additional compensation for serving
on the Board of Directors. Non-employee directors receive an annual retainer of
$40,000, plus $1,000 for each attendance at a meeting of the Board or a
committee thereof which does not immediately precede or follow a meeting of the
Board. The Company had a directors' retirement plan for non-employee directors.
Under the plan, directors having served at least ten years as a director after
reaching the age of 65 are entitled to receive an annual retirement benefit
equal to 50% of the annual retainer fee in effect at the time of retirement,
increasing 10% for each year of service after the tenth year. Such payments will
be made for the number of years equal to the number of years served as a
director or until his or her death; provided, that a surviving spouse is
entitled for a period of five years after death to continue to receive the same
benefits that such director would have been so entitled to receive. If a
director has reached age 60 and ceases to serve as a director at the request of
the Company, he will be entitled to the same retirement benefits as if he
retired at age 65. In the event of a change in control, a director leaving the
Board would be entitled to receive an immediate lump sum payment of the present
value of his accrued retirement benefit. In January 1996, the Company terminated
the directors' retirement plan except to the extent rights thereunder were
vested. Messrs. Cost's and Rosenberg's rights were fully vested under the plan.
Non-employee directors (currently Messrs. Cost, Craig and Rosenberg) are also
entitled to receive stock options under the Company's Non-employee Directors'
Stock Option Plan. Under the Plan, each non-employee director receives options
for 10,000 shares upon his election as a director and an option for 1,000 shares
for each year thereafter in which he is reelected. Pursuant to the Plan, Messrs.
Cost, Craig and Rosenberg each received options covering 10,000 shares in May
1996 when the Plan was first adopted and options covering 1,000 shares in May
1997.

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INFORMATION REGARDING SHAREHOLDERS

PRINCIPAL SECURITY HOLDERS

To the Company's knowledge, except as hereinafter described, no single
shareholder owned of record or beneficially as of March 1, 1998 more than 5% of
the Company's common stock. As of that date, Cede & Co., a nominee of securities
depositories for various segments of the financial industry, held approximately
8,289,000 shares representing 89% of the Company's outstanding common stock,
none of which was owned beneficially by such organization. Based upon reports
filed through December 31, 1997 with the Securities and Exchange Commission, the
Company believes that each of the companies named below beneficially owns 5% or
more of the Company's common stock:

NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------

Newsouth Capital Management 515,412 5.5%
1000 Ridgeway Loop Road, Suite 233 (Direct)
Memphis, Tennessee 38120
Dimensional Fund Advisors 487,991 5.2%
1299 Ocean Avenue, 11th Floor (Direct)
Santa Monica, California 90401
The TCW Group, Inc. 486,092 5.2%
865 South Figueroa Street (Direct)
Los Angeles, California 90017

SECURITY OWNERSHIP OF MANAGEMENT

The following table shows the beneficial ownership of the Company's common
stock of those executive officers of the Company listed in the "Summary
Compensation Table" under EXECUTIVE COMPENSATION, who are not directors, as well
as the beneficial ownership of common stock of all nominees for directors and
executive officers of the Company as a group as of March 1, 1998. Information
regarding the stock ownership of director nominees is contained in the prior
table under ELECTION OF DIRECTORS.

AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------------ ----------------------- --------

Tracy A. Edwards 38,161(2) (1)
Executive Vice President -- Finance and Operations, (Direct)
and Chief Financial Officer

D.J. Hough 81,042(3) (1)
Senior Vice President (Direct)
and Chief Information Officer

Stephen A. Weeks 4,293(4) (1)
Vice President and Treasurer (Direct)

All directors and executive officers as a group (9) 562,544(5) 6%

- ---------------

(1) Less than 1% of the outstanding.

(2) Includes 25,239 shares issuable pursuant to currently exercisable stock
options.

(3) Includes 28,495 shares issuable pursuant to currently exercisable stock
options.

(4) Includes 4,067 shares issuable pursuant to currently exercisable stock
options.

(5) Includes 129,513 shares issuable pursuant to currently exercisable stock
options.

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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(A):
BELL INDUSTRIES, INC., NYSE MARKET INDEX AND PEER GROUP INDEX

MEASUREMENT PERIOD
(FISCAL YEAR COVERED) BELL INDUSTRIES PEER GROUP BROAD MARKET

1992 100 100 100
1993 158 129 114
1994 193 126 111
1995 224 164 144
1996 224 188 174
1997 173 212 229

(A) Assumes $100 invested on December 31, 1992 and dividends reinvested.

(B) The Peer Group consists of the following electronic and industrial
distribution companies:

Arrow Electronics, Inc. Kent Electronics Corp.
Avnet, Inc. Marshall Industries
Bell Microproducts, Inc. Nu-Horizons Electronics
Jaco Electronics Inc. Pioneer Standard Electronics

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9

EXECUTIVE COMPENSATION

The following table shows all cash compensation and certain other
compensation paid to (i) the chief executive officer and (ii) the other four
most highly compensated executive officers (other than Mr. Doucette, "the Named
Officers") for the three years in the period ending December 31, 1997 for
services rendered in all capacities to the Company and its subsidiaries:

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION OPTIONS
-------------------------------- (NUMBER OF
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) OTHER(3) SHARES)
--------------------------- ---- -------- -------- -------- ------------

Theodore Williams(1) 1997 $400,000 $ -0- $43,827 90,000
Chairman and former 1996 400,000 101,878 41,957 -0-
Chief Executive Officer 1995 400,000 246,089 41,602 -0-
Gordon Graham 1997 $519,000 $ 50,000 $56,527 60,000
President and 1996 176,000 44,829 19,047 4,200
Chief Executive Officer 1995 120,000 70,227 13,602 -0-
Tracy A. Edwards 1997 $250,000 $ 50,000 $27,627 54,800
Executive Vice President -- 1996 173,750 44,253 19,251 4,200
Finance and Operations, and 1995 145,520 89,527 16,122 -0-
Chief Financial Officer
D.J. Hough 1997 $227,000 $ 50,000 $25,127 6,000
Senior Vice President and 1996 202,800 51,652 22,322 -0-
Chief Information Officer 1995 202,800 124,767 21,882 -0-
Stephen A. Weeks 1997 $138,000 $ 20,000 $15,527 3,000
Vice President and Treasurer 1996 105,000 26,743 12,747 2,400
1995 95,000 55,596 9,769 3,970
Paul F. Doucette (4) 1997 $329,000 $ -0- $35,500 6,000
Former Senior Vice President 1996 250,000 63,673 27,123 5,250
1995 240,000 147,353 25,525 -0-

- ---------------

Certain columns have not been included in this table because the
information called for therein is not applicable to the Company or the
individuals named above for the periods indicated.

(1) Mr. Williams currently receives a salary of $150,000 for his services as
Chairman. Commencing November 1997, the Company agreed to pay interest (at a
rate equal to its borrowing rate, currently 7%) on the amount of Mr.
Williams' unpaid retirement benefit (approximately $1,012,000).

(2) Includes bonuses accrued and earned for the period although paid in a later
period. For example, executive bonuses earned in 1996 were not paid until
February 1997. For 1995, the named individuals received, pro-rata, an
aggregate of 6,638 shares of common stock as part of their bonuses in
accordance with the policy established by the Compensation Committee of
paying bonuses earned by reason of achieving a return on equity in excess of
a predetermined amount in shares of common stock rather than cash. The
shares were valued at the average of the closing prices on the NYSE for the
ten days preceding February 1, 1996.

(3) Consists of amounts contributed by the Company on behalf of the named
individual under the Company's Savings and Profit Sharing Plan and Executive
Deferred Income and Pension Plan.

(4) Mr. Doucette is married to a niece of Mr. Williams. Mr. Doucette's
employment with the Company ended in October 1997.

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STOCK OPTIONS

The following table shows information on grants of stock options during the
twelve month period ended December 31, 1997 to the chairman, the chief executive
officer and the Named Officers (including Mr. Doucette) reflected in the Summary
Compensation Table.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTS(1)(2) CALENDAR 1997 SHARE(2)(3) DATE 5% 10%
---- ------------ ------------- ----------- ---------- ---------- ----------

Theodore Williams 90,000 16% $14.38 1/15/2007 $ 813,915 $2,062,621
Chairman and former
Chief Executive Officer

Gordon Graham 60,000 10% $14.38 1/15/2007 $ 542,610 $1,375,081
President and
Chief Executive Officer

Tracy A. Edwards 54,800 10% $13.81 12/11/2007 $ 451,435 $1,137,838
Executive Vice President --
Finance and Operations, and
Chief Financial Officer

D.J. Hough 6,000 1% $14.38 1/15/2002 $ 23,838 $ 52,675
Senior Vice President and
Chief Information Officer

Stephen A. Weeks 3,000 1% $16.56 7/9/2002 $ 13,726 $ 30,330
Vice President and Treasurer

Paul F. Doucette 6,000 1% $14.38 5/15/2002 $ 23,838 $ 52,675
Former Senior Vice President

Other employees 361,800 61%

- ---------------

(1) All options granted are exercisable in cumulative installments commencing
one year from date of grant, with full vesting on the fourth anniversary
date. Vesting may be accelerated in certain events relating to the change of
the Company's ownership or certain corporate transactions.

(2) All stock option and per share data have been adjusted to reflect stock
dividends.

(3) All stock options were granted at market value (closing price on the New
York Stock Exchange) on the date of grant.

(4) Reported net of the option exercise price. These amounts represent certain
assumed rates of appreciation only. Actual gains, if any, on stock option
exercises are dependent on the future performance of the common stock,
overall stock conditions, as well as the option holders' continued
employment through the vesting period. The amounts reflected in this table
may not be indicative of the value that will actually be achieved or
realized.

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OPTION EXERCISES AND HOLDINGS

The following table sets forth information with respect to the chairman,
the chief executive officer and the Named Officers, concerning the exercise of
options during the twelve month period ended December 31, 1997 and unexercised
options held as of December 31, 1997:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

NUMBER OF VALUE OF
VALUE REALIZED UNEXERCISED OPTIONS AT UNEXERCISED OPTIONS AT
(MARKET PRICE DECEMBER 31, 1997 DECEMBER 31, 1997(1)
SHARES ACQUIRED AT EXERCISE LESS --------------------------- ---------------------------
NAME ON EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ---------------- ----------- ------------- ----------- -------------

Theodore Williams -0- -0- 9,000 81,000 $ -0- $ -0-
Chairman
Gordon Graham 4,335 39,168 7,512 57,528 $ -0- $ -0-
President and
Chief Executive Officer
Tracy A. Edwards 5,778 58,346 25,239 72,220 $15,767 $2,362
Executive Vice President --
Finance and Operations, and
Chief Financial Officer
D.J. Hough 5,778 58,346 28,495 22,070 $16,476 $2,834
Senior Vice President and
Chief Information Officer
Stephen A. Weeks 2,890 29,183 4,067 7,542 $ 6,112 $ -0-
Vice President and Treasurer

- ---------------

(1) Based upon the closing price on the New York Stock Exchange on that date
($13.75).

TABLE OF TEN-YEAR OPTION REPRICINGS

On May 13, 1997, the Compensation Committee decided to give all holders of
stock options the ability to have their options repriced at the fair market
value of the Company's common stock on that date. If the option holder elected
to have his/her option repriced, the holder also agreed that the option could
not be exercised unless the fair market value of the Company's common stock on
date of exercise equalled or exceeded his/her original exercise price plus
$1.00. Substantially all of the holders of outstanding options elected to
reprice. The repricing (reduction of the exercise price to current market
values) was intended to increase employee incentive and morale by producing a
more meaningful financial reward for improved corporate performance.

The following table sets forth information concerning options of the
executive officers that were repriced during fiscal year 1997.

LENGTH OF
NUMBER OF MARKET PRICE OF ORIGINAL OPTION
SECURITIES STOCK AT TIME OF EXERCISE PRICE AT TERM REMAINING
UNDERLYING REPRICING OR TIME OF REPRICING AT DATE OF
OPTIONS OR AMENDMENT OR AMENDMENT NEW EXERCISE REPRICING
NAME DATE AMENDED (#) ($) ($) PRICE ($) AMENDMENT (YRS)
---- ------- ------------ ----------------- ------------------ ------------- ----------------

Theodore Williams 5/13/97 90,000 $14.38 $20.00 $14.38 10
Gordon Graham 5/13/97 65,040 $14.38 $19.90 $14.38 10
Tracy A. Edwards 5/13/97 9,840 $14.38 $17.99 $14.38 4
D. J. Hough 5/13/97 6,000 $14.38 $20.00 $14.38 5
Stephen A. Weeks 5/13/97 6,370 $14.38 $16.48 $14.38 3
Paul F. Doucette 5/13/97 12,300 $14.38 $17.99 $14.38 4

The foregoing Stock Option Pricing Report is made by the Company's
Compensation Committee.

John J. Cost Charles S. Troy
Anthony L. Craig Milton Rosenberg

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12

In January 1998, subsequent to his leaving the employ of the Company, Mr.
Doucette exercised options to purchase 5,778 shares of common stock at an
average exercise price of $9.52. The total value realized, net of the exercise
price was $22,274.

EMPLOYMENT AGREEMENTS

In January 1979, the Company entered into an employment agreement with Mr.
Williams, the Company's Chairman and former Chief Executive Officer. Mr.
Williams' agreement provided for an annual salary of not less than $179,400. He
was to be employed as Chief Executive Officer until retirement. Upon retirement,
Mr. Williams was entitled to receive for his lifetime an annual amount equal to
one-half of the average of the highest three years of salary plus bonus paid
during his last ten years of employment. Also, the Company is required to
maintain life and medical insurance benefits at least equal to those in effect
at the time of retirement. In August 1994, Mr. Williams' agreement was amended
so as to fix his retirement benefits to those accrued through June 30, 1994. As
amended, Mr. Williams' employment agreement provided that upon his retirement or
death prior to retirement, he or his estate would receive approximately
$2,187,000, which amount represented the then present value of the estimated
future payments payable under his employment agreement as at June 30, 1994, as
determined by recognized actuarial standards. In September 1995 and November
1996, the employment agreement was further amended to permit partial withdrawals
prior to retirement of $187,000 (1995) and $988,000 (1996), which withdrawals
were made. As of December 31, 1997, Mr. Williams was owed approximately
$1,022,000, including accrued interest, under his employment agreement.
Commencing November 1997, unpaid amounts bear interest at a rate equal to the
rate of interest paid by the Company under its bank line of credit (at March 1,
1998 approximately 7%). Effective January 1, 1998, Mr. Williams is employed as a
consultant to the Company pursuant to a three year agreement which provides for
annual compensation of $150,000. He is also receiving $150,000 annually for his
services as Chairman of the Board of Directors.

In February 1995, the Company entered into an employment and retirement
agreement with Paul F. Doucette, a former Senior Vice President. This agreement
provided for an annual salary of not less than $230,000. Mr. Doucette was to be
employed as a Senior Vice President. Upon retirement at age 65, Mr. Doucette was
entitled to annual retirement payments for life equal to one-half of the average
of the highest three years of salary and bonus paid during his last ten years of
employment. Further, he could elect early retirement at age 62, in which event
the retirement payments are equal to one-third of such average amount. Under
most circumstances, a termination by the Company prior to age 62 is deemed a
retirement by Mr. Doucette at age 62 and from age 62 through 65, the retirement
payments would be increased proportionately. If there is a voluntary termination
by Mr. Doucette prior to age 62, he would receive no payments until he reaches
age 62, at which time he would be deemed to have retired at age 62. If
terminated after a change in control, he is entitled to the same benefits as if
he retired at age 65. Also, the Company is required to maintain life and medical
insurance benefits at least equal to those in effect at the time of retirement.
Mr. Doucette had been employed with the Company in a managerial position for
over twenty-five years at the time the employment agreement was signed. The
Company and Mr. Doucette are disputing whether or not his leaving the Company's
employ in October 1997 was done "voluntarily" or by the Company. Mr. Doucette
has sued the Company regarding this dispute.

The Company has severance agreements with its executive officers, including
Messrs. Graham, Hough, Edwards and Weeks. Each of these agreements provides, in
essence, that should there be a "change in control" (as defined) and the
officer's employment is terminated either (i) involuntarily, without just cause,
or (ii) voluntarily, if the officer has determined in good faith that his duties
have been altered in a material respect or there has been a reduction in his
compensation or employee benefits, then upon termination, the officer would be
entitled to receive a payment in the amount of 295% of the officer's "base
amount" (generally

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equivalent to the average of his last three years compensation) as determined in
accordance with Section 280G of the Internal Revenue Code. A "change of control"
of the Company is generally defined as (i) any consolidation or merger of the
Company, other than a merger of the Company in which the holders of the
Company's common stock immediately prior to the merger have at least
seventy-five percent (75%) ownership of the voting capital stock of the
surviving corporation immediately after the merger, (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, (iii)
the shareholders of the Company approve any plan or proposal for the liquidation
or dissolution of the Company, (iv) any person shall become the beneficial owner
of thirty percent (30%) or more of the Company's outstanding common stock, or
(v) during any period of two consecutive years, individuals who at the beginning
of such period constitute the entire Board of Directors shall cease for any
reason (except death) to constitute a majority thereof unless the election, or
the nomination for election by the Company's shareholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.

The Company has entered into Indemnity Agreements with all directors and
all executive officers of the Company after having received shareholder approval
at the Company's 1986 Annual Meeting. The Indemnity Agreements provide for
indemnification of directors and officers in cases where indemnification might
not otherwise have been available.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Cost who is also a member of the Compensation Committee is the
Secretary of the Company. He receives as compensation for his services as
Secretary, in lieu of the annual retainer for being a director, an amount equal
to the annual retainer.

COMPENSATION STRUCTURE AND COMMITTEE RESPONSIBILITIES

The Company compensates its executive officers with two basic forms of
compensation: cash (salary and incentive bonus) and stock options. Bonuses were
granted for the fiscal years ended December 31, 1995 and 1996, based upon the
formulas described hereafter. For the fiscal year ended December 31, 1997,
minimal cash bonuses were awarded on an evaluation of the recipient's
performance during the year. The Company's earnings for that year were not
sufficient to warrant the payment of bonuses under the predetermined formula for
incentive compensation based upon a minimum return on shareholders' equity.
Further in February 1996 and January and December 1997, executives were awarded
stock options under Bell's stock option plans at an exercise price equal to the
fair market value of the underlying shares on the date of grant.

The Company Compensation Committee currently consists of Messrs. Cost,
Craig, Davidson and Rosenberg. The duties of the Committee are to determine the
overall compensation policy for the Company's executive officers, including
specifically fixing the compensation of the chief executive officer.

The following report is submitted by the Compensation Committee as it
relates to both cash compensation of, and stock options granted to, executive
officers of the Company. This report is not deemed "filed" with the Securities
and Exchange Commission and is therefore not intended to be incorporated by
reference in any other document filed by the Company with the Commission.

REPORT OF THE COMPENSATION COMMITTEE

The Company's compensation philosophy is based upon the belief that the
Company's success is the result of the coordinated efforts of all employees
working towards common objectives. Its executive officer

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compensation program is composed of base salary, annual incentive cash bonuses
and long-term incentive compensation in the form of stock options.

BASE SALARY

The Committee attempts to set the base salary levels competitively with
those paid by others in the electronics and industrial distribution companies
comprising its Peer Group. Based upon its most recent survey (December 1996),
the Committee believes that the compensation levels paid to Company executives
are in the mid-range of compensation paid by its Peer Group. In determining
salaries, the Committee also takes into account individual experience and
performance, past salary history and specific issues particular to the Company.

ANNUAL INCENTIVE BONUS

Prior to fiscal 1994, cash bonuses were considered annually and awarded
generally upon a subjective evaluation of the particular officer's performance
for the year and were dependent upon the overall financial achievement of the
Company during the year. For example, bonuses usually were not given in years
where the Company's growth was nominal. Thereafter, the Committee established an
incentive bonus program based upon the return on shareholders' equity and
awarded incentive bonuses for those periods in accordance with such programs.
For each period, no incentive bonus would be earned unless the Company's
earnings exceeded a predetermined percentage minimum return on shareholders'
equity as at the beginning of the period. If that minimum return was achieved,
each executive officer (including the Chief Executive Officer) earned a bonus
based upon the extent to which the Company's actual earnings exceeded the
minimum return on shareholders' equity. For the years ended December 31, 1995
and 1996, the Company's return on shareholders' equity was approximately 14% and
12%, respectively, in each case in excess of the predetermined minimum. The
amount of a particular officer's bonus was an arithmetic calculation based upon
the actual return on shareholders' equity and that officer's base salary. Since
the amount of any bonus was dependent upon the extent to which the Company's
actual return on shareholders' equity exceeded the predetermined minimum return,
there was no arithmetic limitation upon the amount of bonuses that could be
earned. Although individual performance may also be taken into consideration in
determining bonuses, it was not for any of those periods except for Mr. Hough in
1996. For the fiscal year ended December 31, 1997, the Company's return on
shareholders' equity did not equal or exceed the predetermined percentage
minimum; and therefore, no bonuses were earned under the formula plan. Although
the Company's earnings were less than necessary to achieve the minimum return on
shareholders' equity previously established by the Committee, it decided to
award discretionary cash bonuses to six corporate officers in the aggregate
amount of $206,667. Of that amount, Messrs. Graham, Edwards and Hough received
$50,000 each. For the current fiscal year, the Committee intends to continue the
incentive program based upon the Company's exceeding a predetermined percentage
return on shareholders' equity.

LONG-TERM INCENTIVE PROGRAM

Currently, the Company's long-term incentive program consists of the award
of stock options to executive officers and other key employees at current market
prices. The grant of options with exercise prices at prevailing market prices is
designed to align executive compensation and shareholder long-term interests by
creating a direct link between long-term executive compensation and shareholder
return as evidenced by increased stock market value.

The Compensation Committee's current policy is to award significant amounts
of stock options to executive officers and other key employees. Exercise prices
are established equal to the fair market value of Bell's common stock on the
date of grant. Options are usually for a term of five (5) years and become
vested
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over a period of four (4) years dependent upon continued employment. The number
of stock options granted to executive officers is based upon an evaluation of
the particular officer's deemed ability to influence the long-term growth and
profitability of the Company. Stock options were granted to the Company's
executive officers in February 1996 and January 1997 with exercise prices equal
to fair market value at the time of grant. Additionally, Mr. Edwards was granted
a stock option covering 50,000 shares in December 1997.

CHIEF EXECUTIVE OFFICER'S COMPENSATION

Mr. Williams had been the Company's Chief Executive Officer for over
twenty-five years. Effective January 1, 1998, Mr. Williams resigned as Chief
Executive Officer but remained Chairman of the Board. His annual base salary was
$400,000 for the fiscal year ended December 31, 1997. Mr. Williams did not
receive a cash bonus for fiscal 1997. The Committee has fixed Mr. Graham's base
salary for the current fiscal year at an annual rate of $600,000.
Submitted By: John J. Cost (Chairman),
Anthony Craig, Herbert Davidson, and Milton
Rosenberg

OTHER COMPENSATION

SAVINGS AND PROFIT SHARING PLAN

The Company established the Bell Industries' Employees' Savings and Profit
Sharing Plan (the "PSP") in 1973 under which both employees and the Company may
make contributions. The PSP will continue until terminated by the Board of
Directors. Employees must contribute at least 1% of their annual compensation to
participate in the PSP. The Company's contribution to the PSP is determined by
the Board of Directors in its discretion. For the fiscal year ended December 31,
1997, the Company contributed $920,000 to the PSP.

EXECUTIVE DEFERRED INCOME AND PENSION PLAN

In July 1993, the Company adopted an Executive Deferred Income and Pension
Plan (the "EDP"). Under the EDP, each officer and such other highly compensated
employees as the Board may designate are eligible to participate. Each
participant may elect a percentage (not more than 10%) of his salary that he
wishes to defer. The Company matches the amount of the chosen deferral. Such
deferred sums bear an assumed interest at a rate equal to the Lehman Brothers
Long T-Bond index.

In the event of an unforeseen emergency, a participant may withdraw his
deferred salary plus accrued interest but no portion of the matching funds
contributed by the Company. In such an event, the participant would be
ineligible from participating in the EDP for a period of two years. After
reaching age 62 and retiring, a participant may elect to have his benefit paid
in a lump sum or payable over a period of 5 to 15 years.

If a participant voluntarily resigns before age 62, he will be entitled to
receive at age 62 only a pro-rata portion of Company matching funds through the
date of his termination. That proration is based upon the period of EDP
participation; the participant being fully vested after 12 years. If a
participant dies while employed, his beneficiary would receive a lump sum
payment equal to all amounts that have accrued for his benefit through date of
death. If a participant's employment is terminated without cause or after a
change in control, he will receive the same benefit as he would have received if
his employment had been terminated due to death. If a participant is terminated
for cause, or if the Board determines within one year after termination that
cause existed at the time of termination, he will be entitled to receive in a
lump sum payment only the amount attributable to his deferred salary plus
accrued interest.

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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Company's Board of Directors held seven meetings during calendar 1997.
Each director attended at least 80% of the meetings of the Board of Directors
and the committees on which he served.

The Board of Directors also has standing committees: an Audit Committee, a
Compensation Committee, Long-Range Planning Committee and a Nominating
Committee. The Company does not currently have an acting Executive Committee.
The Audit Committee currently consists of Messrs. Cost, Davidson and Rosenberg
and held two meetings during calendar 1997. The Audit Committee reviews periodic
financial statements of the Company, reviews the independent accountants' scope
of engagement, performance and fees, and reviews the adequacy of the Company's
financial control procedures. The Compensation Committee is composed of Messrs.
Cost, Craig, Davidson and Rosenberg and during calendar 1997 held five meetings.
Its function is to fix compensation of the chief executive officer and other key
executives and to administer various benefit plans, including the stock option
plans, in which officers and employees may participate. Messrs. Cost, Rosenberg
and Williams are members of the Nominating Committee which was established in
March 1993. The Nominating Committee held no meetings during calendar 1997. Its
function is to recommend individuals to be members of the Board of Directors. In
October 1997, the Board established a Long-Range Planning Committee. The members
of that Committee are Messrs. Cost, Graham, Rosenberg and Williams. The purpose
of that committee is to formulate the future direction for the Company. In
fiscal 1997, that Committee held two meetings.

ANNUAL REPORT ON FORM 10-K

The Company will provide, without charge, a copy of the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 1997 upon the written request of any shareholder. This
request should be directed to Mr. Tracy A. Edwards, Executive Vice President,
Bell Industries, Inc., 2201 E. El Segundo Blvd., El Segundo, California
90245-4608.

SHAREHOLDER PROPOSALS

If a shareholder wishes to have a proposal printed in the Proxy Statement
to be used in connection with the Company's next Annual Meeting of Shareholders,
tentatively scheduled for May 11, 1999, such a proposal must be received by the
Company at its Corporate Office prior to December 18, 1998.

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MISCELLANEOUS

Price Waterhouse has been the Company's independent accountants for a
number of years and has been selected to continue in such capacity for the
current fiscal year. It is anticipated that a representative from Price
Waterhouse will attend the Annual Meeting of Shareholders, will be available to
answer questions, and will be afforded the opportunity to make any statements
the representative desires to make.

The Board of Directors knows of no other matters that are likely to come
before the meeting. If any such matters should properly come before the meeting,
however, it is intended that the persons named in the accompanying form of proxy
will vote such proxy in accordance with their best judgment on such matters. The
Company's Bylaws require that, for other business to be properly brought before
an annual meeting by a shareholder, the Company must have received written
notice thereof not less than 60 nor more than 90 days prior to the annual
meeting (or, if less than 70 days notice or other public disclosure of the date
of the annual meeting is given, not later than 10 days after the earlier of the
date notice was mailed or public disclosure of the date was made). The notice
must set forth (a) a brief description of the business proposed to be brought
before the annual meeting, (b) the shareholder's name and address, (c) the
number of shares beneficially owned by such shareholder as of the date of the
shareholder's Notice, and (d) any financial interest of such shareholder in the
proposal. Similar information is required with respect to any other shareholder,
known by the shareholder giving notice, supporting the proposal. Further, if the
proposal includes the nomination of a person to become a director which person
was not set forth in a proxy statement submitted to all shareholders pursuant to
the federal proxy rules, such proposal shall contain all the information
specified by such rules.

By Order of the Board of Directors

John J. Cost
Secretary

March 20, 1998

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PROXY PROXY

BELL INDUSTRIES, INC.
2201 E. El Segundo Boulevard
El Segundo, California 90245-4608

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

The undersigned hereby appoints Theodore Williams, Gordon Graham and John
J. Cost and each of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote as
designated below, all the shares of the common stock of Bell Industries, Inc.
held of record by the undersigned on March 20, 1998, at the Annual Meeting of
Shareholders to be held on May 5, 1998 or any adjournment or postponement
thereof.

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.

(Continued and to be signed on reverse side.)

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FOLD AND DETACH HERE
19
BELL INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. []

The Board of Directors recommends a vote FOR the election as Directors of the
nominees listed below.

For Withhold For All
All All Except nominee(s)
written below
1. ELECTION OF DIRECTORS:
Nominees: J. Cost, A. Craig,
H. Davidson, G. Graham, M. Rosenberg, [] [] []
T. Williams

In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, the proxy will be
voted for the election of all nominees as directors.

Please sign exactly as name appears below.

When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.

-------------------------------------------------
Signature

-------------------------------------------------
Signature (if held jointly)

Dated: , 1998
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FOLD AND DETACH HERE