UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
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Filed
by the Registrant
x
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Filed
by a Party other than the Registrant ¨
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Check
the appropriate box:
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o
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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WINLAND
ELECTRONICS, INC.
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(Name of Registrant as Specified
In Its Charter)
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(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
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Payment
of Filing Fee (Check the appropriate
box):
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x
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No
fee required.
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¨
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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¨
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Fee
paid previously with preliminary
materials.
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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WINLAND
ELECTRONICS, INC.
_______________________
to
be held
May
5, 2009
_______________________
TO THE
SHAREHOLDERS OF WINLAND ELECTRONICS, INC.:
The 2009 Annual Meeting of Shareholders
of Winland Electronics, Inc. will be held at the Marriott Minneapolis City
Center, 30 South 7th Street,
Minneapolis, Minnesota, at 3:30 p.m. on Tuesday, May 5, 2009, for the following
purposes:
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1.
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To
set the number of members of the Board of Directors at five
(5).
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2.
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To
elect directors.
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3.
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To
approve the increase from 300,000 shares to 500,000 shares authorized for
Winland’s 2008 Equity Incentive
Plan.
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4.
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To
take action on any other business that may properly come before the
meeting or any adjournment thereof.
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Accompanying this Notice of Annual
Meeting is a combined Proxy Statement and Annual Report and form of
Proxy.
Only shareholders of record as shown on
the books of Winland Electronics at the close of business on March 9, 2009 will
be entitled to vote at the 2009 Annual Meeting or any adjournment
thereof. Each shareholder is entitled to one vote per share on all
matters to be voted on at the meeting.
You are cordially invited to attend the 2009 Annual Meeting. Whether
or not you plan to attend the 2009 Annual Meeting, please vote your shares by
via the internet, telephone or sign, date and mail the enclosed form of Proxy in
the return envelope provided. The Proxy is revocable and will not
affect your right to vote in person in the event you attend the
meeting. The prompt return of proxies will help us avoid the
unnecessary expense of further requests for proxies.
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BY
ORDER OF THE BOARD OF DIRECTORS,
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Date:
March 26, 2009
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By:
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/s/ Thomas J. Goodmanson | |
| Mankato, Minnesota | Thomas J. Goodmanson | ||
| Chairman of the Board | |||
WINLAND
ELECTRONICS, INC.
_______________________
ANNUAL
MEETING OF SHAREHOLDERS
to
be held
May
5, 2009
_______________________
The accompanying Proxy is solicited by
the Board of Directors of Winland Electronics, Inc. for use at our 2009 Annual
Meeting of Shareholders to be held on Tuesday, May 5, 2009, at the location/time
and for the purposes set forth in the Notice of Annual Meeting, and at any
adjournment thereof.
The cost of soliciting proxies,
including the preparation, assembly and mailing of the proxies and soliciting
material, as well as the cost of forwarding such material to the beneficial
owners of stock, will be borne by us. Our directors, officers and
employees may, without compensation other than their regular remuneration,
solicit proxies personally or by telephone.
You may vote your shares as
follows:
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§
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Vote
by Internet: www.proxyvote.com
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§
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Vote
by
Telephone: 1-800-690-6903
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§
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Vote
by Mail: Mark, sign and date your proxy card and return it in
the postage-paid envelope provided.
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Any shareholder giving a Proxy may
revoke it any time prior to its use at the 2009 Annual Meeting by giving written
notice of such revocation to the Secretary or any other officer of Winland
Electronics or by filing a later dated written Proxy with one of our
officers. Personal attendance at the 2009 Annual Meeting is not, by
itself, sufficient to revoke a Proxy unless written notice of the revocation or
a later dated Proxy is delivered to an officer before the revoked or superseded
Proxy is used at the 2009 Annual Meeting. Proxies will be voted as
directed therein. Proxies which are signed by shareholders but which
lack specific instruction with respect to any proposal will be voted in favor of
the number and slate of directors proposed by the Board of Directors and listed
herein.
The presence at the Annual Meeting in
person or by proxy of the holders of a majority of the outstanding shares of our
Common Stock entitled to vote shall constitute a quorum for the transaction of
business. If a broker returns a “non-vote” proxy, indicating a lack
of voting instructions by the beneficial holder of the shares and a lack of
discretionary authority on the part of the broker to vote on a particular
matter, then the shares covered by such non-vote shall be deemed present at the
meeting for purposes of determining a quorum but shall not be deemed to be
represented at the meeting for purposes of calculating the vote required for
approval of such matter. If a shareholder abstains from voting as to
any matter, then the shares held by such shareholder shall be deemed present at
the meeting for purposes of determining a quorum and for purposes of calculating
the vote with respect to such matter, but shall not be deemed to have been voted
in favor of such matter. An abstention as to any proposal will
therefore have the same effect as a vote against the proposal.
The mailing address of the principal
executive office of Winland Electronics is 1950 Excel Drive, Mankato, Minnesota
56001. We expect that this Proxy Statement, the related Proxy and
Notice of Meeting will first be mailed to shareholders on or about March 26,
2009.
The Board of Directors has fixed March
9, 2009 as the record date for determining shareholders entitled to vote at the
2009 Annual Meeting. Persons who were not shareholders on such date
will not be allowed to vote at the 2009 Annual Meeting. At the close
of business on March 9, 2008, there were 3,669,148 shares of our Common Stock,
par value $.01 per share, issued and outstanding. The Common Stock is
our only outstanding class of capital stock. Each share of Common
Stock is entitled to one vote on each matter to be voted upon at the 2009 Annual
Meeting. Holders of Common Stock are not entitled to cumulative
voting rights.
The
following table provides information as of March 9, 2008 concerning the
beneficial ownership of our Common Stock by (i) the persons known by us to own
more than 5% of our outstanding Common Stock, (ii) each of our directors, (iii)
the named executive officers in the Summary Compensation Table and (iv) all
current executive officers and directors as a group. Except as
otherwise indicated, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock owned by
them. As of March 9, 2008, there were 3,669,148 shares of our Common
Stock issued and outstanding.
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Name
(and Address of 5%
Owner)
or Identity of Group
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Number
of Shares
Beneficially
Owned(1)
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Percent
of
Class (1)
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Lorin
E. Krueger
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215,416 | (2) | 5.9 | % | ||||
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Thomas
J. de Petra
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44,727 | (3) | 1.2 | % | ||||
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Richard
T. Speckmann
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36,100 | (4) | 1.0 | % | ||||
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Warren
Mitchell
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0 | 0.0 | % | |||||
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David
Kuklinski
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0 | 0.0 | % | |||||
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Thomas
J. Goodmanson
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18,000 | (5) | * | |||||
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Glenn
A. Kermes
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22,000 | (6) | * | |||||
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Thomas
J. Brady
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23,000 | (7) | * | |||||
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Greg
Burneske
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28,805 | (8) | * | |||||
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FMR
LLC
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337,600 | (9) | 9.2 | % | ||||
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All
Executive Officers and
Directors
as a Group (9 Individuals)
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388,048 | (10) | 10.2 | % | ||||
*
Less than 1% of the outstanding shares of Common Stock.
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(1)
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Under
the rules of the SEC, shares not actually outstanding are deemed to be
beneficially owned by an individual if such individual has the right to
acquire the shares within 60 days. Pursuant to such SEC Rules,
shares deemed beneficially owned by virtue of an individual’s right to
acquire them are also treated as outstanding when calculating the percent
of the class owned by such individual and when determining the percent
owned by any group in which the individual is
included.
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(2)
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Includes
880 shares held by Mr. Krueger’s spouse and 5,500 shares which may be
purchased by Mr. Krueger upon exercise of currently exercisable
options. Mr. Krueger’s address is 517 River Hills Road, Mankato
MN 56001.
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(3)
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Includes
31,500 shares which may be purchased by Mr. de Petra upon exercise of
currently exercisable options.
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(4)
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Includes
27,000 shares which may be purchased by Mr. Speckmann upon exercise of
currently exercisable options.
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(5)
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Includes
11,000 shares which may be purchased by Mr. Goodmanson upon exercise of
currently exercisable options.
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(6)
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Includes
18,000 shares which may be purchased by Mr. Kermes upon exercise of
currently exercisable options.
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(7)
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Includes
12,000 shares held by Mr. Brady’s spouse and 11,000 shares which may be
purchased by Mr. Brady upon exercise of currently exercisable
options.
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(8)
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Includes
25,200 shares which may be purchased by Mr. Burneske upon exercise of
currently exercisable options.
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(9)
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According
to a Schedule 13G filed with the Securities and Exchange Commission on
February 17, 2009 by FMR LLC (“FMR”) and Edward C. Johnson III, Chairman
and principal shareholder of FMR, the shares are beneficially owned by
Fidelity Management & Research Company (“Fidelity Research”) as an
investment adviser to various investment companies (the “Funds”),
including Fidelity Low Priced Stock Fund (“Fidelity Fund”), with Mr.
Johnson, FMR and the Funds each having the sole power to dispose of such
shares and the Funds’ Boards of Trustees having the sole power to vote or
direct the vote of such shares. Fidelity Research and Fidelity
Fund are wholly-owned subsidiaries of FMR. The address for FMR
is 82 Devonshire Street, Boston, Massachusetts
02109.
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(10)
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Includes
129,200 shares which may be purchased by executive officers and directors
upon exercise of currently exercisable
options.
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Our business affairs are conducted
under the direction of the Board of Directors in accordance with the Minnesota
Business Corporation Act and our Articles of Incorporation and
Bylaws. Members of the Board of Directors are informed of our
business through discussions with management, by reviewing materials provided to
them and by participating in meetings of the Board of Directors and its
committees. The corporate governance practices that we follow are
summarized below.
Independence
The Board has determined that a
majority of its members are “independent” as defined by the listing standards of
the American Stock Exchange. Our independent directors are Richard T.
Speckmann, Thomas J. Goodmanson and Thomas J. Brady. In the last
three years, there have been no transactions, relationships or arrangements,
other than in connection with service on our Board, between the independent
directors and Winland Electronics.
Code
of Ethics and Business Conduct
The Board has approved a Code of Ethics
and Business Conduct that applies to all of our employees, directors and
officers, including our principal executive officer, principal financial
officer, principal accounting officer and controller. The Code of
Ethics and Business Conduct addresses such topics as protection and proper use
of our assets, compliance with applicable laws and regulations, accuracy and
preservation of records, accounting and financial reporting, conflicts of
interest and insider trading. The Code of Ethics and Business Conduct
is available free of charge to any shareholder who sends a request for a copy to
Winland Electronics, Inc., Attn. Chief Financial Officer, 1950 Excel Drive,
Mankato, Minnesota 56001, and it is also available on our website at
www.winland.com. We intend to disclose on our website any amendment
to, or waiver from, a provision of our Code of Ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer and controller relating to any element of the code of ethics definition
enumerated in Item 406(b) of Regulation S-K. Late in 2003, we
contracted with an independent professional organization to provide anonymous
hotline services that permit our employees to communicate any concerns about
behavior or practices of Winland Electronics, its employees, officers or
directors. This service began January 1, 2004 which is still
currently used and was established to assist the Board of Directors in effective
internal control.
Meeting
Attendance
Board and
Committee Meetings. Directors are required to attend a minimum
of 75% of Board and committee meetings. During fiscal 2008, the Board
held four (4) meetings. Each director attended 100% of the meetings
of the Board and the committees on which such director served.
Annual Meeting of
Shareholders. Directors are encouraged to attend our annual
meetings of shareholders; however, there is no formal policy regarding
attendance at annual meetings. All directors were in attendance for
our 2008 annual meeting of shareholders.
Executive
Sessions of the Board
An executive session of non-management
directors is held at least once a year. In 2008, the Board held
one (1) executive sessions this year and the Audit committee held
four (4) executive sessions.
Committees
of the Board
Our Board of Directors has three
standing committees, the Audit Committee, the Compensation Committee and the
Nominating/Governance Committee. Each of the current members of these
committees is a non-employee independent director.
Audit
Committee. The Audit Committee is comprised of Thomas J. Brady
(Chairman), Thomas J. Goodmanson and Richard T. Speckmann. Messrs.
Brady and Goodmanson are "audit committee financial experts" as defined by Item
401(e) of Regulation S-K under the Securities Act of 1933. Mr. Brady
has a degree in accounting and is an inactive CPA in the state of
Minnesota. He currently serves as Chief Financial officer of
Digineer, Inc., an end-to-end e-business solutions provider. Mr.
Goodmanson has a degree in accounting and is an inactive CPA in the State of
Minnesota. He currently serves as Chief Financial Officer of
Calibrio, Inc. a leading provider of workforce optimization and unified desktop
software for IP-based contact centers. We acknowledge that the
designation of Messrs. Brady and Goodmanson as audit committee financial experts
does not impose on Messrs. Brady and Goodmanson any duties, obligations or
liability that are greater than the duties, obligations and liability imposed on
Messrs. Brady and Goodmanson as a member of the audit committee and the Board of
Directors in the absence of such designation or identification. The
Audit Committee reviews the selection and work of our independent registered
public accounting firm and the adequacy of internal controls for compliance with
corporate policies and directives. The Audit Committee's Report is
included on page 15. During 2008, the Audit Committee met four (4)
times. Our independent registered public accounting firm was present
at all of these meetings.
Compensation
Committee. The Compensation Committee is comprised of Richard
T. Speckmann (Chairman), Thomas J. Goodmanson and Thomas J.
Brady. Mr. Brady was appointed to the committee on May 6,
2008. This committee determines the compensation of the Chief
Executive Officer; and, taking into consideration any recommendations by the
Chief Executive Officer, it also determines the compensation for our other
executive officers. The committee makes recommendations to the
Board of Directors with respect to incentive compensation plans. This
committee is vested with the same authority as the Board of Directors with
respect to the administration of our equity plans. During 2008, the
Compensation Committee met once.
Nominating/Governance
Committee. The Nominating/Governance Committee is comprised of
Richard T. Speckmann (Chairman), Thomas J. Brady and Thomas J.
Goodmanson. On May 6, 2008, Mr. Brady was appointed to the committee
and Mr. Speckmann was appointed Chairman of the committee. This
committee recommends to the Board of Directors nominees for vacant positions on
the Board, sets goals for the Board and monitors the achievement of such
goals. This committee will consider a candidate for director proposed
by a shareholder. Candidates must have broad training and experience in their
chosen fields and must have achieved distinction in their
activities. The committee considers the particular expertise of each
nominee and strives to achieve an appropriate breadth of skills among the Board
members. A shareholder who wants to propose a candidate must comply
with the provisions of our Bylaws regarding nominations for the election of
directors. The policies of the committee are described more fully in
the Nominating/Governance Committee’s Report on page 6. During 2008,
the Nominating/Governance Committee met once.
Communications
with the Board
Shareholders may communicate directly
with the Board of Directors. All communications, other than
shareholder proposals and director nominations which must comply with certain
other requirements as discussed under “Shareholder Proposals and Nominations of
Director Candidates” on page 15, should be directed to our Chief Financial
Officer at the address below and should prominently indicate on the outside of
the envelope that it is intended for the Board of Directors or for
non-management directors. If no director is specified, the
communication will be forwarded to the entire Board. The
communication will not be opened before being forwarded to the intended
recipient, but it will go through normal security
procedures. Shareholder communications to the Board should be sent
to:
Glenn A.
Kermes, Chief Financial Officer
Winland
Electronics, Inc.
1950
Excel Drive
Mankato,
MN 56001
Compensation
to Non-Employee Directors
Cash
Compensation. In addition to being reimbursed for
out-of-pocket expenses incurred in connection with attendance at Board or
Committee meetings, the non-employee directors receive the following
fees:
Retainer:
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$1,200
per month for service on the Board, with the Chairman receiving an
additional $22,000 per year.
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Meeting Fees:
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$1,200
for Board meeting attendance.
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$1,200
for Audit Committee meeting attendance, with the chairman of the Audit
Committee receiving an additional $1,200 per
meeting.
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·
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$800
for Compensation Committee or Nominating/Governance Committee meeting
attendance, with the chairman of each of the Compensation Committee and
the Nominating/Governance Committee receiving an additional $750 per
meeting.
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Equity
Compensation. Our 2008 Equity Incentive Plan provides for
automatic option grants to each non-employee director. Each
non-employee director who is elected for the first time as a director is granted
a nonqualified option to purchase 5,500 shares of Common Stock. Each
non-employee director who is re-elected as a director or whose term of office
continues after a meeting of shareholders at which directors are elected shall,
as of the date of such re-election or shareholder meeting, automatically be
granted a five-year nonqualified option to purchase 5,500 shares of Common
Stock. No director shall receive more than one option pursuant to the
formula plan in any one fiscal year. All options granted pursuant to
these provisions are granted at a per share exercise price equal to 100% of the
fair market value of the Common Stock on the date of grant, and they are
immediately exercisable. On May 6, 2008, each of our
non-employee directors received an option to purchase 5,500 shares at $1.74 per
share. On January 2, 2008, Mr. Brady was elected to the Board and
received an option to purchase 5,500 shares at $2.23 per share.
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Name
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Fees
Earned or Paid in Cash ($)(1)
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Option
Awards ($)(2)
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Total
($)
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Options
to purchase shares of stock (#)(3)
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Thomas
J. Goodmanson
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$ | 36,433 | $ | 7,959 | $ | 44,395 | 11,000 | |||||||||
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Thomas
J. Brady
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22,800 | 7,959 | 30,759 | 11,000 | ||||||||||||
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Richard
T. Speckmann
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21,950 | 7,959 | 29,909 | 27,000 | ||||||||||||
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Lorin
E. Krueger
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18,000 | 7,959 | 25,959 | 5,500 | ||||||||||||
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(1)
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The
amounts consist of the cash fees paid to the non-employee directors as
described in “Cash Compensation”
above.
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(2)
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The
amounts reflect the amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008 in accordance with
FAS 123R for stock option awards automatically granted to non-employee
directors in fiscal year 2008 pursuant to our 2008 Equity Incentive
Plan. Assumptions used in the calculation of these amounts are
included in footnote 7 to our financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2008 filed with the
Securities and Exchange Commission
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(3)
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The
amounts reflect the total number of options held by each director to
purchase shares of the Company’s common
stock.
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The Nominating/Governance Committee is
comprised of independent directors. In accordance with its written
charter, the Nominating/Governance Committee assists the Board of Directors with
fulfilling its responsibility regarding any matters relating to corporate
governance including selection of candidates for our Board of
Directors. Its duties shall include oversight of the principles of
corporate governance by which Winland Electronics and the Board shall be
governed; the codes of ethical conduct and legal compliance by which Winland
Electronics and its directors, executive officers, employees and agents will be
governed; policies for evaluation of the Board and the chairperson; policies for
election and reelection of Board members; and policies for succession planning
for the Chief Executive Officer, Board chairperson and other Board
members. In addition, the Nominating/Governance Committee is
responsible for annually reviewing the composition of the Board, focusing on the
governance and business needs and requirements of Winland Electronics,
nominating and screening of Board member candidates, evaluating the performance
of Board members and recommending the reelection of Board members who are
performing effectively and who continue to provide a competency needed on the
Board. When a director’s principal occupation or business association
changes substantially, such director shall tender a letter of resignation to the
Board through the Nominating/Governance Committee, which resignation will be
considered and acted upon in a manner that is best for the Board and Winland
Electronics.
The Nominating/Governance Committee will consider candidates for nomination as a
director recommended by shareholders. In evaluating director
nominees, the Nominating/Governance Committee requires certain minimum
qualifications, including high moral character and mature judgment and the
ability to work collegially with others. In addition, factors such as
the following shall be considered:
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appropriate
size and diversity of the Board;
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·
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needs
of the Board with respect to particular talent and
experience;
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·
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knowledge,
skills and experience of nominee;
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·
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familiarity
with our business and industry;
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·
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appreciation
of the relationship of our business to the changing needs of society;
and
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·
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desire
to balance the benefit of continuity with the periodic injection of the
fresh perspective provided by a new
member.
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Shareholders who wish to recommend one
or more candidates for director to the Nominating/Governance Committee must
provide written recommendation to the Chief Financial Officer. Notice
of a recommendation must include the shareholder’s name, address and the number
of shares owned, along with information with respect to the person being
recommended, i.e. name, age, business address, residence address, current
principal occupation, five-year employment history with employer names and a
description of the employer’s business, the number of shares beneficially owned
by the prospective nominee, whether such person can read and understand basic
financial statements and other board memberships, if any. The
recommendation must be accompanied by a written consent of the prospective
nominee to stand for election if nominated by the Board of Directors and to
serve if elected by the shareholders. Winland Electronics may require
any nominee to furnish additional information that may be needed to determine
the eligibility of the nominee. In addition, the Bylaws permit
shareholders to nominate directors for consideration at a meeting of
shareholders at which one or more directors are to be elected. For a
description of the process for nominating directors in accordance with the
Bylaws, see “Shareholder Proposals and Nominations of Director Candidates” on
page 15.
A copy of the current
Nominating/Governance Committee Charter is available on our website at
www.winland.com.
| Members of the Nominating/Governance Committee | |
| Richard T. Speckmann, Chairman | |
| Thomas J. Goodmanson | |
| Thomas J. Brady |
(Proposals
#1 and #2)
Our Bylaws provide that the number of
directors shall be the number set by the shareholders, which shall be not less
than one. The Nominating/Governance Committee recommended to the
Board of Directors that the number of directors be set at five and that the
persons currently serving on the Board be nominated for
re-election. The Board of Directors unanimously recommends that the
number of directors be set at five and that the five persons nominated be
re-elected. Unless otherwise instructed, the Proxies will be so
voted.
Under applicable Minnesota law,
approval of the proposal to set the number of directors at five requires the
affirmative vote of the holders of the greater of a majority of the voting power
of the shares represented in person or by proxy at the Annual Meeting with
authority to vote on such matter, and the election of directors requires the
affirmative vote of the holders of a plurality of the voting power of the shares
represented in person or by proxy at the Annual Meeting with authority to vote
on such matter.
In the absence of other instruction,
the Proxies will be voted for setting the number of directors at five and for
each of the individuals listed below. If elected, such individuals
shall serve until the next annual meeting of shareholders and until their
successors shall be duly elected and shall qualify. All of the
nominees are members of the present Board of Directors. If, prior to
the 2009 Annual Meeting of Shareholders, it should become known that any one of
the following individuals will be unable to serve as a director after the 2009
Annual Meeting by reason of death, incapacity or other unexpected occurrence,
the Proxies will be voted for such substitute nominee(s) as is selected by the
Nominating/Governance Committee. Alternatively, the Proxies may, at
the Board’s discretion, be voted for such fewer number of nominees as results
from such death, incapacity or other unexpected occurrences. The
Board of Directors has no reason to believe that any of the following nominees
will be unable to serve.
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Name
and Age of Director/Nominee
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Age
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Current
Position With Winland Electronics, Inc.
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Director Since
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Thomas
J. de Petra
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62
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President,
Chief Executive Officer and Director
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1994
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Lorin
E Krueger
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53
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Director
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1983
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Richard
T. Speckmann
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58
|
Director
|
2002
|
|
Thomas
J. Goodmanson
|
39
|
Director
|
2007
|
|
Thomas
J. Brady
|
44
|
Director
|
2008
|
Thomas de Petra has been
President and Chief Executive Officer since April 2008. Mr. de Petra
served as Chairman of Winland’s Board of Directors from October 2006 until April
2008, and a Director of the company since 1994. He is the founder and president
of Vantage Advisory Services LLC, providing management consulting and business
advisory services. While serving as a self-employed management consultant during
the past 12 years, Mr. de Petra has served in various interim executive officer
roles. He also served as Chief Executive Officer of Nortech Forest Technologies,
Inc., a publicly traded company, from February 1996 to June 1997.
Lorin E. Krueger serves as a
Director. He is President and Chief Executive Officer of Rt 66
Holdings Inc., a private venture company. From June 1, 2001 to
January 2, 2008, Mr. Krueger served as President and Chief Executive Officer of
the Company and as President of the Company from January 1999 until June of 2001
when he assumed the additional role of CEO. Mr. Krueger has served as a
Director of the Company since 1983. Mr. Krueger served as the Company’s Chief
Operating Officer, and other executive officer positions in the company, from
1983 until January of 1999. Mr. Krueger was one of the founding partners
of the company.
Richard T. Speckmann serves
as a Director and Chairman of the Compensation Committee and
Nominating/Governance Committee. He is the Chief Executive Officer and
President of EmPerform, Inc., a company that evaluates employee performance and
productivity, since March 2004. He served as Chief Executive Officer of
Outside the Box, Inc. and as President of Amcon Construction Company, LLC April
2001 to November 2002. From January 1997 to March 2001, Mr. Speckmann, a
partner of Art Holdings Corporation, served as its President.
Thomas J. Goodmanson serves
as a Director and Chairman of the Board. He is the Chief Financial
Officer, of Calabrio, Inc., a leading provider of workforce optimization and
unified desktop software for IP-based contact centers. From March 2006 to
January 2008, Mr. Goodmanson served as the Chief Financial and Administrative
Officer of Gelco Information Network, Inc., a leading provider of global
software-as-a-service and other on-demand business services. From September 1999
to March 2006, Mr. Goodmanson was Chief Financial Officer of Magenic
Technologies. From August 1992 to September 1999, he was a senior manager at
KPMG, LLP and is a CPA, inactive, in the state of Minnesota.
Thomas J. Brady serves as a
Director and Chairman of the Audit Committee. He is the Chief Financial
Officer of Digineer, Inc., a growing IT consulting firm, which he joined in
October 2006. At Digineer, he is responsible for all aspects of internal
and external financial reporting, as well as information technology, legal,
operations and general administration. Previously, Mr. Brady spent 19 years with
KPMG, LLP, most recently as Audit Partner, where he was responsible for
corporate audits in a wide range of companies and industries with revenues
ranging from under $10 million to over $1 billion.
(Proposal
#3)
General
On March 5, 2009, the Board of
Directors amended, subject to shareholder approval, our 2008 Equity Incentive
Plan (the "Equity Incentive Plan") to increase the reserved shares of Common
Stock under the Equity Incentive Plan from 300,000 to
500,000. The Equity Incentive Plan was originally adopted by
the Board on March 17, 2008 and approved by the shareholders in May
2008.
The Board believes that granting equity
incentives to employees, officers, consultants, advisors and directors is an
effective and crucial means to promote the future growth and development of
Winland. Such Awards, among other things, increase these individuals’
proprietary interest in Winland’s success and enables Winland to attract and
retain qualified personnel. There are currently 159,000 shares of
Common Stock reserved under the Equity Incentive Plan for Awards that have
previously been granted under the Equity Incentive Plan. Winland does
not have the ability to grant future Awards under the 2005 Equity Incentive Plan
or the 1997 Stock Option Plan, nor does it have the ability to reissue Common
Stock which was previously reserved for Awards that have expired or
terminated. We believe that in order to attract and retain qualified
personnel, we must have the capacity to offer Awards under the Equity Incentive
Plan.
Because of the current state of the
economy and the current trading price of our Common Stock, all of the Awards
granted under the Equity Incentive Plan, as well as the 2005 Equity Incentive
Plan are under water. Winland deems it important to have the ability
to grant Awards in order to attract and retain qualified personnel, including
those qualified personnel who have been granted Awards in the past under either
the Equity Incentive Plan or the 2005 Equity Incentive Plan.
The Board therefore recommends that all
shareholders vote in favor of the amendment to the Equity Incentive Plan to
increase the shares of Common Stock reserved under the Equity Incentive Plan
from 300,000 to 500,000.
A general description of the basic
features of the Equity Incentive Plan is presented below, but such description
is qualified in its entirety by reference to the full text of the Equity
Incentive Plan, a copy of which may be obtained without charge upon written
request to Brian Lawrence, Winland’s Controller.
Description
of the Equity Incentive Equity Incentive Plan
General. Under
the Equity Incentive Plan, the Compensation Committee may award incentive or
nonqualified stock options, restricted stock, stock appreciation rights,
performance shares and performance units to those officers and employees of
Winland (including any subsidiaries and affiliates), or to directors of or
consultants or advisors to Winland, whose performance, in the judgment of the
Board or Committee, can have a significant effect on the success of
Winland.
Shares Available. The Equity
Incentive Plan currently provides for the issuance of up to 300,000 shares of
Common Stock, subject to adjustment of such number in the event of certain
increases or decreases in the number of outstanding shares of Common Stock
effected as a result of stock splits, stock dividends, combinations of shares or
similar transactions in which Winland receives no
consideration.
The total number of shares and the
exercise price per share of Common Stock that may be issued pursuant to
outstanding Awards are subject to adjustment by the Board upon the occurrence of
stock dividends, stock splits or other recapitalizations, or because of mergers,
consolidations, reorganizations or similar transactions in which we receive no
consideration. The Board may also provide for the protection of
Participants in the event of a merger, liquidation, reorganization, divestiture
(including a spin-off) or similar transaction.
Administration
and Types of Awards. As permitted in
the Equity Incentive Plan, the Board has designated the Compensation Committee
(hereinafter referred to as the “Administrator”) to administer the Equity
Incentive Plan. The Administrator has broad powers to administer and
interpret the Equity Incentive Plan, including the authority to (i) establish
rules for the administration of the Equity Incentive Plan, (ii) select the
participants in the Equity Incentive Plan, (iii) determine the types of awards
to be granted and the number of shares covered by such awards, and (iv) set the
terms and conditions of such awards. All determinations and
interpretations of the Administrator are binding on all interested
parties.
Options. Options granted under the Equity Incentive Plan may
be either “incentive” stock options within the meaning of Section 422 of the
Internal Revenue Code (“IRC”) or “nonqualified” stock options that do not
qualify for special tax treatment under the IRC. No incentive stock
option may be granted with a per share exercise price less than the fair market
value of a share of the Company’s Common Stock on the date the option is
granted. The closing sale price of a share of our Common Stock was
$0.45 on March 9, 2009.
The period during which an option may
be exercised and whether the option will be exercisable immediately, in stages,
or otherwise is set by the Administrator. An incentive stock option
may not be exercisable more than ten (10) years from the date of
grant. Participants generally must pay for shares upon exercise of
options with cash, certified check or Common Stock of Winland valued at the
stock’s then “fair market value” as defined in the Equity Incentive
Plan. Each incentive option granted under the Equity Incentive
Plan is nontransferable during the lifetime of the Participant. A
nonqualified stock option may, if permitted by the Administrator, be transferred
to certain family members, family limited partnerships and family
trusts.
The Administrator may, in its
discretion, modify or impose additional restrictions on the term or
exercisability of an option. The Administrator may also determine the
effect a Participant’s termination of employment with Winland or a subsidiary
may have on the exercisability of such option. The grants of stock
options under the Equity Incentive Plan are subject to the Administrator’s
discretion.
Restricted Stock
Award, Performance Share Awards and Performance Units. The Administrator is also
authorized to grant awards of restricted stock, performance shares and
performance units. Each restricted stock award granted under the
Equity Incentive Plan shall be for a number of shares as determined by the
Administrator, and the Administrator, in its discretion, may also establish
continued employment, vesting or other conditions that must be satisfied for the
restrictions on the transferability of the shares and the risks of forfeiture to
lapse. Performance share awards generally provide the recipient
with the opportunity to receive shares of Winland’s Common Stock and performance
units generally provide recipients with the opportunity to receive cash awards,
but only if Winland’s financial goals or other business objectives are achieved
over specified performance periods.
Stock
Appreciation Rights. A stock appreciation right may be granted
independent of or in tandem with a previously or contemporaneously granted stock
option, as determined by the Administrator. Generally, upon the
exercise of a stock appreciation right, the recipient will receive cash, shares
of Common Stock or some combination of cash and shares having a value equal to
the excess of (i) the fair market value of a specified number of shares of
Winland’s Common Stock, over (ii) a specified exercise price. If the
stock appreciation right is granted in tandem with a stock option, the exercise
of the stock appreciation right will generally cancel a corresponding portion of
the option, and, conversely, the exercise of the stock option will cancel a
corresponding portion of the stock appreciation right. The
Administrator will determine the term of the stock appreciation right and how it
will become exercisable. A stock appreciation right may not be
transferred by an optionee except by will or the laws of descent and
distribution.
Amendment. The Board may, from time to time, suspend or discontinue the
Equity Incentive Plan or revise or amend it in any respect; provided, (i) no
such revision or amendment may impair the terms and conditions of any
outstanding option or stock award to the material detriment of the participant
without the consent of the participant except as authorized in the event of
merger, consolidation or liquidation of Winland, (ii) the Equity Incentive Plan
may not be amended in any manner that will (a) materially increase the number of
shares subject to the Equity Incentive Plan except as provided in the case of
stock splits, consolidations, stock dividends or similar events, (b) change the
designation of the class of employees eligible to receive awards; (c) decrease
the price at which options will be granted; or (d) materially increase the
benefits accruing to participants under the Equity Incentive Plan, without the
approval of the shareholders, to the extent such approval is required by
applicable law or regulation.
Federal
Income Tax Matters
Options. Under
present law, an optionee will not realize any taxable income on the date a
nonqualified option is granted pursuant to the Equity Incentive
Plan. Upon exercise of the option, however, the optionee must
recognize, in the year of exercise, ordinary income equal to the difference
between the option price and the fair market value of Winland’s Common Stock on
the date of exercise. Upon the sale of the shares, any resulting gain
or loss will be treated as capital gain or loss. Winland will receive
an income tax deduction in its fiscal year in which nonqualified options are
exercised equal to the amount of ordinary income recognized by those optionees
exercising options, and must withhold income and other employment related taxes
on such ordinary income.
Incentive stock options granted under the Equity Incentive Plan are intended to
qualify for favorable tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended. Under Section 422, an optionee recognizes
no taxable income when the option is granted. Further, the optionee
generally will not recognize any taxable income when the option is exercised if
he or she has at all times from the date of the option’s grant until three
months before the date of exercise been an employee of
Winland. Winland ordinarily is not entitled to any income tax
deduction upon the grant or exercise of an incentive stock
option. Certain other favorable tax consequences may be available to
the optionee if he or she does not dispose of the shares acquired upon the
exercise of an incentive stock option for a period of two years from the
granting of the option and one year from the receipt of the shares.
Restricted Stock
Awards. Generally, no income is taxable to the recipient of a
restricted stock award in the year that the award is
granted. Instead, the recipient will recognize compensation taxable
as ordinary income equal to the fair market value of the shares in the year in
which the transfer restrictions lapse. Alternatively, if a recipient
makes a “Section 83(b)” election, the recipient will, in the year that the
restricted stock award is granted, recognize compensation taxable as ordinary
income equal to the fair market value of the shares on the date of the
award. Winland normally will receive a deduction equal to the amount
of compensation the recipient is required to recognize as ordinary taxable
income, and must comply with applicable tax withholding
requirements.
Performance Share
and Performance Unit Awards. A recipient of performance shares
or performance units will recognize compensation taxable as ordinary income
equal to the value of the shares of Common Stock or the cash received, as the
case may be, in the year that the recipient receives payment. Winland
normally will receive a deduction equal to the amount of compensation the
recipient is required to recognize as ordinary taxable income, and must comply
with applicable tax withholding requirements.
Stock
Appreciation Rights. Generally, a recipient of a stock appreciation
right will recognize compensation taxable as ordinary income equal to the value
of the shares of Common Stock or the cash received in the year that the stock
appreciation right is exercised. Winland normally will receive a
deduction equal to the amount of compensation the recipient is required to
recognize as ordinary taxable income, and must comply with applicable tax
withholding requirements.
Equity
Compensation Plan Information
The following table summarizes our
equity compensation plan information as of December 31, 2008.
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted
average exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|||||||||
|
(a)
|
(b)
|
(c)
|
||||||||||
|
Equity
compensation plans approved by security holders
|
468,800 | $ | 2.44 | 343,202 | (1) | |||||||
|
Equity
compensation plans not approved by security holders (2)
|
12,500 | $ | 3.52 | 0 | ||||||||
|
TOTAL
|
481,300 | $ | 2.46 | 343,202 | ||||||||
|
(1)
|
Includes
190,202 shares available for issuance under Winland’s 1997 Employee Stock
Purchase Plan.
|
|
(2)
|
The
plans consist of three warrant agreements to purchase shares of Winland’s
Common Stock issued in 2006 as partial consideration for consulting
services to the following: (i) Board Assets, Inc., a board
evaluation and consulting firm – warrant to purchase 5,000 shares of
Common Stock, which warrant vests upon performance of certain services and
expires on February 16, 2016 (2,500 shares vested on July 17, 2006, and
the remaining shares did not vest because the consulting arrangement has
been terminated); and (ii) each of two principals of Genoa Business
Advisors, LLC, a business consulting firm – warrant to purchase 10,000
shares of Common Stock, which vest in 5,000-share increments upon
performance of certain services and expire on September 6, 2011 (10,000
shares vested on January 19, 2007, and the remaining shares did not vest
because the consulting arrangement has been
terminated).
|
Summary
Compensation Table
The following table sets forth certain
information regarding compensation paid or accrued for our last fiscal year to
our Chief Executive Officer, Chief Financial Officer and our two highest paid
executive officers whose total compensation earned or accrued for fiscal year
2008 exceeded $100,000.
We have entered into employment
agreements with each of the named executive officers, which agreements are
described below.
|
Name and
Principal Position
|
Year
|
Salary
($)
|
Option
Awards ($)(1)
|
Non-Equity
Incentive Plan Compensation ($)
|
All
Other Compensation ($)(3)
|
Total
($)
|
|||||||||||||||
|
Thomas
J. de Petra
|
2008
|
$ | 174,358 | $ | 15,925 | $ | - | $ | - | $ | 190,283 | ||||||||||
|
Chief
Executive Officer
and President
|
|||||||||||||||||||||
|
Glenn
Kermes
|
2008
|
$ | 149,989 | $ | 32,039 | $ | - | $ | 4,907 | $ | 186,935 | ||||||||||
|
Chief
Financial Officer and Executive
Vice President
|
|||||||||||||||||||||
|
Warren
E. Mitchell
|
2008
|
$ | 118,558 | $ | 8,834 | $ | 20,000 | (2) | $ | - | $ | 147,392 | |||||||||
|
Vice
President of Operations
& Supply
|
|||||||||||||||||||||
|
Gregory
W. Burneske
|
2008
|
$ | 123,594 | $ | 16,951 | $ | - | $ | 4,121 | $ | 144,666 | ||||||||||
|
Vice
President of
Engineering
|
|||||||||||||||||||||
|
(1)
|
The
amounts reflect the amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008 in accordance with
FAS 123R of stock option awards pursuant to our 2008 Equity Incentive
Plan, 2005 Equity Incentive Plan and 1997 Stock Option
Plan. Assumptions used in the calculation of these amounts are
included in footnote 7 to our financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2008 filed with the
Securities and Exchange Commission.
|
|
(2)
|
The
amount represents cash incentive awards made pursuant to Mr. Mitchell’s
employment agreement as noted
below.
|
|
(3)
|
Other
Annual compensation for fiscal year 2008 consists of contributions to our
401(k) plan for the named executive officer’s
benefit.
|
Employment
Agreements
Thomas J. de
Petra. On May 6, 2008, Winland entered into an
employment agreement with Thomas J. de Petra, Chief Executive Officer and
President which continues until either party terminates such agreement as
provided in the agreement. Pursuant to the terms of the agreement,
Mr. de Petra’s base salary beginning on April 24, 2008 is $202,000 and is
subject to review at least annually. Pursuant to the employment
agreement, if Mr. de Petra’s employment is terminated by Winland without
cause or by Mr. de Petra for good reason, Mr. de Petra is entitled to
his base salary for twelve months and health care benefits for six months;
provided, however, if such termination occurs within two years after a change of
control, Mr. de Petra will be entitled to an amount equal to his salary and
bonus payments for the two completed fiscal years immediately preceding
termination payable over the 24 months following the termination. During
employment with Winland and for one year following termination of such
employment, Mr. de Petra has agreed that he will not compete with Winland
or solicit any of its employees, customers or contractors for employment or
business purposes.
Glenn A.
Kermes. On December 31, 2007, Winland entered into an
Amendment to Employment Agreement with Glenn Kermes, Chief Financial Officer,
dated January 23, 2007, which agreement continues until either party
terminates such agreement as provided in the agreement. Pursuant to the terms of
the amendment, Mr. Kermes’ base salary beginning January 1, 2009 is
$185,000 and is subject to review at least annually. Pursuant to the employment
agreement, as amended, if the Mr. Kermes’ employment is terminated by
Winland without cause or by Mr. Kermes for good reason, Mr. Kermes is
entitled to his base salary for six months and health care benefits for three
months; provided, however, if such termination occurs within two years after a
change of control, Mr. Kermes will be entitled to an amount equal to his
salary and bonus payments for the one completed fiscal year immediately
preceding termination payable over the 12 months following the termination.
During employment with Winland and for one year following termination of such
employment, pursuant to the amendment, Mr. Kermes has agreed that he will
not compete with Winland or solicit any of its employees, customers or
contractors for employment or business purposes.
Warren E.
Mitchell. On February 4, 2008, Winland entered into an
employment agreement with Warren Mitchell as Company’s Executive Supply Chain
Leader. On June 11, 2008, Winland promoted Mr. Mitchell to Vice
President of Operations and Supply. Mr. Mitchell’s base salary
beginning January 1, 2009 is $149,350 and is subject to review at least annually
pursuant to the agreement. Pursuant to the employment agreement,
Mr. Mitchell’s employment may be terminated by Winland or by
Mr. Mitchell for any or no reason. If, during the first six
months of the new CEO’s employment, Mr. Mitchell is terminated without cause, or
due to an organization restructure, Mr. Mitchell will be entitled to 6 months of
his base salary. Also, if Mr. Mitchell is terminated (outside of the
first six months of the new CEO’s employment) without cause or is impacted
during a potential change of control of the company, his severance will be four
months of the his base salary. During employment with Winland and for
one year following termination of such employment, Mr. Mitchell has agreed
that he will not compete with Winland or solicit any of its employees, customers
or contractors for employment or business purposes.
Gregory W.
Burneske. On May 17, 2004, Winland entered into an Employment
Agreement with Gregory Burneske as Winland’s Vice President of Engineering which
continues until either party terminates such agreement as provided in the
agreement. Pursuant to the terms of the agreement, Mr. Burneske’s base
salary beginning January 1, 2009 is $127,300 and is subject to review at
least annually. Pursuant to the employment agreement,
if Mr. Burneske’s employment is terminated by Winland without
cause or by Mr. Burneske for good reason, Mr. Burneske is entitled to
his base salary for six months and health care benefits for three months;
provided, however, if such termination occurs within two years after a change of
control, Mr. Burneske will be entitled to an amount equal to his salary and
bonus payments for the one completed fiscal year immediately preceding
termination payable over the 12 months following the termination. During
employment with Winland and for one year following termination of such
employment, pursuant to the amendment, Mr. Burneske has agreed that he will
not compete with Winland or solicit any of its employees, customers or
contractors for employment or business purposes.
Outstanding
Equity Awards at Fiscal Year-End
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Un-exercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
|||||||||
|
Thomas
J. de Petra
|
5,000 | -- | $ | 3.00 |
05/11/2009
|
||||||||
| 5,500 | -- | $ | 4.11 |
05/10/2015
|
|||||||||
| 5,500 | -- | $ | 4.48 |
05/09/2016
|
|||||||||
| 5,500 | -- | $ | 3.28 |
05/08/2017
|
|||||||||
| -- | 50,000 | (1) | $ | 1.74 |
05/06/2014
|
||||||||
|
|
|||||||||||||
|
Glenn
A. Kermes
|
14,400 | 21,600 | (2) | $ | 3.33 |
10/02/2012
|
|||||||
| 3,600 | 14,400 | (3) | $ | 2.55 |
11/08/2013
|
||||||||
| -- | 12,000 | (4) | $ | 0.70 |
01/15/2015
|
||||||||
|
|
|||||||||||||
|
Warren
E. Mitchell
|
5,400 | 21,600 | (5) | $ | 2.13 |
02/04/2014
|
|||||||
| -- | 9,000 | (6) | $ | 1.60 |
06/11/2014
|
||||||||
|
|
|||||||||||||
|
Gregory
W. Burneske
|
14,400 | 3,600 | (7) | $ | 3.00 |
05/17/2010
|
|||||||
| 10,800 | 7,200 | (8) | $ | 3.35 |
01/01/2012
|
||||||||
|
(1)
|
The
stock option was granted on May 6, 2008. The option vests to
the extent of 10,000 shares annually on the first five anniversary dates
of the date of grant.
|
|
(2)
|
The
stock option was granted on October 2, 2006. The option vests
to the extent of 7,200 shares annually on the first five anniversary dates
of the date of grant.
|
|
(3)
|
The
stock option was granted on November 8, 2007. The option vests
to the extent of 3,600 shares annually on the first five anniversary dates
of the date of grant.
|
|
(4)
|
The
stock option was granted on January 15, 2009. The option vests
to the extent of 2,400 shares annually on the first five anniversary dates
of the date of grant.
|
|
(5)
|
The
stock option was granted on February 4, 2008. The option vests
to the extent of 5,400 shares annually on the first five anniversary dates
of the date of grant.
|
|
(6)
|
The
stock option was granted on June 11, 2008. The option vests to
the extent of 1,800 shares annually on the first five anniversary dates of
the date of grant.
|
|
(7)
|
The
stock option was granted on May 17, 2004. The option vests to
the extent of 3,600 shares annually on the first five anniversary dates of
the date of grant.
|
|
(8)
|
The
stock option was granted on January 1, 2006. The option vests
to the extent of 3,600 shares annually on the first five anniversary dates
of the date of grant.
|
During the two most recent fiscal
years, we have not had any transactions in which any director or executive
officer, or any other member of the immediate family of any director or
executive officer, had a material direct or indirect interest reportable under
applicable Securities and Exchange Commission rules, and there are no such
transactions proposed.
Section 16(a) of the Securities
Exchange Act of 1934 requires our executive officers and directors, and persons
who own more than ten percent of a registered class of our equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the “SEC”). Executive officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. Based solely on its
review of the copies of such forms received, we believe that, during fiscal year
2008, all of our executive officers, directors and greater than ten-percent
beneficial owners complied with the applicable filing requirements, except that
Messrs. Goodmanson and Krueger each reported one transaction and Mr. Brady
reported two transactions on a Form 4 that were not timely filed.
McGladrey & Pullen, LLP has served
as our independent registered public accounting firm since May
1998. Representatives of McGladrey & Pullen, LLP are expected to
be present at the 2009 Annual Meeting, will be given an opportunity to make a
statement regarding financial and accounting matters if they so desire, and will
be available to respond to appropriate questions from our
shareholders.
Audit
Fees
We paid the following fees to McGladrey
& Pullen, LLP or its affiliated entity RSM McGladrey, Inc. for fiscal years
2007 and 2008:
|
2007
|
2008
|
|||||||
|
Audit
Fees
|
$ | 222,000 | $ | 193,000 | ||||
|
Tax
Fees
|
90,000 | 48,000 | ||||||
| $ | 312,000 | $ | 241,000 | |||||
Audit fees are professional services
rendered for the audit of our annual financial statements and review of
financial statements included in our Forms 10-K and 10-Q. Tax fees
include fees for services provided in connection with tax planning and tax
compliance. Tax fees for 2007 included fees paid to RSM McGladrey,
Inc. to perform a Research and Development Tax Credit Study for tax years 2003
thru 2006.
The Audit Committee has considered
whether provision of the above non-audit services is compatible with maintaining
accountants’ independence and has determined that such services are compatible
with maintaining accountants’ independence.
Pre-Approval
Policy
The Audit Committee has not formally
adopted a policy for pre-approval of all audit and non-audit services by its
independent auditors, but it has routinely approved all audit and permitted
non-audit services to be performed for Winland by its independent
auditors.
The Board maintains an Audit Committee
comprised of the three outside directors. The Board and the Audit
Committee believe that the Audit Committee’s current member composition
satisfies the Listing Standards of the American Stock Exchange (“AMEX”) that
governs audit committees, Section 121(B), including the requirement that audit
committee members all be “independent directors” as that term is defined by AMEX
Listing Standards Section 121(A).
The Audit Committee has established a Disclosure Committee, comprised of
executives and senior managers who are actively involved in the disclosure
process, to specify, coordinate and oversee the review procedures that are used
each quarter, including at fiscal year end, to prepare our periodic and current
SEC reports.
In
accordance with its written charter adopted by the Board (available on our
website), the Audit Committee assists the Board with fulfilling its oversight
responsibility regarding the quality and integrity of the accounting, auditing
and financial reporting practices of Winland. In discharging its
oversight responsibilities regarding the audit process, the Audit
Committee:
(1) reviewed
and discussed the audited financial statements with management;
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(2)
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discussed
with the independent registered public accounting firm the material
required to be discussed by Statement on Auditing Standards No. 61, as
amended; and
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(3)
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reviewed
the written disclosures and the letter from the independent registered
public accounting firm required by the Independence Standards Board
Standard No.1 and discussed with the independent registered public
accounting firm any relationships that may impact their objectivity and
independence.
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Based
upon the review and discussions referred to above, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as
filed with the Securities and Exchange Commission.
| Members of the Audit Committee | |
| Thomas J. Brady, Chairman | |
| Thomas J. Goodmanson | |
| Richard T. Speckmann |
Management knows of no other matters to
be presented at the 2009 Annual Meeting. If any other matter properly
comes before the 2009 Annual Meeting, the appointees named in the proxies will
vote the proxies in accordance with their best judgment.
Under the SEC Rules, we are required to
provide the following information to you based on the assumption that the date
for our annual meeting in 2010 will not deviate more than thirty (30) days from
the date for the 2009 Annual Meeting: Any appropriate proposal
submitted by a shareholder of Winland and intended to be presented at the 2010
Annual meeting of shareholders must be received by us by December 14, 2009 to be
considered for inclusion in our proxy statement and related proxy for our annual
meeting in 2010. Also, our Bylaws permit shareholders to make
nominations for the election of directors and propose business to be brought
before any regular meeting of shareholders, provided advance written notice of
such nomination or proposal is received by us after February 8, 2010, but on or
before March 8, 2010. According to our Bylaws, a shareholder
nomination or proposal received outside of this time period will be considered
untimely and the chairman of the meeting shall refuse to acknowledge such
untimely nomination or proposal.
We will inform you of any changes of
the aforesaid dates in a timely manner and will provide notice of the new dates
in our earliest possible quarterly report on Form 10-Q.
Any shareholder nomination or proposal
must provide the information required by our Bylaws and comply with any
applicable laws and regulations. All submissions should be made to
the Secretary of Winland Electronics at our principal offices at 1950 Excel
Drive, Mankato, Minnesota 56001.
A copy of our Annual Report to
Shareholders for the fiscal year ended December 31, 2008, including
financial statements, accompanies this Notice of Annual Meeting and Proxy
Statement. No portion of the Annual Report is incorporated herein or
is to be considered proxy soliciting material.
WE WILL FURNISH WITHOUT CHARGE TO EACH
PERSON WHOSE PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST OF ANY SUCH PERSON,
A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
2008, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS AND A LIST OF EXHIBITS TO SUCH FORM 10-K. WE
WILL FURNISH TO ANY SUCH PERSON ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING
THE FORM 10-K UPON THE ADVANCE PAYMENT OF REASONABLE FEES. REQUESTS
FOR A COPY OF THE FORM 10-K AND/OR ANY EXHIBIT(S) SHOULD BE DIRECTED TO THE
CHIEF FINANCIAL OFFICER OF WINLAND ELECTRONICS, INC., 1950 EXCEL DRIVE, MANKATO,
MINNESOTA 56001. YOUR REQUEST MUST CONTAIN A REPRESENTATION THAT, AS
OF MARCH 9, 2009, YOU WERE A BENEFICIAL OWNER OF SHARES ENTITLED TO VOTE AT THE
2009 ANNUAL MEETING OF SHAREHOLDERS.
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BY
ORDER OF THE BOARD OF DIRECTORS,
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Date:
March 26, 2009
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By:
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/s/ Thomas J. Goodmanson | |
| Mankato, Minnesota | Thomas J. Goodmanson | ||
| Chairman of the Board | |||
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