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 SS240.14a-11(c) or SS240.14a-12
.............................Culp,Inc...........................................
(Name of Registrant as Specified in Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box)
[x] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6 (i) (4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee us calculated and state how it was determined) :
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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
(LOGO) CULP
101 South Main Street
Post Office Box 2686
High Point, North Carolina 27261-2686
Telephone: (336) 889-5161
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
September 26, 2000
- --------------------------------------------------------------------------------
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Culp, Inc. (the "company") will be held at
the Radisson Hotel, 135 South Main Street, High Point, North Carolina on
Tuesday, September 26, 2000 at 9:00 a.m. local time, for the purpose of
considering and acting on the following matters:
(1) To ratify the appointment of KPMG LLP as the independent auditors of
the company for the current fiscal year;
(2) To elect four (4) directors;
(3) To amend the company's 1993 Stock Option Plan to (i) increase the
number of shares available for issuance thereunder from 809,500 to
1,159,500 and (ii) add Section 14 thereof so that options granted
under the Plan shall not be subject to repricing; and
(4) To transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
Only shareholders of record as of the close of business on July 24, 2000
are entitled to notice of and to vote at the Annual Meeting and any adjournment
or adjournments thereof.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEEING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU
UPON REQUEST.
The Proxy Statement accompanying this notice sets forth further information
concerning the items listed above and the use of the enclosed proxy. You are
urged to study this information carefully.
The Annual Report of the company also accompanies this notice.
BY ORDER OF THE BOARD OF DIRECTORS.
By: /s/ Kathy J. Hardy
--------------
KATHY J. HARDY
Corporate Secretary
August 18, 2000
(LOGO) CULP
Proxy Statement
---------------
INTRODUCTION
This Proxy Statement is furnished to the shareholders of Culp, Inc.
(hereinafter sometimes referred to as the "company") by the company's Board of
Directors in connection with the solicitation of proxies for use at the Annual
Meeting of Shareholders of the company to be held on Tuesday, September 26,
2000, at 9:00 a.m. at the Radisson Hotel, 135 South Main Street, High Point,
North Carolina, and at any adjournment or adjournments thereof. Action will be
taken at the Annual Meeting on the ratification of the appointment of
independent auditors, the election of certain directors, amendments to the
company's 1993 Stock Option Plan, and any other business that properly comes
before the meeting.
This Proxy Statement and accompanying form of proxy are first being mailed
to shareholders on or about August 18, 2000.
Whether or not you expect to attend the Annual Meeting, please complete,
date and sign the accompanying form of proxy and return it promptly to ensure
that your shares are voted at the meeting. Any shareholder giving a proxy may
revoke it at any time before a vote is taken: (i) by duly executing a proxy
bearing a later date; (ii) by executing a notice of revocation in a written
instrument filed with the secretary of the company; or (iii) by appearing at the
meeting and notifying the secretary of the intention to vote in person. Unless a
contrary choice is specified, all shares represented by valid proxies received
pursuant to this solicitation, and not revoked before they are exercised, will
be voted for the ratification of the appointment of KPMG LLP as the independent
auditors of the company for the current fiscal year, for the election of the
four (4) directors named as nominees in this Proxy Statement, and for the
amendments to the 1993 Stock Option Plan. The proxy also confers discretionary
authority upon the persons named therein, or their substitutes, with respect to
any other business that may properly come before the meeting. Unless otherwise
stated herein, each matter submitted to the shareholders requires the
affirmative vote of a majority of the votes cast at the Annual Meeting for
approval. A shareholder abstaining from the vote on a proposal will be counted
as present for purposes of determining whether a quorum is present, but will be
counted as not having voted on the proposal in question. This means that in
cases where a majority of the shares represented is required to approve a
proposal, an abstention will have the effect of a vote against the proposal in
question.
The company will bear the entire cost of preparing this Proxy Statement and
of soliciting proxies. Proxies may be solicited by employees of the company,
either personally, by special letter, or by telephone. The company also will
request brokers and others to send solicitation material to beneficial owners of
the company's stock and will reimburse them for this purpose upon request.
1
VOTING SECURITIES
Only shareholders of record at the close of business on July 24, 2000 will
be entitled to vote at the Annual Meeting or any adjournment or adjournments
thereof. The number of outstanding shares entitled to vote at the meeting is
11,208,720.
The following table lists the beneficial ownership of the company's common
stock ("Common Stock") with respect to: (i) each person known by the company to
be the beneficial owner of more than five percent of such Common Stock, as shown
on the last public filing made by each such person, and (ii) all executive
officers, directors and nominees of the company as a group, a total of 12
persons, as of July 24, 2000.
Number of Shares Percent of
Title of Name and Address of Beneficially Outstanding
Class Beneficial Owner Owned (1) Shares
----- ---------------- --------------- ------
Common Stock, Robert G. Culp, III 3,033,283 (2) 26.7%
par value, 903 Forrest Hill Drive
$.05 per share High Point, NC 27262
Winsal & Company 2,408,750 (3) 21.5%
c/o First Union Corporation
401 S. Tryon Street
Fiduciary Operations NC1151
Charlotte, NC 28288-1151
Dimensional Fund Advisors Inc 1,001,740 (4) 8.9%
Ocean Avenue, 11th Floor
Santa Monica, CA 90401
T. Rowe Price Associates, Inc. 1,180,000 (5) 10.5%
100 East Pratt Street
Baltimore, Maryland 21289-1009
U. S. Bancorp 562,635 (6) 5.0%
601 2nd Avenue, South
Minneapolis, Minnesota 55402-4302
All executive officers,
directors and nominees
as a group (12 persons) 3,769,331 (7) 32.5%
(1) References in this proxy statement to immediately exercisable options refer
to options that are currently exercisable or exercisable within six months.
(2) These shares include all of the shares listed below that also are
beneficially owned in the name of Winsal & Company as trustee of the Robert
G. Culp, Jr. Family Trust, all of which shares Robert G. Culp, III has the
right to vote and jointly (with Winsal & Company) has the right to invest.
(SEE NOTE (2) BELOW); also includes 63,338 shares held of record by Susan
B. Culp, the wife of Mr. Culp, the beneficial ownership of which shares Mr.
Culp disclaims, 7,698 shares owned by Mr. Culp's wife as custodian for his
daughter, the beneficial ownership of which shares Mr. Culp disclaims, and
includes 164,500 shares subject to options owned by Mr. Culp that are
immediately exercisable.
(3) All of these shares also are included in the shares listed above for Robert
G. Culp, III (SEE NOTE (1) ABOVE). Includes 709,375 shares held of record
by Winsal & Company for the benefit of Judith C. Walker, sister of Robert
G. Culp, III; 505,000 shares held of record by Winsal & Company for the
benefit of Harry R. Culp, brother of Robert G. Culp, III; and 1,194,375
shares held of record by Winsal & Company for the benefit of Robert G.
Culp, III, all of which shares Robert G. Culp, III has the right to vote
and jointly (with Winsal & Company) has the right to invest.
2
(4) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts.
(These investment companies and investment vehicles are the "Portfolios").
In its role as investment advisor and investment manager, Dimensional
possesses both voting and investment power over 1,001,740 shares of the
company's stock as of March 31, 2000. The Portfolios own all securities
reported in this statement, and Dimensional disclaims beneficial ownership
of such securities.
(5) These securities are owned by various individual and institutional investors
as of March 31, 2000, which T. Rowe Price Associates, Inc. (Price
Associates) serves as investment advisor with power to direct investments
and/or sole power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of
such securities.
(6) As of March 31, 2000, these shares are owned by various trust accounts
established for individuals for whom one or more affiliated banks of U.S.
Bancorp serve as trustee with power to direct investments and/or sole power
to vote the shares. For purposes of reporting requirements of the
Securities Exchange Act of 1934, U. S. Bancorp is deemed to be the
beneficial owner of such shares; however, U.S. Bancorp disclaims beneficial
ownership of all such shares.
(7) Includes 389,250 shares subject to options owned by certain officers and
directors that are immediately exercisable.
PROPOSAL 1: INDEPENDENT AUDITORS
The Board of Directors recommends that the shareholders ratify the board's
appointment of KPMG LLP to serve as the auditors for the company for the fiscal
year ending April 29, 2001. The Audit Committee recommended such appointment to
the board. KPMG LLP served as the independent auditors for the company for the
last ten fiscal years. Representatives of the firm are expected to attend the
Annual Meeting and will have the opportunity to make any statements they
consider appropriate and to respond to shareholders' questions. If the
appointment of KPMG is not ratified by the shareholders, the Board of Directors
will consider whether to replace KPMG or retain the firm for the current year as
the company's auditors. The proposal to ratify the appointment will be approved
upon the vote of a majority of the votes cast on the proposal.
PROPOSAL 2: ELECTION OF DIRECTORS
The number of directors constituting the board has been fixed at ten by the
company's shareholders in accordance with the company's bylaws.
The company's bylaws provide that the Board of Directors shall be divided
into three classes of directors with staggered three-year terms, so that one
class or approximately one-third of the Board of Directors will be elected every
year. At the Annual Meeting the shareholders will be asked to elect four
directors. Two of the three directors whose terms expire at the 2000 Meeting of
Shareholders (Robert G. Culp, III and Patrick H. Norton) have been nominated for
re-election. In addition, Patrick B. Flavin has been nominated to serve a
three-year term. Mr. Flavin was appointed to the board to fill a vacant seat on
December 14, 1999. H. Bruce English has been nominated to fill the vacancy
created by the resignation of a director whose term was to expire in 2001, and
therefore he has been nominated for election to a one-year term.
In the absence of specifications to the contrary, proxies will be voted for
the election of each of the four (4) nominees listed in the table below, and an
equal number of votes will be cast for each nominee. The persons who receive the
highest number of votes for election at the Annual Meeting will be elected as
directors. If, at or before the time of the meeting, any of the nominees becomes
unavailable for any reason, the proxy holders have the discretion to vote for a
substitute nominee or nominees. The board currently knows of no reason why any
of the nominees listed below is likely to become unavailable.
3
NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the four
(4) nominees for election to the Board of Directors, and the other directors and
executive officers of the company:
SHARES AND PERCENT
YEAR YEAR OF COMMON STOCK
BECAME TERM BENEFICIALLY OWNED
NAME AND AGE POSITION WITH COMPANY (1) DIRECTOR EXPIRES AS OF JULY 24, 2000 NOTES
- ------------ ------------------------- -------- ------- ------------------- -----
NOMINEES
- --------
Robert G. Culp, III, 53 Chairman of the Board and 1972 2000 3,033,283 (3)
Chief Executive Officer; 26.7%
Director
H. Bruce English, 66 N/A N/A N/A _ (2)
Patrick B. Flavin, 53 Director 1999 2000 67,800 (2)(4)
Patrick H. Norton, 78 Director 1987 2000 45,666 (2)(5)
DIRECTORS AND
- -------------
EXECUTIVE OFFICERS
- ------------------
Robert T. Davis, 73 Director 1998 2002 122,083 (6)
1.1%
Howard L. Dunn, Jr., 62 President and Chief Operating 1972 2001 356,443 (7)
Officer; Director 3.2%
Earl N. Phillips, Jr., 60 Director 1992 2001 25,225 (2)(8)
Franklin N. Saxon, 48 Senior Vice President and 1987 2002 38,416 (2)(9)
President of the Culp
Velvets/Prints division; Director
Judith C. Walker, 57 Director 1999 2002 7,500 (2)(10)
Kenneth M. Ludwig, 47 Senior Vice President - Human N/A N/A 48,119 (2)(11)
Resources; Assistant Secretary
Rodney A. Smith, 52 Senior Vice President and N/A N/A 11,579 (2)(12)
President of the Culp Yarn
division
Phillip W. Wilson, 44 Vice President and N/A N/A 13,217 (2)(13)
Chief Financial Officer
(1) Officers of the company are elected by the Board of Directors each year.
The present officers were elected by the board on June 20, 2000.
4
(2) Less than one percent (1%).
(3) Includes 2,408,750 shares held of record by Winsal & Company for the
benefit of Robert G. Culp, III, Judith C. Walker and Harry R. Culp, all of
which shares Robert G. Culp, III has the right to vote and jointly (with
Winsal & Company) has the right to invest; includes 63,338 shares held of
record by Susan B. Culp, wife of Robert G. Culp, III, the beneficial
ownership of which shares Mr. Culp, III disclaims, 7,698 shares owned by
Mr. Culp's wife as custodian for his daughter, the beneficial ownership of
which shares Mr. Culp disclaims, and 164,500 shares subject to options
owned by Mr. Culp that are immediately exercisable.
(4) Includes 58,600 shares held by Flavin, Blake Investors, L.P., a partnership
in which Mr. Flavin is a partner, and in an account that is managed by
Flavin, Blake & Co., L.P., an investment manager of which Mr.Flavin is a
principal, under an arrangement that provides compensation directly or
indirectly to Mr. Flavin based in whole or in part upon the performance
of the investment, as to which shares Mr. Flavin disclaims beneficial
ownership. Also includes 7,400 shares held in an account that is managed by
Flavin, Blake & Co., L.P., an investment manager of which Mr. Flavin is a
principal under an arrangement that provides compensation directly or
indirectly to Mr. Flavin based in whole or in part upon the performance
of the investment, as to which shares Mr. Flavin disclaims beneficial
ownership.
(5) Includes 5,000 shares owned by the Estate of LaVerne Norton, deceased
wife of Mr. Norton, and 13,125 shares subject to options owned by Mr.
Norton that are immediately exercisable.
(6) Includes 200 shares owned by Helen Davis, wife of Mr. Davis, the
beneficial ownership of which shares Mr. Davis disclaims, and 1,875 shares
subject to options owned by Mr. Davis that are immediately exercisable.
(7) Includes 66,715 shares owned by Patricia Dunn, wife of Mr. Dunn, 87,625
shares subject to options owned by Mr. Dunn that are immediately
exercisable, and approximately 15,196 shares owned through the company's
401(k) plan.
(8) Includes 100 shares owned by Sally Phillips, wife of Mr. Phillips, and
13,125 shares subject to options owned by Mr. Phillips that are immediately
exercisable.
(9) Includes 38,000 shares subject to options owned by Mr. Saxon that are
immediately exercisable.
(10) Includes 7,500 shares subject to options owned by Ms. Walker that are
immediately exercisable.
(11) Includes 41,500 shares subject to options owned by Mr. Ludwig that are
immediately exercisable, and approximately 6,619 shares owned through the
company's 401(k) plan.
(12) Includes 11,000 shares subject to options owned by Mr. Smith that are
immediately exercisable and approximately 579 shares owned by Mr. Smith
through the company's 401(k) plan.
(13) Includes 11,000 shares subject to options owned by Mr. Wilson that are
immediately exercisable, and approximately 717 shares owned by Mr. Wilson
through the company's 401(k) plan.
Nominees:
ROBERT G. CULP, III is one of the founders of the company and was executive
vice president and secretary until 1981 when he was elected by the board to
serve as president. The board elected Mr. Culp chief operating officer in 1985,
and chief executive officer in 1988. In 1990, the Board of Directors elected Mr.
Culp chairman of the board. He was elected to serve as a member of the North
Carolina board of First Union National Bank in 1998, and was elected to serve as
a member of the board of directors of Stanley Furniture Company, Inc. in
Stanleytown, Virginia in 1999. Mr. Culp also serves as a trustee of High Point
University. He is the brother of Harry R. Culp and Judith C. Walker.
5
H. BRUCE ENGLISH was employed by the Monsanto Company, a highly diversified
manufacturer of chemicals and other products, for forty years until his
retirement in early 1997. During his service, he worked in various divisions and
capacities. From 1975 to retirement, he was operating head of a number of
business units, including business director - Acrilan from 1989 to 1997.
PATRICK B. FLAVIN co-founded Flavin, Blake & Co., Inc. in 1992 and is
president and chief investment officer of that investment management company. He
currently serves as a member of the board of directors of adDIRECT, Inc., a
private company.
PATRICK H. NORTON joined La-Z-Boy Incorporated, a furniture manufacturing
and marketing company located in Monroe, Michigan, in 1981 as senior vice
president of sales and marketing. Mr. Norton served in this position until 1997
when he was elected chairman of the board of La-Z-Boy Incorporated. He currently
serves as a member of the board of directors of the American Furniture
Manufacturers Association.
Other Officers and Directors:
ROBERT T. DAVIS was chairman of Artee Industries, Incorporated ("Artee")
from 1984 when he and his family purchased the company until February 1998, when
Culp, Inc. purchased substantially all of the assets of Artee. Mr. Davis and a
group of investors started Wrap Spun Yarns, Inc. in 1985, and in 1990 merged
that company into Artee. He had previously been associated with Collins & Aikman
and Dixie Yarns. Mr. Davis is a past president of the American Yarn Spinners
Association and a former director of the American Textile Manufacturers
Institute.
HOWARD L. DUNN, JR. is one of the founders of the company and served as
vice president of manufacturing and product development from 1972 until 1988,
when the board elected Mr. Dunn executive vice president. The board elected Mr.
Dunn president and chief operating officer in 1993.
EARL N. PHILLIPS, JR. is a co-founder of First Factors Corporation, an
asset-based lending firm located in High Point, North Carolina. First Factors
Corporation was acquired by GE Capital in 1998, and Mr. Phillips served as
chairman and chief executive officer of GE Capital First Factors until his
retirement in 2000. He currently serves as president and chief executive officer
of Phillips Interests, an investment and real estate development company.
FRANKLIN N. SAXON has been employed by the company since 1981, serving in
various capacities, including chief financial officer from 1985 to 1998. In
1998, the board elected Mr. Saxon senior vice president and president of the
Culp Velvets/Prints division.
JUDITH CULP WALKER was a practicing attorney with Keziah, Gates and Samet
in High Point, North Carolina from 1987 through 1995. She is the sister of
Robert G. Culp, III. She has served previously as a director of the company from
September 28, 1993 to September 17, 1996.
KENNETH M. LUDWIG joined the company in 1985 as director of personnel. The
board elected Mr. Ludwig vice president-human resources in 1986 and senior vice
president-human resources in 1996.
RODNEY A. SMITH joined the company in 1997 as manager of the Phillips
Weaving operation. The board elected Mr. Smith vice president and president of
the Culp Yarn division in 1998, and senior vice president and president of the
Culp Yarn division in 1999. Prior to joining the company, Mr. Smith served in
management positions with various manufacturers of dobby and jacquard home
furnishings fabrics, including vice president of manufacturing for Elite
Textiles Ltd. from 1995 to 1996, and technical director for Hoffman Mills from
1996 to 1997.
PHILLIP W. WILSON joined the company in October 1997 as director of
logistics. Prior to joining the company, Mr. Wilson was a partner in a CPA firm
since 1987. Through his partnership, Mr. Wilson provided consulting services to
the company. Additionally, he was the company's internal auditor from March 1993
until he was elected to the position of vice president and chief financial
officer by the board in June 1998.
6
BOARD COMMITTEES AND ATTENDANCE
There are four standing committees of the Board of Directors: Executive
Committee, Audit Committee, Compensation Committee, and Nominating Committee.
The Executive Committee, the members of which are Messrs. Culp, Dunn, and
Saxon, may exercise the full authority of the Board of Directors when the board
is not in session, except for certain powers related to borrowing, electing
certain officers, and other powers that may not lawfully be delegated to board
committees.
Members of the Audit Committee are Messrs. Phillips, Davis, and Flavin. The
function of the Audit Committee is to review the scope of the audits and the
findings of the independent auditors. The auditors meet with the Audit Committee
to discuss audit and financial reporting issues. The committee also reviews the
company's significant accounting policies, major internal accounting controls,
reports from the company's internal auditor, the Annual Report to shareholders,
and the Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
The Compensation Committee approves matters relating to compensation,
including fringe benefits and benefit plans for management and directors of the
company, and reports to the Board of Directors from time to time as to its
recommendation on compensation and policies for both management and directors.
The committee also administers the company's stock option plans. The members of
this committee are Messrs. Norton and Flavin.
The members of the Nominating Committee, which recommends nominees for
election to the Board of Directors, during fiscal 2000 were Messrs. Culp and
Norton. The nominees for election to the Board of Directors contained in this
Proxy Statement have been chosen by the Nominating Committee. Recommendations
from shareholders for nominees to the Board of Directors will be considered by
the Nominating Committee if made in writing addressed to any member of the
Nominating Committee at the company's main office. In order to be considered,
such recommendations must be received at least 120 days prior to the date of the
meeting at which directors are to be elected.
During the fiscal year ended April 30, 2000, the Board of Directors had
four meetings; the Audit Committee four meetings; the Compensation Committee one
meeting and one Consent to Action without Meeting; and the Nominating Committee
one meeting. Each board member attended at least 75% of the aggregate number of
the meetings of the Board of Directors and of the committees on which he served.
Under current management practices, the Executive Committee exists mainly to act
in place of the board in cases where time constraints or other considerations
make it impractical to convene a meeting of the entire board or to obtain
written consents from all board members. The Executive Committee held several
informal meetings during fiscal 2000, and took action on three occasions by
written consent. All significant management decisions requiring action by the
Board of Directors were considered and acted upon by the full board.
7
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth compensation
paid by the company in the forms specified therein for the years ended April 30,
2000, May 2, 1999, and May 3, 1998 to (i) the chief executive officer of the
company and (ii) the company's four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
=================================================================================================
Annual Compensation
Name and ------------------- Long-Term Compensation All Other
Principal Position Year Salary $ Bonus $ Option Grants # Compensation
- ------------------ ---- -------- ------- --------------- ------------
(1)(2)
------
Robert G. Culp, III 2000 400,000 68,000 8,000 83,751(3)
Chairman of the Board; 1999 284,000 -0- 30,000 80,180
Chief Executive Officer 1998 265,000 195,570 15,000 93,200
Howard L. Dunn, Jr. 2000 350,000 59,500 5,000 58,152(3)
President and 1999 241,000 -0- 25,000 49,480
Chief Operating Officer 1998 225,000 166,050 10,000 46,650
Dan E. Jacobs (5) 2000 250,000 26,432 3,000 8,458
Formerly Senior Vice President 1999 175,000 45,000 25,000 5,329
and President of the Culp 1998 - - - -
Decorative Fabrics division
Franklin N. Saxon 2000 225,000 33,233 3,000 46,689(4)
Senior Vice President and 1999 161,000 20,000 25,000 40,767
President of the Culp 1998 150,000 55,350 7,000 35,500
Velvets/Prints division
Kenneth M. Ludwig 2000 175,000 17,850 3,000 30,584(4)
Senior Vice President- 1999 134,000 15,000 20,000 25,028
Human Resources; 1998 125,000 46,125 7,000 22,145
Assistant Secretary
(1) Includes the company's matching contribution to such officers' accounts
under the Employee Retirement Builder 401(k) Plan.
(2) Includes reportable interest on deferred compensation. In 2000, these
amounts were $14,306 for Mr. Culp; $13,542 for Mr. Dunn; $14,928 for Mr.
Saxon; $2,772 for Mr. Ludwig; and $811 for Mr. Jacobs.
(3) Includes annual premiums of $61,100 paid by the company for split-dollar
life insurance on the life of Mr. Culp, and $36,267 for split-dollar life
insurance on the life of Mr. Dunn.
(4) Includes supplemental deferred compensation payments of $24,150 to Mr.
Saxon, and $21,000 to Mr. Ludwig.
(5) Mr. Jacobs became an executive officer of the company effective June 16,
1998, and resigned for health reasons effective June 1, 2000.
================================================================================
8
Option Grants Table. The following table sets forth certain information
concerning grants of stock options to the executive officers named in the
Summary Compensation Table during the year ended April 30, 2000.
STOCK OPTION GRANTS IN FISCAL 2000
==============================================================================================================
% of Total Potential Realizable Value at
Options Market Assumed Annual Rates of
Granted to Exercise or Price on Stock Price Appreciation
Options Employees in Base Price Date of Expiration for Option Term
-----------------------
Name Granted Fiscal Year (%) ($/Share) Grant Date 5%($) 10%($)
- ---- ------- --------------- --------- ----- ------- ------ -------
Robert G. Culp, III 8,000 20.0 9.125 9.125 6/27/09 45,893 116,294
Howard L.Dunn, Jr. 5,000 12.5 9.125 9.125 6/27/09 28,683 72,684
Dan E. Jacobs 3,000 7.5 9.125 9.125 6/27/09 17,210 43,610
Franklin N. Saxon 3,000 7.5 9.125 9.125 6/27/09 17,210 43,610
Kenneth M. Ludwig 3,000 7.5 9.125 9.125 6/27/09 17,210 43,610
=============================================================================================================
Option Exercises and Year-End Value Table. The following table sets forth
certain information concerning exercises of stock options during fiscal 2000 by
the executive officers named in the Summary Compensation Table, and options held
by such officers at the end of fiscal 2000.
AGGREGATED OPTION EXERCISES IN FISCAL 2000
AND FISCAL YEAR OPTION VALUES
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year-End(#) at Fiscal Year-End($)(1)
Shares Acquired Value ----------------------- ---------------------------
on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
--------------- ------------ ----------- ------------- ----------- -------------
Robert G. Culp, III -0- -0- 150,500 57,000 213,239 120,312
Howard L. Dunn, Jr. -0- -0- 77,625 43,000 127,161 86,625
Dan E. Jacobs -0- -0- 16,000 33,000 -0- 48,125
Franklin N. Saxon 6,500 54,925 30,000 33,000 -0- 48,125
Kenneth M. Ludwig -0- -0- 34,500 29,000 31,694 48,125
(1) Closing price of company stock at April 30, 2000 was $5.8125.
9
PERFORMANCE COMPARISON
The following graph shows changes over the five-year period ended April 30,
2000 in the value of $100 invested in (1) the Common Stock of the company, (2)
the New York Stock Exchange Market Index, and (3) the Textile Manufacturing
Index reported by Media General Financial Services, Richmond, Virginia,
consisting of forty-four (44) companies (including the company) in the textile
industry. The graph shows year-end values for an investment in each of the three
investments described, assuming the reinvestment of dividends and excluding any
trading commissions or taxes.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CULP, INC.
NYSE MARKET INDEX AND MG GROUP INDEX
(Performance Graph appears here. See table below for plot points.)
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
CULP, INC. 100 134 186 200 88 64
MG GROUP INDEX 100 101 124 148 93 66
NYSE MARKET INDEX 100 129 156 219 245 252
ASSUMES $100 INVESTED ON APRIL 30, 1995
ASSUMES DVIDENDS REINVESTED
FISCAL YEAR ENDED APRIL 30, 2000
10
Severance Protection Plan. In September 1989, the company adopted a
Severance Protection Plan, which covers certain officers ("Executives") of the
company. Pursuant to the Severance Protection Plan, the company and covered
Executives have entered into written agreements that do not become effective
except upon a change in control (as defined in such agreements) of the company.
If a change in control occurs, the agreements provide that the Executive will be
entitled to continued employment with the company with the same basic
responsibilities and compensation as before the change in control for a period
of one year. If the Executive is terminated, demoted or has his pay or benefits
reduced for reasons other than good cause, or if the Executive terminates his
employment voluntarily after serving nine months of the one-year employment
period, the Executive is entitled to a lump sum payment equal to the Executive's
base salary plus bonus during the twelve months immediately preceding the
termination of employment. The plan does not prevent the company from
terminating the Executive for cause at any time. The purpose of the Severance
Protection Plan is to ensure the company continuity of management and the
Executive continuity of employment in the event of any actual or threatened
change in control of the company. The plan is not intended to alter materially
the compensation and benefits a covered Executive could reasonably expect in the
absence of such a change in control. As of April 30, 2000, the company's
potential obligation pursuant to the Severance Protection Plan was $1,185,000,
which is the amount that would be expended by the company under the Plan if all
of the designated executives were terminated or otherwise entitled to benefits
after a change in control of the company.
Compensation of Directors. Directors who are also employees of the company
do not receive additional compensation for service as directors. Non-employee
directors receive $15,000 per year for participation as a member of the Board of
Directors; $5,000, $3,000, and $2,000 per year for serving on the Audit
Committee, Compensation Committee and Nominating Committee, respectively; and an
annual stock option grant of 1,875 shares.
Compensation Committee Interlocks and Insider Participation. All of the
members of the Compensation Committee are non-employee directors. No member of
the Compensation Committee serves on the compensation committee of another
corporation that has a business relationship with the company.
Compensation Committee Report. The following is a report of the
Compensation Committee on compensation of executive officers for the fiscal year
ended April 30, 2000.
The membership of the Compensation Committee underwent several changes
during the fiscal year. At the beginning of the year, its members were Earl M.
Honeycutt and Bland W. Worley. As noted in the 1999 proxy statement, Mr. Worley
resigned from the Board of Directors on July 23, 1999 for health reasons. After
Mr. Worley's resignation, Patrick H. Norton was appointed to the committee. On
October 24, 1999, Mr. Honeycutt resigned from the Board of Directors, also for
health reasons, leaving Mr. Norton as the only member of the committee until
June 20, 2000, when Patrick B. Flavin was appointed to the committee. Thus, Mr.
Flavin did not serve on the Compensation Committee at any time during the fiscal
year ended April 30, 2000. The current members of the committee are Mr. Norton
and Mr. Flavin, with Mr. Norton serving as Chairman.
The Compensation Committee has traditionally based compensation for the
company's executive officers on three primary factors: (1) compensation paid to
executive officers at comparable firms in the company's industry, (2) the
individual executive's performance and contribution to the company, and (3) the
financial performance of the company. In general, the committee has set base
salaries for executives relying most heavily on the first two factors mentioned
above, and has linked executive compensation to the third factor, the company's
financial performance, through (a) incentive cash bonuses that are based on the
annual financial results of the company and (b) periodic grants of stock options
to executive officers. These basic policies were continued during fiscal 2000.
As it has done for each of the past several years, the committee reviewed
published compensation surveys and proxy information from firms in the company's
industry, including many of the companies included in the Performance Comparison
data in the table above. Based upon this review and based on general knowledge
of the industry, the committee believes that the base salaries paid to the
company's executive officers have been significantly below those generally
prevailing in the company's industry and for other manufacturing companies of
similar size. For this reason, in recent years a larger portion of the
compensation paid to the company's executives has been based on incentive
compensation (cash bonuses and stock options) that is dependent upon the
company's financial results. Despite increases in base salary during
11
fiscal 1999, the committee concluded during fiscal 2000 that the total
compensation of the company's executive officers was too heavily weighted toward
incentive compensation. This was illustrated by the fact that the company's
Management Incentive Plan (discussed below) did not call for any bonuses to be
paid to executive officers in fiscal 1999, even though the committee believed
that management had done a commendable job in dealing with difficult business
decisions that faced the company during that year. For that reason,
discretionary bonuses were paid to certain management employees in fiscal 1999,
although none were paid to the President or Chief Executive Officer. The result
was that the total cash compensation paid in the form of salary and bonus to the
top two executives of the company decreased by approximately 40% from fiscal
1998 to fiscal 1999.
In addition, the committee had become concerned that the company would not
be able to retain key employees unless compensation was adjusted to bring cash
compensation paid to executive officers more in line with industry standards.
The committee stated in its 1999 report that it expected salaries for executive
officers to be substantially higher in fiscal 2000. In keeping with its
continuing review of executive salaries, the committee approved substantial
increases in the salaries of all persons named in the Summary Compensation
Table, including the Chief Executive Officer, for fiscal 2000. It should be
noted that, even after the increases in salaries that became effective during
fiscal 2000, the committee believes that total cash compensation paid to the
company's executives remains generally lower than comparable compensation paid
to many or most executives in the company's industry. This is especially true of
the company's Chief Executive Officer.
Under the company's Management Incentive Plan, certain executives and key
associates (including those in the Summary Compensation Table) are selected by
the Compensation Committee (based on management recommendations) to receive
annual cash bonuses based on the company's financial results. The Compensation
Committee (based on the recommendations of management) sets performance targets
for the company in terms of financial measurements judged by the committee to be
relevant indicators of management and corporate performance. Cash bonuses are
then awarded to the executives participating in the plan pursuant to a formula
that pays a percentage of the maximum bonus award established by the committee
for each participating executive based upon the percentages of the performance
targets the company achieves in a fiscal year. The cash bonuses shown in the
Summary Compensation Table for 1998 and 2000 were paid under this plan. No
bonuses were paid under the plan in 1999, as discussed above, although
discretionary bonuses were paid to certain individuals.
The committee maintains a policy of encouraging executives to make
significant investments in the company's stock, so that executive officers'
long-term interests will be aligned with those of the company's shareholders. To
that end, the committee periodically approves the grant of stock options to
executive officers under the company's stock option plans. The Compensation
Committee believes that the company's option plans have been successful in
helping the company attract and retain skilled management to focus on efforts to
increase the company's earnings and returns for its shareholders.
Periodic grants of incentive stock options are made to the executive
officers and selected other employees under the company's Incentive Stock Option
Plan, which was adopted by the company and approved by the company's
shareholders in 1993. These options are granted at exercise prices equal to the
fair market value of the underlying shares at the time the option is granted. As
set forth elsewhere in this proxy statement, the committee has recommended (and
the board has approved) the addition of 350,000 shares that would be available
for future grants of options under the Incentive Stock Option Plan. The addition
of these shares will allow the continued grant of options to employees of the
company, including the executives named in the Summary Compensation Table, under
the principles discussed above.
In addition to the Incentive Stock Option Plan, the company has adopted two
Performance-Based Option Plans under which options are granted to senior
management with exercise prices significantly below fair market value of the
underlying shares, but which do not become exercisable unless the company
achieves certain growth rates in its earnings or for a period of nine to ten
years after grant. The purpose of these plans is to provide incentive to senior
management to maximize the company's earnings potential and to make a
significant portion of executive compensation contingent on meeting earnings
targets. In 1994, the company adopted (and the shareholders subsequently
approved) the 1994 Performance-Based Option Plan, which provided for the
one-time grant to executives of options that could become exercisable after the
announcement of earnings for fiscal 1997 only if the company met a targeted
compound growth rate of 13% over that three-year period (otherwise these options
would not become exercisable until January 1, 2003). The company's reported
earnings for fiscal 1997 were at a level that allowed the options to become
exercisable in May of 1997, and represented a compound growth rate of 20% for
the three years which ended April 27, 1997. In 1997, the company adopted (and
the shareholders approved) the 1997 Performance-Based Option Plan. This plan is
similar in concept to the
12
1994 Performance-Based Option Plan, in that it provided for the one-time grant
to executives of options that could become exercisable if the company's earnings
reached a specific target by the end of fiscal 1999. Otherwise, the options do
not become exercisable until January 1, 2006. The earnings target under the 1997
Performance-Based Option Plan was not met, and thus the options under this plan
will not become exercisable until January 1, 2006.
The Compensation Committee approved grants of stock options to certain
officers and employees during fiscal 2000 to increase the opportunity of these
employees to participate in the growth of the company and the value of its
stock. The specific levels of options granted generally reflected the level of
responsibility of the employees and officers receiving the option awards and the
committee's judgment about the direct link between the employee's performance
and decisions and the company's financial results. For that reason, more senior
officers received larger awards, and the Chief Executive Officer received a
significantly larger award than other officers did.
A supplemental deferred compensation plan was adopted during fiscal 1998
for two of the company's Senior Vice Presidents. This plan provides for
additional deferred compensation payments for the benefit of the specified
Senior Vice Presidents in the amount of fifteen percent of such officers' base
salary for the fiscal year. The committee adopted this plan for the specified
officers in lieu of providing split dollar life insurance plans such as those
provided for the Chief Executive Officer and the President, as discussed below.
The compensation for the Chief Executive Officer is determined under the
same policies and practices used for all of the company's executive officers, as
discussed above. In addition, the company has provided a split-dollar life
insurance plan for the Chief Executive Officer for many years; this program was
continued in fiscal 2000 and now includes a split-dollar life insurance plan for
the President. The committee believes this type of plan provides a
cost-effective means of providing this benefit, since the company expects to
recover the cost of premium payments on the plan from the cash value of proceeds
of the insurance policy.
The foregoing report has been furnished by the members of the Compensation
Committee.
Patrick H. Norton, Chairman
Patrick B. Flavin
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lease Transactions. During fiscal 2000, the company leased two (2)
industrial facilities from partnerships owned by certain of the company's
executive officers, directors, principal shareholders and members of their
immediate families. Principals of these related entities include Robert G. Culp,
III, Judith C. Walker (sister of Robert G. Culp, III and a director), and Harry
R. Culp (brother of Robert G. Culp, III). These facilities contain a total of
340,000 square feet of floor space. The company also leases its headquarters
office space (40,128 square feet) from Phillips Interests. Earl N. Phillips, Jr.
is the president and chief executive officer of Phillips Interests, and a
director of the company. (See "Certain Business Relationships").
The initial terms of the leases described above generally range from five
to ten years, with one or more five-year renewal options. Base rent per year for
the leased industrial facilities ranges from $1.98 to $2.32 per square foot. The
leases typically prohibit assignment or subletting without the lessor's consent
but such consent may not be unreasonably withheld. The lessor is generally
responsible for maintenance only of roof and structural portions of the leased
facilities. The industrial facilities are leased on a "triple net" basis, with
the company responsible for payment of all property taxes, insurance premiums
and maintenance, other than structural maintenance. The company believes that at
the time the leases and any lease renewals were executed the terms of all such
leases were no less favorable to the company than could have been obtained in
arms-length transactions with unaffiliated persons. The company received
independent appraisals to this effect with respect to the industrial facility
leases. At the time the company entered into the initial lease with Phillips
Interests (January 19, 1990), Mr. Phillips was not a director of the company.
Related party leases and amendments thereto are approved by the Audit Committee
and are reviewed annually by the Audit Committee. The total amounts of rent paid
by the company under the industrial facilities and office leases during fiscal
2000 were approximately $695,000 and $522,000, respectively.
Certain Business Relationships. The company had sales of approximately
$39.5 million, 8.1% of the company's net sales, to La-Z-Boy Incorporated in
fiscal 2000. Patrick H. Norton, a director of the company, serves as chairman of
the board of La-Z-Boy Incorporated.
PROPOSAL 3 - APPROVAL OF AMENDMENTS TO THE COMPANY'S
1993 STOCK OPTION PLAN
The Board of Directors is submitting to the shareholders, for their
approval, two amendments to the company's 1993 Stock Option Plan (the "1993
Plan"). The 1993 Plan was adopted by the company's Board of Directors and
subsequently approved by the shareholders on September 28, 1993, at which time
it became effective for a period of ten years ending September 28, 2003.
The board believes that the 1993 Plan has been an important means of
attracting, retaining and motivating key employees and directors. Accordingly,
the board believes that it is in the best interest of the company that the 1993
Plan continue to operate as it has since inception. The board believes that two
amendments are needed to ensure this continued operation and has adopted these
amendments, subject to shareholder approval.
The 1993 Plan provides for a total of 809,500 shares for which options may
be issued during the full ten year term of the 1993 Plan. The company currently
has available 121,500 shares for which options may be issued. The Board of
Directors recognizes that there may be a need for issuance of additional options
to meet the goals of the 1993 Plan during its remaining three year term.
Accordingly, the board submits to the shareholders for approval an amendment
that would increase the total number of shares that may be issued pursuant to
the 1993 Plan by 350,000 to 1,159,500 shares.
The 1993 Plan currently provides that options granted thereunder may be
amended by the Compensation Committee of the Board of Directors, subject to
certain restrictions. While there are no limitations upon changing the option
price of an option granted under the 1993 Plan (a so-called "repricing"), it has
been the policy of the Board of Directors and the Compensation Committee not to
"reprice" options granted under the plan. The board believes it is advisable to
explicitly set forth in the 1993 Plan that such repricings are not permissible
under the plan, and it is submitting an amendment to the shareholders to
accomplish this purpose.
14
The text of the proposed amendments are as follows:
Amendment 1: The last sentence of Section 2 is amended to read: "The
------------
maximum number of shares that may be issued pursuant to this Plan is 1,159,500."
Amendment 2: The 1993 Plan is amended by adding an additional Section 14,
------------
as follows:
"14. Repricing of Options. Neither the company, the Committee, nor any
--------------------
person or entity administering the plan or options granted thereunder may
adjust or amend the exercise price of any option previously granted under
the Plan, whether through amendment, cancellation or replacement grant of
such option."
The following is additional information regarding the 1993 Plan:
Summary of the 1993 Plan
The 1993 Plan is summarized below. However, this summary is qualified in
its entirety by reference to the text of the 1993 Plan, a copy of which may be
obtained without charge, by written request to the company, P.O. Box 2686, High
Point, North Carolina 27261-2686, Attention: Kenneth M. Ludwig, Senior Vice
President-Human Resources.
General. The 1993 Plan provides that the company may grant options to
purchase the company's Common Stock ("Options") to employees and directors of
the company and its subsidiaries. The purposes of the 1993 Plan are (1) to align
the interests of participating employees and directors with the shareholders by
reinforcing the relationship between shareholder gains and participant rewards,
(2) to encourage equity ownership in the company by participants and (3) to
provide an incentive to employee participants to continue their employment with
the company.
The 1993 Plan divides the persons to whom Options may be granted into two
groups: (i) officers and key employees (Options to such persons being referred
to herein as "Employee Options"), and (ii) directors who are neither officers
nor employees of the company (Options to such persons being referred to herein
as "Non-employee Director Options"). An aggregate of 809,500 shares has been
reserved for grants of Options under the 1993 Plan, which will be increased to
1,159,500 under the proposed amendment. The Employee Options may qualify as
incentive stock options under Section 422 of the Internal Revenue Code (the
"Code"). The number of shares that may be granted under the 1993 Plan and the
number of shares and exercise prices of outstanding Options will be adjusted to
reflect any change in the capitalization of the company as contemplated in the
1993 Plan. On April 30, 2000, the closing sales price for the company's Common
Stock as reported on the New York Stock Exchange was $5.8125 per share.
Administration. The 1993 Plan is administered by the Compensation Committee
of the Board of Directors (the "Committee") composed solely of members who are
"disinterested persons" (persons not eligible to receive Employee Options). The
Committee has complete authority to: (a) determine the employees who will
receive Employee Options, the timing of the grants of Employee Options, and
other terms of such Employee Options, subject to the terms of the 1993 Plan; (b)
make and amend rules governing the administration of the 1993 Plan; (c) construe
and interpret the 1993 Plan; (d) take actions necessary to keep the 1993 Plan in
compliance with securities, tax and other laws; and (f) make other necessary
determinations in connection with the administration of the 1993 Plan.
The Committee may designate selected Committee members or certain employees
of the company to assist the Board of Directors or Committee in the
administration of the 1993 Plan and may grant authority to such persons to
execute documents, including Options, on behalf of the Committee. The 1993 Plan
provides that no member of the Committee or employee of the company assisting
the Board of Directors or Committee in connection with the 1993 Plan shall be
liable for any action taken or determination made in good faith.
Eligibility and Criteria for Grants. The 1993 Plan provides that Employee
Options may be granted to any of the employees of the company or its
subsidiaries. As of April 30, 2000, the company had approximately 3,800
employees. In making the determination as to the employees who will be granted
Employee Options, the Committee is to consider the duties of the employee, the
employee's present and potential contributions to the success of the company,
and such other factors as the Committee deems relevant in connection with
accomplishing the purposes of the 1993 Plan.
15
The 1993 Plan also provides that, with respect to Non-employee Director
Options, each non-employee director shall automatically receive on October 1st
of each year an Option to acquire 1,875 shares of Common Stock at an exercise
price equal to the closing sales price of the Common Stock on the date of grant.
The 1993 Plan provisions for grants of Non-employee Director Options may not be
amended more frequently than once every six months, other than to comply with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder. At April 30, 2000, there were five directors who
were not employees of the company.
Terms and Conditions of Options. The price per share at which an Employee
Option may be exercised is determined by the Committee at the time of grant, but
the exercise price per share may not be less than 100% of the fair market value
of the company's Common Stock on the date of the grant. Payment of the exercise
price must be in cash, except that, if permitted by the terms of the specific
Option, payment may be in shares of Common Stock having a fair market value on
the date of exercise equal to the exercise price. Options granted under the 1993
Plan may be exercised for any lesser number of shares than the full amount for
which it could be exercised. Such a partial exercise of an Option does not
affect the right to exercise the Option for the remaining shares subject to the
Option. The 1993 Plan generally provides that Options are exercisable at such
time and upon such conditions as may be determined by the Committee at the time
of grant, except that the term of such Options may not exceed ten years from the
date of grant.
In general, Options granted under the 1993 Plan may not be transferred
other than by will or the laws of descent and distribution and during the
optionee's lifetime may be exercised only by the optionee. In general,
outstanding Options terminate within three months of the death, disability or
termination of service of the participant holding such Option. If an optionee
dies without having exercised an Option, the Option may be exercised by the
optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, to the extent of the shares with respect to which the
Option could have been exercised on the date of the optionee's death.
Amendment of Plan and Options. The 1993 Plan may be amended, altered or
discontinued by the Board of Directors at any time, but no such termination or
amendment may materially and adversely affect the rights and obligations of a
holder of an Option theretofore granted without such holder's consent. The
Committee may also amend the terms and conditions of any outstanding Option.
However, no action may be taken that would alter or impair any rights or
obligations under any outstanding Option without the consent of the holder of
the Option. In addition, the proposed amendment to the 1993 Plan would prohibit
the amendment of Options granted thereunder to "reprice" such Options to a
different exercise price.
Federal Income Tax Consequences. The grant of an Option under the 1993 Plan
is not a taxable event; the recipient of the Option does not recognize income
for federal income tax purposes, and the company does not get a tax deduction.
The Employee Options are designed so that they may qualify as "incentive
stock options" under Section 422 of the Internal Revenue Code. If the employee
observes certain rules applicable to the exercise of the Options and the sale of
the shares thereafter, then the exercise of the Option does not result in the
recognition of taxable income, and the company is not entitled to a tax
deduction as a result of such exercise. However, if the employee does not follow
the rules applicable to incentive stock options (for example, if shares
purchased pursuant to the exercise of an Employee Option are sold within two
years from the date of grant or within one year after the transfer of such
shares to the participant), then the difference between the fair market value of
the shares at the date of exercise and the exercise price will be considered
ordinary income, and the company will be entitled to a tax deduction at the same
time and in the same amount.
The Non-employee Director Options cannot qualify for incentive stock option
treatment. When a director exercises a Non-employee Director Option, he will
recognize taxable income in the amount by which the fair market value of the
shares at the date of exercise exceeds the exercise price, and the company will
be entitled to a tax deduction at the same time and in the same amount.
The proposal to amend the 1993 Plan requires the affirmative vote of a
majority of the outstanding shares of the company's Common Stock for approval.
16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the company's
directors, its executive officers, any persons who hold more than ten percent of
the company's common stock and certain trusts (collectively, "insiders") to
report their holdings of and transactions in the company's Common Stock to the
Securities and Exchange Commission (the "SEC"). Specific due dates for these
reports have been established, and the company is required to disclose in this
proxy statement any late filings and any failures to file that have occurred
since May 2, 1999. Insiders must file three types of ownership reports with the
SEC: initial ownership reports, change-in-ownership reports and year-end
reports. Under the SEC's rules, insiders must furnish the company with copies of
all Section 16(a) reports that they file. Based solely on a review of copies of
these reports and on written representations the company has received, the
company believes that since May 2, 1999, its insiders have complied with all
applicable Section 16(a) reporting requirements, except Franklin N. Saxon failed
to report one purchase of shares on a timely basis, which transaction was
subsequently reported.
================================================================================
YOUR DIRECTORS RECOMMEND VOTES "FOR"
- THE RATIFICATION OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR FISCAL 2001
- THE FOUR NOMINEES FOR DIRECTOR
- THE AMENDMENTS TO THE 1993 STOCK OPTION PLAN
================================================================================
17
SHAREHOLDER PROPOSALS FOR 2001 MEETING
Shareholders may submit proposals appropriate for shareholder action at the
company's Annual Meeting consistent with the regulations of the Securities and
Exchange Commission and the company's bylaws. The nominees named in this Proxy
Statement are those chosen by the Nominating Committee of the Board of
Directors. Nominations may also be made by shareholders in accordance with the
company's bylaws. The bylaws require that such nominations must be received by
the company at least 120 days prior to the Annual Meeting and shall include
certain biographical and other information about the persons nominated as
specified in the bylaws. For shareholder proposals and nominations for director
to be considered for inclusion in the Proxy Statement for the 2001 Annual
Meeting, the company must receive them no later than April 29, 2001. Such
proposals should be directed to Culp, Inc., Attention: Phillip W. Wilson, Vice
President and Chief Financial Officer, 101 South Main Street, Post Office Box
2686, High Point, North Carolina 27261.
OTHER MATTERS
The company's management is not aware of any matter that may be presented
for action at the Annual Meeting other than the matters set forth herein. Should
any matters requiring a vote of the shareholders arise, it is intended that the
accompanying proxy will be voted in respect thereof in accordance with the best
judgment of the person or persons named in the proxy, discretionary authority to
do so being included in the proxy.
By Order of the Board of Directors,
By: /s/ Phillip W. Wilson
-----------------
PHILLIP W. WILSON
Vice President and Chief Financial Officer
- --------------------------------------------------------------------------------
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED, AND TO EACH PERSON REPRESENTING THAT AS OF THE RECORD DATE FOR THE
ANNUAL MEETING HE OR SHE WAS A BENEFICIAL OWNER OF SHARES OF THE COMPANY, ON
WRITTEN REQUEST, A COPY OF THE COMPANY'S 2000 ANNUAL REPORT ON FORM 10-K TO THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE CONSOLIDATED FINANCIAL
STATEMENTS AND SCHEDULES THERETO. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO
CULP, INC., ATTENTION: PHILLIP W. WILSON, VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, 101 SOUTH MAIN STREET, P. O. BOX 2686, HIGH POINT, NORTH CAROLINA
27261.
18
********************************************************************************
APPENDIX
PROXY CULP, INC. PROXY
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert G. Culp, III, Kathy J. Hardy and Phillip
W. Wilson, and each of them, attorneys and proxies with full power of
substitution, to act and vote as designated below the shares of common stock of
Culp, Inc. held of record by the undersigned on July 24, 2000, at the Annual
Meeting of Shareholders to be held on September 26, 2000, or any adjournment or
adjournments thereof.
This proxy will be voted as directed herein. If no direction is made, this proxy
will be voted for the ratification of KPMG LLP as independent auditors in
proposal 1, for the nominees listed in proposal 2, and for the amendments to the
1993 Stock Option Plan. If, at or before the time of the meeting, any of the
nominees listed above has become unavailable for any reason, the proxies have
the discretion to vote for a substitute nominee or nominees.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please sign exactly as name appears on this card. If signing as attorney,
administrator, executor, guardian, or trustee, please give such title. If
signing on behalf of a corporation, please give name and title of authorized
officer signing.)
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
PLEASE MARK VOTES
[X] AS IN THIS EXAMPLE
- --------------------------
CULP, INC.
- --------------------------
1. Proposal to ratify the appointment of KPMG LLP
as the Company's independent auditors for fiscal
2001.
For Against Abstain
[ ] [ ] [ ]
2. Election of Directors:
For All With- For All
Nominees hold Except
[ ] [ ] [ ]
CONTROL NUMBER:
RECORD DATE SHARES: (01) Robert G. Culp, III
(02) Patrick H. Norton
(03) Patrick B. Flavin
(04) H. Bruce English
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A
PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT" BOX
AND STRIKE A LINE THROUGH THE NAME(S) OF THE
NOMINEE(S). YOUR SHARES WILL BE VOTED FOR THE
REMAINING NOMINEE(S).
3. Amendments to 1993 Stock Option Plan
For Against Abstain
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized
to vote upon any other business that may
properly come before the meeting.
Be sure to sign and date this Proxy Date
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Mark box at right if an address
change or comment has been noted [ ]
on the reverse side of this card.
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Shareholder sign here Co-owner sign here
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