PAGE 1
Tultex Corporation
P.O. Box 5191
Martinsville, VA
24115
703-632-2961
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Tultex Corporation to be held on Tuesday, May 2, 1995 at 10:00 a.m. at our
Customer Service Center in Martinsville, Virginia. Your Board of Directors and
management look forward to greeting you personally and discussing the affairs
of our Company.
At this year's meeting, we are asking that you (1) elect a Board of Directors
and (2) ratify the appointment of Price Waterhouse LLP as auditors. In
addition to this usual business, the officers will present their reports and
be available for questions from stockholders.
At this year's meeting, three Directors -- William F. Franck, J. Burness Frith
and John M. Tully, who together have an aggregate of 93 years of service on
your Board of Directors -- are retiring from the Board. We expect to recognize
these three directors for their long and faithful service to Tultex
Corporation at the Annual Meeting. At its meeting on January 26, 1995, the
Board of Directors elected F. Kenneth Iverson, Chairman and Chief Executive
Officer of Nucor, Inc., as a member of the Board of Directors. Mr. Iverson
will be standing as a nominee for election by the stockholders for the first
time at the Annual Meeting, and we welcome him to the Tultex family.
THE DIRECTORS BELIEVE THESE PROPOSALS ARE IN THE BEST INTEREST OF ALL OF THE
COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR EACH OF
THEM.
Please send in your proxy card as soon as possible. Thank you for your
continued interest and support.
Sincerely,
John M. Franck Charles W. Davies, Jr.
Chairman of the Board President and Chief Executive Officer
March 24, 1995
PAGE 2
Tultex Corporation
P.O. Box 5191
Martinsville, VA
24115
703-632-2961
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Tultex
Corporation will be held at the Company's Customer Service Center, State Route
174, Martinsville, Virginia, on Tuesday, May 2, 1995, at 10:00 a.m. for the
following purposes:
1. To elect a Board of Directors, consisting of eight persons, to serve for
the ensuing year;
2. To ratify the Board of Directors' appointment of Price Waterhouse LLP,
independent accountants, as auditors for the Company for fiscal 1995; and
3. To transact such other business as may properly come before the meeting.
Your attention is directed to the accompanying proxy statement for further
information with respect to the matters to be acted upon at the meeting. Only
holders of Common Stock and Cumulative Convertible Preferred Stock, $7.50
Series B, of record at the close of business on March 10, 1995, are entitled
to notice of and to vote on matters to be acted on at the Annual Meeting.
If you are present at the Annual Meeting, you may vote in person even though
you have previously delivered your proxy.
By Order of the Board of Directors
James M. Baker, Secretary
March 24, 1995
PAGE 1
Tultex Corporation
P.O. Box 5191
Martinsville, VA
24115
703-632-2961
PROXY STATEMENT DATED AND MAILED MARCH 24, 1995
GENERAL
Proxies in the form enclosed are solicited by the Board of Directors for the
1995 Annual Meeting of Stockholders to be held at 10:00 a.m. on Tuesday, May
2, 1995 at the Company's Customer Service Center, State Route 174,
Martinsville, Virginia. Any stockholder giving a proxy may revoke it at any
time before it is voted by written notice to the Company, P. O. Box 5191,
Martinsville, Virginia 24115, Attention: James M. Baker, Corporate Secretary,
by the execution of a proxy with a later date, or by voting in person the
shares represented by the proxy.
The cost of solicitation of proxies will be borne by the Company. In addition
to the use of the mails, proxies may be solicited personally or by telephone
by regular employees of the Company, but no special compensation will be paid
to any regular employees for personal solicitation of proxies. Banks,
brokerage houses and other institutions, nominees and fiduciaries will be
requested to forward the soliciting material to beneficial owners and to
obtain authorization for the execution of proxies. The Company will, upon
request, reimburse such parties for their reasonable expenses in forwarding
proxy material to their beneficial owners.
OWNERSHIP OF EQUITY SECURITIES
On March 10, 1995, the date for determining stockholders entitled to notice of
and to vote at the Annual Meeting, there were outstanding and entitled to vote
29,806,793 shares of Common Stock and 150,000 shares of Cumulative Convertible
Preferred Stock, $7.50 Series B (the "Series B Preferred Stock"). The Common
Stock and the Series B Preferred Stock have one vote per share on all matters,
including those to be acted on at the Annual Meeting.
1
PAGE 2
The table below presents certain information as of the Record Date regarding
beneficial ownership of shares of Common Stock by all directors and nominees
for director, by the Chief Executive Officer and the four next most highly
compensated executive officers, by all directors and executive officers as a
group, and by owners of 5% or more of the Common Stock. The Series B Preferred
Stock is owned by Simon Trust Partnership No. 3 (25%), Herbert Simon Trust No.
3 (25%) and L. G. Sale Corporation, Inc., (50%), respectively.
<TABLE>
<CAPTION
SOLE VOTING AND AGGREGATE
INVESTMENT PERCENTAGE
NAME POWER (1) OTHER (2) OWNED
<S> <C> <C> <C>
Charles W. Davies, Jr................................................ 144,106 142 *
Lathan M. Ewers, Jr.................................................. 5,025 2,425 *
John M. Franck....................................................... 774,543 126,233 3.02
William F. Franck.................................................... 923,902 175,231 3.69
J. Burness Frith..................................................... 380,000 1,200 1.28
Irving M. Groves, Jr................................................. 43,998 44,386 *
H. Richard Hunnicutt, Jr............................................. 35,000 -- *
F. Kenneth Iverson................................................... -- -- --
Bruce M. Jacobson (3)................................................ 3,500 -- *
Richard M. Simmons, Jr............................................... 176,121 615 *
John M. Tully........................................................ 243,524 81,696 1.09
B. Alvin Ratliff..................................................... 74,267 -- *
John J. Smith........................................................ 43,620 47 *
Don P. Shook......................................................... 76,471 18,200 *
Executive officers and directors as a group (20 persons
including those named above)....................................... 3,118,975 1,026,200 13.75
Sound Shore Management, Inc. 8 Sound Shore Drive
Greenwich, Connecticut............................................. 1,772,600(4) -- 5.95
</TABLE>
* Less than 1%
(1) Includes shares that may be acquired by certain of the Company's officers
within 60 days under the Company's stock option plans.
(2) Includes shares (a) owned by or with certain relatives; (b) held in
various fiduciary capacities; and (c) held by certain corporations.
(3) Mr. Jacobson is the designee of Simon Trust Partnership No. 3, Herbert
Simon Trust No. 3, and L. G. Sale Corporation, Inc., which own 37,500
shares, 37,500 shares and 75,000 shares, respectively, of the Series B
Preferred Stock which are convertible into an aggregate of 1,496,260
shares (4.78%) of Common Stock.
(4) As reported in Schedule 13G filed by Sound Shore Management, Inc. dated
December 31, 1993.
2
PAGE 3
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Corporation's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, file with the
Securities and Exchange Commission initial reports of ownership and reports of
change in ownership of Common Stock and other equity securities of the
Company. The same persons are also required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934 that have been received by the Company or
written representations from certain reporting persons that no annual
statements on Form 5 were required, the Company believes that all filing
requirements applicable to its officers, directors and beneficial owners of
greater than 10% of its Common Stock have been complied with.
ELECTION OF DIRECTORS
Proxies will be voted for the election of eight nominees as directors to serve
until the 1996 Annual Meeting of Stockholders. The election of each nominee
for director requires the affirmative vote of the holders of a plurality of
the shares cast in the election of directors. Votes that are withheld and
shares held in street name that are not voted in the election of directors
will not be included in determining the number of votes cast. All of the
nominees are presently members of the Board and all except Mr. Iverson were
elected by stockholders at last year's Annual Meeting. The Board of Directors
has no reason to believe that any of the nominees will be unavailable for
service if elected, but if any are unavailable, proxies will be voted for such
substitute as the Board may designate.
DIRECTOR
NAME AGE SINCE
Charles W. Davies, Jr.................................... 46 1990
Lathan M. Ewers, Jr...................................... 53 1993
John M. Franck........................................... 42 1984
Irving M. Groves, Jr..................................... 66 1978
H. Richard Hunnicutt, Jr................................. 56 1981
F. Kenneth Iverson....................................... 69 1995
Bruce M. Jacobson........................................ 45 1992
Richard M. Simmons, Jr................................... 68 1973
CHARLES W. DAVIES, JR. became President and Chief Executive Officer on January
1, 1995, after serving as President and Chief Operating Officer since January
1991, and prior thereto as Executive Vice President since December 1989.
LATHAN M. EWERS, JR. has been a partner in Hunton & Williams, Richmond,
Virginia, counsel to the Company, since 1976.
JOHN M. FRANCK was Vice President of the Company from 1984 until November
1988, at which time he became President and Chief Operating Officer. Effective
January 1, 1991, he became Chairman of the Board of Directors and Chief
Executive Officer. He retired as Chief Executive Officer on January 1, 1995,
but continues as Chairman.
3
PAGE 4
IRVING M. GROVES, JR. retired as President, Chief Executive Officer and
Chairman of the Board of Piedmont BankGroup Incorporated, the parent of
Piedmont Trust Bank, Martinsville, Virginia in June 1994. Mr. Groves was
President of Piedmont Trust Bank, Martinsville, Virginia, from 1973 through
December 1993, when he retired from that position. Mr. Groves is a director of
Hooker Furniture Corporation, Martinsville, Virginia, a furniture
manufacturing firm, and Multitrade Group, Inc., a generator of steam energy.
H. RICHARD HUNNICUTT, JR. was Chairman and Chief Executive Officer of the
Company from November 1988 through December 1990 when he retired. He was
President and Chief Operating Officer from 1984 to 1988.
F. KENNETH IVERSON was elected a director on January 26, 1995 and is a nominee
for election by shareholders for the first time. Since 1984, he has been
Chairman and Chief Executive Officer of Nucor, Inc., Charlotte, North
Carolina, a steel producer. Mr. Iverson is a director of Wachovia Corporation,
a bank holding company, and Wal-Mart Stores, Inc., a retail mass merchandiser.
BRUCE M. JACOBSON has been a partner in Katz, Sapper & Miller, Indianapolis,
Indiana, certified public accountants, since 1977. In connection with the
Company's acquisition of Logo 7, Inc. on January 31, 1992 and the issuance of
the Series B Preferred Stock, the Company agreed that so long as the previous
shareholders of Logo 7 and their affiliates hold at least 3% of the voting
securities of the Company (on a fully-diluted basis), the Company has agreed
to nominate a designee of such shareholders for election to the Board. Mr.
Jacobson is the designee.
RICHARD M. SIMMONS, JR. is the retired Chairman of the Board of Virginia
Carolina Freight Lines, Inc., Martinsville, Virginia, a trucking firm. He
served as Chairman from 1987 until 1992. He was a consultant to American
Furniture Company from 1987 to 1988, and was its President from 1961 to 1987
and its Chairman of the Board from 1974 to 1986. He is a director of Piedmont
BankGroup Incorporated, a bank holding company, and Dibrell Brothers, Inc.,
Danville, Virginia, leaf tobacco processors.
COMMITTEES OF THE BOARD
The only standing committees of the Board of Directors are the Audit
Committee, the Nominating Committee and the Executive Compensation Committee.
The AUDIT COMMITTEE reviews with management and the Company's auditors the
scope of the annual audit, the results of the audit and the Company's internal
accounting and control systems. The Audit Committee also recommends to the
full Board of Directors the auditors to be appointed by the Board (subject to
stockholder ratification) and reviews the auditors' services to the Company
and their fees. The NOMINATING COMMITTEE reviews the qualifications of
possible candidates recommended by stockholders, provided that stockholder
recommendations are submitted in writing addressed to the Secretary of the
Company, are accompanied by statements signed by the recommended candidates of
their willingness to serve, if elected, and are received not later than 120
days before the date that proxy material is mailed to stockholders for the
annual meeting of stockholders at which the recommended candidates, if
approved by the Nominating Committee and the incumbent Board of Directors,
would be nominated by the Board for election by the stockholders. The
EXECUTIVE COMPENSATION COMMITTEE administers the Company's stock option plans
and other incentive programs, approves or recommends to the Board changes in
compensation for the Chief Executive Officer and approves all Company employee
benefit programs.
4
PAGE 5
The members of Committees of the Board are:
AUDIT COMMITTEE -- Irving M. Groves, Jr., J. Burness Frith and John M. Tully
(Messrs. Frith and Tully are retiring from the Board at the Annual Meeting)
NOMINATING COMMITTEE -- H. Richard Hunnicutt, Jr., Lathan M. Ewers, Jr. and
John M. Franck
EXECUTIVE COMPENSATION COMMITTEE -- Bruce M. Jacobson and Richard M. Simmons,
Jr.
The Board of Directors held nine meetings during the fiscal year ended
December 31, 1994. The Audit Committee held two meetings during the year and
the Executive Compensation Committee held three meetings. During the fiscal
year, each director attended all of the meetings of the Board and of any
committee on which he serves.
COMPENSATION OF DIRECTORS
Directors of the Company who are not full-time employees are paid a fee of
$2,500 for each fiscal quarter. In addition they are paid $1,000 for each
Board meeting attended and $1,000 for each Committee meeting attended which
does not occur on the same date as a Board meeting day. They are paid $500 for
each Committee meeting attended that does occur on the same day as a Board
meeting.
EXECUTIVE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
JOHN M. FRANCK, Chairman of the Tultex Board, is a director of Piedmont Trust
Bank, a subsidiary of Piedmont BankGroup Incorporated, and serves on the Bank
Board's Asset/Liability Management, Audit/Code of Conduct, and Corporate
Benefit and Compensation committees. IRVING M. GROVES, JR., a director of
Tultex, was President, Chief Executive Officer and Chairman of the Board of
Piedmont BankGroup Incorporated until he retired from these positions in June
1994.
5
PAGE 6
EXECUTIVE COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
THIS REPORT BY THE EXECUTIVE COMPENSATION COMMITTEE IS REQUIRED BY RULES OF
THE SECURITIES AND EXCHANGE COMMISSION. IT IS NOT TO BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT WHICH INCORPORATES BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, AND IT IS NOT TO BE OTHERWISE DEEMED FILED UNDER EITHER
SUCH ACT.
Two outside directors comprise the Executive Compensation Committee of the
Board of Directors. Neither of these directors serves on the board of the
other committee member's company or organization and none of the executive
officers of Tultex serve on the board of any committee member's organization.
The Committee has access to outside consultants and counsel.
The Committee oversees three elements of executive compensation: base pay or
salary, annual performance bonus, and long-term compensation, which consists
of a stock option plan approved by shareholders. The Committee seeks to
provide a competitive compensation package that enables the Company to attract
and retain key executives, to integrate pay programs with the business
objectives of the Company, and to link individual executive compensation with
the Company's performance. The Committee surveys other comparable companies
and believes that Tultex's current executive compensation generally is in line
with comparable companies.
BASE PAY. The salary paid to the Company's executives is targeted to be
competitive with related industry companies of similar size, taking into
account the responsibilities and experience of individual officers. In
general, the Committee attempts to fix base salaries at lower levels to
emphasize result-oriented factors reflected in a bonus potential and the value
of stock options. The Committee reviews salaries and pay ranges for the named
executives, and salaries may be increased based on the Committee's assessment
of an individual's performance and contributions to Tultex's goals. All of the
Company's executive employees were eligible for 1994 base pay increases, but
the Committee recommended, and the Board agreed, not to increase the base pay
for the five named executives. The Committee and Board's decisions for 1994
compensation were based on the Company's performance in 1993 and the lack of
improvement in the Company's stock price from 1993 to 1994 reflected on the
stock performance graph in this Proxy Statement.
BONUS. The Board has approved and the Committee administers an annual
incentive bonus plan by which the Company's senior executives may earn cash
bonus awards based on corporate return on invested capital. No payments were
made under the bonus plan in 1994. In January 1995, the Committee proposed and
the Board approved changes in the incentive bonus plan to reflect earnings the
Company can realistically expect to achieve. The threshold (stated as a
function of earnings per share) at which bonus awards will be made under the
revised plan is annual per share earnings of $0.50 for a minimum bonus and
$1.00 per share for a full bonus. The bonus pool is divided equally among six
executive officers. If the performance criterion for a full bonus had been
achieved in 1994, bonus awards totalling approximately $1,063,000 would have
been paid to six executive officers.
LONG-TERM INCENTIVE. The Company's only method of awarding long-term
compensation is its incentive stock option plan, approved by shareholders. Ten
officers are eligible to receive grants under the stock option plan, including
the five named executive officers. Grants under the plan normally extend for
10 years, cannot be exercised until one year after the date of grant, are
priced at fair market value on the date 6
PAGE 7
of grant, and are intended to provide incentive for future performance rather
than reward past performance. Together with base pay and bonuses, the
Committee reviews material for comparable companies in determining grants to
be made to the named executive officers. In 1994, the Committee recommended
and the Board approved options for 30,000 shares for each of Mr. John Franck
and Mr. Davies, 10,000 shares for each of Mr. Ratliff and Mr. Smith, and
12,500 shares for Mr. Shook. The exercise price for all such options is $6 per
share, and all expire on May 16, 1999. The options granted to these five
officers represent 23.1% of options granted to employees in 1994.
1994 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. In 1994, John M. Franck was
eligible to participate in the same executive compensation plans as the other
named executives. The Committee's approach to setting Mr. Franck's target
annual compensation was to set a compensation level commensurate with his
responsibilities and the objectives of his position that would be competitive
with other textile and apparel companies of comparable size. In setting Mr.
Franck's base salary, the Committee compared his salary to the salaries of
other chief executive officers in the Company's peer group, including those
included in the performance graph, and in 1994 determined not to increase his
salary. Mr. Franck retired as Chief Executive Officer effective January 1,
1995, and Charles W. Davies, Jr. was appointed Chief Executive Officer. In
recognition of his increased responsibilities, the Committee recommended and
the Board approved an increase in Mr. Davies' annual salary to $300,000
effective January 1, 1995. Effective January 1, 1995, for his services as
Chairman of the Board, Mr. Franck is being paid $12,000 a month.
EXECUTIVE COMPENSATION COMMITTEE
Bruce M. Jacobson
Richard M. Simmons, Jr.
Dated: March 16, 1995
7
PAGE 8
EXECUTIVE COMPENSATION
The following table presents information relating to total compensation of the
Chief Executive Officer and the four next most highly compensated executive
officers of the Company during the fiscal year ended December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND COMPENSATION OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) (SHARES) COMPENSATION (2)
<S> <C> <C> <C> <C> <C> <C>
John M. Franck 1994 $ 240,000 $ -- $ -- 30,000 $ --
Chairman and Chief Executive 1993 240,000 -- -- 15,000 --
Officer 1992 240,000 -- -- 0 --
Charles W. Davies, Jr. 1994 246,541 -- -- 30,000 --
President and Chief Operating 1993 245,834 -- -- 165,000 --
Officer 1992 240,000 -- -- 15,000 --
B. Alvin Ratliff 1994 163,800 -- -- 10,000 --
Vice President and 1993 172,800 -- -- 23,000 --
Service/Quality Coordinator 1992 172,800 -- -- 15,000 --
John J. Smith 1994 146,400 5,636(3) -- 10,000 --
Vice President of 1993 146,400 -- 1,860 8,000 --
Customer Service 1992 146,400 -- 1,595 15,000 --
Don P. Shook 1994 144,000 5,543(3) -- 12,500 936
Vice President of 1993 144,000 -- -- 18,000 936
Finance 1992 144,000 -- -- 15,000 288
</TABLE>
(1) Country club dues and fees.
(2) Payment of excess life insurance premium.
(3) These bonuses were not paid under the Company's incentive bonus plan but
represent discretionary bonuses awarded in recognition of special efforts
by the named executives in 1994.
8
PAGE 9
The following tables present information concerning stock options granted to
the Chief Executive Officer and the four next most highly compensated
executive officers of the Company and exercises of options by such persons.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
NUMBER OF % OF TOTAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL
UNDERLYING GRANTED TO RATES OF STOCK PRICE
OPTIONS EMPLOYEES EXERCISE APPRECIATION
GRANTED IN FISCAL OR BASE EXPIRATION FOR OPTION TERM
NAME (SHARES) YEAR PRICE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
John M. Franck................ 30,000 7.5% $ 6.00 5/19/99 $ 49,731 $ 109,892
Charles W. Davies, Jr......... 30,000 7.5 6.00 5/19/99 49,731 109,892
B. Alvin Ratliff.............. 10,000 2.5 6.00 5/19/99 16,577 36,631
John J. Smith................. 10,000 2.5 6.00 5/19/99 16,577 36,631
Don P. Shook.................. 12,500 3.1 6.00 5/19/99 20,721 45,788
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FY-END (SHARES) IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE FY-END
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
John M. Franck................. -- -- 45,000 -- -- --
Charles W. Davies, Jr.......... -- -- 95,000 150,000 -- --
B. Alvin Ratliff............... -- -- 48,000 -- -- --
John J. Smith.................. -- -- 33,000 -- -- --
Don P. Shook................... -- -- 45,500 -- -- --
</TABLE>
9
PAGE 10
RETIREMENT PLAN. The Company maintains for the benefit of its eligible
employees a defined benefit pension plan qualified under section 401(a) of the
Internal Revenue Code. The following table illustrates annual retirement
benefits payable under the plan at the indicated Final Average Compensation
and Credited Service levels, assuming retirement at age 65 in 1995:
PENSION PLAN TABLE
ANNUAL RETIREMENT BENEFITS PAYABLE FOR CREDITED
SERVICE OF
FINAL AVERAGE EARNINGS 10 YEARS 20 YEARS 30 YEARS 40 YEARS
$100,000.................... $ 10,380 $ 20,760 $ 31,140 $ 36,140
150,000.................... 16,380 32,760 49,140 56,640
200,000.................... 22,380 44,760 67,140 77,140
250,000.................... 28,380 56,760 85,140 97,640
300,000.................... 34,380 68,760 103,140 118,140
Benefits are paid to plan participants based on their final average
compensation (as limited according to federal tax laws), years of credited
service with the Company, and the amount of covered compensation (as
determined by Social Security). Benefits under the Retirement Plan are not
subject to any deduction for Social Security or other offset amounts. Under
current federal tax law, in 1995 compensation in excess of $150,000 may not be
taken into account for purposes of accruing benefits under the Retirement
Plan.
The number of credited years of service for each person named in the Summary
Compensation Table are as follows: John M. Franck -- 18 years, Charles W.
Davies, Jr. -- 18 years, B. Alvin Ratliff -- 26 years, John J. Smith -- 10
years, and Don P. Shook -- 19 years.
The Company maintains a supplemental benefit plan to provide key management
personnel who have satisfied the eligibility requirements with supplemental
retirement benefits, including a retirement benefit which, when aggregated
with the benefit available under the retirement plan, is equivalent to 50% of
their final average earnings for 30 years of service. The eligibility
requirements include being 100% vested under the retirement plan. The majority
of this benefit will be funded through the retirement plan, with the balance
being funded by the Company through a supplemental nonqualified program which
is funded through the purchase of life insurance policies on each covered
individual. Benefits under the supplemental benefit plan are fully vested
after five years of service. The estimated annual benefits under the
supplemental benefit plan for each officer named in the Summary Compensation
Table as of December 31, 1994 are as follows: John M. Franck -- $41,459,
Charles W. Davies, Jr. -- $41,729, B. Alvin Ratliff -- $52,332, John J.
Smith -- $12,605 and Don P. Shook -- $30,408.
EMPLOYMENT CONTRACTS AND EMPLOYMENT CONTINUITY AGREEMENTS
The Company has entered into employment continuity agreements with John M.
Franck, Charles W. Davies, Jr., B. Alvin Ratliff, John J. Smith, and Don P.
Shook, which provide for their continued employment in the event of a change
in control of the Company and the payment of compensation and benefits if
their employment is terminated following a change in control. The Board of
Directors believes that these agreements will enable key employees to conduct
the Company's business with less concern for personal economic risk when faced
with a possible change in control. The Board believes the agreements also
should enhance the Company's ability to attract new key executives as needed.
10
PAGE 11
The agreements define "change in control" as occurring when a person becomes
the owner of 20% or more of the Company's voting securities or when there is a
change in a majority of the members of the Board of Directors, direct or
indirect, as a result of a cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested election of directors or a
combination of such transactions. Upon a change in control, the Company agrees
to continue the employee's employment with responsibilities, compensation and
benefits identical to or greater than those prior to the change in control
until the earlier of the third anniversary following the change in control or
the employee's normal retirement date. If employment is terminated without
cause by the Company during this period, or if the employee voluntarily
terminates employment within six months after receiving lesser
responsibilities, compensation or benefits or after being relocated without
his consent, and the employee has made an offer to work that has been rejected
by the Company, the Company must pay the employee compensation as follows: (i)
three times the employee's annual base salary as of his termination date, (ii)
three times the employee's average incentive bonus payable for the two fiscal
years prior to the termination date, (iii) cash or property due as a result of
exercise of stock options, and (iv) amounts the employee is entitled to
receive under the Company's tax-qualified benefit plans and, at the employee's
expense, health care coverage under welfare plans. This compensation will be
reduced, if necessary, to assure that any payments would not be "excess
parachute payments" under the Internal Revenue Code, which imposes significant
penalties on payments under such severance agreements which equal or exceed
300% of an employee's average annual compensation during the five most recent
taxable years ending prior to a change in control. The Company must pay all
legal fees and expenses incurred by the employee in seeking to obtain these
benefits. All agreements continue in effect from year to year unless the
Company notifies the employee before an anniversary date that the agreement
will terminate. The Company has entered into similar agreements with other
members of management.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Frith Construction Company, Inc., of which J. Burness Frith, a director of the
Company, was Honorary Chairman, a director and a principal stockholder until
September 1994, performed construction work for various manufacturing
divisions of the Company during fiscal 1994. The aggregate amount paid to
Frith Construction Company, Inc. by the Company for such construction work (at
cost plus a fixed percentage of cost) during fiscal 1994 was $131,749.
During fiscal 1994, Piedmont Trust Bank ("Piedmont") performed routine banking
services for the Company. John M. Franck and Richard M. Simmons, Jr. are two
of the 13 current members of the Board of Directors of Piedmont. Piedmont is a
subsidiary of Piedmont BankGroup Incorporated ("BankGroup"). Mr. Simmons is
one of the 12 current members of the Board of Directors of BankGroup.
Multitrade Group, Inc., of which J. Burness Frith and Irving M. Groves, Jr.,
directors of the Company, are shareholders and of which Mr. Groves is a
director, provided the Company with steam energy in fiscal 1994 for which it
was paid $4,039,895.
The Company believes that the terms of the transactions described above are
comparable to terms available for similar transactions with entities
unaffiliated with its officers and directors.
Lathan M. Ewers, Jr. is a partner in the law firm of Hunton & Williams,
counsel to the Company. 11
PAGE 12
PERFORMANCE OF COMPANY'S COMMON STOCK
The following graph compares the performance of the Company's Common Stock to
(1) the Standard & Poor 500 Index and (2) a Peer Group Index for the Company's
last five fiscal years. The Company's Peer Group consists of Oneita
Industries, Inc., Russell Corporation, Signal Apparel Co., Techknits, Inc. and
Tultex Corporation. The graph assumes that $100 was initially invested on
December 31, 1989 in the Company's Common Stock and in each index and that all
dividends were reinvested.
COMPARISON OF FIVE YEAR
CUMULATIVE SHAREHOLDER RETURN
1989 1990 1991 1992 1993 1994
Tultex $100.00 $83.74 $73.69 $ 96.41 $ 80.04 $ 56.25
Peer Group 100.00 87.85 129.34 120.55 102.39 110.24
S&P 500 100.00 96.90 126.42 136.05 149.76 151.74
12
PAGE 13
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Price Waterhouse LLP, independent
certified public accountants, to examine the financial statements of the
Company for the fiscal year ending December 30, 1995. Shareholders will be
asked to ratify this appointment at the Annual Meeting. Price Waterhouse LLP
has been the Company's independent accountants since 1971.
Representatives of Price Waterhouse LLP are expected to be present at the
meeting and will be given an opportunity to make a statement if they desire to
do so. They are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
PRICE WATERHOUSE LLP AS AUDITORS.
STOCKHOLDER PROPOSALS
Stockholders having proposals which they desire to present at next year's
annual meeting should, if they desire that such proposals be included in the
Board of Directors' proxy and proxy statement relating to such meeting, submit
such proposals in time to be received by the Company at its principal
executive offices in Martinsville, Virginia, not later than November 16, 1995.
To be so included, all such submissions must comply with the requirements of
Rule 14a-8 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934 and the Board of Directors directs the close attention of
interested stockholders to that Rule.
AMENDMENTS TO THE BYLAWS
The Company's Bylaws require that if any Bylaw is adopted, amended or repealed
by the Board between meetings of stockholders, the notice of the next meeting
of stockholders for the election of directors must set forth such amendment
and a concise statement of the changes made.
Since the 1994 Annual Meeting of Stockholders, the Board of Directors has
twice amended the Bylaws. On January 26, 1995, the first sentence of Article
III, Section 2 was amended to increase the Board of Directors from 10 to 11
members to permit the election of F. Kenneth Iverson to the Board of Directors
at that meeting.
Three directors -- William F. Franck, J. Burness Frith and John M. Tully --
are retiring at the 1995 Annual Meeting. In recognition of the vacancies
created by these retirements, the Board of Directors has amended the first
sentence of Article III, Section 2 to reduce the Board of Directors from 11 to
eight members, effective upon the convening of the 1995 Annual Meeting. This
amendment assures there are no vacancies on the Board of Directors at the time
of the 1995 Annual Meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
matter to come before the meeting other than those stated in the notice of the
meeting. As to other matters, if any, that may properly come before the
meeting, it is intended that proxies in the accompanying form will be voted in
accordance with the best judgment of the persons named therein.
13
PAGE 14
We hope that you will be able to attend this meeting in person, but if you
cannot be present, please execute the enclosed proxy and return it in the
accompanying envelope (no postage required) as promptly as possible. Your
stock will be voted in accordance with the instructions you give on the proxy,
and in the absence of any such instructions will be voted FOR election of
directors, and ratification of appointment of auditors, as described herein.
James M. Baker
Secretary
Martinsville, Virginia
March 24, 1995
14
