<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
TULTEX CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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 is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF TULTEX]
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Tultex
Corporation to be held on Tuesday, April 29, 1997 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.
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,
/s/ John M. Franck /s/ Charles W. Davies, Jr.
John M. Franck Charles W. Davies, Jr.
Chairman of the Board President and Chief Executive Officer
March 21, 1997
<PAGE>
[LETTERHEAD OF TULTEX]
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, April 29, 1997 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 1997 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 7, 1997, 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
Kathy H. Rogers, Secretary
March 21, 1997
<PAGE>
[LETTERHEAD OF TULTEX]
PROXY STATEMENT DATED AND MAILED MARCH 21, 1997
GENERAL
Proxies in the form enclosed are solicited by the Board of Directors for the
1997 Annual Meeting of Stockholders to be held at 10:00 a.m. on Tuesday, April
29, 1997 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: Kathy H. Rogers, 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.
A majority of the votes entitled to be cast on matters to be considered at the
meeting constitutes a quorum. If a share is represented for any purpose at the
meeting, for quorum purposes it is present for all matters considered at the
meeting. Abstentions and shares held of record by a broker or its nominee
("Broker Shares") that are voted on any matter are included in determining the
number of votes present or represented at the meeting. Broker Shares that are
not voted on any matter at the meeting are not included in determining whether a
quorum is present. Directors are elected by a plurality of the votes cast by
holders of Common Stock and Series B Preferred Stock; the vote required on other
matters is disclosed under the caption for such matters. Votes that are withheld
and Broker Shares that are not voted (commonly referred to as "broker
non-votes") are not included in determining the number of votes cast in the
election of directors or on other matters.
OWNERSHIP OF EQUITY SECURITIES
On March 7, 1997, the date for determining stockholders entitled to notice of
and to vote at the Annual Meeting, there were outstanding and entitled to vote
29,464,071 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
and vote together on all matters, including those to be acted on at the Annual
Meeting.
1
<PAGE>
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 AGGREGATE
AND INVESTMENT PERCENTAGE
NAME POWER (1) OTHER (2) OWNED
- - ---- -------------- ----------- ------------
<S> <C> <C> <C>
Charles W. Davies, Jr.............................. 185,362 shs. 142 shs. * %
Seth P. Bernstein.................................. 0 -- *
Walter J. Caruba................................... 59,165 -- *
Lathan M. Ewers, Jr................................ 5,025 2,400 *
John M. Franck..................................... 756,860 141,233 3.04
Irving M. Groves, Jr............................... 60,802 44,386 *
H. Richard Hunnicutt, Jr........................... 35,000 -- *
F. Kenneth Iverson................................. 5,000 -- *
Bruce M. Jacobson (3).............................. 4,500 -- *
B. Alvin Ratliff................................... 95,015 -- *
O. Randolph Rollins................................ 95,286 472,008 1.93
Richard M. Simmons, Jr............................. 182,921 615 *
John J. Smith...................................... 62,264 47 *
Executive officers and directors as a group
(19 persons including those named above)......... 1,653,911 663,531 7.85%
Piedmont Company, c/o Piedmont Trust Bank
P. O. Box 4751, Martinsville, Virginia........... 1,597,625(4) 5.45%
Pioneering Management Corporation,
60 Main Street, Boston, Massachusetts............ 2,873,500(5) 9.80%
</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 Piedmont Company dated January 30,
1997.
(5) As reported in Schedule 13G filed by Pioneering Management Corporation,
January 23, 1997.
2
<PAGE>
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 because of late filing, 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 1998 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. 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.
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
---- --- --------------
<S> <C> <C>
Seth P. Bernstein................................ 36 1997
Charles W. Davies, Jr............................ 48 1990
Lathan M. Ewers, Jr.............................. 55 1993
John M. Franck................................... 44 1984
H. Richard Hunnicutt, Jr......................... 58 1981
F. Kenneth Iverson............................... 71 1995
Bruce M. Jacobson................................ 47 1992
Richard M. Simmons, Jr........................... 70 1973
</TABLE>
SETH P. BERNSTEIN was elected a director by the Board of Directors on February
4, 1997. He is a Managing Director of and Head of the Leveraged Finance Group of
J. P. Morgan & Company, Inc., New York. Mr. Bernstein has been employed by J. P.
Morgan since 1984.
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 since 1976 in Hunton & Williams,
Richmond, Virginia, counsel to the Company.
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
3
<PAGE>
Board of Directors and Chief Executive Officer. He retired as Chief Executive
Officer on January 1, 1995, and continues as Chairman.
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 Chairman and Chief Executive Officer of Nucor, Inc.,
Charlotte, North Carolina, a steel producer, from 1984 through January 1, 1996,
when he retired. He continues as Chairman of Nucor.
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 a retired business executive. He was President of
American Furniture Company from 1961 to 1987 and its Chairman from 1974 to 1986.
He is a director of MainStreet BankGroup Incorporated, a Martinsville-based bank
holding company.
COMMITTEES OF THE BOARD
The 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.
The members of Committees of the Board are:
AUDIT COMMITTEE -- Irving M. Groves, Jr. and Bruce M. Jacobson
NOMINATING COMMITTEE -- H. Richard Hunnicutt, Jr., F. Kenneth Iverson and John
M. Franck
EXECUTIVE COMPENSATION COMMITTEE -- Lathan M. Ewers, Jr., Bruce M. Jacobson and
Richard M. Simmons, Jr.
<PAGE>
The Board of Directors held four regular meetings and two special meetings
during the fiscal year ended December 28, 1996. The Audit Committee held four
meetings during the year, the Executive Compensation Committee held two
meetings, and the Nominating Committee held one meeting.
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.
The Board of Directors has adopted the 1997 Directors Compensation Plan, which
permits directors to defer their retainer and meeting fees for the purchase of
the Company's Common Stock. Deferred fees are credited with "phantom" Common
Stock valued at fair market value. Directors receive distribution of their
accounts at death, disability, termination of service as a director, or on
six-months' notice. Directors who participate are general unsecured creditors of
the Company for their account balances. At the time account balances are
distributed in the form of Common Stock, directors pay federal and state income
taxes on the Common Stock distributed valued at its fair market value, and the
Company is able to deduct as an ordinary business expense an amount equal to the
fair market value of the stock distributed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1996, Piedmont Trust Bank performed routine banking services for
the Company. John M. Franck is a director of Piedmont Trust Bank. Piedmont Trust
Bank is a subsidiary of MainStreet BankGroup Incorporated (formerly Piedmont
BankGroup). Richard M. Simmons is a director of MainStreet BankGroup.
Multitrade Group, Inc., of which Irving M. Groves, Jr., a director of the
Company, is a shareholder and director, provided the Company with steam energy
in fiscal 1996 for which it was paid $4,485,162.
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.
5
<PAGE>
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 28, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
- - ----------------------------------------------------------------------------- -----------------------------------------
(F) (H)
(A) (D) (E) RESTRICTED (G) ALL
NAME AND (B) (C) BONUS OTHER ANNUAL STOCK OPTIONS/ OTHER
PRINCIPAL POSITION YEAR SALARY (1) COMPENSATION AWARD(S)(1) SARS COMPENSATION
- - ------------------ ---- ------- ------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles W. Davies, Jr. 1996 $300,000 $87,570 -- 3,020shs. 10,000 shs. --
President and 1995 300,000 -- -- -- 7,500 --
Chief Executive Officer 1994 246,541 -- -- -- 30,000 --
Randolph Rollins 1996 200,004 41,881 -- 1,444 10,000 --
Executive Vice President & 1995 200,004 -- $7,007(2) -- 7,500 --
General Counsel 1994 50,001 -- -- -- 50,000 --
B. Alvin Ratliff 1996 172,800 39,510 -- 1,248 10,000 $288(3)
Vice President, Resources 1995 172,800 -- -- -- 7,500 288(3)
1994 163,800 -- -- -- 10,000
Walter J. Caruba 1996 159,000 33,295 -- 1,148 10,000 --
Vice President, 1995 156,000 -- -- -- 7,500
Sales & Marketing 1994 138,000 -- -- -- 10,000 --
John J. Smith 1996 158,400 33,169 -- 1,144 10,000 --
Vice President, 1995 156,400 2,817 -- -- 7,500
Distribution/Logistics 1994 146,400 5,635 -- -- 10,000 --
and Systems
</TABLE>
________________
(1) Bonus represents cash Incentive Awards under the Consolidated Incentive Plan
(CIP) and Restricted Stock Awards represent Restricted Stock awarded under
the CIP. Shareholders approved the CIP at the 1996 Annual Meeting. The CIP
provides for cash Incentive Awards based primarily on return on assets, with
separate secondary goals for activewear and licensed apparel employees, and
for Restricted Stock Awards equal to 25% of the cash Incentive Award.
Restricted Stock Awards are valued at fair market value at the time of
grant, and vest 20% per year. Holders of Restricted Stock vote the shares
and receive any dividends paid thereon. Accelerated vesting of the shares
occurs in the event of a change in control, death, disability, normal
retirement or other circumstances determined by the Executive Compensation
Committee.
(2) Represents payment of residence relocation reimbursement.
(3) Represents payment of excess life insurance premiums.
6
<PAGE>
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>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- - ----------------------------------------------------------------------------------------- ----------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED
OPTIONS EMPLOYEES EXERCISE
GRANTED IN FISCAL OR BASE EXPIRATION
NAME (SHARES) YEAR PRICE DATE 5% 10%
- - ---- -------- --------- -------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Davies, Jr....... 10,000 3.41% $4.875 7/30/01 $13,469 $29,762
O. Randolph Rollins......... 10,000 3.41 4.875 7/30/01 13,469 29,762
B. Alvin Ratliff............ 10,000 3.41 4.875 7/30/01 13,469 29,762
Walter J. Caruba............ 10,000 3.41 4.875 7/30/01 13,469 29,762
John J. Smith............... 10,000 3.41 4.875 7/30/01 13,469 29,762
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FY-END IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE (SHARES) FY-END
--------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Davies, Jr.............. -- -- 127,500 100,000 $ 66,250 $ --
Randolph Rollins................... -- -- 37,500 30,000 56,250 30,000
B. Alvin Ratliff................... -- -- 65,500 -- 48,050 --
Walter J. Caruba................... -- -- 61,000 -- 56,250 --
John J. Smith...................... -- -- 50,500 -- 46,250 --
</TABLE>
7
<PAGE>
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 1996:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFITS PAYABLE FOR CREDITED SERVICE OF
----------------------------------------------------------------------
FINAL AVERAGE EARNINGS 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- - ---------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000................ $10,200 $20,400 $ 30,600 $ 35,600
150,000................ 16,200 32,400 48,600 56,100
200,000................ 22,200 44,400 66,600 76,600
250,000................ 28,200 56,400 84,600 97,100
300,000................ 34,200 68,400 102,600 117,600
400,000................ 46,200 92,400 138,600 158,600
</TABLE>
The benefits shown are annual payments based on an employee attaining age 65
during the 1996 plan year. Under current provisions of the Internal Revenue
Code, these amounts are limited to $120,000. Compensation is limited to
$150,000. The amounts in the table are based upon the formula in the current
Salaried Plan assuming retirement after attainment of normal retirement age. In
no case will the benefit amount be less than the minimum accrued benefit at May
31, 1994 based on the 401(a)(17) compensation limit of $235,840 plus additional
accruals for service after May 31, 1994. Benefits under the Retirement Plan are
not subject to any deduction for Social Security or other offset amounts.
The number of credited years of service for each person named in the Summary
Compensation Table are as follows: Charles W. Davies, Jr. -- 20 years, O.
Randolph Rollins -- 2 years, B. Alvin Ratliff -- 28 years, John J. Smith -- 12
years, and Walter J. Caruba -- 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.1 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 28, 1996 are as follows: O. Randolph Rollins -- $0, Charles W. Davies,
Jr. -- $58,165, B. Alvin Ratliff -- $61,195, John J. Smith -- $18,715 and Walter
J. Caruba -- $27,510.
_______________________
/1/ N.B. The Plan actually provides an accrual of 1.66% per year for up to 40
years of service.
8
<PAGE>
EMPLOYMENT CONTRACTS AND EMPLOYMENT CONTINUITY AGREEMENTS
The Company has entered into employment continuity agreements with the five
officers named in the Summary Compensation Table, 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.
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.
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.
Three directors comprise the Executive Compensation Committee of the Board of
Directors. None of these directors serves on the board of the other committee
member's company or organization and none of the
9
<PAGE>
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.
In late 1995, the Company engaged William M. Mercer Incorporated, an executive
compensation consulting firm, to assist the Committee in devising a new
incentive program for executive officers. The resulting Consolidated Incentive
Plan was approved by the shareholders at the 1996 Annual Meeting, retroactive to
the beginning of the 1996 fiscal year. The incentive awards discussed below
reflect implementation of the Consolidated Incentive Plan in the fiscal year
ended December 28, 1996.
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 base
salaries are fixed 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 1996 base pay increases and, upon the recommendation of the chief
executive officer, the Committee approved increases in salary for the officers
named in the Summary Compensation Table, other than the chief executive officer,
in the range of $8,000 to $20,000 a year, to become effective in the period
November 1, 1996 through February 1, 1997.
INCENTIVE AWARDS. The Consolidated Incentive Plan enables the Company's senior
executives to earn cash Incentive Awards based primarily on return on assets,
with separate secondary goals for activewear and licensed apparel employees.
Approximately 630 officers and employees are eligible to receive cash Incentive
Awards. Based on 1996 actual results, the Company paid cash Incentive Awards
shown in the Summary Compensation Table to the five named executives. As
discussed in the next paragraph, the Consolidated Incentive Plan also provides
for Restricted Stock Awards equal to 25% of the cash Incentive Award as
long-term incentive for executive officers.
LONG-TERM INCENTIVE. The Company awards long-term compensation through its Stock
Option Plan and as Restricted Stock Awards under the Consolidated Incentive
Plan. Approximately 630 officers and employees are eligible to receive grants
under the stock option plan, including the five named executives. Options
normally extend for 10 years, are priced at fair market value on the date of
grant, and are intended to provide incentive for future performance rather than
reward past performance. Together with base pay and cash Incentive Awards, the
Committee considers the record of comparable companies in determining grants to
be made to the named executives. In 1996, the Committee recommended and the
Board of Directors approved options for the named executives as reflected in the
Option Grants in Last Fiscal Year Table. The options granted to these five
officers represent 17.05% of options granted to employees in
10
<PAGE>
1996. Restricted Stock Awards equal to 25% of the cash Incentive Award are
valued at fair market value at the time of the grant, and vest 20% per year
commencing in 1997. Restricted Stock Awards for fiscal 1996 to the five named
executives are shown in the Summary Compensation Table. Holders of Restricted
Stock vote the shares and receive any dividends paid thereon, and accelerated
vesting of the shares occurs in the event of a change of control, death,
disability, normal retirement or other circumstances determined by the
Committee.
1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. Charles W. Davies, Jr. was
appointed chief executive officer effective January 1, 1995. In recognition of
his increased responsibilities, Mr. Davies' annual salary was increased to
$300,000 effective January 1, 1995. In setting Mr. Davies' base salary, the
Committee compares his salary to the salaries of other chief executive officers
in the Company's peer group, including those included in the performance graph.
Mr. Davies was paid at the same annual rate in 1996, and is currently being paid
at the same annual rate in 1997. Mr. Davies is eligible to participate in the
same bonus and long-term executive compensation plans as the other named
executives. The Committee's approach to setting Mr. Davies' target annual
compensation is 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.
EXECUTIVE COMPENSATION COMMITTEE
Lathan M. Ewers, Jr.
Bruce M. Jacobson
Richard M. Simmons, Jr.
Dated: March 21, 1997
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Lathan M. Ewers, Jr., a member of the Executive Compensation Committee, is a
partner of Hunton & Williams, counsel to the Company.
11
<PAGE>
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 the Company.
The graph assumes that $100 was initially invested on December 31, 1991 in the
Company's Common Stock and in each index and that all dividends were reinvested.
COMPARISON OF FIVE YEAR
CUMULATIVE SHAREHOLDER RETURN
[Performance Graph appears here]
<TABLE>
<CAPTION>
Dec. 91 Dec. 92 Dec. 93 Dec. 94 Dec. 95 Dec. 96
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Tultex $100.00 $130.83 $108.62 $76.33 $ 64.59 $109.61
S&P 500 Index 100.00 107.62 118.46 120.03 165.13 203.05
Peer Group 100.00 93.20 79.16 85.23 75.09 80.83
</TABLE>
12
<PAGE>
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 January 3, 1998. Shareholders will be asked to ratify this
appointment at the Annual Meeting. Ratification of Price Waterhouse LLP requires
the affirmative vote of a majority of Common Stock and Series B Preferred Stock
(voting together) voted 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 14, 1997. 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.
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.
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
FOR the ratification of appointment of auditors, as described herein.
Kathy H. Rogers
Secretary
Martinsville, Virginia
March 21, 1997
13
<PAGE>
COMMON STOCK PROXY
This Proxy is Solicited on behalf of the Board of Directors.
The undersigned hereby appoints John M. Franck, Kathy H. Rogers and Regina C.
Haynes, and each of them, with full power of substitution to each. Proceeds to
vote all Common Stock of the undersigned in Tulex Corporation at the annual
meeting to be held on April 29, 1997, and at any and all adjournments thereof.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
(1) Election of Directors
[_] FOR Charles W. Davies, JR., Lathan M. Evers, Jr., John M.
Franck, Seth P. Bernstein, H. Richard Hunnicutt, Jr.,
F. Kenneth Iverson, Bruce M. Jocobson, Richard M.
Simmons, Jr., excepted as marked to the contrary.
[_] VOTE WITHHELD To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in
the 1st above.
(2) [_] FOR Ratification of the Board of Directors' appointment of
Price Waterhouse LLP, Independent accountants, as
auditors of the Company.
[_] AGAINST
[_] ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
The proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted for
Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporation name
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person. Please sign and return, whether or not
you plan to attend the meeting.
___________________________ ___________________________ --------, 1997
Signature Signature if held jointly Dated
