<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
BASSETT FURNITURE INDUSTRIES, INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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)(1) 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 is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
BASSETT FURNITURE INDUSTRIES, INCORPORATED
BASSETT, VIRGINIA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 19, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Bassett Furniture Industries, Incorporated (the Company) will be held at the
Company's Main Office Building, Bassett, Virginia, on Wednesday, February 19,
1997, at 10:00 a.m., Local Time, for the purpose of considering and acting upon
the following:
1. The election of eleven Directors.
2. A proposal to ratify the selection of KPMG Peat Marwick as
independent public accountants for the fiscal year ending
November 30, 1997.
3. Any and all other matters that may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 13,
1996 as the record date for determining the stockholders entitled to notice of
and to vote at the meeting and any adjournment thereof, and only holders of
Common Stock of the Company of record at such date will be entitled to notice
of or to vote at the meeting.
THE BOARD OF DIRECTORS WILL APPRECIATE THE PROMPT RETURN OF THE
ENCLOSED PROXY, DATED AND SIGNED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME
BEFORE IT IS EXERCISED AND WILL NOT BE EXERCISED IF YOU ATTEND THE MEETING AND
VOTE IN PERSON.
By Order of the Board of Directors
Philip E. Booker
Vice President and Controller
Bassett, Virginia
January 10, 1997
<PAGE> 3
BASSETT FURNITURE INDUSTRIES, INCORPORATED
Post Office Box 626, Bassett, Virginia 24055
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of proxies to be used at the Annual Meeting of
Stockholders of Bassett Furniture Industries, Incorporated (the Company) to be
held at its Main Office Building, Bassett, Virginia, at 10:00 a.m., Local Time,
on Wednesday, February 19, 1997. This Proxy Statement and accompanying proxy
are being sent to the stockholders of the Company on or about January 10, 1997.
Solicitation other than by mail may be made personally and by
telephone by regularly employed officers and employees of the Company who will
not be additionally compensated therefor. The Company will request brokers,
dealers, banks or voting trustees, or their nominees, who hold stock in their
names for others or hold stock for others who have the right to give voting
instructions, to forward proxy materials to their principals and request
authority for the execution of the proxy and will reimburse such institutions
for their reasonable expenses in so doing. The total cost of soliciting proxies
will be borne by the Company.
Any proxy delivered in the accompanying form may be revoked by the
person executing the proxy at any time, before the authority thereby granted is
exercised, by written request addressed to Glenn A. Hunsucker, President and
Chief Operating Officer, Bassett Furniture Industries, Incorporated, Post
Office Box 626, Bassett, Virginia 24055 or by attending the meeting and
electing to vote in person. Proxies received in such form will be voted as
therein set forth at the meeting or any adjournment thereof.
The only matters to be considered at the meeting, so far as known to
the Board of Directors, are the matters set forth in the Notice of Annual
Meeting of Stockholders, and routine matters incidental to the conduct of the
meeting. However, if any other matters should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy, or their substitutes, to vote said proxy in
accordance with their judgment on such matters.
Stockholders present or represented and entitled to vote on a matter
at the meeting or any adjournment thereof will be entitled to one vote on such
matter for each share of the Common Stock of the Company held by them of record
at the close of business on December 13, 1996, which is the record date for
determining the stockholders entitled to notice of and to vote at such meeting
or any adjournment thereof. Voting on all matters, including the election of
Directors, will be by voice vote or by show of hands. The number of shares of
Common Stock of the Company outstanding on December 13, 1996 was 13,075,595.
<PAGE> 4
PRINCIPAL STOCKHOLDERS AND HOLDINGS OF MANAGEMENT
At December 13, 1996, the only persons known to the Company to be
beneficial owners of more than 5% of the $5.00 par value Common Stock of the
Company (the Common Stock) were as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING
- ------------------- -------------------- -----------------
<S> <C> <C>
Bassett Employee Savings/ 999,517(1) 7.54%
Retirement Plan
D. W. Miller, Trustee
Bassett, Virginia 24055
Pioneering Management Corporation 1,255,100(2) 9.60%
60 State Street
Boston, Massachusetts 02109
</TABLE>
- ---------------------
(1) In his capacity as Trustee, D. W. Miller, Vice President of the Company,
has sole voting and dispositive power over these shares.
(2) The information concerning beneficial ownership has been provided to the
Company by Pioneering Management Corporation (Pioneering). Pioneering has
sole voting power over all of these shares, sole dispositive power over
270,000 shares and shared dispositive power over 985,100 shares.
The following table sets forth, as of December 13, 1996, information
as to the beneficial ownership of the Common Stock by all Directors and
executive officers of the Company as a group and by the named Executive
Officers who are not also nominees for Directors. Information with respect to
the beneficial ownership of the Common Stock by Robert H. Spilman, Glenn A.
Hunsucker and the other nominees for Directors is contained in the table under
"Election of Directors."
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING(1)
- ----------------- -------------------- --------------------
<S> <C> <C>
Directors and executive 1,687,000(2)(3) 12.73%
officers as a group
(28 persons)
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING(1)
- ---------------- -------------------- --------------------
<S> <C> <C>
J. R. Meadors 28,064(4) (5)
J. C. Philpott 27,283(4) (5)
Robert H. Spilman, Jr.(6) 78,804(4) (5)
</TABLE>
- ---------------------
(1) Based on the number of shares outstanding plus options held by
directors and executive officers that are currently exercisable or
that are exercisable within 60 days.
(2) Includes 172,983 shares subject to options held by directors and
executive officers that are currently exercisable or that are
exercisable within 60 days.
(3) Includes 999,517 shares of Common Stock held by the Company's Employee
Savings/Retirement Plan, for which D. W. Miller, Vice President of
the Company, has sole voting and dispositive power in his capacity as
Trustee.
(4) Includes 35,643 shares subject to options that are currently
exercisable or that are exercisable within 60 days as follows: J.R.
Meadors 10,929; J.C. Philpott 12,000; and Robert H. Spilman, Jr.
12,714. Also includes 19,118 shares allocated to the named Executive
Officers under the Company's Employee Savings/Retirement Plan as
follows: J.R. Meadors 8,134; J.C. Philpott 9,486; and Robert H.
Spilman, Jr. 1,498.
(5) Less than 1% of the outstanding Common Stock.
(6) Robert H. Spilman, Jr. is the son of Robert H. Spilman, Chairman of
the Board and Chief Executive Officer of the Company.
ELECTION OF DIRECTORS
The Bylaws of the Company provide for eleven Directors. At the
meeting, eleven Directors will be elected to serve, subject to the provisions
of the Bylaws, until the 1998 Annual Meeting of Stockholders and until their
successors are duly elected and qualified; however, Robert H. Spilman intends
to resign from the Board effective May 1, 1997, coincident with his retirement
as Chief Executive Officer of the Company. Directors are elected by a plurality
of the votes cast by the holders of the shares entitled to vote at a meeting at
which a quorum is present. Provided a quorum is present, abstentions and shares
not voted are not taken into account in determining a plurality. A quorum
consists of a majority of votes entitled to be cast. It is the intention of the
persons named in the accompanying proxy to vote all proxies solicited
3
<PAGE> 6
by the Board of Directors FOR the eleven nominees listed below unless authority
to vote for the nominees or any individual nominee is withheld by a stockholder
in such stockholder's proxy. If for any reason any nominee shall not become a
candidate for election as a Director at the meeting, an event not now
anticipated, the proxies will be voted for the eleven nominees including such
substitutes as shall be designated by the Board of Directors.
The eleven nominees for election as a Director are listed below. All
of the nominees were elected to their current terms, which expire in 1997, at
the Annual Meeting of Stockholders held on February 21, 1996.
<TABLE>
<CAPTION>
PERCENT OF
COMMON
OFFICES WITH THE COMPANY OR SHARES OF STOCK
NAME AND OTHER OCCUPATION DURING COMMON STOCK OUTSTAND-
DIRECTOR SINCE AGE PAST FIVE YEARS OWNED (1) ING(2)
-------------- --- --------------- --------- ---------
<S> <C> <C> <C> <C>
Peter W. Brown, 54 Partner, Virginia Surgical 3,648(3) (4)
M.D. Associates of Richmond
1993 (general surgery).
Thomas E. Capps 61 Chairman of the Board, 2,212(3) (4)
1989 President and Chief
Executive Officer, Dominion
Resources, Inc. (electric
utility holding company);
Director of Dominion
Resources, Inc. and
NationsBank Corporation
Alan T. Dickson 65 Chairman of the Board since 3,375(3) (4)
1989 1994 and President until
1994 of Ruddick Corporation
(diversified holding com-
pany); Director of Lance,
Inc., NationsBank
Corporation and Sonoco
Products Company
Paul Fulton 62 Dean of the Kenan-Flagler 3,511(3) (4)
1993 Business School of the Uni-
versity of North Carolina
at Chapel Hill; President
of Sara Lee Corporation
(packaged food and consumer
products) until 1993;
Director of Sonoco Products
Company, NationsBank Corpo-
ration, Cato Corporation
and Winston Hotels, Inc.
William H. Goodwin, 56 Chairman of the Board, CCA 19,899(3) (4)
Jr. Industries, Inc. (diver-
1992 sified holding company);
Director of First Union
Corporation
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PERCENT OF
COMMON
OFFICES WITH THE COMPANY OR SHARES OF STOCK
NAME AND OTHER OCCUPATION DURING COMMON STOCK OUTSTAND-
DIRECTOR SINCE AGE PAST FIVE YEARS OWNED (1) ING(2)
-------------- --- --------------- --------- ---------
<S> <C> <C> <C> <C>
Glenn A. Hunsucker 62 President and Chief 36,868(5) (4)
1974 Operating Officer of the
Company; Director of First
Union National Bank of
Virginia
James W. McGlothlin 56 Chairman of the Board and 5,968(3) (4)
1981 Chief Executive Officer,
The United Company (energy,
real estate, financial
services, hotel and golf
properties, retail and
industrial supplies);
Director of CSX Corporation
Thomas W. Moss, Jr. 68 Speaker of the Virginia 600(3) (4)
House of Delegates; Senior
1996 Partner of the law firm
Thomas W. Moss, Jr., P.C.;
Director of Star Oil & Gas,
Ltd. and Goodman-Segar-Ho-
gan-Hoffer, Inc.
Albert F. Sloan 67 Retired Chairman of the 1,887(3) (4)
1984 Board, Lance, Inc. (snack
foods); Director of PCA
International, Inc.,
Richfoods Holdings, Inc.
and Cato Corporation
John W. Snow 57 Chairman of the Board, 3,175(3) (4)
1990 President and Chief
Executive Officer, CSX
Corporation rail-based
international tran-
sportation); Director of
CSX Corporation, Circuit
City Stores, Inc., Nati-
onsBank Corporation,
Textron, Inc. and USX
Corporation
Robert H. 69 Chairman of the Board and 196,212(7) 1.48%
Spilman(6) Chief Executive Officer of
1961 the Company; Director of
NationsBank Corporation,
Jefferson-Pilot
Corporation, Trinova
Corporation, The Pittston
Company and Dominion Re-
sources, Inc.
</TABLE>
- --------------------
(1) Also includes shares allocated to officers of the Company as participants
in the Company's Employee Savings/Retirement Plan.
5
<PAGE> 8
(2) Based on the number of shares outstanding plus options held by directors
and executive officers that are currently exercisable or that are
exercisable within 60 days.
(3) Includes 1,500 shares subject to options which are currently exercisable
or exercisable within 60 days for each person indicated, except for Mr.
Moss who only owns one option for 500 shares.
(4) Less than 1% of the outstanding Common Stock.
(5) Includes 17,939 shares that are subject to options which are presently
exercisable or are exercisable within 60 days and 10,044 shares allocated
to Mr. Hunsucker under the Company's Employee Savings/Retirement Plan.
(6) Robert H. Spilman is the father of Robert H. Spilman, Jr., Executive Vice
President of Marketing and Merchandising of the Company.
(7) Includes 36,091 shares that are subject to options which are presently
exercisable or are exercisable within 60 days and 21,032 shares allocated
to Mr. Spilman under the Company's Employee Savings/Retirement Plan. Also
includes a total of 119,126 shares that are held in a trust of which Mr.
Spilman is co-trustee, shares held by Mr. Spilman's wife directly and
shares held in trusts of which Mr. Spilman's wife is trustee. Mr. Spilman
disclaims beneficial ownership of these 119,126 shares.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met five times during the 1996 fiscal year.
Each Director attended at least 75% of the meetings of the Board of Directors
and Committees on which he served. The Company has an Audit Committee and an
Organization, Compensation and Nominating Committee.
The Audit Committee is composed of Messrs. Brown, Capps, Dickson,
Fulton, Moss and Sloan and is responsible for monitoring the performance of the
independent auditors for the Company, recommending their engagement or
dismissal to the Board of Directors, approving all audit and related fees and
reviewing and evaluating the internal auditor's audit schedule. The Audit
Committee met two times during the fiscal year.
The Organization, Compensation and Nominating Committee is composed of
Messrs. Dickson, Goodwin, McGlothlin, Sloan and Snow. The Committee reviews and
makes recommendations to the Board of Directors with respect to executive and
officer compensation; establishes, reviews and recommends changes to the
organizational structure of the Company so as to utilize the management
resources to best respond to the changing demands of the marketplace; reviews
the individual performance of each director in terms of overall contribution to
the betterment of the Company,
6
<PAGE> 9
including meeting attendance and participation; reviews the composition of the
Board, and; recommends a slate of directors for nomination to the Board. The
Organization, Compensation and Nominating Committee met once during the fiscal
year.
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Organization, Compensation and Nominating Committee is composed of
Messrs. Dickson, Goodwin, McGlothlin, Sloan and Snow. Mr. McGlothlin is
Chairman of the Board and Chief Executive Officer of The United Company. In
1993, a subsidiary of The United Company, United Central Industrial Supply
Company, purchased the assets of Blue Ridge Industrial Supply Company. United
Central Industrial Supply Company has operated mining, mill and industrial
supply stores for over 20 years. Blue Ridge Industrial Supply Company conducted
business with the Company prior to such acquisition and has continued to do
business with the Company. Blue Ridge Industrial Supply Company had sales of
approximately $1,720,000 to the Company in the 1996 fiscal year. The prices
charged by Blue Ridge Industrial Supply Company were negotiated on an
arms-length basis and the Company believes such prices are at or below the
prices charged for comparable products by other companies in the area. Robert
H. Spilman, Chairman of the Board and Chief Executive Officer of the Company,
serves on the Organization and Compensation Committee of the Board of Directors
of Dominion Resources, Inc. Thomas E. Capps, a member of the Company's Board of
Directors, is Chairman of the Board, President and Chief Executive Officer of
Dominion Resources, Inc.
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE REPORT
The Organization, Compensation and Nominating Committee of the Board
of Directors has assisted the Company in developing and implementing
compensation policies and programs which seek to improve the profitability of
the Company and to maximize stockholder value over time. To accomplish this,
the five outside directors who compose the Organization, Compensation and
Nominating Committee have developed executive compensation policies which are
consistent with, and directly linked to, the Company's business objectives.
These business objectives represent a composite of factors that are considered
important for the future success of the Company. These factors attempt to
balance long and short-term performance, including the continued maintenance of
a strong balance sheet, growth of pre-tax profitability and earnings per share,
control of costs, market growth and diversification and other criteria which
may be introduced over time as a result of changes in the household furniture
environment. The members of the Organization, Compensation and Nominating
Committee deliberate on matters affecting executive compensation. The decisions
are reviewed by the full Board, with the exception of decisions on stock or
option awards which are made by the Organization, Compensation and Nominating
Committee to satisfy tax and securities law requirements.
7
<PAGE> 10
The key principles which the Organization, Compensation and Nominating
Committee emphasizes in developing compensation programs affecting senior
executives are:
. Paying for performance that emphasizes corporate, business unit
and individual achievement.
. Motivating senior executives to the achievement of strategic and
tactical business goals and objectives and rewarding outstanding
achievement.
. Linking the interests of senior executives with the long-term
interests of the stockholders through ownership of the Common
Stock.
As the level of responsibility increases, an executive's compensation
will be proportionately at greater risk, reflecting the rewards earned as a
result of goal attainment. As responsibility increases, the compensation mix
will rely increasingly on the value of stock awards.
The four components of executive compensation are:
Base Salary. Base salaries are generally competitive with
high-performing, similar-sized companies in the industry. In recent years the
base salaries have been kept at a relatively fixed rate to reflect the general
economic conditions of the industry and to keep fixed costs under control.
Increases in base salary have been the result of increased responsibilities
assumed by an executive officer and profitability of the Company or a business
unit in an increasingly competitive industry. The Organization, Compensation
and Nominating Committee emphasizes rewards in the total compensation context,
rather than increasing base salary.
Annual Incentive Bonuses. Target annual incentives are established for
each executive in the form of a percentage of base salary. Discretionary
adjustments to targets are made based on performance criteria, subjectively
applied, which include the continued maintenance of a strong balance sheet,
growth of pre-tax profitability and earnings per share, control of costs,
market growth and diversification and other criteria which may be introduced
over time as a result of changes in the household furniture environment. Annual
bonuses are considered part of the total compensation package and represent a
targeted portion of such total compensation. There were approximately 400
participants in the executive and management incentive plans for the years
covered by this report.
Annual Stock Option Grants. The Organization, Compensation and
Nominating Committee may grant options to acquire shares of Company Common
Stock to those key executives who, in their judgment, have achieved goals and
objectives as described in the corporate business plans.
8
<PAGE> 11
The performance criteria used to determine the eligibility to receive
a stock option include growth of pre-tax profitability and earnings per share,
control of costs, market growth and diversification, continued maintenance of a
strong balance sheet and other criteria which may be introduced over time as a
result of changes in the household furniture environment. The number of option
shares granted to each executive is determined by taking a percentage of the
total cash compensation and dividing that amount by the fair market value per
share at the date of grant. The percentage is set annually by the Organization,
Compensation and Nominating Committee on a subjective basis, based upon
individual performance. The number of option shares granted will be reduced in
the event the executive does not own at least that number of shares of Company
Common Stock equal to the number of shares subject to the option grant. This
encourages executives to hold shares received upon the exercise of the options,
further linking their interests to those of the stockholders. Stock option
grants are considered part of the total compensation package and represent a
targeted portion of such total compensation.
Benefits. These programs are designed to provide protection against
financial catastrophe that can result from illness, disability or death.
Benefits offered to senior executives are those offered to all employees, with
certain variations, to promote tax efficiency and replacement of benefits lost
due to regulatory limitations.
The Organization, Compensation and Nominating Committee believes that
executive compensation programs serve the interest of the stockholders of the
Company. Pay delivered to the senior executive is intended to emphasize the
achievement of goals and objectives of the Company. At risk, performance-based
bonus compensation averaged approximately 30% of total annual cash compensation
for the executive group during the fiscal year ended November 30, 1996. The
range of bonus compensation can be from zero to a multiple of base salary,
depending upon performance against goals and objectives for the year. The use
of equity in the form of stock option grants requires executives to invest in
the company they manage, and stockholder value creation becomes important, as
with other stockholders.
Chief Executive Officer's 1996 Compensation. Robert H. Spilman,
Chairman of the Board and Chief Executive Officer of the Company, is eligible
to participate in the same compensation programs available to other senior
executives. The Organization, Compensation and Nominating Committee seeks to be
competitive with high-performing, similar-sized companies in the household
furniture industry in the context of total compensation, placing more emphasis
on at-risk incentives than on base salary. While this performance-driven
compensation may produce variable compensation over the years, it is the belief
of the Organization, Compensation and Nominating Committee that this approach
focuses the executive on the achievement of short and long-term goals and
objectives which enhance stockholder value.
The Organization, Compensation and Nominating Committee determines,
subjectively, the emphasis and importance of the above criteria each year to
reflect the economic conditions of the household furniture industry and that of
the Company.
9
<PAGE> 12
The base salary component of total compensation for Mr. Spilman for
fiscal year 1996 was $475,000. Mr. Spilman's salary is competitive when
compared to company size, performance and position within the industry.
The annual bonus paid to Mr. Spilman was based upon the subjective
application of the objective performance criteria stated above. The annual
bonus for fiscal year 1996 was determined using these criteria resulting in a
payment of $202,500, which was a decrease of 10% from 1995. No stock option
grants were awarded to Mr. Spilman in 1996.
For fiscal year 1997, the Organization, Compensation and Nominating
Committee will again establish performance criteria designed to enhance
stockholder value. These criteria will be consistent with financial objectives
of the Company and will be representative of the success needed to insure
growth and profitability.
James W. McGlothlin, Chairman
Alan T. Dickson
William H. Goodwin, Jr.
Albert F. Sloan
John W. Snow
10
<PAGE> 13
STOCKHOLDER RETURN PERFORMANCE GRAPH
Included below is a line graph comparing the yearly percentage change
in the cumulative total stockholder return on the Company's Common Stock
against the cumulative total return of the Standard & Poor's 500 Index and the
Company's Peer Group for the period commencing December 1, 1991 and ending
November 30, 1996, covering the Company's five fiscal years ended November 30,
1996. The Company's Peer Group (the Peer Group) consists of nine
publicly-traded companies, the Company, Ameriwood Industries International
Corporation, Bush Industries, Inc. Class A Common Stock, DMI Furniture, Inc.,
La-Z-Boy Chair Company, Ladd Furniture, Inc., Masco Corp., Pulaski Furniture
Corp. and Rowe Furniture Corp, each of which is in the household furniture
industry.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX
AND THE PEER GROUP
<TABLE>
<CAPTION>
INDEXED RETURNS
BASE YEARS ENDING
PERIOD
COMPANY NAME/INDEX NOV31 NOV92 NOV93 NOV94 NOV95 NOV96
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BASSETT FURNITURE INDS 100 161.88 182.59 164.64 134.13 140.14
S&P 500 INDEX 100 118.47 130.44 131.80 180.54 230.84
PEER GROUP #1 100 133.51 175.77 126.90 157.47 194.93
</TABLE>
This graph assumes that $100 was invested in the Company's Common Stock on
December 1, 1991, in the S&P 500 Index and the Peer Group and that dividends
were reinvested.
11
<PAGE> 14
EXECUTIVE COMPENSATION
The table below shows the compensation paid or accrued by the Company
for the three fiscal years ended November 30, 1996, to or for the account of
the Chief Executive Officer and the Company's four other most highly
compensated officers whose total annual salary and bonus exceeded $100,000 for
the 1996 fiscal year (collectively, the named Executive Officers).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPEN-
------------------- SATION
---------
OTHER
ANNUAL ALL
COM- STOCK OTHER
NAME AND PENSA- OPTION COMPEN-
PRINCIPAL FISCAL SALARY BONUS TION AWARDS SATION
POSITION YEAR ($)(1) ($)(2) ($)(3) (#SH) ($)(4)
------------------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Spilman 1996 475,000 202,500 --- 0 9,919
Chairman of the 1995 450,000 225,000 --- 0 9,919
Board and Chief 1994 450,000 225,000 --- 7,500 10,626
Executive Officer
Glenn A. Hunsucker 1996 250,000 117,000 --- 0 8,625
President and Chief 1995 240,000 130,000 --- 0 9,919
Operating Officer 1994 230,000 130,000 --- 5,000 10,626
Robert H. Spilman, 1996 135,000 45,000 --- 0 6,210
Jr. 1995 120,000 45,000 --- 0 5,865
Executive Vice 1994 100,000 40,000 --- 2,000 4,543
President -
Marketing and
Merchandising
J. C. Philpott 1996 122,500 65,000 --- 0 8,573
Executive Vice 1995 119,000 65,000 --- 0 10,341
President - Manu- 1994 115,000 65,000 --- 2,000 10,063
facturing
J. R. Meadors 1996 97,500 62,000 --- 0 9,171
Senior Vice 1995 95,000 62,000 --- 0 9,054
President 1994 92,000 62,000 --- 2,000 8,687
- Marketing
</TABLE>
- ----------------
(1) The salaries shown above include deferred compensation for each named
Executive Officer under the Section 401(k) qualified, defined
contribution Employee Savings/Retirement Plan.
(2) Under the Company's incentive bonus program, executives are paid cash
awards which are directly related to their performance and contribution
to the attainment
12
<PAGE> 15
of Company objectives and individual goals. Awards are made annually
following the completion of the fiscal year.
(3) No named Executive Officer has received personal benefits during the
listed years in excess of the lesser of $50,000 or 10% of annual salary.
(4) Company matching contributions under the Company's Employee
Savings/Retirement Plan.
The table below shows, on an aggregated basis, each exercise of stock
options or SARs during the fiscal year ended November 30, 1996 by the Chief
Executive Officer and each named Executive Officer and the 1996 fiscal year-end
value of unexercised in-the-money options and SARs.
AGGREGATED OPTION/SAR EXERCISES IN THE 1996
FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER IN-THE-MONEY
OF UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT AT FY-END
FY-END (#SH)(1) ($)(1)(2)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#SH) REALIZED ($) UNEXERCISABLE
- ---- ----------------- ----- --------------- -------------
<S> <C> <C> <C> <C>
Robert H. Spilman 0 0 29,657/24,272 0/0
Glenn A. Hunsucker 0 0 15,265/17,414 0/0
Robert H. Spilman, Jr. 0 0 10,479/2,235 0/0
J. C. Philpott 0 0 9,765/2,235 0/0
J. R. Meadors 0 0 8,694/2,235 0/0
- -------------------
</TABLE>
(1) No SARs were exercised in 1996 and there were no SARs outstanding at the
1996 fiscal year end.
(2) The exercise price for unexercised options is $26.25 per share for 1994
grants, $37.40 per share for 1993 grants and $28 per share for 1992
grants.
SUPPLEMENTAL RETIREMENT INCOME PLAN
The Company has a Supplemental Retirement Income Plan (the Supplemental
Plan) that covers certain senior executives to promote their long service and
dedication and to provide an additional retirement benefit. Upon retirement,
the Supplemental Plan provides for lifetime monthly payments in an amount equal
to 65% of the Participant's final average compensation as defined in the
Supplemental Plan, which amount is reduced by (i) 50% of old age social
security benefits, (ii) the benefit that would be
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<PAGE> 16
payable on a life annuity basis from Company contributions to the Employee
Savings/Retirement Plan based on a formula using maximum employee
contributions, and (iii) the benefit that would be payable on a life annuity
basis from funds the Company contributed to a Defined Benefit Plan that was
terminated in 1977. There is no provision under the Supplemental Plan for a
disability benefit if a participant's employment is terminated prior to age 65
due to disability; however, the participant, notwithstanding the termination of
employment, shall continue to be covered by the Supplemental Plan. The death
benefit is divided into (a) prior to retirement death, which pays the
beneficiary 50% of final average compensation for a period of 120 months, and
(b) post retirement death, which pays the beneficiary 200% of final average
compensation in a single payment. There are no benefits payable as a result of
a termination of employment for any reason other than death or retirement. The
Supplemental Plan contains a change of control provision which provides for the
immediate vesting and payment of the retirement benefit under the Supplemental
Plan in the event of an employment termination resulting from a change of
control. The Supplemental Plan is an unfunded liability of the Company which is
credited with an interest rate representative of the Company's interest rate
used in its major financial transactions and fluctuates with the market. The
executives covered under this Supplemental Plan have waived participation in
the Company's Group Life Insurance Program.
Assuming no change in the rate of compensation after November 30, 1996,
the estimated annual net benefit payable on retirement at age 65 (at a later
assumed age for Mr. Spilman) for the named Executive Officers was as follows:
Robert H. Spilman $291,003, Glenn A. Hunsucker $162,874, J. C. Philpott $71,034
and J. R. Meadors $57,306. Inasmuch as the estimated annual net benefit is
based on the assumption of no change in the rate of compensation after November
30, 1996, it is projected that the net benefit payable to Robert H. Spilman,
Jr. will be covered by the benefits calculated (using the aforementioned
formula) to be payable from Company contributions to the Employee
Savings/Retirement Plan.
DIRECTOR COMPENSATION
Directors who are also employees of the Company receive no additional
compensation for serving as directors. Directors who are not employees of the
Company receive an annual retainer fee of $15,000, plus a fee of $500 for each
Board and for each Committee meeting attended.
Under the Company's 1993 Stock Plan for Non-Employee Directors (the
Director Plan), Directors who are not regular employees of the Company are each
automatically granted an option to purchase 500 shares of Common Stock on April
1 of each year, subject to adjustment in the event of stock dividends and
splits, recapitalizations and similar transactions. On April 1, 1996, nine
Directors were each granted an option to purchase 500 shares of Common Stock at
an exercise price of $25.75 per share.
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<PAGE> 17
An option granted under the Director Plan is not exercisable unless the
optionee remains available to serve as a Director of the Company for six months
after the date of grant. An optionee's rights under all outstanding options
will terminate three years after his termination as a Director, unless the
termination is because of death or disability, in which case the options will
be exercisable for one year after such termination. Unless earlier terminated,
all options granted under the Director Plan expire ten years from the date of
grant.
In addition, the Director Plan provides that eligible Directors of the
Company may make an annual irrevocable election to receive up to 100% of their
annual retainer fee in the form of a stock award. The total number of shares
subject to a stock award will be determined based on the fair market value of
the Common Stock on the date the award is made. The Director may specify the
percentage of the Director's annual retainer fee subject to the election, and
the percentage of and the dates on which the shares covered by the stock award
are to be issued. In the event a Director ceases to be a member of the Board of
Directors for any reason, the total number of shares subject to the award which
have not yet been issued to the Director will be issued to the Director within
one year of his termination as a Director.
The Company also has established a planned gift program for directors
funded by life insurance policies on directors as part of its overall program
to promote charitable giving. After the death of a Director, the Company will
donate $500,000 to one or more qualifying charitable organizations recommended
by the individual director and subsequently be reimbursed by life insurance
proceeds. Individual directors derive no financial benefit from this program
since all charitable deductions accrue solely to the Company. The program does
not result in any material cost to the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the Exchange Act)
requires the Company's Directors and executive officers and persons who own
more than 10% of the Company's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of the Common Stock and other equity securities. Executive officers,
Directors and greater than 10% stockholders are required to furnish the Company
with copies of all such reports they file. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, during the fiscal
year ended November 30, 1996, all Section 16(a) filing requirements applicable
to its executive officers, Directors and greater than 10% beneficial
stockholders were complied with.
15
<PAGE> 18
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
has approved the selection of KPMG Peat Marwick as independent public
accountants to audit the financial statements of the Company for the fiscal
year ending November 30, 1997. This selection is being presented to the
stockholders for their ratification at the Annual Meeting of Stockholders. The
firm of KPMG Peat Marwick has audited the Company's financial statements
annually since 1990 and is considered well qualified.
Representatives of KPMG Peat Marwick are expected to be present at the
Annual Meeting of Stockholders with an opportunity to make a statement if they
desire to do so, and they are expected to be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of KPMG Peat Marwick as independent public accountants to audit the
financial statements of the Company for the fiscal year ending November 30,
1997, and proxies solicited by the Board of Directors will be so voted unless
stockholders specify a different choice. If the stockholders do not ratify the
selection of KPMG Peat Marwick, the selection of independent public accountants
will be reconsidered by the Board of Directors.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder intends to present for action at the 1998
Annual Meeting of Stockholders, currently scheduled for February 18, 1998, must
be received by the Company no later than September 12, 1997, in order for the
proposal to be included in the proxy statement and form of proxy for the 1998
Annual Meeting of Stockholders. The proposal should be sent to Glenn A.
Hunsucker, President and Chief Operating Officer, Bassett Furniture Industries,
Incorporated, Post Office Box 626, Bassett, Virginia 24055.
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<PAGE> 19
APPENDIX A
PROXY BASSETT FURNITURE INDUSTRIES, INCORPORATED PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD FEBRUARY 19, 1997
The undersigned hereby appoints Robert H. Spilman and Philip E. Booker,
each or either of them, proxies, with full power of substitution, with the
powers the undersigned would possess if personally present, to vote, as
designated below, all shares of the $5.00 par value Common Stock of the
undersigned in Bassett Furniture Industries, Incorporated at the Annual Meeting
of Stockholders to be held on February 19, 1997, and at any adjournment
thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN AND, UNLESS OTHERWISE
DIRECTED, WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS AND FOR
THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS. The Board of Directors
recommends voting FOR on each item.
1. ELECTION OF DIRECTORS: Nominees are Peter W. Brown, M.D., Thomas E. Capps,
Alan T. Dickson, Paul Fulton, William H. Goodwin, Jr., Glenn A.
Hunsucker, James W. McGlothlin, Thomas W. Moss, Jr., Albert F. Sloan, John
W. Snow and Robert H. Spilman.
[ ] FOR all listed nominees (except do not vote for the nominee(s)
whose name(s) I have written below)
------------------------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for the listed nominees
2. RATIFICATION OF SELECTION OF KPMG PEAT MARWICK AS INDEPENDENT PUBLIC
ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued from other side)
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Receipt of Notice of Annual Meeting of Stockholders and accompanying Proxy
Statement is hereby acknowledged. PLEASE DATE AND SIGN EXACTLY AS PRINTED
BELOW AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
Dated: ______________________________, 1997.
____________________________________
____________________________________
(When signing as attorney, executor,
administrator, trustee, guardian, etc.,
give title as such. If joint account,
each joint owner should sign.)
