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:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Concord Fabrics Inc.
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(Name of Registrant as Specified in Its Charter)
JOAN WEINSTEIN
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|_| $0.00 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| 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 transactions applies:
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(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(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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CONCORD FABRICS INC.
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of
Stockholders (the "Meeting") to be held on Tuesday, January 12, 1999, at 10:00
A.M., in Room C, Eleventh Floor, Chase Manhattan Bank, 270 Park Avenue, New
York, New York, for the following purposes:
1. To elect seven directors to serve until the next Annual
Meeting and until their successors are elected.
2. To vote on the ratification of the selection by the Board of
Directors of Arthur Andersen LLP as independent public
accountants of the Company for the fiscal year ending August
29, 1999.
3. To ratify an amendment to the Company's Incentive Plan
increasing the number of shares of Class A Common Stock
available thereunder by 100,000 shares.
4. To transact such other business as may properly come before
the meeting and any adjournments thereof.
Only stockholders of record at the close of business on December 10,
1998 are entitled to receive notice of and to vote at the meeting.
Please sign, date and mail the enclosed proxy in the enclosed
envelope, which requires no postage if mailed in the United States. A list of
stockholders entitled to vote at the Meeting will be open to examination by
stockholders during ordinary business hours for a period of ten (10) days prior
to the Meeting at the offices of the Company, 1359 Broadway, New York, New York
10018.
By order of the Board of Directors
JOAN WEINSTEIN
Secretary
New York, New York
December 18, 1998
<PAGE>
CONCORD FABRICS INC.
1359 Broadway
New York, New York 10018
-------------
PROXY STATEMENT
-------------
GENERAL
The Annual Meeting of Stockholders of Concord Fabrics Inc., a
Delaware corporation (the "Company"), will be held on January 12, 1999 (the
"Meeting"), for the purposes set forth in the foregoing notice. The accompanying
form of proxy for use at the Meeting and at any adjournments thereof is
solicited by the Board of Directors and may be revoked at any time prior to its
exercise by written notice to the Secretary of the Company. Proxies in the
accompanying form, which are properly executed by stockholders and duly returned
and not revoked, will be voted in the manner specified in the proxy; if no
specification is made, the proxies will be voted: (a) with respect to directors,
in favor of the nominees indicated below unless authority to vote with respect
to any or all nominees is withheld; (b) with respect to the ratification of the
selection of Arthur Andersen LLP as the Company's independent public
accountants, in favor of ratification of the selection; (c) with respect to
ratification of the amendment to the Company's Incentive Plan, in favor of
ratification of the amendment; and (d) with respect to such other business as
may properly come before the Meeting, and any adjournments thereof, in the best
judgment of the persons acting under such proxies. This Proxy Statement and the
accompanying form of proxy are being mailed to stockholders on or about December
18, 1998.
As of the close of business on December 10, 1998, the record date
for determining the holders of Class A and Class B Common Stock of the Company
(the "Common Stock") entitled to vote at the Meeting, the Company had issued and
outstanding (i) 2,224,453 shares of Class A Common Stock, each share being
entitled to one vote for all seven nominees for director of the Company and one
vote on each other matter presented to the Meeting; and (ii) 1,446,451 shares of
Class B Common Stock, each share being entitled to ten votes for five of the
seven nominees for director of the Company and ten votes on each other matter
presented to the Meeting.
As required under Section 231 of the Delaware General Corporation
Law (the "DGCL"), the Company will, in advance of the Meeting, appoint one or
more Inspectors of Election to conduct the vote at the Meeting. The Company may
designate one or more persons as alternate Inspectors of Election to replace any
Inspector of Election who fails to act. If no Inspector or alternate Inspector
is able to act at the Meeting, the person presiding at the Meeting will appoint
one or more Inspectors of Election. Each Inspector of Election before entering
the discharge of his duties shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality. The Inspectors of Election
will (i) ascertain the number of shares of Common Stock outstanding as of the
record date, (ii) determine the number of shares of Common Stock present in
person or represented by proxy at the Meeting and the validity of the proxies
and ballots, (iii) count all votes
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and ballots, and (iv) certify the determination of the number of shares of
Common Stock present in person or represented by proxy at the Meeting and the
count of all votes and ballots.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting, present in person or
represented by proxy, shall constitute a quorum at the Meeting. Under Section
216 of the DGCL, any stockholder who abstains from voting on any particular
matter described herein will be counted for purposes of determining a quorum.
Shares of Common Stock represented by proxies which are marked "withhold
authority" with respect to the election of one or more nominees for director and
abstentions with respect to the other proposals have the same effect as if the
shares represented thereby were voted against such nominee or nominees and
against such other matters, respectively. Shares not voted on one or more but
less than all such matters on proxies returned by brokers will be treated as not
represented at the Meeting as to such matter or matters. For purposes of voting
on the matters described herein, the affirmative vote of (i) a majority of the
shares of Class A Common Stock present or represented at the Meeting is required
to elect two directors, (ii) a majority of the shares of Class A Common Stock
and Class B Common Stock present or represented at the Meeting and voting
together as a group is required to elect five directors and (iii) a majority of
the shares of Class A Common Stock and Class B Common Stock present or
represented at the Meeting and voting together as a group is required to ratify
the selection by the Board of Directors of Arthur Andersen LLP as independent
public accountants of the Company for the fiscal year ending August 29, 1999 and
to ratify the amendment to the Company's Incentive Plan approved by the Board of
Directors.
No compensation will be paid by the Company to any person in
connection with the solicitation of proxies. Brokers, banks and other nominees
will be reimbursed for out-of-pocket and other reasonable clerical expenses
incurred in obtaining instructions from beneficial owners of the Company's
stock. In addition to the solicitation by mail, solicitation of proxies may, in
certain instances, be made personally or by telephone by directors, officers and
employees of the Company. It is expected that the expense of such special
solicitation will be nominal. All expenses incurred in connection with this
solicitation will be borne by the Company.
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of December 10, 1998,
with respect to the beneficial ownership of Common Stock by (i) each person
known to the Company to be the beneficial owner of more than 5% of its
outstanding shares of Class A Common Stock or Class B Common Stock (and such
person's address), (ii) each director of the Company and each nominee for
director, (iii) each of the executive officers named in the Summary Compensation
Table under "Executive Compensation," and (iv) all directors and executive
officers of the Company as a group.
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===============================================================================
Title Name and Address of Number Percent
of Class Beneficial Owner of Shares of Class
- -------------------------------------------------------------------------------
Class A Alvin Weinstein*.............................. 877,310(1) 36.83%
FMR Corp...................................... 169,600(2) 7.12%
Edward C. Johnson 3d
82 Devonshire Street
Boston, MA 02109
Dimensional Fund Advisors Inc................. 132,700(3) 5.57%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90400
Franklin Resources Inc........................ 148,800(4) 6.25%
777 Mariners Island Boulevard
San Mateo, CA 94403
David Weinstein*.............................. 144,463(5) 6.06%
Earl Kramer*.................................. 94,200(6) 3.95%
Class B Fred Heller................................... 7,000(8) (7)
Richard Solar................................. 5,000(9) (7)
All directors and officers as a group
(11 persons)(11)........................... 1,127,973 47.36%
Alvin Weinstein*.............................. 902,460(10) 62.39%
FMR Corp. .................................... 122,700(2) 8.48%
Edward C. Johnson 3d
82 Devonshire Street
Boston, MA 02109
Dimensional Fund Advisors Inc................. 85,300(3) 5.90%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90400
David Weinstein*.............................. 70,113 4.85%
Earl Kramer*.................................. 200 (7)
All directors and officers as a group
(11 persons)(11)........................... 972,773 67.25%
===============================================================================
*c/o Concord Fabrics Inc., 1359 Broadway, New York, New York 10018.
(1) Includes 60,000 shares of Class A Common Stock owned of record and
beneficially by Joan Weinstein, Mr. Alvin Weinstein's wife, who is an
officer of the Company, but does not include 254,115 shares of Class A
Common Stock, or 11.42% of the class, owned of record and beneficially by
Mr. Alvin Weinstein's children. Mr. David Weinstein is the only child who
has an interest exceeding 5% of the class. Mr. Weinstein disclaims
beneficial ownership of all of the shares owned by his spouse and
children. Includes 20,000 shares which Mr. Alvin Weinstein has the right
to acquire and 20,000 shares which Mr. Weinstein will have the right to
acquire on or within 60 days after December 10, 1998 upon the exercise of
options granted to him under the Company's Incentive Plan, as amended (the
"Incentive Plan").
(2) Based on information provided to the Company by FMR Corp., as a parent
holding company, Edward C. Johnson 3d, as a controlling person of FMR
Corp., and various affiliates, Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp. ("FMRC"), and Fidelity Low-Priced
Stock Fund. FMRC is a registered investment company.
(footnotes continued on next page)
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(footnotes continued from previous page)
(3) Based on information provided to the Company by Dimensional Fund Advisors
Inc., a registered investment advisor ("Dimensional"), Dimensional is
deemed to have beneficial ownership of 132,700 shares of Class A Common
Stock and 85,300 shares of Class B Common Stock of the Company, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company (the "Fund"), or in series
of The DFA Investment Trust Company, a Delaware business trust (the
"Trust"), or the DFA Group Trust and the DFA Participating Group Trust,
investment vehicles for qualified employee benefit plans, for all of which
Dimensional serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares.
CLASS A COMMON STOCK
SOLE VOTING POWER = 69,900 shares*
SHARED VOTING POWER = 0
SOLE DISPOSITIVE POWER = 132,700
SHARED DISPOSITIVE POWER = 0
CLASS B COMMON STOCK
SOLE VOTING POWER = 59,600 shares*
SHARED VOTING POWER = 0
SOLE DISPOSITIVE POWER = 85,300
SHARED DISPOSITIVE POWER = 0
* Persons who are officers of Dimensional also serve as officers of the
Fund and the Trust, each an open-end management investment company
registered under the Investment Company Act of 1940. In their capacities
as officers of the Fund and the Trust, these persons vote 45,700
additional shares of Class A Common Stock and 45,700 additional shares of
Class B Common Stock which are owned by the Fund and 16,600 shares of
Class A Common Stock which are owned by the Trust (included in Sole
Dispositive Power above).
(4) Based on information provided to the Company by Franklin Resources, Inc.,
as a parent holding company ("Franklin"), Charles B. Johnson and Rupert H.
Johnson, Jr., as controlling persons of Franklin, and Franklin Advisory
Services, Inc., which has sole dispositive power.
(5) Includes 40,000 shares which Mr. David Weinstein has the right to acquire
and 20,000 shares which Mr. Weinstein will have the right to acquire on or
within 60 days after December 10, 1998 upon the exercise of options
granted to him under the Company's Incentive Plan.
(footnotes continued on next page)
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(footnotes continued from previous page)
(6) Includes 50,000 shares which Mr. Kramer has the right to acquire upon the
exercise of options granted to him under the Company's Incentive Plan.
Also includes 200 shares held in trust for two of Mr. Kramer's children.
(7) Represents less than 1% of the shares of the class outstanding.
(8) Includes with respect to Mr. Heller 2,500 shares which may be acquired by
him upon the exercise of stock options granted to him under the Company's
Incentive Plan.
(9) Includes with respect to Mr. Solar 5,000 shares which may be acquired by
him upon the exercise of stock options granted to him under the Company's
Incentive Plan.
(10) Includes 60,000 shares of Class B Common Stock owned of record and
beneficially by Joan Weinstein, but does not include 211,065 shares of
Class B Common Stock, or 14.59% of the class, owned of record and
beneficially by Mr. Alvin Weinstein's children, none of whom individually
have an interest exceeding 5% of the class. Mr. Alvin Weinstein disclaims
beneficial ownership of all of these shares owned by his spouse and
children.
(11) Mr. Martin Wolfson, an officer and director of the Company, and Mr. George
Gleitman, a director of the Company, do not own of record or beneficially
any shares of Common Stock of the Company.
ELECTION OF DIRECTORS
(Purpose 1)
The By-Laws of the Company provide that the number of directors
constituting the Board of Directors shall be determined from time to time by the
Board of Directors. The number of directors is currently set at seven.
Seven directors are to be elected to serve until the next Annual
Meeting of Stockholders and until their respective successors are elected. Two
directors are to be elected by the Class A Common Stock alone, and five
directors are to be elected by the Class A and Class B Common Stock voting
together as a group. Proxies in the accompanying form which do not withhold
authority to vote for one or more nominees for directors will be voted for the
election as directors of the persons whose names are listed in the table below.
Authority to vote for any or all nominees may be withheld in the manner
indicated on the proxy. If any of the nominees should not be candidates for
director at the Meeting, the proxies will be voted in favor of the remainder of
those named, and may be voted for substitute nominees in the place of those who
are not candidates. The Board of Directors has no reason to expect that any of
the nominees will fail to be candidates at the Meeting, and therefore does not
at this time have in mind any substitute for any nominee.
Certain information about the seven nominees is set forth on the
following page. This information has been furnished to the Company by the
individuals named. All of the
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nominees for election at this Meeting have been elected previously by the
Company's shareholders as directors of the Company.
NOMINEES FOR DIRECTORS
Nominees for Election by Holders of Class A Common Stock First Elected
and Class B Common Stock Age as Director
- -------------------------------------------------------- --- -------------
Alvin Weinstein.......................................... 73 1958
Chairman of the Board of the Company
David Weinstein.......................................... 36 1996
President of the Company's Concord House Division
Earl Kramer.............................................. 65 1974
President of the Company
Fred Heller.............................................. 74 1987
Chairman Emeritus of Genlyte Group, Inc.
Martin Wolfson........................................... 62 1973
Senior Vice President-Treasurer of the Company
Nominees for Election by Holders of Class A Common Stock
- --------------------------------------------------------
Richard Solar............................................ 59 1994
Senior Vice President of Gerber Childrenswear, Inc.
George Gleitman.......................................... 70 1970
President Emeritus of the Company's
Concord House Division
Mr. Alvin Weinstein has held his position as Chairman of the Board
of the Company for more than seven years. Joan Weinstein, who has served as
Secretary of the Company since October 1981, is the wife of Alvin Weinstein.
Mrs. Weinstein has also been the Company's fashion director for more than seven
years. Mr. David Weinstein, who has been employed by the Company for more than
seven years and is currently the President of the Company's Concord House
Division, is the son of Mr. Alvin Weinstein.
Mr. Kramer joined the Company in June 1972 as President of its Knit
Division. Mr. Kramer was elected a Vice President of the Company in March 1976
and President of the Company in 1979. Mr. Heller, formerly the President and
Chairman of the Board of Directors of Genlyte Group, Inc. ("Genlyte"), presently
serves as the Chairman Emeritus of Genlyte. Mr. Heller also remains a director
of Genlyte. Genlyte manufactures commercial and residential lighting equipment.
Mr. Wolfson was Secretary and Treasurer of the Company from 1973 to October
1981, at which time he was elected Vice President, Treasurer and Chief Financial
Officer. He was elected
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Senior Vice President in 1995. Mr. Wolfson is currently a director of Winston
Resources, Inc., a staffing industry company.
Mr. Solar is currently a Senior Vice President and a director of
Gerber Childrenswear, Inc. (formerly GCIH Inc.), a manufacturer of apparel for
infants and toddlers ("Gerber"). He joined Gerber in January 1996. Prior to that
time, Mr. Solar served for 10 years as a managing director of the Investment
Banking Division of Bankers Trust Company. Mr. Gleitman was elected a Vice
President of the Company in 1968. From 1980 through fiscal 1992, Mr. Gleitman
was President of the Company's Concord House Division and is currently President
Emeritus of that Division.
The Board of Directors has no standing nominating committee. On
October 25, 1992, the Board of Directors appointed an Audit Committee. The Audit
Committee, which is currently comprised of Messrs. Solar and Heller, met twice
during the fiscal year ended August 30, 1998. The functions of the Audit
Committee are to review the adequacy of systems and procedures for preparing the
financial statements of the Company as well as the suitability of internal
financial controls, and to review and approve the scope and performance of the
independent auditors' work. The Compensation Committee, which makes
recommendations to the Board of Directors concerning compensation of executive
officers and incentives for officers and key employees under the Company's
Incentive Plan, met once during the fiscal year ended August 30, 1998. The Board
of Directors met six times during the fiscal year ended August 30, 1998. All of
the directors attended at least five meetings.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company
during the three fiscal years during the period ended August 30, 1998 for
services, in all capacities, to the Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company whose
aggregate remuneration exceeded $100,000 (the "Named Executive Officers").
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SUMMARY COMPENSATION TABLE
Other
Annual All Other
Name and Salary Bonus Compensation Compensation
Principal Position Year $ $ $ $ (2)
- --------------------- ---- ------ ----- ------------ ------------
Earl Kramer 1998 317,968 273,800 (1) 6,378(3)
President and Director 1997 302,443 311,700 6,347
1996 298,351 69,000 2,561
Alvin Weinstein 1998 283,500 268,800 (1) 5,078
Chairman of the Board 1997 275,000 304,700 90,478
1996 262,250 64,900 73,764
Martin Wolfson 1998 198,000 50,000 (1) 5,078
Senior Vice President- 1997 196,000 65,000 5,248
Treasurer and Director 1996 196,000 25,000 1,630
David Weinstein 1998 200,000 65,000 (1) 5,078
President of the 1997 200,000 145,800 5,248
Concord House Division 1996 200,000 97,900 1,630
and Director
Joan Weinstein 1998 125,000 0 (1) 4,232
Secretary 1997 125,000 0 4,373
1996 125,000 0 1,630
(1) The named executive officer receives certain perquisites, including, in
certain cases, a non-accountable expense allowance; such perquisites,
however, do not exceed the lesser of $50,000 or 10% of such officer's
salary and bonus.
(2) Includes contributions to the Company's Profit Sharing Plan of $5,078
($4,232 in the case of Ms. Weinstein) for the year ended August 30, 1998;
5,248 ($4,373 in the case of Ms. Weinstein) for the year ended August 31,
1997; and $1,630 for each of the above named executive officers for the
fiscal year ended September 1, 1996.
(3) The Company has paid the premiums on a life insurance policy for the
benefit of Earl Kramer's estate on a split dollar basis. The economic
value of such policy to Mr. Kramer for the year ended August 30, 1998 was
$1,300, which amount is included in the table above.
The Company has a Profit Sharing Plan for employees which provides
for a minimum annual contribution by the Company based on a percentage of its
income before taxes for the fiscal year, and provides for larger annual
contributions, at the discretion of the Board of Directors, within prescribed
limits. All individuals who are employed by the Company on the first day of any
fiscal year are eligible to participate in the Profit Sharing Plan for that
fiscal year. The Company makes contributions on behalf of those individuals who
remain employed for the entire fiscal year. Contributions to a covered
employee's account are based upon a pro rata percentage of the employee's
compensation (up to $150,000), and benefits are payable upon death, retirement,
disability or termination of employment with the Company. Covered employee
benefits vest over a period of seven years. In fiscal 1998, the Company
contributed $335,000 to the Profit Sharing Plan.
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The Company has a 401(k) Plan for employees which provides for the
deferral of pre-tax income. The Company does not contribute to this Plan.
OPTION GRANTS IN LAST FISCAL YEAR
During fiscal year 1998, the Company did not grant any stock options
to any of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides certain summary information concerning
stock option exercises during fiscal year 1998 by the Named Executive Officers
and the value of unexercised stock options held by the Named Executive Officers
as of August 30, 1998.
================================================================================
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
8/30/98 (#) 8/30/98 ($)
Value Exercisable/ Exercisable/
Shares Acquired Realized Unexercisable Unexercisable
Name on Exercise (#) ($) (Class A)(1) (Class A)(2)
- --------------------------------------------------------------------------------
Earl Kramer..... 0 0 50,000/-0- 175,000/-0-
Alvin Weinstein. 0 0 20,000/80,000 750/1,750
David Weinstein. 0 0 40,000/60,000 75,000/112,500
================================================================================
(1) Represents the aggregate number of stock options held as of August 30, 1998
which could and could not be exercised on that date pursuant to the terms of the
stock option agreements related thereto and the Incentive Plan.
(2) Values were calculated by multiplying the closing market price of the Class
A Common Stock, as reported on the American Stock Exchange on August 28, 1998
(the last trading day of the fiscal year), by the respective number of shares
and subtracting the exercise price per share, without any adjustment for any
termination or vesting contingencies.
DIRECTOR COMPENSATION
During fiscal 1998, the Company paid $24,219 each to Messrs. Richard
Solar, Fred Heller and George Gleitman for their participation at Board of
Directors' meetings. Messrs. Solar and
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Heller were also paid $3,000 each in connection with their participation at the
two Audit Committee Meeting held in fiscal 1998.
In fiscal 1996, the Board adopted, and the stockholders ratified,
the Director Plan for the benefit of directors of the Company who are neither
employees nor officers of the Company or its subsidiaries (the "Outside
Directors"). Under the Director Plan, each Outside Director received an option
to purchase 2,500 shares of Class A Common Stock on the date that the Plan was
ratified by the stockholders. The Director Plan also provides for the automatic
grant of stock options to Outside Directors on the first business day of each of
the four fiscal years commencing with fiscal 1997. The exercise price of options
granted under the Director Plan (the "Director Options") is the fair market
value of the Class A Common Stock on the date of grant. Director Options vest in
full on the one year anniversary of the date of grant and vest immediately upon
the death of the grantee or a "change of control" of the Company. Director
Options terminate five years after the date of grant or, if sooner, two years
after the grantee's termination as a director of the Company for any reason
(except that if the grantee is removed from the Board for cause, all Director
Options awarded to him terminate immediately upon such removal). In addition,
the Board of Directors may at any time cancel any previously issued Director
Options if it finds that the grantee committed fraud, dishonesty or similar acts
while serving on the Board, disclosed "proprietary information" of the Company
without the Company's consent or engaged in activity detrimental to the
Company's interests after leaving the Board of Directors.
On December 4, 1996, the Board of Directors terminated the Director
Plan and adopted an amendment to the Incentive Plan, which was approved by the
Company's stockholders, permitting Outside Directors to participate on a
discretionary basis in the Incentive Plan.
To date, Messrs. Solar and Heller have each received options to
purchase an aggregate of 17,500 shares, and Mr. Gleitman has received options to
purchase an aggregate of 12,500 shares.
EMPLOYMENT AGREEMENTS
An incentive compensation arrangement between the Company and Mr.
Alvin Weinstein provides for Mr. Weinstein to receive a bonus equal to 1 1/2% of
the Company's pre-tax profits for the fiscal year ended August 30, 1998 if the
pre-tax profits are equal to or greater than 10% of the Company's Stockholders'
Equity on the first day of such fiscal year, or 2 1/2% of the pre-tax profits
for such fiscal year if such pre-tax profits are equal to or greater than 20% of
the Company's Stockholders' Equity on the first day of such fiscal year. Mr.
Weinstein received a bonus of $80,650 under such arrangement in fiscal 1998,
which is reflected in the "Summary Compensation Table" above.
An incentive compensation arrangement between the Company and Alvin
Weinstein provides for Mr. Weinstein to receive a bonus equal to 3 1/2% of the
Company's pre-tax profits for each fiscal year covered by the agreement
commencing with September 1, 1986. Mr. Weinstein earned a $188,150 bonus
pursuant to this arrangement in respect of fiscal 1998.
On March 2, 1994, the Company and Mr. Kramer entered into an
employment agreement (which amended a previous agreement) under which he will
serve as the Company's
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President through August 31, 1999. The agreement provides for an annual salary
of $234,289 (adjusted for increases in the consumer price index) commencing
September 1, 1994. Under the agreement, Mr. Kramer is entitled to a bonus equal
to 3 1/2% of the Company's pre-tax profits for each year of the agreement. He
earned a $191,650 bonus pursuant to this arrangement in respect of fiscal year
1998. In addition, Mr. Kramer is entitled to receive a bonus equal to 1 1/2% of
the pre-tax profits for each year of the agreement, if such pre-tax profits are
equal to or greater than 10% of the Company's Stockholders' Equity on the first
day of that fiscal year, or 2 1/2% of the pre-tax profits for such year if such
pre-tax profits are equal to or greater than 20% of the Company's Stockholders'
Equity on the first day of that fiscal year. He earned a bonus of $82,150
pursuant to this arrangement in respect of fiscal year 1998. The agreement also
calls for a portion of Mr. Kramer's compensation to be deferred. In that
connection, $59,000 of Mr. Kramer's compensation was deferred for the fiscal
year ended August 30, 1998, which amount is included in the "Summary
Compensation Table" above.
On February 5, 1986, the Company and Mr. Wolfson amended a deferred
compensation agreement under which the payment of a portion of his compensation
is deferred each year. In the fiscal year ended August 30, 1998, $13,000 of Mr.
Wolfson's compensation was deferred, which amount is included in the "Summary
Compensation Table," above. The agreement provides that Mr. Wolfson is entitled
to receive the aggregate deferred compensation upon termination of his
employment with the Company other than for cause or by reason of his death. The
agreement provides that if Mr. Wolfson dies while in the employ of the Company,
his estate will receive an aggregate of $500,000 payable in three equal annual
installments. The Company is the beneficiary of a $250,000 insurance policy on
Mr. Wolfson's life.
Mr. David Weinstein is paid an annual salary of $200,000. The
balance of his compensation, included in the "Summary Compensation Table,"
above, is based on a formula related to the operating profit of the Concord
House Division for the year and, to a lesser extent, the operating profit of the
Company for the year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following officers of the Company are members of the Board of
Directors and as such participated in the deliberations of the Board of
Directors concerning executive officer compensation: Alvin Weinstein, David
Weinstein, Earl Kramer and Martin Wolfson. There are no compensation committee
interlocks between the Company and any other entities involving any of the
executive officers or directors of such other entities.
BOARD OF DIRECTORS COMPENSATION REPORT
The full Board of Directors is responsible for the formulation and
implementation of the Company's compensation policies. The Company's
compensation policies are based upon a philosophy that there should be a direct
correlation between executive compensation and the value delivered to
shareholders. In furtherance of this philosophy, the Company has developed
incentive pay programs which provide competitive compensation and attempt to
mirror Company performance. It is the goal of the Company's compensation program
to attract and retain key executives required for the growth and success of the
Company and each of its business groups in a manner that encourages a continuing
focus on building profitability and shareholder value. Both short-term and
long-term
12
<PAGE>
incentive compensation are based on corporate, business unit and/or individual
performance, and thus coincide with the interests of shareholders.
The Company's executive compensation has three principal components:
base salary; annual cash bonuses; and, from time to time, the grant of incentive
and nonqualified stock options pursuant to the Incentive Plan. Individual bonus
awards for the Company's executive officers are based upon pre-determined
percentages of the Company's pre-tax profits for the fiscal year, or, as is the
case with one executive officer, a divisional president, based upon a percentage
of the operating profit of that division. Bonuses awarded to executives in
respect of fiscal 1998 reflected the earnings reported by the Company for that
year. See "Summary Compensation Table" and "Employment Agreements". The Company
made no awards to officers during fiscal year 1998 under its Incentive Plan.
The compensation of Mr. Earl Kramer, the Company's President, is
governed by his employment agreement. For the fiscal year ended August 30, 1998,
the employment agreement provided for a base salary of $258,968. The base salary
increased 2.33% from the President's fiscal year 1997 base salary, which
increase was provided for by the terms of his employment agreement and reflects
a comparable increase in the consumer price index. The President received a
bonus of $273,800 for fiscal 1998 in accordance with the terms of his employment
agreement. The President's employment agreement provides for bonuses only if the
Company meets certain predetermined levels of pre-tax profits set forth therein,
as discussed above. See "Employment Agreements".
In the aggregate, 37% of the Named Executive Officers' cash
compensation for fiscal year 1998 represents incentives directly tied to
performance criteria.
Submitted by the Board of Directors:
Alvin Weinstein David Weinstein
Earl Kramer Fred Heller
Martin Wolfson Richard Solar
George Gleitman
13
<PAGE>
STOCK PERFORMANCE GRAPH
The line graph on the following page compares the yearly percentage
change in the cumulative total shareholder return on the Company's Class A
Common Stock against the cumulative total return on the Amex Market Index and an
industry index known as the broadwoven fabric mills--cotton industry (SIC Code
2211) index, for the period of five years commencing September 1, 1993. The
specific companies constituting part of the industry index are as follows: Cone
Mills Corp.; Courtaulds PLC; Crown Crafts, Inc.; Culp, Inc.; Dan River Inc.;
Delta Woodside Industries, Inc.; Dyersburg Corp.; Galey & Lord Inc.; Novel Denim
Holdings, Ltd.; Springs Industries, Inc.; Thomaston Mills, Inc.; Triarc
Companies, Inc.; and West Point-Stevens, Inc. The comparisons in the graph are
required by the Securities and Exchange Commission and are not intended to
forecast or be indicative of possible future performance of the Company's Common
Stock.
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 8/31/1993 8/31/1994 9/01/1995 8/30/1996 8/29/1997 8/28/1998
Concord Fabrics A 100.00 142.31 75.00 101.92 110.58 100.00
Broadwoven Fabric Mill, Cotton 100.00 93.78 96.43 89.83 99.25 102.01
AMEX Market Index 100.00 100.96 120.88 125.79 144.70 126.88
</TABLE>
14
<PAGE>
SECTION 16(a) REPORTING UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's executive officers and directors,
and persons who own more than ten percent of the Common Stock of the Company to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the exchange on which the Common Stock is listed for
trading. Executive officers, directors and more than ten percent stockholders
are required by regulations promulgated under the Exchange Act to furnish the
Company with copies of all Section 16(a) reports filed.
Based solely on the Company's review of copies of the Section 16(a)
reports filed for the year ended August 30, 1998, the Company believes that,
during the year ended August 30, 1998, all reporting requirements applicable to
its executive officers, directors, and more than ten percent stockholders were
complied with.
WEINSTEIN FAMILY STOCKHOLDERS' AGREEMENT
Mr. Alvin Weinstein, his spouse and children and the Company are
parties to a stockholders' agreement (the "Stockholders' Agreement'") which
restricts the transfer of any Class B Common Stock owned by them by requiring
that any of them who wishes to sell or transfer any shares of Class B Common
Stock first offer the shares to the other signing stockholders at the prevailing
market price of shares of Class A Common Stock at the time of transfer, and
then, to the Company, on the condition that any Class B Common Stock so offered
be converted into Class A Common Stock on a share-for-share basis prior to
transfer. As a result of such restriction, prior to any sale of Class B Common
Stock by a signing stockholder, the shares of Class B Common Stock offered by a
signing stockholder will be canceled and converted into shares of Class A Common
Stock by the Company. If neither any signing stockholder nor the Company wishes
to purchase shares offered for sale pursuant to the Stockholders' Agreement, the
stockholder offering to sell may convert such shares into shares of Class A
Common Stock on a share-for-share basis. In addition, the Stockholders'
Agreement provides that if the stockholders or the Company approve a transaction
in which the Class A Common Stock is exchanged for cash, stock, securities or
any other property of the Company or of any other corporation or entity, each
signing stockholder will convert his or her shares of Class B Common Stock into
shares of Class A Common Stock prior to the effective date of such transaction,
so that a holder of such Class B Common Stock receives the same cash, stock or
other consideration that a holder of Class A Common Stock would receive in such
a transaction. There are certain exceptions to the restrictions for gifts and
transfers to family members.
The Stockholders' Agreement will terminate upon either (a) the
deaths of Alvin and Joan Weinstein, if David Weinstein survives them but ceases
to be actively involved in the business of the Company and the holders of a
majority of shares of Class B Common Stock held by the remaining stockholders
who are parties to the Agreement elect to terminate, or (b) a period ending
twenty-one years after the death of the last survivor of the parties thereto.
Mr. Alvin Weinstein is currently in a position to control the
election of directors of the Company and other matters requiring stockholder
votes by virtue of his ownership of a majority of the
15
<PAGE>
Company's outstanding Class B Common Stock and approximately 37% of its
outstanding Class A Common Stock. The Stockholders' Agreement is intended to
enhance the possibility that current members of the Weinstein family will retain
such control of the Company so long as one or more of them is active in the
business of the Company.
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
(Purpose 2)
The Board of Directors of the Company, subject to ratification by
the Stockholders, has selected the firm of Arthur Andersen LLP ("Andersen"), to
examine the financial statements of the Company for the fiscal year ending
August 29, 1999. Representatives of Andersen will attend the Meeting, have an
opportunity to make a statement if they wish to do so, and will be available to
respond to appropriate questions from Stockholders.
RATIFICATION OF THE AMENDMENT
TO THE CONCORD FABRICS INC. INCENTIVE PLAN
(Purpose 3)
The Board of Directors adopted an amendment (the "Amendment") to the
Company's Incentive Plan (the "Plan") on November 10, 1998, subject to the
approval of the Company's stockholders at the Meeting. The Amendment to the
Incentive Plan for which stockholder approval is being sought is attached as
Exhibit A to this Proxy Statement. The Amendment would increase the number of
shares available under the Plan from (a) 500,000 shares of Class A Common Stock
plus (i) any shares which are forfeited under the Plan after the Plan became
effective (the "Forfeited Shares") plus (ii) any shares surrendered to the
Company in payment of the exercise price of options issued under the Plan or in
payment of any federal, state or local income or other taxes required by law to
be withheld with respect to benefit awards under the Plan (the "Surrendered
Shares"), to 600,000 shares plus (i) any Forfeited Shares plus (ii) any
Surrendered Shares. The purpose of the Plan is to attract, retain, motivate, and
reward officers, directors and key employees of the Company and its direct and
indirect subsidiaries who contribute to the management, growth and profitability
of the business of the Company, and to strengthen the mutuality of interests
between such individuals and the Company's stockholders by offering them equity
or equity-based incentives. The increase in the number of shares that may be
issued under the Plan was adopted by the Board of Directors in order to enable
the Company to continue to use the Plan as an incentive for key employees,
officers and directors to promote the long term success of its business. Prior
to the Amendment only 4,955 shares were available for grant under the Plan.
16
<PAGE>
MISCELLANEOUS
(Purpose 4)
Management does not know of any other matters to be presented at the
Meeting for action by Stockholders. If any other matters requiring a vote of the
Stockholders arise at the Meeting or any adjournment thereof, it is intended
that votes will be cast pursuant to the proxies with respect to such matters in
accordance with the best judgment of the persons acting under the proxies.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended August 30,
1998 is being mailed to the Company's Stockholders together with this Proxy
Statement but is not part of the proxy solicitation material.
UPON WRITTEN REQUEST BY A STOCKHOLDER ENTITLED TO VOTE AT THE
MEETING, THE COMPANY WILL FURNISH THAT PERSON WITHOUT CHARGE WITH A COPY OF THE
FORM 10-K ANNUAL REPORT FOR THE FISCAL YEAR ENDED AUGUST 30, 1998 WHICH IS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES THERETO. If the person requesting the report was not a Stockholder
on December 10, 1998, the request must contain a good faith representation that
the person making the request was a beneficial owner of the Class A or Class B
Common Stock of the Company at the close of business on such date. Requests
should be addressed to Concord Fabrics Inc., 1359 Broadway, New York, New York
10018 (ATTN: Martin Wolfson).
STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the Company's next Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices for inclusion in its proxy statement and form of proxy
relating to that Meeting no later than August 4, 1999.
By Order of the Board of Directors
JOAN WEINSTEIN
Secretary
Dated: December 18, 1998
17
<PAGE>
EXHIBIT A
1998 AMENDMENT
TO
CONCORD FABRICS INC.
INCENTIVE PLAN
This Amendment to the Incentive Plan, as amended on December 4,
1996, (the "Program") of Concord Fabrics Inc. (the "Company") is being made this
10th day of November, 1998.
WHEREAS, the Board of Directors has authorized, subject to the
approval of the stockholders of the Company, an increase in the number of shares
that may be issued pursuant to benefit awards under the Program from (a) 500,000
shares of Class A Common Stock plus (i) any shares which are forfeited under the
Program after the Program becomes effective (the "forfeited shares") plus (ii)
any shares surrendered to the Company in payment of the exercise price of
options issued under the Program or in payment of any Federal, State or local
income or other taxes required by law to be withheld with respect to benefit
awards under the Program (the "surrendered shares") to (b) 600,000 shares plus
(i) any forfeited shares plus (ii) any surrendered shares.
NOW, THEREFORE, subject to the approval of the stockholders, the
Company's Incentive Plan, as amended on December 4, 1996, shall be amended as
follows:
1. Unless otherwise specifically indicated herein, all defined terms
herein shall have the same meaning given such terms in the Company's Incentive
Plan, as amended on December 4, 1996.
2. The number of shares of Common Stock that may be issued under the
Program is hereby increased from (a) 500,000 shares plus (i) any forfeited
shares plus (ii) any surrendered shares to (b) 600,000 shares plus (i) any
forfeited shares plus (ii) any surrendered shares. In order to reflect the
above-referenced increases in the number of shares subject to issuance,
Paragraph (1) of Section VII of the Program, entitled "Awards Grantable," is
hereby deleted and the following is substituted in lieu thereof:
VII. Awards Grantable. (1) Subject to adjustment as provided in
Article VIII, the aggregate number of Shares that may be issued or transferred
under the Program is 600,000 Shares plus, (i) any Shares which are forfeited
under the Program after the Program becomes effective; plus (ii) any Shares
surrendered to the Company in payment of the exercise price of options issued
under the Program or in payment of any Federal, state or local income or other
taxes required by law to be withheld with respect to award grants under the
Program. However, no award may be issued that would bring the total of all
outstanding awards under the Program to more than 750,000 Shares of Class A
Common Stock of the Company. The Shares may be authorized but unissued Shares or
Treasury Shares.
18
<PAGE>
3. This Amendment to the Program shall become effective upon its
approval by the Company's stockholders under applicable law and regulatory
requirements.
4. Except as specifically amended hereby, the terms and provisions
of the Program shall remain in full force and effect.
19
<PAGE>
8888
CONCORD FABRICS INC.
Class A Proxy - Annual Meeting of Stockholders - January 12, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder(s) of Class A Common Stock of CONCORD FABRICS
INC. (the "Corporation") hereby appoints Alvin Weinstein and David Weinstein, or
either of them, with full power of substitution and revocation to each, for and
in the name of the undersigned, with all the powers the undersigned would
possess if personally present, to vote the Class A Common Stock of the
undersigned in the Corporation at the meeting of its Stockholders to be held
January 12, 1999 and at any adjournment thereof, for the following matters:
(continued of reverse side)
<PAGE>
Please date, sign and mail your proxy card back as soon as possible!
Annual Meeting of Stockholders
CONCORD FABRICS INC.
Class A
January 12, 1999
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark your |
votes as in this |
example. |____
<TABLE>
<CAPTION>
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for all nominees
the contrary below) listed at right.
<S> <C> <C>
1. Election of [ ] [ ] Nominees:
Directors Class A Common Stock acting alone only
Richard Solar
Instruction: To withhold authority to vote George Gleitman
for any individual nominee, write that
nominee's name on the space provided below.
- ------------- ----------- Class A voting with the Class B Common
- ------------- ----------- Stock
- ------------- ----------- Alvin Weinstein
Martin Wolfson
Earl Kramer
David Weinstein
Fred Heller
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. To ratify the appointment of Arthur Andersen
LLP as Independent Public Accountants of the
Corporation for the fiscal year ending August 29, 1999. [ ] [ ] [ ]
3. To ratify the amendment to the Concord Fabrics Inc. [ ] [ ] [ ]
Incentive Plan.
</TABLE>
4. In their discretion upon any other matters which may properly come before
such meeting.
This Proxy will be votes as specified above.
This Proxy confers authority to vote "FOR" each proposition listed above unless
otherwise indicated.
IMPORTANT - Please vote, sign and return this Proxy promptly, so that it will
arrive before the Annual Meeting on January 12, 1999.
<TABLE>
<S> <C> <C> <C>
Signed Dated 199( )
---------------------------------- -------------------------------- ----------------------- --
Signature of Shareholder Signature of Shareholder
</TABLE>
NOTE: Signature(s) should follow exactly the name(s) on the stock certificate.
Executor, administrator, trustee, or guardian should sign as such. If more
than one trustee, all should sign. ALL JOINT OWNERS MUST SIGN.
<PAGE>
CONCORD FABRICS INC.
Class B Proxy - Annual Meeting of Stockholders - January 12, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder(s) of Class A Common Stock of CONCORD FABRICS
INC. (the "Corporation") hereby appoints Alvin Weinstein and David Weinstein, or
either of them, with full power of substitution and revocation to each, for and
in the name of the undersigned, with all the powers the undersigned would
possess if personally present, to vote the Class B Common Stock of the
undersigned in the Corporation at the meeting of its Stockholders to be held
January 12, 1999 and at any adjournment thereof, for the following matters:
(continued of reverse side)
<PAGE>
Please date, sign and mail your proxy card back as soon as possible!
Annual Meeting of Stockholders
CONCORD FABRICS INC.
Class B
January 12, 1999
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark your |
votes as in this |
example. |____
<TABLE>
<CAPTION>
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for all nominees
the contrary below) listed at right.
<S> <C> <C>
1. Election of [ ] [ ] Nominees:
Directors Class A voting with the Class B Common
Stock
Instruction: To withhold authority to vote Alvin Weinstein
for any individual nominee, write that Martin Wolfson
nominee's name on the space provided below Earl Kramer
David Weinstein
- ------------- ----------- Fred Heller
- ------------- -----------
- ------------- -----------
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. To ratify the appointment of Arthur Andersen
LLP as Independent Public Accountants of the
Corporation for the fiscal year ending August 29, 1999. [ ] [ ] [ ]
3. To ratify the amendment to the Concord Fabrics Inc. [ ] [ ] [ ]
Incentive Plan
</TABLE>
4. In their discretion upon any other matters which may properly come before
such meeting.
This Proxy will be votes as specified above.
This Proxy confers authority to vote "FOR" each proposition listed above unless
otherwise indicated.
IMPORTANT - Please vote, sign and return this Proxy promptly, so that it will
arrive before the Annual Meeting on January 12, 1999.
<TABLE>
<S> <C> <C> <C>
Signed Dated 199( )
---------------------------------- -------------------------------- ----------------------- --
Signature of Shareholder Signature of Shareholder
</TABLE>
NOTE: Signature(s) should follow exactly the name(s) on the stock certificate.
Executor, administrator, trustee, or guardian should sign as such. If more
than one trustee, all should sign. ALL JOINT OWNERS MUST SIGN.
