<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Cone Mills Corporation
(Name of Registrant as Specified In Its Charter)
Terry L. Weatherford, Secretary, 1201 Maple Street,
Greensboro, North Carolina 27405, (910) 379-6220
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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 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:
4) Proposed maximum aggregate value of transaction:
[ ] 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>
CONE MILLS CORPORATION
GREENSBORO, N. C. 27405
April 4, 1994
DEAR SHAREHOLDER:
On behalf of the Board of Directors, we are pleased to invite you to attend
the Annual Meeting of Shareholders of Cone Mills Corporation to be held at 10:00
a.m. on Tuesday, May 10, 1994, at the Sheraton Hotel & Conference Center, 303
North Elm Street, in Greensboro, NC.
The notice of meeting and proxy statement accompanying this letter describe
the matters on which action will be taken. At the Annual Meeting we will also
review the Corporation's activities and provide time for questions from
shareholders.
Please sign and return the enclosed proxy form in the envelope provided as
soon as possible to ensure that your shares will be voted at the meeting.
Sincerely,
Dewey L. Trogdon
Chairman of the Board
J. Patrick Danahy
President and Chief Executive Officer
(Cone Mills logo)
<PAGE>
CONE MILLS CORPORATION
1201 MAPLE STREET, GREENSBORO, NC 27405
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 4, 1994
TO THE HOLDERS OF COMMON STOCK OF
CONE MILLS CORPORATION:
The Annual Meeting of the Shareholders of Cone Mills Corporation will be
held at the Sheraton Hotel & Conference Center, 303 North Elm Street, in
Greensboro, North Carolina, on Tuesday, May 10, 1994, at 10:00 a.m. for the
following purposes:
1. To elect four directors as Class II Directors, for a term of three years
or until their successors are elected and qualified.
2. To approve the Cone Mills Corporation 1994 Stock Option Plan for
Non-Employee Directors.
3. To ratify the appointment of McGladrey & Pullen as independent auditors
for the Corporation for the fiscal year ending January 1, 1995.
4. To act upon such other business as may properly come before the meeting
and any adjournment thereof.
The Board of Directors of the Corporation has fixed the close of business
on March 18, 1994, as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting.
YOUR PROXY IS ENCLOSED. YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING,
BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE DATE AND SIGN YOUR PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. THE GIVING OF THIS PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU FIND IT CONVENIENT TO
ATTEND.
TERRY L. WEATHERFORD
SECRETARY
<PAGE>
CONE MILLS CORPORATION
1201 MAPLE STREET
GREENSBORO, NC 27405
PROXY STATEMENT FOR
ANNUAL MEETING TO BE HELD MAY 10, 1994
DATED: APRIL 4, 1994
Your proxy is solicited on behalf of the Board of Directors of Cone Mills
Corporation (the "Corporation" or "Cone") for use at the Annual Meeting of
Shareholders to be held at the time and place set forth in the accompanying
Notice of Annual Meeting. It may be revoked by you at any time before it is
exercised. All unrevoked proxies that are properly executed will be voted and,
if a choice is specified with respect to any matter to be acted on, the shares
will be voted in accordance with such specifications. If no specifications are
given, the persons named in the accompanying proxy intend to vote the shares
represented thereby in favor of: (i) election of the four nominees for Director
(Class II) named herein for terms of three years; (ii) approval of the Cone
Mills Corporation 1994 Stock Option Plan for Non-Employee Directors; and (iii)
ratification of the Board of Directors' appointment of McGladrey & Pullen as
independent auditors.
This Proxy Statement and the enclosed proxy are being first mailed to
shareholders on or about April 4, 1994. The cost of soliciting proxies will be
borne by the Corporation. In addition to solicitation by mail, arrangements will
be made with brokerage houses and other custodians, nominees and fiduciaries to
send proxy materials to their principals, and the Corporation will reimburse
them for their expenses in so doing. Personal solicitation may also be conducted
by telephone and mail by officers and employees of Cone without added
compensation.
Holders of Common Stock of record at the close of business March 18, 1994,
will be entitled to vote at the meeting. On that date 27,747,021 shares of
Common Stock were outstanding. Each share is entitled to one vote and a majority
of the shares of Common Stock outstanding is necessary to constitute a quorum
for the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth each person or entity who may be deemed to
have beneficial ownership of more than five percent (5%) of the Company's
outstanding Common Stock:
<TABLE>
<CAPTION>
NAME OF AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS
<S> <C> <C>
The Equitable Companies Incorporated................................................ 2,316,600(2) 8.35%
787 Seventh Avenue
New York, N.Y. 10019
</TABLE>
(1) Does not include Crestar Bank, trustee of the Cone Employee Equity Plan
which held of record for the plan 2,823,218 shares of Common Stock on March
18, 1994. The plan trustee votes shares held in the plan only if
participants do not exercise pass-through voting rights, and exercises
investment or dispositive rights only in accordance with the terms of the
plan. The trustee, therefore, disclaims beneficial ownership.
(2) According to a Schedule 13G filed with the Securities and Exchange
Commission and received by the Corporation from The Equitable Companies
Incorporated ("Equitable), these shares may be deemed to be owned by a group
consisting of Equitable, AXA (a French holding company), and five French
mutual insurance companies consisting of AXA Assurances I.A.R.D. Mutuelle,
AXA Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle and Uni Europe Assurance Mutuelle. According to the
Schedule 13G, the shares are held by Alliance Capital Management L.P., a
subsidiary of Equitable, and were acquired solely for investment purposes on
behalf of client discretionary investment advisory accounts. The Schedule
13G states that the group may be deemed to exercise sole voting power as to
1,788,700 shares and sole investment power as to 2,316,600 shares.
1
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES
AND NAMED EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
beneficial ownership of the Corporation's Common Stock as of March 18, 1994:
<TABLE>
<CAPTION>
NAME OF DIRECTOR AMOUNT AND NATURE OF
NOMINEE OR OFFICER BENEFICIAL OWNERSHIP (L)(2)
<S> <C>
John L. Bakane (3).............................................................. 199,809
Doris R. Bray................................................................... 15,000
J. Patrick Danahy (3)(4)........................................................ 300,620
Norman Friedman (3)(5).......................................................... 219,177
Leslie W. Gaulden (6)........................................................... 376,000
Jeanette C. Kimmel.............................................................. 121,000
Charles M. Reid................................................................. 5,000
John W. Rosenblum............................................................... 300
Dewey L. Trogdon (7)............................................................ 965,194
Richard S. Vetack (3)(8)........................................................ 207,549
Bud W. Willis III (3)(9)........................................................ 272,259
All Directors, Nominees and Officers as a Group (18 persons).................... 3,772,240
<CAPTION>
NAME OF DIRECTOR
NOMINEE OR OFFICER PERCENTAGE OF CLASS
<S> <C>
John L. Bakane (3).............................................................. *
Doris R. Bray................................................................... *
J. Patrick Danahy (3)(4)........................................................ 1.08%
Norman Friedman (3)(5).......................................................... *
Leslie W. Gaulden (6)........................................................... 1.35%
Jeanette C. Kimmel.............................................................. *
Charles M. Reid................................................................. *
John W. Rosenblum............................................................... *
Dewey L. Trogdon (7)............................................................ 3.48%
Richard S. Vetack (3)(8)........................................................ *
Bud W. Willis III (3)(9)........................................................ *
All Directors, Nominees and Officers as a Group (18 persons).................... 13.58%
</TABLE>
* Represents less than 1%.
(1) Unless otherwise indicated, all shares are owned of record and the
beneficial ownership consists of sole voting power and sole investment power.
Includes shares subject to options which are presently exercisable or are
exercisable within 60 days of March 18, 1994 as follows: Mr. Bakane (5,000
shares), Mr. Danahy (6,000 shares), Mr. Vetack (5,000 shares), Mr. Willis
(12,600 shares), and all Directors, Nominees, and Officers as a Group (38,400
shares). Does not include 1,000 shares that may be granted to each nonemployee
director pursuant to the 1994 Stock Option Plan for Non-Employee Directors if
approved by the shareholders at the Annual Meeting.
(2) Does not include shares of the Corporation's Class A Preferred Stock
allocated to the individual accounts of officers in the Cone Mills
Corporation 1983 ESOP.
(3) Includes shares of Common Stock allocated to the individual accounts of
directors and Named Executive Officers in the Cone Mills Corporation
Employee Equity Plan as of December 31, 1993, as follows:
<TABLE>
<S> <C>
Mr. Bakane.................................................................................. 26,651 shares
Mr. Danahy.................................................................................. 38,528 shares
Mr. Friedman................................................................................ 29,777 shares
Mr. Vetack.................................................................................. 20,014 shares
Mr. Willis.................................................................................. 45,026 shares
All Directors, Nominees and Officers as a group (18 persons)................................ 264,268 shares
</TABLE>
(4) Includes 72,000 shares owned of record by Mr. Danahy's wife.
(5) Mr. Friedman retired on December 31, 1993 as an active employee and officer
of the Corporation.
(6) Includes 100,000 shares owned of record by Mr. Gaulden's wife.
(7) Includes 250,000 shares owned of record by Mr. Trogdon's wife and 50,694
shares owned of record by the Trustee for Mr. Trogdon's Individual
Retirement Account.
(8) Includes 32,325 shares owned of record by Mr. Vetack's wife.
(9) Includes 81,506 shares owned of record by Mr. Willis' wife and two children.
ELECTION OF DIRECTORS
The Restated Articles of Incorporation of Cone Mills Corporation provide
for a Board of Directors consisting of not less than nine (9) or more than
fifteen (15) members as determined by the majority vote of the entire Board of
Directors. The Board has set the number of directors at ten. The Restated
Articles of Incorporation further provide that the Board shall be divided into
three classes, as nearly equal in number as the then total number of directors
constituting the entire Board permits. The terms of four Class II Directors
expire at the 1994 Annual Meeting, and the persons elected at the Annual Meeting
to fill the Class II vacancies will serve terms of three years or until their
successors are elected and qualified. The
2
<PAGE>
Board of Directors proposes that the four persons nominated below be elected as
Class II Directors for terms expiring at the 1997 Annual Meeting. Each person
nominated below is an incumbent director of the Corporation.
The persons nominated below will be elected if they receive a plurality of
the votes cast for their election. Abstentions and broker nonvotes will not
affect the election results if a quorum is present. Unless otherwise specified,
the persons named in the accompanying proxy intend to vote the shares
represented by proxy for election of the nominees named below. If any nominee
should not be available to serve for any reason (which is not anticipated), the
proxy holders may vote for substitute nominees designated by the Board of
Directors.
The following information is furnished with respect to the nominees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION; BUSINESS
EXPERIENCE PAST FIVE YEARS; DIRECTOR
NAME PRESENT AGE AND OTHER DIRECTORSHIPS SINCE
<S> <C> <C> <C>
NOMINEES FOR THREE-YEAR TERM (CLASS II)
J. Patrick Danahy 50 President and Chief Executive Officer of the Corporation (1990-Present); 1989
President and Chief Operating Officer (1989-1990); Vice President of the
Corporation and President of the Cone Finishing Division (1986-1989)
Leslie W. Gaulden 71 Retired November 30, 1987; Vice President and Controller of the Corporation 1986
(1984-1987)
Jeanette C. Kimmel 55 Private Investment Management 1971
John W. Rosenblum 50 Tayloe Murphy Professor of the Darden Graduate School of Business 1993
Administration, University of Virginia (1993-Present); Dean, Darden Graduate
School of Business Administration (1982-1993); Director, Cadmus Communications
Corporation; Chesapeake Corporation, Comdial Corporation; The Providence
Journal Company; and T. Rowe Price & Associates.
</TABLE>
The following information is furnished with respect to directors continuing
in office.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION; BUSINESS
EXPERIENCE PAST FIVE YEARS; DIRECTOR
NAME OF NOMINEE PRESENT AGE AND OTHER DIRECTORSHIPS SINCE
<S> <C> <C> <C>
CLASS I (TERM EXPIRING IN 1996)
John L. Bakane 43 Vice President and Chief Financial Officer of the Corporation 1989
(1988-Present); Vice President of the Corporation (1986-1988)
Charles M. Reid 59 Director, President and Chief Executive Officer, United Guaranty Corporation 1988
(1987-Present)
Richard S. Vetack 57 Senior Vice President of the Corporation and President of the Textile Products 1988
Group (1987-Present)
<CAPTION>
CLASS III (TERM EXPIRING IN 1995)
<S> <C> <C> <C>
Doris R. Bray 56 Partner, Schell Bray Aycock Abel & Livingston (Attorneys at Law) 1989
(1987-Present)
Dewey L. Trogdon 62 Retired March 31, 1992; Chairman of the Board of Directors 1978
(1981-Present); Chief Executive Officer of the Corporation (1980-1990);
President of the Corporation (1979-1980; 1987-1989); Director, First Union
Corporation
Bud W. Willis III 51 Vice President of the Corporation (1985-Present); Executive Vice President of 1988
the Textile Products Group (1991-1992); and President, Denim Division of
Textile Products Group (1992-Present)
</TABLE>
COMMITTEES AND DIRECTOR ATTENDANCE
During the year ended January 2, 1994, the Board of Directors of the
Corporation held five meetings and the Executive, Compensation, and Audit
Committees held three meetings each. Each director attended at least 75% of the
aggregate of Board of Directors' meetings and meetings of Committees of the
Board on which he or she served during 1993.
The Executive Committee generally has the same authority as the Board to
manage the affairs of the Corporation but may not make determinations with
respect to dissolutions, mergers, amendments to the Articles of Incorporation or
Bylaws, compensation, removal of directors or declaration of dividends.
Executive Committee members are Dewey L. Trogdon, Chair, John L. Bakane, Doris
R. Bray, J. Patrick Danahy and Charles M. Reid.
3
<PAGE>
The Audit Committee's principal responsibilities consist of recommending to
the Board of Directors the selection of the Corporation's independent
accountants, reviewing the scope and results of completed audits, reviewing the
Corporation's internal audit staff functions and evaluating the quality of the
Corporation's financial reporting and internal control systems. Audit Committee
members are Leslie W. Gaulden, Chair, Jeanette C. Kimmel and Doris R. Bray.
The Corporation also has a Compensation Committee. See "Compensation
Committee Report on Executive Compensation" and "Compensation Committee
Interlocks and Insider Participation."
The Board of Directors does not have a standing nominating committee;
however, in relation to nominations, the Executive Committee considers and makes
recommendations to the Board with respect to the size and composition of the
Board and candidates for membership on the Board. The Committee has not
established procedures for the submission by shareholders of proposed candidates
for its consideration. The Executive Committee met one time in 1993 in relation
to the increase of the size of the Board and to consider a candidate for the new
position created.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under federal securities laws, the Company's directors, its executive
officers, and any persons holding more than 10 percent of the Company's stock
are required to report their ownership of the Company's stock and any changes in
that ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established and the Company is required to report in
this proxy statement any failure to file by these dates during fiscal 1993. All
of these filing requirements were satisfied by its directors, officers and 10
percent holders. In making these statements, the Company has relied on the
written representations of its directors, officers and 10 percent holders and
copies of the reports that they have filed with the Commission.
EXECUTIVE COMPENSATION
The following information relates to all compensation awarded to, earned by
or paid pursuant to a plan or otherwise, to (i) the Chief Executive Officer of
the Corporation (the "CEO") and (ii) the four most highly compensated executive
officers, other than the CEO, who were serving as executive officers of the
Corporation on December 31, 1993, the last business day of the fiscal year
ending on January 2, 1994. The CEO and the four most highly compensated officers
are referred to herein as the Named Executive Officers.
The following information does not reflect any compensation earned and paid
to the Named Executive Officers subsequent to January 2, 1994, unless otherwise
indicated. Any such compensation earned and paid to the Named Executive Officers
during 1994 will be recorded in the proxy statement for the Corporation's 1995
Annual Meeting of Shareholders, unless such compensation is required to be
reported previously.
SUMMARY COMPENSATION TABLE
The following table sets forth for the Named Executive Officers for each of
the last three fiscal years annual compensation amounts as indicated by the
applicable table headings. Annual Compensation, columns (c), (d) and (e),
includes base salary and bonus earned during the year covered and, if
applicable, other annual compensation not properly categorized as salary or
bonus. Long-Term Compensation, column (g), reports the number of shares
underlying stock option grants to the Named Executive Officers during 1993. The
Named Executive Officers were not awarded, granted or paid any forms of
compensation that are required to be reported in the Long-Term Compensation
columns (f) or (h).
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION PAYOUTS
(G)
(E) SECURITIES (H)
(C) (D) OTHER ANNUAL (F) UNDERLYING LTIP
(A) (B) SALARY BONUS COMPENSATION RESTRICTED STOCK OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2)(4) AWARDS ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
J. Patrick Danahy 1993 400,000 290,000 50,501(3) -- 30,000 --
President and 1992 375,000 300,000 967,086(3) -- -- --
Chief Executive Officer 1991 325,000 -- -- -- -- --
Richard S. Vetack 1993 270,000 162,000 84,374(3) -- 25,000 --
Senior Vice President, 1992 250,000 212,000 2,128,192(3) -- -- --
the Corporation; President, 1991 235,000 -- -- -- -- --
Textile Products Group
John L. Bakane 1993 245,000 165,000 67,499(3) -- 25,000 --
Vice President and 1992 230,000 171,000 1,775,977(3) -- -- --
Chief Financial Officer 1991 200,000 -- -- -- -- --
Norman Friedman 1993 220,000 97,000 -- -- -- --
Vice President, the 1992 210,000 120,000 -- -- -- --
Corporation; President, 1991 200,000 40,000 -- -- -- --
John Wolf Division
Bud W. Willis III 1993 235,000 137,000 -- -- 25,000 --
Vice President, the 1992 220,000 147,000 994,960(3) -- -- --
Corporation; President 1991 200,000 -- -- -- -- --
Denim Division
<CAPTION>
(I)
ALL OTHER
(A) COMPENSATION
NAME AND PRINCIPAL POSITION ($)(2)(5)
<S> <C>
J. Patrick Danahy 10,784
President and 6,974
Chief Executive Officer --
Richard S. Vetack 12,057
Senior Vice President, 8,864
the Corporation; President, --
Textile Products Group
John L. Bakane 7,947
Vice President and 5,200
Chief Financial Officer --
Norman Friedman 17,688
Vice President, the 12,773
Corporation; President, --
John Wolf Division
Bud W. Willis III 9,554
Vice President, the 6,898
Corporation; President --
Denim Division
</TABLE>
(l) All bonuses were paid pursuant to a Management Incentive Plan for the fiscal
years shown. See "Compensation Committee Report on Executive Compensation."
(2) Information under columns (e) and (i) is not required for 1991.
(3) Represents cash payments based upon federal and state income tax savings
expected to be realized by the Corporation upon the exercise of Nonqualified
Options under the Cone Mills Corporation 1984 Stock Option Plan. See
"Compensation Committee Report on Executive Compensation."
(4) Does not include the amount of the incremental cost of certain incidental
benefits, perquisites and other benefits, securities or property which in
the aggregate do not exceed the lesser of $50,000 or 10% of the total amount
of salary and bonus reported for the Named Executive Officer.
(5) Represents the Corporation's matching contributions to the 401(k) plans
(Supplemental Retirement Plan and Employee Equity Plan) and the dollar value
of insurance premiums paid by the Corporation with respect to group term
life insurance for benefit of the Named Executive Officers as follows:
A. 401(k) Plan matching contributions for 1992 and 1993 respectively: Mr.
Danahy ($4,364 and $8,000); Mr. Vetack ($4,364 and $7,197); Mr. Bakane
($4,364 and $6,947); Mr. Friedman ($2,189 and $6,600) and Mr. Willis
($4,364 and $6,847).
B. Insurance Premiums for 1992 and 1993 respectively: Mr. Danahy ($2,610
and $2,784); Mr. Vetack ($4,500 and $4,860); Mr. Bakane ($836 and
$1,000); Mr. Friedman ($10,584 and $11,088); and Mr. Willis ($2,534
and $2,707).
5
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following sets forth certain information with respect to options
granted to the Named Executive Officers during the fiscal year ended January 2,
1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
(B) (C)
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS (D)
UNDERLYING GRANTED EXERCISE OR (E)
(A) OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) (1) IN FISCAL YEAR ($/SH) DATE
<S> <C> <C> <C> <C> <C>
J. Patrick Danahy 30,000 6.0 15.625 2/17/2003
Richard S. Vetack 25,000 5.0 15.625 2/17/2003
John L. Bakane 25,000 5.0 15.625 2/17/2003
Norman Friedman -- -- -- --
Bud W. Willis, III 25,000 5.0 15.625 2/17/2003
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION TERM (2)
(A) (F) (G)
NAME 5% ($) 10% ($)
<S> <C><C> <C>
J. Patrick Danahy 294,900 747,000
Richard S. Vetack 245,750 622,500
John L. Bakane 245,750 622,500
Norman Friedman -- --
Bud W. Willis, III 245,750 622,500
</TABLE>
(1) Options granted in 1993 are Incentive Stock Options which are exercisable
six months after the grant date (February 17, 1993), with 20% of the shares
covered thereby becoming exercisable at that time and an additional 20% of
the option shares becoming exercisable on each successive anniversary date.
The price for shares that may be purchased pursuant to the options is equal
to the fair market value of the Corporation's Common Stock on the date of
grant.
(2) The dollar amounts under these columns assume that the market price per
share of the Corporation's Common Stock appreciates in value from the date
of grant to the expiration of the option at the annualized rates indicated.
These rates are set by the Securities and Exchange Commission and are not
intended to forecast possible future appreciation, if any, of the price of
the Common Stock. If the stock price increased by 5% or 10% per year for a
period of ten years from the date of grant (February 17, 1993), the total
increase in shareholder value would be $259,850,298 and $658,511,673
respectively.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table shows stock option exercises by the Named Executive
Officers during 1993, including the aggregate value of gains on the date of
exercise ("Value Realized"). In addition, this table includes the number of
shares covered by exercisable and unexercisable options as of January 2, 1994.
Also reported, both as to exercisable and unexercisable options, are the values
of "in-the-money" options, which are options with a positive spread between the
fiscal year-end market price of the underlying Common Stock and the exercise
price of such stock options.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1993 AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
(D)
NUMBER OF
SECURITIES
UNDERLYING
(B) UNEXERCISED OPTIONS
SHAREES (C) AT 1/2/94
(A) ACQUIRED ON VALUE REALIZED EXERCISABLE/
NAME EXERCISE (#) ($)(1) UNEXERCISABLE
<S> <C> <C> <C>
J. Patrick Danahy 7,600 81,700 6,000/24,000
Richard S. Vetack 13,000 136,500 5,000/20,000
John L. Bakane 10,400 109,200 5,000/20,000
Norman Friedman -- -- --
Bud W. Willis III -- -- 12,600/20,000
<CAPTION>
(E)
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT 1/2/94 ($)(2)
(A) EXERCISABLE/
NAME UNEXERCISABLE
<S> <C>
J. Patrick Danahy 7,500/30,000
Richard S. Vetack 6,250/25,000
John L. Bakane 6,250/25,000
Norman Friedman --
Bud W. Willis III 94,600/25,000
</TABLE>
(1) Fair market value on date of exercise less exercise price.
(2) Based on $16.875 fair market value per share on December 31, 1993, the last
trading day of fiscal year 1993.
6
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The Corporation does not have a long-term incentive plan in effect.
PENSION PLAN TABLE
The following table sets forth in the ERP column the estimated annual
benefits payable in 1994 upon retirement at age 65 under the Employees'
Retirement Plan of Cone Mills Corporation (the "ERP") in the compensation and
years of service categories indicated. Benefit amounts shown are payable for
life with no contingent death benefits. Benefits are based upon total annual
salary and bonus, compensation in excess of the amount covered by Social
Security as determined in the year of retirement and total years of service. The
years of service credited as of March 31, 1994, for the Named Executive Officers
are: Mr. Danahy -- 22 years; Mr. Vetack -- 30 years; Mr. Bakane -- 18 years; Mr.
Friedman -- 31 years; and Mr. Willis -- 23 years.
Pension benefits under the ERP are subject to certain limitations imposed
by the Internal Revenue Code of 1986, as amended (the "Code"). The aggregate
annual pension which may be paid under the ERP and all other defined benefit
plans of the Corporation taken together is generally restricted to $118,800 in
1994. In addition, the Code limits annual compensation of each employee that can
be taken into account in computing pension benefits to $235,840 in 1993 and to
$150,000 in 1994. These amounts are adjusted for cost of living each year as
provided in the Code. Pension benefits that cannot be paid from the ERP by
reason of the limitations in the Code are provided by the Corporation's Excess
Benefit Plan and by the Supplemental Executive Retirement Plan, both of which
are unfunded, nonqualified excess benefit plans. Such amounts are identified in
the following table in the columns headed "NQP". The Corporation accrues
annually the estimated expense for providing benefits under the ERP and the
nonqualified plans, as determined by an independent consulting actuary; however,
this expense cannot be specifically allocated to any individual or to the Named
Executive Officers as a group under the funding method used by the actuary.
APPROXIMATE ANNUAL BENEFIT FOR YEARS OF SERVICE INDICATED (1)
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR HIGHEST
CONSECUTIVE FIVE YEARS
DURING LAST TEN YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
BEFORE RETIREMENT ERP NQP ERP NQP ERP NQP ERP NQP
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$200,000 $ 62,255 $ 988 $ 81,114 $ 988 $ 93,112 $ 604 $ 104,690 $ 604
$300,000 62,372 33,808 81,308 43,643 93,304 49,268 104,907 55,282
$400,000 62,372 66,745 81,308 86,461 93,304 98,125 104,907 110,177
$500,000 62,372 99,682 81,308 129,279 93,304 146,981 104,907 165,072
$600,000 62,372 132,619 81,308 172,097 93,304 195,838 104,907 219,967
$700,000 62,372 165,556 81,308 214,915 93,304 244,694 104,907 274,862
$800,000 62,372 198,493 81,308 257,733 93,304 293,551 104,907 329,757
$900,000 62,372 231,430 81,308 300,551 93,304 342,407 104,907 384,652
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR HIGHEST
CONSECUTIVE FIVE YEARS
DURING LAST TEN YEARS 35 YEARS
BEFORE RETIREMENT ERP NQP
<S> <C> <C>
$200,000 $ 111,306 $ 329
$300,000 111,538 58,287
$400,000 111,538 116,475
$500,000 111,538 174,664
$600,000 111,538 232,853
$700,000 111,538 291,041
$800,000 111,538 349,230
$900,000 111,538 407,419
</TABLE>
(1) Pension benefits provided by the ERP with respect to service after 1983 are
subject to a "floor offset" arrangement in conjunction with the Cone Mills
Corporation 1983 ESOP (the "1983 ESOP"), a separate defined contribution
pension plan maintained by the Corporation. The amounts shown in the above
table are calculated on the assumption that the participant elects to
receive the maximum pension benefit available under the ERP, and in
accordance with the terms of each plan, authorizes a transfer of funds in
his 1983 ESOP account to the trustee of the ERP in a dollar amount equal to
the actuarial equivalent of the pension benefit attributable to service
after 1983. The balance, if any, in the 1983 ESOP account will be
distributed to the participant. To the extent that a participant's 1983 ESOP
account is insufficient to fund the pension benefits attributable to service
after 1983, the cost of benefits not covered by the 1983 ESOP will be funded
through the ERP. If the participant does not elect to transfer funds from
his 1983 ESOP account to the trustee of the ERP, his account balance will be
distributed in accordance with the terms of the 1983 ESOP, and his pension
payable from the ERP with respect to service after 1983 will be reduced (but
not below zero) by the actuarial equivalent of his 1983 ESOP account
balance. The 1983 ESOP is designed to invest primarily in qualifying
securities under ERISA. Assets of the 1983 ESOP consist of shares of the
Corporation's Class A Preferred Stock and other money market and marketable
debt securities which are allocated to individual accounts of participants.
The fair market value of the stock is determined by independent appraisal
performed several times each year. No contributions to the 1983 ESOP have
been made for salaried employees since 1986. The value of the account in the
1983 ESOP for each of the Named Executive Officers as of
7
<PAGE>
January 2, 1994, was: Mr. Danahy -- $96,300; Mr. Vetack -- $56,226; Mr.
Bakane -- $51,646; Mr. Friedman -- $-0-; and Mr. Willis -- $111,264.
COMPENSATION OF DIRECTORS
Directors who are also officers of the Corporation do not receive
additional compensation for service as directors or as members of committees of
the Board of Directors. Nonemployee directors receive a retainer fee of $17,000
per year and an attendance fee of $1,000 per diem for meetings of the Board of
Directors and any committee of the Board held on the same day. The fee for a
Committee meeting not held on the same day as a Board meeting is $500. Travel
expenses of directors incurred in attending meetings are reimbursed by the
Corporation. In 1993, retainers and attendance fees paid to all directors
totaled $104,267.
The Corporation has recommended to the shareholders for adoption a stock
option plan whereby each nonemployee director will receive each year after the
annual meeting of shareholders a stock option grant to purchase 1,000 shares of
Common Stock at the fair market value of a share of Common Stock on the grant
date. See a discussion of the proposal at page 12.
The Board of Directors has approved a Consulting Agreement between the
Corporation and Dewey L. Trogdon whereby Mr. Trogdon provides consultation and
advice. Mr. Trogdon's consulting fee was $30,000 per calendar quarter in 1993
and is $15,000 per calendar quarter in 1994. In addition, Mr. Trogdon was
reimbursed for expenses incurred by him in providing such consulting services.
The consulting fee payments are in addition to any pension or other supplemental
retirement benefits that Mr. Trogdon is entitled to receive by reason of his
service as an employee of the Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Norman Friedman retired on December 31, 1993, as an active employee and
officer of the Corporation. The Corporation has entered into a Consulting
Agreement with Mr. Friedman for calendar year 1994 by which Mr. Friedman will
perform consulting services as requested by the Chief Executive Officer. The
Corporation will pay him $27,500 per quarter and reimburse all travel and
entertainment expenses incurred in rendering the consulting services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Mr. Charles M. Reid,
Mrs. Jeanette C. Kimmel, and Dr. John W. Rosenblum, all of whom are nonemployee
directors of the Corporation. Doris R. Bray, who was a member of the
Compensation Committee until November 11, 1993, is a partner of Schell Bray
Aycock Abel & Livingston, a law firm that regularly serves as counsel to the
Corporation. The Corporation and its subsidiary, Cornwallis Development Co.,
paid to the firm legal fees of $232,806 in 1993.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporation's executive compensation program is administered by the
Compensation Committee of the Board of Directors. It is the responsibility of
the Compensation Committee to review and make recommendations to the Board of
Directors concerning the salaries of and other cash compensation plans
applicable to the Chief Executive Officer and the other executive officers of
the Corporation.
COMPENSATION POLICY
The Corporation strives to provide executives an opportunity to earn
compensation that is fair, reasonable and competitive with that paid by
comparable companies to executives in similar positions with similar duties and
responsibilities. In accordance with this policy, the Committee is guided by
three goals as it considers the compensation of executive officers. First,
executive compensation must be effective in attracting, motivating and retaining
executives who possess the skills and experience necessary to ensure the
Corporation's success. Second, the Corporation should recognize and reward
executives for their contributions to the success of the business. Third, the
Corporation must be aware of the importance of planning and controlling the cost
of executive compensation.
To implement this policy, the Corporation maintains an executive
compensation program that consists of base salaries, annual incentive plans,
stock option plans and competitive benefits. It is the belief of the Committee
that through these components executives will receive compensation that is
competitive as well as compensation that is earned only upon achievement of
performance standards as established and approved each year.
8
<PAGE>
SALARIES
By providing salaries at competitive market levels with other industry
leaders, the Corporation rewards and encourages individual performance. The
Committee tracks and monitors salary levels the Corporation provides to
executives through the use of compensation consultants and available industry
information. The Committee generally approaches its decisions in establishing
levels of compensation as a process, which requires a substantial amount of
judgment against the background of objective information furnished by its
consultants. The salary of the Chief Executive Officer is evaluated solely by
the Compensation Committee. The salaries of other executive officers are
evaluated by the Committee with input from the Chief Executive Officer. Final
approval of salaries of the Chief Executive Officer and the other executive
officers are made by the independent members of the Board of Directors after
receiving recommendations of the Committee.
In developing current salary levels, including that of the Chief Executive
Officer, the Committee reviewed an analysis of cash compensation (base salary
and annual bonus or incentives) prepared specifically for the Corporation by a
major compensation consulting firm. In the analysis, the Corporation's executive
positions were matched with similar positions at other companies based on data
from executive compensation surveys, a proprietary survey of the textile
industry and proxy statements of companies that appear in the peer line of the
Performance Graph below. A weighted composite was developed, and the Committee
targeted 1993 and 1994 salary levels to the market median rate of the composite.
Specifically, the Committee determined that a salary increase for the Chief
Executive Officer was in order to place his salary closer to the market median
rate and to recognize satisfactory performance by the Company under his
direction.
INCENTIVE COMPENSATION
The Corporation has established an annual management incentive plan that
links executive compensation to the Corporation's performance. Under the plan,
executive officers and other key management employees can earn annual cash
incentive bonuses based upon the achievement of corporate and individual goals
established at the beginning of each year. Special awards can be made to
recognize exceptional individual performance in the discretion of the Committee.
No such awards were made in 1993 to the Named Executive Officers. Performance
goals are set at the corporate level and at division levels. Corporate level
performance targets are determined by measuring return on capital employed and
earnings per share. The Committee examines costs of capital and earnings of
other public companies (including companies that appear in the performance graph
below) as it establishes and approves these targets. Division-level goals are
established based on return of capital employed for the division. Awards to
individual officers and the aggregate amount of awards to all key management
employees must be approved by the Board at year-end.
The achievable bonus for each officer and management employee is based upon
a blend of corporate and/or division and individual goals tailored to that
particular executive, based upon his or her responsibilities. Specifically, for
the CEO, the corporate goals of return on capital employed and earnings per
share accounts for 80% of his incentive compensation and 20% is attributable to
individual functional goals. The weight given to each factor comprising the
bonus allocation varies for the other executives in accordance with the
percentage of target bonus being allocated to corporate, division, or individual
goals.
The incentive compensation awarded to the Chief Executive Officer and the
other Named Executives for 1993 is reported in column (d) of the Summary
Compensation Table. Based on 1993 results, officers earned from 40% to 73% of
base salary depending upon performance and the scope of their responsibilities.
The 1993 bonus awards represent significant achievement by executive officers of
the performance measures set for 1993.
Before approving the 1993 bonuses, the Committee met with the Chief
Executive Officer in February, 1994 and reviewed the structure and mechanics of
the incentive compensation plan and compared performance goals with results. It
was noted that the Company had exceeded its objectives established for 1993 as
to return on capital employed and for corporate objectives, as to earnings per
share. The Committee recommended approval of the bonuses to the full Board,
noting very favorable performance by management for the year, including record
results and the successful completion of a secondary offering.
STOCK OPTIONS
The Corporation maintains the 1984 Stock Option Plan and the 1992 Stock
Option Plan through which key management employees have and may receive grants
of stock options. No additional grants are available under the 1984 Stock Option
Plan. It is the belief of the Committee that since executives earn no rewards
through these stock options unless the stock price increases, this form of
executive compensation has the potential to benefit shareholders as well as
executives by aligning the
9
<PAGE>
interests of the Corporation's executives with those of shareholders and by
encouraging executives to devote their abilities to the successful operation of
the Corporation.
The Corporation's stock option plans permit the granting of both incentive
stock options, as defined under the Internal Revenue Code, and nonqualified
options. The exercise price of these options may not be less than 100 percent of
the fair market value of the Common Stock on the date the option is granted.
Prior to 1994, the stock option plans were administered by a Stock Option
Committee of the Board of Directors consisting of Jeanette C. Kimmel, chair,
Doris R. Bray and Leslie W. Gaulden. Beginning in February 1994, all stock
option plans of the Corporation will be administered by the Compensation
Committee. Both the Stock Option Committee and the Compensation Committee
consist of persons who are disinterested persons as defined by Rule 16b-3 of the
Securities Exchange Act of 1934, as amended.
With respect to grants of stock options, the Committee currently operates
under the general objective that stock option grants to executives should be
considered every two years. Stock option grants are made in the discretion of
the Committee, which considers stock options to provide incentive to executives,
because they have value only if the Corporation's stock appreciates in value. As
reported in the Option Grants Table above, incentive stock options were granted
in 1993 to a number of executives and employees, including the Chief Executive
Officer and the other Named Executive Officers. In making the grants, the Stock
Option Committee considered that no options had been granted to the Named
Executive Officers in four years and deemed it an appropriate time to make
option grants in the amount set forth in the Option Grants Table. The Stock
Option Committee allocated the total number of stock options granted in 1993 to
individuals based on a three-tier structure. It was determined that 20 percent
of all options granted in 1993 would be granted to the Named Executive Officers,
30 percent of the options would be granted to other corporate officers and 50
percent of the options would be granted to other key employees. The specific
number of stock options granted to each individual within the Named Executive
Officer tier was determined by the Stock Option Committee based on job
responsibilities. The specific number of stock options granted to each
individual within the other two tiers was based upon recommendations of the
Chief Executive Officer based on salary grades. The number of shares of Common
Stock or outstanding options currently held by each option grantee was not a
consideration in determining the number of options that were granted to each
person in 1993.
Non-qualified stock options granted by the Corporation may include a
provision whereby the Corporation will pay to the executive an amount that is
equal to the savings the Corporation realizes through tax deductions related to
the option exercise. The amount of payments to the Named Executive Officers
under this tax reimbursement feature of the stock option plans is reported in
column (e) of the Summary Compensation Table. The Committee believes this form
of compensation is in accordance with the Compensation Policy of the Corporation
because it enables the executives to retain shares the executives otherwise
would have needed to sell to meet tax obligations. The number of shares of
Corporation common stock received by the Named Executive Officers is reported in
the table entitled Aggregated Option Exercises in Fiscal Year 1993 and Fiscal
Year End Option Values above. The Committee believes that the exercise of stock
options by executives has resulted in significant share ownership of executives
of the Corporation that should strengthen the mutuality of interests between
management and shareholders.
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") limits for 1994 and
years thereafter to $1,000,000 the amount that can be deducted by a publicly
held corporation for compensation paid to the Named Executive Officers unless
the compensation in excess of $1,000,000 is performance based or meets certain
other conditions. As the regulations implementing OBRA have only recently been
implemented and as the compensation in 1994 not qualifying as performance based
under OBRA to any one of the Named Executive Officers is not anticipated to
exceed $1,000,000, the Committee did not consider the deductibility limits in
making its compensation decisions for 1994 for any one of the Named Executive
Officers. However, the Committee's policy is to design and administer
compensation programs which meet the objectives set forth above and which reward
executives for corporate performance which meets established financial goals,
and to the extent reasonably practicable and to the extent consistent with its
other compensation objectives, to maximize the amount of compensation expense
that is tax-deductible by the Corporation.
<TABLE>
<S> <C>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Charles M. Reid, Chair Jeanette C. Kimmel, Chair
Jeanette C. Kimmel Doris R. Bray
John W. Rosenblum Leslie W. Gaulden
</TABLE>
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
shareholder return on the Corporation's Common Stock with the cumulative return
of the Standard & Poor's 500 Stock Index and with a peer group index developed
by KPMG Peat Marwick, assuming reinvestment of dividends. The Corporation's
Common Stock was registered under Section 12 of the Securities Exchange Act of
1934 on June 18, 1992, in connection with an initial public offering of
6,000,000 shares. Accordingly, the measurement period selected by the
Corporation for its Performance Graph begins on June 17, 1992, the last trading
day before the initial public trading of Cone Common Stock, and ends on December
31, 1993, the last trading day of the Corporation's fiscal year.
The Peer Group index has been constructed by calculating the cumulative
total return of the common stock of the following companies: Burlington
Industries, Inc.; Delta Woodside Industries, Inc.; Dixie Yarns, Inc.; Fieldcrest
Cannon, Inc.; Guilford Mills, Inc.; and Springs Industries, Inc. The return of
each peer company was weighted according to its stock market capitalization as
of the beginning of the period.
COMPARISON OF SHAREHOLDER RETURN
AMONG CONE MILLS, S&P 500 AND PEER GROUP
(Comparison Graph appears here--see appendix)
11
<PAGE>
APPROVAL OF THE CONE MILLS CORPORATION 1994 STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS
On August 19, 1993, the Board of Directors of the Corporation adopted The
Cone Mills Corporation 1994 Stock Option Plan for Non-Employee Directors (the
"Plan") and approved its submission to the shareholders for approval. The
following summary describes the principal features of the Plan and is qualified
in its entirety by the text of the Plan.
The purpose of the Plan is to enable the Corporation to compensate
non-employee members of the Board of Directors in part through incentives which
are linked directly to increases in shareholder value. An aggregate of 100,000
shares of Common Stock shall be available for grant under the Plan subject to
proportionate adjustments for any increase or decrease in the number of issued
shares of Common Stock resulting from a sub-division or consolidation of shares
or the payment of a stock dividend on common shares or any other increase or
decrease in the number of shares effected without receipt of consideration by
the Corporation.
Pursuant to the terms of the Plan, each Eligible Director of the
Corporation is granted, on the fifth business day after each annual meeting of
shareholders ("grant date"), an option to purchase 1,000 shares of Common Stock.
The price at which shares of Common Stock may be purchased under the Plan is the
fair market value of the Common Stock at the grant date. The fair market value
is the closing price of the Common Stock as reported on the composite tape of
the New York Stock Exchange. The closing price of the Common Stock on March 23,
1994, was $15.00. An Eligible Director is defined as a director, who at the time
of the grant, is not an employee of the company or its subsidiaries. Currently,
six directors would be eligible to receive options under the Plan. The following
table sets forth the benefits the eligible group will receive in 1994 if the
Plan is approved:
NEW PLAN BENEFITS
1994 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
<TABLE>
<CAPTION>
SECURITIES UNDERLYING
NAME AND POSITION(1) OPTIONS (#)
<S> <C>
Non-Executive Director Group (6) persons......................................... 6,000
</TABLE>
(1) Named Executive Officers, executives, and employees are not eligible to
receive options pursuant to the Plan. A dollar value of the options to be
received is not presently determinable.
The Plan is administered by the Board of Directors; however, the Board may,
in its discretion, delegate to a committee of members of the Board its authority
with respect to the administration of the Plan. The Board of Directors has no
discretion as to the date of the grants or the option price.
Options granted under the Plan shall be non-qualified stock options. No
options may be granted under the Plan after August 19, 2003, but awards granted
prior to that date may extend beyond such date.
Under the Plan, options are granted for a term of seven years from the date
of grant. The option may be exercised only during the term and during the time
the optionee is a director or three months after termination of the
directorship.
An option granted under the Plan is not assignable or transferable other
than by will or the laws of descent and distribution, and an option shall be
exercisable during the lifetime of the optionee only by him or her. An option
transferred by will or the laws of descent and distribution may only be
exercised by the legatee or distributee during the one year period following the
optionee's death or earlier expiration of the option.
Options may be exercised by giving written notice to the Corporation,
specifying the number or shares to be purchased, accompanied by the full
purchase price for the shares to be purchased either in cash, by check or by
delivery of shares of Common Stock with a value equal to the purchase price. In
addition, when an optionee is required to pay tax withholdings to the
Corporation under applicable income tax or other laws in connection with the
exercise of an option, the optionee must satisfy this obligation to the
Corporation prior to the delivery of the shares.
There will be no federal income tax consequences to either the optionee or
the Corporation on the grant of a non-qualified option. On the exercise of such
an option, the optionee has taxable ordinary income equal to the difference
between the option price and the fair market value of the shares on the date of
the exercise. The Corporation will be entitled to a tax deduction in an amount
equal to such difference, provided the Corporation complies with applicable
withholding rules. On the sale or exchange of shares received upon exercise of
an option at a gain, the optionee will recognize long-term or short-
12
<PAGE>
term capital gain equal to the difference between the amount realized on the
sale and the fair market value on the date of exercise. The Stock Option
Agreement which each optionee will sign with the Corporation provides that the
shares cannot be sold during the six-month period after the date of grant. If
the option is exercised prior to the expiration date of such restrictive period,
the share certificates will bear a restrictive legend prohibiting the sale of
the shares during such period.
The Plan may not be amended or modified without shareholder approval if
such approval is required to satisfy any applicable statutory or regulatory
requirements. No amendment shall be made more than once every six months nor
shall any amendment increase the number of shares subject to the Plan or change
the individuals eligible to receive option grants or reduce the option price.
The proposed Plan requires the approval of the majority of the outstanding
shares of Common Stock present in person or by proxy and entitled to vote at the
Annual Meeting. Abstentions and broker non-votes will have the effect of a vote
against the proposal.
The Board recommends a vote FOR the adoption of The Cone Mills Corporation
1994 Stock Option Plan for Non-Employee Directors.
SELECTION OF AUDITORS
The Corporation's Board of Directors has appointed McGladrey & Pullen,
independent certified public accountants, as auditors of the Corporation's
records for the fiscal year 1994. McGladrey & Pullen or its predecessor has
acted as auditors for the Corporation since 1943 and continue to be considered
by the Board to be well qualified.
Although not required to do so, the Board believes it is desirable to
submit its appointment of said firm to the shareholders at the Annual Meeting
for ratification. Representatives of McGladrey & Pullen are expected to be
present at the meeting and will be available to respond to appropriate questions
or make a statement if they desire to do so.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends that shareholders vote FOR electing the
Board of Directors' nominees for director as set forth in this proxy statement,
FOR approval of the Cone Mills Corporation 1994 Stock Option Plan for
Non-Employee Directors, and FOR ratifying the Board of Directors' appointment of
McGladrey & Pullen as independent auditors for the year ending January 1, 1995.
SHAREHOLDER PROPOSALS
In the event any shareholder wishes to present a proposal at the 1995
Annual Meeting of Shareholders, such proposal must be received by the
Corporation for inclusion in the proxy statement and form of proxy relating to
such meeting on or before December 6, 1994, and must conform to such other
requirements as may be imposed by the Securities and Exchange Commission.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed of any matter to be acted upon at
the Annual Meeting other than those specifically referred to in this Proxy
Statement. If other matters should properly come before the Annual Meeting it is
intended that the holders of the proxies will act in respect thereto in
accordance with their best judgment.
By order of the Board of Directors.
TERRY L. WEATHERFORD
SECRETARY
13
<PAGE>
CONE MILLS CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS TERRY L. WEATHERFORD AND NEIL W. KOONCE, OR
EITHER OF THEM, PROXIES WITH FULL POWER OF SUBSTITUTION TO VOTE ALL SHARES OF
COMMON STOCK OF CONE MILLS CORPORATION, STANDING IN THE NAME OF THE UNDERSIGNED
AT THE ANNUAL MEETING OF SHAREHOLDERS OF THE COMPANY TO BE HELD MAY 10, 1994,
AND ANY ADJOURNMENT THEREOF, AS FOLLOWS:
1. ELECTION OF DIRECTORS (CLASS II).
<TABLE>
<S> <C>
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY TO VOTE FOR
(EXCEPT ALL NOMINEES LISTED BELOW
AS MARKED TO THE CONTRARY
BELOW)
</TABLE>
J. PATRICK DANAHY, LESLIE W. GAULDEN, JEANETTE C. KIMMEL, JOHN W. ROSENBLUM
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW).
2. TO APPROVE THE CONE MILLS CORPORATION 1994 STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
3. TO RATIFY APPOINTMENT OF MCGLADREY & PULLEN AS INDEPENDENT AUDITORS.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued on Reverse Side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES NAMED IN THE PROXY STATEMENT AND FOR PROPOSALS 2 AND 3.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: , 1994
****************************************************************************
APPENDIX
On the Dear Shareholder's page the Cone Mills logo appears where noted.
On Page 11 the Comparison Graph appears where indicated. The plot points
are as follows:
6/17/92 12/31/92 12/31/93
Cone Mills $100 $143 $169
S&P 500 $100 $111 $122
Peer Group $100 $105 $107
