<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Cone Mills Corporation
(Name of Registrant as Specified In Its Charter)
Terry L. Weatherford, Vice President, Secretary
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange
Act Rule 0-11 (Set forth the amount on which the filing fee is calculated
and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
(Cone Mills logo appears here)
GREENSBORO, N.C. 27415
April 1, 1997
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 13, 1997, at the Cone Corporate Center, 3101 North Elm
Street, 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,
(sig of Dewey L. Trogdon)
Dewey L. Trogdon
Chairman of the Board
(sig of J. Patrick Danahy)
J. Patrick Danahy
President and Chief Executive Officer
(Cone Mills logo appears here)
<PAGE>
CONE MILLS CORPORATION
CONE CORPORATE CENTER
3101 NORTH ELM STREET
GREENSBORO, NC 27415-6540
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 1, 1997
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 Cone Corporate Center, 3101 North Elm Street, in Greensboro, North
Carolina, on Tuesday, May 13, 1997, at 10:00 a.m. for the following purposes:
1. To elect three directors as Class II Directors, for a term of three
years or until their successors are elected and qualified.
2. To ratify the appointment of McGladrey & Pullen, LLP, as independent
auditors for the Corporation for the fiscal year ending December 28, 1997.
3. 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 14, 1997, 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
VICE PRESIDENT AND SECRETARY
<PAGE>
CONE MILLS CORPORATION
CONE CORPORATE CENTER
3101 NORTH ELM STREET
GREENSBORO, NC 27415-6540
PROXY STATEMENT FOR
ANNUAL MEETING TO BE HELD MAY 13, 1997
DATED: APRIL 1, 1997
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 three nominees for Director
(Class II) named herein for terms of three years; and (ii) ratification of the
Board of Directors' appointment of McGladrey & Pullen, LLP as independent
auditors.
This Proxy Statement and the enclosed proxy are being first mailed to
shareholders on or about April 1, 1997. 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. In addition the Corporation has retained Georgeson & Company, Inc.
to assist in the solicitation of proxies and distribution of proxy materials for
which it will pay approximately $5,500 in fees plus expenses.
Holders of Common Stock of record at the close of business March 14, 1997,
will be entitled to vote at the meeting. On that date 26,169,133 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>
Norwest Corporation................................................................. 1,937,800(2) 7.40%
Sixth and Marquette
Minneapolis, MN 55479-1026
Sanford C. Bernstein & Co., Inc..................................................... 1,639,800(3) 6.27%
767 Fifth Avenue
New York, NY 10153
The Equitable Companies Incorporated................................................ 1,587,100(4) 6.06%
787 Seventh Avenue
New York, NY 10019
</TABLE>
(1) Does not include Crestar Bank, trustee of the Cone Employee Equity Plan,
which held of record for the plan 2,604,363 shares of Common Stock on March
14, 1997. This represents 9.95% of the Company's outstanding Common Stock.
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 by Norwest Corporation on behalf of itself and its subsidiaries,
Norwest Bank Colorado, N.A. and Norwest Bank Minnesota, N.A., Norwest
Corporation beneficially owns the 1,937,800 shares which includes 1,917,000
shares deemed to be beneficially owned by Norwest Bank Colorado, N.A. Of the
1,937,800 shares, Norwest has sole voting power with respect to 1,690,800
shares and shared power to vote as to 500 shares. It has sole power to
dispose of or direct the disposition of 1,934,800 shares and shared power
with respect to 0 shares.
1
<PAGE>
(3) According to a Schedule 13G filed with the Securities and Exchange
Commission by Sanford C. Bernstein & Co., Inc., it has sole voting power
with respect to 1,389,900 shares, shared voting power on 39,900 shares, sole
dispositive power on 1,639,800 shares, and no shared dispositive power.
(4) 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 AXA Courtage Assurance Mutuelle, formerly
known as Uni Europe Assurance Mutuelle. According to the Schedule 13G, the
shares are held by Alliance Capital Management L.P. and Equitable Life
Assurance Society of United States, subsidiaries of Equitable. The Schedule
13G states that the group may be deemed to exercise sole voting power as to
1,408,100 shares and the sole dispositive power as to 1,587,000 shares.
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 14, 1997:
<TABLE>
<CAPTION>
NAME OF DIRECTOR AMOUNT AND NATURE OF
NOMINEE OR OFFICER BENEFICIAL OWNERSHIP (1)(2)
<S> <C>
John L. Bakane (3).............................................................. 195,157
Doris R. Bray................................................................... 18,000
James S. Butner (3)............................................................. 126,320
J. Patrick Danahy (3)(4)........................................................ 332,393
Leslie W. Gaulden (5)........................................................... 353,000
James D. Holder (3)............................................................. 154,709
Jeanette C. Kimmel.............................................................. 128,000
Neil W. Koonce (3)(6)........................................................... 154,226
Charles M. Reid................................................................. 18,000
John W. Rosenblum............................................................... 6,000
Dewey L. Trogdon (7)............................................................ 502,500
Terry L. Weatherford (3)........................................................ 11,939
Bud W. Willis III (3)(8)........................................................ 257,060
All Directors and Executive Officers as a Group
(15 persons)(3)............................................................... 2,433,285
<CAPTION>
NAME OF DIRECTOR
NOMINEE OR OFFICER PERCENTAGE OF CLASS
<S> <C>
John L. Bakane (3).............................................................. *
Doris R. Bray................................................................... *
James S. Butner (3)............................................................. *
J. Patrick Danahy (3)(4)........................................................ 1.27%
Leslie W. Gaulden (5)........................................................... 1.35%
James D. Holder (3)............................................................. *
Jeanette C. Kimmel.............................................................. *
Neil W. Koonce (3)(6)........................................................... *
Charles M. Reid................................................................. *
John W. Rosenblum............................................................... *
Dewey L. Trogdon (7)............................................................ 1.92%
Terry L. Weatherford (3)........................................................ *
Bud W. Willis III (3)(8)........................................................ *
All Directors and Executive Officers as a Group
(15 persons)(3)............................................................... 9.21%
</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 14, 1997 as follows: Mr. Bakane
(43,000 shares), Mr. Butner (20,000 shares), Mr. Danahy (58,000 shares), Mr.
Holder (10,000), Mr. Koonce (20,000 shares), Mr. Weatherfold (8,000), Mr.
Willis (42,600 shares), and 3,000 for each of Mrs. Bray, Mr. Gaulden, Mrs.
Kimmel, Mr. Reid, Mr. Rosenblum and Mr. Trogdon, and all Directors and
Executive Officers as a Group (244,000 shares). Does not include an option
to purchase 1,000 shares to be granted to each nonemployee director as of
May 20, 1997, pursuant to the 1994 Stock Option Plan for Non-Employee
Directors.
(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.
2
<PAGE>
(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, 1996, as follows:
<TABLE>
<S> <C>
Mr. Bakane.................................................................................. 30,222 shares
Mr. Butner.................................................................................. 16,656 shares
Mr. Danahy.................................................................................. 42,045 shares
Mr. Holder.................................................................................. 21,130 shares
Mr. Koonce.................................................................................. 25,445 shares
Mr. Weatherford............................................................................. 2,789 shares
Mr. Willis.................................................................................. 48,612 shares
All Directors and Executive Officers as a group (15 persons)................................ 221,743 shares
</TABLE>
(4) Includes 72,000 shares owned of record by Mr. Danahy's wife.
(5) Includes 100,000 shares owned of record by Mr. Gaulden's wife.
(6) Includes 6,000 shares owned of record by Mr. Koonce's wife and 5,018 shares
allocated to Mrs. Koonce's individual account in the Cone Mills Corporation
Employee Equity Plan as of December 31, 1996.
(7) Includes 125,000 shares owned of record by Mr. Trogdon's wife.
(8) Includes 80,553 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 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 1997 Annual Meeting, including Leslie W.
Gaulden who is retiring as a director. The Bylaws of the Corporation provide no
person shall be elected as a director after he or she reaches the age of 72. A
vacancy exists in each of the directorships in Class I and Class III and the
Board intends to fill the vacancies. However, nominees have not been identified.
If nominees are identified prior to the 1998 meeting of shareholders, the Board
may fill the vacancies for the interim period. If the Board of Directors fills
the positions, the nominees will be submitted to the shareholders for election
at the 1998 annual meeting. Persons elected as Class II Directors 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 Board of Directors proposes that
the three persons nominated below be elected as Class II Directors for terms
expiring at the Annual Meeting in the year 2000. 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. A proxy cannot be voted for more than the number of nominees named.
The following information is furnished with respect to the nominees:
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION; BUSINESS
EXPERIENCE PAST FIVE YEARS; DIRECTOR
NAME OF NOMINEE PRESENT AGE AND OTHER DIRECTORSHIPS SINCE
<S> <C> <C> <C>
NOMINEES FOR THREE YEAR TERM (CLASS II)
J. Patrick Danahy 53 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)
Jeanette C. Kimmel 58 Private Investment Management 1971
John W. Rosenblum 53 Dean, Jepson School of Leadership Studies, University of Richmond 1993
(1996-Present); Tayloe Murphy Professor of the Darden Graduate School of
Business Administration, University of Virginia (1993-1996); Dean, Darden
Graduate School of Business Administration (1982-1993); Director, Cadmus
Communications Corporation; Chesapeake Corporation; Comdial Corporation; and
T. Rowe Price Associates.
</TABLE>
The following information is furnished with respect to directors continuing
in office.
<TABLE>
<CAPTION>
CLASS III (TERM EXPIRING IN 1998)
<S> <C> <C> <C>
Doris R. Bray 59 Partner, Schell Bray Aycock Abel & Livingston, P.L.L.C. (Attorneys at Law) 1989
(1987-Present); Director, Vanguard Cellular Systems, Inc.
Dewey L. Trogdon 65 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
</TABLE>
<TABLE>
<CAPTION>
CLASS I (TERM EXPIRING IN 1999)
<S> <C> <C> <C>
John L. Bakane 46 Executive Vice President of the Corporation (1995-present); Chief Financial 1989
Officer of the Corporation (1988-Present);
Vice President of the Corporation (1986-1995)
Charles M. Reid 62 Director, President and Chief Executive Officer, United Guaranty 1988
Corporation, a member company of American International Group (1987-Present)
</TABLE>
COMMITTEES AND DIRECTOR ATTENDANCE
During the year ended December 31, 1996, the Board of Directors of the
Corporation held nine meetings and the Executive, Audit, and Compensation
Committees held five, three, and two meetings, respectively. 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 1996.
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 or 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.
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.
Leslie W. Gaulden is retiring as a member of the Board of Directors and its
committees as of May 13, 1997.
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, with respect 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.
4
<PAGE>
SECTION (16)(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1996 or
prior fiscal years. All of these filing requirements were satisfied by its
directors and officers except for a report relating to a gift was filed late by
John L. Bakane and a report relating to a sale was filed late by Bud W. Willis,
III. In making these statements, the Company has relied on the written
representations of its directors and officers and copies of the reports that
they have filed with the Commission. The Company is not aware of the existence
of any ten percent (10%) holders of the Company's stock.
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 29, 1996. Information is also provided on Mr. Willis and
Mr. Holder who resigned as executive officers on November 8, 1996, and December
15, 1996 respectively. The CEO, the four most highly compensated officers, and
Messrs. Willis and Holder 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 December 31, 1996, unless
otherwise indicated. Any such compensation earned and paid to the Named
Executive Officers during 1997 will be recorded in the proxy statement for the
Corporation's 1998 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 the
respective fiscal year. 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).
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) AWARDS ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
J. Patrick Danahy 1996 490,000 -- -- -- 50,000 --
President and 1995 450,000 -- -- -- -- --
Chief Executive Officer 1994 425,000 100,000 -- -- 40,000 --
John L. Bakane 1996 300,000 -- -- -- 40,000 --
Executive Vice President and 1995 280,000 -- -- -- -- --
Chief Financial Officer 1994 260,000 72,000 -- -- 25,000 --
Bud W. Willis III 1996 300,000 -- -- -- -- --
Executive Vice President, the 1995 280,000 -- -- -- -- --
Corporation; President, 1994 250,000 93,000 -- -- 25,000 --
Cone Apparel Products
Neil W. Koonce 1996 185,000 -- -- -- 10,000 --
Vice President and 1995 177,000 15,000 -- -- -- --
General Counsel 1994 170,000 33,000 -- -- 10,000 --
James S. Butner 1996 175,000 -- -- -- 10,000 --
Vice President 1995 167,000 18,000 -- -- -- --
Industrial and 1994 160,000 32,000 -- -- 10,000 --
Public Relations
Terry L. Weatherford 1996 155,000 -- -- -- 10,000 --
Vice President 1995 142,000 15,000 -- -- -- --
and Secretary 1994 130,000 24,000 -- -- 10,000 --
James D. Holder 1996 150,000 30,000 -- -- -- --
Controller 1995 144,000 15,000 -- -- -- --
1994 138,000 24,000 -- -- 5,000 --
<CAPTION>
(I)
ALL OTHER
(A) COMPENSATION
NAME AND PRINCIPAL POSITION ($)(3)
<S> <C>
J. Patrick Danahy 12,146
President and 9,038
Chief Executive Officer 7,458
John L. Bakane 6,556
Executive Vice President and 6,344
Chief Financial Officer 6,310
Bud W. Willis III 9,771
Executive Vice President, the 11,710
Corporation; President, 6,240
Cone Apparel Products
Neil W. Koonce 6,167
Vice President and 6,045
General Counsel 5,683
James S. Butner 6,243
Vice President 6,243
Industrial and 5,614
Public Relations
Terry L. Weatherford 6,342
Vice President 6,143
and Secretary 2,855
James D. Holder 5,549
Controller 6,905
5,460
</TABLE>
5
<PAGE>
(1) All bonuses were paid pursuant to a Management Incentive Plan for the fiscal
years shown. See "Compensation Committee Report on Executive Compensation."
(2) 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.
(3) Represents the Corporation's matching contributions to the 401(k) Program
(Supplemental Retirement Plan and Employee Equity Plan), the dollar value of
insurance premiums paid by the Corporation with respect to group term life
insurance and universal life insurance for benefit of the Named Executive
Officers and service awards as follows:
A. 401(k) Plan matching contributions for 1996 were $4,500 each for: Messrs.
Danahy, Bakane, Willis, Koonce, Butner, and Weatherford and $2,250 for
Mr. Holder.
B. Insurance Premiums for 1996 respectively: Mr. Danahy ($5,146); Mr.
Bakane ($2,056); Mr. Willis ($5,271); Mr. Koonce ($1,667); Mr. Butner
($1,743), Mr. Weatherford ($1,842) and Mr. Holder ($3,299).
C. A service award of $2,500 was granted to Mr. Danahy in 1996
pursuant to the Company's service award program.
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following sets forth certain information with respect to options
granted to the Named Executive Officers during the fiscal year ended December
29, 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
(B) (C)
NUMBER OF PERCENT OF (D)
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED OR (E)
(A) OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED (#) (1) IN FISCAL YEAR ($/SH) DATE
<S> <C> <C> <C> <C>
J. Patrick Danahy 50,000 12.76 8.00 11/06/2006
John L. Bakane 40,000 10.20 8.00 11/06/2006
Neil W. Koonce 10,000 2.55 8.00 11/06/2006
James S. Butner 10,000 2.55 8.00 11/06/2006
Terry L. Weatherford 10,000 2.55 8.00 11/06/2006
<CAPTION>
(F)
(A) GRANT DATE
NAME PRESENT VALUE $(2)
<S> <C>
J. Patrick Danahy $334,000
John L. Bakane $267,200
Neil W. Koonce $ 66,800
James S. Butner $ 66,800
Terry L. Weatherford $ 66,800
</TABLE>
(1) The Corporation has not granted SARs. Options granted in 1996 are
Nonqualified Stock Options which are exercisable six months after the grant
date (November 7, 1996), 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. However, no more than 50%
of the option shares can be exercised in any one calendar year. 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.
The grant of the options includes a provision that the Corporation will pay
to the optionee after exercise an amount in cash equal to the tax benefit
the Corporation expects to realize from the exercise of the option.
(2) The Black-Scholes option pricing model was used to estimate the present
value of the options as $6.68 per share. The model assumed a dividend yield
of 0%, a risk-free interest rate of 6.50%, expected price volatility based
on historical experience of 34.42%, and an expected option life of 8 years
based on historical experience. As the options were granted with a tax
reimbursement feature which grants the optionee upon exercise a cash payment
equal to the benefit the Company expects to receive from the exercise, a
value of $2.38 per share was assumed based upon the Company's assumed
effective tax rate for 1996. The assumptions are deemed to be reasonable but
there is no assurance that the assumptions will be true and an accurate
determination of present value. The actual value, if any, will ultimately
depend upon the excess of the market price of shares of Common Stock over
the exercise price on the date the option is exercised.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
There were no stock option exercises by the Named Executive Officers during
1996. The following table includes the number of shares covered by exercisable
and unexercisable options as of December 29, 1996. Also reported, both as to
exercisable and unexercisable options, are the values of "in-the-money" options,
which are options with a positive spread between the fiscal year-end market
price of the underlying Common Stock and the exercise price of such stock
options.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
(D)
NUMBER OF
SECURITIES
UNDERLYING
(B) UNEXERCISED OPTIONS
SHARES (C) AT 12/29/96
(A) ACQUIRED ON VALUE REALIZED EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE
<S> <C> <C> <C>
J. Patrick Danahy -- -- 40,000/80,000
John L. Bakane -- -- 30,000/60,000
Bud W. Willis III -- -- 37,600/20,000
Neil W. Koonce -- -- 16,000/19,000
James S. Butner -- -- 16,000/19,000
Terry L. Weatherford -- -- 4,000/16,000
James D. Holder -- -- 6,000/4,000
<CAPTION>
(E)
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT 12/29/96 ($)(1)
(A) EXERCISABLE/
NAME UNEXERCISABLE
<S> <C>
J. Patrick Danahy 0/12,500
John L. Bakane 0/10,000
Bud W. Willis III 22,800/0
Neil W. Koonce 0/2,500
James S. Butner 0/2,500
Terry L. Weatherford 0/2,500
James D. Holder 0/0
</TABLE>
(1) Based on $8.250 fair market value (closing price of NYSE) on December 27,
1996, the last trading day of fiscal year 1996.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The Corporation had no long-term incentive plan in effect in 1996.
PENSION PLAN TABLE
The following table sets forth in the ERP column the estimated annual
benefits payable upon retirement in 1997 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, 1997, for the Named Executive Officers
are: Mr. Danahy -- 25 years; Mr. Bakane -- 21 years; Mr. Willis -- 26 years; Mr.
Koonce -- 23 years; and Mr. Butner -- 24 years; Mr. Weatherford -- 3 years; Mr.
Holder -- 40 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 that may be paid under the ERP and all other defined benefit
plans of the Corporation taken together is generally restricted to $120,000 in
1996 and $125,000 in 1997. In addition, the Code limits annual compensation of
each employee that can be taken into account in computing pension benefits to
$150,000 in 1996 and $160,000 in 1997. These amounts may be adjusted for cost of
living 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 benefit plans. Such amounts are identified in
the following table in the columns headed "NQP". The Corporation has established
a "rabbi" trust agreement that will be funded upon a change of control with the
accrued vested benefits in these nonqualified plans. A change of control is
defined as a transaction in which a 50% change in the ownership of the
outstanding shares occurs, a report is filed with the Securities and Exchange
Commission on Schedule 13D or 14D-1 which discloses a person has become the
beneficial owner of more than 50% of the Common Stock, or a change in the
majority of the directors during a two year period of time not approved by
two-thirds of the directors who were in office at the beginning of the period.
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.
7
<PAGE>
APPROXIMATE ANNUAL BENEFIT FOR YEARS OF SERVICE INDICATED (1)
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR
HIGHEST CONSECUTIVE
FIVE YEARS DURING LAST
TEN YEARS BEFORE 15TH YEAR 20TH YEAR 25TH YEAR 30TH YEAR
RETIREMENT ERP NQP ERP NQP ERP NQP ERP NQP
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 58,792 $ 3,755 $ 77,450 $ 3,755 $ 90,361 $ 2,295 $ 101,806 $ 2,295
$ 250,000 58,928 20,088 77,652 24,962 90,623 26,460 102,106 29,443
$ 300,000 58,928 36,556 77,652 46,371 90,623 50,889 102,106 56,890
$ 400,000 58,928 69,493 77,652 89,189 90,623 99,745 102,106 111,785
$ 500,000 58,928 102,430 77,652 132,007 90,623 148,602 102,106 166,680
$ 600,000 58,928 135,367 77,652 174,825 90,623 197,458 102,106 221,575
$ 700,000 58,928 168,304 77,652 217,643 90,623 246,315 102,106 276,470
$ 800,000 58,928 201,241 77,652 260,461 90,623 295,171 102,106 331,365
$ 900,000 58,928 234,178 77,652 303,279 90,623 344,028 102,106 386,260
$1,000,000 58,928 267,115 77,652 346,098 90,623 392,884 102,106 441,155
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR
HIGHEST CONSECUTIVE
FIVE YEARS DURING LAST
TEN YEARS BEFORE 35TH YEAR
RETIREMENT ERP NQP
<S> <C> <C>
$ 200,000 $ 109,125 $ 1,252
$ 250,000 109,457 30,014
$ 300,000 109,457 59,108
$ 400,000 109,457 117,297
$ 500,000 109,457 175,486
$ 600,000 109,457 233,674
$ 700,000 109,457 291,863
$ 800,000 109,457 350,052
$ 900,000 109,457 408,240
$1,000,000 109,457 466,429
</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 that 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 December 31, 1996,
was: Mr. Danahy -- $123,074; Mr. Bakane -- $66,005; Mr. Willis -- $142,198;
Mr. Koonce -- $47,605; Mr. Butner -- $23,147; Mr. Weatherford -- $0; and Mr.
Holder -- $0.
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. No additional fee is paid for meetings of any committee of the Board
held on the same day as a Board meeting. 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 1996,
retainers and attendance fees paid to all directors totaled $170,625.
The Shareholders approved at the 1994 annual meeting the 1994 Non-Employee
Director Stock Option Plan whereby each nonemployee director receives 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. The grant date is the fifth business day after the annual
meeting.
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 is $15,000 per calendar quarter and he is
reimbursed for expenses incurred 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. The consulting agreement has been in
effect since 1993 and has been renewed each year upon agreement by the parties.
8
<PAGE>
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 directors
who are not currently or formerly employees of the Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporation's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Committee's membership is
comprised of nonemployee directors, none of whom participate in any of the plans
administered by the Committee. It is the responsibility of the Compensation
Committee to review and make recommendations to the Board of Directors
concerning the salaries and incentive compensation and to approve grants of
stock options, restricted stock or performance shares for 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 the 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 plans and competitive benefits. It is the belief of the Committee that
through these components executives are provided compensation and benefits that
are competitive; are provided incentives for additional annual compensation that
is earned only upon achievement of performance standards as established and
approved each year; and are provided long-term incentive compensation through
the grant of stock options, restricted stock or performance shares that can
appreciate in value.
SALARIES
The Committee's objective in establishing the base salaries of the Named
Executive Officers is to provide salaries at competitive market levels with
other industry leaders in order to reward and encourage individual performance.
The salary of the Chief Executive Officer is evaluated solely by the
Compensation Committee and the salary of other executive officers is determined
by the Committee based upon recommendations 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. The Committee deems its
compensation decisions to be a cumulative process involving a substantial amount
of judgement concerning an executive's experience and responsibilities against
objective information furnished by compensation consultants.
In developing current salary levels, including that of the Chief Executive
Officer, the Committee reviewed the Corporation's assessment of salaries in the
textile industry in addition to an analysis of cash compensation (base salary
and annual bonus or incentives) prepared specifically for the Corporation and
the Compensation Committee 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 are in the Peer Group for the Performance Graph set forth below. A weighted
composite was developed, and the Committee compared executive salaries to the
market composite and considered those comparisons in making salary decisions. In
general, the Committee targets executive salaries at the market median; however,
in a given year an individual executive's salary may vary from median due to
experience, performance, or other factors deemed relevant by the Committee and
considered on a subjective basis. For 1996, 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; however, for 1997 the Corporation has imposed
a salary wage freeze and the salaries of the Chief Executive Officer and the
Named Executive Officers have been similarly affected.
INCENTIVE COMPENSATION
For 1996 the Corporation had in effect an annual management incentive plan
that linked executive compensation to the performance of the Corporation and the
executive. Under the plan, executive officers and other key management employees
9
<PAGE>
could earn annual cash incentive awards based upon the achievement of corporate
and individual goals established at the beginning of the year. Special awards
could be made to recognize exceptional individual performance at the discretion
of the Committee and the Board. Performance goals were set at the corporate
level and at division levels depending upon the responsibilities of each of the
executives. Corporate level performance targets were determined by measuring
return on capital employed and earnings per share. The Committee examined the
returns on capital employed and earnings of other public companies (including
companies that appear in the Performance Graph below) as it established and
approved these targets. Division-level goals were established based upon return
on capital employed for the division. Awards, if any, for individual officers
and the aggregate amounts of awards to all key management employees are reviewed
by the Committee and approved by the Board after the close of the fiscal year.
The achievable incentive award for each officer and management employee was
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 Chief Executive Officer, the corporate goals of return on capital
employed and earnings per share account for 80% of his incentive compensation
and 20% is attributable to individual goals. The weight given to each factor
comprising the incentive award varies per each executive.
The Corporation's performance for 1996 did not meet the minimal level of
profitability nor did the earnings per share and return on capital employed meet
the minimum goal for the payment of incentives for corporate, divisional, or
individual performance under the Corporation's incentive compensation plan.
Accordingly, no incentive payments based on corporate, divisional, or individual
performance were granted for the year to any participant including the Chief
Executive Officer and the Named Executive Officers. A special award was granted
to Mr. Holder based on his retirement with 40 years of exceptional service.
The shareholders approved at the May 1996 annual meeting the adoption of
the 1997 Senior Management Incentive Compensation Plan. The Incentive Plan which
is effective for 1997 is similar to the annual management incentive compensation
plan described above but it was specifically designed to assure compensation
paid pursuant to the Incentive Plan is deemed to be qualified performance based
compensation as defined in Section 162(m) of the Internal Revenue Code (See
discussion below entitled Deductibility of Compensation). The Incentive Plan
sets forth the business criteria on which incentive compensation can be granted
according to pre-established objective, numerical formulae and the process by
which goals are established and compensation is awarded. Up to 90% of base
salary can be paid as incentive compensation to the participants who are
officers and division presidents and other key management employees as selected
by the Committee to participate. The current management incentive compensation
plan continues in effect for key management employees who are not participants
in the Incentive Plan. The Committee is of the opinion that not all incentive
compensation can be objectively measured even though it is based upon strategic
performance goals and that some judgemental discretion is warranted in
administering compensation plans. For that reason, upon the Committee's
recommendation, the Board of Directors established a separate plan entitled the
1997 Senior Management Discretionary Bonus Plan that authorizes the grant of a
completely discretionary bonus if the Committee and the Board deem special
circumstances warrant. No more than 30% of base salary can be awarded pursuant
to this bonus plan and such award would not qualify as performance based
compensation under Code Section 162(m).
STOCK OPTIONS, PERFORMANCE SHARES, AND RESTRICTED STOCK
The Corporation maintains the Amended and Restated 1992 Stock Plan through
which key management employees have received grants of stock options and may
receive in the future additional stock options and grants of restricted stock or
performance shares. Although no additional grants may be made under the
Corporation's 1984 Stock Option Plan, some stock options previously granted are
outstanding under that Plan.
At the May 14, 1996 annual meeting of shareholders, a proposal to amend and
restate the 1992 plan as the Amended and Restated 1992 Stock Plan was approved.
The amendments (i) authorized the grant of "restricted stock" and "performance
shares" in a total aggregate amount not to exceed 200,000 shares and (ii) added
a provision that no individual grantee may receive grants of restricted stock,
performance shares, or options to purchase shares exceeding in the aggregate
more than 200,000 shares under the plan. The addition of the limitation on the
number of shares that could be awarded or granted to any one individual was to
conform to a requirement of Code Section 162(m) so as to assure that any
"compensation" realized was tax deductible.
It is the belief of the Committee that, since executives earn no rewards
through 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 interests of the Corporation's executives with those of
shareholders. The plan permits the granting of both incentive stock
10
<PAGE>
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. Nonqualified
stock options granted by the Committee 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, if any, 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 for the fiscal year indicated. The Committee believes
this form of compensation is in accordance with the Compensation Policy of the
Committee because it enables the executives to retain shares that otherwise may
be sold to meet tax obligations.
The Plan authorizes the Committee (i) to award restricted stock which shall
contain conditions by which rights to the stock issued to the grantee are
forfeited and (ii) to grant performance shares which shall confer upon the
grantee the right to receive a specified number of shares contingent upon the
achievement of specified corporate or individual performance objectives. The
Committee recommended amending the plan to authorize the grant of up to 200,000
in total of shares of restricted stock or performance shares as such capability
would give it greater flexibility in structuring a stock-based long term
incentive program to meet the purposes of the plan for different levels of key
management employees. No grant of restricted stock or performance shares have
been made to the Chief Executive Officer or the Named Executive Officers.
The Compensation Committee currently operates under the general objective
that grants to executives of stock options or restricted or performance shares
should be considered on a regular basis. Recently, the Committee has granted
options approximately every two years but annual grants will be considered in
the future. Grants are recommended to the Committee by the Chief Executive
Officer. The Corporation's consultant provides advice as to equity ownership of
and the size of grants to the named executive officers of public companies
within the textile industry including members of the Corporation's Peer Group.
DEDUCTIBILITY OF COMPENSATION
As part of the Omnibus Budget Reconciliation Act passed by Congress in
1993, the Internal Revenue Code of 1986 was amended to add Section 162(m), which
limits the deductibility for federal income tax purposes of compensation paid to
the Chief Executive Officer and the next four most highly compensated executive
officers of the Company. Under Section 162(m), compensation paid to each of
these officers in excess of $1 million per year is not deductible unless it is
"performance based." The Committee did not consider the deductibility limits in
making its compensation decisions for any one of the Named Executive Officers
for 1995 or 1996 fiscal years as the deductibility limits would not be exceeded
under any circumstances. However, the Committee's policy is to design and
administer compensation programs that meet the objectives set forth above and
that 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. The adoption of
the 1997 Senior Management Incentive Compensation Plan and the amendments to the
1992 Stock Option Plan described above were recommended as part of such policy.
<TABLE>
<S> <C>
COMPENSATION COMMITTEE
Charles M. Reid, Chair
Jeanette C. Kimmel
John W. Rosenblum
</TABLE>
11
<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
27, 1996, 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
(Performance Graph appears here, plot points are below)
6/18/92 12/31/92 12/31/93 12/31/94 12/31/95 12/27/96
Cone Mills $100 $143 $169 $119 $113 $83
S&P 500 $100 $111 $122 $124 $170 $214
Peer Group $100 $102 $104 $92 $91 $94
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Doris R. Bray, a Class III director, is a partner of Schell Bray Aycock
Abel & Livingston P.L.L.C., 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 $190,358 in 1996.
SELECTION OF AUDITORS
The Corporation's Board of Directors has appointed McGladrey & Pullen, LLP,
independent certified public accountants, as auditors of the Corporation's
records for the fiscal year 1997. McGladrey & Pullen, LLP, 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, LLP, 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
and FOR ratifying the Board of Directors' appointment of McGladrey & Pullen,
LLP, as independent auditors for the year ending December 28, 1997.
SHAREHOLDER PROPOSALS
In the event any shareholder wishes to present a proposal at the 1998
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 1, 1997, 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
VICE PRESIDENT AND SECRETARY
13
<PAGE>
*****************************************************************************
Appendix
*****************************************************************************
CONE MILLS CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1997
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 13, 1997,
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 AS MARKED TO THE ALL NOMINEES LISTED BELOW
CONTRARY BELOW)
</TABLE>
J. PATRICK DANAHY, JEANETTE C. KIMMEL, AND JOHN W. ROSENBLUM
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW).
2. TO RATIFY APPOINTMENT OF MCGLADREY & PULLEN, LLP AS INDEPENDENT AUDITORS.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
3. 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: , 1997
