<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(x) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
(x) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-b(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
ALBA-WALDENSIAN, INC.
(Name of Registrant as Specified In Its Charter)
ALBA-WALDENSIAN, INC.
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
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(i)(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:
5) Total fee paid:
(Set forth the amount on which the filing fee is calculated and state how
it was determined)
( ) Fee previously paid 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>
ALBA-WALDENSIAN, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Alba-Waldensian, Inc. (the Company) will be held at the office of the Company,
201 St. Germain Avenue, S.W., Valdese, North Carolina 28690, on Wednesday, May
17, 1995, at 9:00 a.m., Local Time, for the purpose of considering and acting
upon the following:
1. The election of three Directors for a term of three years pursuant to
the Certificate of Incorporation and the Bylaws of the Company.
2. Any and all other matters that may properly come before the meeting or
any adjournment thereof.
Only stockholders of record at the close of business on April 7, 1995, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
If you do not expect to be present at the meeting, please date and sign the
accompanying proxy and return it promptly in the enclosed envelope. The proxy
may be revoked at any time before it is exercised and will not be exercised if
you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS.
THOMAS F. SCHUSTER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Valdese, North Carolina
April 24, 1995
<PAGE>
ALBA-WALDENSIAN, INC.
Post Office Box 100
201 St. Germain Avenue, S.W.
Valdese, North Carolina 28690
PROXY STATEMENT FOR 1995 ANNUAL MEETING
OF STOCKHOLDERS
GENERAL INFORMATION
The accompanying proxy is being solicited on behalf of the Board of
Directors of Alba-Waldensian, Inc., a Delaware corporation (the Company), for
use at the Annual Meeting of Stockholders to be held at the office of the
Company, 201 St. Germain Avenue, S.W., Valdese, North Carolina 28690, on
Wednesday, May 17, 1995, at 9:00 a.m., Local Time, and at any adjournment
thereof.
Solicitation other than by mail may be made personally and by telephone by
regularly employed officers and employees of the Company who will not be
additionally compensated therefor. In addition, arrangements will be made with
brokerage houses, banks, voting trustees and their nominees to send proxy
material to any beneficial owner of shares of the Company's Common Stock held of
record by them. This proxy material will be first mailed on or about April 24,
1995. The Company has engaged its Transfer Agent, First Union National Bank
(First Union) to deliver proxy materials and solicit proxies. First Union will
be reimbursed for its printing costs, postage and freight charges and other
expenses and will be paid a reasonable fee for its services. All expenses in
connection with the solicitation will be borne by the Company.
Each proxy submitted will be voted as directed. If no direction is given,
the proxy will be voted for the action proposed. The only matters to be
considered at the meeting, so far as known to the Board of Directors, are the
matters set forth in the Notice of Annual Meeting of Stockholders and routine
matters incidental to the conduct of the meeting. If any other matters do
properly come before the meeting, however, the persons named as attorneys and
proxies will vote on such matters in accordance with their best judgment. Each
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by filing an instrument revoking it, by filing a duly executed proxy
bearing a later date with the Secretary of the Company or by attending the
meeting and voting in person.
VOTING SECURITIES, PRINCIPAL STOCKHOLDERS
AND HOLDINGS OF MANAGEMENT
The record date for determination of stockholders entitled to notice of and
to vote at the meeting is the close of business on April 7, 1995. On such date,
1,864,403 shares of the Company's Common Stock, par value $2.50 per share (the
Common Stock), were issued and outstanding. Each share of Common Stock is
entitled to one vote on each matter to be voted on at the meeting. Voting on the
election of Directors at the meeting shall be by ballot. Voting on all other
matters shall be by voice vote or by show of hands.
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The following table sets forth certain information regarding each person
known to the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
<S> <C> <C>
Sunstates Corporation 950,700(1) 50.9%
Clyde Wm. Engle
3500 West Peterson Avenue
Chicago, IL 60659
The Killen Group, Inc. 238,000(2) 12.8%
1189 Lancaster Ave.
Berwyn, PA 19312
Dimensional Fund Advisors, Inc. 96,500(3) 5.2%
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
</TABLE>
(1) According to information provided to the Company, Sunstates Corporation
(formerly Acton Corporation) owns these shares both directly through
wholly-owned subsidiaries and indirectly through majority-owned
subsidiaries. Wellco Enterprises, Inc., a 58.6% owned subsidiary of
Sunstates, owns 400,000 shares of the Company's Common Stock.
Alba-Waldensian Holding Company, a wholly-owned subsidiary of Coronet
Insurance Company, owns 548,700 shares of the Company's Common Stock.
Coronet Insurance Company is a wholly-owned subsidiary of Normandy Insurance
Agency, Inc., which is a wholly-owned subsidiary of Sunstates Corporation.
Mr. Engle, a Director and Chairman of the Board of the Company, is a
Director of Alba-Waldensian Holding Company, Coronet Insurance Company and
Normandy Insurance Agency, Inc. and is Chairman, Chief Executive Officer and
a Director of Sunstates Corporation. Wisconsin Real Estate Investment Trust
is a subsidiary of Hickory Furniture Company, and Mr. Engle is Chief
Executive Officer and a director of Hickory Furniture Company. Mr. Engle is
also Chairman of the Board and Chief Executive Officer of Telco Corporation
and is Chairman and Treasurer of RDIS Corporation. Mr. Engle and all of such
corporations have sole voting and dispositive power with respect to all
948,700 shares of Common Stock. 548,700 of such shares have been pledged a
security for a loan made by LaSalle National Bank, 120 South LaSalle St.,
Chicago, Illinois to certain subsidiaries of Sunstates Corporation.
Additionally, Sunstates Corporation has pledged its shares of Wellco
Enterprises Common Stock as security for such loan. Also includes 2,000
shares subject to options held by Mr. Engle that are presently exercisable
or exercisable within 60 days.
(2) According to information contained in an amendment to Schedule 13G dated
January 31, 1995, The Killen Group, Inc. beneficially owns 237,000 shares of
Common Stock as of December 31, 1993 and has sole power to dispose of the
shares. The Killen Group, Inc. is a registered investment adviser. Robert E.
Killen, president and sole shareholder of The Killen Group, Inc., is the
beneficial owner of 1,000 shares of Common Stock and has sole power to vote
and dispose of such shares.
(3) According to information contained in an amendment to Schedule 13G dated
January 30, 1995, Dimensional Fund Advisors Inc. (DFA) is deemed to have
beneficial ownership of 96,500 shares of Common Stock as of December 31,
1994, all of which shares are owned by advisory clients of DFA, no one of
which, to the knowledge of DFA, owns more than 5% of the Common Stock. DFA
has sole voting power with respect to 68,000 shares of Common Stock. Certain
officers of DFA also serve as officers of DFA Investment Dimensions Group
Inc. (the Fund) and The Investment Trust Company (the Trust), each an open-
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end investment company, and as such officers have sole voting power with
respect to 21,000 shares of Common Stock owned by the Fund and 7,500 shares
of Common Stock owned by the Trust.
The following table sets forth, as of March 31, 1995, certain information
with respect to the beneficial ownership of the Common Stock by all Directors,
nominees for Director and Executive Officers of the Company as a group and
certain named Executive Officers. The named Executive Officers listed below are
the Company's three executive officers, other than the Chief Executive Officer,
whose total annual salary and bonus for the fiscal year ended December 31, 1994
exceeded $100,000. Information with respect to the beneficial ownership of the
Common Stock by the Chief Executive Officer, each of the Directors and the
nominees is contained in the table under "Information About Directors and
Nominees for Director."
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
<S> <C> <C>
Donald R. Denne 7,375(2) *
Robert F. Fumento 6,375(3) *
Charles D. Poteat 1,750(4) *
All Directors, nominees 1,008,613(5) 52.7 %
and Executive Officers
as a group (15 persons)
</TABLE>
* Less than 1%.
(1) Except as indicated in the table under the heading "Voting Securities,
Principal Stockholders and Holdings of Management" above, each Director,
nominee and named Executive Officer possesses the sole power to vote and
dispose of the shares beneficially owned by him.
(2) Includes 6,875 shares subject to options that are presently exercisable or
exercisable within 60 days.
(3) Includes 4,875 shares subject to options that are presently exercisable or
exercisable within 60 days.
(4) Includes 1,250 shares subject to options that are presently exercisable or
exercisable within 60 days.
(5) Includes 48,063 shares subject to options that are presently exercisable or
exercisable within 60 days.
INFORMATION ABOUT DIRECTORS AND NOMINEES FOR DIRECTOR
The Company's Bylaws provide that the number of Directors shall be not less
than five nor more than 15, the exact number to be determined from time to time
by resolution of the Board of Directors. By resolution adopted February 15,
1995, the Board set the number of Directors at nine. The Bylaws also provide for
three classes of Directors having staggered terms of office, with each Director
serving a three year term expiring upon the election and qualification of his
successor.
Three Directors, Messrs. Clyde Wm. Engle, Joseph C. Minio and Thomas F.
Schuster, are currently serving terms that expire at the 1995 annual meeting.
Mr. Engle was first elected in 1980, Mr. Minio in 1983 and Mr. Schuster in 1992,
at the respective Annual Meeting of Stockholders. The six Directors whose terms
expire in 1996 and 1997 were elected by the Company's stockholders at prior
annual meetings to serve until the annual meeting to be held in the year set
forth in the table below and until their successors are elected and qualified.
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On February 15, 1995, the Directors nominated Messrs. Engle, Minio and
Schuster to serve new three year terms. The accompanying proxy will be voted FOR
the election of these three nominees unless authority to do so is withheld.
Directors shall be elected by a plurality of the votes cast by the holders
of the shares present in person or represented by proxy at a meeting at which a
quorum is present and which are entitled to vote on the election of directors.
Abstentions and shares not voted are not taken into account in determining a
plurality in the election of directors. Although the Board of Directors does not
expect that any of the nominees will be unavailable for election, if a vacancy
in the slate of nominees unexpectedly occurs, proxies will be voted in favor of
those nominees who remain as candidates and may be voted for a substitute
nominee designated by the Board of Directors.
The table below sets forth certain information about the three nominees for
Director and the remaining Directors whose terms continue beyond the 1995 Annual
Meeting of Stockholders, including information about their beneficial ownership
of Common Stock as of April 7, 1995. A description of each person's business
activities during the past five years, including his position, if any, with the
Company, and other pertinent information follow the table.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
YEAR FIRST OF COMMON STOCK (1)
NOMINEES FOR BECAME NO. OF % OF
TERM EXPIRING 1998 AGE DIRECTOR SHARES CLASS
<S> <C> <C> <C> <C>
Clyde Wm. Engle 52 1980 950,700(2)(3) 50.9 %
Joseph C. Minio 52 1983 2,000(2) *
Thomas F. Schuster 53 1992 17,000(4) *
<CAPTION>
DIRECTORS WITH
TERM EXPIRING 1996
<S> <C> <C> <C> <C>
James M. Fawcett, Jr. 58 1992 2,000(2) *
C. Alan Forbes 61 1974 2,050(2) *
Lee N. Mortenson 59 1984 6,200(2) *
<CAPTION>
DIRECTORS WITH
TERM EXPIRING 1997
<S> <C> <C> <C> <C>
Paul H. Albritton, Jr. 51 1991 2,600(2) *
Glenn J. Kennedy 43 1991 2,000(2) *
William M. Cousins, Jr. 70 1991 2,000(2) *
</TABLE>
* Less than 1% of the outstanding shares of Common Stock of the Company.
(1) Except as otherwise noted, each Director or nominee possesses the sole power
to vote and dispose of the shares beneficially owned by him.
(2) Includes 2,000 shares subject to options that were granted on December 10,
1992 to each non-employee Director under the Company's 1992 Nonqualified
Stock Option Plan for Non-Employee Directors.
(3) See Note 1 in the table under the heading "Voting Securities, Principal
Stockholders and Holdings of Management" above.
(4) Includes 15,000 shares subject to options that are presently exercisable or
exercisable within 60 days and 500 shares owned by Mr. Schuster's wife.
4
<PAGE>
Mr. Albritton is a Vice President and Chief Financial Officer (since May
1994) of Target Technologies, Inc., a publicly traded company engaged in
electronic communications manufacturing. From September 1992 to May 1994, Mr.
Albritton, an attorney and certified public accountant, was a self-employed
financial consultant and private investor. Mr. Albritton was a Director and
Executive Vice President (May 1988 to August 1992) and chief operating officer
(May 1988 to December 1990) of Acton Corporation (now Sunstates Corporation), a
publicly traded company primarily engaged in specialized automobile insurance
underwriting, real estate development and manufacturing.
Mr. Cousins has been President of William M. Cousins Jr., Inc., a
management consulting firm, since 1974. Mr. Cousins received his MBA from
Harvard University. Mr. Cousins is also a Director of Wellco Enterprises, Inc.
and BioSerpa, Inc.
Mr. Engle has served as Chairman of the Board of the Company since May
1991. He also holds positions with various businesses headquartered in Chicago,
Illinois, including RDIS Corporation (formerly Libco Corporation) (Chairman of
the Board and President), which is the sole shareholder of Telco Capital
Corporation; Telco Capital Corporation, which is principally engaged in the
manufacturing, insurance underwriting and real estate businesses (Chairman of
the Board and Chief Executive Officer); GSC Enterprises, Inc., a one bank
holding company (Chairman of the Board, President and Chief Executive Officer);
Bank of Lincolnwood (Chairman of the Board); and Sierra Associates, which is a
general partner of an investment limited partnership (General Partner). Mr.
Engle is also a Director of various other businesses, including Hickory
Furniture Company; NRG, Incorporated, an equipment leasing company; Wellco
Enterprises, Inc., a manufacturer and seller of shoe making equipment and
footwear; Wisconsin Real Estate Investment Trust (Chairman of the Board); Rocky
Mountain Chocolate Factory, Inc., a manufacturer and retailer of confectionery;
Indiana Financial Investors, Inc., a real estate mortgage company (Chairman of
the Board since 1991); and Sunstates Corporation (Chairman of the Board and
Chief Executive Officer). Sunstates Corporation, a Delaware corporation, is a
publicly traded company primarily engaged in specialized automobile insurance
underwriting, real estate development and manufacturing.
Mr. Fawcett has been a Registered Representative and Agent for the
Equitable Financial Companies since 1990. He served as President and Owner of
The Fawcett Group, a financial consulting and investment banking firm, from 1973
to 1990. Mr. Fawcett also serves as a Director of Wellco Enterprises, Inc.
Mr. Forbes is a management consultant in Charlotte, North Carolina and is
President of C.A. Forbes & Assoc., Inc. From 1985 through 1988 he was President
of Delta Square, Inc., of Atlanta, Georgia, which is a manufacturer of
electronic productivity measuring systems.
Mr. Kennedy is a Vice President (since July 1988) and Treasurer and Chief
Financial Officer (since May 1988) of Sunstates Corporation (formerly Acton
Corporation), a publicly traded company primarily engaged in specialized
automobile insurance underwriting, real estate development and manufacturing,
and he was formerly Chief Financial Officer and Treasurer of Sunstates
Corporation, a publicly traded company primarily engaged in specialized
automobile insurance underwriting and real estate development, which was merged
into Acton Corporation in May of 1988.
Mr. Minio has been President, Chief Executive Officer and Director of Belle
Haven Management Ltd. in Greenwich, Connecticut since 1986. Belle Haven
Management Ltd. is engaged in the business of acquiring controlling positions in
small and medium-sized under-performing companies, and provides top level
general management services, including strategic planning, restructuring,
financing and acquisition search, analysis
5
<PAGE>
and negotiation. He has also served as President and Chief Executive Officer of
Intelligent Business Communications Corporation. Intelligent Business
Communications was engaged in the design, development, manufacture, and
marketing of advanced state of the art satellite data control equipment as well
as vertical circuit switches and T-1 multiplexers for both data and voice
communications. From 1981 until 1986, Mr. Minio was President, Chief Executive
Officer and a Director of Publicker Industries, Inc. of Greenwich, Connecticut,
which was a manufacturer of alcohol and related products. Mr. Minio also serves
as a Director of Wellco Enterprises, Inc.
Mr. Mortenson has been President, Chief Operating Officer and a Director of
Telco Capital Corporation of Chicago, Illinois since January, 1984. Telco
Capital Corporation is principally engaged in the manufacturing, insurance
underwriting and real estate businesses. He was President, Chief Executive
Officer and a Director of Sunstates Corporation (formerly Acton Corporation) to
December, 1990 and he has been President, Chief Operating Officer and a Director
of Sunstates Corporation (formerly Acton Corporation) since December, 1990.
Sunstates Corporation, a Delaware corporation, is a publicly traded company
primarily engaged in specialized automobile insurance underwriting, real estate
development and manufacturing. Mr. Mortenson also serves as a Director of Rocky
Mountain Chocolate Factory, Inc. and Wellco Enterprises, Inc.
Mr. Schuster served as Executive Vice President and Chief Operating Officer
of the Company from February 1992 until he was appointed President and Chief
Executive Officer of the Company on June 30, 1992. From 1989 until joining the
Company, Mr. Schuster managed his own consulting practice, serving clients in
the manufacturing and retailing industries. From 1987 to 1989, he was President
and Chief Executive Officer of Coats Viyella, the multi-divisional US subsidiary
of an English conglomerate which manufactured knitwear, neckwear and Viyella
shirts. Prior to 1987, Mr. Schuster served as President and Chief Executive
Officer of Great American Knitting Mills, manufacturer of Gold Toe and Arrow
hosiery. After receiving his MBA from Harvard University in 1972, Mr. Schuster
served in progressively more responsible marketing positions.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Executive Committee is currently comprised of Messrs. Albritton, Engle,
Forbes and Mortenson. The Executive Committee is available to counsel with the
Chief Executive Officer of the Company and assists in developing policies,
evaluating major proposals and formulating resolutions to present to the Board
of Directors. The Executive Committee did not meet during 1994.
The Audit Committee is currently comprised of Messrs. Albritton, Cousins,
Fawcett and Kennedy. Mr. Kennedy serves as Chairman. The principal duties of the
Audit Committee are to review with the independent auditors (i) the purpose and
scope of services to be performed by them, (ii) the financial statements and
related opinions of the auditors, (iii) the observations and recommendations of
the auditors relating to accounting principles or practices, internal controls,
financial reporting and operations and (iv) other pertinent matters necessary to
assist the Board of Directors in fulfilling its responsibilities for public
financial reporting. In addition, the Audit Committee communicates with members
of the Company's management staff with respect to auditing matters and
recommends to the Board of Directors nomination of an independent auditing firm
for the Company. The Audit Committee met twice during 1994.
The Stock Option and Executive Compensation Committee is currently
comprised of Messrs. Fawcett, Forbes, Minio and Mortenson. Mr. Mortenson serves
as Chairman. The principal duties of the Stock Option and Executive Compensation
Committee are to review and recommend changes with respect to the Company's
stock option plans, to recommend options to be granted under the plans, to
review salaries and other compensation paid to management of the Company and to
assist the Chief Executive Officer with respect to
6
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the Company's executive compensation policies. The Stock Option and Executive
Compensation Committee met three times during 1994.
The Company does not have a nominating committee.
The Board of Directors met five times during 1993. All Directors attended
at least 75% of the meetings of the Board and all committees of which they were
a member.
COMPENSATION OF DIRECTORS
Directors who are not otherwise employed by the Company receive an annual
retainer of $1,000 (or $1,700 for each committee member) and $1,000 for each
regular meeting of the Board attended ($500 for each telephonic Board meeting).
Directors who serve on the Audit Committee, the Executive Committee or the Stock
Option and Executive Compensation Committee receive an additional $500 for each
Committee meeting attended (or $250 for each telephone Committee meeting).
STOCK OPTION AND EXECUTIVE COMPENSATION COMMITTEE REPORT
The Stock Option and Executive Compensation Committee of the Board of
Directors of the Company (the Committee) provides overall guidance with respect
to the Company's executive compensation programs. The Committee is composed of
four members (all outside directors) and it meets at least once a year to review
the Company's compensation programs, including executive salary administration,
stock and incentive compensation plans. The Committee considers and makes final
decisions regarding the compensation of the Chief Executive Officer and the
other executive officers of the Company. Neither the Chief Executive Officer nor
any other named Executive Officer participates in those discussions or in the
making of such decisions.
GENERAL EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation policies are designed to attract and
retain top quality executive officers and to reward executive officers for
performance measured by review of financial performance criteria and achievement
of strategic corporate objectives.
The Company awards its executive officers three principal types of
compensation: base salary, annual incentive compensation and stock options, each
of which is more fully described below. In addition, executive officers
participate in the Company's various other employee benefit plans, including the
Company's Employee Savings and Profit Sharing Plan.
1. BASE SALARY. The Company has historically established the base salary of
its executive officers on the basis of each executive officer's experience,
scope of responsibility and accountability within the Company and salary and
benefits at comparable public companies.
To correlate the compensation of the executive officers to individual and
corporate performance and increases in shareholder value, the Company also
relies on performance-related annual incentive awards and long-term
incentive/stock option awards in addition to base salary.
2. ANNUAL INCENTIVE COMPENSATION. To incentivize the compensation of
executive officers, a component of an executive officer's total compensation
arrangement derives from participation in the Company's 1989 Management
Incentive Plan (the MI Plan). MI Plan participants are divided into three groups
based upon job level as determined by the Company's salary administration plan.
Each group can earn a designated percentage of annual salary based upon two out
of three criteria: actual performance against established personal objectives
7
<PAGE>
(MBOs), Company profit performance against the established budget, and/or
divisional profit performance against the established budget. Under the MI Plan,
Messrs. Denne, Fumento and Poteat may be awarded up to 35%, 36% and 32%,
respectively, of their base salary in bonuses.
One-half of each named Executive Officer's bonus for 1994 was tied to the
achievement of established financial and budget objectives. These budget
objectives are approved annually by the Board of Directors. The ability of the
named Executive Officer to receive an award of the full amount for a particular
year depends on whether or not the established objective, which may be
subjectively adjusted by the Committee for unusual circumstances, is met.
Falling below 85% of the budget objective results in no bonus award with respect
to the budget objective component of the bonus. The other half of each named
Executive Officer's bonus depends on his achievement of MBOs and other strategic
goals of the Company which were determined and approved for the fiscal year
ended December 31, 1994 by the Committee.
3. LONG-TERM INCENTIVE/STOCK OPTION COMPENSATION. The Committee believes
that stock ownership is another way to align the interests of the executive
officers with those of the Company's shareholders. To that end, the Committee
may award executive officers with stock options under the Company's 1993 Long
Term Performance Plan (the 1993 Plan). During the fiscal year ended December 31,
1994, the Board of Directors granted a stock option to two of the named
Executive Officers under the 1993 Plan with respect to a total of 5,000 shares
of Common Stock. An option to purchase 2,500 shares was granted to Mr. Denne to
replace an option exercised during the fiscal year, and an option for 2,500
shares was granted to Mr. Poteat to bring the number of options held by Mr.
Poteat to the level of the other vice presidents. No stock options were granted
to the Chief Executive Officer during the fiscal year ended December 31, 1994.
Under the Company's 1991 Management Bonus Plan, a bonus will be paid to
holders of options granted to executive officers in the event that on the date
the option expires, the book value of the stock has increased during the
option's term more rapidly than the market value of the stock. In such event,
the optionee is paid a bonus equal to the amount by which the growth in the book
value per share exceeds the growth in the market price of the Company's Common
Stock. If the stock price exceeds the growth in book value per share, no bonuses
under the 1991 Management Bonus Plan shall be paid.
The Committee generally awards stock options to an executive officer based
on his position with the Company. Currently, no named Executive Officer is
eligible to receive an option for additional shares of Common Stock unless and
until an option expires or is exercised; however, the Committee may in its
discretion grant an option for additional shares in the absence of such exercise
or expiration. The Committee believes that stock options give the executive
officer a proprietary interest in the Company and allow executive officers to
realize upon increases in shareholder value over time.
Effective January 1, 1994, (section mark) 162(m) of the Internal Revenue
Code of 1986 provides that certain compensation to certain executive officers in
excess of $1 million will not be deductible for federal income tax purposes. The
current compensation levels of the Company's executive officers are well below
the $1 million level. In the event that the Company's compensation levels
approach the $1 million compensation deduction cap, the Committee will study the
provision further and take such action as they deem appropriate.
1994 COMPENSATION FOR MR. SCHUSTER
The general policies described above for the compensation of executive
officers also apply to Mr. Schuster as the Company's Chief Executive Officer.
Mr. Schuster's annual incentive compensation, however, is earned on the basis of
a slightly different formula. Mr. Schuster may be awarded up to a maximum of 25%
of his base salary in bonus depending upon his achievement of MBOs. In addition,
Mr. Schuster may be
8
<PAGE>
awarded a bonus equal to 33% of 25% of his base salary in the event the Company
achieves 85% of the preestablished financial and budget objectives. For every
percentage point by which the Company exceeds 85% of the established financial
and budget objectives, which may be subjectively adjusted by the Committee for
unusual circumstances, the percentage of the applicable portion of his base
salary subject to the bonus may be increased by 2.23 percentage points. In
determining Mr. Schuster's base salary, the Committee took into account
comparable salary and benefits at other publicly traded companies in the textile
industry as well as the performance of the Company in 1994. Based on the formula
described above, Mr. Schuster's total incentive compensation in 1994 was equal
to $71,000. Mr. Schuster's annual salary was increased from $170,000 to $180,000
for the fiscal year beginning January 1, 1994 as a result of Mr. Schuster's and
the Company's performance in 1993.
The Stock Option and Executive Compensation Committee Report is presented
by the members of the Committee at December 31, 1994:
<TABLE>
<S> <C>
James M. Fawcett, Jr. Joseph C. Minio
C. Alan Forbes Lee N. Mortenson, Chairman
</TABLE>
9
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock (AWS)
against the cumulative total return of the S&P 500 Composite Index and the
Company's Peer Group for the period covering the Company's five fiscal years
ended December 31, 1990, 1991, 1992, 1993 and 1994. The Peer Group consists of
the following publicly-held companies in the textile industry: Hartmarx Corp.,
Hampshire Group Ltd., Danskin Inc., Nantucket Industries, Inc., Warnaco Group
Inc. Class A Common Stock, Fruit of the Loom Inc. Class A Common Stock, Sara Lee
Corp., Tecnol Medical Products, Inc. and Munsingwear, Inc. Two companies,
Crystal Brands, Inc. and Kendall International, Inc., have been eliminated from
the Company's Peer Group. Crystal Brands, Inc. and Kendall International, Inc.
were acquired by other entities in 1994 and are no longer primarily engaged in
the textile industry. The Company has added Tecnol Medical Products, Inc., a
health product manufacturing company, to its Peer Group as a replacement.
(Performance Graph appears here plot points are as followed)
Index Description 1989 1990 1991 1992 1993 1994
AWS $100.00 $122.64 $92.45 $118.57 $156.60 $167.93
S&P 500 100.00 96.83 126.38 136.22 149.82 151.81
Peer Group 100.00 91.51 176.59 205.05 160.75 168.01
Assumes $100 invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year in AWS Common Stock,
the S&P 500 and the Peer Group.
Source: Frank Russell Company
* Cumulative total return assumes reinvestment of dividends.
10
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The table below shows the compensation paid or accrued by the Company for
the three fiscal years ended December 31, 1994, 1993 and 1992, to or for the
account of each of the Chief Executive Officer and the Company's three other
executive officers whose total annual salary and bonus for 1994 exceeded
$100,000 (collectively, the named Executive Officers).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION
OTHER ANNUAL STOCK OPTION LTIP ALL OTHER
NAME AND FISCAL COMPENSATION AWARDS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (#SH) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Schuster 1994 180,000 71,000 (2) -- 0 2,392(3)
President and Chief 1993 170,004 57,682 (2) -- 0 3,175(3)
Executive Officer (1) 1992 138,083 85,452 35,500(4) 25,000 0 1,765(3)
Donald R. Denne 1994 118,500 35,000 (2) 2,500 0 2,339(3)
Senior Vice President 1993 112,008 26,903 (2) -- 3,145(5) 1,404(3)
of Company and 1992 106,008 32,465 (2) 5,000 0 2,686(3)
President of Health
Products Division
Robert F. Fumento (6) 1994 130,008 24,000 (2) -- 0 2,329(3)
Vice President and 1993 122,085 15,157 34,688(7) 5,500 0 1,958(3)
President of the 1992 42,600 24,000 (2) 7,000 0 0
Consumer Products
Division
Charles D. Poteat (8) 1994 101,004 9,000 (2) 2,500 0 0
Vice President of 1993 51,460 10,000 16,395(9) 10,000 0 0
Operations
</TABLE>
(1) Mr. Schuster was not an officer or employee of the Company prior to February
1992.
(2) Neither the Chief Executive Officer nor any named Executive Officer has
received personal benefits during such years in excess of 10% of his annual
salary and bonus.
(3) Represents matching contributions by the Company under its Employee Savings
and Profit Sharing Plan.
(4) Includes a $30,000 moving allowance paid to or on behalf of Mr. Schuster.
(5) These Long Term Incentive Plan payouts were made to Mr. Denne pursuant to
the Company's 1991 Management Bonus Plan in connection with the expiration
of stock options. See Note 2 to the Option Grants Table below.
(6) Mr. Fumento was not an officer or employee of the Company prior to August
1992.
(7) Includes a $25,000 moving allowance paid to or on behalf of Mr. Fumento.
(8) Mr. Poteat was not an officer or employee of the Company prior to June 1993.
(9) Includes a $14,950 moving allowance paid to or on behalf of Mr. Poteat.
11
<PAGE>
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
In October of 1990, the Board of Directors approved certain termination of
employment and change of control arrangements with respect to the named
executive officers of the Company. In the event an individual's employment is
involuntarily terminated, without cause, such individual shall be entitled to
100% of his base pay for the period following such termination indicated in the
table below (the Guarantee Period). Following the expiration of the Guarantee
Period, the individual shall be entitled to the indicated percentage of his base
pay for the indicated period, contingent upon the individual actively seeking
other employment (the Contingent Payments). Subject to the above restrictions
and limitations, such individual's medical insurance also shall be continued. No
other fringe benefits shall be continued. The Contingent Payments shall cease
immediately upon the individual no longer actively seeking employment or the
individual becoming employed.
<TABLE>
<CAPTION>
TERM CONTINGENT AMOUNTS
NAME OF INDIVIDUAL GUARANTEED @ 100% @ 80% @ 60%
<S> <C> <C> <C> <C>
Thomas F. Schuster....12 months 12 mos. -- --
Donald R. Denne....... 6 months 3 mos. 3 mos. --
Robert F. Fumento..... 9 months 9 mos. -- --
</TABLE>
In the event of a takeover of the Company by any person other than Clyde
Wm. Engle or one controlled by Mr. Engle, the following severance arrangements
(subject to the same restrictions and limitations recited above) will be
effective if the employee is involuntarily terminated within two years following
such takeover, or if such individual's base pay is reduced by more than twenty
percent within such two year period:
<TABLE>
<CAPTION>
TERM CONTINGENT AMOUNTS
NAME OF INDIVIDUAL GUARANTEED @ 100% @ 80% @ 60%
<S> <C> <C> <C> <C>
Thomas F. Schuster........ 12 months 12 mos. -- --
Donald R. Denne........... 6 months 3 mos. 3 mos. --
</TABLE>
The table below shows the individual grants of stock options to the named
Executive Officers during the fiscal year ended December 31, 1994. No stock
appreciation rights (SARs) were granted during the year.
OPTION GRANTS IN 1994 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZED
VALUE AT ASSUMED
INDIVIDUAL RATES OF STOCK
GRANTS PRICE
% OF TOTAL OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EMPLOYEES EXERCISE OR EXPIRATION OPTION TERM*
NAME GRANTED (SHS) IN FISCAL YEAR BASE PRICE ($/SH) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Thomas F. Schuster 0 0 -- -- -- --
Donald R. Denne 2,500(1) 5% $10.625 12/15/99 $7,339 $16,217
Robert F. Fumento 0 0 -- -- -- --
Charles D. Poteat 2,500(1) 5% $10.625 12/15/99 $7,339 $16,217
</TABLE>
(1) Qualified stock option granted by the Board of Directors under the 1993 Long
Term Performance Plan. The option becomes exercisable as to one-fourth of
the shares each year beginning one year after the date of grant. The option
price equals the average of the high and low price of the Common Stock on
the American Stock Exchange on the date of grant. Special provisions govern
the exercise of the option in the event of termination of employment,
retirement, disability or death. In connection with the grant of stock
options, under the Company's 1991 Management Bonus Plan, each named
Executive Officer is entitled to
12
<PAGE>
a payment in the event the stock option expires unexercised. If the market
price of the Common Stock on the expiration date (as determined by the
closing price of the Common Stock on the American Stock Exchange on such
date) is less than the exercise price, the optionee is paid an amount equal
to the increase, if any, in the book value per share of Common Stock over
the term of the option.
* These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions.
The table below shows, on an aggregated basis, each exercise of stock
options during the fiscal year ended December 31, 1994 by each of the named
Executive Officers and the 1994 fiscal year-end value of unexercised options. No
SARs were granted or exercised during the year and no SARs are currently
outstanding.
AGGREGATED OPTION EXERCISES IN THE 1994 FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FY-END (#SH) AT FY-END ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#SH) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Thomas F. Schuster 0 0 15,000/10,000 $44,688/$53,437
Donald R. Denne 2,000 $ 7,800.00 6,875/ 5,625 $28,984/$12,266
Robert F. Fumento 0 0 4,875/ 7,625 $24,453/$17,234
Charles D. Poteat 0 0 1,250/11,250 $ 4,844/$16,094
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF
SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during the fiscal year ended December 31, 1994 and
Forms 5 and amendments thereto furnished to the Company with respect to the
fiscal year ended December 31, 1994, and any written representations from a
reporting person that no Form 5 is required, to the best of the Company's
knowledge, no person who was a director, officer or beneficial owner of more
than ten percent of any class of equity securities of the Company (a reporting
person) failed to file on a timely basis, as disclosed in the above Forms,
reports required by Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") during the most recent fiscal year other than Mr. Schuster, who
failed to file four reports regarding five transactions on a timely basis. In
addition, Mr. Engle, a Director of the Company, did not furnish the Company with
copies of any Form 5 or written representation with respect to reporting during
the fiscal year ended December 31, 1994.
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
selected BDO Seidman to serve as the Company's independent accountants for the
fiscal year ending December 31, 1995. BDO Seidman served as the Company's
independent accountants for the fiscal year ended December 31, 1994. Deloitte &
Touche LLP served as the Registrant's independent accountants to audit the
financial statements of the Registrant and its subsidiaries for each of the two
fiscal years ended December 31, 1992 and December 31, 1993 and for prior fiscal
years. On August 26, 1994, the Registrant replaced Deloitte & Touche LLP with
BDO Seidman as its independent accountants to audit the financial statements of
the Registrant and its subsidiaries for the fiscal year ended December 31, 1994.
This change in independent accountants, effective
13
<PAGE>
August 26, 1994, was recommended by the Audit Committee of the Registrant's
Board of Directors and approved by the Board of Directors on August 25, 1994.
Deloitte & Touche LLP's reports on the financial statements of the
Registrant and its subsidiaries for the two fiscal years ended December 31, 1993
did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
During the Registrant's two fiscal years ended December 31, 1993 and the
subsequent period, (1) there were no disagreements with Deloitte & Touche LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which disagreement(s), if not
resolved to the satisfaction of Deloitte & Touche LLP, would have caused it to
make reference to the subject matter of the disagreement(s) in its report, and
(2) no "reportable event" (as defined in Item 304(a)(1)(v) of Regulation S-K)
occurred.
Representatives of BDO Seidman are expected to be present at the Annual
Meeting of Stockholders with an opportunity to make a statement if they desire
to do so, and they are expected to be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1996 annual
meeting must be received by the Company for inclusion in the Company's proxy
statement and form of proxy relating to such meeting on or before December 24,
1995. The 1996 annual meeting of stockholders is currently contemplated to be
held on May 15, 1996. However, if the date of the 1996 annual meeting is changed
by more than 30 days from such date, proposals of stockholders must be received
by the Company a reasonable time prior to the date the Company's proxy statement
and form of proxy relating to such meeting are first sent to the stockholders.
14
**************************************************************************
APPENDIX
<PAGE>
(Alba Waldensian ALBA-WALDENSIAN, INC.
logo appears here) PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD MAY 17, 1995
The undersigned hereby appoints Paul H. Albritton, Glenn J. Kennedy and
William M. Cousins, Jr., and each or any of them, proxies, with full power of
substitution, with the powers the undersigned would possess if personally
present, to vote, as designated below, all shares of the $2.50 par value Common
Stock of the undersigned in Alba-Waldensian, Inc. at the Annual Meeting of
Stockholders to be held on May 17, 1995, and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS. The Board of
Directors recommends voting FOR on each item.
1. ELECTION OF DIRECTORS: Nominees are Clyde Wm. Engle, Joseph C. Minio and
Thomas F. Schuster.
[ ] FOR all listed nominees (except do not vote for the nominee(s) whose
name(s) I have written below)
[ ] WITHHOLD AUTHORITY to vote for the listed nominees
<PAGE>
(Continued from other side)
2. In their discretion, the proxies are
authorized to vote upon such other
business as may properly come before the
meeting.
Receipt of Notice of Annual Meeting of
Shareholders and accompanying Proxy Statement is hereby acknowledged.
PLEASE DATE AND SIGN EXACTLY AS PRINTED BELOW AND RETURN PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
Dated: ,1995.
(When signing as attorney, executor,
administrator, trustee, guardian,
etc., give title as such. If joint
account, each joint owner should
sign.)
