<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FAB INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
FAB INDUSTRIES, INC.
(Name of Person(s) Filing the Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), or 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 transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FAB INDUSTRIES, INC.
200 MADISON AVENUE
NEW YORK, NEW YORK 10016
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1994
---------------------
TO: THE STOCKHOLDERS OF FAB INDUSTRIES, INC.
Please take notice that the Annual Meeting of Stockholders of Fab
Industries, Inc. (the "Company") will be held at the principal office of the
Company, 200 Madison Avenue, New York, New York 10016, on Thursday, May 5, 1994
at 10:15 a.m. for the following purposes:
1. To elect two (2) directors to Class III of the Company's Board of
Directors.
2. To ratify the employment agreement dated March 1, 1993 between the
Company and Mr. Samson Bitensky.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 18, 1994 as
the record date for the purpose of determining the stockholders entitled to
notice of, and to vote at, the meeting. A list of the stockholders entitled to
vote at the meeting will be open to the examination of any stockholder of the
Company for any purpose germane to the meeting during ordinary business hours,
at the offices of the Company, 200 Madison Avenue, New York, New York, for the
10-day period prior to the meeting.
You are requested, whether or not you plan to be present at the meeting, to
mark, date, sign and return promptly the accompanying proxy in the enclosed
envelope to which no postage need be affixed if mailed in the United States. You
may revoke your proxy for any reason at any time prior to the voting thereof,
and if you attend the meeting in person you may withdraw the proxy and vote your
own shares.
By Order of the Board of Directors
SHERMAN S. LAWRENCE,
Secretary
Dated: March 25, 1994
<PAGE> 3
ANNUAL MEETING OF STOCKHOLDERS
OF
FAB INDUSTRIES, INC.
200 MADISON AVENUE
NEW YORK, NEW YORK 10016
-------------------------------
PROXY STATEMENT
-------------------------------
The proxy accompanying this Proxy Statement is solicited by the Board of
Directors of Fab Industries, Inc. (the "Company") for use at the Annual Meeting
of Stockholders to be held at the principal office of the Company, 200 Madison
Avenue, New York, New York 10016, on Thursday, May 5, 1994 at 10:15 a.m., and at
any adjournment or adjournments thereof. All proxies in the accompanying form
which are properly executed and duly returned will be voted in accordance with
the instructions specified therein. If no instructions are given, such proxies
will be voted in favor of each of the nominees for director and for Proposal 2.
The proxy may be revoked at any time prior to its exercise by written notice to
the Company, by submission of another proxy bearing a later date, or by voting
in person at the meeting. The approximate date of mailing of this Proxy
Statement and the accompanying proxy to stockholders is March 25, 1994.
VOTING SECURITIES -- RECORD DATE
Only holders of the Company's Common Stock, $.20 par value (the "Common
Stock"), of record at the close of business on March 18, 1994 (the "Record
Date") will be entitled to notice of and to vote at the meeting or any
adjournment or adjournments thereof. On that date, 6,190,226 shares of Common
Stock were issued and outstanding. Each outstanding share entitles the holder
thereof to one vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
(except as noted below) as to the shares of Common Stock beneficially owned by
each person known by the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
------------------------------------------------------------------------------ --------
<S> <C> <C>
Samson Bitensky(2)....................................... 1,488,562(3) 24.0%
200 Madison Avenue
New York, New York 10016
Quest Advisory Corp.,
Quest Management Company and
Charles M. Royce(4)...................................... 506,732(4) 8.2%
1414 Avenue of the Americas
New York, New York 10019
</TABLE>
- ---------------
(1) Except as otherwise indicated below, each of the persons listed in the table
owns the shares of Common Stock opposite his or its name and has sole
voting and dispositive power with respect to such shares of Common Stock.
(2) Under rules and regulations of the Securities and Exchange Commission (the
"Commission"), Mr. Bitensky may be deemed a "control person" of the
Company.
<PAGE> 4
(3) Includes 25,000 shares of Common Stock owned by the Halina and Samson
Bitensky Foundation, Inc., but does not include 89,996 shares of Common
Stock owned by Mr. Bitensky's spouse. Mr. Bitensky disclaims beneficial
ownership of the shares owned by his spouse.
(4) Quest Advisory Corp., a New York corporation ("Quest"), Quest Management
Company, a Connecticut general partnership ("QMO") and Charles M. Royce
comprise a group under Rule 13d-1(b) of the Securities Exchange Act of
1934, as amended. Quest beneficially owns and has sole voting power and
sole dispositive power with respect to 506,732 shares of Common Stock and
QMO beneficially owns and has sole voting power and sole dispositive power
with respect to 35,200 shares of Common Stock shown in the table above.
Charles M. Royce is an individual who may be deemed a controlling person of
Quest and QMO. Mr. Royce disclaims beneficial ownership of the shares held
by Quest and QMO. This information is derived from Quest's Schedule 13G
dated February 8, 1994, filed with the Commission.
The following table sets forth certain information as of the Record Date as
to the Common Stock beneficially owned by the Company's directors (of which
Messrs. Bitensky and Lawrence constitute the nominees for directors), the Chief
Executive Officer of the Company, the other four executive officers identified
in the Summary Compensation Table set forth herein and the directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK PERCENT
BENEFICIALLY OF
NAME OF OWNED ON THE OUTSTANDING
BENEFICIAL OWNER RECORD DATE(1) COMMON STOCK
--------------------------------------------------- ---------------- ------------
<S> <C> <C>
Samson Bitensky.................................... 1,488,562(2) 24.0%
Sherman S. Lawrence................................ 7,750 *
Donald D. Shack.................................... 308 *
Oscar R. Kunreuther................................ 400 *
Louis Feil......................................... 4,000 *
Lawrence H. Bober.................................. 332 *
Stanley August..................................... 56,164(3) *
Howard Soren....................................... 45,081(4) *
Steven Myers....................................... 40,772(5)(6) *
Susan Lerner....................................... 65,860(7) 1.1%
All directors and officers as a group (10
persons)......................................... 1,709,229(2)(6)(8) 27.3%
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise indicated below, each of the persons listed in the table
owns the shares of Common Stock opposite his or her name and has sole
voting and dispositive power with respect to the shares of Common Stock
indicated as being beneficially owned by him or her.
(2) See footnote 3 to the first table set forth above under the heading
"Security Ownership of Certain Beneficial Owners and Management" with
respect to beneficial ownership of these shares.
(3) Includes 16,000 shares of Common Stock deemed to be beneficially owned by
reason of the right to acquire such shares within 60 days of the Record
Date.
(4) Includes 16,000 shares of Common Stock deemed to be beneficially owned by
reason of the right to acquire such shares within 60 days of the Record
Date.
(5) Includes 16,000 shares of Common Stock deemed to be beneficially owned by
reason of the right to acquire such shares within 60 days of the Record
Date.
(6) Does not include 46,666 shares of Common Stock owned by Beth B. Myers; 3,332
shares owned by Jessica C. Myers in a Custodial Account under control of
Beth B. Myers; and 2,000 shares owned by Allison R. Myers in a Custodial
Account under control of Beth B. Myers. Beth B. Myers is the daughter of
Mr. Bitensky and the spouse of Steven Myers, an officer of the Company.
Jessica C. Myers and Allison R. Myers are the minor daughters of Mr. and
Mrs. Myers. Mr. Myers disclaims beneficial ownership of the shares owned by
his spouse and minor daughters.
2
<PAGE> 5
(7) Includes 14,000 shares of Common Stock deemed to be beneficially owned by
reason of the right to acquire such shares within 60 days of the Record
Date.
(8) Includes 62,000 shares of Common Stock deemed to be beneficially owned by
directors and executive officers of the Company by reason of their right to
acquire such shares within 60 days of the Record Date.
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the 1994 Annual Meeting of Stockholders, two directors are to be elected
to Class III of the Company's Board of Directors for a term of three years.
Unless a proxy shall specify that it is not to be voted for a director, it is
intended that the shares represented by each duly executed and returned proxy
will be voted in favor of the election as directors of Mr. Samson Bitensky and
Mr. Sherman S. Lawrence to Class III. Messrs. Bitensky and Lawrence are at
present directors of the Company. Messrs. Bitensky and Lawrence were most
recently elected at the 1991 Annual Meeting of Stockholders.
The Class III directors elected will hold office until the 1997 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualify. If any of such nominees is not a candidate for election at the
meeting, an event which the Board of Directors does not anticipate, the proxies
will be voted for a substitute nominee. The Board of Directors recommends a vote
FOR the election of each of the nominees.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND COMPANY OFFICE(1) SINCE
- -------------------- --- ------------------------------------ ------------
<S> <C> <C> <C>
NOMINEES FOR ELECTION TO CLASS III OF THE BOARD OF DIRECTORS:
Samson Bitensky 74 Chairman of the Board of 1966
Directors, President and Chief
Executive Officer of the Company(2)
Sherman S. Lawrence 75 Attorney; Secretary of 1966
the Company(2)(3)
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS:
Class I -- Term expires at the 1995 Annual Meeting of Stockholders:
Donald D. Shack 65 Attorney, member of the 1986
firm of Shack & Siegel,
P.C.(4)
Oscar R. Kunreuther 73 Certified Public Accountant; 1991
Associated with the
Radix Organization, Inc.(5)
Class II -- Term expires at the 1996 Annual Meeting of Stockholders:
Louis Feil 80 Real estate investment(2) 1966-1983
1984
Lawrence H. Bober 69 Retired, Vice Chairman 1979
of the Board, First New
York Bank for Business and
First New York Business
Bank Corp.(6)
</TABLE>
- ---------------
(1) Unless otherwise indicated, directors' principal occupations have been their
respective principal occupation for at least five years.
(2) Member of the Executive Committee.
(3) The Company has retained since 1966, and proposes to retain in the current
fiscal year, Mr. Sherman S. Lawrence to render legal services. The Company
made payments aggregating $50,000 to Mr. Lawrence
3
<PAGE> 6
in respect of legal services rendered to the Company and its subsidiaries
during the fiscal year ended November 27, 1993.
(4) Since April 3, 1993 Mr. Donald D. Shack has been a member of the law firm of
Shack & Siegel, P.C. From January 1, 1990 until April 2, 1993, Mr. Shack
was a member of the law firm of Whitman & Ransom. For more than five years
prior to that time, Mr. Shack was a member of Golenbock and Barell which
merged with Whitman & Ransom as of January 1, 1990. The Company had
retained Golenbock and Barell since 1966, Whitman & Ransom since 1990, and
Shack & Siegel, P.C. since its inception on April 3, 1993, to render legal
services. Mr. Shack is a director of the following publicly-held companies:
Andover Togs, Inc., Ark Restaurants Corp., International Citrus Corporation
and Just Toys, Inc.
(5) Mr. Oscar R. Kunreuther was a partner in BDO Seidman, Certified Public
Accountants and predecessor firms in excess of five years, until his
retirement on June 30, 1987. Since then he has been associated with Radix
Organization, Inc., a private merchant banking firm.
(6) Mr. Lawrence H. Bober is a retired Vice Chairman of the Board of First New
York Business Bank Corp. ("FNYBBC") and of First New York Bank for Business
(formerly, The First Women's Bank), a commercial bank and wholly-owned
subsidiary of FNYBBC (the "Bank"), where he served from January 1988 until
January 1991. On November 13, 1992, the Federal Deposit Insurance
Corporation was appointed as receiver for the Bank. Prior to 1988 and for
in excess of five years, Mr. Bober was a Senior Vice President of
Manufacturers Hanover Trust Company, a commercial bank.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Audit Committee (composed of Mr. Kunreuther as Chairman and Messrs.
Bober, Lawrence and Shack) held four meetings during the Company's past fiscal
year. The committee is charged with receiving and reviewing the recommendations
of the independent auditors, reviewing the audited consolidated financial
statements, meeting periodically with the independent auditors and Company
personnel with respect to the adequacy of internal accounting controls and
reviewing the Company's accounting policies.
The Company has a finance committee composed of Samson Bitensky, Lawrence
H. Bober, and Louis Feil, whose purpose is to discuss proper investments for
corporate funds. There were no formal meetings of this committee held during the
Company's past fiscal year.
The Company has a stock option committee composed of Messrs. Bitensky, Feil
and Lawrence, whose purpose is to make recommendations concerning the grant of
options pursuant to the Company's stock option plan. There were no formal
meetings of this committee held during the Company's past fiscal year.
The Company established a compensation committee (the "Compensation
Committee") on October 4, 1993 which is composed of Messrs. Bober and Feil. The
Compensation Committee is charged with making recommendations regarding the
compensation of senior management personnel and setting performance goals. The
Compensation Committee held one meeting during the past fiscal year.
The Company does not have a nominating committee.
During the Company's past fiscal year, the Board of Directors held four
meetings. No member of the Board of Directors attended fewer than 75% of the
aggregate of (i) the number of meetings of the Board of Directors, and (ii) the
number of meetings of committees of the Board of Directors (during the periods
he served on such committees), except that Mr. Louis Feil attended only two of
the four Board of Directors meetings held during fiscal 1993.
During fiscal 1993, the Company paid a fee of $7,500 per annum to each
director who was not a full-time employee. No additional fee is paid for service
on committees of the Board of Directors. On November 22, 1993, the Board of
Directors approved an increase of $2,500 per annum for directors' fees to be
paid to each of Messrs. Feil, Kunreuther and Bober.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The Summary Compensation Table shown below sets forth certain information
concerning the annual and long-term compensation for services in all capacities
to the Company for the 1993, 1992 and 1991 fiscal years, of those persons who
were, during fiscal 1993 and at November 27, 1993 (i) the Chief Executive
Officer and (ii) the other four most highly compensated executive officers of
the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
AWARDS
-------------------------------
ANNUAL COMPENSATION SECURITIES
------------------------------ RESTRICTED UNDERLYING
NAME AND PRINCIPAL SALARY STOCK OPTIONS ALL OTHER
POSITION YEAR ($)(1) BONUS ($)(2) AWARD(S) ($)(3) (#) COMPENSATION ($)(4)
- ---------------------- ----- ------------ ------------ --------------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Samson Bitensky 1993 350,000 939,200 23,981
President and Chief 1992 350,000 948,700 21,627
Executive Officer 1991 350,000 841,500 16,736
Stanley August 1993 214,583 140,000 21,959
Vice President 1992 209,167 140,000 19,806
1991 197,916 150,000 780,000 16,000
Howard Soren 1993 149,583 110,000 15,266
Vice
President-Finance 1992 144,166 110,000 13,596
and Treasurer 1991 135,000 120,000 390,000 10,800
Steven Myers 1993 149,583 110,000 15,266
Vice President 1992 144,166 110,000 13,342
1991 134,166 120,000 390,000 10,800
Susan Lerner 1993 104,583 50,000 10,631
Vice President 1992 97,917 25,000 8,912
1991 74,167 25,000 10,000 6,000
</TABLE>
- ---------------
(1) Includes compensation deferred pursuant to the Company's qualified 401K
Money Option Savings Plan.
(2) The amounts set forth for Mr. Bitensky represent incentive compensation paid
to Mr. Bitensky pursuant to his current and prior employment agreements as
more fully discussed herein in the Report of the Compensation Committee on
Executive Compensation.
(3) Restricted stock is valued at the closing price of the Common Stock on the
American Stock Exchange on the date of grant. On November 27, 1993, Messrs.
August, Soren and Myers held 18,000, 9,000 and 9,000 shares (remaining from
the original grant of 30,000, 15,000 and 15,000 shares), respectively, of
restricted Common Stock having a market value, based on the closing price
of the Common Stock on November 26, 1993, of $630,000, $315,000 and
$315,000, respectively. The foregoing shares of restricted Common Stock
will become transferable to the extent of 33.3% of such shares on each of
the next three anniversaries of the date of grant hereafter. Any dividends
declared in respect of shares of restricted Common Stock which are
transferable by the applicable officer were paid to such applicable
officer. Any dividends declared in respect of shares of restricted Common
Stock which have not become transferable by the applicable officer are held
in escrow by the Company and will be paid to the applicable officer at such
time as the shares in respect of which such dividend was declared become
transferable by such officer.
(4) Represents the amount of the Company's contribution under its Non-Qualified
Executive Retirement Plan for Messrs. Bitensky, August, Soren and Myers, the
amount contributed by the Company to its Profit-Sharing Plan for Ms. Lerner
and, for 1992 and 1993 only, the amount contributed by the Company to its
Employee Stock Ownership Plan for shares allocated during such year to the
account of the applicable officer.
5
<PAGE> 8
The table below sets forth certain information at November 27, 1993 with
respect to options to purchase shares of Common Stock under the Company's Stock
Option Plan held by the Chief Executive Officer of the Company and the other
four most highly compensated executive officers of the Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR-END(#) OPTIONS AT FISCAL
SHARES VALUE YEAR-END($)(1)
ACQUIRED ON REALIZED ------------------------------ ------------------------------
NAME EXERCISE(#) ($) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- -------- ------------- ----------- -------------
EXERCISABLE
-----------
<S> <C> <C> <C> <C> <C> <C>
Samson Bitensky............. -- -- -- -- -- --
Stanley August.............. 20,000 373,125 16,000 4,000 312,960 78,240
Howard Soren................ 20,000 387,500 16,000 4,000 312,960 78,240
Steven Myers................ 20,000 435,000 16,000 4,000 312,960 78,240
Susan Lerner................ -- -- 14,000 6,000 196,440 70,960
</TABLE>
- ---------------
(1) Based on the closing sale price on the American Stock Exchange of the
Company's Common Stock on November 26, 1993.
1990 EXECUTIVE RETIREMENT PLAN
A trusteed non-qualified Executive Retirement Plan was adopted by the
Company effective November 30, 1990. Its purpose is to provide benefits to those
key employees who are not participating in the Company's Profit-Sharing Plan.
The plan is administered by a committee appointed by the Board of Directors who,
prior to the first day of the plan year, designate those key employees who will
be covered by the plan.
1987 STOCK OPTION PLAN
The 1987 Stock Option Plan (the "Plan"), adopted on June 1, 1987 and
amended March 15, 1988, February 28, 1989 and May 7, 1992, was approved by the
stockholders of the Company on May 5, 1988. Under the Plan, options to purchase
shares of Common Stock are designated at the time of grant as either "incentive
stock options" ("ISOs"), which are intended to qualify under Section 422A of the
Internal Revenue Code of 1986, or options which do not so qualify ("NQOs").
Under the Plan, ISOs may be granted to employees, including employees who are
also officers or directors of the Company. NQOs may be granted to employees,
officers or directors of the Company, whether or not such directors are
employees of the Company. An aggregate of 650,000 shares of Common Stock were
reserved for issuance pursuant to options granted or to be granted under the
Plan and 154,400 shares remain available for issuance.
EMPLOYEE STOCK OWNERSHIP PLAN
Effective as of November 25, 1991, the Company established the Fab
Industries, Inc., Employee Stock Ownership Plan (the "ESOP"). All full-time
employees are eligible to participate upon the completion of one year of
service. On December 18, 1991, the ESOP purchased 340,000 shares of Common Stock
from Samson Bitensky, the Chairman of the Board and President of the Company,
for $34.875 per share, which represented approximately 5.5% of the Company's
then outstanding Common Stock. The Company loaned the sum of $11,857,500 to the
ESOP to enable it to purchase such shares. The loan is payable by the ESOP in
fifteen equal annual installments plus interest at prime adjusted periodically.
Participants are not required or permitted to make contributions to the
ESOP. The only contributions to the ESOP are made by the Company which is
obligated to make contributions sufficient to pay the principal amount of the
loan and interest accrued thereon. Dividends on the shares of Common Stock
acquired by the ESOP are utilized to repay the loan from the Company. The shares
of Common Stock acquired by the ESOP are allocated among the participants on the
basis of their relative compensation (as defined in the ESOP). Voting rights
attach to the allocated shares and to a participant's percentage of unallocated
or unvoted shares, according to a formula detailed in the ESOP.
6
<PAGE> 9
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN
The graph set forth below compares the cumulative total stockholder return
on the Company's Common Stock against the cumulative total return on the
American Stock Exchange Market Value index and a peer group comprised of those
public companies whose business activities fall within the same standard
industrial classification code as the Company for the period commencing December
3, 1988 and ending November 26, 1993. This graph assumes a $100.00 investment in
the Company's Common Stock and in each index on December 3, 1988 and that all
dividends paid by companies in each index were reinvested.
[The Performance Graph is being filed under Regulation 304(d)(1)
of Regulation S-T under cover of FORM SE.]
7
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
On October 4, 1993, the Company established the Compensation Committee
composed of Messrs. Bober and Feil. Prior to that time the Company's executive
compensation was determined by the entire Board of Directors. The Board
determines the compensation of Mr. Bitensky with Mr. Bitensky excusing himself
from those deliberations. At a meeting of the Board of Directors held on
February 18, 1993, the Board, with Mr. Bitensky excusing himself, authorized the
Company to enter into an employment agreement with Mr. Bitensky as set forth
below. These actions were subsequently ratified by the Compensation Committee at
a meeting held on October 4, 1993. Prior to the formation of the Compensation
Committee, the compensation of the four other executives was determined through
consultation between the Board and the President. The Board, and now the
Compensation Committee, has relied extensively on Mr. Bitensky's views on
matters relating to the compensation of the other executives.
It has been the policy of the Board to tie a significant portion of
executive compensation to corporate performance. The Compensation Committee
adheres to the same policy of basing a significant portion of executive
compensation on the Company's performance. For the executives other than Mr.
Bitensky, the key elements are base salary, annual bonus and long-term incentive
opportunities in the form of restricted stock and stock options. For all of the
four principal executives, the largest portions of total compensation are based
on performance (as opposed to base salaries and benefits).
Mr. Bitensky is one of the founders of the Company. He owns approximately
1,500,000 shares of Common Stock constituting approximately 24% of the total
amount. Accordingly, his interest is very much aligned with the interest of all
stockholders and the Board and, subsequent to its formation, the Compensation
Committee, has not considered it sensible to relate Mr. Bitensky's compensation
to the Company's performance through long-term stock incentives such as
restricted stock or stock options. Instead, the Board, as ratified by the
Compensation Committee, has determined to tie Mr. Bitensky's compensation to
Company performance through the use of incentive compensation. The members of
the Compensation Committee believe that Mr. Bitensky continues to be
significantly responsible for the Company's success.
Mr. Bitensky entered into an employment agreement with the Company
effective April 1, 1993, pursuant to which he is to perform the duties of its
President and Chief Executive Officer. This agreement supersedes his previous
employment agreement with the Company. The agreement provides for a five year
term commencing April 1, 1993 and expiring on March 31, 1998, and provides for
automatic successive one year renewal periods unless either party shall advise
the other, by written notice delivered not less than six months prior to the
then current expiration date, of his or its desire not to extend the term of the
agreement beyond such date. The agreement provides for an annual base salary of
$350,000, or such greater amount as the Board of Directors may from time to time
determine, and incentive compensation if the Company's annual pre-tax income
exceeds $10,000,000 equal to 3% of the Company's annual pre-tax income up to
$11,000,000 and 4% of such pre-tax income in excess of $11,000,000. In the event
of disability (defined as the inability to perform his duties for a period of
four consecutive months or for an aggregate of 180 days in any consecutive 12
month period, or when Mr. Bitensky's physician shall have determined that he
shall not be able, by reason of physical or mental disability, to devote his
time and energy to the business of the Company to the extent otherwise required
under the agreement for a period of four consecutive months or for an aggregate
of 180 days in any consecutive period of 12 months), compensation at the above
rate is payable for the first year, and at one half such rate for the second
year of such disability. Upon termination of full-time employment, Mr. Bitensky
will be retained to provide advisory and consulting services for a period of
five years for a fee of $250,000 per annum. The agreement further provides for
the payment of a benefit over a five year period to Mr. Bitensky's beneficiary
in the event of the death of Mr. Bitensky while employed or providing consulting
services in the amount of one year's average compensation paid to Mr. Bitensky
over the three most recent years payable over a period of five years commencing
with the last day of the calendar quarter in which Mr. Bitensky's death occurs.
In addition, in the event of Mr. Bitensky's death while employed or within
two years after termination of employment, the agreement provides an option to
Mr. Bitensky's estate, for a period of six months after the
8
<PAGE> 11
appointment of Mr. Bitensky's personal representative, to sell to the Company
such number of shares of Common Stock as may be purchased with (i) the lesser of
(A) $7,000,000 or (B) 10% of the Company's net worth at the end of the fiscal
year immediately prior to Mr. Bitensky's death, plus (ii) such amount as may be
purchased with the proceeds of life insurance which the Company may purchase
from time to time on Mr. Bitensky's life. Currently the Company maintains
several life insurance policies on Mr. Bitensky's life providing for the payment
of an aggregate of $3,000,000 in benefits in connection with the Common Stock
purchase discussed above. The purchase price of shares purchased pursuant to the
option is the market price per share increased by an amount equal to one-half of
the amount by which the book value per share exceeds the market price per share.
The April 1, 1993 employment agreement with Mr. Bitensky is being submitted
for approval by stockholders under Proposal 2 hereof.
Prior to April 1, 1993, Mr. Bitensky was employed as President and Chief
Executive Officer of the Company pursuant to the terms of an employment
agreement dated as of April 1, 1984. The agreement had an initial expiration
date of March 31, 1987 and provided for automatic successive one-year renewal
periods (in the absence of notice by either party to the contrary). The
agreement provided for an annual base salary of $350,000 and incentive
compensation if the Company's pre-tax income exceeded $5,000,000 equal to 3% of
the Company's annual pre-tax income up to $11,000,000 and 4% of such pre-tax
income in excess of $11,000,000. Upon termination of full-time employment, Mr.
Bitensky was to be retained to provide advisor and consulting services for a
period of five years for a fee of $175,000 per annum. The agreement also
provided for disability and death benefits similar to the benefits contained in
Mr. Bitensky's current employment agreement.
As indicated above, the key elements of the compensation payable to the
four principal executives other than the President are base salary, annual bonus
and long-term incentives in the form of restricted stock and stock options. By
far, the largest portions of total compensation are performance based.
Adjustment of base salaries involves considerations of competitive data,
assessment of performance, position tenure and internal comparability. The base
salaries of the four executives are considered to be average by industry
standards and are adjusted modestly, the primary focus being on total
compensation. All four executives are eligible to receive annual cash bonuses
based on a review of the Company's performance during the year for which such a
bonus is payable. 1993 was an extremely profitable year. However, the increase
in earnings over 1992 was not significant. Accordingly, the 1993 cash bonuses
were equal to those paid in 1992 except for Ms. Lerner who had increased
responsibilities during fiscal 1993 based on her new position as a Vice
President of the Company.
The Company's stock option and restricted stock programs are designed to
align the interests of the executives with those of the stockholders at large.
Options are granted with exercise prices equal to market on the grant date and
vest, generally, over a period of five years. This approach is designed to
provide incentives for the creation of stockholder values over the long term
since the full benefit of the option cannot be realized unless price
appreciation occurs over a number of years and the executive is rewarded only to
the extent that stockholders at large have benefited. The Company's restricted
stock program contemplates the grant of shares of Common Stock which the
recipient may not sell or otherwise dispose of until an applicable restriction
period lapses and which are forfeited if the recipient terminates employment
prior to the lapsing of the restriction period.
The Company does not issue options or grant restricted stock on any fixed
basis preferring to maintain a flexible program. No options were issued or
grants made to executives in 1993. Options were issued in equal amount to
Messrs. August, Soren and Myers in 1988 and 1990 and options were issued to Ms.
Lerner in 1990 and 1991. Restricted stock grants, related in amount to salary
and bonus, were made to Messrs. August, Soren and Myers in 1991. The restricted
shares granted vested as to 40% in two years with an additional 20% vesting in
each of the next three years.
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The foregoing Report of the Compensation Committee on Executive
Compensation shall not be deemed to be incorporated by reference into any filing
of the Company under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates such information by reference.
Lawrence H. Bober
Louis Feil
PROPOSAL 2 -- RATIFICATION OF
SAMSON BITENSKY'S EMPLOYMENT AGREEMENT
The 1993 Revenue Reconciliation Act (the "Revenue Act") provides that
publicly held corporations will not be able to deduct compensation paid to
certain executive officers to the extent that such compensation exceeds
$1,000,000, unless certain requirements are satisfied. The Revenue Act rules do
not apply to compensation based on the attainment of performance goals if: (i)
the performance goals are established by a compensation committee of the board
of directors which is comprised of two or more outside directors; (ii) the
material terms of the compensation, including the performance goals, are
disclosed to stockholders and approved by majority vote in a separate
stockholder vote before the compensation is paid; and (iii) before the
compensation is paid, the compensation committee certifies the performance goals
and other material terms were satisfied.
As set forth in the Report of the Compensation Committee on Executive
Compensation, Mr. Bitensky's employment agreement provides for incentive
compensation based on specific performance goals with respect to pre-tax income
of the Company. In the past, Mr. Bitensky's total annual compensation, including
incentive compensation, has exceeded $1,000,000, the threshold under the Revenue
Act, and may exceed $1,000,000 in the future. The Board is therefore submitting
Mr. Bitensky's employment agreement for ratification in order to comply with
that portion of the Revenue Act referred to above which requires, among other
things, that the performance goals and other material compensation terms be
disclosed to and approved by stockholders.
Accordingly, the Board of Directors and the Compensation Committee, which
has ratified Mr. Bitensky's employment agreement, recommends to stockholders
that they ratify and approve Mr. Bitensky's employment agreement. In the event
that stockholders do not ratify the employment agreement, the Company will
nonetheless remain bound by the terms of the agreement but will be prohibited
from deducting any compensation paid to Mr. Bitensky in excess of $1,000,000.
REQUIRED VOTE
The affirmative vote of a majority of the shares of Common Stock
outstanding and entitled to vote on this matter is required to ratify the
employment agreement between the Company and Mr. Bitensky pursuant to the
following resolution:
"RESOLVED, that the employment agreement dated March 1, 1993 between
the Company and Mr. Samson Bitensky, is hereby ratified, affirmed and
approved in all respects."
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" RATIFICATION AND APPROVAL OF
MR. BITENSKY'S EMPLOYMENT AGREEMENT.
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Commission and
the American Stock Exchange. Officers, directors and greater than ten percent
stockholders are required by the Commission's regulation to furnish the Company
with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Form 5 for specified years, the Company believes that
all of its officers, directors and greater than ten percent beneficial owners
complied with all filing requirements applicable to them with respect to
transactions during fiscal 1993, except for a filing in respect of the exercise
of an option by Mr. Stanley August in March 1993 which was required to be
disclosed on a Form 4 otherwise filed by Mr. August in September 1993. The Form
4 and all subsequent filings have subsequently been amended to properly reflect
this transaction.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTS
The firm of BDO Seidman, Certified Public Accountants, 15 Columbus Circle,
New York, New York, served as the Company's independent public accountants for
its fiscal year ended November 27, 1993. No independent public accountant has
been formally selected by the Company for the current fiscal year. In keeping
with the Company's policy, formal selection of the Company's independent public
accountants will be considered by the Company's newly-elected Board of Directors
at the Annual Meeting of Directors to be held immediately following the
Company's Annual Meeting of Stockholders on Thursday, May 5, 1994.
Representatives of BDO Seidman are expected to be present at the Company's 1994
Annual Meeting of Stockholders and available to respond to appropriate questions
from stockholders. Such representatives will also be accorded an opportunity to
make a statement at such time should they desire to do so.
VOTING PROCEDURES
Pursuant to Commission rules, a designated blank space is provided on the
proxy card to withhold authority to vote for one or more nominees for director
and a box is provided on the proxy card for stockholders to mark if they wish to
abstain on Proposal 2. Votes withheld in connection with the election of one or
more directors will not be counted in determining the votes cast and will have
no effect on the vote. Abstentions in connection with the ratification of the
employment agreement between the Company and Mr. Samson Bitensky will be counted
and therefore will affect a negative vote.
Under the rules of the National Association of Securities Dealers, brokers
who hold shares in street name for customers have the authority to vote on
certain items when they have not received instructions from beneficial owners.
Under the General Corporation Law of the State of Delaware, a broker non-vote
will have no effect on the outcome of the election of directors and will have
the effect of a vote against Proposal 2.
GENERAL
The solicitation of proxies in the accompanying form is made by the Board
of Directors and the cost thereof will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, some of the officers, directors
and other employees of the Company may also solicit proxies personally or by
mail, telephone or telegraph, but they will not receive additional compensation
for such services. Brokerage firms, custodians, banks, trustees, nominees or
other fiduciaries holding shares of Common Stock in their names will be
requested by the Company to forward proxy materials to their principals and will
be reimbursed for their reasonable out-of-pocket expenses in such connection.
As of the date of this Proxy Statement, the Board of Directors is not aware
of any other matters to be presented for action, but if any other matters
properly come before the meeting, it is intended that the persons
11
<PAGE> 14
voting the accompanying proxy will vote the shares represented thereby in
accordance with their best judgment.
It is important that proxies be returned promptly. Therefore, whether or
not you plan to attend the meeting in person, you are urged to mark, date,
execute and return your proxy in the enclosed envelope, to which no postage need
be affixed if mailed in the United States. The proxy may be revoked at any time
before it is exercised. If you attend the meeting in person you may withdraw the
proxy and vote your own shares.
STOCKHOLDER PROPOSALS
Stockholder proposals in respect of matters to be acted upon at the
Company's 1995 Annual Meeting of Stockholders should be received by the Company
on or before November 25, 1994 in order that they may be considered for
inclusion in the Company's proxy materials.
THE COMPANY WILL PROVIDE WITHOUT A CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED NOVEMBER 27, 1993, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO, TO EACH OF THE COMPANY'S STOCKHOLDERS OF
RECORD ON MARCH 18, 1994, AND EACH BENEFICIAL STOCKHOLDER ON THAT DATE, UPON
RECEIPT OF A WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY'S OFFICES, 200
MADISON AVENUE, NEW YORK, NEW YORK 10016, ATTENTION: SECRETARY. IN THE EVENT
THAT EXHIBITS TO SUCH FORM 10-K ARE REQUESTED, A FEE WILL BE CHARGED FOR
REPRODUCTION OF SUCH EXHIBITS. REQUESTS FROM BENEFICIAL STOCKHOLDERS MUST SET
FORTH A GOOD FAITH REPRESENTATION AS TO SUCH OWNERSHIP ON MARCH 18, 1994.
By Order of the Board of Directors,
SHERMAN S. LAWRENCE,
Secretary
Dated: March 25, 1994
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<PAGE> 15
FAB INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1994
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED, revoking all previous proxies, hereby appoints HOWARD
SOREN and SUSAN B. LERNER, or either of them, attorneys and proxies with power
of substitution, for and in the name, place and stead of the undersigned, and
with all the powers the undersigned would possess if personally present, to
vote as instructed below all of the shares of Common Stock of FAB INDUSTRIES,
INC. (the "Company"), which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company, to be held on Thursday, May 5, 1994 at
10:15 A.M., at the principal office of the Company, 200 Madison Avenue, New
York, New York 10016, and at any adjournment or adjournments thereof. The
shares represented by this Proxy will be voted as indicated below upon the
following matters, as more fully described in the Proxy Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE INSTRUCTIONS GIVEN. IF NO SUCH INSTRUCTIONS ARE GIVEN, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED IN FAVOR OF THE NOMINEES FOR DIRECTORS
AND FOR ITEM 2.
(SEE REVERSE SIDE)
<PAGE> 16
( ) ________________________ _________________
ACCOUNT NUMBER COMMON
________________________________________________________________________________
1. Election of (2) Directors to Class III (INSTRUCTION: TO WITHHOLD
FOR ALL NOMINEES WITHHOLD AUTHORITY TO VOTE FOR ANY
LISTED (except as AUTHORITY INDIVIDUAL NOMINEE STRIKE A
marked to the to vote for all LINE THROUGH THE NOMINEE'S
contrary) nominees NAME IN THE TEXT BELOW.)
listed To Class III of the Board of
Directors (to hold
office until the 1997 Annual
Meeting of Stockholders):
Samson Bitensky, Sherman S.
Lawrence
( ) ( )
________________________________________________________________________________
2. Ratification of the employment agreement dated March 1, 1993
between the Company and Mr. Samson Bitensky.
FOR AGAINST ABSTAIN
( ) ( ) ( )
________________________________________________________________________________
3. In their discretion, upon such other business
as may properly come before the meeting.
________________________________________________________________________________
Dated: _________________________________,1994
______________________________________________
______________________________________________
Note: Please sign exactly as your name
or names appear hereon. Joint owners should
each sign personally. When signing as
executor, administrator, corporation officer,
attorney, agent, trustee or guardian etc.,
please add your full title to your signature.
Note: Please date, mark (in blue or black
ink), sign and mail this Proxy in the
envelope provided for this purpose. No
postage is required for mailing in the
United States.
