<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:
/x/ Preliminary proxy statement
/ / 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 Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 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 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
PRELIMINARY COPY
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. 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, 6,201,226 shares of Common
Stock were issued and outstanding. Each outstanding share entitles the holder
thereof to one vote.
1
<PAGE> 4
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.
(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.
2
<PAGE> 5
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 PERCENT
STOCK 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 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) 1.0%
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
<PAGE> 6
(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.
(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.
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND COMPANY OFFICE(1) SINCE
- ----- --- --------------------- --------
<S> <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
BankCorp.(6)
</TABLE>
- -----------------------------
(1) Unless otherwise indicated, directors' principal occupations have been
their respective principal occupation for at least five years.
5
<PAGE> 8
(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 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 conferring with the independent
auditors with respect to the training and supervision of internal accounting
personnel, receiving and reviewing the recommendations of the independent
auditors, reviewing consolidated financial statements, meeting periodically
with the independent auditors and Company personnel with respect to the
adequacy of internal accounting controls, resolving potential conflicts of
interest and reviewing the Company's accounting policies.
6
<PAGE> 9
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 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 $2,500 per annum for directors' fees
to be paid to each of Messrs. Feil, Kunreuther and Bober.
EXECUTIVE COMPENSATION
The Summary Compensation Table shown below sets forth certain
information concerning the annual and long-term compensation for services in
all capacities to the Company for the 1993, 1992 and 1991 fiscal years, of
those persons who were, during fiscal 1993 and at November 27, 1993 (i) the
Chief Executive Officer and (ii) the other four most highly compensated
executive officers of the Company.
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
AWARDS
------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES All OTHER
------------------- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(2) AWARD(s) ($)(3) OPTIONS(#) SATION ($)(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 $315,000, respectively. The foregoing shares of restricted
Common Stock will become transferable to the extent of 33.3% of such
shares on each of the next three anniversaries of the date of grant
hereafter. Any dividends declared in respect of shares of restricted
Common Stock which are transferrable by the applicable officer were paid
to such applicable officer. Any dividends declared in respect of shares
of restricted Common Stock
8
<PAGE> 11
which have not become transferable by the applicable officer are held in
escrow by the Company and will be paid to the applicable officer at such
time as the shares in respect of which such dividend was declared become
transferable by such officer.
(4) Represents the amount of the Company's contribution under its
Non-Qualified Executive Retirement Plan for Messrs. Bitensky, August,
Soren and Myers, the amount contributed by the Company to its
Profit-Sharing Plan for Ms. Lerner and, for 1992 and 1993 only, the
amount contributed by the Company to its Employee Stock Ownership Plan
for shares allocated during such year to the account of the applicable
officer.
The table below sets forth certain information at November 27,
1993 with respect to unexercised options to purchase shares of Common Stock
under the Company's Stock Option Plan to the Chief Executive Officer of the
Company and the other four most highly compensated executive officers of the
Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
SHARES VALUE NUMBER OF SECURITIES
ACQUIRED ON REALIZED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
NAME EXERCISE (#) ($) OPTIONS AT FISCAL YEAR-END (#) OPTIONS AT FISCAL YEAR-END ($)(1)
- ------------------------------------------------------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<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.
9
<PAGE> 12
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 plan.
10
<PAGE> 13
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN
The graph set forth below compares the yearly percentage change
and the cumulative total shareholder 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 pursuant to Item 304(d)(1)
of Regulation S-T under cover of Form SE.]
11
<PAGE> 14
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
12
<PAGE> 15
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
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.
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<PAGE> 16
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.
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
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<PAGE> 17
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."
15
<PAGE> 18
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" RATIFICATION AND APPROVAL OF
MR. BITENSKY'S EMPLOYMENT AGREEMENT.
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
16
<PAGE> 19
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 same effect as 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
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.
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<PAGE> 20
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> 21
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> 22
[ ] _____________________ ____________________
ACCOUNT NUMBER COMMON
_______________________________________________________________
1. Election of (2) Directors to Class III
FOR ALL NOMINEES WITHHOLD
LISTED (except as AUTHORITY
marked to the to vote for all
contrary) nominees
listed
/ / / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE STRIKE A LINE THROUGH
THE NOMINEE'S NAME IN THE TEXT BELOW.)
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.
