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 |_| Confidential for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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)
or Item 22(a)(2) of Schedule 14A.
|_| $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
FAB INDUSTRIES, INC.
200 MADISON AVENUE
NEW YORK, NEW YORK 10016
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 1996
--------------------
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 2, 1996
at 10:15 a.m. for the following purposes:
1. To elect two (2) directors to Class II of the
Company's Board of Directors.
2. To elect one (1) director to Class I of the Company's
Board of Directors.
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 14,1996
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
/S/ SHERMAN S. LAWRENCE,
------------------------
Secretary
Dated: April 1, 1996
<PAGE>
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 2, 1996 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 April 1, 1996.
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 14, 1996 (the "Record
Date") will be entitled to notice of and to vote at the meeting or any
adjournment or adjournments thereof. On that date, 5,756,613 shares of Common
Stock were issued and outstanding. Each outstanding share entitles the holder
thereof to one vote.
<PAGE>
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.
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(1) OF CLASS
- ---------------- -------- --------
Samson Bitensky(2) 1,564,165(3) 27.17%
200 Madison Avenue
New York, New York 10016
Quest Advisory Corp.,
Quest Management Company and
Charles M. Royce(4) 695,732(4) 11.73%(4)
1414 Avenue of the Americas
New York, New York 10019
Heine Securities Corporation,
Michael F. Price (5) 336,000(5) 5.6%(5)
51 John F. Kennedy Parkway
Shore Hills, New Jersey 07078
- ----------------------------
(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 54,000 shares of Common Stock owned by the Halina and Samson
Bitensky Foundation, Inc., 89,996 shares of Common Stock owned by Mr.
Bitensky's spouse and 410 shares allocated to Mr. Bitensky pursuant to
the Company's Employee Stock Ownership Plan (the "ESOP"). Mr. Bitensky
disclaims beneficial ownership of the shares owned by his spouse and
does not have dispositive power with respect to the ESOP shares.
(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 667,032 shares
of Common Stock and QMO beneficially owns and has sole voting power and
sole dispositive power with respect to 28,700 shares of Common Stock
shown in the table above. Charles M. Royce is an individual who may be
deemed a "control 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, as amended, dated
February 14, 1995, filed with the Commission.
(5) Michael F. Price is President of Heine Securities Corporation
("Heine"), a Delaware corporation, in which capacity he exercises
voting control and dispositive power over the Common Stock shown in the
table above. Heine is an investment advisor registered under the
Investment Advisors Act of 1940. One or more of Heine's advisory
clients is the legal owner of the Common Stock shown in the table
above. Pursuant to investment advisory agreements with its clients,
Heine has sole investment discretion and voting authority with respect
to such shares of Common Stock. Both Heine and Mr. Price disclaim
beneficial ownership of all the Common Stock shown in the table above.
This information is derived from Heine's Schedule 13G, as amended,
dated February 1, 1996, filed with the Commission.
2
<PAGE>
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. Feil and Bober constitute the nominees for Class II directors and
Mr. Marlin is the nominee for Class I director), the Chief Executive Officer of
the Company, the other three executive officers identified in the Summary
Compensation Table set forth herein and the directors and executive officers of
the Company as a group.
Shares of Common Percent
Stock Beneficially of
Name of Owned on the Outstanding
Beneficial Owner Record Date(1) Common Stock
---------------- -------------- ------------
Samson Bitensky 1,564,165(2) 27.17%
Sherman S. Lawrence 7,750 *
Richard Marlin 0 0
Oscar R. Kunreuther 400 *
Louis Feil 4,000 *
Lawrence H. Bober 332 *
Stanley August 54,582(3) *
Howard Soren 15,332 *
Steven Myers 97,388(3)(4) 1.69%
All directors and officers
as a group (9 persons) 1,743,949(2)(4)(5) 30.09%
- -----------------
* Less than 1%
(1) Except as otherwise indicated below, and except for 410, 782, 662 and
654 shares allocated respectively to Messrs. Bitensky, August, Soren
and Myers pursuant to the Company's ESOP, each of the persons listed in
the table owns the shares of Common Stock opposite his name and has
sole voting and dispositive power with respect to the shares of Common
Stock indicated as being beneficially owned by him.
(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 20,000 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 48,370 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 the control of Beth B. Myers. Beth B. Myers is
the daughter of Mr. Bitensky, President and Chief Executive of the
Company, 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.
(5) Includes 40,000 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.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT. The Company's executive officers
and directors are required under the Securities Exchange Act of 1934, as
amended, to file reports of ownership and changes in ownership of Common Stock
with the Commission and the American Stock Exchange. In 1996, timely Annual
Statements of Changes in Beneficial Ownership on Forms 5 filed by Messrs.
Bitensky, August and Myers and by Mr. David A. Miller (See Note 5 to the
"Summary Compensation Table") were later amended to reflect shares of Common
Stock owned by the immediate family members of Messrs. Bitensky and Myers and to
reflect options to purchase Common Stock awarded in 1990 to Messrs. Myers,
August and Miller under the Company's 1987 Stock Option Plan, as amended.
3
<PAGE>
ELECTION OF DIRECTORS
At the 1996 Annual Meeting of Stockholders, two directors are to be
elected to Class II of the Company's Board of Directors for a term of three
years and one director is to be elected to Class I of the Company's Board of
Directors for the remaining two years of the Class I term. 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. Louis Feil and Mr. Lawrence H. Bober
to Class II and Mr. Richard Marlin to Class I. Messrs. Feil, Bober and Marlin
are at present directors of the Company. Messrs. Feil and Bober were most
recently elected at the 1993 Annual Meeting of Stockholders and Mr. Marlin was
elected by the Board of Directors on September 21, 1995 to fill a vacancy in the
Board of Directors which resulted from the resignation of Mr. Donald D. Shack
from the Board of Directors.
The Class II directors elected will hold office until the 1999 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualify. The Class I director elected will hold office until the 1998 Annual
Meeting of Stockholders and until a successor is duly elected and qualifies. 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 for Class II and FOR the election of the nominee for
Class I.
Principal Occupation Director
Name Age and Company Office(1) Since
NOMINEES FOR ELECTION TO CLASS II OF THE BOARD OF DIRECTORS:
Louis Feil 82 Real estate investment(2) 1966-1983
1984
Lawrence H. Bober 71 Retired, Vice Chairman 1979
of the Board, First New
York Bank for Business and
First New York Business
BankCorp.(3)
NOMINEE FOR ELECTION TO CLASS I OF THE BOARD OF DIRECTORS:
Richard Marlin 62 Attorney, member of the 1995
firm of Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel (4)
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS:
Class III---Term expires at the 1997 Annual Meeting of Stockholders:
Samson Bitensky 76 Chairman of the Board of 1966
Directors, President and Chief
Executive Officer of the Company(2)
Sherman S. Lawrence 77 Attorney; Secretary of 1966
the Company(2)(5)
Class I---Term expires at the 1998 Annual Meeting of Stockholders:
Oscar R. Kunreuther 75 Certified Public Accountant; 1991
Associated with the
Radix Organization, Inc. (6)
4
<PAGE>
- -------------
(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) 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.
(4) Since 1979, Mr. Richard Marlin has been a member of the law firm of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel ("Kramer Levin"). In
1995, the Company retained Kramer Levin to render legal services.
(5) 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 $55,000 to Mr. Lawrence in
respect of legal services rendered to the Company and its subsidiaries
during the fiscal year ended December 2, 1995.
(6) 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.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company has an audit committee (the "Audit Committee") composed of
Mr. Kunreuther as Chairman and Messrs. Bober, Lawrence and Marlin (Mr. Marlin
joined the Audit Committee on September 21, 1995 filling the vacancy created by
the resignation of Mr. Donald D. Shack from the Board of Directors) whose
purpose is to receive and review the recommendations of the independent
auditors, review the audited consolidated financial statements, meet
periodically with the independent auditors and Company personnel with respect to
the adequacy of internal accounting controls and review the Company's accounting
policies. The Audit Committee held two meetings during the Company's past fiscal
year.
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
5
<PAGE>
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. Lawrence H. Bober attended only one of the two
Audit Committee meetings held during fiscal 1995.
During 1995, the Company paid a fee of $10,000 per annum to Messrs.
Feil, Kunreuther and Bober and $7,500 to each other director who was not a
full-time employee, other than Mr. Marlin who was paid $1,875 for his services
as director from September 21, 1995 through year end. No additional fee is paid
for service on committees of the Board of Directors.
6
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table shown below sets forth certain
information concerning the annual and long-term compensation for services in all
capacities to the Company for the 1995, 1994 and 1993 fiscal years, of those
persons who were (i) the Chief Executive Officer during fiscal 1995 and (ii) the
other three executive officers of the Company at the fiscal year ended December
2, 1995.
SUMMARY COMPENSATION TABLE
Annual All Other
Compensation Compen-
Name and Principal Position Year Salary($)(1) Bonus($)(2) sation($)(3)
- --------------------------- ---- ------------ ----------- ------------
Samson Bitensky 1995 350,000 464,400 13,810
President and Chief 1994 350,000 815,120 20,341
Executive Officer 1993 350,000 939,200 23,981
Stanley August(4) 1995 228,749 100,000 13,810
Vice President 1994 215,000 140,000 19,358
1993 214,583 140,000 21,959
Howard Soren(5) 1995 159,166 -- 13,810
Vice President-Finance 1994 150,000 110,000 15,328
and Treasurer 1993 149,583 110,000 15,266
Steven Myers(4) 1995 159,166 90,000 13,810
Vice President 1994 150,000 110,000 15,318
1993 149,583 110,000 15,266
- ----------------
(1) Includes compensation deferred pursuant to the Company's qua lified
401K Money Option Savings Plan.
(2) The amounts set forth for Mr. Bitensky represent incentive c
ompensation paid to Mr. Bitensky pursuant to his current and prior
employment agreements as more fully discussed below under "Report of
the Compensation Committee on Executive Compensation".
(3) Represents the amount of the Company's contribution under its
Non-Qualified Executive Retirement Plan and the amount contributed by
the Company to its Employee Stock Ownership Plan for shares allocated
during each year to the account of the applicable officer.
(4) On December 2, 1995, Messrs. August and Myers held 6,000 and 3,000
shares (remaining from the original grant 30,000 and 15,000 shares
during the 1991 fiscal year), respectively, of restricted Common Stock
having a market value, based on the closing price of the Common Stock
on November 29, 1995, of $177,750 and $88,875, respectively. Such
remaining shares of restricted Common Stock will become transferable on
the next anniversary of the date of grant hereafter. Any dividends
declared in respect of shares of restricted Common Stock which are
transferrable by the applicable officer were paid to such applicable
officer. Any dividends declared in respect of shares of restricted
Common Stock which have not become transferable by the applicable
officer are held in escrow by the Company and will be paid to the
applicable officer at such time as the shares in respect of which such
dividend was declared become transferable by such officer.
(5) On December 6, 1995, Mr. Howard Soren, Chief Financial Officer,
Vice-President - Finance and Treasurer retired from the Company. On
December 7, 1995, Mr. David A. Miller, Controller of the Company since
1973, became Vice President - Finance and Treasurer of the Company.
7
<PAGE>
The table below sets forth certain information at December 2, 1995 with
respect to unexercised options to purchase shares of Common Stock under the
Company's Stock Option Plan held by the Chief Executive Officer of the Company
and the other three executive officers of the Company.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON VALUE UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL
NAME EXERCISE (#) REALIZED ($) OPTIONS AT FISCAL YEAR-END (#) YEAR-END ($)(1)
---- ------------ ------------ ------------------------------ ---------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Samson Bitensky..... -- -- -- -- -- --
Stanley August...... -- -- 20,000 -- 283,700 --
Howard Soren........ 20,000 318,700(2) -- -- -- --
Steven Myers........ -- -- 20,000 -- 283,700 --
</TABLE>
- ------------------
(1) Based on the closing sale price on the American Stock Exchange of the
Company's Common Stock on November 29, 1995.
(2) Based on the closing sale price on the American Stock Exchange of the
Company's Common Stock on February 7, 1995, the date Mr. Soren
exercised his options.
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 168,800 shares remain available for issuance as of the Record Date.
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 15
equal annual installments plus interest at prime adjusted periodically.
8
<PAGE>
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.
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, 1990 and ending December 2, 1995. This graph
assumes a $100.00 investment in the Company's Common Stock and in each index on
December 3, 1990 and that all dividends paid by companies in each index were
reinvested.
[The Performance Graph is being filed in tabular form pursuant to
Item 304(d) of Regulation S-T.]
1990 1991 1992 1993 1994 1995
Fab Industries, Inc $100 $213.27 $204.02 $234.17 $218.54 $207.37
Broad Market Index -
American Stock Exchange $100 $117.37 $126.29 $145.73 $138.71 $174.29
Peer Group -
SIC Code 225 $100 $184.04 $286.30 $229.79 $209.12 $172.70
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
It has been the policy of the Company to tie a significant portion of
executive compensation to corporate performance. For all principal executives,
the key elements of compensation are (i) base salary and (ii) annual bonus and,
for the principal executives other than Mr. Bitensky, (iii) long-term incentive
opportunities in the form of restricted stock and stock options. For all of the
principal executives, the largest portions of total compensation are generally
based on performance (as opposed to base salaries and benefits).
Mr. Bitensky is one of the founders of the Company. He owns
approximately 1,565,000 shares of Common Stock constituting approximately 27% of
the total amount outstanding. Accordingly, his interest is very much aligned
with the interest of all stockholders and the Company 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, Mr. Bitensky's compensation is tied 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. The agreement expires March 31, 1998,
subject to automatic successive one year renewals unless either party terminates
on notice given not less than six months prior to the then expiration 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 as defined
in the employment agreement, 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. In the event of the death of Mr. Bitensky while employed or
providing consulting services, an amount equal to the average one year total
annual compensation paid to Mr. Bitensky, based upon the three most recent
full-time employment years, is payable to his beneficiaries over a five year
period.
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, exercisable during the 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 an amount equal
to (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 for such purpose. 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.
As indicated above, the key elements of the compensation payable to the
three principal executives other than the President are base salary, annual
bonus and long-term incentives in the form of restricted stock and stock
options. In general, 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 three executives are considered to be average by industry
standards and are adjusted modestly, the primary focus being on total
compensation. 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. 1995 was not as profitable as 1994 and it was deemed appropriate that
bonuses to the executives be decreased and, accordingly, the cash bonuses for
1995 were less than those paid in 1994.
10
<PAGE>
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 1995. Options were issued in equal amount to
Messrs. August, Soren and Myers in 1988 and 1990. 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
11
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of BDO Seidman, LLP, Certified Public Accountants, 330 Madison
Avenue, New York, New York, served as the Company's independent public
accountants for its fiscal year ended December 2, 1995. 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 2, 1996.
Representatives of BDO Seidman are expected to be present at the Company's 1996
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 for each of Class I and Class II. 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.
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.
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 1996 Annual Meeting of Stockholders should be received by the Company
on or before November 30, 1996 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 DECEMBER 2, 1995, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULE THERETO, TO EACH OF THE COMPANY'S STOCKHOLDERS OF RECORD
ON MARCH 14, 1996, AND EACH BENEFICIAL STOCKHOLDER ON THAT DATE, UPON
12
<PAGE>
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 14, 1996.
By Order of the Board of Directors,
/S/ SHERMAN S. LAWRENCE,
-----------------------------------
Secretary
Dated: April 1, 1996
13
<PAGE>
Appendix A
FAB INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 1996
This Proxy Solicited on Behalf of the Board of Directors
THE UNDERSIGNED, revoking all previous proxies, hereby appoints DAVID
A. MILLER and SHERMAN S. LAWRENCE, 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 2, 1996 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.
(See reverse side)
<PAGE>
Please mark your |X|
vote as indicated in
this example
1. Election of Two (2) Directors to Class II (Instructions: To withhold
authority to vote for any
FOR ALL WITHHOLD individual Class II nominee
NOMINEES LISTED AUTHORITY strike a line through the
(Except as marked to vote for all nominee's name in the text
to the contrary) nominees listed below.)
To Class II of the Board of
Directors (to hold office
until the 1999 Annual Meeting
of Stockholders):
|_| |_| Lawrence H. Bober, Louis Feil
2. Election of Richard Marlin as Director to Class I (to hold
office until the 1998 Annual Meeting of Stockholders)
FOR THE WITHHOLD AUTHORITY
NOMINEE LISTED to vote for the nominee listed
|_| |_|
3. In their discretion, upon such other
business as may properly come before
the meeting.
Dated:___________________________, 1996
________________________________________
Signature
________________________________________
Signature
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.
