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
|X| Definitive proxy statement Commission Only (as permitted
|_| Definitive additional materials by Rule 14a-6(e)(2))
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FAB INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
(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 12, 1998
--------------------
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 Tuesday, May 12, 1998
at 10:15 a.m. for the following purposes:
1. To elect two (2) directors to Class I of the
Company's Board of Directors.
2. 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 13,
1998 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
----------------------
SHERMAN S. LAWRENCE
Secretary
Dated: March 30, 1998
<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 Tuesday, May 12, 1998 at 10:15
a.m., and at any adjournment or adjournments thereof (the "Annual Meeting"). 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 (i) FOR the election of the
nominees named below under the caption "Election of Directors" and (ii) in the
discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the Annual Meeting. 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 Annual
Meeting. The approximate date of mailing of this Proxy Statement and the
accompanying proxy to stockholders is March 30, 1998.
VOTING SECURITIES---RECORD DATE
Only holders of the Company's common stock, par value $.20 per share
(the "Common Stock"), of record at the close of business on March 13, 1998 (the
"Record Date"), will be entitled to notice of and to vote at the Annual Meeting.
On that date, 5,690,342 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.
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned(1) of Class
Samson Bitensky(2).......................... 1,514,259(3) 26.61%
c/o Fab Industries, Inc.
200 Madison Avenue
New York, New York 10016
Royce & Associates, Inc.,
Royce Management Company and
Charles M. Royce(4)......................... 635,732(4) 11.17%
1414 Avenue of the Americas
New York, New York 10019
<PAGE>
Franklin Resources, Inc.,
Franklin Mutual Advisers, Inc.,
Charles B. Johnson and
Rupert H. Johnson, Jr.(5)................... 524,800(5) 9.22%
777 Mariners Island Blvd.
San Mateo, California 94404
T. Rowe Price Associates, Inc. and
T. Rowe Price Small Cap Value Fund, Inc.(6). 345,000(6) 6.06%
100 E. Pratt Street
Baltimore, Maryland 21202
Dimensional Fund Advisors Inc.(7)........... 317,647(7) 5.58%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
David L. Babson and Company Incorporated(8). 289,600(8) 5.09%
One Memorial Drive
Cambridge, Massachusetts 02142
- ----------------------------
(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 the rules and regulations of the Securities and Exchange
Commission (the "Commission"), Mr. Bitensky may be deemed a "control
person" of the Company.
(3) Includes 100,582 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 484 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) Royce & Associates, Inc., a New York corporation ("Royce"), Royce
Management Company, a Connecticut general partnership ("RMC"), and
Charles M. Royce comprise a group under Rule 13d-1(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Royce
beneficially owns and has sole voting power and sole dispositive power
with respect to 609,232 shares of Common Stock and RMC beneficially
owns and has sole voting power and sole dispositive power with respect
to 26,500 shares of Common Stock shown in the table above. Charles M.
Royce is an individual who may be deemed a "control person" of Royce
and RMC. Mr. Royce disclaims beneficial ownership of the shares held by
Royce and RMC. This information is derived from Royce's Schedule 13G,
as amended, dated February 4, 1998, filed with the Commission.
(5) Franklin Mutual Adviser, Inc., a Delaware corporation ("FMA"), is an
investment advisory subsidiary of Franklin Resources, Inc., a Delaware
corporation ("Franklin"). FMA may be deemed to be the beneficial owner
of the securities for purposes of Rule 13d-3 under the Exchange Act.
Charles B. Johnson and Rupert H. Johnson, Jr. (collectively, the
"Principal Shareholders"), each own in excess of 10% of the outstanding
common stock of Franklin. Franklin, FMA and the Principal Shareholders
disclaim any economic interest or beneficial ownership in any of the
securities. Certain of the shares shown in the table above were
previously reported under the name of Heine Securities Corporation,
certain of whose assets and liabilities were acquired by FMA on
November 1, 1996. This information is derived from Franklin's Schedule
13-G, as amended, dated February 12, 1997, filed with the Commission.
2
<PAGE>
(6) These securities are owned by various individual and institutional
investors, including T. Rowe Price Small Cap Value Fund, Inc., a
Maryland corporation (which owns 325,000 shares of Common Stock), which
T. Rowe Price Associates, Inc., a Maryland corporation ("Price
Associates"), serves as investment adviser with power to direct
investments and/or sole power to vote the securities. For purposes of
the reporting requirements of the Exchange Act, Price Associates is
deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities. This information is derived from Price
Associates' Schedule 13G, as amended, dated February 12, 1998, filed
with the Commission.
(7) Dimensional Fund Advisors Inc., a Delaware corporation ("Dimensional"),
is deemed to have beneficial ownership of 317,647 shares of Common
Stock as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of The DFA Investment Trust
Company, a Delaware business trust, or The DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares. This
information is derived from Dimensional's Schedule 13G, dated February
9, 1998, filed with the Commission.
(8) For purposes of the reporting requirements of the Exchange Act, David
L. Babson and Company Incorporated, a Massachusetts corporation
("DLB"), is deemed to be a beneficial owner of 289,600 shares of Common
Stock, which are owned by numerous investment counselling clients. This
information is derived from DLB's Schedule 13G, dated January 20, 1998,
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 Ms. Lerner and Mr. Marlin constitute the nominees for Class I 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.
Shares of Common Percent
Stock Beneficially of
Name of Owned on the Outstanding
Beneficial Owner Record Date(1) Common Stock
---------------- -------------- ------------
Samson Bitensky....................... 1,514,259(2) 26.61%
Sherman S. Lawrence................... 7,050 *
Richard Marlin........................ 500 *
Oscar R. Kunreuther................... 400 *
Louis Feil............................ 4,000 *
Lawrence H. Bober..................... 332 *
Susan B. Lerner....................... 66,161(3) 1.16%
Stanley August........................ 51,926(4) *
Bernd Hopp............................ 4,000(5) *
David A. Miller....................... 6,513(6) *
Steven Myers.......................... 96,216(4)(7) 1.68%
All directors and
officers as a group (10 persons).... 1,747,357(2)(7)(8) 30.44%
- -------------
* Less than 1%
(1) Except as otherwise indicated below, and except for 484, 1,126, 513,
982 and 457 shares allocated, respectively, to Messrs. Bitensky,
August, Miller and Myers and Ms. Lerner pursuant to the Company's ESOP,
each of the persons listed in the table owns the shares of Common Stock
opposite his or her name
3
<PAGE>
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 4,000 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 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.
(5) Includes 4,000 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. On February 2, 1998, Mr. Hopp resigned as Co-President,
Chief Operating Officer of the Company.
(6) Includes 6,000 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.
(7) 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, Chief Executive Officer of the Company,
and the spouse of Steven Myers, Co-President, Chief Operating 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.
(8) Includes 50,000 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 Exchange Act to file reports of
ownership and changes in ownership of Common Stock with the Commission and the
American Stock Exchange. To the Company's knowledge, based solely on review of
the copies of such reports furnished to the Company, all Section 16(a) filing
requirements during the fiscal year ended November 29, 1997 have been complied
with, except as follows: Ms. Lerner did not file a Form 3 on a timely basis to
report her appointment as a director of the Company.
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, two directors are to be elected to Class I 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 Ms. Susan B. Lerner and Mr. Richard Marlin
to Class I. Ms. Lerner and Mr. Marlin are currently directors of the Company.
Mr. Marlin was most recently elected at the 1996 Annual Meeting of Stockholders,
and Ms. Lerner was elected by the Board of Directors on May 1, 1997 to fill a
vacancy in the Board of Directors which resulted from the creation of an
additional seat to Class I of the Company's Board of Directors. Mr. Kunreuther,
a current Class I member of the Board of Directors, has declined to stand for
re-election, and the Board of Directors, in accordance with the Company's
By-Laws, has reduced the size of the Board of Directors, effective immediately
following the Annual Meeting, to six members.
The Class I directors elected will hold office until the 2001 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
4
<PAGE>
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 I.
<TABLE>
<CAPTION>
Principal Occupation Director
Name Age and Company Office(1) Since
- ---- --- --------------------- -----
Nominees for Election to Class I of the Board of Directors:
<S> <C> <C> <C>
Susan B. Lerner 42 Corporate Counsel and Assistant 1997
Secretary of the Company(2)
Richard Marlin 64 Attorney, member of the law 1995
firm of Kramer, Levin, Naftalis
& Frankel(3)
Continuing Members of the Board of Directors:
Class II---Term expires at the 1999 Annual Meeting of Stockholders:
Louis Feil 84 Real estate investment(4) 1966-1983
1984
Lawrence H. Bober 73 Retired, Vice Chairman 1979
of the Board, First New
York Bank for Business and
First New York Business
Bank Corp.(5)
Class III---Term expires at the 2000 Annual Meeting of Stockholders:
Samson Bitensky 78 Chairman of the Board of 1966
Directors and Chief
Executive Officer
of the Company(4)
Sherman S. Lawrence 79 Attorney; Secretary of 1966
the Company(4)(6)
</TABLE>
- -------------
(1) Unless otherwise indicated, directors' principal occupations have been
their respective principal occupation for at least five years.
(2) Ms. Susan B. Lerner has served as Corporate Counsel of the Company
since 1995 and as Assistant Secretary of the Company since May 1997.
From 1993 to 1995, she was president of the Company's Raval Lace
Division. Ms. Lerner is the daughter of Mr. Bitensky, Chairman of the
Board of Directors and Chief Executive Officer of the Company.
(3) Since 1979, Mr. Richard Marlin has been a member of the law firm of
Kramer, Levin, Naftalis & Frankel ("Kramer Levin"). The Company has
retained Kramer Levin to render legal services since 1995.
(4) Member of the Executive Committee.
5
<PAGE>
(5) 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 more than five years, Mr. Bober was a Senior Vice
President of Manufacturers Hanover Trust Company, a commercial bank.
(6) 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 $70,000 to Mr. Lawrence in
respect of legal services rendered to the Company and its subsidiaries
during the fiscal year ended November 29, 1997.
Information Concerning the Board of Directors
The Company has an audit committee (the "Audit Committee") composed of
Mr. Kunreuther (during fiscal 1997) as Chairman, Messrs. Bober and Marlin, and
Ms. Lerner. Mr Bober is expected to become the Chairman of this committee
following Mr. Kunreuther's departure as a director in May 1998. The purpose of
the Audit Committee 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 three meetings during the Company's past
fiscal year.
The Company has a finance committee composed of Messrs. Bitensky, Bober
and 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 (the "Stock Option Committee")
composed of Messrs. Feil and Bober, whose purpose is to make recommendations
concerning the grant of options pursuant to the Company's stock option plan. The
Stock Option Committee held two meetings 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).
During fiscal 1997, the Company paid a fee of $10,000 per annum to
Messrs. Feil, Kunreuther and Bober and $7,500 to each other director who was not
a full-time employee. No additional fee is paid for service on committees of the
Board of Directors.
EXECUTIVE COMPENSATION
The Summary Compensation Table shown below sets forth certain
information concerning the annual and long-term compensation for services in all
capacities to the Company for the 1997, 1996 and 1995 fiscal years, of
6
<PAGE>
those persons who were (i) the Chief Executive Officer during fiscal 1997 and
(ii) the other four executive officers of the Company at the fiscal year ended
November 29, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation All Other
Name and Principal Position Year Salary ($)(1) Bonus ($)(2) Compensation ($)(3)
- --------------------------- ---- ------------- ------------ -------------------
<S> <C> <C> <C> <C>
Samson Bitensky 1997 350,000 455,160 11,416
Chairman of the Board 1996 350,000 417,840 11,700
of Directors and Chief 1995 350,000 464,400 13,810
Executive Officer
Stanley August 1997 230,000 40,000 12,714
Vice Chairman 1996 230,000 80,000 12,074
1995 228,749 100,000 13,810
Bernd Hopp(4) 1997 179,166 -- --
Co-President, Chief
Operating Officer
David A. Miller 1997 128,333 40,000 9,655
Vice President-Finance, 1996 108,125 35,000 8,068
Treasurer and Chief 1995 87,083 35,000 6,928
Financial Officer
Steven Myers 1997 183,333 70,000 12,423
Co-President, Chief 1996 160,000 78,000 11,967
Operating Officer 1995 159,166 90,000 13,810
</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 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 for Messrs. Bitensky, August
and Myers and Fab Industries, Inc. Profit Sharing Plan for Mr. Miller
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 February 2, 1998, Mr. Hopp resigned as Co-President, Chief
Operating Officer of the Company.
The table below sets forth certain information concerning stock options
grants made during the last fiscal year to the Chief Executive Officer and the
other four executives of the Company. In addition, in accordance with Commission
disclosure rules, the hypothetical gains, or "options spreads," for each option
grant are shown based on compound annual rates of stock price appreciation of 5%
and 10% from the grant date to the expiration date. The assumed rates of growth
are prescribed by the Commission and are for illustrative purposes only; they
are not intended to predict future stock prices, which will depend upon market
conditions and the Company's future performance and prospects. All options were
issued under the Company's 1987 Stock Option Plan and 1997 Stock Incentive Plan.
7
<PAGE>
<TABLE>
<CAPTION>
OPTIONS GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants (1) for Option Term (2)
------------------------------------------------------------- ----------------------
Number of
Securities % of Total Options
Underlying Granted to
Options Employees in Last Exercise Price Expiration
Granted (#) Fiscal Year (3) ($/Share) Date 5% ($) 10% ($)
----------- --------------- --------- ---- ------ -------
Name
<S> <C> <C> <C> <C> <C> <C> <C>
Bernd Hopp(4)....... 20,000 31% 30.06 5/15/07 378,000 958,200
</TABLE>
- ------------------
(1) In general, options become exercisable in five annual installments.
(2) Assumes that the stock price on the grant date ($30.06 on May 16, 1997)
has grown, as indicated, at (a) 5% per annum over the term of the
option to $48.96 or (b) 10% per annum over the term of the option to
$77.97.
(3) During the last fiscal year, the Company granted to thirteen employees
options to purchase an aggregate of 64,000 shares. All grants were made
at exercise prices equal to the market price on the date of grant.
(4) On February 2, 1998, Mr. Hopp resigned as Co-President, Chief Operating
Officer of the Company. Unvested options to acquire 16,000 shares of
Common Stock terminated upon Mr. Hopp's termination of employment with
the Company, and vested options to acquire 4,000 shares of Common Stock
will expire within 90 days following his termination, if not exercised.
The table below sets forth certain information at November 29, 1997
with respect to unexercised options to purchase shares of Common Stock under the
Company's Stock Option Plan held by the Chief Executive Officer and the other
four executive officers of the Company.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Shares Number of Securities Value of Unexercised in-the-
Acquired on Value Underlying Unexercised Money Options at Fiscal
Name Exercise (#) Realized ($) Options at Fiscal Year-End (#) Year-End ($)(1)
---- ------------ ------------ ------------------------------ ---------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Stanley August...... -- -- 20,000 -- 286,200 --
Bernd Hopp(2)....... -- -- 4,000 16,000 -- --
David A. Miller..... -- -- 6,000 6,000 38,620 15,000
Steven Myers........ -- -- 20,000 -- 286,620 --
</TABLE>
- ------------------
(1) Based on the closing sale price on the American Stock Exchange of the
Company's Common Stock on November 28, 1997 at $29-3/4.
(2) On February 2, 1998, Mr. Hopp resigned as Co-President, Chief Operating
Officer of the Company. Unvested options to acquire 16,000 shares of
Common Stock terminated upon Mr. Hopp's termination of
8
<PAGE>
employment with the Company, and vested options to acquire 4,000 shares
of Common Stock will expire within 90 days following his termination,
if not exercised.
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 "1987 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. The 1987 Plan terminated on May
31, 1997. All awards made under the 1987 Plan prior to its termination shall
remain in effect until they are satisfied or terminated. As of the Record Date,
options to acquire 199,350 shares of Common Stock granted under the 1987 Plan
remained outstanding.
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 Chief Executive Officer 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.
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.
1997 Stock Incentive Plan
The 1997 Stock Incentive Plan (the "1997 Plan"), adopted on February
27, 1997, was approved by the stockholders of the Company on May 1, 1997. The
1997 Plan provides for the issuance of a total of up to 175,000 authorized and
unissued shares of Common Stock, treasury shares and/or shares acquired by the
Company for the purposes of the 1997 Plan. Awards under the 1997 Plan may be
made in the form of (i) incentive stock options, (ii) nonqualified stock
options, (iii) stock appreciation rights, (iv) dividend equivalent rights, (v)
restricted stock, (vi) restricted stock units and (vii) other stock-based
awards. Awards may be made to any director, officer and other employee of the
Company and its subsidiaries, and to such consultants to the Company, as the
Stock Option Committee shall in its discretion select. As of the Record Date,
160,000 shares of Common Stock remained available for issuance under the 1997
Plan.
9
<PAGE>
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 1, 1992 and ending November 29, 1997. This graph
assumes a $100.00 investment in the Company's Common Stock and in each index on
December 1, 1992 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.]
1992 1993 1994 1995 1996 1997
FAB INDUSTRIES INC. 100 114.78 107.11 101.64 94.84 108.03
INDUSTRY INDEX 100 80.26 73.04 60.32 85.41 72.43
BROAD MARKET 100 115.39 109.83 138.00 148.87 170.05
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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, significant 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 1,514,000 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
Chief Executive Officer. The agreement provided it would expire on 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 current expiration date is March 1999. 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, if any, 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 Chief Executive Officer are base
salary, annual bonus and long-term incentives in the form of restricted stock
and stock options. In general, significant 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
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receive annual cash bonuses based on a review of the Company's overall
profitability, divisional profitability and such executives' performance during
the year for which such a bonus is payable.
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. Other than for Mr. Hopp,
no options were issued or grants made to executives in 1997. Currently
outstanding options were issued to Messrs. August, Myers and Miller in 1990 and
to Mr. Miller in 1996. Restricted stock grants, related in amount to salary and
bonus, were made to Messrs. August 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. As of fiscal 1996 year-end, all restricted shares granted
have fully vested, and there are no restricted shares outstanding.
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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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 November 29, 1997. 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 on Tuesday, May 12, 1998. Representatives
of BDO Seidman are expected to be present at the Company's Annual Meeting 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 Class I. 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.
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<PAGE>
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 1999 Annual Meeting of Stockholders should be received by the Company
on or before November 30, 1998 in order that they may be considered for
inclusion in the Company's proxy materials.
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED NOVEMBER 29, 1997, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULE THERETO, TO EACH OF THE COMPANY'S STOCKHOLDERS OF RECORD
ON MARCH 13, 1998, 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 13, 1998.
By Order of the Board of Directors,
/s/SHERMAN S. LAWRENCE
SHERMAN S. LAWRENCE,
Secretary
Dated: March 30, 1998
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<PAGE>
FAB INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998
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, and each of them, attorneys and proxies with
full power of substitution and resubstitution, 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 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 the Stockholders of the Company to be held on Tuesday, May
12, 1998 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, as instructed below and in their discretion with respect to any other
matter that may properly come before such meeting.
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, AS SET FORTH IN
THE ACCOMPANYING PROXY STATEMENT.
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<PAGE>
1. Election of Two (2) Directors to Class I
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY
(except as marked to the contrary) |_| to vote for all nominees listed |_|
(Instruction: To withhold authority to vote for any individual Class I
nominee, strike a line through the nominee's name in the list below.)
To Class I of the Board of Directors (to hold office until the 2001 Annual
Meeting of Stockholders):
Susan B. Lerner
Richard Marlin
2. In their discretion, upon any other business that may properly come before
the meeting.
Dated: _____________________________, 1998
------------------------------------------------
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 envelop provided
for this purpose. No postage is required for
mailing in the United States.
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