<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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
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> 2
FAB INDUSTRIES, INC.
200 MADISON AVENUE
NEW YORK, NEW YORK 10016
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1999
------------------------
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 6, 1999
at 10:15 a.m. for the following purposes:
1. To elect three (3) directors to Class II 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 12, 1999 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 10016, 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,
LOGO
SHERMAN S. LAWRENCE
Secretary
Dated: March 29, 1999
<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 6, 1999 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 29, 1999.
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 12, 1999 (the
"Record Date"), will be entitled to notice of and to vote at the Annual Meeting.
On that date, 5,414,738 shares of Common Stock were issued and outstanding,
excluding shares held by the Company in treasury. Each outstanding share
entitles the holder thereof to one vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
(except as noted below) as to the shares of Common Stock beneficially owned by
each person known by the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
------------------------------------ --------------------- --------
<S> <C> <C>
Samson Bitensky(2).............................. 1,514,481(3) 27.97%
c/o Fab Industries, Inc.
200 Madison Avenue
New York, New York 10016
Private Capital Management, Inc. and
Bruce S. Sherman(4)............................. 602,950(4) 11.14%
3003 Tamiami Trail N.
Naples, Florida 34109
Royce & Associates, Inc.,
Royce Management Company and
Charles M. Royce(5)............................. 556,732(5) 10.28%
1414 Avenue of the Americas
New York, New York 10019
David L. Babson and Company Incorporated(6)..... 381,300(6) 7.04%
One Memorial Drive
Cambridge, Massachusetts 02142
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
------------------------------------ --------------------- --------
<S> <C> <C>
Dimensional Fund Advisors Inc.(7)............... 368,847(7) 6.81%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
T. Rowe Price Associates, Inc. and
T. Rowe Price Small Cap Value Fund, Inc.(8)..... 335,000(8) 6.19%
100 E. Pratt Street
Baltimore, Maryland 21202
</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 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 659 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) Bruce S. Sherman is President of Private Capital Management, Inc., a Florida
corporation ("PMC"), and exercises shared dispositive power with respect to
shares held by PMC on behalf of its clients. Mr. Sherman disclaims existence
of a group, as defined under Section 13(d)(3) and Rule 13d-5(b)(1) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
information is derived from PMC's Schedule 13G filed with the Commission on
February 17, 1999.
(5) 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-5(b)(1) of the Exchange Act. Royce
beneficially owns and has sole voting power and sole dispositive power with
respect to 540,432 shares of Common Stock and RMC beneficially owns and has
sole voting power and sole dispositive power with respect to 16,300 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, filed with the Commission
on February 10, 1999.
(6) 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 381,300 shares of Common Stock, which are
owned by numerous investment counselling clients. This information is
derived from DLB's Schedule 13G, as amended, filed with the Commission on
January 19, 1999.
(7) Dimensional Fund Advisors Inc., a Delaware corporation ("Dimensional") and
an investment advisor registered under Section 203 of the Investment
Advisors Act of 1940, furnishes investment advice to four investment
companies registered under the Investment Advisors Act of 1940 and serves as
investment manager to certain other investment vehicles, including
commingled group trusts. In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over the
shares of Common Stock that are owned by these investment companies and
investment vehicles. Dimensional disclaims beneficial ownership of all such
shares. This information is derived from Dimensional's Schedule 13G, as
amended, filed with the Commission on February 11, 1999.
(8) These securities are owned by various individual and institutional
investors, including T. Rowe Price Small Cap Value Fund, Inc., a Maryland
corporation (which owns 318,000 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, filed with the Commission
on February 5, 1999.
2
<PAGE> 5
The following table sets forth certain information as of the Record Date as
to the shares of Common Stock beneficially owned by the Company's directors (of
which Messrs. Bober, Bernstein and Greenberg constitute the nominees for Class
II directors), the Chief Executive Officer of the Company, the other four
executive officers identified in the Summary Compensation Table set forth herein
and the directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY PERCENT OF
NAME OF OWNED ON THE OUTSTANDING
BENEFICIAL OWNER RECORD DATE(1) COMMON STOCK
- ---------------- ------------------ ------------
<S> <C> <C>
Samson Bitensky............................. 1,514,481(2) 27.97%
Sherman S. Lawrence......................... 7,050 *
Richard Marlin.............................. 500 *
Lawrence H. Bober........................... 332 *
Frank S. Greenberg.......................... 500 *
Martin B. Bernstein......................... 1,000 *
Susan B. Lerner............................. 68,266(3) 1.26%
Stanley August.............................. 52,092(4) *
Sam Hiatt................................... 3,272(5) *
David A. Miller............................. 10,659(6) *
Steven Myers................................ 96,389(4)(7) 1.77%
All directors and officers as a group (13
persons).................................. 1,765,308(2)(7)(8) 32.20%
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise indicated below, and except for 659 shares allocated to
Mr. Bitensky, 1,292 shares allocated to Mr. August, 1,072 shares allocated
to Mr. Hiatt, 659 shares allocated to Mr. Miller, 1,155 shares allocated to
Mr. Myers, and 562 shares allocated to 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 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 note 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 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.
(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 600 shares granted pursuant to a Restricted Stock Award that will
become vested within 60 days of the Record Date. Also includes 1,000 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) Includes 10,000 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 67,000 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 28, 1998 have been complied
with, except as follows: Messrs. August, Bitensky, Miller and Myers and Ms.
Lerner failed to file Forms 5 on a timely basis to report shares allocated to
them pursuant to the Company's ESOP, and Messrs. Hiatt and Jerry Deese failed to
file Forms 5 on a timely basis to report holdings that should have been reported
during the most recent fiscal year.
3
<PAGE> 6
PROPOSAL -- ELECTION OF DIRECTORS
At the Annual Meeting, three directors are to be elected to Class II 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 Messrs. Lawrence H. Bober, Martin B.
Bernstein and Frank S. Greenberg to Class II. Messrs. Bober, Bernstein and
Greenberg are currently directors of the Company. Mr. Bober was most recently
elected at the 1997 Annual Meeting of Stockholders. Mr. Bernstein was elected by
the Board of Directors on May 12, 1998 to replace Mr. Louis Feil. Mr. Greenberg
was elected on May 12, 1998 to fill a vacancy in the Board of Directors which
resulted from the creation of an additional seat to Class II of the Company's
Board of Directors.
The Class II directors elected will hold office until the 2002 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 for Class II.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND COMPANY OFFICE(1) SINCE
- ---- --- --------------------- --------
<S> <C> <C> <C>
NOMINEES FOR ELECTION TO CLASS II OF THE BOARD OF DIRECTORS:
Lawrence H. Bober 74 Retired, Vice Chairman of the Board, 1979
First New York Bank for Business and
First New York Business Bank Corp.(2)
Martin B. Bernstein 65 Chief Executive Officer of Ponderosa 1998
Fibres of America, Inc.(3)(4)
Frank S. Greenberg 69 Retired, Chairman of the Board of 1998
Directors and Chief Executive Officer,
Burlington Industries(5)
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS:
Class I -- Term expires at the 2001 Annual Meeting of Stockholders:
Susan B. Lerner 43 Corporate Counsel and Assistant 1997
Secretary of the Company(6)
Richard Marlin 65 Attorney, member of the law firm of 1995
Kramer Levin Naftalis & Frankel LLP(7)
Class III -- Term expires at the 2000 Annual Meeting of Stockholders:
Samson Bitensky 79 Chairman of the Board of Directors and 1966
Chief Executive Officer of the
Company(3)
Sherman S. Lawrence 80 Attorney; Secretary of the 1966
Company(3)(8)
</TABLE>
- ---------------
(1) Unless otherwise indicated, directors' principal occupations have been their
respective principal occupation for at least five years.
(2) 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. Prior to 1988 and for more than five years, Mr. Bober was a
Senior Vice President of Manufacturers Hanover Trust Company, a commercial
bank.
(3) Member of the Executive Committee.
(4) Mr. Martin B. Bernstein is Chief Executive Officer of Ponderosa Fibres of
America, Inc. ("PFAI"). PFAI is a member of a limited liability company or a
stockholder of a corporation that are partners of two partnerships in
pending Chapter XI proceedings. Mr. Bernstein is a member of the Board of
Directors of Empire Insurance Company and Allcity Insurance Company.
4
<PAGE> 7
(5) Mr. Frank S. Greenberg is a retired Chairman of the Board and Chief
Executive Officer of Burlington Industries, where he served from October
1986 until February 1998.
(6) 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.
(7) Since 1979, Mr. Richard Marlin has been a member of the law firm of Kramer
Levin Naftalis & Frankel LLP ("Kramer Levin"). The Company has retained
Kramer Levin to render legal services since 1995.
(8) 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 28, 1998.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company has an audit committee (the "Audit Committee") composed of
Messrs. Bober and Marlin and Ms. Lerner. 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
Greenberg and Ms. Lerner, 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. Bernstein, Bober and Greenberg, 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 has a compensation committee (the "Compensation Committee")
composed of Messrs. Bernstein, Bober and Greenberg. The Compensation Committee
is charged with making recommendations regarding the compensation of senior
management personnel and setting performance goals. There were no formal
meetings of this committee held during the Company's 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 or she served on such committees).
During fiscal 1998, the Company paid fees to the following directors who
were not employees of the Company: $10,000 to Mr. Bober, $7,500 each to Messrs.
Lawrence and Marlin, $5,000 each to Messrs. Bernstein and Greenberg who became
directors of the Company on May 12, 1998, $5,000 to Mr. Feil who resigned from
the Board of Directors as of May 12, 1998, and $5,000 to Mr. Oscar Kunreuther
who did not stand for reelection. No additional fee is paid for service on
committees of the Board of Directors.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The Summary Compensation Table shown below sets forth certain information
concerning the annual and long-term compensation for services in all capacities
to the Company for the 1998, 1997 and 1996 fiscal years, of those persons (the
"named executive officers") who were (i) the Chief Executive Officer during
fiscal 1998 and (ii) the other four most highly-compensated executive officers
of the Company at the fiscal year ended November 28, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(2) COMPENSATION ($)(3)
- --------------------------- ---- ------------- ------------ -------------------
<S> <C> <C> <C> <C>
Samson Bitensky................ 1998 350,000 -- 7,942
Chairman of the Board 1997 350,000 455,160 11,888
of Directors and Chief 1996 350,000 417,840 11,700
Executive Officer
Stanley August................. 1998 230,000 -- 7,942
Vice Chairman 1997 230,000 40,000 12,916
1996 230,000 80,000 12,074
Steven Myers................... 1998 200,000 -- 7,942
Co-President, Chief 1997 183,333 70,000 12,822
Operating Officer 1996 160,000 78,000 11,967
Sam Hiatt...................... 1998 169,166 -- 7,942
Vice President-Sales 1997 160,000 90,000 12,765
1996 160,000 132,000 11,842
David A. Miller................ 1998 134,583 -- 6,570
Vice President-Finance, 1997 128,333 40,000 10,209
Treasurer and Chief 1996 108,125 35,000 8,068
Financial Officer
</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, Myers and Hiatt 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.
6
<PAGE> 9
OPTIONS GRANTS IN LAST FISCAL YEAR
No stock options were granted to any of the named executive officers or
directors of the Company during the last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The table below sets forth certain information at November 28, 1998 with
respect to unexercised options to purchase shares of Common Stock under the
Company's Stock Option Plan held by the named executive officers of the Company.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL
SHARES OPTIONS AT FISCAL YEAR-END (#) YEAR-END ($)(1)
ACQUIRED ON VALUE ------------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley August....... -- -- 20,000 -- 87,400 --
David A. Miller...... -- -- 8,000 4,000 8,740 --
Steven Myers......... -- -- 20,000 -- 87,400 --
Sam Hiatt............ 1,000 16,810 1,000 -- 4,370 --
</TABLE>
- ---------------
(1) Based on the closing sale price on the American Stock Exchange of the
Company's Common Stock on November 27, 1998 at $19 13/16.
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 159,150 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.
7
<PAGE> 10
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,
165,000 shares of Common Stock remained available for issuance under the 1997
Plan.
8
<PAGE> 11
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 November 28, 1993 and ending November 28, 1998. This graph
assumes a $100.00 investment in the Company's Common Stock and in each index on
November 28, 1993 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.
<TABLE>
<CAPTION>
FAB INDUSTRIES, INC PEER GROUP INDEX AMEX MARKET INDEX
------------------- ---------------- -----------------
<S> <C> <C> <C>
'1993' 100 100 100
'1994' 93.32 91.01 95.18
'1995' 88.55 75.15 119.6
'1996' 82.63 106.42 129.01
'1997' 94.12 90.24 147.37
'1998' 64.24 59.84 145.59
</TABLE>
9
<PAGE> 12
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
1,514,500 shares of Common Stock constituting approximately 28% 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 2000. 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
four 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 four 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 overall profitability, divisional profitability and such
executives' performance during the year for which such a bonus is payable.
Fiscal 1998 was not as profitable as fiscal 1997 and it was deemed appropriate
that no bonuses were given to any of the named executive officers.
10
<PAGE> 13
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's employment is
terminated (other than by reason of death or long-term disability) 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. Currently outstanding options
were issued to Messrs. August, Hiatt, 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 and Mr. Hiatt in 1996. 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 to Messrs. August and Myers have fully vested, and there are no
restricted shares issued to Messrs. August and Myers outstanding. As of fiscal
1998 year-end, of the 2,400 restricted shares initially granted to Mr. Hiatt,
1,800 shares have vested and 600 shares have not yet vested.
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
Martin B. Bernstein
Frank S. Greenberg
11
<PAGE> 14
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 28, 1998. BDO Seidman continues
to serve as the Company's independent public accountants and is expected to be
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 Thursday, May 6, 1999. 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 directors
for 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
Pursuant to the Company's By-Laws, in order for a stockholder to present
business at an annual meeting of stockholders, such matters must be filed in
writing with the Secretary of the Company in a timely manner. To be timely, a
stockholder's notice must be delivered to the principal executive offices of the
Company not less than one hundred (100) nor more than one hundred twenty (120)
days prior to the anniversary date of the immediately preceding annual meeting
(the "Anniversary Date"); provided, however, that in the event that the annual
meeting is scheduled to be held on a date more than thirty (30) days before the
Anniversary Date or more than sixty (60) days after the Anniversary Date, notice
by the stockholder must be received by the Company not later than the close of
business on the later of (i) the 100th day prior to the scheduled date of
12
<PAGE> 15
such annual meeting or (ii) the 15th day following the public announcement of
the date of the meeting. Such notice shall set forth, as to each matter proposed
to be brought before the annual meeting, (i) a brief description of the business
desired to be brought before such annual meeting and the reasons for conducting
such business at such annual meeting; (ii) the name and address of the
stockholder giving notice as they appear on the Company's stock transfer books,
and the class and number of shares of the Company's capital stock which are
beneficially owned by such stockholder; (iii) the names and addresses of the
beneficial owners of the Company's capital stock registered in the stockholder's
name, and the class and number of shares of the Company's capital stock
beneficially owned by such beneficial owners; (iv) the names and addresses of
other stockholders known by the stockholder giving notice to support such
proposal, and the class and number of shares of the Company's capital stock
beneficially owned by such other stockholders; and (v) any material interest of
the stockholder in such proposal.
Stockholder proposals in respect of matters to be acted upon at the
Company's 2000 Annual Meeting of Stockholders should be received by the Company
on or before January 27, 2000 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 28, 1998, INCLUDING FINANCIAL STATEMENTS
AND SCHEDULE THERETO, TO EACH OF THE COMPANY'S STOCKHOLDERS OF RECORD AS OF
MARCH 12, 1999, 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 AS OF MARCH 12, 1999.
By Order of the Board of Directors,
LOGO
SHERMAN S. LAWRENCE
Secretary
Dated: March 29, 1999
13
<PAGE> 16
FAB INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1999
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 Thursday,
May 6, 1999 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.
(SEE REVERSE SIDE)
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<PAGE> 17
1. Election of Three (3) Directors to Class II
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 II
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
To Class II of the Board of Directors (to hold office until the 2002
Annual Meeting of Stockholders):
Lawrence H. Bober
Martin B. Bernstein
Frank S. Greenberg
2. In their discretion, upon any other business that may properly come
before the meeting.
Dated:_____________________________, 1999
_________________________________________
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.
-2-
