<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 4, 2000
------------------------
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 4, 2000
at 10:15 a.m., local time, for the following purposes:
1. To elect two (2) directors to Class III of the Company's Board of
Directors.
2. To consider a stockholder proposal.
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 10, 2000 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 27, 2000
<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 4, 2000 at 10:15 a.m., local
time, 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," (ii) AGAINST the
stockholder proposal and (iii) 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 27,
2000.
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 10, 2000 (the
"Record Date"), will be entitled to notice of and to vote at the Annual Meeting.
On that date, 5,353,516 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 (5%) 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).............................. 1,513,930(3) 28.28%
c/o Fab Industries, Inc.
200 Madison Avenue
New York, New York 10016
Private Capital Management, Inc.,............... 972,388(4) 18.16%
Bruce S. Sherman(4), and
Michael J. Seaman(4)
3003 Tamiami Trail N
Naples, Florida 34109
Royce & Associates, Inc.,....................... 531,132(5) 9.92%
Royce Management Company and
Charles M. Royce(5)
1414 Avenue of the Americas
New York, New York 10019
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
------------------------------------ --------------------- --------
<S> <C> <C>
David L. Babson and Company Incorporated(6)..... 270,600(6) 5.05%
One Memorial Drive
Cambridge, Massachusetts 02142
Dimensional Fund Advisors Inc.(7)............... 367,247(7) 6.86%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Graces & White, Inc.(8)......................... 273,900(8) 5.12%
515 Madison Ave
New York, New York 10016
</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 108 shares allocated to Mr. Bitensky pursuant to the
Fab Industries, Inc. 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 Chairman of Private Capital Management, Inc., a Florida
corporation ("PCM"), and exercises shared dispositive power with respect to
shares held by PCM on behalf of its clients. Mr. Bruce S. 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, as amended, with
the Commission on February 15, 2000.
(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 527,432 shares of Common Stock and RMC beneficially owns and has
sole voting power and sole dispositive power with respect to 3,700 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 9, 2000.
(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 270,600 shares of Common Stock, which are
owned by numerous investment counseling clients. This information is derived
from DLB's Schedule 13G, as amended, filed with the Commission on January
27, 2000.
(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 3, 2000.
(8) Grace & White, Inc., a New York corporation ("Grace") and an investment
advisor registered under Section 203 of the Investment Advisers Act of 1940,
beneficially owns and has sole dispositive power with respect to 273,900
shares of Common Stock shown in the table above. Grace has sole voting power
with respect to 71,000 shares of Common Stock shown in the table above. This
information is derived from Grace's Schedule 13G filed with the Commission
on February 7, 2000.
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 Mr. Greenberg constitutes one of the two nominees for Class III
directors), the Chief Executive Officer of the Company (constituting the other
nominee for Class III directors), 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............................. 1,513,930(2) 28.28%
Sherman S. Lawrence......................... 7,050 *
Richard Marlin.............................. 500 *
Lawrence H. Bober........................... 332 *
Frank S. Greenberg.......................... 500 *
Martin B. Bernstein......................... 2,000 *
Susan B. Lerner............................. 70,327(3) 1.31%
Stanley August.............................. 52,202(4) *
Jerry Deese................................. 12,840(5) *
Sam Hiatt................................... 2,178(6) *
David A. Miller............................. 12,748(5) *
Steven Myers................................ 96,497(4)(7) 1.80%
All directors and officers as a group (12
persons).................................. 1,771,104(2)(7)(8) 32.64%
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise indicated below, and except for 108 shares allocated to
Mr. Bitensky, 1,402 shares allocated to Mr. August, 840 shares allocated to
Mr. Deese, 1,178 shares allocated to Mr. Hiatt, 748 shares allocated to Mr.
Miller, 1,263 shares allocated to Mr. Myers, and 623 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 8,000 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 12,000 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 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.
(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 73,000 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 27, 1999 have been complied
with, except the Forms 5 for Jerry Deese, Sam Hiatt, Stanley August, Samson
Bitensky, David A. Miller, Steven Myers and Susan B. Lerner were untimely filed
in disclosing shares allocated to them under the Company's ESOP.
3
<PAGE> 6
PROPOSAL -- ELECTION OF DIRECTORS
At the Annual Meeting, two directors are to be elected to Class III of the
Company's Board of Directors for a term of three years. Unless a proxy shall
specify that it is not to be voted for a director, it is intended that the
shares represented by each duly executed and returned proxy will be voted in
favor of the election as directors of Messrs. Samson Bitensky and Frank S.
Greenberg to Class III. Messrs. Bitensky and Greenberg are currently directors
of the Company. Mr. Bitensky was most recently elected as a Class III board
member at the 1997 Annual Meeting of Stockholders. Mr. Greenberg was elected as
a Class II board member at the 1999 Annual Meeting of Stockholders. Mr.
Greenberg has been reclassified as a Class III board member to fill a vacancy in
that class due to the decision of Mr. Sherman S. Lawrence, a current Class III
member of the Board of Directors, not to stand for re-election. 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 III directors elected will hold office until the 2003 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualified. 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 III.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR
NAME AGE AND COMPANY OFFICE(1) SINCE
---- --- --------------------- --------
<S> <C> <C> <C>
NOMINEES FOR ELECTION TO CLASS III OF THE BOARD OF DIRECTORS:
Samson Bitensky...................... 80 Chairman of the Board of Directors and 1966
Chief Executive Officer of the
Company(2)
Frank S. Greenberg................... 70 Retired, Chairman of the Board of 1998
Directors and Chief Executive Officer,
Burlington Industries, Inc.(3)
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS:
Class I -- Term expires at the 2001 Annual Meeting of Stockholders:
Susan B. Lerner...................... 44 Corporate Counsel and Assistant 1997
Secretary of the Company(4)
Richard Marlin....................... 66 Attorney, member of the law firm of 1995
Kramer Levin Naftalis & Frankel LLP(5)
Class II -- Term expires at the 2002 Annual Meeting of Stockholders:
Lawrence H. Bober.................... 75 Retired, Vice Chairman of the Board, 1979
First New York Bank for Business and
First New York Business Bank Corp.(6)
Martin B. Bernstein.................. 66 Chief Executive Officer of Ponderosa 1998
Fibres of America, Inc.(2)(7)
</TABLE>
- ---------------
(1) Unless otherwise indicated, directors' principal occupations have been their
respective principal occupation for at least five years.
(2) Member of the Executive Committee.
(3) Mr. Frank S. Greenberg is a retired Chairman of the Board and Chief
Executive Officer of Burlington Industries, Inc., where he served from
October 1986 until February 1998.
(4) 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.
4
<PAGE> 7
(5) 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.
(6) Mr. Lawrence H. Bober is a retired Vice Chairman of the Board of First New
York Business Bank Corp. ("FNYBBC") and of First New York Bank for Business
(formerly, The First Women's Bank), a commercial bank and wholly-owned
subsidiary of FNYBBC, 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.
(7) 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 which
have been reorganized under Chapter XI in fiscal 1999. Mr. Bernstein is a
member of the Board of Directors of Empire Insurance Company and Allcity
Insurance Company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Company has an audit committee (the "Audit Committee") composed of
Messrs. Bober, Greenberg and Marlin. 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 (the "Finance Committee") composed of
Messrs. Bitensky, Bober and Greenberg and Ms. Lerner, whose purpose is to
discuss proper investments for corporate funds. This committee held one meeting
during the Company's past fiscal year.
The Company has a compensation and stock option committee (the
"Compensation Committee") composed of Messrs. Bernstein, Bober and Greenberg,
whose purposes are to make recommendations concerning the grant of options
pursuant to the Company's stock option plan, and to make recommendations
regarding the compensation of senior management personnel and setting
performance goals. This Compensation Committee was formed on May 16, 1999 to
merge the stock option committee and compensation committee into one committee.
This committee held one meeting during the Company's past fiscal year.
The Company has an executive committee (the "Executive Committee") composed
of Messrs. Bernstein, Bitensky and Lawrence, whose purpose is to operate the
Company and to serve as the main contact for the Company committees. There were
no formal meetings of this committee held during the Company's past fiscal year;
however, several telephone meetings were held. Mr. Lawrence has decided not to
stand for re-election to the Board of Directors and will cease to be a member of
the Executive Committee as of the date of the Annual Meeting.
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 1999, the Company paid fees to the following directors who
were not employees of the Company: $10,000 each to Messrs. Bober, Greenberg and
Bernstein, and $7,500 each to Messrs. Lawrence and Marlin. No additional fee is
paid for service on committees of the Board of Directors.
During fiscal 1999, the Company granted options to each of Messrs.
Bernstein, Bober, Greenberg, Lawrence and Marlin to acquire 2,000 shares of
Common Stock at an exercise price of $13.00 (representing the closing sale price
of the Company's Common Stock on the date of grant). These options are to expire
in ten years. The Company also granted Ms. Lerner options to acquire 5,000
shares of Common Stock at an exercise price of $13.00 (representing the closing
sale price of the Company's Common Stock on the date of grant). These options
will expire in ten years.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The Summary Compensation Table shown below sets forth certain information
concerning the annual and long-term compensation for services in all capacities
to the Company for the 1999, 1998 and 1997 fiscal years of those persons (the
"named executive officers") who were (i) the Chief Executive Officer during
fiscal 1999 and (ii) the other four most highly-compensated executive officers
of the Company at the fiscal year ended November 27, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($)(2) COMPENSATION ($)(3)
- --------------------------- ---- ------------- ------------ -------------------
<S> <C> <C> <C> <C>
Samson Bitensky................ 1999 350,000 -- 4,483
Chairman of the Board 1998 350,000 -- 7,942
of Directors and Chief 1997 350,000 455,160 11,888
Executive Officer
Stanley August................. 1999 230,000 -- 4,483
Co-President, Chief 1998 230,000 -- 7,942
Operating Officer 1997 230,000 40,000 12,916
Steven Myers................... 1999 227,500 -- 4,483
Co-President, Chief 1998 200,000 -- 7,942
Operating Officer 1997 183,333 70,000 12,822
Sam Hiatt...................... 1999 206,667 -- 4,483
Vice President-Sales 1998 169,166 -- 7,942
1997 160,000 90,000 12,765
David A. Miller................ 1999 148,750 -- 4,080
Vice President-Finance, 1998 134,583 -- 6,570
Treasurer and Chief 1997 128,333 40,000 10,209
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
the Fab Industries, Inc. Profit Sharing Plan for Mr. Miller and the amount
contributed by the Company to its ESOP for shares allocated during each year
to the account of the applicable officer.
6
<PAGE> 9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The table below sets forth certain information concerning individual grants
of stock options made during the last fiscal year to the named executive
officers.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (1)
------------------------------------------------------------------------- ----------------
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS
UNDERLYING OPTION/ GRANTED TO EMPLOYEES EXERCISE OF EXPIRATION
NAME SARS GRANTED (#) IN FISCAL YEAR BASE PRICE ($) DATE 5% ($) 10% ($)
- ---- -------------------- -------------------- -------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Sam Hiatt............ 4,000 3.5% 13.00 10/27/09 32,703 82,875
David A. Miller...... 10,000 8.8% 13.00 10/27/09 81,756 207,187
</TABLE>
- ---------------
(1) The amounts shown on this table represent hypothetical gains that could be
achieved for the options if exercised at the end of the option term. These
gains are based on the assumed rates of stock appreciation (based on the
market value on the date of grant of $13.00 per share) of 5% and 10%,
compounded annually from the date the options were granted to their
expiration date. The gains shown are net of the option exercise price, but
do not include deductions for taxes or other expenses associated with the
exercise. Actual gains, if any, on stock option exercises will depend on the
future performance of the Common Stock, the optionholder's continued
employment through the option period, and the date on which the options are
exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The table below sets forth certain information at November 27, 1999 with
respect to unexercised options to purchase shares of Common Stock held by the
named executive officers of the Company.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL
SHARES OPTIONS AT FISCAL YEAR-END (#) YEAR-END ($)(1)
ACQUIRED ON VALUE ------------------------------- -----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley August....... -- -- 20,000 -- -- --
Steven Myers......... -- -- 20,000 -- -- --
Sam Hiatt............ -- -- 1,000 4,000 -- --
David A. Miller...... -- -- 10,000 12,000 -- --
</TABLE>
- ---------------
(1) Based on the closing sale price on the American Stock Exchange of the
Company's Common Stock on November 29, 1999 at $11 7/8.
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 146,050 shares of Common Stock granted under the 1987 Plan remained
outstanding.
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.
7
<PAGE> 10
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,
123,700 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 December 3, 1994 and ending November 27, 1999. This graph
assumes a $100.00 investment in the Company's Common Stock and in each index on
December 3, 1994 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.
[COMPARISON GRAPH]
<TABLE>
<CAPTION>
FAB INDUSTRIES INC PEER GROUP INDEX AMEX MARKET INDEX 100
------------------ ---------------- ---------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 94.89 82.58 125.65
1996 88.54 116.94 135.54
1997 100.85 99.16 154.83
1998 68.83 65.75 152.96
1999 43.47 26.30 191.10
</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
1,513,930 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 2001. 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 1999 was not as profitable as fiscal 1998 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, to Mr. Miller in
1996, and to Messrs. Hiatt and Miller in 1999. 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 1999 year-end, all of the 2,400 restricted
shares initially granted to Mr. Hiatt 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
STOCKHOLDER PROPOSAL
Mr. Ralph A. Young, 110 Muchmore Road, Harrison, New York 10528, beneficial
owner of 30,666 shares of the Company's Common Stock, has proposed adoption of
the following resolution and has furnished the following statement in support of
his proposal:
PROPOSED RESOLUTION
"Resolved: The stockholders of Fab Industries hereby urge the Board of
Directors to retain the services of an investment banking company, not
previously retained by Fab, for the sole purpose of studying and recommending
the best course of action between the choices of selling, liquidating or
continuing the operations of Fab Industries."
SUPPORTING STATEMENT
"In spite of unprecedented national prosperity, the price of Fab
Industries' stock has fallen in the last two years to approximately one third of
its former high. Much of this has been blamed by management on lower earnings
caused by competition from cheaper imports. The United States is publicly
committed to fair trade policies that will continue to permit these imports. It
has, in fact, recently signed trade agreements permitting even more imports in
the future. A reasonable person could well question the long-term viability of
Fab if something dramatic does not occur quickly.
The book value of Fab at the time of this writing is approximately twice
the current stock price. Could these assets be put to better use? Viewing the
above, one might question whether it would be better and realistic to sell or
liquidate the company in order to recapture the value of these assets for
stockholders. In a case like this, an independent outside expert such as a major
investment banking or consulting firm with a completely objective and
arms-length point of view should be retained to study and report back whether it
believes stockholders would be better served by the sale, liquidation or some
other course of action by the company.
By voting yes to this Proposal the stockholders would recommend to the
company to commission a study of this nature and fully report the results to
stockholders within six months or upon its completion, whichever comes first."
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board of Directors recommends a vote AGAINST this proposal. For the
reasons set forth below, the Board believes that the approval of this proposal
would not be in the best interests of the Company or its stockholders.
The Board, which consists of persons familiar with the business and
industry of the Company, believes that it is in the best position to make
decisions about business matters affecting the Company and its stockholders. The
Board has always acted and will continue to act in what it considers to be the
best interests of the Company's stockholders. The Board has reviewed and will
continue to review all available strategic alternatives to maximize the overall
value to the Company's stockholders and will pursue the course of action which
best achieves that objective.
By way of contrast, the stockholder proposal focuses narrowly on only two
alternatives -- sale or liquidation -- and requires the Company to incur the
expense of hiring an investment banking firm to make a recommendation. Also, the
proposal appears to assume that the Company could be sold or liquidated for book
value without any analysis or support for such conclusion.
Furthermore, the Board believes that any suggestion to the public of a
possible sale or liquidation of the Company would have a detrimental effect on
the Company's relationships with its lenders, customers, suppliers and employees
by creating uncertainty about the strength and veracity of its future. As a
result, the revenues and profits and, in turn, stockholder value would decline.
12
<PAGE> 15
The Board should retain the discretion to determine when an evaluation by
investment bankers is appropriate and must not be urged to pursue a limited
analysis. Regardless of the outcome of the vote on this proposal, the Board has
and will continue to consider all possible avenues and strategic alternatives to
increase stockholder value.
FOR ALL THE REASONS STATED ABOVE, THE BOARD UNANIMOUSLY URGES STOCKHOLDERS
TO VOTE AGAINST THIS PROPOSAL.
13
<PAGE> 16
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of BDO Seidman, LLP ("BDO Seidman"), 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
continued to serve as the Company's independent public accountants until
November 16, 1999, when it was replaced with Ernst & Young, LLP. The firm of
Ernst & Young, LLP ("Ernst & Young"), Certified Public Accountants, 101
Independence Center, 101 North Tryon Street, Suite 1100, Charlotte, North
Carolina, served, beginning on November 16, 1999, as the Company's independent
public accountants for its fiscal year ended November 27, 1999. Ernst & Young
now serves 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 4, 2000.
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 III. 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, Inc., 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.
The affirmative vote of a majority of shares participating in the voting on
the stockholder proposal is required for adoption of this proposal. Proxies will
be voted AGAINST this proposal unless instructed otherwise. Abstentions and
broker non-votes will have the same effect as a negative vote with respect to
this proposal.
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
If you wish to submit a stockholder proposal for possible inclusion in the
proxy statement for the Company's 2001 Annual Meeting of Stockholders, you must
ensure that your proposal is received by us on or before November 27, 2000. If
we do not receive notice by that date, no discussion of your proposal is
required
14
<PAGE> 17
to be included in our 2001 proxy statement and we may use our discretionary
authority to vote on the proposal if you do present it at our Annual Meeting of
Stockholders.
If you intend to present a proposal at our 2001 Annual Meeting of
Stockholders and do not request timely inclusion of the proposal in our proxy
statement, then we must receive notice of such proposal no earlier than January
4, 2001 and not later than January 24, 2001.
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED NOVEMBER 27, 1999, INCLUDING FINANCIAL STATEMENTS
AND SCHEDULE THERETO, TO EACH OF THE COMPANY'S STOCKHOLDERS OF RECORD AS OF
MARCH 10, 2000, 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 10, 2000.
By Order of the Board of Directors,
LOGO
SHERMAN S. LAWRENCE
Secretary
Dated: March 27, 2000
15
<PAGE> 18
[X] PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE.
<TABLE>
<C> <C> <C> <S>
Election of Two (2) Directors to Class III (Instruction: To withhold authority to vote for either
individual Class III nominee, strike a line through the
nominee's name in the list below.)
FOR BOTH WITHHOLD To Class III of the Board of Directors (to hold office until
NOMINEES LISTED AUTHORITY the 2003 Annual Meeting of Stockholders):
(except as to vote for both
marked to the nominees listed Samson Biteneky, Frank S. Greenberg
contrary) [ ]
[ ]
Stockholder Proposal 3. In their discretion, upon such other business as may
properly come before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
Dated:
-----------------------------------,
2000
-----------------------------------
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.
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<PAGE> 19
FAB INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2000
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 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
Stockholders of the Company to be held on Thursday, May 4, 2000 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 upon
the following matter, as more fully described in the accompanying Proxy
Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN AND AS PROVIDED FOR IN THE TRUST AGREEMENT UNDER THE PLAN.
(SEE REVERSE SIDE)
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O FOLD AND DETACH HERE O
