SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
( X ) Filed by the Registrant
( ) Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-b(e)(2))
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Guilford Mills, Inc.
(Name of Registrant as Specified In Its Charter)
Guilford Mills, Inc.
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
( X ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which 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:
(Set forth the amount on which the filing fee is calculated and state how
it was determined)
( ) Fee previously paid 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>
GUILFORD MILLS, INC.
4925 West Market Street
Greensboro, North Carolina 27407
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On February 1, 1996
The Annual Meeting of Stockholders of Guilford Mills, Inc., a Delaware
corporation (the "Company"), will be held at the Joseph S. Koury Convention
Center, 3121 High Point Road, Greensboro, North Carolina, on Thursday, February
1, 1996 at 10:00 A.M. for the following purposes:
1. To elect four directors for three-year terms;
2. To ratify the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending September 29, 1996; and
3. To transact such other business as properly may come before the meeting or
any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 22,
1995 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting and at any adjournment or adjournments thereof.
Whether or not you plan to attend the meeting, please sign, date and
return the enclosed proxy which is being solicited by and on behalf of the
Board of Directors.
By Order of the Board of Directors
Sherry R. Jacobs
Secretary
Greensboro, North Carolina
December 29, 1995
<PAGE>
GUILFORD MILLS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On February 1, 1996
This Proxy Statement is furnished to the stockholders of Guilford
Mills, Inc. (the "Company") in connection with the solicitation of proxies by
the Board of Directors (the "Board") of the Company to be voted at the Annual
Meeting of Stockholders of the Company to be held at the Joseph S. Koury
Convention Center, 3121 High Point Road, Greensboro, North Carolina, on
Thursday, February 1, 1996 at 10:00 a.m. (the "Annual Meeting"). Stockholders of
record at the close of business on December 22, 1995 will be entitled to notice
of and to vote at the Annual Meeting and at all adjournments thereof.
The entire cost of soliciting proxies for the Annual Meeting will be
borne by the Company. In addition to solicitation by mail, proxies may be
solicited through personal calls upon, or telephone or facsimile communications
with, stockholders or their representatives by officers and other employees of
the Company, who will receive no additional compensation therefor.
Any stockholder giving a proxy has the power to revoke it at any time
before it is voted by giving written notice of such revocation to the Secretary
of the Company, by attending the Annual Meeting and voting in person or by
submitting a subsequently dated proxy. When a proxy is received, properly
executed, prior to the Annual Meeting, the shares represented thereby will be
voted at the Annual Meeting. If the accompanying form of proxy is signed but no
specification is made thereon, the shares represented thereby will be voted for
(i) the nominees for director designated by the Board and (ii) the ratification
of the selection of Arthur Andersen LLP as independent auditors for the fiscal
year ending September 29, 1996. If a specification has been made on the form of
proxy, the shares will be voted in accordance with the specification. Other than
the election of directors, which requires a plurality of the votes cast, each
matter to be submitted to the stockholders requires the affirmative vote of a
majority of the shares present at the Annual Meeting in person or by proxy and
entitled to be cast. Abstentions and broker non-votes are not included in the
tabulation of the voting results on the election of directors. For issues
requiring approval of a majority of the shares present and entitled to be cast,
abstentions have the effect of votes in opposition and broker non-votes are not
included in the tabulation of the voting results. A broker non-vote typically
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner. Shares as to which a stockholder abstains or broker non-votes are
included for purposes of determining whether a quorum of shares is present at
the Annual Meeting.
The complete mailing address of the Company's principal executive
offices is P. O. Box 26969, Greensboro, North Carolina 27419-6969. The
approximate date on which this Proxy Statement and the form of proxy were first
sent or given to the stockholders of the Company was December 29, 1995. The
Annual Report of the Company for the fiscal year ended October 1, 1995,
including audited financial statements, has been sent to each stockholder.
<PAGE>
VOTING SECURITIES
On December 22, 1995, there were outstanding and entitled to vote 14,117,163
shares of the Company's common stock, par value $.02 per share (the "Common
Stock"), which constitutes the only class of capital stock outstanding.
Stockholders are entitled to one vote, exercisable in person or by proxy, for
each share of Common Stock owned on the record date of December 22, 1995. The
holders of a majority of the outstanding shares of the Common Stock represented
at the Annual Meeting will constitute a quorum.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Under the proxy rules, a beneficial owner of a security includes any person
who directly or indirectly has or shares voting power and/or investment power
with respect to such security or has the right to obtain such voting power
and/or investment power within 60 days. Except as otherwise noted, each
designated beneficial owner in this Proxy Statement has sole voting power and
investment power with respect to the shares beneficially owned by such person.
The following table sets forth information as of December 22, 1995 with
respect to each person who is known by the management of the Company to be the
beneficial owner of more than 5% of the Common Stock:
Name and Address Amount and Nature
of Beneficial Owner of Beneficial Ownership Percent of Class
Victor Posner 1,987,275 (1) 14.08
6917 Collins Avenue
Miami Beach, FL 33141
Mitchell Hutchins Institutional 1,253,200 (2) 8.88
Investors, Inc.
1285 Avenue of the Americas
New York, NY 10019
Charles A. Hayes 1,116,473 (3)(4) 7.91
c/o Guilford Mills, Inc.
4925 West Market Street
Greensboro, NC 27407
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(1) Such information is based upon a copy of the report on Schedule 13D,
dated January 10, 1994, filed with the Securities and Exchange Commission
("SEC") and furnished to the Company by the beneficial owner.
(2) Such information is based upon a copy of the report on Schedule 13G,
dated February 13, 1995, filed with the SEC and furnished to the Company by the
beneficial owner.
(3) Mr. Hayes, Maurice Fishman, a director of the Company, and George
Greenberg, a director of the Company, have entered into certain agreements
relating to the disposition of their shares of Common Stock. See "Stockholders'
Agreements" below.
(4) Includes 17,500 shares of Common Stock subject to options granted to
Mr. Hayes under the Company's 1991 Stock Option Plan.
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<PAGE>
The following table sets forth certain information, as of December 22, 1995,
with respect to Common Stock beneficially owned by each director of the Company,
each person nominated or chosen to become a director, each of the executive
officers named in the Summary Compensation Table under the heading "Executive
Compensation" below and all directors and executive officers as a group:
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
Directors and Director Nominees(1)(2)
Charles A. Hayes 1,116,473 (3) 7.91
George Greenberg 525,209 (3)(4) 3.72
Maurice Fishman 492,888 (3)(5) 3.49
John A. Emrich 21,617 (13)
Terrence E. Geremski 20,585 (13)
Sherry R. Jacobs 20,312 (13)
Donald B.Dixon 19,450 (13)
Stephen C. Hassenfelt 18,625 (6) (13)
Tomokazu Adachi 15,250 (13)
Dr. Jacobo Zaidenweber 11,000 (13)
Stig A. Kry 0 (13)
Paul G. Gillease 0 (7) (13)
Non-Director Executive Officers (8)(9)
Alfred A. Greenblatt 53,945 (13)
Phillip D. McCartney 40,032 (13)
All directors, director nominees
and executive officers as a group
(consisting of 17 persons) 2,375,619 (10)(11)(12) 16.83
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(1) The amount of shares beneficially owned by Ms. Jacobs and Messrs. Hayes,
Greenberg, Fishman, Dixon and Hassenfelt includes 17,500 shares of Common Stock,
and the amount of shares beneficially owned by Mr. Adachi includes 11,250 shares
of Common Stock, subject to options granted to each such director under the
Company's 1991 Stock Option Plan. See "Election of Directors - Additional
Information" below. The amount of shares benefically owned by Mr. Emrich
includes 4,334 shares of Common Stock subject to options granted pursuant to the
Company's stock option plans.
(2) Includes 10,000 and 10,667 shares of restricted Common Stock awarded to
Messrs. Emrich and Geremski, respectively, under the Company's 1989 Restricted
Stock Plan. Such persons have sole voting power with respect to such shares. See
"Executive Compensation - Summary Compensation Table" below.
(3) See footnotes to previous table.
(4) Does not include 49,900 shares held by Mr. Greenberg's wife, as to
which beneficial ownership is disclaimed.
(5) Does not include 45,675 shares held by Mr. Fishman's wife, as to
which beneficial ownership is disclaimed.
(6) Does not include 375 shares held by Mr. Hassenfelt's wife, as to
which beneficial ownership is disclaimed.
(7) Does not include 10,381 shares held by Mr. Gillease's wife, as to
which beneficial ownership is disclaimed.
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<PAGE>
(8) The amount of shares beneficially owned by Messrs. Greenblatt and
McCartney includes 667 shares of Common Stock subject to options granted to such
persons pursuant to the Company's stock option plans.
(9) Includes 32,000 and 20,000 shares of restricted Common Stock awarded to
Messrs. Greenblatt and McCartney, respectively, under the Company's 1989
Restricted Stock Plan. Such persons have sole voting power with respect to such
shares.
(10) Includes 121,918 shares of Common Stock subject to options granted
pursuant to the Company's stock option plans.
(11) Excludes 106,329 shares owned by relatives of officers and directors of
the Company, as to which beneficial ownership is disclaimed by such officers and
directors.
(12) Includes 92,667 shares of restricted Common Stock awarded to officers
under the Company's 1989 Restricted Stock Plan. Such persons have sole voting
power with respect to such shares.
(13) Less than one percent.
Stockholders' Agreements
Messrs. Fishman, Greenberg and Hayes have entered into a Stockholders'
Agreement dated as of June 22, 1990, as amended, relating to the disposition of
their shares of Common Stock. Until June 22, 1997 (or its earlier termination as
otherwise provided therein), none of Messrs. Fishman, Greenberg and Hayes may
transfer or otherwise dispose of, except by gift, any or all of the shares of
Common Stock beneficially owned by any such stockholder, until such shares are
offered first to the Company at the same price and upon the same terms and
conditions as those offered by a bona fide purchaser or purchasers. The terms
and provisions of the Stockholders' Agreement apply to any shares of Common
Stock owned by the stockholders on the date of the Stockholders' Agreement or
acquired thereafter and are binding upon the heirs, successors and assigns of
the stockholders.
Messrs. Fishman and Hayes have entered into a Stockholders' Agreement with
the Company dated as of April 30, 1991, as amended, relating to the acquisition
by the Company of certain of their shares of Common Stock. Until June 22, 1997
(or the earlier termination of the 1991 Stockholders' Agreement as provided
therein), the Company will, upon the death of either Mr. Fishman or Mr. Hayes,
purchase such number of shares of Common Stock beneficially owned by each such
person as equal $4,000,000 and $5,000,000, respectively. The purchase price for
each share of Common Stock will equal the average of the closing price for such
shares on the New York Stock Exchange for the 20 trading days preceding the date
of death.
ELECTION OF DIRECTORS
Directors and Nominees
The Board is divided into three classes, with the term of office of one
class expiring each year. At the last annual meeting of stockholders held on
February 2, 1995, Messrs. Dixon, Geremski, Greenberg and Zaidenweber were
elected as directors of the Company, each to serve for a three-year term until
the first annual meeting of stockholders held following the end of the Company's
1997 fiscal year and until his successor is elected and qualified. At the annual
meeting of stockholders held on November 4, 1993, Ms. Jacobs and Messrs. Adachi,
Kry and Paul R. McGarr were elected as directors of the Company, each to serve
for a three-year term until the first annual meeting of stockholders held
following the end of the Company's 1996 fiscal year and until her or his
successor is elected and qualified. Mr. McGarr resigned from the Board effective
as of February 2, 1995 and the Board, at its November 16, 1995 meeting, elected
Mr. Emrich, the Company's President and Chief Operating Officer, to fill the
vacancy created by such resignation and to serve the remainder
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<PAGE>
of Mr. McGarr's unexpired term. At the annual meeting of stockholders held on
November 5, 1992, Messrs. Fishman, Hassenfelt and Hayes were elected as
directors of the Company, each to serve for a three-year term until the first
annual meeting of stockholders held following the end of the Company's 1995
fiscal year and until his successor is elected and qualified. At the 1993 annual
meeting of stockholders, Mr. Gillease was elected to serve as a director of the
Company for a two-year term until the first annual meeting of stockholders held
following the end of the Company's 1995 fiscal year and until his successor is
elected and qualified.
The Board has nominated Messrs. Fishman, Gillease, Hassenfelt and Hayes for
election as directors of the Company, each to serve for a three-year term until
the first annual meeting of stockholders held following the end of the Company's
1998 fiscal year and until his successor is elected and qualified. Unless a
contrary specification is indicated, it is intended that the accompanying form
of proxy will be voted for the election of Messrs. Fishman, Gillease, Hassenfelt
and Hayes. The Board does not contemplate that any of such persons will be
unable, or will decline, to serve; however, if any of such persons is unable or
declines to serve, the persons named in the accompanying proxy may vote for
another person, or persons, in their discretion.
The following table sets forth certain information with respect to each
director and each person nominated or chosen to become a director. Except as
otherwise indicated, each such person has held his or her present principal
occupation for the past five years:
<TABLE>
<CAPTION>
Name Age (1) Principal Occupation or Occupations Director Since
- ---- --- ----------------------------------- --------------
<S> <C> <C> <C>
Director Nominees
Nominees for a Three-Year Term
Expiring at Annual Meeting
After 1998 Fiscal Year
- --------------------------------
Maurice Fishman 72 Vice Chairman of the Board (since 1976); 1963
retired since 1989; for more than five years
prior thereto, a Senior Vice President of
the Company
Paul G. Gillease (2) 63 Consultant to the Company (since 1993); Vice 1993
President and General Manager, DuPont Nylon,
a division of E. I. du Pont de Nemours
and Company, Inc. (from 1992 to 1993); for
more than five years prior thereto, Vice
President and General Manager of DuPont
Textiles, a division of E. I. du Pont
Nemours and Company, Inc.
Stephen C. Hassenfelt 45 Chairman and Chief Executive Officer of 1989
North Carolina Trust Company
Charles A. Hayes 61 Chairman of the Board and Chief Executive 1963
Officer of the Company (since 1976);
President and Chief Operating
Officer of the Company (from 1991 to
1995)
</TABLE>
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(1) As of December 22, 1995.
(2) Mr. Gillease is a director of Pillowtex Corp. and Galey & Lord, Inc.,
each of which has a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
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<PAGE>
Continuing Directors
<TABLE>
<CAPTION>
Class of Directors Whose Term
Expires at Annual Meeting
After 1997 Fiscal Year
- --------------------------------
<S> <C> <C> <C>
Donald B. Dixon 67 Retired since 1984; for more than five years 1987
prior thereto, a partner at Arthur Andersen
LLP
Terrence E. Geremski 48 Vice President/Chief Financial Officer and 1993
Treasurer (since 1992); Vice President and
Controller of Varity Corporation (from 1989
to 1991); for more than five years prior
thereto, the holder of various executive and
administrative positions with Dayton Walther
Corp.
George Greenberg (3) 73 Vice Chairman of the Board (since 1989); 1968
retired since 1989; for more than five years
prior thereto, the President and Chief Operating
Officer of the Company
Dr. Jacobo Zaidenweber 66 Chairman of the Board of Grupo Ambar, S.A. 1995
de C.V. (since 1965), a subsidiary of the
Company; Chairman of the Board of Encajes
Mexicano, S.A. de C.V. (since 1992), a
textile manufacturer
Class of Directors Whose Term
Expires at Annual Meeting
After 1996 Fiscal Year
- --------------------------------
Sherry R. Jacobs 52 Secretary and acting General Counsel of the 1983
Company (since 1994); Managing Director,
Pencil, Inc., an educational foundation
(since 1995); Principal, Jonal, couturier
(from 1989 to 1994); Vice President/
Administration and General Counsel of the
Company (from 1986 to 1989); and Secretary
of the Company (from 1987 to 1989)
Tomokazu Adachi 54 President of Japan Tech, Inc., an importer 1990
of textile machinery and equipment
John A. Emrich 51 President and Chief Operating Officer (since 1995
1995); Senior Vice President and
President/Automotive Business Unit (from
1993 to 1995); Vice President/Planning and
Vice President/Operations for the Apparel
and Home Fashions Business Unit (from 1991
to 1993); Director of Operations with FAB
Industries (from 1990 to 1991)
Stig A. Kry (4) 66 Chairman Emeritus, Kurt Salmon Associates, 1993
Inc., a management consulting firm
</TABLE>
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(3) Mr. Greenberg is a director of Nautica Enterprises, Inc., which has a
class of securities registered pursuant to Section 12 of the Exchange Act.
(4) Mr. Kry is a director of Paul Harris Stores, Inc. and Dominion
Textiles, Inc., each of which has a class of securities registered pursuant to
Section 12 of the Exchange Act.
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<PAGE>
Additional Information
During the last fiscal year, the Board's Audit Committee, which currently
consists of Messrs. Dixon, Hassenfelt and Fishman, held four meetings. The Audit
Committee's responsibilities include reviewing the Company's financial
statements and the accounting principles utilized by the Company, evaluating the
services of the Company's independent auditors and making recommendations with
respect to the retention of independent auditors, evaluating the adequacy of the
Company's system of internal controls and confirming the Company's full
cooperation with the independent auditors' annual examination of the Company's
financial statements.
In addition, during the last fiscal year, the Board's Compensation
Committee, which currently consists of Ms. Jacobs and Messrs. Hassenfelt and
Greenberg, held two meetings. The functions of the Compensation Committee
include making recommendations to the Board regarding compensation for certain
executive officers of the Company and administering certain of the Company's
benefit plans. See "Executive Compensation - Report of the Compensation
Committee of the Board of Directors" below.
The Board's Nominating Committee, which currently is comprised of Messrs.
Dixon, Hayes, Adachi and Gillease, did not hold any formal meetings during the
last fiscal year. The duties of the Nominating Committee include identifying and
interviewing candidates to serve on the Board, making recommendations to the
entire Board regarding whether a candidate should be nominated to the Board and
making recommendations to the entire Board concerning compensation and other
benefits to be paid to directors.
Non-employee directors receive a quarterly retainer of $3,500 and $1,000 for
each Board meeting attended (other than telephonic Board meetings). Committee
chairmen are paid $1,000, and each other member of a committee (who is not an
employee of the Company) is paid $750, for each committee meeting attended.
During the last fiscal year, the Board had a total of seven meetings, four of
which were held in person and three of which were held by means of a telephonic
conference call. All directors then in office attended at least 75% of the total
number of meetings of the Board and the committees on which they served during
the last fiscal year.
Ms. Jacobs is serving as Secretary and acting General Counsel of the
Company on an interim basis. Ms. Jacobs received approximately $56,000 during
the 1995 fiscal year for such service. Since October 1, 1993, Mr. Gillease has
provided consulting services to the Company on certain strategic planning
matters. The Company pays Mr. Gillease approximately $21,000 per month under
such consulting arrangement.
The Company affords each director the opportunity to defer his or her
quarterly retainer. Pursuant to such arrangement, the quarterly retainer a
director would otherwise receive is credited to a separate account which accrues
interest. Upon his or her termination of service on the Board, the director will
be entitled to receive the amounts credited to his or her deferred compensation
account, together with interest accrued thereon. Currently, Mr. Dixon is the
only director who participates in the retainer deferral arrangement.
The Company's 1991 Stock Option Plan (the "Option Plan") provides for the
automatic grant of options not meeting the requirements of incentive stock
options ("Non-Qualified Options"), within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"), to directors who have served as such
for a designated period of time. Specifically, each person who has served as a
director of the Company for two or more consecutive years on the date of grant
will automatically be granted (i) upon the first date of grant after the
completion of two consecutive years of service as a director, an option to
purchase 7,500 shares of Common Stock and (ii) upon each of the second, third,
fourth and fifth date of grant after the completion of such service, an option
to purchase 3,750 shares of Common Stock. For each year, the date of grant will
be the third trading date following the later of (i) the date of the annual
stockholders' meeting or (ii) the date on which the Company's earnings for the
fiscal quarter just prior to such meeting date are released to the public. The
purchase price of the shares of Common Stock covered by the options granted to
directors will be the fair market value of the shares as of the date of grant.
Options granted to directors, which have a five year term, will be exercisable
with respect to 33-1/3% of the aggregate number of shares initially subject to
the option during
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<PAGE>
each of the first, second and third years of the option. Any exercisable portion
of an option that is not exercised will be carried forward through the term of
the grant. Notwithstanding the foregoing, in the event of a "change in control"
of the Company, as such term is defined in the Option Plan, all then outstanding
options will immediately become exercisable. In addition to the automatic grant
of options to directors according to the above formula, the Option Plan also
provides for the award, in the discretion of the Compensation Committee, of
options to salaried key employees of the Company. Any director who receives an
option award under the formula provision, however, is ineligible to receive
discretionary grants as a key employee.
There are no family relationships among any of the directors and officers of
the Company.
Mr. Hayes may be deemed a "control" person of the Company, as that term is
defined in Rule 12b-2 under the Exchange Act.
EXECUTIVE COMPENSATION
Report of the Compensation Committee of the Board of Directors
The Compensation Committee of the Board administers the Company's
compensation program for executive officers. Specifically, the Committee serves
as the administrator of the Company's 1989 Restricted Stock Plan (the
"Restricted Plan"), the Option Plan and the Incentive Stock Option Plan-1981
(the "1981 Plan"). In addition, the Committee makes recommendations to the
entire Board regarding the compensation package for each of the Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer ("CEO", "COO" and
"CFO", respectively). The Committee is also responsible for periodically
reviewing, for adequacy and continued appropriateness, the entire compensation
package of other executive officers and recommending to the Board any changes to
such package. Further, the Committee is required to approve any proposed
employment, severance, consulting or retirement agreement with any executive
officer.
In performing its duties, the Committee seeks to insure that the Company's
compensation program for executive officers attracts and retains qualified,
talented and highly motivated personnel, links executive compensation to
corporate performance and is administered in an equitable fashion. The Company's
executive officer compensation program consists of two major elements: (i) a
short-term component, consisting of base salary and a potential annual cash
bonus, intended to reward executives for current and past performance and (ii) a
long-term component, consisting of restricted (or phantom) stock and stock
options, designed to align further the interests of executives with those of
stockholders in general. In addition, in order to offer a competitive
compensation program, the Company maintains certain retirement plans such as a
Qualified Profit-Sharing Plan (the "Profit-Sharing Plan") and an Employee Stock
Ownership Plan (the "ESOP") and offers other benefits such as a split-dollar
insurance program.
The Committee has considered the impact of Section 162(m) of the Code on the
Company's executive compensation program. Section 162(m), which first became
applicable to the Company for its 1995 fiscal year, denies a public company a
deduction, except in limited circumstances, for compensation paid to those
employees named in the "Summary Compensation Table" below, to the extent such
compensation exceeds $1,000,000. Although the Committee has recommended, and may
in the future recommend, changes to an individual's compensation package in
order to preserve the income tax deductibility of such compensation, the
Committee also retains the discretion to authorize the payment of compensation
that does not qualify for such deductibility under Section 162(m).
Short-Term Component - Base Salary and Annual Bonus. The Committee evaluates
the base salary of each of the CEO, COO and CFO on a biennial basis, or more
frequently if appropriate, and recommends to the entire Board any changes in
such base salary levels. In making such evaluations and recommendations, the
Committee considers the historical pay practices of the Company, the officer's
leadership and advancement of the Company's long-term strategic plans and
objectives, and the salary levels of executives holding similar
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<PAGE>
positions in certain other textile companies. The Committee generally recommends
salaries for the Company's CEO, COO and CFO at levels exceeding the average
salary level of executives holding the same positions in such other companies.
Not all of the textile companies which the Company considers for comparative
compensation purposes are included in the peer group index described in the
"Performance Graph" below because the Committee believes that the Company's most
direct competitors for executive talent are not necessarily the same companies
that would be included in a peer group established to compare stockholder
returns. Mr. Hayes' annual salary as CEO for the 1995 fiscal year did not change
from the 1994 fiscal year. From the end of the 1991 fiscal year through the end
of the 1995 fiscal year, Mr. Hayes assumed the additional responsibilities of
the COO. In consideration of the performance of such additional duties, Mr.
Hayes received a supplemental salary of $150,000 per year. Effective October 1,
1995, the Board elected Mr. Emrich to succeed Mr. Hayes as COO. As a result, Mr.
Hayes, who continues to serve as Chairman and CEO, will no longer receive such
supplemental salary.
The Company maintains for its executive officers and other key employees a
Short-Term Incentive Compensation Plan (the "Bonus Plan"), which allows
participants to earn annual cash bonuses based upon the Company's achievement of
an earnings per share target, established by the Board at the beginning of each
fiscal year. Upon the attainment of such target, a participant is eligible to
receive a cash bonus (the "Bonus") equal to the product of a percentage, as the
same may be adjusted as described below (the "Multiplier"), and such
participant's compensation for the prior year. The Multiplier, which is
established by the Committee for the CEO, COO and CFO, and by the CEO for the
other executive officers, varies from participant to participant according to
the nature and degree of each participant's level of responsibility. The
Multiplier for the Company's executive officers ranges from 33% to 75%. If the
Company's actual earnings per share for a given year do not equal the Bonus
Plan's target earnings per share, but fall within a designated range of such
target (either more or less), the Multiplier for each participant, including the
CEO, COO and CFO, will be adjusted upward or downward accordingly. If the
Company's actual earnings per share fall within the established range of the
target, each participant, other than the CEO, COO and CFO, will receive one-half
of his Bonus, with the remainder of the Bonus being pooled into certain groups
and allocated, in the discretion of the head of each group, among all group
participants according to each participant's relative contribution to the
success of the Company. The amount of the discretionary bonus for the head of
each such group is determined by the CEO. Depending upon such allocation, a
participant's Multiplier may be adjusted further upward or downward resulting in
a greater or lesser Bonus, as the case may be, than the participant otherwise
would have received. The Bonus, if any, paid to the CEO, COO and CFO is not
subject to such discretionary allocation. Achievement of an earnings per share
level within the prescribed range will entitle such persons to their full Bonus
payments.
Long-Term Component - Restricted Stock, Phantom Stock and Stock Options. In
addition to the short-term elements of the Company's executive compensation
program described above, the Company maintains certain equity based plans
described below, the benefits of which are linked to the Company's long-term
performance. The Committee believes that compensation in the form of Common
Stock serves to align further the interests of executives with the interests of
stockholders. Moreover, compensation which is "at risk," in that its amount, or
the timing of its receipt, is dependent upon the Company's performance, provides
a strong incentive for individuals to achieve superior performance. Finally,
long-term compensation helps balance the Company's overall executive
compensation program by encouraging executives to focus on the Company's long
term objectives and goals as well as the Company's quarter to quarter results.
Restricted and Phantom Stock. In its capacity as the administrator of the
Restricted Plan, which was approved by stockholders at their 1989 Annual
Meeting, the Committee determines, among other things, which key employees will
participate in the Restricted Plan, any individual or corporate performance
goals applicable to a participant, the date on which awards will be made, the
number of shares to be awarded and the restrictions to be applicable to such
shares. In determining the number of shares of restricted stock to be awarded to
a particular executive (as well as the number of shares of phantom stock awarded
to Mr. Hayes), the Committee has not followed any specific guideline or formula,
but rather has considered more subjective factors such as the executive's level
of responsibility and past performance. All currently outstanding stock awards
under the Restricted Plan are subject to identical restrictions. See Footnote 5
to the "Summary Compensation Table" below. The Committee determined that, in
light of Mr. Hayes' already substantial equity interest in the
-9-
<PAGE>
Company, it was not appropriate for him to participate in the Restricted Plan.
The Company instead granted Mr. Hayes shares of phantom stock which, upon their
vesting, entitled him to a cash payment equal to the fair market value of the
Common Stock, plus dividends and interest, rather than actual shares of Common
Stock.
Stock Options. As the administrator of the Option Plan, which was approved
by stockholders at their 1991 Annual Meeting, the Committee determines, among
other things, the employees who are to receive options, the date of grant of
options, and (subject to the terms of the Option Plan) the purchase price of
each share subject to such options. The Option Plan permits the granting of
incentive stock options ("Incentive Options"), within the meaning of Section 422
of the Code, Non-Qualified Options and stock appreciation rights ("SARs").
(There are currently no outstanding SARs under the Option Plan and the only
outstanding Non-Qualified Options represent grants to eligible directors
pursuant to a formula provision in the Option Plan.) The 1981 Plan permits the
granting of only Incentive Options. The 1981 Plan expired in accordance with its
terms on September 14, 1991 and no further options may be granted thereunder.
Certain options granted under the 1981 Plan prior to September 14, 1991 extend
beyond such date and remain exercisable. All outstanding Incentive Options have
a five year term and are not exercisable during the first two years after the
date of grant. The exercise price of an Incentive Option is not less than 100%
of the fair market value of a share of Common Stock on the date the Incentive
Option was granted. As a result, a grantee only benefits from such an option if
the price of the Common Stock increases (in which case all stockholders will
benefit). In determining the amount of options to be awarded to any person, the
Committee considers the recommendations of management as well as those
subjective factors used in making grants under the Restricted Plan. In addition,
the Committee generally has granted options every 18 to 24 months, with
approximately two-thirds of the aggregate amount of the options being awarded to
employees below the executive officer level. The grant of Non-Qualified Options
to Mr. Hayes during the 1995 fiscal year represents a grant, under the Option
Plan's formula provision, to him in his capacity as a director. Mr. Hayes is not
eligible to receive awards under the Option Plan as an employee. See "Election
of Directors - Additional Information" above.
Retirement Plans and Other Benefits. In addition to the foregoing components
of the executive compensation program, the Company maintains certain other plans
in which executives participate, including the Profit-Sharing Plan, the ESOP and
an excess benefit plan (which is designed to supplement certain of the Company's
other benefit plans). For the 1995 fiscal year, the Company contributed to the
Profit-Sharing Plan 6% of the aggregate compensation of all participants in such
plan. Contributions to the ESOP are made in the form of Common Stock or cash
used to purchase Common Stock and the amount of such contributions is dependent
upon the Company meeting the same earnings per share target established under
the Bonus Plan. If the Company's actual earnings per share fall within a range
of the target earnings per share (either more or less), then the Company will
adjust its ESOP contribution, upward or downward, accordingly. For the 1995
fiscal year, the Company contributed Common Stock to the ESOP in the amount of
3.6% of the compensation of the eligible employees for such period. The Company
also maintains for almost all of its executive officers a split-dollar insurance
program and a supplemental executive retirement plan, which are described,
respectively, in Footnote 6 to the "Summary Compensation Table" and in "Other
Benefit Plans" below. The Company also offers to its executives a plan pursuant
to which they may be reimbursed, up to a designated amount, for personal tax and
financial planning expenses.
Stephen C. Hassenfelt (Chairman)
George Greenberg
Sherry R. Jacobs
Performance Graph
Set forth below is a line graph comparing the five-year cumulative total
stockholder return on the Common Stock with the cumulative return of the
Standard & Poor's 500 Stock Index (the "S&P 500") and with a peer group index,
assuming the reinvestment of dividends. The peer group index represents the
cumulative total return on the common stock of the following textile companies:
Burlington Industries, Inc., Cone Mills Corp., Delta Woodside Industries, Inc.,
Dixie Yarns, Inc., Dyersburg Corp., Fab Industries, Inc., Johnston Industries,
-10-
<PAGE>
Inc., Lida, Inc., Springs Industries, Inc., Texfi Industries, Inc., Tultex
Corp., Unifi, Inc., United Merchants and Manufacturers, Inc., Wellman, Inc., and
West Point Stevens, Inc. The return of each company included in the peer group
index has been weighted according to its respective stock market capitalization.
[ Total Shareholder Return chart appears here, plot points are as follows.]
$Total Shareholder Return
<TABLE>
<CAPTION>
September 30, September 30, September 30, September 30, September 30,
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
GUILFORD $100.00(1) $155.8 $207.5 $215.3 $224.0 $260.9
S&P 500 100.00 131.1 145.5 164.3 170.3 220.8
Peer Group 100.00 215.6 220.0 206.4 217.8 218.9
</TABLE>
- ------------------
(1) Assumes $100.00 invested on September 30, 1990 in the Company, the S&P 500
and the companies that comprise the peer group with all dividends reinvested.
-11-
<PAGE>
Summary of Cash and Certain Other Compensation
The following table shows for the fiscal years ended October 1, 1995,
October 2, 1994 and June 27, 1993, as well as for the transition period from
June 28, 1993 to September 26, 1993 (the "Transition Period") (resulting from
the change in the Company's fiscal year end from the Sunday nearest June 30 to
the Sunday nearest September 30), the cash compensation paid by the Company, as
well as certain other compensation paid or accrued for those periods, to the
Company's CEO and to the Company's four most highly compensated executive
officers (other than the CEO).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
All Other
Long-Term Compen-
Annual Compensation Compensation sation
Restricted
Name and Other Annual Stock
Principal Fiscal Salary Bonus Compensation Awards Options
Position Year or Period ($) ($) ($)(4) ($)(5) (#) ($)(6)
-------- -------------- ----- ----- ------ ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles A. Hayes, Chairman, 1995 720,000(2) 384,750(3) -- 0 3,750 234,3262
Chief Executive Officer, 1994 720,000(2) 257,384(3) 61,511 0 3,750 13,229
President and Chief Transition Period 168,750(2) 40,566 29,300 0 0 55,229
Operating officer (1) 1993 675,000(2) 324,450 -- 0 3,750 261,953
Alfred A. Greenblatt, Senior 1995 372,501 183,813 -- 0 2,000 47,675
Vice President, President/ 1994 350,004 91,001 -- 0 0 38,902
Apparel & Home Fashions Transition Period 87,501 8,025 -- 0 0 11,370
Business Unit 1993 350,000 124,200 -- 0 0 46,991
John A. Emrich, Senior Vice 1995 306,251 162,907 -- 0 2,000 51,386
President, President/ 1994 250,008 111,394 -- 0 0 38,725
Automotive Business Transition Period 62,502 10,688 -- 0 0 9,569
Unit (1) 1993 191,670 105,000 -- 174,656 0 32,169
Terrence E. Geremski, 1995 250,008 112,503 -- 0 0 32,936
Vice President/Chief 1994 212,505 55,251 -- 0 0 25,081
Financial Officer and Transition Period 50,001 10,300 -- 0 0 6,878
Treasurer 1993 160,008 65,920 -- 497,500 0 --
Phillip D. McCartney, 1995 222,500 100,125 -- 0 2,000 31,595
Vice President/Technical 1994 180,000 46,800 -- 0 0 23,737
Operations Transition Period 45,000 9,270 -- 0 0 6,769
1993 180,000 74,160 -- 0 0 72,908
</TABLE>
- ---------------
(1) Mr. Emrich succeeded Mr. Hayes as President and COO effective
October 1, 1995. Mr. Hayes remains Chairman and CEO.
(2) Mr. Hayes' salary for the 1995, 1994 and 1993 fiscal years includes a
special supplement of $150,000, and his salary for the Transition Period
includes a special supplement of $37,500, for assuming interim responsibilities
as President and COO. Mr. Hayes' bonus award for such periods was based solely
on his salary as Chairman and CEO.
(3) Mr. Hayes has been granted certain appreciation rights. Such rights
entitle Mr. Hayes to a cash payment equal to the excess, if any, of the market
value of Common Stock on each of January 2, 1995, 1996
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<PAGE>
and 1997 (each such date, a "Measurement Date") over $20.90 (the average closing
price of Common Stock during the last ten trading days of the Company's 1994
fiscal year), multiplied in each instance by 28,000 (one-third of the aggregate
84,000 right grant). Mr. Hayes will vest in, and be entitled to receive, such
cash payments 30 days after the date (the "Vesting Date") he is no longer a
"covered employee" within the meaning of Section 162(m) of the Code. The rights,
together with certain dividend equivalents, will earn interest from their
respective Measurement Date to the Vesting Date. If the price of the Common
Stock on any Measurement Date is equal to or less than $20.90 per share, then
the rights to be valued on such date will expire and Mr. Hayes will not receive
any payment with respect to such rights.
Mr. Hayes' bonus award for the 1995 fiscal year does not include the value,
which is not determinable as of the date hereof, of the rights based on the
market value of Common Stock on January 2, 1996. Mr. Hayes' bonus award for the
1994 fiscal year includes $35,084, representing the value of those rights based
on the market value of Common Stock on January 2, 1995 and the interest accrued
thereon (and on the related dividend equivalents) through the end of the 1995
fiscal year.
(4) The amount in this column for the 1994 fiscal year represents (i)
$39,800 paid to Mr. Hayes in reimbursement for tax and financial planning
expenses, and (ii) $21,711 in additional health insurance benefits. The figure
in this column for the Transition Period represents amounts paid to Mr. Hayes in
reimbursement for tax and financial planning expenses.
(5) The amounts shown in this column reflect the market value of the
restricted stock granted, under the terms of the Restricted Plan, to Messrs.
Emrich and Geremski. (The market value is given as of the date of grant of the
restricted stock.)
The restricted stock awarded to an executive officer is held by an escrow
agent, appointed by the Company, until such officer vests in his award.
Similarly, the dividends paid on each share of restricted stock (which are paid
to the same extent as dividends on the Common Stock generally) are held by the
escrow agent until the executive vests in his restricted stock, at which time
the executive will also be entitled to receive the interest credited by the
Company on such dividends. Each of Messrs. Emrich and Geremski vested in 20% of
his aggregate restricted stock award on October 1, 1994. The vesting of the
balance of each such person's restricted stock award, which occurs over a three
year period, commenced on January 2, 1995. Notwithstanding the foregoing, upon a
"change in control" of the Company, as such term is defined in the Restricted
Plan, the restrictions applicable to an outstanding restricted stock award will
lapse and the executive will immediately vest in such award and in any dividends
paid on such award and then held in escrow, together with interest thereon. As
of the last day of the 1995 fiscal year, Messrs. Emrich and Geremski held 10,000
and 10,667 shares of restricted stock, respectively, at an aggregate market
value of $242,500 and $258,675, respectively (based upon a price of $24.25 per
share - the closing price of the Common Stock on the last business day of the
1995 fiscal year).
(6) The components of the amounts shown in this column for the 1995 fiscal
year consist of the following:
(i) Contributions of $9,000 each to the accounts of Messrs. Hayes,
Greenblatt, Emrich, Geremski and McCartney, pursuant to the Profit-Sharing Plan.
(ii) Contributions of shares of Common Stock at an aggregate market value
of $5,400 under the ESOP to the accounts of each of Messrs. Hayes, Greenblatt,
Emrich, Geremski and McCartney.
(iii) Contributions of $76,060, $30,096, $25,694, $14,904 and $11,453 to
the accounts of Messrs. Hayes, Greenblatt, Emrich, Geremski and McCartney,
respectively, pursuant to the Company's excess benefit plan which is designed to
supplement the Profit-Sharing Plan and the ESOP.
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<PAGE>
(iv) With respect to Messrs. Greenblatt, Emrich, Geremski and McCartney,
the value of benefits under the Company's Senior Managers' Life Insurance Plan,
a split dollar plan, and with respect to Mr. Hayes, the value of benefits under
a separate split dollar arrangement with the Company. During the 1995 fiscal
year, each of Messrs. Greenblatt, Emrich, Geremski and McCartney paid the amount
of the premium associated with the term life component of his split dollar life
insurance coverage. With respect to Mr. Hayes, the Company paid, during the 1995
fiscal year, $12,240 in premiums for the term portion of his coverage, and paid
the remainder of the premium associated with the whole life component of the
coverage. For each named executive officer, the Company expects to recover the
premiums it pays. The following amounts reflect the value of the benefits
accrued during the 1995 fiscal year, calculated on an actuarial basis, ascribed
to life insurance policies purchased on the lives of the named executives: Mr.
Hayes - $128,313; Mr. Greenblatt - $2,889; Mr. Emrich - $5,157; Mr. Geremski -
$3,632; and Mr. McCartney - $5,742.
(v) For the 1995 fiscal year, that portion of interest earned (that the SEC
considers to be at above market rates) on the deferred compensation accounts of
Messrs. Hayes and Greenblatt in the amount of $3,313 and $290, respectively.
(vi) For the 1995 fiscal year, imputed interest income to Mr. Emrich of
$6,135, in connection with an interest free loan made by the Company to such
officer. See "Certain Transactions" below.
Stock Option Grants
The table below shows, among other things, hypothetical potential gains from
stock options granted during the Company's 1995 fiscal year. Such hypothetical
gains are based entirely on assumed annual growth rates of 5% and 10% in the
price of Common Stock over the five year life of the stock options (which would
equal a total increase in stock price of approximately 28% and 61%,
respectively) and represent the spread between the option exercise price and the
assumed market value of the underlying Common Stock. The assumed rates of growth
were selected by the SEC for illustrative purposes only and are not intended to
predict future stock prices which will depend upon, among other things, market
conditions and the Company's future performance.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option
Term
--------------------------------------------------------- -------------------------------
Percent of
Number of Total Options
Securities Granted to
Underlying Employees in
Options Fiscal Yea Exercise or Expiration
Name Granted (#) % Base Price ($) Date 5% ($) 10% ($)
---- ----------- ----------- ----------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Charles A. Hayes(1) 3,750 1.33 20.75 02/07/00 21,487 47,512
Alfred A.Greenblatt 2,000 .71 20.81 12/15/99 11,500 25,400
John A. Emrich 2,000 .71 20.81 12/15/99 11,500 25,400
Terrence E. Geremski 0 -- -- -- -- --
Phillip D. McCartney 2,000 .71 20.81 12/15/99 11,500 25,400
</TABLE>
- ---------------
(1) The grant of options to Mr. Hayes reflects an automatic grant, pursuant
to the formula provision for eligible director participants, of Non-Qualified
Options under the Option Plan. As a result of the grant to Mr. Hayes under such
provision, he is not eligible, in accordance with the terms of the Option Plan,
to receive discretionary awards as a key employee. See "Election of Directors -
Additional Information" above.
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<PAGE>
Stock Option Exercises
The table below shows option exercises by the five most highly compensated
executive officers during the 1995 fiscal year as well as the value of the
options held by such persons at the end of the 1995 fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Value Realized Underlying Unexercised In-the-Money Options at
Name Acquired on ($) (1) Options at Fiscal Fiscal Year-End ($) (2)
Exercise (#) Year-End (#)
----- ----------- ----------- ------------------- -----------------------
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- --------------------------
<S> <C> <C> <C> <C>
Charles A. Hayes -- -- 15,000/3,750 64,343/13,825
Alfred A. Greenblatt 1,750 25,891 667/2,333 667/7,213
John A. Emrich -- -- 4,333/2,667 33,103/7,547
Terrence E. Geremski -- -- 0 --
Phillip D. McCartney 1,750 20,204 667/2,333 667/7,213
</TABLE>
(1) The values in this column represent the product of the number of
options exercised and the excess of the market value of the underlying Common
Stock on the date of exercise over the option exercise price.
(2) The values in this column represent the product of the number of
options and the excess, if any, of $24.25, the market value of the underlying
Common Stock on September 29, 1995 (the last business day of the 1995 fiscal
year), over the option exercise price.
Other Benefit Plans
Supplemental Retirement Plan. In 1992, the Company adopted the Senior
Managers' Supplemental Retirement Plan ("SERP") which provides for retirement
and death benefits to a select group of senior managers. The SERP provides that
upon retirement from the Company after attaining age 65, and after at least 60
months of service with the Company, participants will be entitled to receive a
specified dollar amount for a period of ten years following retirement ("Ten
Year Payments"). If the officer dies prior to the termination of his or her
employment or during the period while the Ten Year Payments are being made, the
full amount of the Ten Year Payments or the unpaid portion thereof, as the case
may be, will be paid according to the installment schedule to the officer's
designated beneficiary.
The SERP also provides that if the officer's employment with the
Company is terminated for any reason other than his or her death or disability
(prior to the officer attaining age 65) and the officer has been employed by the
Company for at least 60 months, the officer will be entitled to a reduced
retirement benefit commencing at age 65. Such reduced benefit will be based upon
the officer's total months of employment with the Company as compared with the
total months of employment the officer would have had with the Company if he or
she had remained in the employ of the Company until age 65. If, at the time of
his or her termination of employment with the Company for any reason other than
death or disability, the officer has been employed by the Company for less than
60 months following the effective date of the agreement, he or she will not be
entitled to any retirement benefits and his or her beneficiaries will not be
entitled to any death benefits. If an officer becomes disabled prior to
attaining age 65 and such disability continues until age 65, the officer will be
entitled to receive the full amount of the Ten Year Payments commencing at age
65, regardless of whether he or she has completed 60 months of service with the
Company.
-15-
<PAGE>
The Company has purchased life insurance policies on the lives of all
executive officers participating in the SERP in amounts which are designed to
enable the Company ultimately to recover all sums paid pursuant to the SERP.
Such life insurance policies are held in trust for the benefit of such officers.
The following table sets forth the Ten Year Payments for each of the
executive officers named in the "Summary Compensation Table" above.
Name of Individual Ten Year Payments (Per Annum)
Charles A. Hayes $345,000
Alfred A. Greenblatt 125,000
John A. Emrich 125,000
Terrence E. Geremski 125,000
Phillip D. McCartney 125,000
Severance Agreements. The Company has entered into severance agreements
with each of the executive officers named in the "Summary Compensation Table"
above. The severance agreements, which expire on August 31, 1999 (unless
extended by the Board), provide for the payment of specified compensation and
benefits to such employees upon certain terminations of their employment within
two years after a change in control of the Company. These severance agreements
are intended to assure that management will continue to act in the interest of
the stockholders rather than be affected by personal uncertainties during any
attempts to effect a change in control of the Company, and to enhance the
Company's ability to attract and to retain executives.
The compensation and benefits which may be awarded under the severance
agreements include, among other specified items of compensation and other
benefits, a lump sum payment equal to three times an employee's highest annual
salary during the year preceding the change in control (including any bonuses
and contributions made on the employee's behalf to the Profit-Sharing Plan, ESOP
and excess benefit plan), and also include continuation of participation in the
Company's life, health, accident and disability and insurance plans for a period
of three years (or until the employee commences full-time substantially
equivalent employment with a new employer). If the total payments made to any
particular employee under a severance agreement would not be tax deductible by
the Company or would cause an "excess parachute payment" to exist within the
meaning of Section 280G of the Code, such payments will be reduced until no
portion of such payments would fail to be deductible by reason of being an
excess parachute payment. The severance agreements further provide that in order
for an employee to receive the benefits contemplated by the severance agreement,
if any person or organization takes steps designed to effect a change in control
of the Company, the employee will not voluntarily terminate his or her
employment and will continue to perform his or her regular duties, until such
person or organization has abandoned or terminated such effort to effect a
change in control.
Had a "change in control" taken place during the fiscal year ended
October 1, 1995, Messrs. Hayes, Greenblatt, Emrich, Geremski and McCartney would
have received, had their employment ceased on that date, lump sum payments in
the approximate amounts of $3,311,940, $1,926,300, $1,968,418, $1,179,113 and
$941,040, respectively.
Compensation Committee Interlocks and Insider Participation
Ms. Jacobs, a member of the Company's Compensation Committee, served as
Vice President/Administration and General Counsel of the Company from 1986 to
1989 and as Secretary of the Company from 1987 to 1989. From time to time since
1989 and, more recently, since the third quarter of the 1994 fiscal year, Ms.
Jacobs has served as Secretary and acting General Counsel of the Company on an
interim basis. See "Election of Directors - Additional Information" above.
-16-
<PAGE>
Mr. Greenberg, a member of the Company's Compensation Committee, had served
as President and COO of the Company for 12 years until his retirement as an
executive officer in 1989.
Mr. Hassenfelt, Chairman of the Company's Compensation Committee, serves as
Chairman and Chief Executive Officer of North Carolina Trust Company. Mr. Hayes
is a member of the Board of Directors of North Carolina Trust Company, but does
not serve on the Compensation Committee of such Board.
CERTAIN TRANSACTIONS
During the 1995 fiscal year, the Company paid $150,000 in consulting
fees to Japan Tech, Inc., of which Mr. Adachi, a director of the Company, is the
President and controlling stockholder. In addition, in the ordinary course of
its business and through a series of arm's-length transactions, the Company
purchased machinery and equipment from Japan Tech, Inc. during the 1995 fiscal
year totaling $8,245,089.
In the ordinary course of business and through a series of arm's-length
transactions, during the 1995 fiscal year, the Company paid $1,369,210 for
forklifts and forklift repairs to Western Carolina Forklift, Inc., which is
controlled by David Hayes, the son of Charles A. Hayes, the Chairman and CEO of
the Company. Charles A. Hayes serves on the Board of Directors of Western
Carolina Forklift, Inc.
In connection with the Company's 1994 acquisition of an additional 55%
of the capital stock of Grupo Ambar, S.A. de C.V. ("Grupo Ambar"), thereby
increasing the Company's ownership in Grupo Ambar to 75%, the Company agreed to
pay the selling stockholders, including Dr. Zaidenweber (a director of the
Company) and his late brother, additional aggregate consideration of up to
approximately $3,700,000, provided Grupo Ambar achieves certain earnings
objectives through the end of calendar year 1995. The amount of any such
additional consideration will be paid in calendar year 1996, but is not
currently determinable. Dr. Zaidenweber remains the Chairman of the Board, and a
stockholder, of Grupo Ambar.
In fiscal year 1993, in connection with its request that Mr. Emrich,
then Senior Vice President of the Company and President of the Automotive
Business Unit and currently the President and COO of the Company, relocate to
Kenansville, North Carolina, the Company loaned Mr. Emrich $100,000 to purchase
a residence. The loan bears no interest, is secured by a Deed of Trust on such
residence and is payable on demand.
Since October 1, 1993, Mr. Gillease, a director of the Company, has
provided consulting services to the Company. See "Election of Directors -
Additional Information" above. Mr. Gillease's wife, a former executive officer
of the Company, also provides consulting services to the Company. The Company
pays Mrs. Gillease $15,000 per month for such services.
COMPLIANCE WITH STOCK OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and any persons holding more than 10% of the Company's
equity securities, to file with the SEC and the New York Stock Exchange reports
disclosing their initial ownership of the Company's equity securities, as well
as subsequent reports disclosing changes in such ownership. To the Company's
knowledge, based solely on a review of such reports furnished to it and written
representations by certain reporting persons that no other reports were
required, during the fiscal years ended October 2, 1994 and October 1, 1995, the
Company's directors, executive officers and greater than 10% beneficial owners
complied with all Section 16(a) filing requirements, except that Mr. Gillease, a
director of the Company, failed to report timely the withholding of shares by
his wife, who was then an executive officer of the Company, pursuant to the
exercise of a tax withholding right under the Restricted Plan. This omission was
corrected by Mr. Gillease's filing of an amended report.
-17-
<PAGE>
RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING SEPTEMBER 29, 1996
The Board has selected Arthur Andersen LLP to serve as independent
auditors to audit the financial statements of the Company for the fiscal year
ending September 29, 1996 and recommends that stockholders vote to ratify such
selection.
Representatives of Arthur Andersen LLP are expected to attend the
Annual Meeting and will be afforded an opportunity to make a statement and to
respond to appropriate questions.
MISCELLANEOUS
Stockholder Proposals
Any stockholder who wishes to present a proposal for action at the next
annual meeting and who wishes to have it set forth in the Proxy Statement and
identified in the form of proxy prepared by the Company must notify the Company
in such manner so that such notice is received by the Company by August 31, 1996
and in such form as is required under the rules and regulations promulgated by
the SEC.
In addition, under the Company's By-Laws, as amended through the date
hereof (the "By-Laws"), in order for business to be properly brought before the
next annual meeting, notice of such business must be received by the Secretary
of the Company not less than 60 days and not more than 90 days prior to such
meeting (provided that if less than 70 days notice or prior public disclosure of
the date of the meeting is given to stockholders, notice of such business must
be received by the Secretary of the Company no later than ten days following the
day on which notice of the date of the meeting was mailed or such public
disclosure was made, whichever occurs first). Such notice must contain (i) a
brief description of the business and the reasons for conducting it at the
meeting, (ii) the name and address of the stockholder proposing such business,
(iii) a representation that the proposing stockholder is a holder of record and
the number of shares of the Company that are beneficially owned by such
stockholder and (iv) a description of any material interest of such stockholder
in such business. The chairman of the meeting may disregard any business that he
or she determines was not properly brought before the meeting in accordance with
the By-Laws.
The By-Laws also provide that if a stockholder of the Company intends
to nominate at a meeting one or more persons for election to the Board, notice
of such nomination must be received by the Secretary of the Company not less
than 60 days and not more than 90 days prior to such meeting (provided that if
less than 70 days notice or prior public disclosure of the date of the meeting
is given to stockholders, such nomination must be received by the Secretary of
the Company no later than ten days following the day on which notice of the date
of the meeting was mailed or such public disclosure was made, whichever occurs
first). Such notice must contain (a) as to each proposed nominee, (i) the name,
age and business and residence address of such nominee, (ii) the principal
occupation of such nominee, (iii) the number of shares, if any, of the Company
that are beneficially owned by such nominee and (iv) any other information that
must be disclosed pursuant to the proxy rules of the SEC if such person had been
nominated by the Board and (b) as to the proposing stockholder, (i) the name and
address of such stockholder, (ii) a representation that the proposing
stockholder is a holder of record of shares of the Company entitled to vote at
the meeting and the number of shares of the Company that are beneficially owned
by such stockholder, (iii) a representation that the proposing stockholder
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice and (iv) a description of all arrangements and
understandings between the stockholder and each nominee pursuant to which the
nominations are to be made by the stockholder. The chairman of the meeting may
disregard any nomination that he or she determines was not made in accordance
with the foregoing procedures.
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Annual Report on Form 10-K
Any stockholder of record on December 22, 1995 who desires a copy of
the Company's 1995 Annual Report on Form 10-K, as filed with the SEC, may obtain
a copy (excluding exhibits) without charge by addressing a request to the
Secretary, Guilford Mills, Inc., P. O. Box 26969, Greensboro, North Carolina
27419-6969. A charge equal to the reproduction cost will be made if the exhibits
are requested.
Other Matters
The Board is not aware of any matters to be presented for action at the
Annual Meeting other than those described herein and does not intend to bring
any other matters before the Annual Meeting. However, if other matters shall
come before the Annual Meeting, it is intended that the holders of proxies
solicited hereby will vote thereon in their discretion.
By Order of the Board of Directors
Sherry R. Jacobs
Secretary
Dated: December 29, 1995
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