SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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) No fee required
( ) 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
GUILFORD MILLS, INC.
4925 West Market Street
Greensboro, North Carolina 27407
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On February 6, 1997
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
6, 1997 at 10:00 A.M. for the following purposes:
1. To elect five directors for three-year terms;
2. To consider and adopt amendments to the Company's 1991 Stock
Option Plan;
3. To consider and adopt an amendment to the Company's 1989 Restricted
Stock Plan;
4. To ratify the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending September 28, 1997; and
5. 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 20, 1996
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 26, 1996
<PAGE>
GUILFORD MILLS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 6, 1997
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 6, 1997 at 10:00 a.m. (the "Annual Meeting"). Stockholders of
record at the close of business on December 20, 1996 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, (ii) the adoption of the
amendments to each of the Company's 1989 Restricted Stock Plan (the "Restricted
Plan") and 1991 Stock Option Plan (the "Option Plan") and (iii) the ratification
of the selection of Arthur Andersen LLP as independent auditors for the fiscal
year ending September 28, 1997. 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 26, 1996. The
Annual Report of the
<PAGE>
Company for the fiscal year ended September 29, 1996, including audited
financial statements, has been sent to each stockholder.
VOTING SECURITIES
On December 20, 1996, there were outstanding and entitled to vote
14,506,459 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 20, 1996. 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 20, 1996 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) 13.70
6917 Collins Avenue
Miami Beach, FL 33141
Charles A. Hayes 1,092,732 (2)(3) 7.53
c/o Guilford Mills, Inc.
4925 West Market Street
Greensboro, NC 27407
ICM Asset Management, Inc. 1,072,700(4) 7.39
601 West Main Avenue
Suite 917
Spokane, WA 99201
Investment Counselors of 887,873(5) 6.12
Maryland, Inc.
803 Cathedral Street
Baltimore, MD 21201-5297
Pioneering Management Corporation 879,700(6) 6.06
60 State Street
Boston, MA 02109
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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) 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.
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<PAGE>
(3) Includes 13,750 shares of Common Stock subject to options
granted to Mr. Hayes under the Option Plan.
(4) Such information is based upon a copy of the
report on Schedule 13G, dated February 10, 1996, filed with the SEC and
furnished to the Company by the beneficial owner, and upon subsequent
information communicated to the Company by the beneficial owner.
(5) Includes 777,473 shares of Common Stock as to which the beneficial owner
has sole voting power. Such information is based upon a copy of the
report on Schedule 13G, dated February 12, 1996, filed with the SEC and
furnished to the Company by the beneficial owner, and upon subsequent
information communicated to the Company by the beneficial owner.
(6) Such information is based upon a copy of the report on Schedule 13G,
dated January 26, 1996, filed with the SEC and furnished to the Company
by the beneficial owner, and upon subsequent information communicated to
the Company by the beneficial owner.
The following table sets forth certain information, as of December 20,
1996, 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 1,092,732 (3) 7.53
George Greenberg (3)(4) 528,459 3.64
Maurice Fishman (3)(5) 463,043 3.19
Bruno Hofmann 381,000 (6) 2.63
John A. Emrich 37,322 (14)
Terrence E. Geremski 26,245 (14)
Sherry R. Jacobs 19,250 (14)
Donald B. Dixon 17,150 (14)
Stephen C. Hassenfelt 16,473 (7) (14)
Tomokazu Adachi 19,000 (14)
Dr. Jacobo Zaidenweber 11,000 (14)
Stig A. Kry 5,000 (14)
Paul G. Gillease 5,000 (8) (14)
Non-Director Executive Officers (9)(10)
Alfred A. Greenblatt 40,979 (14)
Byron McCutchen 1,048 (14)
All directors, director nominees 2,702,483 (11)(12)(13) 18.48
and executive officers as a group
(consisting of 17 persons)
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(1) The amount of shares beneficially owned by Ms. Jacobs and Messrs.
Hayes, Greenberg, Fishman, Dixon and Hassenfelt includes 13,750 shares of Common
Stock, the amount of shares beneficially owned by Mr. Adachi includes 15,000
shares of Common Stock, and the amount of shares beneficially owned by Messrs.
Geremski, Kry and Gillease includes 5,000 shares of Common Stock, subject to
options granted to each such director under the Option Plan. See "Election of
Directors - Additional Information" below. The amount of shares beneficially
owned by Mr. Emrich includes 2,667 shares of Common Stock subject to options
granted pursuant to the Option Plan.
(2) Includes 21,000 and 5,333 shares of restricted Common Stock awarded
to Messrs. Emrich and Geremski, respectively, under the Restricted Plan. Such
persons have sole voting power with respect to such shares. See "Executive
Compensation - Summary Compensation Table" below.
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<PAGE>
(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 45,599 shares held by Mr. Fishman's wife, as to
which beneficial ownership is disclaimed.
(6) Includes 200,000 shares of restricted Common Stock paid to Mr.
Hofmann in connection with the sale of the capital stock of the Hofmann
Companies to the Company. See "Certain Transactions" below.
Mr. Hofmann has sole voting power with respect to such shares.
(7) Does not include 425 shares held by Mr. Hassenfelt's wife, as to
which beneficial ownership is disclaimed.
(8) Does not include 7,084 shares held by Mr. Gillease's wife, as to
which beneficial ownership is disclaimed.
(9) The amount of shares beneficially owned by Messrs. Greenblatt and
McCutchen includes 1,667 and 667 shares of Common Stock, respectively, subject
to options granted to such persons pursuant to the Option Plan.
(10) Includes 16,000 shares of restricted Common Stock awarded
to Mr. Greenblatt under the Restricted Plan. Mr. Greenblatt has sole voting
power with respect to such shares.
(11) Includes 119,168 shares of Common Stock subject to options
granted pursuant to the Option Plan.
(12) Excludes 103,008 shares owned by relatives of officers and
directors of the Company, as to which beneficial ownership is disclaimed by such
officers and directors.
(13) Includes 52,333 shares of restricted Common Stock awarded to
officers under the Restricted Plan. Such persons have sole voting power with
respect to such shares.
(14) 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.
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<PAGE>
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 1, 1996, Messrs. Fishman, Gillease, 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 1998
fiscal year and until his successor is elected and qualified. At the 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 of Mr. McGarr's unexpired term.
The Board has nominated Ms. Jacobs and Messrs. Adachi, Emrich, Hofmann
and Kry 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 1999 fiscal year and until her or his successor is elected and
qualified. Under the terms of the Stock Purchase Agreement, dated January 12,
1996, between the Company and Mr. Hofmann, pursuant to which the Company
acquired 100% of the outstanding capital stock of Hofmann Laces, Ltd., Raschel
Fashion Interknitting, Ltd. and Curtains and Fabrics, Inc. (collectively, the
"Hofmann Companies") from Mr. Hofmann, the Company agreed to nominate Mr.
Hofmann for election as a director in such class. Unless a contrary
specification is indicated, it is intended that the accompanying form of proxy
will be voted for the election of Ms. Jacobs and Messrs. Adachi, Emrich, Hofmann
and Kry. 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>
<S> <C> <C> <C>
Name Age (1) Principal Occupation or Occupations Director Since
- ---- ---- ----------------------------------- --------------
DIRECTOR NOMINEES
Nominees for a Three-Year Term
Expiring at Annual Meeting
After 1999 Fiscal Year
- --------------------------------
Sherry R. Jacobs 53 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 55 President of Japan Tech, Inc., an importer 1990
of textile machinery and equipment
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(1) As of December 20, 1996.
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<PAGE>
John A. Emrich 52 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)
Bruno Hofmann 57 President and Chief Executive Officer of the (2)
Hofmann Companies and predecessor companies
(since 1976)
Stig A. Kry (3) 67 Chairman Emeritus, Kurt Salmon Associates, 1993
Inc., a management consulting firm
CONTINUING DIRECTORS
Class of Directors Whose Term
Expires at Annual Meeting
After 1998 Fiscal Year
- --------------------------------
Maurice Fishman 73 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 (4) 64 Consultant to the Company (from 1993 to 1993
1996); Vice 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 46 Chairman and Chief Executive Officer of 1989
North Carolina Trust Company
Charles A. Hayes 62 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)
Class of Directors Whose Term
Expires at Annual Meeting
After 1997 Fiscal Year
- --------------------------------
Donald B. Dixon 68 Retired since 1984; for more than five years 1987
prior thereto, a partner at Arthur Andersen
LLP
Terrence E. Geremski (5) 49 Senior Vice President, Chief Financial 1993
Officer and Treasurer (since 1996); Vice
President, Chief Financial Officer and
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.
- --------
(2) Mr. Hofmann will stand as a director nominee of the Company for the first
time at the Annual Meeting.
(3) Mr. Kry is a director of Paul Harris Stores,
Inc., Oshkosh B' Gosh, Inc. and Dominion Textiles, 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").
(4) 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
Exchange Act.
(5) Mr. Geremski is a member of the Board of Trustees of Alexander Hamilton
Variable Insurance Trust, which is registered as an investment company under the
Investment Company Act of 1940, as amended.
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<PAGE>
George Greenberg (6) 74 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 67 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
- --------
(6) Mr. Greenberg is a director of Nautica Enterprises, Inc., which has a class
of securities registered pursuant to Section 12 of the Exchange Act.
</TABLE>
ADDITIONAL INFORMATION
During the last fiscal year, the Board's Audit Committee, which
consists of Messrs. Dixon, Hassenfelt and Fishman, held two 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 consists of Ms. Jacobs and Messrs. Hassenfelt and Greenberg,
held three 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 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 $5,000 and
$1,000 for each Board meeting attended (other than telephonic Board meetings).
Each member of a committee (who is not an employee of the Company) is paid
$1,000 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 $19,000 during
the 1996 fiscal year for such service. From October 1, 1993 to June 30, 1996,
Mr. Gillease provided consulting services to the Company on certain strategic
planning matters. The Company paid Mr. Gillease approximately $21,000 per month
under such consulting arrangement. Mr. Hofmann, a director nominee, has entered
into a consulting agreement with the Company pursuant to which he will provide
certain consulting and advisory services to the Company during a period ending
on December 31, 2000. The Company pays Mr. Hofmann an annual consulting fee of
$100,000 for such services. Mr. Hofmann is also a party to an employment
agreement with the Hofmann Companies. See "Certain Transactions" below.
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.
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<PAGE>
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. Subject to
stockholder approval, the Compensation Committee has adopted an amendment to the
Option Plan extending such formula provision. See "Proposal to Approve
Amendments to the Guilford Mills, Inc. 1991 Stock Option Plan" below. 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 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. Subject to stockholder approval, the Compensation
Committee has adopted an amendment to the Option Plan permitting any employee
director who has received an option award under the formula provision to receive
subsequent discretionary grants (of options or stock appreciation rights) as a
key employee. See "Proposal to Approve Amendments to the Guilford Mills, Inc.
1991 Stock Option Plan" below.
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 Restricted Plan and the Option 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's approval is required for 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 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
-8-
<PAGE>
(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) denies a public
company a deduction, except in limited circumstances, for compensation paid to
"covered employees", i.e., those employees named in the "Summary Compensation
Table" below, to the extent such compensation exceeds $1,000,000. The deduction
limitation contained in Section 162(m) does not apply to certain
performance-based compensation. The Committee does not currently intend to
recommend changes to the Company's benefit plans in order to qualify
compensation paid to covered employees for such exception.
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 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. The textile companies which the Company considers for comparative
compensation purposes are not identical to the companies 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 1996 fiscal year was increased 9.6%, the first increase since the 1994
fiscal year.
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 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
-9-
<PAGE>
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.
In its capacity as the administrator of the Restricted Plan, 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, 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. Subject to stockholder approval, the
Compensation Committee has adopted an amendment to the Restricted Plan relating
to the discretion and authority of the administrator to amend the Restricted
Plan from time to time without stockholder approval. See "Proposal to Approve an
Amendment to the Guilford Mills, Inc. 1989 Restricted Stock Plan" below.
As the administrator of the Option Plan, 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. 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 Messrs. Geremski and Hayes during the 1996 fiscal year
represents a grant, under the Option Plan's formula provision, to such persons
in their capacities as directors. Subject to stockholder approval, the
Compensation Committee has adopted certain amendments to the Option Plan. See
"Proposal to Approve Amendments to the Guilford Mills, Inc. 1991 Stock Option
Plan" below.
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 1996 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 1996 fiscal year, the Company contributed Common Stock to
the ESOP in the amount of 2% of the compensation of the eligible employees for
such period. The Company also maintains for its executive officers a
split-dollar insurance program and a supplemental executive retirement plan,
which are described, respectively, in Footnote 5 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, assuming reinvestment of dividends, on the Common
Stock, the Standard & Poor's 500 Stock Index (the "S&P 500"), the Company's
former peer group index ("Peer Group I"), and the Company's current peer group
index ("Peer Group II"). The Company has selected a different peer group index
because the companies included in Peer Group II are those companies with which
the Company currently compares itself in evaluating its own financial and
operating performance. Peer Group I represents the cumulative total return on
the common stock of the
-10-
<PAGE>
following textile companies: Burlington Industries,
Inc., Cone Mills Corp., Delta Woodside Industries, Inc., Dixie Yarns, Inc.,
Dyersburg Corp., Fab Industries, Inc., Johnston Industries, Inc., Lida, Inc.,
Springs Industries, Inc., Texfi Industries, Inc., Tultex Corp., Unifi, Inc.,
United Merchants and Manufacturers, Inc., Wellman, Inc., and WestPoint Stevens
Inc. Peer Group II represents the cumulative total return on the common stock of
the following textile companies: Burlington Industries, Inc., Collins & Aikman
Corp., Concord Fabrics Inc., Cone Mills Corp., Crown Crafts, Inc., Culp, Inc.,
Delta Woodside Industries, Inc., Dixie Yarns, Inc., Dyersburg Corp., Fab
Industries, Inc., Fieldcrest Cannon, Inc., Foamex International Inc., Galey &
Lord, Inc., Johnston Industries, Inc., Pillowtex Corp., Quaker Fabric Corp.,
Springs Industries, Inc., Texfi Industries, Inc., Thomaston Mills, Inc., Unifi,
Inc., Wellman, Inc. and WestPoint Stevens Inc. The return of each company
included in each peer group index has been weighted according to its respective
stock market capitalization.
[GRAPHIC OF TOTAL SHAREHOLDER RETURN APPEARS HERE, WITH PLOT POINTS SHOWN BELOW]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
9/30/91 9/90/92 9/30/93 9/30/94 9/30/95 9/30/96
------------------------------------------------------------------------------------
- ---------------------------
Guilford Mills $100.0 $133.2 $138.2 $143.8 $167.5 $159.6
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------
S&P 500 $100.0 $111.0 $125.4 $130.0 $168.5 $202.6
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------
Peer Group I $100.0 $102.1 $ 95.7 $101.0 $101.5 $100.7
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------
Peer Group II $100.0 $105.4 $103.7 $110.0 $105.4 $107.6
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: ASSUMES AN INITIAL INVESTMENT OF $100 ON SEPTEMBER 30, 1991.
TOTAL RETURN INCLUDES REINVESTMENT OF DIVIDENDS.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows for the fiscal years ended September 29,
1996, October 1, 1995 and October 2, 1994, the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for those
periods, to the Company's CEO and to the Company's four most highly compensated
executive officers (other than the CEO).
-11-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
All Other
Annual Long-Term Compen-
Compensation Compensation sation
Restricted
Name and Other Annual Stock
Principal Fiscal Salary Bonus Compensation Awards Options
Position Year ($) ($) ($)(3) ($)(4) (#) ($)(5)
-------- ----- ----- ----- ------ ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles A. Hayes, 1996 625,000 117,188 -- 0 3,750 234,489
Chairman 1995 720,000(1) 384,750(2) -- 0 3,750 234,326
and Chief Executive 1994 720,000(1) 257,384(2) 61,511 0 3,750 213,229
Officer
John A. Emrich, 1996 450,000 67,500 -- 437,500 0 61,362
President and 1995 306,251 162,907 -- 0 2,000 51,386
Chief Operating Officer 1994 250,008 111,394 -- 0 0 38,725
Alfred A. Greenblatt, 1996 405,000 50,625 -- 0 0 51,466
Senior 1995 372,501 183,813 -- 0 2,000 47,675
Vice President, 1994 350,004 91,001 -- 0 0 38,902
President/
Apparel & Home Fashions
Business Unit
Terrence E. Geremski, 1996 256,256 58,000 -- 0 7,500 34,277
Senior Vice 1995 250,008 112,503 -- 0 0 32,936
President/Chief 1994 212,505 55,251 -- 0 0 25,081
Financial Officer and
Treasurer
Byron McCutchen, 1996 250,000 26,702 -- 0 0 31,649
Senior 1995 225,002 84,038 -- 0 2,000 25,120
Vice President,
President/
Fibers Business Unit
(6)
</TABLE>
- --------
(1) Mr. Hayes' salary for the 1995 and 1994 fiscal years includes a special
supplement of $150,000 for assuming interim responsibilities as President and
COO. (Mr. Emrich succeeded Mr. Hayes as President and COO effective October 1,
1995.) Mr. Hayes' bonus award for such periods was based solely on his salary as
Chairman and CEO.
(2) 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 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 1996 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, 1997. The market value of the Common
Stock on January 2, 1996 was less than $20.90 per share and, therefore, Mr.
Hayes will not receive any payment with respect to the rights valued on such
date. 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.
(3) 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.
12
<PAGE>
(4) The amount shown in this column reflects the market value of the 20,000
shares of restricted stock granted, under the terms of the Restricted Plan, to
Mr. Emrich during the 1996 fiscal year. (The market value is given as of the
date of grant of the restricted stock.) Mr. Emrich vested in 4,000 shares of
such award on October 9, 1996 and will vest in the balance of the award, subject
to his continued employment with the Company, in equal 4,000 share increments on
October 1 of each of 1997, 1998, 1999 and 2000.
The restricted stock awarded to Mr. Emrich is held by an escrow agent,
appointed by the Company, until Mr. Emrich 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 Mr. Emrich vests in his restricted stock, at which time he will also be
entitled to receive the interest credited by the Company on such dividends.
Notwithstanding the foregoing, upon a "change in control" of the Company, as
such term is defined in the Restricted Plan, the restrictions applicable to Mr.
Emrich's 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 1996
fiscal year, Mr. Emrich held 21,000 shares of restricted stock at an aggregate
market value of $477,750 (based upon a price of $22.75 per share - the closing
price of the Common Stock on the last business day of the 1996 fiscal year).
(5) The components of the amounts shown in this column for the 1996 fiscal
year consist of the following:
(i) Contributions of $9,000 each to the accounts of Messrs. Hayes,
Emrich, Greenblatt, Geremski and McCutchen, pursuant to the Profit-Sharing Plan.
(ii) Contributions of shares of Common Stock at an aggregate market
value of $3,000 under the ESOP to the accounts of each of Messrs. Hayes, Emrich,
Greenblatt, Geremski and McCutchen.
(iii) Contributions of $68,780, $37,032, $35,105, $17,500 and $14,723
to the accounts of Messrs. Hayes, Emrich, Greenblatt, Geremski and McCutchen,
respectively, pursuant to the Company's excess benefit plan which is designed to
supplement the Profit-Sharing Plan and the ESOP.
(iv) With respect to Messrs. Emrich, Greenblatt, Geremski and
McCutchen, 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
1996 fiscal year, each of Messrs. Greenblatt, Emrich, Geremski and McCutchen
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 1996 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 1996 fiscal year, calculated on an actuarial
basis, ascribed to life insurance policies purchased on the lives of the named
executives: Mr. Hayes - $137,295; Mr. Emrich - $6,358; Mr. Greenblatt - $3,996;
Mr. Geremski - $4,777; and Mr.McCutchen - $4,926.
(v) For the 1996 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 $4,174 and $365, respectively.
(vi) For the 1996 fiscal year, imputed interest income to Mr. Emrich of
$5,972, in connection with an interest free loan made by the Company to such
officer. See "Certain Transactions" below.
(6) Mr. McCutchen assumed the position of Senior Vice President and
President/Fibers Business Unit in April, 1995.
13
<PAGE>
STOCK OPTION GRANTS
The table below shows, among other things, hypothetical potential gains from
stock options granted during the Company's 1996 fiscal year. Such hypothetical
gains are based entirely on assumed annual growth rates of 5% and 10% in the
price of Common Stock over the five year life of the stock options (which would
equal a total increase in stock price of approximately 28% and 61%,
respectively) and represent the spread between the option exercise price and the
assumed market value of the underlying Common Stock. The assumed rates of growth
were selected by the SEC for illustrative purposes only and are not intended to
predict future stock prices which will depend upon, among other things, market
conditions and the Company's future performance.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option
Term
--------------------------------------------------------- -------------------------------
Percent of
Total
Number of Options
Securities Granted to
Under Employees in Exercise or Expiration
Options Fiscal Year Base ($)Price Date 5% ($) 10% ($)
Name (1) Granted (#) ------------- ----------- ------ ------
-------- --------
(%)
<S> <C> <C> <C> <C> <C> <C>
Charles A. Hayes 3,750 N/A 22.31 02/06/01 23,100 51,075
Terrence E. 7,500 N/A 22.31 02/06/01 46,200 102,150
Geremski
</TABLE>
- --------
(1) The grant of options to Messrs. Hayes and Geremski reflects an automatic
grant, pursuant to the formula provision for eligible director participants, of
Non-Qualified Options under the Option Plan; no other options were granted to
employees during the 1996 fiscal year under the Option Plan. Subject to
stockholder approval, the Compensation Committee has adopted certain amendments
to the formula provision of the Option Plan. See "Proposal to Approve Amendments
to the Guilford Mills, Inc. 1991 Stock Option Plan" below.
STOCK OPTION EXERCISES
The table below shows option exercises by the five most highly compensated
executive officers during the 1996 fiscal year as well as the value of the
options held by such persons at the end of the 1996 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 -- -- 18,750/3,750 48,093/3,600
John A. Emrich 3,000 31,365 2,000/2,000 0/3,880
Alfred A. Greenblatt -- -- 1,000/2,000 0/3,880
Terrence E. Geremski -- -- 2,500/5,000 1,100/2,200
Byron McCutchen -- -- 0/2,000 0/3,880
</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
$22.75, the market value of the underlying Common Stock on September 27, 1996
(the last business day of the 1996 fiscal year), over the option exercise price.
14
<PAGE>
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.
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
John A. Emrich 125,000
Alfred A. Greenblatt 125,000
Terrence E. Geremski 125,000
Byron McCutchen 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
15
<PAGE>
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
September 29, 1996, Messrs. Hayes, Emrich, Greenblatt, Geremski and McCutchen
would have received, had their employment ceased on that date, lump sum payments
in the approximate amounts of $2,529,489, $1,736,372, $1,543,519, $1,109,628 and
$930,317, 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" above.
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 1996 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 1996 fiscal
year totaling $4,654,114.
In the ordinary course of business and through a series of arm's-length
transactions, during the 1996 fiscal year, the Company paid $1,467,465 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, together with George Greenberg, a director of the
Company, serve 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 consideration, provided Grupo Ambar
were to achieve certain earnings objectives through the end of calendar year
1995. Based on Grupo Ambar's actual earnings results over the relevant
measurement period, the Company paid the selling stockholders in the 1996 fiscal
year an aggregate of $3,667,000 pursuant to such agreement. Dr. Zaidenweber and
his late brother received approximately 42% and 16%, respectively, of such
payment. Dr. Zaidenweber remains the Chairman of the Board, and a stockholder,
of Grupo Ambar. Dr. Zaidenweber receives an annual salary of $328,000 for his
service as Chairman of the Board 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,
16
<PAGE>
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.
Mr. Gillease, a director of the Company, provided consulting services
to the Company until June, 1996. See "Election of Directors - Additional
Information" above. Mr. Gillease's wife, a former executive officer of the
Company, also provided consulting services to the Company until June, 1996. The
Company paid Mrs. Gillease $15,000 per month for such services.
During the 1996 fiscal year, the Company acquired 100% of the issued
and outstanding capital stock of the Hofmann Companies from Bruno Hofmann, a
director nominee. The purchase price for such stock paid by the Company to Mr.
Hofmann during the 1996 fiscal year consisted of: (i) a cash payment of
$25,430,000 and (ii) 200,000 shares of Common Stock, the further transfer of
such stock being prohibited, with certain exceptions, until December 31, 2000.
On the date the Hofmann Companies were acquired, the Company loaned to one of
the Hofmann Companies the sum of $16,500,000, an amount equal to such Company's
accumulated adjustments account which was distributed to Mr. Hofmann on the
closing date. In addition, the Company paid Mr. Hofmann during the 1996 fiscal
year the amount of $2,500,300, representing the additional tax payable by Mr.
Hofmann arising by virtue of the Company's decision to file an election under
Section 338(h)(10) of the Code with respect to the acquisition of the Hofmann
Companies. The Company will also make an additional payment to Mr. Hofmann
during calendar year 1997, the amount of which is not yet known, representing
taxes payable by one of the Hofmann Companies as a result of the Company's
election under Section 338(h)(10) of the Code. In connection with its
acquisition of the Hofmann Companies, the Company also agreed to pay Mr. Hofmann
additional consideration in accordance with a formula based on the Company's
price-earnings' multiple and the Hofmann Companies' performance through the end
of calendar year 2000. Mr. Hofmann has entered into an employment agreement with
the Hofmann Companies pursuant to which he will serve as President and Chief
Executive Officer of the Hofmann Companies for a period ending on December 31,
2000. The Hofmann Companies, as a group, pay Mr. Hofmann an annual base salary
of $305,000 in consideration for such services. Mr. Hofmann is also eligible to
receive a cash bonus of up to one-half of his annual base salary based upon the
Hofmann Companies' financial performance.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1996 fiscal year, the Company's directors, executive
officers and greater than 10% beneficial owners complied with all Section 16(a)
filing requirements, except that (i) Mr. Gillease, a director of the Company,
failed to report the sale of 3,300 shares of Common Stock by his wife and (ii)
Mr. Fishman, a director of the Company, failed to report gifts of 2,728 shares
of Common Stock, 76 shares of which represented a gift made by Mr. Fishman's
wife. Such omissions have been corrected by the reporting persons.
PROPOSAL TO APPROVE AMENDMENTS TO THE
GUILFORD MILLS, INC. 1991 STOCK OPTION PLAN
On December 9, 1996, the Compensation Committee of the Board, which
administers the Option Plan, approved, and recommended for submission to the
stockholders for their approval, amendments to the Option Plan (i) extending the
existing formula provision for directors, (ii) modifying the eligibility
provision applicable to employee directors and (iii) granting the administrator
of the Option Plan greater discretion in amending the plan from time to time
without stockholder approval. The amendments described below will become
effective only upon being approved by the stockholders of the Company.
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GENERAL TERMS OF THE OPTION PLAN
The stockholders of the Company approved the adoption of the Option
Plan at their 1991 annual meeting. The Option Plan provides for the granting of
incentive stock options ("Incentive Options"), within the meaning of Section 422
of the Code, Non-Qualified Options or stock appreciation rights ("SARs") to
purchase or acquire, in the aggregate, up to 1,350,000 shares of Common Stock
(which number was increased from 900,000 shares due to the Company's 1992
3-for-2 stock split and which number is subject to further adjustment in the
event of future stock dividends, stock splits and other contingencies) during
the period from August 29, 1991 through August 28, 2001. The shares of Common
Stock with respect to which Incentive Options, Non-Qualified Options or SARs may
be granted may be made available from either authorized and unissued or treasury
shares. Incentive Options may be granted only to salaried key employees of the
Company or any subsidiary or parent corporation of the Company now existing or
hereafter formed or acquired. Non-Qualified Options or SARs may be granted to
salaried key employees of the Company or any subsidiary or parent corporation of
the Company now existing or hereafter formed or acquired. Non-Qualified Options
are granted to directors in accordance with the formula provision described
below. SARs may be granted (i) alone, (ii) simultaneously with the grant of an
option and in conjunction therewith or in the alternative thereto or (iii)
subsequent to the grant of a Non-Qualified Option and in conjunction therewith
or in the alternative thereto. (There are currently no outstanding SARs under
the Option Plan.)
The term of each option granted under the Option Plan is determined by
the administrator of the plan in its discretion, except with respect to
Non-Qualified Options granted to directors pursuant to the formula provision
which are not exercisable more than five years after the date of grant, and
except with respect to Incentive Options which are not exercisable more than ten
years after the date of grant. All outstanding Incentive Options have a five
year term and are not exercisable during the first two years after the date of
grant. In the event of a "change in control" of the Company, as defined in the
Option Plan, all outstanding Incentive Options, Non-Qualified Options (other
than those granted pursuant to the formula provision) and SARs will immediately
become exercisable. The Compensation Committee has the right to accelerate, in
whole or in part, rights to exercise any option granted under the Option Plan.
The exercise price of an Incentive Option, or a Non-Qualified Option granted to
a director pursuant to the formula provision, will not be less than 100% of the
fair market value of a share of Common Stock on the date such option was
granted. The exercise price of other Non-Qualified Options is determined by the
plan administrator in its discretion.
The closing price of the Common Stock, as reported by the New York
Stock Exchange on December 20, 1996, was $27.25 per share.
AMENDMENT EXTENDING THE FORMULA PROVISION
As indicated above, see "Election of Directors - Additional
Information," the Option Plan currently provides for the automatic grant of
Non-Qualified Options to directors as follows: 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 is
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. A
director who has received the five option grants provided for in the above
formula will not currently be eligible to receive additional grants under such
formula even though he may continue to serve as a director. For example, each of
the following current directors has received five annual option grants in
accordance with the formula provision and, therefore, is ineligible to receive
any additional option grants pursuant to such provision (or any other provision
of the plan): Ms. Jacobs and Messrs. Fishman, Hassenfelt, Hayes, Dixon and
Greenberg.
The Option Plan's director formula provision is designed to maintain
the Company's ability to attract and retain the services of experienced and
highly qualified directors and to increase the alignment of their interest
18
<PAGE>
with the interest of the Company's stockholders in general. The Compensation
Committee believes that extending the period over which directors are eligible
to receive option grants under the formula provision will further these
objectives. As a result, the Compensation Committee adopted an amendment to the
Option Plan, subject to stockholder approval, extending the director formula
provision. Pursuant to the amendment, each person who has served as a director
of the Company for two or more consecutive years from the date of grant will
automatically be granted, subject to continued service as a director, (i) upon
the first date of grant after the completion of two consecutive years of service
as a director, a Non-Qualified Option to purchase 7,500 shares of Common Stock
and (ii) upon each of the dates of grant after the completion of such service
prior to the expiration of the Option Plan, a Non-Qualified Option to purchase
3,750 shares of Common Stock.
If the amendment extending the Option Plan's formula provision is
approved by the stockholders of the Company, current non-employee directors and
non-employee director nominees, as a group, will receive an aggregate of 116,250
Non-Qualified Options during the remaining term of the Option Plan (excluding
options to be granted in accordance with the Option Plan's current formula
provision before the adoption of such amendment). As indicated below, if the
amendments to the Option Plan are approved by the stockholders of the Company,
employee directors will no longer participate in the plan's formula provision.
AMENDMENT OF ELIGIBILITY PROVISION
The Option Plan currently provides that any director who receives an
option pursuant to the plan's formula provision, as described above, is
ineligible to receive any other grant or award under any other article of the
plan. As a result, an employee director who has received an option grant under
the formula provision is not eligible to receive discretionary grants of options
or SARs under the plan. Currently, two of the Company's employee directors,
Messrs. Hayes and Geremski, have received option grants under the formula
provision and, as a result, are ineligible under the terms of the Option Plan to
receive any discretionary awards under the plan. (Mr. Emrich, also an employee
director, has not yet met the minimum service requirement to receive option
grants under the formula provision.)
The Compensation Committee believes that the Option Plan's eligibility
provision applicable to employee directors unnecessarily limits the freedom of
the Company to structure an effective executive compensation program. The
ability to make discretionary grants of equity based instruments, such as stock
options, to the Company's senior executives is a critical component of the
Company's overall executive compensation program. As a result, the Compensation
Committee adopted an amendment to the Option Plan, subject to stockholder
approval, providing that any employee director who has received Non-Qualified
Option grants in accordance with the plan's formula provision will be eligible
to receive subsequent discretionary grants of options or SARs. The amendment
also provides that, during the remaining term of the Option Plan, employee
directors will be eligible to receive only discretionary grants of options or
SARs, and will not be eligible to receive Non-Qualified Option grants pursuant
to the formula provision. (Participation by non-employee directors in the Option
Plan will remain limited to participation in the plan's formula provision.)
FUTURE AMENDMENT OF THE OPTION PLAN
The Option Plan currently provides that the plan administrator may,
from time to time, amend the plan, provided that no amendment shall be made,
without the approval of the stockholders of the Company, that will (i) increase
the total number of shares reserved for options and SARs under the plan (other
than an increase resulting from adjustments in connection with certain changes
in the Company's capital structure, e.g., merger, stock dividend, stock split),
(ii) reduce the exercise price of any Incentive Option below the price required
by the plan, (iii) modify the provisions of the Option Plan relating to
eligibility or (iv) materially increase the benefits accruing to participants
under the Option Plan. The Option Plan's current requirement for stockholder
approval of certain plan amendments is based, in part, on the requirements of
former Rule 16b-3 promulgated under the Exchange Act. The SEC, however, during
1996 adopted amendments to Rule 16b-3 which, among other things, deleted the
requirement that plan amendments be approved by stockholders.
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<PAGE>
In light of this recent change in the law, and the Compensation
Committee's belief that the Company should preserve the flexibility to amend the
Option Plan from time to time without stockholder approval, except in certain
circumstances described below, the Compensation Committee adopted an amendment
to the Option Plan, subject to stockholder approval, modifying the circumstances
under which stockholder approval of future plan amendments is required. Pursuant
to such amendment, the plan administrator has the authority, from time to time,
to adopt amendments to the Option Plan without obtaining stockholder approval,
unless such approval is otherwise required by law. Although such amendment
expands the ability of the administrator to adopt plan amendments in its
discretion, stockholder approval of plan amendments will nonetheless be required
in certain instances. For instance, pursuant to Section 162(m) of the Code, and
the regulations promulgated thereunder, compensation paid to covered employees
in excess of $1,000,000 is not eligible for a tax deduction by the Company,
unless certain conditions are satisfied. If the Company intended to qualify
compensation attributable to options granted under the Option Plan for
deduction, such conditions would require, among other things, that the
stockholders of the Company approve an amendment to the Option Plan setting
forth the maximum number of shares subject to options which an individual could
receive pursuant to the plan. In addition, the Code requires that Incentive
Options be granted under a stockholder approved plan that sets forth the total
number of shares that may be issued as options and the employees (or class of
employees) who are eligible to receive options.
THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS CONSIDER AND APPROVE THE AMENDMENTS
TO THE OPTION PLAN.
PROPOSAL TO APPROVE AN AMENDMENT TO THE
GUILFORD MILLS, INC. 1989 RESTRICTED STOCK PLAN
On December 9, 1996, the Compensation Committee adopted, and
recommended for submission to the stockholders for their approval, an amendment
to the Restricted Plan. The purpose of the amendment is to modify the
circumstances under which stockholder approval of plan amendments is required.
Such amendment, described below, will become effective only upon being approved
by the stockholders of the Company.
GENERAL TERMS OF THE RESTRICTED PLAN
The stockholders of the Company approved the adoption of the Restricted
Plan at their 1989 annual meeting. The stockholders approved amendments to the
Restricted Plan, at their 1991 annual meeting, increasing the number of shares
of Common Stock which may be issued pursuant to the Restricted Plan from 500,000
to 1,000,000 shares and permitting shares awarded under the Restricted Plan to
be either authorized and unissued shares or treasury shares or both at the
discretion of the Company. (Due to a 3-for-2 stock-split in 1992, the number of
shares issuable under the Restricted Plan was adjusted from 1,000,000 to
1,500,000 shares of Common Stock.) The purpose of the Restricted Plan is to
provide for the award of shares of Common Stock to key employees of the Company
and its subsidiaries, with such award being subject to such restrictions, terms
and conditions as the Compensation Committee may require. The Restricted Plan
expires on June 30, 1999, although awards made prior to expiration may extend
beyond that date. Subject to the provisions of the Restricted Plan, the
Compensation Committee has the authority to determine to whom shares will be
awarded, the number of shares to be awarded, the restrictions applicable to a
particular award and to make all other determinations necessary for
administering the Restricted Plan. If there is a "change in control" of the
Company, as defined in the Restricted Plan, any restrictions on a participant's
awarded shares will lapse and any and all share certificates not previously
delivered to the participant will be delivered to the participant. The
Compensation Committee may decide at any time, in its sole discretion and on
such terms and conditions that it deems appropriate, to remove restrictions on
shares awarded to any participant under the Restricted Plan.
A participant in the Restricted Plan will be entitled to enjoy all
rights and privileges of stockholders of the Company generally with respect to
the shares awarded under the Restricted Plan, including the right to receive
dividends and the right to vote on matters which come before the stockholders.
During the period that any portion of the shares are subject to any
restrictions, however, the participant will not be permitted to sell,
20
<PAGE>
transfer, assign or otherwise dispose of such shares or pledge, grant a security
interest or otherwise encumber such shares.
FUTURE AMENDMENT OF THE RESTRICTED PLAN
The Restricted Plan currently provides that the administrator of the
plan generally has the authority in its discretion to amend the plan and the
awards granted thereunder, provided that without the approval of the
stockholders of the Company, no amendment shall be made which will (i) increase
the total number of shares reserved for award under the plan (other than
increases reflecting certain changes in the Company's capitalization), (ii)
modify the provisions of the plan relating to eligibility or (iii) materially
increase the benefits accruing to participants under the plan. Like the
comparable section of the Option Plan, the foregoing language is based, in part,
on the requirements of former Rule 16b-3 promulgated under the Exchange Act.
Given the recent modification to such rule (deleting the requirement that plan
amendments be approved by stockholders) and the Committee's belief that the
Company should maintain the flexibility of amending the plan from time to time
without stockholder approval, the Committee has adopted an amendment to the
Restricted Plan, subject to stockholder approval, granting the plan
administrator the authority to amend the plan and the awards granted thereunder
from time to time without stockholder approval, unless such approval is
otherwise required by law. Notwithstanding such amendment, stockholder approval
of amendments to the Restricted Plan and awards thereunder may be required in
certain instances. For instance, if the Company intended to qualify restricted
stock granted under the Restricted Plan for a deduction pursuant to Section
162(m) of the Code, then either the grant of the restricted stock or the
determination of whether the restricted stock will vest must be conditioned upon
the attainment of a performance goal approved by stockholders of the Company.
THE COMPANY RECOMMENDS THAT THE STOCKHOLDERS CONSIDER AND APPROVE THE AMENDMENT
TO THE RESTRICTED PLAN.
RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING SEPTEMBER 28, 1997
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 28, 1997 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, 1997
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
21
<PAGE>
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.
ANNUAL REPORT ON FORM 10-K
Any stockholder of record on December 20, 1996 who desires a copy of
the Company's 1996 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 26, 1996
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<PAGE>
(This Page Left Blank Intentionally)
<PAGE>
[Pursuant to Instruction 3 to Item 10 of Schedule 14A, Appendices A and
B are being filed electronically, but have not been included in the proxy
statement distributed to security holders.]
APPENDIX A
PROPOSED AMENDMENTS TO THE
GUILFORD MILLS, INC.
1991 STOCK OPTION PLAN
(Replacements and additions are in all CAPS or, if the original text is in
all CAPS, set within asterisks; deletions are set within back slashes.)
<PAGE>
The first sentence of Article X of the Option Plan shall be amended to
read in its entirety as follows:
Subject to the terms and conditions of Articles X through XIV
hereof, commencing with the Annual Meeting of stockholders of
the Company to be held in FEBRUARY, 199/1/7, each person who
has served as a director of the Company for two or more
consecutive years on the date of grant shall automatically be
granted, SUBJECT TO CONTINUED SERVICE AS A DIRECTOR, (a) upon
the first date of grant occurring after the completion of two
consecutive years of service as a director of the Company, an
option to purchase 7,500 Shares, and (b) upon each of the
/second, third, fourth and fifth/ dateS of grant occurring
after the completion of two consecutive years of service as a
director of the Company PRIOR TO THE EXPIRATION OF THIS PLAN,
an option to purchase 3,750 Shares.
Article XIII of the Option Plan shall be amended to read in its
entirety as follows:
XIII. DIRECTOR PARTICIPANT'S /IN/ELIGIBILITY /FOR OTHER
GRANTS/ *UNDER* THE PLAN
Any Director Participant WHO IS ALSO A KEY EMPLOYEE OF THE
COMPANY OR A KEY EMPLOYEE OF ANY SUBSIDIARY CORPORATION OR
PARENT CORPORATION OF THE COMPANY NOW EXISTING OR HEREAFTER
FORMED OR ACQUIRED AND who HAS receive/s/d an Option pursuant
to Article X hereof PRIOR TO THE ANNUAL MEETING OF
STOCKHOLDERS OF THE COMPANY TO BE HELD IN FEBRUARY, 1997 shall
be /in/eligible to receive any other grant or award under any
other Article of this Plan. COMMENCING WITH THE ANNUAL MEETING
OF STOCKHOLDERS OF THE COMPANY TO BE HELD IN FEBRUARY, 1997,
A DIRECTOR OF THE COMPANY WHO IS ALSO A KEY EMPLOYEE OF THE
COMPANY OR A KEY EMPLOYEE OF ANY SUBSIDIARY CORPORATION OR
PARENT CORPORATION OF THE COMPANY NOW EXISTING OR HEREAFTER
FORMED OR ACQUIRED SHALL BE INELIGIBLE TO RECEIVE AN OPTION
PURSUANT TO ARTICLE X HEREOF, BUT SHALL BE ELIGIBLE TO
RECEIVE ANY OTHER GRANT OR AWARD UNDER ANY OTHER ARTICLE OF
THIS PLAN.
<PAGE>
The first sentence of Article XXIV of the Option Plan shall be amended
to read in its entirety as follows:
The Board of Directors, the Executive Committee or the Option
Committee, as the case may be, may, from time to time, amend
the Plan /,provided that no amendments shall be made,/ without
the approval of the stockholders of the Company, UNLESS SUCH
APPROVAL IS OTHERWISE REQUIRED BY LAW. /that will (a) increase
the total number of Shares reserved for Options and Rights
under the Plan (other than an increase resulting from an
adjustment provided for in Article XVII hereof), (b) reduce
the exercise price of any Incentive Option granted hereunder
below the price required by Article V hereof, (c) modify the
provisions of the Plan relating to eligibility, or (d)
materially increase the benefits accruing to participants
under the Plan./
<PAGE>
APPENDIX B
PROPOSED AMENDMENT TO THE
GUILFORD MILLS, INC.
1989 RESTRICTED STOCK PLAN
(Replacements and additions are in all CAPS; deletions are set within back
slashes.)
The first sentence of the third paragraph of Article III of the
Restricted Plan shall be amended to read in its entirety as follows:
Subject to the express provisions of the Plan, the
Compensation Committee also shall have authority, in its sole
discretion, to construe, amend, suspend or terminate the Plan
and the awards granted hereunder (including amendments which
accelerate the lapse of a restriction described in Article V),
to prescribe, amend and rescind rules and regulations relating
to the Plan, and to make all other determinations necessary or
advisable for administering the Plan (including determinations
during any suspension or after any termination). /, provided,
however, that without the approval of the stockholders of the
Company, no amendment, rule, regulation, or determination
shall be made which will (i) increase the total number of
Shares reserved for award under the Plan (other than
increases reflecting a change in capitalization as provided
below), (ii) modify the provisions of the Plan relating to
eligibility, or (iii) materially increase the benefits
accruing to Participants under the Plan./ ANY SUCH
AMENDMENT TO THE PLAN OR THE AWARDS GRANTED HEREUNDER MAY BE
MADE BY THE COMPENSATION COMMITTEE WITHOUT THE APPROVAL OF THE
STOCKHOLDERS OF THE COMPANY, UNLESS SUCH APPROVAL IS OTHERWISE
REQUIRED BY LAW.
****************************************************************************
APPENDIX
*****************************************************************************
GUILFORD MILLS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 6, 1997
Proxy Solicited by the Board of Directors
The undersigned hereby appoints CHARLES A. HAYES and TERRENCE E. GEREMSKI,
or either of them, with full power of substitution in each, proxies (and if
the undersigned is a proxy, substitute proxies) to vote all Common Stock of
the undersigned in Guilford Mills, Inc. at the Annual Meeting of Stockholders
of such Company to be held on February 6, 1997, and at any and all
adjournments thereof, with authority to vote such stock on the matters set
forth on the reverse side hereof and upon such other matters as may properly
come before the meeting.
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
HAS YOUR ADDRESS CHANGED?
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
_____________________________________
GUILFORD MILLS, INC.
_____________________________________
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date______________________
Stockholder sign here________________Co-owner sign here_________________
This proxy is solicited by the Board of Directors. If no specification
is made, this Proxy will be voted FOR Proposals 1, 2, 3 and 4.
1. ELECTION OF DIRECTORS For Withhold For all except
Tomokazu Adachi, John A. Emrich,
Bruno Hofmann, Sherry R. Jacobs, [ ] [ ] [ ]
and Stig A. Kry
INSTRUCTION: To withhold authority to vote for any nominee, mark the "For
All Except" box and draw a line through the nominee's name in the list above.
For Against Abstain
2. Proposal to approve amendments
to the Company's 1991 Stock [ ] [ ] [ ]
Option Plan.
3. Proposal to approve an
amendment to the Company's [ ] [ ] [ ]
1989 Restricted Stock Plan.
4. Proposal to approve the
appointment of Arthur Andersen
LLP as independent auditors of [ ] [ ] [ ]
the Company.
Discretion will be used with respect to such other matters as may properly
come before the meeting or at any adjournments thereof.
Mark box at right if an address change has been noted on the reverse
side of this card. [ ]
Please sign name as it appears on stock certificate. Only one of several
joint owners need sign. Fiduciaries should give full title.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH CARD DETACH CARD
GUILFORD MILLS, INC.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the Company that require
your immediate attention and approval. These are discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then, sign the card, detach it, and return your proxy vote
in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders
to be held on February 6, 1997.
Thank you for your prompt consideration of these matters.
Sincerely,
GUILFORD MILLS, INC.
