<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (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.
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(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
GUILFORD MILLS, INC.
4925 West Market Street
Greensboro, North Carolina 27407
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on February 1, 2001
The Annual Meeting of Stockholders of Guilford Mills, Inc., a Delaware
corporation (the "Company"), will be held at the Company's IFD Building, 6001
West Market Street, Greensboro, North Carolina, on Thursday, February 1, 2001
at 10:00 a.m. for the following purposes:
1. To elect three directors for three-year terms;
2. To ratify the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending September 30, 2001; and
3. To transact such other business as properly may come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 15, 2000
as the 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
/s/ Robert A. Emken, Jr.
Robert A. Emken, Jr.
General Counsel and Secretary
Greensboro, North Carolina
December 22, 2000
<PAGE>
GUILFORD MILLS, INC.
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On February 1, 2001
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 Company's IFD
Building, 6001 West Market Street, Greensboro, North Carolina, on Thursday,
February 1, 2001 at 10:00 a.m. (the "Annual Meeting"). Stockholders of record
at the close of business on December 15, 2000 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 the nominees for director designated by the Board and the
ratification of the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending September 30, 2001. If a specification has been
made on the form of proxy, the shares will be voted in accordance with the
specification. The election of directors requires a plurality of the votes
cast, and the ratification of the selection of Arthur Andersen LLP 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 22, 2000. The Annual
Report of the Company for the fiscal year ended October 1, 2000, including
audited financial statements, has been sent to each stockholder.
VOTING SECURITIES
On December 15, 2000, there were outstanding and entitled to vote
19,194,295 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
15, 2000. The holders of a majority of the outstanding shares of the Common
Stock represented at the Annual Meeting will constitute a quorum.
<PAGE>
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 (except as set forth
below) December 15, 2000 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:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
------------------- -------------------- ----------------
<S> <C> <C>
Dimensional Fund Advisors Inc. ...... 1,788,667(1) 9.32
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Charles A. Hayes..................... 1,499,061(2)(3) 7.78
c/o Guilford Mills, Inc.
4925 West Market Street
Greensboro, NC 27407
</TABLE>
--------
(1) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts
(such investment companies and investment vehicles, the "Portfolios"). In
its role as investment advisor and investment manager, Dimensional
possesses both voting and investment power over 1,788,667 shares of
Common Stock as of September 30, 2000. Dimensional has advised the
Company that the Portfolios own all such shares of Common Stock and that
Dimensional disclaims beneficial ownership of such shares.
(2) Mr. Hayes 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.
(3) Includes (i) 75,625 shares of Common Stock subject to options granted to
Mr. Hayes under the Company's 1991 Stock Option Plan, as amended (the
"Option Plan"), (ii) 85,864 shares of restricted Common Stock awarded to
Mr. Hayes under the Company's 1989 Restricted Stock Plan, as amended (the
"Restricted Plan"), as to which Mr. Hayes has sole voting power (see
"Executive Compensation-Summary Compensation Table" below), (iii) 500,000
shares of Common Stock held by a grantor retained annuity trust (the
"GRAT") and (iv) 700,000 shares of Common Stock held by a family limited
partnership (the "FLP"). Mr. Hayes, as settlor of the GRAT, has the right
to substitute property of equivalent value in return for the shares of
Common Stock held by the GRAT. Mr. Hayes has a membership interest in a
limited liability company, whose other members are all relatives of Mr.
Hayes, which serves as the sole general partner of the FLP. Mr. Hayes has
shared voting and investment power with respect to the shares of Common
Stock held by the FLP.
2
<PAGE>
The following table sets forth certain information, as of December 15,
2000, 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:
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
------------------------ -------------------- ----------------
<S> <C> <C>
Directors and Director Nominees
(1)(2)
Charles A. Hayes................ 1,499,061(3) 7.78
Bruno Hofmann................... 573,150(4) 2.99
John A. Emrich.................. 275,357 1.43
Terrence E. Geremski............ 199,112(5) 1.03
George Greenberg................ 110,328(6)(7) *
Stephen C. Hassenfelt........... 70,495(8) *
Dr. Jacobo Zaidenweber.......... 45,116 *
Tomokazu Adachi................. 44,291 *
Sherry R. Jacobs................ 36,209(9) *
Donald B. Dixon................. 33,166(7) *
Paul G. Gillease................ 30,791(10) *
Stig A. Kry..................... 30,791(7) *
Grant M. Wilson................. 13,916 *
Non-Director Executive Officers
(11)(12)
Byron J. McCutchen.............. 31,438 *
Christopher J. Richard.......... 51,915 *
All directors, director nominees
and executive officers as a
group (consisting of 22
persons) ...................... 3,093,908(13)(14)(15) 15.64
</TABLE>
--------
* Less than one percent.
(1) Includes shares of Common Stock subject to options beneficially owned by
the following persons: Mr. Emrich-116,000 options; Mr. Geremski-103,916
options; Mr. Greenberg-25,166 options; Mr. Hassenfelt-25,166 options; Dr.
Zaidenweber-21,416 options; Mr. Adachi-25,166 options; Ms. Jacobs-25,166
options; Mr. Dixon-25,166 options; Mr. Gillease-30,791 options;
Mr. Kry-30,791 options; and Mr. Wilson-13,916 options.
(2) Includes 72,000 and 54,000 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.
(3) See Footnotes 2 and 3 to previous table.
(4) Includes 300,000 shares of restricted Common Stock paid to Mr. Hofmann in
connection with the sale of the capital stock of Hofmann Laces, Ltd.,
Raschel Fashion Interknitting, Ltd. and Curtains and Fabrics, Inc.
(collectively, the "Hofmann Companies") to the Company. Mr. Hofmann has
sole voting power with respect to such shares.
(5) Mr. Geremski's term on the Board will end as of December 31, 2000. See
"Election of Directors" and "Certain Transactions" below.
(6) Excludes 62,650 shares held by Mr. Greenberg's wife, as to which
beneficial ownership is disclaimed. See Footnote 2 to previous table.
(7) Pursuant to the terms of the Company's retirement policy for directors,
Messrs. Greenberg, Dixon and Kry will retire from the Board effective with
the Annual Meeting. See "Election of Directors" below.
(8) Excludes 637 shares held by Mr. Hassenfelt's wife, as to which beneficial
ownership is disclaimed.
(9) Excludes 20,000 shares held by Ms. Jacobs' husband, as to which beneficial
ownership is disclaimed.
(10) Excludes 135 shares held by Mr. Gillease's wife, as to which beneficial
ownership is disclaimed.
3
<PAGE>
(11) The amount of shares beneficially owned by Messrs. McCutchen and Richard
includes 16,666 shares and 31,666 shares of Common Stock, respectively,
subject to options granted to such persons pursuant to the Option Plan.
(12) Includes 12,000 shares and 8,400 shares of restricted Common Stock
awarded to Messrs. McCutchen and Richard, respectively, under the
Restricted Plan. Such persons have sole voting power with respect to such
shares.
(13) Includes 582,784 shares of Common Stock subject to options granted
pursuant to the Option Plan.
(14) Excludes 83,422 shares owned by relatives of directors of the Company, as
to which beneficial ownership is disclaimed by such directors.
(15) Includes 232,264 shares of restricted Common Stock awarded to officers
under the Restricted Plan. Such persons have sole voting power with
respect to such shares.
Stockholders' Agreements
Messrs. 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 (the "1990 Stockholders' Agreement"). Until June 22,
2001 (or its earlier termination as otherwise provided therein), neither Mr.
Greenberg nor Mr. 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 1990 Stockholders'
Agreement apply to any shares of Common Stock beneficially owned by the
stockholders on the date of the 1990 Stockholders' Agreement or acquired
thereafter and are binding upon the heirs, successors and assigns of the
stockholders. Pursuant to the terms of certain of the Company's loan
agreements, the Company is currently not permitted to exercise (in the absence
of a waiver of, or an amendment to, such loan agreements) the foregoing right
of first refusal under the 1990 Stockholders' Agreement.
Mr. Hayes has 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 his shares of Common Stock. Until June 22, 2001 (or the earlier
termination of the 1991 Stockholders' Agreement as provided therein), the
Company will, upon the death of Mr. Hayes, purchase such number of shares of
Common Stock beneficially owned by him as equals $2,900,000. The purchase
price for each share of Common Stock will equal the average of the closing
price for such shares on the New York Stock Exchange for the 20 trading days
preceding the date of death.
ELECTION OF DIRECTORS
Directors and Nominees
The Board is divided into three classes with staggered, three year terms,
so that the term of office of one class will expire each year. The Board has
nominated Messrs. Adachi, Wilson and Zaidenweber 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 2003 fiscal
year and until his successor is elected and qualified. Under the current Board
retirement policy, Dr. Zaidenweber will retire from the Board effective with
the annual meeting of stockholders held after the Company's 2001 fiscal year.
Pursuant to the terms of the Company's retirement policy for directors,
Messrs. Greenberg and Dixon, each of whose current three-year term as a
director will expire at the Annual Meeting, are not eligible for re-election
to the Board and, therefore, will retire from the Board effective with the
Annual Meeting. Mr. Kry, who was elected to the Board at the last annual
meeting of stockholders, will also retire from the Board effective with the
Annual Meeting, pursuant to the directors' retirement policy. Mr. Geremski had
been elected to the same class of directors as Messrs. Greenberg and Dixon. In
connection with his resignation as Executive Vice President and Chief
Financial Officer of the Company, announced in the fourth quarter of the
Company's last fiscal year, Mr. Geremski will resign from the Board effective
December 31, 2000. Given that Messrs. Greenberg, Dixon, Kry and Geremski will
cease to be directors on or before the Annual Meeting, the Board would have
consisted, as of
4
<PAGE>
the Annual Meeting and in the absence of any further action, of three classes
of directors-one class of four persons, a second class of three persons and a
third class of two persons. The Company's certificate of incorporation
provides that the directors in the three classes are to be as nearly equal in
number as possible. As a result, in order to better balance the director
classes in accordance with the Company's certificate of incorporation, the
Board approved transferring Mr. Adachi from one class to another.
Specifically, the Board approved transferring Mr. Adachi from the class of
directors whose three-year term will expire at the first annual meeting of
stockholders held after the Company's 2002 fiscal year, a class which (taking
into account Mr. Kry's retirement) otherwise would have consisted of four
persons, to the class of directors to be elected at the Annual Meeting to
serve for a three-year term until the first annual meeting of stockholders
held after the Company's 2003 fiscal year, a class which (taking into account
the retirement or resignation, as the case may be, of Messrs. Greenberg, Dixon
and Geremski) otherwise would have consisted of two persons. As a result,
immediately after the Annual Meeting, assuming that all director nominees are
elected, the Board will be comprised of three classes, each consisting of
three persons. Unless a contrary specification is indicated, it is intended
that the accompanying form of proxy will be voted for the election of Messrs.
Adachi, Wilson and Zaidenweber. 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
continuing director and each person nominated to become a director. Except as
otherwise indicated, each such person has held his or her present principal
occupation for the past five years and references to executive offices held
are with the Company:
<TABLE>
<CAPTION>
Director
Name Age (1) Principal Occupation and Business Experience Since
---- ------- -------------------------------------------- --------
Director
Nominees
Nominees for a
Three-Year
Term Expiring at
Annual Meeting
After 2003 Fiscal
Year
------------------
<C> <C> <S> <C>
Tomokazu Adachi 59 President of Japan Tech, Inc. (since 1990
1982), an importer of textile
machinery and equipment
Grant M. Wilson 59 Chairman of Cohasset Capital 1997
Corporation (since 1983), a financial
and managerial services firm
Dr. Jacobo Zaidenweber 71 Chairman of the Board of Grupo Ambar, 1995
S.A. 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
Continuing
Directors
Class of
Directors Whose
Term Expires at
Annual Meeting
After 2002 Fiscal
Year
------------------
John A. Emrich 56 President and Chief Executive Officer 1995
(since 2000); President and Chief
Operating Officer (from 1995 to 1999);
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)
Bruno Hofmann 61 General Manager of the Hofmann 1997
Companies (since 1998); President and
Chief Executive Officer of the Hofmann
Companies and predecessor companies
(from 1976 to 1998)
Sherry R. Jacobs 57 Attorney and advisor to educational 1983
organizations (since 1994); Secretary
and acting General Counsel (from 1994
to 1999); Managing Director, Pencil,
Inc., an educational foundation (from
1995 to 1997)
</TABLE>
--------
(1) As of December 15, 2000
5
<PAGE>
<TABLE>
<CAPTION>
Director
Name Age (1) Principal Occupation and Business Experience Since
---- ------- -------------------------------------------- --------
Class of
Directors Whose
Term Expires at
Annual Meeting
After 2001 Fiscal
Year
------------------
<C> <C> <S> <C>
Paul G. Gillease 68 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); Director of
Pillowtex Corp. and Galey & Lord, Inc.
Stephen C. Hassenfelt 50 Chairman and Chief Executive Officer of 1989
U. S. Trust Company of North Carolina
(since 1999); for more than five years
prior thereto, Chairman and Chief
Executive Officer of North Carolina
Trust Company
Charles A. Hayes 65 Chairman of the Board (since 1976); 1963
Chief Executive Officer (from 1976 to
1999); President and Chief Operating
Officer (from 1991 to 1995)
</TABLE>
--------
(1) As of December 15, 2000
Additional Information
During the last fiscal year, the Board's Audit Committee, which consists of
Messrs. Hassenfelt, Dixon and Kry, 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. See "Audit Committee Report" below.
In addition, during the last fiscal year, the Board's Compensation
Committee, which consists of Messrs. Gillease, Dixon and Wilson, held six
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 Ms. Jacobs and
Messrs. Hayes, Adachi and Gillease, did not hold any 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. (During the 2000 fiscal year, the
entire Board, rather than the Nominating Committee, addressed certain of the
foregoing issues.) The Company's By-Laws, as amended (the "By-Laws"), set
forth procedures regarding the nomination of persons for election to the
Board. See "Miscellaneous-Stockholder Proposals" below.
Non-employee directors receive a quarterly retainer of $6,250 and $1,000
for each Board meeting attended (other than routine telephonic Board
meetings). A non-employee chairman and each other non-employee member of a
committee are paid $3,000 and $2,000, respectively, 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, except Mr. Hofmann who
attended approximately 71% of the total number of Board meetings.
In connection with the Company's acquisition of the Hofmann Companies in
January, 1996, Mr. Hofmann entered into a consulting agreement with the
Company pursuant to which he will provide certain consulting and
6
<PAGE>
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. Mr. Gillease, Chairman of
the Board's Compensation Committee, was paid (in addition to fees for
committee meetings he attended) $3,000 during the last fiscal year, or the
equivalent of one committee meeting fee, for services performed (outside of
formal meetings) in connection with work of such committee. Mr. Gillease also
earned $8,000 during the 2000 fiscal year for certain consulting services
provided to the Company.
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.
The Option Plan provides for the automatic grant of options not meeting the
requirements of incentive stock options, within the meaning of Section 422 of
the Internal Revenue Code of 1986 (the "Code"), to non-employee directors.
Specifically, pursuant to the current Option Plan, each non-employee director
of the Company is automatically granted upon each annual meeting of the
Company's stockholders at which such director is elected, re-elected or after
which he remains on the Board, an option, having a ten year term, to purchase
4,000 shares of Common Stock. The purchase price of the shares of Common Stock
covered by the options granted to directors under the formula provision will
be the fair market value of the shares as of the date of grant. The options
are 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 non-employee directors according to the above formula, the
Option Plan also provides for the award, in the discretion of the Compensation
Committee, of options, and stock appreciation rights, to salaried key
employees, including employee directors, of the Company.
Pursuant to the terms of the Guilford Mills, Inc. Non-Employee Director
Stock Plan, each non-employee director will receive upon each annual meeting
of the Company's stockholders at which such director is elected, re-elected or
after which he remains on the Board such number of restricted stock units as
equals $20,000. Dividend equivalents will be paid on such restricted stock
units at the same rate as dividends are paid on actual shares of Common Stock.
The dividend equivalents will be used to acquire additional restricted stock
units for the account of each participant. A non-employee director will not be
entitled to receive any distribution from his restricted stock unit account
until after his termination of service on the Board. Distribution of a
director's account will be made (at the director's option, in a lump sum or in
five equal annual installments) in actual shares of Common Stock in an amount
representing the initial number of restricted stock units credited to the
account plus any stock units acquired with dividend equivalents.
There are no family relationships among any of the directors and officers
of the Company.
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 reviews the compensation package for each of the
Chairman, Chief Executive Officer and Chief Financial Officer. 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.
7
<PAGE>
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 the Salaried Associate Retirement Profit-Sharing Plan (the
"Profit-Sharing Plan") and a 401(k) Savings and Investment Plan (the "401(k)
Plan") 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. Based on its review of the likely impact of
Section 162(m), the Committee may in the future 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,
and approves appropriate changes to, the base salary of each of the Chairman,
Chief Executive Officer and Chief Financial Officer on a biennial basis, or
more frequently if appropriate. In making such evaluations and changes, 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 approves salaries for
the Company's Chairman, Chief Executive Officer and Chief Financial Officer 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 the same as the companies
included (for the 2000 fiscal year) in the peer group index described in the
"Performance Graph" below. During the last fiscal year, the Committee approved
an 8% increase in the annual base salary of Mr. Emrich, who was then serving
as President of the Company, in connection with his promotion, as of January
1, 2000, to the additional position of Chief Executive Officer.
The Company maintains for its executive officers and other key employees a
Short-Term Incentive Compensation Plan, which allows participants to earn
annual cash bonuses. None of the officers named in the "Summary Compensation
Table" below received a cash bonus for the 2000 fiscal year.
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 has maintained 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 is dependent
upon the Company's performance, provides a strong incentive for individuals to
achieve superior performance. Finally, long-term compensation helps balance
the Company's overall executive compensation program by encouraging executives
to focus on the Company's long term objectives and goals as well as the
Company's quarter to quarter results.
The Restricted Plan expired in accordance with its terms during the 1999
fiscal year, though certain shares of stock granted thereunder prior to the
expiration date remain outstanding. The Committee remains as the administrator
of the Restricted Plan. 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.
8
<PAGE>
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
401(k) Plan and an excess benefit plan (which is designed to supplement certain
of the Company's other benefit plans). For the 2000 fiscal year, the Company
contributed to the Profit-Sharing Plan 6% of the aggregate compensation of all
participants in such plan. Although the Company also provides an Employee Stock
Ownership Plan ("ESOP"), the Company has not made a contribution to such plan
for the last three fiscal years and currently intends to merge the ESOP into
the 401(k) Plan. The Company also maintains for executives a split-dollar
insurance program and a supplemental executive retirement plan, which are
described, respectively, in Footnote 2 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.
Paul G. Gillease (Chairman)
Donald B. Dixon
Grant M. Wilson
Performance Graph
Set forth below is a line graph comparing the five-year cumulative total
stockholder return on the Common Stock with the cumulative return of the
Standard & Poor's 500 Stock Index and with an index comprised of certain peer
group companies, assuming the reinvestment of dividends. The peer group index
represents the cumulative total return on the common stock of the following
textile companies: Burlington Industries, Inc., Collins & Aikman Corp., Cone
Mills Corp., Crown Crafts, Inc., Culp, Inc., Delta Woodside Industries, Inc.,
Dixie Group, Inc., Dyersburg Corp., Fab Industries, Inc., Foamex International
Inc., Galey & Lord, Inc., Pillowtex Corp., Quaker Fabric Corp., Springs
Industries, Inc., Thomaston Mills, Inc., Unifi, Inc., Wellman, Inc. and
WestPoint Stevens Inc. (The following companies which have been included in the
Company's peer group index during some period of the last four years are not
included in the peer group index in this Proxy Statement because they have
ceased to be publicly traded: Concord Fabrics, Inc., Fieldcrest Cannon, Inc.,
Johnston Industries, Inc. and Texfi Industries, Inc.) The return of each
company included in the peer group index has been weighted according to its
respective stock market capitalization.
[GRAPH]
<TABLE>
<CAPTION>
09/30/95 09/30/96 09/30/97 09/30/98 09/30/99 09/30/00
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
GUILFORD MILLS............ $100.0 $ 95.2 $168.7 $ 98.3 $ 59.2 $ 13.4
S&P 500................... $100.0 $120.3 $169.0 $184.3 $235.5 $266.8
PEER GROUP................ $100.0 $ 99.8 $141.5 $ 97.5 $ 74.8 $ 54.7
</TABLE>
--------
Note: Assumes an initial investment of $100 on September 30, 1995. Total return
includes reinvestment of dividends.
9
<PAGE>
Summary of Cash and Certain Other Compensation
The following table shows for the fiscal years ended October 1, 2000,
October 3, 1999 and September 27, 1998 the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for those
periods, to the Company's Chief Executive Officer, and to the Company's four
most highly compensated executive officers (other than the Chief Executive
Officer).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term All Other
Annual Compensation Compensation Compensation
---------------------------- ------------------ ------------
Restricted
Other Annual Stock
Name and Principal Fiscal Salary Bonus Compensation Awards Options
Position Year ($) ($) ($) ($)(1) (#) ($) (2)
------------------ ------ ------- ------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles A. Hayes,
Chairman 2000 675,000 0 -- 0 0 109,228
of the Board 1999 675,000 0 -- 0 0 70,417
1998 675,000 0 -- 0 0 115,517
John A. Emrich,
President 2000 662,500 0 -- 0 0 63,525
and Chief Executive
Officer 1999 625,000 250,000 -- 0 0 47,039
1998 566,667 0 -- 790,000 150,000 73,405
Terrence E. Geremski, 2000 350,000 0 -- 0 38,000 31,692
Former Executive Vice 1999 325,000 50,000 -- 0 0 27,620
President and Chief
Financial 1998 325,000 0 -- 355,500 90,000 42,377
Officer (3)
Byron J. McCutchen,
Senior 2000 287,500 0 -- 0 0 37,040
Vice President,
President/ 1999 278,750 15,000 -- 0 0 36,762
Fibers, Industrial,
Medical 1998 270,000 0 -- 0 14,000 48,896
and Specialty
Christopher J. Richard, 2000 276,250 0 55,380(4) 0 0 30,587
Senior Vice President, 1999 250,000 149,000 88,700(4) 0 0 20,197
President/U.S.
Automotive 1998 237,500 0 -- 0 14,000 24,592
Business Unit
</TABLE>
--------
(1) The amounts shown in this column reflect the market value of the
restricted stock granted, under the terms of the Restricted Plan, to
Messrs. Emrich and Geremski. (The market value is given as of the date of
grant of the restricted stock.)
The restricted stock awarded to an executive officer is held by an escrow
agent, appointed by the Company, until such officer vests in his award.
Similarly, the dividends paid on each share of restricted stock (which are
paid to the same extent as dividends on the Common Stock generally) are
held by the escrow agent until the executive vests in his restricted stock,
at which time he will also be entitled to receive the interest credited by
the Company on such dividends. With respect to the restricted stock granted
to him during the 1998 fiscal year, Mr. Emrich vested in one-third of such
shares on September 30 in each of 1998, 1999 and 2000. Pursuant to the
terms of the Restricted Plan, in connection with his resignation as an
employee of the Company, Mr. Geremski will vest in 54,000 shares of
restricted stock (and related dividends and interest) on December 31, 2000.
See "Certain Transactions" below. As of the last day of the 2000 fiscal
year, Messrs. Hayes, Emrich, Geremski, McCutchen and Richard held 85,864,
72,000, 54,000, 12,000 and 8,400 shares of restricted stock, respectively,
at an aggregate market value of $160,995, $135,000, $101,250, $22,500 and
$15,750, respectively (based upon a price of $1.875 per share-the closing
price of the Common Stock on the last business day of the 2000 fiscal
year).
10
<PAGE>
(2) The components of the amounts shown in this column for the 2000 fiscal
year consist of the following:
(i) Contributions of $9,600 each to the accounts of Messrs. Hayes, Emrich,
Geremski, McCutchen and Richard, pursuant to the Profit-Sharing Plan.
(ii) Contributions of $30,900, $45,150, $14,400, $8,550 and $15,915 to the
accounts of Messrs. Hayes, Emrich, Geremski, McCutchen and Richard,
respectively, pursuant to the Company's excess benefit plan which is
designed to supplement the Profit-Sharing Plan and the ESOP.
(iii) With respect to Messrs. Emrich, Geremski, McCutchen and Richard, 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 2000 fiscal year, each of Messrs. Emrich,
Geremski, McCutchen and Richard 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 2000 fiscal year, $10,520 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 benefits related to the non-
term portion of the premiums to be paid by the Company under the
insurance policies purchased on the lives of the named executives, in
each case with the non-term portion of the premium being treated as
the present value of an interest-free loan, in the case of Mr. Hayes,
for five years and, in the case of the other named executives, to age
65: Mr. Hayes-$44,011; Mr. Emrich-$8,775; Mr. Geremski-$7,692;
Mr. McCutchen-$18,890; and Mr. Richard-$5,072.
(iv) For the 2000 fiscal year, that portion of interest earned (that the
Securities and Exchange Commission ("SEC") considers to be at above
market rates) on the deferred compensation accounts of Mr. Hayes in
the amount of $14,197.
(3) Mr. Geremski resigned as an officer of the Company pursuant to a severance
agreement with the Company executed in the fourth quarter of the 2000
fiscal year. See "Certain Transactions" below.
(4) All of the amount shown in this column for the 1999 fiscal year, and
approximately $46,000 of the amount shown in this column for the 2000
fiscal year, represents a payment for certain moving related costs and
expenses incurred, and an associated tax reimbursement, in connection with
Mr. Richard's relocation from the Company's Michigan office to the
Company's Kenansville, North Carolina office.
Stock Option Grants
The table below provides information regarding stock options granted to the
one executive officer named in the "Summary Compensation Table" above who
received an option grant during the Company's 2000 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------------------
Percent of
Total
Number of Options Granted Exercise Grant Date
Securities Underlying to Employees in or Base Expiration Present Value
Name Options Granted (#) Fiscal Year (%) Price ($) Date (1) ($)(2)
---- --------------------- --------------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Terrence E. Geremski.... 38,000 79 6.03 3/31/01 113,620
</TABLE>
--------
(1) Of the options shown in this table, 25,334 options will be forfeited as
of December 31, 2000 and 12,666 options will be exercisable through March
31, 2001, all pursuant to the terms of the Option Plan and Mr. Geremski's
severance agreement with the Company. See "Certain Transactions" below.
11
<PAGE>
(2) The values in this column represent the grant date present value, based
upon application of the Black-Scholes option pricing model, of all the
options reflected in the above table (including the options to be
forfeited as described in the preceding footnote). The material
assumptions and adjustments used in estimating the present value pursuant
to such model, all of which are based on conditions and factors prevailing
on the option grant date, are: (i) a volatility factor of 45%; (ii) a
dividend yield of 5%; (iii) a risk-free rate of return of 6.6%; and (iv)
an expected five year option life. The actual value, if any, an executive
officer receives from a stock option, is dependent on future market
conditions, and there can be no assurance that the value ultimately
realized by the executive will not be more or less than the amount
reflected in the "Grant Date Present Value" column.
Stock Option Exercises and Fiscal Year-End Stock Option Values
The table below shows the number of options held by the persons named in
the "Summary Compensation Table" above at the end of the 2000 fiscal year.
None of such persons exercised any options during the 2000 fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options at Fiscal
Year-End (#)(1)
Name Exercisable/Unexercisable
---- -------------------------
<S> <C>
Charles A. Hayes................................ 75,625/35,000
John A. Emrich.................................. 116,000/133,000
Terrence E. Geremski............................ 103,916/110,334
Byron J. McCutchen.............................. 16,666/15,334
Christopher J. Richard.......................... 26,666/20,334
</TABLE>
--------
(1) None of the options listed in this column were "in-the-money" on the last
business day of the 2000 fiscal year based on the per share closing price
of Common Stock of $1.875.
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. (Mr. Geremski, who has resigned as an officer of
the Company, is entitled to a different retirement benefit pursuant to his
severance agreement with the Company. See "Certain Transactions" below.) 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
12
<PAGE>
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.
<TABLE>
<CAPTION>
Ten Year
Payments
Name of Individual (Per Annum)
------------------ -----------
<S> <C>
Charles A. Hayes............................................. $345,000
John A. Emrich............................................... 300,000
Terrence E. Geremski......................................... 125,000
Byron J. McCutchen........................................... 125,000
Christopher J. Richard....................................... 125,000
</TABLE>
Change In Control Agreements. The Company has entered into change in
control agreements with certain key managers, including each of the executive
officers named in the "Summary Compensation Table" above. These agreements
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. Such 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 change in
control 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 (other than Messrs. Hayes,
Emrich and Geremski) under a change in control agreement or under any other
plan, arrangement or agreement with the Company would not be tax deductible by
the Company by virtue 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. Any payments made to Messrs.
Hayes, Emrich and Geremski will not be reduced as described in the preceding
sentence. Pursuant to the change in control agreement for each of Messrs.
Hayes, Emrich and Geremski, if any payments thereunder or under any other
plan, arrangement or agreement with the Company would cause the imposition of
an excise tax on the individual executive officer by virtue of Section 4999 of
the Code, then the Company will make a tax reimbursement payment to the
executive officer in an amount designed to place him in the same after-tax
position he would have been in had such payments not been subject to the
excise tax. The change in control agreements further provide that in order for
an employee to receive the benefits contemplated thereunder, 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.
13
<PAGE>
AUDIT COMMITTEE REPORT
The Company's Audit Committee is comprised of three independent directors
within the meaning of applicable New York Stock Exchange rules. The Board has
adopted a written charter, a copy of which is attached hereto as Exhibit A,
which governs the operation of the Audit Committee.
The Audit Committee has reviewed and discussed with management and Arthur
Andersen, LLP, the Company's independent accountants, the Company's
consolidated financial statements for the fiscal year ended October 1, 2000.
The Audit Committee also has discussed with the independent accountants the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Company's independent accountants also provided to the Audit Committee
the written disclosures required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants their independence.
Based upon its review of the audited financial statements and the
discussions noted above, the Committee recommended that the Board include the
audited consolidated financial statements in the Company's Annual Report on
Form 10-K for the year ended October 1, 2000.
Stephen C. Hassenfelt (Chairman)
Donald B. Dixon
Stig A. Kry
CERTAIN TRANSACTIONS
During the 2000 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, equipment and supplies from Japan Tech, Inc. during the
2000 fiscal year totaling $4,987,296.
In the ordinary course of business and through a series of arm's-length
transactions, during the 2000 fiscal year, the Company paid $1,211,760 for
forklifts and forklift repairs to Western Carolina Forklift, Inc., which is
controlled by David Hayes, the son of Charles A. Hayes, the Chairman 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.
Dr. Zaidenweber (a director of the Company) serves as the Chairman of the
Board of Grupo Ambar, S.A. de C.V., a subsidiary of the Company ("Grupo
Ambar"). Dr. Zaidenweber, who is a 5% stockholder of Grupo Ambar, receives an
annual salary of approximately $300,000 for his service as Chairman of the
Board of Grupo Ambar. Dr. Zaidenweber is a party to a stockholders' agreement
with the Company relating to his stock ownership in Grupo Ambar. Pursuant to
such agreement, Dr. Zaidenweber has the right to sell his shares of Grupo
Ambar capital stock to the Company at a price equal to the net worth of such
shares. The Company has the right, under the stockholders' agreement with Dr.
Zaidenweber, to purchase his shares of Grupo Ambar capital stock at a price
equal to the net worth of such shares multiplied by two (the "Call Price").
Under certain circumstances, including upon the death or disability of Dr.
Zaidenweber, the Company is required to purchase Dr. Zaidenweber's stock at
the Call Price.
An indirect wholly owned subsidiary of the Company (the "Optionee") is a
party to an option agreement with Tucci Associates, Inc. (the "Optionor"),
pursuant to which the Optionor granted the Optionee the exclusive right to
acquire certain proprietary technology. Nathan Dry, a Vice President of the
Company, owns 24.5% of the capital stock, and is the President, of the
Optionor. If it elects to exercise the option, then the Optionee will be
required to make an additional payment to the Optionor of approximately
$4,900,000.
14
<PAGE>
Mr. Hofmann, a director of the Company, is a party to an employment
agreement with the Hofmann Companies pursuant to the amended terms of which he
will serve as General Manager of the Hofmann Companies for a period ending on
December 31, 2000. The Hofmann Companies, as a group, paid Mr. Hofmann
approximately $158,000 during the last fiscal year in consideration for such
services. Pursuant to a separate agreement, Mr. Hofmann has agreed with the
Company that he will not acquire, through December 31, 2003, more than 600,000
shares of Common Stock.
Pursuant to a severance agreement executed during the fourth quarter of the
2000 fiscal year, Mr. Geremski has resigned as Executive Vice President and
Chief Financial Officer of the Company and will resign from the Company's
Board effective December 31, 2000. Under such agreement, Mr. Geremski will
receive his current base salary and other employee benefits through December
31, 2000. Subject to the terms of the agreement, the Company will make
severance payments to Mr. Geremski as follows: a lump sum payment of $175,000
in January, 2001 and 24 monthly payments of approximately $26,000 each,
commencing in February, 2001. Mr. Geremski will remain eligible to participate
in certain health and life insurance plans during the period in which he is
receiving the above monthly payments. The severance agreement provides that
Mr. Geremski will be entitled to his full retirement benefit under the SERP,
commencing at age 65, and will continue to participate in a certain executive
whole life insurance program until age 65, at which time Mr. Geremski will be
entitled to the policy's cash surrender value remaining after the Company has
recovered the premiums it has paid under such policy.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 2000 fiscal year, the
Company's directors, executive officers and greater than 10% beneficial owners
complied with all Section 16(a) filing requirements, except that Mr.
Greenberg, a director of the Company, did not timely file one report for one
transaction representing a gift (in fiscal year 1999) of an aggregate of 2,000
shares of Common Stock.
RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 2001
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 30, 2001 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.
THE BOARD RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP
MISCELLANEOUS
Stockholder Proposals and Board Nominations
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
15
<PAGE>
the Company in such manner so that such notice is received by the Company by
August 23, 2001 and in such form as is required under the rules and
regulations promulgated by the SEC.
A proposal submitted by a stockholder outside of the process of SEC Rule
14a-8 will not be considered timely unless notice of such proposal is received
by the Company at its principal executive offices prior to the notice date set
forth in the Company's advance notice By-Law provision described in the
following paragraph. The proxy to be solicited on behalf of the Company's
Board for the annual meeting to be held in 2002 may confer discretionary
authority to vote on any such proposal not considered to have been timely
received that nonetheless properly comes before the 2002 annual meeting.
Under the By-Laws, in order for business to be properly brought before the
next annual meeting, notice of such business must be received by the Secretary
of the Company not less than 60 days and not more than 90 days prior to such
meeting (provided that if less than 70 days notice or prior public disclosure
of the date of the meeting is given to stockholders, notice of such business
must be received by the Secretary of the Company no later than ten days
following the day on which notice of the date of the meeting was mailed or
such public disclosure was made, whichever occurs first). Such notice must
contain (i) a brief description of the business and the reasons for conducting
it at the meeting, (ii) the name and address of the stockholder proposing such
business, (iii) a representation that the proposing stockholder is a holder of
record and the number of shares of the Company that are beneficially owned by
such stockholder and (iv) a description of any material interest of such
stockholder in such business. The chairman of the meeting may disregard any
business that he or she determines was not properly brought before the meeting
in accordance with the By-Laws.
The By-Laws also provide that if a stockholder of the Company intends to
nominate at a meeting one or more persons for election to the Board, notice of
such nomination must be received by the Secretary of the Company not less than
60 days and not more than 90 days prior to such meeting (provided that if less
than 70 days notice or prior public disclosure of the date of the meeting is
given to stockholders, such nomination must be received by the Secretary of
the Company no later than ten days following the day on which notice of the
date of the meeting was mailed or such public disclosure was made, whichever
occurs first). Such notice must contain (a) as to each proposed nominee, (i)
the name, age and business and residence address of such nominee, (ii) the
principal occupation of such nominee, (iii) the number of shares, if any, of
the Company that are beneficially owned by such nominee and (iv) any other
information that must be disclosed pursuant to the proxy rules of the SEC if
such person had been nominated by the Board and (b) as to the proposing
stockholder, (i) the name and address of such stockholder, (ii) a
representation that the proposing stockholder is a holder of record of shares
of the Company entitled to vote at the meeting and the number of shares of the
Company that are beneficially owned by such stockholder, (iii) a
representation that the proposing stockholder intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice and (iv) a description of all arrangements and understandings between
the stockholder and each nominee pursuant to which the nominations are to be
made by the stockholder. The chairman of the meeting may disregard any
nomination that he or she determines was not made in accordance with the
foregoing procedures. The By-Laws also provide that no director may serve as
such beyond the age of 70, except that directors serving as such on September
5, 1998 may serve until the later of the expiration of their current term of
office or age 72. Pursuant to the director retirement policy, a director who
will reach mandatory retirement age during his term of office is permitted to
serve through and until the next annual stockholders' meeting held after he
has reached mandatory retirement age.
Annual Report on Form 10-K
Any stockholder of record on December 15, 2000 who desires a copy of the
Company's 2000 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.
16
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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
/s/ Robert A. Emken, Jr.
Robert A. Emken, Jr.
General Counsel and Secretary
Dated: December 22, 2000
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EXHIBIT A
Guilford Mills, Inc.
Audit Committee Charter
Purpose:
To establish the objectives of the Company's Audit committee of the Board of
Directors and identify the Committee's responsibilities in attaining the
objectives. The Audit Committee is established by the Board of Directors to
provide oversight in the areas of financial reporting and internal control. The
Company's management has primary responsibility for financial reporting and
internal controls.
Membership:
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
Responsibilities and authority:
1. The Committee and the Board of Directors have the final authority and
responsibility to select, evaluate and replace the independent auditors. In
that regard, the Committee will (a) recommend to the Board of Directors the
selection of the independent auditors, considering independence and
effectiveness and approve the fees and other compensation to be paid to the
independent auditors, and (b) review the performance of the independent
auditors and approve or recommend any proposed discharge of the independent
auditors when circumstances warrant.
2. On an annual basis, review and discuss with the independent auditors all
significant relationships the independent auditors have with the Company to
determine the independent auditors' independence. Review and approve the
level of nonaudit work performed for the Company by the independent auditors
to assess potential impact on independence. Obtain a formal written
statement from the independent auditors detailing all relationships between
the independent auditor and the Company that may impact the independent
auditor's objectivity and independence. If circumstances warrant, recommend
that the full Board of Directors take action to address the independent
auditor's independence.
3. Instruct the independent auditor that the Board of Directors, as the
shareholders' representative, is the independent auditor's client and the
independent auditor is ultimately responsible to the Board of Directors and
the Committee.
4. Meet at least semi-annually with the independent auditors to review scope
and estimated cost of proposed audits and the results of the auditor's prior
work, including: audit reports, management letters (including management's
responses to audit findings), adequacy of the Company's accounting
procedures and financial controls, and such other matters as either party
may wish to raise. A part of each such meeting should be private with no
members of management present.
5. Meet at least semi-annually with the internal auditor to review scope of
internal audits planned for the year and related internal audit budget,
evaluate the effectiveness, independence and competence of the internal
audit function and the adequacy of staff and review internal audit reports.
These reviews may be incorporated into meetings described in the previous
paragraph.
6. Meet periodically and at least semi-annually with the Company's top
financial management to review adequacy, completeness and fairness of
significant accounting principles and procedures employed by the Company,
financial statement disclosures, judgments regarding important accounting
estimates, the impact
A-1
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of changed laws or accounting standards, unusual transactions, and steps
taken by management to insure that a proper internal control function is in
place and operating effectively. These reviews may be incorporated into
meetings described in the previous paragraphs.
7. Advise financial management and the independent auditor they are expected
to provide a timely analysis of significant current financial reporting
issues and practices.
8. Provide that financial management and the independent auditor discuss with
the audit committee their qualitative judgments about the appropriateness,
not just the acceptability, of accounting principles and the clarity of the
financial disclosure practices used or proposed to be adopted by the
Company and, particularly, about the degree of aggressiveness or
conservatism of its accounting principles and underlying estimates.
9. Inquire as to the independent auditor's views about whether management's
choices of accounting principles are conservative, moderate or aggressive
from the perspective of income, asset, and liability recognition, and
whether those principles are common practices or are minority practices.
10. Determine, as regards to new transactions or events, the independent
auditor's reasoning for the appropriateness of the accounting principles
and disclosure practices adopted by management.
11. Assure that the independent auditor's reasoning is described in
determining the appropriateness of changes in accounting principles and
disclosure practices.
12. Review financial results and annual reports and compare with plans and
past performance. Recommend to the Board of Directors, based on these
reviews and discussions with the Company's management and independent
auditors, that the audited financial statements be included in the
Company's Form 10-K for the last fiscal year for filing with the
Securities and Exchange Commission.
13. Each quarter, the Chairman of the Committee will meet with the Chief
Financial Officer of the Company and the independent auditor to discuss
and review the financial statements to be included in the Company's Form
10-Q for filing with the Securities and Exchange Commission. At the
discretion of the Chairman, the full Committee will participate in such a
meeting.
14. At least annually review management's programs to assure adherence to the
Corporate Code of Ethics by all officers and employees.
15. At least annually, review the Company's plan for monitoring compliance
with laws and regulations, e.g., the Foreign Corrupt Practices Act.
16. Report to the Board of Directors at its next meeting on meetings and
other actions by the Committee.
17. Review and update this Charter periodically, at least annually, as
conditions dictate.
A-2
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GUILFORD MILLS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 1, 2001
Proxy Solicited by the Board of Directors
The undersigned hereby appoints CHARLES A. HAYES and JOHN A. EMRICH, 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 1, 2001, 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.
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PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
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HAS YOUR ADDRESS CHANGED?
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(Continued and to be signed on reverse side)
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<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
GUILFORD MILLS, INC.
February 1, 2001
Please Detach and Mail in the Envelope Provided
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A [X] Please mark your
votes as in this
example
WITHHOLD
FOR ALL AUTHORITY
EXCEPT to vote for all nominees
(as noted below) listed at right. Nominees:
1. Election of Tomokazu Adachi
Directors [ ] [ ] Grant M. Wilson
Dr. Jacobo Zaidenweber
NOTE: If you do not wish your shares voted "FOR" a particualr nominee, mark the
"FOR ALL EXCEPT" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
2. Proposal to approve the appointment of Arthur FOR AGAINST ABSTAIN
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.
This Proxy is solicited by the Board of Directors. If no specification is made,
this Proxy will be voted FOR Proposals 1 and 2.
Mark box at right if an address change has
been noted on the reverse side of this card. [ ]
Please be sure to sign and date this Proxy.
Stockholder sign here____________________Co-owner sign here_____________________
Date:_______________
NOTE: Please sign name as it appears on stock certificate. Only one of serveral
joint owners need sign. Fiduciaries should give full title.
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