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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
Stanley Furniture Company, 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
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration statement
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Notes:
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Stanley Furniture Company, Inc.
1641 Fairystone Park Highway
Stanleytown, Virginia 24168
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held April 19, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Stanley
Furniture Company, Inc. (the "Company") will be held at the Company's corporate
headquarters, 1641 Fairystone Park Highway, Stanleytown, Virginia, on Wednesday,
April 19, 2000, at 11:00 A.M., for the following purposes:
(1) To elect two directors to serve a three-year term on the Company's
Board of Directors; and
(2) To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The stockholders of record of the Company's common stock at the close of
business on March 3, 2000 are entitled to notice of and to vote at this Annual
Meeting or any adjournment thereof.
Even if you plan to attend the meeting in person, we request that you mark,
date, sign and return your proxy in the enclosed self-addressed envelope as soon
as possible so that your shares may be certain of being represented and voted at
the meeting. Any proxy given by a stockholder may be revoked by that stockholder
at any time prior to the voting of the proxy.
By Order of the Board of Directors,
Douglas I. Payne
Secretary
March 10, 2000
<PAGE>
Stanley Furniture Company, Inc.
1641 Fairystone Park Highway
Stanleytown, Virginia 24168
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 19, 2000
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Stanley Furniture Company, Inc. (the "Company") for use at the Annual Meeting
of Stockholders to be held on Wednesday, April 19, 2000, at 11:00 A.M., at the
Company's corporate headquarters, 1641 Fairystone Park Highway, Stanleytown,
Virginia, and any adjournment thereof. The matters to be considered and acted
upon at such meeting are described in the foregoing notice of the meeting and
this proxy statement. This proxy statement and the related form of proxy are
being mailed on or about March 10, 2000 to all holders of record of the
Company's common stock, $.02 par value (the "Common Stock") on March 3, 2000.
Shares of the Common Stock represented in person or by proxy will be voted as
hereinafter described or as otherwise specified by the stockholder. Any proxy
given by a stockholder may be revoked by such stockholder at any time prior to
the voting of the proxy by delivering a written notice to the Secretary of the
Company, by executing and delivering a later-dated proxy or by attending the
meeting and voting in person.
The cost of preparing, assembling and mailing the proxy, this proxy
statement, and other material enclosed, and all clerical and other expenses of
solicitations will be borne by the Company. In addition to the solicitation of
proxies by use of the mails, directors, officers and employees of the Company
may solicit proxies by telephone, telegram or personal interview. The Company
also will request brokerage houses and other custodians, nominees and
fiduciaries to forward soliciting material to the beneficial owners of Common
Stock held of record by such parties and will reimburse such parties for their
expenses in forwarding soliciting material.
VOTING RIGHTS
On March 3, 2000 there were 7,000,399 shares of Common Stock outstanding
and entitled to vote. Each such share of Common Stock entitles the holder
thereof to one vote.
ELECTION OF DIRECTORS
The Board of Directors of the Company presently consists of six directors
who are divided into three classes with staggered terms. The term of Messrs.
David V. Harkins and Albert L. Prillaman expires at the time of the 2000 Annual
Meeting of Stockholders. The Company proposes the reelection of Messrs. Harkins
and Prillaman for a three-year term expiring at the time of the 2003 Annual
Meeting.
The shares represented by proxies will be voted as specified by the
stockholder. If the stockholder does not specify his choice, the shares will be
voted in favor of the election of the nominees listed on the proxy card, except
that in the event such nominees should not continue to be available for
election, such proxies will be voted for the election of such other persons as
the Board of Directors may recommend. As of the date of this proxy statement,
the Board of Directors has no reason to believe that the nominees named below
will be unable or unwilling to serve.
<PAGE>
Nominees for Election for Three-Year Term Ending 2003
- -----------------------------------------------------
David V. Harkins, 59, has been a Director of the Company since September
1988. Mr. Harkins is President of Thomas H. Lee Partners, L.P. Mr. Harkins has
been associated with the Thomas H. Lee Company, a sole proprietorship engaged in
acquiring or making controlling investments in established operating companies,
since 1975. Mr. Harkins is a director and Chairman of the Board of National
Dentex Corporation and also a director of Conseco, Inc., Cott Corporation,
Fisher Scientific International Inc., Freedom Securities Corporation, Metris
Companies Inc. and Syratech Corporation.
Albert L. Prillaman, 54, has been a Director of the Company since March
1986. Mr. Prillaman has been Chief Executive Officer and President of the
Company since December 1985 and Chairman of the Board of Directors since
September 1988. Prior thereto, Mr. Prillaman had served as a Vice President of
the Company and President of the Stanley Furniture division of the Company's
predecessor since 1983, and in various executive and other capacities with the
Stanley Furniture division of the predecessors of the Company since 1969. Mr.
Prillaman is a director of American Woodmark Corporation.
Directors Whose Terms Do Not Expire this Year
- ---------------------------------------------
Robert G. Culp, III, 53, has been a Director of the Company since July 1999
and his present term will expire in 2002. Mr. Culp has been Chief Executive
Officer and Chairman of the Board of Culp, Inc., a marketer of upholstery
fabrics for furniture and mattress ticking for bedding, since 1990.
Edward J. Mack, 84, has been a Director of the Company since January 1989
and his present term will expire in 2001. From 1948 to 1981, Mr. Mack served in
various capacities with Burlington Industries, Inc., including director and
Executive Vice President with responsibility for Burlington's furniture
operations. He has been an independent consultant, primarily with Burlington
Industries, Inc., and President of Global Business Services, LTD, an
international trading company, for more than five years.
T. Scott McIlhenny, Jr., 52, has been a Director of the Company since April
1997 and his present term will expire in 2002. Mr. McIlhenny has been Group Vice
President of Cahners Travel Group, a publisher of materials for the hospitality
and travel industries and a division of Cahners Publishing Company ("Cahners", a
subsidiary of Reed Elsevier, Inc.), since December 1999. From January 1999 to
December 1999, Mr. McIlhenny was managing principal of Red Rock Terrace
Investment Partners; a position which he also held from 1995 to October 1996.
From October 1996 to January 1999, he was Executive Vice President of The
Village Companies of Chapel Hill, Inc., a media and communications company. From
1988 to 1995, Mr. McIlhenny served in various capacities with Cahners, including
Group Vice President and General Manager for Cahners Business Newspapers. From
1981 to 1988, Mr. McIlhenny served in various capacities with
Communications/Today, LTD. (acquired by Cahners in 1988), the publisher of
Furniture/Today, including Senior Vice President, Group Publisher.
Thomas L. Millner, 46, has been a Director of the Company since April 1998
and his present term will expire in 2001. Mr. Millner has been Chief Executive
Officer and President of Remington Arms Company, Inc. ("Remington"), a
manufacturer of sporting good products for the hunting, shooting sports and
fishing markets, since April 1999 and a director of Remington and RACI Holding,
Inc., Remington's parent, since June 1994. From May 1994 to April 1999, Mr.
Millner served as President and Chief Operating Officer of Remington. From 1987
to May 1994, Mr. Millner served as Chief Executive Officer and President of The
Pilliod Cabinet Company. From 1984 to 1987, Mr. Millner served as General
Manager of the Armstrong Furniture Division of Thomasville Furniture Industries.
From 1977 to 1984, Mr. Millner served in various sales and sales management
positions with Thomasville Furniture Industries and Broyhill Furniture
Industries.
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MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company has an Audit Committee, presently consisting of Messrs. Culp,
Harkins, Mack, McIlhenny and Millner, which is charged with evaluating
accounting and control procedures and practices of the Company and reporting on
such to the Board of Directors. The Audit Committee also serves as direct
liaison with the Company's independent public accountants and recommends the
selection or discharge of such accountants. The Audit Committee met twice in
1999.
The Company has a Compensation Committee, presently consisting of Messrs.
Culp, Harkins, Mack, McIlhenny and Millner, which makes recommendations
concerning salaries and incentive compensation for officers and employees of the
Company. The Compensation Committee also administers the Company's 1992 and 1994
Stock Option Plans and has authority to grant options under such plans to
officers and key employees and to determine the terms of such options in
accordance with such plans. The Compensation Committee met one time during 1999.
The full Board of Directors met six times during 1999. Each incumbent
director attended at least 75% of the total 1999 board meetings and committee
meetings held during periods that he was a member of the Board or such
committees.
Messrs. Harkins, Mack, McIlhenny and Millner each received compensation in
the amount of $15,000 for serving as a director in 1999. Mr. Culp received
$7,500 in 1999. Mr. Prillaman did not receive any separate compensation for
serving in that capacity during 1999. The annual compensation for outside
directors of the Company will be increased to $20,000 for 2000.
NOMINATIONS FOR DIRECTOR
The Company's Bylaws provide that a stockholder entitled to vote in the
election of directors may nominate one or more persons for election as a
director only if advance written notice is given. Written notice of such
stockholder's intent to make such nomination must be received by the Secretary
of the Company or deposited in the U.S. mail, postage prepaid, to the Secretary
of the Company not later than 120 days in advance of the anniversary date of the
Company's proxy statement for the previous year's Annual Meeting. Any
stockholder wishing to nominate one or more persons as director must submit the
following information in writing: (i) the name and address of the stockholder
who intends to make the nomination; (ii) a representation that the stockholder
is entitled to vote at such meeting and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in the notice; (iii)
a description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which any nomination is to be made by the stockholder; (iv) such
other information regarding each nominee as would be required to be included in
a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission, had the nominee been nominated by the Board of Directors;
and (v) the consent of each proposed nominee to serve as a director of the
Company if so elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
By requiring advance notice of stockholder nominations, this Bylaw affords
the Board of Directors the opportunity to consider the qualifications of the
proposed nominees and, to the extent deemed necessary or desirable by the Board,
to inform stockholders about such qualifications. The Bylaw does not give the
Board of Directors any power to approve or disapprove a stockholder's nomination
for election of directors. However, it may have the effect of precluding a
contest for the election if its procedures are not followed, and therefore may
discourage or deter a stockholder from conducting a solicitation of proxies to
elect such stockholder's own slate of directors.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and any persons owning more than 10% of the Common
Stock, to file certain reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely on its review of the copies of
the Forms 3, 4 and 5 received by it, and written representations from certain
reporting persons that no Forms 5 were required to be filed by those persons,
the Company believes that all executive officers, directors and 10% stockholders
complied with such filing requirements, except that Edward J. Mack, Director,
filed one late report with respect to two purchase transactions. A corrective
filing has been made by Mr. Mack.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
- --------------------------
The following table sets forth, for the years ended December 31, 1999, 1998
and 1997, the annual and long-term compensation for services in all capacities
to the Company of those persons who at December 31, 1999 were the Company's
Chief Executive Officer and the next four most highly compensated executive
officers of the Company for the year ended December 31, 1999 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------------- ----------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options (#)(1) Compensation (2)
- ------------------------------------ ---- --------- --------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
ALBERT L. PRILLAMAN 1999 $380,004 $380,000 $ 2,898 - $26,116
Chairman, President and 1998 350,040 350,000 280,610 (3) - 26,116
Chief Executive Officer............. 1997 350,040 350,000 298,570 (3) - 25,380
DOUGLAS I. PAYNE 1999 $180,000 $144,000 $ 72 - $ 4,800
Senior Vice President - 1998 160,008 135,000 63 - 4,800
Finance and Administration, 1997 150,012 90,000 122 - 3,362
Secretary and Treasurer.............
WILLIAM A. SIBBICK, JR. 1999 $165,000 $124,000 $ 356 - $ 4,800
Senior Vice President - 1998 148,008 105,000 403 - 4,800
Sales............................... 1997 136,008 60,000 444 - 3,557
JOHN W. JOHNSON 1999 $165,000 $124,000 $ 1,802 - $ 4,800
Senior Vice President - 1998 144,000 105,000 1,533 10,000 4,800
Manufacturing....................... 1997 132,000 60,000 1,675 - 3,200
KELLY S. CAIN 1999 $159,996 $120,000 $ 131 $ 4,800
Senior Vice President - 1998 140,004 105,000 114 - 4,800
Product Development and 1997 124,008 60,000 178 - 3,788
Merchandising......................
</TABLE>
____________
(1) All share and per share information in this proxy statement reflect a two-
for-one stock split effective May 15, 1998.
(2) All Other Compensation listed for Mr. Prillaman reflects premiums paid by
the Company in connection with a split-dollar life insurance agreement
($21,316 in 1999) and employer contributions to the Company's 401(k) Plan
($4,800 in 1999). The amounts for each of Messrs. Payne, Sibbick, Johnson
and Cain reflect employer contributions to the Company's 401(k) Plan.
(3) Includes forgiveness of interest and principal, and payroll taxes paid by
the Company, with respect to a loan under the Executive Loan Plan for Mr.
Prillaman of $270,512 for 1998 and $283,837 for 1997.
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Option Value Table
- ------------------
The following table sets forth information concerning the year-end number
and value of unexercised options for each of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN 1999 AND 1999 YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised In-the-
Acquired on Value Underlying Unexercised Money Options
Name Exercise (#) Realized ($) Options at Fiscal Year End (#) At Fiscal Year End ($) (1)
---- ------------ ------------ ------------------------------ ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Albert L. Prillaman................... 70,000 $1,355,825 330,420 - $4,419,368 $ -
Douglas I. Payne...................... 11,686 222,833 81,000 4,000 1,051,125 40,750
William A. Sibbick, Jr................ 10,000 155,755 51,006 - 697,830 -
John W. Johnson....................... - - 59,000 6,000 751,250 -
Kelly S. Cain......................... 17,252 269,843 23,000 1,000 312,750 12,313
</TABLE>
__________
(1) In-the-money options are those for which the December 31, 1999 fair market
value of the underlying shares of Common Stock (as determined by the
closing price on The Nasdaq Stock Market) exceeds the exercise price of the
option.
Employment Agreements
- ---------------------
Mr. Prillaman has an employment agreement with the Company that provides
that he has the duties of President, Chief Executive Officer and Chairman of the
Board of Directors of the Company at a base salary, which was initially $275,000
per year, subject to annual upward adjustment by the Board. Mr. Prillaman is
also entitled to a graduated bonus amount up to a maximum of 80% of his then
current base salary, contingent upon the achievement of certain threshold profit
objectives to be determined by the Board at the beginning of each year. The
agreement is automatically extended for an additional one year term at the end
of each year unless either party to the agreement gives notice on or before
November 1 of any year that the agreement will not be extended. In the event of
such notice, employment terminates as of December 31 of the year in which such
notice is given. If the Company gives such notice, Mr. Prillaman is entitled to
severance pay during the two years following termination in an amount equal to
his base salary plus the average of bonuses paid for the three fiscal years
preceding the year in which notice of termination is given. Mr. Prillaman is
entitled to receive the total severance pay in a single payment in the event a
change in control (as defined in the agreement) occurs. During the two years
after such a change of control, Mr. Prillaman is entitled to terminate his
employment with the Company and receive such severance pay in a single payment.
The agreement provides that Mr. Prillaman will not compete with the Company for
two years after termination of the employment agreement, except that this non-
competition covenant does not apply if: (i) Mr. Prillaman terminates his
employment within two years after a change of control or (ii) Mr. Prillaman
voluntarily terminates his employment and the Company does not elect to pay
severance to Mr. Prillaman.
In addition, the Company has entered into employment agreements with the
following executives: Douglas I. Payne, William A. Sibbick, Jr., John W.
Johnson, and Kelly S. Cain. Each of these employment agreements is on similar
terms as those discussed above with respect to Mr. Prillaman, with the following
exceptions: Mr. Payne serves as Senior Vice President - Finance and
Administration, Treasurer and Secretary of the Company, his base salary is at
least $136,000, and he is entitled to receive a potential annual bonus of
$50,000, subject to upward adjustment; Mr. Sibbick serves as Senior Vice
President - Sales, his base salary is at least $165,000, and he is entitled to
receive a potential annual bonus of $124,000, subject to upward adjustment; Mr.
Johnson serves as Senior Vice President - Manufacturing, his base salary is at
least $165,000, and he is entitled to receive a potential annual bonus of
$124,000, subject to upward adjustment; and, Mr. Cain serves as Senior Vice
President - Product Development and Merchandising, his base salary is at least
$160,000, and he is entitled to receive a potential annual bonus of $120,000,
subject to upward adjustment. In addition, during the first year after a change
of control (as defined in the agreement) Messrs. Sibbick, Johnson, and Cain are
entitled to terminate their employment with the Company and receive severance
pay only if: (i) their base salary is reduced, (ii) they are not in good faith
considered for an annual bonus, (iii) they are denied certain customary fringe
benefits, (iv) their place of employment is relocated further
5
<PAGE>
than 100 miles from their current place of employment, or (v) their duties and
responsibilities are substantially reduced.
In connection with the employment agreement with Mr. Prillaman, the Company
has entered into a split-dollar life insurance agreement under which the Company
has agreed to pay premiums with respect to a life insurance policy for Mr.
Prillaman until the cash surrender value of the policy and all paid up additions
are sufficient to repay the Company all premiums and other amounts paid by it
and to maintain the policy's death benefit at a level no less than the policy's
initial face amount without further premium payments. At such time, Mr.
Prillaman is obligated to repay such premiums to the Company. Mr. Prillaman has
executed a collateral assignment of his policy in favor of the Company to secure
repayment to the Company of the premiums paid on such policy. The initial face
amount of the policy for Mr. Prillaman is $1 million. During the year ended
December 31, 1999, the Company paid $21,316 in premiums for the policy of Mr.
Prillaman.
Defined Benefit Pension Plans
- -----------------------------
The Company maintains a qualified defined benefit pension plan for all its
eligible employees, The Stanley Retirement Plan, and also maintains a
nonqualified, unfunded supplemental retirement plan for certain of its
employees. Effective on December 31, 1995, future benefit accruals under both
plans were curtailed. Although participants continue their participation in both
plans, additional benefits do not accrue. The accrued monthly benefit under The
Stanley Retirement Plan, assuming retirement at age 65, for each of the Named
Executive Officers through December 31, 1995, was: Albert L. Prillaman, $5,244;
Douglas I. Payne, $993; William A. Sibbick, Jr., $515; John W. Johnson, $2,864;
and Kelly S. Cain, $692. The accrued monthly benefit under the Supplemental
Retirement Plan, assuming retirement at age 65, for each of the Named Executive
Officers through December 31, 1995, was: Albert L. Prillaman, $8,838; Douglas I.
Payne, $591; William A. Sibbick, Jr., $0; John W. Johnson, $1,422; and Kelly S.
Cain $322.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Executive Compensation Philosophy
- ---------------------------------
Under the supervision of the Committee, the Company has developed and
implemented executive compensation policies, plans, and programs that seek to
enhance the profitability and value of the Company. The primary objective is to
align closely the financial interests of the Company's executives with those of
its stockholders. The Committee believes that equity ownership by management is
beneficial in conforming management and stockholder interests in the enhancement
of stockholder value.
The Committee's philosophy is to integrate management pay with the
achievement of both annual and long-term financial performance goals. The
compensation package for each officer is designed to recognize individual
initiative and achievement. In establishing compensation, the Committee
incorporates a number of factors to promote both long and short-term performance
of the Company. These factors include earnings, market share growth, cost
control efforts, balance sheet strength and organizational developments. The
compensation for individual executives is based on both corporate and individual
goals, with varying weight being given to such factors for particular
executives. The Committee does not make compensation comparisons with the
companies that are used for the performance graph that follows this report.
The Committee believes that the Company's overall executive compensation
package should enable the Company to obtain and retain the services of top
executives. The Company operates with a small team of top executives who are
given significant and extensive responsibilities. These executives' duties
encompass both overall strategic policy of the Company and direct day-to-day
activity in sales, customer communications, product development, marketing,
manufacturing and other similar activities. The compensation package is
intended to reflect these broad responsibilities.
6
<PAGE>
The compensation currently paid by the Company is not subject to certain
Internal Revenue Code provisions that may limit the income tax deductibility to
the Company of certain forms of compensation paid to its Named Executive
Officers in excess of $1 million per year. These provisions allow full
deductibility of certain types of performance-based compensation. If these
limitations should become of broader applicability to the Company, the Committee
will consider modifications to the Company's compensation practices, to the
extent practicable, to provide the maximum deductibility for compensation
payments.
The Company's compensation package for its executive officers consists of
base salary, annual performance-based incentive compensation, stock option
grants, retirement benefits and, for certain executive officers, other benefits.
Base Salary
- -----------
The Committee sets base salary at the minimum level deemed sufficient to
attract and retain qualified executives. By restricting the role of base salary
in the compensation package, more of an executive's compensation can be paid in
the form of incentives that encourage and reward performance. The base salaries
of individual executives are set in light of the responsibilities of the
position held and the experience of the individual, with a recognition of the
Company's requirements for the top executives to perform many varied tasks.
Annual Incentives
- -----------------
The Company's annual incentive compensation program, the Executive
Incentive Compensation Plan (the "Incentive Plan"), is for corporate officers
and key employees who can directly influence the Company's financial results.
Awards under the Incentive Plan are based on the achievement of corporate
objectives that are established annually in conjunction with adoption of the
Company's budget for the next year. At that time, the Committee sets corporate
objectives for the coming year. For 1999, the performance measure was the
Company's earnings before interest and taxes ("EBIT"). No bonus would be paid
if an EBIT threshold was not met and the bonus would be increased for
performance above the threshold up to a maximum award on a per employee basis.
The amount of the maximum awards under the Incentive Plan are recommended
by management of the Company subject to approval by the Committee. For each of
the Named Executive Officers, the Committee approves an award as a set
percentage of either the executive's base salary or a fixed amount. The maximum
incentives were paid for 1999 based on the targets for the Company's EBIT
performance. The Incentive Plan awards are shown on the Summary Compensation
Table under the Bonus column.
Long-Term Incentives
- --------------------
The Company maintains the Stanley Furniture Company, Inc. 1994 Stock Option
Plan and the Stanley Furniture Company, Inc. 1992 Stock Option Plan (the "Option
Plans") to provide employees with options to acquire Common Stock. All options
under the Option Plans must be granted at an option exercise price of 100% of
the stock's fair market value on the date of grant. In 1999, option grants were
made to officers and key employees under the Option Plan; however, none of the
grant recipients were Named Executive Officers.
Other Compensation
- ------------------
The Company also has a Supplemental Retirement Plan covering designated
employees and former employees of the Company, including some executive
officers. See "Compensation of Executive Officers - Defined Benefit Pension
Plans."
7
<PAGE>
Chief Executive Officer Compensation
- ------------------------------------
Mr. Prillaman has an employment agreement with the Company that is
described under "Compensation of Executive Officers - Employment Agreements."
The Committee increased Mr. Prillaman's base salary for 1999 to $380,000 in view
of the Company's superior financial performance during the preceding fiscal
year.
A major portion of Mr. Prillaman's compensation is contingent on the
Company's performance. In 1999, Mr. Prillaman participated in the Incentive
Plan with the same corporate objectives as other corporate officers. The
Committee set Mr. Prillaman's potential bonus for 1999 at 100% of his base
salary. The Committee believes that this bonus level was appropriate because
Mr. Prillaman's leadership continues to be a key component in the Company's
performance. For 1999, Mr. Prillaman received the maximum allowable bonus. The
Committee believes that Mr. Prillaman's bonus was justified by the Company's
financial performance during 1999.
Mr. Prillaman participates in the Supplemental Retirement Plan. In
addition, the Company has entered into a split-dollar life insurance agreement
with Mr. Prillaman. See "Compensation of Executive Officers - Employment
Agreements." Mr. Prillaman has received stock option awards under the Option
Plans but did not receive an award in 1999.
Mr. Robert G. Culp, III became a member of the Compensation Committee in
August 1999. Mr. Culp did not take part in any decisions regarding
determination of 1999 salaries or bonus opportunities for 1999.
The members of the Compensation Committee are:
David V. Harkins
Robert G. Culp, III
T. Scott McIlhenny, Jr.
Edward J. Mack
Thomas L. Millner
8
<PAGE>
PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return for the
Company with a broad performance indicator, the Nasdaq Non-Financial Stock
Index, and an industry index, the Wood Household Furniture Index, for the period
from December 31, 1994 to December 31, 1999.
[GRAPH APPEARS HERE]
1994 1995 1996 1997 1998 1999
Stanley Furniture 100.00 80.00 198.75 278.75 365.00 367.50
Wood Household Furniture
Index (2) 100.00 125.17 158.05 225.98 243.79 231.06
Nasdaq Non-Financial Stock
Index (3) 100.00 129.71 161.18 197.16 278.08 490.46
(1) The graph shows the cumulative total return on $100 invested at the market
close on December 30, 1994, the last trading day in 1994, in Common Stock or
the specified index, including reinvestment of dividends.
(2) SIC Code 2511 Wood Household Furniture Index as prepared by Media General
Financial Services, Inc. ("Media General"). At January 31, 2000, Media
General reported that SIC Code 2511 consisted of: Bassett Furniture
Industries, Inc., Bush Industries, Inc. (Class A Common Stock), Chromcraft
Revington, Inc., DMI Furniture, Inc., Ethan Allen Interiors Inc., Furniture
Brands International, Inc., Ladd Furniture, Inc., Pulaski Furniture
Corporation and Stanley Furniture Company, Inc.
(3) Nasdaq Non-Financial Stock Index prepared for The Nasdaq Stock Market by the
Center for Research in Securities Prices at the University of Chicago.
9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 3, 2000, by each
stockholder known by the Company to be the beneficial owner of more than 5% of
its outstanding Common Stock, by each director and director nominee, by each of
the Named Executive Officers and by all directors and executive officers as a
group:
<TABLE>
<CAPTION>
Amount and Nature Percent of
Name of Beneficial Ownership Class
---- ------------------------------- ----------
<S> <C> <C>
FMR Corp. (a).................................................... 702,100 (a) 10.0%
Brinson Partners, Inc. and affiliated entities (b)............... 607,932 (b) 8.7%
T. Rowe Price Associates, Inc. (c)............................... 567,500 (c) 8.1%
Albert L. Prillaman (d).......................................... 548,214 (e) 7.5%
Dimensional Fund Advisors Inc.(f)................................ 516,100 (f) 7.4%
J.P. Morgan & Co. Incorporated (g)............................... 512,600 (g) 7.3%
Muhlenkamp & Company, Inc. and affiliated entities (h)........... 507,910 (h) 7.3%
Investment Counselors of Maryland, Inc. (i)...................... 359,000 (i) 5.1%
Douglas I. Payne (d)............................................. 86,000 (j) 1.2%
John W. Johnson (d).............................................. 63,097 (k) (l)
William A. Sibbick, Jr. (d)...................................... 51,006 (m) (l)
Kelly S. Cain (d)................................................ 25,158 (n) (l)
Edward J. Mack (d)............................................... 11,232 (l)
David V. Harkins (o)............................................. 5,000 (l)
T. Scott McIlhenny (d)........................................... 2,600 (l)
Thomas L. Millner (d)............................................ 1,800 (l)
Robert G. Culp, III (d).......................................... 300 (l)
All directors and executive officers as a group (11 persons)..... 803,107 (p) 10.6%
</TABLE>
________________________
(a) The information concerning the shares beneficially owned by FMR Corp. is
based upon the Schedule 13G/A filed with the SEC February 14, 2000 by FMR
Corp. together with Edward C. Johnson 3d, Chairman of FMR Corp., and
Abigail P. Johnson, a director of FMR Corp. Fidelity Management & Research
Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp., is the
beneficial owner of 702,100 shares of Common Stock as a result of acting as
investment advisor to Fidelity Low-Priced Stock Fund, which owned all
702,100 shares. Edward C. Johnson 3d, FMR Corp., through its control of
Fidelity, and Fidelity Low-Priced Stock Fund each has sole power to dispose
of the 702,100 shares owned by Fidelity Low-Priced Stock Fund. Neither
Edward C. Johnson 3d nor FMR Corp. has sole power to vote or direct the
voting of the shares owned directly by Fidelity Low-Priced Stock Fund,
which power resides with the Board of Trustees of Fidelity Low-Priced Stock
Fund. The principal business address of FMR Corp., Fidelity and Fidelity
Low-Priced Stock Fund is 82 Devonshire Street, Boston, Massachusetts 02109.
(b) The beneficial ownership information with respect to Brinson Partners, Inc.
("BPI") is based upon the Schedule 13G/A filed with the SEC February 11,
2000 by BPI together with UBS AG ("UBS AG"). BPI is an indirect, wholly-
owned subsidiary of UBS AG. The Schedule 13G/A indicates that UBS AG,
through its ownership of BPI and otherwise, has sole voting and shared
dispositive power with respect to 607,932 shares and that BPI has sole
voting and shared dispositive power with respect to 604,032 of such shares.
BPI and UBS AG disclaim beneficial ownership of such shares. The principal
business address of BPI is 209 South LaSalle, Chicago, Illinois 60604. The
principal business address of UBS AG is Bahnhofstrasse 45, 8021, Zurich,
Switzerland.
(c) The beneficial ownership information for T. Rowe Price Associates, Inc.
("Price Associates") is based upon the Schedule 13G/A filed with the SEC
February 8, 2000 by Price Associates together with T. Rowe Price Small-Cap
Value Fund, Inc. ("TRP Small-Cap"). Price Associates has sole dispositive
power with respect to 567,500 shares (and has sole voting power with
respect to 128,000 of such shares). Such shares are owned by various
individual and institutional investors, including TRP Small-Cap (which has
sole voting power with respect to 400,000 of such shares, representing 5.6%
of the shares outstanding) which Price Associates serves as investment
advisor. Price Associates disclaims beneficial ownership of such shares.
The principal business address of Price Associates and TRP Small-Cap is 100
E. Pratt Street, Baltimore, Maryland 21202.
(d) The business address for such persons is c/o Stanley Furniture Company,
Inc., 1641 Fairystone Park Highway, Stanleytown, Virginia 24168.
(e) Includes 330,420 shares which could be acquired through the exercise of
stock options.
(f) The beneficial ownership information with respect to Dimensional Fund
Advisors Inc. ("Dimensional") is based upon its Schedule 13G/A filed with
the SEC February 3, 2000. Dimensional has sole voting and dispositive power
with respect to 516,100 shares in its capacities as investment advisor to
four investment companies and investment manager to certain other
investment vehicles (collectively, the "Dimensional Funds"). Such shares
are owned by the Dimensional Funds, and Dimensional disclaims beneficial
ownership of such shares. The principal business address of Dimensional is
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
10
<PAGE>
(g) The beneficial ownership information with respect to J.P. Morgan & Co.
Incorporated ("J.P. Morgan") is based upon its Schedule 13G/A filed with
the SEC February 14, 2000. The Schedule 13G/A indicates that J.P. Morgan
has sole voting power with respect to 431,900 shares and sole dispositive
power with respect to 512,600 shares. The principal business address of
J.P. Morgan is 60 Wall Street, New York, New York 10260.
(h) The beneficial ownership information with respect to Muhlenkamp & Company,
Inc. ("Muhlenkamp & Co.") is based upon its Schedule 13G filed with the SEC
February 28, 2000. The Schedule 13G indicates that Muhlenkamp & Co. has
shared voting and dispositive power with respect to 507,910 shares. The
principal business address of Muhlenkamp & Co. is 12300 Perry Highway,
Wexford, Pennsylvania 15090.
(i) The beneficial ownership information with respect to Investment Counselors
of Maryland, Inc. ("Investment Counselors of Maryland") is based upon its
Schedule 13G filed with the SEC February 10, 2000. The Schedule 13G
indicates that Investment Counselors of Maryland has sole voting power with
respect to 316,000 shares, shared voting power with respect to 43,000
shares and sole dispositive power with respect to 359,000 shares. The
principal business address of Investment Counselors of Maryland is 803
Cathedral Street, Baltimore, Maryland 21201-5297.
(j) Includes 81,000 shares which could be acquired through the exercise of
stock options.
(k) Includes 59,000 shares which could be acquired through the exercise of
stock options.
(l) Less than 1%.
(m) Represents 51,006 shares which could be acquired through the exercise of
stock options.
(n) Mr. Cain has sole voting power and dispositive power with respect to 1,100
shares and shared voting and dispositive power with respect to 1058 shares.
Includes 23,000 shares which could be acquired through the exercise of
stock options.
(o) The business address for such person is c/o Thomas H. Lee Company, 75 State
Street, Boston, Massachusetts 02109.
(p) Includes 553,126 shares which could be acquired through the exercise of
stock options.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP served as independent public
accountants for the Company for 1999 and has served in that capacity since 1979.
While the Company expects PricewaterhouseCoopers LLP to be selected as its
independent public accountants for 2000, the Board of Directors will not make
that selection until the Audit Committee completes its review of the engagement
terms for the current year.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting. Such representatives will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
OTHER BUSINESS
Management knows of no other business which will be presented for
consideration at the Annual Meeting, but should any other matters be brought
before the meeting, it is intended that the persons named in the accompanying
proxy will vote such proxy at their discretion.
ADDITIONAL INFORMATION
Voting Procedures. Votes will be tabulated by one or more Inspectors of
Elections. Except for the election of directors, approval of other matters
properly brought before the meeting will require the affirmative vote of the
holders of at least a majority of the shares of outstanding Common Stock
represented at the meeting. If a stockholder, present in person or by proxy,
abstains on any matter, the stockholder's shares will not be voted on such
matter. Thus an abstention from voting on a matter has the same legal effect as
a vote "against" the matter, even though the stockholder may interpret such
action differently. With respect to the election of directors, the two nominees
in the class which term ends in 2003 receiving the greatest number of votes cast
for the election of directors will be elected.
A majority of the shares entitled to vote, represented in person or by
proxy, will constitute a quorum for the transaction of business at the meeting.
Shares for which the holder has elected to abstain or to withhold the proxies'
authority to vote on a matter will count toward a quorum. "Broker non-votes"
will not count toward a quorum and will not be voted on any matter to be
considered at the meeting.
11
<PAGE>
Stockholder Proposals for 2001 Annual Meeting. Any stockholder desiring to
present a proposal to the stockholders at the 2001 Annual Meeting and who
desires that such proposal be included in the Company's proxy statement and
proxy card relating to that meeting, must transmit such to the Secretary of the
Company so that it is received at the Company's principal executive offices on
or before November 10, 2000. All such proposals should be in compliance with
applicable Securities and Exchange Commission regulations. With respect to
stockholder proposals that are not included in the proxy statement for the 2001
Annual Meeting, the persons named in the proxy solicited by the Company's Board
of Directors for the 2001 Annual Meeting will be entitled to exercise the
discretionary voting power conferred by such proxy under the circumstances
specified in Rule 14a-4(c) under the Securities Exchange Act of 1934, as
amended, including with respect to proposals received by the Company after
January 24, 2001.
By Order of the Board of Directors,
Douglas I. Payne
Secretary
March 10, 2000
12
<PAGE>
REVOCABLE PROXY
STANLEY FURNITURE COMPANY, INC.
Annual Meeting of Stockholders - April 19, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Douglas I. Payne and David W. Robertson and
either of them, proxies of the undersigned, with full power of substitution, to
vote all the shares of Common Stock of Stanley Furniture Company, Inc. (the
"Company") held of record by the undersigned on March 3, 2000, at the Annual
Meeting of Stockholders to be held April 19, 2000, and at any adjournment
thereof.
(1) Election of directors for three-year term ending 2003.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as indicated otherwise below) for all nominees listed below
NOMINEES: David V. Harkins and Albert L. Prillaman
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
such nominee's name in the space provided below.
_________________________________________________________
(2) In their discretion the proxies are authorized to vote upon such other
matters as may come before the meeting or any adjournment thereof.
All as more particularly described in the Company's Proxy Statement for the
Annual Meeting of Stockholders to be held on April 19, 2000, receipt of which is
hereby acknowledged.
(Continued and to be dated and signed on reverse side)
- -------------------------------------------------------------------------------
(continued from reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS
PROXY WILL BE VOTED "FOR" ALL PORTIONS OF ITEM (1), AND IN THE PROXIES'
DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE MEETING.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote upon or act with respect to such stock and hereby ratifies and confirms all
that said proxies, their substitutes or any of them may lawfully do by virtue
hereof.
Please date this Proxy Card and sign
your name exactly as it appears
hereon. Where there is more than one
owner, each should sign. When
signing as an attorney,
administrator, executor, guardian or
trustee, please add your title as
such. If executed by a corporation,
this Proxy Card should be signed by a
duly authorized officer. If executed
by a partnership, please sign in
partnership name by authorized
persons.
Dated_____________________________,2000.
________________________________________
________________________________________
Please promptly mark, date, sign, and
mail this Proxy Card in the enclosed
envelope. No postage is required.
