SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 mark)240.14a-11(c) or (section
mark)240.14a-12
Pluma, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth in amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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(PLUMA LOGO GOES HERE)
Pluma, Inc.
801 Fieldcrest Road
Eden, NC 27288
April 14, 1998
Dear Share Owner:
You are cordially invited to attend the Annual Meeting of share owners which
will be held on Tuesday, June 2, 1998 at 10:00 a.m.
The enclosed Notice and Proxy Statement contain details concerning the business
to come before the meeting. You will note that the Board of Directors of the
Company recommends a vote "FOR" the election of three Directors to serve until
the Annual Meeting of share owners to be held in the year 2001 and "FOR" the
ratification of Deloitte & Touche, LLP as independent auditors of the Company
for the 1998 fiscal year. Please sign and return your proxy card in the enclosed
envelope at your earliest convenience to assure that your shares will be
represented and voted at the meeting even if you cannot attend.
Sincerely,
/s/ George Walker Box /s/ R. Duke Ferrell, Jr.
G. WALKER BOX R. DUKE FERRELL JR.
Chairman President and CEO
<PAGE>
(PLUMA LOGO GOES HERE)
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
TO THE OWNERS OF COMMON STOCK
PLUMA, INC.
The Annual Meeting of share owners of PLUMA, INC. a North Carolina corporation
(the "Company"), will be held at Bassett Country Club, Oak Level Road, Bassett,
Virginia, on Tuesday, June 2, 1998 at 10:00 a.m., local time, for the following
purposes:
1. to elect three Directors to serve until the Annual Meeting of share
owners to be held in the year 2001;
2. to ratify the appointment of Deloitte & Touche, LLP as independent
auditors; and,
3. to transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
Share owners of record at the close of business on April 3, 1998, are entitled
to notice of and to vote at the meeting and any adjournments or postponements
thereof. A list of share owners of the Company as of the close of business on
April 3, 1998, will be available for inspection during normal business hours
from April 3, 1998, through June 1, 1998, at the offices of the Company and will
also be available at the meeting.
Attendance at the meeting will be limited to share owners of record or their
authorized representative by proxy. If your shares are held through an
intermediary, such as a bank or broker, you should request a ticket from the
intermediary, or present proof of your ownership of Pluma, Inc. shares at the
meeting. Proof of ownership could include a proxy from the intermediary or a
copy of your account statement, which confirms your beneficial ownership of
Pluma, Inc. shares.
By Order of the Board of Directors
/s/ George G. Wade
SECRETARY and CHAIRMAN EMERITUS
Eden, North Carolina
April 14, 1998
EACH SHARE OWNER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY. IN
THE EVENT A SHARE OWNER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY, IF SO
DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE>
PROXY STATEMENT
FOR ANNUAL MEETING OF SHARE OWNERS
TO BE HELD JUNE 2, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ELECTION OF DIRECTORS............................................................1
BOARD OF DIRECTORS ..............................................................1
RECOMMENDATION OF THE BOARD OF DIRECTORS
CONCERNING THE ELECTION OF DIRECTORS.............................................2
NOMINEES FOR ELECTION -- TERM EXPIRING 2001......................................2
INCUMBENT DIRECTORS TERM EXPIRING 2000...........................................2
INCUMBENT DIRECTORS -- TERM EXPIRING 1999........................................2
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS
AND COMPENSATION OF DIRECTORS....................................................3
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION......................3
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS INVOLVING DIRECTORS
NOT ON THE COMPENSATION COMMITTEE................................................4
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..........................5
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY....................................6
PRINCIPAL SHARE OWNERS...........................................................7
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION..........................8
OVERALL OBJECTIVES AND PROGRAMS..................................................8
COMPONENTS OF EXECUTIVE COMPENSATION.............................................9
BASE SALARY......................................................................9
SENIOR EXECUTIVE BONUS PLAN......................................................9
STOCK OPTION PLAN...............................................................10
BENEFITS .......................................................................10
SALES INCENTIVE PLAN............................................................10
1997 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER...............................11
SUMMARY ........................................................................11
EXECUTIVE COMPENSATION..........................................................11
SUMMARY COMPENSATION TABLE .....................................................12
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.....................................12
AGGREGATED OPTION/SAR EXERCISES IN THE LAST
FISCAL YEAR AND YEAR-END OPTION VALUES .........................................13
<PAGE>
<CAPTION>
<S> <C>
OPTION GRANTS IN LAST FISCAL YEAR...............................................13
EMPLOYMENT AGREEMENTS, CHANGE OF CONTROL ARRANGEMENTS...........................13
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.............................14
RECOMMENDATION OF THE BOARD OF DIRECTORS........................................15
PROXY PROCEDURE AND
EXPENSES OF SOLICITATION........................................................15
SHARE OWNERS' PROPOSALS.........................................................15
OTHER INFORMATION...............................................................15
</TABLE>
<PAGE>
PLUMA, INC.
Eden, North Carolina
April 14, 1998
PROXY STATEMENT
FOR ANNUAL MEETING OF SHARE OWNERS
TO BE HELD JUNE 2, 1998
This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Pluma, Inc. (the "Company") to be voted
at the Annual Meeting of share owners of the Company to be held at Bassett
Country Club, Oak Level Road, Bassett, Virginia, on June 2, 1998, at 10:00 a.m.,
local time, and at any adjournments or postponements thereof.
All proxies delivered pursuant to this solicitation are revocable at any time at
the option of the persons executing them by giving written notice to the
Secretary of the Company, by delivering a later dated proxy or by voting in
person at the Annual Meeting.
The mailing address of the principal executive offices of the Company is 801
Fieldcrest Road, Eden, North Carolina, 27288. The approximate date on which this
Proxy Statement, form of proxy, and Annual Report to share owners are first
being sent or given to share owners is April 14, 1998.
All properly executed proxies delivered pursuant to this solicitation and not
revoked will be voted at the Annual Meeting in accordance with the directions
given. Regarding the election of Directors to serve until the Annual Meeting of
share owners to be held in the year 2001, in voting by proxy, share owners may
vote in favor of all nominees or withhold their votes as to all nominees or
withhold their votes as to specific nominees. With respect to the ratification
of the appointment of Deloitte & Touche LLP as independent auditors, share
owners may vote in favor of the proposal, against the proposal or may abstain
from voting. Share owners should specify their choices on the enclosed form of
proxy. If no specific instructions are given with respect to the matters to be
acted upon, the shares represented by a signed proxy will be voted FOR the
election of all nominees and FOR the proposal to ratify the appointment of
Deloitte & Touche LLP. Directors will be elected by a plurality, and
ratification of the appointment of Deloitte & Touche LLP will require approval
by a majority of the votes cast by the holders of the shares of Common Stock of
the Company voting in person or by proxy at the Annual Meeting. Accordingly,
abstentions and broker non-votes will not be included in vote totals and will
have no effect on the outcome of the vote. Only owners of record of shares of
Common Stock of the Company at the close of business on April 3, 1998, are
entitled to vote at the meeting or adjournments or postponements thereof. Each
owner of record on the record date is entitled to one vote for each share of
Common Stock of the Company so held. On April 14, 1998, there were 8,109,152
shares of Common Stock of the Company issued and outstanding.
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
The Company's Bylaws authorize twelve (12) directorships. The Board of
Directors currently consists of nine members. Dr. David Jones, a former
director, resigned his directorship on February 3, 1998. The Directors are
divided into three classes, each class serving for a period of three years,
which has been the practice of the Company since June of 1996.
Approximately one-third of the members of the Board of Directors are elected by
the share owners annually. The Directors whose terms will expire at the 1998
Annual Meeting of share owners are R. Duke Ferrell, Jr., Barry A. Bowles and R.
Stephens Pannill, all of whom have been nominated to stand for reelection as
Directors at the 1998 Annual Meeting of share owners to hold office until the
Annual Meeting of share owners to be held in the year 2001 and until their
successors are elected and qualified.
Should any one or more of these nominees become unable to serve for any reason,
or for good cause will not serve, which is not anticipated, the Board of
Directors may, unless the Board by resolution provides for a lesser number of
Directors, designate substitute nominees, in which event the persons named in
the enclosed proxy will vote proxies that would otherwise be voted for all named
nominees for the election of such substitute nominee or nominees.
1
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
CONCERNING THE ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR R. DUKE FERRELL JR.,
BARRY A. BOWLES AND R. STEPHENS PANNILL, AS DIRECTORS TO HOLD OFFICE UNTIL THE
ANNUAL MEETING OF SHARE OWNERS TO BE HELD IN THE YEAR 2001 AND UNTIL THEIR
SUCCESSORS ARE ELECTED AND QUALIFIED. PROXIES RECEIVED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXY A CONTRARY CHOICE.
NOMINEES FOR ELECTION -- TERM EXPIRING 2001
R. DUKE FERRELL, JR., age 45, a founder of the Company, has been the Company's
President since January 1992 and its Chief Executive Officer since September
1993. He served as the Company's Executive Vice President and Chief Operating
Officer from 1991 until he became President of the Company and is a member of
the Board of Directors, serving on its Nominating Committee as a non-voting
member, and Strategic Planning Committee. In 1987, Mr. Ferrell was employed by
Box-Ferrell and Company until his employment by Pluma as Executive Vice
President and Chief Operating Officer. He was employed by Bassett-Walker, Inc.
from 1982 to 1986.
BARRY A. BOWLES, age 52, became a member of the Board of Directors in 1988 and
is the chairman of the Compensation Committee and a member of the Nominating
Committee. Mr. Bowles is Chairman of the Board of Directors of Stanley W. Bowles
Corporation, a general construction contractor by which he has been employed
since 1967.
R. STEPHENS PANNILL, age 51, became a member of the Board of Directors in 1988
and is the chairman of the Audit Committee and a member of the Nominating
Committee. Mr. Pannill is a private investor.
INCUMBENT DIRECTORS TERM EXPIRING 2000
GEORGE G. WADE, age 64, a founder of the Company, served as Chairman of the
Company's Board of Directors until January 1996, when he became Chairman
Emeritus. Mr. Wade served as the Company's President and Chief Executive Officer
from January 1987, until he relinquished the titles of Chief Executive Officer
and President in September 1993 to become the Company's Secretary. Mr. Wade is a
member of the Company's Strategic Planning Committee. He was employed by
Bassett-Walker, Inc. from 1956 to 1986.
G. WALKER BOX, age 47, a founder of the Company, has served as a member of the
Board since 1987 and became Chairman of the Company's Board of Directors in
January 1996. He is a non-voting member of the Company's Nominating Committee
and a member of the Strategic Planning Committee. Mr. Box was employed by
Bassett-Walker, Inc. from 1973 to 1986 when he became the President of
Box-Ferrell and Company, the Company's first exclusive sales agent. Mr. Box
served as President of Box & Company from 1991 until December 1995, which served
as the Company's exclusive sales agent until purchased by the Company on
December 31, 1995. Mr. Box is also a member of the Board of Directors of the
North Carolina Textile Foundation. Mr. Box is the brother of Kemp D. Box, a
Director of the Company.
J. ROBERT PHILPOTT, JR., age 52, became a director in April 1996. Mr. Philpott
is President, Treasurer and a director of Philpott, Ball & Company ("Philpott,
Ball"), a private investment banking firm that he co-founded in 1991. Philpott,
Ball has served as a financial adviser to the Company since 1991, providing
corporate financial advisory services and valuations of Company stock from time
to time. Prior to founding Philpott, Ball, Mr. Philpott was a Senior Vice
President and Managing Director of Interstate/Johnson Lane, Capital Markets
Group. He has served as a director of Emergent Group, Inc. since May 1997. Mr.
Philpott is a member of the Compensation, Nominating and Strategic Planning
Committees.
JOHN B. ADAMS, JR., age 53, is President and CEO of The Bowman Companies, a
manufacturer and bottler of distilled spirits and has served in that capacity
since 1971. He also serves as a director of Dominion Resources and Pinnacle
Pharmaceuticals, Richmond, Virginia. Mr. Adams has accepted a nomination by
Pluma's Board of Directors to serve as a Director beginning April 21, 1998.
INCUMBENT DIRECTORS -- TERM EXPIRING 1999
C. MONROE LIGHT, age 57, a founder of the Company, became executive vice
president of manufacturing services in October of 1997. Mr. Light has been Vice
President of Manufacturing responsible for yarn sourcing and knitting and a
Director since 1987. He became an Executive Vice President in January 1996. Mr.
Light was employed from 1960 to 1986 by Bassett-Walker, Inc. He serves on the
Company's Strategic Planning Committee.
WILLIAM K. MILESKI, age 55, a founder of the Company, has served as a member of
the Board of Directors since 1987 and is a member of the Audit and Nominating
Committees. He was Vice President of the Company responsible for dyeing,
finishing and cutting operations from 1987 until he left the Company in December
1995 to establish Meritage LLC, a contract garment-dyeing company.
2
<PAGE>
KEMP D. BOX, age 44, became a member of the Board of Directors in 1988 and is a
member of the Compensation and Nominating Committees. He is a private investor.
Mr. Box is the brother of G. Walker Box, who is a Director and executive officer
of the Company.
RONALD A. NORELLI, age 52, is President and CEO of Norelli & Company, a
consulting firm, providing services to companies in the areas of financial
strategy, marketing, organization and operations strategy, and other areas of
corporate management. Mr. Norelli has served in his present position for
seventeen years. He currently serves as chairman of the Board of CEM Corporation
and Director of Rowe Corporation. Mr. Norelli has accepted a nomination by
Pluma's Board of Directors to serve as Director beginning April 21, 1998.
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS
AND COMPENSATION OF DIRECTORS
In accordance with the Bylaws of the Company, the Board of Directors has
established an Audit Committee, a Compensation Committee and a Nominating
Committee. The Company also has a Strategic Planning Committee. The members of
these Committees are indicated below.
The Company's Board of Directors established an Audit Committee in March 1994.
The responsibilities of the Audit Committee include recommending to the Board of
Directors the independent public accountants to be selected to conduct the
annual audit of the Company's financial statements, reviewing the proposed scope
of such audit and approving the audit fees to be paid. This committee is also
responsible for reviewing the adequacy and effectiveness of the internal
auditing, accounting and financial controls of the Company with the independent
public accountants and the Company's financial and accounting staff. The Audit
Committee consists exclusively of outside directors who are R. Stephens Pannill
(chairman), and William K. Mileski. Dr. David C. Jones was a member of the Audit
Committee until he resigned from the Company's Board of Directors on February 3,
1998. The Audit Committee met two times during 1997.
The Company's Board of Directors established a Compensation Committee in April
1989. The Compensation Committee provides a general review of the Company's
compensation plans to ensure that they meet corporate objectives. The
responsibilities of the Compensation Committee also include administering the
Company's Senior Executive Bonus Plan, Sales Incentive Plan, Non-Qualified
Deferred Compensation Plan and 1995 Stock Option Plan, including selecting the
officers and salaried employees to whom bonuses and stock options will be
granted. The Compensation Committee consists exclusively of outside directors
who are Barry A. Bowles (chairman), Kemp D. Box and J. Robert Philpott, Jr. The
Compensation Committee met two times during 1997.
The Company's Board of Directors established a Nominating Committee in January
1994. The Nominating Committee is responsible for making recommendations to the
Board of Directors concerning executive officer appointments. The Nominating
Committee consists of J. Robert Philpott, Jr., Kemp D. Box, William K. Mileski,
Barry A. Bowles, and R. Stephens Pannill. R. Duke Ferrell, Jr. and G. Walker Box
serve as non-voting members of this Committee. The Nominating Committee did not
meet during 1997. The Nominating Committee will consider nominees for
directorships recommended by Company share owners, provided such recommendations
are made in writing to the Secretary of the Company at the Company's principal
business address at least one-hundred twenty days prior to the date of the
Company's most recent Proxy Statement.
The Company's Board of Directors established a Strategic Planning Committee in
October 1996. This Committee is responsible for monitoring industry trends and
making recommendations to the Company's Board of Directors regarding Company
actions designed to enable the Company to compete effectively in the future. The
Strategic Planning Committee consists of G. Walker Box, R. Duke Ferrell, Jr., C.
Monroe Light, J. Robert Philpott, Jr. and George G. Wade. The Strategic Planning
Committee met four times during 1997.
In 1997, the Board of Directors held fifteen meetings and committees of the
Board of Directors met a total of eight times. Overall attendance at such
meetings was 98% for Board and 100% for Committees. Officers of the Company who
are also directors do not receive any fee or remuneration for services as
members of the Board of Directors or of any Committee of the Board of Directors.
Each non-employee director of the Company receives $10,000 annually for serving
as a director, $750 for each board meeting attended and $500 for each meeting of
any Committee of the Board attended, except that the Chairman of each Committee
is paid $750 for each meeting of his Committee which he attends. In addition,
directors may be compensated under the Company's 1995 Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On December 31, 1997, the Company's Compensation Committee consisted of Barry A.
Bowles (Chairman), Kemp D. Box, and J. Robert Philpott, Jr.
North Bowles Partnership is a general partnership of which Barry A. Bowles, a
director of Pluma and a member of its Compensation Committee, owns a 33.0%
general partnership interest.
On June 10, 1989, the Company entered into a lease with North Bowles Partnership
for a building located in Martinsville, Virginia, to
3
<PAGE>
operate a distribution center. On December 1, 1990, this lease was amended to
add 67,500 square feet to the building subject to the original lease. The
building now contains 181,550 square feet. Rental expense for 1997 was
$52,743.00 per month, or a total of $644,916.00 annually. Rental payments
increase with any annual increase in the Consumer Price Index for Urban Wage
Earners and Clerical Workers. The term of this lease is 20 years. As additional
rent, the Company is responsible for paying 75.0% of the increase in taxes and
insurance premium payments due on this property. This lease grants the Company
the option to purchase the distribution center at the end of the fifth year,
tenth year and fifteenth year of the lease term, as well as at the end of the
lease term in June 2009, at a price to be agreed upon by the parties, or if no
agreement can be reached, at a price determined by appraisers.
On December 1, 1995, the Company entered into a lease with North Bowles
Partnership for a 83,200 square foot building that is being utilized by the
Company as a warehouse, packaging facility and management information systems
location. Seven hundred square feet of additional office space was added to this
facility in 1997. Rent is payable in monthly installments of $14,880.
On February 1, 1996, the Company entered into a lease with North Bowles
Partnership for a 198,000 square foot building that is being utilized by the
Company as a warehouse and distribution facility. Annual rental on this facility
is $384,000 payable in equal monthly installments of $32,000. This lease
terminates on July 31, 1998. As additional rent, the Company is responsible for
paying any increase in North Bowles Partnership's taxes and insurance premiums
related to the property in excess of 1995 levels.
For the year ended December 31, 1997, the Company paid Stanley Bowles
Corporation $344,751 for services rendered in connection with contract building
and repair work. This payment included the cost of the equipment and labor and
materials utilized for installation. Stanley Bowles Corporation is a corporation
of which Barry A. Bowles, a director of Pluma and a member of its Compensation
Committee, owns 20% of the voting stock.
For the year ended December 31, 1997, the Company paid Diversified Distribution,
Inc. $118,345 in fees related to contract services rendered to the Company for
packaging and preparing Company products for shipment. These services were
contracted for on a job-by-job basis as needed during busy delivery times. The
Company has no long-term contract for such services. Barry A. Bowles owns 22.5%
of the Common Stock of Diversified Distribution, Inc.
The Company paid Philpott, Ball $120,000 of advisory fees plus out-of-pocket
expenses during 1997 pursuant to a contract for financial advisory services.
Philpott, Ball's advisory services performed under this agreement included
negotiating with underwriters regarding pricing of the Company's stock in a
public offering and other matters related thereto; coordinating selling
shareholders in the Company's public offering; assisting in the preparation of
"road-shows" for the public offering; and assisting the Company with strategic
planning, executive compensation, benefits, financial forecasting and
acquisition inquiries. Under a separate agreement, Philpott, Ball was paid a
one-time success fee of $225,000 for its services in connection with the
negotiation and closing of the Company's acquisition of Stardust Corporation in
December of 1997 and out-of-pocket expenses related to the Stardust
transaction and the Company's acquisition of Frank L. Robinson Company
in the amount $16,472. J. Robert Philpott, Jr., a director of the Company,
owns 50.0% of the outstanding equity interests in Philpott, Ball.
With reference to all the transactions described above, the Company followed its
policy set forth in its Bylaws related to transactions with its directors
("Interested Directors"). The Company's Bylaws require that with respect to any
transaction or series of transactions between the Company and an Interested
Director in which such Interested Director may receive either directly or
indirectly (through an entity with which the director is affiliated as a
shareholder, partner, director, officer, employee or agent) compensation or
benefits of more than $25,000 within a twelve-month period, the Company's Board
of Directors (without the involvement of the Interested Director and any of his
family members who may be directors) must determine that the terms of such
transaction(s) are at least equal to, if not better than, terms which the
Company could have received from a party unaffiliated with the Company. Although
transactions in the ordinary course of the Company's business can be exempted
from this requirement, the transactions described above were not in the ordinary
course of business and were determined to be on terms at least equal to, if not
better than, the terms the Company could have received from a nonaffiliated
party.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS INVOLVING DIRECTORS
NOT ON THE COMPENSATION COMMITTEE
For the year ended December 31, 1997, the Company paid $16,894 to Meritage LLC
for special contract dyeing services. In addition, in 1997, the Company had
sales of fleece activewear totaling $871,958 to Meritage LLC. As of March 20,
1998, Meritage LLC had a trade payable due the Company of $470,898.00. During
1997, the largest amount at any one time of Meritage LLC's trade payable to the
Company was $461,267.00. Meritage LLC is a limited liability company principally
owned by William K. Mileski, a director of Pluma and a member of the Company's
Audit Committee.
For the year ended December 31, 1997, the Company paid $333,104 to Light
Electric Company in connection with the relocation and installation of
manufacturing equipment during the Company's reconfiguration of its
manufacturing facilities. Walter Light, brother of C. Monroe Light, a Director
and executive vice president of the Company, owns 100% of the equity interest of
Light Electric Company.
For the year ended December 31, 1997, the Company had sales of fleece and jersey
activewear totaling 1,460,338 to Skyline Corporation. As of March 20, 1998,
Skyline had a trade payable due the Company of $500,417. During 1997, the
largest amount at any one time of Skyline's trade payable to the Company was
$639,865. Skyline is a company owned 50% by Sue Anne Wade, the daughter of
George G. Wade, a Director and Secretary of the Company.
4
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Pluma's Directors
and executive officers and any persons who own beneficially more than 10% of the
outstanding shares of the Company's common stock to file with the Securities and
Exchange Commission and the New York Stock Exchange reports disclosing their
initial ownership of the Company's common stock, as well as subsequent reports
disclosing changes of such ownership. The Company became subject to the
reporting requirements of this Rule on March 11, 1997. Since that time, those
persons identified above who are required to file reports have not failed to
timely file any such reports.
5
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OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
The following table sets forth information regarding beneficial ownership of the
Company's Common Stock as of March 20, 1998, by each Director, the Company's
chief executive officer, and the Company's four most highly compensated
executive officers at year-end and the Directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
AGGREGATE PERCENTAGE
NUMBER OF
OF SHARES OUTSTANDING
BENEFICIALLY SHARES(1)
NAME OWNED
<S> <C> <C> <C> <C>
G. Walker Box................................................................. 802,893(2)(3) 9.68%(3)
R. Duke Ferrell, Jr........................................................... 528,410(2)(4) 6.37%(4)
George G. Wade................................................................ 423,561(5) 5.11%(5)
Kemp D. Box................................................................... 387,589(6)(7) 4.67%(7)
William K. Mileski............................................................ 262,878(6)(8) 3.17%(8)
C. Monroe Light............................................................... 285,536(2)(9) 3.44%(9)
R. Stephens Pannill........................................................... 247,185(6)(10) 2.98%(6)(10)
Barry A. Bowles............................................................... 144,523(6)(11) 1.74%(6)(11)
Milton A. Barber, IV.......................................................... 17,376(6) .21%
J. Robert Philpott, Jr........................................................ 7,944(12) .10%
John B. Adams................................................................. 6,110(13) .07%
All directors and executive officers as a group (20 persons) 2,835,858 34.20%
</TABLE>
(1) As of March 20, 1998, the percentages calculated are based on 8,109,152
shares issued and outstanding plus 183,707 shares subject to presently
exercisable stock options issued under the Company's 1995 Stock Option Plan, a
total of 8,292,859 shares.
(2) Includes 17,664 shares issuable upon the exercise of options that have
vested (does not include 26,496 shares issuable upon the exercise of options
that have not yet vested).
(3) Includes (a) 23,552 shares owned by the George Walker Box Family Trust of
which G. Walker Box is the trustee and has sole voting and investment power; (b)
187,423 shares owned by Box, Ferrell & Co. of which Mr. Box shares voting power
and investment power equally with R. Duke Ferrell, Jr. -- these shares are
included in both Mr. Box's and Mr. Ferrell's beneficially owned shares; (c)
51,156 shares owned by Mr. Box as custodian for his minor children living in his
household; (d) 68,136 shares owned by the George Henry Box, Jr. Revocable Trust
dated April 27, 1992 of which Mr. Box as Co-trustee, shares voting and
investment power equally with Kemp D. Box -- these shares are included in both
Mr. Box's and Kemp D. Box's beneficially owned shares; and (e) 18,740 shares
owned by Mr. Box's wife of which shares Mr. Box disclaims beneficial ownership.
(4) Includes (a) 187,423 shares owned by Box, Ferrell & Co. of which Mr. Ferrell
shares voting power and investment power equally with G. Walker Box -- these
shares are included in both Mr. Ferrell's and Mr. Box's beneficially owned
shares; (b) 26,776 shares held by Mr. Ferrell as custodian for his minor
children living in his household; (c) 4,740 shares held by Mr. Ferrell's
Individual Retirement Account; and (d) 20,020 shares owned of record by Mr.
Ferrell's wife of which shares Mr. Ferrell disclaims beneficial ownership.
(5) Includes (a) 44,160 shares issuable upon the exercise of options that are
currently exercisable; and (b) 73,876 shares owned by Mr. Wade's wife. Mr. Wade
disclaims beneficial ownership of the shares owned by his wife. Does not include
295 shares owned by one of Mr. Wade's adult children who does not reside in
his household.
(6) Includes 5,888 shares issuable upon the exercise of options that are
currently exercisable (does not include 8,832 shares issuable upon the exercise
of options that have not yet vested).
(7) Includes (a) 68,136 shares owned by the George Henry Box, Jr. Revocable
Trust dated April 27, 1992 of which Mr. Box as Co-trustee, shares
6
<PAGE>
voting and investment power equally with G. Walker Box -- these shares are
included in both Mr. Box's and G. Walker Box's beneficially owned shares; (b)
23,552 shares owned by the Kemp D. Box Family Trust, of which Mr. Box is the
trustee and has sole voting and investment power; (c) 4,465 shares owned by Mr.
Box's wife; (d) 19,997 shares owned by Mr. Box's wife as trustee for trusts for
her and Mr. Box's minor children living in Mr. Box's household; and (e) 43,357
shares owned by Mr. Box's wife as trustee for the Kemp D. Box Descendants'
Trust. Mr. Box disclaims beneficial ownership of all shares beneficially owned
by his wife.
(8) Includes 22,080 shares owned by Mr. Mileski's wife of which shares Mr.
Mileski disclaims beneficial ownership. Does not include 466 shares owned by Mr.
Mileski's adult children who do not reside in his household.
(9) Includes 54,170 shares owned by Mr. Light's wife of which shares Mr. Light
disclaims beneficial ownership. Does not include 8,690 shares owned by Mr.
Light's adult children who do not reside in his household and 5,888 shares owned
by Mr. Light's grandchildren who do not reside in his household.
(10) Includes (a) all of the 238,615 shares Mr. Pannill owns of record with his
wife as a joint tenant with right of survivorship; and (b) 2,682 shares owned by
Mr. Pannill's wife of which shares Mr. Pannill disclaims beneficial ownership.
(11) Includes 1,472 shares held by Mr. Bowles' Individual Retirement Account.
Does not include 29 shares owned by Mr. Bowles' adult children who do not reside
in his household and does not include 11,482 shares owned by the Barry A. Bowles
Irrevocable Trust of which John L. Gregory, III is the trustee.
(12) Includes 2,944 shares issuable upon the exercise of options that have
vested (does not include 11,776 shares issuable upon the exercise of options
that have not vested).
(13) Mr. Adams has been appointed to fill the vacancy on the Board created by
Dr. David Jones' resignation from the board on February 3, 1998. It is expected
that Mr. Adams will assume his responsibilities as a director on April 21, 1998.
PRINCIPAL SHARE OWNERS
Set forth in the table below is information as of March 20, 1998 with respect to
persons known to the Company to be the beneficial owners of more than five
percent of the Company's issued and outstanding stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS # OF % OF
SHARES CLASS
BENEF-
CIALLY
OWNED
<S> <C> <C> <C> <C>
G. Walker Box(1)......................................................... 802,893(4) 9.68%
R. Duke Ferrell, Jr(1)................................................... 528,410(5) 6.37%
George C. Wade(1)........................................................ 423,561(6) 5.11%
The Goldman Sachs Group, LP, Goldman, Sachs & Co and Goldman Sachs Trust 541,700 6.53%
on behalf of G. S. Small Cap Value Fund(2)...............................
Brinson Partners, Inc., Brinson Holdings, Inc., SBC Holding (USA),
Inc.(3).................................................................. 472,838 5.70%
</TABLE>
............................................
- ------------------------------------------------------------------------------
(1) c/o Pluma, Inc., 801 Fieldcrest Road, Eden, North Carolina 27288.
(2) 85 Broad Street, New York, New York, 10004 and for Goldman Sachs Trust, 1
New York Plaza, New York, New York, 10004.
(3) 209 South LaSalle Street, 11th floor, Chicago, Illinois, 60604.
(4) Includes (a) 23,552 shares owned by the George Walker Box Family Trust of
which G. Walker Box is the trustee and has sole voting and investment power; (b)
187,423 shares owned by Box, Ferrell & Co. of which Mr. Box shares voting power
and investment power equally with R. Duke Ferrell, Jr. -- these shares are
included in both Mr. Box's and Mr. Ferrell's beneficially owned shares; (c)
51,156 shares owned by Mr. Box as custodian for his minor children living in his
household; (d) 68,136 shares owned by the George Henry Box, Jr. Revocable Trust
dated April 27, 1992 of which Mr. Box as Co-trustee, shares voting and
investment power equally with Kemp D. Box and (e) 18,740 shares owned by Mr.
Box's wife of which shares Mr. Box disclaims beneficial ownership.
(5) Includes (a) 187,423 shares owned by Box, Ferrell & Co. of which Mr. Ferrell
shares voting power and investment power equally with G. Walker Box -- these
shares are included in both Mr. Ferrell's and Mr. Box's beneficially owned
shares; (b) 26,776 shares held by Mr. Ferrell as custodian for his minor
children living in his household; (c) 4,740 shares held by Mr. Ferrell's
Individual Retirement Account; and (d) 20,020 shares owned of record by Mr.
Ferrell's wife of which shares Mr. Ferrell disclaims beneficial ownership.
(6) Includes (a) 44,160 shares issuable upon the exercise of options that are
currrently exercisable; and (b) 73,876 shares owned by Mr. Wade's wife. Mr. Wade
disclaims beneficial ownership of the shares owned by his wife. Does not include
295 shares owned by one of Mr. Wade's adult children who does not reside in his
household.
7
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of Pluma's filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings by reference, including
this Proxy Statement, in whole or in part, the following Report of the
Compensation Committee shall not be incorporated by reference into any such
filings.
OVERALL OBJECTIVES AND PROGRAMS
The objective of the Company's executive compensation program is to provide
compensation that will attract and retain executives, to motivate each executive
toward the achievement of the Company's short and long-term financial and other
goals and to recognize individual contributions as well as overall business
results. In order to achieve this objective, the primary focus of the
Compensation Committee has been on the competitiveness of each of the key
elements of executive compensation -- base salary, bonus and periodic stock
option grants -- and the compensation package as a whole. In general, the
Committee believes that total compensation should be competitive with the
compensation paid by a peer group used for compensation comparisons (the
"Compensation Peer Group"). As described below, the Company's executive
compensation has recently become more dependent upon the Company achieving
targeted pre-tax income goals set each year by the Compensation Committee.
Each year the Compensation Committee reviews a report prepared by Philpott Ball
& Company, the Company's consultant (50% of the outstanding stock of which is
owned by J. Robert Philpott, Jr., a director of the Company and member of the
Compensation Committee) assessing the competitiveness of the Company's
compensation program for the past year with the Compensation Peer Group to
determine whether there is a need to make prospective adjustments in the
compensation of executive officers. The Compensation Peer Group incudes all of
the companies listed on page 11, footnote 2 to the Performance Graph.
Over the last several years the Compensation Committee has sought to relate an
increasingly greater percentage of total executive compensation directly to the
financial performance of the Company and to the part each executive played in
achieving that performance. In 1996, this resulted in a compensation package
in which a greater portion of each executive officer's compensation is
contingent upon the achievement of specific targeted pretax income goals for the
year. For 1997 no bonuses were paid to Participants in tier 1 of the Pluma
Executive Bonus Plan (see Senior Executive Bonus Plan) and therefore, these
Participants' 1997 compensation consisted only of base salary.
It has also been the Committee's objective that, in any year in which a budgeted
bonus pool is earned under the Senior Executive Bonus Plan and the Company's
performance compares favorably with the Compensation Peer Group, the total
direct compensation of Pluma's executive officers should be relatively
comparable to the executive compensation of other members of the Compensation
Peer Group whose performances compare to the Company's performance. The same
competitive peer group is used for all components of the compensation package.
The total executive compensation for each top executive in any year is based on
Pluma's financial performance relative to the financial performance of the
Compensation Peer Group (comparing, among other criteria, the company's net
margins, return on assets, total assets, net income and net revenue) and the
attainment of individual non-financial objectives during the preceding fiscal
year.
8
<PAGE>
COMPONENTS OF EXECUTIVE COMPENSATION
The five primary components of executive compensation are:
o Base Salary
o Senior Executive Bonus Plan
o Stock Option Plan
o Benefits
o Sales Incentive Plan (for salesmen only, only one of which was
currently an executive officer in 1997)
Each category is offered to key executives in various combinations, structured
in each case to meet varying business objectives, to cumulatively provide a
level of total compensation that is competitive with total compensation offered
by the Compensation Peer Group.
BASE SALARY
Executive officers' base salaries are determined by evaluating the
responsibilities of their positions and their performance, and by reference to
the levels of base salaries paid in the Compensation Peer Group. In the case of
operating executive officers, other factors considered are manufacturing
productivity; product quality and relationships with customers, suppliers and
employees; employee safety; environmental quality of operations; business
ethics; and leadership and management development. The Committee exercises its
judgment in determining the impact that these or any other relevant performance
criteria have on setting the executive officers' base salaries.
SENIOR EXECUTIVE BONUS PLAN
The Company's Compensation Committee administers Pluma's Senior Executive Bonus
Plan (the "Bonus Plan"), which is designed to create incentive for participants
in the Bonus Plan to increase Company profitability. Participants in the Bonus
Plan are stratified by the Compensation Committee into one of two tiers, based
upon the executive's responsibility, past performance with the Company, and
possible impact on Company profitability as a result of his or her executive
position with the Company. Eleven executives were eligible to participate in the
Bonus Plan in 1997 (the "Participants"). R. Duke Ferrell, Jr., George Walker
Box, George G. Wade and C. Monroe Light participated in tier 1. Forrest H.
Truitt, II, Milton A. Barber, IV, David S. Green, Walter E. Helton, Raymond L.
Rea, Nancy B. Barksdale and Douglas A. Shelton participated in tier 2.
The "Bonus Pool" available for distribution is determined in the early part of
each fiscal year by adding executive compensation to the Company's previous
fiscal year-end's pre-tax income (Pre-Tax Income Before Compensation). In 1997,
15% of this adjusted Pre-Tax Income Before Compensation was the "Compensation
Pool" from which the "Bonus Pool" was determined. In any year, this percentage
could be increased or decreased, at the discretion of the Compensation
Committee, to adjust for increases or decreases in the number of Participants to
allow for unforeseen factors which might affect Pluma's performance and to
adjust for changes in the performance of the Compensation Peer Group. The "Bonus
Pool" is equal to the amount of the "Compensation Pool" less the sum of all base
salaries paid to the Participants for the year in which bonuses are calculated.
The Compensation Committee allocates the "Bonus Pool" between the two tiers
described above in a discretionary manner, with consideration given to the
number of Participants in each tier as determined at the sole discretion of the
Compensation Committee. In addition, the Compensation Committee and the Board
may grant to the tier 1 Participants an extraordinary bonus ("Bonus Percentage")
equal to a percentage (as determined by the Compensation Committee) of any
annual Pre-Tax Income Before Compensation earned in excess of a pre-determined
Pre-Tax Income Before Compensation level (the "Profit Target"). The Bonus
Percentage and the Profit Target are determined in the early part of each fiscal
year at the discretion of the Compensation Committee. The Compensation Committee
attempts to set the Profit Target at a level so that if Pluma attains the Profit
Target, the total compensation paid to the Company's executives will be
relatively similar in amount to the total compensation of executives of other
high performing companies within the Compensation Peer Group.
Notwithstanding the formulization of the process used to determine bonuses under
the Bonus Plan, the Compensation Committee is allowed discretion to consider or
disregard extraordinary items, usually of a one-time nature, that might either
increase or decrease the amount of the "Compensation Pool." In 1997 the Company
paid no bonuses under its Senior Executive Bonus Plan.
9
<PAGE>
STOCK OPTION PLAN
In May 1995, the Company and its share owners adopted the Pluma, Inc. 1995 Stock
Option Plan (the "1995 Stock Option Plan"), which provides for the issuance of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986 and non-qualified stock options to purchase an aggregate of
up to 515,200 shares of Common Stock. The 1995 Stock Option Plan permits the
grant of options to officers, employees, directors and independent contractors
of the Company and their employees.
The 1995 Stock Option Plan is administered by the Company's Compensation
Committee, of which all voting members are "disinterested persons" within the
meaning of Rule 16b-3 under the Securities and Exchange Act of 1934, as amended
(the "Committee"). Each option is evidenced by written agreement in a form
approved by the Committee. No options granted under the 1995 Stock Option Plan
are transferable by the optionee other than by will or by the laws of descent
and distribution, and each option is exercisable, during the lifetime of the
optionee, only by the optionee.
Under the 1995 Stock Option Plan, the exercise price of an incentive stock
option must be at least equal to 100.0% of the fair market value of the Common
Stock on the date of grant (110.0% of the fair market value in the case of
options granted to employees who hold more than ten percent of the voting power
of the Company's capital stock on the date of grant). The exercise price of a
non-qualified stock option is the same as for incentive stock options. The term
of an incentive or non-qualified stock option is not to exceed ten years (five
years in the case of an incentive stock option granted to a ten percent Pluma
shareholder). The Committee has the discretion to determine the vesting schedule
and the period required for full exercisability of stock options, and all
options granted under the Plan to date have contained a 20.0% per year vesting
schedule, except for options granted to George G. Wade and to a former director,
both who became 100% vested in all option shares granted to them under the 1995
Stock Option Plan at the time of the grant. Upon exercise of any option granted
under the 1995 Stock Option Plan, the exercise price may be paid in cash and/or
such other form of payment as may be permitted under the applicable option
agreement, including, without limitation, previously owned shares of the
Company's Common Stock. The Company has not granted stock options each year to
its executive officers and directors, but reserves the right to do so in the
future if determined by the Company's Board of Directors that such grants are
necessary for the Company's compensation structure to remain competitive with
the Compensation Peer Group.
BENEFITS
In 1991, the Company adopted the Pluma, Inc. 401(k) Retirement Savings Plan (the
"401(k) Plan"), which is intended to be qualified under section 401(k) of the
Internal Revenue Code of 1986, as amended. To be eligible, an employee must have
been employed by the Company for at least one year and be at least twenty-one
years of age. The 401(k) Plan permits employees who have completed one year of
service to defer up to 15.0% of their annual compensation into the 401(k) Plan,
provided, the total amount of compensation deferred in any year does not exceed
the maximum amount allowed under law (which sum is adjusted annually).
Additional annual contributions may be made at the discretion of the Company,
and matching contributions may be made by the Company up to a maximum of 4.0% of
a participating employee's annual compensation. To date, Company matching
contributions have equaled $0.40 for every $1.00 contributed by the employee.
Contributions made by the Company vest after two years of employment.
Effective December 19, 1996, the Company adopted a Non-Qualified Deferred
Compensation Plan for certain selected key executives and for certain of its
Directors. This plan is designed to mirror the 401(k) Plan. Key executive
employees and directors chosen to participate in this plan are selected by the
Compensation Committee of the Company's Board of Directors. The purposes of this
plan are to provide certain directors and selected key executives of the Company
the opportunity to defer elements of their compensation which might not
otherwise be deferrable under other Company plans, including the 401(k) Plan; to
receive the benefit of additions to their deferral comparable to those
obtainable under the 401(k) Plan in the absence of certain restrictions and
limitations in the Internal Revenue Code; and to provide the directors with
benefits similar to the 401(k) Plan (absent certain restrictions and
limitations) were they eligible to participate in such 401(k) Plan.
SALES INCENTIVE PLAN
The Company's Compensation Committee administers Pluma's Sales Incentive Plan
(the "Sales Incentive Plan") which is designed to create incentive for the
Company's sales staff to increase customer sales. Each year, the Company's
Compensation Committee establishes a base level of annual sales volume (the
"Sales Threshold") upon which the incentive sales bonus is calculated. At each
fiscal year-end, the Company subtracts the Sales Threshold from the Company's
actual total net sales for such year. This difference (the "Bonus Base") is the
base amount upon which bonuses are determined for the Company's salespeople. In
the event the Company's actual net sales for a fiscal year exceed the Sales
Threshold, then each Company salesperson is entitled to the payment of a bonus
determined by multiplying his or her base annual salary by a fraction, the
numerator of which is the Bonus Base and the denominator of which is the Sales
Threshold. The Sales Threshold is determined annually by the Company's Board of
Directors after a recommendation from its Compensation Committee. Milton A.
Barber, IV, is currently the only executive officer entitled to participate in
the Company's Sales Incentive Plan.
10
<PAGE>
1997 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is determined pursuant to the same
basic factors as described above for other members of senior management. In
establishing a base salary and bonus of the Chief Executive Officer for 1997,
the Committee considered the base salary of the chief executive officers of the
Compensation Peer Group. As the Company failed to achieve its targeted income
goals for 1997, Mr. Ferrell received no bonus for the year 1997.
SUMMARY
The Committee believes the executive compensation policies and programs
described in this Report serve the interests of the share owners and the
Company. Pay delivered to executives is intended to be linked to, and
commensurate with, Company performance and with share owner expectations. The
Committee cautions that the practice and the performance results of the
compensation philosophy described herein should be measured over a period
sufficiently long to determine whether strategy development and implementation
are in line with, and responsive to, share owner expectation.
Barry A. Bowles, Chairman
Kemp D. Box
J. Robert Philpott, Jr.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING PERFORMANCE
GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
PERFORMANCE GRAPH (1)
Comparisons of Total Cumulative Return Among
Pluma, Inc., S&P 500 Index and Industry Peer Group (2)
TOTAL SHAREHOLDER RETURNS
-------------------------
(DIVIDENDS REINVESTED)
ANNUAL RETURN PERCENTAGE
Years Ending
COMPANY NAME/INDEX DEC97
- -------------------------------------------------
PLUMA INC -32.18
S&P 500 INDEX 21.20
PEER GROUP -1.80
INDEXED RETURNS
BASE Years Ending
PERIOD
COMPANY NAME/INDEX 11MAR97 DEC97
- -------------------------------------------------
PLUMA INC 100 67.82
S&P 500 INDEX 100 121.20
PEER GROUP 100 98.20
PEER GROUP COMPANIES
- --------------------------------------------------
FRUIT OF THE LOOM INC. -CLA
RUSSELL CORP
TULTEX CORP
VF CORP
(1) Pluma, Inc., completed an initial public offering of its common shares on
March 11, 1997. Therefore, this graph reflects the performance of the common
stock of the Company, the Industry Peer Group and the S&P Index over a limited
period of time and should not be considered indicative of the future performance
of the Company's stock or the stock of the compared indices.
(2) Based on information for a self-constructed peer group consisting of Tultex
Corporation; Fruit of the Loom, Inc.; Russell Corporation; and VF Corporation.
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and the four most highly compensated executive officers other than the
Chief Executive Officer (the "Named Officers"), for services rendered to the
Company during 1997, 1996 and 1995:
11
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Annual Compensation(1) Compensation
Securities underlying All Other
Name and Position Year Salary(1) Bonus(2) Options (#) Compensation (3)
----------------- ---- --------- -------- ------- --- ------------ ---
G. Walker Box
<S> <C> <C> <C> <C>
Chairman of the Board 1997 $198,500 $0 $2,429
1996(4) $196,500 $229,667 44,160 $1,278
1995 ----- ----- -----
R. Duke Ferrell, Jr.
President, Chief Executive Officer and Director 1997 $198,500 $0 $4,786
1996 196,500 229,667 44,160 2,200
1995 192,520 118,164 1,857
George G. Wade
Chairman Emeritus of the Board,
Secretary and Director 1997 $191,130 $0 $4,855
1996 189,200 221,135 44,160 5,428
1995 185,323 80,760 4,513
C. Monroe Light
Executive Vice President of
Manufacturing Services and Director 1997 $178,000 $0 $4,524
1996 168,000 196,357 44,160 3,304
1995 153,465 66,877 2,451
Milton A. Barber, IV
Senior Vice President of Sales and Marketing 1997 $175,000 $23,377 $1,981
1996(5) 165,500 59,348(6) 14,720 316
1995 ----- ----- -----
</TABLE>
(1) Certain of the Company's executive officers receive personal benefits in
addition to salary and cash bonuses, including car allowances. The aggregate
amount of such personal benefits, however, do not exceed the lesser of $50,000
or 10.0% of the total of the annual salary and bonus reported for the named
executive officer.
(2) Bonuses are reflected in the year in which they are earned and are paid in
the following year.
(3) These amounts represent the Company's contribution to the Company's
non-qualified deferred compensation plan and the payment of premiums on
split-dollar life insurance policies owned by the employee.
(4) On January 1, 1996, G. Walker Box became the Chairman of the Company's Board
of Directors and an employee of the Company. Prior to that date, Mr. Box was not
a paid employee of the Company.
(5) On January 1, 1996, Milton A. Barber, IV became a Vice President of the
Company in charge of sales and marketing. Prior to that date, Mr. Barber was not
employed by the Company.
(6) Mr. Barber is a participant in the Company's Senior Executive Bonus Plan and
Sales Incentive Plan.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information with respect the exercise of options
during 1997 and exercisable and unexercisable options to acquire common stock of
the Company held at December 31, 1997 by the Named Officers.
These values have not been, and may never be, realized, as these options have
not been, and may never be, exercised. Actual gains, if any, upon exercise will
depend on the value of common stock on the date of any exercise of options.
12
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN THE LAST
FISCAL YEAR AND YEAR-END OPTION VALUES
SHARES VALUE OF UNEXERCISED
ACQUIRED VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ON EXERCISE REALIZED AT FY-END (#) AT FY-END (2)
--------------------------------------------------------------------
NAME (#)(1) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------ --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
G. Walker Box 0 N/A 17,644 26,496 0 $0
George G. Wade 0 N/A 44,160 -- 0 $0
R. Duke Ferrell 0 N/A 17,644 26,496 0 $0
C. Monroe Light 0 N/A 17,644 26,496 0 $0
Milton A. Barber IV 0 N/A 5,888 8,832 0 $0
</TABLE>
(1) No options were exercised in 1997.
(2) Based on market price of $6.56 per share (market price of the Company's
common stock on March 26, 1998), less the exercise price.
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options to Named Officers during 1997.
EMPLOYMENT AGREEMENTS, CHANGE OF CONTROL ARRANGEMENTS
Pursuant to employment contracts (the "Employment Agreements"), George G. Wade,
R. Duke Ferrell, Jr., G. Walker Box, C. Monroe Light, David S. Green, Walter E.
Helton, Raymond L. Rea, Nancy B. Barksdale, Forrest H. Truitt, II, Milton A.
Barber, IV, Jeffrey N. Robinson, John R. Beale, and James A. Beale (each an
"employee") are employed by the Company in their various executive capacities.
Each of these Employment Agreements, if not sooner terminated (for reasons of
death, disability, change of control or "for cause"), terminates in December of
1998, except that Jeffrey N. Robinson's and John R. Beale's Employment
Agreements terminate in December, 2000 and James A. Beale's Employment Agreement
terminates in December of 2002. Thereafter an employee's employment may continue
until terminated by the Company or the employee. Under the Employment
Agreements, these individuals are entitled to annual bonus payments pursuant to
Pluma's Senior Executive Bonus Plan and all benefits made available to other
senior executives under any employee benefit plans including the Company's
401(k) Plan, medical expense reimbursement plans, group life, health, accident,
medical, hospitalization and disability insurance plans. Currently, no senior
executive is the beneficiary of any such plans not made available to all Pluma
employees except for Pluma's Senior Executive Bonus Plan, Non-Qualified Deferred
Compensation Plan, Sales Incentive Plan (with respect to the Company's
salespeople) and the split-dollar insurance policies referenced in note (3) to
the Summary Compensation Table.
The Company or the employee may terminate his or her Employment Agreement upon a
"change of control" of the Company. A change of control shall mean the
occurrence of any one of the following events:
(1) If any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Act") (other
than the Company, any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan of the Company),
together with all "affiliates" and "associates" (as such terms are
defined in Rule 12b-2 under the Act) of such person, shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company
representing 50.0% or more of either (a) the combined voting power
of the Company's then outstanding securities having the right to
vote in an election of the Company's Board of Directors ("Voting
Securities"), or (b) the then outstanding shares of the Company (in
either such case other than as a result of acquisition of
securities directly from the Company); or
(2) If the majority of those persons who, as of January 1, 1996 (or
as of January 1, 1998 with respect to Messrs. Robinson, Beale and
Beale) constituted the Company's Board of Directors (the "Incumbent
Directors") cease for any reason, including, without limitation, as
a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board of
Directors, provided that any person becoming a director of the
Company subsequent to January 1, 1996, whose election or nomination
for election was approved by a vote of at least a majority of the
Incumbent Directors or Directors chosen by the Incumbent Directors
shall be considered an Incumbent Director; or
(3) If the shareholders of the Company shall approve (a) any
consolidation or merger of the Company where the shareholders of
the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, shares representing in the aggregate
50.0% of the voting shares of the corporation issuing cash
securities in the consolidation or merger (or of its ultimate
parent corporation, if any), (b) any sale, lease, exchange or other
conveyance, in a transaction or series of transactions of all or
substantially all of the assets of the Company, or (c) any plan or
proposal for the liquidation or dissolution of the Company.
13
<PAGE>
Upon termination of the Employment Agreements after a "change of control", if
the employee is eligible (as defined below), the Company shall:
(1) Within 30 days after termination, pay to the employee an
amount, in cash, equal to: (a) three times the employee's (i)
average annual salary for the 36-month period (12-month period with
respect to John and James Beale) prior to such change of control
and (ii) any bonuses received during the 18 months preceding the
effective date of the change of control, less (b) 1/36 (1/12 with
respect to John Beale and James Beale) of the amount calculated in
(a) above for each month that the employee remains employed with
the Company following the effective date of the change of control;
and
(2) Continue the medical, disability and life insurance benefits
the employee was receiving at the time of termination for a period
of 36 months after termination of employment or, if earlier, until
the employee has commenced employment elsewhere and becomes
eligible for participation in the medical, disability and life
insurance programs, if any, of the successor employer. Coverage
under the Company's medical, disability and life insurance programs
shall cease with respect to each such program as the employee
becomes eligible for the medical, disability and life insurance
programs, if any, of the successor employer. During the first 18
months of such 36-month period, the Company shall be responsible
for the costs associated with continued insurance coverage for the
employee, but only to the extent it would have been responsible for
such costs if the employee was still employed by the Company. The
employee shall be responsible for the remaining costs. If at the
end of 18 months, the employee is still afforded medical,
disability and life insurance coverage under the Company's
insurance programs, the Company shall arrange to provide continued
coverage under said programs, but the employee will be responsible
for the total cost of all such continued coverage after the first
18-month period.
The employee is eligible for the benefits provided above, unless the Company or
the Company's successor, after a change of control, offers the employee a bona
fide employment contract for a term that would expire no earlier than three
years after the effective date of the change of control under the terms of which
the employee would perform the same duties for the same or greater levels of
compensation as were afforded under the terms of the Employment Agreement, and
the employee rejects the offer.
The employee's employment may also be terminated under the Employment Agreement
in the event of death, "for cause" or, at the Company's election, in the event
of the employee's long-term disability. In the event of the death of the
employee during employment, the following payments shall be made to the
employee's designated beneficiary, or, in the absence of such designation, to
the estate or other legal representative of the employee: (i) base salary for
the month in which death occurs, and (ii) such bonuses (if any) as have been
earned and not paid at the time of death. Any rights and benefits the employee
or his/her estate or any other person may have under employee benefit plans and
programs of the Company generally applicable in the event of the employee's
death shall be determined in accordance with the terms of such plans and
programs. Except as provided in the Employment Agreement, neither the employee's
estate nor any other person shall have any rights or claims against the Company
in the event of the death of the employee during employment.
Upon termination for cause, the employee shall receive his or her base salary
only through the date of termination, and neither the employee nor any other
person shall be entitled to any further payments from the Company for salary,
unpaid bonuses or any other amounts. Any rights and benefits the employee may
have under employee benefit plans and programs of the Company generally
following a termination of the employee's employment for cause shall be
determined in accordance with the terms of such plans and programs.
In the event of the employee's disability during his or her employment under the
Employment Agreement, employment may be terminated by the Company. For the first
three months following termination of employment due to disability, the employee
shall be paid the base salary in effect at the time of the commencement of
disability. Thereafter, the employee shall be entitled to benefits in accordance
with and subject to the terms and provisions of the Company's long-term
disability plan for senior management employees, as in effect at the time of the
commencement of disability. If, during the three-month period following a
termination of employment because of disability in which salary continuation
payments are payable by the Company, the employee becomes re-employed (whether
as an employee, partner, consultant or otherwise), any salary or other
remuneration or benefits earned by him or her from such employment or engagement
shall not offset any payments due the employee from the Company as the result of
disability.
The Board of Directors believes that these Employment Agreements will enable key
employees to conduct Company business with less concern for personal economic
risk when faced with a possible change of control. Furthermore, it is the
opinion of Pluma's Board of Directors that these agreements also should enhance
the Company's ability to attract new key executives as needed.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the firm of Deloitte & Touche, LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
1998, subject to ratification of this appointment by the share owners of the
Company. Deloitte & Touche, LLP has served as independent auditors of the
Company since 1987 and is considered by management of the Company to be well
qualified. The Company has been advised by that firm that neither it nor any
member thereof has any financial interest, direct or indirect, in the Company or
any of its subsidiaries in any capacity.
One or more representatives of Deloitte & Touche, LLP will be present at this
year's Annual Meeting of share owners, will have an opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
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Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the votes cast by the holders of the shares of
Common Stock of the Company voting in person or by proxy at the Annual Meeting
of share owners. If the share owners should not ratify the appointment of
Deloitte & Touche LLP, the Board of Directors will reconsider the appointment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE, LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE 1998 FISCAL YEAR. PROXIES RECEIVED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
PROXY PROCEDURE AND
EXPENSES OF SOLICITATION
The Company will hold the votes of all share owners in confidence from the
Company, its Directors, officers and employees except: (i) as necessary to meet
applicable legal requirements and to assert or defend claims for or against the
Company; (ii) in case of a contested proxy solicitation; (iii) in the event that
a share owner makes a written comment on the proxy card or otherwise
communicates his/her vote to management; or (iv) to allow the independent
inspectors of the election of directors to certify the results of the vote. The
Company will also retain an independent tabulator to receive and tabulate the
proxies and an independent inspector of election to certify the results.
All expenses incurred in connection with the solicitation of proxies will be
borne by the Company. The Company has engaged Corporate Communications, Inc.,
the Company's consultant for investor relations, to assist with the solicitation
of proxies. The Company will reimburse brokers, fiduciaries and custodians for
their costs in forwarding proxy materials to beneficial owners of Common Stock
held in their names.
Solicitation may be undertaken by mail, telephone and personal contact by
Directors, officers and employees of the Company without additional
compensation.
Under North Carolina law, abstentions and broker nonvotes are counted to
determine whether a quorum is present at the Meeting. (Under New York Stock
Exchange rules, a broker may, if the broker does not have instruction from a
beneficial owner, vote shares on routine proposals. If a broker does not have
discretionary voting instructions regarding nonroutine proposals from the
beneficial owner, the broker cannot vote on those proposals. This is referred to
as a broker nonvote).
SHARE OWNERS' PROPOSALS
Proposals of share owners intended to be presented at the 1999 Annual Meeting of
share owners must be received by the Company on or before December 15, 1998, to
be eligible for inclusion in the Company's Proxy Statement and proxy relating to
that meeting.
According to the Bylaws of the Company, a proposal for action to be presented by
any share owner at an annual or special meeting of share owners shall be out of
order unless specifically described in the Company's notice to all share owners
of the meeting and the matters to be acted upon there, or unless the proposal
shall have been submitted in writing to the Chairman of the Board of Directors
and received at the principal executive offices of the Company at least 60 days
prior to the date of such meeting, and such proposal is, under law, an
appropriate subject for share owner action.
OTHER INFORMATION
Management does not know of any matters other than those referred to in the
accompanying Notice of Annual Meeting of share owners which may properly come
before the meeting or other matters incident to the conduct of the meeting. As
to any other matter or proposal that may properly come before the meeting,
including voting for the election of any person as a Director in place of a
nominee named herein who becomes unable to serve or for good cause will not
serve and voting on a proposal omitted from this Proxy Statement pursuant to the
rules of the Securities and Exchange Commission, it is intended that proxies
received will be voted in accordance with the discretion of the proxy holders.
The form of proxy and this Proxy Statement have been approved by the Board of
Directors and are being mailed and delivered to share owners by its authority.
/s/ George G. Wade
SECRETARY AND CHAIRMAN EMERITUS
Eden, North Carolina
April 14, 1998
THE ANNUAL REPORT TO SHARE OWNERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997, WHICH INCLUDES FINANCIAL STATEMENTS FOLLOWS THIS PROXY
STATEMENT. THE ANNUAL REPORT DOES NOT FORM ANY PART OF THE MATERIALS FOR THE
SOLICITATION OF PROXIES.
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APPENDIX
PLUMA, INC. - PROXY
- --------------------------------------------------------------------------------
Solicited by Board of Directors for Annual Meeting of Share Owners June 2, 1998.
The undersigned appoints R. Duke Ferrell, Jr. and G. Walker Box, or any one of
them, attorneys and proxies with power of substitution to vote all of the Common
Shares of Pluma, Inc., standing in the name of the undersigned at the Annual
Meeting of Share Owners on June 2, 1998, and at all adjournments thereof, upon
the matters set forth in the Notice and Proxy Statement of said meeting,
receipt of which is acknowledged.
The shares represented by this proxy will be voted as directed by the share
owner. If you wish to vote in accordance with the recommendations of the Board
of Directors, you may sign below and mail in the envelope provided. If no
direction is given, shares will be voted FOR Proposals 1 and 2. Specific choices
may be made on the reverse side.
DATED: _________________________, 1998
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SIGNATURE(S) OF SHAREHOLDER(S)
Please sign exactly as name or names
appear hereon. (Full title of one signing
in representative capacity should be
clearly designated after signature.
Names of all joint holders should be
written even if signed by only one.)
Please complete, date, sign and mail Proxy Card
in the envelope provided. Postage not
necessary if mailed in the United States.
i
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<TABLE>
<CAPTION>
<S> <C>
The Board of Directors recommends a vote "FOR" Proposals 1 and 2
1. Election of Directors
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY TO
(except as marked to the contrary) vote for all nominees listed
R. Duke Ferrell, Jr. Barry A. Bowles R. Stephens Pannill
(To withhold authority to vote for any individual nominee, line through the
nominee's name above.) 2. Proposal to ratify Deloitte & Touche, LLP as the
Company's independent auditors for the 1998 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
This proxy will be voted FOR Proposals 1 and 2 unless instructions to the
contrary are indicated.
PLEASE TURN OVER AND SIGN ON THE REVERSE SIDE
<PAGE>
PLUMA
ANNUAL REPORT
1997
