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
Collins & Aikman Corporation
................................................................................
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
................................................................................
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
................................................................................
2) Aggregate number of securities to which transaction applies:
................................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
................................................................................
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
................................................................................
2) Form, Schedule or Registration Statement No.:
................................................................................
3) Filing Party:
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4) Date Filed:
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<PAGE>
April 8, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Collins & Aikman Corporation to be held on May 20, 1998, at The New York
Palace, 455 Madison Avenue at 50th Street, New York, New York, at 11:00 a.m.,
Eastern Daylight Savings Time.
You are urged to read carefully the formal notice of the meeting and the
Proxy Statement which follow. After reading them, please sign and mail the
enclosed proxy card so that your shares will be represented at the meeting. A
prepaid return envelope is provided for this purpose.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Thomas E. Hannah
Thomas E. Hannah
Chief Executive Officer
<PAGE>
COLLINS & AIKMAN CORPORATION
701 McCullough Drive
Charlotte, North Carolina 28262
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 20, 1998
-------------------
To the Stockholders of
COLLINS & AIKMAN CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of the
holders of Common Stock, par value $0.01 per share (the "Common Stock"), of
COLLINS & AIKMAN CORPORATION, a Delaware corporation (the "Company"), will be
held on May 20, 1998, at The New York Palace, 455 Madison Avenue at 50th Street,
New York, New York, commencing at 11:00 a.m., Eastern Daylight Savings Time, for
the purpose of considering and voting upon the following matters:
(I) the election of three directors to hold office until the year 2001
Annual Meeting and thereafter until their successors are elected and
qualified; and
(II) such other matters as may properly come before the Meeting or any
adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 23, 1998, as
the record date for the determination of stockholders entitled to notice of and
to vote at the Meeting. Therefore, only holders of record of Common Stock at the
close of business on such date will be entitled to notice of and to vote at the
Meeting.
A complete list of stockholders entitled to notice of and to vote at the
Meeting will be available at 1556 Third Avenue, Suite 603, New York, New York,
at least ten days prior to the Meeting. The list will also be available for
inspection by stockholders at the Meeting on the day thereof.
Stockholders are requested to sign and date the enclosed proxy and return it
promptly in the enclosed pre-addressed reply envelope, whether or not they plan
to attend the Meeting, so that their shares may be represented. Any proxy may be
revoked by filing with the Secretary of the Company in care of the First Union
Customer Information Service Center at the address set forth in the accompanying
proxy statement either a written notice of revocation bearing a later date than
the proxy or a subsequent proxy relating to the same shares at any time prior to
the time the proxy is voted. Further, any person who has executed a proxy and is
present at the Meeting may vote in person instead of by proxy, thereby canceling
any proxy previously given.
By Order of the Board of Directors,
/s/ Elizabeth R. Philipp
Elizabeth R. Philipp
Secretary
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY CARD WHETHER OR NOT YOU INTEND TO
BE PRESENT AT THE ANNUAL MEETING.
April 8, 1998
<PAGE>
PROXY STATEMENT
----------
COLLINS & AIKMAN CORPORATION
701 McCullough Drive
Charlotte, North Carolina 28262
-----------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 20, 1998
General Information
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Collins & Aikman Corporation, a Delaware corporation
(the "Company"), of proxies for use at the Annual Meeting of Stockholders of the
Company to be held on May 20, 1998, at The New York Palace, 455 Madison Avenue
at 50th Street, New York, New York, commencing at 11:00 a.m., Eastern Daylight
Savings Time, and at any adjournment or postponement thereof (the "Meeting").
The presence, in person or by proxy, of stockholders holding a majority of
the shares entitled to vote at the Meeting is necessary to constitute a quorum
at the Meeting.
All shares of the Common Stock, par value $0.01 per share (the "Common
Stock"), of the Company which are entitled to vote and are represented at the
Meeting by properly executed proxies received prior to or at the Meeting, and
not revoked, will be voted at the Meeting in accordance with the instructions
indicated on such proxies. If no instructions are indicated, such proxies will
be voted to elect the three nominees for director named below (or if any nominee
becomes unavailable, such other person as the Nominating Committee of the Board
of Directors or the Company selects) and in accordance with the Board of
Directors' recommendations with respect to any other matter that may properly
come before the Meeting.
The Board of Directors has fixed the close of business on March 23, 1998,
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Meeting. Therefore, only holders of
record of Common Stock at the close of business on the Record Date will be
entitled to notice of and to vote at the Meeting.
Any proxy may be revoked by the person giving it at any time before it is
voted. A proxy may be revoked by filing, with the Secretary of the Company (in
care of the First Union Customer Information Service Center, Client Service
Group, 1525 West W.T. Harris Boulevard, NC-1153, Charlotte, North Carolina,
28288-1153, Attention: Proxy Department) at any time prior to the time the proxy
is voted, either a written notice of revocation bearing a later date than the
proxy or a subsequent proxy relating to the same shares, or by attending the
Meeting and voting in person (although attendance at the Meeting will not in and
of itself constitute revocation of a proxy).
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies may be solicited by directors,
officers and employees of the Company in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for out-of-pocket expenses in
connection with such solicitation. Arrangements will also be made with
custodians, nominees and fiduciaries for forwarding of proxy solicitation
materials to beneficial owners of shares of Common Stock held of record by such
custodians, nominees and fiduciaries, and the Company may reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith. In addition, the Company has retained Georgeson & Company
Inc. to distribute proxy soliciting materials to brokers, banks and
institutional holders for a fee of approximately $1,000, plus reasonable
expenses.
This Proxy Statement and the accompanying proxy are being mailed to
stockholders commencing on or about April 8, 1998.
<PAGE>
Voting Securities and Principal Stockholders
On the Record Date, 65,611,864 shares of Common Stock were outstanding.
Only holders of Common Stock of record on the close of business on the Record
Date are entitled to notice of and to vote at the Meeting. Each stockholder of
record is entitled to one vote for each share of Common Stock held on all
matters to come before the Meeting.
Set forth in the table below is certain information as of March 20, 1998,
regarding the beneficial ownership of voting securities of the Company by
persons who are known to the Company to own beneficially more than 5% of the
Company's voting stock.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Name and Address Beneficial of
Title of Class of Beneficial Owner Ownership Class
- --------------- ------------------- ---------- --------
<S> <C> <C> <C>
Common Stock Blackstone Capital Partners L.P. 26,131,107 (1) 39.8%
345 Park Avenue
New York, New York 10154
Wasserstein/C&A 27,874,573 (2) 42.5%
Holdings, L.L.C.
31 West 52nd Street
New York, New York 10019
J.P. Morgan & Co. 3,402,600 (3) 5.2%
Incorporated
60 Wall Street
New York, New York 10260
</TABLE>
(1) Of these shares (i) 20,571,403 shares are held directly by Blackstone
Capital Partners L.P., a Delaware limited partnership ("Blackstone
Partners"), the sole general partner of which is Blackstone Management
Associates L.P. ("Blackstone Associates"), (ii) 1,061,413 shares are held
directly by Blackstone Family Investment Partnership I L.P., a Delaware
limited partnership ("BFIP"), the sole general partner of which is
Blackstone Management Associates I L.L.C. ("BMA"), (iii) 93,291 shares are
held directly by Blackstone Advisory Directors Partnership L.P., a Delaware
limited partnership ("BADP"), the sole general partner of which is
Blackstone Associates, and (iv) 4,405,000 shares are held directly by
Blackstone Capital Company II, L.L.C., a Delaware limited liability
company, all the ownership interest of which is owned directly and
indirectly by Blackstone Partners, BFIP and BADP.
(2) Of these shares (i) 27,629,573 are held directly by Wasserstein/C&A
Holdings, L.L.C. (the "Wasserstein L.L.C."), which is controlled by
Wasserstein Perella Partners, L.P. ("WP Partners"), the sole general
partner of which is Wasserstein Perella Management Partners, Inc. ("WP
Management"), which is an indirect wholly owned subsidiary of Wasserstein
Perella Group, Inc. ("WP Group"), (ii) 200,000 are held directly by WPPN,
Inc., an indirect subsidiary of WP Group, and (iii) 45,000 shares are held
directly 33% by each of three trusts for which Bruce Wasserstein, the
Chairman and Chief Executive Officer of WP Management (who is also a
director and stockholder of WP Group), is the Co-Trustee.
(3) Based on a Form 13-G filed by J.P. Morgan & Co. Incorporated ("Morgan"),
the number shown includes (i) 3,016,300 shares over which Morgan has sole
power to vote and (ii) 3,402,600 shares over which Morgan has sole power to
dispose.
2
<PAGE>
Security Ownership of Management
Set forth in the table below is certain information as of March 20,
1998, regarding the beneficial ownership of equity securities of the Company by
(i) directors of the Company, (ii) the executive officers of the Company named
in the Summary Compensation Table set forth in this Proxy Statement (and
referred to herein as the "Named Executive Officers") and (iii) directors and
executive officers of the Company as a group. Unless otherwise indicated, the
beneficial owner has sole voting power and sole investment power over the
securities shown below.
<TABLE>
<CAPTION>
Amount and Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Robert C. Clark 40,000 (1) *
Thomas E. Hannah 987,435 (2) 1.5%
Dennis E. Hiller 156,670 (3) *
George L. Majoros, Jr. 6,000 (4) *
John D. Moose 500 (5) *
James J. Mossman (6) (6)
Elizabeth R. Philipp 92,853 (7) *
Warren B. Rudman 30,000 (1) *
Stephen A. Schwarzman (6) (6)
J. Michael Stepp 169,584 (8) *
David A. Stockman (6) (6)
Randall J. Weisenburger 22,000 (4) *
W. Townsend Ziebold, Jr. 3,000 (4) *
Executive officers and directors
as a group (13 persons) (9) 1,508,042 2.3%
</TABLE>
* Less than one percent of shares of Common Stock outstanding.
(1) Represents shares underlying options granted under the 1994 Directors Stock
Option Plan (the "Directors Plan") which are vested or will vest within 60
days.
(2) Of these shares (i) 981,435 represent shares underlying options granted
under the Company's 1993 Employee Stock Option Plan (the "1993 Plan") which
are vested and (ii) 6,000 shares are held directly.
(3) Of these shares (i) 95,566 represent shares underlying options granted
under the 1993 Plan which are vested, (ii) 26,400 represent shares
underlying options granted under the Company's 1994 Employee Stock Option
Plan (the "1994 Plan") which are vested, (iii) 17,895 shares are held
directly (and Mr. Hiller shares voting power and investment power over
17,700 of such shares), (iv) 15,337 and 1,027 shares, respectively, are
held indirectly in the Company Stock Fund of the Company's 401(k) plan and
non-qualified excess benefit plan and (v) 445 shares are held by Mr.
Hiller's spouse.
(4) All shares are held directly. Messrs. Weisenburger and Ziebold are officers
of, and Mr. Majoros is an employee of, WP Management, which is the general
partner of WP Partners, which controls the Wasserstein L.L.C. The
Wasserstein L.L.C. holds 27,629,573 shares of Common Stock directly. An
additional 245,000 shares of Common Stock are held by affiliates of the
Wasserstein L.L.C. See "Voting Securities and Principal Stockholders".
However, Mr. Majoros, Mr. Weisenburger and Mr. Ziebold do not hold or share
the power to vote or to dispose of the shares of Common Stock held directly
by the Wasserstein L.L.C. or its affiliates and accordingly are not the
beneficial owners of such shares.
(5) Represents shares held in a trust for the benefit of Mr. Moose's spouse.
Mr. Moose is not the trustee and does not exercise or share investment
control over the trust.
3
<PAGE>
(6) Mr. Mossman, Mr. Schwarzman and Mr. Stockman, in their capacities as
general partners of Blackstone Associates and Members of BMA, collectively
share with all general partners of Blackstone Associates and Members of BMA
the power to vote and to dispose of 26,131,107 shares of Common Stock which
are held directly by partnerships, including Blackstone Partners, of which
Blackstone Associates or BMA is the sole general partner, and a limited
liability company, all the limited liability company interest of which is
owned directly and indirectly by partnerships of which Blackstone
Associates or BMA is the sole general partner. See "Voting Securities and
Principal Stockholders". For purposes of this filing under the Securities
Exchange Act of 1934, as amended, Mr. Mossman, Mr. Schwarzman and Mr.
Stockman may be deemed to be beneficial owners, respectively, of such
securities; however, each of Mr. Mossman, Mr. Schwarzman and Mr. Stockman
expressly disclaims such beneficial ownership of any equity securities of
the Company.
(7) Of these shares (i) 91,853 represent shares underlying options granted
under the 1993 Plan which are vested and (ii) 1,000 shares are held
directly.
(8) Of these shares (i) 100,000 represent shares underlying options granted
under the 1994 Plan which vest on April 6, 1998, (ii) 65,000 shares are
held directly (and Mr. Stepp shares voting power and investment power over
such shares) and (iii) 2,624 and 1,960 shares, respectively, are held
indirectly in the Company Stock Fund of the Company's 401(k) plan and
non-qualified excess benefit plan.
(9) Excludes shares held by Blackstone Partners and its affiliates.
Voting
As of March 20, 1998, Blackstone Partners and its affiliates and the
Wasserstein L.L.C., which is controlled by WP Partners, and its affiliates
(collectively, the "Partners") beneficially own or have the right to vote in the
aggregate approximately 82% of the outstanding Common Stock. See "Voting
Securities and Principal Stockholders" and "Information as to Nominees and other
Directors - Certain Relationships". The Partners have advised the Company that
they intend to vote all such shares in favor of PROPOSAL I. Accordingly, the
presence of a quorum at the Meeting and the approval and adoption of PROPOSAL I
are assured.
PROPOSAL I
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation provides that the Board of
Directors of the Company is divided into three classes serving staggered
three-year terms. Three directors will be elected at the Meeting, each to hold
office until his term expires at the year 2001 Annual Meeting and until his
successor is elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. All the
nominees are presently directors of the Company. Proxies will be voted for the
election of the nominees listed below and identified as Nominees for Election at
the Meeting, unless contrary instructions are set forth on the proxy card. If
any nominee shall be unavailable to serve as a director, proxies will be voted
for the election of such other person or persons as the Nominating Committee of
the Board of Directors or the Company may select. The Company is not aware of
any circumstances likely to render any nominee unavailable. According to the
By-laws of the Company, directors shall be elected by a plurality of the votes
cast. Therefore, the three persons receiving the greatest number of votes cast
at the Meeting for the election of directors shall be elected as directors and
abstentions and broker non-votes will not affect the outcome of the election.
Information as to Nominees and Other Directors
Set forth below, as of March 20, 1998, are the name, age and principal
occupation or employment during the last five years of each nominee for election
to the Board of Directors and all other directors whose terms have not expired.
None of the nominees or other directors is related to any executive officer or
other director of the Company by blood, marriage or adoption. The affiliations
between the Company and WP Management, WP Group, WP & Co., Blackstone and BGH
(as such terms are defined herein) are set forth under "Voting Securities and
Principal Stockholders" and "Information as to Nominees and other Directors -
Certain Relationships".
4
<PAGE>
Management recommends that stockholders vote FOR the election of each of Messrs.
Hannah, Majoros and Schwarzman.
Nominees for Election at the Meeting - Class I Directors
Thomas E. Hannah, 59, has been a director of the Company and Chief
Executive Officer of the Company since July 1994. Mr. Hannah was President and
Chief Executive Officer of Collins & Aikman Textile and Wallcoverings Group, a
division of a wholly owned subsidiary of the Company, from November 1991 until
July 1994 and prior to that date was President and Chief Executive Officer of
the Collins & Aikman Textile Group. Mr. Hannah was named an executive officer of
the Company for purposes hereof in April 1993.
George L. Majoros, Jr., 36, has been a director of the Company since June
1995. Mr. Majoros has been a Managing Director of Wasserstein & Co., Inc. since
December 1997. Mr. Majoros was a Director of Wasserstein Perella & Co., Inc.
("WP & Co.") from December 1994 until December 1997 and a Vice President of WP &
Co. from February 1993 until December 1994. Prior to that, Mr. Majoros was an
attorney in the law firm of Jones, Day, Reavis & Pogue. Mr. Majoros is also Vice
Chairman and a director of Yardley of London, Ltd.
Stephen A. Schwarzman, 51, has been a director of the Company since October
1988 and was President of the Company from October 1988 to July 1994. Mr.
Schwarzman has been a Co-Founding Member of Blackstone Group Holdings L.L.C.
("BGH"), which is under common control with Blackstone Partners, since March
1996 pursuant to a reorganization of Blackstone Group Holdings L.P. ("Blackstone
Group") and has been President and Chief Executive Officer of The Blackstone
Group L.P. ("Blackstone") since 1985. Mr. Schwarzman was a Co-Founding Partner
of Blackstone Group from 1985 to February 1996. Mr. Schwarzman is also a
director of Great Lakes Dredge & Dock Corporation, Transtar, Inc. and Volume
Services, Inc.
Directors Whose Terms Expire at the 1999 Annual Meeting - Class II Directors
James J. Mossman, 39, has been a director of the Company since January
1995. Mr. Mossman has been a Member of BGH since March 1996 pursuant to a
reorganization of Blackstone Group, and has been a Senior Managing Director of
Blackstone (or served in this capacity) since 1990. Mr. Mossman was a General
Partner of Blackstone Group from 1990 to February 1996. Mr. Mossman is also a
director of Great Lakes Dredge & Dock Corporation, People's Choice T.V. Corp.
and Transtar, Inc.
Warren B. Rudman, 68, has been a director of the Company since June 1995.
Mr. Rudman has been a partner in the law firm of Paul, Weiss, Rifkind, Wharton &
Garrison since January 1993. Mr. Rudman served as a United States Senator from
New Hampshire from 1980 through 1992 and as Attorney General of New Hampshire
from 1970 until 1976. Mr. Rudman is also a director of the Chubb Corporation,
Prime Succession, Allied Waste and the Raytheon Company and an independent
trustee of seventeen mutual funds of the Dreyfus Corporation.
W. Townsend Ziebold, Jr., 36, has been a director of the Company since
December 1992. Mr. Ziebold has been a Managing Director of WP & Co. since
December 1994 and was a Director of WP & Co. from December 1993 to December
1994. Mr. Ziebold was a Vice-President of WP & Co. from December 1991 to
December 1993 and an Associate of WP & Co. prior to that. Mr. Ziebold is a
director of Imax Corporation and Alliance Entertainment Corp.
5
<PAGE>
Directors Whose Terms Expire at the 2000 Annual Meeting - Class III Directors
Robert C. Clark, 54, has been a director of the Company since October 1994.
Mr. Clark is Dean of the Harvard Law School and Royall Professor of Law. Mr.
Clark joined Harvard Law School in 1979 after four years at Yale Law School,
where he was a tenured professor, and became Dean in 1989. Mr. Clark is a
corporate law specialist and author of numerous texts and legal articles. Prior
to his association with academia, he was in private practice with Ropes & Gray.
Mr. Clark is also a director of Beneficial Corporation and American Lawyer Media
Holdings, Inc. and a trustee of Teachers Insurance Annuity Association (TIAA).
David A. Stockman, 51, has been a director of the Company since October
1988 and has been Co-Chairman of the Board of the Company since July 1993. Mr.
Stockman has been a Member of BGH since March 1996 pursuant to a reorganization
of Blackstone Group and has been a Senior Managing Director of Blackstone (or
has served in this capacity) since 1988. Mr. Stockman was a General Partner of
Blackstone Group from 1988 to February 1996. Prior to joining Blackstone Group,
Mr. Stockman was a Managing Director of Salomon Brothers Inc. Mr. Stockman
served as the Director of the Office of Management and Budget in the Reagan
Administration from 1981 to 1985. Prior to that, Mr. Stockman represented
Southern Michigan in the U.S. House of Representatives. Mr. Stockman is also a
director of Bar Technologies Inc., American Axle & Manufacturing, Clark Refining
& Marketing Inc., Clark USA, Inc. and Haynes International, Inc.
Randall J. Weisenburger, 39, has been a director of the Company since
August 1989 and has been Co-Chairman of the Board of the Company since June
1995. Mr. Weisenburger was Vice Chairman of the Company from April 1994 to June
1995, Deputy Chairman of the Company from July 1992 to April 1994 and Vice
President from August 1989 to July 1992. Mr. Weisenburger has been a Managing
Director of WP & Co. since December 1993. Mr. Weisenburger was a Director of WP
& Co. from December 1992 to December 1993 and a Vice President of WP & Co. from
December 1989 to December 1992. Mr. Weisenburger is also Chairman of Yardley of
London, Ltd. and a director of Sunbelt Manufacturing, Inc., American Lawyer
Media Holdings, Inc. and Alliance Entertainment Corp.
Certain Relationships. Blackstone Partners is a Delaware limited
partnership formed in 1987 for the purpose of, among other things, (i)
committing capital to facilitate corporate restructurings, leveraged buyouts,
bridge financings and other investments and (ii) capitalizing affiliates that
will engage in investment and merchant banking activities. The sole general
partner of Blackstone Partners is Blackstone Associates, a Delaware limited
partnership, whose general partners include Messrs. Mossman, Schwarzman and
Stockman. At present, the business of Blackstone Associates consists of
performing the function of, and serving as, the general partner of certain
limited partnerships, including Blackstone Partners. Messrs. Mossman, Schwarzman
and Stockman are also Members of Blackstone Management Partners L.L.C., which is
the general partner of Blackstone Management Partners L.P. ("Blackstone
Management"), and BMA, which is the general partner of BFIP.
WP Partners is a Delaware limited partnership, the general partner of
which is WP Management. WP Partners was formed by WP Group for the purpose of
participating in merchant banking activities, including committing capital to
the organization and consummation of leveraged buyout transactions. WP
Management and WP Group are both Delaware corporations. WP Management serves as
general partner of WP Partners and as such is engaged in managing WP Partners.
WP Group is an international private advisory and merchant banking firm. The
principal subsidiaries of WP Group are WP & Co., an international investment
banking firm, and Wasserstein & Co., Inc., a company formed to hold investments
of WP Group. Mr. Weisenburger and Mr. Ziebold are Managing Directors of WP & Co.
and Mr. Majoros is a Managing Director of Wasserstein & Co., Inc. Messrs.
Weisenburger and Ziebold are also officers of WP Management and Mr. Majoros is
an employee of WP Management.
Blackstone Partners and its affiliates and the Wasserstein L.L.C.,
which is controlled by WP Partners, and its affiliates as of March 20, 1998
beneficially own or have the right to vote in the aggregate approximately 82% of
the outstanding Common Stock and are in a position to jointly control the
Company.
6
<PAGE>
Certain Agreements. Blackstone Partners, WP Partners and the Company
have entered into an Amended and Restated Stockholders Agreement (the
"Stockholders Agreement") relating to the governance and management of the
Company, and WP Partners and Blackstone Partners have entered into a Voting
Agreement (the "Voting Agreement") relating to voting for nominees affiliated
with each other. Pursuant to the Voting Agreement, each Partner will be
obligated to vote for nominees to the Board of Directors that are affiliated
with the other Partner (and in certain circumstances, a transferee of the other
Partner). Pursuant to the Stockholders Agreement, each of WP Partners,
Blackstone Partners and the Company has a right of first refusal with regard to
sales of Common Stock by each Partner (with certain exceptions). Each Partner
also has the right to sell along with the other (with certain exceptions). Under
certain circumstances, such as resignation of a director, the Company is
required to replace the director with an individual affiliated with the same
Partner as the former director. The affiliates of Blackstone Partners who hold
shares of Common Stock directly and the Wasserstein L.L.C. are successors under
the Stockholders Agreement to Blackstone Partners and WP Partners, respectively,
with respect to the shares of Common Stock such entities hold directly and as
such are bound by the obligations of and entitled to the rights of their
affiliated Partner under the Stockholders Agreement.
The shares of Common Stock beneficially owned by Blackstone Partners
and the Wasserstein L.L.C. and their affiliates have, in each case, been pledged
to The Chase Manhattan Bank in connection with the financing of the purchase of
a portion of those shares under a credit facility with The Chase Manhattan Bank
and to secure the obligations of the pledgors under such credit facility. Each
credit facility with The Chase Manhattan Bank contains events of default typical
for facilities of this type (with customary qualifications and exceptions),
including nonpayment of principal or interest; violation of covenants; material
breaches of representations and warranties; bankruptcy; material undischarged
judgments; invalidity of security documents; Change in Control (as defined
therein); and insufficiency of Collateral Value of the Stock Collateral (as
defined therein).
Meetings and Committees of the Board of Directors.
Meetings and Attendance. In fiscal 1997, the Board of Directors held a
total of three meetings. All incumbent directors attended at least 75% of the
aggregate of the total number of meetings held by the Board and the total number
of meetings held by the Committees on which he served during the period for
which he has been a director, except Mr. Stockman and Mr. Schwarzman.
Committees of the Board. The Board of Directors has designated the
Audit Committee, which consists of Mr. Clark and Mr. Rudman, and the
Compensation Committee, which consists of Mr. Stockman and Mr. Weisenburger. In
addition, the Company's Restated Certificate of Incorporation provides for the
Nominating Committee, which consists of Messrs. Clark, Majoros, Mossman, Rudman,
Schwarzman, Stockman, Weisenburger and Ziebold.
The Audit Committee held four meetings in fiscal 1997. The Audit
Committee's function is to meet with the Company's independent public
accountants and with management to make inquiries regarding the manner in which
the responsibilities of each are being discharged. The Audit Committee reviews
the scope of audit and non-audit assignments and related fees, the Company's
accounting principles, and the adequacy of internal controls.
The Compensation Committee held one meeting in fiscal 1997. The
Compensation Committee's function is to determine compensation for executive
officers of the Company and to decide matters and policies with respect to the
compensation of such executive officers, including the entry into employment
agreements and the grant of awards under, and administration of, the Company's
option plans. The Compensation Committee is not entitled to award or authorize
any compensation to be paid to any executive officer of the Company who is also
a partner or employee of Blackstone Partners, WP Partners or their affiliates.
See "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION".
The Nominating Committee held one meeting in fiscal 1997. The
Nominating Committee's function is to nominate, by a majority vote thereof,
persons for election to the Board of Directors at any annual meeting of
stockholders or at any special meeting of stockholders called for the purpose of
electing directors. Stockholders wishing to recommend director candidates for
consideration by the Nominating Committee may do so by writing to the Secretary
of the Company, giving the recommended candidate's name, biographical data and
qualifications, not later than the date by which stockholder proposals for
action must be submitted. See "STOCKHOLDER PROPOSALS". Pursuant to the Restated
Certificate of Incorporation of the Company, the Nominating Committee consists
of all directors serving on the Board of Directors, excluding directors that are
salaried employees of the Company.
7
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the Compensation
Committee of the Board of Directors. The Committee is responsible for the
design, administration and oversight of all senior management compensation and
benefit policies, plans, programs and agreements.
EXECUTIVE OFFICER COMPENSATION
The Company's compensation programs for its executive officers are intended to
recognize individual performance in conjunction with overall corporate
performance and to link a significant portion of the compensation paid to
executives with the Company's current and long-term performance. The
Compensation Committee believes that this goal is best implemented by providing
a compensation package consisting of three major components: base salary,
short-term incentive compensation and long-term incentive compensation.
The Compensation Committee is not empowered to award or authorize any
compensation to be paid to any executive officer of the Company who is also a
partner or employee of Blackstone Partners, WP Partners, Blackstone Group, WP
Management or WP & Co.
BASE SALARY
When determining base salaries for the executive officers, the Compensation
Committee considers the Company's retention needs, individual experience,
performance and responsibilities. No relative weights are assigned to any
factor. In addition, the Compensation Committee considers survey-based
compensation data for companies of similar size with jobs similar to those of
the Company in magnitude, complexity and scope of responsibility. While some of
the companies identified in the peer group performance graph participate in
these surveys, the Compensation Committee believes its competitors for executive
talent are broader than this group due to the varied businesses in which its
divisions compete for executive talent. As a matter of policy, base salaries are
generally targeted at the 50th percentile of this broader group of automotive
supply and general industry companies.
Salaries of executive officers are reviewed periodically by the Compensation
Committee, generally on a 12 to 18 month cycle. Salary adjustments are
determined by evaluating performance of the executive and performance of the
Company.
In the opinion of the Compensation Committee, competitive base salaries
contribute to the Company's overall performance by attracting and retaining high
quality management.
SHORT-TERM INCENTIVE COMPENSATION
The second major component of the executive compensation program is the
Company's Executive Incentive Compensation Plan (the "Bonus Plan") adopted each
year. The objectives of this plan are to:
(bullet) Motivate key employees to achieve and exceed the Company's financial
goals
(bullet) Maintain management's focus on the importance of earnings
(bullet) Encourage management to balance the longer-term needs of the
business with shorter-term requirements
(bullet) Attract and retain key employees of the quality required to
successfully manage the Company's businesses.
Under the Bonus Plan, the Company's executive officers and other key employees
who are in a position to have an impact on the attainment of the goals of the
Company and its operating divisions have the opportunity to earn annual
performance bonuses. While the number of persons participating in the Bonus Plan
varies from year to year, approximately 300 persons have participated each year.
The bonuses are based primarily on Earnings Before Interest and Taxes (EBIT). At
the beginning of the year, EBIT goals are established for Threshold (lowest),
Target (expected) and Maximum performance for each operating division; such EBIT
goals correspond generally with Threshold, Target and Maximum bonus levels
established for each participant. The amount of
8
<PAGE>
bonus actually paid to participants is based primarily on the extent to which
unit performance meets or exceeds the predetermined goals, thereby linking pay
and unit performance and can range from 50% (for Threshold) to 200% (for
Maximum) of the target award.
Four of the Named Executive Officers, as well as Mr. Hannah (whose bonus is
discussed separately below), received bonuses for fiscal 1997 under the Bonus
Plan. For such four Named Executive Officers, the target bonuses assigned
equaled 40% of base salary for two of such officers and 50% of base salary for
the other two such officers. Bonuses actually awarded were approximately 70%,
37%, 39% and 49% of annual base salary, respectively. Such awards were generally
pursuant to the formula under the Bonus Plan, except that the impact of Collins
& Aikman Plastics and approximately half of the impact of labor strikes at
General Motors, one of the Company's major customers, were excluded from the
EBIT calculations.
LONG-TERM INCENTIVE
The third major component of the Company's executive compensation program is its
long-term incentive compensation plans. Through the 1993 Plan and the 1994 Plan,
the Company seeks to align the interests of key employees more closely with
those of the Company's stockholders, and to motivate and reward actions which
lead to long-term value creation for stockholders. Stock option grants provide a
direct link between any rewards executives may receive and the results achieved
for stockholders. Stock options are intended to serve as compensation over a
period of several years and are therefore generally not granted every year.
The Chief Executive Officer and three of the other Named Executive Officers
received stock option grants in fiscal 1993 under the 1993 Plan, which vested in
increments and were fully vested in June 1996. One such Named Executive Officer
also received a grant in fiscal 1993 under the 1994 Plan, which vested 33% in
January 1997 and 33% in January 1998 and will vest 34% in January 1999. In light
of these grants in fiscal 1993, there have been no further stock option grants
to the Chief Executive Officer and the Named Executive Officers except as
follows. One Named Executive Officer, who joined the Company in 1995, received
at that time a grant of stock options under the 1994 Plan, which vests 100% in
April 1998. In addition, in 1996, grants of stock options (which will vest in
March 2001) were made to two Named Executive Officers as part of a special
Chairman's Award made for the purpose of recognizing outstanding contributions.
Additional grants were made to the same two Named Executive Officers during the
last fiscal year in view of their increased responsibilities, which grants will
vest 40% in February 1999 and 60% in February 2000.
Stock option grants are made based on an evaluation of the duties and
responsibilities of the individual and his or her present and potential
contributions to the long-term growth and success of the Company. Stock options
granted to the Named Executive Officers during the last fiscal year, the value
realized on options exercised by them during the last fiscal year and year-end
option values are reflected in the tables provided below.
TERMINATION BENEFITS
The Company generally determines termination benefits of executive officers
based on the executive officer's employment agreement (if applicable), the
Company's general severance policies for "exempt employees" (if applicable) or
agreement with the departing executive officer at the time of separation.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Company's Chief Executive Officer is consistent with the
compensation philosophy of the Company described above. In August 1997, Mr.
Hannah's base salary was increased from $525,000 to $600,000. The increase was
Mr. Hannah's first base salary increase since February 1994 and was based on his
individual performance as well as survey-based compensation data considering
comparable base salaries of the chief executive officers in the industry in
which the Company competes. The terms of Mr. Hannah's employment agreement are
described under "Employment Agreements" elsewhere in this Proxy Statement.
In addition to his base salary, Mr. Hannah is eligible to receive annual
incentive compensation under the Bonus Plan. Mr. Hannah's target bonus
opportunity equals 100 percent of current annual base salary, with a maximum
opportunity of 200 percent of current annual base salary. EBIT goals are
established by the Compensation Committee at the beginning of each fiscal year;
award calculations are based on the same factors as are bonuses for all
executive officers. In 1997, the Company's financial performance was slightly
below the targets set by the Compensation Committee, excluding, as discussed
above, the impact of the Collins & Aikman Plastics subsidiary and approximately
half of the impact of the General Motors strikes. Mr. Hannah's annual bonus
award for the most recent fiscal year was $582,000.
9
<PAGE>
The Compensation Committee, at its sole discretion, determines the amount of any
stock options to be granted to Mr. Hannah. During the most recent fiscal year,
no stock options were granted to Mr. Hannah in view of grants made previously
under the 1993 Plan.
The Compensation Committee believes the total compensation program for Mr.
Hannah is competitive with that provided by comparable companies, matches the
responsibilities of his office and reflects his personal contributions to the
Company's performance.
DEDUCTIBILITY OF COMPENSATION IN EXCESS OF $1 MILLION A YEAR
In 1993, Congress enacted Section 162(m) of the U.S. Internal Revenue Code of
1986, effective for tax years beginning in 1994. This legislation precludes a
public corporation from taking a federal income tax deduction for compensation
in excess of $1 million per year for its chief executive officer and any of its
four other highest paid executive officers (with exceptions for certain
performance based compensation), although "grandfather" provisions may apply to
certain compensation arrangements that were entered into by a corporation before
it was publicly held.
In view of the grandfather provisions regarding going public in an initial
public offering, this legislation did not limit the Company's tax deductions for
executive compensation prior to fiscal 1996. Due to a modification of Mr.
Hannah's employment agreement in fiscal 1996 to increase certain bonus
percentages, the grandfather provisions of Section 162(m) did not apply to
certain compensation paid for fiscal 1996 and fiscal 1997 pursuant to Mr.
Hannah's employment agreement. Consequently, Section 162(m) limited the
Company's tax deductions with respect to a portion of Mr. Hannah's compensation
in excess of $1 million for fiscal 1996 and fiscal 1997. In addition, the
duration of the grandfather provisions of Section 162(m) is limited and will not
apply to compensation paid by the Company after the Meeting (although options
granted prior to the Meeting will continue to be exempt under Section 162(m)).
The Company will continue to review its executive compensation practices and
plans on an ongoing basis with respect to Section 162(m). Where it deems
advisable, the Company will take appropriate action to preserve the tax
deductibility of its executive compensation while balancing the more important
objective of maintaining competitive compensation. However, at this time, the
Company believes the requirements of Section 162(m) are somewhat arbitrary and
inflexible. To retain highly skilled managers and remain competitive with other
employers, the Compensation Committee retains the authority to authorize other
payments, including salary and bonuses, that would not be deductible for federal
income tax purposes.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF COLLINS & AIKMAN
CORPORATION:
DAVID A. STOCKMAN
RANDALL J. WEISENBURGER
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation for services rendered to the Company and its subsidiaries by (i)
the Company's Chief Executive Officer and (ii) the Company's four most highly
compensated executive officers (other than the Chief Executive Officer) whose
total annual salary and bonus exceeded $100,000 and who were serving as
executive officers at the end of the fiscal year ended December 27, 1997 (the
individuals named in clauses (i) and (ii) being referred to in this Proxy
Statement as the "Named Executive Officers"). All compensation shown has been
paid by Collins & Aikman Products Co., a wholly owned subsidiary of the Company
("Products"), or by a subsidiary of Products (although any options shown as
awarded are for Common Stock of the Company). The Company does not separately
compensate its executive officers for their duties as officers of the Company
(except for any such options).
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
-------------------------------------------------- -----------------------
Other Awards
Name and Annual Securities All Other
Principal Year Salary Bonus Compensation Underlying Compensation
Position (1) ($) ($) ($) Options (#) ($)
- -------- ----- ------- ------------ -------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas E. Hannah 1997 556,250 582,000 (2) 0 32,215 (3)
Chief Executive Officer 1996 481,250 761,250 (2) 0 18,604
1995 525,000 275,625 20,869 (2) 0 30,487
Dennis E. Hiller 1997 275,000 192,500 (2) 25,000 14,596 (4)
President, Automotive 1996 215,417 188,000 (2) 25,000 8,463
Carpet and Acoustics 1995 202,917 132,000 51,465 (5) 40,000 8,542
Group
John D. Moose 1997 325,000 119,600 (2) 0 16,983 (6)
President, Automotive 1996 297,917 106,600 (2) 0 9,246
Fabrics Division 1995 311,250 62,000 (2) 0 14,808
Elizabeth R. Philipp 1997 300,200 116,478 (2) 0 16,346 (7)
Executive Vice President, 1996 265,850 174,116 (2) 0 9,079
General Counsel, 1995 299,683 100,136 (2) 0 13,674
and Secretary
J. Michael Stepp 1997 264,000 128,040 (2) 20,000 14,550 (12)
Executive Vice 1996 228,000 155,120 135,005 (10) 25,000 9,169
President and Chief 1995 197,230 (9) 92,000 56,555 (11) 100,000 1,380
Financial Officer (8)
</TABLE>
(1) The information given in this table is for the fiscal years indicated, not
calendar years. 1997 indicates the fiscal year ended December 27, 1997. In
1996, the Company changed its fiscal year end to the last Saturday of
December. Previous fiscal years ended on the last Saturday of January.
Accordingly, in this table, 1996 indicates the fiscal year ended December
28, 1996 (an 11 month fiscal year). 1995 indicates the fiscal year ended
January 27, 1996.
(2) Total perquisites for executive officer were less than the lesser of
$50,000 or 10% of annual salary and bonus and accordingly the dollar value
of such perquisites is not shown. Perquisites for an executive officer may,
but do not necessarily, include reimbursement for any of the following
expenses: car; financial planning; executive fitness; executive physicals
and medical; luncheon club; and relocation.
(3) Amount for fiscal 1997 for Mr. Hannah consists of (i) contributions to the
Collins & Aikman Corporation Profit Sharing and Personal Savings Plan, a
defined contribution plan (the "PSP"), in the amount of $4,625, (ii)
contributions to the non-qualified supplement
11
<PAGE>
to the PSP (the "SPSP") in the amount of $23,150 and (iii) premiums in the
amount of $3,003 and $1,437 paid for basic term life insurance and
Accidental Death & Dismemberment insurance ("AD&D insurance"),
respectively, under group life insurance policies.
(4) Amount for fiscal 1997 for Mr. Hiller consists of (i) contributions to the
PSP in the amount of $4,625, (ii) contributions to the SPSP in the amount
of $8,123 and (iii) premiums in the amount of $1,502 and $346 paid for
basic term life insurance and AD&D insurance, respectively, under group
life insurance policies.
(5) Includes $32,969 for reimbursement of relocation costs in connection with
Mr. Hiller's move to North Carolina and $12,553 for gross-ups of relocation
reimbursements to compensate the executive for incremental federal and
state income taxes.
(6) Amount for fiscal 1997 for Mr. Moose consists of (i) contributions to the
PSP in the amount of $5,600, (ii) contributions to the SPSP in the amount
of $9,088 and (iii) premiums in the amount of $1,775 and $520 paid for
basic term life insurance and AD&D insurance, respectively, under group
life insurance policies.
(7) Amount for fiscal 1997 for Ms. Philipp consists of (i) contributions to the
PSP in the amount of $4,625, (ii) contributions to the SPSP in the amount
of $9,663 and (iii) premiums in the amount of $1,639 and $419 paid for
basic term life insurance and AD&D insurance, respectively, under group
life insurance policies.
(8) Mr. Stepp was appointed Executive Vice President and Chief Financial
Officer on April 6, 1995. Prior to that date, Mr. Stepp held no positions
with the Company or its subsidiaries.
(9) Includes salary for the period from April 6, 1995 through January 27, 1996,
the portion of fiscal 1995 during which Mr. Stepp was an executive officer
of the Company.
(10) Includes $81,438 for reimbursement of relocation costs in connection with
Mr. Stepp's move to Charlotte, North Carolina and $44,268 for gross-ups of
relocation reimbursements to compensate the executive for incremental
federal and state income tax.
(11) Includes $33,699 for reimbursement of relocation costs in connection with
Mr. Stepp's move to Charlotte, North Carolina, and $18,059 for gross-ups of
relocation reimbursements to compensate the executive for incremental
federal and state income tax.
(12) Amount for fiscal 1997 for Mr. Stepp consists of (i) contributions to the
PSP in the amount of $4,625, (ii) contributions to the SPSP in the amount
of $8,152 and (iii) premiums in the amount of $1,441 and $332 paid for
basic term life insurance and AD&D insurance, respectively, under group
life insurance policies.
12
<PAGE>
Option Grants In Last Fiscal Year
Shown below is information on grants of stock options made during the
fiscal year ended December 27, 1997, to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees Price Expiration Grant Date
Name Granted (#) in Fiscal 1997 ($/sh)(1) Date Present Value ($)(2)
- --------- ----------- -------------- -------------- ----- --------------------
<S> <C> <C> <C> <C> <C>
Thomas E. Hannah 0 0 N/A N/A N/A
Dennis E. Hiller 25,000 (3) 4.4 7.50 2/19/07 120,539
John D. Moose 0 0 N/A N/A N/A
Elizabeth R. Philipp 0 0 N/A N/A N/A
J. Michael Stepp 20,000 (3) 3.5 7.50 2/19/07 96,431
</TABLE>
(1) "N/A" appearing in the table denotes not applicable since no options were
granted to the Named Executive Officer.
(2) Option values reflect Black-Scholes model output for options. The
assumptions used in the model were expected volatility of 40%, risk-free
rate of return of 6.72%, dividend yield of 0% and time to exercise of ten
years. Additionally, no liquidity discount or forfeiture discount was
applied.
(3) Options were awarded pursuant to the 1994 Plan and vest 40% on February 19,
1999 and 60% on February 19, 2000.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
Shown below is information with respect to the exercise of stock options
during the last fiscal year and the year-end value of unexercised options to
purchase Common Stock granted to the Named Executive Officers and held by them
as of December 27, 1997.
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options at Value of Unexercised
FY-End (#) In-The-Money-Options at FY-End ($)
(1)
Shares Acquired Value
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Hannah 0 0 841,230 0 3,899,101 0
140,205 0 51,175 0
Dennis E. Hiller 0 0 83,048 40,000 384,928 65,000
12,518 25,000 4,569 40,625
0 25,000 0 28,125
John D. Moose 121,555 836,906 (2) 0 0 0 0
50,074 130,944 (2) 0 0 0 0
25,000 153,375 (3) 0 0 0 0
Elizabeth R. Philipp 0 0 83,508 0 387,060 0
8,345 0 3,046 0
J. Michael Stepp 0 0 0 100,000 0 62,500
0 25,000 0 40,625
0 20,000 0 22,500
</TABLE>
(1) The value of in-the-money options is based on the difference between the
exercise price of such options and the closing price of the
13
<PAGE>
Common Stock on the New York Stock Exchange on December 26, 1997 (the last
trading day of the fiscal year ended December 27, 1997), which was $8.625.
(2) Value realized is based on the difference between the exercise price of
such options and the closing price of the Common Stock on the New York
Stock Exchange on July 31, 1997 (the date of exercise), which was $10.875.
(3) Value realized is based on the difference between the exercise price of
such options and the closing price of the Common Stock on the New York
Stock Exchange on May 2, 1997 (the date of exercise), which was $10.125.
Defined Benefit or Actuarial Plan Disclosure
C&A Co. Plan. Provided certain eligibility requirements are met, at the
end of each calendar month, pay credits are applied to a participant's account
under the Collins & Aikman Corporation Employees' Pension Account Plan (the "C&A
Co. Plan") based on the participant's length of credited service and
compensation (as defined) during that month. For participants aged 50 or older,
the monthly pay credit is based on either credited service and compensation or
age and compensation, whichever results in the higher amount.
The following chart sets forth how pay credits are determined under the
C&A Co. Plan:
<TABLE>
<CAPTION>
Percentage of
Compensation Used to
Determine Pay Credits
---------------------------------------------
Eligibility Requirements Up to 1/3 Over 1/3
Years Of of the S.S. of the S.S.
Credited Service or Age Wage Base Wage Base
- ---------------- ---- --------- ----------
<S> <C> <C> <C> <C>
less than 10 less than 50 2.5% 4.5%
10 - 14 50 - 54 3.0% 5.5%
15 - 19 55 - 59 4.0% 6.5%
20 - 24 60 - 64 5.0% 8.0%
25 or more 65 or more 6.0% 10.0%
</TABLE>
The dollar amounts that result from these percentages are added together and the
total is the pay credit for the month.
In addition, interest credits are applied each month to the account
balance. Participants make no contributions to the C&A Co. Plan. Employer
contributions are 100% vested after five years of service or at age 65,
whichever is earlier, and may vest under certain other circumstances as set
forth in the C&A Co. Plan. The estimated annual benefits payable upon retirement
at normal retirement age under the C&A Co. Plan for Messrs. Hannah, Hiller,
Moose and Stepp and Ms. Philipp are $16,733, $42,899, $56,437, $5,467 and
$30,773, respectively. Participants in the C&A Co. Plan have the option,
however, of receiving the value of their vested account in a lump sum following
termination of employment.
C&A Co. Excess Plan. The Excess Benefit Plan of Collins & Aikman
Corporation (the "C&A Co. Excess Plan") works in conjunction with the C&A Co.
Plan (which is described above) and provides to the employee any benefit which
the C&A Co. Plan would have provided but for certain legal limitations under the
Employee Retirement Income Security Act of 1974 and Internal Revenue Service
regulations. The pay credits and interest credits are determined as described
with respect to the C&A Co. Plan as if no legal limitations existed, and then
this plan provides any benefit which is in excess of the benefit provided under
the C&A Co. Plan. The estimated annual benefits payable upon retirement at
normal retirement age under the C&A Co. Excess Plan for Messrs. Hannah, Hiller,
Moose and Stepp and Ms. Philipp are $70,702, $24,705, $29,651, $6,473 and
$27,211, respectively.
C&A Co. SRIP. Participation in the Collins & Aikman Corporation
Supplemental Retirement Income Plan (the "C&A Co. SRIP") is solely at the
discretion of the Board of Directors of Products and is extended to a select
group of key executives. The plan provides a participating employee with a
retirement benefit at or after age 62. A target benefit is first calculated for
each employee based on Total Annual Compensation (final base salary plus the
average of the bonuses paid for the last three fiscal years) and years of
service at retirement. The benefit payable from the C&A Co. SRIP is determined
as the excess of the target benefit over any pension benefits payable from
Social Security and any other retirement plans sponsored by the Company. An
employee does not become vested in a benefit until reaching age 62.
14
<PAGE>
The following table shows, for specified compensation/years of service
classifications, the hypothetical annual target benefits under the C&A Co. SRIP
for employees retiring at age 65, assuming that the retiring participant elects
a single life annuity.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Total Annual Years of Service
Compensation ---------------------------------------------------------------------------------------------
10 15 20 25 30 35 43
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 84,000 $102,000 $120,000 $120,000 $120,000 $120,000 $120,000
225,000 94,500 114,750 135,000 135,000 135,000 135,000 135,000
250,000 105,000 127,500 150,000 150,000 150,000 150,000 150,000
275,000 115,500 140,250 165,000 165,000 165,000 165,000 165,000
300,000 126,000 153,000 180,000 180,000 180,000 180,000 180,000
350,000 147,000 178,500 210,000 210,000 210,000 210,000 210,000
400,000 168,000 204,000 240,000 240,000 240,000 240,000 240,000
450,000 189,000 229,500 270,000 270,000 270,000 270,000 270,000
500,000 210,000 255,000 300,000 300,000 300,000 300,000 300,000
600,000 252,000 306,000 360,000 360,000 360,000 360,000 360,000
700,000 294,000 357,000 420,000 420,000 420,000 420,000 420,000
800,000 336,000 408,000 480,000 480,000 480,000 480,000 480,000
900,000 378,000 459,000 540,000 540,000 540,000 540,000 540,000
1,000,000 420,000 510,000 600,000 600,000 600,000 600,000 600,000
1,100,000 462,000 561,000 660,000 660,000 660,000 660,000 660,000
1,200,000 504,000 612,000 720,000 720,000 720,000 720,000 720,000
1,300,000 546,000 663,000 780,000 780,000 780,000 780,000 780,000
1,400,000 588,000 714,000 840,000 840,000 840,000 840,000 840,000
1,500,000 630,000 765,000 900,000 900,000 900,000 900,000 900,000
</TABLE>
All the Named Executive Officers except Ms. Philipp participate in the
C&A Co. SRIP. Mr. Hannah currently has nine years, two months of plan service,
and at age 65, he will have an estimated 14 years, five months of plan service.
Mr. Hiller currently has 22 years, two months of plan service and at age 65 will
have an estimated 43 years, five months of plan service. Mr. Moose currently has
37 years, nine months of plan service and at age 65 will have an estimated 41
years, four months of plan service. Mr. Stepp currently has two years, 11 months
of plan service and at age 65 will have an estimated 14 years of plan service.
15
<PAGE>
Employment Agreements
In July 1992, Products entered into an employment agreement with Mr.
Hannah, which was amended as of February 1994, October 1996 and August 1997. The
agreement, as amended, provides for an initial base salary of $600,000 and
participation in any executive bonus plan, with a target bonus of 100% of the
base salary then in effect up to a maximum of 200% of base salary. The agreement
is automatically renewed each year unless Products notifies Mr. Hannah of its
intention to terminate the agreement. In the event of involuntary termination
for reasons other than cause and other than a change of control, the agreement
provides for severance benefits equal to Mr. Hannah's base salary then in effect
for a period of one year from the termination date plus any unpaid cash bonus
for the prior fiscal year and a pro rata portion of any bonus he would have
received had he been employed for the entire fiscal year.
Products entered into letter agreements with Mr. Hannah, Mr. Hiller and
Mr. Moose (in May 1991, October 1992 and May 1991, respectively) which provide
that if such executive's employment is terminated by Products or any successor
company other than for cause at any time within three months prior to or one
year following a change of control (as defined) of Products, then in lieu of any
severance available under policies or practices of Products he shall receive an
amount equal to two times his base salary as in effect at the time of
termination.
In June 1995, Products entered into another letter agreement with Mr.
Moose which provides that if his employment is terminated by Products without
cause (except in the event the change of control provisions of the May 1991
letter govern) after June 30, 1996 while he is a member of Products' Operating
Committee, he shall receive severance in accordance with Products' policy and
practices regarding involuntary termination of employment of a member of the
Operating Committee.
In July 1990, Products entered into an employment agreement with Ms.
Philipp at an initial base salary of $225,000 per year. The agreement is
automatically renewed each year. In the event of involuntary termination for
reasons other than cause, including failure to renew the agreement, any
requirement that Ms. Philipp's office be relocated or any change in control (as
defined), the agreement provides for severance benefits equal to Ms. Philipp's
base salary then in effect for a period of one year from the termination date
plus the pro rata portion of any cash bonuses she would have received had she
been employed for the entire fiscal year.
In April 1995, Products entered into an employment agreement with Mr.
Stepp for a period of three years ending April 5, 1998, subject to the terms and
conditions of the agreement. The agreement provides for an initial base salary
of $240,000 per year and a guaranteed cash bonus for Mr. Stepp's first year of
employment of no less than $92,000. In the event of involuntary termination for
any reason other than cause, the agreement provides for severance benefits equal
to Mr. Stepp's base salary for the entire remaining portion of his term of
employment then in effect or, if longer, for a one year period following the
termination date.
In March 1998, the Company entered into letter agreements with each of
Mr. Hannah, Mr. Hiller, Ms. Philipp and Mr. Stepp which provide for certain
benefits if, during the period commencing three months prior to a change in
control (as defined) of the Company and ending one year thereafter (or 45 days
after notice of intent to constructively terminate employment, if later) (a
"Change in Control Period"), (i) the executive's employment is involuntarily
terminated other than for cause or (ii) there is a constructive termination of
executive's employment (which is a termination by the executive due to
involuntary relocation, a material reduction in executive's total compensation
and benefit package or a significant reduction in executive's responsibilities,
position or authority). The benefits payable in a lump sum to the executive in
such an event are as follows: (a) executive's base salary through the date of
termination; (b) a pro rata bonus equal to executive's target bonus immediately
preceding the Change in Control Period multiplied by a fraction, the numerator
of which is the number of months in the year prior to termination and the
denominator of which is twelve; (c) twenty-four months of base salary; and (d)
two times executive's target annual bonus in effect immediately preceding the
Change in Control Period. The Company shall also (w) offer executive an
opportunity to purchase his Company automobile at its net book value, (x) deem
executive to continue as an employee of the Company for two years following
termination for purposes of eligibility and vesting (but not benefit accrual)
under retirement plans, (y) allow executive to continue to participate in
welfare benefit plans for two years (or until new employment) and (z) reimburse
executive for costs of continued coverage for executive and dependents under the
Company's group health plans at the end of the welfare benefit continuation
period described in (y). The letter agreements provide that any such benefits to
an executive which constitute "Parachute Payments" under Section 280G of the
U.S. Internal Revenue Code of 1986 (the "Code") may be reduced so that the
Company shall not be caused to have paid an "Excess Parachute Payment" under
such Section 280G of the Code. In addition, any lump sum payment shall be
reduced by the amount of cash severance or salary continuation benefits paid to
the executive under any other plan or policy of the Company or a written
employment agreement between the Company (or one of its affiliates) and
executive.
16
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return
from July 7, 1994 (the date the Common Stock was first registered under Section
12 of the Exchange Act and traded on the New York Stock Exchange) through
December 26, 1997 of (i) the Company, (ii) the S&P 500, (iii) a peer group of
companies selected by the Company (consisting of Lear Seating Corporation,
Burlington Industries, Inc., Quaker Fabric Corporation, Culp, Inc., Norwall
Group Inc., Fieldcrest Cannon, Inc. (until its acquisition by Pillowtex
Corporation on December 19, 1997), Cone Mills Corporation and Masland
Corporation (until its acquisition by Lear Seating Corporation in June 1996))
(the "Old Peer Group") and (iv) a new peer group of companies selected by the
Company (consisting of Lear Corporation, Magna International Inc., Johnson
Controls, Inc., Superior Industries International Inc., MascoTech Inc., Arvin
Industries, Inc., Dana Corporation, Eaton Corporation and Borg Warner Automotive
Inc.) (the "Automotive Peer Group"). Dividend reinvestment has been assumed and,
with respect to the companies in the Old Peer Group and the Automotive Peer
Group, the returns of each such company have been weighted to reflect relative
stock market capitalization. The graph assumes an investment of $100 on July 7,
1994 in each of the Common Stock and the stocks comprising the S&P 500, the Old
Peer Group and the Automotive Peer Group.
In 1997, the Company sold its Mastercraft Group and Floorcoverings
subsidiary and entered into an agreement to sell its Imperial Wallcoverings,
Inc. subsidiary, which sale was completed on March 13, 1998. As a result, the
Company's continuing operations are now exclusively in the automotive sector.
Accordingly, the Company believes that the Old Peer Group, which appeared in the
Company's 1997 Annual Meeting Proxy Statement, should be replaced by the
Automotive Peer Group in order to reflect a more appropriate basis on which to
compare stockholder return in the future given the recent divestitures. In
changing its peer group from the Old Peer Group to the Automotive Peer Group,
the Company has deleted companies supplying customers in the Interior
Furnishings and Wallcoverings markets and substituted them with companies in the
automotive supply industry.
(graph appears here with plot points)
<TABLE>
<CAPTION>
===================================================================================================================================
July 7, January 28, January 26, December 27, December 26,
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
Collins & Aikman $100.00 $ 80.95 $68.69 $60.10 $82.14
Corporation
S&P 500 $100.00 $107.02 $145.61 $180.25 $225.18
Old Peer Group $100.00 $87.16 $106.28 $116.36 $203.88
Automotive Peer Group $100.00 $89.85 $118.76 $148.97 $186.85
==================================================================================================================================
</TABLE>
17
<PAGE>
COMPENSATION OF DIRECTORS
Each director of the Company and Products who is not a full-time
employee thereof (or the Partner who designates such director to the Board of
Directors) receives a fee of $40,000 per year, payable quarterly.
In addition, under the Directors Plan, each non-employee director of
the Company who is not affiliated with a major stockholder receives an annual
automatic grant of options for 10,000 shares of Common Stock each November. The
options have a per share exercise price equal to the closing sales price of the
Common Stock on the New York Stock Exchange on the date of grant and are
exercisable six months and one day after the date of grant. Currently, only Mr.
Clark and Mr. Rudman are eligible to receive grants under the Directors Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Mr. Stockman and Mr.
Weisenburger, the Co-Chairmen of the Company. Neither Mr. Stockman nor Mr.
Weisenburger is or has been an employee of the Company or any of its
subsidiaries, including Products, or is or has been separately compensated for
serving as an officer of the Company or any of its subsidiaries, including
Products. See "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION". Mr.
Stockman and Mr. Weisenburger participated in deliberations during the last
completed fiscal year concerning compensation of executive officers who are
separately compensated for serving as executive officers. None of the executive
officers who are separately compensated for serving as executive officers (or
who received options) serve on the Compensation Committee.
Mr. Stockman is a Member of BGH, BMA and Blackstone Management Partners
L.L.C. and a general partner of Blackstone Associates. Mr. Weisenburger is a
Managing Director of WP & Co., which is a subsidiary of WP Group. WP Group
formed WP Partners. See "Security Ownership of Management" and "Information as
to Nominees and Other Directors - Certain Relationships".
Pursuant to the Stockholders Agreement, each of Blackstone Partners and
WP Partners or their affiliates receive a $1 million annual monitoring fee
payable quarterly and the reimbursement of expenses from the Company. Since the
beginning of fiscal 1997, pursuant to the Stockholders Agreement the Company has
paid to each of Blackstone Partners and WP Partners or their affiliates $1.25
million in annual monitoring fees plus expenses.
Wasserstein Perella Securities, Inc. ("WP Securities"), a wholly owned
subsidiary of WP Group, has acted, and may in the future act, as agent for the
Company in the repurchase from time to time of the Common Stock. Since the
beginning of fiscal 1997, approximately $91,000 in fees have been paid or
accrued to WP Securities in connection with such repurchases.
Since the beginning of fiscal 1997, the Company has paid to each of
Blackstone Partners and WP Partners or their affiliates the following in fees
for advisory services in connection with transactions: (i) approximately $1.3
million in connection with the acquisition of JPS Automotive L.P. in December
1996, (ii) approximately $.6 million in connection with the acquisition in
December 1996 of Perstorp AB's automotive supply operations in Europe and North
America, (iii) approximately $.4 million in connection with a joint venture
entered into in December 1996 relating to Perstorp's automotive supply
facilities in Sweden, Belgium and France, (iv) approximately $1.2 million in
connection with the disposition of the Company's Floorcoverings subsidiary in
February 1997 and (v) approximately $1.9 million in connection with the
disposition of the Company's Mastercraft Group in July 1997. In connection with
advisory services for these transactions, the Company also reimbursed Blackstone
Partners or their affiliates approximately $75,000 and WP Partners or their
affiliates approximately $428,000 for out-of-pocket expenses.
On November 5, 1997, the Company announced that it entered into an
agreement to sell its Imperial Wallcoverings, Inc. subsidiary ("Wallcoverings")
to a company sponsored by Blackstone Capital Partners III Merchant Banking Fund
LP, an affiliate of Blackstone Partners. The sale closed on March 13, 1998. The
purchase price for Wallcoverings includes $71.2 million in cash, subject to
adjustment, and an option to acquire 6.7% of the common stock of the purchaser
(which includes both Wallcoverings and the wallcovering and vinyl units of
Borden Inc., which the purchaser also acquired) outstanding as of closing. The
price for the sale of Wallcoverings was determined through negotiations between
the Company and a special committee of independent directors of the Company, on
the one hand, and the purchaser, on the other hand. The special committee of
independent directors consisted of Messrs. Clark and Rudman. In connection with
the transaction, the Company recorded a loss of approximately $21.1 million, net
of income taxes, in the third quarter of 1997. The Company also accrued a $.75
million fee payable to WP Partners or their affiliates for advisory services to
the Company in connection with the sale of Wallcoverings.
For a description of the relationships of the Company's directors with
any of BGH, Blackstone Partners, Blackstone Management, WP Partners, WP & Co. or
WP Management, see "Information as to Nominees and Other Directors - Certain
Relationships" above.
18
<PAGE>
RELATIONSHIPS WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP served as independent auditors of the Company for
the fiscal year ended December 27, 1997, and has served as independent auditors
of the Company since the Company's inception in 1988. The Board of Directors has
selected Arthur Andersen LLP to serve as independent auditors of the Company for
the fiscal year ending December 26, 1998. A representative of Arthur Andersen
LLP is expected to be present at the Meeting with the opportunity to make a
statement if he or she desires to do so and to respond to appropriate questions
from stockholders.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for action to be
included in the proxy materials for the Company's 1999 Annual Meeting must
submit such proposal so that it is received by the Secretary of the Company not
later than December 9, 1998. Proposals must be in writing and sent via
registered, certified or express mail. Facsimile or other forms of electronic
submissions will not be accepted.
OTHER MATTERS TO COME BEFORE THE MEETING
The federal proxy rules specify what constitutes timely submission for
a stockholder proposal to be included in the Proxy Statement, as discussed above
under "STOCKHOLDER PROPOSALS". If a stockholder desires to bring business before
an annual meeting which is not the subject of a proposal timely submitted for
inclusion in the Proxy Statement, the stockholder must follow procedures
outlined in the Company's By-laws. A copy of these By-law procedures is
available upon request from the Secretary of the Company, 701 McCullough Drive,
Charlotte, North Carolina 28262. One of the procedural requirements in the
By-laws is timely notice in writing of the business the stockholder proposes to
bring before the annual meeting. Notice must be received not less than 90 days
nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that if the annual
meeting is called for a date that is not within 30 days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth day following the day
on which notice of the date of the annual meeting was mailed or public
disclosure was made, whichever occurs first. It should be noted that those
By-law procedures govern proper submission of business to be put before a
stockholder vote and do not preclude discussion by any stockholder of any
business properly brought before an annual meeting.
For a description of the requirements for recommending director
candidates for consideration to the Nominating Committee, see "Information as to
Nominees and Other Directors - Committees of the Board." If a stockholder wants
to nominate a person for election to the Board of Directors other than a
director nominated by the Nominating Committee, notice of the proposed
nomination must be delivered to or mailed and received by the Secretary of the
Company at the address set forth in the previous paragraph by the time periods
set forth in the previous paragraph in the case of an annual meeting and, in the
case of a special meeting called for the purpose of electing directors, by the
close of business on the tenth day following the day on which public disclosure
of the date of the special meeting was made. The By-law provision contains other
requirements for notice and a copy thereof is available upon request from the
Secretary of the Company.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 27,
1997, is being sent to the stockholders of the Company. The Company will furnish
without charge to any stockholder who so requests in writing a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended December 27,
1997, including financial statements and financial statement schedules. The
Company will furnish a copy of any of the exhibits referenced in the Annual
Report on Form 10-K upon the request in writing of a stockholder for a fee of
not more than $.50 per page to cover the cost of reproduction and mailing.
Requests may be directed to: Collins & Aikman Corporation, 701 McCullough Drive,
P.O. Box 32665, Charlotte, NC 28232-2665, Attention: Investor Relations.
Neither the Annual Report nor any of the financial statements contained
therein are to be considered filed as part of this Proxy Statement or deemed
soliciting material.
19
<PAGE>
OTHER MATTERS
It is not expected that any other matters will be brought before the
Meeting. If any matter not described in this Proxy Statement should properly
come before the Meeting, the persons named in the accompanying proxy will vote
the proxy in accordance with their best judgment unless a stockholder, by
striking out the appropriate provision of the proxy, chooses to withhold
authority to vote on such matters.
By Order of the Board of Directors,
/s/ Elizabeth R. Philipp
ELIZABETH R. PHILIPP
Secretary
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY. NO
POSTAGE STAMP IS NECESSARY IF MAILED IN THE UNITED STATES.
- -------------------------------------------------------------------------------
20
<PAGE>
APPENDIX
P R O X Y
COLLINS & AIKMAN CORPORATION
This Proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Stockholders to be held on May 20, 1998
and any adjournment or postponement thereof
The undersigned hereby appoints Thomas E. Hannah, David A. Stockman, and
Randall J. Weisenburger (the "Agents") as proxies (each with the power to act
alone and to appoint a substitute) and hereby authorizes each of them to
represent and to vote, as designated hereon, all the shares of Common Stock,
par value $0.01 per share, of Collins & Aikman Corporation (the "Company"),
held of record by the undersigned at the close of business on March 23, 1998,
at the Annual Meeting of Stockholders of the Company to be held on May 20,
1998, at 11:00 a.m., Eastern Daylight Savings Time, and at any adjournment or
postponement thereof, on the proposal referred to below.
This Proxy, when executed, will be voted in accordance with the
specifications hereon. In the absence of such specifications, this Proxy will
be voted FOR proposal (I) and if any nominee shall be unavailable to serve as a
director, this Proxy will be voted for the election of such other person or
persons as the Nominating Committee of the Board of Directors or the Company
may select.
The Board of Directors recommends a vote FOR Proposal (I).
The undersigned hereby revokes any proxies heretofore given and directs
the Agents to vote as follows:
Proposal (I) Election of the following Nominees as Directors: Thomas E.
Hannah, George L. Majoros, Jr. and Stephen A. Schwarzman.
<TABLE>
<S> <C> <C>
[ ] FOR all Nominees (except as [ ] WITHHOLD AUTHORITY (for all [ ] If you wish to withhold authority
indicated) nominees) to vote for any nominee(s), write
his (their) name(s), on the lines
below.
---------------------
---------------------
---------------------
</TABLE>
Continued, and to be signed and dated, on reverse side.
<PAGE>
In their discretion, the Agents are authorized to vote on any other
matters as may properly come before the meeting or any adjournment or
postponement thereof.
The undersigned hereby
ratifies and confirms all that
these Agents may do by virtue
hereof and hereby acknowledges
receipt of the Notice of
Annual Meeting of Stockholders
and the Proxy Statement.
Dated ____________________,1998
------------------------------
------------------------------
Signature(s)*
*Please sign your name(s)
exactly as it (they) appear(s)
opposite. When shares are held
by joint owners, all should
sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
president or other authorized
officer and indicate title. If
a partnership, please sign in
partnership name by authorized
person and indicate title.
Please Mark, Sign, Date and Return
the Proxy Card Promptly Votes should be indicated
Using the Enclosed Envelope. (x) in Black or Blue ink.
