<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
WESTPOINT STEVENS 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)(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:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[WESTPOINT STEVENS LOGO]
April 4, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of WestPoint Stevens Inc. (the "Company") on Wednesday, May 14,
1997, beginning at 10:30 a.m., Eastern Daylight Time, at the Cotton Duck, 6101
Twentieth Avenue (U.S. Highway 29), Valley, Alabama. I look forward to
greeting as many of you as can attend the Annual Meeting.
Holders of the Company's Common Stock are being asked to vote on the
matters listed in the enclosed Notice of Annual Meeting of Stockholders. YOUR
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE MATTERS SET FORTH IN THE
NOTICE.
Whether or not you plan to attend the Annual Meeting, it is important
that your shares of Common Stock be represented and voted at the Annual
Meeting. Accordingly, after reading the enclosed Notice of Annual Meeting and
accompanying Proxy Statement, please sign, date and mail the enclosed proxy
card in the envelope provided.
Very truly yours,
/s/ Holcombe T. Green, Jr.
Holcombe T. Green, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
[WESTPOINT STEVENS LOGO]
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1997
__________________
To the Stockholders
of WestPoint Stevens Inc.:
The Annual Meeting of Stockholders of WestPoint Stevens Inc. (the
"Company") will be held at the Cotton Duck, 6101 Twentieth Avenue (U.S. Highway
29), Valley, Alabama, on Wednesday, May 14, 1997, at 10:30 a.m., Eastern
Daylight Time, for the following purposes:
1. To elect three directors to serve for a term of three years and until
their respective successors are elected and qualified.
2. To approve the adoption of the WestPoint Stevens Inc. Omnibus Stock
Incentive Plan.
3. To ratify the appointment of Ernst & Young LLP, independent certified
public accountants, as auditors for the Company for fiscal 1997.
4. To act upon such other matters as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 20, 1997
are entitled to notice of, and to vote at, the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING AND REGARDLESS OF
THE NUMBER OF SHARES YOU OWN, YOU ARE REQUESTED TO FILL IN, DATE AND SIGN THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY,
AND TO MAIL IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
Your proxy will be revocable by filing with the Secretary a written
revocation or a proxy bearing a later date at any time prior to the time it is
voted, or by attending the Annual Meeting and voting thereat.
By Order of the Board of Directors,
Christopher N. Zodrow
Vice President and Secretary
West Point, Georgia
April 4, 1997
<PAGE> 4
[WESTPOINT STEVENS LOGO]
507 WEST TENTH STREET
WEST POINT, GEORGIA 31833
(706) 645-4000
________________
PROXY STATEMENT
________________
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1997
________________
This Proxy Statement is furnished to holders of Common Stock, par
value $.01 per share (the "Common Stock"), of WestPoint Stevens Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders of the Company to be held on Wednesday, May 14, 1997, at 10:30
a.m., Eastern Daylight Time, at the Cotton Duck, 6101 Twentieth Avenue (U.S.
Highway 29), Valley, Alabama, 36854, and at any adjournment or adjournments
thereof (the "Annual Meeting"). This Proxy Statement and the accompanying form
of proxy are first being mailed to stockholders on or about April 4, 1997.
THE PROXY
Joseph L. Jennings, Jr., Vice Chairman and a member of the Board of
Directors of the Company, and Christopher N. Zodrow, Vice President and
Secretary of the Company, have been selected as proxies by the Board of
Directors of the Company with respect to the matters to be voted upon at the
Annual Meeting.
All shares of Common Stock represented by properly executed proxies
received prior to or at the Annual Meeting and not revoked prior to the Annual
Meeting in accordance with the procedures therefor will be voted and will be
voted as specified in the instructions indicated in such proxies. IF NO
INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS CONTAINED IN THIS PROXY STATEMENT
AND, IN THE DISCRETION OF THE PERSONS NAMED IN THE PROXY, ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
A stockholder may revoke his, her or its proxy at any time prior to
use of such proxy by delivering to the Secretary of the Company a signed notice
of revocation or a later dated and signed proxy or by attending the Annual
Meeting and voting in person. Attendance at the Annual Meeting will not in
itself constitute the revocation of a proxy.
<PAGE> 5
RECORD DATE; SHARES ENTITLED TO VOTE
The Board of Directors of the Company has fixed the close of business
on March 20, 1997 as the date (the "Record Date") for determining the
stockholders entitled to notice of, and to vote at, the Annual Meeting. On the
Record Date, there were 31,191,686 shares of Common Stock outstanding
(excluding 3,756,564 shares in the Company's treasury), with each share
entitled to one vote per share on each matter submitted to stockholders for
consideration at the Annual Meeting.
QUORUM; REQUIRED VOTE
The presence, in person or by proxy, of the holders of record of a
majority of the issued and outstanding shares of Common Stock entitled to vote
at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. With respect to abstentions and broker non-votes, the shares covered
thereby are deemed to be present at the Annual Meeting for purposes of
determining a quorum.
A plurality of the votes cast by the shares of Common Stock entitled
to vote at the Annual Meeting present in person or by proxy is required to
elect the nominees for director in respect of the Election Proposal (as defined
under "BOARD OF DIRECTORS -- Election Proposal").
The affirmative vote of a majority of votes cast by the shares of
Common Stock at the Annual Meeting represented in person or by proxy and
entitled to vote is required to ratify the appointment of Ernst & Young LLP as
the Company's independent auditors. In the case of such approval, abstentions
are not votes cast for such matters, and therefore, are not counted.
The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting and entitled to vote is
required to approve the adoption of the WestPoint Stevens Inc. Omnibus Stock
Incentive Plan (the "Omnibus Stock Incentive Plan"). In the case of such
approval, abstentions are not affirmative votes for such matter, and therefore,
have the same effect as votes against such matter.
On each matter submitted to stockholders for consideration at the
Annual Meeting, only shares of Common Stock that are voted in favor of such
matter (including proxies for which no direction is provided) will be counted
toward approval of such matter. Shares of Common Stock present at the Annual
Meeting that are not voted for a particular matter or shares of Common Stock
present by proxy where the stockholder properly withheld authority to vote for
such matter (including broker non-votes) will not be counted toward approval of
such matter. Stockholders will not be allowed to cumulate their votes in the
election of directors.
A broker non-vote occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that proposal and has
not received instructions from the beneficial owner. With respect to broker
non-votes, the shares of Common Stock are not considered present at the Annual
Meeting as to the proposal for which the broker withheld authority.
Consequently, broker non-votes are not counted regarding any such proposal.
Stockholders are not entitled to appraisal rights or similar rights of
dissenters under the Delaware General Corporation Law in connection with any of
the matters to be acted upon at the Annual Meeting.
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<PAGE> 6
BOARD OF DIRECTORS
ELECTION PROPOSAL
The Board of Directors of the Company currently consists of nine
members, divided into three classes (Class I, Class II and Class III (each of
which has three members)). The terms of office of the members of the Class II
directors expire at the Annual Meeting. The terms of office of the members of
each class of directors are staggered so that the terms of office of no more
than one class expires in any one year. At each annual meeting of
stockholders, the directors elected to succeed the directors in the class whose
terms then expire are elected for a term of office to expire at the third
succeeding annual meeting of stockholders, with each newly-elected director
holding office until his successor is duly elected and qualified, or until his
earlier death, resignation or removal.
The Board of Directors has nominated for election Messrs. Holcombe T.
Green, Jr., Charles W. McCall and John F. Sorte to serve as Class II directors
of the Company until the 2000 Annual Meeting of Stockholders and until their
successors are duly elected and qualified (the "Election Proposal"). Messrs.
Green, McCall and Sorte currently are members of the Board of Directors. The
other six directors (whose names are listed below) will continue in office.
The following table lists the name, age and positions with the Company
of each of the three nominees and each of the continuing directors, as well as
the year in which each such person's term of office will expire and the month
and year in which each director was first elected as a director of the Company
(in each case assuming that each of the nominees is elected at the Annual
Meeting).
<TABLE>
<CAPTION>
Term Positions with the Served as
Name Age Expires Company Director Since
---- --- ------- ------------------- --------------
<S> <C> <C> <C> <C> <C>
NOMINEES
Class II
Holcombe T. Green, Jr. 57 2000 Chairman of the Board and September 1992
Chief Executive Officer
Charles W. McCall 53 2000 Director May 1994
John F. Sorte 49 2000 Director January 1993
CONTINUING DIRECTORS
Class III
John G. Hudson 71 1998 Director September 1992
Joseph L. Jennings, Jr. 59 1998 Director, Vice Chairman March 1993
Douglas T. McClure, Jr. 44 1998 Director September 1992
Class I
M. Katherine Dwyer 48 1999 Director October 1996
Gerald B. Mitchell 69 1999 Director September 1992
Phillip Siegel 54 1999 Director September 1992
</TABLE>
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<PAGE> 7
NOMINEES
HOLCOMBE T. GREEN, JR. Mr. Green is founder and principal of Green
Capital Investors, L.P., a private investment partnership, and certain other
affiliated partnerships. He is Chairman of HBO & Company ("HBOC"), a supplier
of hospital information systems. He also is a director of Georgia Gulf Corp.
and Southwire Company. Mr. Green became Chairman and Chief Executive Officer
of the Company and West Point-Pepperell, Inc., a former subsidiary of the
Company which was merged with and into the Company on December 10, 1993
("WPP"), on October 22, 1992. Mr. Green is Chairman of the nominating
committee and a member of the cotton committee of the Board of Directors of the
Company (the "Nominating Committee" and the "Cotton Committee," respectively).
CHARLES W. MCCALL. Mr. McCall has been President, Chief Executive
Officer and a director of HBOC since January 1991. From 1985 until joining
HBOC, he served as President and Chief Executive Officer of CompuServe, Inc., a
computer services and communications company. Mr. McCall also is a director of
EIS International, Inc. and Physician Support Systems, Inc. Mr. McCall is a
member of the audit committee of the Board of Directors of the Company (the
"Audit Committee") and until November 14, 1996, was a member of the Company's
pension committee (the "Pension Committee"). The Pension Committee is not a
committee of the Board of Directors.
JOHN F. SORTE. Mr. Sorte has been President of New Street Advisors
L.P., a merchant bank, and of New Street Investments L.P., its broker-dealer
affiliate, since he co-founded such entities in March 1994. From April 1992
until February 1994, Mr. Sorte served as President and Chief Executive Officer
of New Street Capital Corporation ("New Street Capital"). Mr. Sorte served as
President and Chief Executive Officer of The Drexel Burnham Lambert Group Inc.
from July 1990 until April 1992, as Executive Vice President and co-head of
Corporate Finance of Drexel Burnham Lambert Incorporated ("Drexel"), an
investment banking firm and predecessor to New Street Capital, from January
1989 to June 1990 and previously as a Managing Director of Drexel. Mr. Sorte
also is a director of Vail Resorts, Inc. (and a member of its audit committee)
and is Chairman of The New York Media Group, Inc. Mr. Sorte is Chairman of the
Pension Committee and until January 1, 1996, was a member of the Nominating
Committee.
Each of the above-named nominees has consented to being named in the
Proxy Statement and will serve as a director if elected. If at the time of the
Annual Meeting, however, any of the above-named nominees should be unable or
decline to serve, the persons named as proxies herein will vote for such
substitute nominee or nominees as the Board of Directors recommends, or vote to
allow the vacancy created thereby to remain open until filled by the Board of
Directors, as the Board of Directors recommends.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION PROPOSAL TO
ELECT THE THREE NOMINEES FOR DIRECTOR NAMED ABOVE.
CONTINUING DIRECTORS
M. KATHERINE DWYER. Ms. Dwyer is Senior Vice President of Revlon,
Inc, a personal care consumer products company, and has been President, Revlon
Cosmetics USA since November 1995. Previously, Ms. Dwyer served as Executive
Vice President and General Manager of Mass Cosmetics and Executive Vice
President of Cosmetics and Fragrance Marketing for Revlon North America. She
joined Revlon in June 1993. Prior to joining Revlon, Ms. Dwyer was Vice
President of Marketing Consumer Products for Clairol, Inc., from 1991 until
1993, Executive Vice President and General Manager for Victoria Creations from
1989 to 1991, and Vice President of US Communications and Group Director of
Skin Care for Avon Products, Inc., from 1987 until 1989. Ms. Dwyer is a
director of Chesapeake Corp. (and a member of its audit committee). She is a
member of the Company's Pension Committee.
4
<PAGE> 8
JOHN G. HUDSON. Mr. Hudson, from July 1986 until his retirement in
September 1990, served as President of Avondale Mills, Inc., a textile
manufacturer. He also is a director of Oneita Industries, Inc. (and a member
of its executive committee and chairman of its compensation committee). Mr.
Hudson is Chairman of the Cotton Committee and a member of the compensation
committee of the Board of Directors (the "Compensation Committee") and the
Nominating Committee.
JOSEPH L. JENNINGS, JR. Mr. Jennings joined WPP as President and
Chief Operating Officer on February 1, 1993 and, upon consummation of the
merger of WPP with and into the Company, assumed the same positions with the
Company. On January 1, 1997 Mr. Jennings left the office of President and
Chief Operating Officer to fill the newly created office of Vice Chairman of
the Board of Directors. Prior to joining WPP, Mr. Jennings spent almost 20
years with Mount Vernon Mills, Inc., a major textile manufacturer of denims and
other fabrics, the last 11 years of which he served as its President and Chief
Operating Officer. Mr. Jennings is a member of the Cotton Committee and until
January 1, 1996, was a member of the Pension Committee.
DOUGLAS T. MCCLURE, JR. Mr. McClure has served as a Managing Director
of The Private Merchant Banking Company, a company which provides capital
raising and financial advisory services to small and medium sized companies,
since February 1996. He served as a Managing Director of New Street Capital
from April 1992 until February 1994. Between 1987 and April 1992, Mr. McClure
served as a Managing Director of Drexel. He also is a director of Ampex
Corporation (and a member of its compensation, audit and stock incentive plan
committees). Mr. McClure is a member of the Audit Committee and the Pension
Committee.
GERALD B. MITCHELL. Mr. Mitchell retired in 1988 after serving as
Chairman of Dana Corporation, an auto parts original equipment manufacturer.
He also is a director of Geo Weston Ltd. (and a member of its pension committee
and chairman of its environment, health and safety committee), Worthington
Industries (and a member of its compensation committee) and Eastman Chemical
Company, Inc. (and a member of its director affairs committee and chairman of
its nominating committee). Mr. Mitchell is Chairman of the Compensation
Committee and a member of the Nominating Committee.
PHILLIP SIEGEL. Mr. Siegel has been Vice President and Chief
Financial Officer of Health Management Systems, Inc., a health care information
systems company, since June 1996. He was an independent business consultant
from February 1993 until June 1996. He served as a senior executive officer of
Presidential Life Insurance Company from December 1989 until February 1993,
most recently as its Senior Vice President. During 1988, Mr. Siegel served as
Chief Operating Officer and Chief Financial Officer of Sherwood Group and
Sherwood Securities. Mr. Siegel is Chairman of the Audit Committee and a
member of the Compensation Committee.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Audit Committee, a
Compensation Committee, a Cotton Committee and a Nominating Committee, the
current members of which are named below.
AUDIT COMMITTEE
The Company's Audit Committee was formed in September 1992 and held
two meetings during the fiscal year ended December 31, 1996 ("Fiscal 1996").
The members of the Audit Committee are Phillip Siegel (Chairman), Charles W.
McCall and Douglas T. McClure, Jr. Among other things, the Audit Committee (i)
reviews the procedures employed in connection with the internal auditing
program, internal control procedures and accounting procedures of the Company,
(ii) consults with the Company's independent auditors, (iii) reviews the
reports submitted by the Company's independent auditors, (iv) reviews with the
Company's management
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compliance reporting and accounting, and (v) makes such reports and
recommendations to the Board of Directors as it deems appropriate.
COMPENSATION COMMITTEE
The Compensation Committee was formed in February 1993 and held four
meetings during Fiscal 1996. The members of the Compensation Committee are
Gerald B. Mitchell (Chairman), John G. Hudson and Phillip Siegel. The function
of the Compensation Committee is to establish salaries, bonuses and other
incentive plans in order to attract persons to serve as, and to retain,
motivate and reward qualified persons serving as, directors, executive officers
and key employees of the Company. In addition, the Compensation Committee
administers the Management Stock Option Plan, the MIP, the Key Employee Stock
Bonus Plan (each as defined under "EXECUTIVE COMPENSATION"), and the 1994
Non-Employee Directors Stock Option Plan (the "Directors Stock Option Plan").
See "APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN."
COTTON COMMITTEE
The Cotton Committee was formed in August 1995. The Cotton Committee
met on various occasions during Fiscal 1996. The members of the Cotton
Committee are John G. Hudson (Chairman), Holcombe T. Green, Jr. and Joseph L.
Jennings, Jr. The function of the Cotton Committee is to review and monitor
the conditions of the cotton supply market, to review cotton purchase and use
planning with Company management and to make such reports to the Board of
Directors as it deems appropriate with respect to this aspect of the Company's
business.
NOMINATING COMMITTEE
The Nominating Committee was formed in February 1994. The Nominating
Committee met four times during Fiscal 1996. The members of the Nominating
Committee are Holcombe T. Green, Jr. (Chairman), Gerald B. Mitchell and John G.
Hudson. The Nominating Committee is responsible for (i) evaluating and
recommending qualified persons as nominees for re-election or election as
directors of the Company; (ii) establishing procedures for identifying
nominees; (iii) recommending criteria for membership on the Board of Directors
or any committee thereof; (iv) recommending directors for membership on, and to
serve as chairman of, any committee of the Board of Directors; (v) recommending
qualified persons to serve as Chairman of the Board of Directors and as senior
executive officers of the Company; and (vi) considering nominees for election
as directors of the Company submitted by stockholders.
The Nominating Committee will consider nominees recommended by a
stockholder entitled to vote for the election of the director nominated, upon
written notice of such stockholder given to the Secretary in accordance with
the notice provisions and procedures set forth in the By-laws. With respect to
an election to be held at an annual meeting, such notice must be given not less
than 60 nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting, unless the date of the annual meeting is advanced by
more than 30 or delayed by more than 60 days from such anniversary, in which
case such notice must be given not less than 60 nor more than 90 days prior to
such annual meeting or the tenth day following the day on which public
announcement is first made of the date of such meeting, whichever is later.
Other requirements may apply in the event of an election involving an increase
in the number of members of the Board of Directors. With respect to an
election to be held at a special meeting of stockholders at which directors are
to be elected pursuant to the Company's notice of special meeting, such notice
must be given not less than 60 nor more than 90 days prior to such special
meeting or the tenth day following the day on which public announcement is
first made of the date of the special meeting and of the nominees proposed by
the Board to be elected at such meeting, whichever is later. Each such notice
shall set forth as to each nominee, each stockholder giving the notice and as
to the
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<PAGE> 10
beneficial owner, if any, on whose behalf the nomination is made: (i) the
name, age, business address and residence address of each such person, (ii) the
principal occupation or employment of each such person, (iii) the class and
number of shares of Common Stock of the Company which are owned beneficially
and of record by each such person and (iv) any other information relating to
each such person that is required to be disclosed in connection with the
solicitation of proxies for the election of directors or as otherwise required
under applicable proxy rules (including, without limitation, the nominee's
written consent to being named in a proxy statement as a nominee and to serving
as a director, if elected).
DIRECTORS' COMPENSATION
Directors receive a $25,000 retainer fee per year, plus a fee of
$1,500 ($1,000 prior to January 1, 1997) for each Board and committee meeting
attended. In addition, the chairman of a committee receives an additional
$4,000 retainer fee per year and all committee members receive an additional
$3,000 retainer fee per year. Mr. Hudson is paid a fee of $1,000 per month in
connection with meetings of the Cotton Committee rather than $1,500 for each
such meeting. Directors and other members of any committee of the Company who
are employees of the Company or its affiliates are not paid extra compensation
or retainer fees for their services on the Board or any committee.
Stock options exercisable for shares of Common Stock are granted to
non-employee directors of the Company pursuant to the Directors Stock Option
Plan in order to provide non-employee directors of the Company an opportunity
to acquire a proprietary interest in the Company through automatic,
non-discretionary awards of Common Stock and thus to create in such directors
an increased interest in and a greater concern for the welfare of the Company
and its subsidiaries. Also see "EXECUTIVE COMPENSATION" and "APPROVAL OF
OMNIBUS STOCK INCENTIVE PLAN" for information concerning the granting of
options to purchase, and awards of, Common Stock to directors.
DIRECTOR ATTENDANCE
The Board of Directors held four meetings during Fiscal 1996. None of
the incumbent directors attended fewer than 75% of the aggregate of (i) the
total number of meetings of the Board of Directors (held during the periods
such director served) and (ii) the total number of meetings of all committees
of the Board of which they were members (held during the periods such director
served). See "-- Committees of the Board of Directors."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The members of the Compensation Committee are Gerald B. Mitchell
(Chairman), John G. Hudson and Phillip Siegel. None of the current members of
the Compensation Committee of the Board of Directors of the Company is an
executive officer of the Company.
MANAGEMENT
On December 10, 1993, certain subsidiaries of the Company were merged
with and into each other and into the Company, with the Company as the ultimate
sole surviving corporation (collectively, the "Mergers"). Pursuant to the
Mergers, the Company acquired the publicly held shares of its indirect
subsidiary, WPP. On such date, the officers of WPP became the officers of the
Company. Accordingly, the information set forth under this caption and the
caption "EXECUTIVE COMPENSATION" includes information with respect to the
Company and WPP. References in this Proxy Statement to the Company prior to
December 10, 1993 include WPP and the Company's other former and present
subsidiaries, unless the context otherwise requires.
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<PAGE> 11
EXECUTIVE OFFICERS
The following individuals are the executive officers of the Company:
<TABLE>
<CAPTION>
NAME OF OFFICER AGE TITLE
--------------- --- -----
<S> <C> <C>
Holcombe T. Green, Jr. . . . . . . . . . . . . . 57 Chairman of the Board of Directors and
Chief Executive Officer
Morgan M. Schuessler . . . . . . . . . . . . . . 61 Executive Vice President/Finance and Chief
Financial Officer
Thomas J. Ward . . . . . . . . . . . . . . . . . 50 President and Chief Operating Officer
William F. Crumley . . . . . . . . . . . . . . . 59 Executive Vice President/Manufacturing
Richmond B. Terry . . . . . . . . . . . . . . . . 63 Senior Vice President/Manufacturing Services
Ronald M. Hester . . . . . . . . . . . . . . . . 53 President-Alamac Knit Fabrics, Inc.
Robert J. Gehm . . . . . . . . . . . . . . . . . 38 Senior Vice President
John T. Toolan . . . . . . . . . . . . . . . . . 38 Senior Vice President
Dale C. Williams . . . . . . . . . . . . . . . . 42 Senior Vice President
</TABLE>
For a discussion of the business experience of Mr. Green, see "BOARD
OF DIRECTORS -- Election Proposal."
MORGAN M. SCHUESSLER. Mr. Schuessler joined the Company as Executive
Vice President/Finance and Chief Financial Officer on April 1, 1993. Since
1982 until joining the Company, Mr. Schuessler was employed by Dixie Yarns,
Inc., most recently as its Senior Vice President and Chief Financial Officer.
Mr. Schuessler is a member of the Pension Committee.
THOMAS J. WARD. Mr. Ward has been President and Chief Operating
Officer since January 1, 1997. Mr. Ward was Executive Vice President/Sales and
Marketing and President-Home Fashions Division from October 1992 and September
1992, respectively, until December 31, 1996. Mr. Ward originally joined the
Company in connection with its acquisition of J.P. Stevens & Co., Inc.
("Stevens") in 1988; he had been with Stevens since 1969. Prior to his present
position, Mr. Ward served as Vice President/Sales of Stevens since August 1988
and as President of Stevens since August 1989.
WILLIAM F. CRUMLEY. Mr. Crumley originally joined the Company as
Vice President/Manufacturing for Stevens Terry and Bath Products in 1989. He
then became Vice President/Manufacturing for Bed Products, Finishing
Fabrication and Distribution, and in 1991 assumed the same additional
responsibilities for the Company's accessories operations. In September 1992,
Mr. Crumley became Executive Vice President/Manufacturing of the Company.
RICHMOND B. TERRY. Mr. Terry joined the Company in 1950. Mr. Terry
has held his current position since May 1989 and prior thereto served as Vice
President of Stevens since June 1988.
RONALD M. HESTER. Mr. Hester assumed his present position with Alamac
Knit Fabrics, Inc., a wholly owned subsidiary of the Company ("Alamac"), in
March 1993. (Until July 1993, Alamac was operated as a division of the
Company.) Mr. Hester originally joined the Company in 1968 upon its
acquisition of Alamac's
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predecessor. Prior to his present position and during the period since 1990, Mr.
Hester served as Plant Manager, General Manager and Senior Vice President of
Alamac.
ROBERT J. GEHM. Mr. Gehm has been Senior Vice President of the
Company since January 1, 1997. Mr. Gehm originally joined the Company in
connection with its acquisition of Stevens in 1988. He had been with Stevens
since 1984. Prior to his present position he served as Senior Vice
President/Home Fashions Division.
JOHN T. TOOLAN. Mr. Toolan has been Senior Vice President of the
Company since January 1, 1997. Prior to his present position Mr. Toolan served
as Senior Vice President/Home Fashions Division from January 1, 1996 and Vice
President/Home Fashions Division from October 1, 1994. Since May 1990 until
joining the Company in October 1994, Mr. Toolan was Vice President Sales of
Crown Crafts Inc.
DALE C. WILLIAMS. Mr. Williams has been Senior Vice President of the
Company since January 1, 1997. Prior to his present position he served as
Senior Vice President/Home Fashions Division since January 1, 1996 and Vice
President Marketing/Home Fashions Division since March 15, 1993. Since 1984
until joining the Company in March 1993, Mr. Williams was employed by Pillowtex
Corp. most recently as Senior Vice President/Marketing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 10,
1997 (except as otherwise specified in the footnotes thereto) with respect to
the beneficial ownership (as such term is defined under Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of the Common
Stock by (i) each person who is the beneficial owner of more than 5% of the
Common Stock outstanding as of such date, (ii) all directors of the Company and
the nominees for director whose names are set forth under "BOARD OF DIRECTORS
- -- Election Proposal," (iii) the Named Officers (as defined under "EXECUTIVE
COMPENSATION"), and (iv) all directors and executive officers as a group, as
reported by each such person.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner(1) Beneficial Ownership of Class
------------------------------------ -------------------- --------
<S> <C> <C> <C>
Holcombe T. Green, Jr. . . . . . . . . . . . . . . . . . . . . 9,635,601(2) 30.9%
HTG Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,204,153(2) 29.5%
WPS Investors, L.P. . . . . . . . . . . . . . . . . . . . . . . 9,204,153(2) 29.5%
3343 Peachtree Road, N.E. Suite 1420
Atlanta, Georgia 30326
John G. Hudson . . . . . . . . . . . . . . . . . . . . . . . . 38,422(3) *
Charles W. McCall . . . . . . . . . . . . . . . . . . . . . . . 37,000(4) *
Douglas T. McClure, Jr. . . . . . . . . . . . . . . . . . . . . 30,000(5) *
Gerald B. Mitchell . . . . . . . . . . . . . . . . . . . . . . 30,000(6) *
Phillip Siegel . . . . . . . . . . . . . . . . . . . . . . . . 29,000(7) *
John F. Sorte . . . . . . . . . . . . . . . . . . . . . . . . . 60,000(8) *
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C> <C>
Joseph L. Jennings, Jr. . . . . . . . . . . . . . . . . . . . . 38,100(9) *
Thomas J. Ward . . . . . . . . . . . . . . . . . . . . . . . . 113,666(10) *
Morgan M. Schuessler . . . . . . . . . . . . . . . . . . . . . 99,775(11) *
William F. Crumley . . . . . . . . . . . . . . . . . . . . . . 67,288(12) *
All Directors and Executive Officers as a group (17 persons) . 10,264,218(13) 32.6%
</TABLE>
_______________________________
* Represents less than 1%
(1) Except as otherwise noted, the address of each person who is an officer or
director of the Company is c/o WestPoint Stevens Inc., 507 West Tenth Street,
West Point, Georgia 31833.
(2) As of March 10, 1997, Mr. Green possessed shared voting and investment
power with respect to (i) 9,204,153 shares held directly by WPS Investors,
L.P., of which HTG Corp., a company owned by him, is general partner; and (ii)
116,250 shares held by Hall Family Investments, L.P., of which Mr. Green's wife
is general partner. In addition, the total amount for Mr. Green includes
308,765 shares owned directly by Mr. Green and 6,433 shares held through the
WestPoint Stevens Retirement Savings Value Plan (the "Savings Plan").
(3) Includes 10,000 shares held directly, 200 shares held indirectly as
custodian for a grandson, 200 shares held by Mr. Hudson's daughter as
custodian for another grandson, 3,022 shares held in trust for grandchildren
and 25,000 shares as to which Mr. Hudson holds currently exercisable options.
Mr. Hudson disclaims beneficial ownership of the 200 shares held as custodian
for a grandson, the 200 shares held by his daughter for the other grandson and
the 3,022 shares held in trust for grandchildren.
(4) Includes 10,000 shares held directly, 2,000 shares held indirectly by
nieces and nephews and 25,000 shares as to which Mr. McCall holds currently
exercisable options. Mr. McCall disclaims beneficial ownership of the 2,000
shares held by nieces and nephews.
(5) Includes 5,000 shares held directly and 25,000 shares as to which Mr.
McClure holds currently exercisable options.
(6) Includes 5,000 shares held directly and 25,000 shares as to which Mr.
Mitchell holds currently exercisable options.
(7) Includes 4,000 shares held directly and 25,000 shares as to which Mr.
Siegel holds currently exercisable options.
(8) Includes 35,000 shares held directly and 25,000 shares as to which Mr.
Sorte holds currently exercisable options.
(9) Includes 17,835 shares held directly, 20,000 shares as to which Mr.
Jennings holds currently exercisable options and 265 shares held through the
Savings Plan. See "EXECUTIVE COMPENSATION -- Employment Agreements,
Termination Provisions and Change in Control Arrangements."
10
<PAGE> 14
(10) Includes 12,010 shares held directly, 87,000 shares as to which Mr. Ward
holds currently exercisable options and 14,656 shares held through the Savings
Plan. See "EXECUTIVE COMPENSATION -- Employment Agreements, Termination
Provisions and Change in Control Arrangements."
(11) Includes 41,344 shares held directly, 5,000 shares held by Mr.
Schuessler's wife, 50,000 shares as to which Mr. Schuessler holds currently
exercisable options and 3,431 shares held through the Savings Plan. Mr.
Schuessler disclaims beneficial ownership of the 5,000 shares held by his wife.
See "EXECUTIVE COMPENSATION -- Employment Agreements, Termination Provisions
and Change in Control Arrangements."
(12) Includes 12,032 shares held directly, 55,000 shares as to which Mr.
Crumley holds currently exercisable options and 256 shares held through the
Savings Plan. See "EXECUTIVE COMPENSATION -- Employment Agreements,
Termination Provisions and Change in Control Arrangements."
(13) Includes 473,198 shares held directly, 9,791,020 shares held indirectly,
of which 34,195 shares are held through the Savings Plan, 276,000 shares as to
which certain members of management hold currently exercisable options, and
150,000 shares as to which non-employee directors hold currently exercisable
options. See footnotes 2-12.
EXECUTIVE COMPENSATION
The following table sets forth information concerning total
compensation earned by or paid to the Chief Executive Officer and the four
other highest-paid executive officers of the Company employed as of December
31, 1996 (the "Named Officers") during the fiscal years indicated for services
rendered to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
------------------- ------------------------
Restricted Stock
Stock Options (# All Other
Name and Principal Salary Bonus Awards of Comp.
Position Year ($) ($)(1) ($)(2) shares)(3) ($)(4)
- ------------------ ------ --------- ------ ------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
Holcombe T. Green, Jr. 1996 629,500 755,400 484,934 200,000 1,500
Chairman and Chief 1995 622,000 684,946 682,749 0 1,500
Executive Officer 1994 600,000 720,000 0 0 0
Joseph L. Jennings, Jr. 1996 536,500 643,800 404,111 0 1,500
Vice Chairman(5) 1995 518,333 570,789 568,961 0 1,500
1994 500,000 600,000 0 0 0
Thomas J. Ward . . . . 1996 335,083 402,100 252,565 100,000 1,500
President and Chief 1995 323,917 388,700 355,018 0 1,500
Operating 1994 311,000 373,200 0 0 0
Officer(5)
Morgan M. Schuessler . 1996 280,167 336,200 210,605 50,000 1,500
Executive Vice 1995 270,083 297,416 295,845 0 1,500
President 1994 259,167 311,000 0 0 0
William F. Crumley . . 1996 258,250 309,900 194,291 50,000 1,500
Executive Vice 1995 249,167 299,000 273,096 0 1,500
President 1994 239,169 287,000 0 0 0
</TABLE>
11
<PAGE> 15
(1) Bonuses earned for 1994 were paid in the first quarter of 1995.
Bonuses earned for 1995 were paid in the first quarter of Fiscal 1996,
except Mr. Green received partial payment of his bonus in 1995 and the
remainder in the first quarter of Fiscal 1996. Bonuses earned for
Fiscal 1996 were paid in the first quarter of 1997.
(2) Bonus Awards earned under the WestPoint Stevens Inc. 1995 Key Employee
Stock Bonus Plan (the "Key Employee Stock Bonus Plan") are subject to
vesting requirements. The dollar value is based upon the share price
on the date of grant of the Bonus Awards.
(3) Options granted to the Named Officers in Fiscal 1996 are subject to
stockholder approval and are subject to vesting requirements. See
"APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN."
(4) These amounts represent the Company's matching contribution under the
Savings Plan which was $1,500 for each of the Named Officers.
(5) Prior to January 1, 1997, Mr. Jennings' title was President and Chief
Operating Officer and Mr. Ward's title was Executive Vice
President/Sales and Marketing.
SENIOR MANAGEMENT INCENTIVE PLAN
Pursuant to the WestPoint Stevens Inc. Senior Management Incentive
Plan (the "MIP"), performance awards were made to key employees of the Company
and its subsidiaries with respect to Fiscal 1996. The purpose of this
incentive plan is to provide additional compensation above base salary to key
employees if the Company meets or exceeds certain performance goals established
by the Compensation Committee. Incentive payments for certain participants are
based solely upon predetermined annual operating profit goals of the Company.
Other participants' payments are based on the operating profit (as defined in
the MIP) of the Company and certain business units and/or divisions. The MIP
provides that no participant will receive payments under the plan unless the
Company's actual annual operating profit equals or exceeds 90% of the
predetermined operating profit goal. Incentive payments to each of the Named
Officers under the MIP and previous years' management incentive plans are
included in the Summary Compensation Table.
Performance awards payable to the Named Officers with respect to 1997
will be determined based on the terms and provisions of the MIP with new
predetermined operating profit goals established by the Compensation Committee
in writing during the first ninety days of 1997.
KEY EMPLOYEE STOCK BONUS PLAN
Pursuant to the Key Employee Stock Bonus Plan, the Company may grant
bonus awards of shares of Common Stock to those key employees of the Company
who are deemed eligible to participate in the Key Employee Stock Bonus Plan,
based on the Company's achievement of certain pre-established earnings levels
during the Company's fiscal year. On February 16, 1996, the Company granted
Bonus Awards (as defined in the Key Employee Stock Bonus Plan) covering an
aggregate of 337,338 shares of Common Stock to certain key employees, including
each of the Named Officers. On February 13, 1997, the Compensation Committee
certified in writing that Bonus Awards for Fiscal 1996 were earned (except for
Bonus Awards forfeited by certain individuals). Twenty percent of each earned
Bonus Award for Fiscal 1996 vested on February 13, 1997, and the remainder of
such Bonus Award is subject to vesting ratably on January 1 of each of years
1998 through 2001.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Stock options exercisable for shares of Common Stock are granted to
certain key employees of the Company pursuant to the 1993 Management Stock
Option Plan (the "Management Stock Option Plan") in order to secure and retain
the services of persons capable of filling key positions with the Company, to
encourage their continued employment and to increase their interest in the
growth and performance of the Company by providing
12
<PAGE> 16
them with an ownership stake. The following table provides information on stock
options granted to the Named Officers during the last fiscal year pursuant to
the Management Stock Option Plan.
The table also shows, among other data, hypothetical potential gains
from stock options granted in Fiscal 1996. These hypothetical gains are based
entirely on assumed annual growth rates of 5% and 10% in the value of the price
of Common Stock over the ten-year life of the stock options granted in Fiscal
1996 (which would equal a total increase in the Company's stock price of 62.9%
and 159.4%, respectively, from the date of the grant). The assumed rates of
growth were selected by the Securities and Exchange Commission (the
"Commission") for illustrative purposes only, and are not intended to predict
future stock prices, which will depend upon market conditions and the Company's
future performance and prospects. See "APPROVAL OF OMNIBUS STOCK INCENTIVE
PLAN."
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Ten-Year
Individual Grants Term of Options
--------------------------------------- -----------------------------------
% of Total Exercise
Number of Options/SARs Price
Options/SARs Granted to All Per Share Expiration At 5% Annual At 10% Annual
Name of Executive(1) Granted Employees ($/Sh) Date Growth Rate ($) Growth Rate($)
- -------------------- ------------ -------------- --------- ----------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Holcombe T. Green, Jr.(2) 200,000 23% 26.625 11/19/2006 3,348,863 8,486,679
Joseph L. Jennings, Jr. 0 N/A N/A N/A N/A N/A
Thomas J. Ward(3) 100,000 11% 26.875 11/14/2006 1,690,154 4,283,183
Morgan M. Schuessler(3) 50,000 6% 26.875 11/14/2006 845,077 2,141,591
William F. Crumley(3) 50,000 6% 26.875 11/14/2006 845,077 2,141,591
</TABLE>
________________________
(1) Options granted to the Named Officers in Fiscal 1996 are subject to
stockholder approval and subject to vesting requirements. See "APPROVAL OF
OMNIBUS STOCK INCENTIVE PLAN."
(2) Options were granted on November 19, 1996, subject to stockholder approval.
(3) Options were granted on November 14, 1996, subject to stockholder approval.
FISCAL YEAR-END OPTION HOLDINGS
The following table summarizes for each of the Named Officers the total
number of unexercised options for Common Stock, if any, held at December 31,
1996, and the aggregate dollar value of unexercised in-the-money options for
Common Stock, if any, held at December 31, 1996. Value of unexercised
in-the-money options at fiscal year-end is the difference between the exercise
or base price of such options and the fair market value of the underlying
Common Stock on December 31, 1996, which was $29 7/8 per share. These values
have not been, and may never be, realized, as these options have not been, and
may never be, exercised. Actual gains, if any, upon exercise will depend on
the value of Common Stock on the date of any exercise of options.
13
<PAGE> 17
AGGREGATED OPTION/SAR EXERCISES IN THE
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Shares (at year end)
Acquired Number of Unexercised in-the-Money
on Value Options at FY-End (#) Options at FY-End ($)
Exercise Realized -------------------------- ----------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Holcombe T. Green, Jr. 0 0 0 200,000(1) 0 650,000
Joseph L. Jennings, Jr. 55,000 540,000 178,750 41,250 3,172,031 682,969
Thomas J. Ward 0 0 69,000 121,000(2) 1,140,375 625,875
Morgan M. Schuessler 0 0 43,750 56,250(3) 760,156 258,594
William F. Crumley 0 0 43,750 62,500(4) 735,781 350,938
</TABLE>
(1) Includes 200,000 shares granted on November 19, 1996, which are subject to
stockholder approval. See "APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN."
(2) Includes 100,000 shares granted on November 14, 1996, which are subject to
stockholder approval. See "APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN."
(3) Includes 50,000 shares granted on November 14, 1996, which are subject to
stockholder approval. See "APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN."
(4) Includes 50,000 shares granted on November 14, 1996, which are subject to
stockholder approval. See "APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN."
PENSION PLAN AND RETIREMENT PLANS
WestPoint Pension Plan
Executive officers of the Company and certain of its subsidiaries are
covered by the WestPoint Stevens Inc. Retirement Plan (the "WestPoint Pension
Plan"). The WestPoint Pension Plan covers all salaried employees of the
Company and certain subsidiaries and affiliates who have met eligibility
requirements and may include certain hourly employees if designated for
coverage.
Contributions to the plan are computed on an actuarial basis and, as
such, individual employee payments (or accruals) cannot be calculated until
retirement. Compensation covered by the pension plan consists of all payments
made to a participant for personal services rendered as an employee of the
Company that are subject to federal income tax withholding, including before
tax contributions to certain employee benefit plans and excluding imputed
income attributable to certain fringe benefit programs. With respect to
executive officers, plan compensation covers up to a maximum of $150,000 per
individual for Fiscal 1996. The plan provides that participants' benefits
fully vest after five years of service or the attainment of age 65.
Retirement benefits for the WestPoint Pension Plan are computed as the
sum of 1% of a participant's average compensation (the annual average of five
consecutive, complete plan years of highest compensation during the last 10
years of service) multiplied by the years of benefit service, plus 0.6% of a
participant's average compensation which exceeds the participant's Social
Security Integration Level (equal to $27,576 in Fiscal 1996), multiplied by the
participant's years of benefit service, not to exceed 35 years.
The following table indicates the approximate amounts of annual
retirement income that would be payable under the WestPoint Pension Plan based
on various assumptions as to compensation and years of service for certain
employees. There is no social security or other offset deducted from the
amounts shown.
14
<PAGE> 18
PENSION PLAN TABLE(1)
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------
5 YEAR(2)
COMPENSATION 15 20 25 30 35
- -------------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 250,000 . . . . $ 57,518 $ 76,691 $ 95,864 $115,036 $134,209
300,000 . . . . 69,518 92,691 115,864 139,036 162,209
350,000 . . . . 81,518 108,691 135,864 163,036 190,209
400,000 . . . . 93,518 124,691 155,864 187,036 218,209
450,000 . . . . 105,518 140,691 175,864 211,036 246,209
500,000 . . . . 117,518 156,691 195,864 235,036 274,209
550,000 . . . . 129,518 172,691 215,864 259,036 302,209
600,000 . . . . 141,518 188,691 235,864 283,036 330,209
650,000 . . . . 153,518 204,691 255,864 307,036 358,209
700,000 . . . . 165,518 220,691 275,864 331,036 386,209
750,000 . . . . 177,518 236,691 295,864 355,036 414,209
800,000 . . . . 189,518 252,691 315,864 379,036 442,209
850,000 . . . . 201,518 268,691 335,864 403,036 470,209
900,000 . . . . 213,518 284,691 355,864 427,036 498,209
950,000 . . . . 225,518 300,691 375,864 451,036 526,209
1,000,000 . . . . 237,518 316,691 395,864 475,036 554,209
1,050,000 . . . . 249,518 332,691 415,864 499,036 582,209
1,100,000 . . . . 261,518 348,691 435,864 523,036 610,209
1,150,000 . . . . 273,518 364,691 455,864 547,036 638,209
1,200,000 . . . . 285,518 380,691 475,864 571,036 666,209
1,400,000 . . . . 333,518 444,691 555,864 667,036 778,209
1,600,000 . . . . 381,518 508,691 635,864 763,036 890,209
</TABLE>
____________________________________
(1) Assumes individual retires at age 65 with indicated years of service but
further assumes covered compensation as it was determined in Fiscal 1996,
which was $27,576 (Table I of IRS Notice 85-4), as updated each year for
annual covered compensation. Includes benefits payable under the
Supplemental Retirement Plan (as defined under "-- Supplemental Retirement
Plan").
(2) Represents the average of the annual covered compensation for the five
consecutive, complete plan years of highest compensation during the last 10
years of service.
As of the date hereof, Messrs. Green, Jennings, Ward, Schuessler and Crumley
have 4.5, 4.2, 21.3, 4 and 7.9 years, respectively, of credited service under
the WestPoint Pension Plan. Messrs. Green's, Jennings', and Schuessler's
benefits are not yet vested. The estimated annual benefits payable under the
WestPoint Pension Plan and the Supplemental Retirement Plan to Mr. Crumley and
Mr. Ward, as of December 31, 1996, would be based on $423,498.14, and
$544,233.15, respectively, which were their annual average compensation
received for their five consecutive, complete plan years of highest
compensation during their last ten years of service.
15
<PAGE> 19
Supplemental Retirement Plan
The Company's Supplemental Retirement Plan for Eligible Executives
("Supplemental Retirement Plan") provides for payment of amounts which would
have been paid under the WestPoint Pension Plan but for the limitations on
covered compensation and benefits applicable to qualified retirement plans
imposed by the Internal Revenue Code of 1986, as amended (the "Code"). The
Supplemental Retirement Plan is non-qualified and benefits are paid from the
general assets of the Company. Benefits payable under the Supplemental
Retirement Plan are included in the "Pension Plan Table" above.
Supplemental Executive Retirement Plan
The Supplemental Executive Retirement Plan (the "Executive Retirement
Plan") provides an enhanced level of post-retirement income to those executives
who participated in the 1982 Restricted Stock and Performance Share Plan (of
WPP) and its successor plans (collectively, the "RSPSP"), all of which were
terminated in the first half of 1989. The benefit is based on the executive's
average monthly compensation ("AMC"), including salary, bonus and commissions
during the 60 consecutive calendar months during which compensation was highest
out of the executive's last 120 calendar months of employment. The Executive
Retirement Plan provides a monthly benefit calculated as a single life and
10-year certain annuity based upon the following formula:
3.5% x (AMC) x (lesser of 10 or number of years of service
under RSPSP) plus 1% x (AMC) x (years of service under RSPSP
in excess of 10 not to exceed 30) minus benefits payable under
the WestPoint Pension Plan and the Supplemental Retirement
Plan.
The Executive Retirement Plan was frozen by the Company as of December
31, 1993. At such time, seven of the Company's current executives were
accruing benefits under the Executive Retirement Plan. Of the Named Officers,
only Mr. Ward was accruing a benefit under the Executive Retirement Plan, which
as of December 31, 1996 entitled him to gross monthly payments of $21,939.40
commencing on his 65th birthday, subject to reduction in proportion to
increases in benefits under the WestPoint Pension Plan and the Supplemental
Retirement Plan.
EMPLOYMENT AGREEMENTS, TERMINATION PROVISIONS AND CHANGE IN CONTROL
ARRANGEMENTS
The Company entered into employment agreements with Messrs. Green
(effective as of March 8, 1993), Jennings (effective as of February 1, 1993),
Ward (effective as of March 8, 1993), and Schuessler (effective as of April 1,
1993).
Each agreement is for a three-year term and, except for Mr.
Schuessler's employment agreement, is automatically renewable for successive
additional one-year terms, unless a notice of termination is given one year
prior to the expiration of any such term. Mr. Schuessler's employment
agreement is automatically extended upon January 1 of each year of the term of
his employment for successive additional one-year periods, except for the year
in which he attains the age of 65 (in which event any extension period for that
year expires on his 65th birthday), unless a notice of termination is given on
or prior to January 1 of each year of Mr. Schuessler's term of employment.
Each executive receives an annual base salary, subject to annual review.
Annual base salaries in Fiscal 1996 were as follows: Mr. Green -- $630,000;
Mr. Jennings -- $538,000; Mr. Ward -- $336,000; and Mr. Schuessler -- $281,000.
For 1997 the annual base salary for each of the following executives was
increased effective January 1, 1997 to the following: Mr. Green -- $650,000;
Mr. Ward -- $400,000; and Mr. Schuessler -- $300,000. Effective January 1,
1997, Mr. Jennings' employment agreement was superseded by a new agreement
16
<PAGE> 20
under which he left the office of President and Chief Operating Officer and
became Vice Chairman of the Board. Although no longer responsible for daily
management of operations of the Company, Mr. Jennings remains an employee of the
Company. Under his new agreement his base salary is $120,000 for 1997 and he
continues to participate in the annual cash bonus and stock bonus programs. Mr.
Green also is entitled under his employment agreement to reimbursement from the
Company for all reasonable living expenses for maintaining a residence in New
York, New York, that are reasonably attributable to business time he spends
there for the Company. Each executive also is entitled to receive an annual
bonus in an amount initially up to 120% of such executive's annual base salary
based on the Company's achievement of certain performance goals in accordance
with the Company's management incentive plan in existence from time to time.
See "-- Senior Management Incentive Plan" and "Key Employee Stock Bonus Plan."
Upon a termination of employment by the Company without "Cause" or by
the executive for "Good Reason" (which includes, among other things, a change
in control of the Company in certain circumstances), each of the following
executives will receive the following payments within 30 days after such
termination becomes effective (in addition to all compensation owed to the
executive at the time of such termination): a one-time, lump-sum cash payment
equal to the sum of (i) two times the executive's 1993 annual base salary
(plus, in the case of Mr. Green, $50,000) and (ii) the maximum bonus amount
payable to such executive under the management incentive plan applicable to the
year in which such termination becomes effective, whether or not the
requirements otherwise applicable to the payment of such bonus amount under
such plan have been met. Accordingly, if such a termination were to occur in
1997, Mr. Green would be entitled to a payment of $2,030,000; Mr. Ward --
$1,080,000; and Mr. Schuessler -- $860,000. In addition, the Company has
agreed to make an indemnity payment to each executive with respect to any of
the aforementioned lump-sum cash payments and any payments under any plan or
other compensatory arrangement in connection therewith, in an amount equal to
the sum of (i) the excise tax, if any, imposed on each executive under Section
4999 of the Code, in respect of any such payments and (ii) any federal, state
or local income tax imposed on any such indemnity payment. In addition, each
executive's then unvested options will become immediately vested at the time of
such termination and each executive will be entitled to receive all fringe
benefits provided by the Company under such agreements for a period of one year
following such termination (see "--Option/SAR Grants in Last Fiscal Year" and
"--Fiscal Year-End Option Holdings").
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee sets the compensation policies applicable
to the Company's executive officers.
General Policies. The goals of the Company's executive compensation
program for Fiscal 1996 were to attract, retain, motivate and reward qualified
persons serving as executive officers. To achieve the goals of the program,
the Company relies primarily on salary, annual bonuses and stock options.
The salary levels for existing executive officers depend primarily on
individual levels of responsibility within the Company. The level of salaries
for newly hired executive officers, while similarly dependent on individual
levels of responsibility within the Company, also is affected by the market for
executive talent. Additional consideration in setting salary levels is given
to the Company's competitive position in its industry and the need to establish
compensation and terms of employment that will attract and retain the
leadership the Company believes necessary to maintain its position. The
Compensation Committee also takes into account the expenses of relocation and
the loss of accrued benefits.
17
<PAGE> 21
Bonus levels for executive officers and other key employees of the
Company depend on performance and are designed to encourage the achievement of
certain annual operating profit goals. Annual bonuses for Fiscal 1996 for
executive officers and certain other key employees were determined by the
Compensation Committee under the MIP. In the case of the most senior executive
officers, 50% or more of total compensation depended on exceeding predetermined
annual operating profit goals. Other participants' payments were based on a
combination of factors, including the operating profit of the Company and
certain business units and/or divisions. The MIP provided for threshold
incentive payments to all participants only when actual annual operating profit
equaled or exceeded 90% of the predetermined annual operating profit goal.
Annual bonuses for 1997 for the Named Officers will be determined under the MIP
based upon whether the Company meets or exceeds certain performance goals
established by the Compensation Committee for 1997. See "-- Senior Management
Incentive Plan."
The Management Stock Option Plan provides for the grant by the Company
of stock options exercisable for Common Stock to certain key employees of the
Company. The stock options offered pursuant to the Management Stock Option
Plan are a matter of separate inducement to key employees and are not granted
in lieu of any other compensation. By means of the Management Stock Option
Plan, the Company seeks to retain the services of persons now holding key
positions with the Company and to secure and retain the services of persons
capable of filling such positions by providing them with an ownership stake in
the Company. See "--Option/SAR Grants in Last Fiscal Year." The number of
options held by a key employee is not a factor in determining or otherwise
limiting future grants. Such a factor could create an incentive to exercise
options and sell the underlying shares, defeating the Company's objective of
providing key employees with an ownership stake in the Company's business.
In order to provide broad flexibility in designing stock-based
incentives, the Board of Directors has approved, subject to approval of the
Company's stockholders, the Omnibus Stock Incentive Plan, which is an amendment
and restatement of the Management Stock Option Plan. A committee appointed by
the Board of Directors to administer the Omnibus Stock Incentive Plan will be
able to choose from among six categories of incentive awards: options, stock
appreciation rights, restricted shares, deferred shares, performance shares and
performance units. See "APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN."
In order to advance the interest of the Company and its stockholders
by motivating key employees to attain extraordinary performance exceeding
industry norm, promote the long-term success and growth of the Company and to
remain in the service of the Company, participants in the Key Employee Stock
Bonus Plan may receive, if the Company achieves certain performance criteria,
annual bonuses, payable in shares of Common Stock of the Company, equal to 80%
of their base salary. Earned Bonus Awards are subject to a vesting schedule
determined by the Compensation Committee, provided, however, that at least 20%
of the shares of Common Stock earned will vest on January 1 of each of the five
calendar years following the performance year for which such Bonus Awards are
earned.
Compensation of the Chief Executive Officer. Mr. Green's compensation
is determined pursuant to the principles noted above and by the terms of his
employment agreement. Mr. Green will receive 25,356 shares of Common Stock
under the terms of the Key Employee Stock Bonus Plan in 1997 for Fiscal 1996.
The only other component of his compensation for Fiscal 1996 that was not
determined under the terms of his employment agreement was his annual bonus,
which was determined under the MIP. The Compensation Committee believes that
Mr. Green, as a substantial stockholder of the Company, is committed to acting
to optimize overall Company performance to the benefit of all stockholders, and
that he demonstrated such commitment in Fiscal 1996. In Fiscal 1996, Mr. Green
was instrumental in, among other things, the continued implementation of
aggressive cost reduction and capital expenditure programs as well as in
substantially increasing earnings per share. In the Compensation Committee's
view, these actions on the part of Mr. Green improved the Company's operating
results and capital structure.
18
<PAGE> 22
Compliance with Section 162(m) of the Code. With certain exceptions,
Section 162(m) of the Code ("Section 162(m)") disallows a publicly-held
company's deduction for compensation paid in excess of $1 million per taxable
year to certain executives. The Company does not believe it is currently
subject to Section 162(m). However, even if Section 162(m) applies to the
Company, the Company believes that compensation paid under the MIP and the Key
Employee Stock Bonus Plan to the Chief Executive Officer and the Chief
Operating Officer should qualify for the performance-based compensation
exception to Section 162(m) and that options granted under the Management Stock
Option Plan before the Company's 1997 Annual Meeting of Stockholders should
qualify for a special transition rule which exempts such options from Section
162(m) pursuant to an exemption for certain previously-approved plans, provided
that the Management Stock Option Plan is not terminated or materially modified
prior to such meeting. In addition, by obtaining stockholder approval of the
Omnibus Stock Incentive Plan, provided certain requirements are satisfied,
awards granted under the Omnibus Stock Incentive Plan should qualify for the
performance-based compensation exception to Section 162(m). See "APPROVAL OF
OMNIBUS STOCK INCENTIVE PLAN."
Compensation Committee
Gerald B. Mitchell, Chairman
John G. Hudson
Phillip Siegel
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
returns on the Common Stock based on an investment of $100 after the close of
the market on August 2, 1993, the date the Common Stock became listed for
quotation on the National Association of Securities Dealers Automated Quotation
System (National Market System)1, on December 31, 1993, December 30, 1994,
December 29, 1995, and December 31, 1996, against Standard & Poor's 500 Stock
Index ("S&P 500") and an index compiled consisting of 56 companies (listed on
Annex A hereto) with market capitalizations that were similar to that of the
Company at the end of 1995 (the "Market Index") (prepared by Standard & Poor's
Compustat Services, Inc.), in each case assuming reinvestment of any dividends.
The Company believes that published industry indices are not representative of
the Company and its lines of business and that it cannot reasonably identify a
group of peer issuers that are in the same industry or lines of business as the
Company or that are reasonably comparable with the Company on any other basis.
Therefore, in accordance with the rules and regulations of the Commission, the
Company has selected the Market Index for purposes of comparing the Company's
cumulative total returns on the Common Stock. Furthermore, the following graph
is not, nor is it intended to be, indicative of future performance of the
Company's Common Stock, which performance could be affected by factors and
circumstances outside of the Company's control.
__________________________________
(1) The Company registered the Common Stock (formerly Class A Common Stock) and
rights to purchase such stock pursuant to Section 12(g) of the Exchange Act
on a registration statement on Form 10 originally filed with the Commission
on July 1, 1993, as amended on January 6, 1994, and declared effective by
order of the Commission on July 30, 1993.
19
<PAGE> 23
TOTAL SHAREHOLDER RETURN
<TABLE>
<CAPTION>
Company Name/Index 8/2/93 12/31/93 12/30/94 12/29/95 12/31/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WESTPOINT STEVENS INC. $100 $140.19 $107.48 $150.00 $223.37
S&P 500 INDEX $100 $105.04 $106.43 $146.42 $180.04
PEER GROUP $100 $121.71 $122.89 $153.20 $181.48
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In Fiscal 1996, the Company made payments to Mr. Green and HTG Corp.
in the aggregate amount of $346,646 as (i) reimbursements for expenses incurred
by Mr. Green and/or HTG Corp. in renting an airplane utilized by the Company,
(ii) as payments to HTG Corp. for use by the Company of an airplane it partly
owns and (iii) as reimbursement from the Company for all reasonable living
expenses for maintaining a residence in New York, New York, pursuant to his
employment agreement (see "EXECUTIVE COMPENSATION --Employment Agreements,
Termination Provisions and Change in Control Arrangements"). Such payments
were made at rates that the Company believes were no less favorable than rates
available from non-affiliated third parties for comparable services.
Also see "BOARD OF DIRECTORS -- Compensation Committee Interlocks and
Insider Participation in Compensation Decisions" for additional information
concerning transactions and relationships with management and others.
APPROVAL OF OMNIBUS STOCK INCENTIVE PLAN
The Board of Directors adopted the WestPoint Stevens Inc. Omnibus Stock
Incentive Plan (the "Omnibus Stock Incentive Plan") on March 21, 1997, subject
to approval by the stockholders of the Company at the Annual Meeting. The
Omnibus Stock Incentive Plan is intended to allow the Company to attract and
retain key employees and directors and to provide such persons with incentives
and rewards for superior performance.
20
<PAGE> 24
The Omnibus Stock Incentive Plan is an amendment and restatement of
the Management Stock Option Plan. The Plan is also intended to replace the
Directors Stock Option Plan. Options in respect of the remaining shares of
Common Stock authorized under the Directors Stock Option Plan will be
automatically granted to the current non-employee directors pursuant to the
terms of the Directors Stock Option Plan on the date of the Annual Meeting, and
no further options will be awarded under the Directors Stock Option Plan.
The Omnibus Stock Incentive Plan allows the committee appointed by the
Board to administer the Plan (the "Committee") broad flexibility in designing
stock-based incentives. The Committee may select from among six categories of
incentive awards: options, stock appreciation rights, restricted shares,
deferred shares, performance shares and performance units.
The number of shares of the Company's Common Stock ("Shares") that may
be (i) issued or transferred upon the exercise of options or stock appreciation
rights, (ii) awarded as restricted shares and released from substantial risk
of forfeiture, or (iii) issued or transferred in payment of deferred shares,
performance shares or performance units, shall not in the aggregate exceed
1,625,350 (which includes 125,350 Shares remaining available to be the subject
of awards under the Management Stock Option Plan and 1,500,000 Shares not
previously authorized for issuance under any plan of the Company). The number
of performance units granted under the Omnibus Stock Incentive Plan may not in
the aggregate exceed 5,000,000. No participant may receive awards during any
one calendar year representing more than 250,000 Shares or more than 1,000,000
performance units. These limits are subject to adjustments as provided in the
Omnibus Stock Incentive Plan for stock splits, stock dividends,
recapitalizations and other similar transactions or events. Shares issued
under the Omnibus Stock Incentive Plan may be Shares of original issuance,
Shares held in treasury or Shares that have been reacquired by the Company.
Upon the payment of any option price by the transfer to the Company of
Shares or upon satisfaction of tax withholding obligations under the Omnibus
Stock Incentive Plan by the transfer or relinquishment of Shares, there shall
be deemed to have been issued or transferred only the number of Shares actually
issued or transferred by the Company, less the number of Shares so transferred
or relinquished. In any event, the number of Shares actually issued or
transferred by the Company upon the exercise of incentive stock options may not
exceed 1,625,350, subject to adjustment as provided for in the Omnibus Stock
Incentive Plan. Upon the payment in cash of a benefit provided by any award
under the Omnibus Stock Incentive Plan, any Shares that were subject to such
award shall again be available for issuance or transfer under the Omnibus Stock
Incentive Plan. Performance units that are paid in Shares or are not earned by
a participant at the end of a performance period are available for future
grants of performance units.
Employees of the Company and its subsidiaries and members of the
Board who are not employees ("non-employee directors") may be selected by the
Committee to receive benefits under the Omnibus Stock Incentive Plan, provided,
however, that only employees of the Company and its subsidiaries are eligible
to receive incentive stock options under the Omnibus Stock Incentive Plan.
Subject to the terms of the Omnibus Stock Incentive Plan, the Committee has the
discretion to determine the terms of each award granted under the Omnibus Stock
Incentive Plan and to interpret the Omnibus Stock Incentive Plan and all
related documents and agreements.
The Committee may grant options that entitle the optionee to purchase
Shares at a price equal to or greater than fair market value on the date of
grant. Options granted under the Omnibus Stock Incentive Plan may be options
that are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Code or "nonqualified stock options" that are not intended
to so qualify.
21
<PAGE> 25
The option may specify that the option price is payable (i) in cash,
(ii) by the transfer to the Company of unrestricted Shares that have been owned
by the optionee for at least six months, (iii) with any other legal
consideration the Committee may deem appropriate or (iv) by any combination of
the foregoing methods of payment. Any grant of an option may provide for
deferred payment of the option price from the proceeds of sale through a broker
of some or all of the Shares to which the option relates. Payment of the
option price of any nonqualified stock option may also be made in whole or in
part in the form of restricted shares or other Shares that are subject to risk
of forfeiture or restriction on transfer. In such event, unless otherwise
determined by the Committee, the Shares received by the optionee upon the
exercise of the nonqualified stock option will be subject to the same risks of
forfeiture or restrictions on transfer as applied to the consideration
surrendered by the optionee, provided that such risks of forfeiture and
restriction on transfer shall apply only to the same number of Shares received
by the optionee as applied to the forfeitable or restricted shares surrendered
by the optionee.
No option may be exercised more than ten years from the date of grant.
Each grant must specify the period of continuous employment with the Company or
any subsidiary (or in the case of a non-employee director, service on the
Board) that is necessary before the options will become exercisable and may
provide for the earlier exercise of the option in the event of a change in
control of the Company or similar event.
The Committee may grant "tandem" stock appreciation rights in
connection with an option granted under the Omnibus Stock Incentive Plan or
"freestanding" stock appreciation rights unrelated to any option. Tandem stock
appreciation rights entitle the holder to receive an amount equal to a
percentage (not exceeding 100 percent) of the "spread" between the option
price under the related option and the fair market value of the Shares subject
to the option. Freestanding stock appreciation rights entitle the holder to
receive a payment equal to the increase in the value of the Shares over a
specified "base price" determined by the Committee at the time of grant. Any
grant of stock appreciation rights may be paid in cash, Shares or any
combination thereof, or grant to the participant or reserve to the Committee
the right to elect among those alternatives.
An award of restricted shares involves the immediate transfer by the
Company to a participant of ownership of a specific number of Shares in
consideration of the performance of services. The participant is entitled
immediately to voting, dividend and other ownership rights in such Shares,
although the Committee may provide for the sequestration of dividends during
the restriction period. The transfer may be made without additional
consideration from the participant. The Committee may specify performance
objectives (as discussed below) which, if achieved, will result in termination
or early termination of the restrictions applicable to such Shares. The
Committee shall also specify in respect of the specified performance
objectives, a minimum acceptable level of achievement and must set forth a
formula for determining the number of restricted shares on which restrictions
will terminate if performance is at or above the minimum level, but below full
achievement of the specified performance objectives. Restricted shares must be
subject to a "substantial risk of forfeiture" within the meaning of Section 83
of the Code. To enforce these forfeiture provisions, the transferability of
restricted shares will be prohibited or restricted in a manner and to the
extent prescribed by the Committee for the period during which the forfeiture
provisions are to continue. The Committee may provide for a shorter period
during which the forfeiture provisions are to apply in the event of a change
in control of the Company or similar event.
An award of deferred shares granted under the Omnibus Stock Incentive
Plan represents the right to receive a specific number of Shares at the end of
a specified deferral period. Any grant of deferred shares may be further
conditioned upon the attainment of performance objectives (as described below).
The grant may provide for the early termination of the deferral period in the
event of a change in control of the Company or similar event. During the
deferral period, the participant is not entitled to vote or receive dividends
on the Shares subject to the award, but the Committee may provide for the
payment of dividend equivalents on a current or
22
<PAGE> 26
deferred basis. The grant of deferred shares may be made without any
consideration from the participant other than the performance of future
services.
A performance share is the equivalent of one Share, and a performance
unit is equivalent to one dollar. Each grant will specify one or more
performance objectives to meet within a specified period (the "performance
period"). The specified performance period may be subject to earlier
termination in the event of a change in control of the Company or a similar
event. If by the end of the performance period the participant has achieved the
specified performance objectives, the participant will be deemed to have fully
earned the performance shares or performance units. If the participant has not
achieved the performance objectives but has attained or exceeded the
predetermined minimum level of acceptable achievement, the participant may be
deemed to have partly earned the performance shares or performance units in
accordance with a predetermined formula. To the extent earned, the performance
shares or performance units will be paid to the participant at the time and in
the manner determined by the Committee in cash, Shares or any combination
thereof.
The Omnibus Stock Incentive Plan provides for the Committee to
establish "performance objectives" for purposes of the granting or vesting of
performance shares, performance units, deferred shares and restricted stock.
Performance objectives may be described in terms of either Company-wide
objectives or objectives that are related to the performance of the individual
participant or subsidiary, division, department or function within the Company
or a subsidiary. Any performance objectives intended by the Committee to
qualify as "performance-based compensation" under Section 162(m) shall be
limited to specified levels of or growth in (i) return on capital, (ii) return
on equity, (iii) return on assets, (iv) earnings per share and/or (v) market
value per share. Except in the case of such an award intended to qualify under
Section 162(m), if the Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or circumstances
render the performance objectives unsuitable, the Committee may modify such
performance objectives, in whole or in part, as the Committee deems appropriate
and equitable.
Except as provided below, no award under the Omnibus Stock Incentive
Plan may be transferred by a participant other than by will or the laws of
descent and distribution, and options and stock appreciation rights may be
exercised during the participant's lifetime only by the participant or, in the
event of the participant's legal incapacity, the guardian or legal
representative acting on behalf of the participant. The Committee may
expressly provide in a nonqualified stock option agreement (or amendment
thereto) the participant may transfer the option to a spouse or lineal
descendant, a trust for the exclusive benefit of such family members, a
partnership or other entity in which all the beneficial owners are such family
members, or any other entity affiliated with the participant that the Committee
may approve.
The Board may appoint one or more Committees under the Omnibus Stock
Incentive Plan. Any grants of awards to officers who are subject to Section 16
of the Exchange Act will be made by a Committee composed of not less than two
members of the Board, each of whom shall be a "non-employee director" within
the meaning of Rule 16b-3 under the Exchange Act. To the extent that an award
is intended to qualify as "performance-based compensation" under Section
162(m), the Committee will consist of not less than two "outside directors"
within the meaning of the regulations under Section 162(m). For purposes of
awards to non-employee directors, the Board will serve as the Committee.
The Omnibus Stock Incentive Plan may be amended from time to time by
the Board of Directors, but without further approval by the stockholders of the
Company no such amendment may increase the aggregate number of Shares that may
be issued or transferred, increase the aggregate number of performance units
that may
23
<PAGE> 27
be granted, or increase the number of Shares or performance units that may be
granted to any participant in any two-year period.
The following is a brief summary of certain of the federal income tax
consequences of benefits granted under the Omnibus Stock Incentive Plan.
Statements in the following paragraph are based on statutory authority and
judicial and administrative interpretations as of the date of this Proxy
Statement, which are subject to change at any time (possibly with retroactive
effect). This summary is not intended to be exhaustive and does not describe
state or local tax consequences.
In general, an optionee will not recognize income at the time a
nonqualified stock option is granted. At the time of exercise, the optionee
will recognize ordinary income in an amount equal to the difference between the
option price paid for the Shares and the fair market value of the Shares on the
date of exercise. At the time of sale of Shares acquired pursuant to the
exercise of a nonqualified stock option, any appreciation (or depreciation) in
the value of the Shares after the date of exercise generally will be treated as
capital gain (or loss).
An optionee generally will not recognize income upon the grant of an
incentive stock option. Similarly, an optionee will not recognize income upon
the exercise of an incentive stock option, provided that (i) the federal
"alternative minimum tax," which depends on the employee's particular tax
situation, does not apply and (ii) the employee is employed by the Company (or
a subsidiary corporation of the Company) from the date of grant of the option
until three months prior to the exercise thereof, except where such employment
terminates by reason of disability (where the three month period is extended to
one year) or death (where this requirement does not apply). If an employee
exercises an incentive stock option after these requisite periods, the
incentive stock option will be treated as a nonqualified stock option and will
be subject to the rules described in the immediately preceding paragraph. If
Shares are issued to an optionee pursuant to the exercise of an incentive stock
option and are not disposed of in a disqualifying disposition within two years
after the date of grant or within one year after the transfer of the Shares to
the optionee, then upon the sale of the Shares any amount realized in excess of
the option price will be taxed to the optionee as long-term capital gain and
any loss sustained will be a long-term capital loss. If Shares acquired upon
the exercise of an incentive stock option are disposed of prior to the
expiration of either holding period described above, the optionee generally
will recognize ordinary income in the year of disposition in an amount equal to
any excess of the fair market value of the Shares at the time of exercise (or,
if less, the amount realized on the disposition of the Shares) over the option
price paid for the Shares. Any further gain (or loss) realized by the optionee
generally will be taxed as short-term or long-term capital gain (or loss)
depending on the holding period.
A recipient of restricted shares generally will be subject to tax at
ordinary income rates on the fair market value of the restricted shares
(reduced by any amount paid by the recipient) at such time as the Shares are no
longer subject to a risk of forfeiture or restrictions on transfer for purposes
of Section 83 of the Code. However, a recipient who so elects under Section
83(b) of the Code within 30 days of the date of transfer of the restricted
shares will recognize ordinary income on the date of transfer of the Shares
equal to the excess of the fair market value of the restricted shares on such
date (determined without regard to the risk of forfeiture or restrictions on
transfer) over any purchase price paid for the Shares. If a Section 83(b)
election has not been made, any dividends received with respect to restricted
shares that are subject at that time to a risk of forfeiture or restrictions on
transfer generally will be treated as compensation that is taxable as ordinary
income to the recipient.
A recipient of deferred shares generally will not recognize income
until Shares are transferred to the recipient at the end of the deferral period
and are no longer subject to a substantial risk of forfeiture or restrictions
on transfer for purposes of Section 83 of the Code. At that time, the
participant will recognize ordinary income equal to the fair market value of
the Shares, reduced by any amount paid by the recipient.
24
<PAGE> 28
A participant generally will not recognize income upon the grant of
performance shares or performance units. Upon payment in respect of
performance shares or performance units, the participant generally will
recognize as ordinary income an amount equal to the amount of cash received and
the fair market value of any unrestricted Shares received.
In limited circumstances where the sale of Shares received under the
Omnibus Stock Incentive Plan could subject an officer or director to suit under
Section 16(b) of the Exchange Act, the federal income tax consequences to the
officer or director may differ from the federal income tax consequences
described above. In these circumstances, absent a Section 83(b) election (as
described above), the principal difference usually will be to postpone
valuation and taxation of the Shares received so long as the sale of the stock
received could subject the officer or director to suit under Section 16(b) of
the Exchange Act, but not longer than six months.
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company or subsidiary for which the
participant performs services will be entitled to a corresponding deduction,
provided that, among other things, the income meets the test of reasonableness,
is an ordinary and necessary business expense, is not an "excess parachute
payment" within the meaning of Section 280G of the Code and is not disallowed
by the $1 million limitation on certain executive compensation under Section
162(m).
1996 OMNIBUS STOCK INCENTIVE PLAN GRANTS
Because the key employees and directors of the Company may change over
time and because the selection of participants is discretionary, it is
impossible to determine the number of persons who will be eligible for awards
under the Omnibus Stock Incentive Plan during its term. However, seven
executive officers and five key employees have been granted options, subject to
stockholder approval of the Omnibus Stock Incentive Plan. The following table
sets forth the options granted under the Omnibus Stock Incentive Plan in the
last fiscal year.
NEW PLAN BENEFITS
OMNIBUS STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER OF
NAME AND POSITION VALUE ($) UNITS GRANTED
- ----------------- --------- -------------
<S> <C> <C>
Holcombe T. Green, Jr., Chairman and Chief Executive Officer (1) 200,000(2)
Thomas J. Ward, President and Chief Operating Officer (1) 100,000(3)
Morgan M. Schuessler, Executive Vice President (1) 50,000(3)
William F. Crumley, Executive Vice President (1) 50,000(3)
Executive Officer Group (1) 520,000(3)
Non-Executive Director Group -0- -0-
Non-Executive Officer Employee Group (1) 145,000(2)
</TABLE>
(1) Options are exercisable at fair market value at date of grant, subject to
vesting requirements and do not have a readily ascertainable value. See
"EXECUTIVE COMPENSATION--Option/SAR Grants in Last Fiscal Year."
(2) Exercise price of $26.625 per share based on the Fair Market Value of the
Common Stock on November 19, 1996, the date of grant. Options expire on
November 19, 2006.
25
<PAGE> 29
(3) Exercise price of $26.875 per share based on the Fair Market Value of the
Common Stock on November 14, 1996, the date of grant. Options expire on
November 14, 2006.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
ADOPTION OF THE OMNIBUS STOCK INCENTIVE PLAN.
APPOINTMENT OF AUDITORS
Ernst & Young LLP, independent auditors, audited the financial
statements of the Company for the year ended December 31, 1996, contained in
the Company's Annual Report on Form 10-K/A (which was filed with the Commission
on March 20, 1997). Such audit services consisted of the firm's audit of and
report on such financial statements and other annual financial statements of
the Company and other matters.
Representatives of Ernst & Young LLP are expected to attend the Annual
Meeting and will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
Based upon the recommendation of the Audit Committee, and subject to
ratification by the stockholders, the Board of Directors has appointed Ernst &
Young LLP, independent auditors, as auditors for the Company for the fiscal
year ending December 31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR SUCH RATIFICATION.
1998 PROPOSALS OF STOCKHOLDERS
The Company intends to hold the 1998 Annual Meeting of Stockholders in
the spring of 1998. Any stockholder of the Company wishing to include
proposals in the proxy materials for such meeting must meet the requirements of
the rules of the Commission relating to stockholders' proposals. Such proposal
must be received by the Secretary of the Company in writing at the principal
executive offices of the Company prior to December 5, 1997.
OTHER BUSINESS
The Board of Directors of the Company is not aware of any other
matters that may be presented at the Annual Meeting other than those mentioned
in the Company's Notice of Annual Meeting of Stockholders enclosed herewith and
a part hereof. If, however, any other matters do properly come before the
Annual Meeting, or any adjournment or adjournments thereof, it is intended that
the persons named as proxies will vote, pursuant to their discretionary
authority, according to their best judgment in the interest of the Company.
ADDITIONAL INFORMATION
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the accompanying materials will be paid by the Company. In
addition to solicitation by mail, directors, officers and regular employees of
the Company may solicit proxies by telephone, telegram or by personal
interviews. Such persons will receive no additional compensation for such
services. The Company will reimburse brokers and certain other persons for
their charges and expenses in forwarding proxy materials to the beneficial
owners of Common Stock held of record by such persons.
26
<PAGE> 30
Copies of the Company's 1996 Annual Report to Stockholders are being
mailed to the stockholders simultaneously with this Proxy Statement. The
financial statements and financial information appearing in such Annual Report
are incorporated by reference herein.
By Order of the Board of Directors,
/s/ Christopher N. Zodrow
Christopher N. Zodrow
Vice President and Secretary
West Point, Georgia
April 4, 1997
27
<PAGE> 31
ANNEX A
MARKET INDEX FOR WESTPOINT STEVENS INC.
<TABLE>
<S> <C>
AK Steel Holding Corp. Kaiser Aluminum Corp.
Alberto-Culver Co. Kemet Corp.
Amdahl Corp. Madeco S A
American Pwr Cnvrsion Micron Electronics Inc.
Arrow International Nautica Enterprises Inc.
Banta Corp. Nordson Corp.
Beckman Instruments Inc. Oce Van Der Grinten NV
Blyth Industries Inc. Pentair Inc.
Cephalon Inc. Perrigo Company
Cincinnati Milacron Inc. Pittway Corp/DE
Coca-Cola Femsa De C V Plum Creek Timber Co.
Coleman Co. Inc. Quebecor Inc.
Cooper Cameron Corp. Rauma OY
Cypress Semiconductor Corp. Rayonier Inc.
Cytec Industries Inc. Sci Systems Inc.
De Reigo S P A Shiva Corp.
Desc S A De C V Smith International Inc.
Domtar Inc. Summit Technology Inc.
Echostar Commun Corp. Symbol Technologies
Exide Corp. Thermedics Inc.
First Brands Corp. Thermo Fibertek Inc.
Freeport McMoran Inc. Thermolase Corp.
Hanna (M A) Co. Thermotrex Corp.
Integrated Device Tech Inc. Tootsie Roll Inds
Iomega Corp. U S Industries Inc.
Jefferson Smurfit CP Unisys Corp.
Jones Apparel Group Inc. Universal Foods Corp.
Jostens Inc. Valspar Corp.
</TABLE>
<PAGE> 32
ANNEX B
WESTPOINT STEVENS INC.
OMNIBUS STOCK INCENTIVE PLAN
<PAGE> 33
WESTPOINT STEVENS INC.
OMNIBUS STOCK INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. History and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Shares Available Under the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. Restricted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8. Deferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9. Performance Shares and Performance Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. Transferability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. Certain Terminations of Employment, Hardship and Approved Leaves of Absence . . . . . . . . . . . . . . . . 10
15. Foreign Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16. Amendments and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17. Effective Date and Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 34
WESTPOINT STEVENS INC.
OMNIBUS STOCK INCENTIVE PLAN
1. HISTORY AND PURPOSE. This Plan is an amendment and
restatement of Valley Fashions Corp. 1993 Management Stock Option Plan (the
"Predecessor Plan"). The purpose of this Plan is to attract and retain key
employees and directors for WestPoint Stevens Inc. (the "Company") and its
subsidiaries and to provide such persons with incentives and rewards for
superior performance.
2. DEFINITIONS. As used in this Plan, the following terms shall
be defined as set forth below:
"AWARD" means any Option, Stock Appreciation Right, Restricted
Shares, Deferred Shares, Performance Shares or Performance Unit.
"BASE PRICE" means the price to be used as the basis for
determining the Spread upon the exercise of a Freestanding Stock Appreciation
Right.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITTEE" means the committee described in Section 4 of this
Plan.
"COMPANY" means WestPoint Stevens Inc., a Delaware
corporation, or any successor corporation.
"DEFERRAL PERIOD" means the period of time during which
Deferred Shares are subject to deferral limitations under Section 8 of this
Plan.
"DEFERRED SHARES" means an Award pursuant to Section 8 of this
Plan of the right to receive Shares at the end of a specified Deferral Period.
"EMPLOYEE" means any person, including an officer, employed by
the Company or a Subsidiary.
"FAIR MARKET VALUE" means the fair market value of the Shares
as determined by the Committee from time to time.
"FREESTANDING STOCK APPRECIATION RIGHT" means a Stock
Appreciation Right granted pursuant to Section 6 of this Plan that is not
granted in tandem with an Option or similar right.
"GRANT DATE" means the date specified by the Committee on
which a grant of an Award shall become effective, which shall not be earlier
than the date on which the Committee takes action with respect thereto.
"INCENTIVE STOCK OPTIONS" means any Option that is intended
to qualify as an "incentive stock option" under Section 422 of the Code or any
successor provision.
<PAGE> 35
"NON-EMPLOYEE DIRECTOR" means a member of the Board who is not
an Employee.
"NONQUALIFIED STOCK OPTION" means an Option that is not
intended to qualify as an Incentive Stock Option.
"OPTION" means any option to purchase Shares granted under
this Plan.
"OPTION PRICE" means the purchase price payable upon the
exercise of an Option.
"OPTIONEE" means the person so designated in an agreement
evidencing an outstanding Option.
"PARTICIPANT" means an Employee or Non-employee Director who
is selected by the Committee to receive benefits under this Plan, provided that
Non-employee Directors shall not be eligible to receive grants of Incentive
Stock Options.
"PERFORMANCE OBJECTIVES" means the achievement of performance
objectives established pursuant to this Plan for Participants who have received
grants of Performance Shares or Performance Units or, when so determined by the
Committee, Deferred Shares or Restricted Shares. Performance Objectives may be
described in terms of Company-wide objectives or objectives that are related to
the performance of the individual Participant or the Subsidiary, division,
department or function within the Company or Subsidiary in which the
Participant is employed. Any Performance Objectives applicable to Awards
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code shall be limited to specified levels of or increases in the Company's
or Subsidiary's return on equity, earnings per share, total earnings, earnings
growth, return on capital, return on assets, or increase in the Fair Market
Value of the Shares. Except in the case of such an Award intended to qualify
under Section 162(m) of the Code, if the Committee determines that a change in
the business, operations, corporate structure or capital structure of the
Company, or the manner in which it conducts its business, or other events or
circumstances render the Performance Objectives unsuitable, the Committee may
modify such Performance Objectives or the related minimum acceptable level of
achievement, in whole or in part, as the Committee deems appropriate and
equitable.
"PERFORMANCE PERIOD" means a period of time established under
Section 9 of this Plan within which the Performance Objectives relating to a
Performance Share, Performance Unit, Deferred Shares or Restricted Shares are
to be achieved.
"PERFORMANCE SHARE" means a bookkeeping entry that records the
equivalent of one Share awarded pursuant to Section 9 of this Plan.
"PERFORMANCE UNIT" means a bookkeeping entry that records a
unit equivalent to $1.00 awarded pursuant to Section 9 of this Plan.
"PREDECESSOR PLAN" means the Valley Fashions Corp. 1993
Management Stock Option Plan.
"RESTRICTED SHARES" mean Shares granted under Section 7 of
this Plan subject to a substantial risk of forfeiture.
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<PAGE> 36
"RULE 16B-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect), as in effect from time
to time.
"SHARES" means Shares of the common stock of the Company, $.01
par value, or any security into which Shares may be converted by reason of any
transaction or event of the type referred to in Section 11 of this Plan.
"SPREAD" means, in the case of a Freestanding Stock
Appreciation Right, the amount by which the Fair Market Value on the date when
any such right is exercised exceeds the Base Price specified in such right or,
in the case of a Tandem Stock Appreciation Right, the amount by which the Fair
Market Value on the date when any such right is exercised exceeds the Option
Price specified in the related Option.
"STOCK APPRECIATION RIGHT" means a right granted under Section
6 of this Plan, including a Freestanding Stock Appreciation Right or a Tandem
Stock Appreciation Right.
"SUBSIDIARY" means a corporation or other entity (i) more than
50 percent of whose outstanding shares or securities (representing the right to
vote for the election of directors or other managing authority) are, or (ii)
which does not have outstanding shares or securities (as may be the case in a
partnership, joint venture or unincorporated association), but more than 50
percent of whose ownership interest (representing the right generally to make
decisions for such other entity) is, now or hereafter owned or controlled
directly or indirectly by the Company, provided that for purposes of
determining whether any person may be a Participant for purposes of any grant
of Incentive Stock Options, "Subsidiary" means any corporation in which the
Company owns or controls directly or indirectly more than 50 percent of the
total combined voting power represented by all classes of stock issued by such
corporation at the time of such grant.
"TANDEM STOCK APPRECIATION RIGHT" means a Stock Appreciation
Right granted pursuant to Section 6 of this Plan that is granted in tandem with
an Option or any similar right granted under any other plan of the Company.
3. SHARES AVAILABLE UNDER THE PLAN.
(a) Subject to adjustment as provided in Section 11 of
this Plan, the number of Shares that may be (i) issued or transferred upon the
exercise of Options or Stock Appreciation Rights, (ii) awarded as Restricted
Shares and released from substantial risk of forfeiture, or (iii) issued or
transferred in payment of Deferred Shares, Performance Shares or Performance
Units, shall not in the aggregate exceed (y) 125,350 Shares remaining
available for award under the Predecessor Plan, plus (z) 1,625,350 Shares not
previously authorized for issuance under any plan of the Company. Such Shares
may be Shares of original issuance, Shares held in treasury, or Shares that
have been reacquired by the Company. The number of Performance Units granted
under this Plan may not in the aggregate exceed 5,000,000.
(b) Upon the payment of any Option Price by the transfer
to the Company of Shares or upon satisfaction of tax withholding obligations
under the Plan by the transfer or relinquishment of Shares, there shall be
deemed to have been issued or transferred only the number of Shares actually
issued or transferred by the Company, less the number of Shares so transferred
or relinquished. In any event, the number of Shares actually issued or
transferred by the Company upon the exercise of Incentive Stock Options may not
exceed 1,625,350, subject to adjustment as provided in Section 11 of the Plan.
Upon the payment in cash of a benefit provided by any award under this Plan,
any Shares that were subject to such award shall again be available for
issuance or
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<PAGE> 37
transfer under this Plan. Performance Units that are paid in Shares or are not
earned by a Participant at the end of a Performance Period are available for
future grants of Performance Units.
(c) No Participant may receive Awards during any one
calendar year representing more than 250,000 Shares or more than 1,000,000
Performance Units.
4. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by one or more
committees appointed by the Board. Any grants of Awards to officers who are
subject to Section 16 of the Securities Exchange Act of 1934 shall be made by a
Committee composed of not less than two members of the Board, each of whom
shall be a "non-employee director" within the meaning of Rule 16b-3. Any grant
of an Award that is intended to qualify as "performance-based compensation"
under Section 162(m) of the Code shall be made by a Committee composed of not
less than two members of the Board, each of whom shall be an "outside director"
within the meaning of the regulations under Section 162(m). For purposes of
grants of Awards to Non-employee Directors, the Board shall serve as the
Committee.
(b) The interpretation and construction by the Committee
of any provision of this Plan or of any agreement or document evidencing the
grant of any Award and any determination by the Committee pursuant to any
provision of this Plan or any such agreement, notification or document, shall
be final and conclusive. No member of the Committee shall be liable to any
person for any such action taken or determination made in good faith.
5. OPTIONS. The Committee may from time to time authorize grants
to Participants of Options to purchase Shares upon such terms and conditions as
the Committee may determine in accordance with the following provisions:
(a) Each grant shall specify the number of Shares to
which it pertains.
(b) Each grant shall specify an Option Price per Share,
which shall be equal to or greater than the Fair Market Value on the Grant
Date.
(c) Each grant shall specify the form of consideration to
be paid in satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or check or
other cash equivalent acceptable to the Company, (ii) nonforfeitable,
unrestricted Shares that have been owned by the Optionee for at least six
months and have a value at the time of exercise that is equal to the Option
Price, (iii) any other legal consideration that the Committee may deem
appropriate, including without limitation any form of consideration authorized
under Section 5(d) below, on such basis as the Committee may determine in
accordance with this Plan, or (iv) any combination of the foregoing.
(d) On or after the Grant Date of any Option other than
an Incentive Stock Option, the Committee may determine that payment of the
Option Price may also be made in whole or in part in the form of Restricted
Shares or other Shares that are subject to risk of forfeiture or restrictions
on transfer. Unless otherwise determined by the Committee, whenever any Option
Price is paid in whole or in part by means of any of the forms of consideration
specified in this Section 5(d), the Shares received by the Optionee upon the
exercise of the Options shall be subject to the same risks of forfeiture or
restrictions on transfer as those that applied to the consideration surrendered
by the Optionee, provided that such risks of forfeiture and restrictions on
transfer shall
B-4
<PAGE> 38
apply only to the same number of Shares received by the Optionee as applied to
the forfeitable or Restricted Shares surrendered by the Optionee.
(e) Any grant may provide for deferred payment of the
Option Price from the proceeds of sale through a bank or broker on the date of
exercise of some or all of the Shares to which the exercise relates.
(f) On or, in the case of Nonqualified Stock Options,
after the Grant Date, the Committee may provide for the automatic grant to the
Optionee of a "reload" Option in the event the Optionee surrenders Shares in
satisfaction of the Option Price upon the exercise of an Option as authorized
under Sections 5(c) and (d) above. Each reload Option shall pertain to a
number of Shares equal to the number of Shares utilized by the Optionee to
exercise the original Option. Each reload Option shall have an exercise price
equal to Fair Market Value on the date it is granted and shall expire on the
stated exercise date of the original Option.
(g) Each Option grant may specify a period of continuous
employment of the Optionee by the Company or any Subsidiary (or, in the case of
a Non-employee Director, service on the Board) that is necessary before the
Options or installments thereof shall become exercisable, and any grant may
provide for the earlier exercise of such rights in the event of a change in
control of the Company or other similar transaction or event.
(h) Options granted under this Plan may be Incentive
Stock Options, Nonqualified Stock Options or a combination of the foregoing,
provided that only Nonqualified Stock Options may be granted to Non-employee
Directors. Each grant shall specify whether (or the extent to which) the
Option is an Incentive Stock Option or a Nonqualified Stock Option.
Notwithstanding any such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by an Optionee
during any calendar year (under all plans of the Company) exceeds $100,000 such
Options shall be treated as Nonqualified Stock Options.
(i) No Option granted under this Plan may be exercised
more than 10 years from the Grant Date.
(j) Each grant shall be evidenced by an agreement
executed on behalf of the Company by any officer thereof and delivered to and
accepted by the Optionee and containing such terms and provisions as the
Committee may determine consistent with this Plan.
6. STOCK APPRECIATION RIGHTS. The Committee may also authorize
grants to Participants of Stock Appreciation Rights. A Stock Appreciation
Right is the right of the Participant to receive from the Company an amount,
which shall be determined by the Committee and shall be expressed as a
percentage (not exceeding 100 percent) of the Spread at the time of the
exercise of such right. Any grant of Stock Appreciation Rights under this Plan
shall be upon such terms and conditions as the Committee may determine in
accordance with the following provisions:
(a) Any grant may specify that the amount payable upon
the exercise of a Stock Appreciation Right may be paid by the Company in cash,
Shares or any combination thereof and may (i) either grant to the Participant
or reserve to the Committee the right to elect among those alternatives or (ii)
preclude the right of the Participant to receive and the Company to issue
Shares or other equity securities in lieu of cash.
(b) Any grant may specify that the amount payable upon
the exercise of a Stock Appreciation Right shall not exceed a maximum specified
by the Committee on the Grant Date.
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<PAGE> 39
(c) Any grant may specify (i) a waiting period or periods
before Stock Appreciation Rights shall become exercisable and (ii) permissible
dates or periods on or during which Stock Appreciation Rights shall be
exercisable.
(d) Any grant may specify that a Stock Appreciation Right
may be exercised only in the event of a change in control of the Company or
other similar transaction or event.
(e) On or after the Grant Date of any Stock Appreciation
Rights, the Committee may provide for the payment to the Participant of
dividend equivalents thereon in cash or Shares on a current, deferred or
contingent basis.
(f) Each grant shall be evidenced by an agreement
executed on behalf of the Company by any officer thereof and delivered to and
accepted by the Optionee, which shall describe the subject Stock Appreciation
Rights, identify any related Options, state that the Stock Appreciation Rights
are subject to all of the terms and conditions of this Plan and contain such
other terms and provisions as the Committee may determine consistent with this
Plan.
(g) Each grant of a Tandem Stock Appreciation Right shall
provide that such Tandem Stock Appreciation Right may be exercised only (i) at
a time when the related Option (or any similar right granted under any other
plan of the Company) is also exercisable and the Spread is positive; and (ii)
by surrender of the related Option (or such other right) for cancellation.
(h) Regarding Freestanding Stock Appreciation Rights
only:
(i) Each grant shall specify in respect of each
Freestanding Stock Appreciation Right a Base Price per Share, which shall be
equal to or greater than the Fair Market Value on the Grant Date;
(ii) Successive grants may be made to the same
Participant regardless of whether any Freestanding Stock Appreciation Rights
previously granted to such Participant remain unexercised;
(iii) Each grant shall specify the period or
periods of continuous employment of the Participant by the Company or any
Subsidiary that are necessary before the Freestanding Stock Appreciation Rights
or installments thereof shall become exercisable, and any grant may provide for
the earlier exercise of such rights in the event of a change in control of the
Company or other similar transaction or event; and
(iv) No Freestanding Stock Appreciation Right
granted under this Plan may be exercised more than 10 years from the Grant
Date.
7. RESTRICTED SHARES. The Committee may also authorize
grants to Participants of Restricted Shares upon such terms and conditions as
the Committee may determine in accordance with the following provisions:
(a) Each grant shall constitute an immediate transfer of
the ownership of Shares to the Participant in consideration of the performance
of services, entitling such Participant to dividend, voting and other ownership
rights, subject to the substantial risk of forfeiture and restrictions on
transfer hereinafter referred to.
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<PAGE> 40
(b) Each grant may be made without additional
consideration from the Participant or in consideration of a payment by the
Participant that is less than the Fair Market Value on the Grant Date.
(c) Each grant shall provide that the Restricted Shares
covered thereby shall be subject to a "substantial risk of forfeiture" within
the meaning of Section 83 of the Code for a period to be determined by the
Committee on the Grant Date, and any grant or sale may provide for the earlier
termination of such risk of forfeiture in the event of a change in control of
the Company or other similar transaction or event.
(d) Each grant shall provide that, during the period for
which such substantial risk of forfeiture is to continue, the transferability
of the Restricted Shares shall be prohibited or restricted in the manner and to
the extent prescribed by the Committee on the Grant Date. Such restrictions
may include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Shares to a continuing
substantial risk of forfeiture in the hands of any transferee.
(e) Any grant or the vesting thereof may be further
conditioned upon the attainment of Performance Objectives established by the
Committee in accordance with the applicable provisions of Section 9 of this
Plan regarding Performance Shares and Performance Units.
(f) Any grant may require that any or all dividends or
other distributions paid on the Restricted Shares during the period of such
restrictions be automatically sequestered and reinvested on an immediate or
deferred basis in additional Shares, which may be subject to the same
restrictions as the underlying Award or such other restrictions as the
Committee may determine.
(g) Each grant shall be evidenced by an agreement
executed on behalf of the Company by any officer thereof and delivered to and
accepted by the Participant and containing such terms and provisions as the
Committee may determine consistent with this Plan. Unless otherwise directed
by the Committee, all certificates representing Restricted Shares, together
with a stock power that shall be endorsed in blank by the Participant with
respect to such Shares, shall be held in custody by the Company until all
restrictions thereon lapse.
8. DEFERRED SHARES. The Committee may authorize grants of
Deferred Shares to Participants upon such terms and conditions as the Committee
may determine in accordance with the following provisions:
(a) Each grant shall constitute the agreement by the
Company to issue or transfer Shares to the Participant in the future in
consideration of the performance of services, subject to the fulfillment during
the Deferral Period of such conditions as the Committee may specify.
(b) Each grant may be made without additional
consideration from the Participant or in consideration of a payment by the
Participant that is less than the Fair Market Value on the Grant Date.
(c) Each grant shall provide that the Deferred Shares
covered thereby shall be subject to a Deferral Period, which shall be fixed by
the Committee on the Grant Date, and any grant or sale may provide for the
earlier termination of such period in the event of a change in control of the
Company or other similar transaction or event.
(d) During the Deferral Period, the Participant shall not
have any right to transfer any rights under the subject Award, shall not have
any rights of ownership in the Deferred Shares and shall not have any
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<PAGE> 41
right to vote such Shares, but the Committee may on or after the Grant Date
authorize the payment of dividend equivalents on such Shares in cash or
additional Shares on a current, deferred or contingent basis.
(e) Any grant or the vesting thereof may be further
conditioned upon the attainment of Performance Objectives established by the
Committee in accordance with the applicable provisions of Section 9 of this
Plan regarding Performance Shares and Performance Units.
(f) Each grant shall be evidenced by an agreement
executed on behalf of the Company by any officer thereof and delivered to and
accepted by the Participant and containing such terms and provisions as the
Committee may determine consistent with this Plan.
9. PERFORMANCE SHARES AND PERFORMANCE UNITS. The Committee may
also authorize grants of Performance Shares and Performance Units, which shall
become payable to the Participant upon the achievement of specified Performance
Objectives, upon such terms and conditions as the Committee may determine in
accordance with the following provisions:
(a) Each grant shall specify the number of Performance
Shares or Performance Units to which it pertains, which may be subject to
adjustment to reflect changes in compensation or other factors.
(b) The Performance Period with respect to each
Performance Share or Performance Unit shall commence on the Grant Date and may
be subject to earlier termination in the event of a change in control of the
Company or other similar transaction or event.
(c) Each award shall specify the Performance Objectives
that are to be achieved by the Participant with respect to the grant or the
vesting thereof.
(d) Each grant may specify in respect of the specified
Performance Objectives a minimum acceptable level of achievement below which no
payment will be made and shall set forth a formula for determining the amount
of any payment to be made if performance is at or above such minimum acceptable
level but falls short of the maximum achievement of the specified Performance
Objectives.
(e) Each grant shall specify the time and manner of
payment of Performance Shares or Performance Units that shall have been earned,
and any grant may specify that any such amount may be paid by the Company in
cash, Shares or any combination thereof and may either grant to the Participant
or reserve to the Committee the right to elect among those alternatives.
(f) Any grant of Performance Shares may specify that the
amount payable with respect thereto may not exceed a maximum specified by the
Committee on the Grant Date. Any grant of Performance Units may specify that
the amount payable, or the number of Shares issued, with respect thereto may
not exceed maximums specified by the Committee on the Grant Date.
(g) Any grant of Performance Shares may provide for the
payment to the Participant of dividend equivalents thereon in cash or
additional Shares on a current, deferred or contingent basis.
(h) If provided in the terms of the grant, the Committee
may adjust Performance Objectives and the related minimum acceptable level of
achievement if, in the sole judgment of the Committee, events or transactions
have occurred after the Grant Date that are unrelated to the performance of the
Participant and result in distortion of the Performance Objectives or the
related minimum acceptable level of achievement.
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<PAGE> 42
(i) Each grant shall be evidenced by an agreement
executed on behalf of the Company by any officer thereof and delivered to and
accepted by the Participant, which shall state that the Performance Shares or
Performance Units are subject to all of the terms and conditions of this Plan
and such other terms and provisions as the Committee may determine consistent
with this Plan.
10. TRANSFERABILITY.
(a) Except as provided in Section 10(b), no Award granted
under this Plan shall be transferable by a Participant other than by will or
the laws of descent and distribution, and Options and Stock Appreciation Rights
shall be exercisable during a Participant's lifetime only by the Participant
or, in the event of the Participant's legal incapacity, by his guardian or
legal representative acting in a fiduciary capacity on behalf of the
Participant under state law and court supervision.
(b) The Committee may expressly provide in a Nonqualified
Stock Option agreement (or an amendment to such an agreement) that a
Participant may transfer such Nonqualified Stock Option to a spouse or lineal
descendant (a "Family Member"), a trust for the exclusive benefit of Family
Members, a partnership or other entity in which all the beneficial owners are
Family Members, or any other entity affiliated with the Participant that may be
approved by the Committee. Subsequent transfers of any such Nonqualified Stock
Option shall be prohibited except in accordance with this Section 10(b). All
terms and conditions of any such Nonqualified Stock Option, including
provisions relating to the termination of the Participant's employment or
service with the Company or a Subsidiary, shall continue to apply following a
transfer made in accordance with this Section 10(b).
(c) Any Award made under this Plan may provide that all
or any part of the Shares that are (i) to be issued or transferred by the
Company upon the exercise of Options or Stock Appreciation Rights, upon the
termination of the Deferral Period applicable to Deferred Shares or upon
payment under any grant of Performance Shares or Performance Units, or (ii) no
longer subject to the substantial risk of forfeiture and restrictions on
transfer referred to in Section 7 of this Plan, shall be subject to further
restrictions upon transfer.
11. ADJUSTMENTS. The Committee may make or provide for such
adjustments in the (a) number of Shares covered by outstanding Options, Stock
Appreciation Rights, Deferred Shares and Performance Shares granted hereunder,
(b) prices per Share applicable to such Options and Stock Appreciation Rights,
and (c) kind of Shares covered thereby, as the Committee in its sole discretion
may in good faith determine to be equitably required in order to prevent
dilution or enlargement of the rights of Optionees that otherwise would result
from (x) any stock dividend, stock split, combination or exchange of shares,
recapitalization or other change in the capital structure of the Company, (y)
any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of assets
(other than a normal cash dividend), issuance of rights or warrants to purchase
securities or (z) any other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding Awards under this Plan such alternative consideration as it may in
good faith determine to be equitable under the circumstances and may require in
connection therewith the surrender of all Awards so replaced. The Committee
may also make or provide for such adjustments in the number of Shares specified
in Section 3 of this Plan as the Committee in its sole discretion may in good
faith determine to be appropriate in order to reflect any transaction or event
described in this Section 11.
12. FRACTIONAL SHARES. The Company shall not be required to issue
any fractional Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement thereof in cash.
B-9
<PAGE> 43
13. WITHHOLDING TAXES. To the extent that the Company is required
to withhold federal, state, local or foreign taxes in connection with any
payment made or benefit realized by a Participant or other person under this
Plan, it shall be a condition to the receipt of such payment or the realization
of such benefit that the Participant or such other person make arrangements
satisfactory to the Company for payment of all such taxes required to be
withheld. At the discretion of the Committee, such arrangements may include
relinquishment of a portion of such benefit.
14. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED
LEAVES OF ABSENCE. Notwithstanding any other provision of this Plan to the
contrary, in the event of termination of employment by reason of death,
disability, normal retirement, early retirement with the consent of the Company
or leave of absence approved by the Company, or in the event of hardship or
other special circumstances, of a Participant who holds an Option or Stock
Appreciation Right that is not immediately and fully exercisable, any
Restricted Shares as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, any Deferred Shares as
to which the Deferral Period is not complete, any Performance Shares or
Performance Units that have not been fully earned, or any Shares that are
subject to any transfer restriction pursuant to Section 10(b) of this Plan, the
Committee may in its sole discretion take any action that it deems to be
equitable under the circumstances or in the best interests of the Company,
including without limitation waiving or modifying any limitation or requirement
with respect to any Award under this Plan.
15. FOREIGN EMPLOYEES. In order to facilitate the making of any
grant or combination of grants under this Plan, the Committee may provide for
such special terms for Awards to Participants who are foreign nationals, or who
are employed by the Company or any Subsidiary outside of the United States of
America, as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to, or amendments, restatements or alternative
versions of, this Plan as it may consider necessary or appropriate for such
purposes without thereby affecting the terms of this Plan as in effect for any
other purpose, provided that no such supplements, amendments, restatements or
alternative versions shall include any provisions that are inconsistent with
the terms of this Plan, as then in effect, unless this Plan could have been
amended to eliminate such inconsistency without further approval by the
stockholders of the Company.
16. AMENDMENTS AND OTHER MATTERS.
(a) This Plan may be amended from time to time by the
Board, but no such amendment shall increase any of the limitations specified in
Section 3 of this Plan, other than to reflect an adjustment made in accordance
with Section 11, without the further approval of the stockholders of the
Company.
(b) With the concurrence of the affected Optionee, the
Committee may cancel any agreement evidencing Options or any other Award
granted under this Plan. In the event of such cancellation, the Committee may
authorize the granting of new Options or other Awards hereunder, which may or
may not cover the same number of Shares that had been the subject of the prior
Award, in such manner, at such Option Price and subject to such other terms,
conditions and discretions as would have been applicable under this Plan had
the canceled Options or other Award not been granted.
(c) This Plan shall not confer upon any Participant any
right with respect to continuance of employment or other service with the
Company or any Subsidiary and shall not interfere in any way with any right
that the Company or any Subsidiary would otherwise have to terminate any
Participant's employment or other service at any time.
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<PAGE> 44
(d) To the extent that any provision of this Plan would
prevent any Option that was intended to qualify under particular provisions of
the Code from so qualifying, such provision of this Plan shall be null and void
with respect to such Option, provided that such provision shall remain in
effect with respect to other Options, and there shall be no further effect on
any provision of this Plan.
17. EFFECTIVE DATE AND STOCKHOLDER APPROVAL. This Plan, as an
amendment and restatement of the Predecessor Plan, shall become effective upon
its approval by the Board, subject to approval by the stockholders of the
Company at the next Annual Meeting of Stockholders. The Committee may grant
Awards subject to the condition that this Plan shall have been approved by the
stockholders of the Company.
18. TERMINATION. This Plan shall terminate on March 21, 2007, and
no Award shall be granted after that date.
19. GOVERNING LAW. The validity, construction and effect of this
Plan and any Award hereunder will be determined in accordance with (i) the
Delaware General Corporation Law, and (ii) to the extent applicable, other laws
(including those governing contracts) of the State of Georgia.
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<PAGE> 46
APPENDIX A
WESTPOINT STEVENS INC.
ANNUAL MEETING OF STOCKHOLDERS, MAY 14, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of WestPoint Stevens, Inc., a Delaware
corporation (the "Company"), hereby appoints JOSEPH L. JENNINGS, JR. and
CHRISTOPHER N. ZODROW, and each of them, with full power of substitution and
revocation, as proxies to represent the undersigned at the Annual Meeting of
Stockholders of the Company to be held at the Cotton Duck, 6101 Twentieth
Avenue (U.S. Highway 29), Valley, Alabama, on Wednesday, May 14, 1997 at 10:30
a.m., Eastern Daylight Time, and at any and all adjournments thereof, and
thereat to vote all shares of the Company which the undersigned would be
entitled to vote, with all powers the undersigned would possess if personally
present in accordance with the instructions on the reverse side of this proxy.
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL
BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS IN RESPECT OF THE ELECTION
PROPOSAL, FOR THE APPROVAL OF THE OMNIBUS STOCK INCENTIVE PLAN, FOR THE
RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S AUDITORS AND, IN THE
DISCRETION OF THE PROXIES, WITH RESPECT TO ALL OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING AND ANY AND ALL ADJOURNMENTS THEREOF. THE UNDERSIGNED
ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT.
WESTPOINT STEVENS INC.
P.O. BOX 11220
NEW YORK, N.Y. 10203-0220
(CONTINUED, AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE> 47
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL ITEMS.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1. ELECTION PROPOSAL FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below. [X] for all nominees listed below. [X] [X]
Nominees: Holcombe T. Green, Jr., Charles W. McCall and John F. Sorte
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK THE "EXCEPTIONS" BOX AND STRIKE A LINE THROUGH THAT
NOMINEE'S NAME.)
2. With respect to the proposal to approve the WestPoint 3. With respect to the proposal to ratify the appointment
Stevens Inc. Omnibus Stock Incentive Plan. of Ernst & Young LLP, independent certified public
accountants, as auditors for the Company for the year
ending December 31, 1997
FOR [X] AGAINST [X] ABSTAIN [X] FOR [X] AGAINST [X] ABSTAIN [X]
4. In their discretion, on such other matters as may
properly come before the meeting and any and all
adjournments thereof. CHANGE OF ADDRESS AND
OR COMMENTS MARK HERE [X]
Please sign exactly as name or names appear on this
proxy. If stock is held jointly, each holder should
sign. If signing as attorney, trustee, executor,
administrator, custodian, guardian or corporate
officer, please give full title.
Dated:_________________________________________, 1997
_____________________________________________________
Signature
_____________________________________________________
Signature
VOTES MUST BE INDICATED
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK [X]
</TABLE>
