<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
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 date of its filing.
1) Amount Previously Paid: $
-----------------
2) Form, Schedule or Registration Statement No:
------------------------
3) Filing Party:
------------------------------------------------------
4) Date Filed:
-------------------------
<PAGE> 2
[LOGO] WESTPOINT STEVENS
April 9, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of WestPoint Stevens Inc. (the "Company") on Wednesday, May 12,
1999, beginning at 10:00 a.m., Eastern Daylight Time, at the Company's New York
offices, 1185 Avenue of the Americas (13th floor), New York, New York. 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
[LOGO] WESTPOINT STEVENS
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1999
-------------------
To the Stockholders
of WestPoint Stevens Inc.:
The Annual Meeting of Stockholders of WestPoint Stevens Inc. (the
"Company") will be held at the Company's New York offices, 1185 Avenue of the
Americas (13th floor), New York, New York, on Wednesday, May 12, 1999, at 10:00
a.m., Eastern Daylight Time, for the following purposes:
1. To elect two directors to serve for a term of three years and until
their respective successors are elected and qualified ("Proposal 1").
2. To approve the WestPoint Stevens Inc. Omnibus Stock Incentive Plan (As
Amended ) ("Proposal 2").
3. To ratify the appointment of Ernst & Young LLP, independent certified
public accountants, as auditors for the Company for fiscal 1999
("Proposal 3").
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 19, 1999,
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.
You may revoke your proxy 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 voting in person at the Annual Meeting.
By Order of the Board of Directors,
/s/ Christopher N. Zodrow
Christopher N. Zodrow
Vice President and Secretary
West Point, Georgia
April 9, 1999
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Notice of 1999 Annual Meeting of Stockholders ............................................................ 1
Proxy Statement .......................................................................................... 3
The Proxy ....................................................................................... 3
Stockholders Entitled to Vote ................................................................... 4
Quorum; Required Vote ........................................................................... 4
PROPOSAL 1 - ELECTION OF DIRECTORS ....................................................................... 5
Board of Directors ....................................................................................... 5
Committees of the Board of Directors ..................................................................... 7
Directors' Compensation .................................................................................. 9
Director Attendance ...................................................................................... 10
Compensation Committee Interlocks and Insider Participation in Compensation Decisions..................... 10
Management ............................................................................................... 10
Executive Officers .............................................................................. 10
Security Ownership of Certain Beneficial Owners and Management ........................................... 12
Section 16(a) Beneficial Ownership Reporting Compliance .................................................. 14
Executive Compensation ................................................................................... 15
Summary Compensation Table ...................................................................... 15
Senior Management Incentive Plan ................................................................ 16
Key Employee Stock Bonus Plan ................................................................... 16
Option/SAR Grants in Last Fiscal Year .......................................................... 16
Fiscal Year-End Option Holdings ................................................................. 17
Pension Plan and Retirement Plans ............................................................... 18
Employment Agreements, Termination Provisions and
Change in Control Arrangements ............................................................... 21
Compensation Committee Report on Executive Compensation .................................................. 22
Performance Graph ........................................................................................ 24
Certain Relationships and Related Transactions ........................................................... 25
PROPOSAL 2 - APPROVAL OF WESTPOINT STEVENS INC. OMNIBUS STOCK INCENTIVE PLAN (AS AMENDED)................. 25
1999 Omnibus Stock Incentive Plan Grants.................................................................. 30
New Plan Benefits ........................................................................................ 30
PROPOSAL 3 - APPOINTMENT OF AUDITORS ..................................................................... 31
Proposals of Stockholders ................................................................................ 31
Other Business ........................................................................................... 31
Additional Information ................................................................................... 32
</TABLE>
<PAGE> 5
[LOGO]WESTPOINT STEVENS
-------------------
507 WEST TENTH STREET
WEST POINT, GEORGIA 31833
(706) 645-4000
PROXY STATEMENT
-------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1999
-------------------
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 12, 1999, at 10:00
a.m., Eastern Daylight Time, at the Company's New York offices, 1185 Avenue of
the Americas (13th floor), New York, New York, 10036, 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 9, 1999.
THE PROXY
Thomas J. Ward, President and Chief Operating Officer 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.
3
<PAGE> 6
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record owning shares of Common Stock at the close of
business on March 19, 1999, (the "Record Date") are entitled to notice of, and
to vote at, the Annual Meeting. On the Record Date, there were 55,543,959 shares
of Common Stock outstanding (excluding 15,517,374 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 and is necessary to
hold the Annual Meeting. Abstentions and broker non-votes are counted as present
at the Annual Meeting for purposes of determining a quorum.
A plurality (the highest number) of the votes duly cast is required to
elect the nominees for director in respect of Proposal 1 (the election of two
directors).
The affirmative vote of a majority of the shares present at the Annual
Meeting is required to approve Proposal 2 (the approval of the proposed
amendment of the WestPoint Stevens Inc. Omnibus Stock Incentive Plan). In the
case of such vote, abstentions and failures to vote are not affirmative votes
for such matter and, therefore, have the same effect as votes against it.
The affirmative vote of a majority of votes duly cast is required for
Proposal 3 (ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors). In the case of such vote, abstentions are not
votes cast for such matter and, therefore, are not counted.
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 ("DGCL") in connection
with any of the matters to be acted upon at the Annual Meeting.
4
<PAGE> 7
PROPOSAL 1 - ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors of the Company currently consists of nine
members, divided into three classes. The terms of office of the three Class I
directors expire at the Annual Meeting. The terms of office of the members of
each class of directors are staggered so that the term of office of no more than
one class expires in any one year.
The Board of Directors has nominated for election Ms. M. Katherine
Dwyer and Mr. Gerald B. Mitchell to serve as Class I directors of the Company
until the 2002 Annual Meeting of Stockholders and until their successors are
duly elected and qualified. Ms. Dwyer and Mr. Mitchell currently are members of
the Board of Directors. The six directors in Class II and Class III will
continue in office.
Each of the above-named nominees has consented to being named in this
Proxy Statement and will serve as a director if elected. If at the time of the
Annual Meeting, however, either 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 will 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 TWO NOMINEES FOR DIRECTOR NAMED ABOVE.
The following table lists the name, age and positions with the Company
of each of the two nominees and each of the continuing directors, the year in
which their term of office will expire and the month and year in which each
director was first elected (in each case assuming that each of the nominees is
elected at the Annual Meeting).
<TABLE>
<CAPTION>
Term Positions with Served as
Name Age Expires the Company Director Since
---- --- ------- ----------- --------------
<S> <C> <C> <C> <C>
NOMINEES
Class I*
M. Katherine Dwyer 50 2002 Director October 1996
Gerald B. Mitchell 71 2002 Director September 1992
CONTINUING DIRECTORS
Class II
Holcombe T. Green, Jr. 59 2000 Chairman of the Board and September 1992
Chief Executive Officer
Charles W. McCall 55 2000 Director May 1994
John F. Sorte 51 2000 Director January 1993
Class III
Hugh M. Chapman 66 2001 Director August 1997
John G. Hudson 73 2001 Director September 1992
Thomas J. Ward 52 2001 Director; President and October 1998
Chief Operating Officer
</TABLE>
5
<PAGE> 8
*In October 1998, Mr. Phillip Siegel announced his decision not to stand for
re-election at the Annual Meeting due to personal reasons. Mr. Siegel will
continue as a Class I director of the Company until the time of election of
directors at the Annual Meeting ("Time of Election"). Pursuant to its authority
under the Company's Restated Certificate of Incorporation and Amended and
Restated By-laws, in February 1999 the Board of Directors took action, which
will be effective at the Time of Election, which will reduce the number of
directors comprising the entire Board of Directors of the Company from nine to
eight and the number of directors comprising Class I from three to two.
NOMINEES
M. KATHERINE DWYER. Ms. Dwyer is Senior Vice President of Revlon, Inc.
and President of two divisions, Revlon Consumer Products USA and since November
1995, Revlon Cosmetics USA. 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 Reebok
International Ltd. (and a member of its compensation and audit committees).
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).
CONTINUING DIRECTORS
HUGH M. CHAPMAN. Mr. Chapman, from January 1992 until his retirement in
June 1997, served as Chairman of NationsBank, National Association (South). He
also is a director of SCANA Corporation (and a member of its executive
committee, chairman of its management development and corporate performance
committee and chairman of its long term compensation committee) and Printpack
Inc. (and chairman of its audit committee).
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 the retired Chairman of McKesson HBOC, Inc.
("HBOC"), a supplier of hospital information systems. Mr. Green became Chairman
and Chief Executive Officer of the Company on October 22, 1992.
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).
CHARLES W. MCCALL. Mr. McCall has been President, Chief Executive
Officer and a director of HBOC since January 1991 (and a member of its executive
committee) and became Chairman of that company on February 10, 1998. 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 a member of its compensation
committee) and AMERIGROUP Corporation.
6
<PAGE> 9
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.
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. Mr. Ward served as Vice President/Sales of
Stevens since August 1988 and as President of Stevens since August 1989.
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.
BOARD COMMITTEE MEMBERSHIP ROSTER
(AS OF MARCH 31, 1999)
<TABLE>
<CAPTION>
MANAGEMENT
NAME AUDIT COMPENSATION COTTON NOMINATING PENSION***
===================================================================================
<S> <C> <C> <C> <C> <C>
H. M. Chapman X X
M. K. Dwyer X X
H. T. Green, Jr. X X*
J. G. Hudson X X* X
C. W. McCall X
G. B. Mitchell X* X
P. Siegel X* X
J. F. Sorte X*
T. J. Ward
Number of Meetings
in 1998 2 5 ** 3 4
</TABLE>
* Chairperson
** The Cotton Committee conducted business on an informal basis by telephone
conference call throughout Fiscal 1998.
*** The Management Pension Committee is not a committee of the Board of
Directors
7
<PAGE> 10
AUDIT COMMITTEE
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 compliance reporting and
accounting; and
(v) makes reports and recommendations to the Board of Directors as it
deems appropriate regarding, among other matters, appointment of
independent auditors.
COMPENSATION COMMITTEE
The Compensation Committee establishes and administers 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.
COTTON COMMITTEE
The Cotton Committee reviews and monitors the conditions of the cotton
supply market, reviews cotton purchases and use planning with Company management
and makes reports to the Board of Directors with respect to this aspect of the
Company's business.
NOMINATING COMMITTEE
The Nominating Committee
(i) evaluates and recommends qualified persons as nominees for
re-election or election as directors of the Company;
(ii) establishes procedures for identifying nominees;
(iii) recommends criteria for membership on the Board of Directors or
any committee thereof;
(iv) recommends directors for membership on, and to serve as chairman
of, any committee of the Board of Directors;
(v) recommends qualified persons to serve as Chairman of the Board of
Directors and as senior executive officers of the Company; and
(vi) considers nominees submitted by stockholders for election as
directors of the Company.
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 of
Directors to be elected at such meeting, whichever is later. Each such notice
shall set forth as to each nominee,
8
<PAGE> 11
each stockholder giving the notice and as to the 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).
MANAGEMENT PENSION COMMITTEE
The Management Pension Committee is not a committee of the Board of
Directors, however, the committee includes directors as members. The Management
Pension Committee
(i) monitors the performance of the trustees and all investment
managers for Company pension and retirement plans;
(ii) establishes general guidelines for the investment of plan
assets and authorizes the trustees and investment managers to
invest the assets of the plans in accordance with such
guidelines;
(iii) engages or dismisses investment managers, investment
consultants, trustees, independent certified public
accountants and actuaries when, in its opinion, such
engagement or dismissal would be in the best interest of a
plan and its members;
(iv) authorizes the allocation of assets of pension plans among
investment managers;
(v) monitors liquidity requirements for the plans and the ability
of each to meet expected benefit payments and qualified plan
expenses;
(vi) reviews all proposed amendments to the plans or any trust
associated therewith and either approves the amendments or
provides the Board of Directors with its recommendations
concerning such proposed amendments, depending upon the
significance of the amendments; and
(vii) makes reports and recommendations to the Board of Directors
regarding, among other matters, the performance and management
of the plans.
DIRECTORS' COMPENSATION
We do not pay directors or other committee members who are employees of
the Company additional compensation for service as directors or committee
members. In 1998, non-employee directors received the following compensation:
DIRECTORS' COMPENSATION TABLE
<TABLE>
<CAPTION>
TYPE OF COMPENSATION CASH STOCK OPTIONS(1)
===================================================================================
<S> <C> <C>
Annual Retainer $25,000 5,000
Annual Retainer for Committee Chair $ 4,000 5,000
Annual Retainer for Committee Members $ 3,000 5,000
Board or Committee Attendance Fee (per meeting) $ 1,500(2) 5,000
</TABLE>
(1) Immediately following each annual meeting
of stockholders, each non-employee director then in office is granted an option
to purchase 5,000 shares of Company stock pursuant to the Omnibus Stock
Incentive Plan at a price equal to the fair market value of the shares on the
date of the grant of the option.
(2) Mr. Hudson is paid a fee of $1,000 per month in connection with meetings of
the Cotton Committee.
9
<PAGE> 12
DIRECTOR ATTENDANCE
The Board of Directors held six meetings during Fiscal 1998. None of
the incumbent directors, except Ms. M. Katherine Dwyer, 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 M. Katherine Dwyer. 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
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..... 59 Chairman of the Board of Directors and
Chief Executive Officer
Thomas J. Ward............ 52 President and Chief Operating Officer
Morgan M. Schuessler...... 63 Executive Vice President/Finance and
Chief Financial Officer
William F. Crumley........ 61 Executive Vice President/Manufacturing
Robert J. Gehm............ 40 Executive Vice President/President Domestic
Sales Division
John T. Toolan............ 40 Executive Vice President/President Domestic
Marketing Division
Dale C. Williams.......... 44 Executive Vice President/President
International Sales and Marketing Division
</TABLE>
For a discussion of the business experience of Messrs. Green and Ward,
see "Board of Directors."
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 Company's Management Pension Committee.
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.
10
<PAGE> 13
ROBERT J. GEHM. Mr. Gehm has been Executive Vice President of the
Company and President of the Domestic Sales Division since January 1, 1999. Mr.
Gehm was Senior Vice President of the Company from January 1, 1997, and
President of its Mass Brands Division from January 1, 1998. 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 from January 1995.
JOHN T. TOOLAN. Mr. Toolan has been Executive Vice President of the
Company and President of the Domestic Marketing Division since January 1, 1999.
He was Senior Vice President of the Company from January 1, 1997, and President
of the Fashion Brands Division since January 1, 1998. Prior to his present
position he 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 Executive Vice President of the
Company and President of the International Sales and Marketing Division since
January 1, 1999. He was Senior Vice President of the Company from January 1,
1997, and President of the International Division since January 1, 1998. 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.
11
<PAGE> 14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 5, 1999,
(except as otherwise specified in the footnotes) about beneficial ownership of
the Common Stock by (i) each person who is the beneficial owner of more than 5%
of the outstanding Common Stock, (ii) all directors of the Company and the
nominees for director, (iii) the five most highly compensated executive officers
who are not directors, and (iv) all directors and executive officers as a group,
based in each case on information furnished to the Company.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner(1) Beneficial Ownership of Class
--------------------------------------- -------------------- --------
<S> <C> <C>
Holcombe T. Green, Jr ................................. 18,696,649(2) 32.63%
WPS Investors, L.P. ................................... 17,408,306(2) 30.56%
3343 Peachtree Road, N.E. Suite 1420
Atlanta, Georgia 30326
Putnam Investments Inc. ............................... 3,321,250(3) 5.83%
Putnam Investment Management Inc. ..................... 2,488,800(3) 4.37%
The Putnam Advisory Company, Inc. ..................... 832,450(3) 1.46%
One Post Office Square
Boston, Massachusetts 01209
Hugh M. Chapman ....................................... 29,000(4) *
M. Katherine Dwyer .................................... 30,000(5) *
John G. Hudson ........................................ 80,800(6) *
Charles W. McCall ..................................... 84,000(7) *
Gerald B. Mitchell .................................... 70,000(8) *
Phillip Siegel ........................................ 68,000(9) *
John F. Sorte ......................................... 130,000(10) *
Thomas J. Ward ........................................ 439,592(11) *
Morgan M. Schuessler .................................. 331,479(12) *
William F. Crumley .................................... 203,240(13) *
Robert J. Gehm ........................................ 146,216(14) *
John T. Toolan ........................................ 98,094(15) *
Dale C. Williams ...................................... 134,888(16) *
All Directors and Executive Officers as a group ....... 20,541,958(17) 35.10%
(14 persons)
</TABLE>
- ---------------------
* Represents less than 1%
(1) 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.
12
<PAGE> 15
(2) As of March 5, 1999, Mr. Green possessed shared voting and investment power
with respect to (i) 17,408,306 shares held directly by WPS Investors, L.P., of
which HTG Corp., a company owned by him, is general partner; (ii) 232,500 shares
held by Hall Family Investments, L.P., of which Mr. Green's wife is general
partner and (iii) 338 shares held in a non-employee compensation plan of which
Mr. Green is trustee. In addition, the total amount for Mr. Green includes (iv)
698,153 shares owned directly by Mr. Green; (v) 344,980 shares as to which Mr.
Green holds currently exercisable options and (vi) 12,372 shares held through
the WestPoint Stevens Retirement Savings Value Plan (the "Savings Plan"). See
"EXECUTIVE COMPENSATION -- Employment Agreements, Termination Provisions and
Change in Control Arrangements."
(3) Putnam Investments, Inc. ("PI"), which is a wholly-owned subsidiary of Marsh
& McLennan Companies, Inc. ("M&MC"), wholly owns two registered investment
advisers: Putnam Investment Management, Inc., which is the investment adviser to
the Putnam family of mutual funds and The Putnam Advisory Company, Inc., which
is the investment adviser to Putnam's institutional clients. Both subsidiaries
have dispository power over the shares as investment managers, but each of the
mutual fund's trustees have voting power over the shares held by each fund, and
The Putnam Advisory Company, Inc. has shared voting power over the shares held
by the institutional clients. The shares of The Putnam Advisory Company, Inc.
and Putnam Investment Management, Inc. are combined together as the holdings of
Putnam Investments, Inc.
(4) Includes 4,000 shares held directly and 25,000 shares as to which Mr.
Chapman holds currently exercisable options.
(5) Includes 30,000 shares as to which Ms. Dwyer holds currently exercisable
options.
(6) Includes 20,000 shares held directly, 400 shares held indirectly as
custodian for a grandson, 400 shares held by Mr. Hudson's daughter as custodian
for another grandson and 60,000 shares as to which Mr. Hudson holds currently
exercisable options. Mr. Hudson disclaims beneficial ownership of the 400 shares
held as custodian for a grandson and the 400 shares held by his daughter for the
other grandson.
(7) Includes 20,000 shares held directly, 4,000 shares held indirectly by nieces
and nephews and 60,000 shares as to which Mr. McCall holds currently exercisable
options. Mr. McCall disclaims beneficial ownership of the 4,000 shares held by
nieces and nephews.
(8) Includes 10,000 shares held directly and 60,000 shares as to which Mr.
Mitchell holds currently exercisable options.
(9) Includes 8,000 shares held directly and 60,000 shares as to which Mr. Siegel
holds currently exercisable options.
(10) Includes 70,000 shares held directly and 60,000 shares as to which Mr.
Sorte holds currently exercisable options.
(11) Includes 79,124 shares held directly, 331,300 shares as to which Mr. Ward
holds currently exercisable options and 29,168 shares held through the Savings
Plan. See "EXECUTIVE COMPENSATION --Employment Agreements, Termination
Provisions and Change in Control Arrangements."
13
<PAGE> 16
(12) Includes 163,867 shares held directly, 21,000 shares held by Mr.
Schuessler's wife, 139,000 shares as to which Mr. Schuessler holds currently
exercisable options and 7,612 shares held through the Savings Plan. Mr.
Schuessler disclaims beneficial ownership of the 21,000 shares held by his wife.
See "EXECUTIVE COMPENSATION -- Employment Agreements, Termination Provisions and
Change in Control Arrangements."
(13) Includes 74,663 shares held directly, 13,000 shares held by Mr. Crumley's
wife, 115,000 shares as to which Mr. Crumley holds currently exercisable options
and 577 shares held through the Savings Plan. Mr. Crumley disclaims beneficial
ownership of the 13,000 shares held by his wife.
(14) Includes 33,432 shares held directly, 101,000 shares as to which Mr. Gehm
holds currently exercisable options and 11,784 shares held through the Savings
Plan.
(15) Includes 20,424 shares held directly, 74,208 shares as to which Mr. Toolan
holds currently exercisable options and 3,462 shares held through the Savings
Plan.
(16) Includes 33,345 shares held directly, 101,000 shares as to which Mr.
Williams holds currently exercisable options and 543 shares held through the
Savings Plan.
(17) Includes 1,235,008 shares held directly, 19,306,950 shares held indirectly,
of which 65,518 shares are held through the Savings Plan, 1,206,488 shares as to
which certain members of management hold currently exercisable options, and
355,000 shares as to which non-employee directors hold currently exercisable
options. See footnotes 3-16.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
During 1998 Mr. Robert Gehm, who is an executive officer, failed to
timely file with the Securities and Exchange Commission one Form 4 related to
one transaction.
14
<PAGE> 17
EXECUTIVE COMPENSATION
The following table sets forth information concerning total
compensation earned by or paid to the Chief Executive Officer and the six other
highest-paid executive officers of the Company employed as of December 31, 1998,
(the "Named Officers") during the fiscal years indicated for services rendered
to the Company and its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
LONG-TERM COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS
------------------- ----------------------------------
Restricted Stock Stock Options All Other
Name and Principal Position Year Salary ($) Bonus ($)(1) Awards ($)(2) (# of shares)(3) Comp. ($)(4)
- --------------------------- ----- ---------- ------------ ---------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Holcombe T. Green, Jr...... 1998 673,000 807,600 577,573 100,000 1,600
Chairman and Chief 1997 650,000 780,000 529,983 0 1,600
Executive Officer 1996 629,500 755,400 484,934 400,000 1,500
Thomas J. Ward............. 1998 414,000 496,800 355,315 100,000 1,600
President and Chief 1997 400,000 480,000 326,145 0 1,600
Operating Officer 1996 335,083 402,100 252,565 200,000 1,500
Morgan M. Schuessler....... 1998 310,500 372,600 266,486 50,000 1,600
Executive Vice President 1997 300,000 360,000 244,617 0 1,600
1996 280,167 336,200 210,605 100,000 1,500
William F. Crumley......... 1998 295,000 354,000 253,178 50,000 1,600
Executive Vice President 1997 285,000 342,000 232,368 0 1,600
1996 258,250 309,900 194,291 100,000 1,500
Robert J. Gehm............. 1998 236,500 236,500 202,980 50,000 1,600
Executive Vice President 1997 215,000 215,000 175,307 20,000 1,600
1996 176,667 176,667 132,116 80,000 1,500
John T. Toolan............. 1998 236,500 236,500 202,980 50,000 1,600
Executive Vice President 1997 215,000 215,000 175,307 20,000 1,600
1996 162,533 162,533 121,463 80,000 1,500
Dale C. Williams........... 1998 236,500 236,500 202,980 50,000 1,600
Executive Vice President 1997 215,000 215,000 175,307 20,000 1,600
1996 193,796 193,796 150,762 80,000 1,500
</TABLE>
(1) Bonuses earned for Fiscal 1996, 1997 and 1998 were paid in the first
quarter of the following year.
(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) Shares available under stock option awards are adjusted to reflect the
two-for-one stock split effective in March 1998.
(4) These amounts represent the Company's matching contributions under the
Savings Plan which were $1,600 in 1998 and 1997 and $1,500 in 1996 for
each of the Named Officers.
15
<PAGE> 18
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 1998. 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 1999
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 90 days of 1999.
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 11, 1998, the Company granted
Bonus Awards (as defined in the Key Employee Stock Bonus Plan) covering an
aggregate of 270,454 shares of Common Stock (on a post-split basis) to certain
key employees, including each of the Named Officers. On February 11, 1999, the
Compensation Committee certified in writing that Bonus Awards for Fiscal 1998
were earned (except for Bonus Awards forfeited by certain individuals). Twenty
percent of each earned Bonus Award for Fiscal 1998 vested on February 11, 1999,
and the remainder of such Bonus Award is subject to vesting ratably on January
1 of each of years 2000 through 2003
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 WestPoint Stevens Inc.
Omnibus Stock Incentive Plan (the "Omnibus Stock Incentive 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 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
Omnibus Stock Incentive Plan.
The table also shows, among other data, hypothetical potential gains
from stock options granted in Fiscal 1998. 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
1998 (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.
16
<PAGE> 19
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
Number of Options/SARs Exercise Price
Options/SARs Granted to All Per Share Expiration At 5% Annual At 10% Annual
Name of Executive Granted Employees ($/Sh) Date Growth Rate ($) Growth Rate ($)
- ----------------- --------- ----------- ----------- ----- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Holcombe T. Green, Jr. 100,000 13.3 $35.25 8/13/08 2,216,854 5,617,942
Thomas J. Ward 100,000 13.3 $35.25 8/13/08 2,216,854 5,617,942
Morgan M. Schuessler 50,000 6.6 $35.25 8/13/08 1,108,427 2,808,971
William F. Crumley 50,000 6.6 $35.25 8/13/08 1,108,427 2,808,971
Robert J. Gehm 50,000 6.6 $35.25 8/13/08 1,108,427 2,808,971
John T. Toolan 50,000 6.6 $35.25 8/13/08 1,108,427 2,808,971
Dale C. Williams 50,000 6.6 $35.25 8/13/08 1,108,427 2,808,971
</TABLE>
FISCAL YEAR-END OPTION HOLDINGS
The following table summarizes for each of the Named Officers option
exercises during Fiscal 1998, including the aggregate value of gains on the
date of exercise, the total number of unexercised options for Common Stock, if
any, held at December 31, 1998, and the aggregate dollar value of unexercised
in-the-money options for Common Stock, if any, held at December 31, 1998. 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, 1998, which was $31-9/16 per share.
These values have not been, and may never be, realized, as these options have
not been, and may never be, exercised. Actual gains, if any, upon exercise will
depend on the value of Common Stock on the date of any exercise of options.
AGGREGATED OPTION/SAR EXERCISES IN THE
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
Value of Unexercised
Shares (at year end)
Acquired on Value Number of Unexercised in-the-Money
Name Exercise(#)(1) Realized($) Options at FY-End(#)(1) Options at FY-End($)
- ---- --------------- ------------ --------------------- ---------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Holcombe T. Green, Jr. 15,020 246,891 224,980 160,000 4,105,885 2,920,000
Thomas J. Ward 39,300 914,700 251,300 80,000 5,401,031 1,450,000
Morgan M. Schuessler 55,000 1,218,188 94,000 40,000 1,948,125 725,000
William F. Crumley 41,000 864,500 116,920 40,000 2,487,663 725,000
Robert J. Gehm 26,600 596,885 56,000 44,000 956,876 710,314
John T. Toolan 12,000 281,000 29,208 44,000 471,271 710,314
Dale C. Williams 24,900 551,500 56,000 44,000 956,876 710,314
</TABLE>
(1)The number of shares shown is an adjusted number reflecting the two-for-one
stock split effective in March 1998.
17
<PAGE> 20
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"), a defined benefit 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 income
attributable to stock based awards and imputed income attributable to certain
fringe benefit programs. With respect to executive officers, plan compensation
covers up to a maximum of $160,000 per individual for Fiscal 1998. 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 ($31,128 in Fiscal 1998), 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
calculated on a straight-life annuity basis and 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.
18
<PAGE> 21
PENSION PLAN TABLE(1)
YEARS OF SERVICE
<TABLE>
<CAPTION>
5 YEAR(2)
COMPENSATION 15 20 25 30 35
- -------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 250,000...... $57,198 $76,265 $95,331 $114,397 $133,463
300,000...... 69,198 92,265 115,331 138,397 161,463
350,000...... 81,198 108,265 135,331 162,397 189,463
400,000...... 93,198 124,265 155,331 186,397 217,463
450,000...... 105,198 140,265 175,331 210,397 245,463
500,000...... 117,198 156,265 195,331 234,397 273,463
550,000...... 129,198 172,265 215,331 258,397 301,463
600,000...... 141,198 188,265 235,331 282,397 329,463
650,000...... 153,198 204,265 255,331 306,397 357,463
700,000...... 165,198 220,265 275,331 330,397 385,463
750,000...... 177,198 236,265 295,331 354,397 413,463
800,000...... 189,198 252,265 315,331 378,397 441,463
850,000...... 201,198 268,265 335,331 402,397 469,463
900,000...... 213,198 284,265 355,331 426,397 497,463
950,000...... 225,198 300,265 375,331 450,397 525,463
1,000,000...... 237,198 316,265 395,331 474,397 553,463
1,050,000...... 249,198 332,265 415,331 498,397 581,463
1,100,000...... 261,198 348,265 435,331 522,397 609,463
1,150,000...... 273,198 364,265 455,331 546,397 637,463
1,200,000...... 285,198 380,265 475,331 570,397 665,463
1,400,000...... 333,198 444,265 555,331 666,397 777,463
1,600,000...... 381,198 508,265 635,331 762,397 889,463
</TABLE>
- -------------------------------
(1) Assumes individual retires at age 65 with indicated years of service but
further assumes covered compensation as it was determined in Fiscal 1998,
which was $31,128 (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.
The following table indicates the credited years of service as of the date
hereof for each of the Named Officers and the annual average compensation for
each of their five consecutive plan years of highest compensation during their
last ten years of service:
19
<PAGE> 22
<TABLE>
<CAPTION>
Credited 5 Year
Years Compensation
------- ------------
<S> <C> <C>
Holcombe T. Green, Jr 6.5 $1,085,469.22
Thomas J. Ward 23.3 708,080.23
Morgan M. Schuessler 6 556,456.51
William F. Crumley 9.9 530,448.85
Robert J. Gehm 13.7 225,380.06
John T. Toolan 9.3 203,538.10
Dale C. Williams 6.1 234,960.08
</TABLE>
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"). For
certain participants, the compensation taken into account under the
Supplemental Retirement Plan is limited to the lesser of (i) $300,000 or (ii)
120% of the participant's base salary. The Supplemental Retirement Plan is not
qualified under Section 401(a) of the Code 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
West Point-Pepperell, Inc. 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 and minus amounts attributable to employer
contributions under the WestPoint Stevens Inc. Retirement
Savings Value Plan ("RSVP").
Participation in the Executive Retirement Plan was frozen by the
Company as of December 31, 1993. At such time, three of the Company's current
executives were accruing benefits under the Executive Retirement Plan. Of the
Named Officers, only Mr. Ward was a participant and accruing a benefit under
the Executive Retirement Plan. As of December 31, 1998, due to the offset of
benefits payable under the WestPoint Pension Plan, the Supplemental Retirement
Plan and the RSVP, no amounts would be paid to Mr. Ward under the Executive
Retirement Plan upon termination of employment at age 65.
20
<PAGE> 23
EMPLOYMENT AGREEMENTS, TERMINATION PROVISIONS AND CHANGE IN CONTROL
ARRANGEMENTS
The Company entered into employment agreements with Messrs. Green
(effective as of March 8, 1993), Ward (effective as of March 8, 1993), and
Schuessler (effective as of April 1, 1993).
Each agreement was 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 1998 were as follows: Mr. Green -- $673,000; Mr. Ward --
$414,000; and Mr. Schuessler -- $310,500. For 1999 the annual base salary for
each of the following executives was increased effective January 1, 1999, to
the following: Mr. Green -- $715,000; Mr. Ward -- $500,000; and Mr. Schuessler
- -- $325,000. 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
1999, Mr. Green would be entitled to a payment of $2,108,000; Mr. Ward --
$1,200,000; and Mr. Schuessler -- $890,000. 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").
21
<PAGE> 24
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 1998 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.
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 1998 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 1999 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 1999. See "-- Senior Management
Incentive Plan."
The Omnibus Stock Incentive Plan provides for the grant by the Company
of stock-based incentives to certain key employees of the Company. The
stock-based incentives offered pursuant to the Omnibus Stock Incentive Plan are
a matter of separate inducement to key employees and are not granted in lieu of
any other compensation. By means of the Omnibus Stock Incentive 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. A
committee appointed by the Board of Directors to administer the Omnibus Stock
Incentive Plan can choose from among six categories of incentive awards: stock
options, stock appreciation rights, restricted shares, deferred shares,
performance shares and performance units. 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 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 10%
of the shares of Common Stock earned will vest on January 1 of each calendar
year following the performance year for which such Bonus Awards are earned
until fully vested.
22
<PAGE> 25
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 23,219 shares of Common Stock
under the terms of the Key Employee Stock Bonus Plan in 1999 for Fiscal 1998.
On August 13, 1998, Mr. Green was granted options to purchase 100,000 shares of
common stock under the terms of the Omnibus Stock Incentive Plan. The stock
options provide Mr. Green compensation if, and only if, the price of the Common
Stock is above the exercise price during the time the options are exercisable.
The only other component of his compensation for Fiscal 1998 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 1998. In Fiscal 1998, Mr. Green
was instrumental in, among other things, the continued implementation of cost
reduction and capital expenditure programs, substantially increasing earnings
per share and directing the refinancing of the Company's debt pursuant to which
the Company reduced its interest expense, extended debt maturities and improved
financial flexibility. In the Compensation Committee's view, these actions on
the part of Mr. Green improved the Company's operating results and capital
structure.
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). In addition, options granted under the Omnibus
Stock Incentive Plan should qualify for the performance-based compensation
exception to Section 162(m).
Compensation Committee
Gerald B. Mitchell, Chairman
John G. Hudson
M. Katherine Dwyer
23
<PAGE> 26
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 the last trading day of the year ending on December 31, 1993,
plotted on an annual basis for a five year period ending on December 31, 1998,
against Standard & Poor's 500 Stock Index ("S&P 500") and an index compiled
consisting of 130 companies (listed on Annex A hereto) with market
capitalizations that were similar to that of the Company at the end of 1997
(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.
TOTAL SHAREHOLDER RETURNS
<TABLE>
<CAPTION>
Base Years Ending
Period ----------------------------------------------
Company Name/Index Dec93 Dec94 Dec95 Dec96 Dec97 Dec98
- --------------------- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
WestPoint Stevens Inc. 100 76.67 107.00 159.34 252.00 336.67
S&P 500 Index 100 101.32 139.40 171.40 228.59 293.91
Peer Group 100 95.11 115.70 136.22 162.61 161.98
</TABLE>
24
<PAGE> 27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In Fiscal 1998, the Company made payments to Mr. Green and HTG Corp.
in the aggregate amount of $405,675 (i) as payments to HTG Corp. for use by the
Company of an airplane HTG Corp. owns and (ii) 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 and premises.
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.
PROPOSAL 2 - APPROVAL OF THE WESTPOINT STEVENS INC. OMNIBUS STOCK
INCENTIVE PLAN (AS AMENDED)
The WestPoint Stevens Inc. Omnibus Stock Incentive Plan was approved
by the stockholders of the Company at its annual meeting held on May 14, 1997.
The WestPoint Stevens Inc. 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. The proposed
amendment to the WestPoint Stevens Inc. Omnibus Stock Incentive Plan (the
"WestPoint Stevens Inc. Omnibus Stock Incentive Plan (As Amended)," the
"Omnibus Stock Incentive Plan" or the "Plan") will increase the maximum number
of shares of the Company's Common Stock that may be issued under the Plan by
two million shares to a total of 5,250,700 shares (on a post-split basis).
The WestPoint Stevens Inc. Omnibus Stock Incentive Plan (As Amended)
will continue to allow 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: stock
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 stock 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 5,250,700 (which includes the 3,250,700 Shares (on a
post-split basis) previously available for awards under the Plan and 2,000,000
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
25
<PAGE> 28
may not exceed 5,250,700, 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 the performance units. The counting conventions described in
this paragraph, however, do not apply for purposes of determining the maximum
number of awards that a participant may receive in any one calendar year.
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 stock options that entitle the optionee to
purchase Shares at a price equal to or greater than fair market value on the
date of grant. Stock 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.
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 a stock 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 stock 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 stock 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.
26
<PAGE> 29
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. With regard
to specified performance objectives, the Committee shall also specify 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 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 equal 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.
27
<PAGE> 30
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 stock 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 be granted, or increase the number of Shares or performance units that
may be granted to any participant in any calendar year.
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 or stock appreciation right is granted. However, the
optionee generally will recognize ordinary income upon exercise of a
nonqualified stock option in an amount equal to the excess of the fair market
value of the Shares at the time of exercise over the exercise price. Similarly,
upon the receipt of cash or Shares pursuant to the exercise of a stock
appreciation right, the individual generally will recognize ordinary income in
an amount equal to the sum of the cash and the fair market value of the shares
received. If an individual exercises a nonqualified stock option by delivering
Shares to the Company, other than Shares previously acquired pursuant to the
exercise of an incentive stock option which is treated as a "disqualifying
disposition" as described below, the individual will not recognize gain or loss
with respect to the exchange of such shares, even if their then fair market
value is different from the individual's tax basis. The individual, however,
will be taxed as described above with respect to the exercise of the
nonqualified stock option as if he or she had paid the exercise price in cash.
So long as the individual receives a separate identifiable stock certificate
therefor or such shares are otherwise identifiable, the tax basis and the
holding period for that number of Shares received on such exercise that is
equal to the number of Shares surrendered on such exercise will be equal to the
tax basis and include the holding period of those Shares surrendered.
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
28
<PAGE> 31
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, under certain circumstances
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 substantial 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.
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 $1 million limitation on certain executive compensation under Section
29
<PAGE> 32
162(m). An employee who recognizes ordinary income in the circumstances
described above will be subject to both wage withholding and other employment
taxes.
1999 OMNIBUS STOCK INCENTIVE PLAN GRANTS
Because the key employees and directors of the Company may change over
time and because the selection of participants is discretionary, it is
impossible to determine the number of persons who will be eligible for awards
under the WestPoint Stevens Inc. Omnibus Stock Incentive Plan (As Amended)
during its term. However, two executive officers have been granted options,
subject to stockholder approval of the Plan. The following table sets forth the
options granted under the WestPoint Sevens Inc. Omnibus Stock Incentive Plan
(As Amended).
NEW PLAN BENEFITS
OMNIBUS STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER OF
NAME AND POSITION VALUE ($) UNITS GRANTED
- ----------------- --------- -------------
<S> <C> <C>
Holcombe T. Green, Jr., Chairman And Chief Executive Officer (1) 50,000(2)
Thomas J. Ward, President And Chief Operating Officer (1) 50,000(2)
Executive Officer Group (1) 100,000(2)
Non-Executive Director Group -0- -0-
Non-Executive Officer Employee Group -0- -0-
</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 $26.75 per share based on the Fair Market Value of
the Common Stock on January 28, 1999, the date of grant. Options
expire on January 28, 2009.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
WESTPOINT STEVENS INC. OMNIBUS STOCK INCENTIVE PLAN (AS AMENDED).
30
<PAGE> 33
PROPOSAL 3 - APPOINTMENT OF AUDITORS
Ernst & Young LLP, independent auditors, audited the financial
statements of the Company for the year ended December 31, 1998, contained in
the Company's Annual Report on Form 10-K (which was filed with the Commission
on March 31, 1999). 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, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR SUCH RATIFICATION.
PROPOSALS OF STOCKHOLDERS
The Company intends to hold the Annual Meeting of Stockholders for
year 2000 in the spring of next year. 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 11,
1999.
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 attached Company's Notice of Annual Meeting of Stockholders. If any
other matters do properly come before the Annual Meeting, 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.
31
<PAGE> 34
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.
Copies of the Company's 1998 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 9, 1999
32
<PAGE> 35
ANNEX A
MARKET INDEX FOR WESTPOINT STEVENS INC.
<TABLE>
<S> <C> <C>
Advanced Fibre Comm Inc. Everest Reinsurance Hldgs Peoples Bank Bridgeport Ct
Alberta Energy Co. Ltd Fina Inc. Perusahaan Indo Sat
Alleghany Corp. First Commercial Corp. Petroleum Geo-Svc
Allegiance Corp. FMC Corp. Pimco Advisors
Allergan Inc. Gener S A PMI Group Inc.
AMB Property Corp. Giant Food Inc. Polaroid Corp.
American Pwr Cnvrsion Grupo Iusacell Provident Financial Grp Inc.
American Water Works Inc. Gulf Canada Res Ltd. Quebecor Printing
Andrew Corp. Gulfstream Aerospace Rexall Sundown Inc.
Archstone Communitys Tr Harsco Corp. Rexam PLC
Arterial Vascular Engr Inc. Heftel Broadcasting Rouse Co.
Asia Pulp & Paper Ltd HRPT Pptys Trust Saga Petroleum Asa
Banco De Galicia Bueno ICN Pharmaceuticals Inc. Silicon Graphics Inc.
Barnes & Noble Inc. Illinois Central Corp. SKF Ab
Bausch & Lomb Inc. Immunex Corp. Sovereign Bancorp Inc.
Bemis Co. International Home Foods Inc. SPX Corp
Benckiser N V Jones Apparel Group Inc. Stewart Enterprises
Bergen Brunswig Corp. Keystone Financial Inc. Sulzer Medica
Biochem Pharma Inc. King World Productions Inc. Sybron Intl Corp.
Borders Group Inc. Lafarge Corp. Synopsys Inc.
Brooks Fiber Properties Inc. Leucadia National Corp. Tektronix Inc.
Cabletron Systems Louisiana-Pacific Corp. Tele-Commun Intl Inc.
Cablevision Systems Lubrizol Corp. Timken co.
Calenergy Inc. Lyondell Chemical Co. U S Industries Inc.
Callaway Golf Co. Mack Cali Realty Corp. U S Office Products Co.
Cambridge Technology Partner Macronix Intl Ltd. U S Surgical Corp
Camco International Inc. Manor Care Inc. USG Corp
Catellus Development Corp. McCormick & Co. Utilicorp United Inc.
CBRL Group Inc. McDermott Intl Inc. Weatherford Enterra Inc.
CCB Financial Corp. McLeodusa Inc. Wesco Financial Corp.
Centocor Inc. Mercantile Stores Co. Inc. Westcoast Energy Inc.
Citrix Systems Inc. MGM Grand Inc. Western Natl Corp
Clayton Homes Inc. Mid Ocean Limited Wilmington Trust Corp.
Companhia Paranaense MidAmerican Energy Hldg Witco Corp.
Consolidated Papers Inc. Modis Professional Svcs Inc.
Crane Co. National Service Inds. Inc.
Creative Technology Netcom AB
Cummins Engine Netscape Communications Corp.
Cytec Industries Inc. Nicor Inc.
Deposit Guaranty Corp. Noble Affiliates Inc.
Dial Corporation North Fork Bancorporation
DST Sytems Inc. Oce NV
Duff & Phelps Utils Oge Energy Corp.
Dura Pharmaceuticals Inc. Olin Corp
Echlin Inc. Pacific Century Financial CP
Electronic Arts Inc. Pacific Dunlop Ltd
Energy East Corp. Pacificare Health Sys
Erie Indemnity Co. Patriot Amer Hospitality Inc.
</TABLE>
<PAGE> 36
ANNEX B
WESTPOINT STEVENS INC.
OMNIBUS STOCK INCENTIVE PLAN
(AS AMENDED)
<PAGE> 37
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...............................................................................10
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> 38
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> 39
"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.
"OPTIONEE" means the person so designated in an agreement
evidencing an outstanding Option right.
"OPTION" means any option to purchase Shares granted under
this Plan.
"OPTION PRICE" means the purchase price payable upon the
exercise of an 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> 40
"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 5,250,700. 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 5,250,700, 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 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
B-3
<PAGE> 41
of Performance Units. This Section 3(b) shall only apply for purposes of
determining the limitations contained in Section 3(a) and shall not apply for
purposes of determining the limitations contained in Section 3(c).
(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
B-4
<PAGE> 42
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.
(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-5
<PAGE> 43
(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.
(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
B-6
<PAGE> 44
other ownership rights, subject to the substantial risk of forfeiture and
restrictions on transfer hereinafter referred to.
(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.
B-7
<PAGE> 45
(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
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,
B-8
<PAGE> 46
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.
(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.
B-9
<PAGE> 47
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.
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.
B-10
<PAGE> 48
(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.
(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.
B-11
<PAGE> 49
WESTPOINT STEVENS INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1999
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned stockholder of WestPoint Stevens Inc., a Delaware
corporation (the "Company"), hereby appoints THOMAS J. WARD 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 Company's New York offices, 1185 Avenue of the
Americas (13th floor), New York, New York on Wednesday, May 12, 1999 at 10:00
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 WESTPOINT STEVENS INC. OMNIBUS STOCK
INCENTIVE PLAN (AS AMENDED), 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.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE> 50
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL ITEMS.
Please mark boxes [ ] or [X] in blue or black ink.
1. ELECTION PROPOSAL: GRANTING [ ] WITHHOLDING [ ] authority to vote for the
election as directors of all the nominees listed below:
Ms. M. Katherine Dwyer and Mr. Gerald B. Mitchell
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "GRANTING" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME FOR WHICH
AUTHORITY TO VOTE IS WITHHELD.)
2. With respect to the proposal to approve the WestPoint Stevens Inc. Omnibus
Stock Incentive Plan (As Amended). FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. With respect to the proposal to ratify the appointment of Ernst & Young
LLP, independent certified public accountants, as auditors for the Company
for the year ending December 31, 1999. FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, on such other matters as may properly come before the
meeting and any and all adjournments thereof.
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: __________________ , 1999
-------------------------------------
Signature
-------------------------------------
Signature
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
