<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Rowe Furniture Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Rowe Furniture Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
-------------------
NOTICE
of
ANNUAL MEETING
of
STOCKHOLDERS
and
PROXY STATEMENT
-------------------
TIME:
Tuesday, March 31, 1998
at 10:00 a.m.
PLACE:
Roanoke Airport Marriott
Roanoke, Virginia
-------------------
ROWE FURNITURE CORPORATION
Salem, Virginia
--------------------
<PAGE>
ROWE FURNITURE CORPORATION
239 Rowan Street
Salem, Virginia 24153
To The Stockholders of
Rowe Furniture Corporation February 20, 1998
Notice is hereby given that the annual meeting of stockholders of Rowe Furniture
Corporation (the "Company") will be held at the Roanoke Airport Marriott, 2801
Hershberger Road, Roanoke, Virginia, on Tuesday, March 31, 1998, at 10:00 a.m.
The annual meeting is for the purpose of considering and acting upon the
election of three directors of the Company, each for a term of three years, and
such other business as may properly come before the meeting or any adjournment
or postponement thereof. The Board of Directors is not aware of any other
business to come before the meeting.
Any action may be taken on the foregoing proposal at the meeting on the
date specified above, or on any date or dates to which the meeting may be
adjourned or postponed. Stockholders of record at the close of business on
February 12, 1998 are the stockholders entitled to vote at the meeting, and at
any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy which is
solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.
By Order of the Board of Directors,
ARTHUR H. DUNKIN, Secretary-Treasurer
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE THE PRESENCE OF A QUORUM AT THE
MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE
IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
ROWE FURNITURE CORPORATION
239 Rowan Street
Salem, Virginia 24153
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, March 31, 1998
---------------------------------
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Rowe Furniture Corporation
(hereinafter called the "Company") to be used at the Annual Meeting of
Stockholders of the Company (hereinafter called the "Meeting"), which will be
held at the Roanoke Airport Marriott, Roanoke, Virginia, on March 31, 1998, at
10:00 a.m., and all adjournments and postponements of the Meeting. The
accompanying Notice of Meeting, form of proxy and this proxy statement are first
being mailed to stockholders on or about February 20, 1998.
All shares of the Company's common stock, par value $1.00 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the nominees set forth in
this Proxy Statement. Proxies marked as abstaining will be treated as present
for purposes of determining a quorum at the Meeting, but will not be counted as
voting on any matter for which an abstention is indicated. Proxies returned by
brokers as "non-votes" on behalf of shares held in street name will not be
treated as present for purposes of determining a quorum for the Meeting unless
they are voted by the broker on at least one matter on the agenda. Such non-
voted shares will not be counted as voting on any matter as to which a non-vote
is indicated on the broker's proxy.
The Company does not know of any matters, other than as described in the
Notice of Meeting, that are to come before the Meeting. If any other matters are
properly presented at the Meeting for action, the persons named in the enclosed
form of proxy and acting thereunder will have the discretion to vote on such
matters in accordance with their best judgment.
Stockholders who execute proxies solicited by the Company's Board of
Directors retain the right to revoke them at any time. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments and postponements thereof. The presence of a stockholder at the
Meeting will not automatically revoke such stockholder's proxy. Any proxy may be
revoked, however, at any time prior to its exercise by written notice to the
Secretary of the Company or the filing of a later dated proxy prior to a vote
being taken on a particular proposal at the Meeting or by attending the Meeting
and voting in person. Any written notice revoking a proxy should be delivered to
Arthur H. Dunkin, Secretary-Treasurer of the Company, at 239 Rowan Street,
Salem, Virginia 24153.
2
<PAGE>
STOCKHOLDER APPROVAL
Although the Company's principal administrative offices are located in
Salem, Virginia, the Company is incorporated under the laws of the State of
Nevada. Under Nevada law, the affirmative vote of a plurality of the votes cast
at the Meeting is required for the election of Directors. Accordingly,
withholding of authority and broker non-votes will have no effect upon the
election of Directors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on February 12, 1998
will be entitled to one vote for each share then held. As of February 12, 1998,
the Company had 12,544,327 shares of common stock issued and outstanding.
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of February 12, 1998, by (i) each person who is
known by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, (ii) each director, nominee and Named Executive (as
defined herein) and (iii) all directors, nominees and executive officers as a
group. The Company believes that the individuals listed each have sole voting
and investment power with respect to such shares, except as otherwise indicated
in the footnotes to the table. Unless otherwise indicated below, the business
address of each person listed below is: c/o Rowe Furniture Corporation, 239
Rowan Street, Salem, Virginia 24153.
<TABLE>
<CAPTION>
Shares Beneficially
Owned
-----------------------
Amount of
Beneficial Percent
Ownership(1) of Class
------------ --------
Name and Address,
of Beneficial Owner
- -------------------
<S> <C> <C>
Caryl S. Bentz (2) 1,172,433 9.3%
Gerald M. Birnbach (3)(4)(5) 1,669,921 13.1
Sidney J. Silver (6) 1,477,723 11.7
Arthur H. Dunkin 157,017 1.2
Keith J. Rowe (3)(7)(8) 1,361,885 10.8
Harvey I. Ptashek (9) 123,839 1.0
Gerald O. Woodlief (10) 172,647 1.4
Richard E. Cheney 92,162 *
Charles T. Rosen 55,249 *
Allan Tofias 264 *
Charlene A. Pedrolie 4,000 *
All directors, nominees and executive officers
as a group (11 persons) 4,319,872 33.1
</TABLE>
* Less than one percent.
3
<PAGE>
(1) Includes shares subject to options currently exercisable or which will
become exercisable within 60 days of February 12, 1998 granted to the
directors and executive officers as follows: Mr. Birnbach -181,900, Mr.
Cheney - 39,937, Mr. Dunkin - 76,750, Ms. Pedrolie - 4,000, Mr. Ptashek -
64,750, Mr. Rosen - 39,937, Mr. Rowe - 39,937, Mr. Silver - 24,750 and Mr.
Woodlief - 39,937. Also includes shares held in retirement accounts.
(2) Ms. Bentz's business address is- 4749 Barclay Square, Roanoke, Virginia
24018.
(3) Includes 280,098 shares held by Mr. Birnbach and Mr. Keith Rowe, as co-
trustees under the trust FBO Michael Rowe, over which shares these
individuals exercise shared voting and investment power. Mr. Birnbach does
not have any income or residuary interest in these shares.
(4) Includes 115,803 and 398,670 shares held as co-trustee under irrevocable
trust agreements for the descendants of D. E. Rowe, Jr. and for the
descendants of Gladys B. Rowe, respectively, over which shares Mr. Birnbach
exercises shared voting and investment power.
(5) Includes 2,430 shares held jointly by Mr. Birnbach with his wife. Includes
36,121 shares as co-trustee with Miriam Birnbach for the Irrevocable Trust
for the Benefit of Jami Taff and the Descendants of Jami Taff, 36,121
shares as co-trustee with Miriam Birnbach for the Irrevocable Trust for the
Benefit of Bruce Birnbach and the Descendants of Bruce Birnbach, 28,771
shares as co-trustee with Miriam Birnbach for the Irrevocable Trust for the
Benefit of Nina Patton and the Descendants of Nina Patton, and 21,421
shares as co-trustee with Miriam Birnbach for the Irrevocable Trust for the
Benefit of Tom Birnbach and the Descendants of Tom Birnbach. Excludes 3,795
shares held by Mr. Birnbach's wife of which Mr. Birnbach disclaims
beneficial ownership.
(6) Excludes the following shares of which Mr. Silver disclaims beneficial
ownership: 3,479 shares owned by Mr. Silver's wife, 189,843 shares held by
Mr. Silver's wife and son as trustees under the Irrevocable Trust for the
Wife and Descendants of Sidney J. Silver, 15,000 shares held by Mr.
Silver's wife and son as trustees under the Irrevocable Trust for the
Benefit of Beth D. Silver and the Descendants of Beth D. Silver, 35,000
shares held by Mr. Silver's wife and son as trustees under the Irrevocable
Trust for the Benefit of Patricia A. Silver and the Descendants of Patricia
A. Silver, 48,500 shares held by Mr. Silver's wife and son as trustees
under the Irrevocable Trust for the Benefit of Lisa E. Cannon and the
Descendants of Lisa E. Cannon, 15,000 shares held by Mr. Silver's wife and
son as trustees under the Irrevocable Trust for the Benefit of David C.
Silver and the Descendants of David C. Silver and 15,000 shares held by Mr.
Silver's wife and son as trustees under the Irrevocable Trust for the
Benefit of Daniel B. Silver and the Descendants of Daniel B. Silver.
Includes 115,803 and 398,670 shares held as co-trustee under Irrevocable
Trust agreements for the descendants of D.E. Rowe, Jr. and for the
descendants of Gladys B. Rowe, respectively, 792 shares held as co-trustee
under the Revocable Trust Agreement FBO Jonathan Simon Elsberg and 15,187
shares in the Silver, Freedman & Taff Profit Sharing Plan and Trust over
which shares Mr. Silver exercises shared voting and investment power. Mr.
Silver's business address is: c/o Silver, Freedman & Taff, L.L.P, 1100 New
York Ave., N.W., Washington, D.C. 20005.
(7) Messrs. Michael and Keith Rowe are co-executors of the estate of Elizabeth
J. Rowe and have shared voting and investment power with respect to 10,084
shares.
(8) Excludes 792 shares owned by Mr. Rowe's wife of which Mr. Rowe disclaims
beneficial ownership. Includes 142,890 shares held as co-trustee with Mr.
Rowe's wife in the Rowe Charitable Remainder Trust.
(9) Includes 54,278 shares held as co-trustee with Mr. Ptashek's wife of which
Mr. Ptashek disclaims beneficial ownership.
(10) Includes 72,595 shares held as co-trustee with Mr. Woodlief's wife of which
Mr. Woodlief disclaims beneficial ownership.
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is composed of nine directors.
Approximately one-third of the Directors are elected annually. Three Directors
are to be elected at the Meeting for terms of three years or until their
successors are elected and qualified.
4
<PAGE>
Unless contrary specification is indicated, it is intended that the
accompanying form of proxy will be voted for the election of the three nominees
named below. If any of such persons is unable, or declines to serve, the persons
named in the accompanying proxy may vote for another person, or persons, in
their discretion. There are no arrangements or understandings between any
nominee and any other person pursuant to which such nominee was selected.
The following table sets forth certain information with respect to each
nominee for election to the Board and each Director continuing to serve.
INFORMATION CONCERNING NOMINEES
<TABLE>
<CAPTION>
Director Term To
Age Since Expire
--- ----- ------
<S> <C> <C> <C>
Gerald M. Birnbach................................. 67 1966 1998
Keith J. Rowe...................................... 54 1977 1998
Richard E. Cheney.................................. 76 1988 1998
</TABLE>
DIRECTORS CONTINUING TO SERVE
<TABLE>
<CAPTION>
Director Term To
Age Since Expire
--- ----- ------
<S> <C> <C> <C>
Charles T. Rosen................................... 64 1977 1999
Sidney J. Silver................................... 63 1982 1999
Arthur H. Dunkin................................... 52 1986 1999
Harvey I. Ptashek.................................. 59 1984 2000
Gerald O. Woodlief................................. 67 1982 2000
Allan Tofias....................................... 67 1998 2000
</TABLE>
Gerald M. Birnbach has been in the service of the Company since 1956. He
has served as the Company's President since 1972, and Chairman of the Board
since 1976. Prior to becoming President, he was Vice President of Merchandising
and Sales.
Keith J. Rowe served as a Vice President of the Company from 1977 to
January 1993. He is presently a private investor and currently serves on the
board of directors of Enabling Technologies, Inc.
Richard E. Cheney was the Chairman of the Board of Hill & Knowlton, an
international public relations company, from 1987 to 1991 and served as the
Chairman Emeritus from 1991 to 1993. He currently serves on the boards of
directors of Chattem, Inc. and Stoneridge, Inc.
Charles T. Rosen has served as Vice President of Luth Research, Inc., a
market research company since 1993.
Sidney J. Silver has been a member of the Washington, D.C. law firm Silver,
Freedman & Taff, L.L.P. since 1972.
5
<PAGE>
Arthur H. Dunkin has been the Company's Secretary-Treasurer since 1986.
Mr. Dunkin has been in the service of the Company since 1984.
Harvey I. Ptashek, who has been employed by the Company since 1964, has
served as its Senior Vice President since 1984. He was the Vice President of
Sales from 1980 to 1984. Prior to that time, he held positions with the Company
as National Sales Manager and Director of Sales Administration.
Gerald O. Woodlief served as a Senior Vice President of the Company from
1982 until his retirement in December 1992. Mr. Woodlief was a consultant to
the Company from January, 1993 until December, 1997. From 1949 until 1982, Mr.
Woodlief served in various manufacturing positions with the Company.
Allan Tofias was elected to the Board of Directors on January 26, 1998,
effective February 3, 1998. Mr. Tofias is the former managing shareholder and
President of the accounting firm of Tofias, Fleishman, Shapiro & Company, P.C.
Mr. Tofias is a trustee of Gannett Welsh & Kotler Fund, a mutual fund.
Board of Directors Meetings and Committees. The Board conducts its business
through meetings of the Board and through the activities of its committees.
During the fiscal year ended November 30, 1997, the Board of Directors held
eight regular Board meetings. No incumbent director of the Company attended
fewer than 75 percent of the total meetings of the Board of Directors and
committee meetings on which such Board member served during this period.
The Audit Committee of the Board of Directors consists of Messrs. Cheney,
Rosen, Rowe and Silver. The primary functions of this committee are to evaluate
audit performance, oversee relations with the Company's independent auditors,
and evaluate internal accounting policies and procedures. Three meetings were
held by the Audit Committee during the year ended November 30, 1997.
The Executive Committee of the Board of Directors consists of Messrs.
Birnbach, Rowe, Silver and Woodlief. This committee determines the compensation
of the executive officers of the Company. One meeting was held by the Executive
Committee during the year ended November 30, 1997.
The Stock Option Committee of the Board of Directors consists of Messrs.
Cheney, Rosen, Rowe and Woodlief. The Stock Option Committee determines the
number of stock options to be granted to all officers and employees of the
Company. Two meetings were held by the Stock Option Committee during the year
ended November 30, 1997.
The Company's full Board of Directors act as a nominating committee for the
annual selection of nominees for election as Directors. While the Board of
Directors will consider nominees recommended by stockholders, it has not
established any procedures for this purpose.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation for each of the last three
fiscal years earned by the President and each of the most highly compensated
executive officers whose salary and bonus exceeded $100,000 for the fiscal year
ended November 30, 1997 (the "Named Executives").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual ------
Name and Compensation Securities Underlying All Other
Principal Position Year Salary Bonus Options Compensation(1)(4)
- ------------------ --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gerald M. Birnbach
Chairman and President 1997 $777,600 0 0 $250,656
1996 754,512 $250,000(2) 50,000 249,271
1995 745,404 0 40,000 249,675
Harvey I. Ptashek
Senior Vice President 1997 248,333 0 0 19,900
1996 230,000 15,000 16,000 19,700
1995 230,000 15,000 15,000 19,700
Arthur H. Dunkin
Secretary Treasurer 1997 213,333 0 0 16,800
1996 195,000 0 16,000 15,700
1995 195,000 15,000 12,000 16,600
Charlene A. Pedrolie
Vice President - Manufacturing
Systems(3) 1997 183,750 0 0 11,026
1996 165,833 0 10,000 9,950
1995 106,067 0 20,000 5,600
</TABLE>
(1) Except as noted in the paragraph below with respect to Mr. Birnbach,
includes (i) matching contributions by the Company pursuant to its Cash-or-
Deferred Non-Qualified Executive Retirement Plan (the "Executive Retirement
Plan") and (ii) supplemental contributions under the Executive Retirement plan
as follows: Mr. Birnbach - 1997 $23,328 and $23,328, 1996 $22,636 and $22,635,
1995 $22,338 and $22,337; Mr. Ptashek - 1997 $7,450 and $7,450, 1996 $7,350 and
$7,350, 1995 $7,350 and $7,350; Mr. Dunkin - 1997 $6,400 and $6,400, 1996 $5,850
and $5,850 - 1995 $6,300 and $6,300 and Ms. Pedrolie - 1997 $5,513 and $5,513,
1996 $4,975 and $4,975, 1995 $2,800 and $2,800. The amounts for Mr. Birnbach
also include payments to Mr. Birnbach of $200,000 in 1997, 1996 and 1995
pursuant to the termination and settlement of his SERP agreement. The SERP
agreement was terminated in December, 1993 in connection with amendments to Mr.
Birnbach's then existing employment agreement.
7
<PAGE>
(2) Payable in the year following Mr. Birnbach's retirement and will
accrue interest annually based on the average ten-year U. S. treasury
bond rate.
(3) Ms. Pedrolie ceased to be an executive officer of the Company on
August 15, 1997.
(4) Amounts for Messrs. Birnbach, Ptashek and Dunkin include directors
fees, as follows: 1997 - $4,000 each; 1996 - $4,000 each and 1995 -
$4,000 each.
The following table sets forth information concerning the exercise of
options during the last fiscal year and unexercised options held as of the end
of the fiscal year with respect to each of the Named Executives. No stock
options or stock appreciation rights were granted to the Named Executives during
fiscal 1997.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at 11-30-97 Options at 11-30-97
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized(1) Unexercisable(2) Unexercisable(3)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerald M. Birnbach 14,468 $100,573 133,400/ $160,171/
13,000 0
Harvey I. Ptashek 0 0 64,750/ 79,308/
0 0
Arthur H. Dunkin 0 0 61,750/ 73,777/
0 0
Charlene A. Pedrolie 18,000 42,625 0/ 0/
4,000 10,875
</TABLE>
- ------------------------
(1) The difference between fair market value of the Company's Common Stock at
exercise and exercise price.
(2) Includes option grants under the 1983 Stock Option Plan and the 1993 Stock
Option Plan.
(3) The difference between fair market value of the Company's Common Stock
price at fiscal year end and exercise price.
Supplemental Executive Retirement Plan ("SERP"). The plan provides for a
fixed retirement benefit at age 65 of $100,000 per year for ten years for a
total sum of $1.0 million. A participant who retires between the ages of 55 and
65 will receive a reduced annual payment over a greater number of years for a
total sum of one million dollars. A participant who retires at age 53 or 54 will
receive a reduced annual payment over a greater number of years for total sums
of $650,000 and $700,000, respectively. A participant who retires before age 53
will receive a lump sum payment equal to the total amount previously accrued by
the Company for financial accounting purposes. In September 1995, the Company
revised the SERP to provide for the transfer into a separate grantor trust of
assets equal to the Company's obligations and to eliminate the reduction in
8
<PAGE>
the full benefit provided by the Plan because of age in the event of a change in
control. The Named Executives who are participants in the plan are Messrs.
Ptashek and Dunkin.
Employment Agreements. Effective December 1, 1997, the Company entered into
a new employment agreement with Mr. Birnbach. The agreement provides for an
annual base salary of $791,850. The annual base salary is subject to adjustment
annually based upon increases in the Consumer Price Index (the "adjusted base
salary"). Provision is also made for a bonus for unusual efforts made by Mr.
Birnbach on behalf of the Company to be awarded in the sole discretion of the
Company's Board of Directors. The employment agreement also provides for
termination benefits, disability and death benefits, vacation and other employee
benefits, including the furnishing of an automobile to Mr. Birnbach.
The employment agreement is for a term of five years, commencing on
December 1, 1997 (the "Commencement Date"). On each anniversary of the
Commencement Date, the term of the employment agreement will automatically be
extended for an additional year unless at least 90 days before such anniversary
the Company's Board of Directors, by the affirmative vote of at least two-thirds
of its membership, determines not to extend the term and written notice of such
action is provided to Mr. Birnbach.
The employment agreement provides for mandatory deferral of certain
compensation by Mr. Birnbach, if necessary, to assure tax deductibility thereof
by the Company. No amounts are currently being deferred for tax reasons.
The employment agreement allows the Board of Directors to terminate Mr.
Birnbach's employment at any time with or without cause. If Mr. Birnbach
voluntarily terminates his employment with the Company prior to a change in
control of the Company without "good reason," or the Company terminates his
employment for "cause," then he will not be entitled to any severance payments.
If Mr. Birnbach terminates his employment prior to a change in control for "good
reason," or the Company terminates his employment without "cause" (other than on
account of permanent disability), then he will be entitled to receive all
compensation which he would otherwise have been paid for the remainder of the
term of the employment agreement in installments consistent with prior practice.
The employment agreement defines the term "good reason" as the occurrence of
certain diminutions of or interferences with Mr. Birnbach's duties,
responsibilities or benefits under the agreement. If Mr. Birnbach's employment
is terminated prior to a change in control on account of permanent disability,
then he will be entitled to partial salary continuation through the remaining
term of the employment agreement. If Mr. Birnbach should die while employed and
prior to the Board of Directors approving a change in control transaction, his
estate shall be entitled to receive his adjusted base salary as then in effect
for the lesser of 18 months or the balance of the employment agreement term.
If Mr. Birnbach's employment is terminated for any reason in connection
with or following a change in control of the Company, then in lieu of the
benefits described above and other benefits under the employment agreement
through the date of termination, he shall be entitled to receive, on the date of
termination, an amount equal to 299% of his "base amount," as determined under
Section 280G of the Code, payable in a single cash lump sum. If the termination
in connection with or following the change in control of the Company is
involuntary (excluding death or total disability) or made by Mr. Birnbach for
good reason and Mr. Birnbach offers to continue to provide services as
contemplated by the employment agreement and the offer is declined, then,
subject to certain conditions, the Company must also, during the shorter period
of the date of termination through the
9
<PAGE>
remaining term of the employment agreement or two years following the
termination, pay to Mr. Birnbach monthly 1/12 of his adjusted base salary, plus
1/12 of the average amount of cash bonus and cash incentive compensation earned
by Mr. Birnbach for the two full years preceding the change in control.
Mr. Birnbach and his spouse will also receive certain post-termination
health benefits for their respective lifetimes following termination of Mr.
Birnbach's employment; provided such benefits will not be provided if his
termination of employment is for "cause" prior to and not in connection with a
change in control.
Under the employment agreement, subject to limited exceptions, for a
period of two years after the voluntary or involuntary termination of Mr.
Birnbach's employment with the Company, Mr. Birnbach may not compete or own an
interest in any other business in competition with that of the Company's
business, except for the purchase and holding of securities of any publicly
traded company.
The Board of Directors approved employment contracts with Messrs.
Ptashek and Dunkin in 1984 and 1985, respectively. The contracts provide that
if the officers are terminated for the convenience of the Company, without cause
or any reason related to job performance, they may receive a sum equal to their
annual base compensation for a period of two years or until the attainment of
the normal retirement age under the Company's retirement plans, whichever is
earlier. Payments made under these employment contracts are credited toward age
requirements under the SERP. These employment contracts were amended in
September, 1995 to provide for the transfer into a separate grantor trust of
assets equal to the Company's obligations in the event of a change in control of
the Company.
Cash-or-Deferred Non-Qualified Executive Retirement Plan. Effective
December 1, 1994, the Company adopted an unfunded Cash-or-Deferred Non-Qualified
Executive Retirement Plan (the "Executive Retirement Plan"). The Executive
Retirement Plan is designed to enable the executive officers to defer current
income. Under the Executive Retirement Plan, a participant may elect to defer an
unlimited amount of his salary and bonus. Each participant will receive a
matching Company contribution equal to (i) 75% of the first 1% to 3% of
compensation deferred and (ii) 25% of deferred amounts from 4% to 6% of
compensation. No matching contribution will be made for deferred amounts in
excess of 6% of salary and bonus. In its discretion, the Board of Directors may
award supplemental credits to the account of plan participants. Participants are
fully vested in the amounts credited to their plan accounts at all times.
Prior to January 26, 1998, participant deferral amounts, matching credits and
any supplemental credits earned interest based on the then current 10-year
treasury bond rate. Effective January 27, 1998, the Executive Retirement Plan
was amended to allow participants to earn additional credits on amounts held in
their accounts based on the performance of one or more of four measurement funds
available to participants for their selection.
In addition, the Executive Retirement Plan provides for the transfer
into a separate grantor trust of assets equal to the Company's obligations to
the plan participants upon the occurrence of certain events, including a change
in control of the Company. As of November 30, 1997, each of the Named Executives
was a participant in the Executive Retirement Plan.
Director Compensation. Directors employed by the Company are paid fees
of $500 per meeting and non-employee directors receive a fee of $1,750 per
meeting. No fees are paid to
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members of committees appointed by the Board of Directors for their service on
committees. The directors who are not employees of the Company received the
following amounts in fiscal 1997 for serving on the Company's Board of
Directors: Messrs. Cheney, Silver, Rosen, Rowe and Woodlief, $14,000 each.
Directors who are executive officers of the Company each received $4,000 in 1997
in compensation for their service on the Company's Board of Directors. In
accordance with the 1993 Stock Option and Incentive Plan, directors who are not
employees of the Company each receive on the first Monday in February of each
year an automatic grant of options to purchase 4,500 shares. Accordingly, the
following directors each received on February 3, 1997, an option to purchase
4,500 shares at an exercise price of $8.875 per share: Messrs. Cheney, Rosen,
Rowe, Silver and Woodlief. No stock options by non-employee directors were
exercised during fiscal 1997.
Compensation Committee Interlocks and Insider Participation. The members
of the Company's Compensation Committee are Messrs. Birnbach, Rowe, Silver and
Woodlief. Mr. Birnbach is currently the Company's Chairman, President and Chief
Executive Officer, and Messrs. Rowe and Woodlief are former officers of the
Company. Since his retirement in December 1992, Mr. Woodlief has been a
consultant to the Company and was paid $16,250 for fiscal 1997. Mr. Woodlief
ceased to be a consultant to the Company on January 1, 1998. Mr. Silver is a
member of the law firm Silver, Freedman & Taff, L.L.P. which serves as general
counsel to the Company. Total fees incurred for legal services rendered by this
firm to the Company and its subsidiaries during the fiscal year ended November
30, 1997 did not exceed 5% of such firm's gross revenues in its last fiscal
year.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934 requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
the ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16 (a) forms they
file.
To the Company's knowledge, based solely upon information provided to the
Company by the officers and directors subject to Section 16 of the Securities
Exchange Act of 1934, each of the Company's executive officers, directors and
greater than 10% shareholders timely filed all required reports, with the
exception of former Director W. Patrick Dolan, who retired from the Board in
January, 1998 and who inadvertently failed to timely report a transaction with
occurred in January, 1997. Mr. Dolan subsequently filed a Form 4 to report the
transaction.
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REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The compensation policies of the Company seek to align the compensation of
its executive officers with the Company's financial and other performance
aspects, thereby improving performance and enhancing stockholder value.
Compensation Philosophy. The Company's compensation programs are designed
to attract and retain qualified management personnel by providing competitive
compensation while, at the same time, providing incentive to enhance stockholder
value consistent with the business strategies and long-term objectives of the
Company. Accordingly, the Company's compensation programs include the following
aspects:
The compensation program includes a base salary providing competitive
compensation and reflecting the Company's financial and other performance as
well as the individual's performance.
Long-term incentive in the form of stock options are designed to reward and
retain executives over a period of years, and to align the interests of
executives with those of stockholders by relating compensation to the Company's
stock price.
Base Salaries. Base salaries are intended to compensate fairly all of the
executive officers of the Company for the effective exercise of their
responsibilities, their management of the business functions for which they are
responsible, and their extended period of service to the Company. Actual
salaries paid to the Company's executive officers are based upon their level of
experience and performance and their years of service to the Company.
Long-term Incentives. The Company provides long-term, stock-related
incentives to key executives and employees including the Named Executives under
the 1993 Stock Option and Incentive Plan (the "Plan"). Awards under the Plan may
be either "incentive" stock options, qualifying for favorable income tax
treatment, or "non-qualified" stock options. Awards are designed to align
management's incentives with the interests of the Company's stockholders and to
reward executives for increases in stockholder value. On December 2, 1997, stock
options were awarded to the following Named Executives in the following amounts:
Mr. Birnbach - 50,000 shares and Mr. Dunkin - 15,000 shares. Such awards were to
link an adequate portion of executive compensation to benefits produced for all
other stockholders.
Compensation of the Chief Executive Officer. Effective December 1993,
Mr. Birnbach received an increase in his salary from $641,600 to $725,000 as an
inducement to extend his contract to serve as Chairman and President of the
Company and to reward him for improvement in the Company's financial and other
performance. Mr. Birnbach's compensation is adjusted annually for cost of living
increases. Effective December 1, 1997, the Company entered into a new
employment agreement with Mr. Birnbach to compensate him for his value and past
services to the Company and as an inducement to secure his future services to
the Company. See "Executive Compensation - Employment Agreements."
In 1993, Section 162(m) was added to the Internal Revenue Code of 1986, as
amended (the "Code"), the effect of which is to eliminate the deductibility of
compensation over $1 million, with certain exclusions, paid to each of certain
highly compensated executive officers of publicly held
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corporations, such as the Company. Section 162(m) applies to remuneration (both
cash and non-cash) that would otherwise be deductible for tax years beginning on
or after January 1, 1994, unless expressly excluded. The Company has included a
provision in Mr. Birnbach's employment agreement limiting his compensation to
the $1 million threshold and deferring any amount in excess of such limit. In
addition, although the current compensation of each of the Company's other
executive officers is below the $1 million threshold, the Company intends to
consider this provision in establishing future compensation policies for such
officers.
EXECUTIVE COMMITTEE
Gerald M. Birnbach
Keith J. Rowe
Sidney J. Silver
Gerald O. Woodlief
STOCK OPTION COMMITTEE
Richard E. Cheney
Charles T. Rosen
Keith J. Rowe
Gerald O. Woodlief
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PERFORMANCE GRAPH
The following is a line graph comparing the yearly change in the
cumulative total return on the Company's Common Stock with the cumulative total
return on the NYSE Market Index and the Company's peer group index for the
Company's last five fiscal years.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Rowe Furniture Corporation, the NYSE Market
Index, and the Company's Peer Group
The peer group consists of household furniture manufacturing companies with
the same Standard Industrial Classification as the Company.
[LINE GRAPH APPEARS HERE]
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG ROWE FURNITURE CORPORATION
NYSE MARKET INDEX AND SIC CODE INDEX
FISCAL YEAR ENDING
- --------------------------------------------------------------------------------
COMPANY 1992 1993 1994 1995 1996 1997
ROWE FURNITURE CORP 100 266.97 320.69 272.61 440.08 384.60
INDUSTRY INDEX 100 135.32 107.82 131.93 165.81 225.63
BROAD MARKET 100 112.21 114.08 145.94 181.52 229.70
THE INDUSTRY INDEX CHOSEN WAS:
SIC CODE 251 - HOUSEHOLD FURNITURE
THE BROAD MARKET INDEX CHOSEN WAS:
NEW YORK STOCK EXCHANGE
THE CURRENT COMPOSITION OF THE INDUSTRY INDEX IS AS FOLLOWS:
AMERIWOOD INDUSTRIES INT
BASSETT FURNITURE IND
BUSH INDUSTRIES INC CL A
CHROMCRAFT REVINGTON INC
DMI FURNITURE INC
ETHAN ALLEN INTERIORS
FLEXSTEEL INDUSTRIES INC
FURNITURE BRANDS INTL
INDUSTRIE NATUZZI S.P.A.
KRAUSE'S FURNITURE INC
LA-Z-BOY INC
LADD FURNITURE INC
LEGGETT & PLATT INC
MASCO CORP
MEADOWCRAFT INC
O'SULLIVAN IND HLDGS INC
PULASKI FURNITURE CORP
ROWE FURNITURE CORP
STANLEY FURNITURE INC
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(804) 649-6826
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INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors engaged the independent certified public accounting
firm of BDO Seidman, L.L.P. to audit the records of the Company for the 1995,
1996 and 1997 fiscal years. Representatives of BDO Seidman, L.L.P. are expected
to attend the Meeting to respond to appropriate questions and to make a
statement if they so desire.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company' s proxy materials
for the next year's annual meeting of stockholders, any stockholder proposal to
take action at such meeting must be received at the Company's principal
administrative offices at 239 Rowan Street, Salem, Virginia, no later than
October 23, 1998. Any such proposal shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this proxy statement.
However, if other matters should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Company's Common Stock. In addition to
solicitation by mail, directors, officers and regular employees of the Company
may solicit proxies personally or by telegraph or telephone, without additional
compensation. The Company may also retain the services of a proxy solicitation
firm, the fees and expenses of which firm will be paid for by the Company,
although there is no present intention to retain any such firm.
The Company's annual report to stockholders, including financial
statements, has been mailed to all stockholders of record as of the close of
business on February 12, 1998. Any stockholder who has not received a copy of
such annual report may obtain a copy by writing to the Company. Such annual
report is not to be treated as part of the proxy solicitation materials, nor as
having been incorporated herein by reference.
ARTHUR H. DUNKIN
Secretary-Treasurer
February 20, 1998
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ROWE FURNITURE CORPORATION - COMMON STOCK PROXY
For the Annual Meeting of Stockholders to be held at 10:00 a.m., local time, on
Tuesday, March 31, 1998 at the Roanoke Airport Marriott, Roanoke, Virginia
The undersigned hereby appoints A. H. Dunkin and B. A. Rotramel or either
one of them with full powers of substitution as Proxies to vote the Common Stock
of Rowe Furniture Corporation (the "Company") held by the undersigned at the
above stated Annual Meeting or any adjournments and or postponements thereof,
upon the matters set forth in the Notice of Annual Meeting of Stockholders and
Proxy Statement dated February 20, 1998, as follows:
ELECTION OF DIRECTORS. The nominees to serve until 2001 are Messrs.
Gerald M. Birnbach Keith J. Rowe Richard E. Cheney
[_] VOTE FOR all nominees [_] VOTE WITHHELD for all nominees
[_] VOTE FOR, except vote withheld from the following nominee(s):
-----------------------------
In their discretion, the Proxies are authorized to vote upon such other matters
as may properly come before the Annual Meeting or any adjournments or
postponements thereof.
The Board of Directors recommends a vote "FOR" each of the nominees .
(continued and to be signed on the reverse side)
<PAGE>
This proxy will be voted as specified. If no specification is made, this Proxy
will be voted FOR all nominees. If any other matter is presented at the Annual
Meeting, this proxy will be voted by those named in their best judgment. At the
present time, the Board of Directors knows of no other matter to be presented at
the Annual Meeting.
Any proxy heretofore given by the undersigned with respect to such stock is
hereby revoked. Receipt of the Notice of the 1998 Annual Meeting, Proxy
Statement and Annual Report to Shareholders is hereby acknowledged. PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
-----------------------------------
SIGNATURE DATE
-----------------------------------
SIGNATURE DATE
Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on
this card. When signing as attorney, trustee, executor, administrator or
guardian, please give your full title. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
<PAGE>
ROWE FURNITURE CORPORATION
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, March
31, 1998.
Sincerely,
Rowe Furniture Corporation
