<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission 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
</TABLE>
BURLINGTON INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
BURLINGTON INDUSTRIES, INC.
3330 WEST FRIENDLY AVENUE [LOGO]
GREENSBORO, NORTH CAROLINA 27410
December 16, 1996
Dear Stockholder:
We cordially invite you to attend your Company's 1997 Annual Meeting of
Stockholders on Thursday, February 6, 1997. The meeting will be held at
Corporate Headquarters in Greensboro, North Carolina and will begin at 9:30 a.m.
The formal notice of meeting, proxy statement and form of proxy accompany
this letter and describe in detail the matters to be acted upon at the meeting.
As a stockholder, your vote is important. We urge you to execute and return
your proxy promptly whether or not you plan to attend so that we may have as
many shares as possible represented at the meeting. Returning your completed
proxy will not prevent you from voting in person at the meeting if you wish to
do so.
On behalf of your Board of Directors, thank you for your continued support
and interest in Burlington Industries, Inc.
Sincerely,
<TABLE>
<S> <C>
/s/ Frank S. Greenberg /s/ George W. Henderson, III
- ------------------------------ -----------------------------
Frank S. Greenberg George W. Henderson, III
Chairman of the Board President and Chief
Executive Officer
</TABLE>
<PAGE> 3
BURLINGTON INDUSTRIES, INC.
[LOGO]
3330 WEST FRIENDLY AVENUE
GREENSBORO, NORTH CAROLINA 27410
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 6, 1997
----------------------------------------
December 16, 1996
To the Holders of Common Stock of
BURLINGTON INDUSTRIES, INC.
The 1997 Annual Meeting of Stockholders of Burlington Industries, Inc. will
be held at the principal executive offices of the Corporation, 3330 West
Friendly Avenue, Greensboro, North Carolina on Thursday, February 6, 1997, at
9:30 a.m. for the following purposes:
1. To elect two Class II Directors to serve for a three-year term and until
the election and qualification of their respective successors;
2. To consider and act upon the selection of independent public accountants
to audit the books and accounts of the Corporation for the 1997 fiscal
year; and
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
Only the holders of record of Common Stock of the Corporation as of the
close of business on December 10, 1996, will be entitled to notice of and to
vote at the meeting.
By Order of the Board of Directors,
/s/ Barbara K. Eisenberg
------------------------------------
Barbara K. Eisenberg
Vice President and Secretary
IMPORTANT -- YOUR PROXY IS ENCLOSED
Stockholders are requested to complete, sign, date and promptly return the
enclosed Proxy in the envelope provided. No postage is required for mailing in
the United States.
<PAGE> 4
BURLINGTON INDUSTRIES, INC.
3330 WEST FRIENDLY AVENUE
GREENSBORO, NORTH CAROLINA 27410
----------------------------------------
PROXY STATEMENT
----------------------------------------
ANNUAL MEETING OF STOCKHOLDERS, FEBRUARY 6, 1997
The enclosed Proxy is solicited on behalf of the Board of Directors of
Burlington Industries, Inc. (hereinafter referred to as "Burlington" or the
"Corporation") and is revocable at any time before it is exercised by written
notice to the Secretary of the Corporation, by submission of a Proxy bearing a
later date or by voting in person at the Meeting. Unless revoked, properly
executed and returned Proxies will be voted as specified thereon. The cost of
soliciting Proxies will be borne by the Corporation. Solicitation may be made by
the Corporation's officers, Directors or employees, personally or by telephone
or telecopier. In addition, the Corporation has retained Morrow & Company, Inc.
to assist in the solicitation of Proxies and will pay that firm a fee estimated
not to exceed $5,000 plus out-of-pocket expenses. The Corporation will reimburse
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding soliciting materials to the
beneficial owners of Common Stock of the Corporation. This Proxy Statement and
the accompanying form of Proxy are being mailed to stockholders on or about
December 16, 1996.
On December 10, 1996, the record date for the 1997 Annual Meeting of
Stockholders, there were outstanding 56,165,768 shares of common stock, par
value $.01 per share ("Common Stock"), having one vote each. Only holders of
Common Stock of record at the close of business on December 10, 1996 will be
entitled to vote at the Meeting.
1. ELECTION OF DIRECTORS
The Corporation's Restated Certificate of Incorporation and Bylaws provide
that the number of Directors, as determined from time to time by the Board of
Directors, shall be not less than three nor more than fifteen. The Board of
Directors has currently fixed the number of Directors at nine. Effective upon
the completion of elections of Directors at the 1997 Annual Meeting of
Stockholders, the Board of Directors has fixed the number of Directors at eight
persons. The Restated Certificate of Incorporation and Bylaws further provide
that Directors shall be divided into three classes (Class I, Class II and Class
III) serving staggered three-year terms, with each class to be as nearly equal
in number as possible.
In accordance with the recommendation of its Nominating Committee, the
Board of Directors has nominated John D. Englar and Abraham B. Stenberg for
election as Class II Directors for a term expiring at the 2000 Annual Meeting
and in each case until their respective successors are elected and qualified.
Both nominees are currently Directors of the Corporation whose terms expire at
the 1997 Annual Meeting. Mr. Leventhal, a Director and Vice Chairman, has
requested not to stand for reelection because he would be unable to serve a full
term as a Director under the Corporation's retirement policy for Directors who
are employees of the Corporation. Other Directors who are remaining on the Board
will continue in office in accordance with their previous elections until the
expiration of their terms at the 1998 or 1999 Annual Meeting, as the case may
be. The Board of Directors has announced its intention to re-elect Mr. Greenberg
as Chairman of the Board of Directors for a one-year term commencing on February
6, 1997.
It is the intention of the persons named in the enclosed form of Proxy to
vote such Proxies for the election of the nominees listed herein. The proposed
nominees are willing to be elected and serve, but in the event any nominee at
the time of election is unable to serve or is otherwise unavailable for
election, it is intended that votes will be cast pursuant to the accompanying
Proxy for substitute nominees designated by the Board of Directors, unless the
Board of Directors reduces the number of Directors to
<PAGE> 5
be elected. The Board of Directors is not aware of any circumstances under which
the proposed nominees would decline or become unable to serve.
INFORMATION ABOUT NOMINEES AND DIRECTORS
The following information is furnished for each person who is nominated for
election as a Director or who is continuing as an incumbent Director: name; age;
whether such person is a nominee for election ("Nominee") or an incumbent
Director whose term does not expire at the 1997 Annual Meeting ("Incumbent");
how long he has served as a Director of the Corporation; the year in which his
term is to expire; principal occupation and employment during the past five
years; boards of directors of other publicly-owned companies on which he serves;
and Committees of the Board of the Corporation of which he is a member.
<TABLE>
<S> <C> <C>
JOSEPH F. ABELY, JR., 67 Incumbent Term Expires in 1999
</TABLE>
Mr. Abely is the retired Chairman of the Board, Chief Executive Officer and
Director of Sea-Land Corporation, an international transportation company. He is
a Director of C.R. Bard, Inc. and Perkin-Elmer Corporation. He has been a
Director of the Corporation since 1992, and served as a Director of the
Corporation's predecessor, Burlington Industries, Inc., from 1979 until 1987. He
is Chairperson of the Compensation and Benefits Committee and a member of the
Audit, Executive and Nominating Committees of the Board.
<TABLE>
<S> <C> <C>
JOHN D. ENGLAR, 49 Nominee Term Expires in 1997
</TABLE>
Mr. Englar has been Senior Vice President, Corporate Development and Law of
the Corporation since 1995. Prior thereto he was Senior Vice President, Finance
and Law (from 1993) and Chief Financial Officer of the Corporation (from 1994).
He was Vice President and General Counsel of the Corporation for more than five
years prior to 1994 and Secretary for more than five years prior to 1993. Mr.
Englar is Chairperson of the Investment Committee of the Board. He has been a
Director of the Corporation since 1990.
<TABLE>
<S> <C> <C>
FRANK S. GREENBERG, 67 Incumbent Term Expires in 1998
</TABLE>
Mr. Greenberg has been Chairperson of the Board of the Corporation for more
than five years and until 1995 was also Chief Executive Officer of the
Corporation for more than five years. He was President of the Corporation until
1993 and for more than five years prior thereto. Mr. Greenberg is also a
Director of Clark-Schwebel, Inc., a manufacturer of fiber glass fabric primarily
for printed circuit boards. Mr. Greenberg is Chairperson of the Executive
Committee and a member of the Nominating Committee of the Board. He has been a
Director of the Corporation since 1987.
<TABLE>
<S> <C> <C>
GEORGE W. HENDERSON, III, 48 Incumbent Term Expires in 1999
</TABLE>
Mr. Henderson has been Chief Executive Officer of the Corporation since
1995 and President and Chief Operating Officer since 1993. He was a Group Vice
President of the Corporation for more than five years prior to 1993. Mr.
Henderson is also a Director of Jefferson Pilot Corporation, The Research
Triangle Foundation of North Carolina and Wachovia Bank of North Carolina, N.A.
Mr. Henderson is a member of the Executive Committee of the Board. He has been a
Director of the Corporation since 1990.
<TABLE>
<S> <C> <C>
DAVID I. MARGOLIS, 66 Incumbent Term Expires in 1999
</TABLE>
Mr. Margolis has been Chairman of the Executive Committee of Coltec
Industries Inc ("Coltec"), a manufacturer of aerospace, automotive and
industrial products, since 1995. He had been Chairman of the Board and Chief
Executive Officer of Coltec for more than five years prior thereto. Mr. Margolis
has been a Director of the Corporation since 1992. He is Chairperson of the
Audit Committee and a member of the Compensation and Benefits, Executive and
Nominating Committees of the Board.
2
<PAGE> 6
<TABLE>
<S> <C> <C>
JOHN G. MEDLIN, JR., 63 Incumbent Term Expires in 1998
</TABLE>
Mr. Medlin is Chairman of the Board of Directors of Wachovia Corporation, a
bank holding company. He retired from management of Wachovia Corporation at the
end of 1993, after seventeen years as Chief Executive Officer. Mr. Medlin is
also a director of BellSouth Corp., Media General, Inc., Nabisco Holdings Corp.,
National Service Industries, Inc., RJR Nabisco Holdings Corp. and USAir Group,
Inc. Mr. Medlin is Chairperson of the Nominating Committee and a member of the
Audit, Compensation and Benefits and Executive Committees of the Board. Mr.
Medlin has been a Director of the Corporation since 1994.
<TABLE>
<S> <C> <C>
NELSON SCHWAB III, 51 Incumbent Term Expires in 1998
</TABLE>
Mr. Schwab is co-founder of Carousel Capital, a merchant banking firm, and
has been Managing Director since its inception in January 1996. He was Chairman
and Chief Executive Officer of Paramount Parks Inc., owner of theme amusement
parks, from 1992 until June 1995. For more than five years prior to 1992, Mr.
Schwab was Chairman and Chief Executive Officer of Kings Entertainment Co.,
owner of theme amusement parks. He is also a Director of Summit Properties, Inc.
and First Union National Bank of North Carolina. He has been a Director of the
Corporation since 1995. Mr. Schwab is a member of the Audit and Nominating
Committees of the Board.
<TABLE>
<S> <C> <C>
ABRAHAM B. STENBERG, 61 Nominee Term Expires in 1997
</TABLE>
Mr. Stenberg has been an Executive Vice President of the Corporation since
1993 and President and Chief Operating Officer of the Burlington Interior
Furnishings Group since 1995, in which capacity he has senior management
responsibility for the Corporation's interior furnishings segment's four
businesses -- Burlington House, Lees, Burlington House Area Rugs, and The Bacova
Guild, Ltd. -- as well as the Corporation's operations in Mexico. He was a Group
Vice President of the Corporation for more than five years prior to 1993. Mr.
Stenberg has been a Director of the Corporation since 1990.
CERTAIN COMMITTEES OF THE BOARD
Included in the committees of the Corporation's Board of Directors are
Audit, Compensation and Benefits and Nominating Committees. The members of these
Committees have been identified above. During the 1996 fiscal year, the Board
met five times, the Audit Committee met twice, the Compensation and Benefits
Committee met five times and the Nominating Committee met three times.
The Audit Committee's principal responsibilities consist of recommending
the selection of independent auditors, reviewing the scope of the audit
conducted by such auditors, as well as the results of the audit itself,
reviewing the Corporation's internal audit staff function and reviewing with
appropriate officers of the Corporation matters relating to financial reporting
and to accounting and auditing procedures and policies generally. It also
submits to the Board of Directors recommendations with respect to financial
reporting, accounting practices and policies and other appropriate matters.
The Compensation and Benefits Committee has authority to formulate and give
effect to policies respecting salary, compensation and other matters relating to
employment of executive officers with the Corporation, including, without
limitation, incentive compensation plans for such persons. The Committee also
reviews and makes recommendations with respect to pension, profit sharing and
other compensation plans of the Corporation.
The Nominating Committee's responsibilities are to review the size and
composition of the Board and the qualifications of possible candidates for the
Board and, as a result, to make recommendations respecting nominees to be
proposed for election. In addition, it is authorized to evaluate the existence,
composition and membership of the Committees of the Board of Directors and to
recommend a successor to the Chief Executive Officer in the event of a vacancy.
The Committee will consider recommendations made in writing by stockholders
respecting possible candidates for the Board of Directors to be elected at the
1998 Annual Meeting. Such recommendations must be received by the Secretary of
the Corporation not later than the latest date on which such stockholder could
otherwise
3
<PAGE> 7
nominate such person for Director pursuant to the Corporation's Bylaws, and must
include a written consent of the possible candidate to be considered for a
nomination. The procedure for nominating candidates for Director is described
under "Proposals of Stockholders" below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following Table sets forth, as of December 2, 1996, information with
respect to each person known to the Corporation (based on public filings) to be
the beneficial owner of more than five percent of the outstanding shares of
Common Stock. Beneficial ownership disclosed in the Tables in this section has
been determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------------------------------------------------------- -------------------- --------
<S> <C> <C>
FMR Corp...................................................... 8,355,300(a) 12.5%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company................................. 6,700,000(b) 10.0%
75 State Street
Boston, MA 02109
MacKay-Shields Financial Corporation.......................... 4,935,200(c) 7.4%
9 West 57th Street
New York, NY 10019
Merrill Lynch Asset........................................... 3,817,200(d) 5.7%
Management L.P. dba
Merrill Lynch Asset Management
("MLAM") and Fund Asset Management L.P.
dba Fund Asset Management ("FAM")
800 Scudders Mill Road
Plainsboro, NJ 08536-1606
</TABLE>
- ---------------
(a) According to information provided by FMR Corp., FMR Corp. has sole voting
power with respect to 170,600 of the above-listed shares and sole investment
power with respect to all of the above-listed shares.
(b) According to information provided by Wellington Management Company
("Wellington"), Wellington has no voting power and shared investment power
with respect to all of the above-listed shares.
(c) According to information provided by MacKay-Shields Financial Corporation
("MSF"), MSF has shared voting and investment power with respect to all of
the above-listed shares.
(d) According to information provided by MLAM and FAM, MLAM and FAM have sole
voting and investment power with respect to all of the above listed shares,
although Merrill Lynch and Co., Inc., the parent company of MLAM and FAM,
may be deemed to share voting and investment power with respect to such
shares.
There are two classes of common stock of the Corporation: Common Stock and
nonvoting common stock ("Nonvoting Common Stock"). Generally, all holders of
shares of Common Stock and Nonvoting Common Stock are entitled to the same
rights and privileges. Differences between Common Stock and Nonvoting Common
Stock relate primarily to voting rights. Holders of shares of Common Stock are
entitled to vote on the election or removal of the Directors of the Corporation
and on all other matters to be voted on by the stockholders of the Corporation.
Except as otherwise provided by law, holders of shares of Nonvoting Common Stock
do not have any right to vote on any matters to be voted on by the stockholders
of the Corporation.
On December 2, 1996, The Equitable Companies Incorporated ("Equitable"),
The Equitable Life Assurance Society of the United States, Equitable Deal Flow
Fund, L.P., and Equitable Variable Life Insurance Company, 1285 Avenue of the
Americas, New York, New York 10019 owned an aggregate of
4
<PAGE> 8
6,904,808 shares of Nonvoting Common Stock, constituting all of the issued and
outstanding shares of Nonvoting Common Stock. Such shares constitute 10.3% of
the outstanding shares of common stock of the Corporation. Subject to the
provisions of the Corporation's Restated Certificate of Incorporation, each
record holder of shares of Nonvoting Common Stock is entitled at any time to
exchange any of such shares for shares of Common Stock on a one-for-one basis;
provided, however, that shares of Nonvoting Common Stock held by Equitable and
its affiliates may not be exchanged for shares of Common Stock so long as such
shares of Nonvoting Common Stock are held by such parties.
The following Table sets forth the number of shares of Common Stock
beneficially owned, as of December 2, 1996, by each Director and each nominee
for Director, by each of the named executive officers of the Corporation (as
defined in "Executive Compensation -- Summary Compensation Table") and by all
Directors and executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(a) OF CLASS
- ----------------------------------------------------------- ----------------------- --------
<S> <C> <C>
Joseph F. Abely, Jr........................................ 8,500(b) *%
John D. Englar............................................. 196,122(c) *
Frank S. Greenberg......................................... 655,213(b)(c) *
George W. Henderson, III................................... 462,178(c) *
Bernard A. Leventhal....................................... 320,667(c) *
David I. Margolis.......................................... 17,500(b) *
John G. Medlin, Jr......................................... 6,500(b) *
Nelson Schwab III.......................................... 2,250(b) *
Abraham B. Stenberg........................................ 311,460(c) *
Gary P. Welchman........................................... 281,610(c) *
All Directors and executive officers as a group
(18 persons), including the above..................... 2,514,773(b)(c) 3.76%
</TABLE>
- ---------------
* Represents less than 1% of the class.
(a) Unless otherwise indicated in a footnote below, each Director and named
executive officer possesses sole voting and sole investment power with
respect to the shares shown in the Table above.
(b) Includes 7,500 shares each held in the names of Messrs. Abely and Margolis,
4,500 shares held in the name of Mr. Medlin, 3,000 shares held in the name
of Mr. Greenberg and 2,250 shares held in the name of Mr. Schwab under the
Stock Plan for Non-Employee Directors, as to which such persons possess
voting power but not investment power.
(c) Included for executive officers of the Corporation are shares in which they
have voting power, but not investment power, under the Burlington
Industries, Inc. Employee Stock Ownership Plan ("ESOP"). Also included are
shares not currently owned but which are issuable upon exercise of stock
options under the Burlington Industries, Inc. Amended and Restated 1990
Equity Incentive Plan (the "1990 Equity Incentive Plan") and the Burlington
Industries, Inc. 1992 Equity Incentive Plan (the "1992 Equity Incentive
Plan"), which are currently exercisable, as follows: Mr. Englar, 131,527
shares; Mr. Greenberg, 475,402 shares; Mr. Henderson, 289,762 shares; Mr.
Leventhal, 205,428 shares; Mr. Stenberg, 205,428 shares; Mr. Welchman,
216,527 shares; and all executive officers and Directors as a group (12
persons), 1,657,870 shares. The Table above also includes unvested shares of
restricted stock granted under the 1992 Equity Incentive Plan as to which
such persons possess voting power but not investment power, as follows: Mr.
Englar, 10,000 shares; Mr. Henderson, 45,000 shares; and all executive
officers and Directors as a group, including Messrs. Englar and Henderson (3
persons), 65,000 shares.
5
<PAGE> 9
COMPENSATION OF DIRECTORS
An annual fee of $30,000 is paid to each Director who is not an employee of
the Corporation. No separate attendance fees are paid with respect to
participation in and attendance at Board of Directors or Committee meetings. No
fees are paid to employee Directors for their services in such capacity.
Directors may participate, along with all other employees of the Corporation, in
the Corporation's matching charitable gifts program to qualifying educational
institutions.
Directors who are not employees of the Corporation also are awarded grants
of restricted shares of Common Stock under the Stock Plan for Non-Employee
Directors. Pursuant to this Plan, each non-employee Director receives a grant of
1,500 shares of Common Stock with respect to each year of service as a Director.
Each annual stock grant will vest upon the completion of the year of service
with respect to which such grant has been made. Such stock grants are subject to
(a) restrictions on transfer and other disposition until completion of the
Director's service on the Board, and (b) forfeiture in whole or in part of
unvested share awards in the event that the Director fails to complete the
related year of service. Under the Plan, Messrs. Abely, Greenberg, Margolis,
Medlin and Schwab were each granted 1,500 shares of Common Stock in 1996, which
will vest upon completion of the Board year of service ending on February 6,
1997.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Corporation's executive compensation program is designed to achieve
superior operating performance, thereby maximizing stockholder value, and to
attract, retain and motivate a highly qualified senior management team which is
critical to the Corporation's long-term success. The Compensation and Benefits
Committee (the "Committee") believes that these objectives can best be obtained
by directly tying executive compensation to meeting annual and long-term
financial performance goals and to appreciation in the Corporation's stock
price.
In line with these objectives, the total compensation program for the
Corporation's executive officers consists of three components:
1. Base salary.
2. Annual incentive compensation consisting of a cash bonus if designated
financial performance objectives are achieved.
3. Long-term equity incentives composed of stock options and performance
unit awards based on achieving cumulative long-term financial objectives
("Performance Units").
To support these fundamental principles, the portion of executives'
compensation related to annual incentive compensation and equity-based long-term
incentive plans is designed to be significant in relation to base salary,
especially for senior executives. The Corporation has further linked employee
and stockholders' interests through the Performance Shares Plan under which
existing ESOP accounts of all employees will be credited with shares of the
Corporation's Common Stock if the Corporation achieves certain annual financial
performance levels.
In fiscal year 1996, the Board of Directors adopted and the stockholders
approved, the 1995 Equity Incentive Plan which includes performance goals based
upon earnings before interest and taxes ("EBIT") and return on investment
("ROI"). These performance goals reinforce the Corporation's strategic plan
which focuses on growth and increased profitability.
THE COMMITTEE
The Committee establishes compensation objectives and policies for
executive officers, sets compensation payable to executive officers under those
policies, administers the 1995 Equity Incentive Plan and has general oversight
responsibility for incentive compensation and benefit plans. The
6
<PAGE> 10
Committee is entirely composed of independent, non-employee Directors. The
Committee uses independent compensation consultants and compensation surveys
furnished and evaluated by such consultants to provide advice and data to assist
it in developing compensation that is competitive with other similarly-situated
United States industrial companies and which reinforce the Corporation's
objective of aligning executive compensation with the interests of the
Corporation's stockholders.
BASE SALARY
The base salary of the Corporation's executive officers is determined by
evaluating the responsibilities of the position and individual performance. A
salary range is established for each position based on survey information of
salary levels of similarly-situated U.S. industrial companies, which the
Corporation regards as the competitive marketplace for executive talent. Because
of the Corporation's size and diversification, the Committee has not limited
these comparisons to companies in the U.S. textile industry or companies
reflected in the Stock Performance Graph set forth below. These salary ranges
are reviewed on an annual basis and adjusted when appropriate. Generally, base
salary for executive officers is targeted at the mid-point of the range. Actual
salaries paid to the Corporation's executive officers are positioned within the
salary range for their position based upon their level of experience and
performance. Mr. Henderson's salary is below the median of salaries for chief
executive officers of industrial companies in the United States. None of the
named executive officers received salary increases in fiscal year 1996.
ANNUAL INCENTIVE BONUS
Guided by the Corporation's objective of promoting superior operating
performance by making incentive compensation a significant portion of executive
officers' compensation, the Corporation's 1996 Cash Incentive Plan ("1996 Plan")
(in which approximately 204 senior managers participated) provides for an annual
bonus based on achieving certain EBITDA levels (operating earnings before
interest, taxes, depreciation and amortization) and to a lesser extent working
capital performance measurements, established for each division (corporate
EBITDA goals are used in the case of Mr. Henderson and other corporate staff
participants).
Bonus awards are earned in proportion to the achievement of divisional (or
corporate) performance goals and, if threshold targets are met, will be based on
varying percentages (previously established by the Committee) of base salary,
depending on the Committee's determination of the executive officer's level of
contribution to the business unit's performance. The 1996 Plan is positioned so
that bonuses paid at target performance levels are at the median range of annual
incentive awards for similarly-situated U.S. industrial companies. Aggregate
payments under the 1996 Plan were capped at 3.0% of EBITDA. The Committee
reviewed and approved each of the performance standards for the Corporation,
individual divisions and individual executive officers and, based upon advice of
an independent compensation consultant, believes they are reasonable.
The Corporation's operating performance in fiscal year 1996 resulted in
lower corporate EBITDA and divisional EBITDA for several of the divisions.
Accordingly, bonuses under the 1996 Plan paid to Mr. Henderson and the other
named executive officers (other than Mr. Welchman) and to certain of the
Corporation's executive officers were earned at lower levels than in prior
years. Mr. Henderson's award of $500,000 under the 1996 Plan was 17.4% less than
his bonus award in 1995.
LONG-TERM INCENTIVES
The Corporation provides long-term, stock-related incentives to key
executives and employees (including the named executive officers) under the 1995
Equity Incentive Plan. In fiscal year 1996, the Corporation's 1992 Equity
Incentive Plan was replaced by the 1995 Equity Incentive Plan and no further
awards will be issued under the 1992 Equity Incentive Plan. Outstanding awards
under the 1992 Equity Incentive Plan may continue to be exercised, vest or be
paid in accordance with their terms.
7
<PAGE> 11
1995 Equity Incentive Plan
Awards under the 1995 Equity Incentive Plan consist of stock options to
purchase shares of Common Stock and Performance Units dependent upon achievement
of specified performance goals. The 1995 Equity Incentive Plan permits awards of
restricted shares of Common Stock, although the Committee has not made any such
awards and does not plan to do so other than in exceptional circumstances (e.g.
new hires if the situation requires).
In fiscal year 1996, the Committee awarded stock options and Performance
Units to certain executive officers and key employees. These awards were
designed to further align management's incentives with the interests of the
Corporation's stockholders and to reward executives for increases in stockholder
value. The Performance Units awarded are dependent upon achievement of targets
based upon performance goals measured by both divisional or corporate cumulative
EBIT and ROI, each over the three-year period of fiscal years 1996, 1997 and
1998 (the "Performance Goals"). The Performance Goals are "stretch goals" in
that the targets have been set at levels higher than those ever attained by the
Corporation during any three-year period and both EBIT and ROI targets must be
achieved. The Committee believes that using EBIT and ROI as the Performance
Goals will more directly tie the executives' and key employees' compensation to
the Corporation's objectives of growth, profitability and return on
stockholders' investment. Performance Units which are earned will be payable in
three annual installments, commencing in November 1998, in Common Stock valued
at the prevailing market price on the date of payment of the installment.
The stock options awarded in fiscal year 1996 under the 1995 Equity
Incentive Plan were granted at the fair market value on the grant date and,
therefore, will only have value to the extent the Common Stock increases in
value over the exercise price. The stock options vest in five years from the
date of grant, but to further emphasize the importance of achieving the
Performance Goals, the vesting schedule will be accelerated from five years to
three years if the target Performance Goals are achieved.
The 1995 Equity Incentive Plan is positioned so that targeted awards are at
the lower median range of awards for similarly-situated United States industrial
companies. With respect to Performance Units, targets for each executive officer
were established based upon varying percentages (previously established by the
Committee) of base salary depending upon the Committee's determination of the
participant's level of contribution to achieving the Performance Goals.
Awards under the 1995 Equity Incentive Plan were designed to be multiple
year, not annual, awards to give executives incentives to have their business
units achieve superior performance over a three-year period, not to have their
performance focused only on annual results. Awards outstanding under the 1995
Equity Incentive Plan are subject to vesting schedules ranging from three to
five years, designed to retain key executives and employees in the Corporation's
employ. The Committee believes that these schedules are considerably longer than
is customary.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), limits the tax deductibility of certain compensation exceeding $1
million per year paid to a company's chief executive officer and its four other
highest paid executive officers in office at fiscal year end. The Corporation
believes that the impact, if any, of such limitation is immaterial to the
Corporation with respect to fiscal year 1996. The 1995 Equity Incentive Plan was
structured so as to preserve the tax deduction for performance-based
compensation paid thereunder. The Committee will continue to monitor this tax
law and evaluate whether any modifications should be made to the Corporation's
compensation programs in future years.
COMPENSATION AND BENEFITS COMMITTEE
Joseph F. Abely, Jr., Chairman
David I. Margolis
John G. Medlin, Jr.
8
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Table sets forth information regarding the compensation of
the Corporation's Chief Executive Officer during fiscal year 1996 and each of
the Corporation's four most highly compensated senior executive officers
(collectively, the "named executive officers") for services in all capacities to
the Corporation in fiscal years 1996, 1995 and 1994.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------
AWARDS
ANNUAL COMPENSATION ----------------
------------------------------------------
OTHER
ANNUAL RESTRICTED STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARD(S)($)(2)
- ---------------------------------------------------- ---- --------- --------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
George W. Henderson, III............................ 1996 500,000 500,000 -- --
President and Chief 1995 475,002 605,000 -- 455,625
Executive Officer 1994 400,008 430,000 1,682 --
Bernard A. Leventhal................................ 1996 375,000 115,000 -- --
Vice Chairman 1995 367,500 150,000 -- --
1994 345,000 400,000 4,485 --
Abraham B. Stenberg................................. 1996 400,000 465,000 -- --
Executive Vice President 1995 385,002 500,000 -- --
and President and Chief 1994 340,008 460,000 3,882 --
Operating Officer of the
Burlington Interior
Furnishings Group
Gary P. Welchman.................................... 1996 330,000 150,000 -- --
Executive Vice President 1995 322,500 125,000 -- --
1994 300,000 260,000 -- --
John D. Englar...................................... 1996 250,000 160,000 -- --
Senior Vice President, 1995 247,500 210,000 -- 101,250
Corporate Development 1994 233,751 175,000 -- --
and Law
<CAPTION>
SECURITIES PAYOUTS
UNDERLYING -------------
OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION SARS(#)(3) PAYOUTS($)(4) COMPENSATION($)(5)
- ---------------------------------------------------- ---------- ------------- ------------------
<S> <C> <C> <C>
George W. Henderson, III............................ 160,000 381,816 1,644
President and Chief 100,000 509,088 240,392
Executive Officer -- -- 4,890
Bernard A. Leventhal................................ 65,000 211,764 1,644
Vice Chairman -- 282,353 351,725
-- -- 4,890
Abraham B. Stenberg................................. 110,000 552,000 1,644
Executive Vice President -- 736,000 351,725
and President and Chief -- -- 4,890
Operating Officer of the
Burlington Interior
Furnishings Group
Gary P. Welchman.................................... 65,000 206,099 1,644
Executive Vice President -- 274,799 129,059
-- -- 4,890
John D. Englar...................................... 55,000 152,727 1,644
Senior Vice President, 40,000 203,636 86,672
Corporate Development -- -- 4,890
and Law
</TABLE>
- ---------------
(1) The amounts in this column for 1994 are amounts paid to reimburse certain of
the named executive officers for taxes paid on imputed income on promissory
notes issued by certain of the named executive officers to the Corporation,
which notes were paid in full during fiscal year 1995.
(2) This column shows the market value (on the date of grant) of awards of
shares of restricted stock under the 1992 Equity Incentive Plan. The
aggregate number and value (inclusive of all amounts paid therefor by the
grantee) of shares of restricted stock held by the named executive officers
(including the awards shown in this column) at September 28, 1996 were as
follows: Mr. Henderson, 45,000 shares ($450,000) and Mr. Englar, 10,000
shares ($100,000). Holders of restricted stock have the same right to
receive dividends as other holders of Common Stock. The Corporation has not
paid any dividends on its Common Stock.
(3) The Corporation has not granted any SARs.
(4) The amounts shown in this column were paid upon achievement of specified
aggregate performance goals for fiscal years 1993, 1994 and 1995 in
connection with Performance Units awarded under the 1992 Equity Incentive
Plan. These amounts were paid primarily in shares of Common Stock valued at
the fair market value on the payment date.
(5) The amounts in this column for 1996 and 1994 are the value of shares of the
Corporation's Common Stock allocated to the named executive officers'
accounts under the ESOP ("ESOP Allocation"), valued on the respective
allocation dates. The amounts in this column for 1995 for the named
executive officers are the value of the ESOP Allocation, valued on the
allocation date, and the one-time payment on January 1, 1995 of deferred
cash rights ("Deferred Cash Rights") awarded under the Corporation's 1990
Equity Incentive Plan, as follows: for Mr. Henderson, $1,841 for the ESOP
Allocation and $238,551 for the Deferred Cash Rights; for Mr. Leventhal,
$1,841 for the ESOP Allocation and $349,884 for the Deferred Cash Rights;
for Mr. Stenberg, $1,841 for the ESOP Allocation and $349,884 for the
Deferred Cash Rights; for Mr. Welchman, $1,841 for the ESOP Allocation and
$127,218 for the Deferred Cash Rights; and for Mr. Englar, $1,841 for the
ESOP Allocation and $84,831 for the Deferred Cash Rights.
9
<PAGE> 13
The Corporation's loan to Mr. J.H. Clippard, Vice President Investor
Relations, and his wife of $358,500 on an interest-free basis in connection with
his relocation to the Corporation's headquarters in North Carolina was repaid in
full in 1996.
STOCK OPTIONS AND PERFORMANCE UNITS
The following Table shows information concerning stock options granted to
each of the named executive officers during fiscal year 1996.
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1)(2) FISCAL YEAR ($/SH) DATE VALUE $(3)
- ------------------------------ --------------------- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
George W. Henderson, III...... 160,000 7% $ 11.625 11/13/05 $743,257
Bernard A. Leventhal.......... 65,000 3% $ 11.625 11/13/05 $301,948
Abraham B. Stenberg........... 110,000 5% $ 11.625 11/13/05 $510,989
Gary P. Welchman.............. 65,000 3% $ 11.625 11/13/05 $301,948
John D. Englar................ 55,000 2% $ 11.625 11/13/05 $255,495
</TABLE>
- ---------------
(1) The Corporation has not granted any SARs.
(2) The options vest and become exercisable on September 30, 2000, but such
vesting and exercisability will be accelerated to November 13, 1998 if
target levels of the performance goals established for fiscal years 1996,
1997 and 1998 are achieved. In addition, (i) all the unvested options will
vest if the optionee dies or becomes permanently disabled, or if within two
years following a change of control of the Corporation his employment is
terminated by the Corporation "without cause" or if he voluntarily
terminates his employment for "good reason" (as those terms are defined in
the option agreements); (ii) a pro rata portion of the unvested options will
vest if the optionee retires or if his employment is terminated by the
Corporation "without cause" or if he voluntarily terminates his employment
for "good reason" (and such termination does not occur within two years
after a change of control of the Corporation); and (iii) all the unvested
options will be canceled if the optionee is terminated "for cause" or if he
voluntarily terminates his employment without "good reason".
(3) These values were calculated using the Black-Scholes option pricing model.
The data relating to the hypothetical value is presented pursuant to SEC
rules. The actual gain executives will realize on the options will depend on
the future price of the Common Stock and cannot be accurately forecast by
application of an option pricing model. The assumptions used for the
variables in the model were: 33% volatility (which is the weekly volatility
of the Common Stock for the period from March 1992 to November 1995); a 5.8%
risk-free rate of return (which is the yield as of the date of grant on a
U.S. Treasury zero-coupon bond with a maturity date closest to the assumed
exercise period of the option); and no projected dividends. In addition, the
assumed option term of the awards (six years on a ten year option) reflects
the likelihood of exercise before the expiration date, and an adjustment for
non-transferability or risk of forfeiture of 1.5% per annum.
10
<PAGE> 14
The following Table shows the number and value of stock options held by
each of the named executive officers at the end of fiscal year 1996 (the value
being the difference between the closing price of the Corporation's Common Stock
on September 27, 1996 and the respective option exercise prices). The named
executive officers did not exercise any stock options in fiscal year 1996.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END (#) AT FISCAL YEAR-END($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George W. Henderson, III.... 0 0 289,762 160,000 31,355 0
Bernard A. Leventhal........ 0 0 205,428 65,000 0 0
Abraham B. Stenberg......... 0 0 205,428 110,000 0 0
Gary P. Welchman............ 0 0 216,527 65,000 0 0
John D. Englar.............. 0 0 131,527 55,000 2,237 0
</TABLE>
The following Table sets forth certain information concerning Performance
Unit Awards granted during fiscal year 1996 to each of the named executive
officers.
LONG-TERM INCENTIVE PLAN -- AWARDS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYMENTS UNDER
NON-STOCK PRICE-BASED PLANS
-----------------------------------
NAME THRESHOLD($) TARGET($) MAXIMUM($)
- ------------------------------------------------------------- ------------ --------- ----------
<S> <C> <C> <C>
George W. Henderson, III..................................... 200,000 500,000 1,000,000
Bernard A. Leventhal......................................... 80,000 200,000 400,000
Abraham B. Stenberg.......................................... 140,000 350,000 700,000
Gary P. Welchman............................................. 86,000 215,000 430,000
John D. Englar............................................... 66,000 165,000 330,000
</TABLE>
The dollar amounts set forth in the above Table are based upon achieving
certain target levels under Performance Goals measured by both divisional or
corporate cumulative EBIT and ROI performance over the three-year period of
fiscal years 1996, 1997 and 1998. The Performance Unit Awards vest in three
installments; 40%, 30% and 30%, respectively, on the last day of each of fiscal
years 1998, 1999 and 2000. On each vesting date, the vested percentage of the
total amount earned, determined in dollars, will be paid in shares of the
Corporation's Common Stock (subject to certain maximum limitations on the number
of shares), valued at the closing price of the Common Stock on the New York
Stock Exchange on the day that Performance Goals and resulting Award values are
calculated, in the case of the first vesting date, or on the subsequent two
vesting dates. If the total amount earned cannot be paid in stock (because of
such maximum limitation), the balance will be paid in cash.
RETIREMENT PLANS
Retirement System
Each eligible employee, including the named executive officers, may elect
to participate in the Corporation's "Retirement System", which is a
defined-benefit plan qualified under the Internal Revenue Code. Both individual
and Corporation contributions are made to the Retirement System. Employee
contributions represent a fixed percentage of base salary, calculated at the
rate of 1.5% or 3.0%, as the employee elects, of base salary up to $6,600 plus
3.0% of base salary in excess of $6,600 each plan year, subject to maximum
participating earnings levels established by the Internal Revenue Service
("IRS").
The Retirement System provides an annual benefit payable to an eligible
member at age 65 equal to the greater of (a) the sum of (i) the number of years
of continuous participation prior to October 1,
11
<PAGE> 15
1984, multiplied by the sum of 0.75% of the first $12,000 of annual salary at
September 30, 1984, plus 1.5% of the excess over $12,000, and (ii) one-half of
the member's contributions after September 30, 1984, (b) one-half of the
member's total contributions, or (c) an amount determined under applicable
Federal law requiring a minimum return on a participant's personal
contributions. This benefit represents a life annuity with a guaranteed minimum
return of personal contributions and may, at the participant's election, be paid
as a lump sum. Benefits are not subject to offset for Social Security benefits
or other amounts. Contributions made by the Corporation to the Retirement System
in respect of a specified person cannot readily be separately or individually
calculated by the actuaries of the Retirement System.
The credited years of service to date under the Retirement System for named
executive officers are as follows: Mr. Henderson -- 17; Mr. Leventhal -- 36; Mr.
Stenberg -- 36; Mr. Welchman -- 25; and Mr. Englar -- 11. Covered remuneration
under the Retirement System for such individuals is the base salary amount
described in the first paragraph of "-- Employment Agreements" below, subject to
limitations on amount imposed under Federal regulations. Estimated annual
benefits payable upon retirement under the Retirement System at age 65 to the
named executive officers (which benefits are fully vested), assuming no increase
in present salary levels, would be: Mr. Henderson -- $187,022; Mr.
Leventhal -- $117,752; Mr. Stenberg -- $149,701; Mr. Welchman -- $117,898; and
Mr. Englar $88,648.
Benefits provided under the Retirement System are subject to certain
restrictions and limitations under the Code and applicable regulations
promulgated thereunder, as in effect from time to time, and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Under a benefits
equalization plan, the Corporation will pay to certain participants in the
Retirement System upon retirement supplemental benefits equal to the reduction
in such plan benefits mandated by maximum benefit and salary limitations
established under the Code and ERISA. Such supplemental amounts are reflected in
the individual annual benefits indicated in the next preceding paragraph.
Supplemental Pre-Retirement/Post-Retirement Plan
The named executive officers participate in the Supplemental Pre-Retirement
and Post-Retirement Benefits Plan (the "Benefits Plan"). In the event of the
death before retirement of a named executive officer prior to age 65, the
Benefits Plan provides a pre-retirement survivor benefit of 120 monthly payments
equal to (a) in the case of Messrs. Leventhal and Stenberg, one-half of the
greater of (i) the monthly base salary on the January 1 occurring concurrently
with or immediately preceding such person's death or (ii) the average of the
monthly base salary on January 1 for each of the previous five years (such
greater amount being referred to as the "Monthly Base Salary") and (b) in the
case of Messrs. Henderson, Welchman and Englar, one-half of their Monthly Base
Salary in the case of death prior to age 60, thereafter decreasing by 5% each
year to 25% of Monthly Base Salary if death occurs at or after age 64. The
Benefits Plan also provides a post-retirement benefit, payable over 10 years,
equal in total to one and one-half times the greater of (a) final annual base
salary as of the January 1 occurring concurrently with or immediately preceding
retirement or (b) an average of annual base salary on January 1 for each of the
five years preceding retirement (such greater amount being referred to as the
"Annual Base Salary"). The Benefits Plan also provides a post-retirement death
benefit equal to the named executive officer's Annual Base Salary. Prior to
retirement, the named executive officer may elect to convert such
post-retirement death benefit to a monthly payment over a ten-year period. Any
payments in the future will depend upon the Annual Base Salary level of the
named executive officer at that time and whether he meets all the terms and
conditions of the Benefits Plan, including refraining from engaging in any
activities materially competitive with the business of the Corporation.
Each named executive officer who attains age 50 and completes 10 years of
service with the Corporation (currently each of them other than Messrs.
Henderson and Englar) has a nonforfeitable right to receive benefits accrued
under the post-retirement benefits portions of the Benefits Plan. Any named
executive officer who begins to receive post-retirement payments before age 65
will have his payments reduced by a factor of 5% for each year remaining until
he attains age 60 and reduced by a factor of 3% for each year remaining between
age 61 and 65. Under the Benefits Plan, (a) the monthly pre-retirement
12
<PAGE> 16
survivor benefit (to be paid for 120 months) calculated assuming the death of
the participant as of December 1, 1996, for Mr. Henderson would be $20,833, for
Mr. Leventhal would be $15,625, for Mr. Stenberg would be $16,667, for Mr.
Welchman would be $13,750, and for Mr. Englar would be $10,417; (b) the
aggregate post-retirement benefits (payable over 10 years) calculated assuming
retirement as of December 1, 1996, at current plan salary for Mr. Leventhal
would be $528,750, for Mr. Stenberg would be $528,000, for Mr. Welchman would be
$247,500, and for Messrs. Henderson and Englar would be $0; and (c) the
post-retirement death benefit calculated assuming death of the participant as of
December 1, 1996, for Mr. Leventhal would be $352,500, for Mr. Stenberg would be
$352,000, for Mr. Welchman would be $165,000 and for Messrs. Henderson and
Englar would be $0.
EMPLOYMENT AGREEMENTS
The Corporation has employment agreements with the named executive officers
providing for periods of employment as follows: the agreements with Messrs.
Leventhal and Stenberg through December 31, 1997; the agreement with Mr.
Welchman through January 31, 1998; and the agreements with Messrs. Henderson and
Englar through January 31, 1999. These agreements provide, among other things,
for minimum annual salaried compensation as follows: Mr. Henderson -- $500,000
per annum ($540,000 per annum effective January 1, 1997); Mr.
Leventhal -- $385,000 per annum; Mr. Stenberg -- $425,000 per annum; Mr.
Welchman -- $345,000 per annum; and Mr. Englar -- $265,000 per annum.
The employment agreements with the named executive officers provide that in
the event of a voluntary termination of employment for "good reason", an
involuntary termination of employment "without cause", disability (as defined in
the agreements) or the sale of a subsidiary or division of the Corporation with
respect to which the executive is employed in which such executive is not
offered reasonably comparable employment with such business or subsidiary or
with the Corporation or its affiliates, such executive will receive a lump sum
in cash equal to the present value of the salary that would have been payable
over the "remaining term" of the agreement had such executive not been
terminated plus the present value of the average of the prior three years'
bonuses times the "remaining term" of the agreement. The "remaining term" of an
agreement in the case of Messrs. Henderson and Englar means two years if
termination occurs on or before January 31, 1998, or one year if it occurs after
such date; in the case of Messrs. Leventhal and Stenberg means two years if
termination occurs on or before December 31, 1996, or one year if it occurs
after such date; and in the case of Mr. Welchman means the period commencing on
the date of termination and ending on January 31, 1998, if such termination
occurs on or before February 1, 1997, or one year if it occurs after such date.
Present value is to be computed by using the applicable Federal rate in effect
at the time of computation as determined by the IRS for purposes of Section
1274(d) of the Code, and "good reason" means a material breach of an employment
agreement involving the Corporation's failure to pay compensation due thereunder
or a failure to be employed as a senior management employee of the Corporation.
All the employment agreements provide that in the event of an involuntary
termination for cause where such conduct is not found to be willful, the
executive will receive a lump sum equal to the present value of the amount
payable under the terms of the Corporation's payroll severance policy applicable
to such employee.
Mr. Greenberg has a one-year consulting agreement with the Corporation to
provide consulting advice in the areas of his expertise at an annual retainer of
$100,000, plus per diem consulting fees which may not exceed $100,000. The Board
of Directors has approved a one-year renewal of such consulting agreement,
effective January 1, 1997, on the same terms.
CHANGE IN CONTROL ARRANGEMENTS
The agreements which the Corporation has entered into with each of the
named executive officers in connection with the Benefits Plan contain provisions
under which such officer's rights to receive pre-retirement survivor benefits
and post-retirement benefits automatically, upon the occurrence of a change in
control of the Corporation, become fully vested, nonforfeitable and payable on
normal payment dates at 100% of benefit level (without regard to reductions of
benefits arising from early retirement). Such
13
<PAGE> 17
officers have also entered into agreements with the Corporation in connection
with the 1992 Equity Incentive Plan and the 1995 Equity Incentive Plan. Such
agreements contain provisions under which such officers' awards of restricted
stock, stock options and Performance Units will fully vest if their employment
is terminated "without cause" or they voluntarily terminate their employment for
"good reason", in each case within two years after the occurrence of a change in
control of the Corporation.
STOCK PERFORMANCE GRAPH
The following is a line graph presentation comparing the yearly percentage
change in the cumulative total shareholder return on the Corporation's Common
Stock with the cumulative total return on the Standard & Poor's 500 Stock Index
and a peer group index for the period from the initial public offering of Common
Stock on March 19, 1992 to September 27, 1996 (assuming reinvestment of any
dividends and an investment of $100 in each on March 19, 1992):
<TABLE>
<CAPTION>
Measurement Period Burlington Indus-
(Fiscal Year Covered) tries, Inc. S&P 500 Peer Group
<S> <C> <C> <C>
3/19/92 $100.00 $100.00 $100.00
10/2/92 89.29 101.81 93.89
10/1/93 103.57 117.17 100.29
9/30/94 75.00 120.81 94.55
9/29/95 90.18 156.74 96.83
9/27/96 71.43 188.31 102.01
</TABLE>
This peer group consists of Burlington Industries, Inc., Cone Mills
Corporation, Culp, Inc., Delta Woodside Industries, Inc., Dixie Yarns, Inc.,
Dyersburg Corporation, Fab Industries, Inc., Forstmann & Company, Inc., Galey &
Lord, Inc., Guilford Mills, Inc., Mohawk Industries, Inc., Springs Industries,
Inc., Texfi Industries, Inc. and Unifi, Inc.
2. SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The appointment of auditors is approved annually by the Board of Directors
and subsequently submitted to the stockholders for ratification. In recommending
the ratification by the stockholders of the appointment of Ernst & Young LLP,
the Board of Directors is acting upon the recommendation of the Audit Committee,
which is composed entirely of non-employee Directors and which has satisfied
itself as to the firm's professional competence and standing. In making its
recommendation, the Audit Committee has taken into consideration the audit scope
and audit fees associated with such retention. A representative of Ernst & Young
LLP will attend the 1997 Annual Meeting of Stockholders to answer appropriate
questions and to make any statement that such representative may desire to make.
14
<PAGE> 18
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2, THE APPROVAL OF
THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT
THE BOOKS AND ACCOUNTS OF THE CORPORATION FOR THE 1997 FISCAL YEAR, AND YOUR
PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
3. OTHER BUSINESS
Management of the Corporation is not aware of any other business which may
be presented for action at the 1997 Annual Meeting. However, the enclosed Proxy
confers discretionary authority with respect to matters that are not known to
the Board at the date hereof and which may properly come before the meeting. It
is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment on any such matter.
VOTE REQUIRED FOR APPROVAL
Votes with respect to matters submitted to stockholders at the 1997 Annual
Meeting will be tabulated and certified by a representative of The Corporation
Trust Company, who will be appointed as an independent inspector of election.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote thereat shall constitute a
quorum for the transaction of business at the Annual Meeting. Treasury shares
shall not be counted for quorum purposes and shall not be voted for any purpose
at the Annual Meeting. Although abstentions and broker non-votes (matters
subject to vote on validly submitted proxies for which no vote is indicated) are
counted for purposes of determining whether a quorum is present at the Annual
Meeting, they are not treated as votes cast on any matter as to which no voting
instruction is indicated. The vote required to elect each Director is a
plurality of the votes cast at the Meeting.
PROPOSALS OF STOCKHOLDERS
In order for proposals by stockholders to be considered for inclusion in
the Proxy and the Proxy Statement for the 1998 Annual Meeting, such proposals
must be received by the Secretary of the Corporation at P.O. Box 21207,
Greensboro, North Carolina 27420 no later than August 18, 1997.
The Corporation's Bylaws set forth certain procedures that stockholders
must follow in order to nominate a director or present any other business at an
Annual Meeting of Stockholders. In addition to any other applicable
requirements, for business to be properly brought before the 1998 Annual Meeting
by a stockholder, such stockholder must have given timely notice thereof in
proper written form to the Secretary of the Corporation. To be timely, a
stockholder's notice to the Secretary must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than 90
days nor more than 120 days prior to the anniversary date of the 1997 Annual
Meeting, provided that if the 1998 Annual Meeting is called for a date that is
not within 30 days before or after such anniversary date, notice by the
stockholder must be so received not later than the close of business on the
tenth day following the day on which notice of the date of the 1998 Annual
Meeting is mailed or public disclosure of the date of the 1998 Annual Meeting is
made, whichever first occurs. The Bylaw provisions relating to advance notice of
business to be transacted at Annual Meetings may be obtained from the Secretary
of the Corporation.
15
<PAGE> 19
AVAILABILITY OF FORM 10-K
THE CORPORATION'S ANNUAL REPORT ON FORM 10-K WITH RESPECT TO THE FISCAL
YEAR ENDED SEPTEMBER 28, 1996 IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST
TO J.H. CLIPPARD, JR., VICE PRESIDENT, INVESTOR RELATIONS, BURLINGTON
INDUSTRIES, INC., P.O. BOX 21207, GREENSBORO, NORTH CAROLINA 27420. SUCH REQUEST
MUST INCLUDE A GOOD FAITH REPRESENTATION THAT, AS OF DECEMBER 10, 1996, THE
PERSON MAKING SUCH REQUEST WAS A BENEFICIAL OWNER OF SHARES OF COMMON STOCK.
Stockholders are urged to specify choices on the enclosed Proxy and to date
and return it in the enclosed envelope. Your prompt response will be
appreciated.
By Order of the Board of Directors,
/s/ Barbara K. Eisenberg
------------------------------------
Barbara K. Eisenberg
Vice President and Secretary
December 16, 1996
16
<PAGE> 20
CONFIDENTIAL VOTING INSTRUCTIONS
TO: NATIONSBANK OF GEORGIA, N.A., TRUSTEE OF THE BURLINGTON INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")
THESE VOTING INSTRUCTIONS ARE BEING SOLICITED ON BEHALF OF THE TRUSTEE
I acknowledge receipt of a copy of the Annual Report of Burlington
Industries, Inc. for fiscal year 1996, Notice of Annual Meeting and Proxy
Statement relating to the Annual Meeting of Stockholders to be held on February
6, 1997, and a letter from the ESOP Committee concerning voting instructions.
You are hereby instructed, with respect to the shares of Burlington
Industries, Inc. allocated to my account, to vote as indicated on the reverse
side and to confer discretionary authority to vote upon any other business that
may properly come before the meeting.
PLEASE VOTE, SIGN AND DATE
THIS FORM ON THE REVERSE SIDE
AND RETURN IT IN THE ENCLOSED
ENVELOPE.
THANK YOU FOR YOUR PROMPT RESPONSE.
<PAGE> 21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors.
/ / FOR all nominees (except as written below)
Nominees: John D. Englar and Abraham B. Stenberg
/ / WITHHOLD AUTHORITY to vote for all nominees
INSTRUCTION; To withhold authority to vote for one or more individual
nominees, write the name(s) of such nominees in the space provided
below)
-----------------------------------------------------------------------
2. Selection of Ernst & Young LLP as independent public accountants.
/ / FOR / / AGAINST / / ABSTAIN
IF THESE INSTRUCTIONS ARE NOT RECEIVED BY THE TRUSTEE BY 5:00 P.M. EST ON
FEBRUARY 5, 1997, THE TRUSTEE WILL NOT VOTE SUCH SHARES.
---------------------------------------
(Please sign here)
Dated:
--------------------------------------
<PAGE> 22
BURLINGTON INDUSTRIES, INC.
Proxy for Annual Meeting of Stockholders
February 6, 1997
The undersigned hereby appoints Barbara K. Eisenberg and Robert A. Wicker,
and each of them, proxies with full power of substitution, to vote all of the
Common Stock of Burlington Industries, Inc. which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held at the offices of the
Corporation, 3330 West Friendly Avenue, Greensboro, North Carolina, on February
6, 1997, at 9:30 a.m., and at any adjournment thereof, with all the powers the
undersigned would possess if personally present, upon the proposals as indicated
on the reverse side and in their discretion upon any other matters that may
properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
WILL BE VOTED AS PROVIDED ON THE REVERSE SIDE. IF NOT OTHERWISE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH DIRECTOR NOMINEE AND FOR ITEM 2.
PLEASE VOTE, SIGN AND DATE
THIS PROXY ON THE REVERSE
SIDE AND RETURN IT IN THE
ENCLOSED ENVELOPE.
THANK YOU FOR YOUR PROMPT RESPONSE.
<PAGE> 23
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors.
/ / FOR all nominees (except as written below)
Nominees: John D. Englar and Abraham B. Stenberg
/ / WITHHOLD AUTHORITY to vote for all nominees
(INSTRUCTION: To withhold authority to vote for one or more individual
nominees, write the name(s) of such nominees in the space provided
below)
----------------------------------------------------------------------
2. Selection of Ernst & Young LLP as independent public accountants.
/ / FOR / / AGAINST / / ABSTAIN
I plan to attend the Annual Meeting of Stockholders on February 6, 1997.
/ / YES / / NO
----------------------------------------------
(Signature)
----------------------------------------------
(Signature)
DATED: , 199
----------------------------------
IMPORTANT: Please sign your name or names
exactly as shown hereon and date your proxy in
the blank space provided above. For joint
accounts, each joint owner must sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give your full title
as such. If signing for a corporation, indicate
the capacity in which you are signing.
<PAGE> 24
[LETTERHEAD]
BURLINGTON INDUSTRIES, INC. Plan Committee
3330 West Friendly Avenue
EMPLOYEE STOCK OWNERSHIP PLAN Greensboro, NC 27410
December 16, 1996
To Members of the Employee Stock Ownership/Performance Shares Plan
The Annual Meeting of Stockholders of Burlington Industries, Inc. will
be held on February 6, 1997. At that meeting, NationsBank of Georgia, N.A.
("NationsBank"), the Trustee of the Burlington Industries, Inc. Employee Stock
Ownership Plan (the "Plan"), as the record holder of stock in the Plan, will be
entitled to vote the shares of Burlington Industries, Inc. stock held by the
Plan.
You have the right to instruct the Trustee how to vote the shares of
stock allocated to your account in the Plan.
You are receiving the following materials with this letter:
1) Notice of the Annual Meeting and the accompanying Proxy Statement.
This contains an explanation of the issues upon which you
may vote.
2) 1996 Annual Report to Shareholders.
3) A voting instruction card which you should use to instruct
NationsBank how to vote the shares of stock in your account.
4) A postage paid return envelope.
NationsBank, as Trustee, has requested that the Committee inform you
that it will vote the shares in the Plan only according to members'
instructions. We assure you that your personal voting instructions will remain
confidential. If you do not choose to vote, or if NationsBank has not received
your instructions by 5:00 p.m. EST on February 5, 1997, NationsBank will not
vote the shares allocated to your account. ---
You are urged to give your instructions to the Trustee since otherwise your
shares will not be voted.
BURLINGTON EMPLOYEE STOCK OWNERSHIP PLAN COMMITTEE
