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:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BURLINGTON INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
George W. Henderson, III
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| $0.00 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| 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 transactions applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
<PAGE>
- --------------------------------------------------------------------------------
|_| 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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<PAGE>
[Graphic-Logo]
BURLINGTON INDUSTRIES, INC.
3330 West Friendly Avenue
Greensboro, North Carolina 27410
December 18, 1998
Dear Stockholder:
We cordially invite you to attend your Company's 1999 Annual Meeting of
Stockholders on Thursday, February 4, 1999. 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,
/s/ George W. Henderson, III
George W. Henderson, III
Chairman of the Board and
Chief Executive Officer
<PAGE>
<GRAPHIC OMITTED>
BURLINGTON INDUSTRIES, INC.
3330 West Friendly Avenue
Greensboro, North Carolina 27410
-----------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held February 4, 1999
-----------------------------------------------
December 18, 1998
To the Holders of Common Stock of
BURLINGTON INDUSTRIES, INC.
The 1999 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 4, 1999, at
9:30 a.m. for the following purposes:
1. To elect three Class I 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 approval of the Burlington Industries,
Inc. 1998 Equity Incentive Plan;
3. To consider and act upon the selection of independent public
accountants to audit the books and accounts of the Corporation for the
1999 fiscal year; and
4. 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 7, 1998, will be entitled to notice of and to
vote at the meeting.
By Order of the Board of Directors,
/s/ Alice Washington Grogan
Alice Washington Grogan
Corporate 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>
BURLINGTON INDUSTRIES, INC.
3330 West Friendly Avenue
Greensboro, North Carolina 27410
--------------------------------
PROXY STATEMENT
--------------------------------
Annual Meeting of Stockholders, February 4, 1999
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 enclosed
proxy also will serve as confidential voting instructions with respect to the
Corporation's Employee Stock Ownership Plan (the "ESOP"). If voting
instructions from an ESOP participant have not been received by the Trustee of
the ESOP by 5:00 p.m. EST on February 3, 1999, the Trustee will not vote the
shares allocated to such participant's ESOP account. This Proxy Statement and
the accompanying form of Proxy are being mailed to stockholders on or about
December 18, 1998.
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 facsimile. 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 $6,500 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.
On December 7, 1998, the record date for the 1999 Annual Meeting of
Stockholders, there were outstanding 56,919,705 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 7, 1998 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. The Restated
Certificate of Incorporation and Bylaws further provide that Directors shall be
divided into three classes (Class I,
<PAGE>
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 George W. Henderson, III, David I. Margolis
and W. Barger Tygart for election as Class I Directors for a term expiring at
the 2002 Annual Meeting and in each case until their respective successors are
elected and qualified. All nominees are currently Directors of the Corporation
whose terms expire at the 1999 Annual Meeting. Mr. Abely, a Director, has
indicated his intention to retire from the Corporation's Board of Directors
when his term of office expires at the 1999 Annual Meeting, and, accordingly,
he has requested not to stand for reelection. 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 2000 or 2001 Annual
Meeting, as the case may be. Effective upon the completion of elections of
Directors at the 1999 Annual Meeting of Stockholders, the Board of Directors
has fixed the number of Directors at eight persons.
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 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 1999 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.
JERALD A. BLUMBERG, 58 Incumbent Term Expires in 2000
Mr. Blumberg has been President, Chief Executive Officer and a Director of
Ambar Inc., an oilfield services company, since January 1998. Prior thereto, he
was Executive Vice President of E.I. du Pont de Nemours and Co. until his
retirement at the end of 1997. Mr. Blumberg
2
<PAGE>
has been a Director of the Corporation since April 1998. He is a member of the
Audit and Nominating Committees of the Board.
JOHN D. ENGLAR, 51 Incumbent Term Expires in 2000
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). Mr. Englar has been a Director of the Corporation since 1990. He
is Chairman of the Investment Committee of the Board.
GEORGE W. HENDERSON, III, 50 Nominee Term Expires in 1999
Mr. Henderson has been Chairman of the Board of Directors of the
Corporation since February 1998 and Chief Executive Officer of the Corporation
since 1995. Prior thereto he was President and Chief Operating Officer (from
1993). Mr. Henderson is also a Director of Jefferson Pilot Corporation, The
Research Triangle Foundation of North Carolina and Wachovia Corporation. Mr.
Henderson has been a Director of the Corporation since 1990. He is Chairman of
the Executive Committee of the Board.
DAVID I. MARGOLIS, 68 Nominee Term Expires in 1999
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 Chairman of
the Audit Committee and a member of the Compensation and Benefits, Executive,
and Nominating Committees of the Board.
JOHN G. MEDLIN, JR., 65 Incumbent Term Expires in 2001
Mr. Medlin was elected Chairman Emeritus of Wachovia Corporation, a bank
holding company, in April 1998. He served at Wachovia as non-executive Chairman
of the Board from 1994 to 1998 and as Chief Executive Officer from 1977 to
1993. Mr. Medlin is also a director of BellSouth Corp., Media General, Inc.,
National Service Industries, Inc., US Airways Group, Inc. and Wachovia
Corporation. He has been a Director of the Corporation since 1994. Mr. Medlin
is Chairman of the Nominating Committee and a member of the Audit, Compensation
and Benefits, and Executive Committees of the Board.
NELSON SCHWAB III, 53 Incumbent Term Expires in 2001
Mr. Schwab is co-founder of Carousel Capital, a merchant banking firm, and
has been Managing Director since its inception in 1996. He was Chairman and
Chief Executive Officer of Paramount Parks Inc.,
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<PAGE>
owner of theme amusement parks, from 1992 until 1995. 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 Chairman of the
Compensation and Benefits Committee and a member of the Executive, Investment,
and Nominating Committees of the Board.
ABRAHAM B. STENBERG, 63 Incumbent Term Expires in 2000
Mr. Stenberg has been Vice Chairman of the Corporation since November
1997. Prior thereto he was an Executive Vice President of the Corporation (from
1993) and President and Chief Operating Officer of the Burlington Interior
Furnishings Group (from 1995). Mr. Stenberg has been a Director of the
Corporation since 1990. He is a member of the Investment Committee.
W. BARGER TYGART, 63 Nominee Term Expires in 1999
Mr. Tygart retired as Vice Chairman (since 1997) and a Director (since
1995) of The J.C. Penney Company ("J.C. Penney"), a retail marketing company,
in July 1998. Prior thereto he was President and Chief Operating Officer of
J.C. Penney (from 1995 to 1997) and senior executive vice president (from
1992). He has been a Director of the Corporation since April 1998. Mr. Tygart
is a member of the Audit and Compensation and Benefits Committees of the Board.
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 1998 fiscal year, the
Board met five times, the Audit Committee met two times, 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.
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<PAGE>
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
2000 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 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 November 30, 1998, 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. In addition to the beneficial owners listed below, the Corporation's
Employee Stock Ownership Plan holds 3,332,323 shares of Common Stock (5.84%)
which is allocated to the accounts of the plan participants.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership of Class
- -------------------------------------- ---------------------- -----------
<S> <C> <C>
FMR Corp. 7,092,200(a) 12.44%
82 Devonshire Street
Boston, MA 02109
Pzena Investment Management, LLC 4,092,575(b) 7.18%
830 Third Avenue, 14th floor
New York, NY 10022-7522
Wellington Management Company 4,046,150(c) 7.10%
75 State Street
Boston, MA 02109
Reich & Tang Asset Management L.P. 3,268,000(d) 5.73%
600 Fifth Avenue
New York, NY 10020-2302
</TABLE>
- -----------------------
(a) According to information provided by FMR Corp., FMR Corp. has sole voting
and investment power with respect to all of the above-listed shares.
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<PAGE>
(b) According to information provided by Pzena Investment Management, LLC
("Pzena"), Pzena has sole investment power with respect to all of the
above-listed shares and sole voting power with respect to 3,930,625 of the
above-listed shares.
(c) According to information provided by Wellington Management Company
("Wellington"), Wellington has shared voting power with respect to 36,050
shares and no voting power with respect to the remaining above-listed
shares and has shared investment power with respect to all of the
above-listed shares.
(d) According to information provided by Reich & Tang Asset Management, L.P.
("Reich & Tang"), Reich & Tang has sole voting and investment power with
respect to all of the above-listed shares.
The following Table sets forth the number of shares of Common Stock
beneficially owned, as of November 30, 1998 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. 11,500(b) *%
Jerald A. Blumberg 1,500(b) *
John D. Englar 247,385(c) *
George W. Henderson, III 619,598(c) 1.09%
David I. Margolis 20,500(b) *
John G. Medlin, Jr. 9,500(b) *
Charles E. Peters, Jr. 60,242(c) *
Nelson Schwab III 5,250(b) *
Abraham B. Stenberg 101,757(c) *
W. Barger Tygart 1,500(b) *
Gary P. Welchman 309,549(c) *
All Directors and executive officers as
a group (17 persons), including
the above 1,615,204(c)(d) 2.83%
</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 10,500 shares each held in the names of Messrs. Abely and
Margolis, 7,500 shares held in the name of Mr. Medlin, 5,250 shares held in
the name of Mr. Schwab and 1,500 shares each held in the names of Messrs.
Blumberg and Tygart under the Stock Plan for Non-Employee Directors, as to
which such persons possess voting power but not investment power.
(c) Includes for executive officers of the Corporation shares in which they
have voting power, but not investment power, under the Burlington
Industries, Inc. Employee Stock Ownership Plan ("ESOP"). Also includes
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"), the Burlington
Industries, Inc. 1992 Equity Incentive Plan (the "1992 Equity Incentive
Plan") and the Burlington Industries, Inc. 1995 Equity Incentive Plan (the
"1995 Equity Incentive Plan"), which are currently exercisable, as follows:
Mr. Englar,
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<PAGE>
186,527 shares; Mr. Henderson, 449,762 shares; Mr. Peters, 50,000 shares;
Mr. Welchman, 246,527 shares; and all executive officers and Directors as a
group (11 persons), 1,144,888 shares.
(d) Includes 27,431 shares owned by a family member of one executive officer
who disclaims beneficial ownership of such shares.
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.
A non-employee Director may elect to defer receipt of all or a portion of
his cash director's fees, pursuant to the Deferred Compensation Plan for
Non-Employee Directors, until the earlier of his termination of Board service,
the date specified by the Director or his death. The Director selects whether
his deferred account (which is unfunded) is credited with phantom stock of the
Corporation or interest at a rate established by the Corporation's Board of
Directors. The current interest rate is 7.5%. Deferred accounts are paid in
cash in either a lump sum or in installments over a period not exceeding five
years, as the Compensation and Benefits Committee of the Board may determine.
The Compensation and Benefits Committee may accelerate payment of deferred
amounts upon a change of control of the Corporation (as defined in such
Deferred Compensation Plan).
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, Blumberg, Margolis,
Medlin, Schwab and Tygart each were granted 1,500 shares of Common Stock in
1998, which will vest upon completion of the Board year of service ending on
February 4, 1999.
7
<PAGE>
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 related awards based on
achieving cumulative long-term financial objectives.
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 Committee
The Committee establishes compensation objectives and policies for
executive officers, sets compensation payable to executive officers under those
policies, administers each of the Corporation's equity incentive plans and has
general oversight responsibility for incentive compensation and benefit plans.
The Committee is composed entirely 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
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<PAGE>
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.
In fiscal year 1998, Messrs. Stenberg, Welchman and Englar received salary
increases.
Annual Incentive Bonus
The Corporation's 1998 Annual Incentive Plan ("1998 Plan") (in which
approximately 200 senior managers participated) provides for an annual bonus
based on achieving certain earnings per share (operating earnings before
interest and taxes for divisional participants) and return on invested capital
levels. For divisional participants, a portion of the available bonus is based
on division performance and a portion is based on corporate performance. For
Mr. Henderson and other corporate staff participants, the bonus opportunity is
based only on corporate performance.
Bonus awards are earned in proportion to the achievement of divisional and
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 1998 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. The
Committee reviewed and approved each of the performance standards for the
Corporation, individual divisions, and individual executive officers and, based
upon the advice of an independent compensation consultant, believes they are
reasonable.
The Corporation's earnings per share in fiscal year 1998 was higher than
that for the prior fiscal year. Some divisions exceeded established performance
goals, while others did not achieve the goals set for the year under the 1998
Plan. Bonuses under the 1998 Plan paid to Mr. Henderson and the other named
executive officers (other than Mr. Welchman) were earned at higher levels than
in fiscal year 1997. Aggregate payments to all participants under the 1998 Plan
were slightly higher than in 1997, but lower than in previous years.
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Long-term Incentives
The Corporation has provided long-term, stock-related incentives to key
executives and employees (including the named executive officers) under the
1995 Equity Incentive Plan. Awards under the 1995 Equity Incentive Plan
consists 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 used such awards only in exceptional circumstances
(e.g., new hires if the situation required).
Awards were granted principally in fiscal year 1996 and, other than in
connection with the assumption of additional responsibilities and new hires, no
awards were made in fiscal year 1997. During fiscal year 1998, the vesting of
certain of these stock option awards was accelerated, including awards made to
Mr. Henderson and each of the named executive officers, when stockholder return
performance goals were met. In fiscal year 1998, incremental stock option
awards were made to Mr. Henderson, the other named executive officers, and to
certain other executive officers to recognize key contributions as well as to
provide additional incentive to meet long term financial goals. The 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 stock options awarded 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 Performance Units awarded in fiscal year 1996 were dependent upon
achievement of targets based upon performance goals measured by both divisional
or corporate cumulative earnings before interest and taxes ("EBIT") and return
on invested capital ("ROI"), each over the three-year period of fiscal years
1996, 1997 and 1998 (the "Performance Goals"). The Performance Goals were
"stretch goals" in that the targets were set at levels higher than those ever
attained by the Corporation during any three-year period and both EBIT and ROI
targets were required to be achieved. The Committee believes that using EBIT
and ROI as the Performance Goals directly ties the executives' and key
employees' compensation to the Corporation's objectives of growth,
profitability and return on stockholders' investment. Performance Units which
were earned are 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. Only one division of the Corporation met the
targeted Performance Goals, and no Performance Units have been or will be paid
to Mr. Henderson or any of the other named executive officers pursuant to such
awards.
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<PAGE>
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.
In November 1998, the Committee approved the award of stock options to
certain key employees including each of the named executive officers. These
option awards were made under the 1995 Equity Incentive Plan and in keeping
with the Committee's philosophy of aligning management's incentives with the
interests of the Corporation's stockholders and to maintain long term incentive
opportunities as a significant part of total compensation, and were granted at
fair market value.
Also in November 1998, as more fully discussed in the description of the
proposed 1998 Equity Incentive Plan, set forth in Proposal 2 herein for
stockholder approval, the Committee and the Board of Directors approved a new
long-term incentive plan and made awards under such plan to certain eligible
key employees including each of the named executive officers, subject to
approval of the plan by stockholders.
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 $1.0
million per year paid to a company's chief executive officer and its four other
highest paid officers in office at fiscal year end. The Corporation believes
that the impact, if any, of such limitation is immaterial to the Corporation
with respect to fiscal year 1998. The 1995 Equity Incentive Plan was structured
so as to preserve the tax deduction for performance-based compensation paid
thereunder. The 1998 Equity Incentive Plan, as set forth in Proposal 2 herein
for stockholder approval, also has been structured so as to preserve the tax
deduction for performance-based compensation paid thereunder. The Committee
will continue to monitor this tax law and evaluate whether any modifications
should be made to the Corporation's compensation programs in future years.
COMPENSATION AND BENEFITS COMMITTEE
Nelson Schwab III, Chairman
Joseph F. Abely, Jr.,
David I. Margolis
John G. Medlin, Jr.
D. Barger Tygart
11
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Table sets forth information regarding the compensation of
the Corporation's Chief Executive Officer and each of the Corporation's four
most highly compensated senior executive officers (collectively, the "named
executive officers") for services in all capacities to the Corporation in
fiscal years 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------- ------------------------- ---------
Restricted Securities
Stock Underlying LTIP All Other
Award(s) Options/ Payouts Compen-
Name and Principal Position Year Salary($) Bonus($) ($)(1) SARs(#)(2) ($)(3) sation($)(4)
- ----------------------------- ------ ----------- ---------- ------------ ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
George W. Henderson, III 1998 540,000 552,100 -- 50,000 -- 1,947
Chairman of the Board and 1997 530,000 350,000 -- -- 381,816 9,438
Chief Executive Officer 1996 500,000 500,000 -- 160,000 381,816 1,644
Abraham B. Stenberg 1998 435,417 349,200 -- 25,000 -- 1,947
Vice Chairman 1997 422,917 285,000 -- -- 552,000 9,008
1996 400,000 465,000 -- 110,000 552,000 1,644
Gary P. Welchman 1998 347,083 61,800 -- 10,000 -- 1,943
Executive Vice President 1997 343,750 340,000 -- -- 206,099 9,438
1996 330,000 150,000 -- 65,000 206,099 1,644
John D. Englar 1998 266,667 157,000 -- 10,000 -- 1,947
Senior Vice President, 1997 263,750 95,000 -- -- 152,727 9,500
Corporate Development 1996 250,000 160,000 -- 55,000 152,727 1,644
and Law
Charles E. Peters, Jr. 1998 255,000 140,500 -- 40,000 -- 1,872
Senior Vice President and 1997 246,250 100,000 -- -- -- 947
Chief Financial Officer 1996 212,727 115,000 116,250 50,000 -- --
</TABLE>
- ----------------------
(1) This column shows the market value (on the date of grant) of awards of
shares of restricted stock under the 1995 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 October 2, 1998 was 10,000
shares ($90,625) held by Mr. Peters. Holders of restricted stock have the
same right to receive dividends as other holders of Common Stock. The
Corporation has not paid any dividends on its Common Stock.
(2) The Corporation has not granted any SARs.
(3) The amounts shown in this column were paid upon achievement of specified
aggregate performance goals for fiscal years 1994 and 1995 in connection
with Performance Units awarded under the 1992 Equity Incentive Plan. These
amounts were paid primarily in shares of Common Stock valued at the fair
market value on the payment date.
(4) The amounts in this column are the value of shares of the Corporation's
Common Stock allocated to the named executive officers' accounts under the
ESOP ("ESOP Allocation"), valued on the respective allocation dates.
12
<PAGE>
Stock Options and Performance Units
The following Table shows information about stock options granted to each
of the named executive officers during fiscal year 1998. No SARs were granted
to any of the named executive officers during fiscal year 1998.
Option Grants in Fiscal Year 1998
<TABLE>
<CAPTION>
Potential Realizable
Number of Percent Value at Assumed
Securities of Total Annual Rates of Stock
Underlying Options Price Appreciation
Options Granted to Exercise or for Option Term
Granted Employees in Base Price Expiration ----------------------
Name (#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
- -------------------------- ------------ -------------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
George W. Henderson, III 50,000 19.8 14.75 11/12/05 463,810 1,175,385
Abraham B. Stenberg 25,000 9.9 14.75 11/12/05 231,905 587,693
Gary P. Welchman 10,000 4.0 14.75 11/12/05 92,762 235,077
John D. Englar 10,000 4.0 14.75 11/12/05 92,762 235,077
Charles E. Peters, Jr. 40,000 15.8 14.75 11/12/05 371,048 940,308
</TABLE>
The following Table shows information about stock options held by each of
the named executive officers at the end of fiscal year 1998 (the value being
the difference between the closing price of the Corporation's Common Stock on
October 2, 1998 and the respective option prices). No SARs are held by any of
the named executive officers.
Aggregated Option Exercises in Fiscal Year 1998
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying In-the-
Acquired Unexercised Options Money Options at
on at Fiscal Year-End (#) Fiscal Year-End($)
Exercise Value ----------------------------- ----------------------------
Name (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ---------- ------------ ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
George W. Henderson, III 0 0 449,762 50,000 0 0
Abraham B. Stenberg 315,428 1,864,997 0 25,000 0 0
Gary P. Welchman 35,000 224,213 246,527 10,000 0 0
John D. Englar 0 0 186,527 10,000 0 0
Charles E. Peters, Jr. 0 0 50,000 40,000 0 0
</TABLE>
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
13
<PAGE>
years of continuous participation prior to October 1, 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--19; Mr. Stenberg--38;
Mr. Welchman--27; Mr. Englar--13; and Mr. Peters--2. 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 except for those of Mr. Peters which
will be fully vested on February 10, 2000), assuming no increase in present
salary levels, would be: Mr. Henderson--$197,072; Mr. Stenberg--$151,889; Mr.
Welchman--$124,261; Mr. Englar--$96,149; and Mr. Peters--$80,516.
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 Mr. Stenberg, one-half of the greater of (i) the
monthly base salary on the January 1 occurring concurrently with or immediately
preceding such
14
<PAGE>
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,
Englar and Peters, 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 Mr. Peters) has
a nonforfeitable right to receive benefits accrued under the post-retirement
benefits portions of the Benefits Plan. Any named executive officer who
receives post-retirement benefits before age 65 will have his benefits 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 survivor benefit (to be paid for
120 months) calculated assuming the death of the participant as of December 1,
1998, for Mr. Henderson would be $22,500, for Mr. Stenberg would be $17,708,
for Mr. Welchman would be $14,375, for Mr. Englar would be $11,042, and for Mr.
Peters would be $10,625; (b) the aggregate post-retirement benefits (payable
over 10 years) calculated assuming retirement as of December 1, 1998, at
current plan salary for Mr. Henderson would be $283,500, for Mr. Stenberg would
be $599,250, for Mr. Welchman would be $517,500, for Mr. Englar would be
$159,000 and for Mr. Peters would be $0; and (c) the post-retirement death
benefit calculated assuming death of the participant as of December 1, 1998,
for Messrs. Welchman and Peters would be $0, for Mr. Henderson would be
$189,000, for Mr. Stenberg would be $399,500 and for Mr. Englar would be
$106,000.
Employment Agreements
The Corporation has employment agreements with the named executive
officers providing for employment through December 31,
15
<PAGE>
2000. These agreements provide, among other things, for minimum annual salaried
compensation as follows: Mr. Henderson--$600,000 per annum; Mr.
Stenberg--$425,000 per annum; Mr. Welchman--$345,000 per annum; Mr.
Englar--$285,000 per annum; and Mr. Peters-- $290,000.
The employment agreements with the named executive officers provide that
in the event of a voluntary termination of employment for "good reason" or an
involuntary termination of employment "without cause", such executive will
receive a lump sum in cash equal to (x) the salary that would have been payable
over the "severance period" of the agreement had such executive not been
terminated plus (y) the amount of the target incentive bonus payment for the
year in which termination occurred, times the number of years or partial years
in the "severance period". The executive also is entitled to continue
participating in all applicable benefit and welfare plans of the Corporation
during the "severance period". With regard to such termination, the "severance
period" of an agreement in the case of Mr. Henderson means two years and in the
case of Messrs. Stenberg, Welchman, Englar and Peters means one and one-half
years. "Good reason" means a failure to pay compensation due and payable, a
reduction in compensation level (other than changes to incentive or benefit
plans affecting all executives), an assignment of duties resulting in a
diminution of the executive's position, authority, duties or responsibilities
which is not agreed to by the executive, or a change in employment requirements
which the Board Compensation and Benefits Committee determines subjects the
executive to an unfair change of circumstances.
All the employment agreements provide that in the event of a voluntary
termination of employment for "good reason" or an involuntary termination of
employment "without cause" which occurs within two years of a "change of
control", the "severance period" shall mean three years. In the event of
disability (as defined in the agreements), the employment agreements provide
that the Corporation may terminate the agreement and provide the executive with
salary payments and benefits for one year in the case of Mr. Henderson and six
months in the case of Messrs. Stenberg, Welchman, Englar and Peters. Further,
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.
Change of Control Arrangements
In addition to the provisions of the employment agreements discussed
above, the agreements which the Corporation has entered into with each of the
named executive officers in connection with the Ben-
16
<PAGE>
efits 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 of 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 officers have also entered into agreements with the Corporation in
connection with the 1992 Equity Incentive Plan, the 1995 Equity Incentive Plan
and the 1998 Equity Incentive Plan under which such officers' awards of
restricted stock, stock options and Performance Units or Performance Shares
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 of 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 October 1, 1993 to October 2, 1998
(assuming reinvestment of any dividends and an investment of $100 in each on
October 1, 1993):
Plot Points
Burlington S&P Peer Group
---------- --- ----------
"10/1/93" 100 100 100
"9/30/94" 72.41 103.11 94.27
"9/29/95" 87.06 133.77 96.54
"9/27/96" 68.96 160.71 101.71
"9/26/97" 98.27 226.04 138.01
"10/2/98" 62.5 243.56 87.92
<TABLE>
<CAPTION>
10/1/93 9/30/94 9/29/95 9/27/96 9/26/97 10/2/98
<S> <C> <C> <C> <C> <C> <C>
Burlington Industries, Inc. $ 100.00 $ 72.41 $ 87.06 $ 68.96 $ 98.27 $ 62.50
S&P 500 100.00 103.11 133.77 160.71 226.04 243.56
Peer Group 100.00 94.27 96.54 101.71 138.01 87.92
</TABLE>
17
<PAGE>
This peer group consists of Burlington Industries, Inc., Cone Mills
Corporation, Culp, Inc., Delta Woodside Industries, Inc., The Dixie Group,
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. Approval of the Burlington Industries, Inc.
1998 Equity Incentive Plan.
The continued success of the Corporation and its subsidiaries depends on
their ability to attract, retain and motivate a superior management team. In
the belief that the Corporation should be in a position to continue to provide
long-term equity incentives to officers and key employees to contribute to the
future growth and profitability of the Corporation, on November 5, 1998, the
Board of Directors of the Corporation adopted, subject to approval by the
Corporation's stockholders, the Burlington Industries, Inc. 1998 Equity
Incentive Plan (the "1998 Equity Incentive Plan").
The Board of Directors believes the 1998 Equity Incentive Plan will
benefit the Corporation's stockholders by encouraging stock ownership and
focusing officers and key employees on performance that will enhance
stockholder value by directly tying compensation to meeting long-term financial
performance goals and to appreciation in the Corporation's stock price. The
Board of Directors therefore recommends approval of the 1998 Equity Incentive
Plan.
The following is a general summary of the 1998 Equity Incentive Plan,
which is qualified in its entirety by reference to the 1998 Equity Incentive
Plan included as Exhibit A to this proxy statement.
Types of Awards
Awards under the 1998 Equity Incentive Plan ("Awards") may consist of
Stock Options (which may be Incentive Stock Options or Non-Qualified Stock
Options), Performance Shares, Stock Appreciation Rights (which may be Tandem
Stock Appreciation Rights or Non-Tandem Stock Appreciation Rights) and
Restricted Shares.
Under the 1998 Equity Incentive Plan, the maximum number of Options and
Stock Appreciation Rights that may be granted to a participant in a given
fiscal year may not exceed 150,000 Options and 150,000 Stock Appreciation
Rights. The maximum dollar value of any Restricted Shares that may be granted
to a participant in any given fiscal year under the 1998 Equity Incentive Plan
may not exceed $500,000. The maximum number of Performance Shares that a
participant may earn in a given fiscal year may not exceed 50,000 Performance
Shares.
Administration
The 1998 Equity Incentive Plan is administered and interpreted by a
committee (the "Committee") whose members are those members of
18
<PAGE>
the Compensation and Benefits Committee of the Board of Directors (no fewer
than two) who qualify as "outside directors" within the meaning of Section
162(m) of the Code and "non-employee directors" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934 ("Exchange Act"). The Committee
has the power, among other things, to select persons to receive Awards from
among the eligible employees, determine the types and vesting dates of Awards
and the number of shares to be awarded, set the Performance Goals for
Performance Share and Restricted Share Awards, and set the terms, conditions
and provisions of Awards consistent with the terms of the 1998 Equity Incentive
Plan.
Eligible Employees
Officers and other key employees of the Corporation, its subsidiaries and
affiliates, are eligible to be granted Awards under the 1998 Equity Incentive
Plan. Currently, approximately 200 employees are eligible to receive Awards
thereunder.
Performance Goals
The value of Performance Shares under the 1998 Equity Incentive Plan must
be based (and vesting of Restricted Shares may be based) upon achieving
Performance Goals pre-established by the Committee with respect to a
pre-established Performance Period. The Performance Goals are based on one or
more of the following objective business criteria to be attained by the
Corporation (or a subsidiary or division thereof): (i) total shareholder
return, (ii) fair market value of a share of Common Stock, (iii) earnings
before interest and taxes ("EBIT"), (iv) return on investment ("ROI"), (v)
earnings per share, (vi) return on equity, and (vii) earnings before interest,
taxes, depreciation and amortization ("EBITDA"). Performance Goals may be
revised by the Committee to take into consideration any unforeseen events or
changes in circumstances.
Performance Shares
Performance Shares may be granted under the 1998 Equity Incentive Plan. A
Performance Share is a right whose value is determined with reference to
attaining Performance Goals for a Performance Period, as determined by the
Committee, and which is paid in shares of Common Stock, cash or a combination
thereof. The Committee shall also determine the vesting periods of the
Performance Shares.
Stock Options
Incentive Stock Options intended to qualify for tax treatment in
accordance with Section 422 of the Code ("ISOs") and Non-Qualified Stock
Options not intended to qualify for such tax treatment may be
19
<PAGE>
granted alone or in tandem with other Awards under the 1998 Equity Incentive
Plan. An Option will be exercisable at such times and subject to such terms and
conditions as the Committee determines, but may not be exercised more than 10
years after the date it is granted. The exercise price of Options will be
determined by the Committee, but may not be less than the fair market value of
a share of Common Stock on the date of grant. On December 7, 1998, the closing
price of the Corporation's Common Stock on the New York Stock Exchange
(Composite Transactions) was $10.3125. Payment of an Option's exercise price
may be made in such manner as the Committee may provide, including in cash, by
delivery of shares of Common Stock owned by the optionee or through withholding
of Common Stock subject to the Option. Options will not be transferable other
than by will or by the laws of descent and distribution, and may be exercised
only by the optionee during his/her lifetime, subject to the Committee's
permitting transfer to an optionee's family member or a trust for the benefit
of a family member.
Stock Appreciation Rights
Stock Appreciation Rights ("SARs") may be granted alone or in tandem with
Options under the 1998 Equity Incentive Plan. Upon the exercise of an SAR, the
grantee will receive from the Corporation cash, Common Stock or a combination
thereof (at the discretion of the Committee) having a value equal to the excess
of the fair market value of the Common Stock on the exercise date over (i) in
the case of a freestanding SAR, the initial value of the SAR (as set by the
Committee on the date of grant which may not be less than the fair market value
of a share of Common Stock on the date of grant), and (ii) in the case of a
tandem SAR, the exercise price (as set by the Committee on the date of grant)
of the related Option. There are no SARs currently outstanding, and the
Committee does not plan to grant Awards of SARs other than in exceptional
circumstances.
Restricted Shares
Restricted Shares may be granted or, in the Committee's discretion,
offered for sale (at a price determined by the Committee) under the 1998 Equity
Incentive Plan. The vesting periods of Restricted Shares shall be determined by
the Committee, but may not be less than three years from the date of grant or,
if vesting of the Restricted Shares is subject to the attainment of Performance
Goals, not less than one year from the date of grant. During the restricted
period, the grantee may not sell, transfer, pledge or assign the Restricted
Shares, but will have the right to vote the Restricted Shares and to receive
dividends. The Committee does not plan to grant Awards of Restricted Shares
other than in exceptional circumstances.
20
<PAGE>
Shares Subject to the Plan
The maximum number of shares that may be issued pursuant to Awards under
the 1998 Equity Incentive Plan is 2,700,000 shares of Common Stock. Any Awards
that may be forfeited or canceled or may expire without the participant having
received value therefor shall again become available for Awards under the 1998
Equity Incentive Plan. In the event of a stock split, stock dividend or other
relevant change affecting the Common Stock, or a major corporate change,
including a merger, consolidation or reorganization, the Committee may make
appropriate adjustments to the number of shares available for Award grants and
to the number of shares and price under outstanding Awards made before the
event.
The percentage of the maximum aggregate number of shares of Common Stock
that may be granted or offered for sale to all participants under the 1998
Equity Incentive Plan may not exceed a total of 30% of the maximum if the
awards are Performance Shares and 15% if the awards are Restricted Shares.
Amendment and Termination
The Board of Directors of the Corporation may at any time, modify, amend,
suspend or terminate the 1998 Equity Incentive Plan, in whole or in part,
provided, however, that any amendment which is required by law or by the rules
of any stock exchange upon which shares of Common Stock are traded which
require stockholder approval thereof shall not be effective unless and until
such stockholder approval has been obtained. No termination, modification or
amendment of the 1998 Equity Incentive Plan may, without the consent of the
participant to whom an Award has been granted, adversely affect the rights of
such participant under such Award.
The 1998 Equity Incentive Plan terminates on February 4, 2004, and no
further Awards may be granted thereunder after such date. Awards then
outstanding may continue to be exercised, vest or be paid in accordance with
their terms.
Change of Control
The Committee has authority to provide for the accelerated vesting and/or
payment of Awards (with or without regard to the achievement of Performance
Goals) in the event of a Change of Control (as defined in the 1998 Equity
Incentive Plan) or a determination by the Committee that a Change of Control
may occur.
U.S. Federal Income Tax Consequences
There are no federal income tax consequences, under present law, to the
participant or to the Corporation upon the issuance of Non-
21
<PAGE>
Qualified Stock Options, ISOs or SARs. All Options issued to date under the
1998 Equity Incentive Plan are Non-Qualified Stock Options. Upon exercise of
any such Options, the excess of the fair market value of the shares on the date
of exercise over the Option price will be taxable to the participant as
ordinary income and deductible by the Corporation.
With respect to ISOs, an optionee generally does not recognize taxable
income until the shares acquired upon exercise of such Options are sold or
disposed of (although there may be alternative minimum tax consequences to the
optionee upon exercise of the ISOs). If certain holding period requirements are
met, any gain realized by the optionee upon a sale of such shares will be
treated as long-term capital gain and no deduction will be available to the
Corporation. If the optionee disposes of the shares before the holding period
requirements are satisfied, the optionee will generally realize ordinary income
and the Corporation will be entitled to a corresponding deduction on a portion
of the gain, if any, resulting from the disqualifying disposition.
Upon the exercise of an SAR, the amount of any cash plus the fair market
value of any Common Stock received at the time of exercise will be taxable to
the participant as ordinary income and deductible by the Corporation.
The 1998 Equity Incentive Plan has been structured so that compensation
received by participants thereunder can qualify as performance-based
compensation and thus not be subject to the $1,000,000 limit of Section 162(m)
of the Code.
Awards Granted
In November 1998, the Committee awarded Options and (in certain
situations) Performance Shares under the 1998 Equity Incentive Plan to certain
executive officers and key employees, subject to approval of the 1998 Equity
Incentive Plan by the stockholders. These awards are 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
Shares awarded are dependent upon achievement of total shareholder return
targets over the three-year period ending in November 2001. Performance Shares
which are earned will be payable in shares of Common Stock in November 2001.
The Options awarded under the 1998 Equity Incentive Plan have been granted
with an exercise price of $9.1875 per share (the closing price of the Common
Stock on the grant date) and, therefore, will only have value to the extent the
Common Stock increases in value over the exercise price. The Options vest
proportionately over a three year period from the date of grant.
22
<PAGE>
The 1998 Equity Incentive Plan is positioned so that targeted awards are
at the lower median range of awards for similarly-situated United States
industrial companies. Awards under the 1998 Equity Incentive Plan are designed
to be annual awards to give executives incentives to have their business units
achieve superior performance that will result in increased shareholder value,
to permit flexibility so that awards may be granted to reflect individual
performance on an annual basis, and to more closely reflect current market
conditions in the establishment of Performance Goals.
The following Table sets forth certain information concerning the Option
and Performance Share Awards granted under the 1998 Equity Incentive Plan,
subject to stockholder approval, to the named executive officers, all executive
officers as a group (including the named executive officers) and to all other
employees of the Corporation as a group. The amounts of any other awards which
may be granted under the 1998 Equity Incentive Plan are not determinable at
this time.
<TABLE>
<CAPTION>
Number of Performance Number of Options
Name and Position Shares Awarded Awarded
- ------------------------------ ----------------------- ------------------
<S> <C> <C>
George W. Henderson, III
Chairman of the Board
and Chief Executive Officer 12,900 0
Abraham B. Stenberg
Vice Chairman 7,000 0
Gary P. Welchman
Executive Vice President 5,800 0
John D. Englar
Senior Vice President,
Corporate Development
and Law 3,900 0
Charles E. Peters, Jr.
Senior Vice President
and Chief Financial Officer 3,900 0
All executive officers as a
group (including the above
executive officers) 44,200 13,400
All employees as a group
(excluding the above
executive officers) 28,000 16,500
</TABLE>
The Board of Directors recommends a vote FOR Proposal 2, approval of the
1998 Equity Incentive Plan, and your proxy will be so voted unless you specify
otherwise.
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3. 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 1999 Annual Meeting of Stockholders to answer
appropriate questions and to make any statement that such representative may
desire to make.
The Board of Directors recommends a vote FOR Proposal 3, the approval of
the selection of Ernst & Young LLP as independent public accountants to audit
the books and accounts of the Corporation for the 1999 fiscal year, and your
proxy will be so voted unless you specify otherwise.
4. Other Business
Management of the Corporation is not aware of any other business which may
be presented for action at the 1999 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 1999 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. On all matters other than the
election of Directors, the affirmative vote of the holders of a majority of the
shares of Common Stock
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present in person or by proxy at the Annual Meeting and entitled to vote is
required. An abstention will in effect constitute a vote against any such
matter while a broker non-vote will not be counted.
Proposals of Stockholders
In order for proposals by stockholders to be considered for inclusion in
the Proxy and the Proxy Statement for the 2000 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 20, 1999.
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 2000 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 1999
Annual Meeting, provided that if the 2000 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 2000 Annual
Meeting is mailed or public disclosure of the date of the 2000 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Burlington's
directors and executive officers, and any persons who own beneficially more
than 10% of the outstanding Common Stock (there being, to the Corporation's
knowledge, no such 10% stockholders as of the end of the 1998 fiscal year), to
file with the SEC and the New York Stock Exchange reports disclosing their
ownership of and transactions in the Common Stock. To the Corporation's
knowledge, based solely on a review of the copies of such reports furnished to
the Corporation and written representations that no such reports were required
during the fiscal year ended October 3, 1998, Burlington's directors and
executive officers complied with all Section 16(a) filing requirements except
that the timely filing on behalf of one executive officer, Mr. George C.
Waldrep, Jr., of a report on Form 4 of a sale of Common Stock was inadvertently
overlooked. This sale was reported as soon as the oversight was discovered.
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Availability of Form 10-K
The Corporation's Annual Report on Form 10-K with respect to the fiscal
year ended October 3, 1998 is available without charge upon written request to
Lynn L. Lane, Vice President, Treasurer and 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 7, 1998,
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.
/s/ Alice Washington Grogan
Alice Washington Grogan
Corporate Secretary
By Order of the Board of Directors,
December 18, 1998
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Exhibit A
BURLINGTON INDUSTRIES, INC.
1998 EQUITY INCENTIVE PLAN
1. Purpose. The Burlington Industries, Inc. 1998 Equity Incentive Plan
(the "Plan") is intended to enhance the ability of Burlington Industries, Inc.,
a Delaware corporation (the "Company"), to attract, retain and motivate key
executives and employees of the Company, its affiliates, joint ventures or
subsidiaries, by providing such persons with an opportunity to obtain a
proprietary interest in the Company and by rewarding them for their
contribution to the Company. The Company believes that providing key executives
and employees with such opportunities and rewards serves the best interests of
the Company's shareholders.
2. Definitions. As used herein:
"Agreement" means the agreement described in Section 8 hereof.
"Award" means Options, Performance Shares, Stock Appreciation Rights and
Restricted Shares.
"Beneficiary" or "Beneficiaries" means the person or persons designated by
a Participant pursuant to the provisions of the Agreement to receive payments
or rights pursuant to such Agreement upon the Participant's death. If no
Beneficiary is so designated by a Participant or if no Beneficiary is living at
the time a payment is due pursuant to such Agreement, payments shall be made to
the estate of such Participant. The Agreement shall provide a Participant with
the right to change the designated Beneficiaries from time to time by written
instrument executed by the Participant and filed with the Committee in
accordance with such rules as may be specified by the Committee.
"Board" means the Board of Directors of the Company.
"Change of Control" has the meaning set forth in Section 14 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, as such law or regulations may be amended
from time to time.
"Committee" means the committee of the Board described in Section 5
hereof.
"Common Stock" means the Common Stock of the Company, par value $0.01 per
share, or such other class or kind of shares or other securities as may be
applicable under Section 13 hereof.
"Effective Date" means the date described in Section 3 hereof.
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, as such act, rules or regulations may be
amended from time to time.
"Fair Market Value" means the closing price of a share of Common Stock on
a specified date as reported in the New York Stock Exchange Composite
Transactions for such date, or such other measurement of value as may be
specified by the Committee from time to time.
"Free-Standing Stock Appreciation Right" means a Stock Appreciation Right
not granted in tandem with an Option.
"Grant Date" means, with respect to any Award, the date designated by the
Committee as the date on which such Award was granted.
"Incentive Stock Option" means an Option which is qualified as an
incentive stock option under Section 422(b) of the Code.
"Initial Value" means the initial value, if any, of a Free-Standing Stock
Appreciation Right, as determined at the time of grant by the Committee in its
discretion and as set forth in the applicable Agreement; provided, however,
that the Initial Value of a Stock Appreciation Right shall be no less than 100%
of the Fair Market Value of a share of Common Stock as of the Grant Date.
"Non-qualified Stock Option" means an Option which does not qualify as an
Incentive Stock Option.
"Option" means an option to purchase shares of Common Stock, subject to
the terms and conditions provided for in Section 9 hereof.
"Option Price" means the exercise price of an Option, as determined at the
time of grant by the Committee in its discretion and as set forth in the
applicable Agreement; provided, however, that the Option Price shall be no less
than 100% of the Fair Market Value of a share of Common Stock as of the Grant
Date; and provided, further, that the Option Price of any Incentive Stock
Option shall be subject to the terms set forth in Section 9(a)(iv) hereof.
"Participant" means a key employee of the Company, or one of its
subsidiaries, joint ventures or affiliates, who is designated by the Committee
to receive an Award under the Plan.
"Performance Goals" have the meaning set forth in Section 7 hereof.
Performance Goals shall be objective and pre-established by the Committee
within the meaning of Section 162(m) of the Code.
"Performance Period" means a fixed period of time, pre-established by the
Committee, during which a Participant performs service for the Company and
during which Performance Goals may be achieved.
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<PAGE>
"Performance Share" means a right whose value is determined with reference
to attaining Performance Goals for a Performance Period or such other measure
as may be approved by the Committee, from time to time, and which is paid in
shares of Common Stock, cash or a combination thereof, as determined by the
Committee in its discretion, subject to the terms and conditions provided for
in Section 11 hereof.
"Plan" means the Burlington Industries, Inc. 1998 Equity Incentive Plan,
as the same may be amended, from time to time, in accordance with Section 15
hereof.
"Restricted Share" means a share of Common Stock which is restricted
subject to the terms and conditions provided for in Section 12 hereof.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.
"Stock Appreciation Right" or "SAR" means a right to receive the
appreciation, if any, in the Fair Market Value of one share of Common Stock,
subject to the terms and conditions provided for in Section 10 hereof.
"Tandem Stock Appreciation Right" means a Stock Appreciation Right granted
in tandem with an Option.
3. Effective Date. The Plan shall become effective on the date
("Effective Date") of its adoption by the Board, subject to approval of the
Plan by the stockholders of the Company. Prior to such stockholder approval,
the Committee may grant Awards conditioned on stockholder approval. If such
stockholder approval is not obtained by the first annual meeting of
stockholders to occur after the adoption of the Plan by the Board, the Plan and
any Awards made thereunder shall terminate ab initio and be of no further force
and effect.
4. Maximum Number of Shares Available for Grant; Maximum Number of
Options, SARS and Restricted Shares to be Awarded; Maximum Value of Performance
Shares to be Awarded.
(a) Subject to adjustment pursuant to Section 13 hereof, the maximum
aggregate number of shares of Common Stock that may be used to settle Awards
made under the Plan shall not exceed 2,700,000 shares of Common Stock.
Notwithstanding the foregoing, any Awards that have been forfeited or canceled
or have expired without the relevant Participant having received value
therefor, such as the forfeiture of a Participant's unvested Options upon
termination of his/her service (an "Expired Award"), shall not be counted for
purposes of determining the number of shares of Common Stock issued or issuable
in con-
3
<PAGE>
nection with Awards granted under the Plan. For purposes of the immediately
preceding sentence, neither (i) any Award tendered to the Company or withheld
by the Company to satisfy tax withholding requirements, nor (ii) any Restricted
Share that is forfeited, canceled or expired and with respect to which a
Participant received any dividends or "benefits of ownership" (within the
meaning of the rules under Section 16(b) of the Exchange Act), shall be deemed
an Expired Award.
(b) Shares of Common Stock issued under the Plan may be authorized and
unissued shares or issued and re-acquired shares, as the Committee may from
time to time determine.
(c) In a given fiscal year of the Company, a Participant may be granted
a maximum of 150,000 Options (to purchase 150,000 shares of Common Stock),
150,000 Stock Appreciation Rights and $500,000 of Restricted Shares, and a
Participant may earn a maximum of 50,000 Performance Shares.
(d) The percentage of the maximum aggregate number of shares of Common
Stock that may be granted or offered for sale to all Participants under the
Plan in accordance with Section 4(a) hereof shall not exceed 30.0%if the Awards
are Performance Shares and 15.0% if the Awards are Restricted Shares.
5. Administration.
(a) The Plan shall be administered by the Committee, which shall be
appointed by the Board and which shall consist of two or more members of the
Board. Each member of the Committee at all times during service as a member of
the Committee shall qualify with respect to the Plan as a "Non-Employee
Director" within the meaning of Rule 16b-3 under the Exchange Act and as an
"outside director" within the meaning of Section 162(m) of the Code. The
Committee shall have full power and authority to interpret and construe the
provisions of the Plan and of any Agreements under the Plan and make
determinations pursuant to any Plan provision or Agreement. Each
interpretation, determination or other action made or taken pursuant to the
Plan by the Committee shall be final, conclusive and binding on all persons.
(b) No member of the Committee shall be liable for anything whatsoever
in connection with the administration of the Plan except such member's own
willful misconduct. Under no circumstances shall any member of the Committee be
liable for any act or omission of any other member of the Committee. In the
performance of its functions with respect to the Plan, the Committee shall be
entitled to rely upon information and advice furnished by the Company's
officers, the Company's accountants, the Company's counsel and any other party
the Committee deems necessary, and no member of the Committee shall be liable
for any action taken or not taken in reliance upon any such advice.
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<PAGE>
6. Grant or Offer of Awards. The Committee shall, from time to time,
select and make grants of Awards or offers for the sale of Awards to
Participants.
7. Establishment of Performance Goals. Awards of Performance Shares
hereunder shall be based, and Awards of Restricted Shares hereunder may be
based (in the Committee's discretion), upon Performance Goals pre-established
by the Committee with respect to a Performance Period. The Performance Goals
shall be based on one or more of the following criteria to be attained by the
Company (or a subsidiary or division thereof): (i) total shareholder return,
(ii) Fair Market Value of a share of Common Stock, (iii) earnings before
interest and taxes, (iv) return on investment, (v) earnings per share, (vi)
return on equity, and (vii) earnings before interest, taxes, depreciation and
amortization. The Committee shall certify in writing that a Performance Goal
has been attained prior to payment of any Award based on such Performance Goal.
Performance Goals may be revised by the Committee, at such times as it deems
appropriate during the Performance Period, in order to take into consideration
any unforeseen events or changes in circumstances.
8. Agreement; Transferability of Awards.
(a) Agreement. The terms and conditions of each grant of Awards shall be
embodied in a written agreement (the "Agreement") in a form approved by the
Committee and delivered to the Participant as soon as practicable following the
Grant Date. The Agreement shall contain terms and conditions not inconsistent
with the Plan and which shall incorporate the Plan by reference. Each Agreement
shall: (a) state the Grant Date of the Award, the number of shares issuable in
connection with the Award or the number of Performance Shares, Free-Standing
Stock Appreciation Rights or Restricted Shares related to the Award, as the
case may be, as well as the exercisability, payment and other restrictions
applicable to the Award, as determined by the Committee, and (i) in the case of
Options (and any related Tandem Stock Appreciation Rights), the Option Price,
(ii) in the case of Restricted Shares, the purchase price, if any, for such
Restricted Shares, or (iii) in the case of Free-Standing Stock Appreciation
Rights, the Initial Value thereof and the maximum number of shares of Common
Stock that may be issued in connection therewith; (b) specify any applicable
vesting schedule; (c) in the case of Options, state whether the Option is
intended to qualify as an Incentive Stock Option; (d) provide that Restricted
Shares shall only be transferable after they vest and that, subject to Section
8(b) hereof, all other Awards shall not be transferable by the Participant
otherwise than by will or the laws of descent and distribution, by a qualified
legal representative in the event of disability or incompetence, or pursuant to
a qualified domestic relations order as such term is defined in the Code or
Title I of the Employee
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Retirement Income Security Act of 1974, as amended, or the rules thereunder,
and during the Participant's lifetime shall only be exercisable by or paid to
the Participant; (e) provide for the treatment of Awards in the event of the
termination of the Participant's employment; (f) provide such other additional
or alternative terms as may, in the Committee's discretion, be advisable to
comply with the exemptive relief provided by Rule 16b-3 under the Exchange Act;
(g) provide such other terms and conditions, not inconsistent with the Plan, as
the Committee may deem advisable; and (h) be signed by the recipient of the
Award and a person designated by the Committee.
(b) Transferability. Notwithstanding Section 8(a) hereof, the Committee
may, subject to such terms and conditions as the Committee shall specify,
permit the transfer of an Award to a Participant's family members or to one or
more trusts, partnerships or corporations established in whole or in part for
the benefit of one or more of such family members; provided, further, that the
restrictions in this sentence shall not apply to shares of Common Stock
received in connection with an Award after the date that the restrictions on
transferability of such shares set forth in the applicable Agreement have
lapsed. During the lifetime of the Participant, an Option, Stock Appreciation
Right or similar-type of Award shall be exercisable only by the Participant or
by the family member or trust to whom such Option, Stock Appreciation Right or
other Award has been transferred in accordance with the previous sentence.
9. Terms of Options.
(a) Terms of Options Generally. Options may be granted to any
Participant to purchase such number of shares of Common Stock and having such
terms as the Committee shall determine in exchange for payment of the Option
Price in cash, or, in the discretion of the Committee and to the extent
provided in the applicable Agreement, in shares of Common Stock already owned
by the Participant, through withholding of Common Stock subject to the Option
with a value equal to the exercise price, in other property acceptable to the
Committee or in any combination of cash, shares of Common Stock or such other
property, or such other manner of settlement of the Option Price as the
Committee shall determine. Options granted under the Plan shall comply with the
terms and conditions set forth in this Section 9.
(i) Vesting. Each Option shall vest and become exercisable as determined
by the Committee and as set forth in the applicable Agreement.
(ii) Duration of Options. Each Option shall be effective for such term
as shall be determined by the Committee and set forth in the Agreement;
provided, however, that no Option shall be exercisable beyond the tenth
anniversary of the Grant Date of such Option.
6
<PAGE>
(iii) Exercise Price. The price at which shares of Common Stock may be
purchased under an Option shall not be less than 100% of the Fair Market
Value of the Common Stock on the Grant Date.
(iv) Incentive Stock Options Granted to Certain Shareholders. No
Incentive Stock Option may be issued pursuant to the terms of the Plan to
any individual who, at the time the Option is granted, owns stock
possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any of its subsidiaries, unless (A) the Option
Price determined as of the Grant Date is at least 110% of the Fair Market
Value on the Grant Date of the shares of Common Stock subject to such
Option, and (B) the Incentive Stock Option is not exercisable more than
five years from the Grant Date thereof.
(b) Effect of Exercise on Related Tandem Stock Appreciation Rights. The
exercise of an Option shall result in the cancellation of any related Tandem
Stock Appreciation Rights on a share-for-share basis.
(c) Limitation on Exercise. The Option shall not be exercisable unless
the offer and sale of the Common Stock subject to the Option has been
registered under the Securities Act, or the Company has determined that an
exemption from registration under the Securities Act is available and
applicable to the offer and sale of the Common Stock subject to the Option.
(d) Delivery of Certificate. As soon as practicable following the
exercise of an Option, a certificate in the Participant's name evidencing the
appropriate number of shares of Common Stock issued in connection with such
exercise shall be delivered to the Participant.
10. Terms of Stock Appreciation Rights.
(a) Terms of Stock Appreciation Rights Generally. Each Stock
Appreciation Right granted under the Plan shall comply with the terms and
conditions set forth in this Section 10.
(i) Grants of Stock Appreciation Rights. Each Tandem Stock Appreciation
Right shall relate to a specific Option granted under the Plan and in the
case of Incentive Stock Options may be granted only concurrently with the
Option to which it relates. In the case of Non-qualified Stock Options,
Tandem Stock Appreciation Rights may be granted at any time prior to the
exercise, termination or expiration of such Option. Free-Standing Stock
Appreciation Rights may be granted by the Committee at any time to any
Participant.
(ii) Vesting, Exercise and Duration of Stock Appreciation Rights. A
Tandem Stock Appreciation Right shall be exercisable by a Participant only
at such times as the Option to which it relates
7
<PAGE>
may be exercised, shall be forfeited when the related Option is forfeited
and may expire no later than the expiration of the related Option. Each
Free-Standing Stock Appreciation Right shall vest and become exercisable
as determined by the Committee and as set forth in the applicable
Agreement.
(iii) Value of Stock Appreciation Rights. A vested Stock Appreciation
Right shall entitle a Participant to receive from the Company, upon
exercise of the right, an amount (payable in the manner described in
Section 10(c) hereof) equal to the Fair Market Value on the exercise date
of the Stock Appreciation Right of the total number of shares of Common
Stock for which the Stock Appreciation Right is exercised, less (A) in the
case of Tandem Stock Appreciation Rights, the Option Price that the
Participant would have otherwise been required to pay to purchase such
shares had the Option been exercised with respect to such shares, or (B)
in the case of a Free-Standing Stock Appreciation Right, the Initial
Value.
(iv) Number of Shares Covered by a Tandem Stock Appreciation Right. In
no case may the number of shares of Common Stock covered by a Tandem Stock
Appreciation Right exceed the number of shares of Common Stock covered by
the related Option.
(b) Effect of Exercise of Tandem Stock Appreciation Right on Related
Option. The exercise of a Tandem Stock Appreciation Right shall automatically
result in the cancellation of the related Option on a share-for-share basis,
and the shares of Common Stock which were related to such Option shall not
again be available for future grants or sales of Awards.
(c) Payment. Payment to a Participant upon the exercise of a Stock
Appreciation Right shall be made as soon as practicable following such exercise
and, in the discretion of the Committee, may be made in cash, in shares of
Common Stock or a combination of cash and shares of Common Stock; provided,
however, that payment shall not be made in Common Stock unless the Common Stock
has been registered under the Securities Act, or the Company has determined
that an exemption under such Act is available and applicable to such exercise
and payment in Common Stock.
(d) Delivery of Certificate. As soon as practicable following the
exercise of a Stock Appreciation Right that is paid in whole or part in Common
Stock, a certificate evidencing the appropriate number of shares of Common
Stock issued in connection with such exercise shall be delivered to the
Participant.
11. Terms of Performance Shares.
(a) Terms of Performance Shares Generally. Performance Shares may be
granted to any Participant. The Performance Shares granted hereunder shall
comply with the terms and conditions set forth in this Section 11.
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<PAGE>
(i) Measurement of Value of Performance Shares. A vested Performance
Share shall entitle the Participant to receive from the Company, on such
date as the Committee may determine in its discretion and as set forth in
the applicable Agreement, the value of the number of shares of Common
Stock determined with reference to attaining Performance Goals for a
Performance Period as set forth in the applicable Agreement.
(ii) Vesting. Each Performance Share shall vest as determined by the
Committee and as set forth in the applicable Agreement, but in no event
less than one year from the Grant Date.
(b) Payment. Payment to a Participant with respect to a Performance
Share shall be made in the discretion of the Committee, in shares of Common
Stock, cash, or a combination of cash and shares of Common Stock; provided,
however, that payment shall not be made in Common Stock unless the Common Stock
has been registered under the Securities Act in connection therewith, or the
Company has determined that an exemption under such Act is available and
applicable to such exercise and payment in Common Stock.
(c) Delivery of Certificate. Upon payment of a Performance Share that is
paid in whole or part in Common Stock, a certificate evidencing the appropriate
number of shares of Common Stock issued in connection with such exercise shall
be delivered to the Participant.
12. Terms of Restricted Shares.
(a) Terms of Restricted Shares Generally. Restricted Shares may be
granted or offered for sale to any Participant, may be granted solely in
consideration for services rendered or to be rendered to the Company, or its
subsidiaries or affiliates, and may also be granted in substitution and
exchange for restricted property (within the meaning of Section 83 of the Code)
held by a Participant. If Restricted Shares are offered for sale hereunder, the
purchase price shall be payable in cash, or, in the discretion of the Committee
and to the extent provided in the applicable Agreement, in shares of Common
Stock already owned by the Participant, in other property or in any combination
of cash, shares of Common Stock or such other property. The Restricted Shares
granted or offered for sale under the Plan shall comply with the terms and
conditions set forth in this Section 12.
(b) Purchase Price; Offering Period. Restricted Shares offered for sale
shall be sold at a purchase price determined at the time of offering by the
Committee in its discretion and as set forth in the applicable Agreement.
(c) Delivery of Certificate. At the time of grant or sale of Restricted
Shares to a Participant, a certificate evidencing the appropriate number of
shares of Common Stock granted or sold to the Par-
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<PAGE>
ticipant as Restricted Shares shall be issued in the Participant's name but
shall be subject to a substantial risk of forfeiture within the meaning of
Section 83 of the Code and shall be held by the Company for the account of the
Participant until such time as such Restricted Shares vest hereunder. Upon such
vesting, the certificate evidencing such shares shall be delivered to the
Participant.
(d) Vesting. Each Restricted Share shall vest as determined by the
Committee and as set forth in the applicable Agreement, but in no event less
than three years from the Grant Date. Notwithstanding the foregoing, the
vesting of each Restricted Share which is subject to the attainment of
Performance Goals for the relevant Performance Period established by the
Committee shall not vest in less than one year.
13. Certain Adjustments.
(a) Effect of Reorganization. Subject to the provisions of Section 14
hereof, in the event that (i) the Company is merged or consolidated with
another corporation, (ii) all or substantially all the assets of the Company
are acquired by another corporation, person or entity, (iii) the Company is
reorganized, dissolved or liquidated, or (iv) the division or subsidiary for
which a Participant performs services is sold, merged, consolidated,
reorganized or liquidated (each such event in (i), (ii), (iii) or (iv) being
hereinafter referred to as a "Reorganization Event"), or (v) the Board shall
propose that the Company enter into a Reorganization Event, then the Committee
shall (A) make appropriate adjustment in the number and kind of Common Stock
reserved for Awards that may be granted or offered pursuant to the Plan, and
(B) with respect to then outstanding Awards, make appropriate adjustments to
provide each Participant with a benefit equivalent to that which he/she would
have been entitled to had such Reorganization Event not occurred.
(b) Dilution and Other Adjustments. In the event of a stock dividend,
stock split, recapitalization, exchange of shares, warrants or rights offering
to purchase Common Stock at a price substantially below fair market value or
other similar event affecting the Common Stock, the Committee shall adjust the
number and kind of Common Stock reserved for Awards that may be granted or
offered pursuant to the Plan, and shall make any or all of the following
adjustments that in its discretion it deems necessary or advisable to provide
each Participant with a benefit equivalent to that to which he/she would have
been entitled had such event not occurred: (i) adjust the number of Awards
granted or offered to each Participant and the number of Awards that may be
granted or offered generally pursuant to the Plan, (ii) adjust the Option Price
of any Options and the Initial Value of any Stock Appreciation Rights, and
(iii) make any other adjustments, or take such action, as the Committee, in its
discretion, deems appropriate. Such adjustments shall be conclusive and binding
for all purposes. Unless
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otherwise determined by the Committee, such adjustments shall be subject to the
same vesting schedule and restrictions to which the underlying Award is
subject. No fractional shares of Common Stock shall be reserved or authorized
by any such adjustment. In the event of a change in the Common Stock which is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par value
to no par value, without increase or decrease in the number of issued shares,
the shares resulting from any such change shall be deemed to be Common Stock
within the meaning of the Plan.
14. Change of Control.
(a) Notwithstanding any other provision of the Plan or any Agreement,
the Committee shall have the authority in its discretion to provide for the
accelerated vesting and/or payment of Awards (with or without regard to the
achievement of Performance Goals) in the event of a Change of Control or in the
event of a determination by the Committee that a Change of Control may occur.
(b) For purposes of this Section 14, "Change of Control" means that any
of the following events shall have occurred:
(i) The Company is merged or consolidated or reorganized into or with
another corporation, person or entity, and as a result of such merger,
consolidation or reorganization less than a majority of the combined
voting power of the then outstanding securities of such corporation,
person or entity immediately after such transaction are held in the
aggregate by the holders of Voting Stock (as that term is hereafter
defined) of the Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or substantially all
of its assets to any other corporation, person or entity, and less than a
majority of the combined voting power of the then-outstanding securities
of such corporation, person or entity immediately after such sale or
transfer is held in the aggregate by the holders of Voting Stock of the
Company immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 of the
Exchange Act by a person other than a person that satisfies the
requirements of Rule 13d-1(b)(1) under the Exchange Act for filing such
report on Schedule 13G, which report as filed discloses that any person
(as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) has become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 under the Exchange Act) of securities
representing 12.5% or more of the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
Directors of the Company ("Voting Stock");
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(iv) The Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A that a change in control of the
Company has or may have occurred or will or may occur in the future
pursuant to any then-existing contract or transaction; or
(v) If during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Directors of the Company
cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's stockholders, of
each Director of the Company first elected during such period was approved
by a vote of at least two-thirds of the Directors of the Company then
still in office who were Directors of the Company at the beginning of any
such period.
Notwithstanding the foregoing provisions of Clause (iii) or (iv) hereof,
a "Change of Control" shall not be deemed to have occurred for purposes of
the Plan solely because (x) the Company, (y) an entity in which the
Company directly or indirectly beneficially owns 50% or more of the voting
securities, or (z) any Company-sponsored employee stock ownership plan or
any other employee benefit plan of the Company (or any trustee of any such
plan on its behalf), either files or becomes obligated to file a report or
a proxy statement under or in response to Schedule 13D, Schedule 14D-1, or
Form 8-K or Schedule 14A under the Exchange Act, disclosing beneficial
ownership by it of shares of Voting Stock, whether in excess of 12.5% or
otherwise, or because the Company reports that a Change of Control of the
Company has or may have occurred or will or may occur in the future by
reason of such beneficial ownership.
15. Amendment of the Plan. The Board may at any time and from time to time
modify, amend, suspend or terminate the Plan in whole or in part; provided,
however, that any amendment which is required by law (including the Code) or by
the rules of any stock exchange upon which shares of Common Stock are traded
which require shareholder approval thereof shall not be effective unless and
until such shareholder approval has been obtained in compliance with such rule
or law. No termination, modification or amendment of the Plan may, without the
consent of the Participant to whom an Award has been granted, adversely affect
the rights of such Participant under such Award.
16. Termination. Unless previously terminated pursuant to Section 15
hereof, the Plan shall terminate on the fifth anniversary of the date of
stockholder approval of the Plan, and no further Awards may be granted
hereunder after such date. Awards then outstanding may continue to be
exercised, vest or be paid in accordance with their terms.
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17. Use of Proceeds. The proceeds received by the Company from the sale of
Common Stock pursuant to the sale or exercise of Awards under the Plan shall be
added to the Company's general funds and used for general corporate purposes.
18. Miscellaneous.
(a) No Rights to Grants or Continued Service. Except as expressly
provided for in the Plan, no Participant shall have any claim or right to be
granted an Award under the Plan, nor shall any Participant have a right to
receive payment of an Award in any form other than as the Committee shall
approve. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company.
(b) No Restriction on Right of Company to Effect Corporate
Changes. Nothing in the Plan shall affect the right or power of the Company or
its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of stock, options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to
or affect the Common Stock or the rights thereof or which are convertible into
or exchangeable for Common Stock, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
(c) Governing Law. The Plan, and all agreements entered into under the
Plan shall be construed in accordance with and governed by the internal laws of
the State of Delaware.
(d) Withholding. As a condition to the making of any Award, the vesting
or payment of any Award or the lapse of the restrictions pertaining thereto,
the Company may, in the discretion of the Committee, require the Participant to
pay such sum to the Company as may be necessary to discharge the Company's
obligations with respect to any taxes, assessments or other governmental
charges imposed on property or income received by a Participant pursuant to the
Plan. In the discretion of the Committee, such payment may be in the form of
cash or other property. In the discretion of the Committee, the Company may
make available for delivery a lesser number of shares, in satisfaction of such
taxes, assessments or other governmental charges. At the discretion of the
Committee, the Company may deduct or withhold from any payment or distribution
to a Participant whether or not pursuant to the Plan. In the discretion of the
Committee, the Company may offer loans to Participants to satisfy withholding
requirements on such terms as the Committee may determine, which loans may be
non-interest bearing.
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(e) Shareholder Rights. A Participant shall not have any dividend,
voting or other stockholder rights by reason of any Award prior to the
Participant becoming the record holder on the books of the Company of shares of
Common Stock pursuant to such Award, and no adjustment shall be made for
dividends or distributions or other rights in respect of any share for which
the record date is prior to the date upon which the Participant shall become
the holder of record thereof; provided, however, that a Participant shall have
all rights of a shareholder as to any Restricted Shares sold or granted to
him/her (except for any applicable risk of forfeiture and restrictions on
transferability), including the right to receive dividends and the right to
vote for directors and upon other matters in accordance with the Company's
Certificate of Incorporation; and provided, further, that the Participant shall
not have the right to transfer, sell, hypothecate, pledge or otherwise alienate
any unvested Restricted Shares.
(f) Headings. The headings of Sections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.
November 5, 1998
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[LOGO] BURLINGTON INDUSTRIES, INC.
Proxy for Annual Meeting of Stockholders
February 4, 1999
The undersigned hereby (a) appoints Alice Washington Grogan and Robert A.
Wicker, and each of them, proxies with full power of substitution, to vote the
stock the undersigned is entitled to vote at the 1999 Annual Meeting of
Stockholders of Burlington Industries Inc. to be held at the offices of the
Corporation, 3330 West Friendly Avenue, Greensboro, North Carolina, on February
4, 1999, and at any adjournment therof, with all the powers the undersigned
would possess if personally present as specified on the reverse side of this
card on proposals 1, 2 and 3, and in their discretion upon any other matters
that may properly come before the meeting and any adjournment thereof and (b)
directs the Trustee of the Employee Stock Ownership Plan (ESOP) to vote all of
the shares allocated to the undersigned's ESOP account at such 1999 Annual
Meeting of Stockholders, and at any adjournment thereof, as specified on the
reverse side of this card on proposals 1, 2 and 3, and in the Trustee's
discretion upon any other matters that may properly come before the meeting and
any adjournment thereof. If the Trustee does not receive the undersigned's
voting instructions by 5:00 p.m. EST on February 3, 1999, the Trustee will not
vote the shares allocated to the undersigned's ESOP account.
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 items 2 and 3.
PLEASE VOTE, SIGN AND DATE THIS PROXY ON
THE REVERSE SIDE AND RETURN IT IN THE
ENCLOSED ENVELOPE.
Thank you for your prompt response.
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The Board of Directors Recommends a vote FOR Proposals 1, 2 and 3
1. Election of Directors
Nominees: George W. Henderson, III, David I. Margolis and W. Barger Tygart
[ ] For all nominees [ ] WITHHOLD AUTHORITY [ ] FOR, except withhold vote
to vote for all from the following
nominees nominee(s)_______________
2. Approval of the Burlington Industries, Inc. 1998 Equity Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the selection of Ernst & Young LLP as independent public
accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
I plan to attend the Annual Meeting of
Stockholders on February 4, 1999.
[ ] YES [ ] NO
-------------------------------------------
(Signature)
-------------------------------------------
(Signature)
Date:______________________________, 199__
IMPORTANT: Please sign exactly as name
appears 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.
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