<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
FOAMEX INTERNATIONAL INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
FOAMEX
FOAMEX INTERNATIONAL INC.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
DEAR STOCKHOLDERS:
On behalf of the Board of Directors, it is my pleasure to invite you to attend
the 1997 Annual Meeting of Stockholders which will be held on Thursday, May 22,
1997, at 10:30 a.m., local time, at the Company's offices, 1000 Columbia Avenue,
Linwood, Pennsylvania. All holders of the Company's outstanding common stock as
of April 14, 1997 are entitled to vote at the Annual Meeting.
The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
describe the formal business to be transacted at the Annual Meeting. Directors
and Officers will be present at the Annual Meeting to respond to any questions
you may have.
Please sign, date and return the enclosed Proxy Card in the envelope provided as
soon as possible so that your shares can be voted at the meeting in accordance
with your instructions. If you plan to attend the meeting, please mark the box
on the Proxy Card.
Very truly yours,
/s/ Marshall S. Cogan
MARSHALL S. COGAN
CHAIRMAN OF THE BOARD
<PAGE>
FOAMEX INTERNATIONAL INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
------------------------
The Annual Meeting of Stockholders of Foamex International Inc., a Delaware
corporation (the "Company"), will be held at the offices of the Company, 1000
Columbia Avenue, Linwood, Pennsylvania 19061, on Thursday, May 22, 1997, at
10:30 a.m., local time, for the purpose of considering and acting upon the
following matters, which are described more fully in the accompanying Proxy
Statement.
(a) To elect seven directors to serve until the 1998 annual meeting of
stockholders or until their respective successors are duly elected and
qualified;
(b) To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the year ending December 28, 1997 ("Fiscal
1997"); and
(c) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of Common Stock of record at the close of business on April 14, 1997
(the "Record Date") are entitled to vote at the Annual Meeting and any
adjournment thereof. A list of stockholders of the Company as of the Record Date
will be available for inspection during business hours through May 21, 1997, at
the Company's offices, 1000 Columbia Avenue, Linwood, Pennsylvania 19061, and
will also be available for inspection at the Annual Meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED FOR
YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. ANY STOCKHOLDER PRESENT
AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY, AND VOTE PERSONALLY ON ALL
MATTERS BROUGHT BEFORE THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ Philip N. Smith, Jr.
PHILIP N. SMITH, JR.
SECRETARY
<PAGE>
FOAMEX INTERNATIONAL INC.
1000 COLUMBIA AVENUE
LINWOOD, PENNSYLVANIA 19061
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Foamex International Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held on Thursday, May 22, 1997, at
10:30 a.m., local time, at the offices of the Company, 1000 Columbia Avenue,
Linwood, Pennsylvania 19061, or at any adjournment or postponement thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. It is expected that the Notice of Annual Meeting of Stockholders,
this Proxy Statement and the enclosed proxy card will be mailed to stockholders
entitled to vote at the Annual Meeting commencing on or about May 2, 1997.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Foamex International Inc., Investor
Relations, 375 Park Avenue, 11th Floor, New York, New York 10152, (212)
230-0400. To provide the Company sufficient time to arrange for reasonable
assistance, please submit all requests by May 15, 1997.
RECORD DATE AND VOTING SECURITIES
Stockholders can ensure that their shares are voted at the Annual Meeting by
signing and returning the enclosed proxy card in the envelope provided. The
submission of a signed proxy will not affect a stockholder's right to attend the
Annual Meeting and vote in person. Stockholders who execute proxies retain the
right to revoke them at any time before they are voted by filing with the
Secretary of the Company a written revocation or a proxy bearing a later date.
The presence at the Annual Meeting of a stockholder who has signed a proxy does
not itself revoke that proxy unless the stockholder attending the Annual Meeting
files written notice of revocation of the proxy with the Secretary of the
Company at any time prior to the voting of the proxy.
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted FOR the proposals submitted for
approval. The proxy card provides space for a stockholder to withhold voting for
any or all nominees to the Board of Directors or to abstain from voting for any
proposal if the stockholder chooses to do so. For purposes of determining the
number of votes cast with respect to any voting matter, only those cast "for" or
"against" are included. Abstentions and broker non-votes are counted only for
purposes of determining whether a quorum is present at the Annual Meeting.
The Board of Directors has fixed the close of business on April 14, 1997 as
the record date (the "Record Date") for the determination of the stockholders of
the Company who are entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on the Record Date, the Company had
outstanding 25,341,100 shares of common stock, par value $0.01 per share (the
"Common Stock"), excluding treasury shares.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the issued and outstanding Common Stock is necessary to constitute
a quorum. The holders of Common Stock are entitled to one vote for each share
held on the Record Date.
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors is responsible for the management and direction of
the Company and for establishing broad corporate policies. The Board of
Directors held two meetings during the year ended December 29, 1996 ("Fiscal
1996") and acted by written consent five times. No director attended less than
75% of the board and committee meetings scheduled during Fiscal 1996. On March
7, 1997, Carl Spielvogel resigned as a director of the Company. Additionally, on
April 21, 1997, John Rallis announced his retirement from the Company and his
resignation as a director of the Company, effective as of May 22, 1997. In
connection with the resignations of Mr. Spielvogel and Mr. Rallis, the Board of
Directors of the Company will reduce the number of directors constituting the
entire Board from nine to seven members.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has four standing committees: the Executive
Committee, the Audit Committee, the Compensation Committee and the Stock Option
Plan Committee. The Company does not have a standing committee on nominations.
The principal responsibilities of each committee are described in the following
paragraphs.
EXECUTIVE COMMITTEE. The Executive Committee held no meetings in Fiscal
1996. It is currently comprised of Marshall S. Cogan, who serves as its
Chairman, Robert J. Hay, Andrea Farace and John Rallis. Mr. Farace was appointed
to the Executive Committee on March 10, 1997. On May 22, 1997, Mr. Rallis will
resign as a member of the Executive Committee and Salvatore J. Bonanno will be
appointed to the Executive Committee. The Executive Committee's primary function
is to assist the Board of Directors by acting upon matters when the board is not
in session. The Executive Committee has the full power and authority of the
Board, except to the extent limited by law or the Company's Restated Certificate
of Incorporation or By-laws.
AUDIT COMMITTEE. The Audit Committee held one meeting in Fiscal 1996. It is
comprised of Etienne Davignon, who serves as its Chairman, Mr. Hay and John V.
Tunney, all of whom are non-employee directors. The Audit Committee is
responsible for overseeing the Company's financial reporting process. The Audit
Committee consults with management and the Company's independent accountants
during the year on matters related to the annual audit, internal controls, the
published financial statements, and the accounting principles and auditing
procedures being applied. The Audit Committee also recommends a firms of
certified independent accountants to serve as the Company's independent
accountants, authorizes all audit fees and other professional services rendered
by the accountants and periodically reviews the independence of the accountants.
COMPENSATION COMMITTEE. The Compensation Committee held two meetings during
Fiscal 1996. It is comprised of Mr. Tunney, who serves as its Chairman and
Stuart J. Hershon, both of whom are nonemployee directors. Prior to his
resignation, Mr. Spielvogel was also a member of the Compensation Committee. The
Compensation Committee reviews and recommends to the Board of Directors the
compensation to be paid to the executive officers of the Company.
STOCK OPTION PLAN COMMITTEE. The Stock Option Plan Committee is comprised
of Mr. Tunney, who serves as its Chairman, and Mr. Hershon. The Stock Option
Plan Committee administers and makes awards under Company's Stock Option Plan.
The Stock Option Plan Committee held two meetings during Fiscal 1996.
COMPENSATION OF DIRECTORS
In 1993, the Company instituted the Foamex International Inc. Non-Employee
Director Compensation Plan (the "NonEmployee Plan"), to provide compensation to
its non-employee directors (the "Outside Directors"). Pursuant to the
NonEmployee Plan, each Outside Director receives an annual retainer of $50,000,
payable in cash or Common Stock and a $1,000 fee for each meeting of the Board
of
2
<PAGE>
Directors attended by such Outside Director. In addition, for serving on a
committee of the Board of Directors, each Outside Director receives a $1,000 fee
for each meeting of such committee attended by such Outside Director and Outside
Directors who serve as Chairman of a Committee receive an additional fee of
$1,000 per meeting attended. Currently, there are four Outside Directors of the
Company and four employee directors and, effective May 22, 1997, there will be
four Outside Directors and three employee directors. Mr. Hay, who was previously
employed by the Company, retired in December 1995, and is now considered to be
an Outside Director. All directors are entitled to reimbursement for their
reasonable out-of-pocket expenses in connection with their travel to and
attendance at meetings of the Board of Directors or committees thereof.
Directors who are also employees of the Company or its subsidiaries receive no
cash compensation for serving as Directors or as members of Board committees.
ELECTION OF DIRECTORS
The Company has only one class of directors who will be elected at each
annual meeting of stockholders. Seven directors have been nominated by the Board
of Directors for re-election and to serve in such capacity for a term of one
year until the 1998 Annual Meeting of Stockholders and until their successors
have been duly elected and qualified.
Unless otherwise specified in the proxy, it is the intention of the persons
named in the proxies solicited by the Board of Directors to vote FOR the seven
nominees whose biographies are set forth below. If events not now known or
anticipated make any of the nominees unable to serve, the proxies will be voted,
at the discretion of the holders thereof, for other nominees supported by the
Board of Directors in lieu of those unable to serve.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
OCCUPATION AGE AND BIOGRAPHICAL INFORMATION
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
SALVATORE J. BONANNO................ Salvatore "Sam" J. Bonanno, 56, has been Executive Vice President of
Vice President of Manufacturing, Manufacturing, Corporate Planning of the Company and President of Foamex
Corporate Planning of the Company, L.P., a Delaware limited partnership and a subsidiary of the Company
and President of Foamex L.P. engaged in the foam business ("Foamex L.P."), since July 1995 and director
of the Company since February 1996. Effective May 30, 1997, Mr. Bonanno
will begin serving as President of the Company. Prior to joining the
Company, Mr. Bonanno was employed with Chrysler Corporation for thirty
years, most recently serving as the General Manger of International
Manufacturing Operations. Mr. Bonanno currently serves on the Industrial
Advisory Board of Lawrence Livermore National Laboratories.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
MARSHALL S. COGAN................... Marshall S. Cogan, 59, has been the Chairman of the Board and Chairman of
Chairman of the Board and Chief the Executive Committee of the Company since its inception in September
Executive Officer of the Company 1993 and Chief Executive Officer since January 1994. Effective May 30,
and Chairman and Chief Executive 1997, Mr. Cogan will resign as Chairman and Chief Executive Officer of the
Officer of Trace International Company and Foamex L.P. and will begin serving as Vice Chairman of the
Holdings, Inc. Company. Mr. Cogan served as Vice Chairman of Foamex L.P. from January 1993
until January 1994 and has served as Chairman and Chief Executive Officer
of Foamex L.P. since January 1994. Mr. Cogan has been a director of Trace
Foam Company, Inc. ("Trace Foam"), since December 1991 and the Chairman of
the Board and President of Trace Foam and its wholly-owned subsidiary Trace
Foam Sub, Inc. ("Trace Foam Sub"), since January 1992 and March 1995,
respectively. Mr. Cogan has been the principal stockholder, Chairman or
Co-Chairman of the Board and Chief Executive Officer or Co-Chief Executive
Officer of Trace International Holdings, Inc. ("Trace Holdings"), since
1974. He has also been a member of the Board of Directors of United Auto
Group, Inc. ("UAG"), an affiliate of Trace Holdings, since November 1990,
and of Recticel s.a. ("Recticel") since February 1993. On April 17, 1997,
Mr. Cogan became the Chairman and Chief Executive Officer of UAG.
Additionally, Mr. Cogan serves on the Board of Directors of the American
Friends of the Israel Museum and the American Ballet Theater, the Board of
Trustees of The Museum of Modern Art, the Boston Latin School and New York
University Medical Center. Mr. Cogan also serves on several committees of
Harvard University.
ETIENNE DAVIGNON.................... Etienne Davignon, 64, has been a director of the Company since December
Chairman of Societe General de 1993. Mr. Davignon has been the Chairman of Societe Generale de Belgique, a
Belgique Belgian bank and holding company, and a director of it subsidiary Recticel
since April 1989. Mr. Davignon was a Vice President of the EEC Commission
in charge of industry, research and energy from 1977 through 1984. He was
the first President of the International Energy Agency. Mr. Davignon
currently serves as a director of, among other companies, Generale de
Banque s.a., Gilead Sciences, Compagnie de Suez s.a., Solvay s.a. and
Kissinger Associates. Mr. Davignon also serves as a member of the
International Advisory Board of Fiat S.p.A. He is the Chairman of the
Association for the Monetary Union of Europe, the Paul-Henri Spaak
Foundation and the Royal Institute for International Relations and is a
member of the European Roundtable of Industrialists, chairing the working
group on Trade and Investment.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
ANDREA FARACE....................... Andrea Farace, 41, has been a director of the Company since February 1996.
President of Trace International Mr. Farace has been President and a director of Trace Holdings since
Holdings, Inc. December 1994 and December 1993, respectively. Effective May 30, 1997, Mr.
Farace will begin serving as Chairman and Chief Executive Officer of the
Company and Foamex L.P. Prior to December 1993, Mr. Farace held several
executive positions within Trace Holdings beginning in April 1991. Mr.
Farace was Senior Executive of C.I.R S.p.A. from May 1990 to March 1991.
Prior to that, Mr. Farace was a Managing Director at Shearson Lehman
Hutton, Inc. Mr. Farace is a director of Trace Foam and CHF Industries,
Inc., both of which are subsidiaries of Trace Holdings as well as Atlantic
Auto Finance, Inc., an affiliate of Trace Holdings, and General Felt
Industries, Inc. ("General Felt") and Foamex Capital Corporation, both of
which are subsidiaries of the Company. Additionally, Mr. Farace is a
director of the Managed High Income Portfolio, Inc. and a member of the
Advisory Board of the Italy Fund, both of which are NYSE-listed mutual
funds.
ROBERT J. HAY....................... Robert J. Hay, 71, has been the Chairman Emeritus and a director of the
Chairman Emeritus Company since its inception in September 1993. Mr. Hay served as Chairman
and Chief Executive Officer of Foamex L.P. from January 1993 until January
1994. Mr. Hay was President of Foamex L.P. and its predecessor from 1972
through 1992. Mr. Hay began his career as a chemist with The Firestone Tire
and Rubber Company, a predecessor of Foamex L.P., in 1948.
STUART J. HERSHON................... Stuart J. Hershon, 59, has been a director of the Company since December
Orthopedic Surgeon 1993. He was a member of the Board of Directors of Trace Holdings from
April 1986 until May 1994. He is a board certified, practicing orthopedic
surgeon at North Shore University Hospital and at Columbia Presbyterian
Medical Center in New York where he is an assistant clinical professor of
orthopedic surgery. Dr. Hershon has served as orthopedic consultant and
team physician for certain New York area professional sports teams.
JOHN V. TUNNEY...................... John V. Tunney, 62, has been a director of the Company since May 1994. He
Chairman of the Board of has been Chairman of the Board of Cloverleaf Group, Inc., an investment
Cloverleaf Group, Inc. company, since 1981, President of John V. Tunney & Associates, Inc. since
1991 and Chairman of the Board of Logan Manufacturing Company since 1993.
Mr. Tunney has served as Vice Chairman of the Board of the Corporate Fund
for Housing since 1988. Mr. Tunney served as a U.S. Senator from the State
of California from 1971 until 1977. Prior to that, Mr. Tunney served as a
member of Congress from the 38th district of California from 1965 until
1971. Mr. Tunney currently serves as a member of the Board of Directors of
the Prospect Group, Inc., Garnet Resources Corporation, Illinois Central
Railroad Corp. Enterprise Plan, Inc. and The Forschner Group.
</TABLE>
VOTE REQUIRED
The affirmative vote of a plurality of the shares of Common Stock present or
represented at the Annual Meeting and entitled to vote is required for the
election of directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE NOMINEES
LISTED ABOVE.
5
<PAGE>
OWNERSHIP OF COMMON STOCK OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 14, 1997,
regarding the beneficial ownership of Common Stock by (i) each stockholder who
is known by the Company to own more than 5% of the outstanding shares of Common
Stock, (ii) each director, (iii) each executive office named in the Summary
Compensation Table and (iv) all directors and executive officers as a group.
Except as otherwise indicated, each stockholder has (i) sole voting and
investment power with respect to such stockholder's shares of stock, except to
the extent that authority is shared by spouses under applicable law and (ii)
record and beneficial ownership with respect to such stockholder's shares of
stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)(2)(3)
---------------------------------------
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNERS SHARES % OF CLASS OUTSTANDING
- ---------------------------------------------------------------------------- ------------ -------------------------
<S> <C> <C>
Trace International Holdings, Inc. (2)...................................... 11,349,900 44.8
375 Park Avenue, 11th Floor
New York, New York 10152
Trace Foam Sub, Inc. (2).................................................... 7,000,247 27.6
375 Park Avenue, 11th Floor
New York, New York 10152
Lion Advisors, L.P. (4)..................................................... 3,347,421 13.2
1301 Avenue of the Americas
New York, New York 10019
Apollo Advisors, L.P. (4)................................................... 3,347,421 13.2
2 Manhattanville Road
Purchase, New York 10577
Marshall S. Cogan (2)....................................................... 11,907,400 46.7
Salvatore J. Bonanno (5).................................................... 45,796 *
Barry Zimmerman............................................................. 15,305 *
Theodore J. Kall............................................................ 4,853 *
Philip N. Smith, Jr. (5).................................................... 14,094 *
Etienne Davignon............................................................ 15,892 *
Robert J. Hay............................................................... 8,429 *
Andrea Farace............................................................... 9,028 *
Stuart J. Hershon (6)....................................................... 31,402 *
John Rallis................................................................. 359,813 1.4
John V. Tunney (7).......................................................... 15,200 *
All executive officers and directors as a group
(17 persons) (2)(5)(6)(7)................................................. 12,464,072 48.7
</TABLE>
- ------------------------
* Less than 1%
(1) Each named person is deemed to be the beneficial owner of securities which
may be acquired within sixty days through the exercise of options, warrants
and rights, if any, and such securities are deemed to be outstanding for the
purpose of computing the percentage of the class beneficially owned by such
person. However, any such shares are not deemed to be outstanding for the
purpose of computing the percentage of the class beneficially owned by any
other person, except as noted.
(2) Trace Foam Sub is wholly-owned by Trace Foam, which, in turn, is
wholly-owned by Trace Holdings. The number of shares beneficially owned by
Trace Holdings includes the shares beneficially owned by Trace Foam Sub.
Additionally, 50,000 shares of the Common Stock reported herein are held in
trust for the exclusive benefit of participants under the Trace
International Holdings, Inc. Retirement Plan for Salaried Employees.
Marshall S. Cogan, Chairman of the Board and President of each of Trace
6
<PAGE>
Foam Sub and Trace Foam, is the Chairman of the Board, Chief Executive
Officer and majority stockholder of Trace Holdings. Mr. Cogan disclaims
beneficial ownership of the Common Stock owned by Trace Foam Sub or Trace
Holdings.
(3) Prior to the sale of JPS Automotive L.P. ("JPS Automotive") to Collins &
Aikman Products Co. On December 11, 1996 (the "JPS Automotive Sale"), JPS
Automotive was a subsidiary of the Company. Prior to the JPS Automotive
Sale, Jerry A. Burns and Dean C. Gaskins were executive officers of the
Company. Mr. Burns and Mr. Gaskins are not listed in the table since each,
to the best of the Company's knowledge, does not beneficially own any shares
of Common Stock.
(4) Lion Advisors, L.P. ("Lion"), pursuant to an investment advisory contract
with its client, Marely I s.a. ("Marely"), possess the sole power to vote
and dispose of l,548,710 of the indicated shares, which shares are held for
the account of Marely. Apollo Advisors, L.P., which is an affiliate of Lion,
possess the sole power to vote and dispose of 1,798,711 of the shares in its
capacity as managing general partner of AIF II, L.P., for whose account the
shares are held. The Common Stock presented in the table includes 531,174
shares of Common Stock issuable to Marely and 531,175 shares issuable to AIF
II, L.P. upon the exercise of warrants exercisable at any time on or before
October 12, 1999 at an exercise price of approximately $12.30 per share.
(5) Includes shares of the Company's Common Stock held by officers and directors
under the Company's 401(k) Plan. In the above table 5,041 of such shares
have been included for All Executive Officers and Directors as a Group under
the Company's 401(k) Plan. Includes 2,450 shares of Common Stock held by the
immediate family members of an executive officer, as to which such executive
officer disclaims beneficial ownership.
(6) Includes 1,075 shares of Common Stock held in a trust of which Dr. Hershon
is the sole trustee.
(7) Includes 9,000 shares of Common Stock held in a trust of which Mr. Tunney
serves as a co-trustee.
EXECUTIVE OFFICERS
Executive offices are elected by the Board of Directors and hold office
until their successors have been duly elected and qualified or until their
earlier resignation or removal from office. Effective May 30, 1997, Mr. Cogan
will resign as Chairman and Chief Executive Officer of the Company and will
begin serving as Vice Chairman of the Company. Mr. Cogan will be replaced as
Chairman and Chief Executive Office by Mr. Farace. Also effective May 30, 1997,
Mr. Rallis will resign as President and Chief Operating Officer of the Company
and Mr. Bonanno will begin serving as President of the Company. A brief
biography of each executive officer of the Company who served as such at the end
of the Fiscal 1996 is provided below (other than Messrs. Bonanno and Cogan,
whose biographies are set forth above).
David E. Bright, 40, has been Vice President, Director of Communications of
the Company since March 1994. Prior to joining the Company, Mr. Bright served as
the Vice President of Communications for the Knoll Group from 1989 until 1993
and as Vice President of Communications for Knoll International Inc., its
predecessor company, from 1987 until 1989.
William H. Bundy, 56, has been a Senior Vice President of the Company since
March 1994 and a Senior Vice President of Foamex L.P. since January 1994. Mr.
Bundy served as a director of the Company from September 1993 until May 1994.
Mr. Bundy served as President and Chief Operating Officer of the Company from
September 1993 until January 1994 and as President and Chief Operating Officer
of Foamex L.P. from January 1993 until January 1994. Mr. Bundy was Senior Vice
President of Manufacturing of Foamex L.P. from 1984 through 1992. Mr. Bundy
began his career as a production manager for the predecessor to Foamex L.P. in
1967.
Kenneth R. Fuette, 52, has been the Senior Vice President--Finance, Chief
Financial Officer and Chief Accounting Officer since January 1996. Prior to that
Mr. Fuette served as a Vice President of the
7
<PAGE>
Company or its predecessors from 1983 to 1995 and as Controller of the Company
or its predecessors from 1977 to 1995.
Leonard P. Gineitis, 50, has been the Senior Vice President of Procurement
since January 1995. Prior to that, Mr. Gineitis was Vice President of Purchasing
of Sealy, Inc. from November 1990 until December 1994 and Director of Corporate
Purchasing of Invacare Corporation from October 1988 until November 1990. Prior
to that, Mr. Gineitis was the Supervisor of Purchasing for the Intelligent
Motion Controls division of Allen Bradley & Company from September 1984 until
1988.
Paul A. Haslanger, 50, has been Senior Vice President of Strategic Planning
and the Technical Products Segment Group of the Company since October 1995. From
September 1993 to January 1996, Mr. Haslanger was Senior Vice President of the
Company. Mr. Haslanger was also Senior Vice President of Manufacturing of Foamex
L.P. from February 1993 to January 1996. Mr. Haslanger was Vice President of
Manufacturing of Foamex L.P. and its predecessor from 1984 through January 1993.
He began his career with the predecessor to Foamex L.P. in 1969.
Theodore J. Kall, 56, has been President and Chief Executive Officer of
General Felt since April 1995. Mr. Kall previously served as General Felt's
National Accounts Manager from July 1993 to April 1995. Mr. Kall has served in
various sales, marketing and product management positions with General Felt,
including Vice President of Sales and Marketing from 1980 to 1993. He began his
career with General Felt in 1974.
John Rallis, 59, has been a director of the Company since its inception in
September 1993 and has been the President and Chief Operating Officer of the
Company since January 1994. Effective May 22, 1997, Mr. Rallis will resign as a
director of the Company, and effective May 30, 1997, he will resign as President
and Chief Operating Officer of the Company. Mr. Rallis served as President of
Foamex L.P. from January 1994 until July 1995. Prior to that, Mr. Rallis served
as a Senior Vice President of the Company and Foamex L.P. from September 1993
until January 1994. He held various managerial and executive positions with The
General Tire & Rubber Company beginning in 1962 prior to becoming President of
the foam operations of that company in 1977. In 1980, Mr. Rallis became Chairman
and Chief Executive Officer of Great Western Foam Products Corporation and
certain related entities ("Great Western"), which was acquired by the Company in
1993.
Philip N. Smith, Jr., 54, has been Vice President, Secretary and General
Counsel of the Company since its inception in September 1993 and of UAG since
June 1996. Mr. Smith has been the Secretary of Trace Foam since its inception in
October 1990 and a Vice President of Trace Foam since December 1991. Mr. Smith
has been a Vice President or Senior Vice President and the Secretary and General
Counsel of Trace Holdings since January 1988 and has overseen and been actively
involved in transaction negotiations, litigation, stockholder and director
relations and other corporate legal matters. Prior to joining Trace Holdings, he
was the sole shareholder of a professional corporation which was a partner of
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Barry Zimmerman, 59, has been the Senior Vice President of Productivity and
Quality of Foamex L.P. since October 1995 and Chairman, President and a director
of Foamex Latin America, Inc. since September 1993. Mr. Zimmerman has been a
Senior Vice President or Vice President and Managing Director of Trace Holdings
since October 1986. Prior to that, Mr. Zimmerman held several executive
positions within Trace Holdings beginning in August 1978. Mr. Zimmerman has been
a director of Trace Foam since October 1990. Mr. Zimmerman has served as
director of General Felt since March 1993 and Foamex Capital Corporation since
July 1992.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION
The following Summary Compensation Table contains information concerning
annual and long-term compensation provided to (i) the Chief Executive Officer,
(ii) each of the four next most highly compensated executive officers of the
Company as of the end of Fiscal 1996 and (iii) two other persons who were
executive officers during Fiscal 1996 and would have been included in such table
but for the fact that they were not executive officers at the end of Fiscal 1996
(collectively, the "Named Executive Officers"), for services rendered in all
capacities during the fiscal years 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
--------------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(2) COMPENSATION(3)
- ----------------------------------------- --------- ---------- ---------- -------------------- -----------------
<S> <C> <C> <C> <C> <C>
Marshall S. Cogan........................ 1996 $ 750,000 -- 100,000 --
Chairman of the Board, Chief Executive 1995 750,000 -- 229,167 --
Officer 1994 750,000 -- -- --
Salvatore J. Bonanno(3)(4)............... 1996 $ 201,850 $ 250,000 25,000 $ 1,500
Executive Vice President of 1995 77,308 100,000 49,590 700
Manufacturing, President of Foamex L.P. 1994 -- -- -- --
Barry Zimmerman(3)....................... 1996 $ 306,730 $ 50,000 -- $ 1,500
Senior Vice President of Productivity 1995 300,000 -- 17,569 1,500
and Quality 1994 300,000 80,000 -- 1,500
Theodore J. Kall(3)(5)................... 1996 $ 260,885 $ 4,545 7,616 $ 1,500
President and Chief Executive Officer 1995 228,885 33,600 7,384 1,500
of General Felt 1994 175,000 -- -- 1,450
Philip N. Smith, Jr.(3).................. 1996 $ 265,000 -- -- $ 1,500
Vice President, Secretary and General 1995 315,000 -- 7,028 3,202
Counsel 1994 315,000 110,000 -- 1,140
Jerry A. Burns(3)(6)..................... 1996 $ 240,012 $ 466,750 -- $ 3,675
Senior Vice President of the Company 1995 250,000 82,908 49,107 2,821
and Chairman and Chief Executive 1994 125,000 365,653 75,000 963
Officer of JPS Automotive
Dean C. Gaskins(3)(6).................... 1996 $ 240,296 $ 607,313 -- $ 3,675
Executive Vice President and Chief 1995 212,083 130,093 41,353 2,954
Operating Officer of JPS Automotive 1994 88,615 72,500 30,000 977
</TABLE>
- ------------------------
(1) Because none of the Named Executive Officers received (i) perquisites in
excess of the lesser of $50,000 or 10% of their reported salary and bonus,
(ii) any other annual compensation required to be reported, (iii) LTIP
payouts or (iv) any restricted stock awards, information relating to "Other
Annual Compensation", "LTIP Payouts" and "Restricted Stock Awards" is
inapplicable and has therefore been omitted from the table.
(2) On December 6, 1995, the Stock Option Plan Committee approved a stock option
exchange program (the "Stock Option Exchange Program") which permitted
optionees of record as of that date to
9
<PAGE>
exchange all options previously granted to be exchanged for new options
priced at the fair market value ("FMV") share price as of the close of
business on that date. The number of new options (the "New Options") to be
exchanged for previously granted options (the "Old Options") was determined
on the basis of the ratio of the FMV on December 6, 1995 to the FMV or the
discount share value of the options when originally granted. The table above
sets forth as compensation for 1995 the number of New Options issued to the
Named Executive Officers in exchange for their Old Options. See "Company
Stock Option Plan".
(3) The amounts shown represent (i) the Company's matching contribution to the
Company's 401(k) plan on behalf of Mr. Bonanno, Mr. Zimmerman, Mr. Smith,
and Mr. Kall and (ii) JPS Automotive's matching contribution to JPS
Automotive's 401(k) plan on behalf of Messrs. Burns and Gaskins. Mr. Cogan
did not participate in a 401(k) plan.
(4) Salvatore J. Bonanno became Executive Vice President of Manufacturing of the
Company and President of Foamex L.P. in July 1995.
(5) Theodore Kall became President and Chief Executive Officer of General Felt
in April 1995.
(6) The compensation reported for Messrs. Burns and Gaskins in 1994 represents
compensation for only part of the year paid after the acquisition, through
JPS Automotive, of the business and assets of the automotive products and
industrial fabrics divisions of JPS Textile Group, Inc. ("JPS Textile") (the
"JPS Automotive Acquisition"). The compensation reported for Messrs. Burns
and Gaskins in 1996 represents compensation for only part of the year paid
prior to the JPS Automotive Sale on December 11, 1996.
EMPLOYMENT AGREEMENTS
The Company does not have any employment agreements with its chief executive
officer or, with the exception of Salvatore J. Bonanno, any of the other Named
Executive Officers who are currently employed by the Company. The Securities and
Exchange Commission requires disclosure of any employment agreement between the
Company and any Named Executive Officer, whether or not such officer is still
employed by the Company.
On June 26, 1995, Foamex L.P. entered into an employment agreement with
Salvatore J. Bonanno, Executive Vice President of Manufacturing of the Company
and President of Foamex L.P. The agreement provides for a three-year employment
term commencing on February 1, 1994, which employment may be automatically
extended for two additional one-year terms unless either party gives written
notice as set forth therein. The employment agreement provides that as
compensation for all services rendered by Mr. Bonanno, he will receive an annual
salary at the rate of $150,000 per annum for the period from June 26, 1995
through June 30, 1996; and at the rate of $250,000 per annum commencing as of
July 1, 1996. In addition, Mr. Bonanno will be paid a bonus of $100,000 on or
before December 31, 1995 and a bonus of $150,000 on or before June 30, 1996. Mr.
Bonanno will be eligible to earn an additional bonus of $100,000 based upon the
attainment of company performance targets (including but not limited to, an
earnings target) for that period, which targets as required to be mutually
established in good faith between Foamex L.P. and Mr. Bonanno. Also, Mr. Bonanno
will participate in certain employee benefit plans and receive certain other
perquisites. Mr. Bonanno's employment agreement also provides for the grant by
the Company's Compensation Committee to Mr. Bonanno of non-qualified options to
purchase 55,000 shares of Common Stock at a per share price equivalent to the
closing price of the Common Stock on June 26, 1995, which options were
exercisable on the date of grant as to 20% of the Common Stock subject thereto,
and an additional 20% exercisable on each of the first four anniversaries of the
date of grant. The employment agreement further provides that upon termination
of the employment agreement (i) by Foamex L.P. for "cause", (ii) by Mr. Bonanno
other than for "good reason" (as such terms are defined therein) or (iii) by
reason of either party's election not to extend the employment agreement as
provided therein, Foamex L.P. shall pay Mr. Bonanno, in addition to any amounts
earned but not yet paid, an
10
<PAGE>
amount equal to one-year's then current base salary (payable in twelve equal
monthly installments). In the event the employment agreement is terminated (i)
by Foamex L.P. other than for "cause" or (ii) by Mr. Bonanno for "good reason,"
Mr. Bonanno shall be entitled to receive the greater of (a) one-year's then
current base salary or (b) continued payment of Mr. Bonanno's then current base
salary for the remainder of the term of the agreement, subject to certain
provisions set forth therein (payable in twelve equal monthly installments).
Additionally, during the period for which Mr. Bonanno is receiving continued
payment of base salary, Mr. Bonanno would be entitled to receive health care
benefits, to continue to participate in other employee benefit plans to the
extent permissible under such plans and to receive a supplemental annual pension
benefit equal to (i) the annual pension benefit that would have been payable to
Mr. Bonanno under the Retirement Plan (as defined therein) had Mr. Bonanno
continued to earn credited service under the Retirement Plan until February 1,
1999, reduced by (ii) the annual pension benefit payable to Mr. Bonnanno under
the Retirement Plan. The employment agreement prohibits Mr. Bonanno from owning
any controlling or substantial stock or other beneficial interest in any
business enterprise which is engaged in, or competitive with, any business
engaged in by Foamex L.P. Additionally, the employment agreement provides that
for a period of one year following his termination date, Mr. Bonanno may not,
among other things, engage in any business activities reasonably determined by
Foamex L.P. to be competitive with any substantial type or kind of busines
activities conducted by Foamex L.P. at the time of termination.
EMPLOYMENT AND OTHER AGREEMENTS RELATING TO OFFICERS OF JPS AUTOMOTIVE
In connection with the JPS Automotive Acquisition, JPS Automotive entered
into an employment agreement with Jerry A. Burns, Chief Executive Officer of JPS
Automotive, which was guaranteed by the Company. In connection with the JPS
Automotive Sale, JPS Automotive agreed to make the Company whole for any amounts
paid to Mr. Burns pursuant to this guarantee. The agreement provides for a
three-year term commencing on July 22, 1994, and automatically renews for
additional one-year terms unless notice of termination is given by the Board of
Directors of JPSGP Inc. ("JPSGP"). The agreement provides that as compensation
for all services rendered, Mr. Burns will receive compensation of $250,000 per
year plus salary increases and bonuses during the term of the agreement at the
discretion of the JPSGP Board of Directors. Additionally, Mr. Burns may
participate in certain other bonus plans specified in his employment agreement
contingent on JPS Automotive achieving certain performance and EBITDA levels,
may participate in employee benefit plans on the same basis as other senior
officers of JPS Automotive and may be granted such other perquisites as Mr.
Burns and the JPSGP Board of Directors may agree upon. Mr. Burns' employment
agreement further provides for the grant by the Company's Compensation Committee
to Mr. Burns of non-qualified options to purchase 75,000 shares of Common Stock
at a per share price equivalent to the closing price of the Common Stock on June
28, 1994, which options were exercisable on the date of grant as to 20% of the
Common Stock subject thereto, and an additional 20% exercisable on each of the
first four anniversaries of the date of grant. In the event Mr. Burns'
employment agreement is terminated for any reason other than for "cause" or
"good reason" (as such terms are defined in the agreement), Mr. Burns is
entitled to receive an amount equal to his annual base salary (excluding
bonuses) payable in monthly installments over not more than twelve months plus
continuation, during the severance payment period, of all medical benefits to
which Mr. Burns was entitled under the agreement. Additionally, for a period of
one year from the termination of the agreement for "cause" or a Voluntary
termination without "good reason" (as such terms are defined in the agreement),
Mr. Burns may not (i) induce JPS Automotive employees to leave the employ of JPS
Automotive, (ii) solicit customers of JPS Automotive within six months of such
termination or (iii) engage in any business which would be competitive with the
Company or JPS Automotive, or any subsidiary of either existing as of July 22,
1994.
On September 1, 1995, JPS Automotive and Mr. Gaskins entered into an
employment agreement. The agreement provides for a three-year term commencing on
September 1, 1995, and automatically renews for additional one-year terms unless
notice of termination is given by the JPSGP Board of Directors. The
11
<PAGE>
agreement further provides that as compensation for all services rendered, Mr.
Gaskins will receive compensation of $250,000 per year and shall be eligible to
receive annual bonuses and participate in any executive incentive programs and
employee benefit plans commensurate with his position as may from time to time
be in effect. Mr. Gaskins' agreement provides for the grant by the Company's
Stock Option Plan Committee of options to purchase 30,000 shares of Common Stock
at a per share price equivalent to the closing price of the Common Stock on
September 1, 1995, which options will be exercisable 20% annually, beginning one
year after the date of grant. In the event the agreement is terminated for any
reason, Mr. Gaskins shall be entitled to receive any base salary or other
compensation earned and not paid, including any bonuses for which Mr. Gaskins is
eligible and has not yet received prior to the effective date of such
termination. In the event the agreement is terminated by (i) JPS Automotive for
"cause" or (ii) Mr. Gaskins other than for "good reason" (as such terms are
defined in the agreement), Mr. Gaskins shall be entitled to receive an amount
equal to one year's then current base salary, in twelve equal monthly
installments following the date of such termination plus continuation during the
severance period of all health care benefits, at JPS Automotive's expense, and
participation in other JPS Automotive benefit plans to the extent permissible
under the terms of such plans. Additionally, for a period of one year from any
termination of employment with JPS Automotive, Mr. Gaskins shall not, directly
or indirectly, (i) engage in any business activities reasonably determined by
the Company to be competitive with JPS Automotive at the time of such
termination; (ii) solicit or induce JPS Automotive employees to leave the employ
of JPS Automotive or (iii) divert, or attempt to divert, any customer or
supplier from doing business with JPS Automotive.
In October 1995, the Board of Directors of the Company approved a plan to
evaluate the potential reduction of long-term debt with, among other things,
substantially all of the proceeds from the possible sale of the automotive
carpet, trim and/or textile businesses of JPS Automotive (which together
comprise substantially all of the assets of JPS Automotive). In connection with
such plans, the Company implemented enhanced severance benefits (the "Severance
Plan") and a bonus plan for certain executives of JPS Automotive, including
Messrs. Burns and Gaskins. Under the Severance Plan, if either Mr. Burns or Mr.
Gaskins were involuntarily separated from JPS Automotive within one year of
closing of such a sale, he would be entitled to one additional year of his
current base salary under his employment agreement in addition to the benefits
under his employment agreement. The bonus plan provided for bonuses which were
payable upon the sale of one or more of the divisions of JPS Automotive. In
connection with the JPS Automotive Sale, Mr. Burns and Mr. Gaskins were each
paid a $250,000 bonus.
COMPANY STOCK OPTION PLAN
Upon completion of the Company's initial public offering in December 1993
(the "IPO"), pursuant to the Company's 1993 Stock Option Plan (the "Stock Option
Plan"), non-qualified stock options were issued to purchase (i) 248,600 shares
of Common Stock at an exercise price equal to 90% of the $15.00 per share
offering price in the IPO (the "IPO Price"), (ii) 1,000,000 shares of Common
Stock at an exercise price equal to the IPO Price and (iii) 750,000 shares of
Common Stock at an exercise price equal to 150% of the IPO Price. All
outstanding options were exchanged in connection with the Stock Option Exchange
Program described below. The options which were granted with an exercise price
equal to 90% or 150% of the IPO Price will become exercisable in cumulative
annual installments of 20% each, beginning as of January 1, 1994. The options
which were granted with an exercise price equal to the IPO Price will become
exercisable in cumulative annual installments of 20% each, beginning January 1,
1995.
During 1996, 1995 and 1994, the Stock Option Committee granted 202,240,
150,000 and 145,000 options to purchase Common Stock to officers or key
employees of the Company, respectively, pursuant to the Stock Option Plan. The
1996 options were granted at exercise prices of $6.875 to $10.25 per share, the
1995 options were granted at exercise prices ranging from $7.625 to $19.50 per
share and the 1994 options were granted at an exercise price of $10.50 per
share, all such exercise prices representing the closing price of the Common
Stock on each grantees' date of hire or the date of grant. See "Stock Option
Exchange
12
<PAGE>
Program" below. Twenty percent of the options granted in 1996 will vest each
year beginning December 6, 1996. With the exception of Messrs. Burns and Gaskins
and one other employee who is not a Named Executive Officer, whose vesting
provisions were determined in accordance with their respective employment
agreements, the 1995 and 1994 options will vest 20% annually, beginning one year
after the grantees' date of hire.
STOCK OPTION EXCHANGE PROGRAM
On December 6, 1995, the Stock Option Plan Committee approved the Stock
Option Exchange Program which permitted optionees of record as of that date to
exchange all options previously granted to be exchanged for options priced at
the FMV share price, $6.875, as of the close of business on that date. The
number of New Options to be exchanged for previously granted Old Options was
determined on the basis of the ratio of the FMV on December 6, 1995 to the FMV
or the discount share value of the options when originally granted. New Options
were not exerciseable until December 6, 1996 and will vest and expire upon the
same terms as the Old Options.
STOCK OPTION PLAN COMMITTEE
JOHN V. TUNNEY, CHAIRMAN
STUART J. HERSHON
The following table provides information on option grants in Fiscal 1996 by
the Company to the Named Executive Officers.
FOAMEX INTERNATIONAL OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS/SARS EXERCISE MARKET PRICE APPRECIATION
OPTIONS/ GRANTED TO OR BASE PRICE ON FOR OPTION TERM(2)
SAR'S EMPLOYEES IN PRICE EXPIRATION DATE OF ----------------------
GRANTED(#) FISCAL YEAR ($/SH) DATE GRANT 5% 10%
----------- --------------- ----------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Marshall S. Cogan.................... 100,000 49.4% $ 6.875 05/17/06 $ 12.125 1,814,017 3,114,691
Salvatore J. Bonanno................. 25,000 12.4% 6.875 05/17/06 12.125 453,504 778,673
Theodore J. Kall..................... 7,616 3.8% 6.875 05/17/06 12.125 138,156 237,215
</TABLE>
- ------------------------
(1) Messrs. Zimmerman, Smith, Burns and Gaskins are not included in this table
since no options were granted during Fiscal 1996.
(2) Based on December 29, 1996 market value of the Company's common stock of
$16 1/8 per share.
13
<PAGE>
TRACE HOLDINGS STOCK OPTION PLAN
In 1987, Trace Holdings established a Nonqualified Stock Option Plan (the
"Trace Holdings Option Plan"), under which options for the purchase of shares of
common stock of Trace Holdings may be granted to officers, directors and
employees of Trace Holdings or its affiliates. Under the Trace Holdings Option
Plan, options may generally be granted for a term not to exceed eleven years and
are exerciseable at the cumulative rate of one-third per year on the fifth,
sixth and seventh anniversaries of the date of grant. Under the Trace Holdings
Option Plan, the option exercise price of an option may not be less than the
fair market value of the common stock of Trace Holdings as of the date of grant.
In 1987, Trace Holdings granted options to Mr. Zimmerman to purchase 595 shares
of common stock of Trace Holdings, and in 1988, Trace Holdings granted options
to Mr. Smith to purchase 120 shares of common stock of Trace Holdings. The
options granted to Mr. Zimmerman have an exercise price of $260 per share, and
the options granted to Mr. Smith have an exercise price of $1,450 per share. The
options granted to Mr. Zimmerman and Mr. Smith expire eleven years from the date
of grant. No options have been subsequently granted to Named Executive Officers
of the Company.
AGGREGATE OPTION VALUES
The following table sets forth as of December 29, 1996 the number of options
for the Company's Common Stock, the number of options for Trace Holdings' common
stock and the value of the unexercised options and SARs held by the Named
Executive Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR END(2) AT FISCAL YEAR END(3)
-------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Marshall S. Cogan........................................ 157,500 171,667 $ 1,456,875 $ 1,587,920
Salvatore J. Bonanno..................................... 14,918 59,672 137,992 551,966
Barry Zimmerman.......................................... 7,791 9,778 72,067 90,447
595(4) -- (5) (5)
Theodore J. Kall......................................... 4,853 10,147 44,890 43,860
Philip N. Smith, Jr...................................... 3,117 3,911 28,832 36,177
120(4) -- (5) (5)
Jerry A. Burns........................................... 29,464(6) 19,643(6) 475,107(6) 316,743(6)
Dean C. Gaskins.......................................... 16,128(6) 25,226(6) 260,064(6) 406,769(6)
</TABLE>
- ------------------------
(1) No stock options or SARs were exercised in 1996.
(2) Except as otherwise noted, these options are for common stock of the Company
and were granted pursuant to the Stock Option Plan.
(3) As of December 29, 1996, the market value of the Company's common stock was
$16 1/8 per share.
(4) These options are for common stock of Trace Holdings and were granted
pursuant to the Trace Holdings Option Plan.
(5) Trace Holdings is a privately-held company. There is no public market for
its securities and no valuation of Trace Holdings for the purpose of
ascertaining the value of stock options has been undertaken.
(6) Mr. Burns and Mr. Gaskins exercised all of their exerciseable options in
February 1997. Pursuant to the terms of their employment agreements, all of
the unexerciseable options of Mr. Burns and Mr. Gaskins expired in February
1997 in connection with their departure from the Company pursuant to the JPS
Automotive Sale.
14
<PAGE>
PENSION PLANS
Effective December 31, 1994, the Foamex L.P. Salaried Employees Retirement
Plan (the "Foamex Plan") merged with the General Felt Industries, Inc.
Retirement Plan for Salaried Employees and the General Felt Industries, Inc.
Pension Plan for Bargaining Unit Employees National Sponge Cushion Division. The
surviving plan is called the Foamex Group Salaried Employees Pension Plan (the
"Retirement Plan"). The Retirement Plan is a defined benefit pension plan that
is qualified under the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), and in which executive officers are eligible to participate.
The following table illustrates estimated annual pensions under the
Retirement Plan for various compensation levels and periods of credited service,
assuming present compensation rates at all points in the past and until Normal
Retirement Date (as defined in the Retirement Plan) and a constant Social
Security Wage Base ($65,400 in 1997). The pension amount is expressed as a life
annuity with certain benefits continuing to the spouse.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
-----------------------------------------------------
15 20 25 30 35
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Current Compensation:
$125,000................................................... $ 25,400 $ 33,867 $ 42,334 $ 50,801 $ 59,267
$160,000 and above......................................... $ 31,607 $ 41,742 $ 52,178 $ 62,613 $ 73,049
</TABLE>
The Retirement Plan is a career pay plan. The Retirement Plan formula is
1.25% of annual compensation up to the Social Security Wage Base and 1.75% of
annual compensation in excess of the Social Security Wage Base, subject to an
annual compensation limit of $160,000. Prior to September 1, 1994, the Foamex
Plan was a final average pay plan, with retirement benefits based upon earnings
for the five consecutive years within the last ten years which yield the highest
average yearly salary ("Final Average Compensation"). Annual benefit
calculations under the Foamex Plan for service prior to June 1, 1994, will be
the years of credited service multiplied by the sum of 2.0% of Final Average
Compensation and 0.4% of Final Average Compensation in excess of the average of
the Social Security Wage Bases over the 35 year period ending with the year an
employee reaches age 65 (such 35 year average referred to herein as the "Covered
Compensation"). For service subsequent to May 31, 1994, but before September 1,
1994, annual benefit calculations will be the years of credited service
multiplied by the sum of 1.1% of Final Average Compensation and 0.4% of Final
Average Compensation in excess of Covered Compensation. The actuarially
determined cost of providing benefits under the Retirement Plan is provided by
the Company. The participants are neither required nor permitted to make
contributions.
The compensation used as a basis for computing pension benefits is primarily
based on salaries set forth in the Summary Compensation Table and excludes
bonuses set forth therein. In 1996 and 1995, the compensation used as a basis
for computing the pension of each of the executive officers named in the Summary
Compensation Table was as follows: Mr. Cogan, $150,000 and $150,000,
respectively; Mr. Bonanno, $150,000 in 1996; Mr. Zimmerman, $150,000 and
$150,000, respectively; Mr. Smith, $150,000 and $150,000, respectively; and Mr.
Kall $150,000 and $150,000, respectively. Mr. Bonanno was not a plan participant
in 1995 and Messrs. Burns and Gaskins were not plan participants in 1995 or
1996.
The estimated annual benefits under the Retirement Plan payable on
retirement at normal retirement age, or immediately if the individual has
reached normal retirement age, for each of the employees named in the Summary
Compensation Table are as follows: Mr. Cogan, $23,250; Mr. Bonanno, $24,050; Mr.
Zimmerman, $22,100; Mr. Smith, $35,260; and Mr. Kall $43,550. These amounts
assume the employees continue their employment with Foamex L.P. at present
salary levels until normal retirement age. As of December 29, 1996, the
employees named in the Summary Compensation Table had been credited with
15
<PAGE>
years of service under the Retirement Plan as follows: Mr. Cogan, 3.83 years;
Mr. Bonanno, 0.50 years; Mr. Zimmerman, 3.83 years; Mr. Smith, 3.83 years; and
Mr. Kall, 22.08 years.
JPS AUTOMOTIVE PLAN
Prior to the JPS Automotive Acquisition, Messrs. Burns and Gaskins were
participants in the Retirement Plan for Employees of JPS Textile (the "Textile
Plan"). Upon the JPS Automotive Acquisition, Messrs. Burns and Gaskins ceased
accruing benefits under the Textile Plan. As a consequence of the JPS Automotive
Acquisition, JPS Automotive obligated itself to adopt a plan that would be
substantially comparable to the Textile Plan (the "New JPS Automotive Plan").
JPS Automotive adopted the New JPS Automotive Plan effective January 1, 1995 at
which time Messrs. Burns and Gaskins became participants in the New JPS
Automotive Plan.
The estimated annual benefit under the New JPS Automotive Plan payable at
normal retirement age is approximately $25,000 for each of Mr. Burns and Mr.
Gaskins and assumes that each of them will continue their respective employment
with JPS Automotive at their present salaries until normal retirement age.
Pursuant to the JPS Automotive Sale, JPS Automotive is no longer a subsidiary of
the Company.
IRS LIMITATIONS
Under the Internal Revenue Code, a participant's compensation in excess of
$160,000 (as adjusted to reflect cost of living increases) is disregarded for
purposes of determining pension benefits. Benefits accrued for plan years prior
to 1994 on the basis of certain compensation in excess of $160,000 are
preserved. In addition, as required by law, the maximum annual pension payable
to a participant under a qualified pension plan in 1997 is $125,000, in the form
of a qualified joint and survivor annuity, although certain benefits are not
subject to such limitation. Such limits have been included in the calculation of
estimated annual benefit amounts listed above for each of the Named Executive
Officers. The Company does not have a non-qualified defined benefit plan to
provide payments in excess of limits imposed by the Internal Revenue Service.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THAT MIGHT
INCORPORATE FILINGS BY REFERENCE, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN
PART, THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE (THE "COMPENSATION
COMMITTEE") AND STOCK OPTION PLAN COMMITTEE (THE "STOCK OPTION COMMITTEE") ON
EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK OPTION
PLAN COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibilities include establishing the
Company's policies governing the compensation of officers and other key
executives of the Company. The Compensation Committee approves all elements of
compensation for Executive Officers. The Stock Option Committee is responsible
for the administration of the 1993 Stock Option Plan.
EXECUTIVE COMPENSATION
The Company's compensation program consists of base salary, incentive
programs, stock options and employee benefits. The goal of the Company's
compensation program is to motivate and reward its executive officers and other
key employees to improve long-term stockholder value and to attract and retain
the highest quality executive and key employee talent available. The Company's
executive compensation program is designed to align executive compensation
practices with increasing the value of the Company's Common Stock and to foster
adherence to, and promotion of, the Company's business mission,
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values, strategic goals and annual objectives. The compensation levels for Mr.
Bonanno and certain other officers of the Company (or its subsidiaries) who are
not Named Executive Officers, are determined pursuant to the terms of their
respective employment agreements. The compensation levels for Messrs. Burns and
Gaskins were determined pursuant to the terms of their employment agreements
prior to the JPS Automotive Sale. See "Compensation of Executive
Officers--Employment Agreements."
The Compensation Committee will meet at least annually to review salary
increases for the current year and incentive payments to be made in connection
with the previous year's performance. The Compensation Committee will consider
an executive's scope of responsibilities, level of experience, individual
performance and attainment of pre-established goals as well as the Company's
business plan and general economic factors. In making its decisions, and to
maintain the desired levels of competitiveness and congruity with the Company's
long-term performance goals, the Compensation Committee will receive input from
the Company's President, Chief Operating Officer and Executive Vice President of
Manufacturing and the Company's Human Resources Department.
BASE SALARY
The salary levels for executive officers are determined by such officer's
level of job responsibility and experience, job performance and attainment of
pre-established goals. Additional consideration is given to salaries for a
comparable position within the industry and the Company's ability to pay. In
December 1995, the Compensation Committee adopted a salary reduction program
(the "Salary Reduction Program") pursuant to which all key employees of Foamex
L.P. with annual salaries in excess of $150,000 received a 5% salary reduction
effective January 1, 1996. The Salary Reduction Program further provided that if
certain pre-established goals were met, (i) executives would receive a cash
award equal to the amount of the salary reduction, (ii) salaries would be re-set
to pre-reduction levels and (iii) a merit increase pool would be reinstated for
potential salary increases (collectively, the "Readjustment Payments"). Pursuant
to the Salary Reduction Program, upon achievement of such pre-established goals,
all such key employees received Readjustment Payments in October 1996. The
Compensation Committee believes that the Salary Reduction Program emphasized the
importance of reducing costs and focusing on performance, thereby helping to
increase earnings and shareholder value.
BONUS
Bonus payouts to executive officers and other key employees of the Company
are generally based on the attainment of corporate earnings goals. No bonus
payments were made to the Company's executive officers and key employees, with
the exception of Messrs. Bonanno, Zimmerman, Burns and Gaskins, and certain
other employees who are not Named Executive Officers. The bonuses of Messrs.
Bonanno, Burns and Gaskins were determined pursuant to the terms of their
respective employment agreements and were based upon achieving certain
pre-established financial goals for Foamex L.P. or JPS Automotive. For more
information on Messrs. Bonanno's, Burns' and Gaskins' bonus arrangements, see
"Compensation of Executive Officers--Employment Agreements."
OPTIONS
The Stock Option Committee believes strongly that the interests of senior
management must be closely aligned with those of the stockholders. Long-term
incentives in the form of stock options provide a vehicle to reward executive
officers only if there is an increase in stockholder value. Stock options are
granted on a discretionary basis within a guideline range that takes into
account the position responsibilities of executive officers and key employees of
the Company whose contributions and skills are important to the long-term
success of the Company. Stock options to purchase Common Stock providing
long-term incentives may be granted to executive officers or key employees of
the Company with a maximum term of ten years.
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In 1996, the Stock Option Committee granted 202,240 options to purchase
Common Stock to officers or key employees of the Company pursuant to the Stock
Option Plan. Such options were granted at exercise prices of $6.875 to $10.25
per share, which price represents the closing price of the Common Stock on each
officer's or key employee's date of hire or the date of grant. Twenty percent of
the options granted in 1996 will vest each year beginning December 6, 1996.
CHIEF EXECUTIVE OFFICER
In 1996, Mr. Cogan received $750,000 in compensation from the Company. Mr.
Cogan's salary was approved based upon a review of market data for similar
positions, the exceptional contribution already made by Mr. Cogan to the Company
as well as his continued leadership in positioning the Company to take advantage
of emerging domestic and international long-term growth opportunities. Effective
January 1, 1996, Mr. Cogan's salary was reduced by 5%, pursuant to the Company's
Salary Reduction Plan. Mr. Cogan's salary, however, was re-set to its
pre-reduction level ($750,000) later in Fiscal 1996 upon achievement of certain
pre-established goals, in accordance with the Salary Reduction Program discussed
above.
POLICY REGARDING QUALIFYING COMPENSATION
Section 162(m) of the Internal Revenue Code imposes a $1,000,000 ceiling on
tax-deductible remuneration paid to the five most highly compensated executive
officers of a publicly-held corporation, unless the compensation is treated as
performance related. The compensation paid to each of the Company's Named
Executive Officer's is less than the $1,000,000 threshold. The Compensation
Committee has not yet made any policy decisions with respect to this limit.
<TABLE>
<S> <C> <C>
COMPENSATION COMMITTEE STOCK OPTION PLAN COMMITTEE
JOHN V. TUNNEY, CHAIRMAN JOHN V. TUNNEY, CHAIRMAN
STUART J. HERSHON STUART J. HERSHON
</TABLE>
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of Outside Directors. No
employee of the Company serves on the Compensation Committee. The Company is not
aware of any other corporation in which both (i) an executive officer of the
Company serves on the board of directors and/or compensation committee and (ii)
a director of the Company serves as an executive officer. Carl Spielvogel was a
member of the Committee until his resignation from the Board of Directors on
March 7, 1997 and was the Chairman and Chief Executive Officer of UAG, an
affiliate of Trace Holdings of which Trace Holdings indirectly owns
approximately 40%, until his resignation on April 17, 1997. Mr. Cogan is the
Chairman of the Executive Committee of UAG, which determined Mr. Spielvogel's
compensation at UAG.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company regularly enters into transactions with its affiliates on terms
it believes to be the same as could be obtained in third party transactions.
Payments to affiliates by Foamex L.P. and its subsidiaries in connection with
any such transactions are governed by the provisions of the indentures for their
public debt securities which generally provide that such transactions be on
terms comparable to those generally available in equivalent transactions with
third parties.
TECHNOLOGY SHARING ARRANGEMENTS
In December 1992, Foamex, L.P., Recticel and Beamech Group Limited
("Beamech"), an unaffiliated third party, formed a Swiss corporation to develop
new manufacturing technology for the production of polyurethane foam. Each of
Foamex, L.P., Recticel and Beamech contributed or caused to be contributed to
such corporation a combination of cash and technology valued at $1.5 million,
$3.0 million and $1.5 million, respectively, for a 25%, 50% and 25% interest,
respectively, in the corporation. Foamex, L.P., Recticel and their affiliates
have been granted a royalty-free license to use certain technology, and it is
expected that the corporation will license use of such technology to other foam
producers in exchange for royalty payments.
TAX SHARING AGREEMENT
In 1992, Foamex L.P. and its partners entered into a tax sharing agreement,
as amended (the "Foamex L.P. Tax Sharing Agreement"), pursuant to which Foamex
L.P. agreed to make quarterly distributions to its partners which, in the
aggregate, will equal the tax liability that Foamex L.P. would have paid if it
had been a Delaware corporation filing separate tax returns rather than a
Delaware partnership. In connection with the IPO and the attendant reallocation
of partnership interests, the Foamex L.P. Tax Sharing Agreement was amended to
provide that 99% of the payments would be made to the Company and its
subsidiaries and 1% of the payments would be made to Trace Foam. In 1996, Foamex
L.P. made payments pursuant to the terms of the Foamex L.P. Tax Sharing
Agreement of approximately (i) $3.5 million to the Company and its subsidiaries
and (ii) $45,000 to Trace Foam.
INDEMNIFICATION REGARDING ENVIRONMENTAL MATTERS
Pursuant to an Asset Transfer Agreement (the "RFC Asset Transfer Agreement")
between Foamex L.P. and Recticel Foam Corporation ("RFC"), Foamex L.P. is
indemnified by RFC for any liabilities incurred by Foamex L.P. arising out of or
resulting from, among other things, the ownership or use of any of the assets
transferred pursuant to the RFC Asset Transfer Agreement or the conduct of the
transferred business on or prior to October 2, 1990, including, without
limitation, any loss actually arising out of or resulting from any events,
occurrences, acts or activities occurring before October 2, 1990 or occurring
after October 2, 1990 to the extent resulting from conditions existing on or
prior to October 2, 1990, relating to (i) injuries to or the contraction of any
diseases by any person resulting from exposure to Hazardous Substances (as
defined in the RFC Asset Transfer Agreement) without regard to when such
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injuries or diseases are first manifested, (ii) the generation, processing,
handling, storage or disposition of or contamination by any waste or Hazardous
Substance, whether on or off the premises from which the transferred business
has been conducted or (iii) any pollution or other damage or injury to the
environment, whether on or off the premises from which the transferred business
has been conducted. Foamex L.P. is also indemnified by RFC for any liabilities
arising under Environmental Laws (as defined in the RFC Asset Transfer
Agreement) relating to current or former RFC assets and for any liability for
property damage or bodily harm relating to products of the transferred business
shipped on or prior to October 2, 1990. Such indemnification is limited after
December 1993 unless such liability is covered by insurance. Foamex L.P. has
agreed to assume certain known environmental liabilities relating to the assets
transferred by RFC to Foamex L.P., with an estimated redemption cost of less
than $0.5 million, in exchange for a cash payment by RFC to Foamex L.P.
approximately equal to the remediation cost for such environmental liabilities.
Pursuant to the Asset Transfer Agreement, dated as of October 2, 1990, as
amended, between Trace Holdings and Foamex L.P. (the "Trace Holdings Asset
Transfer Agreement"), Foamex L.P. is indemnified by Trace Holdings for any
liabilities incurred by Foamex L.P. arising out of or resulting from, among
other things, the ownership or use of any of the assets transferred pursuant to
the Trace Holdings Asset Transfer Agreement or the conduct of the transferred
business on or prior to October 2, 1990, including, without limitation, any loss
actually arising out of or resulting from any events, occurrences, acts or
activities occurring after October 2, 1990, to the extent resulting from
conditions existing on or prior to October 2, 1990, relating to (i) injuries to
or the contraction of any diseases by any person resulting from exposure to
Hazardous Substances (as defined in the Trace Holdings Asset Transfer Agreement)
without regard to when such injuries or diseases are first manifested, (ii) the
generation, processing, handling, storage or disposition of or contamination by
any waste or Hazardous Substance, whether on or off the premises from which the
transferred business has been conducted or (iii) any pollution or other damage
or injury to the environment, whether on or off the premises from which the
transferred business has been conducted. Foamex L.P. is also indemnified by
Trace Holdings for any liabilities arising under Environmental Laws (as defined
in the Trace Holdings Asset Transfer Agreement) relating to current or former
Trace Holdings' assets and for any liability relating to products of the
transferred business shipped on or prior to October 2, 1990.
CERTAIN TRANSACTIONS RELATING TO THE ACQUISITION OF GENERAL FELT
In connection with the Company's acquisition of General Felt in March 1993,
Trace Holdings and General Felt entered into the General Felt Reimbursement
Agreement pursuant to which Trace Holdings has agreed to reimburse General Felt
on a PRO RATA basis reflecting the period of time each has occupied the facility
for costs relating to a cleanup plan for a facility in Trenton, New Jersey
formerly owned by General Felt. In Fiscal 1996, such PRO RATA amount
attributable to Trace Holdings was approximately $97,000.
CERTAIN TRANSACTIONS RELATING TO THE ACQUISITION OF GREAT WESTERN
In connection with its acquisition of Great Western in May 1993, Foamex,
L.P. entered into lease agreements dated May 1993, with Mr. Rallis,
individually, or an affiliate of Mr. Rallis, relating to former Great Western
manufacturing facilities. Aggregate lease payments in 1996 were $1.7 million. In
connection therewith, Foamex L.P. has the option to purchase each of these
properties at any time after April 2001 at a price equal to fair market value.
Part of the aggregate consideration paid by Foamex L.P. for the assets of
Great Western was in the form of a subordinated promissory note payable to Mr.
Rallis in an original principal amount of $7,014,864 that bears interest at a
rate of 6.0% per annum payable semi-annually.
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OTHER TRANSACTIONS
The Company made charitable contributions to the Trace International
Holdings, Inc. Foundation (the "Foundation") in the amount of $200,000 in Fiscal
1996. The Foundation is a Delaware tax-exempt private foundation. Marshall S.
Cogan, Chairman and Chief Executive Officer of the Company and Foamex L.P., is
the sole director of the Foundation.
On July 8, 1993, Foamex L.P. loaned $3.0 million to Trace Holdings which
loan was evidenced by a promissory note from Trace Holdings to Foamex L.P. at a
rate of 9.5% interest in the original principal amount of $3.0 million. On July
7, 1995, such note was amended and restated to include the original loan amount
of $3.0 million and other receivables of $1.4 million. In July 1996, Foamex L.P.
and Trace Holdings agreed to extend the terms of the note for an additional year
and a new promissory note was executed. The note is due on demand, or if no
demand is made, on July 7, 1997. Interest is due and payable quarterly.
In 1992, Foamex L.P. and Trace Foam entered into a management services
agreement pursuant to which Trace Foam provides Foamex L.P. with general
managerial services of a financial, technical, legal, commercial, administrative
and/or advisory nature for an annual fee of $1.75 million, and reimbursement of
expenses incurred. Management believes that the agreement is no less favorable
to Foamex L.P. than that which Foamex L.P. could have obtained from unaffiliated
third parties. In addition, certain employees of Trace Holdings and its
affiliates provide services to the Company.
Trace Holdings rents approximately 5,900 square feet of general, executive
and administrative office space in New York, New York from Foamex L.P. on
substantially the same terms as Foamex L.P. leases such space from a third party
lessor. The lease commenced October 1, 1993 and the occupancy and rent payments
commenced on October 1, 1994. The lease provides for an initial term of 11 years
and expires on September 30, 2004. The lease provides for two optional five-year
renewal periods at the fair market rental value of the property on the first day
of such renewal term. The annual rental for the period October 1, 1994 through
September 30, 1999 is $679,868 and for the period October 1, 1999 through
September 30, 2004 is $735,652. Under the lease, Foamex L.P. is required to pay
certain excess real estate taxes and operating expenses incurred by lessor
relating to the property for which it will be proportionally reimbursed by Trace
Holdings. The rental terms were the result of arm-length negotiations between
Foamex L.P. and the third party lessor. Trace Holdings will reimburse, through
increased rent, Foamex L.P. for the cost of any leasehold improvements
applicable to the space occupied for the benefit of Trace Holdings.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to stockholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Coopers &
Lybrand L.L.P. as the independent accountants of the Company for Fiscal 1997.
Coopers & Lybrand L.L.P. will examine the financial statements of the Company
for the year 1997. This firm has examined the accounts of the Company since its
inception in 1993 and for Foamex L.P. and its subsidiaries since fiscal year
1992. If the stockholders do not ratify this appointment, the Board will
consider other independent accountants. One or more members of Coopers & Lybrand
L.L.P. are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire and will be available to
respond to questions.
VOTE REQUIRED
The affirmative vote of a majority of the issued and outstanding shares of
Common Stock is required for the ratification of the independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS.
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SHARE INVESTMENT PERFORMANCE
The following graph compares the cumulative total stockholder returns on the
Common Stock based on an investment of $100 after the close of the market on (i)
December 7, 1993, the date of the Company's IPO; (ii) the close of the market on
December 31, 1993; (iii) the close of the market on December 31, 1994; (iv) the
close of the market on December 31, 1995; and (v) the close of the market on
December 31, 1996 against the Standard & Poor's Index ("S&P 500") and an
industry peer group consisting of the following companies: Armstrong World
Industries, Inc., Leggett & Platt, Inc., Sealed Air Corporation and Shaw
Industries, Inc.
COMPARISON OF 37-MONTH CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, THE S & P 500 AND INDUSTRY PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FOAMEX INTERNATIONAL,
S&P 500 PEER GROUP INC.
<S> <C> <C> <C>
12/07/1993 100 100 100
Dec-93 100 116 111
Dec-94 101 81 66
Dec-95 139 109 48
Dec-96 171 131 108
</TABLE>
* $100 invested on 12/07/93 in stock or index, including reinvestment of
dividends.
FILINGS UNDER SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires executive officers and directors,
and persons who beneficially own more than 10% of the Company's stock, to file
initial reports of ownership and reports of changes of ownership with the SEC
and the NASDAQ National Market System, Inc. Executive officers, directors and
greater than 10% beneficial owners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms furnished
to the Company and written representations from the executive officers,
directors and greater than 10% beneficial owners, the Company believes that all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% owners were complied with.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 1998
Any proposals intended to be presented to stockholders at the Company's 1998
Annual Meeting of Stockholders must be received by the Company for inclusion in
the proxy statement for such annual meeting by December 31, 1997. Such proposals
must meet other requirements of the rules of the SEC relating to stockholders'
proposals and the requirements set forth in the Company's By-Laws.
Pursuant to the By-Laws, stockholders proposing business to be brought
before the Annual Meeting must deliver written notice thereof to the Secretary
of the Company not later than the close of business on the tenth day following
the date on which the Company first makes public disclosure of the date of the
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annual meeting. The stockholder's notice must contain a brief description of the
business and reasons for conducting the business at an annual meeting, the name
and address of the stockholder making the proposal, and any material interest of
the stockholder in the business. The stockholder is also required to furnish a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at such meeting to propose such business.
OTHER BUSINESS
It is not anticipated that there will be presented to the Annual Meeting any
business other than the election of directors and the proposals described
herein, and the Board of Directors was not aware, a reasonable time before this
solicitation of proxies, of any other matters which might properly be presented
for action at the meeting. If any other business should come before the Annual
Meeting, the persons named on the enclosed proxy card will have discretionary
authority to vote all proxies in accordance with their best judgment.
Proxies in the form enclosed are solicited by or on behalf of the Board of
Directors. The cost of this solicitation will be borne by the Company. In
addition to the solicitation of the proxies by use of the mails, some of the
officers and regular employees of the Company, without extra remuneration, may
solicit proxies personally, or by telephone or otherwise. In addition,
arrangements will be made with brokerage houses and other custodian, nominees
and fiduciaries to forward proxies and proxy material to their principals, and
the Company will reimburse them for their expenses in forwarding soliciting
materials, which are not expected to exceed $5,000.
It is important the proxies be returned promptly. Therefore, stockholders
are urged to sign, date and return the enclosed proxy card in the accompanying
stamped and addressed envelope.
By Order of the Board of Directors
/s/ Philip N. Smith, Jr.
Philip N. Smith, Jr.
May 1, 1997
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FOAMEX INTERNATIONAL INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes all prior proxies and appoints Marshall
S. Cogan, John Rallis and Philip N. Smith, Jr., and each of them, as proxies
with full power of substitution, to vote on behalf of the undersigned the
same number of shares of Foamex International Inc. Common Stock which the
undersigned is then entitled to vote, at the Annual Meeting of Stockholders
to be held on Thursday, May 22, 1997, at 10:30 a.m., at the offices of the
Corporation, 1000 Columbia Ave., Linwood, PA 19061, and at any adjournments
thereof, on any matter properly coming before the meeting, and specifically
the following:
THE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT
WILL BE VOTED FOR PROPOSALS 1 AND 2.
(Continued on reverse side)
/\ FOLD AND DETACH HERE /\
<PAGE>
<TABLE>
<S> <C> <C> <C>
To elect seven directors to serve until the 1998 annual meeting of stockholders or until their respective successors are
duly elected and qualified:
FOR all nominees listed WITHHOLD authority SALVATORE J. BONANNO, MARSHALL S. COGAN, ETIENNE DAVIGNON, ANDREA FARACE,
(except as marked to to vote for all nominees ROBERT J. HAY, STUART J. HERSHON, JOHN V. TUNNEY
the contrary) listed
INSTRUCTIONS: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below.
_________________________________________________________________________
To ratify the selection of Coopers & Lybrand L.L.P. as the 3. To transact such other business as may properly come
Company's independent accountants for the year ending before the meeting or any adjournment or postponement
December 28, 1997 ("Fiscal 1997"); and thereof.
FOR AGAINST ABSTAIN
_______________________________________________
_______________________________________________
Signature of Stockholder(s)
_______________________________________________
Date
Note: Please sign your name exactly as it is
shown at the left. When signing as attorney,
executor, administrator, trustee, guardian or
corporate officer, please give your full title
as such. EACH joint owner is requested to sign.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
/\ FOLD AND DETACH HERE /\
</TABLE>
