Span America Medical Systems (SPAN) DEF 14A Definitive proxy

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

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 under Rule 14a-12

SPAN-AMERICA MEDICAL SYSTEMS, INC.

Name of the Registrant as Specified In Its Charter

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[   ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1. Title of each class of securities to which transaction applies:

2. Aggregate number of securities to which transaction applies:

3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

4. Proposed maximum aggregate value of transaction:

5. Total fee paid:

[   ]	Fee paid previously with preliminary materials.
[   ]	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

1. Amount Previously Paid:

2. Form, Schedule or Registration Statement No.:

3. Filing Party:

4. Date Filed:

SPAN-AMERICA MEDICAL SYSTEMS, INC.

Post Office Box 5231

Greenville, South Carolina 29606-5231

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

February 20, 2014

TO THE SHAREHOLDERS OF SPAN-AMERICA MEDICAL SYSTEMS, INC.

Notice is hereby given that the Annual Meeting of Shareholders (the “Annual Meeting”) of Span-America Medical Systems, Inc. (the “Company”) will be held at the Company’s headquarters at 70 Commerce Center, Greenville, South Carolina, on February 20, 2014, at 9:00 a.m. EST, for the following purposes:

1) to elect three directors to serve until the 2017 Annual Meeting;

2) to approve the selection of Elliott Davis, LLC as the Company’s independent registered public accounting firm for fiscal year 2014; and

3) to transact any other business that properly comes before the Annual Meeting or any adjournment or postponement thereof.

The Board of Directors has selected the close of business on January 10, 2014 as the record date for determining the shareholders entitled to notice of, and to vote at, the Annual Meeting. The approximate mailing date of these Proxy Materials to our shareholders is January 24, 2014. Pursuant to rules promulgated by the Securities and Exchange Commission (“SEC”), we have elected the full set delivery option to deliver our proxy materials to our shareholders. Nonetheless, this Notice of Annual Meeting of Shareholders and our proxy statement, proxy card and annual report are available athttp://www.irinfo.com/span/html/annrep.htm.

YOU ARE REQUESTED TO COMPLETE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON. THE PROXY WILL BE RETURNED TO ANY SHAREHOLDER WHO IS PRESENT IN PERSON AT THE ANNUAL MEETING AND REQUESTS SUCH RETURN.

By Order of the Board of Directors,

/s/ Richard C. Coggins

Richard C. Coggins

Secretary

January 17, 2014

Greenville, South Carolina

Please Return the Enclosed Proxy Immediately

Span-America Medical Systems, Inc.

Proxy Statement

Annual Meeting of Shareholders

February 20, 2014

Notice of Annual Meeting of Shareholders		Cover
Proposals to be Voted Upon		2
	Item 1 – Election of Directors	2
	Item 2 – Approval of the Selection of the Company’s Independent RegisteredPublic Accounting Firm	6
Corporate Governance		7
	Director Independence	7
	Meetings and Committees of the Board of Directors	8
	Board Leadership Structure and Role in Risk Oversight	9
	Director Nominating Process	9
	Director Compensation	11
	Compensation Committee Interlocks and Insider Participation	12
	Communications Between Shareholders and Board of Directors	12
	Attendance at the Annual Meeting of Shareholders	12
	Code of Business Conduct and Ethics	12
	Website Access to Corporate Governance Documents	12
	Audit Committee Report	13
Executive Officers		14
Compensation of Executive Officers		15
	Compensation Discussion and Analysis	15
	Compensation Committee Report	24
	Summary Compensation Table for Fiscal Year 2013	24
	Grants of Plan-Based Awards	26
	Outstanding Equity Awards at September 28, 2013	27
	Option Exercises in Fiscal Year 2013	29
	Potential Payments Upon Termination or Change in Control	29
Equity Compensation Plans		31
Security Ownership of Certain Beneficial Owners and Management		31
Section 16(a) Beneficial Ownership Reporting Compliance		33
Certain Relationships and Related Transactions		34
Additional Information		34

SPAN-AMERICA MEDICAL SYSTEMS, INC.

Post Office Box 5231

Greenville, South Carolina 29606-5231

(864) 288-8877

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

February 20, 2014

Solicitation of Proxies

This Notice of Annual Meeting, Proxy Statement and Proxy (these “Proxy Materials”) are being furnished to shareholders in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Span-America Medical Systems, Inc. (the “Company” or “Span-America”), to be voted at the annual meeting of shareholders (the “Annual Meeting”) to be held at 9:00 a.m. EST on February 20, 2014, at the Company’s headquarters at 70 Commerce Center, Greenville, South Carolina. The approximate mailing date of these Proxy Materials is January 24, 2014.

Voting at the Annual Meeting

Shareholders of record at the close of business on January 10, 2014 (the “Record Date”) will be entitled to notice of and to vote at the Annual Meeting. At the close of business on such record date, there were outstanding 2,927,416 shares of the Company’s no par value common stock (the “Common Stock”). The Common Stock is the only class of voting securities of the Company. Holders of shares of Common Stock are entitled to one vote for each share held on the Record Date on all matters presented for action by the shareholders. The presence, either in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock of the Company as of the Record Date is necessary to constitute a quorum at the Annual Meeting. All shares represented by valid proxies received prior to the Annual Meeting and not revoked before they are exercised will be voted in accordance with specifications thereon. If no contrary instructions are indicated, all shares represented by a proxy will be voted (i) FOR the election to the Board of the nominees described herein, (ii) FOR approval of the selection of Elliott Davis, LLC as the Company’s independent registered public accounting firm for fiscal year 2014 and (iii) in the discretion of the proxy holders as to all other matters that may properly come before the Annual Meeting or any adjournment or postponement thereof.

Shares will be tabulated by inspectors of election appointed by the Company, with the aid of the Company’s transfer agent. The inspectors will not be directors or nominees for director. The inspectors shall determine, among other things, the number of shares represented at the Annual Meeting, the existence of a quorum and the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, determine the result, and do such acts as are proper to conduct the election and voting with fairness to all shareholders. A quorum will be present if holders of a majority of the shares of Common Stock outstanding on the Record Date are present in person or represented by proxy at the Annual Meeting. Directors are elected by a plurality of votes cast. The selection of Elliott Davis, LLC as the Company’s independent registered public accounting firm for fiscal year 2014 will be approved if a quorum is present and the number of votes cast in favor of approval exceeds the number of votes cast against approval. Abstentions and broker non-votes are each included in the determination of the number of shares present at the meeting, and thus are counted for purposes of determining whether a quorum is present at the meeting. However, abstentions and broker non-votes will have no effect on the election of directors or the approval of the appointment of Elliott Davis, LLC.

1

Revocation of Proxies

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. Proxies may be revoked by: (i) filing with the Secretary of the Company, at or before the Annual Meeting, a written notice of revocation bearing a later date than the proxy; (ii) duly executing a subsequent proxy relating to the same shares and delivering it to the Secretary of the Company at or before the Annual Meeting; or (iii) attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). Any written notice revoking a proxy should be sent to: Span-America Medical Systems, Inc., Post Office Box 5231, Greenville, South Carolina 29606-5231, Attention: Secretary.

PROPOSALS TO BE VOTED UPON

ITEM 1 – ELECTION OF DIRECTORS

The number of the Company’s directors is currently set at nine persons in accordance with the Company’s Articles of Incorporation. As provided in the Company’s Articles of Incorporation, the Board is divided into three classes of directors, with each class being comprised of three persons who serve separate three-year terms. Accordingly, management has nominated Richard C. Coggins, Thomas F. Grady, Jr. and Dan R. Lee to serve as directors for terms that will expire at the earlier of the 2017 annual meeting of shareholders or when their successors are duly elected.

Unless authority to vote with respect to the election of one or more nominees is “WITHHELD,” it is the intention of the persons named in the accompanying proxy to vote such proxy for the election of the nominees set forth below. All nominees are United States citizens. In the event that any of the nominees for director should become unavailable to serve as a director, which is not anticipated, the proxy holders named in the accompanying proxy will vote for other persons in their places in accordance with their best judgment. There are no family relationships among the directors, nominees and executive officers of the Company.

Directors will be elected by a plurality of votes cast at the Annual Meeting. The Company’s Articles of Incorporation provide that cumulative voting is not available in the election of directors.

Information Regarding Nominees for Director and Current Directors

The following table sets forth the names and ages of the three nominees for director and the directors who are continuing in office, the positions and offices with the Company held by each such person, and the period that each such person has served as a director of the Company.The Board recommends a vote FOR election of the three nominees for director with terms expiring in 2017 listed below.

2

Name	Age	Position or Office with the Company	Director Since
Nominees for Director with Terms Expiring in 2017
Richard C. Coggins	56	Director, Chief Financial Officer,VP - Finance and Secretary	1993
Thomas F. Grady, Jr. *	71	Director	1975
Dan R. Lee *	66	Director	2008
Continuing Directors with Terms Expiring in 2015
Guy R. Guarch *	73	Director	2003
Thomas D. Henrion *	71	Director & Chairman of the Board	1996
Linda D. Norman *	66	Director	2006
Continuing Directors with Terms Expiring in 2016
Robert H. Dick*	70	Director	1999
James D. Ferguson	57	Director, President andChief Executive Officer	1998
Robert B. Johnston *	48	Director	2004

* Directors whom the Board has determined are “independent directors” within the meaning of the listing standards of the National Association of Securities Dealers (the “NASD”) and Regulation S-K Item 407(a). A majority of the directors are “independent directors.”

Business Experience of Nominees and Directors

Mr. Coggins joined the Company as Controller in 1986. He was elected Treasurer in January 1987, Vice President of Finance in January 1989, and Secretary and Chief Financial Officer in January 1990. He currently serves as the Company’s Chief Financial Officer, Vice President – Finance and Secretary. Mr. Coggins was previously employed by NCNB National Bank in Charlotte, North Carolina from 1984 to 1986, where he served as Commercial Banking Officer and Metropolitan Area Director. Mr. Coggins was chosen as a nominee for director because of his knowledge in the fields of finance and accounting and because of his 27 years of experience managing the financial functions of the Company.

Mr. Grady joined Federal Paper Board Company, Inc. (“Federal”) in 1971, serving in various sales and marketing management positions. He served as Vice President of Sales for Federal from 1990 to 1996, when Federal was acquired by International Paper Company. Prior to the acquisition, Federal was a manufacturer and supplier of paper, packaging and wood products, which is the current business of International Paper. Following the acquisition, Mr. Grady served as Vice President of Sales with International Paper from 1996 until September 2000, when he retired. Mr. Grady was chosen as a nominee for director because of his extensive knowledge of the Company gained through 38 years of experience as a Company director and because of his significant experience in the fields of sales, marketing and corporate management.

Mr. Lee is a Member and Managing General Partner of DAS Medical, LLC (“DAS”), which he co-founded in 2010.  DAS is a contract manufacturer of disposable medical devices.  Prior to joining DAS, Mr. Lee served as President of Microtek Medical, Inc. (“Microtek”) and Senior Vice President of Ecolab, Inc. (NYSE:ECL).  He retired from those positions on December 31, 2009. Microtek is a wholly owned subsidiary of Ecolab and specializes in the design, manufacture and marketing of infection and fluid control products. Microtek was acquired by Ecolab in November 2007. Before the acquisition, Mr. Lee had served as President and Chief Executive Officer of Microtek beginning in December 2000 and Chairman of the Board beginning in May 2002. Microtek was named “Isolyser Company, Inc.” until 2002. From 1986 to 2000, Mr. Lee held various positions with Microtek or its subsidiaries and predecessors, including President, Chief Financial Officer, Chief Operating Officer and Director. Prior to his corporate positions, Mr. Lee was a partner for eight years with the CPA firm of Gallant, King & Lee, and he worked as an auditor for KPMG for five years after graduating with a Bachelor of Science degree in Accounting from Mississippi State University. Mr. Lee became a Certified Public Accountant in 1975. Until January 6, 2010, Mr. Lee was also a director of Cadence Financial Corporation (Nasdaq:CADE), a financial services corporation, and he served on the audit and compensation committees of that company’s board of directors. Mr. Lee was chosen as a nominee for director because of his extensive business and management experience in the medical industry and because of his knowledge and experience in the fields of accounting and finance.

3

Mr. Guarch retired in 2001 from C.R. Bard, Inc. (“Bard”) where he spent 32 years in various sales, marketing, and management roles. Bard is a leading multinational developer, manufacturer and marketer of medical technologies in the fields of vascular, urology, oncology and surgical specialty products. From 1993 to 2001, Mr. Guarch served as Regional Vice President – Corporate Account Management for Bard’s Southeast Region. He worked as President of Bard Venture Division in Boston, Massachusetts from 1991 to 1993. From 1988 to 1991, Mr. Guarch worked in London, England, as Vice President – Sales for the Bard Europe Division and Managing Director of Bard LTD, UK. Before 1988, Mr. Guarch worked in several sales and marketing roles for Bard’s USCI International Division in Boston, Massachusetts, which focused on the design, manufacture and sale of cardiac catheters, urological catheters and artificial arteries. Mr. Guarch also serves as director of Synergetics USA, Inc. (Nasdaq:SURG) and serves as chairman of its nominating and governance committee and as a member of its audit committee. Synergetics designs, manufactures and markets instruments and equipment for ophthalmic, ENT and neuro surgery.The Nominating Committee and the Board believe that Mr. Guarch should continue to serve as a director because of his 32 years of sales, marketing and management experience in the medical industry and because of his extensive international business experience.

Mr. Henrion is President and owner of Silver Thread Farm, LLC, a thoroughbred breeding farm in La Grange, Kentucky. From 1980 to 1999, Mr. Henrion was President, Chief Executive Officer, and Director of FoodService Purchasing Cooperative, Inc. (“FSPC”) in Louisville, Kentucky. FSPC provided equipment, food, packaging items, and financial services to quick-service restaurant operators including KFC, Taco Bell, Dairy Queen, and Pizza Hut. In March 1999, FSPC merged with the purchasing organization of Tricon Global Restaurants, Inc. (now Yum! Brands, Inc.) to form Unified Foodservice Purchasing Co-op (“UFPC”). Mr. Henrion also serves as a director for Brinly-Hardy Company, Inc., a manufacturer and marketer of various lawn care, gardening and landscaping products. The Nominating Committee and the Board believe that Mr. Henrion should continue to serve as a director and Chairman of the Board because of his extensive executive management experience in several industries and because of his experience in the fields of corporate finance and investments.

Dr. Norman has been in the field of nursing and nursing education since beginning her career in 1969. In July 2013 she was named Dean of Vanderbilt University School of Nursing in Nashville, Tennessee, where she has been employed since 1991. Dr. Norman previously held the position of Senior Associate Dean for Academics at the Vanderbilt University School of Nursing. She has been involved nationally in the areas of care of the elderly and quality improvement and patient safety in health care. Dr. Norman is the co-author of over 30 articles in professional publications, including theJournal of Nursing Administration,Nursing Economic$, Joint Commission Journal of Quality and Patient Safety and theJournal of Professional Nursing. She is also the author or co-author of chapters or books on various nursing and patient care topics in nine books published from 1990 through 2012. The Nominating Committee and the Board believe that Dr. Norman should continue to serve as a director because of her significant clinical experience and because of her knowledge of and experience in the fields of nursing and nursing education.

4

Mr. Dick has served as President of R.H. Dick & Company, an investment banking and management consulting firm, since 1998. He also has served on the board of Synergetics USA, Inc. (Nasdaq:SURG) since 1997, and serves as chairman of the board and as a member of the audit and compensation committees of that company’s board.  Synergetics designs, manufactures and markets instruments and equipment for ophthalmic and neuro surgery.  From 1996 to 1998, Mr. Dick was a partner with Boles, Knop & Company, Inc., an investment banking firm in Middlebury, Virginia.  From 1994 to 1996, Mr. Dick served as interim President, CEO, and CFO for two of Boles’ clients.  From 1982 until 1994, Mr. Dick served in various executive roles with Codman & Shurtleff, Inc., a subsidiary of Johnson & Johnson and a manufacturer of surgical instruments, implants, equipment, and other surgical products.  Mr. Dick’s positions with Codman included Director, Vice President - New Business Development, Vice President - U. S. Sales and Marketing, and Vice President - International.  From 1978 to 1982, Mr. Dick was President and CEO of Applied Fiberoptics, Inc., which designed, manufactured and marketed fiber optic products for medical and defense applications, and stereo surgical microscopes for microsurgery.  From 1969 to 1978, Mr. Dick held various sales, marketing and general management positions with the USCI division of C. R. Bard, Inc., a leading multinational developer, manufacturer and marketer of medical technologies in the fields of vascular, urology, oncology and surgical specialty products.The Nominating Committee and the Board believe that Mr. Dick should continue to serve as a director because of his extensive executive management experience in the medical industry, his investment banking experience and his knowledge of and experience in the fields of finance and accounting.

Mr. Ferguson joined the Company as Materials Manager in 1990. He was promoted to Plant Manager of the Company’s contract packaging business in 1992, Director of Contract Packaging in 1994, and Vice President of Operations in 1995. Mr. Ferguson was named President and Chief Executive Officer of the Company in 1996 and continues to serve in those roles. From 1981 to 1990, Mr. Ferguson worked for C.B. Fleet in Lynchburg, Virginia, where he served in various manufacturing management positions, ending as Director of Manufacturing. C.B. Fleet is a manufacturer and marketer of various products for feminine care, gastro care, skin care, oral rehydration and oral care. The Nominating Committee and the Board believe that Mr. Ferguson should continue to serve as a director because of his significant knowledge of and experience in the fields of manufacturing and operations and because of his 23 years of management experience with the Company.

Mr. Johnston currently serves as Executive Vice President and Chief Strategy Officer for The InterTech Group, Inc. in North Charleston, South Carolina where he has been employed since 1998. InterTech is a holding company and operator of a diverse, global group of companies with primary emphasis in the technology-driven manufacturing sector. The InterTech Group is controlled by Anita G. Zucker, the owner of approximately 8.5% of Span-America’s common stock. In addition to his duties at InterTech, Mr. Johnston was named President of The Hudson’s Bay Company (“HBC”) in August 2007 and Chief Executive Officer of HBC in April 2008. HBC is Canada’s largest diversified general merchandise retailer, operating in department store, mass merchandise, specialty and discount formats. HBC operates more than 580 retail locations and has nearly 70,000 associates located in every province in Canada. Mr. Johnston served as President and CEO of HBC until July 2008 when HBC was sold. He holds an MBA degree from the John Molson School of Business at Concordia University in Montreal as well as a Master’s degree in Public Policy and Public Administration from Concordia University. Mr. Johnston has extensive experience in mergers, acquisitions and corporate finance. He currently serves as a director of Fyffes plc (listed on the Enterprise Securities Market in Dublin and the Alternative Investment Market in London) and Circa Enterprises (TSX:CTO) and is a board member of the Lowcountry Housing Trust and the Advisory Board of The McGill University Executive Institute. He previously served as director of HBC, Canada’s National History Society and the Carolina Youth Development Center as well as a number of public and closely held companies.

5

Mr. Johnston was nominated by the Company for election as a director at the Company’s 2004 annual meeting of shareholders pursuant to an agreement dated December 17, 2003 between the late Jerry Zucker (whose shares are now held by his widow as trustee for a trust), Mr. Johnston and the Company. This agreement has been terminated and replaced by a Standstill Agreement dated March 1, 2013. The Standstill Agreement generally prohibits the InterTech Parties and their affiliates and associates from (a) acquiring beneficial ownership of 20% or more of the Company’s then outstanding common stock, (b) effecting or participating in an acquisition transaction, as defined in the Standstill Agreement, with respect to the Company, (c) making or participating in any proxy or consent solicitation with respect to the Company or (d) taking certain other actions that could affect control of the Company, as more specifically described in the Standstill Agreement. In the event any person or group other than the InterTech Parties and their affiliates and associates commences a bona fide tender offer or exchange offer to acquire at least 50.01% of the outstanding shares of the Company’s common stock, the Standstill Agreement includes an exception to the restrictions summarized above that generally permits the InterTech Parties to commence and consummate a tender offer or exchange offer to acquire the same or a larger amount of Company common stock. The Standstill Agreement provides that the restrictions summarized above shall remain in effect until the first anniversary of the date on which there ceases to be any affiliate or associate of the Zucker trust or InterTech (including but not limited to Robert Johnston) serving on the Board. The text of this March 1, 2013 agreement was filed as Exhibit 4.1 to the Company’s Form 8-K dated March 1, 2013 and is incorporated herein by reference, and the foregoing summary is qualified in its entirety by the full text of the agreement.

Even in the absence of the agreement described above, the Nominating Committee and the Board believe that Mr. Johnston should continue to serve as a director because of his extensive executive management experience with various specialty manufacturing companies and other industries and because of his significant experience in the fields of mergers, acquisitions and corporate finance.

ITEM 2 – APPROVAL OF THE SELECTION OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected Elliott Davis, LLC as the independent registered public accounting firm for the Company for its 2014 fiscal year. The Audit Committee is responsible for selecting the Company’s independent registered public accounting firm. Accordingly, shareholder approval is not required to appoint Elliott Davis, LLC as the Company’s independent registered public accounting firm for fiscal year 2014. Our Board believes, however, that submitting the appointment to the shareholders for approval is a matter of good corporate governance. Elliott Davis, LLC audited the Company’s financial statements for fiscal year 2013 and has been the Company’s independent registered public accounting firm and tax advisor since 2000.

Representatives of Elliott Davis, LLC will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders. Neither the firm nor any of its members has any relation with the Company except in the firm’s capacity as auditors and tax advisors.

6

Audit Fees

The table below and the accompanying footnotes set forth the fees paid by the Company to its independent registered public accounting firm, Elliott Davis, LLC, for the periods and in the categories indicated.

Description	Fiscal 2013				Fiscal 2012
Audit fees	$	97,490			$	86,750
Audit-related fees		9,850	(1	)		9,850	(1	)
Tax fees		23,155	(2	)		14,700	(2	)
All other fees		1,550	(3	)		41,475	(3	)
Total fees for all services	$	132,045			$	152,775

(1) Audit-related fees consist of fees paid for the audit of the Company’s 401(k) plan.

(2) Tax fees consist of fees paid for preparation of the Company’s federal and state income tax returns and tax research in fiscal 2013 and fiscal 2012.

(3) All other fees consist of the following items: in fiscal 2013, $1,550 for tax return preparation for a Named Executive Officer; and in fiscal 2012, $39,950 related to the M.C. Healthcare Products Inc. asset acquisition and $1,525 for tax return preparation for a Named Executive Officer.

The Audit Committee charter permits the committee to establish pre-approval policies and procedures to delegate authority to engage the independent auditors within certain parameters prescribed by the committee; however, the committee has not chosen to adopt any such policies and procedures and instead has itself approved all services of Elliott Davis, LLC prior to the beginning of each engagement.The Audit Committee did not approve any services pursuant to the de minimis exception set forth in 17 CFR 210.2-01(c)(7)(i)(C) during either of the last two fiscal years.

In the event that our shareholders fail to ratify the selection of Elliott Davis, LLC, our Audit Committee will reconsider the selection (but is not required to select a different independent registered public accounting firm). Even if the selection is ratified, our Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the fiscal year if our Audit Committee believes that such a change would be in the Company’s best interests and the best interests of our shareholders.

The Board recommends a vote “FOR” the ratification of the appointment of Elliott Davis, LLC as the Company’s independent registered public accounting firm for the 2014 fiscal year.

CORPORATE GOVERNANCE

DIRECTOR INDEPENDENCE

A Director is independent when our Board affirmatively determines that he or she has no material relationship with the Company, other than as a director. Our Board makes this determination in accordance with the standards set forth in the listing standards of the NASD and SEC rules. The Board has affirmatively determined that the following Directors are independent within the meaning of SEC rules and the listing standards of the NASD.

Robert H. Dick	Robert B. Johnston
Thomas F. Grady, Jr.	Dan R. Lee
Guy R. Guarch	Linda D. Norman
Thomas D. Henrion

7

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During the 2013 fiscal year, the Board held five meetings. Each director attended all of the board meetings and meetings of committees on which such directors served during the 2013 fiscal year. The Board has standing Audit, Compensation and Nominating Committees. The charters for these committees are posted on the Company’s website atwww.spanamerica.com (select “Company” then “Investor Relations” and then the desired committee charter).

Audit Committee. The Audit Committee was comprised in fiscal year 2013 of Messrs. Dick, Grady and Lee. All members of the Audit Committee are independent within the meaning of NASD listing standards and Rule 10A-3(b) under the Securities Exchange Act of 1934.The Board has determined that Messrs. Dick and Lee are “audit committee financial experts” within the meaning of Item 407(d)(5) of Regulation S-K.The Audit Committee met four times during fiscal 2013.The Audit Committee oversees the Company’s accounting and financial reporting processes, oversees the audits of the Company’s financial statements, reviews the financial reports and other financial information provided by the Company to any governmental body or the public and reviews the Company’s systems of internal controls regarding finance, accounting, legal compliance, and ethics. Its primary duties and responsibilities are to: (i) serve as an independent and objective party to monitor the Company’s financial reporting process, audits of the Company’s financial statements, and the Company’s internal control system and (ii) appoint from time to time, evaluate, and, when appropriate, replace the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company, determine the compensation of such “outside auditors” and the other terms of their engagement, and oversee the work of the outside auditors. The Company’s outside auditors report directly to the Audit Committee. The Audit Committee is also charged with establishing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

Compensation Committee. The Compensation Committee is comprised of Messrs. Grady, Henrion, and Johnston, all of whom are independent within the meaning of the NASD listing standards. The Compensation Committee met one time during the 2013 fiscal year. The primary function of the Compensation Committee is to assist the Board in fulfilling its oversight responsibilities relating to officer and director compensation. Its primary duties and responsibilities are to: (i) oversee the development and implementation of the compensation policies, strategies, plans and programs for the Company’s executive officers and outside directors; (ii) review and determine the compensation of the executive officers of the Company; and (iii) oversee the selection and performance of the Company’s executive officers and succession planning for key members of the Company’s management. Additional information on the Company’s processes and procedures for considering and determining executive and director compensation is set forth below under “Director Compensation” and “Executive Officers – Compensation of Executive Officers - Compensation Discussion and Analysis.” The Compensation Committee’s report is included below under “Compensation of Executive Officers.”

Nominating Committee. The Nominating Committee is comprised of Messrs. Dick, Guarch, and Henrion and Dr. Norman, all of whom are independent within the meaning of the NASD listing standards. The Nominating Committee met one time during the 2013 fiscal year. The primary function of the Nominating Committee is to assist the Board in fulfilling its responsibilities with respect to Board and committee membership and shareholder proposals. Its primary duties and responsibilities are to: (i) establish criteria for Board and committee membership and recommend to the Board proposed nominees for election to the Board and (ii) make recommendations regarding proposals and nominees for director submitted by shareholders of the Company.

8

BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT

Since 1994, the Board has divided its leadership structure into two separate positions: chairman of the board and chief executive officer. The Board’s policy since that time has required that the chairman of the board be an independent, non-employee director elected by the Board each year to serve a one-year term as chairman. The chief executive officer is a full-time officer and employee of the Company, who is appointed by the Board and traditionally has also served as the Company’s president and principal executive officer. The Board believes corporate governance is strengthened by a structure that allows for independent board oversight of the performance of the chief executive officer, and the Board believes such oversight is strongest if the Board is led by an independent chairman rather than by the chief executive officer himself.

The Board is actively involved in oversight of the Company’s risk through a system of monthly reports, more frequent communications with management as deemed necessary by the Board, regular Board and committee meetings and review and approval of the Company’s operating and strategic plans. Any material departure from the Company’s operating or strategic plans must be separately approved by the Board. In addition, any material investment or change in business practice that could increase the Company’s normal risk profile must be separately approved by the Board.

DIRECTOR NOMINATING PROCESS

The Nominating Committee will consider director nominees recommended by shareholders. A shareholder who wishes to recommend a person or persons for consideration as a Company nominee for election to the Board must send a written notice by mail to Secretary, Span-America Medical Systems, Inc., 70 Commerce Center, Greenville, South Carolina 29615, by fax to 864-288-8692, or by e-mail toboard@spanamerica.com that sets forth (i) the name of each person whom the shareholder recommends be considered as a nominee; (ii) a business address and telephone number for each such person (an e-mail address may also be included); and (iii) biographical information regarding such person, including the person’s employment and other relevant experience. Shareholder recommendations will be considered only if received no later than the 120^th calendar day before the first anniversary of the date of the Company’s proxy statement in connection with the previous year’s annual meeting (no later thanSeptember 19, 2014 with respect to recommendations for nominees to be considered at the2015 Annual Meeting of Shareholders). Shareholders may also make their own nominations directly (as opposed to recommending candidates for the Company to nominate) as described below under the heading “Shareholder Proposals.”

A nominee recommended for a position on the Board must meet the following minimum qualifications:

● he or she must be over 21 years of age and under 72 years of age at the time of election (the Company’s bylaws provide that no person shall be elected to serve as a director for a term that will commence after such person’s 72nd birthday);

● he or she must have experience in a position with a high degree of responsibility in a business or other organization;

● he or she must be able to read and understand basic financial statements;

● he or she must possess integrity and have high moral character;

9

● he or she must be willing to apply sound, independent business judgment; and

● he or she must have sufficient time to devote to the Company.

The Nominating Committee identifies potential nominees for director, other than potential nominees who are current directors whose terms of office are expiring and who are standing for re-election, through business and other contacts. The Nominating Committee may in the future choose to retain a professional search firm to identify potential nominees for director. In addition, the Nominating Committee will consider potential nominees who are recommended by shareholders.

The Company’s Nominating Committee evaluates a potential nominee by considering whether the potential nominee meets the minimum qualifications described above, as well as by considering the following factors:

● whether the potential nominee has leadership, strategic, or policy setting experience in a complex organization, including any scientific, governmental, educational, or other non-profit organization;

● whether the potential nominee has experience and expertise that is relevant to the Company’s business, including any specialized business experience, technical expertise, or other specialized skills, and whether the potential nominee has knowledge regarding issues affecting the Company;

● whether the potential nominee is highly accomplished in his or her field;

● in light of the relationship of the Company’s business to the medical science field, whether the potential nominee has received any awards or honors in the fields of medicine or the biological sciences and whether he or she is recognized as a leader in medicine or the biological sciences;

● whether the addition of the potential nominee to the Board would assist the Board in achieving a mix of Board members that represents a diversity of background and experience, including diversity with respect to age, gender, national origin, race, and competencies;

● whether the potential nominee has high ethical character and a reputation for honesty, integrity, and sound business judgment;

● whether the potential nominee is independent, as defined by NASD listing standards, whether he or she is free of any conflict of interest or the appearance of any conflict of interest with the best interests of the Company and its shareholders, and whether he or she is willing and able to represent the interests of all shareholders of the Company;

● whether the potential nominee is financially sophisticated, as defined by NASD listing standards, or qualifies as an audit committee financial expert, as defined by SEC rules and regulations; and

● any factor affecting the ability or willingness of the potential nominee to devote sufficient time to Board activities and to enhance his or her understanding of the Company’s business.

In addition, with respect to an incumbent director whom the Nominating Committee is considering as a potential nominee for re-election, the Company’s Nominating Committee reviews and considers the incumbent director’s service to the Company during his or her term, including the number of meetings attended, level of participation, and overall contribution to the Company. The manner in which the Nominating Committee evaluates a potential nominee does not differ based on whether the potential nominee is recommended by a shareholder or the Company.

The Nominating Committee does not have a formal written policy regarding the consideration of diversity in identifying nominees for director. However, the committee seeks to follow the guidelines described above in selecting candidates for director. The Board and Nominating Committee believe that it is beneficial to the Company and its shareholders to have a diverse mix of Board members with regard to background, experience, age, gender, national origin, race and competencies. In evaluating candidates with otherwise similar qualifications as described above, the Nominating Committee and Board would prefer a candidate who increases such diversity on the Board. We believe our current practices have been successful at increasing Board diversity, and we will continue to make diversity an important consideration when evaluating candidates for director.

10

Messrs. Coggins, Grady and Lee, nominees for director at the 2014 Annual Meeting of Shareholders, are current directors standing for re-election.

The Company did not pay any fee to any third party to identify, evaluate or assist in identifying or evaluating potential nominees for director at the 2014 Annual Meeting of Shareholders. The Company did not receive, by September 23, 2013 (the 120^th calendar day before the first anniversary of the date of the proxy statement for the Company’s 2013 annual meeting of shareholders), any recommended nominee from a shareholder who beneficially owns more than 5% of the Company’s stock or from a group of shareholders who beneficially own, in the aggregate, more than 5% of the Company’s stock.

DIRECTOR COMPENSATION

The table below sets forth the compensation paid to the Company’s non-employee directors in fiscal year 2013.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)(1)		Total ($)
Robert H. Dick	$	6,500	$	28,950	$	35,450
Thomas F. Grady, Jr.		7,000		19,300		26,300
Guy R. Guarch		4,500		19,300		23,800
Thomas D. Henrion		5,000		38,600		43,600
Robert B. Johnston		5,000		19,300		24,300
Dan R. Lee		6,500		19,300		25,800
Linda D. Norman		4,500		19,300		23,800

(1) Based on the $19.30 per share market value on January 30, 2013 when the stock compensation was issued.

Each director of the Company who is not also an officer of the Company receives an annual fee of 1,000 shares of Common Stock plus a per-diem fee of $1,000 for each Board meeting and committee meeting attended. In addition, each non-officer director receives a fee of $500 for participating in Board or committee meetings held by telephone conference call. The Chairman of the Board receives an additional 1,000 shares of Common Stock per year (for a total of 2,000 shares) plus the same per-diem and conference call fees described above. The Chairman of the Audit Committee receives an additional 500 shares of Common Stock per year (for a total of 1,500 shares) plus the same per-diem and conference call fees described above. Stock compensation is issued to directors in accordance with the 2007 Equity Incentive Plan approved by the Company’s shareholders at the 2007 annual meeting. Directors who are also employees of the Company do not receive compensation for their service as directors.

11

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board is comprised of Thomas F. Grady, Jr., Thomas D. Henrion and Robert B. Johnston. The Company is not aware of any compensation committee interlocks or insider participation in the Compensation Committee.

COMMUNICATIONS BETWEEN SHAREHOLDERS AND BOARD OF DIRECTORS

The Board provides a process for shareholders to send communications to the Board or any of the Directors. Shareholders may send written communications to the Board or any one or more of the individual Directors by mail to Secretary, Span-America Medical Systems, Inc., 70 Commerce Center, Greenville, South Carolina 29615, by fax to 864-288-8692, or by e-mail toboard@spanamerica.com.Such communications will be reviewed by our Secretary, who will remove communications relating to solicitations, junk mail, customer service concerns and the like. All other shareholder communications shall be promptly forwarded to the applicable member(s) of our Board or to the entire Board, as requested in the shareholder communication.

ATTENDANCE AT THE ANNUAL MEETING OF SHAREHOLDERS

It is the Company’s policy that all of the Company’s directors and nominees for election as directors at the Annual Meeting attend the Annual Meeting except in cases of extraordinary circumstances. All of the nominees for election at the 2013 Annual Meeting of Shareholders and all of the other directors attended the 2013 Annual Meeting of Shareholders. The Company expects all nominees and directors to attend the 2014 Annual Meeting of Shareholders.

CODE OF BUSINESS CONDUCT AND ETHICS

The Company has adopted a Code of Conduct that applies to all of the Company’s employees, including but not limited to the Company’s principal executive officer, principal financial and accounting officer and controller. Any amendments or waivers to provisions applicable to our principal executive officer, principal financial and accounting officer or controller will be posted on the Company’s website.

WEBSITE ACCESS TO CORPORATE GOVERNANCE DOCUMENTS

The Company’s Code of Conduct and Audit, Compensation and Nominating Committee Charters are posted on the Company’s website atwww.spanamerica.com (Select “Company” then “Investor Relations”).

12

AUDIT COMMITTEE REPORT

Notwithstanding any statement in any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, incorporating future or past filings, including this Proxy Statement, in whole or in part, the following Audit Committee Report shall not be incorporated by reference into any such filing unless the incorporation specifically lists the following Audit Committee Report.

The Audit Committee is comprised of three non-employee directors, all of whom are independent as defined in the NASD listing standards and as required by SEC Rule 10A-3 promulgated under the Exchange Act. The Board has determined that Audit Committee Chairman Robert H. Dick and Audit Committee member Dan R. Lee are audit committee financial experts with respect to the Company as defined by SEC regulations.

In carrying out its responsibilities, the Audit Committee has done the following:

● Reviewed and discussed the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2013 with the Company’s management and independent accountant.

● Discussed with the independent accountant the matters required to be discussed by Statement on Auditing Standards No. 61, as amended,Communication with Audit Committees (AICPA,Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

● Received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with the independent accountant its independence.

Based on the review and discussions described above, the Audit Committee recommended to the Board that the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2013 be included therein, for filing with the Securities and Exchange Commission.

All members of the 2013 Audit Committee concur in this report.

Robert H. Dick (Chairman)

Thomas F. Grady, Jr.

Dan R. Lee

13

EXECUTIVE OFFICERS

The following table sets forth all of the current executive officers of the Company and their respective ages, company positions and offices, and periods during which they have served as officers of the Company. There are no persons who have been selected by the Company to serve as its executive officers who are not set forth in the following table.

Name	Age	Company Offices Currently Held	Company Officer Since
James D. Ferguson	57	President and Chief Executive Officer	1995
Robert E. Ackley	59	Vice President of Custom Products	1995
Richard C. Coggins	56	Vice President of Finance, Secretary	1987
and Chief Financial Officer
William D. Darby	38	Director of Quality	2010
Erick C. Herlong	43	Vice President of Operations	2001
James R. O’Reagan	61	Vice President of R&D and Engineering	2001
Clyde A. Shew	56	Vice President of Medical Sales and Marketing	1996
Marie Sitter	63	Vice President of Human Resources	2004

The Company’s executive officers are appointed by the Board and serve at the direction of the Board.

Business Experience of Executive Officers

Mr. Ferguson’s business experience is set forth above under “Business Experience of Nominees and Directors.”

Mr. Ackley joined the Company as Materials Manager in 1987. He was named Director of Consumer Sales in 1993, Vice President of Marketing in 1995, Vice President of Consumer Sales in 1996, Vice President of Operations in 1998, and Vice President of Custom Products in 2000. Prior to joining the Company, Mr. Ackley worked in various operations management roles for Almay Cosmetics in North Carolina and C.B. Fleet Company in Virginia.

Mr. Coggins’ business experience is set forth above under “Business Experience of Nominees and Directors.”

Mr. Darby joined the Company as Production Manager in September 2002.  He was promoted to Plant Manager and then named Director of Quality in May 2010.  From 1997 to 2002, Mr. Darby worked for Dunlop Sports Group in various Quality Management roles and lastly as Quality Manager – Supply Chain.  Mr. Darby is a certified Six Sigma Master Black Belt through the University of Texas and graduated with a B.S. degree in Business Administration from the University of South Carolina.

Mr. Herlong joined Span-America in 1995 as Packaging Engineer. He became Production Manager in 1998 and Plant Manager in 2000. He was named Director of Operations in May 2001 and Vice President of Operations in December 2008. Before joining Span-America, Mr. Herlong worked for Dixie-Narco, a division of Maytag Corporation, an appliance manufacturer, for two years in the positions of Technical Services Representative and Materials Management Specialist. Mr. Herlong graduated from Clemson University in 1993 with a B.S. degree in Packaging Science.

Mr. O’Reagan joined the Company in August 2001 as Vice President of R&D and Engineering. From 1982 until 2001, Mr. O’Reagan worked for C.B. Fleet Company in Virginia. While at Fleet, he served in various positions including Director of Engineering, Director of Operations, Director of Global Operations Planning and Engineering, and Director of Latin America and Global Manufacturing Planning. Mr. O’Reagan holds B.S. and M.S. degrees in Mechanical Engineering from the University of Virginia.

14

Mr. Shew joined the Company as Director of Corporate Accounts in May 1996. He was promoted to Vice President of Medical Sales in October 1996 and Vice President of Medical Sales and Marketing in February 1998. From 1984 to 1996, Mr. Shew worked in various sales and marketing roles for Professional Medical Products, Inc. in Greenwood, South Carolina. His final position there was Director of Corporate Accounts, where he was responsible for contracting with multi-facility health care organizations in the United States. Professional Medical Products was a manufacturer and distributor of various health care products.

Ms. Sitter joined Span-America in 2000 as Human Resources Manager. She was promoted to Director of Human Resources in 2004. In December 2008, Ms. Sitter was named Vice President of Human Resources. Prior to joining the Company, Ms. Sitter was employed as Director of Human Resources for CDS Ensembles, a privately held manufacturer of bedding products, where she worked from 1993 to 2000.

COMPENSATION OF EXECUTIVE OFFICERS

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Decisions

The compensation of our executive officers is proposed by our Board’s Compensation Committee to the full Board and approved by resolution of the full Board. Thomas F. Grady, Jr., Thomas D. Henrion and Robert B. Johnston constituted the Compensation Committee in fiscal year 2013, and, assuming Mr. Grady is reelected as a director, they will continue to serve as members of the Compensation Committee in fiscal year 2014. Each member of the Compensation Committee is a non-employee director determined by the Board to be independent within the meaning of NASD listing standards. As requested by the Compensation Committee, our chief executive officer, Mr. Ferguson, presents individual performance review summaries, proposed annual salary adjustments and option grant recommendations for the other executive officers to the members of the Compensation Committee. The Compensation Committee reviews the information and either approves the recommendation or makes changes at the Compensation Committee’s discretion. The Compensation Committee makes its own assessment of Mr. Ferguson based on the Company’s financial performance, his compensation relative to comparable CEOs, the components of his compensation and his total compensation level. The Compensation Committee chairman then presents the Compensation Committee’s recommendation to the full Board for discussion and approval.

Shareholder Votes on Executive Compensation

The Board has evaluated the results of the shareholder votes on executive compensation that were held at the 2011 annual meeting. The shareholders voted to hold a say-on-pay advisory vote on executive compensation every two years, and the Board resolved to accept the shareholders’ recommendation. As a result, the advisory vote on executive compensation was held at the 2013 annual shareholders’ meeting. The next shareholder advisory vote on executive compensation will occur at the Company’s 2015 annual shareholders’ meeting.

At the 2013 annual meeting, the shareholders also voted to approve the compensation of the executive officers by the following vote: 1,499,239 shares “For,” 27,456 shares “Against” and 10,868 shares “Abstained.” The Board is encouraged that the executive compensation was approved by a wide margin of the votes cast on this proposal and believes that the supportive vote was an indication that the Company’s executive compensation policies are reasonably well aligned with shareholder value.

15

Compensation Policies and Objectives

In general, the Compensation Committee and the Board have structured officer compensation so as to:

● provide competitive levels of compensation that integrate pay with the Company’s annual and long-term performance goals;

● reward above-average corporate performance;

● recognize individual initiative, responsibility and achievements; and

● assist the Company in attracting and retaining qualified executives.

In addition, the Compensation Committee believes that stock ownership by management and stock-based performance compensation arrangements are beneficial because they align management’s and shareholders’ interest in the enhancement of shareholder value.

The executive officers’ overall compensation is intended to be consistent with the compensation paid to executives of companies similar in size and character to the Company, provided that the Company’s performance warrants the compensation being paid. In determining the appropriate mix of compensation, the Compensation Committee has utilized a combination of salary, cash bonuses, equity compensation and benefits. The Compensation Committee has also attempted to maintain an appropriate relationship between the compensation of the executive officers and their relative levels of responsibility within the Company.

The Compensation Committee does not maintain formal, written executive compensation policies. The Compensation Committee initially engaged a consulting firm in 2002 as described below under “Benchmarking” and has generally continued to follow guidance received in 2002 from that consultant. In 2012, the Compensation Committee engaged the same consulting firm to update the 2002 analysis. This updated analysis is further described below. Except to the extent described under “Benchmarking” and “Base Salary” below, the Compensation Committee has not relied on formulas or specific analysis in determining levels and mixes of compensation but rather has relied on its members’ subjective, but reasonable, good faith judgment based on their years of experience both with the Company and with other companies they have been involved with in their professional careers. To some degree, the structure of the Company’s executive compensation reflects a long-standing historical tradition that the Compensation Committee and the Board believe, based on their professional experience, has served the Company well. Consequently, the Compensation Committee and the Board have not sought to revisit sound prior decisions. The discussions below under the headings “Incentive Compensation – Fiscal Year 2013 Bonuses” and “Incentive Compensation – Extraordinary Bonuses” demonstrate how this subjective process resulted in specific compensation decisions.

Benchmarking

In 2002, the Compensation Committee retained the human resources and compensation advisory firm Mercer, LLC (“Mercer”) to assist the Compensation Committee in structuring the Company’s executive compensation policies and plans, focusing on total cash compensation (base salary plus annual incentives) and long-term incentives, including stock options and restricted stock awards. Mercer reviewed and confirmed the reasonableness of the Company’s salary administration system. Under this system, management assigns a particular job grade level to each Company employee, including the Named Executive Officers, using a quantitative scoring system which considers various factors under the major categories of job demands, knowledge, job content and level of responsibility. Management then assigns a salary range to each job grade level. Management used input from Mercer in assigning salary ranges in 2002, and at Mercer’s suggestion, has periodically updated the salary ranges for changes in cost of living since 2002. The structure of the salary administration system is reviewed periodically and approved by the Compensation Committee. Any material change in the Company’s salary administration system in between reviews must also be approved by the Compensation Committee.

16

Mercer evaluated the base salary and incentive compensation of the Company’s executive officers and selected jobs from each job grade level by comparing Company information to published compensation survey data from companies in the non-durable goods manufacturing segment with annual revenues similar to those of the Company (approximately $35 million at the time of the study). The survey data included information on job duties, base salary and total cash compensation at the 25^th, 50^th and 75^th percentiles, adjusted where appropriate for the geographic differential in Greenville, South Carolina. Mercer also compared the Company’s one and three-year financial performance to a different peer group of 12 publicly traded manufacturing companies identified by management and Mercer as being comparable to the Company. This analysis served as a basis to evaluate the correlation between Company performance and compensation. Mercer and the Compensation Committee generally considered compensation to be within the market competitive range if total cash compensation was within 80% to 120% of the market 50^th percentile.

Neither peer group used by Mercer for its 2002 analysis is the same as the peer group used in the Company’s Performance Graph included in Item 5 of the Company’s Annual Report on Form 10-K. For the Performance Graph, the Company has historically used a peer group consisting of publicly traded companies with the SIC code of 3842, which includes manufacturers of medical products and supplies. We chose not to design a custom peer group for Mercer’s 2002 analysis because there would be few if any directly comparable companies as we have separate competitors in the medical, consumer and industrial businesses, and we are not aware of another single competitor with a similar mix of our products or businesses. Several of our closest competitors in the medical and consumer businesses are privately held with no or limited data available. Other competitors are so much larger than the Company that we believe they are not comparable to us, particularly with regard to compensation. Mercer selected peer groups from its own “off-the-shelf” data at the request of the Company rather than collecting new “custom-made” data for the SIC code 3842 group to reduce the expense of Mercer’s engagement. Mercer advised us that they selected their peer group companies by revenue size within the industry because executive market values are strongly correlated with company revenues.

Except to the extent to which incentive compensation used to be tied to the achievement of individual performance goals as described below, job grade level is the primary factor in determining the difference between the amounts of any particular component of compensation awarded to different executive officers.

In August 2012, the Compensation Committee retained Mercer in a limited role to evaluate the competitiveness of executive compensation for the company’s eight most senior managers, which includes the Named Executive Officers. As a result of Mercer’s 2012 analysis, the Compensation Committee recommended that the salary ranges for job levels 13 and above (which currently include only the eight most senior managers) in the Company’s salary administration system be increased to more competitive levels in comparison to the Company’s peer group. The Board approved these changes in September 2012. The salary changes became effective during the first quarter of fiscal 2013 on December 1, 2012.

17

For the 2012 analysis, Mercer collected data from peer group companies and market surveys and blended the peer group and survey data together equally to develop market composite data. Companies comprising the peer group (listed below) are in the “Healthcare Supplies” and “Alternative Manufacturing” sub-industries, and are generally within 0.5 to 2.0 times Span-America’s fiscal year 2012 revenue of approximately $76 million. Mercer’s market survey data targeted companies in the “Manufacturing” industry with annual revenues generally less than $200 million.

Companies included in the peer group for Mercer’s 2012 analysis were as follows:

Company Name	Ticker	Company Name	Ticker
CCA Industries	CAW	RiceBran Technologies (1)	RIBT
Derma Sciences, Inc.	DSCI	Rochester Medical Corp.	ROCM
Eastern Company	EML	Superior Uniform Group, Inc.	SGC
Lakeland Industries, Inc.	LAKE	Synergetics USA, Inc.	SURG
Met-Pro Corporation	MPR	Taylor Devices, Inc.	TAYD
Natural Alternatives Intnl., Inc.	NAII	Utah Medical Products, Inc.	UTMD
OmegaFlex, Inc.	OFLX	WSI Industries, Inc.	WSCI
PGT, Inc.	PGTI

(1) RiceBran Technologies was formerly Nutracea (NTRZ) at the time of the 2012 study.

Base Salary

Generally, each year, our CEO, Mr. Ferguson, and the Company’s human resources personnel determine a base salary adjustment level for an employee who is an average performer based primarily on the annual change in the cost of living and also on Company performance based on several measures including but not limited to the Company’s operating income, net income, sales growth, return on equity and return on assets. Individual employees are given higher or lower raises (or no raise for low-performers) based on individual performance and where their pre-raise salary falls within the salary range for their job grade level under the salary administration system described above. Mr. Ferguson provides the Compensation Committee with his assessment of the performance of senior managers, including the executive officers other than himself, and his recommended salary changes, if any. The Compensation Committee then considers and approves or alters Mr. Ferguson’s recommendations and makes its own recommendation to the full Board for approval. The Compensation Committee uses a similar process, but without any recommendation from Mr. Ferguson, for determining the amount of base salary for Mr. Ferguson it will recommend to the Board. Each executive officer’s base salary has been revised annually since 2002 on the anniversary date of his or her last performance review, which historically has been on December 1^st for all executive officers, based generally on this procedure.

Incentive Compensation

The Management Bonus Plan. The Compensation Committee believes that a significant portion of the executive officers’ compensation should be based on corporate performance. The principal means through which the Company ties compensation to performance is through the Company’s Management Bonus Plan (the “Bonus Plan”). Participants in the Bonus Plan include the Company’s executive officers and senior management, including all of the Named Executive Officers. The Bonus Plan requires that, prior to the beginning of each fiscal year, the Board approves the Company’s operating plan, which contains financial projections for the coming fiscal year. The operating plan includes an operating profit target that takes into consideration the prior fiscal year’s operating profit, current fiscal year business conditions, expectations for the coming fiscal year and the Company’s long-term growth goals. Bonus payments are determined by a formula in the Bonus Plan and are based entirely on the Company’s actual operating profit performance in relation to the planned operating profit contained in the current fiscal year operating plan. The Compensation Committee and the Board must approve the operating profit target at the beginning of the new fiscal year. Bonus payments are not based on current fiscal year operating profit results compared with prior-fiscal year levels. Consequently, it is possible to have large bonus payments in a fiscal year when the Company’s operating profit declined from prior-fiscal year levels as long as the actual operating profit exceeded the planned operating profit by a wide margin. Conversely, it is possible to have small bonus payments or no bonus payments at all in a fiscal year when the Company’s operating profit increased over prior-fiscal year levels if actual operating profit exceeded planned operating profit by a small margin or did not reach at least 80% of the planned operating profit level.

18

Since fiscal 2005, bonuses for each of the executive officers have been based entirely on overall Company operating profit performance. Prior to fiscal 2005, bonuses for the executive officers were based approximately 60% on overall Company operating profit performance and approximately 40% on the achievement of individual targets pertinent to the participant’s business unit or area of operations that were determined by the chief executive officer and reviewed by the Compensation Committee. Individual targets have not been assigned since fiscal 2005 because the Compensation Committee and Board believed that the individual targets created potentially divisive competition among the Company’s managers and business units. In addition, it was difficult to make the individual targets equitable among managers and business units. The Compensation Committee and Board believed that having all participating managers focused on the same target was a more effective incentive system than using a number of disparate targets.

The percentage of base salary each executive officer can earn is variable starting at 0% if Company operating profit performance is less than approximately 80% of target. If the Company reaches 100% of its target operating profit performance, the bonus is approximately 25% of base salary. Bonuses can be higher if Company performance exceeds operating profit targets, and there is no cap on the amount of bonus that can be earned. Historically, the largest bonuses earned by the executive officers under the plan were approximately 63.4% of base salary and resulted from the Company achieving an operating profit in excess of 155% of that year’s target. In general, achieving 80% of the Company operating profit target requires a slight improvement in operating profit over the previous year’s performance; achieving 100% of the Company target generally requires a 15% to 20% increase in operating profit compared with the prior year; and achieving 150% of the Company target requires a 60% to 70% increase in operating profit compared with the previous year. However, the Compensation Committee may adjust these percentage ranges up or down for unusual events affecting Company operations, such as the Company’s exit of the safety catheter business in fiscal 2007 or the loss of large customers in fiscal years 2009 and 2014.

Under the executive compensation disclosure rules promulgated by the SEC, awards and payments under the Bonus Plan are classified as “non-equity incentive plan” awards and compensation, respectively, rather than “bonuses” for purposes of disclosure in the management compensation tables below because there is substantial uncertainty over whether the Bonus Plan targets will be achieved when they are established, and the targets are communicated to management after they are established.

Fiscal Year 2013 Bonuses. Fiscal year 2013 bonus payments under the Bonus Plan were based solely on the Company’s achievement of fiscal year 2013 planned operating profit targets and not on fiscal 2013 operating profit performance compared with fiscal 2012 levels. The Company’s actual operating profit for fiscal year 2013 was 87.1% of the planned operating profit target for the fiscal year. Based on the Bonus Plan formulas approved by the Compensation Committee and Board at the beginning of the fiscal year, the fiscal year 2013 operating profit performance resulted in bonus payments for the Named Executive Officers totaling 8.7% of their base salary.

19

Extraordinary Bonuses.The Compensation Committee and the Board reserve the right to award discretionary bonuses outside the scope of the Bonus Plan, either in addition to or in lieu of payments under the Bonus Plan, and to adjust the targets or calculations in the Bonus Plan. Circumstances in which the Compensation Committee or the Board would consider awarding such bonuses include but are not limited to situations in which the Company failed to meet targets under the Bonus Plan because of factors outside the control of the Company and management but in which the Compensation Committee and the Board felt management nevertheless performed well in mitigating the adverse effects of such factors. If the Compensation Committee and the Board award bonuses outside the scope of the Bonus Plan, these bonuses usually qualify as true “bonuses” under the SEC executive compensation disclosure regulations and are disclosed as bonuses in the management compensation tables below.

The Board has not granted extraordinary bonuses since fiscal year 2007 when it adjusted the formulas in the Bonus Plan to exclude the write-off of the safety catheter business from the fiscal 2007 bonus calculations. The Board made this decision because the continuing business units, medical and custom products, had excellent performances and were not affected by the safety catheter segment. In addition, the Board believed that the poor performance of the safety catheter segment was primarily the result of market conditions rather than the result of specific management decisions.

Equity Compensation

The Board and its Compensation Committee believe that it is in the best interests of the Company and its shareholders to provide equity-based compensation to the Company’s management, key employees and non-employee directors to (i) attract and retain the highest quality people for these positions, (ii) incentivize them to maximize shareholder value and (iii) better align their compensation with the interests of the Company’s shareholders. While the Board and the Compensation Committee believe that it is generally in the best interests of the Company and its shareholders to increase management’s equity ownership, the Board and the Compensation Committee have not set minimum management stock ownership requirements or determined any target levels for management equity ownership.

The 1997 Stock Option Plan and Equity Compensation from 1991 to 2011. Historically, the Compensation Committee and the Board have primarily used stock options to provide equity compensation. Prior to fiscal year 2008, the Board awarded options to the Company’s management under the Company’s 1991 Stock Option Plan, which expired in 2001, and the Company’s 1997 Stock Option Plan, which expired on October 20, 2007. The table below under the heading “Outstanding Equity Awards at September 28, 2013” shows the remaining outstanding options awarded to the Named Executive Officers under the 1997 Stock Option Plan as well as options and restricted shares awarded under the 2007 Equity Incentive Plan and the 2000 Restricted Stock Plan as described below. The last remaining options under the 1991 Stock Option Plan expired or were exercised in fiscal year 2011.

The 2007 Equity Incentive Plan. The 2007 Equity Incentive Plan (the “2007 Equity Plan”) was approved by the Company’s shareholders at the 2007 Annual Meeting of Shareholders. Under the 2007 Equity Plan, the Compensation Committee has the discretion to grant restricted and non-restricted stock awards, restricted stock units, stock options and stock appreciation rights up to an aggregate of 250,000 shares of the Company’s Common Stock, of which not more than 75,000 shares may be issued pursuant to stock awards and restricted stock unit awards. Restricted stock units represent the right to receive a specified number of shares of Common Stock upon satisfaction of the vesting conditions applicable to the award. Stock appreciation rights or “SARs” generally represent the right to receive shares of Common Stock, cash or other property equal in value to the spread between the fair market value of the Common Stock on the date the SAR is exercised and the per share exercise price of the SAR multiplied by the number of shares of Common Stock subject to the SAR.

20

The 2000 Restricted Stock Plan. To encourage management employees to increase their ownership of the Company’s stock through their own investments, the Board adopted the Company’s 2000 Restricted Stock Plan. This plan provides that at the end of each year, the Company will award to each plan participant a number of shares of restricted stock equal to half the number of shares of Company stock the participant himself or herself purchased during the year (excluding shares received on exercise of options) up to a maximum annual award of 5% of each participant’s annual salary. The restricted shares in each award vest at a rate of 25% per year beginning with the end of the year in which the purchases giving rise to the award occurred. All of the Company’s executive officers are participants in the 2000 Restricted Stock Plan. This plan also permits the Compensation Committee to make additional restricted stock awards subject to such restrictions and conditions as the Compensation Committee may establish; however, the Compensation Committee has not made any such additional awards since the plan’s inception. The 2000 Restricted Stock Plan expired on February 2, 2010, and the Compensation Committee currently does not expect to replace the plan because of low historic participation.

No Equity Compensation Grants in Fiscal Year 2013. The Board, in consultation with the Compensation Committee, did not grant equity compensation to any Company employees in fiscal year 2013.

Generally, each year, the Company’s Chief Executive Officer, Jim Ferguson, proposes option grants to the Compensation Committee. The Compensation Committee declined to grant options in fiscal years 2012 and 2013 generally because the Compensation Committee felt that (i) the cash bonuses under the Bonus Plan adequately rewarded management for the Company’s operating performance in those fiscal years and (ii) awarding equity compensation in addition to such cash bonuses was unwarranted, considering the Company’s overall performance in the prior fiscal year for each of those two fiscal years. At the recommendation of the Compensation Committee, the Board granted options in fiscal year 2011 in lieu of salary increases for fiscal year 2011 and to increase the executive officers’ incentive to create long-term growth in the Company’s stock price. The number of options awarded to each manager is determined subjectively, taking into account the manager’s individual level of responsibility and performance for the previous fiscal year, the Company’s overall financial performance in the previous fiscal year, the manager’s total compensation level, the estimated fair value of the options as calculated in accordance with Accounting Standards Codification 718-20 and the number of options granted in previous fiscal years.

Adjustment or Recovery of Awards

The Compensation Committee and the Board have not adopted a formal or informal policy regarding the adjustment or recovery of awards in the event that a restatement of the Company’s financial statements is required which would show financial results indicating that lesser bonuses, options or other incentive compensation should have been awarded with respect to the fiscal years subject to the restatement. We have not been required to restate any of our financial statements or experienced any other circumstances that would have resulted in lower incentive awards being paid or given than those actually paid or given. If we were required to restate our financial statements or otherwise adjust indicators on which performance compensation was based, the Compensation Committee and the Board would assess the circumstances and take such action as they believe legally permissible and appropriate.

Benefits

The Company has adopted certain broad-based employee benefit plans in which the Named Executive Officers participate. Benefits under these plans are not included in the compensation tables set forth below except to the extent detailed in Note 4 to the Summary Compensation Table. The Company has adopted executive officer life insurance plans that are not broadly available to other employees, and the premiums paid by the Company under these plans for the Named Executive Officers are included in the Summary Compensation Table and described in Note 4 to the Summary Compensation Table.

21

Severance Protection

The Board and the Compensation Committee generally believe that employment agreements reduce the Company’s flexibility in employment relationships and that it is in the best interests of the Company and its shareholders for all employees, including the Company’s executive officers, to be employed on an at-will basis without employment agreements. However, as an exception to this general rule, the Company has entered into severance protection agreements with each of the executive officers except Mr. Darby. Each agreement generally provides the executive officer with a lump-sum cash payment equal to either 210% (for Mr. Ferguson and Mr. Coggins) or 110% (for the other executive officers) of his or her annual compensation in the event he or she is terminated without cause following a change in control of the Company. The agreements are described in more detail below under the heading “Potential Payments Upon Termination or Change in Control – Severance Protection Agreements.”

The Board believes that its executive officers are likely to be approached from time to time by potential acquirers of the Company and believes the severance protection provided to its executive officers – who are the most vulnerable to losing their employment in connection with a change of control of the Company – will align their interests with the interests of the Company’s shareholders in situations where a change-of-control is possible by (i) encouraging them to bring contacts from potential acquirers to the attention of the Board to assist the Board in maximizing shareholder value, (ii) keeping them committed to running the Company day-to-day and (iii) increasing their support for any strategic transaction that would be beneficial to shareholders. The Board believes that Mr. Ferguson, our President and CEO, and Mr. Coggins, our Vice President and CFO, are the most vulnerable to being replaced following a change in control; therefore, their severance payments were set at a larger percentage of their annual compensation.

Tax and Accounting Implications

Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally denies a corporate income tax deduction for annual compensation in excess of $1,000,000 paid to any of the Named Executive Officers. Certain types of compensation, including performance-based compensation, are generally excluded from this deduction limit. Historically, the total annual compensation of each of the Company’s executive officers, including the President and CEO, has been substantially less than $1,000,000, so the effects of Section 162(m) have not been a significant consideration in determining executive compensation.

Section 409A of the Internal Revenue Code. Section 409A of the Internal Revenue Code generally imposes an excise tax on deferred compensation paid to employees that is not structured to comply with the requirements of Section 409A, which are complex. Section 409A imposes excise tax liability on the employee rather than the employer. However, because the Compensation Committee and the Board believe it would provide a disincentive to employees that would be contrary to the interests of the Company and its shareholders if Company employees had to pay such excise taxes on any deferred compensation they receive from the Company, the Compensation Committee and the Board seek to structure all deferred compensation arrangements so as to avoid the excise tax.

22

Compensation Decisions for Fiscal Year 2014

As discussed above under the heading “Benchmarking,” the Board has increased the Named Executive Officers’ base salaries effective December 1, 2013 to the following amounts:

Name	FY 2014 Base Salary
James D. Ferguson	$	331,000
Richard C. Coggins		214,200
Robert E. Ackley		189,959
James R. O’Reagan		177,290
Clyde A. Shew		222,800

Raises for fiscal 2014 were determined using the process described above under the heading “Base Salary,” including the recent updated analysis from Mercer with respect to the Company’s eight most senior managers. Specific raise amounts for each officer and manager were determined subjectively taking into consideration the officer’s and manager’s individual performance for the previous fiscal year, the Company’s overall financial performance for the previous fiscal year, the current estimated level of inflation and where the officer’s and manager’s pre-raise salary falls within the salary range for his or her job level in accordance with the salary administration system as described above.

The Board, on the recommendation of the Compensation Committee, has also set the bonus targets and amounts for the Named Executive Officers under the Bonus Plan for fiscal year 2014 using the procedure described above under the heading “Incentive Compensation – The Management Bonus Plan.” Bonuses will be based solely on the Company’s achievement of operating profit targets.

Relationship of Compensation Policies and Practices to the Company’s Risk Management

The Board and Compensation Committee believe that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company’s operations or financial condition. We also believe that our compensation structures are not reasonably likely to encourage excessive risk taking by our executive officers or managers. As discussed above under the headings “Incentive Compensation” and “Equity Compensation,” the primary elements of the Company’s incentive compensation are the Bonus Plan and stock options granted under the Company’s equity incentive plans. The Bonus Plan is designed to be a short-term incentive plan. It rewards all participants based on the Company’s actual fiscal year operating profit performance in relation to planned fiscal year operating profit. Participants in the Bonus Plan are incentivized to maximize the Company’s operating profit in relation to the operating plan. The operating plan for each fiscal year and the Bonus Plan formulas must be approved by the Board at the beginning of each fiscal year. Before approving the plan for each new fiscal year, the Board considers whether the plan meets the Company’s short- and long-term growth and risk management goals. Since bonus payments are tied to overall Company performance, we believe no employee has an incentive to sacrifice the Company’s best interest for his or her own self-interest. We also believe this Bonus Plan process aligns the interests of our officers, managers and shareholders by rewarding officers and managers if the Company achieves the earnings goals approved by the Board. Shareholders should in turn be rewarded by a higher stock price related to the Company’s earnings growth.

The primary means of providing long-term incentive compensation is through stock options granted under the Company’s equity incentive plans. Options are granted to officers and managers periodically by the Board as recommended by the Compensation Committee. Options are granted at 100% of the fair market value of the Company’s stock price on the date of grant. Options generally vest at the greater of 1,000 shares per year or 20% of the underlying grant per year. Since the options have value only if the Company’s stock price increases above the grant date fair market value, participants are therefore incentivized to maximize the increase in the Company’s stock price over time. We believe this process aligns the interests of the Company’s officers, managers and shareholders.

23

The Company’s sales representatives are compensated through a combination of base salary and commission payments that we believe is common in our industry. Commissions are paid based on sales of the company’s products, and commission rates vary generally depending on the profitability of the products sold. We do not believe that our commission compensation plan increases the Company’s overall risk because increased sales volume of our products does not increase the Company’s level of risk.

COMPENSATION COMMITTEE REPORT

Notwithstanding any statement in any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, incorporating future or past filings, including this Proxy Statement, in whole or in part, the following Compensation Committee Report shall not be incorporated by reference into any such filing other than the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2013 unless the incorporation specifically lists the following Compensation Committee Report.

The Compensation Committee has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. As a result, the Compensation Committee believes the Compensation Discussion and Analysis represents the intent and actions of the Compensation Committee and the Board with regard to executive compensation and has recommended to the Board that it be included in this proxy statement for filing with the SEC.

The Compensation Committee

Thomas F. Grady, Jr.

Thomas D. Henrion

Robert B. Johnston

SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2013

The following table shows the cash compensation paid or accrued by the Company during fiscal years 2011, 2012 and 2013, as well as certain other compensation paid or accrued during those fiscal years, to the Company’s Chief Executive Officer and to each of the four other most highly compensated officers (the “Named Executive Officers”).

24

Summary Compensation Table 

Name and Principal Position	Fiscal Year	Salary ($)		Stock Awards ($) (1)		Option Awards ($)(2)		Non-Equity Incentive Plan Compensation ($) (3)		All Other Compensation ($) (4)		Total ($)
James D. Ferguson	2013	$	320,233	$	-	$	-	$	28,198	$	9,326	$	357,757
President & Chief Executive Officer	2012		305,663		2,470		-		81,216		8,071		397,420
	2011		297,000		3,880		40,152		-		8,483		349,515
Richard C. Coggins	2013		206,333		-		-		18,170		8,025		232,528
VP & Chief Financial Officer	2012		196,883		-		-		52,313		6,400		255,596
	2011		191,300		-		28,680		-		5,783		225,763
Robert E. Ackley	2013		184,818		-		-		16,268		6,751		207,837
VP - Custom Products	2012		177,013		-		-		46,959		5,382		229,354
	2011		173,400		-		22,944		-		5,456		201,800
James R. O’Reagan	2013		170,212		-		-		14,963		7,133		192,308
VP - R&D and Engineering	2012		164,125		-		-		43,540		5,832		213,497
	2011		160,775		1,438		22,944		-		6,301		191,458
Clyde A. Shew	2013		213,633		-		-		18,807		9,886		242,326
VP - Medical Sales & Marketing	2012		204,467		-		-		54,242		8,253		266,962
	2011		200,300		-		28,680		-		7,388		236,368

(1) Awards were made pursuant to the Company’s 2000 Restricted Stock Plan. The amount shown in the table is the value of the portion of the award that vested in the applicable year. As provided by the plan, the number of shares awarded equals half of the number of shares purchased by the recipient in the open market (excluding the exercise of stock options) during the plan year for that award. The value of each award equals the number of shares awarded under the plan multiplied by the per share purchase price of the Company’s Common Stock paid by the Named Executive Officer in the purchase that entitled him to receive the plan shares. Each award vests at a rate of 25% of the restricted shares per year beginning on the last day of the plan year to which the award pertains. Once shares vest, they are no longer restricted within the meaning of the plan. Dividends are not paid or accrued on non-vested shares.

(2) The fair value of each option award is estimated on the grant date in accordance with Accounting Standards Codification 718-20. Fair value was calculated using the Black-Scholes options pricing model and the assumptions shown in “Note 1. Significant Accounting Policies – Stock-Based Compensation” in the Notes to Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2013.

(3) Payments made for fiscal years 2013, 2012 and 2011 under the Company’s Management Bonus Plan in accordance with the operating income targets set when awards were made at the beginning of those fiscal years are shown in the “Non-Equity Incentive Plan Compensation” column above.

(4) All other compensation includes (i) contributions to the Company’s 401(k) plan by the Company on behalf of the Named Executive Officers to match pre-tax deferral contributions from the Named Executive Officers, all of which are vested, (ii) life insurance premiums for both the term and non-term portions of the premium paid by the Company on behalf of the Named Executive Officers, and (iii) in the case of Mr. Ferguson, Mr. Coggins and Mr. Shew, payments for tax return preparation services and related Medicare tax liabilities incurred in connection with those payments for tax return preparation services.

25

All Other Compensation

Name	Year	401(k)		Life Insurance		Tax Return Preparation and Related Medicare Taxes		Total
James D. Ferguson	2013	$	6,861	$	1,158	$	1,307	$	9,326
	2012		5,763		1,158		1,150		8,071
	2011		6,125		1,158		1,200		8,483
Richard C. Coggins	2013		6,466		824		735		8,025
	2012		4,896		824		680		6,400
	2011		4,359		824		600		5,783
Robert E. Ackley	2013		5,794		957		-		6,751
	2012		4,425		957		-		5,382
	2011		4,499		957		-		5,456
James R. O’Reagan	2013		5,344		1,789		-		7,133
	2012		4,043		1,789		-		5,832
	2011		4,512		1,789		-		6,301
Clyde A. Shew	2013		6,697		1,617		1,572		9,886
	2012		5,111		1,617		1,525		8,253
	2011		4,446		1,617		1,325		7,388

For more information on individual items of compensation disclosed in the Summary Compensation Table above, see the disclosure set forth under the headings “Base Salary,” “Incentive Compensation,” “Equity Compensation” and “Benefits” contained in the “Compensation Discussion and Analysis” above, which disclosure is incorporated herein by reference.

GRANTS OF PLAN-BASED AWARDS

The table below sets forth certain information about fiscal year 2013 awards made under the Company’s Management Bonus Plan.

		Estimated Future Payouts
		Under Non-Equity Incentive Plan Awards
Name	Grant Date (1)	Threshold ($)		Target ($)(2)		Maximum ($)
James D. Ferguson
Bonus Plan	11/01/12	$	0	$	80,700		(2	)
Richard C. Coggins
Bonus Plan	11/01/12		0		52,000		(2	)

26

		Estimated Future Payouts
		Under Non-Equity Incentive Plan Awards
Name	Grant Date (1)	Threshold ($)	Target ($)(2)	Maximum ($)
Robert E. Ackley
Bonus Plan	11/01/12	0	46,559	(2	)
James R. O’Reagan
Bonus Plan	11/01/12	0	42,824	(2	)
Clyde A. Shew
Bonus Plan	11/01/12	0	53,825	(2	)

(1) The Grant Date shown in the table above is the date on which the Board approved the bonus plan for fiscal 2013.

(2) Bonuses for fiscal year 2013 were based on the Company’s achievement of operating profit performance in relation to its operating plan. The target amount shown in the table above for each Named Executive Officer equals 25% of the Named Executive Officer’s base salary on the date of his fiscal 2013 salary review, which was December 1, 2012. Under the bonus plan formula, there is no cap on the maximum bonus that can be earned in a fiscal year. Historically, the largest bonuses ever earned were 63.4% of each Named Executive Officer’s base salary. Actual bonus payouts for fiscal year 2013 were 8.7% of each Named Executive Officer’s base salary and were below the target. These amounts are shown in the Summary Compensation Table above. For additional information on the Management Bonus Plan, see the discussion above in the Compensation Discussion and Analysis under the heading “Incentive Compensation – The Management Bonus Plan.”

For more information on the awards and grants disclosed in the Grants of Plan-Based Awards Table above, see the disclosure set forth under the heading “Incentive Compensation” contained in the “Compensation Discussion and Analysis” above, which disclosure is incorporated herein by reference.

OUTSTANDING EQUITY AWARDS AT SEPTEMBER 28, 2013

The table below lists all outstanding Company stock options granted under the Company’s 1997 Stock Option Plan and 2007 Equity Incentive Plan as of September 28, 2013. As of that date, no shares of restricted stock issued under the Company’s 2000 Restricted Stock Plan remained unvested.

27

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

		Option Awards
		Number of		Number of
		Securities		Securities
		Underlying		Underlying
		Unexercised		Unexercised
		Options		Options		Option		Option
	Grant	(#)		(#)(1)		Exercise		Expiration
Name	Date	Exercisable		Unexercisable		Price		Date
Ferguson	02/11/04		4,519		-	$	10.52	02/11/14
	02/10/05		4,519		-		9.18	02/10/15
	08/07/06		3,551		-		9.67	08/07/16
	02/11/09		3,000		-		9.34	02/11/19
	11/09/10		4,200		2,800		14.90	11/09/20
Sub-total			19,789		2,800
Coggins	02/11/04		2,582		-		10.52	02/11/14
	02/10/05		2,582		-		9.18	02/10/15
	08/07/06		2,583		-		9.67	08/07/16
	02/11/09		2,500		-		9.34	02/11/19
	11/09/10		3,000		2,000		14.90	11/09/20
Sub-total			13,247		2,000
Ackley	02/11/04		2,582		-		10.52	02/11/14
	02/10/05		2,582		-		9.18	02/10/15
	08/07/06		2,583		-		9.67	08/07/16
	02/11/09		2,000		-		9.34	02/11/19
	11/09/10		3,000		1,000		14.90	11/09/20
Sub-total			12,747		1,000
O’Reagan	02/11/04		2,582		-		10.52	02/11/14
	02/10/05		2,582		-		9.18	02/10/15
	08/07/06		2,583		-		9.67	08/07/16
	02/11/09		2,000		-		9.34	02/11/19
	11/09/10		3,000		1,000		14.90	11/09/20
Sub-total			12,747		1,000
Shew	02/11/04		2,582		-		10.52	02/11/14
	02/10/05		2,582		-		9.18	02/10/15
	08/07/06		2,583		-		9.67	08/07/16
	02/11/09		2,500		-		9.34	02/11/19
	11/09/10		3,000		2,000		14.90	11/09/20
Sub-total			13,247		2,000
Total			71,777		8,800

(1) The unexercisable options shown above will vest at the rate of 1,400 shares per year for Mr. Ferguson and 1,000 shares per year for the other officers beginning on July 1, 2014.

28

OPTION EXERCISES IN FISCAL YEAR 2013

The following table sets forth information with respect to the Company’s Named Executive Officers concerning the exercise of options during the 2013 fiscal year. There are no outstanding unvested restricted stock awards and no such awards vested in fiscal year 2013.

	Option Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($) (1)
James D. Ferguson	6,458	$ 82,662
Richard C. Coggins	3,875	50,763
Robert E. Ackley	3,229	43,301
James R. O’Reagan	3,229	41,719
Clyde A. Shew	3,875	50,453

(1) The “value realized” on option exercises is determined by subtracting the amount paid upon exercise of the options from the market value of the underlying Common Stock as of the exercise date.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Severance Protection Agreements

All Span-America employees, including the Named Executive Officers, are employed at will by the Company and do not have employment agreements. The Company has entered into severance protection agreements dated July 25, 2002 with each of its Named Executive Officers. The agreements provide for a lump sum severance payment of either 110% (for Messrs. Ackley, O’Reagan and Shew) or 210% (for Messrs. Ferguson and Coggins) of each executive’s annual compensation if the executive’s employment is terminated without cause (as defined in the agreements) within one year following a change in control. For purposes of determining the annual amount of an element of compensation that is not fixed, such as a bonus, the annual amount is deemed equal to the average of such component over the three-year period immediately prior to termination. An amount equal to 10% of the Named Executive Officer’s base salary at the rate in effect immediately prior to the change in control is deemed to be the value of lost benefits. The agreements also provide for vesting of the executives’ then outstanding options and restricted stock following such termination. The agreements have a rolling term of one year (except for Mr. Ferguson’s and Mr. Coggins’ agreements, which have two-year terms) that automatically extend each day for an additional day without any action by either party. Either party to an agreement may terminate the agreement by written notice to the other. Upon such notice, the agreement will cease to extend automatically and will be terminated one year from the notice date (two years for Mr. Ferguson’s and Mr. Coggins’ agreements).

The severance protection agreements include “double trigger” provisions, meaning that any payments and benefits are paid only if (i) there is a “change in control” and (ii) the covered executive officer is terminated without cause within one year following a “change in control.” We believe this “double trigger” approach is appropriate because it enhances retention following a change in control, and a change in control may require the continued services of an executive officer without a change in that officer’s position, role or compensation opportunities. Furthermore, the “double trigger” approach is intended to motivate the covered executive officer to remain with us, or any successor to us, in spite of any disruptions or dislocations resulting from ownership changes. We believe that such “double trigger” provisions, both presently and prospectively, enhance shareholder value by ensuring business continuity in the event of a change in control and allow us to employ and retain executives who are truly committed to our business.

29

Under the severance agreements, “change in control” is generally defined as (i) the acquisition by any person of securities representing 35% or more of the combined voting power of the Company’s outstanding voting securities; (ii) during any period of up to two consecutive years, individuals who, at the beginning of such period, constitute the Board, or whose nomination as directors was approved by two-thirds of such persons or successors to such directors who were previously so approved, cease for any reason to constitute a majority of the Board; (iii) the shareholders of the Company approve a merger or consolidation of the Company with any corporation other than (A) a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to the merger or consolidation continuing to represent at least 51% of the voting power of the surviving entity, (B) a merger or consolidation effected to implement a recapitalization of the Company that meets certain conditions or (C) a plan of complete liquidation of the Company or a sale of substantially all of the Company’s assets; or (iv) the occurrence of any other event that the Board determines affects control of the Company and with respect to which the Board adopts a resolution that such event constitutes a change in control for purposes of the severance agreements.

The severance agreements contain a “golden parachute savings clause” that generally provides that if the Company’s independent accountants determine that severance payments under the agreements would constitute “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code, then the payments will be reduced to the point that they do not constitute “excess parachute payments.” The agreements also provide that the Company must indemnify the Named Executive Officer against any penalties or excise taxes the Named Executive Officer might incur if the payments do cause a “parachute payment” within the meaning of Section 280G(b)(2) of the Internal Revenue Code. The agreements provide that if a Named Executive Officer becomes entitled to receive severance payments in connection with any change in control, then any non-compete agreement between the Named Executive Officer and the Company terminates. The agreements also require the Company to pay reasonable accountant’s, attorney’s and actuary’s fees incurred by a Named Executive Officer in confirming his or her rights under his or her agreement, in enforcing those rights and in responding to a tax audit related to payment of benefits under his or her agreement.

The table below sets forth the severance payments to which the Named Executive Officers would have been entitled had change in control severance payments been determined as of September 28, 2013 and also the death benefit payable under the life insurance policy on the life of each of the Named Executive Officers purchased by the Company had such Named Executive Officer passed away on September 28, 2013.

30

Involuntary Termination Change-in-Control and
Death Benefits at September 28, 2013
													Life
	Accrued												Insurance
	Compen-		Annual Compensation				Lost		Option				Death
Name	sation		Salary		Bonus		Benefits		Vesting (1)		Total		Benefit
Ferguson	$	28,198	$	645,600	$	72,943	$	32,280	$	18,802	$	797,823	$	100,239
Coggins		18,170		416,000		46,989		20,800		13,430		515,389		107,899
Ackley		16,268		186,235		21,076		18,624		6,715		248,918		110,476
O’Reagan		14,963		171,295		19,501		17,130		6,715		229,604		87,146
Shew		18,807		215,300		24,350		21,530		13,430		293,417		96,463

(1) The amount shown represents the aggregate amount of the differences between the market value of the Common Stock on September 28, 2013 and the exercise prices of unvested options that would have vested as a result of involuntary termination following a change in control at September 28, 2013.

EQUITY COMPENSATION PLANS

The following table summarizes information regarding our equity compensation plans as of September 28, 2013:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)(1)		(b)		(c)
Equity compensation plans approved by security holders (1)		119,405	$	11.30		190,500
Equity compensation plans not approved by security holders		0		0		0
Total		119,405	$	11.30		190,500

(1) Includes options granted under the 1997 Stock Option Plan, which plan expired in 2007, and options granted under the 2007 Equity Incentive Plan.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth below is furnished as of the Record Date, with respect to Common Stock owned beneficially or of record by (i) persons known to the Company to be the beneficial owners of more than 5% of the Common Stock as of the Record Date, (ii) each of the directors and nominees individually, (iii) each of the Named Executive Officers included in the summary compensation table, and (iv) all directors and executive officers as a group. Unless otherwise noted, each person has sole voting and investment power with respect to such person’s shares shown in the table. All share amounts in the table include shares which are not outstanding but which are the subject of options exercisable in the 60 days following the Record Date. All percentages are calculated based on the total number of outstanding shares, plus the number of shares for the particular person or group which are not outstanding but which are the subject of options exercisable in the 60 days following the Record Date.

31

	Amount/Nature
Name and Address	of Beneficial			Percent
of Beneficial Owner	Ownership			of class
Beneficial Owners of More Than 5% of the Company’s Common Stock
Fidelity Puritan Trust		288,000	(1)		9.8%
82 Devonshire Street
Boston, MA 02109
Anita G. Zucker, as Trustee of		249,310	(2)		8.5%
Jerry Zucker Revocable Trust
c/o The Inter Tech Group, Inc.
4838 Jenkins Avenue
North Charleston, SC 29405
Morgan Dempsey Capital Management LLC		161,879	(3)		5.5%
309 N Water Street, Suite 510
Milwaukee, WI 53202
Santa Monica Partners, LP		150,432	(4)		5.1%
1865 Palmer Avenue
Larchmont, NY 10538
Directors and Nominees
Richard C. Coggins		55,949	(5)		1.9%
Robert H. Dick		26,000	(6)		*
James D. Ferguson		103,261	(7)		3.5%
Thomas F. Grady, Jr.		45,595			1.6%
Guy R. Guarch		13,000			*
Thomas D. Henrion		140,984	(8)		4.8%
Robert B. Johnston		259,310	(9)		8.9%
Dan R. Lee		9,500			*
Linda D. Norman		8,400			*
Named Executive Officers
James D. Ferguson		103,261	(7)		3.5%
Robert E. Ackley		20,558	(10)		*
Richard C. Coggins		55,949	(5)		1.9%
James R. O’Reagan		28,042	(11)		*
Clyde A. Shew		38,719	(12)		1.3%
Directors and Executive Officers as a Group
All Directors and Executive		777,066	(13)		25.7%
Officers of the Company as a
Group (15 persons)

32

(1) The amount shown as beneficially owned by Fidelity Puritan Trust is based on its Form N-Q filed on December 30, 2013.

(2) The amount shown as beneficially owned by Mrs. Anita G. Zucker is based on her Schedule 13D/A filed on June 14, 2012.

(3) The amount shown as beneficially owned by Morgan Dempsey Capital Management LLC is based on its Schedule 13F-HR filed on November 25, 2013.

(4) The amount shown as beneficially owned by Santa Monica Partners, LP is based on its Schedule 13D/A filed on July 17, 2002.

(5) The amount shown as beneficially owned by Mr. Coggins includes 13,247 shares subject to options held by Mr. Coggins which are exercisable within 60 days of the Record Date.

(6) The amount shown as beneficially owned by Mr. Dick includes 1,000 shares held in an IRA account.

(7) The amount shown as beneficially owned by Mr. Ferguson includes 19,789 shares subject to options held by Mr. Ferguson which are exercisable within 60 days of the Record Date.

(8) The amount shown as beneficially owned by Mr. Henrion includes 8,200 shares owned by his spouse. Mr. Henrion disclaims beneficial ownership with respect to the shares owned by his spouse. The amount also includes 44,026 shares owned in a brokerage account with margin capabilities.

(9) The amount shown as beneficially owned by Mr. Johnston consists of 10,000 shares owned directly by Mr. Johnston and 249,310 shares owned directly by Mrs. Anita G. Zucker who controls The InterTech Group, Inc., Mr. Johnston’s employer. Mr. Johnston disclaims beneficial ownership with respect to the shares owned by Mrs. Zucker. The 10,000 shares are held in a brokerage account with margin capabilities.

(10) The amount shown as beneficially owned by Mr. Ackley includes 12,747 shares subject to options held by Mr. Ackley which are exercisable within 60 days of the Record Date.

(11) The amount shown as beneficially owned by Mr. O’Reagan includes 12,747 shares subject to options held by Mr. O’Reagan which are exercisable within 60 days of the Record Date.

(12) The amount shown as beneficially owned by Mr. Shew includes 13,247 shares subject to options held by Mr. Shew which are exercisable within 60 days of the Record Date.

(13) The amount shown as beneficially owned by all directors and executive officers as a group includes 93,524 shares subject to options held by such persons which are exercisable within 60 days of the Record Date and the 249,310 shares owned directly by Mrs. Anita G. Zucker who controls The InterTech Group, Inc., the employer of Company director Robert Johnston.

* Less than one percent.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities to file with the Securities and Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Executive officers, directors and greater than 10% beneficial owners of the Company’s Common Stock are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required during the 2013 fiscal year, the Company believes that all of its executive officers and directors and all beneficial owners of more than 10% of the Company’s Common Stock of which the Company is aware filed the required reports on a timely basis under Section 16(a), except for one Form 4 for one transaction on November 20, 2012 filed late by Mr. Henrion and one Form 4 for one transaction on December 4, 2012 filed late by Mr. Ackley.

33

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company is not aware of any relationships or related party transactions required to be disclosed in this Proxy Statement pursuant to Item 404 of Regulation S-K.

The Company does not have policies or procedures as contemplated in Item 404(b) of Regulation S-K for the review, approval or ratification of related party transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K because the Company has not had any such transactions in reasonably recent history and does not anticipate any such transactions being proposed in the foreseeable future. If any such transaction is proposed in the future, the Board would expect to adopt appropriate policies and procedures at that time.

ADDITIONAL INFORMATION

SHAREHOLDER PROPOSALS

Proposals by shareholders for consideration at the 2015 Annual Meeting of Shareholders must be received at the Company’s offices at 70 Commerce Center, Greenville, South Carolina 29615 no later than September 19, 2014 if any such proposal is to be eligible for inclusion in the Company’s proxy materials for its 2015 Annual Meeting of Shareholders. Under the regulations of the SEC, the Company is not required to include shareholder proposals in its proxy materials unless certain other conditions specified in those regulations are satisfied.

If shareholders wish to nominate their own candidates for director (as opposed to recommending candidates to be nominated by the Company as described above under the heading “Corporate Governance – Director Nominating Process”), shareholder nominations for directors at the 2015 Annual Meeting of Shareholders must be submitted to the Company in proper written form (as provided in the Company’s bylaws) and must be received by the Secretary of the Company at the above address no later than the close of business on the 30^th day prior to the date of the 2015 Annual Meeting and no earlier than the close of business on the 60^th day prior to the date of the 2015 Annual Meeting. Other shareholder proposals to be brought before the 2015 Annual Meeting of Shareholders must be submitted to the Company in proper written form (as provided in the Company’s bylaws) and must be received by the Secretary of the Company at the above address no later than the close of business on December 22, 2014 and no earlier than the close of business on November 22, 2014 if any such proposals are to be eligible to be brought up and considered at the 2015 Annual Meeting.

PROXY SOLICITATION

Cost of Solicitation

The Company will bear the cost of this proxy solicitation, including the cost of preparing, handling, printing and mailing these Proxy Materials. Employees and officers will be reimbursed for any actual, out-of-pocket expenses they incur in connection with the solicitation. Proxies will be solicited principally by mail but may also be solicited by telephone or through personal solicitation conducted by regular employees of the Company without additional compensation. The Company has also engaged Corporate Communications, Inc., in Nashville, Tennessee, to assist in investor relations activities, including distributing shareholder information and contacting brokerage houses, custodians, nominees and fiduciaries, for a fee of approximately $5,000 plus reimbursement of reasonable, out-of-pocket expenses.

34

Banks, Brokers and Other Custodians

Banks, brokers and other custodians are requested to forward proxy solicitation materials to their customers where appropriate, and the Company will reimburse such banks, brokers and custodians for their reasonable, out-of-pocket expenses in sending the Proxy Materials to beneficial owners of Common Stock.

DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS

We may deliver only one set of these Proxy Materials to shareholders who share a single address unless we have received contrary instructions from any shareholder at the address. In that case, we will deliver promptly a separate copy of these Proxy Materials. Even if we deliver only one set of these Proxy Materials to shareholders who share a single address, each shareholder will still receive his, her or its own proxy card utilized to vote. For future deliveries, shareholders who share a single address can request a separate copy of our Proxy Materials. Similarly, if multiple copies of these Proxy Materials are being delivered to a single address, shareholders can request a single copy of these Proxy Materials for future deliveries. To make a request, please call (864) 288-8877 ext. 6922 or write to the Secretary, Span-America Medical Systems, Inc., 70 Commerce Center, Greenville, South Carolina 29615.

FINANCIAL INFORMATION

The Company’s 2013 Annual Report on Form 10-K containing financial statements reflecting the financial position and results of operations of the Company for the fiscal year ended September 28, 2013, but excluding exhibits, is being mailed to shareholders with these Proxy Materials.The Company will provide without charge to any shareholder of record as of January 10, 2014, and to each person to whom these Proxy Materials are delivered in connection with the Annual Meeting, who so requests in writing, a copy of such Annual Report on Form 10-K including all exhibits thereto. Any such request should be directed to Span-America Medical Systems, Inc., P.O. Box 5231, Greenville, South Carolina 29606-5231 Attention: Richard C. Coggins, or by email to rcoggins@spanamerica.com.

OTHER MATTERS

Management of the Company is not aware of any other matter to be brought before the Annual Meeting. If other matters are duly presented for action, it is the intention of the persons named in the enclosed proxy to vote on such matters in accordance with their best judgment.

By Order of the Board of Directors,

/s/ Richard C. Coggins

Richard C. Coggins

Secretary

January 17, 2014

Greenville, South Carolina

35

SPAN-AMERICA MEDICAL SYSTEMS, INC.

Post Office Box 5231

Greenville, South Carolina 29606-5231

PROXY

SPAN-AMERICA MEDICAL SYSTEMS, INC.

Annual Meeting – February 20, 2014

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned shareholder of Span-America Medical Systems, Inc. (the “Company”), hereby revoking all previous proxies, hereby appoints THOMAS D. HENRION and JAMES D. FERGUSON, and each of them individually, the attorney of the undersigned with power of substitution, to vote all stock of the Company standing in the name of the undersigned upon all matters at the Company’s Annual Meeting of Shareholders to be held at the Company’s headquarters at 70 Commerce Center, Greenville, South Carolina, on Thursday, February 20, 2014, at 9:00 a.m. EST and at any adjournments or postponements thereof, with all powers the undersigned would possess if personally present, and without limiting the general authorization and power hereby given, directs said attorneys or either of them to cast the undersigned’s vote as specified on the reverse side.

(Continued and to be signed on the reverse side)

ANNUAL MEETING OF SHAREHOLDERS OF

SPAN-AMERICA MEDICAL SYSTEMS, INC.

February 20, 2014

9:00 a.m. EST

70 Commerce Center, Greenville, SC 29615

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on February 20, 2104:

The Notice of Meeting, proxy statement, proxy card and annual report

are available athttp://www.irinfo.com/span/html/annrep.htm

Please sign, date and mail your proxy card in the envelope provided as soon as possible.

Please detach along the perforated line and mail in the envelope provided.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” APPROVAL OF THE SELECTION OF ELLIOTT DAVIS, LLC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2014 IN PROPOSAL 2. THE NOMINEES FOR DIRECTOR LISTED BELOW WERE NOMINATED BY THE COMPANY’S BOARD OF DIRECTORS, AND PROPOSAL 2 IS BEING MADE BY THE COMPANY. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:

☒

1. Election of Directors as set forth in the accompanying Proxy Statement (except as marked to the contrary below).

			NOMINEES
☐	FOR ALL NOMINEES	☐	Richard C. Coggins
		☐	Thomas F. Grady, Jr.
☐	WITHHOLD AUTHORITY	☐	Dan R. Lee
	FOR ALL NOMINEES
☐	FOR ALL EXCEPT
	(See instructions below)

INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the box next to each nominee you wish to withhold as shown here: ■

2. The proposal to approve the selection of Elliott Davis, LLC as the Company’s independent registered public accounting firm for fiscal year 2014.

For Against  Abstain 

3. At their discretion, proxies are authorized to vote upon such other matters as may properly come before the meeting.

No approval of any matter is conditioned on the approval of any other matter.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SPAN-AMERICA MEDICAL SYSTEMS, INC., IS REVOCABLE AND WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE BY THE UNDERSIGNED. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED “FOR” ALL OF THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” APPROVAL OF THE SELECTION OF ELLIOTT DAVIS, LLC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2014 IN PROPOSAL 2.

Your properly signed and dated proxy card must be received at the address on the envelope provided with this proxy no later than 11:59 p.m. EST on February 19, 2014 in order for your shares to be voted by this proxy at the meeting.

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please notethat changes to the registered name(s) on the account may not be submitted via this method.  ☐

Signature of Shareholder:	Date:
Signature of Shareholder:	Date:

NOTE: Please sign your name exactly as the name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.