SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Bassett Furniture Industries, Incorporated
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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BASSETT FURNITURE INDUSTRIES, INCORPORATED
BASSETT, VIRGINIA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 26, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Bassett
Furniture Industries, Incorporated (the "Company"), will be held at the
Company's headquarters at 3525 Fairystone Park Highway, Bassett, Virginia, on
Tuesday, March 26, 2002, at 11:00 a.m., local time, for the purpose of
considering and acting upon the following:
1. The election of nine Directors.
2. A proposal to ratify the selection of Arthur Andersen LLP as
independent public accountants for the fiscal year ending November 30,
2002.
3. Any and all other matters that may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on February 15, 2002
as the record date for determining the stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof, and only holders of Common
Stock of the Company of record at such date will be entitled to notice of or to
vote at the meeting.
THE BOARD OF DIRECTORS WILL APPRECIATE THE PROMPT RETURN OF THE ENCLOSED
PROXY, DATED AND SIGNED. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT
IS EXERCISED AND WILL NOT BE EXERCISED IF YOU ATTEND THE MEETING AND VOTE IN
PERSON.
By Order of the Board of Directors
Robert H. Spilman, Jr.
Chief Executive Officer and President
Bassett, Virginia
February 22, 2002
BASSETT FURNITURE INDUSTRIES, INCORPORATED
POST OFFICE BOX 626, BASSETT, VIRGINIA 24055
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of proxies to be used at the Annual Meeting of
Stockholders of Bassett Furniture Industries, Incorporated (the "Company") to be
held at the Company's headquarters at 3525 Fairystone Park Highway, Bassett,
Virginia, at 11:00 a.m., local time, on Tuesday, March 26, 2002. This Proxy
Statement and accompanying proxy are being sent to the stockholders of the
Company on or about February 22, 2002.
Solicitation other than by mail may be made personally and by telephone by
regularly employed officers and employees of the Company who will not be
additionally compensated therefor. The Company will request brokers, dealers,
banks or voting trustees, or their nominees, who hold stock in their names for
others or hold stock for others who have the right to give voting instructions,
to forward proxy materials to their principals and request authority for the
execution of the proxy and will reimburse such institutions for their reasonable
expenses in so doing. The total cost of soliciting proxies will be borne by the
Company.
Any proxy delivered in the accompanying form may be revoked by the person
executing the proxy at any time before the authority thereby granted is
exercised, by written request addressed to Barry C. Safrit, Chief Financial
Officer, Bassett Furniture Industries, Incorporated, Post Office Box 626,
Bassett, Virginia 24055 or by attending the meeting and electing to vote in
person. Proxies received in such form will be voted as therein set forth at the
meeting or any adjournment thereof.
The only matters to be considered at the meeting, so far as known to the
Board of Directors, are the matters set forth in the Notice of Annual Meeting of
Stockholders, and routine matters incidental to the conduct of the meeting.
However, if any other matters should come before the meeting or any adjournment
thereof, it is the intention of the persons named in the accompanying form of
proxy, or their substitutes, to vote said proxy in accordance with their
judgment on such matters.
Stockholders present or represented and entitled to vote on a matter at the
meeting or any adjournment thereof will be entitled to one vote on such matter
for each share of Common Stock, par value $5.00 per share, of the Company (the
"Common Stock") held by them of record at the close of business on February 15,
2002, which is the record date for determining the stockholders entitled to
notice of and to vote at such meeting or any adjournment thereof. Voting on all
matters, including the election of Directors, will be by voice vote or by show
of hands. The number of shares of Common Stock of the Company outstanding on
February 15, 2002 was 11,730,274.
Presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting will
constitute a quorum. If a quorum is present, Directors will be elected by a
plurality of the votes cast and action on other matters submitted to the
stockholders will be approved if the votes cast in favor of the action exceed
the votes cast opposing the action. Shares for which the holder has elected to
abstain or to withhold the proxies' authority to vote (including broker
non-votes) on a matter will count toward a quorum but will have no effect on the
action taken with respect to such matter.
PRINCIPAL STOCKHOLDERS AND HOLDINGS OF MANAGEMENT
The table below presents certain information as to the only persons known
to the Company to be the beneficial owners of more than 5% of the Common Stock
of the Company as of February 15, 2002. Except as otherwise noted, each of the
beneficial owners listed below has sole voting and investment power with respect
to the shares listed.
1
AMOUNT AND
NAME AND ADDRESS OF NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING
------------------- -------------------- -----------------
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue 955,375(1) 8.14%
11th Floor
Santa Monica, CA 90401
Bassett Employee Savings/
Retirement Plan 750,962(2) 6.40%
Barry C. Safrit, Trustee
Bassett, VA 24055
Royce & Associates, Inc.
1414 Avenue of the Americas 748,762(3) 6.38%
New York, NY 10019
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(1) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of these shares which are
held by certain investment companies, trusts and other investment vehicles
for which Dimensional serves as investment advisor or manager. Dimensional
has sole investment and voting power with respect to all of these shares.
Dimensional disclaims beneficial ownership of all such shares. The
information provided is based upon a Schedule 13-G dated January 30, 2002,
filed by Dimensional.
(2) In his capacity as Trustee, Barry C. Safrit, Vice President and Chief
Financial Officer of the Company, has sole voting and dispositive power
over these shares. Mr. Safrit disclaims beneficial ownership of these
shares.
(2) Royce & Associates, Inc. ("Royce"), a registered investment advisor, has
sole voting and investment power with respect to all of these shares, which
it holds on behalf of its clients. The information provided is based upon a
Schedule 13-G dated December 31, 2001, filed by Royce.
The following table sets forth, as of February 15, 2002, information as
to the beneficial ownership of the Common Stock by all Directors and executive
officers of the Company as a group and by the named Executive Officers who are
not also nominees for Directors. Information with respect to the beneficial
ownership of the Common Stock by the nominees for Directors is contained in the
table under "Election of Directors."
2
AMOUNT AND
NAME OF NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING
---------------- --------------------- -----------------
Directors and executive
officers as a group 1,668,774(2,3) 14.23%
(19 persons)
Barry C. Safrit, individually and as
Trustee of the Bassett Employee
Savings/Retirement Plan 767,284(3,4) 6.54%
Keith R. Sanders 19,000(4) (1)
John E. Bassett, III 83,720(4) (1)
Thomas E. Prato 39,849(4) (1)
(1) Less than 1% of the outstanding Common Stock.
(2) Includes 724,524 shares subject to options held by Directors and executive
officers that are currently exercisable or that are exercisable within 60
days.
(3) Includes 750,962 shares held by the Company's Employee Savings/Retirement
Plan, for which Barry C. Safrit, Vice President of the Company, has sole
voting and dispositive power in his capacity as Trustee. Mr. Safrit
disclaims beneficial ownership of these shares.
(4) Includes shares subject to options that are currently exercisable or that
are exercisable within 60 days as follows: Mr. Safrit 15,000, Mr. Sanders
15,000, Mr. Bassett 50,408, and Mr. Prato 37,681.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide for nine Directors. At the meeting,
nine Directors will be elected to serve, subject to the provisions of the
Bylaws, until the 2003 Annual Meeting of Stockholders and until their successors
are duly elected and qualified. It is the intention of the persons named in the
accompanying proxy to vote all proxies solicited by the Board of Directors FOR
the nine nominees listed below unless authority to vote for the nominees or any
individual nominee is withheld by a stockholder in such stockholder's proxy. If
for any reason any nominee shall not become a candidate for election as a
Director at the meeting, an event not now anticipated, the proxies will be voted
for the nine nominees including such substitutes as shall be designated by the
Board of Directors.
The nine nominees for election as Directors are listed below. All of
the nominees are currently members of the Board of Directors. All were elected
to their current terms, which expire in 2002, at the Annual Meeting of
Stockholders held on March 27, 2001, except Dale C. Pond who was elected by the
Board of Directors on January 15, 2002.
3
AMOUNT AND PERCENT OF
OFFICES WITH THE COMPANY OR OTHER NATURE OF COMMON
NAME AND OCCUPATION DURING PAST FIVE YEARS AND COMMON STOCK STOCK
DIRECTOR SINCE AGE DIRECTORSHIP OWNERSHIP OUTSTANDING
- -------------- --- ------------------------------------- ------------ -----------
Peter W. Brown, M.D.
1993 59 Partner, Virginia Surgical Associates of 12,786(2) (1)
Richmond (general surgery).
Willie D. Davis
1997 67 President of All Pro Broadcasting, Inc. 9,668(2) (1)
(radio broadcasting). Director of K-Mart
Corp., Johnson Controls, Wisconsin Energy,
Sara Lee Corporation, MGM Mirage, Dow
Chemical, MGM, Inc., and Strong Capital
Fund.
Alan T. Dickson
1989 70 Chairman of the Board since 1994 and 13,374(2) (1)
President from 1964 to 1994 of Ruddick
Corporation (diversified holding company).
Director of Lance, Inc., BankAmerica
Corporation and Sonoco Products Company.
Paul Fulton
1993 67 Chairman of the Board of the Company since 274,724(2) 2.29%
1997; Chief Executive Officer of the
Company from 1997 to 2000; Dean of the
Kenan-Flagler Business School of the
University of North Carolina at Chapel
Hill from 1994 to 1997. Director of Sonoco
Products Company, BankAmerica Corporation,
Cato Corporation, Coach Leather, Inc., and
Lowe's Companies, Inc.
Howard H. Haworth
1997 67 President, Haworth Group since 1984 10,759(2) (1)
(personal and family investment group);
Chief Executive Officer from 1973 to 1982
and Chairman and Chief Executive Officer
from 1982 to 1985 of Drexel Heritage Home
Furnishings; Chairman Emeritus, North
Carolina State Board of Education since
1995; Secretary of Commerce of the State
of North Carolina from 1985 to 1987;
Emeritus Member, Board of Directors,
Wachovia Corporation.
Michael E. Murphy
1997 65 Private investor. Vice Chairman and Chief 11,480(2) (1)
Administrative Officer of Sara Lee
Corporation from 1994 to 1997. Director of
GATX Corporation, Payless ShoeSource,
Inc., True North Communications, Inc.,
American General Corporation and Northern
Funds.
Robert H. Spilman, Jr.
1997 45 President and Chief Executive Officer of 281,316(2,3) 2.36%
the Company since 2000; President and
Chief Operating Officer of the Company
since 1997; Executive Vice President,
Marketing and Merchandising from 1993 to
1997.
David A. Stonecipher
2001 60 Chairman of the Board since 1998 and 10,045(2) (1)
President and Chief Executive Officer
since 1993 of Jefferson-Pilot Corporation
and Jefferson-Pilot Insurance Company;
Chairman of American Council of Life
Insurance since 1997.
Dale C. Pond
2002 56 Executive Vice President, Merchandising, 0 --
Lowe's Companies, Inc. since 1998; Senior
Vice President, Marketing & Advertising
from 1993 to 1997; Director, Center for
Retailing Studies at Texas A&M University.
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(1) Less than 1% of the outstanding Common Stock.
4
(2) Includes shares subject to options that are currently exercisable or
exercisable within 60 days as follows: Peter W. Brown 8,500; Willie D.
Davis 6,500; Alan T. Dickson 8,500; Paul Fulton 260,000; Howard H. Haworth
6,500; Michael E. Murphy 6,500; Robert H. Spilman, Jr. 183,825; and David
A. Stonecipher 3,500.
(3) Includes 16,517 shares held by Mr. Spilman's wife, 33,040 shares held by
his children and 6,515 shares held in trusts of which Mr. Spilman is the
beneficiary.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met five times during the 2001 fiscal year. Each
Director attended at least 75% of the meetings of the Board of Directors and
Committees on which such Director served. The Board of Directors' committees
include an Audit Committee and an Organization, Compensation and Nominating
Committee.
The Audit Committee is composed of Ms. Brinkley and Messrs. Murphy and
Dickson. Among other things, the Audit Committee monitors the performance of the
independent auditors for the Company; recommends their engagement or dismissal
to the Board of Directors; approves all audit and related fees; and reviews and
evaluates audit activities. The Audit Committee met four times during the fiscal
year.
The Organization, Compensation and Nominating Committee is composed of Dr.
Brown and Messrs. Davis, Haworth and Stonecipher. The Organization, Compensation
and Nominating Committee reviews and makes recommendations to the Board of
Directors with respect to executive compensation; establishes, reviews and
recommends changes to the organizational structure of the Company so as to
utilize the management resources to best respond to the changing demands of the
marketplace; reviews the individual performance of each Director in terms of
overall contribution to the betterment of the Company, including meeting
attendance and participation; reviews the composition of the Board; and
recommends a slate of Directors for nomination to the Board. The Organization,
Compensation and Nominating Committee met four times during the fiscal year.
The Organization, Compensation and Nominating Committee will consider
recommendations by stockholders as to nominees for Directors. Such
recommendations should be submitted in writing addressed to Jay R. Hervey,
Secretary, Bassett Furniture Industries, Incorporated, Post Office Box 626,
Bassett, Virginia 24055.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
composed of three directors and operates under a written charter adopted by the
Board of Directors on June 29, 1999, and annually reassessed and updated, as
needed, in accordance with applicable rules of the Securities and Exchange
Commission and Nasdaq. Each of the members of the Audit Committee is
independent, as defined by Nasdaq.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's financial statements in
accordance with auditing standards generally accepted in the United States and
issuing a report thereon. The Audit Committee's primary responsibility is to
monitor and oversee these processes. The Audit Committee also recommends to the
Board of Directors the selection of the Company's independent auditors.
In this context, the Audit Committee has reviewed and discussed the
Company's financial statements with both management and the independent
auditors. The Audit Committee also discussed with the independent auditors
matters required of auditors to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees). The Company's independent auditors
also provided to the Audit Committee the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with the independent auditors
their independence.
Based on the foregoing, the Audit Committee recommends to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended November 24, 2001 for
filing with the Securities and Exchange Commission. The Audit Committee also
recommends that
5
Arthur Andersen LLP be retained as the Company's independent auditors for the
fiscal year ending November 30, 2002.
Audit Committee:
Michael E. Murphy, Chairman
Amy Woods Brinkley
Alan T. Dickson
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE REPORT
The Organization, Compensation and Nominating Committee of the Board of
Directors (the "Committee") has assisted the Company in developing and
implementing compensation policies and programs which seek to improve the
profitability of the Company and to maximize stockholder value over time. To
accomplish this, the directors who comprise the Committee have developed
executive compensation policies that are consistent with, and directly linked
to, the Company's business objectives. These business objectives represent a
composite of factors that are considered important for the future success of the
Company. These factors attempt to balance long and short-term performance,
including the continued maintenance of a strong balance sheet, growth of pre-tax
profitability and earnings per share, control of costs, market growth and
diversification and other criteria which may be introduced over time as a result
of changes in the household furniture environment. The members of the Committee
deliberate on matters affecting executive compensation. The decisions are
reviewed by the full Board, with the exception of decisions on stock or option
awards which are made by the Committee to satisfy tax law requirements.
The key principles which the Committee emphasizes in developing
compensation programs affecting senior executives are:
o Paying for performance that emphasizes corporate, business unit and
individual achievement.
o Motivating senior executives to the achievement of strategic and
tactical business goals and objectives and rewarding outstanding
achievement.
o Linking the interests of senior executives with the long-term
interests of the stockholders through ownership of the Common Stock.
As the level of responsibility increases, an executive's compensation will
be proportionately at greater risk, reflecting the rewards earned as a result of
goal attainment. As responsibility increases, the compensation mix will rely
increasingly on the value of stock awards.
Section 162(m) of the Internal Revenue Code (the "Code") imposes a $1
million limit on the amount of annual compensation that can be deducted by the
Company with respect to each of the Chief Executive Officer and the four other
most highly compensated executive officers. Performance-based compensation that
meets certain requirements will not be subject to this deductibility limit. It
is generally the Company's policy to seek to qualify the performance-based
components of its compensation program for this exclusion from the Section
162(m) limitation as necessary to maximize the deductibility of executive
compensation so long as doing so is consistent with the Committee's objectives
for executive compensation.
The four components of executive compensation are:
Base Salary. The Committee has reviewed the base salaries of the named
executive officers at similar-sized companies and at the companies included in
the performance peer group shown on page 8. The base salaries of the Company's
executive officers are generally in the low- to mid-range compared with the base
salaries at those other companies. In recent years the base salaries have been
kept at a relatively fixed level to reflect the general economic conditions of
the industry and to keep fixed costs under control. Increases in base salary
have generally been the result of increased responsibilities assumed by an
executive officer to strive to increase profitability of the Company or a
6
business unit in an increasingly competitive industry. The Committee and the
Company emphasize rewards in the total compensation context (i.e., with greater
emphasis on at-risk compensation), rather than appreciably increasing base
salary.
Annual Incentive Bonuses. Annual incentives are established for each
executive in the form of a percentage of base salary. Bonus targets are based on
performance criteria related to achievement of the Company's annual plans, such
as profitability, earnings per share, market growth and returns on invested
capital and equity, and bonus targets include, to a certain extent,
individualized goals based on areas of responsibility. In the last two years,
and for the current fiscal year, more emphasis (and reward) has been placed on
improving cash flow and managing the balance sheet to reflect the Company's
response to market conditions and efforts to position the Company for earnings
growth as the overall market improves. The bonuses paid to the Company's
executive officers for the 2001 fiscal year generally ranged from 15% to 20% of
the executives' maximum potential bonus amounts for the year. The determination
of the amount of any bonus to be paid is made after the end of the year based on
the degree to which the performance criteria have been met. At risk,
performance-based bonus compensation averaged approximately 23% of total annual
cash compensation for the executive officers named in the Summary Compensation
Table during the fiscal year ended November 24, 2001.
Stock Option Grants. Grants of stock options to the Company's executives
under the Company's stock option plans provide incentives to achieve the
Company's long-term performance objectives. Because the value of stock options
is entirely a function of the value of the Company's Common Stock, the Committee
believes that this component of the Company's compensation package closely
aligns the interests of executive officers and other key managers with those of
the Company's stockholders. Whether a grant will be made to an executive
officer, and if so in what amount, is determined by the Committee based on the
Committee's subjective evaluation of the executive officer's potential
contribution to the Company's future success, the level of incentive already
provided by the number and terms of the executive officer's existing stock
option holdings and the market price of the Company's Common Stock. Consistent
with the Committee's compensation philosophy, all stock options awarded to
executive officers and other key managers in fiscal year 2001 were granted with
a three-year vesting requirement.
Benefits. These programs are designed to provide protection against
financial catastrophe that can result from illness, disability or death.
Benefits offered to executive officers are similar to those offered to all
employees, with certain variations to promote tax efficiency and the replacement
of benefits lost due to regulatory limitations.
Chief Executive Officer's 2001 Compensation. The base salary component of
Mr. Spilman's compensation for fiscal 2001 was $275,000, unchanged from fiscal
year 2000. Mr. Spilman's bonus, based on quantifiable, objective performance
measures set at the beginning of the year (which related to operating income and
cash flow), was 20% of the maximum potential bonus amount for the year.
For fiscal year 2002, the Organization, Compensation and Nominating
Committee has again established performance criteria designed to enhance
stockholder value. These criteria are heavily weighted toward improved operating
earnings, and maintaining fixed cost and operating cash flow levels, consistent
with financial objectives of the Company and representative of the success
needed to ensure growth and profitability.
Howard H. Haworth, Chairman
Peter W. Brown
Willie D. Davis
David A. Stonecipher
7
STOCKHOLDER RETURN PERFORMANCE GRAPH
Presented below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Standard & Poor's 500 Index and the Company's
peer group for the period commencing December 1, 1996 and ending November 24,
2001, covering the Company's five fiscal years ended November 24, 2001. The
Company's peer group consists of eight publicly traded companies: the Company,
Bush Industries, Inc. Class A Common Stock, Chromcraft Revington Inc., Ethan
Allen Interiors, Inc., Furniture Brands International, Inc., La-Z-Boy
Incorporated, the Rowe Companies and Stanley Furniture Company, Inc., each of
which is in the household furniture industry. This graph assumes that $100 was
invested on December 1, 1996 in the Company's Common Stock, the S&P 500 Index
and the peer group and that dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
S&P 500 INDEX AND PEER GROUP
1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------ ------
Bassett 100.00 134.29 117.53 78.17 61.01 80.81
Peer Group 100.00 161.20 181.19 182.03 143.26 207.38
S&P 500 100.00 128.51 158.92 192.13 184.02 161.53
Media General Financial Services supplied the data for the Company, the S&P
500 Index and the Company's peer group.
8
EXECUTIVE COMPENSATION
The table below shows the compensation paid or accrued by the Company for
the three fiscal years ended November 24, 2001, to or for the account of the
Chief Executive Officer and the Company's four other most highly compensated
officers who were serving at the end of the fiscal year (collectively, the
"named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- -----------------------
RESTRICTED SECURITIES ALL OTHER
OTHER ANNUAL STOCK UNDERLYING COMPEN-
NAME AND FISCAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS SATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) ($) (#SH) ($)(4)
- ------------------ ------ ------- ------ ------------ ---------- ---------- ---------
Robert H. Spilman, Jr 2001 275,000 82,500 -- 0 0 28,535
President and Chief 2000 275,000 16,459 -- 0 76,668 28,995
Executive Officer 1999 225,000 89,944 -- 0 0 27,615
Keith R. Sanders 2001 178,000 35,600 -- 0 0 3,753
Executive Vice President- 2000 178,000 0 -- 0 0 4,357
Operations 1999 147,500 22,523 -- 0 40,000 3,074
Barry C. Safrit 2001 143,333 21,750 -- 0 0 3,545
Vice President and 2000 125,000 10,781 -- 0 0 3,613
Chief Financial Officer 1999 110,000 33,344 -- 0 10,000 2,530
John E. Bassett, III 2001 125,000 18,750 -- 0 0 5,496
Vice President - Global Sourcing 2000 125,000 0 -- 0 18,420 7,613
1999 110,000 40,523 -- 0 0 6,847
Thomas E. Prato 2001 125,000 18,750 -- 0 0 4,405
Vice President - Sales 2000 125,000 5,022 -- 0 23,334 5,601
1999 110,000 37,339 -- 0 0 6,324
- ----------------
(1) The salaries shown above include deferred compensation for each named
Executive Officer under the Section 401(k) qualified, defined contribution
Employee Savings/Retirement Plan.
(2) Under the Company's incentive bonus program, executives are paid cash
awards, which are directly related to predetermined performance goals and
attainment of Company objectives, including, in fiscal year 2001, goals for
operating cash flow and operating income, which were partially achieved and
not achieved, respectively. Awards are made annually following the
completion of the fiscal year.
(3) No named Executive Officer has received personal benefits during the listed
years in excess of the lesser of $50,000 or 10% of annual salary and bonus.
(4) Includes amounts accrued under a deferred compensation agreement with one
of the named Executive Officers and Company matching contributions under
the Company's Employee Savings/Retirement Plan. During the 2001 fiscal
year, the amount accrued under the deferred compensation agreement with Mr.
Spilman was $20,715.
9
The table below shows, on an aggregated basis, the exercise of stock
options during the fiscal year ended November 24, 2001 by each named Executive
Officer and the 2001 fiscal year-end value of unexercised in-the-money stock
options.
AGGREGATED OPTION/SAR EXERCISES IN THE 2001 FISCAL YEAR
AND FY-END OPTION/SAR VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
ON VALUE OPTIONS/SARS AT FY-END AT FY-END
EXERCISE REALIZED (#SH)(1) ($)(1)(2)
NAME (#SH) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------- -------- ------------------------- -------------------------
Robert H. Spilman, Jr. 0 0 158,269/51,112 0/0
Barry C. Safrit 0 0 15,000/10,000 0/0
Keith R. Sanders 0 0 15,000/40,000 0/0
John E. Bassett, III 0 0 44,268/12,280 0/0
Thomas E. Prato 0 0 29,903/15,556 0/0
- -------------------
(1) No SARs were exercised in 2001 and there were no SARs outstanding at the
2001 fiscal year-end.
(2) Represents the difference between the fair market value of the Company's
Common Stock and the exercise price at the 2001 fiscal year-end.
SUPPLEMENTAL RETIREMENT INCOME PLAN
The Company has a Supplemental Retirement Income Plan (the "Supplemental
Plan") that covers one current and certain former senior executives to promote
their long service and dedication and to provide an additional retirement
benefit. Upon retirement, the Supplemental Plan provides for lifetime monthly
payments in an amount equal to 65% of the participant's final average
compensation as defined in the Supplemental Plan, which amount is reduced by (i)
50% of old age social security benefits, (ii) the benefit that would be payable
on a life annuity basis from Company contributions to the Employee
Savings/Retirement Plan based on a formula using maximum employee contributions,
and (iii) the benefit that would be payable on a life annuity basis from funds
the Company contributed to a Defined Benefit Plan that was terminated in 1977.
There is no provision under the Supplemental Plan for a disability benefit if a
participant's employment is terminated prior to age 65 due to disability;
however, the participant, notwithstanding the termination of employment, will
continue to be covered by the Supplemental Plan. The death benefit is divided
into (a) prior to retirement death, which pays the beneficiary 50% of final
average compensation for a period of 120 months, and (b) post-retirement death,
which pays the beneficiary 200% of final average compensation in a single
payment. There are no benefits payable as a result of a termination of
employment for any reason other than death or retirement. The Supplemental Plan
contains a change of control provision which provides for the immediate vesting
and payment of the retirement benefit under the Supplemental Plan in the event
of an employment termination resulting from a change of control. The executives
covered under this Supplemental Plan have waived participation in the Company's
group life insurance program.
Assuming no change in the rate of compensation for Robert H. Spilman, Jr.,
after November 24, 2001, it is projected that the benefit that would otherwise
have been payable on retirement at age 65 to Mr. Spilman will be fully offset by
the benefits calculated (using the aforementioned formula) to be payable from
Company contributions to the Employee Savings/Retirement Plan. Mr. Spilman is
the only named Executive Officer participating in the Supplemental Plan.
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DEFERRED COMPENSATION AGREEMENT
Robert H. Spilman, Jr. has entered into a Deferred Compensation Agreement
with the Company pursuant to the Executive Deferred Compensation Plan. Under
that agreement, Mr. Spilman deferred a portion of his compensation over a
four-year period. Upon Mr. Spilman's retirement, death or disability, he would
be entitled to the following annual payments for a fifteen year period: upon his
retirement, $108,125.20; upon his death, $14,776.40; and upon his disability,
$8,200.00.
DIRECTOR COMPENSATION
Directors who are also employees of the Company receive no additional
compensation for serving as directors. Directors who are not employees of the
Company receive an annual retainer fee of $20,000. Chairpersons of the Board of
Directors' standing committees receive an additional fee of $1,000 per Board
meeting.
Under the Company's 1993 Stock Plan for Non-Employee Directors (the
"Director Plan"), each Director who is not a regular employee of the Company
automatically receives an option to purchase 2,500 shares of Common Stock upon
his or her initial election to the Board of Directors and on each April 1
thereafter automatically receives an option to purchase 1,000 shares of Common
Stock. All such options have an exercise price equal to the market price of the
Common Stock on the date of grant and are subject to adjustment in the event of
stock dividends and splits, recapitalizations and similar transactions. An
option granted under the Director Plan is not exercisable unless the optionee
remains available to serve as a Director of the Company for six months after the
date of grant. An optionee's rights under all outstanding options will terminate
three years after his termination as a Director, unless the termination is
because of death or disability, in which case the options will be exercisable
for one year after such termination. Unless earlier terminated, all options
granted under the Director Plan expire ten years from the date of grant.
In addition, the Director Plan provides that on April 1 of each year, each
eligible Director will receive one-half of his or her annual retainer fee in the
form of a Common Stock award. In addition, each eligible Director may elect to
receive all or part of the remaining portion of his or her annual retainer fee
on October 1 in the form of a Common Stock award. Such election must specify the
percentage of the Director's remaining annual retainer fee that is to be paid in
Common Stock and must be made in writing no later than September 1, of the year
for which the election is made. The total number of shares of Common Stock to be
issued pursuant to a stock award is determined by dividing the amount of the
Director's compensation that is to be paid in Common Stock by the fair market
value of a share of the Common Stock on the date the award is made.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's Directors and executive officers and persons who own more
than 10% of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
the Common Stock and other equity securities. Executive officers, Directors and
greater than 10% stockholders are required to furnish the Company with copies of
all such reports they file. To the Company's knowledge, based solely on a review
of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended November 24, 2001, all Section 16(a) filing requirements applicable to its
executive officers, Directors and greater than 10% beneficial stockholders were
complied with.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation and approval of the Audit Committee, the Board of
Directors has approved the selection of Arthur Andersen LLP as independent
public accountants to audit the financial statements of the Company for the
fiscal year ending November 30, 2002. This selection is being presented to the
stockholders for their ratification at the Annual Meeting of Stockholders. After
taking into consideration recent events affecting Arthur Andersen LLP, given the
confidence in and respect for the audit team from Arthur Andersen LLP with whom
the Audit Committee and
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the Company have worked over the past four years, the firm of Arthur Andersen
LLP is considered well qualified. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting of Stockholders with an opportunity
to make a statement if they desire to do so and are expected to be available to
respond to appropriate questions.
Audit Fees. The Company paid to Arthur Andersen LLP $285,000.00 in
aggregate fees for the 2001 annual audit and for review of the Company's
financial statements included in its Form 10-Qs for the 2001 fiscal year.
Financial Information Systems Design and Implementation. No fees relating
to these types of services were paid to Arthur Andersen LLP for the 2001 fiscal
year.
All Other Fees. The Company paid to Arthur Andersen LLP $208,000.00 for all
other services, including audit related fees of $53,000.00 and other fees of
$155,000.00. Audit related fees include the audit of the Company's employee
benefit plan, accounting consultation, and consents. Other fees were primarily
tax compliance and tax consultation.
The Audit Committee considered whether, and determined that, the auditor's
provision of non-audit services was compatible with maintaining the auditor's
independence. The Company's management intends to continue using Arthur
Andersen, LLP solely for audit and audit related services, tax consultation and
tax compliance services, and, as needed, for due diligence in acquisitions.
The Board of Directors recommends a vote FOR the ratification of the
selection of Arthur Andersen LLP as independent public accountants to audit the
financial statements of the Company for the fiscal year ending November 30,
2002, and proxies solicited by the Board of Directors will be so voted unless
stockholders specify a different choice. If the stockholders do not ratify the
selection of Arthur Andersen LLP, the selection of independent public
accountants will be reconsidered by the Board of Directors.
STOCKHOLDER PROPOSALS FOR INCLUSION IN THE PROXY STATEMENT
Any proposal that a stockholder intends to present for action at the 2003
Annual Meeting of Stockholders, currently scheduled for March 25, 2003, must be
received by the Company no later than October 25, 2002, in order for the
proposal to be included in the proxy statement and form of proxy for the 2003
Annual Meeting of Stockholders. Any such proposal must meet the applicable
requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder. Such proposals should be sent to Jay R. Hervey,
Secretary, Bassett Furniture Industries, Incorporated, Post Office Box 626,
Bassett, Virginia 24055.
OTHER STOCKHOLDER PROPOSALS AND NOMINATIONS
The Company's Bylaws prescribe the procedures that a stockholder must
follow to nominate directors for election at an annual meeting or to bring other
business before an annual meeting (other than matters that have been included in
the Company's proxy statement for such meeting). The Chairman of the meeting may
refuse to acknowledge the nomination of any person as a director or any other
proposal by a stockholder not made in compliance with these procedures. The
following summary of these procedures is qualified by reference to the Company's
Bylaws, a copy of which may be obtained, without charge, upon written request to
Jay R. Hervey, Secretary, Bassett Furniture Industries, Incorporated, Post
Office Box 626, Bassett, Virginia 24055.
A stockholder who desires to nominate a director for election at an annual
meeting must give timely written notice thereof to the Secretary of the Company
by personal delivery or by registered or certified mail, postage prepaid, at the
address shown above. To be timely, a stockholder's notice must be received not
later than December 26, 2002 for nominations to be made at the 2003 Annual
Meeting. The notice must contain the information specified in the Bylaws
regarding the stockholder giving the notice and each person whom the stockholder
wishes to nominate for election as a director. The notice must be accompanied by
the written consent of each proposed nominee to serve as a director of the
Company, if elected.
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A stockholder who desires to bring any other business before an annual
meeting (other than matters that have been included in the Company's proxy
statement for such meeting) must give timely written notice thereof to the
Secretary of the Company by personal delivery or by registered or certified
mail, postage prepaid, at the address shown above. To be timely, a stockholder's
notice must be received not later than October 17, 2002 for business to be acted
upon at the 2003 Annual Meeting. The notice must contain the information
specified in the Bylaws regarding the stockholder giving the notice and the
business proposed to be brought before the meeting.
With respect to stockholder proposals not included in the Company's proxy
statement for the 2003 Annual Meeting, the persons named in the Board of
Directors' proxy for such meeting will be entitled to exercise the discretionary
voting power conferred by such proxy under the circumstances specified in Rule
14a-4(c) under the Exchange Act, including with respect to proposals received by
the Company after October 17, 2002.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED NOVEMBER 24 2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
CAN BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO JAY R. HERVEY, SECRETARY,
BASSETT FURNITURE INDUSTRIES, INCORPORATED, POST OFFICE BOX 626, BASSETT,
VIRGINIA 24055.
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