SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
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(section mark)240.14a-12
Fieldcrest Cannon, Inc.
(Name of Registrant as Specified In Its Charter)
Fieldcrest Cannon, Inc.
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
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(Fieldcrest Cannon Logo Goes Here)
FIELDCREST CANNON, INC.
One Lake Circle Drive
Kannapolis, North Carolina 28081
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held April 22, 1997
TO THE STOCKHOLDERS OF
FIELDCREST CANNON, INC.
The Annual Meeting of Stockholders of Fieldcrest Cannon, Inc. will
be held at 1271 Avenue of the Americas, New York, New York, 10020, on
April 22, 1997 at 10:00 a.m., for the following purposes:
I. To elect eight directors to the Company's Board of Directors;
II. To consider and vote upon a proposal to ratify the selection of
Ernst & Young LLP as independent accountants to audit the
accounts of the Company for the year ending December 31, 1997;
and to act upon such other matters as may properly come before the
meeting or any adjournment thereof.
Only holders of Common Stock at the close of business on March 20,
1997, will be entitled to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors,
M. KENNETH DOSS
Secretary
Kannapolis, North Carolina
March 28, 1997
IMPORTANT -- YOUR PROXY IS ENCLOSED
Stockholders are requested to execute and promptly return the enclosed
proxy in the enclosed envelope. No postage is required for mailing in the
United States.
March 28, 1997
FIELDCREST CANNON, INC.
One Lake Circle Drive
Kannapolis, North Carolina 28081
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 22, 1997
The enclosed proxy is solicited by the Board of Directors of Fieldcrest
Cannon, Inc., a Delaware corporation (the "Company"). Arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries to send
proxy material to their principals, and the Company will reimburse them for
their reasonable expenses in doing so. Copies of this proxy statement and
accompanying proxy card will first be mailed to stockholders on or about March
28, 1997.
The expense of this solicitation will be paid by the Company. In addition
to solicitation by mail, officers and other employees of the Company may solicit
proxies by personal interview, telephone or other methods of telecommunication.
The Company has retained Morrow & Company, Inc. ("Morrow") to assist in such
solicitation. The Company has been advised that the fee of Morrow is estimated
not to exceed $6,000, plus reasonable out-of-pocket costs and expenses.
When the enclosed proxy is properly executed and returned, the shares it
represents will be voted in accordance with the directions indicated thereon, or
if no direction is indicated, it will be voted in favor of the election of the
eight nominees for director identified below and in favor of the ratification of
the selection of Ernst & Young LLP as independent accountants. Any stockholder
giving a proxy has the power to revoke it at any time before it is voted.
Only the holders of Common Stock of record at the close of business on
March 20, 1997, will be entitled to vote at the meeting. On that date 9,145,932
shares of Common Stock having one vote each were outstanding.
Under the Company's Amended and Restated By-Laws and applicable law, the
holders of a majority of the shares of capital stock of the Company issued and
outstanding and entitled to vote, present in person or represented by proxy,
will constitute a quorum for the transaction of business at the 1997 Annual
Meeting of Stockholders. Abstentions, votes withheld for director nominees and
shares held of record by a broker, as nominee ("Broker Shares"), that are voted
on any matter will be included in determining the number of shares present or
represented at the meeting. Broker Shares that are not voted on any matter at
the meeting will not be included in determining the number of shares present or
represented at the meeting. Under the Company's Restated Certificate of
Incorporation, each proposal to be presented to stockholders for their
consideration at the 1997 annual meeting will be approved if the holders of a
majority of the votes which may be cast vote in favor of such proposal.
Abstentions, votes withheld for director nominees and Broker Shares that are not
properly voted will have the same effect as negative votes with respect to each
proposal.
I. ELECTION OF DIRECTORS
The Company's By-Laws provide that the number of directors of the Company
shall be determined by resolution of the Board of Directors. The Board of
Directors presently consists of eight directors. Eight persons have been
nominated to serve for one-year terms and until their successors have been duly
elected and qualified. Each nominee for director has indicated a willingness to
being named in the proxy statement and to serve if elected, and the persons
named as proxies intend to vote for such nominees absent instructions to the
contrary on the enclosed proxy. However, if any nominee for director becomes
unavailable for election, the persons named on the enclosed proxy intend to vote
for such other person as the Board of Directors may recommend in their place.
Each nominee is currently a director of the Company and has served as such since
the year set forth in the table below. None of the nominees is related by blood,
marriage or adoption to any other nominee or any executive officer of the
Company.
Director
Name and Age Since Board Committee Memberships
James M. Fitzgibbons, 62................................ 1985
William E. Ford, 71..................................... 1993 Audit; Retirement Review
John C. Harned, 69...................................... 1985 Audit; Compensation; Retirement Review
Noah T. Herndon, 65..................................... 1995 Audit; Compensation; Retirement Review
S. Roger Horchow, 68.................................... 1994 Audit; Nominating
W. Duke Kimbrell, 72.................................... 1993 Compensation; Nominating
C. J. Kjorlien, 80...................................... 1989 Audit; Compensation; Nominating; Retirement
Review
Alexandra Stoddard, 55.................................. 1995 Nominating
JAMES M. FITZGIBBONS was appointed Chairman of the Company's Board of
Directors and Chief Executive Officer on October 15, 1990. Mr. Fitzgibbons
served as President of Amoskeag Company from March 9, 1987 until March 6, 1992
and previously served as President and a Director of Howes Leather Company,
Inc., a company which manufactures sole leather for the shoe industry. Mr.
Fitzgibbons is also a Trustee of Dreyfus Laurel Funds, which provides a variety
of investment services through a series of mutual funds, and a Director of
Barrett Resources Corporation, an oil and gas exploration company.
WILLIAM E. FORD served as the Goodyear Executive Professor at Kent State
University's College of Business Administration and Graduate School of
Management from January 1994 until May 1, 1996. Mr. Ford has served as President
of Bejai, Inc., a venture capital company, since 1991. He served as President of
VMI, a Dutch Company producing high tech equipment for the tire industry, from
1986 until 1991. In addition, he has served as a consultant on international
ventures to the United Nations and as a senior advisor to a development project
in China.
JOHN C. HARNED has been President of Bedford Advisors, Inc., a corporate
financial consulting company, for more than five years. He serves as Managing
Director of Middlemarket Capital Management Company, L.C., a merger and
acquisition buyout company. Mr. Harned also has served as Vice President of
Dartmouth College and Executive Vice President and Chief Financial Officer of
Penn Central Corporation.
NOAH T. HERNDON has been a partner for more than five years of Brown
Brothers Harriman & Co., a private commercial bank and investment advisory and
stock brokerage firm. Mr. Herndon served as a Director of the Company from 1982
through 1993. Mr. Herndon is also a Director of Watts Industries, Inc., National
Auto Credit, Inc. and Zoll Medical Corporation.
S. ROGER HORCHOW has served as Chairman of R. Horchow Productions, Inc.
since 1990. He was Chairman of the Horchow Collection from 1973 until 1990. He
has been active in numerous civic and charitable organizations and has produced
the award winning Broadway play Crazy for You. Mr. Horchow is a Director of
Delias, a mail order catalog company. He is also a Director of the Dallas
Symphony, Public Radio International, Smithsonian Institution, American
Institute for Public Service, Friends of Art and Preservation in Embassies, and
Better Business Bureau of Dallas and serves on the Board of Governors of the
Yale University Art Gallery. He is presently a Marketing Consultant to Sotheby's
New York and London.
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W. DUKE KIMBRELL has been Chairman of the Board, Chief Executive Officer,
and a Director of Parkdale Mills, Inc., a textile manufacturer, since 1961. He
is also a Director of Inman Mills, North Carolina State Textile Foundation, and
Acme Petroleum and Fuel Company.
C.J. KJORLIEN was President of West Point-Pepperell, Inc. for more than
five years before his retirement in 1986. He is also a Director of Johnston
Industries, Inc. and Service America, Inc.
ALEXANDRA STODDARD is President of Alexandra Stoddard Incorporated, founder
and President of Design and Art Society, Ltd., and a Dame of the American
Society of the Order of St. John, designated by Queen Elizabeth II. Mrs.
Stoddard is an acclaimed philosopher of contemporary lifestyle whose unique
positive insights inspire a large international audience. She has published 18
books, the most recent of which is Living in Love.
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SECURITY OWNERSHIP
Security Ownership of Certain Beneficial Owners
The Company knows of no one who beneficially owns in excess of five percent
of a class of the Company's voting securities except as set forth in the table
below. Except as indicated in the footnotes, each stockholder set forth below
has, to the best of the Company's knowledge, the sole power to vote and to
dispose of the shares beneficially owned by such stockholder. Common Stock has
one vote per share.
Amount and
Nature of
Title of Beneficial Percent
Class Name and Address of Beneficial Owner Ownership of Class
Common Stock Mario J. Gabelli 1,406,797 (1) 14.84%
One Corporate Center
Rye, New York 10580-1434
Common Stock The Prudential Insurance Company 1,029,346 (2) 10.64%
of America
Prudential Plaza
Newark, New Jersey 07102-3777
Common Stock Dimensional Fund Advisors Inc. 476,700 (3) 5.21%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Common Stock Mellon Bank Corporation 468,678 (4) 5.12%
One Mellon Bank Center
Pittsburgh, Penn 15258
(1) According to information contained in a statement on Schedule 13D filed with
the Securities and Exchange Commission, as of March 7, 1997, GAMCO
Investors, Inc., Gabelli Funds, Inc., Gabelli International Limited, Gabelli
Performance Partnership L.P., and Mario J. Gabelli had the sole dispositive
power over 1,406,797 shares of the Company's Common Stock (including shares
that may be acquired upon the conversion of the Company's Convertibile
Perferred Stock and 6% Convertible Subordinated Debentures) and sole voting
power with respect to 1,371,797 of these shares. Mr. Gabelli is deemed to
have beneficial ownership of the securities beneficially owned by each of
the foregoing persons, and Gabelli Funds, Inc. is deemed to have beneficial
ownership of the securities owned beneficially by each of the foregoing
persons other than Mr. Gabelli.
(2) According to information contained in a statement on Schedule 13G filed with
the Securities and Exchange Commission, as of December 31, 1996, The
Prudential Insurance Company of America is the beneficial owner of 1,029,346
shares of the Company's Common Stock (including shares that may be acquired
upon the conversion of the Company's Convertible Preferred Stock and 6%
Convertible Subordinated Debentures) and has sole voting, shared voting,
sole dispositive and shared dispositive power with respect to 3,200,
490,310, 3,200 and 494,610, respectively, of these shares.
(3) According to information contained in a statement on Schedule 13G filed with
the Securities and Exchange Commission, as of December 31, 1996, Dimensional
Fund Advisors Inc. is the beneficial owner of 476,700 shares of the
Company's Common Stock and has sole voting, shared voting and sole
dispositive power with respect to 318,100, 476,700 and 476,700,
respectively, of these shares.
(4) According to information contained in a statement on Schedule 13G filed with
the Securities and Exchange Commission, as of December 31, 1996, Mellon Bank
Corporation is the beneficial owner of 468,678 shares of the Company's
Common Stock and has sole voting, sole dispositive and shared dispositive
power with respect to 388,678, 417,000 and 51,768, respectively, of these
shares.
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Security Ownership of Management
The following table sets forth certain information with respect to the
beneficial ownership at March 20, 1997, of each class of equity securities of
the Company, by each director, nominee for director and executive officer named
in the Summary Compensation Table under the heading "Executive Compensation,"
below, and for all directors and executive officers of the Company as a group.
Unless otherwise indicated, the individuals named below hold sole voting power
and investment power as to the shares.
No. of Percent
Directors Shares of Class
James M. Fitzgibbons.......................................................... 109,405(1)(2)(3)(4) 1.19%
William E. Ford............................................................... 5,700(5) *
John C. Harned................................................................ 13,000(6) *
Noah T. Herndon............................................................... 10,000(7) *
S. Roger Horchow.............................................................. 5,000(5) *
W. Duke Kimbrell.............................................................. 307,282(8)(9) 3.34%
C. J. Kjorlien................................................................ 30,000(6) *
Alexandra Stoddard............................................................ 2,000(10) *
Non-Director Executives:
John M. Nevin................................................................. 16,166(4) *
Robert E. Dellinger........................................................... 35,622(3)(4) *
Kevin M. Finlay............................................................... 30,409(4) *
Thomas R. Staab............................................................... 33,920(3)(4) *
All directors and executive officers of the Company as a group
(16 persons, including the ones listed above)................................ 627,110(11) 6.70%
* Represents less than 1%.
(1) Includes 8,000 shares of Common Stock which may be purchased upon the
exercise of options granted under the Director Stock Option Plan.
(2) Includes 20,000 shares of Common Stock covered by an option that the
Company granted to Mr. Fitzgibbons pursuant to a Stock Option Agreement
dated as of September 11, 1991 between the Company and Mr. Fitzgibbons. The
option is exercisable at $14.875 per share, which was the closing price per
share of the Common Stock on the New York Stock Exchange on September 11,
1991, and may be exercised in whole or in part at any time before September
10, 1998, provided Mr. Fitzgibbons is on the date of exercise an employee
of the Company.
(3) Includes outstanding shares of stock granted under the Long-Term Incentive
Plan as of March 20, 1997 and subject to forfeiture. See note (2) to the
Summary Compensation Table below.
(4) Includes shares which may be purchased within 60 days upon the exercise of
options granted under the 1995 Employee Stock Option Plan (the "1995 Stock
Option Plan"). Shares which may be purchased by the Named Executives are as
follows: J. M. Fitzgibbons -- 30,000 shares; John M. Nevin -- 11,250
shares; R. E. Dellinger -- 22,500 shares; K. M. Finlay -- 22,500 shares;
and T. R. Staab -- 22,500 shares.
(5) Includes 5,000 shares of Common Stock which may be purchased upon the
exercise of options granted under the Director Stock Option Plan.
(6) Includes 10,000 shares of Common Stock which may be purchased upon the
exercise of options granted under the Director Stock Option Plan.
(7) Includes 4,000 shares of Common Stock which may be purchased upon the
exercise of options granted under the Director Stock Option Plan.
(8) Includes 3,000 shares of Common Stock which may be purchased upon the
exercise of options granted under the Director Stock Option Plan.
(9) Includes 50,000 shares owned by daughters of Mr. Kimbrell and 51,282 shares
that may be acquired upon the conversion of 30,000 shares of $3.00
Convertible Preferred Stock owned by Parkdale Mills, Inc. Mr. Kimbrell is
an owner and the Chairman of the Board and Chief Executive Officer of
Parkdale Mills. Mr. Kimbrell shares voting and investment power as to all
the shares owned by Parkdale Mills.
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(10) Includes 2,000 shares of Common Stock which may be purchased upon the
exercise of options granted under the Director Stock Option Plan.
(11) Includes 47,000 shares of Common Stock that may be purchased by directors
upon the exercise of options granted under the Director Stock Option Plan,
119,200 shares of Common Stock that may be purchased by employees within 60
days upon the exercise of options granted under the 1995 Stock Option Plan,
12,545 shares that have been granted to directors and executive officers
under the Long-Term Incentive Plan and that are subject to forfeiture and
20,000 shares covered by the option granted to Mr. Fitzgibbons as described
in note (2).
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1996, the Board of Directors held eight meetings. Each director
attended more than 75 percent of the 1996 Board meetings and meetings of Board
Committees of which they were a member.
The business of the Company is under the general management of the Board of
Directors as provided by the laws of Delaware and the By-Laws of the Company.
The Board of Directors has established an Audit Committee, Compensation
Committee, Retirement Review Committee, and Nominating Committee.
The Audit Committee consists of five members who are not salaried employees
and who are, in the opinion of the Board of Directors, free from any
relationship that would interfere with their exercise of independent judgment as
Audit Committee members. During 1996, the Audit Committee held three meetings.
The functions of the Audit Committee are to recommend the engagement of the
Company's independent auditors and to review with them the plan and scope of
their audit for each year, the status of their audit during the year, the
results of the audit when completed, the auditors' letter on their observations
and recommendations to the Company and their fees for services performed. The
Committee also reviews the results of the annual audit with management, both
jointly with the independent auditors and separately, reviews financial
statements and filings with the Securities and Exchange Commission, discusses
with management the adequacy of internal controls, monitors the work of the
Company's Internal Audit Department and reports to the entire Board with respect
to audit-related matters.
The Compensation Committee consists of four non-employee directors and held
three meetings during 1996. The functions of the Committee are to review the
compensation of the Company's corporate officers and to make adjustments with
respect thereto. The Compensation Committee also administers other aspects of
the Company's executive compensation program and makes recommendations to the
full Board with respect to compensation for Board service.
The Retirement Review Committee consists of four members and held five
meetings during 1996. This Committee monitors, reviews and reports to the Board
on the Company's defined benefit and contribution plans, and any future, new or
substituted plans, the level of benefits provided and proposed thereunder, and
the investment of assets by investment managers of such plans.
The Nominating Committee consists of four members and held one meeting
during 1996. The function of the Committee is to make recommendations to the
full Board as to the desirable number of directors and candidates to fill any
positions on the Board. Stockholders may nominate candidates by submitting
nominations in writing to the Secretary of the Company at the address appearing
on the first page of this Proxy Statement and otherwise in accordance with the
By-Laws of the Company. The By-Laws contain requirements as to information about
candidate requirements to be presented and the deadlines for submitting
nominations.
COMPENSATION OF DIRECTORS
Meeting Fees and Expenses
Non-employee directors of the Company are paid quarterly retainers of
$4,500 and a fee of $1,000 for each Board or Committee meeting attended, except
that Committee Chairmen are paid a fee of $1,500 per Committee meeting.
Non-employee directors are also paid a fee of $600 for each short telephonic
meeting. Directors, including employee directors, are reimbursed for travel and
other expenses relating to their functions served as directors. In addition, the
Company presently has a consulting arrangement with C. J. Kjorlien pursuant to
which
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Mr. Kjorlien provides from time to time consulting services to certain executive
officers of the Company. During 1996, Mr. Kjorlien received $7,972 in
consideration for his services under this arrangement.
Director Stock Option Plan
Pursuant to the Director Stock Option Plan of Fieldcrest Cannon, Inc., an
option for 2,000 shares of Common Stock is granted annually to each non-employee
director. The grant is made on the fifth business day after the annual meeting
of stockholders. The Company has reserved 500,000 shares of Common Stock for
issuance pursuant to the plan. In 1996 options for 14,000 shares were granted at
a per share exercise price of $20.625. At March 20, 1997, options to purchase a
total of 47,000 shares of Common Stock at exercise prices ranging from $13.000
to $25.625 were outstanding and exercisable under the plan. The purpose of the
plan is to encourage and enable directors to acquire or increase their ownership
of the Company's Common Stock and to promote a closer identification of their
interests with those of the Company and its stockholders.
Director Stock Appreciation Rights Plan
On May 22, 1994, each non-employee director was granted stock appreciation
rights ("SARs") with respect to 1,000 shares of Common Stock under the plan. The
SARs may be exercised up to seven years from the grant date for cash equal to
the increase in the market value of the Company's Common Stock above $25.625,
the closing price on May 22, 1994. At March 20, 1997, SARs with respect to 6,000
shares of Common Stock were outstanding and exercisable.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation earned by the Chief
Executive Officer and the other four most highly compensated executive officers
who were serving as executive officers at the end of 1996 (the "Named
Executives") for the years ended December 31, 1996, 1995, and 1994.
Long-Term
Compensation Awards
Securities
Restricted Underlying
Name and Annual Compensation Stock Options/ All Other
Principal Position Year Salary ($) Bonus ($)(1) Awards ($)(2) SARs (#)(3) Compensation ($)(4)
J. M. Fitzgibbons (5) 1996 $531,599 $ -- $ -- -- $ 5,600
Chairman and Chief 1995 531,599 -- -- 62,000/ -- 4,631
Executive Officer 1994 439,966 74,794 96,646 1,000/30,000 34,284
J.M. Nevin (5) 1996 300,000 -- -- -- 3,500
Executive Vice President 1995 65,909 -- -- 45,000/ -- --
R. E. Dellinger (5) 1996 248,843 -- -- -- $ 4,088
Vice President and 1995 248,843 -- -- 45,000/ -- 4,142
President Sales and 1994 224,503 38,166 49,302 --/7,206 19,691
Marketing Division
K.M. Finlay (5)(6) 1996 234,741 -- -- -- $ 3,947
Vice President 1995 215,000 -- -- 45,000/ -- 3,813
1994 156,667 36,817 34,408 --/4,800 12,791
T.R. Staab (5) 1996 212,380 -- -- -- $ 3,610
Vice President and 1995 212,380 -- -- 45,000/ -- 3,772
Chief Financial Officer 1994 191,607 32,573 42,086 --/6,150 14,830
(1) The amount shown in this column represents annual bonuses under the
Company's Short-Term Incentive Compensation Plan. Awards under this plan are
at the discretion of the Board of Directors.
(2) Amounts set forth in this column represent the value of shares awarded to
the Named Executives under the Company's Long-Term Incentive Plan. The value
of such shares is determined by multiplying the number of shares of stock
earned by the value of the Company's Common Stock at the close of business
on the date of award. The number (and value) of shares of stock held by the
Named Executives at December 31, 1996 (including 1993 shares which vested on
January 2, 1997) is as follows: J. M. Fitzgibbons -- 7,667 shares
($121,714); R. E. Dellinger -- 4,114 shares ($65,310); K. M. Finlay -- 3,016
shares ($47,879); T. R. Staab -- 3,367 shares ($53,451). The Named
Executives are entitled to dividends and voting rights with
7
respect to such stock awards as of the grant date. The Named Executives
become vested with respect to such shares on the first to occur of death,
disability, normal retirement or completion of four years of continued
employment following the award, subject to the right of the Compensation
Committee to accelerate vesting in its discretion.
(3) Includes options granted under the Director Stock Option Plan. In 1996, the
Plan was amended to limit option grants to non-employee directors. J. M.
Fitzgibbons received 2,000 options under the plan in 1995 at an option price
of $22.125. No options or SARs were granted in 1996 to any of the Named
Executives.
Also includes options granted under the 1995 Stock Option Plan as approved
by the stockholders in 1995. As of March 20, 1997, options to purchase
385,100 shares of Common Stock were outstanding at option prices ranging
from $16.250 to $22.375. The number of shares which may be purchased by the
Named Executives as of December 31, 1996 is as follows: J. M.
Fitzgibbons -- 60,000 shares; J. M. Nevin -- 45,000 shares; R. E.
Dellinger -- 45,000 shares; K. M. Finlay -- 45,000 shares; and T. R.
Staab -- 45,000 shares. Options granted under the 1995 Stock Option Plan are
exercisable for a period of ten years from date of grant and vest
twenty-five percent one year after grant date and twenty-five percent for
each of the subsequent three years.
Effective March 1, 1994 the Board of Directors initiated a salary reduction
plan under which Mr. Fitzgibbons' annual salary was reduced by $100,000 and
the annual salaries of all other executive officers were reduced by 10%. In
connection with such reduction, stock appreciation rights ("SARs") equal to
300 shares per $1,000 of salary reduction were granted to these employees.
The SARs may be exercised up to seven years from the grant date for cash
equal to increases in the market value of the Company's Common Stock above
$28.50, the closing market value on March 1, 1994. The annual salaries of
all executive officers were increased as of January 1, 1995 by the amount of
the March 1, 1994 reduction.
(4) The amount shown in this column consists of deferred compensation allocated
by the Company to the account of the Named Executives under the Executive
Capital Accumulation Plan, a nonqualified deferred compensation profit
sharing plan, and the value of Common Stock as of the grant date
representing the Company match under the Company's Retirement Savings Plan.
The account balance in the Capital Accumulation Plan of each of the Named
Executives at December 31, 1996 is as follows: J. M. Fitzgibbons-$109,777;
R. E. Dellinger-$68,781; K. M. Finlay-$38,001; and T. R. Staab-$40,984. The
number (and value) of shares held by each of the Named Executives at
December 31, 1996 in the Company's Retirement Savings Plan is as follows: J.
M. Fitzgibbons-919 shares ($14,589); J. M. Nevin-216 shares ($3,429); R. E.
Dellinger-799 shares ($12,684); K. M. Finlay-687 shares ($10,906); and T. R.
Staab-678 shares ($10,763). The Named Executives are entitled to dividends
and voting rights with respect to shares held in the plan.
(5) Certain executives of the Company are parties to agreements under which they
are entitled to a lump-sum payment of an amount based on their base salary
in the event of a change in control of the Company. Under the agreements,
upon a change in control of the Company, the following executive officers
will be entitled to receive a lump-sum payment of their base salary
otherwise payable over the following number of years: J. M. Fitzgibbons, 3
years; J. M. Nevin, 2 years; R. E. Dellinger, 2 years, K. M. Finlay, 2
years; and T. R. Staab, 2 years.
(6) Mr. Finlay, a Vice President, resigned from the Company, effective February
28, 1997.
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Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth the number of unexercised options and SARs
held by the Named Executives at December 31, 1996 and the value of such options
and SARs at December 31, 1996, as represented by the positive spread between the
exercise price of such options and the value of shares of the Company's Common
Stock at December 31, 1996. No options and SARs were exercised by any of the
Named Executives during 1996.
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Options/SARs at FY-End at FY-End
December 31, 1996 (#) December 31, 1996 ($)
Name Exercisable Unexercisable Exercisable Unexercisable
J. M. Fitzgibbons 43,000/30,000 45,000/ -- $ 28,625/ -- 0/ --
Chairman and Chief Executive Officer
J. M. Nevin 11,250/ -- 33,750/ -- 0/ -- 0/ --
Executive Vice President
R. E. Dellinger 11,250/7,206 33,750/ -- 0/ -- 0/ --
Vice President and President Sales and
Marketing Division
K. M. Finlay 11,250/7,138 33,750/ -- 0/ -- 0/ --
Vice President
T. R. Staab 11,250/5,077 33,750/ -- 0/ -- 0/ --
Vice President and Chief Financial Officer
Retirement Plan for Salaried Employees
Each of the Named Executives listed in the Summary Compensation Table and
all other salaried employees are participants in this plan. The plan is a
qualified, defined benefit plan which, until January 1, 1981, was contributory
on the part of the participants. For the calendar year 1996, the Company's
aggregate contribution for all participants in the plan amounted to
approximately 7.28% of the total plan compensation of the participants. The plan
provides benefits upon early or normal retirement of the Named Executives and
employees.
Upon normal retirement at age 65 or early retirement, the participant is
paid a monthly pension by the plan trust based on years of participation in the
plan. The participant's annual benefit at normal retirement is 1.5% of career
average earnings, as defined, times the number of years of service up to a
maximum of 20 years, plus .75% of career average earnings times the number of
years of service in excess of 20 years. The normal form of benefit is a life
annuity. Actuarially computed reductions in vested benefits are made in the
event of early retirement or termination. The table below illustrates the
estimated annual pension benefit payable by the Company under this formula to a
person at normal retirement based on specified average salary "remuneration" and
years of service classifications.
9
Years of Service
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
125,000 28,125 37,500 42,188 46,875 51,563
150,000 33,750 45,000 50,625 56,250 61,875
175,000 39,375 52,500 59,063 65,625 72,188
200,000 45,000 60,000 67,500 75,000 82,500
225,000 50,625 67,500 75,938 84,375 92,813
250,000 56,250 75,000 84,375 93,750 103,125
300,000 67,500 90,000 101,250 112,500 123,750
350,000 78,750 105,000 118,125 131,250 144,375
400,000 90,000 120,000 135,000 150,000 165,000
450,000 101,250 135,000 151,875 168,750 185,625
500,000 112,500 150,000 168,750 187,500 206,250
550,000 123,750 165,000 185,625 206,250 226,875
600,000 135,000 180,000 202,500 225,000 247,500
700,000 157,500 210,000 236,250 262,500 288,750
800,000 180,000 240,000 270,000 300,000 330,000
900,000 202,500 270,000 303,750 337,500 371,250
Plan compensation of participants is limited to base salary and incentive
bonuses earned and specifically excludes items required to be added to W-2 wages
such as moving expenses and other similar forms of compensation.
Credited compensation covered by either the Retirement Plan or the Excess
Benefit Plan for 1996 for the Named Executives listed in the Summary
Compensation Table was as follows: J. M. Fitzgibbons -- $531,599; J. M.
Nevin -- $300,000; R. E. Dellinger -- $248,843; K. M. Finlay -- $234,741; and T.
R. Staab -- $212,380. Directors who are not employees are not eligible to
participate in the plan. The benefit amounts in the table shown above are not
subject to deduction for Social Security benefits or other offset amounts.
At December 31, 1996, the credited service for pension calculations for the
Named Executives was as follows: J. M. Fitzgibbons -- 5 years; J. M. Nevin -- 2
years; R. E. Dellinger -- 11 years; K. M. Finlay -- 26 years; and T. R.
Staab -- 16 years.
The Company funds the entire cost of the plan by periodic contributions to
the Fieldcrest Cannon, Inc. Retirement Plan Trust, which are determined on an
actuarial basis. To the extent that the annual retirement benefit exceeds
certain limits established by the Internal Revenue Code of 1986, as amended (the
"Code"), for payments from qualified trust funds, the difference will be paid
from the general operating funds of the Company in accordance with the Company's
Excess Benefit Plan described below. The Company's contributions are not
allocated to the account of any particular employee. Officers participate in the
plan on the same basis as approximately 1,600 other salaried employees of the
Company.
To protect employees (including the Named Executives) from the loss of
benefits resulting from these limitations imposed by the Code, the Company
sponsors a non-qualified plan, the Fieldcrest Cannon, Inc. Excess Benefit Plan
(the "Excess Benefit Plan"). Should benefits under the Retirement Plan otherwise
payable to participating employees be reduced to comply with these limitations,
the Excess Benefit Plan will pay to such employees the difference between the
benefits actually paid under the Retirement Plan and the benefits which would
have been paid thereunder if the limitations had not been in effect. Payments
are made to participants in the Excess Benefit Plan in the same manner and at
the same time or times as under the Retirement Plan.
10
Performance Graph
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of the Standard & Poor's 500 Stock Index and a peer
group, constructed by the Company, consisting of four corporations (Fieldcrest
Cannon, Inc., Crown Crafts, Inc., Springs Industries, Inc., and Thomaston Mills,
Inc.) that are engaged principally in the manufacture and sale of home
furnishing textile products.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
This report of the Compensation Committee of the Board of Directors of the
Company sets forth the Committee's compensation policies applicable to the Named
Executives and the other executive officers of the Company, including the
specific relationship of corporate performance to executive compensation, with
respect to compensation reported in this proxy statement for 1996.
Executive Compensation Policies
Decisions on compensation of the Company's executive officers are made by
the Compensation Committee of the Board consisting of non-employee directors.
The Committee's executive compensation policies are to motivate key senior
executives to achieve short-term and long-term goals, while providing
competitive levels of compensation that will assist the Company in attracting
and retaining qualified executives. As discussed below, these policies are
implemented through annual bonuses paid under short-term incentive compensation
criteria established each year by the Committee (the "Annual Bonus" or "Annual
Bonuses"), awards of stock under the Long-Term Incentive Plan (the "Long-Term
Plan"), the grant of options to purchase stock under the 1995 Stock Option Plan,
the payment of deferred compensation paid pursuant to the Executive Capital
Accumulation Plan (the "Capital Accumulation Plan") and the payment of base
salaries at a level that is consistent with the incentive-based aspects of the
Committee's policies.
11
Relationship of Corporate Performance to Executive Compensation
The key mechanism of the Committee's incentive-based compensation policies
is the Annual Bonuses, which are paid to the Company's executive officers if the
Company achieves a minimum return on equity ("ROE") for the year. The Committee
believes that ROE usually provides a reasonably accurate comparison of corporate
performance with that of the Company's peers. The criteria for Annual Bonuses
for 1996 provided that each of the Company's executive officers could earn a
bonus equal to certain specified percentages of his base salary, depending on
the Company's ROE for the year. Based on the ROE achieved by the Company for
1996, the Named Executives received no bonuses for 1996.
The Committee believes that stock ownership and stock based compensation
are important tools to improve the Company's long-term performance and enhance
stockholder value and has used awards of Common Stock under the Long-Term Plan
and the 1995 Stock Option Plan to help achieve this goal.
Share awards under the Long-Term Plan vest after four years of continued
employment (or earlier in the event of death, disability or normal retirement).
Accordingly, executives who receive awards of shares are motivated to improve
corporate performance and increase stockholder value on a long-term basis. By
this means, the interests of such executives are further aligned with those of
the Company's stockholders. In determining the amount of shares of stock to be
awarded, the Committee considers, in addition to the incentive-based purpose of
the plan, the recent performance of the Company and other factors such as
whether actions during the year that promote long-term goals of the Company may
have been at the expense of short-term performance, thereby reducing ROE and the
amount of the Annual Bonuses. The Named Executives received no shares for 1996.
The Company's 1995 Stock Option Plan is designed to promote a closer
identification of the interests of executive officers with those of the
stockholders and stimulate efforts to enhance stockholder value. Options to
purchase 4,600 shares were granted to executive officers under this plan in
1996.
The Capital Accumulation Plan also is designed to motivate the Company's
executives to improve corporate performance. The plan provides for the Company
to credit to the executives' deferred compensation accounts, as of each December
31, an aggregate amount as determined with respect to each Plan Year in the
discretion of the Committee. This aggregate amount is allocated among the
several executives' accounts pro rata based on their relative compensation.
Amounts credited to the accounts of the Named Executives for 1994 are set forth
in the Summary Compensation Table. Based on the ROE achieved by the company for
1996 and 1995, the Named Executives received no credits to their deferred
compensation accounts.
The base salaries of the Company's executives are generally set at levels
that will attract and retain qualified executives, taking into account the
Compensation Committee's desire to link a significant percentage of an
executive's compensation to corporate performance. Year-to-year adjustments are
made on a subjective basis each year based on a number of factors, including the
Company's performance and company-wide salary adjustments.
Compensation Paid to the Chief Executive Officer
1996 compensation paid to J. M. Fitzgibbons, the Company's Chief Executive
Officer, was based on the factors generally applicable to compensation paid to
executives of the Company as described above.
The foregoing report is submitted by the members of the Compensation
Committee.
Noah T. Herndon
John C. Harned
W. Duke Kimbrell
C. J. Kjorlien
II. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of its Audit
Committee, has selected the firm of Ernst & Young LLP as independent auditors
for the Company and its subsidiaries for the year 1997, subject to ratification
by the stockholders. This firm has audited the accounts of the Company since its
organization and has advised the Company that it does not have, and has not had,
any direct or indirect financial interest in the Company or its subsidiaries in
any capacity other than that of independent auditors. Ernst & Young LLP
12
representatives are expected to attend the Annual Meeting of Stockholders. They
will have an opportunity to make a statement if they desire to do so, and will
also be available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" ratification.
STOCKHOLDER PROPOSALS
Stockholders having proposals which they desire to present at next year's
annual meeting should, if they desire that such proposals be included in the
Board of Directors' proxy and proxy statement relating to such meeting, submit
such proposals in time to be received by the Company at its principal executive
office in Kannapolis, North Carolina, not later than November 29, 1997.
OTHER MATTERS
The shares represented by each properly executed proxy received by the
Company will be voted in accordance with the instructions, if any, given
therein. The Company does not know of any other business to be brought before
the meeting, but it is intended that, as to any such other business, the shares
will be voted pursuant to the proxy in accordance with the judgment of the
person or persons acting thereunder.
By Order of the Board of Directors,
M. KENNETH DOSS
Secretary
One Lake Circle Drive
Kannapolis, North Carolina 28081
March 28, 1997
13
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APPENDIX
FIELDCREST CANNON, INC. Common Stock Proxy
Kannapolis, North Carolina 28081
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James M. Fitzgibbons proxy, with power
of substitution, and all powers the undersigned would possess if personally
present to vote at the meeting of stockholders of Fieldcrest Cannon, Inc.
called to be held at 1271 Avenue of the Americas, New York, NY, April 22,
1997 at 10 o'clock a.m., and any adjournment thereof, upon the following
matters, all as more fully described in the Notice of Meeting and Proxy
Statement, receipt of which is hereby acknowledged, and in their discretion
upon other matters properly coming before the meeting.
I. Election of Directors
FOR James M. Fitzgibbons, William E. Ford, John C.
[ ] Harned, Noah T. Herndon, S. Roger Horchow, W. Duke
Kimbrell, C. John Kjorlien, Alexandra Stoddard
VOTE WITHHELD To withhold authority to vote for any individual
[ ] nominee strike a line through the nominee's name
in the list above.
II. FOR AGAINST ABSTAIN Ratification of the Board of Directors' selection
[ ] [ ] [ ] of Ernst & Young LLP, independent accountants, as
auditors for the Company.
III. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on reverse side)
THIS PROXY IS ENTITLED TO ONE VOTE PER SHARE AND WHEN PROPERLY EXECUTED, WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS I AND II.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized persons.
________________________ 1997 __________________________________
Date Signature
__________________________________
Signature if held jointly
Common Stock
This Proxy is entitled to one vote
per share.
Please, Date, Sign and Mail This Proxy in the Enclosed Envelope. No Postage
is Required.