SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
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14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Pluma, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[ ] 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 in amount on which the filing
fee is calculated and state how it was determined):
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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:
June 5, 1997
(PLUMA LOGO GOES HERE)
Pluma, Inc.
801 Fieldcrest Road
Eden, NC 27288
May 5, 1997
Dear Share Owner:
You are cordially invited to attend the Annual Meeting of
share owners which will be held on Thursday, June 5, 1997, at
10:00 a.m., local time at Bassett Country Club, Oak Level Road,
Bassett, Virginia.
The enclosed Notice and Proxy Statement contain details
concerning the business to come before the meeting. You will
note that the Board of Directors of the Company recommends a
vote "FOR" the election of four Directors to serve until the
Annual Meeting of share owners to be held in the year 2000 and
"FOR" the ratification of Deloitte & Touche, LLP as independent
auditors of the Company for the 1997 fiscal year. Please sign
and return your proxy card in the enclosed envelope at your
earliest convenience to assure that your shares will be
represented and voted at the meeting even if you cannot attend.
Sincerely,
/s/ George Walker Box /s/ Robert Ferrell, Jr.
G. WALKER BOX R. DUKE FERRELL JR.
(PLUMA LOGO GOES HERE)
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
TO THE OWNERS OF COMMON STOCK
PLUMA, INC.
The Annual Meeting of share owners of PLUMA, INC. A North Carolina
corporation (the "Company"), will be held at Bassett Country Club, Oak Level
Road, Bassett, Virginia, on Thursday, June 5, 1997, at 10:00 a.m., local time,
for the following purposes:
1. to elect four Directors to serve until the Annual Meeting of share
owners to be held in the year 2000;
2. to ratify the appointment of Deloitte & Touche, LLP as independent
auditors; and,
3. to transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
Share owners of record at the close of business on April 22, 1997, are
entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof. A list of share owners of the Company as of the close of
business on April 22, 1997, will be available for inspection during normal
business hours from May 15 through June 4, 1997, at the offices of the Company
and will also be available at the meeting.
Attendance at the meeting will be limited to shareholders of record or
their authorized representative by proxy. If your shares are held through an
intermediary, such as a bank or broker, you should request a ticket from the
intermediary, or present proof of your ownership of Pluma, Inc., shares at the
meeting. Proof of ownership could include a proxy from the intermediary or a
copy of your account statement, which confirms your beneficial ownership of
Pluma, Inc., shares.
By Order of the Board of Directors
/s/ George G. Wade
SECRETARY
Eden, North Carolina
May 5, 1997
EACH SHARE OWNER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY
PROMPTLY. IN THE EVENT A SHARE OWNER DECIDES TO ATTEND THE MEETING, HE OR SHE
MAY, IF SO DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
PROXY STATEMENT
FOR ANNUAL MEETING OF SHARE OWNERS
TO BE HELD JUNE 5, 1997
TABLE OF CONTENTS
ELECTION OF DIRECTORS.................................................................................................. 1
Board of Directors................................................................................................... 1
Recommendation of the Board of Directors Concerning the Election of Directors........................................ 2
NOMINEES FOR ELECTION TO TERM EXPIRING 2000............................................................................ 2
INCUMBENT DIRECTORS -- TERM EXPIRING 1999.............................................................................. 2
INCUMBENT DIRECTORS -- TERM EXPIRING 1998.............................................................................. 2
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS AND COMPENSATION OF DIRECTORS........................................... 3
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION............................................................ 4
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS INVOLVING DIRECTORS NOT ON THE COMPENSATION COMMITTEE................... 5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................................................................ 5
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY.......................................................................... 6
PRINCIPAL SHARE OWNERS................................................................................................. 7
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION................................................................ 7
Overall Objectives and Programs...................................................................................... 7
Components of Executive Compensation................................................................................. 8
Base Salary.......................................................................................................... 8
Senior Executive Bonus Plan.......................................................................................... 8
Stock Option Plan.................................................................................................... 9
Benefits............................................................................................................. 10
Sales Incentive Plan................................................................................................. 10
1996 Compensation for the Chief Executive Officer.................................................................... 10
Summary.............................................................................................................. 10
PERFORMANCE GRAPH...................................................................................................... 11
EXECUTIVE COMPENSATION................................................................................................. 12
Summary Compensation Table........................................................................................... 12
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS............................................................................ 12
Aggregated Option/SAR Exercises in the Last Fiscal Year-End and FY End Option Values................................. 13
Option Grants in Last Fiscal Year.................................................................................... 13
Employment Agreements, Change of Control Arrangements................................................................ 13
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.................................................................... 15
Recommendation of the Board of Directors............................................................................. 15
PROXY PROCEDURE AND EXPENSES OF SOLICITATION........................................................................... 15
SHARE-OWNERS' PROPOSALS................................................................................................ 16
OTHER INFORMATION...................................................................................................... 16
PLUMA, INC.
Eden, North Carolina
May 5, 1997
PROXY STATEMENT
FOR ANNUAL MEETING OF SHARE OWNERS
TO BE HELD JUNE 5, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Pluma, Inc. (The "Company") to be
voted at the Annual Meeting of share owners of the Company to be held at Bassett
Country Club, Oak Level Road, Bassett, Virginia, on June 5, 1997, at 10:00 a.m.,
local time, and at any adjournments or postponements thereof.
All proxies delivered pursuant to this solicitation are revocable at any
time at the option of the persons executing them by giving written notice to the
Secretary of the Company, by delivering a later dated proxy or by voting in
person at the Annual Meeting.
The mailing address of the principal executive offices of the Company is
801 Fieldcrest Road, Eden, North Carolina, 27288. The approximate date on which
this Proxy Statement, form of proxy, and Annual Report to share owners are first
being sent or given to share owners is May 5, 1997.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of Directors to serve until the Annual
Meeting of share owners to be held in the year 2000, in voting by proxy, share
owners may vote in favor of all nominees or withhold their votes as to all
nominees or withhold their votes as to specific nominees. With respect to the
ratification of the appointment of Deloitte & Touche LLP as independent
auditors, share owners may vote in favor of the proposal, against the proposal
or may abstain from voting. Share owners should specify their choices on the
enclosed form of proxy. If no specific instructions are given with respect to
the matters to be acted upon, the shares represented by a signed proxy will be
voted FOR the election of all nominees and FOR the proposal to ratify the
appointment of Deloitte & Touche LLP. Directors will be elected by a plurality,
and ratification of the appointment of Deloitte & Touche LLP will require
approval by a majority of the votes cast by the holders of the shares of Common
Stock of the Company voting in person or by proxy at the Annual Meeting.
Accordingly, abstentions and broker non-votes will not be included in vote
totals and will have no effect on the outcome of the vote. Only owners of record
of shares of Common Stock of the Company at the close of business on April 22,
1997, are entitled to vote at the meeting or adjournments or postponements
thereof. Each owner of record on the record date is entitled to one vote for
each share of Common Stock of the Company so held. On April 22, 1997, there were
8,109,152 shares of Common Stock of the Company issued and outstanding.
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
The Board of Directors consists of ten members. The Directors are divided
into three classes, each class serving for a period of three years, which has
been the practice of the Company since June of 1996.
Approximately one-third of the members of the Board of Directors are
elected by the share owners annually. The Directors, whose terms will expire at
the 1997 Annual Meeting of share owners are George G. Wade, G. Walker Box, Dr.
David C. Jones and J. Robert Philpott, Jr., all of whom have been nominated to
stand for reelection as Directors at the 1997 Annual Meeting of share owners to
hold office until the Annual Meeting of share owners to be held in the year 2000
and until their successors are elected and qualified.
Should any one or more of these nominees become unable to serve for any
reason, or for good cause will not serve, which is not anticipated, the Board of
Directors may, unless the Board by resolution provides for a lesser number of
Directors, designate substitute nominees, in which event the persons named in
the enclosed proxy will vote proxies that would otherwise be voted for all named
nominees for the election of such substitute nominee or nominees.
1
RECOMMENDATION OF THE BOARD OF DIRECTORS CONCERNING THE ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR GEORGE G. WADE,
G. WALKER BOX, DR. DAVID C. JONES AND J. ROBERT PHILPOTT, JR., AS DIRECTORS TO
HOLD OFFICE UNTIL THE ANNUAL MEETING OF SHARE OWNERS TO BE HELD IN THE YEAR 2000
AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED. PROXIES RECEIVED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXY A
CONTRARY CHOICE.
NOMINEES FOR ELECTION TO TERM EXPIRING 2000
GEORGE G. WADE, age 63, a founder of the Company, served as Chairman of the
Company's Board of Directors until January 1996, when he became Chairman
Emeritus. Mr. Wade served as the Company's President and Chief Executive Officer
from January 1987, until he relinquished the titles of Chief Executive Officer
and President in September 1993 to become the Company's Secretary. Mr. Wade is a
member of the Company's Strategic Planning Committee. Mr. Wade was employed by
Bassett-Walker, Inc. from 1956 to 1986.
G. WALKER BOX, age 46, a founder of the Company, has served as a member of
the Board since 1987 and became Chairman of the Company's Board of Directors in
January 1996. He is a member of the Company's Nominating Committee and Strategic
Planning Committee. Mr. Box was employed by Bassett-Walker, Inc. from 1973 to
1986 when he became the President of Box-Ferrell and Company, the Company's
first exclusive sales agent. Mr. Box served as President of Box & Company from
1991 until December 1995, which served as the Company's exclusive sales agent
until purchased by the Company on December 31, 1995. Mr. Box is also a member of
the Board of Directors of the North Carolina Textile Foundation. Mr. Box is the
brother of Kemp D. Box, a Director of the Company.
DR. DAVID C. JONES, age 50, became a member of the Board of Directors in
1994 and has been engaged in the private practice of orthodontics since 1978. He
serves as a member of the Audit Committee.
J. ROBERT PHILPOTT, JR., age 51, became a director in April 1996. Mr.
Philpott is President, Treasurer and a director of Philpott, Ball & Company
("Philpott, Ball"), a private investment banking firm that he co-founded in
1991. Philpott, Ball has served as a financial adviser to the Company since
1991, providing corporate financial advisory services and valuations of Company
stock from time to time. Prior to founding Philpott, Ball, Mr. Philpott was a
Senior Vice President and Managing Director of Interstate/Johnson Lane, Capital
Markets Group. Mr. Philpott is a member of the Compensation and Strategic
Planning Committees.
INCUMBENT DIRECTORS -- TERM EXPIRING 1999
C. MONROE LIGHT, age 56, a founder of the Company, has been Vice President
of Manufacturing responsible for yarn sourcing and knitting and a Director since
1987. He became an Executive Vice President in January 1996. Mr. Light was
employed from 1960 to 1986 by Bassett-Walker, Inc. He serves on the Company's
Strategic Planning Committee.
WILLIAM K. MILESKI, age 54, a founder of the Company, has served as a
member of the Board of Directors since 1987 and is a member of the Audit
Committee. He was Vice President of the Company responsible for dyeing,
finishing and cutting operations from 1987 until he left the Company in December
1995 to found Meritage LLC, a contract garment-dyeing company.
KEMP D. BOX, age 43, became a member of the Board of Directors in 1988 and
is a member of the Compensation Committee. He is a private investor. Mr. Box is
the brother of G. Walker Box, who is a Director and executive officer of the
Company.
INCUMBENT DIRECTORS -- TERM EXPIRING 1998
R. DUKE FERRELL, JR., age 44, a founder of the Company, has been the
Company's President since January 1992 and its Chief Executive Officer since
September 1993. He served as the Company's Executive Vice President and Chief
Operating Officer from 1991 until he became President of the Company and is a
member of the Board of Directors, serving on its Nominating Committee and
Strategic Planning Committee. In 1987, Mr. Ferrell was employed by Box-Ferrell
and Company until his employment by Pluma as Executive Vice President and Chief
Operating Officer. He was employed by Bassett-Walker, Inc. from 1982 to 1986.
2
BARRY A. BOWLES, age 51, became a member of the Board of Directors in 1988
and is the chairman of the Compensation Committee and a member of the Nominating
Committee. Mr. Bowles is Chairman of the Board of Directors of Stanley W. Bowles
Corporation, a general construction contractor by which he has been employed
since 1967.
R. STEPHENS PANNILL, age 50, became a member of the Board of Directors in
1988 and is the chairman of the Audit Committee and a member of the Nominating
Committee. Mr. Pannill is a private investor.
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS
AND COMPENSATION OF DIRECTORS
In accordance with the Bylaws of the Company, the Board of Directors has
established a Nominating Committee, an Audit Committee, a Compensation
Committee, and a Strategic Planning Committee. The members of these Committees
are indicated below.
The Company's Board of Directors established an Audit Committee in March
1994. The responsibilities of the Audit Committee include recommending to the
Board of Directors the independent public accountants to be selected to conduct
the annual audit of the Company's financial statements, reviewing the proposed
scope of such audit and approving the audit fees to be paid. This committee is
also responsible for reviewing the adequacy and effectiveness of the internal
auditing, accounting and financial controls of the Company with the independent
public accountants and the Company's financial and accounting staff and
reviewing and approving transactions between the Company and its directors,
officers and their affiliates. The Audit Committee consists exclusively of
outside directors who are R. Stephens Pannill (chairman), Dr. David C. Jones and
William K. Mileski.
The Company's Board of Directors established a Compensation Committee in
April 1989. The Compensation Committee provides a general review of the
Company's compensation plans to ensure that they meet corporate objectives. The
responsibilities of the Compensation Committee also include administering the
Company's Senior Executive Bonus Plan, Sales Incentive Plan, Non-Qualified
Deferred Compensation Plan and 1995 Stock Option Plan, including selecting the
officers and salaried employees to whom bonuses and stock options will be
granted. The Compensation Committee consists exclusively of outside directors
who are Barry A. Bowles (chairman), Kemp D. Box and J. Robert Philpott, Jr.
Until April 10, 1996, G. Walker Box also served as a member of this Committee.
The Company's Board of Directors established a Nominating Committee in
January 1994. The Nominating Committee is responsible for making recommendations
to the Board of Directors concerning executive officer appointments. The
Nominating Committee consists of R. Duke Ferrell, Jr. (chairman), Barry A.
Bowles, G. Walker Box and R. Stephens Pannill.
The Company's Board of Directors established a Strategic Planning Committee
in October 1996. This Committee is responsible for monitoring industry trends
and making recommendations to the Company's Board of Directors regarding Company
actions designed to enable the Company to compete effectively in the future. The
Strategic Planning Committee consists of G. Walker Box, R. Duke Ferrell, Jr., C.
Monroe Light, J. Robert Philpott, Jr. and George G. Wade.
In 1996, the Board of Directors held nine meetings and committees of the
Board of Directors held a total of thirteen meetings. Overall attendance at such
meetings was 97% for Board and 88% for Committees. All of the Directors attended
more than 90% of the aggregate of all meetings of the Board of Directors and the
Committees on which they served during 1996.
Officers of the Company who are also directors do not receive any fee or
remuneration for services as members of the Board of Directors or of any
Committee of the Board of Directors.
Each non-employee director of the Company receives $10,000 annually for
serving as a director, $750 for each board meeting attended and $500 for each
meeting of any Committee of the Board attended, except that the Chairman of each
Committee is paid $750 for each meeting of his Committee which he attends. In
addition, directors may be compensated under the Company's 1995 Stock Option
Plan. J. Robert Philpott, Jr., became a member of the Company's Board of
Directors in April of 1996. At that time, and pursuant to the Company's 1995
stock option plan, Mr. Philpott was granted the option to purchase 14,720 shares
of the Company's common stock at a price of $13.07 per share. At the time of the
grant of this option, the exercise price was equal to or greater than the value
of the option shares. Beginning in April of 1997, and in April of each year
thereafter, Mr. Philpott's right to purchase the option shares vest with respect
to twenty percent of the option shares so granted.
3
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On December 31, 1996, the Company's Compensation Committee consisted of
Barry A. Bowles (Chairman), Dr. David C. Jones, and J. Robert Philpott, Jr.
Until April 10, 1996, G. Walker Box also served as a member of this Committee.
On December 29, 1995, pursuant to an Agreement of Termination and Release,
the Company terminated the Sales and Marketing Agreement with Box & Company by
paying to Box & Company a termination payment in the amount of $2.0 million. The
Company paid Box & Company $1,000 on December 29, 1995, and the balance on
January 30, 1996, pursuant to a promissory note given as payment for the
termination payment. In addition to the $2.0 million termination payment, the
Company paid Box & Company all commissions due under the Sales and Marketing
Agreement for shipments made by the Company to customers prior to December
31,1995 ("Final Commissions"). The amount of the Final Commissions was $152,418,
which was paid in full on February 5, 1996. Also, as part of the negotiated
settlement related to the termination, Pluma assumed the risk of all customer
returns of products previously shipped (for which commissions had been paid) and
waived any further right of offset against sums due Box & Company as the result
of uncollected accounts receivable due from Pluma's customers (on which
commissions had been paid previously). Box & Company is a company solely owned
by G. Walker Box.
North Bowles Partnership is a general partnership of which Barry A. Bowles,
a director of Pluma and a member of its Compensation Committee, owns a 33.0%
general partnership interest.
On June 10, 1989, the Company entered into a lease with North Bowles
Partnership for a building located in Martinsville, Virginia, to operate a
distribution center. On December 1, 1990, this lease was amended to add 67,500
square feet to the building subject to the original lease. The building now
contains 181,550 square feet. Rental expense for 1996 was $52,026 per month, or
a total of $624,312 annually. Rental payments increase with any annual increase
in the Consumer Price Index for Urban Wage Earners and Clerical Workers. The
term of this lease is 20 years. As additional rent, the Company is responsible
for paying 75.0% of the increase in taxes and insurance premium payments due on
this property. This lease grants the Company the option to purchase the
distribution center at the end of the fifth year, tenth year and fifteenth year
of the lease term, as well as at the end of the lease term in June 2009, at a
price to be agreed upon by the parties, or if no agreement can be reached, at a
price determined by appraisers.
On December 1, 1995, the Company entered into a lease with North Bowles
Partnership for a 83,200 square foot building that is being utilized by the
Company as a warehouse, packaging facility and management information systems
location. Seven hundred square feet of additional office space was recently
added to this facility. Rent is payable in monthly installments of $14,500. This
lease terminates on February 1, 1998.
On February 1, 1996, the Company entered into a lease with North Bowles
Partnership for a 200,000 square foot building that is being utilized by the
Company as a warehouse and distribution facility. Annual rental on this facility
is $384,000 payable in equal monthly installments of $32,000. This lease
terminates on July 31, 1998. As additional rent, the Company is responsible for
paying any increase in North Bowles Partnership's taxes and insurance premiums
related to the property in excess of 1995 levels.
For the year ended December 31, 1996, the Company paid Stanley Bowles
Corporation $478,646 for services rendered in connection with the installation
of a new conveyor system linking two of the Company's distribution facilities.
This payment included the cost of the equipment and labor and materials utilized
for installation. Stanley Bowles Corporation is a corporation of which Barry A.
Bowles, a director of Pluma and a member of its Compensation Committee, owns 20%
of the voting stock.
For the year ended December 31, 1996, the Company paid Diversified
Distribution, Inc. $223,338 in fees related to contract services rendered to the
Company for packaging and preparing Company products for shipment. These
services were contracted for on a job-by-job basis as needed during busy
delivery times. The Company has no long term contract for such services. Barry
A. Bowles owns 22.5% of the Common Stock of Diversified Distribution, Inc.
The Company paid Philpott, Ball $120,000 of advisory fees plus
out-of-pocket expenses during 1996 pursuant to a contract for financial advisory
services. The Company has signed a similar contract, requiring the payment of
$120,000 during 1997. Philpott, Ball's advisory services performed or to be
performed under these agreements include negotiating with underwriters regarding
pricing of the Company's stock in a public offering and other matters related
thereto, coordinating selling shareholders in the Company's public offering,
assisting in the preparation of "road-shows" for any public offering, assisting
the Company with strategic planning, executive compensation and benefits,
financial forecasting and acquisition inquiries. J. Robert Philpott, Jr., a
director of the Company, owns 50.0% of the outstanding equity interests in
Philpott, Ball.
4
With reference to all of the transactions described above, the Company
followed its policy set forth in its Bylaws related to transactions with its
directors ("Interested Directors"). The Company's Bylaws require that any
transaction or series of transactions between the Company and an Interested
Director in which such Interested Director may receive either directly or
indirectly, (through an entity with which the director is affiliated as a
shareholder, partner, director, officer, employee or agent) compensation or
benefits of more than $25,000 within a twelve-month period be first considered
by the Company's Board of Directors (without, the involvement of the Interested
Director and any of his family members who may be directors) and determined by
it that the terms of such transaction(s) are on terms at least equal to, if not
better than, terms which the Company could have received from a party
unaffiliated with the Company. Although transactions in the ordinary course of
the Company's business can be exempted from this requirement, the transactions
described above were not in the ordinary course of business and were on terms at
least equal to, if not better than, the terms the Company could have received
from a nonaffiliated party.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS INVOLVING DIRECTORS
NOT ON THE COMPENSATION COMMITTEE
For the year ended December 31, 1996, the Company paid $42,776 to Meritage
LLC for special contract dyeing services. In addition, in 1996, the Company had
sales of fleece activewear totaling $80,005 to Meritage LLC. Meritage LLC is a
limited liability company principally owned by William K. Mileski, a director of
Pluma and a member of the Company's Audit Committee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Pluma's
Directors and executive officers and any persons who own beneficially more than
10% of the outstanding shares of the Company's common stock to file with the
Securities and Exchange Commission and the New York Stock Exchange reports
disclosing their initial ownership of the Company's common stock, as well as
subsequent reports disclosing changes of such ownership. The Company became
subject to the reporting requirements of this Rule on March 11, 1997 and
therefore no reports were required to be filed in 1996.
[REMAINDER OF PAGE IS LEFT BLANK INTENTIONALLY]
5
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock as of April 22, 1997, by each Director, the
Company's five most highly compensated executive officers at year end and the
Directors and executive officers of the Company as a group.
AGGREGATE
NUMBER PERCENTAGE
OF SHARES OF
BENEFICIALLY OUTSTANDING
NAME(1) OWNED SHARES(2)
G. Walker Box.......................................................................... 794,061 (2)(3) 9.65 %(3)
R. Duke Ferrell, Jr.................................................................... 513,621 (2)(4) 6.24 %(4)
George G. Wade......................................................................... 423,561 (5) 5.15 %(5)
Kemp D. Box............................................................................ 383,114 (6)(7) 4.66 %(7)
Dr. David C. Jones..................................................................... 359,085 (6)(8) 4.36 %(8)
William K. Mileski..................................................................... 259,934 (6)(9) 3.16 %(9)
C. Monroe Light........................................................................ 281,414 (2)(10) 3.42 %(10)
R. Stephens Pannill.................................................................... 244,241 (6)(11) 2.97 %(6)(11)
Barry A. Bowles........................................................................ 141,579 (6)(12) 1.72 %(6)(12)
Milton A. Barber, IV................................................................... 14,432 (6) .18 %
J. Robert Philpott, Jr................................................................. 7,944 (6) .10 %
All directors and executive officers as a group (17 persons)........................... 3,231,530 39.27 %
(1) As of April 22, 1997, the percentages calculated are based on 8,109,152
shares issued and outstanding plus 120,115 shares subject to presently
exercisable stock options issued under the Company's 1995 Stock Option Plan,
a total of 8,229,267 shares.
(2) Includes 8,832 shares issuable upon the exercise of options that have vested
(does not include 35,328 shares issuable upon the exercise of options that
have not yet vested).
(3) Includes (a) 23,552 shares owned by the George Walker Box Family Trust of
which G. Walker Box is the trustee and has sole voting and investment power;
(b) 237,687 shares owned by Box, Ferrell & Co. of which Mr. Box shares
voting power and investment power equally with R. Duke Ferrell, Jr. -- these
shares are included in both Mr. Box's and Mr. Ferrell's beneficially owned
shares; (c) 46,758 shares owned by Mr. Box as custodian for his minor
children living in his household; (d) 100,995 shares owned by the George
Henry Box, Jr. Revocable Trust dated April 27, 1992 of which Mr. Box as
Co-trustee, shares voting and investment power equally with Kemp D.
Box -- these shares are included in both Mr. Box's and Kemp D. Box's
beneficially owned shares; and (e) 16,240 shares owned by Mr. Box's wife of
which shares Mr. Box disclaims beneficial ownership.
(4) Includes (a) 237,687 shares owned by Box, Ferrell & Co. of which Mr. Ferrell
shares voting power and investment power equally with G. Walker Box -- these
shares are included in both Mr. Ferrell's and Mr. Box's beneficially owned
shares; (b) 19,636 shares held by Mr. Ferrell as custodian for his minor
children living in his household; (c) 4,740 shares held by Mr. Ferrell's
Individual Retirement Account; and (d) 20,019 shares owned of record by Mr.
Ferrell's wife of which shares Mr. Ferrell disclaims beneficial ownership.
(5) Includes (a) 44,160 shares issuable upon the exercise of options that are
currently exercisable; and (b) 85,376 shares owned by Mr. Wade's wife. Mr.
Wade disclaims beneficial ownership of the shares owned by his wife. Does
not include 589 shares owned by Mr. Wade's adult children who do not reside
in his household.
(6) Includes 2,944 shares issuable upon the exercise of options that are
currently exercisable (does not include 11,776 shares issuable upon the
exercise of options that have not yet vested).
(7) Includes (a) 100,995 shares owned by the George Henry Box, Jr. Revocable
Trust dated April 27, 1992 of which Mr. Box as Co-trustee, shares voting and
investment power equally with G. Walker Box -- these shares are included in
both Mr. Box's and G. Walker Box's beneficially owned shares; (b) 23,552
shares owned by the Kemp D. Box Family Trust, of which Mr. Box is the
trustee and has sole voting and investment power; (c) 4,465 shares owned by
Mr. Box's wife; (d) 18,468 shares owned by Mr. Box's wife as trustee for
trusts for her and Mr. Box's minor children living in Mr. Box's household;
and (e) 43,356 shares owned by Mr. Box's wife as trustee for the Kemp D. Box
Descendants' Trust. Mr. Box disclaims beneficial ownership of all shares
beneficially owned by his wife.
(8) Includes 31,100 shares owned by his Individual Retirement Account, but does
not include 36,108 shares owned by the David C. Jones Foundation, the
trustees of which are Dr. Jones' wife, Karen Jones, and Philip G. Gardner.
6
(9) Includes 22,080 shares owned by Mr. Mileski's wife of which shares Mr.
Mileski disclaims beneficial ownership. Does not include 3,165 shares owned
by Mr. Mileski's adult children who do not reside in his household.
(10) Includes 58,880 shares owned by Mr. Light's wife of which shares Mr. Light
disclaims beneficial ownership. Does not include 8,689 shares owned by Mr.
Light's adult children who do not reside in his household and 5,888 shares
owned by Mr. Light's grandchildren who do not reside in his household.
(11) Includes (a) all of the 257,600 shares Mr. Pannill owns of record with his
wife as a joint tenant with right of survivorship; and (b) 2,682 shares
owned by Mr. Pannill's wife of which shares Mr. Pannill disclaims
beneficial ownership.
(12) Includes 1,472 shares held by Mr. Bowles' Individual Retirement Account.
Does not include 29 shares owned by Mr. Bowles' adult children who do not
reside in his household and does not include 11,482 shares owned by the
Barry A. Bowles Irrevocable Trust of which John L. Gregory, III is the
trustee.
PRINCIPAL SHARE OWNERS
Set forth in the table below is information as of April 22, 1997 with respect to
persons known to the Company to be the beneficial owners of more than five
percent of the Company's issued and outstanding stock:
NUMBER OF SHARES PERCENT
NAME AND ADDRESS(1) BENEFICIALLY OWNED OF CLASS
G. Walker Box............................................................................... 794,061(2) 9.65 %(2)
R. Duke Ferrell, Jr......................................................................... 513,621(3) 6.24 %(3)
George C. Wade.............................................................................. 423,561 5.15 %(3)
(1) The address of each who is a person five percent shareholder of the Company
is c/o Pluma, Inc., 801 Fieldcrest Road, Eden, North Carolina 27288.
(2) Includes (a) 23,552 shares owned by the George Walker Box Family Trust of
which G. Walker Box is the trustee and has sole voting and investment power;
(b) 237,687 shares owned by Box, Ferrell & Co. of which Mr. Box shares
voting power and investment power equally with R. Duke Ferrell, Jr. -- these
shares are included in both Mr. Box's and Mr. Ferrell's beneficially owned
shares; (c) 46,758 shares owned by Mr. Box as custodian for his minor
children living in his household; (d) 100,995 shares owned by the George
Henry Box, Jr. Revocable Trust dated April 27, 1992 of which Mr. Box as
Co-trustee, shares voting and investment power equally with Kemp D. Box and
(e) 16,240 shares owned by Mr. Box's wife of which shares Mr. Box disclaims
beneficial ownership.
(3) Includes (a) 237,687 shares owned by Box, Ferrell & Co. of which Mr. Ferrell
shares voting power and investment power equally with G. Walker Box -- these
shares are included in both Mr. Ferrell's and Mr. Box's beneficially owned
shares; (b) 19,636 shares held by Mr. Ferrell as custodian for his minor
children living in his household; (c) 4,740 shares held by Mr. Ferrell's
Individual Retirement Account; and (d) 20,019 shares owned of record by Mr.
Ferrell's wife of which shares Mr. Ferrell disclaims beneficial ownership.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of Pluma's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings by reference,
including this Proxy Statement, in whole or in part, the following Report of the
Compensation Committee shall not be incorporated by reference into any such
filings.
OVERALL OBJECTIVES AND PROGRAMS
The objective of the Company's executive compensation program is to provide
compensation that will attract and retain executives, to motivate each executive
toward the achievement of the Company's short and long-term financial and other
goals and to recognize individual contributions as well as overall business
results. In order to achieve this objective, the primary focus of the
Compensation Committee has been on the competitiveness of each of the key
elements of executive compensation -- base salary, bonus and periodic stock
option grants -- and the compensation package as a whole. In general, the
Committee believes that total compensation should be competitive with the
compensation paid by a peer group used
7
for compensation comparisons (the "Compensation Peer Group"). As described
below, the Company's total executive compensation has recently become more
dependent upon the Company achieving targeted pre-tax income goals set each year
by the Compensation Committee.
Each year the Compensation Committee reviews a report prepared by Philpott
Ball & Company, the Company's consultant (50% of the outstanding stock of which
is owned by J. Robert Philpott, Jr., a director of the Company and member of the
Compensation Committee) assessing the competitiveness of the Company's
compensation program for the past year with the Compensation Peer Group to
determine whether there is a need to make prospective adjustments in the
compensation of executive officers. The Compensation Peer Group incudes all of
the companies listed on page 11, footnote 2 to the Performance Graph.
Over the last several years the Compensation Committee has sought to relate
an increasingly greater percentage of total executive compensation directly to
the financial performance of the Company and to the part each executive played
in achieving that performance. This has resulted in a compensation package in
which a greater portion of each executive officer's compensation is contingent
upon the achievement of specific targeted pretax income goals for the year. For
1996 executive bonus compensation represented approximately 40.3% of their total
direct compensation (base salary plus bonus).
It has also been the Committee's objective that, in any year in which a
budgeted bonus pool is earned under the Senior Executive Bonus Plan and the
Company's performance compares favorably with the Compensation Peer Group, the
total direct compensation of Pluma's executive officers should be relatively
comparable to the executive compensation of other members of the Compensation
Peer Group whose performances compare to the Company's performance. The same
competitive peer group is used for all components of the compensation package.
The total executive compensation for each top executive in any year is based on
Pluma's financial performance relative to the financial performance of the
Compensation Peer Group (comparing, among other criteria, the company's net
margins, return on assets, total assets, net income and net revenue) and the
attainment of individual non-financial objectives during the preceding fiscal
year. For the most recent period for which information is available, the total
direct compensation of the Company's executive officers was the eighth highest
within the Compensation Peer Group of twenty-four companies.
COMPONENTS OF EXECUTIVE COMPENSATION
The five primary components of executive compensation are:
(Bullet) Base Salary
(Bullet) Senior Executive Bonus Plan
(Bullet) Stock Option Plan
(Bullet) Benefits
(Bullet) Sales Incentive Plan (for salesmen only, only one of which is
currently an executive officer)
Each category is offered to key executives in various combinations,
structured in each case to meet varying business objectives, to cumulatively
provide a level of total compensation that is competitive with total
compensation offered by the Compensation Peer Group.
BASE SALARY
Executive officers' base salaries are determined by evaluating the
responsibilities of their positions and their performance, and by reference to
the levels of base salaries paid in the Compensation Peer Group. In the case of
operating executive officers, other factors considered are manufacturing
productivity; product quality and relationships with customers, suppliers and
employees; employee safety; environmental quality of operations; business
ethics; leadership and management development. The Committee exercises its
judgment in determining the impact that these or any other relevant performance
criteria have on setting the executive officers' base salaries.
SENIOR EXECUTIVE BONUS PLAN
The Company's Compensation Committee administers Pluma's Senior Executive
Bonus Plan (the "Bonus Plan"), which is designed to create incentive for
participants in the Bonus Plan to increase Company profitability. Participants
in the Bonus Plan are stratified by the Compensation Committee into one of two
tiers, based upon the executive's responsibility, past performance with the
Company, and possible impact on Company profitability as a result of his or her
executive position
8
with the Company. Ten executives participated in the Bonus Plan in 1996 (the
"Participants"). R. Duke Ferrell, Jr., George Walker Box, George G. Wade and C.
Monroe Light participated in tier 1. Milton A. Barber, IV, David S. Green,
Walter E. Helton, Raymond L. Rea, Nancy B. Barksdale and Jeffrey D. Cox
participated in tier 2.
The "Bonus Pool" available for distribution is determined in the early part
of each fiscal year by adding executive compensation to the Company's previous
fiscal year-end's pre-tax income (Pre-Tax Income Before Compensation). In 1996,
20% of this adjusted Pre-Tax Income Before Compensation was the "Compensation
Pool" from which the "Bonus Pool" was determined. In any year, this percentage
could be increased or decreased, at the discretion of the Compensation
Committee, to adjust for increases or decreases in the number of Participants to
allow for unforeseen factors which might affect Pluma's performance and to
adjust for changes in the performance of the Compensation Peer Group. The "Bonus
Pool" is equal to the amount of the "Compensation Pool" less the sum of all base
salaries paid to the Participants for the year in which bonuses are calculated.
The Compensation Committee allocates the "Bonus Pool" between the two tiers
described above in a discretionary manner, with consideration given to the
number of Participants in each tier as determined at the sole discretion of the
Compensation Committee. In addition, the Compensation Committee and the Board
may grant to the tier 1 Participants an extraordinary bonus ("Bonus Percentage")
equal to a percentage (as determined by the Compensation Committee) of any
annual Pre-Tax Income Before Compensation earned in excess of a pre-determined
Pre-Tax Income Before Compensation level (the "Profit Target"). This Bonus
Percentage was 10% of Pre-Tax Income Before Compensation in excess of a
predetermined level of Pre-Tax Income Before Compensation for 1996. The Bonus
Percentage and the Profit Target are determined in the early part of each fiscal
year at the discretion of the Compensation Committee. The Compensation Committee
attempts to set the Profit Target at a level so that if Pluma attains the Profit
Target, the total compensation paid to the Company's executives will be
relatively similar in amount to the total compensation of executives of other
high performing companies within the Compensation Peer Group.
Notwithstanding the formularization of the process used to determine
bonuses under the Bonus Plan, the Compensation Committee is allowed discretion
to consider or disregard extraordinary items, usually of a one-time nature, that
might either increase or decrease the amount of the "Compensation Pool."
STOCK OPTION PLAN
In May 1995, the Company and its shareholders adopted the Pluma, Inc. 1995
Stock Option Plan (the "1995 Stock Option Plan"), which provides for the
issuance of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986 and non-qualified stock options to purchase an
aggregate of up to 515,200 shares of Common Stock. The 1995 Stock Option Plan
permits the grant of options to officers, employees, directors and independent
contractors of the Company and their employees.
The 1995 Stock Option Plan is administered by the Company's Compensation
Committee, of which all voting members are "disinterested persons" within the
meaning of Rule 16b-3 under the Securities and Exchange Act of 1934, as amended
(the "Committee"). Each option is evidenced by written agreement in a form
approved by the Committee. No options granted under the 1995 Stock Option Plan
are transferable by the optionee other than by will or by the laws of descent
and distribution, and each option is exercisable, during the lifetime of the
optionee, only by the optionee.
Under the 1995 Stock Option Plan, the exercise price of an incentive stock
option must be at least equal to 100.0% of the fair market value of the Common
Stock on the date of grant (110.0% of the fair market value in the case of
options granted to employees who hold more than ten percent of the voting power
of the Company's capital stock on the date of grant). The exercise price of a
non-qualified stock option is the same as for incentive stock options. The term
of an incentive or non-qualified stock option is not to exceed ten years (five
years in the case of an incentive stock option granted to a ten percent Pluma
shareholder). The Committee has the discretion to determine the vesting schedule
and the period required for full exercisability of stock options, and all
options granted under the Plan to date have contained a 20.0% per year vesting
schedule, except for options granted to George G. Wade and to a former director,
both who became 100% vested in all option shares granted to them under the 1995
Stock Option Plan at the time of the grant. Upon exercise of any option granted
under the 1995 Stock Option Plan, the exercise price may be paid in cash and/or
such other form of payment as may be permitted under the applicable option
agreement, including, without limitation, previously owned shares of the
Company's Common Stock. J. Robert Phillpot, Jr., was the only director or
executive officer who was granted stock options in 1996. The Company has not
granted stock options each year to its executive officers and directors, but
reserves the right to do so in the future if determined by the Company's Board
of Directors that such grants are necessary for the Company's compensation
structure to remain competitive with the Compensation Peer Group.
9
BENEFITS
In 1991, the Company adopted the Pluma, Inc. 401(k) Retirement Savings Plan
(the "401(k) Plan"), which is intended to be qualified under section 401(k) of
the Internal Revenue Code of 1986, as amended. To be eligible, an employee must
have been employed by the Company for at least one year. The 401(k) Plan permits
employees who have completed one year of service to defer up to 10.0% of their
annual compensation into the 401(k) Plan, provided, the total amount of
compensation deferred in any year does not exceed the maximum amount allowed
under law (which sum is adjusted annually). Additional annual contributions may
be made at the discretion of the Company, and matching contributions may be made
by the Company up to a maximum of 6.0% of a participating employee's annual
compensation. To date, Company matching contributions have equaled $0.35 for
every $1.00 contributed by the employee. Contributions made by the Company vest
after two years of employment.
Effective December 19, 1996, the Company adopted a Non-Qualified Deferred
Compensation Plan for certain selected key executives and for certain of its
Directors. This plan is designed to mirror the 401(k) Plan. Key executive
employees and directors chosen to participate in this plan are selected by the
Compensation Committee of the Company's Board of Directors. The purposes of this
plan is to provide certain directors and selected key executives of the Company
the opportunity to defer elements of their compensation which might not
otherwise be deferrable under other Company plans, including the 401(k) Plan, to
receive the benefit of additions to their deferral comparable to those
obtainable under the 401(k) Plan in the absence of certain restrictions and
limitations in the Internal Revenue Code, and to provide the directors with
benefits similar to the 401(k) Plan (absent certain restrictions and
limitations) were they eligible to participate in such 401(k) Plan.
SALES INCENTIVE PLAN
The Company's Compensation Committee administers Pluma's Sales Incentive
Plan (the "Sales Incentive Plan") which is designed to create incentive for the
Company's sales staff to increase customer sales. Each year, the Company's
Compensation Committee establishes a base level of annual sales volume (the
"Sales Threshold") upon which the incentive sales bonus is calculated. At each
fiscal year end, the Company subtracts the Sales Threshold from the Company's
actual total net sales for such year. This difference (the "Bonus Base") is the
base amount upon which bonuses are determined for the Company's salespeople. In
the event the Company's actual net sales for a fiscal year exceed the Sales
Threshold, then each Company salesperson is entitled to the payment of a bonus
determined by multiplying his or her base annual salary by a fraction, the
numerator of which is the Bonus Base and the denominator of which is the Sales
Threshold. The Sales Threshold is determined annually by the Company's Board of
Directors after a recommendation from its Compensation Committee. Milton A.
Barber, IV, is currently the only executive officer entitled to participate in
the Company's Sales Incentive Plan.
1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is determined pursuant to the
same basic factors as described above for other members of senior management. In
establishing a base salary and bonus of the Chief Executive Officer for 1996,
the Committee considered the base salary of the chief executive officers of the
Compensation Peer Group. Mr. Ferrell's bonus was determined in a similar manner
to G. Walker Box, George G. Wade and C. Monroe Light under the Company's Senior
Executive Bonus Plan.
SUMMARY
The Committee believes the executive compensation policies and programs
described in this Report serve the interests of the share owners and the
Company. Pay delivered to executives is intended to be linked to, and
commensurate with, Company performance and with share owner expectations. The
Committee cautions that the practice and the performance results of the
compensation philosophy described herein should be measured over a period
sufficiently long to determine whether strategy development and implementation
are in line with, and responsive to, share owner expectation.
Barry A. Bowles, Chairman
Kemp D. Box
J. Robert Philpott, Jr.
10
PERFORMANCE GRAPH
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING PERFORMANCE
GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
PERFORMANCE GRAPH (1)
Comparisons of Total Cumulative Return Among
Pluma, Inc., S&P 500 Index and Industry Peer Group (2)
(PERFORMANCE GRAPH GOES HERE/PLOT POINTS NEEDED)
(1) Pluma, Inc., completed an initial public offering of its common shares on
March 11, 1997. Therefore, this graph reflects the performance of the common
stock of the Company, the Industry Peer Group and the S&P Index over a very
limited period of time and should not be considered indicative of the future
performance of the Company's stock or the stock of the compared indices.
(2) Based on information for a self-constructed peer group consisting of Tultex
Corporation; Fruit of the Loom, Inc.; Russell Corporation; and VF
Corporation.
11
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and the four most highly compensated executive officers other than the
Chief Executive Officer (the "Named Officers"), for services rendered to the
Company during 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
(1) SECURITIES
SALARY BONUS UNDERLYING ALL OTHER
NAME AND POSITION YEAR (1) (2) OPTIONS (#) COMPENSATION (3)
G. Walker Box 1996(4) $196,500 $229,667 -- $1,278
Chairman of the Board 1995 -- -- 44,160 --
1994 -- -- -- --
R. Duke Ferrell, Jr. 1996 196,500 229,667 -- 2,200
President, Chief Executive 1995 192,520 118,164 44,160 1,857
Officer and Director 1994 179,925 32,887 -- 1,280
George G. Wade 1996 189,200 221,135 -- 5,428
Chairman Emeritus of the 1995 185,323 80,760 44,160 4,513
Board, Secretary and Director 1994 179,925 26,309 -- 3,023
C. Monroe Light 1996 168,000 196,357 -- 3,304
Executive Vice President of 1995 153,465 66,877 44,160 2,451
Manufacturing and Director 1994 146,157 16,546 -- 2,242
Milton A. Barber, IV 1996(5) 165,000 59,348(6) -- 316
Vice President of Sales 1995 -- -- 14,720 --
and Marketing 1994 -- -- -- --
(1) Certain of the Company's executive officers receive personal benefits in
addition to salary and cash bonuses, including car allowances. The aggregate
amount of such personal benefits, however, do not exceed the lesser of
$50,000 or 10.0% of the total of the annual salary and bonus reported for
the named executive officer.
(2) Bonuses are reflected in the year in which they are earned and are paid in
the following year.
(3) These amounts represent the Company's contribution to the Company's 401(k)
plan and the payment of premiums on split-dollar life insurance policies
owned by the employee.
(4) On January 1, 1996, G. Walker Box became the Chairman of the Company's Board
of Directors and an employee of the Company. Prior to that date, Mr. Box was
not a paid employee of the Company.
(5) On January 1, 1996, Milton A. Barber, IV became a Vice President of the
Company in charge of sales and marketing. Prior to that date, Mr. Barber was
not employed by the Company.
(6) Mr. Barber is a participant in the Company's Senior Executive Bonus Plan and
Sales Incentive Plan.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information with respect the exercise of
options during 1996 and exercisable and unexercisable options to acquire common
stock of the Company held at December 31, 1996 by the Named Officers.
These values have not been, and may never be, realized, as these options
have not been, and may never be, exercised. Actual gains, if any, upon exercise
will depend on the value of common stock on the date of any exercise of options.
12
AGGREGATED OPTION/SAR EXERCISES IN THE
LAST FISCAL YEAR-END AND FY END OPTION VALUES
VALUE OF
UNEXERCISED
IN-THE-MONEY
SHARES OPTIONS
ACQUIRED ON VALUE UNEXERCISED OPTIONS AT FY-END
EXERCISE REALIZED AT FY-END (#) (2)
NAME (#)(1) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE
G. Walker Box................................... 0 N/A 8,832 35,328 $ 0
George G. Wade.................................. 0 N/A 44,160 -- 0
R. Duke Ferrell................................. 0 N/A 8,832 35,328 0
C. Monroe Light................................. 0 N/A 8,832 35,328 0
Milton A. Barber, IV............................ 0 N/A 2,944 11,776 0
NAME UNEXERCISABLE
G. Walker Box................................... $ 0
George G. Wade.................................. 0
R. Duke Ferrell................................. 0
C. Monroe Light................................. 0
Milton A. Barber, IV............................ 0
(1) No options were exercised in 1996.
(2) Based on market price of $12.50 per share (market price of the Company's
common stock on April 30, 1997), less the exercise price.
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options to Named Officers during 1996.
EMPLOYMENT AGREEMENTS, CHANGE OF CONTROL ARRANGEMENTS
Pursuant to employment contracts dated December 19, 1996 (the "Employment
Agreements"), George G. Wade, R. Duke Ferrell, Jr., G. Walker Box, C. Monroe
Light, David S. Green, Walter E. Helton, Raymond L. Rea, Nancy B. Barksdale,
Forrest H. Truitt, II, Jeffrey D. Cox and Milton A. Barber, IV (each an
"employee") are employed by the Company in their various executive capacities.
Each of these Employment Agreements, if not sooner terminated (for reasons of
death, disability, change of control or "for cause"), terminates on December 18,
1998. Thereafter an employee's employment may continue until terminated by the
Company or the employee. Under the Employment Agreements, these individuals are
entitled to annual bonus payments pursuant to Pluma's Senior Executive Bonus
Plan and all benefits made available to other senior executives under any
employee benefit plans including the Company's 401(k) Plan, medical expense
reimbursement plans, group life, health, accident, medical, hospitalization and
disability insurance plans. Currently, no senior executive is the beneficiary of
any such plans not made available to all Pluma employees except for Pluma's
Senior Executive Bonus Plan, Non-Qualified Deferred Compensation Plan, Sales
Incentive Plan (with respect to the Company's salespeople) and the split-dollar
insurance policies referenced in note (3) to the Summary Compensation Table.
The Company or the employee may terminate his or her Employment Agreement
upon a "change of control" of the Company. A change of control shall mean the
occurrence of any one of the following events:
(1) if any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "Act") (other than the Company,
any trustee, fiduciary or other person or entity holding securities under
any employee benefit plan of the Company), together with all "affiliates"
and "associates" (as such terms are defined in Rule 12b-2 under the Act) of
such person, shall become the "beneficial owner" (as such term is defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company representing 50.0% or more of either (a) the combined voting power
of the Company's then outstanding securities having the right to vote in an
election of the Company's Board of Directors ("Voting Securities"), or (b)
the then outstanding shares of the Company (in either such case other than
as a result of acquisition of securities directly from the Company); or
(2) if the majority of those persons who, as of January 1, 1996,
constituted the Company's Board of Directors (the "Incumbent Directors")
cease for any reason, including, without limitation, as a result of a
tender offer, proxy contest, merger or similar transaction, to constitute
at least a majority of the Board of Directors, provided that any person
becoming a director of the Company subsequent to January 1, 1996, whose
election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors or Directors chosen by the Incumbent
Directors shall be considered an Incumbent Director; or
(3) if the shareholders of the Company shall approve (a) any
consolidation or merger of the Company where the shareholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as such
term is defined in Rule 13d-3 under the Act), directly or indirectly,
13
shares representing in the aggregate 50.0% of the voting shares of the
corporation issuing cash securities in the consolidation or merger (or of
its ultimate parent corporation, if any), (b) any sale, lease, exchange or
other conveyance, in a transaction or series of transactions of all or
substantially all of the assets of the Company, or (c) any plan or proposal
for the liquidation or dissolution of the Company.
Upon termination of the Employment Agreements after a "change of control,"
if the employee is eligible (as defined below), the Company shall:
(1) Within 30 days after termination, pay to the employee an amount,
in cash, equal to: (a) three times the employee's (i) average annual salary
for the 36-month period prior to such change of control and (ii) any
bonuses received during the 18 months preceding the effective date of the
change of control, less (b) 1/36 of the amount calculated in (a) above for
each month that the employee remains employed with the Company following
the effective date of the change of control; and
(2) Continue the medical, disability and life insurance benefits the
employee was receiving at the time of termination for a period of 36 months
after termination of employment or, if earlier, until the employee has
commenced employment elsewhere and becomes eligible for participation in
the medical, disability and life insurance programs, if any, of the
successor employer. Coverage under the Company's medical, disability and
life insurance programs shall cease with respect to each such program as
the employee becomes eligible for the medical, disability and life
insurance programs, if any, of the successor employer. During the first 18
months of such 36-month period, the Company shall be responsible for the
costs associated with continued insurance coverage for the employee, but
only to the extent it would have been responsible for such costs if the
employee was still employed by the Company. The employee shall be
responsible for the remaining costs. If at the end of 18 months, the
employee is still afforded medical, disability and life insurance coverage
under the Company's insurance programs, the Company shall arrange to
provide continued coverage under said programs, but the employee will be
responsible for the total cost of all such continued coverage after the
first 18-month period.
The employee is eligible for the benefits provided above, unless the
Company or the Company's successor, after a change of control, offers the
employee a bona fide employment contract for a term that would expire no earlier
than three years after the effective date of the change of control under the
terms of which the employee would perform the same duties for the same or
greater levels of compensation as were afforded under the terms of the
Employment Agreements, and the employee rejects the offer.
The employee's employment may also be terminated under the Employment
Agreement in the event of death, "for cause" or, at the Company's election, in
the event of the employee's long-term disability. In the event of the death of
the employee during employment, the following payments shall be made to the
employee's designated beneficiary, or, in the absence of such designation, to
the estate or other legal representative of the employee: (i) base salary for
the month in which death occurs, and (ii) such bonuses (if any) as have been
earned and not paid at the time of death. Any rights and benefits the employee
or his/her estate or any other person may have under employee benefit plans and
programs of the Company generally applicable in the event of the employee's
death shall be determined in accordance with the terms of such plans and
programs. Except as provided in the Employment Agreement, neither the employee's
estate nor any other person shall have any rights or claims against the Company
in the event of the death of the employee during employment.
Upon termination for cause, the employee shall receive his or her base
salary only through the date of termination, and neither the employee nor any
other person shall be entitled to any further payments from the Company for
salary, unpaid bonuses or any other amounts. Any rights and benefits the
employee may have under employee benefit plans and programs of the Company
generally following a termination of the employee's employment for cause shall
be determined in accordance with the terms of such plans and programs.
In the event of the employee's disability during his or her employment
under the Employment Agreement, employment may be terminated by the Company. For
the first three months following termination of employment due to disability,
the employee shall be paid the base salary in effect at the time of the
commencement of disability. Thereafter, the employee shall be entitled to
benefits in accordance with and subject to the terms and provisions of the
Company's long-term disability plan for senior management employees, as in
effect at the time of the commencement of disability. If, during the three-month
period following a termination of employment because of disability in which
salary continuation payments are payable by the Company, the employee becomes
re-employed (whether as an employee, partner, consultant or otherwise), any
salary or other remuneration or benefits earned by him or her from such
employment or engagement shall not offset any payments due the employee from the
Company as the result of disability.
14
The Board of Directors believes that these Employment Agreements will
enable key employees to conduct Company business with less concern for personal
economic risk when faced with a possible change of control. Furthermore, it is
the opinion of Pluma's Board of Directors that these agreements also should
enhance the Company's ability to attract new key executives as needed.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the firm of Deloitte & Touche, LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
1997, subject to ratification of this appointment by the share owners of the
Company. Deloitte & Touche, LLP has served as independent auditors of the
Company since 1987 and is considered by management of the Company to be well
qualified. The Company has been advised by that firm that neither it nor any
member thereof has any financial interest, direct or indirect, in the Company or
any of its subsidiaries in any capacity.
One or more representatives of Deloitte & Touche, LLP will be present at
this year's Annual Meeting of share owners, will have an opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the votes cast by the holders of the shares of
Common Stock of the Company voting in person or by proxy at the Annual Meeting
of share owners. If the share owners should not ratify the appointment of
Deloitte & Touche LLP, the Board of Directors will reconsider the appointment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE, LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE 1997 FISCAL YEAR. PROXIES RECEIVED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
PROXY PROCEDURE AND
EXPENSES OF SOLICITATION
The Company will hold the votes of all share owners in confidence from the
Company, its Directors, officers and employees except: (i) as necessary to meet
applicable legal requirements and to assert or defend claims for or against the
Company; (ii) in case of a contested proxy solicitation; (iii) in the event that
a share owner makes a written comment on the proxy card or otherwise
communicates his/her vote to management; or (iv) to allow the independent
inspectors of the election of directors to certify the results of the vote. The
Company will also retain an independent tabulator to receive and tabulate the
proxies and an independent inspector of election to certify the results.
All expenses incurred in connection with the solicitation of proxies will
be borne by the Company. The Company has engaged Corporate Communications, Inc.,
the Company's consultant for investor relations, to assist with the solicitation
of proxies. The Company will reimburse brokers, fiduciaries and custodians for
their costs in forwarding proxy materials to beneficial owners of Common Stock
held in their names.
Solicitation may be undertaken by mail, telephone and personal contact by
Directors, officers and employees of the Company without additional
compensation.
Under North Carolina law, abstentions and broker nonvotes are counted to
determine whether a quorum is present at the Meeting. (Under New York Stock
Exchange rules, a broker may, if the broker does not have instruction from a
beneficial owner, vote shares on routine proposals. A broker does not have
discretionary voting instructions regarding nonroutine proposals from the
beneficial owner, the broker cannot vote on those proposals. This is referred to
as a broker nonvote.)
15
SHARE OWNERS' PROPOSALS
Proposals of share owners intended to be presented at the 1998 Annual
Meeting of share owners must be received by the Company on or before January 5,
1998, to be eligible for inclusion in the Company's Proxy Statement and proxy
relating to that meeting.
According to the Bylaws of the Company, a proposal for action to be
presented by any share owner at an annual or special meeting of share owners
shall be out of order unless specifically described in the Company's notice to
all share owners of the meeting and the matters to be acted upon, thereat or
unless the proposal shall have been submitted in writing to the Chairman of the
Board of Directors and received at the principal executive offices of the
Company at least 60 days prior to the date of such meeting, and such proposal
is, under law, an appropriate subject for share owner action.
OTHER INFORMATION
Management does not know of any matters other than those referred to in the
accompanying Notice of Annual Meeting of share owners which may properly come
before the meeting or other matters incident to the conduct of the meeting. As
to any other matter or proposal that may properly come before the meeting,
including voting for the election of any person as a Director in place of a
nominee named herein who becomes unable to serve or for good cause will not
serve and voting on a proposal omitted from this Proxy Statement pursuant to the
rules of the Securities and exchange Commission, it is intended that proxies
received will be voted in accordance with the discretion of the proxy holders.
The form of proxy and this Proxy Statement have been approved by the Board
of Directors and are being mailed and delivered to share owners by its
authority.
/s/ George G. Wade
SECRETARY
Eden, North Carolina
May 5, 1997
THE ANNUAL REPORT TO SHARE OWNERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, WHICH INCLUDES FINANCIAL STATEMENTS FOLLOWS THIS PROXY
STATEMENT. THE ANNUAL REPORT DOES NOT FORM ANY PART OF THE MATERIALS FOR THE
SOLICITATION OF PROXIES.
16
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APPENDIX
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PLUMA, INC. - PROXY
Solicited by Board of Directors for Annual Meeting of Shareholders-June 5, 1997
The undersigned appoints R. Duke Ferrell, Jr. and G. Walker Box, or any one
of them, attorneys and proxies with power of substitution to vote all of the
Common Shares of PLUMA, INC, standing in the name of the undersigned at the
Annual Meeting of Shareholders on June 5, 1997, and at all adjournments thereof,
upon the matters set forth in the Notice and Proxy Statement of said meeting,
receipt of which is acknowledged.
The shares represented by this proxy will be voted as directed by the
Shareholder. If you wish to vote in accordance with the recommendations of the
Board of Diectors, you may sign below and mail in the envelope provided. If no
direction is given, shares will be voted FOR Proposals 1 and 2. Specific choices
may be made on the reverse side.
DATED: _________________________, 1997
______________________________________
______________________________________
SIGNATURE(S) OF SHAREHOLDER(S)
Please sign exactly as name or names
appear hereon. Full title of one
signing in representative capacity
should be clearly designated after
signature. Names of all joint holders
should be written even if signed by
only one.)
Please complete, date, sign and mail Proxy Card in the envelope provided.
Postage not necessary if mailed in the United States.
The Board of Directors recommends a vote "FOR" Proposals 1 and 2
1. Election of Directors
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY TO
(except as marked to the contrary) vote for all nominees listed
George G. Wade Dr. David C. Jones G. Walker Box J. Robert Philpott, Jr.
(To withhold authority to vote for any individual nominee, line through the
nominee's name above.)
2. Proposal to ratify Deloitte & Touche, LLP as the Company's independent
auditors for the 1997 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted FOR Proposals 1 and 2 unless instructions to the
contrary are indicated.
PLEASE TURN OVER AND SIGN ON THE REVERSE SIDE