[Tultex Logo appears here]
Tultex Corporation
P.O. Box 5191
Martinsville, VA
24115
540-632-2961
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Tultex
Corporation to be held on Tuesday, May 5, 1998 at 10:00 a.m. at our Customer
Service Center in Martinsville, Virginia. Your Board of Directors and management
look forward to greeting you personally and discussing the affairs of our
Company.
At this year's meeting, we are asking that you (1) elect a Board of Directors
and (2) ratify the appointment of Price Waterhouse LLP as auditors. In addition
to this usual business, the officers will present their reports and be available
for questions from stockholders.
THE DIRECTORS BELIEVE THESE PROPOSALS ARE IN THE BEST INTEREST OF ALL OF THE
COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR EACH OF
THEM.
Please send in your proxy card as soon as possible. Thank you for your continued
interest and support.
Sincerely,
/s/ John M. Franck /s/ Charles W. Davies, Jr.
John M. Franck Charles W. Davies, Jr.
Chairman of the Board President and Chief Executive Officer
March 27, 1998
[Tultex Logo appears here]
Tultex Corporation
P.O. Box 5191
Martinsville, VA
24115
540-632-2961
Notice of Annual Meeting of Stockholders
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Tultex
Corporation will be held at the Company's Customer Service Center, State Route
174, Martinsville, Virginia, on Tuesday, May 5, 1998 at 10:00 a.m. for the
following purposes:
1. To elect a Board of Directors, consisting of nine persons, to serve for the
ensuing year;
2. To ratify the Board of Directors' appointment of Price Waterhouse LLP,
independent accountants, as auditors for the Company for fiscal 1998; and
3. To transact such other business as may properly come before the meeting.
Your attention is directed to the accompanying proxy statement for further
information with respect to the matters to be acted upon at the meeting. Only
holders of Common Stock, Cumulative Convertible Preferred Stock, $7.50 Series B
and Cumulative Convertible Preferred Stock, 4.5% Series C, of record at the
close of business on March 13, 1998, are entitled to notice of and to vote on
matters to be acted on at the Annual Meeting.
If you are present at the Annual Meeting, you may vote in person even though you
have previously delivered your proxy.
By Order of the Board of Directors
Kathy H. Rogers, Secretary
March 27, 1998
[Tultex Logo appears here]
Tultex Corporation
P.O. Box 5191
Martinsville, VA
24115
540-632-2961
Proxy Statement dated and mailed MARCH 27, 1998
General
Proxies in the form enclosed are solicited by the Board of Directors for the
1998 Annual Meeting of Stockholders to be held at 10:00 a.m. on Tuesday, May 5,
1998 at the Company's Customer Service Center, State Route 174, Martinsville,
Virginia. Any stockholder giving a proxy may revoke it at any time before it is
voted by written notice to the Company, P. O. Box 5191, Martinsville, Virginia
24115, Attention: Kathy H. Rogers, Corporate Secretary, by the execution of a
proxy with a later date, or by voting in person the shares represented by the
proxy.
The cost of solicitation of proxies will be borne by the Company. In addition to
the use of the mails, proxies may be solicited personally or by telephone by
regular employees of the Company, but no special compensation will be paid to
any regular employees for personal solicitation of proxies. Banks, brokerage
houses and other institutions, nominees and fiduciaries will be requested to
forward the soliciting material to beneficial owners and to obtain authorization
for the execution of proxies. The Company will, upon request, reimburse such
parties for their reasonable expenses in forwarding proxy material to their
beneficial owners.
A majority of the votes entitled to be cast on matters to be considered at the
meeting constitutes a quorum. If a share is represented for any purpose at the
meeting, for quorum purposes it is present for all matters considered at the
meeting. Abstentions and shares held of record by a broker or its nominee
("Broker Shares") that are voted on any matter are included in determining the
number of votes present or represented at the meeting. Broker Shares that are
not voted on any matter at the meeting are not included in determining whether a
quorum is present. Directors are elected by a plurality of the votes cast by
holders of Common Stock, Series B Preferred Stock and Series C Preferred Stock;
the vote required on other matters is disclosed under the caption for such
matters. Votes that are withheld and Broker Shares that are not voted (commonly
referred to as "broker non-votes") are not included in determining the number of
votes cast in the election of directors or on other matters.
Ownership of Equity Securities
On March 13, 1998, the date for determining stockholders entitled to notice of
and to vote at the Annual Meeting, there were outstanding and entitled to vote
29,875,488 shares of Common Stock, 75,000 shares of Cumulative Convertible
Preferred Stock, $7.50 Series B (the "Series B Preferred Stock"), and 33,260
shares of Cumulative Convertible Preferred Stock, 4.5% Series C (the "Series C
Preferred Stock"). The Common Stock, the Series B Preferred Stock, and the
Series C Preferred Stock have one vote per share on all matters and vote
together on all matters, including those to be acted on at the Annual Meeting.
1
The table below presents certain information as of the Record Date regarding
beneficial ownership of shares of Common Stock by all directors and nominees
for director, by the Chief Executive Officer and the four next most highly
compensated executive officers, by all directors and executive officers, by all
directors and executive officers as a group, and by owners of 5% or more of the
Common Stock. The Series B Preferred Stock is owned by Simon Trust Partnership
No. 3 (25%), Herbert Simon Trust No. 3 (25%) and L. G. Sale Corporation, Inc.
(50%), respectively. The Series C Preferred Stock is owned by John Box (74%)
and Todd Hines (26%).
Sole Voting Aggregate
and Investment Percentage
Name Power (1) Other (2) Owned
- --------------------------------------------------- ------------------ ----------- -----------
Directors:
Charles W. Davies, Jr. ............................ 239,520 shs. 142 shs. * %
John M. Franck .................................... 746,582 141,233 2.97
Lynn J. Beasley ................................... 2,024 -- *
Seth P. Bernstein ................................. 2,518 -- *
Lathan M. Ewers, Jr. .............................. 500 -- *
H. Richard Hunnicutt, Jr. ......................... 35,000 -- *
F. Kenneth Iverson ................................ 7,920 -- *
Bruce M. Jacobson ................................. 6,268 -- *
Richard M. Simmons, Jr. ........................... 182,921 615 *
Officers:
O. Randolph Rollins ............................... 113,286 362,748 1.59
Anthony J. Pichirallo ............................. 28,234 -- *
Walter J. Caruba .................................. 45,665 -- *
John J. Smith ..................................... 47,524 47 *
Executive officers and directors as a group
(20 persons including those named above) ......... 1,601,774 504,785 7.04
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA ................................. 1,497,872(3) 5.01
Pioneering Management Corporation
60 State Street
Boston, MA ....................................... 2,873,500(4) 9.62
- ----------
* Less than 1%
(1) Includes shares that may be acquired by certain of the Company's officers
within 60 days under the Company's stock option plans and phantom stock
credited to certain directors in 1997 under the Directors Compensation Plan.
(2) Includes shares (a) owned by or with certain relatives; (b) held in various
fiduciary capacities; and (c) held by certain corporations.
(3) Dimensional Fund Advisors, Inc., a registered investment advisor, is deemed
to have beneficial ownership of 1,497,872 shares, all of which shares are
held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
(4) As reported in Schedule 13G filed by Pioneering Management
Corporation, January 30, 1998.
2
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Corporation's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, file with the
Securities and Exchange Commission initial reports of ownership and reports of
change in ownership of Common Stock and other equity securities of the Company.
The same persons are also required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms that they file.
Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934 that have been received by the Company or
written representations from certain reporting persons that no annual statements
on Form 5 were required because of late filing, the Company believes that all
filing requirements applicable to its officers, directors and beneficial owners
of greater than 10% of its Common Stock have been complied with.
Election of Directors
Proxies will be voted for the election of nine nominees as directors to serve
until the 1999 Annual Meeting of Stockholders. The election of each nominee for
director requires the affirmative vote of the holders of a plurality of the
shares cast in the election of directors. Votes that are withheld and shares
held in street name that are not voted in the election of directors will not be
included in determining the number of votes cast. All of the nominees are
presently members of the Board. Lynn J. Beasley was elected a director by the
Board of Directors since last year's annual meeting. The Board of Directors has
no reason to believe that any of the nominees will be unavailable for service if
elected, but if any are unavailable, proxies will be voted for such substitute
as the Board may designate.
Name Age Director Since
- ---------------------------------------- ----- ---------------
Lynn J. Beasley ................... 40 1997
Seth P. Bernstein ................. 37 1997
Charles W. Davies, Jr. ............ 49 1990
Lathan M. Ewers, Jr. .............. 56 1993
John M. Franck .................... 45 1984
H. Richard Hunnicutt, Jr. ......... 59 1981
F. Kenneth Iverson ................ 72 1995
Bruce M. Jacobson ................. 48 1992
Richard M. Simmons, Jr. ........... 71 1973
Lynn J. Beasley is Executive Vice President of R. J. Reynolds Tobacco Company,
Winston-Salem, NC. Ms. Beasley has been employed by R. J. Reynolds since 1982.
Seth P. Bernstein is a Managing Director of and Head of the Leveraged Finance
Group of J. P. Morgan & Company, Inc., New York. Mr. Bernstein has been
employed by J. P. Morgan since 1984.
Charles W. Davies, Jr. became President and Chief Executive Officer on January
1, 1995, after serving as President and Chief Operating Officer since January
1991, and prior thereto as Executive Vice President since December 1989.
Lathan M. Ewers, Jr. has been a partner since 1976 in Hunton & Williams,
Richmond, Virginia, counsel to the Company.
3
John M. Franck became Chairman of the Board of Directors and Chief Executive
Officer on January 1, 1991. He retired as Chief Executive Officer on January 1,
1995, and as an employee of the Company on July 1, 1997. He currently serves as
Chairman of the Board. Mr. Franck is President and CEO of Quibell Spring Water
Beverages, a privately-owned beverage company located in Roanoke, Virginia. Mr.
Franck is a director of Piedmont Trust Bank, a subsidiary of MainStreet
BankGroup, Incorporated.
H. Richard Hunnicutt, Jr. was Chairman and Chief Executive Officer of the
Company from November 1988 through December 1990, when he retired. He was
President and Chief Operating Officer from 1984 to 1988.
F. Kenneth Iverson was Chairman and Chief Executive Officer of Nucor, Inc.,
Charlotte, North Carolina, a steel producer, from 1984 through January 1, 1996,
when he retired. He continues as Chairman of Nucor.
Bruce M. Jacobson is a senior partner in the certified public accounting firm of
Katz, Sapper & Miller, Indianapolis, Indiana, and has been a partner in such
firm since 1977.
Richard M. Simmons, Jr. is a retired business executive. He was President of
American Furniture Company from 1961 to 1987 and its Chairman from 1974 to
1986.
Committees of the Board
The standing committees of the Board of Directors are the Audit Committee, the
Nominating Committee and the Executive Compensation Committee. The Audit
Committee reviews with management and the Company's auditors the scope of the
annual audit, the results of the audit and the Company's internal accounting and
control systems. The Audit Committee also recommends to the full Board of
Directors the auditors to be appointed by the Board (subject to stockholder
ratification) and reviews the auditors' services to the Company and their fees.
The Nominating Committee reviews the qualifications of possible candidates
recommended by stockholders, provided that stockholder recommendations are
submitted in writing addressed to the Secretary of the Company, are accompanied
by statements signed by the recommended candidates of their willingness to
serve, if elected, and are received not later than 120 days before the date that
proxy material is mailed to stockholders for the annual meeting of stockholders
at which the recommended candidates, if approved by the Nominating Committee and
the incumbent Board of Directors, would be nominated by the Board for election
by the stockholders. The Executive Compensation Committee administers the
Company's stock option plans and other incentive programs, approves or
recommends to the Board changes in compensation for the Chief Executive Officer
and approves all Company employee benefit programs.
The members of Committees of the Board are:
Audit Committee -- Bruce M. Jacobson and Richard M. Simmons, Jr.
Nominating Committee -- H. Richard Hunnicutt, Jr., F. Kenneth Iverson and John
M. Franck
Executive Compensation Committee -- Seth P. Bernstein, Lathan M. Ewers, Jr. and
Bruce M. Jacobson.
The Board of Directors held four regular meetings and two special meetings
during the fiscal year ended January 3, 1998. The Audit Committee held four
meetings during the year, the Executive Compensation Committee held three
meetings, and the Nominating Committee held one meeting.
4
Compensation of Directors
Directors of the Company who are not full-time employees are paid a fee of
$2,500 for each fiscal quarter. In addition, they are paid $1,000 for each Board
meeting attended and $1,000 for each Committee meeting attended which does not
occur on the same date as a Board meeting day. They are paid $500 for each
Committee meeting attended that does occur on the same day as a Board meeting.
The Chairman of the Board is paid twice the fee paid other directors for each
fiscal quarter and each meeting attended.
The Board of Directors has adopted the 1996 Directors Compensation Plan, which
permits directors to defer their retainer and meeting fees for the purchase of
the Company's Common Stock. Deferred fees are credited with "phantom" Common
Stock valued at fair market value. Directors receive distribution of their
accounts at death, disability, termination of service as a director, or on
six-months' notice. Directors who participate are general unsecured creditors of
the Company for their account balances. At the time account balances are
distributed in the form of Common Stock, directors pay federal and state income
taxes on the Common Stock distributed valued at its fair market value, and the
Company is able to deduct as an ordinary business expense an amount equal to the
fair market value of the stock distributed.
Certain Relationships and Related Transactions
Seth P. Bernstein is a Managing Director at J.P. Morgan and Company, Inc., which
provides investment banking services to the Company. In 1997, the Company paid
J.P. Morgan and Company, Inc. $1,707,044 for investment banking services, which
included acting as co-lead manager of the private placement of $75 million
principal amount of the Company's 9 5/8% Senior Notes due 2007.
Lathan M. Ewers, Jr. is a partner in the law firm of Hunton & Williams, counsel
to the Company, which provides legal services to the Company and its
subsidiaries.
The Company believes that the terms of the transactions described above are
comparable to terms available for similar transactions with entities
unaffiliated with its officers and directors.
5
Executive Compensation
The following table presents information relating to total compensation of the
Chief Executive Officer and the four next most highly compensated executive
officers of the Company during the fiscal year ended January 3, 1998.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Awards Compensation
- ------------------------------------------------------------ -------------------------------------------------
(e) (g)
(a) (d) Restricted (f) All
Name and (b) (c) Bonus $ Stock Options/ Other
Principal Position Year Salary $ (1) Award(s)(1) SARs Compensation
- -------------------------- ------ ---------- --------- -------------- -------------- ---------------
Charles W. Davies, Jr. 1997 300,000 -- -- shs. 110,000 shs. --
President and 1996 300,000 87,570 3,020 10,000 --
Chief Executive Officer 1995 300,000 -- -- 7,500 --
O. Randolph Rollins 1997 209,167 -- -- 15,000 --
Executive Vice President 1996 200,004 41,881 1,444 10,000 --
and General Counsel 1995 200,004 -- -- 7,500 7,007(2)
Anthony J. Pichirallo 1997 164,500 -- -- 55,000 35,707(3)
Vice President- 1996 136,700 19,005 606 5,000 --
Wholesale 1995 127,530 13,084 -- 4,000 --
Walter J. Caruba 1997 174,000 -- -- 15,000 --
Vice President- 1996 159,000 33,295 1,148 10,000 --
Sales & Marketing 1995 156,000 -- -- 7,500 --
John J. Smith 1997 166,200 -- -- 15,000 --
Vice President 1996 158,400 33,169 1,144 10,000 --
1995 156,400 2,817 -- 7,500 --
- ----------
(1) Bonus represents cash Incentive Awards under the Consolidated Incentive Plan
(CIP) and Restricted Stock Awards represent Restricted Stock awarded under
the CIP. Shareholders approved the CIP at the 1996 Annual Meeting. The CIP
provides for cash Incentive Awards based primarily on return on assets, for
activewear and licensed apparel employees, and for Restricted Stock Awards
equal to 25% of the cash Incentive Award. Restricted Stock Awards are valued
at fair market value at the time of grant, and vest 20% per year. Holders of
Restricted stock vote the shares and receive any dividends paid thereon.
Accelerated vesting of shares occurs in the event of change in control,
death, disability, normal retirement or other circumstances determined by
the Executive Compensation Committee. No Cash Incentive or Restricted Stock
Awards were granted in 1997.
(2) Represents payment of residence relocation reimbursement.
(3) Represents a reward recognition payment which was not part of the incentive
compensation plan.
6
The following tables present information concerning stock options granted to the
Chief Executive Officer and the four next most highly compensated executive
officers of the Company and exercises of options by such persons.
OPTION GRANTS IN LAST FISCAL YEAR TABLE
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term
- ------------------------------------------------------------------------------------------- ----------------------
Number % Total
of Securities Options
Underlying Granted to
Options Granted Employees in Exercise Expiration
Name (Shares) # Fiscal Year or Base Price Date 5% 10%
- ---------------------------- ----------------- -------------- --------------- ------------- ---------- -----------
Charles W. Davies, Jr. ..... 25,000 4.07% $ 8.25 3/20/2002 $ 56,983 $125,918
15,000* 2.44 8.25 1/28/2003 35,665 82,071
35,000 5.69 5.81 10/17/2000 32,418 68,813
35,000 5.69 5.81 7/30/2006 112,176 276,334
O. Randolph Rollins ........ 15,000 2.44 5.81 10/17/2000 13,893 29,492
Anthony J. Pichirallo ...... 15,000 2.44 8.25 3/20/2002 34,190 75,551
20,000 3.25 5.81 10/17/2000 18,525 39,322
20,000 3.25 5.81 7/30/2006 64,101 157,904
Walter J. Caruba ........... 15,000 2.44 5.81 10/17/2000 13,893 29,492
John J. Smith .............. 15,000 2.44 5.81 10/17/2000 13,893 29,492
* Shares were repriced and expiration date extended.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUE TABLE
Number of Unexercised Value of Unexercised
Options at FY-End in-the-Money Options at
Shares FY-End
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ----------------- ---------- ------------- --------------- ------------- --------------
Charles W. Davies, Jr. ..... -- -- 162,500 145,000 -- --
O. Randolph Rollins ........ -- -- 52,500 30,000 -- --
Anthony J. Pichirallo ...... -- -- 19,500 55,000 -- --
Walter J. Caruba ........... 10,000 $31,250 35,500 15,000 -- --
John J. Smith .............. -- -- 35,500 15,000 -- --
7
RETIREMENT PLAN. The Company maintains for the benefit of its eligible employees
a defined benefit pension plan qualified under Section 401(a) of the Internal
Revenue Code. The following table illustrates annual retirement benefits payable
under the plan at the indicated Final Average Compensation and Credited Service
levels, assuming retirement at age 65 in 1997:
Years of Service
-------------------------------------------------
Final Average Earnings 10 20 30 40
- ------------------------ ---------- ---------- ---------- ----------
$100,000................ $10,200 $20,400 $30,600 $35,600
150,000 ............... 16,200 32,400 48,600 56,100
200,000 ............... 22,200 44,400 66,600 76,600
250,000 ............... 28,200 56,400 84,600 97,100
300,000 ............... 34,200 68,400 102,600 117,600
400,000 ............... 46,200 92,400 138,600 158,600
The benefits shown are annual payments based on an employee attaining age 65
during the 1997 plan year. Under current provisions of the Internal Revenue
Code, these amounts are limited to $125,000. Compensation is limited to
$160,000. The amounts in the table are based upon the formula in the current
Salaried Plan assuming retirement after attainment of normal retirement age. In
no case will the benefit amount be less than the minimum accrued benefit at May
31, 1994 based on the 401(a)(17) compensation limit of $235,840 plus additional
accruals for service after May 31, 1994. Benefits under the Retirement Plan are
not subject to any deduction for Social Security or other offset amounts.
The number of credited years of service for each person named in the Summary
Compensation Table are as follows: Charles W. Davies, Jr. -- 21 years, O.
Randolph Rollins -- 3 years, John J. Smith -- 13 years, Walter J. Caruba -- 20
years, and Anthony J. Pichirallo -- 10 years.
The Company maintains a supplemental benefit plan to provide key management
personnel who have satisfied the eligibility requirements with supplemental
retirement benefits, including a retirement benefit which, when aggregated with
the benefit available under the retirement plan, is equivalent to 50% of their
final average earnings for 30 years of service. The eligibility requirements
include being 100% vested under the retirement plan. The majority of this
benefit will be funded through the retirement plan, with the balance being
funded by the Company through a supplemental nonqualified program which is
funded through the purchase of life insurance policies on each covered
individual. Benefits under the supplemental benefit plan are fully vested after
five years of service. The estimated annual benefits under the supplemental
benefit plan for each officer named in the Summary Compensation Table as of
December 31, 1997 are as follows: O. Randolph Rollins -- $0, Charles W. Davies,
Jr. -- $57,761, John J. Smith -- $19,399, Walter J. Caruba -- $20,679, and
Anthony J. Pichirallo -- $10,245.
Employment Contracts and Employment Continuity Agreements
The Company has entered into employment continuity agreements with the five
officers named in the Summary Compensation Table, which provide for their
continued employment in the event of a change in control of the Company and the
payment of compensation and benefits if their employment is terminated following
a change in control. The Board of Directors believes that these agreements will
enable key employees to conduct the Company's business with less concern for
personal economic risk when
8
faced with a possible change in control. The Board believes the agreements also
should enhance the Company's ability to attract new key executives as needed.
The agreements define "change in control" as occurring when a person becomes the
owner of 20% or more of the Company's voting securities or when there is a
change in a majority of the members of the Board of Directors, direct or
indirect, as a result of a cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested election of directors or a
combination of such transactions. Upon a change in control, the Company agrees
to continue the employee's employment with responsibilities, compensation and
benefits identical to or greater than those prior to the change in control until
the earlier of the third anniversary following the change in control or the
employee's normal retirement date. If employment is terminated without cause by
the Company during this period, or if the employee voluntarily terminates
employment within six months after receiving lesser responsibilities,
compensation or benefits or after being relocated without his consent, and the
employee has made an offer to work that has been rejected by the Company, the
Company must pay the employee compensation as follows: (i) three times the
employee's annual base salary as of his termination date, (ii) three times the
employee's average incentive bonus payable for the two fiscal years prior to the
termination date, (iii) cash or property due as a result of exercise of stock
options, and (iv) amounts the employee is entitled to receive under the
Company's tax-qualified benefit plans and, at the employee's expense, health
care coverage under welfare plans. This compensation will be reduced, if
necessary, to assure that any payments would not be "excess parachute payments"
under the Internal Revenue Code, which imposes significant penalties on payments
under such severance agreements which equal or exceed 300% of an employee's
average annual compensation during the five most recent taxable years ending
prior to a change in control. The Company must pay all legal fees and expenses
incurred by the employee in seeking to obtain these benefits. All agreements
continue in effect from year to year unless the Company notifies the employee
before an anniversary date that the agreement will terminate. The Company has
entered into similar agreements with other members of management.
Executive Compensation Committee's Report on Executive Compensation
This report by the Executive Compensation Committee is required by rules of the
Securities and Exchange Commission. It is not to be deemed incorporated by
reference by any general statement which incorporates by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and it is not to be otherwise deemed filed under either
such Act.
Three directors comprise the Executive Compensation Committee of the Board of
Directors. None of these directors serves on the board of the other committee
member's company or organization and none of the executive officers of Tultex
serve on the board of any committee member's organization. The Committee has
access to outside consultants and counsel.
The Committee oversees three elements of executive compensation: base pay or
salary, annual performance bonus, and long-term compensation, which consists of
a stock option plan approved by shareholders. The Committee seeks to provide a
competitive compensation package that enables the Company to attract and retain
key executives, to integrate pay programs with the business objectives of the
9
Company, and to link individual executive compensation with the Company's
performance. The Committee surveys other comparable companies and believes that
Tultex's current executive compensation generally is in line with comparable
companies.
BASE PAY. The salary paid to the Company's executives is targeted to be
competitive with related industry companies of similar size, taking into account
the responsibilities and experience of individual officers. In general, the base
salaries are fixed at lower levels to emphasize result-oriented factors
reflected in a bonus potential and the value of stock options. The Committee
reviews salaries and pay ranges for the named executives, and salaries may be
increased based on the Committee's assessment of an individual's performance and
contributions to Tultex's goals. Upon the recommendation of the chief executive
officer, the Committee approved no increases in salary for the officers named in
the Summary Compensation Table in 1997; the increases reflected in the table
were approved by the Committee in 1996 for implementation in late 1996 and early
1997.
INCENTIVE AWARDS. The Consolidated Incentive Plan enables the Company's senior
executives to earn cash Incentive Awards based primarily on return on assets,
with a separate secondary goal based on Operating Cycle Days for activewear and
licensed apparel employees. Approximately 617 officers and employees are
eligible to participate in the Cash Incentive Plan. The five named executives
earned no cash incentive awards in 1997. The Consolidated Incentive Plan also
provides for Restricted Stock Awards equal to 25% of the cash Incentive Award as
long-term incentive for executive officers.
LONG-TERM INCENTIVE. The Company awards long-term compensation through its Stock
Option Plan and as Restricted Stock Awards under the Consolidated Incentive
Plan. Approximately 617 officers and employees are eligible to receive grants
under the stock option plan, including the five named executives. Options
normally extend for 10 years, are priced at fair market value on the date of
grant, and are intended to provide incentive for future performance rather than
reward past performance. Together with base pay and cash Incentive Awards, the
Committee considers the record of comparable companies in determining grants to
be made to the named executives. In 1997, the Committee recommended and the
Board of Directors approved options for the named executives as reflected in the
Option Grants in Last Fiscal Year Table. The options granted to these five
officers represent 36.6% of options granted to employees in 1997. No Restricted
Stock Awards were awarded in fiscal 1997.
1997 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. In setting the Chief
Executive Officer's base salary, the Committee compares his salary to the
salaries of other chief executive officers in the Company's peer group,
including those included in the performance graph. Mr. Davies was paid at the
same annual rate in 1997, as in 1996, and is currently being paid at the same
annual rate in 1998. Mr. Davies is eligible to participate in the same bonus and
long-term executive compensation plans as the other named executives. The
Committee's approach to setting Mr. Davies' target annual compensation is to set
a compensation level commensurate with his responsibilities and the objectives
of his position that would be competitive with other textile and apparel
companies of comparable size.
EXECUTIVE COMPENSATION COMMITTEE
Seth P. Bernstein
Lathan M. Ewers, Jr.
Bruce M. Jacobson
Dated: March 27, 1997
10
Compensation Committee Interlocks and Insider Participation
The following two directors, with Bruce M. Jacobson., comprise the Executive
Compensation Committee of the Board of Directors.
Seth P. Bernstein is a Managing Director at J.P. Morgan and Company, Inc., which
provides investment banking services to the Company. In 1997, the Company paid
J.P. Morgan and Company, Inc. $1,707,044 for investment banking services, which
included acting as co-lead manager of the private placement of $75 million
principal amount of the Company's 9 5/8% Senior Notes due 2007.
Lathan M. Ewers, Jr., is a partner in the law firm of Hunton & Williams, counsel
to the Company, which provides legal services to the Company and its
subsidiaries.
PERFORMANCE OF COMPANY'S COMMON STOCK
The following graph compares the performance of the Company's Common Stock to
(1) the Standard & Poor 500 Index and (2) a Peer Group Index for the Company's
last five fiscal years. The Company's Peer Group consists of Fruit of the Loom,
Inc., Oneita Industries, Inc., Russell Corporation, Starter Corporation, and the
Company. The Company has changed its peer group to better reflect the Company's
competition since entering the licensed apparel business and shifting its
emphasis toward marketing and distribution. The graph assumes that $100 was
initially invested on December 31, 1991 in the Company's Common Stock and in
each index and that all dividends were reinvested.
11
COMPARISON OF FIVE YEAR
CUMULATIVE SHAREHOLDER RETURN
[Comparison Graph appears here with the following plot points]
Base Period
Dec. 92 Dec. 93 Dec. 94 Dec. 95 Dec. 96 Dec. 97
------------ ------------ ------------ ------------ ------------ ------------
Tultex 100 $ 83.02 $ 58.35 $ 49.37 $ 83.78 $ 48.62
S&P 500 Index 100 110.08 111.53 153.45 188.68 251.63
New Peer Group 100 61.30 62.12 55.62 75.25 54.56
Old Peer Group 100 84.94 91.45 80.57 86.72 72.68
Old Peer Group: New Peer Group:
Oneita Industries, Inc. Fruit of the Loom, Inc. - CLA
Russell Corp. Oneita Industries, Inc.
Signal Apparel Co. Russell Corp.
Techknits, Inc. Starter Corp.
Tultex Corp. Tultex Corp.
Ratification of Appointment of Auditors
The Board of Directors has appointed Price Waterhouse LLP, independent certified
public accountants, to examine the financial statements of the Company for the
fiscal year ending January 2, 1999. Shareholders will be asked to ratify this
appointment at the Annual Meeting. Ratification of Price Waterhouse LLP requires
the affirmative vote of a majority of Common Stock and Series B Preferred Stock
and Series C Preferred Stock (voting together) voted at the Annual Meeting.
Price Waterhouse LLP has been the Company's independent accountants since 1971.
12
Representatives of Price Waterhouse LLP are expected to be present at the
meeting and will be given an opportunity to make a statement if they desire to
do so. They are expected to be available to respond to appropriate questions.
The Board of Directors Unanimously Recommends a Vote "FOR" Ratification of Price
Waterhouse LLP as Auditors.
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
offices in Martinsville, Virginia, not later than November 13, 1998. To be so
included, all such submissions must comply with the requirements of Rule 14a-8
of the Securities and Exchange Commission under the Securities Exchange Act of
1934 and the Board of Directors directs the close attention of interested
stockholders to that Rule.
Other Matters
As of the date of this Proxy Statement, the Board of Directors knows of no
matter to come before the meeting other than those stated in the notice of the
meeting. As to other matters, if any, that may properly come before the meeting,
it is intended that proxies in the accompanying form will be voted in accordance
with the best judgment of the persons named therein.
We hope that you will be able to attend this meeting in person, but if you
cannot be present, please execute the enclosed proxy and return it in the
accompanying envelope (no postage required) as promptly as possible. Your stock
will be voted in accordance with the instructions you give on the proxy, and in
the absence of any such instructions will be voted FOR election of directors and
FOR the ratification of appointment of auditors, as described herein.
Kathy H. Rogers
Secretary
Martinsville, Virginia
March 27, 1998
13
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APPENDIX
[GRAPHIC OMITTED]
Tultex Corporation Common Stock Proxy
P.O. Box 5191
The Board of Directors recommends a vote FOR Proposals 1 and 2.
(1) Election of Directors
Martinsville, VA 24115
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints John M. Franck, Kathy H. Rogers and Regina C.
Haynes, and each of them, with full power of substitution to each,
Proxies to vote all Common Stock of the undersigned in Tultex Corporation at
the annual meeting to be held on May 5, 1998, and at any and all adjourn
ments thereof.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
(1) Election of Directors
[ ] FOR
[ ] VOTE WITHHELD
(2) [ ] FOR
[ ] AGAINST
[ ] ABSTAIN
(3)
The proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted for
Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title
as such. If a corporation, please sign in full corporation name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Please sign and return, whether or not you plan to attend the meeting.
- -------------------------- ---------------------- ---------------------- , 1998
Signature Signature if held jointly Date