INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Filed by a Party other than the Registrant [_]
o
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
Unifi, Inc.
--------------------------------------------------------------------------------
(Name
| o Preliminary Proxy Statement | o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| x Definitive Proxy Statement | ||
| o Definitive Additional Materials | ||
| o Soliciting Material under Rule 14a-12 | ||
UNIFI, INC.
Payment of Filing Fee (Check the appropriate box):
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Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[_] Check box if any part of the fee is offset as provided by Exchange Act
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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: ________________________________________________________
2
(Unifi, Inc. Logo)
| x | No fee required. |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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| o | Fee paid previously with preliminary materials. |
| o | 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. |
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| (4) | Date Filed: |
7201 West Friendly Avenue
September 21, 2001
23, 2002
TO THE SHAREHOLDERS OF
UNIFI, INC.
The Annual Meeting of the Shareholders of your Company will be held at 10:00 A.M. Eastern Daylight Savings Time on Thursday,Wednesday, October 25, 2001,23, 2002, at the Company'sCompany’s corporate headquarters at 7201 West Friendly Avenue, Greensboro, North Carolina. The Notice of the Annual Meeting and the Proxy Statement containing detailed information about the business to be transacted at the meeting, as well as a form of proxy, are enclosed.
Detailed information relating to the Company'sCompany’s activities and operating performance is contained in our 20012002 Annual Report on Form 10-K, which is also enclosed.
You are cordially invited to attend the Annual Meeting of the Shareholders in person. We would appreciate your signing and returning your proxy in the enclosed postage-paid return envelope so that your shares can be voted in the event you are unable to attend the meeting. Your proxy will be returned to you if you are present at the meeting and so request.
Sincerely,
/s/ Brian R. Parke
Brian R. Parke
President and Chief Executive Officer
3
(Unifi, Inc. Logo)
| Sincerely, | |
 | |
| Brian R. Parke | |
| President and Chief Executive Officer |
7201 West Friendly Avenue
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF UNIFI, INC.:
The Annual Meeting of the Shareholders of Unifi, Inc. will be held at the Company'sCompany’s corporate headquarters at 7201 West Friendly Avenue, Greensboro, North Carolina, 27410 on Thursday,Wednesday, October 25, 200123, 2002, at 10:00 A.M. Eastern Daylight Savings Time, for the following purposes:
1. To elect as Directors of the Corporation those nominees listed in the
accompanying Proxy Statement;
| 1. | To adopt and approve an amendment to the Company’s Restated Certificate of Incorporation to declassify the Board of Directors so that each Director would stand for re-election on an annual basis. |
| 2. | To elect ten (10) Directors to serve until the next Annual Meeting of Shareholders or until their respective successors are duly elected and qualified in the event Proposal 1 is adopted and approved. |
| 3. | Alternatively, to elect three (3) Class 2 Directors to serve until their terms expire at the 2005 Annual Meeting of Shareholders or until their respective successors are duly elected and qualified in the event Proposal 1 is not adopted and approved. |
| 4. | To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. |
The Board of Directors, under the provisions of the Bylaws, has fixed the close of business on September 13, 2001,12, 2002, as the record date for determination of Shareholders entitled to notice of and to vote at the Annual Meeting of Shareholders or any adjournment or adjournments thereof. The transfer books of the CorporationCompany will not be closed.
YOUR VOTE IS IMPORTANTand the Board of Directors would appreciate your signing and returning the accompanying proxy card promptly. A proxy may be revoked by the Shareholder at any time before it is exercised.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/ Charles F. McCoy
Charles F. McCoy
Vice President, Secretary and General
Counsel
| BY ORDER OF THE BOARD OF DIRECTORS: | |
 | |
| Charles F. McCoy | |
| Vice President, Secretary and General Counsel |
Greensboro, North Carolina
7201 West Friendly Avenue
PROXY STATEMENT
SOLICITATION OF PROXIES
This solicitation of the enclosed proxy is made by the Board of Directors (the "Board"“Board”) of Unifi, Inc. (the "Company"“Company”) for use at the Annual Meeting of the Shareholders to be held Thursday,Wednesday, October 25, 2001,23, 2002, at 10:00 A.M. Eastern Daylight Savings Time, at the Company'sCompany’s corporate headquarters located at 7201 West Friendly Avenue, Greensboro, North Carolina, 27410, or at any adjournment or adjournments thereof. This statement and the form proxy will first be mailed to the Shareholders entitled to notice of the Annual Meeting of Shareholders on or about September 21, 2001.23, 2002.
The expense of this solicitation will be borne by the Company. Solicitations of proxies may be made in person, by mail or otherby telephone, telegraph or electronic means by directors,Directors, officers and regular employees of the Company who will not be specificallyspecially compensated in such regard. In addition, the Company has retained D. F. King & Company to assist in the solicitation of proxies and will pay such firm a fee estimated not to exceed $6,500 plus reimbursement of expenses. Arrangements will be made with brokers, nominees and fiduciaries to send proxies and proxy materials, at the Company'sCompany’s expense, to their principals.
The Company'sCompany’s common stock, par value $.10 per share (common stock) is the only type of stock of the Company. Shareholders of record, as of the close of business on September 13, 2001,12, 2002, will be entitled to notice of and to vote at the meeting or any adjournment thereof. On September 4, 2001,2002, the Company had outstanding 53,811,53353,850,841 shares of its common stock. Each share of the Company'sCompany’s common stock entitles the holder to one vote with respect to all matters coming before the meeting and all of such shares vote as a single class.
All shares represented by valid proxies received pursuant to this solicitation and not revoked before they are exercised will be voted in the manner specified therein. If no specification is made with respect to the matter to be acted upon, the shares represented by the proxies will be voted (i) in favor of Proposal No. 1, the electionamendment to the Company’s Restated Certificate of Incorporation declassifying the Board of Directors, (ii) if Proposal No. 1 is approved, in favor of Proposal No. 2, to elect the ten (10) nominees for Director, (iii) if Proposal No. 1 is not approved, in favor of Proposal No. 3 to elect the three (3) nominees as directorsClass 2 Directors, and (iv) in the discretion of those nominees named in thisthe proxy statement.
IF THE ENCLOSED FORM OF PROXY IS EXECUTED AND RETURNED IT MAY, NEVERTHELESS, BE
REVOKED AT ANY TIME BEFORE IT IS VOTED BY WRITTEN NOTICE TO THE SECRETARY OF THE
COMPANY OR BY THE SHAREHOLDER PERSONALLY ATTENDING AND VOTING HIS OR HER SHARES
AT THE MEETING.
holders on any other matters presented at the Annual Meeting of Shareholders.If the enclosed form of proxy is executed and returned it may, nevertheless, be revoked at any time before it is voted by written notice to the Secretary of the Company or by the Shareholder personally attending and voting his or her shares at the meeting.
VOTING OF SHARES
The holders of a majority of the outstanding shares entitled to vote, present in person or represented by proxy at this meeting, will constitute a quorum for the transaction of business. New York law and the Company'sCompany’s By-Laws require the presence of a quorum at Annual Meetings. Votes withheld from
director nomineesMeetings of Shareholders. Abstentions and abstentionsbroker non-votes are counted as present for purposes of determining a quorum.
Each share represented is entitled to one vote on all matters properly brought before the meeting. Please specify your choice by marking the appropriate boxes on the enclosed proxy card and signing it. Directors shall be elected by a plurality of the votes cast by the Shareholders at a meeting in which a quorum was present. Therefore, shares not voted and broker non-votes will have no affect on the election of directors.
Directors.
1 5
The proposed amendment to the Company’s Restated Certificate of Incorporation must receive the affirmative vote of a majority of the outstanding shares of common stock of the Company. A properly executed proxy card marked “Abstain” with respect to this proposal will not be voted. In addition, broker non-votes will not be voted with respect to this proposal. Accordingly, abstentions and broker non-votes will have the effect of a vote “Against” the proposal to amend the Company’s Restated Certificate of Incorporation.
INFORMATION RELATING TO PRINCIPAL SECURITY HOLDERS
The following table sets forth information, as of September 4, 20012002 (unless otherwise set forth in the footnotes), with respect to each person known or believed by the Company to be the beneficial owner, having sole voting and/or investment power (other than as set forth below) of more than five percent (5%) of the Company'sCompany’s common stock and the Company's directors and officers as a
group.
stock.
| Name and Address of | Amount and Nature | Percent of | ||||||
| Beneficial Owner | Beneficially Owned(1) | Class | ||||||
| Dimensional Fund Advisors Inc. (2) | ||||||||
| 1299 Ocean Avenue | ||||||||
| 11th Floor | ||||||||
| Santa Monica, CA 90401 | 3,268,700 | 6.1% | ||||||
| | ||||||||
| Merrill Lynch & Co., Inc. (3) | ||||||||
| 4 World Financial Center | ||||||||
| New York, NY 10080 | 4,182,261 | 7.8% | ||||||
| | ||||||||
| T. Rowe Price Associates, Inc. (4) | ||||||||
| 100 East Pratt Street | ||||||||
| Baltimore, MD 21202 | 3,495,400 | 6.4% | ||||||
| (1) | “Beneficial Ownership,” for purposes of the table, is determined according to the meaning of applicable securities regulations and |
| (2) | As indicated in its Schedule 13G/A, filed February 12, 2002, Dimensional Fund Advisors Inc. |
| (3) | As indicated in its Schedule 13G/A, filed February 5, 2002, Merrill Lynch & Co. |
PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION
The Company’s Restated Certificate of Incorporation, currently in effect, provides that the Board of Directors shall be divided into three (3) classes, as nearly equal in number as possible, with each class having a three-year term. The Board of Directors has unanimously adopted resolutions, subject to Shareholder approval, deleting Article Seventh of the Company’s Restated Certificate of Incorporation in its Schedule 13G, dated February entirety and replacing it with a new Article Seventh that would provide for a declassified Board of Directors, such that all Directors will be elected annually, with a minimum of nine (9) members (the “Proposal” or the “Proposed Amendment”). The Board of Directors currently has ten (10) members. The Proposal would not change the present number of Directors.
2 2001, Dimensional Fund
Advisors Inc., an investment advisor under Section 203
The adoption by the Company – and many other major corporations – of a classified board reflects widespread concern over hostile and non-negotiated attempts to acquire corporations to the disadvantage of shareholders. A classified board has been widely viewed as discouraging proxy contests for the election of directors, or acquisitions of substantial blocks of stock, by a person or group seeking to acquire control of a company, because the extended and staggered terms of directors could operate to prevent changing the composition of, or the acquisition of control of, the Investment
Advisors Actboard in a relatively short period of 1940,time. In a hostile takeover attempt, for example, a classified board may encourage a person seeking control of a company to initiate arm’s length discussions with the board of directors of that company, which may be deemedin a position to beneficially own 3,182,500 shares by
virtuenegotiate a higher price or more favorable terms for shareholders or to try and prevent a takeover that such board of directors believes is not in the best interest of the shareholders.
A classified board has also been viewed as promoting stability and may help to maintain a greater continuity of experience because the majority of directors at any given time will have at least one year of experience with a company. This continuity may assist a company in long-term strategic planning.
Some investors have, however, come to view classified boards as having sole votingthe effect of insulating directors from being accountable to a corporation’s shareholders. A classified board of directors, for example, limits the ability of shareholders to elect all directors on an annual basis and dispositive powerexercise influence over 3,182,500 shares.
(b) As indicated in its Schedule 13G/A, dated February 14, 2001, FMR Corp, a
holding company, and certainmay discourage proxy contests in which shareholders have an opportunity to vote for a competing slate of nominees. The election of directors is the primary means for shareholders to influence corporate governance policies and to hold management accountable for its implementation of those policies.
After due consideration of the various arguments for and against a classified board, the Board of Directors determined to propose declassifying the Board. This determination by the Board is in furtherance of its subsidiaries,goal of ensuring that the Company’s corporate governance policies maximize management accountability to the Shareholders and Mr. Edward C. Johnson,
IIIwill allow Shareholders the opportunity each year to register their views on the performance of the Board of Directors. The Board of Directors has unanimously approved the Proposed Amendment declassifying the organization of the Board of Directors and, Ms. Abigail P. Johnson, mayif approved by the requisite vote of the Shareholders as set forth below, the Restated Certificate of Incorporation shall be deemedamended to beneficially own 3,562,700declassify the Board of Directors. The Board of Directors will amend the By-Laws to the extent necessary to make them consistent with the amendment to the Restated Certificate of Incorporation.
If the Shareholders approve the Proposal, then all Directors of the Company will be reelected annually beginning at this 2002 Annual Meeting of Shareholders. This amendment is permitted under New York law and is consistent with the rules of the New York Stock Exchange (the “NYSE”). The full text of the Proposed Amendment is attached to this Proxy Statement as Exhibit A. The Shareholders are urged to carefully read Exhibit A.
Adoption of this Proposal requires the affirmative vote of the holders of a majority of the shares by virtue of having sole dispositive power over 3,562,700 shares.
(c) As indicated in its Schedule 13G/A, dated August 8, 2001, Merrill Lynch &
Co. and certain of its subsidiaries, may be deemed to beneficially own
3,783,861 shares by virtue of having shared voting power and shared
dispositive power over 3,783,861 shares.
(d) This amount includes the 857,658 shares of the common stock of the Company which could be acquired throughoutstanding and entitled to vote at the exercise of stock options within sixty
(60) days after June 24, 2001.
Cede & Co., as of September 4, 2001, the nominee2002 Annual Meeting of the Depository Trust
Company, New York, New York, which provides custodial service for various
institutions such as banks and brokerage firms, was the record holder of
49,509,476 shares of the Company's common stock representing 92% of the
outstanding shares of said stock. The Company does not believe that any of these
shares were owned beneficially by Cede & Co.
The definition of "beneficial ownership" referred to herein is that the
owner listed has either the voting or investment power, or both, alone or shared
with others over the number of shares shown, and options beneficially owned
under Rule 13d-3.
ELECTION OF DIRECTORS
GENERAL INFORMATION --
Shareholders.
The Board of Directors recently amendedrecommends that the By-LawsShareholders vote in favor of the CompanyProposed Amendment to reduce the numberCompany’s Restated Certificate of directors servingIncorporation.
ELECTION OF DIRECTORS
General Information —
The Board from eleven (11) toof Directors presently consists of ten (10) members with Classand, prior to the adoption of the Proposed Amendment to the Company’s Restated Certificate of Incorporation, is divided into three (3) classes. Classes 1 and 2 directors consistingeach consist of three (3) persons eachDirectors and Class 3 consistingconsists of four (4) persons.Directors. The term of each class is staggered so that the term of one class expires at each Annual Meeting of the Shareholders. A
director shallDirectors hold office
2
6 until the Annual Meeting of Shareholders for the year in which his or her term expires and until his or her successor shall be elected and qualified, subject to his or her prior death, resignation, retirement or removal from office. The
3
If the Shareholders approve the Proposed Amendment to the Company’s Restated Certificate of Incorporation to declassify the Board of Directors, all ten (10) members of the Board will be up for re-election at this Annual Meeting of Shareholders. However, if the Shareholders do not approve the Proposed Amendment, then the term of office of the current directorsDirectors serving as Class 1 directors2 Directors will expire at this annual
meetingAnnual Meeting of Shareholders and except as otherwise indicated below, the term of office for the current directorsDirectors serving in Class 23 and Class 31 will expire at the 20022003 and 20032004 Annual Meetings of the Shareholders.
Jerry W. Eller, a Class 2 Director, resigned as of October 26, 2000 and G.
Allen Mebane, a Class 1 Director, resigned as of March 28, 2001. The Board of
Directors subsequently elected William J. Armfield, IV to serve as a Class 2
Director and Sue W. Cole to serve as a Class 3 Director until the 2001 Annual
Meeting of the Shareholders. The Board of Directors has nominated the following
persons to the respective classes designated: CLASS 1 DIRECTORS -- Donald F.
Orr, Robert A. Ward, and G. Alfred Webster; CLASS 2 DIRECTOR -- William J.
Armfield, IV and CLASS 3 DIRECTOR -- Sue W. Cole. The Class 1 Directors will
serve until the Annual Meeting in 2004, the Class 2 Director will serve until
the Annual Meeting in 2002 and the Class 3 Director will serve until the Annual
Meeting in 2003, or until their respective successors are elected and qualified.Shareholders, respectively.
All the nominees for election are presently serving and have consented to be named in this proxy statement and to serve, if elected. If for any reason any
of the nominees should not be a candidate for election at the time of the
meeting, the proxy will be voted for substitute nominees designated byAlthough the Board of Directors. The Board does not anticipateDirectors expects that anyeach of the nominees will be unavailable. Theavailable for election, in the event a vacancy in the slate of nominees is occasioned by death or other unexpected occurrence, it is intended that shares represented by proxies in the accompanying form will be voted for the election of a substitute nominee selected by the persons named in the proxy.
Set forth below is the name of each nominee for election to the Board of Directors, as well as each such person’s age, his or her current principal occupation (which has continued for at least the past five years unless otherwise indicated) together with the name and directors continuingprincipal business of the company by which such person is employed, the period during which such person has served as Director, all positions and offices that such person holds with the Company and such person’s directorships in office will normallyother companies with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or companies registered as an investment company under the Investment Company Act of 1940.
NOMINEES FOR ELECTION AS DIRECTORS
If the Shareholders approve the Proposed Amendment, the ten (10) Directors standing for election this year to hold office until the 2003 Annual Meeting of the Shareholders and until his or her successor is elected are:
WILLIAM J. ARMFIELD, IV(67), President of Spotswood Capital, Greensboro, North Carolina.He was a Director and President of Macfield, Inc., a textile company in the year indicated.
Listed below are the names of the three (3) nominees to serve as Class 1
directors, the one (1) nominee to serve asNorth Carolina, from 1970 until August 1991, when Macfield, Inc. merged with and into Unifi, Inc. He was an Executive Officer and a Class 2 director, the one (1)
nominee to serve as a Class 3 director and the five (5) incumbent directors who
will be continuing in office following this meeting, together with: 1) their
ages; 2) their principle occupation during the past five years; 3) any other
directorships they hold with companies having securities registered under the
Securities and Exchange Act of 1934 (the "1934 Act"); 4) the years during which
their consecutive terms as directorsDirector of the Company first commenced; and 5) the
numberfrom 1991 to December of beneficially owned shares of common stock1995. He was again elected a Director of the Company for each
directorby the Board of Directors as of May 24, 2001 and nominee, being set forthby the Shareholders on October 25, 2001. He is also a member of the Company’s Audit Committee.
R. WILEY BOURNE, JR.,(65), Retired Vice-Chairman and Executive Vice President of Eastman Chemical Company, Kingsport, Tennessee.He serves on the table beginningboards of the East Tennessee State University Foundation and School of Medicine, and on page 5.
NOMINEES FOR ELECTION AS DIRECTORS
CLASS 1 DIRECTORS -- NOMINEES FOR ELECTION TO TERMS EXPIRING AT THE 2004 ANNUAL
MEETING:
the Board of Trustees of Tennessee Wesleyan College. He has been a Director of the Company since 1997, and is a member of the Company’s Corporate Governance Committee and Audit Committee (Chair).
CHARLES R. CARTER,(70), Retired Minister of the Forest Hills Presbyterian Church, High Point, North Carolina, which position he held from 1967 to 1997. He has been a Director of the Company since 1982, and is a member of the Company’s Compensation Committee and Corporate Governance Committee (Chair).
SUE W. COLE(51), President and Chief Executive Officer, U.S. Trust Company of North Carolina.She also serves as a member of the Board of Directors of U.S. Trust Company of North Carolina and Martin Marietta Materials, Inc. She joined NC Trust Company (predecessor to U.S. Trust) in 1987. She serves as a Trustee of the University of North Carolina at Greensboro; and as a Director, member of Executive Committee, and First Vice Chair of North Carolina Citizens for Business and Industry. She was elected a Director of the Company by the Board of Directors as of May 24, 2001 and by the Shareholders on October 25, 2001. She is also a member of the Company’s Compensation Committee.
J.B. DAVIS,(58), President and Chief Executive Officer of Klaussner-Furniture Industries, Inc., Asheboro, North Carolina.He has been an Executive Officer and Director of Klaussner Furniture Industries, Inc. since February 1970 and was elected as President and Chief Executive Officer in 1981. He has been a Director of the Company since 1996, and is a member of the Company’s Corporate Governance Committee.
4
KENNETH G. LANGONE,(67), Investment Banker, President and Chief Executive Officer of Invemed Associates, LLC, an investment banking firm, New York, New York, since 1974.He is a Director of ChoicePoint Inc., General Electric Company, The Home Depot, Inc., YUM! Brands, Inc. and the New York Stock Exchange. He has been a Director of the Company since 1969, and is a member of the Company’s Compensation Committee.
DONALD F. ORR, (57)(59), is chairmanChairman of Sweet Pea Capital, Greensboro, North Carolina, an investment capital firm, which was formed in November, 1978.1978. He serves as Chairman of the Moses H. Cone Health System, as Chairman of the Advisory Board of the Duke Eye Institute, and as a Director of the U.S. Trust Company of North Carolina. He has been a Director of the Company since 1988, and in October 2000, was elected the Company'sCompany’s Chairman of the Board. He is also a member of the Company'sCompany’s Audit Committee and Compensation Committee (Chair).
ROBERT A. WARD, (61), Unifi, Inc., Greensboro, North Carolina. He was an
Executive Officer of the Company from 1971 to 1996, has served on various
committees of the Board and has been a Director of the Company since 1971. He is
a Director of Mid Carolina Bank.
G. ALFRED WEBSTER, (53), Executive Vice President of Unifi, Inc.,
Greensboro, North Carolina. He has been an officer of the Company since 1979,
and a Director since 1986.
CLASS 2 DIRECTOR -- NOMINEE FOR ELECTION TO TERM EXPIRING AT THE 2002 ANNUAL
MEETING:
WILLIAM J. ARMFIELD, IV, (67), President of Spotswood Capital, Greensboro,
North Carolina. He was a Director and President of Macfield, Inc., a textile
company in North Carolina, from 1970 until August 8, 1991, when Macfield, Inc.
merged with and into Unifi, Inc. He was an Executive Officer and a Director of
the Company from 1991 to December of 1995. He was again elected a Director of
the Company by the Board of Directors as of May 24, 2001. He was also elected to
Company's Audit Committee.
3
7
CLASS 3 DIRECTOR -- NOMINEE FOR ELECTION TO TERM EXPIRING AT THE 2003 ANNUAL
MEETING:
SUE W. COLE, (50), President, U.S. Trust Company of North Carolina. She
also serves as a member of the Board of Directors of U.S. Trust Company of North
Carolina. She joined NC Trust Company (predecessor to U.S. Trust) in 1987. She
serves as a Trustee of the University of North Carolina at Greensboro; as a
director, member of Executive Committee, and Second Vice Chair of North Carolina
Citizens for Business and Industry; and as a director and member of Executive
Committee for NC Center for Public Policy Research. She was elected a Director
of the Company by the Board of Directors as of May 24, 2001. She was also
elected to the Company's Compensation Committee.
DIRECTORS REMAINING IN OFFICE
CLASS 2 DIRECTORS -- TERMS EXPIRING IN 2002
CHARLES R. CARTER, (69), Retired Minister of the Forest Hills Presbyterian
Church, High Point, North Carolina, which position he held from 1967 to 1997. He
has been a Director of the Company since 1982, and is a member of the Company's
Compensation Committee, Audit Committee and Corporate Governance Committee
(Chair).
KENNETH G. LANGONE, (66), an Investment Banker, President and Chief
Executive Officer of Invemed Associates, Inc., an investment banking firm, New
York, New York, since 1974. He is a Director of ChoicePoint Inc., General
Electric Company, The Home Depot, Inc., Microtune, Inc., the New York Stock
Exchange and Tricon Global Restaurants, Inc. He has been a Director of the
Company since 1969, and is a member of the Company's Compensation Committee.
CLASS 3 DIRECTORS -- TERMS EXPIRING IN 2003
BRIAN R. PARKE, (53)(54), President and Chief Executive Officer of Unifi, Inc., Greensboro, North Carolina.He became an employee of the Company in 1984, served as President of Unifi Textured Yarns Europe (UTYE) in Ireland from October 1997 until January 20, 1999, when he moved to the U.S. and became President and Chief Operating Officer of the Company. He was elected a Director ofSince January 2000, he has been the Company by
the Board of Directors on July 22, 1999, and by the Shareholders on October 21,
1999, and was elected President and Chief Executive Officer of the Company in
January 2000.
J.B. DAVIS, (57), President and Chief Executive Officer of
Klaussner-Furniture Industries, Inc., Asheboro, North Carolina. He has been an
Executive Officer and Director of Klaussner Furniture Industries, Inc. since
February 1970 and was elected as President and Chief Executive Officer in 1981.Company. He has been a Director of the Company since 1996,1999.
ROBERT A. WARD,(62), Unifi, Inc., Greensboro, North Carolina. He was an Executive Officer and is a memberChief Financial Officer of the Company's Corporate Governance Committee.
R. WILEY BOURNE, JR., (64), Retired Vice-Chairman and Executive Vice
President of Eastman Chemical Company Kingsport, Tennessee. He servesfrom 1971 to 1996, has served on the
boardsvarious committees of the East Tennessee State University FoundationBoard and School of Medicine,
and on the Board of Trustees of Tennessee Wesleyan College. He has been a Director of the Company since 1997,1971. He is a past Chair of the Board of Trustees of East Carolina University and past President of the Carolina’s Chapter of the Financial Executive Institute. He is currently a member of the Company's Corporate
Governance CommitteeBoard of Directors of Mid Carolina Bank and Audit Committee (Chair)the Lutheran Retirement Ministries of Alamance County Twin Lakes Center, a member of the Board of Trustees of Elon University, and a member of the Southern Area Advisory Board for Factory Mutual Insurance Company.
G. ALFRED WEBSTER,(54), Executive Vice President of Unifi, Inc., Greensboro, North Carolina. 4
8
SECURITY HOLDINGHe has been an officer of the Company since 1979, and a Director since 1986.
ELECTION OF CLASS 2 DIRECTORS
NOMINEES
If the Shareholders do not approve the Proposed Amendment, the three (3) nominees for Class 2 Directors with a term expiring at the 2005 Annual Meeting of Shareholders are William J. Armfield, IV, Charles R. Carter and Kenneth G. Langone; and R. Wiley Bourne, Jr., Sue W. Cole, J.B. Davis and Brian R. Parke will remain as Class 3 Directors with terms expiring at the 2003 Annual Meeting of Shareholders and Donald F. Orr, Robert A. Ward and G. Alfred Webster will remain as Class 1 Directors with terms expiring at the 2004 Annual Meeting of Shareholders.
Set forth previously is the biographical information with respect to each of the nominees and continuing Directors listed above. In addition, as previously described, in the event of a vacancy in the slate of nominees occasioned by death or other unexpected occurrence, it is intended that the shares represented by proxies in the accompanying form will be voted for the election of a substitute nominee selected by the person named in the proxy.
5
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table presents information regarding the beneficial ownership of the Company’s common stock, within the meaning of applicable securities regulations, of all current Directors of the Company and with sole votingthe executive officers named in the Summary Compensation Table included herein, and dispositive power,
exceptof such Directors and all executive officers of the Company as otherwise noted. Ownership isa group, all as of September 4, 2001.
(2) Includes 10,000 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company, 135,000 shares
owned by Invemed Associates, Inc., in which Mr. Langone owns 81%, and
1,885,000 shares owned by Invemed Catalyst Fund, LLP managed by Invemed
Catalyst General Partnership, LLC, of which Mr. Langone has voting power,
which shares may be determined to be beneficially owned by him.
(3) Includes 2,660 shares held in trust for the benefit of his children, which
shares may be determined to be beneficially owned by him.
(4) Includes 198,632 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company and 100 shares
owned by his son who lives with him, which shares may be determined to be
beneficially owned by him.
(5) Represents less than one percent (1%) of the Company's common stock.
(6) Includes 160,775 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company and 39,339 shares
held in trust for the benefit of his children, which shares may be
determined to be beneficially owned by him.
(7) Includes 35,000 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company, which shares may
be determined to be beneficially owned by him.
(8) Includes 35,000 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company, which shares may
be determined to be beneficially owned by him, and 3,950 shares owned by
the Orr Family Trust over which he has voting power, which shares may be
determined to be beneficially owned by him.
(9) Includes 125,906 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company and 77,011 shares
owned jointly with his wife, which shares may be determined to be
beneficially owned by him.
(10) Includes 20,000 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company and 1,320 shares
owned by his wife over which he has voting rights, which shares may be
determined to be beneficially owned by him.
(11) Includes 20,000 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company and 20,000 shares
held by North Carolina Trust Company over which he has sole voting and
dispositive power, which shares may be determined to be beneficially owned
by him.
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(12) Includes 98,708 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company, which shares may
be determined to be beneficially owned by him.
(13) Includes 84,146 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company, which shares may
be determined to be beneficially owned by him.
(14) Includes 11,106 shares that he has the right to purchase under presently
exercisable stock options granted to him by the Company, which shares may
be determined to be beneficially owned by him.
(15) Includes 857,658 shares that they have the right to purchase within sixty
(60) days after June 24, 2001, under presently exercisable stock options
granted to them by the Company, which shares may be determined to be
beneficially owned by them.
DIRECTORS'2002. Amount and Nature of Percentage Name Beneficial Ownership(1) of Class Kenneth G. Langone (2) 2,205,000 4.1% William J. Armfield, IV (3) 1,375,710 2.6% Brian R. Parke (4) 396,846 (5) G. Alfred Webster (6) 378,590 (5) Charles R. Carter (7) 55,501 (5) Donald F. Orr (8) 186,364 (5) Robert A. Ward (9) 202,917 (5) R. Wiley Bourne, Jr. (10) 21,320 (5) J. B. Davis (11) 40,000 (5) Sue W. Cole 10,000 (5) Willis C. Moore, III (12) 186,486 (5) Stewart Q. Little (13) 141,505 (5) Michael E. Delaney (14) 68,046 (5) All Directors and Executive Officers and Nominees for Directors (15) 5,522,159 10.0%
| (1) | All shares are owned directly and with sole voting and dispositive power, except as otherwise noted. |
| (2) | Includes 10,000 shares that he has the right to purchase under presently exercisable stock options granted to him by the Company, 135,000 shares owned by Invemed Associates, LLC, in which Mr. Langone owns 81%, and 1,885,000 shares owned by Invemed Catalyst Fund, LLP managed by Invemed Catalyst General Partnership, LLC, of which Mr. Langone has voting power, which shares may be determined to be beneficially owned by him. |
| (3) | Includes 2,680 shares held in trust for the benefit of his children, which shares may be determined to be beneficially owned by him. |
| (4) | Includes 389,246 shares that he has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 4, 2002, and 100 shares owned by his son who lives with him, which shares may be determined to be beneficially owned by him. |
| (5) | Represents less than one percent (1%) of the Company’s common stock. |
| (6) | Includes 230,338 shares that he has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 4, 2002, and 39,339 shares held in trust for the benefit of his children, which shares may be determined to be beneficially owned by him. |
| (7) | Includes 35,000 shares that he has the right to purchase under presently exercisable stock options granted to him by the Company, which shares may be determined to be beneficially owned by him. |
| (8) | Includes 35,000 shares that he has the right to purchase under presently exercisable stock options granted to him by the Company, which shares may be determined to be beneficially owned by him, and 3,950 shares owned by the Orr Family Trust over which he has voting power, which shares may be determined to be beneficially owned by him. |
| (9) | Includes 125,906 shares that he has the right to purchase under presently exercisable stock options granted to him by the Company and 77,011 shares owned jointly with his wife, which shares may be determined to be beneficially owned by him. |
| (10) | Includes 20,000 shares that he has the right to purchase under presently exercisable stock options granted to him by the Company and 1,320 shares owned by his wife over which he has voting rights, which shares may be determined to be beneficially owned by him. |
| (11) | Includes 20,000 shares that he has the right to purchase under presently exercisable stock options granted to him by the Company and 20,000 shares held by U.S. Trust Company over which he has sole voting and dispositive power, which shares may be determined to be beneficially owned by him. |
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| (12) | Includes 173,635 shares that he has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 4, 2002, which shares may be determined to be beneficially owned by him. |
| (13) | Includes 129,952 shares that he has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 4, 2002, which shares may be determined to be beneficially owned by him. |
| (14) | Includes 60,552 shares that he has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 4, 2002, which shares may be determined to be beneficially owned by him. |
| (15) | Includes 1,435,764 shares that they have the right to purchase within sixty (60) days after September 4, 2002, under stock options granted to them by the Company, which shares may be determined to be beneficially owned by them. |
DIRECTORS’ COMPENSATION
Each Director who is not an employee of the Company was paid, for serving on the Board during the fiscal year ended June 24, 2001,30, 2002, a retainer at the rate of $24,000 per annum and an additional $1,000 for each meeting of the Board of Directors attended, as well as being reimbursed for reasonable expenses incurred in attending saidthose meetings. The Chairman of the Board of Directors is paid an additional annual compensation of $50,000, in addition to his regular director fee, for serving as Chairman of the Board of Directors and theDirectors. The Chairman of the Company'sCompany’s Audit Committee and Corporate Governance Committee are paid additional annual compensation of $15,000 each, in addition to their regular directors fees for serving as Chairman of said Committees. Directors who are employees of the Company are paid an attendance fee of $1,000 for each meeting of the Board attended.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has three (3) standing committees: the COMPENSATION
COMMITTEE,Compensation Committee, the AUDIT COMMITTEE,Audit Committee, and the CORPORATE GOVERNANCE COMMITTEE.Corporate Governance Committee. The
COMPENSATION COMMITTEE (composedCompensation Committee(composed of Messrs. Carter, Langone, Orr and Ms. Cole) met fourtwo times during the year. The AUDIT COMMITTEE (composedAudit Committee(composed of Messrs. Carter, Orr, Bourne, and Armfield) met four times during the year. The CORPORATE
GOVERNANCE COMMITTEE (composedCorporate Governance Committee(composed of Messrs. Carter, Bourne, Davis, and Sir
Greenbury)Davis) met two times during the year.
The Board of Directors has no Nominating Committee; however, in relation to nominations, the CORPORATE GOVERNANCE COMMITTEE Corporate Governance Committeerecommends to the Board nominees for election as directors.Directors. The CORPORATE GOVERNANCE COMMITTEE Corporate Governance Committeewill consider those recommendations by Shareholders which are submitted with biographical and business experience information to the Secretary of the Company, in compliance with the Shareholder Proposals provision, hereinafter set forth.
The COMPENSATION COMMITTEE'sCompensation Committee’s duties include, reviewing and recommending compensation of principal officers, salary policy, benefit programs, future
objectives and goals of the Company, and recommending and approving the granting of restricted stock and stock options to eligible persons under the Company's incentive and non-qualified
stock option plans.1999 Unifi, Inc. Long Term Incentive Plan (the “1999 Plan”).
The AUDIT COMMITTEE'sAudit Committee’s function is to be aware of the financial reporting procedures of the Company, review with the independent auditors the plans and results of the audit engagement, and to investigate when called upon and recommend such changes as deemed desirable to the Board. The control over the financial reports of the Company is the function of Management and the objective of this committee is to act as liaison with the Board in a recommendation capacity. The Board of Directors has considered the independence of each member of the Audit Committee and has determined that each member is free from any relationship that would interfere with his exercise of independent judgment.judgment and that each member of the Audit Committee is “independent” as defined in the New York Stock Exchange Listed Company Manual.
The CORPORATE GOVERNANCE COMMITTEE'sCorporate Governance Committee’s duties include, considering candidates for the Board of Directors recommended by Shareholders, recommending candidates for membership on the Board and Board committees, overseeing matters of corporate governance, including Board performance, reviews and recommending compensation of non-employee directors.Directors.
The Board of Directors met four (4) times during fiscal year 2001.2002. All directorsDirectors attended at least seventy-five percent (75%) of the meetings of the Board and the Committees of the Board during the period in which they served as a directorDirector or a committee member.
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COMPENSATION COMMITTEE INTERLOCKS AND
None of the members of the Compensation Committee, who are identified under the heading “Compensation Committee Report” in this proxy statement, were at any time officers or employees of the Company or any of its subsidiaries or had any relationship with the Company requiring disclosure under Securities and Exchange Commission regulations.
INSIDER TRANSACTIONS
Mr. Langone is a director, controllingDirector, stockholder, and Chairman of the Executive Committee of Salem National Corporation. In fiscal year 2001,2002, the Company paid Salem Leasing Corporation, a wholly owned subsidiary of Salem National Corporation, $3,208,420$3,420,385 on leases of tractors and trailers, and for services thereto. The terms of the Company'sCompany’s leases with Salem Leasing Corporation are, in Management'sManagement’s opinion, no less favorable than the Company would have been able to negotiate with an independent third party for similar equipment and services.
Mr. Langone is Chairman of the Board of Directors, principal Shareholder,member, President and Chief Executive Officer of Invemed Associates, Inc.,LLC, an investment firm. During fiscal year 2001,2002, such firm performed certain advisory services for the Company and acted as broker on the repurchase of the Company's shares on the
NYSE.Company. The fees of $60,000 and commissions of $56,976$75,000 paid to Invemed Associates, Inc.LLC during the fiscal year ended in 20012002 were, in the opinion of Management, fair and reasonable and as favorable to the Company as could have been obtained from unrelated third parties.
The Company, in relation to Mr. Parke'sParke’s move from Ireland to the United States to become the President and Chief Operating Officer of the Company, agreed to loan Mr. Parke, with the approval of the Board of Directors, sufficient funds for acquiring a home, making repairs and improvements thereto and other expenses relating to the move of hehim and his family to the U.S.United States. The loan amounted to $1,160,741, of which $749,203 was used to purchase the property known as 1510 Edgedale Road, Greensboro, North Carolina, and iswas evidenced by Mr. and Mrs. Parke'sParke’s Promissory Note to the Company for said amount, bearing interest at 6% per annum, payable annually with the unpaid principal amount of said Note and all accrued and unpaid interest being due and payable in full on May 1, 2002, and secured by a first deed of trust on said property. On January 23, 2002, the Board of Directors forgave this loan and any accrued interest thereon and “grossed-up” such amount as necessary to pay Mr. Parke’s tax obligations resulting from the forgiveness of the loan as additional compensation to Mr. Parke.
On December 31, 2000, the Company made loans to Mr. Webster in the amount of $39,150, Mr. Delaney in the amount of $25,653, Mr. Moore in the amount of $41,851 and Mr. Little in the amount of $34,291 in connection with the payment of income taxes relating to stock awards granted to them under the 1999 Plan. These loans bear interest at a rate of 5.87% per annum and are evidenced by Promissory Notes that are payable as follows: (a) interest only on December 31, 2001, December 31, 2002, December 31, 2003 and December 31, 2004; and (b) the principal of said loan plus all accrued interest on December 31, 2005.
Effective January 1, 2000, the Company made a loan to Mr. Delaney in the amount of $27,352 in connection with the payment of income taxes relating to a stock award granted to him under the 1999 Plan. This loan bears interest at a rate of 6.20% per annum and is evidenced by a Promissory Note that is payable as follows: (a) interest only on December 30, 2000, December 30, 2001, December 30, 2002 and December 30, 2003; and (b) the principal of said loan plus all accrued interest on December 30, 2004.
On October 21, 1999, the Company made loans to Mr. Parke in the amount of $37,758 and Mr. Webster, Mr. Moore and Mr. Little in the amount of $25,172 in connection with the payment of income taxes relating to stock awards granted to them under the 1999 Unifi, Inc. Long-Term Incentive Plan. SaidThese loans bear interest at a rate of 6.08% per annum and are evidenced by Promissory Notes that are payable as follows: (a) interest only on December 30, 2000, December 30, 2001, December 30, 2002 and December 30, 2003; and (b) the principal of said loan plus all accrued interest on December 30, 2004.
On December 31, 2000, the Company made loans to Mr. Webster in the amount
of 39,150, Mr. Moore in the amount of $41,851 and Mr. Little in the amount of
$34,291 in connection with the payment of income taxes relating to stock awards
granted to them under the 1999 Unifi, Inc. Long-Term Incentive Plan. Said loans
bear interest at a rate of 5.87% per annum and are evidenced by Promissory Notes
that are payable as follows: (a) interest only on December 31, 2001, December
31, 2002, December 31, 2003 and December 31, 2004; and (b) the principal of said
loan plus all accrued interest on December 31, 2005.
The Company made a personal loan on October 22, 1999, to Mr. Stewart Q.
Little a Senior Vice President of the Company, in the amount of $75,000. The loan is evidenced by a Promissory Note in the principal amount of $75,000 with interest at the rate of 6.5% per annum and is secured by the pledge of 5,000 shares of Unifi, Inc. Common Stock.the Company’s common stock. The loan is payable
8
AUDIT COMMITTEE REPORT
The Company'sCompany’s Audit Committee consists of four directors.three independent Directors and operates under a written charter adopted by the Board. The Board has
adopted a charter that governs the Audit Committee. The Charter is attached to
this Proxy Statement as Appendix A. Thecurrent members of the Audit Committee are William J. Armfield, IV, R. Wiley Bourne, Jr., who is the Committee chair, Charles R.
Carter,Chair, and Donald F. Orr.
The Company'sCompany’s management is responsible for the Company'sCompany’s internal controls and financial reporting. Ernst & Young LLP, the Company'sCompany’s independent auditors, are responsible for auditing the Company's
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11Company’s annual consolidated financial statements in accordance with auditing standards generally accepted auditing standardsin the United States and for issuing a report on those financial statements. The Audit Committee monitors and oversees these processes, and recommends to the Board for its approval a firm of certified independent accountants to be the Company'sCompany’s independent auditors.
To fulfill our responsibilities, we did the following:
- We reviewed and discussed with the Company's management and the
independent auditors the Company's consolidated financial statements for
the fiscal year ended June 24, 2001.
- We reviewed management's representations to us that those consolidated
financial statements were prepared in accordance with generally accepted
accounting principles.
-
| • | We reviewed and discussed with the Company’s management and the independent auditors the Company’s consolidated financial statements for the fiscal year ended June 30, 2002. | |
| • | We reviewed management’s representations to us that those consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States. | |
| • | We discussed with the independent auditors the matters that Statement on Auditing Standards 61 (Codification of Statements on Accounting Standards) requires them to discuss with us, including matters related to the conduct of the audit of the Company’s consolidated financial statements. | |
| • | We received written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 relating to their independence from the Company and we have discussed with Ernst & Young LLP their independence from the Company. | |
| • | Based on the discussions we had with management and the independent auditors, the independent auditors’ disclosures and letter to us, the representations of management to us and the report of the independent auditors, we recommended to the Board that the Company’s audited annual consolidated financial statements for fiscal year 2002 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002 for filing with the Securities and Exchange Commission. | |
| • | Ernst & Young LLP’s fees for the fiscal year ended June 30, 2002 were as follows: |
| Audit Fees | $ | 289,209 | |||
| Financial Information System Design and Implementation Fees | 0 | ||||
| All Other Fees | |||||
| - audit-related services, including fees for foreign statutory and benefit plan audits | 75,197 | ||||
| - non-audit services, including tax services | 38,775 | ||||
| TOTAL | $ | 403,181 | |||
| • | We considered whether Ernst & Young LLP’s provision of financial information systems design and implementation services and other non-audit services to the Company is compatible with Ernst & Young LLP maintaining their independence from the Company and concluded that it is. |
Submitted by the Audit Committee of the audit of the Company's consolidated
financial statements.
- We received written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1 relating
to their independence from the Company and we have discussed with Ernst &
Young LLP their independence from the Company.
- Based on the discussions we had with management and the independent
auditors, the independent auditors' disclosures and letter to us, the
representations of management to us and the report of the independent
auditors, we recommended to the Board that the Company's audited annual
consolidated financial statements for fiscal year 2001 be included in the
Company's Annual Report on Form 10-K for the fiscal year ended June 24,
2001 for filing with the Securities and Exchange Commission.
- Ernst & Young LLP's Fees for the fiscal year ended June 24, 2001 were as
follows:
Board:
| R. Wiley Bourne, Chairperson | |
| William J. Armfield, IV | |
| Donald F. Orr |
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REPORT OF THE COMPENSATION COMMITTEE
This report of the Compensation Committee ("Committee") of the Board of Directors sets forth the Company'sCompany’s compensation policies with respect to the executives of the Company, including the named executives for whom specific compensation information is reported in the accompanying summary compensation tables.
The Compensation Committee during fiscal year 20012002 was composed of non-employee directors.Directors. The Compensation Committee determinesreviews and recommends to the Board of Directors the compensation of the employee directorsDirectors as well as other executive officers of the Company. It'sIts duties also include the review of performance and approval of salaries and other types of compensation for senior management of the Company; advising senior management with respect to the 8
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range of compensation to be paid to other officersemployees of the Company; and making recommendations to the full Board concerning benefit plans for the Company's
directors,Company’s Directors, officers and employees, the granting of restricted stock and stock options under the 1999 Unifi, Inc. Long-Term Incentive Plan (the "1999 Plan") and recommending benefit programs and future objectives and goals of the Company.
IN GENERAL
The Compensation Committee views executive compensation in three component parts: base salary; annual incentive compensation and long-term incentive compensation. The primary goals of the Compensation Committee in setting executive compensation is:are: (i) to ensure that the Company'sCompany’s compensation program for executive officers attracts and retains qualified, talented, and highly motivated personnel, links executive compensation to corporate and individual performance, and is administered in an equitable manner; and (ii) to align the interest of the executives with those of our Shareholders and also with the Company'sCompany’s performance.
The annual and long-term incentive portions of the executive'sexecutive’s compensation are intended to achieve the Committee'sCompensation Committee’s goal of aligning the executive'sexecutive’s interest with those of our Shareholders and with Company performance. These portions of an executive'sexecutive’s compensation are placed at risk and are linked to the accomplishment of specific results that are designated to benefit our Shareholders and the Company, both in the long and short term. As a result, during years of excellent performance, the executives are provided the opportunity to earn a higher competitive level of compensation and, conversely, in years of below average performance, their compensation may be below competitive levels.
The Compensation Committee has considered the impact of Section 162(m) of the Internal Revenue Code on the Company'sCompany’s executive compensation program. Section 162(m) denies a public company a deduction, except in limited circumstances, for compensation paid to "covered“covered employees,"” i.e., those employees named in the "Summary“Summary Compensation Table"Table” below, to the extent such compensation exceeds $1,000,000. Based on its review of the likely impact of Section 162(m), the Compensation Committee may in the future recommend changes to the Company'sCompany’s benefit plans in order to qualify compensation paid to covered employees for such exception.
BASE SALARIES
The Compensation Committee recommends to the Board of Directors base salaries they think are fair and reasonable for the services rendered by the respective executive officers and to retain his or her services. The Compensation Committee evaluates the base salary of each of the executive officers on an annual basis, or more frequently if appropriate, and recommends to the entire Board any changes in such base salary levels. In making such evaluations and recommendations, the Compensation Committee considers the historical practices of the Company, the officer'sofficer’s leadership and advancement of the Company'sCompany’s long term strategy, plans and objectives, individual performance and contribution to the Company'sCompany’s success and salary levels of other executives holding similar positions in certain other textile companies. Base salary adjustments are approved by the full Board. The base salariessalary for Mr. Mebane and Mr. Eller areParke is covered by agreementsan agreement with the Company. Mr. Mebane
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ANNUAL INCENTIVE COMPENSATION
The Company rewards executives based on each fiscal year’s results and Mr. Eller retired as
employeesreflects a balance between overall corporate performance and performance of the specific areas of the Company on October 26, 2000 and January 31, 2001, respectively.
ANNUAL INCENTIVE COMPENSATIONunder the individual’s control. The Committee designed the annual bonus component ofcash incentive compensation, to align officer pay within the annual performanceform of bonuses, are based on subjective evaluation of the Company, based on
corporate earnings per share objectives. Bonuses, if any, recommended by the
Committee are subject to the approval of the full Board. No bonuses were awarded
to the named executive officers during the last fiscal year.
respective executive.
LONG-TERM INCENTIVE COMPENSATION
The 1999 Plan was approved by the Shareholders of the Company at their 1999 Annual Meeting. The 1999 Plan provides for the grant of incentive stock options, ("ISO's"), non-qualified stock options, ("NQSO's"), restricted stock awards and/or performance basedperformance-based awards.
The Company also has sixfour other stock option plans, to wit: the 1996 Incentive Stock Option Plan; the 1996 Non-Qualified Stock Option Plan; the 1992 Incentive Stock Option Plan; and the 1987 Non-Qualified Stock 9
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Option Plan; the 1982 Incentive Stock Option Plan; the Unifi Employee Stock
option Plan (this Plan was acquired in the Vintage Yarns, Inc. merger).Plan. No additional options will be granted under any of the aforesaid sixfour option plans however, all outstanding option grants remain in full force and effect under theretheir respective terms.
STOCK OPTIONS --
Stock Options —Stock options provide incentive for the creation of Shareholder value over the long term since the full benefit of an executive officer'sofficer’s compensation package cannot be realized unless UnifiCompany common stock appreciates in value during the term of the option. All stock options granted under the 1999 Plan during the fiscal year had an exercise price ofequal to the fair market value of said stock on the date of grantgrant. See footnote (1) to the table entitled “Option Grants in Fiscal Year 2002” for one-thirda discussion of the dates options granted shares,
fair market value plus 6% for one-third of the granted shares, and fair market
value plus 12% for the remaining one-third of the granted shares. The stock
option grantsduring fiscal year 2002 become exercisable 20% per year for five years on the anniversary
date of the grant and unlessexercisable. Unless otherwise provided, options may be exercised until the earlier of ten (10) years from the date of grant or, as to the number of shares then exercisable, upon the termination of employment of the participant other than by death, disability, retirement, or change of control, when all options vest. No stock options were granted to any of the named executive officers
during the fiscal year.
RESTRICTED STOCK --
Restricted Stock —Restricted stock is granted from time to time to executive officers, primarily for purposes of retention. Restricted stock is subject to forfeiture and may not be disposed of by the recipient until certain restrictions established by the Compensation Committee lapse. Recipients of restricted stock are not required to provide consideration other than the rendering of their services. RestrictedNo restricted stock awards for 104,366 shares were granted under the 1999
Plan to employees, including the named executive officers (except for Mr. Parke,
who did not receive a grant of restricted stock), during the last fiscal year.
2001
2002 COMPENSATION FOR CHIEF EXECUTIVE OFFICER
Compensation paid to Mr. Parke as CEO of the Company during the fiscal year was based on the same factors generally applicable to compensation paid to other executives of the Company. Mr. Parke does not have anParke’s base salary was $750,000 (as provided in his employment agreement with the Company. In April 2000,Company). Mr. Parke received additional compensation equal to $2,150,241 during the fiscal year which represented the principal and interest of a loan from the Company to Mr. Parke which was forgiven and the “gross up” of such amount necessary to pay Mr. Parke’s tax obligation due to the forgiveness of the loan. The additional compensation paid to Mr. Parke during the fiscal year reflects primarily the Compensation Committee’s evaluation of Mr. Parke’s superior performance. The Board of Directors setgranted Mr. Parke's base salary
at $750,000 per annum, effective May 1, 2000. He did not receive any cash bonus
compensation,Parke stock options or restrictedto purchase 250,000 shares of Company common stock grants inat a per share exercise price of $7.33, the 2001 fiscal year.
COMMITTEE'Sfair market value on the date of grant, under the 1999 Plan.
COMMITTEE’S JUDGMENT
It is the judgment of the Compensation Committee that in 2001,fiscal 2002, and for the three fiscal years ending June 24, 2001,30, 2002, the total compensation to the executives was appropriate for the performance of the Company and to retain and motivate such executives in the future.
The foregoing report is submitted
Submitted by the Compensation Committee:
Donald F. Orr (Chairman)
Charles R. Carter
Sue W. Cole
Kenneth G. Langone
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Committee of the Board:
| Donald F. Orr, Chairman | |
| Charles R. Carter | |
| Sue W. Cole | |
| Kenneth G. Langone |
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EXECUTIVE OFFICERS AND THEIR COMPENSATION
The following table sets forth information for fiscal years ended June
2001, 2000, and 1999, as toSummary Compensation Table shows the compensation paid by the Company and its
subsidiaries (for the purpose of this section, collectively referred to as
"Company") to the Chief Executive officer ("CEO"Officer (“CEO”) and theour four other four most highly compensated executive officers during fiscal year 2002 (the “named executive officers”), for services rendered in all capacities during
the lastpast three (3) fiscal years.
UNIFI, INC. SUMMARY COMPENSATION TABLE
| Long Term Compensation | ||||||||||||||||||||||||||||
| Annual Compensation | ||||||||||||||||||||||||||||
| Restricted | Securities | All Other | ||||||||||||||||||||||||||
| Other Annual | Stock | Underlying | Compensation | |||||||||||||||||||||||||
| Name and Principal Position | Year | Salary | Bonus | Compensations(1) | Awards($) | Options/SARs(#) | ($)(2) | |||||||||||||||||||||
| Brian R. Parke | 2002 | $ | 750,000 | $ | 2,150,241 | $ | 12,141 | $ | — | 250,000 | (3) | $ | 19,112 | |||||||||||||||
| President, CEO | 2001 | $ | 750,000 | $ | — | $ | 4,415 | $ | — | — | $ | 16,628 | ||||||||||||||||
| and Director | 2000 | $ | 541,670 | $ | — | $ | 18,310 | $ | 83,906 | 268,159 | (4) | $ | 24,415 | |||||||||||||||
| | ||||||||||||||||||||||||||||
| Willis C. Moore, III | 2002 | $ | 365,007 | $ | 15,000 | $ | 7,987 | $ | — | 125,000 | (3) | $ | 11,329 | |||||||||||||||
| Executive Vice President | 2001 | $ | 350,004 | $ | — | $ | 7,197 | $ | 93,003 | — | $ | 9,342 | ||||||||||||||||
| and Chief Financial Officer | 2000 | $ | 310,000 | $ | — | $ | 20,266 | $ | 55,938 | 83,131 | (4) | $ | 17,866 | |||||||||||||||
| | ||||||||||||||||||||||||||||
| G. Alfred Webster | 2002 | $ | 365,007 | $ | 15,000 | $ | 909 | $ | — | 125,000 | (3) | $ | 13,849 | |||||||||||||||
| Executive Vice President | 2001 | $ | 350,004 | $ | — | $ | 6,047 | $ | 87,000 | — | $ | 16,593 | ||||||||||||||||
| and Director | 2000 | $ | 260,000 | $ | — | $ | 16,093 | $ | 55,938 | 69,722 | (4) | $ | 24,376 | |||||||||||||||
| | ||||||||||||||||||||||||||||
| Michael E. Delaney (5) | 2002 | $ | 247,506 | $ | 12,000 | $ | 3,342 | $ | — | 115,000 | (3) | $ | 8,175 | |||||||||||||||
| Senior Vice President | 2001 | $ | 240,000 | $ | — | $ | 5,261 | $ | 57,007 | — | $ | 8,714 | ||||||||||||||||
| 2000 | $ | 112,500 | $ | — | $ | 62,392 | $ | 60,782 | 55,527 | (4) | $ | — | ||||||||||||||||
| | ||||||||||||||||||||||||||||
| Stewart Q. Little | 2002 | $ | 253,752 | $ | 10,000 | $ | 2,501 | $ | — | 65,000 | (3) | $ | 8,756 | |||||||||||||||
| Senior Vice President | 2001 | $ | 250,008 | $ | — | $ | 8,551 | $ | 76,201 | — | $ | 9,504 | ||||||||||||||||
| 2000 | $ | 225,000 | $ | — | $ | 21,680 | $ | 55,938 | 60,336 | (4) | $ | 18,176 | ||||||||||||||||
Footnotes:
| (1) | As permitted by the Securities and Exchange Commission’s rules regarding disclosure of executive compensation in proxy statements, this column excludes perquisites and other personal benefits of the named executive officer if their total cost does not exceed the lesser of (i) 10% of the sum of the amounts of salary and bonus for the named executive officer, or (ii) $50,000. The amounts reported under “Other Annual |
| (2) | The components of the amounts shown in this column consists of the following: (i) a director’s fee in 2002, 2001 and |
| (3) | Amounts in this column reflect the number of stock options granted during the fiscal year to the listed individuals. |
| (4) | Amounts reflect the number of stock options granted to the listed individuals in fiscal 2000 |
| (5) | Mr. Delaney |
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OPTION GRANTS IN FISCAL YEAR 2001
There were no stock options granted to the named Executive Officers during
fiscal year 2001.
2002
| Individual Grants | ||||||||||||||||||||||||
| Potential Realizable Value | ||||||||||||||||||||||||
| Number of | Percent of | at Assumed Annual Rates | ||||||||||||||||||||||
| Securities | Total Options/ | of Stock Price Appreciation | ||||||||||||||||||||||
| Underlying | SARs Granted | Exercise | for Option Term(3) | |||||||||||||||||||||
| Options/SARs | to Employees | or Base | ||||||||||||||||||||||
| Granted | in Fiscal | Price | Expiration | 5% | 10% | |||||||||||||||||||
| Name | (#)(1) | Year(2) | ($/sh) | Date | ($) | ($) | ||||||||||||||||||
| Parke | 250,000 | 11.8% | $ | 7.33 | 1/23/12 | $ | 1,152,500 | $ | 2,920,000 | |||||||||||||||
| | ||||||||||||||||||||||||
| Moore | 25,000 | 1.2% | $ | 7.48 | 10/2/11 | $ | 117,500 | $ | 298,000 | |||||||||||||||
| 100,000 | 4.7% | $ | 7.33 | 1/23/12 | $ | 461,000 | $ | 1,168,000 | ||||||||||||||||
| | ||||||||||||||||||||||||
| Webster | 25,000 | 1.2% | $ | 7.48 | 10/2/11 | $ | 117,500 | $ | 298,000 | |||||||||||||||
| 100,000 | 4.7% | $ | 7.33 | 1/23/12 | $ | 461,000 | $ | 1,168,000 | ||||||||||||||||
| | ||||||||||||||||||||||||
| Delaney | 15,000 | 0.7% | $ | 7.48 | 10/2/11 | $ | 70,500 | $ | 178,800 | |||||||||||||||
| 100,000 | 4.7% | $ | 7.33 | 1/23/12 | $ | 461,000 | $ | 1,168,000 | ||||||||||||||||
| | ||||||||||||||||||||||||
| Little | 15,000 | 0.7% | $ | 7.48 | 10/2/11 | $ | 70,500 | $ | 178,800 | |||||||||||||||
| 50,000 | 2.4% | $ | 7.33 | 1/23/12 | $ | 230,500 | $ | 584,000 | ||||||||||||||||
Footnotes:
| (1) | Stock options granted under the 1999 Plan on October 2, 2001, are exercisable as follows: one-sixth immediately, one-sixth on October 2, 2002, one-sixth on October 2, 2003, one-sixth on October 2, 2004, one-sixth on October 2, 2005 and one-sixth on October 2, 2006. Stock options granted under the 1999 Plan on January 23, 2002, are exercisable as follows: one-third immediately, one-third on January 23, 2003 and one-third on January 23, 2004. |
| (2) | Based upon options to purchase 2,113,652 shares granted to all employees during fiscal year 2002. |
| (3) | The amounts represent assumed rates of appreciation in the price of Company common stock during the terms of the options in accordance with the rates specified in applicable federal securities regulations. Actual gains, if any, on stock option exercises will depend on the actual future price of the Company common stock. The 5% rate of appreciation of the $7.33 and $7.48 exercise prices over the option term results in pro forma prices per share of $11.94 and $12.18, respectively. The 10% rate of appreciation of the $7.33 and $7.48 exercise prices over the option term results in pro forma prices per share of $19.01 and $19.40, respectively. There is no representation that the rates of appreciation reflected in this table will be achieved. |
OPTION EXERCISES AND OPTION/SAR VALUES
The net value realized upon the exercise in fiscal year 20012002 of previously granted options and the number and value of unexercised options are shown in the following table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
| Number of Securities | ||||||||||||||||||||||||
| Underlying | Value of Unexercised | |||||||||||||||||||||||
| Unexercised Options/SARs | In-the-Money Options/SARs | |||||||||||||||||||||||
| Shares Acquired | Value | at Year End | at Year End(1) | |||||||||||||||||||||
| on Exercise | Realized | |||||||||||||||||||||||
| Name | (#) | ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
| Parke | 0 | $ | 0 | 335,614 | 327,545 | $ | 297,560 | $ | 594,941 | |||||||||||||||
| Moore | 0 | $ | 0 | 152,841 | 137,371 | $ | 133,272 | $ | 309,228 | |||||||||||||||
| Webster | 0 | $ | 0 | 212,226 | 129,326 | $ | 133,272 | $ | 309,228 | |||||||||||||||
| Delaney | 0 | $ | 0 | 58,052 | 112,475 | $ | 127,574 | $ | 280,726 | |||||||||||||||
| Little | 0 | $ | 0 | 115,384 | 82,030 | $ | 68,062 | $ | 161,738 | |||||||||||||||
Footnotes:
| (1) | The fair market value of |
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EMPLOYMENT AND TERMINATION AGREEMENTS
EMPLOYMENT AGREEMENT WITH MR. MEBANE
The Company has an Employment
Agreement dated July 19, 1990, with Mr. Mebane.Parke
Pursuant to an employment agreement between the Company and Mr. Parke effective January 23, 2002, Mr. Parke is employed by the Company as its President and Chief Executive Officer for a rolling three (3) year term which is automatically extended on a day by day basis until such date as either the Company or Mr. Parke shall terminate the automatic extensions by providing proper notice to the other. Under the terms of his Employment Agreement,the agreement, Mr. Mebane was paid aParke will receive an annual base salary of $800,000 per year duringat least $750,000, plus any other additional compensation or bonuses in the termBoard’s discretion. In addition, Mr. Parke is entitled to participate in any benefit plans offered to other senior executives of his employment with the Company
and upon his retirement from the Company on terms no less favorable than offered to other executives.
Change of Control Agreement with Mr. Webster
Effective October 26, 2001, is being paid a
consulting fee of $200,000 per year through June 30, 2005.
AGREEMENT WITH MR. ELLER
The2000, the Company entered into an Agreement with Mr. Eller effective February 1,
1999. Under the terms of his Agreement, the Company paid Mr. Eller the sum of
$126,000 within 10 days of his retirement from the Company on January 31, 2001,
and is paying him $1,160,000 in 36 equal monthly installments of $32,222,
beginning February 1, 2001. Mr. Eller, until he obtains the age of 65, is
eligible to receive medical and dental insurance as provided to executive
officers covered by the terms of the Company's Employee Welfare Benefit Plan and
the Company is continuing to pay the premiums on the life insurance policies
covering Mr. Eller, currently owned by the Company under split dollar
arrangements.
CHANGE OF CONTROL AGREEMENT WITH MR. WEBSTER
The Company has a Change of Control Agreement with Mr. Webster. The agreement provides that if Mr. Webster'sWebster’s employment is terminated involuntarily, other than by death or disability or cause, or voluntarily, other than for good reason, after a change in control of the Company, Mr. Webster may receive certain benefits. The present value of the benefits will be 2.99 times Mr. Webster'sWebster’s average annual taxable compensation paid during the five (5) calendar years preceding the change in control of the Company, limited to the amount deductible by Unifi, Inc.the Company and as may be subject to excise taxes under the Internal Revenue Code, all as determined by the Company's Independent Certified
Public Accountants,Company’s independent certified public accountants, whose decision shall be binding upon the Company and the
officers.Mr. Webster. A change in control is deemed to occur if someone acquires twenty percent (20%) or more of the outstanding voting stock of the Company, or if there is a change in the majority of directorsDirectors under specified conditions within a two (2) year period. The benefits under this Change of Control Agreement isare contingent and therefore not reported under the Summary Compensation Table.
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17
Change of Control Agreement with Other Officers
Effective January 23, 2002, the Company entered into Change of Control Agreements with Thomas H. Caudle, Jr., Senior Vice President of Manufacturing, Michael E. Delaney, Senior Vice President of Business Development, Stewart Q. Little, Senior Vice President of Customer Development, Willis C. Moore, III, Executive Vice President and C.F.O., Ottis L. Gordon, Senior Vice President of Product Development, Benny L. Holder, Vice President and C.I.O.; and Charles F. McCoy, Vice President, Secretary, & General Counsel (collectively referred to as the “Officers”). These agreements provide that if the Officer’s employment is terminated involuntarily, other than by death or disability or cause, or voluntarily, other than for good reason, after a change in control of the Company, the Officers may receive certain benefits. The present value of the benefits will be 2.99 times the Officers, average annual taxable compensation paid during the five (5) calendar years preceding the change in control of the Company, limited to the amount deductible by the Company and as may be subject to excise taxes under the Internal Revenue Code, all as determined by the Company’s independent certified public accountants, whose decision shall be binding upon the Company and the Officers. These benefits will be paid to the Officers over a twenty-four (24) month period. A change in control is deemed to occur if someone acquires twenty percent (20%) or more of the outstanding voting stock of the Company, or if there is a change in the majority of Directors under specified conditions within a two (2) year period. The benefits under these Change of Control Agreements are contingent and therefore not reported under the Summary Compensation Table.
14
PERFORMANCE GRAPH --— SHAREHOLDER RETURN ON COMMON STOCK
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG UNIFI, INC.
Comparison of 5-Year Cumulative Total Return*
| Company | June 1997 | June 1998 | June 1999 | June 2000 | June 2001 | June 2002 | ||||||||||||||||||
| Unifi, Inc. | $ | 100.00 | $ | 94.23 | $ | 50.90 | $ | 34.56 | $ | 21.87 | $ | 29.99 | ||||||||||||
| NYSE Composite | $ | 100.00 | $ | 124.66 | $ | 134.54 | $ | 138.13 | $ | 134.98 | $ | 115.06 | ||||||||||||
| Peer Group | $ | 100.00 | $ | 120.22 | $ | 88.37 | $ | 54.60 | $ | 59.44 | $ | 91.12 | ||||||||||||
| * | $100 invested on June 29, 1997 |
NEW YORK STOCK EXCHANGE
Unifi, Inc.'s Common Stock
The Company’s common stock trades on the New York Stock Exchange (NYSE) under the symbol "UFI"“UFI”, with the closing price of said stock on September 4, 2001,2002, being $9.98$8.00 per share.
INFORMATION RELATING TO THE COMPANY'S
COMPANY’S
It is the practice of the Board of Directors, pursuant to the recommendation of the Company’s Audit Committee, to select the Company’s independent auditors for the current fiscal year at the meeting of the Board of Directors immediately following the Annual Meeting of Shareholders. Ernst & Young LLP has beenwas selected as the Company'sCompany’s independent auditors for fiscal year ended June 24, 2001.30, 2002. Ernst & Young, LLP has been the Company'sCompany’s independent auditors since 1990. Representatives of Ernst & Young LLP will attend the Annual Meeting.Meeting of Shareholders. They will have the opportunity to make a statement if they so desire and to answer appropriate questions from Shareholders.
COMPLIANCE WITH
SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACTBENEFICIAL OWNERSHIP
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directorsCompany’s Directors and executive officers, and any person who owns more than ten percent of the Company'sCompany’s stock, to file with the Securities and Exchange Commission ("SEC"(“SEC”) initial reports of ownership and reports of changes in ownership of common stock. Such persons are required by the SEC'sSEC’s regulations to furnish the Company with copies of all Section 16(a) reports they filed.
15
To the Company'sCompany’s knowledge, based solely on its review of the copies of such reports furnished to the Company and written representation that no other reports were required, all such Section 16(a) filing requirements have been made during fiscal year ended June 24, 2001, except that Ms. Cole30, 2002.
SHAREHOLDER PROPOSALS
The deadline for submission of shareholder proposals pursuant to Rule 14a-8 under the Exchange Act for inclusion in the Company’s proxy statement for its 2003 Annual Meeting of Shareholders is May 26, 2003. Any shareholder proposal to be submitted at the 2003 Annual Meeting of Shareholders (but not required to be included in the Company’s proxy statement), must be received by August 9, 2003, or such proposal will be considered untimely pursuant to Rules 14a-4 and Mr. Armfield,
who were elected14a-5(e) under the Exchange Act and the persons named in the proxies solicited by us may exercise discretionary voting authority with respect to the Company's Board of Directors effective May 24, 2001,
filed their Initial Statements of Beneficial Ownership of Securities on Form 5's
in August, 2001.
SHAREHOLDER PROPOSALSsuch proposal. Proposals which Shareholders intend to present at the Company's 2002Company’s 2003 Annual Meeting of the Shareholders andor wish to have included in the Company'sCompany’s proxy materials should be sent registered, certified or express mail to Charles F. McCoy, Vice President, Secretary and General Counsel of the Company, at 7201 West Friendly Avenue, Greensboro, North Carolina, 27410. Proposals must be
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The Securities and Exchange Commission recently approved a new rule concerning the delivery of annual reports and proxy statements. It permits registrants to send a single set of these reports to any household at which two or more Shareholders reside if the registrant believes they are members of the same family. Each Shareholder will continue to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information Shareholders receive and reduces the expense to the registrant. The Company has not implemented these householding rules with respect to its record holders; however, a limited number of brokerage firms have instituted householding which may impact certain beneficial owners of Company common stock. If your family has multiple accounts by which you hold Company common stock, you may have received byhouseholding notification from your broker earlier this year. Please contact your broker directly if you have any questions, require additional copies of the proxy statement or annual report, or wish to revoke your decision to household, and thereby receive multiple reports. Those options are available to you at any time.
ANNUAL REPORT
The 2002 Annual Report on Form 10-K of the Company, no later than May 21, 2002.
including financial statements, accompanies this Proxy Statement.
OTHER MATTERS
The Board of Directors does not intend to present any items of business other than those stated in the Notice of Annual Meeting of Shareholders. If other matters are properly brought before the meeting, the persons named in the accompanying proxy will vote the shares represented by it in accordance with their best judgement.judgment. Discretionary authority to vote on other matters is included in the proxy.
By Order of the Board of Directors
/s/ Charles F. McCoy
Charles F. McCoy
Vice President, Secretary & General
Counsel
| By Order of the Board of Directors | |
| |
| Charles F. McCoy | |
| Vice President, Secretary & General Counsel |
16
EXHIBIT A
UNIFI, INC.
AUDIT COMMITTEE CHARTER
(1) CHARTER
This charter governs the operations of the Audit Committee. The Audit
Committee shall review and reassess the charter at least annually and obtain the
approval of the Board of Directors.
(2) ORGANIZATION
There shall be a committee appointed by the Board of Directors to be known
as the Audit Committee. The Audit Committee of the Board of Directors shall be
comprised of at least three directors all of whom are independent of management
and the Company. Members of the Audit Committee shall be considered independent
if they have no relationship to the Company that may interfere
ARTICLE SEVENTH TO THE RESTATED CERTIFICATE OF INCORPORATION
Effective with the exercise2002 Annual Meeting of their independence from management andShareholders, the Company. All Audit Committee
members shall be financially literate, (or shall become financially literate
within a reasonable time after appointment to the Committee), and at least one
member shall have accounting or related financial management expertise.
(3) INDEPENDENCE
In addition to the descriptionRestated Certificate of independence described in paragraph (2),
the following restrictions shall apply to every Audit Committee member:
(a) Employees
A director who is an employee (including non-employee executive
officers)Incorporation of the Company or any ofis amended by deleting Article Seventh in its affiliates may not serve on the
Audit Committee until three years following the termination of his or her
employmententirety and replacing it with the Company.
(b) Business Relationshipfollowing:
ARTICLE SEVENTH
| The number of Directors shall be fixed in the By-Laws but in no case shall be less than nine (9), but this number may be increased and subsequently increased or decreased from time to time by the affirmative vote of the majority of the Board, except that the number of Directors shall not be less than nine (9). A Director shall hold office until his successor shall be elected and qualified, subject to prior death, resignation, retirement, or removal from office. | |
| Newly created directorships resulting from an increase in the number of Directors and vacancies caused by death, resignation, retirement or removal from office, may be filled by the vote of a majority of the Directors remaining in office. Any Director elected by the Board to fill a vacancy shall serve until the next meeting of the Shareholders, at which the election of Directors is in the regular order of business, and until his successor is elected and qualified. In no case will a decrease in the number of Directors shorten the term of an incumbent Director. |
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APPENDIX A director (i) who is a partner, controlling shareholder, or executive
officer of an organization that has a business relationship with the
Company, or (ii) who has a direct business relationship with the Company
(e.g. a consultant) may serve on the Audit Committee only if the Company's
Board of Directors determines in its business judgement that the
relationship does not interfere with the director's exercise of independent
judgement. In making a determination regarding the independence of a
director pursuant to this requirement, the Board of Directors should
consider, among other things, the materiality of the relationship to the
Company, to the director, and, if applicable, to the organization with whom
the director is affiliated. A director may serve on the Audit Committee
without the aforesaid Board of Directors determination three years after
termination of (i) or (ii) above.
(c) Cross Compensation Committee Link
A director who is employed as an executive of another corporation
where any of the Company's executives serve on that corporation's
compensation committee may not serve on the Company's Audit Committee.
(d) Immediate Family
A director who is an Immediate Family member of an individual who is
an executive officer of the Company or any of its affiliates cannot serve
on the Audit Committee until three years following the termination of such
employment relationship by said executive.
Notwithstanding the requirements of paragraphs (3)(a) and (d) above,
one director who is no longer an employee or who is an Immediate Family
member of a former executive officer of the Company or its affiliates, but
is not considered independent pursuant to these provisions due to the
three-year restriction period, may be appointed, under exceptional and
limited circumstances, to the
16
20
Audit Committee if the Company's Board of Directors determines in its
business judgement that membership on the committee by the individual is
required by the best interest of the Company and its Shareholders, and the
Company discloses, in the next annual proxy statement subsequent to such
determination, the nature of the relationship and the reasons for that
determination.
(4) STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling their responsibility to the Shareholders, potential shareholders, the
investment community and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the annual independent audit of the Company's financial
statements, and the legal compliance and ethics programs as established by
management and the Board. In so doing, it is the responsibility of the Audit
Committee to maintain free and open communication between the committee, the
independent auditors, and management of the Company. In discharging its
oversight role, the Audit Committee is empowered to investigate any matter
brought to its attention with full access to all books, records, facilities, and
personnel of the Company and the power to retain outside counsel, or other
experts for this purpose.
(5) RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and Shareholders that the
corporate accounting and reporting practices of the Company are in accordance
with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
(a) Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have
the document published at least every three years in accordance
with SEC regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgements.
3. In consultation with the management and the independent auditors,
consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control,
and report such exposures. Review significant findings prepared by
the independent auditors and the internal auditing department
together with management's responses.
4. Review with financial management and the independent auditors the
company's quarterly financial results prior to the release of
earnings and/or the company's quarterly financial statements prior
to filing or distribution. Discuss any significant changes to the
Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with SAS 61
(see item 9). The Chair of the Committee may represent the entire
Audit Committee for purposes of this review.
(b) Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and
annually recommend to the Board of Directors the appointment of the
independent auditors or approve any discharge of auditors when
circumstances warrant.
6. Approve the fees and other significant compensation to be paid to
the independent auditors.
17
21
7. On an annual basis, the Committee should review and discuss with
the independent auditors all significant relationships they have
with the Company that could impair the auditors' independence.
8. Review the independent auditors audit plan - discuss scope,
staffing, locations, reliance upon management, and general audit
approach.
9. Prior to releasing the year-end earnings, discuss the results of
the audit with the independent auditors. Discuss certain matters
required to be communicated to audit committees in accordance with
AICPA SAS 61.
10.Consider the independent auditors' judgements about the quality and
appropriateness of the Company's accounting principles as applied
in its financial reporting.
(c) Legal Compliance
11.On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from
regulators or governmental agencies.
(d) Other Audit Committee Responsibilities
12.At such time or times as it determines to be appropriate and in the
best interest of the Company, the Audit Committee shall have the
discretion to retain a third party independent auditor to provide
such internal audit services for the Company as the Audit Committee
shall determine is appropriate.
13.Annually prepare a report to Shareholders as required by the
Securities and Exchange Commission. The report should be included
in the Company's annual proxy statement.
14.Perform any other activities consistent with this Charter, the
Company's By-Laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
15.Maintain minutes of meetings and periodically report to the Board
of Directors on significant results of the foregoing activities.
16.Establish, review, and update periodically, as deemed appropriate,
a Code of Ethical Conduct and ensure that management has
established a system to enforce this Code.
17.Periodically perform self-assessment of audit committee
performance.
18.Review financial and accounting personnel succession planning
within the company.
19.Annually review a summary of Directors' and Officers' related party
transactions and potential conflicts of interest.
18
22
UNIFI, INC.
ANNUAL MEETING, OCTOBER 25, 2001
23, 2002
PLEASE DATE, SIGN AND DETACH THE PROXY CARD BELOW, AND
UNIFI, INC.
- FOLD AND DETACH HERE -
The undersigned hereby appoints Willis C. Moore, III and Charles F. McCoy, or either of them, with full power of substitution, as attorneys and proxies to represent and vote all shares of Unifi, Inc. Common Stock which the undersigned is entitled to vote at the Annual Meeting of the Shareholders to be held at the Corporation'sCompany’s corporate headquarters at 7201 West Friendly Avenue, in Greensboro, North Carolina, on Thursday,Wednesday, October 25, 2001,23, 2002, at 10:00 A.M. Eastern Daylight Savings Time, and any adjournment or adjournments thereof as follows:
PROPOSAL NO. 1 -- Election — To adopt and approve the amendment to the Company’s Restated Certificate of Incorporation to declassify the Board of Directors [ ] To vote so that each Director would stand for re-election on an annual basis:
oFOR all nomineesoAGAINST oABSTAIN
PROPOSAL NO. 2 — If Proposal No. 1 is adopted, to elect the ten (10) directors listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked toserve until the contrary below) for all nominees listed below
NOMINEES:
CLASS 1 -- Donald F. Orr, Robert A. Wardnext Annual Meeting of Shareholders or until their respective successors are duly elected and G. Alfred Webster
CLASS 2 --qualified:
| oFORall nominees listed below (except as marked to the contrary below). | oWITHHOLD AUTHORITYto vote for all nominees listed below. |
NOMINEES: William J. Armfield, IV, CLASS 3 --R. Wiley Bourne, Jr., Charles R. Carter, Sue W. Cole, (INSTRUCTION: J.B. Davis, Kenneth G. Langone, Donald F. Orr, Brian R. Parke, Robert A. Ward, G. Alfred Webster
INSTRUCTION:To withhold authority to vote for any individual nominee, write that nominee'snominee’s name in the space provided below.)
--------------------------------------------------------------------------------
PROPOSAL NO. 3 — If Proposal No. 1 is not adopted, to elect three (3) Class 2 Directors to serve until their terms expire at the 2005 Annual Meeting of Shareholders or until their respective successors are duly elected and qualified:
| oFORall nominees listed below (except as marked to the contrary below). | oWITHHOLD AUTHORITYto vote for all nominees listed below. |
CLASS 2 NOMINEES: William J. Armfield, IV, Charles R. Carter, Kenneth G. Langone
INSTRUCTION:To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided below.
ANNUAL MEETING, OCTOBER 23, 2002
PLEASE DATE, SIGN AND DETACH THE PROXY CARD BELOW, AND
UNIFI, INC.
- FOLD AND DETACH HERE -
The undersigned hereby authorizes the proxies, in their discretion, to vote on any other business which may properly be brought before the meeting or any adjournment thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities and Exchange Commission. 23
UNIFI, INC.
ANNUAL MEETING, OCTOBER 25, 2001
PLEASE DATE, SIGN AND DETACH THE PROXY CARD BELOW, AND
RETURN IN THE ENCLOSED BUSINESS REPLY ENVELOPE TO:
UNIFI, INC.
C/O FIRST UNION NATIONAL BANK
PROXY TABULATION
P.O. BOX 217950
CHARLOTTE, NC 28254-3556
- FOLD AND DETACH HERE -
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED FOR PROPOSAL NO. 1 AND FOR EACH OF THE BOARD OF DIRECTORS'DIRECTORS’ NOMINEES FOR DIRECTORS SPECIFIED IN PROPOSAL NO. 2 (IF PROPOSAL NO. 1 IS APPROVED) OR PROPOSAL NO. 3 (IF PROPOSAL NO. 1 IS NOT APPROVED), UNLESS A CONTRARY CHOICE IS SPECIFIED, IN WHICH CASE THE PROXY WILL BE VOTED AS SPECIFIED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders, dated September 21, 2001,23, 2002, and the Proxy Statement furnished therewith.
Dated this ______ day of ____________ , 2001.
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NOTE: Signature should agree with
name on stock certificate as printed
hereon. Executors, administrators,
trustees and other fiduciaries should
so indicate when signing. If the
signer is a corporation, please sign
in full corporate name, by duly
authorized officer.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS. PLEASE DATE,
SIGN AND RETURN THIS PROXY. THANK YOU.