DEF 14A 1 ufi20150830_def14a.htm FORM DEF 14A ufi20150830_def14a.htm Table Of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

(Rule 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No. )

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to § 240.14a-12

 

UNIFI, INC.


(Name of Registrant as Specified in its Charter)

 


(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

  

PAYMENT OF FILING FEE (Check the appropriate box):

No fee required.

   

Fee computed on table below per Exchange Act Rules 14a-6(i)(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):

     
 

4)

Proposed maximum aggregate value of transaction:

     
 

5)

Total fee paid:

     

Fee paid previously with preliminary materials:

   

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

1)

Amount Previously Paid:

     
 

2)

Form, Schedule or Registration Statement No.:

     
 

3)

Filing Party:

     
 

4)

Date Filed:

     

 

 

   

MAKERS OF REPREVE®

 

7201 West Friendly Avenue

Greensboro, North Carolina 27410

 

September 4, 2015

 

To our Shareholders:

 

On behalf of the Board of Directors and management of Unifi, Inc., I invite you to the Annual Meeting of Shareholders of your company to be held at 9:00 A.M. Eastern Time on Wednesday, October 21, 2015, at the Company’s corporate headquarters at 7201 West Friendly Avenue, Greensboro, North Carolina. We look forward to greeting those shareholders who are able to attend in person.

 

At the Annual Meeting, we will discuss and act on each item of business described in the Notice of Annual Meeting of Shareholders and our Proxy Statement, both of which are available via the Internet as described below, along with detailed information relating to our activities and operating performance that is contained in our Annual Report on Form 10-K for the fiscal year ended June 28, 2015 (the “2015 Form 10-K”).

 

We are providing access to our proxy materials via the Internet, and we are mailing a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) to our shareholders of record and beneficial owners at the close of business on September 2, 2015, which is the record date for the Annual Meeting. The Internet Notice will explain how all shareholders and beneficial owners can access all of the proxy materials and the 2015 Form 10-K, free of charge, via the website described in the Internet Notice.

 

It is very important that your shares are represented at the Annual Meeting, whether or not you plan to attend in person. Accordingly, we request and urge you to review the proxy materials and vote your shares in advance of the meeting via the Internet. If you decide to attend the Annual Meeting and wish to vote there in person, you may do so by revoking your prior proxy at that time.

 

The Internet Notice also contains instructions to allow you to request paper copies of the proxy materials to be sent to you by mail. Any paper copies of the proxy materials sent to you will include a proxy card that will provide you with a telephone number you may call to cast your vote, or you may complete, sign and return the proxy card by mail. Your vote is very important and we appreciate your taking the time to vote promptly.

 

 

 

Sincerely,

 

 

 

 

 

 

 

 

 

 

William L. Jasper

 

 

 

Chairman and Chief Executive Officer

 

 

 

 

MAKERS OF REPREVE®

7201 West Friendly Avenue

Greensboro, North Carolina 27410

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON OCTOBER 21, 2015

 

To the Shareholders of Unifi, Inc.:

 

Notice is hereby given that the 2015 Annual Meeting of Shareholders (the “Annual Meeting”) of Unifi, Inc. (the “Company”) will be held at the Company’s corporate headquarters at 7201 West Friendly Avenue, Greensboro, North Carolina, on Wednesday, October 21, 2015, at 9:00 A.M. Eastern Time, for the following purposes:

 

 

1.

To elect six (6) directors to serve until the next annual meeting of shareholders or until their respective successors (if there is to be one) are duly elected and qualified.

 

 

2.

To approve, on an advisory basis, the compensation of the Company’s named executive officers as described in its 2015 Proxy Statement.

 

 

3.

To ratify the appointment of KPMG LLP as the independent registered public accounting firm for the Company for the fiscal year ending June 26, 2016.

 

 

4.

To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

 

The Board of Directors has fixed the close of business on September 2, 2015, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. The transfer books of the Company will not be closed.

 

YOUR VOTE IS VERY IMPORTANT. We appreciate your taking the time to vote promptly. The Company’s 2015 Proxy Statement and a proxy solicited by the Board of Directors of the Company accompany this Notice, and the Proxy Statement explains the above items and how you can vote.

 

After reading the Proxy Statement, please vote at your earliest convenience via the Internet, or request that a paper copy of the proxy materials be sent to you by mail. If you request the proxy materials by mail, included in those materials will be a proxy card with a telephone number you may call to cast your vote, or you may complete, sign and return the proxy card by mail. In any such case, if you decide to attend the Annual Meeting and wish to vote in person, you may do so by revoking your prior proxy at that time.

 

YOUR SHARES CANNOT BE VOTED UNLESS YOU EITHER (I) VOTE VIA THE INTERNET, (II) REQUEST PROXY MATERIALS BE SENT TO YOU BY MAIL AND THEN USE THE PROXY CARD PROVIDED BY MAIL TO CAST YOUR VOTE BY CALLING THE TELEPHONE NUMBER ON THE CARD, OR COMPLETING, SIGNING AND RETURNING THE PROXY CARD BY MAIL, OR (III) ATTEND THE ANNUAL MEETING AND VOTE IN PERSON.

 

 

 

 

 

 

By Order of the Board of Directors,

 

 

 

 

 

 

 

 

 

 

W. Randy Eaddy

 

 

 

Secretary

 

Greensboro, North Carolina      
September 4, 2015      

 

 

  

MAKERS OF REPREVE®

 

7201 West Friendly Avenue

Greensboro, North Carolina 27410

 

 

 __________________

 

PROXY STATEMENT

Dated September 4, 2015

For the Annual Meeting of Shareholders
To be Held on October 21, 2015

 

__________________

   

 

 

GENERAL INFORMATION

 

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Unifi, Inc. (the “Company”) for use at the Annual Meeting of Shareholders to be held on Wednesday, October 21, 2015, at 9:00 A.M. Eastern Time, at the Company’s corporate headquarters located at 7201 West Friendly Avenue, Greensboro, North Carolina, or at any adjournment or postponement thereof (the “Annual Meeting”).

 

In accordance with rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), the Company furnishes its proxy materials via the Internet instead of mailing a paper copy of its proxy materials to each shareholder of record. If you received a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) by mail, you will not receive a paper copy of the proxy materials other than as described in this Proxy Statement. Instead, the Internet Notice will instruct you as to how you may access and review all of the information contained in the proxy materials. The Internet Notice also instructs you as to how you may submit your proxy via the Internet. If you received an Internet Notice by mail and would like to receive a paper copy of our proxy materials or vote by telephone, you should follow the instructions for requesting such a paper copy that is included in the Internet Notice.

 

It is anticipated that the Internet Notice will be sent to shareholders on or about September 4, 2015. The Proxy Statement and the form of proxy relating to the Annual Meeting will be made available to shareholders on the date that the Internet Notice is first sent.

 

Whether or not you received an Internet Notice, if you are a shareholder of record or a beneficial owner of our Common Stock as of the Record Date (defined below), you may request a paper copy of our proxy materials by contacting the Company at 7201 West Friendly Avenue, Greensboro, North Carolina 27410, Attention: Office of the Secretary.

 

 

 

TABLE OF CONTENTS

  

VOTING AND PROXY SOLICITATION INFORMATION

3
   

PRINCIPAL HOLDERS OF COMMON STOCK

6
   

PROPOSAL 1: ELECTION OF DIRECTORS

7
   

COMPENSATION DISCUSSION AND ANALYSIS

9
   

COMPENSATION COMMITTEE REPORT

19
   

EXECUTIVE COMPENSATION

20
   

EQUITY COMPENSATION PLAN INFORMATION

28
   

BENEFICIAL OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS

29
   

DIRECTORS’ COMPENSATION

31
   

PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

32
   

PROPOSAL 3: RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

33
   

BOARD OF DIRECTORS PROCEDURAL MATTERS

34
   

CORPORATE GOVERNANCE MATTERS

37
   

TRANSACTIONS WITH RELATED PARTIES AND CERTAIN OTHER PERSONS

39
   

AUDIT COMMITTEE REPORT

40
   

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

41
   

SHAREHOLDER PROPOSALS

41
   

HOUSEHOLDING OF ANNUAL MEETING MATERIALS

41
   

ANNUAL REPORT

41
   

OTHER MATTERS

42

 

 

 

VOTING AND proxy SOLICITATION information

 

Record Date and Shares Eligible to Vote

 

The Company’s common stock (the “Common Stock”), par value $.10 per share, is the only class of stock of the Company, and thus only holders of shares of Common Stock are eligible to vote. Only such shareholders of record as of the close of business on September 2, 2015 (the “Record Date”), will be entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof (“eligible shareholders”). As of the Record Date, the Company had outstanding 17,833,722 shares of its Common Stock. Each share of the Common Stock entitles the holder to one vote with respect to each matter coming before the Annual Meeting, and all such shares vote as a single class.

 

Voting by Shareholders with Shares Held Directly in Their Names

 

Shareholders with shares registered directly in their names in the Company’s stock records maintained by its transfer agent, American Stock Transfer and Trust Company (“AST”), may vote their shares:

 

 

by submitting a proxy via the Internet at the following web address: www.proxyvote.com and following the instructions provided in the Internet Notice;

 

 

by mailing a signed and dated proxy card in the envelope provided with a paper copy of this Proxy Statement; or

 

 

by making a toll-free telephone call in the U.S. or Canada to 1-800-690-6903.

 

In addition, ballots will be passed out to any shareholder who wants to vote in person at the Annual Meeting.

 

Specific instructions to be followed by registered shareholders are provided at the website described in the Internet Notice and are set forth on the form of proxy card. Proxies submitted via the Internet, or by mail or telephone as described above, must be received by 11:59 p.m., Eastern Time, on October 20, 2015. If you vote via the Internet or by telephone, you do not need to return a proxy card.

 

Voting by Shareholders with Shares Held Through a Bank, Brokerage Firm or Other Nominee

 

Shareholders who hold shares through a bank, brokerage firm or other nominee should refer to the voting instruction form forwarded by their bank or brokerage firm to see which options are available to them. In addition to voting by mail, a number of banks and brokerage firms participate in a program provided through Broadridge Financial Solutions, Inc. (“Broadridge”) that offers telephone and Internet voting options. Votes submitted by telephone or via the Internet through Broadridge’s program must be received by 11:59 p.m., Eastern Time, on October 20, 2015.

 

In addition, ballots will be passed out to any shareholder who wants to vote in person at the Annual Meeting. Should you decide to attend the Annual Meeting and vote your shares in person, you MUST obtain a legal proxy executed in your favor from your bank, brokerage firm or other nominee for your ballot to be counted.

 

Voting of Proxies

 

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 electing as directors of the Company the six (6) nominees for director named in this Proxy Statement, (ii) in favor of the advisory vote to approve executive compensation, (iii) in favor of ratification of the appointment of KPMG LLP as the independent registered public accounting firm for the Company for the fiscal year ending June 26, 2016 and (iv) in the discretion of the proxy holder on any other matters presented at the Annual Meeting.

 

Revocability of Proxies

 

If your shares are held directly in your name, you may revoke your proxy and change your vote at any time prior to the voting of the proxy at the Annual Meeting. You may do this by (i) sending written notice of revocation to Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27410, Attention: Office of the Secretary, (ii) submitting a subsequent proxy via the Internet, or by mail or telephone, with a later date or (iii) voting in person at the Annual Meeting. Attendance at the Annual Meeting will not by itself revoke a proxy.

 

 

  

If your shares are held through a bank, brokerage firm or other nominee, you may revoke your proxy and change your vote at any time prior to the voting of the proxy at the Annual Meeting. You may do this by sending written notice of revocation to your bank, brokerage firm or other nominee. Attendance at the Annual Meeting will not by itself revoke a proxy. Should you decide to attend the Annual Meeting and vote your shares in person, you MUST obtain a legal proxy executed in your favor from your bank, brokerage firm or other nominee for your ballot to be counted.

 

Quorum and Voting Requirements

 

Quorum and “Broker Non-Votes”

 

The holders of a majority of the outstanding shares entitled to vote, present in person or represented by proxy at the Annual Meeting, will constitute a quorum for the transaction of business. New York law and the Company’s Bylaws require the presence of a quorum to conduct business at annual meetings of shareholders. At the Annual Meeting, abstentions and “broker non-votes” (as described below), if any, are counted as present for purposes of determining a quorum.

 

Under the rules of the New York Stock Exchange, Inc. (“NYSE”), a bank, broker or other nominee holding the Company’s shares in “street name” for a beneficial owner has discretion (but is not required) to vote the client’s shares with respect to “routine” matters if the client does not provide voting instructions. The broker or other nominee, however, is not permitted to vote the client’s shares with respect to “non-routine” matters without voting instructions. A “broker non-vote” occurs when the broker or other nominee does not vote on a particular proposal because that broker or other nominee does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

 

The proposal to elect directors and the advisory vote to approve executive compensation are each considered a non-routine matter under the NYSE rules, which means that your broker or other nominee may not use its discretion to vote your shares held in street name on these matters without your express voting instructions. The proposal to ratify the appointment of the Company’s independent registered public accounting firm is considered a “routine” matter under the NYSE rules, which means that your bank, broker or other nominee will have discretionary authority to vote your shares held in street name on that matter. Accordingly, if you do not instruct your broker or other nominee to vote your shares, the broker or other nominee may either: (i) vote your shares on routine matters and allow (or indicate) a “broker non-vote” on non-routine matters or (ii) leave your shares unvoted altogether.

 

Voting Standards

 

Each share represented is entitled to one vote on all matters properly brought before the Annual Meeting. Under our Bylaws, the voting standard for the election of directors is a majority voting standard in uncontested director elections, such as the election presented at the Annual Meeting, and a plurality voting standard in contested elections. A “contested” election is an election where the number of nominees exceeds the number of directors to be elected. A majority vote standard means that a nominee will be elected if he or she receives a majority of the votes cast, with shareholders being allowed to vote “for” or “against” the nominee (i.e., the number of shares voted “for” a nominee must exceed the number of shares voted “against” that director, without counting abstentions or broker non-votes). A plurality vote standard means that a nominee will be elected if he or she receives a plurality of the votes cast, with the nominees who receive the highest number of votes cast for their election being elected (up to the total number of positions being filled). In addition, see “Board of Directors Procedural Matters—Effect of Failure to be Reelected” below for a further description of the effect of a failure to receive a majority vote in an uncontested election.

 

The voting standard and treatment of abstentions and broker non-votes for the matters to be voted upon at the Annual Meeting are as follows:

 

Voting Item

 

Voting Standard

 

Treatment of Abstentions
& Broker Non-Votes

Proposal 1: Election of Directors

 

Majority vote standard

 

Not counted as votes cast; therefore no effect

Proposal 2: Say-on-Pay

 

Majority of votes cast

 

Not counted as votes cast; therefore no effect

Proposal 3: Ratification of Auditors

 

Majority of votes cast

 

Not counted as votes cast; therefore no effect

 

 

 

Solicitation Expenses and Related Matters

 

The expense of this solicitation will be borne by the Company. Solicitations of proxies may be made in person, or by mail, telephone or electronic means by directors, officers and regular employees of the Company who will not be specially compensated in such regard. In addition, the Company has retained Alliance Advisors, LLC to provide certain monitoring and vote reporting services, for which the Company has paid such firm a fee of $4,500, and may request the firm to perform proxy solicitation services, for which the Company could incur additional costs up to $10,000, plus, in each case, reimbursement of expenses. Arrangements will be made with brokers, nominees and fiduciaries to send proxies and proxy materials, at the Company’s expense, to their principals.

 

 

 

PRINCIPAL HOLDERS OF COMMON STOCK

 

The following table sets forth information, as of August 28, 2015, with respect to each person known or believed by the Company to be the beneficial owner of more than five percent (5%) of the Common Stock, which is the Company’s only class of voting security. The nature of beneficial ownership of the shares indicated is set forth in the notes following the table. In the case of certain holders, the most recent information available to the Company is derived from an SEC filing made by the holder on an earlier date as indicated in the notes to the table. Unless otherwise indicated in the notes, the respective holders below have sole voting and sole investment power over the shares.

 

Name and Address of Beneficial Owner

 

Amount and Nature of Beneficial Ownership(1)

   

Percent of Class

 

Dimensional Fund Advisors LP(2)

Building One, 6300 Bee Cave Road

Austin, TX 78746

    1,637,070         9.18 %  
                     

BlackRock, Inc.(3)

55 East 52nd Street

New York, NY 10022

    1,398,702         7.84 %  
                     

Kenneth G. Langone (4)

375 Park Avenue, Suite 2205

New York, NY 10152

    1,201,666         6.73 %  
                     

Pinnacle Associates, Ltd.(5)

335 Madison Avenue, Suite 1100

New York, NY 10017

    976,318         5.47 %  
                     

Impala Asset Management LLC (6)

107 Cherry Street

New Canaan, CT 06840

    912,424         5.12 %  


 

(1)

“Beneficial Ownership”, for purposes of the table, is determined according to the meaning of applicable securities regulations and based on a review of reports filed with the SEC pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

 

(2)

As indicated in its Schedule 13G/A, filed with the SEC on February 5, 2015, Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940 (an “Investment Adviser”), may be deemed to beneficially own shares of Common Stock by virtue of having sole voting power with respect to 1,600,699 shares and sole investment power with respect to 1,637,070 shares.

 

 

(3)

As indicated in its Schedule 13G filed with the SEC on February 2, 2015, BlackRock, Inc. may be deemed to beneficially own shares of Common Stock by virtue of having sole voting power with respect to 1,355,607 shares and sole investment power with respect to 1,398,702 shares.

 

 

(4)

Mr. Langone’s beneficial ownership includes: 130,000 shares owned by Invemed Associates, LLC, in which Mr. Langone owns an 81% interest, and of which Mr. Langone has shared voting and investment power; 26,000 shares owned by Mr. Langone’s wife, as to which he has shared voting and investment power and of which Mr. Langone disclaims beneficial ownership; 18,633 shares that Mr. Langone has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of his services as director; and 6,666 shares that Mr. Langone has the right to purchase pursuant to stock options that are currently exercisable.

 

 

(5)

As indicated in its Schedule 13G/A filed with the SEC on February 17, 2015, Pinnacle Associates, Ltd., an Investment Adviser, may be deemed to beneficially own 976,318 shares of Common Stock by virtue of having sole voting and investment power with respect to such shares.

 

 

(6)

As indicated in its Schedule 13G/A, filed with the SEC on February 12, 2015, Impala Asset Management LLC, an Investment Adviser, may be deemed to beneficially own 912,424 shares of Common Stock by virtue of having sole voting and investment power with respect to such shares.

 

 

 

PROPOSAL 1:

 

ELECTION OF DIRECTORS

 

General Information

 

The number of directors who presently comprise the Board is seven (7). By resolution of the Board in connection with the Annual Meeting, the number of positions on the Board and directors to be elected at the Annual Meeting is set at six (6). All the nominees for election are presently serving as directors and have consented to be named in this Proxy Statement and to serve, if elected. Although the Board expects that each of the nominees will be available 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 person or persons named in the proxy.

 

Set forth below is the name of each of the six (6) nominees for election to the Board, together with the nominee’s age, current principal occupation (which has continued for at least the past five years unless otherwise indicated), the name and principal business of the company by which he or she is employed, if applicable, the period or periods during which he or she has served as director, all positions and offices that he or she holds with the Company, his or her directorships in other 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, and the specific experience, qualifications, attributes or skills that led to the conclusion that such person should serve as a director of the Company. No director (and thus no nominee for director) has a family relationship as close as first cousin with any other director or nominee or executive officer of the Company.

 

G. Alfred Webster, a current director who has served in various roles at the Company, including executive vice president (1986 to 2003), director (1986 to 2004 and since 2007) and “Lead Independent Director” (since April 2011), will not be continuing as a director following the Annual Meeting.  The Board and the Company thank Mr. Webster for his service to the Company and his numerous valuable contributions over the years.

 

Nominees For Election As Directors

 

WILLIAM J. ARMFIELD, IV (80) — Mr. Armfield has been the President (since 1995) and Chairman of the Board (since November 2014) of Spotswood Capital, LLC, Greensboro, North Carolina, a private investment company. Mr. Armfield was a director and President of Macfield, Inc., a textile company in North Carolina, from 1970 until August 1991, when Macfield, Inc. merged with and into the Company. Mr. Armfield was the Vice Chairman and a director of the Company from 1991 to December 1995. Mr. Armfield again became a director of the Company in 2001, and has continued as a director since that time. He is a member of the Board’s Audit Committee and Compensation Committee, and is an audit committee financial expert.

 

Mr. Armfield brings operating and management experience, expertise in finance, and business development experience to the Company as a result of his professional experiences. In addition, through his experience at Macfield, he brings direct textile experience to the Board. These experiences provide the Board with, among other things, expertise and context important to the oversight of the Company’s financial reporting and business strategy implementation.

 

R. ROGER BERRIER, JR. (46) — Mr. Berrier has been the President and Chief Operating Officer of the Company since February 2011. He had been the Executive Vice President of Sales, Marketing and Asian Operations of the Company from September 2007 to February 2011. Prior to September 2007, he had been Vice President of Commercial Operations from April 2006 and Commercial Operations Manager responsible for corporate product development, marketing and brand sales management from April 2004 to April 2006. Mr. Berrier joined the Company in 1991 and has held various management positions within operations, including international operations, machinery technology, research & development and quality control. He has been a director since September 2007 and is a member of the Board’s Executive Committee.

 

Mr. Berrier brings executive decision-making skills, operating and management experience, expertise in sales, marketing and branding, business development and direct textile industry business acumen to the Company as a result of his professional experiences. These experiences and Mr. Berrier’s on-going interaction with the Company’s customers and suppliers provide the Board with, among other things, industry expertise important to the Company’s businesses, as well as a detailed understanding of the Company’s business and operations and the economic environment in which it operates.

 

 

 

ARCHIBALD COX, JR. (75) — Mr. Cox has been the Chairman of Sextant Group, Inc., a financial advisory and private equity firm, since 1993. Mr. Cox is the former Chairman of Barclays Americas, a position he held from May 2008 until June 2011. Mr. Cox was a director of Hutchinson Technology Incorporated from May 1996 to September 2009, was the Chairman of Magnequench, Inc., a manufacturer of magnetic material, from September 2005 to September 2006 and was the President and Chief Executive Officer of Magnequench, Inc., from October 1995 to August 2005. He was Chairman of Neo Material Technologies Inc., a manufacturer of rare earth, zirconium and magnetic materials, from September 2005 to September 2006. Mr. Cox has been a director of the Company since February 2008 and is a member of the Board’s Compensation Committee and Corporate Governance and Nominating Committee (the latter of which he is the Chair).

 

Mr. Cox brings executive decision-making skills, operating and management experience, expertise in finance, investment and business development experience to the Company as a result of his professional experiences. In addition, through his experience as Chairman of Barclays Americas in particular, Mr. Cox brings to the Board considerable experience with financial and strategic planning matters critical to the oversight of the Company’s financial reporting, compensation practices and business strategy implementation.

 

WILLIAM L. JASPER (62) — Mr. Jasper has been the Company’s Chairman of the Board since February 2011 and Chief Executive Officer since September 2007. Mr. Jasper joined the Company in September 2004, was later appointed as the General Manager of the Polyester Division, and in April 2006 was promoted to Vice President of Sales. From September 2007 to February 2011, he was also President of the Company. Prior to joining the Company, he was the Director of INVISTA’s Dacron® polyester filament business. Before working at INVISTA, Mr. Jasper had held various management positions in operations, technology, sales and business for E.I. du Pont de Nemours and Co. since 1980. He has been a director since September 2007 and is a member (and Chair) of the Board’s Executive Committee.

 

Mr. Jasper brings executive decision-making skills, operating and management experience, expertise in manufacturing operations, sales, business and consumer brand development and direct textile industry business acumen to the Company as a result of his professional experiences. These experiences and Mr. Jasper’s on-going leadership of the Company and interaction with the Company’s customers and suppliers provide the Board with, among other things, a detailed understanding of the Company’s businesses and the competitive environment in which it operates.

 

KENNETH G. LANGONE (79) — Mr. Langone has been the President and Chief Executive Officer of Invemed Associates, LLC, an investment banking firm, since 1974. Mr. Langone was a co-founder, and served as a director from 1978 to 2008, of The Home Depot, Inc. He served as Chief Executive Officer, President and Chairman from 2011 to February 2013, and has served as a director since 2011, of Geeknet, Inc. He also served as a director of YUM! Brands from 1997 to 2012, a director of ChoicePoint, Inc. from 2002 to 2008, and a director of General Electric Co. from 1999 to 2005. Mr. Langone has been a director of the Company since 1969, and is a member of the Board’s Corporate Governance and Nominating Committee.

 

Mr. Langone brings operating and management experience, including as chief executive officer of a financial services business, expertise in finance, and public company directorship and committee experience to the Company as a result of his professional experiences. In addition, Mr. Langone’s service on the Board since 1969 provides the Board with a valuable historical perspective through which it can contextualize and direct the Company’s performance and strategic planning.

 

SUZANNE M. PRESENT (56) – Ms. Present is a co-founder and has been a principal of Gladwyne Partners, LLC, a private partnership fund manager, since June 1998, and she is also Executive Director (since 2014) of Ken’s Krew, Inc., a non-profit organization that provides training and other support services to individuals with intellectual and developmental disabilities to assist with entering the workforce. Ms. Present currently serves on the board of directors of Anshe Chung Studios, Limited, a privately-held Chinese-based developer of content for virtual worlds. She served on the board of directors of Geeknet, Inc. from September 2008 to July 2010. She has been a director of the Company since February 2011. Ms. Present is a member of the Board’s Audit Committee and Executive Committee (the former of which she is the Chair); Ms. Present is an audit committee financial expert.

 

Through her experiences at Gladwyne Partners and service on various boards of directors, Ms. Present brings extensive financial expertise important to the oversight of the Company’s audit functions and analysis of business strategies.

 

Vote Required for Approval

 

The affirmative vote of a majority of the votes cast by eligible shareholders who are present in person or represented by proxy at the Annual Meeting, and who actually vote, is required for the election of a nominee as director.

 

The Board recommends that the shareholders vote “FOR” the election of all of the nominees as directors.

  

 

  

COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis provides an overview of the Company’s executive compensation program, including:

 

 

the process the Compensation Committee used to determine compensation and benefits for our named executive officers (“NEOs”) for fiscal year 2015;

 

 

the material elements of the Company’s executive compensation program;

 

 

the key principles and objectives, including the Company’s focus on pay for performance, that guide the Company’s executive compensation program; and

 

 

information about the fiscal year 2015 compensation earned by each of our NEOs, who are listed below:

 

William L. Jasper

Chairman and Chief Executive Officer

R. Roger Berrier, Jr.

President and Chief Operating Officer

Thomas H. Caudle, Jr.

Vice President of Manufacturing

James M. Otterberg

Vice President and Chief Financial Officer

 

The Company had no other executive officers during fiscal year 2015.

 

Executive Summary

 

The Company experienced continued improvements in its business and financial results during fiscal year 2015. The Company achieved adjusted EBITDA results (as described below) above the target level set for fiscal year 2015 as the basis for the Company’s annual cash bonus incentive program. The Company reported net income for fiscal year 2015 of $42.2 million, or $2.32 per basic share, an increase from $28.8 million, or $1.52 per basic share, for fiscal year 2014. The Company also continued strategic repurchases under its stock repurchase program, pursuant to which it repurchased approximately 349,000 shares of Common Stock during fiscal year 2015.

 

As in the prior fiscal year, the Company’s ability to perform successfully was due, in large part, to the leadership and performance of its executive team. In addition to guiding the Company through the continuing challenges of the economic environment for the textile industry in fiscal year 2015, the executive team also helped drive increased demand for the Company’s premier value-added yarns and strong operating results from its international businesses, and continued to expand the profitability and brand recognition of REPREVE®, the Company’s recycled performance fibers and most successful branded product.

 

As described in greater detail below, the Company believes its executive compensation program should attract top executive talent, pay for performance and link executive retention to long-term shareholder value. Accordingly, our NEOs were compensated as follows for fiscal year 2015:

 

 

Base salaries for NEOs for fiscal year 2015 were unchanged from base salaries for fiscal year 2014, except for Mr. Otterberg’s salary, which was increased for his first full fiscal year after becoming our Chief Financial Officer.

 

 

The NEOs received cash bonus payments for fiscal year 2015 performance at the amount payable under the annual cash incentive plan, which was established at the beginning of the fiscal year, due to the level of the Company’s achievement of the fiscal year 2015 adjusted EBITDA target, as described below.

     
  Long-term incentives were granted in the form of 3-year installment vesting stock options to promote executive retention and further align executive pay with long-term shareholder value. In contrast to prior years, the Compensation Committee did not grant to the NEOs any restricted stock units because the Committee has determined that stock options are a preferable form of equity incentive awards for grants to Company employees at this time. The Committee may determine, however, to resume using restricted stock units (which it has used in the past) or to use other forms of equity-based awards as incentive compensation in the future.

  

 

Compensation Philosophy, Principles and Policies

 

The Company’s executive compensation philosophy is to:

 

Attract Top Executive Talent

 

Follow a Pay for Performance Compensation Model

 

Link Retention to Long-Term Shareholder Value

The Company’s compensation program should attract high-quality executives who possess the skills and talent necessary to support and achieve our strategic objectives.

 

Executives should be rewarded for their achievement of near-term and long-term operating performance goals established by the Board.

 

The Company seeks to promote executives’ loyalty and retention by utilizing a stock ownership policy and other arrangements that further link executive compensation to sustained shareholder value and consistent Company performance.

 

Therefore, the focus of the Company’s executive compensation program and the Compensation Committee is to ensure that an appropriate relationship exists between executive pay and the creation of shareholder value, while at the same time enabling the Company to attract, retain, reward and motivate high caliber employees. The Compensation Committee monitors the results of its executive compensation policy to ensure that compensation payable to executive officers creates proper incentives to enhance shareholder value, rewards superior performance, is justified by returns available to shareholders, and discourages employees from taking unnecessary or excessive risks that could ultimately threaten the value of the Company.

 

In establishing compensation for the NEOs, the following principles and policies guide the Company’s executive compensation decisions:

 

 

all components of executive compensation should be set so that the Company can continue to attract, retain, reward and motivate talented and experienced executives;

 

 

ensure alignment of executive compensation with the Company’s corporate strategies and business objectives and the long-term interests of the shareholders;

 

 

increase the incentive to achieve key strategic and financial performance measures by linking incentive award opportunities to the achievement of performance goals in those areas; and

 

 

enhance the NEOs’ incentive to increase the Company’s long-term value, as well as promote retention of key personnel, by providing a portion of total compensation opportunities in the form of direct ownership in the Company through stock ownership.

 

The Compensation Committee reviews and approves all components of the NEOs’ compensation. The Compensation Committee also monitors the compensation levels in general for all other senior level employees of the Company. In addition, the Compensation Committee has the discretion to hire compensation and benefits consultants to assist in developing and reviewing overall executive compensation strategies.

 

 

  

Overview of Compensation Components

 

The Compensation Committee views executive compensation in four component parts:

 

 

A brief description of each of these components is provided below, together with a summary of its objectives:

 

Compensation Element

 

Description

 

Objectives

         

Base Salary

 

Fixed compensation that is reviewed annually based on performance.

 

●     Provide a base level of compensation that fairly accounts for the job and scope of the role being performed.

●     Attract, retain, reward and motivate qualified and experienced executives.

         

Annual Incentives

 

“At-risk” variable compensation earned based on performance measured against pre-established annual goals.

 

●    Provide incentives for achieving annual operating goals that ultimately contribute to long-term return to shareholders.

         

Long-Term Incentives

 

“At-risk” variable compensation in the form of equity awards whose value fluctuates according to shareholder value and that vest based on continued service.

 

Supplemental retirement contributions based on executives’ respective base salaries that executives may earn over time based on continued service.

 

●    Align the economic interests of the executives with the shareholders by rewarding executives for stock price improvement.

 

●     Promote retention (through time-based and performance vesting schedules).

         

Other Personal Benefits

 

Broad-based benefits provided to all the Company’s employees (e.g., health and group term life insurance), a retirement savings plan, and certain perquisites.

 

●     Provide a competitive total compensation package to attract and retain key executives.

 

 

 

Compensation Mix

 

Consistent with the philosophy, objectives and principles of the executive compensation program, the program places a substantial amount of the total executive compensation “at risk” based on the performance of the Company and the executive through an annual cash bonus incentive program and equity-based long-term incentive awards. The Company uses the Unifi, Inc. 2013 Incentive Compensation Plan (the “2013 Incentive Compensation Plan”) in order to provide those awards.

 

The following charts illustrate the mix of “at-risk” compensation for the Chief Executive Officer and the other NEOs that was achieved for fiscal year 2015 by illustrating the mix of total direct compensation, using fiscal year 2015 base salaries, annual cash bonus incentive payments based on fiscal year 2015 performance and the grant-date fair value of long-term equity awards granted in fiscal year 2015*:

 

Chief Executive Officer

All Other NEOs

 

The above results reflect the type of mix that we target for our Chief Executive Officer’s and other NEOs’ compensation, which is for a substantial portion of their compensation to come in the form of annual and long-term incentives, which we believe encourages our executives to achieve near-term and long-term performance goals designed to create or enhance shareholder value. Moreover, our long-term incentive programs provide retention incentives designed to promote stability among the Company’s executive team. We also provide our executives a fixed base salary, which provides them with a base level of economic security.

 

Control by the Compensation Committee

 

The Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of each NEO, evaluates each NEO’s performance in light of these goals and objectives (with input from the Chief Executive Officer for NEOs other than the Chief Executive Officer), and sets each NEO’s compensation level based on this evaluation and consultation. The Compensation Committee also advises senior management with respect to the range of compensation to be paid to other employees of the Company, administers and makes recommendations to the Board concerning benefit plans for the Company’s directors, officers and employees and recommends benefit programs and future objectives and goals for the Company.

 

As in the past, the Compensation Committee continued to consider a wide range of factors in making its fiscal year 2015 compensation decisions for our NEOs, including the historical practices of the Company; the individual NEO’s leadership and role in advancement of the Company’s long-term strategy, plans and objectives; the individual’s performance and contribution to the Company’s success; budget guidelines established by the Board; and assessment of the Company’s financial condition. Additionally, the Compensation Committee considered the Company’s operating results, adjusted EBITDA and the current economic climate. Based on this information and these factors, the Compensation Committee set executive compensation for fiscal year 2015.

 

During fiscal year 2013, the Compensation Committee engaged Frederick W. Cook & Co., Inc. (“Cook & Co.”) as an independent advisor to assist the Compensation Committee with developing a peer group for compensation comparison purposes and to prepare a competitive market assessment of total compensation for the NEOs. Cook & Co. performs no other services for the Company, and its work for the Compensation Committee has not raised any conflict of interests.

 

 

 

While the Compensation Committee believes the information in the Cook & Co. report remains valuable, the Compensation Committee did not use or otherwise consider the Cook & Co. analysis for any particular purpose for fiscal year 2015. The Compensation Committee also did not use any other report as a benchmark or otherwise in setting executive compensation for fiscal year 2015. The Compensation Committee does not believe it is appropriate to tie executive compensation directly to the compensation awarded by other companies or to a particular survey or group of surveys. Instead, the purpose of the Cook & Co. report obtained by the Compensation Committee was to provide a general understanding of compensation practices and trends of similarly situated companies. The Compensation Committee members use that knowledge as a tool in considering the overall compensation of the Company’s executives. No specific compensation decision for any individual was based on or justified by any market comparison reports or information.

 

Detailed Review of Compensation Components

 

Base Salaries

 

The Compensation Committee believes in maintaining a close relationship between the Company’s performance and the base salary component of the compensation for each NEO. As in prior years, no formula-based salary increases were provided to the NEOs during fiscal year 2015. The factors considered by the Compensation Committee in setting the NEOs’ base salaries for fiscal year 2015 included:

 

 

the executive’s leadership and advancement of the Company’s long-term strategy, plans and objectives;

 

 

the executive’s individual performance and contribution to the Company’s success and budget guidelines; and

 

 

an assessment of the Company’s financial condition.

 

In addition to reviewing the above factors, the Compensation Committee also believes that strong and effective communication with management helps the Company adhere to its compensation philosophy, objectives and principles. Therefore, the Compensation Committee consults with the Chief Executive Officer and reviews his recommendations regarding the compensation of all NEOs (other than the Chief Executive Officer) before making its final compensation decisions. Periodically, the Chief Executive Officer meets with the other NEOs regarding their performance. The Compensation Committee reviews the overall performance of each NEO annually, and then approves the actual base salary for each NEO.

 

Upon completing this process, based on the Company’s performance in fiscal year 2014 as well as other factors including each NEO’s individual performance, the Compensation Committee determined to maintain the base salaries for each of the NEOs at their fiscal year 2014 levels, except for the base salary of Mr. Otterberg, whose base salary was increased to reflect his full year of service as Vice President and Chief Financial Officer. The base salaries for the NEOs for fiscal years 2014 and 2015 are listed in the table below.

 

NEO

 

Fiscal Year 2015 Base Salary ($)

   

Fiscal Year 2014 Base Salary ($)

   

Percentage Change

 

William L. Jasper

    710,000         710,000         0.0 %  

R. Roger Berrier, Jr.

    475,000         475,000         0.0 %  

Thomas H. Caudle, Jr.

    335,000         335,000         0.0 %  

James M. Otterberg

    300,000         275,000         +9.1 %  

  

Annual Incentive Compensation

 

To encourage executives to achieve near-term performance goals, the Company has established an annual incentive compensation program in the form of a cash bonus. All NEOs are eligible to earn annual bonuses based on the Company’s fiscal year performance.

 

For fiscal year 2015, the Compensation Committee established a performance target of $62.9 million of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), adjusted to exclude certain items such as non-cash compensation expense, gains or losses on extinguishment of debt, loss on previously held equity interest, operating expenses for Repreve Renewables, restructuring charges and start-up costs, gains or losses on sales or disposals of property, plant and equipment, currency and derivative gains or losses, and other operating or non-operating income or expense items necessary to understand and compare the underlying results of the Company (“adjusted EBITDA”). The Compensation Committee uses adjusted EBITDA as a measure for annual incentive compensation purposes because the Compensation Committee believes adjusted EBITDA provides a clear indicator of cash generation, which is a key performance indicator used by the Board and

 

 

 

management to assess the Company’s operating results generally. The Compensation Committee also believes that a Company-wide performance metric, such as adjusted EBITDA, is appropriate for each NEO because each NEO plays a vital role in the overall success of the Company. Therefore, the Compensation Committee believes that the annual variable compensation received by the NEOs should reflect the Company’s near-term performance.

 

The annual incentive bonus awarded to NEOs may be increased or decreased by the Compensation Committee as a result of the individual’s performance and/or contribution to the Company’s achievement of its financial objectives. Each NEO’s performance, including the Chief Executive Officer’s, is evaluated against specific financial goals prior to payment of bonuses, and the final bonus payment may be adjusted relative to the achievement of those goals. The performance criteria in the annual incentive bonus program may be adjusted by either the Compensation Committee or the Board to account for unusual events, such as extraordinary transactions, asset dispositions and purchases, and merger and acquisitions if, and to the extent, either the Compensation Committee or the Board considers the effect of such events indicative of the Company’s performance. Additionally, the Compensation Committee or the Board has the discretion to award additional bonus compensation even if an executive officer would not be entitled to any bonus based on the targets previously determined.

 

For fiscal year 2015, the Compensation Committee set the threshold, target and maximum performance levels and corresponding potential annual incentive payments to the NEOs, based on percentages of base salary, as set forth in the table below. An NEO would receive a maximum bonus equal to a percentage of his base salary if the Company achieved, for plan purposes, 120% of the adjusted EBITDA target; a target bonus equal to a percentage of his base salary if the Company achieved, for plan purposes, 100% of the adjusted EBITDA target; or a threshold bonus equal to a percentage of his base salary if the Company achieved, for plan purposes, 80% of its adjusted EBITDA target. The Compensation Committee set the percentage of base salary for each NEO at its July 2014 meeting. The calculation of each NEO’s annual incentive bonus in the event of adjusted EBITDA results between these levels is made on a proportional sliding scale basis between the two level amounts. The NEO would not be entitled to a bonus if the Company achieved, for plan purposes, less than 80% of the adjusted EBITDA target.

 

Annual Incentives for Fiscal Year 2015

NEO

 

Threshold:

$50.3 million adjusted

EBITDA ($)

(% of base salary)

 

Target:

$62.9 million adjusted

EBITDA ($)

(% of base salary)

 

Maximum:

$75.5 million adjusted

EBITDA ($)

(% of base salary)

William L. Jasper

    355,000  (50%)     710,000  (100%)     1,420,000  (200%)
                         

R. Roger Berrier, Jr.

    190,000  (40%)     380,000  (80%)     760,000  (160%)
                         

Thomas H. Caudle, Jr.

    125,625  (37.5%)     251,250  (75%)     502,500  (150%)
                         

James M. Otterberg

    112,500  (37.5%)     225,000  (75%)     450,000  (150%)

 

As a result of the Company’s performance during fiscal year 2015, the Company achieved, for plan purposes, 101.5% of its adjusted EBITDA target, and thus each NEO was tentatively entitled to annual incentive bonus compensation based on a percentage of his fiscal year 2015 base salary, equal to approximately 107.5% (Mr. Jasper), 86% (Mr. Berrier), and 80.6% (Messrs. Caudle and Otterberg). At its July 2015 meeting, the Compensation Committee approved the payment of bonuses for fiscal year 2015 at those levels; no amount of discretionary additional cash bonus (whether pursuant to the annual incentive plan or otherwise) was paid to any NEO for fiscal year 2015.

 

Long-Term Incentive Compensation

 

The Compensation Committee believes that stock-based performance compensation is essential to align the interests of management and the shareholders in enhancing the long-term value of the Company’s equity and to encourage executives to retain their employment with the Company. Among the varied types of equity awards the Compensation Committee is authorized to use under the 2013 Incentive Compensation Plan, the Compensation Committee has determined that incentive stock options (“ISOs”) are preferable for use with all Company employees at this time (because their value depends upon a future increase in the value of the Common Stock), and that restricted stock units (which the Compensation Committee has used in the past, along with stock options) should not be granted to NEOs or other Company employees at this time. Consistent with that determination, in fiscal year 2015, the Compensation Committee awarded stock options to each NEO, which have the attributes set forth below.  

 

  

   

Stock Options

Align NEO and shareholder interests

 

●     Each option is an ISO and entitles recipient to purchase a share of Common Stock (at an exercise price equal to at least the stock price on the date of grant).

●     Only have value if price of a share of Common Stock exceeds option exercise price.

     

Promote NEO retention

 

●     Vest in equal installments over three years, contingent upon continued service.

●     Subject to accelerated vesting upon change in control, termination due to death or disability, and approved retirement.

 

The number of these stock options is listed in the table below. When determining the number of stock options to award each NEO, the Compensation Committee considered the difference between the base salary and bonus actually paid for fiscal year 2014 and the total compensation that the Compensation Committee sought to award to the NEO based on the Company’s performance in fiscal year 2014. The options are exercisable at a price of $27.38 per share, a third of which options vested on July 22, 2015, and the remaining of which vest in equal installments at each of July 22, 2016 and July 22, 2017. As “incentive stock options” (to the applicable maximum permitted under the 2013 Incentive Compensation Plan), these stock options offer the NEO the opportunity to receive favorable tax treatment if they retain the shares acquired upon exercise for at least one year. For additional information on the stock options granted in fiscal year 2015, see “Grants of Plan-Based Awards” below.

 

NEO

 

Number of Stock Options

 

William L. Jasper

    37,500    
           

R. Roger Berrier, Jr.

    30,000    
           

Thomas H. Caudle, Jr.

    11,000    
           

James M. Otterberg

    17,000    

 

Perquisites and Other Benefits

 

Perquisites. The Compensation Committee’s general philosophy is to provide executives, including the NEOs, with only limited perquisites. Therefore, the Company does not provide its NEOs with perquisites such as car allowances, reimbursements for car expenses or payment of country club dues.

 

Retirement Benefits. In order to provide employees at all levels with greater incentives, the Company makes available to all employees, including the NEOs, the opportunity to make contributions to the Company’s Retirement Savings Plan (“401(k) Plan”), under which employees may elect to defer up to 75% of their total compensation, not to exceed the amount allowed by applicable Internal Revenue Service regulations. Pursuant to the 401(k) Plan, in fiscal year 2015, the Company matched contributions equal to 100% of the employee’s first 3% of compensation contributed to the 401(k) Plan and 50% of the next 2% of compensation contributed to the 401(k) Plan.

 

Health Plan, Life Insurance and Other Benefits. The Company makes available health and insurance benefits to all employees, including the NEOs. The cost of the health plans is covered partially through employees’ payroll deductions, with the remainder covered by the Company. Disability and life insurance benefits are paid by the Company for all salaried employees; however, the NEOs receive additional life insurance coverage provided by the Company.

 

Supplemental Key Employee Retirement Plan. As an additional means of attracting top executive talent and encouraging executives to remain employed with the Company, the Company maintains the Unifi, Inc. Supplemental Key Employee Retirement Plan (the “SERP”). Participation in the SERP is limited to a select group of management employees who are selected by the Compensation Committee and includes each of our NEOs. As described in greater detail preceding the Nonqualified Deferred Compensation table set forth elsewhere in this Proxy Statement, the SERP provides additional retirement benefits payable to our NEOs following their termination of employment. 

 

  

Change in Control Agreements. The Company has historically provided its NEOs with severance benefits if their employment is involuntarily terminated (or they resign for good reason) after a change in control of the Company. Providing such “double-trigger” change in control benefits assists us in attracting and retaining executive talent and reduces the personal uncertainty that executives may feel when considering such a corporate transaction. As a result, our NEOs are more likely to retain their employment with the Company and complete such a corporate transaction, thereby increasing the likelihood of enhancing long-term shareholder value. We have a Change in Control Agreement with each of our NEOs. The terms of the individual agreements, and a calculation of the estimated severance payments payable to each NEO, are set forth elsewhere in this Proxy Statement under “Executive Compensation – Potential Payments Upon Termination of Employment or Change in Control.”

 

Executive Officer Compensation Recoupment Policy

 

The Company maintains a policy addressing the potential recovery of incentive compensation in the event of a material restatement of the Company’s financial results. This policy, also known as a “clawback” policy, applies to all of the Company’s executive officers. Under the policy, the Company is entitled to recover any incentive compensation paid to a current or former executive officer of the Company as a result of material noncompliance with financial reporting requirements that results in a restatement of the Company’s financial results, to the extent that such compensation is attributable to the erroneous financial data and is in excess of what would have been paid under the accounting restatement. The recovery period pursuant to the policy is up to three years preceding the date on which the Company is required to prepare such an accounting restatement. In addition, if the Board determines that any current or former employee has engaged in fraud or certain other specified misconduct, the Board may require reimbursement of all compensation granted, earned or paid under annual incentive and long-term incentive cash plans, cancellation of outstanding equity awards and reimbursement of any gains realized on the exercise, settlement or sale of equity awards.

 

Officers Stock Ownership Policy

 

During fiscal year 2014, the Company adopted its Officers Stock Ownership Policy to enhance the Company’s ongoing objective to align the compensation paid to its officers with the long-term interests of shareholders. The policy applies to any NEO, any person who holds the position of Vice President, Treasurer or higher with the Company, its primary operating subsidiary and possible other significant operating subsidiaries (“VP-Level Personnel”), and to certain other persons below those levels who may be designated for coverage by the Compensation Committee (for purposes of the policy, collectively, “covered officers”). The policy provides for a ramp-up period for complying with the expected stock ownership levels, both upon the initial implementation of the policy and thereafter upon each person first becoming an NEO or other covered officer. If a covered officer fails to comply with the stock ownership expectation, the Compensation Committee considers that fact in setting future salary, bonus or other compensation for the covered officer. The Company tests for compliance with the stock ownership expectation twice annually, once at the end of the second fiscal quarter and again at the end of the fiscal year.

 

The stock ownership expectation, calculation of shares counted toward the expectation, and valuation of the shares for purposes of the policy are as set forth below. All NEOs are in compliance with their respective stock ownership expectations under the terms of the policy.

 

Stock Ownership Expectation

 

Shares of Common Stock Counted Towards Ownership Expectation

 

Value of Shares of Common Stock

●     NEOs: At least three times (3x) base annual salary.

 

●     VP-Level Personnel (non-NEOs): At least one and one-half times (1.5x) base annual salary.

 

●     Other designated covered officers: In the discretion of the Compensation Committee, at least one times (1x) base annual salary.

 

●     Shares owned directly by the officer, his or her spouse or minor children, or a trust for the exclusive benefit of one or more such persons.

 

●     Shares covered by the portion of stock options or restricted stock units that are vested or not subject to forfeiture.

 

●     Shares subject to pledges, calls or short-sell arrangements are not counted toward the stock ownership expectation.

 

●     Greater of (a) the closing price on the last trading day of the applicable fiscal period or (b) the 30-day average closing price ending on such last trading day.

 

●     Shares underlying vested stock options, restricted stock units and other stock awards are calculated as if they were net exercised using the deemed current market price on the applicable measurement date.

  

 

 

Tax Impact on Compensation

 

The Compensation Committee has considered the impact of Section 162(m) of the Internal Revenue Code (the “Code”) on the Company’s executive compensation program. Code Section 162(m) denies a public company a deduction, except in limited circumstances, for compensation paid to “covered employees” – which includes the NEOs, other than the Company’s Chief Financial Officer – to the extent such compensation exceeds $1,000,000. Based on its review of the likely impact of Code Section 162(m) and other factors, the Compensation Committee previously recommended to the Board, the Board adopted, and the shareholders approved, the 2013 Incentive Compensation Plan. The 2013 Incentive Compensation Plan allows the Company’s annual cash incentive bonus program for the NEOs, as well as equity and equity-based awards to the NEOs, to qualify for an exception to the Code Section 162(m) deduction limitation. The Compensation Committee may in the future adopt or change benefit plans in order to qualify compensation pursuant to them paid to covered employees for the exception. In any event, the Compensation Committee may authorize payments or equity awards to retain and motivate key executives, in any situation it believes to be appropriate, without regard to tax deductibility considerations.

 

Risk Analysis of Compensation Policies and Practices

 

While the Company’s compensation policies and practices are designed to motivate its employees and encourage performance that improves the Company’s financial and other operating results, the Company and the Compensation Committee also seek to design and implement compensation programs and practices that discourage employees from taking unnecessary or excessive risks that could ultimately threaten the value of the Company or otherwise have a material adverse effect on the Company. Management and the Compensation Committee periodically review and assess potential risks associated with the Company’s compensation programs and practices. Management and the Compensation Committee believe that the Company’s incentive compensation programs and practices are appropriately balanced between value created indirectly by the performance of the Company’s stock and payments resulting from the achievement of specific financial performance objectives, so as to minimize the likelihood of unnecessary or excessive risk-taking by Company employees. Management and the Compensation Committee have concluded that any risks from such programs and practices are not reasonably likely to have a material adverse effect on the Company. The Compensation Committee reached its conclusion after considering a number of features of the Company’s compensation structure that are designed to mitigate risk, such as:

 

 

The Company uses a balance of fixed and variable compensation in the form of cash and equity, which is designed to provide both near- and long-term focus.

 

 

The overall compensation of our NEOs is not overly-weighted towards the achievement of performance criteria in a particular fiscal year, and an appropriate portion of compensation is awarded in the form of equity awards that vest over a multi-year period, subject to continued service by the recipient. This further aligns the interests of the NEOs to long-term shareholder value and helps retain management.

 

 

Payouts under the Company’s annual incentive compensation and other long-term incentive programs are based on performance criteria that the Compensation Committee believes to be challenging, yet reasonable and attainable without excessive risk-taking.

 

 

The Company has a compensation recoupment policy that allows the Company to recover certain compensation in the event of a restatement of its financial statements due to the material noncompliance of the Company with federal securities laws or in the event of certain fraud or other misconduct by an employee.

 

 

The Company has a stock ownership policy under which its NEOs and other key personnel are expected to own a significant amount of Common Stock, further aligning their interests with those of our other shareholders.

 

 

The Compensation Committee maintains an open dialogue with management regarding executive compensation policies and practices and the appropriate incentives to use in achieving near-term and long-term performance goals.

 

Shareholder Say-on-Pay Vote

 

At the 2014 annual meeting of shareholders, our shareholders had the opportunity to vote, on a non-binding advisory basis, on a proposal to approve the compensation of the NEOs for fiscal year 2014. This is referred to as a “say-on-pay” proposal. Approximately 95% of the votes cast on last year’s say-on-pay proposal were voted in favor of the proposal. The Compensation Committee believes this vote result reflects the general concurrence by the shareholders in the Company’s philosophy and approach to executive compensation. Therefore, the Company has continued its philosophy and approach to executive compensation as discussed above.

 

 

 
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Table Of Contents
 

 

The Board has determined that the Company’s shareholders should vote on a say-on-pay proposal each year, consistent with the preference expressed by the shareholders at the 2011 annual meeting of shareholders. Accordingly, at the Annual Meeting, shareholders will again have the opportunity to indicate their views on NEO compensation. For additional information, see “Proposal 2: Advisory Vote on Executive Compensation” in this Proxy Statement. The Compensation Committee will continue to consider the vote results for say-on-pay proposals in future years when making compensation decisions for our NEOs.

 

 

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee has reviewed and discussed with management the Company’s Compensation Discussion and Analysis, which is set forth above. Based on that review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement, which is incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended June 28, 2015.

 

Submitted by the Compensation Committee of the Board:

 

G. Alfred Webster, Chair
William J. Armfield, IV
Archibald Cox, Jr.

 

 

 

 

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table is a summary of all compensation awarded or paid to (or earned by) our NEOs for services rendered in all capacities to the Company (including its subsidiaries) for each of the fiscal years indicated. Mr. Otterberg became an executive officer in fiscal year 2014, and accordingly no compensation information is provided for him for fiscal year 2013.

 

Name and Principal Position

 

Year

 

Salary
($)

   

Stock
Awards
(1)
($)

   

Option
Awards
(1)
($)

   

Non-Equity
Incentive Plan
Compensation
(2)

($)

   

All Other
Compensation
(3)

($)

   

Total
($)

 
                                                             

William L. Jasper

 

2015

    710,000               649,301         763,250         98,323       2,220,874    

Chairman and

 

2014

    710,000       220,800         327,665         1,065,000         96,564       2,420,029    

Chief Executive Officer

 

2013

    700,212       126,281         163,832         819,117         91,644       1,901,086    
                                                             

R. Roger Berrier, Jr.

 

2015

    475,000               519,441         408,500         55,241       1,458,182    

President and

 

2014

    475,000       165,600         254,851         570,000         54,725       1,520,176    

Chief Operating Officer

 

2013

    470,885       98,219         127,425         550,847         54,178       1,301,554    
                                                             

Thomas H. Caudle, Jr.

 

2015

    335,000               190,462         270,094         54,907       850,463    

Vice President,

 

2014

    335,000       66,240         87,377         376,875         54,160       919,652    

Manufacturing

 

2013

    323,096       16,838         21,844         377,962         53,358       793,098    
                                                             

James M. Otterberg

 

2015

    300,000               294,350         241,875         35,938       872,163    

Vice President and

 

2014

    265,654               145,629         309,375         32,237       752,895    

Chief Financial Officer

                                                           

 

 

(1)

Amounts reflect the grant date fair value computed in accordance with FASB ASC Topic 718, related to option and stock awards granted in the fiscal year noted. See Note 16 to the consolidated financial statements included in the 2015 Form 10-K for more information about the value of equity awards.

 

 

(2)

Amounts are attributable to cash bonus payments paid under the annual incentive plan for the applicable fiscal year, as described above under “Compensation Discussion and Analysis” with respect to fiscal year 2015 and as previously disclosed with respect to prior fiscal years.

 

 

(3)

All Other Compensation for each of the NEOs for fiscal year 2015 consists of the following:

 

   

William L. Jasper

   

R. Roger Berrier, Jr.

   

Thomas H. Caudle, Jr.

   

James M. Otterberg

 

Life Insurance ($)

    27,173       4,466         16,032       600    

Matching 401(k) Contribution ($)

    10,800       10,400         10,400       10,900    

Contributions to Supplemental Key Employee Retirement Plan ($)

    60,350       40,375         28,475       24,438    

Total

    98,323       55,241         54,907       35,938    

 

 

 

Grants of Plan-Based Awards

 

The fiscal year 2015 grants of plan-based performance cash bonus awards and plan-based long-term equity incentive awards to the NEOs, as well as estimated possible payouts under non-equity incentive plan awards, are set forth below.

 

 

 

 

Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)

   

All Other Stock Awards: Number of Shares of Stock or

   

All Other Option Awards: Number of Securities Underlying

   

Exercise or Base Price of Option

   

Grant Date Fair Value of Stock and Option

 
  Grant Type Grant Date  

Threshold

($)

   

Target

($)

   

Maximum

($)

   

Units

(#)

   

Options(2)

(#)

   

Awards

($ / Share)

   

Awards(3)

($)

 

William L. Jasper

Annual Cash Incentive

7/22/14

    355,000       710,000       1,420,000                          
 

Stock Options

7/22/14

                            37,500       27.38       649,301  
                                                             

R. Roger Berrier, Jr.

Annual Cash Incentive

7/22/14

    190,000       380,000       760,000                          
 

Stock Options

7/22/14

                            30,000       27.38       519,441  
                                                             

Thomas H. Caudle, Jr.

Annual Cash Incentive

7/22/14

    125,625       251,250       502,500                          
 

Stock Options

7/22/14

                            11,000       27.38       190,462  
                                                             

James M. Otterberg

Annual Cash Incentive

7/22/14

    112,500       225,000       450,000                          
 

Stock Options

7/22/14

                            17,000       27.38       294,350  

 


 

(1)

Represents the threshold, target and maximum payments the NEOs were eligible to earn pursuant to the Company’s fiscal year 2015 annual cash incentive plan. The threshold, target and maximum payout amounts represent 50%, 100% and 200% of Mr. Jasper’s fiscal year 2015 base salary; 40%, 80% and 160% of Mr. Berrier’s fiscal year 2015 base salary; and 37.5%, 75% and 150% of the fiscal year 2015 base salaries of Mr. Caudle and Mr. Otterberg. The threshold, target and maximum amounts were based on the Company achieving $50.3 million, $62.9 million and $75.5 million, respectively, of adjusted EBITDA for fiscal year 2015. Based on the Company’s actual fiscal year 2015 adjusted EBITDA, each NEO received a payment under the Company’s annual cash incentive plan, based on a percentage of fiscal year 2015 base salary, equal to approximately 107.5% (Mr. Jasper), 86% (Mr. Berrier) and 80.6% (Messrs. Caudle and Otterberg).

 

 

(2)

Represents stock options granted to NEOs pursuant to the 2013 Incentive Compensation Plan during fiscal year 2015. The stock options are exercisable at a price of $27.38 per share, one third of which options vested on July 22, 2015 and the remaining of which vest in equal installments on each of July 22, 2016 and July 22, 2017. Upon vesting, each stock option entitles the holder to acquire one share of Common Stock.

 

 

(3)

The amounts in this column do not represent amounts the NEOs received or are entitled to receive. As required by SEC rule, this column represents the full grant date fair value of the stock options granted to the NEOs during fiscal year 2015. The full grant date fair value is the amount that the Company will recognize in its financial statements over the award’s vesting schedule, subject to any forfeitures. The grant date fair value was determined under FASB ASC 718. See Note 16 to the consolidated financial statements included in the 2015 Form 10-K.

 

Employment Agreements and Other Individual Agreements

 

None of our NEOs are employed pursuant to employment agreements; however, the Company has entered into a Change in Control Agreement with each of our NEOs. In general, the Change in Control Agreements provide our NEOs with severance benefits upon their involuntary termination without “cause” (or resignation for “good reason”) following a change in control of the Company. Please refer to “Potential Payments Upon Termination or Change in Control” below for detailed information concerning these agreements.

 

We have also granted various long-term incentive awards to each of our NEOs. The material terms of these awards are discussed in the “Compensation Discussion and Analysis” section and are set forth in the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year End” tables in this section.

 

 

 

Outstanding Equity Awards at Fiscal Year End

 

The following table provides information concerning the outstanding equity awards for each of the NEOs as of the end of fiscal year 2015.

 

Outstanding Equity Awards at 2015 Fiscal Year-End

   

Option Awards(1)

   

Stock Awards

 

Name

 

Number of Securities
Underlying Unexercised
Options (#) Exercisable

   

Number of Securities
Underlying Unexercised
Options (#) Unexercisable

   

Option
Exercise Price
($)

   

Option
Expiration
Date

   

Number of Shares or Units of Stock That Have Not Vested (#)

   

Market Value of Shares or Units of Stock That Have Not Vested ($)

 
                                                           

William L. Jasper

    150,000                 5.73      

7/28/2019

                 
      45,000                 12.47      

7/27/2021

                 
      15,000         7,500         11.23      

7/25/2022

                 
      7,500         15,000         22.08      

7/24/2023(2)

                 
              37,500         27.38      

7/22/2024(3)

                 
                                    3,750         127,275 (4)  
                                    6,667         226,278 (5)  
                                                           

R. Roger Berrier, Jr.

    120,000                 5.73      

7/28/2019

                 
      35,000                 12.47      

7/27/2021

                 
      11,666         5,834         11.23      

7/25/2022

                 
      5,833         11,667         22.08      

7/24/2023(2)

                 
              30,000         27.38      

7/22/2024(3)

                 
                                    2,916         98,969 (4)  
                                    5,000         169,700 (5)  
                                                           

Thomas H. Caudle, Jr.

    36,666                 5.73      

7/28/2019

                 
      6,000                 12.47      

7/27/2021

                 
      2,000         1,000         11.23      

7/25/2022

                 
      2,000         4,000         22.08      

7/24/2023(2)

                 
              11,000         27.38      

7/22/2024(3)

                 
                                    500         16,970 (4)  
                                    2,000         67,880 (5)  
                                                           

James M. Otterberg

    6,666         3,334         11.09      

7/27/2022

                 
      3,333         6,667         22.08      

7/24/2023(2)

                 
              17,000         27.38      

7/22/2024(3)

                 

 


 

(1)

Unless otherwise noted, outstanding stock options are fully vested as of June 28, 2015.

 

 

(2)

Represents stock options granted on July 23, 2013, scheduled to vest in one-third increments on each of July 24, 2014, July 24, 2015 and July 24, 2016, contingent upon the NEO’s continued service through the applicable vesting date.

 

 

(3)

Represents stock options granted on July 22, 2014, scheduled to vest in one-third increments on each of July 22, 2015, July 22, 2016 and July 22, 2017, contingent upon the NEO’s continued service through the applicable vesting date.

 

 

(4)

Represents restricted stock units granted on July 25, 2012 that vested in one-third increments on each of August 25, 2013, July 25, 2014 and July 25, 2015.

 

 

 

 

(5)

Represents restricted stock units granted on July 24, 2013, scheduled to vest in one-third increments on each of August 24, 2014, July 24, 2015 and July 24, 2016, contingent upon the NEO’s continued service through the applicable vesting date.

  

Option Exercises and Stock Vested

 

The following table provides information with respect to the vesting of stock awards issued to the NEOs during fiscal year 2015 on an aggregated basis. No stock options were exercised by the NEOs during fiscal year 2015.

 

   

Stock Awards

 

Name

 

Number of Shares Acquired on Vesting(1)

(#)

   

Value Realized on Vesting(2)

($)

 

William L. Jasper

    14,583         429,643    

R. Roger Berrier, Jr.

    11,251         331,628    

Thomas H. Caudle, Jr.

    2,500         72,743    

James M. Otterberg

               

 


 

(1)

Shares included in this column represent the shares of Common Stock underlying restricted stock units that vested during fiscal year 2015. Each NEO elected to defer receipt of these shares until 30 days following the NEO’s separation from service.

 

 

(2)

Calculated based on the market price of the shares of Common Stock underlying the restricted stock units, which was computed as the average of the high and low trading prices on the date of vesting.

 

Pension Benefits

 

The Company does not sponsor, maintain or contribute to any retirement plans that provide for a specified level of retirement benefits (i.e., defined benefit retirement plans).

 

Non-Qualified Deferred Compensation

 

The Company maintains the SERP to provide additional retirement benefits to a select group of management or highly-compensated employees, including each of our NEOs. On an annual basis, the Company credits to the participant’s account an amount equal to 8½% for executive officers, or 5½% for non-executive officers, multiplied by the participant’s base salary. Each participant is always 100% vested in the participant’s SERP account and earns a return on the amounts contributed to the participant’s account as if it had been invested in the stocks that make up the Standard & Poor’s 500 Index in the same proportion as their respective weighting therein. Participants are not entitled to a distribution from the SERP until their termination of employment with the Company, at which time they must wait six months to receive a lump sum payment equal to the balance of their respective accounts. If a participant’s termination is due to death or disability, this six-month delay period is waived.

 

 

 

The following table provides information with respect to the Company’s non-tax qualified compensation deferral plans for each of the NEOs.

 

   

Non-Qualified Deferred Compensation for Fiscal Year 2015

 

Name

 

Executive
Contributions
in Last
Fiscal Year
($)

   

Company
Contributions
in Last
Fiscal Year
(1)
($)

   

Aggregate
Earnings (Loss)
in Last
Fiscal Year
($)

   

Aggregate
Withdrawals
and/or
Distributions
($)

   

Aggregate
Balance at
Last Fiscal
Year End
($)

 
                                             

William L. Jasper

          60,350       67,068               835,645    

R. Roger Berrier, Jr.

          40,375       44,222               551,373    

Thomas H. Caudle, Jr.

          28,475       40,491               499,154    

James M. Otterberg

          24,438       5,660               83,504    

 


(1) Amounts represent Company contributions to the SERP on behalf of the NEOs during fiscal year 2015. These amounts are reported in the Summary Compensation Table under “All Other Compensation.”

 

Potential Payments Upon Termination or Change in Control

 

Change in Control Agreements. The Company is a party to a Change in Control Agreement with each of its NEOs (collectively, as amended, the “Change in Control Agreements”). The Company entered into these agreements in August 2009 with Messrs. Jasper, Berrier and Caudle and amended those agreements effective December 31, 2014, and entered into the agreement with Mr. Otterberg effective December 31, 2014. The primary purpose of the Change in Control Agreements is to promote stability and continuity within management in the event of a “change in control” (as defined below) transaction that might otherwise be distracting or disruptive to management’s continued performance of its responsibilities. The substantive terms are the same in each of the Change in Control Agreements. The Change in Control Agreements will expire on December 31, 2017 unless they are extended or renewed, or unless a change in control occurs prior to that date; in the latter event, the Change in Control Agreements would extend past December 31, 2017 and expire on the two-year anniversary of the change in control event. An NEO’s Change in Control Agreement will expire earlier upon his termination of employment with the Company.

 

The Change in Control Agreement for each NEO provides for the severance benefits described below, if the NEO’s employment with the Company is terminated under certain circumstances following a change in control:

 

 

2.99 times the average total compensation paid to the NEO by the Company during the five calendar years (or less if the NEO has been employed by the Company for fewer than five years) preceding the change in control. This amount is paid in 24 equal monthly installments without interest.

 

 

Continued participation in Company-sponsored life insurance, medical, health and accident and disability plans and programs until the earlier of the second anniversary of the NEO’s termination of employment or the NEO’s commencement of full-time employment with a new employer.

 

The NEO will receive the severance benefits if he is terminated without “cause” or if he resigns for “good reason” within two years following the change in control. “Cause” is defined to mean essentially fraud, misappropriation or embezzlement or the NEO’s malfeasance or misfeasance in performing his duties owed to the Company. “Good reason” is defined to mean essentially the assignment to the NEO of duties materially inconsistent with his duties immediately prior to the change in control, a material change in the NEO’s titles or offices, a material reduction in the NEO’s base salary or a failure to increase the NEO’s base salary similar to those of other executive officers, the Company’s failure to continue certain benefit or bonus plans or arrangements previously available to the NEO, certain relocations of the Company’s principal executive offices or the relocation of the NEO’s office, and other similar specified reasons involving a material adverse consequence to the NEO.

 

The Change in Control Agreements do not provide for any tax “gross-up” payments, and the salary continuation payments may also be reduced to an amount such that they do not constitute an excess parachute payment under Code Section 280G.

 

 

 

A “change in control” under the Change in Control Agreements includes any of the following significant changes to the ownership or control of the Company:

 

 

Any person (as defined in Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the beneficial owner of more than 50% of the total fair market value of the Company’s stock or total voting power of the Company’s stock, excluding certain acquisitions;

 

 

A change in the composition of the Board such that the directors of the Company as of October 23, 2014 (“incumbent directors”) cease to constitute at least a majority of the Board, provided that (a) a change resulting from director elections by shareholders pursuant to a proxy or election contest that occurs at a single meeting of shareholders will not constitute a change of control, (b) any director elected after being nominated or approved by at least a majority of incumbent directors will be considered an “incumbent director” and (c) directors elected by shareholders shall be considered incumbent directors after serving for two years.

 

 

A merger, consolidation or other transaction involving an acquisition or corporate restructuring of the Company or the acquisition of assets of the Company or any subsidiary where (a) the underlying assets involved are equal to or greater than 50% of the gross fair market value of the assets prior to such transaction and (b) the beneficial owners of the fair market value of the Company and total voting power of the Company’s stock prior to such transaction do not beneficially own at least 50.1% of the combined fair market value of the outstanding equity and voting power of the Company after the transaction in substantially the same proportions as prior to such transaction.

 

Terms of Outstanding Equity Awards. Upon a “change in control” as defined for their purposes, all outstanding stock options and other stock awards under the 2013 Incentive Compensation Plan, the 2008 Unifi, Inc. Long-Term Incentive Plan (the “2008 LTIP”) and the Unifi, Inc. 1999 Long-Term Incentive Plan (the “1999 LTIP”), will become fully vested and/or will be immediately exercisable.

 

The 2013 Incentive Compensation Plan and 2008 LTIP both generally define a change in control as:

 

 

The acquisition of more than 50% of the total fair market value or total voting power of the Company’s stock (with certain exceptions such as an acquisition by a person, entity or group that already owns more than 50% of the total fair market value or total voting power before the acquisition);

 

 

The acquisition of 30% (under the 2013 Incentive Compensation Plan), or 20% (under the 2008 LTIP), or more of the total voting power of the Company within a 12-month period by any person (with the same exceptions as referred to above);

 

 

The replacement of a majority of the members of the Board (and with respect to the 2008 LTIP, during any 24 month period) by directors whose appointment or election is not endorsed by two-thirds of the incumbent members of the Board; or

 

 

The acquisition of 40% or more of the total gross fair market value of the Company’s assets by any person.

 

The 1999 LTIP defines a change in control as:

 

 

A consolidation or merger in which the Company is not the surviving corporation or pursuant to which shares of Common Stock would be converted into consideration (other than a merger in which holders of Common Stock have the same proportionate ownership of Common Stock immediately after the merger);

 

 

Any sale, lease, exchange or other transfer to any person (other than to a subsidiary) of all or substantially all of the assets of the Company;

 

 

The approval by the Company’s shareholders of a plan or proposal for the liquidation or dissolution of the Company;

 

 

The acquisition of 20% or more of the outstanding Common Stock by any person; or

 

 

The replacement of a majority of the members of the Board during any 24-month period by directors whose appointment or election is not endorsed by two-thirds of the incumbent members of the Board.

 

 

 

Our NEOs may also become vested in restricted stock units and certain stock options that vest based on continued service with the Company, including the stock options granted to them in fiscal year 2015, upon their retirement with approval by the Compensation Committee after attaining age 57 and upon a termination of employment due to death or disability. In addition, all of our unvested restricted stock unit awards granted to NEOs in prior fiscal years provide for accelerated vesting of all unvested restricted stock units upon the Company’s termination of an NEO’s employment without cause.

 

Accrued and Vested Benefits. Each of the NEOs has accrued various benefits under the Company’s equity compensation programs, such as the 2013 Incentive Compensation Plan, the 2008 LTIP and the 1999 LTIP; retirement plans such as the SERP; and other broad-based employee benefit plans. Many of these benefits and awards are fully vested, and each NEO would receive all of his vested benefits and awards if his employment with the Company ends for any reason.

 

Hypothetical Payments Table. The table below summarizes the potential payments upon termination of employment or a change in control of the Company, as calculated pursuant to SEC rules and regulations, as of June 28, 2015 for each NEO.

  

Hypothetical Payments Upon Termination of Employment or Change in Control

NEO

 

Type of Payment or Benefit

 

Change in Control

($)

   

Termination For Any Reason

($)

   

Termination without Cause

($)

   

Termination Due to Death or Disability

   

Termination Due to Approved Retirement

($)

   

Termination without Cause or Resignation for Good Reason within 2 years After Change in Control(1)

($)

 

Jasper

 

Severance and Benefit Continuation(2)

                                            4,166,927    
   

Accelerated Equity Awards(3) (4)

    947,778                 353,553         947,778         594,225         947,778    
   

Accrued and Vested Benefits(4)

            7,594,217         7,594,217         7,594,217         7,594,217         7,594,217    
   

Total

    947,778         7,594,217         7,947,770         8,541,995         8,188,442         12,708,922    
                                                                 

Berrier

 

Severance and Benefit Continuation(2)

                                            2,603,974    
   

Accelerated Equity Awards(3) (4)

    736,330                 268,669         736,330                 736,330    
   

Accrued and Vested Benefits(4)

            5,898,943         5,898,943         5,898,943         5,898,943         5,898,943    
   

Total

    736,330         5,898,943         6,167,612         6,635,273         5,898,943         9,239,247    
                                                                 

Caudle

 

Severance and Benefit Continuation(2)

                                            1,891,909    
   

Accelerated Equity Awards(3) (4)

    227,160                 84,850         227,160         142,310         227,160    
   

Accrued and Vested Benefits(4)

            1,901,162         1,901,162         1,901,162         1,901,162         1,901,162    
   

Total

    227,160         1,901,162         1,986,012         2,128,322         2,043,472         4,020,231    
                                                                 

Otterberg

 

Severance and Benefit Continuation(2)

                                            1,263,716    
   

Accelerated Equity Awards(3) (4)

    266,773                         266,773                 266,773    
   

Accrued and Vested Benefits(4)

            275,351         275,351         275,351         275,351         275,351    
   

Total

    266,773         275,351         275,351         542,124         275,351         1,805,840    

 


 

(1)

Amounts shown assume the Company experienced a change in control and the NEO was terminated without cause or resigned for good reason on June 28, 2015.

 

 

(2)

Consists of severance benefits and health and welfare benefits. Health and welfare benefits represents the aggregate estimated net cost to the Company of health and welfare benefits provided to each NEO under the terms of the Change in Control Agreements.

 

 

 

 

(3)

As described above, all outstanding and unvested stock options and restricted stock units will become vested upon a change in control of the Company. In addition, upon an NEO’s termination of employment due to approved retirement, the unvested stock options that vest solely based on the NEO’s continued service (“time-based options”) are subject to accelerated vesting; upon an NEO’s termination of employment due to death or disability, all unvested time-based options and all unvested restricted stock units are subject to accelerated vesting; and upon an NEO’s termination of employment without cause (as defined in the applicable award agreements) after specified dates, all unvested restricted stock units are subject to accelerated vesting. Stock options that vest based on an NEO’s continued service and the Company’s achievement of a specified share price do not provide for such accelerated vesting upon termination due to death, disability or approved retirement or upon termination without cause.

 

 

(4)

For purposes of this table, it is assumed that: (a) all vested stock options are exercised on the last business day before June 28, 2015, and the value of such vested stock options is calculated by multiplying the number of stock options by the difference between the exercise price and the closing market price; and (b) as of the date of termination or change in control, as applicable, each vested restricted stock unit is converted into one share of Common Stock and the aggregate value of such vested restricted stock units is calculated by multiplying the number of restricted stock units by the closing market price on the last business day before June 28, 2015.

 

 

 

EQUITY COMPENSATION PLAN INFORMATION

 

The table below presents information as of June 28, 2015 regarding the number of shares of Common Stock that may be issued under the 2013 Incentive Compensation Plan. The 2013 Incentive Compensation Plan replaced the 2008 LTIP for purposes of all incentive awards issued to the Company’s personnel after October 22, 2013. As a result, no further awards were made or will be made under the 2008 LTIP. Any option or restricted stock unit previously granted under the 2008 LTIP that is forfeited or canceled may be reissued under the terms of the 2013 Incentive Compensation Plan and is included in the number of securities remaining available for future issuance reflected in column (c) in the table below.

  

Equity Compensation Plan Information

 

Plan category

 

Number of securities to be issued upon exercise of

outstanding options, warrants and rights

   

Weighted average

exercise price of outstanding options, warrants and rights

   

Number of securities remaining available for future issuance under equity compensation plans (excluding

securities reflected in column (a))

 
   

(a)

   

(b)

   

(c)

 

Equity compensation plans approved by shareholders

    1,121,051       $ 10.52         803,914    

Equity compensation plans not approved by shareholders

                       

Total

    1,121,051       $ 10.52         803,914    

 

 

 

BENEFICIAL OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND EXECUTIVE OFFICERS

 

The following table presents information regarding the beneficial ownership of the Common Stock, within the meaning of applicable securities regulations, of each current director and nominee for director of the Company, each of the NEOs, and of all current directors and executive officers of the Company as a group, as of August 28, 2015. 

 

Name of Beneficial Owner

 

Amount and Nature of Beneficial Ownership(1)

   

Percent of Class (%)

 

William J. Armfield, IV(2)

    302,518         1.69    

R. Roger Berrier, Jr. (3)

    233,312         1.29    

Thomas H. Caudle, Jr. (4)

    61,373         °    

Archibald Cox, Jr. (5)

    164,465         °    

William L. Jasper(6)

    291,415         1.61    

Kenneth G. Langone(7)

    1,201,666         6.73    

James M. Otterberg(8)

    22,333         °    

Suzanne M. Present(9)

    15,033         °    

G. Alfred Webster(10)

    72,662         °    

All current directors and executive officers as a group (9 persons) (11)

    2,364,777         12.74    

 


°

Represents less than one percent (1%) of the outstanding shares of Common Stock.

 

 

(1)

All shares (and underlying shares that the person has a right to receive) are owned or will be owned directly and with sole voting and investment power by the person indicated above, except as otherwise noted below. The information presented in this table is based upon Company information, information furnished to the Company by the named persons or information contained in filings with the SEC.

 

 

(2)

Mr. Armfield’s beneficial ownership includes: 25,000 shares owned by Mr. Armfield’s wife, of which he has shared voting and investment power; 18,633 shares that Mr. Armfield has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of services as a director; and 6,666 shares that Mr. Armfield has the right to purchase pursuant to stock options that are currently exercisable. Of the shares owned by Mr. Armfield, 241,979 shares are pledged as collateral.

 

 

(3)

Mr. Berrier’s beneficial ownership includes: 7,066 shares owned by the Julie Beamer Berrier Revocable Trust, as to which he does not have any voting or investment power; 31,250 shares that Mr. Berrier has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of employment with the Company; and 194,165 shares that Mr. Berrier has the right to purchase pursuant to stock options that are currently exercisable.

 

 

(4)

Mr. Caudle’s beneficial ownership includes: 6,500 shares that Mr. Caudle has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of employment with the Company; and 53,333 shares that Mr. Caudle has the right to purchase pursuant to stock options that are currently exercisable.

 

 

(5)

Mr. Cox’s beneficial ownership includes: 18,633 shares that Mr. Cox has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of services as director; and 6,666 shares that Mr. Cox has the right to purchase pursuant to stock options that are currently exercisable.

 

 

(6)

Mr. Jasper’s beneficial ownership includes: 40,416 shares that Mr. Jasper has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of employment with the Company; and 244,999 shares that Mr. Jasper has the right to purchase pursuant to stock options that are currently exercisable.

 

 

 

 

(7)

Mr. Langone’s beneficial ownership includes: 130,000 shares owned by Invemed Associates, LLC, in which Mr. Langone owns an 81% interest, and of which Mr. Langone has shared voting and investment power; 26,000 shares owned by Mr. Langone’s wife, as to which he has shared voting and investment power and of which Mr. Langone disclaims beneficial ownership; 18,633 shares that Mr. Langone has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of his services as director; and 6,666 shares that Mr. Langone has the right to purchase pursuant to stock options that are currently exercisable.

 

 

(8)

Mr. Otterberg’s beneficial ownership consists of 22,333 shares that Mr. Otterberg has the right to purchase pursuant to stock options that are currently exercisable.

 

 

(9)

Ms. Present’s beneficial ownership consists of 15,033 shares that Ms. Present has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of services as director.

 

 

(10)

Mr. Webster’s beneficial ownership includes: 34,283 shares that Mr. Webster owns jointly with his wife, as to which he has shared voting and investment power; 31,713 shares that Mr. Webster has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following termination of services as director; and 6,666 shares that Mr. Webster has the right to purchase pursuant to stock options that are currently exercisable.

 

 

(11)

Includes all current directors, nominees for directors, and current executive officers of the Company.

 

 

 

DIRECTORS’ COMPENSATION

 

The Company does not pay any meeting fees or annual cash retainers to its directors, although the Company may reimburse each director for reasonable expenses incurred in attending meetings. The Company’s practice for compensating its outside directors over the years has been to grant them awards of stock options and/or restricted stock units, on an annual basis, in amounts that have varied from time to time. The Company does not compensate Messrs. Berrier and Jasper for their service as directors; their compensation as executive officers is discussed elsewhere in this Proxy Statement under “Executive Compensation”.

 

On October 22, 2014, the Board approved and the Company granted restricted stock units to each outside director who had been elected at the 2014 annual meeting of shareholders as an annual retainer for service in fiscal year 2015 and until the Company’s 2015 annual meeting of shareholders. These grants were made pursuant to the 2013 Incentive Compensation Plan. Each outside director received a grant of 2,625 restricted stock units, and Mr. Webster received an additional grant of 1,749 (for a total of 4,374 restricted stock units) for his service as Lead Independent Director. These restricted stock units represent the right to receive shares of Common Stock, and convey no rights of ownership in shares of Common Stock until such restricted stock units have been distributed in the form of Common Stock. The restricted stock units became fully vested on the grant date of October 22, 2014, and will be converted into an equivalent number of shares of Common Stock and distributed to the outside director following such director’s termination of services as a member of the Board. A director may elect to defer delivery of such shares of Common Stock pursuant to the Unifi, Inc. Director Deferred Compensation Plan.

 

The following table shows compensation information for the Company’s non-employee (or outside) directors for fiscal year 2015 that reflect the awards of restricted stock units discussed above.

 

Name

 

Stock Awards(1) ($)

   

Total ($)

 

William J. Armfield, IV

    75,023         75,023    

Archibald Cox, Jr.

    75,023         75,023    

Kenneth G. Langone

    75,023         75,023    

George R. Perkins(2)

               

Suzanne M. Present

    75,023         75,023    

G. Alfred Webster

    125,009         125,009    

Mitchel Weinberger(3)

    75,023         75,023    

 


 

(1)

Amounts reflect the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, related to restricted stock units granted in fiscal year 2015. See Note 16 to the consolidated financial statements included in the 2015 Form 10-K for more information about the value of restricted stock unit awards. At June 28, 2015, our outside directors had the following unexercised options to purchase shares of Common Stock; no outside director held any unvested restricted stock units.

 

   

Shares Underlying Unexercised Stock Options

 

William J. Armfield, IV

    6,666    

Archibald Cox, Jr.

    6,666    

Kenneth G. Langone

    6,666    

Suzanne M. Present

       

G. Alfred Webster

    6,666    

 

 

(2)

Mr. Perkins served as a director during fiscal year 2015 until the Company’s 2014 annual meeting of shareholders. He did not receive any restricted stock units in fiscal year 2015.

 

 

(3)

Mr. Weinberger served as a director during fiscal year 2015 until he resigned from the Board on April 24, 2015.

 

The compensation for outside directors is periodically reviewed for adjustment by the Corporate Governance and Nominating Committee.

 

 

PROPOSAL 2:

 

ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

In accordance with SEC rules and as required by Section 14A of the Exchange Act, we are asking shareholders to approve, on a non-binding basis, the following advisory resolution at the Annual Meeting:

 

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission in the Company’s Proxy Statement for its 2015 annual meeting of shareholders, including in the “Compensation Discussion and Analysis” and “Executive Compensation” sections and the compensation tables therein, is hereby approved.”

 

This advisory vote is not intended to address any specific element of executive compensation, but instead is intended to address the overall compensation of the NEOs as disclosed in this Proxy Statement. The Company includes such an advisory vote annually, as a regular part of each annual meeting of shareholders of the Company, and the next such advisory vote will occur at the 2016 annual meeting of shareholders.

 

The Company’s executive compensation program is designed not only to retain and attract highly qualified and effective executives, but also to motivate them to contribute substantially to the Company’s future success for the long-term benefit of shareholders and to reward them for doing so. Accordingly, the Board and Compensation Committee believe that there should be a strong relationship between pay and corporate performance (both financial results and stock price), and that the Company’s executive compensation program reflects this belief. The Company also maintains other policies that help further align executive compensation with the long-term interests of shareholders, such as our Officers Stock Ownership Policy.

 

In keeping with its overall compensation philosophy, the compensation received by our executives during fiscal year 2015 reflects the Company’s overall performance:

 

 

Base salaries for our NEOs were unchanged from fiscal year 2014 (except for an increase for Mr. Otterberg in recognition of his first full year of service as our Chief Financial Officer), despite strong Company and individual performances during the prior year;

 

 

Annual cash incentive compensation was based on the level of achievement of the adjusted EBITDA target; and

 

 

Long-term equity incentives were awarded to ensure that executive compensation is closely aligned with the creation of shareholder value and to promote executive retention.

 

We urge you to read the “Compensation Discussion and Analysis” and the “Executive Compensation” sections and compensation tables therein, which provide detailed information on the Company’s compensation philosophy, policies and practices and the compensation of our NEOs.

 

Effect of the Proposal

 

This advisory resolution, commonly referred to as a “say-on-pay” resolution, is not binding on the Company, the Board or the Compensation Committee. The vote on this proposal will, therefore, not affect any compensation already paid or awarded to any NEO and will not overrule any decisions made by the Board or the Compensation Committee. However, because we value highly the opinions of our shareholders, the Board and the Compensation Committee will consider the results of this advisory vote when making future executive compensation decisions.

 

Vote Required for Approval

 

The affirmative vote of a majority of the votes cast by eligible shareholders who are present in person or represented by proxy at the Annual Meeting, and who actually vote, is required to approve this proposal.

 

The Board recommends that the shareholders vote “FOR” the resolution to approve the compensation of the Company’s named executive officers as disclosed in the Proxy Statement.

 

 

PROPOSAL 3:

 

RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  

Pursuant to its authority delegated by the Board, the Company’s Audit Committee has appointed and retained KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for the fiscal year ending June 26, 2016. Although the Audit Committee has the sole authority to select and appoint the independent registered public accounting firm, the Board deems it advisable to obtain your ratification of this appointment. In retaining KPMG as the Company’s independent registered public accounting firm, the Audit Committee considered whether the provision of certain non-audit services by KPMG was compatible with maintaining KPMG’s independence, and concluded that it was.

 

KPMG has been the Company’s independent auditors since March 2011. Representatives of KPMG are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they so desire and to answer appropriate questions from shareholders.

 

Audit Fees

 

The fees for professional services to the Company by KPMG as the Company’s independent registered public accounting firm for the fiscal years indicated below were as follows:

 

   

Fiscal Year Ended

($)

 
   

June 28, 2015

   

June 29, 2014

 

Audit Fees(1)

    857,214         819,738    

Audit-Related Fees

               

Tax Fees(2)

    628,027         495,918    

All Other Fees

               

 


 

(1)

Audit fees are those billed or expected to be billed for audit services related to each fiscal year.

 

(2)

Consists of aggregate fees billed for tax compliance, consultation and related tax matters.

 

Audit Committee Pre-Approval Policies and Procedures

 

The Audit Committee is responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firm. The Audit Committee has adopted a policy governing the provision of all audit and non-audit services by the Company’s independent registered public accounting firm. Pursuant to this policy, the Audit Committee considers and approves, if appropriate, the provision of audit services (including audit review and attest services) and certain specific defined permitted non-audit services (“pre-approved services”) by the Company’s independent registered public accounting firm. It may also consider on a case-by-case basis and, if appropriate, approve specific engagements that do not fit within the definition of pre-approved services.

 

The policy provides that any proposed engagement that does not fit within the definition of a pre-approved service must be presented to and approved by the Audit Committee or pre-approved by the Chair or another member of the Audit Committee pending presentation to the Audit Committee. If permissible non-audit services are pre-approved by the Chair or another member of the Audit Committee, that decision is required to be presented at the next meeting of the Audit Committee for approval by the Audit Committee. The Audit Committee regularly reviews summary reports detailing all services (and related fees and expenses) being provided to the Company by the independent registered public accounting firm. All of the fees paid to KPMG in fiscal year 2015 were pre-approved by the Audit Committee.

 

Vote Required for Approval

 

The affirmative vote of a majority of the votes cast by eligible shareholders who are present in person or represented by proxy at the Annual Meeting, and who actually vote, is required to approve this proposal.

 

If the shareholders do not ratify the appointment of KPMG, the Audit Committee will consider a change in independent registered public accounting firm for the next fiscal year.

 

The Board recommends that the shareholders vote “FOR” the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 26, 2016.

 

 

 

BOARD OF DIRECTORS PROCEDURAL MATTERS

 

In accordance with New York law and the Company’s Articles of Incorporation and Bylaws, the Board is charged with governing the Company and supervising the conduct of its business by management. In discharging its duties under those and other legal and regulatory requirements, the Board has adopted and adheres to several corporate governance policies, guidelines and protocols that have been designed to help ensure that the Company operates in compliance with applicable laws and regulations, in accordance with high ethical standards and in pursuit of the interests of the shareholders to enhance the value of the Company. Information about the current members of the Board, several of the corporate governance guidelines and protocols followed by the Board, and other matters relating to the operations of the Board is provided in other sections of this Proxy Statement. The rest of this section contains information about committees of the Board, the process for selection of nominees for election to the Board, directors’ attendance at meetings and other procedural matters.

 

Committees of the Board of Directors

 

The Board has four standing committees: the Compensation Committee, the Audit Committee, the Corporate Governance and Nominating Committee (the “Governance Committee”) and the Executive Committee. During fiscal year 2015, the Compensation Committee met three (3) times and acted by written consent two (2) times; the Audit Committee met nine (9) times; the Governance Committee met three (3) times and acted by written consent one (1) time; and the Executive Committee met four (4) times and acted by written consent two (2) times.

 

The Compensation Committee operates under a written charter, adopted in April 2003 and most recently amended in June 2013. The Compensation Committee discharges the Board’s responsibilities relating to compensation of the Company’s executive officers. At least annually, the Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of each executive officer of the Company (including the Chief Executive Officer), evaluates each executive officer’s performance in light of these goals and objectives, and sets each executive officer’s compensation level based on this evaluation. The Compensation Committee annually determines whether the Chief Executive Officer and other executive officers will participate in any annual or long-term incentive plans established for the Company’s executive officers or employees. The Compensation Committee also advises senior management with respect to the range of compensation to be paid to other employees of the Company and administers and grants stock options and other equity-based awards to the Company’s officers, employees and consultants pursuant to the Company’s equity-based plans.

 

The Compensation Committee has the authority to retain or obtain the advice of any compensation consultant, independent legal counsel or other advisor it determines, in its sole discretion, to be useful to performing its duties. Prior to selecting or receiving advice from any such advisor, the Compensation Committee considers factors relevant to the independence of such advisor under applicable regulations or the NYSE Corporate Governance Standards. Each member of the Compensation Committee is an independent director, in accordance with the independence requirements of the Exchange Act and the NYSE Corporate Governance Standards applicable to members of compensation committees. The current members of the Compensation Committee are Messrs. Webster (Chair), Armfield and Cox.

 

The Audit Committee operates under a written charter, adopted in April 2000 and most recently amended in July 2015. The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee discharges the Board’s responsibility relating to the oversight of: (i) the integrity of the financial statements of the Company, (ii) the independent auditor’s qualifications, independence, appointment and performance, (iii) the performance of the Company’s internal audit function, and (iv) the compliance by the Company with accounting, legal, regulatory and ethical conduct requirements and protocols. As a result, the Audit Committee, among other things, is responsible for the appointment, compensation, retention and oversight of the Company’s independent auditors, and it reviews the Company’s financial statements, audit reports, internal controls and internal audit procedures. Each member of the Audit Committee is an independent director, in accordance with the independence requirements of the Exchange Act and the NYSE Corporate Governance Standards applicable to members of audit committees. The current members of the Audit Committee are Ms. Present (Chair) and Messrs. Armfield and Webster.

 

The Governance Committee operates under a written charter, adopted in April 2003 and most recently amended in April 2015. The Governance Committee is responsible, among other things, for identifying candidates to serve as directors of the Company, consistent with criteria approved by the Board, and for making recommendations to the Board of qualified nominees for election or reelection as directors of the Company. The Governance Committee is also responsible for recommending to the Board, for the Board’s approval, all members and chairs of the Board’s standing committees. The Governance Committee is responsible for establishing a system for, and monitoring the process of, performance reviews of 

 

 

the Board, its committees and key management personnel. The Governance Committee reviews the Corporate Governance Guidelines and Policies (the “Corporate Governance Guidelines”) from time to time and recommends possible changes to the Board.

 

The Governance Committee also monitors compliance with the Company’s Ethical Business Conduct Policy Statement (the “Ethical Policy Statement”), reviews the Ethical Policy Statement from time to time and provides recommendations for possible changes to the Board. The Governance Committee also oversees the administration of the Company’s Related Persons Transactions Policy (the “Related Persons Transactions Policy”) and may from time to time recommend possible changes to the Board. Each member of the Governance Committee is an independent director, in accordance with the independence requirements of the NYSE Corporate Governance Standards. The current members of the Governance Committee are Messrs. Cox (Chair), Langone and Webster.

 

The Executive Committee operates under a written charter adopted in September 2007. The Executive Committee may exercise all of the authority of the Board in the management of the Company, subject to limitations under New York law. The current members of the Executive Committee are Messrs. Jasper (Chair), Berrier and Webster and Ms. Present.

 

Board Leadership Structure

 

Mr. Jasper, the Company’s Chief Executive Officer, is the Chairman of the Board. The Company also has a Lead Independent Director who acts as a liaison between the non-management directors and the Company’s management, chairs the executive sessions of non-management directors, and consults with the Chairman of the Board regarding agendas for Board meetings and other matters pertinent to the Company and the Board.

 

The Board has determined that Mr. Jasper’s service as both Chairman of the Board and Chief Executive Officer is in the best interests of the Company and its shareholders because Mr. Jasper possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its business and is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most important matters. Combining the positions helps to provide a unified leadership and direction for the Company, enables decisive leadership, ensures clear accountability, and enhances the Company’s ability to communicate its message and strategy clearly and consistently to the Company’s shareholders, employees, customers and suppliers. The Board believes that this structure enhances Mr. Jasper’s ability to provide insight and direction on important strategic initiatives simultaneously to both management and the independent directors. The Board also believes its current leadership structure is appropriate in light of the fact that it has designated a Lead Independent Director, and the Compensation Committee, Governance Committee and Audit Committee are each comprised solely of independent directors.

 

Audit Committee Financial Experts

 

The Board has determined that at least two members of the Audit Committee, Mr. Armfield and Ms. Present, are audit committee financial experts, as defined by SEC rules, and a third director who does not serve on the Audit Committee, Mr. Cox, would qualify as an audit committee financial expert if appointed to the Audit Committee. Messrs. Armfield and Cox and Ms. Present are each “independent” as that term is defined in the NYSE Corporate Governance Standards.

 

Attendance at Board and Committee Meetings

 

The Board met seven (7) times during fiscal year 2015. All directors attended at least 75% of the aggregate number of meetings of the Board and meetings held by all committees of the Board on which they serve during the period in which they served as a director or a committee member during fiscal year 2015, except for Mr. Armfield, who attended 14 of 19 Board and committee meetings (for 74%) during fiscal year 2015. Mr. Armfield would have exceeded 75% by attending just one additional meeting, which he would have done but for the fact that he missed a specially called Board meeting because of a serious temporary medical illness. Mr. Armfield has attended at least 75% of the aggregate number of meetings of the Board and all committees of the Board on which he served for at least the five years prior to fiscal year 2015, and the Board believes that his absences from a few meetings during fiscal year 2015 did not compromise the strong contributions he otherwise made during fiscal year 2015, or his ability to continue making such contributions if he is reelected at the Annual Meeting.

 

Attendance at Annual Meetings

 

At the 2014 annual meeting of shareholders, all members of the Board were in attendance. The Company believes that the Annual Meeting is an opportunity for shareholders to communicate directly with our directors. Directors are encouraged to attend each annual meeting of shareholders.  

 

 

Selection of Nominees for Election to the Board

 

Nomination Process

 

The Governance Committee is responsible for identifying and recommending to the Board persons for nomination to be elected as directors by our shareholders, as well as candidates to fill vacancies on the Board that may arise from time to time. The Governance Committee is also responsible for considering any nominees for director who are properly submitted by our shareholders, as described later below. The Board makes the final nomination decisions after considering the recommendations from the Governance Committee.

 

Identification and Evaluation of Nominees

 

The objective of the Governance Committee is to structure a Board that brings to the Company a variety of skills and perspectives developed through high-quality business and professional experiences. All nominees for director must demonstrate integrity, accountability, informed judgment, financial literacy, passion, creativity and vision. The Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue to serve. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining new perspectives. If any member of the Board does not wish to continue in service, or if the Governance Committee decides not to recommend a member for reelection, the Governance Committee will identify and recommend a new nominee with the desired skills and experience as outlined above, unless the Board determines not to fill the resulting vacancy. Historically, the Governance Committee has not engaged outside advisors or consultants to identify or evaluate (or otherwise assist in identifying) potential nominees, although it has authority and is willing to do so if it or the Board believes such assistance would be beneficial.

 

The Governance Committee reviews the background and qualifications of each nominee to determine his or her experience, competence and character, and assesses such nominee’s potential contribution to the Board. Other than the foregoing, there are no stated minimum criteria for director nominees. The Governance Committee may, however, consider such other factors it believes to be in the best interest of the Company and the shareholders. The Governance Committee and the Board do not have a specific diversity policy, but they believe that diversity is a critical aspect of a well-functioning board, and that having directors of different ages, races, genders, and ethnic and cultural backgrounds can contribute different, useful perspectives, and can work effectively together to further the Company’s objectives.

 

Pursuant to its charter, the Governance Committee periodically reviews the criteria for the selection of Board members to ensure that the criteria, including diversity, are adequate for the Company and are being addressed appropriately.

 

Shareholder Nominations

 

Shareholder nominees will be analyzed by the Governance Committee and considered for possible recommendation to the Board in the same manner as nominees that are otherwise considered by the Governance Committee. Any recommendation submitted by a shareholder to the Governance Committee must comply in all respects with Section 1.13 of our Bylaws, which generally requires that such recommendation be in writing and include the shareholder’s name and address; number of shares of Common Stock and other securities of the Company owned by the shareholder; any material interest that the shareholder may have in the election of the proposed nominee to the Board; any other information that would be required to be disclosed in a proxy or information statement of the Company; and information related to the proposed nominee, including a written statement signed by the proposed nominee as to his or her background and qualifications and a description of arrangements and understandings between the shareholder proponent and the proposed nominee. Section 1.13 of our Bylaws also requires that any such shareholder recommendation be received by the Company in accordance with the timeframe that is described under the caption “Shareholder Proposals”.

 

A copy of the Company’s Bylaws is available on the Company’s website at www.unifi.com under the “Investor Relations” section, and may also be obtained upon request to: Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27410, Attention: Office of the Secretary. Information on the Company’s website referenced above or elsewhere in this Proxy Statement does not constitute part of this Proxy Statement.

 

Effect of Failure to be Reelected

 

A director nominee who fails to receive sufficient votes for reelection in an uncontested election shall be deemed to have tendered to the Board his or her resignation as a director, with the Board having authority to determine the timing of accepting the resignation in light of potential governance or other considerations pending the election of his or her successor, if there is to be a successor. 

 

 

  

CORPORATE GOVERNANCE MATTERS

 

Corporate Governance Guidelines and Committee Charters

 

In furtherance of its longstanding goal of providing effective governance of the Company’s business for the benefit of shareholders, the Board has adopted the Corporate Governance Guidelines, which were revised in July 2014. Each of the Audit Committee, the Compensation Committee and the Governance Committee operate under written charters that have been adopted by the Board. The Corporate Governance Guidelines and the committee charters are available on the Company’s website at www.unifi.com under the “Investor Relations”