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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
x
Filed by a Party other than the Registrant o
Check the appropriate box:
| o Preliminary Proxy Statement |
o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
|
| x Definitive Proxy Statement | ||
| o Definitive Additional Materials | ||
| o Soliciting Material under Rule 14a-12 | ||
Unifi, Inc.
(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):
| x | No fee required. |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
| o | Fee paid previously with preliminary materials. |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: |
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
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7201 West Friendly Avenue
Greensboro, North Carolina 27410
September 26,
2006
TO THE
SHAREHOLDERS OF
UNIFI, INC.
UNIFI, INC.
The Annual Meeting of Shareholders of your Company will be held
at 9:00 A.M. Eastern Daylight Savings Time on
Wednesday, October 25, 2006, at the Company’s
corporate headquarters at 7201 West Friendly Avenue, Greensboro,
North Carolina. The Notice of the Annual Meeting and the Proxy
Statement containing detailed information about the business to
be transacted at the meeting, as well as a proxy card, are
enclosed.
Detailed information relating to the Company’s activities
and operating performance is contained in our Annual Report on
Form 10-K
for the fiscal year ended June 25, 2006, which is also
enclosed.
You are cordially invited to attend the Annual Meeting of
Shareholders in person. We would appreciate your signing, dating
and returning the accompanying proxy card in the enclosed
postage-paid return envelope so that your shares can be voted in
the event you are unable to attend the meeting. Your proxy will
be returned to you if you are present at the meeting and so
request.
Sincerely,
Brian R. Parke
Chairman, President and CEO
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7201 West Friendly Avenue
Greensboro, North Carolina 27410
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 25, 2006
TO BE HELD ON OCTOBER 25, 2006
To
The Shareholders of Unifi,
Inc.:
The Annual Meeting of Shareholders of Unifi, Inc. will be held
at the Company’s corporate headquarters at 7201 West
Friendly Avenue, Greensboro, North Carolina, on Wednesday,
October 25, 2006 at 9:00 A.M. Eastern Daylight
Savings Time, for the following purposes:
| 1. | To elect eight (8) directors to serve until the next Annual Meeting of Shareholders or until their respective successors are duly elected and qualified. |
| 2. | To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. |
The Board of Directors, under the provisions of the
Company’s By-Laws, has fixed the close of business on
September 22, 2006, as the record date for determination of
Shareholders entitled to notice of and to vote at the Annual
Meeting of Shareholders or any adjournment or adjournments
thereof. The transfer books of the Company will not be closed.
YOUR VOTE IS IMPORTANT and the Board of Directors would
appreciate your signing, dating and returning the accompanying
proxy card promptly. A postage-paid return envelope is enclosed
for your convenience. A proxy may be revoked by the Shareholder
at any time before it is exercised.
By Order Of The Board Of
Directors:
Charles F. McCoy
Vice President, Secretary and General Counsel
Greensboro, North Carolina
September 26, 2006
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7201 West Friendly Avenue
Greensboro, North Carolina 27410
This solicitation of the enclosed proxy is made by the Board of
Directors (the “Board”) of Unifi, Inc. (the
“Company”) for use at the Annual Meeting of
Shareholders to be held Wednesday, October 25, 2006, at
9:00 A.M. Eastern Daylight Savings Time, at the
Company’s corporate headquarters located at 7201 West
Friendly Avenue, Greensboro, North Carolina, or at any
adjournment or adjournments thereof (the “Annual
Meeting”). This statement and the form of proxy will first
be mailed to the Shareholders entitled to notice of the Annual
Meeting on or about September 26, 2006.
The expense of this solicitation will be borne by the Company.
Solicitations of proxies may be made in person, by mail or by
telephone, telegraph 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 D. F. King & Company to assist in the
solicitation of proxies and will pay such firm a fee estimated
not to exceed $8,000 plus 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.
The Company’s common stock (the “Common Stock”),
par value $.10 per share is the only class of stock of the
Company. Shareholders of record, as of the close of business on
September 22, 2006 (the “Record Date”), will be
entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. As of the Record Date, the Company had
outstanding 52,208,467 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.
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 eight (8) nominees
for director named in this Proxy Statement, and (ii) in the
discretion of the proxy holders on any other matters presented
at the Annual Meeting. If the enclosed form of proxy is
executed and returned it may, nevertheless, be revoked at any
time before it is voted by written notice to the Secretary of
the Company, by submitting a properly signed proxy with a later
date or by the Shareholder personally attending and voting his
or her shares at the Annual Meeting.
VOTING OF
SHARES
The holders of a majority of the outstanding shares entitled to
vote, present in person or represented by proxy at this meeting,
will constitute a quorum for the transaction of business. New
York law and the Company’s By-Laws require the presence of
a quorum at annual meetings of shareholders. Abstentions and
broker non-votes are counted as present for purposes of
determining a quorum.
Each share represented is entitled to one vote on all matters
properly brought before the Annual Meeting. Please specify your
choice by marking the appropriate box on the enclosed proxy card
and signing, dating and returning it. Directors will be elected
by a plurality of the votes cast by the Shareholders at a
meeting in which a quorum is present. Therefore, shares not
voted and broker non-votes will have no affect on the election
of directors.
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INFORMATION
RELATING TO PRINCIPAL SECURITY HOLDERS
The following table sets forth information, as of
September 1, 2006, 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. The nature of beneficial
ownership of the shares indicated is set forth in the notes
following the table.
|
Name and Address of |
Amount and Nature |
Percent of |
||||||
|
Beneficial Owner
|
Beneficially Owned(1) | Class | ||||||
|
Dimensional Fund Advisors
Inc.(2)
|
4,605,462 | 8.83 | % | |||||
| 1299 Ocean Avenue | ||||||||
| 11th Floor | ||||||||
| Santa Monica, CA 90401 | ||||||||
| (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 Securities and Exchange Commission (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 February 6, 2006, Dimensional Fund Advisors Inc., an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, may be deemed to beneficially own 4,605,462 shares by virtue of having sole voting and dispositive power over 4,605,462 shares. |
ELECTION
OF DIRECTORS
General
Information —
The Board presently is fixed at eight (8) members. All the
nominees for election are presently serving 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 persons named in the proxy.
Set forth below is the name of each of the eight
(8) nominees for election to the Board, as well as each
such person’s age, his or her current principal occupation
(which has continued for at least the past five years unless
otherwise indicated) together with the name and principal
business of the company by which such person is employed, the
period during which such person has served as director, all
positions and offices that such person holds with the Company
and such person’s directorships in 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.
NOMINEES
FOR ELECTION AS DIRECTORS
WILLIAM J. ARMFIELD, IV (71) —
Mr. Armfield has been the President of Spotswood Capital,
LLC, Greensboro, North Carolina, a private investment company
since 1995. 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
Unifi, Inc. Mr. Armfield was the Vice Chairman and a
director of the Company from 1991 to December of 1995.
Mr. Armfield again became a director of the Company in
2001, and is a member of the Company’s Audit Committee and
Compensation Committee (Chair). Mr. Armfield serves as the
Audit Committee financial expert.
R. WILEY BOURNE, JR. (69) —
Mr. Bourne is the retired Vice-Chairman and Executive Vice
President of Eastman Chemical Company, Kingsport, Tennessee,
which position he held from 1994 to 2000. Mr. Bourne
has been a director of the Company since 1997, and is a member
of the Company’s Corporate Governance and Nominating
Committee and Audit Committee (Chair).
CHARLES R. CARTER (74) — Mr. Carter is
the retired Minister of the Forest Hills Presbyterian Church,
High Point, North Carolina, which position he held from 1967 to
1997. Mr. Carter has been a director of the Company
since 1982, and is a member of the Company’s Compensation
Committee and Corporate Governance and Nominating Committee
(Chair).
SUE W. COLE (55) — Ms. Cole is a
Principal of Granville Capital, Inc. and has been since July
2006. Prior to joining Granville Capital, Inc. she had been
the Regional Chief Executive Officer, Mid-Atlantic Region, for
U.S. Trust
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Company, N.A. since July 2003. In July 2003, U.S. Trust
Company of North Carolina merged with U.S. Trust Company,
N.A. Prior to the merger she had been the President, from 1997
to 2003, and President and Chief Executive Officer, from 2001 to
2003, of U.S. Trust Company of North Carolina. She also
serves as a member of the Board of Directors of Martin Marietta
Materials, Inc. She became a director of the Company in 2001,
and is a member of the Company’s Audit Committee and
Compensation Committee.
J.B. DAVIS (61) — Mr. Davis is the
President and Chief Executive Officer of Klaussner Furniture
Industries, Inc., Asheboro, North Carolina. Mr. Davis
has been an Executive Officer and director of Klaussner
Furniture Industries, Inc. since February 1970 and was elected
as President and Chief Executive Officer in 1981. Mr. Davis
has been a director of the Company since 1996, and is a member
of the Company’s Corporate Governance and Nominating
Committee.
KENNETH G. LANGONE (70) — Mr. Langone
has been the President and Chief Executive Officer of Invemed
Associates, LLC, an investment banking firm, New York, New York,
since 1974. Mr. Langone is a director of ChoicePoint
Inc., The Home Depot, Inc. and YUM! Brands, Inc.
Mr. Langone has been a director of the Company since 1969.
DONALD F. ORR (63) — Mr. Orr has been
the Chairman of Sweet Pea Capital, Greensboro, North Carolina,
an investment capital firm, since November, 1978.
Mr. Orr has been a director of the Company since 1988, and
served as Chairman of the Board from October 2000 to April 2004.
Additionally, he has served as the independent “Lead
Director” of the Board since October 2004. He is also a
member of the Company’s Audit Committee, Compensation
Committee and Corporate Governance and Nominating Committee.
BRIAN R. PARKE (58) — Mr. Parke has
been the Chief Executive Officer of the Company since January
2000 and the President of the Company since 1999. He also
served as Chief Operating Officer of the Company from 1999 to
2000. Prior to that time, Mr. Parke had been the Manager or
President of the Company’s former Irish subsidiary (Unifi
Textured Yarns Europe Limited) since its acquisition by the
Company in 1984 and became a Vice President of the Company in
October 1993. Mr. Parke was elected to the Board in July
1999 and was elected Chairman of the Board in 2004.
No director has a family relationship as close as first cousin
with any other director, nominee for director or executive
officer of the Company.
The Board recommends that the Shareholders vote to elect
all of the nominees as directors.
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BENEFICIAL
OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND EXECUTIVE OFFICERS
BY DIRECTORS AND EXECUTIVE OFFICERS
The following table presents information regarding the
beneficial ownership of the Company’s Common Stock, within
the meaning of applicable securities regulations, of all current
directors of the Company and each of the executive officers
named in the Summary Compensation Table included herein, and of
such directors and all executive officers of the Company as a
group, all as of September 1, 2006.
|
Amount and Nature of |
Percentage |
|||||||
|
Name
|
Beneficial Ownership(1) | of Class | ||||||
|
William J. Armfield, IV (2)
|
932,695 | 1.69 | % | |||||
|
R. Wiley Bourne, Jr. (3)
|
21,320 | * | ||||||
|
Charles R. Carter (4)
|
30,501 | * | ||||||
|
Thomas H. Caudle, Jr. (5)
|
256,810 | * | ||||||
|
Sue W. Cole
|
10,000 | * | ||||||
|
J. B. Davis (6)
|
40,000 | * | ||||||
|
Benny L. Holder (7)
|
258,166 | * | ||||||
|
Kenneth G. Langone (8)
|
2,205,000 | 4.0 | % | |||||
|
William M. Lowe, Jr. (9)
|
428,333 | * | ||||||
|
Charles F. McCoy (10)
|
234,894 | * | ||||||
|
Donald F. Orr (11)
|
161,364 | * | ||||||
|
Brian R. Parke (12)
|
1,550,759 | 2.8 | % | |||||
|
All directors and executive
officers as a group (14 persons) (13)
|
6,303,747 | 11.45 | % | |||||
| * | Represents less than one percent (1%) of the Company’s Common Stock. | |
| (1) | All shares are owned directly and with sole voting and investment power, except as otherwise noted. | |
| (2) | Includes 2,680 shares held in trust for the benefit of Mr. Armfield’s children, as to which he has shared voting and investment power, which shares are deemed to be beneficially owned by him. | |
| (3) | Includes 20,000 shares that Mr. Bourne has the right to purchase under presently exercisable stock options granted to him by the Company, as to which he would have sole voting and investment power upon acquisition, and 1,320 shares owned by his wife, as to which she has sole voting and investment power, which shares are deemed to be beneficially owned by him. | |
| (4) | Includes 10,000 shares that Mr. Carter has the right to purchase under presently exercisable stock options granted to him by the Company, as to which he would have sole voting and investment power upon acquisition. | |
| (5) | Includes 251,890 shares that Mr. Caudle has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 1, 2006, as to which he would have sole voting and investment power upon acquisition. | |
| (6) | Includes 20,000 shares that Mr. Davis has the right to purchase under presently exercisable stock options granted to him by the Company, as to which he would have sole voting and investment power upon acquisition. | |
| (7) | Includes 253,166 shares that Mr. Holder has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 1, 2006, as to which he would have sole voting and investment power upon acquisition. | |
| (8) | Includes 10,000 shares that Mr. Langone has the right to purchase under presently exercisable stock options granted to him by the Company, as to which he would have sole voting and investment power upon acquisition, 135,000 shares owned by Invemed Associates, LLC, in which Mr. Langone owns 81%, and 1,885,000 shares owned by Invemed Catalyst Fund, LLP of which Mr. Langone has shared voting and investment power. | |
| (9) | Includes 353,333 shares that Mr. Lowe has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 1, 2006, as to which he would have sole voting and investment power upon acquisition. | |
| (10) | Includes 226,890 shares that Mr. McCoy has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 1, 2006, as to |
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| which he would have sole voting and investment power upon acquisition, and 1,100 shares jointly owned with his wife as to which he has shared voting and investment power. | ||
| (11) | Includes 10,000 shares that Mr. Orr has the right to purchase under presently exercisable stock options granted to him by the Company, as to which he would have sole voting and investment power upon acquisition, and 3,950 shares owned by the Orr Family Trust over which he has shared voting and investment power. | |
| (12) | Includes 1,493,159 shares that Mr. Parke has the right to purchase under stock options granted to him by the Company that are currently exercisable or become exercisable within 60 days of September 1, 2006, as to which he would have sole voting and investment power upon acquisition. | |
| (13) | Includes an aggregate 173,905 shares that two additional executive officers have the right to purchase under stock options granted by the Company that are currently exercisable or become exercisable within 60 days of September 1, 2006, as to which they would have sole voting and investment power upon acquisition. |
DIRECTORS’
COMPENSATION
During the fiscal year ended June 25, 2006, each director,
who was not an employee of the Company, was paid an annual
retainer of $24,000 and an additional $1,000 for each Board
meeting attended and for each meeting of Board committees on
which they serve when such meeting was held on a day other than
a day scheduled for a regular Board meeting. Each such director
was also reimbursed for reasonable expenses incurred in
attending those meetings. During fiscal year 2006, Mr. Orr,
as Lead Director of the Board, was paid $15,000 in addition to
his regular director fees. The Chairman of each of the
Company’s Audit Committee, Compensation Committee and
Corporate Governance and Nominating Committee was also paid
$15,000 each, in addition to their regular directors fees, for
serving in that capacity on those committees. Directors who are
employees of the Company are paid an attendance fee of $1,000
for each Board meeting attended. Directors who attend Board or
committee meetings via telephone conferencing receive attendance
fees as if they were physically present at such Board or
committee meetings.
COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors has three (3) standing committees:
the Compensation Committee, the Audit
Committee, and the Corporate Governance and
Nominating Committee. The Compensation Committee
(composed of Messrs. Armfield (Chair), Carter, Orr
and Ms. Cole) met five times during the last fiscal year.
The Audit Committee (composed of
Messrs. Bourne (Chair), Armfield, Orr and Ms. Cole)
met six times during the last fiscal year. The Corporate
Governance and Nominating Committee (composed of
Messrs. Carter (Chair), Bourne, Davis and Orr) met two
times during the last fiscal year.
The Compensation Committee operates under a
written charter, adopted in April 2003 and amended in July 2004.
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 Committee also administers
and grants stock options to the Company’s officers,
employees and consultants pursuant to the Company’s
equity-based plans, including the 1999 Unifi, Inc. Long-term
Incentive Plan (the “1999 Plan”). Each member of the
Compensation Committee is an independent director, in accordance
with the independence requirements of the New York Stock
Exchange Corporate Governance Standards.
The Audit Committee operates under a written
charter, adopted in April 2000 and most recently amended in July
2004. 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 compliance by the Company with legal and
regulatory requirements, (iii) the independent
auditor’s independence and qualifications, and
(iv) the performance of the Company’s internal audit
function and independent auditors. The Audit Committee, among
other things, is responsible for the appointment, compensation,
retention, and oversight of the Company’s independent
auditors and reviews the financial statements, audit reports,
internal controls and internal audit procedures. Each member of
the Audit
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Committee is an independent director, in accordance with the
independence requirements of the SEC and the New York Stock
Exchange Corporate Governance Standards.
The Corporate Governance and Nominating Committee
operates under a written charter, adopted in April 2003
and amended in July 2004. The Corporate Governance and
Nominating Committee is responsible for, among other things,
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 re-election as directors of the Company. It is also
responsible for recommending to the Board for the Board’s
approval all committee members and chairpersons. The Corporate
Governance and Nominating 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 Corporate Governance and Nominating
Committee reviews the Corporate Governance Issues and Policies
Guidelines (the “Corporate Governance Guidelines”)
from time to time and recommends to the Board any changes to the
Corporate Governance Guidelines. The Corporate Governance and
Nominating Committee also monitors compliance with the
Company’s Ethical Business Conduct Policy Statement (the
“Policy Statement”), reviews the Policy Statement from
time to time and provides recommendations to the Board for any
changes to the Policy Statement. Each member of the Corporate
Governance and Nominating Committee is an independent director,
in accordance with the independence requirements of the New York
Stock Exchange Corporate Governance Standards.
SHAREHOLDER
RECOMMENDATIONS FOR DIRECTOR NOMINEES
The Corporate Governance and Nominating Committee will consider
those recommendations by Shareholders of director nominees which
are submitted in writing with biographical and business
experience information to the Secretary of the Company, in the
manner described in the section entitled “Shareholder
Proposals” contained in this Proxy Statement. All nominees
for director must demonstrate integrity, accountability,
informed judgment, financial literacy, passion, creativity and
vision. In addition, the Board is comprised of directors from
various backgrounds and professions in order to maximize
perspective and ensure a wealth of experiences to inform its
decisions. Men and women of different ages, races and ethnic
backgrounds can contribute different, useful perspectives, and
can work effectively together to further the Company’s
mission. The Corporate Governance and Nominating 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. Shareholder nominees will be analyzed by the Corporate
Governance and Nominating Committee in the same manner as
nominees that are otherwise considered by the Corporate
Governance and Nominating Committee.
ATTENDANCE
OF DIRECTORS
The Board met four (4) times during fiscal year 2006. All
directors attended at least seventy-five percent (75%) of the
aggregate number of meetings of the Board and all 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,
except for Mr. Davis, who attended sixty percent (60%) of
the aggregate of such meetings.
CORPORATE
GOVERNANCE MATTERS
Director
Independence
For a director to be considered independent under the New York
Stock Exchange Corporate Governance Standards, the Board must
affirmatively determine that the director has no direct or
indirect “material relationship” with the Company,
other than as a director. In accordance with the New York Stock
Exchange Corporate Governance Standards, the Board has adopted
categorical standards to assist it in making independence
determinations. These Director Independence Standards are
attached to this Proxy Statement as Appendix A and are also
available on the Company’s website referenced below as
Exhibit A to the Corporate Governance Guidelines.
After considering these categorical standards, the New York
Stock Exchange Corporate Governance Standards, and all other
relevant facts and circumstances, including commercial or
charitable relationships between the directors and the Company,
the Board has determined that all of its members meet the
Company’s categorical standards, meet the independence
requirements of the New York Stock Exchange and are independent,
except for Brian R. Parke who is employed by the Company.
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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. Each of the Audit Committee, the Compensation
Committee and the Corporate Governance and Nominating 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”
section. In addition, print copies of the Corporate Governance
Guidelines and the committee charters are available to any
Shareholder that requests a copy. Information on the
Company’s website, however, does not form a part of this
Proxy Statement.
Audit
Committee Financial Expert
The Board has determined that at least one member of the Audit
Committee, William J. Armfield, IV, is an audit committee
financial expert. Mr. Armfield is “independent”
as that term is defined in the New York Stock Exchange Corporate
Governance Standards.
Executive
Sessions of Non-Management Directors
Non-management Board members meet without management present at
regularly scheduled executive sessions. In addition, to the
extent that, from time to time, the group of non-management
directors includes directors that are not independent, at least
once a year there will be scheduled an executive session
including only independent directors. During fiscal 2006,
Mr. Orr, as the Company’s independent Lead Director,
presided over meetings of the independent and non-management
directors.
Code of
Business Conduct and Ethics; Ethical Business Conduct Policy
Statement
The Company has adopted a written Code of Business Conduct and
Ethics applicable to members of the Board and executive
officers, including the Chief Executive Officer and Chief
Financial Officer (the “Code of Business Conduct and
Ethics”). The Company has also adopted the Policy Statement
that applies to all employees. The Code of Business Conduct and
Ethics and the Policy Statement are available on the
Company’s website referenced above, under the
“Investor Relations” section and printed copies of
each are available to any Shareholder that requests a copy. Any
amendments to or waiver of the Code of Business Conduct and
Ethics will be disclosed on the Company’s website promptly
following the date of such amendment or waiver. Information on
the Company’s website, however, does not form a part of
this Proxy Statement.
Shareholder
Communications
You may communicate directly with the entire Board, any
committee of the Board, the Chair of any Board committee, any
individual director, the independent Lead Director, the
independent or non-management directors, as a group, or any
other group of directors by writing to: Unifi, Inc. Board of
Directors, c/o Corporate Compliance Officer, 7201 West
Friendly Avenue, Greensboro, North Carolina 27410. Any
correspondence sent in this manner and directed to the Lead
Director, any particular director, any group of directors, or
any particular committee will be forwarded accordingly. If no
specific addressee is provided, the communication will be
forwarded to the Chairman of the Board. Reference is also made
to Article VIII of the Corporate Governance Guidelines.
Director
Attendance at Annual Meetings
At the 2005 Annual Meeting of Shareholders, six of the eight
members of the Board were in attendance. The Company believes
that the Annual Meeting is an opportunity for Shareholders to
communicate directly with the directors. Directors are
encouraged to attend the Annual Meeting of Shareholders.
COMPENSATION
COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
None of the individuals that served as a member of the
Compensation Committee during fiscal 2006 were at any time
officers or employees of the Company or any of its subsidiaries
or had any relationship with the Company requiring disclosure
under SEC regulations, except for the relationship between
Mr. Orr’s son, Donald Fraser Orr, Jr., and the
Company described under “Insider Transactions” below.
7
Table of Contents
INSIDER
TRANSACTIONS
Mr. Langone is a director, stockholder, and Chairman of the
Board of Salem National Corporation. In fiscal 2006, the Company
paid Salem Leasing Corporation, a wholly owned subsidiary of
Salem National Corporation, $3,079,689 in connection with leases
of tractors and trailers, and for related services. The terms of
the Company’s leases with Salem Leasing Corporation are, in
management’s opinion, no less favorable than the Company
would have been able to negotiate with an independent third
party for similar equipment and services.
Mr. Orr’s son, Donald Fraser Orr, Jr., was the
General Manager of the Company’s Polyester Business Unit
from the beginning of the fiscal year through November 4,
2005, when he resigned from the Company, and earned a salary of
$54,017 for his services during fiscal 2006. Donald Fraser
Orr, Jr. was not an executive officer of the Company.
AUDIT
COMMITTEE REPORT
The Company’s Audit Committee consists of four independent
directors and operates under a written charter adopted by the
Board and amended in July 2004. The current members of the Audit
Committee are R. Wiley Bourne, Jr., who is the Committee
Chair, William J. Armfield, IV, Sue W. Cole, and Donald F. Orr.
The Company’s management is responsible for the
Company’s financial statements and reporting process and
for establishing and maintaining an adequate system of internal
control over financial reporting. Ernst & Young LLP
(E&Y), the Company’s independent registered public
accounting firm, is responsible for auditing the Company’s
consolidated financial statements, for attesting to
Management’s Report on Internal Control over Financial
Reporting, and for assessing the effectiveness of internal
control over financial reporting. The Audit Committee monitors
and oversees these processes and is directly responsible for the
appointment, compensation, retention and oversight of the
Company’s independent registered public accounting firm.
Information related to the fees paid to E&Y for services
during fiscal 2005 and 2006 is included in the Proxy Statement
in the section entitled “Information Relating to the
Company’s Independent Registered Public Accounting
Firm”.
To fulfill its responsibilities, the Audit Committee:
| • | reviewed and discussed with the Company’s management and the independent registered public accounting firm the Company’s audited consolidated financial statements for the fiscal year ended June 25, 2006 and Management’s Report on Internal Control over Financial Reporting for the fiscal year ended June 25, 2006; | |
| • | reviewed management’s representations to us that those audited consolidated financial statements were prepared in accordance with generally accepted accounting principles; | |
| • | discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards 61 (Codification of Statements on Auditing Standards), as amended; and | |
| • | received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and has discussed with E&Y their independence from the Company. |
Based on its discussions with management and the independent
registered public accounting firm, the representations of
management and the report of the independent registered public
accounting firm, the Audit Committee recommended to the Board
that the Company’s audited consolidated financial
statements for fiscal year 2006 be included in the
Company’s Annual Report on
Form 10-K
for the fiscal year ended June 25, 2006 for filing with the
Securities and Exchange Commission.
Submitted by the Audit Committee of the Board:
R. Wiley Bourne, Chairperson
William J. Armfield, IV
Sue W. Cole
Donald F. Orr
8
Table of Contents
REPORT OF
THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
ON EXECUTIVE COMPENSATION
This report of the Compensation Committee of the Board of
Directors (the “Committee”) sets forth the
Company’s compensation policies with respect to the
executives of the Company, including the named executives for
whom specific compensation information is reported in the tables
included under “Executive Officers and Their
Compensation.”
The Committee was composed of four independent directors during
fiscal 2006, in accordance with the independence requirements of
the New York Stock Exchange Corporate Governance Standards. The
Committee discharges the Board’s responsibilities relating
to compensation of the Company’s executive officers.
Its duties include the review of performance and approval of
salaries and other types of compensation for senior management
of the Company, advising senior management with respect to the
range of compensation to be paid to other employees of the
Company, administering and making recommendations to the full
Board concerning benefit plans for the Company’s directors,
officers and employees and recommending benefit programs and
future objectives and goals for the Company.
EXECUTIVE
COMPENSATION POLICY
The Committee has developed an executive compensation policy
that is primarily based upon the practice of
pay-for-performance.
In conjunction with this policy, the Committee strives to create
a direct relationship between pay levels and individual
performance, corporate performance and returns to Shareholders.
The Committee vigilantly monitors the results of its executive
compensation policy to assure that compensation payable to
executive officers provides overall competitive pay levels
compared to peer companies, creates proper incentive to enhance
Shareholder value, rewards superior performance, and is
justified by returns available to Shareholders. In accordance
with this policy, the Committee reviews and approves corporate
goals and objectives relevant to the compensation of each
executive officer of the Company, 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.
SUMMARY
OF EXECUTIVE COMPENSATION COMPONENTS
The Committee views executive compensation in three component
parts: base salary, annual incentive compensation and long-term
incentive compensation. The primary goals of the Committee in
setting executive compensation are: (i) to ensure that the
Company’s compensation program for executive officers
attracts and retains qualified, talented, and highly motivated
personnel, links executive compensation to corporate and
individual performance, and is administered in an equitable
manner; and (ii) to align the interests of the executives
with those of the Shareholders and also with the Company’s
performance.
The annual and long-term incentive portions of the
executive’s compensation are intended to achieve the
Committee’s goal of aligning the executive’s interests
with those of the Shareholders and with Company performance.
These portions of an executive’s compensation are placed at
risk and are linked to the accomplishment of specific results
that are designed to benefit the Shareholders and the Company,
both in the long and short term. As a result, during years of
excellent performance, the executives are provided the
opportunity to earn a higher competitive level of compensation
and, conversely, in years of below average performance, their
compensation may be below competitive levels.
The Committee has considered the impact of Section 162(m)
of the Internal Revenue Code on the Company’s executive
compensation program. Section 162(m) denies a public
company a deduction, except in limited circumstances, for
compensation paid to “covered employees,” i.e., those
employees named in the “Summary Compensation Table”
below, to the extent such compensation exceeds $1,000,000. Based
on its review of the likely impact of Section 162(m), the
Committee may in the future recommend changes to the
Company’s benefit plans in order to qualify compensation
paid to covered employees for such exception.
BASE
SALARIES
The 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
9
Table of Contents
evaluation. The Committee also provides general oversight of
management’s decisions concerning the performance and
compensation of the other officers of the Company and reviews
compensation ranges and compensation strategy relating to other
personnel. In carrying out its duties, the Committee considers
the historical practices of the Company, the officer’s
leadership and advancement of the Company’s long term
strategy, plans and objectives, individual performance and
contribution to the Company’s success and salary levels of
other executives holding similar positions in certain other
textile companies. The base salary for Mr. Lowe is now
covered by an agreement with the Company described in this Proxy
Statement in the section entitled “Employment and
Termination Agreements.”
ANNUAL
INCENTIVE COMPENSATION
The Company rewards executives based on each fiscal year’s
results and reflects a balance between overall corporate
performance and performance of the specific areas of the Company
under the individual’s control. The annual cash incentive
compensation, in the form of bonuses, is payable based upon the
achievement of predetermined, objective performance goals which
are specific to each executive. In addition to the objective
criteria, bonuses may also be granted based upon the subjective
evaluation of the performance and contribution of the respective
executive to the Company.
Mr. Lowe’s annual incentive compensation for fiscal
2006 was based entirely upon the Company’s achievement of
its budgeted EBITDA target capped at a maximum 50% of his fiscal
2006 base salary. The annual incentive compensation for
Messrs. Caudle, McCoy and Holder was based upon the
Company’s achievement of two component targets, budgeted
EBITDA and working capital, capped at an aggregate maximum of
40% of their respective fiscal 2006 base salaries. As a result
of the Company’s performance during fiscal 2006, annual
incentive compensation was paid at a level of 42.5% of
Mr. Lowe’s fiscal 2006 base salary and at a level of
23.4% of each of the respective fiscal 2006 base salaries of
Messrs. Caudle, McCoy and Holder. Information regarding
Mr. Parke’s annual incentive compensation is covered
under “2006 Compensation for Chief Executive Officer.”
LONG-TERM
INCENTIVE COMPENSATION
The 1999 Plan was approved by the Shareholders of the Company at
their 1999 Annual Meeting. The 1999 Plan provides for the grant
of incentive stock options, non-qualified stock options,
restricted stock awards and performance-based awards.
The Company also has two other stock option plans: the 1996
Incentive Stock Option Plan; and the 1996 Non-Qualified Stock
Option Plan. No additional options will be granted under these
two option plans; however, all outstanding option grants remain
in full force and effect under their respective terms.
Stock Options — Stock options provide incentive
for the creation of Shareholder value over the long term since
the full benefit of an executive officer’s compensation
package cannot be realized unless the Common Stock appreciates
in value during the term of the option. Unless otherwise
provided, options may be exercised until the earlier of ten
(10) years from the date of grant or, as to the number of
shares then exerciseable, upon the termination of employment of
the participant other than by death, disability, retirement, or
change of control, when all options vest. No stock options were
granted to the executive officers named in the Summary
Compensation Table during fiscal year 2006.
Restricted Stock — Restricted stock is granted
from time to time to executive officers, primarily for purposes
of retention. Restricted stock is subject to forfeiture and may
not be disposed of by the recipient until certain restrictions
established by the Compensation Committee lapse. Recipients of
restricted stock are not required to provide consideration other
than the rendering of their services. There were no grants of
restricted stock to the executive officers named in the Summary
Compensation Table during fiscal 2006.
SUPPLEMENTAL
RETIREMENT PLAN
In July 2006, the Company established an unfunded supplemental
retirement plan known as the Unifi, Inc. Supplemental Key
Employee Retirement Plan (the “Plan”) for a select
group of management employees (including the Chief Executive
Officer and the other executive officers) for the purpose of
providing supplemental retirement benefits. Participants in the
Plan are those employees of the Company or its subsidiaries who
are determined to be participants in the Plan by the Committee
in its sole and exclusive discretion.
10
Table of Contents
The Plan provides for an initial credit to each
participant’s account equal to three (3) times the
product of the participant’s base salary for the 2005
calendar year multiplied by the participant’s SERP Credit
Percentage
(81/2
% of the annual base salary for executive officers of the
Company and
51/2
% of the annual base salary for participants who are not
officers of the Company). Thereafter, as of the end of each
calendar year, each participant’s account shall be credited
with an amount equal to the product of such participant’s
base salary for such calendar year multiplied by the
participant’s applicable SERP Credit Percentage. Each
participant’s account will be adjusted as if the balance in
such account had been invested in the stocks that make up the
Standard & Poor’s 500 Index in the same proportion
as their respective weighting therein. Upon a participant’s
termination of employment with the Company, the participant
shall be entitled to receive the amount credited to such
participant’s account in a single lump sum payable six
months after the participant’s termination of employment
with the Company, except in the event that the
participant’s termination is due to death or disability, in
which case the participant or the participant’s designated
beneficiary, as applicable, shall immediately be entitled to
such payout.
OTHER
BENEFITS
It is the view of the Committee that offering certain
perquisites helps in the operation of the Company’s
business as well as assists the Company to recruit and retain
key executives. Perquisites are intended to serve a specific
business need for the benefit of the Company; however, it is
understood that some may be used for personal reasons as well.
When perquisites are utilized for purely personal reasons, the
cost is imputed to the executive officer as income and the
executive officer is responsible for all applicable taxes. The
executive officers of the Company are eligible to receive group
life insurance benefits on the same terms applicable to the
Company’s other employees and also participate in the
Company’s Retirement Savings Plan. To the extent they are
required to be reported, these benefits are disclosed in the
Summary Compensation Table that follows this report.
2006
COMPENSATION FOR CHIEF EXECUTIVE OFFICER
The general compensation policy described previously is equally
applicable to the compensation decisions made with respect to
Mr. Parke, the Company’s CEO. Mr. Parke’s
base salary was $750,000, as provided by the terms of his
employment agreement with the Company described under
“Employment and Termination Agreements.” His long-term
compensation during fiscal 2006 was based on the same factors
generally applicable to the other executive officers of the
Company described above. As a result, Mr. Parke was not
granted any options or shares of restricted stock during fiscal
2006.
Annual incentive compensation for Mr. Parke was based upon
two component targets, the Company’s achievement of its
budgeted EBITDA and the Company’s Chinese joint
venture’s achievement of its budgeted EBITDA, and was
capped at an aggregate maximum of 75% of his fiscal 2006 base
salary. As a result of the Company’s performance during
fiscal 2006 Mr. Parke merited annual incentive compensation
in the amount of $292,500, or 39.0% of his fiscal 2006 base
salary. However, consistent with his decision following fiscal
2005, Mr. Parke elected not to accept this compensation as
the Company was not profitable during fiscal 2006. As the
Company’s Chinese joint venture did not achieve its
budgeted EBITDA goals for fiscal 2006, no annual incentive
compensation was merited by Mr. Parke due to the
performance of the Chinese joint venture.
COMMITTEE’S
JUDGMENT
It is the judgment of the Compensation Committee that in fiscal
2006, and for the three fiscal years ending June 25, 2006,
the total compensation to the Company’s executive officers
was appropriate for the performance of the Company and to retain
and motivate such executives in the future.
Submitted by the Compensation Committee of the Board:
William J. Armfield, IV, Chairman
Charles R. Carter
Sue W. Cole
Donald F. Orr
Charles R. Carter
Sue W. Cole
Donald F. Orr
11
Table of Contents
EXECUTIVE
OFFICERS AND THEIR COMPENSATION
The following Summary Compensation Table shows the compensation
of the Chief Executive Officer (“CEO”), and the
Company’s four other most highly compensated executive
officers employed at the end of fiscal year 2006, in each case,
for services rendered in all capacities during the periods
indicated.
UNIFI,
INC. SUMMARY COMPENSATION TABLE
| Long Term Compensation | ||||||||||||||||||||||||||||
| Annual Compensation |
Restricted |
Securities |
All Other |
|||||||||||||||||||||||||
|
Other Annual |
Stock |
Underlying |
Compensation |
|||||||||||||||||||||||||
|
Name and Principal Position
|
Year | Salary | Bonus | Compensation(1) | Awards($)(2) | Options/SARs(#)(3) | ($)(4) | |||||||||||||||||||||
|
Brian R. Parke
|
2006 | $ | 750,000 | $ | — | $ | — | $ | — | — | $ | 20,257 | ||||||||||||||||
|
President, CEO
|
2005 | $ | 750,000 | $ | — | $ | 59,649 | $ | — | 600,000 | $ | 37,694 | ||||||||||||||||
|
and Chairman of the Board
|
2004 | $ | 750,000 | $ | — | $ | 80,011 | $ | — | — | $ | 30,914 | ||||||||||||||||
|
William M. Lowe, Jr.
|
2006 | $ | 550,008 | $ | 233,750 | $ | — | $ | — | — | $ | 6,781 | ||||||||||||||||
|
Vice President, COO
|
2005 | $ | 550,008 | $ | 220,003 | $ | — | — | 300,000 | $ | 134,962 | |||||||||||||||||
|
and Chief Financial Officer
|
2004 | $ | 175,000 | $ | 75,000 | $ | — | $ | 130,200 | 20,000 | $ | 41,903 | ||||||||||||||||
|
Thomas H. Caudle, Jr.
|
2006 | $ | 250,008 | $ | 58,502 | $ | — | $ | — | — | $ | 9,406 | ||||||||||||||||
|
Vice President, Global
|
2005 | $ | 237,208 | $ | 154,191 | $ | 857 | $ | — | 120,000 | $ | 12,529 | ||||||||||||||||
|
Operations
|
2004 | $ | 223,308 | $ | — | $ | 2,563 | $ | — | — | $ | 10,299 | ||||||||||||||||
|
Charles F. McCoy
|
2006 | $ | 215,004 | $ | 50,311 | $ | — | $ | — | — | $ | 9,260 | ||||||||||||||||
|
Vice President, Sec., General
|
2005 | $ | 209,504 | $ | 92,086 | $ | 9,086 | $ | — | 100,000 | $ | 13,844 | ||||||||||||||||
|
Counsel and Corp.
|
2004 | $ | 203,004 | $ | — | $ | 31,170 | $ | — | — | $ | 5,512 | ||||||||||||||||
|
Governance Officer
|
||||||||||||||||||||||||||||
|
Benny L. Holder
|
2006 | $ | 215,004 | $ | 50,311 | $ | — | $ | — | — | $ | 9,239 | ||||||||||||||||
|
Vice President, Information
|
2005 | $ | 209,504 | $ | 64,501 | $ | — | $ | — | 100,000 | $ | 10,698 | ||||||||||||||||
|
Technology
|
2004 | $ | 203,004 | $ | — | $ | — | $ | — | — | $ | 8,435 | ||||||||||||||||
| Footnotes: |
| (1) | As permitted by the SEC’s rules regarding disclosure of executive compensation in proxy statements, this column excludes perquisites and other personal benefits of the named executive officer if their total cost does not exceed the lesser of (i) 10% of the sum of the amounts of salary and bonus for the named executive officer, or (ii) $50,000. To the extent reportable, the amounts reported under “Other Annual Compensation” for the periods indicated include the following items: foreign housing expenses for Mr. Parke ($24,869 in 2005 and $20,415 in 2004); automobile allowance for Mr. Parke ($15,905 in 2005) and for Mr. McCoy ($13,295 in 2004); personal use of Company aircraft for Mr. Parke ($21,859 in 2004) and for Mr. McCoy ($9,791 in 2004); and tax reimbursement for Mr. Parke ($5,801 in 2005 and $17,669 in 2004), for Mr. Caudle ($857 in 2005 and $2,563 in 2004) and for Mr. McCoy ($9,086 in 2005 and $7,914 in 2004). The Company sold its aircraft in the 2004 fiscal year. | |
| (2) | On January 6, 2004, the Company granted Mr. Lowe 20,000 restricted shares. The closing price of the Common Stock as reported on the New York Stock Exchange was $6.51 per share on that date. Pursuant to the terms of this grant, Mr. Lowe receives the same cash dividends as other Shareholders owning Common Stock. The restrictions imposed on the restricted shares lapse with respect to one-fifth of the shares on January 6th each year, beginning with the year the shares were granted. At June 25, 2006, Mr. Lowe owned an aggregate of 8,000 restricted shares that had a market value of $23,600 based on the closing price of $2.95 per share of the Common Stock as reported by the New York Stock Exchange on that date. | |
| (3) | Amounts in this column reflect the number of stock options granted during such fiscal year to the listed individuals. | |
| (4) | The components of the amounts shown in this column for fiscal 2006 consists of the following: (i) a director’s fee for Mr. Parke of $4,000; (ii) insurance benefits as follows: Mr. Parke — $5,898; Mr. Lowe — $1,452; Mr. Caudle — $660; Mr. McCoy — $568; and Mr. Holder — $568; and (iii) allocation of the Company’s contribution to the Unifi, Inc. Retirement Savings Plan as follows: Mr. Parke — $10,359; Mr. Lowe — $5,329; Mr. Caudle — $8,746; Mr. McCoy — $8,692; and Mr. Holder — $8,671. |
12
Table of Contents
OPTION
GRANTS, EXERCISES AND OPTION/SAR VALUES
There were no options granted to the executive officers named in
the Summary Compensation Table during fiscal 2006. The following
table sets forth information regarding option exercises during
fiscal 2006 and the number and value of unexercised options held
at fiscal year-end.
AGGREGATED
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
OPTION/SAR VALUES
|
Number of Securities |
||||||||||||||||||||||||
|
Underlying Unexercised |
Value of Unexercised |
|||||||||||||||||||||||
|
Shares Acquired |
Value |
Options/SARS |
In-the-Money
Options/SARs |
|||||||||||||||||||||
|
on Exercise |
Realized |
at Year End | at Fiscal Year End (1) | |||||||||||||||||||||
|
Name
|
(#) | ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
|
Parke
|
0 | $ | 0 | 993,179 | 199,980 | $ | 75,992 | $ | 38,008 | |||||||||||||||
|
Lowe
|
0 | $ | 0 | 220,010 | 99,990 | $ | 37,996 | $ | 19,004 | |||||||||||||||
|
Caudle
|
0 | $ | 0 | 190,228 | 39,996 | $ | 15,198 | $ | 7,602 | |||||||||||||||
|
McCoy
|
0 | $ | 0 | 171,894 | 33,330 | $ | 12,665 | $ | 6,335 | |||||||||||||||
|
Holder
|
0 | $ | 0 | 198,170 | 33,330 | $ | 12,665 | $ | 6,335 | |||||||||||||||
| Footnotes: |
| (1) | The fair market value of the Company’s Common Stock at fiscal year-end, June 25, 2006, was $2.95. |
EMPLOYMENT
AND TERMINATION AGREEMENTS
Agreement
with Mr. Parke
Pursuant to an employment agreement between the Company and
Mr. Parke effective January 23, 2002, Mr. Parke
is employed by the Company as its President and Chief Executive
Officer for a rolling three (3) year term which is
automatically extended on a day by day basis until such date as
either the Company or Mr. Parke shall terminate the
automatic extensions by providing proper notice to the other.
Under the terms of the agreement, Mr. Parke will receive an
annual base salary of at least $750,000, plus any other
additional compensation or bonuses in the Board’s
discretion. In addition, Mr. Parke and his eligible family
members are entitled to participate in any benefit plans offered
to other senior executives of the Company on terms no less
favorable than offered to other executives.
Agreement
with Mr. Lowe
On July 25, 2006, the Company entered into an employment
agreement with William M. Lowe, Jr., the Company’s
Vice President, Chief Financial Officer and Chief Operating
Officer. The agreement provides for a rolling three
(3) year term which is automatically extended on a day by
day basis until such date as either the Company or Mr. Lowe
shall terminate the automatic extensions by providing proper
notice to the other. Under the terms of the agreement,
Mr. Lowe will receive an annual base salary of at least
$550,000, plus any other additional compensation or bonuses in
the discretion of the Compensation Committee. In addition,
Mr. Lowe and his eligible family members are entitled to
participate in any benefit plans and other benefits as are
offered to other senior executives of the Company on terms no
less favorable than offered to such other executives.
Change of
Control Agreement with Various Officers
The Company entered into Change of Control Agreements with
William M. Lowe, Jr., Thomas H. Caudle, Jr., Benny L.
Holder, and Charles F. McCoy on November 1, 2005 (each, an
“Officer”). The agreements provide that if an
Officer’s employment is terminated involuntarily, other
than by death or disability or cause, or voluntarily, other than
for good reason, after a change in control of the Company, such
Officer will receive certain benefits. The present value of
those benefits will be 2.99 times the average of such
Officer’s annual taxable compensation paid during the five
(5) calendar years (or the period of such Officer’s
employment with the Company if such Officer has been employed
13
Table of Contents
with the Company for less than five calendar years) preceding
the change of control of the Company, limited to the amount
deductible by the Company and as may be subject to excise taxes
under the Internal Revenue Code, all as determined by the
Company’s independent certified public accountants, whose
decision shall be binding upon the Company and such Officer.
These benefits will be paid to such Officer in equal
installments over a twenty-four (24) month period.
For purposes of the agreements, a change of control is deemed to
occur if, among other things, (i) there shall be
consummated any consolidation or merger of the Company or the
sale of all or substantially all of the assets of the Company,
(ii) the Shareholders of the Company have approved any plan
or proposal for the liquidation or dissolution of the Company,
(iii) any person acquires twenty percent (20%) or more of
the outstanding voting stock of the Company, or (iv) if
there is a change in the majority of directors under specified
conditions within a two (2) year period. The benefits under
these Change of Control Agreements are contingent and therefore
not reported under the Summary Compensation Table.
14
Table of Contents
PERFORMANCE
GRAPH — SHAREHOLDER RETURN ON COMMON STOCK
Set forth below is a line graph comparing the cumulative total
Shareholder return on the Company’s Common Stock with
(i) the New York Stock Exchange Composite Index, a broad
equity market index, and (ii) a peer group selected by the
Company in good faith (the “Peer Group”), assuming in
each case, the investment of $100 on June 25, 2001 and
reinvestment of dividends. Including the Company, the Peer Group
consists of fourteen publicly traded textile companies,
including Albany International Corp., Culp, Inc., Decorator
Industries, Inc., Dixie Group, Inc., Hallwood Group Inc.,
Hampshire Group, Limited, Innovo Group Inc., Interface, Inc.,
JPS Industries, Inc., Lyndall, Inc., Marisa Christina, Inc.,
Mohawk Industries, Inc., and Quaker Fabric Corporation.
COMPARISON
OF 5-YEAR
CUMULATIVE TOTAL RETURN*
AMONG UNIFI, INC., THE NYSE COMPOSITE INDEX AND A PEER GROUP
AMONG UNIFI, INC., THE NYSE COMPOSITE INDEX AND A PEER GROUP
|
Company
|
June 2001 | June 2002 | June 2003 | June 2004 | June 2005 | June 2006 | ||||||||||||||||||
|
Unifi, Inc.
|
$ | 100.00 | $ | 137.11 | $ | 75.47 | $ | 33.46 | $ | 49.81 | $ | 37.11 | ||||||||||||
|
NYSE Composite
|
$ | 100.00 | $ | 86.38 | $ | 86.53 | $ | 103.07 | $ | 113.14 | $ | 122.41 | ||||||||||||
|
Peer Group
|
$ | 100.00 | $ | 159.33 | $ | 134.89 | $ | 169.19 | $ | 185.14 | $ | 172.42 | ||||||||||||
| * | $100 invested on June 24, 2001 in stock index — including reinvestment of dividends. |
INFORMATION
RELATING TO THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Pursuant to its authority, the Company’s Audit Committee
will select the Company’s independent registered public
accounting firm for the current fiscal year at a meeting
subsequent to the Annual Meeting of Shareholders.
Ernst & Young LLP was selected as the Company’s
independent registered public accounting firm for fiscal year
ended June 25, 2006. Ernst & Young LLP has been
the Company’s independent auditors since 1990.
Representatives of Ernst & Young LLP will attend the
Annual Meeting of Shareholders. They will have the opportunity
to make a statement if they so desire and to answer appropriate
questions from Shareholders.
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Fees Paid
to Independent Registered Public Accounting Firm
The fees paid to Ernst & Young LLP for services
rendered to the Company for the fiscal years indicated below
were as follows:
| Fiscal Year Ended | ||||||||
|
June 25, |
June 26, |
|||||||
| 2006 | 2005 | |||||||
|
Audit Fees(1)
|
$ | 1,545,500 | $ | 945,500 | ||||
|
Audit-Related Fees(2)
|
12,000 | 86,000 | ||||||
|
Tax Fees(3)
|
68,450 | 129,000 | ||||||
|
All Other Fees(4)
|
2,000 | 1,500 | ||||||
| (1) | For fiscal 2006, includes $291,000 of fees for consultation services related to the $190 million 11.5% senior secured note offering. | |
| (2) | For fiscal 2006, this amount consists of aggregate fees paid for audit services related to the employee benefit plan of the Company’s former Irish subsidiary. For fiscal 2005, this amount consists of aggregate fees paid for audit services related to the employee benefit plan of the Company’s former Irish subsidiary, due diligence for the Company’s Chinese joint venture and fees for consultations related to audit and accounting matters. | |
| (3) | Consists of aggregate fees paid for tax compliance, consultation and related tax matters. | |
| (4) | For fiscal 2006, this amount consists of fees paid for the use of “EYOnline,” an Ernst & Young LLP research tool, and for continuing professional education seminars. For fiscal 2005, this amount consists entirely of fees paid for the use of “EYOnline”. |
Policy on
Audit Committee Pre-Approval of the Audit and Permissible
Non-Audit Services by the Company’s 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 will annually consider and approve,
if appropriate, the provision of audit services (including audit
review and attest services) and of certain specific defined
permitted non-audit services (“pre-approved services”)
by its independent registered public accounting firm. It will
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 the Audit Committee for consideration (a) at a
regular meeting, (b) at a special meeting called to
consider the proposed engagement or by a unanimous written
consent of the Audit Committee or (c) by the Chairperson of
the Audit Committee, or another member of the Audit Committee.
If permissible non-audit services are pre-approved by the
Chairperson or another member of the Committee, that decision is
required to be presented at the next meeting of the Audit
Committee. The Audit Committee will regularly review summary
reports detailing all services (and related fees and expenses)
being provided to the Company by the independent registered
public accounting firm.
SECTION 16(a)
BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Company’s directors and executive officers, and any person
who owns more than ten percent of the Company’s stock, to
file with the Securities and Exchange Commission
(“SEC”) initial reports of beneficial ownership and
reports of changes in beneficial ownership of the Common Stock.
Such persons are required by the SEC’s regulations to
furnish the Company with copies of all Section 16(a)
reports they filed.
To the Company’s knowledge, based solely on its review of
the copies of such reports furnished to the Company and written
representations that no other reports were required, all such
Section 16(a) filings were timely made during the fiscal
year ended June 25, 2006.
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SHAREHOLDER
PROPOSALS
The deadline for submission of Shareholder proposals pursuant to
Rule 14a-8
under the Exchange Act for inclusion in the Company’s proxy
statement for its 2007 Annual Meeting of Shareholders is
May 29, 2007. Any Shareholder proposal to be submitted at
the 2007 Annual Meeting of Shareholders (but not required to be
included in the Company’s proxy statement), must be
received by August 12, 2007, or such proposal will be
considered untimely pursuant to
Rules 14a-4
and 14a-5(e)
under the Exchange Act and the persons named in the proxies
solicited by us may exercise discretionary voting authority with
respect to such proposal. Proposals which Shareholders intend to
present at the Company’s 2007 Annual Meeting of
Shareholders or wish to have included in the Company’s
proxy materials should be sent registered, certified or express
mail to Charles F. McCoy, Vice President, Secretary and General
Counsel of the Company, at 7201 West Friendly Avenue,
Greensboro, North Carolina, 27410.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
The SEC has adopted rules permitting registrants to send a
single set of the annual report and proxy statement to any
household at which two or more Shareholders reside if the
registrant believes they are members of the same family. Each
Shareholder will continue to receive a separate proxy card. This
procedure, referred to as “householding,” reduces the
volume of duplicate information Shareholders receive and reduces
the expense to the registrant. The Company has not implemented
these householding rules with respect to its record holders;
however, a number of brokerage firms have instituted
householding which may impact certain beneficial owners of the
Common Stock. If your family has multiple accounts by which you
hold the Common Stock, you may have received a householding
notification from your broker. Please contact your broker
directly if you have any questions, require additional copies of
the proxy statement or annual report, or wish to revoke your
decision to household, and thereby receive multiple reports.
Those options are available to you at any time.
ANNUAL
REPORT
The Company’s 2006 Annual Report on
Form 10-K,
including financial statements, accompanies this Proxy
Statement. Upon written request, the Company will provide
without charge to any Shareholder of record or beneficial owner
of Common Stock a copy of the Company’s Annual Report on
Form 10-K
(without exhibits) for the fiscal year ended June 25, 2006,
including financial statements, filed with the SEC. Any such
request should be directed to William M. Lowe, Jr., the
Company’s Vice President, Chief Operating Officer and Chief
Financial Officer, at 7201 West Friendly Avenue,
Greensboro, North Carolina, 27410.
OTHER
MATTERS
The Board does not intend to present any items of business other
than those stated in the Notice of Annual Meeting of
Shareholders. If other matters are properly brought before the
meeting, the persons named in the accompanying proxy will vote
the shares represented by it in accordance with their best
judgment. Discretionary authority to vote on other matters is
included in the proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Charles F. McCoy
Vice President, Secretary and General Counsel
Greensboro, North Carolina
September 26, 2006
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APPENDIX A
DIRECTOR
INDEPENDENCE STANDARDS
A majority of Board of Directors of Unifi, Inc. (the
“Company”) shall be independent. No director shall
qualify as “independent” unless the Board of Directors
affirmatively determines that the director has no material
relationship with the Company (either directly or as a partner,
shareholder or officer of an organization that has a
relationship with the Company). In making such determination,
the Board of Directors shall consider the factors identified
below, as well as such other factors that the Board of Directors
may deem relevant. A director will not be deemed independent if:
| 1. | the director is employed by the Company or any of its affiliates (as used herein, such term shall have the meaning set forth in Rule 144(a)(1) promulgated under the Securities Act of 1933, as amended) or was employed by the Company or any of its affiliates at any time during the preceding year, provided that as of November 4, 2004 (the “Effective Date”), the lookback period shall be three years; |
| 2. | the director is a member of the immediate family of an individual who is, or has been, employed by the Company or any of its affiliates as an executive officer at any time during the preceding year, provided that as of the Effective Date the lookback period shall be three years; |
| 3. | the director (a) presently receives, or his or her immediate family member receives, more than $100,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), or (b) the director or the director’s immediate family member had received such compensation within the preceding year, provided that as of the Effective Date the lookback period shall be three years [Note: Compensation received by an immediate family member for service as a non-executive employee of the Company need not be considered in determining independence under this test.]; |
| 4. | the director (a) is presently affiliated with or employed by, or his or her immediately family member is affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Company, or (b) the director or the director’s immediate family member had been affiliated with or employed by such internal or external auditor of the Company within the preceding year, provided that as of the Effective Date the lookback period shall be three years; |
| 5. | the director (a) is presently an executive officer or an employee, or his or her immediate family member is an executive officer, of another company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any single fiscal year, exceeds $1 million or 2 percent of such other company’s consolidated gross revenues for its last fiscal year, whichever is greater, or (b) the Company and the company of which director is an executive officer or employee or his or her immediate family member is an executive officer had such relationship within the preceding year, provided that as of the Effective Date the lookback period shall be three years; |
| 6. | the director is affiliated with, or his or her immediate family member is affiliated with, a paid advisor or consultant to the Company; |
| 7. | the director has, or his or her immediate family member has, a personal services contract with the Company; |
| 8. | the director or his or her immediate family member is employed and compensated by a foundation, university or other nonprofit institution that has received significant charitable contributions from the Company that are disclosed or will be required to be disclosed in the Company’s proxy statement; and |
| 9. | the director (a) is presently employed, or his or her immediate family member is presently employed, as an executive officer of another company where any of the Company’s present executive officers serves on that company’s compensation committee, or (b) such director or his or her immediate family member was employed in such capacity within the preceding year, provided that as of the Effective Date the lookback period shall be three years. |
In addition to being independent as determined by the Board of
Directors in accordance with the factors set forth above,
(a) members of the Audit Committee may not
(i) receive, directly or indirectly, any compensation other
than directors’ fees from the Company, or (ii) be an
“affiliated person” of the Company or any of its
subsidiaries as such term is defined under
Rule 10A-3
promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and (b) members of
the Compensation Committee must qualify as “outside
directors” as such term is defined under
Section 162(m) of the Internal Revenue Code of 1986, as
amended, and as “non-employee directors” as such term
is defined under
Rule 16b-3
promulgated under the Exchange Act.
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Table of Contents
ANNUAL MEETING OF
SHAREHOLDERS OF
UNIFI, INC.
October 25, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
your proxy card in the
envelope provided as soon
as possible.
¯ Please detach along perforated line
and mail in the envelope
provided. ¯
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x |
||
1.
|
To elect the eight (8) Directors listed below to serve until the next Annual Meeting of Shareholders or until their respective successors are duly elected and qualified: | ||||||||
| NOMINEES: | |||||||||
o
|
FOR ALL NOMINEES | O | William J. Armfield, IV | ||||||
| O | R. Wiley Bourne, Jr. | ||||||||
o
|
WITHHOLD AUTHORITY | O | Charles R. Carter | ||||||
| FOR ALL NOMINEES | O | Sue W. Cole | |||||||
| O | J.B. Davis | ||||||||
o
|
FOR ALL EXCEPT | O | Kenneth G. Langone | ||||||
| (See instructions below) | O | Donald F. Orr | |||||||
| O | Brian R. Parke | ||||||||
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: l
|
|||||||||
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. |
o | ||||||||
In their
discretion, the proxies are authorized to vote upon such other
business as properly may come before the Annual Meeting of
Shareholders. |
||||||||
The undersigned hereby authorizes the proxies, in their discretion, to vote on any
other business which may properly be brought before the meeting or any adjournment
thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities and
Exchange Commission. |
||||||||
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
WILL BE VOTED FOR EACH OF THE BOARD OF DIRECTORS’ NOMINEES FOR
DIRECTOR SPECIFIED IN PROPOSAL NO. 1, UNLESS A CONTRARY CHOICE IS
SPECIFIED, IN WHICH CASE THE PROXY WILL BE VOTED AS SPECIFIED. |
||||||||
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders, dated September 26, 2006, and the Proxy Statement furnished therewith. |
||||||||
Signature of Stockholder
|
Date: | Signature of Stockholder | Date: |
| Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney,
trustee or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as such. If
signer is a partnership, please sign in partnership name by authorized person. |
Table of Contents
| | ||||||||
UNIFI, INC.
ANNUAL MEETING, OCTOBER 25, 2006
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints William M. Lowe, Jr. and Charles F. McCoy, or either of them, with full power of substitution, as attorneys and proxies to represent and vote all shares of Unifi, Inc. Common Stock which the undersigned is entitled to vote at the Annual Meeting of the Shareholders to be held at the Company’s corporate headquarters at 7201 West Friendly Avenue, in Greensboro, North Carolina, on Wednesday, October 25, 2006, at 9:00 A.M. Eastern Daylight Savings Time, and any adjournment or adjournments thereof as follows:
(Continued and to be
signed on the reverse side.)
| 14475 | |||||||||