Unifi, Inc.
Shareholder Annual Meeting in a DEF 14A on 09/02/2021   Download
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DEF 14A 1 ufi-def14a_20211029.htm DEF 14A ufi-def14a_20211029.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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)

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UNIFI, INC.

 

 

Notice of Annual Meeting

and

Proxy Statement

 

 

2021 Annual Meeting of Shareholders

October 27, 2021

 

 

 


 

 

UNIFI, INC.

7201 West Friendly Avenue

Greensboro, North Carolina 27410

September 2, 2021

Dear Shareholder:

On behalf of the Board of Directors and the management of Unifi, Inc., I invite you to attend the 2021 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting will be held at 8:30 a.m., Eastern Time, on Wednesday, October 27, 2021 at the Lotte New York Palace located at 455 Madison Avenue at 50th Street, New York, New York 10022. Details regarding admission to the Annual Meeting and the business to be conducted are described in the accompanying Notice of 2021 Annual Meeting of Shareholders and Proxy Statement.

Whether or not you plan to attend the Annual Meeting in person, I strongly encourage you to vote as soon as possible to ensure that your shares are represented at the meeting. The accompanying Proxy Statement explains more about voting. Please read it carefully.

Thank you for your continued support.

Sincerely,

 

 

Albert P. Carey

 

Executive Chairman

 

 

 

 

 


 

 

UNIFI, INC.

7201 West Friendly Avenue

Greensboro, North Carolina 27410

(336) 294-4410

NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS

The 2021 Annual Meeting of Shareholders (the “Annual Meeting”) of Unifi, Inc. (the “Company”) will be held at 8:30 a.m., Eastern Time, on Wednesday, October 27, 2021 at the Lotte New York Palace located at 455 Madison Avenue at 50th Street, New York, New York 10022, for the following purposes:

 

 

1.

To elect the 10 directors nominated by the Board of Directors;

 

 

2.

To approve, on an advisory basis, the Company’s named executive officer compensation in fiscal 2021;

 

 

3.

To approve the Unifi, Inc. Employee Stock Purchase Plan;

 

 

4.

To ratify the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022; and

 

 

5.

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

The Board of Directors recommends that you vote “FOR” Items 1, 2, 3, and 4. The proxy holders will use their discretion to vote on other matters that may properly arise at the Annual Meeting or any adjournment or postponement thereof.

Only shareholders of record as of the close of business on August 31, 2021 will be entitled to vote at the Annual Meeting.

Your vote is important. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote as soon as possible to ensure that your shares are represented at the meeting. If you are a shareholder of record and received a paper copy of the proxy materials by mail, you may vote your shares by proxy using one of the following methods: (i) vote by telephone; (ii) vote via the Internet; or (iii) complete, sign, date, and return your proxy card in the postage-paid envelope provided. If you are a shareholder of record and received only a Notice of Internet Availability of Proxy Materials by mail, you may vote your shares by proxy at the Internet site address listed on your Notice. If you hold your shares through an account with a bank, broker, or similar organization, please follow the instructions you receive from the shareholder of record to vote your shares.

By Order of the Board of Directors,

 

 

Gregory K. Sigmon

Vice President

General Counsel

Corporate Secretary

September 2, 2021

 

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Shareholders To Be Held on October 27, 2021:

The Notice of Annual Meeting and Proxy Statement

and the Annual Report on Form 10-K are available at www.proxyvote.com.

 

 

 

 


 

 

 

Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

Page

General Information

 

 

 

1

 

 

 

Security Ownership of Certain Beneficial Owners and Management

 

 

 

7

 

 

 

 

Proposal 1:

 

Election of Directors

 

 

 

10

 

 

 

 

 

 

Director Nominees

 

 

 

10

 

 

 

Corporate Governance

 

 

 

15

 

 

 

 

 

 

The Board of Directors

 

 

 

15

 

 

 

 

 

 

Documents Available

 

 

 

15

 

 

 

 

 

 

Director Independence

 

 

 

15

 

 

 

 

 

 

Board Leadership Structure

 

 

 

16

 

 

 

 

 

 

Board Committees

 

 

 

17

 

 

 

 

 

 

Director Meeting Attendance

 

 

 

19

 

 

 

 

 

 

Director Nomination Process

 

 

 

19

 

 

 

 

 

 

Shareholder Recommendations of Director Candidates

 

 

 

19

 

 

 

 

 

 

Annual Evaluation of Directors and Board Committee Members

 

 

 

21

 

 

 

 

 

 

Prohibitions Against Hedging, Pledging, or Short Selling

 

 

 

21

 

 

 

 

 

 

Policy for Review of Related Person Transactions

 

 

 

21

 

 

 

 

 

 

Related Person Transactions

 

 

 

21

 

 

 

 

 

 

The Board’s Role in Risk Oversight

 

 

 

21

 

 

 

 

 

 

Compensation Committee Advisors

 

 

 

22

 

 

 

 

 

 

Communications with the Board of Directors

 

 

 

22

 

 

 

Director Compensation

 

 

 

23

 

 

 

Information about our Executive Officers

 

 

 

25

 

 

 

Compensation Discussion and Analysis

 

 

 

26

 

 

 

 

 

 

Executive Summary

 

 

 

26

 

 

 

 

 

 

Compensation Philosophy, Principles, and Policies

 

 

 

27

 

 

 

 

 

 

Overview of Compensation Components

 

 

 

29

 

 

 

 

 

 

Compensation Mix

 

 

 

30

 

 

 

 

 

 

Control by the Compensation Committee

 

 

 

30

 

 

 

 

 

 

Peer Group

 

 

 

30

 

 

 

 

 

 

Detailed Review of Compensation Components

 

 

 

31

 

 

 

 

 

 

Policy on Executive Officer and Employee Incentive Compensation Recoupment

 

 

 

35

 

 

 

 

 

 

Officers Stock Ownership Policy

 

 

 

35

 

 

 

 

 

 

Tax Impact on Compensation

 

 

 

36

 

 

 

 

 

 

Risk Analysis of Compensation Programs and Practices

 

 

 

36

 

 

 

 

 

 

Shareholder Say-on-Pay Vote

 

 

 

37

 

 

 

Executive Compensation Tables

 

 

 

38

 

 

 

 

 

 

Summary Compensation Table

 

 

 

38

 

 

 

 

 

 

Grants of Plan-Based Awards

 

 

 

39

 

 

 

 

 

 

Outstanding Equity Awards at Fiscal Year-End

 

 

 

40

 

 

 

 

 

 

Option Exercises and Stock Vested

 

 

 

41

 

 

 

 

 

 

Nonqualified Deferred Compensation

 

 

 

42

 

 

 

 

 

 

Potential Payments Upon Termination of Employment or Change in Control

 

 

 

42

 

 

 

 

 

 

Pay Ratio Disclosure

 

 

 

44

 

 

 

 

 

 

 

Equity Compensation Plan Information

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Committee Interlocks and Insider Participation

 

 

 

45

 

 

 

 

 

 

 

Compensation Committee Report

 

 

 

46

 

 

 

 

 

 

 

Audit Committee Report

 

 

 

47

 

 

 

 

 

 

 

Proposal 2:

 

Advisory Vote to Approve Named Executive Officer Compensation

 

 

 

48

 

 

 

 

 

 

 

Proposal 3:

 

Approval of the Unifi, Inc. Employee Stock Purchase Plan

 

 

 

49

 

 

Eligibility

 

 

 

49

 

 

Enrolling in the Plan

 

 

 

49

 

 

Withdrawal from Participation

 

 

 

50

 

 

Purchases of Common Stock

 

 

 

50

 

 

Purchase Price

 

 

 

50

 

 

Limitation on Common Stock Purchases

 

 

 

50

 

 

Transfer or Assignment of Participant’s Right to Purchase

 

 

 

50

 

 

Termination or Amendments

 

 

 

50

 

 

Sale of Common Stock Purchased under the Plan

 

 

 

51

 

 

Plan Administrator

 

 

 

51

 

 

United States Federal Income Tax Consequences

 

 

 

51

 

 

Vote Recommendation

 

 

 

51

Proposal 4:

 

Ratification of the Appointment of Independent Registered Public Accounting Firm

 

 

 

52

 

 

Fees Paid to Independent Registered Public Accounting Firm

 

 

 

52

i


 

 

 

Audit Committee Pre-Approval of Audit and Non-Audit Services

 

 

 

53

 

 

 

 

 

 

 

Additional Information

 

 

 

54

 

 

 

 

 

 

 

 

 

Shareholder Proposals for the 2022 Annual Meeting of Shareholders

 

 

 

54

 

 

 

 

 

 

 

 

 

2021 Annual Report to Shareholders

 

 

 

54

 

 

 

 

 

 

 

 

 

Annual Report on Form 10-K

 

 

 

54

 

 

 

 

 

 

 

 

 

Householding

 

 

 

54

 

 

 

 

 

 

 

Appendix A:

 

Non-GAAP Financial Performance Measures

 

 

 

A-1

Appendix B:

 

Unifi, Inc. Employee Stock Purchase Plan

 

 

 

B-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ii


 

 

PROXY STATEMENT

 

The Board of Directors (the “Board of Directors” or the “Board”) of Unifi, Inc. (“UNIFI” or the “Company”) is providing these materials to you in connection with the 2021 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting will be held at 8:30 a.m., Eastern Time, on Wednesday, October 27, 2021 at the Lotte New York Palace located at 455 Madison Avenue at 50th Street, New York, New York 10022.

General Information

Why did I receive these materials?

You received these materials because the Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting. This Proxy Statement includes information that UNIFI is required to provide you under the Securities and Exchange Commission rules and regulations (the “SEC rules”) and is designed to assist you in voting your shares.

What is a proxy?

The Board is asking for your proxy. This means you authorize persons selected by the Company to vote your shares at the Annual Meeting in the way that you instruct. All shares represented by valid proxies received and not revoked before the Annual Meeting will be voted in accordance with the shareholder’s specific voting instructions.

Why did I receive a one-page notice regarding Internet availability of proxy materials instead of a full set of proxy materials?

The SEC rules allow companies to choose the method for delivery of proxy materials to shareholders. For most shareholders, the Company has elected to mail a notice regarding the availability of proxy materials on the Internet (the “Notice of Internet Availability”), rather than sending a full set of these materials in the mail. The Notice of Internet Availability, or a full set of the proxy materials (including the Proxy Statement and form of proxy), as applicable, was sent to shareholders beginning September 2, 2021, and the proxy materials were posted on the investor relations portion of the Company’s website, www.unifi.com, and on the website referenced in the Notice of Internet Availability on the same day. Utilizing this method of proxy delivery expedites receipt of proxy materials by the Company’s shareholders and lowers the cost of the Annual Meeting. If you would like to receive a paper or e-mail copy of the proxy materials, you should follow the instructions in the Notice of Internet Availability for requesting a copy.

What is included in these materials?

These materials include:

 

the Notice of Annual Meeting and Proxy Statement; and

 

the Annual Report on Form 10-K for fiscal 2021, which contains the Company’s audited consolidated financial statements.

If you received a paper copy of these materials by mail, these materials also include the proxy card or voting instruction form for the Annual Meeting.

1


 

What items will be voted on at the Annual Meeting?

There are four proposals scheduled to be voted on at the Annual Meeting:

 

the election of the 10 directors nominated by the Board of Directors;

 

the approval, on an advisory basis, of the Company’s named executive officer compensation in fiscal 2021;

 

the approval of the Unifi, Inc. Employee Stock Purchase Plan; and

 

the ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022.

The Board is not aware of any other matters to be brought before the Annual Meeting. If other matters are properly raised at the Annual Meeting, the proxy holders may vote any shares represented by proxy in their discretion.

What are the Board’s voting recommendations?

The Board recommends that you vote your shares:

 

“FOR” the election of each of the 10 directors nominated by the Board of Directors;

 

“FOR” the approval, on an advisory basis, of the Company’s named executive officer compensation in fiscal 2021;

 

“FOR” the approval of the Unifi, Inc. Employee Stock Purchase Plan; and

 

“FOR” the ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022.

Who can attend the Annual Meeting?

Admission to the Annual Meeting is limited to:

 

shareholders of record as of the close of business on August 31, 2021;

 

holders of valid proxies for the Annual Meeting; and

 

invited guests.

Admission to the Annual Meeting will be on a first-come, first-served basis. Each shareholder may be asked to present valid photo identification, such as a driver’s license or passport, and proof of stock ownership as of the record date for admittance. Attendees must comply with any and all COVID-19 health and safety protocols imposed by the Annual Meeting venue or applicable governmental agency.

When is the record date and who is entitled to vote?

The Board set August 31, 2021 as the record date. As of the record date, 18,517,713 shares of common stock, par value $0.10 per share, of UNIFI (“Common Stock”) were issued and outstanding. Shareholders are entitled to one vote per share of Common Stock outstanding on the record date on any matter properly presented at the Annual Meeting.

2


 

What is a shareholder of record?

A shareholder of record or registered shareholder is a shareholder whose ownership of Common Stock is reflected directly on the books and records of UNIFI’s transfer agent, American Stock Transfer & Trust Company, LLC. If you hold Common Stock through an account with a bank, broker, or similar organization, you are considered the beneficial owner of shares held in street name and are not a shareholder of record. For shares held in street name, the shareholder of record is your bank, broker, or similar organization. UNIFI only has access to ownership records for the registered shares. If you are not a shareholder of record and you wish to attend the Annual Meeting, UNIFI will require additional documentation to evidence your stock ownership as of the record date, such as a copy of your brokerage account statement, a letter from the shareholder of record (e.g., your bank, broker, or other nominee), or a copy of your voting instruction form or Notice of Internet Availability.

How do I vote?

You may vote by any of the following methods:

 

In person. Shareholders of record and beneficial owners of shares held in street name may vote in person at the Annual Meeting. If you hold shares in street name, you must also obtain a legal proxy from the shareholder of record (e.g., your bank, broker, or other nominee) to vote in person at the Annual Meeting.

 

By telephone or via the Internet. Shareholders of record may vote by proxy, by telephone, or via the Internet, by following the instructions included in the proxy card or Notice of Internet Availability provided or the instructions received by e-mail. If you are a beneficial owner of shares held in street name, your ability to vote by telephone or via the Internet depends on the voting procedures of the shareholder of record (e.g., your bank, broker, or other nominee). Please follow the instructions included in the voting instruction form or Notice of Internet Availability provided to you by the shareholder of record.

 

By mail. Shareholders of record and beneficial owners of shares held in street name may vote by proxy by completing, signing, dating, and returning the proxy card or voting instruction form provided.

How can I revoke my proxy or change my vote?

Shareholders of record. You may revoke your proxy or change your vote at any time prior to the taking of the vote at the Annual Meeting by (i) submitting a written notice of revocation to the Company’s Corporate Secretary at Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27410; (ii) delivering a proxy bearing a later date using any of the voting methods described in the immediately preceding Q&A, including by telephone or via the Internet, and until the applicable deadline for each method specified in the accompanying proxy card or the Notice of Internet Availability; or (iii) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request or vote in person at the meeting. For all methods of voting, the last vote cast will supersede all previous votes.

Beneficial owners of shares held in street name. You may revoke or change your voting instructions by following the specific instructions provided to you by the shareholder of record (e.g., your bank, broker, or other nominee), or, if you have obtained a legal proxy from the shareholder of record, by attending the Annual Meeting and voting in person.

3


 

What happens if I vote by proxy and do not give specific voting instructions?

Shareholders of record. If you are a shareholder of record and you vote by proxy, by telephone, via the Internet, or by returning a properly executed and dated proxy card by mail, without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion for any other matters properly presented for a vote at the Annual Meeting.

Beneficial owners of shares held in street name. If you are a beneficial owner of shares held in street name and you do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on “routine” matters but cannot vote on “non-routine” matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a “non-routine” matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on that matter with respect to your shares. This is referred to as a “broker non-vote.”

Proposals 1, 2, and 3, the election of directors, the advisory vote to approve the Company’s named executive officer compensation in fiscal 2021, and the approval of the Unifi, Inc. Employee Stock Purchase Plan, respectively, are “non-routine” matters. Consequently, without your voting instructions, the organization that holds your shares cannot vote your shares on these proposals. Proposal 4, the ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022, is considered a “routine” matter.

What is the voting requirement to approve each of the proposals?

 

Proposal 1, Election of Directors. Directors shall be elected by the affirmative vote of a majority of the votes cast (meaning that the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee). If any existing director who is a nominee for reelection receives a greater number of votes “against” his or her election than votes “for” such election, the Company’s Amended and Restated By-laws provide that such person shall be deemed to have tendered to the Board his or her resignation as a director. There is no cumulative voting with respect to the election of directors.

 

Proposal 2, Advisory Vote to Approve Named Executive Officer Compensation. Advisory approval of the Company’s named executive officer compensation in fiscal 2021 requires the affirmative vote of a majority of the votes cast (meaning that the number of shares voted “for” the proposal must exceed the number of shares voted “against” such proposal).

 

Proposal 3, Approval of the Unifi, Inc. Employee Stock Purchase Plan. Approval of the Unifi, Inc. Employee Stock Purchase Plan requires the affirmative vote of a majority of the votes cast (meaning that the number of shares voted “for” the proposal must exceed the number of shares voted “against” such proposal).

 

Proposal 4, Ratification of the Appointment of Independent Registered Public Accounting Firm. Ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022 requires the affirmative vote of a majority of the votes cast (meaning that the number of shares voted “for” the proposal must exceed the number of shares voted “against” such proposal).

 

Other Items. Approval of any other matters requires the affirmative vote of a majority of the votes cast (meaning that the number of shares voted “for” the item must exceed the number of shares voted “against” such item).

4


 

What is the quorum for the Annual Meeting? How are abstentions and broker non-votes treated?

The presence, in person or by proxy, of the holders of a majority of the outstanding shares entitled to vote is necessary for the transaction of business at the Annual Meeting. Your shares are counted as being present if you vote in person at the Annual Meeting, by telephone, via the Internet, or by returning a properly executed and dated proxy card or voting instruction form by mail. Abstentions and broker non-votes are counted as present for the purpose of determining a quorum for the Annual Meeting.

With respect to Proposal 1, the election of directors, you may vote “for” or “against” each of the nominees for the Board, or you may “abstain” from voting for one or more nominees. Abstentions and broker non-votes are not considered votes cast for the foregoing purpose and will therefore have no effect on the election of director nominees.

With respect to Proposals 2, 3, and 4, the advisory vote to approve the Company’s named executive officer compensation in fiscal 2021, the approval of the Unifi, Inc. Employee Stock Purchase Plan, and the ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022, respectively, you may vote “for” or “against” these proposals, or you may “abstain” from voting on these proposals. Abstentions and broker non-votes are not considered votes cast for the foregoing purposes and will therefore have no effect on the vote for these proposals. As discussed above, because Proposal 4, the ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022, is considered a “routine” matter, the Company does not expect any broker non-votes with respect to this proposal.

Who are the proxy holders and how will they vote?

The persons named as attorneys-in-fact in the proxies, Edmund M. Ingle and Gregory K. Sigmon, were selected by the Board and are officers, and with respect to Mr. Ingle, a director, of the Company. If you are a shareholder of record and you return a properly executed and dated proxy card but do not provide specific voting instructions, your shares will be voted on the proposals as follows:

 

“FOR” the election of each of the 10 directors nominated by the Board of Directors;

 

“FOR” the approval, on an advisory basis, of the Company’s named executive officer compensation in fiscal 2021;

 

“FOR” the approval of the Unifi, Inc. Employee Stock Purchase Plan; and

 

“FOR” the ratification of the appointment of KPMG LLP to serve as the Company’s independent registered public accounting firm for fiscal 2022.

If other matters properly come before the Annual Meeting and you do not provide specific voting instructions, your shares will be voted on such matters in the discretion of the proxy holders.

Who pays for solicitation of proxies?

The Company is paying the cost of soliciting proxies and will reimburse brokerage firms and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to shareholders and obtaining their proxies. In addition to soliciting the proxies by mail and the Internet, certain of the Company’s directors, officers, and employees, without compensation, may solicit proxies personally or by telephone, facsimile, and e-mail.

5


 

Where can I find the voting results of the Annual Meeting?

The Company will announce preliminary or final voting results at the Annual Meeting and publish final results in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) within four business days of the completion of the meeting.

6


 

Security Ownership of Certain Beneficial Owners and Management

The table below provides information about the beneficial ownership of Common Stock as of August 31, 2021, by each person known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock as well as by each director, director nominee, and named executive officer and by all directors and executive officers as a group. In computing the number of shares beneficially owned by a person and the ownership percentage of that person, shares deemed outstanding include (i) shares of Common Stock subject to stock options held by that person that are currently exercisable or exercisable within 60 days of August 31, 2021 and (ii) restricted stock units and vested share units that are currently vested. However, these shares or units are not deemed outstanding for the purpose of computing the ownership percentage of any other person. The ownership percentage is based on 18,517,713 shares of Common Stock outstanding as of August 31, 2021. Except as otherwise indicated in the footnotes below, each of the persons named in the table has sole voting and investment power with respect to the securities indicated as beneficially owned by such person, subject to community property laws where applicable. Unless otherwise indicated in the footnotes below, the address for each of the beneficial owners is c/o Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27410.

 

Name

 

Number of Shares and

Nature of Beneficial Ownership

 

Ownership

Percentage

Principal Shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock, Inc.

 

 

 

2,250,650

 

(1)

 

 

 

12.15

%

 

Kenneth G. Langone

 

 

 

1,636,285

 

(2)

 

 

 

8.84

%

 

Impala Asset Management LLC

 

 

 

1,621,740

 

(3)

 

 

 

8.76

%

 

Dimensional Fund Advisors LP

 

 

 

1,484,567

 

(4)

 

 

 

8.02

%

 

Inclusive Capital Partners, L.P.

 

 

 

1,417,054

 

(5)

 

 

 

7.65

%

 

The Vanguard Group, Inc.

 

 

 

1,006,355

 

(6)

 

 

 

5.43

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors, Director Nominees, and Named Executive Officers:

 

 

 

 

 

 

 

 

 

 

 

 

Emma S. Battle

 

 

 

3,957

 

 

 

 

*

 

 

Robert J. Bishop

 

 

 

1,515,942

 

(7)

 

 

 

8.19

%

 

Albert P. Carey

 

 

 

190,230

 

(8)

 

 

 

1.03

%

 

Thomas H. Caudle, Jr.

 

 

 

216,916

 

(9)

 

 

 

1.17

%

 

Archibald Cox, Jr.

 

 

 

119,980

 

(10)

 

 

*

 

 

Craig A. Creaturo

 

 

 

31,945

 

(11)

 

 

*

 

 

Edmund M. lngle

 

 

 

54,451

 

(12)

 

 

*

 

 

James M. Kilts

 

 

 

32,661

 

(13)

 

 

*

 

 

Kenneth G. Langone

 

 

 

1,636,285

 

(2)

 

 

 

8.84

%

 

Hongjun Ning

 

 

 

5,000

 

(14)

 

 

*

 

 

Suzanne M. Present

 

 

 

48,099

 

(15)

 

 

*

 

 

Rhonda L. Ramlo

 

 

 

 

 

 

 

*

 

 

Eva T. Zlotnicka

 

 

 

1,422,039

 

(16)

 

 

 

7.68

%

 

Directors, director nominees, and current executive officers as a group (13 persons)

 

 

 

5,066,589

 

(17)

 

 

 

27.36

%

 

 

*

Less than 1%.

(1)

This information is based upon a Schedule 13G/A filed with the SEC on January 27, 2021 by BlackRock, Inc. (“BlackRock”), whose address is 55 East 52nd Street, New York, New York 10055. The Schedule 13G/A reports that BlackRock has sole voting power over 2,235,311 shares, shared voting power over no shares, and sole investment power over all of the shares shown.

 

(2)

Includes (i) 130,000 shares owned by Invemed Associates LLC, of which Mr. Langone is the principal equity holder and serves as President and Chief Executive Officer, as to which Mr. Langone has shared voting and investment power; (ii) 30,000 shares owned by Mr. Langone’s wife, as to which

7


 

Mr. Langone has shared voting and investment power; and (iii) 47,767 shares that Mr. Langone has the right to receive pursuant to restricted stock units and vested share units that will automatically convert into shares of Common Stock following the termination of his service as a director of the Company. Mr. Langone disclaims beneficial ownership of (A) the shares of Common Stock held by Invemed Associates LLC, and any proceeds thereof, that exceed his pecuniary interest therein and/or are not actually distributed to him; and (B) the shares of Common Stock held by his wife.

(3)

This information is based upon a Schedule 13D filed jointly with the SEC on February 14, 2020 by Impala Asset Management LLC, Impala Asset Advisors LLC, Impala Master Fund Ltd., Impala Alpha Master Fund Ltd., Waterbuck Master Fund Ltd., Impala Bluebuck LP, and Robert J. Bishop. The address for each of Impala Asset Management LLC and Mr. Bishop is 324 Royal Palm Way, 3rd Floor, Palm Beach, Florida 33480, each of Impala Asset Advisors LLC and Impala Bluebuck LP is 3500 South Dupont Highway, Dover, Delaware 19901, and each of Impala Master Fund Ltd., Impala Alpha Master Fund Ltd., and Waterbuck Master Fund Ltd. is PO Box 309, Ugland House, South Church Street, George Town KY1-1104, Cayman Islands. The Schedule 13D reports that each of Impala Asset Management LLC and Impala Asset Advisors LLC has shared voting and investment power over all of the shares shown; Impala Master Fund Ltd. has sole voting and investment power over no shares and shared voting and investment power over 1,228,021 shares; Impala Alpha Master Fund Ltd. has sole voting and investment power over no shares and shared voting and investment power over 56,532 shares; Waterbuck Master Fund Ltd. has sole voting and investment power over no shares and shared voting and investment power over 113,667 shares; Impala Bluebuck LP has sole voting and investment power over no shares and shared voting and investment power over 223,520 shares; and Mr. Bishop has sole voting and investment power over 26,702 shares (see clause (ii) in footnote (7) below) and shared voting and investment power over all of the shares shown. Impala Asset Management LLC, in its capacity as the investment adviser or manager to various private funds, has the power to direct the investment activities of each of the private funds.

(4)

This information is based upon a Schedule 13G/A filed with the SEC on February 16, 2021 by Dimensional Fund Advisors LP (“Dimensional”), whose address is 6300 Bee Cave Road, Building One, Austin, Texas 78746. The Schedule 13G/A reports that Dimensional has sole voting power over 1,434,938 shares, shared voting power over no shares, and sole investment power over all of the shares shown. Dimensional furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as investment manager or sub-adviser to certain other commingled funds, group trusts, and separate accounts (such investment companies, funds, trusts, and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional may act as an adviser or sub-adviser to certain Funds. In its role as investment adviser, sub-adviser, and/or manager, Dimensional or its subsidiaries may possess voting and/or investment power over the securities of the Company owned by the Funds and may be deemed to be the beneficial owner of these shares. However, all securities reported on the Schedule 13G/A are owned by the Funds, and Dimensional and its subsidiaries disclaim beneficial ownership of all of the shares shown.

(5)

This information is based upon a Schedule 13D filed jointly with the SEC on August 5, 2020 by Inclusive Capital Partners, L.P. and Jeffrey W. Ubben, each of whose address is 572 Ruger Street, Suite B, San Francisco, California 94129. The Schedule 13D reports that each of Inclusive Capital Partners, L.P. and Mr. Ubben has shared voting and investment power over all of the shares shown.

(6)

This information is based upon a Schedule 13G filed with the SEC on February 10, 2021 by The Vanguard Group, Inc. (“Vanguard”), whose address is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. The Schedule 13G reports that Vanguard has sole voting power over no shares, shared voting power over 9,143 shares, sole investment power over 993,042 shares, and shared investment power over 13,313 shares.

(7)

Consists of (i) 1,489,240 shares owned by Impala Asset Management LLC and Impala Asset Advisors LLC, which are investment manager and general partner, respectively, to funds that hold such securities; and (ii) 26,702 shares that Mr. Bishop has the right to receive pursuant to restricted stock units and vested share units that will automatically convert into shares of Common Stock following the termination of his service as a director of the Company. Mr. Bishop is the founder, the Managing

8


 

Principal, and a member of each of Impala Asset Management LLC and Impala Asset Advisors LLC and a limited partner in some of the funds that hold the securities owned by Impala Asset Management LLC and Impala Asset Advisors LLC, as to which Mr. Bishop has shared voting and investment power and of which Mr. Bishop disclaims beneficial ownership, except to the extent of his pecuniary interest therein.

(8)

Includes (i) 132,894 shares that Mr. Carey has the right to purchase pursuant to stock options that are currently exercisable; (ii) 16,027 shares that Mr. Carey has the right to receive pursuant to restricted stock units and vested share units that will automatically convert into shares of Common Stock following the termination of his service as a director of the Company; (iii) 6,446 shares that Mr. Carey will have the right to receive on October 30, 2021 that will automatically convert into shares of Common Stock following the termination of his service as a director of the Company; and (iv) 12,963 shares that Mr. Carey will have the right to purchase pursuant to stock options that will become vested and exercisable on October 29, 2021.

(9)

Includes 116,889 shares that Mr. Caudle has the right to purchase pursuant to stock options that are currently exercisable.

(10)

Includes 51,917 shares that Mr. Cox has the right to receive pursuant to restricted stock units and vested share units that will automatically convert into shares of Common Stock following the termination of his service as a director of the Company.

(11)

Includes (i) 5,000 shares that Mr. Creaturo has the right to purchase pursuant to stock options that are currently exercisable; (ii) 5,000 shares that Mr. Creaturo has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock on September 9, 2021; (iii) 5,000 shares that Mr. Creaturo will have the right to purchase pursuant to stock options that will become vested and exercisable on September 9, 2021; and (iv) 4,445 shares that Mr. Creaturo will have the right to purchase pursuant to stock options that will become vested and exercisable on October 30, 2021.

(12)

Includes 15,000 shares that Mr. Ingle has the right to purchase pursuant to stock options that are currently exercisable.

(13)

Includes 12,485 shares that Mr. Kilts has the right to receive pursuant to restricted stock units that will automatically convert into shares of Common Stock following the termination of his service as a director of the Company.

(14)

Consists of 5,000 shares that Mr. Ning has the right to purchase pursuant to stock options that are currently exercisable.

(15)

Consists of 48,099 shares that Ms. Present has the right to receive pursuant to restricted stock units and vested share units that will automatically convert into shares of Common Stock following the termination of her service as a director of the Company.

(16)

Includes 1,417,054 shares held by Inclusive Capital Partners Spring Master Fund, L.P., which may be deemed to be indirectly beneficially owned by Inclusive Capital Partners, L.P. Ms. Zlotnicka and each of Inclusive Capital Partners, L.P. and Inclusive Capital Partners Spring Master Fund, L.P. disclaim beneficial ownership of the reported securities except to the extent of her or its pecuniary interest therein.

(17)

Includes 400,745 shares that a director, a director nominee, or a current executive officer has the right to acquire within 60 days of August 31, 2021 through the exercise of stock options or the vesting of restricted stock units and vested share units.

 

 

9


 

 

Proposal 1:

Election of Directors

On the recommendation of the Corporate Governance and Nominating Committee, the Board has nominated the 10 persons listed below for election as directors at the Annual Meeting. If elected, each nominee will serve until his or her term expires at the 2022 Annual Meeting of Shareholders or until his or her successor is duly elected and qualified. Each nominee has agreed to be named in this Proxy Statement and to serve if elected.

All of the nominees are currently serving as directors, except Rhonda Ramlo whose Board service would commence upon her election at the Annual Meeting. Ms. Ramlo was identified to the Board as a potential director by a non-management director. Except for Emma S. Battle who was elected to the Board effective January 25, 2021, the other current directors were elected to the Board at the 2020 Annual Meeting of Shareholders (the “2020 Annual Meeting”). Ms. Battle was identified to the Board as a potential director through the University of North Carolina at Chapel Hill School of Law’s Director Diversity Initiative (the “DDI”), a cost-free resource that maintains a database of prospective female and/or racially or ethnically diverse director candidates.

The Company’s Corporate Governance Guidelines establish certain limits for other directorships for the Company’s directors. In evaluating Mr. Kilts’ nomination for election as a director at the Annual Meeting, the Board determined that Mr. Kilts’ other directorships and officer positions would not impair his ability to carry out effectively his duties and responsibilities on the Board. Mr. Kilts has served as an integral member of the Board since 2016, and the Board believes that his strategic experience, acumen, and expertise provide valuable insights for UNIFI’s leadership.

Although the Company knows of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxy holders intend to vote your shares for any substitute nominee proposed by the Board.

The Board of Directors recommends that you vote “FOR” the election of each of the 10 nominees listed below. Unless otherwise specified, proxies will be voted “FOR” the election of each of the 10 nominees listed below.

Director Nominees

Listed below are the 10 persons nominated for election to the Board of Directors. The following paragraphs include information about each director nominee’s business background, as furnished to the Company by the nominee, and additional experience, qualifications, attributes, or skills that led the Board of Directors to conclude that the nominee should serve on the Board.

 

  Name

 

Age

  

Principal Occupation

  

Director

Since

Emma S. Battle

 

60

 

President and Chief Executive Officer, Market Vigor, L.L.C.

 

2021

Robert J. Bishop

  

64

  

Managing Principal, Impala Asset Management LLC

  

2016

Albert P. Carey

  

69

  

Executive Chairman of UNIFI

  

2018

Archibald Cox, Jr.

  

81

  

Chairman, Sextant Group, Inc.

  

2008

Edmund M. Ingle

  

56

  

Chief Executive Officer of UNIFI

  

2020

James M. Kilts

  

73

  

Founding Partner, Centerview Capital

  

2016

Kenneth G. Langone

  

85

  

President and Chief Executive Officer, Invemed Associates LLC

  

1969

Suzanne M. Present

  

62

  

Principal, Gladwyne Partners, LLC

  

2011

Rhonda L. Ramlo

 

61

 

Vice President & General Manager, The Clorox Company

 

Eva T. Zlotnicka

  

38

  

Managing Partner, Inclusive Capital Partners, L.P.

  

2018

 

10


 

 

Emma S. Battle

Ms. Battle has served as President and Chief Executive Officer of Market Vigor, L.L.C., a business services company focused on strategic consulting and digital and online marketing, since she founded the company in 2003. From 2015 to 2017, Ms. Battle was Vice President of Client Success at Windsor Circle, an e-commerce marketing company. Previously, she served in executive and senior marketing and sales roles at Three Ships Media, Red Hat, Art.com, 1 Sync, and Sara Lee Branded Apparel (now known as Hanesbrands Inc.). Ms. Battle also serves on the boards of directors of Bassett Furniture Industries, Inc. and Nu Skin Enterprises, Inc., and was a director of Primo Water Corporation until 2020. Ms. Battle pursues continuing education through online classes and membership in professional organizations, like Brentwood Advisory Group, and supports and collaborates with current and aspiring board directors through the DDI, Onboard NC, Santa Clara University's Black Corporate Board Readiness program, and the newly established Take Your Seat initiative. Ms. Battle also devotes time to charitable and civic causes: since 2017, she has served as President and Chief Executive Officer of Higher Ed Works, a charitable organization that supports public higher education in North Carolina, and she also serves on the boards of FPG Child Development Institute, Southeastern Wind Coalition, and Elon University's Martha & Spencer Love School of Business.

 

Ms. Battle is a successful businessperson with an extensive background in digital and online marketing, marketing analytics, and business and marketing strategy. She also brings to the Board her perspective from working with other large corporations and serving on other public company boards. In addition, her commitment to sustainability and social responsibility is valuable to the Company.

Robert J. Bishop

Mr. Bishop founded Impala Asset Management LLC, a private investment management firm, in 2004 and is the Managing Principal of the firm and manages the Impala, Waterbuck, and Alpha Funds and other managed accounts. From 2002 to 2003, he was Chief Investment Officer at Soros Fund Management overseeing the Quantum Endowment Fund. From 1998 to 2002, he was a principal at Maverick Capital. Mr. Bishop was a portfolio manager at Kingdon Capital from 1995 to 1998 and, from 1992 to 1995, he was Managing Director of Tiger Management. From 1986 to 1992, Mr. Bishop was an equity analyst at Salomon Brothers and, from 1980 to 1984, he worked as a legislative assistant/director for Congressmen Don Ritter and Toby Roth.

Mr. Bishop brings valuable financial and managerial expertise to the Board through his extensive experience in investment and asset management.

Albert P. Carey

Mr. Carey has served as Executive Chairman of the Board of UNIFI since April 2019. Mr. Carey previously served as Non-Executive Chairman of the Board of the Company from January 2019 to March 2019. In March 2019, Mr. Carey retired from PepsiCo, Inc., a consumer products company, after a 38-year career with the company in which he held a number of senior leadership roles, including Chief Executive Officer of PepsiCo North America from March 2016 to January 2019, Chief Executive Officer of PepsiCo North America Beverages from July 2015 to March 2016, Chief Executive Officer of PepsiCo Americas Beverages from September 2011 to July 2015, and President and Chief Executive Officer of Frito-Lay North America from June 2006 to September 2011. Mr. Carey joined PepsiCo in 1981 after spending seven years with The Procter & Gamble Company. Mr. Carey also serves on the board of directors of The Home Depot, Inc. and the board of trustees at the University of Maryland, and volunteers at the Bridgeport Rescue Mission in Bridgeport, Connecticut.

Mr. Carey brings to the Board more than 40 years of experience with consumer product companies. In addition, having served in a number of senior executive positions at PepsiCo, Mr. Carey brings to the Board valuable leadership and strategic management skills.

11


 

Archibald Cox, Jr.

Mr. Cox has served as 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 to June 2011. Mr. Cox was a director of Hutchinson Technology Incorporated from May 1996 to September 2009. He was also Chairman of Magnequench, Inc., a manufacturer of magnetic material, from September 2005 to September 2006 and President and Chief Executive Officer of Magnequench, Inc. from October 1995 to August 2005. Mr. Cox was Chairman of Neo Material Technologies Inc., a manufacturer of rare earth, zirconium, and magnetic materials, from September 2005 to September 2006. Mr. Cox also serves on the boards of several private companies and as Chairman of two of these companies. Since July 2012, Mr. Cox has served on the board of trustees of St. Paul’s School, a secondary educational institution located in Concord, New Hampshire, where he currently serves as board president. Mr. Cox has served as Lead Independent Director of UNIFI since August 2019.

Mr. Cox brings to the Board executive decision-making skills, operating and management experience, expertise in finance, and investment and business development experience. In addition, 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.

Edmund M. Ingle

Mr. Ingle has served as Chief Executive Officer of UNIFI since June 2020. From May 2019 to June 2020, he served as Chief Executive Officer of the Recycling group of Indorama Ventures, a global chemicals company and a global integrated leader in PET and fibers serving major customers in diversified end-use markets. From May 2018 to June 2020, he was Chairperson and Chief Executive Officer of Indorama’s Wellman International division. Prior to that, Mr. Ingle was with UNIFI for approximately 30 years, during which time he held various key leadership positions, including Vice President of Global Corporate Sustainability, Vice President of Supply Chain, General Manager of the Company’s Flake and Chip business, Vice President and General Manager of REPREVE® Polymers, General Manager of the Company’s Nylon business, and Director of Global Procurement.

Mr. Ingle brings to the Board a deep understanding of UNIFI’s operations and the textile industry, gained through his approximately 30 years of experience with the Company. He also brings important executive leadership and strategic management skills to the Board.

James M. Kilts

Mr. Kilts is the founding partner of Centerview Capital, a private equity firm which was founded in 2006, and currently serves as Co-Chief Executive Officer of Conyers Park III Acquisition Corp., a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. Mr. Kilts served as Chairman and Chief Executive Officer of The Gillette Company from 2001, and as President from 2003, until it merged with The Procter & Gamble Company in 2005, at which time he became Vice Chairman of The Procter & Gamble Company. Prior to Gillette, Mr. Kilts served as President and Chief Executive Officer of Nabisco Group Holdings Corporation from 1998 until its acquisition by the Philip Morris Companies in 2000. Before joining Nabisco, Mr. Kilts was an Executive Vice President of the Philip Morris Companies from 1994 to 1997 and headed the Worldwide Food Group. In that role, Mr. Kilts was responsible for integrating Kraft and General Foods and for shaping the group’s domestic and international strategy. Mr. Kilts has served as a member of the board of directors of Pfizer Inc. since 2007, Chairman of The Simply Good Foods Company (formerly known as Conyers Park Acquisition Corp.) since 2016, and Chairman of Advantage Solutions Inc. (formerly known as Conyers Park II Acquisition Corp.) since 2020. Mr. Kilts was also Executive Chairman of Conyers Park II Acquisition Corp. until 2020, Chairman of Nielsen Holdings N.V. until 2013, Chairman of Nielsen Company B.V. until 2014, Chairman of Big Heart Pet Brands until 2015, a director of MeadWestvaco Corporation until 2014, a director of Nielsen Holdings plc until 2017, and a director of MetLife, Inc. until 2020.

12


 

As Chief Executive Officer of Gillette and Nabisco and as Vice Chairman of Procter & Gamble, Mr. Kilts developed valuable business, leadership, and strategic management skills, including expertise in cost management, value creation, and resource allocation, which he brings to the Board. Mr. Kilts also brings to the Board valuable experience with consumer product companies.

Kenneth G. Langone

Mr. Langone has been President and Chief Executive Officer of Invemed Associates LLC, an investment banking firm, since 1974. From 2011 to 2013, he served as Chief Executive Officer, President, and Chairman of Geeknet, Inc., a retailer of a wide range of products aimed at technology enthusiasts. Mr. Langone was a co-founder, and served as a director from 1978 to 2008, of The Home Depot, Inc. Mr. Langone was a director of ChoicePoint Inc. from 2002 to 2008, Geeknet, Inc. from 2010 to 2015, General Electric Company from 1999 to 2005, and YUM! Brands, Inc. from 1997 to 2012.

Mr. Langone brings to the Board extensive operating and management experience, including as Chief Executive Officer of a financial services business, financial expertise, and public company directorship and committee experience. In addition, Mr. Langone’s extensive service on the Board of Directors provides a valuable historical perspective through which it can contextualize and direct the Company’s performance and strategic planning.

Suzanne M. Present

Ms. Present is a co-founder and has been a principal of Gladwyne Partners, LLC, a private partnership fund manager, since 1998. Prior to Gladwyne’s formation, Ms. Present spent 15 years at Lazard Freres & Co., the first five as a securities analyst before moving on to investment banking.  From 2013 to 2020, Ms. Present served as Executive Director 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, and now serves as Chairman and Treasurer, positions she assumed in 2020. Ms. Present has served as a director of numerous public and private companies in a variety of industries, including media, technology, healthcare, and retail.

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

Rhonda L. Ramlo

Ms. Ramlo is Vice President & General Manager of Strategy, Acquisitions, and New Business Development at The Clorox Company, a leading multinational manufacturer and marketer of consumer and professional products, a position she has held since 2013. From 2010 to 2012, Ms. Ramlo served as Vice President & General Manager of The Clorox Company’s Laundry and Water Filtration businesses. Before joining The Clorox Company, Ms. Ramlo was with Dreyer’s Grand Ice Cream Holdings, Inc. for 16 years, where she held numerous executive leadership positions. Prior to that, Ms. Ramlo worked at Booz Allen Hamilton Holding Corporation as a strategic consultant. Ms. Ramlo also serves on the boards of directors of Nuun, Inc. and REDD Bar, two privately held consumer packaged goods companies.

Ms. Ramlo brings to the Board considerable strategic and development experiences, which offer brand strategy, marketing, sales, and innovation expertise.

Eva T. Zlotnicka

Ms. Zlotnicka is a co-founder and has been a Managing Partner and a member of the Management Committee of Inclusive Capital Partners, L.P., a San-Francisco-based investment firm, since July 2020. Prior to that, she was Managing Director of the ValueAct Spring Fund and Head of Stewardship at ValueAct Capital, a San-Francisco-based investment firm, from January 2020 to July 2020, and a Vice President of

13


 

Value Act Capital from February 2018 to December 2019. Prior to joining ValueAct Capital in February 2018, Ms. Zlotnicka was an Environmental, Social, and Governance (“ESG”) equity research analyst for nearly seven years. Previously, Ms. Zlotnicka was U.S. lead for the Sustainability Research team at Morgan Stanley, a global financial services firm, from January 2015 to February 2018, and held a similar role at UBS Investment Bank, a division of UBS Group AG, a Swiss multinational investment bank and financial services company, from July 2011 to January 2015. Prior to becoming an ESG equity research analyst, she spent five years at Morgan Stanley primarily focused on fixed income securities and derivatives. Ms. Zlotnicka is a director of Hawaiian Electric Industries, Inc. Ms. Zlotnicka also serves as a member of the Investor Advisory Group for the Sustainability Accounting Standards Board and is a member of the Advisory Board of the Institute for Corporate Governance and Finance at the New York University School of Law. Ms. Zlotnicka also co-founded Women Investing for a Sustainable Economy (WISE), a global professional community.

Ms. Zlotnicka brings to the Board valuable expertise in sustainable investing and multinational ESG initiatives. Ms. Zlotnicka also brings to the Board extensive experience in a number of critical areas, including investment management and finance.

 

14


 

 

Corporate Governance

The Board of Directors

The Company is governed by the Board of Directors and its various committees. The Board and its committees have general oversight responsibility for the affairs of the Company. In exercising its fiduciary duties, the Board represents and acts on behalf of UNIFI’s shareholders. The Board has adopted written corporate governance policies, principles, and guidelines, known as the Corporate Governance Guidelines. The Board also has adopted (i) a Code of Ethics for Senior Financial and Executive Officers (the “Code of Ethics for Senior Financial and Executive Officers”), which applies to the Company’s Chief Executive Officer, Chief Financial Officer, Vice President & Treasurer, Vice President of Finance, and other senior financial and executive officers and employees; (ii) a Code of Business Conduct and Ethics (the “Code of Ethics”), which applies to the Company’s directors, officers, and employees; and (iii) an Ethical Business Conduct Policy Statement (the “Ethics Policy Statement”), which applies to the Company’s directors, officers, and employees. The Code of Ethics for Senior Financial and Executive Officers, the Code of Ethics, and the Ethics Policy Statement include guidelines relating to the ethical handling of actual or potential conflicts of interest, compliance with laws, accurate financial reporting, and other related topics.

Documents Available

Certain of the Company’s corporate governance materials, including the charters for the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee, as well as the Corporate Governance Guidelines, the Code of Ethics for Senior Financial and Executive Officers, the Code of Ethics, and the Ethics Policy Statement, are published on the investor relations portion of the Company’s website at www.unifi.com. These materials are also available in print free of charge to any shareholder upon request by contacting the Company in writing at Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27410, Attention: Investor Relations, or by telephone at (336) 294-4410. Any modifications to these corporate governance materials will be reflected, and the Company intends to post any amendments to, or waivers from, the Code of Ethics for Senior Financial and Executive Officers (to the extent required to be disclosed pursuant to Form 8-K), on the investor relations portion of the Company’s website at www.unifi.com. By referring to the Company’s website, www.unifi.com, or any portion thereof, including the investor relations portion of the Company’s website, the Company does not incorporate its website or its contents into this Proxy Statement.

Director Independence

The Board believes that a majority of its members are independent under the applicable New York Stock Exchange rules (the “NYSE rules”) and SEC rules. The NYSE rules provide that a director does not 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). The NYSE rules recommend that a board of directors consider all of the relevant facts and circumstances in determining the materiality of a director’s relationship with a company. The Board has adopted Director Independence Standards, which incorporate the independence standards of the NYSE rules, to assist the Board in determining whether a director has a material relationship with UNIFI. The Director Independence Standards are available on the investor relations portion of the Company’s website, www.unifi.com, as an appendix to the Corporate Governance Guidelines.

In August 2021, the Board of Directors, with the assistance of the Corporate Governance and Nominating Committee, conducted an evaluation of director independence based on the Director Independence Standards, the NYSE rules, and the SEC rules. The Board considered all relationships and transactions between each director or director nominee (and his or her immediate family members and affiliates) and each of UNIFI, its management, and its independent registered public accounting firm, as well as the transactions described below under “—Related Person Transactions.” As a result of this evaluation, the Board determined those relationships that do exist or did exist within the last three fiscal years (except for Messrs. Ingle’s and Carey’s relationships as employees of UNIFI and Mr. Caudle’s relationship as a former

15


 

employee of UNIFI) all fall below the thresholds in the Director Independence Standards. Consequently, the Board of Directors determined that each of Messrs. Bishop, Cox, Kilts, Langone, and Mead and Mses. Battle, Present, Ramlo, and Zlotnicka qualifies (and, in the case of Mr. Mead, qualified) as an independent director under the Director Independence Standards, the NYSE rules, and the SEC rules. The Board also determined that each member of the Audit, Compensation, and Corporate Governance and Nominating Committees (see membership information below under “—Board Committees”) is independent, including that each member of the Audit Committee is “independent” as that term is defined under Rule 10A-3(b)(1)(ii) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Board Leadership Structure

The Company’s Corporate Governance Guidelines provide the Board with flexibility to select the appropriate leadership structure at a particular time based on what the Board determines to be in the best interests of the Company and its shareholders. The Company’s Corporate Governance Guidelines provide that the Board has no established policy with respect to combining or separating the offices of Chairman of the Board and principal executive officer.

The Company currently has separated the roles of Chairman of the Board and principal executive officer. Albert P. Carey serves as the Executive Chairman of the Board and Edmund M. Ingle, as Chief Executive Officer, serves as the Company’s principal executive officer. The Company previously combined the roles of Chairman of the Board and principal executive officer and, in the future, the Board may determine in certain circumstances that it is in the best interests of the Company and its shareholders for the same person to hold the positions of Chairman of the Board and principal executive officer. The Board, however, believes that the Company’s present leadership structure is appropriate for the Company at the current time, as it allows Mr. Ingle to focus on the day-to-day operation of the business, while allowing Mr. Carey to focus on overall leadership and strategic direction of UNIFI, guidance of the Company’s senior management, and leadership of the Board.

The Company’s Corporate Governance Guidelines further provide that if the Chairman is not determined by the Board as independent, the independent directors may determine that the Board should have a Lead Independent Director. In the event that the independent directors make such a determination, the Lead Independent Director is appointed by a majority of the independent directors. In October 2020, the independent directors reappointed Archibald Cox, Jr. to serve as Lead Independent Director, a position he has held since August 2019.

The duties of the Lead Independent Director include: (i) providing leadership to the Board; (ii) chairing Board meetings in the absence of the Chairman; (iii) organizing, setting the agenda for, and leading executive sessions of the independent directors without the attendance of management; (iv) serving as a liaison between management and the independent directors; (v) consulting with the Chairman to approve the agenda for each Board meeting and the information that shall be provided to the directors for each scheduled meeting; (vi) approving meeting schedules to assure that there is sufficient time for discussion of all agenda items; (vii) meeting with the Chairman between Board meetings as appropriate in order to facilitate Board meetings and discussions; (viii) advising the Corporate Governance and Nominating Committee on the selection of committee chairpersons; and (ix) having the authority to call meetings of the independent directors.

16


 

Board Committees

The Board of Directors has a standing Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee. Committee members and committee chairs are appointed by the Board. The members and chairs of these committees are identified in the following table:

 

Name

 

 

Audit

Committee

 

 

 

Compensation

Committee

 

 

 

Corporate

Governance and

Nominating

Committee

Emma S. Battle

 

 

 

 

 

 

Member

 

 

 

 

Robert J. Bishop

 

 

Member

 

 

 

 

 

 

 

 

Albert P. Carey

 

 

 

 

 

 

 

 

 

 

 

Archibald Cox, Jr.

 

 

 

 

 

 

Chair

 

 

 

Member

Edmund M. Ingle

 

 

 

 

 

 

 

 

 

 

 

James M. Kilts

 

 

 

 

 

 

Member

 

 

 

 

Kenneth G. Langone

 

 

 

 

 

 

Member

 

 

 

Member

Suzanne M. Present

 

 

Chair

 

 

 

 

 

 

 

 

Eva T. Zlotnicka

 

 

Member

 

 

 

 

 

 

 

Chair

Each committee of the Board of Directors functions pursuant to a written charter adopted by the Board. The following table provides information about the operation and key functions of these committees:

 

 

 

 

 

 

Committee

 

Key Functions and Additional Information

 

Number of

Meetings in

Fiscal 2021

Audit

Committee

 

•  Assists the Board in its oversight of (i) the Company’s accounting and financial reporting processes, (ii) the integrity of the Company’s financial statements, (iii) the Company’s compliance with legal and regulatory requirements, (iv) the qualifications and independence of the Company’s independent registered public accounting firm, and (v) the performance of the Company’s internal audit function and the Company’s independent registered public accounting firm.

 

•  Appoints, compensates, retains, and oversees the work of the Company’s independent registered public accounting firm.

 

•  Reviews and discusses with management and the Company’s independent registered public accounting firm the annual and quarterly financial statements.

 

•  Reviews and discusses with management the quarterly earnings releases.

 

•  Reviews and pre-approves all audit and non-audit services proposed to be performed by the Company’s independent registered public accounting firm.

 

•  Reviews and, if appropriate, approves or ratifies related person transactions.

 

•  Discusses with management, the Company’s independent registered public accounting firm, and Company personnel responsible for the Company’s internal audit function, the quality and adequacy of the Company’s internal controls.

 

•  Assists the Board in its oversight of enterprise risk management. 

 

•  The Board of Directors has determined that each of Mses. Present and Zlotnicka and Mr. Bishop is an “audit committee financial expert” within the meaning of the SEC rules and that each of Mses. Present and Zlotnicka and Mr. Bishop is “financially literate” and has accounting or related financial management expertise, in each case, as determined by the Board in its business judgment.

 

 

9

17


 

Compensation

Committee

 

•  Oversees the administration of the Company’s compensation plans.

 

•  Reviews and approves the compensation of the executive officers and oversees management’s decisions concerning the compensation of the other officers.

 

•  Reviews and makes recommendations to the independent directors on the Board with respect to any employment agreements, consulting arrangements, severance or retirement arrangements, or change of control agreements and provisions covering any current or former executive officer of the Company.

 

•  Conducts annual performance evaluation of management.

 

•  Oversees regulatory compliance regarding compensation matters.

 

 

5

Corporate Governance

and Nominating

Committee

 

•  Identifies, evaluates, and recommends director candidates to the Board.

 

•  Determines the criteria for membership on the Board and its committees and recommends such criteria to the Board for approval.

 

•  Makes recommendations to the Board concerning committee appointments and Board and committee leadership.

 

•  Makes recommendations to the Board with respect to determinations of director independence.

 

•  Reviews and recommends to the Board the form and amount of director compensation.

 

•  Oversees annual performance evaluation of the Board, the committees of the Board, leadership of the Board (including the Chairman of the Board and the Lead Independent Director), and individual directors.

 

•  Oversees director education and new director onboarding.

 

•  Considers and recommends to the Board other actions relating to corporate governance.

 

 

5

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The Board may also establish other committees from time to time as it deems necessary.

Director Meeting Attendance

The Board of Directors held nine meetings during fiscal 2021. Each incumbent director attended 75% or more of the aggregate number of meetings of the Board and committees of the Board on which the director served during fiscal 2021. It is the Board’s policy that the directors should attend the Company’s annual meeting of shareholders absent extenuating circumstances. All of the Company’s nine directors in office at the time attended the 2020 Annual Meeting.

Pursuant to the Company’s Corporate Governance Guidelines, the independent directors meet in regularly scheduled executive sessions without management. Archibald Cox, Jr., as the Lead Independent Director, presides over these executive sessions.

Director Nomination Process

The Corporate Governance and Nominating Committee is responsible for identifying and evaluating individuals qualified to become members of the Board and for recommending to the Board the individuals for nomination as members. In considering whether to recommend any particular candidate for inclusion in the Board’s slate of recommended director nominees, the Corporate Governance and Nominating Committee considers the following criteria, in addition to other factors it may determine appropriate: (i) the candidate’s roles and contributions valuable to the business community; (ii) the candidate’s diversity, integrity, accountability, informed judgment, financial literacy, passion, creativity, and vision; (iii) the candidate’s knowledge about the Company’s business or industry; (iv) the candidate’s independence; (v) the candidate’s willingness and ability to devote adequate time and effort to Board responsibilities in the context of the existing composition and needs of the Board and its committees; and (vi) the NYSE rules.

Neither the Corporate Governance and Nominating Committee nor the Board has a specific policy with regard to the consideration of diversity in identifying director nominees. However, the Board believes that men and women of different ages, races, and ethnic and cultural backgrounds can contribute different and useful perspectives, and can work effectively together to further the Company’s objectives, and, as noted above, a candidate’s diversity is one of the criteria that the Corporate Governance and Nominating Committee considers in evaluating potential director nominees.

The Corporate Governance and Nominating Committee may, at its discretion, hire or solicit third parties to assist in the identification and evaluation of director nominees.

Shareholder Recommendations of Director Candidates

Recommendations by shareholders for director candidates to be considered for the 2022 Annual Meeting of Shareholders must be in writing and received by the Company’s Corporate Secretary at Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27410 no earlier than June 29, 2022 and no later than July 29, 2022. However, if the date of the 2022 Annual Meeting of Shareholders is more than 30 days before or more than 90 days after October 27, 2022, then the written notice must be received by the Company’s Corporate Secretary no earlier than 120 days prior to the date of the 2022 Annual Meeting of Shareholders and no later than the close of business on the later of (i) 90 days prior to the date of such annual meeting or (ii) 10 days following the day on which the Company first announced publicly (or mailed notice to the shareholders of) the date of such meeting.

The notice must contain certain information about the nominee and the shareholder submitting the nomination as set forth in the Company’s Amended and Restated By-laws. With respect to the nominee,

19


 

the notice must contain, among other things, (i) the nominee’s name, age, and business and residence addresses; (ii) the nominee’s background and qualification, including, the principal occupation or employment of the nominee; (iii) the class and number of shares or other securities of the Company owned of record or beneficially by the nominee or any Shareholder Associated Person (as defined in the Company’s Amended and Restated By-laws); (iv) any derivative positions held of record or beneficially by the nominee or any Shareholder Associated Person related to, or the value of which is derived in whole or in part from, the value of any class of the Company’s shares or other securities and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement, or understanding has been made, the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, the nominee or any Shareholder Associated Person with respect to the Company’s shares or other securities; (v) a written statement executed by the nominee (A) acknowledging that as a director of the Company, the nominee will owe a fiduciary duty under New York law with respect to the Company and its shareholders; (B) disclosing whether the nominee is a party to an agreement, arrangement, or understanding with, or has given any commitment or assurance to, any person or entity as to how the nominee, if elected as a director of the Company, will act or vote on any issue or question; (C) disclosing whether the nominee is a party to an agreement, arrangement, or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with the nominee’s service or action as a director of the Company; (D) agreeing to update continually the accuracy of the information required by the immediately preceding clauses (B) and (C) for as long as the nominee is a nominee or a director of the Company; and (E) agreeing, if elected as a director of the Company, to comply with all codes of conduct and ethics, corporate governance, conflict of interest, confidentiality, and stock ownership and trading policies and guidelines of the Company applicable to directors; and (vi) any other information regarding the nominee or any Shareholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with a contested solicitation of proxies for the election of directors or that the Company may reasonably require to determine the eligibility of the nominee to serve as a director of the Company. With respect to the shareholder submitting the nomination, the notice must contain: (1) the name and address, as they appear on the Company’s books, of such shareholder and any Shareholder Associated Person; (2) the class and number of shares or other securities of the Company owned of record or beneficially by such shareholder or any Shareholder Associated Person; (3) any derivative positions held of record or beneficially by such shareholder or any Shareholder Associated Person related to, or the value of which is derived in whole or in part from, the value of any class of the Company’s shares or other securities and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement, or understanding has been made, the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such shareholder or any Shareholder Associated Person with respect to the Company’s shares or other securities; (4) any other information regarding such shareholder or any Shareholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with a contested solicitation of proxies for the election of directors; and (5) a representation whether either such shareholder or any Shareholder Associated Person intends to, or is part of a group which intends to, deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee and/or otherwise to solicit proxies from shareholders in support of such nomination.

A shareholder who is interested in recommending a director candidate should request a copy of the Company’s Amended and Restated By-laws by writing to the Company’s Corporate Secretary at Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27410. Recommended candidates will be subject to a background check by a qualified firm of the Company’s choosing. Appropriate submission of a recommendation by a shareholder does not guarantee the selection of the shareholder’s candidate or the inclusion of the candidate in the Company’s proxy materials; however, the Corporate Governance and Nominating Committee will consider any such candidate in accordance with the director nomination process described above.

20


 

Annual Evaluation of Directors and Board Committee Members

The Board of Directors evaluates the performance of each director, each committee of the Board, the Chairman, the Lead Independent Director, and the Board of Directors as a whole on an annual basis. In connection with this annual self-evaluation, each director records his or her views on the performance of each director standing for reelection, each committee of the Board, the Chairman, the Lead Independent Director, and the Board of Directors as a whole. The entire Board of Directors reviews the results of these reports and determines what, if any, actions should be taken in the upcoming year to improve its effectiveness and the effectiveness of each director and committee.

Prohibitions Against Hedging, Pledging, or Short Selling

UNIFI maintains policies that apply to all directors, officers, and employees that prohibit hedging or short selling (profiting if the market price decreases) of Company securities. Such policies also prohibit all directors, officers, and employees from pledging any Company securities, purchasing any Company securities on margin, or incurring any indebtedness secured by a margin or similar account in which Company securities are held, without the prior approval of the Audit Committee of the Board.

Policy for Review of Related Person Transactions

Pursuant to the Company’s Related Persons Transactions Policy, which is available on the investor relations portion of the Company’s website at www.unifi.com, the Company reviews relationships and transactions in which the Company and its directors and executive officers or their immediate family members are participants to determine whether such related persons have a direct or indirect material interest in the relationships or transactions. The Company’s executive management is primarily responsible for developing and implementing processes and controls to obtain information from the directors and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether a related person has a direct or indirect material interest in any such transaction. As required under the SEC rules, transactions that are determined to be directly or indirectly material to a related person are disclosed in this Proxy Statement. In addition, the Audit Committee reviews and, if appropriate, approves or ratifies any related person transaction that is required to be disclosed under the SEC rules. As set forth in the Audit Committee’s charter, which is available on the investor relations portion of the Company’s website at www.unifi.com, in the course of its review and, if appropriate, approval or ratification of a disclosable related person transaction, the Audit Committee considers the relevant facts and circumstances, including the material terms of the transaction, risks, benefits, costs, availability of other comparable services or products, and, if applicable, the impact on a director’s independence.

Related Person Transactions

In fiscal 2021, the Company paid Salem Leasing Corporation, a wholly owned subsidiary of Salem Holding Company, approximately $4.12 million in connection with leases of tractors and trailers and for related transportation services. Kenneth G. Langone, a director of the Company, owns a non-controlling 33% equity interest in, and is a director and the Non-Executive Chairman of, Salem Holding Company. Mr. Langone is not an employee of Salem Holding Company or any of its subsidiaries and is not involved in the day-to-day operations of any such company. The terms of the Company’s leases with Salem Leasing Corporation are, in the Company’s opinion, no less favorable than the terms the Company would have been able to negotiate with an independent third party. The foregoing transaction was approved under UNIFI’s Related Persons Transactions Policy.

The Board’s Role in Risk Oversight

The Board of Directors oversees the Company’s risk profile and management’s processes for assessing and managing risk, both as a whole Board and through its committees. The full Board reviews strategic risks and opportunities facing the Company. Among other areas, the Board is involved in overseeing risks

21


 

related to the Company’s overall strategy, business results, capital structure, capital allocation and budgeting, and executive officer succession. Certain other important categories of risk are assigned to designated Board committees (which are composed solely of independent directors) that report back to the full Board. In general, the committees oversee the following risks:

 

Audit Committee oversees risks related to internal financial and accounting controls, legal, regulatory, cyber security, and compliance risks, work performed by the Company’s independent registered public accounting firm and the Company’s internal audit function, related person transactions, and the overall risk management governance structure and risk management function;

 

Compensation Committee oversees the Company’s compensation programs and practices. For a detailed discussion of the Company’s efforts to manage compensation-related risks, see “Compensation Discussion and Analysis—Risk Analysis of Compensation Programs and Practices” beginning on page 36; and

 

Corporate Governance and Nominating Committee oversees issues that may create governance risks, such as Board composition and structure, director selection, director succession planning, and environmental, social, and sustainability activities.

The Board believes that its leadership structure supports the Company’s governance approach to risk oversight as both the Executive Chairman and the principal executive officer are involved directly in risk management as members of the Company’s management team, while the committee chairpersons, in their respective areas, maintain oversight roles as independent members of the Board.

Compensation Committee Advisors

The Compensation Committee has sole authority under its charter to retain compensation consultants and other advisors and to approve such consultants’ and advisors’ fees and retention terms. The Compensation Committee has retained Korn Ferry to serve as its independent advisor and to provide it with advice and support on executive compensation issues.

The Compensation Committee has reviewed and confirmed the independence of Korn Ferry as the Compensation Committee’s compensation consultant. Neither Korn Ferry nor any of its affiliates provides any services to UNIFI except for services provided to the Compensation Committee. In addition to Korn Ferry, the Compensation Committee has reviewed the independence of each other outside advisor in advance of receiving advice from such advisor.

Communications with the Board of Directors

Shareholders and other interested parties can communicate directly with any of the Company’s directors, by sending a written communication to a director at Unifi, Inc. c/o Corporate Secretary, 7201 West Friendly Avenue, Greensboro, North Carolina 27410. Shareholders and other interested parties wishing to communicate with Archibald Cox, Jr., as Lead Independent Director, or with the independent directors as a group may do so by sending a written communication to Mr. Cox at the above address. In addition, any party who has concerns about accounting, internal controls, or auditing matters may contact the Audit Committee directly by sending a written communication to the Chair of the Audit Committee at the above address or by calling toll-free 1-800-514-5265. Such communications may be confidential or anonymous. All such communications are promptly reviewed before being forwarded to the addressee. Any concerns relating to accounting, internal controls, auditing matters, or officer conduct are sent immediately to the Chair of the Audit Committee. UNIFI generally will not forward to directors a shareholder communication that it determines to be primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information about the Company.

 

22


 

 

Director Compensation

Pursuant to the Company’s Director Compensation Policy, each director who is considered “independent” within the meaning of the Director Independence Standards adopted by the Board of Directors, which incorporate the independence standards of the NYSE rules, receives compensation for his or her service on the Board, while each non-independent director receives no compensation for his or her service as a director. In fiscal 2021, the Company’s non-independent directors were Messrs. Ingle, Caudle, and Carey. The following table sets forth the compensation paid to each independent director who served on the Board in fiscal 2021:

2021 Director Compensation Table

 

Name

 

Fees Earned or

Paid in Cash

($)

 

Stock Awards

($)(1)

 

Option Awards

($)

 

 

Total

($)

 

Emma S. Battle

 

 

 

 

 

 

75,995

 

 

 

 

 

 

 

75,995

 

Robert J. Bishop

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

100,000

 

Archibald Cox, Jr.

 

 

 

 

 

 

125,000

 

(2)

 

 

 

 

 

125,000

 

James M. Kilts

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

100,000

 

Kenneth G. Langone

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

100,000

 

James D. Mead (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suzanne M. Present

 

 

 

 

 

 

115,000

 

(4)

 

 

 

 

 

115,000

 

Eva T. Zlotnicka

 

 

60,000

 

(5)

 

 

50,000

 

 

 

 

 

 

 

110,000

 

 

(1)

Represents the grant date fair value of either (i) Common Stock, in the case of Mses. Battle and Zlotnicka, or (ii) share unit awards that, in the case of all independent directors other than Mses. Battle and Zlotnicka, vested upon each director’s election at the 2020 Annual Meeting and were computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). Generally, the full grant date fair value is the amount that the Company would expense in the consolidated financial statements over the award’s vesting period. For additional information regarding the assumptions made in calculating these amounts, see Note 17 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2021. These amounts reflect the accounting expense and do not correspond to the actual value that will be recognized by the directors.

(2)

In addition to the annual retainer for his service as an independent director in fiscal 2021, Mr. Cox received (i) a $15,000 annual retainer for his service as Lead Independent Director and (ii) a $10,000 annual retainer for his service as Chair of the Compensation Committee.

(3)

On August 4, 2020, Mr. Mead notified the Company of his resignation from the Board of Directors, effective October 29, 2020.

(4)

In addition to the annual retainer for her service as an independent director in fiscal 2021, Ms. Present received a $15,000 annual retainer for her service as Chair of the Audit Committee.

(5)

In addition to the annual retainer for her service as an independent director in fiscal 2021, Ms. Zlotnicka received a $10,000 annual retainer for her service as Chair of the Corporate Governance and Nominating Committee.


23


 

 

The Corporate Governance and Nominating Committee reviews the form and amount of director compensation and makes recommendations to the Board of Directors for its consideration and approval. The Board approved the Company’s Director Compensation Policy on October 30, 2019. The compensation for UNIFI’s independent directors is as follows:

 

$100,000 annual retainer, where up to 50% of such amount is payable (at the director’s election) in cash and the remainder of such amount is an equity grant payable in shares of Common Stock;

 

$15,000 annual retainer for the Lead Independent Director, payable (at the director’s election) in cash or shares of Common Stock;

 

$15,000 annual retainer for the Chair of the Audit Committee, payable (at the director’s election) in cash or shares of Common Stock;

 

$10,000 annual retainer for the Chairs of the Compensation Committee and the Corporate Governance and Nominating Committee, payable (at such director’s election) in cash or shares of Common Stock; and

 

reimbursement of reasonable expenses incurred for attending Board and committee meetings.

A director may be issued stock units, in lieu of shares of Common Stock, which would be payable upon the director’s cessation of service as a member of the Board. The number of any shares of Common Stock or stock units granted to a director shall be determined based on the fair market value of the Common Stock on the date of the director’s election to the Board, and the number of shares of Common Stock underlying any stock option granted to a director shall be determined based on the Black-Scholes value of the Common Stock on the option grant date.

Any independent director who is initially appointed or elected to the Board other than at the annual meeting of shareholders will receive his or her annual retainer calculated on a pro rata basis based upon the period between the date of such appointment or election and the anticipated date of the next annual meeting of shareholders.

 

24


 

 

Information about our Executive Officers

Set forth below are the names, ages, and professional backgrounds of the Company’s executive officers, including all positions and offices with the Company held by each such person and each such person’s principal occupation or employment during at least the past five years. Each executive officer of UNIFI is elected by the Board and holds office from the date of election until thereafter removed by the Board.

Edmund M. Ingle. Mr. Ingle, age 56, has served as Chief Executive Officer of UNIFI and a member of the Board of Directors since June 2020. From May 2019 to June 2020, he served as Chief Executive Officer of the Recycling group of Indorama Ventures, a global chemicals company and a global integrated leader in PET and fibers serving major customers in diversified end-use markets. From May 2018 to June 2020, he was Chairperson and Chief Executive Officer of Indorama’s Wellman International division. Prior to that, Mr. Ingle was with UNIFI for approximately 30 years, during which time he held various key leadership positions, including Vice President of Global Corporate Sustainability, Vice President of Supply Chain, General Manager of the Company’s Flake and Chip business, Vice President and General Manager of REPREVE® Polymers, General Manager of the Company’s Nylon business, and Director of Global Procurement. Additional information about Mr. Ingle can be found under “Proposal 1: Election of Directors—Director Nominees” beginning on page 10 of this Proxy Statement.

Albert P. Carey. Mr. Carey, age 69, has served as Executive Chairman of the Board of UNIFI since April 2019 and a member of the Board of Directors since 2018. Mr. Carey previously served as Non-Executive Chairman of the Board of the Company from January 2019 to March 2019. In March 2019, Mr. Carey retired from PepsiCo, Inc., a consumer products company, after a 38-year career with the company in which he held a number of senior leadership roles, including Chief Executive Officer of PepsiCo North America from March 2016 to January 2019, Chief Executive Officer of PepsiCo North America Beverages from July 2015 to March 2016, Chief Executive Officer of PepsiCo Americas Beverages from September 2011 to July 2015, and President and Chief Executive Officer of Frito-Lay North America from June 2006 to September 2011. Additional information about Mr. Carey can be found under “Proposal 1: Election of Directors—Director Nominees” beginning on page 10 of this Proxy Statement.

Craig A. Creaturo. Mr. Creaturo, age 51, has served as Executive Vice President & Chief Financial Officer of UNIFI since September 2019. Mr. Creaturo served as Chief Financial Officer & Vice President-Administration of Chromalox, Inc., an advanced thermal technologies manufacturing company, from February 2015 to March 2019. Prior to that, he served as Chief Financial Officer of II-VI Incorporated, a publicly traded global leader in engineered materials and optoelectronic components, from 2004 to 2014, Treasurer of II-VI from 2000 to 2014, and Corporate Controller of II-VI from 1998 to 2000. From 1992 to 1998, he held a variety of audit roles at Arthur Andersen LLP.  Mr. Creaturo is a certified public accountant in the Commonwealth of Pennsylvania.

Hongjun Ning. Mr. Ning, age 54, has served as an Executive Vice President of UNIFI since July 2020, President of Unifi Textiles (Suzhou) Co. Ltd. (“UTSC”) (UNIFI’s subsidiary in China) since March 2020, and President of Unifi Asia Pacific (Hong Kong) Company, Limited (“UAP”) (UNIFI’s subsidiary in Hong Kong) since June 2017. Previously, he served as Vice President of UTSC from September 2013 to June 2017, Director of Sales & Marketing of UTSC from August 2008 to September 2013, and General Manager, Sales & Marketing of a former UNIFI joint venture in China from January 2006 to August 2008.

Lucas de Carvalho Rocha. Mr. Rocha, age 64, has served as an Executive Vice President of UNIFI since July 2020 and Vice President of Unifi Latin America (“ULA”) (UNIFI’s subsidiary in Colombia) and President of Unifi do Brasil, Ltda. (“UdB”) (UNIFI’s subsidiary in Brazil) since January 2018. Previously, he served as Director of Operations of UdB from April 1999 to January 2018. Prior to his career with UNIFI, Mr. Rocha also spent time at the following textile entities in Brazil: Fairway Filamentos SA (Rhodia & Hoechst J.V.), Textuval Indústria Têxtil Ltda., Rhodia SA (Rhone Poulenc Group), and Polyenka SA (ex-AKZOGroup).

25


 

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 the following named executive officers (“NEOs”) for fiscal 2021:

 

Edmund M. Ingle

  

Chief Executive Officer

 

 

Thomas H. Caudle, Jr.

  

Former President & Chief Operating Officer(1)

 

 

 

Albert P. Carey

  

Executive Chairman

 

 

Craig A. Creaturo

  

Executive Vice President & Chief Financial Officer

 

 

Hongjun Ning

  

Executive Vice President, President of UTSC, and President of UAP

 

 

 

 

(1)

On April 20, 2020, Mr. Caudle informed the Board that he would retire from his positions with the Company on June 27, 2021.  

 

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

 

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

Executive Summary

Company Performance Highlights

In fiscal 2021, the Company’s Polyester and Nylon Segments were adversely impacted by the COVID-19 pandemic, as manufacturing activity in the North and Central America regions has recovered less rapidly than in Asia and Brazil. Although productivity remains pressured by lower global demand, the Company’s Asia Segment continues to perform well with both new and existing customer programs. The Company’s Brazil Segment was able to navigate its domestic recovery more favorably than competitive importers, resulting in sales volume and market share growth compared to recent fiscal years. The Company believes the outperformance by the Brazil Segment includes the temporary capture of market share from competitive imports and higher conversion margin due to the unfavorable dynamics facing competitors regarding input and freight costs combined with weaker delivery speed. Such competition, pricing, and gross margins are expected to normalize over the mid- to long-term, especially following the exceptional gross margin rates achieved by the Brazil Segment during most of fiscal 2021.

Although sales volumes in the North and Central America regions were pressured in fiscal 2021, the Company’s operations benefited from selling price stability and responsiveness and sales mix improvements. Accordingly, the Company was able to achieve better-than-expected operating results in fiscal 2021. The Company achieved a significant year-over-year increase in its key performance indicators, including net sales growth of 10% and gross profit growth of 139%, along with operating income and net income levels that had not been achieved in recent fiscal years.

Additionally, the Company generated strong operating cash flows and reduced its debt principal during fiscal 2021 despite an increase in working capital following the economic rebound that occurred after the most severe months of demand pressures from the COVID-19 pandemic. The Company’s performance in fiscal 2021 has further strengthened its balance sheet and solidified the foundation for additional growth subsequent to the negative impacts of the COVID-19 pandemic.

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The Company believes that several aspects of its business will remain drivers for growth once the COVID-19 pandemic subsides, including: (i) continued sales and portfolio growth for its Asia Segment; (ii) U.S. market share recapture from its recent trade initiatives; (iii) continued commitments to sustainability by corporations, governments, and other entities leading to further demand for its REPREVE® platform; (iv) leading-edge innovation and commercialization efforts that deliver meaningful consumer products; and (v) continued expansion of its portfolio with additional markets, applications, and brand partners.

Executive Compensation Highlights

As described in greater detail below, the Company believes its executive compensation program should attract top executive talent, follow a pay-for-performance compensation model, and link executive retention to long-term shareholder value. Accordingly, the Company took the following actions during fiscal 2021 with respect to the compensation of its NEOs:

 

based annual incentive compensation payments to the NEOs, with the exception of Mr. Caudle, on Adjusted EBITDA (as hereinafter defined) targets for fiscal 2021, and made no payouts below applicable Adjusted EBITDA thresholds;

 

awarded a one-time cash payment to Mr. Caudle, who did not participate in the Company’s annual incentive compensation program, in recognition of his key strategic accomplishments during fiscal 2021;

 

entered into an employment agreement with Mr. Ning, in substantially the same form as the employment agreements between the Company and its other executive officers; and

 

awarded long-term incentives in the form of stock options and restricted stock units consistent with past practice.

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 Executive Retention to

Long-Term Shareholder Value

The Company’s executive compensation program should attract high-quality executives who possess the skills and talent necessary to support and achieve the Company’s 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 its 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 talented and experienced executives. 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.

27


 

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

 

set all components of executive compensation 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 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 the 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.

 

What the Company Does

 

What the Company Doesn’t Do

•     The Company’s pay-for-performance philosophy means the majority of executive officer compensation is “at risk” and tied to the creation of shareholder value.

 

•     The Company doesn’t discount, reload, or reprice stock option awards.

 

 

 

•     The Company’s stock ownership guidelines align the interests of the Company’s executives with those of its shareholders.

 

•     The Company doesn’t pay gross-ups for golden parachute excise taxes.

 

 

 

•     The Company uses objective financial performance measures in the annual incentive compensation plan closely tied to the Company’s business strategy.

 

•     The Company doesn’t permit hedging or short selling (profiting if the market price decreases) of UNIFI securities.

 

 

 

•     The Company has caps on payouts for annual incentive compensation.

 

•     The Company doesn’t design compensation plans that encourage unnecessary or excessive risk.

 

 

 

•     The Company has a robust clawback policy for annual and long-term incentive awards.

 

•     The Company doesn’t provide guaranteed minimum payouts of annual incentive opportunities.

 

 

 

•     The Company has engaged an independent compensation consultant.

 

•     The Company doesn’t provide excessive perquisites.

 

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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

Component

  

Description

  

Objectives

Base Salary

  

•   Fixed compensation that is reviewed periodically based on performance and changes in job scope and responsibilities.

  

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

 

•   Attract, retain, reward, and motivate talented 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 value for shareholders.

 

Long-Term Incentives

  

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

  

•   Align the economic interests of the Company’s executives with its shareholders by rewarding executives for stock price improvement.

 

•   Promote retention (through time-based vesting periods).

 

 

  

 

•   Supplemental retirement contributions based on executives’ respective base salaries earned over time, subject to continued service. 

  

 

29


 

Compensation

Element

  

Description

  

Objectives

Other Personal Benefits

  

•   Broad-based benefits provided to all of 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, principles, and policies of the Company’s executive compensation program, the program places approximately 60% of 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. During fiscal 2021, the Company used the Unifi, Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Amended 2013 Plan”) and the Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (the “Second Amended 2013 Plan”) to provide those equity-based awards. The Company believes the substantial weighting of performance-based compensation encourages its executives to achieve near-term and long-term operating performance goals designed to create or enhance shareholder value.

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 principal executive officer for NEOs other than the principal 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 goals and objectives for the Company.

As in the past, the Compensation Committee continued to consider a wide range of factors in making its fiscal 2021 compensation decisions for the Company’s 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 NEO’s performance and contribution to the Company’s success; budget guidelines established by the Board; and an assessment of the Company’s financial condition. Additionally, the Compensation Committee considered the Company’s fiscal 2020 operating and Adjusted EBITDA results, along with the existing economic climate. Based on this information and these factors, the Compensation Committee set executive compensation for fiscal 2021.

During fiscal 2021, the Compensation Committee engaged Korn Ferry as an independent advisor to assist the Compensation Committee with the administration of the Company’s executive compensation program. 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 Compensation Committee consults with Korn Ferry to gain a general understanding of compensation practices and trends of the Company’s peer group. 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.

Peer Group

The Compensation Committee periodically compares the Company’s compensation practices to those of other companies within its U.S. geographical footprint and industry (or related industries from which UNIFI might seek, or to which UNIFI possibly could lose, management talent). Such comparisons have been done

30


 

with the assistance of Korn Ferry. The Compensation Committee believes the comparison data provides useful information for the administration of the Company’s executive compensation program.

The Compensation Committee evaluates and approves of the peer group of companies each year. For fiscal 2021, the Compensation Committee considered a number of factors and determined to leave the peer group unchanged from fiscal 2020. It includes the following 10 companies:

 

•    Culp, Inc.

•    Interface, Inc.

•    Delta Apparel, Inc.

•    Lifetime Brands, Inc.

•    Ethan Allen Interiors Inc.

•    Oxford Industries, Inc.

•    Flexsteel Industries, Inc.

•    Superior Group of Companies, Inc.

•    Hooker Furniture Corporation

•    Vera Bradley, Inc.

 

The peer group allows the Compensation Committee to monitor the compensation practices of the Company’s primary competitors for executive talent. However, the Compensation Committee does not target any specific pay percentile of the peer group for the Company’s executive officers. Instead, this information is used to provide a general overview of market practices and trends and to ensure the Compensation Committee makes informed decisions regarding the Company’s executive compensation program.

Detailed Review of Compensation Components

Base Salary

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. The factors considered by the Compensation Committee in setting the NEOs’ base salaries include:

 

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

 

the executive’s performance and contribution to the Company’s success;

 

budget guidelines established by the Board; 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, principles, and policies. Therefore, the Compensation Committee consults with the principal executive officer and reviews his recommendations regarding the compensation of all NEOs (other than the principal executive officer) before making its final compensation decisions. Periodically, the principal executive officer meets with the other NEOs regarding their performance.

The Compensation Committee made no adjustments to the base salaries of the NEOs during fiscal 2021, because their base salaries were appropriate based on the executives’ roles during fiscal 2021.

Annual Incentive Compensation

To encourage executives to achieve near-term operating performance goals, the Company has established an annual incentive compensation plan in the form of a cash bonus. Certain NEOs employed during the fiscal year are eligible to earn annual bonuses based on the Company’s fiscal year performance provided they remain employed through the last day of the fiscal year. Any bonus payouts for NEOs employed after the beginning of a fiscal year are prorated.

31


 

The Compensation Committee uses EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and adjusted to exclude certain operating or non-operating income or expense items necessary to understand and compare the underlying results of the Company (“Adjusted EBITDA”), as a performance measure for the annual incentive compensation plan because the Compensation Committee believes Adjusted EBITDA serves as a high-level proxy for cash generated from operations, which is a key performance indicator used by the Board of Directors and management to assess the Company’s operating results generally. Accordingly, the Compensation Committee elected to use Adjusted EBITDA as the sole metric by which annual incentive compensation was calculated for fiscal 2021, which was consistent with fiscal 2020.

The Compensation Committee believes that the single performance measure of 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 operating performance. In accordance with this belief, the annual incentive compensation for the U.S.-based NEOs was based on Global Adjusted EBITDA for the Company and the annual incentive compensation for Mr. Ning was based on Adjusted EBITDA for the subsidiary over which he serves as President, as described below.

For fiscal 2021, the Compensation Committee set the Global Adjusted EBITDA target for the Company at $24.7 million. The target Global Adjusted EBITDA level for the Company was based on the Board-approved business plan for fiscal 2021 and represented an increase from the Company’s actual fiscal 2020 Global Adjusted EBITDA of $16.6 million. Mr. Ning’s annual incentive compensation was based on an Adjusted EBITDA target of 70.0 million Chinese Renminbi (“RMB”) for UAP.

The annual incentive bonus awarded to NEOs may be 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 principal 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 compensation plan 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 mergers 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, either the Compensation Committee or the Board has the discretion to award additional bonus compensation even if a NEO would not be entitled to any bonus based on the targets previously determined.

For fiscal 2021, the Compensation Committee set annual incentive opportunities, threshold, target, and maximum performance levels, and corresponding potential annual incentive payments to the eligible NEOs (based on percentages of base salary) as set forth in the tables below.

 


32


 

 

 

 

Annual Incentive Opportunity

(as a % of Base Salary)

Name(1)

 

Threshold

 

Target

 

Maximum

Edmund M. Ingle

 

 

50.0

%

 

 

 

100.0

%

 

 

 

150.0

%

 

Craig A. Creaturo

 

 

37.5

%

 

 

 

75.0

%

 

 

 

120.0

%

 

Hongjun Ning

 

 

30.0

%

 

 

 

60.0

%

 

 

 

100.0

%

 

 

Name(1)

 

Performance Measure

 

Weight

 

Target Performance

Edmund M. Ingle

 

Global Adjusted EBITDA

 

 

100.0

%

 

 

24.7M

USD

 

Craig A. Creaturo

 

Global Adjusted EBITDA

 

 

100.0

%

 

 

24.7M

USD

 

Hongjun Ning

 

UAP Adjusted EBITDA

 

 

100.0

%

 

 

70.0M

RMB

 

 

(1)

Messrs. Carey and Caudle did not participate in the Company’s annual incentive compensation plan.

The following table shows the threshold, target, and maximum performance levels established by the Compensation Committee for fiscal 2021 as well as the Company’s actual performance in fiscal 2021.

 

Performance Metric

 

Threshold

Performance

 

Target

Performance

 

Maximum

Performance

 

Actual Fiscal

2021 Performance

Global Adjusted EBITDA

 

19.8M

USD

 

 

24.7M

USD

 

 

29.6M

USD

 

 

64.6M

USD

 

 

UAP Adjusted EBITDA

 

56.0M

RMB

 

 

70.0M

RMB

 

 

83.9M

RMB

 

 

119.2M

RMB

 

 

 

 

 

 

The fiscal 2021 Global Adjusted EBITDA performance shown above reflects the Company’s publicly reported results. Adjusted EBITDA is a non-GAAP financial performance measure. A reconciliation of Net income, which is the most directly comparable GAAP financial measure, to Adjusted EBITDA is presented in Appendix A to this Proxy Statement.

Based on the performance measures established by the Compensation Committee for fiscal 2021 and the Company’s actual performance (adjusted as described above), the annual incentive compensation award earned by the NEOs for fiscal 2021 is shown in the table below.

 

 

 

Fiscal 2021

Annual Incentive Compensation Payout

 

Name

 

% of Base Salary

Amount ($)

 

Edmund M. Ingle

 

150.0%

 

 

 

1,012,500

 

Craig A. Creaturo

 

120.0%

 

 

 

576,000

 

Hongjun Ning

 

100.0%

 

 

 

320,000

 

 

Long-Term Incentive Compensation

The Compensation Committee believes that stock-based compensation is essential to align the interests of the Company’s management and its 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 both the Amended 2013 Plan and the Second Amended 2013 Plan, the Compensation Committee has determined that an equal blend of incentive stock options and restricted stock units is appropriate for covered officers (as defined below under “—Officers Stock Ownership Policy”) to provide a mix composed of awards whose value depends upon a future increase in the value of the Common Stock (incentive stock options) and awards that serve primarily as a retention or recruitment tool (restricted stock units). For other key employees, the Compensation Committee has determined that restricted stock units are preferable, because they serve as an important retention or recruitment tool.

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Consistent with those determinations, in fiscal 2021, the Compensation Committee awarded stock options and restricted stock units to the NEOs on October 28, 2020 (except as otherwise noted) as shown in the Grants of Plan-Based Awards table beginning on page 39.

The stock option awards vest and become exercisable 25% on the first anniversary of the grant date, 25% on the second anniversary of the grant date, and 50% on the third anniversary of the grant date. As “incentive stock options” (to the applicable maximum permitted under either the Amended 2013 Plan or the Second Amended 2013 Plan, as may apply), these stock options offer the NEO the opportunity to receive favorable tax treatment if he retains the shares acquired upon exercise for at least one year. The restricted stock units vest 25% 30 days after the first anniversary of the grant date, 25% on the second anniversary of the grant date, and 50% on the third anniversary of the grant date.

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 (other than Mr. Ning) with perquisites, such as car allowances, reimbursements for car expenses, or payment of country club dues. In fiscal 2021, Mr. Ning was (i) reimbursed for the cost of one personal trip to the United States, (ii) reimbursed for the cost of rental housing in China, (iii) afforded de minimis personal use of Company car services, and (iv) reimbursed for de minimis personal tax services.

Retirement Benefits.    In order to provide employees at all levels with greater incentives, the Company makes available to all U.S.-based employees, including the NEOs, the opportunity to make contributions to the Unifi, Inc. Retirement Savings Plan (the “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 2021, 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 (subject to standard eligibility waiting periods), including the NEOs. The cost of the health plans is covered partially through employee payroll deductions (except for Mr. Ning, who incurs no such 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 currently employed NEOs, with the exception of Messrs. Ingle and Carey, currently receive or will 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. As described in greater detail preceding the Nonqualified Deferred Compensation table on page 41, the SERP provides additional retirement benefits payable to the Company’s NEOs following their termination of employment.

Employment Agreements.    The Company is party to employment agreements with each of Messrs. Ingle, Carey, Creaturo, and Ning. With the exception of Mr. Carey, each employment agreement provides that each executive will (i) receive an annual base salary at the annual rate set forth in the agreement, (ii) be eligible to receive bonuses and to participate in compensation plans of the Company in accordance with any plan or decision that the Board may determine from time to time, (iii) be paid or reimbursed for business expenses, and (iv) be entitled to participate in other employment benefits generally available to other executives of the Company. Each employment agreement (with the exception of Mr. Carey’s agreement) also contains provisions regarding the termination of the executive’s employment and related severance obligations. Mr. Carey’s employment agreement provides that he will (A) receive an annual base salary at the annual rate set forth in the agreement and (B) be paid or reimbursed for business expenses. Mr. Carey’s employment agreement does not provide eligibility for bonus plan or other employment benefits generally available to other executives of the Company. The executives agreed in their employment agreements to

34


 

neither compete with the Company or its affiliated entities nor solicit their respective customers, suppliers, or employees for the 12 months immediately following termination of employment.

Calculations of the estimated severance payments and benefits payable under the employment agreements are set forth under “Executive Compensation Tables—Potential Payments Upon Termination of Employment or Change in Control” beginning on page 42.

Policy on Executive Officer and Employee Incentive Compensation Recoupment

The Company has a written policy to address the recoupment of performance-based compensation awarded to or earned by an executive officer if there is a restatement of the Company’s financial results due to the material noncompliance of the Company with any financial reporting requirement under the federal securities laws. In the event of a restatement, the Board shall review the performance-based compensation awarded to or earned by the executive officers for the three-year period prior to the restatement event and, if the Board determines in its reasonable discretion that any such performance-based compensation would not have been awarded to or earned by an executive officer based on the restated financial results, the Board shall seek to recover from such executive officer any portion of the performance-based compensation that is greater than that which would have been awarded or earned had it been calculated on the basis of the restated financial results.

The Company’s recoupment policy also addresses the recoupment of performance-based compensation awarded to or earned by any current or former employee if such employee engaged in certain misconduct (e.g., embezzlement, fraud, or theft or unethical behavior that harms the Company’s business, reputation, or other employees). In such event, the Board may require reimbursement of compensation granted, earned, or paid under any Company annual incentive or long-term incentive cash plans to such employee and cancellation of outstanding equity awards and reimbursement of any gains realized on the exercise, settlement, or sale of equity awards held by such employee at any time during the three-year period ending on the date on which such misconduct is discovered.

Officers Stock Ownership Policy

The Company has adopted an 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 and any person who holds the position of Vice President or higher with the Company, its primary operating subsidiary, and possible other significant operating subsidiaries (“VP-Level Personnel”) (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 a 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 at the end of the fiscal year.

The stock ownership expectation, the calculation of shares of Common Stock counted towards the ownership expectation, and the valuation of shares of Common Stock for purposes of the policy are as set

35


 

forth below. All covered officers were in compliance with their respective stock ownership expectations under the terms of the policy at the end of fiscal 2021.

 

 

 

 

 

 

Stock Ownership

Expectation

  

Shares of Common Stock

Counted Towards

Ownership Expectation

  

Valuation of Shares

of Common Stock

•     CEO: At least three times annual base salary.

•     Other Executive Officers: At least two times annual base salary.

•     VP-Level Personnel: At least one times annual base salary.

  

•     Shares of Common Stock owned directly by the officer and shares of Common Stock held indirectly (e.g., by his or her spouse or a trust for the exclusive benefit of one or more such persons).

•     The in-the-money value of vested, but unexercised, stock options.

•     Restricted stock units that have vested or are no longer subject to forfeiture.

  

•     The average of the daily closing market prices during the fiscal year.

 

If an officer falls below the applicable minimum ownership guideline due solely to a decline in the value of the Common Stock, the officer will not be required to acquire additional shares to meet the guideline; however, the officer will be required to retain all shares then held (except for shares withheld to pay withholding taxes or the exercise price of options) until such time that the officer again satisfies the policy’s minimum ownership requirements.

Tax Impact on Compensation

The Compensation Committee considers the tax and accounting effects of compensation components when designing the Company’s incentive and equity compensation plans. However, the Compensation Committee has not adopted a policy that all compensation must be deductible for federal income tax purposes.

Under Section 162(m) of the Internal Revenue Code of 1986 (the “Code”), as amended by the Tax Cuts and Jobs Act in December 2017, the Company may not deduct compensation in excess of $1 million paid to “covered individuals” (as defined in Section 162(m)). Therefore, compensation in excess of $1 million paid to the covered NEOs is not deductible by the Company for federal income tax purposes unless it qualifies for a transition relief provision included in the Tax Cuts and Jobs Act for certain arrangements in place as of November 2, 2017.

Risk Analysis of Compensation Programs and Practices

While the Company’s compensation programs 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 Common 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

36


 

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-term and long-term focus.

 

The overall compensation of the Company’s 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 plans are based on performance criteria that the Compensation Committee believes to be challenging, yet reasonable and attainable without excessive risk-taking.

 

The Company caps payouts from its annual incentive compensation plan.

 

The Company has a compensation recoupment policy that allows the Company to recover certain compensation from an executive officer in the event of a restatement of its financial results due to the material noncompliance of the Company with any financial reporting requirement under the 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 the Company’s other shareholders.

 

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

Shareholder Say-on-Pay Vote

At the 2020 Annual Meeting, the Company’s shareholders had the opportunity to vote, on an advisory basis, on a proposal to approve the compensation of the NEOs for fiscal 2020. This is referred to as a “say-on-pay” proposal. Approximately 97% of the votes cast at the 2020 Annual Meeting on the say-on-pay proposal were voted in favor of the proposal. The Compensation Committee believes this vote result reflects robust concurrence by the Company’s shareholders with the Company’s philosophy and approach to executive compensation. Additionally, management will continue to have open, transparent communications with the investment community throughout fiscal 2022. At the Annual Meeting, shareholders will have the opportunity to indicate their views on the Company’s NEO compensation for fiscal 2021. For additional information, see “Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation.” The Compensation Committee will continue to consider the vote results for say-on-pay proposals in future years when making compensation decisions for the Company’s NEOs.

 

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Executive Compensation Tables

The following tables, narratives, and footnotes describe the total compensation and benefits for the NEOs for fiscal 2021, as well as the total compensation and benefits for the NEOs for the two preceding fiscal years.

Summary Compensation Table

 

Name

 

Position

 

Year

 

Salary

($)

 

 

Bonus

($)(1)

 

 

Stock

Awards

($)(2)

 

 

Option

Awards

($)(2)

 

 

Non-Equity

Incentive Plan

Compensation

($)(3)

 

 

All Other

Compensation

($)(4)

 

 

Total

($)

 

Edmund M. Ingle

 

Chief Executive

 

2021

 

 

675,000

 

 

 

 

 

 

 

 

 

 

 

 

1,012,500

 

 

 

60,873

 

 

 

1,748,373

 

 

 

Officer

 

2020

 

 

25,961

 

 

 

 

 

 

670,000

 

 

 

330,000

 

 

 

 

 

 

 

 

 

1,025,961

 

Thomas H. Caudle, Jr.

 

Former President &

 

2021

 

 

770,000

 

 

 

230,000

 

 

 

 

 

 

 

 

 

 

 

 

162,674

 

 

 

1,162,674

 

 

 

Chief Operating

 

2020

 

 

770,000

 

 

 

 

 

 

192,488

 

 

 

192,501

 

 

 

 

 

 

156,846

 

 

 

1,311,835

 

 

 

Officer

 

2019

 

 

770,000

 

 

 

 

 

 

270,864

 

 

 

404,479

 

 

 

 

 

 

163,729

 

 

 

1,609,072

 

Albert P. Carey

 

Executive

 

2021

 

 

700,000

 

 

 

 

 

 

350,000

 

 

 

350,000

 

 

 

 

 

 

 

 

 

1,400,000

 

 

 

Chairman

 

2020

 

 

700,000

 

 

 

 

 

 

699,981

 

 

 

1,779,434

 

 

 

 

 

 

 

 

 

3,179,415

 

Craig A. Creaturo

 

Executive Vice

 

2021

 

 

480,000

 

 

 

 

 

 

120,000

 

 

 

120,000

 

 

 

576,000

 

 

 

57,303

 

 

 

1,353,303

 

 

 

President &

 

2020

 

 

387,692

 

 

 

 

 

 

411,000

 

 

 

105,904

 

 

 

 

 

 

117,049

 

 

 

1,021,645

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hongjun Ning

 

Executive Vice

 

2021

 

 

320,000

 

 

 

 

 

 

160,000

 

 

 

 

 

 

320,000