Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 45

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 45
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 market when superior performance occurs, and below market when performance results are below target levels. Base Salary The Committee considers base salaries to be a fixed expense and, as discussed previously, began setting them in fiscal 2022 based on the gradual implementation of pay positioning targets for our NEOs. However, during fiscal 2023, in response to ongoing macroeconomic headwinds affecting the Company’s business and industry, as described in more detail above, the Company temporarily implemented a freeze on base salaries for most employees making over $150,000, including all NEOs. This salary freeze remained in effect for all NEOs throughout fiscal 2023. For fiscal 2024, based on ongoing macroeconomic uncertainty and market volatility, and in light of recent financial results, the Company again delayed any further implementation of adjusting executive pay to move towards the targeted pay positioning targets, and instead executives other than the chief executive officer were eligible for modest merit increases

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based on individual performance. Our chief executive officer, Mr. Culp, did not receive a salary increase in fiscal 2024 at his request in light of financial results that were below expectations. For fiscal 2025, neither Mr. Culp nor any of the other NEOs received salary increases due to the continued macroeconomic uncertainty and market deterioration. As such, our chief executive officer has not received a salary increase since fiscal 2022. Moreover, the Committee believes the base salaries for NEOs in fiscal 2025 remained well below the 50th percentile market level compared to the Company’s peer group.

No increases in base salary are currently anticipated for NEOs in fiscal 2026 due to the persistent macroeconomic and industry uncertainty; however, the Committee may re-evaluate NEO salaries later in fiscal 2026 if there is significant improvement in Company performance and market conditions.

Annual Incentive Plan

Our fiscal 2025 annual incentive plan provided for potential cash bonus payments to plan participants based upon actual performance versus pre-established metrics tied to the Company’s annual business plan and strategic priorities. For fiscal 2025, award opportunities were tied to measures of adjusted annual operating income (loss), adjusted operating cash flow, and net sales, with a weighting of 60% for adjusted annual operating income (loss), 20% for adjusted operating cash flow, and 20% for net sales, with each component separately funded. The plan provided for cash bonuses based upon these metrics for the entire Company in the case of the executive shared services reporting unit (which