Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 48

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 48
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 well above the annual operating budget. |

As shown above, performance goals required significant year-over-year improvement versus the mattress fabrics reporting unit’s adjusted operating loss result of $(6,845,000) in fiscal 2024. Moreover, the target performance goal for net sales required year-over-year improvement versus the mattress fabrics segment's net sales result of $116,370,000 in fiscal 2024. The mattress fabric reporting unit's actual adjusted operating income (loss), adjusted operating cash flow, and net sales results for fiscal 2025 were below the threshold performance hurdles for each measure. As a result, Mr. Bruno did not earn a payout under the fiscal 2025 annual incentive plan. The potential threshold, target, and maximum award opportunities that were available to our NEOs under this plan to are reflected in the Grants of Plan-Based Awards table in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns. In light of the challenging business environment facing the Company, the Committee focused on profitability, top line sales growth, cash generation, and balance sheet management during fiscal 2025. The Committee believes the lack of any payouts under the annual cash incentive plan was appropriate in light of performance outcomes in those areas and consistent with the Company's pay for performance philosophy. Fiscal 2025 Long-Term Incentive Awards In accordance with our overall compensation strategy, the Committee has established a program of granting long-term equity incentive awards to our NEOs pursuant to the Company’s Amended and Restated Equity Incentive Plan (previously known as the 2015 Equity Incentive Plan, prior to its amendment in 2023). Grants to our NEOs in fiscal 2025 consisted solely of performance-based RSU opportunities rather than the mix of performance-based and service-based RSU opportunities traditionally granted to NEOs. The Committee implemented this structure in response to feedback received from shareholders indicating a preference for a higher weighting of performance-based versus service-based awards under the long-term incentive program, as well as to align pay with longer-term Company performance success and also to continue our focus of aligning the long-term interest of management with those of our shareholders. Award vesting for the performance-based RSUs granted in fiscal 2025 is tied to the cumulative adjusted operating income (loss) of the applicable reporting unit for a three-year performance period ending as of the conclusion of our fiscal year 2027, with any earned awards payable in stock following the end of the three-year vesting period. The Committee implemented this