Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 41

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 41
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Us from the fiscal 2023 grant were earned by any participants.

Additional details about the Company’s LTIP, including information with respect to long-term incentive awards granted in fiscal 2025, are discussed later in this Compensation Discussion and Analysis section under the heading “Long-Term Incentive Awards.”

The Committee determined that fiscal 2025 pay levels for executive officers were appropriate, aligned with our strategic objectives, and consistent with our pay-for-performance philosophy. This determination was based on the Committee’s primary focus on profitability, top line sales growth, cash generation, and balance sheet management during fiscal 2025; and also taking into account that:

executive officer base salaries in fiscal 2025 were generally believed to be well below the 50 th percentile market level compared to the Company’s peer group, with neither the Company's chief executive officer nor any other executive officers receiving salary increases during fiscal 2025 and with the Company's chief executive officer also not receiving a salary increase in fiscal 2023 or fiscal 2024;

adjusted operating income (loss), adjusted operating cash flow, and net sales targets for each reporting unit in the fiscal 2025 annual cash incentive program were set at levels considered to be very challenging, generally requiring significant year-over-year improvement and performance above the Company's internal annual operating plan budgets for each reporting unit to achieve a target payout, with no executive officer earning an award under the fiscal 2025 annual cash incentive program due to below-threshold performance by the Company and the mattress fabrics reporting unit; and

the three-year cumulative adjusted operating income target for the performance-based shares granted under the fiscal 2023 LTIP that were eligible to vest in fiscal 2025 was set at a level considered to be very challenging, with no executive

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officers earning any performance-based shares under such award due to the Company's below-threshold operating performance during the applicable performance period.

Overview and Objective –Compensation Strategy

The primary purpose of our executive compensation program is to reinforce key business and strategic objectives in support of long-term value creation. The Committee believed that the best way to accomplish this purpose was to focus the fiscal 2025 program on the following objectives:

embracing a pay-for-results philosophy, with total pay aligned with Company performance success through the use of management incentives;

attracting and retaining management with the knowledge, skills, and ability to lead the Company successfully;

fairly compensating management for their service to our Company, which in turn helps to retain and motivate