Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 38

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 38
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 on aligning executive compensation with longer-term Company performance success, as well as aligning the long-term interest of senior management with that of our shareholders. The vesting conditions for these performance-based units are based on the applicable reporting unit's three-year cumulative adjusted operating income goals, with all goals set at the time of grant and with any earned awards subject to adjustment by up to +/- 25% based on the Company’s three-year relative total shareholder return performance as compared to the Company’s peer group, as described in detail below. As was the case with the fiscal 2025 annual cash incentive program, performance hurdles for our fiscal 2025 performance-based restricted stock awards were stretch goals set at levels considered to be challenging for the three-year period.

In addition to these major elements of executive compensation, the Company provided a limited selection of additional benefits and perquisites to NEOs during fiscal 2025.

Company Performance Highlights and Effects on Compensation

The Company continued to face a difficult business environment during fiscal 2025. The ongoing slowdown in demand for home furnishings, soft home sales, reduced discretionary spending on consumer durables, inflation concerns, and general economic uncertainty all played a role in creating weakness in the domestic mattress and residential home furnishings industries. In addition, the market uncertainty derived from the recent global trade discussions and increased tariff and related measures imposed upon goods imported into the United States at various junctures also contributed to what remained very difficult business conditions. Our financial results for fiscal 2025 reflect these challenging conditions, with lower sales for the Company overall and for both our mattress fabrics and upholstery fabrics operating segments compared to the prior fiscal year. Despite these external pressures, the Company, under the leadership of its executive officers, made substantial strides in reducing its cost structure and improving its operating efficiency to better navigate the continued difficult industry environment and position the Company to take advantage of any improvement in business conditions.

In response to the continuing challenges presented by the current home furnishings industry environment, the Company successfully completed a multi-faceted restructuring plan in fiscal 2025 that was designed to reduce costs, improve asset utilization, and drive performance and profitable growth. This restructuring plan, which was primarily focused within the Company’s mattress fabrics segment and, to a lesser extent, its upholstery fabrics segment, included the following strategic actions: (i) consolidating the Company’s North American mattress fabrics operations, including a phased wind-down and closure of the Company’s manufacturing plant in Quebec, Canada, and the incorporation of the knitting and finishing capacity at this plant into the Company’s facility in