Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 60

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 60
---
, as well as historical consolidated performance. Critical factors, such as the potential for continued macro-economic headwinds, inflationary trends affecting consumer discretionary spending, current demand levels for furniture and bedding, and pressure from ongoing global trade negotiations and related tariff and other measures, were also considered in setting the performance levels. Consistent with the approach used in fiscal 2025, the

<div align='center'>38</div>

target adjusted EBITDA goal for fiscal 2026 was set well above the internal operating budget and requires significant improvement compared to performance in fiscal 2025.

The practice of granting long-term incentive equity awards was continued for fiscal 2026 and, consistent with fiscal 2025, NEOs were granted only performance-based restricted stock units along with a performance-based long-term incentive cash component for above-target award opportunities. The Committee implemented this structure to continue to align NEO pay with performance.

Grants of performance-based restricted stock units are based on adjusted EBITDA goals in fiscal 2028 (i.e., in the third year from grant), with the number of units that can be earned ranging from 0% to 100% of target award levels. Similar to prior performance-based RSU grants, 20% of target RSUs can be earned at the threshold level, with award funding for results in between threshold and target levels determined using straight-line interpolation, with any earned awards payable in stock. Maximum equity-based RSU award opportunities are capped at 100% of target to help manage equity plan dilution and share usage. Threshold and target performance hurdles for fiscal 2028 require significant improvement over current levels. Consistent with our historical practice, NEOs and other participants will be able to earn total long-term incentive awards of up to 200% of target award opportunities. However, for the fiscal 2026 grant, the above-target portion will be denominated in and payable in cash to help manage equity plan dilution and share usage, with the maximum adjusted EBITDA goal set meaningfully above the target hurdle associated with RSU grants. Award funding for results in between target and maximum levels will be determined using straight-line interpolation and payable in cash. The Committee believes the fiscal 2026 long-term incentive program will further reinforce the Company’s strategic transformation initiatives in support of long-term value creation while demonstrating responsible equity grant usage given the current stock price level. Compared with fiscal 2025, target and maximum long-term incentive award opportunities for NEOs remained unchanged while total incentive award opportunities are lower due to the above-re