Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 42

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 42
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 them; and

aligning the long-term interests of senior management with those of our shareholders by providing all long-term incentive award opportunities in the form of performance-based restricted stock units tied to challenging goals for a three-year performance period, with any earned awards paid in stock and subject to adjustment based on the Company’s three-year total shareholder return relative to industry peers.

As described below under “—Compensation Elements—Position Relative to Market and Peer Comparison Group,” and “—Compensation Elements—Base Salary,” in response to ongoing macroeconomic uncertainty and market volatility, and in light of financial results below Company expectations, the Committee again delayed its prior plan to position base salaries and target short- and long-term award opportunities at or near market median levels in fiscal 2025. Moreover, no NEO received an increase in base salary for fiscal 2025, including our chief executive officer, whose salary has been frozen since fiscal 2023. Based on these considerations, our executive compensation program for fiscal 2025 generally comprised:

setting base salaries at levels generally believed to be well below the 50th percentile market level compared to the Company’s fiscal 2025 peer group;

setting challenging financial targets for annual cash incentives, 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, despite ongoing economic headwinds;

providing only performance-based awards for long-term equity incentives to NEOs in order to align executive pay with the Company’s longer-term success and shareholder interests; and

setting challenging performance goals for the fiscal 2025 long term equity incentive program, which required significant improvements in profitability.

Our corporate culture and compensation philosophy call for rewarding successful results, rather than effort, through performance-leveraged and variable incentives. Our compensation program for fiscal 2025 was primarily intended to support the following:

continuing to be a leader in product innovation in our industry;

a planned and disciplined approach to managing our business and the utilization of capital;

maintaining a strong focus on increasing earnings, return on capital, cash generation, balance sheet management, and shareholder returns;

prudent/calculated risk taking;

providing only very limited perquisites;

being more team-oriented than individual accountability oriented;

decision making that is decentralized as pertains to sales, marketing, and operations, and centralized as pertains to strategic matters; and

a balanced perspective between short-term and long-term incentives and goals.

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Compensation Elements The overall compensation program for fiscal