Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 58

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 58
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 need to focus on key strategic priorities for the Company in the face of significant industry and macro-economic uncertainty.                                                                                                                                                                                                     |     | The Committee considered this feedback and acknowledged that it also desires and expects to return to an EVA or ROC metric for the annual cash incentive plan in the future, once business conditions stabilize, but the Committee believed that the measures of adjusted operating income (loss), adjusted operating cash flow, and net sales were appropriate metrics for the fiscal 2025 annual cash incentive program in order to align with key strategic priorities of returning to profitability, growing top line sales, generating cash, and maintaining the Company's solid balance sheet in an ongoing challenging environment. |

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In addition to the above-described shareholder outreach, we continuously monitor all of our executive compensation program elements and practices and how they compare with current market practices and align with our overall compensation philosophy. Over the past several fiscal years, the Committee took additional action to enhance various aspects of our compensation program, including:

adding a negative moderator/gatekeeper to the Company's fiscal 2024 annual incentive award program to reduce earned awards for adjusted operating cash flow and net sales components in the event adjusted operating income (loss) for the applicable reporting unit falls below a threshold level, with no award being earned in the event adjusted operating income (loss) falls significantly below the threshold level;

adding a gatekeeper to the Company's fiscal 2024 long term incentive award program to provide that no awards will vest, and no shares will be earned, if the cumulative three-year adjusted operating income for the applicable reporting unit is not positive for the three-year overall performance period;

adding a relative total shareholder return (TSR) element to the performance criteria for the LTIP for NEOs;

enhancing and expanding anti-hedging and anti-pledging policies;

modifying the change of control provisions of incentive compensation awards to a “double trigger,” requiring adverse consequences in addition to a change of control before accelerated vesting of compensation or other benefits;

adding a clawback feature to the annual incentive plan for NEOs to match the previously existing clawback feature in the LTIP award agreement and enacting a new clawback policy for all incentive-based compensation to executive officers; and

adopting share ownership and share retention requirement policies applicable to executive officers and directors.

Executive Compensation Program Changes for Fiscal 2026

For fiscal 2026, the Committee again worked with Pearl Meyer to evaluate our executive compensation program. Based on this review, our executive compensation program for fiscal 202