Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 7

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 7
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 received awards under the fiscal 2025 annual cash incentive program.

Long-term equity incentive awards that were previously granted under the long-term incentive compensation plan (LTIP) for a three-year period ended in fiscal 2025 consisted of a mix of 75% performance-based stock awards and 25% service-based stock awards for our chief executive officer and a mix of one-half performance-based stock awards and one-half service-based stock awards for all other executive officers. For each reporting unit, cumulative adjusted operating income (loss) over the three-year performance period for the applicable reporting unit was the metric for the performance-based stock awards. Operating results for each reporting unit during the applicable three-year period were below the threshold performance hurdle for these awards due primarily to the above-referenced industry and macroeconomic conditions. As a result, no performance-based stock awards eligible to vest in fiscal 2025 were earned by any of our executive officers.

Notably, our Compensation Committee did not alter or adjust the performance targets originally set under the fiscal 2025 annual cash incentive plan or under the above-referenced long-term equity incentive compensation plan to favorably benefit any participants despite greater-than-expected macroeconomic, industry, global trade/tariff and other headwinds faced by the Company during the applicable performance periods.

Our Compensation 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 our Compensation Committee’s

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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 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 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 any award under the fiscal 2025 annual cash incentive program due to below-threshold performance by the Company and