Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 37

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 37
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 the fiscal 2025 executive compensation program through short-term and long-term incentive plans that could result in compensation at, above, or below targeted levels based on actual versus targeted performance results. Short-term (annual) cash incentive compensation for fiscal 2025 tied award opportunities to measures of operating, cash flow, and revenue performance in order to focus participants on profitability, top line sales growth, cash generation and balance sheet management during a time of continued uncertainty due to industry and macroeconomic challenges. For fiscal 2025, cash incentive award opportunities were tied to measures of annual adjusted operating income (loss), adjusted operating cash flow, and net sales, with a weighting of 60% for adjusted annual operating income (loss), 20% for adjusted operating cash flow, and 20% for net sales, in each case, of the applicable reporting unit. For executive officers in the executive shared services reporting unit (which includes corporate senior officers and managers), these measures were based on the Company's consolidated results. For the executive officer in our

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mattress fabrics division reporting unit, these measures were based on the results of our mattress fabrics operating segment. Any earned award for the adjusted operating cash flow and net sales components was subject to a downward adjustment of 40% if adjusted operating income (loss) was below a threshold level established for the applicable reporting unit, and no bonus could be earned for any component if adjusted operating income (loss) was significantly below the threshold level set for the applicable reporting unit. The target goals for each metric were generally set above the Company's internal annual operating plan budgets for each applicable reporting unit and required significant year-over-year improvement in order to receive a target payout. As such, the performance hurdles for each reporting unit were considered to be challenging in light of business conditions and expectations. As discussed in more detail below, no NEOs received any annual cash incentive compensation for fiscal 2025.

The practice of granting long-term equity incentive awards was continued for fiscal 2025. However, instead of granting a combination of performance-based and service-based restricted stock units consistent with our historical practice, grants to all NEO participants consisted solely of performance-based restricted stock units in fiscal 2025. The Committee implemented this structure in response to feedback from shareholders, as well as to more closely manage the Company's stock-based compensation expense during what it anticipated to be challenging business conditions during the applicable performance period. The performance-based incentive awards granted to NEOs in fiscal 2025 also reflect the Committee's continued focus