Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 79

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 79
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 primary purpose of the Company’s executive compensation program is to reinforce key business and strategic objectives in support of long-term value creation. To that end, the fiscal 2025 compensation program focused on four objectives:

Embracing a pay-for-results philosophy, with total pay aligned with Company performance success through the use of management incentives;

Attracting and retaining management with the knowledge, skills, and ability to lead the Company successfully;

Fairly compensating management for their service to our Company, which in turn helps to retain and motivate 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.

The Compensation Committee, which is comprised exclusively of independent directors, approved an executive compensation philosophy in fiscal 2021 to begin positioning base salaries and target short-term and long-term incentive award opportunities for NEOs at or near market 50thpercentile (or median) levels, as compared to the Company’s peer group, through gradual salary and incentive compensation increases over time, while continuing to place significant emphasis on variable pay to help align executive pay with performance and long-term shareholder value creation. However, this program was paused in fiscal 2023 in response to macroeconomic and industry headwinds affecting the Company’s business, when the Company implemented a freeze on base salaries for most employees with base salaries over $150,000, including all of our NEOs at the time. In fiscal 2024, the Company again delayed any further implementation of adjustments to executive pay to move toward peer-median targets. Instead, executives other than the chief executive officer received modest (four percent) base salary merit increases based on individual performance, in line with salary increase percentages for other salaried employees. The chief executive officer requested to continue the salary-freeze already in place for him in fiscal 2024, in light of recent financial results for the Company that were below expectations. 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