Ronald S. Chandler

About Ronald S. Chandler

Ronald S. Chandler is Vice President and Corporate Controller of Culp, Inc., serving as the company’s Principal Accounting Officer since March 2025. He joined Culp in January 2014 as Assistant Corporate Controller, became Corporate Controller in July 2021, and was elevated to VP & Corporate Controller alongside his PAO appointment in March 2025; earlier roles include Accounting Manager at Inmar (2010–2014) and audit associate roles at Grant Thornton (2006–2010). Age 46. As context for incentive alignment, Culp’s FY2025 net sales declined 5.4% to $213.2M and loss from operations widened to $(18.4)M amid restructuring; however adjusted operating loss improved ~15% YoY excluding restructuring as management prioritized profitability, cash generation, and balance-sheet discipline .

Past Roles

Fixed Compensation

• Executive pay levels remained frozen in FY2025 (and CEO since FY2023), with the Compensation Committee maintaining executive base salaries generally below the 50th percentile of peers given macro headwinds; no across-the-board FY2026 increases are anticipated absent material performance improvement .

Performance Compensation

Culp’s incentive design emphasizes pay-for-results with challenging hurdles; no changes to targets were made despite industry headwinds.

• Annual cash incentive (FY2025): Metrics and outcomes (executive shared services plan basis)

Notes:

• 40% negative moderator applied to cash flow and sales components if adjusted operating income fell below threshold; no payout for any component if significantly below threshold .

• Result: No annual bonuses were paid to executive officers for FY2025 .

• Long-term incentives (LTIP):

  • FY2025 grants: performance-based RSUs only; 3-year cumulative adjusted operating income goals (FY2025–FY2027) with TSR-based +/-25% moderator vs peer group; vest cliff at ~3 years; payout range: 0%–200% of target (20% at threshold) .
  • Realization to date: No performance-based RSUs vested for the FY2023 LTIP cycle; FY2024 and FY2025 LTIP awards are currently not expected to vest based on performance to date; service-based 2022 RSUs vested per schedules (non-CEO NEOs) .

Equity Ownership & Alignment

• Ownership policy: Executive officers and directors are subject to stock ownership/retention guidelines; NEOs: CEO 3x base salary; other NEOs 2x; directors 2x retainer. Individuals below requirements must retain at least 50% of shares from Company grants until compliance; as of 4/27/2025, all directors/NEOs at 5+ years met guidelines except the CFO, who remains subject to 50% retention .
• Anti-hedging/anti-pledging: Hedging is prohibited. Pledging is strongly discouraged and requires preclearance; no executive officers or directors currently have pledged Culp securities .
• Insider trading policy: Broad policy covers directors, officers, employees, and other covered persons .

Employment Terms

• No employment agreements: The Company does not provide employment agreements for executive officers .
• Severance/change-of-control: Culp maintains a severance protection plan covering certain officers (including all NEOs in FY2025). It is double-trigger—benefits require a qualifying termination in connection with change of control—and target benefits are approximately 2x total cash compensation (base + target bonus) plus eligibility for any earned prior-year bonus; an additional 1x total cash compensation is payable for non-compete covenants (subject to 280G cutback/no tax gross-ups) .
• Clawback: Mandatory recovery policy (effective Sept 28, 2023) requires recoupment of erroneously awarded incentive compensation tied to financial reporting measures for the 3 completed fiscal years preceding a required restatement (with limited exceptions). LTIP/bonus agreements also include additional discretionary clawback provisions and “for-cause” recoupment .

Company Performance Context

• Restructuring (FY2025): Completed mattress fabrics consolidation (closure/sale of Quebec facility; transition to sourcing for weaving; Haiti consolidation) with ~$9.4M restructuring/restructuring-related costs in FY2025; expected to generate $10–$11M annualized savings, with a gain on sale recognized in Q1 FY2026 .

Say-on-Pay & Shareholder Feedback

• Say-on-Pay approval improved from 67.6% in 2023 to ~83% in 2024 following outreach and program changes (peer group recalibration; 100% performance-based LTIP for NEOs) .
• 2025 Say-on-Pay vote: 7,489,641 “For”; 1,677,090 “Against”; 68,632 “Abstain” (broker non-votes 1,476,332) .

Investment Implications

• Strong pay-for-performance guardrails: No FY2025 annual bonuses and no LTIP vesting for recent cycles reinforce alignment and limit near-term insider selling pressure tied to vesting liquidity; TSR moderator and double-trigger CIC terms further mitigate windfall risk .
• Governance and control focus under PAO: Chandler’s PAO role (signatory on SEC filings) bolsters financial reporting rigor amid restructuring/integration and evolving tariff dynamics—positive for disclosure quality and risk oversight .
• Retention risk appears contained: While executive base pay levels are below peer-median and increases paused, broad-based design (deferred comp plan, limited perqs, ownership/retention guidelines, CIC protection) supports retention without overpaying for underperformance—consistent with shareholder feedback trends .
• Policy red flags low: No hedging/pledging, double-trigger CIC, clawback policy, and absence of tax gross-ups reflect shareholder-friendly practices; activist cooperation agreements and strategy committee formation suggest continued focus on value creation .