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<PAGE>

                                               --------------------------------
                                               \        OMB APPROVAL          \
                                               \------------------------------\
                                               \  OMB Number:      3235-0059  \
                                               \  Expires:  January 31, 2002  \
                                               \  Estimated average burden    \
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                                               --------------------------------
                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                 SCHEDULE 14A

          Proxy Statement Pursuant to Section 14(a) of the Securities
                    Exchange Act of 1934 (Amendment No.  )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_]  Preliminary Proxy Statement

[_]  CONFIDENTIAL, FOR USE OF THE
     COMMISSION ONLY (AS PERMITTED BY
     RULE 14A-6(E)(2))

[X]  Definitive Proxy Statement

[_]  Definitive Additional Materials

[_]  Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

                              Polymer Group, Inc.
--------------------------------------------------------------------------------
               (Name of Registrant as Specified In Its Charter)


--------------------------------------------------------------------------------
   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)


Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.


     (1) Title of each class of securities to which transaction applies:

     -------------------------------------------------------------------------


     (2) Aggregate number of securities to which transaction applies:

     -------------------------------------------------------------------------


     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which
         the filing fee is calculated and state how it was determined):

     -------------------------------------------------------------------------


     (4) Proposed maximum aggregate value of transaction:

     -------------------------------------------------------------------------


     (5) Total fee paid:

     -------------------------------------------------------------------------

[_]  Fee paid previously with preliminary materials.

[_]  Check box if any part of the fee is offset as provided by Exchange
     Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
     was paid previously. Identify the previous filing by registration statement
     number, or the Form or Schedule and the date of its filing.

     (1) Amount Previously Paid:

     -------------------------------------------------------------------------


     (2) Form, Schedule or Registration Statement No.:

     -------------------------------------------------------------------------


     (3) Filing Party:

     -------------------------------------------------------------------------


     (4) Date Filed:

     -------------------------------------------------------------------------

Notes:






Reg. (S) 240.14a-101.

SEC 1913 (3-99)


<PAGE>


                                 [POLYMER LOGO]

                                   Notice of
                      2001 Annual Meeting of Stockholders
                                      and
                                Proxy Statement
<PAGE>

[Polymer Group, Inc. Logo]

4838 Jenkins Avenue
North Charleston, South Carolina 29405

                                                                 April 30, 2001

Dear Stockholder:

   You are cordially invited to attend the 2001 Annual Meeting of Stockholders
which will be held on June 1, 2001, at 11:00 a.m., local time, at the Harbour
Club, 35 Prioleau Street, Charleston, South Carolina 29401.

   The Notice of Meeting, Proxy Statement and Proxy are included with this
letter. The matters listed in the Notice of Meeting are more fully described
in the Proxy Statement.

   It is important that your shares are represented and voted at the Annual
Meeting, regardless of the size of your holdings. Accordingly, please mark,
sign and date the enclosed Proxy and return it promptly in the envelope
provided. If you attend the Annual Meeting, you may, of course, withdraw your
Proxy should you wish to vote in person.

                                          Sincerely,

                                          /s/ Jerry Zucker

                                          Jerry Zucker
                                          Chairman, President and Chief
                                           Executive Officer
<PAGE>

                              Polymer Group, Inc.

                              4838 Jenkins Avenue
                    North Charleston, South Carolina 29405

                 NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS

   The 2001 annual meeting (the "Annual Meeting") of stockholders of Polymer
Group, Inc. (the "Corporation" or the "Company") will be held on June 1, 2001,
at 11:00 a.m., local time, at the Harbour Club, 35 Prioleau Street,
Charleston, South Carolina 29401, to consider and take action with respect to
the following matters:

     (1) The election of two directors for three-year terms or until their
  successors are duly elected and qualified.

     (2) Approval of the 2001 Polymer Group Stock Option Plan.

     (3) The ratification of the appointment of Ernst & Young LLP as
  independent auditors for the year ending December 29, 2001.

     (4) The transaction of such other business as may properly come before
  the Annual Meeting and any adjournments or postponements thereof.

   Holders of record of the Corporation's Common Stock at the close of
business on April 5, 2001, are entitled to receive notice of and to vote on
all matters presented at the Annual Meeting and at any adjournments or
postponements thereof.

                                          By order of the Board of Directors

                                          /s/ James G. Boyd
                                          James G. Boyd
                                          Secretary

April 30, 2001

   Whether or not you plan to attend the Annual Meeting in person and
regardless of the number of shares you own, please mark, sign and date the
enclosed Proxy and mail it promptly in the envelope provided to ensure that
your shares will be represented. You may nevertheless vote in person if you
attend the Annual Meeting.
<PAGE>

                              Polymer Group, Inc.

                              4838 Jenkins Avenue
                    North Charleston, South Carolina 29405

                               ----------------

                                PROXY STATEMENT

                               ----------------

                        Annual Meeting of Stockholders
                                 June 1, 2001

                               ----------------

   This proxy statement (the "Proxy Statement") is being furnished to the
holders of common stock, par value $0.01 per share (the "Common Stock"), of
Polymer Group, Inc. (the "Corporation" or the "Company") in connection with
the solicitation of proxies on behalf of the Board of Directors of the
Corporation (the "Board of Directors" or "Board") for the 2001 annual meeting
(the "Annual Meeting") of stockholders to be held on June 1, 2001 at the
Harbour Club, 35 Prioleau Street, Charleston, South Carolina 29401, and at any
adjournments or postponements thereof. Proxy Statements and proxies are being
mailed to stockholders on or about April 30, 2001.

   When you sign and return the enclosed proxy, the shares represented thereby
will be voted in accordance with the directions noted thereon. If no direction
is indicated, the shares represented thereby will be voted FOR the slate of
directors described herein, FOR the adoption of the 2001 Polymer Group Stock
Option Plan, FOR the ratification of the appointment of Ernst & Young LLP as
independent auditors for the year ending December 29, 2001, and, with respect
to any other business as may properly be brought before the Annual Meeting and
any adjournments or postponements thereof, in accordance with the judgment of
the person or persons voting on such matter or matters.

   Returning your completed proxy will not prevent you from voting in person
at the Annual Meeting should you be present and wish to do so. In addition,
you may revoke your proxy any time before it is voted by written notice to the
Secretary of the Corporation prior to the Annual Meeting or by submission of a
later-dated proxy.

   Each outstanding share of Common Stock entitles the holder thereof to one
vote. Holders are not entitled to vote fractional shares. On April 5, 2001,
the record date, there were 32,004,200 shares of Common Stock outstanding. The
presence in person or by proxy of the holders of a majority of such shares of
Common Stock shall constitute a quorum. Under Delaware law, abstentions are
treated as present and entitled to vote and therefore are counted in
determining the existence of a quorum and will have the effect of a vote
against any matter requiring the affirmative vote of a majority of the shares
present and entitled to vote at the Annual Meeting. If an executed proxy is
returned by a broker holding shares in street name which indicates that the
broker does not have discretionary authority as to certain shares to vote on
one or more matters (a "broker non-vote"), such shares will be considered
present but not entitled to vote, and thus will be counted in determining the
existence of a quorum but will not be counted in determining whether a matter
requiring approval of a majority of the shares present and entitled to vote
has been approved or whether a plurality of the vote of the shares present and
entitled to vote has been cast.

                             ELECTION OF DIRECTORS

   The Board of Directors is currently comprised of six directors divided into
three classes. The term of each class expires in different years. One class
consists of James G. Boyd, whose term expires at the 2001 Annual Meeting. One
class consists of David A. Donnini, Duncan M. O'Brien, Jr. and L. Glenn Orr,
Jr., whose terms
<PAGE>

expire at the 2002 Annual Meeting. In connection with the Annual Meeting in
order to equalize the three classes, Mr. O'Brien is being moved into the class
with Mr. Boyd and will stand for election this year, with a term to expire at
the 2004 Annual Meeting. The final class consists of Jerry Zucker and Bruce V.
Rauner, whose terms expire at the 2003 Annual Meeting. Mr. Boyd and Mr.
O'Brien have been nominated for re-election to the Board of Directors this
year to serve for three-year terms or until their successors are duly elected
and qualified. The Board of Directors expects all nominees named herein to be
available for election. In case any nominee is not available, the proxy
holders may vote for a substitute, unless the Board of Directors reduces the
number of directors.

   Directors will be elected at the Annual Meeting by a plurality of the votes
cast at the Annual Meeting by the holders of shares represented in person or
by proxy. There is no right to cumulative voting as to any matter, including
the election of directors.

   The following sets forth information as to each director and nominee for
director as of April 5, 2001, including age, principal occupation and
employment during the past five years, directorships in other publicly held
companies, membership on committees of the Board of Directors and period of
service as a director of the Corporation.

   The Board of Directors recommends a vote "FOR" the re-election of Mr. Boyd
and Mr. O'Brien to the Board of Directors.

Nominees for Board of Directors

   James G. Boyd, 56, has served as Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and a Director of the Corporation since its
inception. In addition to his duties with the Corporation, Mr. Boyd presently
serves as Executive Vice President, Treasurer, Secretary and Director of The
InterTech Group, Inc. ("InterTech") and has served in this capacity since
1986.

   Duncan M. O'Brien, Jr., 41, has served as a Director of the Corporation
since September 1998. Mr. O'Brien has been President of Crescendo Capital
Partners, an investment banking firm, since August 1999. From June 1998
through August 1999, Mr. O'Brien served as Vice Chairman, Director of
Investment Banking, of George K. Baum & Company, an investment banking firm.
Prior thereto, from 1984 until April 1998, Mr. O'Brien was with Goldman, Sachs
& Co., an investment banking firm, serving most recently as a Vice President.

Current Continuing Directors

   Jerry Zucker, 51, has served as Chairman, President, Chief Executive
Officer and a Director of the Corporation since its inception. In addition to
his duties with the Corporation, Mr. Zucker presently serves as Chairman,
President, Chief Executive Officer and a Director of InterTech, one of the
Corporation's principal stockholders, and has served in this capacity since
1983.

   Bruce V. Rauner, 45, has been a Director of the Corporation since its
inception. Mr. Rauner has been a Principal of Golder, Thoma, Cressey, Rauner,
Inc. ("Golder, Thoma") since 1984 and a Principal of GTCR Golder Rauner,
L.L.C. ("Golder Rauner") since January 1998, where he is responsible for
originating and making new investments, monitoring portfolio companies and
recruiting and training associates. Mr. Rauner is also a Director of
AnswerThink Consulting Group, Inc., Dynacare, Inc. and U.S. Aggregates, Inc.

   David A. Donnini, 35, has served as a Director of the Corporation since its
inception. Mr. Donnini has been a Principal of Golder, Thoma since 1993 and a
Principal of Golder Rauner since January 1998. From 1991 to 1993, Mr. Donnini
was an Associate with Golder, Thoma. Prior to joining Golder, Thoma in 1991,
Mr. Donnini attended The Stanford Graduate School of Business. Mr. Donnini is
also a director of U.S. Aggregates, Inc.

                                       2
<PAGE>

   L. Glenn Orr, Jr., 60, has served as a Director of the Corporation since
February 1997. Mr. Orr has been Chairman, President and Chief Executive
Officer of Orr Management Company, a management consulting firm, since
February 1995. Prior thereto, from October 1990 until February 1995, Mr. Orr
was Chairman, President and Chief Executive Officer of Southern National
Corporation, a bank holding company which merged with BB&T Corp. in 1995. Mr.
Orr is also a director of Highwoods Properties.

Senior Officers (Other Than Those who are Directors and Listed Above)

   James L. Schaeffer, 50, Executive Vice President of the Corporation and
President and Chief Operating Officer, Nonwovens since August 1999. Mr.
Schaeffer served as Vice President and Chief Operating Officer, Nonwovens from
February 1998 through August 1999. Mr. Schaeffer served as Group Vice
President--Operations and General Manager (Americas), Nonwovens from March
1995 through February 1998. From 1992 until March 1995, Mr. Schaeffer served
as Vice President--Operations/Engineering of FiberTech Group, Inc.
("FiberTech"), a wholly-owned subsidiary of the Corporation. Prior to joining
FiberTech, Mr. Schaeffer served as General Manager for Scott Nonwovens at the
Landisville facility from 1990 to 1992.

   S. Grant Reeves, 45, has served as Vice President and Chief Operating
Officer, Oriented Polymers Division since February 1998. From February 1994
through February 1998, Mr. Reeves also served as a Vice President of the
Corporation. Mr. Reeves joined InterTech in 1986, where he served as
Controller of Reemay, Inc. ("Reemay"), a former InterTech affiliate, through
December 1987. From January 1988 through June 1991, Mr. Reeves served as Vice
President--Finance and Manufacturing for RM Engineered Products, Inc., a
former InterTech affiliate. From June 1991 through January 1994, Mr. Reeves
served as General Manager at Fabrene, Inc. ("Fabrene"), a wholly-owned
subsidiary of the Corporation.

   Thomas E. Phillips, 51, has served as Senior Vice President--Nonwovens
since August 1999. From February 1998 through August 1999, Mr. Phillips served
as Group Vice President--Sales (Americas), Finance, Information Technology and
Human Resources, Nonwovens. Mr. Phillips served as Group Vice President--
Finance, Systems and Administration, Nonwovens from March 1995 through
February 1998. From 1993 until March 1995, Mr. Phillips served as General
Manager and Vice President of FiberTech. Prior to joining FiberTech, Mr.
Phillips served as a Vice President (1986-1992) and a Senior Vice President
(1992-1993) of Reemay, where his responsibilities included financial, systems,
human resources and administrative functions.

   Rolf J. Altdorf, 47, has served as Vice President--Europe, Nonwovens since
July 1998. From March 1995 to July 1998, Mr. Altdorf served as Managing
Director and Vice President--Marketing and Sales of Chicopee B.V., a
subsidiary of the Corporation, in Cuijk, The Netherlands. From October 1985 to
March 1995, Mr. Altdorf served in several different capacities in the research
and development, marketing and European projects departments of Johnson &
Johnson in Dusseldorf, Germany and Cuijk, The Netherlands.

   Richard L. Ferencz, 56, has served as Group Vice President--Asia and
Engineering, Nonwovens since May 2000. From February 1998 until May 2000, Mr.
Ferencz served as Group Vice President--Advanced Technology and Engineering,
Nonwovens. From March 1996 to February 1998, Mr. Ferencz served as Vice
President--Advanced Technology and Engineering of the Company. From 1992 to
1996 Mr. Ferencz served as Vice President of Engineering of the Company. Prior
to joining the Company, Mr. Ferencz served as Director of Systems of Reemay
(1986-1992).

   Peter C. Bourgeois, 57, has served as Group Vice President and General
Manager--Fabrene and DIFCO Performance Fabrics, Inc., a wholly-owned
subsidiary of the Corporation, since February 1998. Mr. Bourgeois served as
Vice President, Wovens from 1993 through February 1998. Mr. Bourgeois served
as Vice President--Marketing and Sales for Fabrene from June 1989 until 1993.

   There are no family relationships among the foregoing persons.

                                       3
<PAGE>

Board and Committee Meetings

   The Board of Directors held four meetings (exclusive of committee meetings)
during the preceding fiscal year. The Board of Directors has established the
following committees, the functions and current members of which are noted
below. Each current director attended 75% or more of the number of meetings
held during the preceding fiscal year by the Board of Directors and any
committees on which such director served.

   Compensation Committee. The Compensation Committee of the Board of
Directors consists of Messrs. Donnini, Orr, Rauner and O'Brien. The
Compensation Committee reviews and makes recommendations to the Board of
Directors regarding salaries, compensation and benefits of executive officers
and key employees of the Corporation. The Compensation Committee met one time
during the preceding fiscal year.

   Stock Option Committee. The 1996 Key Employee Stock Option Plan Committee
(the "Stock Option Committee") of the Board of Directors consists of Messrs.
Donnini and Rauner. The Stock Option Committee is empowered to grant options
to purchase Common Stock of the Corporation. The Stock Option Committee met
one time during the preceding fiscal year.

   Audit Committee. The Audit Committee of the Board of Directors consists of
Messrs. Donnini, O'Brien and Rauner. The Audit Committee, among other duties,
reviews the internal and external financial reporting of the Corporation,
reviews the scope of the independent audit and considers comments by the
auditors regarding internal controls and accounting procedures and
management's response to those comments. The Audit Committee held two meetings
during the preceding fiscal year.

   The Corporation does not have a nominating committee.

Compensation of Directors

   Management directors are not entitled to receive any fees for their service
on the Board of Directors. Non-management directors are reimbursed for out-of-
pocket expenses incurred in connection with attending meetings. In addition,
all non-management directors received $2,500 per meeting attended for service
on the Board of Directors during 2000 and $500 for any committee meetings
attended during 2000.

Section 16(a) Beneficial Ownership Reporting Compliance

   Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's officers, directors and persons
who beneficially own more than ten percent of a registered class of the
Corporation's equity securities to file reports of securities ownership and
changes in such ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater-than-ten percent beneficial owners are
also required to furnish the Corporation with copies of all Section 16(a)
forms they file.

   Based solely upon a review of the copies of such forms furnished to the
Corporation, or written representations that no Form 5 filings were required,
the Corporation believes that during the period from January 2, 2000 through
December 30, 2000 all Section 16(a) filing requirements applicable to its
officers, directors and greater-than-ten percent beneficial owners were
complied with.

                   THE 2001 POLYMER GROUP STOCK OPTION PLAN

General

   The Company has adopted the 2001 Polymer Group Stock Option Plan (the "2001
Plan"), subject to stockholder approval, effective April 1, 2001. The 2001
Plan provides for grants of stock options. Directors, officers and other
employees of the Company and its subsidiaries, are eligible for grants under
the 2001 Plan. The purpose of the 2001 Plan is to provide these individuals
with incentives to enhance stockholder value and otherwise contribute to the
success of the Company and to enable us to attract, retain and reward the best
available persons for positions of responsibility.

                                       4
<PAGE>

   A total of 1,500,000 shares of our common stock, representing 4.7% of our
currently outstanding common stock, will be available for issuance under the
2001 Plan, subject to adjustment in the event of a stock split, merger or
similar change in the corporate structure of the Company or the outstanding
shares of common stock. In the event of any of these occurrences, the Company
may make any adjustments it considers appropriate to, among other things, the
number and kind of shares, options or other property available for issuance
under the 2001 Plan or covered by grants previously made under the plan. The
shares available for issuance under the 2001 Plan may be, in whole or in part,
authorized and unissued or held as treasury shares. As of April 12, 2001, the
closing price of the common stock as reported on the New York Stock Exchange
was $1.28 per share.

   The compensation committee of our board of directors will administer the
2001 Plan. Our board also has the authority to administer the 2001 Plan and to
take all actions that the compensation committee is otherwise authorized to
take under the 2001 Plan. Grants will be awarded under the 2001 Plan entirely
in the discretion of the compensation committee. As a result, we are unable to
determine at this time the recipients, amounts and values of future benefits
to be received under the 2001 Plan.

Option Grants

   The following table sets forth the number of options which have been
granted under the 2001 Plan to the Company's chief executive officer ("CEO"),
the four other most highly compensated executive officers, all executive
officers as a group, each other person who received or is to receive five
percent of such options and all employees, including all current officers who
are not executive officers, as a group, subject to approval by the Company's
stockholders at the Annual Meeting.

<TABLE>
<CAPTION>
                                                               Options Granted
                        Name and Position                            (#)
                        -----------------                      ---------------
   <S>                                                         <C>
   Jerry Zucker...............................................      50,000
     (Chairman, President, CEO and Director)
   James G. Boyd..............................................      50,000
     (Executive Vice President, Chief Financial Officer,
      Treasurer, Secretary and Director)
   James L. Schaeffer.........................................      24,400
     (Executive Vice President, President and Chief Operating
      Officer, Nonwovens Division)
   S. Grant Reeves............................................      19,600
     (Vice President and Chief Operating Officer Oriented
      Polymer Division)
   Thomas E. Phillips.........................................      24,400
     (Senior Vice President, Nonwovens Division)
   All executive officers as a group (5 persons)..............     168,400
   All other employees, including officers who are not
    executive officers, as a group............................     296,400
                                                                   -------
       Total..................................................     464,800
                                                                   =======
</TABLE>

   The following is a summary of the material terms of the 2001 Plan, but does
not include all of the provisions of the 2001 Plan. For further information
about the 2001 Plan, we refer you to the 2001 Plan, which we intend to file as
an exhibit to our Quarterly Report on Form 10-Q for our first fiscal quarter
of 2001.

Terms of the 2001 Plan

   Eligibility. Directors, officers and employees of the Company and its
subsidiaries, as well as other individuals to whom we have extended an offer
of employment, will be eligible to receive grants under the 2001 Plan.
However, only employees may receive grants of incentive stock options. In each
case, the compensation committee will select the actual grantees. As of April
1, 2001, there were approximately 4,000 employees expected to be eligible to
participate in the 2001 Plan.


                                       5
<PAGE>

   Stock Options. Under the 2001 Plan, the compensation committee or the board
may award grants of incentive stock options conforming to the provisions of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), and other, non-qualified stock options. The compensation
committee may not, however, award to any one person in any calendar year
options to purchase common stock equal to more than 10% of the total number of
shares authorized under the 2001 Plan, and it may not award incentive options
first exercisable in any calendar year whose underlying shares have a fair
market value greater than $100,000, determined at the time of grant.

   The compensation committee will determine the exercise price of any option
in its discretion. However, the exercise price of an incentive option may not
be less than 100% of the fair market value of a share of common stock on the
date of grant, and the exercise price of an incentive option awarded to a
person who owns stock constituting more than 10% of the Company's voting power
may not be less than 110% of such fair market value on such date.

   Unless the compensation committee determines otherwise, the exercise price
of any option may be paid in any of the following ways:

  . in cash, and/or

  . by simultaneous sale through a broker of shares of common stock acquired
    upon exercise.

   The compensation committee will determine the term of each option in its
discretion. However, no term may exceed ten years from the date of grant or,
in the case of an incentive option granted to a person who owns stock
constituting more than 10% of the voting power of the Company, five years from
the date of grant. In addition, all options under the 2001 Plan, whether or
not then exercisable, generally cease vesting when a grantee ceases to be a
director, officer or employee of, or to otherwise perform services for, the
Company or its subsidiaries. Options generally expire 30 days after the date
of cessation of service, so long as the grantee does not compete with the
Company during the 30-day period.

   There are, however, exceptions depending upon the circumstances of
cessation. In the case of a grantee's death or disability, all options will
become fully vested and exercisable and remain so for up to 180 days after the
date of death or disability. In the event of retirement, a grantee's options
will continue to vest and become exerciseable for a period of three years from
the date of retirement, at which time all unexercised portions will be
forfeited. Upon termination for cause, all options will terminate immediately.
And if there is a change in control of the Company and a grantee is terminated
from service with the Company and its subsidiaries within one year thereafter,
all options will become fully vested and exercisable and remain so for up to
one year after the date of termination. In addition, the compensation
committee has the authority to grant options that will become fully vested and
exercisable automatically upon a change in control of the Company, whether or
not the grantee is subsequently terminated.

   Vesting, Withholding Taxes and Transferability of All Options. The terms
and conditions of each grant made under the 2001 Plan, including vesting
requirements, will be set forth consistent with the 2001 Plan in a written
agreement with the grantee. Except in limited circumstances, no option under
the 2001 Plan may fully vest and become exercisable within six months of the
date of grant, unless the compensation committee determines otherwise.

   Unless the compensation committee determines otherwise, no grant made under
the 2001 Plan will be transferable other than by will or the laws of descent
and distribution and each grant may be exercised only by the grantee or his or
her respective executors, administrators, guardians, or legal representatives.

   Amendment and Termination of the 2001 Plan. The board may amend or
terminate the 2001 Plan in its discretion, except that no amendment will
become effective without prior approval of the Company's stockholders if such
approval is necessary for continued compliance with the performance-based
compensation exception of Section 162(m) of the Internal Revenue Code or any
applicable stock exchange listing requirements.

                                       6
<PAGE>

Furthermore, any termination may not materially and adversely affect any
outstanding rights or obligations under the 2001 Plan without the affected
participant's consent. If not previously terminated by the board, the 2001
Plan will terminate on the tenth anniversary of its adoption.

Certain Federal Income Tax Consequences of the 2001 Plan

   The following is a brief summary of the U.S. federal income tax rules
relevant to options issued under the 2001 Plan, based upon the Internal
Revenue Code as currently in effect. These rules are highly technical and
subject to change in the future. Because federal income tax consequences will
vary as a result of individual circumstances, grantees should consult their
personal tax advisors with respect to the tax consequences associated with
stock options. Moreover, the following summary relates only to grantees' U.S.
federal income tax treatment, and the state, local and foreign tax
consequences may be substantially different.

   Non-Qualified Options. Upon the grant of a non-qualified option, a grantee
will not recognize any taxable income, and the Company will not be entitled to
a deduction. Upon the exercise of a non-qualified option, the grantee will
recognize ordinary income, subject to wage and employment tax withholding,
equal to the excess of the fair market value of the common stock acquired on
the date of exercise over the exercise price. The Company will be entitled to
a deduction equal to the compensation taxable to the grantee.

   If a grantee sells common stock acquired upon the exercise of a non-
qualified option, the grantee will recognize capital gain or loss equal to the
difference between the selling price of the stock and its fair market value on
the date of exercise. The capital gain or loss will be long- or short-term,
depending on whether the grantee has held the stock for more than one year. In
any event, the Company will not be entitled to a deduction with respect to any
capital gain recognized by the grantee.

   Short-term capital gains are generally subject to the same federal income
tax rate as ordinary income; the current maximum rate is 39.6%. Long-term
capital gains are generally subject to a maximum rate of 20% for shares held
for more than one year. Capital losses on the sale of stock acquired upon an
option's exercise may be used to offset capital gains. If capital losses
exceed capital gains, then up to $3,000 of the excess losses may be deducted
from ordinary income. Remaining capital losses may be carried forward to
future tax years.

   Incentive Options. A grantee will not recognize taxable income on the grant
or exercise of an incentive option. However, the excess of the common stock's
fair market value on the option exercise date over the exercise price will be
included in the grantee's alternative minimum taxable income. The grantee may
thereby become subject to an alternative minimum tax, which may be payable
even though the grantee does not receive any cash upon the option's exercise
with which to pay the tax.

   Upon the sale of common stock acquired upon exercise of an incentive
option, the grantee will recognize long-term capital gain or loss, measured by
the difference between the stock's selling price and the option exercise
price, so long as he or she has held the stock more than one year after the
date of exercise and more than two years after the date of grant. The Company
will not be entitled to any deduction because of the grant or exercise of an
incentive option, or because of the sale of stock received upon exercise of an
incentive option after the required holding periods have been satisfied.

   However, if a grantee disposes of common stock acquired upon exercise of an
incentive option before the required holding periods have expired, including
through the delivery of any shares of the stock in payment of all or part of
the exercise price of an incentive option, the grantee will recognize taxable
ordinary income in an amount equal to the difference between the option's
exercise price and the lesser of (i) the common stock's fair market value on
the date of exercise and (ii) the selling price. The Company will be allowed a
corresponding deduction equal to the amount of compensation taxable to the
grantee. If the selling price of the stock exceeds the fair market value on
the exercise date, the excess will be taxable to the grantee as long- or
short-term capital gain, depending on whether the grantee held the stock for
more than one year. The Company will not be allowed a deduction with respect
to any capital gain of this nature recognized by the grantee.


                                       7
<PAGE>

   Effect of Rule 16b-3(d)(3) under the Exchange Act. The tax consequences of
either non-qualified options or incentive options may vary for those directors
and executive officers who are subject to the short-swing trading restrictions
of Section 16(b) of the Securities Exchange Act of 1934, if those persons are
exempted from these restrictions by the six-month holding provision of Rule
16b-3(d)(3). In general, a participant that falls into this category will
recognize income, or begin applicable holding periods, on the later of (i) the
date of exercise and (ii) the date six months after the option grant date,
unless the participant files an election with the Internal Revenue Service
under Section 83(b) of the Internal Revenue Code within 30 days of the grant
date. Under the election, a grantee elects to recognize income on the exercise
date, based on the common stock's fair market value on that date.

   One Million Dollar Compensation Limit. The Revenue Reconciliation Act of
1993 limits the annual deduction a publicly held company may take for
compensation paid to its chief executive officer or any of its four other
highest compensated officers in excess of $1,000,000 per year, excluding for
this purpose compensation that is "performance-based" within the meaning of
Internal Revenue Code Section 162(m). The Company intends that compensation
realized upon the exercise of an option granted under the 2001 Plan be
regarded as "performance-based" under Section 162(m) and that such
compensation be deductible without regard to the limits imposed by Section
162(m) on compensation that is not "performance-based."

Vote Required

   In order to be approved, the 2001 Plan must receive the affirmative vote of
a majority of the votes cast by the holders of common stock represented in
person or by proxy at the meeting. Approval of the 2001 Plan is required for
shares of common stock issued under the plan to be listed for trading on the
New York Stock Exchange and for grants of options made under the 2001 Plan to
qualify as performance-based compensation deductible by the Company without
limitation under Section 162(m) of the Internal Revenue Code.

   The Board of Directors has approved the 2001 Plan and recommends that
stockholders vote "FOR" such Plan.

                                       8
<PAGE>

              RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

   The Board of Directors, upon recommendation by the Audit committee, has
appointed Ernst & Young LLP as independent auditors to examine the financial
statements of the Corporation for fiscal 2001 and to perform other appropriate
accounting services.

   A proposal will be presented at the Annual Meeting to ratify the
appointment of Ernst & Young LLP as the Corporation's independent auditors.
One or more members of that firm are expected to be presented at the Annual
Meeting to respond to questions and to make a statement if they desire to do
so. If the stockholders do not ratify this appointment by the affirmative vote
of a majority of the shares represented in person or by proxy at the Annual
Meeting, other independent auditors will be considered by the Board of
Directors upon recommendation by the Audit Committee.

   The Board of Directors recommends a vote "FOR" ratification of the
appointment of Ernst & Young LLP as the Corporation's independent auditors.

                                OTHER BUSINESS

   At the date of this Proxy Statement, the Corporation has no knowledge of
any business other than that described above that will be presented at the
Annual Meeting. If any other business should come before the Annual Meeting,
the proxies will be voted in the discretion of the proxy holders.

                              SECURITY OWNERSHIP

   The following information with respect to the outstanding shares of Common
Stock beneficially owned by each director and nominee for director of the
Corporation, the chief executive officer and the four other most highly
compensated executive officers, all beneficial owners of more than five
percent of the Common Stock known to the Corporation and the directors and
executive officers as a group is furnished as of April 5, 2001, except as
otherwise indicated.

<TABLE>
<CAPTION>
                                                              Common Stock
                                                          ---------------------
                                                          Number of  Percent of
Name                                                      Shares(1)   Class(2)
----                                                      ---------- ----------
<S>                                                       <C>        <C>
Jerry Zucker(3)(4)(5)....................................  7,407,607    23.1%
James G. Boyd(4)(5)(6)...................................  4,352,479    13.6
The InterTech Group, Inc.(5)(7)..........................  3,861,208    12.1
Golder, Thoma, Cressey Fund III Limited
 Partnership(4)(5)(8)....................................  7,109,096    22.2
Bruce V. Rauner(9).......................................  7,121,596    22.2
David A. Donnini(10).....................................     12,500      *
Duncan M. O'Brien, Jr.(11)...............................     17,500      *
L. Glenn Orr, Jr.(12)....................................     16,800      *
James L. Schaeffer(13)...................................     51,000      *
S. Grant Reeves(14)......................................     17,000      *
Thomas E. Phillips(15)...................................     18,500      *
Leeway & Co.(5)(16)......................................    795,838     2.5
FMR Corp.(17)............................................  3,827,490    12.0
Dimensional Fund Advisors(18)............................  2,173,300     6.8
All directors and executive officers as a group (12
 persons)(19)............................................ 15,152,524    47.2
</TABLE>
--------
 (1) Each holder has sole voting and investment power with respect to the
     shares listed unless otherwise indicated. The number of shares includes
     shares of Common Stock subject to options exercisable within 60 days of
     April 5, 2001.

                                       9
<PAGE>

 (2) Percentages less than one percent are denoted by an asterisk. Shares
     subject to options exercisable within 60 days of April 5, 2001 are
     considered outstanding for the purpose of determining the percentage of
     the class held by the holder of such options, but not for the purpose of
     computing the percentage held by others.
 (3) Includes 3,515,929 shares held by Mr. Zucker, 7,080 held by Mr. Zucker's
     wife, 10,890 held in trust for Mr. Zucker's children, 3,599,557 shares
     held by InterTech, 261,651 shares held by FTG, Inc. ("FTG") and 12,500
     shares subject to options. Mr. Zucker is Chairman, Chief Executive
     Officer and President of InterTech and FTG, and as a result may be deemed
     to have voting and dispositive power over the shares held by InterTech
     and FTG.
 (4) Each of these Stockholders has entered into an agreement pursuant to
     which, upon the occurrence of certain events, Messrs. Zucker and Boyd and
     J.P. Morgan Partners (BHCA), L.P. ("JPMP") as successor to Chase
     Manhattan Investment Holdings, Inc. would acquire additional shares of
     Common Stock from Golder, Thoma, Cressey Fund III Limited Partnership
     ("GTC Fund III"), which would result in an increase in the ownership of
     Common Stock by Messrs. Zucker and Boyd and JPMP and a corresponding
     decrease in the ownership of Common Stock by GTC Fund III.
 (5) Each of these parties has entered into an agreement providing for the
     election of directors. Each such party disclaims beneficial ownership of
     shares of Common Stock owned by the other parties.
 (6) Includes 478,771 shares held by Mr. Boyd, 3,599,557 shares held by
     InterTech, 261,651 shares held by FTG and 12,500 shares subject to
     options. Mr. Boyd is Executive Vice President, Secretary and Treasurer of
     InterTech and FTG.
 (7) Includes 3,599,557 shares held by InterTech and 261,651 shares held by
     FTG. The address of InterTech is 4838 Jenkins Avenue, North Charleston,
     SC 29405.

 (8) All of the reported shares are held by GTC Fund III, of which Golder,
     Thoma, Cressey & Rauner, L.P. is the general partner. Mr. Rauner is a
     general partner of Golder, Thoma, Cressey & Rauner, L.P., but disclaims
     beneficial ownership of such shares. The address of GTC Fund III is c/o
     Golder, Thoma, Cressey, Rauner, Inc., 6100 Sears Tower, Chicago, IL
     60606-6402.
 (9) Includes 12,500 shares subject to option.
(10) Includes 12,500 shares subject to option.
(11) Includes 5,000 shares held in an individual retirement account of Mr.
     O'Brien and 12,500 shares subject to option.
(12) Includes 3,800 shares held by Mr. Orr, 500 shares held by Mr. Orr's
     daughter and 12,500 shares subject to option. Mr. Orr disclaims
     beneficial ownership of the shares held by his daughter.
(13) Includes 38,500 shares held by Mr. Schaeffer and 12,500 shares subject to
     options.
(14) Includes 7,000 shares held by Mr. Reeves and 10,000 shares subject to
     options.
(15) Includes 6,000 shares held by Mr. Phillips and 12,500 shares subject to
     options.
(16) The address of Leeway & Co. is c/o State Street Bank and Trust Co.,
     Master Trust Division--Q4W, P.O. Box 1992, Boston, MA 02110.
(17) FMR Corp. ("FMR") reported as of December 31, 2000 sole voting power over
     64,100 shares and sole dispositive power over 3,827,490 shares. The
     information set forth herein is based solely on a Schedule 13G filed by
     FMR for the year ended December 31, 2000. The address of FMR, as so
     reported, was 82 Devonshire Street, Boston, MA 02109.
(18) Dimensional Fund Advisors ("Dimensional") reported as of December 31,
     2000 sole voting and dispositive power over 2,173,300 shares. The
     information set forth herein is based solely on a Schedule 13G filed by
     Dimensional for the year ended December 31, 2000. The address of
     Dimensional, as so reported, was 1299 Ocean Avenue, 11th Floor, Santa
     Monica, CA 90401.
(19) Includes shares held by GTC Fund III, InterTech and FTG.

                                      10
<PAGE>

                            EXECUTIVE COMPENSATION

Summary Compensation Table

   The following summary compensation table specifies the components of the
compensation packages of the Corporation's chief executive officer and four
other most highly compensated executive officers (collectively, the "Named
Executives") for the years ended December 30, 2000, January 1, 2000 and
January 2, 1999. The Corporation does not maintain any long-term compensation
plans.

<TABLE>
<CAPTION>
                                                         Long Term
                                Annual Compensation     Compensation
                                -------------------- ------------------
                                                      Stock  Restricted  All Other
        Name and         Fiscal                      Options   Stock    Compensation
   Principal Position     Year  Salary ($) Bonus ($)   (#)   Awards ($)    ($)(1)
   ------------------    ------ ---------- --------- ------- ---------- ------------
<S>                      <C>    <C>        <C>       <C>     <C>        <C>
Jerry Zucker............  2000   924,776     204,000     --     --         18,984
  Chairman, President
   and Chief              1999   924,776   1,530,000 100,000    --         19,015
  Executive Officer       1998   932,469   1,020,000     --     --         18,090

James G. Boyd...........  2000   540,884     135,000     --     --         19,751
  Executive Vice
   President, Chief       1999   540,884   1,012,500  75,000    --         20,800
  Financial Officer,      1998   544,731     675,000     --     --         20,800
  Treasurer and
  Secretary

James L. Schaeffer......  2000   412,100     105,000     --     --         16,892
  Executive Vice
   President, President   1999   283,605     245,000  37,000    --         17,983
  and Chief Operating
   Officer,               1998   202,840     170,000     --     --         13,684
  Nonwovens Division

S. Grant Reeves.........  2000   168,772      39,000     --     --         10,693
  Vice President and
   Chief Operating        1999   160,750     102,000  15,000    --         12,014
  Officer, Oriented
   Polymer Division       1998   152,952      95,000     --     --         11,660

Thomas E. Phillips......  2000   210,203      91,000     --     --         15,541
  Senior Vice President,  1999   188,322     195,000  30,000    --         13,433
  Nonwovens Division      1998   172,540     140,000     --     --         12,446
</TABLE>
--------
(1) The following table identifies and quantifies the amount of All Other
    Compensation for each Named Executive.

<TABLE>
<CAPTION>
                                    Money
                                   Purchase    401(k)      401( h)
                            Fiscal Pension  Corporation  Corporation  Retirement
Name                         Year    Plan   Contribution Contribution  Annuity
----                        ------ -------- ------------ ------------ ----------
<S>                         <C>    <C>      <C>          <C>          <C>
Jerry Zucker...............  2000    5,950     11,050       1,984        --
                             1999   13,600      3,015       2,400        --
                             1998   13,600      2,090       2,400        --
James G. Boyd..............  2000    6,739     11,028       1,984        --
                             1999   13,600      4,800       2,400        --
                             1998   13,600      4,800       2,400        --
James L. Schaeffer.........  2000    5,185     10,180       1,527        --
                             1999   10,305      6,266       1,412        --
                             1998    7,655      5,124         905        --
S. Grant Reeves............  2000    6,610      3,910         173        --
                             1999    7,292      3,000       1,722        --
                             1998    6,937      3,000       1,723        --
Thomas E. Phillips.........  2000    3,474     11,492         575        --
                             1999    7,255      5,514         664        --
                             1998    6,640      5,205         601        --
</TABLE>

                                      11
<PAGE>

   The amounts included under the column entitled "Money Purchase Pension
Plan" are amounts paid by the Corporation into a trust fund which provides
retirement benefits and, under certain circumstances, death or disability
benefits or benefits upon termination of employment.

Option Exercises and Year-End Option Value Table

  Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values

<TABLE>
<CAPTION>
                                                                          Value of Unexercised
                                                Number of Unexercised     In-the-Money Options
                           Shares     Value     Options at FY-End (#)           at FY-End
                         Acquired on Realized ------------------------- -------------------------
     Name                Exercise(1)  ($)(1)  Unexercisable Exercisable Unexercisable Exercisable
     ----                ----------- -------- ------------- ----------- ------------- -----------
<S>                      <C>         <C>      <C>           <C>         <C>           <C>
Jerry Zucker............     --        --        120,000      140,000        $ 0          $ 0
James G. Boyd...........     --        --         75,000       60,000          0            0
James L. Schaeffer......     --        --         40,711       40,733          0            0
S. Grant Reeves.........     --        --         18,111       21,333          0            0
Thomas E. Phillips......     --        --         35,111       39,333          0            0
</TABLE>
--------
(1) None of the options granted to the Named Executives has been exercised.

The 1996 Key Employee Stock Option Plan

   In March 1996, the Board of Directors of the Corporation approved the 1996
Key Employee Stock Option Plan (the "Key Employee Plan" or "Plan"). The Key
Employee Plan was approved by the stockholders of the Corporation in April
1996. The Key Employee Plan is administered by the Stock Option Committee. Any
person who is a full-time, salaried employee of the Corporation is eligible to
participate in the Plan (a "Participant"). Approximately 1,287 persons are
currently eligible to participate in the Key Employee Plan. The Stock Option
Committee selects the Participants and determines the terms and conditions of
the options. In April 1996, the Board of Directors approved the Plan providing
for up to 1,500,000 shares to be issued thereunder, subject to certain
adjustments reflecting changes in the Corporation's capitalization. On April
12, 2001, the market value of the Common Stock underlying the 1,500,000
options was $1,920,000. The description of the Key Employee Plan set forth
herein is qualified in its entirety by reference to the complete text of such
Plan, which is filed as an Exhibit to the Corporation's Registration Statement
on Form S-1 (Reg. No. 333-2424), and incorporated herein by reference.

   Options granted under the Key Employee Plan may be either incentive stock
options ("ISOs") or such other forms of nonqualified stock options ("NQOs") as
the Compensation Committee may determine. ISOs are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code"). The exercise price of the options will be
at least 100% of the fair market value of a share of Common Stock on the date
of grant, except that the exercise price of an ISO granted to an individual
who directly (or by attribution under Section 424(d) of the Code) owns shares
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation will be at least 110% of the fair market value of a
share of Common Stock on the date of grant.

   Options granted under the Key Employee Plan may be subject to time vesting
and certain other restrictions at the Stock Option Committee's sole
discretion. Subject to certain exceptions and unless otherwise provided in the
option agreement, the right to exercise an option generally terminates at the
earlier of (i) the first date on which the initial grantee of such option is
not employed by either the Corporation or any subsidiary for any reason other
than termination without cause, death or permanent disability or (ii) the
expiration date of the option. If the holder of an option dies or suffers a
permanent disability while still employed by the Corporation or any
subsidiary, the right to exercise all unexpired installments of such option
shall be accelerated and shall accrue as of the date of such death or the
later of the date of such permanent disability or the discovery of such
permanent disability, and such option shall be exercisable, subject to certain
exceptions, for 90 days after such date. If the holder of an option is
terminated without cause, to the extent the option has vested, such option
shall be exercisable for 30 days after such date.

                                      12
<PAGE>

   The Board of Directors has the power and authority to amend the Plan at any
time without approval of the Corporation's stockholders; provided, that the
Board of Directors shall not amend the Plan to cause any outstanding ISOs to
no longer qualify as ISOs or materially increase the benefits or number of
shares under the Plan or modify the eligibility requirements without the
affirmative approval of the Corporation's stockholders. In addition, the Board
of Directors shall not amend the Plan to materially and adversely affect the
rights of an option holder under such option without the consent of such
option holder.

   Supplemental cash payments may also be made in conjunction with options
granted under the Key Employee Plan.

Employment and Management Agreements

   Pursuant to management agreements originally entered into in October 1992
(the "PGI Polymer Management Agreements"), Messrs. Zucker and Boyd
(collectively, the "Executives") have agreed to serve as President and Chief
Executive Officer, and Executive Vice President, Secretary and Treasurer,
respectively, of the Corporation's subsidiaries, PGI Polymer, Inc. ("PGI
Polymer") and FiberTech Group, Inc. ("FiberTech"). Pursuant to management
agreements entered into in March 1995 (the "Chicopee Management Agreements"
and, together with the PGI Polymer Management Agreements, the "Management
Agreements"), the Executives have agreed to serve in the same capacities for
the Corporation's subsidiary, Chicopee, Inc. ("Chicopee"). The Management
Agreements provide that the Executives' employment thereunder will continue
until the Executive's resignation, permanent disability, death or termination
by PGI Polymer's or Chicopee's Board of Directors, as the case may be.

   The PGI Polymer Management Agreements provide for an annual base salary of
$250,000 to be paid to Mr. Zucker and an annual base salary of $150,000 to be
paid to Mr. Boyd, while the Chicopee Management Agreements provide for an
annual base salary of $400,000 to be paid to Mr. Zucker and an annual base of
$200,000 to be paid to Mr. Boyd, all of which amounts may be increased as
determined in good faith by the Board of Directors. The Management Agreements
also provide for a bonus to be paid at the end of each fiscal year to each of
the Executives in an amount determined by the Board of Directors, but not to
exceed such Executive's base salary.

   The Management Agreements provide that upon the termination of either
Executive's employment, such Executive is entitled to receive severance
payments equal to either one-half (in the case of death, disability,
resignation without good reason or termination for cause) or three times (in
all other cases) his annual salary.

   The Corporation has not entered into written employment contracts with any
of its other executive officers.

Termination Benefits

   In 1998, the Corporation entered into Change in Control Severance
Compensation Agreements (the "Agreements"), with Messrs. Zucker and Boyd. The
Agreements were a result of a determination by the Board of Directors that it
was important and in the best interests of the Corporation and its
shareholders to ensure that, in the event of a possible change in control of
the Corporation, the stability and continuity of management would continue
unimpaired, free of the distractions incident to any such change in control.

   For purposes of the Agreements, a "change in control" occurs when (i) any
person or group of persons acting jointly and in concert acquire 35% or more
of the Corporation's voting securities, (ii) any person, or group of persons
acting jointly and in concert, owning 5% or greater of the voting power of the
Corporation's Common Stock nominates individuals for election to the Board
(who have not been approved by the incumbent board) who, if elected, would
constitute a majority of the members on the Board who are not full-time
employees of the Corporation, and a majority of such nominees are elected to
the Board of Directors, or (iii) the Corporation ceases to control in fact,
directly or indirectly, all or substantially all of the assets employed in
carrying on the business of the Corporation.


                                      13
<PAGE>

   Benefits are payable under the Agreements only if a change in control has
occurred and thereafter the officer's employment is terminated involuntarily
without cause or voluntarily by the officer for reasons such as demotion,
relocation, loss of benefits or other changes. The principal benefit to be
provided to officers under the Agreements is a payment equal to 2.99 times the
sum of (i) base salary, (ii) the cash value of the non-cash benefit plans and
(iii) the average of the annual bonus received in the prior two years.

   The Agreements are not employment agreements, and do not impair the right
of the Corporation to terminate the employment of the officer with or without
cause prior to a change in control or absent a potential or pending change in
control, or the right of the officer to voluntarily terminate his employment.

Compensation Committee Interlocks and Insider Participation

   The members of the Corporation's Compensation Committee are Messrs.
Donnini, Orr, Rauner, O'Brien, and Mr. Rauner, a director of the Corporation,
is also a general partner of Golder, Thoma, Cressey & Rauner, L.P. Golder,
Thoma, Cressey & Rauner, L.P. is the general partner of GTC Fund III, which
owns 22.2% of the Corporation's Common Stock.

Compensation Committee Report on Executive Compensation

   The Compensation Committee of the Board of Directors (the "Committee") is
pleased to present its report on executive compensation. The Committee reviews
and makes recommendations to the Board of Directors regarding salaries,
compensation and benefits of executive officers and key employees of the
Corporation. This Committee report documents the components of the
Corporation's executive officer compensation programs and describes the bases
upon which compensation will be determined by the Committee with respect to
the executive officers of the Corporation, including the Named Executives.

   This Committee report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Exchange Act, except to
the extent that the Corporation specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.

   Compensation Philosophy. The compensation philosophy of the Corporation is
to endeavor to directly link executive compensation to continuous improvements
in corporate performance and increases in shareholder value. The Committee has
adopted the following objectives as guidelines for compensation decisions.

  . Display a willingness to pay levels of compensation that are necessary to
    attract and retain highly qualified executives.

  . Be willing to compensate executive officers in recognition of superior
    individual performance, new responsibilities or new positions within the
    Corporation.

  . Take into account historical levels of executive compensation and the
    overall competitiveness of the market for high quality executive talent.

  . Implement a balance between short-term and long-term compensation to
    complement the Corporation's annual and long-term business objectives and
    strategy and to encourage executive performance in furtherance of the
    fulfillment of those objectives.

  . Provide variable compensation opportunities based on the performance of
    the Corporation, encourage stock ownership by executives and align
    executive remuneration with the interests of stockholders.

   Compensation Program Components. The Committee regularly reviews the
Corporation's compensation program to ensure that pay levels and incentive
opportunities are competitive with the market and reflect the performance of
the Corporation. The particular elements of the compensation program for
executive officers are further explained below.

                                      14
<PAGE>

   Base Salary. The Corporation's base pay levels are largely determined by
evaluating the responsibilities of the position held and the experience of the
individual and by comparing the salary scale with companies of similar size
and complexity. Actual base salaries are kept within a competitive salary
range for each position that is established through job evaluation and market
comparisons and approved by the Committee as reasonable and necessary. Mr.
Zucker's and Mr. Boyd's minimum base salaries are $650,000 and $350,000 per
year, respectively, pursuant to the Management Agreements, which is comparable
to salaries paid for executives holding positions with comparable
responsibilities. The Management Agreements provide that the Compensation
Committee may increase the base salaries for each year at its discretion.

   Annual Incentives. The Management Agreements provide that Messrs. Zucker
and Boyd may also receive an annual bonus, determined by the Board of
Directors, up to their base salaries.

   Stock Option Program. The Committee strongly believes that by providing
those persons who have substantial responsibility over the management and
growth of the Corporation with an opportunity to increase their ownership of
the Corporation's stock, the interests of stockholders and executives will be
closely aligned. Therefore, the Corporation's key employees (including the
Named Executives) are eligible to receive either incentive stock options or
nonqualified stock options as the Stock Option Committee may determine from
time to time, giving them the right to purchase shares of the Corporation's
Common Stock at an exercise price equal to 100% of the fair market value of
such Common Stock at the date of grant (or such greater amount as the Stock
Option Committee may determine). The number of stock options granted to
executive officers is based on competitive practices.

   Certain Tax Considerations. Section 162(m) of the Code generally limits the
corporate tax deduction for compensation paid to the Named Executives to
$1,000,000 in any given taxable year, unless certain requirements are met. The
Compensation Committee has carefully considered the impact of this tax code
provision. The Committee currently believes that it has structured the
compensation plans for the Named Executives as necessary in order to maximize
the Corporation's corporate tax deduction without limiting the Corporation's
ability to attract and retain qualified executives.

   Summary. After its review of all existing programs, the Committee continues
to believe that the total compensation program for executives of the
Corporation is focused on increasing values for stockholders and enhancing
corporate performance. The Committee currently believes that the compensation
of executive officers is properly tied to stock appreciation through their
significant ownership interests in the Corporation. The Committee believes
that executive compensation levels at the Corporation are competitive with the
compensation programs provided by other corporations with which the
Corporation competes. The foregoing report has been approved by all members of
the Committee.

                                          COMPENSATION COMMITTEE

                                          David A. Donnini

                                          Duncan M. O'Brien, Jr.

                                          L. Glenn Orr, Jr.

                                          Bruce V. Rauner

Report of Audit Committee

   The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility
for the financial statements and the reporting process including the systems
of internal controls. In fulfilling its oversight responsibilities, the
Committee reviewed the audited financial statements in the Annual Report with
management including a discussion of the quality, not

                                      15
<PAGE>

just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements. The Committee also reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of audited financial
statements with generally accepted accounting principles, their judgments as
to the quality, not just the acceptability, of the Company's accounting
principles and such other matters as are required to be discussed with the
Committee under generally accepted auditing standards. In addition, the
Committee has discussed with the independent auditors the auditors'
independence from management and the Company including the matters in written
disclosures required by the Independence Standards Board Number 1 and
considers the compatibility of nonaudit services with the auditors'
independence.

   For the fiscal 2000 audit, the Committee discussed with the Company's
independent auditors the overall scope and plans for their respective audits.
The Committee meets with the independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of
the company's internal controls, and the overall quality of the Company's
financial reporting.

   In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements for fiscal 2000 be included in the Annual Report
on Form 10-K for the year ended December 30, 2000 for filing with the
Securities and Exchange Commission.

                                          AUDIT COMMITTEE

                                          Duncan M. O'Brien, Jr., Chairman

                                          David A. Donnini

                                          Bruce V. Rauner

Audit, Financial Information Systems Design and Implementation and Other Fees

   For the fiscal year ended December 30, 2000 the Company incurred fees from
Ernst & Young LLP of approximately $900,000 for professional services rendered
in connection with the annual audit and all other fees of $2.1 million,
including audit related services of $100,000, and non-audit services of $2.0
million. Audit related services generally include fees for pension and
statutory audits and accounting consultation. For the fiscal year ended
December 30, 2000, Ernst & Young LLP did not provide the Company with any
professional services in connection with financial information systems design
and implementation

                                      16
<PAGE>

                CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Right of First Refusal, Registration Agreement and Voting Agreement

   In June 1994, Messrs. Zucker and Boyd entered into an agreement with the
Corporation pursuant to which Messrs. Zucker and Boyd granted to the
Corporation the prior right to acquire any business identified by either of
them (while employed by the Corporation), or their affiliates, engaged in, or
planning to engage in, the manufacture and marketing of nonwoven and woven
polyolefin fabrics for industrial and consumer applications or any other
business then engaged in by the Corporation. To the extent the Corporation
does not elect to pursue any such acquisition, Messrs. Zucker and Boyd are
free to acquire such business.

   In June 1995, the Corporation and certain of the stockholders entered into
an Amended and Restated Registration Agreement, pursuant to which such
stockholders have the right, in certain circumstances and subject to certain
conditions, to require the Corporation to register shares of the Corporation's
Common Stock held by them under the Securities Act of 1933. Under the
Registration Agreement, except in certain limited circumstances, the
Corporation is obligated to pay all expenses in connection with such
registration.

   In May 1996, certain of the Corporation's stockholders entered into an
agreement (the "Voting Agreement") providing, among other things, for the
nomination and voting for up to six directors of the Corporation by such
stockholders. As of April 5, 2001, such stockholders beneficially owned
approximately 49.3% of the outstanding Common Stock of the Corporation. Under
the Voting Agreement, each of the stockholders party thereto has agreed to
vote its shares in favor of the Corporation's Chief Executive Officer and
Executive Vice President, two nominees designated by GTC Fund III and two
outside directors to be jointly designated by GTC Fund III and InterTech. Each
director nominated by parties to the Voting Agreement may be removed only at
the request of the party who nominated such director. The Voting Agreement
terminates at such time as (a) GTC Fund III and its affiliates cease to own at
least 10% of the Common Stock and (b) InterTech and its affiliates cease to
own 10% of the Common Stock. The stockholders who are parties to the Voting
Agreement hold, in the aggregate, a substantial amount of the voting power of
the Corporation and thus, if acting in unison or in various combinations,
could likely be able to elect a majority of the directors of the Corporation
even if the Voting Agreement were not in place.

Other Transactions

   The Corporation's corporate headquarters are housed in space leased by
InterTech from an affiliate of InterTech. A portion of the payments and other
expenses, primarily insurance and allocated costs, are charged to the
Corporation. Such amounts approximated $1.7 million during 2000. In addition,
during fiscal 2000 the Company purchased equipment for approximately $0.3
million from an entity affiliated with the Company.

   On September 1, 1993, ConX, Inc. ("ConX"), a subsidiary of InterTech,
acquired a manufacturing facility in Vineland, New Jersey for the benefit of
Technetics Group, Inc. ("Technetics"), a wholly owned subsidiary of FiberTech,
and entered into a lease of the facility to Technetics at a base rate of $2.50
per square foot, subject to adjustment to account for inflation, which is
comparable to similar properties in the area. During 2000, the Corporation
paid ConX approximately $200,000 for use of the facility. The lease terminates
on August 31, 2003 and is subject to a purchase option at termination. The
leased facility consists of 83,500 square feet of manufacturing space and was
acquired by ConX for $1,250,000.

                                      17
<PAGE>

                               PERFORMANCE GRAPH

   The following graph compares the Corporation's cumulative total stockholder
return since the Common Stock became publicly traded on May 9, 1996 with the
Russell 2000 Index and with selected companies that the Corporation believes
are similar to the Corporation (the "Peer Group"). The Corporation's Peer
Group is comprised of the following companies: Intertape Polymer Group, Inc.,
Lydall Corporation, Millipore Corporation, Pall Corporation and Unifi, Inc.
The Peer Group is identical to last year, with the exception of the
replacement of Dexter Corporation with Unifi, Inc.

                          Comparison of Total Return*
          Polymer Group, Inc., Russell 2000 Index and the Peer Group

                             [GRAPH APPEARS HERE]

COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
<TABLE>
<CAPTION>
                        -------------------FISCAL YEAR ENDING----------------
COMPANY/INDEX/MARKET    5/09/1996 12/31/1996 12/31/1997 12/31/1998 12/31/1999
<S>                     <C>       <C>        <C>        <C>        <C>
Polymer Group              100.00      77.11      52.78      55.22     101.39
Customer Selected Stock
 List                      100.00      98.28      82.72      89.22      92.28
Russell 2000 Index         100.00     105.21     128.72     125.11     149.62
----------
12/29/2000
     29.86
    103.22
    143.16
</TABLE>
SOURCE:  MEDIA GENERAL FINANCIAL SERVICES
         P.O. BOX 85333
         RICHMOND, VA 23293
         PHONE: 1-(800) 446-7922
         FAX:   1-(804) 649-6826
--------
*  Total Return assumes reinvestment of dividends.

                                      18
<PAGE>

                 STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

   Proposals of stockholders intended to be presented at the annual meeting in
2001 must be received by the Secretary of the Corporation, at the address
below, not later than December 31, 2001 to be considered for inclusion in the
Corporation's 2002 proxy materials.

                            ADDITIONAL INFORMATION

   This solicitation is being made by the Corporation. All expenses of the
Corporation in connection with this solicitation will be borne by the
Corporation. In addition to the solicitation by mail, proxies may be solicited
by directors, officers and other employees of the Corporation by telephone,
telefax, in person or otherwise, without additional compensation. The
Corporation will request brokerage firms, nominees, custodians and fiduciaries
to forward proxy materials to the beneficial owners of shares held of record
by such persons and will reimburse such persons and the Corporation's transfer
agent for their reasonable out-of-pocket expenses in forwarding such
materials.

   The Corporation will furnish without charge to each person whose proxy is
being solicited, upon the written request of any such person, a copy of the
Corporation's Annual Report on Form 10-K for the fiscal year ended December
30, 2000, as filed with the Securities and Exchange Commission, including the
financial statements and the schedule thereto. Requests for copies of such
Annual Report on Form 10-K should be directed to Robert Johnston, Vice
President--Strategic Planning and Investor Relations, at the address below. A
list of shareholders entitled to vote on matters at the Annual Meeting will be
available for inspection at the Corporation's headquarters beginning on May
15, 2001.

   Please complete the enclosed proxy and mail it in the enclosed postage-paid
envelope as soon as possible.

                                        By order of the Board of Directors

                                        James G. Boyd
                                        Secretary

Polymer Group, Inc.
4838 Jenkins Avenue
North Charleston, SC 29405
April 30, 2001

                                      19
<PAGE>

                                                                     APPENDIX A

                         EFFECTIVE AS OF JUNE 1, 2000

                              POLYMER GROUP, INC.

                            AUDIT COMMITTEE CHARTER

                                 ORGANIZATION

   There shall be a committee of the board of directors to be known as the
audit committee. The Committee shall be comprised of not less than three
members of the Board of Directors (the "Board"), and the Committee's
composition will meet the requirements of the Audit Committee Policy of the
New York Stock Exchange.

   Accordingly, all of the members will be directors:

     1. Who have no relationship to the Company that may interfere with the
  exercise of their independence from management and the Company; and

     2. Who are financially literate or who become financially literate
  within a reasonable period of time after appointment to the Committee. In
  addition, at least one member of the Committee will have accounting or
  related financial management expertise.

                              STATEMENT OF POLICY

   The primary purpose of the Audit Committee (the "Committee") is to assist
the Board in fulfilling its responsibility to oversee management's conduct of
the Company's financial reporting process, including by overviewing the
financial reports and other financial information provided by the Company to
any governmental or regulatory body, the public or other users thereof, the
Company's systems of internal accounting and financial controls, and the
annual independent audit of the Company's financial statements.

   In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain
outside counsel, auditors or other experts for this purpose. The Board and the
Committee are in place to represent the Company's shareholders; accordingly,
the outside auditor is ultimately accountable to the Board and the Committee.

   The Committee shall review the adequacy of this Charter on an annual basis.

                               RESPONSIBILITIES

   The Committee's job is one of oversight and it recognizes that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditors are responsible for auditing those
financial statements. Additionally, the Committee recognizes that financial
management, as well as the outside auditors, have more time, knowledge and
more detailed information on the Company than do Committee members;
consequently, in carrying out its oversight responsibilities, the Committee is
not providing any expert or special assurance as to the Company's financial
statements or any professional certification as to the outside auditor's work.

   In carrying out these responsibilities, the audit committee will:

  . Review and recommend to the directors the independent auditors to be
    selected to audit the financial statements of the company and its
    divisions and subsidiaries.

  . review with management the appointment, termination or replacement of the
    director of internal audit.


                                      20
<PAGE>

  . Meet with the independent auditors and financial management of the
    Company to review the scope of the proposed audit for the current year
    and the audit procedures to be utilized, the adequacy of the independent
    auditor's compensation, and at the conclusion thereof review such audit,
    including any comments or recommendations of the independent auditors.

  . Review with the independent auditors, the company's internal auditor, and
    financial and accounting personnel, the adequacy and effectiveness of the
    accounting and financial controls of the company, and elicit any
    recommendations for the improvement of such internal controls or
    particular areas where new or more detailed controls or procedures are
    desirable. Particular emphasis should be given to the adequacy of
    internal controls to expose any payments, transactions, or procedures
    that might be deemed illegal or otherwise improper. Further, the
    committee periodically should review company policy statements to
    determine their adherence to the code of conduct.

  . Review reports received from regulators and other legal and regulatory
    matters that may have a material effect on the financial statements or
    related company compliance policies.

  . Review the audit function of the company including the independence and
    authority of its reporting obligations, the proposed audit plans for the
    coming year and the coordination of such plans with the independent
    auditors.

  . Inquire of management, and the independent auditors about significant
    risks or exposures and assess the steps management has taken to minimize
    such risks to the Company.

  . Receive prior to each meeting, a summary of findings from completed
    internal audits and a progress report on the proposed internal audit
    plan, with explanations for any deviations from the original plan.

  . The Committee shall review with management and the outside auditors the
    audited financial statements to be included in the Company's Annual
    Report on Form 10-K (or the Annual Report to Shareholders if distributed
    prior to the filing of Form 10-K) and review and consider with the
    outside auditors the matters required to be discussed by Statement of
    Auditing Standards ("SAS") No. 61. As a whole, or through the Committee
    chair, the Committee shall review with the outside auditors the Company's
    interim financial results to be included in the Company's quarterly
    reports to be filed with Securities and Exchange Commission and the
    matters required to be discussed by SAS No. 61; this review will occur
    prior to the Company's filing of the Form 10-Q.

  . Review with financial management and the independent auditors the results
    of their timely analysis of significant financial reporting issues and
    practices, including changes in, or adoptions of, accounting principles
    and disclosure practices. Also review with financial management and the
    independent auditors their qualitative judgments about the
    appropriateness, not just acceptability, of accounting principles and
    financial disclosure practices used or proposed to be used, and
    particularly, the degree of aggressiveness or conservatism of the
    organization's accounting principles and underlying estimates.

  . Provide sufficient opportunity for the internal and independent auditors
    to meet with the members of the audit committee without members of
    management present. Among the items to be discussed in these meetings are
    the independent auditors' evaluation of the company's financial,
    accounting, and auditing personnel, and the cooperation that the
    independent auditors received during the course of audit.

  . Review accounting and financial human resources and succession planning
    within the Company.

  . Report the results of the annual audit to the Board. If requested by the
    Board, invite the independent auditors to attend the full Board meeting
    to assist in reporting the results of the annual audit or to answer other
    directors' questions (alternatively, the other directors, particularly
    the other independent directors, may be invited to attend the audit
    committee meeting during which the results of the annual audit are
    reviewed).

  . The Committee shall:

    . request from the outside auditors annually, a formal written
      statement delineating all relationships between the auditor and the
      Company consistent with Independence Standards Board Standard Number
      1;

                                      21
<PAGE>

    . discuss with the outside auditors any such disclosed relationships
      and their impact on the outside auditor's independence; and

    . recommend that the Board take appropriate action to oversee the
      independence of the outside auditor, in response to the outside
      auditor's report to satisfy itself of the auditor's independence.

  . Submit the minutes of all meetings of the audit committee to, or discuss
    the matters discussed at each committee meeting with, the Board.

  . Investigate any matter brought to its attention within the scope of its
    duties, with the power to retain outside counsel for this purpose if, in
    its judgment, that is appropriate.

  . The Committee, subject to any action that may be taken by the full Board,
    shall have the ultimate authority and responsibility to select (or
    nominate for shareholder approval), evaluate and, where appropriate,
    replace the outside auditor.

                                          AUDIT COMMITTEE

                                          Duncan M. O'Brien, Jr., Chairman

                                          David A. Donnini

                                          Bruce V. Rauner

                                      22
<PAGE>

PROXY
                      Solicited by the Board of Directors
                              POLYMER GROUP, INC.
                              4838 Jenkins Avenue
                     North Charleston, South Carolina 29405

                      2001 Annual Meeting of Stockholders

  The undersigned hereby appoints Jerry Zucker and James G. Boyd, and each of
them, proxies, with power of substitution and revocation, acting by a majority
of those present and voting or if only one is present and voting then that one,
to vote the stock of Polymer Group, Inc. which the undersigned is entitled to
vote, at the Annual Meeting of Stockholders to be held June 1, 2001 and at any
adjournment or postponements thereof, with all the powers the undersigned would
possess if present, with respect to the following:

  1. Election of directors:      [_] FOR the nominees      [_] WITHHOLD
AUTHORITY

                James G. Boyd      Duncan M. O'Brien, Jr.

 To withhold authority for an individual nominee, draw a line through his name.

  2. Approval of the 2001 Polymer Group Stock Option Plan

                   [_] FOR      [_] AGAINST      [_] ABSTAIN

  3. Ratification of the appointment of Ernst & Young LLP as the Corporation's
independent public accountants

                   [_] FOR      [_] AGAINST      [_] ABSTAIN
  This proxy, when properly executed, will be
voted in the manner directed herein by the
undersigned. If signed and no direction is
given for any item, this proxy will be voted
for all nominees.

  Please return your executed form as soon as
possible in the envelope provided to First
Union National Bank, Attention: Proxy
Tabulation, P.O. Box 217950, Charlotte, North
Carolina 28254-3555.

                                                 Please sign exactly as name
                                                 appears on this Proxy. Joint
                                                 owners should each sign.
                                                 Trustees, executors, etc.
                                                 should indicate the capacity
                                                 in which they are signing.

                                                 ------------------------------
                                                 Signature                Date

                                                 ------------------------------
                                                 Signature                Date
</TEXT>
</DOCUMENT>
</SUBMISSION>
