<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
Steelcase 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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<PAGE>
STEELCASE INC.
901 44TH STREET SE
GRAND RAPIDS, MICHIGAN 49508
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1998
To the Shareholders:
PLEASE TAKE NOTICE that the 1998 Meeting of Shareholders (the "Meeting") of
Steelcase Inc. (the "Company") will be held on June 17, 1998, at 10:00 A.M.
Eastern Daylight Time, at the Gerald R. Ford Fieldhouse, Grand Rapids
Community College, 111 Lyon N.E., Grand Rapids, Michigan, for the following
purpose:
1. Electing 11 directors to serve for the applicable terms of their
respective classes and until their successors shall have been duly
elected and qualified;
2. Transacting such other business as may properly come before the meeting.
Only shareholders of record at the close of business on May 15, 1998 will be
entitled to vote at the meeting.
Your attention is called to the attached proxy statement and accompanying
proxy. You are requested to sign and return the proxy in the enclosed
envelope, to which no postage need be affixed if mailed in the United States.
If you attend the meeting, you may withdraw your proxy and vote your own
shares.
A copy of the Annual Report of the Company for the fiscal year ended
February 27, 1998 accompanies this Notice.
By Order of the Board of Directors
Jon D. Botsford
Secretary
Grand Rapids, Michigan
May 26, 1998
<PAGE>
STEELCASE INC.
901 44TH STREET SE
GRAND RAPIDS, MI 49508
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1998
GENERAL INFORMATION
The Board of Directors (the "Board") of Steelcase Inc. ("Steelcase" or the
"Company") solicits your proxy for use at the 1998 Annual Meeting of
Shareholders (the "Meeting") to be held on Wednesday, June 17, 1998, at 10:00
A.M. Eastern Daylight Time, and at any adjournments, at the Gerald R. Ford
Fieldhouse, Grand Rapids Community College, 111 Lyon N.E., Grand Rapids,
Michigan. This Proxy Statement and a proxy card are first being sent to
shareholders on or about May 26, 1998. All costs of solicitation will be borne
by the Company.
In the following pages, you will find information on the nominees for
election to the Board and on your current Board to help you decide how to vote
for the election of directors to the Board.
As of the close of business on May 15, 1998, the record date for
determination of shareholders entitled to notice of and to vote at the
Meeting, there were outstanding 19,250,109 shares of Class A Common Stock and
135,161,550 shares of Class B Common Stock. Each outstanding share of Class A
Common Stock is entitled to one vote on all matters that may come before the
Meeting. Each outstanding share of Class B Common Stock is entitled to ten
votes on all matters that may come before the Meeting.
You can ensure that your shares are voted at the Meeting by completing,
signing, dating and returning the accompanying proxy card in the enclosed
postage-paid envelope. Sending in a signed proxy will not affect your right to
attend the Meeting and vote. A shareholder who gives a proxy may revoke it at
any time before it is exercised by notifying the Secretary of the Company in
writing before the proxy is exercised, or by delivering to the Secretary of
the Company a proxy bearing a later date, or by attending the Meeting and
voting in person.
ELECTION OF DIRECTORS
At the Meeting, eleven directors are to be elected who, following the 1998
Meeting, will be divided into three classes, with the term of each director
expiring at the annual meeting of the Company in the year indicated on the
following pages. Generally, approximately one-third of the Board will be
elected each year.
Unless otherwise instructed on the proxy card, the proxy holders intend to
vote for the election of David D. Hunting, Jr., Frank H. Merlotti, Peter M.
Wege II, Earl D. Holton, William P. Crawford, Robert C. Pew III, Peter M.
Wege, David Bing, James P. Hackett, Robert C. Pew II and P. Craig Welch, Jr.
The Board believes that, if elected, each nominee will be able and willing to
serve. However, if any nominee should be unable or unwilling to serve as a
director, the Board may select a substitute nominee and, in that event, the
proxy will be voted for the person so selected.
Information concerning each of the nominees is set forth on the following
pages.
<PAGE>
NOMINEES FOR ELECTION AS CLASS I DIRECTORS FOR THE TERM EXPIRING IN 1999
<TABLE>
<C> <S>
DAVID D. HUNTING, JR........... After joining the Company in 1948, Mr.
Director since 1960. Hunting held various positions, including
Executive Vice President, Subsidiaries,
from 1981 until his retirement in 1989. Age
71.
FRANK H. MERLOTTI.............. After joining the Company in 1961, Mr.
Director since 1973. Merlotti held various positions, including
President and Chief Operating Officer of
the Company from 1980 and Chief Executive
Officer from 1988, in each case until his
retirement in 1991. Mr. Merlotti also
served as President and Chief Executive
Officer of the Company on an interim basis
for part of 1994. Age 71.
PETER M. WEGE II............... Mr. Wege has been President and Chief
Director since 1979. Executive Officer of Greylock, Inc., a
venture capital firm, since 1990. From 1981
to 1989, he held various positions at the
Company, including President of Steelcase
Canada Ltd. Age 49.
EARL D. HOLTON................. Mr. Holton is President and a member of the
Proposed New Member of the Board of Directors of Meijer, Inc., a Grand
Board. Rapids, Michigan based operator of food and
general merchandise centers. Mr. Holton is
also a director of CMS Energy Corporation
and Old Kent Financial Corporation, a bank
holding company that serves as trustee for
the Company's retirement and 401(k) funds.
Age 64.
</TABLE>
NOMINEES FOR ELECTION AS CLASS II DIRECTORS FOR THE TERM EXPIRING IN 2000
<TABLE>
<C> <S>
WILLIAM P. CRAWFORD............ Mr. Crawford has been President and Chief
Director since 1979. Executive Officer, Steelcase Design
Partnership since 1991. Mr. Crawford also
serves on the Board of Directors of Old Kent
Financial Corporation. Age 55.
ROBERT C. PEW III.............. Since 1995, Mr. Pew has been the manager of
Director since 1987. Cross Creek Farm. From 1974 to 1984 and from
1988 to 1994, Mr. Pew held various positions
at the Company, including President of
Steelcase North America and Executive Vice
President, Operations. Age 47.
PETER M. WEGE.................. Since joining the Company in 1947, Mr. Wege
Director since 1948. has held various positions with the Company,
including Secretary from 1961 to 1985 and
Vice Chairman of the Board since 1985. Age
78.
DAVID BING..................... Mr. Bing has been Chairman of the Board of
Proposed New Member of the Bing Steel, Inc., a Detroit, Michigan based
Board. steel service center since 1986. Mr. Bing
also serves on the Board of Directors of DTE
Energy Company. Age 54.
</TABLE>
NOMINEES FOR ELECTION AS CLASS III DIRECTORS FOR THE TERM EXPIRING IN 2001
<TABLE>
<C> <S>
JAMES P. HACKETT............... Mr. Hackett has been President and Chief
Director since 1994. Executive Officer of the Company since 1994.
Mr. Hackett also serves on the Board of
Directors of Old Kent Financial Corporation.
Age 43.
ROBERT C. PEW II............... From 1952 to 1989, Mr. Pew held various
Director since 1960. positions at the Company, including
President from 1966 to 1979 and Chief
Executive Officer from 1966 to 1988. Mr. Pew
has been Chairman of the Board since 1974.
Age 74.
P. CRAIG WELCH, JR............. From 1967 to 1987, Mr. Welch held various
Director since 1979. positions at the Company, including Director
of Information Services, Director of
Production Inventory Control and Manager of
Manufacturing Systems Data Processing. Since
leaving the Company, Mr. Welch has been a
venture capitalist. Age 53.
</TABLE>
2
<PAGE>
Mr. Robert C. Pew II is the father of Robert C. Pew III and the uncle of
William P. Crawford and P. Craig Welch, Jr. Additionally, Messrs. Pew III,
Crawford and Welch are first cousins. Mr. Peter M. Wege is the father of Peter
M. Wege II.
THE BOARD RECOMMENDS THE ELECTION OF
DAVID D. HUNTING, JR., FRANK H. MERLOTTI, PETER M. WEGE II, EARL D. HOLTON,
WILLIAM P. CRAWFORD,
ROBERT C. PEW III, PETER M. WEGE, DAVID BING, JAMES P. HACKETT, ROBERT C. PEW
II,
AND P. CRAIG WELCH, JR.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF DIRECTORS, BOARD COMMITTEES
AND DIRECTOR COMPENSATION
The Board held seven meetings during the fiscal year ended February 27, 1998
("Fiscal 1998"). All incumbent directors attended in excess of 75% of the
aggregate number of meetings of the Board and meetings of committees on which
they served during the year.
The Audit Committee reviews the internal accounting procedures of the
Company, reviews the scope and cost of audit, considers the comments made by
the auditors with respect to accounting procedures and internal controls and
considerations given thereto by management, and reviews internal accounting
procedures and controls with the Company's financial and accounting staff. The
Committee, which had three meetings during Fiscal 1998, currently consists of
David D. Hunting, Jr. (Chairman), Peter M. Wege and P. Craig Welch, Jr.
The Compensation Committee makes general policy and administrative decisions
relating to compensation and benefits for the Company's employees and
directors and recommends the compensation of the President/Chief Executive
Officer. The Committee, which held two meetings during Fiscal 1998, currently
consists of Frank H. Merlotti (Chairman), Robert C. Pew II, James P. Hackett,
Robert C. Pew III, Peter M. Wege II and William P. Crawford.
The Executive Committee exercises all the powers of the Board when required
in the management of the business affairs and property of the Company during
intervals between regular meetings of the Board. The Committee, which had no
meetings during Fiscal 1998, currently consists of Frank H. Merlotti
(Chairman), Robert C. Pew II, James P. Hackett, Robert C. Pew III and Peter M.
Wege II.
Directors who are not compensated as employees of the Company receive an
annual retainer fee in the amount of $20,000, as well as additional payments
of $1,500 for each Board meeting attended and $1,000 for each Committee
meeting attended, except that the Chairman of the Board receives an aggregate
annual fee in the amount of $40,000. Directors who are compensated as
employees of the Company receive no additional compensation for services
rendered as a director. The Company also reimburses each director for out-of-
pocket expenses incurred in connection with attending meetings of the Board
and its committees.
All directors are eligible to participate under the Incentive Compensation
Plan. In connection with the Company's initial public offering in February
1998 (the "IPO"), Frank H. Merlotti was granted the right to acquire 100,000
shares. See "Compensation Committee Report on Executive Compensation--Stock
Options." Additionally, Robert C. Pew II, David D. Hunting, Jr., Frank H.
Merlotti and Robert C. Pew III currently receive or are entitled to receive
payments under supplemental retirement and/or deferred compensation
arrangements in effect at the time of their respective cessation of active
employment with the Company.
3
<PAGE>
BENEFICIAL SECURITY OWNERSHIP
SECURITY OWNERSHIP OF MANAGEMENT AND NOMINEES
The following table sets forth information as to the beneficial ownership of
the Company's Common Stock, as of May 15, 1998, by current directors, nominees
for the Board of Directors, the executive officers of the Company named in the
Summary Compensation Table on page 6 and all current directors and executive
officers as a group.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------------- --------------------------------
AMOUNT AND NATURE OF PERCENT AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------ ----------------------- -------- ----------------------- --------
<S> <C> <C> <C> <C>
Robert C. Pew II(2)..... 0 * 18,015,053 13.3
Peter M. Wege(3)........ 0 * 29,362,727 21.7
James P. Hackett(4)..... 110 * 81,900 *
William P. Crawford(5).. 10 * 12,073,004 8.9
Robert C. Pew III(6).... 0 * 1,993,112 1.5
Peter M. Wege II(7)..... 0 * 2,362,055 1.7
David D. Hunting,
Jr.(8)................. 0 * 3,526,173 2.6
Frank H. Merlotti(9).... 100 * 5,428 *
P. Craig Welch, Jr.(10). 0 * 5,287,225 3.9
Robert A. Ballard....... 110 * 56,000 *
Alwyn Rougier-
Chapman(11)............ 110 * 80,571 *
James G. Mitchell....... 110 * 28,000 *
Earl D. Holton.......... 1,000 * 0 *
David Bing.............. 0 * 0 *
Current Directors and
Executive
Officers as a group (20
persons)............... 1,430 * 72,927,248 54.0
</TABLE>
- --------
(1) Pursuant to Securities and Exchange Commission (the "SEC") regulations,
shares are deemed to be "beneficially owned" by a person if such person
directly or indirectly has or shares the power to vote or dispose of such
shares or the right to acquire the power to vote or dispose of such
shares within 60 days, including any right to acquire through the
exercise of any option, warrant or right, whether or not such person has
any pecuniary interest in such shares.
(2) Includes (i) 314,057 shares held by Mr. Pew in a revocable trust, (ii)
4,055,842 shares held by Mr. Pew's wife in a revocable trust, for which
Mr. Pew serves as co-trustee, (iii) 10,088,269 shares held by various
trusts for the benefit of Mr. Pew's family members, for which Mr. Pew
serves as co-trustee and shares voting and investment powers and (iv)
3,556,885 shares held in a revocable trust of which Mr. Pew is a
beneficiary. Mr. Pew's business address is the Company's corporate
headquarters.
(3) Represents (i) 8,983,985 shares held by a trust of which Mr. Wege is the
grantor with a right to revoke the trust within 60 days, (ii) 20,039,814
shares held by the Peter Martin Wege Trust, for which Mr. Wege shares
investment authority, and (iii) 338,928 shares held by The Wege
Foundation, of which Mr. Wege is the sole member and one of six trustees.
The 338,928 shares held by The Wege Foundation are also listed as
beneficially owned by Peter M. Wege II, who disclaims beneficial
ownership of such shares. See footnote 7. Mr. Wege's business address is
the Company's corporate headquarters.
(4) Mr. Hackett's shares are held by a trust for the benefit of Mr. Hackett's
family members, the trustee of which is Mr. Hackett.
(5) Includes (i) 57,971 shares held by Mr. Crawford's wife, (ii) 667,100
shares held by trusts for which Mr. Crawford's wife serves as trustee,
(iii) 703,500 shares held by trusts for which Mr. Crawford serves as
trustee and (iv) 9,122,248 shares held by trusts for which Mr. Crawford
serves as co-trustee.
4
<PAGE>
(6) Includes (i) 193,871 shares held by Mr. Pew's wife, (ii) 114,171 shares
held in accounts for the benefit of Mr. Pew's family members, for which
Mr. Pew has sole voting and investment power, (iii) 193,685 shares held
in a trust for the benefit of Mr. Pew's children, for which Mr. Pew
serves as trustee, and (iv) 834,400 shares held by a charitable
foundation for which Mr. Pew has sole voting and investment authority.
(7) Represents (i) 202,885 shares held by the Peter M. Wege II Trust, the
trustee of which is Peter M. Wege, (ii) 205,200 shares held by the
Kathleen M. Wege Trust, the trustee of which is Mr. Wege's spouse, (iii)
1,155,271 shares held by trusts for the benefit of Mr. Wege's family
members, a trustee of which is Mr. Wege's spouse, (iv) 459,771 shares
held by trusts for Mr. Wege's family members, the trustee of which is Mr.
Wege and (v) 338,928 shares held by The Wege Foundation, of which Mr.
Wege is one of six trustees. Mr. Wege disclaims beneficial ownership of
shares held by the Wege Foundation. The 338,928 shares of The Wege
Foundation are also listed as beneficially owned by Peter M. Wege. See
footnote 3.
(8) Includes (i) 1,763,474 shares held by retained annuity trusts for the
benefit of Mr. Hunting, for which Mr. Hunting serves as trustee, and (ii)
1,762,699 shares held by retained annuity trusts for the benefit of Mr.
Hunting's wife, for which Mr. Hunting serves as trustee.
(9) Includes 100 shares in a trust for the benefit of Mr. Merlotti, of which
Mr. Merlotti serves as trustee, and 5,428 shares held in a trust for the
benefit of Mr. Merlotti's wife, of which Mr. Merlotti's wife serves as
trustee.
(10) Includes (i) 75,957 shares held by Mr. Welch's wife, (ii) 3,758,626
shares held by trusts for which Mr. Welch serves as co-trustee, (iii)
112,000 shares held by trusts for which Mr. Welch serves as trustee, (iv)
186,342 shares held by trusts for which Mr. Welch's wife serves as co-
trustee, (v) 161,700 shares held by trusts for which Mr. Welch's wife
serves as trustee and (vi) 834,400 shares held by the JCT Foundation, for
which Mr. Welch is President and Principal Manager.
(11) Includes 21,014 shares held by Mr. Rougier-Chapman's wife.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed by
management to be beneficial owners of more than 5% of either class of the
Company's outstanding shares of Common Stock on the Record Date or as
disclosed in certain reports received to date regarding such ownership filed
by such persons with the Company and with the SEC in accordance with Sections
13(d) and 13(g) of either class of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Other than those persons listed below and
certain of the Company's directors (as disclosed above under "Security
Ownership of Management"), the Company is not aware of any person, as such
term is defined in the Exchange Act, that owns more than 5% of the Company's
common stock as of May 15, 1998.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------------- --------------------------------
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------- ----------------------- -------- ----------------------- --------
<S> <C> <C> <C> <C>
Peter Martin Wege 0 * 20,039,814 14.8
Trust(2)...............
Old Kent Bank
111 Lyon Street, N.W.
Grand Rapids, MI 49503
</TABLE>
- --------
(1) Pursuant to SEC regulations, shares are deemed to be "beneficially owned"
by a person if such person directly or indirectly has or shares the power
to vote or dispose of such shares or the right to acquire the power to
vote or dispose of such shares within 60 days, including any right to
acquire through the exercise of any option, warrant or right, whether or
not such person has any pecuniary interest in such shares.
(2) Peter M. Wege, Vice Chairman of the Board and a director of the Company,
shares investment authority with respect to the Peter Martin Wege Trust.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation for Fiscal 1998 and 1997
paid or awarded to the Company's Chief Executive Officer and each of its four
other most highly compensated executive officers (collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ---------------------
AWARDS PAYOUTS
---------- ----------
SECURITIES LONG-TERM
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING INCENTIVE ALL OTHER
POSITION YEAR SALARY(1) BONUS(2) COMPENSATION(3) OPTIONS(4) PAYOUTS(5) COMPENSATION(6)
- ------------------ ------ --------- ---------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
James P. Hackett........ 1998 $603,894 $1,255,218 $88,460 300,100 $614,304 $20,000
President and Chief 1997 $561,538 $ 626,999 $26,539 $241,267 $18,750
Executive Officer
Robert A. Ballard....... 1998 $403,115 $ 726,971 $29,291 150,100 $203,406 $20,000
Executive Vice 1997 $333,884 $ 296,433 $ 7,811 $ 71,007 $18,750
President, Business
Operations
Alwyn Rougier-Chapman... 1998 $269,961 $ 382,520 $21,877 95,100 $151,921 $20,000
Senior Vice President-- 1997 $252,211 $ 173,116 $ 7,303 $ 66,392 $18,750
Finance, Chief
Financial Officer and
Treasurer
James G. Mitchell....... 1998 $263,500 $ 373,095 $22,503 75,100 $156,270 $20,000
President, Steelcase 1997 $254,318 $ 174,675 $ 7,661 $ 69,643 $18,750
Canada Ltd. (7)
William P. Crawford..... 1998 $244,952 $ 313,873 $17,161 85,000 $119,175 $20,000
President and Chief 1997 $225,077 $ 154,479 $ 6,069 $ 55,176 $18,750
Executive Officer
Steelcase Design
Partnership
</TABLE>
- --------
(1) Includes withholding amounts under the Company's 401(k) Plan and any
deferred compensation under the applicable deferred compensation agreement
of the Named Executive Officer.
(2) Represents amounts paid from the annual component of the Company's
Management Incentive Plan ("MIP"). See "Compensation Committee Report on
Executive Compensation--Annual and Long-Term Incentive". This amount also
includes $280, which is the value of 10 shares of Class A Common Stock
granted to each of the Named Executive Officers, and other eligible
employees, in connection with the IPO.
(3) Represents earnings for the fiscal year on the long-term amounts paid from
the MIP, based on the Company's annual return on equity. See "Compensation
Committee Report on Executive Compensation--Annual and Long-Term
Incentive".
(4) Represents options granted under the Incentive Compensation Plan and
Purchase Plan in connection with the IPO. See "Option Grants" and
"Compensation Committee Report on Executive Compensation--Stock Options".
(5) Represents amounts actually paid from the long-term component of the MIP.
See "Compensation Committee Report on Executive Compensation--Annual and
Long-Term Incentive".
(6) Includes contribution amounts made by the Company to the Profit-Sharing
and the Money Purchase defined contribution plans. The Board declares
contributions to the plans at the end of each fiscal year. The rate of
contribution to Profit-Sharing for each of the plan years 1998 and 1997
was 7.5% of eligible compensation.
6
<PAGE>
A 5% contribution to the Money Purchase plan is required to be made by the
Company each plan year. Pursuant to the Company's 401(k) plan, employees
may make non-matching contributions. Contributions to the Named Executive
Officers were limited as required under the Internal Revenue Code of 1986,
as amended, and its regulations. Account balances are invested in a trust
managed by a trustee until finally distributed. Under the Profit-Sharing
and Money Purchase plans there is a scaled vesting schedule beginning with
20% after three years and full vesting after seven years. All of the Named
Executive Officers are 100% vested except Mr. Mitchell, who is 40% vested
as of the end of Fiscal 1998. A participant is also 100% vested after
attaining the earlier of normal retirement or termination of employment due
to death or total disability. 401(k) account balances are always 100%
vested.
(7) Mr. Mitchell has been President, Steelcase Canada Ltd. since March 1998.
Previously, Mr. Mitchell had been Senior Vice President, Sales, Marketing
and Dealer Alliances of the Company since 1995.
OPTION GRANTS
The following table sets forth information concerning options to acquire
Class A Common Stock granted under the Company's Incentive Compensation Plan
to the Named Executive Officers during Fiscal 1998.
OPTION GRANTS IN FISCAL 1998(1)
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SECURITIES OF TOTAL EXERCISE
UNDERLYING OPTIONS OR BASE GRANT DATE
NAME AND PRINCIPAL OPTIONS GRANTED PRICE EXPIRATION PRESENT
POSITION GRANTED TO EMPLOYEES ($/SHARE) DATE VALUE(2)
- ------------------ ---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James P. Hackett........ 300,000 11.3% $28 2/18/08 $3,180,000
President and Chief
Executive
Officer
Robert A. Ballard....... 150,000 5.6% $28 2/18/08 $1,590,000
Executive Vice
President,
Business Operations
Alwyn Rougier-Chapman... 95,000 3.6% $28 2/18/08 $1,007,000
Senior Vice President--
Finance,
Chief Financial Officer
and
Treasurer
James G. Mitchell....... 75,000 2.8% $28 2/18/08 $ 795,000
President,
Steelcase Canada Ltd.
William P. Crawford..... 85,000 3.2% $28 2/18/08 $ 901,000
President and Chief
Executive Officer
Steelcase Design
Partnership
</TABLE>
- --------
(1) The options vest at a cumulative rate of 10%, 20%, 40%, 70% and 100% at
the end of each year during the five year period beginning with the date
of grant. Upon termination of employment due to retirement, the options
continue to vest as if employment continued and vested options must be
exercised within three years from the date of retirement or five years
from date of grant, whichever is later. The options become fully vested
upon death or total disability and must be exercised within one year from
that date. All vested and unvested options are forfeited in the event of a
termination for gross misconduct or if the executive engages in certain
competitive activity. Upon termination of employment for any other reason,
vested options must be exercised within 90 days and any unvested options
are forfeited. In no event may options be exercised beyond the expiration
date of February 18, 2008. The information reflected in this table does
not include the options to purchase up to 100 shares under the Company's
Employee Stock Purchase Plan (the
7
<PAGE>
"Purchase Plan") granted to each of the Named Executive Officers, except
Mr. Crawford, in connection with the IPO. The grant date value and the
year-end value of each of these options, using the Black-Scholes option
pricing model (see note (2) below), approximated $4.53 per share.
(2) The weighted average fair market value of the Company's stock options on
the date of grant approximated $10.60 per share. This value was determined
using the Black-Scholes option pricing model based upon the following
assumptions: an expected volatility of 30.0% of the market price of the
Class A Common Stock; an expected term to exercise of 6.8 years; a risk-
free rate of return of 5.5%; and an annual dividend yield of 1.4%. The
actual value of the options, if any, realized by an executive will depend
on the extent to which the market value of the Class A Common Stock
exceeds the exercise price of the option on the date the option is
exercised. Consequently, there is no assurance that the value realized by
the officer will be at or near the estimated value above. These amounts
should not be used to predict stock performance.
No options were exercised by any of the Named Executive Officers during
Fiscal 1998, and as of the end of Fiscal 1998, such officers owned no other
options to acquire any of the Company's common stock, except for the
opportunity to purchase up to 100 shares under the Purchase Plan (see note (1)
to the foregoing table). The "Grant Date Present Value" shown above with
respect to each officer's options equals the aggregate value of such officer's
options as of the end of Fiscal 1998.
LONG-TERM INCENTIVE PLAN--AWARDS
The following table sets forth long-term compensation amounts earned by the
Named Executive Officers for Fiscal 1998.
LONG-TERM INCENTIVE PLAN--AWARDS IN FISCAL 1998
<TABLE>
<CAPTION>
PERFORMANCE
PERIOD
UNTIL ESTIMATED FUTURE
NAME MATURATION TARGETED PAYOUTS(1)
- ---- ----------- -------------------
<S> <C> <C>
James P. Hackett................................ 3 years $2,123,741
Robert A. Ballard............................... 3 years $ 992,833
Alwyn Rougier-Chapman........................... 3 years $ 486,236
James G. Mitchell............................... 3 years $ 463,714
William P. Crawford............................. 3 years $ 420,080
</TABLE>
- --------
(1) This amount represents the long-term component of compensation earned
under the MIP. See "Compensation Committee Report on Executive
Compensation--Annual and Long-Term Incentive."
SUPPLEMENTAL PLAN
The Named Executive Officers are covered by the Steelcase Inc. 1994
Executive Supplemental Retirement Plan (the "Supplemental Plan"). This is an
unfunded plan under which benefits are to be paid directly by the Company to
officers of the Company who are designated from time to time by the
Compensation Committee to be plan participants. Benefits under the plan are
payable following retirement at age 65, or early retirement age when the age
plus years of service equal 80, or upon death of the participant. Benefits are
payable to the participant or the participant's surviving spouse. The amount
of the benefit includes the sum of (i) five annual payments equal to 70% of
the average base salary for the three consecutive calendar years prior to
retirement or death multiplied by the participant's vested percentage, and
(ii) 15 annual payments equal to $50,000 multiplied by the participant's
vested percentage. A participant's vested percentage is 20% after three
completed years of service while a participant under the plan and increases by
20% annually until full vesting after seven completed years of service while a
participant. Benefits normally commence on the March 1 following the
participant attaining age 65 or death of the participant. In the event of
early retirement and with the approval of the
8
<PAGE>
Compensation Committee, the participant may elect to receive earlier benefits
in lower annual amounts and ending on the date that the final payment would
have been made had no earlier benefits been elected.
Rights to receive benefits under the plan are forfeited upon the occurrence
of (i) termination of employment prior to reaching normal or early retirement,
(ii) termination for cause, (iii) death of the participant without a surviving
spouse or the death of the participant's surviving spouse following the death
of the participant, and (iv) without the consent of the Board, a participant's
employment or performance of services for a competitor of the Company, its
subsidiaries or affiliates.
The following table sets forth the estimated annual income benefits payable
upon satisfaction of Supplemental Plan requirements to each of the Named
Executive Officers, or his surviving spouse, during the five-year period
following the commencement of payments under the Supplemental Plan, assuming
that no early payment election is made:
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF PARTICIPATION(1)
FINAL AVERAGE -----------------------------------------------------------------------
BASE SALARY 7 OR
(3 YEARS) 3 4 5 6 MORE
- ------------- -------- -------- -------- -------- ----
<S> <C> <C> <C> <C> <C>
$700,000 $108,000 $216,000 $324,000 $432,000 $540,000
650,000 101,000 202,000 303,000 404,000 505,000
600,000 94,000 188,000 282,000 376,000 470,000
550,000 87,000 174,000 261,000 348,000 435,000
500,000 80,000 160,000 240,000 320,000 400,000
450,000 73,000 146,000 219,000 292,000 365,000
400,000 66,000 132,000 198,000 264,000 330,000
350,000 59,000 118,000 177,000 236,000 295,000
300,000 52,000 104,000 156,000 208,000 260,000
250,000 45,000 90,000 135,000 180,000 225,000
200,000 38,000 76,000 114,000 152,000 190,000
</TABLE>
- --------
(1) These amounts are not subject to any deduction for Social Security or
other offsetting amounts.
For years six through 15, payments to each Named Executive Officer, or his
surviving spouse, will equal $50,000 for those with seven years of
participation, $40,000 for those with six years, $30,000 for those with five
years, $20,000 for those with four years and $10,000 for those with three
years. Early retirement, if approved, results in reduced annual payments.
As of the date of this Proxy Statement, the completed years of service while
a participant under the Supplemental Plan for each of the Named Executive
Officers are as follows: James P. Hackett 7, Robert A. Ballard 12, Alwyn
Rougier-Chapman 15, James G. Mitchell 3 and William P. Crawford 9.
DEFERRED COMPENSATION AGREEMENTS
Each Named Executive Officer (the "Executive") has entered into one or more
deferred compensation agreements with the Company. If the Executive completes
the deferrals and lives until age 70, the Company will make corresponding
annual payments to the Executive for 15 years commencing in the month of March
after the Executive's 70th birthday. If the Executive dies before reaching age
70, the Company will make the above payments, in the same manner and over the
same time period, to the beneficiary designated by the Executive. If an
Executive is discharged for cause, an amount equal to the compensation
actually deferred, if any, shall be paid to the Executive, without interest,
in five equal annual payments commencing after the discharge. Entitlement to
payments under the agreements is subject to a scaled vesting requirement
during the five years following the completed deferral period.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Hackett, President and Chief Executive Officer of the Company, and Mr.
Crawford, President and Chief Executive Officer, Steelcase Design Partnership,
are members of the Compensation Committee. Other members of the Compensation
Committee who previously served as officers of the Company are Robert C. Pew
II, Robert C. Pew III, Peter M. Wege II and Frank H. Merlotti.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee (the "Committee") has developed an executive
compensation philosophy that is intended to:
. Attract and retain highly qualified, experienced and motivated executives
needed for the success of the Company;
. Provide for a total pay package to be competitive with a comparable group
of global industrial companies that are of similar size to the Company;
. Reward executives based on the profitability of the Company; and
. Align executives' interests with the interests of the shareholders for
the long-term success of the Company.
The Company values the contributions of all employees and shares rewards
through broad-based incentive arrangements to motivate teamwork for Company
success. Incentive opportunity is based on profitability for all employees
and, consistent with market practice, represents a larger percentage of total
pay at higher levels in the organization.
The Company also believes in equity across the regular employment groups and
therefore limits differences in benefit arrangements. A financially secure
retirement for career employees is a key benefit objective which is possible
only through Company success.
On an annual basis, the Committee reviews the levels of executive base
salaries, annual and long-term incentives and benefits. The Committee also
reviews and approves any proposed changes to compensation philosophy.
As a result of the IPO, the Company qualifies for a three year exemption
from the Internal Revenue Code Section 162(m) requirement for full
deductibility of pay over $1 million. Accordingly, all pay opportunities
currently provided by the Company should qualify for full deductibility. The
Committee will continue to monitor the requirements for compliance with
Internal Revenue Code Section 162(m) as the end of the exemption period
approaches.
BASE SALARY
Base salaries are set in a context of total direct pay (base plus annual
incentive) such that total direct pay is targeted at the midpoint of market
levels of the comparable group. Annual salary comparisons are made through
position matching against data from the comparable group and supplemented with
other survey sources as necessary. All comparison data is regressed to the
Company's size whenever possible.
The base salary of Mr. James P. Hackett, the Company's President and Chief
Executive Officer, has been determined by the Committee, and recommended by
the Committee for approval by the full Board of Directors. The factors
considered by the Committee in determining his base salary included market
data from comparable
10
<PAGE>
companies, the financial performance and growth of the Company as well as Mr.
Hackett's leadership and establishment and implementation of strategic
direction of the Company. Base salaries of the four other Named Executive
Officers have been determined by Mr. Hackett based on his assessment of
individual performance and market data from comparable companies. In
determining compensation for Mr. Hackett or any of the other Named Executive
Officers, no particular weight was given to any individual factor.
ANNUAL AND LONG-TERM INCENTIVE
The Company's MIP creates annual and long-term incentive opportunities for
the Named Executive Officers and other key management employees. The amount of
both annual and long-term bonus payments under the MIP are determined on the
basis of the Company's actual performance compared to the Company's targeted
performance as measured by economic value added ("EVA"). EVA is a profit
measurement that reflects all the costs of operating the Company as a
business, including the cost of capital.
At the beginning of each fiscal year, the Committee establishes target
incentives in the form of target percentages of base salary for annual and
long-term bonus payments. The Committee exercises discretion in establishing
these target percentages considering factors such as the midpoint of market
data for such incentives, the Company's historical and projected performance,
and the executive's tenure and individual performance. Actual incentive
percentage and the related incentive pay will be higher or lower than these
targets depending on the actual performance of the Company as measured by EVA.
At the end of a fiscal year, actual EVA performance is calculated and compared
to EVA targets. A bonus multiple is derived based two-thirds on the growth in
EVA and one-third on absolute EVA results. The bonus multiple is multiplied by
an employee's target annual and long-term incentive percentages to arrive at
the employee's actual incentive percentages. The actual incentive percentages
are multiplied by the base pay to determine an employee's annual and long-term
incentive payments for the fiscal year. For Fiscal 1998, EVA performance
exceeded targeted levels, and, therefore, annual and long-term incentive
payments exceeded targeted amounts.
The annual incentives are paid in cash after the end of the fiscal year. The
long-term incentive is paid in cash over three years in substantially equal
payments beginning after the end of the year following the year in which it is
earned. The unpaid portion of the long-term amount is adjusted at the end of
each year based on the Company's return on equity for that year. There is no
maximum payment under the MIP. Currently, Mr. Hackett has a target annual
incentive percentage of 65% and a target long-term incentive percentage of
110%, which incentive percentages are the maximum permitted under the MIP.
STOCK OPTIONS
At the time of the IPO, one-time nonqualified stock options were granted to
the Named Executive Officers and certain other eligible individuals including
Mr. Frank H. Merlotti, one of the Company's directors and Chairman of the
Committee. The grant levels were determined based on median practices for
similarly sized companies engaged in initial public offerings in recent years.
These options were granted at the IPO price and vesting is over a period of
five years, except that, vesting for Mr. Merlotti's options is over three
years. The options will expire after ten years from the date of grant.
Eligibility, option levels and all other terms and conditions for the IPO
options were approved by the Committee and the Board of Directors. In all,
options for 2,661,000 shares of Class A Common Stock were granted to eligible
individuals. Mr. Merlotti abstained from the discussion and approval of his
option grant.
Approximately 15,000 eligible employees were granted additional options on
the IPO date to purchase up to 100 shares of Steelcase Inc. Class A Common
Stock at 85% of the IPO price, as provided in the Purchase Plan. All Named
Executive Officers, except William P. Crawford, were eligible for the purchase
opportunity. Mr. Crawford was not eligible due to his beneficial ownership of
more than 5% of the outstanding common stock of the Company.
11
<PAGE>
EMPLOYEE STOCK GRANT
As of the date of the IPO, the Company granted 10 shares of Steelcase Inc.
Class A Common Stock to each of approximately 15,000 employees, including all
of the Named Executive Officers. The Company wanted to ensure that each
eligible employee had an opportunity to participate in the IPO and become a
shareholder.
THE COMPENSATION COMMITTEE
Frank H. Merlotti (Chairman)
Robert C. Pew II
James P. Hackett
Robert C. Pew III
Peter M. Wege II
William P. Crawford
12
<PAGE>
PERFORMANCE GRAPH
The following line graph compares (i) the cumulative total shareholder
return (i.e., the change in share price plus the cumulative amount of
dividends, if any, assuming dividend reinvestment, divided by the initial
share price, expressed as a percentage) on the Company's Class A Common Stock,
with (ii) the cumulative total return of the Standard & Poor's 500 Stock Index
and with (iii) the cumulative total return of an industry peer group (the
"Peer Group") for the period commencing on February 17, 1998, the effective
date of the Company's IPO, and ending on February 27, 1998. The Peer Group
consists of Herman Miller, Inc., Knoll, Inc., and Hon Industries Inc., each of
which is engaged in the manufacture of office furniture and believed by the
Company to have similar industry characteristics as the Company.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG STEELCASE INC., STANDARD & POOR'S 500 STOCK INDEX
AND THE PEER GROUP INDEX
LOGO
<TABLE>
<CAPTION>
2/17/98 2/27/98
------- -------
<S> <C> <C>
Steelcase Inc............................................. 100.00 129.46
Standard & Poor's 500 Stock Index......................... 100.00 103.49
Peer Group Index.......................................... 100.00 99.50
</TABLE>
13
<PAGE>
OTHER MATTERS
VOTING
Michigan law and the Company's By-laws require the presence of a quorum for
the Meeting, defined here as the holders of a majority of the voting power
entitled to vote, present in person or represented by proxy. Votes withheld
from director nominees and abstentions will be counted in determining whether
a quorum has been reached.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on each matter submitted for shareholders' approval. The
director nominees must receive a plurality of the votes cast at the Meeting;
therefore, abstentions will not affect the election of directors.
Under the rules of the New York Stock Exchange ("NYSE"), brokers who hold
shares on behalf of their customers (shares held in street name), have the
authority to vote on certain items when they have not received instructions
from beneficial owners. However, brokers are not authorized to vote on "non-
routine" matters if they do not receive instructions from beneficial owners
("Broker Non-votes"). Under NYSE rules, all the matters presently before the
meeting are "routine" matters, therefore brokers holding shares in street name
for their customers may vote, in their discretion, on behalf of any customer
who does not furnish voting instructions. If a "non-routine" matter comes
before the meeting, Broker Non-votes will not be treated as votes cast in
determining the outcome of the vote.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities, to file initial reports of ownership and
changes in ownership of shares of Common Stock with the Securities and
Exchange Commission. Directors, officers and greater than 10% beneficial
owners are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) reports they file. Based
on its review of the copies of such reports received by it, or written
representations from certain reporting persons that no Forms 5 were required
for those persons, the Company believes that, from February 17, 1998 (the date
on which the Company became subject to the reporting requirements of the
Exchange Act) through February 27, 1998, its directors, officers and 10%
beneficial owners complied with all applicable filing requirements, except
that the Peter Martin Wege Trust failed to file a Form 3 to report its initial
holdings of the Company's stock as of the IPO and failed to file a Form 4 and
Form 5 to report three exempt transactions involving the recapitalization and
stock split associated with the Company's IPO and one nonexempt transaction
involving the sale of shares by that trust in the Company's IPO. Subsequent to
the discovery of these omissions, the appropriate forms were filed.
COST OF SOLICITATION OF PROXIES
The cost of soliciting Proxies will be borne by the Company and the
solicitation will be made by use of the mails, personally or by telephone or
telegraph by officers, directors and regular employees of the Company and its
subsidiaries who will not be additionally compensated therefor. The firm of
Corporate Investors Communications, Inc. has been retained to assist with the
solicitation of broker and nominee Proxies at a cost of approximately
$4,000.00. The Company will also reimburse banks, brokers, nominees and other
fiduciaries who have been requested to forward the Proxy material for
reasonable expenses incurred by them in forwarding such material to the
beneficial owners of the Company's Class A Common Stock.
INDEPENDENT AUDITORS
The Company has been advised that representatives of BDO Seidman, LLP, the
Company's independent auditors in Fiscal 1998, will attend the Meeting, will
have an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
14
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals to be presented at the Company's 1999 Annual Meeting
of Shareholders must be received by the Secretary of the Company, at 901 44th
Street S.E., Grand Rapids, Michigan 49508, no later than January 26, 1999.
By Order of the Board of Directors
Jon D. Botsford
Secretary
Grand Rapids, Michigan
May 26, 1998
15
<PAGE>
STL442 DETACH HERE
PROXY
STEELCASE INC.
901 44th Street SE
Grand Rapids, MI 49508
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints Rober C. Pew II and James P. Hackett, individually and
with full power of substitution and resubstitution, as such shareholder's proxy
to vote all the outstanding shares of Class A Common Stock and/or Class B Common
Stock of SteelCASE INC. held by the undersigned at the Annual Meeting of
Shareholders to be held on June 17, 1998, or any adjournments thereof.
This proxy when properly executed will be voted in the manner by the
undersigned shareholder(s). If no contrary direction is made, the proxy will be
voted FOR the election of all the nominees for director on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SEE REVERSE
SIDE SIDE
<PAGE>
STEELCASE INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy. The
Annual Meeting of Shareholders will be held on Wednesday, June 17,1998, at 10:00
A.M. Eastern Daylight Time at the Gerald R. Ford Fieldhouse, Grand Rapids
Community College, 111 Lyon N.E., Grand Rapids, Michigan.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of this matter.
Sincerely,
Steelcase Inc.
DETACH HERE
[x] Please mark votes as in
this example.
1. Election of Directors.
Nominees: David D. Hunting, Jr., Frank H. Meriotti, Peter M. Wege II,
Earl D. Holton, William P. Crawford, Robert C. Pew III, Peter M. Wege,
David Bing, James P. Hackett, Robert C. Pew II and P. Craig Welch, Jr.
FOR WITHHELD
[ ] [ ]
[ ]______________________________________
For all nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as name appears hereon, including any official position or
representative capacity.
Signature ___________________________ Date:___________________
Signature ___________________________ Date:___________________
