<PAGE>
SCHEDULE 14A INFORMATION
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 Section 240.14a-11(c) or Section
240.14a-12
Hillenbrand Industries 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)(1)
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:
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<PAGE>
HILLENBRAND INDUSTRIES
NOTICE OF ANNUAL MEETING
TO BE HELD APRIL 7, 1998
The annual meeting of shareholders of Hillenbrand Industries, Inc., an
Indiana corporation, 700 State Route 46 East, Batesville, Indiana 47006-8835,
will be held at the Sherman House in Batesville, Indiana, on Tuesday, April 7,
1998, at 10:00 o'clock a.m., local time, for the following purposes:
(1) To elect three members to the Board of Directors;
(2) To ratify the appointment of Price Waterhouse LLP as independent
auditors of Hillenbrand Industries, Inc.; and
(3) To transact such other business as may properly come before the
meeting and any adjournment of the meeting.
The Board of Directors has fixed the close of business on February 13,
1998, as the record date for determining which shareholders are entitled to
notice of and to vote at the meeting.
By Order of the Board of Directors
Mark R. Lindenmeyer
Secretary
February 27, 1998
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
VOTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . 1
ABOUT THE BOARD OF DIRECTORS (INCLUDING DIRECTOR COMPENSATION). . . . 6
RATIFICATION OF APPOINTMENT OF AUDITORS . . . . . . . . . . . . . . . 8
EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . 8
COMPENSATION COMMITTEES' REPORT . . . . . . . . . . . . . . . . . . . 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION . . . . . 16
COMPANY STOCK PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . 16
RETIREMENT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
COST OF SOLICITATION. . . . . . . . . . . . . . . . . . . . . . . . . 18
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . 18
INCORPORATION BY REFERENCE. . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE>
HILLENBRAND INDUSTRIES
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Hillenbrand
Industries, Inc. (the "Company"), 700 State Route 46 East, Batesville, Indiana
47006-8835 [telephone (812) 934-7000], for use at the annual meeting of its
shareholders to be held at the Sherman House in Batesville, Indiana, on April
7, 1998, at 10:00 a.m., local time, and at any adjournments of the meeting, and
was mailed initially to shareholders on or about February 27, 1998. All shares
represented by these proxies will be voted at this meeting in accordance with
instructions given by shareholders. Where no instructions are given the shares
will be voted (1) in favor of the election of the Board of Directors' nominees
for three directors; (2) in favor of the ratification of the appointment of
Price Waterhouse LLP as independent auditors of the Company; and (3) in the
discretion of the proxy holder upon such other business as may properly come
before the meeting.
The purpose of the annual meeting is to vote upon the matters set forth
above. The Board of Directors is not aware of any other business which may
come before the meeting. A shareholder executing and delivering the enclosed
proxy may revoke it by giving a later proxy, notifying the Secretary of the
Company in writing, or voting in person at the annual meeting.
VOTING
The close of business on February 13, 1998, has been fixed as the record
date for determining which shareholders are entitled to notice of and to vote
at the annual meeting. On February 13, 1998, there were 67,526,880 shares of
the Company's common stock issued and outstanding. Each share of common stock
is entitled to one vote with respect to every matter submitted to a vote at the
meeting. Votes cast by proxy or in person at the annual meeting will be
tabulated by the election inspectors appointed for the meeting.
VOTES NECESSARY TO ADOPT PROPOSALS. A plurality of the votes cast is
required for the election of directors. Directors are elected by a plurality
of the votes cast by shareholders entitled to vote at a meeting at which a
quorum is present. The affirmative vote of the holders of a majority of the
votes cast is required for the ratification of the appointment of the auditors.
A majority of the shares issued and outstanding constitutes a quorum.
Under Indiana law, once a share is represented for any purpose at a meeting it
is deemed present for quorum purposes for the remainder of the meeting.
Abstentions, broker non-votes, and instructions on a proxy to withhold
authority to vote for one or more of the director nominees will result in fewer
votes being cast with respect to a particular issue or nominee.
ELECTION OF DIRECTORS
The Articles of Incorporation and the Code of By-laws of the Company
provide that members of the Board of Directors shall be classified with respect
to the terms which they shall serve by dividing them into three classes. Each
class consists of three or four members. At the upcoming annual meeting, three
members of the Board of Directors in Class II shall be elected for three year
terms expiring at the 2001 annual meeting, or until their successors are duly
elected and qualified.
-1-
<PAGE>
The three directors in Class III and four directors in Class I were each
previously elected to three year terms expiring at the 1999 and 2000 annual
meetings, respectively.
The enclosed proxy, unless authority is withheld, will be voted in favor
of electing as directors the nominees listed for the terms indicated. If any
one or more of these nominees should be unable to serve, the enclosed proxy may
be voted for a substitute nominee selected by the Board of Directors or the
Board of Directors may amend the Code of By-laws of the Company to reduce the
number of directors.
NOMINEES:
CLASS II
To be elected to serve three year terms expiring at the 2001 annual meeting:
<TABLE>
<CAPTION>
SERVED SHARES(1)
AS A BENEFICIALLY PERCENT OF
DIRECTOR OWNED AS OF TOTAL SHARES
NAME AGE PRINCIPAL OCCUPATION SINCE FEBRUARY 6, 1998 OUTSTANDING
- ---- --- -------------------- -------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
LAWRENCE R. BURTSCHY 61 CHAIRMAN OF L.R. 1970 4,981,766(2)(3) 7.4%
BURTSCHY & COMPANY
DANIEL A. HILLENBRAND 74 CHAIRMAN OF THE BOARD 1969 1,980,822(2)(4) 2.9%
OF THE COMPANY
RAY J. HILLENBRAND 63 PERSONAL INVESTMENTS 1970 1,976,761(2)(5) 2.9%
</TABLE>
DIRECTORS:
CLASS III
Serving three year terms expiring at the 1999 annual meeting:
<TABLE>
<CAPTION>
SERVED SHARES(1)
AS A BENEFICIALLY PERCENT OF
DIRECTOR OWNED AS OF TOTAL SHARES
NAME AGE PRINCIPAL OCCUPATION SINCE FEBRUARY 6, 1998 OUTSTANDING
- ---- --- -------------------- -------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
JOHN C. HANCOCK 68 CONSULTANT 1980 13,000(6) (11)
GEORGE M. HILLENBRAND II 58 PERSONAL INVESTMENTS 1986 5,004,285(2)(7) 7.4%
JOHN A. HILLENBRAND II 66 PERSONAL INVESTMENTS 1981(8) 3,710,075(2)(9) 5.5%
</TABLE>
-2-
<PAGE>
CLASS I
Serving three year terms expiring at the 2000 annual meeting:
<TABLE>
<CAPTION>
SERVED SHARES(1)
AS A BENEFICIALLY PERCENT OF
DIRECTOR OWNED AS OF TOTAL SHARES
NAME AGE PRINCIPAL OCCUPATION SINCE FEBRUARY 6, 1998 OUTSTANDING
- ---- --- -------------------- -------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
PETER F. COFFARO 69 CHAIRMAN OF THE BOARD PABCO 1987 42,874 (11)
FLUID POWER CO., OHIO VALLEY
FLOORING, AND ANCHOR FLANGE
COMPANY
EDWARD S. DAVIS 66 PARTNER, HUGHES HUBBARD 1974 4,000(6) (11)
& REED LLP, ATTORNEYS
LEONARD GRANOFF 71 PRESIDENT OF GRANOFF ASSOCIATES 1978 16,208 (11)
W AUGUST HILLENBRAND 57 PRESIDENT AND CHIEF EXECUTIVE 1972 3,922,745(2)(6) 5.8%
OFFICER OF THE COMPANY (10)
</TABLE>
STOCK OWNERSHIP OF OTHER NAMED EXECUTIVE OFFICERS:
<TABLE>
<CAPTION>
SHARES(1)
BENEFICIALLY PERCENT OF
OWNED AS OF TOTAL SHARES
NAME AGE PRINCIPAL OCCUPATION FEBRUARY 6, 1998 OUTSTANDING
- ---- --- -------------------- ---------------- ------------
<S> <C> <C> <C> <C>
TOM E. BREWER 59 SENIOR VICE PRESIDENT & CHIEF 41,340 (11)
FINANCIAL OFFICER
MARK R. LINDENMEYER 51 VICE PRESIDENT, GENERAL 2,386 (11)
COUNSEL & SECRETARY
MICHAEL L. BUETTNER 40 VICE PRESIDENT, 1,614 (11)
CORPORATE DEVELOPMENT
ROBERT J. TENNISON 51 VICE PRESIDENT, 280 (11)
CONTINUOUS IMPROVEMENT
ALL DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY 17,924,943(3)(4)(5)(6) 26.5%
AS A GROUP, CONSISTING OF 19 PERSONS. (7)(9)(10)
</TABLE>
(1) The Company's only class of equity securities outstanding is common stock
without par value. The Company is not aware of any person, other than
members of the Hillenbrand family as indicated herein, beneficially owning
more than five percent (5%) of the Company's common stock.
(2) John A. Hillenbrand II and Ray J. Hillenbrand are brothers. John A., Ray
J., W August and George M. Hillenbrand II are nephews of Daniel A.
Hillenbrand. Lawrence R. Burtschy is a son-in-law of George C.
Hillenbrand, deceased, brother of Daniel A. Hillenbrand.
-3-
<PAGE>
(3) Includes 3,814,920 shares owned of record by trusts, of which Lawrence R.
Burtschy is co-trustee, for the benefit of certain members of the Daniel
A. Hillenbrand and George C. Hillenbrand families; and 951,489 shares
owned of record and beneficially by his wife, Elisabeth H. Burtschy. Mr.
Burtschy disclaims beneficial ownership of these shares.
(4) Includes 72,400 shares held of record and beneficially owned by Daniel A.
Hillenbrand's wife, Mary H. Hillenbrand. Mr. Hillenbrand disclaims
beneficial ownership of these shares.
(5) Includes 800,000 shares held of record by a trust, of which Ray J.
Hillenbrand is trustee; 15,975 shares held of record by a charitable
foundation, of which Mr. Hillenbrand is a trustee; and 991,501 shares held
of record by family partnerships for the benefit of other members of his
immediate family. Mr. Hillenbrand disclaims beneficial ownership of these
shares.
(6) Does not include deferred compensation in the form of deferred shares of
common stock held on the books and records of the Company in the following
amounts: Edward S. Davis - 4,425 shares; John C. Hancock - 5,016 shares;
W August Hillenbrand - 145,882 shares; and other executive officers -
13,196 shares.
(7) Includes 3,814,920 shares owned of record by trusts, of which George M.
Hillenbrand II is co-trustee, for the benefit of Mr. Hillenbrand and other
members of his immediate family. Mr. Hillenbrand disclaims beneficial
ownership of these shares.
(8) John A. Hillenbrand II previously served as a Director of the Company from
1972 to 1979.
(9) Includes 16,240 shares held of record by his wife, Joan L. Hillenbrand;
593,576 shares held of record by trusts for the benefit of his children
and grandchildren; and 2,473,392 shares held of record by a family
partnership for the benefit of other members of his immediate family. Mr.
Hillenbrand disclaims beneficial ownership of these shares.
(10) Includes 1,844,590 shares owned of record by trusts, of which W August
Hillenbrand is trustee or co-trustee; and 688,716 shares owned of record
by a family partnership for the benefit of members of his family. Mr.
Hillenbrand disclaims beneficial ownership of these shares except to the
extent of his pecuniary interest therein. Also includes 217,174 shares
owned of record and beneficially by his wife, Nancy K. Hillenbrand; 56,509
shares held of record by a charitable trust, of which Mr. Hillenbrand is a
co-trustee; and 251,325 shares held by a limited partnership, of which Mr.
Hillenbrand is a limited partner. Mr. Hillenbrand disclaims beneficial
ownership of these shares.
(11) Ownership of less than one percent (1%) of the total shares outstanding.
Daniel A. Hillenbrand has been Chairman of the Board since 1972. Mr.
Hillenbrand served as President of the Company from 1972 through October 20,
1981, and as Chief Executive Officer from 1972 through April 11, 1989. Mr.
Hillenbrand had been employed by the Company throughout his business career
until his retirement on April 30, 1989.
-4-
<PAGE>
W August Hillenbrand has been President of the Company since October 21,
1981 and was elected Chief Executive Officer of the Company on April 11, 1989.
Mr. Hillenbrand has been employed by the Company throughout his business
career. He is also a director of DPL, Inc. of Dayton, Ohio.
George M. Hillenbrand II has devoted his business career to the management
of personal and family investments.
John A. Hillenbrand II has managed personal and family investments since
1979. He is also a director of PSI Energy of Plainfield, Indiana, CINergy
Corp. of Cincinnati, Ohio and National City Bank, of Indianapolis, Indiana.
Mr. Hillenbrand was employed by and active in the management of the Company
prior to his resignation as an officer in 1979. He is also chairman, vice
chairman, or a director of several privately owned companies.
Ray J. Hillenbrand has been engaged in the management of personal and
family investments for much of his career. Mr. Hillenbrand was employed by and
active in the management of the Company prior to his resignation as an officer
in 1977.
Mr. Burtschy is Chairman of L.R. Burtschy & Company, an investment
management company, and has been so engaged since 1969. Mr. Burtschy is also a
director of Skyline Chili, Inc. of Cincinnati, Ohio, and a director or partner
of several privately owned companies.
Mr. Coffaro, a mechanical engineer, has devoted his career to the
development of a number of manufacturing and distribution businesses. He is a
director of several privately owned companies located in Cincinnati, Ohio.
Mr. Davis, a partner in Hughes Hubbard & Reed LLP, a New York law firm,
has practiced law during his entire professional career. He is also a director
of Cognitronics Corporation of Danbury, Connecticut.
Mr. Granoff is President and director of Granoff Associates, a privately
owned investment company in Providence, Rhode Island.
Dr. Hancock, who holds a Ph.D. in Electrical Engineering, is a consultant.
Until 1988, he was Executive Vice President for Corporate Development and
Technology of United Telecommunications, Inc. (Sprint).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors, its executive officers and any person holding more than ten percent
of the Company's common stock are required to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. The
Company is required to report in this proxy statement any failure to file or
late filing occurring during 1997. Based solely on reports and other
information from reporting persons, the Company believes that all of these
filing requirements were satisfied by its directors, executive officers and ten
-5-
<PAGE>
percent beneficial owners, except that one report involving one transaction was
filed late by Peter F. Coffaro.
ABOUT THE BOARD OF DIRECTORS
(INCLUDING DIRECTOR COMPENSATION)
The Board of Directors has the following standing committees: an
Executive Committee, a Finance Committee, an Audit Committee, a Compensation
Committee and a Performance Compensation Committee. The Company does not have
a nominating committee. During 1997, the Board of Directors of the Company
held seven meetings.
The Executive Committee of the Board of Directors consists of Messrs.
Lawrence R. Burtschy, Daniel A. Hillenbrand (Chairman), George M. Hillenbrand
II, John A. Hillenbrand II, Ray J. Hillenbrand and W August Hillenbrand. The
Executive Committee advises the Chief Executive Officer on business decisions
of significant impact and on the business in general. Subject to limitations
provided by law or the Code of By-laws, the Executive Committee exercises the
power and authority of the Board of Directors as may be necessary during the
intervals between meetings of the Board. The Executive Committee met four
times during 1997.
The Finance Committee of the Board of Directors consists of Messrs.
Lawrence R. Burtschy, Daniel A. Hillenbrand (Chairman), George M. Hillenbrand
II, John A. Hillenbrand II, Ray J. Hillenbrand and W August Hillenbrand. The
Finance Committee reviews financial policies and procedures of the Company. It
also makes recommendations to the Board of Directors on dividend policy,
issuance and sale or repurchase of Company securities, and the investment of
Company funds, including pension and thrift plans. The Finance Committee also
advises on proposed acquisitions and divestments. During 1997, the Finance
Committee held four meetings.
The Audit Committee of the Board of Directors consists of Messrs. Peter F.
Coffaro, Edward S. Davis (Chairman) and Daniel A. Hillenbrand. The Audit
Committee annually recommends to the Board of Directors of the Company
independent accountants for appointment by the Board of Directors as auditors
of the books, records and accounts of the Company and its subsidiaries. The
Audit Committee reviews the services to be performed by the independent
accountants; makes a determination regarding the possible effect of the
performance of such services on the independence of the principal independent
accountants; receives and reviews the reports submitted by the principal
independent accountants of the Company; and takes such action with respect to
such reports as it deems appropriate. In addition, the Audit Committee
determines the duties and responsibilities of the internal auditing staff;
reviews the annual program for the internal audit of the operational procedures
of the Company; receives and reviews reports submitted by the internal auditing
staff; and takes such action as it deems appropriate to assure that the
interests of the Company are adequately protected, including the maintenance of
accounting controls and standards. During 1997, the Audit Committee held four
meetings.
The Compensation Committee of the Board of Directors consists of Messrs.
Peter F. Coffaro, Edward S. Davis (Chairman), John C. Hancock, Daniel A.
Hillenbrand and W August Hillenbrand. The Compensation Committee annually
reviews the performance contributions of the officers of the Company and makes
recommendations to the Board of Directors for adjustments to the base salaries
of those officers. The Compensation Committee also has general oversight
responsibility for other
-6-
<PAGE>
compensation programs of the Company and reviews the structure, cost
effectiveness, and competitive position of the Company's compensation
programs. During 1997, the Compensation Committee held two meetings.
The Performance Compensation Committee of the Board of Directors consists
of Messrs. Peter F. Coffaro, Edward S. Davis, John C. Hancock and Daniel A.
Hillenbrand (Chairman) and its Sub-Committee consists of Messrs. Peter F.
Coffaro and John C. Hancock. The Performance Compensation Committee is
responsible for the administration of the Company's Performance Compensation
Plan, Restricted Stock Plan, and Senior Executive Compensation Program, except
for those responsibilities designated to the Sub-Committee under those plans.
The Performance Compensation Committee and/or its Sub-Committee selects
participants, makes awards, establishes specific performance objectives, and
assesses individual and subsidiary performance achievements against those
previously established performance objectives. The Sub-Committee is
responsible for administering the 1996 Stock Option Plan. The Performance
Compensation Committee held two meetings in 1997.
During the Company's fiscal year ended November 29, 1997, each Director
who was not a salaried officer or employee of the Company received an annual
fee of $20,000 and a fee of $3,000 for each Board of Directors meeting
attended. Directors who are members of the Executive, Finance, Audit and
Compensation Committees received $1,000 for each committee meeting attended.
Directors were reimbursed for expenses incurred as a result of attendance at
Board or committee meetings. Directors of the Company may defer receipt of
directors' fees otherwise payable to them by the Company. Under the Company's
1996 Stock Option Plan, non-employee Directors receive non-qualified stock
options to purchase 2,000 shares of common stock each year. Non-employee
Directors are also eligible to participate in the Company's group term life
insurance program in which premiums are paid by the Company. Death benefits,
which are age related, range from $60,000 to $150,000.
Daniel A. Hillenbrand has entered into a Consulting Agreement with the
Company under which he is to provide consulting and advisory services to the
Company, including advice on acquisitions and capital expenditures, until May
31, 1999, for which he receives an annual consulting fee of $505,289, as well
as certain pension, health care, insurance and other benefits which totaled
$106,675 during 1997. Mr. Hillenbrand has unique knowledge and extensive
experience in the industries served by the Company, in part because of his long-
term relationship with the Company, and in addition he is well-recognized as an
innovator and leader in these industries. Therefore, consulting services from
other sources would not be comparable to the services provided by Mr.
Hillenbrand. Mr. Hillenbrand retired from the Company on April 30, 1989, but
continues to serve as Chairman of the Board.
During the past year the Company purchased 290,395 shares of common stock
from one of Ray J. Hillenbrand's sons and 990,000 shares of common stock from a
trust established by George C. Hillenbrand to facilitate the payment of the
trust's federal and state taxes upon the death of Mr. Hillenbrand's widow,
Margaret M. Hillenbrand.
-7-
<PAGE>
RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to shareholder ratification, the Board of Directors of the Company
has appointed the firm of Price Waterhouse LLP, certified public accountants,
as independent auditors to make an examination of the financial statements of
the Company for its fiscal year ending November 28, 1998. The appointment was
made upon the recommendation of the Audit Committee, which is composed of
members of the Board of Directors who are not officers or otherwise employees
of the Company. A representative of Price Waterhouse LLP will be present at
the annual meeting with an opportunity to make a statement, if he so desires,
and will respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT AUDITORS
OF THE COMPANY.
EXECUTIVE COMPENSATION
The following tabulation and notes set forth the compensation paid or
accrued by the Company during the three fiscal years ended November 29, 1997,
November 30, 1996 and December 2, 1995 to the Chief Executive Officer and each
of the other four most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- --------------------
AWARDS PAYOUTS
----------------------
NAME OTHER SECURITIES
AND ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION YEAR $ $ $(1) #(2) $(3) $(4)
---------- ----- -------- -------- ------------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
W AUGUST HILLENBRAND 1997 $732,032 $661,433 $110,442 30,000 $ 0 $227,220
PRESIDENT & CHIEF 1996 $690,972 $623,633 $105,023 N/A $ 0 $186,032
EXECUTIVE OFFICER 1995 $657,987 $ 0 $ 78,853 N/A $ 0 $146,177
- ----------------------------------------------------------------------------------------------------------------------
TOM E. BREWER 1997 $321,615 $193,800 (5) 8,000 $ 0 $ 66,473
SENIOR VICE PRESIDENT & 1996 $304,308 $183,000 (5) N/A $ 0 $ 55,819
CHIEF FINANCIAL OFFICER 1995 $293,423 $ 0 (5) N/A $ 0 $ 46,557
- ----------------------------------------------------------------------------------------------------------------------
MARK R. LINDENMEYER 1997 $204,423 $123,000 (5) 4,000 $ 0 $ 17,067
VICE PRESIDENT, GENERAL 1996 $194,423 $117,000 (5) N/A $ 0 $ 25,667
COUNSEL & SECRETARY 1995 $182,192 $ 0 (5) N/A $ 0 $ 5,440
- ----------------------------------------------------------------------------------------------------------------------
MICHAEL L. BUETTNER 1997 $184,048 $123,681 (5) 4,000 $ 0 $ 3,200
VICE PRESIDENT, 1996 $148,981 $ 74,003 (5) N/A N/A $ 3,000
CORPORATE DEVELOPMENT 1995 $127,942 $ 10,000 (5) N/A N/A $ 3,000
- ----------------------------------------------------------------------------------------------------------------------
ROBERT J. TENNISON 1997 $209,423 $ 94,500 (5) 2,000 N/A $ 3,200
VICE PRESIDENT, 1996 $153,750 $ 69,111 (5) N/A N/A $ 3,000
CONTINUOUS IMPROVEMENT 1995 N/A N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of the cost of perquisites and other personal benefits provided
by the Company. Included in the 1997 amounts shown for W August
Hillenbrand are $86,469 for financial planning services reimbursed.
-8-
<PAGE>
(2) All options were granted pursuant to the Company's 1996 Stock Option Plan.
The Company has not awarded stock appreciation rights.
(3) The amounts appearing in this column are the values as of November 29,
1997, November 30, 1996 and December 2, 1995 of the shares earned under
the Senior Executive Compensation Program for 1995-1997, 1994-1996 and
1993-1995 performance cycles respectively.
(4) All other compensation earned or allocated in 1997 is as follows:
<TABLE>
<CAPTION>
PENSION CONTRIBUTIONS ABOVE MARKET
SUPPLEMENTAL 401(K) INTEREST EARNED TOTAL
------------- -------- --------------- ----------
<S> <C> <C> <C> <C>
W AUGUST HILLENBRAND $ 192,193 $3,200 $31,827 $227,220
TOM E. BREWER $ 53,399 $3,200 $ 9,873 $ 66,472
MARK R. LINDENMEYER $ 13,546 $3,200 $ 321 $ 17,067
MICHAEL L. BUETTNER NONE $3,200 NONE $ 3,200
ROBERT J. TENNISON NONE $3,200 NONE $ 3,200
</TABLE>
(5) Amounts do not exceed disclosure thresholds established under SEC rules.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning stock option
grants to the named executive officers during the fiscal year ended November
29, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS GRANTED EMPLOYEES IN PRICE GRANT DATE
NAME #(1) FISCAL YEAR ($/SHARE) EXPIRATION DATE PRESENT VALUE (2)
- ----- --------------- ----------------- ---------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
W AUGUST HILLENBRAND 30,000 11.01% $44.3125 4/9/07 $397,836
TOM E. BREWER 8,000 2.94% $44.3125 4/9/07 $106,090
MARK R. LINDENMEYER 4,000 1.47% $44.3125 4/9/07 $ 53,045
MICHAEL L. BUETTNER 4,000 1.47% $44.3125 4/9/07 $ 53,045
ROBERT J. TENNISON 2,000 .73% $44.3125 4/9/07 $ 26,522
</TABLE>
(1) All options were granted pursuant to the Company's 1996 Stock Option Plan.
The options were granted at an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant. The options
were granted for terms of ten years, and vest one-third on each of the
first three anniversaries of the date of grant. In the event of a change
of control of the Company, the unvested portions of the options will be
subject to limited accelerated vesting. No stock appreciation rights were
granted to executive officers in fiscal 1997.
(2) Option values were calculated on the basis of the Black-Scholes option
pricing model. Options were assumed to be exercised 5.97 years after the
date of grant. Other assumptions used for the valuations are a risk-free
interest rate of 6.83%, stock price volatility of .1903 and annual
dividend yield of 1.44%. The actual value of the options will depend on
the market value of the Company's Common Stock on the dates the options
are exercised.
-9-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning option
exercises during fiscal year 1997 by the named executive officers and
unexercised options held by such officers as of November 29, 1997:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
--------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W AUGUST HILLENBRAND 0 $0 0 30,000 $0 $7,500
TOM E. BREWER 0 $0 0 8,000 $0 $2,000
MARK R. LINDENMEYER 0 $0 0 4,000 $0 $1,000
MICHAEL L. BUETTNER 0 $0 0 4,000 $0 $1,000
ROBERT J. TENNISON 0 $0 0 2,000 $0 $ 500
</TABLE>
LONG TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR
The following table gives information regarding long term incentive plan
awards made during fiscal year 1997 to each of the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF SHARES/ PERFORMANCE OR OTHER ESTIMATED FUTURE
UNITS OR PERIOD UNTIL PAYOUTS UNDER NON-STOCK PRICE-BASED PLANS
------------------------------------------
NAME OTHER RIGHTS(1) MATURATION OR PAYOUT THRESHOLD # TARGET # MAXIMUM #
- ---- ------------------ -------------------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
W AUGUST HILLENBRAND 10,490 1997/1999 1 10,490 20,980
TOM E. BREWER 2,767 1997/1999 1 2,767 5,534
MARK R. LINDENMEYER 1,756 1997/1999 1 1,756 3,512
MICHAEL L. BUETTNER 1,558 1997/1999 1 1,558 3,116
ROBERT J. TENNISON 1,199 1997/1999 1 1,199 2,398
</TABLE>
(1) Performance share award based on participation in the Senior Executive
Compensation Program. Payout of award is dependent on specified levels of
shareholder value created during a three year period. The target amount
will be earned if 100% of targeted shareholder value created is achieved.
Incremental amounts above the threshold will be earned as incremental
shareholder value is created and the maximum award is based on achievement
of 200% of the targeted shareholder value created.
COMPENSATION COMMITTEES' REPORT
The Compensation Committee and the Performance Compensation Committee of
the Board of Directors, under the direction of the Board of Directors, have
prepared the following report for inclusion in this proxy statement. This
report sets forth the compensation policies applicable to the Company's
executive officers and the relationship of corporate performance to executive
compensation. The functions of each Committee and of a sub-committee of one of
them are divided in order to meet applicable legal requirements, but those
committees are collectively referred to in this report as the Committee.
-10-
<PAGE>
COMPENSATION PHILOSOPHY
The Company's compensation programs reflect a long-standing and strongly
held belief in the principle of performance oriented compensation. The values
that are integral to the design and operation of the Company's compensation
administration and plan designs include:
- - creating long term shareholder value as the cornerstone of the Company's
compensation philosophy
- - linking compensation programs to the achievement of business strategies in
each subsidiary
- - having financial objectives at the subsidiary level that reflect the
performance expectations of the Company for that entity
- - emphasizing variable pay rather than fixed compensation
Performance expectations reflect the Company's commitment to continuous
improvement. When expectations are met or exceeded, variable compensation
should be paid; to the extent expectations are not met, variable incentive
compensation should not be paid.
The compensation package for the senior executives of the Company is
comprised of base salary, an annual cash incentive, a three-year performance
opportunity, stock options, and benefits which are generally available in
companies of similar size.
COMPENSATION ELEMENTS
1. BASE SALARY
At the senior executive level, base salaries are conservative when
compared with companies of similar size and financial performance. Emphasis
in the Company's compensation programs is placed on variable or "at risk"
compensation rather than on base salary. The Committee reviews the base
salaries of the executive officers on an annual basis. Adjustments to base
salaries result from an assessment of the performance contributions of each
executive in relationship to that executive's scope of responsibility. The
Committee also examines the overall competitive position of the base salaries
of its executive officers in relation to companies of similar size and
financial performance. The Committee maintains an appropriate position for
other compensation elements, i.e. short term incentive compensation,
perquisite compensation, long term incentive compensation, and other benefit
programs including life insurance and pension benefits. The Company rewards
the creation of sustainable long term shareholder value and as a result
places greater emphasis on variable compensation than on base salary.
Effective June 21, 1997 the Board of Directors acted on the
recommendation of the Committee to increase the compensation of W August
Hillenbrand by 7%. Prior to making the adjustment the Committee reviewed the
year to date performance of each of the subsidiaries, the financial
performance of the Company, and the performance contributions of Mr.
Hillenbrand in relationship to performance objectives, such as management of
cash flow and return on equity, and made an assessment of the degree to which
he was contributing to the creation of long term shareholder
-11-
<PAGE>
value. The Committee also reviewed competitive compensation information
provided by an independent consulting firm prior to recommending to the Board
of Directors the adjustment to Mr. Hillenbrand's base salary. The Committee
utilized the services of an independent compensation consulting firm to
provide marketplace competitive information regarding base salaries of
executive officers. The base salaries of executive officers of the Company
were compared with those of other diversified manufacturing firms, and with
base salaries practices of companies who have generated total shareholder
returns similar to those of the Company. Other executive officers were
granted adjustments to their base salaries at the same time based both upon
their performance contributions, such as attainment of continuous improvement
in their areas of responsibility and management of cash flow, during the
preceding twelve months and marketplace comparisons. Adjustments to the base
salaries of the other executive officers were recommended by the Committee
and approved by the Board of Directors.
2. PERQUISITES
The senior executive officers are eligible for perquisite compensation
under the Company's Senior Executive Compensation Program (the "Program").
The annual amount of a perquisite account is limited to 10% of each
participant's base salary or such other limits as may be imposed on
participants by the Committee (in the case of the Chief Executive Officer of
the Company and certain other senior executives who are participants) and by
the Chief Executive Officer of the Company (in the case of other
participants). Perquisite compensation may be used to pay for supplemental
health care, insurance benefits, financial planning assistance, club
membership fees or Company common stock. All or a portion of perquisite
compensation may be deferred to be paid in cash at the end of the deferral
period.
3. INCENTIVE COMPENSATION
a. SHORT TERM INCENTIVE COMPENSATION
Under the terms of the Program, the Committee establishes specific
financial and non-financial objectives for each subsidiary and for the
Company overall. Each subsidiary is measured and rewarded based upon its
performance contributions and the performance of its strategic business
units. Short term financial performance objectives are established annually
at levels which generally represent continuous improvement over prior years'
results. Non-financial performance objectives are established to assure
proper attention by each subsidiary to those non-financial factors which are
necessary for long term shareholder value creation. Achievement of financial
objectives determines how much short term incentive compensation is
potentially available for distribution in each subsidiary; achievement of
both the financial and non-financial objectives determines how much incentive
compensation will actually be paid. The Committee established financial and
non-financial objectives to maintain the appropriate balance between the
short and long term performance expectations of shareholders.
The amount of short term incentive compensation is determined by first
establishing a performance base ("Performance Base") and a target ("Target")
for each subsidiary. The Performance Base and Target for the Company's Chief
Executive Officer and Vice Presidents are recommended by the Chief Executive
Officer of the Company and approved by the Committee. The Performance Base
and Target for each participant in the Program who is a chief executive
officer of a subsidiary are
-12-
<PAGE>
approved by the Chief Executive Officer of the Company. The Performance Base
and Target for other participants who are employees of the Company are
established and approved by the Chief Executive Officer of the Company and
the Performance Base and Target for participants who are employees of
subsidiaries of the Company are established by the chief executive officer of
such subsidiary. The Performance Base and Target for the Chief Executive
Officer of the Company are directly related to the return on shareholder
equity of the Company or as otherwise determined by the Committee. Goals for
other participants include both financial and non-financial measures and may
reflect the accomplishment of tactical and strategic plans of each subsidiary.
Short term incentive compensation opportunity is equal to 60% of base
salary for the Chief Executive Officer of the Company; 50% of base salary in
the case of a chief executive officer of a subsidiary; 40% of base salary for
corporate or subsidiary senior executives; and 30% for all other executive
participants. Attainment of the Performance Base results in short term
incentive compensation equal to 50% of the above scale. Short term incentive
compensation of up to 150% of the amount of the above scale may be paid.
Achievement above Performance Base is paid according to a formula recommended
by the Chief Executive Officer of the Company and approved by the Committee.
Short term incentive compensation is calculated for each senior executive
participant at the end of each fiscal year. Short term incentive compensation
is payable in cash after forty days, but within seventy-five days, after the
end of the fiscal year. All or a portion of short term incentive compensation
may be deferred by the employee and invested either in cash or common stock to
be paid at the end of the deferral period.
Executive officers of the Company were awarded cash bonuses in January
1998 based upon the achievement of return on shareholder equity objectives
established by the Committee at the beginning of the 1997 fiscal year.
b. LONG TERM INCENTIVE COMPENSATION
Under the terms of the Program, the Committee reviews the business plans
of each of the subsidiaries and the performance expectations of the Company
overall at the commencement of each fiscal year. The performance history and
expected performance contributions of each subsidiary provide the foundation
for the Committee to establish performance objectives for long term
compensation programs.
The Committee recommends to the Board of Directors the establishment and
administration of the Company's long term incentive compensation. The
Committee designates participants in the long term component of the Program and
establishes the shareholder value creation objectives for each subsidiary and
for the Company for each three-year cycle of the Program. The Committee reviews
a mathematically calculated analysis of a shareholder's risk-adjusted
expectation for return on his or her investment in the Company's common stock.
The Committee establishes specific performance objectives for each subsidiary
and for the Company based upon the shareholder value calculation. For the
executive officers of the Company, the base for the three-year cycle is
established by taking the prior year's net income and dividing it by the
weighted average cost of capital for the Company. During the three-year cycle,
the positive and negative cash flows are measured and adjusted to account for
their time value to the Company. At the end of the three-year period, the
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<PAGE>
Company's net income is again capitalized by dividing it by the Company's
weighted average cost of capital. The result of these calculations is
compared with the present value of the base year's capitalized net income to
determine if shareholder value exceeded calculated shareholder expectations.
The sum of the performance objectives so established for the various
subsidiaries is higher than calculated shareholder expectation for the
Company as a whole, as calculated under this model. The level of performance
so determined represents the minimum level of performance which must be
achieved for payment of long term incentive compensation. The Committee
further establishes a maximum level of shareholder value creation for which
incentive compensation will be paid. Performance above that target level
creates additional value for shareholders but does not result in additional
payments to executive officers.
The long term component of the Program affords executives the
opportunity to become significant shareholders in the Company, thereby
aligning the interests of shareholders and executives. At the commencement
of each three-year cycle a performance opportunity for each participant is
established. That opportunity is equal to 50% of base salary for the Chief
Executive Officer of the Company; 45% of base salary in the case of a chief
executive officer of a subsidiary; 30% of base salary for corporate or
subsidiary senior executives; and 20% of base salary for all other executive
participants. That opportunity is divided by the preceding year's average
share price of the Company's common stock to determine the tentative award in
shares of common stock. At the conclusion of the performance cycle the
extent to which the financial performance of the Company exceeded the
calculated expectations of shareholders is determined. To the extent that
calculated shareholder expectations were exceeded, payouts are made under the
Program, some of which may be required to be deferred. The range of award
can be from 0 to 200% of the opportunity established for each executive at
the outset of the cycle.
Long term performance share compensation is payable at the end of the
three-year cycle (but not sooner than forty days after the end of the cycle)
in the form of shares of common stock. Payment of long term performance
compensation is contingent upon a participant's continued employment
throughout the three-year period to which the compensation relates. All or a
portion of long term performance compensation earned may be deferred by the
employee. All earned compensation above the 100% target achievement at the
end of each cycle must be deferred until the later of age 62 or retirement
and is subject to forfeiture in the event the employee voluntarily terminates
employment within three years after the end of the cycle.
During the 1995/1997 cycle the financial performance of the Company was
below the performance targets for the Program's minimum payout; therefore no
amounts were earned or paid to the executive officers of the Company for the
1995/1997 cycle.
c. STOCK OPTION PLAN
The 1996 Stock Option Plan provides for the opportunity to grant stock
options to officers, other key employees and non-employee directors to help
align those individuals' interests with those of shareholders, to motivate
executives to make strategic long-term decisions, and to better enable the
Company to attract and retain capable directors and executive personnel.
-14-
<PAGE>
The Committee utilized the services of an independent consulting
compensation firm to provide marketplace competitive information as well as
the practices of companies who have generated similar total shareholder
returns.
Stock option grants for non-employee directors of 2,000 shares are
provided by the Plan and are to be granted as of the first day following each
annual meeting of the Company's shareholders.
Officers, other key employees and non-employee directors were granted
stock options during the 1997 fiscal year. The options vest over a three
year period. Officers and some key employees have been given shareholding
guidelines to encourage them to become significant shareholders of the
Company.
* * *
Section 162(m) of the Internal Revenue Code limits tax deductibility of
certain executive compensation in excess of $1 million per year unless
certain requirements are met. The Program is designed to meet these
requirements. The policy of the Committee related to these requirements is
to maintain a compensation program which maximizes the creation of long term
shareholder value. The Committee's intention is to comply with the
requirements of Section 162(m) except in those limited cases where the
Committee believes shareholder interests are best served by another approach.
Respectfully submitted to the Company's shareholders by the Compensation
Committee and the Performance Compensation Committee of the Board of
Directors.
<TABLE>
<CAPTION>
<C> <C>
BY: COMPENSATION COMMITTEE BY: PERFORMANCE COMPENSATION
COMMITTEE
Peter F. Coffaro Peter F. Coffaro
Edward S. Davis (Chairman) Edward S. Davis
John C. Hancock John C. Hancock
Daniel A. Hillenbrand Daniel A. Hillenbrand (Chairman)
W August Hillenbrand
</TABLE>
-15-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Peter F. Coffaro, Edward S. Davis, John C. Hancock, Daniel A.
Hillenbrand and W August Hillenbrand served on the Compensation Committee
during 1997, and Peter F. Coffaro, Edward S. Davis, John C. Hancock and
Daniel A. Hillenbrand served on the Performance Compensation Committee during
1997.
Daniel A. Hillenbrand, Chief Executive Officer of the Company until
April 11, 1989, and currently Chairman of the Board of the Company, serves on
both the Compensation Committee and the Performance Compensation Committee of
the Company. W August Hillenbrand, President and Chief Executive Officer of
the Company, serves on the Compensation Committee.
Edward S. Davis, who is Chairman of the Compensation Committee and a
member of the Performance Compensation Committee, is a partner in the law
firm of Hughes Hubbard & Reed LLP. The Company retains Hughes Hubbard & Reed
LLP as legal counsel.
COMPANY STOCK PERFORMANCE
The following graph compares the cumulative total return for Hillenbrand
common shares of the Company with the S & P 500 Index and S & P Manufacturing
(Diversified Industrial) Index:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HILLENBRAND INDUSTRIES, S&P 500 AND
S&P MANUFACTURING (DIVERSIFIED INDUSTRIALS)
BASE = NOVEMBER 1992
<TABLE>
<CAPTION>
DATE HILLENBRAND S&P 500 S&P MFG
<C> <C> <C> <C>
1992 $100 $100 $100
1993 $120 $110 $101
1994 $123 $111 $ 74
1995 $181 $152 $ 82
1996 $254 $195 $ 94
1997 $299 $250 $116
</TABLE>
Assumes $100 invested in November 1992. Total return assumes that all
dividends are reinvested when received.
-16-
<PAGE>
RETIREMENT PLANS
SAVINGS PLAN
Under the Hillenbrand Industries, Inc., Savings Plan (the "Savings Plan"),
officers of the Company and other employees may contribute through payroll
deduction up to 15 percent of their base salary on a pre-tax basis, subject to
certain maximum amounts established by the Internal Revenue Service, pursuant
to Section 401(k) of the Internal Revenue Code, into a choice of investment
vehicles. The Company makes matching contributions of 40 percent of the first
five percent of pre-tax contributions (prior to January 1, 1992, the Company
contributed 25 percent of the first four percent of pre-tax contributions),
subject to certain maximum amounts established by the Internal Revenue Service,
and such amounts become fully vested after five years of service with the
Company and its subsidiaries.
PENSION PLAN
The Hillenbrand Industries, Inc. Pension Plan (the "Pension Plan") covers
officers of the Company and other employees. Directors of the Company who are
not employees of the Company or one of its subsidiaries are not eligible to
participate in the Pension Plan. Contributions to the Pension Plan by the
Company are made on an actuarial basis, and no specific contributions are
determined or set aside for any individual.
Employees, including officers of the Company, who retire under the Pension
Plan receive fixed benefits calculated by means of a formula that takes into
account the highest average annual base salary earned over five consecutive
years and the employees' years of service. The following table shows
approximate representative pension benefits based on a single life annuity
calculation for the compensation and years of service indicated:
APPROXIMATE ANNUAL PENSION UPON RETIREMENT AT AGE 65
<TABLE>
<CAPTION>
HIGHEST AVERAGE BASE
SALARY FOR ANY PERIOD OF 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
5 CONSECUTIVE YEARS OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- ------------------------ ---------- ---------- ---------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 6,000 $ 12,000 $ 18,000 $ 24,000 $ 30,000 $ 36,000 $ 43,000 $ 49,000
$ 200,000 $ 14,000 $ 28,000 $ 42,000 $ 56,000 $ 70,000 $ 84,000 $ 99,000 $113,000
$ 300,000 $ 22,000 $ 44,000 $ 66,000 $ 88,000 $110,000 $132,000 $155,000 $177,000
$ 400,000 $ 30,000 $ 60,000 $ 90,000 $120,000 $150,000 $180,000 $211,000 $241,000
$ 500,000 $ 38,000 $ 76,000 $114,000 $152,000 $190,000 $228,000 $267,000 $305,000
$ 600,000 $ 46,000 $ 92,000 $138,000 $184,000 $230,000 $276,000 $323,000 $369,000
$ 700,000 $ 54,000 $108,000 $162,000 $216,000 $270,000 $324,000 $379,000 $433,000
$ 800,000 $ 62,000 $124,000 $186,000 $248,000 $310,000 $372,000 $435,000 $497,000
$ 900,000 $ 70,000 $140,000 $210,000 $280,000 $350,000 $420,000 $491,000 $561,000
$1,000,000 $ 78,000 $156,000 $234,000 $312,000 $390,000 $468,000 $547,000 $625,000
</TABLE>
The credited years of service under the Pension Plan and the 1997
calendar year base salaries for the officers named in the table are as
follows: W August Hillenbrand - 37 years, $734,925; Tom E.
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<PAGE>
Brewer - 15 years, $323,000; Mark R. Lindenmeyer - 11 years, $205,000;
Michael L. Buettner - 3 years, $186,588; and Robert J. Tennison - 2 years,
$210,000.
The Internal Revenue Code limits the amount of benefits which may be
paid under a qualified pension plan, such as the Company's Pension Plan. In
order to be able to pay the full benefits which are earned as described in
the paragraph and table above, the Company has established a non-qualified,
unfunded pension plan for senior executives to pay the amounts which could
not otherwise be paid because of the limitations established by the Internal
Revenue Code. The Pension Plan is not subject to deductions for Social
Security or other offset amounts.
COST OF SOLICITATION
The entire cost of solicitation of proxies by the Board of Directors
will be borne by the Company. In addition to the use of the mails, proxies
may be solicited by personal interview, facsimile, telephone and telegram by
directors, officers and employees of the Company. The Company expects to
reimburse brokers or other persons for their reasonable out-of-pocket
expenses in forwarding proxy material to beneficial owners.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder which is to be presented at the annual
meeting to be held in 1999 must be received at the Company's principal
executive offices in Batesville, Indiana, not later than December 28, 1998,
in order to be included in the proxy statement and form of proxy relating to
that meeting.
Pursuant to the Code of By-laws of the Company, any proposal by a
shareholder may not be presented at the annual meeting to be held in 1999
unless it is delivered to or mailed and received by the Secretary at the
Company's principal offices in Batesville, Indiana, not later than 100 days
prior to the anniversary of the April 7, 1998 annual meeting. If the date of
the annual meeting to be held in 1999 is more than 30 days after such
anniversary date, such notice will also be timely if received by the
Secretary by the later of 100 days prior to the forthcoming 1999 annual
meeting date and the close of business 10 days following the date on which
the Company first makes public disclosure of the 1999 annual meeting date.
INCORPORATION BY REFERENCE
Notwithstanding anything to the contrary set forth in any of the
Company's previous or future filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that
incorporates this proxy statement by reference, the Compensation Committees'
Report and the line graph Comparison of Five Year Cumulative Total Return
shall not be incorporated by reference into any such filings.
Mark R. Lindenmeyer
Secretary
February 27, 1998
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<PAGE>
HILLENBRAND INDUSTRIES, INC.
Proxy for Annual Meeting Of Shareholders To Be Held April 7, 1998
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Daniel A. Hillenbrand and W August Hillenbrand, or
either of them, with full power of substitution, as proxies to vote all the
shares of the undersigned at the Annual Meeting of Shareholders of
Hillenbrand Industries, Inc. (the "Company") to be held at the Sherman House
in Batesville, Indiana 47006, on April 7, 1998 at 10:00 a.m., local time, and
at any adjournments of the meeting, on the following matters:
(1) Election of director nominees Lawrence R. Burtschy, Daniel
A. Hillenbrand and Ray J. Hillenbrand to serve three year
terms as directors.
/ / FOR ALL NOMINEES / / WITHHOLD AUTHORITY
(except as marked to the contrary below)
(INSTRUCTION: To withhold authority for any individual nominee,
write that nominee's name on the line provided below.)
___________________________________
(2) Ratification of the appointment of Price Waterhouse LLP as
independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
(3) In their discretion upon such other business as may properly
come before the meeting or any adjournment thereof.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
(continued and to be signed on reverse side)
__________________________________________________________
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
ITEMS 1 AND 2. IF ANY DIRECTOR NOMINEE SHOULD BE UNABLE TO SERVE, THE SHARES
WILL BE VOTED FOR A SUBSTITUTE NOMINEE SELECTED BY THE BOARD OF DIRECTORS. IF
ANY OTHER BUSINESS COMES BEFORE THE MEETING, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXY HOLDERS.
_____________________________
Signature
_____________________________
Signature if held jointly
Please sign name and title exactly
as shown on label on this proxy card.
Dated:____________________, 1998
IMPORTANT: THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, PARTNER, OFFICER OR
GUARDIAN, PLEASE GIVE YOUR FULL TITLE. IF SHARES ARE HELD JOINTLY, ALL HOLDERS
MUST SIGN THE PROXY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
