<PAGE> 1
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 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KIMBALL INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
KIMBALL INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
/ / 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:
- - --------------------------------------------------------------------------------
- - -------------------------
1Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE> 2
KIMBALL INTERNATIONAL, INC.
1600 ROYAL STREET
JASPER, INDIANA 47549
(812) 482-1600
------------------
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
TO BE HELD OCTOBER 11, 1994
------------------
To the Share Owners of KIMBALL INTERNATIONAL, INC.:
The annual meeting of the Share Owners of KIMBALL INTERNATIONAL, INC., an
Indiana corporation (the "Company"), will be held at the principal offices of
the Company, 1600 Royal Street, Jasper, Indiana on Tuesday, October 11, 1994, at
9:30 A.M., Eastern Standard Time, for the following purposes:
1. To elect twelve directors of the Company.
2. To consider and transact such other business as may properly come before
the meeting, or any adjournments thereof.
The Board of Directors has fixed the close of business on August 15, 1994,
for determining the Share Owners entitled to notice of and to vote at the
meeting and any adjournments thereof. Only Share Owners of record at the close
of business on that date will be entitled to vote. Holders of shares of the
Company's Class A common stock are entitled to elect eleven directors and to
vote upon all other matters to be presented at the meeting. Holders of shares of
the Company's Class B common stock are entitled to elect one director, but are
not otherwise entitled to vote.
A form of proxy, being solicited on behalf of the Board of Directors, is
enclosed along with a return envelope which requires no postage if mailed in the
United States.
Whether or not you plan to attend the meeting, we urge you to execute and
return promptly the enclosed form of proxy. If you own both shares of Class A
common stock and shares of Class B common stock, a separate form of proxy for
each class should be returned. The proxy is revocable and will not affect your
right to vote in person if you attend the meeting.
By Order of the Board of Directors
GARY P. CRITSER,
Secretary
September 1, 1994
PLEASE EXECUTE AND DATE THE ACCOMPANYING PROXY AND MAIL
IT PROMPTLY.
<PAGE> 3
KIMBALL INTERNATIONAL, INC.
1600 ROYAL STREET
JASPER, INDIANA 47549
(812) 482-1600
------------------
ANNUAL MEETING OF SHARE OWNERS
OCTOBER 11, 1994
------------------
PROXY STATEMENT
This Proxy Statement is being mailed to Share Owners of KIMBALL
INTERNATIONAL, INC. (the "Company") on or about September 1, 1994, and is
furnished in connection with the Board of Directors' solicitation of proxies to
be used at the annual meeting of Share Owners to be held October 11, 1994, at
the time and place and for the purpose of considering and acting upon the
matters specified in the Notice of Annual Meeting of Share Owners accompanying
this Proxy Statement.
Any Share Owner who executes and returns a proxy may revoke the same at any
time prior to the voting thereof by filing a written revocation with the
secretary of the Company, submitting another duly executed proxy with a later
date, requesting the return of the proxy from the secretary prior to the vote,
or attending the meeting and voting in person.
The entire cost of soliciting proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by directors, officers and employees of the
Company without extra compensation. The Company will also reimburse brokerage
houses, custodians, nominees and fiduciaries for actual expenses incurred in
forwarding proxy material to beneficial owners.
The Annual Report to Share Owners for the year ended June 30, 1994,
accompanies this Proxy Statement.
VOTING INFORMATION
Only Share Owners of record at the close of business on August 15, 1994,
will be entitled to vote at the annual meeting. On that date, there were
outstanding 7,357,323 shares of Class A common stock and 13,805,491 shares of
Class B common stock. Each share of Class A common stock is entitled to one vote
with respect to the election of eleven directors and any other matters submitted
to a vote at the meeting. Each share of Class B common stock is entitled to one
vote with respect to the election of one director but otherwise is not entitled
to vote.
Assuming a quorum is present at the meeting, directors will be elected by
the plurality of the votes cast by the shares entitled to vote in the election
at the meeting. The presence of a quorum requires that a majority of outstanding
shares be present at the meeting by proxy or in person. The favorable vote of
the holders of a plurality of the shares of Class A common stock present or duly
represented at the meeting is necessary for the election of eleven of the twelve
directors. The election of the remaining director requires the favorable vote of
the holders of a plurality of the shares of Class B common stock present or duly
represented at the meeting. Withholding authority to vote for a director will
not count as a vote against the director. Because the proposal to be considered
at the meeting does not require the affirmative vote of a specific number of
outstanding shares (only a plurality of shares voted is required), neither the
non-voting of shares nor abstentions will affect the determination of whether
the proposal for election of directors will be approved.
<PAGE> 4
All properly executed proxies received by the Board of Directors will be
voted. In the absence of contrary direction, the Board of Directors proposes to
vote the proxies FOR the election of each of the named nominees to the Board.
Management knows of no other matter which may come up for action at the
meeting. However, if any other matter properly comes before the meeting, the
persons named in the proxy forms enclosed will vote in accordance with their
judgment on such matter.
Proposals which are desired to be presented at the 1995 annual meeting by
Share Owners of record in respect of such a meeting must be received by the
Company at its principal executive offices, 1600 Royal Street, Jasper, Indiana
47549, no later than May 4, 1995. Such proposals, however, must meet certain
requirements of regulations of the Securities and Exchange Commission for
inclusion in the Company's Proxy Statement.
SHARE OWNERSHIP INFORMATION
Under regulations of the Securities and Exchange Commission, persons who
have power to vote or dispose of shares of the Company, either alone or jointly
with others, are deemed to be beneficial holders of such shares. Because the
voting or dispositive power of certain shares listed in the following table is
shared, the same securities in such cases are listed opposite more than one name
in the table. The total number of shares of the Company listed in the table for
the executive officers and directors shown, after elimination of such
duplication, is 2,476,463 shares of Class A common stock (33.7% of the
outstanding) and 1,906,149 shares of Class B common stock (13.8% of the
outstanding).
Set forth in the following table are the beneficial holdings as of August
15, 1994, of the Company's Class A common stock and Class B common stock on the
basis described above of each person, including nominees for election as
directors, known to the Company who may be deemed to own more than 5% of either
class of the Company's outstanding shares, of all other nominees for election as
directors, and of all directors and executive officers as a group:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(A)(B)
--------------------------------------
SOLE SHARED
VOTING AND VOTING AND
DISPOSITIVE DISPOSITIVE PERCENT
NAME POWER POWER OF CLASS
---------- ---------- --------
<S> <C> <C> <C> <C>
HOLDERS, INCLUDING NOMINEES FOR
ELECTION AS A DIRECTOR, OF MORE
THAN 5% OF THE OUTSTANDING
SHARES OF EITHER CLASS
NOMINEES FOR ELECTION AS A DIRECTOR:
Thomas L. Habig(c)...................... Class A...... 75,318 1,093,039 15.9%
1600 Royal Street Class B...... 38,328 1,144,618 8.6%
Jasper, Indiana 47549
Douglas A. Habig(c)..................... Class A...... 537,946 1,114,906 22.5%
1600 Royal Street Class B...... 173,979 1,144,618 9.6%
Jasper, Indiana 47549
John B. Habig........................... Class A...... 325,830 1,114,906 19.6%
1600 Royal Street Class B...... 118,360 372,322 3.6%
Jasper, Indiana 47549
James C. Thyen(c)....................... Class A...... 63,585 None (d)
1600 Royal Street Class B...... 112,969 772,296 6.4%
Jasper, Indiana 47549
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(A)(B)
--------------------------------------
SOLE SHARED
VOTING AND VOTING AND
DISPOSITIVE DISPOSITIVE PERCENT
NAME POWER POWER OF CLASS
---------- ---------- --------
<S> <C> <C> <C> <C>
OTHERS:
Arnold F. Habig.............................. Class A 476,192 686,472 15.8%
1600 Royal Street Class B 338,129 48,830 2.8%
Jasper, Indiana 47549
The Kimball International, Inc. Retirement
Plan
c/o Springs Valley Bank & Trust Co.--Trustee
1500 Main Street............................. Class A None None --
Jasper, Indiana 47546 Class B 772,296 None 5.6%
Patricia H. Snyder........................... Class A 1,796 None (d)
4011 Fairfax Road Class B 807,508 None 5.8%
Evansville, Indiana 47710
OTHER NOMINEES:
Anthony P. Habig............................. Class A 19,640 None (d)
Class B 52,328 None (d)
Ronald J. Thyen.............................. Class A 66,287 None (d)
Class B 113,263 None (d)
Leonard B. Marshall, Jr...................... Class A None None --
Class B 5,000 None (d)
Dr. Jack R. Wentworth........................ Class A None None --
Class B 600 None (d)
John T. Thyen................................ Class A 84,505 None (d)
Class B 82,571 None (d)
Brian K. Habig............................... Class A 161,605 None 2.2%
Class B 14,572 None (d)
Gary P. Critser.............................. Class A 950 None (d)
Class B 34,674 None (d)
Christine M. (Tina) Vujovich................. Class A None None --
Class B 250 None (d)
All Executive Officers and Directors
as a Group (13 persons)(c)...................... Class A 1,811,858 664,605 33.7%
Class B 1,085,023 821,126 13.8%
</TABLE>
- - ---------------
(a) Includes shares owned by spouse and children living in the household of the
individuals listed. Beneficial ownership is disclaimed as to such shares
and as to all other shares over which the named person does not have full
beneficial rights.
(b) Class A common stock is convertible at the option of the holder to Class B
common stock on a share-for-share basis. Amounts are reported and
percentages are calculated on an unconverted basis.
(c) Thomas L. Habig, Douglas A. Habig and James C. Thyen are among members of
the Advisory Committee of the Company's Retirement Plan. The Plan owns
772,296 shares of Class B common stock. The Committee has the power to
instruct the Trustee as to the voting and disposition of these shares. The
shares held by the Plan are included in shares shown in the above table.
(d) Totals are under one percent of the outstanding class of stock.
3
<PAGE> 6
ELECTION OF DIRECTORS
At the annual meeting, twelve directors, constituting the entire Board of
Directors of the Company, are to be elected to hold office until the next annual
meeting of Share Owners, or until their successors are duly elected and
qualified. Holders of shares of the Company's Class A common stock are entitled
to elect eleven directors, and holders of shares of the Company's Class B common
stock are entitled to elect one director. Each nominee is now a director of the
Company. Patricia Harding Snyder retired from the Board in December 1993 after
serving as a Director for approximately 17 years. At the February 1994 meeting,
the Board appointed Christine M. "Tina" Vujovich as a director representing
Class A common stock Share Owners. The Board then appointed Leonard B. Marshall,
Jr., who has been a director representing Class A common stock Share Owners of
the Company since 1975, as the director representing Class B common stock Share
Owners. If any such nominee shall be unable to serve, the proxies will be voted
to fill any vacancy so arising in accordance with the discretionary authority of
the persons named in the proxies. Management has no reason to believe that any
such nominee will be unable to serve. The nominees are:
NOMINEES FOR ELECTION AS DIRECTORS
BY HOLDERS OF CLASS A COMMON STOCK
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
- - ------------------------------ --------------------------------------------------- --------
<S> <C> <C>
Thomas L. Habig(a)(c)......... Chairman of the Board of Directors of the Company; 1950
age 66
Douglas A. Habig(a)........... President and Chief Executive Officer of the 1973
Company; also Director of NBD Indiana, Inc., a
banking subsidiary of NBD Bank N.A.; age 47
James C. Thyen(b)............. Senior Executive Vice President, Chief Financial 1982
and Administrative Officer and Treasurer of the
Company; age 50
John B. Habig(a).............. Senior Executive Vice President, Operations 1956
Officer, Assistant Secretary of the Company; age 61
Anthony P. Habig.............. Executive Vice President, International of the 1969
Company; age 69 (also 1959
to 1966)
Ronald J. Thyen(b)............ Senior Executive Vice President, Operations Officer 1973
of the Company; age 57
Dr. Jack R. Wentworth......... Arthur M. Weimer Professor of Business 1984
Administration, Indiana University; former Dean of
School of Business, Indiana University; also
Director of Lone Star Industries and Market Facts,
Inc.; age 66
Brian K. Habig(c)............. Vice President, Administration, Office Furniture of 1992
the Company; age 37
John T. Thyen(b).............. Senior Executive Vice President, Marketing and 1990
Sales of the Company; age 56
Gary P. Critser............... Senior Executive Vice President, Chief Accounting 1990
Officer and Secretary of the Company; age 57
Christine M. (Tina)
Vujovich.................... Vice President of Product Planning and 1994
Environmental Management of Cummins Engine Co.,
Inc.; age 42
</TABLE>
4
<PAGE> 7
NOMINEE FOR ELECTION AS DIRECTOR
BY HOLDERS OF CLASS B COMMON STOCK
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
- - ------------------------------ --------------------------------------------------- --------
<S> <C> <C>
Leonard B. Marshall, Jr....... President of Marshall Holdings, Inc., a family 1975
consulting and investment firm; former Chairman,
President and Chief Executive Officer of Community
Bank of Greater Peoria and Chairman, President and
Chief Executive Officer of Jefferson Bank of Peoria
and Jefferson Bancorp, Inc. (Bank holding company);
age 62
</TABLE>
- - ---------------
(a) Thomas L. Habig, Douglas A. Habig and John B. Habig are brothers.
(b) Ronald J. Thyen, James C. Thyen and John T. Thyen are brothers.
(c) Brian K. Habig is the son of Thomas L. Habig.
Each of the nominees who is currently a director of the Company has been
employed for more than the past five years by the same employer in the capacity
shown above, or some other executive capacity, except Leonard B. Marshall, Jr.
and Jack R. Wentworth. Prior to January 1990, Mr. Marshall held senior executive
positions with the Midwest Financial Group, Inc. From January 1990 through
December 1992, Mr. Marshall was Chairman, President and Chief Executive Officer
of Jefferson Bank of Peoria and Jefferson Bancorp, Inc. (a bank holding
company). In October 1992, Jefferson Bancorp, Inc. became Bank One of Peoria (a
subsidiary of Banc One Corporation, Columbus, Ohio), and Mr. Marshall resigned
his positions during December 1992. In June 1993, Mr. Marshall accepted on an
interim basis the position of Chairman, President and Chief Executive Officer of
the Community Bank of Greater Peoria and retired from that position in November
1993. Mr. Marshall is presently President of Marshall Holdings, Inc., a family
consulting and investment firm, director of Magna Bank of Illinois, a banking
subsidiary of Magna Group, Inc., and a director in other non-public companies.
During June 1993, Dr. Wentworth retired from the position of Dean of School of
Business, Indiana University, a position held since 1984. Dr. Wentworth is now
the Arthur M. Weimer Professor of Business Administration, Indiana University.
Ms. Vujovich has been an employee of Cummins Engine Co., Inc., of Columbus,
Indiana, since 1978. Ms. Vujovich has held various management positions with
Cummins since 1983. From 1985 to 1989, Ms. Vujovich was Vice President--Customer
Engineering and was named to her current position of Vice President, Product
Planning and Environmental Management in 1989.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES
Your Board has four standing Committees: the Executive Committee, the Audit
Committee, the Compensation Committee and the Stock Option Committee. The
Executive Committee currently consists of Thomas L. Habig, Douglas A. Habig,
James C. Thyen, John B. Habig, Ronald J. Thyen, John T. Thyen and Gary P.
Critser. The by-laws of the Company provide, except to the extent limited by
Indiana law, that the Executive Committee may exercise during the intervals
between the meetings of the Board all powers of the Board of Directors with
reference to the conduct of the business of the Company. At the Board of
Directors meetings, all actions of the Executive Committee are reaffirmed.
During the fiscal year this Committee met five times. The Board of Directors met
six times during fiscal year 1994.
The Audit Committee consists of three members of the Board: Leonard B.
Marshall, Jr. (Chairperson), Dr. Jack R. Wentworth and Christine M. Vujovich,
who are not salaried employees of the Company and who are, in the opinion of the
Board of Directors, free from any relationship that would interfere with the
exercise of independent judgment as a Committee member. The Committee, which met
four times during the 1994 fiscal year, annually recommends to the Board of
Directors the appointment of a firm of independent auditors and reviews with the
independent auditors and approves the plan and scope of their audit for each
year. The Committee also reviews with the independent auditors the adequacy of
internal accounting and financial controls and reviews directly with the
Company's Audit and Management Services Department the activities
5
<PAGE> 8
of the department and the results of their internal control reviews and tests.
The Committee receives periodic written reports directly from the Company's
Audit and Management Services Department between meeting dates. In addition, the
Committee reviews and approves fees paid to the independent auditors for both
audit and non-audit services.
The Compensation Committee was organized in February 1993. Its members are:
Douglas A. Habig (Chairperson), Leonard B. Marshall, Jr., Jack R. Wentworth,
James C. Thyen and Gary P. Critser. The Committee's responsibilities consist of
making all determinations with respect to the compensation of the Chief
Executive Officer and to establish and maintain general compensation policies
with respect to all other executive officers of the Company. Members of the
Committee also serve as the Stock Option Committee of the Company's 1987 Stock
Incentive Program. The Compensation Committee and the Stock Option Committee
both met twice during fiscal year 1994.
All directors receive compensation of $16,000 per year. Directors who are
not Company employees receive an additional $2,000 for each meeting attended.
Directors who are Company employees receive an additional $1,500 for each
meeting attended. The Chairperson of the Board of Directors Audit Committee
receives $3,500 per meeting, and other Audit Committee members receive $2,500
per meeting. Members of the Board of Directors Compensation Committee who are
not Company employees receive $1,000 per meeting. Members of the Executive
Committee and the Stock Option Committee receive no additional compensation.
All directors during fiscal year 1994 attended in excess of 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees of the Board on which the
directors served.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the periods indicated, the aggregate cash
compensation, including incentive compensation, paid by the Company to the Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Company during the years ended June 30, 1994, 1993 and 1992:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
-------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)(1) OPTIONS/SAR (#) COMPENSATION ($)(2)
- - --------------------------- ---- ---------- --------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Habig........... 1994 $232,200 $195,133 $29,841 5,500(3) $13,649
President and Chief 1993 216,600 151,585 22,542 -- 12,024
Executive Officer 1992 185,640 138,774 22,900 -- 12,084
Thomas L. Habig............ 1994 $217,800 $167,501 $34,642 5,500 $13,649
Chairman of the Board 1993 212,600 130,105 27,480 -- 12,024
1992 190,400 131,606 27,330 -- 12,084
James C. Thyen............. 1994 $195,800 $153,774 $29,055 4,500(3) $13,649
Senior Executive 1993 179,900 116,563 24,380 -- 12,024
Vice President, 1992 156,980 100,932 23,042 -- 12,084
Chief Financial and
Administrative Officer,
Treasurer
John B. Habig.............. 1994 $185,700 $140,488 $37,551 4,500 $13,649
Senior Executive 1993 172,400 105,231 27,914 -- 12,024
Vice President, 1992 152,000 103,811 23,133 -- 12,084
Operations Officer,
Assistant Secretary
John T. Thyen.............. 1994 $185,700 $138,421 $32,074 4,500 $13,649
Senior Executive 1993 172,400 103,788 23,969 -- 12,024
Vice President, 1992 152,000 93,840 25,897 -- 12,084
Marketing and Sales
</TABLE>
- - ---------------
(1) Includes director fees, executive tax assistance program, and along with
other officers and certain employees, supplemental group medical and life
insurance, and automotive allowances.
(2) Company payment to the Company's Retirement Trust Plan on behalf of the
named individual.
(3) Each of the persons indicated was granted a stock ownership equivalent award
payable solely in cash on August 26, 1998, in an amount equal to the
appreciation, if any, in the fair market value of the number of shares of
Class B common stock of the Company, indicated above, at a fair market value
of $29.60 per share, from August 27, 1993, until August 26, 1998, subject to
earlier payout if the officer dies, becomes totally disabled or retires at
age 62 or later.
CASH BONUS PLANS
Your Company has a Profit Sharing Bonus Plan for all eligible salaried
employees in which the executive officers participate. Salaries are paid for
individual value-added efforts. By contrast, profit sharing bonuses are paid
based directly upon the Company's financial success and will vary with the level
of that success. The amount of bonus earned is based upon a predetermined Return
on Assets (ROA) target of a unit, group or the Company. ROA is benchmarked
against the ROAs reported in the annual Fortune 500 listing for manufacturing
companies. The plan is structured allowing for a greater portion of the total
cash compensation at risk commensurate with the individual's level of
responsibility. The plan is also designed to pay bonus earned as an increasing
percent of salary the higher the ROA achieved. Once a minimum threshold of ROA
is attained, eligible employees may earn bonuses from 2% to 100% of salary,
while officers, including executive officers, may earn a bonus from 20% to 100%
of salary. The plan is structured whereby unit and group managers may earn a
higher bonus as a percent of salary than officers, including executive officers.
Because no
7
<PAGE> 10
single incentive plan is perfect and special situations occur where an
individual achievement may not be adequately recognized by the Profit Sharing
Bonus Plan, there is a supplemental bonus plan, reviewed and approved on an
annual basis by the Board of Directors, where a maximum of 1 1/2% of the
Company's overall annual income (before federal income taxes and bonuses to be
paid pursuant to the Company's Profit Sharing Bonus Plan) may be designated as
supplemental bonuses to those eligible participants at the discretion of the
Chairman of the Board, and President and Chief Executive Officer. However, any
award to the Chief Executive Officer under this supplemental bonus plan must be
approved and awarded by the Board of Directors Compensation Committee.
Under the Company's bonus plans, with certain exceptions, bonuses are
accrued annually and paid in five installments over an eleven month period in
the next succeeding fiscal year. Except for provisions relating to retirement,
individuals must be actively employed on each payment date to receive the bonus.
DEFINED CONTRIBUTION RETIREMENT PLAN
The Company maintains a trusteed defined contribution retirement plan for
all eligible domestic employees which includes a provision for voluntary
employee contributions. The plan provides for a discretionary annual Company
contribution based on income as determined by the Board of Directors which may
not exceed a specific maximum limit as a percent of net income as defined in the
plan. All eligible employees' Company contribution is defined as a percent of
eligible compensation, the percent being identical for all eligible employees,
including executive officers. However, for those individuals who under the laws
of the 1986 Tax Reform Act are deemed to be highly compensated, the Company
contribution for such individuals is reduced. Participant accounts are fully
vested after seven years of participation. All executive officers were fully
vested at June 30, 1994. The Retirement Trust account is fully funded and fully
vested.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1994
------------------------------------------------- POTENTIAL REALIZED
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS/SAR EXERCISE ANNUAL RATES OF STOCK
SECURITIES GRANTED TO OR PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES STRIKE THE 5-YR OPTION/SAR TERM(1)
OPTIONS/SAR IN FISCAL PRICE EXPIRATION ------------------------------------
NAME GRANTED (#) YEAR ($) DATE 0% ($) 5% ($) 10% ($)
- - ---------------------- ----------- ----------- -------- ---------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas L. Habig....... 5,500 4.5% $29.60 8/26/98 0 $44,979 $99,391
Douglas A. Habig...... 5,500 4.5% $29.60 8/26/98 0 $44,979 $99,391
John B. Habig......... 4,500 3.7% $29.60 8/26/98 0 $36,801 $81,320
James C. Thyen........ 4,500 3.7% $29.60 8/26/98 0 $36,801 $81,320
John T. Thyen......... 4,500 3.7% $29.60 8/26/98 0 $36,801 $81,320
All Optionees......... 121,150 100% $29.60 8/26/98 0 $990,757 $2,189,313
All Share Owners(2)... N/A N/A N/A N/A 0 $173,068,000 $382,435,000
All Optionees'
potential gain as a
percent of all Share
Owner gain.......... 0.6% 0.6%
</TABLE>
- - ---------------
(1) Potential realizable values are based upon assumed rates of appreciation
prescribed by the Securities and Exchange Commission. Under these rules it
is assumed the Company's Class B common stock will appreciate in value from
the date of grant to the end of the award term (5 years from date of grant)
at annualized rates of 5% and 10%. The 5% and 10% rates prescribed by the
Securities and Exchange Commission are not intended to forecast possible
future appreciation of the Company's stock.
(2) The amounts shown represent a hypothetical return to all holders of the
Company's common stock, assuming that all Share Owners purchased their
shares at a purchase price of $29.60, the exercise price for all options
granted during the period, and that all Share Owners hold the shares
continuously for a 5-year period. The amounts were computed based upon
21,162,814 shares outstanding at June 30, 1994. The computed increase in
market value to common stock Share Owners is shown for comparative purposes
only. It is not a prediction of future stock appreciation.
8
<PAGE> 11
Your Company's 1987 Stock Incentive Program (1987 Plan) was approved by
Share Owners at the October 1987 Annual Meeting. The 1987 Plan permits a variety
of benefits consisting of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock Awards and Performance Shares. All
Incentive Stock and Non-Qualified Stock Options were granted at 100% of fair
market value on date of grant. Options become exercisable two years from date of
grant and expire five years from date of grant. The options have certain
provisions relating to termination of employment by reason of disability or
retirement and provisions regarding death of the option's holder. Under certain
circumstances, the options may be forfeited.
Options issued include 76,650 shares of Incentive Stock Options, 30,000
shares of Non-Qualified Stock Options with Stock Appreciation Rights and 14,500
shares of stock ownership equivalent awards. Shares issued to Thomas L. Habig,
John B. Habig and John T. Thyen are Non-Qualified Stock Options with Stock
Appreciation Rights. Shares issued to Douglas A. Habig and James C. Thyen are
stock ownership equivalent awards. As members of the Stock Option Committee,
these two individuals are not eligible to participate in the 1987 Stock
Incentive Plan. Provisions of the stock ownership equivalent awards are
described elsewhere in this proxy statement.
Stock options and stock ownership equivalent awards only produce value to
executives if the price of your Company stock appreciates, thereby increasing
the link of interest of executives with those of Share Owners.
AGGREGATED OPTION/SAR EXERCISES IN
LAST YEAR AND YEAR END OPTION/SAR VALUES
During fiscal year 1994, no executive officer exercised any stock
options/SARs. The only stock options/SARs presently held by the named executive
officers are disclosed in the summary compensation table. All exercise or strike
prices for unexercised options and SARs held by the named executives exceeded
the market value of Class B common stock at June 30, 1994, thus at this time
there is no value.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
Your Company applies a consistent philosophy to compensation for all
employees, including senior management. The goal of the Compensation Program is
to align compensation with business objectives and performance as a key link in
the achievement of the Company's Mission. The Committee's responsibility as
delegated by the Board of Directors is to establish the general compensation
policies with respect to the Company's executive officers and to make all
determinations with respect to the compensation of the Company's Chief Executive
Officer. The Committee was appointed by the Board in February 1993. The members
of the Committee are also members of the Stock Option Committee of the Company's
1987 Stock Incentive Program.
COMPENSATION PHILOSOPHY
Since its founding, Kimball International has linked all employees'
compensation to the financial success of the Company. Through the use of
incentives, including commissions, profit sharing bonuses, a defined
contribution retirement plan funded in part through a percentage share of
corporate profits, retirement trust investments in Company stock, and a stock
option plan, all employees are linked in a common interest with Share Owners in
the Company's short and long-term performance.
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<PAGE> 12
This basic philosophy is acknowledged in our Company's Mission and Guiding
Principles communicated to all employees which state in part:
"Profits are the ultimate measure of how efficiently and effectively
we serve our customers and are the only true source of long-term job
security. Profitability and financial resources give us the freedom to
shape our future and achieve our vision."
and
"We want employees to share in their Company's success, both
financially and through personal growth and fulfillment."
In this regard, every Kimball International employee has a portion of his
or her compensation linked to Company performance.
Most production employees are paid incentives based upon units of
production. Compensation rises and falls with success in improving
productivity and production processes. Holiday and vacation compensation is
tied directly to incentive compensation.
Field sales personnel compensation includes commissions related to
sales. Compensation rises and falls with success in making sales.
Salaried employees at all levels participate in a common Profit
Sharing Bonus Plan. Basing goals on external benchmarks assures a
consistent focus of providing excellent returns on the investments of our
Share Owners. Further, the plan places a proportionately higher share of
compensation at risk at each level of management.
Key management personnel participate in the 1987 Stock Incentive
Program, strengthening the link to a common interest with Share Owners.
The Retirement Plan for all employees is funded in part through
Company contributions directly related to Company profitability. In
addition, all employees who are eligible to participate in the plan are
indirectly Share Owners through the 772,296 shares of Company stock held in
the Retirement Trust.
Combining the Cash Bonus and Stock Option Plans, a total of approximately
100 managers, including senior management, have in excess of 50% of their total
potential compensation tied to Company performance related to profitability and
Share Owners' returns.
The Committee believes that the Company's historical and ongoing strategy
of strongly linking a significant portion of compensation of all employees to
Company financial performance is a competitive advantage and serves the
interests of Share Owners by enabling employees to share in Company risk and
success. It is the Committee's intent to continue this strategy, refining
programs consistent with changing business needs, to assure a continuing
commitment to financial success.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
For the Committee to determine a benchmark for comparing compensation of
the Company's executive officers to other companies, the Committee commissioned
a special study by a national compensation consulting firm concerning the 1992
total compensation of the CEO and the other four named executives in the summary
compensation table. The compensation consultant report indicated on a
broad-based comparison with published data that the 1992 total cash compensation
of the Chief Executive Officer (CEO) and the other four reporting executive
officers was below what was considered to be the median of the published data,
and the proportion of the cash compensation at risk was higher than the median
of the published data. The review compared executive compensation to a broad
base of companies which were not in the same group of companies in the stock
performance graph.
The annual salary of the CEO is based upon numerous subjective factors,
including responsibility level, overall conduct of corporate affairs and
leadership in progress towards achieving strategic objectives. The Committee
does not target any specific quartile of public survey data for any component of
the CEO's total
10
<PAGE> 13
compensation, nor utilize any specific target or formula. While the Committee
does review compensation of CEO's of other companies of similar size in sales
named in the Fortune 500 listing of manufacturing companies, there is no special
attempt to set Mr. Habig's compensation in any particular relationship to the
comparative data. In consultation with Thomas L. Habig, Chairman of the Board
(and with the CEO absent from this portion of the meeting and not voting), the
Committee, based on factors discussed above, unanimously increased Douglas A.
Habig's salary during August 1993 from an annualized base of $218,400 to
$234,000.
Under the Company's Profit Sharing Bonus Plan described elsewhere in this
Proxy Statement, the CEO's bonus for 1994 amounted to 53% of 1994 salary, while
under this plan the percent earned was 37% and 42% in 1993 and 1992
respectively. Under the Supplemental Bonus Plan also described elsewhere herein,
for 1994 the Committee, in consultation with Thomas L. Habig, Chairman of the
Board (with the CEO absent from this portion of the meeting and not voting),
unanimously awarded Douglas A. Habig a bonus of $70,000. Under this plan, Mr.
Habig was awarded $70,000 and $59,000 in 1993 and 1992 respectively. These
awards were based upon the Committee's subjective evaluations of Mr. Habig's job
performance and leadership in the planning and implementation of the Company's
strategic objectives which are both short and long term in nature. Consideration
was also given to the increase in net income and related return on assets in the
1994 fiscal year.
As described elsewhere within this Proxy Statement, during the Company's
1994 fiscal year, the Stock Option Committee of the 1987 Incentive Stock Plan
granted options to key executives. Because Mr. Habig is a member of the Stock
Option Committee, thus not eligible to participate in the Stock Option Plan, the
Committee unanimously awarded Mr. Habig 5,500 shares in the form of stock
ownership equivalents as described elsewhere in this Proxy Statement. The Stock
Ownership Equivalents Award issued to Mr. Habig was made in coordination with
stock options issued to other key executives. Options issued to the key
executives by the Stock Option Committee were based on level of individual
responsibility. Thus, taking into consideration the cash bonus which can be
earned under the Company's Profit Sharing and Supplemental Bonus Plans and stock
options or stock ownership equivalents, over one-half of the total potential
compensation of the CEO, as well as the other four named executive officers, are
tied directly into performance related to profitability and your Company's stock
price.
OTHER
The Committee has also considered the potential effect of the Revenue
Reconciliation Act of 1993 on executive compensation. The Committee believes
that in the foreseeable future, none of the Company's officers covered under the
new law will have annual compensation in excess of $1 million. Thus, all
compensation will be deductible for tax purposes. The Committee will continue to
monitor the Company's compensation program in relation to the Act.
While the Company has no policy on stock ownership of key management
employees, the Committee is cognizant of the significant amount of shares of
your Company stock owned by the CEO and the additional four reporting executive
officers, providing a strong link with the common interest of Share Owners and
the Company's long term success.
The Committee, in its June 1994 meeting, unanimously approved the profit
targets under the Company's 1995 Profit Sharing Bonus Plan.
COMPENSATION COMMITTEE
<TABLE>
<S> <C>
Douglas A. Habig (Chairman) James C. Thyen
Leonard B. Marshall, Jr. Jack R. Wentworth
Gary P. Critser
</TABLE>
11
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Douglas A. Habig is President and Chief Executive Officer of the Company
and a brother of Thomas L. Habig, Chairman of the Board, and John B. Habig,
Senior Executive Vice President and Assistant Secretary of the Company. James C.
Thyen, Senior Executive Vice President, Chief Financial and Administrative
Officer and Treasurer, is a brother of John T. Thyen and Ronald J. Thyen, Senior
Executive Vice Presidents of the Company. Gary P. Critser is a Senior Executive
Vice President, Chief Accounting Officer and Secretary of the Company. Leonard
B. Marshall, Jr. and Jack R. Wentworth are directors of the Company and are not
employees.
Certain executive officers and directors of the Company, including Messrs.
Habig, Thyen and Critser, as a group own beneficially (including shares held by
spouses and minor children of which beneficial ownership is disclaimed) 20.0% of
the outstanding shares of SVB&T Corp., the holding company of Springs Valley
Bank and Trust Co., French Lick and Jasper, Indiana ("the Bank"). In addition,
the Company's Retirement Trust owns beneficially 19.4% of the outstanding stock
of the holding company. The Bank is a principal depository of the Company. It
also serves and receives fees as trustee and administrator of various Company
employee benefit programs. The Company believes that the terms of the
above-described transactions with the Bank are as favorable as available from
other sources.
PERFORMANCE GRAPH
The graph below compares the cumulative total return to Share Owners on the
common stock of the Company from June 30, 1989, through June 30, 1994, to the
cumulative total return of the S&P Midcap 400 Index and the NASDAQ U.S.
Composite Index for the same period of time. The Company does not believe that
any other published industry or line-of-business index adequately represents the
current operations of the Company or that it can identify a peer group that
merits comparison. The graph assumes $100 is invested in your Company stock and
each of the two indexes at the closing market quotations on June 30, 1989, and
that dividends are reinvested. The performances shown on the graph are not
necessarily indicative of future performance.
<TABLE>
<CAPTION>
Kimball In- NASDAQ U.S.
Measurement Period ternational, S&P Midcap Composite
(Fiscal Year Covered) Inc. 400 Index Index
<S> <C> <C> <C>
1989 100 100 100
1990 127.7 115.4 107.8
1991 123.4 130.3 114.2
1992 140.5 154.4 137.1
1993 177.8 189.5 172.3
1994 145.6 189.4 173.0
</TABLE>
12
<PAGE> 15
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co., independent certified public accountants, examined
the Company's financial statements for the year ended June 30, 1994, and also
for the prior fourteen fiscal years. Representatives of Arthur Andersen & Co.
will be present at the annual meeting and will have the opportunity to make a
statement and will be available to respond to appropriate questions.
By Order of the Board of Directors
GARY P. CRITSER, Secretary
September 1, 1994
13
<PAGE> 16
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY
(For Class A Stock)
KIMBALL INTERNATIONAL, INC.
I appoint Thomas L. Habig, James C. Thyen, and Douglas A. Habig, and each of
them, each with full power of substitution, as Proxies to vote all shares of
CLASS A COMMON STOCK of Kimball International, Inc. standing in my name on its
books at the close of business on August 15, 1994, at the annual meeting of its
share owners to be held at the principal offices of the Company located at
1600 Royal Street, Jasper, Indiana, at 9:30 A.M., Eastern Standard Time, on
Tuesday, October 11, 1994, and at any adjournments thereof, with respect to
the following matters:
This Proxy when properly executed will be voted in the manner directed by the
undersigned share owner. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1. PLEASE MARK BOX [X]
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) the nominees
listed below
Thomas L. Habig, Douglas A. Habig, James C. Thyen, John B. Habig,
Anthony P. Habig, Ronald J. Thyen, Christine M. "Tina" Vujovich,
Dr. Jack R. Wentworth, Brian K. Habig, John T. Thyen, Gary P. Critser
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
________________________________________________
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(PLEASE DATE AND SIGN BELOW.)
THE UNDERSIGNED HEREBY REVOKES ANY PROXY HERETOFORE GIVEN AND ACKNOWLEDGES
RECEIPT OF THE NOTICE AND PROXY STATEMENT FOR THE ANNUAL MEETING.
Date: _______________________, 1994.
____________________________________
(Signature)
____________________________________
(Signature)
(If the stock is registered in the
name of more than one person the
Proxy should be signed by all named
owners. If signing as attorney,
executor, administrator, trustee,
guardian, corporate official, etc.,
please give full title as such.)
<PAGE> 17
KIMBALL INTERNATIONAL, INC.
PROXY
(FOR CLASS B STOCK)
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I appoint Thomas L. Habig, James C. Thyen, and Douglas A. Habig, or any
one or more of them, each with full power of substitution, as Proxies to
vote all shares of CLASS B COMMON STOCK of Kimball International, Inc.
standing in my name on its books at the close of business on August 15,
1994, at the annual meeting of its share owners to be held at the principal
offices of the Company located at 1600 Royal Street, Jasper, Indiana, at
9:30 A.M., Eastern Standard Time, on Tuesday, October 11, 1994, and at any
adjournments thereof, with respect to the following matters:
(Please date and sign on reverse side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHARE OWNER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
1. Election of Director Leonard B. Marshall, Jr. PLEASE MARK BOX [X] OR [X]
For WITHHOLD
the nominee AUTHORITY
listed to vote for the
nominee listed
[ ] [ ]
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE UNDERSIGNED HEREBY REVOKES ANY PROXY
HERETOFORE GIVEN AND ACKNOWLEDGES
RECEIPT OF THE NOTICE AND PROXY
STATEMENT FOR THE ANNUAL MEETING.
(If the stock is registered in the name
of more than one person the Proxy should
be signed by all named owners. If
signing as attorney, executor,
administrator, trustee, guardian,
corporate official, etc., please give
full title as such.)
Date: _________________________, 1994
_______________________________________
(Signature)
_______________________________________
(Signature)
"PLEASE MARK INSIDE BLUE BOXES SO
THAT DATA PROCESSING EQUIPMENT
WILL RECORD YOUR VOTES"
