KIMBALL INTERNATIONAL INC, DEF 14A, 1995-09-12

KIMBALL INTERNATIONAL INC
DEF 14A, 1995-09-12
OFFICE FURNITURE

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<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 / /

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

/X/ Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

KIMBALL INTERNATIONAL, 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/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $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 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:

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(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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<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 24, 1995

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

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 24, 1995, at
9:30 A.M., Eastern Standard Time, for the following purposes:

1. To elect eleven 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 23, 1995,
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 ten 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 12, 1995

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 24, 1995

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

PROXY STATEMENT

This Proxy Statement is being mailed to Share Owners of KIMBALL
INTERNATIONAL, INC. (the "Company") on or about September 12, 1995, 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 24, 1995, 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 either 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, 1995,
accompanies this Proxy Statement.

VOTING INFORMATION

Only Share Owners of record at the close of business on August 23, 1995,
will be entitled to vote at the annual meeting. On that date, there were
outstanding 7,319,896 shares of Class A common stock and 13,678,443 shares of
Class B common stock. Each share of Class A common stock is entitled to one vote
with respect to the election of ten directors and any other matters submitted to
a vote at the meeting. Mr. Anthony P. Habig retired as an officer of the Company
on December 31, 1994, and will retire as a director of the Company at the
conclusion of his current term on October 24, 1995, after approximately 35 years
of service to your Company. At this time there is no plan to replace Mr. Habig
on the Board, and the total number of directors representing Class A Share
Owners will be reduced from eleven to ten. 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.

With a quorum 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 holders of Class A
common stock elect ten directors, and the holders of Class B common stock elect
one director. Directors are elected by plurality vote, i.e., the nominees
receiving the highest number of votes cast in each category will be elected.
Accordingly, neither the non-voting of shares nor withholding authority to vote
will affect the election of directors.
<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 1996 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 15, 1996. 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 2,553,532 shares of Class A common stock (34.9% of the
outstanding) and 1,900,315 shares of Class B common stock (13.9% of the
outstanding).

Set forth in the following table are the beneficial holdings as of August
15, 1995, 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)(d)............................. Class A 64,438 1,200,288 17.3%
1600 Royal Street Class B 43,828 1,107,602 8.4%
Jasper, Indiana 47549
Douglas A. Habig(c)............................... Class A 539,586 1,117,668 22.6%
1600 Royal Street Class B 176,439 1,088,130 9.2%
Jasper, Indiana 47549
John B. Habig(d).................................. Class A 322,472 1,214,187 21.0%
1600 Royal Street Class B 122,860 335,306 3.3%
Jasper, Indiana 47549
James C. Thyen(c)................................. Class A 70,385 None (e)
1600 Royal Street Class B 107,769 772,296 6.4%
Jasper, Indiana 47549
OTHERS:
Arnold F. Habig(d)................................ Class A 487,332 678,504 15.9%
1600 Royal Street Class B 302,789 32,182 2.4%
Jasper, Indiana 47549
</TABLE>

2
<PAGE> 5

Patricia H. Snyder................................ Class A 1,796 None (e)
4011 Fairfax Road Class B 805,908 None 5.9%
Evansville, Indiana 47710

Quest Advisory Corp(f)............................ Class A None None --
1414 Avenue of Americas Class B 902,790 None 6.6%
New York, NY 10019

OTHER NOMINEES:
Ronald J. Thyen(d)................................ Class A 67,487 None (e)
Class B 106,563 None (e)

Leonard B. Marshall, Jr. ......................... Class A None None --
Class B 5,000 None (e)

Dr. Jack R. Wentworth............................. Class A None None --
Class B 600 None (e)

John T. Thyen(d).................................. Class A 85,305 None 1.2%
Class B 87,871 None (e)

Brian K. Habig(d)................................. Class A 134,813 None 1.8%
Class B 36,072 None (e)

Gary P. Critser................................... Class A 950 None (e)
Class B 33,996 None (e)

Christine M. (Tina) Vujovich...................... Class A None None --
Class B 250 None (e)

All Executive Officers and Directors as a Group
(13 persons)(c)(d)................................... Class A 1,792,408 761,124 34.9%
Class B 1,076,365 823,950 13.9%
</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) Class B shares include the following shares, including stock appreciation
rights, subject to acquisition by exercise of stock options within sixty
days; Thomas L. Habig 5,500 shares; John B. Habig, Ronald J. Thyen, John T.
Thyen, and Arnold F. Habig, 4,500 shares each; Brian K. Habig 1,500 shares;
and all executive officers and directors as a group 25,000 shares. The
percentage of Class B Share Owners by each person, or group, are determined
by including in the number of Class B shares outstanding those Class B
shares issuable to such person or group, assuming exercise of stock options
within sixty days.

(e) Totals are under one percent of the outstanding class of stock.

(f) This information is derived from notification received by the Company on
Schedule 13G and other communications. Information was received regarding
Quest Advisory Corp. (Quest), Quest Management Company (QMC) and Mr.
Charles M. Royce indicating Mr. Royce may be deemed to be a controlling
person of Quest and QMC, and as such, may be deemed to beneficially own
shares of Class B Common Stock.

3
<PAGE> 6

ELECTION OF DIRECTORS

At the annual meeting, eleven 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 ten 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. 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 67
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 48
James C. Thyen(b)............. Senior Executive Vice President, Chief Financial 1982
and Administrative Officer and Treasurer of the
Company; age 51
John B. Habig(a).............. Senior Executive Vice President, Operations 1956
Officer, Assistant Secretary of the Company; age 62
Ronald J. Thyen(b)............ Senior Executive Vice President, Operations Officer 1973
of the Company; age 58
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 67
Brian K. Habig(c)............. Vice President, Administration, Office Furniture of 1992
the Company; age 38
John T. Thyen(b).............. Senior Executive Vice President, Marketing and 1990
Sales of the Company; age 57
Gary P. Critser............... Senior Executive Vice President, Chief Accounting 1990
Officer and Secretary of the Company; age 58
Christine M. (Tina) Vice President of Product Planning and 1994
Vujovich.................... Environmental Management of Cummins Engine Co.,
Inc.; age 43
</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 63
</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.

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 Dr. 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, 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 one time. The Board of Directors met
six times during fiscal year 1995.

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 1995 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 of the
department and the results of their internal control reviews and tests. The
Committee receives periodic

5
<PAGE> 8

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 members of the Compensation Committee are: Douglas A. Habig
(Chairperson), Leonard B. Marshall, Jr., Dr. 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 1995.

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 1995 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, 1995, 1994 and 1993:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- ---------------
OTHER ANNUAL SECURITIES ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) OPTIONS/SAR (#) ($)(2)
--------------------------------- ---- -------- -------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Habig................. 1995 $247,800 $243,503 $ 34,965 6,000(3) $ 24,645
President and Chief 1994 232,200 195,133 29,841 5,500(3) 13,649
Executive Officer 1993 216,600 151,585 22,542 -- 12,024
Thomas L. Habig.................. 1995 $227,600 $211,585 $ 38,434 6,000 $ 25,850
Chairman of the Board 1994 217,800 167,501 34,642 5,500 13,649
1993 212,600 130,105 27,480 -- 12,024
James C. Thyen................... 1995 $211,400 $199,726 $ 38,415 5,000(3) $ 21,507
Senior Executive 1994 195,800 153,774 29,055 4,500(3) 13,649
Vice President, 1993 179,900 116,563 24,380 -- 12,024
Chief Financial and
Administrative Officer,
Treasurer
John B. Habig.................... 1995 $198,700 $179,534 $ 44,021 5,000 $ 21,081
Senior Executive 1994 185,700 140,488 37,551 4,500 13,649
Vice President, 1993 172,400 105,231 27,914 -- 12,024
Operations Officer,
Assistant Secretary
John T. Thyen.................... 1995 $198,700 $177,233 $ 33,804 5,000 $ 20,245
Senior Executive 1994 185,700 138,421 32,074 4,500 13,649
Vice President, 1993 172,400 103,788 23,969 -- 12,024
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) For 1995 includes on behalf of the named individuals All Other Compensation
as follows:

<TABLE>
<CAPTION>
COMPANY PAYMENTS
TO RETIREMENT AND SPLIT-DOLLAR
SUPPLEMENTAL EXECUTIVE LIFE INSURANCE
RETIREMENT PLANS PREMIUM VALUE
---------------------- --------------
<S> <C> <C>
Thomas L. Habig............................... $ 22,654 $1,991
Douglas A. Habig.............................. $ 25,208 $ 642
James C. Thyen................................ $ 20,848 $ 659
John B. Habig................................. $ 19,668 $1,413
John T. Thyen................................. $ 19,350 $ 895
</TABLE>

Payments in 1994 and 1993 on behalf of the named individuals are to the
Company Retirement Plan.

(3) Each of the persons indicated was granted a stock ownership equivalent award
payable solely in cash five years after date of grant 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, from date of grant
to five years after date of grant, subject to earlier payout if the
individual dies, becomes totally disabled or retires at age 62 or later.

7
<PAGE> 10

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 business unit, group of units or the Company. ROA is
benchmarked against the ROAs reported in the annual Fortune 500 listing of the
largest U.S. corporations. 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 4% to
100% of salary, while officers, including executive officers, may earn a bonus
from 20% to 100% of salary. The plan is structured whereby business unit and
group managers may earn a higher bonus as a percent of salary than officers,
including executive officers. Because no 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 a twelve-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.

RETIREMENT PLANS

The Company maintains a defined contribution retirement plan with a 401(K)
provision for all eligible domestic employees. The plan provides for voluntary
employee contributions as well as a discretionary annual Company contribution as
determined by the Board of Directors based on income of the Company as defined
in the plan. Each eligible employee's Company contribution is defined as a
percent of eligible compensation, the percent being identical for all eligible
employees, including executive officers. Participant accounts are fully vested
after seven years of participation. All executive officers were fully vested at
June 30, 1995. The Retirement Trust account is fully funded and fully vested.
For those eligible employees, who, under the 1986 Tax Reform Act, are deemed to
be highly compensated, their individual Company contribution under the
retirement plan is reduced. For employees who are eligible, there is a
non-qualified, unfunded Supplemental Executive Retirement Plan (SERP) in which
the Company contributes to the account of each individual an amount equal to the
reduction in the contribution under the defined contribution retirement plan
arising from the provisions of the 1986 Tax Reform Act.

8
<PAGE> 11

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1995
------------------------------------------------- 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....... 6,000 3.2% $24.44 8/24/99 0 $40,500 $89,520
Douglas A. Habig...... 6,000(3) 3.2% $24.44 8/24/99 0 $40,500 $89,520
John B. Habig......... 5,000 2.7% $24.44 8/24/99 0 $33,750 $74,600
James C. Thyen........ 5,000(3) 2.7% $24.44 8/24/99 0 $33,750 $74,600
John T. Thyen......... 5,000 2.7% $24.44 8/24/99 0 $33,750 $74,600
All Optionees......... 187,500 100% $24.44 8/24/99 0 $1,265,625 $2,797,500
All Share Owners(2)... N/A N/A N/A N/A 0 $141,739,000 $313,295,000
All Optionees'
potential gain as a
percent of all Share
Owner gain.......... 0.9% 0.9%
</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 per share purchase price of $24.44, 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 20,998,339 shares outstanding at June 30, 1995. 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.

(3) Securities shown are stock ownership equivalents.

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 during 1995 include 139,500 shares of Incentive Stock
Options, 32,000 shares of Non-Qualified Stock Options with Stock Appreciation
Rights and 16,000 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.

9
<PAGE> 12

OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table sets forth information with respect to the named
officers concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of this fiscal year:

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT YEAR END 1995(#) YEAR END 1995 ($)(1)
ACQUIRED ON VALUE ----------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas L. Habig....... None None None 11,500 None $16,860
Douglas A. Habig...... None None None 11,500(2) None $16,860
John B. Habig......... None None None 9,500 None $14,050
James C. Thyen........ None None None 9,500(2) None $14,050
John T. Thyen......... None None None 9,500 None $14,050
</TABLE>

---------------
(1) Based on the NASDAQ quoted closing price as published in the Wall Street
Journal for the last business day of the fiscal year ($27.25 per share).

(2) Securities shown are stock ownership equivalents.

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 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 plan 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. Total compensation is
viewed as more than cash payments and unrelated pieces. The total compensation
package is planned and managed to keep various elements of compensation in
balance to help maintain the link of a common interest with Share Owners.

This basic philosophy is acknowledged in your 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."

10
<PAGE> 13

Our philosophies are translated into practice through specific compensation
plans. 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 your 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

In the context of historical practice, 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 compensation, nor
utilize any specific target or formula. While the Committee does review
compensation of CEO's of other manufacturing companies of similar size in sales,
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 1995 from an annualized base
of $234,000 to $249,600.

Under your Company's Profit Sharing Bonus Plan described elsewhere in this
Proxy Statement, the CEO's bonus for 1995 amounted to 59% of 1995 salary, while
under this plan the percent earned was 53% and 37% in 1994 and 1993
respectively. Under the Supplemental Bonus Plan also described elsewhere herein,
for 1995 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 $95,000. Under this plan, Mr.
Habig was awarded $70,000 both in 1994 and 1993 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 1995
fiscal year.

As described elsewhere within this Proxy Statement, during your Company's
1995 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

11
<PAGE> 14

Committee unanimously awarded Mr. Habig 6,000 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 your Company's compensation program in relation to the Act.

During 1995, the Committee thought it was in the best interests of the
Company and agreed to the grant of additional life insurance, with Board of
Directors approval, to Mr. Habig and other senior executives through a
split-dollar life insurance program. In part, the program enables senior
executives to maintain their significant shareholdings of your Company stock,
helping to maintain the strong link with other Share Owners. The deemed current
dollar benefit of this insurance program is in the compensation tables included
elsewhere in this report. Under the agreement, your Company will be fully
reimbursed for all premiums paid upon termination of the individual policies.

While your 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 other 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 1995 meeting, unanimously approved the profit
targets under the Company's 1996 Profit Sharing Bonus Plan.

COMPENSATION COMMITTEE

<TABLE>
<S> <C>
Douglas A. Habig (Chairperson) James C. Thyen
Leonard B. Marshall, Jr. Dr. Jack R. Wentworth
Gary P. Critser
</TABLE>

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 Dr. 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) 19.9% 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.

12
<PAGE> 15

PERFORMANCE GRAPH

The graph below compares the cumulative total return to Share Owners on the
common stock of the Company from June 29, 1990, through June 30, 1995, 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 29, 1990, and
that dividends are reinvested. The performances shown on the graph are not
necessarily indicative of future price performance.

<TABLE>
<CAPTION>
Kimball NASDAQ U.S.
Measurement Period International, S&P Midcap Composite
(Fiscal Year Covered) Inc. 400 Index Index
<S> <C> <C> <C>
1990 100.0 100.0 100.0
1991 96.7 112.8 105.9
1992 110.0 133.8 127.3
1993 139.3 164.1 160.0
1994 114.0 164.0 161.6
1995 138.3 200.7 215.3
</TABLE>

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP, independent certified public accountants, examined the
Company's financial statements for the year ended June 30, 1995, and also for
the prior fifteen fiscal years. Representatives of Arthur Andersen LLP 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. Arthur Andersen LLP
has been selected as the Company's independent auditors for the 1996 fiscal
year.

By Order of the Board of Directors

GARY P. CRITSER, Secretary

September 12, 1995

13
<PAGE> 16

<TABLE>
<S><C>
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 23, 1995, 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 24, 1995, 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 the nominees
to the contrary below) listed below

Thomas L. Habig, Douglas A. Habig, James C. Thyen, John B. 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: , 1995.
-------------------------------

--------------------------------------------
(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.)
</TABLE>
<PAGE> 17
<TABLE>
<S><C>
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 / / or /X/

1. Election of Director Leonard B. Marshall, Jr.

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.

Date: , 1995
--------------------------------

--------------------------------------------
(Signature)

"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
-----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

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 23, 1995, 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 24, 1995, and at any
adjournments thereof, with respect to the following matters:

(Please date and sign on reverse side)

-----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE

</TABLE>