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:
[ X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or Section 240.14a-
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] No Filing Fee Required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
KIMBALL INTERNATIONAL, INC.
1600 Royal Street
Jasper, Indiana 47549
(812) 482-1600
_________________
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
to be held October 28, 1997
_______________
To the Share Owners of Kimball International, Inc.:
The annual meeting of our 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 28, 1997, at
9:30 A.M., Eastern Standard Time, for the following purposes:
1. To elect eleven Directors of your Company.
2. To consider and act upon a proposed restatement to the Articles of
Incorporation of your Company which would have the effect of splitting
each issued share of Class A Common Stock and Class B Common Stock
into two issued shares of Class A Common Stock and Class B Common
Stock, respectively, by means of a two-for-one stock split, and in
connection therewith increasing the number of authorized shares of
Class A Common Stock to 50,000,000 shares, increasing the number of
authorized shares of Class B Common Stock to 100,000,000, reducing the
par value of the Company's Class A Common Stock and Class B Common
Stock to $.05 per share, increasing the dividend preference on the
Class B Common Stock to $.02 per share, effect a two-for-one stock
split, and making certain technical amendments, as described in the
accompanying proxy statement.
3. 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 25, 1997,
for determining our 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. Voters of the shares of the
Company's Class A Common Stock are entitled to elect ten Directors, consider and
act upon approval of the proposed restatement of the Articles of Incorporation
and related stock split of your Company, and to vote upon all other matters to
be presented at the meeting. Voters of the shares of the Company's Class B
Common Stock are entitled to elect one Director, consider and act upon approval
of the proposed restatement of the Articles of Incorporation and related stock
split of your Company, but are not otherwise entitled to vote.
Proxies, being solicited on behalf of the Board of Directors, are 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 Class B Common Stock, you will receive the Class A and Class B
proxies in separate mailings. Each of the proxies should be returned in the
envelope provided. 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 15, 1997
PLEASE EXECUTE AND DATE THE ACCOMPANYING PROXY AND MAIL IT PROMPTLY.
KIMBALL INTERNATIONAL, INC.
1600 ROYAL STREET
JASPER, INDIANA 47549
(812) 482-1600
_______________
ANNUAL MEETING OF SHARE OWNERS
OCTOBER 28, 1997
_________________
PROXY STATEMENT
This Proxy Statement is being mailed to our Share Owners of KIMBALL
INTERNATIONAL, INC. (the "Company") on or about September 15, 1997, 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 28, 1997, 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 of our Share Owners who execute and return a proxy may revoke the proxy
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 your 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 your
Company without extra compensation. Your 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 our Share Owners for the year ended June 30, 1997,
accompanies this Proxy Statement.
VOTING INFORMATION
Only Share Owners of record at the close of business on August 25, 1997,
will be entitled to vote at the Annual Meeting. On that date, there were
outstanding __,___,___ shares of Class A Common Stock and __,___,___ shares of
Class B Common Stock. Class A Share Owners will elect ten Directors. Each
share of Class A Common Stock is entitled to one vote with respect to the
election of the ten Directors, the proposal to restate the Articles of
Incorporation, effect a two-for-one stock split, 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, the proposal to restate the
Articles of Incorporation, effect a two-for-one stock split, 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, i.e., the nominees receiving the highest number of votes cast in
each category will be elected. The presence of a quorum requires that a
majority of outstanding shares be present at the meeting by proxy or in person.
Accordingly, neither the non-voting of shares nor withholding authority to vote
will affect the election of Directors. The affirmative vote of the holders of
the majority of the outstanding shares of each class of stock, voting
separately, is required for approval of the proposed restatement to the Articles
of Incorporation and related stock split. Abstentions from voting, and
broker/non-votes, will count as voting against the proposal.
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 and
FOR approval of the restatement to your Company's Articles of Incorporation and
related two-for-one stock split.
The Board of Directors knows of no other matters which may come up for
action at the meeting. However, if any other matters 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 1998 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 18, 1998. 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 2,466,220 shares of Class A Common Stock (34.2%.of the
outstanding) and 1,686,082 shares of Class B Common Stock (12.5% of the
outstanding).
Set forth in the following table are the beneficial holdings as of August
15, 1997, of the Company's Class A Common Stock and Class B Common Stock on the
basis described above for 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 your 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
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:
<S> <C> <C> <C> <C>
Thomas L. Habig(d) . . . . . . . . . . . . . . . . Class A 48,847 1,051,312 15.2%
1600 Royal Street Class B 55,828 305,324 2.7%
Jasper, Indiana 47549
Douglas A. Habig(c) . . . . . . . . . . . . . . . . Class A 474,050 1,007,819 20.5%
1600 Royal Street Class B 159,992 1,058,148 9.0%
Jasper, Indiana 47549
John B. Habig(d) . . . . . . . . . . . . . . . . . Class A 317,462 1,051,312 19.0%
1600 Royal Street Class B 132,860 334,505 3.5%
Jasper, Indiana 47549
James C. Thyen(c) . . . . . . . . . . . . . . . . . Class A 126,735 none 1.8%
1600 Royal Street Class B 54,382 772,296 6.1%
Jasper, Indiana 47549
OTHERS:
Arnold F. Habig(d) . . . . . . . . . . . . . . . . Class A 434,448 622,646 14.6%
1600 Royal Street Class B 284,611 29,182 2.3%
Jasper, Indiana 47549
The Kimball International, Inc. . . . . . . . . . . Class A none none none
Retirement Plan Class B 772,296 none 5.7%
Springs Valley Bank & Trust Co. - Trustee
1500 Main Street
Jasper, Indiana 47546
A. C. Sermersheim Family (g) . . . . . . . . . . . Class A 405,000 none 5.6%
Limited Partnership Class B 186,788 none 1.4%
1113 West 14th Street
Jasper, Indiana 47546
Barbara J. Habig (f) . . . . . . . . . . . . . . . Class A 361,865 none 5.0%
4949 Lampkins Ridge Road Class B 67,600 none (e)
Bloomington, IN 47401
OTHER NOMINEES:
Ronald J. Thyen(d) . . . . . . . . . . . . . . . . Class A 115,837 none 1.6%
Class B 69,340 none (e)
Dr. Jack R. Wentworth . . . . . . . . . . . . . . . Class A none none none
Class B 1,046 none (e)
John T. Thyen(d) . . . . . . . . . . . . . . . . . Class A 133,655 none 1.9%
Class B 52,506 none (e)
Brian K. Habig(d) . . . . . . . . . . . . . . . . . Class A 148,097 none 2.1%
Class B 20,561 none (e)
Gary P. Critser . . . . . . . . . . . . . . . . . . Class A 950 none (e)
Class B 31,097 3,370 (e)
Christine M. (Tina) Vujovich . . . . . . . . . . . Class A none none none
Class B 404 none (e)
Alan B. Graf, Jr. . . . . . . . . . . . . . . . . . Class A none none none
Class B 2,505 none (e)
All Executive Officers . . . . . . . . . . . . . . Class A 1,800,081 666,139 34.2%
and Directors as a Group Class B 865,132 820,950 12.5%
(12 persons) (c) (d)
_________
(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) 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 17,500 shares; John B. Habig, Ronald J. Thyen, John T.
Thyen, and Arnold F. Habig 14,500 shares each; Brian K. Habig 5,000 shares;
and all executive officers and directors as a group 80,500 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.
(g) This information is derived from notification received by the Company on
Schedule 13D. As disclosed in the Schedule 13D, Jane M. Hackman, Shirley A.
Lewis and Ronald J. Sermersheim each have joint voting and dispositive power
of the shares listed. In addition, Ms. Hackman, Ms. Lewis and Mr.
Sermersheim each vote individually and own on a direct basis a total of
200,728 shares of Class A Common Stock and 565,314 shares of Class B Common
Stock.
</TABLE>
ELECTION OF DIRECTORS
At the annual meeting, eleven Directors, constituting the full Board, are
to be elected to hold office until the next Annual Meeting of our 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. The Board of Directors 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
NAME PRINCIPAL OCCUPATION SINCE
Douglas A. Habig(a) . . . Chairman of the Board of Directors and 1973
Chief Executive Officer of the Company;
also Director of NBD Indiana, Inc., a
banking subsidiary of NBD Bank N.A.; age 50
Thomas L. Habig(a)(c) . . Vice Chairman of the Board of Directors of 1950
the Company; age 69
James C. Thyen(b) . . . . President of the Company; age 53 1982
John B. Habig(a) . . . Senior Executive Vice President, Operations 1956
Officer, Electronics of the Company;
age 64
Ronald J. Thyen(b) . . . Senior Executive Vice President, Operations 1973
Officer, Furniture and Cabinets of the
Company; age 60
Brian K. Habig(c) . . . . Executive Vice President, Sales and Marketing,1992
Kimball Office Group of the Company; age 40
John T. Thyen(b) . . . . Senior Executive Vice President, Marketing 1990
and Sales of the Company; age 58
Gary P. Critser . . . . . Senior Executive Vice President, Secretary 1990
and Treasurer of the Company; age 60
Christine M. (Tina) . . . Vice President, Worldwide Marketing, Bus and 1994
Vujovich Light Commercial Automotive and Environmental
Management, Cummins Engine Co., Inc.; also
Director of Irwin Union Bank, a banking
subsidiary of Irwin Financial Corporation; age 45
Alan B. Graf, Jr. . . . . Executive Vice President and Chief Financial 1997
Officer, Federal Express Corporation; age 44
NOMINEE FOR ELECTION AS DIRECTOR
BY HOLDERS OF CLASS B COMMON STOCK
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE
Dr. Jack R. Wentworth . . Arthur M. Weimer Professor of Business 1984
Administration, Indiana University; former
Dean of the School of Business, Indiana University;
also Director of Lone Star Industries and
Market Facts, Inc.; age 69
_____________
(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.
At the December 1996 meeting the Board appointed Alan B. Graf, Jr. as a
Director representing Class A Common Stock Share Owners replacing Leonard B.
Marshall, Jr. who died unexpectedly during June 1996. Mr. Graf Jr. has been an
employee of Federal Express Corporation since 1980. In 1987 Mr. Graf Jr. was
appointed Vice President, in 1991 Senior Vice President and Chief Financial
Officer, and in 1996 to his present position of Executive Vice President and
Chief Financial Officer. He is a member of a four-person Executive Committee of
Federal Express Corporation responsible for planning and executing all sales,
marketing, operations and customer service functions of the corporation.
Each of the other ten nominees is also currently a Director of the Company
and 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 for Christine
M. Vujovich and Dr. Jack R. Wentworth. During June 1993, Dr. Wentworth retired
from the position of Dean of the 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 Vice President, Product Planning and Environmental Management in 1989. In
1996 Ms. Vujovich was appointed Vice President of Worldwide Marketing, Bus and
Light Commercial Automotive and Environmental Management of Cummins.
In addition, the responsibilities and titles of certain executive officers
of your Company who are also Directors were changed by the Board effective
July 1, 1997, as follows:
. Douglas A. Habig from President and Chief Executive Officer to Chairman of
the Board of Directors and Chief Executive Officer.
. Thomas L. Habig from Chairman of the Board of Directors to Vice Chairman of
the Board of Directors.
. James C. Thyen from Senior Executive Vice President, Chief Financial and
Administrative Officer and Treasurer to President.
. Gary P. Critser from Senior Executive Vice President, Chief Accounting
Officer and Secretary to Senior Executive Vice President, Secretary and
Treasurer.
. Brian K. Habig from Vice President, General Manager, Office Furniture,
Strategic Operations Planning and Administration to Executive Vice President,
Sales and Marketing, Kimball Office Group.
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 1997 fiscal year this Committee met three times while the Board of
Directors met six times.
The Audit Committee consists of three members of the Board: Dr. Jack R.
Wentworth (Chairperson), Christine M. Vujovich, and Alan B. Graf, Jr., 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 two
times during the 1997 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
fiscal 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 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), Dr. Jack R. Wentworth, Christine M. Vujovich, 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 and 1996 Stock Incentive
Programs. The Compensation and Stock Option Committees each met once during
fiscal year 1997.
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 Audit Committee of the Board of
Directors receives $3,500 per meeting, and other Audit Committee members receive
$2,500 per meeting. Members of the Compensation Committee who are not Company
employees receive $1,000 per meeting. Members of the Executive Committee and
the Stock Option Committee receive no additional compensation for their service
on these committees.
The Company maintains the 1996 Director Stock Compensation and Option Plan,
approved by Share Owners at the 1996 annual meeting, which allows Directors to
receive their annual retainer and meeting fees in shares of Class B Common Stock
and receive grants of nonqualified stock options in connection with that
election.
All Directors during fiscal year 1997 attended in excess of 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees of the Board on which the
Directors served.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for the fiscal years indicated, the aggregate
cash compensation, including incentive compensation, paid by your Company to the
Chief Executive Officer and each of the four other most highly compensated
Executive Officers of your Company during the years ended June 30, 1997, 1996
and 1995:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) (#) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Douglas A. Habig (4) 1997 $279,600 $318,324 $37,847 6,000(3)
Chairman of the Board 1996 264,600 258,045 36,271 6,000(3) 28,868
and Chief Executive 1995 247,800 243,503 34,965 6,000(3) 24,645
Officer
Thomas L. Habig (4) 1997 $251,400 $269,148 $37,723 6,000
Vice Chairman of 1996 241,300 224,764 40,018 6,000 31,009
the Board 1995 227,600 211,585 38,434 6,000 25,850
James C. Thyen (4) 1997 $243,200 $265,376 $37,984 5,131(3)
President 1996 228,200 215,074 40,632 5,000(3) 24,775
1995 211,400 199,726 38,415 5,000(3) 21,507
John B. Habig 1997 $227,800 $238,100 $48,134 5,000
Senior Executive 1996 215,200 192,387 43,956 5,000 26,050
Vice President, 1995 198,700 179,534 44,021 5,000 21,081
Operations Officer,
Electronics
John T. Thyen 1997 $227,800 $234,904 $39,790 5,000
Senior Executive 1996 215,200 190,164 32,753 5,000 23,876
Vice President, 1995 198,700 177,233 33,804 5,000 20,245
Marketing and Sales
(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 1997 includes on behalf of the named individuals all other
compensation as follows:
COMPANY PAYMENTS
TO RETIREMENT AND SPLIT-DOLLAR
SUPPLEMENTAL EMPLOYEE LIFE INSURANCE
RETIREMENT PLAN PREMIUM VALUE
Thomas L. Habig $11,644
Douglas A. Habig 3,756
James C. Thyen 3,854
John B. Habig 8,262
John T. Thyen 5,237
(3) These individuals were 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.
For James C. Thyen, 1997 also includes options in the amount of 131
shares under the 1996 Director Stock Compensation and Option Plan.
(4) Compensation shown in this schedule is earnings for responsibilities up
to June 30, 1997, and does not reflect new responsibilities effective
July 1, 1997.
</TABLE>
CASH BONUS PLANS
Your Company has a Profit Sharing Bonus Plan in which all Executive
Officers and eligible salaried employees participate. Effective July 1, 1996,
the plan was amended and is now based on "Economic Value Added" or "EVA" (EVA is
a registered trademark of Stern Stewart & Co.) concepts whereby the Company's
cost of capital is deducted from income to arrive at an Economic Profit. The
Compensation Committee believes that changes in Economic Profit correlate with
long-term Share Owner value. The amount of bonus earned during a fiscal year is
based upon achieving predetermined Economic Profit levels (the higher the
Economic Profit, the higher the bonus earned). The Economic Profit levels
required to achieve bonus are based in part on external benchmarks.
Capital from which the cost of capital is computed includes all assets
deployed (with certain adjustments to reflect current economic costs) less
current liabilities. Capital computed for the individual business unit plans
exclude all cash and cash investments while capital computed for the Officers'
plan includes these less productive assets. This motivates the business units
to generate cash and the Officers to seek out and deploy the Company's cash and
cash investments in business ventures that generate returns in excess of your
Company's cost of capital.
The plan is structured whereby eligible employees with more responsibility
to impact profitability have a greater percentage of their total compensation at
risk, allowing for a greater incentive to increase Economic Profit. The plan is
also designed to pay bonuses at an increasing percent of base salary the higher
the Economic Profit that is achieved; so higher levels of Economic Profit result
in a greater amount of each dollar of profit being paid out in bonus than at
lower profit levels, again providing a greater incentive to increase Economic
Profit. Once a minimum threshold of Economic Profit is attained, eligible
employees may earn bonuses ranging from 4% to 100% of base salary. Officers,
including Executive Officers, may earn a bonus ranging from 20% to 100% of base
salary, while other participants may earn a bonus ranging from 4% to 100% of
base salary, depending upon responsibility level. The plan is also structured
whereby business unit and group participants may earn a higher bonus as a
percent of salary than 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 2.4% of the
Company's overall annual net income (before bonuses paid pursuant to the
Company's Profit Sharing Bonus Plan) may be designated as supplemental bonuses
to those eligible employees at the discretion of the Chairman of the Board, and
Vice Chairman of the Board. The 2.4% is an effective 1.5% on a comparative
after tax basis. Any award to the Chief Executive Officer under this
supplemental bonus plan must be approved and awarded by the Compensation
Committee of the Board of Directors.
Under your Company's bonus plans, with certain exceptions, bonuses are
accrued annually and paid in five installments over the succeeding fiscal year.
Except for provisions relating to retirement, death and permanent disability,
participants must be actively employed on each payment date to be eligible to
receive the bonus.
RETIREMENT PLANS
Your 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, 1997. 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
nonqualified, unfunded Supplemental Employee Retirement Plan (SERP) in which
your 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.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1997
NUMBER OF % OF TOTAL POTENTIAL REALIZED
SECURITIES OPTIONS/SAR VALUE AT ASSUMED
UNDERLYING GRANTED TO EXERCISE ANNUAL RATES OF STOCK
OPTIONS/ EMPLOYEES OR PRICE APPRECIATION FOR
SAR IN FISCAL STRIKE EXPIRATION THE 5-YR OPTION/SAR TERM(1)
NAME GRANTED (#) YEAR PRICE($) DATE 0%($) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas L.
Habig 6,000 2.8% 27.54 7/17/01 0 45,625 100,811
Douglas A.
Habig 6,000(4) 2.8% 27.54 7/17/01 0 45,625 100,811
John B.
Habig 5,000 2.3% 27.54 7/17/01 0 38,020 84,009
James C. 111 .1% 35.81 10/21/01 0 1,098 2,425
Thyen 5,000(4) 2.3% 27.54 8/12/01 0 38,020 84,009
20 - 36.62 4/20/02 0 202 447
John T.
Thyen 5,000 2.3% 27.54 7/17/01 0 38,020 84,009
All 7/17/01
Optionees 217,419 100% 27.59 (2) through 0 1,656,002 3,659,071
4/20/02
All Share
Owners(3) N/A N/A N/A N/A 0 157,809,000 348,697,000
All Optionees' potential
gain as a percent of
all Share Owner gain 1.0% 1.0%
(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) Weighted average per share exercise price of all options issued in fiscal
year ended June 30, 1997.
(3) 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 $27.59, the weighted average of
the exercise prices for all options granted during the period, and that
all Share Owners hold the shares continuously for a 5 and 10-year period.
The amounts were computed based upon 20,715,180 shares outstanding at
June 30, 1997. The computed increase in market value to Share Owners is
shown for comparative purposes only. It is not a prediction of future
stock appreciation.
(4) Securities shown are stock ownership equivalents.
</TABLE>
Your Company's 1996 Stock Incentive Program (1996 Plan) was approved by
Share Owners at the October 1996 Annual Meeting replacing the 1987 Stock
Incentive Program. The 1996 Plan permits a variety of benefits consisting of
Incentive Stock Options, NonQualified Stock Options, Stock Appreciation Rights,
Restricted Stock Awards and Performance Shares. All Incentive Stock and
NonQualified Stock Options issued were granted at 100% of fair market value on
date of grant. Options generally 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 1997 include 166,062 shares of Incentive Stock
Options, 32,500 shares of Nonqualified Stock Options with Stock Appreciation
Rights, 2,857 shares of Nonqualified Stock Options, and 16,000 shares of stock
ownership equivalent awards. These Incentive Stock Options and Nonqualified
Stock Options were issued under the 1987 Plan which expired August 10, 1997,
except for 1,119 shares issued under the 1996 Director Stock Compensation and
Option Plan. Shares issued to Thomas L. Habig, John B. Habig and John T. Thyen
are NonQualified Stock Options with Stock Appreciation Rights. Shares issued to
Douglas A. Habig and James C. Thyen are stock ownership equivalent awards.
James C. Thyen also received Nonqualified Stock Options under the 1996 Director
Stock Compensation and Option Plan. 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 FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table sets forth information with respect to the named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of this fiscal year:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired On Value Options at Year End 1997(#) Year End 1997($)(1)
Name Exercise (#) Realized(#) Exercisable Unexercisable Exercisable Eexercisable
<S> <C> <C> <C> <C> <C> <C>
Thomas L.
Habig None None 11,500 12,000 153,435 164,520
Douglas A. None None None 23,500 0 317,955
Habig
John B.
Habig None None 9,500 10,000 126,975 137,100
James C.
Thyen None None None 19,631 0 264,640
John T.
Thyen None None 9,500 10,000 126,975 137,100
(1) Based on the NASDAQ quoted closing price as published in the Wall Street
Journal for the last business day of the fiscal year ($40.25 per share).
(2) Securities shown are stock ownership equivalents.
</TABLE>
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 your Company's Mission. The Committee's responsibility as
delegated by the Board of Directors is to establish the general compensation
policies with respect to your 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 and 1996 Stock Incentive Programs.
COMPENSATION PHILOSOPHY
Since its founding, Kimball International has linked all employees'
compensation to the financial success of your 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."
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, either on an individual basis or
through team participation, 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. Effective for the fiscal year beginning July 1, 1996, this plan was
amended to link to Economic Profit. It is believed the change to Economic
Profit for the incentive bonus plan will help focus our decision makers on the
most effective use of capital and will improve the focus of providing excellent
returns on the investments of you our Share Owners. The Profit Sharing Bonus
Plan goals are based in part on external benchmarks as guidelines which help to
assure a consistent focus and reasonable benchmark on providing these returns.
Further, the plan places a proportionately higher share of compensation at risk
at each level of management.
Key personnel participated in the 1987 Stock Incentive Program and will
participate in the 1996 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 your Company stock held in the Retirement
Trust.
The Cash Bonus Plans, Stock Incentive Programs, and Retirement Plans are
described elsewhere in this proxy statement.
Combining the Profit Sharing and Supplemental Bonus Plans for short-term
incentive and the 1987 and 1996 Stock Incentive Plans for long-term incentive, a
total of approximately 125 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 serves in the best 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 Chief
Executive Officer 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 Chief
Executive Officer's total compensation, nor utilize any specific target or
formula. While the Committee does review compensation of the Chief Executive
Officers 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, (and with the
Chief Executive Officer 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 July 1996 from an annualized base of $265,200 to
$280,800.
Under your Company's Profit Sharing Bonus Plan described elsewhere in this
Proxy Statement, the CEO's bonus for 1997 amounted to 68% of 1997 salary, while
under this plan the percent earned was 53% and 59% in 1996 and 1995
respectively. Under the Supplemental Bonus Plan, also described elsewhere, for
1997 the Committee, in consultation with Thomas L. Habig, (with the CEO absent
from this portion of the meeting and not voting), unanimously awarded Douglas A.
Habig a bonus of $125,000. Under this plan, Mr. Douglas A. Habig was awarded
$105,000 in 1996 and $95,000 in 1995 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 improvement in Economic Profit and return on Economic Capital in
the 1997 fiscal year. The Company's Chairman and Chief Executive Officer and
Vice Chairman establish the salaries and supplemental bonuses of the Company's
other Executive Officers.
As described elsewhere within this Proxy Statement, during your Company's
1997 fiscal year, the Stock Option Committee of the 1987 and 1996 Incentive
Stock Plans granted options under the 1987 plan to key executives and other key
employees. Because Mr. Douglas A. Habig is a member of the Stock Option
Committee, thus was not eligible to participate in the Stock Option Plan, the
Committee (with Mr. Habig not voting) 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 executives and key employees.
Options issued to the executives and other Company employees 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
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.
At the June 1997 Board meeting, the Board of Directors approved a strategy
of a long term requirement regarding expectations of ownership of your Company
stock by its key decision makers, including members of the Board of Directors.
The Committee is also cognizant of the significant amount of shares of your
Company stock presently owned by the Chief Executive Officer and the other four
reporting Executive Officers. This policy regarding share ownership and the
present significant shareholdings of the Chief Executive Officer and other four
reporting Officers help assure a strong link with the common interest of Share
Owners in the Company's long term success.
The Committee, in its June 1997 meeting, unanimously approved the economic
profit targets under the Company's 1998 fiscal year Profit Sharing Bonus Plan.
COMPENSATION COMMITTEE
Douglas A. Habig (Chairperson) James C. Thyen
Dr. Jack R. Wentworth Gary P. Critser
Christine M. (Tina) Vujovich
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Douglas A. Habig is Chairman of the Board and Chief Executive Officer and a
brother of Thomas L. Habig, Vice Chairman of the Board, and John B. Habig,
Senior Executive Vice President, Operations Officer, Electronics, of the
Company. James C. Thyen, President, 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, Secretary and Treasurer of the Company. Dr.
Jack R. Wentworth is a Director of the Company and is not an employee.
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. Executive Management of your 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 your Company from June 30, 1992, through June 30, 1997, the last
business day in the respective fiscal years, 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. Your Board of Directors does not believe that any other published
industry or line-of-business index adequately represents the current operations
of your 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, 1992, and that dividends are
reinvested. The performances shown on the graph are not necessarily indicative
of future price performance.
(GRAPH)
1992 1993 1994 1995 1996 1997
KIMBALL INTERNATIONAL, INC. 100.0 126.6 103.6 125.7 131.9 197.6
S&P MIDCAP 400 INDEX 100.0 122.7 122.6 150.0 182.4 225.0
NASDAQ U.S. COMPOSITE INDEX 100.0 125.8 127.0 169.5 217.6 264.6
RESTATEMENT OF ARTICLES OF INCORPORATION
The Board of Directors recommends that our Share Owners approve a
restatement of your Company's Articles of Incorporation which would increase the
Company's authorized and issued Class A and Class B Common Stock and effect a
two-for-one stock split for each class. If approved, the restatement would
increase the number of authorized shares of Class A Common Stock from 10,413,300
(as of August 15, 1997) to 50,000,000 and the number of authorized shares of
Class B Common Stock from 30,000,000 to 100,000,000. It would also change the
par value of each class of Common Stock from $.31 1/4 per share to $.05 per
share. In addition, it would increase the annual dividend preference on the
Class B Common Stock from $.01 to $.02 per share. It would convert each
presently issued share of Class A Common Stock and each presently issued share
of Class B Common Stock into two shares of Class A Common Stock and Class B
Common Stock, respectively. Finally, it would remove from the Articles of
Incorporation the provisions regarding the name and address of the Company's
resident agent and the address of the Company's principal office, change all
references to the Indiana General Corporation Act to references to the Indiana
Business Corporation Law, the current applicable Indiana statute, clarify that
the dividend preference on the Class B Common Stock only applies to cash
dividends, and correct a typographical error. A copy of the text of the
proposed restatement is attached as Exhibit A to this Proxy Statement. As of
August 25, 1997, there were ____________ shares of Class A Common Stock
outstanding and _______________ shares of Class B Common Stock outstanding.
Each class of stock is entitled to vote separately on this proposed restatement.
Following the two-for-one stock split, a distribution of certificates
representing one share of Class A Common Stock, $.05 par value, would be made to
each holder of an issued share of Class A Common Stock on the record date for
the stock split, and a distribution of certificates representing one share of
Class B Common Stock, $.05 par value, would be made to each holder of an issued
share of Class B Common Stock on the record date for the stock split.
The Company's Articles of Incorporation presently provide that the holders
of Class B Common Stock are entitled to receive dividends in each fiscal year of
the Company in an amount which is $.01 per share greater than the amount of
dividends which are paid on the Class A Common Stock in such year (the
"differential"). Pursuant to the proposed restatement, this dividend
differential will be changed, effective on the record date for the stock split,
to $.02 per share. In 1976, the time your Company's Class B Common Stock
became a publicly traded stock, the Class B Common Stock dividend differential
was $.04 per share. Two subsequent stock splits have reduced the differential
to $.01 per share a year. Without adjusting the differential, if this proposed
stock split is approved, the differential would become $.005 a year, or 1/8 cent
a quarter. Your Board of Directors feels the tradition of a meaningful dividend
differential for Class B Common Stock should be continued, as the differential
could aid in the marketability and liquidity of the Class B Common Stock on the
NASDAQ market, which would also have a positive effect on Class A Common Stock.
Thus, your Board is recommending the Class B Common Stock dividend differential
be restated to $.02 per share a year.
The two-for-one stock split has been proposed because in the judgment of
the Board of Directors, it would decrease the market price of the Class B Common
Stock to a level at which the Class B Common Stock would be more readily
tradeable and at which it would be more accessible to a broader base of
investors. The related reduction of par value would help to assure that the
Company's annual franchise taxes in states where the franchise tax is related to
par value would not increase as a result of the split. Holders of neither class
of Common Stock of the Company have presently, and each class will continue not
to have, any preemptive rights to subscribe to or purchase any of the authorized
shares of Class A Common Stock or Class B Common Stock.
Because of the reduction of par value effected by the restatement under
generally accepted accounting principles, if the split is effected, no transfer
to the Company's Common Stock account will be necessary. In the opinion of the
Company's tax counsel, the stock split will result in no gain or loss to Share
Owners for federal income tax purposes. The restatement and the stock split will
not change the powers, preferences or rights of the Class A Common Stock or the
Class B Common Stock, except for the dividend differential as described above.
The proposed increase in the number of authorized shares of Class A and
Class B Common Stock is greater than the number necessary to effect the proposed
split. This larger number of authorized shares will provide the Company some
flexibility by making available additional shares of Class B Common Stock that
can be issued for other corporate purposes. At present, there are no plans for
the issuance of additional shares of Class A or Class B Common Stock other than
by reason of the stock split. The additional unissued shares of Class A Common
Stock and Class B Common Stock will be available for issuance in the future by
the Board of Directors without further authorization by vote of Share Owners
other than as required by applicable law. The Company has no present plans for
the issuance of additional shares of Class A or Class B Common Stock other than
by reason of the stock split.
If the restatement is adopted, it is anticipated that it would be made
effective on or about November 12, 1997. The date the restatement is effective
would become the record date for the stock split. It is expected that
certificates for the additional shares to which each Share Owner on the record
date will become entitled as a result of the stock split will be mailed on or
about December 8, 1997. All certificates outstanding on the record date will
continue to be valid and, after filing of the restatement, will represent the
same number of shares of Class A Common Stock or Class B Common Stock as they
represented prior to the split, except that the par value of the shares they
represent will be reduced to $.05 per share.
The affirmative vote of the holders of the majority of the outstanding
shares of both "A" and "B" Share Owners, voting separately, is required for
approval of the proposed restatement to the Articles of Incorporation.
Abstentions and broker/nonvotes will count as a vote against the proposal.
The Board of Directors recommends a vote FOR approval of the restatement to
the Articles of Incorporation of your Company and related two-for-one stock
split.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, independent certified public accountants, examined the
Company's financial statements for the year ended June 30, 1997, and also
for the prior seventeen 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 1998 fiscal year.
By Order of the Board of Directors
Gary P. Critser, Secretary
September 15, 1997
(AS AMENDED IF APPROVED)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
KIMBALL INTERNATIONAL, INC.
Kimball International, Inc. (the "corporation"), a corporation
existing pursuant to the provisions of the Indiana Business Corporation Law (the
"Corporation Law"), hereby amends and restates its Articles of Incorporation in
accordance with Indiana Code_23-1-38-7. These Amended and Restated Articles of
Incorporation shall be effective as of November 12, 1997 (the "Effective Date"),
and shall supersede and take the place of the existing Restated Articles of
Incorporation of Kimball International, Inc., which are dated April_9, 1991, and
all subsequent amendments thereto.
ARTICLE I
NAME
The name of the corporation is Kimball International, Inc.
ARTICLE II
PURPOSES
The purposes for which the corporation is formed are:
(a) to transact any and all lawful businesses for which corporations may be
incorporated under the Corporation Law;
(b) to carry on the trade or business of manufacturing, purchasing, buying,
selling, handling, disposing of, merchandising and dealing in, either at
wholesale or at retail, manufactured products of metal, wood, or other
materials and/or the combinations thereof, of the various and several
kinds, and especially furniture of the various and several kinds of
construction, parts, and accessories, and in general, the engagement in
manufacturing and merchandising and as before said, either at wholesale or
at retail, and all or either, in whole or in part, as the further interests
and opportunities may suggest, and as the subsequent conditions may
indicate or require;
(c) to engage and conduct a business in the United_States and internationally
for the manufacture of products of metal, wood or other materials and/or
the combinations thereof; to buy, sell, own, manufacture, assemble, build,
construct and otherwise handle and deal in all kinds of machinery,
equipment, supplies, parts or accessories, and to manufacture, build and
construct furniture of the various and several kinds of construction, parts
and accessories and to dispose and deal in the same as manufacturers,
jobbers, wholesalers and retailers;
(d) to acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage and otherwise deal in and dispose of Letters Patent of the
United_States or any foreign country, patent rights, licenses and
privileges, inventions, improvements and processes, copyrights, trademarks
and trade names incident to or useful in connection with any business of
this corporation;
(e) to acquire the capital stock, bonds or other evidences of indebtedness,
secured or unsecured, of any other corporation and to acquire the good
will, rights, assets and property and to undertake and assume all or any
part of the obligations or liabilities of any other corporation, firm,
association or person;
(f) to acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or
otherwise dispose of or deal in and with any of the shares of the capital
stock, or any voting trust certificates in respect of the shares of capital
stock, scrip, warrants rights, bonds, debentures, notes, trust receipts and
other securities, obligations, choses in action and evidences of
indebtedness or interest issued or created by any corporations, joint stock
companies, syndicates, associations, firms, trusts or persons, public or
private, or by the government of the United_States of America, or by any
foreign government, or by any state, territory, province, municipality or
other political subdivision or by any governmental agency, and as owner
thereof to possess and exercise all the rights, powers and privileges of
ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof;
(g) to buy, hold, own, improve, manage, operate, lease as lessee or as lessor,
sell, convey and/or mortgage either alone or in conjunction with others,
real estate of every kind, character and description whatsoever and
wheresoever situated, and any interest therein; and to purchase, acquire,
hold, mortgage, pledge, hypothecate, exchange, sell, deal in and dispose
of, alone or in syndicates, or otherwise in conjunction with others,
commodities and other personal property of every kind, character and
description whatsoever and wheresoever situated, and any interest therein;
(h) to act as agent or representative of others for any lawful business
purposes;
(i) to make contracts; to make any guaranty respecting stocks, leases,
securities, indebtedness, interest, contracts, or other obligations; to
borrow money; to issue bonds, promissory notes, debentures and other
evidences of indebtedness; to secure such evidence of indebtedness by
pledge, mortgage and/or hypothecation of certain or all of the assets of
the corporation; to enter into indentures specifying the various terms and
incidents of such evidences of indebtedness; and to do any and all other
incidental acts and things necessary to borrow money on the part of the
corporation;
(j) to borrow or raise monies for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or nonnegotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon or pledge, conveyance
or assignment in trust of the whole or any part of the property of the
corporation, whether at the time owned or thereafter acquired, and to sell,
pledge or otherwise dispose of such bonds or other obligations of the
corporation for its corporate purposes;
(k) to purchase, hold, sell and transfer the shares of its own capital stock;
provided it shall not use its funds or property for the purchase of its own
shares of capital stock when such use would cause any impairment of its
capital except as otherwise permitted by law, and provided further that
shares of its own capital stock belonging to it shall not be voted upon
directly or indirectly;
(l) to have one or more offices, to carry on all or any of its operations and
business and without restriction or limit as to amount, to purchase or
otherwise acquire, hold, own, amortize, sell, convey or otherwise deal in
or dispose of real and personal property of every class and description in
any of the states, districts, territories or colonies of the United_States,
and in any and all foreign countries, subject to the laws of such state,
district, territory, colony or country;
(m) in general, to carry on any other businesses in connection with the
foregoing and to have and exercise all of the powers conferred by the laws
of the State of Indiana upon corporations by the Corporation Law.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the corporation shall continue is perpetual.
ARTICLE IV
SHARES
Section 1. Number. The total number of shares into which the
corporation's capital stock is to be divided is 150,000,000 shares, identified
by class and par value of shares as follows:
(a) 50,000,000 shares of Class A Common Stock of the par value of $.05 per
share; and
(b) 100,000,000 shares of Class B Common Stock of the par value of $.05 per
share.
Section 2. Share Split. On the Effective Date, and without any
further action on the part of the corporation or its shareholders, each share of
Class A Common Stock, $.31-1/4 par value, then issued (including shares held by
the corporation as treasury shares), shall be split into two fully paid and
nonassessable shares of Class A Common Stock, $.05 par value per share, and each
share of Class B Common Stock, $.31-1/4 par value, then issued (including shares
held by the corporation as treasury shares), shall be split into two fully paid
and nonassessable shares of Class B Common Stock, $.05 par value per share. To
reflect the share split provided above, each certificate representing shares of
Class A Common Stock, $.31-1/4 par value, theretofore issued and outstanding or
theretofore issued and held in the corporate treasury, and each certificate
representing shares of Class B Common Stock, $.31-1/4 par value, theretofore
issued and outstanding or theretofore issued and held in the corporate treasury,
shall continue to represent, after the Effective Date, the same number of shares
of Class A Common Stock and Class B Common Stock, respectively, theretofore
represented by such certificate, and each holder of shares of Class A Common
Stock or Class B Common Stock shall be entitled, as soon as practicable after
the Effective Date, to receive a new certificate representing a number of shares
of Class A Common Stock, $.05 par value, or Class B Common Stock, $.05 par
value, respectively, as authorized by the foregoing provisions, equal to the
number of shares theretofore held so that, upon the Effective Date, each holder
of record of a certificate theretofore representing issued Class A Common Stock
or Class B Common Stock will be entitled to certificates representing in the
aggregate two shares of Class A Common Stock, $.05 par value, or Class B Common
Stock, $.05 par value, respectively, for each share of Class A Common Stock,
$.31-1/4 par value, or Class B Common Stock, $.31-1/4 par value, respectively,
of which the shareholder was the holder prior to the Effective Date.
Section 3. Terms. The relative rights, preferences, limitations and
restrictions of each class of shares of Common Stock are as follows:
(a) Dividends. The holders of Class A Common Stock and Class B Common Stock
shall be entitled to receive, when and as declared by the Board of
Directors, from funds lawfully available therefor, all dividends payable in
cash or other property of the corporation, and for this purpose Class A
Common Stock and Class B Common Stock shall be considered as one class, and
the holders thereof shall be entitled to participate ratably, share for
share, and without preference of either class over the other, in all
dividends so declared and paid. Notwithstanding the foregoing, the holders
of Class B Common Stock shall be entitled to receive cash dividends in each
fiscal year of the corporation in an amount which is $.02 per share (the
"Differential") greater than the amount of cash dividends which are paid on
the Class A Common Stock in such year; provided, however, that
(i) if any such fiscal year shall consist of less than 360 days, then the
Differential for each quarterly dividend declared during the resulting
short fiscal year shall be equal to one-fourth of the Differential
applicable to a full fiscal year (taking into account any adjustments that
may be made to the Differential in accordance with Section_3(a)(iii)
below);
(ii) with respect to the first fiscal year ending after the Effective Date, the
Differential for each quarterly dividend declared during the remainder of
that fiscal year shall be equal to one-fourth of the Differential
applicable to a full fiscal year (taking into account any adjustments that
may be made to the Differential in accordance with Section 3(a)(iii)
below); and
(iii)in the event of a split or division of the outstanding shares of
Class B Common Stock into more shares of that class (excluding the split
effected pursuant to Article IV, Section 2 above), or a combination of the
outstanding shares of Class B Common Stock into a lesser number of shares
of that class, or the declaration and payment of a stock dividend payable
in shares of Class B Common Stock on the outstanding shares of Class B
Common Stock, then, effective upon the effectiveness of such split,
division or combination, or upon the payment of such stock dividend, as the
case may be, the Differential shall be adjusted by multiplying the
Differential theretofore in effect by a fraction, the numerator of which is
the number of shares of Class B Common Stock outstanding immediately prior
to the effectiveness of such split, division or combination, or the payment
of such stock dividend, as the case may be, and the denominator of which is
the number of shares of Class B Common Stock outstanding immediately
following such split, division or combination, or the payment of such
dividend, as the case may be. The Differential as so adjusted shall be
rounded to the nearest tenth of a cent.
All cash dividend payments to a holder of Class B Common Stock on any payment
date with respect to all shares of Class B Common Stock held by such holder
shall be rounded to the nearest whole cent.
No stock dividend may be declared or paid on the outstanding shares of any class
of Common Stock unless payable in shares of that class, and no stock dividend
may be declared or paid on the outstanding shares of any class of Common Stock
unless, at the same time, a stock dividend, at the same rate, is declared and
paid on the outstanding shares of each class of Common Stock, payable in shares
of that class. The outstanding shares of any class of Common Stock shall not be
split or divided into more shares of that class, or combined into a lesser
number of shares of that class, unless, at the same time, the outstanding shares
of each class of Common Stock are similarly split, divided or combined.
(b) Voting. Except as otherwise provided in this Article IV and except as
otherwise required by law, the voting power of the corporation shall vest
in the holders of Class A Common Stock, the holder of each issued and
outstanding share of Class A Common Stock being entitled to one vote in
person or by proxy for each such share, on all matters requiring the vote
of shareholders, and the holders of Class B Common Stock shall not be
entitled by reason of their holdings thereof to any voice or vote in the
management or affairs of the corporation. Notwithstanding the foregoing,
the holders of Class B Common Stock at any time issued and outstanding
shall be entitled, as a class, (i) to elect, at each meeting of
shareholders at which directors are elected, one member of the Board of
Directors of the corporation but shall not be entitled to vote upon the
election of the remaining members of the Board of Directors of the
corporation, and (ii) to full voting powers at any meeting of the
shareholders of the corporation with respect to any proposed amendment to
this Article IV or with respect to any consolidation, merger, sale, lease,
exchange, mortgage, pledge or other disposition of all or substantially all
of its fixed assets, or the dissolution of the corporation. In addition to
the foregoing, the express terms and provisions of any class of Common
Stock shall not be changed without the affirmative vote of the holders of
at least a majority of the issued and outstanding shares of such class of
Common Stock.
(c) Conversion. Any record holder of shares of Class A Common Stock shall be
entitled, at any time or from time to time, to convert any or all of such
shares held by such holder into the same number of shares of Class B Common
Stock. A record holder desiring to effect the conversion of shares of
Class A Common Stock into shares of Class B Common stock shall furnish the
corporation with (i) a signed written notice of the intended conversion,
stating that such record holder desires to convert such shares of Class A
Common Stock into the same number of shares of Class B Common Stock and
requesting that the corporation issue all of such shares of Class B Common
Stock to such holder, and (ii) the certificate or certificates representing
the shares of Class A Common Stock to be converted, in proper form for
transfer. All Class A Common Stock surrendered for conversion hereunder
shall be cancelled and retired permanently and shall not be reissued.
(d) Dissolution. The Class A Common Stock and Class B Common Stock shall
participate equally per share in all distributions of assets of the
corporation upon voluntary or involuntary dissolution.
(e) Elimination of the Foregoing Provisions. If, at any time, the number of
issued and outstanding shares of Class A Common Stock shall constitute less
than 15% of the aggregate number of shares of Class A Common Stock and
Class B Common Stock then issued and outstanding or the corporation shall
not have paid any dividends on the Class B Common Stock for a period of
thirty-six consecutive calendar months, then thereupon, all of the rights,
preferences, limitations and restrictions set forth in this Section 3
relating to Class B Common Stock shall become the same as the rights,
preferences, limitations and restrictions of the Class A Common Stock
provided for herein, without any further action on the part of the
corporation or its shareholders, and all distinctions between Class A
Common Stock and Class B Common Stock shall thereupon and thereby be
eliminated, so that all shares of Class B Common Stock shall be equal to
shares of Class A Common Stock with respect to all matters, including
without limitation, dividend payments and voting rights and all holders of
shares of Class A Common Stock and Class B Common Stock shall vote as a
single class (except as otherwise required by applicable law) on all
matters submitted to a vote of the shareholders of the corporation;
provided, however, the right and power to convert any shares of Class A
Common Stock into shares of Class B Common Stock shall continue and, upon
written request from the corporation to all holders of Class A Common
Stock, such holders shall promptly take such steps as shall be necessary to
convert the shares of Class A Common Stock held by such holders into shares
of Class B Common Stock.
ARTICLE V
DIRECTORS
Section 1. Number of Directors. The number of directors of the
corporation shall be not less than seven (7) nor more than fifteen (15), as may
from time to time be specified in the By-Laws, and there shall be thirteen (13)
Directors whenever the By-Laws do not contain such authorized provision.
Section 2. Qualifications of Directors. Directors need not be
shareholders of the corporation. A majority of the Directors at any time shall
be citizens of the United States.
ARTICLE VI
PROVISIONS FOR REGULATION OF BUSINESS
AND CONDUCT OF AFFAIRS OF CORPORATION
The business and conduct of the affairs of the corporation shall be
regulated as follows:
(a) The corporate seal of this corporation shall be circular in form and shall
have around the circumference in raised letters and words "Kimball
International, Inc.," and in other respects shall be in such form and
device as the Board of Directors may determine. The directors may change
the form, device and inscription of the seal at pleasure.
(b) The shares of this corporation may be issued by the corporation for such
amount of consideration as may be fixed from time to time by the Board of
Directors.
(c) Meetings of the shareholders of the corporation shall be held at such
place, within or without the State of Indiana, as may be specified in the
respective notices, or waivers of notice, thereof.
(d) Meetings of the directors of the corporation shall be held at such place,
within or without the State of Indiana, as may be specified in the
respective notices, or waivers of notice, thereof.
(e) The Board of Directors of the corporation shall have power, without the
assent or vote of the shareholders, to make, alter, amend or repeal the
Code of By-Laws of the corporation, but the affirmative vote of a majority
of the members of the Board of Directors for the time being shall be
necessary to effect any alteration, amendment or repeal.
(f) The corporation reserves the right to amend, alter, change or repeal any
provisions contained in these Articles of Incorporation in the manner now
or hereafter prescribed by the provisions of the Corporation Law, or any
other pertinent enactment of the General Assembly of the State of Indiana;
and all rights and powers conferred hereby on shareholders, directors
and/or officers are subject to this reserved power.
(g) No contract or other transaction between this corporation and any one or
more members of the Board of Directors, or between this corporation and
another corporation, firm, partnership, joint venture, trust or other
enterprise of which any one or more such interested members are directors,
officers, shareholders, partners, members, employees or agents or in which
any one or more such interested members are financially interested, shall
be void or voidable because of such relationship or interest or because
such interested member or members are present at the meeting of the Board
of Directors at which such contract or transaction is authorized or
approved or because such interested member's or members' votes are counted
for such purposes, if (1) the fact of such relationship or interest is
disclosed or known to the disinterested members of the Board of Directors
who authorize, approve or ratify such contract or transaction by a vote or
consent sufficient for the purpose without counting the votes of such
interested member or members of the Board of Directors, or (2) the fact of
such relationship or interest is disclosed or known to the holders of
shares of this corporation and such holders authorize, approve or ratify
such contract or transaction by a vote or consent sufficient for the
purpose, or (3) such contract or transaction is fair and reasonable insofar
as this corporation is concerned. Such interested member or members of the
Board of Directors may be counted in determining the presence of a quorum
at a meeting of the Board of Directors at which such contract or
transaction is authorized, approved or ratified. This paragraph (g) shall
not be construed to invalidate any contract or other transaction which
would otherwise be valid under applicable common and statutory law.
(h) It is intended that this corporation may acquire and own wasting assets or
property having a limited life. The depletion of such assets by sale,
lapse of time or otherwise need not be deducted in the computation of
surplus available for dividends.
(i) Any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting, if
prior to such action the written consent thereto is signed by all members
of the Board or of such committee, as the case may be, and such written
consent is filed with the minutes of the proceedings of the Board or
committee.
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 25, 1997, 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 9:30A.M., Eastern Standard
Time, on Tuesday, October 28, 1997, 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 PROPOSALS 1 AND 2. PLEASE
MARK BOX N OR
1. ELECTION OF DIRECTOR 3. In their discretion,
/ / FOR the nominee listed DR. JACK R. WENTWORTH the Proxies are
authorized to vote
upon such other
business as may
properly come before
the meeting.
/ / WITHHOLD AUTHORITY
to vote for the nominee listed
2. Approval of proposed Restatement to the Articles of Incorporation of the
Company increasing the number of authorized shares of Class A Common Stock
to 50,000,000 shares, increasing the number of authorized shares of Class B
Common Stock to 100,000,000 shares, reducing the par value of both Classes
of Stock to $.05, increasing the dividend preference on the Class B Common
Stock to $.02 per share, effecting a two-for-one stock split and making
certain technical amendments.
/ / For / / Against / / Abstain
THE UNDERSIGNED HEREBY REVOKES ANY PROXY HERETOFORE
GIVEN AND ACKNOWLEDGES RECEIPT OF THE NOTICE AND PROXY
STATEMENT FOR THE ANNUAL MEETING.
Date: __________________________, 1997
___________________________________
(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.)
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 25, 1997, 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 28, 1997, 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 PROPOSALS 1 AND 2. PLEASE
MARK BOX N OR
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, Ronald J.
Thyen, Christine M. "Tina" Vujovich, Brian K. Habig, John T. Thyen, Alan B.
Graf, Jr., Gary P. Critser
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
___________________________________________________
2. Approval of proposed Restatement to the Articles of Incorporation of the
Company increasing the number of authorized shares of Class A Common Stock
to 50,000,000 shares, increasing the number of authorized shares of Class B
Common Stock to 100,000,000 shares, reducing the par value of both Classes
of Stock to $.05, increasing the dividend preference on the Class B Common
Stock to $.02 per share, effecting a two-for-one stock split and making
certain technical amendments.
/ / For / / Against / / Abstain
3. 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: ________________________________, 1997
___________________________________________
(Signature)
___________________________________________
(Signature)
(If 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.)