SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
LA-Z-BOY CHAIR COMPANY
(Name of Registrant as Specified In Its Charter)
LA-Z-BOY CHAIR COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii),14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)4 and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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:
<PAGE>
LA-Z-BOY CHAIR COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Monroe, Michigan
La-Z-Boy Chair Company: June 30, 1995
Notice is hereby given that the annual meeting of shareholders of
La-Z-Boy Chair Company will be held at the La-Z-Boy Chair Company Auditorium,
1314 North Telegraph Road, Monroe, Michigan, on Monday, July 31, 1995 at 11:00
o'clock A.M. Eastern Daylight Time for the following purposes:
(1) To elect four (4) directors of the Company to three year
terms expiring in 1998.
(2) To transact such other business as may properly come before
the meeting or any adjournments thereof.
A copy of the Annual Report, containing the financial statements of the
Company for the year ended April 29, 1995, is enclosed herewith.
Only shareholders of record at the close of business on June 23, 1995
will be entitled to notice of, and to vote at, the meeting.
Shareholders, whether planning to attend in person or not, are urged to
date, sign and return the enclosed proxy in the accompanying envelope, to which
no postage need be affixed if mailed in the United States. Even though you
sign and return the proxy, you may vote your shares in person by revoking the
proxy at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Gene M. Hardy, Secretary
<PAGE>
Monroe, Michigan
June 30, 1995
PROXY STATEMENT
The following statement is furnished in connection with the solicitation
of proxies by the Board of Directors of La-Z-Boy Chair Company to be used at
the annual meeting of shareholders to be held on Monday, July 31, 1995 and at
any adjournments thereof. The meeting will be held at the La-Z-Boy Chair
Company Auditorium, 1314 North Telegraph Road, Monroe, Michigan. The Board of
Directors knows of no business which will be presented to the meeting other
than the matters referred to in the accompanying Notice of Annual Meeting.
However, if any other matters are properly presented to the meeting, it is
intended that the persons named in the proxy will vote upon the same and act
in accordance with their judgment. Shares represented by properly executed
proxies in the form accompanying this proxy statement will be voted at the
meeting in the manner specified therein. If no instructions are specified in
the proxy, the shares represented thereby will be voted for the election of the
director nominees referred to under Proposal 1 on page 4. A proxy may be
revoked at any time insofar as it has not been exercised by executing and
returning a later proxy or by giving notice to the Company in writing or in
the open meeting. The Company's principal executive office is located at
1284 North Telegraph Road, Monroe, Michigan 48162.
As of June 23, 1995, there were 18,450,344 shares of the Common Stock,
$1.00 par value, of the Company ("common shares") issued and outstanding. Each
common share is entitled to one vote on each matter to be presented at the
meeting. Only shareholders of record at the close of business on June 23, 1995
will be entitled to vote at the meeting. There were no shares of preferred
stock issued and outstanding at the close of business on June 23, 1995.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Under rules adopted by the Securities and Exchange Commission, a person is
deemed to be the beneficial owner of the Company's common shares if he or she
has or shares the right to vote the shares or if he has or shares the
investment power over such shares. There may be, therefore, more than one
beneficial owner with respect to any share or group of shares. A person may
also be deemed to be the beneficial owner if he is the settlor of a trust with
a right to revoke the trust and regain the shares or has the power to acquire
shares by means of outstanding options or rights to convert other securities
into common shares.
The following information is furnished in compliance with these rules with
respect to security ownership of each person known to the Company to
beneficially own more than 5% of the Company's common shares as of June 23,
1995, based in each case on data provided by such person.
TABLE I
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
---------------------- ---------------------- ----------
Edwin J. Shoemaker
8 Sylvan Drive
Monroe, Michigan 48162................. 1,015,528(1) 5.504%
Monroe Bank & Trust
Monroe, Michigan 48161.................. 5,070,140(2) 27.480%
Mitchell Hutchins Institutional Investor Inc.
New York, NY 10019 .................. 1,477,100(3) 8.006%
__________
(1) Mr. Shoemaker beneficially owns and is the donor of a revocable trust
which holds 1,015,528 shares.
(2) Monroe Bank & Trust is the trustee of a number of revocable and
irrevocable trusts under which it, under certain conditions, has sole or shared
voting power over the above-mentioned shares. It may in certain instances have
sole or shared investment power with respect to such shares. The shares
referred to above include the shares identified in footnote (1) above as being
beneficially owned by Mr. Shoemaker, since Monroe Bank & Trust is the trustee
of his trust.
(3) Based on information contained in the named shareholders' Schedule 13G
dated February 13, 1995, filed pursuant to the Securities and Exchange Act of
1934 and based on information delivered to the Company by the named shareholder
in June 1995. The Schedule states that Mitchell Hutchins Institutional
Investor Inc. has shared voting and investment powers over all the shares
reported above and the shares were acquired for investment.
<PAGE>
Stock Ownership of Directors and Executive Officers
The following table sets forth information as to the common shares
beneficially owned as of June 23, 1995 by each director and each executive
officer of the Company, based in each case on data provided by such person.
TABLE II
Amount and Nature of Percent
Name Beneficial Ownership Of Class
------ ---------------------- ----------
Edwin J. Shoemaker ..................... 1,015,528 (1) 5.504%
Charles T. Knabusch .................... 717,507 (2) 3.888%
Lorne G. Stevens ....................... 29,202 (3) .158%
Frederick H. Jackson ................... 246,763 (4) 1.337%
Gene M. Hardy .......................... 176,706 (5) .958%
Patrick H. Norton ...................... 55,515 (6) .301%
Warren W. Gruber ....................... 3,200 (7) .017%
David K. Hehl .......................... 7,630 (8) .041%
John F. Weaver ......................... 158,700 (9) .860%
Rocque E. Lipford ...................... 3,500 (10) .019%
James W. Johnston ...................... 321,450 (11) 1.742%
Charles W. Nocella ..................... 23,739 (12) .129%
All Directors and Executive Officers
As A Group (12) ...................... 2,339,440 12.680%
__________
(1) See footnote 1 to Table I.
(2) Mr. Knabusch owns 202,455 shares of record and beneficially. He has
options to purchase 70,832 shares which are exercisable within 60 days of June
23, 1995. His wife owns 74,720 shares individually and as a trustee for their
children. He is also one of the members of the advisory committee of an
irrevocable trust holding 229,500 shares and as such has shared voting and
investment powers with respect to such shares. In addition, he has shared
investment power as a member of the Investment Committee under the Company's
Employees' Profit Sharing Plan which holds 140,000 shares. He may be deemed to
own all of such shares beneficially.
(3) Mr. Stevens owns 12,700 shares of record and beneficially and his
wife owns 16,502 shares of record and beneficially.
(4) Mr. Jackson owns 93,613 shares of record and beneficially and his
wife owns 800 shares of record and beneficially. He has options to purchase
12,350 shares which are exercisable within 60 days of June 23, 1995. In
addition, he has shared investment power as a member of the Investment
Committee under the Company's Employees' Profit Sharing Plan which holds
140,000 shares. He is deemed to own all of such shares beneficially.
(5) Mr. Hardy owns 20,011 shares of record and beneficially and he has
options to purchase 4,252 shares which are exercisable within 60 days of June
23, 1995. His wife owns 12,443 shares of record and beneficially.
In addition, he has shared investment power as a member of the
Investment Committee under the Company's Employees' Profit Sharing Plan which
holds 140,000 shares. He is deemed to own all of such shares beneficially.
(6) Mr. Norton owns 37,190 shares of record and beneficially and his wife
owns 5,975 shares. He has options to purchase 12,350 shares which are
exercisable within 60 days of June 23, 1995.
(7) Mr. Gruber owns 3,100 shares of record and beneficially. His wife
owns 100 shares of record and beneficially.
(8) Mr. Hehl owns 5,101 shares of record and beneficially. His wife owns
1,872 shares individually and their three sons own 657 shares of record and
beneficially.
<PAGE>
(9) Mr. Weaver owns 3,100 shares of record and beneficially and his wife
owns 15,600 shares. In addition, he has shared investment power as a member of
the Investment Committee under the Company's Employees' Profit Sharing Plan
which holds 140,000 shares. He is deemed to own all of such shares
beneficially.
(10) Mr. Lipford owns 2,700 shares of record and beneficially. His wife
owns 800 shares of record and beneficially.
(11) Mr. Johnston owns 268,465 shares of record and beneficially and his
wife owns 52,985 shares of record and beneficially.
(12) Mr. Nocella owns 8,404 shares of record and beneficially and his wife
owns 11,685 shares. He has options to purchase 3,650 shares which are
exercisable within 60 days of June 23, 1995.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers and
directors, and persons who own more than 10% of the Company's Common Stock, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Executive
officers, directors and greater than ten percent stockholders are required by
SEC regulations to furnish the Company with all copies of Section 16(a) forms
they file. Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that during the fiscal
year ended April 29, 1995, all filing requirements were complied with in a
timely fashion.
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, one
consisting of three directors and two consisting of four directors. Directors
serve for three-year, staggered terms, such that the terms of office of
directors comprising one of the classes expires each year. This year, four
directors are to be elected, to serve until the Company's annual meeting of
shareholders in 1997 or until their successors are elected and qualified.
Pursuant to applicable Michigan corporate law, assuming the presence of a
quorum, directors will be elected at the meeting from among those persons duly
nominated for such positions by a plurality of votes cast by holders of the
Common Stock who are present in person, or represented by proxy, and entitled
to vote at the meeting. Thus, for this year, those nominees who receive the
highest through fourth-highest numbers of votes for their election as directors
will be elected, regardless of the number of votes which for any reason,
including abstention, withholding of authority, or broker non-vote, are not
cast for the election of such nominees.
The Board's nominees for election as directors are the four current
directors whose terms expire with the 1995 annual meeting. In the absence of
other instruction, the persons named in the accompanying form of proxy intend
to vote in favor of these four nominees (or, if any such nominee should become
unable or unwilling to serve, which is not presently anticipated, for such
substitute nominee as is designated by the Board). The tables which follow
provide background information concerning each of the Board's nominees and each
other director of the Company whose term of office will continue beyond the
1995 annual meeting, and each executive officer who is not also a director.
NOMINEES FOR DIRECTOR FOR THREE YEAR TERM EXPIRING JULY, 1998
Director Business Experience
Name Age Since and Other Directorships
---- --- -------- -----------------------
Edwin J. Shoemaker 88 1941 Mr. Shoemaker has been Vice Chairman
of the Board and Executive and
Executive Vice President of
Engineering for more than five years.
Gene M. Hardy 58 1982 Mr. Hardy has been Secretary and
Treasurer of the Company for more
than five years.
David K. Hehl 48 1977 Mr. Hehl has been a partner in the
public accounting firm of Cooley Hehl
Wohlgamuth & Carlton PLLC, for
more than five years.
Rocque E. Lipford 56 1979 Mr. Lipford has been a principal
partner in the law firm of Miller,
Canfield, Paddock and Stone, P.L.C.,
since January 1994 and previously was
a partner of Miller, Canfield, Paddock
and Stone for more than five years.
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Director Business Experience
Name Age Since and Other Directorships
---- --- -------- -----------------------
Charles T. Knabusch 55 1970 Mr. Knabusch has been Chairman of the
Board and President of the Company for
more than five years.
John F. Weaver 78 1971 Mr. Weaver has been Executive Vice
President and a Director of Monroe Bank
& Trust for more than five years.
Frederick H. Jackson 67 1971 Mr. Jackson has been Vice President
Finance for more than five years.
Lorne G. Stevens 67 1972 On April 30, 1988, Mr. Stevens retired
from the Company as Vice President of
Manufacturing, a position he held for
more than five years.
Patrick H. Norton 73 1981 Mr. Norton has been Senior Vice
President, Sales and Marketing for more
than five years.
Warren W. Gruber 74 1981 Mr. Gruber has been President and Chief
Operating Officer and a Director of
Gruber Valu-World for more than five
years.
James W. Johnston 56 1991 Mr. Johnston has been a self-employed
financial and business consultant for
more than five years. He was appointed
a Director in January 1991.
NON-DIRECTOR EXECUTIVE OFFICERS
Name Age Business Experience
---- --- -------------------
Charles W. Nocella 63 Vice President of Manufacturing for
more than five years
BOARD OF DIRECTORS AND COMMITTEES
Edwin J. Shoemaker and Charles T. Knabusch may be deemed to be persons who
are in control of the Company.
During the Company's fiscal year ending April 29, 1995, the Board of
Directors held eleven meetings. Each director attended 100% of the total
number of meetings of the Board and of all committees on which he served. All
directors are in regular touch with the Company's affairs. Employee directors
receive a fee of $250 for each meeting of the Board of Directors attended.
Non-employee directors receive an annual retainer of $12,000 and a fee of $400
for each Board meeting and for each committee meeting attended.
<PAGE>
In addition, each non-employee director receives an initial grant of
30-day options on 1,500 common shares of Restricted Stock upon election to the
Board and a subsequent annual grant at the beginning of each fiscal year of
30-day options on 200 common shares of Restricted Stock. Such grants are made
pursuant to the La-Z-Boy Chair Company Restricted Stock Plan for Non-Employee
Directors approved by the shareholders effective September 1, 1989. The Plan
contemplates a present sale of the optioned shares at 25% of market value, but
provides restrictions on the transfer or other disposition of the shares by the
non-employee director during the restricted time, which expires upon the
earliest to occur of the following events: death or disability, retirement
from the Board, change of control, or termination of the participant's service
as a director with the consent of a majority of the Company's employee members
of the Board, all as defined in the Plan.
The Board of Directors has an Audit Committee and a Compensation
Committee.
The Audit Committee, which held two meetings during the fiscal year,
consists of Mr. Hehl, Chairman, and Messrs. Weaver, Gruber, Stevens and
Lipford, all of whom are non-employee Directors. The functions of the Audit
Committee are to recommend to the Board of Directors the firm of independent
accountants to serve the Company each fiscal year, to review the scope, fees
and results of the audit by independent accountants and to review the adequacy
of the Company's system of internal accounting controls and the scope and
results of internal auditing procedures.
The Compensation Committee, which held four meetings during the fiscal
year, consists of Mr. Weaver, Chairman, and Messrs. Hehl, Gruber and Lipford,
all non-employee directors. The functions of the Compensation Committee include
recommending to the Board of Directors remuneration of the officers of the
Company, recommending to the Board of Directors remuneration of the members of
the Board and of the Board Committees, and the administration of the Company's
executive incentive compensation and stock option plans.
The Board of Directors has no nominating committee. Nominations for
Director are considered by the entire Board.
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or earned by the
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers (the "named executives") during the last three
fiscal years.
SUMMARY COMPENSATION TABLE
<CAPTION> Long-Term
Annual Compensation Compensation
- -------------------------------------------------------------------- --------------------
Awards Payouts
--------- ----------
Incentive Long-Term
Stock Incentive
Other Annual Option Plan All Other
Name and Principal Salary(1) Bonus(2) Compensation Grants Payouts Compensation(4)
Position Year $ $ $ # $ $
- ------------------ ---- --------- -------- ------------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles T. Knabusch 1995 398,656 163,921 0 20,232 343,375(3) 75,142
Chairman of the Board 1994 386,625 264,046 0 22,500 0 70,913
President and Chief 1993 377,550 198,056 0 24,400 0 67,206
Executive Officer
Edwin J. Shoemaker 1995 131,340 38,721 0 0 0 23,426
Vice Chairman and 1994 127,345 62,373 0 0 0 17,347
Executive Vice President 1993 124,350 45,030 0 0 0 16,229
of Engineering
Frederick H. Jackson 1995 245,573 82,259 0 8,640 148,625(3) 46,836
Vice President Finance 1994 238,250 132,503 0 9,600 0 44,147
and Chief Financial 1993 232,550 97,180 0 10,500 0 41,055
Officer
Patrick H. Norton 1995 245,573 82,259 0 8,640 148,625(3) 46,819
Senior Vice President 1994 238,250 132,503 0 9,600 0 44,504
Sales & Marketing 1993 232,550 97,180 0 10,500 0 41,921
Charles W. Nocella 1995 154,140 52,216 0 4,140 71,750(3) 30,244
Vice President of 1994 149,650 84,111 0 4,600 0 28,566
Manufacturing 1993 146,050 61,688 0 5,000 0 26,645
__________
</TABLE>
(1) Includes, where applicable, amounts electively deferred by a named
executive under the Company's Matched Retirement Savings Plan, which is
a so-called "401(k)" plan, and directors' fees paid to the named
executives, where applicable, for attendance at La-Z-Boy Chair Company
Board of Directors' meetings.
(2) Allocated to named executives for the applicable fiscal year under the
Company's Executive Incentive Compensation Plan.
(3) Amount reported represents the aggregate closing market price on date of
grant (June 9, 1995) of shares of common stock awarded to the named
executive under the Company's 1993 Performance-Based Stock Plan in light
of performance goals achieved for the three-year Performance Period
ended April 29, 1995.
<PAGE>
(4) The amounts in this column include amounts allocated for the named
executives to the Supplemental Executive Retirement Plan (SERP), earnings
credited under the SERP, and Company matching contributions in the form of
Company stock to the Matched Retirement Savings Plan. Set forth below is
a breakdown of the totals contained in the Table for fiscal 1995:
Amounts allocated to the Supplemental Earnings credited on supplemental
Executive Retirement Plan of the retirement balances under the
Company were as follows: Company's Supplemental Executive
Retirement Plan were as follows:
1995 1995
------ ------
Charles T. Knabusch $59,386 Charles T. Knabusch $14,411
Edwin J. Shoemaker 19,288 Edwin J. Shoemaker 4,138
Frederick H. Jackson 36,423 Frederick H. Jackson 8,897
Patrick H. Norton 36,423 Patrick H. Norton 8,840
Charles W. Nocella 23,121 Charles W. Nocella 5,574
Contributions under the Company's
Matched Retirement Savings Plan
were as follows:
1995
------
Charles T. Knabusch $ 1,345
Edwin J. Shoemaker -0-
Frederick H. Jackson 1,516
Patrick H. Norton 1,556
Charles W. Nocella 1,549
<PAGE>
<TABLE>
The following table shows all stock options granted to each of the named
executive officers of the Company during fiscal year 1995 and the potential
realizable value of the grants assuming stock price appreciation rates of 5%
and 10% over the five-year term of the options.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants (1) Appreciation for Option Terms ($)(2)
-------------------------------------------------- --------------------------------------------
5% Per Year 10% Per Year
% of Total -------------------- ---------------------
Options Options Granted Exercise or Price Aggregate Price Aggregate
Granted To Employees Base Price Expiration Per Share Value Per Share Value
Name (#) In Fiscal Year ($/SH) Date ($/SH) ($) ($/SH) ($)
- ------------------- -------- --------------- ----------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles T. Knabusch 20,232 17.70 29.70 08/09/99 37.9056 766,906 47.8321 967,739
Edwin J. Shoemaker -0- -0- -0- N/A -0- -0- -0- -0-
Frederick H. Jackson 8,640 7.56 27.00 08/09/99 34.4596 297,731 43.4834 375,697
Patrick H. Norton 8,640 7.56 27.00 08/09/99 34.4596 297,731 43.4834 375,697
Charles W. Nocella 4,140 3.62 27.00 08/09/99 34.4596 142,663 43.4834 180,021
All Optionees 114,257 100.00 27.4777 08/09/99 35.0693 4,006,913 44.2531 5,056,226
_____________
(1) All of the above options were granted pursuant to the terms of the
Company's 1986 Incentive Stock Option Plan as approved by the shareholders
of the Company in 1986 and in effect as of the date of the grant.
One-fourth of the shares purchasable under each option normally becomes
exercisable beginning in the second, third, fourth and fifth years after
the date of the grant. However, under the terms of the agreements
described under "Certain Agreements" below, then outstanding options would
be accelerated upon the occurrence of a change in control. Options once
exercisable generally remain exercisable until the expiration of the fifth
year after the date of grant. In the event of the optionee's death or
retirement, the right to exercise the option will exist for a period of
one year following the date of such event for the full amount of shares
remaining unexercised. The optionee's right to exercise an option
immediately terminates in the event the optionee's employment terminates
for any reason other than death or retirement. The per share exercise
price at which the options were granted was 100% of the fair market value
of the Company's Common Stock on the date the options were granted, except
that in the case of options granted to Mr. Knabusch, such price was 110%
of fair market value on the grant date.
(2) The 5% and 10% rates of appreciation are required to be disclosed by the
Securities and Exchange Commission ("SEC") and are not intended to
forecast possible future actual appreciation, if any, in the Company's
stock prices. It is important to note that options have potential value
for the named executive only if the Company's stock price advances beyond
the exercise price shown in the table during the effective five-year
option period.
</TABLE>
<PAGE>
<TABLE>
The following table provides information as to stock options exercised by
each of the named executive officers in fiscal year 1995 and the value of the
remaining options held by each such executive officer at the Company's
year-end, April 29, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money Options
Options at Fiscal Year-End At Fiscal Year-End (2)
---------------------------- ----------------------------
Shares
Acquired Value
On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name # $(1) # # $ $
- ------------------- ----------- ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles T. Knabusch -0- -0- 70,832 58,410 468,636 83,030
Edwin J. Shoemaker -0- -0- -0- -0- -0- -0-
Frederick H. Jackson 8,925 103,219 12,350 22,165 69,128 35,087
Patrick H. Norton 8,925 103,219 12,350 22,165 69,128 35,087
Charles W. Nocella 2,350 31,431 3,650 10,815 13,125 18,200
- --------------
(1) Based on the closing market price of the Company's Common Stock on the
date of exercise, minus the exercise price. An individual, upon exercise
of an option, does not receive cash equal to the amount contained in the
Value Realized column of this table. No cash is realized until the shares
received upon exercise of an option are sold.
(2) Based on the closing market price of the Company's Common Stock at fiscal
1995 year end ($27.00), minus the exercise price.
</TABLE>
<PAGE>
LONG-TERM INCENTIVE COMPENSATION UNDER THE
LA-Z-BOY CHAIR COMPANY 1993 PERFORMANCE-BASED STOCK PLAN
At the 1993 Annual Meeting, shareholders approved a long-term incentive
compensation plan designated as the La-Z-Boy Chair Company 1993 Performance-
Based Stock Plan (the "Performance Plan"). The purpose of the Performance Plan
is to provide the Company and its subsidiaries with an additional means to (a)
attract and retain competent new personnel and other key employees, (b) insure
retention of the services of existing executive personnel and key employees,
and (c) provide incentive to all such personnel to devote their utmost effort
and skills to the long-term advancement and betterment of the Company and its
shareholders. The Performance Plan seeks to accomplish that purpose through
the grant to selected employees of contingent awards ("Target Awards") the
potential pay-outs on which ("Performance Awards") are linked to achievement by
the end of a cycle of three Company fiscal years (a "Performance Cycle") of
Company performance goals specified toward the beginning of the Performance
Cycle, and by structuring all Performance Awards which may be earned as options
to purchase or outright grants of Company Common Stock. For each recipient of
a Target Award for a given Performance Cycle, his maximum Performance Award
potential, which is awarded after the end of the cycle if all of performance
goals are achieved, is a grant of shares equal to twice the base number of
shares established by the Compensation Committee with respect to that Target
Award; the minimum potential Performance Award, for achievement of only one
performance goal during the cycle, is a 30-day option to purchase the base
number of shares at 50% of their fair market value at date of grant of the
Target Award.
For Target Awards granted by the Compensation Committee with respect to
the Performance Cycle that ended at the close of 1995 (which were reported in
the Company's 1993 proxy material), the Compensation Committee established four
uniform financial goals, each relating to the operating performance of the
Company and its consolidated subsidiaries for that cycle: (1) sales growth
at a rate greater than that of the residential furniture industry, (2) an
increase in earnings before income tax equal to or greater than sales growth,
(3) operating profit margin growth at a rate equal to or greater than sales
growth, and (4) return on total capital at a specified rate, and the Committee
subsequently elected to follow the same practice for its grants of Target
Awards for the cycle ending in 1997 (all of which occurred during fiscal 1994
and accordingly were reported in last year's proxy material). Since the
Committee already had granted Target Awards for the cycle ending in 1997, no
Target Award grants were made during fiscal 1995.
<PAGE>
CERTAIN AGREEMENTS
The Company recognizes that establishing and maintaining a strong
management team are essential to protecting and enhancing the interests of the
Company and its shareholders. In order to assure management stability and the
continuity of key management personnel, the Company has entered into change in
control agreements with certain key employees including, among others, all
current executive officers. The employees eligible for change in control
agreements are those selected by the Compensation Committee. These agreements,
which were unanimously approved by the Board of Directors, provide that if any
of such persons is terminated, other than for cause, disability, death or
retirement, within three years after a change in control of the Company, that
person shall be entitled to receive a lump sum severance payment equal to three
times the sum of (i) his annualized salary and (ii) an amount equal to the
average bonus paid to the employee in the previous three years, as well as
certain other payments and benefits, including continuation of employee welfare
benefit payments, and reimbursement of certain legal fees and expenses incurred
by such employee in connection with enforcing such agreement following a change
in control. In consideration of the foregoing, each of such persons agrees to
remain in the employ of the Company during the pendency of any proposal for a
change in control of the Company. The agreements expire December 31, 1995 and
are automatically renewed for additional one-year periods unless either party
gives 90 days' notice that it does not wish to extend the agreement. In the
event of a change in control, the agreements are automatically extended for
36 months.
All of these agreements originally were entered into prior to 1993, but it
is possible none of them would be eligible for "grandfathering" for purposes of
$1,000,000 compensation deductibility limit imposed August 1993 by enactment of
$162(m) of the Internal Revenue Code (further discussed under "Report of the
Compensation Committee on Executive Compensation"), due to the renewal feature
of the agreements. Therefore, if a payment obligation under an agreement is
triggered by termination after a change in control, it also is possible that a
substantial portion of the amount payable will not be deductible by the Company.
<PAGE>
PERFORMANCE COMPARISON
The following graph provides an indicator of the return for the Company's
last five fiscal years that would have been realized (assuming reinvestment of
dividends) by an investor who invested $100 on April 27, 1990 in each of (i)
the New York Stock Exchange Index, (ii) a Peer Group of publicly traded
furniture industry companies, and (iii) the Company's Common Stock.
La-Z-Boy Chair Company
Comparison of Total Return to Shareholders
April 27, 1990 through April 28, 1995
1990 1991 1992 1993 1994 1995
------ ------ ------ ------ ------ ------
LA-Z-BOY CHAIR COMPANY 100.00 111.98 127.02 155.25 189.50 156.32
PEER GROUP INDEX 100.00 99.92 128.34 152.85 153.87 139.16
NYSE MARKET INDEX 100.00 117.11 131.94 146.09 156.69 175.37
Peer Group Index
The Peer Group consists of seven public companies operating primarily in
the residential segment of the furniture industry and two other larger public
companies which operate in that business segment as well as in other business
segments. The returns of each company have been weighted according to their
respective stock market capitalization for purposes of arriving at a peer group
average: RESIDENTIAL - Bassett Furniture, Bush Industries, DMI Furniture,
Flexsteel Industries, LADD Furniture, Pulaski Furniture, and Rowe Furniture;
OTHERS - MASCO Corporation and Leggett & Platt.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of the Chief Executive Officer and other four highest
paid executive officers, as well as the corporation's other senior executives
at La-Z-Boy and all subsidiaries, is determined by the Compensation Committee
of the Board of Directors. The Committee is a standing committee of the Board
of Directors which is comprised entirely of non-employee directors. The
Committee has access to an independent compensation consultant to enable it to
carry out its responsibilities. The Compensation Committee met four times in
fiscal 1995. No member of the Committee is eligible to participate in any of
the employee compensation plans or programs it administers. The Committee
presents the following report on compensation for the Company's executive
officers for fiscal 1995. Actual awards for fiscal year 1995 for the named
executives are shown in the Summary Compensation Table preceding this report.
Compensation Philosophy
- -----------------------
The Company's executive compensation programs are premised on the belief
that the interests of executives should be closely aligned with those of the
Company's stockholders. Based on this philosophy, the Committee believes that
a substantial portion of the aggregate potential compensation of executive
officers should be directly and materially linked to the Company's operating
performance. Consequently, a significant portion of each executive's total
compensation is placed at risk and linked to the accomplishment of specific
results which will benefit the Company's stockholders in both the short and
long-term. Since the achievement of performance objectives over time is a
primary determinant of share price, executive compensation is weighted heavily
on the basis of performance and achievement of these goals. Under this
performance orientation:
* Executives are motivated to improve the overall performance and
profitability of the Company by rewarding them when specific,
measurable results have been achieved.
* Accountability is further encouraged by incentive awards on the basis
of executives' performance and contribution against defined short and
long term goals.
* In years when corporate performance has been superior, executives
will be well compensated, which will permit the Company to attract
and retain the talent needed to lead and grow its business;
conversely, in years of below average performance, compensation
declines below competitive benchmarks.
* The compensation strategy will support business goals and direction
and specifically link executive and shareholder interests through
equity-based plans linked to the Company's common stock.
* The Company's compensation policy will maximize growth-driven
financial performance, balancing appropriately the short and long
term goals of the Company.
<PAGE>
Compensation Plan Generally
- ----------------------------
In carrying out its duties, the Committee regularly reviews the executive
compensation programs of the Peer Group identified under "Performance
Comparison" and of various manufacturing companies of similar size whose
executives have similar responsibilities and operations. In fiscal 1995,
this review included an analysis by an independent compensation consultant
retained by the Company to permit the Committee to assure itself that the
Company's total compensation program is properly integrated with both the
Company's annual and longer term objectives and is competitive with
compensation programs of other companies with which the Company must directly
compete for executive talent.
The chief components of the Company's executive compensation program are
salary, annual cash incentive bonuses, and long-term incentives utilizing
stock-based awards. As it has done in prior years, in making its compensation
decisions for 1995, the Compensation Committee considered these components as a
whole and sought to balance the total compensation package between the more
stable salary portion and the "at risk" incentive portions so that a substantial
percentage of the total potential compensation of each executive, and
particularly that of the CEO, would be dependent on the achievement of Company
long and short-term strategic goals and increases in value of the Common Stock.
Information concerning other factors bearing on the Committee's 1995 executive
compensation decisions relating to particular components is provided below.
Except as otherwise indicated in this report, the 1995 salary, short-term
incentive bonus, and long-term incentive awards to Mr. Knabusch were determined
by the Committee based on the same policies and after consideration of the same
factors as were applied by the Committee with respect to the other executive
officers of the Company.
Salary
- ------
Consistent with past practice, in considering adjustments to the salaries
of executive officers for 1995, the Committee reviewed with the independent
compensation consultant retained to advise it the results of various surveys of
salaries being paid to executives at other companies (including, where
available, Peer Group companies and other companies considered potential
competitors for the services of Company executives) and a report prepared by
the consultant assigning a range of salaries for each executive, based on the
survey data and his position with the Company. The Committee then considered
whether the performance of each executive considered in the context of Company
financial results, any changes in the scope of any executive's
responsibilities, or any other special factors concerning any executive were
such as might call for a departure from the Committee's general practice in
recent years, which has been to establish executive salaries at approximately
90% of the midpoint of the salary range for their respective positions as
reported for the year by the compensation consultant.
Based on the foregoing considerations, the Compensation Committee
determined uniformly to follow its prior practice for 1995 and, accordingly,
adjusted the salary of each executive, including Mr. Knabusch, to approximately
90% of the midpoint for his position as reflected in the compensation
consultant's 1995 report to the Committee. The salary amounts so established
for Mr. Knabusch and the other executives named in the Summary Compensation
Table preceding this report are provided in that table.
<PAGE>
Short-Term Incentive Awards
- ---------------------------
Annually, the Compensation Committee establishes short-term performance
criteria for the management incentive plan. Performance criteria include such
areas as growth in revenue and improved earnings. The specific focus and
weighing of the criteria is based on the Committee's assessment of the key
short-term priorities of the corporation. The performance criteria are
established at the start of the fiscal year or as shortly thereafter as
possible. The target and maximum award opportunity for each executive is based
on competitive data provided by the independent compensation consultant. The
award paid is based on actual results compared to the established performance
targets. For Fiscal 1995, the maximum award opportunity available for each
executive named in the Summary Compensation Table was 77% of his salary for the
CEO and 63% of his salary for each of the other named executives. The
performance criteria for fiscal 1995 were improvement in sales revenue and
net earnings. One-third of the award was based on sales revenue and two-thirds
was based on earnings. This weighing is the result of the Board's continuing
emphasis on improving earnings. For fiscal 1995, the Company's consolidated
sales revenue increased 6% over fiscal 1994, and the Company's net earnings
for fiscal 1995 increased 5% over fiscal 1994. Based on the sliding scale of
performance goals established prior to the start of the fiscal year, the
Company's financial performance resulted in the bonus payments as set forth in
the Summary Compensation Table. The annual incentive awards paid to the CEO
and the other executives named in the table were based exclusively on the
overall corporate performance using the system described above.
Long-Term Incentives
- --------------------
The Company and the Compensation Committee have long recognized the
importance of linking executive compensation and value created for
shareholders. Consequently, stock-based awards are an important component of
executive compensation and one which particularly links executive compensation
to the maximization of shareholder values. For fiscal 1995, stock-based awards
were potentially available to executive officers and other management personnel
under the Performance Plan approved by the shareholders in 1993, as well as
under the Company's previously established and approved employee stock option
and restricted stock plans. However, consistent with a policy previously
adopted by the Committee after the Performance Plan was approved, the
Compensation Committee determined not to make any 1995 grants of restricted
stock to any executive officers or other employees eligible to receive Target
Awards under that plan.
When considering the grant of 1995 incentive stock options to executive
officers, the Compensation Committee primarily was concerned with achieving an
appropriate balance between such stock-based awards, and the salary and short-
term incentive compensation components of executive compensation under
consideration for the year. Toward that end, the Committee relied heavily on
survey data and the advice of the independent compensation consultant concern-
ing the practices in this area followed by other companies (including
Peer Group companies and other potential competitors for executives) and the
consultant's recommendations for achieving comparable allocation results,
which were based on that data and the consultant's analyses and estimates of
the present and potential future value of the Company's stock-based awards.
The Committee also considered the compensation opportunity that had been
afforded executives near the end of the prior fiscal year through the grant of
Target Awards under the Performance Plan for the Performance Cycle ending in
1997 and the availability of the Performance Plan for subsequent grants of
Target Awards to executives. Based on the factors described above, the
Committee determined to grant options on 20,232 shares to the CEO at an
exercise price equal to 110% of market value at date of grant and options at
a market value exercise price to certain other named executives, all as more
fully described in the option grant table preceding this report.
<PAGE>
The Performance Awards under the Performance Plan reported as 1995 long-
term incentive plan payouts in the Summary Compensation Table were awarded to
the named executives after the close of fiscal 1995 for the three-year
Performance Cycle then ended (the "1995 cycle"). As discussed above under
"Long-Term Incentive Compensation under the La-Z-Boy Chair Company 1993 Stock-
Based Performance Plan," the Compensation Committee previously had established
four uniform performance goals for each of the Target Awards relating to that
cycle, and all four of those goals were achieved. Accordingly, pursuant to
the terms of the Performance Plan, each recipient of a Target Award for that
cycle received from the Compensation Committee a grant of shares of Common
Stock equal to twice the base number of shares reflected in his Target Award
for the cycle. The numbers of shares so granted to executives named in the
Summary Compensation Table were as follows: Mr. Knabusch, 13,400 shares; Mr.
Jackson, 5,800 shares; Mr. Norton, 5,800 shares; Mr. Nocella, 2,800 shares.
Limits on Compensation Deduction under Sec-162(m)
- -------------------------------------------------
In August 1993, the Internal Revenue Code was amended to add a new Sec-162
(m), which, in general, limits the deductibility of certain compensation in
excess of $1,000,000 per year paid on or after January 1, 1994 by a publicly-
held corporation to individuals named in the corporation's Summary
Compensation Table for the year. Proposed regulations concerning Sec-162 (m)
were issued by the Internal Revenue Service in December 1993 and revised
proposed regulations were issued last December.
Some types of compensation are excluded from the million-dollar deduction
limit imposed by 162(m), including certain compensation payable under
"grandfathered" agreements entered into before the section was enacted and
certain "performance-based" compensation. Compensation associated with stock
options or their exercise can qualify for a performance-based exclusion, as
can compensation awarded on the basis of objective performance criteria,
provided certain requirements are satisfied.
While there necessarily is some uncertainty in this area in the absence of
final regulations, the Committee believes that Sec-162(m) does not adversely
affect deduction by the Company of any fiscal 1995 compensation and does not
expect the section to adversely affect deduction of compensation for the
current year. The Committee also believes that the deductibility of any
compensation that might arise in connection with exercises of currently
outstanding employee stock options will not be adversely affected by
Sec-162(m), and it expects in due course to take or propose such additional
actions as may be necessary or appropriate to preserve such deductibility with
respect to options granted in the future.
However, as noted under "Certain Agreements," compensation payable in the
future under the change of control agreements there discussed may not be fully
deductible under Sec-162(m). In addition, despite the use of objective
performance criteria under the Performance Plan, it is possible that some of
the compensation associated with Performance Awards earned in the future with
respect to Target Awards previously or hereafter granted may prove to be non-
deductible.
<PAGE>
The availability of tax deductions is taken into account by the Committee
as it reviews existing compensation programs and considers whether changes
should be implemented or new programs developed. However, as in other areas
affecting the Company, there can be situations in which, due to other factors,
the interests of shareholders are best served by a compensation practice or
arrangement which may not be fully deductible. Consequently, while the
Committee has considered and expects to continue to consider the impact of
Sec-162(m) in the course of its deliberations, the section's deduction limits
are unlikely always to determine the outcome of those deliberations.
Rather, the Committee's decisions and recommendations will continue to be made
with the goal of maximizing the creation of long-term shareholder value within
the framework of the general compensation philosophy described above.
The Compensation Committee
John F. Weaver, Chairman
David K. Hehl
Rocque E. Lipford
Warren W. Gruber
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The above named non-employee directors constitute the Compensation
Committee of the Company's Board of Directors and served in that capacity for
the entire 1995 fiscal year. No other persons served on the Compensation
Committee during that fiscal year.
John F. Weaver is an Executive Vice President of Monroe Bank & Trust.
Charles T. Knabusch, Chairman of the Board, President and CEO of the Company is
a member of the Board of Directors of Monroe Bank & Trust and serves as a
member of the Personnel Committee of the Bank.
The law firm of Miller, Canfield, Paddock and Stone, P.L.C., of which
Rocque E. Lipford is a principal, provides legal services to the Company and
has done so for the past 15 years.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors, at the recommendation of its Audit Committee, has
reappointed the firm of Price Waterhouse LLP as its independent accountants.
Price Waterhouse has served as independent accountants for the Company
continuously since 1968. It is expected that a representative of Price
Waterhouse will be present at the annual shareholders' meeting with the
opportunity to make a statement if he or she desires and to answer appropriate
questions which may be raised by shareholders at the meeting.
SHAREHOLDER PROPOSALS
Shareholders who intend to present a proposal at the annual meeting to be
held in 1996 must furnish such information to the Company by March 2, 1996 for
the proposal to be included in the Company's proxy statement for that meeting.
The Company may omit a proposal and any statement in support thereof from its
proxy statement and form of proxy in accordance with rules issued by the
Securities and Exchange Commission.
OTHER MATTERS
The Management is not aware of any other matters which may come before the
meeting. However, if any other matters properly come before the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxy in accordance with their judgment on such matters.
The total expense of sending out notices, proxies and the proxy statement
will be paid by the Company. This expense is limited to the cost of preparing
and mailing this proxy statement and accompanying documents.
Please execute and return the accompanying proxy, so that your shares may
be voted at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Gene M. Hardy, Secretary
Monroe, Michigan
June 30, 1995
A copy of the Company's Annual Report to the Securities and Exchange
Commission (Form 10-K) may be obtained by writing the Secretary's office.
<PAGE>
LA-Z-BOY CHAIR COMPANY PROXY
The undersigned hereby appoints C.T. Knabusch, and E.J. Shoemaker, and
both of them Proxies with power of substitution to attend the Annual Meeting
of Shareholders of La-Z-Boy Chair Company to be held at the La-Z-Boy Chair
Company Auditorium, 1314 North Telegraph Road, Monroe, Michigan, July 31, 1995
at 11:00 o'clock A.M., Eastern Daylight Time and any adjournment thereof, and
thereat to vote all shares now or hereafter standing in the name of the
undersigned.
(Continued TO BE SIGNED on other side)
[X] Please mark your
votes as in this
example.
WITHHOLD Authority
to vote for all
FOR all nominees nominees listed
listed to right to right Nominees:
1. Election of [ ] [ ] Edwin J. Shoemaker
Directors Eugene M. Hardy
David K. Hehl
Rocque E. Lipford
(INSTRUCTIONS: To withhold authority to vote for any individual nominees,
write that nominee's name on the line below.)
- ----------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted for
all director nominees listed.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Please mark, sign, date, and return the proxy card using the enclosed envelope.
SIGNATURE__________________________________________DATE_______________________
Signature should agree with name(s) on stock certificate(s).
SIGNATURE__________________________________________DATE_______________________
Signature should agree with name(s) on stock certificate(s).
NOTE: When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please
sign in partnership name by authorized person.
