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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
HERMAN MILLER, INC.
- - -------------------------------------------------------------------------------
(Name of Registrant as specified in its charter)
HERMAN MILLER, INC.
- - -------------------------------------------------------------------------------
(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 transactions 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:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, schedule, or registration statement no.:
------------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------------
(4) Date filed:
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PROXY STATEMENT 1994
Herman Miller, Inc.
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
HERMAN MILLER, INC., Zeeland, MI 49464-0302, Telephone 616 654 3000
To our Shareholders:
The annual meeting of the shareholders of Herman Miller, Inc. (the "company"),
will be held at the company's Midwest Distribution Center, 10001 Adams Street,
Holland, Michigan, on Thursday the 6th of October, 1994, at 4:00 p.m. (E.D.T.)
for the following purposes:
1. To elect four directors, each for a term of three years.
2. To consider and act on the proposal to approve the Herman Miller, Inc., 1994
Long-Term Incentive Plan.
3. To consider and act on the proposal to approve the Herman Miller, Inc.,
1994 Non-Employee Officer and Director Stock Option Plan.
4. To consider and act on the proposal to approve the Herman Miller, Inc., 1994
Key Executive Stock Purchase Assistance Plan.
5. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen & Co. as independent public accountants for the company for the
fiscal year ending June 3, 1995.
6. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Shareholders of record at the close of business on August 8, 1994, will
be entitled to vote at the meeting. Whether or not you expect to be present
at this meeting, you are urged to sign the enclosed proxy and return it
promptly in the enclosed envelope. If you do attend the meeting and wish to
vote in person, you may do so even though you have submitted a proxy.
By order of the Board of Directors
James N. DeBoer, Jr., Secretary of the Board
August 22, 1994
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PROXY STATEMENT AUGUST 22, 1994
HERMAN MILLER, INC., 855 East Main Avenue, PO Box 302, Zeeland, MI 49464-0302
This proxy statement is furnished to shareholders of Herman Miller, Inc. (the
"company"), in connection with the solicitation by the Board of Directors of
proxies to be used at the annual meeting of shareholders. This meeting will be
held on Thursday, October 6, 1994, at 4:00 p.m. (E.D.T.) at the company's
Midwest Distribution Center, 10001 Adams Street, Holland, Michigan.
SOLICITATION OF PROXIES
Each shareholder, as an owner of the company, is entitled to vote on matters
scheduled to come before the annual meeting. The use of proxies allows a
shareholder of the company to be represented at the annual meeting if he or she
is unable to attend the meeting in person. The proxy card accompanying this
proxy statement is to be used for such purpose.
If the proxy card is properly executed and returned to the company, the
shares represented by the proxy will be voted at the annual meeting of
shareholders and at any adjournment of that meeting. Where shareholders specify
a choice, the proxy will be voted as specified. If no choice is specified, the
shares represented by the proxy will be voted for the election of all nominees
named in the proxy and for each of the proposals described in this proxy
statement.
A proxy may be revoked prior to its exercise by (1) delivering a
written notice of revocation to the Secretary of the company, (2) executing a
proxy at a later date, or (3) attending the meeting and voting in person.
However, attendance at the meeting does not automatically serve to revoke a
proxy.
ELECTION OF DIRECTORS
The company's Articles of Incorporation and Bylaws provide for the division of
the Board of Directors into three classes of nearly equal size, with the
directors of each class to hold office for staggered three-year terms. At the
annual meeting, four directors are to be elected to the class of directors
whose term of office expires at the 1997 annual meeting. The Board of Directors
has nominated William K. Brehm, C. William Pollard, Ruth Alkema Reister, and
Richard H. Ruch for election to serve as members of that class. Each of the
nominees previously has been elected as a director by the company's
shareholders. The latter portion of this proxy statement contains more
information about the nominees.
Unless otherwise directed by a shareholder's proxy, the persons named
as proxy voters in the accompanying proxy will vote for the nominees named
above. If any of the nominees become unavailable, which is not anticipated, the
Board of Directors, at its discretion, may designate substitute nominees, in
which event the enclosed proxy will be voted for such substituted nominees.
Proxies cannot be voted for a greater number of persons than the number of
nominees named.
A plurality of the votes cast at the meeting is required to elect the
nominees as directors of the company. Accordingly, the four individuals who
receive the largest number of votes cast at the meeting will be elected as
directors for the class whose term of office is to expire at the 1997 annual
meeting. Shares not voted at the meeting, whether by abstention, broker
nonvote, or otherwise, will not be treated as votes cast at the meeting. The
Board of Directors recommends a vote FOR the election of all persons nominated
by the board.
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VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
On August 8, 1994, the company had 24,595,375 shares of common stock issued and
outstanding, par value $.20 per share. Shareholders are entitled to one vote
for each share of common stock registered in their names at the close of
business on August 8, 1994, the record date fixed by the Board of Directors.
Votes cast at the meeting and submitted by proxy will be tabulated by the
company's transfer agent.
As of August 8, 1994, no person was known by management to be the
beneficial owner of more than 5 percent of the company's common stock, except
as follows:
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Amount and Percent
Nature of of Class
Beneficial Ownership
<S> <C> <C>
FMR Corp. 3,746,800(1) 15.23%
82 Devonshire Street, Boston, Massachusetts 02109
Trimark Investment Management, Inc. 2,410,000(2) 9.80%
One First Canadian Place, Suite 5600,
PO Box 487, Toronto, Ontario M5X 1E5
Ariel Capital Management, Inc. 1,324,030(3) 5.38%
307 North Michigan Avenue, Chicago, Illinois 60601
</TABLE>
(1) This information is derived from notification received by the company from
the beneficial owner, including notice that it has sole voting power as to
1,501,000 shares and sole dispositive power as to 3,746,800 shares.
(2) This information is derived from notification received by the company from
the beneficial owner, including notice that it has sole voting and
dispositive power as to 2,410,000 shares.
(3) This information is derived from notification received by the company from
the beneficiaI owner, including notice that it has sole voting power as to
828,000 shares and sole dispositive power as to 1,324,030 shares.
DIRECTOR AND EXECUTIVE OFFICER INFORMATION
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of August 8, 1994, the number of shares
beneficially owned by each of the Named Executives identified in the executive
compensation tables of this proxy statement and by all directors and executive
officers as a group. Except as described in the notes following the table, the
following persons have sole voting and dispositive power as to all of their
respective shares.
<TABLE>
<CAPTION>
Named Executive Amount and Percent
Nature of of Class(4)
Beneficial Ownership(1)
<S> <C> <C>
J. Kermit Campbell 110,722(2) .44%
Philip J. Mercorella 111,523 .44%
Gary J. TenHarmsel 57,710 .23%
Gary S. Miller 53,610 .21%
Robert A. Harvey 65,259 .26%
All executive officers and directors as a
group (21 persons) 927,346(3) 3.68%
</TABLE>
(1) Includes the following numbers of shares with respect to which the Named
Executives have the right to acquire beneficial ownership under stock
options exercisable in 60 days: Mr. Campbell-27,000;
Mr. Mercorella-83,750; Mr. TenHarmsel-43,500; Mr. Miller-48,000; and
Mr. Harvey-62,500.
(2) Included in this number are 45,000 shares of restricted stock granted to
Mr. Campbell which are subject to forfeiture under certain conditions.
(3) Included in this number are 585,750 shares with respect to which executive
officers and directors have the right to acquire beneficial ownership under
options exercisable within 60 days.
(4) Calculated based on the number of shares outstanding plus the shares
referred to in note (3) above.
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THE BOARD OF DIRECTORS
The information in the following table relating to each nominee's and
director's age, principal occupation or employment for the past five years, and
beneficial ownership of shares of common stock as of August 8, 1994, has been
furnished to the company by the respective nominees and directors. Except as
described in the notes following the table, the following nominees and
directors have sole voting and dispositive power as to all of the shares set
forth in the following table.
<TABLE>
<CAPTION>
Name and Principal Occupation Age Year First Shares Percent
Became a Owned(i) of Class
Director
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING IN 1997
<S> <C> <C> <C> <C>
William K. Brehm 65 1991 4,500 .02%
Chairman of the Board SRA International, Inc. (Consulting Engineering Firm)
C. William Pollard 56 1985 19,749(2) .08%
Chairman of the Board and Chief Executive Officer, The ServiceMaster Company
(Management and Consumer Services for Health Care, Industrial, and Educational
Facilities)
Ruth Alkema Reister 58 1985 13,436(3) .05%
Private Investments and Civic and Charitable Activities
Richard H. Ruch 64 1986 137,505(4) .55%
Since March 1992 -- Vice Chairman of the Board of Directors, Herman Miller,
Inc.; Prior to April 1992 -- President and Chief Executive Officer,
Herman MIller, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 1995
J. Kermit Campbell 55 1992 110,722(5) .44%
Since April 1992 -- President and Chief Executive Officer, Herman
Miller, Inc.; Prior to April 1992 -- Group Vice President,
Dow Corning Corp. (Silicone Manufacturing and Marketing)
Dr. E. David Crockett 58 1982 15,300 .06%
Since November 1993 -- Chairman, Cornerstone Imaging, Inc.
(Document Image Processing) Prior to November 1993 -- General Partner,
Aspen Ventures (Venture Capitalists);
David L. Nelson 64 1972 16,600(6) .07%
Since January 1994 -- Vice President, Customer Support, America's Region
Asea, Brown, Boveri, Inc.
Prior to January 1994 -- Vice President, Customer Satisfaction,
Industry Segment, Asea, Brown, Boveri, Inc.
(Manufacturer of Computerized Equipment for Measuring and
Controlling Industrial Processes)
Charles D. Ray, M.D. 66 1977 16,530(7) .07%
Chairman of the Board of Directors, Ray Medica, Inc.
(Formerly The CeDaR Companies, Inc.)
(Development and Manufacturer of Health Care Products)
DIRECTORS WHOSE TERMS EXPIRE IN 1996
Max O. DePree 69 1950 64,117(8) .25%
Chairman of the Board of Directors, Herman Miller, Inc.
Dr. Alan M. Fern 63 1983 10,800 .04%
Director, National Portrait Gallery, Smithsonian Institution
Brian Griffiths, Lord Griffiths of Fforestfach 52 1991 4,500 .02%
Since 1990 -- International Advisor, Goldman Sachs International Limited
(International Investment Banking Firm);
Prior to 1990 -- Government Service, United Kingdom
</TABLE>
(1) Shares shown for each director who is not an officer of the company
include 13,500 shares for Messrs. Crockett, Nelson, and Ray, 12,000 shares
for Ms. Reister and Mr. Pollard, 10,500 shares for Dr. Fern, and 4,500
shares for Messrs. Brehm and Griffiths with respect to which the director
has the right to acquire beneficial ownership under options exercisable
within 60 days. Percentages are calculated based upon shares outstanding,
plus shares which the directors have the right to acquire under stock
options exercisable within 60 days.
(2) Excludes 403 shares owned of record and beneficially by Mr.
Pollard's wife. Mr. Pollard disclaims beneficial ownership of these shares.
(3) Excludes 600 shares owned by Mrs. Reister's husband. Mrs. Reister
disclaims beneficial ownership of these shares.
(4) Includes 57,500 shares with respect to which Mr. Ruch has a right
to acquire beneficial ownership under options exercisable within 60 days and
4,800 shares of restricted stock which are subject to forfeiture under
certain conditions. In addition, Mr. Ruch's wife owns 7,200 shares which
are excluded from the table and as to which Mr. Ruch disclaims beneficial
ownership.
(5) Includes 27,000 shares with respect to which Mr. Campbell has the
right to acquire beneficial ownership under options exercisable within 60
days and 45,000 shares of restricted stock granted to Mr. Campbell which
are subject to forfeiture under certain conditions. Excludes 3,000 shares
owned of record by Mr. Campbell's wife with respect to which Mr. Campbell
disclaims beneficial ownership.
(6) Shares are owned jointly by Mr. Nelson and his wife. Excludes 1,200
shares owned of record and beneficially by Mr. Nelson's wife, with respect
to which Mr. Nelson disclaims beneficial ownership.
(7) Includes 30 shares which Mr. Ray owns as custodian for his minor
children.
(8) Mr. DePree's wife owns of record and beneficially 139,881 shares
which are excluded from the table. Mr. DePree disclaims beneficial ownership
of these shares.
Mr. Crockett also is a director of Cornerstone Imaging, Inc., and Metatec
Corporation. Mr. Nelson also is a director of Cardinal Fund, Inc. Mr. Pollard
also is a director of The ServiceMaster Company, Provident Life and Accident
Insurance Company, and Trammell Crow Company. Brian Griffiths, Lord Griffiths
of Fforestfach, also is a director of The ServiceMaster Company. Mr. Campbell
also is a director of SPX Corporation.
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<PAGE> 7
The Board of Directors held five meetings during the last fiscal year. All
of the directors attended at least three-fourths of the aggregate number of
meetings of the board and the board committees on which they served with the
exception of Lord Griffiths, who attended 60 percent of the meetings.
FINANCE AND AUDIT COMMITTEE
The company has a finance and audit committee comprised of Ms. Ruth A. Reister
(chair); Dr. E. David Crockett (vice chair); Messrs. William K. Brehm, C.
William Pollard, Alan M. Fern, and Brian Griffiths, Lord Griffiths of
Fforestfach. The finance and audit committee recommends to the Board of
Directors the selection of independent auditors and reviews the scope of their
audit, their audit reports, and any recommendations made by them. The committee
approves fees paid for audit and nonaudit services by the independent public
accountants. The committee also reviews the activities of the company's
internal auditors and reviews and recommends to the Board issues concerning the
company's dividend policies, capital expenditures, welfare benefits plans, and
other related financial matters. The committee met four times during the last
fiscal year.
EXECUTIVE COMPENSATION COMMITTEE
The company has an executive compensation committee, comprised of Mr. David L.
Nelson (chair), Messrs. William K. Brehm, E. David Crockett, Richard H. Ruch,
and Charles D. Ray, M.D. The executive compensation committee recommends to the
Board of Directors the annual executive incentive plan, the grant of employee
stock options, and the annual remuneration of the company's Chairman, Vice
Chairman, and Chief Executive Officer, and acts as the administrative committee
for the company's employee stock option plans. The committee met four times
during the last fiscal year.
NOMINATING COMMITTEE
The company has a nominating committee comprised of Mr. J. Kermit Campbell
(chair), and Messrs. David L. Nelson, C. William Pollard, and Richard H. Ruch.
The nominating committee selects and presents to the board candidates for
election to fill vacancies on the board. The nominating committee did not meet
during the last fiscal year. The nominees for election at this year's annual
meeting were approved by the full Board. The committee will consider nominees
recommended by shareholders, provided recommendations are submitted in writing,
on or before the 60th day preceding the date of the annual meeting, including a
description of the proposed nominee's qualifications, his or her consent to
serve as a director, as well as other required data on the nominee and the
shareholder submitting the proposal, including relevant biographical data, to
Mr. J. Kermit Campbell, at Herman Miller, Inc., 855 East Main Avenue, PO Box
302, Zeeland, Michigan 49464-0302.
COMPENSATION OF BOARD MEMBERS AND NON-EMPLOYEE OFFICERS
The company pays directors' fees to non-employee directors at the rate of
$32,500 per year and at one-half that rate to employee directors. No additional
amounts are payable for service on committees of the board or for any other
assignments that may be undertaken by a director as a director. During the past
year, Mr. DePree received additional compensation equal to 25 percent of the
base salary of the company's President and Chief Executive Officer in
consideration of his agreement to devote 25 percent of his business time to the
activities of the Board of Directors. Mr. Ruch, serving in his role as Vice
Chairman of the Board of Directors, received additional compensation equal to
30 percent of the base salary of the President and Chief Executive Officer in
consideration of his agreement to devote 30 percent of his business time to the
activities of the Board of Directors. Pursuant to these agreements Messrs.
DePree and Ruch received $114,650 and $131,455, respectively, in total
compensation for their services as directors during the company's fiscal year
ended May 28,1994.
The company has in effect a stock option plan, approved and adopted by its
shareholders, under which officers and directors who are not employees of the
company or its subsidiaries are granted options to purchase shares of the
company's common stock. This plan provides for the annual grant of options to
each participant, effective the last business day of the company's third fiscal
quarter, to acquire 1,500 shares of common stock at prices equal to the fair
market value of the shares on the date of grant. Subject to certain
exceptions, the options are not exercisable until 12 months after the date of
grant and expire 10 years after the date of the grant. The option price is
payable upon exercise in cash or, subject to certain limitations, in shares of
the company's common stock already owned by the optionee, or a combination of
Shares and cash. Options are not transferable by optionees, except by will or
by the laws of descent and distribution, and may be exercised only while an
optionee serves as a non-employee officer or director of the company
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or during various limited periods after death or retirement. In the
event of stock splits, stock dividends, or similar transactions, the number of
shares available for grant under the plan and the number of shares subject to
options then outstanding are subject to corresponding adjustment.
During fiscal 1994 each director and officer of the company who was not an
employee was granted an option to purchase 1,500 shares of the company's common
stock at $34.625, its fair market value on the date of grant. Under this plan,
a total of 16,500 options were granted to all non-employee directors and
officers as a group, and 32,501 options were exercised at an average exercise
price of $31.73 per share during the past year.
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION COMMITTEE REPORT
The company has long recognized the importance of a well-founded executive
compensation program and the role it plays in achieving the company's short-
and long-term objectives of promoting superior corporate performance, creating
shareholder value, and maintaining fairness and relative equity in the
compensation of and between its executives and all other employee-owners. The
executive compensation committee of the Board of Directors, which is comprised
of five non-employee directors, was established over 20 years ago to provide an
ongoing review of the executive compensation program to assure that it is
structured and administered to support the company's mission and strategy. The
committee is responsible for recommendations to the full board for several
aspects of executive compensation, including the annual remuneration of the
company's Chief Executive Officer, which includes base salary, cash bonus, and
equity-based awards. The committee also establishes for both the Chief
Executive Officer and the company's other executive officers the performance
objectives for the annual executive incentive plan which covers approximately
85 individuals. The company's Chief Executive Officer establishes the base
salary of the company's other executive officers.
COMPENSATION PHILOSOPHY
The company's compensation philosophy, as formulated by the executive
compensation committee and endorsed by the Board of Directors, is designed to
engender and preserve a sense of fairness and equity among employees,
shareholders, and customers. For example, the company has established a formula
for determining maximum compensation which can be received by the Chief
Executive Officer. This formula, which has been in effect since 1984, limits
cash compensation (including salary and incentive bonus) to 20 times the
average annual compensation earned by the company's regular full-time
employee-owners.
The executive compensation program has been designed to:
. Link a material portion of annual compensation directly to operating
performance.
. Promote achievement of long-term strategic goals and objectives.
. Align the interests of executives with the long-term interests of the
shareholders.
. Attract, motivate, and retain executives of outstanding ability.
EXECUTIVE STOCK OWNERSHIP GUIDELINES To further emphasize and reinforce
the importance of linking shareholder and management interests, the
Compensation Committee recommended, and at its meeting on July 13, 1994 the
Board adopted, stock ownership guidelines for approximately 150 executives,
including all officers. Under the guidelines, the CEO will be expected to own
120,000 shares of company stock, while other employees, depending upon their
relative level of responsibility, will be expected to attain ownership levels
of either 30,000, 10,000, or 3,000 shares. Management will have a period of ten
years to increase their present holdings to achieve these ownership objectives.
Executives are expected to make reasonable progress toward meeting the
ownership guidelines over the ten-year period if their present ownership is
below target levels.
COMPENSATION ELEMENTS Presently, the executive compensation program
consists of salary, annual cash incentives, long-term incentives in the form of
stock options and restricted stock, and selected benefits typically offered to
executives by major corporations.
As described earlier in this proxy statement, the Board recommends that
shareholders adopt the Herman Miller, Inc., Long-Term Incentive Plan and the
Herman Miller, Inc., Key Executive Stock Purchase Assistance Plan. Both the
plans support the company's objective of aligning management's interests with
those of the shareholders. If adopted, both plans will be vehicles to assist
management in attaining the share ownership guidelines established by the
Board. The committee and the Board believe that these plans fit well into the
company's overall compensation strategy.
The company's compensation strategy is not limited to executive
officers but is designed to create a sense of common purpose and interest among
all employees. To that end, the company has adopted plans which align the
interests of all
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its employees with the interests of its shareholders. Some of the plans
designed to achieve this goal are:
. All employees with over one year of service are shareholders of the company
through participation in the Employee Ownership- Profit-Sharing Plan. All
company contributions to the Plan are invested exclusively in the company's
common stock, except to satisfy liquidity needs of the plan. On May 28,
1994, the Employee Ownership-Profit-Sharing Plan held 1,453,502 shares, or
5.9 percent, of the company's outstanding common stock.
. Additional stock ownership is available to all employees with over one year
of service through participation in the Employee Stock Purchase Plan. In
fiscal 1994, 1,384 of the 4,973 eligible employees, or 27.8 percent, purchased
90,470 shares of the company's common stock through this plan. Since inception
of the plan in 1977, employees have purchased a total of 1,835,914 shares.
. Retirement benefits are provided through a qualified and fully funded Defined
Benefit Retirement Income Plan. (Plan assets consist primarily of listed
common stocks, bonds, mutual funds, and corporate obligations.) On May 28,
1994, Plan assets included 327,672 shares, or 1.3 percent, of the company's
outstanding common stock.
. Quarterly cash bonuses can be earned by all employees through the Earned
Share Bonus Plan. This incentive compensation plan measures performance
against a series of predetermined goals for product quality, customer
service, net sales and net income growth, asset utilization, and implemented
cost savings. For fiscal 1994 aggregate bonuses of $7.5 million, or 6.6
percent of compensation of eligible employees, was paid pursuant to this
plan.
In addition, a wide range of other benefits is provided to employees to
ensure a competitive wage and benefit package is provided. A summary which
further describes the above-mentioned compensation plans appears on pages
11-13.
COMPANY PERFORMANCE AND EXECUTIVE COMPENSATION The salaries of the company's
Chief Executive Officer and other executives are established on a performance-
based evaluation system. Each executive officer's performance, excepting that
of the Chief Executive Officer, is evaluated by his or her superior and
reviewed by the executive compensation committee. This review considers the
employee's overall performance relative to the achievement of corporate
objectives as well as individual contributions and achievements. This same
evaluation system is applied to the company's Chief Executive Officer by the
committee.
Annual cash incentive bonuses can be earned through the Executive
Incentive Plan, which is designed to tie compensation to corporate performance.
Currently, the plan consists of a four-part formula which weights consolidated
net sales, net income, earnings per share, and net return on average total
assets measured against the annual plan as approved by the Board of Directors.
No bonus is paid if a minimum net income threshold is not met. Depending on
their individual level of responsibility, an executive officer can earn up to
60 percent of his or her salary under this plan if all performance objectives
are attained. An additional bonus can be earned when overperformance against
the annual plan occurs. This additional bonus is limited to 20 percent of the
individual officer's incentive bonus. For example, an executive officer with a
60 percent bonus potential could earn a maximum bonus of 72 percent of salary
based on a bonus payout of 120 percent, (i.e., 60% x 1.20 = 72%), resulting
from overperformance against the plan.
In relating this pay-for-performance program to the results achieved by
the company in the last three fiscal years, amounts paid under the Executive
Incentive Program were 120.0 percent, 93.1 percent, and 0.0 percent of eligible
bonuses for the fiscal years ended in 1994, 1993, and 1992, respectively.
The executive compensation committee also authorizes the grant of stock
options to employees of the company, including executive officers. As a
guideline, the committee believes that the aggregate number of shares subject
to options granted in any one year to all employees should not exceed 1 percent
of the company's outstanding shares at the time of grant. In general, options
are granted to employees based on their respective levels of responsibility
within the company, as well as their past performance and potential to
contribute to the future success of the company.
As indicated earlier, the cash compensation including salary, Earned
Share Bonus, and Executive Incentive Bonus of the company's Chief Executive
Officer, J. Kermit Campbell, is limited by formula to 20 times the average
annual compensation earned by the company's regular full-time employee-owners
(currently $30,957). This imposes a cap on the CEO's cash compensation for 1994
of $619,140. Salary and bonus totaling $580,945 were earned in 1994 by Mr.
Campbell and are shown in the Summary Compensation Table. Some additional
notes regarding his pay are as follows:
. Base salary of $336,100 was established at the time Mr. Campbell joined the
company as CEO in April of 1992. Mr. Campbell received no increase for fiscal
1994. His base salary has been increased 5 percent to $352,900 for fiscal
1995.
. Mr. Campbell's maximum bonus potential under the Executive Incentive Plan for
fiscal 1995 is 72 percent (i.e., 60 percent plus an additional 20 percent of
60 percent) of his base salary. Mr. Campbell earned the maximum bonus
potential
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during fiscal year 1994 which was $241,992, or 72 percent of salary as the
overperformance against the four-part bonus formula resulted in a 120
percent bonus payout.
. Mr. Campbell received options to purchase 12,000 shares of stock during
fiscal 1994 at an exercise price of $26.875.
. Mr. Campbell received an Incentive Share Grant totalling 75,000 shares
during fiscal 1993 in connection with the initiation of his employment as
president and Chief Executive Officer. The shares are subject to forfeiture
provisions which lapse over a five- to six-year period depending on the
company's performance under Mr. Campbell's leadership, as measured against
annual objectives established by the Board of Directors. At May 28, 1994,
45,000 shares remained subject to forfeiture.
It is the judgment of the Board of Directors that the share grant was
in the best interests of the company and its shareholders. The meaningful
ownership interest it provides to Mr. Campbell further aligns his interests
with those of the company's shareholders. The grant and its five- to six-year
vesting schedule also provide Mr. Campbell with an incentive to remain with
the company for the long term.
David L. Nelson (Chair) William K. Brehm
E. David Crockett Charles D. Ray, M.D.
Richard H. Ruch
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<PAGE> 11
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the Named
Executives for each of the three fiscal years ended May 28, 1994; May 29, 1993;
and May 30, 1992.
<TABLE>
<CAPTION>
Long-Term Compensation Awards
Name and Other Securities
Principal Position Annual Compensation Annual Restricted Underlying All Other
Year Salary(1) Bonus(2) Compensation Stock Awards($) Options(#) Compensation(3)
<S> <C> <C> <C> <C> <C> <C> <C>
J. Kermit Campbell, 1994 $336,100 $244,845 $ 0 $ 0 12,000 $7,706
1993 336,100 190,597 0 1,275,000(5) 15,000 4,908
President and 1992 45,244 0 0 0 0 0
Chief Executive Officer(4)
Philip J. Mercorella, 1994 195,840 143,858 0 0 8,000 5,584
1993 192,000 110,094 0 0 10,000 5,032
Senior Vice President and 1992 192,000 847 0 0 0 4,248
General Manager of Systems
Gary J. Tenharmsel, 1994 185,640 136,514 0 0 8,000 5,373
1993 182,000 104,507 28,939(6) 0 10,000 5,026
Senior Vice President for 1992 182,000 847 0 0 0 3,967
North American Distribution
Alignment
Gary S. Miller, 1994 153,000 113,013 0 0 8,000 5,314
1993 150,000 86,630 0 0 10,000 4,700
Senior Vice President for 1992 150,000 847 0 0 0 4,370
Design and Development
Robert A. Harvey, 1994 153,000 113,013 0 0 8,000 5,904
1993 150,000 86,630 0 0 10,000 5,055
Senior Vice President for 1992 150,000 847 0 0 0 4,751
Business Development
</TABLE>
(1) Includes amounts deferred by employees pursuant to Section 401(k) of the
Internal Revenue Code.
(2) Represents amounts earned under the company's Earned Share Bonus Plan and
Executive Incentive Plan.
(3) The amounts disclosed in this column include: (a) amounts contributed by
the company to the company's Employee Ownership-Profit Sharing Plan,
pursuant to which substantially all employees of the company participate;
and (b) payments by the company in fiscal 1994 of premiums for term life
insurance for the benefit of the Named Executives.
(4) Mr. Campbell began his employment with the company on April 13, 1992.
(5) The amount represents the value of 75,000 shares of the company's common
stock (based on the closing price of the stock on the date of grant of
$17.00 per share) granted to Mr. Campbell under the terms of an Incentive
Share Grant Agreement, dated July 15, 1992. The shares are subject to
forfeiture provisions which lapse as to the number of shares which become
vested each year over a five-or six-year period. The minimum annual rate
ofvesting is 10% of the total shares granted during the first five years
following the date of grant, with the balance vesting at the end of the
sixth year (fiscal 1998). The rate of vesting may be accelerated if certain
corporate performance goals are achieved, which would permit full vesting
not earlier than fiscal 1997. Dividends are payable on the restricted
shares at the same rate as dividends on unrestricted shares of the
company's common stock. At May 28, 1994, the value of the 75,000 restricted
shares held by Mr. Campbell, based on the closing price of the company's
common stock on that date ($24.875 per share) equalled $1,865,625.
(6) Includes $12,785 for reimbursement for spousal travel, as may be paid to
other executive officers of the company, and a one time cost of living
payment of $16,153 attributable to Mr. TenHarmsel's services outside of the
United States.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on options granted to the Named
Executives during the year ended May 28, 1994.
<TABLE>
<CAPTION>
Individual Grants
Name Options/Sars Percentage of Exercise or Expiration Grant Date
Granted (#)(1) Total Options Base Price Date Present Value(4)
Granted to (per share)($)(3)
Employees in
Fiscal Year(2)
<S> <C> <C> <C> <C> <C>
J. Kermit Campbell 12,000 4.8% $26.875 07/19/03 $133,200
Philip J. Mercorella 8,000 3.2% 26.875 07/19/03 88,800
Gary J. Tenharmsel 8,000 3.2% 26.875 07/19/03 88,800
Gary S. Miller 8,000 3.2% 26.875 07/19/03 88,800
Robert A. Harvey 8,000 3.2% 26.875 07/19/03 88,800
</TABLE>
(1) Indicates number of shares that may be purchased pursuant to options
granted under the company's 1985 Stock Option Plan. The options granted
in fiscal 1994 (July 19, 1993 grant date) were made with respect to services
rendered during fiscal 1993. In prior years, it has been the practice of
the company to grant options to employees during the fiscal year with
respect to which services were performed. In general, options may not be
exercised in full or in part prior to the expiration of one year from the
date of grant. The company did not grant any SARs in connection with the
options granted in fiscal 1994.
(2) The company granted options on July 19, 1993, totalling 253,240 shares to
eligible employees of the company and its subsidiaries.
(3) The exercise price equals the prevailing market price of the company's
common stock on the date of grant. The exercise price may be paid in cash
or, at least 500 shares are being acquired, by the delivery of previously
owned shares, or a combination of cash and previously owned shares.
(4) The values reflect standard application of the Black-Scholes option pricing
model based on: (a) expected stock price volatility of 0.315; (b) a risk
free rate of return of 5.899%; (c) a cash dividend yield of 1.99%; and
(d) an expected time of ten years to exercise. The actual value, if and, of
the options granted is dependent upon the market values of the company's
common stock subsequent to the date the options become exercisable.
9
<PAGE> 12
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 1994 AND YEAR END OPTION VALUES
The following table provides information on the exercise of stock options during
fiscal 1994 by the Named Executives and the number and value of unexercised
options at May 28, 1994.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at May 28, 1994 In-the Money Options
at May 28, 1994(2)
Name Shares Acquired Value Realized(1) Exercisable Unexercisable Exercisable Unexercisable
on Exercise
<S> <C> <C> <C> <C> <C> <C>
J. Kermit Campbell 0 $ 0 15,000 12,000 $ 93,750 $ 0
Philip J. Mercorella 4,800 63,600 75,750 8,000 253,500 0
Gary J. TenHarmsel 16,500 130,910 35,500 8,000 137,625 0
Gary S. Miller 3,750 38,906 40,000 8,000 160,125 0
Robert A. Harvey 3,750 41,381 54,500 8,000 208,875 0
</TABLE>
(1) Represents the aggregate market value of shares acquired at time of
exercise, less the aggregate exercise price paid by the employee to the
company.
(2) Values are based on the difference between the closing price of the
company's common stock on May 28, 1994 ($24.875) and the exercise prices of
the options.
PENSION PLAN TABLE
The following table sets forth the estimated annual benefits payable upon
normal retirement at age 65, on May 29, 1994, to persons in specified
compensation and years of service classifications under the company's
Retirement Income Plan and the company's Officers' Supplemental Retirement
Income Plan ("Supplemental Plan"). Projected benefits are computed on a
straight line annuity basis, and such benefits are in addition to any amounts
which may be received under the Social Security Act. Amounts in excess of
$118,800, as limited by Section 415 of the Internal Revenue Code, are payable
under the Supplemental Plan to employees eligible or designated to participate
in that plan. All of the Named Executives participate in the Supplemental Plan,
except Mr. Miller.
<TABLE>
<CAPTION>
Average Annual Years of Benefit Service(1)
Compensation(l) 10 15 20 25 30 35 and over
<S> <C> <C> <C> <C> <C> <C>
$150,000 $ 37,500 $52,500 $ 67,500 $ 82,500 $ 97,500 $112,500
200,000 50,000 70,000 90,000 110,000 130,000 150,000
250,000 62,500 87,500 112,500 137,500 162,500 187,500
300,000 75,000 105,000 135,000 165,000 195,000 225,000
350,000 87,500 122,500 157,500 192,500 227,500 262,500
400,000 100,000 140,000 180,000 220,000 260,000 300,000
450,000 112,500 157,500 202,500 247,500 292,500 337,500
500,000 125,000 175,000 225,000 275,000 325,000 375,000
550,000 137,500 192,500 247,500 302,500 357,500 412,500
600,000 150,000 210,000 270,000 330,000 390,000 450,000
650,000 162,500 227,500 292,500 357,500 422,500 487,500
</TABLE>
(1) Average annual compensation is determined under the Retirement Income
Plan by the average of the five highest consecutive years of annual
compensation (the amounts included under the columns "Salary" and
"Bonus" in the Summary Compensation Table) during the last ten years of
employment, subject to a maximum of $235,840 for fiscal 1994. Average
annual compensation under the Supplemental Plan is not subject to a
maximum. For employees designated as participants in the Supplemental
Plan prior to January 21, 1986, average annual compensation is defined
as the highest annual compensation out of the last three years of
employment prior to retirement; for employees designated as participants
after January 21, 1986, average annual compensation is determined in the
same manner as under the Retirement Income Plan. The combined benefit
under both the Retirement Income Plan and Supplemental Plan may not
exceed a designated percentage of an officer's highest annual
compensation, ranging from 50% if an employee retires at age 55, to 75%
if the employee retires at or after age 65.
(2) The Named Executives have credited years of service and "average annual
compensation" under the Retirement Income Plan and Supplemental Plan as
follows: J. Kermit Campbell, 2 years - $553,821*; Philip J. Mercorella,
20 years - $247,589; Gary J. TenHarmsel, 25 years - $240,471; Gary S.
Miller, 17 years - $171,023; and Robert A. Harvey, 15 years - $199,707.
* Average pension wages for fiscal years 1994 and 1993
OTHER ARRANGEMENTS
The company maintains a Salary Continuation Plan, which provides that an
officer's base salary (as shown in the "Salary" column of the Summary
Compensation Table) will be continued for twelve months after termination of
the officer's employment. Under this plan, benefits terminate if the officer
performs services for a competitor of the company, and benefits are offset for
any noncompetitor payments for services. No benefits are payable under the plan
if an officer dies, retires, voluntarily terminates employment, or is
terminated for malfeasance.
10
<PAGE> 13
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the company's common stock with that of
the cumulative total return of the Standard & Poor's 5oo Stock Index and the
NASD Non-Finandal Index for the five year period ended May 28, 1994. The
following information is based on an annual investment of $100, on June 3,
1989, in the company's common stock, the Standard & Poor's 500 Stock Index and
the NASD Non-Financial Index, with dividends reinvested.
TOTAL SHAREHOLDER RETURN HERMAN MILLER, INC.*
[GRAPH]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
NASD Non-Financial $100 $111 $126 $142 $168 $171
S&P 500 Index 100 116 130 143 160 166
Herman Miller, Inc. 100 100 101 98 135 131
</TABLE>
*Assumes $100 invested on June 3, 1989. Total return assumes reinvestment
of dividends
SUMMARY OF COMPENSATION PLANS
The following is an overview of several compensation plans which apply to a
broad range of Herman Miller, Inc., employee-owners. It is intended to
demonstrate the company's philosophy of compensation as it relates to all
employee-owners.
ANNUAL INCENTIVE COMPENSATION PLANS
EXECUTIVE INCENTIVE PLAN The company has an Executive Incentive Plan,
which applied to 85 executives and management employees of the company during
the fiscal year ended May 28, 1994. This plan is administered by the executive
compensation committee of the Board of Directors, no members of which are
eligible to participate. Participants in this plan receive cash bonuses based
upon a four-part formula giving weight to consolidated net sales, net income,
earnings per share, and net return on average total assets, measured against
the annual plan as approved by the Board of Directors. No bonus is paid if a
minimum net income threshold is not met. Bonuses paid under the Executive
Incentive Plan during fiscal 1994 totaled $3.8 million.
EARNED SHARE BONUS PLAN The company has in effect an Earned Share Bonus
Plan, an incentive cash bonus program, covering all production, administrative,
and service employees. This plan is administered by a committee consisting of
elected representatives and appointed members. The elected representatives
comprise a majority of the committee and include a broad cross section of all
production, administrative, and service employees. The incentive cash bonus is
based upon a quarterly comparison of actual performance to predetermined goals
for product quality, customer service, net sales and net income growth, asset
utilization, and implemented cost savings. Bonuses paid to executive officers
are limited to the first $42,903 of annual compensation. Aggregate bonuses paid
under this plan to all employees during fiscal 1994 totaled $7.5 million, or
6.6 percent of eligible compensation.
11
<PAGE> 14
STOCK OWNERSHIP PLANS
EMPLOYEE STOCK PURCHASE PLAN All active employees of the company and its
participating subsidiaries, except certain part-time employees, are eligible to
participate in the Stock Purchase Plan after completing one year of continuous
employment as of the beginning of an Option Period. An Option Period begins on
the first day of each fiscal quarter and ends on the last day of the fiscal
quarter. No employee is entitled to purchase shares of common stock under the
Plan if he or she is or would be, after the purchase, the holder of 5 percent
or more of the total voting power of the company. On May 28, 1994, 4,973
employees were eligible to participate in the plan, of which 1,384 were
participants. During the past fiscal year, employees purchased 90,470 shares of
the company's common stock.
EMPLOYEE STOCK OPTION PLANS The company's 1985 Employee Stock Option
Plan, as amended, provides for the issuance of an aggregate of up to 1,750,000
shares of the company's common stock. On May 28, 1994, options to purchase a
total of 1,906,490 shares had been granted under this plan. A total of 552,260
shares had been purchased pursuant to the exercise of options, options for
423,510 shares had terminated, 223 employees (including the 10 present
executive officers) held outstanding options to purchase 930,720 shares, and
267,020 shares remained available for future option grants. In addition, there
were outstanding options to purchase 65,955 shares issued under the 1981
Employee Stock Option Plan. This plan has expired and no options were granted
under this plan during the past fiscal year.
EMPLOYEE OWNERSHIP--PROFIT-SHARING PLAN The company's Employee
Ownership--Profit-Sharing Plan and Trust is designed as a qualified plan under
both Section 401 and Section 409 of the Internal Revenue Code. The plan covers
all employees of the company who have completed one year of service (3,996
persons as of August 8, 1994). Unless otherwise directed by the company's Board
of Directors, the plan provides that the company's contribution will be
sufficient to permit credits to employee accounts under the plan, increasing in
relation to the employee's length of service, with the most recently hired
employees credited as if the company had contributed 4 percent of net earnings
of Herman Miller, Inc., (before income taxes and before contribution to the
plan) for the year ("Net Earnings") and the longest term employees credited as
if the company had contributed 6 percent of Net Earnings. Funds contributed by
the company are credited to the account of each participating employee in the
various participation groups in proportion to the first $200,000 of his or her
annual compensation. Company contributions are invested exclusively in the
company's common stock except to satisfy liquidity needs of the plan. Employee
contributions pursuant to Section 401(k) of the Internal Revenue Code may be
invested, as elected by the employee, in the common stock of the company or one
or more of three pooled investment funds or in a guaranteed investment fund.
RETIREMENT PLANS
RETIREMENT INCOME PLAN All full-time and qualified part-time employees of
the company (4,225 persons as of August 8, 1994) are covered by a trusteed
pension plan, designed as a qualified non-contributory plan under Section 401
of the Internal Revenue Code, which provides for annual pensions following
retirement of a fixed amount based on average earnings for the highest 5
consecutive years out of the last 10 years prior to retirement and on years of
service with the company. Under the plan, the monthly benefit at normal
retirement (age 65) is 1.3 percent of such average monthly earnings multiplied
by the employee's years of benefit service (not to exceed 40 years for
employees hired after 1981) plus .55 percent of average monthly earnings in
excess of "covered compensation" multiplied by years of benefit service (not to
exceed 35 years). Covered compensation is the monthly average of the Social
Security taxable wage base in effect over the 35-year period. Benefits become
vested upon a participant's fifth year of service and are payable beginning at
early retirement (age 55) or upon a participant's death or disability.
SEVERANCE COMPENSATION PLAN (SILVER PARACHUTE) The company maintains a
severance compensation plan to provide benefits to employees following a
hostile change in control of the company. A hostile change in control is deemed
to occur if a person or entity who owns 10 percent or more of the outstanding
voting stock of the company, and who possesses the power to direct the
management and policies of the company, commits a hostile act, as defined in
the plan. All full-time and part-time employees who are regularly scheduled to
work 20 or more hours per week and who have completed at least two years of
continuous employment with the company are participants in the plan. A
severance benefit is payable under the plan if a participant's employment with
the company terminates, voluntarily or involuntarily, within two years after a
hostile change in control for reasons such as reduction in compensation,
discontinuance of employee benefit plans without replacement with substantially
similar plans, change in duties or status, certain changes in job location, and
involuntary termination of employment for reasons other than just cause. For
participants who have completed two but less than five years of employment, the
benefit is equal to the employee's
12
<PAGE> 15
annual compensation during the year immediately preceding the termination of
employment. For employees who have completed five or more years of employment,
the benefit is equal to two-and-one half times the employee's annual
compensation during the 12 months ending on the date of termination of
employment, but may not exceed 2.99 times average annual compensation during
the preceding five years. Annual compensation is defined for purposes of the
plan as the amount of the employee's wages, salary, bonuses, and other
incentive compensation. Benefits are payable in a cash lump sum not more than
10 days after termination of employment.
PROPOSAL TO APPROVE THE HERMAN MILLER, INC., 1994 LONG-TERM INCENTIVE PLAN
On July 13, 1994, the Board of Directors adopted the Herman Miller, Inc.,
Long-Term Incentive Plan (the "Plan"), subject to approval by the company's
shareholders. If approved, the Plan will succeed the company's 1985 Employee
Stock Option Plan which expires next year. The following summary of the Plan is
subject to the specific provisions contained in the complete text of the Plan
set forth in Appendix A to this Proxy Statement.
PURPOSE
The purpose of the Plan is to promote the long-term success of the company for
the benefit of its shareholders through stock-based compensation, by further
aligning the personal interests of the company's key employees with those of
its shareholders. The Plan is designed to allow selected key employees of the
company and certain of its subsidiaries to participate financially in the
company's future, as well as to enable the company to attract, retain, and
reward such employees.
ADMINISTRATION
The Plan will be administered by the Executive Compensation Committee of the
Board of Directors (the "committee"). The committee is composed of five
directors, each of whom is not an employee of the company. Each member of the
committee is required to be a "disinterested person" within the meaning of Rule
16b-3 of the General Rules and Regulations under the Securities and Exchange
Act of 1934, as amended, and no member of the committee is eligible to
participate in the Plan. Subject to the company's Articles of Incorporation,
Bylaws, and the provisions of the Plan, the committee has the authority to
select key employees to whom Awards may be awarded; the type of Awards (or
combination thereof) to be granted; the number of shares of Common Stock to be
covered by each Award; and the terms and conditions of any Award, such as
conditions of forfeiture, transfer restrictions, and vesting requirements.
The Plan provides for the granting of a variety of stock-based Awards,
described in more detail below, such as Stock Options, including Incentive
Stock Options, as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), Reload Options, Stock Appreciation Rights, Restricted
Stock, Performance Shares, and other Stock-Based Awards. The term of the Plan
is ten (10) years; no Awards may be granted under the Plan after October 5,
2004.
TYPES OF AWARDS
The following types of Awards may be granted under the Plan.
An "Option" is a contractual right to purchase a number of shares at a
price determined at the date the Option is granted. Options include Incentive
Stock Options, as defined in Section 422 of the Code, as well as Nonqualified
Stock Options. The exercise price included in both Incentive Stock Options and
Nonqualified Stock Options must equal at least 100 percent of the fair market
value of the stock at the date of the grant. Awards of certain Options also may
include Reload Options. A Reload Option is an Option to purchase shares equal
to the number of shares of Common Stock delivered in payment of the exercise
price (including, in the discretion of the committee, the number of shares
tendered to the company to satisfy any withholding tax liability arising upon
exercise) and is deemed to be granted upon such delivery without further action
by the committee. A Reload Option is subject to the same terms of the original
option, including the term thereof; however, the exercise price of the Reload
Option must equal the fair market value of the company's Common Stock on the
date of grant of the Reload Option.
A "Stock Appreciation Right" is an Award of the right to receive stock or
cash of an equivalent value in an amount equal to the difference between the
price specified in the Stock Appreciation Right and the prevailing market price
of the company's Common Stock at the time of exercise. Stock Appreciation
Rights may be granted only in tandem with Options.
"Restricted Stock" are shares of Common Stock granted to an employee
for no or nominal consideration. Title to the shares passes to the employee at
the time of that grant; however, the ability to sell or otherwise dispose of
the shares is subject to restrictions and conditions determined by the
committee.
13
<PAGE> 16
"Performance Shares" are an Award of the right to receive stock or cash of
an equivalent value at the end of the specified performance period upon the
attainment of specified performance goals.
An "Other Stock-Based Award" is any other Award that may be granted
under the Plan that is valued in whole or in part by reference to or is payable
in or otherwise based on Common Stock.
SHARES SUBJECT TO PLAN
One million two hundred fifty thousand (1,250,000) shares of Common Stock, $.20
par value, are proposed to be set aside for use under the Plan. The shares to
be offered under the Plan will be authorized and unissued shares, including
shares reacquired by the company which have that status. The number of shares
that may be issued under the Plan and the number of shares subject to Options
are subject to adjustments in the event of a merger, reorganization,
consolidation, recapitalization, dividend (other than ordinary cash dividends),
stock splits, or other change in corporate structure affecting the Common
Stock. Subject to certain restrictions, unexercised Options, lapsed shares of
Restricted Stock, and shares surrendered in payment for exercising Options may
be reissued under the Plan. The Plan prohibits the award of more than 10
percent of Plan shares to any one employee.
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue, or terminate this Plan or any
part thereof; however, unless otherwise required by law, after shareholder
approval, the rights of a participant may not be impaired without the consent
of such participant. In addition, without the approval of the company's
shareholders, no amendment may be made which would increase the aggregate
number of shares of Common Stock that may be issued under the Plan, change the
definition of employees eligible to receive Awards under the Plan, extend the
maximum option period under the Plan, decrease the Option price of any Option
to less than 100 percent of the fair market value on the date of grant, or
otherwise materially increase the benefits to participants in the Plan.
ELIGIBILITY
Key employees of the company and its designated subsidiaries are eligible to be
granted Awards under the Plan. Eligibility is determined by the committee. At
present, no employees have been granted Awards or are otherwise participating
in the Plan. It is not possible to predict the number or identity of future
participants or, except as set forth in the Plan, to describe the restrictions
that may be included in Award agreements. Information covering options granted
by the company under the 1985 Employee Stock Option Plan is set forth on page
12 of this Proxy Statement.
PARTICIPATION AND ASSIGNABILITY
No Award, Option, or other benefit payable under the Plan may, except as
otherwise specifically provided by law, be subject in any manner to assignment,
transfer, or encumbrances. Neither the Plan nor any Award agreement granted
under the Plan entitles any participant or other employee to any right to
continued employment by the company or any subsidiary.
FEDERAL TAX CONSEQUENCES
The following summarizes the consequences of the grant and acquisition of
Awards under the Plan for federal income tax purposes, based on management's
understanding of existing federal income tax laws. This summary is necessarily
general in nature and does not purport to be complete. Also, state and local
income tax consequences are not discussed and may vary from locality to
locality.
OPTIONS Plan participants will not recognize taxable income at the time an
Option is granted under the Plan unless the Option has a readily ascertainable
market value at the time of grant. Management understands that Options to be
granted under the Plan will not have a readily ascertainable market value;
therefore, income will not be recognized by participants before the time of
exercise of an option. For Nonqualified Stock Options the difference between
the fair market value of the shares at the time an Option is exercised and the
Option price generally will be treated as ordinary income to the optionee, in
which case the company will be entitled to a deduction equal to the amount of
the optionee's ordinary income. With respect to Incentive Stock Options,
participants will not realize income for Federal Income tax purposes as a
result of the exercise of such Options. In addition, if Common Stock acquired
as a result of the exercise of an Incentive Stock Option is disposed of more
than two years after the date the Option is granted and more than one year
after the date the Option was exercised, the entire gain, if any, realized upon
disposition of such Common Stock will be treated as capital gain for federal
income tax purposes. Under these circumstances, no deduction will be allowable
to the company in connection with either the grant or exercise of an Incentive
Stock Option. Exceptions to the
14
<PAGE> 17
general rules apply in the case of a "disqualifying disposition."
If a participant disposes of shares of Common Stock acquired pursuant to
the exercise of an Incentive Stock Option before the expiration of one year
after the date of exercise or two years after the date of grant, the sale of
such stock will be treated as a "disqualifying disposition." As a result, such
a participant would recognize ordinary income and the company would be entitled
to a deduction in the year in which such disposition occurred. The amount of
the deduction and the ordinary income recognized upon a disqualifying
disposition would generally be equal to the lesser of: (a) the sale price of
the shares sold minus the Option price, or (b) the fair market value of the
shares at the time of exercise and minus the Option price. If the disposition
is to a related party (such as a spouse, brother, sister, lineal descendant, or
certain trusts for business entities in which the seller holds a direct or
indirect interest), the ordinary income recognized generally is equal to the
excess of the fair market value of the shares at the time of exercise over the
exercise price. Any additional gain recognized upon disposition, in excess of
the ordinary income, will be taxable as capital gain. In addition, the exercise
of Incentive Stock Options may result in an alternative minimum tax liability.
RELOAD STOCK OPTIONS Participants will recognize no income on the grant of
any Reload Option. On exercise of a reload option, the tax consequences to the
participant and the company are the same as that for a Nonqualified Stock
Option.
STOCK APPRECIATION RIGHTS Upon the grant of a Stock Appreciation Right,
the participant will realize no taxable income and the company will receive no
deduction. A participant will realize income at the time of exercise if the
Award becomes vested and is no longer subject to forfeiture and the participant
is entitled to receive the value of the Award. The company will receive a
deduction of an equal amount in the same year the participant recognizes
income.
RESTRICTED STOCK Recipients of shares of Restricted Stock that are
not "transferable" and are subject to "substantial risk of forfeiture" at the
time of grant will not be subject to federal income taxes until the lapse or
release of the restrictions or sale of the shares, unless the recipient files a
specific election under the Code to be taxed at the time of grant. The
recipient's income and the company's deduction will be equal to the excess of
the then fair market value (or sale price) of the shares less any purchase
price.
PERFORMANCE SHARES Participants are not taxed upon the grant of
Performance Shares. Upon receipt of the underlying shares or cash, a
participant will be taxed at ordinary income tax rates (subject to withholding)
on the amount of cash received and/or the current fair market value of stock
received, and the company will be entitled to a corresponding deduction. The
participant's basis in any Performance Shares received will be equal to the
amount of ordinary income on which he or she was taxed and, upon subsequent
disposition, any gain or loss will be capital gain or loss.
REQUIRED VOTE FOR APPROVAL
The affirmative vote of a majority of the company's Common Stock voted at the
annual meeting, by person or by proxy, is required to approve the Plan. While
broker nonvotes will not be treated as votes cast on the approval of this Plan,
Shares voted as abstentions will be counted as votes cast. Since a majority of
the votes cast is required for approval, the sum of any negative votes and
abstentions will necessitate offsetting affirmative votes to assure approval.
Unless otherwise directed by marking the accompanying proxy, the proxy holders
named therein will vote for the approval of the Plan. The Board of Directors
recommends a vote FOR the approval of the proposed Plan.
PROPOSAL TO APPROVE THE HERMAN MILLER, INC.,
1994 NONEMPLOYEE OFFICER AND DIRECTOR STOCK OPTION PLAN
On July 13, 1994, the Board of Directors also adopted the Herman Miller, Inc.,
1994 Nonemployee Officer and Director Stock Option Plan (the "Plan"), subject
to approval by the company's shareholders. If approved, the Plan will succeed
the company's 1985 Nonemployee Officer and Director Stock Option Plan which
expires next year. The following summary of the Plan is subject to the specific
provisions contained in the complete text of the Plan set forth in Appendix B
to this Proxy Statement.
PURPOSE
The Plan is intended to encourage stock ownership by nonemployee officers and
directors of the company and to provide those individuals with additional
incentive to manage the company effectively and to contribute to its success.
The Plan also is intended to provide a form of compensation that will attract
and retain highly qualified individuals as nonemployee officers and members of
the Board of Directors of the company.
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ANNUAL GRANT OF OPTIONS TO ACQUIRE COMMON STOCK
The Plan provides that all persons who are officers or directors of the
company, but are neither contractual nor common law employees of the company,
will be granted an option, as of the last day of the third quarter of each
fiscal year of the company, providing for the purchase of 1,500 shares of the
company's Common Stock. Because the final grant of options under the 1985
Nonemployee Officer and Director Plan will occur as of the last day of this
year's third fiscal quarter, the initial grant under this Plan will not occur
until the last day of the third fiscal quarter ending in 1996. The Plan is
intended to qualify as a "formula" plan under Section 16(b) of the Securities
and Exchange Act of1934, as amended.
There are currently 11 persons who are eligible to participate in the Plan.
Based on the current number of nonemployee directors and officers, options
providing for the purchase of an aggregate of 16,500 shares of Common Stock
would be granted to such persons under the Plan each year. The Plan precludes
any one participant from receiving options covering more than a total of 15
percent of the Common Stock reserved for issuance under the Plan.
The term of each option granted under the Plan is 10 years from the date of
grant. The option price for each option must equal 100 percent of the fair
market value of the company's Common Stock on the date the option is granted.
in general, no option may be exercisable in whole or in part prior to the first
anniversary of the date of grant of the option. In consideration of the grant
of an option, optionees are required to agree to continue to serve as an
officer or director of the company, as the case may be, for the lesser of at
least 12 months from the date the option is granted or the remainder of the
optionee's term as an officer or director of the company. Notwithstanding this
requirement, nothing contained in the Plan or any agreement to be executed
pursuant to the Plan will obligate the company, its Board of Directors, or its
shareholders to retain an optionee as an officer or director of the company.
ADMINISTRATION
The Plan is administered by a committee of not less than three persons, which
is to consist of the company's Chief Executive Officer and two or more persons
appointed by the Chief Executive Officer (the "committee"). The committee's
authority is limited to interpreting the provisions of the Plan and supervising
its administration, including the power to adopt procedures and regulations for
administrative purposes.
SHARES SUBJECT TO PLAN
One hundred thousand (100,000) shares of Common Stock, $.20 par value, are
proposed to be set aside for use under the Plan. The shares of Common Stock
that may be delivered under the Plan pursuant to the exercise of options will
consist of authorized and unissued shares, which may, subject to certain
conditions, include shares reacquired by the company. The Plan provides for an
equitable adjustment in the number, kind, or price of shares of Common Stock
covered by options in the event the outstanding shares of Common Stock are
increased, decreased, changed into, or exchanged for a different number or kind
of shares of the company through stock dividends or similar changes.
TERMINATION OR AMENDMENT OF THE PLAN
The Board of Directors of the company may amend or terminate the Plan with
respect to shares not subject to option at the time of amendment or
termination. The Plan may not be amended without shareholder approval if the
amendment would increase the maximum number of shares that may be issued under
the Plan, increase the maximum number of shares that may be optioned to any one
nonemployee officer or director, materially increase the benefits accruing to
option holders under the Plan, decrease the price at which options may be
granted, remove the administration of the Plan from the committee, or permit
the granting of options under the Plan after October 5, 2004. In addition, the
provisions of the Plan governing the class of persons entitled to participate
in the Plan, the amount of shares subject to each grant, the option price, and
the timing of grant of options, may not be made more than once every six
months, except to comply with changes in the Internal Revenue Code of 1986, as
amended (the "Code"). Unless earlier terminated by the Board of Directors, the
Plan will expire on October 5, 2004.
TRANSFERABILITY OF OPTIONS AND COMMON STOCK
Options granted under the terms of the Plan may be transferred only by will or
according to the laws of descent and distribution. Options may be exercised
only by an optionee during his or her lifetime. The company may impose such
restrictions on shares acquired pursuant to the exercise of an option as it
deems advisable, including without limitation, restrictions under federal and
state securities laws.
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FEDERAL TAX CONSEQUENCES
The following summarizes the consequences of the grant and exercise of options
under the Plan for federal income tax purposes, based on management's
understanding of existing federal income tax laws. This summary is necessarily
general in nature and does not purport to be complete. Also, State and local
income tax consequences are not discussed, and may vary from locality to
locality.
Optionees will not recognize taxable income at the time an option is
granted under the Plan unless the option has a readily ascertainable market
value at the time of grant. Management understands that options to be granted
under the Plan will not have a readily ascertainable market value; therefore,
income will not be recognized by participants before the time of exercise of an
option. Because options will not qualify as incentive stock options under the
Code, the difference between the fair market value of the shares at the time an
option is exercised and the option exercise price generally will be treated as
ordinary income to the optionee. The company is entitled to a corresponding
deduction equal to the amount of an optionee's ordinary income.
Tax consequences to an optionee will arise again at the time the shares of
Common Stock are sold. In general, if the shares have been held for more than
one year, the gain or loss will be treated as long-term capital gain or loss.
Otherwise, the gain or loss will be treated as short-term capital gain or
loss. The amount of any gain or loss will be calculated under the general
principles for determining gain and loss, and will equal the difference between
the amount realized in the sale and the tax basis and the shares of Common
Stock. The tax basis will generally equal the cost of the shares (the option
exercise price paid) plus any income recognized upon exercise of the option.
REQUIRED VOTE FOR APPROVAL
The affirmative vote of a majority of the company's Common Stock voted at the
Annual Meeting, by person or by proxy, is required to approve the Plan. While
broker nonvotes will not be treated as votes cast on the approval of this Plan,
shares voted as abstentions will be counted as votes cast. Since a majority of
the votes cast is required for approval, the sum of any negative votes and
abstentions will necessitate offsetting affirmative votes to assure approval.
Unless otherwise directed by marking the accompanying proxy, the proxy holders
named therein will vote for the approval of the Plan. The Board of Directors
recommends a vote FOR the approval of the proposed Plan.
PROPOSAL TO APPROVE THE HERMAN MILLER, INC.,
1994 KEY EXECUTIVE STOCK PURCHASE ASSISTANCE PLAN
On July 13, 1994, the Board of Directors adopted the Herman Miller, Inc. 1994
Key Executive Stock Purchase Assistance Plan (the "Plan"), subject to approval
by the company's shareholders. The following summary of the Plan is subject to
the specific provisions contained in the complete text of the Plan set forth in
Appendix C to this Proxy Statement.
PURPOSE
The purpose of the Plan is to promote the long-term interests of the company
and its shareholders by further encouraging and assisting its officers and key
executives to make a meaningful investment in its Common Stock, with the
intention of further aligning their interests and views as shareholders with
other shareholders of the company. The Board believes that a meaningful level
of stock ownership will provide these employees with an additional incentive to
use their best efforts to increase the value of the company. The Board also
believes that the Plan will enhance the company's ability to recruit and retain
persons who have special competence to contribute to the company's success.
ADMINISTRATION
The Plan must be administered by a committee of three or more members of the
Board of Directors (the "committee"). Each member of the committee is required
to be a "disinterested person," within the meaning of Rule 16b-3 of the General
Rules and Regulations under the Securities and Exchange Act of 1934, as
amended, as well as an "outside director," within the meaning of Section 162
of the Internal Revenue Code of 1986, as amended (the "Code"). The Board's
Executive Compensation Committee will serve as the Plan's committee. Subject to
the terms of the Plan, the committee is authorized to determine eligibility for
loans, the amount of each loan, and the terms and conditions of repayment. The
committee also has the authority to interpret the Plan and to establish rules
and regulations for purposes of administering the Plan.
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ELIGIBILITY
Only officers and key executives of the company and certain subsidiaries who,
in the judgment of the committee, are or will be in a position to contribute
significantly to the long-term growth and success of the company, are eligible
to receive loans under the Plan. At present, 16 key executives have been
offered loans under the Plan. Conditioned upon shareholder approval of the Plan
and the extension of Plan loans, these loans will enable the executives to
purchase up to 185,000 shares of the company's Common Stock within 15 business
days after the plan is approved by shareholders. If the plan is not approved by
the company's shareholders, these agreements will be void and of no effect.
PLAN LOANS
GENERAL TERMS The Plan authorizes the committee to extend company loans to
selected officers and key executives of the company and certain subsidiaries
for the purpose of acquiring company stock, including the exercise of employee
stock options. The Plan also authorizes loans to fund the payment of taxes
incurred in connection with the grant of company stock or the exercise of stock
options as well as to refinance loans incurred to purchase company stock.
The committee is authorized to establish the terms of each loan offered
to key executives under the Plan, provided that no loan may exceed the fair
market value of the shares of Common Stock purchased with the loan proceeds.
All loans will be full recourse loans. Each loan must be evidenced by a
promissory note from the key executive, must be secured by all or a portion of
the shares purchased with the loan proceeds, and must bear a rate of interest
equal to the lowest prevailing rate of interest that would avoid imputed
interest under Section 7872 of the Code. The payment of interest is required to
be made annually, beginning with the first day of September following the date
of the loan. All loans must be repaid in full on or before the fifth
anniversary of the initial interest payment date, subject to the authority of
the committee to extend the time for repayment. The Plan requires the immediate
payment of a loan upon a key executive's termination of employment with the
company or his or her default in payment of any loan under the Plan.
The transfer of shares of company stock acquired with the proceeds of a
loan under the Plan will be subject to restrictions on transfer and
assignability during the period of the loan and for an additional five years
after the loan has been paid. The committee is authorized to waive these
transfer restrictions after the maturity of the loan to permit the executive to
sell or pledge those shares to finance the repayment of the loan, or in other
situations where the committee determines that the justification for the waiver
is not inconsistent with the purpose of the Plan.
LOAN LIMITS The Plan establishes limits on the aggregate amount of
loans that may be made to all participants in the Plan, as well as on the
amount of loans that can be made to any one executive. No loans may be made
under the Plan if the aggregate principal amount of all outstanding loans under
the Plan would exceed 2% of the company's consolidated assets, subject to the
Board's authority to increase this amount if the number of key executives
eligible to receive loans under the Plan is increased. Also, unless otherwise
determined by the committee, the aggregate principal amount of all loans to an
employee may not exceed 300% of the average of his or her annual cash
compensation for the past three years.
REPAYMENT OF LOANS THROUGH PERFORMANCE The Plan provides that a portion of
the principal amount of a loan and accrued interest may be repaid by means of
the attainment of certain predetermined, personal or corporate performance
objectives established by the committee. The Plan authorizes the committee to
establish, as of the beginning of each fiscal year, corporate or personal
performance goals for each key executive to whom a loan has been made. During
the original term of a loan, as established by the committee, a key executive
may earn the repayment of up to 50% of the principal amount of a loan and
accrued interest if the established objectives are attained as of the end of
each fiscal year during the term of the loan.
If a loan is not paid in full at the end of the original term of the loan,
the Plan authorizes the committee to (a) extend the maturity of the loan, (b)
require the payment of the loan and direct the sale of shares pledged as
collateral in an amount sufficient to pay the unpaid principal and interest, as
well as the estimated amount of taxes incurred by the employee by reason of the
sale, (c) require the payment of the loan and waive the restrictions on
transfer to permit the employee to pledge the shares as collateral as may be
required by a lender to finance the repayment of the loan, or (d) a combination
of the foregoing. If a loan is extended by the committee for a period of three
years, the committee may permit a key executive to earn up to 30% of the
original principal amount of the loan plus accrued interest during the period
of extension by means of the satisfaction of personal or corporate performance
goals. If the time for repayment of a loan is extended in this manner, the time
for repayment may not be extended further. If a loan is extended by the
committee for a period of more than three years, the executive may not earn any
additional repayment of loan.
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Under the terms of the Plan, if a key executive earns a repayment of a loan
through performance after the prepayment of all or part of a loan, and the
amount of the earned repayment (excluding the earned payment of interest)
exceeds the unpaid principal amount of the loan at that time, the amount of the
excess will be paid by the company as an earned cash bonus. No cash bonus may
be paid with respect to interest which otherwise would have accrued on the
prepaid principal of a loan.
The Plan authorizes the Board, upon recommendation from the committee, to
forgive: (1) all the principal and accrued interest on any outstanding loan to
key executives upon a change of control of the company, and (2) up to 50% of
the principal amount of a loan and all accrued interest upon the death or
disability of a key executive. The Plan also authorizes the payment of
compensation for any additional federal, state, or local taxes incurred as
result of: (1) an earned loan repayment, any forgiveness, or earned cash bonus;
and (2) the receipt of compensation to pay taxes on such loan repayment,
forgiveness, or earned cash bonus to fully compensate the employee on an
after-tax basis. In determining whether an employee is compensated on an after
tax basis, the committee is required to take into account the economic benefit
and tax effect of cash or other dividends on the stock acquired with the loan
proceeds as well as interest payment deductions.
TERMINATION OR AMENDMENT OF THE PLAN
The Board may amend, discontinue, or terminate the Plan at any time; however,
no amendment, discontinuance or termination may alter or otherwise affect the
terms and conditions of any outstanding loan without the written consent of the
key executive. In addition, without the prior approval of the shareholders of
the company, no amendment may change the purpose of the Plan or the purposes
for which loans may be extended to key employees, materially increase the
aggregate loan limits, or change the definition of "Key Executives" for
purposes of expanding materially the eligibility of employees to receive loans
under the Plan.
FEDERAL TAX CONSEQUENCES
The following summarizes the consequences of the extension and repayment of
loans under the Plan for federal income tax purposes, based on management's
understanding of existing federal income tax laws. This summary is necessarily
general in nature and does not purport to be complete. Also, state and local
income tax consequences are not discussed, and may vary from locality to
locality.
Based on the terms and conditions of the loans that may be made under the
Plan, key executives will not recognize any compensation upon the extension of
a loan. In the event a key executive earns the repayment of the principal or
interest portion of any loan under the Plan, or if any principal or interest is
forgiven, the amount of the earned repayment or forgiveness will be recognized
as ordinary income to the key executive. Any additional cash compensation paid
under the Plan by the company will also be recognized as ordinary income. The
company will be entitled to a corresponding deduction in the year in which the
key executive recognizes any ordinary income under the Plan.
REQUIRED VOTE FOR APPROVAL
The affirmative vote of a majority of the company's Common Stock voted at the
Annual Meeting, by person or by proxy, is required to approve the Plan. Broker
nonvotes and abstentions will not be counted as votes cast on this proposal.
Since a majority of the votes cast is required for approval, any negative votes
will necessitate offsetting affirmative votes to assure approval. Unless
otherwise directed by marking the accompanying proxy, the proxy holders named
therein will vote for the approval of the Plan. The Board of Directors
recommends a vote FOR the approval of the proposed Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen & Co. as independent
public accountants for the company for the fiscal year ending June 3, 1995.
Representatives of Arthur Andersen & Co. will be present at the annual meeting
of shareholders and available to respond to appropriate questions. The Arthur
Andersen & Co. representatives will have the opportunity to make a statement if
they so desire.
Although the submission of this matter for approval by shareholders is not
legally required, the Board of Directors believes that such submission follows
sound corporate business practice and is in the best interests of the
shareholders. If the shareholders do not approve the selection of Arthur
Andersen & Co., the selection of such firm as independent public accountants
for the company will be reconsidered by the Board of Directors.
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The Board of Directors recommends a vote FOR the ratification of the
appointment of Arthur Andersen & Co. as the company's independent public
accountants.
SHAREHOLDER PROPOSALS--1995 ANNUAL MEETING
Any shareholder proposal intended to be presented at the next annual meeting of
the company must be received by the company at 855 East Main Avenue, PO Box
302, Zeeland, MI 49464-0302 not later than April 24, 1995, if the shareholder
wishes the proposal to be included in the company proxy materials relating to
the meeting.
In addition, the company's bylaws contain certain notice and procedural
requirements applicable to director nominations and shareholder proposals,
irrespective of whether the proposal is to be included in the company's proxy
materials. A copy of the company's bylaws has been filed with the Securities
and Exchange Commission and can be obtained from the Public Reference Section
of the Commission or the company.
MISCELLANEOUS
Pursuant to Section 16 of the Securities Exchange Act of 1934, the
company's directors and executive officers, as well as any person holding more
than 10 percent of the company's Common Stock are required to report initial
statements of ownership of the company's stock and changes in ownership of
those securities to the Securities and Exchange Commission. To the company's
knowledge, all the required reports were filed by such persons during the
fiscal year ended May 28, 1994, except that one report of change in ownership,
covering one transaction, was filed late by Mr. Hansjorg Broser, an executive
officer of the company.
If any matters, other than the matters set forth herein, properly come
before the meeting, it is the intention of the persons named in the enclosed
proxy to vote the shares thereby represented in accordance with their judgment.
The company has engaged Corporate Investor Communications, Inc., 111
Commerce Road, Carlstadt, New Jersey 07072 for solicitation of proxies for the
1994 Annual Meeting. The cost of the solicitation of proxies, estimated to be
approximately $4,500, will be borne by the company. In addition to the use of
the mails, proxies may be solicited personally or by telephone or telegraph by
a few regular employees of the company without additional compensation. The
company may reimburse brokers and other persons holding stock in their names or
in the names of nominees for their expenses in sending proxy materials to the
principals and obtaining their proxies.
The annual report of the company for the fiscal year ended May 28,
1994, including financial statements, is being mailed to shareholders with this
proxy statement. Shareholders are urged to date and sign the enclosed proxy and
return it promptly to the company in the enclosed envelope.
On May, 13, 1994, the company engaged First Chicago Trust Company of
New York to act in the capacity of stock transfer agent, registrar, and
dividend paying agent replacing NBD Bank N.A., who has since exited from the
business.
Questions related to your holdings can be directed as follows:
First Chicago Trust Company of New York
PO Box 2500
Jersey City, NJ 07303-2500
Phone: 1 800 446 2617
By Order of the Board of Directors
James N. De Boer, Jr., Secretary of the Board
August 22,1994
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APPENDIX A
HERMAN MILLER, INC., LONG-TERM INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 ESTABLISHMENT OF THE PLAN. Herman Miller, Inc., a Michigan
corporation (the "Company"), hereby establishes an incentive compensation plan
to be known as the "Herman Miller, Inc. Long-Term Incentive Plan" (the "Plan"),
as set forth in this document. The Plan permits the granting of stock options,
stock appreciation rights, restricted stock, and other stock-based awards to
key employees of the Company and its subsidiaries. Upon approval by the Board
of Directors of the Company, subject to ratification by the affirmative vote of
holders of a majority of shares of the Company's Common Stock present and
entitled to vote at the 1994 Annual Meeting of Shareholders, the Plan shall
become effective as of October 6, 1994 (the "Effective Date").
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
long-term success for the Company for the benefit of the Company's
shareholders, through stock-based compensation, by aligning the personal
interests of the Company's key employees with those of its shareholders. The
Plan is also designed to allow key employees to participate in the Company's
future, as well as to enable the Company to attract, retain and award such
employees.
1.3 TERM OF THE PLAN. No Awards shall be granted pursuant to the Plan on
or after the tenth anniversary of the effective Date ("Termination Date"),
provided that Awards granted prior to the Termination Date may extend beyond
that date, and Cash Payment Rights and Reload Options may be effected pursuant
to the terms of Awards granted prior to the Termination Date.
ARTICLE 2
DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings set
forth below:
2.1 "Award" shall mean any award under this Plan of any Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares or Other Stock-Based
Award.
2.2 "Award Agreement" shall mean an agreement evidencing the grant of an
Award under this Plan. Awards under the Plan shall be evidenced by Award
Agreements that set forth the details, conditions and limitations for each
Award, as established by the Committee and shall be subject to the terms and
conditions of the Plan.
2.3 "Award Date" shall mean the date that an Award is made, as specified
in an Award Agreement.
2.4 "Board" shall mean the Board of Directors of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Committee" shall mean the Committee, as specified in Article 3,
appointed by the Board to administer the Plan, no members of which shall be
eligible to receive an Award pursuant to the Plan.
2.7 "Common Stock" shall mean the Coommon Stock, $.20 par value per
share, of the Company.
2.8 "Disability" shall mean permant and total disability as determined
under the rules and guidelines established by the Committee for purposes of the
Plan.
2.9 "Disinterested Person" shall have the meaning set forth in Rule
16b-3(c)(2), as promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
definition adopted by the Commission.
2.10 "Fair Market Value" shall be the mean between the highest and lowest
sales prices per share of the Common Stock for such date on the National
Association of Securities Dealers Automated Quotation System or any successor
system then in use ("NASDAQ"). If no sale of shares of Common Stock is
reflected on the NASDAQ on a date, "Fair Market Value" shall be determined on
the next preceding day on which there was a sale of shares of Common Stock
reflected on NASDAQ.
2.11 "Incentive Stock Option" or "ISO" shall mean an option to purchase
shares of Common Stock granted under Article 6, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section 422
of the Code.
2.12 "Insider" shall mean an employee who is an officer (as defined in
Rule 16a-1(f) of the Exchange Act) or director of the Company, or holder of
more than ten percent (10%) of its outstanding shares of Common Stock.
2.13 "Nonqualified Stock Option" or "NQSO" shall mean an option to
purchase shares of Common Stock, granted under Article 6, which is not an
Incentive Stock Option.
2.14 "Option" means an Incentive Stock Option, a Nonqualified Stock
Option, or a Reload Option.
2.15 "Option Price" shall mean the price at which a share of Common Stock
may be purchased by a participant pursuant to an Option, as determined by the
Committee.
2.16 "Other Stock-Basked Award" shall mean an Award under Article 10 of
this Plan that is valued in whole or in part by reference to, or is payable in
or otherwise based on, Common Stock.
2.17 "Participant" shall mean an employee of the Company or a Subsidiary
who holds an outstanding Award granted under the Plan.
2.18 "Performance Shares" shall mean an Award granted under Article 9 of
this Plan evidencing the right to receive Common Stock or cash of an equivalent
value at the end of a specified performance period.
2.19 "Reload Option" shall mean an Option that is awarded under the
conditions of Section 6.5 of the Plan.
2.20 "Retirement" shall mean that termination of a Participant's
employment with the Company or a Subsidiary after the Participant attains
normal retirement age as established by the Committee at the time an Award is
made.
2.21 "Restricted Stock" shall mean an Award granted to a participant
under Article 8 of this Plan.
2.22 "Stock Appreciation Right" or "SAR" shall mean an Award granted to a
participant under Article 7 of this Plan.
2.23 "Subsidiary" shall mean any corporation in which the Company owns
diretly, or indiretly through subsidiaries, at least fifty percent (50%) of the
total combined voting power of all classes of stock, or any other entity
(including but not limited to, partnerships and joint ventures) in which the
Company owns at least fifty percent (50%) of the combined equity thereof.
2.24 "Termination of Employment" shall mean the termination of a
Participant's employment with the Company or a Subsidiary. A Participant
employed by a Subsidiary shall also be deemed to incur a Termination of
Employment if the subsidiary ceases to be a Subsidiary and the Participant does
not immediately thereafter become an employee of the Company or another
subsidiary.
ARTICLE 3
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by a Committee
designated by the Board consisting of not less than three (3) directors who
shall be appointed from time to time by the Board, each of whom shall qualify
as a Disinterested Person.
3.2 COMMITTEE AUTHORITY. Subject to the Company's Articles
Appendix A 21
<PAGE> 24
of Incorporation, Bylaws and the provisions of this Plan, the Committee shall
have full authority to grant Awards to key employees of the Company or a
Subsidiary. Awards may be granted singly, in combination, or in tandem. The
authority of the Committee shall include the following:
(a) To select the key employees of the Company or a Subsidiary to
whom Awards may be granted under the Plan;
(b) To determine whether and to what extent Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares and
Other Stock-Based Awards, or any combination thereof are to be
granted under the plan;
(c) To determine the number of shares of Common Stock to be covered by
each Award;
(d) To determine the terms and conditions of any Award Agreement,
including but not limited to, the Option Price, any vesting
restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions of waiver thereof,
regarding any Award and the shares Common Stock relating thereto,
based on such factors as the Committee shall determine in its sole
discretion;
(e) To determine whether, to what extent and under what circumstances
grants of Awards are to operate on a tandem basis and/or in
conjunction with or apart from other cash compensation arrangement
made by Company other than under the terms of this Plan;
(f) To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof; and
(g) To determine to what extent and under what circumstances shares of
Common Stock and other amounts payable with respect to an Award
shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of
the Plan and any Award issued under the Plan (including any Award Agreement) and
to otherwise supervise the administration of the Plan. A majority of the
Committee shall constitute a quorum, and the acts of a majority of a quorum at
any meeting, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. The
interpretation and construction by the Committee of any provisions of the Plan
or any Award granted under the Plan shall be final and binding upon the Company,
the Board and Participants, including their respective heirs, executors and
assigns. No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or an Award
granted hereunder.
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 13.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan shall not
exceed 1,250,000 shares, which may be either unauthorized and unissued Common
Stock reacquired by the Company ("Plan Shares"). Determinations as to the
number of Plan Shares that remain available for issuance under the Plan shall
be made in accordance with such rules and procedures as the Committee shall
determine from time to time, which shall be consistent with the requirements of
Rule 16b-3 of the Exchange Act and such interpretations thereof. If an Award
expires unexercised or is forfeited, cancelled, terminated or settled in cash
in lieu of Common Stock, the shares of Common Stock that were theretofore
subject (or potentially subject) to such Award may again be made subject to an
Award Agreement; provided, however, that any such shares subject to a forfeited
or cancelled Award shall not again be made subject to an Award Agreement to any
Participant who received, directly or indirectly, any of the benefits of
ownership of the securities underlying such Award, excluding the right to vote
such shares.
ARTICLE 5
ELIGIBILITY
The persons who shall be eligible to receive Awards under the Plan
shall be such key employees of the Company or a Subsidiary as the Committee
shall select from time to time. In making such selections, the Committee shall
consider the nature of the services rendered by such employees, their present
and potential contribution to the Company's success and the success of the
particular Subsidiary or division of the Company by which they are employed,
and such other factors as the Committee in its discretion shall deem relevant.
Participants may hold more than one Award, but only on the terms and subject to
the restrictions set forth in the Plan and their respective Award Agreements.
ARTICLE 6
STOCK OPTIONS
6.1 OPTIONS. Options may be granted alone or in addition to other
Awards granted under this Plan. Each Option granted under this Plan shall be
either an Incentive Stock Option (ISO) or a Nonqualified Stock Option (NQSO).
6.2 GRANTS. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does
not qualify shall constitute a separate Nonqualified Stock Option.
6.3 INCENTIVE STOCK OPTIONS. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. The aggregate Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to
which one or more Incentive Stock Options (or other incentive stock options
within the meaning of Section 422 of the Code, under all other option plans of
the Company) granted on or after Janaury 1, 1987, that are exercisable for the
first time by a Participant during any calendar year shall not exceed the
$100,000 limitation imposed by Section 422(d) of the Code.
6.4 TERMS OF OPTIONS. Options granted under the Plan shall be
evidenced by Award Agreements in such form as the Committee shall, from time to
time approve, which Agreement shall comply with and be subject to the following
terms and conditions:
(a) Participant's Agreement. Each Participant shall agree to remain in the
continuous employ of the Company for a period of at least twelve (12)
months from the Award date or until Retirement, if Retirement occurs prior
to twelve (12) months from the date of Option. Such Agreement shall not
impose upon the Company any obligation to retain the Participant in its
employ for any period.
(b) Option Price. The Option Price per share of Common Stock purchasable
under an Option shall be determined by the Committee at the time of
grant but shall be not less than one
22 APPENDIX A
<PAGE> 25
hundred percent (100%) of the Fair Market Value of the Common Stock at
the Award Date.
(c) Option Term. The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten (10) years after the
date the Option is granted.
(d) Exercisability. Except as provided in Section 13.2, no Option shall
be exercisable in either in whole or in part prior to the first
anniversary of the Award Date. Thereafter, an Option shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee and set forth in
the Award Agreement. If the Committee provides that any Option is
exercisable only in installments, the Committee may at any time
waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine.
(e) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (d) above, Options may
be exercised in whole or in part at any time during the term of the
Option, by giving written notice of exercise to the Company specifying
the number of shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in such form as the Committee
may accept. Notwithstanding the foregoing, an Option shall not be
exercisable with respect to less than 100 shares of Common Stock unless
the remaining shares covered by an Option are fewer than 100 shares.
If and to the extent determined by the Committee in its sole discretion
at or after grant, payment in full or in part may also be made in the
form of Common Stock owned by the Participant (and for which the
Participant has good title free and clear of any liens and
encumbrances) or Restricted Stock, or by reduction in the number of
shares issuable upon such exercise based, in each case, on the Fair
Market Value of the Common Stock on the last trading date preceding
payment as determined by the Committee (without regard to any forfeiture
restrictions applicable to Restricted Stock). No shares of stock shall
be issued until payment has been made. A Participant shall generally
have the rights to dividends or other rights of a shareholder with
respect to shares subject to the Option when the optionee has given
written notice of exercise, has paid for such shares as provided
herein, and, if requested, has given the representation described in
Section 14.1 of the Plan. Notwithstanding the foregoing, if payment in
full or in part has been made in the form of Restricted Stock, an
equivalent number of shares of Common Stock issued on exercise of the
Option shall be subject to the same restrictions and conditions, and
during the remainder of the Restriction Period [as defined in Section
8.3(a)], applicable to the shares of Restricted Stock surrendered
therefor.
(f) Nontransferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution. Further, all
Options shall be exercisable, during the Participant's lifetime, only
by such Participant.
(g) Termination of Employment for Reasons other than Retirement,
Disability, or Death. Upon Termination of Employment for any reason
other than Retirement or on account of Disability or death, each
Option held by the Participant shall, to the extent rights to purchase
shares under such Option have accrued at the date of such Termination
of Employment and shall not have been fully exercised, be exercisable,
in whole or in part, at any time within a period of three (3) months
following Termination of Employment, subject, however, to prior
expiration of the term of such Options and any other limitations on
the exercise of such Options in effect at the date of exercise.
Whether an authorized leave of absence or absence because of military
or governmental serivce shall constitute Termination of Employment for
such purposes shall be determined by the Committee, which
determination shall be final and conclusive.
(h) Termination of Employment for Retirement or Disability. Upon
Termination of Employment by reason of Retirement or Disability, each
Option held by such Participant shall, to the extent rights to
purchase shares under the Option have accrued at the date of such
Retirement or Disability and shall not have been fully exercised,
remain exercisable in whole or in part, for a period of five (5) years
following such Termination of Employment, subject, however, to prior
expiration according to its terms and other limitations imposed by the
Plan. If the Participant dies after such Retirement or Disability, the
Participant's Options shall be exercisable in accordance with Section
6.4(i) below.
(i) Termination of Employment for Death. Upon Termination of Employment
due to death, each Option held by such Participant shall, to the
extent rights to purchase shares under the Options have accrued at the
date of death and shall not have been fully exercised, be exercisable,
in whole or in part, by the personal representative of the
Participant's estate or by any person or persons who shall have
acquired the Option directly from the Participant by bequest or
inheritance only under the following circumstances and during the
following periods: (i) if the Participant dies while employed by the
Company or a Subsidiary, at any time within five (5) years after his
death, or (ii) if the Participant dies during the extended exercise
period following Termination of Employment specified in Section 6.4(h),
at any time within the longer of such extended period or one (1) year
after death, subject, however, in any case, to the prior expiration of
the term of the Option and any other limitation on the exercise of
such Option in effect at the date of exercise.
(j) Termination of Options. Any Option that is not exercised within
whichever of the exercise periods specified in Section 6.4(g), (h) or
(i) is applicable shall terminate upon expiration of such exercise
period.
(k) Purchase and Settlement Provisions. The Committee may at any time
offer to purchase an Option previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the
Participant at the time that such offer is made. In addition, if an
Award Agreement so provides at the Award Date or is thereafter amended
to so provide, the Committee may require that all or part of the
shares of Common Stock to be issued with respect to the exercise of an
Option, in an amount not greater than the Fair Market Value of the
shares that is in excess of the aggregate Option Price, take the form
of Performance Shares or Restricted Stock, which shall be valued on the
date of exercise on the basis of the Fair Market Value of such
Performance Shares or Resricted Stock determined without regard to
the deferral limitations and/or forfeiture restrictions involved.
6.5 RELOAD OPTIONS. Without in any way limiting the authority of the
Committee to make grants hereunder, and in order to induce employees to retain
ownership of shares of Common Stock, the Committee shall have the authority
(but not an obligation) to include within any Award Agreement a provision
entitling the Participant to a further Option (a "Reload Option") in the event
the Participant exercises the Option evidenced by the Award Agreement, in whole
or in part, by surrendering shares of Common Stock previously owned by the
Participant, in accordance with this Plan and the terms and conditions
Appendix A 23
<PAGE> 26
of the Award Agreement. A Reload Option shall entitle a Participant to purchase
a number of shares of Common Stock equal to the number of such shares so
delivered upon exercise of the original Option and, in the discretion of the
Committee, the number of shares, if any, tendered to the Company to satisfy any
withholding tax liability arising in connection with the exercise of the
original Option. A Reload Option shall: (a) have an Option Price of not less
than one hundred percent (100%) of the per share Fair Market Value of the
Common Stock on the date of grant of such Reload Option; (b) have a term not
longer than the remaining term of the original Option at the time ofexercise
thereof; (c) become exercisable in the event the shares acquired upon exercise
of the original Option are held for a minimum period of time established by
the Committee; and (d) be subject to such other terms and conditions as the
Committee may determine.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARs. The Committee may approve the grant of Stock
Appreciation Rights ("SARs") that are related to Options only. A SAR may be
granted only at the time of grant of the related Option. A SAR will entitle
the holder of the related Option, upon exercise of the SAR, to surrender such
Option or any portion thereof to the extent unexercised, with respect to the
number of shares as to which such SAR is exercised, and to receive payment of
an amount computed pursuant to Section 7.2. Such Option will, to the extent
surrendered, then cease to be exercisable. Subject to Section 7.4, a SAR
granted hereunder will be exercisable at such time or times, and only to the
extent that a related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.
7.2 PAYMENT OF SAR AMOUNT. Upon the exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined
by multiplying (i) the difference between the Fair Market Value of a share of
Common Stock on the date of exercise over the Option Price, by (ii) the number
of shares of Common Stock with respect to which the SAR is exercised. At the
discretion of the Committee, the payment upon SAR exercise may be in cash, in
shares of Common Stock of equivalent value, or in some combination thereof.
7.3 RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of
the Plan, the Committee may impose such conditions on exercise of a SAR
(including, without limitation, the right of the Committee to limit the time of
exercise to specified period(s) as may be required to satisfy the requirements
of Rule 16b-3, any successor rule), under the Exchange Act. Without limiting
the foregoing, the Committee may determine that a SAR may be exercised only
during the period beginning on the third business day and ending on the twelfth
business day following the publication of the Company's quarterly and annual
summary financial information.
7.4 NONTRANSFERABILITY. No SAR may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by laws
of descent and distribution. Further, all SARs shall be exercisable, during
the Participant's lifetime, only by such Participant.
ARTICLE 8
RESTRICTED STOCK
8.1 AWARDS OF RESTRICTED STOCK. Shares of Restricted Stock may be
issued either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times
at which, grants of Retricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the Participant, the time or times
within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Awards. The Committee may condition the grant of Restricted Stock upon the
achievement of specific business objectives, measurements of individual or
business unit or Company performances, or such other factors as the Committee
may determine. The provisions of Restricted Stock awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.
8.2 AWARDS AND CERTIFICATES. A prospective Participant selected to
receive a Restricted Stock shall not have any rights with respect to such
Award, unless and until such Participant has executed an Award Agreement
evidencing the Award and has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the applicable terms and conditions of
such Award. Further, such Award shall be subject to the following conditions:
(a) Acceptance. Awards of Restricted Stock must be accepted within a
period of 20 days (or such shorter period as the Committee may specify
at grant) after the Award Date, by executing an Award Agreement and by
paying whatever price (if any) the Committee has designated for such
shares of Restricted Stock.
(b) Legend. Each Participant receiving a Restricted Stock Award shall be
issued a stock certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award,
substantially in the following form: "The transferability of this
certificate and the shares of stock represented hereby are
subject to the terms and conditions (including forfeiture) of the Herman
Miller, Inc. Long-Term incentive Plan and related Award Agreement
entered into between the registered owner and the Company, dated
_________. Copies of such Plan and Agreement are on file in the
offices of the Company, 855 East Main Avenue, Zeeland, Michigan 49464."
(c) Custody. The Committee may require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of
any award of Restricted Stock, the Participant shall have delivered a
duly signed stock power, endorsed in blank, relating to the Common
Stock covered by such Award.
8.3 RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock
awarded pursuant to this Plan shall be subject to the following restrictions
and conditions:
(a) Restriction Period. Subject to the provisions of this Plan and the
Award Agreement, during a period set by the Committee commencing with
the Award Date (the "Restriction Period"), the Participant shall not
be permitted to sell, transfer, pledge, or assign shares of Restricted
Stock awarded under this Plan. Within these limits, the Committee, in
its sole discretion, may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions in whole or
in part, based on service, performance and/or such other factors or
criteria as the Committee may determine.
(b) Rights as Shareholder. Except as provided in this subsection (b) and
subsection (a) above, the Participant shall have, with respect to the
shares of Restricted Stock, all of the rights of a holder of shares of
Common Stock of the Company including the right to receive any
dividends. The Committee, in its sole discretion, as determined at
the time of Award, may permit or require the payment of dividends to
be deferred. If any dividends or other distributions are paid in
shares of Common Stock, such shares shall be subject to the same
restrictions on transferability and forfeitability as the shares of
24 Appendix A
<PAGE> 27
Restricted Stock with respect to which they were paid.
(c) Termination of Employment. Subject to the applicable provisions
of the Award Agreement and this Article 8, upon Termination of
Employment for any reason during the Restriction Period, all Restricted
Shares still subject to restriction will vest or be forfeited in
accordance with the terms and conditions established by the Committee as
specified in the Award Agreement.
(d) Lapse of Restrictions. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock, the certificates for
such shares shall be delivered to the Participant.
ARTICLE 9
PERFORMANCE SHARES
9.1 AWARD OF PERFORMANCE SHARES. Performance Shares may be awarded
either alone or in addition to other Awards granted under this Plan. The
Committee shall determine the eligible persons to whom and the time or times at
which Performance Shares shall be awarded, the number of Performance Shares to
be awarded to any person, the duration of the period (the "Performance Period")
during which, and the conditions under which, receipt of the Performance Shares
will be deferred, and the other terms and conditions of the Award in addition
to those set forth in Section 9.2, as specified in the Award Agreement. The
Committee may condition the grant of Performance Shares upon the achievement of
specific business objectives measurements of individual or business unit or
Company performance, or such other factors or criteria as the Committee shall
determine. The provisions of the award of Performance Shares need not be the
same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
9.2 TERMS AND CONDITIONS. Performance Shares awarded pursuant to this
Article 9 shall be subject to the following terms and conditions:
(a) Nontransferability. Subject to the provisions of this Plan and the
related Award Agreement, Performance Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Performance Period.
At the expiration of the Performance Period, share certificates or cash of
an equivalent value (as the Committee may determine in its sole discretion)
shall be delivered to the Participant, or his legal representative, in a
number equal to the shares covered by the Award Agreement.
(b) Dividends. Unless otherwise determined by the Committee at the
time of Award, amounts equal to any cash dividends declared during the
Performance Period with respect to the number of shares of Common Stock
covered by a Performance Share Award will not be paid to the Participant.
(c) Termination of Employment. Subject to the provisions of the Award
Agreement and this Article 9, upon Termination of Employment for any reason
during the Performance Period for a given Award, the Performance Shares in
question will vest or be forfeited in accordance with the terms and
conditions established by the Committee at or after grant.
(d) Accelerated Vesting. Based on service, performance and/or such
other factors or criteria as the Committee may determine and set forth in
the Award Agreement, the Committee may, at or after grant, accelerate the
vesting of all or any part of any award of Performance Shares and/or waive
the deferral limitations for all or any part of such Award.
ARTICLE 10
OTHER STOCK-BASED AWARDS
10.1 OTHER AWARDS. Other Awards of Common Stock and other Awards
that are valued in whole or in part by reference to, or are payable in or
otherwise based on, Common Stock ("Other Stock-Based Awards"), may be granted
either alone or in addition to or in tandem with Options, SARs, Restricted
Stock or Performance Shares. Subject to the provisions of this Plan, the
Committee shall have authority to determine the persons to whom and the time or
times at which such Awards shall be made, the number of shares of Common Stock
to be awarded pursuant to such awards, and all other conditions of the Awards.
The Committee may also provide for the grant of Common Stock under such Awards
upon the completion of a specified performance period. The provisions of Other
Stock-Based Awards need not be the same with respect to each participant and
such Awards to individual Participants need not be the same in subsequent years.
10.2 TERMS AND CONDITIONS. Other Stock-Based Awards made pursuant to
this Article 10 shall be set forth in an Award Agreement and shall be subject
to the following terms and conditions:
(a) Nontransferability. Subject to the provisions of this Plan and the
Award Agreement, shares of Common Stock subject to Awards made under this
Article 10 may not be sold, assigned, transferred, pledged, or otherwise
encumbered prior to the date on which the shares are issued, or, if later,
the date on which any applicable restriction, performance or deferral
period lapses.
(b) Dividends. Unless otherwise determined by the Committee at the
time of Award, subject to the provisions of this Plan and the Award
Agreement, the recipient of an Award under this Article 10 shall be
entitled to receive, currently or on a deferred stock basis, dividends or
other distributions with respect to the number of shares of Common Stock
covered by the Award.
(c) Vesting. Any Award under this Article 10 and any Common Stock
covered by any such Award shall vest or be forfeited to the extent so
provided in the Award Agreement, as determined by the Committee, in its
sole discretion.
(d) Waiver of Limitation. In the event of the Participant's Retirement,
Disability or death, or in cases of special circumstances, the Committee
may, in its sole discretion, waive in whole or in part any or all of the
limitations imposed hereunder (if any) with respect to any or all of an
Award under this Article 10.
(e) Price. Common Stock issued or sold under this Article 10 may be
issued or sold for no cash consideration or such consideration as the
Committee shall determine and specify in the Award Agreement.
ARTICLE 11
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's shareholders, no
amendment may be made which would (i) increase the aggregate number of shares
of Common Stock that may be issued under this Plan (except by operation of
Section 13.1); (ii) change the definition of employees eligible to receive
Awards under this Plan; (iii) decrease the option price of any Option to less
than one hundred percent (100%) of the Fair Market Value on the date of grant
for an Option; (iv) extend the maximum option period under Section 6.4(c) of
the Plan; or (v) otherwise materially increase the benefits accruing to
Participants under the Plan. The Committee may amend the terms of any Award
theretofore granted,
Appendix A 25
<PAGE> 28
prospectively or retroactively, but, subject to Section 13.2, no such amendment
or other action by the Committee shall impair the rights of any Participant
without the Participant's consent. Awards may not be granted under the Plan
after the Termination Date, but Awards granted prior to such date shall remain
in effect or become exercisable pursuant to their respective terms and the
terms of this Plan.
ARTICLE 12
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payment not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant anyrights that are greater than those of a general creditor of the
Company.
ARTICLE 13
ADJUSTMENT PROVISIONS
13.1 ANTIDILUTION. Subject to the provisions of this Article 13, if
the outstanding shares of Common Stock are increased, decreased, or exchanged
for a different number or kind of shares or other securities, or if additional
shares or new or different shares or other securities are distributed with
respect to such of Common Stock or other securities, through merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other distribution with respect to such shares of
Common Stock or other securities, an appropriate and proportionate adjustment
may be made in (i) the maximum number and kind of shares provided in Article 4
of the Plan, (ii) the number and kind of shares or other securities subject to
the then outstanding Awards, and (iii) the price for each share or other unit
of any other securities subject to the then outstanding Awards.
13.2 CHANGE IN CONTROL. Notwithstanding Section 13.1, upon
dissolution of liquidation of the Company, or upon upon a reorganization,
merger, or consolidation of the Company with one or more corporations as a
result of which the Company is not the surviving corporation, or upon the sale
of all or substantially all the assets of the Company, all Awards then
outstanding under the Plan will be fully vested and exercisable and all
restrictions will immediately cease, unless provisions are made in connection
with such transaction for the continuance of the Plan and the assumption of or
the substitution for such Awards of new Awards covering the stock of a
successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices.
13.3 ADJUSTMENTS BY COMMITTEE. Any adjustments pursuant to this
Article 13 will be made by the Committee, whose determination as to what
adjustments will be made and the extent thereof will be final, binding, and
conclusive. No fractional interest will be issued under the Plan on account of
any such adjustments. Only cash payments will be made in lieu of fractional
shares.
ARTICLE 14
GENERAL PROVISIONS
14.1 LEGEND. The Committee may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, any applicable corporate law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
14.2 NO RIGHT TO EMPLOYMENT. Neither this Plan nor the grant of any
Award hereunder shall give any Participant or other employee any right with
respect to continuance of employment by the Company or any Subsidiary, nor
shall there be a limitation in any way on the right of the Company or any
Subsidiary by which an employee is employed to terminate his or her employment
at any time.
14.3 WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made pursuant to this Plan, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be withheld. Unless otherwise prohibited by the
Committee, each Participant may satisfy any such withholding tax obligation by
any of the following means or by a combination of such means: (a) tendering a
cash payment; (b) authorizing the Company to withhold from the shares otherwise
issuable to the Participant a number of shares having a Fair Market Value, as
of the Tax Date, less than or equal to the amount of the withholding tax
obligation. The "Tax Date" shall be the date that the amount of tax to be
withheld is determined. If a Participant is an Insider, his or her election to
pay the withholding tax obligation by either of the latter two means of payment
shall be irrevocable, may be disapproved by the Committee, and must be made
either six months prior to the Tax Date or during the period beginning on the
third business day following the date of release of the Company's quarterly or
annual summary statement of sales and earnings and ending on the twelfth
business day following such date, provided that no such election may be made
within six months of an Award Date.
14.4 NO ASSIGNMENT OF BENEFITS. No Option, Award or other benefit
payable under this Plan shall, except as otherwise specifically transfer,
provided by law, be subject in any manner to anticipation, alienation,
attachment, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt to anticipate, alienate, attach, sell, transfer, assign, pledge,
encumber or charge, any such benefits shall be void, and any such benefit shall
not in any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such
benefit, nor shall it be subject to attachment or legal process for or against
such person.
14.5 GOVERNING LAW. This Plan and actions taken in connection
herewith shall be governed and construed in accordance with the laws and in the
courts of the state of Michigan.
14.6 APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of shares of Common Stock pursuant to Awards granted under this Plan
will be used for general corporate purposes.
14.7 RIGHTS AS A SHAREHOLDER. Except as otherwise provided in an
Award Agreement, a Participant shall have no rights as a shareholder of the
Company until he or she becomes the holder of record of Common Stock.
26 Appendix A
<PAGE> 29
APPENDIX B
HERMAN MILLER, INC., 1994 NONEMPLOYEE OFFICER AND DIRECTOR STOCK OPTION PLAN
1. NAME AND PURPOSE. This plan shall be called the Herman Miller, Inc.
Nonemployee Officer and Director Stock Option Plan (the "Plan"). The Plan is
intended to encourage stock ownership by nonemployee officers and directors of
Herman Miller, Inc. (the "Company"), to provide them with an additional
incentive to manage the Company effectively and to contribute to its success,
and to provide a form of compensation which will attract and retain highly
qualified individuals as nonemployee officers and members of the Board of
Directors of the Company.
2. EFFECTIVE DATE AND TERM OF THE PLAN. The Plan shall become effective
upon its approval by the shareholders of the Company. Options may not be
granted under the Plan after October 5, 2004; provided, however, that all
options outstanding as of that date shall remain or become exercisable pursuant
to their terms and the terms of the Plan.
3. ADMINISTRATION. The Plan shall be administered by a committee of not
less than three persons (the "Committee"), consisting of the Chief Executive
Officer of the Company and two or more persons appointed by the Chief Executive
Officer, who are either officers of the Company or members of the Company's
Board of Directors, none of whom is eligible to participate in the Plan. The
Chief Executive Officer of the Company may from time to time remove members
from, add members to, and fill vacancies on the Committee.
The Committee may, from time to time, establish such regulations,
provisions and procedures, within the terms of the Plan, as in the opinion of
its members may be advisable in the administration of the Plan. The Committee
shall keep minutes of its meetings. A majority of the Committee shall
constitute a quorum, and the acts of a majority of a quorum at any meeting,
or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted pursuant to the Plan shall be final and
binding upon the Company, the Board of Directors of the Company and any
optionee. No member of the Board of Directors of the Company or the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any option granted pursuant thereto.
4. PARTICIPATION. Subject to the limitations contained in this Section
4, officers and directors of the Company, who are neither contractual nor
common law employees of the Company or any of its subsidiaries, shall be
granted options to purchase shares of the Company's common stock in accordance
with the provisions of Section 6 of the Plan and consistent with the terms and
conditions of the Plan. An optionee may hold more than one option, but only on
the terms and subject to the restrictions hereafter set forth. Subject to
adjustments consistent with the provisions of Subsection 6(i), no one
nonemployee officer or director may be granted options covering more than a
total of fifteen percent (15%) of the common stock originally reserved for
issuance under the Plan, as defined in Section 5, plus such increases therein
as may from time to time be approved by the Company's shareholders.
5. STOCK AVAILABLE FOR OPTIONS. Subject to the adjustments as provided
in subsection 6(i), the aggregate number of shares reserved for purposes of the
Plan shall be 100,000 shares of the Company's common stock, par value $.20 per
share, either authorized and unissued shares or issued shares reacquired by the
Company (the "Shares"). Determinations as to the number of Shares that remain
availiable for issuance under the Plan shall be made in accordance with such
rules and procedures as the Committee shall determine from time to time, which
shall be consistent with the requirements of Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, and such interpretations thereof. If any
outstanding option under the Plan expires or is terminated for any reason
before October 6, 2004, the shares allocable to the unexercised portion of such
option shall become available for the grant of other options under the Plan.
No shares delivered to the Company in full or partial payment upon exercise of
an option pursuant to Subsection 6(e) or in full or partial payment of any
withholding tax liability permitted under Section 9 shall become available for
the grant of other options under the Plan.
6. DATE OF GRANT, TERMS AND CONDITIONS OF OPTIONS OF THE PLAN. Options
granted under this Plan shall be evidenced by agreements in such form as the
Committee shall from time to time approve, which agreements shall comply with
and be subject to the following conditions:
(a) Optionee's Agreement. Each optionee shall agree to continue to serve as an
officer or director of the Company, as the case may be, for the lesser of at
least twelve (12) months from the date of the grant of the option or for the
remainder of such optionee's term as an officer or director of the Company.
Such agreement shall not impose upon the Company, its Board of Directors, or
its shareholders any obligation to retain the optionee as an officer or
director for any period.
(b) Effective Grant Date of Options. Beginning with the third fiscal quarter
ending in 1996, options shall be granted on the last day of the third
quarter of each of the Company's fiscal years during the term of this Plan,
to each person entitled to participate in the Plan under Section 4.
(c) Number of Shares and Term of Options. Each option shall provide for the
purchase of one thousand five hundred (1,500) shares of the common stock of
the Company. The term of each option shall be for a period of ten (10)
years from the date of grant of the option.
(d) Option Price. The exercise price of each option shall equal to one
hundred percent (100%) of the Fair Market Value of the shares of common
stock on the date of the grant of the option. If the shares are traded in
the over-the-counter market, the Fair Market Value per share shall be the
closing price on the national market list as quoted in the National
Association of Securities Dealers Automated Quotation System (NASDAQ")
on the day the option is granted or if no sale of shares is reflected in
NASDAQ on that day, on the next preceding day on which there was a sale
of shares reflected in NASDAQ. If the shares are not traded in the
over-the-counter market but are listed upon an established stock exchange
or exchanges, such Fair Market Value shall be deemed to be the closing
price of the shares on such stock exchange or exchanges on the day the
option is granted or if no sale of the shares shall have been made
on any stock exchange on that day, on the next preceding day on which
there was a sale of the shares.
(e) Medium of Payment. The option price shall be payable to the Company either
(i) in United States dollars in cash or by check, bank draft, or money order
payable to the order of the Company or (ii) through the delivery of shares
of the Company's common stock with a Fair Market Value on the date of the
exercise equal to the option price, provided such shares are utilized as
payment to acquire at least 100 share of common stock, or (iii) by a
combination of (i) and (ii) above. Fair Market Value will be determined in
Appendix B 27
<PAGE> 30
the manner specified in Subsection 6(d) except as to the date of
determination.
(f) Exercise of Options. Except as provided in Subsection 6(i) no option
shall be exercisable, either in whole or in part, prior to the first
anniversary of the date of grant of the option. Thereafter, an option
shall be exercisable at any time or from time to time during the term of
the option, upon written notice to the Company, as to any or all shares
covered by the option, until its termination or expiration in accordance
with its terms or the provisions of the Plan. Notwithstanding the
foregoing, an option shall not at any time be exercisable with respect to
less than 100 shares unless the remaining shares covered by an option are
less than 100 shares. The purchase price of the shares purchased
pursuant to an option shall be paid in full upon delivery to the optionee
of certificates for such shares.
(g) Options not Transferable. Options may not be sold, pledged, assigned, or
transferred in any manner otherwise than by will or the laws of descent
or distribution to the extent provided in Subsection 6(h). During the
lifetime of an optionee, the options shall be exercisable only by the
optionee. Following the death of an optionee, the options shall be
exercisable only to the extent provided in Subsection 6(h).
(h) Termination of Service as Nonemployee Officer or Director.
(i) Termination of Service for any Reason Other than Death. In the
event an optionee shall cease to serve the Company as a
nonemployee officer or director for any reason other than such
optionee's death, each option held by such optionee shall remain
exercisable, subject to prior expiration according to its terms and
other limitations imposed by the Plan, for a period of five (5)
years following the optionee's cessation of service as a nonemployee
officer or director of the Company. If the optionee dies after such
retirement, the optionee's options shall be exercisable in
accordance with Subsection 6(h)(ii) hereof.
(ii) Termination of Service for Death. If an optionee ceases
to be a nonemployee officer or director by reason of death, each
option held by such optionee shall, to the extent rights to purchase
shares under the option have been accrued at the time of death and
shall not have been fully exercised, be exercisable, in whole or in
part, by the personal representative of the optionee's estate or by
any person or persons who have acquired the option directly from the
optionee by bequest or inheritance during the shorter of the
following periods: (i) the term of the option, or (ii) a period of
five (5) years from the death of such optionee. If an optionee dies
during the extended exercise period following termination of service
for retirement or disability specified in Subsection 6(h)(i) above,
such option may be exercised any time within the longer of such
extended period or one (1) year after death, subject to the prior
expiration of the term of the option.
(i) Adjustment in Shares Covered by Option. The number of shares
covered by each outstanding option, and the purchase price per share
thereof, shall be proportionately adjusted for any increase or decrease
in the number of issued and outstanding shares resulting from a split in
or combination of shares or the payment of a stock dividend on the shares
or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company.
If the Company shall be the surviving corporation in any merger or
consolidation or if the Company is merged into a wholly-owned subsidiary solely
for purposes of changing the Company's state of incorporation, each outstanding
option shall pertain to and apply to the securities to which a holder of the
number of shares subject to the option would have been entitled. A dissolution
or liquidation of the Company or a merger or consolidation in which the Company
is not the surviving corporation, except as above provided, shall cause each
outstanding option to terminate, provided, that each optionee shall, in that
event, have the right immediately prior to such dissolution or liquidation, or
merger or consolidation in which the Company is not the surviving corporation,
to exercise his or her option in whole or in part.
In the event of a change in the shares as presently constituted, which
is limited to a change of all its authorized shares with par value into the
same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the shares within
the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
Any such adjustment may provide for the elimination of any fractional share
which might otherwise become subject to an option.
Except as hereinbefore expressly provided in this Subsection 6(i), the
optionee shall have no rights by reason of any split or combination of shares
of stock of any class or the payment of any stock divided or any other increase
or decrease in the number of shares of stock of any class or by reason of
any dissolution, liquidation, merger, or consolidation or spinoff of assets or
stock of another corporation, and any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of stock subject to the option.
The grant of an option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge
or to consolidate or to dissolve, liquidate or sell, or transfer all or any
part of its business or assets.
(j) Rights of a Shareholder. An optionee shall have no rights as a shareholder
with respect to any shares covered by his or her option until
the date on which the optionee becomes the holder of record of such
shares. No adjustment shall be made for dividends, distributions, or
other rights for which the record date is prior to the date on which he or
she shall have become the holder of record thereof, except as provided in
Subsection 6(i).
(k) Postponement of Delivery of Shares and Representations. The Company, in
its discretion, may postpone the issuance and/or delivery of shares
upon any exercise of an option until completion of the registration or
other qualification of such shares under any state and/or federal law,
rule or regulation as the Company may consider appropriate, and may
require any person exercising an option to make such representations,
including a representation that it is the optionee's intention to acquire
shares for investment and not with a view to distribution thereof, and
furnish such information as it may consider appropriate in connection with
the issuance or delivery of the shares in compliance with applicable laws,
rules, and regulations. In such event no shares shall be issued to such
holder unless and until the Company is satisfied with the accuracy of any
such representations.
(l) Other Provisions. The option agreements authorized under the Plan shall
contain such other provisions, including, without limitation, restrictions
upon the exercise of the option, as the Committee shall deem advisable.
7. ADJUSTMENTS IN SHARES AVAILABLE FOR OPTIONS. The
28 Appendix B
<PAGE> 31
adjustments in number and kind of shares and the substitution of shares,
affecting outstanding options in accordance with Subsection 6(i) hereof, shall
also apply to the number and kind of shares reserved for issuance pursuant to
the Plan, but not yet covered by options.
8. AMENDMENT OF THE PLAN. The Committee, insofar as permitted by law,
shall have the right from time to time, with respect to any shares at the time
not subject to options, to suspend or discontinue the Plan or revise or amend
it in any respect whatsoever, except that the provisions of the Plan set forth
in Section 4 and Subsections 6(b), (c), and (d) may not be amended more than
once every six (6) months (other than to comport with changes in the Internal
Revenue Code and the rules and regulations promulgated thereunder), and except
that, without approval of the shareholders of the Company, no such revision or
amendment shall:
(a) increase the maximum number of shares which may be subject to the Plan,
(b) increase the maximum number of shares which may be optioned to any one
nonemployee officer or director,
(c) materially increase the benefits accruing to option holders under the Plan,
(d) decrease the exercise price of options granted under the Plan,
(e) remove the administration of the Plan from the Committee, or
(f) permit the granting of options under the Plan after October 5, 2004.
9. WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made pursuant to this Plan, or to otherwise require,
prior to the issuance or delivery of any shares of common stock, payment by the
optionee of any federal, state, or local taxes required by law to be withheld.
Unless otherwise prohibited by the Committee, an optionee may satisfy any such
withholding tax obligation by any of the following means or by a combination of
such means:
(a) tendering a cash payment;
(b) authorizing the Company to withhold from the shares otherwise issuable to
the optionee a number of shares having a Fair Market Value as of the "Tax
Date," less than or equal to the amount of withholding tax obligation; or
(c) delivering to the Company unencumbered shares owned by the optionee having
a Fair Market Value, as of the Tax Date, less than or equal to the amount of
the withholding tax obligation.
The "Tax Date" shall be the date that the amount of tax to be withheld is
determined. Fair Market Value shall be determined in the manner specified in
Subsection 6(d), except as to the date of determination. An optionee's
election to pay the withholding tax obligation by either of (b) or (c) above
shall be irrevocable, may be disapproved by the Committee, and must be made
either six months prior to the Tax Date or during the period beginning on the
third business day following the date of release of the Company 's
quarterly or annual summary statement of sales and earnings and ending on
the twelfth business day following such date.
10. RIGHT OF SHAREHOLDERS TO TERMINATE DIRECTOR'S SERVICE. Nothing in
this Plan or in the grant of any option hereunder shall in any way limit or
effect the right of the shareholders of the Company to remove any officer or
director or otherwise terminate his or her service as an officer or director,
pursuant to law, the Articles of Incorporation, or Bylaws of the Company.
11. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of stock pursuant to options will be used for general corporate purposes.
12. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall
impose no obligation upon the optionee to exercise such option.
13. CONSTRUCTION. This Plan shall be construed under the laws of the
State of Michigan, United States of America.
Appendix B 29
<PAGE> 32
APPENDIX C
HERMAN MILLER, INC.,
1994 KEY EXECUTIVE STOCK PURCHASE ASSISTANCE PLAN
SECTION 1. PURPOSES.
The purpose of the Plan is to promote the long-term interests of Herman Miller,
Inc. and its shareholders by encouraging and assisting its officers and key
executives to make meaningful investments in the Common Stock of the Company so
that, as shareholders, their views and interests will be identified with the
views and interests of the other shareholders. Meaningful stock ownership will
provide officers and key executives with an additional incentive to exert their
best efforts to increase the value of the Company for the benefit of all
shareholders. The Plan will also strengthen the Company's ability to recruit
and retain persons who have special competence to contribute to the Company's
success.
SECTION 2. DEFINITION.
"Applicable Rate" means, with respect to a Loan, the lowest rate or rates of
interest which would avoid the imputation of interest under Section 7872 of the
Code.
"Annual Cash Compensation" means, with respect to a Key Executive, the
sum of his or her annual base salary plus the annual cash incentive earned in a
particular fiscal year of the Company.
"Average Annual Cash Compensation" means the average of the Annual Cash
Compensation earned by the Key Executive during the three (3) years preceding
the date on which such average is determined. If the Key Executive has been
employed for less than three (3) years, then Annual Cash Compensation shall be
averaged for the year(s) in which he or she has been employed.
"Board" means the Board of Directors of the Company.
"Change in Control" means the first to occur of any one of the events
described below:
(a) Stock Acquisition. Any "person," as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934 as amended
("Act"), other than the Company or a Subsidiary, or a trustee of an
employee benefit plan sponsored solely by the Company or a Subsidiary
is or becomes, other than by purchase from the Company, the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Act), directly
or indirectly, of shares of Common Stock or other securities of the
Company representing 20 percent or more of the combined voting power of
the Company's then outstanding voting securities.
(b) Change in Board. During any period of two (2) consecutive years,
individuals who at the beginning of such period were members of the
Board cease for any reason to constitute at least a majority of the
Board, unless each new director was nominated or elected by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(c) Other Events. Any other event or series of events which,
notwithstanding any other provisions of this definition, is determined
by the Board to constitute a change in control of the Company for
purposes of this Plan.
"Code" means the Internal Revenue Code, as amended.
"Committee" means the Executive Compensation Committee of the Board, or
any successor committee thereto.
"Common Stock" means the shares of common stock of the Company.
"Company" means Herman Miller, Inc., a Michigan corporation.
"Extended Period of the Loan" means a period of three (3) years
beginning at the end of the Initial Period of the Loan.
"Initial Period of the Loan" means the period from the date of the Loan
until the maturity date established by the Committee as provided in Section
4(d)(i).
"Key Executive" means any officer or other key executive of the Company
or a Subsidiary who, in the judgment of the Committee, is or will be in
position to contribute significantly to the longer-term growth and success of
the Company.
"Loan" means the loan made by the Company to a Key Executive pursuant to
the Plan.
"Loan Offer" means an offer by the Committee in behalf of the Company
to extend a Loan to a Key Executive.
"Plan" means the Herman Miller, Inc. 1994 Key Executive Stock Purchase
Assistance Plan.
"Restriction Period" means the period defined in Section 4(f).
"Subsidiary" means any corporation at least 80 percent of the
outstanding voting stock of which is owned by the Company.
SECTION 3. ADMINISTRATION.
(a) The Committee. The Committee shall be responsible for administering
the Plan. The Committee shall be comprised of three or more members of
the Board, all of whom shall be "disinterested persons" as defined in
Securities Exchange Commission Rule 16b-3 and "outside directors" as
that term is used in Section 162 of the Code and the regulations
promulgated thereunder.
(b) Powers. The Committee shall have full and exclusive discretionary
power to interpret the Plan, to determine eligibility for Loans, and
to adopt such rules, regulations, and guidelines for administering the
Plan as the Committee may deem necessary or proper. The Committee may
employ attorneys, consultants, accountants, and other persons. The
Board, Committee, the Company, and its officers shall be entitled to
rely upon the advice or opinion of such persons.
(c) Binding Effect of Committee Actions. All actions taken and all
interpretations and determinations made by the Committee in good faith
shall be final and binding upon the Key Executives, the Company, and
all other interested persons. No member of the Committee shall be
personally liable for any action, determination, or interpretation made
in good faith with respect to the Plan or Loans. All members of the
Committee shall be fully protected and indemnified by the Company, to
the fullest extent permitted by applicable law, in respect of any such
action, determination, or interpretation.
SECTION 4. LOANS.
(a) Benefit to Company. The Board has reasonably determined that the Plan
will benefit the Company.
(b) Purpose of Loan. The Company may extend Loans from time to time to Key
Executives to be used solely for the purpose of:
(i) acquiring Common Stock at fair market value in open market
transactions or from the Company;
(ii) acquiring Common Stock upon the exercise of stock options
granted under a stock option plan of the Company;
(iii) paying taxes incurred in connection with the exercise of such a
stock option;
(iv) paying taxes incurred in connection with the grant of Common
Stock;
(v) refinancing loans incurred to purchase Common Stock; or
(vi) any combination of the above.
(c) Amount; General Terms. Each Loan shall be made pursuant to a Loan
Offer by the Committee to a Key Executive. The amount of Loan offered
shall be determined by the Committee, but shall not
30 Appendix C
<PAGE> 33
exceed the fair market value of the shares of Common Stock to be
purchased with the proceeds of the Loan. Each Loan shall be full
recourse, evidenced by a promissory note and a loan agreement which
together shall contain the relevant terms and conditions of the Plan
and such other terms and conditions not inconsistent with the Plan as
the Committee shall determine.
(d) Interest Rate and Maturity. Each Loan shall bear interest
at the Applicable Rate. The first interest payment date shall
be the first day of September next following the date of the Loan, and
thereafter interest payments shall be due annually on September 1 of
each year until the maturity of the Loan. Each Loan shall mature and
the principal and unpaid interest shall become immediately due and
payable in full upon the earlier of:
(i) the fourth or fifth anniversary date (as determined by the
Committee) of the first interest payment date;
(ii) the default by the Key Executive on any Loan made to him or
her under the Plan;
(iii) the termination of employment (whether voluntary or
involuntary) or death of the Key Executive; or
(iv) such other date as is determined by the Committee at the time
the Loan is made.
The Committee may, in its discretion, authorize the extension of the
time for repayment of a Loan upon such terms and conditions as the Committee
may determine, provided that no such extension shall entitle a Key Executive
to earn repayments of the principal and interest of a Loan in excess of the
maximum repayments permitted by Sections 6(a) and 6(b).
(e) Security. Each Loan shall be secured by the pledge of all or a portion
(as determined by the Committee) of the shares of Common Stock acquired
with the proceeds of the Loan, provided that, at the time of making the
Loan, the principal amount thereof shall not exceed the fair market
value of the shares of Common Stock pledged as security therefor.
Shares of Common Stock pledged to secure repayment of a Loan
shall be delivered to the Company, endorsed in blank by the
Key Executive to whom the Loan is made or accompanied by a separate
stock power so endorsed, with signature guaranteed. The fluctuation
in the market value of the shares pledged as security for a Loan shall
not affect any of the terms or conditions of the Loan, or of the note,
loan agreement, or pledge related thereto.
(f) Restricted Shares; Legend.
(i) The tranfer of shares of Common Stock purchased with the
proceeds of a Loan shall be restricted during the period that
all or any part of the Loan remains unpaid, and for
an additional period of five (5) years after the Loan is fully
paid (the "Restriction Period") whether the Loan is fully paid
during or at the end of the Initial Period of the Loan or
during or at the end of the Extended Period of the Loan.
During the Restriction Period, a Key Executive shall not be
permitted to sell, give, pledge (except to the Company),
assign or otherwise transfer any shares purchased with the
proceeds of the Loan.
(ii) The Committee, in its discretion, may waive such restrictions
at the end of the Initial Period of the Loan, as permitted by
Sections 6(b)(ii) and (iii). The Committee shall also have
authority to waive such restrictions in other situations if the
Committee determines, in its discretion, that a waiver in the
particular situation is not inconsistent with the purpose of
the Plan.
(iii) Stock certificates representing the shares of Common Stock
purchased with the proceeds of a Loan shall bear a legend in
substantially the following form:
The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions of the Herman
Miller, Inc. 1994 Key Executive Stock Purchase Assistance Plan and related Loan
Agreement entered into between the registered owner and the Company dated
____________. Copies of the Plan and Loan Agreement are on file in the offices
of Herman Miller, Inc., 855 East Main Avenue, Zeeland, Michigan 49464.
(g) Acceptance of Loan Offer. The Committee shall establish a reasonable
time period during which each Loan Offer may be accepted by a Key
Executive. During such time period, the Key Executive may accept the
whole or less than the whole amount of the Loan offered. The manner of
acceptance shall be prescribed by the Committee. If a Key Executive
does not accept a Loan Offer during such time period, in whole or
in part, the Loan Offer, or the amount not accepted, shall lapse.
SECTION 5. LOAN LIMITS.
(a) Key Executive. No Loan shall be made to a Key Executive which will
cause the aggregate principal amount of all Loans outstanding to such
Key Executive to exceed 300 percent of his or her Average Annual Cash
Compensation, provided that the Committee is authorized to approve Loans
exceeding such limit if the Committee determines in its discretion that
a larger Loan to a particular Key Executive is prudent and consistent
with the purpose of the Plan.
(b) Company Aggregate. No Loans shall be made under the Plan which will
cause the aggregate principal amount of all outstanding Loans made
under the Plan to exceed 2 percent of the consolidated assets of the
Company and its Subsidiaries. The Board may from time to time adjust
the limit on the aggregate principal amount of Loans which may be
outstanding under the Plan based upon changes in the number of Key
Executives who are eligible to receive Loans.
SECTION 6. LOAN REPAYMENT EARNED THROUGH PERFORMANCE.
(a) Earned Repayment -- Annual Performance Objectives. As of the beginning
of each fiscal year of the Company, the Committee in its discretion
shall establish corporate or personal performance objectives applicable
to each Key Executive to whom a Loan is outstanding or is then being
made, and shall provide that the Key Executives may earn repayment of
(i) a portion of the principal amount of such Loans, and (ii) all or a
portion of the interest accrued on such Loans to the interest payment
date following the end of such year, if such objectives have been met
as of the end of such year. Likewise, the Committee may, in its
discretion, provide that Key Executives may earn repayment of a lesser
or greater portion of a Loan if, respectively, less or more than 100
percent of such objectives are met. During the Initial Period of the
Loan, no Key Executive shall be entitled to earn repayment of more than
50 percent of the original principal amount of any Loan to him or her,
plus interest accrued on the Loan during such period.
(b) Alternatives as of End of Initial Period of Loan. If a Loan to a Key
Executive is not paid in full at or before the end of the Initial
Period of the Loan, the Committee, in its discretion, may proceed in
accordance with any one or more of the following, as it shall
determine in its discretion:
(i) to extend the maturity of the Loan for three (3) years and
provide that during the Extended Period of the Loan the Key
Executive may earn repayment of not more than 30 percent of the
original principal amount of any Loan to him or her, plus
accrued interest, in the same manner as is provided in (a) above
during the Initial Period of the Loan; or
Appendix C 31
<PAGE> 34
(ii) to require payment of the Loan in full at maturity and, after
waiving the restrictions imposed by Section 4(f), direct the Company to
sell, or permit the Key Executive to sell, a number of the shares of
Common Stock pledged to the Company as security, the sale proceeds of
which will be sufficient (A) to pay the unpaid principal of the Loan and
all interest accrued thereon, and (B) to pay the estimated amount of
income taxes incurred by the Key Executive by reason of the sale of such
shares; or
(iii) to require payment of the Loan in full at maturity and waive the
restrictions imposed by Section 5(f) on the number of shares (out of
those pledged to the Company as security for the Loan) which the Key
Executive is required by a lender to pledge as collateral for a loan in
an amount sufficient to pay the Loan in full; or
(iv) to extend the maturity of the Loan as permitted by Section 4(d); or
(v) any combination of the above.
If the maturity of the Loan is extended pursuant to (i) above, the Key
Executive shall be obligated, absolutely and unconditionally, to pay the Loan
in full at the end of the Extended Period of the Loan.
If the restrictions on Common Stock are waived pursuant to (iii) above,
and the lien on the shares pledged to the lender as collateral is released
before the end of the Restriction Period, the restrictions on such shares
imposed by Section 4(f) shall be reimposed for the duration of the Restriction
Period and the legend required by Section 4(f) shall again be affixed to the
certificates representing such shares.
(c) Forgiveness -- Change in Control. In connection with a Change in
Control, the Board in its discretion, upon the recommendation of the
Committee, shall have the authority to forgive all principal and interest
on all outstanding Loans to Key Executives under the Plan.
(d) Forgiveness -- Death or Disability. Upon the death of a key
Executive, or if the Key Executive's employment is terminated by reason of
his or her total disability, the Board, upon the recommendation of the
Committee, shall have the authority in its discretion to reduce, by
forgiveness, the principal amount of all Loans to that Key Executive by an
amount equal to not more than 50 percent of the original principal amount
of such Loans and to forgive all accrued interest on the principal amount
so forgiven.
(e) Earned Repayment -- Cash Payment. If a Key Executive earns one or
more Loan repayments under Section 6(a) during the Initial Period of the
Loan, or under 6(b) during the Extended Period of the Loan at any time
after he or she has prepaid all or a part of his or her Loan, and if the
dollar amount of such earned repayment(s) (excluding earned payment of
interest) exceeds the unpaid principal amount of the Loan at that time,
the amount of the excess shall be paid by the Company to the Key Executive
as an earned cash bonus. If the Loan has been fully prepaid, the entire
amount of the earned repayment of principal shall be paid as an earned cash
bonus. No cash bonus shall be paid with respect to interest which
otherwise would have accrued on the prepaid principal of the Loan.
(f) Compensation for Taxes. The Committee shall have the authority,
in its discretion, to authorize payments of compensation by the Company to
Key Executives for additional federal, state, or local taxes they will
incur as a result of (i) earned Loan repayment or forgvieness, whether
principal or interest, (ii) payment of a cash bonus earned under Section
6(e), and (iii) receipt of compensation to pay the taxes on such Loan
repayment, forgiveness or earned cash bonus, so that the Key Executive
shall be compensated fully on an aftertax basis. In determining whether
a Key Executive is fully compensated on an aftertax basis, the Committee
shall take into account the beneficial effects of the annual cash
dividends received by the Key Executive on the Common Stock purchased with
the proceeds of a Loan, including both the aftertax income realized from
the dividends received and their effect on the deductibility of interest
paid on the Loan. Such compensation payments to the Key Executive, if
authorized by the Committee, shall be in the form of cash bonuses.
(g) Deduction of Benefits. In the administration of the discretionary
provisions of this Section 6 which may result in the realization of
taxable income by a Key Executive, the Committee, in the exercise of its
discretion, may consider as one of the factors relevant to its decision
the Company's ability to deduct for federal income tax purposes the
taxable income to be realized by the Key Executive.
(h) Tax Withholding. The Company may take such action as may be
necessary or appropriate to satisfy tax withholding requirements of any
federal, state, or local laws or regulation in connection with Loan
forgiveness.
SECTION 7. GENERAL PROVISIONS
(a) No Right to Loan or Employment. No Key Executive or other person
shall have any claim or right to receive a Loan under the Plan or to be
retained in the employment of the Company or a Subsidiary by reason of the
Plan or any Loan to him or her.
(b) Compliance with Laws. No Loan shall be made hereunder unless
counsel for the Company shall be satisfied that such Loan will be in
compliance with all applicable federal, state, and local laws.
(c) Plan Expenses. The expenses of the Plan and its administration
shall be borne by the Company.
(d) Plan Not Funded. The Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund or to make any
other segregation of assets to assure the making of any Loan under the
Plan. The Plan shall not establish a fiduciary relationship between the
Company and any Key Executive or other person.
(e) Acceptance of Actions Taken Under Plan. By accepting a Loan under
the Plan, a Key Executive shall be deemed conclusively to have indicated
his or her acceptance and consent to any action taken under the Plan by
the Company, the Board, or the Committee.
(f) Reports. The appropriate officers of the Company shall cause to be
filed any reports, returns, or other information regarding Loans hereunder,
as may be required by any applicable statute, rule, or regulation.
(g) Governing Law. The validity, construction, and effect of the
Plan, and any actions relating to the Plan, shall be determined in
accordance with the laws of the state of Michigan and applicable federal
law.
(h) Successors and Assigns of Key Executive. The Plan shall be
binding upon all successors and assigns of each Key Executive, including,
without limitation, his or her estate, the personal representative,
executor, administrator, or trustee of such estate, or any trustee in
bankruptcy or representative of his or her creditors.
SECTION 8. AMENDMENT AND TERMINATION OF THE PLAN
The Board may from time to time amend the Plan in any respect, or may
discontinue or terminate the Plan at any time, provided, however, that:
(a) No such amendment, discontinuance, or termination shall alter or
otherwise affect the terms and conditions of any Loan then outstanding to a
Key Executive without such Key Executive's written consent, except as
otherwise provided herein or in the promissory note or loan agreement
evidencing such Loan; and
32 Appendix C
<PAGE> 35
(b) Without the approval of the shareholders of the Company, no amendment
shall (i) change the purpose of the Plan or the purposes for which
Loans may be extended to Key Employees, (ii) increase materially the
aggregate Loan limits established by Section 5 except as permitted
therein, or (iii) change the definition of Key Executive for the purpose
of expanding materially the eligibility of employees to receive Loans.
SECTION 9. EFFECTIVE DATE OF PLAN
The Plan has been adopted by the Board, subject to approval of the shareholders
of the Company. The Plan shall become effective when approved by the
shareholders. It is the intention of the Board to submit the Plan for
shareholder approval at the 1994 annual meeting of shareholders.
Appendix C 33
<PAGE> 36
|
| 4268
X Please mark |_______
<TABLE>
<CAPTION>
<S> <C> <C>
For Withheld For Against Abstain For Against Abstain
1. ELECTION 2. APPROVAL OF THE 4. APPROVAL OF THE 1994 KEY
OF DIRECTORS 1994 LONG-TERM EXECUTIVE STOCK PURCHASE
AS LISTED ON INCENTIVE PLAN. ASSISTANCE PLAN.
REVERSE SIDE.
For, except vote withheld
from the following
nominee(s):
3. APPROVAL OF THE 5. RATIFICATION OF APPOINTMENT
1994 NON-EMPLOYEE OF ARTHUR ANDERSEN & CO. AS
OFFICER AND DIRECTOR INDEPENDENT AUDITORS FOR
STOCK OPTION PLAN THE YEAR ENDING JUNE 3, 1995.
6. At their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting or adjournment thereof.
Signature___________________________________________________________
Title if required_________________________Date______/_______/_______
Signature___________________________________________________________
Title if required_________________________Date______/_______/_______
Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such.
</TABLE>
PLEASE MARK THE BOXES ON THE ABOVE PROXY TO INDICATE HOW YOU WISH YOUR SHARES
TO BE VOTED. SIGN AND DATE THE PROXY, DETACH IT, AND RETURN IT IN THE
ENCLOSED POSTAGE PAID ENVELOPE. WE MUST RECEIVE YOUR VOTE BEFORE THE ANNUAL
MEETING OF SHAREHOLDERS ON OCTOBER 6, 1994.
[LOGO] HERMAN MILLER
<PAGE> 37
HERMAN MILLER, INC. This proxy is solicited on behalf of the Board of Directors.
By signing this card, the shareholder appoints Max O. DePree, J. Kermit
Campbell, and David L. Nelson, and each of them, as attorneys, with the power
of substitution, to vote the shares of Common Stock of Herman Miller, Inc.
("the company") held of record by the undersigned on August 8, 1994, at the
Annual Meeting of Shareholders to be held at the company's Midwest Distribution
Center, 10001 Adams Street, Holland, Michigan on Thursday, October 6, 1994, at
4:00 p.m. (E.D.T.) and at any adjournment thereof.
ELECTION OF FOUR DIRECTORS, each for a term of three years. Nominees: William
K. Brehm, C. William Pollard, Ruth Alkema Reister, and Richard H. Ruch
The Proxies will vote your shares in accordance with your direction on this
card. If you do not indicate your choice on this card, the Proxies will vote
your shares "FOR" the nominees and "FOR" the proposals.
All shares votable hereby by the undersigned include shares, if any, held for my
account in the company's Employee Stock Ownership Plan.
