<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HERMAN MILLER, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
HERMAN MILLER, INC.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[HERMAN MILLER LOGO]
HERMAN MILLER, INC.
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
August 26, 1996
Dear Shareholder:
Herman Miller, Inc.'s fiscal year ended June 1, 1996. Enclosed
you will find this year's Annual Report and a proxy card to vote
your shares. Also, let us know if you expect to attend the annual
Shareholders Meeting scheduled for October 2, 1996, by mailing a
reservation card or by contacting Robbie Kroll at 616-654-3305.
We will be meeting in a new location this year. The Shareholders
Meeting will take place in the West Ottawa Public Schools
Performing Arts Center, 1024 N. 136th Ave., Holland, Michigan. (A
map is enclosed.) Chairman of the Board David Nelson will convene
the business meeting promptly at 4 p.m. EDT. Please allow time
for parking and registration. After the business meeting, we will
serve hors d'oeuvres and light refreshments to all who indicate on
the reservation card that they will be staying.
The Annual Report discusses our performance for fiscal 1996 and
the importance of continuity and change at Herman Miller. If you
have any questions for us or for other senior managers, please
write them on the enclosed card and return it to us. If there
isn't time at the meeting to answer all the questions we receive,
a member of our team or one of us will mail you a response. We
will also take questions during the meeting.
During the business meeting, we will elect three directors to the
Board of Directors, ratify Arthur Andersen LLP as our independent
public accountants, and transact any other business as may come
before the meeting.
We hope to see you there.
Sincerely,
/s/ Michael A. Volkema
Michael A. Volkema David L. Nelson
President and Chief Chairman of the Board
Executive Officer of Directors
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN YOUR PROXY
CARD IN THE ENCLOSED ENVELOPE
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of the shareholders of Herman Miller, Inc.
(the "Company"), will be held at the West Ottawa Performing Arts
Center, West Ottawa High School, 1024 N. 136th Ave., Holland,
Michigan, on Wednesday, the 2nd of October, 1996, at 4 p.m.
(E.D.T.) for the following purposes:
1. To elect three directors, each for a term of three
years.
2. To consider and act upon a proposal to ratify the
appointment of Arthur Andersen LLP as independent
public accountants for the Company for the fiscal year
ending May 31, 1997.
3. 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 5,
1996, 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 26, 1996
<PAGE> 4
HERMAN MILLER, INC.
855 East Main Avenue
P.O. Box 302
Zeeland, Michigan 49464-0302
PROXY STATEMENT
This Proxy Statement is furnished to the 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 Wednesday, October 2, 1996, at 4 p.m. (E.D.T.) at the
West Ottawa Performing Arts Center, West Ottawa High School, 1024 N. 136th
Ave., 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 the proposal 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 Board of Directors has nominated William K. Brehm, J. Harold Chandler,
and Brian Griffiths, Lord Griffiths of Fforestfach, for election to serve as
members whose terms expire at the 1999 annual meeting. Each of the nominees
previously has been elected as a director by the Company's shareholders. Dr.
Alan Fern, whose term expires at the annual meeting this year, will retire at
that time. In conjunction with this, the Board of Directors has reduced the
number of directors from 11 to 10.
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.
To achieve the required balance in size of classes, Mr. Brehm, whose term
otherwise would have expired next year, has agreed to stand for election in
place of Dr. Fern.
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 three individuals who
receive the largest number of votes cast at the meeting will be elected as
directors. 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.
-1-
<PAGE> 5
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
On August 5, 1996, the Company had 24,171,305 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 5, 1996, 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 5, 1996, 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 AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
<S> <C> <C>
Ariel Capital Management, Inc. 1,455,745(1) 6.02%
307 North Michigan Avenue
Chicago, Illinois 60601
Trimark Investment Management, Inc. 1,441,300(2) 5.96%
Scotia Plaza, Suite 5200, 40 King Street West
Toronto, Ontario M5H 3Z3
GeoCapital Corporation 1,410,358(3) 5.83%
767 Fifth Avenue, 45th Floor
New York, New York 10153
</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 1,371,745 shares, shared voting power as to 23,300 shares, and sole
dispositive power as to 1,455,745 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 1,441,300 shares.
(3) This information is derived from notification received by the Company
from the beneficial owner, including notice that it has sole dispositive
power as to 1,410,348 shares.
-2-
<PAGE> 6
DIRECTOR AND EXECUTIVE OFFICER INFORMATION
SECURITY OWNERSHIP OF MANAGEMENT. The following table shows, as of August
5, 1996, 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>
AMOUNT AND NATURE
NAMED EXECUTIVE OF BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(3)
<S> <C> <C>
Michael A. Volkema 148,230 .60%
Christopher A. Norman 32,086 .13%
Hansjorg Broser 39,943 .16%
Andrew C. McGregor 49,307 .20%
Gary S. Miller 68,471 .28%
All executive officers and directors
as a group (22 persons) 702,141(2) 2.86%
</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. Volkema - 20,000; Mr. Norman -
20,600; Mr. Broser - 18,000; Mr. McGregor - 31,000; and Mr. Miller -
47,000. Includes the following number of shares which are restricted and
subject to certain conditions: Mr. Volkema - 87,165; Mr. Norman - 10,000;
Mr. Broser - 13,600; Mr. McGregor - 10,000; and Mr. Miller - 10,000.
(2) Included in this number are 352,950 shares with respect to which
executive officers and directors have the right to acquire beneficial
ownership under options exercisable within 60 days.
(3) Calculated based on the number of shares outstanding plus the shares
referred to in note (2) above.
-3-
<PAGE> 7
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 5, 1996, 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>
YEAR FIRST
BECAME A SHARES PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR OWNED(1) CLASS(2)
- -----------------------------------------------------------------------------------------------------------
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS
TO EXPIRE IN 1999:
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. Harold Chandler
Since November 1993--Chairman, President and Chief 47 1995 2,500 .01%
Executive Officer, Provident Life & Accident Insurance Co.
From June 1993 to November 1993--President,
MidAtlantic NationsBank and Maryland National Corporation
From January 1992 to June 1993--President,
NationsBank/Washington, D.C., Maryland, and N. Virginia
Prior to January 1992--President and Chief
Executive Officer, Sovran Bank-Washington, D.C.,
Maryland, and N. Virginia
- -----------------------------------------------------------------------------------------------------------
William K. Brehm
Chairman of the Board SRA International, Inc.
(Consulting Engineering Firm) 67 1991 7,500 .03%
- -----------------------------------------------------------------------------------------------------------
Brian Griffiths, Lord Griffiths of Fforestfach 54 1991 7,500 .03%
Since 1990--International Advisor, Goldman Sachs
International Limited (International Banking Firm)
Prior to 1990--Government Service, United Kingdom
- -----------------------------------------------------------------------------------------------------------
DIRECTORS WHOSE TERMS EXPIRE IN 1997:
- -----------------------------------------------------------------------------------------------------------
C. William Pollard 58 1985 22,749(3) .09%
Chairman of the Board, The ServiceMaster Company
(Management and Consumer Services for Health Care,
Industrial, and Educational Facilities)
- -----------------------------------------------------------------------------------------------------------
Ruth Alkema Reister
Private Investments and Civic and Charitable Activities 60 1985 16,436(4) .07%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE> 8
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A SHARES PERCENT OF
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR OWNED(1) CLASS(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard H. Ruch
From July 1995 to October 1995--Chairman of the Board of 66 1986 127,714(5) .52%
Directors, Herman Miller, Inc.
From April 1992 to July 1995--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 1998:
- -----------------------------------------------------------------------------------------------------------
Dr. E. David Crockett 60 1982 16,800 .07%
Since November 1992--Chairman, Cornerstone Imaging,
Inc. (Document Image Processing)
Since May 1991--General Partner, Aspen Ventures (Venture
Capitalists)
- -----------------------------------------------------------------------------------------------------------
David L. Nelson 66 1972 23,100(6) .09%
Since October 1995--Chairman of the Board of Directors
of Herman Miller, Inc.
From 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.
(Electronics Manufacturer)
- -----------------------------------------------------------------------------------------------------------
Charles D. Ray, M.D. 69 1977 18,000(7) .07%
Chairman of the Board of Directors, Ray Medica,
Inc. (Development and Manufacturer of Health Care
Products) and Director of Research and Development, Spinal
Research and Education Foundation
- -----------------------------------------------------------------------------------------------------------
Michael A. Volkema 40 1995 148,230(8) .60%
Since July 1995- Chief Executive Officer, Herman
Miller, Inc.
Since May 1995- President, Herman Miller, Inc.
From February 1995 to May 1995- President and Chief
Executive Officer, Coro, Inc. (a subsidiary of Herman
Miller, Inc.)
From May 1993 to September 1994- Chairman of the
Board, Meridian, Inc. (a subsidiary of Herman Miller, Inc.)
Prior to May 1993- President, Meridian, Inc. (a
subsidiary of Herman Miller, Inc.)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Shares shown for each director who is not an officer of the Company
include 13,500 shares for Messrs. Crockett, Nelson, Pollard, Ray, and Ms.
Reister; 7,500 shares for Mr. Griffiths; and 3,000 shares for Mr. Brehm
with respect to which the director has the right to acquire beneficial
ownership under options exercisable within 60 days.
(2) Percentages are calculated based upon shares outstanding, plus shares
which the director has the right to acquire under stock options
exercisable within 60 days.
(3) Excludes 403 shares owned of record and beneficially by Mr. Pollard's
wife. Mr. Pollard disclaims beneficial ownership of these shares.
(4) Excludes 600 shares owned by Mrs. Resister's husband. Mrs. Reister
disclaims beneficial ownership of these shares.
(5) Includes 34,500 shares with respect to which Mr. Ruch has a right to
acquire beneficial ownership under options exercisable within 60 days.
In addition, Mr. Ruch's wife owns 5,700 shares which are excluded from
the table and as to which Mr. Ruch 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 Dr. Ray owns as custodian for his children.
(8) Includes 20,000 shares with respect to which Mr. Volkema has a right to
acquire beneficial ownership under options exercisable within 60 days and
87,165 shares of restricted stock which are subject to forfeiture under
certain conditions.
Mr. Crockett also is a director of Cornerstone Imaging, Inc., and Metatec
Corporation. Mr. Nelson also is a director and trustee of Cardinal Fund, Inc.
Mr. Pollard also is a director of The ServiceMaster Company, Provident Life and
Accident Insurance Company. Brian Griffiths, Lord Griffiths of Fforestfach,
also is a director of The ServiceMaster Company. Mr. Chandler is also a
director of Provident Life & Accident Insurance Company, AmSouth Bank
Corporation and Healthsource, Inc.
-5-
<PAGE> 9
The Board of Directors held six meetings, one of which was a telephone
conference, during the last fiscal year. All of the directors attended at least
75 percent of the aggregate number of meetings of the Board and the Board
committees on which they served.
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, Richard H. Ruch, 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 two times during the last fiscal year.
EXECUTIVE COMPENSATION COMMITTEE. The Company has an Executive
Compensation Committee, comprised of Messrs. William K. Brehm (chair), E. David
Crockett, J. Harold Chandler, and Charles D. Ray, M.D. The Executive
Compensation Committee recommends to the Board 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 and Long Term
Incentive Plans. The committee met four times during the last fiscal year.
NOMINATING COMMITTEE. The Company has a Nominating Committee comprised of
Messrs. C. William Pollard (chair), David L. Nelson, J. Harold Chandler,
Michael A. Volkema, and Richard H. Ruch. The Nominating Committee selects and
presents to the Board candidates for election to fill vacancies on the 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
and other relevant biographical data, to C. William Pollard, at Herman Miller,
Inc., 855 East Main Avenue, P.O. Box 302, Zeeland, Michigan 49464-0302. The
committee met one time during the last fiscal year.
EXECUTIVE COMMITTEE. The Company has an Executive Committee comprised of
Messrs. David L. Nelson (chair), William K. Brehm, C. William Pollard, Richard
H. Ruch, and Michael A. Volkema. The Executive Committee acts from time to
time on behalf of the Board in managing the business and affairs of the Company
(except as limited by law or the Company's Bylaws), and is delegated certain
assignments and functions by the Board of Directors. The Committee met five
times during the last fiscal year.
COMPENSATION OF BOARD MEMBERS AND NON-EMPLOYEE OFFICERS
The Company pays directors' fees to nonemployee directors at the rate of
$32,500 per year, and at one-half that rate to employee directors. In addition,
$1,000 per meeting is paid to directors attending Executive Committee meetings.
No other 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. Ruch, serving in his role as Vice Chairman of the Board of
Directors, through July 1995 and as Chairman from July to October 1995,
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 Mr. Ruch received $87,435 in total
compensation for his services as a director during the Company's fiscal year
ended June 1, 1996.
Mr. Nelson became the Chairman of the Board on October 30, 1995. For the
12 month period ending October 1997, Mr. Nelson agreed to devote at least 80
percent of his business time to the Board of Directors for the payment of
$250,000 plus director fees, and $1,200 per month living allowance. In
addition, he will receive an annual benefit package of $10,000. On October 30,
1995, Mr. Nelson was granted a special stock option of 20,000 shares at a fair
market value of $30.25 per share, which is subject to the same terms and
conditions as the 1994 Nonemployee Officer and Director Stock Option Plan.
Amounts paid to Mr. Nelson under these arrangements through June 1, 1996,
totaled $197,853.
-6-
<PAGE> 10
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 nonemployee officer or director of the Company or during various limited
periods after death or retirement.
During fiscal 1996, each director and officer of the Company who is not an
employee was granted an option to purchase 1,500 shares of the Company's common
stock at $32.1875, its fair market value on the date of grant. Under this plan,
a total of 16,500 options were granted to all nonemployee directors and
officers as a group, and 41,000 options were exercised at an average exercise
price of $28.73 per share during the past year.
EXECUTIVE COMPENSATION COMMITTEE REPORT
GENERAL
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 comprises
four nonemployee directors, was established over 20 years ago to provide an
ongoing review of the executive compensation program to ensure 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, incentive pay,
and equity-based compensation. In addition, the committee also establishes the
performance objectives for the annual executive incentive plan which covers the
Chief Executive Officer, corporate officers, vice presidents, and directors at
each of the Company's business units. 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. Consistent with this philosophy, a new
performance measurement and incentive compensation system has been created and
installed. This system, called "Economic Value Added" (EVA(R)),1 is an
internal measurement of operating and financial performance that has been shown
by extensive independent market research to more closely correlate with
shareholder value than any other performance measure.
Beginning in fiscal 1997, the incentive compensation plans of corporate
officers, vice presidents, and directors at each of the Company's business
units will be linked to the EVA concept. Under the terms of the EVA plan,
focus is shifted from budget performance to long-term continuous improvements
in shareholder value. Each year, the EVA target is raised over the actual EVA
earned the prior year by an improvement factor so that higher EVA targets must
be attained in order to earn the same level of incentive pay. This improvement
factor is established by the Board of Directors for a period of three years.
The Committee believes that the utilization of the EVA measurement system,
with its focus on maximizing the Company's return on capital investments
relative to its cost of capital, will be a more effective means of evaluating
- --------------------------
(1)EVA is a registered trademark of Stern Stewart & Co.
-7-
<PAGE> 11
and rewarding management performance. The Committee believes the adoption of
the EVA measurement system is consistent with its objective of endorsing an
executive compensation program 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 Board has
adopted stock ownership guidelines for approximately 150 executives, including
all officers. Under these guidelines, the CEO is expected to own 120,000
shares, and other executives are expected to own between 3,000 and 50,000
shares, with the level of ownership determined by the executive's
responsibility level and corresponding management position within the Company.
To assist executives in attaining the required ownership levels, the Board
and shareholders adopted the 1994 Key Executive Stock Purchase Assistance Plan.
The plan authorizes the Board's Executive Compensation Committee to extend
loans to selected executives to acquire shares of the Company's stock. The
executives can earn repayment of a portion of the principal and interest due on
these loans provided that certain corporate performance goals are attained.
During fiscal 1996, five individuals were selected to participate in the
plan. Loans totaling $2.3 million resulting in the acquisition of 79,000 shares
were made. Currently, loans under this plan totaling $3.8 million have been
extended to 13 individuals. Based on the Company's performance as measured
against its fiscal 1996 goals, 180.9 percent of the annual repayment of
principal and 100 percent of interest due was earned.
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, except 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 this committee.
In 1996, annual cash incentive bonuses were earned through the Executive
Incentive Plan, which was designed to tie compensation to corporate
performance. The plan consisted of a formula approved by the Executive
Compensation Committee which weighed the achievement of selected performance
objectives against the annual plan as approved by the Board of Directors. No
bonus would be paid if a minimum net income threshold was not met. Depending
on their individual level of responsibility, an executive officer could earn up
to 60 percent of his or her salary under this plan if all performance
objectives were attained. Under the plan, an additional bonus can be earned
when overperformance against the annual plan occurs. In 1996, over performance
against the annual plan resulted in a bonus payout of 180.9 percent of eligible
bonuses. For example, an officer whose bonus potential is 50 percent of salary
at 100 percent goal attainment would have earned a bonus equal to 90.5 percent
(50% x 180.9%) of his or her salary in fiscal 1996. For fiscal 1997, the
Company's new EVA measurement system will replace the formula in the current
Executive Incentive 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 180.9 percent, 35.0 percent, and 120.0 percent of
eligible bonuses for the fiscal years ended in 1996, 1995, and 1994,
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.
-8-
<PAGE> 12
Cash compensation including salary, Earned Share Bonus, and Executive
Incentive Bonus of the Company's Chief Executive Officer was limited by formula
to 20 times the average annual compensation earned by the Company's regular
full-time employee-owners ($31,602 in 1996). This imposes a cap on the CEO's
cash compensation of $632,040. During fiscal 1996, Mr. Michael A. Volkema, the
Company's Chief Executive Officer, earned a base salary and cash bonus of
$357,771 and $274,269, respectively, representing total cash compensation of
$632,040. Mr. Volkema's cash incentive of $274,269 represents 71.6 percent of
his potential earned bonus of $383,101. Mr. Volkema's bonus pay out for fiscal
1996 was limited by the Company's cash compensation formula described above.
In addition, Mr. Volkema received stock option grants in 1996 of 20,000
shares and restricted stock grants totaling 50,000 shares (36,000 net of tax),
and loans totaling $1,491,872 which allowed him to purchased 50,000 shares of
the Company's stock. It is believed that the significant ownership position
created by these actions will more closely align Mr. Volkema's interests with
those of the shareholders. The size of the equity-based compensation awards
and cash compensation reflect the committee's evaluation and recognition of Mr.
Volkema's contribution to the significant accomplishments and successes
achieved by the Company in fiscal 1996.
William K. Brehm (Chair)
E. David Crockett
J. Harold Chandler
Charles D. Ray, M.D.
-9-
<PAGE> 13
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the Named
Executives for each of the three fiscal years ended June 1, 1996, June 3, 1995
and May 28, 1994.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------------------------------
AWARDS PAYOUTS
------------------------------------------
SECURITIES
RESTRICTED STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY(1) BONUS(2) OTHER(3) AWARDS OPTIONS/SARS PAYOUTS(4) COMPENSATION(5)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael A. Volkema, 1996 357,771 274,269 -0- 1,435,000(6) 20,000 465,877 2,718
President & Chief Executive 1995 159,000 -0- -0- 200,000(7) 20,000 -0- -0-
Officer 1994 151,320 94,802 -0- -0- 5,000 -0- 2,883
- ----------------------------------------------------------------------------------------------------------------------------------
Christopher A, Norman, 1996 207,692 180,930 -0- -0- 12,000 83,682 4,551
President, Miller SQA, Inc. 1995 130,461 191,532 -0- -0- 15,000 34,317 1,753
1994 117,692 203,525 -0- -0- 5,000 -0- 3,119
- ----------------------------------------------------------------------------------------------------------------------------------
Hansjorg Broser, 1996 198,000 179,121 -0- -0- -0- 136,602 11,738
Vice President 1995 179,384 36,960 24,728 -0- 18,000 50,599 4,611
1994 168,000 81,065 -0- -0- 8,000 -0- 8,852
- ----------------------------------------------------------------------------------------------------------------------------------
Andrew C. McGregor, 1996 194,923 185,317 -0- -0- 12,000 125,406 6,099
Executive Vice President, 1995 162,058 29,876 44,402 -0- 20,000 46,167 3,151
Commercial Services 1994 153,000 91,800 -0- -0- 5,000 -0- 4,393
- ----------------------------------------------------------------------------------------------------------------------------------
Gary S. Miller, 1996 180,000 162,837 -0- -0- 7,000 122,334 7,053
Senior Vice President, Design 1995 162,058 35,241 -0- -0- 23,000 44,852 4,061
and Development 1994 153,000 113,013 -0- -0- 8,000 -0- 5,314
</TABLE>
(1) Includes amounts deferred by employees pursuant to Section 401(k) of the
Internal Revenue Code. Includes 52 weeks of compensation for 1996 and 53
weeks for 1995 and 52 weeks for 1994, consistent with the Company's fiscal
year.
(2) Represents amounts earned under the Company's Earned Share Bonus Plan and
Executive Incentive Plan.
(3) The amounts disclosed in this column include cost of living, foreign
assignment, foreign exchange, spouse travel, and moving expenses.
(4) Represents amounts earned under the Company's 1994 Key Executive Stock
Purchase Assistance Plan and applied to the repayment of loans made
thereunder.
(5) Includes amounts attributable during fiscal 1996 to benefit plans of the
Company as follows: (a) amounts contributed by the Company pursuant to the
Company's profit sharing plan for the account of Messrs. Volkema, Norman,
Broser, McGregor, and Miller were $2,717; $4,551; $3,310; $4,965; and
$4,965, respectively; and (b) payments by the Company in fiscal 1996 of
premiums for life insurance for the benefit of Messrs. Broser, McGregor,
and Miller were $8,427; $1,134; and $2,088, respectively.
(6) This amount represents the value of 30,000 and 20,000 shares of the
Company's common stock (based on the closing price on the date of grant
of $26.50 and $32.00 per share, respectively) granted to Mr. Volkema under
the terms of two Incentive Share Grant Agreements. Mr. Volkema elected to
use 28 percent of his grants to pay his federal taxes on these grants which
resulted in his receipt (net of taxes) of 21,600 and 14,400 shares,
respectively. The shares are subject to forfeiture provisions which lapse
as the number of shares become vested each year over a five- or six-year
period. The minimum annual rate of vesting 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 2001 and 2002,
respectively). The rate of vesting may be accelerated if certain corporate
performance goals are achieved, which would permit full vesting not earlier
than fiscal 2000 and 2001, respectively. Dividends are payable on the
restricted shares at the same rate as dividends on the Company's common
stock. At June 1, 1996, the value of the 36,000 restricted shares held by
Mr. Volkema based on the closing price of the Company's common stock on that
date ($30.875 per share) equaled $1,111,500.
(7) The amount represents the value of 9,524 shares of the Company's common
stock (based on the closing price on the date of grant of $21.00 per
share) granted to Mr. Volkema under the terms of an Incentive Share Grant
Agreement. Mr. Volkema elected to use 28 percent of his grant to pay his
federal taxes on this grant which resulted in his receipt (net of taxes) of
6,857 shares. The shares are subject to the same forfeiture and vesting
provisions described in footnote (6) above. Full vesting would occur not
earlier than fiscal 2000 and not later than fiscal 2001. At June 1, 1996,
the value of the 6,857 restricted shares held by Mr. Volkema, based on the
closing price of the Company's common stock on that date ($30.825 per share)
equaled $211,710.
-10-
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on options granted to the Named
Executives during the year ended June 1, 1996.
<TABLE>
<CAPTION>
Percentage of Total
Options
Granted to Exercise or Grant Date
Options/SARs Employees in Base Price Present
Name Granted(1) Fiscal Year (per share)(2) Expiration Date Value(3)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Michael A. Volkema 20,000 5.5 $32.00 5/15/06 $252,600
Christopher A. Norman 12,000 3.3 $32.00 5/15/06 $151,560
Hansjorg Broser -0- -0- --- --- -0-
Andrew C. McGregor 12,000 3.3 $32.00 5/15/06 $151,560
Gary S. Miller 7,000 1.9 $32.00 5/16/06 $ 88,410
</TABLE>
(1) Indicates number of shares that may be purchased pursuant to
options granted under the Company's 1994 Long Term Incentive Plan.
The Company granted options on July 12, 1995, October 5, 1995, and
May 15, 1996, totaling 22,500, 101,300, and 239,600 shares,
respectively, to eligible employees of the Company and its
subsidiaries. In general, options may not be exercised in full or
in part prior to the expiration of one year from the date of grant.
(2) 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, if at least 500 shares are being acquired, by
the delivery of previously owned shares, or a combination of cash
and previously owned shares.
(3) For the options expiring on May 15, 2006, the values reflect
standard application of the Black-Scholes option pricing model based
on: (a) expected stock price volatility of .271; (b) risk free rate
of return of 6.63%; (c) a cash dividend yield of 2%; and (d) an
expected time of ten years to exercise. The actual value, if any, of
the options granted is dependent upon the market values of the
Company's common stock subsequent to the date the options become
exercisable.
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 1996 AND YEAR END OPTION VALUES
The following table provides information on the exercise of stock options
during fiscal 1996 by the Named Executives and the number and value of
unexercised options at June 1, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In the Money Options
Options at June 1, 1996 at June 1, 1996(2)
--------------------------------------------------------
Shares
Acquired
on Value
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Volkema 5,000 $16,250 20,000 20,000 $197,500 -0-
Christopher A. Norman 600 3,150 20,600 12,000 130,950 -0-
Hansjorg Broser 8,000 41,000 18,000 -0- 112,750 -0-
Andrew C. McGregor 3,000 15,375 31,000 12,000 239,125 -0-
Gary S. Miller 4,500 20,250 47,000 7,000 362,875 -0-
</TABLE>
(1) Represents the aggregate market value of shares acquired at time
of exercise, less the aggregate exercise price paid by the employee.
(2) Values are based on the difference between the closing price of
the Company's common stock on June 1, 1996 ($30.875) and the
exercise prices of the options.
-11-
<PAGE> 15
PENSION PLAN TABLE
The following table sets forth the estimated annual benefits payable upon
normal retirement at age 65, on June 1, 1996, to persons in specified
compensation and years of service classifications under the Company's
Retirement Income 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 $120,000, 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. Mr. Broser is the only Named Executive who participates in the
Supplemental Plan.
<TABLE>
<CAPTION>
YEARS OF BENEFIT SERVICE(2)
-----------------------------------------------
AVERAGE ANNUAL
COMPENSATION(1) 20 25 30 35 40
----------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$150,000....... 52,467 65,583 78,700 92,817 104,933
$180,000....... 63,567 79,458 95,350 111,242 127,133
$210,000....... 74,667 93,333 112,000 130,667 149,333
$240,000....... 85,767 107,208 128,650 150,092 171,533
$270,000....... 96,867 121,083 145,300 169,517 193,733
$300,000....... 107,967 134,958 161,950 188,942 215,933
$330,000....... 119,067 148,833 178,600 208,367 238,133
$360,000....... 130,167 162,708 195,250 227,792 260,333
$390,000....... 141,267 176,583 211,900 247,217 282,533
$420,000....... 152,367 190,458 228,550 266,642 304,733
$450,000....... 163,467 204,333 245,200 286,067 326,933
</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 $150,000 for
fiscal 1996. Average annual compensation under the Supplemental
Plan is not subject to a maximum. For employees designated as
participants in the Supplemental Plan, 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) Mr. Broser has 4 credited years of service and "average annual
compensation" of $290,880 under the Supplemental Plan.
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.
-12-
<PAGE> 16
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 500 Stock Index and the
NASD Non-Financial Index for the five year period ended June 1, 1996. The
following information is based on an annual investment of $100, on May 31,
1991, 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.
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
NASD Non-Financial 100 113 133 137 162 236
S&P 500 Index 100 110 123 128 154 197
Herman Miller, Inc. 100 97 133 132 119 171
</TABLE>
-13-
<PAGE> 17
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants for the Company for the fiscal year ending May 31, 1997.
Representatives of Arthur Andersen LLP will be present at the annual meeting of
shareholders and available to respond to appropriate questions. The Arthur
Andersen LLP 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 LLP, the selection of such firm as independent public accountants for
the Company will be reconsidered by the Board of Directors.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Arthur Andersen LLP as the Company's independent public
accountants.
SHAREHOLDER PROPOSALS--1997 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 22, 1997, if the
shareholder wishes the proposal to be included in the Company's 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
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 cost of the solicitation of proxies 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 June 1, 1996,
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.
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 26, 1996
-14-
<PAGE> 18
<TABLE>
<S><C>
/X/ Please mark
your votes as in
this example.
This proxy is solicited on behalf of the Board of Directors.
For Withheld For Against Abstain
1. ELECTION / / / / 2. RATIFICATION OF / / / / / / 3. At their discretion,
OF DIRECTORS APPOINTMENT OF the Proxies are
AS LISTED ON ARTHUR ANDERSEN authorized to vote
REVERSE SIDE. LLP AS INDEPEN- upon such other
For, except vote withheld from the following DENT AUDITORS FOR THE YEAR business as may
nominee(s): ENDING MAY 31, 1997. properly come before
the meeting or
- ------------------------------------------------------- adjournment thereof.
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.
Dated , 1996
--------------------------------------------------
Signature
----------------------------------------------------
Signature (if held jointly)
----------------------------------
FOLD AND DETACH HERE
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 2, 1996.
</TABLE>
<PAGE> 19
HERMAN MILLER, INC.
By signing this card, the shareholder appoints David L. Nelson and Michael A.
Volkema, 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 5, 1996, at the Annual Meeting of Shareholders to
be held at the West Ottawa Public Schools Performing Arts Center, 1024 N. 136th
Avenue, Holland, Michigan on Wednesday, October 2, 1996, at 4:00 p.m. (E.D.T.)
and at any adjournment thereof.
ELECTION OF THREE DIRECTORS, each for a term of three years. Nominees: William
K. Brehm, J. Harold Chandler, and Brian Griffiths, Lord Griffiths of Fforestfach
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 proposal.
All shares votable hereby by the undersigned include shares, if any, held for
my account in the company's Employee Stock Ownership Plan and Employee Stock
Purchase Plan.
