SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [xx]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[xx] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LA-Z-BOY CHAIR COMPANY
(Name of Registrant as Specified In Its Charter)
[not applicable]
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[xx] $125 per Exchange Act Rules 0-11(c)(1)(ii), 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 off-
setting 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:
LA-Z-BOY CHAIR COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Monroe, Michigan
La-Z-Boy Chair Company: June 28, 1996
Notice is hereby given that the annual meeting of shareholders of
La-Z-Boy Chair Company will be held at the La-Z-Boy Chair Company
Auditorium, 1314 North Telegraph Road, Monroe, Michigan, on Monday, July 29,
1996 at 11:00 o'clock A.M. Eastern Daylight Time for the following
purposes:
(1) To elect four (4) directors to three year terms scheduled for
expiration in 1999;
(2) to consider and act upon a proposal to approve an amendment
and restatement of the Company's 1993 Performance-Based Stock
Plan (a copy of which appears as Exhibit A to the
accompanying Proxy Statement);
(3) to consider and act upon a proposal to adopt an amendment of
the Company's Articles of Incorporation as currently in
effect, to change the Company's name to "La-Z-Boy
Incorporated"; and
(4) to transact such other business as may properly come before
the meeting or any adjournments thereof.
A copy of the Annual Report, containing the financial statements of
the Company for the year ended April 27, 1996, is enclosed herewith.
Only shareholders of record at the close of business on June 21, 1996
will be entitled to notice of, and to vote at, the meeting.
Shareholders, whether planning to attend in person or not, are urged
to date, sign and return the enclosed proxy in the accompanying envelope, to
which no postage need be affixed if mailed in the United States. Even
though you sign and return the proxy, you may vote your shares in person by
revoking the proxy at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Gene M. Hardy, Secretary
Monroe, Michigan
June 28, 1996
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of La-Z-Boy Chair Company to be used at
the annual meeting of shareholders to be held on Monday, July 29, 1996 and
at any adjournments thereof. The meeting will be held at the La-Z-Boy Chair
Company Auditorium, 1314 North Telegraph Road, Monroe, Michigan. The Board
of Directors knows of no business which will be presented to the meeting
other than the matters referred to in the accompanying Notice of Annual
Meeting. However, if any other matters are properly presented to the
meeting, it is intended that the persons named in the proxy will vote upon
the same and act in accordance with their judgment. Shares represented by
properly executed proxies in the form accompanying this proxy statement will
be voted at the meeting in the manner specified therein. If no instructions
are specified in the proxy, the shares represented thereby will be voted FOR
the election of the director nominees referred to in this Proxy Statement
and FOR approval of amendment and restatement of the 1993 Performance Based
Stock Plan as set forth in Exhibit A to this Proxy Statement, and FOR
approval of amendment of the Company's Article of Incorporation as currently
in effect (the "Current Articles") to change the name of the Company to "La
Z-Boy Incorporated." A proxy may be revoked at any time insofar as it has
not been exercised by executing and returning a later proxy or by giving
notice to the Company in writing or in the open meeting. The Company's
principal executive office is located at 1284 North Telegraph Road, Monroe,
Michigan 48162.
As of June 21, 1996, there were issued and outstanding 18,312,369 common
shares, $1.00 par value, of the Company ("common shares") whici is the only
class of Company equity securities outstanding. Each common share is
entitled to one vote on each matter to be presented at the meeting. Only
shareholders of record at the close of business on June 21, 1996 will be
entitled to vote at the meeting.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Under rules adopted by the Securities and Exchange Commission, a person
is deemed to be the beneficial owner of the Company's common shares if he or
she has or shares the right to vote the shares or if he has or shares the
investment power over such shares. There may be, therefore, more than one
beneficial owner with respect to any share or group of shares. A person may
also be deemed to be the beneficial owner if he is the settlor of a trust
with a right to revoke the trust and regain the shares or has the power to
acquire shares by means of outstanding options or rights to convert other
securities into common shares.
The following information is furnished in compliance with these rules
with respect to security ownership of each person known to the Company to
beneficially own more than 5% of the Company's common shares as of June 21,
1996, based in each case on data provided by such person.
TABLE I
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
Edwin J. Shoemaker
8 Sylvan Drive
Monroe, Michigan 48162...... 1,012,328(1) 5.539%
Monroe Bank & Trust
Monroe, Michigan 48161...... 5,054,332(2) 27.601%
_________
(1) All of these shares are held in a revocable trust established by Mr.
Shoemaker who is deemed a beneficial owner of the shares due to his power to
revoke the trust.
(2) The shares reported for Monroe Bankd & Trust are held in various
revocable and irrevocable trusts of which Monroe Bank & Trust is the trustee
or a co-trustee.
In such capacity, Monroe Bank & Trust has sole or shared and/or voting power
and accordingly is deemed a beneficial owner of all of these shares. The
reported shares include the shares reported above for Mr. Shoemaker, since
Monroe Bank & Trust is the trustee of his trust.
Stock Ownership of Directors and Executive Officers
The following table sets forth information as to the common shares
beneficially owned as of June 21, 1996 by each director and by each current
or former executive officer of the Company, and by all directors and current
executive officers as a group, based upon data provided by the named
individuals and group members.
TABLE II
Amount and Nature of Percent
Name Beneficial Ownership Of Class
---- -------------------- --------
Edwin J. Shoemaker ..................... 1,014,328 (1) 5.539%
Charles T. Knabusch .................... 769,157 (2) 4.184%
Lorne G. Stevens ....................... 29,402 (3) .161%
Frederick H. Jackson ................... 261,756 (4) 1.428%
Gene M. Hardy .......................... 180,356 (5) .985%
Patrick H. Norton ...................... 66,031 (6) .360%
Warren W. Gruber ....................... 3,400 (7) .019%
David K. Hehl .......................... 7,799 (8) .043%
John F. Weaver ......................... 158,900 (9) .868%
Rocque E. Lipford ...................... 3,700 (10) .020%
James W. Johnston ...................... 322,050 (11) 1.759%
Charles W. Nocella ..................... 37,565 (12) .205%
All Directors and Executive Officers
As A Group ...................... 2,406,953 (13) 13.144%
__________
(1) See footnote 1 to Table I.
(2) Includes 71,018 shares subject to options exercisable currently
or within 60 days of the date of this Proxy Statement. Also includes
74,718 shares owned by Mr. Knabusch's wife individually or as a trustee for
their children, as to which Mr. Knabusch disclaims beneficial ownership. In
addition, includes 140,000 shares over which Mr. Knabusch has shared
investment power as a member of the Investment Committee for the Company's
Employees' Profit Sharing Plan (the "Profit Sharing Plan"), as to which
shares he also disclaims beneficial ownership.
(3) Includes 16,502 shares owned by Mr. Stevens' wife, as to which he
disclaims beneficial ownership.
(4) Includes 19,135 shares subject to options exercisable currently
or within 60 days of the date of this Proxy Statement. Also includes 800
shares owned by Mr. Jackson's wife, as to which he disclaims beneficial
ownership, and 140,000 shares over which Mr. Jackson has shared investment
power as a member of the Investment Committee for the Profit Sharing Plan,
as to which he also disclaims beneficial ownership.
(5) Includes 6,175 shares subject to options exercisable currently
or within 60 days of the date of this Proxy Statement. Also includes
15,037 shares owned by Mr. Hardy's wife, as to which he disclaims
beneficial ownership, and 140,000 shares over which Mr. Hardy has shared
investment power as a member of the Investment Committee for the Profit
Sharing Plan, as to which he also disclaims beneficial ownership.
(6) Includes 19,135 shares subject to options exercisable currently
or within 60 days of this Proxy Statement. Also includes 7,730 shares
owned by Mr. Norton's wife, as to which he disclaims beneficial ownership.
(7) Includes 100 shares owned by Mr. Gruber's wife, as to which he
disclaims beneficial ownership.
(8) Includes 2,498 shares owned by Mr. Hehl's wife, as to which he
disclaims beneficial ownership.
(9) Includes 15,600 shares owned by Mr. Weaver's wife, as to which he
disclaims beneficial ownership, and 140,000 shares over which Mr. Weaver has
shared investment power as a member of the Investment Committee for the
Profit Sharing Plan, as to which he also disclaims beneficial ownership.
(10) Includes 800 shares owned by Mr. Lipford's wife, as to which he
disclaims beneficial ownership.
(11) Includes 53,285 shares owned by Mr. Johnston's wife, as to which
he disclaims beneficial ownership.
(12) Includes 14,540 shares subject to options exercisable currently or
within 60 days of this Proxy Statement. Also includes 11,160 shares owned
by Mr. Nocella's wife, as to which he disclaims beneficial ownership
(13) See the preceding footnotes to this table concerning included
shares. In addition, includes 5,425 other shares subject to options
exercisable currently or within 60 days of this Proxy Statement. Shares
reported above for more than one named individual are included only once.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of the Company's
Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Executive officers, directors and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with all copies of
Section 16(a) forms they file. Based solely on its review of the copies of
such forms received by it, or written representations from certain reporting
persons that no Forms 5 were required for those persons, the Company
believes that during the fiscal year ended April 27, 1996, all filing
requirements were complied with in a timely fashion.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, one
consisting of three directors and two consisting of four directors.
Directors serve for three-year, staggered terms, such that the terms of
office of directors comprising one of the classes expires each year. This
year, four directors are to be elected, to serve until the Company's annual
meeting of shareholders in 1999 or until their successors are elected and
qualified.
Pursuant to applicable Michigan corporate law, assuming the presence
of a quorum, directors will be elected at the meeting from among those
persons duly nominated for such positions by a plurality of votes cast by
holders of the common shares who are present in person, or represented by
proxy, and entitled to vote at the meeting. Thus, for this year, those
nominees who receive the highest through fourth-highest numbers of votes for
their election as directors will be elected, regardless of the number of
votes which for any reason, including abstention, withholding of authority,
or broker non-vote, are not cast for the election of such nominees.
The Board's nominees for election as directors are the four current
directors whose terms are scheduled to expire at the 1996 annual meeting.
In the absence of other instruction, the persons named in the accompanying
form of proxy intend to vote in favor of these four nominees (or, if any
such nominee should become unable or unwilling to serve, which is not
presently anticipated, for such substitute nominee as is designated by the
Board). The tables which follow provide background information concerning
each of the Board's nominees and each other director of the Company whose
term of office will continue beyond the 1996 annual meeting, and each
current executive officer who is not also a director.
NOMINEES FOR DIRECTOR FOR THREE YEAR TERM EXPIRING JULY, 1999
Director Business Experience
Name Age Since and Other Directorships
---- --- -------- -----------------------
Charles T. Knabusch 56 1970 Mr. Knabusch has been Chairman of the
Board and President of the Company for
more than five years.
John F. Weaver 79 1971 Mr. Weaver has been Executive Vice
President and a Director of Monroe
Bank & Trust for more than five years.
Warren W. Gruber 75 1981 Mr. Gruber has been General Partner of
Grubers Investment Company since 1984
and previously was President and Chief
Operating Officer and a Director of
Gruber Valu-World for more than five
years.
James W. Johnston(1)57 1991 Mr. Johnston has been a self-employed
financial and business consultant and
private investor for more than five
years. He was appointed a Director in
January 1991.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
Director Business Experience
Name Age Since and Other Directorships
---- --- -------- -----------------------
Lorne G. Stevens 68 1972 On April 30, 1988, Mr. Stevens retired
from the Company as Vice President of
Manufacturing, a position he held for
more than five years.
Patrick H. Norton 74 1981 Mr. Norton has been Senior Vice
President, Sales and Marketing for
more than five years.
Frederick H. Jackson 68 1971 Mr. Jackson has been Vice President
Finance for more than five years.
Edwin J. Shoemaker(1) 89 1941 Mr. Shoemaker has been Vice Chairman
of the Board and Executive Vice
President of Engineering for more than
five years.
Gene M. Hardy 59 1982 Mr. Hardy has been Secretary and
Treasurer of the Company for more than
five years.
David K. Hehl 49 1977 Mr. Hehl has been a member in the
public accounting firm of Cooley Hehl
Wohlgamuth & Carlton P.L.L.C. since
January 1995 and previously was a
partner of Cooley Hehl Wohlgamuth &
Carlton for more than five years.
Rocque E. Lipford 57 1979 Mr. Lipford has been a senior member
in the law firm of Miller, Canfield,
Paddock and Stone, P.L.C., since
January 1994 and previously was a
partner of Miller, Canfield, Paddock
and Stone for more than five years.
NON-DIRECTOR EXECUTIVE OFFICERS
Name Age Business Experience
---- --- -------------------
Gerald L. Kiser 49 Mr. Kiser was elected Vice President -
Operations on May 6, 1996. Prior to his
election as Vice President - Operations,
Mr. Kiser held the position of Vice
President of Engineering and Development
for one year and senior Vice President
of Operations of Kincaid Furniture
Company for more than five years.
Douglas R. Jordan 56 Mr. Jordan joined the Company on May 1,
1996 as Vice President Organization
Development and Planning. He formerly
was a management consultant for the
Company and President of Management
Resource Center.(2)
(1) Mr. James W. Johnston is the son-in-law of Mr. Edwin J. Shoemaker.
(2) As indicated below under "Report of the Compensation Committee on
Executive Compensation," Management Resource Center, is the compensation
consulting firm which for several years, including fiscal 1996, has been
retained by the Company to assist the Compensation Committee in its
deliberations concerning executive compensation. That firm also rendered
certain other consulting services to the Company in fiscal 1996. Until his
resignation from Management Resource Center to join the Company, Mr. Jordan
personally participated in rendering such services in his capacity as
President with that firm. Mr. Jordan also was a 50% owner of that firm
throughout fiscal 1996. Since joining the Company, his former equity
interest in the firm has been purchased for cash by its other owners.
BOARD OF DIRECTORS AND COMMITTEES
Edwin J. Shoemaker and Charles T. Knabusch may be deemed to be persons
who are in control of the Company.
During the Company's fiscal year ending April 27, 1996, the Board of
Directors held ten meetings. Each director attended at least 90% of the
total number of meetings of the Board and of all committees on which he
served. All directors are in regular touch with the Company's affairs.
Employee directors receive a fee of $250 for each meeting of the Board of
Directors attended. Non-employee directors receive an annual retainer of
$12,000 and a fee of $400 for each Board meeting and for each committee
meeting attended.
In addition, each non-employee director receives an initial grant of 30
day options on 1,500 common shares of Restricted Stock upon first election
to the Board and while he or she is still a director, a subsequent annual
grant at the beginning of each fiscal year of 30-day options on 200 common
shares of Restricted Stock. Such grants are made pursuant to the La-Z-Boy
Chair Company Restricted Stock Plan for Non-Employee Directors approved by
the shareholders effective September 1, 1989. The Plan contemplates a
present sale of the optioned shares at 25% of market value, but provides
restrictions on the transfer or other disposition of the shares by the non
employee director during the restricted time, which expires upon the
earliest to occur of the following events: death or disability, retirement
from the Board, change of control, or termination of the participant's
service as a director with the consent of a majority of the Company's
employee members of the Board, all as defined in the Plan.
The Board of Directors has an Audit Committee and a Compensation
Committee.
The Audit Committee, which held two meetings during the fiscal year,
currently consists of Mr. Hehl, Chairman, and Messrs. Weaver, Gruber,
Stevens and Lipford, all of whom are non- employee Directors. The functions
of the Audit Committee are to recommend to the Board of Directors the firm
of independent accountants to serve the Company each fiscal year, to review
the scope, fees and results of the audit by independent accountants and to
review the adequacy of the Company's system of internal accounting controls
and the scope and results of internal auditing procedures.
The Compensation Committee, which held five meetings during the fiscal
year, currently consists of Mr. Weaver, Chairman, and Messrs. Hehl, Gruber
and Lipford, all non-employee directors. The functions of the Compensation
Committee include recommending to the Board of Directors remuneration of the
officers of the Company, recommending to the Board of Directors remuneration
of the members of the Board and of the Board Committees, and the
administration of the Company's executive incentive compensation and stock
option plans.
The Board of Directors has no nominating committee. Nominations for
Director are considered by the entire Board.
EXECUTIVE COMPENSATION
The following table sets forth summary information for the Company's
1996 fiscal year and the preceding two fiscal years with respect to the
compensation paid to or earned by the Chief Executive Officer and each of
the Company's other current or former executive officers (the "named
executives") who served as such during fiscal 1996 and whose total salary
and bonus for that year exceeded $100,000.00.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Awards Payouts
Incentive Long-Term
Stock Incentive
Other Annual Option Plan All Other
Name and Principal Salary(1)Bonus(2) Compensation Grants Payouts(3) Compensation(4)
Position Year $ $ $ # $ $
Charles T. Knabusch 1996 435,000 150,082 22,255 398,119 88,582
Chairman of the Board 1995 398,656 163,921 0 20,232 343,375 75,142
President and Chief 1994 386,625 264,046 0 22,500 0 70,913
Executive Officer
Edwin J. Shoemaker 1996 133,734 33,557
Vice Chairman and 1995 131,340 38,721 0 0 0 23,426
Executive Vice President1994 127,345 62,373 0 0 0 17,347
of Engineering
Frederick H. Jackson 1996 267,120 75,404 9,500 170,213 55,017
Vice President Finance 1995 245,573 82,259 0 8,640 148,625 46,836
and Chief Financial 1994 238,250 132,503 0 9,600 0 44,147
Officer
Patrick H. Norton 1996 267,120 75,404 9,500 170,213 54,947
Senior Vice President 1995 245,573 82,259 0 8,640 148,625 46,819
Sales & Marketing 1994 238,250 132,503 0 9,600 0 44,504
Charles W. Nocella 1996 185,004 57,244 4,550 81,281 40,733
Former Vice President of1995 154,140 52,216 0 4,140 71,750 30,244
Manufacturing 1994 149,650 84,111 0 4,600 0 28,566
(Retired April 26, 1996)
__________
(1) Includes, where applicable, amounts electively deferred by a named
executive under the Company's Matched Retirement Savings Plan, which is
a so-called "401(k)" plan, and directors' fees paid to the named
executives, where applicable, for attendance at La-Z-Boy Chair Company
Board of Directors' meetings.
(2) Allocated to named executives for the applicable fiscal year under the
Company's Executive Incentive Compensation Plan.
(3) Amounts reported for fiscal 1996 and fiscal 1995 represents the
aggregate closing market price on date of grant of shares of common
stock awarded to the named executive under the Company's 1993
Performance Based Stock Plan in light of performance goals achieved for
the three-year Performance Period ended April 27, 1996 and April 29,
1995, respectively.
(4) The amounts in this column include amounts allocated for the named
executives to the Supplemental Executive Retirement Plan (SERP),
earnings credited under the SERP, and Company matching contributions in
the form of Company stock to the Matched Retirement Savings Plan. Set
forth below is a breakdown of the totals contained in the Table for
fiscal 1996:
Amounts allocated to the Supplemental Executive
Retirement Plan of the Company were as follows:
1996
------
Charles T. Knabusch $65,250
Edwin J. Shoemaker 20,060
Frederick H. Jackson 40,068
Patrick H. Norton 40,068
Charles W. Nocella 30,418
Earnings credited on supplemental retirement balances
under the Company's Supplemental Executive Retirement Plan
were as follows:
1996
------
Charles T. Knabusch $21,978
Edwin J. Shoemaker 6,468
Frederick H. Jackson 13,552
Patrick H. Norton 13,482
Charles W. Nocella 8,512
Contributions under the Company's Matched
Retirement Savings Plan were as follows:
1996
------
Charles T. Knabusch $1,354
Edwin J. Shoemaker -0-
Frederick H. Jackson 1,397
Patrick H. Norton 1,397
Charles W. Nocella 1,803
The following table shows all stock options granted to each of the
named executive officers of the Company during fiscal year 1996 and the
potential realizable value of the grants assuming stock price appreciation
rates of 5% and 10% over the five-year term of the options.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants(1) Potential Realizable Value at
------------------------------------ Assumed Annual Rates of Stock Price
Appreciation for Option Terms ($)(2)
--------------------------------------
% of Total 5% Per Year 10% Per Year
Options ----------------- -------------------
Options Granted Exercise or Price Aggregate Price Aggregate
Granted To Employees Base Price Expiration Per Share Value Per Share Value
Name (#) In Fiscal Year ($/SH) Date ($/SH) ($) ($/SH) ($)
- - - ------------------ ------ ----------- ------- --------- ------- ------- ------- ----------
Charles T. Knabusch 22,255 15.48 33.55 10/08/00 42.8192 952,941 54.0326 1,202,496
Edwin J. Shoemaker -0- -0- -0- N/A -0- -0- -0- -0-
Frederick H. Jackson 9,500 6.61 30.50 10/08/00 38.9266 369,803 49.1206 466,646
Patrick H. Norton 9,500 6.61 30.50 10/08/00 38.9266 369,803 49.1206 466,646
Charles W. Nocella 4,550 3.16 30.50 10/08/00 38.9266 177,116 49.1206 223,499
All Optionees 143,785 100.00 30.9721 10/08/00 39.5291 5,683,692 49.8809 7,172,125
_________
(1) All of the above options were granted pursuant to the terms of the
Company's 1986 Incentive Stock Option Plan as approved by the
shareholders of the Company in 1986 and in effect as of the date of the
grant. One-fourth of the shares purchasable under each option normally
becomes exercisable beginning in the second, third, fourth and fifth
years after the date of the grant. However, under the terms of the
agreements described under "Certain Agreements" below, then outstanding
options would be accelerated upon the occurrence of a change in control.
Options once exercisable generally remain exercisable until the
expiration of the fifth year after the date of grant. In the event of
the optionee's death or retirement, the right to exercise the option
will exist for a period of one year following the date of such event for
the full amount of shares remaining unexercised. The optionee's right
to exercise an option immediately terminates in the event the optionee's
employment terminates for any reason other than death or retirement.
The per share exercise price at which the options were granted was 100%
of the fair market value of the Company's Common Stock on the date the
options were granted, except that in the case of options granted to Mr.
Knabusch, such price was 110% of fair market value on the grant date.
(2) The 5% and 10% rates of appreciation are required to be disclosed by the
Securities and Exchange Commission ("SEC") and are not intended to
forecast possible future actual appreciation, if any, in the Company's
stock prices. It is important to note that options have potential value
for the named executive only if the Company's stock price advances
beyond the exercise price shown in the table during the effective five
year option period.
The following table provides information as to stock options exercised
by each of the named executives in fiscal year 1996 and the value of the
remaining options held by each such executive officer at the Company's year
end, April 27, 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-The-Money Options
Options at Fiscal Year-End At Fiscal Year-End (2)
------------------------- ---------------------------
Shares
Acquired Value
On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name # $(1) # # $ $
- - - ------------------ ------- -------- -------- -------- --------- ----------
Charles T. Knabusch 25,700 339,561 71,018 54,779 411,441 44,269
Edwin J. Shoemaker -0- -0- -0- -0- -0- -0-
Frederick H. Jackson 1,475 19,544 19,135 23,405 118,641 44,634
Patrick H. Norton 1,475 19,544 19,135 23,405 118,641 44,634
Charles W. Nocella 4,475 46,578 14,540 -0- 25,706 -0-
__________
(1) Based on the closing market price of the Company's common shares on the
date of exercise, minus the exercise price. An individual, upon exercise
of an option, does not receive cash equal to the amount contained in the
Value Realized column of this table. No cash is realized until the
shares received upon exercise of an option are sold.
(2) Based on the closing market price of the Company's Common Stock at
fiscal 1996 year end ($30.125), minus the exercise price.
LONG-TERM INCENTIVE COMPENSATION TARGET AWARDS
Under the Company's 1993 Performance-Based Stock Plan, as currently
in effect (the "Performance Plan"), prior to or early in each fiscal year
employees selected by the Compensation Committee of the Board of Directors
may be granted contingent awards ("Target Awards") the potential payments
on which ("Performance Awards") are linked to achievement by the end of a
three-year cycle consisting of that and the next two Company fiscal years
(a "Performance Cycle") of performance goals established by the
Compensation Committee when the Target Awards are granted. All
Performance Awards under this plan are structured as options to purchase
or outright grants of Company common shares. For each recipient of a
Target Award for a given Performance Cycle, his maximum Performance Award
potential, which is awarded after the end of the cycle if all of
performance goals are achieved, is a grant of shares equal to four times
the base number of shares established by the Compensation Committee with
respect to that Target Award; the minimum potential Performance Award, for
achievement of only one performance goal during the cycle, is a 30-day
option to purchase the base number of shares at 50% of their fair market
value at date of grant of the Target Award.
Early in fiscal 1996, the Compensation Committee granted Target
Awards to certain employees including named executives for the Performance
Cycle ending April 25, 1998 (the "1998 cycle"). As has been the case since
its first grant of Target Awards under thePerformance Plan, for the 1998
cycle the Committee established four uniform financial goals for all Target
Award recipients, each relating to the operating performance of the Company
and its subsidiaries for that cycle. One of these goals relates to sales
growth, the second to earnings before income taxes, the third to operating
profit margins growth, and the fourth to return on total capital. In
addition, as permitted by the Performance Plan, the Committee set an
additional, individualized goal for each Target Award recipient, the
achievement ofwhich is a precondition to receipt of any Performance Award
for the 1998 cycle by the Target Award recipient, regardless of the extent
to which the other goals are achieved.
The table which follows provides information concerning the Target
Awards so granted to, the named executives.
LONG TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
Number of Performance
Performance Period Until
Shares (1) Maturation Threshold Target Maximum
Name # Or Payout #(2) #(3) #(4)
---- ----------- ------------- --------- ------- --------
Charles T. Knabusch 3,090 (5) 3,090 6,180 12,360
Edwin J. Shoemaker -0- -0- -0- -0- -0-
Frederick H. Jackson 1,325 (5) 1,325 2,650 5,300
Patrick H. Norton 1,325 (5) 1,325 2,650 5,300
Charles W. Nocella 633 (5) 633 1,265 2,530
____________
(1) Numbers reported are the base numbers of shares subject to Target
Awards granted.
(2) Numbers reported are the numbers of shares which would become subject
to 30-day option if only one performance goal is achieved. The per share
exercise price for any such option would be 50% of the "Fair Market Value"
(as defined in the Performance Plan) of a common share at date of grant of
the Target Awards.
(3) Numbers reported are the numbers of shares which would become subject
to 30-day option if two performance goals are achieved. The per share
exercise price for each such option would be 25% of Fair Market Value of
a common share on date of grant of the Target Awards. For achievement of
three performance goals, an outright grant of 150% of the same number of
shares would be made. Under the terms of the Performance Plan, if a Target
Award grantee's employment terminates due to death, or if termination is
due to disability (as therein defined) or retirement with the consent of
the Company and the terminated employee subsequently dies before the end of
the Performance Cycle, his or her estate administrator may elect to receive
a Performance Award prior to the end of the cycle. If the election is made,
the estate would receive either a 30-day option on the number of shares
shown in this column, as if two Performance Goals had been met, or an
outright grant of that number of shares, depending upon whether employment
termination occurred during the first or second half of the Performance
Cycle. Termination of the grantee's employment due to death, disability,
or consensual retirement otherwise has no effect on any outstanding Target
Awards of the grantee, but termination for any other reason automatically
cancels such awards.
(4) Numbers reported are the numbers of shares which would be awarded,
in the form of an outright grant, if all performance goals are achieved.
Under the terms of the Performance Plan, the holder of a Target Award
also will be deemed automatically to have earned and been granted the
same Performance Award if a person or group becomes an Acquiring Person
(as defined in the Performance Plan) or certain changes in the composition
of the Board of Directors occurs while the Target Award is outstanding.
The same effect upon then- outstanding Target Awards also will result, if,
while there is an Acquiring Person, any of certain other significant
transactions involving the Company should occur, unless the transaction has
been approved by a majority of Directors who were Board members before the
Acquiring Person became such.
(5) The performance period (Performance Cycle) until maturation or payout
is three fiscal years ending April 25, 1998.
CERTAIN AGREEMENTS
The Company recognizes that establishing and maintaining a strong
management team are essential to protecting and enhancing the interests
of the Company and its shareholders. In order to assure management
stability and the continuity of key management personnel, the Company has
entered into change in control agreements with certain key employees
including, among others, all current executive officers except Mr. Jordan
and Mr. Kiser. Mr. Nocella also had such an agreement until his
retirement at the end of fiscal 1996. The employees eligible for change
in control agreements are those selected by the Compensation Committee.
These agreements, which were unanimously approved by the Board of
Directors, provided that if a covered employee is terminated, other than
for cause, disability, death or retirement, within three years after a
change in control of the Company, that employee shall be entitled to
receive a lump sum severance payment equal to three times the sum of (i)
his annualized salary and (ii) an amount equal to the average bonus paid
to the employee in the previous three years, as well as certain other
payments and benefits, including continuation of employee welfare benefit
payments, and reimbursement of certain legal fees and expenses incurred by
such employee in connection with enforcing such agreement following a change
in control. In consideration of the foregoing, each of such persons agrees
to remain in the employ of the Company during the pendency of any proposal
for a change in control of the Company. The agreements expire December 31,
1996 and are automatically renewed for additional one-year periods unless
either party gives 90 days' notice that it does not wish to extend the
agreement. In the event of a change in control, the agreements are
automatically extended for 36 months.
PERFORMANCE COMPARISON
The following graph provides an indicator of the return for the
Company's last five fiscal years that would have been realized (assuming
reinvestment of dividends) by an investor who invested $100 on April 26,
1991 in each of (i) the New York Stock Exchange Index, (ii) a Peer Group
of publicly traded furniture industry companies, and (iii) the Company's
Common Stock.
La-Z-Boy Chair Company
Comparison of Total Return to Shareholders
April 26, 1991 through April 26, 1996
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
La-Z-Boy Chair Company 100 113.43 138.65 169.23 139.60 159.77
Peer Group 100 128.61 153.40 154.97 139.97 161.93
New York Stock
Exchange Index 100 112.66 124.75 133.80 149.74 193.43
Peer Group Index
The Peer Group consists of seven public companies operating primarily
in the residential segment of the furniture industry and two other larger
public companies which operate in that business segment as well as in other
business segments. The returns of each company have been weighted
according to their respective stock market capitalization for purposes of
arriving at a peer group average: RESIDENTIAL - Bassett Furniture, Bush
Industries, DMI Furniture, Flexsteel Industries, LADD Furniture, Pulaski
Furniture, and Rowe Furniture; OTHERS - MASCO Corporation and Leggett &
Platt.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of the Chief Executive Officer and other four highest
paid executive officers, as well as the other senior executives at La-Z-
Boy and all subsidiaries, was determined by the Compensation Committee of
the Board of Directors. The Committee presents the following report on
compensation for the Company's executive officers for fiscal 1996. Actual
awards for fiscal year 1996 for the named executives are shown in the
Summary Compensation Table preceding this report.
Compensation Philosophy
- - - -----------------------
The Company's executive compensation programs are premised on the
belief that the interests of executives should be closely aligned with
those of the Company's stockholders. Based on this philosophy, the
Committee believes that a substantial portion of the aggregate potential
compensation of executive officers should be directly and materially linked
to the Company's operating performance. Consequently, a significant
portion of each executive's total compensation is placed at risk and linked
to the accomplishment of specific results which will benefit the Company's
stockholders in both the short and long-term. Since the achievement of
performance objectives over time is a primary determinant of share price,
executive compensation is weighted heavily on the basis of performance and
achievement of these goals. Under this performance orientation:
- Executives are motivated to improve the overall performance and
profitability of the Company by rewarding them when specific,
measurable results have been achieved.
- Accountability is further encouraged by incentive awards on the
basis of executives' performance and contribution against defined
short and long-term goals.
- In years when corporate performance has been superior, executives
will be well compensated, which will permit the Company to attract
and retain the talent needed to lead and grow its business;
conversely, in years of below average performance, compensation
declines below competitive benchmarks.
- The compensation strategy will support business goals and direction
and specifically link executive and shareholder interests through
equity-based plans linked to the Company's common shares.
- The Company's compensation policy will maximize growth-driven
financial performance, balancing appropriately the short and long
term goals of the Company.
Compensation Plan Generally
- - - ---------------------------
In carrying out its duties, the Committee regularly reviews the
executive compensation programs of the Peer Group identified under
"Performance Comparison" and of various manufacturing companies of similar
size whose executives have similar responsibilities and operations. In
fiscal 1996, this review included an analysis by a compensation consultant
retained by the Committee to assure itself that the Company's total
compensation program is properly integrated with both the Company's annual
and longer term objectives and is competitive with compensation programs of
other companies with which the Company must directly compete for executive
talent.
The chief components of the Company's executive compensation program
are salary, annual cash incentive bonuses, and long-term incentives
utilizing stock-based awards. As it has done in prior years, in making its
compensation decisions for 1996, the Compensation Committee considered
these components as a whole and sought to balance the total compensation
package between the more stable salary portion and the "at risk" incentive
portions so that a substantial percentage of the total potential
compensation of each executive, and particularly that of the CEO, would be
dependent on the achievement of Company long and short-term strategic goals
and increases in value of the Common Stock. Information concerning other
factors bearing on the Committee's 1996 executive compensation decisions
relating to particular components is provided below. Except as otherwise
indicated in this report, the 1996 salary, short-term incentive bonus, and
long-term incentive awards to Mr. Knabusch were determined by the Committee
based on the same policies and after consideration of the same factors as
were applied by the Committee with respect to the other executive officers
of the Company.
Salary
- - - ------
Consistent with past practice, in considering adjustments to the
salaries of executive officers for 1996, the Committee reviewed with the
compensation consultant retained to advise it the results of various
surveys of salaries being paid to executives at other companies (including,
where available, Peer Group companies and other companies considered
potential competitors for the services of Company executives) and a report
prepared by the consultant assigning a range of salaries for each executive,
based on the survey data and his position with the Company. The Committee
then considered whether the performance of each executive considered in the
context of Company financial results, any changes in the scope of any
executive's responsibilities, or any other special factors concerning any
executive were such as might call for a departure from the Committee's
general practice in recent years, which has been to establish executive
salaries at approximately 90% of the midpoint of the salary range for their
respective positions as reported for the year by the compensation
consultant.
Based on the foregoing considerations, the Compensation Committee
determined uniformly to follow its prior practice for 1996 and, accordingly,
adjusted the salary of each executive, including Mr. Knabusch, to
approximately 90% of the midpoint for his position as reflected in the
compensation consultant's 1996 report to the Committee. The salary amounts
so established for Mr. Knabusch and the other executives named in the
Summary Compensation Table preceding this report are provided in that table.
Short-Term Incentive Awards
- - - ---------------------------
Annually, the Compensation Committee establishes short-term
performance criteria for the management incentive plan. Performance
criteria include such areas as growth in revenue and improved earnings.
The specific focus and weighing of the criteria is based on the Committee's
assessment of the key short-term priorities of the corporation. The
performance criteria are established at the start of the fiscal year or as
shortly thereafter as possible. The target and maximum award opportunity
for each executive is based on competitive data provided by the
compensation consultant. The award paid is based on actual results
compared to the established performance targets. For Fiscal 1996, the
maximum award opportunity available for each executive named in the Summary
Compensation Table was 77% of his salary for the CEO, 63% of his salary for
Messrs. Jackson, Norton and Nocella and 56% of his salary for Mr. Kiser.
The performance criteria for fiscal 1996 were improvement in sales revenue
and pretax income. One-third of the award was based on sales revenue and
two-thirds was based on pretax income. This weighing is the result of the
Board's continuing emphasis on improving earnings. For fiscal 1996, the
Company's consolidated sales revenue increased 11% over fiscal 1995, and the
Company's pretax income for fiscal 1996 increased 7% over fiscal 1995.
Based on the sliding scale of performance goals established prior to the
start of the fiscal year, the Company's financial performance resulted in
the bonus payments as set forth in the Summary Compensation Table. The
annual incentive awards paid to the CEO and the other executives named in
the table were based exclusively on the overall corporate performance using
the system described above.
Long-Term Incentives
- - - --------------------
The Company and the Compensation Committee have long recognized the
importance of linking executive compensation and value created for
shareholders. Consequently, stock-based awards are an important component
of executive compensation and one which particularly links executive
compensation to the maximization of shareholder values. For fiscal 1996,
stock- based awards were potentially available to executive officers and
other management personnel under the Performance Plan approved by the
shareholders in 1993, as well as under the Company's previously established
and approved employee stock option and restricted stock plans. However,
consistent with a policy previously adopted by the Committee after the
Performance Plan was approved, the Compensation Committee determined not to
make any 1996 grants of restricted stock to any executive officers or other
employees eligible to receive Target Awards under that plan.
When considering the grant of 1996 incentive stock options to executive
officers, the Compensation Committee primarily was concerned with achieving
an appropriate balance between such stock-based awards, and the salary and
short-term incentive compensation components of executive compensation
under consideration for the year. Toward that end, the Committee relied on
survey data provided by the compensation consultant concerning the
practices in this area followed by other companies (including Peer Group
companies and other potential competitors for executives) and the
consultant's recommendations for achieving comparable allocation results,
which were based on that data and the consultant's analyses and estimates of
the present and potential future value of the Company's stock-based awards.
The Committee also considered the compensation opportunity that had been
afforded executives early in the fiscal year through the grant of Target
Awards under the Performance Plan for the Performance Cycle ending in 1998
and the availability of the Performance Plan for subsequent grants of Target
Awards to executives. Based on the factors described above, the Committee
determined to grant options on 22,255 shares to the CEO at an exercise price
equal to 110% of market value at date of grant and options at a market value
exercise price to certain other named executives, all as more fully
described in the option grant table preceding this report.
The Performance Awards under the Performance Plan reported as 1996
long-term incentive plan payouts in the Summary Compensation Table were
awarded to the named executives after the close of fiscal 1996 for the
three-year Performance Cycle then ended (the "1996 cycle"). As discussed
above under "Long-Term Incentive Compensation under the La-Z-Boy Chair
Company 1993 Stock-Based Performance Plan," the Compensation Committee
previously had established four uniform performance goals for each of the
Target Awards relating to that cycle, and all four of those goals were
achieved. Accordingly, pursuant to the terms of the Performance Plan, each
recipient of a Target Award for that cycle received from the Compensation
Committee a grant of shares of Common Stock equal to four times the base
number of shares reflected in his Target Award for the 1996 cycle. The
numbers of shares so granted to executives named in the Summary Compensation
Table were as follows: Mr. Knabusch, 12,490 shares; Mr. Shoemaker, 0
shares; Mr. Jackson, 5,340 shares; Mr. Norton, 5,340 shares; Mr. Nocella,
2,550 shares.
The Compensation Committee
John F. Weaver, Chairman
David K. Hehl
Rocque E. Lipford
Warren W. Gruber
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The above named non-employee directors constitute the Compensation
Committee of the Company's Board of Directors and served in that capacity
for the entire 1996 fiscal year. No other persons served on the
Compensation Committee during that fiscal year.
John F. Weaver is an Executive Vice President of Monroe Bank & Trust.
Charles T. Knabusch, Chairman of the Board, President and CEO of the
Company is a member of the Board of Directors of Monroe Bank & Trust and
serves as a member of the Personnel Committee of the Bank.
The law firm of Miller, Canfield, Paddock and Stone, P.L.C., of which
Rocque E. Lipford is a Senior Member, provides legal services to the
Company and has done so for the past 16 years.
PROPOSAL 2: APPROVAL OF AMENDMENT AND RESTATEMENT
OF 1993 PERFORMANCE-BASED STOCK PLAN
Background
- - - ----------
As noted earlier in this Proxy Statement (see, for example, "Long-
Term Incentive Compensation Target Awards"), at the 1993 annual meeting
of the Company's shareholders, the shareholders approved a long-term
incentive compensation plan for executive officers and other key employees
known as the 1993 Performance-Based Stock Plan. By virtue of such
approval, the previously contingent grants of Target Awards under the plan
for the Performance Cycle ended on April 29, 1995 also became effective at
that time.
Later in 1993, the U.S. Congress enacted a new Section 162(m) of the
Internal Revenue Code, which, subject to certain exclusions (including an
exclusion for certain performance- based compensation), imposes a $1
million-per-executive cap on the amount a public company (such as the
Company) may deduct as compensation expense for Federal income tax purposes
on account of compensation paid in any tax year beginning after 1993 to
executives named in its Summary Compensation Table for that year. Final
regulations concerning the requirements for a performance-based exclusion
from this $1 million deduction cap subsequently were not adopted until
December 1995. Currently, the Performance Plan already satisfies many of
the requirements applicable to performance-based compensation eligible for
exclusion from Section 162(m)'s deduction limit, but the plan does not
satisfy all relevant requirements under the finalized regulations.
Primarily in light of those regulations, on May 30 of this year, the
Board of Directors took action to adopt an amendment and restatement of the
Performance Plan (the "Amended Plan"), subject to shareholder approval at
the upcoming annual meeting. For the same reason, Target Award grants for
the Performance Cycle ending April 24, 1999 (the "1999 cycle") also have
been made contingent upon shareholder approval of the Amended Plan at the
annual meeting.
The full text of the Amended Plan is provided in Exhibit A to this
Proxy Statement. The discussion which follows summarizes the significant
differences between the current Performance Plan and the Amended Plan,
provides information concerning the Target Awards that have been granted
for the 1999 cycle, and also provides information concerning other matters,
relevant to the proposal to approve the Amended Plan (and thereby,
effectively, those Target Awards). The summary information concerning the
Amended Plan provided below should be read in conjunction with Exhibit A,
which shareholders are advised to review in its entirety in connection with
their deliberations upon this proposal.
Material Plan Amendments in the Amended Plan
- - - --------------------------------------------
Administration. The Board committee charged with administering the
1993 Performance- Based Stock Plan (the "Plan Committee") currently is
defined in the Performance Plan as the Compensation Committee (or such
successor Board committee as the Board of Directors may designate from time
to time), all the members of which at any given time must satisfy
"disinterested" administration requirements of Securities and Exchange
Commission Rule 16b-3 as then in effect and applicable to transactions in
Company common shares ("Rule 16b-3). Comparable provisions are continued in
the applicable definition under the Amended Plan. However, because the
Section 162(m) regulations also impose requirements concerning the
composition of the committee administering a qualified performance-based
plan, which in some respects are more restrictive than those under Rule 16b
3, the definition in the Amended Plan has been expanded to require
compliance with those Section 162(m) regulations, as well, and to expressly
authorize a subcommittee of the Compensation Committee (or a successor
committee) to serve as the Plan Committee whenever necessary to satisfy
those regulations.
Performance Goals. For all Target Award grants for any Performance
Cycle that heretofore have been made by the Compensation Committee, the
committee has established four uniform and objectively determinable
Performance Goals relating to the following areas of Company performance
over the relevant cycle: sales growth, earnings before income taxes,
operating profit margin growth, and total return on capital. However, the
Performance Plan does not require that Performance Goals established for
any Performance Cycle relate to those or any other particular performance
areas, nor require that any Performance Goal established necessarily be
determinable without the application of subjective judgment. Instead, such
matters currently are left entirely to the discretion of the Plan Committee.
In order to conform with requirements of the Section 162(m)
regulations ,the comparable provisions of the Amended Plan have been
changed to reduce the Plan Committee's discretion by requiring that each
Performance Goal used for a Target Award be objectively determinable and
relate to one of the areas of Company performance identified above or one
of the following other areas of Company performance: earnings per share;
sales or other revenue growth; operating income; operating cash flow
improvement; net income, before or after taxes; operating profit margin
growth; return on total capital, equity, revenues, or assets; or EVA (net
operating profit after tax less a charge for use of capital). As permitted
by the Section 162(m) regulations, the Plan Committee will continue to have
discretion under the Amended Plan to impose additional preconditions to
receipt of any Performance Award for a given cycle, including preconditions
the satisfaction of which may require subjective determinations by the
committee. However, except as provided in Section 7.1 or Section 7.2 of
the Amended Plan (the substance of which sections are not changed from
those in the current Performance Plan), in no event may the holder of any
Target Award receive any Performance Award unless and until it subsequently
has been determined by the Plan Committee in accordance with the other
provisions of the Amended Plan that at least one of the Performance Goals
related to his or her Target Award actually has been achieved or receive a
Performance Award more favorable to the holder than the Performance Award
set for achievement of the number of Performance Goals actually achieved.
Performance Goal Adjustments. Currently, under the Performance Plan,
at any time prior to the Plan Committee's final determination concerning
whether Performance Goals for a given Performance Cycle actually have been
achieved, the Plan Committee has discretionary authority to adjust any or
all of the preestablished goals in such manner as it deems appropriate, in
light of any facts, circumstances, or developments determined by the
committee to bear significantly upon such goals and that have arisen or
occurred after the preestablished goals were set or that were unknown to
the committee at that time. Due to the Section 162(m) regulations, these
provisions of the Performance Plan have been modified in the Amended Plan
to more narrowly circumscribes the Plan Committee's discretion in this
area. Under the relevant Amended Plan provisions, the Plan Committee
continues to have discretion to specify types or categories of unusual,
nonrecurring, or other items or events to be excluded or otherwise not
taken into account when actual Company results relating to a Performance
Goal for a given Target Award are determined, but it may exercise that
discretion only in connection with the establishment of the Performance
Goal; thereafter, only objectively determinable adjustments for the items
or events so specified would be permissible.
Payment Methods for Exercised Options. Subject to such
limitations as the Plan Committee may impose, the Performance Plan
currently permits the holder of a Performance Award granted in the
form of an option on common shares to pay the exercise price of the
option (which is due at the time of exercise) in cash, by check, or
by transferring to the Company common shares then owned by the
holder. The Amended Plan adds an additional payment method for
option exercises: directing the Company to retain some of the
shares otherwise issuable upon exercise of the option. This payment
method is comparable to the provision already in the Performance
Plan (and carried over in the amended Plan) that, again subject to
limitation by the Plan Committee, permits the recipient of a
Performance Award to elect to satisfy his or her tax withholding
obligations arising from the award in the same manner. In light of
existing regulations under Section 6 of the Securities Exchange Act
of 1934, it is not currently expected that any executive officer
receiving a Performance Award in the form of an option would elect
this new method of paying the exercise price, but another recipient
of such an award who wishes to pay his or her exercise price in
shares may find the new method preferable to delivering already-
owned shares with a lower tax basis.
Share Limits. The Performance Plan currently provides that,
subject to adjustment for recapitalization events of the types
described in Section 8.3 of the Amended Plan (which is essentially
the same as in the Performance Plan), the aggregate number of
Company common shares that may be issued as Performance Awards and
made subject to options granted as Performance Awards is 400,000.
It also provides that, if any option or portion of an option granted
under the plan should expire, terminate, or be canceled for any
reason prior to its exercise, the shares for which it no longer may
be exercised will again become available for purposes of the plan.
The Performance Plan does not impose any limit on the number of
shares that any given Target Award holder may receive as or in
settlement of Performance Awards other than the overall limit
described above.
The Amended Plan does not change the 400,000 aggregate maximum
number of shares that may be issued under the Performance Plan.
However, in addition to retaining the plan provisions concerning
terminated options described above and clarifying that any shares
retained from a Performance Award for tax withholding purposes
pursuant to the plan are not counted as issued for purposes of this
limit on available shares, the Amended Plan further provides that
any shares so retained in payment for the exercise price of any
option granted under the plan also are not to be considered issued
for that purpose and that the plan's limit on available shares will
be increased by the number of any already owned common shares
transferred to the Company to satisfy withholding obligations
pursuant to the plan or as payment for an exercised plan option. In
addition, in light of certain requirements of the Section 162(m)
regulations, the Amended Plan also provides that, subject to
adjustment pursuant to Section 8.3, the base number of shares for
any given Target Award granted for a Performance Cycle ending after
the close of the Company's 1998 fiscal year may not exceed 7,500
shares and prohibits the grant of more than one Target Award per
employee for any Performance Cycle ending after that fiscal year.
In effect, this establishes 30,000 shares (four times the maximum
base number) as the maximum number of shares that any individual may
receive as a Performance Award for any such Performance Cycle.
Target Award Grants for 1999 Cycle
- - - ----------------------------------
The table which follows provides information concerning the
Target Award grants that were made by the Compensation Committee in
the first quarter of fiscal 1997 for the Performance Cycle ending on
April 24, 1999. As stated above and in the last section of the
Amended Plan, these grants will become effective only if the
proposal to approve the Amended Plan is carried. As in prior years,
the Compensation Committee has established four uniform and
objectively determinable Performance Goals for all of these Target
Award grants. The areas of Company performance over the 1999 cycle
to which these goals relate are sales growth, earnings before income
taxes, international sales growth and total return on capital.
LONG TERM INCENTIVE PLAN - AWARDS IN FIRST QUARTER FISCAL YEAR 1997
FOR THE 1999 PERFORMANCE CYCLE
Number of Estimated Future Payouts
Performance
Shares(1) Threshold Target Maximum
Name # #(2) #(3) #(4)
Charles T. Knabusch 3,000 3,000 6,000 12,000
Edwin J. Shoemaker -0- -0- -0- -0-
Frederick H. Jackson 1,250 1,250 2,500 5,000
Patrick H. Norton 1,250 1,250 2,500 5,000
Charles W. Nocella -0- -0- -0- -0-
Current Executive
Officers, As a Group 7,160 7,160 14,320 28,640
Non-employee Directors,
as a Group -0- -0- -0- -0-
Employees, excluding
Executive Officers, as
a Group 3,695 3,695 7,390 14,780
(1) Numbers reported are the base numbers of shares subject to
Target Awards granted.
(2) Numbers reported are the numbers of shares which would become
subject to 30-day option if only one performance goal is achieved.
The per share exercise price for any such option would be 50% of the
"Fair Market Value" (as defined in the Performance Plan) of a common
share at date of grant of the Target Awards.
(3) Numbers reported are the numbers of shares which would become
subject to 30-day option if two performance goals are achieved. The
per share exercise price for each such option would be 25% of Fair
Market Value of a common share on date of grant of the Target
Awards. For achievement of three performance goals, an outright
grant of 150% of the same number of shares would be made.
(4) Numbers reported are the numbers of shares which would be
awarded, in the form of an outright grant, if all performance goals
are achieved.
Other Matters
- - - -------------
Shareholder approval of the Amended Plan is not required by
the terms of the Performance Plan or applicable Michigan corporation
law. However, shareholder approval of the categories of performance
to which Performance Goals may relate is required by the Section
162(m) regulations, and Rule 16b-3 may require shareholder approval
of the provisions of the Amended Plan which affect the counting of
shares toward the aggregate limit on available shares discussed
above. The Board of Directors has determined that it is preferable
to submit the entire Amended Plan for approval, rather than merely
those provisions for which shareholder approval is necessary.
If the Amended Plan is approved as proposed, the Target Awards
that have been granted for the 1999 cycle thereupon will become
effective. Based on the current Section 162(m) regulations, the
Board of Directors believes that, upon such approval, any
Performance Awards that subsequently are paid out after the end of
that cycle on account of those Target Awards will satisfy the
requirements for exclusion from Section 162(m)'s deduction limit.
As indicated in the last section of the Amended Plan, to the extent
that it proves to be necessary to seek additional shareholder
approval in order for any post-cycle payouts on Target Awards that
may be granted for a later Performance Cycle also to qualify for
exclusion from that deduction limit, such Target Awards that may be
granted for a later Performance Cycle also to qualify for exclusion
from that deduction limit, such Target Awards will not be granted
(or, if granted on a contingent basis, will not become effective)
unless the requisite shareholder approval has been obtained. (Based
on the current Section 162(m) regulations, additional shareholder
approval of Target Awards hereafter granted would not be needed for
any Target Awards granted prior to the first meeting of the
Company's shareholders held in calendar year 2001.) Despite
shareholder approval of the Amended Plan, however, if and to the
extent that provisions of Section 7.1 or Section 7.2 of the Amended
Plan should result in payout of Performance Award for the 1999 cycle
or a later-ending Performance Cycle irrespective of the actual
achievement of Performance Goals for the cycle, such a payout would
not be excluded from the Section 162(m) deduction limit under the
current regulations, and the same would be true for any Performance
Award paid for the cycles that will end at the close of fiscal years
1997 and 1998. Thus, it is possible that not all Performance Award
payouts for those or subsequent cycles will be fully deductible.
If the Amended Plan is not approved as proposed, the Target
Awards have been granted for the 1999 cycle will not become
effective, and no Target Award grants for that cycle or any
subsequent Performance Cycle will be made unless any shareholder
approval for such grants required by the Section 162(m) regulations
subsequently is obtained.
The proposal to approve the Amended Plan will be carried if a
majority of the common shares entitled to vote and actually voted
upon the proposal at the annual meeting are voted in favor of the
proposal. Thus, if an abstention or broker non-vote is registered
concerning the proposal with respect to any shares entitled to be
voted, those shares will be disregarded for purposes of determining
whether the proposal has carried.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE AMENDMENT AND RESTATEMENT OF THE PERFORMANCE PLAN.
PROPOSAL 3: ADOPTION OF AMENDMENT OF THE CURRENT ARTICLES TO CHANGE
THE COMPANY'S NAME
"La-Z-Boy Chair Company" has been the name of the Company since
its incorporation in 1941. Since the Company originally began business
as a manufacturer of upholstered chairs, and its dramatic sales growth
in the 1960's and 1970's primarily was due to the invention and
patenting of its now famous reclining chair mechanism, the current name
was well-suited to the Company for many years.
However, beginning in the 1980's, the Company's product line
began to expand significantly to include stationary sofas and
loveseats, reclining sofas, sleep sofas, modular seating groups, and
contract furniture such as office and health care furniture, as well
as chairs. In addition, during the last ten years, the Company has
made five acquisitions of companies whose product lines include
occasional tables, other occasional furniture, living room cabinets,
wall entertainment units, solid wood bedroom and dining room furniture,
modular business systems, and various types of upholstered furniture
other than chairs. For fiscal 1996, sales of reclining and stationary
chairs represented only about 40% of the Company's total consolidated
sales. Thus, although the Company's chairs, and particularly its
reclining chairs, continue to be important to the Company, many of its
other products now are becoming significant as well.
As the Company has grown, the La-Z-Boy name has become one of the
most well-recognized and respected names in the furniture industry.
However, in light of the developments described above, the Board of
Directors believes that the Company and its shareholders now will be
best served by modifying its name to reflect its expanded product
lines. Accordingly, the Board is proposing for shareholder adoption
at the annual meeting an amendment to Article I of the current Articles
(which sets forth the Company's current name) that would replace
current Article I with the following: "The name of this corporation
is La-Z-Boy Incorporated."
Under applicable Michigan corporate law, adoption of the proposed
amendment of the Current Articles requires the affirmative vote of a
majority of all outstanding common shares entitled to vote at the
annual meeting. Thus, for purposes of the vote on the proposed
amendment, if any common shares entitled to be voted at the meeting are
not voted for adoption of the amendment for any reason (including,
without limitation, due to abstention or broker non-vote), this will
have the same effect as if those shares had been voted against adoption
of the amendment.
If the proposed amendment is adopted at the annual meeting, the
Company intends as promptly as practicable thereafter to file a
Certificate of Amendment setting forth the amendment with the Michigan
Corporation and Securities Bureau, whereupon the amendment will become
effective and the Company's name will become "La-Z-Boy Incorporated."
If the proposed amendment is not adopted, the Company's name will
continue to be "La-Z-Boy Chair Company."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL TO CHANGE NAME OF COMPANY
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors, at the recommendation of its Audit
Committee, has reappointed the firm of Price Waterhouse LLP as its
independent accountants. Price Waterhouse has served as independent
accountants for the Company continuously since 1968. It is expected
that a representative of Price Waterhouse will be present at the annual
shareholders' meeting with the opportunity to make a statement if he
or she desires and to answer appropriate questions which may be raised
by shareholders at the meeting.
SHAREHOLDER PROPOSALS
Shareholders who intend to present a proposal at the annual
meeting to be held in 1997 must furnish such information to the Company
by February 28, 1997 for the proposal to be included in the Company's
proxy statement for that meeting. The Company may omit a proposal and
any statement in support thereof from its proxy statement and form of
proxy in accordance with rules issued by the Securities and Exchange
Commission.
OTHER MATTERS
The Management is not aware of any other matters which may come
before the annual meeting. However, if any other matters properly come
before the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the proxy in accordance with their
judgment on such matters.
The total expense of sending out notices, proxies, and this Proxy
Statement will be paid by the Company. This expense is expected to be
limited to the cost of preparing and mailing this Proxy Statement and
accompanying documents.
Please execute and return the accompanying proxy, so that your
shares may be voted at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Gene M. Hardy, Secretary
Monroe, Michigan
June 28, 1996
A copy of the Company's Form 10-K Annual Report for the fiscal
year ended April 27, 1996, may be obtained by writing the Secretary's
office.
Exhibit A
LA-Z-BOY CHAIR COMPANY
1993 PERFORMANCE-BASED STOCK PLAN
( As Amended and Restated)
ARTICLE I
1.1 Purpose. The purpose of the Plan is to provide the Company
and its subsidiaries with additional means of (a) attracting and
retaining competent new personnel and other key
employees, (b) insuring the retention of the services of existing
executive personnel and key
employees, and (c) providing incentive to all such personnel to devote
their utmost effort
and skills to the long-term advancement and betterment of the Company
and its shareholders.
ARTICLE II
2.1 Certain Definitions. When used in the Plan, the following
terms have the following
respective meanings:
(a) "Base Number" has the meaning set forth in Section 6.1
hereof.
(b) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as in
effect at a given time,
or any such successor code as may be in effect at the time.
(d) "Company" means La-Z-Boy Chair Company, a Michigan
corporation.
(e) "Committee" means the Compensation Committee of the Board
of Directors (or such other Board committee or subcommittee as
the Board of Directors hereafter may designate from time to
time), all of the members of which at any given time shall satisfy
all such criteria as are then necessary in order to facilitate
exemption of compensation paid pursuant to the Plan from the tax
deduction limit imposed by Section 162(m) and also shall satisfy
all such criteria for "disinterested" administration of the Plan
as then may be applicable under Rule 16b-3.
(f) "Disability" means permanent mental or physical
disability as determined by the Committee.
(g) "Employee" means an employee (who also may be an officer)
of the Company or any of its subsidiaries.
(h) "Fiscal Year" means the fiscal year of the Company.
(i) "Fair Market Value" means the closing sale price of a
Share on the New York Stock Exchange for the date as of which such
value is being determined or, if no shares traded on such exchange
on that date, then for the latest preceding date on which the
Shares so traded.
(j) "Option" means an option to purchase Shares granted as
a Performance Award hereunder.
(k) "Performance Award" means an Option or an award of Shares
granted pursuant to Section 6.4, 7.1, or 7.2 of the Plan to the
holder of a Target Award.
(l) "Performance Cycle" means a period of three consecutive
Fiscal Years commencing with and including the Fiscal Year in or
for which a given Target Award is granted.
(m) "Performance Goal" means an objectively determinable
performance goal established by the Committee with respect to a
given Target Award and relating to any of the following areas of
Company performance over the Performance Cycle for such Target
Award: earnings per share; sales or other revenue growth;
operating income; operating cash flow improvements; net income,
before or after taxes; operating profit margin growth; return on
total capital, equity, revenues, or assets; or EVA (net operating
profit after tax less a charge for use of capital).
(n) "Plan" means the La-Z-Boy Chair Company 1993 Stock-Based
Performance Plan, as in effect at a given time.
(o) "Rule 16b-3" means Rule 16b-3 of the Securities and
Exchange Commission as in effect and applicable to transactions in
Shares at a given time, or such successor rule or regulation as in
then in effect and so applicable.
(p) "Shares" means the Company's Common Shares, $1.00 par
value.
(q) "Section 162(m)" means Section 162(m) of the Code (or
such successor section as may be in effect at a given time),
together with the regulations of the U.S. Department of the
Treasury promulgated thereunder.
(r) "Target Award" means an award, granted pursuant to the
Plan and more fully described in Article VI hereof, entitling the
holder to receive a Performance Award if one or more Performance
Goals are met.
ARTICLE III
3.1 Aggregate Number of Shares Available and Reserved for the
Plan. Subject to
the provisions of Section 8.3 hereof, the aggregate maximum number of
Shares which may be issued as Performance Awards or in settlement of
Options granted as Performance Awards is 400,000, which Shares were
reserved for issuance in connection with original approval of the Plan
by the Company's shareholders. If any Option or Option portion granted
under the Plan shall expire, terminate, or be canceled for any reason
prior to its exercise, the Shares theretofore subject to such Option
or portion shall continue to be available for purposes of the Plan.
Moreover, any Shares retained by the Company at the direction of the
recipient of a Performance Award in satisfaction of tax withholding
obligations associated with such Award or in payment of the exercise
price of an Option shall not be counted toward the aggregate number of
available Shares hereinabove set forth, and that number shall be
increased by the number of any already owned Shares that may be
transferred to the Company in satisfaction of such withholding
obligations or in payment of the exercise price of an Option.
3.2 Limits on Awards to Individual Grantees. The Base Number for
any Target Award granted to any Employee for a given Performance Cycle
may not exceed 7,500 shares (subject to adjustment pursuant to Section
8.3 hereof), and no more than one Target Award may be granted to any
employee for any given Performance Cycle.
ARTICLE IV
4.1 Eligibility. No one other than an Employee shall be eligible
to receive any Target Award under the Plan, and the only Employees
eligible to receive Target Awards at a given time shall be those who
at such time are officers of the Company or a subsidiary or are
otherwise determined by the Committee to be key Employees. Eligibility
to be granted a Target Award confers no right upon any Employee to be
selected for or to receive any such grant.
4.2 No Effect on Employment Rights. Nothing in the Plan or in
any instrument or document describing the Plan or evidencing or
describing any Target Award or Performance Award shall in any way be
construed to limit in any respect the right of the Company or a
subsidiary to terminate any Employee's employment at any time, without
regard to the effect of such termination on any rights or expectations
of benefit such Employee would or might otherwise have under the Plan
or any Target Award or Performance Award made to such Employee, or to
give any right to any Employee to remain employed by the Company or a
subsidiary in any particular position or at any rate of compensation.
ARTICLE V
5.1 Authority of the Committee. The Plan shall be administered
by the Committee, which, subject to the limitations expressly set forth
in the Plan, shall have the exclusive authority to (a) determine those
Employees who are eligible to be granted Target Awards, (b) select
from among such eligible Employees those to whom such awards will be
granted, (c) establish the terms and conditions of each Target Award
and Performance Award granted, (d) establish and adjust the
Performance Goals related to any Target Award, and (e) determine the
extent to which Performance Goals have been met. Prior to making the
decisions described above, in addition to consulting with such other
persons and considering such other matters as it may deem appropriate
or advisable, the Committee shall consult with and consider the
recommendations of the Chairman of the Board and such other management
personnel as the Chairman may designate, but the Committee need not
follow such recommendations in reaching such decisions, all of which
shall be made by the Committee in its sole discretion. The Committee
also shall have the authority to interpret the provisions of the Plan
and the terms of any instruments or other documents evidencing Target
Awards or Options, to prescribe, amend, and rescind rules and
regulations relating to the Plan, and to make all other determinations
necessary or advisable for its administration. The Committee's
interpretation or construction of the Plan and any awards granted under
it shall be conclusive and binding upon all interested persons.
ARTICLE VI
6.1 Timing of Grant and Basic Terms of Target Awards. As soon as
practicable after the beginning of each Performance Cycle (and in any
case during the first quarter of the first Fiscal Year within the
Performance Cycle), the Committee shall:
(a) select from among the then-eligible Employees those (if
any) to whom Target Awards will then be granted; and
(b) with respect to each such Target Award: (i) establish
at least four Performance Goals, (ii) specify a minimum number of
Shares to be the subject of a Performance Award if the Committee
subsequently determines that any of such Performance Goals have
been achieved (the "Base Number"), and (iii) establish the
specific Performance Award to be awarded depending on the number
of Performance Goals subsequently determined to have been
achieved, which Performance Award shall range from an Option
covering that number of Shares which equals the Base Number and
having a per Share exercise price equal to 50% of Fair Market
Value on the date the Target Award was granted, for achievement of
one, but only one, of the Performance Goals, to an outright grant
of that number of Shares which is four times the Base Number, for
achievement of all the Performance Goals.
Except to the extent expressly required in (b) above, the Base Number,
the Performance Goals, and the range of potential Performance Awards
established by the Committee with respect to any Target Award granted
at a given time need not be the same as those of any other Target Award
granted then or at any other time. In addition, in connection with any
grant of a Target Award, the Committee may establish other
preconditions to receipt of a Performance Award relating to that Target
Award, including preconditions the satisfaction of which may call for
subjective determinations by the Committee. However, except as
otherwise expressly provided in Section 7.1 or 7.2, in no event shall
the holder of any Target Award receive any Performance Award in respect
of such Target Award unless and until it subsequently has been
determined by the Committee that at least one of the Performance Goals
related to such Target Award actually has been achieved or receive a
Performance Award more favorable to the holder than the Performance
Award originally specified for achievement of the number of Performance
Goals that actually are achieved.
6.2 Adjustment of Performance Goals. In connection with the
establishment of Performance Goals for a given Target Award, the
Committee shall specify which (if any) types of categories of
extraordinary, unusual, or other items or events shall be excluded or
otherwise not taken into account when actual Company results relating
to any or all such Performance Goals are calculated, and the only
adjustments to actual Company results which thereafter shall be
permissible for purposes of such calculation shall be objectively
determinable adjustments for the items or events so specified.
6.3 Form of Instrument. Each Target Award granted under the Plan
shall be evidenced by a written instrument in form prescribed by the
Committee, which instrument, in addition to such other terms,
provisions, and conditions not inconsistent with the Plan as the
Committee deems appropriate, shall set forth the Base Number of Shares
and all Performance Goals for such Target Award, the effect of
achievement of one or more of the Performance Goals upon the nature of
the Performance Award which may be earned, and any other preconditions
to receipt of a Performance Award which the Committee has established.
6.4 Determination, Grant, and Notice of Performance Awards
Earned. As soon as practicable after the end of each Performance
Cycle, the Committee shall determine the extent to which the
Performance Goals in effect for each outstanding Target Award granted
for that cycle have been achieved and, in light of such determinations
and the pertinent provisions of each such Target Award, shall declare
the particular Performance Award, if any, which the holder of the
Target Award has earned. As promptly as practicable thereafter, each
holder of such a Target Award shall be notified in writing whether a
Performance Award has been earned with respect to such Target Award
and, if so, the specific terms and conditions of that Performance
Award. Whenever the Committee declares that a Performance Award has
been earned, the date of grant of such award shall be deemed to be the
date of such Committee declaration.
6.5 Certain Provisions Concerning Option Exercises. Each option
granted as a Performance Award hereunder may be exercised in whole or
in part at any time or from time to time, but only up to and including
the 30th day following the date of written notice of the Option
contemplated by Section 6.4, upon the close of which day it shall
expire to the full extent theretofore unexercised. During the lifetime
of any Employee-grantee of an Option, the Option may be exercised only
by such grantee. The exercise of any Option shall be made only by a
written notice delivered to and acknowledged by the Secretary or an
Assistant Secretary of the Company, specifying the number of optioned
Shares to be purchased, accompanied by payment in full therefore, and
otherwise in accordance with such terms and conditions relating to the
Option as may have been set forth in the notice of the Option
contemplated by Section 6.4. Unless further limited in said notice at
the direction of the Committee, the exercise price may be paid by the
Option holder in cash, by check, or by transferring to the Company
Shares then owned by the holder or directing the Company in writing to
retain some of the Shares otherwise issuable upon exercise of the
Option (in either case, with such transferred or retained Shares valued
at their aggregate Fair Market Value as of the Option exercise date),
or by a combination of the foregoing.
6.6 Withholding. The recipient of a Performance Award may be
required to pay the Company, and the Company shall have the right to
deduct from any amounts otherwise payable by the Company to said
recipient, the full amount of any and all taxes required by law to be
paid or withheld in respect of such Performance Award or, if the
Performance Award is an Option, in respect of its exercise. Subject
to any limitations imposed by the Committee, a Performance Award
recipient may elect to satisfy his or her withholding obligations in
whole or in part by transferring Shares to the Company or directing it
in writing to retain some of the Shares otherwise issuable to the
recipient in settlement of the Performance Award or its exercise. Any
Shares so transferred shall be valued at their aggregate Fair Market
Value on the transfer date, and any Shares so retained shall be valued
at their aggregate Fair Market Value on the settlement date.
ARTICLE VII
7.1 Effect of Employment Termination on Outstanding Target
Awards. If the grantee of an outstanding Target Award ceases to be an
Employee at any time during the Performance Cycle relating to the
Target Award (or thereafter but prior to the Committee determination
concerning such award contemplated by Section 6.4) for any reason other
than death, disability, or retirement with the consent of the Company,
the Target Award thereupon automatically shall be canceled. If during
the Performance Cycle relating to a Target Award: (a) the grantee of
an outstanding Target Award dies while still an Employee or the grantee
both (i) ceases to be an Employee due to disability or retirement with
the consent of the Company and (ii) subsequently dies; and (b) the
personal representative, executor, or other administrator of the estate
of such grantee so requests in writing in such form as the Committee
shall have prescribed, then upon receipt and acknowledgement by the
Secretary or an Assistant Secretary of the Company of such written
request, the following Performance Award shall be deemed to have been
earned and granted in respect of such Target Award: (y) the Performance
Award which would have been earned for achievement of two, but not more
than two, of the Performance Goals related to such Target Award, if the
grantee's employment terminated during the first half of the
Performance Cycle or (z) a Performance Award consisting of an outright
grant of that number of Shares which equals twice the Base Number
specified in the Target Award, if the grantee's employment terminated
during the second half of the Performance Cycle. Except as hereinabove
expressly provided, termination of the employment of the grantee of an
outstanding Target Award due to death, disability, or retirement with
the consent of the Company shall have no effect on the terms of such
Target Award.
7.2 Effect of Change in Control Upon Outstanding Target Awards.
If after the effective date of the amendment and restatement of the
Plan as set forth herein: (a) any "person" or "group" (as such terms
are used with respect to Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended), other than pursuant to a transaction
or agreement approved in advance by the Board of Directors, becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Securities and
Exchange Commission) of voting securities representing 25% or more of
the combined voting power of all then outstanding voting securities of
the Company, or obtains the right to acquire such beneficial ownership
(any such person or group an "Acquiring Person") or (b) during any
period of 24 consecutive calendar months, the individuals who at the
beginning of such period constituted the Board of Directors, and any
new Directors whose election by the Board or whose nomination for
election by Company shareholders was approved by a vote of at least
two-thirds of the members of the Board who either were Directors at the
beginning of the period or whose election or nomination as Directors
was previously so approved, cease for any reason to constitute at least
a majority of the Board members, then, each holder of a Target Award
then outstanding thereupon automatically shall be deemed to have earned
and been granted the Performance Award which the holder would have
earned had all Performance Goals related to such Target Award been
achieved. If, at any time while there is an Acquiring Person, there
occurs (x) a merger or consolidation to which the Company is a party,
whether or not the Company is the surviving or resulting corporation,
(y) a reorganization (including, without limitation, a share exchange)
pursuant to which the Company becomes a subsidiary of another entity,
or (z) the sale of all or substantially all of the assets of the
Company, then, each holder of a Target
Award outstanding immediately prior to the effective time of such
merger, consolidation, reorganization, or asset sale shall be deemed
to have earned and been granted immediately prior to such effective
time the Performance Award which the holder would have earned had all
Performance Goals related to such Target Award been achieved, unless
such merger, consolidation, reorganization, or asset sale had been
approved by a majority of the Directors who were members of the Board
prior to the time the Acquiring Person became such.
7.3 Effect of Employment Termination upon Options. Termination
of employment of the Employee-grantee of an outstanding Option shall
have no effect upon the terms of such Option.
ARTICLE VIII
8.1 Non-Transferability. No Target Award or Option, and no
rights of an Employee relating to any Target Award or Option, may
be sold, pledged, assigned, hypothecated, or otherwise transferred in
any manner whatsoever, other than by will or the law of
descent and distribution.
8.2 Regulatory Compliance and Listing. Notwithstanding anything
in the Plan to the contrary, the issuance or delivery of any Shares as
a Performance Award or pursuant to the exercise of an Option may be
postponed by the Company for such period as may be required to enable
the Company to comply with any applicable securities laws or
regulations, any applicable listing requirements of any national
securities exchange, or any requirements under any other law or
regulation applicable to the issuance or delivery of such Shares, and
the Company shall not be obligated to issue or deliver any such Shares
if the issuance or delivery thereof shall constitute a violation of any
applicable provision of law or regulation of any governmental authority
or national securities exchange.
8.3 Adjustments for Recapitalization. Whenever a stock split,
stock-on-stock dividend, or other relevant change in the capitalization
of the Company or a successor thereto (each, a "recapitalization
event") occurs, the Board of Directors shall make such changes in the
kind of securities which thereafter may be directly granted as
Performance Awards or made subject to Options, the maximum Base Number
that may be used for any Target Award, the Base Number theretofore
designated with respect to any then-outstanding Target Award, the type
and number of securities subject to any then- outstanding Option and/or
the exercise price thereof, and the other terms and conditions of
then-outstanding Target Awards or Options as the Board determines to
be appropriate in order to carry out the purposes of the Plan in light
of such recapitalization event.
8.4 Termination, Suspension, or Amendment. The Plan at any time
or from time to time may be terminated, suspended, or amended in any
manner, in whole or in part, by resolution of the Board of Directors;
provided however, that no such action by the Board shall adversely
affect the rights of the holder of any then-outstanding Option or
Target Award without such holder's consent.
8.5 Governing Law. The Plan and the terms of any Target Award or
Option shall be governed and construed in accordance with the laws of
the State of Michigan applicable to contracts made and to be performed
within such State.
8.6 Shareholder Approval. The amendment and restatement of the
Plan set forth herein shall be disclosed to and submitted for approval
by the Company's shareholders at its annual meeting to be held in
calendar year 1996, and any Target Awards for the Performance Cycle
ending April 24, 1999 that are granted by the Committee prior to such
meeting shall be subject to such approval and shall be canceled and of
no effect unless such approval is obtained. If such approval is
obtained, those aspects of the Plan concerning subsequent grants of
Target Awards for which additional shareholder approval may become
required under Section 162(m) also shall be disclosed to and submitted
for shareholder approval as and to the extent so required. In no event
may any Target Award be granted for any Performance cycle ending after
April 24, 1999 unless, either any and all of such shareholder approval
requirements as Section 162(m) then would impose concerning the Target
Award already have been satisfied, or the award is granted subject to
such approval.
LA-Z-BOY CHAIR COMPANY PROXY
The undersigned hereby appoints C. T. Knabusch, and E. J.
Shoemaker, and both of them Proxies with power of substitution to
attend the Annual Meeting of Shareholders of La-Z-Boy Chair Company
to be held at the La-Z-Boy Chair Company Auditorium, 1314 North
Telegraph Road, Monroe, Michigan, July 29, 1996 at 11:00 o'clock
A.M., Eastern Daylight Time, and any adjournment thereof, and
thereat to vote all shares now or hereafter standing in the name of
the undersigned.
(Continued and TO BE SIGNED on other side)
- - - --------------------------------------------------------
1. ELECTION OF DIRECTORS
Withhold Authority Nominees:
For all nominees to vote for all Charles T. Knabusch
listed to right nominees listed to right John F. Weaver
Warren W. Gruber
James W. Johnston
[ ] [ ]
2. APPROVAL of Amendment and Restatement of 1993 Performance-Based Stock
Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. ADOPTION of Amendment of Article of Incorporation to Change the
Company's Name.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(INSTRUCTIONS: To withhold authority to vote for any individual nominees,
write that nominee's name on the line below.)
______________________________________________
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this proxy will be
voted FOR all director nominees listed and FOR proposals 2 and 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please mark, sign, date and return the proxy card using the enclosed
envelope.
SIGNATURE_______________________________________ DATE__________________
Signature should agree with name(s) on stock
certificate.
SIGNATURE_______________________________________ DATE__________________
Signature if held jointly
NOTE: When shares are held by joint tenants both should sign. When
signing as attorney, as executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in
partnership name by authorized person.
