UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

(Rule 14a - 101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

Check the appropriate box:

August 30, 201628, 2018

Dear Fellow Herman Miller Shareholder,

It’s no coincidence that over the last 50For several years now, we’ve had a clear vision to transform Herman Miller has been at the centerinto a global provider of virtually every game-changing innovation the office furniture industry has seen - and we’re just getting started. At the heart of Herman Miller has always been a culture motivated by a sense of purpose and ownership; and driven to create inspiring designs to help people do great things. AsWe have focused on expanding our addressable markets and creating new channels of distribution to serve our customers. This strategy includes five key priorities, which I will provide an update on shortly. Achieving this vision requires imagination, stretches our resources, and pulls us to constantly re-examine what we lookdo and how we do it. I’m proud that Herman Miller’s 8,000 employees continue to respond with the future, we’ve combinedspirit and creativity that have propelled Herman Miller for more than 100 years.

Strengthening our dealer eco-system remains a focal point. We expanded our product offerings into growing categories like performance seating and enclosures. The seating launches of Cosm, Verus, and Lino expand our leading line-up of seating designs. With the recently announced investment in Maars Living Walls, a global leader in interior wall solutions; the launch of Overlay, a system of sub-architectural, moveable walls; and an alliance with Framery, a provider of high performance soundproof enclosures, we have made a strong push into the enclosures category. The Herman Miller Elements team continues to help our dealers fully understand the breadth of our offering across the Herman Miller group of brands a commitmentin the fast-growing ancillary space. To further support our dealers, we’ve made significant progress this year enhancing our digital tools to innovationmake it as easy as possible for dealers to order, specify, and an unrivaled global distribution channelvisualize the entire product offering across all of our group of brands. We’ll continue to position ourselvesenhance these tools with new search and visualization features planned for growth.the year ahead.

We made progress this year on our corporate-wide profit optimization goal, our fifth strategic priority. Given inflationary pressures over the past year, this work, combined with pricing actions we implemented in the third quarter of fiscal 2018 and a planned price increase in January of 2019, is proving to be critical to helping to address those pressures and drive improvements in operating margins. Across three phases of work

Let me provide more perspective on each of the phases. The initial corporate-wide push that we began 18 months ago has generated a larger footprint.run-rate of $23 million of annual savings to date and we believe will realize another $5 million from our recent manufacturing consolidation efforts. In August of 2017, we also began a focused initiative aimed at profit optimization within our Consumer business. We believe we can drive $15 million to $20 million of profit improvement in the Consumer segment as part of our drive to achieve sustained operating margins of 8% to 10% in that business. This includes $2 million of initial benefits realized in the fourth quarter in fiscal 2018. As most of the benefits of the work to date have been offset by increased inflation and discounting, we have recently increased the scope of our efforts to include the North America business. While we are still in the opportunity confirmation stage, we see the potential for $20 million to $40 million of benefit based on the distinct work streams identified to date. All together, these phases will be critical in helping us fund growth initiatives, offset potential inflationary pressures and, ultimately, achieve or exceed our goal of consolidated operating margins of 10% by the end of this fiscal year 35%2020.

First, we must increase our efforts and commitment toward building an inclusive and diverse culture. Diverse perspectives, thoughts, and experiences are critical to attracting and keeping the best talent, as well as to understanding the diverse perspectives and needs of our United States dealers had implementedcustomers. While this is not new to us, we are committed to continuing to grow in this area. We’re building intentionality and purpose into everything we do to ensure we’re creating systems that afford every person at Herman Miller the new brand standardsopportunity to achieve their full potential.

The second area we are ramping up is modernizing our manufacturing capabilities. The first step is to stabilize our core competencies and bring our capacities in their markets. Last year,line with market demands. This work is well underway. We’re in the process of resetting our footprint in China by consolidating the Dongguan and Ningbo plants, and in the U.S., we reset eachhave approved nearly $100M in investments to modernize our capabilities. Along with stabilizing our core, we must also further integrate technology with our manufacturing equipment and processes. Increasing computing power, combined with proven manufacturing techniques, will help us redefine what’s possible. We’ll build the next stage of our global showroomslean journey by incorporating automation into all of our thinking.

Last, and a more long-range objective, is “becoming a digital enterprise.” This begins with a shift in perspective. Our information technology teams are moving from a “boxes and wires” focus to reflect our best thinking of what is required to create an inspiringhelping drive growth as digital business partners. This work placewill build on the progress we have already made and demonstrate our expanded portfolio of solutions. This past year,will happen in four areas. First, we opened new showrooms in Washington, D.C.are simplifying and New York. The New York showroom is our first flagship location and unites our Herman Miller, Geiger, Collection and Maharam brands. This location includesexpanding the first Herman Miller branded retail studiodigital highway in the United Statesdealer eco-system. Second, we are expanding our digital service offering with platforms like Live OS. Third, artificial intelligence, data, and serves asvisualization tools will help us become better at core competencies like customer service, training, and design. Finally, technology will help us with the home for our talented team in this region.modernization of manufacturing.

On a personal note, as Herman Miller moves with commitment toward the competitiveness of our offer.

Sincerely,

Brian C. Walker

President and Chief Executive Officer

The Annual Meeting of the Shareholders of Herman Miller, Inc. (the “Company”) will be held on October 10, 2016,8, 2018, by means of remote communication on the Internet at www.virtualshareholdermeeting.com/MLHR16,MLHR18, at 10:30 a.m. (ET) for the following purposes:

Shareholders of record at the close of business on August 12, 2016,10, 2018, will be entitled to vote at the meeting.

Please note that this year's Annual Shareholders' Meeting will be held via the Internet only. The accompanying proxy materials include instructions on how to participate in the meeting and the means by which you may vote your shares of Companycompany stock.

You may also vote at the meeting via the internet by visiting www.virtualshareholdermeeting.com/MLHR16MLHR18 and following the instructions. Regardless of whether you expect to attend the meeting through the Internet, please vote your shares in one of the ways listed above.

By order of the Board of Directors

H. Timothy Lopez, Secretary

855 East Main Avenue

PO Box 302

This Proxy Statement and the accompanying Proxy, which we are making available to shareholders on or about August 30, 2016,28, 2018, are furnished to the shareholders of Herman Miller, Inc. in connection with the solicitation by the Board of Directors of proxies to be used at the Annual Meeting of Shareholders. This meeting will be held on October 10, 2016,8, 2018, at 10:30 a.m. (ET). Please note that this year's Annual Meeting will once again be held via the Internet rather than in person.

If you submit a proxy to the Companycompany before the Annual Meeting, whether by proxy card, by telephone or by Internet, the persons named as proxies will vote your shares as you direct. If no instructions are specified, the proxy will be voted for the four directors nominated by the Board of Directors; for the proposal to approve an amendment to our Articles of Incorporation to allow our by-laws to provide for a majority voting standard for the election of directors in uncontested elections; for the ratification of the appointment of Ernst & Young LLP as the Company’scompany’s independent registered public accounting firm for the fiscal year ending June 3, 20171, 2019; and for the non-binding advisory proposal to approve the compensation of our Named Executive Officers.

If you hold your shares in “street name,” you must vote your shares in the manner that your brokerage firm, bank or other nominee has prescribed.

On the Record Date, there were 60,010,54059,497,056 shares of common stock issued and outstanding. Therefore, at least 30,005,27029,748,529 shares need to be present at the Annual Meeting.

We are asking you to vote on: (i) the election of four directors to serve three-year terms expiring in 2019;2021; (ii) a proposal to approve an amendment to our Articles of Incorporation to allow our by-laws to provide for a majority voting standard for the election of directors in an uncontested election: (iii) the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 3, 20171, 2019; and (iii)(iv) a non-binding advisory proposal on the compensation of our Named Executive Officers, otherwise known as a “say-on-pay” proposal. We describe these matters more fully in this proxy statement.Proxy Statement.

You may obtain a copy of the Company’scompany’s Annual Report on Form 10-K for the fiscal year ended May 28, 2016,June 2, 2018, as filed with the SEC, without charge upon written request to the Secretary of the Company,company, Herman Miller, Inc., 855 East Main Street, P.O. Box 302, Zeeland, Michigan 49464-0302.

This summary highlights information contained elsewhere in this proxy statement.Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. For more complete information regarding the Company’scompany’s fiscal 20162018 performance, please review the Company’scompany’s Annual Report on Form 10-K for the year ended MayJune 2, 2018.

This Proxy Statement and the accompanying Proxy, which we are making available to shareholders on or about August 28, 2016.2018, are furnished to the shareholders of Herman Miller, Inc. in connection with the solicitation by the Board of Directors of proxies to be used at the 2018 Annual Meeting of Shareholders. This meeting will be held on October 8, 2018, at 10:30 a.m. (ET). Please note that this year's Annual Meeting will once again be held via the Internet rather than in person.

The Nominating and Governance Committee has not received any nominations from any of our shareholders in connection with our 20162018 Annual Meeting. The nominees who are standing for election as directors at the 20162018 Annual Meeting are incumbent directors.

The Guidelines, with respect to the position of Chief Executive Officer (“CEO”) and Chairperson, state that “the Board believes the roles of CEO and Chairperson should normally be separated. If the positions are combined, the Board will closely monitor the performance and working relationship between the CEO/Chairperson and the Board and will establish a Lead Director who actsto act as a liaison between directors and the CEO/ChairmanChairperson and who chairs meetings of the independent directors.” Consistent with our Guidelines, the roles of CEO and Chairperson are currently separate. Mr. Volkema currently serves as Chairman of the Board. As Mr. Volkema is not an employee of the company, he serves as a non-executive Chairman.

The Company'scompany's management annually engages in an enterprise risk management process, the key output of which is a series of risk matrices intended to identify and categorize strategic risks. The matrices also identify (1) those members of senior management who are responsible for monitoring each major risk, and (2) whether that risk is reviewed by the Board or a committee of the Board. The development of the matrices is facilitated by the Company'scompany's Business Risk Group, through discussions with executive and senior management. Management and the Business Risk Group annually review and discuss the risk assessment process and results with the Audit Committee and, if applicable, recommend what risks are being adequately addressed, directly or indirectly, on a regular basis and what risks should be further discussed with the full Board or other committees and the appropriate form and timing of such discussions. The Business Risk Group is the internal audit group of the company.

During the past fiscal year, the Business Risk Group reviewed the Company'scompany's compensation policies and practices to determine if those policies or practices are reasonably likely to have a material adverse impact on the Company.company. The Business Risk Group conducted its review in late 20152017 and provided a report to the Committee in January 2016.2018. In conducting its review of the compensationscompensation plans, the Committee considered both the structure of the compensation plans and the presence of risk mitigating features such as caps, multi-year earning requirements, vesting provisions and “clawbacks.” Based on the evaluation, the Committee determinedconcurs with management's determination that the Company'scompany's compensation policies and practices are not reasonably likely to create a material adverse impact on the Company.company.

Under the Guidelines, the Board of Directors is responsible for evaluating CEO performance, monitoring succession planning, reviewing the Company'scompany's major financial objectives, evaluating whether the business is being properly managed and overseeing the processes for maintaining the integrity of the Companycompany with respect to its financial statements, public disclosures and compliance with laws. The Board has delegated the primary oversight for managing the risk with respect to some of these to the various board committees as described in the committee charters.

Our Bylaws contain certain procedural requirements applicable to shareholder nominations of directors. Shareholders may nominate a person to serve as a director if they provide written notice to us not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year's Annual Meeting of Shareholders and, with respect to any special meeting of shareholders, not later than the close of business on the 10th day following the date on which the meeting is first publicly announced or, if there is no announcement, the 10th day following the date on which the notice of that meeting was first sent to our shareholders. The notice must include (1) the name and address of the shareholder providing notice and of the person or persons nominated, including information on the securities of the Companycompany held by those individuals, including any derivative securities, the details of which are set forth in our Bylaws, (2) a representation that the shareholder is a current record holder and will continue to hold those shares through the date of the meeting and intends to attend the meeting in person or by proxy, (3) for each proposed nominee, (a) all information relating to that person that would be required to be disclosed in a proxy statementProxy Statement required to be made in connection with solicitations or proxies for election of directors in a contested election pursuant to Section 14 of the Securities and Exchange Act of 1934 (including that person's written consent to be named in the proxy statementProxy Statement as a nominee and to serve as a director if elected) and (b) a description of all direct and indirect compensation and other material monetary arrangements existing during the past three years, as well as any other material relationships between or among the shareholders (and beneficial owner, if any) and their respective affiliates and associates and the proposed nominee and his or her respective affiliates and associates, including all information required to be disclosed pursuant to Rule 404 under Regulation S-K, and (4) the completed and signed questionnaire from each nominee with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made.

Our Nominating and Governance Committee is responsible for reviewing the qualifications and independence of the members of the Board. To meet the needs of the Companycompany in a rapidly changing environment, the Guidelines explain that the Companycompany requires a high-performance board of directors whose members subscribe to our values and meet the specific resource needs of the business. To that end, the Nominating and Governance Committee considers a number of factors it deems appropriate when considering candidates for the Board; such factors may include experience and knowledge of the Company'scompany's history and culture, technical experience and backgrounds such as manufacturing, design, marketing, technology, finance, management structure and philosophy, and experience as a senior executive of a public company.company, and diversity. The Nominating and Governance Committee may also consider such factors as race and gender as well as experience in a variety of industries in annually assessing and reviewing the current slate of directors and potential director candidates as the need arises. The Nominating and Governance Committee is responsible for assessing the appropriate skills and characteristics required of Board members. These factors, and others as considered useful by the Nominating and Governance Committee or the Board, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time.

A shareholder may also make a recommendation to the Nominating and Governance Committee regarding any individual that the shareholder desires the Committee to consider for possible nomination as a candidate for election to the Board. The Board believes that all candidates, including those that shareholders recommend, should be evaluated in the same manner.

Under our Bylaws and Governance Guidelines, no person is to be elected as a director: (a) after he or she attains age 72 or (b) for a term that expires later than the annual meeting of shareholders at or immediately after such person attains age 72.

We have a Nominating and Governance Committee comprised of Dorothy A. TerrellMary Vermeer Andringa (chair), Mary V. AndringaBrenda Freeman and David O. Ulrich.Douglas French. The Nominating and Governance Committee develops and recommends to the Board governance standards and policies and board compensation including that of the Chairman of the Board. In addition, the committee identifies and recommends to the Board candidates for election to the Board. The Committee met fivefour times during the last fiscal year.

We have an Audit Committee comprised of Lisa A. Kro (chair), Douglas D. French and Heidi J. Manheimer. The Board has determined that Ms. Kro is qualified as an “Audit Committee“audit committee financial expert” within the meaning of the applicable SEC regulations. This committee, composed entirely of independent directors under the applicable listing standards of the NASDAQ listing requirements, as well as the requirements of the Sarbanes-Oxley Act of 2002, is responsible for overseeing management's reporting practices, internal controls, and risk management on behalf of the Board of Directors. The Committeecommittee is also responsible for appointing, approving the compensation of, and overseeing our independent registered public accounting firm. The Audit Committee met eight times during the last fiscal year.

We have an Executive Compensation Committee comprised of J. Barry Griswell (chair), David A. Brandon and John R. Hoke III. The Executive Compensation Committee recommends to the Board the annual executive incentive plan and the annual remuneration of our Chief Executive Officer and President, approves the annual remuneration and executive incentive plan for the other executive officers, approves the grants of employee stock options and other equity awards, and acts as the administrative committee for our equity-based compensation plans. A description of the Committee'scommittee's processes and procedures for the consideration and determination of executive and director compensation is set forth under the caption “Compensation DisclosureDiscussion and Analysis -The- Executive Compensation Committee”Summary” below in this Proxy Statement. The Committeecommittee met four times during the last fiscal year.

We have an Executive Committee comprised of Michael A. Volkema (chair), Mary Vermeer Andringa, J. Barry Griswell and Lisa A. Kro and Dorothy A. Terrell.Kro. The Executive Committee acts from time to time on behalf of the Board in managing our business and affairs (except as limited by law or our Bylaws) and is delegated certain assignments and functions by the Board of Directors. The Committeecommittee met four times during the last fiscal year.

No member of the Executive Compensation Committee is or has been an officer or employee of the Companycompany or had any relationship that is required to be disclosed as a transaction with a related party except as noted under Certain Relationships and Related Party Transactions. In addition, no current executive officer of the Companycompany has ever served as a member of the Board of Directors or Compensation Committeecompensation committee of any other entity that has or has had one or more executive officers serving as a member of our Board of Directors or Executive Compensation Committee.

Our Audit Committee has appointed Ernst & Young LLP (Ernst & Young) as our independent registered public accounting firm for the fiscal year ending June 3, 2017.1, 2019. Representatives of Ernst & Young will be present atparticipate in the Annual Meeting of Shareholders and will be available to respond to appropriate questions submitted in advance. Shareholders may submit questions in advance by logging on to www.virtualshareholdermeeting.com/MLHR18. The Ernst & Young representatives will have the opportunity to make a statement if they so desire.

Although the submission of this matter for approval by shareholders is not legally required, our Board of Directors believes that such submission follows sound corporate business practice and is in the best interests of our shareholders. If our shareholders do not approve the selection of Ernst & Young, the selection of this firm as our independent registered public accounting firm will be reconsidered by the Audit Committee. This ratification of the appointment of Ernst & Young requires the affirmative vote of a majority of the votes cast on this proposal. Unless otherwise instructed by you, brokers, banks, and other street name holders will have the discretionary authority to vote your shares on this matter.

Aggregate fees billed to us for the fiscal years ended May 30, 2015June 3, 2017 and May 28, 2016,June 2, 2018, by our independent registered public accounting firm, Ernst & Young were as follows:

Our Audit Committee has adopted a policy for pre-approving services performed by Ernst & Young and other firms. This policy requires the Committee's pre-approval of all services that may be provided by our independent registered public accounting firm and certain audit services provided by other firms. The policy authorizes the committee to delegate to one or more of its members pre-approval authority with respect to permitted services. All of the services provided by Ernst & Young under the captions “Audit Fees,” “Audit Related Fees,” and “Tax Fees” were approved by the Audit Committee under this policy.

The Audit Committee’s purpose is to oversee the accounting and financial reporting processes of the company;company, the audits of the company’s financial statements and management’s assessment of the company’s internal controls;controls, the qualifications of the public accounting firm engaged as the company’s independent registered public accounting firm;firm, and the performance of the company’s internal auditors and independent registered public accounting firm. The Committee’s function is more fully described in its charter, which the Board has adopted and is available on the Company'scompany's web site at http://www.hermanmiller.com/content/dam/hermanmiller/documents/investors/audit_committee_charter.pdf. The Committee reviews the charter on an annual basis. The Board annually reviews the NASDAQ listing standards definition of independence for audit committee members and has determined that each member of the Committee meets that standard.

Consistent with our Board's recommendation, as approved by our shareholders and as required pursuant to Section 14A of the Securities Exchange Act, we allow our shareholders the opportunity to vote, on an advisory and annual basis, on the compensation of our named executive officers. As a result,officers ("say on pay"). Thus, you are asked to vote upon the following resolution at this year's annual meeting,meeting.

“RESOLVED, that the compensation paid to the Company'scompany's named executive officers, as disclosed in the Company's proxy statementcompany's Proxy Statement for this annual meeting pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and narrative disclosure, is hereby APPROVED."

Security Ownership of Directors

For fiscal year 2016, weWe are required to provide information regarding our compensation policies and decisions relating to our President and Chief Executive Officer (CEO), our Chief Financial Officer (CFO) and the three other most highly compensated executive officers serving as executive officers at the end of the year. We refer to our CEO, our CFO and the other executive officers for whom disclosure is required as our “named executive officers” or “NEOs.” This (‘CEO’ and ‘NEOs’ are referenced earlier in the document)“NEOs”. We intend this Compensation Discussion and Analysis is intended to provide information regarding, among other things, the overall objectives of our compensation programsprogram and each element of compensation we provided to the NEOs.

At the 2015 annual shareholders’ meeting, our shareholders overwhelmingly approved, on an advisory basis, the compensation we paidPrior to our NEOs during2017 Say on Pay Vote, we had historically received overwhelming support of our executive compensation program, averaging 98%. Around the time of the 2017 Annual Shareholders Meeting, we contacted shareholders over the course of the proxy voting period to hear their views regarding our executive compensation program. A majority of the investors with whom we spoke supported our compensation program, which was further exhibited by 82% of shareholders voting in favor of our 2017 Say on Pay proposal.

The Committee believes that the performance of our executive compensation programsprogram during fiscal year 20162018 was consistent with our compensation philosophy and objectives, as describedwe describe below, and that the compensation we paid to our NEOs was appropriate givenand reflective of our overall performance. However, we value investor input and, based on the suggestions of our investors, we made several changes to our long-term incentive compensation for fiscal 2019 (see the “Changes to Compensation Program for 2019 -Long-Term Equity Incentives” section below).

Our shareholders will have the opportunity to cast an advisory “Say on Pay” vote at this year’s annual meeting as well. The Committee will take the vote into consideration when evaluating the effectiveness of the company’s executive compensation programs.program.

The following charts illustrate the key elements of our compensation for our NEOs:

The Committee and the Board granted merit increases for fiscal year 20162018 to our employees, including the NEOs. EachThe base salaries of the base salarieseach of our NEOs was within the range established based on market data for their performance and position. Salary changes went into effect July 13, 201518, 2017 and are detailed as follows:

* Measured in pounds sterling at an exchange rate of 1.58661.2794 would yield £259,095.£268,876.

Mr. Walker’s increase reflectsThe Board approved the Board’s continuing recognition of Mr. Walker’s significant contributions to the company’s performance. Mr. Stutz’s increase was a result of his promotion to Executive Vice President and Chief Financial Officer during fiscal year 2015. Mr. Bylsma’s increase was a result of his change in position within the company during fiscal year 2015, which includes new and additional responsibilities. Mr. Lock’s increase was a result of his continued leadership and expansion2018 salary for each of the International business. Mr. Watson’s increase was a resultNEOs based on its review of his continued leadershipmarket data, corporate results and execution of the company’s brand strategy.

The Committee, at the beginning of each fiscal year, establishes a target bonus pool representing the amount of Incentive Cash Bonusesincentive bonuses that may be paid under the Annual Executive Cash Incentive Bonus Plan if the company achieves the EBITDA amount contained in the company’s annual financial plan as approved by the Committee and the Board. The Committee also establishes a target bonus for each participant, expressed as a percentage of base salary, which is the targetbonus amount of EBITDA for the company andNEO would receive if all performance goals were achieved at target. The NEOs each have the amount of variation from target EBITDA that would result in either a doublingopportunity to earn up to 200% of the target bonus or noand may earn zero bonus referred to as maximum and minimum threshold performance, respectively.if our goals are not achieved. The target EBITDA and the interval used for maximum and minimum threshold performance are the three points that are used to determine the slope of the bonus factor line. The actual bonus factor paid to an employee represents a point on the line.

The Committee and Board review the adjustments, and in certain instances the Committee and/or the Board decides whether certain adjustments should apply to the bonus calculations for specific participants. Based on this reviewconsolidated Corporate EBITDA target for fiscal year 2016,2018, which would result in 100% payout of the Committee determined that Andrew Lock,EBITDA portion of the annual incentive bonus, was $269.0 million. Achieving 113% of the EBITDA target ($304.0 million) would result in his role as Presidenta 200% payout of Herman Miller International,the eligible bonus payout, and anything below 94.4% of the target EBITDA ($254.0 million) would result in no payout. The maximum payout for the portion of our NEOs’ bonuses based on functional goals or business unit EBITDA was instrumentalalso limited to 200%.

Prior to payout of 8.13% Business Unit (bonusthe bonuses, the Audit Committee approves the calculation of EBITDA results for the year and the resulting company performance factor. The Committee also certifies the company performance factor of 1.3007) and 8.13% Functional (bonus factor of 1.2100).the function/business unit performance factors for use in the Incentive bonus calculation.

Our 2011 Long-Term Incentive Plan (which we refer to as the LTI Plan) authorizes us to grant various forms of equity-based compensation (which we refer to as Long-Term Incentive Grants or LTI grants or awards). The Committee is responsible for administering all elements of the LTI Plan and for making all Long-Term Incentive Grants, with the exception of the CEO whose grants the Board approves.

Grants under the LTI Plan are typically made in connection with the Board of Directors meeting in July of each year following the public release of our fiscal year-end financial results. We do not attempt to influence the amount of executive compensation by timing equity grants in connection with the disclosure of material information to the public. The backdating of equity award dates is specifically prohibited under policies adopted by the Board of Directors.

We maintain a broad basebroad-base of health insurance plans available to all full-time and most part-time employees. The NEOs participate in such health insurance plans on the same terms as all other employees within their respective geographic region or business unit.

We maintain broad basedbroad-based retirement plans available for employees in the United States and the United Kingdom (UK). Our retirement plans are designed to provide an appropriate level of replacement income upon retirement. The benefits available to NEOs are the same as those available to other non-executive employees in their respective geographic region subject to limitations provided by law or regulation.

Profit Sharing Plan and 401(k) Plan: The Herman Miller, Inc. Profit Sharing and 401(k) Plan consists of threetwo parts. We annuallyFirst, we make a core contribution to the profit sharing portion based upon our EBITDA results for the year that may range from 0%an employee’s 401(k) account equal to 6%4% of base salaries, withsalary on a target contribution of 3% of base salary. Based upon our EBITDA results, the actual percentage contributed for fiscal year 2016 was 4.31%.quarterly basis. The amount of salary included in the base for the calculation is limited to the maximum salary level permitted by the IRS. We also make a 4% core contribution to an employee’s 401(k) account on a quarterly basis. TheSecond, the 401(k) portion of the plan is apermits employees to make salary deferral plan. Each employee may elect to deferdeferrals into the plan up to the maximum amount permitted by law. We also make a matching contribution to fully match employee contributions up to 3%4% of the employee’s compensation contributed.

Herman Miller Limited Retirement Plan: Herman Miller Limited, our wholly owned UK subsidiary, provides a defined contribution retirement plan which provides for a non-discretionary fixed company contribution and a company matching contribution. The fixed company contribution for employees varies between 2.4% and 6.4% of the employee’s eligible compensation depending upon age and date of hire. In addition, the company will match an employee’s contributions up to an additional 2.8% of eligible compensation. Andrew Lock is the only NEO who participates in this defined contribution retirement plan. He is also a participant in the frozen defined benefit plan sponsored by Herman Miller Limited for employees hired prior to March 1, 2012.

The Herman Miller, Inc. Executive Equalization Retirement Plan was approved by the Committee and the Board in 2007. The plan is a supplemental deferred compensation plan and became available for salary deferrals beginning in January 2008. The plan is available to highly compensated United States employees who are selected for participation by the Committee. All of the NEOs are currently able to participate, except Andrew Lock due to his employment outside the United States. The plan allows participants to defer up to 50% of their base salary and 100% of their Incentive Cash Bonus. Companyincentive bonus. company contributions to the plan “mirror” the amounts we would have contributed to the Herman Miller Profit Sharing and 401(k) Plan had the employee’s compensation not been above the statutory ceiling (currently $265,000)$275,000). Investment options under this plan are the same as those available under the 401(k) Plan except forPlan. company stock which is not an investment option under this plan. Company contributions for amounts deferred in fiscal year 20162018 appear in the 20162018 Summary Compensation Table under All Other Compensation.

The plan covers 60% of the rolling two yeartwo-year average of executive incentive compensation. Corporate Officersofficers are eligible to participate when they have earned over $6,000 in annual executive incentive compensation. This benefit continues as long as the executive isremains disabled until age 65. The monthly benefit is capped at $10,000.

We are conservative in our approach to executive perquisite benefits. Company compensation practices in general do not provide for personal perquisites and the Committee has adopted a policy which specifically restricts the use of corporate aircraft for non-business purposes. We provide a limited number of perquisites to Corporate Officers.corporate officers. We normally provide each NEO with a specified dollar amount which can be used for a rangevariety of approved perquisites. These perquisites include financial planning, life insurance, spousal travel and other benefits. The 2016Committee has adopted a policy that specifically restricts the use of corporate aircraft for non-business purposes. The 2018 calendar year benefit isperquisite maximum was $20,000 for the CEO and $12,000 for each of the other NEOs, except for the CFO for whom the benefit is $6,000.NEOs. Unspent allowances may be carried over into the next calendar year provided an executive continues to participate in the program.this benefit. The total maximum allowance (new calendar year allowance plus amount carried over) may not exceed the sum of reimbursement allowances approved for the prior two calendar years.

Each NEO is party to a change in control agreement with us. The Committee believes that the use of change in control agreements is appropriate as they help ensure a continuity of management during a threatenedpossible take-over and help ensure that management remains focused on completing a transaction that is likely to maximize shareholder value. Potential payments under the change in control agreements are included in the tally sheets provided annually tothat the Committee.Committee reviews annually.

The narrative and footnotes to the tables entitled Potential Payments upon Termination, in Connection with aDeath, Disability, Retirement or Change in Control describe the change in control payments in greater detail.

The income tax lawsfollowing is a summary of changes that our Committee and Board of Directors have made to our executive compensation program for fiscal 2019 as of the United States (Section 162(m)) limit the amount we may deduct for compensation paid to our CEO and the other three most highly-paid Corporate Officers (other than the CFO). Under Section 162(m) compensation that qualifies as “performance based” is not subject todate of this limit. It is generally our intention to qualify compensation payments for tax deductibility under Section 162(m). Notwithstanding our intentions, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given that compensation intended to satisfy the requirements for deductibility under Section 162(m) will so qualify.proxy statement.

The Committee reservesdecided not to increase Mr. Walker’s compensation in light of his impending retirement. Mr. Stutz's increase is the rightresult of his proficient performance in his role having completed a full three years in 2018 as CFO particularly in light of complexities in the global financial environment. Mr. Bylsma’s increase is a reflection of his continued improvement of the company’s operations capabilities as well as his new responsibility for the overall North America Contract business which includes North America Work, Government, Healthcare and Education businesses. Mr. Lock has no increase due to provide compensation that does not qualify ashis retirement on July 31, 2018. Mr. Watson’s increase is in recognition of the improvement in the company’s brand strategy and messaging, his new responsibility for R&D and his new responsibility for streamlining our global portfolio of new products.

Each of the base salaries set for the NEOs was within the range established for his performance based compensationand position.

For fiscal 2019, the measure of achievement under Section 162(m)the Executive Incentive Cash Bonus Plan continues to be EBITDA. For fiscal 2019 awards, we are eliminating the extent it believes such compensation is necessary or appropriate to continue to provide competitive arrangements intended to attract and retain, and provide appropriate incentives to, Corporate Officersfunction goals for Mr. Watson and other key employees.functional leaders, such that their 2019 annual incentive bonus will be based 100% on corporate EBITDA. Other provisions of the fiscal 2019 plan, such as the use of business unit goals, are the same as the fiscal 2018 plan. As discussed above, Mr. Walker is not eligible for a 2019 annual incentive bonus given that he is retiring by August 31, 2018.

The Committee and the Board of Directors hashave adopted a policy prohibiting the Board of Directors and the Corporate Officerscorporate officers from hedging the economic risk of their ownership of our stock, including options or other derivatives related to the stock.

The Committee believes that significant stock ownership by top management is of critical importance to our ongoing success, as it helps link the interests of senior management and our shareholders. StockAs such, we have established stock ownership requirementsguidelines, which apply to the nine members of the executive leadership team and, beginning January 1, 2018, certain other corporate officers who work alongside the Executive Leadership Team; who are requiredTeam to ensure global strategic alignment across business units and functions. The stock ownership guidelines require these individuals to own shares of our common stock equal to a specified multiple of their annual base salary. The applicable levels are as follows:

Until the executive meets the ownership guidelines are met, the executive must retain 40% of the pretax spread value of vested restricted stock, performance shares, restricted stock units, deferred stock, and 40% of the pretax spread value of exercised stock options must be retained in company stock. Compliance with the requirements is determined at each time an executive disposes of company stock.

We have not had any material restatement of prior financial results. If such restatements were to occur, the Committee would review the matter and determine what, if any, adjustment to current compensation might be appropriate. The LTI Plan and the Annual Executive Incentive Cash Bonus Plan give the Committee reviewed executivethe ability to “claw back” incentive bonus payments and LTI grants in the event of certain restatements.

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation tally sheets provided by Pearl Meyer with respectin excess of $1 million paid for any fiscal year to each Corporate Officer which reflectedindividuals who are covered executives. For compensation paid for fiscal 2018, our covered executives were limited to our CEO and our other three most highly compensated corporate officers for that year, other than our CFO. However, for compensation that we paid for fiscal 2018, Section 162(m) generally exempted compensation that qualified as “performance based” from the total direct$1 million deduction limit. It was generally our intention that the compensation we paid to our covered executives for fiscal 2018 was deductible under Section 162(m) of the Code. Despite our intentions, because of ambiguities and uncertainties as to the NEOsapplication and also information relatinginterpretation of Section 162(m) and the regulations issued under that section, we cannot assure that compensation we intend to allsatisfy the requirements for deductibility under Section

162(m) will so qualify. In addition, the Committee reserved the right to provide compensation during fiscal 2018 that did not qualify as performance-based compensation under Section 162(m) to the extent it believed such compensation was necessary or appropriate to continue to provide competitive arrangements intended to attract and retain, and provide appropriate incentives to, corporate officers and other elements of compensation including payments under severance or change in control obligations. The Committee uses this information to help it determine that our compensation program is consistent with market norms andkey employees.

Starting with our fiscal 2019, as a result of changes made to the applicability of Section 162(m) of the Code pursuant to the Tax Cuts and Jobs Act, our number of covered executives will expand to include our covered executives for 2018 plus any executive who, starting with fiscal 2019, serves as our CEO or CFO, or who is among the three most highly compensated executive officers, for any fiscal year. In addition, only qualifying performance-based compensation philosophythat is paid pursuant to a binding contract in effect on November 2, 2017 will be exempt from the deduction limit. Accordingly, any compensation that we pay in the future pursuant to new compensation arrangements entered into after November 2, 2017, even if performance-based, will count towards the $1 million fiscal year deduction limit if paid to a covered executive. Because of these changes to Code Section 162(m) by the Tax Cuts and Jobs Act, some of the objectives referenced above.compensation that we provide to our named executive officers in 2019 and future years may not be deductible under Section 162(m).

The NEOs are generally “at will” employees. This means that they can be discharged at any time and for no reason. We have agreed to pay Corporate Officerscorporate officers severance if they are terminated for reasons other than malfeasance or voluntary separation. For each NEO, severance would be equal to 18 months of base salary subject to the employee not competing with us during that period. The Committee’s determination as to the amount of severance payments for these NEOs is the result of benchmarking our practices to the Published SurveyMarket Data. In addition, we maintain the health insurance on such employee during the salary continuation period. In exchange for such payments the employee provides the company with a mutual release of all claims and agrees not to work for a competitor or solicit our employees during the salary continuation period.

The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement.