STEELCASE, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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| SEC 1913 | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
The Board of Directors of Steelcase Inc. cordially invites all shareholders to attend the Company’s 20052006 Annual Meeting as follows:
| Date: | June | |||
| Time: | 11:00 a.m. Eastern Daylight Time | |||
| Location: | Steelcase Town Hall 1111 Grand Rapids, Michigan 49508 |
The Annual Meeting is being held to allow you to vote on any matter properly brought before the shareholders, including the following proposal for the election of directors nominated to a three-year term by the Board of Directors:
If you were a shareholder of record as of the close of business on April 27, 2005,26, 2006, you are eligible to vote. You may either vote at the meeting or by proxy, which allows your shares to be voted at the meeting even if you are not able to attend. If you choose to vote by proxy:
| • | Please carefully review the enclosed proxy statement and proxy card. | |
| • | Select your preferred method of voting, including by telephone, Internet or signing and mailing the proxy card. | |
| • | You can withdraw your proxy and vote your shares at the meeting if you decide to do so. |
Every vote is important, and you are urged to vote your shares as soon as possible.
We look forward to seeing you at the meeting.
| By Order of the Board of Directors, | |
 | |
| Jon D. Botsford | |
| Senior Vice President, Secretary | |
| and Chief Legal Officer |
May 20, 200518, 2006
Steelcase Inc., P.O. Box 1967, Grand Rapids, MI 49501-1967 USA www.steelcase.com
PROXY STATEMENT
TABLE OF CONTENTS
| Page No. | ||||
| 33 | ||||
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QUESTIONS AND ANSWERS
| What am I voting on? |
| How does the Board of Directors recommend I vote? |
The Board of Directors recommends that you vote FOR each of the nominees for director listed on pages 53 and 6.4.
| Who is entitled to vote? |
Shareholders of record of Class A Common Stock or Class B Common Stock at the close of business on April 27, 200526, 2006 may vote at the Meeting.
| How many shares can be voted at the Meeting? |
| How many votes do I have? |
Each shareholder has one vote per share of Class A Common Stock and ten votes per share of Class B Common Stock owned of record at the close of business on April 27, 2005.26, 2006.
| How do I vote? |
If you are a registered shareholder (that is, if you hold your Steelcase stock directly in your name), you may vote by telephone, Internet or mail or by attending the Meeting and voting in person.
| To vote by telephone or Internet: Please follow the instructions on the proxy card. The deadline for voting by telephone or Internet is 11:59 p.m. Eastern Daylight Time on June | |
| To vote by mail: Please complete, sign and date the accompanying proxy card and return it in the enclosedpostage-paid envelope. Only cards received and processed before 11:00 a.m. Eastern Daylight Time on June |
If you hold your stock in “street name” (that is, your shares are registered in the name of a bank, broker or other nominee, which we will collectively refer to as your “broker”), you must vote your shares in the manner required by your broker.
Whether you vote by telephone, Internet or mail, you may specify whether your shares should be voted for all, some or none of the nominees for director.
If you do not specify a choice and you use the enclosed proxy card, your shares will be voted FOR the election of all nominees for director listed underProposal Requiring yourYour Vote –— Election of Directors.Directorson pages 3 and 4.
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If you do not specify a choice and you use a ballot card supplied by your broker, the rules of the New York Stock Exchange (“NYSE”) provide that your broker can vote as they wish on the election of nominees for director.
1
| What should I do if I received more than one proxy card? |
If you received more than one proxy card, it is likely that your shares are registered differently or are in more than one account. You should sign and return all proxy cards to ensure all of your shares are voted.
| How will voting on any other business be conducted? |
For any other matter that properly comes before the Meeting, your shares will be voted in the discretion of the proxy holders. As of April 27, 2005,26, 2006, we do not know of any other matter to be considered at the Meeting.
| Can I revoke my proxy? |
If you appoint a proxy, you may revoke it at any time before it is exercised by notifying the Company’s Secretary in writing, by delivering a later dated proxy to the Company’s Secretary or by attending the Meeting and voting in person.
| Who can attend the Meeting? |
Shareholders of record of Class A Common Stock or Class B Common Stock.Stock may attend the Meeting.
| Can I listen to the Meeting if I cannot attend? |
You can listen to a live webcast of the Meeting on the Internet. Instructions for listening to thisthe webcast will be available on the “Webcasts & Presentations” page of the InvestorsInvestor Relations section ofwww.steelcase.com our website, located atwww.steelcase.com/ir, approximately one week before the Meeting. An audio replay of the Meeting will be available on our website within two hours after the Meeting and until September 23, 2005.22, 2006.
| When and how are shareholder proposals for next year’s Annual Meeting to be submitted? |
We must receive any shareholder proposals submitted for inclusionto be included in our proxy statement for the 20062007 Annual Meeting of Shareholders by January 20, 2006.18, 2007. Shareholder proposals to be presented from the floor of the Shareholders2007 Annual Meeting must be received no earlier than March 25, 200626, 2007 and no later than April 14, 2006.13, 2007. All shareholder proposals must be sent in the manner and meet the requirements specified in our amended bylaws.by-laws.
| What if I have the same address as another shareholder? |
We will send a single copy of theour annual report and proxy statement to any household at which two or more shareholders reside if they appear to be members of the same family. This practice is known as “householding” and helps reduce our printing and postage costs. Any shareholder residing at such anthe same address as another shareholder who wishes to receive a single document or separate documents can obtain them by callingshould call (800) 542-1061 or writing to:write to ADP Householding Department, 51 Mercedes Way, Edgewood, New York 11717.11717, and we will deliver the requested documents promptly.
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PROPOSAL REQUIRING YOUR VOTE – VOTE—ELECTION OF DIRECTORS
There are four nominees for election this year. Each is currently a member of our Board and is nominated to serve as a Class III director for a term that will expire at the 20082009 Annual Meeting.
The Board of Directors recommends that you vote FOR each of the nominees.
OUR BOARD OF DIRECTORS
Nominees for Election as Class III Directors for the Term Expiring in 2008:
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 | William P. Crawford Director since 1979 Mr. Crawford held various positions at Steelcase from 1979 until his retirement in 2000, including President and Chief Executive Officer of the Steelcase Design Partnership. Mr. Crawford is also a director of Fifth Third Bank—a Michigan banking corporation. Age | |
 | Elizabeth Valk Long Director since 2001 Ms. Long held various management positions at Time Inc., a magazine publisher, until her retirement in | |
 | Robert C. Pew III Director since 1987 Mr. Pew has been a private investor since 2004 and operated Cane Creek Farm from 1995 to 2003. From 1974 to 1984 and from 1988 to 1994, Mr. Pew held various positions at Steelcase, including President, Steelcase North America and Executive Vice President, Operations. Mr. Pew has | |
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 | Cathy D. Ross Director since 2006 Ms. Ross has been Senior Vice President and Chief Financial Officer of Federal Express Corporation, an express transportation company and subsidiary of FedEx Corporation, since 2004. Ms. Ross also held a variety of other positions at FedEx, including Vice President, Express Financial Planning from 1998 to 2004. Age 48. | |
Class III Directors Continuing in Office for the Term Expiring in 2007:
 | James P. Hackett Director since 1994 Mr. Hackett has been President and Chief Executive Officer of Steelcase since 1994. Mr. Hackett also serves as a member of the Board of Trustees of The Northwestern Mutual Life Insurance Company and the Board of Directors of Fifth Third Bancorp. Age | |
 | David W. Joos Director since 2001 Mr. Joos has been President and Chief Executive Officer of CMS Energy Corporation, an energy company, and | |
 | P. Craig Welch, Jr. Director since 1979 Mr. Welch has been Manager and a member of Honzo LLC, an investment/venture capital firm, since 1999. | |
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Class I Directors Continuing in Office for the Term Expiring in 2008:
 | Earl D. Holton Director since 1998 Mr. Holton served as Vice Chairman and member of the Board of Directors of Meijer, Inc., a Grand Rapids, Michigan-based operator of retail food and general merchandise stores, from 1999 until his retirement in 2004. He also held a variety of other positions at Meijer, including President from 1980 until 1999. Mr. Holton also serves on the Board of Directors of CMS Energy Corporation and Consumers Energy Company and has acted as the presiding director at executive sessions of those Boards since 2002. Age 72. | |
 | Michael J. Jandernoa Director since 2002 Mr. Jandernoa has been a general partner of Bridge Street Capital Fund I, L.P., a Grand Rapids, Michigan venture capital fund, since 2004. He served as Chairman of the Board of Directors of Perrigo Company, a manufacturer of over-the-counter store-brand pharmaceutical and nutritional products, from 1991 through 2003. Mr. Jandernoa also served in various executive capacities with Perrigo Company, including Chief Executive Officer from 1988 to 2000. He is also a director of Perrigo Company and Fifth Third Bank—a Michigan banking corporation. Age 56. | |
 | Peter M. Wege II Director since 1979 Mr. Wege has been Chairman of the Board of Directors of Contract Pharmaceuticals Ltd., a manufacturer and distributor of prescription and over-the-counter pharmaceuticals, since 2000. From 1981 to 1989, he held various positions at Steelcase, including President of Steelcase Canada Ltd. Age 57. | |
 | Kate Pew Wolters Director since 2001 Ms. Wolters has been engaged in philanthropic activities since 1996. She is currently President of the Kate and Richard Wolters Foundation and is a community volunteer and advisor. She also serves as Chair of the Board of Trustees of the Steelcase Foundation. Age 48. | |
Related Directors
Chairman Emeritus
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DIRECTOR COMPENSATION
In fiscal year 2005,2006, we compensated our outside directors as follows:
| Type of Compensation | Type of Compensation | Director | Board Chair | Type of Compensation | Director | Board Chair | ||||||||||||||
| Board Compensation: | Board Compensation: | Board Compensation: | ||||||||||||||||||
| Annual Retainer | $ | 25,000 | $ | 90,000 | ||||||||||||||||
| Annual Retainer | $ | 25,000 | $ | 90,000 | Meeting Attendance Fee (per meeting) | $ | 2,000 | — | ||||||||||||
| Meeting Attendance Fee (per meeting) | $ | 2,000 | $ | 0 | ||||||||||||||||
| Committee Compensation: | Committee Compensation: | Committee Compensation: | ||||||||||||||||||
| Audit Committee Chair Annual Retainer | $ | 7,500 | — | |||||||||||||||||
| Audit Committee Chair Annual Retainer | $ | 7,500 | $ | 0 | Other Committee Chair Annual Retainer | $ | 3,500 | — | ||||||||||||
| Committee Chair Attendance Fee (per meeting) | $ | 1,500 | — | |||||||||||||||||
| Other Committee Chair Annual Retainer | $ | 3,500 | $ | 0 | Committee Attendance Fee (per meeting) | $ | 1,000 | — | ||||||||||||
| Committee Chair Attendance Fee (per meeting) | $ | 1,500 | $ | 0 | ||||||||||||||||
| Committee Attendance Fee (per meeting) | $ | 1,000 | $ | 0 | ||||||||||||||||
| • | a deemed investment in Class A Common Stock under our Non-Employee Director Deferred Compensation Plan or | |
| • | Class A Common Stock issued under our Incentive Compensation Plan. |
Our Board expects that any shares issued to outside directors under the Steelcase Inc.
Each outside director is also reimbursed for out-of-pockettheout-of-pocket expenses incurredhe or she incurs to attend Board and committee meetings. Mr. Holton received an additional $784 in taxable income arising from one occasion on which his spouse accompanied him to Grand Rapids, Michigan on the Company’s corporate aircraft.
Each non-employee directorof our outside directors is eligible to participate in the Steelcase Inc.our Non-Employee Director Deferred Compensation Plan. Under this plan, directors may defer all or part of their retainer and/or committee fees until they no longer serve on our Board of Directors.Board. A participating director may elect to have the deferred amount deemed as an investmentinvested in Class A Common Stock or invested in any of several other investment funds.
Each directorof our outside directors also participates in the Steelcase Inc.our Incentive Compensation Plan. The only awards made to our outside directors under this plan during fiscal year 20052006 were to those directors electing to receive 25% or more of their annual retainer in Class A Common Stock.
William P. Crawford and Robert C. Pew III currently receive or are entitled to receive payments under supplemental retirement and/or deferred compensation arrangements that were in effect when their active employment with us ended. Mr. Crawford also participates in our retiree medical and life insurance benefit plans on the Company ended.same terms as other North American-based retirees. Their rightrights to receive thesethose payments isand benefits are not conditioned on continued Board service.service on our Board.
8
| Calendar 2004 | ||||||||||
| Participating Directors | Taxable Income | |||||||||
| Robert C. Pew III | $ | 10,746 | ||||||||
| Peter M. Wege II | $ | 10,746 | ||||||||
| P. Craig Welch Jr. | $ | 10,746 | ||||||||
| Kate Pew Wolters | $ | 4,574 | ||||||||
| Fiscal Year 2006 | ||||
| Participating Directors | Taxable Income | |||
| Robert C. Pew III | $ | 12,629 | ||
| Peter M. Wege II | $ | 12,629 | ||
| P. Craig Welch Jr. | $ | 8,839 | ||
| Kate Pew Wolters | $ | 4,209 | ||
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CORPORATE GOVERNANCE
Corporate Governance Principles
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| • |
10
Director Independence
A majority of the members of our Board of Directors must be independent, as defined by the NYSE listing standards.
| • | the director is currently employed in any capacity by, or is an equity owner in, another company that has done or does business with the Company, provided that: |
7
| • | ||
| • | ||
| • | ||
| • | ||
| • | ||
| • |
As used in the above categorical standards, “business with the Company” includes the Company selling products and/or services to the other company, either directly or through an independently owned dealer, and the Company buying products and/or services from the other company during the last three years. Unless the context otherwise requires, “director” includes the director and his or her immediate family members as defined in the NYSE listing standards.
Applying the NYSE listing standards and the Board’s categorical standards and considering all the relevant facts and circumstances, theour Board of Directors determined that William P. Crawford, Earl D. Holton, Michael J. Jandernoa, David W. Joos, Elizabeth Valk Long, Robert C. Pew III, Cathy D. Ross, Peter M. Wege II, P. Craig Welch, Jr. and Kate Pew Wolters are independent. Additionally, William P. Crawford is independent as of May 1, 2005, the fifth anniversary of his retirement
11
Audit Committee Matters
Our Corporate Governance Principles prohibit any member of our Audit Committee from sitting on the audit committees of more than two other public companies. Additionally, the Board of Directors has designated Michael J. Jandernoa as an “audit committee financial expert” as defined by the rules of the Securities and Exchange Commission (the “SEC”), based on his financial and accounting education and experience.
Compensation Committee Interlocks and Insider Participation
Earl D. Holton, Michael J. Jandernoa, David W. Joos, P. Craig Welch, Jr. and Kate Pew Wolters currently serve as members of our Compensation Committee, and there is no insider participation.
8
Executive Sessions of Non-Management Directors
The only member of our Board who is also a member of management is James P. Hackett, our President and Chief Executive Officer. Our Board meets quarterly in executive session without Mr. Hackett present. During these sessions, Robert C. Pew III, as Chair of the Board, presides. Our Corporate Governance Principles provide that if the Chair of the Board is a member of management, the outside directors will designate a member to preside at executive sessions. You may contact the Chair of the Board (or the lead non-management director, if one is subsequently appointed) by sending a certified letter to:
| Chair of the Board/Lead Non-Management Director | |
| c/o Steelcase Inc. | |
| P.O. Box 1967 | |
| Grand Rapids, MI 49501-1967 |
Code of Ethics, Code of Business Conduct and Board Committee Charters
Our Board has adopted a Code of Ethics applicable to our chief executive and senior financial officers, as well as a Code of Business Conduct that applies to all of our employees and directors. Only our Nominating and Corporate Governance Committee may grant any waivers of either code for a director or executive officer. Each of these codes, the charters of our Audit, Compensation and Nominating and Corporate Governance Committees, and our Corporate Governance Principles are available in the Corporate Governance section (found under Our Company — About Steelcase) of our Internet website, located atwww.steelcase.com. If any amendment to, or waiver from, a provision of our Code of Ethics is made for our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, we will also post such information in the Corporate Governance section of our website.
We will provide a printed copy of any of these materials to you upon request and without charge. Please send any such requests to us by email atir@steelcase.com or by mail at:
| Steelcase Inc. | |
| Investor Relations | |
| GH-3C | |
| P.O. Box 1967 | |
| Grand Rapids, MI 49501-1967 |
Contacting Our Board
Our Board has adopted a process for our shareholders to send communications to the Board. To contact the Board, any of its committees or any of our directors, please send a certified letter addressed to:
| Board of Directors | |
| c/o Jon Botsford, Secretary | |
| Steelcase Inc. | |
| P.O. Box 1967 | |
| Grand Rapids, MI 49501-1967 |
All such letters will be opened by the Company’s Secretary. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board or any committee or group of directors, the Secretary will make sufficient copies of the contents and send them to each director who is a member of the committee or group to which the envelope is addressed.
9
The Steelcase Foundation
The Steelcase Foundation is included in the above categorical independence standards.standards described on pages 7 and 8. The Foundation was established in 1951 to make grants to non-profit organizations, projects and programs in the communities where our employees live and work. Established by the founders of Steelcase Inc., the Foundation seeks to give back to the communities that have been instrumental to the Company’s operations and growth. TheFrom time to time, the Company has regularly donated a portion of its profitsearnings to the Foundation. The Company’sOur Board of Directors determines whether a donation will be made to the Foundation and determines the amount. Several of our directors also serve as Foundation Trustees, including James P. Hackett, Earl D. Holton, Robert C. Pew III and Kate Pew Wolters, who serves as Chair of the Board of Trustees. The other Trustees of the Foundation include David D. Hunting, Jr., Mary Goodwillie Nelson, Peter M. Wege and James C. Welch and Fifth Third Bank.Welch. During fiscal year 2006, Fifth Third Bank isalso served as a trustee and was compensated for its services in connection with the Foundation. IndividualFoundation, but individual trustees are not compensated for their service.
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COMMITTEES OF THE BOARD OF DIRECTORS
Four standing committees assist theour Board of Directors in fulfilling the responsibilities summarized below. Each committee has the power to conduct or authorize investigations or studies of matters within the scope of its responsibilities and may, at the Company’s expense, retain independent counsel or other consultants or advisors as deemed necessary. Each committee also has the sole authority to retain or terminate its consultants and approve the payment of fees.
Audit Committee
| Current Members: | Responsibilities: | |||
| Michael J. Jandernoa (Chair) | • | Appoints the independent auditor and reviews and approves its | ||
| Earl D. Holton | services and fees in advance | |||
| Elizabeth Valk Long | ||||
| Robert C. Pew III | • | Reviews the performance of | ||
| Cathy D. Ross | circumstances warrant, makes decisions regarding its replacement | |||
| Peter M. Wege II | or termination | |||
Number of Meetings | • | Evaluates the independence of the independent auditor | ||
in Fiscal Year 2006: 7 | ||||
| • | Reviews the appointment, replacement, reassignment or dismissal of the head of | |||
| • | Reviews the scope of the internal and independent annual audit plans and monitors progress and | |||
| • | Reviews | |||
| • | Reviews the adequacy and effectiveness of | |||
| • | Reviews | |||
| • | Reviews the process by which | |||
| • | Reviews | |||
| • | Performs an annual self-evaluation of the Committee, as well as other duties specified in its | |||
| • | Reports to | |||
1311
Compensation Committee
| Current Members: | Responsibilities: | |||
| David W. Joos (Chair) | • | Establishes philosophy | ||
| Earl D. Holton | ||||
| Michael J. Jandernoa | • | Establishes the compensation of Officer | ||
| P. Craig Welch, Jr. | ||||
| Kate Pew Wolters | • | Reviews the compensation of officers | ||
Number of Meetings in | • | Reviews executive and non-executive compensation programs and | ||
Fiscal Year 2006: 7 | benefit plans to assess their competitiveness, reasonableness and alignment with | |||
| • | Makes awards and takes other actions under | |||
| • | Performs an annual self-evaluation of the Committee, as well as other duties specified in its | |||
| • | Reports to | |||
Executive Committee
| Current Members: | Responsibilities: | |||
| Earl D. Holton (Chair) | • | Exercises the powers of | ||
| William P. Crawford | between regular meetings, subject to any legal or regulatory | |||
| James P. Hackett | limitations | |||
| Robert C. Pew III | ||||
| Peter M. Wege II | • | Performs other duties as assigned by | ||
| P. Craig Welch, Jr. | time to time | |||
Number of Meetings | • | Reports to | ||
in Fiscal Year 2006: 1 | undertaken by the | |||
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Nominating and Corporate Governance Committee
| Current Members: | Responsibilities: | |||
| Kate Pew Wolters (Chair) | • | Establishes procedures for identifying and evaluating potential | ||
| William P. Crawford | director nominees and recommends nominees for election to | |||
| Elizabeth Valk Long | Board of Directors | |||
| Robert C. Pew III | ||||
| Peter M. Wege II | • | Reviews the suitability for continued service of directors when their | ||
| P. Craig Welch, Jr. | terms are expiring or a significant change in responsibility occurs, | |||
| including a change in employment | ||||
Number of Meetings in | ||||
Fiscal Year 2006: 2 | • | Reviews annually the composition of | ||
| • | Makes recommendations to | |||
| • | Makes recommendations to | |||
| • | Reviews our Corporate Governance Principles at least annually and recommends | |||
| • | Oversees the annual self-evaluation of | |||
| • | Reviews director compensation and recommends appropriate changes to | |||
| • | Administers the Board’s policy on disclosing and managing conflicts of | |||
| • | Considers any waiver request under | |||
| • | Performs an annual self-evaluation of the Committee, as well as other duties specified in its | |||
| • | Reports to | |||
1513
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE REPORT
The Nominating and Corporate Governance Committee has six members, all of whom are independent under the NYSE listing standards. TheOur Committee performs the duties described inCommittees of the Board of Directorson page 13 and operates under a written charter adopted by the Board of Directors that is reviewed and assessed at least annually.
Corporate Governance
Since its formation in June 2002, theour Committee has focused on seeking out and implementing world class governance policies and practices. Some of the resulting policies and practices are summarized inCorporate Governance.on pages 7 through 10.
Board Composition
Qualifications
Nominees for director are selected on the basis of several criteria, the most fundamental of which is integrity. Steelcase isWe are committed to diversity, and a candidate’s ability to add to the diversity of theour Board is also considered. Directors are expected to be curious and demanding independent thinkers who possess appropriate business judgment and are committed to representing the long-term interests of shareholders. Directors must possess knowledge, experience, skills or expertise that enhances thewill enhance our Board’s ability to direct the business of the Company.our business. They must also be willing and able to spend the time and effort necessary to effectively discharge their responsibilities. Directors must be prepared to resign from theour Board in the event that they have a significant change in responsibilities, including a change in employment, as required by the Company’sour Corporate Governance Principles.
In addition to the above qualifications, the Committeewe also reviewsreview the effectiveness of directors when determining whether to re-nominate a current member of theour Board for an additional term.
Identification of Candidates for Director
16
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14
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Shareholders may also make their own nominations for director by following the process specified in the Company’s amended bylaws.our by-laws.
| Nominating and Corporate | |
| Governance Committee | |
| Kate Pew Wolters (Chair) | |
| Elizabeth Valk Long | |
| Robert C. Pew III | |
| Peter M. Wege II | |
| P. Craig Welch, Jr. |
1715
AUDIT COMMITTEE REPORT
The Audit Committee consists of five directors,has six members, all of whom are financially literate as defined by the Company’s Board of Directors and are independent under the NYSE listing standards. TheOur Committee performs the duties described inCommittees of the Board of Directorson page 11 and operates under a written charter adopted by the Board of Directors that is reviewed and assessed at least annually.
Management is responsible for Steelcase’sthe Company’s financial reporting process and its internal controls regarding financial reporting, accounting, legal compliance and ethics. BDO Seidman, LLP, the Company’s independent registered public accounting firm (“independent auditor”), is responsible for performing independent audits of the Company’s consolidated financial statements and its internal control over financial reporting and issuing opinions on:
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In this context, we have discussed with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61,Communications with Audit Committees, as amended. In addition, we received the written disclosures and letter from the independent auditor required by Independence Standards Board Standard No. 1 and reviewed, evaluated and discussed the written report and letter with that firm and its independence fromwith respect to the Company.
Based on the review and discussions referred to above, and relying on the representations of the Company’s management and the independent auditor’s reports, thereport, our Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 25, 2005.24, 2006 for filing with the Securities and Exchange Commission.
| Audit Committee | |
| Michael J. Jandernoa (Chair) | |
| Earl D. Holton | |
| Elizabeth Valk Long | |
| Robert C. Pew III | |
| Cathy D. Ross | |
| Peter M. Wege II |
1816
FEES PAID TO PRINCIPAL INDEPENDENT AUDITOR
BDO Seidman’s fees for fiscal year 20052006 (estimated) and fiscal year 20042005 (actual) for work performed for the Companyus are as follows:
| Fiscal Year 2005 | Fiscal Year 2004 | |||||||||
Audit Fees1 | $ | 1,617,000 | $ | 963,000 | ||||||
Audit-Related Fees2 | $ | 213,000 | $ | 152,000 | ||||||
Tax Fees3 | $ | 290,000 | $ | 255,000 | ||||||
| All Other Fees | $ | 0 | $ | 0 | ||||||
| Total | $ | 2,120,000 | $ | 1,370,000 | ||||||
| Fiscal Year | Fiscal Year | ||||||||
| 2006 | 2005 | ||||||||
| Audit Fees (1) | $ | 1,797,000 | $ | 1,667,000 | |||||
| Audit-Related Fees (2) | 234,000 | 213,000 | |||||||
| Tax Fees (3) | 277,000 | 290,000 | |||||||
| All Other Fees | — | — | |||||||
| Total | $ | 2,308,000 | $ | 2,170,000 | |||||
| Audit fees consisted of fees related to the annual audit of | ||
| Audit-related fees consisted of employee benefit plan audits and related services. | ||
| Tax fees consisted of assistance with tax compliance, preparation of certain subsidiary tax returns, tax consultation, planning and implementation services, and assistance in connection with tax audits. |
In addition, theour Audit Committee has adopted a policy under which it approves in advance recurring audit, audit-related and tax services rendered by BDO Seidman, subject to specific fee limits. If circumstances require hiring the independent auditors for services not previously pre-approved or that would exceed the fee limits previously set, the Audit Committee mustpre-approve the new services and/or fee limits. The Audit Committee Chair may approve specified services between regularly scheduled meetings of the Audit Committee, subject to review by the full Audit Committee at its next scheduled meeting. The fiscal year 20052006 services and fees reflected in the above table were pre-approved by the Audit Committee.
1917
COMPENSATION COMMITTEE REPORT
The Compensation Committee consists ofhas five directors,members, all of whom are independent under the NYSE listing standards. The Committee performs the duties described inCommittees of the Board of Directorson page 12 and operates under a written charter adopted by the Board of Directors that is reviewed and assessed at least annually.
Overview –of Compensation Philosophy and Objectives
Steelcase values the contributions of all employees and shares profits through broad-based incentive arrangements designed to reward performance and motivate teamwork for our success.
In line with this philosophy, the Committee’s objectives for executive compensation include:
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| • |
Each year the Committee reviews executive and non-executive compensation and benefit programs to assess reasonableness and alignment with the Company’s compensation philosophy.philosophy and objectives.
In fiscal year 2005,2006, the Committee once again engaged Towers Perrin, a leading compensation consulting firm, to assist in assessing the compensation of the Company’s Chief Executive Officer (“CEO”) and other executives. The firm reported directly to the Committee, consulting with it on best practices in executive compensation and providing relevant market data comparisons for executive compensation.
Taking into consideration the Towers Perrin data, the Committee reviewed the following components of compensation paid by the Company to each of its executive officers: base salary, projected annual and long-term incentive awards based on varying assumptions on companyof the Company’s performance, equity awards, perquisites, amounts made available by the Company to pay for benefits under the Company’s broad-based health and welfare plans, and contributions to retirement plans, including projected benefits payable under the executive supplemental retirement plan.Executive Supplemental Retirement Plan.
Based upon this review, the Committee believes that the CEO and executive compensation for fiscal year 2005 is2006 are reasonable and consistent with the Company’s compensation philosophy and is reasonable.objectives.
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Principle Components of Executive Compensation
| Base Salary |
Base Salary
On an annual basis, Mr.James P. Hackett, the Company’s CEO, establishes and reviews with the Committee the base salaries forof the Company’s executive officers based on his assessment of individual performance and market data from the comparison group of companies. The
In fiscal year 2006, the Committee annually reviewsincreased Mr. Hackett’s base salary from $760,000 to $800,000. In fiscal year 2002, the Committee had approved Mr. Hackett’s request to reduce his base salary from $800,000 to $720,000 due to industry conditions, and evaluatesin fiscal year 2004, the reasonablenessCommittee increased Mr. Hackett’s salary to $760,000. In determining Mr. Hackett’s base salary for fiscal year 2006, the Committee considered market data from the comparison group, the voluntary nature of executive compensation.his previous salary reduction and the factors upon which his annual performance appraisal is based. These factors include Mr. Hackett’s leadership, establishment and implementation of the Company’s
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strategic direction and the Company’s performance on economic value added (“EVA”), which is described below, earnings per share and return on equity goals.
| Annual and Long-Term Incentive Awards |
Annual and long-term incentive awards are tied to achieving specific financial goals. Consistent with market practice and our desire to motivate performance, incentive compensation opportunities represent a larger percentage of total compensation for executives than for other Company employees.
The Steelcase Inc. Management Incentive Plan (“MIP”) provides annual and/or long-term incentive bonus compensation to approximately 350300 participants. Annual awards under the planMIP reward participants for the Company’s current year financial performance. Long-term awards encourage retention and participant focus on decisions that impact the longer-term success of the Company. The executive officers named in theSummary Compensation Tableparticipate in the MIP and are eligible to receive annual and long-term awards.
Annual and long-term awards under the MIP are determined based on Economic Value Added (“EVA”),EVA, which is a profit measure that reflects the Company’s operating costs, including the cost of capital. EVA is calculated based on the Company’s net income less a capital charge representing the economic costscost of a reasonable return on the company’sCompany’s net assets, plus an acquisition allowance and plus or minus any accounting adjustments allowed under the plan and authorized by the Committee.
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At the beginning of each fiscal year, the Committee sets EVA performance goals that must be achieved for MIP participants to earn an award. The performance goals include two components, a growth component and an absolute component. The growth component rewards improvements in EVA and is automatically set each year based on the average of the prior year’s EVA target and actual performance, increased by an improvement factor. The absolute component the minimum level of EVA required for an award, rewards annual achievement of EVA results. The growth and absolute components have separate leverage factors which determine the level of EVA that is required to double the award.
The Committee also approves a schedule of target awards, expressed as a percentage of base salary. The target percentages for annual and long-term awards increase according to base salary. The Committee exercises discretion in setting the targets and considers factors such as the median of market data for similar incentives and the Company’s historic and projected performance.
Following the fiscal year end, both growth and absolute EVA are calculated by applying the leverage factors. Using a weighting of 50% growth component and 50% absolute component established by the Committee, the award multiple is determined. The award multiple is applied to the target annual and long-term incentive percentages to calculate each employee’s actual incentive percentages, which are then multiplied by the employee’s base pay to determine the annual and/orand long-term incentive awards for the fiscal year.
Annual awards are paid in the year declared. Long-term awards are allocated to participant accounts and paid in three equal annual installments, beginning the year after the award is declared. Any unpaid account balance is adjusted at the end of each fiscal year to reflect the year’s change in shareholders’ equity, positive or negative, before payment of dividends. Participants whose employment is terminated for any reason other than death, total disability or retirement, forfeit the right to payment of any unpaid account balances credited to their account unless otherwise determined by the Committee.
In fiscal year 2005,2006, the Company’s EVA performance resulted in ana MIP award multiple of .80.0.95. For fiscal year 2005,2006, Mr. Hackett’s target annual incentive percentage was 70% and his targetlong-term incentive percentage was 115%. Those percentages were established in fiscal year 2004 and were based onare reviewed annually taking into account the market data from the then-currentcurrent comparison group of companies. The change for all MIP participants allowing two-thirds of the long-term award to be paid at the same time as the annual incentive, increased Mr. Hackett’s annual target to 147% and decreased his long-term target to 38%.
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| Equity Awards |
The Company makes awards of equity-based compensation to remain competitive in attracting and retaining management employees and to align management with the interests of shareholders.
In fiscal year 2006, the Committee granted performance shares and performance units to certain executive officers, including the executive officers named in theSummary Compensation Table. Under each award a target number of performance shares or, in the case of executives living outside of the United States, performance units will be earned subject to achievement of specified levels of financial performance over a three-year period.
For fiscal year 2006, the Committee selected cumulative cash flow per share as the performance measure for performance shares and performance units because it focuses on operating results and compliments EVA profitability goals. Upon completion of the three-year performance period, 0% to 200% of the target number of shares or in the case of executives living outside of the United States performance share units (“PSUs”), that will be earned subject to achievement of specified levels of financial performance over a three-year period.
At the end of the performance period, the number of performance shares earned will be determined and issued as Class A Common Stock, and one-third of the shares will vest immediately. The remaining two-thirds will vest equally over the next two years. Dividend equivalents accumulate during the performance period at the same rate as dividends declared on Class A Common Stock and will be paid at the end of the performance period on the actual number of performance shares earned. During the vesting period, dividends will be paid on earned shares.
Similarly, at the end of the performance period, the number of performance units earned will be determined, and one-third will vest immediately and be issued as Class A Common Stock. The remaining two-thirds will vest equally over the next two years and be issued as Class A Common Stock on the annual vesting dates. Dividend equivalents accumulate during the performance period at the same rate as dividends declared on Class A Common Stock and will be paid at the end of the performance period on the actual number of performance units earned. During the vesting period, dividend equivalents will be paid on earned units.
Mr. Hackett’s award of performance shares in fiscal year 2006 was based on market data provided by Towers Perrin and the Committee’s desire to motivate improved Company performance. The performance share awards made in fiscal year 2006 to the executive officers named in theSummary Compensation Tableare shown underLong-Term Incentive Plans— Awards in the Last Fiscal Year— Performance Share Awards. No other equity awards, including options and restricted stock, were made to the executive officers named in theSummary Compensation Tablein fiscal year 2006.
Tax Deductibility under Section 162(m)
The Company also considers the tax deductibility of compensation paid to certain executive officers. Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of annual compensation paid to certain officers to $1 million. The Committee’s goal is to structure the compensation paid to these individuals to maximize deductibility for federal income tax purposes. However, when deemed necessary, the Committee retains the flexibility to authorize compensation that may not be deductible under Section 162(m) to promote incentive and retention goals.
| Compensation Committee | |
| David W. Joos (Chair) | |
| Earl D. Holton | |
| Michael J. Jandernoa | |
| P. Craig Welch, Jr. | |
| Kate Pew Wolters |
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EXECUTIVE COMPENSATION, RETIREMENT PROGRAMS AND OTHER ARRANGEMENTS
Summary Compensation Table
The table below shows compensation information for fiscal years 2006, 2005 and 2004 for James P. Hackett, our President and Chief Executive Officer in fiscal year 2006, and our four next highly paid executive officers as of the end of fiscal year 2006.
| Long-Term Compensation | |||||||||||||||||||||||||||||
| Annual Compensation | Awards | Payouts | |||||||||||||||||||||||||||
| Restricted | Long-Term | ||||||||||||||||||||||||||||
| Name and | Fiscal | Other Annual | Stock | Incentive Plan | All Other | ||||||||||||||||||||||||
| Principal Position | Year | Salary(1) | Bonus(2) | Compensation(3) | Awards(4) | Payouts(5) | Compensation(6) | ||||||||||||||||||||||
| James P. Hackett | 2006 | $ | 797,231 | $ | 530,324 | $ | 13,357 | — | $ | 77,013 | $ | 22,398 | |||||||||||||||||
| President and Chief | 2005 | $ | 760,000 | $ | 893,760 | $ | 7,705 | — | — | $ | 30,931 | ||||||||||||||||||
| Executive Officer | 2004 | $ | 742,615 | — | $ | 6,650 | $ | 308,800 | $ | 112,201 | $ | 30,629 | |||||||||||||||||
| Frank H. Merlotti, Jr. | 2006 | $ | 451,118 | $ | 278,601 | $ | 6,359 | — | $ | 38,456 | $ | 23,430 | |||||||||||||||||
| President, Steelcase | 2005 | $ | 437,000 | $ | 461,472 | $ | 3,625 | — | — | $ | 25,073 | ||||||||||||||||||
| North America | 2004 | $ | 428,596 | — | $ | 3,625 | $ | 144,750 | — | $ | 25,817 | ||||||||||||||||||
| James P. Keane | 2006 | $ | 422,959 | $ | 257,622 | $ | 10,501 | — | $ | 34,337 | $ | 22,479 | |||||||||||||||||
| Sr. Vice President, | 2005 | $ | 396,730 | $ | 399,059 | $ | 6,745 | — | — | $ | 21,269 | ||||||||||||||||||
| Chief Financial | 2004 | $ | 355,016 | — | $ | 5,141 | $ | 295,280 | $ | 17,460 | $ | 18,588 | |||||||||||||||||
| Officer | |||||||||||||||||||||||||||||
| Nancy W. Hickey | 2006 | $ | 344,388 | $ | 176,984 | $ | 3,614 | — | $ | 26,365 | $ | 23,772 | |||||||||||||||||
| Sr. Vice President, | 2005 | $ | 329,558 | $ | 290,018 | $ | 1,945 | — | — | $ | 19,102 | ||||||||||||||||||
| Chief Administrative | 2004 | $ | 311,135 | — | $ | 1,811 | $ | 77,200 | $ | 14,265 | $ | 18,050 | |||||||||||||||||
| Officer | |||||||||||||||||||||||||||||
| Mark A. Baker | 2006 | $ | 343,462 | $ | 176,679 | $ | 7,494 | — | $ | 24,133 | $ | 21,000 | |||||||||||||||||
| Sr. Vice President, | 2005 | $ | 309,689 | $ | 267,229 | $ | 4,225 | $ | 140,100 | — | $ | 15,425 | |||||||||||||||||
| Global Operations | 2004 | $ | 277,349 | — | $ | 2,325 | $ | 96,500 | $ | 10,590 | $ | 13,860 | |||||||||||||||||
| Officer | |||||||||||||||||||||||||||||
| (1) | Includes amounts withheld under our Deferred Compensation Plan and the 401(k) component of our Retirement Plan. The salaries shown for fiscal year 2004 reflect an unpaid week for a company-wide shutdown during the year. |
| (2) | Represents amounts paid from the annual component of the MIP. For fiscal year 2005 only, annual targets were increased by an amount equal to two-thirds of the participants’ long-term target and long-term targets were decreased by the same amount. This methodology for establishing fiscal year 2005 target percentages was used for all MIP participants. |
| (3) | Amounts shown for fiscal years 2006 and 2004 include the earnings credit and debit, respectively, to the long-term amounts paid from the MIP for such fiscal year. Pursuant to the terms of the MIP, a credit or debit is made to the long-term incentive awards based on the percentage of positive or negative change in our shareholders’ equity for the applicable fiscal year. For enhanced disclosure, the amounts shown also include dividends earned on restricted stock. While each of the named executive officers received limited perquisites, no amounts are included in accordance with SEC rules because none of them received perquisites in an aggregate amount of $50,000 or more. |
| (4) | During fiscal year 2004, each of the named executive officers received a grant(s) of restricted stock which vests three years from the date of grant. During fiscal year 2005, Mark Baker received a grant of restricted stock which vests three years from the date of grant. Dividends are |
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| payable on the restricted shares at the same rate as our common stock. The following table shows the market value of each grant on the date of grant and as of February 24, 2006. |
| Fair Market Value | ||||||||||||||||||||||||||||
| Grant Date | as of | |||||||||||||||||||||||||||
| Fair Market Value | February 24, 2006 | |||||||||||||||||||||||||||
| Number | ||||||||||||||||||||||||||||
| of | Value | Value | ||||||||||||||||||||||||||
| Restricted | Per | Total | Per | Total | ||||||||||||||||||||||||
| Name | Grant Date | Shares | Share | Value | Share | Value | Vest Date | |||||||||||||||||||||
| James P. Hackett | 3/27/2003 | 32,000 | $ | 9.65 | $ | 308,800 | $ | 17.34 | $ | 554,880 | 3/27/2006 | |||||||||||||||||
| Frank H. Merlotti, Jr. | 3/27/2003 | 15,000 | $ | 9.65 | $ | 144,750 | $ | 17.34 | $ | 260,100 | 3/27/2006 | |||||||||||||||||
| James P. Keane | 3/27/2003 | 16,000 | $ | 9.65 | $ | 154,400 | $ | 17.34 | $ | 277,440 | 3/27/2006 | |||||||||||||||||
| 10/1/2003 | 12,000 | $ | 11.74 | $ | 140,880 | $ | 17.34 | $ | 208,080 | 10/1/2006 | ||||||||||||||||||
| Nancy W. Hickey | 3/27/2003 | 8,000 | $ | 9.65 | $ | 77,200 | $ | 17.34 | $ | 138,720 | 3/27/2006 | |||||||||||||||||
| Mark A. Baker | 3/27/2003 | 10,000 | $ | 9.65 | $ | 96,500 | $ | 17.34 | $ | 173,400 | 3/27/2006 | |||||||||||||||||
| 7/1/2004 | 10,000 | $ | 14.01 | $ | 140,100 | $ | 17.34 | $ | 173,400 | 7/1/2007 | ||||||||||||||||||
| (5) | Represents the cumulative long-term incentive awards paid under the MIP for the applicable fiscal year prior to any return on equity adjustment for such fiscal year. |
| (6) | Amounts shown include (a) contributions made to our Retirement Plan and Restoration Retirement Plan, (b) the dollar value of premiums paid by the Company for term life insurance for the named executive officers and (c) benefit dollars under our Employee Benefit Plan which the named executive officers elected to have contributed to the 401(k) component of our Retirement Plan. For fiscal year 2006, the amount shown for each named executive officer includes $21,000 in combined contributions to our Retirement Plan and Restoration Retirement Plan, and the remaining amount, if any, represents the dollar value of term life insurance premiums paid for the fiscal year. |
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year End Option Values
The table below shows information concerning the options exercised in fiscal year 2006 by each of our executive officers named in theSummary Compensation Tableand the value of the options held at the end of fiscal year 2006. No stock appreciation rights are held by any of our executives.
| Number of Securities | Value of Unexercised | |||||||||||||||||||||||
| Underlying Unexercised | In The Money | |||||||||||||||||||||||
| Shares | Options at | Options at | ||||||||||||||||||||||
| Acquired | February 24, 2006 | February 24, 2006 | ||||||||||||||||||||||
| on | Value | |||||||||||||||||||||||
| Name | Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
| James P. Hackett | — | — | 1,243,660 | — | $ | 3,186,408 | — | |||||||||||||||||
| Frank H. Merlotti, Jr. | — | — | 200,000 | — | $ | 1,308,000 | — | |||||||||||||||||
| James P. Keane | — | — | 240,372 | — | $ | 607,876 | — | |||||||||||||||||
| Nancy W. Hickey | — | — | 189,060 | — | $ | 385,249 | — | |||||||||||||||||
| Mark A. Baker | — | — | 123,026 | — | $ | 272,503 | — | |||||||||||||||||
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Long-Term Incentive Plans — Awards in the Last Fiscal Year
| MIP Long-Term Awards |
The table below shows the amount of long-term awards made under the MIP for fiscal year 2006 to our executive officers named in theSummary Compensation Table.
| Estimated Future Payouts | ||||||||
| Performance Period Until | Under Non-Stock Price- | |||||||
| Name | Maturation or Payout | Based Plans — Target | ||||||
| James P. Hackett | Fiscal Years 2007-2009 | $ | 871,246 | |||||
| Frank H. Merlotti, Jr. | Fiscal Years 2007-2009 | $ | 428,617 | |||||
| James P. Keane | Fiscal Years 2007-2009 | $ | 401,892 | |||||
| Nancy W. Hickey | Fiscal Years 2007-2009 | $ | 294,494 | |||||
| Mark A. Baker | Fiscal Years 2007-2009 | $ | 293,755 | |||||
These awards are payable in cash in three equal annual installments after the end of fiscal years 2007, 2008 and 2009, and the amounts payable are multiplied by the percentage, positive or negative, of return on our shareholders’ equity for such fiscal year. For more information on awards under the MIP, see theCompensation Committee Reporton pages 18 through 20.
| Performance Share Awards |
The table below shows the number of performance shares awarded during fiscal year 2006 under our Incentive Compensation Plan to our executive officers named in theSummary Compensation Table.
| Estimated Future Payouts Under | ||||||||||||||||||||
| Non-Stock Priced-Based Plans | ||||||||||||||||||||
| Number of | Threshold | Target | Maximum | |||||||||||||||||
| Performance | Performance Period Until | Number | Number of | Number | ||||||||||||||||
| Name | Shares | Maturation or Payout | of Shares | Shares | of Shares | |||||||||||||||
| James P. Hackett | 50,000 | Fiscal Years 2006-2008 | 25,000 | 50,000 | 100,000 | |||||||||||||||
| Frank H. Merlotti, Jr. | 20,000 | Fiscal Years 2006-2008 | 10,000 | 20,000 | 40,000 | |||||||||||||||
| James P. Keane | 15,000 | Fiscal Years 2006-2008 | 7,500 | 15,000 | 30,000 | |||||||||||||||
| Nancy W. Hickey | 7,000 | Fiscal Years 2006-2008 | 3,500 | 7,000 | 14,000 | |||||||||||||||
| Mark A. Baker | 15,000 | Fiscal Years 2006-2008 | 7,500 | 15,000 | 30,000 | |||||||||||||||
The performance shares are earned subject to achievement of specified levels of cumulative cash flow per share for fiscal years 2006, 2007 and 2008. Upon completion of the performance period, the actual number of shares earned will be determined as follows:
| • | No shares will be earned if the cumulative cash flow per share is less than $2.60. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| • | The threshold number of shares will be earned if the cumulative cash flow per share is $2.60. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| • | The target number of shares will be earned if the cumulative cash flow per share is $3.90. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| • | The maximum number of shares will be earned if the cumulative cash flow per share is $6.50 or more. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| • | If the cumulative cash flow per share is between the threshold and the target or between the target and the maximum, the number of shares earned will be determined
At the end of fiscal year 2008, the actual number of shares earned will be issued as Class A Common Stock. One-third of the shares will vest immediately upon issuance, and the remaining two-thirds will be issued as restricted shares which will vest in two equal annual installments at the end of fiscal year 2009 and fiscal year 2010. Dividend equivalents accumulate on the performance shares 23 during the performance period at the same rate as dividends declared on Class A Common Stock and will be paid (in cash or in stock, as determined by our Board) at the end of the performance period on the actual number of performance shares earned. Dividends will be paid on restricted shares during the vesting period. For more information on performance shares see theCompensation Committee Reporton pages 18 through 20. Executive Supplemental Retirement Plan We maintain an Executive Supplemental Retirement Plan. The Compensation Committee determines who participates in the plan. Each executive officer named in theSummary Compensation Tableis a current participant. Under this unfunded plan, participants receive the following benefits:
Benefits normally begin in March of the year in which any of the following occur:
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| • | the
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In the event of early retirement and with the approval of the plan’s administrative committee, a participant can elect, within a specified time frame, to receive benefits earlier and in lower annual amounts. Benefits would end on the date the final payment would have been made if the participant had not elected to receive benefits earlier.
The table below shows a range of estimated annual benefits during the first five years of benefits for plan participants who have the years of participation shown below at retirement, assuming that no early payment election is made and all plan requirements are satisfied.
| Years of Participation | ||||||||||||||||||||
| Average Base | ||||||||||||||||||||
| Salary | ||||||||||||||||||||
| (Final 3 years) | 3 | 4 | 5 | 6 | 7 or more | |||||||||||||||
| $1,000,000 | $ | 150,000 | $ | 300,000 | $ | 450,000 | $ | 600,000 | $ | 750,000 | ||||||||||
| 900,000 | 136,000 | 272,000 | 408,000 | 544,000 | 680,000 | |||||||||||||||
| 800,000 | 122,000 | 244,000 | 366,000 | 488,000 | 610,000 | |||||||||||||||
| 700,000 | 108,000 | 216,000 | 324,000 | 432,000 | 540,000 | |||||||||||||||
| 600,000 | 94,000 | 188,000 | 282,000 | 376,000 | 470,000 | |||||||||||||||
| 500,000 | 80,000 | 160,000 | 240,000 | 320,000 | 400,000 | |||||||||||||||
| 400,000 | 66,000 | 132,000 | 198,000 | 264,000 | 330,000 | |||||||||||||||
| 300,000 | 52,000 | 104,000 | 156,000 | 208,000 | 260,000 | |||||||||||||||
After the first five annual payments, the total benefit reduces to the amounts shown in the following table (this benefit is paid for years 6 through 15):
| Years of Participation | ||||||||
| 3 | 4 | 5 | 6 | 7 or more | ||||
| $10,000 | $20,000 | $30,000 | $40,000 | $50,000 | ||||
Social Security and other offsetting amounts are not deducted from the payments shown in the previous tables. Benefits are paid to the participant or the participant’s surviving spouse, as defined in the plan.
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A participant’s vested percentage is based on completed years of participation in the plan:
| Years of | Vested | |||
| Participation | Percentage | |||
| less than 3 | 0% | |||
| 3 | 20% | |||
| 4 | 40% | |||
| 5 | 60% | |||
| 6 | 80% | |||
| 7 or more | 100% | |||
As of the date of this proxy statement, the executive officers named in theSummary Compensation Tablehave completed the following years of service while a participant under the plan:
| Years of | ||||
| Name | Participation | |||
| James P. Hackett | 15 | |||
| Frank H. Merlotti, Jr. | 3 | |||
| James P. Keane | 5 | |||
| Nancy W. Hickey | 9 | |||
| Mark A. Baker | 4 | |||
A participant forfeits the right to receive benefits under the plan in the following circumstances:
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| Years of Service | Vesting Percentage | |||||||
| Less than 3 | 0% | |||||||
| 3 | 20% | |||||||
| 4 | 40% | |||||||
| 5 | 60% | |||||||
| 6 | 80% | |||||||
| 7 or more | 100% | |||||||
committee; or
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Restoration Retirement Plan
Each executive officer named in theSummary Compensation Tableparticipates in our Restoration Retirement Plan. This unfunded, defined contribution plan is intended to restore retirement benefits that would otherwise be paid under our Retirement Plan but are lost as a result of the limitations on eligible compensation under Internal Revenue Code Section 401(a)(17).
Each participant in the MIP for the full plan year, including each executive officer named in theSummary Compensation Table,is eligible to participate in our Restoration Retirement Plan. We make annual contributions to a participant’s account at the same combined rate of contribution for the plan year used in determining benefits under our Retirement Plan. Eligible compensation under our Restoration Retirement Plan is the amount of the participant’s base salary and annual bonus under the MIP that exceeds the limit under Internal Revenue Code Section 401(a)(17) but not more than twice the limit. Each participant’s account balance is credited annually with earnings at the same rate of return on investment earned by the participant under our Retirement Plan for the same plan year. No earnings are credited following termination of employment.
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Benefits are payable from our Restoration Retirement Plan after a participant terminates employment according to the following vesting schedule:
| Vesting | ||||
| Years of Service | Percentage | |||
| less than 3 | 0% | |||
| 3 | 20% | |||
| 4 | 40% | |||
| 5 | 60% | |||
| 6 | 80% | |||
| 7 or more | 100% | |||
Each executive officer named in theSummary Compensation Tableis 100% vested except for Mr. Merlotti who is 20% vested. Benefits are payable in lump sum or in annual installments over four years. Unpaid benefits are forfeited if the participant is terminated for cause or engages in certain competitive activity without the prior consent of the plan’s administrative committee.
Deferred Compensation Plan
To compete with other comparable global industrial companies, we maintain a Deferred Compensation Plan. This plan permits eligible participants, including our executive officers named in theSummary Compensation Table,to defer up to 25% of their current base salary and up to 50% of their MIP annual incentive payments before income taxes. Each participant elects how the deferred amounts will be deemed invested among various investment funds we make available. The total amount of deferral plus investment earnings is paid to the participants or their beneficiaries upon leaving employment. Prior to establishing the plan, we entered into deferred compensation contracts with certain executive officers, including James P. Hackett. Under the earlier agreement, Mr. Hackett will receive payments upon reaching age 70.
During fiscal year 2006, we amended our Deferred Compensation Plan to allow participants to reduce the time period during which their deferral election must remain in effect and to allow participants to make a special, one-time election, as permitted by Internal Revenue Code Section 409A, to receive a distribution of all or a portion of the amount credited to their accounts under the plan during calendar year 2005.
26
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The tables on the following pages show the amount of Class A Common Stock and Class B Common Stock beneficially owned by certain persons. Generally, a person “beneficially owns” shares if the person has or shares with others the right to vote those shares or to dispose of them, or if the person has the right to acquire voting or disposition rights within 60 days (for example, by exercising options). Except as stated in the notes following the tables, each person has the sole power to vote or dispose of the shares shown in the tables as beneficially owned.
Each share of Class B Common Stock can be converted at the option of the holder into one share of Class A Common Stock. Ownership of Class B Common Stock is, therefore, deemed to be beneficial ownership of Class A Common Stock under the SEC’s rules and regulations. The number of shares of Class A Common Stock and percentages shown for Class A Common Stock in the following tables, however, do not account for this conversion right in order to reduce substantial duplications in the number of shares and percentages shown in the table.
Directors and Executive Officers
This table shows the amount of common stock beneficially owned as of April 26, 2006 by (a) each of our directors, (b) each of our executive officers named in theSummary Compensation Table, and (c) all of our directors and executive officers as a group.
| Class A | Class B | |||||||||||||||||||||||
| Common Stock (1) | Common Stock | |||||||||||||||||||||||
| Shares | Shares | |||||||||||||||||||||||
| Beneficially | Stock | Percent | Beneficially | Percent | Deferred | |||||||||||||||||||
| Name | Owned | Options (2) | of Class | Owned | of Class | Stock (3) | ||||||||||||||||||
| Mark A. Baker | 16,967 | 123,026 | * | — | — | — | ||||||||||||||||||
| William P. Crawford (4) | 1,330 | 13,618 | * | 10,165,163 | 14.0 | % | 1,302 | |||||||||||||||||
| James P. Hackett (5) | 74,778 | 1,243,660 | 1.7 | % | 81,900 | * | — | |||||||||||||||||
| Nancy W. Hickey (6) | 5,803 | 189,060 | * | — | — | — | ||||||||||||||||||
| Earl D. Holton | 8,934 | 80,707 | * | — | — | 15,345 | ||||||||||||||||||
| Michael J. Jandernoa | 11,252 | — | * | — | — | 424 | ||||||||||||||||||
| David W. Joos | 1,400 | 8,000 | * | — | — | 8,158 | ||||||||||||||||||
| James P. Keane | 23,046 | 240,372 | * | — | — | — | ||||||||||||||||||
| Elizabeth Valk Long (7) | 1,400 | 13,618 | * | — | — | 17,217 | ||||||||||||||||||
| Frank H. Merlotti, Jr. | 38,102 | 200,000 | * | — | — | — | ||||||||||||||||||
| Robert C. Pew III (8) | 9,425 | 25,835 | * | 4,033,969 | 5.5 | % | — | |||||||||||||||||
| Cathy D. Ross | — | — | — | — | — | — | ||||||||||||||||||
| Peter M. Wege II (9) | 87,441 | 25,835 | * | 287,218 | * | 1,302 | ||||||||||||||||||
| P. Craig Welch, Jr. (10) | 20,400 | 25,835 | * | 5,016,765 | 6.9 | % | 23,098 | |||||||||||||||||
| Kate Pew Wolters (11) | 5,089 | 8,000 | * | 4,475,884 | 6.2 | % | 1,213 | |||||||||||||||||
| Directors and executive officers as a group (19 persons) (12) | 325,757 | 2,807,367 | 3.9 | % | 24,060,899 | 33.1 | % | 68,059 | ||||||||||||||||
| * | Less than 1% |
| (1) | If the number of shares each director or executive officer could acquire upon conversion of his or her Class B Common Stock were included as shares of Class A Common Stock beneficially owned, the following directors and executive officers would be deemed to beneficially own the |
27
| number of shares of Class A Common Stock (including stock options) and the percentage of the total shares of Class A Common Stock listed opposite their names: |
| Number of | Percent of | |||||||
| Name | Shares | Class A | ||||||
| William P. Crawford | 10,180,111 | 11.7 | % | |||||
| James P. Hackett | 1,400,338 | 1.8 | % | |||||
| Robert C. Pew III | 4,069,229 | 5.0 | % | |||||
| Peter M. Wege II | 400,494 | * | ||||||
| P. Craig Welch, Jr. | 5,063,000 | 6.2 | % | |||||
| Kate Pew Wolters | 4,488,973 | 5.5 | % | |||||
| Directors and executive officers as a group (19 persons) | 27,194,023 | 26.1 | % | |||||
| * | Less than 1% |
| (2) | This column shows the number of shares of Class A Common Stock that can be acquired as a result of the exercise of stock options within 60 days of April 26, 2006. | |
| (3) | The numbers shown in this column represent shares of Class A Common Stock deemed to be credited as of April 26, 2006 to the respective directors’ accounts under our Non-Employee Director Deferred Compensation Plan. Under the plan, directors have no right to receive actual shares and have no voting or dispositive power over any shares. The deemed investment mirrors the actual return on Steelcase Inc. common stock. SeeDirector Compensationon page 6 for a description of the plan. | |
| (4) | Includes (a) 460 shares of Class A Common Stock and 1,262,632 shares of Class B Common Stock of which Mr. Crawford shares the power to vote and dispose and (b) 7,690,909 shares of Class B Common Stock held by CRASTECOM B Limited Partnership, of which Mr. Crawford is the managing partner. | |
| (5) | Includes 12,405 shares of Class A Common Stock and 81,900 shares of Class B Common Stock of which Mr. Hackett shares the power to vote and dispose. | |
| (6) | Includes 220 shares of Class A Common Stock of which Ms. Hickey shares the power to vote and dispose. | |
| (7) | Includes 1,000 shares of Class A Common Stock of which Ms. Long shares the power to vote and dispose. | |
| (8) | Includes (a) 2,000 shares of Class A Common Stock and 193,685 shares of Class B Common Stock of which Mr. Pew III shares the power to vote and dispose and (b) 2,731,428 shares of Class B Common Stock of which Mr. Pew III shares the power to dispose but has the sole power to vote. | |
| (9) | Includes 87,041 shares of Class A Common Stock and 96,600 shares of Class B Common Stock of which Mr. Wege shares the power to vote and dispose. |
| (10) | Includes 4,066,617 shares of Class B Common Stock of which Mr. Welch shares the power to vote and dispose. |
| (11) | Includes 2,931,428 shares of Class B Common Stock of which Ms. Wolters shares the power to dispose but has the sole power to vote. |
| (12) | Includes all nine of our executive officers, only five of whom are named in the table. The numbers shown include (a) the shares described in notes (4) through (11) above and (b) 400 shares of Class A Common Stock of which one of the executive officers shares the power to vote and dispose. |
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Beneficial Owners of More than Five Percent of Our Common Stock
This table shows the amount of common stock beneficially owned by each other person known by us to beneficially own more than 5% of our Class A Common Stock or our total common stock. The information set forth in this table is based on the most recent Schedule 13D or 13G filing made by such persons with the SEC, except where we know of any changes in beneficial ownership holdings after the date of such filings. Please note the percentages listed in the Percent of Class column for Class B Common Stock add up to more than 100% because (1) as described in the notes to the table, some of the persons listed in the table share the power to vote and dispose of shares of Class B Common Stock with one or more of the other persons listed in the table, and (2) for many persons listed in the table, the number of Shares Beneficially Owned is based on filings by such persons with the SEC as of December 31, 2005 or earlier but the Percent of Class is calculated based on the total number of shares of Class B Common Stock outstanding on April 26, 2006.
| Class A | Class B | |||||||||||||||
| Common Stock (1) | Common Stock | |||||||||||||||
| Shares | Shares | |||||||||||||||
| Beneficially | Percent | Beneficially | Percent | |||||||||||||
| Name | Owned | of Class | Owned | of Class | ||||||||||||
| Fifth Third Bancorp and Fifth Third Bank (2) | 8,482,617 | 11.0 | % | 59,199,110 | 81.3% | |||||||||||
| Ariel Capital Management (3) | 16,809,891 | 21.8 | % | — | — | |||||||||||
| Peter M. Wege (4) | 5,753,269 | 7.5 | % | 8,424,944 | 11.6% | |||||||||||
| Robert C. Pew II (5) | 58,131 | * | 11,337,373 | 15.6% | ||||||||||||
| Mary I. Pew (6) | 296 | * | 11,337,373 | 15.6% | ||||||||||||
| Allen I. Hunting, Jr. (7) | — | — | 8,441,404 | 11.6% | ||||||||||||
| CRASTECOM B Limited Partnership(8) | — | — | 7,690,909 | 10.6% | ||||||||||||
| Cooke & Bieler, L.P. (9) | 3,969,894 | 5.1 | % | — | — | |||||||||||
| * | Less than 1% |
| (1) | If the number of shares each shareholder could acquire upon conversion of its, his or her Class B Common Stock were included as shares of Class A Common Stock beneficially owned, the following holders of Class B Common Stock would be deemed to beneficially own the number of shares of Class A Common Stock (including stock options) and the percentage of the total shares of Class A Common Stock listed opposite their names: |
| Number of | Percent of | |||||||
| Name | Shares | Class A | ||||||
| Fifth Third Bancorp and Fifth Third Bank | 67,681,727 | 49.6 | % | |||||
| Peter M. Wege | 14,178,213 | 16.6 | % | |||||
| Robert C. Pew II | 11,395,504 | 12.9 | % | |||||
| Mary I. Pew | 11,337,669 | 12.8 | % | |||||
| Allen I. Hunting, Jr. | 8,441,404 | 9.9 | % | |||||
| CRASTECOM B Limited Partnership | 7,690,909 | 9.1 | % | |||||
| W. Michael Van Haren | 7,334,286 | 9.0 | % | |||||
| James F. Hunting | 5,538,026 | 6.7 | % | |||||
| James C. Welch | 5,066,665 | 6.2 | % | |||||
| Bonnico Limited Partnership | 4,857,342 | 5.9 | % | |||||
| Anne Hunting | 4,594,457 | 5.6 | % | |||||
| ABJ Investments Limited Partnership | 4,476,491 | 5.6 | % | |||||
| Olive Shores, Inc. | 4,476,491 | 5.5 | % | |||||
| (2) | The addresses of Fifth Third Bancorp and Fifth Third Bank — a Michigan banking corporation (collectively, “Fifth Third”) are Fifth Third Center, Cincinnati, OH 45263 and 111 Lyon Street |
29
| NW, Grand Rapids MI 49503, respectively. Includes (a) 3,627,129 shares of Class A Common Stock and 18,613,778 shares of Class B Common Stock which Fifth Third shares with others the power to vote and (b) 4,440,435 shares of Class A Common Stock and 34,164,737 shares of Class B Common Stock of which Fifth Third shares with others the power to dispose. We believe there is substantial duplication between the shares that Fifth Third beneficially owns and the shares which are beneficially owned by the other persons listed in this table and the previous table, because, among other reasons, Fifth Third serves as aco-trustee of a number of trusts of which our directors and executive officers and other beneficial owners of more than 5% of our common stock serve asco-trustees. | |
| (3) | The address of Ariel Capital Management, Inc. (“Ariel”) is 200 East Randolph Drive, Suite 2900, Chicago, IL 60601. Includes (a) 14,112,366 shares of Class A Common Stock which Ariel has the sole power to vote and (b) 16,807,946 shares of Class A Common Stock of which Ariel has the sole power to dispose. |
| (4) | The address of Mr. Wege is P.O. Box 6388, Grand Rapids, MI 49516. Includes 5,363,348 shares of Class A Common Stock and 5,617,755 shares of Class B Common Stock held by various trusts, of which shares Mr. Wege has no ability to vote or direct the disposition but can prevent the disposition of the shares by the trustees; Mr. Wege disclaims beneficial ownership of these shares. |
| (5) | The address of Mr. Pew II is Steelcase Inc., 901 44th Street SE, Grand Rapids, MI 49508. Includes (a) 17,835 shares of Class A Common Stock that can be acquired as a result of the exercise of stock options within 60 days of April 26, 2006 and (b) 296 shares of Class A Common Stock and 3,516,674 shares of Class B Common Stock of which Mr. Pew II has the sole power to vote but does not have any power to dispose. Of the shares reported as beneficially owned by Mr. Pew II, 296 shares of Class A Common Stock and 11,337,373 shares of Class B Common Stock are deemed to be beneficially owned by Mr. Pew II’s wife; see note 6 below. |
| (6) | The address of Mrs. Pew is Steelcase Inc., 901 44th Street SE, Grand Rapids, MI 49508. Includes 296 shares of Class A Common Stock and 3,516,674 shares of Class B Common Stock of which Mrs. Pew shares the power to dispose but does not have the power to vote. All of the shares reported as beneficially owned by Mrs. Pew are deemed to be beneficially owned by Mrs. Pew’s husband; see note 5 above. |
| (7) | The address of Mr. Hunting is 2820 Pioneer Club Road, Grand Rapids, MI 49506. Includes 7,813,033 shares of Class B Common Stock of which Mr. Hunting shares the power to vote and dispose. |
| (8) | The address of CRASTECOM B Limited Partnership is 7091 Conservation Road, Ada, MI 49301. William P. Crawford is the managing partner of this partnership, and the shares held by this partnership are included in his beneficial ownership in the previous table. |
| (9) | The address of Cooke & Bieler, L.P. (“Cooke”) is 1700 Market Street, Suite 3222, Philadelphia, PA 19103. Includes (a) 1,911,754 shares of Class A Common Stock which Cooke shares with others the right to vote |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers, and those who beneficially own more than 10% of our Class A Common Stock to file reports of initial ownership and changes in their beneficial ownership of shares of Class A Common Stock with the SEC. Based on our review of the reports filed with the SEC, or written representations that no reports were required, we believe that during fiscal year 2006, all Section 16(a) reports were filed on a timely basis, except Peter M. Wege filed a late report regarding four transactions.
| Class A | Class B | |||||||||||||||||||||||||
| Common Stock1 | Common Stock2 | |||||||||||||||||||||||||
| Shares | Shares | |||||||||||||||||||||||||
| Beneficially | Stock | Percent | Beneficially | Percent | Deferred | |||||||||||||||||||||
| Name of Beneficial Owner | Owned | Options3 | of Class | Owned | of Class | Stock4 | ||||||||||||||||||||
William P. Crawford 5 | 146,610 | 60,456 | * | 10,403,510 | 12.3 | 856 | ||||||||||||||||||||
James P. Hackett 6 | 84,589 | 1,243,660 | 2.0 | 81,900 | * | 0 | ||||||||||||||||||||
Nancy W. Hickey 7 | 8,330 | 189,060 | * | 0 | 0 | 0 | ||||||||||||||||||||
| Earl D. Holton | 8,514 | 80,707 | * | 0 | 0 | 14,063 | ||||||||||||||||||||
| Michael J. Jandernoa | 10,832 | 0 | * | 0 | 0 | 414 | ||||||||||||||||||||
| David W. Joos | 1,400 | 8,000 | * | 0 | 0 | 6,386 | ||||||||||||||||||||
James P. Keane8 | 28,110 | 240,372 | * | 0 | 0 | 0 | ||||||||||||||||||||
Elizabeth Valk Long9 | 1,400 | 13,618 | * | 0 | 0 | 13,925 | ||||||||||||||||||||
| Michael I. Love | 8,560 | 153,760 | * | 0 | 0 | 0 | ||||||||||||||||||||
Frank H. Merlotti, Jr.10 | 42,850 | 133,333 | * | 0 | 0 | 0 | ||||||||||||||||||||
Robert C. Pew III11 | 7,906 | 25,835 | * | 1,502,541 | 1.8 | 0 | ||||||||||||||||||||
Peter M. Wege II12 | 240,441 | 25,835 | * | 287,218 | * | 856 | ||||||||||||||||||||
P. Craig Welch, Jr.13 | 55,400 | 25,835 | * | 5,016,765 | 5.9 | 19,731 | ||||||||||||||||||||
Kate Pew Wolters14 | 5,000 | 8,000 | * | 1,778,856 | 2.1 | 856 | ||||||||||||||||||||
| Fifth Third Bancorp15 Fifth Third Center Cincinnati, OH 45263 and Fifth Third Bank 111 Lyon Street, NW Grand Rapids, MI 49503 | 9,345,105 | 0 | 14.6 | 64,104,824 | 75.7 | 0 | ||||||||||||||||||||
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| Class A | Class B | |||||||||||||||||||||||||
| Common Stock1 | Common Stock2 | |||||||||||||||||||||||||
| Shares | Shares | |||||||||||||||||||||||||
| Beneficially | Stock | Percent | Beneficially | Percent | Deferred | |||||||||||||||||||||
| Name of Beneficial Owner | Owned | Options3 | of Class | Owned | of Class | Stock4 | ||||||||||||||||||||
| Robert C. Pew II 16 c/o Steelcase Inc. 901 – 44th Street Grand Rapids, MI 49508 | 40,296 | 17,835 | * | 20,136,818 | 23.8 | 0 | ||||||||||||||||||||
| Peter M. Wege17 P.O. Box 6388 Grand Rapids, MI 49516 | 7,270,269 | 12,217 | 11.3 | 12,864,944 | 15.2 | 0 | ||||||||||||||||||||
| Ariel Capital Management 18 200 East Randolph Drive Suite 2900 Chicago, IL 60601 | 16,380,380 | 0 | 25.5 | 0 | 0 | 0 | ||||||||||||||||||||
| W. Michael Van Haren 19 900 Fifth Third Center 111 Lyon Street, NW Grand Rapids, MI 49503 | 321,270 | 0 | * | 12,618,325 | 14.9 | 0 | ||||||||||||||||||||
| Mary I. Pew 20 c/o Steelcase Inc. 901 – 44th Street Grand Rapids, MI 49508 | 40,296 | 0 | * | 11,342,534 | 13.4 | 0 | ||||||||||||||||||||
| Allen I. Hunting, Jr. 21 2820 Pioneer Club Road Grand Rapids, MI 49506 | 0 | 0 | 0 | 8,441,404 | 10.0 | 0 | ||||||||||||||||||||
| CRASTECOM B Limited Partnership 22 7091 Conservation Road Ada, MI 49301 | 0 | 0 | 0 | 7,690,909 | 9.1 | 0 | ||||||||||||||||||||
| Cooke & Bieler, L.P. 23 1700 Market Street Suite 3222 Philadelphia, PA 19103 | 3,865,667 | 0 | 6.0 | 0 | 0 | 0 | ||||||||||||||||||||
| Directors and Executive Officers as a group (18 persons) 24 | 689,679 | 2,787,538 | 5.2 | 19,070,790 | 22.5 | 57,087 | ||||||||||||||||||||
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| Number | Percent | |||||||
| of | of | |||||||
| Name of Beneficial Owner | Shares | Class A | ||||||
| Fifth Third Bancorp and Fifth Third Bank | 73,449,929 | 57.3 | ||||||
| Directors and Executive Officers as a group (18 persons) | 22,548,007 | 26.2 | ||||||
| Peter M. Wege | 20,147,430 | 26.1 | ||||||
| Robert C. Pew II | 20,194,949 | 23.9 | ||||||
| W. Michael Van Haren | 12,939,595 | 16.8 | ||||||
| Mary I. Pew | 11,382,830 | 15.1 | ||||||
| William P. Crawford | 10,610,576 | 14.2 | ||||||
| Allen I. Hunting, Jr. | 8,441,404 | 11.6 | ||||||
| CRASTECOM B Limited Partnership | 7,690,909 | 10.7 | ||||||
| James F. Hunting | 5,538,026 | 8.0 | ||||||
| Bonnico Limited Partnership | 5,167,342 | 7.5 | ||||||
| James C. Welch | 5,138,066 | 7.5 | ||||||
| P. Craig Welch, Jr. | 5,098,000 | 7.4 | ||||||
| Anne Hunting | 4,594,457 | 6.7 | ||||||
| ABJ Investments Limited Partnership | 4,476,491 | 6.5 | ||||||
| Olive Shores, Inc. | 4,476,491 | 6.5 | ||||||
| Mary W. Corl | 3,849,142 | 5.7 | ||||||
| William W. Idema | 3,789,236 | 5.6 | ||||||
| Corl Family Limited Partnership | 3,507,142 | 5.2 | ||||||
| Kate Pew Wolters | 1,791,856 | 2.7 | ||||||
| Robert C. Pew III | 1,536,282 | 2.3 | ||||||
| James P. Hackett | 1,410,149 | 2.2 | ||||||
| Peter M. Wege II | 553,494 | * | ||||||
32
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS During fiscal year 2006, we paid Fifth Third Bancorp and its subsidiaries (“Fifth Third”) an aggregate of approximately $907,000 in fees for various services rendered to us, including cash management services, trustee and investment management services under our Retirement Plan, credit commitments under our global bank facility and other credit services. During fiscal year 2006, we received approximately $11,830,000 in revenues from sales of products and related services to Fifth Third. Fifth Third also received fees of approximately $203,000 during fiscal year 2006 for investment services rendered to the Steelcase Foundation. Fifth Third is a holder of record, through various trusts and accounts, of more than 5% of our Class A Common Stock. We employ Jennifer C. Niemann, daughter of William P. Crawford, as a vice president, a non-executive officer position. Mr. Crawford is a director and the beneficial owner of more than 5% of our Class A Common Stock. In fiscal year 2006, Ms. Niemann earned approximately $156,000 in salary and $58,000 in annual bonus, and she also participated in other plans and received benefits available to our other North American employees in comparable positions. 31 | ||
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STOCK PERFORMANCE GRAPH
The following line graph compares cumulative total shareholder return in Steelcase Inc.of our Class A Common Stock to the Standard & Poor’s 500 Stock Index (“S&P 500”)1 and to a peer group2.group. It is assumed that the valuevalues of the investmentinvestments in Steelcase,Class A Common Stock, the S&P 500 and the peer group was 100were $100.00 on February 25, 200023, 2001 and that all dividends were reinvested.
| 02/25/00 | 02/23/01 | 02/22/02 | 02/28/03 | 02/27/04 | 02/25/05 | |||||||||||||||||||
| Steelcase Inc. Class A Common Stock | $ | 100.00 | $ | 143.92 | $ | 148.67 | $ | 96.20 | $ | 150.39 | $ | 153.60 | ||||||||||||
| Standard & Poor’s 500 Stock Index | $ | 100.00 | $ | 94.51 | $ | 83.80 | $ | 65.83 | $ | 91.19 | $ | 98.17 | ||||||||||||
| Peer Group Index | $ | 100.00 | $ | 123.88 | $ | 124.13 | $ | 113.09 | $ | 166.91 | $ | 177.68 | ||||||||||||
| 2/23/01 | 2/22/02 | 2/28/03 | 2/27/04 | 2/25/05 | 2/24/06 | |||||||||||||||||||||
| Steelcase Inc. Class A Common Stock | $ | 100.00 | $ | 103.34 | $ | 66.87 | $ | 104.46 | $ | 106.70 | $ | 133.73 | ||||||||||||||
| Standard & Poor’s 500 Stock Index(1) | 100.00 | 88.67 | 69.65 | 96.48 | 103.87 | 112.62 | ||||||||||||||||||||
| Peer Group Index(2) | 100.00 | 101.09 | 91.39 | 133.62 | 139.76 | 167.73 | ||||||||||||||||||||
| The S&P 500 is used as a performance indicator of the overall stock market. | ||
| The peer group consists of three companies that manufacture office furniture and have industry characteristics that we believe are similar to Steelcase’s. The peer group consists of Herman Miller, Inc., HNI Corporation |
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SUPPLEMENTAL INFORMATION
Michigan law and our amended bylawsby-laws require a quorum for the Meeting, which means that holders of a majority of the voting power entitled to vote must be present in person or represented by proxy in order to transact business at the meeting.Meeting. Withheld votes and abstentions are counted in determining whether a quorum has been reached.
Assuming a quorum has been reached, we must determine the results of the vote on each matter submitted for shareholders’ approval. In order to be elected, the director nominees must receive a plurality of the votes cast at the Meeting for the election of directors.
36
Under NYSE rules, brokers who hold shares on behalf of their customers (shares held in street name) can vote on certain items when they do not receive instructions from their customers. However, brokers are not authorized to vote on “non-routine” matters if they do not receive instructions from their customers. The election of directors is a “routine” matter under NYSE rules. Therefore, brokers holding shares in street name for their customers can vote as they wish on behalf of any customer who does not give his or her broker instructions on how to vote in the election of directors.
Solicitation of Proxies
Independent Auditor
BDO Seidman, LLP serves as our independent auditor. BDO Seidman representatives will attend the Meeting, have an opportunity to make a statement if they desire to do so, and respond to appropriate questions.
| By Order of the Board of Directors, | |
|
| Jon D. Botsford | |
| Senior Vice President, Secretary | |
| and Chief Legal Officer |
Grand Rapids, Michigan
May 20, 200518, 2006
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  | Please consider the issues discussed in the Proxy Statement and exercise your right to vote by one of the following methods: | |||
| 901 44th Street SE | ||||
| GRAND RAPIDS, MI 49508 |   | Access the Internet voting site: www.proxyvote.com. | ||
  | Call 1-800-690-6903 toll free 24 hours a day, seven days a week. | |||
| The deadline for voting by the Internet or telephone is 11:59 p.m. EDT on June | ||||
  | Complete, sign and date the proxy below and return it in the enclosed postage-paid envelope. Proxy cards received and processed before 11:00 a.m. EDT on June | |||
| �� | ||||
| If you vote by Internet or telephone, | ||||
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | STEEL 1 | KEEP THIS PORTION FOR YOUR RECORDS |
| DETACH AND RETURN THIS PORTION ONLY | ||
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | ||
The Steelcase Inc. Board of Directors recommends a vote FOR the following proposal. | ||||||||
| If you sign and return this card with no specific voting instructions, the shares will be voted FOR all of the following nominees for Director: | For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s number on the line below. | ||||
| o | o | o | ||||||
1. Election of four Director (terms expiring in Nominees: | ||||||||
| 1) | ||||||||
| 2) | ||||||||
| 3) | ||||||||
| 4) | ||||||||
To update your address,please check the box to the right and mark changes on this card or go to | o | |||||||
| Please sign exactly as your name appears on this proxy form. If shares are held jointly, all owners should sign. If signing for a corporation or partnership, or a trustee, guardian, attorney, agent, executor or administrator, etc., please give your full title. |
| Signature (PLEASE SIGN WITHIN BOX) | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||
  Annual Meeting of Shareholders June 11:00 a.m. EDT Steelcase Inc. Town Hall Grand Rapids, Michigan 49508 |   |
DETACH HERE
Steelcase Inc.
901 44th44th Street SE
Grand Rapids, Michigan 49508
Grand Rapids, Michigan 49508
Proxy solicited by the Board of Directors
for the Annual Meeting of Shareholders
for the Annual Meeting of Shareholders
The undersigned appoints Robert C. Pew III and James P. Hackett, individually and with full power of substitution and resubstitution, as such shareholder’s proxy to vote all the outstanding shares of Class A Common Stock and/or Class B Common Stock of Steelcase Inc. held by the undersigned at the Annual Meeting of Shareholders to be held on June 23, 200522, 2006 or any adjournment thereof (the “Annual Meeting”).
If shares of Steelcase Inc. Common Stock are issued to, or held for the account of, the undersigned under the Steelcase Inc. Retirement Plan (the “Plan”), then the undersigned directs Fifth Third Bank, as Trustee of the Plan, to vote all shares of Steelcase Inc. Common Stock in the undersigned’s name and/or account under the Plan in accordance with the instructions given in this proxy, and on any other matter properly coming before the Annual Meeting, in the discretion of the proxy. If this card is not returned or is returned unsigned, shares will be voted at the discretion of the Trustee.
This proxy, when properly executed, will be voted in the manner directed by the undersigned shareholder(s) on the proposal(s)proposal identified on the reverse side hereof, and on any other matter properly coming before the meeting,Annual Meeting, in the discretion of the proxy.proxy. If no contrary direction is made, the shares will be voted FOR election of all nominees for Director named on this proxy as Directors.proxy.