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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material |
Knoll, 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): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
(2) | Aggregate number of securities to which transaction applies: | |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
(4) | Proposed maximum aggregate value of transaction: | |||
(5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: |
1235 Water StreetEast Greenville, PA 18041Tel 215 679-7991Fax 215 679-1013
March 23, 2016
Dear Stockholder:
We cordially invite you to attend our 2016 Annual Meeting of Stockholders to be held at 9:00 a.m. (local time) on Wednesday, May 4, 2016 at our offices located at 1330 Avenue of the Americas, 2nd Floor, New York, New York 10019. The attached notice of Annual Meeting and proxy statement describe the business we will conduct at the meeting and provide information about Knoll, Inc. that you should consider when you vote your shares.
When you have finished reading the proxy statement, please promptly vote your shares via the Internet, via the telephone or by marking, signing, dating and returning a proxy card. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend.
Thank you for your cooperation.
Sincerely,
Andrew B. CoganChief Executive Officer
1235 Water StreetEast Greenville, PA 18041Tel 215 679-7991Fax 215 679-1013Notice of Annual Meeting of Stockholders
KNOLL, INC.NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS When
To the Stockholders of Knoll, Inc.:May 8, 2018TIME: 9:00 a.m. (local time)DATE: Wednesday, May 4, 2016Eastern Time
Knoll, Inc.,
1330 Avenue of the Americas, 2nd Floor, floor
New York, New York 10019
YouStockholders of record as of the close of business on March 15, 2018, are entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof if you were the record owner of Knoll, Inc. common stock at the close of business on March 15, 2016.Meeting. A list of stockholders of record will be available at the meeting and during regular business hours for the 10 days prior to the meeting at our offices at 1330 Avenue of the Americas, 2nd Floor, New York, New York 10019. A stockholder may examine the list for any legally valid purpose related to the meeting.
BY ORDER OF THE BOARD OF DIRECTORSBy Order of the Board of Directors,
Michael A. Pollner
Senior Vice President, Chief Administrative Officer, General Counsel and& Corporate Secretary
March 23, 201629, 2018
Important Notice Regarding the Availability of Proxy Materials for
the
Stockholders Meeting to Be Held on May 4, 20168 2018:
The proxy statement and annual report to stockholders are available at www.edocumentview.com/KNL
Proxy Statement Summary
The Board of Directors ("Board") of Knoll, Inc. (the "Company," "we," "us," "our" or "Knoll") is furnishing this proxy statement and soliciting proxies in connection with the proposals to be voted on at the Knoll, Inc. 2018 Annual Meeting of Stockholders ("Annual Meeting") and any postponements or adjournments thereof. This summary highlights certain information contained in this proxy statement, but does not contain all of the information you should consider when voting your shares. Please read the entire proxy statement carefully before voting.
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| 2018 Annual Meeting Information | | | |||
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Date | May 8, 2018 | |||||
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Time | 9:00 a.m. (Eastern Time) | |||||
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Location | Knoll, Inc. 1330 Avenue of the Americas, 2nd floor New York, New York 10019 | |||||
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Record Date | March 15, 2018 | |||||
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Stock Symbol | KNL | |||||
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Stock Exchange | New York Stock Exchange ("NYSE") | |||||
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Corporate Website | www.knoll.com | |||||
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Voting Matters And Vote Recommendation
PROPOSAL | BOARD RECOMMENDATION | REASONS FOR RECOMMENDATION | MORE INFORMATION | |||||
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1. | Election of 3 director nominees named in our proxy statement to our Board of Directors for three-year terms | FOR | The Board and the Nominating and Corporate Governance Committee believe our nominees possess the skills, experience and qualifications to effectively monitor performance, provide oversight and support management's execution of the Company's long-term strategy. | Page 10 | ||||
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2. | Approval of the Knoll, Inc. 2018 Stock Incentive Plan | FOR | We believe that equity incentives are critical in attracting and retaining talented employees. | Page 24 | ||||
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3. | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2018 | FOR | Based on its assessment, the Audit Committee believes that the re-appointment of Ernst & Young LLP is in the best interests of Knoll and our stockholders. | Page 34 | ||||
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4. | "Say on Pay" advisory vote on 2017 executive compensation | FOR | Our executive compensation program incorporates several compensation governance best practices and reflects our commitment to paying for performance. | Page 35 | ||||
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For over 80 years, Knoll has stood for modern design. Our focus is on design leadership, quality and innovation in both the contract and residential markets. Four strategic imperatives drive our growth:
Knoll is
Modern Always
because modern
always works.
Our strategy and compensation systems have generated significant growth in our sales, margins and profits; however, 2017 represented a pause in our overall improvement:
Note: Adjusted EBITDA and Percentage, and Adjusted EPS are non-GAAP financial measures. For a reconciliation of Net Earnings to Adjusted EBITDA and Percentage and Adjusted EPS to GAAP EPS, see page 74.
We encourage you to review our Annual Report to Shareholders accompanying this proxy statement for more complete financial information.
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| PROPOSAL1 | | ELECTION OF DIRECTORS | |||||
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Our board of directors currently consists of eleven members, classified into three classes. In Proposal 1, stockholders are asked to vote "FOR" the following Class II directors, who have terms that expire at the 2018 Annual Meeting.
Board Committee Assignments | ||||||||||||||||||||
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Name | Director Since | Independent | Audit | Compensation | Nominating and Corporate Governance | |||||||||||||||
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Stephanie Stahl | 2013 | Yes | ✓ | |||||||||||||||||
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Christopher G. Kennedy | 2014 | Yes | ✓ | |||||||||||||||||
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Daniel W. Dienst | 2017 | Yes | ||||||||||||||||||
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Committee membership is as of the date of this proxy statement. Current committee assignments are indicated by a (✓), and committee chairs are indicated by "Chair." Please see pages 10 through 16 for more information regarding our director nominees. Burton B. Staniar and Sidney Lapidus, current Class II directors, will not serve beyond the 2018 Annual Meeting.
Name | Age | Director Since | Independent? | Term Expires | Audit | Compensation | Nominating | |||||||
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Kathleen G. Bradley | 68 | 1999 | Yes | 2019 | ||||||||||
Andrew B. Cogan (CEO and Chairman-Elect) | 55 | 1996 | No | 2020 | ||||||||||
Daniel W. Dienst | 52 | 2017 | Yes | 2018 | ||||||||||
Stephen F. Fisher | 65 | 2005 | Yes | 2020 | Chair | |||||||||
Jeffrey A. Harris (Lead Director) | 62 | 1996 | Yes | 2019 | Chair | |||||||||
Christopher G. Kennedy | 54 | 2014 | Yes | 2018 | ||||||||||
Sidney Lapidus | 80 | 1996 | Yes | 2018 | ||||||||||
John F. Maypole | 78 | 2004 | Yes | 2019 | Chair | |||||||||
Sarah E. Nash | 64 | 2006 | Yes | 2020 | ||||||||||
Stephanie Stahl | 51 | 2013 | Yes | 2018 | ||||||||||
Burton B. Staniar (Chairman) | 76 | 1993 | No | 2018 |
Diversity is one of the factors considered by our nominating and corporate governance committee in the director nomination process. Among the factors considered when we evaluate the skills, experiences and perspectives of our directors are the following: (i) financial and accounting acumen; (ii) educational background; (iii) knowledge of our industry and related industries; (iv) personal and professional integrity; (v) business or management experience; (vi) crisis management experience; (vii) leadership and strategic planning experience; and (viii) brand development and consumer marketing. We also consider diversity with respect to race and gender in evaluating whether the board as a whole has the right mix of perspectives to properly serve the company and its stockholders.
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Size of the Board of Directors | 11** | |||
Number of Independent Directors | 9 | |||
Audit, Compensation and Governance Committees Consist Entirely of Independent Directors | Yes | |||
Lead Independent Director of the Board | Yes | |||
Majority Voting Resignation Policy in Uncontested Director Elections | Yes | |||
Annual Advisory Approval of Named Executive Officer Compensation | Yes | |||
All Directors Attended at Least 75% of Meetings Held | Yes | |||
Annual Board and Committee Self-Evaluations | Yes | |||
Code of Ethics | Yes | |||
Stock Ownership Guidelines for Executive Officers and Directors | Yes | |||
Clawback Policy | Yes | |||
Stockholder Rights Plan (Poison Pill) | No | |||
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| PROPOSAL 2 | | Approval of the Knoll, Inc. 2018 Stock Incentive Plan | |||||
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On February 6, 2018, our board of directors approved for submission to a vote of the stockholders the Knoll, Inc. 2018 Stock Incentive Plan (the "2018 Plan") and submits the 2018 Plan to our stockholders for approval. We believe that equity incentives are critical in attracting and retaining talented employees in our industry. The approval of the Knoll, Inc. 2018 Stock Incentive Plan will allow us to continue to provide such incentives.
The 2018 Plan includes the following key features:
See page 24 for more details regarding the Plan. A copy of the 2018 Plan is set forth in Exhibit B to this proxy statement and is incorporated herein by reference.
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| PROPOSAL 3 | | RATIFICATION OF APPOINTMENT OF AUDITORS | |||||
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Ernst & Young LLP, independent registered public accounting firm, served as our auditors for fiscal 2017. Our Audit Committee has selected Ernst & Young LLP to audit our financial statements for fiscal 2018. Although it is not required to do so, the board is submitting the Audit Committee's selection of our independent registered public accounting firm for ratification by the stockholders at the annual meeting in order to ascertain the view of our stockholders regarding such selection. Below is summary information about Ernst & Young's fees for services during fiscal years 2017 and 2016:
| 2017 | 2016 | |||||
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Audit Fees: | $ | 1,990,588 | $ | 1,742,357 | |||
Audit-Related Fees: | | 0 | | 80,805 | |||
Tax Fees: | | 0 | | 0 | |||
All Other Fees: | | 1,995 | | 2,000 | |||
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Total | $ | 1,992,583 | $ | 1,825,162 | |||
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| PROPOSAL 4 | | ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | |||||
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Our Executive Compensation Program
We provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the rules of the Securities and Exchange Commission ("SEC"). The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote relates to the overall compensation of our named executive officers, as well as the philosophy, policies and practices, all as described in this proxy statement in accordance with the SEC's rules. The vote is advisory, and therefore it is not binding on the company, the compensation committee or our board of directors. We recommend that our stockholders vote "FOR" approval of our executive compensation as described in this proxy statement.
Our executive compensation programs are generally designed to:
We believe that motivating and rewarding exceptional performance is the overriding principle of our executive compensation programs.
WE DO: | WE DO NOT: | |||||
✓ | Provide a significant portion of our named executive officers' total compensation in the form of awards tied to our long-term strategy and our performance. | ✘ | Have employment agreements or change of control agreements with our named executive officers other than Mr. Cogan, and that agreement has an annual term. | |||
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✓ | Require compliance with our Stock Ownership Guidelines, which require that our executive officers own a specified value of shares of the Company's common stock. | ✘ | Provide tax gross-ups for our named executive officers. | |||
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✓ | Have a Compensation Committee comprised entirely of independent directors who use an independent consultant retained by the Compensation Committee. | ✘ | Time the grants of equity awards to coordinate with the release of material non-public information, or time the release of material non-public information for the purpose of affecting the value of any named executive officer compensation. | |||
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✓ | Have ongoing consideration and oversight by the Compensation Committee with respect to any potential risks associated with our incentive compensation programs. | ✘ | Provide material executive perquisites such as corporate aircraft, executive life insurance, tax or estate planning services. | |||
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✓ | Operate a Clawback Policy for Section 16 Officers which permits the Company to recover excess incentive compensation in the event of a restatement. | ✘ | Provide supplemental retirement benefits to our executive officers | |||
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✓ | Prohibit our associates through our Insider Trading Policy from engaging in hedging transaction in our stock | ✘ | Operate deferred compensation plans for our executive officers. | |||
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✓ | Utilize "double trigger" change-in-control provisions in our equity award agreements for awards made after August 2016, | ✘ | Operate a stockholder rights plan (Poison Pill). |
The following sets forth the primary objectives addressed by each component of our executive compensation programs:
For more information regarding our compensation, please see our Compensation Discussion and Analysis on page 39.
In response to our dialogue with stockholders during the past several years, we have incorporated a number of practices into our compensation programs:
See page 39 for more details regarding our executive compensation.
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PROPOSAL | ||
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Director Resignation Policy | ||
Code of Ethics | ||
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Board Leadership Structure | ||
Oversight of Risk Management by our Board of Directors | ||
Board Diversity | ||
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Compensation Committee Interlocks and Insider Participation | ||
Communications with Directors | ||
Compensation of Directors | ||
Director Compensation Table — 2017 | 22 | |
PROPOSAL 2 — APPROVAL OF THE KNOLL, INC. 2018 STOCK INCENTIVE PLAN | 24 | |
REPORT OF AUDIT COMMITTEE | 33 | |
PROPOSAL 3 — INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 34 | |
PROPOSAL 4 — ADVISORY VOTE ON EXECUTIVE COMPENSATION | 35 | |
EXECUTIVE OFFICERS | ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 37 | |
EXECUTIVE COMPENSATION | ||
COMPENSATION DISCUSSION AND ANALYSIS ("CD&A") | 39 | |
How Did We Perform? | 40 | |
What Are Our Compensation Practices? | 42 | |
How Are Compensation Decisions Made? | 43 | |
How Do We Compensate Our CEO and other NEOs? | 45 | |
Tax Implications of Executive Compensation | 48 | |
2017 Compensation — Analysis | 49 | |
How Do We Manage Risks Related to Our Compensation Program? | 53 | |
Risk Assessment — Incentive Compensation Programs | 53 | |
Executive Stock Ownership Policy | 53 | |
Compensation | ||
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Grants of | ||
Narrative Disclosure For Summary Compensation Table and Grants of Plan-Based Awards Table | ||
Outstanding Equity Awards at Fiscal Year-End | ||
Option Exercises and Stock Vested | ||
Pension Benefits | ||
2017 Pension Benefits | 62 | |
Potential Payments Upon Termination or | ||
Severance Under Employment | ||
Severance Pay Plan | ||
Change-in-Control Provisions | ||
Potential Post-Retirement Payments to Named Executive Officers As of December 31, | ||
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TRANSACTIONS WITH RELATED PERSONS | ||
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | ||
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KNOLL, INC.1235 WATER STREETEAST GREENVILLE, PENNSYLVANIA 18041215-679-7991
PROXY STATEMENT FOR THE KNOLL, INC.2016 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
Why Did You Send Me this Proxy Statement?
We have elected to furnish our proxy statement and annual report to certain of our stockholders over the Internet pursuant to United States Securities and Exchange Commission (SEC) rules, which allows us to reduce costs associated with the 2016 annual meeting of stockholders. On or about March 23, 2016, we will mail to certain of our stockholders a notice of Internet availability of proxy materials containing instructions regarding how to access our proxy statement and annual report online (the eProxy Notice). The eProxy Notice contains instructions regarding how you can elect to receive printed copies of the proxy statement and annual report. All other stockholders will receive printed copies of the proxy statement and annual report, which will also be mailed to such stockholders on or about March 23, 2016.
We sent you this proxy statement because our board of directors is soliciting your proxy to vote at our 2016 Annual Meeting of Stockholders and any adjournments of the meeting. This proxy statement summarizes the information you need to know to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares via the Internet or by marking, signing, dating and returning a proxy card. If you hold your shares through a broker you may also be able to vote your shares through such broker either via the Internet or by telephone. Please contact your broker directly for details regarding these voting options.
Only stockholders who owned our common stock at the close of business on March 15, 2016, the record date, are entitled to vote at the Annual Meeting. On the record date, there were 49,034,818 shares of our common stock outstanding, including 47,963,533 shares of stock entitled to vote and 1,071,285 shares of restricted stock that are not entitled to vote. Our common stock is our only class of voting stock. We are also sending along with this proxy statement our 2015 annual report, which includes our financial statements for the fiscal year ended December 31, 2015.
You will be voting on:
Each share of our common stock that you own entitles you to one vote.
Why Did I Receive an eProxy Notice of Internet Availability of Proxy Materials?
The SEC permits us to electronically distribute proxy materials to stockholders. We have elected to provide access to our proxy materials and annual report to certain of our stockholders on the Internet instead of mailing the full set of printed proxy materials. On or about March 23, 2016, we will mail to
certain of our stockholders an eProxy Notice containing instructions regarding how to access our proxy statement and annual report and how to vote online. If you received an eProxy Notice by mail, you will not receive printed copies of the proxy materials and annual report in the mail unless you request them. Instead, the eProxy Notice instructs you how to access and review all of the important information contained in the proxy statement and annual report. The eProxy Notice also instructs you how you may submit your proxy over the Internet. If you received an eProxy Notice by mail and would like to receive a printed copy of our proxy materials and annual report, you should follow the instructions for requesting such materials included in the eProxy Notice.
You may vote via the Internet by going to the website www.envisionreports.com/KNL and following the instructions outlined on the website or via the telephone by calling 1-800-652-VOTE and following the recorded instructions. If you request paper copies of the proxy materials, you can also vote by signing and mailing your proxy card. If you properly fill in your proxy card and send it to us in time, your "proxy" (one of the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxyholder will vote your shares as recommended by our board of directors. Proxy cards must be received prior to the time of the vote in order for the shares represented by the proxy card to be voted. If you hold your shares through a broker or financial institution, you should contact your broker or financial institution to determine how you may vote your shares.
If you hold your shares through a broker, it is important that you cast your vote if you want it to count in the election of directors (Proposal 1) and the advisory vote on executive compensation (Proposal 3). Your broker is not permitted to vote your uninstructed shares in the election of directors or executive compensation matters on a discretionary basis. Thus, if you hold your shares through a broker and you do not instruct your broker how to vote for Proposal 1 (the election of directors) or Proposal 3 (the advisory vote on executive compensation), no votes will be cast on your behalf with respect to those matters. Your broker may vote your uninstructed shares on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm on a discretionary basis.
If you attend the Annual Meeting, you may also submit your vote in person, and any previous votes that you submitted will be superseded by the vote that you cast at the Annual Meeting.
If you plan to attend the Annual Meeting and vote in person, we will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank or other nominee, you must bring an account statement or letter from the nominee indicating that you were the beneficial owner of the shares on March 15, 2016, the record date for voting. The Annual Meeting will be held at 9:00 a.m. (local time) on Wednesday, May 4, 2016 at our offices at 1330 Avenue of the Americas, 2nd Floor, New York, New York 10019. When you arrive at the venue, signs will direct you to the appropriate meeting rooms. You need not attend the Annual Meeting in order to vote.
If you give us your proxy, you may revoke it at any time before it is voted at the meeting. You may revoke your proxy in any one of the following ways:
How Does our Board of Directors Recommend That I Vote on the Proposals?
Our board of directors recommends that you vote as follows:
If any other matter is presented, your proxyholder will vote your shares in accordance with his or her best judgment. At the time this proxy statement was printed, we knew of no matters that needed to be acted on at the Annual Meeting, other than those discussed in this proxy statement.
What Constitutes a Quorum for the Meeting?
The presence, in person or by proxy, of the holders of a majority of the shares of our common stock outstanding and entitled to vote is necessary to constitute a quorum at the meeting. Votes of stockholders of record who are present at the meeting, in person or by proxy, abstentions and broker non-votes are counted for purposes of determining whether a quorum exists.
What Vote is Required to Approve Each Proposal?
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What is the Effect of Broker Non-Votes and Abstentions?
as a routine matter. The election of directors (Proposal 1) and the advisory vote to approve executive compensation (Proposal 3) are not considered routine matters and, consequently, without your voting instructions, your brokerage firm cannot vote your shares. Broker non-votes will not count as votes against any matter at the annual meeting.
What Are the Costs of Soliciting these Proxies?
We will pay all of the costs of soliciting these proxies. Solicitation of proxies will be made principally through the mails, but our officers and employees may also solicit proxies in person or by telephone, fax or email. We will pay these employees and officers no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to the beneficial owners of the common stock and to obtain authority to execute proxies. Upon request, we will then reimburse them for their reasonable expenses.
Votes cast by proxy or in person will be counted by the persons appointed by us to act as election inspectors for the meeting.
Where Do I Find the Voting Results of the Meeting?
We will announce the preliminary voting results at the meeting and provide the final results in a Current Report on Form 8-K filed with the SEC within four business days following the meeting.
Householding of Annual Disclosure Documents
To reduce the expenses of delivering duplicate materials to our stockholders, we are relying on a rule of the Securities and Exchange Commission (the "SEC") that allows us or your broker to send a single set of our annual report and proxy statement to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as "householding," benefits both you and us. The rule applies to our annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be "householded," the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Each stockholder will continue to receive a separate proxy card or voting instruction card.
If your household received a single set of our annual disclosure documents this year, but you would prefer to receive your own copy, please contact us by writing to Knoll, Inc., c/o Corporate Secretary, 1235 Water Street, East Greenville, Pennsylvania 18041, or calling our Investor Relations department at 215-679-7991 and we will promptly send you a copy of our annual disclosure documents.
If you do not wish to participate in "householding" and would like to receive your own set of our annual disclosure documents in future years, follow the instructions described below. Conversely, if you share an address with another of our stockholders and together both of you would like to receive only a single set of our annual disclosure documents, follow these instructions:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of February 29, 2016, for (a) the executive officers named in the Summary Compensation Table on page 31 of this proxy statement, (b) each of our directors and director nominees, (c) all of our directors and executive officers as a group, and (d) each stockholder known by us to own beneficially more than 5% of our outstanding common stock. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, subject to community property laws, based on information provided to us by these stockholders. Percentage of ownership is based on 49,116,313 shares of common stock outstanding on February 29, 2016, including 48,045,028 shares of stock entitled to vote and 1,071,285 shares of restricted stock that are not entitled to vote.
| Common Stock Beneficially Owned | ||||||
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Name of Beneficial Owner | Number | Percent(1) | |||||
Stockholders owning approximately 5% or more: | |||||||
BlackRock, Inc.(2) | 3,626,845 | 7.4 | |||||
The Vanguard Group, Inc.(3) | 3,335,352 | 6.8 | |||||
FMR LLC(4) | 3,074,444 | 6.3 | |||||
Silvercrest Asset Management Group, LLC(5) | 2,849,453 | 5.8 | |||||
Columbia Wanger Asset Management, LLC(6) | 2,833,410 | 5.8 | |||||
T. Rowe Price Associates, Inc.(7) | 2,688,580 | 5.5 | |||||
Directors and Executive Officers: | |||||||
Burton B. Staniar(8) | 139,685 | * | |||||
Andrew B. Cogan(9) | 278,669 | * | |||||
Craig B. Spray(10) | 23,248 | * | |||||
Joseph T. Coppola(11) | * | * | |||||
Benjamin A. Pardo(12) | 13,625 | * | |||||
Pamela J. Ahrens(13) | 4,233 | * | |||||
Jeffrey A. Harris(14)(15) | 81,427 | * | |||||
Sidney Lapidus(14)(16) | 180,017 | * | |||||
Kathleen G. Bradley(14) | 113,447 | * | |||||
John F. Maypole(14) | 29,349 | * | |||||
Stephen F. Fisher(14) | 40,605 | * | |||||
Sarah E. Nash(14)(16) | 50,796 | * | |||||
Stephanie Stahl(14) | 3,565 | * | |||||
Christopher G. Kennedy(17) | 8,604 | * | |||||
All directors and executive officers as a group (18 persons)(18) | 1,069,696 | 2.2 |
Management Group, LLC, Columbia Wanger Asset Management, L.P., and T. Rowe Price Associates, Inc., is based on the latest Schedule 13G report or amendment thereto that each has filed as of the date of this proxy statement.
PROPOSAL 1—1: ELECTION OF DIRECTORS
Our board of directors currently consists of teneleven members, classified into three classes as follows: Andrew B. Cogan, Stephen F. Fisher and Sarah E. Nash constitute a class with a term that expires at the 20172020 Annual Meeting (the "Class I directors"); Burton B. Staniar, Sidney Lapidus, Stephanie Stahl, and Christopher G. Kennedy and Daniel W. Dienst constitute a class with a term that expires at the 2018 Annual Meeting (the "Class II directors"); and Kathleen G. Bradley, Jeffrey A. Harris and John F. Maypole constitute a class with a term that expires at the 20162019 Annual Meeting (the "Class III directors"). At each Annual Meeting of Stockholders, directors are elected for a term ending at the third Annual Meeting of Stockholders after such election or until their respective successors are elected and qualified.
On February 9, 2016,6, 2018, our nominating and corporate governance committee recommended Messrs. HarrisStephanie Stahl, Christopher G. Kennedy and Maypole and Ms. BradleyDaniel W. Dienst for reelectionre-election after due consideration of their qualifications and past experience on our board of directors. Messrs. Staniar and Lapidus have not been asked to continue their service beyond the conclusion of their terms and the size of the board will be reduced to nine members. On February 9, 2016,6, 2018, based, in part, on the recommendation of our nominating and corporate governance committee, our board of directors voted to nominate Messrs. HarrisStephanie Stahl, Christopher G. Kennedy, and Maypole and Ms. BradleyDaniel W. Dienst for reelection at the 20162018 Annual Meeting of Stockholders to serve for a term ending at the 20192021 Annual Meeting of Stockholders.Stockholders or until their respective successors are elected and qualified.
Unless authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be votedFOR the election of the director nominees. However, if you hold your shares through a broker and do not instruct your broker how to vote in the election of directors, no vote will be cast on your behalf with respect to Proposal 1. In the event that a nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the board of directors may recommend in his or her place. We have no reason to believe that any nominee will be unable or unwilling to serve as a director. However, if you hold your shares through a broker and do not instruct your broker how to vote in the election of directors, no vote will be cast on your behalf with respect to Proposal 1.
The election of directors will be determined by a plurality vote and the three nominees receiving the most votes will be elected, subject to our majority vote director resignation policy which is discussed in more detail below.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF JEFFREY A. HARRIS, JOHN F. MAYPOLESTEPHANIE STAHL, CHRISTOPHER G. KENNEDY AND KATHLEEN G. BRADLEYDANIEL W. DIENST AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES |
Our Board of Directors
Set forth below are the names of the persons nominated as directors and directors whose terms do not expire this year, their ages as of February 29, 2016,28, 2018, their offices within the company, if any, their principal occupations or employment for the past five years, the length of their tenure as directors, the names of other public companies in which such persons hold directorships or held directorships within
the past five years, and the particular experience, qualifications, attributes or skills that led the boardBoard to determine that the individual should serve as a director.
NAME | AGE | POSITION | TERM EXPIRATION | |||
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Kathleen G. Bradley | 68 | Director | 2019 Annual Meeting | |||
Andrew B. Cogan | 55 |
| 2020 Annual Meeting | |||
Daniel W. Dienst | 52 |
| 2018 Annual Meeting | |||
Stephen F. Fisher | 65 |
| 2020 Annual Meeting | |||
Jeffrey A. Harris | 62 |
| 2019 Annual Meeting | |||
Christopher G. Kennedy | 54 |
| 2018 Annual Meeting | |||
John F. Maypole | 78 |
| 2019 Annual Meeting | |||
Sarah E. Nash | 64 |
| 2020 Annual Meeting | |||
Stephanie Stahl | 51 |
| 2018 Annual Meeting |
| Director Since:1999 Committee Memberships: Audit | |||||||
| Independent Director Biography Kathleen G. Bradley has served as a director of Knoll, Inc. since November 1999. Ms. Bradley served as President and Chief Executive Officer, Knoll | |||||||
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| Skills and Qualifications Ms. Bradley has exceptional industry knowledge and a deep understanding of Knoll's business, having been associated with Knoll for over 35 years, including over seven years as President and Chief Executive Officer of Knoll, North America, and more than 20 years in numerous management positions. Ms. Bradley's experience has included managing regional divisions and key parts of the organization such as sales and distribution, and customer service. Ms. Bradley also served on the board of our industry trade organization, The Business and Institutional Furniture Manufacturer's Association. Ms. Bradley's in-depth knowledge of our business and her extensive management experience are important aspects of her service on the Board. | |||||||
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Burton B. Staniar has served as Chairman of the Board of Knoll, Inc. since his appointment in December 1993. Mr. Staniar served as our Chief Executive Officer from December 1993 to January 1997. Prior to that time, Mr. Staniar held a number of assignments at Westinghouse Electric Corporation, including President of Group W Cable and Chairman and Chief Executive Officer of Westinghouse Broadcasting. Mr. Staniar previously served as a director of Journal Register Company and Church and Dwight Co., Inc.
Mr. Staniar has been associated with Knoll since 1993 and brings to the board extensive knowledge of our business operations and the contract office furniture industry as a whole. Mr. Staniar also brings to the board significant executive leadership and operational experience, having previously served in senior executive roles with subsidiaries of Westinghouse Electric Corporation and as Chairman and CEO of Westinghouse Broadcasting. Mr. Staniar also previously served on numerous public boards and currently serves as a board member for a number of non-profit organizations. Mr. Staniar's prior business experience and board service, along with his long tenure with Knoll, give him broad and extensive understanding of our operations and the proper role and function of the board.
Andrew B. Cogan has served as a director of Knoll, Inc. since February 1996. Mr. Cogan became Chief Executive Officer of Knoll, Inc. in April 2001 after serving as Chief Operating Officer since December 1999. Mr. Cogan has held several positions in the design and marketing group worldwide since joining us in 1989, including Executive Vice President—Marketing and Product Development and Senior Vice President. Mr. Cogan is also a director of the Chinati Foundation in Marfa, Texas, Interface, Inc. in Atlanta, Georgia, and American Woodmark Corporation in Winchester, Virginia.
Mr. Cogan has substantial industry and management experience, having served in management functions at Knoll for more than 20 years and as our Chief Executive Officer since 2001. Mr. Cogan is uniquely qualified to bring strategic insight, design and marketing expertise and in-depth knowledge of Knoll's worldwide business to the board, having served in numerous key positions within our design and marketing group, and as Chief Operating Officer prior to becoming Chief Executive Officer. In addition to his management experience, Mr. Cogan brings to the board his perspectives as a director of other private and public boards.
Kathleen G. Bradley has served as a director of Knoll, Inc. since November 1999. Ms. Bradley served as President and Chief Executive Officer, Knoll North America, from April 2001 until her retirement on May 23, 2008. Prior to that time she served as President from December 1999 to April 2001, Executive Vice President—Sales, Distribution and Customer Service from August 1998 until December 1999, Senior Vice President from 1996 until August 1998 and Divisional Vice President for Knoll's southeast division from 1988 until 1996. Prior to that time, Ms. Bradley was regional manager
| Director Since:1996 Committee Memberships: None | | ANDREW B. COGAN President and Chief Executive Officer Biography Andrew Cogan has served as a director of Knoll, Inc. since February 1996. Mr. Cogan became Chief Executive Officer of Knoll, Inc. in April 2001 after serving as Chief Operating Officer since December 1999. Mr. Cogan has held several positions in the design and marketing group worldwide since joining us in 1989, including Executive Vice President—Marketing and Product Development and Senior Vice President. | |||||
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| | | Skills and Qualifications Mr. Cogan has substantial industry and management experience, having served in management functions at Knoll for more than 20 years and as our Chief Executive Officer since 2001. Mr. Cogan is uniquely qualified to bring strategic insight, design and marketing expertise and in-depth knowledge of Knoll's worldwide business to the board, having served in numerous key positions within our design and marketing group, and as Chief Operating Officer prior to becoming Chief Executive Officer. Mr. Cogan is also a director of the Chinati Foundation in Marfa, Texas, Interface, Inc. in Atlanta, Georgia, and American Woodmark Corporation in Winchester, Virginia. |
for our Atlanta region, a position to which she was promoted in 1983. She began her career with Knoll in 1979.
| Director Since:2017 Committee Memberships: None | | DANIEL W. DIENST Independent Director Biography Daniel W. Dienst joined us as a director in August 2017. Mr. Dienst has been a Principal of D2Quared, LLC, a consulting firm, since 2013. He previously served as a Director and Chief Executive Officer of Martha Stewart Living Omnimedia, Inc. until its December 2015 sale to Sequential Brands, Inc. Prior to that, Mr. Dienst served as the Group Chief Executive of Sims Metal Management, Ltd., the world's largest publicly-listed metal and electronics recycler from 2008 to 2013. Prior to that, Mr. Dienst held various positions with CIBC World Markets Corp., a diversified global financial services firm. | |||||
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| | | Skills and Qualifications Mr. Dienst has substantial financial and executive experience and brings his strategic insight and financial acumen to the board's deliberations given his prior experience as a chief executive officer of a public company. |
Ms. Bradley has exceptional industry knowledge and a deep understanding of Knoll's business, having been associated with Knoll for over 35 years, including over seven years as President and Chief Executive Officer of Knoll, North America, and more than 20 years in numerous management positions. Ms. Bradley's experience has included managing regional divisions and key parts of the organization such as sales and distribution, and customer service. Ms. Bradley also served on the board of our industry trade organization, The Business and Institutional Furniture Manufacturer's Association. Ms. Bradley's in-depth knowledge of our business and her extensive management experience are important aspects of her service on the Board.
Jeffrey A. Harris has been a director of Knoll, Inc. since February 1996. Mr. Harris is the founder and managing member of Global Reserve Group LLC, a financial advisory and investment firm focused primarily on the energy industry. Previously, he was a Managing Director of Warburg Pincus LLC, a private equity firm, where he was employed from 1983 until 2011 where his responsibilities included involvement in investments in energy, technology and other industries. Mr. Harris is a director of Serica Energy PLC and several private companies. In addition, he is a member of the Board of Trustees of the Cranbrook Educational Community, New York-Presbyterian Hospital and Friends of the High Line. Mr. Harris previously served as a director of Electromagnetic GeoServices ASA.
Mr. Harris brings a strong business background to Knoll, having worked in the private equity field with Warburg Pincus for over 25 years. Mr. Harris has gained substantial experience in overseeing the management of diverse organizations, having served as a board member on many public and private boards, including a number of charitable and non-profit organizations. As a result of this service, Mr. Harris has a broad understanding of the operational, financial and strategic issues facing public and private companies. He has served on our board of directors since 1996 and through that service has developed extensive knowledge of our business.
Sidney Lapidus has been a director of Knoll, Inc. since February 1996. Mr. Lapidus is a Retired Partner of Warburg Pincus LLC, a private equity firm, where he was employed from 1967 to 2007. Mr. Lapidus is a director of Lennar Corporation, as well as a number of non-profit organizations. Mr. Lapidus previously served as a director of The Neiman Marcus Group, Inc.
Mr. Lapidus spent over 40 years with Warburg Pincus, working principally in the private equity field. During those 40 years, Mr. Lapidus developed extensive business, finance and management skills, which he brings to the board's deliberations. Mr. Lapidus also brings to the board his experience in overseeing the management of diverse organizations, having served as a board member on many public and private boards, including a number of charitable and non-profit organizations. Mr. Lapidus' involvement in a variety of businesses has given him a broad understanding of the operational, financial and strategic issues facing public and private companies. He has served on our board of directors since 1996, and through that service has developed extensive knowledge of our business.
John F. Maypole has served as a director of Knoll, Inc. since December 2004. Mr. Maypole has, for over 30 years, served as an independent director of, or consultant to, various corporations and providers of financial services. Mr. Maypole is a director of the National Captioning Institute, Inc. Mr. Maypole previously served as a director of Church and Dwight Co., Inc., Verizon Communications and the MassMutual Financial Group, among others.
Mr. Maypole brings substantial accounting, finance, and management experience to the board. Mr. Maypole previously served as a chief financial officer, chief operating officer, chief executive officer, chairman of the board and independent consultant to numerous industrial and financial services companies and has significant experience with operational and financial matters, including financial reporting. Mr. Maypole has served on a number of private and public boards and his experiences have
| Director Since:2005 Committee Memberships: Audit; Nominating and Corporate Governance | | STEPHEN F. FISHER Independent Director Biography Stephen F. Fisher has served as a director since December 2005. Mr. Fisher served as the Executive Vice President and Chief Financial Officer of Entercom Communications Corp., a radio broadcasting company, from November 1998 until April 28, 2017. | |||||
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| | | Skills and Qualifications Mr. Fisher has held numerous financial management and operational positions. He has served as Executive Vice President and Chief Financial Officer for a public company for over 17 years. Mr. Fisher has also worked in the private equity field, making investments in companies and managing those portfolio companies as well as serving on the board of directors of both public and private companies. He brings significant financial and operational management, as well as financial reporting, experience to the board. |
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| Director Since:1996 Committee Memberships: Compensation; Nominating and Corporate Governance | | JEFFREY A. HARRIS Independent Director Biography Jeffrey A. Harris has been a director of Knoll, Inc. since February 1996. Mr. Harris is the founder and managing member of Global Reserve Group LLC, a financial advisory and investment firm focused primarily on the energy industry. Previously, he was a Managing Director of Warburg Pincus LLC, a private equity firm, where he was employed from 1983 until 2011 where his responsibilities included involvement in investments in energy, technology and other industries. Mr. Harris is a director of several private companies. In addition, he is a member of the Board of Trustees of the Cranbrook Educational Community, New York-Presbyterian Hospital and Friends of the High Line. Mr. Harris previously served as a director of Electromagnetic GeoServices ASA and Serica Energy PLC. | |||||
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| | | Skills and Qualifications Mr. Harris brings a strong business background to Knoll, having worked in the private equity field with Warburg Pincus for over 25 years. Mr. Harris has gained substantial experience in overseeing the management of diverse organizations, having served as a board member on many public and private boards, including a number of charitable and non-profit organizations. As a result of this service, Mr. Harris has a broad understanding of the operational, financial and strategic issues facing public and private companies. He has served on our board of directors since 1996 and through that service has developed extensive knowledge of our business. |
| Director Since:2014 Committee Memberships: Compensation | | CHRISTOPHER G. KENNEDY Independent Director Biography Christopher G. Kennedy joined us as a director in November 2014. Mr. Kennedy serves as Chairman of Joseph P. Kennedy Enterprises, Inc., which is the investment firm of the Kennedy Family. Mr. Kennedy also serves on the Board of Directors of Interface, Inc., a floor covering company, and is the Founder and Chairman of Top Box Foods, a Chicago-based non-profit hunger-relief organization. He formerly served as President of Merchandise Mart Properties, Inc., a subsidiary of Vornado Realty Trust, from 2000 to 2011. Since 1994, he has served on the Board of Trustees of Ariel Mutual Funds. Mr. Kennedy is also active in several educational and civic organizations. | |||||
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| | | Skills and Qualifications Mr. Kennedy has significant experience in the residential and commercial furniture markets, due to his experience as former President of Merchandise Mart Properties. Mr. Kennedy also brings substantial executive level experience that is particularly beneficial to our strategies and sales and marketing efforts in the corporate office and retail market segments. His insight into governmental and economic affairs and his civic involvement also are of great value to the Knoll board. |
Stephen F. Fisher has served as a director since December 2005. Mr. Fisher is the Executive Vice President and Chief Financial Officer of Entercom Communications Corp., a radio broadcasting company, a position he has held since November 1998. Mr. Fisher also is a director of the National Association of Broadcasters.Contents
Mr. Fisher has held numerous financial management and operational positions. He has served as executive vice president and chief financial officer for a public company for over 17 years. Mr. Fisher has also worked in the private equity field, making investments in companies and managing those portfolio companies as well as serving on
| Director Since:2004 Committee Memberships: Audit; Nominating and Corporate Governance | | JOHN F. MAYPOLE Independent Director Biography John F. Maypole has served as a director of Knoll, Inc. since December 2004. Mr. Maypole has, for over 30 years, served as an independent director of, or consultant to, various corporations and providers of financial services. Mr. Maypole is a director of the National Captioning Institute, Inc. Mr. Maypole previously served as a director of Church and Dwight Co., Inc., Verizon Communications and the MassMutual Financial Group, among others. | |||||
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| | | Skills and Qualifications Mr. Maypole brings substantial accounting, finance, and management experience to the board. Mr. Maypole previously served as a chief financial officer, chief operating officer, chief executive officer, chairman of the board and independent consultant to numerous industrial and financial services companies and has significant experience with operational and financial matters, including financial reporting. Mr. Maypole has served on a number of private and public boards and his experiences have resulted in a broad understanding of the operational, financial and strategic issues facing public and private companies. Mr. Maypole's perspectives on executive management, leadership and financial management are important to the board's deliberations. |
| Director Since:2006 Committee Memberships: Audit; Compensation | | SARAH E. NASH Independent Director Biography Sarah E. Nash has served as a director of Knoll, Inc. since September 2006. In August 2005, Ms. Nash retired as a Vice Chairman of J.P. Morgan Chase & Co.'s Investment Bank where she was responsible for the firm's client relationships. Prior to these responsibilities, she was the Regional Executive and Co-Head of Investment Banking for North America at J.P. Morgan Co. Ms. Nash serves on the Board of Directors of Irving Oil Company, Blackbaud Inc. and HBD Industries. She is a Trustee for New York-Presbyterian Hospital and is a member of the National Board of the Smithsonian Institution. Ms. Nash previously served as a director of Pathmark Stores, Inc., AbitibiBowater Inc. and Merrimack Pharmaceuticals, Inc. | |||||
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| | | Skills and Qualifications Ms. Nash has significant finance and investment banking experience, and brings that experience and her perspectives on management and finance to the Knoll board. She had a long, successful career in investment banking, retiring as Vice Chairman of J.P. Morgan Chase & Co.'s Investment Bank. Ms. Nash has served on a number of private and public boards, which has resulted in a broad understanding of the operational, financial and strategic issues facing public and private companies. She brings these experiences and understandings to the Knoll board. |
Sarah E. Nash has served as a director of Knoll, Inc. since September 2006. In August 2005, Ms. Nash retired as a Vice Chairman of J.P. Morgan Chase & Co.'s Investment Bank where she was responsible for the firm's client relationships. Prior to these responsibilities, she was the Regional Executive and Co-Head of Investment Banking for North America at J.P. Morgan Co. Ms. Nash serves on the Board of Directors of Irving Oil Company, Blackbaud Inc. and HBD Industries. She is a Trustee for New York-Presbyterian Hospital and is a member of the National Board of the Smithsonian Institution and on the Business Leadership Council of CUNY. Ms. Nash previously served as a director of Pathmark Stores, Inc., AbitibiBowater Inc. and Merrimack Pharmaceuticals, Inc.Contents
Ms. Nash has significant finance and investment banking experience, and brings that experience and her perspectives on management and finance to the Knoll board. She had a long, successful career in investment banking, retiring as Vice Chairman of J.P. Morgan Chase & Co.'s Investment Bank. Ms. Nash has served on a number of private and public boards, which has resulted in a broad understanding of the operational, financial and strategic issues facing public and private companies. She brings these experiences and understandings to the Knoll board.
Stephanie Stahl joined us as a director in August 2013. Ms. Stahl is the CEO of Apprécier LLC, a company she co-founded in June 2015. Prior to that, Ms. Stahl served as Executive Vice President, Marketing and Strategy for Coach, Inc., a position she held from July 2013 until February 2015. Prior to that, Ms. Stahl served as the Senior Vice President, Strategy and Consumer for Coach from October 2012 until June 2013. Prior to joining Coach, Ms. Stahl was the Chief Executive Officer of the fitness company Tracy Anderson Mind and Body from July 2011 until July 2012. Prior to that, Ms. Stahl served as Executive Vice President and Chief Marketing Officer of Revlon and as a Partner and Managing Director of the Boston Consulting Group in the consumer goods, retail and media industries for over ten years.
Ms. Stahl has significant experience in high-design businesses and in creating and driving global brand building consumer and customer strategies, particularly in the consumer goods and retail segments. Ms. Stahl brings this experience to the board as Knoll positions itself as the premier high design company in the interior space through expanded luxury offerings and new distribution channels.
Christopher G. Kennedy joined us as a director in November 2014. Mr. Kennedy serves as Chairman of Joseph P. Kennedy Enterprises, Inc., which is the investment firm of the Kennedy Family. Mr. Kennedy also serves on the Board of Directors of Interface, Inc., a floor covering company, and is the Founder and Chairman of Top Box Foods, a Chicago-based non-profit hunger-relief organization. He formerly served as President of Merchandise Mart Properties, Inc., a subsidiary of Vornado Realty Trust, from 2000 to 2011. Since 1994, he has served on the Board of Trustees of Ariel Mutual Funds. Mr. Kennedy is also active in several educational and civic organizations.
| Director Since:2013 Committee Memberships: Nominating and Corporate Governance | | STEPHANIE STAHL Independent Director Biography Stephanie Stahl joined us as a director in August 2013. Ms. Stahl is the CEO of Apprécier LLC, a company she co-founded in June 2015. Prior to that, Ms. Stahl served as Executive Vice President, Marketing and Strategy for Coach, Inc., a position she held from July 30, 2013 until February 14, 2015. Prior to that, Ms. Stahl served as the Senior Vice President, Strategy and Consumer for Coach from October 2012 until June 2013. Prior to joining Coach, Ms. Stahl was the Chief Executive Officer of the fitness company Tracy Anderson Mind and Body from July 2011 until July 2012. Prior to that, Ms. Stahl served as Executive Vice President and Chief Marketing Officer of Revlon and as a Partner and Managing Director of the Boston Consulting Group in the consumer goods, retail and media industries for over ten years. Ms. Stahl also serves on the Board of Directors of Dollar Tree Stores. | |||||
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| | | Skills and Qualifications Ms. Stahl has significant experience in high-design businesses and in creating and driving global brand building consumer and customer strategies, particularly in the consumer goods and retail segments. Ms. Stahl brings this experience to the board as Knoll positions itself as the premier high-design company in the interior space through expanded luxury offerings and new distribution channels. |
In accordance with our Corporate Governance Guidelines, our board of directors has reviewed the qualifications of each of its members and, on February 27, 2018, affirmatively determined that a majority of the members of our board of directors are independent under the New York Stock Exchange ("NYSE") Corporate Governance Standards. The independence standards of the NYSE are composed of objective standards and subjective standards. Under the objective standards, a director will generally not be deemed independent if he or she receives compensation (other than as a director) in excess of certain thresholds or if certain described relationships exist. Under the subjective standards, a director will not be independent if the board of directors determines that the director has a material relationship with us. In addition to our board of directors determining these directors meet the objective standards under the listing standards of the NYSE, our board of directors has determined that none of these individuals has a material relationship with the company (directly or as a partner, shareholder, or officer of an organization that has a relationship with the company) other than as a director. In making this determination, the board of directors considered that some of the directors serve on boards of companies, or are (or recently were) associated with companies or entities, to which we sold products, or from which we purchased products or services during the year. Given the size and nature of these transactions, we concluded that they would not interfere with the exercise of independent judgment by these board members. The board of directors relied on both information provided by the directors and information developed internally by the company in evaluating these facts. In the case of Mr. Kennedy, the board of directors also considered that one of Mr. Kennedy's siblings is a partner in a New York-based film production company with the sister-in-law of our chief executive officer and determined that this relationship was not material.
The Board has significant experiencedetermined that each of the following directors and director nominees listed below is independent under the independence standards of the New York Stock Exchange and would constitute a majority of the board of directors:
In addition, the board determined that each member of the Audit Committee also meets the additional independence standards for audit committee members established by the Securities and Exchange Commission ("SEC") and the NYSE, and each member of the Compensation Committee meets the additional independence standards for compensation committee members established by the SEC and the NYSE, and also qualifies as a "Non-Employee Director" as defined in Rule 16b-3 of the residentialExchange Act.
Our Corporate Governance Policies and commercial furniture markets, due to his experience as former President of Merchandise Mart Properties. Mr. Kennedy also brings substantial executive level experience that is particularly beneficial to our strategies and sales and marketing efforts in the corporate office and retail market segments. His insight into governmental and economic affairs and his civic involvement also are of great value to the Knoll board.Practices
Corporate Governance Guidelines
Our board of directors has adopted Corporate Governance Guidelines that provide the framework for the governance of the company. Our Corporate Governance Guidelines are available on our website at
www.knoll.com and will also be made available to stockholders without charge upon request in writing to our Corporate Secretary at Knoll, Inc., 1235 Water Street, East Greenville, Pennsylvania 18041. The information contained on our website is not included as part of, or incorporated by reference into, this proxy statement.
Our Corporate Governance Guidelines include a Director Resignation Policy, adopted in 2014.Policy. Under this policy, any nominee for director in an uncontested election (i.e., an election where the only nominees are those proposed by the board) who receives a greater number of votes "withheld" from his or her election than votes "for" such election shall promptly tender an offer of resignation for consideration by the board. The nominating and corporate governance committee shall evaluate the director's offer of resignation, taking into account the best interests of the Company and its stockholders, and shall recommend to the board whether to accept or reject such offer of resignation. In making this recommendation, the nominating and corporate governance committee may consider all factors deemed relevant by its members, including, without limitation, the underlying reasons why stockholders voted against the director (if ascertainable), the length of service and qualifications of the director, the director's past (and expected future) contributions to the Company, and whether by accepting such resignation the Company will no longer be in compliance with any applicable law, rule, regulation or governing document. The board shall act to accept or reject such offer of resignation within 120 days following certification of the stockholder vote at the stockholder meeting at which the election of directors was held. In making its decision, the board may consider the factors considered by the committee and such additional information and factors the board believes to be relevant.
Our board of directors has adopted a Codecode of Ethicsethics that applies to all of our directors, officers and employees, including our chief executive officer and chief financial and accounting officers. The Codecode of Ethicsethics is publicly available on our website atwww.knoll.com and will also be made available without charge to any person upon request in writing to our Corporate Secretary at Knoll, Inc., 1235 Water Street, East Greenville, Pennsylvania 18041. We intend to disclose amendments to, or waivers from, provisions of the code of ethics that apply to any director or principal executive, financial or accounting officers on our website atwww.knoll.com, in lieu of disclosing such matters in Current Reports on Form 8-K.
In accordance with our Corporate Governance Guidelines, our board of directors has reviewed the qualifications of each of its members and, on February 29, 2016, affirmatively determined that Messrs. Maypole, Fisher, Harris, Lapidus and Kennedy and Ms. Bradley, Ms. Nash and Ms. Stahl, a majority of the members of our board of directors, are independent. The independence standards of the New York Stock Exchange are composed of objective standards and subjective standards. Under the objective standards, a director will generally not be deemed independent if he or she receives
compensation (other than as a director) in excess of certain thresholds or if certain described relationships exist. Under the subjective standards, a director will not be independent if the board of directors determines that the director has a material relationship with us. In addition to our board of directors determining these directors meet the objective standards under the listing standards of the New York Stock Exchange, our board of directors has determined that none of these individuals has a material relationship with the company (directly or as a partner, shareholder, or officer of an organization that has a relationship with the company) other than as a director. In making this determination, the board of directors considered the fact that some of the directors serve on boards of companies, or are (or recently were) associated with companies or entities, to which we sold products, or from which we purchased products or services during the year. Given the size and nature of these transactions, we concluded that they would not interfere with the exercise of independent judgment by these board members. The board of directors relied on both information provided by the directors and information developed internally by the company in evaluating these facts. In the case of Mr. Kennedy, the board of directors also considered the fact that one of Mr. Kennedy's siblings is a partner in a New York-based film production company with the sister-in-law of our chief executive officer and determined that this relationship was not material.
We currently have a separate chief executive officer, chairman of the board, and lead independent director. We do not have a formal policy on whetherdirector; however, this structure will be changing at the same person should (or should not) serve as both the chief executive officer and chairman2018 annual meeting of stockholders. Andrew B. Cogan has been elected Chairman of the board; however, givenBoard, effective May 8, 2018, upon the conclusion of Burton B. Staniar's term. Mr. Cogan has served as our CEO since 2001, and originally joined us in 1989. Given the current composition of the board, we generally believe that different people shouldit is appropriate for Mr. Cogan to hold theboth positions of chairman of the board and chief executive officer. officer in light of the depth of his experience with the company and in our industry generally.
Additionally, we believe that when the chairman of the board is an employee of the company or otherwise not independent, it is important to have a separate lead independent director in order to facilitate the board's oversight of management.
Mr. Staniar has served as our chairman since 1993, and served as our chief executive officer from 1993 until 1997. In serving as chairman, Mr. Staniar serves as a significant resource for our chief executive officer, Mr. Cogan, other members of management and perform many of the board of directors. We believesame functions that the depth of leadership and the significant experience provided by Messrs. Cogan and Staniar in their respective roles asan independent chairman and chief executive officer has benefited Knoll significantly.
Mr. Staniar spends a significant amount of his time involved with day-to-day activities at the company, primarily working with customers and potential customers, but also assisting us with other senior management activities. As a result of this involvement (and the monetary payment he receives for his services), Mr. Staniar is not considered "independent" under applicable New York Stock Exchange listing standards. Accordingly, we also have a lead director who is "independent".
Mr.would perform. Jeffrey A. Harris serves as our lead independent director. In that role, he presides over the board's executive sessions and serves as the principal liaison between management and the independent directors of our board. Mr. Harris has served as a Knoll director since 1996.
We believe that the combination of Mr. Staniar as our chairman and Mr. Harris as our lead director has been an effective structure for Knoll. The division of duties and the additional avenues of communication between the board and our management associated with having Mr. StaniarCogan serve as chairman and Mr. Harris as lead director provides the basis for the proper functioning of our board and its oversight of management.
Oversight of Risk Management by our Board of Directors
Our board of directors has overall responsibility for risk oversight. This role is primarily fulfilled by our audit committee. Our audit committee periodically discusses and evaluates company risk with our management, including our chief executive officer, chief financial officer and our chief legal officer.
Our audit committee also periodically discusses and evaluates risk with our independent auditors and members of our internal audit group. The audit committee reports back to our full board with respect to those activities. In addition, as described in the section entitled "Compensation Risk""Risk Assessment — Incentive Compensation Programs" on page 4353 below, our compensation committee specifically evaluates risks associated with our compensation programs. The board's role in risk oversight has not had any effect on the board's leadership structure.
Diversity is one of the factors considered by our nominating and corporate governance committee in the director nomination process. The overriding principle guiding our director nomination process is a desire to ensure that our board as a whole collectively serves the interests of our stockholders. We believe that having diverse skills, experiences and perspectives represented on the board provides the most value to the company and its stockholders. We also believe that an appropriate level of collegiality and chemistry among board members is extremely important to a well functioningwell-functioning board.
Among the factors considered when we evaluate the skills, experiences and perspectives are the following:
We also consider diversity with respect to race and gender in evaluating whether the board as a whole has the right mix of perspectives to properly serve the company and its stockholders.
All of the factors set forth above are considered by the nominating and corporate governance committee as it evaluates the directors that are nominated to serve on our board. It is not our desire to make sure every skill, type of experience and perspective is represented on the board, but we instead focus on making sure there is an appropriate mix of skills, experiences and perspectives, which we believe leads to more thoughtful and open board discussions and deliberations. Our nominating and corporate governance committee monitors its consideration of diversity as part of the annual self-evaluation process.
During the year ended December 31, 2015,2017, there were four meetings of our board of directors. During 2015,2017, no director attended fewer than 75% of the total number of meetings or fewer than 75% of meetings of a committee of the board on which he or she served. Currently, we do not have a formal policy regarding director attendance at our Annual Meetings of Stockholders. However, it is expected that, absent compelling circumstances, our directors will be in attendance at our 20162018 Annual Meeting of Stockholders. All of our directors except for Mr. Kennedy attended our 20152017 Annual Meeting of Stockholders.
In accordance with our Corporate Governance Guidelines, our non-management directors meet periodically without any management directors or employees present. As required by the New York Stock Exchange Listing requirements and in accordance with our Corporate Governance Guidelines,
our independent directors also meet exclusively in an executive session at least once a year. Mr. Harris presides over meetings of the non-management directors and independent directors.
Our board of directors maintains an audit committee, a compensation committee, and a nominating and corporate governance committee. Each of these committees operates pursuant to a written charter, which are reviewed annually and publicly available on our website atwww.knoll.com and will also be made available to stockholders without charge, upon request in writing to our Corporate Secretary at Knoll, Inc., 1235 Water Street, East Greenville, Pennsylvania 18041.
Audit Committee. Our audit committee met eightnine times during 2015.2017. This committee currently has four members, Messrs. Fisher and Maypole and Ms. Nash and Ms. Bradley. Our board of directors has determined that Mr. Maypole, the Chairman of the audit committee, is an "audit committee financial expert," as the SEC has defined that term in Item 407 of Regulation S-K. The composition of our audit committee meets the currently applicable independence requirements of the New York Stock Exchange and SEC rules and regulations. Our audit committee (i) assists our board in monitoring the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent registered public accounting firm's qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm; (ii) assumes direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review or attest services and for dealing directly with any such accounting firm; (iii) provides a medium for consideration of matters relating to any audit issues; and (iv) prepares the audit committee report that the SEC rules require be included in our annual proxy statement or annual report on Form 10-K. The audit committee reviews and evaluates, at least annually, its performance and the performance of its members, including compliance with its charter. Please see the report of the audit committee set forth elsewhere in this proxy statement.
Compensation Committee. Our compensation committee met fivesix times during 2015.2017. This committee currently has four members, Messrs. Harris, Lapidus and Kennedy and Ms. Nash. Mr. Harris serves as Chairman of the committee. Our compensation committee reviews and recommends policy relating to compensation and benefits of our officers and employees, including reviewing and approving corporate goals and objectives relevant to compensation of the chief executive officer and other senior officers, evaluating the performance of these officers in light of those goals and objectives and setting compensation of these officers based on such evaluations. Our chief executive officer generally makes recommendations to the compensation committee regarding executive compensation matters. Our board of directors has designated our compensation committee to serve as the administrative committee under our stock incentive plans. In that role, our compensation committee determines which individuals receive awards under our stock incentive plans, the types of such awards, the terms and conditions of such awards and, subject to our stock option grant policy, the time at which such awards are granted. The compensation committee reviews and evaluates, at least annually, the performance of the compensation committee and its members, including compliance of the compensation committee with its charter. A description of the compensation committee's processes and procedures for the consideration and determination of executive compensation is set forth in more detail below in this Proxy Statement under the heading "Compensation Discussion and Analysis."
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee met threetwo times during 2015.2017. This committee currently has four members, Messrs. Harris, Maypole and Fisher and Ms. Stahl. Mr. Fisher currently serves as Chairman of our nominating and corporate governance committee. The nominating and corporate governance committee oversees and assists our board of directors in identifying, reviewing and recommending nominees for election as directors; evaluates our board of directors and our management;directors; develops, reviews and recommends corporate governance guidelines and a corporate code of business conduct and ethics; and generally advises our board of directors on corporate
advises our board of directors on corporate governance and related matters. The nominating and corporate governance committee reviews and evaluates, at least annually, its performance and the performance of its members, including compliance with its charter. The nominating and corporate governance committee also facilitates the board's overall self-assessment.
The nominating and corporate governance committee may consider director candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. For all potential candidates, the committee may consider all factors it deems relevant, such as a candidate's personal integrity and judgment, business and professional skills and experience, independence, knowledge of the industry in which we operate, past service on the board of directors, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the board of directors and concern for the long-term interests of the stockholders.
In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes to nominate a candidate to be considered for election as a director at the 20172019 Annual Meeting of Stockholders, it must follow the procedures described in "Stockholder Proposals and Nominations for Director" set forth elsewhere in this proxy statement. If a stockholder wishes simply to propose a candidate for consideration as a nominee by the nominating and corporate governance committee, it should submit any pertinent information regarding the candidate to the nominating and corporate governance committee by mail to Knoll, Inc., c/o Corporate Secretary, 1235 Water Street, East Greenville, Pennsylvania 18041.
Compensation Committee Interlocks and Insider Participation
No person who served as a member of our compensation committee during fiscal year 20152017 was a current or former officer or employee of ours or engaged in transactions with us required to be disclosed by SEC regulations during fiscal year 2015.2017. None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our board of directors or compensation committee.
In accordance with our Corporate Governance Guidelines, interested persons may send communications to the board, to any committee of the board or to any individual members of the board (including non-management directors) by sending a letter to the following address: Knoll, Inc., c/o Corporate Secretary, 1235 Water Street, East Greenville, Pennsylvania 18041. In addition, our board of directors has adopted "Whistleblower Procedures" setting forth procedures to enable the receipt and investigation of accounting, legal or retaliatory claims. The Whistleblower Procedures are publicly available in the Corporate Governance portion of our website atwww.knoll.com.
Our Corporate Governance Guidelines provide that the form and amount of compensation provided to our directors shall be determined by the board of directors with the assistance of the compensation committee. The board of directors and compensation committee periodically review our director compensation programs to ensure that they remain competitive. In making this review, the board of directors and compensation committee considers our size, industry characteristics, location, the practices at comparable companies in the same region, and such other factors as the board of directors or compensation committee deems relevant. Effective October 1, 2007, our board of directors adopted the Knoll, Inc. Non-Employee Director Compensation Plan, which was most recently amended effective
January 1, 2016.2018. Under this Plan, our compensation package for non-employee directors currently consists of:
Table of the audit committee);Contents
All or a portion of annual fees may, at the election of the non-employee director, be paid in the form of shares of our common stock. The number of shares issuable pursuant to such an election is equal to the value of the fee forgone divided by the fair market value of the common stock on the payment date.
The table below sets forth information concerning the compensation we paid to our non-employee directors and our chairman during 20152017 for service on our board of directors. AllWith the exception of Daniel W. Dienst, all of the directors listed below served for the entire year.
Director Compensation Table—2015Table — 2017
Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Stock Awards $(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards $1 | Total ($) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Burton B. Staniar(2) | 115,442 | — | — | — | — | 115,442 | |||||||||||||||||||||||
Kathleen G. Bradley(3) | 50,000 | — | 60,000 | (4) | — | — | 110,000 | ||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Burton B. Staniar2 | | 118,450 | | — | | 118,450 | |||||||||||||||||||||||
Kathleen G. Bradley3 | | 50,000 | | 70,000 | 5 | | 120,000 | ||||||||||||||||||||||
Jeffrey A. Harris | 50,000 | — | 60,000 | (4) | — | — | 110,000 | | 65,000 | 4 | | 70,000 | 5 | | 135,000 | ||||||||||||||
Sidney Lapidus | 50,000 | (5) | — | 60,000 | (4) | — | — | 110,000 | | 50,000 | 6 | | 70,000 | 5 | | 120,000 | |||||||||||||
John F. Maypole | 60,000 | (6) | — | 60,000 | (4) | — | — | 120,000 | | 65,000 | 7 | | 70,000 | 5 | | 135,000 | |||||||||||||
Stephen F. Fisher | 50,000 | — | 60,000 | (4) | — | — | 110,000 | | 50,000 | | 70,000 | 5 | | 120,000 | |||||||||||||||
Sarah E. Nash | 50,000 | — | 60,000 | (4) | — | — | 110,000 | | 50,000 | | 70,000 | 5 | | 120,000 | |||||||||||||||
Stephanie Stahl | 50,000 | — | 60,000 | (4) | — | — | 110,000 | | 50,000 | | 70,000 | 5 | | 120,000 | |||||||||||||||
Christopher G. Kennedy | 50,000 | (7) | — | 60,000 | (4) | — | — | 110,000 | | 50,000 | 6 | | 70,000 | 5 | | 120,000 | |||||||||||||
Daniel W. Dienst | | 19,429 | 8 | | — | | 19,429 |
receives an annual salary of $115,000. Mr. Staniar also received $50,100$3,450 in contributions under the Knoll Retirement Savings Plan. Mr. Staniar also received $52,883 in payments from the Knoll Pension Plan during 2015. The actuarial present value of Mr. Staniar's pension benefit under the Knoll Pension Plan decreased by $30,931 for 2015 due to a change in plan assumptions.2017. Mr. Staniar does not receive any additional compensation for his service on our board of directors.
value of $60,000$70,000 at the time of grant. These shares vest equally in one-third increments on the first, second and third anniversary of the date of grant, subject to earlier pro rata vesting upon the occurrence of certain events. The grant date fair value of each of these restricted stock awards under Topic 718 was $60,000.$70,000. As of December 31, 2015,2017, all of these shares were unvested.
The following table sets forth the aggregate number of unvested restricted stock awards and the aggregate number of stock option awards outstanding as of December 31, 2015:2017:
Name | Aggregate Number of Outstanding Restricted Stock Awards | Aggregate Number of Outstanding Option Awards | |||||
---|---|---|---|---|---|---|---|
Burton B. Staniar | — | 50,000 | |||||
Kathleen G. Bradley | 6,655 | — | |||||
Jeffrey A. Harris | 6,655 | — | |||||
Sidney Lapidus | 6,655 | 25,000 | |||||
John F. Maypole | 6,655 | — | |||||
Stephen F. Fisher | 6,655 | ||||||
Sarah E. Nash | 6,655 | 25,000 | |||||
Stephanie Stahl | 5,429 | — | |||||
Christopher G. Kennedy | 2,795 | — |
Name | Aggregate Number of Outstanding Restricted Stock Awards | Aggregate Number of Outstanding Option Awards | |||||
---|---|---|---|---|---|---|---|
| | | | | | | |
Kathleen G. Bradley | | 6,545 | | — | |||
Daniel W. Dienst | | — | | — | |||
Stephen F. Fisher | | 6,545 | | — | |||
Jeffrey A. Harris | | 6,545 | | — | |||
Christopher G. Kennedy | | 6,545 | | — | |||
Sidney Lapidus | | 6,545 | | — | |||
John F. Maypole | | 6,545 | | — | |||
Sarah E. Nash | | 6,545 | | — | |||
Stephanie Stahl | | 6,545 | | — | |||
Burton B. Staniar | | — | | — |
PROPOSAL 2 — APPROVAL OF KNOLL, INC. 2018 STOCK INCENTIVE PLAN
We are asking for our stockholders to approve the Knoll, Inc. 2018 Stock Incentive Plan (the "2018 Plan"). The Board approved the 2018 Plan on February 6, 2018. The 2018 Plan is set forth in Exhibit B to this proxy statement and incorporated by reference herein.
The board recommends that stockholders approve the 2018 Plan in order to attract, retain and compensate our employees and directors and align the interests of our stockholders with management. Our Board and Compensation Committee considered whether to adopt a new equity plan or to amend the 2013 Stock Incentive Plan (the "2013 Plan"). As of February 28, 2018, the 2013 Plan has approximately 591,000 shares available for issuance. After discussion, the Board and Compensation Committee believe that adopting a new plan, rather than amending the 2013 Plan would provide for a new framework that is aligned with the current status and outlook of the Company's management and Board. Although adopting a new 2018 Plan, the Board and Compensation Committee also determined to keep the 2013 Plan in operation and to grant awards under that Plan as prescribed by its terms.
If the 2018 Plan is not adopted, we could continue to grant awards under the 2013 Plan as adopted by our stockholders at the 2013 annual meeting of stockholders. However, if the 2018 Plan is not approved, we would have fewer awards to grant to employees and directors, directors would be subject to higher compensation limitations and we would have fewer performance measures to use in our compensation program. Accordingly, our Board recommends the approval of the 2018 Plan.
The 2018 Plan Includes Features Designed to Protect Stockholder Interests
The 2018 Plan includes a number of provisions that we believe promote best compensation and governance practices. These provisions include, but are not limited to, the following:
There are typical exceptions to the general rule, including that cash-only awards and substitute awards granted to employees of acquired companies or merger partners, in each case, will not count against the share reserve.
substitute awards. Also, non-employee director awards may vest from one annual stockholders' meeting to the next, which sometimes might not be a full year.
Determination of the Number of Shares Reserved for Issuance under the 2018 Plan
The Compensation Committee has determined that 2,500,000 shares of common stock would be reserved for issuance under the 2018 Plan. In assessing the number of shares to be authorized for issuance under the 2018 Plan, the Compensation Committee considered, among other things, our compensation philosophy and practices, our anticipated compensation needs, our historic burn rate, overhang and dilution and the publicly-available positions of certain stockholder advisory firms and institutional investors.
The share authorization request under the 2018 Plan is a conservative request which we believe is designed to provide us with enough shares for the next 2 to 4 years. Upon stockholder approval of the 2018 Plan, our dilution would be approximately 8.6% based on 49,339,552 fully-diluted shares outstanding. Our 3-year burn rate has varied between approximately 1.6% to 2.9% and the 3-year historical burn rate average has been approximately 2.46%.
If the 2018 Plan is approved, it will increase dilution, but the Board believes that the dilutive effect of the 2018 Plan is reasonable and customary within our industry, especially in light of the importance of equity compensation in attracting and retaining talent in our industry.
Summary of Material Terms of the 2018 Plan
The following discussion summarizes the material terms of the 2018 Plan. This discussion does not purport to be complete and is qualified in its entirety by reference to the 2018 Plan, a copy of which is attached hereto as Exhibit B.
The 2018 Plan would be administered by our Compensation Committee. Subject to the provisions of the 2018 Plan, in its capacity as the 2018 Plan's administrator, the Compensation Committee would be authorized to do all things that it determines to be necessary or appropriate in connection with the administration of the 2018 Plan. All decisions, determinations and interpretations by the Compensation
Committee regarding the 2018 Plan and awards granted under the 2018 Plan would be final and binding on all participants and other persons holding or claiming rights under the 2018 Plan or an award under the 2018 Plan. The Compensation Committee may authorize a special committee, consisting of one or Compensation Committee members, to make grants under the 2018 Plan to any participants other than those insiders subject to the short-swing profit rules of Section 16(a) of the Securities Exchange Act of 1934. Furthermore, the Compensation Committee, as a condition to making any grant under the 2018 Plan, shall have the right to require the employee or director to execute an agreement which makes the employee or director subject to non-competition provisions and other restrictive covenants or conditions which run in favor of the Company.
Any person who is an employee, consultant or non-employee director of our Company or of a 50% or greater owned subsidiary of the Company would be eligible to receive an award under the 2018 Plan.
Shares Subject to the 2018 Plan
Subject to changes in our capitalization, the aggregate number of shares of our common stock available for issuance for all awards under the 2018 Plan would not exceed 2,500,000 shares. The shares issued pursuant to awards granted under the 2018 Plan may be shares that are authorized and unissued or issued shares that were reacquired by us, including shares purchased in the open market.
Shares subject to an award under the 2018 Plan could not again be made available for issuance under the 2018 Plan if such shares were repurchased on the open market with the proceeds from the exercise of an option or SAR. Any unissued or forfeited shares would be available to be granted (or re-granted) under the 2018 Plan.
There are typical exceptions to the general rule, including that cash-only awards and substitute awards granted to employees of acquired companies or merger partners, in each case, will not count against the share reserve.
Non-Employee Director Compensation Limits
The 2018 Plan contains limits on the amount of compensation awarded to non-employee directors. Under the 2018 Plan, a non-employee director may receive no more than $350,000 in total value any fiscal year. For purposes of the $350,000 cap, non-employee director fees paid in cash and the fair value, as of grant date, of stock awards awarded to the director are counted against the limit. Such cap does not include the value of dividend equivalents paid to a non-employee director pursuant to an award granted in a previous year. The Board may award additional compensation to a non-employee director in the event that the circumstances warrant, provided that the non-employee director whose compensation would exceed the limit must recuse himself or herself from such approval.
Restricted Stock and Stock Units
Restricted stock awards are designed to result in the issuance of common stock. Under the 2018 Plan, the grant, issuance and vesting of restricted stock would be subject to conditions (including continued employment or performance conditions) that the Compensation Committee deems appropriate. RSU awards under the 2018 Plan may be settled in either cash or stock, in the Compensation Committee's discretion.
Except as otherwise set forth, and with respect to RSUs, until shares are released to the participant and he or she becomes the holder of record, the participant has none of the rights of a shareholder.
Participants would be entitled to receive dividends or dividend equivalents with respect to shares underlying RSUs only to the extent provided by the Compensation Committee. All dividends or dividend equivalents
with respect to shares of restricted stock or RSUs will be accumulated and subject to the same terms and conditions as are applicable to the restricted stock or RSUs to which the dividends or dividend equivalents relate.
In the Compensation Committee's discretion, an award of restricted stock or RSUs may provide for the vesting and settlement of the award after a participant's death, disability, retirement or other termination of employment.
Option Awards and Stock Appreciation Rights
Under the 2018 Plan, the Committee is authorized to grant stock options and stock appreciation rights. Options can be granted as incentive stock options or nonqualified stock options. The Committee shall determine the terms and conditions of the exercise of options and SARs, but no option or SAR can be exercised more than 10 years after the award date or provide dividend equivalents. The aggregate market value of the stock with respect to which incentive stock options are exercisable for the first time by a participant during any calendar year shall not exceed $100,000 or such other amount as may be permitted under the Internal Revenue Code.
Performance Awards, Performance Goals, and Qualified Performance-Based Awards
Under the 2018 Plan, the Committee may establish performance goals and criteria related to any award (making it a "performance award"). Prior to 2018, performance-based compensation for certain covered employees (generally, our named executive officers other than the CFO) enabled the Company to deduct compensation in excess of the $1 million limit on compensation paid to such covered employees purusant to Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)). As further discussed in —Tax Implications of Executive Compensation —page [48] — the performance-based compensation exception was repealed and all compensation for our named executive officers in excess of $1 million will be non-deductible. Nonetheless, the Board and the Committee decided to retain many of the good-governance features related to the performance-based exception of Section 162(m), while adding some reasonable flexibility. Not all compensation provided to our named executive officers will be performance-based, but much of it will be, and that performance-based compensation will be subject to the good governance provisions of the 2018 Plan.
At the discretion of the Committee, performance goals may be based on the Company's: (1) total shareholder return; (2) earnings before interest, taxes, depreciation and amortization; (3) operating profits; (4) revenue growth; (5) gross profit margin; (6) operating profit margin; (7) net sales; (8) pretax income before allocation of corporate overhead and bonus; (9) budget; (10) earnings per share; (11) net income; (12) division, group or corporate financial goals; (13) return on stockholders' equity; (14) return on assets; (15) attainment of strategic and operational initiatives; (16) appreciation in and/or maintenance of the price of Common Stock or any other publicly-traded securities of the Company; (17) market share; (18) gross profits; (19) earnings before interest and taxes; (20) economic value-added models; (21) comparisons with various stock market indices; reductions in costs; and/or (22) any other business criteria determined in advance and in writing by the Committee.
The Committee may modify performance goals, as it deems appropriate given the circumstances, including, but not limited to when a participant is promoted, demoted, or transferred to a different business.
Within the first 90 days of a performance period, the Committee may establish performance goals for awards granted to covered employees, which are intended to qualify as qualified performance-based awards. The Committee may, at its discretion, specify a performance goal in any manner it deems appropriate, including by not limited to, in absolute terms, in percentages, or as compared to other peer groups and indexes. For any such qualified performance-based award, the Committee must establish a performance period of at least twelve months.
With respect to qualified performance-based awards, the Committee may provide that at the time the performance goals are established, any evaluation of performance shall exclude or otherwise objectively adjust for any specified circumstance or event that occurs during a performance period, including by way of example, but without limitation, the following: (a) asset write-downs or impairment charges; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) accruals for reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in then-current accounting principles; (f) extraordinary nonrecurring items as described in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report for the applicable year; (g) acquisitions or divestitures; and (h) foreign exchange gains and losses.
Prior to any payout for a qualified performance-based award, the Committee would certify the extent to which performance goals and criteria have been satisfied. The Committee reserves the right to exercise negative discretion to decrease a payout based solely upon assessment of performance goals. In addition, the Committee reserves the right to exercise positive discretion, such as in extraordinary situations, to increase a payout (up to the target amount).
Our Board of Directors or the Compensation Committee would be permitted to amend the 2018 Plan to the extent that the Board or Compensation Committee deems necessary or appropriate, and either the Board or the Compensation Committee could suspend the making of grants under the 2018 Plan or terminate the 2018 Plan at any time. Neither the Board nor the Compensation Committee could amend the 2018 Plan on or after the effective date of a change in control, to the extent that the amendment might adversely affect any rights which would otherwise vest on the effective date of the change in control. Similarly, neither the Board nor the Compensation Committee could unilaterally modify, amend or cancel any award previously granted without the consent of the holder of such award if such amendment would reduce or diminish the value of the award as if the award had been exercised, vested, cashed in or otherwise settled on the date of such amendment. Without the approval of our stockholders, neither the Board nor the Compensation Committee would be permitted to amend the 2018 Plan to take any action that would be considered a repricing of any award or extend the original term of an option or a SAR.
In the event of a change in control, if the surviving or acquiring corporation does not assume outstanding awards or substitute similar awards, then subject to the change in control occurring, all outstanding stock awards of participants whose employment with our company has not terminated prior to a change in control would be accelerated in full before the effective time of the change in control; provided, that (a) if any issuance or forfeiture condition described in an award relates to satisfying any performance goal, and there is a target for the performance goal, such issuance or forfeiture condition would be deemed satisfied only to the extent of the target, unless the target has been exceeded before the effective time of the change in control, in which case the performance goal will be deemed to be satisfied to extent of actual performance, and (b) a change in control would affect an RSU which is subject to Section 409A of the Code only if the change in control also constitutes a change in the ownership or effective control of our company or in the ownership of a substantial portion of our assets within the meaning of Section 409A.
In the event of a change in control, if the surviving or acquiring corporation assumes outstanding awards or substitutes similar awards, and a participant is involuntarily terminated, other than for cause, within one year after a change in control, then all of that participant's outstanding stock awards would be accelerated in full before the effective time of the change in control; provided, that (a) if any issuance or forfeiture condition described in an award relates to satisfying any performance goal, and there is a target for the performance goal, such issuance or forfeiture condition would be deemed satisfied only to the extent of the target, unless the target has been exceeded before the effective time of the change in control, in which
case the performance goal will be deemed to be satisfied to extent of actual performance, and (b) a change in control would affect a RSU which is subject to Section 409A of the Code only if the change in control also constitutes a change in the ownership or effective control of our company or in the ownership of a substantial portion of our assets within the meaning of Section 409A.
A change in control means, generally, (a) the acquisition by any person of 50% or more of the outstanding shares of common stock, (b) the current members of our Board, or their approved successors, cease to be a majority of the Board, (c) a reorganization, merger, consolidation or sale or disposition of substantially all of our assets, unless our stockholders control the resulting company, or (d) the approval by our stockholders of a complete liquidation or dissolution of our company. However, the Board, by majority vote, has the power to determine that no such change in control has occurred in certain circumstances.
Outside of a change in control, the Committee may, at its discretion, determine that, upon a participant's termination for any reason, all or a portion of that participant's options or SARs shall become fully exercisable, and deem that any award restrictions are waived and/or performance — based criteria are satisfied, except that any such acceleration remains subject to the minimum vesting requirements as described in —Minimum Vesting Requirements —on page [24].
In lieu of stock or stock-based awards held by individuals of a corporation acquired by the Company through a merger or acquisition, the Committee may grant awards under the 2018 Plan to those individuals who become employees of the Company through such transaction.
Members of the Compensation Committee, and persons to whom the Compensation Committee has delegated authority or responsibility as permitted by the 2018 Plan, would not be personally liable for any good faith acts or omissions in connection with their administration and implementation of the 2018 Plan. We would indemnify, defend and hold harmless any such person for liabilities incurred in connection with such person's or the Compensation Committee's taking or failing to take any action under the 2018 Plan, including the exercise of discretion in the administration and implementation of the 2018 Plan. However, this indemnification obligation would not apply to the extent that it is adjudged that a person otherwise entitled to indemnification failed to act in good faith and in a manner reasonably believed to be in our best interests.
The 2018 Plan provides that the number, kind or class of shares of common stock reserved for issuance under the 2018 Plan, the grant caps, the number, kind or class of shares of common stock granted pursuant to restricted stock or stock-settled RSU awards under the 2018 Plan and the payment due under RSUs under the 2018 Plan, shall be adjusted by the Compensation Committee in a reasonable and equitable manner to reflect any change in our capitalization.
In the event there is a change in the number or kind of outstanding shares under the 2018 Plan as a result of a change of control, other merger, consolidation or otherwise, then the administrator would determine the appropriate and equitable adjustment to be effected. The Compensation Committee may also make adjustments in the terms and conditions of the awards (including the performance goals applicable to such stock awards) in recognition of an unusual or nonrecurring events, including the occurrence or anticipation of any corporate event or transaction, impacting the Company. Stockholders would not be required to approve such adjustment unless approval is required under applicable law or NYSE rules.
The Committee may also amend an award, to take effect retroactively or otherwise, as necessary for the purpose of correcting any errors occurring in connection with the grant or documentation of the award.
The 2018 Plan provides that unless the Compensation Committee determines otherwise, awards may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by a participant other than by will or the laws of descent and distribution.
No Right to Company Employment
Nothing in the 2018 Plan or an award agreement would constitute a contract of employment or a right to continue to serve on the Board, and the 2018 Plan would not confer on an eligible employee or director any rights upon his or her termination of employment or service.
Except as otherwise provided herein, a participant may defer receipt or payment of any award granted under this 2018 Plan, in accordance with the terms of any deferred compensation plan or arrangement of the Company.
Under the 2018 Plan, the grant, issuance, vesting and settlement of awards thereunder, and our obligation to sell, issue or deliver shares under such awards, would be subject to all applicable federal, state, local and foreign laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. We would not be required to register in a participant's name or deliver any shares prior to the completion of any registration or qualification of such shares under any foreign, federal, state or local law or any ruling or regulation of any government body that the administrator determines to be necessary or advisable. No shares would be issued and/or transferable under any award unless a registration statement with respect to the shares underlying the award is effective and current or we determine that such registration is unnecessary.
Effective Date and Termination of the 2018 Plan
If approved by our stockholders, our 2018 Plan will become effective immediately and will remain available for the grant of awards until the 10th anniversary of the effective date (or of any amendment approved by stockholders that would increase the number of Shares available under the 2018 Plan).
The following tax discussion is a general summary as of the date of this proxy statement of the U.S. federal income tax consequences to us and participants in the 2018 Plan. The discussion is intended solely for general information and does not make specific representations to any participant. The discussion does not address state, local or foreign income tax rules or other U.S. tax provisions, such as estate or gift taxes, the alternative minimum tax, or the rules related to excess parachute payments under Code Sections 280G and 4999. A recipient's particular situation may be such that some variation of the basic rules is applicable to him or her. In addition, the federal income tax laws and regulations frequently have been revised and may be changed again at any time. Therefore, each recipient is urged to consult a tax advisor with respect to any awards and/or shares acquired under the 2018 Plan both with respect to federal income tax consequences as well as any state, local or foreign tax consequences.
Restricted Stock and Stock Units. Grantees of restricted stock or RSUs do not recognize income at the time of the grant. When the award vests or is paid, grantees generally recognize ordinary income in an
amount equal to the fair market value of the stock or units at such time, and we will receive a corresponding deduction. However, no later than 30 days after a participant receives a restricted stock award, pursuant to Section 83(b) of the Code, the participant may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the participant will not recognize any additional income. If the participant forfeits the shares to us (e.g., upon the participant's termination prior to vesting), the participant may not claim a deduction with respect to the income recognized as a result of the election. Dividends (if any) paid with respect to unvested restricted stock generally will be taxable as ordinary income to the participant at the time the dividends are received. A Section 83(b) election is generally not available for awards of options (upon grant), SARs or RSUs.
Nonqualified Stock Options. There will be no federal income tax consequences to the grantee or to the Company upon the grant of a stock option under the 2018 Plan. When the participant exercises a stock option, however, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of the common stock received upon exercise over the exercise price, and the Company expects that it will be allowed a corresponding deduction. Any gain that the participant realizes when he or she later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.
Incentive Stock Options. The participant will not recognize any income for federal income tax purposes upon receipt or exercise of an incentive stock option, and the Company will not realize a deduction for federal income tax purposes. However, upon exercise, the difference between the fair market value of a share on the date of grant and the option exercise price is a tax preference item that may subject the grantee to the alternative minimum tax. If the grantee does not dispose of the incentive stock option shares within two years from the date the option was granted or within one year after the shares were transferred to him or her on exercise of the option, then upon any subsequent disposition, that portion of the gain on the sale of the shares that is equal to the difference between the sales price and the option exercise price will be treated as a long-term capital gain. The Company will not be entitled to a deduction either at the time the grantee exercises the incentive stock option or subsequently sells the incentive stock option shares. However, if the grantee sells the incentive stock option shares within two years after the date the incentive stock option is granted or within one year after the date the incentive stock option is exercised, then the sale is considered a disqualifying sale, and the spread on exercise will be taxed as ordinary income. The balance of the gain will be treated as long- or short-term capital gain depending on the length of time the grantee held the stock. If the shares decline in value after the date of exercise, the compensation income will be limited to the difference between the sale price and the amount paid for the shares. The tax will be imposed in the year the disqualifying sale is made. The Company will be entitled to a deduction equal to the ordinary income recognized by the grantee in a disqualifying sale.
Stock Appreciation Rights. A participant receiving a stock appreciation right will not recognize income, and the Company will not be allowed a tax deduction, at the time the award is granted. When the participant exercises the stock appreciation right, the amount of cash and the fair market value of any shares of common stock received will be ordinary income to the participant and the Company expects that it will be allowed a corresponding federal income tax deduction at that time.
Cash-Based Awards. A participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a cash-based award is granted (for example, when the performance goals are established). Upon receipt of cash in settlement of the award, a participant will recognize ordinary income equal to the cash received, and the Company will be allowed a corresponding federal income tax deduction at that time.
Company Deduction and Section 162(m). We generally will be entitled to a deduction for federal income tax purposes when the participant recognizes taxable income as described above with respect to each type
of award. For our chief executive officer, chief financial officer, and for the individuals serving as officers who are among the three highest compensated officers (other than the chief executive officer and chief financial officer) for proxy reporting purposes, Section 162(m) limits the amount of compensation otherwise deductible by us to $1,000,000 per year for each such individual. There is an exception for performance-based compensation granted pursuant to a binding contract that was in effect on or before November 2, 2017, but that exception will not apply for awards under the 2018 Plan.
Section 409A Compliance. The Company intends that the 2018 Plan, and awards granted under it, will either be exempt from, or in compliance with, Section 409A of the Code. However, neither the company nor the Compensation Committee is required to take any action to prevent the assessment of any tax or penalty on a participant under Section 409A. The 2018 Plan states that neither the Company nor the Compensation Committee will have any liability to a participant for such a tax or penalty under Code Section 409A. Any payment that falls within the scope of Section 409A of the Code will be paid on the first business day after the requisite six-month period after the participant terminates employment.
New Plan Benefits
The benefits that could be awarded or paid under the 2018 Plan would be determined in the discretion of the Compensation Committee. Because the Compensation Committee has not determined future awards or who might receive them, the benefits that could be awarded or paid under the 2018 Plan are not currently determinable.
Vote Required
To be approved, this Proposal 2 must receive the affirmative vote of a majority of the shares of our common stock cast at the annual meeting.
The audit committee of the board of directors has furnished the following report:
The audit committee assists the board of directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. This committee's role and responsibilities are set forth in a charter adopted by the board of directors, which is available on our website atwww.knoll.com. This committee reviews and reassesses our charter annually and recommends any changes to the board of directors for approval. The audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of our independent registered public accounting firm. In fulfilling its responsibilities for the financial statements for fiscal year 2017, the audit committee took the following actions:
Based on the audit committee's review of the audited financial statements and discussions with management and Ernst & Young LLP, including meetings held without management present, the audit committee recommended to the board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 for filing with the SEC.
Members of our audit committee
John F. Maypole (Chairman)
Stephen F. Fisher
Sarah E. Nash
Kathleen G. Bradley
PROPOSAL 3 — INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee has appointed Ernst & Young LLP, as our independent registered public accounting firm, to audit our financial statements for the fiscal year ending December 31, 2018. The board of directors proposes that the stockholders ratify this appointment. Although ratification is not required, the board of directors is submitting the selection of Ernst & Young LLP to our stockholders for ratification as a matter of good corporate practice. In the event the stockholders do not ratify the appointment, the appointment will be reconsidered by the audit committee, but the audit committee is not required to appoint another independent registered public accounting firm. Even if the selection is ratified, the audit committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our company and our stockholders.
Ernst & Young LLP has audited our financial statements for the fiscal years ended December 31, 1996 through 2017. We expect that representatives of Ernst & Young LLP will be present at the Annual Meeting of Stockholders, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.
The following table presents fees for professional audit services rendered by Ernst & Young LLP for the audit of our annual financial statements for the years ended December 31, 2017 and 2016, and fees billed for other services rendered by Ernst & Young LLP during those periods.
| 2017 | 2016 | |||||
---|---|---|---|---|---|---|---|
| | | | | | | |
Audit Fees1: | $ | 1,990,588 | $ | 1,742,357 | |||
Audit-Related Fees2: | | 0 | | 80,805 | |||
Tax Fees: | | 0 | | 0 | |||
All Other Fees: | | 1,995 | | 2,000 | |||
| | | | | | | |
Total | $ | 1,992,583 | $ | 1,825,162 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Registered Public Accounting Firm
The audit committee has responsibility for appointing, setting compensation and overseeing the work of the independent registered public accounting firm and pre-approving all audit and permitted non-audit services that may be performed by the independent registered public accounting firm. In recognition of this responsibility, the audit committee has pre-approved compensating Ernst & Young LLP for certain services that they may provide during 2018 based on the specific service or category of service. In addition, the audit committee has delegated authority to its Chairman, John F. Maypole, to approve additional compensation for appropriate miscellaneous services, subject to certain limits depending on the specific service or category of service. Any such approval would be reported to the audit committee at its next meeting.
For fiscal year 2017 and 2016, all audit and non-audit services described above were pre-approved by the audit committee.
The affirmative vote of a majority of the shares present or represented and entitled to vote at the Annual Meeting is required to ratify the audit committee's appointment of the independent registered public accounting firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
PROPOSAL 4 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
Section 14A to the Exchange Act requires that we provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC's rules.
As described in detail under the heading "Compensation Discussion and Analysis," our executive compensation programs are generally designed to provide competitive compensation packages that will attract and retain superior talent, motivate our executive officers to achieve desired company and individual performance and to appropriately reward that performance, and align the interests of our executive officers with the long-term interests of our stockholders.
The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote relates to the overall compensation of our named executive officers, as well as the philosophy, policies and practices, all as described in this proxy statement. The vote is advisory, and therefore it is not binding on the company, the compensation committee or our board of directors. We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. The next advisory vote on the compensation of our named executive officers will be at the 2019 Annual Meeting of Stockholders.
The affirmative vote of a majority of the shares present or represented and entitled to vote at the Annual Meeting is required to approve this Proposal 4.
"RESOLVED, that the company's stockholders approve, on a nonbinding, advisory basis, the compensation of the named executive officers, as disclosed in the company's Proxy Statement for the 2018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.
Set forth below are the names of our executive officers, who are not also directors, their ages as of February 29, 2016,28, 2018, their offices within the company, their principal occupations or employment for the past five years and the names of other public companies in which such persons hold directorships.
Name | Age | Position | |||
---|---|---|---|---|---|
| | | | | |
| |||||
Roxanne B. Klein | 41 | Senior Vice President — Human Resources | |||
Benjamin A. Pardo | |||||
| Executive Vice President | ||||
Michael A. Pollner | 45 | Senior Vice President, Chief Administrative Officer, General Counsel and Secretary | |||
| |||||
| Executive Vice | ||||
| |||||
| Senior Vice President and Chief |
Joseph T. Coppola has served as our Chief Operating Officer since June 1, 2015. Prior to joining us, Mr. Coppola served as Vice President, Global Supply Chain, at Boart Longyear, an international provider of mineral exploration drilling services and drilling products, a position he held from 2013 until May 2015. Prior to that, Mr. Coppola held the title of Vice President, Manufacturing with Boart Longyear from 2006 to 2013. Prior to joining Boart Longyear in 2006, Mr. Coppola held senior supply chain roles with the Mechanical Systems and Airframe Systems units of Honeywell International. He also served in operations and manufacturing roles with Eaton Corporation and Norfolk Southern Corporation.
Benjamin A. Pardo has served as our Executive Vice President—Director of Design, since June 9, 2011. Prior to that, Mr. Pardo served as our Senior Vice President—Director of Design since September 2005. Prior to joining us, Mr. Pardo was President of Unifor, Inc., where he had been employed since 1988.
Craig B. SprayScott F. Cameron has served as our Senior Vice President and Chief Financial Officer— Operations since September 23, 2013. From 2005 untilJuly 2017. Prior to joining Knoll, Mr. Spray served in various financial management positions with Fortune Brands, Inc. and its related companies, including, most recently, as Executive Vice President and Chief Financial Officer of Masterbrand Cabinets, Inc., the kitchen and bath cabinetry subsidiary of Fortune Brands Home & Security, Inc. From 2001 through 2005 Mr. Spray served in various finance roles at Ford Motor Company. Mr. Spray has alsoCameron served as a United States Naval Officer in various leadership roles.
Michael A. Pollner became our Senior Vice President, General CounselGlobal Director of Operations and Secretary on February 3, 2015.Supply Chain with PPG Industries, Protective and Marine Coatings from 2014 to 2017. Prior to that, Mr. Pollner served as our Vice President, General Counsel and Secretary from March 1, 2007 until February 2015, and as our Assistant General Counsel from September 1, 2005 until March 1, 2007. Prior to joining us, Mr. Pollner was a lawyer with the law firm, Blank Rome LLP, which heCameron who originally joined PPG in February 2004. From September 1999 to February 2004, Mr. Pollner was a member of the business law department at Cohen & Grigsby, P.C. in Pittsburgh, Pennsylvania.
Pamela J. Ahrens became our Senior Vice President—Sales and Distribution on September 3, 2013. Prior to joining us, Ms. Ahrens had a thirty-year career with Xerox Corporation holding1994, held a variety of titles including Senior Vice Presidentoperations positions with PPG and General Manager, Northeast Operations (from 2012 until 2013), Senior Vice President, Strategic Business Unit Client Salesled plants in Canada, Europe, Asia, the Middle East and Operations (from 2011 until 2012), Senior Vice President, Major Accounts (2011) and Senior Vice President Indirect Channels, Eastern and Central Region (from 2006 until 2010).the United States.
Roxanne B. Klein has served as our Senior Vice President—President — Human Resources since November 23, 2015. Prior to that, Ms. Klein served as our Vice President, Human Resources for our Knoll Office
division from June 2014 until November 2015, Director, Human Resources from October 2010 until June 2014 and as our Manager, Human Resources from April 2007 until October 2010. Prior to joining us, Ms. Klein worked for Praxair, Inc. as Regional Human Resources Manager from March 2006 until April 2007 and for Danaher Corporation as Director, Human Resources from May 2004 until March 2006. Ms. Klein has over 15 years of Human Resources experience in a variety of businesses.
Roger B. WallBenjamin A. Pardo has served as our Executive Vice President Coverings— Director of Design, since May 2014.June 9, 2011. Prior to that, Mr. WallPardo served as our Senior Vice President — Director of Spinneybeck Enterprises, Inc., a wholly-owned subsidiary of Knoll, Inc. from 1996 until 2014.
Michael A. Beattie became our Global Chief Information Officer on April 28, 2014.Design since September 2005. Prior to joining us, Mr. BeattiePardo was President of Unifor, Inc., where he had been employed since 1988.
Michael A. Pollner became our Senior Vice President, Chief Administrative Officer, General Counsel & Secretary effective January 1, 2018. Prior to that, Mr. Pollner served as Senior Vice President, General Counsel and Secretary from February 3, 2015 until December 2017, as our Vice President, General Counsel and Secretary from March 1, 2007 until February 2015, and as our Assistant General Counsel from September 1, 2005 until March 1, 2007. Prior to joining us, Mr. Pollner was a corporate business lawyer with the law firm, Blank Rome LLP, in Philadelphia, Pennsylvania.
David L. Schutte was appointed Executive Vice President — Specialty Businesses, in December 2016, overseeing Knoll's portfolio of specialty businesses. Previously, he served as President of HOLLY HUNT for 3 years and as Knoll Senior Vice President and Chief InformationMarketing Officer for 7 years. Mr. Schutte began his career with Knoll in 1990 and served until 1995 in several roles including Director of Aramark Uniform Services from October 2012 until April 2014Marketing for KnollStudio. Subsequently, Mr. Schutte held several senior positions in the contract office furniture industry including Vice President of Marketing for Maharam and Vice President of A&D Sales for Herman Miller. He rejoined Knoll in May 2004 as Vice President IT Application Development from January 2010 until October 2012. From January 2001 until January 2010, Mr. Beattieand General Manager of KnollTextiles, a position he held for two and one-half years.
Charles W. Rayfield has served as IT Director at Intel Corporation.our Senior Vice President and Chief Financial Officer since August 2017. Prior to that, Mr. Rayfield served as our Vice President and Corporate Controller from November 2015 until August 2017. Prior to joining us, Mr. Rayfield served as the Vice President, Corporate Controller of The Providence Service Corporation from September 2013 to November 2015 and as the Corporate Controller of Bio Telemetry, Inc. from 2008 to 2013.
Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of February 28, 2018, for (a) the executive officers named in the Summary Compensation Table on page 55 of this proxy statement, (b) each of our directors and director nominees, (c) all of our directors and executive officers as a group, and (d) each stockholder known by us to own beneficially more than 5% of our outstanding common stock. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, subject to community property laws, based on information provided to us by these stockholders. Percentage of ownership is based on 49,500,661 shares of common stock outstanding on February 28, 2018, including 48,596,047 shares of stock entitled to vote and 904,614 shares of restricted stock that are not entitled to vote.
| Common Stock Beneficially Owned | ||||||
---|---|---|---|---|---|---|---|
Name of Beneficial Owner | Number | Percent1 | |||||
| | | | | | | |
Stockholders owning approximately 5% or more: | | | |||||
The Vanguard Group, Inc.2 | | 4,211,216 | | 8.5 | |||
FMR, LLC3 | | 3,740,149 | | 7.6 | |||
Blackrock, Inc.4 | | 3,040,281 | | 6.1 | |||
Silvercrest Asset Management Group, LLC5 | | 2,995,454 | | 6.1 | |||
Directors and Executive Officers: | | | |||||
Burton B. Staniar | | 89,685 | | * | |||
Andrew B. Cogan6 | | 471,159 | | * | |||
Charles W. Rayfield7 | | 0 | | * | |||
Benjamin A. Pardo8 | | 11,122 | | * | |||
Michael A. Pollner9 | | 26,550 | | * | |||
David L. Schutte10 | | 41,093 | | * | |||
Jeffrey A. Harris1112 | | 78,179 | | * | |||
Sidney Lapidus11 | | 179,400 | | * | |||
Kathleen G. Bradley11 | | 120,199 | | * | |||
John F. Maypole11 | | 32,101 | | * | |||
Stephen F. Fisher11 | | 42,337 | | * | |||
Sarah E. Nash11 | | 29,568 | | * | |||
Stephanie Stahl11 | | 10,317 | | * | |||
Christopher G. Kennedy11 | | 18,438 | | * | |||
Daniel W. Dienst | | 0 | | * | |||
All directors and executive officers as a group (17 persons)13 | | 1,113,732 | | 1.9 |
Compensation Discussion andAnd Analysis ("CD&A")
This Compensation Discussion and Analysis addresses theCD&A describes our executive compensation paid or awardedprogram for our five most highly compensated executive officers. For this year, our CD&A also applies to our fiveformer Senior Vice President and Chief Financial Officer, Craig B. Spray, who resigned effective June 23, 2017, and Joseph T. Coppola, our former Chief Operating Officer, who passed away on December 27, 2017. These executive officers, listed in the Summary Compensation Table below. These executive officerschart below, are referred to in this proxy statement as our "named executive officers". Our compensation policies discussed below generally apply equally to all of our executive officers, but for purposes of this compensation discussion and analysisCD&A references to "executive officers" or "officers" refer to our named executive officers, unless the context indicates otherwise.
Named Executive Officers | ||
Name | Title | |
Andrew B. Cogan | President and Chief Executive Officer, Director | |
Charles W. Rayfield | Senior Vice President and Chief Financial Officer | |
Craig B. Spray | Former Senior Vice President and Chief Financial Officer | |
Joseph T. Coppola | Former Chief Operating Officer | |
Benjamin A. Pardo | Executive Vice President — Director of Design | |
Michael A. Pollner | Senior Vice President, Chief Administrative Officer, General Counsel and Secretary | |
David L. Schutte | Executive Vice President — Specialty Businesses | |
Overview How did we respond to our 2017 Advisory Vote on Executive Compensation?
2015 was a strong year for Knoll asAt the business delivered strong operating2017 Annual Meeting of Stockholders, stockholders representing approximately 82% of our issued and outstanding shares of stock voted in favor of our advisory say on pay proposal, relating to the compensation of our named executive officers.
The compensation committee has reviewed the final vote results that improved uponof our accomplishmentssay on pay proposal and continued to discuss our executive compensation policies and decisions with our stockholders. Based on the substantial support we received in 2014 and exceeded2017, we did not make any substantial changes to our 2015 operating profit target. We delivered industry-leading levels of profitabilitycompensation program other than to adjust payouts under the 2017 non-equity incentive program to reflect our performance relative to the goals set forth in the company's 2017 financial plan.
In response to prior say on pay votes, and as a result of our publicly-traded peers and gained market sharedialogue with stockholders, we have incorporated a number of features into our compensation programs:
We remain willing to discuss any compensation concerns with our stockholders if and when they arise.
Our fiscal 2017 financial results were mixed, although consistent with our overall industry:
Virtually every segment of the business contributed to our strong results. Net sales for our Office segment in 2015 were $686.9 million, an increase of 4.7%, when compared with 2014. Operating profit for the Office segment in 2015year decreased 35.5% to $88 million, compared to operating profit of $136.3 million for 2016. Adjusted operating profit was $43.1 million, an increase of 96.4%, when compared with 2014. Net sales for the Studio segment in 2015 were $303.8 million, an increase of $24.7 million, or 8.8%, when compared with 2014. Operating profit for the Studio segment in 2015 was $43.3 million, an increase of 29.1%, when compared with 2014. While net sales for the Coverings segment in 2015 decreased slightly, for the full year 2015, Spinneybeck -- FilzFelt and KnollTextiles both grew. Operating profit for the Coverings segment in 2015 was $14.6$109.2 million, a decrease of $6.7 million, or 31.3%,19.9% when compared with 2014. However, excluding the impact of a one-time impairment charge,to adjusted operating profit of $136.3 million in 2016.
During the first quarter of 2018, we successfully completed the acquisition of Muuto A.p.S. ("Muuto"), the Copenhagen-based designer and provider of affordable luxury furniture, lighting and accessories for the Coverings segment was $25.3 million for 2015, an increase of $2.9 million, or 12.9%, compared to 2014. (SeeExhibit A).
In 2015workplace and home. Concurrent with the Muuto acquisition, we also aggressively managedamended our balance sheet, while simultaneously increasingcredit facility, which now consists of a revolving commitment of $400.0 million, a U.S. term loan commitment of $250.0 million and a multi-currency term loan commitment of €81.7 million. The proceeds of the credit facility were used to fund the Muuto acquisition, refinance certain indebtedness and for ongoing working capital requirements.
Because we only partially achieved our dividend. As of December 31, 2015, our bank leverage was 1.67 times EBITDA, down from 2.41 times EBITDA a year ago. (For details2017 profits plan, but recognizing other subjective achievements like the progress on the leverage ratio calculations, seeExhibit A on page 52). InMuuto acquisition and the fourth quarter, we increasedcredit facility, our dividend by 25%. In the aggregate we paid $24.4 million in dividends to our stockholders for 2015.
As a result of our strong operating performance and year-over-year improvement in sales and operating profits that exceeded our 2015 plan targets, our executive officers received 2015compensation committee approved 2017 non-equity incentive payments that were above target. Base salaries for certain of our executive officers were also increased effective July 1, 2015. We also made equity grants to our executive officers that included both time and performance-based vesting features.were approximately 60% of the target amount.
In general, four strategic imperatives guide our growth:
Our strategy and compensation systems have generated significant growth in our sales, margins and profits; however, 2017 represented a pause in our overall improvement:
Note: Adjusted EBITDA and Percentage, and Adjusted EPS are non-GAAP financial measures. For a reconciliation of Net Earnings to Adjusted EBITDA and Percentage and Adjusted EPS to GAAP EPS, see page 74.
What Are Our Compensation Practices?
Elements of Executive Compensation ProgramObjectives
Our executive compensation programs areprogram is generally designed to:
We believe that motivating Compensation Principles and rewarding exceptional performance is the overriding principle of our executive compensation programs.Policies
Our executive compensation programs are comprised of: (i) base salary; (ii) annual non-equity incentive bonuses, which are discretionary, but based primarily on the achievement of company objectives and performance; and (iii) long-term incentive compensation in the form of periodic equity awards.
The following table sets forthawards that include both time-vesting restricted shares and performance-based stock units that vest on the primary objectives addressed by each componentbasis of our operating performance and total shareholder return ("TSR"). Because our annual incentive and long-term incentive compensation are either discretionary or contingent upon the achievement of our performance goals, our senior executives have a substantial portion of their compensation at risk.
Our executive compensation programs.program reflects the following best practices:
Have employment agreements or change-of-control agreements with our named executive officers other than Mr. Cogan, and that agreement has an annual term. | ||||||
| | | | | | |
✓ | Require compliance with our Stock Ownership Guidelines, which require that our executive officers own a specified value of | ✘ | Provide tax gross-ups for our named executive officers. | |||
| | | | | | |
✓ | Have a Compensation Committee comprised entirely of independent directors who use an independent consultant retained by the Compensation Committee. | ✘ | Time the grants of equity awards to coordinate with | |||
| | | | | | |
✓ | Have ongoing consideration and oversight by the Compensation Committee with respect to any potential risks associated with our incentive compensation programs. | ✘ | Provide material executive perquisites such as corporate aircraft, executive life insurance, tax or estate planning services. | |||
| | | | | | |
✓ | Operate a Clawback Policy for Section 16 Officers which permits the company to recover excess incentive compensation in the event of a restatement. | ✘ | Provide supplemental retirement benefits to our executive officers | |||
| | | | | | |
✓ | Prohibit our associates through our Insider Trading Policy from engaging in hedging transaction in our stock | ✘ | Operate deferred compensation plans for our executive officers. | |||
| | | | | | |
✓ | Utilize "double trigger" change-in-control provisions in our equity award agreements for awards made after August 2016, | ✘ | Operate a stockholder rights plan (Poison Pill). |
Our named executive officers are also provided severance How Are Compensation Decisions Made?
Role of the Compensation Committee and change-in-control protections, which can be triggered in a number of scenarios, and also may participate in our standard retirement plans on the same basis as our associates generally. Our named executive officers are not generally provided with any material perquisites.
ProcessManagement
The compensation committee has overall responsibility for our executive compensation program. Our compensation committee generally meets at least three times a year formally and on more occasions as needed. Members of our compensation committee also discuss compensation matters with our chief executive officer and among themselves informally throughout the year in an effort to both (i) monitor the appropriateness of our executive compensation packages on an on-going basis and (ii) prepare for the formal compensation committee meetings and the definitive compensation decisions that are made at those meetings.
At formal compensation committee meetings, our chief executive officer presents the compensation committee with his recommendations regarding compensation for the named executive officers. In connection with these recommendations, the compensation committee is provided with information on the executive officers' existing compensation arrangements, equity awards and compensation history, if requested. The committee is also provided (and considers) our actual financial performance, both in relation to the performance targets set and in relation to the industry as a whole. Other factors, including the executive officer's individual performance and any extraordinary efforts or hurdles faced by the executive officer, may also be considered.
After reviewing the chief executive officer's recommendations and the other relevant information, the compensation committee determines the compensation packages for each of the named executive officers
other than our chief executive officer. The compensation committee typically makes a
recommendation to our full board of directors with respect to the cash compensation arrangements for our chief executive officer. Our board of directors then evaluates those recommendations and any other information it deems appropriate and determines the applicable cash compensation levels for our chief executive officer.
Our chief executive officer may also periodically recommend to the compensation committee that certain executive officers receive equity grants. We do not have a formal policy Role of standard or periodic equity grants to executive officers. However, we have made equity grants to most of our named executive officers each of the past three years. These grants are typically based on the executive officers' then-outstanding equity and the responsibilities that such executive officer has managed in the past or is expected to manage in the future, and any other factors deemed relevant by the compensation committee.
Independent Compensation Consultants and Peer GroupConsultant
In 20132016, the compensation committee directly engaged Pearl Meyer & Partners ("Pearl Meyer"),Willis Towers Watson, an independent compensation consultant, for the purpose of conducting an overalla review of our executive compensation programs. Pearl MeyerWillis Towers Watson provides no other services for the Company. As part of its engagement, Pearl MeyerWillis Towers Watson evaluated the base salary, annual non-equity incentive and long-term equity components of our executive compensation programs for our most senior executives, including our named executive officers. Working with Pearl Meyer, the compensation committee developed a peer group consisting of the following companies: Herman Miller, Inc., Steelcase, Inc., HNI Corporation, Kimball International, Inc., Interface, Inc., Movado Group, Inc., and Tumi Holdings, Inc. (the "Peer Group"). Pearl MeyerWillis Towers Watson evaluated the competitiveness of our compensation programs using proxy information from the companies included as part of thein our Peer Group (as described below), and also considered data compiled from published surveys of executive compensation for other comparably-sized companies within the durable goods consumer products sectors. The compensation committee considered this data, among other factors, in determining the components and amounts of compensation that are appropriate for the Company's named executive officers. However, the compensation committee did not establish formal benchmarked compensation targets or ranges for our executive officers based on this information. Instead, this information was used as a general market resource in making compensation decisions regarding base salaries, annual non-equity incentive compensation and longer term equity grants.
In 2017, the compensation committee engaged Willis Towers Watson for the purpose of reviewing our non-employee director compensation. Following this review, the annual grant of restricted stock made to non-employee directors under the Non-Employee Director Compensation Plan was increased to $90,000, effective January 1, 2018, and the vesting schedule for such grants was reduced from three years to two years.
Base Salary Compensation Peer Group
In 2017, in conjunction with our work with Willis Towers Watson, the compensation committee developed a new peer group for purposes of assessing our relative TSR performance in relation to our grants of performance-based restricted stock. In establishing this peer group, the compensation committee took into account a number of factors including (i) companies where we primarily compete for executive talent, (ii) industry, and (iii) size and complexity. TSR peer group consists of the following companies:
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ABM Industries Incorporated | Kimball International, Inc. | |||||||
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ACCO Brands Corporation | Matthews International Corporation | |||||||
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Deluxe Corporation | MSA Safety Incorporated | |||||||
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Herman Miller, Inc. | Robert Half International Inc. | |||||||
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HNI Corporation | Steelcase Inc. | |||||||
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Interface, Inc. | West Corporation | |||||||
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Kelly Services, Inc | ||||||||
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How Do We Compensate Our CEO and other NEOs?
Elements of Executive Compensation Program
Our executive compensation programs are comprised of: (i) base salary; (ii) annual non-equity incentive bonuses, which are discretionary, but based primarily on the achievement of company objectives and performance; and (iii) long-term incentive compensation in the form of periodic equity awards.
The following sets forth the primary objectives addressed by each component of our executive compensation programs:
Our named executive officers are also provided severance and change-in-control protections, which can be triggered in a number of scenarios, and also may participate in our standard retirement plans on the same basis as our associates generally. Our named executive officers are not generally provided with any material perquisites.
The compensation committee reviews base salary levels for executive officers on an annual basis and any changes are typically made mid-year. Currently, our only named executive officer with a written employment agreement is our Chief Executive Officer, Mr. Cogan.Cogan, and that agreement has an annual term.
We attempt to set base salaries at levels that are competitive in the industry and in relation to the particular job function of the executive officer. The annual base salary provides a base level of compensation for services rendered during the year and is intended to reward the executive officer for the day-to-day complexities and difficulties of his/her job. We believe this provides the executive with a fair level of compensation, but also enables our annual discretionary non-equity incentive bonuses and equity grants to have a significant motivating impact on the executive officers. Effective July 1, 2017 (or, in the case of
Mr. Rayfield, August 9, 2017 upon his promotion to Chief Financial Officer), the base salaries of our executive officers were as follows:
Name | Salary | |||
---|---|---|---|---|
| | | | |
Andrew B. Cogan | $ | 1,020,000 | ||
Charles W. Rayfield | $ | 300,000 | ||
Benjamin A. Pardo | $ | 307,000 | ||
Michael A. Pollner | $ | 300,000 | ||
David L. Schutte | $ | 350,000 |
Financial Metrics and Subjective Criteria
In connection with our "at-risk" performance compensation, we consider a variety financial metrics (including revenue growth, gross margins, and earnings per share growth), as well as subjective factors such as new product development, acquisitions, and balance sheet management, when making our compensation decisions. We use a number of performance metrics under our equity awards as the trigger target for vesting under portions of our performance-based stock units. These include operating profit, earnings before interest, depreciation and taxes (EBITDA) and total shareholder return (TSR). When evaluating our performance, we believe infrequent or non-recurring items, should be disregarded when we evaluate our performance or compare our performance with the performance of our competitors.
Annual Non-Equity Incentive Bonuses
We award non-equity incentive bonuses on an annual basis. Our annual incentive bonuses are primarily intended to motivate our executive officers to exceed our performance objectives for the year. Typically,In the past, our incentive compensation program is principallyhas been typically focused on operating profit (basedbased on our financial plan for the year and adjusted as necessaryyear; however, beginning in 2018, we will transition to account for one-time and non-recurring items,
TableEBITDA to further align our performance measurement with the expectations of Contents
such as restructuring charges, that are not indicative of operating performance). In addition, our awards sometimes includestockholders. We also consider supplemental goals which may be considered by the compensation committee, in its discretion. These additional goals are merely supplemental measures designed to provide the named executive officers with guidance regardingdetermining annual non-equity incentive bonuses (for example, new product introductions, successful acquisitions, and management of our expectations for performance.balance sheet). Our compensation committee also may, in its discretion, consider the operating performance of our individual business segments; namely, Office, Studio and Coverings, or establish supplemental measures relating to segment performance to the extent there is a relationship between the specific named executive officer's duties and the performance of a particular business segment. We do not use specific quantitative formulas in calculating any of our incentive payments.
The target payouts on our annual non-equity incentive bonuses are generally around 100% of the executive officer's base salary and therefore, provide an opportunity for the executive officerfinancial targets used in connection with these bonuses generally relate to significantly increase his/herour annual cash compensationfinancial plan that is submitted to and approved by delivering strong performance and assistingour board of directors in December of the company in meeting its operating goals. We believe this potential increase in annual cash compensation keeps our executive officers highly motivated and, when performance targets are met and exceeded, appropriately rewarded for their hard work and exceptional performance in what are very demanding jobs.prior year.
The compensation committee ultimately determines the amount of each executive's actual non-equity incentive payment based principally based on our ability to meetachievement of the company's operating goals. When appropriate ingoals relative to our financial plan; however, the discretion of the compensation committee, an assessment of the officer's progress toward achieving supplemental goals, strategic initiatives or an evaluation of specific business segment performance may be conducted. As explained above, the compensation committee typically makes a recommendation to the board of directors with respect to the annual incentive payments for the chief executive officer, and the board of directors makes the final determination of such amounts. These annual payments are disclosed in the "non-equity incentive plan compensation" column of the Summary Compensation Table below.
The compensation committee has significant flexibility to increase or decrease the amounts paid under the non-equity incentive awards, regardless of whether the targets are achieved. However, in response to the concerns previously expressed by certain of our stockholders regarding the discretionary nature of our program, commencing with the 2017 annual non-equity incentive program, bonuses for our named executive officers have been capped at 120% of the executive officer's base salary. These annual payments are disclosed in the "non-equity incentive plan compensation" column of the Summary Compensation Table below. Rather than relying on rigid formulas and calculations, we use our judgment and discretion to determine payouts that we believe are appropriate under the circumstances. The decision to increase or decrease an actual payout under the award is generally based on a variety of factors we deem appropriate, including, without limitation, our overall performance for the year, the individual executive's performance, supplemental factors, the business environment existing during the year and any
extraordinary obstacles that may have arisen during the course of the year. Our officers can be significantly rewarded when the company and individual performance measures are exceeded. Conversely, our officers generally receive significantly smaller cash payouts when our company and/or individual performance measures are not met.
By structuring these annual incentive bonuses in a way that permits us to exercise discretion and to consider individual performance metrics related specifically to the role of the executive officer, as well as overall company performance, (typically operating profit), we enable our executive officers to have a more direct impact on the ultimate payout under their individual annual incentive bonuses. Although their individual performance impacts the overall company performance metric, the satisfaction of that company metric is dependent on the performance of many other parts of the company and can also be impacted by general economic factors outside of anyone's control. In the event overall company performance falls short of the desired target in any given year, we can adjust the payout downward under the award for some executive officers, and at the same time reward other executive officers who met or exceeded their individual performance targets or otherwise performed in a manner that deserved additional recognition, as we determine to be equitable.
The financial targets used in our annual non-equity incentive compensation programs generally relate to our annual financial plan that is submitted to and approved by our board of directors in
December of the prior year. Accordingly, these awards are intended to motivate and drive our officers to achieve (and exceed) those financial plan targets. While supplemental goals may be included, our annual operating profit performance is generally central to our compensation decisions.
Long-term Incentive Compensation—Compensation — Equity Grants
We believe that our executive officers should have significant equity interests, and have designed our compensation programs accordingly. Long-term incentive compensation is a key component of our executive compensation program and serves a retention, motivation and reward function. Equity awards also align the interests of our executive officers with those of our stockholders and reward our executive officers by allowing them to share in any appreciation in the value of our common stock. They are designed to reward a longer performance horizon than our annual non-equity incentive bonuses, typically three to five years, which also serves to mitigate the risk that an executive officer would overly focus on short-term goals to the detriment of the company's long-term success.
We do not apply a formula for determining the specific equity award levels for our executive officers. Rather, the determination is a result of the compensation committee's discretion and judgment as to what is appropriate in light of all of the circumstances, including our strategic and operational objectives, our stock price, the responsibilities of the executive officers, the amounts of the executive officers' then-outstanding equity awards, the compensation of our peers and any other factors that the compensation committee determines are relevant. In exercising its discretion, the compensation committee relies on the individual experiences and perspectives of its members and dialogue with our chief executive officer in evaluating whether the specific recommended grant levels will have the desired effect.
Restricted Shares—Shares — Time Vesting.
We periodically grant time vesting restricted shares to our executive officers and other key employees. These restricted share grants are typically structured to vest on a specified anniversary date, generally betweenon the third and fifth anniversary of the date of grant, at which point the restrictions on the shares lapse and the vested shares may be voted and disposed of by the grantees. The vesting of the restricted shares can also accelerate (on a pro rata basis) upon a change-in-control of the company, death, disability and upon termination without cause. Unvested restricted shares are forfeited if the grantee voluntarily leaves the company prior to the vesting or is terminated for "cause" (as defined in the applicable restricted share agreement or stock incentive plan). Dividends that are paid on our common stock during the vesting period of any restricted shares are typically accrued and paid out to the grantee when the restricted shares vests. In 2016, we inserted a "double-trigger" change-in-control definition into our restricted share grants. This provision states that vesting can accelerate upon a change-in-control, but only when a termination of employment occurs within the 12-month period following the change-in-control.
Performance-Based Restricted Stock Units.Units Following the Pearl Meyer Compensation Study,.
In addition to time vesting restricted shares, we began toalso grant performance-based restricted stock units. These grants have been structured such that fifty (50%) percent of the award vests if the Company achieves certain three-year operating profit targets and the remaining fifty percent (50%) of the award vests if the Company's total shareholder return (calculated in accordance with the applicable restricted stock unit agreement) exceeds the median total shareholder return of the Peer Group. We believe theseour performance grants have both a strong retentive influence on our executive officers and, at the same time, keep them appropriately motivated by incentivizing them to achieve our financial goals and deliver returns forto stockholders. Our grants are subject to two separate performance conditions:
In order for our executive officers to earn all of their performance-based awards, they need to successfully deliver operating profit and generate shareholder returns which compare favorably to our peers.
Tax Implications of Executive Compensation
Internal Revenue Code Section 162(m) limits to $1 million the tax deduction available to public companies for annual compensation that is paid to covered employees (generally, the named executive officers). In evaluating compensation programs applicable to our named executive officers, we consider the potential impact on the Company of Code Section 162(m) while maintaining maximum flexibility in the design of our compensation programs and in making appropriate payments to named executive officers, and consequently, may elect to provide compensation arrangements that may not be fully tax deductible under Code Section 162(m).
For taxable years beginning prior to December 31, 2017, certain performance-based compensation was exempted from Section 162(m)'s deduction limit. However, the exemption from Section 162(m)'s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our named executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Despite our efforts to consider the potential impact on the Company of Code Section 162(m) in structuring our named executive officers' annual compensation, compensation for our covered employees (including our named executive officers) in excess of $1 million will not be deductible, except such performance-based compensation that may qualify for the transition relief. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing Section 162(m)'s exemption from the deduction limit, no assurance can be given that compensation given to our covered employees (including our named executive officers) intended to qualify for the transition relief, will be exempt from the deduction limit.
Retention Feature.Retirement Benefits When an
Our executive officer leavesofficers participate in the company unvested restricted share and stock unit awards are generally forfeited. TheKnoll Retirement Savings Plan pursuant to which they receive matching contributions of 50% of their voluntary contributions, up to a maximum amount of equity provided6% of eligible compensation ($270,000 for 2017), plus potential profit-sharing and transition contributions based on age and length of service. Our executive officers who joined Knoll prior to an executive officer is typically evaluated withJanuary 1, 2011 also participate in the Knoll Pension Plan, a view to making sure thatnoncontributory defined benefit plan. However, effective January 1, 2016, the equity (whether restricted shares, units, stock options, or otherwise) has significant enough value that the forfeiture of the equity upon voluntarily leaving the company significantly discouragesKnoll Pension Plan was frozen for all participants, including our executive officers from seeking other employment opportunities and from entertaining other employment opportunities that may otherwise arise.]
Motivation and Reward Feature. In addition toofficers. For more information on the retention aspect of restricted shares and stock units, we also believe stock option and restricted share and stock unit awards serve a motivation and reward function. The higher our stock price at vesting, the more valuable these equity awards become to the grantee. Over the vesting period, grantees can increase the value of these equity awards (and, therefore, their overall compensation) to the extent their individual performance can positively impact the company's overall performance and result in an increase in our stock price. We, therefore, believe these equity awards motivate the grantees to accomplish desired performance and, to the extent our stock price responds to our overall performance, can result in significant value to our officers, rewarding them for their hard work and exceptional performance.Knoll Pension Plan, see "Pension Benefits" on page 62.
Severance and Change-in-Control Benefits
We dohave a severance pay plan that generally applies to all of our regular full-time or part-time U.S. employees, including our named executive officers, who are not applycovered by a formulacollective bargaining agreement. In general, the severance pay plan provides for determiningseverance payments to eligible employees if their employment is involuntarily severed in connection with a job elimination. All of our named executive officers, other than Mr. Cogan and Mr. Schutte, are technically covered by the severance pay plan, although it is unlikely that the termination of one of our named executive officers would ever constitute a job elimination within the meaning of the plan. Because of this, we have not included any payments under our severance plan in the "Potential Payments upon Termination or Change-in-Control" section below.
We have agreed to provide Mr. Cogan and Mr. Schutte with severance benefits upon certain separations of their employment. Mr. Cogan is entitled to severance benefits if (i) his employment is terminated by us for any reason other than cause or in connection with disability or death, (ii) we elect not to renew the employment agreement, or (iii) the employment agreement is terminated by Mr. Cogan in connection with a material breach of the employment agreement by us. These severance benefits are contained in an employment agreement between us and Mr. Cogan. Under the terms of Mr. Schutte's offer letter, Mr. Schutte is entitled to severance benefits if he is terminated by us without "cause." For more details on these benefits, see "Potential Payments Upon Termination or Change-in-Control — Severance Under Employment Agreement".
Mr. Cogan was paid base salary at a rate of $1,000,000 per annum for the first half of 2016 and at a rate of $1,020,000 per annum for the second half of 2017. Mr. Cogan also received a non-equity incentive bonus of $612,000, 60% of his target award for 2017. In exercising its discretion to pay less than the target amount, the compensation committee primarily considered our operating performance relative to the 2017 operating profit target approved in our financial plan. As described above, we generated operating profit of $88 million for 2017 and adjusted operating profit of $109 million, below our 2017 target level of $136 million. Additionally, the compensation committee considered our comparative performance within the industry and overall progress relative to our strategic imperatives such as the diversification of our business culminating in the Muuto acquisition. We also continued to aggressively manage our balance sheet and expanded our constellation of high-design and high-margin brands and capabilities.
On February 15, 2017, Mr. Cogan was granted 55,000 restricted shares and 55,000 performance-based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. Twenty-five percent of the performance-based stock units vest if the company exceeds $275 million of operating profit over a three-year period and an additional twenty-five percent of the performance-based stock units vest if the company exceeds $325 million of operating profit over a three-year period. The remaining fifty percent of the performance-based stock units vest if the total shareholder return of Knoll stock over a three-year performance period exceeds the median total shareholder return of the 2017 Peer Group. The stock unit grant also includes a "stretch" operating profit goal where an additional twenty-five percent of the stock unit award (for a maximum of 125% of the original stock unit award) will vest if the company achieves $425 million of operating profit over the three-year period. As explained above, the compensation committee believes these grants will have both a strong retentive influence on Mr. Cogan and, at the same time, keep him appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2017, we granted Mr. Cogan a 2018 non-equity incentive award with a target payment of one hundred percent (100%) of his base salary. If earned, this bonus would be paid in February 2019 and cannot exceed one hundred twenty percent (120%) of Mr. Cogan's base salary.
Senior Vice President and Chief Financial Officer
Mr. Rayfield was paid base salary at a rate of $300,000 per annum after his promotion in August 2017. Mr. Rayfield also received a non-equity incentive bonus of $180,000, 60% of his target award. In exercising its discretion to pay less than the target amount, the compensation committee primarily considered our operating performance relative to our 2017 operating profit target, as well as Mr. Rayfield's individual contributions during the year, including his management of our balance sheet. Additionally, the compensation committee considered our comparative performance within the industry and overall progress relative to our strategic imperatives such as the diversification of our business culminating in the Muuto acquisition.
On February 15, 2017, Mr. Rayfield was granted 2,500 restricted shares and 2,500 performance-based stock units while he held the title of Vice President — Corporate Controller. On October 26, 2017, Mr. Rayfield was granted 5,000 restricted shares and 5,000 performance-based stock units in connection with his promotion to the title of Chief Financial Officer. For both grants the restricted shares cliff vest in one tranche on the third anniversary of the date of grant and the performance-based stock units vest in three years subject to our satisfaction of the same performance criteria that are applicable to Mr. Cogan's grant discussed above. As explained above, the compensation committee believes these grants will have both a strong retentive influence on Mr. Rayfield, ensure he receives a competitive pay package relative to his responsibilities as Chief Financial Officer and keep Mr. Rayfield appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2017, we granted Mr. Rayfield a 2018 non-equity incentive award with a target payment of one hundred percent (100%) of his base salary. If earned, this bonus would be paid in February 2019 and cannot exceed one hundred twenty percent (120%) of Mr. Rayfield's base salary.
Former Senior Vice President and Chief Financial Officer
Craig B. Spray was paid base salary at a rate of $342,000 per annum prior to his departure from Knoll in June 2017.
On February 15, 2017, Mr. Spray was granted 15,000 restricted shares and 15,000 performance-based stock units; however, these shares and units were forfeited by Mr. Spray upon his resignation from Knoll, effective June 23, 2017.
Former Chief Operating Officer
Mr. Coppola was paid base salary at a rate of $342,000 per annum for the first half of 2017 and at rate of $349,000 per annum for the second half of 2017. As previously disclosed, Mr. Coppola passed away on December 27, 2017. Mr. Coppola's estate received a non-equity incentive bonus of $210,000, 60% of his target award. In exercising its discretion to pay less than the target amount, the compensation committee primarily considered our operating performance relative to our 2017 operating profit target and Mr. Coppola's significant contributions to our facilities prior to his passing.
On February 15, 2017, Mr. Coppola was granted 10,000 restricted shares and 10,000 performance-based stock units. These grants vested on a pro rata basis upon Mr. Coppola's death.
Senior Vice President, Chief Administrative Officer, General Counsel and Secretary
Mr. Pollner was paid base salary at a rate of $275,000 per annum for the first half of 2017 and at a rate of $300,000 per annum for the second half of 2017. Mr. Pollner also received a non-equity incentive bonus of $120,000, 80% of his target award for 2017. In exercising its discretion to pay less than the target amount, the compensation committee primarily considered our operating performance relative to our 2017 operating profit target. Additionally, the compensation committee considered our comparative performance within the industry and overall progress relative to our strategic imperatives such as the diversification of our business culminating in the Muuto acquisition. The compensation committee also considered Mr. Pollner's leadership of the company's information technology group.
On February 15, 2017, Mr. Pollner was granted 6,000 restricted shares and 6,000 performance-based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. The performance-based stock units vest in three years subject to our satisfaction of the same performance criteria that are applicable to Mr. Cogan's grant discussed above. As explained above, the compensation committee believes these grants will keep Mr. Pollner appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2017, we granted Mr. Pollner a 2018 non-equity incentive award with a target payment of fifty percent (50%) of his base salary. If earned, this bonus would be paid in February 2019.
Executive Vice President — Specialty Businesses
Mr. Schutte was paid base salary at a rate of $300,000 per annum for the first half of 2017 and at a rate of $350,000 per annum for the second half of 2017. Mr. Schutte also received and a non-equity incentive bonus of $210,000, 60% of his target award. In exercising its discretion to pay less than the target amount, the compensation committee primarily considered our operating performance relative to our 2017 operating profit target. Additionally, the compensation committee considered Mr. Schutte's broader role in leading all of our Specialty businesses.
On February 15, 2017, Mr. Schutte was granted 7,500 restricted shares and 7,500 performance-based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. The performance-based stock units vest in three years subject to our satisfaction of the same performance criteria that are applicable to Mr. Cogan's grant discussed above. As explained above, the compensation committee believes these grants will keep Mr. Schutte appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2017, we granted Mr. Schutte a 2018 non-equity incentive award with a target payment of one hundred percent (100%) of his base salary. If earned, this bonus would be paid in February 2019 and cannot exceed one hundred twenty percent (120%) of Mr. Schutte's base salary.
Executive Vice President — Design
Mr. Pardo was paid base salary at a rate of $301,000 per annum for the first half of 2017 and at a rate of $307,000 per annum for the second half of 2017. Mr. Pardo also received a 2017 non-equity incentive bonus of $150,000, 50% of his target award. In exercising its discretion to pay less than the target amount, the compensation committee primarily considered our operating performance relative to our 2017 operating profit target and Mr. Pardo's individual contributions, including his leadership in our development of new products such as Rockwell Unscripted. Additionally, the compensation committee considered our comparative performance within the industry.
On February 15, 2017, Mr. Pardo was granted 5,000 restricted shares and 5,000 performance-based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. The performance-based stock units vest in three years subject to our satisfaction of the same performance criteria that are applicable to Mr. Cogan's grant discussed above. As explained above, the compensation committee believes these grants will have both a strong retentive influence on Mr. Pardo and, at the same time, keep him appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2017, we granted Mr. Pardo a 2018 non-equity incentive award with a target payment of one hundred percent (100%) of his base salary. If earned, this bonus would be paid in February 2019 and cannot exceed one hundred twenty percent (120%) of Mr. Pardo's base salary.
On February 13, 2018, we granted an aggregate of 92,500 time-vesting restricted shares to certain of our named executive officers in the following amounts: Mr. Cogan (62,500 shares), Mr. Rayfield (7,500 shares), Mr. Pollner (7,500 shares), Mr. Schutte (7,500 shares), and Mr. Pardo (7,500 shares). On the same date, we also granted 92,500 performance-based stock units to these executive officers in the same amounts. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. One-half of the performance-based stock units vest if the company exceeds a three-year EBITDA target and the other half vests if the total shareholder return of Knoll stock over a three-year performance period exceeds the
median total shareholder return of the Peer Group. Under the grant, our executive officers can receive additional units equal to twenty-five percent of their target unit award (for example, 15,625 additional units in the case of Mr. Cogan) if we significantly exceed our EBITDA goals. Unvested restricted shares and stock units are automatically forfeited if the grantee voluntarily leaves the company prior to vesting. Consistent with our 2017 equity grants, the compensation committee elected to divide our latest equity grant in this manner in order to simultaneously reward performance, retain our key executives and encourage stock ownership. As explained above, the compensation committee determined the specific equity award levels for our executive officers. Rather, the determination is a resultlevel of the compensation committee'seach of these awards by applying its discretion and judgment as to what is appropriate in light of all of the circumstances, including our strategic and operational objectives, our stock price, the responsibilities of the executive officers and the amounts of the executive officers' then-outstanding equity awardsawards.
How Do We Manage Risks Related to Our Compensation Program?
Risk Assessment — Incentive Compensation Programs
Our compensation committee conducted a risk-assessment of our compensation programs and any otherpractices. This process included: a review of the disclosure requirements contained in Item 402(s) of Regulation S-K; a review of our compensation programs; the identification of features that could potentially encourage excessive or imprudent risk taking of a material nature; a review of our business risks generally, as described in our public filings; the identification and review of additional risks specifically associated with our compensation programs; and the identification and review of factors that themitigate these risks. Based on this process, our compensation committee determinesconcluded that our compensation programs and practices are relevant. In exercising its discretion, the compensation committee reliesappropriately structured and do not create risks that are reasonably likely to have a material adverse effect on the individual experiences and perspectives of its members and dialogue with our chief executive officer in evaluating whether the specific recommended grant levels will have the desired effect.Company.
Executive Stock Ownership Policy.Policy
We maintain a Stock Ownership Policy that is applicable to our directors and executive officers. Under the policy, our chief executive officer and chief financial officer are required to own equity equal to at least four times their base salary and our other executive offers are required to own equity equal to at least one times their base salary. Our directors are required to own equity equal to at least four times their annual cash retainer under the policy. There is a five yearfive-year transition period to allow individuals to become compliant with the policy. Please see the policy, which is available on our website atwww.knoll.com, for more detailed information on how stock and equity derivatives are valued and other details of the policy. We believe this policy helps further our desire to have our named executive officers' interests aligned with the interests of our stockholders.
Pension and Retirement Benefits
Our executive officers who joined Knoll prior to January 1, 2011 participate in the Knoll Pension Plan, a noncontributory defined benefit plan. Mr. Cogan is our only executive officer who accrued additional benefits under the Knoll Pension Plan for 2015. Effective January 1, 2016, the Knoll Pension Plan was frozen for all participants, including Mr. Cogan. For more information on the Knoll Pension Plan, see "Pension Benefits" on page 39. Our other executive officers participate in the Knoll Retirement Savings Plan pursuant to which they receive matching contributions of 50% of their voluntary contributions, up to a maximum amount of 6% of eligible compensation, plus potential profit-sharing and transition contributions based on age and length of service.
Severance and Change-in-Control Benefits
We have a severance pay plan that generally applies to all of our regular full-time or part-time U.S. employees, including our named executive officers, who are not covered by a collective bargaining agreement. In general, the severance pay plan provides for severance payments to eligible employees if their employment is involuntarily severed in connection with a job elimination. All of our named executive officers, other than Mr. Cogan, are technically covered by the severance pay plan, although it is unlikely that the termination of one of our named executive officers would ever constitute a job elimination within the meaning of the plan. For a more detailed discussion of the severance pay plan, see "Potential Payments Upon Termination or Change-in-Control—Severance Pay Plan".
We have agreed to provide Mr. Cogan with severance benefits upon certain separations of his employment. Mr. Cogan is entitled to severance benefits if (i) his employment is terminated by us for any reason other than cause or in connection with disability or death, (ii) we elect not to renew the employment agreement, or (iii) the employment agreement is terminated by Mr. Cogan in connection with a material breach of the employment agreement by us. These severance benefits are contained in an employment agreement between us and Mr. Cogan. For more details on these benefits, see "Potential Payments Upon Termination or Change-in-Control—Severance Under Employment Agreements".
If the severance provisions are triggered under Mr. Cogan's employment agreement, he is entitled to the sum of (i) 200% of his then base salary, plus (ii) the average of the annual bonuses paid to him for the two completed fiscal years that immediately proceeded the fiscal year of the termination.
The severance benefits provided to Mr. Cogan were designed, in part, as an inducement to Mr. Cogan to serve as our Chief Executive Officer, and as consideration for his willingness to agree to a non-competition arrangement. The severance arrangements were also structured to provide Mr. Cogan with a certain measure of job security and protection against termination without cause and termination or loss of employment through no fault of Mr. Cogan.
2015 Compensation—AnalysisCOMPENSATION COMMITTEE REPORT
In making compensation decisions with respect to payouts under our 2015 non-equity incentive awards, ourThe compensation committee primarily considered our strong operating performance relative to our 2015 targethas reviewed and year-over-year improvement across our business segments. We delivered industry-leading performance relative to our publicly-traded peersdiscussed with management the Compensation Discussion and strong top and bottom line growth to close out 2015. Overall operating profit was $101.1 millionAnalysis for 2015, an increase of $24.3 million, or 31.6%, from operating profit of $76.8 million for 2014. After adjusting for one-time expenses, our operating profit for 2015 was $113.5 million, or 110% of our target of $103 million.fiscal year 2017. Based on this performance,the review and discussions, the compensation committee exercised its discretion underrecommended to the non-equity incentive program to pay out annual non-equity incentive bonuses that were at or above target levels. Base salaries for certain executive officers were also increased effective July 1, 2015 in order keep pace with our competitors.
Chief Executive Officer
Mr. Cogan was paid base salaryboard of $847,892 based on a ratedirectors, and the board of $832,000 per annum for the first half of 2015 and a rate of $852,000 per annum for the second half of 2015. Mr. Cogan also received a non-equity incentive bonus of $1,000,000, 120% of his target award for 2015. In exercising its discretion to pay more than the target amount, the compensation committee primarily considered our strong operating performance relative to our 2015 operating profit target. As described above, we generated $101.1 million of operating profit, an increase of 31.6% over 2014. Adjusted operating profit for 2015 was $113.5 million, 110% of our target level of $103 million. Additionally, the compensation committee also considered Mr. Cogan's more active role in our improved performance in the company's Office segment, which gained market share. We also aggressively managed our balance sheet, reducing our leverage ratio, while simultaneously increasing our dividend.
On February 9, 2015, Mr. Cogan was granted 40,000 restricted shares and 40,000 performance based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. Twenty-five percent of the performance based stock units vest if the company exceeds $225 million of operating profit over a three year period and an additional twenty-five percent of the performance based stock units vest if the company exceeds $255 million of operating profit over a three-year period. The remaining fifty percent of the performance based stock units vest if the total shareholder return of Knoll stock over a three-year performance period exceeds the median total shareholder return of the Peer Group. As explained above, the compensation committee believes these grants will have both a strong retentive influence on Mr. Cogan and, at the same time, keep him appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2015, we granted Mr. Cogan a 2016 non-equity incentive award with a target payment of one hundred percent (100%) of his base salary.
Senior Vice President and Chief Financial Officer
Mr. Spray was paid base salary of $331,327 based on a rate of $325,000 per annum for the first half of 2015 and a rate of $335,000 per annum for the second half of 2015. Mr. Spray also received a non-equity incentive bonus of $357,000, 110% of his target award. In exercising its discretion to pay
more than the target amount, the compensation committee primarily considered our strong operating performance relative to our 2015 operating profit target, as well as Mr. Spray's individual contributions during the year, including his management of our balance sheet. As described above, we reduced our leverage ratio from 2.41:1 to 1.67:1 (See Exhibit A on page 51 for more information on the leverage ratio calculation).
On February 9, 2015, Mr. Spray was granted 9,000 restricted shares and 9,000 performance based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. Twenty-five percent of the performance based stock units vest if the company exceeds $225 million of operating profit over a three-year period and an additional twenty-five percent of the performance based stock units vest if the company exceeds $255 million of operating profit over a three-year period. The remaining fifty percent of the performance based stock units vest if the total shareholder return of Knoll stock over a three-year performance period exceeds the median total shareholder return of the Peer Group. As explained above, the compensation committee believes these grants will have both a strong retentive influence on Mr. Spray and, at the same time, keep him appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2015, we granted Mr. Spray a 2016 non-equity incentive award with a target payment of one hundred percent (100%) of his base salary.
Chief Operating Officer
Mr. Coppola commenced employment with Knoll on June 1, 2015 with a base salary of $335,000 and a targeted non-equity incentive bonus of $335,000, which was guaranteed for 2015. Mr. Coppola received fifty percent (50%) of this target amount at employment commencement. Mr. Coppola also received $75,000 under the Knoll Relocation Program and $12,000 for temporary living expenses associated with his relocation to Pennsylvania. After joining Knoll, Mr. Coppola also was granted 20,000 restricted shares and 20,000 performance based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. Twenty-five percent of the performance based stock units vest if the company exceeds $225 million of operating profit over a three-year period and an additional twenty-five percent of the performance based stock units vest if the company exceeds $255 million of operating profit over a three-year period. The remaining fifty percent of the performance based stock units vest if the total shareholder return of Knoll stock over a three-year performance period exceeds the median total shareholder return of the Peer Group. The compensation committee believesdirectors approved, that the package offered to Mr. Coppola was reasonable in light of the significant responsibilities of his positionCompensation Discussion and will encourage him to remain with the company and motivate him to achieve our desired performance goals
In December 2015, we granted Mr. Coppola a 2016 non-equity incentive award with a target payment of one hundred percent (100%) of his base salary.
Senior Vice President—Sales and Distribution
Ms. Ahrens was paid base salary of $284,365 based on a rate of $285,000 per annum for the first half of 2015 and a rate of $295,000 per annum for the second half of 2015. Ms. Ahrens also received and a non-equity incentive bonus of $325,000, 114% of her target award. In exercising its discretion to pay more than the target amount, the compensation committee primarily considered our strong operating performance in 2015 relative to our 2015 operating profit target. The compensation committee also considered the strong orders performance in our Office segment.
On February 9, 2015, Ms. Ahrens was granted 7,500 restricted shares and 7,500 performance based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. Twenty-five percent of the performance based stock units vest if the company exceeds $225 million of operating profit over a three-year period and an additional twenty-five percent of the performance
based stock units vest if the company exceeds $255 million of operating profit over a three-year period. The remaining fifty percent of the performance based stock units vest if the total shareholder return of Knoll stock over a three-year performance period exceeds the median total shareholder return of the Peer Group. As explained above, the compensation committee believes these grants will keep Ms. Ahrens appropriately motivated by incentivizing her to achieve our financial goals and deliver returns for our stockholders.
In December 2015, we granted Ms. Ahrens a 2016 non-equity incentive award with a target payment of one hundred percent (100%) of her base salary.
Executive Vice President—Design
Mr. Pardo was paid base salary of $291,173 based on a rate of $285,000 per annum for the first half of 2015 and a rate of $295,000 per annum for the second half of 2015. Mr. Pardo also received a 2015 non-equity incentive bonus of $290,000, 102% of his target award. In exercising its discretion to pay more than the target amount, the compensation committee primarily considered our strong operating performance relative to our 2015 operating profit target and Mr. Pardo's individual contributions, including his leadership in our development of new products.
On February 9, 2015, Mr. Pardo was granted 5,000 restricted shares and 5,000 performance based stock units. The restricted shares cliff vest in one tranche on the third anniversary of the date of grant. Twenty-five percent of the performance based stock units vest if the company exceeds $225 million of operating profit over a three-year period and an additional twenty-five percent of the performance based stock units vest if the company exceeds $255 million of operating profit over a three-year period. The remaining fifty percent of the performance based stock units vest if the total shareholder return of Knoll stock over a three-year performance period exceeds the median total shareholder return of the Peer Group. As explained above, the compensation committee believes these grants will have both a strong retentive influence on Mr. Pardo and, at the same time, keep him appropriately motivated by incentivizing him to achieve our financial goals and deliver returns for our stockholders.
In December 2015, we granted Mr. Pardo a 2015 non-equity incentive award with a target payment of $285,000.
Operating Profit as a Target
Although we consider various financial metrics (including revenue growth, gross margins, and earnings per share growth), as well as subjective factors, when making our compensation decisions, we use operating profit as the primary performance metric under our annual non-equity incentive awards and as the trigger target for vesting under our restricted stock awards and performance based stock units. We believe that operating profit is the best financial measurement for evaluating our actual operating performance because it is less subject to non-recurring and non-operating items. When evaluating our performance, we believe items such as our tax rates, asset sales and share buybacks, which impact other financial metrics (like net income or earnings per share), should notAnalysis be considered. We generally also exclude the impact of infrequent or non-recurring items, such as restructuring charges, that are not indicative of operating performance, and therefore we generally use adjusted operating profit when we evaluate our performance or compare our performance with the performance of our competitors.
2016 Grant of Restricted Shares
On February 17, 2016, we granted an aggregate of 80,000 time-vesting restricted shares to certain of our named executive officers in the following amounts: Mr. Cogan (55,000 shares), Mr. Spray (12,500 shares), Ms. Ahrens (7,500), and Mr. Pardo (5,000 shares). On the same date we also granted 80,000 performance-based stock units to these executive officers in the same amounts. The restricted
shares cliff vest in one tranche on the third anniversary of the date of grant. One-half of the performance based stock units vest if the company exceeds its three-year operating profit target and the other half vests if the total shareholder return of Knoll stock over a three-year performance period exceeds the median total shareholder return of the Peer Group. Under the grant our executive officers can receive additional units equal to twenty-five percent of the target unit award if we significantly exceed our operating profit goals. Unvested restricted shares and stock units are automatically forfeited if the grantee voluntarily leaves the company prior to vesting. Consistent with our 2015 equity grants, the compensation committee elected to divide our latest equity grant in this manner in order to simultaneously reward performance, retain our key executives and encourage stock ownership. As explained above, the compensation committee determined the specific level of each of these awards by applying its discretion and judgment as to what is appropriate in light of all of the circumstances, including our strategic and operational objectives, our stock price, compensation levels at comparable positions within our Peer Group, the responsibilities of the executive officers and the amounts of the executive officers' then-outstanding equity awards.
Tax Implications of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), places a limit of $1,000,000 on the amount of compensation that may be deducted by the company in any year with respect to the chief executive officer or any other executive officer covered by Section 162(m) unless the compensation is performance-based compensation as described in Section 162(m) and the related regulations. We have qualified certain compensation paid to executive officers for deductibility under Section 162(m), but we generally pay compensation to our executive officers that may not be deductible, including discretionary bonuses or other types of compensation outside of our plans. In many circumstances we believe that our interests are best served by maintaining flexibility in the way compensation is provided, even if it might result in the non-deductibility of certain compensation under the Code.
Advisory Vote on Executive Compensation
We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. At the 2015 Annual Meeting of Stockholders, approximately 20% of our stockholders voted for, on an advisory basis, the compensation of our named executive officers, as disclosed in the proxy statement for that meeting pursuant to the compensation disclosure rules of the SEC. The compensation committee reviewed the final vote results for this proposal and discussed the vote with certain stockholders. On the basis of this evaluation, the compensation committee believes that a supplemental equity retention award made to our CEO in April 2014 was a central focus of our 2014 executive compensation for our stockholders. While we respect the opinions expressed by our stockholders, we believe that the equity retention award was reasonable and necessary given our CEO's central role in driving the strategic direction of the company, the length of the vesting period, and the fact that one-half of the award was performance-based. We also note that the equity retention award was a one-time event and does not constitute a routine aspect of our compensation program. In total, our CEO compensation for 2015 is approximately seventy percent (70%) less than 2014. The compensation committee believes that our compensation program is balanced and appropriately rewards our executive officers for performance. Accordingly, our board recommends that you vote "FOR" Proposal 3 at the annual meeting. For more information, see "Proposal 3—Advisory Vote on Executive Compensation"included in this proxy statement.statement and incorporated into our annual report on Form 10-K for the fiscal year ended December 31, 2017.
This report is submitted by the compensation committee.
Jeffrey A. Harris (Chairman)
Sidney Lapidus
Sarah E. Nash
Christopher G. Kennedy
The following table sets forth information concerning the compensation awarded to or earned during our fiscal years ended December 31, 2015, 20142017, 2016 and 2013,2015, by our Chief Executive Officer, Chief Financial Officer, and each of our three other most highly compensatednamed executive officers whose total compensation (net of any changes in pension values and non-qualified deferred compensation earnings disclosed in the table below) exceeded $100,000.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($) | Total ($) | Year | Salary ($) | Stock Awards ($)1 | Non-Equity Incentive Plan Compensation ($)2 | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)3 | All Other Compensation ($) | Total ($) | | ||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||
Andrew B. Cogan, | 2015 | 847,892 | — | 1,517,654 | — | 1,000,000 | (4) | 6,758 | — | 3,372,304 | | 2017 | | 1,009,923 | | 2,301,750 | | 612,000 | 4 | | 73,142 | 18 | | 8,100 | 7 | | 4,004,915 | ||||||||||||||||||||||||
Chief Executive Officer | 2014 | 816,000 | — | 9,099,300 | — | 900,000 | (5) | 159,954 | — | 10,975,254 | |||||||||||||||||||||||||||||||||||||||||
2013 | 800,000 | — | 1,632,000 | — | 320,000 | (6) | — | — | 2,752,000 | ||||||||||||||||||||||||||||||||||||||||||
Craig B. Spray, | 2015 | 331,327 | — | 341,472 | — | 357,000 | (7) | — | 15,900 | (8) | 1,045,699 | ||||||||||||||||||||||||||||||||||||||||
President and Chief | | 2016 | | 928,500 | | 1,838,925 | | 1,200,000 | 5 | | 55,094 | 18 | | 15,900 | 7 | | 4,038,419 | ||||||||||||||||||||||||||||||||||
Executive Officer | | 2015 | | 847,892 | | 1,517,654 | | 1,000,000 | 6 | | 6,758 | 18 | | — | | 3,372,304 | |||||||||||||||||||||||||||||||||||
Charles W. Rayfield | | 2017 | | 246,870 | | 324,925 | | 180,000 | 8 | | — | | 3,225 | 7 | | 755,020 | |||||||||||||||||||||||||||||||||||
Senior Vice President and | 2014 | 325,000 | — | — | — | 325,000 | (9) | — | 7,800 | (8) | 657,800 | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
Chief Financial Officer | 2013 | 88,750 | — | 1,897,500 | — | 200,000 | (10) | — | 84,933 | (11) | 2,271,183 | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
Craig B. Spray, | | 2017 | | 168,369 | | 627,750 | | — | | — | | 8,100 | 7 | | 804,219 | ||||||||||||||||||||||||||||||||||||
Former Senior Vice President | | 2016 | | 338,500 | | 417,938 | | 425,000 | 9 | | — | | 15,900 | 7 | | 1,197,338 | |||||||||||||||||||||||||||||||||||
and Chief Financial Officer | | 2015 | | 331,327 | | 341,472 | | 357,000 | 10 | | — | | 15,900 | 7 | | 1,045,699 | |||||||||||||||||||||||||||||||||||
Joseph T. Coppola, | 2015 | 198,423 | — | 836,098 | — | 335,000 | (12) | — | 100,748 | (13) | 1,470,269 | | 2017 | | 289,096 | | 418,500 | | 210,000 | 11 | | — | | 8,100 | 7 | | 925,696 | ||||||||||||||||||||||||
Chief Operating Officer | |||||||||||||||||||||||||||||||||||||||||||||||||||
Former Chief | | 2016 | | 338,500 | | — | | 425,000 | 12 | | — | | 15,900 | 7 | | 779,400 | |||||||||||||||||||||||||||||||||||
Operating Officer | | 2015 | | 198,423 | | 836,098 | | 335,000 | 14 | | — | | 100,748 | 13 | | 1,470,269 | |||||||||||||||||||||||||||||||||||
Michael A. Pollner, | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
Senior Vice President, Chief Administrative Officer and | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
General Counsel | | 2017 | | 287,404 | | 251,100 | | 120,000 | 15 | | 8,130 | 18 | | 8,100 | 7 | | 674,734 | ||||||||||||||||||||||||||||||||||
Benjamin A. Pardo, | 2015 | 291,173 | — | 189,707 | — | 290,000 | (14) | — | 18,550 | (8) | 789,430 | | 2017 | | 303,977 | | 209,250 | | 150,000 | 16 | | 3,031 | 18 | | 10,800 | 7 | | 677,058 | |||||||||||||||||||||||
Executive Vice President— | 2014 | 275,000 | — | 201,413 | — | 265,000 | (15) | 56,806 | (16) | 10,400 | (8) | 808,619 | |||||||||||||||||||||||||||||||||||||||
Executive Vice President — | | 2016 | | 298,000 | | 167,175 | | 300,000 | 17 | | 21,046 | 18 | | 18,550 | 7 | | 804,771 | ||||||||||||||||||||||||||||||||||
Director of Design | 2013 | 265,000 | — | 408,000 | — | 100,000 | (17) | — | 10,200 | (8) | 783,200 | | 2015 | | 291,173 | | 189,707 | | 290,000 | 19 | | — | | 18,550 | 7 | | 789,430 | ||||||||||||||||||||||||
Pamela J. Ahrens, | 2015 | 284,365 | — | 284,561 | — | 325,000 | (18) | — | 15,900 | (8) | 909,826 | ||||||||||||||||||||||||||||||||||||||||
Senior Vice President—Sales | 2014 | 285,000 | — | 379,750 | — | 285,000 | (19) | — | 7,800 | (8) | 949,750 | ||||||||||||||||||||||||||||||||||||||||
and Distribution | |||||||||||||||||||||||||||||||||||||||||||||||||||
David L. Schutte, | | 2017 | | 350,000 | | 313,876 | | 210,000 | 20 | | 20,648 | 18 | | 13,500 | 7 | | 908,024 | ||||||||||||||||||||||||||||||||||
Executive Vice President — | | 2016 | | 279,423 | | 167,175 | | 300,000 | 21 | | 22,869 | 18 | | 18,550 | 7 | | 788,017 | ||||||||||||||||||||||||||||||||||
Specialty Businesses | | | | | | | |
Table of Mr. Spray) for services rendered in 2013.
Contents
The following table shows all plan-based awards granted to the named executive officers during fiscal year 2015.2017.
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards Target ($) | Estimated Future Payouts Under Equity Incentive Plan Awards Target (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Options Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(1) | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards Target ($) | Estimated Future Payouts Under Equity Incentive Plan Awards Target (#) | Maximum | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards1 | | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||
Andrew B. Cogan | 12/03/15 | 857,000 | (2) | — | — | — | — | — | | 12/04/17 | | 1,020,000 | 2 | | — | | | | — | | — | |||||||||||||||||||||
02/09/15 | — | 40,000 | (3) | — | — | — | 665,254 | |||||||||||||||||||||||||||||||||||
02/09/15 | — | 40,000 | (4) | — | — | 852,400 | ||||||||||||||||||||||||||||||||||||
| | 02/15/17 | | — | | 55,000 | 3 | | 68,750 | 3 | | — | | 1,043,900 | ||||||||||||||||||||||||||||
| | 02/15/17 | | — | | | | | | 55,000 | 4 | | 1,257,850 | |||||||||||||||||||||||||||||
Charles W. Rayfield | | 12/04/17 | | 300,000 | 2 | | — | | | | — | | — | |||||||||||||||||||||||||||||
| | 02/15/17 | | — | | 2,500 | 3 | | 3,125 | 3 | | — | | 47,451 | ||||||||||||||||||||||||||||
| | 02/15/17 | | — | | — | | | | 2,500 | 4 | | 57,175 | |||||||||||||||||||||||||||||
| | 10/26/17 | | | | 5,000 | 3 | | 6,250 | 3 | | | | 110,150 | ||||||||||||||||||||||||||||
| | 10/26/17 | | | | | | | | 5,000 | 4 | | 110,150 | |||||||||||||||||||||||||||||
Craig B. Spray | 12/03/15 | 335,000 | (5) | — | — | — | — | — | | 02/15/17 | | | | 15,000 | 3 | | 18,750 | | — | | 284,700 | |||||||||||||||||||||
02/09/15 | — | 9,000 | (3) | — | — | — | 149,682 | |||||||||||||||||||||||||||||||||||
02/09/15 | — | — | 9,000 | (4) | — | — | 191,790 | |||||||||||||||||||||||||||||||||||
| | 02/15/17 | | | | | | | | 15,000 | 4 | | 343,050 | |||||||||||||||||||||||||||||
Joseph T. Coppola | 12/03/15 | 335,000 | (6) | — | — | — | — | — | | 02/15/17 | | | | 10,000 | 3 | | 12,500 | | | | 189,800 | |||||||||||||||||||||
10/26/15 | — | 20,000 | (3) | — | — | — | 366,498 | |||||||||||||||||||||||||||||||||||
10/26/15 | 20,000 | (4) | — | — | 469,600 | |||||||||||||||||||||||||||||||||||||
| | 02/15/17 | | | | | | | | 10,000 | 4 | | 228,700 | |||||||||||||||||||||||||||||
Michael A. Pollner | | 12/04/17 | | 175,000 | 2 | | | | | | | | — | |||||||||||||||||||||||||||||
| | 02/15/17 | | | | 6,000 | 3 | | 7,500 | | | | 113,880 | |||||||||||||||||||||||||||||
| | 02/15/17 | | | | | | | | 6,000 | 4 | | 137,220 | |||||||||||||||||||||||||||||
Benjamin A. Pardo | 12/03/15 | 285,000 | (7) | — | — | — | — | — | | 12/04/17 | | 307,000 | 2 | | — | | | | — | | — | |||||||||||||||||||||
02/09/15 | — | 5,000 | (3) | — | — | — | 83,157 | |||||||||||||||||||||||||||||||||||
02/09/15 | — | — | 5,000 | (4) | — | — | 106,550 | |||||||||||||||||||||||||||||||||||
Pamela J. Ahrens | 12/03/15 | 295,000 | (8) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
02/09/15 | — | 7,500 | (3) | — | — | — | 159,825 | |||||||||||||||||||||||||||||||||||
02/09/15 | — | — | 7,500 | (4) | — | — | 124,736 | |||||||||||||||||||||||||||||||||||
| | 02/15/17 | | — | | 5,000 | 3 | | 6,250 | 3 | | — | | 94,900 | ||||||||||||||||||||||||||||
| | 02/15/17 | | — | | — | | | | 5,000 | 4 | | 114,350 | |||||||||||||||||||||||||||||
David L. Schutte | | 12/04/17 | | 350,000 | 2 | | — | | | | — | | — | |||||||||||||||||||||||||||||
| | 02/15/17 | | — | | 7,500 | 3 | | 9,375 | 3 | | — | | 142,351 | ||||||||||||||||||||||||||||
| | 02/15/17 | | — | | — | | | | 7,500 | 4 | | 171,525 |
Narrative Disclosure For Summary Compensation Table and Grants of Plan-Based Awards Table
Employment Arrangements with Named Executive Officers
Mr. Cogan serves as our Chief Executive Officer pursuant to an employment agreement dated March 23, 2001, as amended. Effective July 1, 2015,2016, Mr. Cogan's employment agreement provides for an annual base salary of $857,000 and, for 2015 and subsequent years, a target annual bonus of at least 100% of base salary based upon the attainment of goals set by our board of directors. Effective July 1, 2017, as recommended by our compensation committee and approved by our board of directors, Mr. Cogan's annual base salary was $1,020,000.
The employment agreement for Mr. Cogan expires AprilJuly 1, 20162018 and renews automatically for additional one-year terms each AprilJuly 1 unless either party gives 60 days notice of his or its intention not to renew. The agreement may be terminated by us at any time, but if so terminated without "cause," or if we fail to renew the agreements, or, if the agreement is terminated by Mr. Cogan following our breach, we must pay Mr. Cogan termination compensation. The termination compensation is an amount equal to 200% of Mr. Cogan's then current base salary, plus the average of the annual bonuses paid to him for the last two completed fiscal years preceding the fiscal year of termination. Mr. Cogan's agreement also contains non-competition, non-solicitation (during the term of the agreement and for two years thereafter) and confidentiality provisions. Mr. Cogan is also entitled to participate in the benefit plans available to our employees generally, including, without limitation, healthcare benefits, the Knoll Retirement Savings Plan and the Knoll Pension Plan. For more detailed information on the severance benefits provided under these agreements, see "Potential Payments upon Termination or Change-in-Control" below.
Effective July 1, 2015,August 9, 2017 (upon his promotion to Chief Financial Officer), as approved by our compensation committee, Mr. Spray'sRayfield's annual base salary is $335,000.was $300,000. On December 3, 2015,4, 2017, our compensation committee granted Mr. SprayRayfield an incentive award under our 20162018 Incentive Compensation Program, whereby he can qualify for a target 20162018 non-equity incentive bonus of one hundred percent (100%) of his base salary. Mr. SprayRayfield is also entitled to participate in the benefit plans available to our employees generally, including, without limitation, healthcare benefits and the Knoll Retirement Savings Plan.
Effective JuneJuly 1, 2015,2017, as approved by our compensation committee, Coppola'sMr. Pollner's annual base salary is $335,000. Pursuantwas $300,000 (increased to the terms of$350,000 effective January 1, 2018 in connection with his original offer letter, Mr. Coppola also was guaranteed an incentive award of $335,000 under our 2015 Incentive Compensation Program, $75,000 in relocation expenses and up to $12,000 in temporary living expenses.promotion). On December 3, 2015,4, 2017, our compensation committee granted Mr. CoppolaPollner an incentive award under our 20162018 Incentive Compensation Program, whereby he can qualify for a target 20162018 non-equity incentive bonus of one hundredfifty percent (100%(50%) of his base salary. Mr. CoppolaPollner is also entitled to participate in the benefit plans available to our employees generally, including, without limitation, healthcare benefits and the Knoll Retirement Savings Plan.
Effective July 1, 2015,2017, as approved by our compensation committee, Mr. Pardo's base salary is $295,000.was $307,000. On December 3, 2015,4, 2017, our compensation committee granted Mr. Pardo an incentive award under our 20162018 Incentive Compensation Program, whereby he can qualify for a target 20162018 non-equity incentive bonus of $285,000.one hundred percent (100%) of his base salary. Mr. Pardo is also entitled to participate in the benefit plans available to our employees generally, including, without limitation, healthcare benefits, and the Knoll Retirement Savings Plan.
Effective July 1, 2015,2017, as approved by our compensation committee, Ms. Ahrens'Mr. Schutte's base salary is $295,000.was $350,000. On December 3, 2015,4, 2017, our compensation committee granted Ms. AhrensMr. Schutte an incentive award under our 20162018 Incentive Compensation Program, whereby shehe can qualify for a target 20162018 non-equity incentive bonus of one hundred percent (100%) of herhis base salary. Ms. AhrensMr. Schutte is also entitled to participate in the benefit plans available to our employees generally, including, without limitation, healthcare benefits, and the Knoll Retirement Savings Plan.
Change-in-Control Provisions and Pension Benefits
Certain stock option agreements and restricted stock and unit agreements applicable to our named executive officers provide that upon a change-in-control (as defined therein) of our company, 100% of the outstanding options and a pro rata portion of the outstanding restricted shares and stock units will become vested. The pro rata portion of the restricted shares is calculated based on multiplying the total number of restricted shares times a fraction the numerator of which is the number of whole months that have elapsed since the grant date and the denominator of which is the total number of months over which the grant vests, less any shares which previously vested.
For 2015, Mr. Cogan participated Beginning in mid-2016, our compensation committee modified our equity award agreements to provide for "double-trigger" vesting in the Knoll Pension Plan,event of a noncontributory defined benefit plan, which previously covered allchange-in-control, meaning that the outstanding restricted shares and stock units will only vest upon a change-in-control if there is a termination of our regular full-time or part-time U.S. associates who are not covered by a collective bargaining agreement. The plan provides retirement benefits for service starting on oremployment within 12 months after March 1, 1996, and participants become 100% vested after five years of service. Commencing on January 1, 2012, the Knoll Pension Plan was closed to participants with fewer than seventy points (defined as age plus completed years of service). For 2015, Mr. Cogan was the only named executive officer continuing to accrue benefits under the Knoll Pension Plan. Effective January 1, 2016, the Knoll Pension Plan was frozen for all participants, including Mr. Cogan. For further discussion of pension benefits see "Pension Benefits" and "Potential Payments upon Termination or Change-in-Control" below.change-in-control.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information regarding outstanding equity awards held by our named executive officers as of December 31, 2015.2017.
| Option Awards | Stock Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)1 | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)1 | ||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||
Andrew B. Cogan | — | — | — | — | — | 100,000 | (2) | 1,880,000 | | 4/23/2014 | | 200,000 | 2 | | 4,608,000 | | | | | |||||||||||||||||||||||||
200,000 | (3) | 3,760,000 | ||||||||||||||||||||||||||||||||||||||||||
60,000 | (4) | 1,128,000 | ||||||||||||||||||||||||||||||||||||||||||
40,000 | (5) | 752,000 | ||||||||||||||||||||||||||||||||||||||||||
200,000 | (6) | 3,760,000 | ||||||||||||||||||||||||||||||||||||||||||
60,000 | (7) | 1,128,000 | ||||||||||||||||||||||||||||||||||||||||||
40,000 | (8) | 752,000 | ||||||||||||||||||||||||||||||||||||||||||
Craig B. Spray | — | — | — | — | — | 36,667 | (9) | 689,340 | ||||||||||||||||||||||||||||||||||||
9,000 | (5) | 169,200 | ||||||||||||||||||||||||||||||||||||||||||
9,000 | (8) | 169,200 | ||||||||||||||||||||||||||||||||||||||||||
Joseph T. Coppola | — | — | — | — | — | 20,000 | (5) | 376,000 | ||||||||||||||||||||||||||||||||||||
20,000 | (8) | 376,000 | ||||||||||||||||||||||||||||||||||||||||||
| | 2/9/2015 | | 40,000 | 3 | | 921,600 | | | | | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | 55,000 | 3 | | 1,267,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | 55,000 | 3 | | 1,267,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/9/2015 | | | | | | 40,000 | 6 | | 921,600 | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | | | | | 55,000 | 7 | | 1,267,200 | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | | | | | 55,000 | 8 | | 1,267,200 | |||||||||||||||||||||||||||||||||
Charles W. Rayfield | | 2/17/2016 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | 2,500 | 3 | | 57,600 | | | | | |||||||||||||||||||||||||||||||||
| | 10/26/2017 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | | | | | 5,000 | 7 | | 115,200 | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | | | | | 2,500 | 8 | | 57,600 | |||||||||||||||||||||||||||||||||
| | 10/26/2017 | | | | | | 5,000 | 8 | | 115,200 | |||||||||||||||||||||||||||||||||
Craig B. Spray4 | | — | | — | | — | | — | | — | ||||||||||||||||||||||||||||||||||
Joseph T. Coppola5 | | — | | — | | — | | — | | — | ||||||||||||||||||||||||||||||||||
Michael A. Pollner | | 2/9/2015 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | 6,000 | 3 | | 138,240 | | | | | |||||||||||||||||||||||||||||||||
| | 2/9/2015 | | | | | | 5,000 | 6 | | 115,200 | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | | | | | 5,000 | 7 | | 115,200 | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | | | | | 6,000 | 8 | | 138,240 | |||||||||||||||||||||||||||||||||
Benjamin A. Pardo | — | — | — | — | — | 25,000 | (2) | 470,000 | | 2/9/2015 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||
7,500 | (4) | 141,000 | ||||||||||||||||||||||||||||||||||||||||||
5,000 | (5) | 94,000 | ||||||||||||||||||||||||||||||||||||||||||
7,500 | (7) | 141,000 | ||||||||||||||||||||||||||||||||||||||||||
5,000 | (8) | 94,000 | ||||||||||||||||||||||||||||||||||||||||||
Pamela J. Ahrens | — | — | — | — | — | 18,750 | (10) | 352,500 | ||||||||||||||||||||||||||||||||||||
7,500 | (5) | 141,000 | ||||||||||||||||||||||||||||||||||||||||||
7,500 | (8) | 141,000 | ||||||||||||||||||||||||||||||||||||||||||
| | 2/17/2016 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/9/2015 | | | | | | 5,000 | 6 | | 115,200 | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | | | | | 5,000 | 7 | | 115,200 | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | | | | | 5,000 | 8 | | 115,200 | |||||||||||||||||||||||||||||||||
David L. Schutte | | 2/9/2015 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | 5,000 | 3 | | 115,200 | | | | | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | 7,500 | 3 | | 172,800 | | | | | |||||||||||||||||||||||||||||||||
| | 2/9/2015 | | | | | | 5,000 | 6 | | 115,200 | |||||||||||||||||||||||||||||||||
| | 2/17/2016 | | | | | | 5,000 | 7 | | 115,200 | |||||||||||||||||||||||||||||||||
| | 2/15/2017 | | | | | | 7,500 | 8 | | 172,800 |
Knoll stock over a three-year performance period exceeds the median total shareholder return of our Peer Group. Twenty-five percent (25%) of the restricted stock units vest if we achieve $225 million of operating profit over a three-year performance period and an additional twenty-five percent (25%) of the restricted stock units vest if we achieve $255 million of operating profit over a three-year performance period. The restricted stock units may vest earlier on a pro rata basis upon a change in control, death or disability, all as defined in the applicable equity agreements and stock incentive plan.
Option Exercises and Stock Vested
| Options Awards | Stock Awards | Stock Awards | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)1 | ||||||||||||||
| | | | | | | ||||||||||||||
Andrew B. Cogan | — | — | 85,000 | (3) | 1,811,350 | | 320,000 | 2 | | 7,704,000 | ||||||||||
Charles W. Rayfield | | — | | — | ||||||||||||||||
Craig B. Spray | — | — | 36,667 | (4) | 867,175 | | — | | — | |||||||||||
Joseph T. Coppola | — | — | — | — | | 17,222 | 3 | | 804,683 | |||||||||||
Benjamin A. Pardo | 63,421 | 284,773 | 20,000 | (3) | 426,200 | | 15,000 | 4 | | 393,750 | ||||||||||
Pamela J. Ahrens | — | — | 6,250 | (3) | 133,188 | |||||||||||||||
Michael A. Pollner | | 15,000 | 4 | | 393,750 | |||||||||||||||
David L. Schutte | | 39,293 | 4 | | 1,031,441 |
The Knoll Pension Plan was frozen for all participants, effective January 1, 2016. Messrs. Cogan, Pollner, Pardo and Schutte are the only executive officers who still participate; however, they have ceased to accrue additional benefits. The present value of the accumulated benefits for each of the named executive officers shown in the table below reflects the current value of the benefits earned under the Knoll Pension Plan as of December 31, 2015,2017, the measurement date used for financial statement reporting purposes with respect to our audited financial statements for fiscal year 2015. Mr. Cogan is our only named executive officer who accrued additional benefits under the plan for 2015. The Knoll Pension Plan was frozen for all participants, effective January 1, 2016.2017.
In making the calculations below, we assumed that the retirement age for each named executive officer will be the normal retirement age as defined in the plan. The pension benefits that form the basis for the present values of the accumulated benefits shown are calculated using the executive's career compensation, which is defined in the plan as the sum of the executive's compensation earned for each calendar year starting with the later of the date of hire or March 1, 1996. Annual compensation under the plan is limited to certain dollar amounts set each year by applicable U.S. law.
Upon the earlier of the 5th anniversary of participation in the plan, or the participant turning age 65, a participant becomes entitled, upon retirement at normal retirement age (age 65, 66 or 67 depending on the participant's date of birth), to a pension benefit of 1.55% of the participant's career compensation.
Upon retirement, participants in the plan may elect to receive benefits as a life annuity, joint and survivor annuity, or life annuity with a period certain. Early retirement is available for participants age 55 or older with at least 5 years of service. Benefit payments for early retirement may be reduced by1/2 of 1% for each month's payment before normal retirement age depending on the participant's age and years of service at the time of such early retirement.
The present values of the pension benefits in the table below are determined using the assumptions we use for financial reporting purposes as of December 31, 20152017 (based on a measurement date of December 31, 2015), including a 4.65% discount rate and the RP-2014 Total Dataset Employee Mortality Tables and the RP-2014 Total Dataset Healthy Annuitant Mortality Tables, both projected generationally from 2006 with Mortality Improvement Scale MP-2015.2017). Please see Note 1610 entitled "Pension and Other Postretirement Benefits" in the notes to our audited financial statements included in our 20152017 annual report on Form 10-K for a discussion of these assumptions.
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years Credited Service (#)1 | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | ||||||||||||
Andrew B. Cogan | Knoll Pension Plan | 20 | 475,235 | — | Knoll Pension Plan | | 20 | $ | 603,471 | | — | |||||||||||||
Benjamin A. Pardo | Knoll Pension Plan | 6 | 188,148 | — | Knoll Pension Plan | | 6 | $ | 212,225 | | — | |||||||||||||
Michael A. Pollner | Knoll Pension Plan | | 6 | $ | 119,931 | | — | |||||||||||||||||
David L. Schutte | Knoll Pension Plan | | 8 | $ | 227,731 | | — |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROLPotential Payments Upon Termination or Change in Control
Severance Under Employment AgreementsAgreement
Mr. Cogan is entitled to severance benefits under his employment agreement. The agreement may be terminated by us at any time, but if so terminated without "cause," or if we fail to renew the agreement, we must pay termination compensation. We also must pay termination compensation to Mr. Cogan in the event he terminates his employment agreement on account of our breach. The termination compensation is an amount equal to (i) 200% of his then current base salary, plus (ii) the average of the annual bonuses paid to him for the last two completed fiscal years proceeding the fiscal year of termination. UponIf the termination for any reason,is without "cause," or if we fail to renew the agreement, Mr. Cogan is also generally entitled to continued coverage under our health, disability and medical benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), with the company reimbursing Mr. Cogan for one year from the dateportion of termination.the premium
then paid by the company at the time of termination until the earlier of such time (i) Mr. Cogan obtains alternate employment pursuant to which he is covered by a group health plan, or (ii) Mr. Cogan is no longer eligible for COBRA.
The severance benefits to Mr. Cogan under his employment agreement are triggered upon any of the following events:
Cause is defined in Mr. Cogan's agreement as (i) the substantial and continued failure of the executive to perform material duties reasonably required of executive by the board of directors for a period of not less than 30 consecutive days after receiving written notice, (ii) conduct substantially disloyal to us, which conduct is identified in reasonable detail by written notice and which conduct, if susceptible of cure, is not remedied by executive within 30 days of executive's receipt of such notice, (iii) any act of fraud, embezzlement or misappropriation against us, or (iv) the conviction of executive of a felony.
The portion of the Mr. Cogan's severance amount related to base salary under the employment agreements is payable in twenty-four equal monthly installments following the date of termination and the portion of the severance amounts related to average annual bonuses ("Bonus Severance") is payable in twelve consecutive equal monthly installments following the date of such termination; provided, however, that for purposes of complying with Section 409A of the Internal Revenue Code, the severance amounts shall be paid as follows: (i) the first six monthly installments shall be paid on the six-month anniversary of the date of termination and (ii) the next eighteen monthly installments (six in the case of Bonus Severance amounts) shall be paid in one installment each on the seventh through twenty-fourth (twelfth anniversary in the case of Bonus Severance amounts) monthly anniversary of the date of termination. Mr. Cogan's employment agreement provides for a gross-up for excise tax, if any, under Section 4999 of the Internal Revenue Code.
Mr. Cogan's employment agreement contains non-competition and non-solicitation provisions covering the term of the agreement and two years thereafter.
Mr. CoppolaSchutte is entitled to a severance benefit under the terms of his offer letter. If Mr. CoppolaSchutte is terminated by Knoll without "Cause" during the first 12 months of his employment,, Mr. CoppolaSchutte is entitled to 12 months of his base salary. Cause is defined as (i) failure, neglect, or refusal of the executive to perform his duties which failure, neglect or refusal is not corrected within 30 days of his receipt of written notice from the company of such failure, neglect or refusal, (it being understood that a failure to attain performance objectives shall not in and of itself be treated as a failure to perform duties), (ii) conduct that has the effect of injuring the reputation or business of the company or its affiliates, as determined by the company; (iii) continued or repeated absence from the company, unless such absence is approved or excused; (iv) use of illegal drugs or significant violations of the company's policies and procedures, as determined by the company;repeated drunkenness; (v) conviction for the commission of a misdemeanor involving moral turpitude or a felony or any plea by executive of guilty or "nolo
contendere" to the charge of a misdemeanor involving moral turpitude or a felony; or (vi) the company's reasonable suspicion of the executive's commission of an act of fraud misappropriation or embezzlement against the company or any of its affiliates, employees, customers or suppliers; or (vii) conduct substantially disloyal to the company, as determined by the company.suppliers.
Our other named executive officers do not have formal employment agreements or contractual severance benefits. They are, however, entitled to severance benefits under our severance pay plan described below.
Our severance pay plan generally applies to all of our regular full-time or part-time U.S. employees, including our named executive officers (excluding Mr. Cogan and Mr. Coppola)Schutte), who are not covered by a collective bargaining agreement, unless such agreement calls for participation in the plan. The amount of the severance pay is equal to one week of pay per completed year of service, subject to a minimum of 4 weeks' pay and a maximum of 26 weeks' pay. In general, the severance pay plan provides for severance payments to eligible employees if their employment is involuntarily severed for business or economic reasons, such as due to a reduction in force on account of weak sales volume. This makes it unlikely to apply to our named executive officers.officers and, because of this, we have omitted it from the section entitled "Potential Post-Retirement Payments to Named Executive Officers As of December 31, 2017". The severance pay plan does not cover retirements, terminations for disability or terminations for misconduct (as defined in the plan). It also does not cover terminations in connection with the sale of all or part of us or a subsidiary or other business combination involving us or a subsidiary where (i) the employee is offered a position of comparable pay and responsibility by the purchasing or surviving business (and not required to commute more than 35 miles further) or (ii) the employee accepts employment in any position with the purchasing or surviving business.
For 2015, Mr. Cogan participated in theThe Knoll Pension Plan, a noncontributory defined benefit plan, which coverswas frozen to all of our regular full-time or part-time U.S. associates who joined Knoll prior toparticipants, effective January 1, 2011. The plan provides retirement benefits for service starting on or after March 1, 1996, and participants become 100% vested after five years of service.2016. Mr. Cogan, was ourMr. Pollner, Mr. Pardo and Mr. Schutte are the only named executive officerofficers who accruedparticipate in this plan, however, they are no longer accruing additional benefits under the Plan for 2015. For a more detailed discussion of their pension benefits see "Executive Compensation—Pension Benefits" above.
benefits. As of December 31, 2015,2017, the estimated annual benefits payable under the Knoll Pension Plan upon normal retirement for each of our eligible named executive officers is as follows: Mr. Cogan ($65,100); andMr. Pollner ($20,296); Mr. Pardo ($24,644). Our other named executive officers are not eligible for a benefit under the Knoll Pension Plan due to the partial freeze of the Plan that was announced during 2011 and effective January 1, 2012. The Knoll Pension Plan was frozen to all participants, effective January 1, 2016.Mr. Schutte ($27,580).
Our stock option agreements and restricted stock agreements provide for accelerated vesting upon a change-in-control (as defined therein). In the case of stock options, 100% of the options vest. In the case of restricted stock,For grants made in early 2016 and earlier, the vesting is pro rata and calculated based on multiplying the total number of restricted shares times a fraction the numerator of which is the number of whole months that have
elapsed since the grant date and the denominator of which is the total number of months over which the grant vests. Commencing with our grants made in August 2016, we have implemented "double-trigger" change-in-control provisions, whereby our restricted shares and restricted stock units fully vest upon a change-in-control butonly if there is a termination of employment within one year following the change-in-control.
Potential Post-Retirement Payments to Named Executive Officers As of December 31, 20152017
Set forth below are the estimated benefits that would be payable to each named executive officer (excluding Messrs. Coppola and Spray whose employment ended during 2017) upon various termination of employment and change-in-control triggering events, assuming such events occurred on December 31, 2015.2017. Actual amounts can only be determined upon the actual triggering event.
If Mr. Cogan's employment was terminated on December 31, 20152017 in a manner that triggered the severance payments under his employment agreement, he would be entitled to $2,324,000,$3,140,000, which represents 200% of his base salary of $857,000$1,020,000 as of December 31, 2015,2017, and the average of the bonuses paid to him for 20142016 and 20132015 ($900,0001,200,000 and $320,000,$1,000,000, respectively). If Mr. Cogan was terminated for cause or disability, he would not be entitled to benefits under the severance provisions of his employment agreement. Regardless of the reason forIf Mr. Cogan's termination was without "Cause", he would also be entitled to continued coverage under our health, disability and medical benefits pursuant to COBRA, with the company reimbursing Mr. Cogan for the greaterportion of the premium then paid by the company at the time of termination, until such time (i) the period provided under applicable lawMr. Cogan obtains alternate employment pursuant to which he is covered by a group health plan, or (ii) one year from the date of termination.Mr. Cogan is no longer eligible for COBRRA coverage.
If the termination was in connection with a change-in-control that triggered the accelerated vesting of Mr. Cogan's equity awards, he would also be entitled to pro rata vesting of 356,666356,667 shares of restricted stock and stock units. As of December 31, 2015,2017, these restricted shares and stock units had a value of $6,705,321$8,217,608 based on a closing price of $18.80$23.04 on December 31, 2015.
29, 2017. Mr. Cogan also would not be entitled to early retirement benefits under the Knoll Pension Plan because he wasof $19,856 per year.
Mr. Rayfield would not at least 55 yearsbe entitled to any contractual severance pay upon a termination of ageemployment on December 31, 2015.
Mr. Cogan's employment agreement provides that the severance benefits provided under that agreement are the only severance benefits that Mr. Cogan is entitled. However, if the severance pay plan was applicable to a termination of Mr. Cogan's employment, he would be credited with 26 years of service and entitled to $428,500, or 26 weeks of base salary.
Craig B. Spray2017.
If Mr. Spray'sRayfield's employment was terminated as of December 31, 2015 he would not be entitled to any severance amounts unless it was an involuntary separation covered by the Knoll Severance Pay Plan, in which case he would be entitled to $25,769, or 4 weeks of pay, the minimum under our severance pay plan.
If the termination was2017 in connection with a change-in-control that triggered the accelerated vesting of Mr. Spray'sRayfield's equity awards, he would also be
entitled to pro rata vesting of 11,1108,056 shares of restricted stock and stock units. As of December 31, 2015,2017, these restricted shares had a value of $208,868,$185,610, based on a closing price of $18.80$23.04 on December 31, 2015.29, 2017.
Mr. SprayPollner would not be entitled to early retirement benefits under the Knoll Pension Plan because he is notany contractual severance pay upon a participant in the Plan.
Joseph T. Coppola.termination of employment on December 31, 2017.
If Mr. Coppola'sPollner's employment was terminated on December 31, 2015 in a manner that triggered the severance payments under his offer letter, he would be entitled to $335,000, which represents 12 months of his base salary as of December 31, 2015. If Mr. Coppola was terminated for cause, he would not be entitled to benefits under the severance provisions of his offer letter.
If the termination was2017 in connection with a change-in-control that triggered the accelerated vesting of Mr. Coppola'sPollner's equity awards, he would also be entitled to pro rata vesting of 2,22218,888 shares of restricted stock and stock units. As of December 31, 2015,2017, these restricted shares and stock units had a value of $41,774,$435,180, based on a closing price of $18.80$23.04 on December 31, 2015.29, 2017.
Mr. CoppolaPardo would not be entitled to any contractual severance pay upon a termination of employment on December 31, 2017; however, he would be entitled to early retirement benefits under the Knoll Pension Plan because he is not a participant in the Plan.
The Knoll Severance Pay Plan would not apply to Mr. Coppola during the first 12 months of his employment. However, if the severance pay plan was applicable to a termination of Mr. Coppola's employment, he would be entitled to severance pay of $25,769, or 4 weeks of pay, the minimum under our severance pay plan.
Benjamin A. Pardo.$8,625 per year.
If Mr. Pardo's employment was terminated as of December 31, 2015 he would not be entitled to any severance amounts unless it was an involuntary separation covered by the Knoll Severance Pay Plan, in which case he would be entitled to $56,731 or 10 weeks of pay.
If the termination was2017 in connection with a change-in-control that triggered the accelerated vesting of Mr. Pardo's equity awards, he would be entitled to pro rata vesting of 28,61218,333 shares of restricted stock and stock units. As of December 31, 2015,2017, these restricted shares and stock units had a value of $537,906,$422,392, based on a closing price of $18.80$23.04 on December 29, 2017.
If Mr. Schutte's employment was terminated on December 31, 2015.
2017 in a manner that triggered the severance payments under his offer letter, he would be entitled to $350,000, which represents 12 months of his base salary as of December 31, 2017. If Mr. PardoSchutte was terminated for cause, he would not be entitled to early retirement benefits under the Knoll Pension Plan because he was not at least 55 yearsseverance provisions of age on December 31, 2015.
Pamela J. Ahrens.his offer letter.
If Ms. AhrensMr. Schutte's employment was terminated as of December 31, 2015 she would not be entitled to any severance amounts unless it was an involuntary separation covered by the Knoll Severance Pay Plan, in which case she would be entitled to $22,692, representing 4 weeks of pay, the minimum under our severance pay plan.
If the termination was2017 in connection with a change-in-control that triggered the accelerated vesting of Ms. Ahrens'Mr. Schutte's equity awards, shehe would be entitled to pro rata vesting of 13,19519,722 shares of restricted stock and stock units. As of December 31, 2015,2017, these restricted shares had a value of $248,066,$454,395, based on a closing price of $18.80$23.04 on December 31, 2015.29, 2017.
Ms. Ahrens would not be entitled to early retirement benefits under the Knoll Pension Plan because she is not a participant in the Plan.Table of Contents
Compensation RiskPAY RATIO DISCLOSURE
OurIn August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the Securities and Exchange Commission adopted a rule requiring the annual disclosure of the ratio of the median of the annual total compensation committee conducted a risk-assessmentof all employees (other than the Chief Executive Officer) to the annual total compensation of the Chief Executive Officer. The median of the annual total compensation of our employees (other than the Chief Executive Officer) for 2017 was $57,357. As disclosed in the Summary Compensation Table appearing on page 55, our Chief Executive Officer's annual total compensation programs and practices. This process included: a reviewfor 2017 was $4,004,915. Based on the foregoing, our estimate of the disclosure requirements containedratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was 69.8 to 1.
In determining the median of the annual total compensation of all employees (other than the Chief Executive Officer), a listing was prepared of all employees as of October 1, 2017, as well as their year-to-date gross cash compensation, which was consistently applied to all employees included in the list. Employees on leave of absence were excluded to the extent they received no cash compensation in 2017, and wages and salaries for new employees in North America were adjusted on a pro-rata basis to reflect nine (9) complete months of service. The value of our medical benefits was excluded, given that all employees, including the Chief Executive Officer, are offered the same medical benefits. The median employee was selected from the list. Once the median employee was identified, all of the elements of such employee's compensations for 2017 was combined in accordance with Item 402(s)402(c)(2)(x) of Regulation S-K;S-K, resulting in annual total compensation of $57,357. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a reviewbasis for comparison between companies. This information is being provided for compliance purposes. Neither the Compensation Committee nor the management of ourthe Company used the pay ratio measure in making compensation programs; the identification of features that could potentially encourage excessive or imprudent risk taking of a material nature; a review of our business risks generally, as described in our public filings; the identification and review of additional risks specifically associated with our compensation programs; and the identification and review of factors that mitigate these risks. Based on this process, our compensation committee concluded that our compensation programs and practices are appropriately structured and do not create risks that are reasonably likely to have a material adverse effect on the Company.decisions.
The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis for fiscal year 2015. Based on the review and discussions, the compensation committee recommended to the board of directors, and the board of directors approved, that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into our annual report on Form 10-K for the fiscal year ended December 31, 2015.
This report is submitted by the compensation committee.
Jeffrey A. Harris (Chairman)Sidney LapidusSarah E. NashChristopher G. Kennedy
TRANSACTIONS WITH RELATED PERSONS
We recognize that transactions with our directors or executive officers can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than our best interests and the best interests of our stockholders. Our Codecode of Ethics,ethics, which is available on our website atwww.knoll.com, contains provisions prohibiting certain conflicts of interest, unless such conflicts are disclosed to us and waived in accordance with the waiver provisions of our Codecode of Ethics.ethics. Conflicts involving our directors or executive officers must be reviewed and waived by our audit committee. In addition, our audit committee charter requires that the audit committee approve all related party transactions entered into with any of our directors or executive officers. Our board has also adopted a written policy regarding related person transactions which supplements our audit committee charter and Codecode of Ethicsethics by establishing additional procedures for monitoring, reviewing and, if appropriate, approving or ratifying, these types of transactions. The policy covers any "related person transaction," as defined under SEC rules, which generally includes a transaction, arrangement or relationship involving more than $120,000 in which the Company or any of its subsidiaries, was, is or will be a participant and in which a "related person" has a material direct or indirect interest. "Related persons" includeincludes directors and executive offers, and their immediate family members, and stockholders owning five percent (5%) or more of the Company's outstanding stock. Under the policy, related person transactions must be submitted to the company's legal department and approved or ratified by the company's audit committee or audit committee chair.
During 2015, in the ordinary course of business the Company sold furniture and related products in the aggregate amount of approximately $4.2 million to the following stockholders (or one of their affiliates) who owned more than five percent (5%) of the Company's outstanding stock as of December 31, 2015: FMR LLC, BlackRock, Inc. and The Vanguard Group, Inc. In accordance with the related person transaction policy described above, these transactions were reviewed and approved by the audit committee.
Restricted Stock-Tax Withholding
On each of February 10, 20152017, April 23, 2017 and October 21, 2015,December 27, 2017, restricted stock awarded to certain of our named executive officers vested. In connection with these vestings, we withheld vested shares with an aggregate value of $1,554,605$5,979,937 (based on the closing price of our common stock on the trading day prior to the applicable vesting) to cover the statutory tax obligations of the named executive officers. For more information on these vestings, see "Option Exercises and Stock Vested" on page 3861 above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors and officers, as well as any person holding more than 10% of our outstanding common stock, are required to report equity ownership and changes in equity ownership with the Securities and Exchange Commission, pursuant to Section 16 of the Exchange Act. Our records reflect that all reports that were required to be filed pursuant to Section 16(a) of the Exchange Act were filed on a timely basis, except that onea single Form 4 for John F. Maypolefiled by Charles Rayfield reporting a grant of restricted stock and restricted stock units, a single saleForm 4 filed by Scott Cameron reporting a grant of Knoll commonrestricted stock wasand restricted stock units, the initial Form 3 filed by Daniel W. Dienst and the initial Form 3 filed by Scott Cameron were not filed on a timely basis.
REPORT OF AUDIT COMMITTEEFREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING
Why Did You Send Me this Proxy Statement?
We have elected to furnish our proxy statement and annual report to certain of our stockholders over the Internet pursuant to United States Securities and Exchange Commission (SEC) rules, which allows us to reduce costs associated with the 2018 annual meeting of stockholders. On or about March 29, 2018, we will mail to certain of our stockholders a notice of Internet availability of proxy materials containing instructions regarding how to access our proxy statement and annual report online (the eProxy Notice). The audit committeeeProxy Notice contains instructions regarding how you can elect to receive printed copies of the proxy statement and annual report. All other stockholders will receive printed copies of the proxy statement and annual report, which will also be mailed to such stockholders on or about March 29, 2018.
We sent you this proxy statement because our board of directors has furnishedis soliciting your proxy to vote at our 2018 Annual Meeting of Stockholders and any adjournments of the following report:meeting. This proxy statement summarizes the information you need to know to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares via the Internet or by marking, signing, dating and returning a proxy card. If you hold your shares through a broker you may also be able to vote your shares through such broker either via the Internet or by telephone. Please contact your broker directly for details regarding these voting options.
The audit committee assistsOnly stockholders who owned our common stock at the boardclose of directors in overseeing and monitoringbusiness on March 15, 2018, the integrityrecord date, are entitled to vote at the Annual Meeting. On the record date, there were 48,605,366 shares of our financial reporting process, compliancecommon stock outstanding, including 47,710,072 shares of stock entitled to vote and 895,294 shares of restricted stock that are not entitled to vote. Our common stock is our only class of voting stock. We are also sending along with legal and regulatory requirements and the quality of internal and external audit processes. This committee's role and responsibilities are set forth in a charter adopted by the board of directors,this proxy statement our 2017 annual report, which is available onincludes our website atwww.knoll.com. This committee reviews and reassesses our charter annually and recommends any changes to the board of directors for approval. The audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of our independent registered public accounting firm. In fulfilling its responsibilities for the financial statements for fiscal year 2015, the audit committee took the following actions:
Each share of our common stock that you own entitles you to one vote.
Why Did I Receive an eProxy Notice of Internet Availability of Proxy Materials?
The SEC permits us to electronically distribute proxy materials to stockholders. We have elected to provide access to our proxy materials and annual report to certain of our stockholders on the resultsInternet instead of management's assessmentmailing the full set of printed proxy materials. On or about March 29, 2018, we will mail to certain of our stockholders an eProxy Notice containing instructions regarding how to access our proxy statement and annual report and how to vote online. If you received an eProxy Notice by mail, you will not receive printed copies of the effectivenessproxy materials and annual report in the mail unless you request them. Instead, the eProxy Notice instructs you how to access and review all of the Company's internal controlimportant information contained in the proxy statement and annual report. The eProxy Notice also instructs you how you may submit your proxy over financial reportingthe Internet. If you received an eProxy Notice by mail and would like to receive a printed copy of our proxy materials and annual report, you should follow the independent registered public accounting firm's audit of internal control over financial reporting;instructions for requesting such materials included in the eProxy Notice.
Discussed with Ernst & Young LLPYou may vote via the matters required to be discussedInternet by Auditing Standard No. 16, Communications with Audit Committees; and
Basedinstructions outlined on the audit committee's reviewwebsite or via the telephone by calling 1-800-652-VOTE and following the recorded instructions. If you request paper copies of the audited financial statementsproxy materials, you can also vote by signing and discussions with managementmailing your proxy card. If you properly fill in your proxy card and Ernst & Young LLP, including meetings held without management present, the audit committee recommendedsend it to the board of directors that the audited financial statements be includedus in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the SEC.
Members of our audit committee
John F. Maypole (Chairman)Stephen F. FisherSarah E. NashKathleen G. Bradleytime, your "proxy" (one
PROPOSAL 2—INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMof the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxyholder will vote your shares as recommended by our board of directors. Proxy cards must be received prior to the time of the vote in order for the shares represented by the proxy card to be voted. If you hold your shares through a broker or financial institution, you should contact your broker or financial institution to determine how you may vote your shares.
The audit committee has appointedIf you hold your shares through a broker, it is important that you cast your vote if you want it to count in the election of directors (Proposal 1), the approval of the Knoll, Inc. 2018 Stock Incentive Plan (Proposal 2) and the advisory vote on executive compensation (Proposal 4). Your broker is not permitted to vote your uninstructed shares in the election of directors or executive compensation matters on a discretionary basis. Thus, if you hold your shares through a broker and you do not instruct your broker how to vote for Proposal 1 (the election of directors), Proposal 2 (the approval of the Knoll, Inc. 2018 Stock Incentive Plan) or Proposal 4 (the advisory vote on executive compensation), no votes will be cast on your behalf with respect to those matters. Your broker may vote your uninstructed shares on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2016. The board of directors proposes that the stockholders ratify this appointment. Although ratification is not required, the board of directors is submitting the selection of Ernst & Young LLP to our stockholders for ratification ason a matter of good corporate practice. In the event the stockholders do not ratify the appointment, the appointment will be reconsidered by the audit committee, but the audit committee is not required to appoint another independent registered public accounting firm. Even if the selection is ratified, the audit committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the our company and our stockholders.discretionary basis.
Ernst & Young LLP has audited our financial statements for the fiscal years ended December 31, 1996 through 2015. We expect that representatives of Ernst & Young LLP will be present at the Annual Meeting of Stockholders, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.
The following table presents fees for professional audit services rendered by Ernst & Young LLP for the audit of our annual financial statements for the years ended December 31, 2015 and 2014, and fees billed for other services rendered by Ernst & Young LLP during those periods.
| 2015 | 2014 | |||||
---|---|---|---|---|---|---|---|
Audit Fees(1): | $ | 1,657,423 | $ | 1,884,580 | |||
Audit-Related Fees: | 0 | 0 | |||||
Tax Fees: | 0 | 0 | |||||
All Other Fees: | 2,000 | 0 | |||||
| | | | | | | |
Total | $ | 1,659,423 | $ | 1,884,580 | |||
| | | | | | | |
Policy on Audit Committee Pre-Approval of AuditIf you attend the Annual Meeting, you may also submit your vote in person, and Permissible Non-audit Services of Independent Registered Public Accounting Firmany previous votes that you submitted will be superseded by the vote that you cast at the Annual Meeting.
The audit committee has responsibility for appointing, setting compensationIf you plan to attend the Annual Meeting and overseeingvote in person, we will give you a ballot when you arrive. However, if your shares are held in the workname of your broker, bank or other nominee, you must bring an account statement or letter from the nominee indicating that you were the beneficial owner of the independent registered public accounting firm and pre-approving all audit and permitted non-audit services that mayshares on March 15, 2018, the record date for voting. The Annual Meeting will be performed byheld at 9:00 a.m. Eastern Time on May 8, 2018 at our offices at 1330 Avenue of the independent registered public accounting firm. In recognition of this responsibility,Americas, 2nd Floor, New York, New York 10019. When you arrive at the audit committee has pre-approved compensating Ernst & Young LLP for certain services that they may provide during 2016 based on the specific service or category of service. In addition, the audit committee has delegated authority to its Chairman, John F. Maypole, to approve additional compensation for appropriate miscellaneous services, subject to certain limits depending on the specific service or category of service. Any such approval would be reportedvenue, signs will direct you to the audit committeeappropriate meeting rooms. You need not attend the Annual Meeting in order to vote.
If you give us your proxy, you may revoke it at its nextany time before it is voted at the meeting. You may revoke your proxy in any one of the following ways:
What Constitutes a Quorum for the Meeting?
For fiscal year 2015The presence, in person or by proxy, of the holders of a majority of the shares of our common stock outstanding and 2014, all auditentitled to vote is necessary to constitute a quorum at the meeting. Votes of stockholders of record who are present at the meeting, in person or by proxy, abstentions and non-audit services described above were pre-approved by the audit committee.broker non-votes are counted for purposes of determining whether a quorum exists.
What Vote is Required to Approve Each Proposal?
Proposal 1: Election of Directors | The three nominees for director who receive the most votes (also known as a "plurality" of the votes) will be elected. However, under our Director Resignation Policy contained in our Corporate Governance Guidelines, any director receiving a greater number of votes "withheld" from his or her election than votes "for" such election shall promptly tender an offer of resignation for consideration by our nominating and corporate governance committee and our board of directors. | |
Proposal 2: Approval of the Knoll, Inc. 2018 Stock Incentive Plan | The affirmative vote of a majority of the shares present at the meeting, in person or by proxy, and entitled to vote on the proposal is required to approve the Knoll, Inc. 2018 Stock Incentive Plan. Additionally, under the NYSE approval requirements, the proposal must be approved by a majority of the votes cast and the total votes cast must represent over 50% in interest of all securities entitled to vote on the proposal. | |
Proposal 3: Ratify Appointment of Independent Registered Public Accounting Firm | The affirmative vote of a majority of the shares present at the meeting, in person or by proxy, and entitled to vote on the proposal is required to ratify the selection of our independent registered public accounting firm. | |
Proposal 4: Advisory Vote to Approve Executive Compensation | The affirmative vote of a majority of the shares present at the meeting, in person or by proxy, and entitled to vote on the proposal is required to approve, on an advisory basis, the executive compensation described in this proxy statement. |
What is the Effect of Broker Non-Votes and Abstentions?
What Are the Costs of Soliciting these Proxies?
We will pay all of the independent registered public accounting firm.costs of soliciting these proxies. Solicitation of proxies will be made principally through the mails, but our officers and employees may also solicit proxies in person or by telephone, fax or email. We will pay these employees and officers no additional compensation for these services. We will ask
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
Tablebanks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to the beneficial owners of Contentsthe common stock and to obtain authority to execute proxies. Upon request, we will then reimburse them for their reasonable expenses.
PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION Who Will Tabulate the Votes?
Section 14AVotes cast by proxy or in person will be counted by the persons appointed by us to act as election inspectors for the Securities Exchange Actmeeting.
Where Do I Find the Voting Results of 1934 requires that wethe Meeting?
We will announce the preliminary voting results at the meeting and provide our stockholdersthe final results in a Current Report on Form 8-K filed with the opportunity to vote to approve, on a nonbinding, advisory basis,SEC within four business days following the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC's rules.
As described in detail under the heading "Executive Compensation—Compensation Discussion and Analysis," our executive compensation programs are generally designed to provide competitive compensation packages that will attract and retain superior talent, motivate our executive officers to achieve desired company and individual performance and to appropriately reward that performance, and align the interests of our executive officers with the long-term interests of our stockholders.
The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote relates to the overall compensation of our named executive officers, as well as the philosophy, policies and practices, all as described in this proxy statement in accordance with the SEC's rules. The vote is advisory, and therefore it is not binding on the company, the compensation committee or our board of directors. We have determined that our stockholders should cast an advisory vote on the compensation of our named executive officers on an annual basis. The next advisory vote on the compensation of our named executive officers will be at the 2017 Annual Meeting of Stockholders.
The affirmative vote of a majority of the shares present or represented and entitled to vote at the Annual Meeting is required to approve this Proposal 3.
Accordingly, we ask our stockholders to vote on the following nonbinding resolution at the Annual Meeting:
"RESOLVED, that the company's stockholders approve, on a nonbinding, advisory basis, the compensation of the named executive officers, as disclosed in the company's Proxy Statement for the 2016 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.meeting.
Householding of Annual Disclosure Documents
To reduce the expenses of delivering duplicate materials to our stockholders, we are relying on a rule of the Securities and Exchange Commission (the "SEC") that allows us or your broker to send a single set of our annual report and proxy statement to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as "householding," benefits both you and us. The board of directors knows of no other business whichrule applies to our annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be presented"householded," the practice will continue until you are otherwise notified or until you revoke your consent to the Annual Meeting. practice. Each stockholder will continue to receive a separate proxy card or voting instruction card.
If anyyour household received a single set of our annual disclosure documents this year, but you would prefer to receive your own copy, please contact us by writing to Knoll, Inc., c/o Corporate Secretary, 1235 Water Street, East Greenville, Pennsylvania 18041, or calling our Investor Relations department at 215-679-7991 and we will promptly send you a copy of our annual disclosure documents.
If you do not wish to participate in "householding" and would like to receive your own set of our annual disclosure documents in future years, follow the instructions described below. Conversely, if you share an address with another of our stockholders and together both of you would like to receive only a single set of our annual disclosure documents, follow these instructions:
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR Stockholder Proposals and Nominations for Directors
To be considered for inclusion in the proxy statement relating to our Annual Meeting of Stockholders to be held in 2017,2019, your proposal must be received no later than November 23, 201629, 2018 pursuant to Rule 14a-8 of the Exchange Act. Any such proposal must comply with the proxy rules under the Exchange Act, including Rule 14a-8.
To be considered for presentation at the Annual Meeting of Stockholders to be held in 2017,2019, although not included in the proxy statement, proposals, including stockholder nominations of candidates for directors, must be made using the procedures set forth in our by-laws and received not less than 90 days nor more than 120 days before the first anniversary of the date of the 20162018 Annual Meeting. As a result, any proposal given by a stockholder pursuant to the provisions of our by-laws (other than pursuant to Rule 14a-8) must be received no earlier than January 3, 20178, 2019 and no later than February 2, 2017.7, 2019. However, if the date of the 20172019 Annual Meeting occurs more than 30 days earlier or more than 60 days after May 4, 2017,8, 2019, notice by the stockholder of a proposal must be delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior the date of such annual meeting, the 10th day following the day on which we first make a public announcement of the date of the annual meeting.
If we do not receive notice by these dates, or if we meet certain other requirements under SEC rules, the persons named as proxies in the proxy materials relating to that meeting may use their discretion in voting the proxies when these matters are raised at the meeting. Stockholder proposals must include the specified
information concerning the proposal or nominee as described in our by-laws. All stockholder proposals should be marked for the attention of our Corporate Secretary at Knoll, Inc., 1235 Water Street, East Greenville, Pennsylvania 18041.
Matters for the Annual Meeting
The board of directors knows of no other business which will be presented to the Annual Meeting. If any other business is properly brought before the Annual Meeting, proxies in the enclosed form will be voted in accordance with the judgment of the persons voting the proxies.
By Order of the Board of Directors
Michael A. Pollner Senior Vice President, General Counsel and Secretary | ||
East Greenville, Pennsylvania |
Our Annual Report on Form 10-K for the fiscal year ended December 31, 20152017 (other than exhibits thereto) filed with the SEC, which provides additional information about us, is available on our website atwww.knoll.com and is available in paper form to beneficial owners of our common stock without charge upon written request to our Corporate Secretary at Knoll, Inc., 1235 Water Street, East Greenville, Pennsylvania 18041.
Exhibit A—A — Reconciliation of Non-GAAP Financial Measures
We use certain non-GAAP financial measures in this proxy statement. A "non-GAAP" financial measure is a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP"). We present Non-GAAP financial measures because we consider them to be important supplemental measures of our performance and believe them to be useful to display ongoing results from operations distinct from items that are infrequent or not indicative of our operating performance. Pursuant to applicable reporting requirements, the company has provided reconciliations below of non-GAAP financial measures to the most directly comparable GAAP measure.
The non-GAAP financial measures presented within this proxy statement are Adjusted Diluted Earnings Per Share and Adjusted EBITDA. These non-GAAP financial measures are not indicators of our financial performance under GAAP and should not be considered as an alternative to the applicable GAAP measure. These non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. In addition, in evaluating these non-GAAP financial measures, you should be aware that in the future we may incur expenses similar to the adjustments in this proxy statement. Our presentation of these non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or infrequent items.
The following table reconciles Adjusted Earnings Per Share — Diluted to GAAP Earnings Per Share — Diluted for the periods indicated:
Years Ended December 31, | |||||||||||||
| | | | | | | | | | | | | |
2014 | 2015 | 2016 | 2017 | ||||||||||
| | | | | | | | | | | | | |
Earnings per Share — Diluted | $ | 0.97 | $ | 1.36 | $ | 1.68 | $ | 1.63 | |||||
Add back: | | | | | |||||||||
Intangible asset impairment charge | | — | | 0.22 | | — | | 0.33 | |||||
Pension settlement and OPEB curtailment | | 0.14 | | — | | — | | 0.04 | |||||
Restructuring charges | | 0.03 | | 0.02 | | — | | 0.04 | |||||
Seating product discontinuation charge | | — | | 0.02 | | — | | — | |||||
Acquisition expenses | | — | | — | | — | | 0.01 | |||||
Less: | | | | | |||||||||
Tax effect on non-GAAP adjustments | | 0.05 | | 0.09 | | | | 0.13 | |||||
Tax Reform impact | | — | | — | | — | | 0.54 | |||||
| | | | | | | | | | | | | |
Adjusted Earnings per Share — Diluted | $ | 1.09 | $ | 1.52 | $ | 1.68 | $ | 1.38 |
The following table reconcilies Adjusted EBITDA to GAAP Net Earnings for the periods indicated:
Years Ended December 31, | |||||||||||||
| | | | | | | | | | | | | |
2014 | 2015 | 2016 | 2017 | ||||||||||
| | | | | | | | | | | | | |
Net Earnings ($mm) | $ | 46.6 | $ | 66.0 | $ | 82.1 | $ | 80.2 | |||||
Add back: | | | | | |||||||||
Income tax (benefit) expense | | 29.2 | | 37.5 | | 45.4 | | (1.6 | ) | ||||
Interest expense | | 7.4 | | 6.9 | | 5.4 | | 7.5 | |||||
Depreciation and amortization | | 19.3 | | 20.5 | | 22.4 | | 26.1 | |||||
| | | | | | | | | | | | | |
EBITDA | $ | 102.5 | $ | 130.9 | $ | 155.3 | $ | 112.2 | |||||
Add back: | | | | | |||||||||
Non-cash items and other1 | | 11.9 | | 12.5 | | 13.4 | | 32.3 | |||||
| | | | | | | | | | | | | |
Adjusted EBITDA | $ | 114.4 | $ | 143.4 | $ | 168.7 | $ | 144.5 | |||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Net Sales ($mm) | $ | 1,050.3 | $ | 1,104.4 | $ | 1,164.3 | $ | 1,132.9 | |||||
Adjusted EBITDA % | | 10.9% | | 13.0% | | 14.5% | | 12.8% |
Exhibit B — Knoll, Inc, 2018 Stock Incentive Plan
Knoll Inc.KNOLL, INC.
2018 STOCK INCENTIVE PLAN
Effective as of February 6, 2018
1.1GENERAL. The purpose of the Knoll, Inc. 2018 Stock Incentive Plan (the "Plan") is to promote the success and enhance the value of Knoll, Inc. (the "Company") by linking the personal interests of employees, officers and directors of the Company to those of Company shareowners and by providing such persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, officers, directors and consultants upon whose judgment, interest, and special effort the successful conduct of the Company's operation is largely dependent.
| 2015 | 2014 | |||||
---|---|---|---|---|---|---|---|
Operating Profit ($mm) | $ | 101.0 | $ | 76.8 | |||
Add back (deduct): | |||||||
Intangible asset impairment charge | 10.7 | — | |||||
Pension Settlement and OPEB Curtailment | — | 6.5 | |||||
Restructuring charges | 0.9 | 1.5 | |||||
Seating Product Discontinuation | 0.9 | — | |||||
Acquisition Expenses | — | 0.7 | |||||
Remeasurement of FilzFelt Earn-out Liability | — | 0.5 | |||||
| | | | | | | |
Adjusted Operating Profit | $ | 113.5 | $ | 86.0 | |||
| | | | | | | |
| | | | | | | |
| | | | | | | |
Net Sales ($mm) | $ | 1,104.4 | $ | 1,050.3 | |||
Adjusted Operating Profit % | 10.3 | % | 8.2 | % |
ARTICLE 2Twelve Months Ended December 31, 2015(in millions)DEFINITIONS
2.1DEFINITIONS. As used in this plan, the following words and phrases shall have the following meanings:
"Award" means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards, Dividend Equivalents, or any other right or interest relating to Stock or cash, made to an Eligible Participant under the Plan.
"Award Agreement" means a written document, in such form as the Committee prescribes from time to time, setting forth the terms and conditions of an Award. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.
"Award Date" of an Award means the first date on which all necessary corporate action has been taken to approve the grant of the Award as provided in the Plan, or such later date as is determined and specified as part of that authorization process.
"Board" means the Board of Directors of the Company.
"Change in Control" For purposes of this Plan, (i) if there is an employment agreement or a change in control agreement between the participant and the Company or any of its Subsidiaries in effect, "Change in Control" shall have the same definition as the definition of "Change in Control" contained in such employment agreement or change in control agreement (unless the amount involved is subject to Section 409A of the Code and such definition does not comply with Section 409A(2)(c)(v) of the Code), or (ii) if "Change in Control" is not defined in such employment agreement or change in control agreement (or the amount involved is subject to Section 409A of the Code and such definition does not comply with Section 409A(2)(c)(v) of the Code), or if there is no employment agreement or change in control agreement between the participant and the Company or any of its Subsidiaries in effect, a "Change in Control" of the Company shall be deemed to have occurred upon any of the following events:
This definition shall be interpreted and applied as necessary to avoid imposition of the taxes and interest under Section 409A of the Code. Additionally, no Change in Control will be deemed to have occurred under clause (i), (ii) or (iii) if, subsequent to such time as a Change in Control would otherwise be deemed to have occurred, a majority of the Board in office prior to such Change in Control determines otherwise.
"Code" means the Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.
"Committee" means the Compensation Committee of the Board.
"Company" means Knoll, Inc., a Delaware corporation, and its successors.
"Continuous Service" means the absence of any interruption or termination of service as an employee, officer or director of the Company or any Subsidiary, as applicable; Continuous Service will not be interrupted under any of the following cases:
(i) a Participant transfers employment, without interruption, between the Company and an Subsidiary or between Subsidiaries,
(ii) in the case of a spin-off, sale or disposition of the Participant's employer from the Company or any Subsidiary, but only if the Committee determines before the transaction closes that it will not result in an interruption of service; or
(iii) the Participant is granted an unpaid leave of absence authorized in writing by the Company prior to its commencement that does not exceed twelve months. The Committee has final and conclusive authority to determine whether any other leave of absence constitutes a termination of Continuous Service. Any other leave of absence granted to a Participant must constitute a "bona fide leave of absence" under Treas. Reg. Section 1.409A-1(h) if the Participant's Award is subject to Code Section 409A.
"Covered Person" means the named executive officers for purposes of the Company's annual proxy statement in a given year.
"Disability" means, except as otherwise determined pursuant to an Award Agreement, a condition for which the Participant becomes eligible for a disability benefit under the long term disability insurance policy issued to the Company, or under any other long term disability plan which hereafter may be maintained by the Company, whether or not the Participant is covered by such plan. In the event of a
dispute, the determination of whether a Participant has incurred a Disability will be made by the Committee and may be supported by the advice of a physician competent in the area to which such Disability relates.
"Dividend Equivalent" means a right granted to a Participant under Article 12.
"Effective Date" has the meaning assigned such term in Section 3.1.
"Eligible Participant" means an employee, officer, consultant or director of the Company or any Subsidiary.
"Exchange" means the New York Stock Exchange, or if the Stock is no longer listed on the New York Stock Exchange, any national securities exchange on which the Stock may from time to time be listed.
"Fair Market Value," means (i) the closing price of the Stock on the date of calculation (or on the last preceding trading date if the Stock was not traded on such date) if the Stock is readily tradeable on a national securities exchange or other market system or (ii) if the Stock is not readily tradeable, the amount determined by the Committee in a manner consistent with Section 409A of the Code, or, in the case of Shares underlying Incentive Stock Options, the amount determined by the Committee in a manner consistent with Section 422 of the Code.
"Full-Value Award" means an Award other than in the form of an Option or SAR, and which is settled by the issuance of Stock (or at the discretion of the Committee, settled in cash valued by reference to Stock value).
"Incentive Stock Option" means a mean any Option, or portion thereof, awarded to a Participant which is designated by the Committee as an incentive stock option and also meets the applicable requirements of an incentive stock option pursuant to Section 422 of the Code.
"Independent Directors" means those members of the Board who qualify at any given time as an "independent" director under the applicable rules of the Exchange, and as a "non-employee" director under Rule 16b-3 of the 1934 Act.
"Non-Employee Director" means a director of the Company who is not a common law employee of the Company or a Subsidiary.
"Option" means a right granted to a Participant under Article 7 of the Plan to purchase Stock at a specified price during specified time periods.
"Participant" means an individual to whom an Award has been made under the Plan.
"Performance Award" means any award made under the Plan pursuant to Article 10.
"Plan" means The Knoll, Inc. 2018 Stock Incentive Plan, as amended from time to time.
"Restricted Stock" means Stock granted to a Participant under Article 9 that is subject to certain restrictions and to risk of forfeiture.
"Restricted Stock Unit" means the right granted to a Participant under Article 9 to receive Shares (or the equivalent value in cash subject to 14.2) in the future, which right is subject to certain restrictions and to risk of forfeiture.
"Retirement" means a termination of employment upon reaching age 65, or as otherwise set forth in an Award Agreement.
"Shares" means shares of the Stock. If there has been an adjustment or substitution with respect to the Shares (whether or not pursuant to Article 15), the term "Shares" shall also include any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted.
| Operating Profit | Intangible asset impairment charge | Seating product discontinuation charge | Restructuring Charges | Adj. Operating Profit | % of Sales | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Office | $ | 43.1 | $ | — | $ | 0.9 | $ | 0.5 | $ | 44.5 | 6.5 | % | |||||||
Studio | 43.3 | — | — | 0.4 | 43.7 | 14.4 | % | ||||||||||||
Coverings | 14.6 | 10.7 | — | — | 25.3 | 22.2 | % | ||||||||||||
| | | | | | | | | | | | | | | | | | | |
Knoll Inc. | $ | 101.0 | $ | 10.7 | $ | 0.9 | $ | 0.9 | $ | 113.5 | 10.3 | % | |||||||
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"Stock" means the $0.01 par value common stock of the Company and such other securities of the Company as may be substituted for Stock pursuant to Article 15.
"Stock Appreciation Right" or "SAR" means a right granted to a Participant under Article 8 to receive a payment equal to the difference between the Fair Market Value of a Share as of the date of exercise of the SAR over the base price of the SAR, all as determined pursuant to Article 8.
"Subsidiary" means any corporation, limited liability company, partnership or other entity, of which 50% or more of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.
"Substitute Award" means an Award under Section 14.9 of the Plan.
"1933 Act" means the Securities Act of 1933, as amended from time to time.
"1934 Act" means the Securities Exchange Act of 1934, as amended from time to time.
ARTICLE 3Twelve Months Ended December 31, 2014(in millions)EFFECTIVE TERM OF PLAN
3.1EFFECTIVE DATE. The Plan was adopted by the Board on February 6, 2018, but shall only be effective upon the approval of the Plan by the Company's shareowners within 12 months after the Plan's adoption by the Board (the "Effective Date").
3.2TERMINATION OF PLAN. Unless earlier terminated as provided herein, the Plan shall continue in effect until the 10th anniversary of the Effective Date, or if the shareowners approve an amendment to the Plan that increases the number of Shares subject to the Plan, the tenth anniversary of the date of such approval. The termination of the Plan on such date shall not affect the validity of any Award outstanding on the date of termination, which shall continue to be governed by the applicable terms and conditions of the Plan.
4.1COMMITTEE. The Plan shall be administered by the Committee. It is intended that at least two of the directors appointed to serve on the Committee shall be Independent Directors and that any such members of the Committee who do not so qualify shall abstain from participating in any decision to make or administer Awards that are made to Eligible Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the 1934 Act. However, the mere fact that a Committee member fails to qualify as an Independent Director or fails to abstain from such action shall not invalidate any Award made by the Committee if the Award is otherwise validly made under the Plan.
4.2ACTION AND INTERPRETATIONS BY THE COMMITTEE. The Committee may from time to time adopt rules, regulations, guidelines and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Committee may deem appropriate. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it deems necessary to carry out the intent of the Plan. The Committee's interpretation of the Plan, any Awards made under the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties. No member of the Committee will be liable for any good faith determination, act or omission in connection with the Plan or any Award.
4.3AUTHORITY OF COMMITTEE. Except as provided in Section 4.1 and 4.4 hereof, the Committee has the exclusive power, authority and discretion to:
4.4DELEGATION.
ARTICLE 5
SHARES SUBJECT TO THE PLAN AND PLAN LIMITATIONS
5.1NUMBER OF SHARES. Subject to adjustment as provided in Sections 5.2 and Section 15.1, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted under the Plan shall be 2,500,000. All of the Shares available for issuance pursuant to this Section 5.1 shall, without limitation, be available to be granted as Incentive Stock Options.
5.2SHARE COUNTING. Shares covered by an Award shall be subtracted from the Plan Share reserve as of the Award Date, but shall be added back to the Plan Share reserve or otherwise treated in accordance with subsections (a) through (g) of this Section 5.2.
5.3STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market and may be subject to restrictions deemed appropriate by the Committee.
5.4LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Article 15):
| Operating Profit | Pension settlement and OPEB curtailment | Remeasurement of FilzFelt earn-out liability | Acquisition Expenses and Restructuring Charges | Adj. Operating Profit | % of Sales | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Office | $ | 22.0 | $ | 5.3 | $ | — | $ | 2.1 | $ | 29.4 | 4.5 | % | |||||||
Studio | 33.6 | 0.8 | — | (0.2 | ) | 34.2 | 12.2 | % | |||||||||||
Coverings | 21.2 | 0.4 | 0.5 | 0.3 | 22.4 | 19.5 | % | ||||||||||||
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Knoll Inc. | $ | 76.8 | $ | 6.5 | $ | 0.5 | $ | 2.2 | $ | 86.0 | 8.2 | % | |||||||
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(calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes), including for this purpose, the value of any Awards that are received in lieu of all or a portion of any annual cash retainers or other similar cash based payments and excluding, for this purpose, the value of any Dividend Equivalent payments paid pursuant to any Award granted in a previous fiscal year. Nothing in this section shall limit an Award or other compensation in excess of the limit of this Section 5.4(d) to the extent such award or other compensation is approved by action of the Board whereby all affected Non-Employee Directors have recused themselves from such approval.
(1) The Company intends that non-performance Awards will normally vest over a minimum three year period, except for Awards to Non-Employee Directors, which will normally vest over a two year period.
(2) The minimum vesting period over which Awards shall vest is one (1) year from the Award Date, provided that this restriction shall not apply (A) as determined by the Committee, in the case of the participant's death, Disability or Retirement or a Change in Control, (B) to an Award that is granted in lieu of cash compensation foregone at the election of a Participant, (C) to Awards for an aggregate number of Shares not to exceed 5% of the total number of Shares available for issuance under this Plan (determined as of the Effective Date), and (D) to Substitute Awards, which in each case of (A) through (D) may have no vesting period or a vesting period which lapses in full prior to a Participant's completion of less than one (1) year of service following the Award Date. Notwithstanding the forgoing, awards to Non-Employee Directors granted on or about the annual stockholders' meeting may vest at the next annual stockholders' meeting even if such period between the two meetings is less than one (1) year.
6.1GENERAL. Awards may be granted only to Eligible Participants who are providing services to the Company or a Subsidiary.
7.1GENERAL. Options may be (i) Incentive Stock Options within the meaning of Section 422 of the Code, or (ii) Options which do not qualify as Incentive Stock Options ("Nonqualified Stock Options"). The Committee may grant to any participant one or more Incentive Stock Options, Nonqualified Stock Options, or both types of Options. Each Option shall be subject to such terms and conditions consistent with the Plan as shall be determined by the Committee and as set forth in the Award Agreement. In addition, each Option shall be subject to the following limitations set forth in this Section 7.
cash buyouts, or otherwise) from a Participant if the current Fair Market Value of the Shares underlying the Option is lower than the exercise price per Share of the Option.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1STOCK APPRECIATION RIGHTS. The Committee is authorized to grant SARs to Eligible Participants on the following terms and conditions:
ARTICLE 9
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
9.1RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is authorized to make Awards of Restricted Stock and Restricted Stock Units to Eligible Participants in such amounts and subject to such terms and conditions as may be selected by the Committee.
9.2ISSUANCE AND RESTRICTIONS. Restricted Stock and Restricted Stock Units shall be subject to such restrictions on transferability and other restrictions as the Committee may impose. These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the time of the grant of the Award or thereafter. Except as otherwise provided in an Award Agreement or any special Plan document governing an Award, a Participant shall have none of the rights of a shareowner with respect to Restricted Stock Units until Shares of Stock are released in settlement of such Awards.
9.3DIVIDENDS. In the case of Restricted Stock Units, the Participant shall not be entitled to receive dividends or Dividend Equivalents unless the Award Agreement specifically provides for Dividend Equivalents, subject to Section 12.1. In the case of Restricted Stock, all dividends with respect to such Shares shall be accumulated and shall be subject to the same terms and conditions as are applicable to the Restricted Stock to which the dividends relate. For avoidance of doubt, all such accumulated dividends shall be paid in cash only if and when the Restricted Stock to which they relate vest.
9.4FORFEITURE. Subject to the terms of the Award Agreement and except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of Continuous Service during the applicable restriction period or upon failure to satisfy a performance goal during the applicable restriction period, Restricted Stock or Restricted Stock Units that are at that time subject to restrictions shall be forfeited.
9.5DELIVERY OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered to the Participant at the Award Date either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees) designated by the Committee, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing shares of Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 10Exhibit A—Reconciliation of Non-GAAP Financial MeasuresPERFORMANCE AWARDS
10.1PERFORMANCE AWARDS. The Committee is authorized to make any Award under this Plan, including cash-based Awards, with performance-based vesting criteria, on such terms and conditions as may be selected by the Committee. Any such Awards with performance-based vesting criteria are referred to herein as Performance Awards. The Committee shall have the complete discretion to determine the number of Performance Awards made to each Eligible Participant, subject to Section 5.4, and to designate the provisions of such Performance Awards as provided in Section 4.3. All Performance Awards shall be evidenced by an Award Agreement or a written program established by the Committee, pursuant to which Performance Awards are awarded under the Plan under uniform terms, conditions and restrictions set forth in such written program.
10.2PERFORMANCE GOALS. The Committee may establish performance goals for Performance Awards which may be based on any criteria selected by the Committee. Such performance goals may be described in terms of Company-wide objectives or in terms of objectives that relate to the performance of the Participant, a Subsidiary or a division, region, department or function within the Company or a Subsidiary. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or a Subsidiary conducts its business, or other events or circumstances render performance goals to be unsuitable, the Committee may modify such performance goals in whole or in part, as the Committee deems appropriate. If a Participant is promoted, demoted or transferred to a different business unit or function during a performance period, the Committee may determine that the performance goals or performance period are no longer appropriate and may (i) adjust, change or eliminate the performance goals or the applicable performance period as it deems appropriate to make such goals and period comparable to the initial goals and period, or (ii) make a cash payment to the Participant in an amount determined by the Committee.
ARTICLE 11
QUALIFIED PERFORMANCE-BASED AWARDS
11.1 Unless otherwise determined by the Committee, Performance Awards granted to Covered Employees are intended to qualify as Qualified Performance-Based Awards. The Committee shall establish performance goals for Qualified Performance-Based Awards within the first 90 days of a performance period ("Qualified Business Criteria") based on one or more of the following, which may be expressed in terms of Company-wide objectives or in terms of objectives that relate to the performance of a Subsidiary or a division, region, department or function within the Company or a Subsidiary: total shareholder return, operating profits; revenue growth; gross profit margin; operating profit margin; net sales; pretax income before allocation of corporate overhead and bonus; budget; earnings per Share; net income; division, group or corporate financial goals; return on stockholders' equity; return on assets; attainment of strategic and operational initiatives; appreciation in and/or maintenance of the price of Common Stock or any other publicly-traded securities of the Company; market share; gross profits; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; economic value-added models; comparisons with various stock market indices; reductions in costs; and/or any other business criteria determined in advance and in writing by the Committee.
Performance goals with respect to the foregoing Qualified Business Criteria may be specified in absolute terms, in percentages, or in terms of growth from period to period or growth rates over time, as well as measured relative to the performance of a group of comparator companies, or a published or special index, or a stock market index, that the Committee deems appropriate, and may be calculated for a single year or calculated on a compound basis over multiple years. Any member of a comparator group or an index that ceases to exist during a measurement period shall be disregarded for the entire measurement period. Performance Goals need not be based upon an increase or positive result under a business criterion and
| 12/31/2015 | 12/31/2014 | |||||
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Debt Levels(1) | $ | 238.7 | $ | 275.5 | |||
LTM Net Earnings ($mm) | $ | 66.0 | $ | 46.6 | |||
LTM Adjustments | |||||||
Interest | 6.1 | 6.7 | |||||
Taxes | 37.5 | 29.2 | |||||
Depreciation and Amortization | 21.3 | 20.0 | |||||
Non-cash Items and Other(2) | 12.5 | 11.9 | |||||
| | | | | | | |
LTM Adjusted EBITDA | $ | 143.4 | $ | 114.4 | (3) | ||
Bank Leverage Calculation(4) | 1.67 | 2.41 |
could include, for example, the maintenance of the status quo or the limitation of economic losses (measured, in each case, by reference to a specific business criterion). Performance measures may but need not be determinable in conformance with generally accepted accounting principles.
11.2ACHIEVEMENT OF PERFORMANCE GOALS. Each Qualified Performance-Based Award shall be earned, vested and payable (as applicable) only upon the achievement of performance goals established by the Committee based upon one or more of the Qualified Business Criteria, together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be appropriate; provided, however, that the Committee may provide, either in connection with the grant thereof or by amendment thereafter, that achievement of such performance goals will be waived, in whole or in part, upon (i) the termination of employment of a Participant, or (ii) the occurrence of a Change in Control. Performance periods established by the Committee for any such Qualified Performance-Based Award must be at least twelve months and may be any longer period. In addition, the Committee has the right, in connection with the grant of a Qualified Performance-Based Award, to exercise negative discretion to determine that the portion of such Award actually earned, vested and/or payable (as applicable) shall be less than the portion that would be earned, vested and/or payable based solely upon application of the applicable performance goals. The Committee also reserves the right to exercise positive discretion in extraordinary situations or where such positive discretion is needed to remedy an inequitable outcome, which discretion may be used to increase a payout, but not beyond the target amount.
11.3INCLUSIONS AND EXCLUSIONS FROM PERFORMANCE CRITERIA. The Committee may provide in any Qualified Performance-Based Award, at the time the performance goals are established, that any evaluation of performance shall exclude or otherwise objectively adjust for any specified circumstance or event that occurs during a performance period, including by way of example but without limitation the following: (a) asset write-downs or impairment charges; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) accruals for reorganization and restructuring programs; (e) extraordinary nonrecurring items as described in then-current accounting principles; (f) extraordinary nonrecurring items as described in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report to shareowners for the applicable year; (g) acquisitions or divestitures; and (h) foreign exchange gains and losses.
11.4CERTIFICATION OF PERFORMANCE GOALS. Any payment of a Qualified Performance-Based Award granted with performance goals pursuant to this Article 11 shall be conditioned on the written certification of the Committee in each case that the performance goals and any other material conditions were satisfied. Except as specifically provided in Sections 11.2 or 11.3, no Qualified Performance-Based Award held by a Covered Employee may be amended, nor may the Committee exercise any discretionary authority it may otherwise have under the Plan with respect to a Qualified Performance-Based Award under the Plan, in any manner to waive the achievement of the applicable performance goal based on Qualified Business Criteria or to increase the amount payable pursuant thereto or the value thereof.
ARTICLE 12
DIVIDEND EQUIVALENTS
12.1GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to pay Dividend Equivalents with respect to Full-Value Awards made hereunder, subject to such terms and conditions as may be selected by the Committee, provided that, no Dividend Equivalent shall vest prior to Full-Value Award to which it relates. Dividend Equivalents shall entitle the Participant to receive payments equal to ordinary cash dividends or distributions with respect to all or a portion of the number of Shares subject to a Full-Value Award, as determined by the Committee. The Committee may provide that Dividend Equivalents (i) will be deemed to have been reinvested in additional Shares or otherwise reinvested, or (ii) except in the case of Performance Awards, will be paid or distributed to the Participant as accrued (in which case, such Dividend Equivalents must be paid or distributed no later than the 15th day of the 3rd month following the
later of (A) the end of the calendar year in which the corresponding dividends were paid to shareowners, or (B) the end of the first calendar year in which the Participant's right to such Dividends Equivalents is no longer subject to a substantial risk of forfeiture).
[Reserved]
ARTICLE 14
PROVISIONS APPLICABLE TO AWARDS
14.1AWARD AGREEMENTS. Each Award shall be evidenced by an Award Agreement. Each Award Agreement shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee.
14.2FORM OF PAYMENT FOR AWARDS. At the discretion of the Committee, payment of Awards may be made in cash, Stock, a combination of cash and Stock, or any other form of property as the Committee shall determine. In addition, payment of Awards may include such terms, conditions, restrictions and/or limitations, if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture provisions.
14.3LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or restricted Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or a Subsidiary. No unexercised or restricted Award shall be assignable or transferable by a Participant other than by will or the laws of descent and distribution.
14.4STOCK TRADING RESTRICTIONS. All Stock issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock Agreement or issue instructions to the transfer agent to reference restrictions applicable to the Stock.
14.5TREATMENT UPON TERMINATION OF SERVICE. The applicable Award Agreement or other special Plan document governing an Award shall specify the treatment of such Award upon the termination of a Participant's Continuous Service.
14.6EFFECT OF A CHANGE IN CONTROL. The provisions of this Section 14.6 shall apply in the case of a Change in Control, unless otherwise provided in the Award Agreement or any special Plan document or separate agreement with a Participant governing an Award.
of termination of employment. Any Options or SARs shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Agreement.
14.7ACCELERATION FOR OTHER REASONS. Regardless of whether an event has occurred as described in Sections 14.5 or 14.6 above, subject to 5.4(e), the Committee may in its sole discretion at any time determine that, upon the termination of service of a Participant for any reason, or the occurrence of a Change in Control, all or a portion of such Participant's Options or SARs shall become fully or partially exercisable, that all or a part of the restrictions on all or a portion of the Participant's outstanding Awards shall lapse, and/or that any performance-based criteria with respect to any Awards held by that Participant shall be deemed to be wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole discretion, declare. The Committee may discriminate among Participants and among Awards made to a Participant in exercising its discretion pursuant to this Section 14.7.
14.8FORFEITURE EVENTS. Awards under the Plan shall be subject to any compensation recoupment policy that the Company may adopt from time to time that is applicable by its terms to the Participant, including without limitation, the Knoll, Inc. Compensation Recoupment Policy, as may be amended from time to time. In addition, the Committee may specify in an Award Agreement that the Participant's rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, (i) termination of employment for cause, (ii) violation of material Company or Subsidiary policies, (iii) breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, (iv) other conduct by the Participant that is detrimental to the business or reputation of the Company or any Subsidiary, or (v) a later determination that the vesting of, or amount realized from, a Performance Award was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, whether or not the Participant caused or contributed to such material inaccuracy. The Company shall seek to recover any Award made as required by the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other "clawback" provision required by law or the listing standards of the Exchange.
14.9SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Company or a Subsidiary as a result of a merger or consolidation of the former employing entity with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the former employing corporation. The Committee may direct that the substitute awards be made on such terms and conditions as the Committee considers appropriate in the circumstances.
ARTICLE 15
CHANGES IN CAPITAL STRUCTURE
15.1MANDATORY ADJUSTMENTS. In the event of a nonreciprocal transaction between the Company and its shareowners that causes the per-share value of the Stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the Committee shall make such adjustments to the Plan and Awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. Action by the Committee may include: (i) adjustment of the number and kind of shares that may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding lettersAwards; (iii) adjustment of creditthe exercise price or base price of outstanding Awards or the measure to be used to determine the amount of the benefit payable on an Award; and guarantee obligations. Excess(iv) any other adjustments that the Committee determines to be equitable. Notwithstanding the foregoing, the Committee shall not make any adjustments to outstanding Options or SARs that would constitute a modification or substitution of the stock right under Treas. Reg. Sections 1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or change in the form of payment for purposes of Code Section 409A. Without limiting the foregoing, in the event of a subdivision of the outstanding Stock (stock-split), a declaration of a dividend payable in Shares, or a combination or consolidation of the outstanding Stock into a lesser number of Shares, the authorization limits under Sections 5.1 and 5.4 shall automatically be adjusted proportionately, and the Shares then subject to each Award shall automatically, without the necessity for any additional action by the Committee, be adjusted proportionately without any change in the aggregate purchase price therefor.
15.2DISCRETIONARY ADJUSTMENTS. Upon the occurrence or in anticipation of any corporate event or transaction involving the Company (including, without limitation, any merger, reorganization, recapitalization, combination or exchange of shares, or any transaction described in Section 15.1), the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Stock, (ii) that Awards will become immediately vested and non-forfeitable and exercisable (in whole or in part) and will expire after a designated period of time to the extent not then exercised, (iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over $15.0 million reducesthe exercise or base price of the Award, (v) that performance targets and performance periods for Performance Awards will be modified, or (vi) any combination of the foregoing. The Committee's determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated.
15.3GENERAL. Any discretionary adjustments made pursuant to this Article 15 shall be subject to the provisions of Section 16.2.
ARTICLE 16
AMENDMENT, MODIFICATION AND TERMINATION
16.1AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan without shareowner approval; provided, however, that if an amendment to the Plan would, in the reasonable opinion of the Board or the Committee, either (i) materially increase the number of Shares available under the Plan, (ii) expand the types of awards under the Plan, (iii) materially expand the class of participants eligible to participate in the Plan, (iv) materially extend the term of the Plan, or (v) otherwise constitute a material change requiring shareowner approval under applicable laws, policies or regulations or the applicable listing or other requirements of an Exchange, then such amendment shall be subject to shareowner approval; and provided, further, that the Board or Committee may condition any other amendment or modification on the approval of shareowners of the Company for any reason, including by reason of such approval being necessary or deemed advisable (i) to comply with the listing or other requirements of an Exchange, or
(ii) to satisfy any other tax, securities or other applicable laws, policies or regulations. Notwithstanding the forgoing, any amendment related to the compensation of Non-Employee Directors shall be subject to approval by the Board.
16.2AWARDS PREVIOUSLY MADE. At any time and from time to time, the Committee may amend, modify or terminate any outstanding debt perAward without approval of the Participant; provided, however:
16.3COMPLIANCE AMENDMENTS. Notwithstanding anything in the Plan or in any Award Agreement to the contrary, the Board or the Committee may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 16.3 to any Award made under the Plan without further consideration or action.
16.4CORRECTION OF ERRORS. Notwithstanding anything in any Award Agreement to the contrary, the Committee may amend an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of correcting errors occurring in connection with the grant or documentation of an Award, including rescinding an Award erroneously granted, including, but not limited to, an Award erroneously granted to an individual who does not qualify as an Eligible Participant on the date of grant. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 16.4 to any Award made under the Plan without further consideration or action.
17.1RIGHTS OF PARTICIPANTS.
Committee selectively among Eligible Participants who receive, or are eligible to receive, Awards (whether or not such Eligible Participants are similarly situated).
17.2WITHHOLDING. The Company shall have the right and power to deduct from all amounts paid to a Participant in cash or Shares or to require a Participant to remit in cash to the Company promptly upon notification of the amount due, an amount to satisfy the minimum federal, state or local or foreign taxes or other obligations required by law to be withheld with respect thereto with respect to any Stock Award under this Plan. In the case of any Stock Award satisfied in the form of Shares, no Shares shall be issued unless and until arrangements satisfactory to the Committee shall have been made to satisfy the statutory minimum withholding tax obligations applicable with respect to such Award. The Company may defer issuance or delivery of Stock until such requirements are satisfied. Without limiting the generality of the foregoing, the Company shall have the right to retain, or the Committee may, subject to such terms and conditions as it may establish from time to time, permit Participants to elect to tender, Shares (including Shares pursuant to or issuable in respect of an Award) to satisfy, in whole or in part, the amount required to be withheld (provided that such amount, consistent with Accounting Standards Codification 718 as amended from time to time, shall not be in excess of the maximum statutory federal, state and local withholding requirements).
17.3SPECIAL PROVISIONS RELATED TO CODE SECTION 409A.
17.4UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary. In its sole discretion, the Committee may authorize the creation of grantor trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or payments in lieu of Shares with respect to Awards. This Plan is not intended to be subject to ERISA.
17.5RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company or any Subsidiary unless provided otherwise in such other plan. Nothing contained in the Plan will prevent the Company from adopting other or additional compensation arrangements, subject to shareowner approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
17.6FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down.
17.7GOVERNMENT AND OTHER REGULATIONS.
been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign exchange, a pension settlementlaw or to take any other action in order to cause the issuance and other postretirement benefits curtailment, an intangible asset impairment charge,delivery of such certificates to comply with any such law, regulation or requirement.
17.8GOVERNING LAW. To the extent not governed by federal law, the Plan and restructuring charges.(3)Includes an annualized proforma EBITDA for HOLLY HUNT, which was acquired on February 3, 2014.(4)Debt divided by LTM Adjusted EBITDA, as calculatedall Award Agreements shall be construed in accordance with our credit facility.
17.9SEVERABILITY. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.
17.10NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or with respect to any person. If the Committee so directs, the Company may issue or transfer Shares to an Subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Subsidiary will transfer such Shares to a Participant in accordance with the terms of an Award made to such Participant and specified by the Committee pursuant to the provisions of the Plan.
17.10INDEMNIFICATION. Neither the Board nor the Committee, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Committee (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys' fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors' and officers' liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.
17.11DEFERRAL. Except as otherwise provided herein, a Participant may defer receipt or payment of any Award (other than an Option or a SAR), in accord with the terms of any deferred compensation plan or arrangement of the Company.
NNNNNNNNNNNN . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on May 8, 2018. Vote by Internet • Go to www.envisionreports.com/KNL • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2, 3 and 4. + 1. Election of Directors: To elect three (3) directors named in the proxy statement to hold office for a term ending at the 2021 Annual Meeting of Stockholders. For Withhold For Withhold For Withhold 01 - Stephanie Stahl 02 - Christopher G. Kennedy 03 - Daniel W. Dienst For Against Abstain ForAgainst Abstain 2. To approve the Knoll, Inc. 2018 Stock Incentive Plan. 3. To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2018. For Against Abstain 4. To approve, on an advisory basis, the Company’s 2017 executive compensation. Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. NNNNNNNC 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 U P X3 6 1 9 2 6 1 02SQOD NNNNNNNNN C B A Annual Meeting Proxy Card1234 5678 9012 345 X IMPORTANT ANNUAL MEETING INFORMATION
. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — Knoll, Inc. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KNOLL, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 8, 2018 The undersigned hereby appoints Charles W. Rayfield and Michael A. Pollner, and each of them, as attorneys and proxies of the undersigned, with full power of substitution, to vote all of the shares of stock of Knoll, Inc. which the undersigned may be entitled to vote at the Annual Meeting of Stockholders of Knoll, Inc. to be held at the offices of Knoll, Inc. at 1330 Avenue of the Americas, 2nd Floor, New York, New York 10019 on Tuesday, May 8, 2018 at 9:00 a.m. (local time) and at any and all postponements, continuations and adjournments thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the meeting. To participants in the Knoll Retirement Savings Plan: This proxy covers all shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of the Knoll Retirement Savings Plan. This proxy, when properly executed, will be voted as indicated on the reverse side. If voting instructions are not received by the proxy tabulator by 11:59 p.m. on May 4, 2018, you will be treated as directing the Plan’s Trustee to vote your shares in the Plan in the same proportion as the shares for which the Trustee has received timely instructions from others who do vote. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON MAY 8, 2018: The proxy statement and annual report to stockholders are available at www.envisionreports.com/KNL. (CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
NNNNNNNNNNNN . + NNNNNN C 1234567890 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by Internet • Go to www.envisionreports.com/KNL • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Important Notice Regarding the Availability of Proxy Materials for the Knoll, Inc. Stockholder Meeting to be Held on May 4, 20168, 2018 Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual stockholders’ meeting are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important! This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The proxy statement and annual report to stockholders are available at: www.envisionreports.com/KNL : Easy Online Access — A Convenient Way to View Proxy Materials and Vote When you go online to view materials, you can also vote your shares. Step 1: Go to www.envisionreports.com/KNL to view the materials. Step 2: Click on Cast Your Vote or Request Materials. Step 3: Follow the instructions on the screen to log in. Step 4: Make your selection as instructed on each screen to select delivery preferences and vote. g Obtaining a Copy of the Proxy Materials – If you want to receive a copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy as instructed on the reverse side on or before April 24, 201627, 2018 to facilitate timely delivery. + 2 N O T C O Y 02AT7D02SQRD NNNNNNNNN Stockholder Meeting Notice1234 5678 9012 345 IMPORTANT ANNUAL MEETING INFORMATION
. Knoll, Inc’sInc.’s Annual Meeting of Stockholders will be held on May 4, 20168, 2018 at 1330 Avenue of the Americas, 2nd Floor, New York, New York 10019 at 9:00 a.m. Local Time. Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations. The Board of Directors recommends a vote FOR all nominees listed in Proposal 1 and FOR Proposals 2, 3 and 3:4: 1. 2. Election of Three3. To elect three (3) Directors named in the proxy statement. Ratificationstatement to hold office for a term ending at the 2021 Annual Meeting of Stockholders. To approve the Knoll, Inc. 2018 Stock Incentive Plan. To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016. Approval of2018. To approve, on an advisory basis, the Company’s 2017 executive compensation. 3.4. PLEASE NOTE – YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must vote online or request a paper copy of the proxy materials to receive a proxy card. If you wish to attend and vote at the meeting, please bring this notice with you. Here’s how to order a copy of the proxy materials and select a future delivery preference: Paper copies: Current and future paper delivery requests can be submitted via the telephone, Internet or email options below. Email copies: Current and future email delivery requests must be submitted via the Internet following the instructions below. If you request an email copy of current materials you will receive an email with a link to the materials. PLEASE NOTE: You must use the number in the shaded bar on the reverse side when requesting a set of proxy materials. g Internet – Go to www.envisionreports.com/KNL. Click Cast Your Vote or Request Materials. Follow the instructions to log in and order a copy of the current meeting materials and submit your preference for email or paper delivery of future meeting materials. Telephone – Call us free of charge at 1-866-641-4276 and follow the instructions to log in and order a paper copy of the materials by mail for the current meeting. You can also submit a preference to receive a paper copy for future meetings. Email – Send email to investorvote@computershare.com with “Proxy Materials Knoll, Inc.” in the subject line. Include in the message your full name and address, plus the number located in the shaded bar on the reverse, and state in the email that you want a paper copy of current meeting materials. You can also state your preference to receive a paper copy for future meetings. To facilitate timely delivery, all requests for a paper copy of the proxy materials must be received by April 24, 2016.27, 2018. g g 02AT7D02SQRD Stockholder Meeting Notice
NNNNNNNNNNNN . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on May 4, 2016. Vote by Internet • Go to www.envisionreports.com/KNL • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2 and 3. + 1. Election of Directors: To elect three directors named in the proxy statement to hold office for a term ending at the 2019 Annual Meeting of Stockholders. For Withhold For Withhold For Withhold 01 - John F. Maypole 02 - Jeffrey A. Harris 03 - Kathleen G. Bradley For Against Abstain ForAgainst Abstain 2. To ratify selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2016. 3. To approve, on an advisory basis, the company’s executive compensation. Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. NNNNNNNC 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 U P X2 6 9 6 4 7 1 02AT5D NNNNNNNNN C B A Annual Meeting Proxy Card1234 5678 9012 345 X IMPORTANT ANNUAL MEETING INFORMATION
. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — Knoll, Inc. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KNOLL, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 4, 2016 The undersigned hereby appoints Craig B. Spray and Michael A. Pollner, and each of them, as attorneys and proxies of the undersigned, with full power of substitution, to vote all of the shares of stock of Knoll, Inc. which the undersigned may be entitled to vote at the Annual Meeting of Stockholders of Knoll, Inc. to be held at the offices of Knoll, Inc. at 1330 Avenue of the Americas, 2nd Floor, New York, New York 10019 on Wednesday, May 4, 2016 at 9:00 a.m. (local time) and at any and all postponements, continuations and adjournments thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following matters and in accordance with the following instructions, with discretionary authority as to any and all other matters that may properly come before the meeting. To participants in the Knoll Retirement Savings Plan: This proxy covers all shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of the Knoll Retirement Savings Plan. This proxy, when properly executed, will be voted as indicated on the reverse side. If voting instructions are not received by the proxy tabulator by 11:59 p.m. on May 1, 2016, you will be treated as directing the Plan’s Trustee to vote your shares in the Plan in the same proportion as the shares for which the Trustee has received timely instructions from others who do vote. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 and 3, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON MAY 4, 2016: The proxy statement and annual report to stockholders are available at www.envisionreports.com/KNL. (CONTINUED AND TO BE SIGNED ON REVERSE SIDE)