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.      )
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Hill-Rom Holdings, Inc.
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Enhancing Outcomes for Patients and Their Caregivers.TM












HILL-ROM HOLDINGS, INC.

PROXY
STATEMENT

Annual Meeting of Shareholders





March 4, 2015
10:00 am (Central Time)
Chicago, Illinois


 
HILL-ROM HOLDINGS, INC.

NOTICE OF ANNUAL SHAREHOLDER MEETING
 
To Be Held March 6, 20124, 2015
 
The annual shareholders meeting of shareholders of Hill-Rom Holdings, Inc., an Indiana corporation, will be held at the offices of Hill-Rom Holdings, Inc., 1069 State Route 46 East, Batesville, Indiana 47006, on Tuesday, March 6, 2012, at 10:00 a.m., Easternfollowing time and location, and for the following purposes:
 
       (1)Wednesday, March 4, 2015, at 10:00 a.m., Central time.
      
The offices of Hill-Rom Holdings, Inc., 180 North Stetson Avenue, Two Prudential Plaza, Suite 1630, Chicago, Illinois 60601.
(1)
To elect sixnine members to the Board of Directors to serve one-year terms expiring at the 20132016  annual meeting or until their successors are elected and qualified;
 (2)To consider and vote on a non-binding proposal to approve the compensation of Hill-Rom’s executive officers;
  
 (3)To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Hill-Rom Holdings, Inc. for fiscal year 2012;2015; and
 
 (4)To transact any other items of business that may properly be brought before the meeting and any postponement or adjournment thereof.
 
The Board of Directors has fixed the close of business on December 30, 2011, as the record date for determining which shareholders
      Only stockholders of record as of the close of business on December 31, 2014 are entitled to notice of and to vote at the meeting.
  

Your vote is important. Whether or not you plan to attend the meeting, please cast your vote, as instructed in the Notice of Internet Availability of Proxy Materials, over the Internet, by telephone, or via mail, as promptly as possible. You may also request a paper proxy card to submit your vote by mail, if you prefer. We encourage you to vote via the Internet. We believe it is convenient for our shareholders, while significantly lowering the cost of our annual meeting and conserving natural resources.
 
 
 By Order of the Board of Directors 
   
 
 
 Susan R. Lichtenstein 
 Secretary 
January 17, 201222, 2015
 
 
 

 
TABLE OF CONTENTS

EXECUTIVE SUMMARY1
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING4
PROPOSALS REQUIRING YOUR VOTE8
Proposal No. 1 – Election of Directors8
Proposal No. 2 – Non-Binding Vote on Executive Compensation12
Proposal No. 3 – Ratification of the Appointment of the Independent Registered Public Accounting Firm13
CORPORATE GOVERNANCE14
AUDIT COMMITTEE REPORT18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT19
COMPENSATION DISCUSSION AND ANALYSIS22
    Compensation Committee Report22
    Detailed Table of Contents for CD&A22
COMPENSATION OF NAMED EXECUTIVE OFFICERS34
DIRECTOR COMPENSATION45
EQUITY COMPENSATION PLAN INFORMATION47
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE48
 
HILL-ROM HOLDINGS, INC.

 
PROXY STATEMENT
 
This proxy statement relates to the solicitation by the Board of Directors of Hill-Rom Holdings, Inc. (“Hill-Rom”, the “Company”, “we”, “us” or “our”), 1069 State Route 46 East, Batesville, Indiana 47006, telephone (812) 934-7777, of proxies for use at the annual meeting of Hill-Rom’s shareholders to be held at our offices located at 180 North Stetson Avenue, Two Prudential Plaza, Suite 1630, Chicago, Illinois 60601, on Tuesday,Wednesday, March 6, 2012,4, 2015, at 10:00 a.m., EasternCentral time, and at any adjournments of the meeting.  This proxy statement and the enclosed form of proxy were mailed initially to shareholders on or about January 17, 2012.22, 2015.
 
EXECUTIVE SUMMARY
This summary highlights selected information in this proxy statement.  Please review the entire proxy statement and the Hill-Rom 2014 Annual Report before voting.  This proxy statement and annual report to shareholders are available at www.proxyvote.com.

Key Fiscal 2014 Achievements
 
Important Notice Regarding the AvailabilityIn fiscal 2014, Hill-Rom executed on a number of Proxy Materials for the Shareholders Meetingkey business initiatives by making strategic acquisitions, investing in new products and markets, and leveraging our infrastructure by keeping adjusted SG&A near 30% of revenues, despite a weak capital spending environment in North America and western Europe.  Moreover, we returned over $92 million in cash to Be Held on March 6, 2012:our stockholders via dividends and repurchases.  Specifically, we:

·Diversified our revenue base and expanded our product portfolio through the acquisition of Trumpf Medical, which provides a portfolio of surgical infrastructure solutions, for approximately $250 million.  With the acquisition of Trumpf, approximately 40% of our revenue will be outside the United States.
 
 ·
The proxy statement and annual report to shareholders are available at www.proxyvote.comAchieved a total stockholder return of 17.3% during fiscal year 2014.
·
Commercialized a number of new products, including a new ICU bed frame, the ProgressaTM, and a bed frame for the emerging markets called CenturisTM.  We also commercialized significant new products in our Surgical & Respiratory division, including two airway clearance devices, VitalCoughTM and a new MetaNebTM, and a new surgical table, the Allen Advance TableTM.
·Increased Hill-Rom’s dividend by approximately 10% for the fourth consecutive year.  In the last four fiscal years, Hill-Rom has returned over $365 million to shareholders by dividends and repurchases.
 

1


Voting Matters and Board Recommendations

 ProposalRecommendation of the BoardPage References
To elect nine members to the Board of Directors for one year termsFOR all nominees8
To vote on a non-binding proposal to approve the compensation of Hill-Rom’s executive officersFOR the proposal12
To ratify the appointment of PricewaterhouseCoopers LLP as Hill-Rom’s independent registered public accounting firm for fiscal year 2015FOR ratification of the appointment13


 
 
 
Director
Audit Committee
Nominating/
Corporate
Governance
Committee
Compensation
Committee
Mergers and
Acquisitions
Committee
Rolf A. Classon (Board Chair) (I)üüC
John J. Greischü
William G. Dempsey (I)ü
James R. Giertz (I)
ü
Charles E. Golden (I)Cüü
William H. Kucheman (I)üü
Ronald A. Malone (I)üCü
Eduardo R. Menascé (I)ü
Stacy Enxing Seng*  (I)
Joanne Smith, M.D.*  (I)Cü
(I) Denotes independent director; (C) denotes chair
*Ms. Enxing Seng is a new nominee to the Board; Joanne Smith, M.D., will not stand for reelection.

Additional important information about our annual meeting and voting can be found in the section entitled “General Information About the Annual Meeting and Voting” beginning on page 4.

Governance Highlights

Our Board believes that good corporate governance enhances shareholder value.  Our governance practices include:
 Governance PracticeFor More Information
All of our directors, except our CEO, are independent15
We have a non-executive, independent Board chair14
Our directors attended on average 99% of Board and their respective committee meetings, and each attended more than 90% of the meetings of the Board and their respective committees15
Our directors are elected annually, and we have a resignation policy if a director fails to garner a majority of votes cast8, 6
Our independent directors meet regularly in executive session14
We have a fully independent compensation consultant
33
 
 
2

 
 
TABLE OF CONTENTSExecutive Compensation Highlights

Hill-Rom’s compensation program is designed to align each executive’s compensation with Hill-Rom’s performance and the interests of our shareholders, and to provide the proper incentives to attract, retain and motivate key personnel in a clear, transparent manner.  In order to do this, we:

·
Generally target the 50th percentile of compensation paid by companies with which we compete for executive talent;  
·Provide an annual cash incentive award based on meaningful company performance metrics such as revenue and adjusted earnings per share, modified for individual performance; and
·Align long-term equity compensation with our shareholder’s interests by linking realizable pay with stock performance through a combination of performance stock units, restricted stock units, and stock options.

In summary, we compensate our named executive officers as follows:

 Component of CompensationForm of Compensation
Base SalaryAnnual Cash Salary
Annual Cash Incentive162(m) qualified plan, with negative discretion exercised by reference to our company-wide Short-Term Incentive Compensation Plan
Long-Term Incentive Compensation
Performance Stock Units (50% of annual grant value)
Restricted Stock Units (25% of annual grant value)
Stock Options (25% of annual grant value)
We also adhere to several additional principles regarding executive compensation, which we believe highlight the strength of both our governance and our overall executive compensation program:
 
 Executive Compensation PrincipleFor More Information
We require significant stock ownership by our executive officers, including 6X base salary for our CEO; this was recently increased from 4X30
We have clawback, anti-hedging and anti-pledging policies30
We don’t re-price stock options or buy-back equity grants
30
Our executives all have at-will employment agreements31
We don’t have any single-trigger change in control agreements
31
We don’t provide gross-ups for perquisites or excise taxes, other than moving expenses31
3

 

1.            
1.Who may vote?

Shareholders holding shares of Hill-Rom common stock as of the close of business on December 30, 2011, the record date,31, 2014 are entitled to vote at the annual meeting.  At the close of business on thesuch record date, there were 61,889,95056,499,594 shares of common stock outstanding and entitled to vote at the annual meeting.  Common stock is the only class of stock outstanding and entitled to vote. You have one vote for each share of common stock held as of the record date, which may be voted on each proposal presented at the annual meeting.

2.How can I elect to receive my proxy materials electronically?

If you would like to reduce the costs incurred by us in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically.  To sign up for electronic delivery, follow the instructions provided with your proxy materials and on your proxy card or voting instruction card to vote using the Internet, or go to https://enroll1.icsdelivery.com/hrc/Default.aspxhrc.  When prompted, indicate that you agree to receive or access shareholder communications electronically in the future.

3.Can I vote my shares by filling out and returning the Notice Regarding the Availability of Proxy Materials?

No. See below for instructions on how to vote.

4.            
4.How can I access the proxy materials over the Internet?

You can view the proxy materials for the annual meeting on the Internet at www.proxyvote.com. Please have your 12 digit control number available, which can be found on your Notice Regarding the Availability of Proxy Materials or on your proxy card or voting instruction form.  Our proxy materials are also available on our website at www.hill-rom.comhttp://ir.hill-rom.com.

5.            
5.How does the Board recommend that I vote?

The Board recommends that you vote

 ·
FOR each of the nominees for director,
 ·
FOR the non-binding approval of the compensation of Hill-Rom’s executive officers, and
 ·
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Hill-Rom’s independent registered public accounting firm.

6.            
6.How do I vote?

You may vote by any of the following methods: 

 ·
By Telephone or Internet — You may submit your proxy vote by following the instructions provided in the Notice Regarding the Availability of Proxy Materials, or by following the instructions provided with your proxy materials and on your proxy card or voting instruction form.

 ·
By Mail — You may submit your proxy vote by mail by signing a proxy card if your shares are registered directly in your name or, for shares held beneficially in street name, by following the voting instructions includedprovided by your broker, trustee or nominee, and mailing it in the enclosed envelope.

 ·
In Person at the Annual Meeting — You may vote in person at the annual meeting or may be represented by another person at the meeting by executing a proxy designating that person.
1


7.If I votevoted by telephone or Internet and received a proxy card in the mail, do I need to return my proxy card?

No.

8.            
4

8.Can I change my vote?

If you are a shareholder of record, you may revoke your proxy at any time before the voting polls are closed at the annual meeting by the following methods:

·voting at a later time by telephone or Internet (up to 11:59 p.m. Eastern time on the day before the meeting);

·writing our Corporate Secretary, Susan R. Lichtenstein, Hill-Rom Holdings, Inc., 1069 State Route 46 East, Batesville, Indiana 47006; or

·giving notice of revocation to the Inspector of Election at the annual meeting.
 
If you are a street name shareholder and you votevoted by proxy, you may later revoke your proxy by informing the holder of record in accordance with that entity’s procedures.

9.            
9.What happens if I do not specify a choice for a proposal when returning a proxy?

If you are a shareholder of record and your proxy card is signed and returned without voting instructions, it will be voted according to the recommendation of the Board of Directors.

If you are a beneficial/street name shareholder and fail to provide voting instructions, your broker, bank or other holder of record is permitted to vote your shares on the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm.  However, the record holderthey may not vote on the election of directors or on the proposal to regarding executive compensation absent instructions from you.  Without your voting instructions on the proposals, a “broker non-vote” will occur.occur with respect to those proposals.

10.          
10.How are votes, including broker non-votes and abstentions, counted?

Votes are counted in accordance with our Amended and Restated Code of By-laws and Indiana law.  A broker non-vote or abstention will be counted towards a quorum, but will not be counted in the election of directors or the votes on any of the other proposals.  

11.What constitutes a quorum?

A majority of the outstanding shares of common stock entitled to vote, represented at the meeting in person or by proxy, constitutes a quorum.  Broker non-votes and abstentions will be counted for purposes of determining whether a quorum is present.

12.What happens if other matters come up at the annual meeting?

The matters described in the notice of annual meeting are the only matters we know of that will be voted on at the annual meeting. If other matters are properly presented at the annual meeting, the persons named on the proxy card or voting instruction form will vote your shares according to their best judgment.

11.          
13.Who will count the votes?

A representative of Broadridge Financial Solutions, Inc., an independent tabulator appointed by the Board of Directors, will count the votes and act as the Inspector of Election.  The Inspector of Election will have the authority to receive, inspect, electronically tally and determine the validity of the proxies received.

12.          
14.Who can attend the annual meeting?

Admission to the annual meeting is limited to shareholders of Hill-Rom, persons holding validly executed proxies from shareholders who held Hill-Rom common stock on December 30, 2011,31, 2014, and invited guests of Hill-Rom.

In order to be admitted to the annual meeting in person, you should pre-register by contacting Hill-Rom’s Investor Relations Department at investors@hill-rom.com, or in writing at Investor Relations, Hill-Rom Holdings, Inc., 1069 State Route 46 East, Batesville, IN 47006, no later than March 1, 2012.February 27, 2015.  Additionally, proof of ownership of Hill-Rom stock must be shown at the door.  Failure to pre-register or to provide adequate proof that you were a shareholder on the record date may prevent you from being admitted to the annual meeting.  Please read the following rules carefully because they specify the documents that you must bring with you to the annual meeting in order to be admitted.  
 
 
25

 
 
If you were a record holder of Hill-Rom common stock on December 30, 2011,31, 2014, then you must bring a valid government-issued personal identification (such as a driver’s license or passport).

If a broker, bank, trustee or other nominee was the record holder of your shares of Hill-Rom common stock on December 30, 2011,31, 2014, then you must bring:
 
 ·Valid government-issued personal identification (such as a driver’s license or passport), and

 ·Proof that you owned shares of Hill-Rom common stock on December 30, 2011.31, 2014.
 
If you are a proxy holder for a shareholder of Hill-Rom, then you must bring:

·The validly executed proxy naming you as the proxy holder, signed by a shareholder of Hill-Rom who owned shares of Hill-Rom common stock on December 30, 2011,31, 2014, and

·Valid government-issued personal identification (such as a driver’s license or passport), and

·Proof of the shareholder’s ownership of shares of Hill-Rom common stock on December 30, 2011.31, 2014.
 
13.          
15.How many votes must each proposal receive to be adopted?

Directors are elected by a plurality of the votes cast by shareholders entitled to vote, which means that nominees who receive the greatest number of votes will be elected even if such amount is less than a majority of the votes cast.  However, our Corporate Governance Standards provide that, prior to nomination, director nominees shall submit a letter of resignation that is effective in the event such director receives a greater number of votes “withheld” from his or her election than votes “for” such election.  The Board is required to accept the resignation unless the Board determines that accepting such resignation would not be in the best interests of Hill-Rom and its shareholders.

The non-binding proposal to approve the compensation of our Named Executive Officers and the proposal to ratify the appointment of the independent registered public accounting firm will be approved if the votes cast favoring the action exceed the votes cast opposing the action.  

14.          How are votes, including broker non-votes and abstentions, counted?
16.Who pays for the proxy solicitation related to the annual meeting?

Votes are counted in accordance with our By-laws and Indiana law.  A broker non-vote or abstention will be counted towards a quorum and as represented at the meeting, but will not be counted in the election of directors or the votes on any of the other proposals.  

15.          Who pays for the proxy solicitation related to the annual meeting?

We do.  In addition to sending you or making available to you these materials, some of our directors and officers, as well as management and non-management employees, may contact you by telephone, mail, e-mail or in person.  You may also be solicited by means of press releases issued by Hill-Rom, postings on our website, and advertisements in periodicals.  None of our officers or employees will receive any extra compensation for soliciting you.  We have retained Innisfree M&A Incorporated to assist us in soliciting your proxy for an estimated fee of $8,000 plus reasonable out-of-pocket expenses.   We will also reimburse banks, nominees, fiduciaries, brokers and other custodians for their costs of sending the Notice Regarding the Availability of Proxy Materials or proxy materials to the beneficial owners of Hill-Rom common stock.

16.17.If I want to submit a shareholder proposal for the 20132016 annual meeting, when is it due and how do I submit it?

In order for shareholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 to be presented at our 20132016 annual meeting of shareholders and included in our proxy statement and form of proxy relating to that meeting, such proposals must be submitted to the Secretary of Hill-Rom at our principal offices in Batesville, Indiana no later than September 19, 2012.
3

October 14, 2015, which is 120 days prior to the calendar anniversary of the mailing date of this proxy statement.

In addition, our Amended and Restated Code of By-laws provides that for business to be brought before a shareholders’ meeting by a shareholder or for nominations to the Board of Directors to be made by a shareholder for consideration at a shareholders’ meeting, notice thereof must be received by the Secretary of Hill-Rom at our principal offices not later than 100 days prior to the anniversary of the immediately preceding annual meeting, or not later than November 28, 201225, 2015 for the 20132016 annual meeting of shareholders.  The notice must also provide certain information set forth in the Amended and Restated Code of By-laws.

17.          
6


18.How can I obtain a copy of the Annual Report on Form 10-K?

You may receive a hardcopy of proxy materials, including the Annual Report on Form 10-K, by following the directions set forth on the Notice Regarding the Availability of Proxy Materials.  The Annual Report on Form 10-K is also available on our website at www.hill-rom.comhttp://ir.hill-rom.com.

18.          
19.Where can I find the voting results of the annual meeting?

We will announce preliminary voting results at the conclusion of the annual meeting and publish the final voting results in a Form 8-K to be filed with the U.S. Securities and Exchange Commission (“SEC”) within four business days after the conclusion of the annual meeting.
 




 
47

 
Historically, Hill-Rom’s Articles of Incorporation and By-laws provided that members of the Board of Directors were classified, and directors in each class were elected for a three-year term unless they resigned or retired earlier.  However, the provisions in the Articles of Incorporation and Code of By-laws providing for the classification of the Board of Directors were amended in 2010 to provide that the shareholders elect directors for one-year terms starting with the 2011 annual meeting.  This will result in the entire Board being elected annually for one-year terms beginning at the 2013 annual meeting of shareholders.
   
The Board currently consists of nine members, with three directors in each Class.  Theand the terms of all the six directors in Classes I and III expire at the upcoming annual meeting.  As previously announced, one of our current directors, Joanne Smith, M.D., has decided not to seek reelection to the Board. The shareholders will therefore elect sixnine members of the Board to serve one-year terms expiring at the 20132016 annual meeting of shareholders.  Unless authority is withheld, all shares represented by proxies submitted pursuant to this solicitation (other than broker non-votes) will be voted in favor of electing as directors the nominees listed below for the terms indicated.  If any of these nominees should be unable to serve, shares represented by proxies may be voted for a substitute nominee selected by the Board, or the position may become vacant.
 
The Board of Directors recommends that shareholders vote “FOR” the election to the Board of Directors of each of the nominees named below.

 
NOMINEES:
CLASS I and IIINOMINEES

Nominees to be elected to serve one-year terms expiring at the 2013 annual meeting:
 NameAgePrincipal Occupation
Director Since
 
Rolf A. Classon69Chairman of the Board of Hill-Rom
2002
 
John J. Greisch59President and Chief Executive Officer of Hill-Rom
2010
 
William G. Dempsey63
Retired Executive Vice President, Global
Pharmaceuticals, Abbott Laboratories
 
2014
 
James R. Giertz57
Senior Vice President and Chief Financial
Officer of H.B. Fuller Company
 
2009
Charles E. Golden68
Retired Executive Vice President and Chief
Financial Officer of Eli Lilly and Company
 
2002
William H.  Kucheman
 
65
Former Interim Chief Executive Officer of Boston Scientific Corp.
 
2013
 
Ronald A. Malone60
Retired Chief Executive Officer of
Gentiva Health Services, Inc.
 
2007
Eduardo R. Menascé69
Retired President, Enterprise Solutions
Group, Verizon Communications
 
2004
 
Stacy Enxing Seng50
Former President, Vascular Therapies, Covidien
 
New Nominee
 
Name
 
Age
 
Principal Occupation
Served As A
Director Since
    
Rolf A. Classon66Chairman of the Board of Hill-Rom2002
    
James R. Giertz54
Senior Vice President and Chief Financial
Officer of H.B. Fuller Company
2009
    
Charles E. Golden65
Retired Executive Vice President and Chief
Financial Officer of Eli Lilly and Company
2002
    
W August Hillenbrand71
Retired Chief Executive Officer
of Hill-Rom
1972
    
Katherine S. Napier56
Chief Executive Officer of Arbonne
International, LLC
2009
    
Joanne C. Smith, M.D.51
President and Chief Executive Officer of
the Rehabilitation Institute of Chicago
2003

 
58

 
 
CLASS IIROLF A. CLASSON

Serving terms expiring at the 2013 annual meeting:

 
Name
 
Age
 
Principal Occupation
Served As A
Director Since
    
Ronald A. Malone57
Retired CEO of
Gentiva Health Services, Inc
2007
    
Eduardo R. Menascé66
Retired President, Enterprise Solutions
Group, Verizon Communications
2004
    
John J. Greisch56President and Chief Executive Officer of Hill-Rom2010

Rolf A.Mr. Classon became Chairman of the Board of Hill-Rom in March 2006. He served as Interim President and Chief Executive Officer of Hill-Rom from May 2005 until March 2006 and as Vice Chairman of the Board from December 2003 until his election as Interim President and Chief Executive Officer.  From 2002 to 2004, Mr. Classon served as Chairman of the Executive Committee of Bayer Healthcare AG, the healthcare division of Bayer AG, a global healthcare and chemicals company, and, from 1995 to 2002, Mr. Classon served as President of Bayer Diagnostics. From 1991 to 1995, Mr. Classon was an Executive Vice President in charge of Bayer Diagnostics’ Worldwide Marketing, Sales and Service operations. From 1990 to 1991, Mr. Classon was President and Chief Operating Officer of Pharmacia Biosystems A.B. Prior to 1991,1990, Mr. Classon served as President of Pharmacia Development Company Inc. and Pharmacia A.B.’s Hospital Products Division. Mr. Classon currently serves as a director of Auxilium Pharmaceuticals, Inc. (through January 2015), Fresenius Medical Care, and Tecan Group and Catalent, Inc., and was previously a director of Millipore Corporation until 2010, and PharmaNet Development Group, Inc. until 2009.2010.

Mr. Classon has extensive experience in the health care industry, including positions in management and on the boards of several companies. His service as a senior officer in numerous largeinternational corporations brings an extensive breadth of knowledge and valuable insight to the Board.

JOHN J. GREISCH
Mr. Greisch was elected President & Chief Executive Officer of Hill-Rom effective January 8, 2010. Mr. Greisch was most recently President International Operations for Baxter International, Inc., a position he held since 2006. During his seven year tenure with Baxter, he also served as Baxter's Chief Financial Officer and as President of Baxter's BioScience division. Before his time with Baxter, he was President & CEO for FleetPride Corporation in Deerfield, Ill., an independent after-market distribution company serving the transportation industry. Prior to his tenure at FleetPride, he held various positions at The Interlake Corporation in Lisle, Ill., a leading global engineered materials and industrial equipment supplier, including serving as President of the company's Materials Handling Group. Mr. Greisch currently serves on the Board of Directors for Actelion Ltd, and AdvaMed. Additionally, he is on the Board of Directors for Ann & Robert H. Lurie Children's Hospital of Chicago. Through 2010, Mr. Greisch served as a director of TomoTherapy, Inc.
As the CEO of Hill-Rom, Mr. Greisch brings valuable multinational experience with multiple roles in a major public healthcare company, including as Chief Financial Officer, as well as operational insights and business knowledge to the Board.

WILLIAM G. DEMPSEY

James R. Giertz Mr. Dempsey has served as a director of Hill-Rom since December2014.  Mr. Dempsey previously held various executive positions with Abbott Laboratories from 1982 until 2007, including, Executive Vice President of Global Pharmaceuticals from 2006, Senior Vice President of Pharmaceutical Operations from 2003 and Senior Vice President of International Operations from 1999.  He currently serves as a director of Landauer Inc. and Hospira, Inc., and was on the board of Nordion, Inc. through 2014. He has previously served as Chairman of the International Section of the Pharmaceutical Research and Manufacturers of America (PhRMA) and as Chairman of the Accelerating Access Initiative a cooperative public-private partnership of UNAIDS, the World Bank, and six research-based pharmaceutical companies.  He is a member of the Salvation Army Advisory Board in Chicago and the Board of Trustees for the Guadalupe Center in Immokalee Florida.

Mr. Dempsey has extensive experience in the health care industry, including positions in management and on the boards of several companies.  In addition, his international operations experience and his service as a senior officer at a large company makes him highly qualified to serve on the Board.

9

JAMES R. GIERTZ

Mr. Giertz has served as a director of Hill-Rom since 2009. He has been SeniorExecutive Vice President and Chief Financial Officer of H.B. Fuller Company, St. Paul, Minnesota, since March 2008.  Prior to joining H.B. Fuller, he served as Senior Managing Director, Chief Financial Officer and, for several months in 2007 a director, of Residential Capital, LLC, one of the largest originators, servicers and securitizers of home loans in the United States, and asStates.  Prior to that, he was Senior Vice President of the Industrial Products division, and Chief Financial Officer and as Senior Vice President, Industrial Products division withof Donaldson Company, Inc., a worldwide provider of filtration systems and replacement parts.  In addition, Mr. Giertz has experience with General Motors Corporation where he served as assistant treasurer of the company's operations,parent company at General Motors, and also held several international treasury positions in Canada and Europe. Mr. Giertz also serves on the Board of Directors of Normandale Community College Foundation andthe Junior Achievement of the Upper Midwest.Midwest and the Board of Regents of Concordia University of St. Paul.

Mr. Giertz has extensive experience in financefinancial statement preparation and accounting, and operations, and his service as a senior officer in large corporations brings knowledge and valuable insight to the Board.  In addition, his international operations experience is a valuable asset to the Board.

CHARLES E. GOLDEN
 
Charles E.Mr. Golden has served as director of Hill-Rom since 2002. He served as Executive Vice President and Chief Financial Officer and a director of Eli Lilly and Company, an international developer, manufacturer and seller of pharmaceutical products, from 1996 until his retirement in 2006. Prior to joining Eli Lilly, he had been associated with General Motors Corporation since 1970, where he held a number of positions, including Corporate Vice President, Chairman and Managing Director of the Vauxhall Motors subsidiary and Corporate Treasurer. He is currently on the boardsboard of Eaton Corporation PLC, and formerly on the boards of Unilever NV/PLC.PLC through 2014. He also serves as a director of the Lilly Endowment and Indiana University Health.
 
Mr. Golden has a comprehensive knowledge of both U.S. GAAP and IFRS, has extensive experience in financial statement preparation, accounting, corporate finance, risk management and investor relations both in the U.S. and Europe. His significant financial healthcare experience brings valuable financial operations rigor and insight to the Board.

John J. Greisch, was elected as President and Chief Executive Officer of Hill-Rom in January 2010.  Previously, he held various executive positions with Baxter International, Inc., since 2002, including President, International Operations, since 2006; Chief Financial Officer from 2004 to 2006; and President, Bioscience Division, from 2003 to 2004.  Prior to his time at Baxter, Mr. Greisch was President and Chief Executive Officer of Fleetpride Corporation, a private distribution company serving the transportation industry.  Through January 2010, Mr. Greisch was a director of TomoTherapy, Inc.
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As the CEO of Hill-Rom, Mr. Greisch brings valuable multinational experience with multiple roles in a major public healthcare company, as well as operational insights and business knowledge to the Board.WILLIAM H. KUCHEMAN

W August HillenbrandMr. Kucheman has served as a director of Hill-Rom since 1972.2013.  He waspreviously served as interim Chief Executive Officer of Hill-Rom from 1989 until 2000. Mr. Hillenbrand also served asfor Boston Scientific Corp.  Before being named interim CEO in October 2011, he was Executive Vice President and President of Hill-Rom from 1981 until 1999.the Cardiology, Rhythm and Vascular (CRV) Group of Boston Scientific.  He joined the Company in 1995 as a result of Boston Scientific’s acquisition of SCIMED Life Systems, Inc., becoming Senior Vice President of Marketing.  In this role, Mr. Hillenbrand began his business career in Hill-Rom Manufacturing Operations in 1959.  Mr. Hillenbrand isKucheman was responsible for global marketing. He has served on several industry boards, including the Chief Executive Officerboard of Hillenbrand Capital Partners, an unaffiliated family investment partnership. He is ondirectors of the Board of Directors of Hillenbrand, Inc., which Hill-Rom spun-off during 2008.  Mr. Hillenbrand is alsoGlobal Health Exchange and on the boards of Ocean Reef Medical Center, Ocean Reef Medical Center Foundation and the Ocean Reef Cultural Center.several non-public companies.
 
Mr. Hillenbrand’s long historyKucheman’s executive experience with Hill-Rominvasive medical devices, including FDA regulation, commercialization process, government reimbursement, and its predecessor entities brings valuable insight and historical contextclinical marketing, makes him highly qualified to serve on the Board.  In addition, his knowledge of Hill-Rom’s operations and business arising from his long history of service with the company provides a useful perspective for the Board’s other directors.

RonaldRONALD A. MALONE

Mr. Malone has served as a director of Hill-Rom since July 2007. He has been a memberserved as Chairman of the Board of Directors of Gentiva Health Services Inc. since January 2009, having servedfrom 2002 to 2011, as Chairman and Chief Executive Officer offrom 2002 through 2008, and as a director through 2012.  He joined Gentiva from June 2002 to December 2008. He servedin 2000 as Executive Vice President of Gentiva from March 2000 to June 2002 and as President of Gentiva's home health services division from January 2001 to June 2002.Gentiva’s Home Health Division.  Prior to joining Gentiva, he served in various positions with Olsten Corporation including Executive Vice President of Olsten Corporation and President, Olsten Staffing Services, United States and Canada.  He is a director of Gentiva Health Services, Inc., a director of Capital Senior Living, Inc., a former director of the National Association for Home Care & Hospice and a former director and chairman of the Alliance for Home Health Quality and Innovation.

Mr. Malone has an intimate knowledge of the home health industry and expertise in the legislative and regulatory landscape affecting healthcare companies.  In addition, his experience as an officer of other health care companies provides the Board with valuable operational experience.
 
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EDUARDO R. MENASCÉ

Eduardo R.Mr. Menascé has served as a director of Hill-Rom since 2004. He is the retired President of the Enterprise Solutions Group for Verizon Communications, Inc. Prior to Verizon, he was the President and Chief Executive Officer of CTI MOVIL S.A. (Argentina), a business unit of GTE Corporation, from 1996 to 2000, and also held senior positions at CANTV in Venezuela, Wagner Lockheed and Alcatel in Brazil, and GTE Lighting in France. Mr. Menascé currently serves on the Boards of Directors of Pitney Bowes Inc., John Wiley & Sons, Inc. and Hillenbrand, Inc., and formerly served on the board of KeyCorp.  Mr. Menascé is a Co-Chairman of The Taylor Companies, a privately held global investment bank which specializes exclusively in mergers, acquisitions and divestitures. He is also a member of the Board of Directors of Daybreak, a non-profit charitable organization focused on funding research for rare genetic diseases.
 
Mr. Menascé has broad experience as a former senior executive responsible for a significant international operation of a public company. This operational experience, his experience on other public company boards, and his experience as a director of the New York chapter of the National Association of Corporate Directors, all provide the Board with valuable insight.

Katherine S. Napier hasSTACY ENXING SENG
Ms. Enxing Seng is a new nominee to the Board.  She most recently served as an Executive in Residence for Covidien, as well as President of Covidien’s Vascular Therapies Division from 2012 to 2014, and President of  Peripheral Vascular from 2010 to 2012.  Ms. Enxing Seng joined Covidien in 2010 through the $2.6B acquisition of ev3 Incorporated, where she was a directorfounding member and executive officer responsible for leading ev3’s Peripheral Vascular division from 2001 to 2010.  Prior to that, she held positions of Hill-Rom since July 2009.  Ms. Napier has served as the Chief Executive Officer of Arbonne International, Inc. since August 2009.  Arbonne International Inc. filed for Chapter 11 bankruptcy in January 2010increasing responsibility with SCIMED, Boston Scientific, American Hospital Supply and emerged in March 2010. Ms. Napier is also a 20-year veteran of Procter & Gamble, where from 1979 to 2002 she worked in a number of positions.Baxter.  She also served as senior vice president of marketing at McDonald's Corporation. Ms. Napier currently serves on the boards of directors of Exact Sciences Corporation, is a member of the Board of Trustees of Xavier University,Sonova Holding AG, Solace Therapeutics, and the Board of Visitors of Wake Forest University Calloway School of Business.
                 Ms. Napier's extensive executive, managerial and leadership experience, including many years in the health care industry, positions her well to serve as a member of our Board of Directors. Her business acumen and experiencewas formerly on the boards of directorsFIRE 1 Medical Incubator and CV Ingenuity.
Ms. Enxing Seng has broad experience as a former senior executive responsible for a world-wide business unit of numerous companies makea major medical device company.  In addition, she has significant experience as a co-founder of a successful medical device start-up.  Her operational experience at a large medical device company, combined with her broad scope experience gained from her role as a co-founder of a medical device company, provide the Board with valuable addition.insights in a variety of marketing, sales and other areas.
 
 
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Joanne C. Smith, M.D. has served as a director of Hill-Rom since 2003 and as Vice Chair of the Board of Directors since 2005. She was elected as President and Chief Executive Officer of the Rehabilitation Institute of Chicago in October 2006.  Prior to that, Dr. Smith had been the President of the National Division of the Rehabilitation Institute of Chicago, among other positions. Since 1992 she has been an attending physician at the same institution.  She also serves on the Boards of Directors of AptarGroup, Inc., a leading supplier of personal care, cosmetics, pharmaceutical, food and beverage dispensing systems.  Dr. Smith is also a member of the HealthCare Advisory Board of Madison Dearborn Partners, a private equity firm.
Dr. Smith’s executive background, her public company director experience, and her knowledge of and background in the healthcare and medical technology industry (which is particularly relevant for Hill-Rom’s business), make her a valuable member of the Board.
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At the 2010 annual meeting of shareholders, we submitted to the shareholders a proposal that Hill-Rom provide its shareholdersWe hold an annual non-binding advisory vote regarding our executive compensation.  The shareholders followed the Board’s recommendation and approved an annual, non-binding advisory vote.  Subsequently, the Dodd-Frank Wall Street Reform and Consumer Protection Act (and subsequent SEC rules) mandated a non-binding shareholder vote on executive compensation.  We held this vote lastExecutive Compensation each year.  Last year, along with a vote to determine how often this vote should be held.  Thethe shareholders approved thethis resolution on executive compensation with over 87%98% of shares (excluding abstentions and broker non-votes) being cast in favor of our executive compensation, and adopted for a second time the Board’s recommendation that this vote be held annually.  Therefore,compensation.  Accordingly, we are presenting to our shareholders their annual vote (on a non-binding basis) on the following resolution:

“RESOLVED, that the shareholders of Hill-Rom Holdings, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers and the overall compensation policies and procedures employed by Hill-Rom, disclosed pursuant to Item 402 of Regulation S-K, and described in the Compensation Discussion and Analysis and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this proxy statement.”

As described under “Compensation Discussion and Analysis” beginning on page 18,22, our philosophy in setting executive compensation is to provide a total compensation package that allows us to continue to attract, retain and motivate talented executives who drive our Company’s success, while aligning compensation with the interests of our shareholders and ensuring accountability and transparency.  Consistent with the philosophy, a significant percentagemajority of the total compensation opportunity for each of our named executive officers is based on measurable corporate, business area and individual performance, both financial and non-financial, and on the performance of our shares on a long-term basis. The cumulative total return (which includes reinvestment of dividends) of our Common Stock from April 1, 2008 (the date of our spin-off of our former funeral services business) through December 31, 2011, is approximately 35.4%.  This exceeds the returns of the S&P 500 and our 2011 peer group over the same period, which returned -8.2% and 5.4%, respectively.

Because your vote is advisory, it will not be binding on the Board of Directors. However, the Compensation and Management Development Committee (the “Compensation Committee”) will take into account the outcome of the vote when considering future executive compensation arrangements.


The Board of Directors recommends that you vote “FOR” the approval of this resolution.

 
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Subject to shareholder ratification, the Audit Committee of our Board has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending September 30, 2012.2015.  Representatives from PwC will be present at the annual meeting with an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.
 
The Audit Committee has adopted a policy requiring that all services from the outside independent registered public accounting firm must be pre-approved by the Audit Committee or its delegate and has adopted guidelines that non-audit related services, including tax consulting, tax compliance and tax preparation fees, should not exceed the total of audit and audit related fees.  During fiscal 2011,2014, PwC’s fees for non-audit related services fell within these guidelines.
 
The following table presents fees for professional services rendered by PwC for the audit of our annual consolidated financial statements for the years ended September 30, 20112013 and 2010,2014, and fees billed for other services rendered by PwC during those periods.

  
2011
  
2010
 
Audit Fees (1)  $1,607,280   $1,485,500 
Audit-Related Fees (2)  515,500   262,288 
Tax Fees (3)  130,000   48,000 
All Other Fees (4)  1,500   1,500 
Total  $2,254,280   $1,797,288 
  2013 2014
Audit Fees (1) $2,628,580 $2,783,900
Tax Fees (2) $943,800 $355,732
All Other Fees (3) $146,800 $146,800
Total $3,719,180 $3,286,432

 
(1)1)Audit Fees were billed by PwC for professional services rendered for the integrated audit of our consolidated financial statements and our internal control over financial reporting, along with the review and audit of the application of new accounting pronouncements, SEC releases, and accounting for unusual transactions.
(2)Audit-Related Fees were billed by PwC for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and that are not disclosed under “Audit Fees” above. These audit-related services included fees related to acquisition accounting, statutory audits of European and other foreign entities and other transaction related fees.accounting for unusual transactions.

(3)2)Tax Fees were billed by PwC for professional services rendered for tax compliance, tax advice and tax planning.

(4)3)All Other Fees were fees billed by PwC for all other products and services provided to us. These fees were for a subscription to PwC’s online accounting research tool.
 

The Board recommends that you vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as Hill-Rom’s independent registered public accounting firm.
 
 
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Board Leadership
 
The Board is currently led by our non-executive independent Chair, Mr. Classon. The Board has determined that the leadership of the Board is best conducted by an independent Chair. This allows the Chair to provide overall leadership to the Board in its oversight function, while the Chief Executive Officer, Mr. Greisch, provides leadership with respect to the day-to-day management and operation of our business.  We believe the separation of the offices allows Mr. Classon to focus on managing Board matters and allows Mr. Greisch to focus on managing our business.  In addition, we believe the separation of the offices enhances the objectivity of the Board in its management oversight role.
 
Executive sessions or meetings(meetings of outside and independent directors without management presentpresent) are held regularly at the beginning and end of Board meetings, and, depending on directors’ desire, from time to time during Board and committee meetings.  The Chair generally presides at executive sessions of non-management directors, except that the chairs of the committees of the Board preside at executive sessions of non-management directors held following meetings of their committees or at which the principal items to be considered are within the scope or authority of their committees.directors.
 
Board’s Role in Strategic Planning and Oversight of Risk Management
 
The Board is responsible for directing and overseeing the management of Hill-Rom’s business in the best interests of the shareholders and consistent with good corporate citizenship. The Board sets strategic direction and priorities for the Company, approves the selection of the senior management team and oversees and monitors risks and performance. At Board meetings during the year, members of senior management review their organizations and present their long-range strategic plans to the Board, and at the start of each fiscal year, the Board reviews and approves anthe Company’s operating plan and budget for the next year.
 
A fundamental part of setting Hill-Rom’s business strategy is the assessment of the risks Hill-Rom faces and how they are managed. Senior management regularly meets to review and discuss the Company’s top enterprise risks.  The output of these meetings is provided and discussed at each Board meeting.  In addition, the Board, the Nominating/Corporate Governance, and the Audit CommitteeCommittees meet regularly throughout the year with our financial and treasury management teams and with our Chief Compliance Officer, Vice President, Internal Audit and Chief Legal Officer to assess the financial, legal/legal, compliance, and operational/strategic risks throughout our businesses and review our insurance and other risk management programs and policies in order topolicies.  These regular meetings enable the Board to exercise its ultimate oversight responsibility for Hill-Rom’s risk management processes.
 
In addition, the Compensation Committee assesses Hill-Rom’s compensation structure on a regular basis to appropriately align risks and incentives for our executive management.  See “Compensation Discussion and Analysis” below for additional information.
 
Communications with Directors
 
Shareholders of Hill-Rom and other interested persons may communicate with the Chair of the Board, the chairs of Hill-Rom’s Nominating/Corporate Governance Committee, Audit Committee or Compensation Committeecommittees of the Board, or the non-management directors of Hill-Rom as a group by sending an email to investors@hill-rom.com.  The email should specify which of the foregoing is the intended recipient.
 
Director Attendance at Annual Meeting
 
Hill-Rom currently does not have a formal policy regarding director attendance at its annual meetings of shareholders, but all of Hill-Rom’s directors generally do attend the annual meetings.  The Chair of the Board presides at the annual meeting of shareholders, and the Board holds one of its regular meetings in conjunction with the annual meeting of shareholders.  All members of the Board at the time of our 20112014 annual meeting of shareholders attended that meeting in person.
 
 
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Corporate Governance Standards and Code of Ethics
 
The Board has adopted Corporate Governance Standards for the Board of Directors that provide the framework for the effective functioning of the Board of Directors.  In addition, the Board has adopted a Global Code of Conduct that applies to everyone who conducts business for and with Hill-Rom including all directors, officers, and other employees of Hill-Rom including Hill-Rom’s Chief Executive Officer, Chief Financial Officersuppliers and Chief Accounting Officer,other business partners, and which constitutes a “code of ethics” within the meaning of Item 406 of the SEC’s Regulation S-K. The Board reviews, from time to time, and makes changes to the Code based on recommendations made by the Audit Committee of the Board.  They are both available via the Investor Relations section of the Hill-Rom website at http://ir.hill-rom.com.
 
Determinations with Respect to Independence of Directors
 
The Board determines the independence for each member of the Board based on an annual evaluation performed and recommendations made by the Nominating/Corporate Governance Committee, consistent with the applicable rules of the New York Stock Exchange.  When making these determinations, the Board considered these standards, and in particular considered the following:
Joanne C. Smith, M.D. has served as President and Chief Executive Officer of the Rehabilitation Institute of Chicago since October 2006, which purchased approximately $290,000, $459,000, and $167,000 of products and services from Hill-Rom in fiscal years 2009, 2010, and 2011, respectively.  These amounts are significantly less than 2% of the gross revenues of the Rehabilitation Institute of Chicago in those years.
 
Based on these standards and all relevant facts and circumstances, the Board has determined that each of Rolf A. Classon, William G. Dempsey, James R. Giertz, Charles E. Golden, William H. Kucheman, Ronald A. Malone, Eduardo R. Menascé, Katherine S. Napier and Joanne C. Smith, M.D. is independent, and that neither W August Hillenbrand nor John J. Greisch are independent.is not independent, and that Stacy Enxing Seng will be independent, assuming her election to the Board.

Transactions with Related Persons
 
The Corporate Governance Standards for the Board require that all new proposed related party transactions involving executive officers or directors must be reviewed and approved by the Nominating/Corporate Governance Committee. The Corporate Governance Standards do not specify the standards to be applied by the Nominating/Corporate Governance Committee in reviewing transactions with related persons. However, we expect that in general the Nominating/Corporate Governance Committee will consider all of the relevant facts and circumstances, including: the benefits to us, the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer, the availability of other sources for comparable products or services, the terms of the transaction, and the terms available for similar transactions with unrelated third parties.
 
In addition to the above disclosed transactions with related persons, William A. Hillenbrand II, the son of W August Hillenbrand, a director of the Company, was hired as Hill-Rom’s Director of Marketing in November 2009. He left the company in September 2011, and his gross earnings (including bonus and unused vacation pay) were approximately $160,000 in 2011.
 
Meetings, Committees and CommitteesPosition Specifications of the Board of Directors
 
During the fiscal year ended September 30, 2011,2014, the Board held sixtwelve meetings.  During this period, no incumbent member of the Board attended fewer than 75%90% of the aggregate number of meetings of the full Board and the meetings of the committees on which he or she served, and our directors attended an average of 99% of the meetings of the Board and committees on which they served.  The Board has adopted position specifications applicable to members and nominees.  The specifications provide, in general, that a candidate must be of sound character, be an expert in his or her chosen field, be knowledgeable of Hill-Rom’s business (or be willing to become so) and have experience as an overseer of, and advisor to, senior management.  In addition, the particular skills and talents of any director nominee should positively contribute to the diversity of the various skills and talents of the Board as a whole. 

 
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The following table shows the composition of the committees of the Board:Board, all of which operate pursuant to written charters:
 
Director
Audit Committee
Nominating/
Corporate
Governance
Committee
Compensation
Committee
Rolf A. Classon (Board Chair) (I)VCü
James R. Giertz (I)
ü
Charles E. Golden (I)Cü
John J. Greisch
W August Hillenbrand
Ronald A. Malone (I)C
Eduardo R. Menascé (I)VCü
Katherine S. Napier (I)ü
Joanne C. Smith, M.D. (Board Vice Chair) (I)CVC
 
 
 
Director
 
 
 
Audit Committee
Nominating/
Corporate
Governance
Committee
 
 
Compensation
Committee
 
 
Mergers and
Acquisitions
Committee
Rolf A. Classon (Board Chair) (I) ü
ü
 
C
 
John J. Greisch   
ü
 
William G. Dempsey (I)  
ü
 
 
James R. Giertz (I)
ü 
 
 
 
Charles E. Golden (I)Cü
 
 
ü
 
William H. Kucheman (I)ü  
ü
 
Ronald A. Malone (I) ü
C
 
ü
 
Eduardo R. Menascé (I)ü   
Joanne C. Smith, M.D.*  (I) C
ü
 
 
Number of Meetings in FY 20148668

I = Independent Director
C = Committee Chair
VC =*As previously discussed, Joanne Smith, M.D., has declined to stand for reelection at the 2015 annual meeting.  Stacy Enxing Seng will join the Board at that time, assuming her election.  Committee Vice Chairassignments for Ms. Enxing Seng, assuming her election, have not yet been determined.

The Audit Committee has general oversight responsibilities with respect to Hill-Rom’s financial reporting and controls, and legal, regulatory and ethical compliance.  It regularly reviews Hill-Rom’s financial reporting process, its system of internal control over financial reporting, legal and regulatory compliance and ethics, that management or the Board has established and the internal and external audit processes of Hill-Rom.  The Audit Committee operates pursuant to a written charter, and during the fiscal year ended September 30, 2011, held nine meetings.processes.   Each member of the Audit Committee is independent under Rule 10A-3 of the SEC and NYSE listing standards and meets the financial literacy guidelines established by the Board in the Audit Committee Charter.  The Board of Directors has determined that each of Messrs. Golden, MenascéGiertz, Kucheman, and GiertzMenascé is an “audit committee financial expert” as that term is defined in Item 407(d) of Regulation S-K.

The Compensation Committee assists the Board in ensuring that the officers and key management of Hill-Rom are effectively compensated in terms of salaries, supplemental compensation and other benefitsa way that areis internally equitable and externally competitive.  The Compensation Committee is also responsible for reviewing and assessing the talent development and succession management actions concerning the officers and key employees of Hill-Rom.  The Compensation Committee operates pursuant to a written charter, and during the fiscal year ended September 30, 2011, held four meetings.  
 
The Nominating/Corporate Governance Committee assists the Board in ensuring that Hill-Rom is operated in accordance with prudent and practical corporate governance standards, ensuring that the Board achieves its objective of having a majority of its members be independent in accordance with NYSE listing standards, and other regulations and identifying candidates for the Board of Directors.  It also assists the Audit Committee with Hill-Rom’s non-financial compliance oversight.  The Nominating/Corporate Governance Committee operates pursuant to a written charter, and during the fiscal year ended September 30, 2011, held four meetings.

The Board has adopted position specifications applicable to members and nominees.  The specifications provide, in general, that a candidate must be of sound character, be an expert in his or her chosen field, be knowledgeable of Hill-Rom’s business (or be willing to become so) and have experience as a overseer of, and advisor to, senior management.  In addition, the particular skills and talents of any director nominee should positively contribute to the diversity of the various skills and talents of the Board as a whole. 
 
 
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The Mergers and Acquisitions Committee assists the Board in reviewing potential acquisition opportunities that Hill-Rom may have.
Nomination of Directors for Election

The Nominating/Corporate Governance Committee considers director candidates recommended by shareholders, and any such recommendations should be communicated to the Chair of the Nominating/Corporate Governance Committee in the manner described above in “—Communications“Communications with Directors” and should be accompanied by substantially the same types of information as are required under Hill-Rom’s Code of By-laws for shareholder nominees.
 
Hill-Rom’s Code of By-Laws provides that nominations of persons for election to the Board of Directors of Hill-Rom may be made at any meeting of shareholders by or at the direction of the Board of Directors or by any shareholder entitled to vote for the election of members of the Board of Directors at the meeting.  For nominations to be made by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of Hill-Rom and any nominee must satisfy the qualifications established by the Board of Directors of Hill-RomHill-Rom.   To be timely, a shareholder’s nomination must be delivered to or mailed and received by the Secretary not later than (i) in the case of the annual meeting, 100 days prior to the anniversary of the date of the immediately preceding annual meeting which was specified in the initial formal notice of such meeting (but if the date of the forthcoming annual meeting is more than 30 days after such anniversary date, such written notice will also be timely if received by the Secretary by the later of 100 days prior to the forthcoming meeting date and the close of business 10 days following the date on which Hill-Rom first makes public disclosure of the meeting date) and (ii) in the case of a special meeting, the close of business on the tenth day following the date on which Hill-Rom first makes public disclosure of the meeting date.  The notice given by a shareholder must set forth: (i) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii) a representation that the shareholder is a holder of record, setting forth the shares so held, and intends to appear in person or by proxy as a holder of record at the meeting to nominate the person or persons specified in the notice; (iii) a description of all arrangements or understandings between such shareholder and each nominee proposed by the shareholder and any other person or persons (identifying such person or persons) pursuant to which the nomination or nominations are to be made by the shareholders; (iv) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; (v) the consent in writing of each nominee to serve as a director of Hill-Rom if so elected; and (vi) a description of the qualifications of such nominee to serve as a director of Hill-Rom.
 
Compensation Committee Interlocks and Insider Participation
 
During the fiscal year ended September 30, 2011,2014, the following directors served on the Compensation Committee:  Ronald A. Malone, Joanne C. Smith, M.D. and, Rolf A. Classon.Classon and William G. Dempsey, who joined the Compensation Committee after he was elected to the Board of Directors at last year’s annual meeting on March 7, 2014.  The Compensation Committee had no interlocks or insider participation.
 
Availability of Governance Documents
 
Copies of Hill-Rom’s Corporate Governance Standards, Global Code of Ethical Business Conduct and Board committee charters are available on the Investor Relations section of the Hill-Rom’s website at www.hill-rom.comhttp://ir.hill-rom.com or in print to any shareholder who requests copies through Hill-Rom’s Investor Relations office.  Also available on Hill-Rom’s website are position specifications adopted by the Board for the positions of Chief Executive Officer Chair and Vice Chair of the Board of Directors and its committees, and other members of the Board of Directors.
 
 
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The Audit Committee is comprised entirely of independent directors (as defined for members of an audit committee under NYSE listing standards and SEC audit committee structure and membership requirements) and operates in accordance with a written charter adopted by the Board of Directors. The Board of Directors has determined that each of Golden, Giertz, Kucheman and Menascé is an "audit committee financial expert" as that term is defined in Item 407(d) of Regulation S-K of SEC.

Management is responsible for Hill-Rom’s internal controls, financial reporting process and compliance with laws and regulations and ethical business standards.  The independent registered public accounting firm is responsible for performing an integrated audit of Hill-Rom’s consolidated financial statements and its internal control over financial reporting in accordance with standards of the Public Company Accounting Oversight Board (“PCAOB”) and the issuance of a report thereon.  The Audit Committee of the Board of Directors (the “Committee”) has the responsibility to monitor and oversee these processes.

The Committee meets separately at most regular committee meetings with management, the Vice President of Internal Audit and Hill-Rom’s outside independent registered public accounting firm. The Committee has the authority to conduct or authorize investigations into any matters within the scope of its responsibilities and the authority to retain such outside counsel, experts, and other advisors as it determines appropriate to assist it in the conduct of any such investigation.  In addition, the Committee approves, subject to shareholder ratification, the appointment of Hill-Rom’s outside independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), and pre-approves all audit and non-audit services to be performed by the firm.

The Committee has reviewed and discussed the consolidated financial statements with management and PwC.  Management represented to the Committee that Hill-Rom’s consolidated financial statements were prepared in accordance with generally accepted accounting principles.  PwC discussed with the Committee matters required to be discussed by Statement on Auditing Standards No. 114 (The Auditor’s Communication With Those Charged With Governance).the PCAOB.  Management and the independent registered public accounting firm also made presentations to the Committee throughout the year on specific topics of interest, including:  (i) current developments and best practices for audit committees; (ii) updates on the substantive requirements of the Sarbanes-Oxley Act of 2002, including management’s responsibility for assessing the effectiveness of internal control over financial reporting; (iii) key elements of anti-fraud programs and controls; (iv) transparency of corporate financial reporting; (v) Hill-Rom’s critical accounting policies; (vi) the applicability of new and proposed accounting releases; and (vii) SEC accounting developments.committees.

PwC also provided to the Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee regarding independence.  PwC informed the Audit Committee that it was independent with respect to Hill-Rom within the meaning of the securities acts administered by the SEC and the requirements of the PCAOB.  The Committee discussed this finding, and also considered whether non-audit consulting services provided by PwC could impair the auditors’ independence and concluded that such services have not done so.

Based upon the forgoing,foregoing, the Committee recommended to the Board of Directors that the audited consolidated financial statements be included in Hill-Rom’s Annual Report on Form 10-K for the year ended September 30, 2011.2014.

In addition, the Committee has discussed with the Chief Executive Officer and the Chief Financial Officer of Hill-Rom the certifications required to be given by such officers in connection with Hill-Rom’s Annual Report on Form 10-K pursuant to the Sarbanes-Oxley Act of 2002 and SEC rules adopted thereunder, including the subject matter of such certifications and the procedures followed by such officers and other management in connection with the giving of such certifications.
 
Submitted by the Audit Committee
Charles E. Golden (Chair)
Eduardo R. Menascé (Vice Chair)
James R. Giertz
Katherine S. NapierWilliam H. Kucheman
 
 
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The following table sets forth information with respect to the beneficial ownership of our outstanding common stock as of December 30, 201131, 2014 by:
 
·each of our directors and our Named Executive Officers;
·all of our directors and executive officers as a group; and
·each person or entity whothat is known by us to be the beneficial owner of more than five percent of our common stock.

Our common stock is our only class of equity securities outstanding.  Except as otherwise noted in the footnotes below, the individual director or executive officer or their family members had sole voting and investment power with respect to such securities.  None of the shares beneficially owned by our directors and executive officers are pledged as security.  The number of shares beneficially owned includes, as applicable, directly and/or indirectly owned shares of common stock, common stock shares underlying stock options that are currently exercisable or will become exercisable within 60 days from December 30, 2011,31, 2014, and deferred stock share awards (otherwise known as restricted stock units or RSUs) that are vested or will vest within 60 days from December 30, 2011.31, 2014.  Except as specified below, the business address of the persons listed is our headquarters, 1069 State Route 46 East, Batesville, Indiana 47006.
 
Name of Beneficial Owner
Shares
Owned
Directly(2)
Shares
Owned
Indirectly
Shares Under
Options/RSUs
Exercisable/
Vesting Within
60 Days
Total
Number of
Shares
Beneficially
Owned
 
Percent
of
Class
  
Directors and
Named Executive Officers:
         
Rolf A. Classon15,806-61,236 77,042 *  
John J. Greisch30,000-147,749 177,749 *  
James R. Giertz2,000-6,546 8,546 *  
Charles E. Golden3,299-39,180 42,479 *  
W August Hillenbrand152,972916,30229,222 1,098,496 1.8%  
Ronald A. Malone--14,578 14,578 *  
Eduardo R. Menascé--18,006 18,006 *  
Katherine S. Napier--7,403 7,403 *  
Joanne C. Smith, M.D.2,000-27,788 29,788 *  
Martha G. Aronson5,9465,00010,280 21,226 *  
Mark J. Guinan12,132-17,060 29,192 *  
Alejandro Infante Saracho5,182-11,034 16,216 *  
Susan R. Lichtenstein1,000-12,503 13,503 *  
Gregory N. Miller (1)
36,452-0 36,452 *  
          
All directors and executive
  officers as a group
  (21 individuals)
245,980921,302475,809 1,643,091 2.6%  

 
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Name of Beneficial Owner
Shares
Owned
Directly(1)
Shares
Owned
Indirectly
Shares Under
Options/RSUs
Exercisable/
Vesting Within
60 Days
Total
Number of
Shares
Beneficially
Owned
 
Percent
of
Class
Directors and Named Executive Officers:     
Rolf A. Classon15,806-65,09780,903*
John J. Greisch72,478-577,927650,4051.1%
William G. Dempsey--3,9893,989*
James R. Giertz2,000-18,85220,852*
Charles E. Golden6,464-41,09347,557*
William Kucheman--8,2638,263*
Ronald A. Malone--27,20027,200*
Eduardo R. Menascé--30,85330,853*
Joanne C. Smith, M.D.2,000-41,09343,093*
Susan R. Lichtenstein11,855-98,953110,808*
Michael S. Macek3,648-7,33610,984*
James K. Saccaro (2)
----*
Alejandro Infante Saracho (3)
14,934-82,77997,713*
Alton E. Shader7,642-33,85141,493*
      
All directors and executive officers
    as a group (18)
153,079-1,080,4031,233,4822.1%
 
Name of Beneficial Owner
Total
Number of
Shares
Beneficially
Owned
Percent
of Class
 
Other 5% Beneficial Owners:
  
BlackRock Inc.
 40 East 52nd Street
 New York, NY 10022
4,127,802 (3)
6.7%
   
FMR LLCFidelity Management & Research Co.
 82 Devonshire245 Summer Street
Boston, MA  0210902210
6,529,6323,386,800 (4)
10.6%6.0%
   
   
BlackRock Inc.
40 East 52nd Street
New York, NY 10022
3,378,967 (5)
6.0%   
   
The Vanguard Group
P.O Box 2600
Valley Forge, PA  19482
3,342,331 (6)
5.9%
SouthernSun Asset Management LLC
6070 Popular Ave
Suite 300
Memphis, TN  38119
3,190,144 (7)
5.6% 
*
20


* Less than 1% of the total shares outstanding.
 
 (1)Mr. Miller ceased to be an executive officer of Hill-Rom effective December 13, 2010.  Share ownership is based on the most recently available public data, and is not included in the line item “All directors and executive officers as a group”.
(2)Includes shares of common stock purchased under our employee stock purchase plan over the first quarter of fiscal year 20122015 and issued December 30, 2011.31, 2014.

(2)Mr. Saccaro left Hill-Rom on July 3, 2014; shareholdings based on most recent available information.

 (3)Mr. Infante Saracho left Hill-Rom on December 31, 2014; shareholdings based on most recent available information

(4)This information is based solely on Schedule 13F filed by Fidelity Management & Research Co. with the SEC on November 14, 2014.

(5)This information is based solely on Schedule 13F filed by BlackRock, Inc. with the SEC on November 3, 2011.October 29, 2014.

 (4)(6)This information is based solely on Schedule 13F filed by FMR LLCThe Vanguard Group with the SEC on November 14, 2011.
17


Executive Summary, Financial Highlights & Links to our Incentive Compensation

·Executive compensation is based on (1) base salary, (2) variable cash incentive awards and (3) long-term, equity-based incentive awards.12, 2014.

 ·(7)The Compensation Committee generally targets total compensation atThis information is based solely on Schedule 13F filed by SouthernSun Asset Management LLC with the 50th percentile of compensation paid by our peer group.SEC on November 13, 2014.

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Committee Report
The Compensation and Management Development Committee of the Board of Directors of Hill-Rom Holdings, Inc. has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2014.
The Compensation and Management Development Committee
Ronald A. Malone (Chair)                                 Rolf A. Classon
       Joanne C. Smith, M.D.                                        William G. Dempsey


Contents of the Compensation Discussion and Analysis
Named Executive Officers·23
Goals of Our Compensation Program23
Links Between Executive Compensation and Company Performance23
Compensation of John Greisch, Our variable cash incentive award was based on three metrics for fiscal 2011: revenue, adjusted earnings per share,CEO24
At-Risk Pay24
CEO Reported vs. Realized Pay25
Key Governance Features Relating to Executive Compensation25
Elements of Executive Compensation26
Base Salary26
Annual Cash Incentive27
Long-Term Equity Awards28
Retirement and cash flow return on invested capital (“cash flow ROIC”).Change-in-Control Agreements30
Other Personal Benefits31
Employment Agreements31
Role of the Compensation Committee32
Peer Group and Survey Data32
Peer Group Companies32
Other Factors33
Compensation Consultant33
Risk Assessment33
***Our Key Achievements for fiscal year 2014 can be found in our
executive summary on page 1 of the proxy statement***
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Named Executive Officers

This Compensation Discussion and Analysis (“CD&A”) describes our compensation programs and how they apply to our Named Executive Officers (“NEOs”), including:

John J. GreischPresident and Chief Executive Officer
James K. Saccaro*Former Senior Vice President and Chief Financial Officer
Michael S. Macek*Vice President, Treasurer and Interim Chief Financial Officer
Alejandro Infante Saracho*Former Senior Vice President and President International
Susan R. LichtensteinSenior Vice President, Corporate Affairs, Chief Legal Officer & Corporate Secretary
Alton E. ShaderSenior Vice President and President North America

·In fiscal 2011, Hill-Rom achieved total revenue of almost $1.6 billion, up over $120 million from the prior year.
* Mr. Macek held the position of interim Chief Financial Officer at the start of fiscal year 2014 and stepped down as interim CFO when Mr. Saccaro joined Hill-Rom as Chief Financial Officer on December 30, 2013.  Mr. Saccaro resigned as Chief Financial Officer on July 3, 2014 and Mr. Macek assumed the position as interim Chief Financial Officer as of July 3, 2014.  Steven J. Strobel assumed the position of Chief Financial Officer as of December 1, 2014.  Mr. Infante Saracho resigned as Senior Vice President and President International as of December 31, 2014.

·In fiscal 2011, we achieved an Adjusted Earnings Per Share (as calculated for our STIC plan) of $2.24 per share, $0.14 over our target.

Goals of Our Compensation Program

·In addition, cash flow ROIC, was 39.3%, compared to a target of 34.7%.

Compensation Philosophy
Hill-Rom’s compensation program is designed to:
 
·Align management’s interests with those of shareholders;
 
·Motivate and provide incentive for employees to achieve superior results;
 
·Ensure clear accountabilities and provide rewards for producing results;
 
·Ensure competitive compensation in order to attract and retain superior talent; and
 
·Ensure simplicity and transparency in compensation structure.
 
Hill-Rom’s compensation program has generally targeted the 50th50th percentile of compensation paid by companies with which Hill-Rom competes for executive talent.  However, the Compensation Committee believes that it is critical to retain flexibility in setting compensation when competing for the top executive talent necessary to grow Hill-Rom’s business and increase stockholdershareholder value, and has indicated that it will exceed this target when necessary.  In addition, because Hill-Rom utilizes performance-based compensation, in any given year total compensation can vary when pre-established business and/or personal criteria targets are exceeded or are not achieved.  Accordingly, a significant portion of our executives’ compensation is at risk and tied to the achievement of pre-established corporate financial objectives.

Links Between Executive Compensation and Company Performance
 
ProcessThe 2014 say-on-pay resolution was approved by 98% of shareholders (excluding abstentions and non-votes).  The Hill-Rom Board’s Compensation Committee took that as a sign that the Company’s incentive compensation philosophy was effective, market-appropriate, and in line with shareholder expectations.  However, the Company has a policy of meeting with shareholders to listen to dissenting opinions when the opportunity arises.

·Executive compensation is comprised of (1) base salary, (2) variable cash incentive awards (Short Term Incentive Compensation or STIC) and (3) long-term, equity-based incentive awards (Long-Term Incentives or LTI).
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·
The Compensation Committee generally targets total compensation at the 50th percentile of compensation paid by our peer group.

·Our variable cash incentive award was based on two metrics in fiscal 2014: revenue and adjusted earnings per share.   These same metrics will be used in fiscal 2015.

·As shown below, the significant majority of our CEO’s compensation is tied to company performance, and the actual pay realized by our CEO is substantially less than that reported in the summary compensation table.

·
A summary of our key achievements for fiscal year 2014 can be found in the executive summary of this proxy statement on page 1.

Compensation of John Greisch, Our CEO

While our Compensation Committee works to align the pay of all of our executives to the interests of our shareholders, they believe that it is especially important in the case of our Chief Executive Officer, John Greisch.  Accordingly, the Compensation Committee has selected a mix of pay for DeterminingMr. Greisch which is heavily weighted towards annual bonuses and long-term equity based compensation, and away from base salary, so much so that 85% of Mr. Greisch’s targeted compensation for fiscal year 2015 is at-risk.  This is significantly higher than the at-risk portion of the target compensation of our other named executive officers.   Moreover, the at-risk nature of his compensation is demonstrated by the PSU grants made to Mr. Greisch in 2010 and 2011, which vested in 2013 and 2014 at levels of 0% and 57%, respectively.  Additionally, Mr. Greisch’s annual bonus for fiscal year 2014 was paid at a level of only 73% to target.
The Compensation Committee also recognizes that in extraordinary circumstances, it is appropriate to issue longer term retention awards to executives who have made substantial contributions in enhancing shareholder value to ensure they remain with Hill-Rom to consolidate and accelerate those gains.   As shown by the stockholder returns graph on page 1 of our executive summary, Hill-Rom has substantially outpaced both our peer group and the S&P 500 over the last five years, a period that coincides with Mr. Greisch’s tenure with Hill-Rom.  Accordingly, to ensure the continuity of future leadership, the Compensation Committee made a non-recurring RSU grant in fiscal year 2014 to Mr. Greisch in the amount of $2 million, half of which vests in three years, and half of which vests in five years.  The Compensation Committee believes that these grants will help to ensure that Mr. Greisch remains with Hill-Rom to continue to provide shareholder returns in excess of the market over time.
FY 2015 Target 
CEO Compensation Summary
FY 2015 Target
Continuing NEOs Compensation Summary
Total at Risk: 85%Total at Risk: 72%
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                 *Continuing NEOs are Ms. Lichtenstein and Mr. Shader
CEO Reported Pay vs. Realized Pay
 
*Realized pay includes, with respect to any fiscal year, salary and cash bonus actually paid in such year, the fair value of stock awards vesting in such year, the gain from any exercised stock options, and the value of other perquisites received.

Key Governance Features Relating to Executive Compensation

The Hill-Rom Board has instituted a number of corporate governance features related to executive compensation, which are highlighted below and described more fully later.

What We DoWhat We Don’t Do
Require significant stock ownership, including 6X base salary for our CEO, ensuring that executives are invested in Hill-Rom’s long-term success
  We don’t re-price stock options or buy-back equity grants
 
Have an effective, 24 month clawback policy in place in the event of executive misconduct resulting in a material restatement in our financial statements
 
We don’t provide any gross-ups for perquisites or excise taxes, such as 280G taxes in the event of a change of control, other than certain relocation expenses
  Engage a fully independent compensation consultant 
We don’t provide single-trigger change in control agreements
  Our executives have at-will employment agreements 
We don’t allow executives to hedge or pledge their Hill-Rom stock, unless explicitly approved by the Board

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Elements of Executive Compensation
 
The major components of Hill-Rom’s executive officer compensation are summarized below:

ElementPurposeKey Characteristics
Base Salary
Reflects each executive’s base level of responsibility, qualifications and contributions to the company
Fixed compensation that is reviewed and, if appropriate, adjusted annually
Variable Cash Incentive -
STIC Award
Motivates our executives to achieve annual company objectives that the Board believes will drive long-term growth in shareholder value
This annual cash bonus is earned by achieving designated levels of revenue and adjusted EPS; payouts are adjusted for individual performance
Long-term, Equity
Incentive - PSU Award
Motivates our executives by directly linking their compensation to the value of our stock relative to our peer group
The ultimate number of units earned is based on free-cash flow, as adjusted by our total shareholder return as compared to our custom peer group plus the S&P 400 MidCap Health Care Index (fiscal 2014) or the Morgan Stanley Health Care Index (fiscal 2015)
Long-term, Equity
Incentive - RSU Award
Motivates our executives by tying compensation to long-term stock appreciation; additionally, the time-vesting nature of the awards helps enable executive retention
Long-term restricted stock units vest on a three year cliff basis (other than certain sign-on awards)
Long-term, Equity
Incentive - Stock Options
Motivates our executives by linking their compensation to appreciation in our stock price
Stock options vest 25% per year over a four year period

Base Salary  

Hill-Rom provides senior management a base salary that is competitive and consistent with their positions, skill levels, experience, knowledge and length of service with Hill-Rom.  Base salary is intended to aid in the attraction and retention of talent in a competitive market and is generally targeted at the market median, although actual salaries may be higher or lower as a result of various factors, including those given above as well as individual performance, internal pay equity within Hill-Rom and the degree of difficulty in replacing the individual.
The base salaries of senior management are reviewed by the Compensation Committee on an annual basis, generally during the first quarter of the fiscal year, as well as at the time of promotion or significant changes in responsibility.  Executives are eligible for base salary increases based on individual performance, as well as market benchmarking that helps the Compensation Committee assess the Company’s competitiveness for talent. Individual performance is determined by use of an internal performance management system, which differentiates individual achievement. Market benchmarking is done via the Compensation Committee’s independent consultant, as well as with reference to publicly reported compensation data. For fiscal year 2015, the Compensation Committee granted the following increases which reflect the Committee’s assessment of the executives’ performance during the preceding year, as well as the Compensation Committee’s consideration of market benchmarking for similarly placed executives:
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Name*
 
2014
 Salary
  
2015
 Salary
  
%
Increase
 
John J. Greisch $965,000  $1,000,000   3.6%
Susan R. Lichtenstein $453,614  $464,000   2.3%
Alton E. Shader $420,240  $430,000   2.3%
     *Table represents continuing NEOs only.
Annual Cash Incentives
Overview.  All named executive officers participate in our Incentive Plan, which is designed to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation.  The Incentive Plan provides for a maximum award equal to 2.0% of our EBITDA (as adjusted) for our CEO and 1.0% for each other named executive officer.  However, in determining actual awards made under the plan, the Compensation Committee has the discretion to, and has in the past, paid actual awards which are lower than the maximum awards.  The committee exercises this negative discretion by reference to the Company wide Short-Term Incentive Compensation Plan (the “STIC Plan”), which is discussed herein.  The objective of the STIC Plan is to provide a total level of cash compensation that involves the achievement of internal performance objectives, which take into consideration the competitive market median of total cash compensation.  

Each named executive officer receives a target award that (1) is adjusted upwards or downwards based on achieving Company-wide targets, which set the STIC Funding Percentage, and (2) may be adjusted upwards or downwards based on individual targets and measures.   To the extent that compensation under the Incentive Plan exceeds the compensation that the executive would have been paid under the STIC Plan, the committee has in the past reduced the payment under the Incentive Plan to match the hypothetical payment under the STIC Plan.

STIC Payment Calculation.  The final STIC Plan payment to any individual is calculated by multiplying (a) the STIC Funding Percentage by (b) the Individual STIC Performance by (c) the STIC Target Opportunity by (d) base salary.

STIC Funding Percentage.  Under the terms of the STIC Plan, the Compensation Committee establishes a STIC Plan pool each year that is funded based upon the achievement of pre-established performance objectives.  The STIC Plan pool is generally funded at between 30% and 150% of aggregate target opportunities.
For fiscal year 2014, the targets and achievements (in millions, except per share data) were as follows:

STIC Targets and Achievement Calculation
    
 
Threshold
 
Target
 
Maximum
 
Weight
 
Actual
 
Achievement
Revenue$1,564$1,738$1,91140%$1,65895.4%
Adjusted EPS*  $2.13  $2.51  $2.8960%  $2.2161.8%
                    Total Weighted Average Achievement**73%
*Adjusted for the impact of acquisitions and various one-time events (such as litigation settlements, changes in policies, and certain other unusual charges or benefits) from our as-reported financial results.  These amounts may differ from our reported adjusted numbers.
** Total achievement is lower than a simple weighted average calculation due to Compensation Committee discretion.
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The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year.  In addition, in order to encourage management to take actions in the best interests of Hill-Rom, the Compensation Committee has the discretion to exclude nonrecurring special charges and amounts from the calculation of these targets.  At its November 2014 meeting, the Compensation Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and determined that based on our performance in fiscal year 2014, the aggregate STIC Funding Percentage was 73%, adjusted slightly downward by the Compensation Committee from the nominal achievement level, demonstrating significant pay for performance alignment in our compensation program.
Individual STIC Performance.  The Compensation Committee uses its discretion to assess achievement of individual targets.  Such assessment yields an Individual STIC Performance percentage, which ranged from 75% to 150% in fiscal 2014 for our named executive officers.  The individual targets and measures are targets specific to the officer’s area of responsibility, such as sales, operating income, cash flow, and demonstrated management and leadership, as appropriate.
STIC Target Opportunity.  Fiscal year 2014 and 2015 opportunities, as a percentage of base salary, were:
STIC Target Opportunities
   
NameFY 2014FY 2015
John J. Greisch110%110%
Susan R. Lichtenstein60%60%
James K. Saccaro*75%N/A
Michael S. Macek40%40%
Alejandro Infante Saracho*70%N/A
Alton E. Shader70%70%
* FY 2015 not applicable as participants left Hill-Rom
Long-Term Equity Awards
Overview:  Hill-Rom’s Stock Incentive Plan provides for the opportunity to grant stock options and other equity-based incentive awards to officers, other key employees and non-employee directors to help align those individuals’ interests with those of shareholders, to help motivate executives to make sound strategic long-term decisions, and to better enable Hill-Rom to attract and retain capable directors and executive personnel.

Hill-Rom’s long-term incentive compensation program provides a portfolio approach to long-term incentives by providing:

·  Awards, at target, that are aligned with competitive market levels;
·  Payouts that correlate with high performance resulting in increased payouts and low performance resulting in reduced payouts;

·  A mix of awards representative of typical market practice; and
·  
Awards that support internal equity among Hill-Rom’s executives.

In addition, the Compensation Committee considered the Stock Incentive Plan share usage rate, number of plan participants and potential aggregate target awards for participants in the process of determining target award levels and the mix of long-term incentive awards.

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LTI Target Opportunity.  Fiscal year 2014 and 2015 opportunities, as a percentage of base salary, were and are:
LTI Target Opportunities
   
NameFY 2014FY 2015
John J. Greisch400%450%
Susan R. Lichtenstein175%175%
James K. Saccaro*200%N/A
Michael S. Macek60%60%
Alejandro Infante Saracho*175%N/A
Alton E. Shader175%175%
* No grant provided for FY 2015 as participants left Hill-Rom

Stock Options and RSUs.  Our RSUs generally vest on a three-year cliff basis, and our stock options generally vest in four equal annual installments.

Performance Based Share Units or PSUs.  These awards provide the opportunity to earn shares of Hill-Rom stock based on achievement of performance objectives and completion of a three-year vesting period. For the PSU awards granted in fiscal years 2012 and 2013, vesting was and is based on relative TSR, a stock performance metric based upon share price appreciation and dividends paid to our shareholders.  Fiscal Year 2012 PSU grants vested in November 2014 at a level of 57% of target achievement, again demonstrating pay for performance alignment in our compensation program.  For Fiscal Year 2014 and 2015 PSU vesting is based on the level of achievement (between 0% and 150% of target) against a one-year adjusted free cash flow metric, as further modified by TSR achievement (from 50% to 150%) over the three-year vesting period.    Consequently, in both cases ultimate PSU value will vary depending on Hill-Rom’s TSR during the three year performance period as compared to a peer group of other companies.   Until fiscal 2015, our PSU peer group was comprised of the companies used to evaluate our overall compensation levels plus the S&P Mid-Cap Health Care Index Companies.  In fiscal year 2015, we replaced the S&P Mid-Cap Health Care Index Companies with the Morgan Stanley Health Care Index, which the Compensation Committee believed was a better overall industry fit, since it included more of Hill-Rom’s custom peer group, as well as more companies directly sharing Hill-Rom’s industry classification.
Fiscal Year 2013 PSU Grants
Company’s TSR over Three Year
Performance Period
% of Target Award
Vested
Less than 25th percentile
0%
25th percentile*
50%
35th percentile
64%
45th percentile
79%
50th percentile
86%
60th percentile**
100%
*Awards between 25th and 60th percentile are made based on a straight-line interpolation.
**Performance above 60th percentile may be awarded bonus shares up to 100% of the target amount at the discretion of the Compensation Committee

29

Fiscal Year 2014  and 2015 PSU Grants
Performance Level
Free Cash Flow
Achievement Modifier
Relative TSR
Achievement
Modifier*
Total
Performance Modifier
Below Threshold0%50%0%
Threshold50%50%25%
Target100%100%100%
Maximum150%150%225%
*Modifies one-year adjusted free cash-flow achievement based on three-year TSR measurement period.  Modifiers between the threshold and maximum percentile amounts are based on straight-line interpolation.
Share Ownership Guidelines.  In order to align the interests of executives to the long-term performance of the Company, executive officers are required to own a certain amount of Hill-Rom stock within five years of joining the Company. The Chief Executive Officer is required to achieve ownership of Hill-Rom common stock valued at six times annual base salary, which we recently increased from our previous requirement of four times base salary.  Each of the other executive officers is generally required to achieve ownership of Hill-Rom common stock valued at two times annual base salary, in each case within five years of becoming an executive officer.   Shares owned outright and RSUs count toward the required ownership level.  This requirement, like the Executive Compensation Recoupment Policy discussed below, helps ensure long-term focus and appropriate levels of risk-taking by executive officers.  Other than Mr. Greisch, who has achieved his required ownership level, none of our executive officers have been with the Company for more than five years, and therefore are not required to meet these guidelines.  However, all are on their way to accruing the shares to meet the target by their five year anniversaries.

Hill-Rom’s Compensation Recoupment Policy.  Under our Compensation Recoupment Policy, the Compensation Committee can recoup from an executive officer all performance-based compensation and any trading profits on trades in Hill-Rom securities received during the prior 24 months in the event there is a material restatement of financial results due to misconduct of the executive officer from whom recoupment is sought. The Policy gives the Compensation Committee discretion to determine whether and to what extent to seek recoupment based on specific facts and circumstances.

Timing of Equity Grants.  We generally make all equity grants to our executives on an annual basis (except in the case of a new hire or promotion), and these grants have historically been made at our November Board meeting.  Consequently, they are made approximately two weeks after the release of our fiscal year-end financial results.
Anti-Hedging/Anti-Pledging Policy.  Hill-Rom has adopted an insider trading policy which incorporates anti-hedging and anti-pledging provisions.   Consequently, no employee, officer or director may enter into a hedge or pledge of Hill-Rom stock.  Any exception to this policy must be made by requesting a waiver from the entire Board, and such request must (1) be submitted at least thirty (30) days in advance of the proposed transaction date, (2) contain the relevant transaction documents and a summary thereof, and (3) contain a justification for the request.  The Board has never granted a waiver under this policy.
Re-pricing and Buybacks.  Hill-Rom does not re-price options, nor does it buy-back shares (other than with respect to taxes and the exercise price upon the vesting of equity awards).
Retirement and Change in Control Agreements
Overview.  Hill-Rom believes that it is in the best interests of it and its shareholders to have the unbiased dedication of its executives, without the distraction of personal uncertainties such as retirement or a change in control.  Hill-Rom has designed its senior management retirement and other post-employment benefit programs to reduce such distraction.  We also believe that these benefits are at market levels and competitive with those of other comparable companies.  In addition to our Company-wide retirement programs (including our 401(k) and our pension plan, which has stopped taking new entrants), we have several other programs in place.
30

Normal Retirement Guidelines.  Executives who are at least 55 years of age and with 5 years length of service are eligible to receive certain benefits under Hill-Rom’s Stock Incentive Plan.  These guidelines are incorporated into each individual equity award agreement and have been approved by the Compensation Committee.  The following is allowed upon retirement:

·  accelerated vesting of outstanding time-based RSUs and stock options, which have been held for at least one year;
·  partial vesting of outstanding PSUs and/or performance-based stock options, which have been held for at least one year and for which performance objectives have been achieved;  and
·  an extension of up to three years of the time to exercise eligible outstanding stock options.

Supplemental Executive Retirement Plan.  The Hill-Rom Holdings, Inc. Supplemental Executive Retirement Plan (the “SERP”) provides additional retirement benefits to certain employees selected by the Compensation Committee whose retirement benefits under our Company-wide pension plan or 401(k) plan are reduced, curtailed or otherwise limited as a result of certain limitations under the Internal Revenue Code of 1986.

Change in Control Agreements.  Hill-Rom has a Change in Control agreement in place with each Named Executive Officer other than Mr. Macek.  These change in control agreements are of the form commonly referred to as “double-trigger” agreements, in that they are triggered only in the event that an executive is terminated in connection with a change in control, not merely if a change in control occurs.  Moreover, they do not contain any 280G gross-up provisions.  They are intended to encourage continued employment by Hill-Rom of its key management personnel and to allow such personnel to be in a position to provide assessment and advice to the Board of Directors regarding any proposed change in control without concern that such personnel might be unduly distracted by the uncertainties and risks created by the proposed transaction.  In addition, certain long-term equity awards that our executives hold may vest upon a change of control, even if the executive is not terminated.  The terms of this vesting are controlled by the applicable equity award agreements and not by the change in control agreements.  For information on the potential payments to executives on a change of control, see “Potential Payments Upon Termination or Change in Control”.
Other Personal Benefits

In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives.  Hill-Rom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-Rom and its shareholders.  None of our NEOs receive any excise tax or prerequisite gross-ups, other than potentially for reasonable relocation costs as applicable.

Employment Agreements

We have entered into an employment agreement with each of our Named Executive Officers.  We believe that it is appropriate for our senior executives to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information.  Additionally, we believe that employment agreements are a useful tool in recruiting and retention of senior level employees.  The current employment agreements set forth the basic duties of the executive officers and provide that each executive officer is entitled to receive, in addition to base salary, incentive compensation payable in our discretion and such additional compensation, benefits and perquisites as we may deem appropriate.  The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60) days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement.  See “Potential Payments Upon Termination or Change in Control” for further information regarding payments due upon termination. The employment agreements also contain non-competition and non-solicitation agreements of the executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the executive officer’s employment.
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Role of the Compensation Committee

The Board’s Compensation Committee is charged with ensuring that Hill-Rom’s compensation programs meet the objectives outlined above.  In that role, the Compensation Committee makes all executive compensation decisions, administers Hill-Rom’s compensation plans and keeps the Board informed regarding executive compensation matters.  The Compensation Committee, in consultation with Hill-Rom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer.  The Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of his direct reports, including Hill-Rom’s other Named Executive Officers.  From time to time, Hill-Rom management also provides recommendations to the Compensation Committee regarding modificationschanges to the elements and structure of Hill-Rom’s compensation program.
 
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The Compensation Committee considers peer group data, survey data and other factors when determining the elements and amounts of compensation.  The Compensation Committee also considers the results of the annual advisory ‘say-on-pay’ proposal and incorporates such results as one of the factors considered in connection with the discharge of its responsibilities, although no factor is assigned a quantitative weighting. Because a substantial majority (98% of our stockholders excluding abstentions and non-votes) approved the compensation program described in our proxy statement in 2014, the Committee did not implement changes to our executive compensation program as a result of the stockholder advisory vote.

Peer Group and Survey Data.  

As one of several factors in considering approval of elements of Hill-Rom’s compensation programs, the Compensation Committee compares Hill-Rom’s compensation programs and performance against an approved peer group of companies.  The compensation peer group, which is periodically reviewed and updated by the Compensation Committee, consists of companies that are similar in size and in similar industries as Hill-Rom and with whom Hill-Rom may compete for executive talent.  This peer group is a custom selected peer group and does not include the stock index companies used to calculate TSR for our PSU grants.
 
The Compensation Committee selected the following peer group with the assistance of its independent compensation consultant Mercer (US) Inc. (“Mercer”), focusing on companies whose revenues were one-halfcomparable to two times Hill-Rom’s planned revenue.   In November 2011, theHill-Rom’s.   The Compensation Committee updatedreviews the peer group as indicated belowannually.  Hill-Rom’s annual revenue is approximately equal to eliminate two companies that were acquired, eliminate one non-healthcare company, and to increase the numbermedian revenue of companies in the peer group.  After reviewing, there were no changes to the peer group. 

Peer Group Companies
Alere Inc.Invacare Corporation
Beckman Coulter,Intuitive Surgical, Inc.(2)
Kinetic Concepts, Inc. (2)
C. R. Bard, Inc.
Mednax, Inc. (1)
Invacare Corporation
CareFusion Corp.(1)
Mettler-Toledo InternationalMednax, Inc.(2)
Chemed Corp.(1)
PerkinElmer, Inc.
Conmed CorporationResMed Inc.
Dentsply International Inc.
Sirona Dental Systems Labs, Inc.(1)
Edwards Lifesciences CorporationSteris Corporation
Hologic, Inc. (1)
Inc
Teleflex, Inc.(1)
Hospira, Inc.The Cooper Companies, Inc.
IDEXX Laboratories, Inc.(1)
Varian Medical Systems, Inc.
Integra Lifesciences Holdings Corporation
West Pharmaceutical Services, Inc.(1)
Intuitive Surgical, Inc. (1)
Zimmer Holdings, Inc.(1)
____________________________
(1)  Added
(2)  Removed
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In addition to peer group data, the Compensation Committee considers survey data that include a broad sample of Fortune 1000 companies, focusing primarily on companies with revenues within a range of one-halfcomparable to two times Hill-Rom’s, or its business units’ revenue, companies in the manufacturing industry and companies with a comparable number of full time equivalent employees.  The purpose of the survey data is to provide an additional source of market data to validate the findings under the proxy analysis.  Hill-Rom used the Mercer Benchmark Database Survey Report on Top Management Compensation for this purpose.
 
Other Factors.  

The Compensation Committee is aware that it cannot establish total executive compensation levels solely on the basis of the median range of competitive benchmark survey data without the consideration of additional information and available analysis. Accordingly, the committee also takes into account external and internal factors when establishing the total compensation of each executive.  Some of these factors include the executive’s length of service, the level of experience and responsibility, external market conditions, complexity of position, individual performance, internal pay equity within Hill-Rom and the degree of replacement difficulty.  In addition, the committee periodically reviews the total compensation of Hill-Rom’s Named Executive Officers in comparison to the total compensation of its peer group companies.  The purpose of this high level review is to look at all elements of compensation that are not typically captured within a total direct compensation analysis covering base salary, annual incentive, and long term incentive compensation and, if there were significant differences, to understand what elements of compensation gave rise to the differences.difference.

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Compensation ConsultantRetirement and Change in Control Agreements

The Compensation Committee engages nationally recognized outside compensationOverview.  Hill-Rom believes that it is in the best interests of it and benefits consulting firmsits shareholders to evaluate independentlyhave the unbiased dedication of its executives, without the distraction of personal uncertainties such as retirement or a change in control.  Hill-Rom has designed its senior management retirement and objectively the effectiveness of and assist with implementation of Hill-Rom’s compensation andother post-employment benefit programs to reduce such distraction.  We also believe that these benefits are at market levels and competitive with those of other comparable companies.  In addition to provideour Company-wide retirement programs (including our 401(k) and our pension plan, which has stopped taking new entrants), we have several other programs in place.
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Normal Retirement Guidelines.  Executives who are at least 55 years of age and with 5 years length of service are eligible to receive certain benefits under Hill-Rom’s Stock Incentive Plan.  These guidelines are incorporated into each individual equity award agreement and have been approved by the Compensation Committee with additional expertise in the evaluation of Hill-Rom’s compensation practices.  During the fiscal year ended September 30, 2011, the Compensation Committee retained Mercer as its compensation and benefits consulting firm.

Mercer also provides other consulting services to Hill-Rom, most of which are in the areas of Health & Welfare programs.Committee.  The decision to retain Mercer for these other services was made at the recommendation of Hill-Rom’s management, however the Compensation Committee regularly reviews and approves these services as part of its ongoing vigilance as to Mercer’s objectivity.  In fiscal year 2011, we paid Mercer approximately $127,000 for work related to executive compensation and $717,000 for administrative services related to our health and welfare programs.  We also paid approximately $375,000 to affiliates of Mercer (various Marsh Insurance related entities) for insurance brokerage work.
Risk Assessment of Compensation Policies and Practices
With Mercer’s assistance, the Compensation Committee reviewed our material compensation policies and practices applicable to our employees, including our executive officers, and concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The key features of the executive compensation program that support this conclusion include:following is allowed upon retirement:

·  ·appropriate pay philosophy, peer groupaccelerated vesting of outstanding time-based RSUs and market positioning;stock options, which have been held for at least one year;
 ·effective balance in cash and equity mix, short and long term focus, corporate, business unit and individual performance focus and financial and non-financial performance measurement and discretion;
·  ·compensation programs designed to avoid excessive risk-taking;partial vesting of outstanding PSUs and/or performance-based stock options, which have been held for at least one year and for which performance objectives have been achieved;  and
 
·meaningful risk mitigants, such asan extension of up to three years of the time to exercise eligible outstanding stock ownership guidelines and executive compensation recoupment policies.options.

Elements ofSupplemental Executive Compensation

The three major components of Hill-Rom’s executive officer compensation are: (1) base salary, (2) variable cash incentive awards and (3) long-term, equity-based incentive awards.  Each component of the program, as well as the program as a whole, is designed to be competitive with our peers.
Base SalaryRetirement Plan.  The Hill-Rom Holdings, Inc. Supplemental Executive Retirement Plan (the “SERP”) provides senior management a base salary that is competitive and consistent with their position, skill level, experience, knowledge and length of service with Hill-Rom.  Base salary is intendedadditional retirement benefits to aid incertain employees selected by the attraction and retention of talent in a competitive market and is generally targeted at the market median although actual salaries may be higherCompensation Committee whose retirement benefits under our Company-wide pension plan or lower401(k) plan are reduced, curtailed or otherwise limited as a result of certain limitations under the Internal Revenue Code of 1986.

Change in Control Agreements.  Hill-Rom has a Change in Control agreement in place with each Named Executive Officer other than Mr. Macek.  These change in control agreements are of the form commonly referred to as “double-trigger” agreements, in that they are triggered only in the event that an executive is terminated in connection with a change in control, not merely if a change in control occurs.  Moreover, they do not contain any 280G gross-up provisions.  They are intended to encourage continued employment by Hill-Rom of its key management personnel and to allow such personnel to be in a position to provide assessment and advice to the Board of Directors regarding any proposed change in control without concern that such personnel might be unduly distracted by the uncertainties and risks created by the proposed transaction.  In addition, certain long-term equity awards that our executives hold may vest upon a change of control, even if the executive is not terminated.  The terms of this vesting are controlled by the applicable equity award agreements and not by the change in control agreements.  For information on the potential payments to executives on a change of control, see “Potential Payments Upon Termination or Change in Control”.
Other Personal Benefits

In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives.  Hill-Rom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-Rom and its shareholders.  None of our NEOs receive any excise tax or prerequisite gross-ups, other than potentially for reasonable relocation costs as applicable.

Employment Agreements

We have entered into an employment agreement with each of our Named Executive Officers.  We believe that it is appropriate for our senior executives to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information.  Additionally, we believe that employment agreements are a useful tool in recruiting and retention of senior level employees.  The current employment agreements set forth the basic duties of the executive officers and provide that each executive officer is entitled to receive, in addition to base salary, incentive compensation payable in our discretion and such additional compensation, benefits and perquisites as we may deem appropriate.  The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60) days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement.  See “Potential Payments Upon Termination or Change in Control” for further information regarding payments due upon termination. The employment agreements also contain non-competition and non-solicitation agreements of the executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the executive officer’s employment.
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Role of the Compensation Committee

The Board’s Compensation Committee is charged with ensuring that Hill-Rom’s compensation programs meet the objectives outlined above.  In that role, the Compensation Committee makes executive compensation decisions, administers Hill-Rom’s compensation plans and keeps the Board informed regarding executive compensation matters.  The Compensation Committee, in consultation with Hill-Rom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer.  The Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of his reports, including Hill-Rom’s other Named Executive Officers.  From time to time, Hill-Rom management also provides recommendations regarding changes to the elements and structure of Hill-Rom’s compensation program.
The Compensation Committee considers peer group data, survey data and other factors including those given abovewhen determining the elements and amounts of compensation.  The Compensation Committee also considers the results of the annual advisory ‘say-on-pay’ proposal and incorporates such results as wellone of the factors considered in connection with the discharge of its responsibilities, although no factor is assigned a quantitative weighting. Because a substantial majority (98% of our stockholders excluding abstentions and non-votes) approved the compensation program described in our proxy statement in 2014, the Committee did not implement changes to our executive compensation program as a result of the stockholder advisory vote.

Peer Group and Survey Data

As one of several factors in considering approval of elements of Hill-Rom’s compensation programs, the Compensation Committee compares Hill-Rom’s compensation programs and performance against an approved peer group of companies.  The compensation peer group, which is periodically reviewed and updated by the Compensation Committee, consists of companies that are similar in size and in similar industries as Hill-Rom and with whom Hill-Rom may compete for executive talent.  This peer group is a custom selected peer group and does not include the stock index companies used to calculate TSR for our PSU grants.
The Compensation Committee selected the following peer group with the assistance of its independent compensation consultant focusing on companies whose revenues were comparable to Hill-Rom’s.   The Compensation Committee reviews the peer group annually.  Hill-Rom’s annual revenue is approximately equal to the median revenue of the peer group.  After reviewing, there were no changes to the peer group. 

Peer Group Companies
Alere Inc.Intuitive Surgical, Inc.
C. R. Bard, Inc.Invacare Corporation
CareFusion Corp.Mednax, Inc.
Chemed Corp.PerkinElmer, Inc.
Conmed CorporationResMed Inc.
Dentsply International Inc.Sirona Dental Systems Labs, Inc.
Edwards Lifesciences CorporationSteris Corporation
Hologic, IncTeleflex, Inc.
Hospira, Inc.The Cooper Companies, Inc.
IDEXX Laboratories, Inc.Varian Medical Systems, Inc.
Integra Lifesciences Holdings CorporationWest Pharmaceutical Services, Inc.
Zimmer Holdings, Inc.
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In addition to peer group data, the Compensation Committee considers survey data that include a broad sample of Fortune 1000 companies, focusing primarily on companies with revenues within a range comparable to Hill-Rom’s, companies in the manufacturing industry and companies with a comparable number of full time equivalent employees.  The purpose of the survey data is to provide an additional source of market data to validate the findings under the proxy analysis.  Hill-Rom used the Mercer Benchmark Database Survey Report on Top Management Compensation for this purpose.
Other Factors

The Compensation Committee is aware that it cannot establish total executive compensation levels solely on the basis of the median range of competitive benchmark survey data without the consideration of additional information and available analysis. Accordingly, the committee also takes into account external and internal factors when establishing the total compensation of each executive.  Some of these factors include the executive’s length of service, the level of experience and responsibility, external market conditions, complexity of position, individual performance, internal pay equity within Hill-Rom and the degree of difficulty in replacing the individual.
The base salaries of senior management are reviewed by the Compensation Committee on an annual basis, generally during the first quarter of the fiscal year, as well as at the time of promotion or significant changes in responsibility.  Executives are eligible for base salary increases based on individual performance, as well as market benchmarking that helps the Compensation Committee assess the Company’s competitiveness for talent. Individual performance is determined by use of an internal performance management system, which differentiates individual achievement. Market benchmarking is done via the Compensation Committee’s independent consultant, as well as with reference to publicly reported compensation data. For fiscal year 2012, the Compensation Committee granted base salary merit increases in the amounts of $25,000, $13,000, $13,500, $7,500 and $12,700, for each of Mr. Greisch, Ms. Aronson, Mr. Guinan, Mr. Infante Saracho and Ms. Lichtenstein, respectively.  The increases reflect the Committee’s assessment of the executives’ performance during the preceding year, as well as the Compensation Committee’s consideration of market benchmarking for similarly placed executives.

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Annual Cash Incentives
Overview.  All named executive officers participate in our Incentive Plan, which is designed to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation.  The Incentive Plan provides for a maximum award equal to 2.0% of our EBITDA (as adjusted) for our CEO and 1.0% for each other named executive officer.  However, in determining actual awards made under the plan, the Compensation Committee has the discretion to, and has in the past, paid actual awards which are lower than the maximum awards.  The committee exercises this negative discretion by reference to the Company wide Short-Term Incentive Compensation Plan (the “STIC Plan”).  The objective of the STIC Plan is to provide a total level of cash compensation that involves the achievement of internal performance objectives, which takes into consideration the competitive market median of total cash compensation.  

Each named executive officer receives a target award that is adjusted upwards or downwards based on (1) achieving Company-wide goals, which set the STIC Funding Percentage, and (2) individual goals and measures, which set the Individual STIC Performance.   To the extent that compensation under the Incentive Plan exceeds the compensation that the executive would have been paid under the STIC Plan, the committee generally reduces the payment under the Incentive Plan to match the hypothetical payment under the STIC Plan.

STIC Funding Percentage.  Under the terms of the STIC Plan, the Compensation Committee establishes a STIC Plan pool each year that will be funded based upon the achievement of pre-established performance objectives.  The STIC Plan pool is generally funded at between 30% and 150% of aggregate target opportunities, although the maximum achievement is 200% for our executive officers if certain Adjusted Earnings Per Share (“Adjusted EPS”) targets are met. For fiscal year 2012, the Company determined goals and measures will be based on revenue, adjusted earnings per share, and cash flow ROIC.

For fiscal year 2011, the targets and achievements were as follows:
 TargetWeightActualAchievement
Revenue$1,54625%$1,591.7149.7%
Adjusted EPS$2.1050%
$2.24 (1)
121.9%
Cash Flow ROIC34.7%25%39.3%
150% (2)

(1)Adjusted EPS as calculated (for STIC purposes only) by eliminating various one-time costs (such as litigation settlements, changes in accounting policies, and certain tax and earnings benefits) from our as-reported EPS.  This amount may differ from the Adjusted EPS number we report as part of our normal financial reporting.
(2)Maximum achievement in this category is 150%.

The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year.  In addition, in order to encourage management to take actions in the best interests of Hill-Rom, the Compensation Committee has the discretion to exclude nonrecurring special charges and amounts from the calculation of these targets.  At its November 2011 meeting, the Compensation Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and adjusted to control for certain changes in accounting and tax policy, as well as extraordinary tax structuring costs.  It determined that based on our performance in fiscal year 2011, the aggregate STIC Funding Percentage was 135%.
Individual STIC Performance.  The Compensation Committee uses its discretion to assess achievement of individual goals.  Such assessment yields an Individual STIC Performance percentage, which ranged from 85% to 115% in fiscal 2011.  The individual goals and measures are goals specific to the officer’s area of responsibility, such as sales, operating income, cash flow, and demonstrated management and leadership, as appropriate.
STIC Target Opportunity.  For fiscal 2011, the CEO target opportunity was 100% of base salary and 60% or 75% of base salary for all the other Named Executive Officers.
STIC Payment Calculation.  The final STIC Plan payment to any individual is calculated by multiplying (a) the STIC Funding Percentage by (b) the Individual STIC Performance by (c) the STIC Target Opportunity by (d) base salary.
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Long-Term Equity Awards
Overview:  Hill-Rom’s Stock Incentive Plan provides for the opportunity to grant stock options and other equity-based incentive awards to officers, other key employees and non-employee directors to help align those individuals’ interests with those of shareholders, to help motivate executives to make strategic long-term decisions, and to better enable Hill-Rom to attract and retain capable directors and executive personnel.

Hill-Rom’s long-term incentive compensation program provides a portfolio approach to long-term incentives by providing:
·Awards, at target, that are aligned with competitive market levels;
·Payouts that correlate with high performance resulting in increased payouts and low performance resulting in reduced payouts;
·A mix of awards representative of typical market practice; and
·Awards that support internal equity among Hill-Rom’s executives.
replacement difficulty.  In addition, the Compensation Committee consideredcommittee periodically reviews the Stock Incentive Plan share usage rate, numbertotal compensation of plan participants and potential aggregate target awards for participants in the process of determining target award levels and the mix of long-term incentive awards.
Awards made in fiscal years 2011 and 2012 were typically a combination of stock options and performance stock units (“PSUs”) for theHill-Rom’s Named Executive Officers and a combinationin comparison to the total compensation of stock options, restricted stock units (“RSUs”) and PSUs for others.  
Stock Options and RSUs.  Our stock option and RSU award agreements generally vest in four equal annual installments beginning on the first anniversary of the date of grant for stock options and beginning on the day after the first anniversary of the date of grant for RSUs.  
Performance Based Share Units or PSUs.  These awards provide the opportunity to earn shares of Hill-Rom stock based on achievement of performance objectives and completion of a three-year vesting period. For the PSU awards granted in fiscal years 2011 and 2012 vesting is based on relative total shareholder return (“TSR”), a stock performance metric based upon share price appreciation and dividends paid to our shareholders.  The ultimate PSU value will range from 0% to 100% of the targeted amount, depending on Hill-Rom’s TSR during the performance period as compared to a peer group of other companies.  In addition, if Hill-Rom’s TSR substantially outperforms its peer group the Compensation Committee has the discretioncompanies.  The purpose of this high level review is to grant additional shares uplook at all elements of compensation that are not typically captured within a total direct compensation analysis covering base salary, annual incentive, and long term incentive compensation and, if there were significant differences, to an amount equal to 100%understand what elements of the original grant.  This peer group is comprised of mid-cap medical technology companies and includes, but is not limitedcompensation gave rise to the companies used to evaluate our overall compensation levels.difference.

Share Ownership Guidelines.  In order to drive the long-term performance of the Company, executive officers are required to own a certain amount of Hill-Rom stock within five years of joining the Company. The Chief Executive Officer is required to achieve ownership of Hill-Rom common stock valued at four times annual base salary. Each of the other executive officers is required to achieve ownership of Hill-Rom common stock valued at two times annual base salary, in each case within five years of becoming an executive officer.   Shares owned outright (including vested deferred shares) and deferred stock shares, whether vested or unvested, count toward the required ownership level.  This requirement, like the Executive Compensation Recoupment Policy discussed below, helps ensure long-term focus and appropriate levels of risk-taking by executive officers.  However, as none of our executive officers have been with the Company for more than five years, none are currently required to meet these guidelines.

Hill-Rom’s Compensation Recoupment Policy. In December 2009, our Board of Directors adopted an Executive Compensation Recoupment Policy. Under the policy, the Compensation Committee can recoup from an executive officer all performance-based compensation and any trading profits on trades in Hill-Rom securities received during the prior 24 months in the event there is a material restatement of financial results due to misconduct of the executive officer from whom recoupment is sought. The Policy gives the Compensation Committee discretion to determine whether and to what extent to seek recoupment based on specific facts and circumstances.
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Retirement and Change in Control Agreements
 
Overview.  Hill-Rom believes that it is in the best interests of it and its shareholders to have the unbiased dedication of its executives, without the distraction of personal uncertainties such as retirement or a change in control.  Hill-Rom has designed its senior management retirement and other post-employment benefit programs to reduce such distraction.  We also believe that these benefits are at market levels and competitive with those of other comparable companies.  In addition to our Company-wide retirement programs (including our 401(k) and our pension plan, which has stopped taking new entrants), we have several other programs in place.
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Normal Retirement Guidelines.  Executives who are at least 55 years of age and with 5 years length of service are eligible to receive certain benefits under Hill-Rom’s Stock Incentive Plan.  These guidelines are incorporated into each individual equity award agreement and have been approved by the Compensation Committee.  The following is allowed upon retirement:

·accelerated vesting of outstanding time-based RSUs and stock options, which have been held for at least one year;
 
·partial vesting of outstanding PSUs and/or performance-based stock options, which have been held for at least one year and for which performance objectives have been achieved;  and
 
·an extension of up to three years of the time to exercise eligible outstanding stock options.

Supplemental Executive Retirement Plan.  The Hill-Rom Holdings, Inc. Supplemental Executive Retirement Plan (the “SERP”) provides additional retirement benefits to certain employees selected by the Compensation Committee whose retirement benefits under our Company-wide pension plan or 401(k) plan are reduced, curtailed or otherwise limited as a result of certain limitations under the Internal Revenue Code of 1986.

Change in Control Agreements.  Hill-Rom has a Change in Control agreement in place with each Named Executive Officer who currently is an executive of Hill-Rom.other than Mr. Macek.  These change in control agreements are of the form commonly referred to as “double-trigger” agreements, in that they are triggered only in the event that an executive is terminated in connection with a change in control, not merely if a change in control occurs.  Moreover, they do not contain any excise tax280G gross-up provisions.  They are intended to encourage continued employment by Hill-Rom of its key management personnel and to allow such personnel to be in a position to provide assessment and advice to the Board of Directors regarding any proposed change in control without concern that such personnel might be unduly distracted by the uncertainties and risks created by the proposed transaction.  In addition, certain long-term equity awards that our executives hold may vest upon a change of control, even if the executive is not terminated.  The terms of this vesting are controlled by the applicable equity award agreements and not by the change in control agreements.  For information on the potential payments to executives on a change of control, see “-Potential“Potential Payments Upon Termination or Change in Control” below..
 
Other Personal Benefits

In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives.  Hill-Rom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-Rom and its shareholders.
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  None of our NEOs receive any excise tax or prerequisite gross-ups, other than potentially for reasonable relocation costs as applicable.

Employment Agreements

We have entered into an employment agreement with each of our Named Executive Officers.  We believe that it is appropriate for our senior executives to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information.  Additionally, we believe that employment agreements are a useful tool in recruiting and retention of senior level employees.  The current employment agreements set forth the basic duties of the executive officers and provide that each executive officer is entitled to receive, in addition to base salary, incentive compensation payable in our discretion and such additional compensation, benefits and perquisites as we may deem appropriate.  The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60) days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement.  See “-Potential“Potential Payments Upon Termination or Change in Control” below for further information regarding payments due upon termination. The employment agreements also contain limited non-competition and non-solicitation agreements of the executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the executive officer’s employment.
31


Role of the Compensation Committee

The Board’s Compensation Committee is charged with ensuring that Hill-Rom’s compensation programs meet the objectives outlined above.  In that role, the Compensation Committee makes executive compensation decisions, administers Hill-Rom’s compensation plans and keeps the Board informed regarding executive compensation matters.  The Compensation Committee, in consultation with Hill-Rom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer.  The Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of his reports, including Hill-Rom’s other Named Executive Officers.  From time to time, Hill-Rom management also provides recommendations regarding changes to the elements and structure of Hill-Rom’s compensation program.
Non-Binding Shareholder VoteThe Compensation Committee considers peer group data, survey data and other factors when determining the elements and amounts of compensation.  The Compensation Committee also considers the results of the annual advisory ‘say-on-pay’ proposal and incorporates such results as one of the factors considered in connection with the discharge of its responsibilities, although no factor is assigned a quantitative weighting. Because a substantial majority (98% of our stockholders excluding abstentions and non-votes) approved the compensation program described in our proxy statement in 2014, the Committee did not implement changes to our executive compensation program as a result of the stockholder advisory vote.

At the 2010 annual meetingPeer Group and Survey Data

As one of shareholders, we submitted to the shareholders a proposal that Hill-Rom provide its shareholders an annual non-binding advisory vote regarding our executive compensation.  The shareholders followed the Board’s recommendation and approved an annual, non-binding advisory vote.  Subsequently, the Dodd-Frank Wall Street Reform and Consumer Protection Act (and subsequent SEC rules) mandated a non-binding shareholder vote on executive compensation.  We held this vote last year, along with a vote to determine how often this vote should be held.  The shareholders approved the resolution on executiveseveral factors in considering approval of elements of Hill-Rom’s compensation with over 87% of shares (excluding abstentions and non-votes) being cast in favor of our executive compensation, and again adopted the Board’s recommendation that this vote be held annually.  Given this high percentage of votes in favor of our executive compensation,programs, the Compensation Committee determinedcompares Hill-Rom’s compensation programs and performance against an approved peer group of companies.  The compensation peer group, which is periodically reviewed and updated by the Compensation Committee, consists of companies that are similar in size and in similar industries as Hill-Rom and with whom Hill-Rom may compete for executive talent.  This peer group is a custom selected peer group and does not include the stock index companies used to keepcalculate TSR for our compensation practices in place for fiscal year 2012.PSU grants.
 
The Compensation Committee selected the following peer group with the assistance of its independent compensation consultant focusing on companies whose revenues were comparable to Hill-Rom’s.   The Compensation Committee reviews the peer group annually.  Hill-Rom’s annual revenue is approximately equal to the median revenue of the peer group.  After reviewing, there were no changes to the peer group. 

Peer Group Companies
Alere Inc.Intuitive Surgical, Inc.
C. R. Bard, Inc.Invacare Corporation
CareFusion Corp.Mednax, Inc.
Chemed Corp.PerkinElmer, Inc.
Conmed CorporationResMed Inc.
Dentsply International Inc.Sirona Dental Systems Labs, Inc.
Edwards Lifesciences CorporationSteris Corporation
Hologic, IncTeleflex, Inc.
Hospira, Inc.The Cooper Companies, Inc.
IDEXX Laboratories, Inc.Varian Medical Systems, Inc.
Integra Lifesciences Holdings CorporationWest Pharmaceutical Services, Inc.
Zimmer Holdings, Inc.
 
 
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In addition to peer group data, the Compensation Committee considers survey data that include a broad sample of Fortune 1000 companies, focusing primarily on companies with revenues within a range comparable to Hill-Rom’s, companies in the manufacturing industry and companies with a comparable number of full time equivalent employees.  The purpose of the survey data is to provide an additional source of market data to validate the findings under the proxy analysis.  Hill-Rom used the Mercer Benchmark Database Survey Report on Top Management Compensation for this purpose.
Other Factors


Compensation Consultant

The Compensation Committee engages nationally recognized outside compensation and benefits consulting firms to evaluate independently and objectively the effectiveness of and assist with implementation of Hill-Rom’s compensation and benefit programs and to provide the Compensation Committee with additional expertise in the evaluation of Hill-Rom’s compensation practices.  During the fiscal year ending September 30, 2014, the Compensation Committee used ExeQuity as its executive compensation consulting firm.  ExeQuity has been asked by the Compensation Committee to provide guidance on compensation proposals, including changes to compensation levels, the design of incentive plans, as well as relevant information about market practices and trends.  ExeQuity is an independent compensation consultant that provided no other services to Hill-Rom other than those services provided to the Compensation Committee.

After considering the six independence factors discussed in the relevant SEC rules, the Compensation Committee determined that no conflict of interest existed pursuant to S-K 407(e)(3)(iv).

Risk Assessment
Assisted by its compensation consultant, the Compensation Committee reviewed our material compensation policies and practices applicable to our employees and executive officers.  It concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Key features of the compensation program supporting this conclusion include:

·  appropriate pay philosophy, peer group and market positioning;

·  effective balance in cash and equity mix, short and long term focus, corporate, business unit and individual performance focus and financial and non-financial performance measurement and discretion;

·  compensation programs designed to avoid excessive risk-taking; and

·  meaningful risk mitigants, such as the stock ownership guidelines and executive compensation recoupment policies.

33

COMPENSATION OF NAMED EXECUTIVE OFFICERS

The following tables and notes set forth compensation information for the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 for our Named Executive Officers.
 
Summary Compensation Table
        Change in Pension Value  
       Non-Equityand Nonqualified  
     StockOptionIncentive PlanDeferred CompensationAll Other 
Name and Principal PositionYear SalaryBonus (1)Awards (2)Awards (3)Compensation (4)Earnings (5)Compensation (6)Total
           
           
JOHN J. GREISCH (7)2011 $887,397None$1,448,171$1,800,207$1,197,986-$175,002$5,508,763
President and Chief Executive Officer,2010 $583,014None$800,004$1,609,819$879,692-$134,995$4,007,524
Member of the Board of Directors          
           
MARK J. GUINAN (8)2011 $360,000$200,000$1,612,059$778,440$400,950-$59,471$3,410,920
Senior Vice President and          
Chief Financial Officer          
           
MARTHA G. ARONSON (9)2011 $432,429None$305,176$379,365$402,807-$53,391$1,573,168
Senior Vice President and          
President North America          
           
ALEJANDRO INFANTE SARACHO (10)2011 $380,589None$298,151$370,613$262,036-$50,680$1,372,195
Senior Vice President and          
President International          
           
SUSAN R. LICHTENSTEIN (11)2011 $422,254None$297,995$370,430$376,228-$53,978$1,520,885
Senior Vice President, Corporate Affairs,2010 $163,726None$250,002$201,156$134,750-$6,225$755,859
 Chief Legal Officer and Secretary          
           
GREGORY N. MILLER (12)2011 $100,000None---$4,950$497,682$602,632
Former Senior Vice President and Chief2010 $400,000None$550,030$203,958$345,668$3,827$45,447$1,548,930
Financial Officer and Treasurer2009 $395,178None$189,053$643,302$109,524$9,763$41,431$1,388,251

               Non-Equity       
Name and        Stock  Option  Incentive Plan  All Other    
Principal PositionYear Salary  Bonus (1)  Awards (2)  Awards (3)  Comp. (4)  Comp. (5)  Total 
                       
                       
JOHN J. GREISCH2014 $961,923  None  $5,187,933  $963,908  $774,895  $197,226  $8,085,885 
President and Chief Executive Officer,2013 $942,644  None  $2,331,985  $952,230  $832,355  $193,597  $5,252,811 
Member of the Board of Directors2012 $920,970  None  $1,404,277  $1,850,004  $442,894  $192,185  $4,810,330 
                             
MICHAEL S. MACEK (6)2014 $234,096  None  $236,894  $41,373  $102,940  $16,898  $632,201 
Vice President, Treasurer and2013 $208,875  None  $79,690  $32,542  $84,841  $10,627  $416,575 
Interim Chief Financial Officer                            
                             
JAMES K. SACCARO  (7)2014 $238,846  $250,000  $2,013,847  $230,001  $0  $35,107  $2,767,801 
Former Senior Vice President and                             
Chief Financial Officer                             
                              
ALEJANDRO INFANTE SARACHO2014 $410,208  None  $796,746  $180,417  $157,899  $50,734  $1,596,004 
Former Senior Vice President and2013 $399,425  None  $432,253  $176,496  $246,885  $52,602  $1,307,661 
President International2012 $391,291  None  $234,639  $309,097  $102,150  $49,729  $1,086,906 
                              
SUSAN R. LICHTENSTEIN2014 $452,246  None  $789,227  $208,381  $208,617  $56,738  $1,715,209 
Senior Vice President, Corporate Affairs,2013 $443,693  None  $480,165  $196,057  $235,068  $53,649  $1,408,632 
 Chief Legal Officer and Secretary2012 $433,953  None  $318,548  $419,650  $119,250  $52,704  $1,344,105 
                              
ALTON E. SHADER (8)2014 $418,357  None  $1,068,911  $202,249  $204,006  $51,247  $1,944,770 
Senior Vice President and                             
President North America                             

 1)In 2014 Mr. GuinanSaccaro received a one-time sign-on cash award upon commencement of his employment to compensate him for the bonus opportunity foregone at his previous employer upon joining Hill-Rom.

 2)The 20112014 and 2013 amounts in this column represent the grant date fair value of time-based RSUs granted during the applicable fiscal year, excluding a reduction for risk of forfeiture. Also included is the grant date fair value of PSUs granted during fiscal 20112014, 2013 and 20102012 to certain officers based upon the target achievement of the performance conditions as of the grant date as more fully described in the footnotes to the Grants of Plan-Based Awards Table.  These grant date fair values were based on the methodology set forth in Notes 1 and 87 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014.

 3)The 2011 amounts in this column represent the grant date fair value of time-based stock options granted to our Named Executive Officers during the applicable fiscal years, excluding the reduction for risk of forfeiture.  These grant date fair values were based on the methodology set forth in Notes 1 and 87 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014.

 4)The amounts in this column represent cash awards earned for the applicable fiscal year and paid in the subsequent fiscal year, under our STIC162(m) Incentive Plan.

5)During fiscal year 2011, we did not pay above-market interest on nonqualified deferred compensation, as our monthly deferred compensation interest rate did not exceed 120% of the applicable federal long-term month rate as published by the IRS.  The 2011 amounts in this column reflect changes in the actuarial present value of pension benefits from September 30, 2010.  See the Pension Benefits Table and Nonqualified Deferred Compensation Table below for additional information.
 
 
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 6)5)
Please refer to the “All Other Compensation” table below for further information:

 All Other Compensation for Fiscal Year 2011
 Company Contributions    
Name
401(k)
(a)
Supp
401(k)
(a)
Cash Payout
Unused Vacation
Relocation
Reimbursements
Severance
Benefits
Other
Benefits
(b)
Total All
Other
Compensation
Mr. Greisch$17,150$157,852----$175,002
Mr. Guinan$17,150$28,482-$13,839--$59,471
Ms. Aronson$19,423$31,166---$2,802$53,391
Mr. Infante Saracho$23,877$24,992---$1,811$50,680
Ms. Lichtenstein$23,950$30,028----$53,978
Mr. Miller-$6,913$23,077-$460,000$7,692$497,682
All Other Compensation for Fiscal Year 2014
 Company Contributions  
     
     
Name401(k) (a)
Supp
401(k) (a)
Other Benefits
Total All Other
Compensation
Mr. Greisch$18,400$173,888$4,938$197,226
Mr. Macek$16,581$0$317$16,898
Mr. Saccaro$15,481$19,076$550$35,107
Mr. Infante Saracho$18,400$26,859$5,475$50,734
Ms. Lichtenstein$18,400$32,443$5,895$56,738
Mr. Shader$18,400$25,694$7,153$51,247

 a)Amounts represent Company matching contributions to the Named Executive Officer’s accounts in the applicable plans: 401(k) Savings Plan and 401(k) Savings Plan portion of the SERP.SERP, excluding the reduction for forfeiture of non-vested contributions.

 b)6)Other benefits include expenses paid on behalf of the executives’ spouses who accompanied such executives on business travelMr. Macek served as well as fees for consulting services.our Interim Chief Financial Officer from July 26, 2013 to December 29, 2013 and from July 3, 2014 to November 30, 2014.  Prior to fiscal 2013, Mr. Macek was not a Named Executive Officer.

 7)Effective January 8, 2010,Prior to his resignation on July 1, 2014, Mr. Greisch was elected as our President and Chief Executive Officer and a member of the Board.

8)Effective December 13, 2010, Mr. GuinanSaccaro was elected as our Senior Vice President and Chief Financial Officer.Officer on December 30, 2013.  The stock and option awards amounts were forfeited upon Mr. Saccaro’s resignation.

 9)8)Prior to fiscal year 2011, Ms. Aronson2014, Mr. Shader was not a Named Executive Officer.  Accordingly, compensation is presented for Ms. Aronson for 2011 only.

10)Prior to fiscal year 2011, Mr. Infante Saracho was not a Named Executive Officer.  Accordingly, compensation is presented for Mr. Infante Saracho for 2011 only.

11)Effective May 6, 2010, Ms. Lichtenstein was elected as our Senior Vice President, Corporate Affairs, Chief Legal Officer and Secretary.

12)Effective December 12, 2010 and in connection with Mr. Guinan’s appointment, Mr. Miller stepped down from his positions as Senior Vice President and Chief Financial Officer and Treasurer. Mr. Miller’s employment with us terminated on December 31, 2010.

 
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Grants of Plan-Based Awards forFor Fiscal Year Ended September 30, 20112014

The following table summarizes the grants of plan-based awards to each of the Named Executive Officers for the fiscal year ended September 30, 2011.2014. All stock-basedequity awards ingranted during fiscal year 20112014 were granted under our Stock Incentive Plan.
 
                      All Other       
                      Stock       
  Estimated Future Payouts Under Non-Equity  Estimated Future Payouts Under Equity  Awards:  Exercise  
Grant Date
 
  Incentive Plan Awards (1)  Incentive Plan Awards (2)  Number of  or Base  Fair Value 
 Actual                    Shares or  Price of  of Stock 
 
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
Estimated Future Payouts Under
Equity Incentive Plan Awards (2)
All Other
Stock
Awards:
Number of
 
All Other
Option
Awards:
Number of
Exercise
or Base
Price of
Grant Date
Fair Value of
Grant Amount                    Stock Units  Option  and Option 
Name
 
Grant
Date
MinTargetMaxMinTargetMax
Shares of
Stock or
Units (3)
 
Securities
Underlying
Options (3)
Option
Awards
(4)
Stock and
Option
Awards (5)
Date 2014  Min.  Target  Max.  Min.  Target  Max.  (3)  Awards (4)  Awards (5) 
                                           
John J. Greisch $-$887,397$1,774,795          $774,895   -  $1,061,500  $2,388,375                    
11/16/2010       147,679 $38.81 $1,800,20711/18/2013                           80,797  $41.53  $963,908 
11/16/2010   -  11,597  46,386      $1,448,17111/18/2013                           23,210      $963,911 
            12/12/2013                           50,026      $2,000,040 
Mark J. Guinan $-$270,000$540,000         
11/18/2013                  -   46,420   104,445          $2,223,982 
                                         
Michael S. Macek  $102,940   -  $94,009  $211,520                         
12/13/2010       34,242 $41.84 $449,94011/18/2013                              3,468  $41.53  $41,373 
12/13/2010          25,000     (6)$41.84 $328,50011/18/2013                              3,405      $141,409 
12/13/2010      30,221(6)    $1,250,01211/18/2013                  -   1,993   4,484          $95,485 
12/13/2010   -2,68910,756      $362,047                                         
James K. Saccaro (6)   -   -   -   -                         
            12/30/2013                              19,393  $41.29  $230,001 
Martha G. Aronson $-$259,457$518,915         
11/16/2010       31,121 $38.81 $379,36512/30/2013                              35,846      $1,480,082 
11/16/2010   -2,444 9,775       $305,17612/30/2013                  -   11,141   25,067          $533,765 
                                                     
Alejandro Infante Saracho $-$228,353$456,707           $157,899   -  $288,400  $648,900                         
11/16/2010       30,403 $38.81 $370,61311/18/2013                              15,123  $41.53  $180,417 
11/16/2010   - 2,388  9,550      $298,15111/18/2013                              9,161      $380,456 
            11/18/2013                  -   8,689   19,550          $416,290 
                                         
Susan R. Lichtenstein $-$253,352$506,705           $208,617   -  $272,168  $612,378                         
11/16/2010       30,388 $38.81 $370,43011/18/2013                              17,467  $41.53  $208,381 
11/16/2010   -  2,386  9,545      $297,99511/18/2013                              7,426      $308,402 
            11/18/2013                  -   10,036   22,581          $480,825 
Gregory N. Miller $-$-$----  - $- -
                                         
Alton E. Shader  $204,006   -  $294,168  $661,878                         
11/18/2013                              16,953  $41.53  $202,249 
11/18/2013                              14,502      $602,268 
11/18/2013                  -   9,740   21,915          $466,643 
     

 1)Amounts represent actual and the potential cash awards that could behave been paid under our Section 162(m) Incentive Plan, assuming that the Compensation Committee exercisesexercised its negative discretion by reference to our STIC Plan.

 2)
The amounts under the “Maximum” column reflect the number of PSUs granted to the Named Executive Officer on November 16, 2010.18, 2013 and December 30, 2013. They represent the amount of shares the Named Executive Officer will receive if the target performance goals are met during the three-year performance period. The “Target” amount represents the threshold performance level for each Named Executive Officer.  Refer to the “Long-Term“Long-Term Equity Awards” section of the Compensation Discussion and Analysis for further details.

 3)Amounts under this column represent stock options and RSU’s granted to our Named Executive Officers during fiscal year 2011.2014.  The exercise price for these stock options is the fair market value of our common stock on the grant date, as described in Footnote 4 below.  For RSU’s, the value to beeventually realized by the Named Executive Officer is based on the fair market value of our common stock on the vesting date.dates.  The vesting schedules for these awards, and other unvested awards granted to our Named Executive Officers prior to fiscal year 2011,2014, are disclosed in the footnotes to the Outstanding Equity Awards at September 30, 20112014 table.

36

 4)The average of the high and low selling prices of our common stock on the New York Stock Exchange on the grant date or if the grant date is a non-trading day, then the next trading day thereafter.date.

 5)The grant date fair values of stock options and PSUsoption awards granted to our Named Executive Officers are based on the methodology set forth in Notes 1 and 87 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014.

 6)Amounts represent one-time executive sign-on stock options and RSUs thatDue to Mr. Guinan received in connection with his employment with us during fiscal year 2011.Saccaro’s resignation on July 1, 2014, he forfeited the awards granted on December 30, 2013.
 
 
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Outstanding Equity Awards atAt September 30, 20102014

The following table summarizes the number and terms of stock options, deferred stock shares and PSUs outstanding for each of the Named Executive Officers as of September 30, 2011.2014.
 Option Awards Stock Awards  Option Awards   Stock Awards 
Name
 
Number of
Securities
Underlying
Unexercised
Options
  
Number of Securities
Underlying
Unexercised
Options
Unexercisable
 
Option
Grant
Date (1)
 
Option
Exercise
Price
 
Option
Expiration
Date
 
Number of
Shares or
Units of
Stock That
Have Not
Vested (2)
 
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested (3)
  
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
 Rights That
Have Not
Vested(4)
 
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (3)
  
Number of
Securities
Underlying
Unexercised
Options
  
Number of
Securities
Underlying
 Unexercised
Options
Unexcercisable
 
Option
Grant
Date (1)
 
Option
Exercise
Price
 
Option
Expiration
Date
 Grant Date 
Number of
Shares or
Units of Stock
That Have Not
Vested (2)
  
Market Value
of Shares or
Units of Stock
That Have Not
Vested (3)
  
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (4)
  
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (3)
 
                                                
John J. Greisch  51,996  155,991 1/8/2010  $23.92 1/8/2020  34,171  $1,025,813         207,987   0 1/8/2010 $23.92 1/8/2020              
     147,679 11/16/2010   38.81 11/16/2020         46,386  $1,392,508   110,759   36,920 11/16/2010 $38.81 11/16/2020              
                             94,581   94,581 11/29/2011 $30.63 11/29/2021 11/29/2011        34,428  $1,426,352 
Mark J. Guinan     34,242 12/13/2010  41.84 12/13/2020 30,221  $907,234  10,756  $322,895 
     25,000 12/13/2010  41.84 12/13/2020                30,095   90,288 11/13/2012 $26.94 11/13/2022 11/13/2012  36,163  $1,498,250   70,156  $2,906,563 
                             0   80,797 11/18/2013 $41.53 11/18/2023 11/18/2013  23,552  $975,744   46,420  $1,923,181 
Martha G. Aronson  2,500  7,500 8/2/2010  34.28 8/2/2020 12,577  $377,562        
     31,121 11/16/2010  38.81 11/16/2020        9,775  $293,446                12/12/2013  50,762  $2,103,083 ��       
                                                           
Michael S. Macek  2,250   0 5/27/2008 $31.35 5/27/2018                  
  2,154   718 11/16/2010 $38.81 11/16/2020                  
  1,534   3,068 11/29/2011 $30.63 11/29/2021 11/29/2011          1,117  $46,277 
  0   3,086 11/13/2012 $26.94 11/13/2022 11/13/2012  1,236  $51,212   2,397  $99,308 
  0   3,468 11/18/2013 $41.53 11/18/2023 11/18/2013  3,455  $143,146   1,993  $82,570 
                                
James K. Saccaro (5)                                
                                
Alejandro Infante Saracho  3,434  10,303 5/6/2010  31.69 5/6/2020 5,622  $168,772          13,737   0 5/6/2010 $31.69 5/6/2020                  
  22,802   7,601 11/16/2010 $38.81 11/16/2020                  
  15,802   15,803 11/29/2011 $30.63 11/29/2021 11/29/2011          5,753  $238,347 
  5,578   16,735 11/13/2012 $26.94 11/13/2022 11/13/2012  6,703  $277,713   13,004  $538,756 
     30,403 11/16/2010  38.81 11/16/2020        9,550  $286,691   0   15,123 11/18/2013 $41.53 11/18/2023 11/18/2013  9,296  $385,127   8,689  $359,985 
                                                           
Susan R. Lichtenstein  4,906  14,719 5/6/2010  31.69 5/6/2020 8,030  $241,061          19,625   0 5/6/2010 $31.69 5/6/2020                  
     30,388 11/16/2010  38.81 11/16/2020        9,545  $286,541   22,791   7,597 11/16/2010 $38.81 11/16/2020                  
                             21,454   21,455 11/29/2011 $30.63 11/29/2021 11/29/2011          7,810  $323,568 
Gregory N. Miller (5)                           
  6,196   18,590 11/13/2012 $26.94 11/13/2022 11/13/2012  7,447  $308,508   14,445  $598,456 
  0   17,467 11/18/2013 $41.53 11/18/2023 11/18/2013  7,535  $312,188   10,036  $415,791 
                                
Alton E. Shader  2,991   997 7/11/2011 $45.91 7/11/2021                  
  10,169   10,169 11/29/2011 $30.63 11/29/2021 11/29/2011          3,702  $153,374 
  5,684   17,055 11/13/2012 $26.94 11/13/2022 11/13/2012  6,831  $283,009   13,252  $549,030 
  0   16,953 11/18/2013 $41.53 11/18/2023 11/18/2013  14,715  $609,661   9,740  $403,528 
 
 1)Unvested stock options based solely on continued employment will become exercisable in accordance with the following vesting schedules.
Grant Date         
Remaining Vesting Schedule (as of 9/30/2011)
12/13/2010With respect to the grant of options for 34,342 shares, four equal annual installments beginning on 12/13/2011.
12/13/2010With respect to the grantfirst anniversary of options for 25,000 shares, 8,500 vest on 12/13/2011, 8,250 vest each on 12/13/2012 and 12/13/2013.
     11/16/2010Four equal annual installments beginning on 11/16/2011.
8/2/2010Four equal annual installments beginning on 8/2/2011.
5/6/2010Four equal annual installments beginning on 5/6/2011.
1/8/2010Four equal annual installments beginning on 1/8/2011.the date of grant.

 2)Unvested RSUs based solely on continued employment will vest in accordance with the following vesting schedules.  The amounts include reinvested dividends.

Grant Date
 
Remaining Vesting Schedules (as of 9/30/2011)
2014)
12/13/201012/2013 Vests in three equal annual installments beginning25,381 shares fully vest on 12/14/2011.13/2018
8/2/201012/12/201325,381 shares fully vest on 12/13/2016
11/18/2013 Fully vest on 8/3/2013.11/19/2016
5/6/201011/13/2012 Fully vest on 5/7/2013.
1/8/201020% on 1/9/2012, 30% on 1/9/2013 and 50% on 1/9/2014.11/14/2015

38

 3)Market value is determined by multiplying the number of unvested RSUs and/or PSUs by $30.02,$41.43, the closing price per share of our common stock on September 30, 2011.2014.
 
  4)Represents PSUs granted on November 16, 2010.29, 2011, November 13, 2012, and November 18, 2013.  The performance and service periods for the PSU’s granted on November 29, 2011 ended at the close of business on September 30, 2014 and the awards vested in October 2014 at a level of 57% of target.  The one-year adjusted free cash flow performance period for the PSU’s granted on November 18, 2013 ended at the close of business on September 30, 2014 at 96.5 percent of target achievement, which will be further modified by TSR achievement over the three-year vesting period.

 5)As a result of Mr. Miller’sSaccaro’s resignation, effective December 31, 2010,July 1, 2014, no equity awards were outstanding as of September 30, 2011.2014.
  
 
2839

 
  
Option Exercises and Stock Vested For Fiscal Year Ended September 30, 20112014
 
The following table summarizes the number of stock option awards exercised and the value realized upon exercise during the fiscal year ended September 30, 20112014 for the Named Executive Officers, as well as the number of stock awards vested and the value realized upon vesting.
 
Option AwardsStock AwardsOption AwardsStock Awards
Name
Number of
Shares
Acquired on
Exercise
Value Realized
on Exercise
Number of
Shares
Acquired on
Vesting (1)
Value Realized
on Vesting
Number of
Shares Acquired
on Exercise
Value Realized
on Exercise
Number of Shares Acquired
on Vesting (1)
Value Realized on
Vesting
     
John J. Greisch----64,073$2,438,636
      
Mark J. Guinan---
Michael S. Macek1,802$22,3243,336$126,300
      
Martha G. Aronson---
James K. Saccaro--
       
Alejandro Infante Saracho----9,550$344,469
      
Susan R. Lichtenstein----9,545$344,288
      
Gregory N. Miller152,686$1,949,62723,750$982,324
   
Alton E. Shader-8,582$344,810
1)The pre-tax amounts indicated include a portion of dividends accrued and paid on the date the stock awards vested.

Pension Benefits at September 30, 2011
The following table quantifies the pension benefits expected to be paid from the Hill-Rom, Inc. Pension Plan (the “Pension Plan”).
Name
Plan Name
(1)
Number of
Years
Credited
Service
Present Value of
Accumulated Benefit (2)
Payments During Last
Fiscal Year
     
John J. Greisch----
     
Mark J. Guinan----
     
Martha G. Aronson----
     
Alejandro Infante Saracho----
     
Susan R. Lichtenstein----
     
Gregory N. MillerMaster Pension Plan2$31,160-
1)The Pension Plan covers officers and other employees.  Employer contributions to the Pension Plan are made on an actuarial basis, and no specific contributions are determined or set aside for any individual.  Effective June 30, 2003, the Pension Plan was closed to new participants, and existing participants were given the choice of remaining in the Pension Plan or freezing their accumulated benefit as of January 1, 2004 and to participate in our 401(k) Savings Plan. Mr. Miller has two years of credited service in the Pension Plan, in which his accumulated benefit was frozen as of January 1, 2004.

2)This column represents the total discounted value of the monthly single life annuity benefit earned as of September 30, 2011 assuming the executive leaves Hill-Rom at this date and retires at age 65.  The present value is not the monthly or annual lifetime benefit that would be paid to the executive.  The present values are based on a 4.60% discount rate at September 30, 2011, assume no pre-retirement mortality and utilize the 2012 Static Annuitant Mortality Table.
  
 
2940

 
Nonqualified Deferred Compensation for Fiscal Year Ending September 30, 20112014

NamePlan (2)
Executive
Contributions in
Last FY
Registrant
Contributions in
Last FY
Aggregate
Earnings in Last
FY (3)
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at Last
FYE (4)
       
John J. GreischSERP-$173,888$66,126None$921,118
       
Michael S. MacekSERP---None-
       
James K. Saccaro (1)SERP-$19,076$117None$10,967
       
Alejandro Infante SarachoSERP-$27,706$9,793None$127,609
       
Susan R. LichtensteinSERP-$32,443$10,281None$147,433
       
Alton E. ShaderSERP-$25,694$6,359None$82,265
    
NamePlan (1)
Executive
Contributions
in Last FY
Registrant
Contributions
in Last FY
Aggregate
Earnings in
Last FY (2)
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at
Last FYE (3)
John J. GreischSERP$-$157,852$(17,692)None$244,981
       
Mark J. GuinanSERP$-$28,482$(1,992)None$26,490
       
Martha G. AronsonSERP$-$31,166$(2,493)None$28,673
       
Alejandro InfanteSERP$-$30,028$(1,907)None$28,121
       
Susan R. LichtensteinSERP$-$24,992$(1,882)None$23,110
       
Gregory N. MillerSERP$-$6,913$4,073$(170,969) 

 1)Prior to Mr. Saccaro’s resignation, $10,967 of the Company contributions vested.
2)We maintain a 401(k) Savings Plan portion of the SERP to provide additional retirement benefits to certain employees whose retirement benefits under the 401(k) Savings Plan are limited under the Internal Revenue Code of 1986.  The additional retirement benefits provided by the SERP are for certain participants chosen by the Compensation Committee, and they may annually receive an additional benefit of a certain percentage of their Compensation for such year.  “Compensation” under the SERP means the corresponding definition of compensation under the 401(k) Savings Plan plus a percentage of a participant's eligible compensation as determined under our STIC Program.  A lump sum cash payment is available to the participant beginning on the six-month anniversary of the date of the Named Executive Officer’s termination of employment (except for termination for cause, where the entire SERP is forfeited).  In the alternative a participant may defer receipt by electing a stream of equal annual payments for up to 20 years.

 2)3)Amounts represent interestEarnings on the deferred compensationRegistrant’s SERP balances paid throughfor the first three quarters of fiscal year 2011 offset by gains/(losses) in the investment accounts during the fourth quarter when the investment approach was amended.  During the first three quarters of fiscal year 2011 interest earned was based on the monthly prime rate in effect.  We did not pay above-market interest or preferential earnings during fiscal year 2011 as our monthly deferred compensation interest rate did not exceed 120% of the applicable federal long-term month rate as published by the IRS.  Therefore, for fiscal year 2011, there is no above-market interest or preferential earnings reported as compensation to the Named Executive Officers in the Summary Compensation Table.  During the fourth quarter theyear. The Plan’s investment approach was amended to provideprovides for investments mirroring the employee’s investment allocation in theirunder the 401(k).

 3)4)Of the amounts shown in this column related to the SERP theThe following amountsamount represent Company contributions and above-market interest previously reported in the Summary Compensation Table inof this Proxy Statement and previous Proxy Statements:Statements.

 Plan (1)
Aggregate AmountContributions Reported in the
Summary Compensation Table of Previous
Proxy Statements
John J. GreischSERP$601,661
   
John J. GreischJames K. SaccaroSERP$103,583
Mark J. GuinanSERP$-
Martha G. AronsonSERP$-19,076
   
Alejandro Infante SarachoSERP$-79,036
   
Susan R. LichtensteinSERP$-93,535
   
Gregory N. MillerAlton E. ShaderSERP$133,55925,694
        
 
3041

 
     
Potential Payments Upon Termination or Change in Control

Benefits Payable Upon Termination Under Employment Agreements

Based upon a hypothetical termination date of September 30, 2011,2014, the benefits would be as follows (except in certain situations, identified below, where a Separation Agreement has been executed between the Company and the executive):follows:

John J. Greisch
                               
   Accelerated Accelerated Continuance of Limited       Accelerated  Accelerated  Continuance of  Limited    
 Salary & Other Vesting of Vesting of Health & Outplacement    Salary & Other  Vesting of  Vesting of  Health &  Outplacement    
Event Cash Payments Stock Options (2) Stock Awards (3) Welfare Benefits (4) Assistance Total  Cash Payments  Stock Options (2)  Stock Awards (3)  Welfare Benefits (4)  Assistance  Total 
                               
Permanent Disability (1)  $1,847,009 $951,545 $2,418,296 $15,579   $5,232,429  $1,507,979  $2,426,478  $10,833,172  $16,211     $14,783,840 
                                     
Death  $534,615 $951,545 $2,418,296 $12,999   $3,917,455  $537,115  $2,426,478  $10,833,172  $13,631     $13,810,396 
                                     
Termination Without Cause  $1,834,615     $15,579 $10,000 $1,860,194  $1,967,115          $16,211  $10,000  $1,993,326 
                                      
Resignation With Good Reason  $1,834,615     $15,579 $10,000 $1,860,194  $1,967,115          $16,211  $10,000  $1,993,326 
                                      
Termination for Cause  $34,615         $34,615  $37,115                  $37,115 
                                      
Resignation Without Good Reason  $34,615         $34,615  $37,115                  $37,115 
                                      
Retirement (5)  $34,615         $34,615 
Retirement $37,115                  $37,115 
                                      
                                     
Mark J. Guinan             
Michael S. Macek                        
      Accelerated Accelerated      Continuance of Limited        Accelerated  Accelerated  Continuance of  Limited     
 Salary & Other Vesting of Vesting of Health & Outplacement    Salary & Other  Vesting of  Vesting of  Health &  Outplacement     
Event Cash Payments Stock Options (2) Stock Awards (3) Welfare Benefits (4) Assistance Total  Cash Payments  Stock Options (2)  Stock Awards (3)  Welfare Benefits (4)  Assistance  Total 
                                     
Permanent Disability (1) $2,362,466 $0 $1,230,125 $13,899   $3,606,490  $2,298,735  $79,732  $422,512  $4,396      $2,805,375 
                                     
Death $534,615 $0 $1,230,125 $12,999   $1,777,739  $504,135  $79,732  $422,512  $0      $1,006,379 
                                     
Termination Without Cause $484,615     $13,899 $10,000 $508,514  $136,635          $4,396  $10,000  $151,031 
                                     
Resignation With Good Reason $484,615     $13,899 $10,000 $508,514  $136,635          $4,396  $10,000  $151,031 
                                     
Termination for Cause $34,615         $34,615  $14,135                  $14,135 
                                     
Resignation Without Good Reason $34,615         $34,615  $14,135                  $14,135 
                                     
Retirement (5) $34,615         $34,615 
Retirement $14,135                  $14,135 
                                     
                                     
Martha G. Aronson             
James K. Saccaro (5)                        
                        
                        
Alejandro Infante Saracho                        
   Accelerated Accelerated Continuance of Limited        Accelerated  Accelerated  Continuance of  Limited     
 Salary & Other Vesting of Vesting of Health & Outplacement    Salary & Other  Vesting of  Vesting of  Health &  Outplacement     
Event Cash Payments Stock Options (2) Stock Awards (3) Welfare Benefits (4) Assistance Total  Cash Payments  Stock Options (2)  Stock Awards (3)  Welfare Benefits (4)  Assistance  Total 
                                     
Permanent Disability (1) $2,766,686 $0 $671,005 $13,599   $3,451,290  $1,969,755  $433,077  $1,799,928  $14,155      $4,216,915 
                                     
Death $533,346 $0 $671,005 $12,999   $1,217,350  $523,769  $433,077  $1,799,928  $12,775      $2,769,549 
                                     
Termination Without Cause $466,846     $13,599 $10,000 $490,445  $435,769          $14,155  $10,000  $459,924 
                                     
Resignation With Good Reason $466,846     $13,599 $10,000 $490,445  $435,769          $14,155  $10,000  $459,924 
                                     
Termination for Cause $33,346         $33,346  $23,769                  $23,769 
                                     
Resignation Without Good Reason $33,346         $33,346  $23,769                  $23,769 
                                     
Retirement (5) $33,346         $33,346 
Retirement $23,769                  $23,769 
                        
                        
  
 
3142

 
   
Alejandro Infante Saracho             
   Accelerated Accelerated Continuance Limited   
 Salary & Other Vesting of Vesting of Health & Outplacement   
Event Cash Payments Stock Options (2) Stock Awards (3) Welfare Benefits (4) Assistance Total 
             
Permanent Disability (1) $2,225,829 $- $455,451 $14,379   $2,695,659 
             
Death $522,212 $- $455,451 $12,999   $990,662 
             
Termination Without Cause $407,212     $14,379 $10,000 $431,591 
             
Resignation With Good Reason $407,212     $14,379 $10,000 $431,591 
             
Termination for Cause  $22,212         $22,212 
             
Resignation Without Good Reason  $22,212         $22,212 
              
Retirement (5)  $22,212         $22,212 
              
             
Susan R. Lichtenstein                                     
   Accelerated Accelerated Continuance Limited        Accelerated  Accelerated  Continuance of  Limited     
 Salary & Other Vesting of Vesting of Health & Outplacement    Salary & Other  Vesting of  Vesting of  Health &  Outplacement     
Event Cash Payments Stock Options (2) Stock Awards (3) Welfare Benefits (4) Assistance Total  Cash Payments  Stock Options (2)  Stock Awards (3)  Welfare Benefits (4)  Assistance  Total 
                                     
Permanent Disability (1) $1,812,173 $- $527,595 $14,379   $2,354,147  $1,488,429  $520,987  $1,958,512  $15,373      $3,983,301 
                                     
Death $524,421 $- $527,595 $12,999   $1,065,015  $526,170  $520,987  $1,958,512  $12,793      $3,018,462 
                                     
Termination Without Cause  $447,721     $14,379 $10,000 $472,100  $479,784          $15,373  $10,000  $505,157 
                                      
Resignation With Good Reason  $447,721     $14,379 $10,000 $472,100  $479,784          $15,373  $10,000  $505,157 
                                      
Termination for Cause  $24,421         $24,421  $26,170                  $26,170 
                                      
Resignation Without Good Reason  $24,421         $24,421  $26,170                  $26,170 
                                      
Retirement (5)  $24,421         $24,421 
Retirement $26,170                  $26,170 
                        
                        
Alton E. Shader                        
     Accelerated  Accelerated  Continuance of  Limited     
 Salary & Other  Vesting of  Vesting of  Health &  Outplacement     
Event Cash Payments  Stock Options (2)  Stock Awards (3)  Welfare Benefits (4)  Assistance  Total 
                        
Permanent Disability (1) $2,948,503  $356,952  $1,998,603  $13,375      $5,317,433 
                        
Death $516,163  $356,952  $1,998,603  $12,775      $2,884,493 
                        
Termination Without Cause $436,403          $13,375  $10,000  $459,778 
                        
Resignation With Good Reason $436,403          $13,375  $10,000  $459,778 
                        
Termination for Cause $16,163                  $16,163 
                        
Resignation Without Good Reason $16,163                  $16,163 
                        
Retirement $16,163                  $16,163 

(1)1)Benefits provided under our disability plans are based on various circumstances including the Named Executive Officer meeting certain eligibility requirements. Our disability plans are fully insured; therefore, claim payments are reviewed and processed by our third party insurance carrier.  The following assumptions were used to determine the salary and other cash payment amount for permanent disability: normal retirement age is based on the Social Security Normal Retirement Age Table, short-term disability benefits are based on salary continuation for 26 weeks; long-term disability benefits are based on the lesser of 60% of the Named Executive Officer's monthly earnings or $15,000 per month; and a 4.6%4.5% discount rate.

(2)2)The amounts indicated represent the intrinsic value of all unvested non-qualified stock options that would have become immediately vested and exercisable upon permanent disability or death.  Performance-based stock options were not included in the amount.  The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011.2014.

(3)3)The amounts indicated represent the market value of all unvested RSUs and PSUs that would have vested immediately and been distributed upon permanent disability or death.  The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011.2014.

(4)4)Amounts represent the dollar value of the incremental cost to Hill-Rom by providing continuing health and life insurance coverage based on the individual’s selected coverage in effect immediately before the hypothetical termination.

5)(5)BasedMr. Saccaro resigned on length of service, employeeJuly 1, 2014 and was not eligible for retirement benefits.payments upon termination as of September 30, 2014.

 
3243

 
   
Benefits Payable Under Change in Control Agreements

Based upon a hypothetical Change in Control date of September 30, 2011,2014, the Change in Control benefitsBenefits with a termination of employment would be as follows:

                       
Acceleration of Stock
Based Awards
    
 Name   Salary  
Incentive
Comp
  
Continuation
 of Health and
Welfare
Benefits
  
Vacation
Benefits
  
Retirement
Savings Plan
Benefits
  
Limited
Outplacement
Assistance
  
Continuation of
Term Life
Insurance
Coverage
  
Stock
Options (1)
  RSUs (2)  Total 
John J. Greisch                              
With termination $2,700,000  $1,197,986  $38,997  $34,615  $244,981  $10,000  $7,740  $1,268,721  $1,025,789  $6,528,829 
Without
termination
  -   -   -   -   -   -   -  $951,545  $1,025,789  $1,977,334 
                                         
Mark J. Guinan                                        
With termination $900,000  $364,500  $25,998  $34,615  $26,490  $10,000  $1,800   -   -  $1,363,403 
Without
termination
  -   -   -   -   -   -   -   -   -   - 
                                         
Martha G.
Aronson
                                        
With termination $867,000  $350,267  $25,998  $33,346  $28,673  $10,000  $1,200   -  $377,559  $1,694,043 
Without
termination
  -   -   -   -   -   -   -   -  $377,559  $377,559 
                                         
Susan R.
Lichtenstein
                                        
With termination $846,600  $342,026  $25,998  $24,421  $23,110  $10,000  $2,760   -  $241,055  $1,515,970 
Without
termination
  -   -   -   -   -   -   -   -  $241,055  $241,055 
                                         
Alejandro Infante
Saracho
                                        
With termination $770,000  $314,198  $25,998  $22,212  $28,121  $10,000  $2,760   -  $168,760  $1,342,049 
Without
termination
  -   -   -   -   -   -   -   -  $168,760  $168,760 
                                         
Gregory N. Miller (3)
                                        
                                         
                       Acceleration of Stock Based Awards    
Name Salary  
Incentive
Comp.
  
Continuation
Of Health and
Welfare
Benefits
  
Vacation
 Benefits
  
Retirement
Savings Plan
Benefits
  
Limited
Outplacement
Assistance
  
Continuation
 of Term Life
Insurance
 Coverage
  
Stock
Options (1)
  RSUs (2)  
Performance
Based
Awards (3)
  Total 
                                  
John J. Greisch                                 
With termination $1,451,335  $482,916  $10,381  $37,115  $1,182,641  $5,013  $3,929  $2,399,339  $4,505,577  $3,129,627  $13,207,873 
Without termination                             $2,426,478  $4,577,076  $0  $7,003,554 
                                             
Michael S. Macek (4)                                            
With termination $122,500  $0  $1,904  $14,135  $0  $0  $588  $79,732  $194,357  $228,155  $641,371 
Without termination                             $79,732  $194,357  $0  $274,089 
                                             
James Saccaro (5)                                            
                                             
Alejandro Infante Saracho                                            
With termination $602,325  $210,814  $18,735  $23,769  $127,608  $7,310  $2,024  $423,333  $637,651  $830,527  $2,884,096 
Without termination                             $433,077  $662,840  $0  $1,095,917 
                                             
Susan R. Lichtenstein                                            
With termination $716,779  $215,033  $20,261  $26,170  $147,434  $7,901  $4,086  $515,965  $611,214  $1,056,372  $3,321,215 
Without termination                             $520,987  $620,696  $0  $1,141,683 
                                             
Alton Shader                                            
With termination $489,827  $171,440  $14,981  $16,163  $82,265  $5,828  $704  $339,678  $810,658  $643,539  $2,575,083 
Without termination                             $356,952  $892,670  $0  $1,249,622 
  
(
1)The amounts indicated represent the intrinsic value of all unvested non-qualified stock options that would have become immediately vested and exercisable upon a change in control.  The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011,2014, adjusted, as applicable, for Section 280G limitations, and assume that the options granted were cashed out on the hypothetical change in control.
 
(2)2)The amounts indicated represent the intrinsic value of all unvested RSUs that would have become immediately vested and exercisable upon a change in control.  Performance-based awards were included in the amount only to the extent performance conditions were completely met as of September 30, 2011.  The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011.  RSUs granted to Mr. Guinan would not accelerate on a hypothetical change in control on September 30, 2011 since he would have not held his RSUs2014 and adjusted, as applicable, for the minimum required one year at such date.Section 280G limitations
 
(3)Not serving3)The amounts indicated represent the intrinsic value of all unvested PSUs that would become immediately vested and exercisable upon a change in control.  The amounts were calculated based on the closing stock price of $41.43 on September 30, 2014 and adjusted, as a Named Executive Officer atapplicable, for Section 280G limitations.  The PSU grant agreements require the endNEOs to continue employment through the day after the first anniversary date of the last fiscal year.  SeePSU awards before such awards can become immediately vested under the Benefits Payable Upon Termination Under Employment Agreements table for actual separation payments.NEOs’ change in control agreements.
 
4)Mr. Macek does not have a change in control agreement with the Company.  The benefits available to Mr. Macek following a change of control are subject to terms of his employment and stock award agreements.
5)Mr. Saccaro resigned from the Company on July 1, 2014 and was not entitled to any payments under a change in control agreement as of September 30, 2014.

 
3344

 
 
The Compensation and Management Development Committee of the Board of Directors of Hill-Rom Holdings, Inc. has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2011.
Submitted by the Compensation and Management Development Committee
Ronald A. Malone (Chair)
Joanne C. Smith, M.D. (Vice Chair)
Rolf A. Classon
34

DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
  
In setting non-employee director compensation, the Board of Directors considers the significant amount of time that directors expend in fulfilling their duties to Hill-Rom as well as the skill-levelskill level required for members of the Board. Our director pay package is designed to attract and retain highly-qualified, independent professionals to monitor the effectiveness of policy and decision-making both at the Board and management level, with a view to enhancing shareholder value over the long term. Our Nominating/Corporate Governance Committee generally reviews our non-employee director compensation program or elements thereof, on an annual basis, with the assistance of the compensation consulting firm used by the Compensation Committee. Directors who are also employees of Hill-Rom receive no additional remuneration for services as a director.
 
OurNon-Employee Director Compensation for Fiscal 2014 and Fiscal 2015

For the first two quarters of fiscal year 2014 our non-employee directors (other than the Chair of the Board) receive an annualreceived a quarterly cash retainer of $50,000;$12,500; the Chair of the Board’s quarterly retainer was $25,000.  Committee members, other than the Chair of the Board, of Directors’ annual retainer is $125,000.  Committee members receivereceived a fee in the amount of $1,500 for each committee meeting attended, in person or by telephone, and thetelephone.  Chairs of the Audit, Compensation and Nominating/Corporate Governance Committees receivereceived an additional $12,500, $8,000,$3,125, $2,500 and $7,000 annual$2,500 quarterly retainer, respectively. For the remainder of the fiscal year ended September 30, 2014, our non-employee directors (other than the Chair of the Board) received a quarterly cash retainer of $13,750; the Chair of the Board’s quarterly retainer was $27,500.  Committee members of the Audit, Compensation and Nominating/Corporate Governance Committees received a quarterly retainer in the amount of $3,125, $1,875 and $1,250, respectively.  Chairs of the Audit, Compensation and Nominating/Corporate Governance Committees received a quarterly retainer in the amount of $6,250, $5,000 and $3,750, respectively.   Committee members received a fee in the amount of $1,500 for each other committee meeting attended, in person or by telephone.  In addition, each non-employee director is, on the first trading day following the close of each annual meeting of the Company’s shareholders, awarded vested deferred RSUs valued at $120,000$150,000 ($200,000190,000 in the case of the Chair of the Board).  A new director may receive a pro-rata portion of the annual award representing the time served during the fiscal year of joining the Board of Directors.      Delivery of shares of common stock underlying these RSUs occurs on the later of one year and one day from the date of the grant or the six month anniversary of the date that the applicable director ceases to be a member of the Board of Directors.  This compensation plan will remain in placeIn fiscal year 2014 the annual grant consisted of 4,980 vested deferred RSUs for the Chair of the Board and 3,931 for each other non-employee director.  A new director may receive a pro-rata portion of the annual award representing time served during the fiscal year of joining the Board of Directors.  Director Compensation for fiscal year 2012.2015 is unchanged from the second half of fiscal 2014.

 
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Director Compensation Table For Fiscal Year Ending September 30, 20112014

 
              Change in Pension       
              Value and Nonqualified       
           Non-Equity  Deferred       
  Fees Earned or        Incentive Plan  Compensation  All Other    
 Name Paid in Cash  Stock Awards  Option Awards  Compensation  Earnings  Compensation  Total 
   (1)   (2)  (3)     (4)  (5)    
                           
Rolf A. Classon  $137,000   $200,039   -   -   -   $216  $337,255 
                             
James R. Giertz  $63,500   $120,008   -   -   -   $216  $183,724 
                             
Charles E. Golden  $82,000   $120,008   -   -   -   $216  $202,224 
                             
W August Hillenbrand  $50,000   $120,008   -   -   -   $140  $170,148 
                             
Ronald A. Malone  $64,000   $120,008   -   -   -   $216  $184,224 
                             
Eduardo R. Menascé  $65,000   $120,008   -   -   -   $216  $185,224 
                             
Katherine S. Napier  $63,500   $120,008   -   -   -   $216  $183,724 
                             
Joanne C. Smith, M.D.  $69,000   $120,008   -   -   -   $216  $189,224 
                             
Name
Fees Earned or
Paid in Cash (1)
Stock Awards (2)Option Awards
All Other
Compensation (3)
Total
Rolf A. Classon$123,250$190,037 -$216$313,503
      
William G. Dempsey (4)$43,750$150,007 $126$193,883
      
James R. Giertz$64,750$150,007 -$216$214,973
      
Charles E. Golden$94,750$150,007 -$216$244,973
      
W August Hillenbrand (4)$12,500 - -$59$12,559
      
William H. Kucheman$76,750$150,007 $162$226,919
      
Ronald A. Malone$92,500$150,007 -$216$242,723
      
Eduardo R. Menascé$64,750$150,007 -$216$214,973
      
Joanne C. Smith, M.D.$79,250$150,007 -$216$229,473
    

 1)The amounts in this column include theapplicable annual retainerretainers and the amounts earned by each non-employee director for attending Board and/or committee meetings in person and/or by teleconference that were not held in conjunction with a meeting of our full Board. For the Chair of each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, the additional annual retainer is also included.as applicable.  For Mr. Golden and Mr. Hillenbrand, amounts include $30,000 and $50,000,$12,500, respectively, of cash fees deferred into our common stock.

 2)
The amounts indicated represent the grant date fair value of RSUs granted to our non-employee directors during fiscal 2011.year 2014.  The determination of this value was based on the methodology set forth in Notes 1 and 87 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014.
 
As of September 30, 2011,2014, our non-employee directors owned aggregate stock awards in the following amounts (in shares): Rolf A. Classon 46,209,65,707, William Dempsey 3,976, James R. Giertz 6,523,18,790, Charles E. Golden 27,695, W August Hillenbrand 19,568,45,149, William Kucheman 8,236, Ronald A. Malone 14,469,27,111, Eduardo R. Menascé 17,946, Katherine S. Napier 7,377,Menascé 30,751, and Joanne C. Smith, M.D. 27,695.
42,960.
 
  3)As of September 30, 2011, certain of our non-employee directors had options to purchase our common stock which were granted in prior years as follows:  Rolf A. Classon, 14,800, Charles E. Golden, 7,400, and W August Hillenbrand, 8,000.

4)During fiscal 2011, we did not pay above-market interest on nonqualified deferred compensation to our non-employee directors as our monthly deferred compensation interest rate did not exceed 120% of the applicable federal long-term month rate as published by the IRS in its revenue rulings.

5)Amounts in this column represent the dollar value of the voluntary director life and accidental death and dismemberment insurance premiums paid by us during fiscal 2011year 2014 on behalf of each director.
4)Mr. Hillenbrand left the Board in January 2014, and Mr. Dempsey was elected in March 2014.

 
3646

 
 
EQUITY COMPENSATION PLAN INFORMATION
EQUITY COMPENSATION PLAN INFORMATION
 
The following table sets forth information concerning Hill-Rom's equity compensation plans as of September 30, 2011:2014:
  
Number of securities to
 be issued upon exercise
 of outstanding options,
 warrants and rights
Weighted-average exercise
price of outstanding
options, warrants and
rights (1)
Number of securities
remaining available for
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted-average exercise
price of outstanding
options, warrants and
rights (1)
Number of securities
remaining available for
issuance under equity compensation plans
(excluding securities
reflected in column (a))
Plan Category (a)  (b)  (c) (a)(b)(c)
      
Equity compensation plans
approved by security holders
 
3,059,041
$27.546,889,2663,265,046$31.90
5,488,583 (4)
      
Equity compensation plans not
approved by security holders(2)(3)
10,422      --8,275$0.00-
  
Total3,069,463$27.54
6,889,266 (4)
3,273,303$31.90
    5,488,583 (4)
 
(1)1) RSUs and PSUs are excluded when determining the weighted-average exercise price of outstanding stock options.
 
(2)2) 
Under the Hill-Rom Holdings Stock Award Program, which has not been approved by security holders, shares of common stock have been granted to certain key employees.  All shares granted under this program are contingent upon continued employment over specified terms.  Dividends, payable in stock equivalents accrue on the grants and are subject to the same specified terms as the original grants.  Under this program, a total of 6,0974,250 deferred shares will be issuable at a future date.
 
(3)3) Members of the Board of Directors may elect to defer fees earned and invest them in Hill-Rom common stock under the Hill-Rom Holdings Directors' Deferred Compensation Plan, which has not been approved by security holders.  Under this program, a total of 4,3254,007 deferred shares will be issuable at a future date.
 
(4)
4) 
Amount consists of 6,156,4735,013,166 shares available for issuance under our Stock Incentive Plan and 732,793 475,417 shares available for purchase under our Employee Stock Purchase Plan.
  
 
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Under Section 16(a) of the Securities Exchange Act of 1934, our directors, our executive officers and any person holding more than ten percent of our common stock are required to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock.  We are required to report in this proxy statement any failure to file or late filing occurring during the fiscal year ended September 30, 2011.2014.  Based solely on a review of filings furnished to us and other information from reporting persons, we believe that all of these filing requirements were satisfied by our directors, executive officers and ten percent beneficial owners, with the exception of two late Form 4 filings related to 445 shares of deferred stock granted to Mr. Golden and Mr. Hillenbrand in July 2011, in lieu of cash director’s fees.

owners.
 
48
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HILL-ROM HOLDINGS, INC.
1069 STATE ROUTE  46 EAST
BATESVILLE, IN  47006
 
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
 
 
 
 
 
 
 

 
 
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
  KEEP THIS PORTION FOR YOUR RECORDS
  DETACH AND RETURN THIS PORTION ONLY
THIS  PROXY  CARD  IS  VALID  ONLY  WHEN  SIGNED  AND  DATED.

  ForWithholdFor All To withhold authority to vote for any    
   AllAllExcept individual nominee(s), mark “For All    
 
The Board of Directors recommends that you vote
FOR the following:
     Except” and write the number(s) of the
nominee(s) on the line below.
    
    o o o      
 1.        Election of Directors                    
       Nominees:Nominees          
            
 
01       Rolf A. Classon                                         02    William G. Dempsey                               03      James R. Giertz                                          0304        Charles E. Golden                                               04      W August Hillenbrand                                   05      Katherine S. NapierJohn J. Greisch
 
 06       Joanne C. Smith, M.D.William H. Kucheman                               07    Ronald A. Malone                                   08      Eduardo R. Menascé09        Stacy Enxing Seng 
             
 The Board of Directors recommends you vote FOR proposals 2 and 3. ForAgainstAbstain 
        
 
2         To approve, by non-binding advisory vote, executive compensation.
ooo 
       
 
3         Ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for fiscal 2012.2015.
o
o
o
 
       
 
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
    
             
             
             
             
             
             
             
 Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.    
             
 
 
 
           
 Signature [PLEASE SIGN WITHIN BOX]Date    Signature (Joint Owners)Date   
 
 
 

 
 





 


 

 
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy StatementCombined Document is/
are available at  
www.proxyvote.com .
    
 

 
PROXY
 
   
 This proxy is solicited by the Board of Directors 
   
   
 
The undersigned hereby appoints Rolf A. Classon and Joanne C. Smith, M.D.,John Greisch, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Hill-Rom Holdings, Inc. Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of Hill-Rom Holdings, Inc. to be held on March 6, 20124, 2015 or any adjournment thereof, with all powers which the undersigned would possess if present at the Meeting.
 
   
 
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO SUCH DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL 2, AND FOR PROPOSAL 3, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
 
 
 
 
 
 
 
 
 
 
 Continued and to be signed on reverse side