HNI DEF 14A Report ended May 5, 2020

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1.	To elect Miguel Calado, Cheryl Francis, John Hartnett and Dhanusha Sivajee to the Board of Directors;

2.	To ratify the appointment of KPMG LLP as the Corporation's independent registered public accounting firm for the fiscal year ending January 2, 2021;

3.	To vote on an advisory resolution to approve Named Executive Officer compensation; and

4.	To transact any other business properly brought before the Annual Meeting and any adjournments or postponements thereof.

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•	the integrity of the Corporation's financial statements and the Corporation's accounting and financial reporting processes and financial statement audits;

•	the Corporation's compliance with legal and regulatory requirements;

•	the independent auditor's qualifications and independence; and

•	the performance of the Corporation's internal audit function and independent auditor.

•	compensation of the Corporation's executives;

•	overall member (i.e., employee) relations, culture and morale;

•	human resource practices designed to attract and retain qualified members at all levels;

•	human resources policy and related regulatory compliance issues;

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•	compensation and benefits practices;

•	the selection, performance, compensation, development, and succession of key executives; and

•	the evaluation of the CEO.

•	serving as the Board's nominating committee by identifying individuals qualified to serve as directors consistent with criteria approved by the Board;

•	recommending to the Board the director nominees for annual meetings of the shareholders;

•	developing and recommending to the Board corporate governance principles;

•	monitoring and evaluating corporate governance practices;

•	evaluation of the Board and the Corporation; and

•	finance policy and capital structure of the Corporation.

•	current business trends affecting the Corporation;

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•	major risks facing the Corporation;

•	steps management has taken to monitor and control the risks; and

•	adequacy of internal controls that could significantly affect the Corporation's financial statements.

•	all financial transactions, arrangements or relationships involving more than $100,000;

•	transactions in which the Corporation, or one of its affiliates, is a participant; and

•	transactions in which a related person could have a direct or indirect material interest.

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•	a cash installment payment of $16,750 after the February Board meeting and $17,500 after each of the May, August and November Board meetings; and

•	a $110,000 Common Stock grant after the May Board meeting.

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(1)

For 2019, the independent Directors listed in the table above each earned the following fees paid in cash: Ms. Bell - $69,250 annual retainer plus $7,500 prorated retainer for service as Chair of the Governance Committee; Mr. Calado - $69,250 annual retainer; Ms. Francis - $69,250 annual retainer plus $3,750 prorated retainer for service as Chair of the Audit Committee; Mr. Hartnett - $69,250 annual retainer; Ms. Jones - $69,250 annual retainer; Mr. Porcellato - $69,250 annual retainer plus $54,167 prorated retainer for service as Chair of the Board; Ms. Sivajee - $40,833 prorated annual retainer; Ms. Smith - $69,250 annual retainer plus $11,250 prorated retainer for service as Chair of the Audit Committee; Mr. Stern - $69,250 annual retainer plus $10,000 retainer for service as Chair of the Governance Committee; and Mr. Waters - $69,250 annual retainer plus $2,500 prorated retainer for service as Chair of the Compensation Committee. Ms. Bell and Mr. Hartnett received 100% of cash retainer in the form of Common Stock under the Equity Plan, which equated to the following: Ms. Bell - 2,093 shares and Mr. Hartnett - 1,884 shares; and Ms. Sivajee received 50% of cash retainer in the form of Common Stock under the Equity Plan, which equated to 583 shares.

(2)

Represents (a) the portion of the annual retainer paid in the form of shares – a $110,000 Common Stock grant authorized by the Board on May 7, 2019 under the Equity Plan; (b) an additional prorated retainer paid to Mr. Porcellato for services as Chairman paid in the form of shares - a $100,000 Common Stock grant authorized by the Board on May 7, 2019; and (c) the prorated portion of the annual retainer of $91,667 paid in the form of shares granted to Ms. Sivajee and authorized by the Board on August 6, 2019. In aggregate, Mr. Porcellato was issued 5,750 shares of Common Stock at a price of $36.52 (the closing price of a share of Common Stock on the date of grant, May 7, 2019) for a total grant date fair value of $209,990, as computed in accordance with FASB Accounting Standards Codification Topic 718. The difference between the $210,000 Common Stock grant authorized by the Board and the actual value of Common Stock issued was approximately $10, which was paid in cash to Mr. Porcellato. Ms. Sivajee was issued 2,863 shares of Common Stock at a price of $32.01 (the closing price of a share of Common Stock on the date of grant, August 6, 2019) for a total grant date fair value of $91,645, as computed in accordance with FASB Accounting Standards Codification Topic 718. The difference between the $91,667 Common Stock grant authorized by the Board and the actual value of Common Stock issued was approximately $22, which was paid in cash to Ms. Sivajee. Each remaining independent director serving on the Board as of May 7, 2019 was issued 3,012 shares of Common Stock at a price of $36.52 (the closing price of a share of Common Stock on the date of grant, May 7, 2019) for a total grant date fair value of $109,998, as computed in accordance with FASB Accounting Standards Codification Topic 718. The difference between the $110,000 Common Stock grant authorized by the Board and the actual value of Common Stock issued was approximately $2. As the Corporation only issues fractional shares under the Directors Deferred Plan, and not under the Equity Plan, the Corporation paid each independent Director serving on the Board as of May 7, 2019, $2 in cash. There are no unexercised option awards or unvested stock awards outstanding as of the end of 2019 for any of the Directors.

(3)

Includes above-market interest earned on cash compensation deferred under the Directors Deferred Plan. Interest on deferred cash compensation is earned at one percent over the prime rate. Above-market earnings represent the difference between the interest earned under the Directors Deferred Plan and 120% of the applicable federal long-term rate. Above-market interest earned by Mr. Porcellato is for cash compensation deferred prior to January 1, 2007, and interest earned by Mr. Waters is for cash compensation deferred prior to January 1, 2010.

(4)	Includes dividends earned on 2019 Common Stock grants and consulting payments to Mr. Askren in the amount $180,000 pursuant to the terms of a Consulting Agreement dated November 7, 2018.

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(1)	Audit Fees relate to professional services provided in connection with the audit of the Corporation's annual financial statements and internal control over financial reporting, review of quarterly financial statements and audit services provided in connection with other statutory and regulatory filings or engagements.

(2)	Audit-Related Fees relate to professional services provided that are reasonably related to the performance or review of the Corporation's financial statements.

(3)	Tax Fees relate to professional services provided in connection with tax compliance, and tax consulting and planning services.

(4)	All Other Fees relate to professional services provided other than the services reported in the categories above.

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1.	Executive Compensation Overview

2.	Executive Compensation Objectives and Governance

3.	Executive Compensation Elements

4.	Additional Compensation Programs and Policies

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(1)

The Black-Scholes option value for award purposes was $11.55 and differs from the Black-Scholes option value calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation ("FASB ASC Topic 718"), for financial statement reporting purposes ($9.88). The difference between the Black-Scholes option value for award purposes and for financial statement reporting purposes results from utilizing a ten-year option life when calculating the value of an award and a six-year expected option life when reporting the value of the award under FASB ASC Topic 718. Utilization of the ten-year option life when calculating the value of an award results in fewer options granted to executives due to the higher option value produced.

•	$42.5 million as calculated under the 2019-2021 Plan, resulting in an earned award of 83% for 2019;

•	$41.9 million as calculated under the 2018-2020 Plan, resulting in an earned award of 38% for 2019 ; and

•	$29.1 million as calculated under the 2017-2019 Plan, resulting in an earned award of 0% for 2019

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(1)

Includes: (i) shares to be issued upon the exercise of outstanding stock options granted under the Stock Plans – 3,504,352 (1,333,315 under the 2017 Stock Plan, and 2,171,217 under the 2007 Stock Plan); (ii) shares to be issued upon the vesting of outstanding RSUs under the 2017 Stock Plan – 21,612; and (iii) the target value of the 2019 Annual Incentive Plan awards for all award recipients divided by $37.37, the closing price of a share of common stock on December 27, 2019, the last trading day of Fiscal 2019 – 292,170. As of the last day of Fiscal 2019, there were no outstanding warrants or rights under the 2017 Stock Plan or the 2007 Stock Plan. Also, there were no options, warrants, rights or RSUs under the 2017 Equity Plan for Non-Employee Directors. The number of shares attributable to Annual Incentive Plan awards overstates expected common stock dilution as the Corporation did not pay out any portion of the 2019 Annual Incentive Plan awards for any recipient in the form of common stock.

(2)

Includes the nonvoting share units credited to the account of individual executive officers or Directors under either the Deferred Plan – 45,678 or the Directors Deferred Plan – 154,034. For additional information on the Deferred Plan, see "Additional Compensation Programs and Policies – Deferred Compensation Plan" on page 28. For additional information on the Directors Deferred Plan, see "Director Compensation" on page 13 of this Proxy Statement.

(3)	This column does not take into account any of the RSUs, Long-Term Performance Plan awards, Annual Incentive Plan awards or nonvoting share units discussed in Notes 1 and 2 above.

(4)

Includes shares available for issuance under the Stock Plan – 2,073,271, the 2017 Director's Equity Plan – 205,502 and the MSPP – 593,224. Of the 3,400,000 shares originally available for issuance under the Stock Plan, no more than 1,500,000 of the shares can be issued as full-value awards. At the end of 2019, 1,434,856 of the 1,500,000 shares reserved for full-value awards were available for issuance. The MSPP allows members to purchase common stock at 85% of the closing share price on each quarterly exercise date up to an annual aggregate amount of $25,000 per year and is available generally to all members.

(5)	Includes nonvoting share units available for issuance under the Deferred Plan – 226,844 and the Directors Deferred Plan – 363,113.

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•	a lump-sum severance payment equal to two times (three times for the CEO) the sum of (i) the executive's annual base salary and (ii) the average of the executive's annual incentive compensation awards for the prior two years;

•	annual salary through the date of termination and a bonus equal to the average of the executive's annual incentive compensation awards for the prior two years;

•	continuation of certain medical and dental benefits for up to 18 months and group life insurance benefits for up to two years; and

•	a lump-sum payment for the cost of health and dental coverage for an additional six months and a lump-sum payment for two years of continued participation in disability benefit plans.

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(1)

Amounts in this column include the following: (i) an amount equal to two times (three times for Mr. Lorenger) the sum of (a) the executive's annual base salary and (b) the average of the executive's annual incentive compensation awards for the prior two years; (ii) an incremental bonus payment equal to the difference of the executive's average prior two years annual incentive awards and the current year annual incentive award payable; (iii) an amount equal to the value of the cost of health and dental coverage for an additional six months from the date of termination; (iv) an amount equal to the value of the "gross-up" for any federal, state and local taxes applicable to the value of six months of health and dental coverage continuation; and (v) an amount equal to the value of 24 months of continued participation in the Corporation's accidental death and travel accident insurance plan and disability plans. The amount of cash severance payable to Mr. Berger was reduced by $88,236 so no portion of the executive's benefit constitutes an excess parachute payment subject to the excise tax.

(2)	Represents the value of the following benefits provided following termination of employment under the CIC Agreements for each Named Executive Officer: medical and dental benefits for 18 months, group life insurance benefits for 24 months, and the value of the Corporation’s required contributions to the Retirement Plan.

(3)	Represents the value of the annual incentive award earned for 2019 , which the Named Executive Officer would be entitled to receive under the Annual Incentive Plan if he remained employed by the Corporation on the last day of 2019 .

(4)

Represents the estimated 2017-2019 Plan, 2018-2020 Plan, and 2019-2021 award payable. This amount has been based on the following economic profit assumptions ("Economic Profit Assumptions"). For the 2017-2019 Plan: (i) 0% of the targeted amount for 2017; (ii) 0% of the targeted amount for 2018; and (iii) 0% of the targeted amount for 2019. Amount payable accounts for employment during the entire 36-month performance period. No amount would be payable until the first quarter of 2020. For the 2018-2020 Plan: (i) 0% of the targeted amount for 2018; (ii) 38% of the targeted amount for 2019; and (iii) 100% of the targeted amount for 2020. Amount payable accounts for employment during 24 months of the 36-month performance period. No amount would be payable until the first quarter of 2021. For the 2019-2021 Plan: (i) 83% of the targeted amount for 2019; (ii) 100% of the targeted amount for 2020; and (iii) 100% of the targeted amount for 2021. Amount payable accounts for employment during 12 months of the 36-month performance period. No amount would be payable until the first quarter of 2022. Amounts included for the Long-Term Performance Plan are estimates and are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Due to the number of factors, the actual amounts we pay or distribute under the Long-Term Performance Plan may differ materially. Factors affecting these amounts include the financial performance of the Corporation during 2019, 2020, and 2021 and the achievement of economic profit goals.

(5)	Represents the value of accelerating the vesting of stock options not otherwise vested in accordance with the Stock Plans. These options will remain exercisable until the expiration date established at the time of award.

(1)	Represents the higher of the value of the annual incentive award earned for 2019 , or paid in respect to the three full fiscal years immediately prior to the CIC effective date.

(2)	Represents the estimated 2017-2019 Plan, 2018-2020 Plan, and 2019-2021 Plan awards payable. See Economic Profit Assumptions in footnote 4 of the above table titled Value in Event of Involuntary Termination or Voluntary Termination for Good Reason Following a Change in Control.

(3)	Represents the value of accelerating the vesting of stock options not otherwise vested in accordance with the Stock Plans. These options will remain exercisable until the expiration date established at the time of award.

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(1)	Represents the proceeds of the life insurance policy maintained by the Corporation for each of the Named Executive Officer under the Life Insurance Plan. The policy amount is equal to the lesser of the insured's annual base salary or $150,000. This amount only applies to the Total Value in Event of Death.

(2)	Represents the value of the Corporation’s required contributions to the Retirement Plan.

(3)	Represents the value of the annual incentive award earned for 2019, which the Named Executive Officer would be entitled to receive under the Annual Incentive Plan if he remained employed by the Corporation on the last day of 2019.

(4)	Represents the estimated 2017-2019 Plan, 2018-2020 Plan, and 2019-2021 Plan awards payable. See Economic Profit Assumptions in footnote 4 of the table titled Value in Event of Involuntary Termination or Voluntary Termination for Good Reason Following a Change in Control on page 37 of this Proxy Statement.

(5)	Represents the value of accelerating the vesting of stock options not otherwise vested in accordance with the Stock Plans. These options will remain exercisable until two years from the date of death or disability, and in the case of retirement until the expiration date of the option.

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(1)

State Farm Insurance Companies consists of the following entities: State Farm Mutual Automobile Insurance Company; State Farm Fire and Casualty Company; State Farm Investment Management Corp.; State Farm Insurance Companies Employee Retirement Trust; State Farm Insurance Companies Savings and Thrift Plan for U.S. Employees; State Farm Life Insurance Company; State Farm Associates Funds Trust - State Farm Growth Fund; and State Farm Associates Funds Trust - State Farm Balanced Fund.

(2)	Information is based on a Schedule 13G filed January 28, 2020 with the SEC by State Farm Insurance Companies for the period ended December 31, 2019.  State Farm Insurance Companies has sole voting and investment power with respect to all 5,628,800 beneficially owned shares.

(3)

The following subsidiaries of BlackRock, Inc. hold the shares of Common Stock noted:  BlackRock Institutional Trust Company, N.A.; BlackRock Fund Advisors; BlackRock Asset Management Canada Limited; BlackRock Asset Management Schweiz AG; BlackRock Advisors, LLC; BlackRock Investment Management, LLC; BlackRock Financial Management, Inc.; BlackRock Asset Management Ireland Limited; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Limited; and BlackRock (Netherlands) B.V.

(4)	Information is based on a Schedule 13G/A filed February 4, 2020, with the SEC by BlackRock, Inc., for the period ended December 31, 2019.  Of the 5,034,687 shares beneficially owned, BlackRock Inc. has sole investment power with respect to all shares and sole voting power with respect to 4,941,561 shares.

(5)	The following subsidiaries of The Vanguard Group, Inc. hold the shares of Common Stock noted: Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd.

(6)

Information is based on a Schedule 13G/A filed February 12, 2020 with the SEC by The Vanguard Group, Inc., for the period ended December 31, 2019. Of the 4,207,614 shares beneficially owned, The Vanguard Group, Inc. has sole voting power with respect to 79,632 shares, shared voting power with respect to 6,068 shares, sole investment power with respect to 4,127,402 shares, and shared investment power with respect to 80,212 shares.

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(1)

Includes restricted shares held by executive officers over which they have voting power but not investment power, shares held directly or in joint tenancy, shares held in trust, by broker, bank or nominee or other indirect means and over which the individual or member of the group has sole voting or shared voting and/or investment power. Each individual or member of the group has sole voting and/or investment power with respect to the shares shown in the table above, except Mr. Calado's former spouse shares voting and investment power with respect to 2,700 of the 46,327 shares listed above for Mr. Calado.

(2)

Indicates the nonvoting share units credited to the account of the named individual or members of the group, as applicable, under either the Deferred Plan or the Directors Deferred Plan. For additional information on the Deferred Plan, see " Additional Compensation Programs and Policies – Deferred Compensation Plan" on page 28. For additional information on the Directors Deferred Plan, see " Director Compensation" on page 13 of this Proxy Statement.

(3)	* less than 1%.

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•	Election of each of the four nominees for director named on page 14 of this Proxy Statement under " Proposal No. 1 – Election of Directors."

•	Ratification of the Audit Committee's selection of KPMG LLP as the Corporation's independent registered public accounting firm for the fiscal year ending January 2, 2021, as described on page 17 of this Proxy Statement under " Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm."

•	Adoption of an advisory resolution approving the compensation of the Corporation's named executive officers as described on page 18 of this Proxy Statement under " Proposal No. 3 – Advisory Vote to Approve Named Executive Officer Compensation."

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•	as necessary to meet applicable legal requirements;

•	to allow for the tabulation of votes and certification of the vote; and

•	to facilitate a successful proxy solicitation.

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