As reflected in our Vision
and Guiding Principles,
Kimball is committed to the highest standards of ethical conduct
in its business dealings. Kimball believes that our Company, through
its Board of Directors, Executive Management, and Employees, reflect
these Guiding Principles in the structure of the governance of our
Company. We are aligned, engaged, and operating in an environment
of mutual trust and respect. While ethics cannot be legislated or
mandated, they are the foundation of the Corporate Governance Principles
A. General Authority
The Board is elected by the shareholders to protect their interests
through counsel and direction to the management of the Company with
a long-term view toward the Company's success and prosperity. The
Boards role is to oversee the management and governance of
the Company and to monitor performance of senior management.
The Board has delegated certain functions to committees of the Board,
and primarily delegates to the Chief Executive Officer, working
in conjunction with all the other officers and employees of the
Company, the authority and responsibility for the day-to-day management
of the business of the Company consistent with our Guiding Principles.
Major matters affecting the Company require approval of the Board
of Directors, and in some instances, approval of the shareholders.
C. Core Responsibilities
Among the Boards core fiduciary responsibilities are the
- Select individuals for Board and committee membership and
evaluate the performance of the Board, its committees, and individual
- Select, monitor, evaluate and compensate senior management;
- Assure management succession planning is adequate;
- Review and approve significant corporate actions;
- Review, approve and monitor implementation of managements
- Monitor corporate performance and evaluate results compared
to the strategic plans and other long-range goals;
- Review the Companys financial controls and reporting
systems, oversee the audit function and hire the external auditor;
- Review and approve the Companys financial statements
and financial reporting;
- Review the Companys governance policies, ethical standards
and legal compliance programs and procedures;
- Oversee the Companys management of enterprise risk; and
- Monitor relations with shareholders, employees and the communities
in which the Company operates.
A. Board Leadership Structure
The Board shall determine the leadership structure of the Board
from time to time. The Board shall choose its Chairman based upon
the Boards view of what is in the best interests of the Company
at any given point in time, based on the recommendation of the Compensation
& Governance Committee. Therefore, the Board does not have a
policy on whether the role of the Chairman and Chief Executive Officer
should be separate or combined and, if it is to be separate, whether
the Chairman should be selected from the non-employee directors
or be an employee.
When the Chairman of the Board is not an independent director, the
Board will elect a Lead Independent Director in order
to monitor and support the relationship between the Board and the
Chairman/CEO and ensure that the interests of the shareholders are
served by the Board. The independent members of the Board shall
select the Lead Independent Director. The Lead Independent Director
shall be affirmed or replaced at the Reorganization Meeting held
by the Board following the Annual Shareholder Meeting each year.
The Lead Independent Director shall serve in that role for a maximum
of three years.
The Lead Independent Director shall have the duties and responsibilities
set out in the Corporate Governance Principles and as may be assigned
from time to time by the Board or the Chairman. The Lead Independent
Directors responsibilities shall include:
- presiding at all meetings of the Board, including executive
sessions, when the Chairman is not present;
- presiding over shareholder meetings when the Chairman is
- acting as liaison between the Chairman and independent directors,
although direct communication between each director and the Chairman/CEO
- assisting the Chairman with developing schedules and agendas
for Board meetings and meetings of the independent directors;
- leading the annual board and director performance evaluation
process in conjunction with the Compensation and Governance Committee;
- assisting the Chairman with other Board matters as requested
by the Chairman or the Board.
B. Size of Board
The Company's Articles of Incorporation require that the Board consist
of between 7 and 15 members, the exact number being set by the Board
of Directors as authorized under the By-laws. The Compensation &
Governance Committee and the Board periodically review the appropriate
size of the Board.
C. Director Independence
The exercise of independent judgment by the directors is critical
to effective corporate governance. The majority of the directors
on the Company's Board are classified as "Independent"
in accordance with our stock exchange (NASDAQ) listing requirements.
The Board shall affirmatively determine the independence of each
non-employee director and consider all factors relevant in determining
whether he or she has a relationship with the Company which is material
to the directors ability to be independent from management
in the performance of his or her duties. In addition, a director
will not qualify to serve on either the Companys Audit Committee
or Compensation & Governance Committee if the director is not
independent in accordance with applicable NASDAQ requirements and
the rules of the Securities and Exchange Commission.
D. Board Membership Criteria
The rapidly changing business conditions and markets in which the
Company operates require a high-performance and committed Board.
Expectations of our Board members include:
- Personal integrity;
- Commitment to the Company's Vision, and Guiding Principles;
- Commonsense and practical and good judgment;
- Broad and complementary experience and expertise in various areas
such as finance and accounting, education, government, etc., such
that the members can bring a diverse set of skills and backgrounds
to bear on the complicated issues which come before it;
- Prepare for, attend and participate in all Board and applicable
- Commitment to serve over a period of time sufficient to understand
the Company's history, markets, and business operations; and
- Willingness to think independently and present reasoned points
The Compensation & Governance Committee shall identify possible
nominees who meet specified objectives in terms of the composition
of the Board, taking into account the diversity of the nominees
with respect to gender, race, national origin, education and professional
E. Shareholder Board Member Recommendations
The Compensation & Governance Committee will consider candidates
recommended by shareholders. A shareholder who wishes to recommend
a director candidate for consideration by the Compensation &
Governance Committee should send such recommendation to the Secretary
of the Company at 1600 Royal Street, Jasper, IN 47549, who will
forward it to the Committee. Any such recommendation should include
a description of the candidate's qualifications for Board service,
the candidate's written consent to be considered for nomination
and to serve if nominated and elected, and addresses and telephone
numbers for contacting the shareholder and the candidate for more
information. A shareholder who wishes to nominate an individual
as a director candidate at the annual meeting of shareholders, rather
than recommend the individual to the Compensation & Governance
Committee as a nominee, must comply with the advance notice requirements
mandated by the Company's By-laws and further explained in the "Share
Owner Proposals" section of its Proxy Statement.
F. Conflicts of Interest
A relationship by a Board member, or a member of his or her family,
with a customer, supplier, or other relationship which may impair
a director's ability to exercise independent judgment is prohibited.
G. Directors who Change Their Present Job Responsibility
The Board does not believe that directors who retire or change the
position they held when they became a member of the Board should
necessarily leave the Board. The Compensation & Governance Committee
will review the continued appropriateness of Board membership under
H. Other Directorships and Committee Memberships
Directors are encouraged to limit the number of other public company
boards on which they serve, taking into account potential board
attendance, participation and effectiveness on these boards. Directors
should advise the Chairman of the Board and the Chair of the Compensation
& Governance Committee before accepting an invitation to serve
on another public company board.
In addition, no member of the Company's Audit Committee or Compensation
& Governance Committee may simultaneously serve on committees
of more than two other public companies unless the Board has determined
that service on the respective committees of other public companies
will not impair that director's ability to effectively serve on
the Company's Audit or Compensation & Governance Committee.
I. Majority Election of Directors
In any uncontested election of an individual director or a class
of directors, if more proxy votes are withheld than
are cast for in the election of an incumbent director,
the director shall promptly tender his or her resignation to the
Board of Directors. The Compensation and Governance Committee
of the Board of Directors (the Committee) shall be given
90 days after receipt of the resignation to consider whether to
accept it and shall make a recommendation to the Board regarding
same. The Committee shall review relevant information, including
factors relevant to why votes would have been withheld; the length
of service, qualifications and skillsets of the director; the contributions
by that director to the Company during his or her tenure; the Corporate
Bylaws, Governance Principles, applicable laws and regulations;
and any other relevant factors, to make their determination.
The Board shall review the recommendation of the Committee and render
a decision within 30 days of receipt of the resignation, making
such decision publicly known. The impacted director(s) shall
not participate in either the Committee review or the Board decision,
but may participate in any scheduled Board meetings up to the point
in time when a decision is made to accept or reject the resignation.
If the resignation is accepted, the director will immediately be
removed from the Board. The Compensation and Governance Committee
shall then proceed with selection of a replacement in accordance
with the Bylaws and Corporate Governance Principles.
In the event that more proxy votes are withheld than
cast for more than one director, resulting in the Committee
not having a quorum for purposes of the necessary review, the independent
directors of the Board shall conduct the review normally performed
by the Committee. The Committee and Board may adopt procedures
appropriate to facilitate the review and determination required
by this Policy. Uncontested shall mean that the
proxy election does not involve nominees for director who are not
part of the slate of nominees recommended by the Board, and/or the
number of nominees does not exceed the number of director positions
to be filled at any given proxy election. Independent
directors are determined in accordance with requirements of
NASDAQ, and shall consist only of those independent directors who
received a majority of favorable votes cast, if they were part of
the same proxy election.
A. Scheduling Meetings
Board meetings are scheduled in advance. There are four regularly-scheduled
meetings per year. The Board can also meet at other times or act
by unanimous written consent, as appropriate in the circumstances.
The Chairman, in consultation with the Chief Executive Officer,
Secretary, and Lead Independent Director (if applicable), drafts
the agenda of each meeting and distributes it in advance for input
by the Board. There is an annual cycle of agenda items which include
regular operational reviews and finance reports by the Chief Financial
Officer and/or operating unit executives.
It is expected that directors attend all Board meetings and meetings
of committees on which they serve, as well as the annual meeting
Relevant materials are sent in advance of the Board meeting for
review and adequate preparation by Board members.
E. Board Access to Management
The Board has complete and open access to any member of the Company's
management. Senior Executive Management is often present at Board
meetings which allows access directly to the Board members.
F. Access to Independent Advisors
The Board of Directors and its Committees have the authority, to
the extent necessary to carry out their duties, to retain legal,
financial, or other advisors. The Compensation and Governance Committee
shall conduct a conflict of interest review of such advisors as
required by applicable law.
G. Executive Sessions of Independent Directors
Independent Board members have the opportunity to meet without management
present at least twice annually at regularly scheduled meetings.
The Lead Independent Director of the Board, or if no Lead Independent
Director has been appointed, the Chair of the Compensation &
Governance Committee, shall preside at executive sessions and determine
what record, if any, should be made of the executive session.
H. Shareholder Communications with Board Members
Shareholders may communicate with Board members by sending comments
in care of the Company's Secretary at 1600 Royal Street, Jasper,
IN 47549. The Secretary has the discretion to forward the correspondence
to the director, or if circumstances dictate, to other departments
within the Company to which such communication is more appropriately
addressed. A log of correspondence received and copies of the correspondence
are available to any director who wishes to review it.
I. Annual Board Self-Evaluation
The Board will conduct an annual review of its operation, including
its members and committees with a focus on determining the effectiveness
of the Board in operating as a cohesive and effective governing
body. The Compensation & Governance Committee, in conjunction
with the Lead Independent Director, if any, shall receive comments
from all directors and report annually to the Board with an assessment
of the Boards performance, to be discussed with the full Board.
J. Board Compensation Review
The Board shall conduct an annual review of director compensation.
This review will include input from the Companys management
in order to evaluate director compensation compared to other companies
of like size. Any change in Board compensation will be approved
by the full Board.
K. Director Orientation and Continuing Education
Meetings of the Board shall be designed to provide orientation for
new directors to assist them in understanding the Companys
business as well as an introduction to the Companys management.
Further, the Company encourages directors to participate in continuing
education programs focused on the responsibilities of members of
the Board. The Company shall reimburse the director for customary
and reasonable expenses incurred in connection with their participation
in such continuing education programs
Committees are established by the Board from time-to-time to assist
in the execution of the Board's responsibilities. There are standing
committees, as well as the opportunity if necessary to appoint ad
hoc committees for a specified purpose. There are currently no ad
hoc committees of the Board, and there exist two standing committees:
- Audit Committee
- Compensation & Governance Committee
The Compensation & Governance Committee is responsible for making
recommendations to the Board with respect to the assignment of Board
members to these committees and with respect to the Chairs of the
committees. After reviewing the Compensation & Governance Committees
recommendations, the Board shall be responsible for appointing the
Chairs and members to the committees.
These committees meet at least once per year, but typically more.
Each committee carries out its responsibilities in accordance with
the authority delegated in its Charter from the Board of Directors.
Each committee has the authority to engage outside advisors and
reports its findings and recommendations for action to the full
A brief description for each of the standing committees is as follows:
Audit Committee - The primary function of the Audit Committee is
to provide independent, objective oversight of the Company's accounting
functions, internal controls, and financial reporting. Its primary
duties and responsibilities are to monitor and oversee the Companys
accounting functions, financial reporting processes, and the audit
of the Companys financial statements; assist the Board in
oversight of (i) the integrity of the Companys financial statements,
(ii) the Companys compliance with legal and regulatory requirements,
(iii) the independent registered public accounting firms qualifications,
independence and performance, (iv) the organization and performance
of the Companys internal audit group, and (v) the Companys
internal accounting and financial controls; and provide an open
avenue of communication among the Companys independent registered
public accounting firm, financial and senior management, the internal
audit group, and the Board of Directors.
Compensation & Governance Committee The Committee's primary
functions are to assist the Board of Directors in the discharge
of its fiduciary responsibilities relating to the grant of stock
compensation, the fair and competitive compensation of the Chief
Executive Officer and other Executive Officers, the Company's contribution
to the Retirement Plan, goals and awards under the Profit Sharing
Bonus Plan, matters of corporate governance, identification, evaluation
and nomination of individuals qualified to be Board members, Board
and committee composition and evaluations, Board member orientation
and education and succession planning.
Board Stock Ownership Guidelines
The Board has adopted stock ownership guidelines requiring the
holding of certain levels of equity interest in the Company by not
only executives, but directors as well. These guidelines require
that each director, within 5 years of election, own an equity interest
in the Company with a value equal to at least three times his or
her total annual Board compensation. Annual review of ownership
progression is carried out under the direction of the Board.
Restrictions on Hedging and Pledging Shares
Members of the Companys Board of Directors and
the Kimball Operating Performance Team are not permitted to engage
in the follow practices related to Company stock owned or controlled
- Trading in Company stock on a short-term basis all stock
must be held for at least six months;
- Engaging in short sales;
- Margin-trading, buying or selling puts or calls;
- Pledging Company stock as collateral in transactions or otherwise
to secure debt(s); or
- Engaging in hedging or monetization transactions, such as collaring
or forward sale contracts.
Review of Corporate Governance Principles
These Corporate Governance Principles are subject to
modification from time to time by the Board, based upon the recommendations
from the Compensation & Governance Committee.