KIMBALL INTERNATIONAL INC (Form: 8-K, Received: 10/05/2020 16:39:05)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) October 5, 2020 (September 30, 2020)

KIMBALL INTERNATIONAL, INC.

________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Indiana

0-3279

35-0514506

(State or other jurisdiction of

(Commission File

(IRS Employer Identification No.)

incorporation)

Number)



1600 Royal Street, Jasper, Indiana						47546-2256
(Address of principal executive offices)						(Zip Code)

Registrant's telephone number, including area code (812) 482-1600


Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Class B Common Stock, par value $0.05 per share	KBAL	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On October 5, 2020, Kimball International, Inc. (the “Company”) announced the appointment of Timothy “T.J.” Wolfe as the Chief Financial Officer of the Company effective October 19, 2020 to succeed Michelle Schroeder who is stepping down from the role for personal reasons effective October 19, 2020. Ms. Schroeder will remain with the Company in the role of Sr. Director, Corporate Business Practices and Investor Relations.

Mr. Wolfe, age 43, has over 20 years of strategic and operational experience in both the U.S. and Europe, having served in various capacities from 2005-2020 at Coca-Cola European Partners, formerly Coca-Cola Enterprises Inc, which is the largest global Coca-Cola bottler. Mr. Wolfe’s most recent role was Vice President and Chief Financial Officer, Great Britain since May 2019. Mr. Wolfe also served in the roles of Vice President, Finance Shared Services and Transformation from June 2016 to April 2019, Vice President, Chief Compliance and Risk Officer from January 2014 to May 2016, and Director, Corporate Strategy from January 2012 to December 2013, among other roles.

There are no arrangements or understandings between Mr. Wolfe and any other persons pursuant to which he was appointed Chief Financial Officer. There are no family relationships between Mr. Wolfe and any director or executive officer of the Company, and Mr. Wolfe does not have any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Mr. Wolfe accepted a written Employment Offer on September 30, 2020. Pursuant to the Employment Offer, Mr. Wolfe’s initial compensation will consist of the following:

•An annual base salary of $372,000.

•Mr. Wolfe will be eligible to participate in the Company’s Annual Cash Incentive Plan (the “ACI Plan”), with a target annual incentive of 55% of his base salary. For fiscal year 2021, Mr. Wolfe is guaranteed a minimum payout under the ACI Plan of 27.5% of his base salary. The maximum payout that Mr. Wolfe may earn under the ACI Plan is 100% of his base salary. Any amounts earned under the ACI Plan are paid during the following fiscal year in August.

•The Company will also grant Mr. Wolfe the following equity awards on October 19, 2020, upon his commencement of employment as the Company’s Chief Financial Officer, which awards will be granted under and subject to the terms and conditions of the Kimball International, Inc. 2017 Stock Incentive Plan (the “2017 Stock Plan”):

◦A Restricted Stock Unit (“RSU”) award valued at $101,850 which will vest in full on June 30, 2021, an RSU award valued at $135,800, which will vest in full on June 30, 2022, and an RSU award valued at $135,800, which will vest in full on June 30, 2023. Each of the RSU awards will have such other terms as set forth in the form of RSU award agreement disclosed in the Company’s Current Report Form 8-K filed on July 9, 2018 and incorporated herein by reference.

◦A Relative Total Shareholder Return (“RTSR”) award with a target value of $55,800 which will be earned based on the Company’s RTSR for a performance cycle ending on June 30, 2021, an RTSR award with a target value of $74,400 which will be earned based on the Company’s RTSR for a performance cycle ending on June 30, 2022, and an RTSR award with a target value of $74,400 which will be earned based on the Company’s RTSR for a performance cycle ending on June 30, 2023. Each of the RTSR awards will have such other terms as set forth in the form of RTSR award agreement disclosed in the Company’s Current Report Form 8-K filed on July 9, 2018 and incorporated herein by reference.

◦The number of shares underlying the RSU and RTSR awards set forth above will be determined on the date of grant.

•A one-time cash sign-on bonus of $73,500 to be paid on Mr. Wolfe’s initial paycheck

•For purposes of both the ACI Plan and the equity awards granted to Mr. Wolfe, “retirement” includes any termination of his employment, other than for cause, occurring at or after he has reached the age of 55 and has a combination of age plus years of continuous service as an executive officer of the Company equal to or greater than 75.

•Mr. Wolfe will be eligible to participate in all benefit and retirement plans generally provided to other executive employees of the Company, including the 401(k) Retirement Plan, the Supplemental Retirement Plan (the “SERP”) and the executive preventative healthcare program.

The foregoing summary of the Employment Offer is not intended to be complete and is qualified in its entirety by reference to the Employment Offer attached hereto as Exhibit 10.1 and incorporated herein by reference.

In addition, the Company will enter into an Executive Employment Agreement (the “Executive Employment Agreement”) and a Change in Control Agreement (the “Change in Control Agreement”) with Mr. Wolfe, each of which will be effective as of October 19, 2020 and will supersede the Employment Offer.

Pursuant to the Executive Employment Agreement, if Mr. Wolfe’s employment is terminated by the Company without Cause or by him for Good Reason (both as defined in the Executive Employment Agreement), the Company will provide compensation and benefits as follows: (1) his base salary through the date of termination of employment; (2) (a) unless his termination occurs

during the one-year period before a Change in Control (as defined in the Executive Employment Agreement) or during the two-year period following a Change in Control, severance pay equal to the sum of Mr. Wolfe’s annual base salary at the highest rate in effect during the twelve months immediately preceding his last day of employment, any unpaid cash incentive amounts for the immediately preceding fiscal year, and target cash incentive under the ACI Plan for the period in which the last day of employment occurs, prorated to the termination date, or (b) if his termination occurs during the one-year period before a Change in Control or the two-year period following a Change in Control, severance pay is determined by the terms of the Change in Control Agreement; (3) an amount for COBRA premiums for medical, dental and vision coverage, based upon length of service and the coverage Mr. Wolfe was enrolled in as of his last day of employment, and grossed up for taxes; (4) reimbursement for outplacement service costs up to $25,000; (5) all unvested service-based equity awards will vest on a pro-rata basis; (6) all unvested performance-based equity awards will vest on a pro-rata basis at the same time as if Mr. Wolfe had remained employed by the Company through the end of the applicable performance period and vesting date; and (7) payment of all SERP benefit amounts entitled to Mr. Wolfe in accordance with the terms of the plan.

In addition, the Executive Employment Agreement imposes non-competition and non-solicitation obligations during the term of Mr. Wolfe’s employment and for a period of 12 months (or a shorter period, if he is employed for fewer than 12 months) following termination of employment for any reason.

Pursuant to the Change in Control Agreement, in the event of a Change in Control (as defined in the Change in Control Agreement), the Company will accelerate payment of an amount in cash, shares or a combination thereof equal to the value at the effective date of the Change in Control or the termination of Mr. Wolfe’s employment, as applicable, of all options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and ACI Plan payments, all of which will become fully vested with all performance-based awards vesting at 100% of target (except that RTSR awards will vest and ACI Plan awards will be paid on a pro-rata basis) (1) on the later of the date of Mr. Wolfe’s termination or the effective date of the Change in Control (the “Termination Date”) if Mr. Wolfe’s employment is terminated by the Company without Cause or by him for Good Reason during the one-year period before, or the two-year period following, the Change in Control; and (2) on the effective date of the Change in Control without a termination of employment if any successor entity has not assumed the obligations with respect to such awards or has not substituted benefit rights that are at least as favorable to Mr. Wolfe as such awards. He will also become fully vested in the SERP and will receive all benefit amounts under that plan.

In addition, upon a Change in Control Event (as defined in the Change in Control Agreement), as soon as practicable following his Termination Date, Mr. Wolfe will receive severance pay in a sum equal to two times the sum of his annual base salary at the highest rate in effect during the three years immediately preceding his last day of employment and the higher of either his target annual cash incentive for the period in which his last day of employment occurs or his average annual cash incentive award for the three annual cash incentive periods immediately preceding his last day of employment. Mr. Wolfe will also receive a reimbursement amount equal to two times the product of $50,000 and a fraction, the numerator of which is the Employment Cost Index and the denominator of which is the Employment Cost Index for the first calendar quarter of 2015 for welfare and fringe benefit plan reimbursements. He will also be eligible for $25,000 in outplacement assistance during the first 12 months after separation from employment.

If any payments under the Executive Employment Agreement or Change in Control Agreement are subject to excise tax (or any interest or penalties incurred due to excise tax) imposed by Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), due to early payment of deferred compensation following separation without Cause or resignation for Good Reason or a Change in Control, Mr. Wolfe will be entitled to a supplemental payment in an amount sufficient to pay the income tax liability on those payments and the supplemental payment, in the case of the Executive Employment Agreement, and equal to the special liability for interest and additional tax on those payments pursuant to Section 409A plus all income liability on the supplemental payment, in the case of the Change in Control Agreement.The form of the Change in Control Agreement is substantially the same as the agreements in place with the current executive management team, with updated references to plan names and other immaterial wording changes but with no changes to the substantive terms of the agreement. The foregoing summaries are not intended to be complete and are qualified in their entirety by reference to the form of the Change in Control Agreement disclosed in the Company’s Annual Report on Form 10-K filed on August 28, 2018 and incorporated herein by reference, and the Executive Employment Agreement disclosed in the Company’s Annual Report on Form 10-K filed on August 28, 2020.

Item 7.01 Regulation FD Disclosure

On October 5, 2020, the Company issued a press release announcing Mr. Wolfe’s appointment as Chief Financial Officer of the Company effective October 19, 2020. A copy of the press release is attached hereto as Exhibit 99.1.

The information contained in this Item 7.01, including the related information set forth in the press release attached hereto as Exhibit 99.1, is being “furnished” and shall not be deemed “filed” with the Securities and Exchange Commission for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section and is not incorporated by reference into any filing of the Company under the Securities Act of 1933, as

amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibits are furnished as part of this report:


Exhibit
Number						Description
10.1						Employment Offer for Mr. Wolfe
99.1						Kimball International, Inc. Press Release dated October 5, 2020 and furnished with this Form 8-K
104						Cover Page interactive data file (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



			KIMBALL INTERNATIONAL, INC.

By:			/s/ Michelle R. Schroeder
			MICHELLE R. SCHROEDER Executive Vice President, Chief Financial Officer

Date: October 5, 2020

Exhibit 10.1

Employment Offer for Timothy “T.J.” Wolfe

Cash Compensation: The two components of your cash compensation will include base salary and participation in the Kimball International, Inc. Annual Cash Incentive Plan.

Base salary: $372,000 annually, paid bi-weekly

Annual Cash Incentive (ACI) Plan: Effective October 1, 2020 your target payout is 55% of your salary. There is no guarantee for FY21, payout could be 0% with a max of 100%. Payment for FY21 will be on or about the 15^th day of August, 2021 (with appropriate deductions, including payroll taxes). For FY21, the ACI payout is guaranteed at 50% of Target (50% of 55%).

Signing Bonus: On your first regular bi-weekly payroll, you will receive a special one-time sign on bonus of $73,500.

Stock-based Incentive Compensation: Commensurate with your responsibilities as an Executive Officer of the Company, a significant component of your total compensation will be through long term stock-based incentives. The dollar value of all stock equity awards granted set forth herein will be converted into a set number of shares or units based on the closing stock price of the Company’s stock on award date. The total target value of your long term stock awards and any accumulated dividends is 60% of salary. These stock awards will aid you in attaining your executive vice president ownership expectation, which is 2 times your base salary.

•Restricted Stock Unit Award: This time-based stock incentive encourages you and rewards you for delivering shareholder value by delivering results that increase the value of the Company’s Common Stock. If you meet the conditions of continuous service as outlined in the applicable award agreement on the vesting date, the number of shares of Common Stock set forth in the award agreement plus shares equivalent to dividends your outstanding shares would have earned during the vesting period will be delivered to you as soon as practical after the vesting date with no restrictions. The restricted stock unit awards are subject to the terms and conditions of the 2017 Stock Plan and the terms and conditions of the applicable award agreements that will be entered into between the Company and you with respect to such awards.

The value of the restricted stock units that will be awarded to you upon hire are as follows.

•Vest 6/30/21 - $101,850 value (prorated to 9 months of employment in FY21, will earn estimated $2,500 in dividends during FY21)

•Vest 6/30/22 - $135,800 value (will earn estimated $3,333 in dividends during FY21)

•Vest 6/30/23 - $135,800 value (will earn estimated $3,333 in dividends during FY21)

•Relative Total Shareholder Return Award: This performance-based award rewards you based on the performance of KBAL stock relative to our peer group company’s Total Shareholder Return (TSR), usually over a 3-year period. The performance units earned will be determined based entirely on our RTSR, as of the last day of the performance cycle.

To determine payout under the award, each peer group company’s TSR will be determined at the end of the performance cycle. Our TSR will be compared to the 80th percentile (which would result in a payout at 200% of the target RTSR shares), 50th percentile (which would result in a payout at 100% of the target RTSR shares), and 30th percentile (which would result in a payout at 50% of the target RTSR shares) TSRs of the peer group. Any RTSR between the 80th and 50th and the 50th and 30th percentiles will be interpolated. If our RTSR is less than the 30th percentile, the resulting payout would be 0%. If our TSR is less than zero, the payout will not exceed 100% of the target payout.

The RTSR shares are subject to the terms and conditions of the 2017 Stock Plan and the terms and conditions of the applicable award agreements that will be entered into between the Company and you with respect to such awards.

The value of the RTSRs that will be awarded to you upon hire are as follows.

•Vest 6/30/21 - $55,800 value (prorated to 9 months of employment in FY21)

•Vest 6/30/22 - $74,400 value

•Vest 6/30/23 - $74,400 value

401(k) Retirement Plan: You will be eligible for participation in our all U.S. employee 401(k) Retirement Plan and our Supplemental Retirement Plan (“SERP”).

•401(k) Retirement Plan: You will be eligible to participate in our 401(k) Retirement Plan on your first day of employment. Unless you choose to opt out, your pre-tax contribution rate will automatically increase by one percentage point each July. You can choose to contribute up to 50% of your pay on a pre-tax, traditional after-tax or Roth after-tax basis.

•Supplemental Retirement Plan (SERP): You will be eligible to participate in the Supplemental Retirement Plan. You may elect to defer up to 50% of your compensation into this supplemental retirement plan. Based on your compensation level, tax laws begin to limit your ability to fully participate in the Company’s 401(k) Retirement Plan. Accordingly, the SERP provides a vehicle to offset such effect and contribute greater amounts, in a non-qualified plan, towards your retirement. Participation in the SERP is optional and is simply a vehicle to meet your retirement saving goals if you max out the contributions you can make to the traditional 401(k) Retirement Plan.

•Company Contribution: Each year following the fiscal year end (June 30th), the Company will determine a discretionary profit-sharing contribution to your retirement account. The Company’s contribution is currently not a matching contribution, which means it is not based on the percentage you personally contribute to your retirement account. The Company’s contributions are calculated based on your retirement-eligible wages during the plan year.

Group Healthcare Benefits Plans: Eligibility for insurance is determined by hire date. You will be eligible for participation on the first of the month following one full calendar month of active employment. Kimball International offers at no cost to you basic Short-Term Disability, Accidental Death & Dismemberment and Life Insurance. The following types of coverage are also available with cost to you dependent on the coverage and options you select. Health Care with Prescription coverage, Health Savings Account, Dental, additional Short-Term Disability, Long- Term Disability, additional Employee Life Insurance, Family Life Insurance, additional Accidental Death and Dismemberment Insurance, Vision Insurance, Accident and Critical Illness/Cancer Plans are included. Any and all premiums are payable by you based on your selections and will be deducted from each paycheck.

You will have access to the Kimball International Health Center in Jasper, Indiana. This center provides convenient and low-cost access to a Nurse Practitioner while you are in Jasper.

You will also be eligible to participate in our Executive Wellness program, which provides you access to Mayo Clinic or IU Health’s executive wellness services. Travel expenses to these locations, for you and your spouse, are reimbursable expenses but will be taxable income. The services provided at these clinics are processed through our group healthcare plan and are subject to your deductible.

Paid Time Off: 5 days paid time off will be granted for the balance of calendar year 2020. Effective January 1, 2021, paid time off will be 20 days annually and increases at pre-defined years of service. Kimball International offers flexibility in this policy respecting the demands of time on an executive (the standard number of PTO days for new hires is 15 days).

Holidays: Kimball International observes 9 paid holidays during the course of the calendar year.

Executive Housing: You will be provided a one-bedroom executive apartment in Jasper, Indiana for your use while working from the corporate headquarters campus. The apartment is fully furnished, utilities are paid, and cleaning services are provided biweekly.

Productivity Benefits: In addition to standard issue Windows laptop and iPhone, you will receive an iPad, and peripherals (flat screen monitor, keyboard, printer) for your home office. You will also receive an employee discount on ergonomic task chair and or height adjustable table desk for your home office.

Employment Agreements: Your employment agreements with Kimball International include a Change in Control agreement and an Executive Employment Agreement. These agreements are mutually beneficial and do provide protection for you. The executive employment agreement includes a 12 month non-compete and also an exit payout of one year salary adjusted to 6 months if service is less than 6 months, and prorated vesting of cash and stock incentives if the reason for separation is No Cause or Good Reason as defined in the agreement.

At-Will Employment: Other terms and guidelines for your employment are set forth in our employee handbook, which will be provided to you during your first week of employment. Unless expressly stated otherwise in writing, all employees of Kimball International or any of its brand units are considered at-will. This means that either you or Kimball International may terminate your employment at any time and for any reason. Neither this term sheet nor the employee handbook is considered to be a contract of employment or a contract of employment for any definite term. All terms and conditions of employment are subject to change at the sole and unilateral discretion of Kimball International. To the extent that the terms of any benefit plan documents conflict with the terms listed on this offer sheet, the plan documents shall control.

This offer is contingent upon your meeting the following conditions:

•Eligibility to work in the U.S.

•Successful drug screen

•Successful pre-employment screen

•Signing a Change in Control Agreement (copy attached)

•Signing an Executive Employment Agreement (copy attached)

Attachment(s):

Change in Control Agreement

Executive Employment Agreement

Healthcare Benefits Summary

Exhibit 99.1

Kimball International Announces Executive Changes

JASPER, IN., October 5, 2020 -- Kimball International, Inc. (NASDAQ: KBAL) today announced the following leadership changes in the Company’s Finance and Corporate Business Practices functions effective October 19, 2020.

Michelle Schroeder informed the Company of her decision to step back from her role as Chief Financial Officer for personal reasons but will remain a senior leader at Kimball International, with responsibilities in governance, SEC compliance, and investor relations. Michelle, who has been with Kimball International for 32 years, will be joining Mark Johnson, Chief Legal, Governance Officer and Corporate Secretary, in building the Company’s recently-formed Corporate Business Practices function. “Michelle has led the build out of a center-led Finance function and has been instrumental in the development of the Kimball International Connect 2.0 strategy. We are pleased to support Michelle and to be able to leverage her diverse background and deep knowledge of the Company in this new role,” said Kristie Juster, CEO.

Timothy (T.J.) Wolfe was named to succeed Michelle as Chief Financial Officer. T.J. is a proven Finance leader with experience in global consumer branded organizations. He has more than two decades of experience, including expertise enacting large scale organizational transformation, as well as managing integration and strategic planning activities. Most recently T.J. served as Vice President, Chief Financial Officer of the Great Britain Unit of Coca-Cola European Partners. His early career in public accounting and subsequent roles of increasing scope and responsibility have shown him to be a strategic and operational finance leader and business partner.

“We are delighted that T.J. will be joining our executive team at such an important time in our Company’s history. Throughout his career, T.J. has demonstrated the ability to streamline and integrate financial operations while successfully moving strategic initiatives forward. His experience will play a pivotal role in supporting our recently announced Connect 2.0 strategy,” said Ms. Juster.

About Kimball International, Inc.

For 70 years, Kimball International has created design driven furnishings that have helped our customers shape spaces into places, bringing possibility to life by enabling collaboration, discovery, wellness and relaxation. We go to market through our family of brands: Kimball, Kimball Health, National, Etc. by National, Kimball Hospitality, and D’style by Kimball Hospitality. Our values and high integrity are demonstrated daily by living our Purpose and Guiding Principles that establish us as an employer of choice. We build success by growing long-term relationships with customers, employees, suppliers, shareholders and the communities in which we operate. In fiscal 2020, the Company generated $728 million in revenue and employed over 2,800 people. For more information, visit www.kimballinternational.com.