MILLERKNOLL INC
For the period ended Jun 1, 2024. Filed Aug 30, 2024.
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Jun 1, 2024 · Filed Aug 30, 2024
Contents
Fiscal Compensation Program
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Fiscal 2024 Compensation Program
Consistent with our compensation philosophy, the Committee (or, in the case of the CEO, the Board) approved the following compensation actions for the NEOs.
Base Salaries
Base salary is a customary, fixed element of compensation intended to attract and retain executives. When setting the annual base salaries of our NEOs, the Committee considers market data provided by its independent compensation consultant, internal pay equity, and MillerKnoll’s financial performance and size relative to peer companies. Base salaries for each NEO are set forth below:
| Name | Base Salary2024 ($)(1) |
|---|---|
| Andi R. Owen | 1,100,000 |
| Jeffrey M. Stutz | 580,000 |
| Christopher M. Baldwin | 580,000 |
| John P. Michael | 580,000 |
| Debbie F. Propst | 580,000 |
(1) Reflects annualized salary.
Annual Incentive Plan
The AIP is our annual cash incentive program that covers all non-sales incented employees. For fiscal year 2024, EBITDA, as adjusted (“EBITDA, As Adjusted”) served as the sole performance metric in the AIP.
| (Dollars in millions) · EBITDA, As AdjustedGoals ($)(1) · Payout as a % of Target · Actual | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Period · Threshold · Target · Maximum · Threshold · Target · Maximum · EBITDA, As Adjusted ($)(2) · Payout(3) | |||||||||
| Fiscal 2024 | 268.5 | 383.5 | 517.7 | 0% | 100% | 200% | 388.8 | (2) | 103.9% |
(1)EBITDA, As Adjusted is the Company’s net income or loss before interest, taxes, depreciation, and amortization, excluding earnings attributable to noncontrolling interests and plus or minus any adjustments approved by the Committee.
(2)For fiscal 2024, the Committee did not exercise any discretion and approved adjustments to EBITDA only in accordance with our Incentive Technical Manual. The Incentive Technical Manual is annually reviewed by the Committee and provides clarity, consistency, and efficiency to the adjustment process. For fiscal 2024, the Committee approved adjustments to EBITDA for restructuring amortization.
(3)Expressed as a percentage of target.
The fiscal 2024 AIP payouts for each of the NEOs are set forth below:
| Target 2024 AIP · Payout as a % of Target · Actual 2024AIP Payout($)(1) | ||||
|---|---|---|---|---|
| Name · % of Salary · Value($) | ||||
| Andi R. Owen | 125% | 1,375,000 | 103.9% | 1,428,625 |
| Jeffrey M. Stutz | 70% | 406,000 | 103.9% | 421,834 |
| Christopher M. Baldwin | 70% | 406,000 | 103.9% | 421,834 |
| John P. Michael | 70% | 406,000 | 103.9% | 421,834 |
| Debbie F. Propst | 70% | 406,000 | 103.9% | 421,834 |
(1)This is the amount of the AIP payout if the NEO had elected to receive the payout in cash. See the disclosure in the following paragraph.
To allow the Company to conserve cash and further incentivize desired performance, the Committee provided NEOs and senior leadership the choice at the start of the fiscal year to irrevocably elect to receive either a fiscal 2024 annual cash bonus under the AIP or RSUs under the LTIP with a grant date in July 2024 and vesting in July 2025, depending on the actual level of performance achieved and payout approved by the Committee, if any, with a one-year vesting period. Leaders who elected to receive RSUs were eligible to receive an award equivalent to 200% of what they would have
24 MillerKnoll
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received in a cash bonus under the AIP. The Company, however, reserved the right to pay any or all of the fiscal 2024 AIP in cash, even if an employee agreed to receive the payout in the form of RSUs. In August 2023, all of the NEOs elected to receive any fiscal 2024 AIP payout in the form of RSUs. For further details, see footnote 3 in the Summary Compensation Table. For further details on the payout of AIP in RSUs, seefoot note 3 in the Summary Compensation Table. The Committee does not intend to offer this type of choice in the future as it was a one-time opportunity designed to conserve cash and further align the interests of our management team with shareholders.
Long-Term Incentives
For each executive officer, the Committee approves a target LTI award value and determines the mix of LTI vehicles to deliver that award. We convert that value for each NEO into grants with award types weighted as shown below:
| Weighting for Fiscal 2024 | ||
|---|---|---|
| Award Types | CEO | Other NEOs |
| PSUs | 50% | 25% |
| Premium-Priced Stock Options | 25% | 50% |
| RSUs | 25% | 25% |
The table below sets forth the target value of the LTI grants that the Committee approved for fiscal 2024, with the exception of the LTI grants to the CEO which were approved by the Board.
| Target 2024 LTI Value ($) | PSUs(#) | Stock Options (#) | RSUs (#) | |
|---|---|---|---|---|
| Name | ||||
| Andi R. Owen | 5,500,000 | 110,486 | 313,177 | 89,518 |
| Jeffrey M. Stutz | 1,325,000 | 13,309 | 150,894 | 21,566 |
| Christopher M. Baldwin | 1,325,000 | 13,309 | 150,894 | 21,566 |
| John P. Michael | 1,325,000 | 13,309 | 150,894 | 21,566 |
| Debbie F. Propst | 1,325,000 | 13,309 | 150,894 | 21,566 |
The payout opportunity for PSUs granted in fiscal year 2024 is based on one financial metric: EBITDA, As Adjusted. The performance for the metric is measured over three one-year periods, all of which are eligible to vest on August 1st following the completion of the three-year period and are subject to modification based on our relative total shareholder return (“rTSR”) performance over the full three-year period. PSU grants in fiscal year 2024 continue to utilize three one-year performance periods due to challenges in setting multi-year goals given the cyclicality of our global business including supply chain constraints, commodity price volatility, and geopolitical issues. The rTSR modifier provides for a 25% increase to the earned PSUs if our relative TSR performance is at or above the 75th percentile of our TSR peer group (subject to an overall maximum award equal to 200% of target) or a 25% decrease to the PSUs earned if our relative TSR performance is below the 25th percentile of our TSR peer group. For performance between threshold and target and target and maximum, these adjustments are linearly interpolated. Metric weighting is as shown in the chart below:
| Relative TSR Payout Curve for Fiscal 2024 | ||
| Award Types | Relative TSR(Percentile Ranking) | Payout Modifier(Multiple of Target) |
|---|---|---|
| Maximum(1) | 75th | x 1.25 |
| Target | 55th | x 1.00 |
| Threshold | 25th | x 0.75 |
(1)Subject to an overall maximum award equal to 200% of target.
2024 Proxy Statement 25
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The TSR peer group focuses on key competitors, companies in appropriately adjacent industries, companies with similar business drivers, and other companies with business cycles similar to that of the Company. The TSR peer group for the fiscal 2024 PSU award is as follows:
| American Woodmark Corporation | La-Z-Boy, Inc. | Steelcase, Inc. |
|---|---|---|
| Ethan Allen Interiors Inc. | Leggett & Platt, Inc. | Tempur Sealy International, Inc. |
| HNI Corporation | Masonite International Corporation (1) | UFP Industries, Inc. |
| Interface, Inc. | RH | Williams-Sonoma, Inc. |
| JELD-WEN Holding, Inc. | Sleep Number Corporation |
(1)Masonite International Corporation was removed as a result of the acquisition by by Owens Corning before the end of the Company’s 2024 fiscal year.
RSUs represent the right to receive shares of MillerKnoll common stock with each unit representing the equivalent of one share of common stock as of the date of grant. These awards vest ratably 25%, 25%, and 50% over a three-year period on August 1st of each year, following the first anniversary of the grant date. RSUs, including accrued dividends in the form of additional RSUs on those units, convert into shares upon vesting.
Stock options provide the opportunity to recognize value only if the share price appreciates above the strike price set on the date of grant. Stock option grants made in fiscal 2024 had a $20.00 per share strike price, which is approximately a 16% premium as of the grant date, closing stock price of $17.29. Our stock options vest ratably over three years in substantially equal annual tranches, creating a multi-year alignment between option recipients and shareholders and motivating participants to implement and achieve financial and operational goals that will lead to growth in the share price over a long period of time.
PSUs Earned for Fiscal 2022 to Fiscal 2024 Performance Cycle
PSU grants made in fiscal year 2022 reached the end of their performance period at the close of fiscal year 2024. The tables below outline the metrics, goals, weightings, and actual performance for each tranche. TSR performance for the PSUs granted in fiscal 2022 ranked at the 31 st percentile of the TSR peer group, resulting in an 80.8% multiplier applied to the final payout, resulting in a total payout of 51% of eligible shares vesting. For additional details, see the Grants of Plan-Based Awards table.
| (Dollars in millions) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Measure · Tranche Fiscal Performance Period · Target Payout Weighting · Performance Goals · Actual Performance Results · Unweighted Payout · Weighted Payout | |||||||||
| Threshold · Target · Maximum | |||||||||
| Operating Earnings, | 2022 1st Half | 6.80% | $73.9 | $92.4 | $162.3 | $86.7 | 70.0% | 4.8% | |
| As Adjusted | 2022 2nd Half | 6.80% | $48.1 | $96.1 | $144.2 | $105.6 | 120.0% | 8.2% | |
| 2023 | 14.85% | $262.8 | $375.4 | $431.7 | $245.3 | —% | —% | ||
| 2024 | 14.85% | $139.4 | $254.4 | $388.6 | $258.3 | 102.9% | —% | ||
| Revenue | 2022 1st Half | 6.80% | $1,262.3 | $1,329.5 | $1,583.6 | $1,333.50 | 102.0% | 15.3% | |
| 2022 2nd Half | 6.80% | $1,929.4 | $2,104.1 | $2,278.8 | $2,130.00 | 115.0% | 6.9% | ||
| 2023 | 14.85% | $4,255.7 | $4,665.2 | $4,870.0 | $4,087.10 | —% | 7.8% | ||
| 2024 | 14.85% | $3,469.4 | $3,887.8 | $4,375.9 | $3,625.50 | 37.3% | —% | ||
| Non-Financial | 2022 1st Half | 3.40% | 4.3% | ||||||
| Scorecard(1) | 2022 2nd Half | 3.40% | 5.1% | ||||||
| 2023 | 3.30% | 3.9% | |||||||
| 2024 | 3.30% | 1.4% | |||||||
| Target Payout before rTSR Modifier | 63.1% | ||||||||
| TSR Modifier | x | 80.8% | |||||||
| Final Payout · 51.0% of target | |||||||||
(1)The scorecard evaluated previously disclosed non-financial metrics.
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