SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the registrant X
Filed by a party other than the registrant
Check the appropriate box:
Preliminary proxy statement
Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2).
X Definitive proxy statement.
Definitive additional materials.
Soliciting material pursuant to ss.240.14a-12.
LA-Z-BOY
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
Fee paid previously with preliminary materials.
- -------------------------------------------------------------------------------
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(4) Date Filed:
LA-Z-BOY INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Day: Tuesday, August 12, 2003
Time: 11:00 a.m., Eastern Daylight Time
Place: La-Z-Boy Incorporated Auditorium
1284 North Telegraph Road
Monroe, Michigan
Monroe, Michigan
July 9, 2003
To our shareholders:
We invite you to attend our 2003 annual meeting of shareholders at the time
and place shown above. The purposes of the meeting are to elect three directors
for three-year terms expiring in 2006 and to approve the La-Z-Boy Incorporated
Restricted Stock Plan for Non-Employee Directors, as amended and restated
through August 12, 2003.
We are mailing this notice and the accompanying proxy statement and proxy
card to our shareholders on or about July 9, 2003. We also are enclosing a copy
of our 2003 Annual Report, which contains financial statements for the fiscal
year ended April 26, 2003.
Only shareholders of record at the close of business on June 25, 2003 will
be entitled to vote at the meeting.
Whether you plan to attend the meeting in person or not, please date, sign,
and return the enclosed proxy card in the accompanying envelope. You may also
vote by telephone or on the Internet (see the instructions attached to the proxy
card). Even though you vote by one of these methods prior to the meeting, you
may still vote your shares in person at the meeting, which will revoke your
previous vote.
BY ORDER OF THE
BOARD OF DIRECTORS
James P. Klarr, Secretary
July 9, 2003
2003 PROXY STATEMENT OF LA-Z-BOY INCORPORATED
Questions and Answers
Q: What is a proxy?
A: A proxy is a document, also referred to as a "proxy card," on which you
authorize someone else to vote for you at the upcoming annual meeting
in the way that you want to vote. You also may choose to abstain from
voting. La-Z-Boy's board of directors is soliciting the proxy card
enclosed.
Q: What are the purposes of this annual meeting?
A: At the annual meeting, shareholders will elect three directors for
three-year terms expiring in 2006. The board's nominees are John H.
Foss, Patrick H. Norton, and Helen O. Petrauskas (See page 3).
Shareholders will also vote on a proposal to approve the La-Z-Boy
Incorporated Restricted Stock Plan for Non-Employee Directors, as
amended and restated through August 12, 2003. Other than routine or
procedural matters, we do not expect any other business will be brought
up at the meeting, but if any other business is properly brought up,
the persons named in the enclosed proxy will have authority to vote on
it as they see fit.
Q: Who is entitled to vote?
A: Only record holders of our common shares at the close of business on
the record date for the meeting, June 25, 2003, are entitled to vote at
the annual meeting. Each common share has one vote.
Q: How do I vote?
A: Sign and date each proxy card that you receive and return it in the
enclosed envelope. Proxies will be voted as you specify on each card.
If you sign and return a proxy card without specifying how to vote,
your shares will be voted FOR the election of the director nominees
identified in this proxy statement and FOR approval of the La-Z-Boy
Incorporated Restricted Stock Plan for Non-Employee Directors, as
amended and restated through August 12, 2003. Your shares also will be
voted on any other business that comes before the meeting.
Q: Can I vote by telephone or on the Internet?
A: Yes. If you hold your shares in your own name, you may vote by
telephone or on the Internet by following the instructions attached to
your proxy card.
If your shares are held through a broker, bank, or other nominee, they
will contact you to request your voting instructions and should provide
you with information on voting those shares by telephone or on the
Internet.
Q: Can I change my vote after I have voted?
A: A later vote by any means will cancel any earlier vote. For example, if
you vote by telephone and later vote differently on the Internet, the
Internet vote will count, and the telephone vote will be canceled. If
you wish to change your vote by mail, you should write our Secretary to
request a new proxy card. The last vote we receive before the meeting
will be the one counted. You also may change your vote by voting in
person at the meeting.
Q: What does it mean if I get more than one proxy card?
A: It means that your shares are registered in more than one way. Sign and
return all proxy cards or vote each group of shares by telephone or on
the Internet, to ensure that all your shares are voted.
Q: What makes up a quorum?
A: There were 54,841,637 common shares outstanding on the record date for
the meeting. A majority of those shares present or represented by
proxy at the meeting makes a quorum. A quorum is necessary to conduct
the meeting.
Page 1
Q: What changes are being proposed to the Restricted Stock Plan for Non-
Employee Directors?
A: The proposed amendment would increase initial grants to new
non-employee directors from 4,500 to 5,000 shares, increase annual
grants from 600 to 2,000 shares, increase the total number of shares
which may be sold under the plan, change the time when annual grants
are made and make other changes as described later in this proxy
statement.
Q: How does the voting work?
A: Directors will be elected by plurality vote. The nominees receiving the
highest through third-highest numbers of votes will be elected,
regardless of the total number of votes cast or withheld. You may
withhold votes from one or more directors by writing their names in the
space provided for that purpose on your proxy card. If you vote by
telephone or on the Internet, follow the instructions attached to the
proxy card.
Approval of the La-Z-Boy Incorporated Restricted Stock Plan for
Non-Employee Directors, as amended and restated through August 12,
2003, requires that a majority of the shares entitled to vote at the
meeting are actually voted "FOR" or "AGAINST" the proposal and that the
majority of the shares actually voted are in favor of the proposal. You
may vote or abstain from voting on the proposal on your proxy card. If
you vote by telephone or on the Internet, follow the instructions on
the proxy card.
Q: Where is La-Z-Boy's principal executive office?
A: 1284 North Telegraph Road, Monroe, Michigan 48162.
Page 2
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Our board of directors is divided into three classes, two consisting of
three directors each and one consisting of four directors. Directors in each
class serve for three-year, staggered terms. The terms of the three directors in
one of the classes expire at this year's annual meeting, so three directors will
be elected at the meeting. The three directors elected will serve until our
annual meeting of shareholders in 2006.
Under the applicable Michigan corporate law, directors will be elected at
the meeting by a plurality of votes cast from among those persons duly
nominated. This year, the nominees who receive the highest through third-highest
numbers of votes will be elected, regardless of the number of votes that for any
reason, including abstention or withholding of authority, are not cast for the
election of those nominees.
The board's director nominees are the three current directors whose terms
are scheduled to expire at the meeting. All of the nominees have consented to
serve if elected. In the absence of other instruction, the persons named in the
accompanying form of proxy will vote in favor of these nominees. If any nominee
becomes unable or unwilling to serve, which we do not expect, the proxy holders
will vote for a substitute nominee designated by the board.
Information about each nominee for election at the meeting and each director
continuing in office is given below. Unless otherwise indicated, the principal
occupation of each director or director nominee has been the same for at least
five years.
Directors Nominees for Terms to Expire in 2006
[FOSS PHOTO] John H. Foss, age 60 Director since 2001
o Vice President, Treasurer and Chief
Financial Officer of Tecumseh Products
Company until retirement in October 2001
o Director of United Bankcorp, Inc.
[NORTON PHOTO] Patrick H. Norton, age 81 Director since 1981
o Our Chairman of the Board
o Director of Culp, Inc. (manufacturer and
marketer of upholstery fabrics and mattress
tickings)
[PETRAUSKAS PHOTO] Helen O. Petrauskas, age 59 Director since 2000
o Vice President Environmental and Safety
Engineering of Ford Motor Company from 1983
until retirement in June 2001
Page 3
Directors with Terms Expiring In 2005
[JOHNSTON PHOTO] James W. Johnston, age 64 Director since 1991
o Private investor
[KISER PHOTO] Gerald L. Kiser, age 56 Director since 1997
o Our President and Chief Executive Officer since
July 2001
o Formerly, our President and Chief Operating
Officer (October 1997-July 2001)
o Director of MBT Financial Corp. and of its
subsidiary Monroe Bank & Trust
[LEVY PHOTO] H. George Levy, M.D., age 53 Director since 1997
o Otorhinolaryngologist. Also Chairman and CEO of
USI, Inc. (e-commerce, consulting Web design,
and systems integration) and CEO and founder of
Enduenet, Inc. (Web based e-learning, business
to business, physician practice enhancement)
o Director of Michigan Trust Bank
o Director of Telenetics Corporation.
[MITCHELL PHOTO] Donald L. Mitchell, age 59 Director since 2002
o Our Senior Vice President and President of the
Casegoods Group from July 2001 until retirement
in April 2002
o Executive Vice President of LADD Furniture, Inc.
(our wholly owned subsidiary since January 2000)
until retirement in April 2002
o President of LADD's casegoods group until July
2001
Page 4
Directors with Terms expiring in 2004
[HEHL PHOTO] David K. Hehl, age 56 Director since 1977
o Member of the public accounting firm of
Cooley Hehl Wohlgamuth & Carlton P.L.L.C.
[LIPFORD PHOTO] Rocque E. Lipford, age 64 Director since 1979
o Senior Principal in the law firm of Miller,
Canfield, Paddock and Stone, P.L.C.
o Director of MBT Financial Corp. and of its
subsidiary Monroe Bank & Trust
[THOMPSON PHOTO] Jack L. Thompson, age 64 Director since 2001
o CEO and President of Penda Corporation
(manufacturer and marketer of truck bedliners
and accessories)
Page 5
DIRECTORS' MEETINGS AND STANDING COMMITTEES
During fiscal 2003, our board of directors held nine meetings of the full
board and one meeting without the employee directors. Each director attended at
least 75% of the total number of all fiscal 2003 board meetings and all fiscal
2003 meetings of board committees on which the director served that were held
during his or her period of service.
The standing committees of the board include the Audit Committee, the
Compensation Committee, a subcommittee of the Compensation Committee informally
referred to as the Compensation Subcommittee, the Nominating and Corporate
Governance Committee (previously called the Committee on the Board), and the
Investment Performance Review Committee. We provide more information about each
of them below.
Audit Committee - Members: David K. Hehl (Chairman), John H. Foss and James W.
Johnston
The Audit Committee met six times during the fiscal year 2003. As provided
in its charter (attached as Exhibit A), the Audit Committee assists the Board in
its oversight of the quality and integrity of the Company's financial reporting.
The Audit Committee oversees management (which is responsible for preparing
financial statements) and the outside auditor (which is responsible for auditing
them), but does not provide any expert or special assurance about the financial
statements or any professional certification of the outside auditor's work. In
performing its duties the Audit Committee regularly reviews the audited
financial statements and the interim non-audited financial statements with
management and the outside auditor. In addition, the Audit Committee discusses
the quality and adequacy of internal controls with management and the outside
auditor. To assure itself of the auditor's independence, the Audit Committee
annually requests from the outside auditor a written statement of relationships
between the auditor and La-Z-Boy as provided in Independence Standards Board
Standard No. 1. The Audit Committee discusses with the outside auditor any
relationships disclosed and their impact on the auditor's independence, and
recommends that the board take appropriate action in response to the report.
Compensation Committee - Members: Jack L. Thompson (Chairman), David K. Hehl,
Dr. H. George Levy, Rocque E. Lipford, and Helen O. Petrauskas
The Compensation Committee met five times during fiscal 2003 to review and
determine the cash and other remuneration of the directors and executive
officers (except for plans administered by the Compensation Subcommittee). The
Compensation Committee also administers our cash incentive compensation plan for
employees.
Compensation Subcommittee - Members: Helen O. Petrauskas (Chairman), David K.
Hehl, Dr. H. George Levy, Jack L. Thompson
The Compensation Subcommittee was established to administer the stock-based
employee incentive plans. The Compensation Subcommittee is composed entirely of
directors who are both "non-employee directors" under SEC Rule 16b-3 and
"outside directors" under Internal Revenue Code Section 162(m) regulations. The
Compensation Subcommittee met jointly with the Compensation Committee three
times during fiscal 2003.
Nominating and Corporate Governance Committee (formerly known as the Committee
on the Board)- Members: James W. Johnston (Chairman), Dr. H. George Levy, Rocque
E. Lipford
The Nominating and Corporate Governance Committee, which met four times
during fiscal 2003, was previously called the Committee on the Board. The
Nominating and Corporate Governance Committee adopted a new charter and
concurrently changed its name. Under its charter, the Nominating and Corporate
Governance Committee identifies, evaluates, and recommends to the board
candidates for its slate of director nominees for election by shareholders or
appointment to fill vacancies on the board. In addition to considering
prospective candidates identified by the committee's own members or referred to
it by other board members, management, or outside sources, the Nominating and
Corporate Governance Committee will consider candidates recommended by
shareholders. (For information on how to propose a candidate to the Nominating
and Corporate Governance Committee and on the requirements for a shareholder's
own nomination of a director, see "Director Nominations and Shareholder
Proposals for Next Annual Meeting" on page 20.) The Nominating and
Corporate Governance Committee also considers and makes recommendations to the
board on other matters relating to the board's practices, policies, and
procedures and on the size, structure, and composition of the board and its
committees.
Investment Performance Review Committee - Members: Helen O. Petrauskas
(Chairman), John H. Foss, Jack L. Thompson
The Investment Performance Review Committee's primary purpose is to assist
the Board of Directors in fulfilling its responsibility to oversee the
investment of the assets of employee benefit plans and the La-Z-Boy Foundation.
Pursuant to its charter the Investment Performance Review Committee established
and reviews the investment policy for each of the plans under its oversight. The
Investment Performance Review Committee met three times in fiscal 2003.
Page 6
DIRECTOR COMPENSATION
Directors who also are our employees receive no additional compensation for
serving on the board. For fiscal 2004, Directors who are not our employees will
receive:
Cash Compensation
o $25,000 annual cash retainer
o $8,000 annual cash retainer for the chairman of the Audit Committee
o $4,000 annual cash retainer for the chairmen of the Compensation,
Nominating and Corporate Governance, and Investment Performance Review
committees
o $1,500 attendance fee for each board meeting and board committee or
subcommittee meeting attended, including telephonic attendance.
For fiscal 2003, we paid non-employee directors a $20,000 annual retainer
and $750 for each meeting attended, and we did not pay additional retainers to
committee chairmen. We also reimburse our directors for travel, lodging and
related expenses they incur in attending Board and committee meetings.
Equity
o On first becoming a director, 4,500 common shares at a 75% discount from
the market price of the shares
o At the beginning of each fiscal year while still a director, 600 common
shares similarly discounted
o Transfer of such shares is restricted while a director remains on the
board
We are proposing to increase the equity compensation to our non-employee
directors. See "Proposal No. 2: To Approve the Restricted Stock Plan for Non-
Employee Directors as Amended and Restated" beginning on page 17.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors, some over 10% owners of our common shares, and some
persons who formerly were directors, executive officers, or over 10% owners, to
file reports of ownership and changes in ownership with the SEC and the NYSE and
furnish us with a copy of each report filed. Based solely on our review of
copies of the reports filed by some of those persons and written representations
from others that no reports were required, we believe that during fiscal 2003
all Section 16(a) filing requirements were complied with in a timely fashion
except that James Johnston filed one late report of one transaction in a prior
year.
SHARE OWNERSHIP INFORMATION
The tables below provide information about beneficial owners of our common
shares at the record date for the annual meeting. Under applicable SEC rules,
anyone that has or shares the right to vote any of our common shares or has or
shares dispositive power over any of them is a "beneficial owner" of those
shares. The settlor of a trust with a right to revoke the trust and regain the
shares or a person who can acquire shares by exercising an option or a
conversion right sometimes also is considered a beneficial owner under these
rules. Consequently, more than one person can be considered the beneficial owner
of the same common shares. Unless otherwise indicated below, each owner named in
a table has sole voting and sole dispositive power over the shares reported for
that person.
Security Ownership of Known Over 5% Beneficial Owners
Number of Percent of
Name and Address Shares Class
------------------------ --------- ----------
Perkins, Wolf, McDonnell & Company
Chicago, IL 60604................... 4,318,995 7.9%
Kayne Anderson Rudnick Investment Management, LLC
Los Angeles, CA 90067............... 3,520,363 6.4%
Berger Small Cap Value Fund
Denver, CO 80206.................... 3,071,770 5.6%
Page 7
- ----------
o Information about Perkins, Wolf, McDonnell & Company is based on a
Schedule 13G amendment it filed after December 31, 2002, in which it
reports that as of that date it had sole voting and dispositive power
over 12,350 common shares and shared voting and dispositive power over
4,306,645 common shares.
o Information about Kayne Anderson Rudnick Investment Management, LLC is
based on a Schedule 13G amendment it filed after December 31, 2002. In
the schedule Kayne Anderson Rudnick reports that as of that date it had
shared voting and dispositive power over 3,520,363 common shares but
also disclaims beneficial ownership of those shares, all of which it
identifies as held in managed accounts.
o Information about Berger Small Cap Value Fund is based on a Schedule 13G
amendment it filed after December 31, 2002, in which it reports that as
of that date it has shared voting and dispositive power over 3,071,770
common shares. It also reports that Perkins, Wolf, McDonnell & Company
is the sub-investment advisor delegated with investment and voting
authority.
Security Ownership of Current and Fiscal 2003
Executive Officers, Current Directors, and Nominees
Number of Percent of
Name Shares Class
---------------- --------- ----------
John J. Case............ 94,122 *
John H. Foss............. 5,700 *
David K. Hehl............ 27,372 *
James W. Johnston........ 1,593,054 2.905%
Gerald L. Kiser.......... 233,155 *
H. George Levy........... 9,600 *
Rocque E. Lipford........ 15,300 *
Donald L. Mitchell....... 10,396 *
Patrick H. Norton........ 366,908 *
Helen O. Petrauskas...... 6,300 *
David M. Risley.......... 27,703 *
Jack L. Thompson......... 6,000 *
All as a group (12 persons) 2,395,610 4.342%
- ----------
* less than 1%
o For purposes of calculating the percentage ownership of the group in the
table above, all shares subject to options held by any group member that
currently are exercisable or that will become exercisable within 60 days
of June 25, 2003 are treated as outstanding, but for purposes of
calculating the percentage of ownership of any individual group member
only the optioned shares held by that group member are treated as
outstanding. The table includes the following numbers of optioned
shares:
Mr. Case......................... 70,925
Mr. Kiser........................ 116,100
Mr. Norton....................... 123,600
Mr. Risley....................... 23,475
o The table also includes the following numbers of shares owned by a named
person's wife, beneficial ownership of which is disclaimed by him:
Mr. Hehl......................... 5,616
Mr. Johnston..................... 770,504
Mr. Lipford...................... 2,400
o Shares shown in the table for Mr. Lipford do not include 305,000 common
shares held by the Edwin J. and Ruth M. Shoemaker Foundation. Mr.
Lipford acts as one of the six members of the Board of Directors of the
Foundation. He disclaims beneficial ownership with respect to these
shares.
Page 8
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth, the compensation for fiscal 2003 and, as
relevant, the preceding two fiscal years of the individuals who are or during
fiscal 2003 were our executive officers. In the rest of this proxy statement, we
sometimes call these individuals "named executives."
Summary Compensation Table
Long-Term Compensation
----------------------
Awards Payouts
---------- -----------
Incentive
Annual Compensation Stock Long-Term
--------------------------- Option Incentive All Other
Salary Bonus Grants Plan Payouts Compensation
Name and Principal Position Year $ $ # $ $
- -------------------------------------- ---- ------ ----- --------- ------------ -------------
Gerald L. Kiser 2003 479,997 207,400 50,000 161,744 308,751
President and Chief Executive 2002 383,700 135,830 40,000 57,013 70,681
Officer 2001 383,700 -- 40,000 96,272 81,863
Patrick H. Norton 2003 366,998 158,500 40,000 161,744 71,866
Chairman of the Board 2002 346,548 122,484 40,000 57,013 106,537
2001 346,483 -- 40,000 96,272 86,221
John J. Case 2003 344,498 153,300 31,300 108,773 221,026
President Upholstery, Senior 2002 305,652 143,403 31,300 28,735 55,026
Vice President La-Z-Boy
David M. Risley 2003 302,098 108,800 31,300 88,150 47,523
Senior Vice President and 2002 285,000 84,075 31,300 16,227 44,887
Chief Financial Officer
______________
o Amounts listed under "Salary" include, where applicable, amounts
electively deferred by a named executive under our 401(k) savings plan.
o Amount reported under "Bonus" for Mr. Kiser for fiscal year 2001 does
not include a mandatory bonus paid due to his participation in our
former personal executive life insurance program. That bonus, and
related partial tax gross up, is included under "All Other
Compensation."
o Amounts reported under "Long-Term Incentive Plan Payouts" relate to
performance awards under our Performance-Based Stock Plan, which was
amended and restated, with shareholder approval, in 2001. Under the
plan's terms (both before and after the 2001 amendment), we make
performance awards in common shares or 30-day options on common shares.
The amounts reported in the summary compensation table are the numbers
of shares or options we granted multiplied by the NYSE closing price
for our common shares on the grant dates and reduced, where applicable,
by option exercise prices.
o The fiscal 2001 amount reported for Mr. Kiser under "All Other
Compensation" also includes an amount related to his participation in
the personal executive life insurance program. Under that program,
which we terminated at the end of fiscal 2002, a participating employee
received supplemental life insurance intended to provide benefits to
the employee upon retirement and the employee's beneficiary upon the
employee's death. A participating employee was not eligible to receive
contributions under our profit-sharing plan or supplemental executive
retirement plan (which are not currently taxable to the employee), but
did receive an annual bonus (which was currently taxable) in an amount
equal to the premiums payable during the year on the insurance policy,
plus an additional 32% of the premium amount, which partially
reimbursed the employee for taxes payable on the bonus. In
anticipation of termination of this program, we did not make such bonus
or tax gross-up payments to participants in the program for fiscal
2002. However, we did provide them with benefits under the
supplemental executive retirement plan or profit-sharing plan for
fiscal 2002 and during fiscal 2003 paid each participant an amount,
with tax gross-up, intended to cover taxes the participant paid on past
program-related bonuses that were not previously covered by us. Messrs.
Case and Kiser are the only named executives who participated in the
personal executive life insurance program. The tax gross-up amounts
paid them in fiscal 2003 ($43,718 for Mr. Case and $83,661 for Mr.
Kiser) are included in the fiscal 2003 amounts under "All Other
Compensation."
Page 9
o Amounts reported under "All Other Compensation" also include amounts
allocated for named executives to our supplemental executive retirement
plan (or the deferred compensation plan which replaced it) and/or
profit-sharing plan ("Amounts Allocated to Plans"), amounts intended to
approximate the balances Messrs. Case and Kiser would have had in
their deferred compensation plan accounts related to the termination of
the personal executive life insurance program ("Special Amounts
Credited to Plans"), earnings credited to the accounts of named
executives under the supplemental plan until July 31, 2002 when the
plan was changed -- see "Deferred Compensation Plan" -- ("Earnings"),
and the cash value at date of contribution of matching contributions
made for their accounts under our matched retirement savings plan
("Match Contributions"), which we made in the form of common shares.
A breakdown of these amounts for fiscal 2003 is provided below:
Amounts Allocated Special Amounts Match
to Plans Credited to Plans Earnings Contributions
Name $ $ $ $
----------------- ----------------- ----------------- -------- -------------
Gerald L. Kiser 72,000 144,475 6,723 1,892
Patrick H. Norton 55,050 -- 15,236 1,580
John J. Case 51,675 118,789 4,868 1,976
David M. Risley 45,315 -- 978 1,230
_____________
o We have not included our cost of providing perquisites or other
personal benefits to named executives in the summary compensation table
above. For each year reported, the cost of providing perquisites to any
named executive did not exceed $50,000 or, if less, 10% of his salary
and bonus.
Option Grants
The table below reports on stock options granted to named executives during
fiscal 2003 and the potential realizable value of those grants, assuming stock
price appreciation rates of 5% and 10% annually over the term of the options.
The 5% and 10% rates of appreciation used in the table are not intended to
forecast possible future actual appreciation, if any, in our stock price.
Option Grants in Last Fiscal Year
Potential Realizable Value at Assumed
Individual Grants Annual Rates of Stock Price
------------------------ Appreciation for Option Terms
% of Total ----------------------------------------------
Options 5% Per Year 10% Per Year
Granted to Exercise --------------------- ---------------------
Options Employees or Base Aggregate Aggregate
Granted in Fiscal Price Expiration Value Value
Name (#) Year ($/SH) Date $/Share ($) $/Share ($)
- ------------- -------- ---------- -------- ---------- ------- --------- --------- ---------
G. Kiser 50,000 7.6 22.60 8/14/12 14.213 710,651 36.0186 1,800,928
P. Norton 40,000 6.1 22.60 8/14/12 14.213 568,521 36.0186 1,440,743
J. Case 31,300 4.7 22.60 8/14/12 14.213 444,867 36.0186 1,127,382
D. Risley 31,300 4.7 22.60 8/14/12 14.213 444,867 36.0186 1,127,382
All options reported in the table are options on common shares granted under
our stock option plan for employees. Some of the options qualify as incentive
stock options under the Internal Revenue Code, and the rest are non-qualified
stock options. Options become exercisable in 25% increments on the first through
fourth anniversaries of grant, and once exercisable, remain exercisable through
the tenth anniversary of grant.
However, in the event of a grantee's death or retirement at age 65 (or
earlier with the consent of the board), each of the grantee's options would
become immediately exercisable in full and continue to be exercisable for three
years or, if earlier, until the option's scheduled expiration date.
In addition, all options will become immediately exercisable in full in the
event of a sale, exchange, or other disposition of all or substantially all of
the total assets of the Company or all or substantially all of the outstanding
shares. Termination of an executive's employment under any circumstances other
than those described above would cause all of his options to terminate
immediately.
Page 10
Options Exercised and Held
The following table contains information concerning exercise of stock
options during the last completed fiscal year by each of the named executive
officers, and the fiscal year-end value of unexercised stock options held by
such executive officers:
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities
Underlying Value of Unexercised
Shares Unexercised Options at Fiscal In-the-Money Options
Acquired Value Year End at Fiscal Year End
on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
Name # $ # $
- -------------- ----------- -------- ----------------------------- -------------------------
G. Kiser............ 28,800 283,416 77,100 / 106,500 64,832 / 51,400
P. Norton........... 28,800 283,416 77,100 / 96,500 64,832 / 51,400
J. Case............. 11,100 133,320 45,250 / 71,550 41,557 / 34,695
D. Risley........... -- -- 7,825 / 54,775 -- / --
__________________
o The "Value Realized" column above reports the amount an executive would
have realized if he had sold the shares acquired on the exercise date,
without taking brokerage commissions into account. Amounts reported are
based on the NYSE closing market price of our common shares on the
exercise date, minus the exercise price.
o "In-the-Money" amounts are based on the NYSE closing market price of
our common shares at the end of fiscal 2003 ($18.07), minus the
exercise price.
Long-Term Incentive Compensation Target Awards
Shareholders approved our Further Amended and Restated 1993
Performance-Based Stock Plan in July 2001. This plan authorizes the Compensation
Subcommittee to grant contingent target awards to key employees, the potential
pay-outs on which (performance awards) are linked to achievement over a
performance cycle of three fiscal years of goals established by the Subcommittee
at or near the beginning of the cycle. All performance awards under the plan are
structured as options to purchase or outright grants of our common shares.
The plan requires the Subcommittee to establish a single objectively
determinable and uniform performance goal for all target awards it grants for a
given performance cycle and to establish the maximum number of shares a grantee
may be granted as a performance award if the performance goal is achieved during
the cycle. The plan also authorizes the Subcommittee to establish any number of
subordinate goals, the non-achievement of which may reduce (but never increase)
the performance award a grantee may receive after the end of the cycle.
Normally, the Subcommittee grants target awards at or about the same time
it establishes the goals for a performance cycle, but it also has discretion to
grant a mid-cycle target award to a newly-hired or newly-eligible employee, as
long as there are at least twelve months remaining in the cycle. If a mid-cycle
target award is granted, the pre-established performance goal for the cycle
would apply to that award, as would any subordinate goals the Subcommittee
elects to establish. The potential pay-out on the mid-cycle award would be the
same as the grantee would have received had he been eligible to receive a target
award when the initial target awards for the cycle were granted, reduced
pro-rata based on the number of months in the cycle that already had occurred
before grant of the mid-cycle award.
Early in fiscal 2003, the Compensation Subcommittee granted target awards
under the plan for the performance cycle ending April 30, 2005. For this
three-year cycle, the Subcommittee set as the performance goal achieving at
least a specified level of cumulative diluted earnings per share, and it
established three weighted subordinate goals relating to sales growth, operating
margin and cash flow and a target payout for each subordinate goal. Each
subordinate goal has a sliding scale that provides a payout from 50 to 200
percent of the related target payout. The subordinate goals are not evenly
weighted. We provide more information about the target awards granted to named
executives in the table below.
Page 11
Long-Term Incentive Plan - Awards in Last Fiscal Year
Estimated Future Payouts
Under Non-Stock Price-Based Plans
--------------------------------------------
Period Until
Number of Maturation or Threshold Target Maximum
Name Shares (#) Payout (#) (#) (#)
- ---------------- ---------- ------------- --------- ------ -------
G. Kiser 20,000 3 years 2,500 10,000 20,000
P. Norton 20,000 3 years 2,500 10,000 20,000
J. Case 15,650 3 years 1,956 7,825 15,650
D. Risley 15,650 3 years 1,956 7,825 15,650
The maximum performance award potential for any target award, which would be
awarded after the end of the relevant three-year cycle if the performance goal
is achieved and all subordinate goals are fully achieved, is an outright grant
of the "Maximum" number of shares established for that target award, as shown on
the table. The minimum potential performance award ("Threshold" on the table
shown above), for achievement of the performance goal and meeting the threshold
for just one subordinate goal is an outright grant of 12.5% of the maximum
number of shares under the target award. The final award will be determined
after April 30, 2005 by first determining whether the performance goal was
achieved and, if it was, then determining the degree to which each (if any) of
the subordinate goals were met. If the performance goal is not achieved, or if
that goal is achieved but the subordinate goal thresholds are not achieved,
there will be no payout on the target award.
With respect to each target award reflected in the table:
o If the named grantee dies while employed, or retires with the consent
of the board and then dies, the plan permits his executor or personal
representative to elect payment of a performance award for his estate
before the end of the performance cycle. If early payment is elected
and the grantee died within the first half of the performance cycle,
the estate would receive an option on half the maximum number of shares
specified for the grantee's target award at a per share exercise price
of 25% of the fair market value at the date of the target award grant.
If early payment is elected and the grantee died during the second half
of the performance period, the estate would receive an outright grant
of the same number of shares.
o Each grantee will be deemed automatically to have earned and been
granted a performance award equal to an outright grant of the number of
shares reported for him under "Maximum" if a person or group becomes an
acquiring person or certain changes in the composition of the board
occur while the target award is outstanding. The same effect also will
result if, while there is an acquiring person, other significant
transactions specified in the plan should occur, unless the transaction
has been approved by a majority of directors who were board members
before the acquiring person became an acquiring person.
o If employment terminates by reasons other than retirement or death, all
performance awards are immediately cancelled.
Change in Control Agreements
We have change in control agreements currently in effect with Messrs. Kiser,
Norton, Case and Risley. These agreements are designed primarily to aid in
ensuring continued management in the event of an actual or threatened change in
control of the Company (as defined in the agreements). The agreements provide
that in the event the covered employee is terminated other than upon his death,
disability or for cause (as defined in the agreements) within three years after
a change in control of La-Z-Boy Incorporated, that person will be entitled to
receive a lump sum severance payment equal to three times his annualized salary
and three times the average bonus amount paid to him in the previous three
years. The covered employee also would be entitled to continuation of employee
welfare benefit payments and reimbursement of certain legal fees and expenses
incurred by the employee in enforcing the agreement following a change in
control.
In consideration of these obligations, each covered employee has agreed to
remain in our employ pending the resolution of any proposal for change in
control. Each agreement expires December 31, 2003, but automatically renews for
an additional one-year period unless either party gives the other 90 days prior
notice of non-extension. If a change in control occurs, the agreements
automatically extend for 36 months.
Page 12
Deferred Compensation Plan
Effective August 1, 2002, we adopted the amended and restated La-Z-Boy
Executive Deferred Compensation Plan. This plan incorporates the former La-Z-Boy
Supplemental Executive Retirement Plan (SERP). Under the terms of the amended
and restated plan, senior executive employees of La-Z-Boy and its subsidiaries
(including our named executives) may elect to defer the payment of from 5% to
100% of their base salary and/or from 5% to 100% of their cash bonus under the
Management Incentive Plan for each fiscal year.
In addition, any company match and/or profit sharing contributions that
cannot be credited to executives' accounts under the qualified retirement plans,
due to Internal Revenue Code limitations, are credited to their accounts
maintained in this plan.
All executives' deferrals and any non-qualified company match or profit
sharing amounts are added to a recordkeeping account and credited with earnings
or losses, depending upon actual performance of the mutual-fund-type options the
participant has chosen for the deemed investment of their account. "Earnings"
included in the Summary Compensation Table relate to amounts credited under the
former SERP prior to the adoption of the new plan, because, under the former
SERP, a participant's account was credited with interest at a fixed, stated
rate.
Payment of a participant's account balance will be deferred until a date
designated by the participant upon making the deferral election. The deferral
amounts are paid either in one lump sum or in annual installments for up to 15
years, also as designated in the participant's deferral election. Upon the death
of the participant, any remaining balance in the participant's account will be
paid to the participant's designated beneficiary.
Related Party Transactions
Purchases from John Case and Gerald Kiser. As previously noted under the
summary compensation table in this proxy statement, we terminated our personal
executive life insurance program at the end of fiscal 2002. John Case and Gerald
Kiser were participants in that program.
In connection with termination of the program, we agreed to purchase from
each program participant his or her life insurance policy under the program for
an amount equal to the amount the participant would have received had it been
surrendered to the insurer. We paid the purchase price for each policy
(approximately $106,000 and $203,100, respectively, in the cases of Mr. Case and
Mr. Kiser), plus interest at 5% per annum, in twelve equal monthly installments
through May 2003, and each seller agreed and irrevocably elected to defer an
amount equal to his sale proceeds into his supplemental executive retirement
plan or profit-sharing plan account over the twelve months ending May 2003.
These payments are not included in the Summary Compensation Table. Please refer
to this year's Summary Compensation Table and the paragraphs immediately
following it for information about compensatory arrangements with them relating
to termination of the personal executive life insurance program.
Culp, Inc. Patrick Norton is a member of the Board of Directors of Culp,
Inc. and chairs its compensation committee. Culp provided 16.5% of the total
fabric purchased by us during the fiscal year. The purchases from Culp were at
prices comparable to other vendors and under similar terms. Mr. Norton has no
involvement in our selection or purchase processes related to fabrics.
Miller, Canfield, Paddock and Stone. The law firm of Miller, Canfield,
Paddock and Stone, PLC in which Rocque E. Lipford is a senior principal,
provides us with legal services and has done so for many years. Miller, Canfield
has advised us that the revenues paid to Miller, Canfield during the past fiscal
year were less than 0.5% of their total revenues for the same period. We believe
that the transactions with the firm are on terms no less favorable than those
that could be obtained from unrelated third parties.
Kevin Norton. Kevin Norton, the son of Patrick Norton, is an independent
sales representative for La-Z-Boy residential products under an agreement
providing for the payment of commissions at various rates. The terms of his
agreement, including the commission rates, are identical to those of our
agreements with all of our approximately 94 other La-Z-Boy residential sales
representatives.
Mitch Kiser. Mitch Kiser, the son of Gerald Kiser, is an independent sales
representative for Kincaid products under an agreement providing for the payment
of commissions at various rates. The terms of his agreement, including the
commission rates, are identical to those of our agreements with all of our
approximately 44 other Kincaid sales representatives.
Page 13
PERFORMANCE COMPARISON
The graph below shows the return for our last five fiscal years that would
have been realized (assuming reinvestment of dividends) by an investor who
invested $100 on April 25, 1998 in our common shares, in the S&P 500 Composite
Index, and in a peer group comprised of the following publicly traded furniture
industry companies: Bassett Furniture, Bush Industries, Chromcraft Revington,
Inc., Ethan Allen Interiors, Flexsteel Industries, Furniture Brands
International, Rowe Companies, and Stanley Furniture. The stock performance of
each company in the peer group has been weighted according to its relative stock
market capitalization for purposes of arriving at group averages.
Assumes $100 Invested on April 25, 1998
Assumes Dividends Reinvested
Fiscal Year Ended April 26, 2003
[Graph]
- --------------------------------------------------------------------------------
Company/Index/Market 1998 1999 2000 2001 2002 2003
- -------------------- ---- ---- ---- ---- ---- ----
La-Z-Boy Incorporated..... $100.00 $108.46 $91.08 $106.88 $182.49 $111.08
Peer Group................ 100.00 85.34 71.21 85.65 101.19 71.03
S&P 500 Composite Index... 100.00 121.82 134.16 116.76 102.02 88.44
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP audited our financial statements for
fiscal 2003. A representative of PricewaterhouseCoopers LLP is expected to
attend the annual meeting, will have an opportunity to make a statement at the
meeting if he or she desires to do so, and will be available to answer
appropriate questions that may be raised by shareholders at the meeting. The
Audit Committee reappointed PricewaterhouseCoopers LLP as independent
accountants for fiscal year 2004.
AUDIT FEES
For professional services rendered to us for fiscal years 2003 and 2002,
PricewaterhouseCoopers LLP has billed us as follows:
Page 14
Fiscal 2003 Fiscal 2002
----------- -----------
Audit Fees............................... $634,600 $523,790
Audit Related Fees....................... 97,800 89,710
Tax Fees................................. 412,170 428,947
All Other Fees........................... -- --
----------- -----------
Total $1,144,570 $1,042,447
=========== ===========
Audit fees represent fees for audit work performed on our annual financial
statements and reviews of the quarterly financial statements included in our
quarterly reports on Form 10-Q, as well as audit services that are normally
provided in connection with our statutory and regulatory filings.
Audit-related fees relate to audits of our employee benefit plans.
Tax fees include fees for domestic and foreign tax compliance and advisory
services.
AUDIT COMMITTEE REPORT
The Audit Committee has been established to assist the Board in its
oversight of the financial reporting, internal controls and audit of the
Company's financial statements. Management is primarily responsible for the
consolidated financial statements and for La-Z-Boy's internal controls,
financial reporting process and compliance with laws, regulations and ethical
business standards. The Audit Committee consists of three directors all of whom
meet the independence and financial experience requirements of the New York
Stock Exchange. John Weaver was a fourth member of the committee until his
retirement from the board in August 2002. The Audit Committee operates under a
written charter which was amended in May of 2003 (see attached Exhibit A).
In fulfilling its responsibilities under its charter, the Audit Committee
met six times during fiscal 2003. The Audit Committee reviewed and discussed the
consolidated financial statements with management and La-Z-Boy's independent
accountants, PricewaterhouseCoopers LLP. The discussions with management and
PricewaterhouseCoopers LLP included the quality, not just the acceptability, of
the accounting principles utilized, the reasonableness of the significant
accounting estimates and judgments, and the clarity of disclosures.
PricewaterhouseCoopers LLP is responsible for performing an independent
audit of the consolidated financial statements in accordance with generally
accepted auditing standards and for issuing their opinion. The Audit Committee
discussed with PricewaterhouseCoopers LLP those matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication with Audit Committees).
As part of the Audit Committee's review of the auditor's independence,
PricewaterhouseCoopers LLP provided to the Audit Committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees). In discussions with
PricewaterhouseCoopers LLP about their independence, the Audit Committee also
reviewed the non-audit services they provided by PricewaterhouseCoopers LLP (as
disclosed above under the caption "Audit Fees").
Based upon the discussions with, representations of, and reports from,
management and PricewaterhouseCoopers LLP, the Audit Committee accepted for
inclusion the audited consolidated financial statements in the Corporation's
Annual Report on Form 10-K for the year ended April 26, 2003 filed with the
Securities and Exchange Commission. The Audit Committee also selected
PricewaterhouseCoopers LLP as La-Z-Boy's independent accountants for fiscal year
2004.
The Audit Committee
David K. Hehl, Chairman
John H. Foss
James W. Johnston
JOINT REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the board and its Compensation Subcommittee
determine the compensation of executive officers and of other senior executives.
The Subcommittee is charged with administering the stock-related employee plans
in which executive officers may participate. The Compensation Committee
determines all executive officer compensation not assigned to the Subcommittee.
Page 15
This is a joint report by the Subcommittee and the Committee on the policies
they followed and the decisions they made for fiscal 2003. The Subcommittee
provides information about decisions made by the Subcommittee only. The
Committee provides all other information.
Compensation Philosophy
La-Z-Boy strives to create value for shareholders through superior growth
and profitability. The executive compensation program supports this goal by
linking compensation to business performance and profitability.
We feel that enhancement of shareholder value is reinforced by a
compensation program which:
o Attracts and retains highly qualified individuals
o Includes major components which are linked to creating value for the
shareholder
o Rewards superior results
This linkage is achieved through the design of incentive plans, which focus
on the short- and long-term goals of the Company, and the attainment of
performance goals, by individual executives.
Compensation Plan Overview
The executive compensation program is based upon a pay-for-performance
philosophy. As an executive's level of responsibility increases, a greater
portion of his total compensation opportunity is contingent on improving the
Company's performance and a lesser portion is base salary.
We retain the services of outside consultants to conduct a competitive
review of our executive compensation programs. We completed a review during
fiscal 2003.
Base Salaries
The base salaries of the named executive officers were increased at the
beginning of fiscal year 2003 after a careful review of the competitive
information and recognizing each named executive's contribution over the
previous fiscal period. We increased Mr. Kiser's salary by 25%, and the salaries
of the other named executives by 6%. No further adjustments were made to
salaries during the fiscal year.
Short-Term Incentive Awards
La-Z-Boy's Management Incentive Plan is a cash-based plan that rewards
performance. We establish short-term performance criteria and the weightings for
the various criteria at the start of the fiscal year. The award paid at the end
of the fiscal year is based on actual results compared to the established
performance targets.
For fiscal 2003, the maximum award opportunities were 120% of salary for
Messrs. Kiser and Norton, and 100% of salary for the other named executives.
We structured the awards based one-third on an increase in sales revenue and
two-thirds on operating income, either on a consolidated basis or on the basis
of a specific business segment depending on the executive's responsibilities.
Actual performance yielded payouts shown as bonus in the Summary Compensation
Table.
Long-Term Incentives
We believe that stock-based awards are an important component of executive
compensation because they particularly link executive compensation to the
maximization of shareholder value. For fiscal 2003, we used awards under the
stock option plan and the performance-based stock plan to further these
objectives. No grants under the restricted share plan were made to named
executive officers.
Our goal is to achieve the proper balance between stock-based awards and
other components of the named executives' compensation. The Subcommittee
relied on the studies that had been completed by our consultant to determine the
appropriate mix of stock options and awards under the performance plan.
Taking into consideration the performance target awards that had been
made for the named executive officers at the beginning of the performance
periods, the Subcommittee decided to grant incentive stock options on 4,424
common shares and nonqualified stock options on 45,576 common shares to Mr.
Kiser and stock options covering a total of 107,600 were awarded to the other
named executives.
Page 16
The performance-based plan awards to named executives that are reported
as long-term incentive plan payouts in the Summary Compensation Table were
awarded for the three-year performance cycle that concluded at the end of fiscal
2003. In accordance with the plan then in effect, at the beginning of the cycle,
we had established four performance goals and granted a target award relating to
those goals to all named executives other than Mr. Risley. When Mr. Risley
joined us in 2001, we granted him a mid-cycle award for the cycle using the same
goals. After the end of the cycle, we determined that only two of the four goals
had been achieved. Mr. Kiser and the other named executive officers received
30-day option grants to purchase one-half of the number of shares they would
have received if all four goals had been met, exercisable for 25% of the fair
market value of the shares on the date the goals were set.
Compliance with Federal Tax Legislation
Federal tax legislation enacted in 1993, generally, would preclude
La-Z-Boy and other public companies from taking a tax deduction for compensation
over $1 million which is not performance-based and is paid, or otherwise
taxable, to named executive officers. The 1997 Incentive Stock Option Plan and
the Further Amended and Restated 1993 Performance-Based Stock Plan contain
provisions designed to permit certain awards to qualify as performance-based
compensation and so to exempt such awards from the deduction limitation.
We intend to continue to monitor the executive compensation program
with respect to the present federal tax law to ensure the deductibility of
compensation paid to named executives.
The Compensation Committee
Jack L. Thompson, Chairman *
David K. Hehl *
Rocque E. Lipford
H. George Levy, M. D. *
Helen O. Petrauskas *
-------------------
* Members of the Compensation Subcommittee
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
Each current member of the Compensation Committee and the Compensation
Subcommittee served throughout fiscal 2003. Except for John F. Weaver, who
retired from the board at the August 2002 shareholders meeting and was a member
of the Compensation Committee, no one other than the current members served on
either the Compensation Committee or the Compensation Subcommittee at any time
during fiscal 2003.
The law firm of Miller, Canfield, Paddock and Stone, P.L.C., in which Rocque
E. Lipford is a principal, provides us with legal services and has done so for
many years.
PROPOSAL NO. 2: TO APPROVE THE RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS,
AS AMENDED AND RESTATED
Background
Since September 1, 1989, the Company has maintained the La-Z-Boy Chair
Company Restricted Stock Plan for Non-Employee Directors, as amended (the
"current plan"), for the non-employee directors of the Company. The proposed
amended and restated plan would change the name of the plan to make it
consistent with the Company's current name, increase initial grants to new
non-employee directors from 4,500 to 5,000 shares, increase annual grants from
600 to 2,000 shares, increase the total number of shares which may be sold under
the plan, change the time when annual grants are made and make other
changes as described below.
The purposes of the plan are to provide ownership of the Company's
common shares to non-employee directors in order to improve the Company's
ability to attract and retain highly qualified individuals to serve as
directors, to enhance and make our board compensation more competitive and
commensurate with the ever-increasing demands for directors' time and attention
to Company affairs and to strengthen the commonality of interest between
directors and shareholders. The current plan was adopted by the Board of
Page 17
Directors, subject to shareholder approval, on May 1, 1989. Shareholders
subsequently approved the plan on August 7, 1989 and the plan became effective
the following September 1.
Description of Proposed Plan and Comparison with Current Plan
Under the proposed plan which is included as Exhibit B (the "proposed
plan"), each individual who becomes a non-employee director would be awarded the
opportunity to purchase 5,000 Company common shares for a cash price equal to
25% of their fair market value on the date of their award. Under the current
plan the initial award to newly installed non-employee directors is 4,500 common
shares (which reflects the 3 for 1 stock split in September of 1998) at the same
bargain price. In addition, under the proposed plan, each then non-employee
director (currently 8 individuals) would be awarded the opportunity at the
Annual Organizational Meeting of the Board which follows the annual shareholders
meeting to purchase 2,000 Company common shares at a similar bargain price equal
to 25% of their fair market value on the date of their award. Under the current
plan the annual award of 600 shares is made at the beginning of each fiscal year
at the same bargain price. If the proposed plan is approved, the non-employee
directors will only receive an award of 1,400 shares at the 2003 Annual
Organizational Meeting. Thereafter the annual awards would be 2,000 shares.
As is the case for the current plan, fair market value would be determined
with reference to closing prices on the New York Stock Exchange, and acceptance
of any such offer would be made by execution of a written agreement with the
Company and payment of the purchase price within thirty days.
As under the current plan, all shares sold under the proposed plan would be
subject to transfer restrictions for a restricted period, such that a purchasing
non-employee director would not be permitted to sell, transfer (except as gifts
to immediate family members and with the same restrictions), assign, pledge or
otherwise transfer or encumber any such shares during the restricted period. The
same restrictions and restricted period would apply to any shares distributed to
the purchaser by virtue of his or her ownership of purchased restricted shares,
e.g., in a share split or as a share dividend.
Under the proposed plan the restricted period would commence upon sale
of the shares and would terminate upon the earliest of:
(1) the non-employee director's death or "disability" (as
defined in the proposed plan);
(2) his or her (a) attainment of the age at which the Nominating
and Corporate Governance Committee determines that the non-employee
director is no longer eligible to stand for re-election to the Board,
(b) not being nominated for an additional term despite being willing to
serve, or (c) being nominated for an additional term but not being
reelected; in any of these circumstances, such Committee may delay
termination of the restrictions until a future date if it determines
that termination of the restrictions would not be in the Company's best
interests;
(3) upon or immediately prior to a change in control event (as
defined in the proposed plan); and
(4) the date of termination of the non-employee director's
services as a director if such termination occurs with the consent of
the Nominating and Corporate Governance Committee.
If the purchaser ceases to be a director of the Company prior to
expiration of the restricted period, he or she would be obligated to
sell the restricted shares to the Company for their original purchase
price (appropriately adjusted in light of any intervening share splits,
recapitalizations, and the like). Under the current plan the restricted
period terminates under the same provisions except that:
o the current plan does not contain provisions 2(b) and 2(c)
above; and
o under the current plan, determinations made under provisions 2
and 4 above are made by the employee members of the Board.
While the current plan is administered by a committee consisting of all
employee directors of the Company, the proposed plan would be administered by
the Nominating and Corporate Governance Committee. Under the proposed plan, the
Nominating and Corporate Governance Committee would have authority to
administer, interpret and make determinations under the proposed plan. However,
because of the automatic nature of the eligibility for awards under the proposed
plan and the fixed numbers of shares to be covered by such awards, the
Nominating and Corporate Governance Committee will not have discretion with
Page 18
respect to the amount and terms of any individual award. The Nominating and
Corporate Governance Committee also would have authority to amend the proposed
plan from time to time, prospectively or retroactively, but no such amendment
not approved by the shareholders of the Company could change the eligibility
criteria for awards, increase the number of shares which may be covered by any
award (other than in connection with a stock split, stock dividend or other
relevant change in capitalization), increase the frequency or materially modify
the timing of awards, or decrease the consideration to be paid for shares
purchased under the proposed plan.
The current plan has no fixed expiration date, but the duration of the
proposed plan would be limited to ten years. However, the Board of Directors
would have authority to discontinue the making of awards under the proposed plan
at any time. Subject to adjustments for share dividends, splits and similar
events, up to 250,000 common shares could be awarded in total under the proposed
plan. Shares previously awarded under the current plan would not count toward
this limitation. The current plan authorizes the award of up to 150,000 shares
(as adjusted for our 1998 stock split), of which 93,600 have previously been
awarded.
Existing Equity Compensation Plans
The table below provides information, as of the end of fiscal 2003,
concerning our compensation plans under which common shares may be issued.
Equity Compensation Plan Information (see Note 1)
Number of securities
Number of Weighted- remaining available for
securities to be average future issuance under
issued upon exercise equity compensation
exercise of prices of plans (excluding
outstanding outstanding securities reflected
options options in column (a)) Note 2
Plan category (a) (b) (c)
- -------------------------------------------------------------------------------
Equity compensation plans
approved by shareholders... 2,139,119 $20.03 5,480,127
Note 1: This table relates only to our shareholder-approved equity plans. We
also have an option plan that we adopted without shareholder approval at the
time we acquired LADD Furniture, Inc. solely in order to replace options on LADD
common shares with options on our common shares. At the end of fiscal 2003,
options on 67,403 of our common shares were outstanding under that replacement
plan, with a weighted-average exercise price of $19.24 per share. No additional
options or other awards may be made under that plan. Except for that plan, the
shareholder-approved plans to which this table relates, and broad-based
retirement plans intended to meet the requirements of Section 401(a) of the
Internal Revenue Code, at the end of fiscal 2003 we had no plans (including
individual compensation arrangements) under which any equity securities were
authorized for issuance.
Note 2: The amount reported in this column is the aggregate number of shares
available for future issuance under our 1997 Incentive Stock Option Plan
(excluding shares reported in column (a)), our 1997 Restricted Share Plan, our
Restricted Stock Plan for Non-Employee Directors as currently in effect, or our
1993 Performance-Based Stock Plan. Both restricted stock plans provide for
grants of 30-day options on our common shares. The performance-based plan
provides for grants of our common shares or 30-day options on common shares to
selected key employees based on achievement of pre-set goals over a performance
period (normally of three fiscal years). No options were outstanding under any
of these plans except the incentive plan at the end of fiscal 2003. At that
time, 437,965 shares were available for future issuance under the 1997
restricted plan, 61,200 shares were available for future issuance under the
non-employee directors restricted plan, and 507,982 shares were available for
future issuance under the performance-based plan.
Other Matters
Shareholder approval of the proposed plan is required by the terms of the
current plan, though not by Michigan corporate law or rules of the NYSE. The
Board of Directors has determined that the proposed plan should be submitted for
shareholder approval, both to comply with the requirements of the current plan
and because the current non-employee directors (including the two non-employee
directors standing for re-election, assuming that they are re-elected) will
benefit personally from approval of the proposed plan.
Page 19
The Board also has determined to require approval in accordance with the
NYSE voting rules that would apply if those rules required a shareholder vote.
The NYSE voting rules impose a more rigorous approval standard than otherwise
would apply. Under this standard, the proposal to approve the proposed plan will
be carried if a majority of all common shares entitled to vote actually are
voted "For" or "Against" the proposal and if a majority of the shares actually
voted on the proposal are in favor of the proposal. For these purposes, if an
abstention or broker non-vote is registered concerning the proposal with respect
to any shares entitled to be voted, those shares will be considered not voted.
The Board of Directors recommends a vote "FOR" approval of this plan. If the
proposed plan is not so approved, the current plan will remain in effect with
respect to the remainder of the previously authorized shares.
MISCELLANEOUS
Director Nominations and Shareholder Proposals for Next Annual Meeting
If you would like to recommend a director candidate for consideration by the
Nominating and Corporate Governance Committee, you should send your
recommendation to the Secretary, who will forward it to the Committee. If you
would like your recommendation to be considered for director nominations at the
annual meeting of shareholders to be held in calendar 2004, you should submit it
no later than March 11, 2004. Your recommendation should include a description
of your candidate's qualifications for board service; your candidate's consent
to be considered for nomination and to serve if nominated and elected, and
addresses and telephone numbers for contacting you and the candidate for more
information.
If you would prefer to nominate a director candidate at the meeting
yourself, our bylaws require that you notify us of your intention to do so no
later than May 14, 2004. Your notice must include your nominee's name, age,
residence and business address, and principal occupation, the number of common
shares beneficially owned by the nominee, and all other information about the
nominee that would be required by SEC rules in a proxy statement soliciting
proxies for election of the nominee.
If you would like to submit a proposal for inclusion in our proxy materials
for the calendar 2004 annual meeting, you must submit it to us no later than
March 11, 2004. Even if a proposal is submitted by that date, we will have the
right to omit it if it does not satisfy the requirements for inclusion under SEC
Rule 14a-8.
Any shareholder proposal for the calendar 2004 annual meeting that is
submitted outside the processes of Rule 14a-8 will be considered untimely for
purposes of SEC Rule 14a-4(c)(1) if it is not submitted to us on or before May
25, 2004. Proxies for that meeting may confer discretionary authority to vote on
any untimely proposal without express direction from the shareholders giving the
proxies.
Any shareholder proposal or nomination should be sent to our principal
offices in Monroe, Michigan, addressed to the attention of the Secretary.
Costs of Proxy Solicitation
We will pay the expense of soliciting proxies pursuant to this proxy
statement. That expense is expected to be limited to the cost of preparing and
mailing this proxy statement and accompanying documents.
This year you may vote by mail, by telephone or on the Internet. Your vote
is important. Even if you plan to attend the meeting, please vote by proxy card,
telephone or computer as soon as possible.
BY ORDER OF THE BOARD OF
DIRECTORS
James P. Klarr, Secretary
Monroe, Michigan
July 9, 2003
We will send you a copy of our Form 10-K Annual Report for the fiscal year
ended April 26, 2003 without charge if you send a written request to: Office of
the Secretary, La-Z-Boy Incorporated, 1284 North Telegraph Road, Monroe,
Michigan 48162. You also can obtain copies of our Form 10-K and the other
reports we file with the SEC on our Web site at www.la-z-boy.com or through the
SEC's Web site at www.sec.gov.
Page 20
Exhibit A
LA-Z-BOY INCORPORATED
AUDIT COMMITTEE CHARTER
Purpose of the Audit Committee
The Audit Committee assists the Board of Directors in its oversight of (a)
the integrity and quality of the processes and practices of the company with
respect to financial reporting, (b) management of business and financial risk,
(c) compliance with significant legal, regulatory and ethical requirements,
(d) the qualifications and independence of the independent auditors, and (e) the
effectiveness of the Company's independent auditors and internal audit function.
Responsibilities
The Committee is directly responsible for the appointment, termination,
compensation and oversight of the Company's independent public accountant. With
respect to all other matters, the role of the Audit Committee is one of
oversight and as such the Committee relies on the expertise and knowledge of
management, internal auditors, independent public accountants and other experts.
Management of the Company is responsible for determining that the Company's
financial statements are fairly presented in accordance with generally accepted
accounting principles. The independent public accountant is responsible for
auditing and reporting on the Company's financial statements. It is not the
responsibility of the Committee to plan or conduct audits, to determine the
fairness or accuracy of financial statements, to provide assurance of compliance
with laws and regulations, or to provide assurance with respect to the adequacy
of internal policies, practices, procedures or controls.
Membership
The Committee shall consist of at least three Directors who have no
relationship with the Company that might interfere with the exercise of their
independent judgment. The Committee members shall satisfy the independence,
financial literacy and expertise requirements of the New York Stock Exchange as
interpreted by the Board of Directors and any rules adopted by the Securities
and Exchange Committee pursuant to Section 10A(m)(3) of the Securities Exchange
Act of 1934. The Committee members, including the Chairman, shall be appointed
by the Board of Directors.
Authority
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention with full access to all Company books,
records, facilities and personnel and with the power to retain, at the Company's
expense, outside counsel or other experts for this purpose.
Duties
The Committee's specific duties are set forth in the following table:
Minimum
Duty Frequency
- -------------------------------------------------------------------------------
With Respect to the Independent Auditor:
o Select and retain the independent auditor. Annually
o Pre-approve audit fees charged by the independent auditor. Annually
o Evaluate the performance, qualifications and
independence of the independent auditor. Annually
o Approve, as appropriate, audit, audit-related
and non-audit services proposed to be performed
by the independent auditor. As Needed
o Review the annual audit plan of the independent auditor. Annually
o Meet in separate executive session with the independent
auditor to provide a forum for private comments including
discussion of any restrictions on audit scope or access
to required information or resources. Annually
o Establish hiring policies with respect to employees
or former employees of the independent auditors. Annually
A-1
Minimum
Duty Frequency
- -------------------------------------------------------------------------------
With Respect to Accounting and Financial Control Matters:
o Review with financial management and the independent
auditor any significant accounting developments
including emerging issues. As Needed
o Review with financial management and the independent
auditors the company's critical accounting policies. Annually
o Review with management, the independent auditor
and the internal auditor a) the adequacy of the
Company's internal controls and b) significant
findings and recommendations of the auditors and
management's responses thereto. Quarterly
o Review and discuss with the Company's counsel
significant legal and environmental matters. Quarterly
o Review with financial management and the independent
auditor, a) the Company's annual financial results
and disclosure, b) the independent auditor's audit
of the financial statements and its report thereon,
c) any significant changes required in the audit plan
d) any serious difficulties or disputes with management
encountered during the audit, and e) other matters related
to the audit which are to be communicated to the Committee
under generally accepted auditing standards. Annually
o Review with management and the independent auditor,
the Company's interim financial results and disclosure
prior to the filing with the Securities and Exchange
Commission of the related Form 10-Q and discuss any items
required to be communicated by the independent auditor
under generally accepted auditing standards. Quarterly
o With respect to each periodic filing with the
Securities and Exchange Commission review a)
management's disclosure to the Committee under Section
302 of the Sarbanes-Oxley Act, and b) the contents
of the Chief Executive Officer and the Chief Financial
Officer certificates to be filed under Sections 302
and 906 of that Act. Quarterly
o Review with management and the independent auditor
policies and practices with respect to the preparation
and dissemination of earnings press releases, as well as
financial information and earnings guidance. Quarterly
o Review with management the Company's compliance with
applicable laws and regulations and the results of
examinations conducted by regulatory agencies. Annually
o Meet in executive session with financial management
to provide a forum for their private comments. Quarterly
o Review procedures, and monitor responses thereto,
for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal
accounting controls, or general ethical conduct, and the
confidential anonymous submissions by employees of
concerns regarding questionable accounting controls or
ethical behavior. Quarterly
o Discuss with management the assessment of major
financial business risks and plans, policies and
practices for dealing with such risks. Annually
o Review with management the results of monitoring
the Company's code of conduct. Annually
With Respect to the Internal Audit Function:
o Review the performance of the head of the
Internal Audit department. Annually
o Review the appointment, compensation and replacement
of the head of the Internal Audit department. Annually
o Review the Internal Audit department's annual audit
plan, including any subsequent significant modifications
to that plan. Annually
o Review the Internal Audit department budget and
adequacy of staffing. Annually
A-2
Minimum
Duty Frequency
- -------------------------------------------------------------------------------
o Review and discuss with the head of the Internal
Audit department the results of audits conducted
and management responses thereto. Quarterly
o Meet in executive session with the head of the
Internal Audit department to provide a forum for
private comments including discussion of any
restrictions on audit scope or access to required
information or resources. Semi-annually
With Respect to the Audit Committee:
o Meet at least 4 times per year and more frequently Quarterly and
if circumstances require. as needed
o Evaluate the performance of the Audit Committee. Annually
o Review this charter and recommend any proposed
changes to the Board of Directors. Annually
With Respect to Communications:
o Report to the Board of Directors on significant
matters covered at each Audit Committee meeting. As Needed
o Prepare the report that the Securities and Exchange
Commission rules require be included in the Company's
annual proxy statement. Annually
*****
A-3
Exhibit B
LA-Z-BOY INCORPORATED
RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
Amended and Restated through August 12, 2003
I. Purposes. The purposes of the Restricted Stock Plan for Non-Employee
Directors are to provide ownership of the Company's capital stock to
non-employee members of the Board of Directors in order to improve the Company's
ability to attract and retain highly qualified individuals to serve as directors
of the Company; to provide competitive remuneration for Board service; and to
strengthen the commonality of interest between directors and shareholders.
II. Effective Date and Duration. The original effective date of the Plan
was September 1, 1989. The Plan as amended and restated through August 12, 2003,
as set forth in this document, shall be submitted to the shareholders of the
Company for their approval at the annual meeting of shareholders to be held in
2003. No Awards may be granted under this Plan after August 11, 2013.
III. Definitions. In this Plan, the following definitions apply:
(1) "Award" means an award granted under this Plan which entitles the
recipient to purchase Common Shares as specified in such award and as
hereinafter provided.
(2) "Board" means the Board of Directors of the Company.
(3) "Committee" means the Nominating and Corporate Governance Committee
of the Board (or such other Board committee as at the time may be
performing substantially the same functions).
(4) "Common Shares" means Company Common Shares.
(5) "Company" means La-Z-Boy Incorporated, a Michigan corporation.
(6) "Disability" means a medically determinable physical or mental
impairment which renders a participant substantially unable to function as a
director of the Company.
(7) "Non-Employee Director" means any member of the Board who is not
also an employee of the Company or of an affiliate of the Company.
(8) "Participant" means each Non-Employee Director who has accepted an
award granted under the Plan and purchased restricted stock in accordance with
the terms of such award and the Plan.
(9) "Plan" means this La-Z-Boy Incorporated Restricted Stock Plan for
Non-Employee Directors, formerly known as the La-Z-Boy Chair Company Restricted
Stock Plan for Non-Employee Directors.
(10) "Restricted Period" means the period of time from the date of
acceptance of an award until the restrictions expire.
(11) "Restricted Stock" means any share of capital stock purchased by a
Participant under the Plan, and any other share of stock included within the
term Restricted Stock by Section IX hereof, for as long as it is subject to
restrictions.
(12) "Restrictions" means those restrictions on transfer or other
disposition of Restricted Stock described in Section VII hereof.
(13) "Share" means a Common Share issued and reacquired by the Company
or previously authorized but unissued.
IV. Administration. The Plan shall be administered by the Committee, which
shall have responsibility to conclusively interpret the provisions of the Plan
and decide all questions of fact arising in its application.
This Plan and all action taken under it shall be governed, as to
construction and administration, by the laws of the State of Michigan.
B-1
During the Restricted Period shares granted under the Plan are not subject,
in whole or in part, to attachment, execution, or levy of any kind.
V. Eligibility and Awards. Each person becoming a Non-Employee Director for
the first time on or after August 12, 2003 shall be granted an award (the
"Initial Award") for five thousand (5,000) Common Shares of Restricted Stock,
effective as of the date such person becomes a Non-Employee Director.
Effective with the date of the Annual Organizational Meeting of the Board
immediately following the 2003 Shareholders' Meeting, each continuing incumbent
Non-Employee Director shall be granted an award of one thousand four hundred
(1,400) Common Shares of Restricted Stock as the balance of his/her 2003 Annual
Award. At the 2004 and each subsequent Annual Organizational Meeting, each
continuing incumbent Non-Employee Director shall be granted an Annual Award of
two thousand (2,000) Common Shares of Restricted Stock. For clarification, no
individual shall receive an Initial Award and an Annual Award in the same year.
Each accepted award shall be evidenced by a written agreement executed by
or on behalf of the Company and the Participant. The price at which the Company
shall sell Restricted Stock to the Non-Employee Director shall be equal to
twenty-five percent (25%) of the fair market value of such stock as of the date
of the award. Fair market value shall be deemed to be the closing price on the
New York Stock Exchange on the date of grant or if there are no sales on such
exchange on such date, then on the nearest preceding business day for which
sales prices are available. A Non-Employee Director shall have thirty (30) days
to accept an award granted him or her, by signing the written agreement and
paying the purchase price of the Restricted Stock. Payment must be made in cash.
Payment in currency or by check, bank draft, cashier's check or postal money
order shall be deemed to be payment in cash.
Subject to the provisions of Section IX(1) hereof, the total number of
shares which may be issued on and after August 12, 2003 under this Plan is
250,000. The Board may at any time discontinue the granting of awards under the
Plan.
VI. Restricted Period. The Restricted Period shall commence on the date of
sale and shall terminate upon the earliest to occur of the following events:
(1) Death or Disability. The restrictions applicable to a Participant
shall terminate upon his or her death or disability.
(2) Retirement from the Board. The restrictions applicable to a Participant
shall terminate:
a) when the Participant reaches the age, as determined by the
Committee, at which the Participant is no longer eligible to stand
for election to the Board;
b) at the conclusion of the meeting of shareholders at which the
Participant's term of office as a Director expires if the
Participant was willing to serve for another term but was not
nominated for re-election to the Board; or
c) at the conclusion of the meeting of shareholders at which the
Participant's term of office as a Director expires if the
Participant was nominated for another term but was not re-elected to
the Board.
However, in any of the foregoing circumstances, the Committee may delay
termination of such restrictions until a specified future date if it determines
the termination of such restrictions at retirement would not be in the best
interests of the Company.
(3) Change of Control. If, following the time any person becomes an
Acquiring Person (as hereinafter defined), in the event of: (1) a merger or
consolidation to which the Company is a party, regardless of whether or not the
Company is the surviving or resulting corporation; (2) a reorganization pursuant
to which the Company becomes a subsidiary of another corporation; or (3) the
sale of all or substantially all the assets of the Company, the restrictions
applicable to all Participants shall terminate immediately prior to the
effective date of any such merger, consolidation, reorganization or asset sale,
unless such merger, consolidation, reorganization shall have been approved by a
majority of the Directors who were directors of the Company prior to the time
such person became an Acquiring Person. If (1) any "person" or "group" as such
terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Act"), other than pursuant to a transaction or agreement previously
approved by the Board of Directors, directly or indirectly purchases or
otherwise becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act) or has the right to acquire such beneficial ownership of voting securities
B-2
representing twenty-five percent (25%) or more of the combined voting power of
all outstanding voting securities of the Company (an "Acquiring Person"), or
(2) during any period of twenty-four (24) consecutive calendar months, the
individuals who at the beginning of such period constitute the Board of
Directors of the Company, and any new Directors whose election by such Board or
nomination for election by stockholders was approved by a vote of at least
two-thirds (2/3) of the members of such Board who were either Directors on such
Board at the beginning of the period or whose election or nomination for
election as Directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof, then the restrictions
applicable to all Participants shall terminate immediately upon the occurrence
of any such event.
(4) Approved Termination. The restrictions applicable to a Participant
shall terminate on the date on which the Participant's service as a
Director of the Company terminates with the consent of a majority of the members
of the Committee; provided that if the Participant seeking such consent is a
member of the Committee, he or she shall not participate in consideration of the
request and such consent shall be effective if given by a majority of the other
members of the Committee.
VII. Terms and Conditions of Restricted Stock. A stock certificate
representing the number of shares of Restricted Stock purchased under the Plan
shall be registered in the Participant's name but shall be held in custody by
the Company for the Participant's account. Each Restricted Stock certificate
shall bear a legend giving notice of the restrictions. Each Participant must
also endorse in blank and return to the Company a stock power for each
Restricted Stock certificate.
During the Restricted Period, the Participant shall not be entitled to
delivery of the certificate and cannot sell, transfer, assign, pledge, or
otherwise encumber or dispose of the Restricted Stock except in the
circumstances described below. If the Participant has remained a member of the
Board for the entire Restricted Period, the restrictions shall lapse at the end
of the Restricted Period. If the Participant ceases to be a member of the Board
prior to the expiration of the Restricted Period, the Participant shall sell the
restricted shares back to the Company at the original purchase price thereof,
appropriately adjusted for the declaration of any share dividend, share split or
recapitalization, merger, consolidation or sale of assets occurring between the
date of sale of the shares and the repurchase thereof by the Company, and all
right, title, and interest of the Participant to such shares shall terminate
without further obligation on the part of the Company.
A Participant may transfer Restricted Stock purchased hereunder, including,
but not limited to, transfers to members of his or her Immediate Family (as
defined below), to one or more trusts for the benefit of such Immediate Family
members, to one or more partnerships where such Immediate Family members are the
only partners, or to one or more limited liability companies where such
Immediate Family members are the only members if (i) the Participant does not
receive any consideration in any form whatsoever for such transfer, (ii) such
transfer is permitted under applicable tax laws, and (iii) if such transfer is
permitted under Rule 16b-3 of the Exchange Act as in effect from time to time.
Any Restricted Stock so transferred shall continue to be subject to the same
terms and conditions in the hands of the transferee as were applicable to said
Restricted Stock immediately prior to the transfer thereof. Any reference in
this Plan to services as a director of the Company by the Participant shall
continue to refer to the services of, or performance by, the transferring
Participant. For purposes hereof, "Immediate Family" shall mean the Participant
and the Participant's spouse, children and grandchildren.
To the extent applicable, each Participant under the Plan may, from time to
time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit, which has not been exercised or distributed,
under the Plan is to be exercised or distributed in case of his or her death.
Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company and shall be effective
only when filed by the Participant, in writing, with the Company during the
Participant's lifetime. In the absence of any such designation, any rights
exercisable by the Participant or benefits remaining undistributed at the
Participant's death shall be exercisable by, or distributed to, the
Participant's estate. If required, the spouse of a married Participant domiciled
in a community property jurisdiction shall join in any designation of a
beneficiary or beneficiaries other than the spouse.
At the expiration of the Restricted Period, a stock certificate free of all
restrictions for the number of shares of Restricted Stock registered in the name
of a Participant shall be delivered to that Participant or that Participant's
estate.
VIII. Regulatory Compliance and Listing. The issuance or delivery of any
shares of Restricted Stock may be postponed by the Company for such period as
B-3
may be required to comply with any applicable securities laws or regulations,
any applicable listing requirements of any national securities exchange, or any
requirements under any other law or regulation applicable to the issuance or
delivery of such shares. The Company shall not be obligated to issue or deliver
any such shares if the issuance or delivery thereof shall constitute a violation
of any provision of any law or any regulation of any governmental authority or
any national securities exchange.
IX. Adjustments. Whenever a stock split, stock dividend, or other relevant
change in capitalization occurs;
(1) the number of shares to be subject to any award made thereafter under
this Plan and the total number of shares which may be awarded under this Plan
shall be appropriately adjusted, and
(2) any new, additional or different shares or securities issued as such a
dividend split or as a result of such other change in capitalization with
respect to Restricted Stock previously awarded and purchased under the Plan
shall be delivered to and held by the Company for the Participant's account,
shall be deemed included within the term Restricted Stock and shall have the
same Restricted Period as such previously awarded Restricted Stock.
X. Amendment of the Plan. The Committee may from time to time amend this
Plan or any provision thereof prospectively or retroactively, except that no
such amendment not approved by the shareholders of the Company may change the
eligibility criteria for awards, increase the number of shares which may be
awarded (other than as contemplated by Section IX(1)), increase the frequency,
or materially modify the timing of awards or decrease the consideration to be
paid for Restricted Stock purchased hereunder.
B-4
LA-Z-BOY INCORPORATED
1284 NORTH TELEGRAPH ROAD
MONROE, MI 48162-3390
PROXY VOTING INSTRUCTIONS
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the cut-
off date or meeting date. Have your proxy card in hand when you access the web
site. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you call. You will be prompted to enter your 12-
digit Control Number which is located below and then follow the simple
instructions the Vote Voice provides you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to La-Z-Boy Incorporated, c/o ADP, 51 Mercedes
Way, Edgewood, NY 11717.
Please mark, sign, date and return the proxy card using the enclosed envelope.
________________________
I I
YOUR CONTROL NUMBER IS I________________________I
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
- -------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
LA-Z-BOY INCORPORATED
Vote on Directors
1.ELECTION OF DIRECTORS
Nominees: 01) John H. Foss
02) Patrick H. Norton
03) Helen O. Petrauskas
For Withhold For all
all all except
_______ _______ _______
I I I I I I
I I I I I I
I_______I I_______I I_______I
To withhold authority to vote for any individual nominee, mark "For All Except"
and write the nominee's name on the line below.
- --------------------------------
2. Approval of Restricted Stock Plan for Non-employee Directors.
FOR AGAINST ABSTAIN
_______ _______ _______
I I I I I I
I I I I I I
I_______I I_______I I_______I
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
NOTE: When shares are held by joint tenants both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name
by president or other authorized officer. If a partnership, please sign
in partnership name by authorized person.
_____________________ ________ _______________________ _________
Signature Date Signature (Joint Owners) Date
PROXY
ANNUAL MEETING OF SHAREHOLDERS OF
LA-Z-BOY INCORPORATED
August 12, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gerald L. Kiser and Patrick H. Norton, and
both of them Proxies with power of substitution to attend the Annual Meeting of
Shareholders of La-Z-Boy Incorporated to be held at the La-Z-Boy Incorporated
Auditorium, 1284 North Telegraph Road, Monroe, Michigan, August 12, 2003 at
11:00 o'clock A.M., Eastern Daylight Time, and any adjournment thereof, and
thereat to vote all shares now of hereafter standing in the name of the under-
signed.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
all director nominees listed in Proposal 1 and FOR Proposal 2.
(Continued and TO BE SIGNED on the other side)