NOTICE OF ANNUAL MEETING

 

The Board of Directors of Steelcase Inc. cordially invites all shareholders to attend the Company’s 2009 Annual Meeting of Shareholders as follows:

 

 

The Annual Meeting is being held to allow you to vote on any matter properly brought before the shareholders, including the following proposal for the election of directors nominated to a three-year term on the Board of Directors:

 

 

If you were a shareholder of record as of the close of business on April 27, 2009, you are eligible to vote. You may either vote at the meeting or by proxy, which allows your shares to be voted at the meeting even if you are not able to attend. If you choose to vote by proxy:

 

 

Every vote is important, and you are urged to vote your shares as soon as possible.

 

We look forward to seeing you at the meeting.

 

By Order of the Board of Directors,

 

Lizbeth S. O’Shaughnessy

Vice President,

Chief Legal Officer and Secretary

 

Grand Rapids, Michigan

May 13, 2009

 

Steelcase Inc., P.O. Box 1967, Grand Rapids, MI 49501-1967 USA www.steelcase.com

 

PROXY STATEMENT

 

TABLE OF CONTENTS

 

 

What am I voting on?

 

You are being asked to vote on the election of nominees to serve on our Board of Directors and any other business properly coming before the 2009 Annual Meeting of Shareholders, which we refer to in this proxy statement as the “Meeting.”

 

How does the Board of Directors recommend I vote?

 

The Board of Directors recommends that you vote FOR each of the nominees for director listed on page 3.

 

Who is entitled to vote?

 

Shareholders of record of Class A Common Stock or Class B Common Stock at the close of business on April 27, 2009 (the “Record Date”) may vote at the Meeting.

 

How many shares were outstanding on the Record Date?

 

At the close of business on April 27, 2009, there were 77,755,649 shares of Class A Common Stock and 55,604,152 shares of Class B Common Stock outstanding.

 

How many votes do I have?

 

Each shareholder has one vote per share of Class A Common Stock and ten votes per share of Class B Common Stock owned of record at the close of business on April 27, 2009.

 

How do I vote?

 

If you are a registered shareholder (that is, you hold your Steelcase stock directly in your name), you may vote by telephone, Internet or mail or by attending the Meeting and voting in person.

 

To vote by telephone or Internet:  Please follow the instructions on the proxy card. The deadline for voting by telephone or Internet is 11:59 p.m. Eastern Daylight Time on June 24, 2009.

 

To vote by mail:  Please complete, sign and date the accompanying proxy card and return it in the enclosed postage-paid envelope. Only cards received and processed before 11:00 a.m. Eastern Daylight Time on June 25, 2009 will be voted.

 

If you hold your stock in “street name” (that is, your shares are registered in the name of a bank, broker or other nominee, which we will collectively refer to as your “broker”), you must vote your shares in the manner required by your broker.

 

Whether you vote by telephone, Internet or mail, you may specify whether your shares should be voted for all, some or none of the nominees for director.

 

If you do not specify a choice and you use the enclosed proxy card, your shares will be voted FOR the election of each of the nominees for director listed under Proposal Requiring Your Vote—Election of Directors.

 

If you do not specify a choice and you use a ballot card supplied by your broker, the rules of the New York Stock Exchange, or NYSE, provide that your broker can vote as they wish on the election of nominees for director. For more information on the NYSE rules about broker voting, please see “Voting” under Supplemental Information.

What should I do if I received more than one proxy card?

 

If you received more than one proxy card, it is likely that your shares are registered differently or are in more than one account. You should sign and return all proxy cards to ensure all of your shares are voted.

 

How will voting on any other business be conducted?

 

For any other matter that properly comes before the Meeting, your shares will be voted in the discretion of the proxy holders. As of April 27, 2009, we do not know of any other matter to be considered at the Meeting.

 

Can I revoke my proxy?

 

If you appoint a proxy, you may revoke it at any time before it is exercised by notifying the Company’s Secretary in writing, by delivering a later-dated proxy to the Company’s Secretary or by attending the Meeting and voting in person.

 

Who can attend the Meeting?

 

Shareholders of record of Class A Common Stock or Class B Common Stock may attend the Meeting.

 

Can I listen to the Meeting if I cannot attend?

 

You can listen to a live webcast of the Meeting on the Internet. Instructions for listening to the webcast will be available on the “Events & Presentations” page of the Investor Relations section of our website, located under “our company” at www.steelcase.com, approximately one week before the Meeting. An audio replay of the Meeting will be available on our website shortly after the conclusion of the Meeting and until September 25, 2009.

 

Why didn’t I receive printed copies of this proxy statement and the annual report?

 

To demonstrate our commitment to sustainability by reducing the amount of paper, ink and other resources consumed in printing and mailing our annual report and proxy statement, and to reduce the costs to our company, we follow a process for the distribution of our proxy materials called “notice and access.” Notice and access allows us to send you a brief written notice, called a “Notice of Internet Availability of Proxy Materials” which lists the address of a website where you can view, print or request printed copies of our proxy materials and an email address and toll-free telephone number that you can use to request printed copies of our proxy materials. If you wish to elect to receive printed copies of our proxy materials each year, you can make a permanent request.

 

What if I have the same address as another shareholder?

 

We send a single copy of our Notice of Internet Availability of Proxy Materials to any household at which two or more shareholders reside if they appear to be members of the same family. This practice is known as “householding” and helps reduce our printing and postage costs. Any shareholder residing at the same address as another shareholder who wishes to receive a single document or separate documents should call 1-800-542-1061 or write to Broadridge Financial Solutions, Householding Department, 51 Mercedes Way, Edgewood, New York 11717, and we will deliver the requested documents promptly.

 

When and how are shareholder proposals for next year’s Annual Meeting to be submitted?

 

We must receive any shareholder proposals to be included in our proxy statement for the 2010 Annual Meeting of Shareholders by January 13, 2010. Shareholder proposals to be presented from the floor of the 2010 Annual Meeting must be received no earlier than March 27, 2010 and no later than April 16, 2010. All shareholder proposals must be sent in the manner and meet the requirements specified in our by-laws.

 

Our Board of Directors currently has eleven members and is divided into three classes serving staggered three-year terms. There are four nominees for election this year. Each is currently a member of our Board and is nominated to serve as a Class II director for a term that will expire at the 2012 Annual Meeting. The Board of Directors recommends that you vote FOR each of the nominees.

 

Nominees for Election as Class II Directors for the Term Expiring in 2012:

 

Class III Directors Continuing in Office for the Term Expiring in 2010:

 

 

Class I Directors Continuing in Office for the Term Expiring in 2011:

 

 

Related Directors

 

Robert C. Pew III and Kate Pew Wolters are brother and sister and are first cousins to William P. Crawford and P. Craig Welch, Jr., and Mr. Crawford and Mr. Welch, Jr. are first cousins to each other.

 

Chairman Emeritus

 

Our Board has designated our former director Robert C. Pew II as Chairman Emeritus. As Chairman Emeritus, Mr. Pew II receives Board meeting materials and is invited to attend Board and committee meetings, but he does not have any right to vote as a director and does not receive any retainer or other meeting fees.

 

Fiscal Year 2009 Transactions

 

The following transactions occurred during fiscal year 2009 between our company and our directors, executive officers or owners of more than 5% of our voting securities:

 

 

Related Person Transactions Policy

 

We have a written Related Person Transactions Policy under which the Nominating and Corporate Governance Committee is responsible for reviewing and approving transactions with us in which certain “related persons,” as defined in the policy, have a direct or indirect material interest. Related persons include our directors and executive officers, members of their immediate family and persons who beneficially own more than 5% of our stock. A copy of our Related Person Transactions Policy is posted in the Corporate Governance section of our website, located at www.steelcase.com, and found under “our company,” “investor relations.”

 

Under the policy, our Chief Legal Officer determines whether any identified potential related person transaction requires review and approval by the Committee, in which case the transaction is referred to the Committee for approval, ratification or other action. If management becomes aware of an existing related person transaction which has not been approved by the Committee, the transaction is referred to the Committee for appropriate action. In those instances where it is not practicable or desirable to wait until the next Committee meeting to consider the transaction, the Committee has delegated authority to the Chair of the Committee to consider the transaction in accordance with the policy.

The Committee is authorized to approve those related person transactions which are in, or are not inconsistent with, the best interests of our company and our shareholders. Certain categories of transactions have been identified as permissible without approval by the Committee, as the transactions involve no meaningful potential to cause disadvantage to us or to give advantage to the related person. These categories of permissible transactions include, for example, the sale or purchase of products or services at prevailing prices in the ordinary course of business if (1) the amount involved did not exceed 5% of our gross revenues or the gross revenues of the related person, (2) our sale or purchase decision was not influenced by the related person while acting in any capacity for us, and (3) the transaction did not result in a commission, enhancement or bonus or other direct benefit to an individual related person.

 

In considering any transaction, the Committee considers all relevant factors, including, as applicable:

 

 

The Committee reviewed each of the transactions described above under “Fiscal Year 2009 Transactions,” and following such review, the Committee approved the purchase of products or services from A&K Finishing, Inc., the employment of Ms. Niemann and the payment of related compensation to her. Approval of the transactions with Fifth Third was not required pursuant to our Related Person Transactions Policy, because Fifth Third is an institutional shareholder holding Steelcase stock with no apparent purpose or effect of changing or influencing control of our company. In each case, the director related to the person or entity involved in the transaction did not participate in the review and approval of the transaction by the Committee or the Board of Directors.

 

 

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and those who beneficially own more than 10% of our Class A Common Stock to file reports of initial ownership and changes in their beneficial ownership of shares of Class A Common Stock with the Securities and Exchange Commission, or SEC. Based on our review of the reports filed with the SEC, and written representations that no reports were required, we believe that during fiscal year 2009, all Section 16(a) reports were filed on a timely basis, except one Form 4, reporting one transaction, was filed late by Mark T. Mossing.

 

 

Our Board of Directors has determined that William P. Crawford, Earl D. Holton, Michael J. Jandernoa, David W. Joos, Elizabeth Valk Long, Robert C. Pew III, Cathy D. Ross, Peter M. Wege II, P. Craig Welch, Jr. and Kate Pew Wolters are independent. James P. Hackett is not considered independent because of his executive management position. All of the members of our Audit, Compensation and Nominating and Corporate Governance Committees are independent.

 

The independence of our directors is assessed using the listing standards of the NYSE, and our Board adopted categorical standards to guide the determination of each director’s independence. Under these standards, none of the following is considered a material relationship impairing a director’s independence:

 

 

 

 

 

As used in the above categorical standards, “business with us” includes us selling products or services to the other company, either directly or through our dealers, and us buying products or services from the other company during the last three years. Unless the context otherwise requires, “director” includes the director and his or her immediate family members as defined in the NYSE listing standards. A copy of these categorical standards for director independence is also available in the Corporate Governance section of our website, located at www.steelcase.com, and found under “our company,” “investor relations.”

 

On an annual basis, the Nominating and Corporate Governance Committee assesses the independence of our directors by reviewing and considering all relevant facts and circumstances and presents its findings and recommendations to our Board of Directors. For fiscal year 2009, the following relationships were considered by the Committee in assessing the independence of our directors:

 

 

In addition, the Committee considered that:

 

 

The Committee determined that, with the exception of the relationship between us and Mr. Welch, Jr.’s brother-in-law, each of the relationships it considered fell within the categorical standards adopted by the Board and, as a result, the relationships were not material. Following a review of the relevant facts and circumstances relating to the transaction involving Mr. Welch, Jr.’s brother-in-law and assessing the materiality of the relationship from the standpoint of Mr. Welch, Jr. and of his brother-in-law, the Committee determined that the relationship was not material.

 

The Steelcase Foundation

 

The Steelcase Foundation is included in the categorical standards for director independence described above. The Foundation was established in 1951 by our founders to give back to the communities that have been instrumental to our operations and growth by making grants to non-profit organizations, projects and programs in those communities. From time to time, we donate a portion of our earnings to the Foundation, as determined by our Board of Directors. The following of our directors

also serve as Foundation trustees: James P. Hackett, Earl D. Holton, Robert C. Pew III and Kate Pew Wolters, who serves as Chair of the Board of Trustees of the Foundation. The other trustees of the Foundation are Mary Anne Hunting, Mary Goodwillie Nelson (sister of director Peter M. Wege II) and James C. Welch (brother of director P. Craig Welch, Jr.).

 

Our Board of Directors met five times during fiscal year 2009. Each of our directors attended at least 75% of the total number of meetings of the Board and the committees on which they served during the year. Our Board’s policy is that each director is expected to attend our annual meeting of shareholders, and each of our directors attended our 2008 Annual Meeting.

 

Four standing committees assist our Board of Directors in fulfilling its responsibilities: the Nominating and Corporate Governance Committee, the Audit Committee, the Compensation Committee and the Executive Committee. The Executive Committee, which was established to exercise the powers of the Board of Directors when necessary between regular Board meetings, did not meet during fiscal year 2009. Each committee has the power to conduct or authorize investigations or studies of matters within the scope of its responsibilities and may, at our expense, retain independent counsel or other consultants or advisors as deemed necessary. Each committee also has the sole authority to retain or terminate its consultants and approve the payment of fees.

 

Committee Membership and Meetings

 

The table below indicates the current membership of each of the Board of Directors’ committees and the number of times the committees met during fiscal year 2009. All of the members of these committees are independent.

 

 

Committee Charters

 

Each of these committees operates under a written charter adopted by the Board of Directors that is reviewed and assessed at least annually. The current charters of our Nominating and Corporate Governance, Audit and Compensation Committees, and our Corporate Governance Principles are available in the Corporate Governance section of our website, located at www.steelcase.com, and found under “our company,” “investor relations.” The principal responsibilities of each committee are listed below.

Nominating and Corporate Governance Committee

 

Responsibilities

 

The principal responsibilities of the Nominating and Corporate Governance Committee are:

 

 

Qualifications for Nominees

 

Nominees for director are selected on the basis of several criteria, the most fundamental of which is integrity. Our Board is committed to diversity, and a candidate’s ability to add to the diversity of our Board is also considered. Directors are expected to be curious and demanding independent thinkers who possess appropriate business judgment and are committed to representing the long-term interests of shareholders. Directors must possess knowledge, experience, skills or expertise that will enhance our Board’s ability to direct our business. They must also be willing and able to spend the time and effort necessary to effectively perform their responsibilities. Directors must be prepared to resign from our Board in the event that they have a significant change in responsibilities, including a change in employment, as required by our Corporate Governance Principles.

 

Consideration of Candidates for Director

 

The Nominating and Corporate Governance Committee considers candidates suggested by its members, other directors and senior management in anticipation of potential or expected Board vacancies. After identifying a potential candidate, the Committee collects and reviews publicly-available information to assess whether they should be considered further. If the candidate warrants further consideration, the Chair or another member of the Committee will initiate a contact. Generally, if the person expresses a willingness to be considered, the Committee requests information from the candidate, reviews their qualifications and accomplishments and conducts one or more interviews with

the candidate. Committee members may also contact references or others who have personal knowledge of the candidate’s accomplishments.

 

The Committee will also consider candidates recommended by shareholders for nomination by the Board, taking into consideration the needs of the Board and the qualifications of the candidate. Shareholders must submit recommendations to the Company’s Secretary in writing and include the following information:

 

 

Shareholders may also make their own nominations for director by following the process specified in our by-laws.

 

Audit Committee

 

Responsibilities

 

The principal responsibilities of the Audit Committee are:

 

 

Audit Committee Financial Experts

 

The Board of Directors has designated Michael J. Jandernoa and Cathy D. Ross as “audit committee financial experts,” as defined by the SEC’s rules and regulations, based on their respective financial and accounting education and experience. Mr. Jandernoa and Ms. Ross are independent, as independence of audit committee members is defined by the listing standards of the NYSE.

Compensation Committee

 

Responsibilities

 

The principal responsibilities of the Compensation Committee are:

 

 

Authority of the Compensation Committee

 

Pursuant to its charter, the Compensation Committee is authorized by our Board of Directors to oversee our compensation and employee benefit practices and plans generally, including our executive compensation, incentive compensation and equity-based plans. The Committee may delegate its authority to subcommittees, provided that any such subcommittee must consist of at least two members, and the Committee may also delegate appropriate responsibilities associated with our benefit and compensation plans to members of management. The Compensation Committee must submit any changes to our CEO’s compensation to our Board of Directors for ratification.

 

Delegation of Authority

 

The Compensation Committee has delegated to our CEO the authority to grant stock options, restricted stock and restricted stock units to employees. Under this delegated authority, our CEO cannot grant options to acquire more than 5,000 shares, more than 2,000 shares of restricted stock or more than 2,000 restricted stock units in any year to any one individual, and he cannot grant, in the aggregate, options to acquire more than 100,000 shares, more than 40,000 shares of restricted stock and more than 40,000 restricted stock units in any year. Also, our CEO cannot grant any stock options, restricted stock or restricted stock units to any executive officer. The Compensation Committee also has delegated authority to our CEO to designate those employees who will participate in our Management Incentive Plan; however, the Committee is required to approve participation in such plan by any executive officer or anyone else who directly reports to our CEO.

 

The Committee also has delegated certain responsibilities with regard to our Retirement Plan to an investment committee consisting of directors and members of management and to an administrative committee consisting of members of management.

 

Role of Executive Officers in Determining or Recommending Compensation

 

Our CEO develops and submits to the Compensation Committee his recommendation for the compensation of each of the named executive officers, other than himself, in connection with annual merit reviews of their performance. The Compensation Committee reviews and discusses the recommendations made by our CEO, approves the compensation for each named executive officer for the coming year and submits the compensation for our CEO to the Board of Directors for ratification. In addition, our Chief Financial Officer and other members of our finance staff assist the Committee with establishing performance target levels for performance-based compensation, as well as with the calculation of actual financial performance and comparison to the performance targets, each of which requires the Committee’s approval. See Compensation Discussion and Analysis for more discussion regarding the role of executive officers in determining or recommending the amount or form of executive compensation.

Role of Compensation Consultant

 

Pursuant to its charter, the Compensation Committee has the sole authority to retain or terminate an independent compensation consultant of its choosing to assist the Committee in carrying out its responsibilities. During fiscal year 2009, the Committee engaged Pearl Meyer & Partners, or Pearl Meyer, to advise the Committee on various matters related to the compensation of the named executive officers. See Compensation Discussion and Analysis for more detail regarding the nature and scope of Pearl Meyer’s assignment and the material elements of the instructions or directions given to them with respect to the performance of their duties. The Committee also engaged Towers Perrin to provide the Committee with a study of the competitiveness of our executive compensation relative to market data. Both Pearl Meyer and Towers Perrin were engaged directly by the Compensation Committee and do not perform any other consulting services for our company, but we purchase compensation survey data from Towers Perrin from time to time.

 

Compensation Committee Interlocks and Insider Participation

 

None of the members of our Compensation Committee was an officer or employee of our company during the fiscal year or was formerly an officer of our company, and none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on our Board of Directors or our Compensation Committee. See Related Person Transactions for a discussion of a transaction between our company and a relative of director P. Craig Welch, Jr., who serves on our Compensation Committee.

 

 

Corporate Governance Principles

 

Our Board of Directors is committed to monitoring the effectiveness of policy and decision making at the Board and management levels. Fundamental to its corporate governance philosophy is the Board’s commitment to upholding our reputation for honesty and integrity. Equally fundamental is its commitment to serving as an independent overseer of our management and operations. Our Board adopted a set of Corporate Governance Principles, a copy of which can be found in the Corporate Governance section of our website at www.steelcase.com under “our company,” “investor relations.”

 

Executive Sessions of Non-Management Directors

 

The only member of our Board who is also a member of management is James P. Hackett, our President and CEO. Our Board meets quarterly in executive session without Mr. Hackett present. During these sessions, Robert C. Pew III, as Chair of the Board, presides. Our Corporate Governance Principles provide that if the Chair of the Board is a member of management, the outside directors will designate a member to preside at executive sessions.

 

You may contact the Chair of the Board (or the lead non-management director, if one is subsequently appointed) by sending a certified letter to:

 

Chair of the Board/Lead Non-Management Director

c/o Steelcase Inc.

P.O. Box 1967

Grand Rapids, MI 49501-1967

 

Shareholder Communications

 

Our Board has adopted a process for interested parties to send communications to the Board. To contact the Board, any of its committees or any of our directors, please send a certified letter addressed to:

 

Board of Directors

c/o Lizbeth S. O’Shaughnessy, Secretary

Steelcase Inc.

P.O. Box 1967

Grand Rapids, MI 49501-1967

 

All such letters will be opened by the Company’s Secretary. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board or any committee or group of directors, the Secretary will make sufficient copies of the contents and send them to each director who is a member of the committee or group to which the envelope is addressed.

 

Code of Ethics and Code of Business Conduct

 

Our Board adopted a Code of Ethics applicable to our chief executive and senior financial officers, as well as a Code of Business Conduct that applies to all of our employees and directors. Only our Nominating and Corporate Governance Committee may grant any waivers of either code for a director or executive officer. Each of these codes is available in the Corporate Governance section of our website, located at www.steelcase.com, and found under “our company,” “investor relations.” If any amendment to, or waiver from, a provision of our Code of Ethics is made for our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, we will also post such information in the Corporate Governance section of our website.

 

Materials Available upon Request

 

We will provide a printed copy of any of the following materials (each of which is also available on our website at www.steelcase.com) to you upon request and without charge:

 

 

Please send any such requests to us by email at ir@steelcase.com or by mail at:

 

Steelcase Inc.

Investor Relations, GH-3C

P.O. Box 1967

Grand Rapids, MI 49501-1967

 

 

Management is responsible for the Company’s financial reporting process and its internal controls regarding financial reporting, accounting, legal compliance and ethics. BDO Seidman, LLP, the Company’s independent registered public accounting firm for the fiscal year ended February 27, 2009 (the “independent auditor”), is responsible for performing independent audits of the Company’s consolidated financial statements and its internal control over financial reporting and issuing opinions on:

 

 

Our Committee’s role is to serve as an independent and objective party to monitor these processes on behalf of the Board of Directors and to review the audit efforts of the Company’s internal and independent auditors.

 

In this context, we discussed with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 114, The Auditor’s Communication with Those Charged with Governance (which superseded Statement on Auditing Standards No. 61, Communication With Audit Committee, as amended). In addition, we received the written disclosures and letter from the independent auditor required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Committee concerning independence and reviewed, evaluated and discussed the written report and letter with that firm and its independence with respect to the Company.

 

We discussed with the Company’s internal and independent auditors the overall scope and plans for their respective audits. We also reviewed and discussed with management the Company’s audited financial statements. We met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal control and the overall quality of the Company’s financial reporting.

 

Based on the review and discussions referred to above, and relying on the representations of the Company’s management and the independent auditor’s report, our Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 27, 2009 for filing with the Securities and Exchange Commission.

 

 

Audit Committee

 

Cathy D. Ross (Chair)

Michael J. Jandernoa

Robert C. Pew III

Peter M. Wege II

 

BDO Seidman, LLP’s fees for fiscal year 2009 (estimated) and fiscal year 2008 (actual) for work performed for us are as follows:

 

 

 

 

Our Audit Committee determined that providing the services reflected in the above table was compatible with the maintenance of BDO Seidman, LLP’s independence.

 

In addition, our Audit Committee has a policy under which it approves in advance recurring audit, audit-related and tax services rendered by the principal independent auditor, subject to specific fee limits. If circumstances require hiring the independent auditor for services not previously pre-approved or that would exceed the fee limits previously set, the Audit Committee must pre-approve the new services or fee limits. The Audit Committee Chair may approve specified services between regularly scheduled meetings of the Audit Committee, subject to review by the full Audit Committee at its next scheduled meeting. The fiscal year 2009 services and fees reflected in the above table were pre-approved by the Audit Committee.

 

We reviewed and discussed with management the Compensation Discussion and Analysis which follows this report. Based on such review and discussions, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for filing with the Securities and Exchange Commission and distribution to the Company’s shareholders.

 

Compensation Committee

 

David W. Joos (Chair)
Earl D. Holton
Elizabeth Valk Long
Cathy D. Ross
P. Craig Welch, Jr.

 

Overview

 

This section discusses our policies and practices relating to executive compensation and presents a review and analysis of the compensation earned in fiscal year 2009 by our CEO, our Chief Financial Officer and our three other most-highly compensated executive officers, to whom we refer collectively as the “named executive officers.” The amounts of compensation earned by these executives during fiscal years 2009 and 2008 are detailed in the Summary Compensation Table in Executive Compensation, Retirement Programs and Other Arrangements and the other tables which follow it. This section also discusses changes to the compensation programs for the named executive officers which have been made for fiscal year 2010. The purpose of this section is to provide you with more information about the types of compensation earned by the named executive officers and the philosophy and objectives of our executive compensation programs and practices.

 

Philosophy and Objectives

 

Our philosophy for the compensation of all of our employees, including the named executive officers, is to value the contribution of our employees and share profits through broad-based incentive arrangements designed to reward performance and motivate collective achievement of strategic objectives that will contribute to our company’s success.

 

The primary objectives of the compensation programs for our named executive officers are to:

 

 

Annual Review

 

The compensation of our named executive officers is reviewed and approved on an annual basis, and none of the named executive officers has an employment agreement with us.

 

For fiscal year 2009, the Committee engaged Towers Perrin to provide the Committee with a study of the competitiveness of our executive compensation relative to market data. The Towers Perrin study compares our executive compensation to that of a comparison group of companies. The Committee established the criteria for the composition of the comparison group, and then Towers Perrin presented

a proposed comparison group to the Committee for its review and approval. The criteria established by the Committee were:

 

 

The comparison group approved by the Committee for fiscal year 2009 consisted of the following companies:

 

 

As of December 2006 (the timing of the comparison data), annual revenues for the comparison group ranged from $1.6 billion to $10.7 billion, with a median of $4.2 billion, and market capitalization of the group ranged from $610 million to $10.4 billion, with a median of $2.8 billion.

 

The comparison study showed base salaries of the comparison group at the 25^th percentile, median and 75^th percentile levels and the median levels of target annual incentive compensation, target total cash compensation, annualized expected value of long-term incentive compensation and target total direct compensation. Using the median salary levels shown in the comparison study, management prepared salary ranges for the named executive officers in a manner consistent to the preparation of salary ranges for the Company’s salaried employees generally and presented these ranges to the Committee as part of their review.

 

The Committee did not specifically target each element of compensation of the named executive officers against the comparison group. Instead, the Committee reviewed the comparison data to assess whether or not the compensation of the named executive officers was within a competitive range, and in making its assessment, the Committee considered (a) any difference between the role and responsibilities of each officer compared to those of his peer in the comparison group, (b) the specific contributions the officer has made to the successful achievement of our company goals and (c) the relative experience level of the officer and his tenure with our company.

 

The Committee also reviewed pay illustrations prepared by management for each of the named executive officers which modeled the officer’s compensation for the following five years using assumed base salary changes and future incentive compensation and equity awards and showing the estimated amounts that would be received by the executive under several different business scenarios. These scenarios were based on different levels of business and stock price performance, and the pay illustrations depicted the amounts that would be earned and reported under the SEC’s executive compensation disclosure rules and regulations.

 

Elements of Executive Compensation

 

Base Salary

 

As described above, the base salary of each of our named executive officers is reviewed by the Compensation Committee as part of its overall review of executive compensation, and our Board of Directors ratifies any changes to our CEO’s base salary. As a general rule, base salaries for the named executive officers are set at a level which will allow us to attract and retain highly-qualified executives. In addition to the annual reviews, the base salary of a particular executive may be adjusted during the course of a fiscal year, for example, in connection with a promotion or other material change in the

executive’s role or responsibilities. During fiscal year 2009, each of the named executive officers other than Frank H. Merlotti, Jr. received merit increases to their base salaries.

 

In January 2009, the Compensation Committee approved management-recommended decreases in the annual base salary of our CEO (which was ratified by our Board of Directors) and each of the other named executive officers for fiscal year 2010. Our CEO’s salary was reduced by 12% and the salary of the other named executive officers was reduced by 10%. These reductions were implemented in connection with salary reductions for our salaried workforce in North America generally as part of cost reduction efforts made to respond to global economic challenges, and the reductions are expected to remain in effect for approximately one year or until economic conditions improve.

 

Management Incentive Plan Awards

 

Philosophy and Description of the Plan

 

Each of the named executive officers is a participant in our Management Incentive Plan, or MIP, which can represent a significant portion of the officer’s total compensation earned and reported each year. The MIP, which we originally implemented in fiscal year 1995, provides for short-term and long-term awards which are earned each year based on the achievement of certain economic value added, or EVA, results for the fiscal year. EVA is a profit measure that takes into account the cost of capital and is calculated by taking our net income, deducting a capital charge representing the economic cost of an expected return on average shareholders’ equity (or net assets) of the Company (set by the Compensation Committee at 12% for fiscal year 2009), and then adjusting for excess cash and related interest income, the impact of recent acquisitions and the deferral of a portion of restructuring or other charges to the extent approved by the Committee.

 

We use EVA as the performance measure for the MIP because we believe it is an effective measure of the performance of our business, it reinforces the efficient use of capital and it fits appropriately with our compensation philosophy of sharing profits with our employees. In addition to the named executive officers, over 300 management employees participate in the MIP and a majority of our other employees in North America, both salaried and hourly, also receive annual incentive compensation based on EVA results under our EVA Bonus Plan. We also use EVA as a measurement tool in other areas of our business, such as evaluating business acquisitions, ventures, product development and other capital expenditures.

 

The amounts of the short-term and long-term awards that are payable to the named executive officers upon achievement of the EVA targets are established as specific percentages of the officer’s base salary. The target award percentages are reviewed and approved by the Compensation Committee (and submitted to the Board of Directors for ratification in the case of our CEO) each year as part of its review of the officers’ total compensation. Their target award percentages as of the end of fiscal year 2009 were as follows:

 

 

The short-term awards are paid in cash shortly after the end of each fiscal year. For the long-term awards, 50% of the award is issued in the form of restricted stock units that will be issued as shares of our Class A Common Stock in equal thirds shortly after the end of each of the following three fiscal years and receive dividend equivalent payments during the vesting period, and 50% of the awards are paid in cash in equal thirds shortly after the end of each of the following three fiscal years. We maintain the long-term cash amounts in unfunded accounts which are subject to forfeiture upon termination of employment for any reason other than death, total disability or retirement, except in the circumstances described below under “Severance and Change in Control Benefits.” We credit the long-term MIP account balances each year for interest at a rate which approximates our three-year incremental borrowing rate.

The MIP limits the amount that can be earned by any participant in any year to $3 million for short-term awards and $4 million for long-term awards. The Compensation Committee has also limited the maximum percentage of the target award that can be earned to 200% and has provided that no awards can be earned in a particular fiscal year to the extent that the awards would result in our company recording a net loss for that fiscal year unless the Committee determines otherwise.

 

Fiscal Year 2009 Awards

 

For fiscal year 2009, the Committee established two performance targets for the MIP; one based on the absolute level of EVA achieved and the other based on the improvement (or growth) in EVA for the year. The absolute EVA target was set at $0, equating to a 12% return on average shareholders’ equity. The EVA growth target, which was intended to drive EVA performance upward each year, was based on the average of (a) the actual EVA for the prior year and (b) the EVA growth target for the prior year and adjusted for the impact of recent acquisitions and an improvement factor equal to 1% of our net assets to the extent that the resulting growth target would be less than or equal to 15% of our net assets. The MIP awards earned were based 50% on actual EVA compared to the absolute EVA target and 50% on actual EVA compared to the EVA growth target. The levels of EVA that would have resulted in threshold (equal to 0% of the target awards), target or maximum (equal to 200% of the target awards) MIP awards for fiscal year 2009 were as follows:

 

 

Our financial results for fiscal year 2009 included non-cash impairment charges of $44.5 million after taxes related to goodwill and intangible assets recorded in the fourth quarter due to a substantial decline in the market price of our Class A common stock. On management’s recommendation, the Committee approved amortizing the impact of these charges over a five-year period beginning with fiscal year 2009 for the purposes of calculating EVA results under the MIP as well as under our EVA Bonus Plan, for the following reasons:

 

 

After applying the adjustment described above, EVA for fiscal year 2009 was $(50.2) million, which resulted in MIP awards at 37% of target. Without the adjustment, EVA would have been $(73.6) million, which would have resulted in MIP awards at 18% of target. For the same reasons described above, the Committee approved payment of the higher MIP awards for fiscal year 2009 even though it resulted in our company recording a net loss for the year.

 

Equity-Based Incentive Awards

 

Philosophy and Practice

 

Each of our named executive officers typically receives a long-term equity-based incentive award under our Incentive Compensation Plan each year, in accordance with our philosophy of aligning the interests of our executives with those of our shareholders. The awards typically are approved by the Compensation Committee and, in the case of our CEO only, ratified by our Board at a regularly scheduled meeting at the beginning of each fiscal year, but awards also may be approved by the Committee (and ratified by the Board for the CEO) in a special meeting.

In addition to granting annual equity-based incentive awards, from time to time at the request of our CEO, the Compensation Committee considers granting special awards of restricted stock or restricted stock units to named executive officers in connection with promotions or other changes in responsibilities or in recognition of particular contributions to our company’s performance. No such awards were granted to the named executive officers during fiscal year 2009.

 

All grants of equity-based incentive awards to named executive officers require the advance approval of the Compensation Committee (and, for equity awards to our CEO, ratification by the Board), and we do not have any program or practice to time the grant of equity-based awards relative to the release of any material non-public information. Pursuant to our Incentive Compensation Plan, all stock options are granted with exercise prices equal to the closing market price on the date of the grant, which is the date the Compensation Committee approves or the Board ratifies the grant. We have not granted stock options to any of our named executive officers since September 2002.

 

Fiscal Year 2009 Awards

 

In fiscal year 2009, each of the named executive officers was granted performance shares. These performance share awards can be earned based on the achievement of certain total shareholder return (“TSR”) levels for fiscal years 2009 through 2011, with 50% of the award based on our TSR, or “absolute” TSR, and 50% of the award based on our TSR relative to the industrial subset of companies within the S&P MidCap 400 index. TSR includes the change in trading price and dividends paid on our Class A Common Stock during the performance period and is stated as a percentage relative to the trading price just prior to the performance period. The change in trading price is calculated using the average closing price for the 20 trading days immediately before the beginning of the performance period and for the last 20 trading days during the performance period. The absolute and relative levels of TSR performance that would result in the award of the threshold (50% of target for each half of the award), target or maximum (200% of target for each half of the award) number of shares are as follows:

 

 

The Committee selected TSR as the performance measure for these awards to better align the compensation of the executive officers with the interests of our shareholders. It chose the industrial subset of the S&P MidCap 400 index for the measurement of relative TSR because the Committee desired a large enough group to mitigate the impact of any one-time events that may be experienced by a company within the group, and the group is focused on manufacturing companies with reasonably similar market capitalization to our company.

 

In determining the number of performance shares to be granted, our CEO presented to the Compensation Committee his recommendations for the size of award for each named executive officer other than himself. The Compensation Committee reviewed the value of the proposed awards at the target performance level using the stock price at the time of grant and considered the value of each award relative to the median levels of long-term incentive compensation shown in the Towers Perrin comparison study after deducting the participant’s long-term MIP target award. The Compensation Committee approved the size of the award to be granted to our CEO, subject to ratification by our Board of Directors, and approved a total number of performance shares and performance units to be distributed to the other executive officers. The Committee granted our CEO the authority to determine how the total should be distributed among the other executive officers, as well as authority to redistribute some of the performance shares awarded to him among the other executives, subject to review and approval by the Committee Chair.

 

Fiscal Year 2010 Incentive Compensation Changes

 

During fiscal year 2009, the Compensation Committee engaged Pearl Meyer to assist with a review of the short-term and long-term incentive compensation programs for our executive officers. The material

elements of the instructions or directions given to Pearl Meyer by the Committee with respect to their engagement were to:

 

 

The Committee directed Pearl Meyer to focus on methods to more closely align the relationship between pay and our company’s performance and to suggest incremental changes to the Company’s existing short-term and long-term executive compensation programs rather than entirely new programs, in order to maintain continuity. The Committee expressed its preference to continue to use EVA as a performance measure for a significant part of incentive compensation, but it asked Pearl Meyer to assess the effectiveness of EVA as a performance measure.

 

Representatives of Pearl Meyer worked with the Committee throughout fiscal year 2009 and presented its conclusions to the Committee regarding key themes from its interviews and various alternatives for compensation design. Following the presentation of Pearl Meyer’s conclusions and in consultation with Pearl Meyer, in March 2009, the Committee implemented the following changes to incentive compensation for the named executive officers for fiscal year 2010:

 

 

The Committee also implemented a number of changes to the calculation of EVA under the MIP and eliminated the EVA growth target, in order to provide a stronger correlation between annual business results and annual payouts under the MIP.

 

The changes to the named executive officers’ MIP target award percentages were as follows:

 

 

The performance units granted to each of the named executive officers in March 2009 will be earned in part based on the achievement of certain TSR levels for fiscal years 2010 through 2012 relative to the industrial subset of companies within the S&P MidCap 400 Index. A number of shares equal to 25% of the target award will be earned if the officer remains employed by us through the end of fiscal year 2012 whether or not the performance criteria are met, and a maximum number of shares equal to 200% of the target award (but not to exceed 250,000 shares) will be earned if the performance

criteria are exceeded. The number of performance units awarded to each of the Named Executive Officers is as follows:

 

 

Retirement Plans and Benefits

 

Each of the named executive officers is eligible to participate in the following retirement benefit plans:

 

 

These plans, with the exception of the Executive Supplemental Retirement Plan, are intended to allow the officers to defer portions of their current compensation on a tax-deferred basis and to be competitive with benefits that are offered by similar companies. We also make contributions to participants’ accounts under our Retirement Plan. Amounts deferred under or contributed to these plans earn a return based on the elections made by the individual officer from a number of investment options. The Executive Supplemental Retirement Plan, which was originally adopted in 1981, is intended to assist us with attracting and retaining highly-qualified executives and to enable them to devote their full-time best efforts to our company. We do not have a policy or practice of granting our executive officers extra years of service credit under any of these plans.

 

Each of these plans, other than our Retirement Plan, are discussed below in Executive Compensation, Retirement Programs and Other Arrangements under the headings “Pension Benefits” and “Deferred Compensation.” Our Retirement Plan is a tax-qualified defined contribution plan which is open to all U.S.-based employees of Steelcase Inc. and certain of its subsidiaries and affiliates. Participants may elect to contribute a portion of their earnings to the 401(k) component of the Retirement Plan each year, and we make a non-discretionary contribution of 5% of each participant’s eligible pay (subject to certain limitations) to the Retirement Plan each fiscal year. We also matched 50% of the first 4% of eligible pay each participant contributed to the 401(k) component of the Retirement Plan during fiscal year 2009. In January 2009, the Compensation Committee approved the suspension of the company matching contributions and an amendment to the Retirement Plan to remove the 5% non-discretionary contribution, which will allow us to reduce our contribution for fiscal year 2010.

 

Certain senior management employees, including our CEO, also have individual deferred compensation agreements with us that were entered into more than ten years ago. Under these agreements, the employees deferred a portion of their compensation and are entitled to receive fixed payments beginning at age 70. These agreements were intended to allow participants to build additional retirement income on a tax-deferred basis. At the time we entered into the agreements, we purchased company-owned life insurance policies that, although they were not pledged sources of funding for these agreements, were expected to generate returns that would approximate our obligations under the agreements.

 

In addition to these retirement and deferred compensation plans, upon a qualifying retirement (generally when the age at retirement and number of years of continuous service with our company equals 80 or more), each of the named executive officers (other than Frank H. Merlotti, Jr.) is eligible to

continue to receive healthcare benefits, including medical, dental and vision insurance programs, in the same manner as all other employees of Steelcase Inc. hired before July 22, 2002. Eligible retirees may continue to receive healthcare benefits for life but are required to pay a portion of the cost of coverage; the cost sharing percentage varies depending on the date hired, age and years of service with our company.

 

Severance and Change in Control Benefits

 

Each of the named executive officers participates in our Executive Severance Plan, which provides for certain benefits in the event of certain terminations of employment with our company. This plan is intended to provide clarity to shareholders, executive management and plan participants in the event of a severance or change in control, align the interests of executive management with the long-term interests of our shareholders, reinforce behavior that promotes maximum value in the event of any merger or acquisition activity and attract and retain executive management by maintaining competitive compensation programs. The value of the potential benefits under the Executive Severance Plan for each of the named executive officers as of the end of fiscal year 2009 is detailed below in Executive Compensation, Retirement Programs and Other Arrangements under the heading “Termination or Change in Control Payments.”

 

Other Programs and Practices

 

Perquisites and Other Benefits

 

Our company provides very limited perquisites or other personal benefits to our named executive officers. The only perquisite received in fiscal year 2009 by the named executive officers was an optional annual physical examination. In addition, the family members of some of our named executive officers travelled on our corporate aircraft on occasion during fiscal year 2009, but the incremental cost to our company of such travel was negligible as they were passengers on flights that were otherwise scheduled for business purposes. Any other use of our corporate aircraft by our CEO for personal travel is governed by written aircraft time-sharing agreements under which he reimburses us for all operating expenses associated with the flight, multiplied by 200%. The aggregate incremental cost to our company of the perquisites or other personal benefits received by the named executive officers in fiscal year 2009 was less than $10,000 for each officer.

 

The named executive officers also may elect to participate in other benefit programs on the same terms as other employees of our company. These programs include medical, dental, vision, life and disability insurance, charitable gift matching and discounts on company products. None of the named executive officers has a company car or company-provided housing, and we do not pay any country club memberships or financial planning for any of the named executive officers.

 

Stock Ownership Guidelines

 

The Compensation Committee established stock ownership guidelines to encourage stock ownership among our executives to further the objective of aligning our executives’ interests with those of our shareholders. Under these guidelines, our CEO is expected to own shares of our common stock having a current market value of not less than five times his base salary, and the other named executive officers are expected to own shares of our common stock having a current market value of not less than two or three times their respective base salaries, depending on their position. The amount of holdings required by the guidelines was developed based on market comparisons and the premise that an executive should be able to satisfy the guidelines by retaining shares awarded to the executive as compensation and without purchasing additional shares, assuming the applicable performance criteria for the share awards are satisfied.

 

In addition to shares owned by our executives, holdings which count toward satisfaction of stock ownership guidelines include restricted stock, restricted stock units, performance shares and performance units at target award levels during the vesting period, as does the value of in-the-money

stock options held by the executives. The Compensation Committee reviews compliance with the stock ownership guidelines annually. Persons who were executive officers when the guidelines were adopted in fiscal year 2007 are expected to meet the guidelines by the end of fiscal year 2011, and persons who become executive officers thereafter have a period of five fiscal years to meet these guidelines to allow them an appropriate period of time to build their holdings through annual equity awards.

 

Non-compete and Other Forfeiture Provisions

 

One of the basic principles of the various compensation plans and programs which may provide benefits to our named executive officers following termination of their employment is that certain compensation or benefits will be forfeited or returned if the participant engages in competition with us during a specified period after they leave our employment. Our Executive Severance Plan provides for forfeiture of any remaining payments if the participant engages in competition during a period of two years after leaving our employment. Similarly, the MIP, Incentive Compensation Plan, Restoration Retirement Plan and Executive Supplemental Retirement Plan provide that a participant forfeits any benefits (including any equity awards) under those plans if he or she engages in competition while employed by us or during three years after leaving our employment, and the Deferred Compensation Plan provides for forfeiture of all past earnings on deferred amounts in such event. Under the Incentive Compensation Plan, a participant also must return to us:

 

 

in each case to the extent the gain was received or the award vested within twelve months prior to the date when he or she started competing with us.

 

In addition to non-compete forfeiture provisions, our Executive Severance Plan provides that in the event our financial results are materially restated, the Compensation Committee may review the circumstances surrounding the restatement and determine whether and which participants will forfeit the right to receive any future benefits and/or repay any prior benefits received under the plan. In the event of a material restatement due to fraud, if the Compensation Committee determines that a participant was responsible for or participated in the fraud, that participant will be required to forfeit any future benefits and repay any prior benefits paid in excess of the amounts that would have been paid based on our restated financial results. These are called “clawback” provisions, and the MIP and the Incentive Compensation Plan have similar clawback provisions which apply only to those participants who also participate in the Executive Severance Plan.

 

Tax Considerations

 

In making decisions regarding executive compensation, the Compensation Committee considers the tax deductibility of the amounts payable. Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of annual compensation paid to certain officers to $1 million. The Committee’s goal is to structure the compensation paid to these individuals to maximize deductibility for federal income tax purposes; however, when deemed necessary, the Committee may authorize compensation that may not be deductible under Section 162(m) to promote incentive and retention goals.

 

This section and the tables set forth in this section should be read in conjunction with the more detailed description of our executive compensation plans and arrangements included in the Compensation Discussion and Analysis which precedes this section.

 

Summary Compensation Table

 

The following table shows compensation information for fiscal years 2009, 2008 and 2007 for (1) James P. Hackett, our President and CEO, (2) David C. Sylvester, our Chief Financial Officer, and (3) our three next most highly-paid executive officers as of the end of fiscal year 2009. In this proxy statement, we refer to these five executive officers collectively as the “named executive officers.”

 

Summary Compensation Table

 

 

 

 

								Earnings payable
			Earnings paid					after end of
			after end of					fiscal years
Name			fiscal year 2009					2010 and 2011
James P. Hackett			$	42,275				$	42,396
David C. Sylvester			$	8,306				$	9,620
James P. Keane			$	22,196				$	20,114
Frank H. Merlotti, Jr.			$	22,891				$	20,318
Mark A. Baker			$	16,778				$	15,471

 

 

													Company
			Dividends/					Company					Contributions
			Dividend					Contributions					under
			Equivalents					under					Restoration										All Other
			on Unvested					Retirement					Retirement					Life Insurance					Compensation
Name			Stock Awards					Plan					Plan					Premiums					—Total
James P. Hackett			$	64,553				$	16,100				$	11,500				$	2,328				$	94,481
David C. Sylvester			$	15,081				$	16,100				$	11,500				$	1,188				$	43,869
James P. Keane			$	24,699				$	16,100				$	11,500				$	1,692				$	53,991
Frank H. Merlotti, Jr.			$	26,290				$	16,100				$	11,500				$	4,464				$	58,354
Mark A. Baker			$	21,921				$	16,100				$	11,500					—				$	49,521

Incentive Compensation Awards

 

The following table shows the awards granted to the named executive officers during fiscal year 2009 under our incentive compensation plans.

 

Fiscal Year 2009 Grants of Plan-Based Awards

 

 

 

 

MIP awards

 

The short-term and long-term MIP awards granted for fiscal year 2009 were based 50% on EVA for the fiscal year compared to the absolute EVA target of $0.0 million and 50% on EVA for the fiscal year compared to the EVA growth target of $0.8 million. In March 2009, the Compensation Committee confirmed the performance results, and the awards were earned at 37% of target. The short-term awards were paid in cash in April 2009. The long-term awards are payable 50% in cash and 50% in restricted stock units. The cash portion of the long-term awards will be paid in three equal annual installments shortly after the end of fiscal years 2010, 2011 and 2012, after crediting for interest at a rate which approximates our three-year incremental borrowing rate as of the beginning of the applicable year.

The restricted stock unit portion of the awards will vest in three equal annual installments at the end of fiscal years 2010, 2011 and 2012 and receives dividend equivalent payments during the vesting period.

 

The short-term awards and the cash portion of the long-term awards are included in the Summary Compensation Table as fiscal year 2009 compensation in the column “Non-Equity Incentive Plan Compensation,” and the expense recorded for the restricted stock units are and will be reported in the “Stock Awards” column of the Summary Compensation Table as such expense is recognized for financial reporting purposes during fiscal years 2009 through 2012.

 

Performance share awards

 

The performance share awards granted in fiscal year 2009 can be earned based on the achievement of certain total shareholder return (“TSR”) levels for fiscal years 2009 through 2011, with 50% of the award based on absolute TSR and 50% of the award based on our TSR relative to the industrial subset of companies within the S&P MidCap 400 index. TSR includes the change in trading price and dividends paid on our Class A Common Stock during the performance period and is stated as a percentage relative to the trading price just prior to the performance period. The change in trading price is calculated using the average closing price for the 20 trading days immediately before the beginning of the performance period and for the last 20 trading days during the performance period. The absolute and relative levels of TSR performance that would result in the award of the threshold (50% of target for each half of the award), target or maximum (200% of target for each half of the award) number of shares are as follows:

 

 

At the end of fiscal year 2011, the number of performance shares earned will be issued as Class A Common Stock, and each officer will also receive a cash payment equal to the cumulative total of dividends declared during the performance period on the number of shares earned.

 

Outstanding Equity Awards

 

The following table shows the equity awards granted to the named executive officers under our Incentive Compensation Plan which remained outstanding at the end of fiscal year 2009, including (1) unexercised stock options, (2) unvested restricted stock awards and (3) unearned or unvested performance share awards. The market values shown in the table are based on the closing price of our Class A Common Stock at the end of fiscal year 2009 of $4.03 per share.

 

Fiscal Year 2009 Outstanding Equity Awards at Fiscal Year-End