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KIMBALL ELECTRONICS, INC. | ||
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◦ | Automotive - up 24%. |
◦ | Medical - up 22%. |
◦ | Industrial - up 6%. |
◦ | Public Safety - down 13%. |
◦ | Unfavorable impact of $17.9 million from U.S. Tax Cuts and Jobs Act. |
◦ | Unfavorable impact of $0.66 per diluted share from U.S. Tax Cuts and Jobs Act. |
For more detailed insights into the past year, I encourage you to read our Annual Report and Form 10-K, as well as follow us on our website at www.kimballelectronics.com. | ||||||
And I would like to extend a personal invitation for you to attend our annual meeting at our Kimball Electronics Headquarters, located at 1205 Kimball Blvd. in Jasper, Indiana, beginning at 9 a.m. EST on Thursday, November 8, 2018. I hope to see you there. | ||||||
Donald D. Charron Chairman and Chief Executive Officer Kimball Electronics, Inc. | ||||||
OUR GUIDING PRINCIPLES
Customers
•Our customer is our business. We must provide innovative products and services that excite our customers and exceed their expectations of quality, features and enduring value. We also must recognize and respond quickly and creatively to ideas of others, both internally and externally.
•Long-term customers are more important than short-term results. We will promise only what we know can be delivered; we will strive to deliver more than was promised.
•We seek to consistently demonstrate a sense of warmth, humor and mutual respect in our relationships with our customers, to be the company with which they most enjoy working.
People
•Our people are the company. Kimball has been built upon the tradition of pride in craftsmanship, mutual trust, personal integrity, respect for dignity of the individual, a spirit of cooperation, and a sense of family and good humor. We seek to enhance this culture as we grow.
•We cultivate a leadership style that embraces the attitudes of personal autonomy and empowerment; individual initiative and teamwork; employee involvement and continuous improvement; and open, non-defensive communication.
•We shall foster an organizational structure, information systems and development of personal skills that maximize our peoples' flexibility to respond to our customers on their own terms.
•We want employees to share in their company's success, both financially and through personal growth and fulfillment.
•The most unfair system of all is one that blindly treats all situations the same. Therefore, we discourage rigid rules and policies in favor of a philosophy of individual responsibility and flexibility, so that real needs, rather than the rules, are met.
•Offering ideas for improvements and new products is an opportunity we all share, a responsibility we must all accept. We seek to promote and reinforce an entrepreneurial spirit -- a conviction that growth and continuous improvement is everyone's job.
•We seek a diversified group of employees who can be committed to preserving and enhancing these values.
•Suppliers are our partners, an extension of our company. They must share our commitment to total quality that exceeds our customers' expectations.
Citizenship
•The environment is our home. We will be leaders in not only protecting but enhancing our world.
•Recognizing that an attitude of pride in the company and the community are intertwined, we seek to share, but not impose, our values within the communities in which we live. We also strive to help our communities be great places to live.
•We believe the greatest contribution we can make to the prosperity and quality of life of the communities in which we operate lies in being a dynamic, growing company.
Profits
•Profits are the ultimate measure of how efficiently and effectively we serve our customers and are the only true source of long-term job security.
•Profitability and financial resources give us the freedom to shape our future and achieve our vision.
CHAIRMAN'S OVERVIEW
Dear Share Owner:
I am honored, humbled and extremely excited to begin my first year of service as Chairman of the Board and CEO of Kimball Electronics, Inc., which became a much morefocused and effective competitor within the contract electronics manufacturing services market following the spin-off from Kimball International on October 31, 2014. I am extremely excited because we are in a better position to create greater value for you as a Share Owner.
This has been a record year. A breakout year. A year of firsts and lasts. Highlights include:
•Smooth Transition - became a stand-alone company without interruptions to our operations, customers, or suppliers.
•Timely Post-Spin Separation - necessary activities to physically separate the company completed ahead of schedule; moved into new headquarters building in August.
•Effective Board Leadership - a new board of directors, made up of three independent directors from the Kimball International board and three new independent directors, each of whom has provided a helpful blend of continuity and fresh thinking.
•Outstanding Financial Results- record sales and profits for fiscal year 2015. Consolidated net sales for fiscal year 2015 were $819,350,000, a 10% increase over the prior year. Consolidated net income was a record $26.2 million, or $0.89 per diluted share. Operating cash flow remained strong at $28.1 million for fiscal year 2015 and we ended fiscal year 2015 with a cash balance of $65.2 million and no debt.
•Continued Customer Satisfaction - customer loyalty was strong as indicated by an increased number of customers as well as the percentage of our sales that came from customers that we have been doing business with for over 10 years. We received several supplier recognition awards - three of which came from customers in our top ten by revenue list.
•Investments for the Future - utilizing our strong balance sheet, we deployed capital to support our European capacity expansion in Romania and the significant new business wins that we were awarded during the year. We invested $37 million in capital expenditures to improve our operational efficiencies and support future growth.
We arefocused! As we move forward, we can be proud of the global team of Kimball Electronics employees who have embraced the strategy of growth and new opportunities. They have made it happen. They have remained true to our time-proven values and Guiding Principles (which are reprinted in the inside front cover of this Proxy) which have made Kimball Electronics successful. We are confident that their spirit of commitment will ensure future success.
For more detailed insights into the past year, I encourage you to read our Annual Report and Form 10-K, as well as follow us on our website atwww.kimballelectronics.com.
And I would like to extend a personal invitation for you to attend our annual meeting at our new Kimball Electronics Headquarters, located at 1205 Kimball Blvd. in Jasper, Indiana beginning at 9 a.m. EDT on Wednesday, October 21, 2015. I hope to see you there.
Donald D. Charron
Chairman and Chief Executive OfficerKimball Electronics, Inc.
Kimball Electronics • 2015 Proxy Statement 3
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
1. | To elect three (3) directors of your Company | |
2. | To ratify the | |
3. | To approve, by a non-binding, advisory vote, the compensation paid to the Company’s Named Executive Officers (“Proposal 3”). | |
4. | To approve, by a non-binding, advisory vote, the preferred frequency for the Company to conduct future advisory votes on the compensation paid to the Company’s Named Executive Officers (“Proposal 4”). | |
5. | To consider and transact such other business as may properly come before the meeting or any adjournments thereof. | |
25, 2018
DATE | |
TIME | 9:00 a.m. |
PLACE | Kimball Electronics, Inc. Headquarters 1205 Kimball Blvd. Jasper, IN 47546 |
RECORD DATE | |
VOTING ELIGIBILITY | Registered Share Owners as of the Record Date are entitled to submit proxies or vote in person at the Annual Share Owners |
Proposal | Board Recommendation | Rationale |
Proposal 1: Elect Three Directors for a 3-year Term: • Donald D. Charron • Colleen C. Repplier • Gregory J. Lampert | Vote FOR each of the candidates. | All are very qualified and capable directors |
Proposal 2: Ratify the Selection of Deloitte & Touche LLP as the Independent Public Accounting Firm | Vote FOR ratification of the selection. | Deloitte & Touche is a major public accounting firm who is very well qualified to conduct an independent audit of your Company and has done so very capably |
Proposal 3: To approve, by a non-binding, advisory vote, the compensation paid to the Company’s Named Executive Officers | Vote FOR the advisory proposal approving the compensation paid to our Named Executive Officers. | The Company’s Named Executive Officers are qualified and capable executives with many years of industry experience and tenure with the Company. Their compensation has been benchmarked against relevant market data and is competitive. Market competitive compensation is critical to retain talented management for the Company. |
Proposal 4: To approve, by a non-binding, advisory vote, the preferred frequency for the Company to conduct future advisory votes on the compensation paid to the Company’s Named Executive Officers | Vote to conduct future advisory votes on the compensation paid to our Named Executive Officers every ONE YEAR. | Executive compensation is approved by an independent compensation committee each year. The Company has no excessive or unusual pay practices. Compensation decisions are well managed but annual shareholder approval every year is most appropriate to confirm our Share Owner’s view. |
YOUR VOTE IS IMPORTANT! WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE PROMPTLY BY TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE NOTICE OR THE PROXY CARD, OR IF YOU RECEIVED A PRINTED SET OF PROXY MATERIALS, YOU MAY VOTE BY SIGNING, DATING, AND MAILING THE ACCOMPANYING PROXY CARD. THE PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IF YOU ATTEND THE MEETING IN PERSON. |
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Kimball Electronics • 2015 Proxy Statement 5
Donald D. Charron | Chairman of The Board, Chief Executive Officer | |
| ||
Mr. Charron serves as Kimball | ||
Director since: 2014 Class I - re-election in 2018 |
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|
8
Colleen C. Repplier | Director | ||
| Ms. Repplier | ||
Director since: 2014 Class I - re-election in 2018 |
Gregory J. Lampert | Director | ||
| Mr. Lampert has been | ||
Director since: 2014 Class I - re-election in 2018 | The Board of Directors recommends a vote |
Other Directors Not Standing for Re-election in |
Christine M. Vujovich | Director | |
| ||
Ms. Vujovich |
Kimball Electronics • 2015 Proxy Statement 7
Director since: 2014 Class II - re-election in 2019 |
9
Thomas J. Tischhauser | Director | ||
| Mr. Tischhauser has served as a director of Kimball International since 2008. He has been an independent executive consultant in leadership development and a principal with Wynstone Partners since 2007. He served as Vice President of Continental Automotive from 2006 to 2007 and served in various management positions | ||
Director since: 2014 Class II - re-election in 2019 |
Geoffrey L. Stringer | Director | ||
| Mr. Stringer has served as a director of Kimball International, Inc. since 2003, but is otherwise retired, having most recently served from 1998 to 2001 as Executive Vice President of Bank One Corporation and Chief Executive Officer of Bank One Capital Corporation, and prior to that holding various other senior management positions at banks acquired by the Bank One Corporation. Mr. | ||
Director since: 2014 Class III - re-election in 2020 |
Gregory A. Thaxton | Director | ||
Mr. Thaxton is Executive Vice President and Chief Financial Officer of Nordson Corporation (NASDAQ: NDSN), a $2.1 billion publicly traded industrial technology company focused on precision dispensing, fluid management, and related processes with operations in nearly forty countries. He has more than twenty-five years of experience serving in various domestic and international financial management and leadership roles with Nordson after beginning his career with a Big Four public accounting firm. Mr. Thaxton is a Certified Public Accountant (inactive). Mr. Thaxton’s experience will add significant financial, accounting, capital structure, and SEC reporting expertise to the Board. | |||
|
COMMUNICATING WITH THE BOARD |
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•Financial -to develop a robust Director qualification matrix to allow for evaluation of financial performance, capital investments, and capital structure.
•International - for evaluation of global operations and expansion.
•Technology - for evaluation of technology investments and cyber-security risks.
•Operations - for evaluation of our manufacturing operating plans and strategies.
•Human Resources - for evaluation of our human capital resources, needs and compensation programs.
•Public Company Experience - for evaluation of corporate governance policies, regulatory structures and Share Owner relations.
•Marketing - for evaluation of our business development, customer relationships, and end-market strategies.
•Risk Management - for evaluation of our business risks and mitigation strategies.
•Leadership - for evaluation of management leadershipmore effective board recruiting and succession planning.
Director Committees Skills Name Age Director
Since Independent? Audit Compen-
sation/
Gover-
nance Financial Inter-
national Tech-
nology Opera-
tions Human
Resources Public
Com-
pany Mar-
keting Risk
Manage-
ment Leader-
ship Donald D. Charron 51 2014 No X X X X X X X X Colleen C. Repplier 54 2014 Yes O X X X X X X X X Gregory J. Lampert 48 2014 Yes O X X X X X X X X Christine M. Vujovich 63 2014 Yes Chair X X X X X X Thomas J. Tischhauser 57 2014 Yes O X X X X X X X Geoffrey L. Stringer 72 2014 Yes Chair X X X X X X Christopher B. Curtis 58 2014 Yes O X X X X X X
Director | Tom Tischhauser | Tina Vujovich | Geoffrey Stringer | Greg Lampert | Colleen Repplier | Greg Thaxton | Don Charron |
Age | 60 | 66 | 75 | 51 | 57 | 57 | 54 |
Independent Director | X | X | X | X | X | X | |
Committee: AC - Audit, CGC - Compensation & Governance, LID - Lead Independent Director | CGC | AC | AC | CGC Chair | CGC, LID | AC Chair | |
Strengths, Skills, and Experience | |||||||
Public Company Experience | X | X | X | X | X | X | X |
Active/Recently Retired Public Company CEO | X | ||||||
Active/Recently Retired Public Company Executive | X | X | X | X | X | ||
Electronics Industry or Related Experience | X | X | X | X | X | X | |
Medical Industry or Related Experience | X | X | |||||
Manufacturing Operations Experience | X | X | X | X | X | ||
Product Design and Development | X | X | X | X | |||
International Business Experience | X | X | X | X | X | X | X |
Mergers and Acquisition Experience | X | X | X | X | X | ||
Strategy Development | X | X | X | X | X | X | X |
Marketing Expertise | X | X | X | X | |||
Supply Chain and Logistics Experience | X | X | X | ||||
Business Development/Growth | X | X | X | X | X | X | |
CFO Experience | X | ||||||
Public Company Board Experience | X | X | X | X | X | X | X |
Capital Structure (Finance/Banking) Expertise | X | X | |||||
Talent Development Experience | X | X | X | X | X | X | X |
PR/Communication Experience | X | X | X | X | |||
Government Relations Experience | X | ||||||
Audit/Internal Control Experience | X | X | |||||
Public Financial Reporting Experience | X | X |
Kimball Electronics • 2015 Proxy Statement 9
|
•Value Preservation — recognizing and mitigating as much as possible the risk of potential for loss or harm to any element of our business.
•
The Board regularly reviews the ERM information regarding the Company's financial position, operating results, and strategic plans, as well as risks associated with each. While theis also informed through Audit Committee and the Compensation and Governance Committee are each responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks.
financial and governance risks and mitigation in areas unique to the matters overseen by those committees.
Since the date the spin-off transaction was completed (October 31, 2014) and the end of the
Members | Gregory A. Thaxton (Chairperson), Geoffrey L. Stringer, and Christine M. Vujovich |
Meetings in Fiscal | |
Committee Accomplishments in |
10 www.kimballelectronics.com
|
the fiscal 2018 internal audit plan; Conducted reviews of Company’s cybersecurity program, revenue recognition rule implementation and GDPR readiness, and enterprise risk management process. | |
Responsibilities of the Committee | The Audit Committee operates under, and has the responsibilities set forth in, a written charter, which has been approved by the Board and is reviewed and reassessed annually or as circumstances dictate by the Audit Committee. The Audit Committee modifies the written charter, as necessary, to comply with all regulatory requirements as or before they become effective. A copy of the Audit Committee charter is available on the http://investors.kimballelectronics.com/ The Board has determined that Mr. |
Comments from the Committee | Due to the increasing financial complexities, the Committee added another regular meeting to its schedule and now meets quarterly. The |
Members | Gregory J. Lampert (Chairperson), Colleen C. Repplier, and Thomas J. Tischhauser |
Meetings in Fiscal | |
Committee Accomplishments in | |
Responsibilities of the Committee | The Compensation and Governance http://investors.kimballelectronics.com/ The Compensation and Governance Committee identifies potential nominees for director based on specified objectives in terms of the Board composition, taking into account the need for broad and complementary experience and expertise. Nominees, whether recommended by the Compensation and Governance Committee or a Share Owner, will be evaluated on the basis of established board member criteria, including, but not limited to those noted above in the |
The Compensation and Governance Committee also will consider candidates recommended by Share Owners. A Share Owner who wishes to recommend a director candidate for consideration by the Compensation and Governance Committee should send such recommendation to the Secretary of the Company at 1205 Kimball |
Kimball Electronics • 2015 Proxy Statement 11
|
” | |
The Each of the members of the Compensation and Governance Committee is | |
Comments from the Committee |
None of our executive officers serves, or during fiscal year 2018 served, on a board of directors or compensation committee of a company that has an executive officer serving on our Board or the Compensation and Governance Committee.
Directors'
Committee meeting attendance.
2018
Fees Earned or | Stock | Total | |||||||
Name | Paid in Cash ($) (1) | Awards ($) (2) | ($) | ||||||
(a) | (b) | (c) | (h) | ||||||
Gregory J. Lampert | $ | 85,000 | $ | 40,000 | $ | 125,000 | |||
Colleen C. Repplier | $ | 85,000 | $ | 40,000 | $ | 125,000 | |||
Geoffrey L. Stringer | $ | 75,016 | $ | 40,000 | $ | 115,016 | |||
Gregory A. Thaxton | $ | 85,000 | $ | 40,000 | $ | 125,000 | |||
Thomas J. Tischhauser | $ | 75,018 | $ | 40,000 | $ | 115,018 | |||
Christine M. Vujovich | $ | 75,000 | $ | 40,000 | $ | 115,000 |
(1) | Represents fees paid during fiscal year |
(2) | Represents the value of the equity retainer awards granted during the year which amounted to 1,986 shares |
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Kimball Electronics • 2015 Proxy Statement 13
Securities and Exchange Commission.
Securities and Exchange Commission.
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2018.
Deloitte Entities 2015 2014 Audit Fees(a) $ 985,672 $307,425 Audit-Related Fees(b) $ 39,441 $ 5,997 Tax Fees(c) $ 98,522 $ 32,702 All Other Fees $ 0 $ 0 Total $1,123,635 $346,124
Deloitte Entities | |||||||
2018 | 2017 | ||||||
Audit Fees(a) | $ | 1,324,277 | $ | 1,083,856 | |||
Audit-Related Fees(b) | 55,965 | 64,011 | |||||
Tax Fees(c) | 53,267 | 30,922 | |||||
All Other Fees | — | — | |||||
Total | $ | 1,433,509 | $ | 1,178,789 |
(a) |
(b) | Audit-related fees consist primarily of fees paid or expected to be paid for the audit of various benefit plans. |
(c) |
•performance on past audits, including the expertise of the engagement team;
Kimball Electronics • 2015
COMPENSATION DISCUSSION AND ANALYSIS |
1. | Rewarding Performance. All parts of compensation are designed to reward executive performance. Base salary is designed to reward annual achievements, demonstrated leadership abilities, and management experience and effectiveness. All other elements of compensation focus on motivating the executive to grow sales and achieve superior financial results. |
2. | Aligning with Share Owners’ Interest. Your Company’s objective is to align the interests of the executives with our Share Owners by strongly linking compensation to Company financial performance. Improved Company performance leads to improved stock prices and increased Share Owner value. |
3. | Retaining Executive Talent. Your Company’s objective is to retain our executives by using key elements of compensation that provide better opportunity for financial rewards when compared to other similar professional opportunities. |
Compensation Component | Purpose | Link to Compensation Philosophy | ||
Annual base salary | To provide an appropriate level of fixed compensation that will promote executive recruitment and retention based on business responsibilities, personal performance during the prior year, and leadership qualities. | Rewards performance. Retains executive talent. | ||
Performance-based cash incentive compensation | Variable component used to incentivize, motivate, and link compensation with the company’s financial success. | Rewards performance. Aligns interests with Share Owners’ interests. Retains executive talent. | ||
Long-term performance-based stock incentive compensation | To motivate officers and key managers to focus on long-term financial performance of the Company. | Rewards performance. Aligns interests with Share Owners’ interests. Retains executive talent. | ||
Additional discretionary cash and/or stock compensation | To recognize individual achievement in special situations. | Rewards performance. Retains executive talent. |
Date | Action Taken | |
August 2017 | • Awarded long-term performance share opportunities for fiscal year 2018. • Certified fiscal year 2017 economic profit results and sales growth attainment, resulting in issuance of long-term performance shares and Incentive Bonus Plan payments. | |
February 2018 | • Reviewed and approved compensation of NEOs. | |
July 2018 | • Awarded long-term performance share opportunities for fiscal year 2019. • Certified fiscal year 2018 economic profit results and sales growth attainment, resulting in issuance of long-term performance shares and Incentive Bonus Plan payments. |
Named Executive Officer | Annualized Base Salary | % Increase | |||||
Donald D. Charron | $ | 692,441 | 2.5 | % | |||
John H. Kahle | $ | 397,800 | — | % | |||
Steven T. Korn | $ | 315,297 | 2.5 | % | |||
Michael K. Sergesketter | $ | 312,878 | 3.0 | % | |||
Christopher J. Thyen | $ | 294,899 | 2.5 | % |
Economic Profit | Participant Categories | |||||||||||||||||||||||
Tiers | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | ||||||||||||||||
1 | 100 | % | 80 | % | 60 | % | 50 | % | 40 | % | 30 | % | 20 | % | 10 | % | ||||||||
2 | 80 | % | 60 | % | 45 | % | 35 | % | 30 | % | 22 | % | 15 | % | 7 | % | ||||||||
3 | 60 | % | 40 | % | 30 | % | 25 | % | 20 | % | 15 | % | 10 | % | 5 | % | ||||||||
4 | 40 | % | 20 | % | 15 | % | 12 | % | 10 | % | 7 | % | 5 | % | 3 | % | ||||||||
5 | 20 | % | 10 | % | 8 | % | 6 | % | 5 | % | 4 | % | 3 | % | 2 | % | ||||||||
6 | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % | 0 | % |
| ||
As
Named Executive Officer | FY 2018 LTPS Grant (Shares Issued) (1) | |
Donald D. Charron | 74,351 | |
John H. Kahle | 26,802 | |
Steven T. Korn | 15,493 | |
Michael K. Sergesketter | 14,948 | |
Christopher J. Thyen | 14,590 |
Performance Shares | ||||||||||
Named Executive Officer | Targeted Value for August 2017 Awards | Realized (Earned and Vested Value) | Realized Value as a Percentage of Targeted Value | |||||||
Donald D. Charron | $ | 1,360,623 | $ | 1,475,789 | 108.5 | % | ||||
John H. Kahle | $ | 490,477 | $ | 531,992 | 108.5 | % | ||||
Steven T. Korn | $ | 283,522 | $ | 307,520 | 108.5 | % | ||||
Michael K. Sergesketter | $ | 273,548 | $ | 296,702 | 108.5 | % | ||||
Christopher J. Thyen | $ | 266,997 | $ | 289,596 | 108.5 | % |
Named Executive Officer | FY 2019 LTPS Award (Maximum # of Shares) | |
Donald D. Charron | 65,692 | |
John H. Kahle | 16,746 | |
Steven T. Korn | 13,181 | |
Michael K. Sergesketter | 12,934 | |
Christopher J. Thyen | 12,351 |
Years of Vesting Service | Vested Percentage | |
Less than 1 | 0% | |
1 | 10% | |
2 | 20% | |
3 | 40% | |
4 | 60% | |
5 | 100% |
Fund Name | Asset Class | AATR (1 year) 7/1/17 - 6/30/18 |
American Funds AMCAP R6 | Large Growth | 20.96% |
Small-Cap Index Fund Adm | Domestic Stock Funds | 16.48% |
Kimball Electronics | Company Stock | 1.38% |
International Growth Adm | International Stock Funds | 19.99% |
Inst Index Fund Inst | Large Blend | 14.33% |
Retire Savings Trust III | Short Term Reserves | 2.05% |
Prime Money Mkt Fund | Short Term Reserves | 1.43% |
Inst Target Ret 2065 Fund | Balanced Funds (Stocks and Bonds) | - |
Inst Target Ret 2040 Fund | Balanced Funds (Stocks and Bonds) | 10.15% |
Inst Target Ret 2045 Fund | Balanced Funds (Stocks and Bonds) | 10.62% |
Inst Target Ret 2050 Fund | Balanced Funds (Stocks and Bonds) | 10.58% |
Inst Target Ret 2055 Fund | Balanced Funds (Stocks and Bonds) | 10.59% |
Inst Target Ret 2060 Fund | Balanced Funds (Stocks and Bonds) | 10.49% |
Inst Target Ret 2035 Fund | Balanced Funds (Stocks and Bonds) | 9.33% |
Inst Target Ret 2030 Fund | Balanced Funds (Stocks and Bonds) | 8.51% |
Inst Target Ret 2025 Fund | Balanced Funds (Stocks and Bonds) | 7.63% |
Inflation-Protect Sec Adm | Bond Funds | 1.89% |
Inst Target Ret 2020 Fund | Balanced Funds (Stocks and Bonds) | 6.71% |
Inst Target Ret 2015 Fund | Balanced Funds (Stocks and Bonds) | 5.48% |
Inst Target Ret Inc Fund | Balanced Funds (Stocks and Bonds) | 4.00% |
Real Estate Index Admiral | Real Estate | 2.29% |
Windsor II Fund Adm | Domestic Stock Funds | 7.60% |
Vulcan Value Prtnrs SmCap | Small Blend | 6.03% |
Met West Total Rt Bd Inst | Intermediate-Term Bond | -0.17% |
Total Bond Mkt Index Inst | Bond Funds | -0.52% |
Total Intl Stock Ix Admiral | International Stock Funds | 7.10% |
AATR: Average annual total returns |
Benefit | Rationale | |
Financial Counseling | Aid personal financial planning through expert advice to properly manage financial affairs. | |
Tax Preparation | Assist in accurate preparation of personal income tax filings. | |
Executive Preventive Healthcare Program | Maintain health of executive and primary personal support person to permit peak performance. | |
Medical Reimbursement | Promote seeking of proper medical care by reducing potential financial barriers. |
1. | Responsibilities — the scope and breadth of the duties and level of responsibility undertaken. |
2. | Leadership — demonstrated ability to lead an organization. |
3. | Performance — with an emphasis on consistent, sustained performance. |
4. | Potential — demonstrated capacity to grow into more responsible leadership positions. |
5. | Execution of Strategy — record of getting things done according to plans. |
6. | Personal Development — demonstrated willingness to learn and grow professional and leadership skills. |
7. | Promotion of Company Culture and Values — demonstrated commitment to modeling of Company Mission and Guiding Principles and ethical behavior. |
8. | Company Results — demonstrated teamwork and support of Company goals and performance. |
9. | Benchmarking — comparison of executive compensation to industry or other relevant compensation benchmarks. |
10. | Retention — compensation at sufficient levels to retain talented executives. |
REPORT OF THE COMPENSATION AND GOVERNANCE COMMITTEE |
COMPENSATION RELATED RISK ASSESSMENT |
EXECUTIVE COMPENSATION |
first time in the proxy statement for our 2019 Annual Meeting of Share Owners.
“NEOs.”
Name and Principal Position Stock Awards Non-Equity
Incentive Plan
Compensation All Other
Compensation Total Year Salary ($) ($) (1) ($) (2) ($) (3) ($) Donald D. Charron 2015 $612,356 $741,365 $496,008 $35,516 $1,885,245 Chairman of the Board and Chief Executive Officer 2014 $603,200 $786,767 $548,912 $32,910 $1,971,789 2013 $572,000 $420,638 $371,800 $27,247 $1,391,685 John H. Kahle 2015 $397,800 $564,290 $312,120 $31,581 $1,305,791 Vice President, General Counsel, Secretary 2014 $397,800 $803,201 $338,130 $27,488 $1,566,619 2013 $383,400 $350,750 $153,360 $25,774 $ 913,284 Steven T. Korn 2015 $281,678 $188,246 $228,160 $16,359 $ 714,443 Vice President, North American Operations 2014 $271,466 $172,169 $247,034 $14,022 $ 704,691 2013 $260,073 $ 96,751 $169,047 $10,158 $ 536,029 Michael K. Sergesketter 2015 $253,053 $174,686 $204,973 $38,346 $ 671,058 Vice President, Chief Financial Officer 2014 $242,757 $172,169 $220,909 $33,066 $ 668,901 2013 $232,908 $ 77,095 $151,391 $23,593 $ 484,987 Christopher J. Thyen 2015 $257,799 $176,808 $208,817 $22,970 $ 666,394 Vice President, Business Development 2014 $240,883 $172,169 $219,204 $14,729 $ 646,985 2013 $220,581 $ 96,751 $143,378 $ 9,986 $ 470,696
Name and Principal Position | Year | Salary | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | |||||||||||||||
($) | ($) (1) | ($) (2) | ($) (3) | ($) | |||||||||||||||||
Donald D. Charron | 2018 | $ | 678,800 | $ | 1,360,623 | $ | 461,584 | $ | 40,406 | $ | 2,541,413 | ||||||||||
Chairman of the Board and Chief Executive Officer | 2017 | $ | 662,264 | $ | — | $ | 443,717 | $ | 40,382 | $ | 1,146,363 | ||||||||||
2016 | $ | 645,996 | $ | 811,466 | $ | 400,518 | $ | 35,124 | $ | 1,893,104 | |||||||||||
John H. Kahle | 2018 | $ | 397,800 | $ | 490,477 | $ | 270,504 | $ | 46,747 | $ | 1,205,528 | ||||||||||
Vice President, General Counsel, Chief Compliance Officer, Secretary | 2017 | $ | 397,800 | $ | — | $ | 266,526 | $ | 41,784 | $ | 706,110 | ||||||||||
2016 | $ | 397,800 | $ | 403,307 | $ | 246,636 | $ | 27,731 | $ | 1,075,474 | |||||||||||
Steven T. Korn | 2018 | $ | 309,234 | $ | 283,522 | $ | 210,279 | $ | 16,440 | $ | 819,475 | ||||||||||
Vice President, North American Operations | 2017 | $ | 301,075 | $ | — | $ | 201,720 | $ | 15,259 | $ | 518,054 | ||||||||||
2016 | $ | 290,322 | $ | 169,994 | $ | 180,000 | $ | 14,284 | $ | 654,600 | |||||||||||
Michael K. Sergesketter | 2018 | $ | 305,693 | $ | 273,548 | $ | 207,871 | $ | 31,332 | $ | 818,444 | ||||||||||
Vice President, Chief Financial Officer | 2017 | $ | 292,104 | $ | — | $ | 195,710 | $ | 22,670 | $ | 510,484 | ||||||||||
2016 | $ | 267,824 | $ | 163,886 | $ | 166,051 | $ | 23,476 | $ | 621,237 | |||||||||||
Christopher J. Thyen | 2018 | $ | 289,228 | $ | 266,997 | $ | 196,675 | $ | 24,686 | $ | 777,586 | ||||||||||
Vice President, New Platforms | 2017 | $ | 278,768 | $ | — | $ | 186,775 | $ | 31,266 | $ | 496,809 | ||||||||||
2016 | $ | 267,778 | $ | 161,654 | $ | 166,022 | $ | 19,019 | $ | 614,473 |
(1) | Stock awards consist of performance |
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(2) | Amounts consist of cash incentive compensation earned for services rendered in the applicable fiscal year. The amounts are paid in five installments over the succeeding fiscal year, pursuant to the Incentive Bonus Plan, with 50% payable in August and 12.5% payable in each of the following months of September, January, April, and June. |
(3) | Includes benefits received by the NEOs from executive financial services programs, supplemental medical reimbursement, the value of the services and related benefits provided pursuant to the Executive Preventive Healthcare Program, Company |
2018 Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) Estimated Future Payouts Under Equity Incentive Plan Awards (2) Grant Date Fair Value of Stock and Option Awards (3) Grant Threshold Target Maximum Threshold Target Maximum Name Date ($) ($) ($) (#) (#) (#) ($) (a) (b) (c ) (d) (e) (f) (g) (h) (l) Donald D. Charron Incentive Bonus Plan $ — $ 271,520 $ 678,800 LTPS(4) 08/21/17 — 74,351 74,351 $ 1,360,623 John H. Kahle Incentive Bonus Plan $ — $ 159,120 $ 397,800 LTPS(4) 08/21/17 — 26,802 26,802 $ 490,477 Steven T. Korn Incentive Bonus Plan $ — $ 123,694 $ 309,234 LTPS(4) 08/21/17 — 15,493 15,493 $ 283,522 Michael K. Sergesketter Incentive Bonus Plan $ — $ 122,277 $ 305,693 LTPS(4) 08/21/17 — 14,948 14,948 $ 273,548 Christopher J. Thyen Incentive Bonus Plan $ — $ 115,691 $ 289,228 LTPS(4) 08/21/17 — 14,590 14,590 $ 266,997 2015 Stock Awards Name Equity Incentive Plan Awards:
Number of Unearned Shares,
Units or Other Rights That
Have Not Vested(1) Equity Incentive Plan Awards:
Market or Payout Value of
Unearned Shares, Units or Other
Rights That Have Not Vested(2) (#) ($) Donald D. Charron 178,190 $2,599,789 John H. Kahle 143,363 $2,091,663 Steven T. Korn 40,830 $ 595,713 Michael K. Sergesketter 39,207 $ 572,024 Christopher J. Thyen 39,436 $ 575,368 Stock Awards Name (#)(1) ($)(2) Donald D. Charron 140,479 $ 2,570,766 John H. Kahle 43,649 $ 798,777 Steven T. Korn 28,713 $ 525,448 Michael K. Sergesketter 27,904 $ 510,643 Christopher J. Thyen 26,978 $ 493,697 Stock Award and Initial Grant Date Name Donald D. Charron Shares (#) 49,652 52,863 15,344 13,192 9,428 Vesting Date(s) (a) (b) 8/20/2018 (b) 8/20/2018 John H. Kahle Shares (#) 8,455 9,227 3,347 13,192 9,428 Vesting Date(s) (a) (b) 8/20/2018 (b) 8/20/2018 Steven T. Korn Shares (#) 9,934 10,556 3,684 2,638 1,901 Vesting Date(s) (a) (b) 8/20/2018 (b) 8/20/2018 Michael K. Sergesketter Shares (#) 9,810 10,195 3,360 2,638 1,901 Vesting Date(s) (a) (b) 8/20/2018 (b) 8/20/2018 Christopher J. Thyen Shares (#) 9,292 9,749 3,398 2,638 1,901 Vesting Date(s) (a) (b) 8/20/2018 (b) 8/20/2018 (1)Unearned and unvested equity incentive plan awards consist of the following:
Stock Award and Initial Grant Date Name APS
2/24/2015 APS
6/26/2014 LTPS
6/29/2015 LTPS
6/26/2014 LTPS
8/12/2013 LTPS
8/13/2012 LTPS
8/16/2011 LTPS
8/16/2010 Donald D. Charron Shares (#) - 4,113 46,035 32,980 37,714 28,286 18,857 10,205 Vesting Date(s) n/a 8/21/2015 (a) (b) (c) (d) (e) 8/21/2015 John H. Kahle Shares (#) - 4,113 10,044 32,980 37,714 28,286 18,857 11,369 Vesting Date(s) n/a 8/21/2015 (a) (b) (c) (d) (e) 8/21/2015 Steven T. Korn Shares (#) 2,225 1,940 11,055 6,596 7,605 5,704 3,803 1,902 Vesting Date(s) 8/21/2015 8/21/2015 (a) (b) (c) (d) (e) 8/21/2015 Michael K. Sergesketter Shares (#) 1,580 1,940 10,077 6,596 7,605 5,704 3,803 1,902 Vesting Date(s) 8/21/2015 8/21/2015 (a) (b) (c) (d) (e) 8/21/2015 Christopher J. Thyen Shares (#) 1,695 1,940 10,191 6,596 7,605 5,704 3,803 1,902 Vesting Date(s) 8/21/2015 8/21/2015 (a) (b) (c) (d) (e) 8/21/2015
(a) | Three remaining annual vesting dates beginning 8/ |
(b) | |
Two remaining annual vesting dates beginning 8/ |
Kimball Electronics • 2015 Proxy Statement 17
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(2) Calculated using the $18.30 closing price of KE Common Stock as reported by NASDAQ on June 30, 2018. Option Exercises and Stock Vested in Fiscal Year 2018
31 Nonqualified Deferred Compensation in Fiscal Year 2018
(a) unless the
“Cause” means a determination, by at least three-quarters of the members of the Board, that one or more of the following has occurred:
the
the
the
“Good
a reduction in the
a reduction of 5% or more in the aggregate benefits provided to the executive and his dependents under the
a significant diminution in the
a relocation of the
failure by the Company to obtain an assumption agreement regarding the
In the event of termination of employment for a reason other than by the Company for Cause or by the executive for Good Reason, the executive will receive his base salary through the date of termination and will be entitled to any benefits under the regular terms of the welfare, retirement, Incentive Bonus, SERP, and equity and incentive plans.
33 “Change in
the acquisition during any 12-month period, by any one person or more than one person acting as a group, of ownership interests in a Relevant Company possessing 35% or more of the total voting power of all ownership interests in the Relevant Company;
the acquisition of ownership during any 12-month period, by any one person or more than one person acting as a group, of 40% or more of the total gross fair market value of the assets of a Relevant Company; or
the replacement of a majority of members of the Board during any 12-month period, by members whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or Any occurrence that does not constitute a change in the ownership or effective control, or in the ownership of a substantial portion of the assets, of a Relevant Entity within the meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code and its interpretive regulations does not constitute a Upon a Change in Control of the Company, the Company will pay to the executives an amount in cash, shares, or a combination thereof at the The Employment Agreements also provide that in the event the executive incurs any gross income inclusion, interest or additional tax pursuant to Section 409A of the Internal Revenue Code on any payments from the Company, then the Company will make a supplemental payment to the executive in an amount sufficient to pay the resulting tax liability as well as the tax liability on the supplemental payment. In addition, under the Employment Agreements, if any of the In addition, the Employment Agreements impose non-competition and non-solicitation obligations on the executives during the term of their employment and for a period of 12 months (or a shorter period not less than 6 months, for an executive employed for fewer than 12 months) following termination of employment for any reason. 34
The table below reflects the amount of compensation payable to
35
The amounts shown in the table above do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include accrued salary, health benefits, and distribution of account balances under the Retirement Plan.
The following table provides certain information with respect to our equity compensation plans in effect as of June 30,
2018.
36
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FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS |
SUBMISSION OF NOMINATIONS AND PROPOSALS FOR |
20 www.kimballelectronics.com
Kimball Electronics • 2015 Proxy Statement 21
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If you are a Share Owner of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting. All properly delivered proxies will be voted. In the absence of contrary direction, the proxies will be voted "FOR"“FOR” the election of each of the named nominees to the Board of Directors, and "FOR"“FOR” the ratification of the appointmentselection of the Company'sCompany’s independent registered public accounting firm.firm, “FOR” the advisory proposal approving the compensation paid to our Named Executive Officers, and vote to conduct future advisory votes on executive compensation every “ONE YEAR”. Shares held by participants in the Company'sCompany’s retirement plan will be voted in accordance with the participant'sparticipant’s direction in his or her proxy unless such proxy is not timely received, in which case the trustee of the retirement plan will vote the shares in the same proportion as the shares for which the trustee received timely participant direction.
A. | PRESENTATION OF A PHOTO IDENTIFICATION, AND | |
B. | YOUR NAME MUST BE ON OUR SHARE OWNER LIST OR A RECENT BROKERAGE STATEMENT SHOWING SHARE OWNERSHIP AS OF |
In Bedford take US Highway 50 Westfor approximately 47 miles.
In Loogootee take US 231 South to
Follow US 231 south through Jasper.
22 www.kimballelectronics.com
Dimensional Fund Advisors LP Shares Beneficially Owned(a)(b) Name Sole Voting and
Investment Power Shared Voting and
Investment PowerPercent of Outstanding Shares Holders of more than 5% of the Outstanding Shares
Building One
6300 Bee Cave Road 1,925,274 (e) None 6.60% Austin, Texas 78746 Directors and Named Executive Officers: Donald D. Charron 208,544 (c) None (d) Christine M. Vujovich 30,297 None (d) Geoffrey L. Stringer 41,056 None (d) Thomas J. Tischhauser 32,565 None (d) Colleen C. Repplier 4,000 None (d) Gregory J. Lampert 5,600 None (d) Christopher B. Curtis 4,000 None (d) John H. Kahle 141,397 (c) None (d) Steven T. Korn 54,892 (c) None (d) Michael K. Sergesketter 53,658 (c) None (d) Christopher J. Thyen 86,334 (c) None (d) All executive officers and directors as a Group (15 persons) 753,780 (c) None 2.58%
Shares Beneficially Owned(a)(b) | |||||||
Name | Sole Voting and Investment Power | Shared Voting and Investment Power | Percent of Outstanding Shares | ||||
Holders of more than 5% of the Outstanding Shares | |||||||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, Texas 78746 | 2,262,929 | (e) | None | 8.58 | % | ||
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 1,732,112 | (f) | None | 6.57 | % | ||
Directors and Named Executive Officers: | |||||||
Donald D. Charron | 347,845 | (c) | None | 1.32 | % | ||
Christine M. Vujovich | 37,839 | (g) | None | (d) | |||
Geoffrey L. Stringer | 66,127 | None | (d) | ||||
Thomas J. Tischhauser | 42,119 | None | (d) | ||||
Colleen C. Repplier | 11,085 | (g) | None | (d) | |||
Gregory J. Lampert | 14,696 | (g) | None | (d) | |||
Gregory A. Thaxton | — | (g) | None | (d) | |||
John H. Kahle | 200,035 | (c) | None | (d) | |||
Steven T. Korn | 81,750 | (c) | None | (d) | |||
Michael K. Sergesketter | 80,521 | (c) | None | (d) | |||
Christopher J. Thyen | 118,398 | (c) | None | (d) | |||
All executive officers and directors as a Group (16 persons) | 1,145,079 | (c) | None | 4.34 | % |
(a) | Based upon information obtained from the executive officers, directors, and beneficial owners (according to the definition of |
(b) | The |
(c) | Shares include performance shares which are receivable as of August |
(d) | Totals are under one percent of the outstanding |
(e) | This information is derived from the Schedule |
(f) | This information is derived from the Schedule 13G/A filed by such Share Owner with the SEC on January 25, 2018, indicating beneficial ownership as of |
Kimball Electronics • 2015 Proxy Statement 23
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(g) | Shares do not include phantom stock units. Each phantom stock unit is equivalent of one share of common stock. Such units of phantom stock were acquired under the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan. Phantom stock units granted as of August 17, 2018: Christine M. Vujovich 4,525 units; Colleen C. Repplier 13,506 units; Gregory J. Lampert 9,922 units; and Gregory A. Thaxton 3,413 units. |
On February 23, 2015, the
Position | Value as a Multiple of Base Salary or Fees |
Director | X 3 |
Chairman, CEO | X 5 |
Vice President | X 3 |
24 www.kimballelectronics.com
Kimball Electronics • 2015 Proxy Statement 25
APPROVAL PROCESS FOR SERVICES PERFORMED BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
A-1 www.kimballelectronics.com
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 and follow the instructions to obtain your records and to create an electronic voting instruction form.
KIMBALL ELECTRONICS, INC. 1205 KIMBALL BLVD. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
JASPER, IN 47546 If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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 and then follow the instructions.
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 Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY For Withhold For All To withhold authority to vote for any All All Except individual nominee(s), mark “For All Except” and write the number(s) of the The Board of Directors recommends you vote FOR nominee(s) on the line below. the following: 0 0 0 1. Election of Directors Nominees 01 Donald D. Charron 02 Colleen C. Repplier 03 Gregory J. Lampert The Board of Directors recommends you vote FOR proposals 2. and 3: For Against Abstain 2. To ratify the selection of Deloitte and Touche LLP as the Company's independent registered public accounting firm for the fiscal year 2019. 0 0 0 3. To approve, by a non-binding, advisory vote, the compensation paid to the Company's Named Executive Officers. 0 0 0 The Board of Directors recommends you vote 1 YEAR on the following proposal: 1 year 2 years 3 years Abstain 4. To approve, by a non-binding, advisory vote, the preferred frequency for the Company to conduct future advisory votes on the compensation paid to the Company's Named Executive Officers. 0 0 0 0 NOTE:In their discretion, the proxies are authorized to vote upon such other business as may properly come before
the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. 0000388298_1 R1.0.1.17 Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
KIMBALL ELECTRONICS, INC.Annual0000388298_2 R1.0.1.17 available at Important NoticeRegardingtheAvailabilityofProxyMaterialsforAnnualMeeting: made, thisproxywillbevotedinaccordancewith theBoardofDirectors'recommendations. This 1205 KimballBlvd.,Jasper,IN47546,andanyadjournment orpostponementthereof. Meeting of ShareholdersOctober 21, 2015 9:hereby The www.proxyvote.com common Share proxy, authorizes of Share Owner stock when Owners him of hereby properly KIMBALL to represent to appoints executed, be This proxyissolicitedbytheBoardofDirectors ELECTRONICS, held Continued and tobesignedonreverse side and Donald at Annual MeetingofShareOwners KIMBALL ELECTRONICS,INC. to will 09:00 November 8,20189:00AM vote, D. be AM,This proxy is solicited by the Board of Directors
The shareholder hereby appoints Donald D. Charron as proxy, with the power to appoint his substitute, and hereby authorizes him to represent and to vote,voted INC. designated EST in that as designated on the proxy, 11/ the manner on 8/ Share 2018, the with reverse directed Owner the at the The Notice&ProxyStatement,AnnualReportare power side of this ballot, all of the shares of common stock of KIMBALL ELECTRONICS, INC. that the shareholderKimball is herein. entitled to of appoint this Electronics If ballot, to no vote his such all substitute, Headquarters, at of direction the the Annual Meeting of Shareholders to be held at 09:00 AM, EDT on 10/21/2015, at the Kimball Electronics Headquarters, 1205 Kimball Blvd., Jasper, IN 47546,shares and any adjournment or postponement thereof.is
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations.
Continued and to be signed on reverse side