* Mr. Dempsey served as Executive Chair of the Board from March 6, 2018 through July 16, 2018, at which time he returned to his position as non-executive, independent Chair of the Board.

Name	Age	Principal Occupation/Professional Background	Director Since
William G. Dempsey	69	Chair of the Board Hillrom	2014
John P. Groetelaars	55	President and Chief Executive Officer Hillrom	2018
Gary L. Ellis	64	Retired Executive Vice President, Global Operations, Information Technology and Facilities & Real Estate Medtronic plc	2017
Stacy Enxing Seng	56	Venture Partner, Lightstone Venture Capital	2015
Mary Garrett	62	Retired Chief Marketing Officer of Global Markets IBM	2017
James R. Giertz	63	Retired Senior Vice President and Chief Financial Officer H.B. Fuller Company	2009
William H. Kucheman	71	Retired Interim Chief Executive Officer Boston Scientific Corp.	2013
Gregory J. Moore	56	Corporate Vice President, Health at Microsoft Corporation	2019
Felicia F. Norwood	61	Executive Vice President and President of the Government Business Division at Anthem, Inc.	2020
Nancy M. Schlichting	66	Retired President and Chief Executive Officer Henry Ford Health System	2017

WILLIAM G. DEMPSEY

Mr. Dempsey has served as a director of Hill-RomHillrom since 2014. Mr. Dempsey served as Executive Chair of the Board from March 6, 2018 through July 16, 2018, at which time he returned to his position as non-executive independent Chair of the Board, as further described under “Board Leadership” on page 15.Board. Mr. Dempsey previously held various executive positions with Abbott Laboratories, a medical devices and health care company, from 1982 until his retirement in 2007, including Executive Vice President of Global Pharmaceuticals from 2006, Senior Vice President of Pharmaceutical Operations from 2003 and Senior Vice President of International Operations from 1999. He currently serves as a director of Ashland, Inc. (where he serves on the audit, and governance and nominating environmental, health and safety, and quality committees), and was previously on the boards of MDS, Inc. through 2011, Nordion, Inc. through 2014, Hospira, Inc., through 2015 and Landauer Inc., through 2017. He has previously served as a member of the Salvation Army Advisory Board in Chicago, as Chairman of the International Section of the Pharmaceutical Research and Manufacturers of America (PhRMA) and as Chairman of the Accelerating Access Initiative (a cooperative public-private partnership of UNAIDS, the World Bank, and six research-based pharmaceutical companies). He is a member of the Board of Trustees for the Guadalupe Center in Immokalee, Florida.

Mr. Dempsey has extensive experience in the health care industry, including positions in management and on the boards of several companies. In addition, his international operations experience and his service as a senior officer at a large company makes him highly qualified to serve on the Board.

JOHN P. GROETELAARS

Mr. Groetelaars was elected President & Chief Executive Officer of Hill-RomHillrom and appointed to serve as a director effective May 14, 2018. Mr. Groetelaars most recently served as executive vice president and president of the Interventional Segment at Becton, Dickinson and Company, which he joined ina medical technology company, since December 2017 following its acquisition of C.R. Bard Inc., a medical technology company, where his responsibilities included global strategic, financial, operational and innovation platforms. He previously served in a variety of progressive roles at C.R. Bard during his 10-year career there, including as a group president from 2015 to 2017. Mr. Groetelaars joined C.R. Bard in 2008 as vice president and general manager, Davol Inc., and was appointed president of Davol in 2009. In 2013, Mr. Groetelaars was promoted to group vice president and in 2015 he was promoted to group president, a position he held until C.R. Bard was acquired by Becton, Dickinson and Company in December 2017. Prior to joining C.R. Bard, Mr. Groetelaars held various international leadership positions in Canada, Denmark and the United Kingdom at Boston Scientific Corporation from 2001 until 2008. Prior to joining Boston Scientific, Mr. Groetelaars held positions in general management, marketing, business development and sales with Guidant Corporation and with Eli Lilly.

He currently serves as a director of the AdvaMed board and is a member of The Economic Club of Chicago. Mr. Groetelaars’ extensive experience in the medical device industry, including his multinational experience with substantial public medical device companies and leadership roles in global strategy, operations, sales and business development make him highly qualified to serve as the president and chief executive officer (“CEO”) of Hill-RomHillrom, as well as a member of the Board.

GARY L. ELLIS

Mr. Ellis has served as director of Hill-RomHillrom since 2017.  He was previously Executive Vice President, Global Operations, Information Technology and Facilities & Real Estate of Medtronic plc, a medical device company, in Dublin, Ireland, from June 2016 until his retirement in December 2016. Prior to this role, he held the position of Chief Financial Officer and Senior Vice President of Medtronic, plc.Inc. from April 2014 until June 2016, Senior Vice President and Chief Financial Officer of Medtronic, Inc. from May 2005 to April 2014, and Vice President, Corporate Controller and Treasurer of Medtronic, Inc. from 1999 to May 2005.  Mr. Ellis also serves as an independent director of The Toro Company.Company (where he serves as lead director, chair of the finance committee and a member of the audit committee) and Inspire Medical Systems, Inc. (where he serves as the chair of the nominating committee). He is a Certified Public Accountant.

Mr. Ellis brings significant financial leadership experience and expertise to the Board and provides oversight regarding capital structure, financial condition and policies, long-range financial objectives, financing requirements and arrangements, capital budgets and expenditures, risk-management, and strategic planning matters. Additionally, Mr. Ellis contributes his international experience managing worldwide financial operations and analyzing financial implications of merger and acquisition transactions, as well as aligning business strategies and financial decisions.

10

STACY ENXING SENG

Ms. Enxing Seng has served as director of Hill-RomHillrom since 2015.  She has served as a Venture Partner with Lightstone Venture Capital, a venture capital firm, since March 2016. She is the former President, Vascular Therapies of Covidien from 2011 to 2014 and prior to that was President of Peripheral Vascular of Covidien from 2010 to 2011.  Ms. Enxing Seng joined Covidien in 2010 through the $2.6B acquisition of ev3 Incorporated, where she was a founding member and executive officer responsible for leading their Peripheral Vascular division from 2001 to 2010.  Prior to that, she held positions of increasing responsibility with SCIMED, Boston Scientific, American Hospital Supply and Baxter. Ms. Enxing Seng currently is a Venture Partner with Lightstone Venture Capital and serves on the boards of Sonova Holding AG, Solace Therapeutics and Fogarty Institute for Innovation, and was formerly on the boards of Claret Medical, Inc., Spirox, Inc., FIRE 1 Medical Incubator and CV Ingenuity.

Ms. Enxing Seng has broad experience as a former senior executive responsible for a world-wide business unit of a major medical device company.company, and has served and continues to serve on the boards of several non-public companies and public companies, including Sonova AG and LivaNova Plc, where she serves as the Chair of the Compensation Committee. In addition, she has significant experience as a co-founder of a successful medical device start-up.  Her operational experience at a large medical device company, combined with her broad scope experience gained from her role as a co-founder of a medical device company, provide the Board with valuable insights across marketing, sales, innovation and a variety of other medical device related areas.

MARY GARRETT

Ms. Garrett has served as director of Hill-RomHillrom since 2017.Ms. GarrettmostGarrett most recently served as CMO of Global Markets for IBM Corporation, a leading global provider of technology products and services, from September 2008 until her retirement in December 2015.  She joined IBM in 1981 as an electrical engineer and went on to serve in a number of senior roles including: Partnership Executive for Memorial Sloan Kettering, Vice President, Small and Medium Business for Global Technology Services and Vice President of Marketing for Global Technology Services, and Vice President of Marketing for eBusiness Hosting.Services. Ms. Garrett currently serves as a board member and on the audit committee for Ethan Allen Interiors, Inc. She is a member of the strategic planning and technology committees of the Nuvance Health Network and is on the board of Danbury Hospital. She is an active mentor in W.O.M.E.N. in America, a professional development group aimed at advancing promising women, and is also on the board of the American Marketing Association, servingserves as past Chair.She also serves asan Advisor for the World 50 Organization. Ms. Garrett servesShe is President, M.Power Coaching and Consulting, focused on the strategic planning committee of the Western Connecticut Health Networkdeveloping leaders and is on the board of Danbury Hospital.

aligning brand, culture and customer experience for business vitality and growth. Ms. Garrett has extensive experience in the technology industry, including digital transformation, big data and cognitive analytics, cybersecurity, and cloud computing. In addition, her broad international background, marketing expertise, and business leadership experience, as well as experience as a public company director make her highly qualified to serve on the Board.

JAMES R. GIERTZ

Mr. Giertz has served as a director of Hill-RomHillrom since 2009.  He served as the Senior Vice President and Chief Financial Officer of H.B. Fuller Company, St. Paul, Minnesota, an adhesives manufacturing company, from March 2008 until his retirement in February 2017. Prior to joining H.B. Fuller, he served as Senior Managing Director, Chief Financial Officer and, for several months in 2007, a director, of

Residential Capital, LLC, one of the largest originators, servicers and securitizers of home loans in the United States.  Prior to that, he was Senior Vice President of the Industrial Products division, and Chief Financial Officer of Donaldson Company, Inc., a worldwide provider of filtration systems and replacement parts.  In addition, Mr. Giertz served as assistant treasurer of the parent company at General Motors, and also held several international treasury positions in Canada and Europe. Mr. Giertz currently serves as a director of Schneider National, Inc. and is a member ofChairs the Board of Regents of Concordia University of St. Paul.

Audit Committee. Mr. Giertz has extensive experience in financial statement preparation and accounting, and operations, and his service as a senior officer in large corporations brings knowledge and valuable insight to the Board.  In addition, his international experience is a valuable asset to the Board.

WILLIAM H. KUCHEMAN

Mr. Kucheman has served as a director of Hill-RomHillrom since 2013. He previously served as interim Chief Executive Officer for Boston Scientific Corp.Corporation, a manufacturer of medical devices, from September 2011 until his retirement in November 2012. Before being named interim CEO, in October 2011, he was Executive Vice President and President of the Cardiology, Rhythm and Vascular (CRV) Group of Boston Scientific. He joined the company in 1995 as a result of Boston Scientific’s acquisition of SCIMED Life Systems, Inc., becoming Senior Vice President of Marketing. In this role, Mr. Kucheman was responsible for global marketing. He has served on several industry boards, including the board of directors of the Global Health Exchange and on the boards of several non-public companies.

Mr. Kucheman’s board of directors experience includes committee membership in audit, mergers and acquisitions, compensation and management development, and sales effectiveness. His executive experience with invasive medical devices, including FDA regulation, commercialization process, government reimbursement, and clinical marketing, makes him highly qualified to serve on the Board.

RONALD A. MALONEGREGORY J. MOORE, MD, PhD

Mr. MaloneMoore has served as a director of Hill-RomHillrom since 2007.2019. He is Corporate Vice President, Health at Microsoft Corporation, a technology company, since April 2019. Mr. Moore is an engineer (Massachusetts Institute of Technology PhD), practicing neuroradiologist, clinical informaticist, and innovator experienced in assembling and inspiring highly talented teams to positively transform healthcare and life sciences for the benefit of humankind leveraging technology, AI and machine learning. Mr. Moore is a former Vice President Google Inc., Google Cloud Healthcare & Life Sciences from November 2016 through April 2019. As Google’s senior healthcare leader globally, Mr. Moore led the healthcare vertical for Google Cloud and also partnered closely with various Google teams and the Alphabet companies in the life sciences domains to guide and develop innovative healthcare and life sciences products and solutions leveraging AI, machine learning and advanced analytics at scale to positively impact healthcare quality, value, access and delivery globally. Mr. Moore is board certified in Diagnostic Radiology, Neuroradiology and Clinical Informatics and is also an Adjunct Clinical Professor of Radiology at Stanford University School of Medicine. Prior to his leadership appointment at Google, Mr. Moore was Chief Emerging Technology and Informatics Officer at Geisinger Health System where he was also Director of the Institute for Advanced Application from 2013 through 2016. Mr. Moore’s experience in life sciences and in the digital space provides the Board with valuable experience and leadership.

FELICIA F. NORWOOD

Ms. Norwood has served as Chairmandirector of Hillrom since 2020. Ms. Norwood is currently the Board of Gentiva Health Services from 2002 to 2011, as Chief Executive Officer from 2002 through 2008, and as a director through 2012. He joined Gentiva in 2000 as Executive Vice President and President of Gentiva’s Home Health Division.the Government Business Division at Anthem, Inc. (“Anthem”), a health insurance provider, and has served in this role since she joined Anthem in June 2018. Prior to joining Gentiva, heAnthem, Ms. Norwood served as Director of the Illinois Department of Healthcare and Family Services from January 2015 to June 2018, and prior to that, she

spent over 19 years at Aetna serving in various positions with Olsten Corporation including Executive Vicea number of senior leadership roles including: President of Olsten Corporationthe Mid-America Region and President Olsten Staffing Services, United States& CEO of Active Health Management. Ms. Norwood's combined private and Canada. He is a director of Capital Senior Living, Inc., a former director of the National Association for Home Care & Hospicepublic sector experience and a former director and chairman of the Alliance for Home Health Quality and Innovation.

Mr. Malone has an intimate knowledge of the home health industry and expertiseher senior leadership experiences in the legislative and regulatory landscape affecting healthcare companies. In addition, his experience as an officer of other health care companiessector provides the Board with valuable operational experience.a unique perspective across multiple dimensions, including providers, payers, consumers and regulators. 

NANCY M. SCHLICHTING

Ms. Schlichting has served as director of Hill-RomHillrom since 2017.  Ms. Schlichting is the retired President and Chief Executive officer of Henry Ford Health System (“HFHS”) in Detroit, Michigan, a non-profit health care organization, serving in this role from June, 2003 to January, 2017. She joined HFHS in 1998 as Senior Vice President and Chief Administrative Officer, and was promoted to Executive Vice President and Chief Operating Officer from 1999 to 2003, and President and Chief Executive Officer of Henry Ford Hospital from 2001 to 2003. She currently serves as a director of Walgreens Boots Alliance (13 years of Board service, chair of Compensation Committee and member of Audit Committee), a director on the board of directors of Encompass Health (member(2 years of Board service, member of Compliance and Quality of Care Committee and member of Audit Committee), and a trustee of Kresge Foundation (chair of Compensation Committee and member of Audit Committee), Michigan State University, the Detroit Symphony Orchestra, Duke University and vice-chair of the Duke University Health System Board.

Ms. Schlichting's career in healthcare administration spans more than 35 years in senior-level executive roles.  She is credited with leading HFHS through a dramatic financial turnaround, and for award-winning customer service, quality and diversity initiatives, including HFHS being the recipient of the 2011 Malcolm Baldrige National Quality Award.  Her significant healthcare leadership background, and her comprehensive knowledge of finance and accounting gained by education, experience and service on audit committees for more than a decade provide the Board with additional depth and invaluable insights.

Proposal No. 2 – Non-Binding VoteApproval, on an Advisory Basis, of the Compensation of Hillrom’s Named Executive CompensationOfficers

We hold an annual non-binding vote on Executive Compensation each year. Accordingly, we are presentingAs required by Section 14A of the Exchange Act, the Board is asking you to our shareholders the following resolution for their annual vote (on a non-binding basis):

“RESOLVED, that the shareholders of Hill-Rom Holdings, Inc. approve, on an advisory basis, the compensation of our NEOs for fiscal year 2020, commonly referred to as the Company’s NEOs and“Say-on-Pay” vote. At our 2016 annual meeting of shareholders, shareholders voted to hold an advisory “Say-on-Pay” vote on an annual basis. Accordingly, we have determined to submit an annual, non-binding vote on our executive compensation to our shareholders at each annual meeting (with the overall compensation policies and procedures employed by Hill-Rom, disclosed pursuantnext one occurring in 2022) until we seek another advisory vote on the frequency of such “Say-on-Pay” vote, which is anticipated to Item 402occur at the 2022 annual meeting of the SEC’s Regulation S-K, and described in the Compensation Discussion and Analysis and the tabular disclosure regarding NEO compensation (together with the accompanying narrative disclosure) in this proxy statement.”shareholders.

As described under “Compensation Discussion and Analysis” beginning on page 24,37, our philosophy in setting executive compensation is to provide a total compensation package that allows us to continue to attract, retain and motivate talented executives who drive our Company’s success, while aligning compensation with the interests of our shareholders and ensuring accountability and transparency. Consistent with the philosophy, a significant majority of the total compensation opportunity for each of our NEOs is based on measurable corporate business area and individual performance, both financial and non-financial, and on the performance of our shares on a long-term basis.

Because your vote is advisory, it will not be binding on the Board. However, the Compensation and Management Development Committee will take into account the outcome of the vote when considering future executive compensation arrangements. The Board recommends that the shareholders approve the following resolution:

“RESOLVED, that the shareholders of Hill-Rom Holdings, Inc. approve, on an advisory basis, the compensation of the Company’s NEOs and the overall compensation policies and procedures employed by Hillrom, disclosed pursuant to Item 402 of the SEC’s Regulation S-K, and described in the Compensation Discussion and Analysis and the tabular disclosure regarding NEO compensation (together with the accompanying narrative disclosure) in this proxy statement.”

The Board of Directors recommends that you vote “FOR” the approval, on an advisory basis, of this resolution.the compensation of Hillrom’s named executive officers.

Proposal No. 3 – Ratification of the Appointment of thePricewaterhouseCoopers LLP as Hillrom’s Independent Registered Public Accounting Firm for Fiscal Year 2021

Subject to shareholder ratification, the Audit Committee of our Board has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending September 30, 2019.2021. Representatives from PwC will be present at the meeting with an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.

The Audit Committee has adopted a policy requiring that all services from the outside independent registered public accounting firm must be pre-approved by the Audit Committee or its delegate and has adopted guidelines that non-audit related services should not exceed the total of audit and audit related fees. During fiscal year 2018,2020, PwC’s fees for non-audit related services fell within these guidelines.

The following table presents fees for professional services rendered by PwC for the audit of our annual consolidated financial statements for the fiscal years ended September 30, 20172019 and 2018,2020, and fees billed for other services rendered by PwC during those periods. All services set forth in the following table for both 2019 and 2020 were pre-approved by the Audit Committee before being rendered.

The Board recommends that you vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as Hill-Rom’sHillrom’s independent registered public accounting firm.firm for fiscal year 2021.

Proposal No. 4 – Approval of the 2021 Hill-Rom Holdings, Inc. Stock Incentive Plan

The Company is seeking shareholder approval of the 2021 Hill-Rom Holdings, Inc. Stock Incentive Plan (the “Plan”) which was adopted by the Board on January 19, 2021 subject to shareholder approval. If the Plan is approved by shareholders, no additional awards will be made under the Amended and Restated Hill-Rom Holdings, Inc. Stock Incentive Plan, as amended (the “Prior Plan”), and the Prior Plan, which was initially approved by shareholders in 2002 and subsequently amended and restated and approved by shareholders in 2009, will terminate except as to outstanding awards, and shares remaining available for future awards under the Prior Plan as of the effective date of the Plan will not be available for grants of awards under the Plan.

The purposes of the Plan are to enable the Company and its subsidiaries to attract, retain and reward officers, other key employees and non-employee directors, and to strengthen the mutuality of interests between such persons and the Company’s shareholders by offering such persons an equity interest in the Company and thereby enabling them to participate in the long-term success and growth of the Company. Awards under the Plan may be in the form of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), performance awards (performance shares, performance share units, and performance units), other stock-based awards, dividend equivalents, and cash-based awards.

Dilution, Share Usage, and Outstanding Awards

Existing Dilution and Potential Dilution

As of the record date, there were approximately 1,877,584 shares subject to awards outstanding and approximately 643,991 shares authorized and available for issuance for future awards under the Company’s Prior Plan, together representing 3.77% of the common stock outstanding as of the record date on a fully diluted basis. However, the shares remaining available for grant of future awards under the Prior Plan will not carry forward into the Plan and, consequently, will not be available for issuance under the Plan. In addition, we currently expect to grant no further awards under the Prior Plan between the record date and the date of the annual meeting. The 3,000,000 shares requested under the Plan, which would replace the Prior Plan and the shares remaining available thereunder, represent 4.48% of the common shares outstanding as of the record date on a fully diluted basis. We believe this represents a reasonable amount of potential equity dilution that will permit the Company to continue granting equity awards, which is an important component of our executive compensation program.

Share Usage

The annual share usage under the Company’s equity incentive compensation plans for the last three fiscal years is presented below.

Run Rate equals (Stock Options Granted + Restricted Stock Units Granted + Performance Share Units (at Target) Granted) / Weighted Average Common Shares Outstanding.

Outstanding Awards as of the Record Date

As of the record date, 66,354,009 shares of our common stock were outstanding, while 1,877,584 shares were subject to outstanding equity awards and 643,991 shares were available for future award under the Prior Plan. However, the shares remaining available for grant of future awards under the Prior Plan will not carry forward into the Plan and, consequently, will not be available for issuance under the Plan. In addition, we currently expect to grant no further awards under the Prior Plan between the record date and the date of the annual meeting.

As of the record date, we had the following number of awards outstanding under our equity incentive compensation plans:

The closing price of a share of our common stock on January 13, 2021 was $98.78 per share.

Principal Provisions of the Plan

The following summary of the Plan is qualified in its entirety by reference to the full text of the Plan set forth in Appendix A to this Proxy Statement.

A summary of the types of awards available under the Plan is set forth below.

Stock Options. Incentive stock options (“ISOs”) and non-qualified stock options may be granted for such number of shares of common stock as the Administrator determines. A stock option will be exercisable and vest at such times, over such term and subject to such terms and conditions as the Administrator determines, at an exercise price determined by the Administrator (ISOs are subject to restrictions as to exercise period and price as required by the Internal Revenue Code of 1986, as amended from time to time (the “Code”) and may be granted only to employees). Payment of the exercise price may be made in such manner as the Administrator may provide, including cash, delivery of shares of common stock already owned, broker-assisted “cashless exercise,” or any other manner determined by the Administrator. The Administrator may provide that the stock options will be transferable. Upon an optionee’s termination of service, the option will be exercisable to the extent determined by the Administrator, either in the initial grant or an amendment thereto. The Administrator may provide that an option which is outstanding on the date of an optionee’s death will remain outstanding for an additional period after the date of such death, notwithstanding that such option would have expired earlier under its terms.

SARs. Upon the exercise of an SAR, the Company will pay to the holder in cash, common stock or a combination thereof (the method of payment to be determined at the discretion of the Administrator), an amount equal to the excess of the fair market value of the common stock on the exercise date over the fair market value of the common stock on the date of SAR grant, multiplied by the number of SARs being exercised. The Administrator may also grant “limited SARs” that will be exercisable only within the 60 days after a Change in Control. The Administrator may provide that in the event of a Change in Control, SARs or limited SARs will be paid on the basis of the “Change in Control Price” (as defined in the Plan).

Restricted Stock. Restricted stock is stock which has been issued, subject to forfeiture. In making an award of restricted stock, the Administrator will determine the periods, if any, during which the stock is subject to forfeiture, and the purchase price, if any, for the stock. The vesting of restricted stock (i.e., the point at which it becomes non-forfeitable) may be conditioned upon the completion of a specified period of service with the Company or a subsidiary, the attainment of specific performance goals, or such other criteria as the Administrator may determine. During the restricted period, the award holder may not sell, transfer, pledge or assign the restricted stock, except as may be permitted by the Administrator. The certificate evidencing the restricted stock will be registered in the holder’s name, although the Administrator may direct that it remain in the possession of the Company until the restrictions have lapsed. Except as may otherwise be provided by the Administrator, upon the termination of the award holder’s service for any reason during the period before the restricted stock has vested, or in the event the conditions to vesting are not satisfied, all restricted stock that has not vested will be forfeited and the Administrator may provide that any purchase price paid by the holder, or an amount equal to the restricted stock’s fair market value on the date of forfeiture, if lower, shall be paid to the holder. During the restricted period, the holder will have the right to vote the restricted stock and to receive any cash dividends, if so provided by the Administrator. Stock dividends will be treated as additional shares of restricted stock and will be subject to the same terms and conditions as the initial grant, unless otherwise provided by the Administrator.

RSUs. An RSU award represents the Company’s agreement to deliver shares of common stock (or their cash equivalent) at a specified future time. Such delivery may be conditioned upon the completion of a specified period of service, the attainment of specific performance goals or such other criteria as the Administrator may determine or may provide for the unconditional delivery of shares (or their cash equivalent) on the specified date. In making an award of this type, the Administrator will determine the period during which receipt of the common stock will be restricted, and the period, if any, during which the award is subject to forfeiture, and may provide for the issuance of stock pursuant to the award without payment therefor. At the end of the restricted period, and assuming the satisfaction of any condition(s) to vesting of the award, the award will be settled in shares of common stock, cash equal to the fair market value of such stock, or a combination thereof, as provided by the Administrator. During the restricted period set by the Administrator, the award holder may not sell, transfer, pledge or assign the RSU award. In the event of termination of service before the RSU award has vested, the award will be forfeited, except as may be provided by the Administrator. RSUs will carry no voting rights until such time as shares of common stock are actually issued.

Performance Awards. The Administrator may designate any awards under the Plan as “Performance Awards”. Either the granting or vesting of a Performance Award will be subject to the achievement of performance objectives specified by the Administrator. The performance objectives specified for a particular award may be based on one or more of the following criteria, which the Administrator may apply to the Company on a consolidated basis and/or to a business unit, and which the Administrator may use either as an absolute measure, as a measure of improvement relative to prior performance, or as a measure of comparable performance relative to a peer group of companies: sales, operating profits, operating profits before taxes, operating profits before interest expense and taxes, net earnings, earnings per share, return on equity, return on assets, return on invested capital, total shareholder return, cash flow, debt to equity ratio, market share, stock price, economic value added, and market value added.

Other Stock-Based Awards. Under the Plan, the Administrator may grant other awards of shares of our common stock, and other awards that are valued in whole or in part by reference to, or are otherwise based on, shares of our common stock or other property, having such terms and conditions as the Administrator may determine. We refer to these types of awards as Other Stock-Based Awards. Other Stock-Based Awards may be available as a form of payment in settlement of other awards granted under the Plan or as payment in lieu of compensation to which a participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of our common stock or in cash, as the Administrator may determine. The award agreement of an Other Stock-Based Award may provide the holder of an Other Stock-Based Award with the right to receive dividend equivalents. Dividend equivalents may be settled in cash and/or shares of our common stock and may be subject to the same restrictions on transfer and forfeitability as the Other Stock-Based Award with respect to which they are awarded, in each case as set forth in the applicable award agreement.

Dividend Equivalents. As determined by the Administrator in its discretion, awards other than stock options and SARs under the Plan may provide the participant with a deferred and contingent right to receive dividend equivalents, either in cash or in additional shares. Any such dividend equivalents will be accumulated or deemed reinvested until such time as the underlying award becomes vested (including, where applicable, vesting based on the achievement of performance objectives). No dividend equivalents may be granted with respect to shares underlying any stock option or any SAR.

Cash-Based Awards. The Administrator may grant Cash-Based Awards under the Plan that specify the amount of cash to which the award pertains, the conditions under which the award will be vested and exercisable or payable, and such other conditions as the Administrator may determine that are consistent with the terms of the Plan. Although based on a specified amount of cash, cash-based awards may be paid, in the Administrator's discretion, either in cash or by the delivery of shares of our common stock.

Deferrals of Awards. The Administrator may permit an award recipient to elect to defer receipt of any award for a specified period or until a specified event, upon such terms as are determined by the Administrator.

Non-Employee Director Awards. The Plan will also be used to grant equity awards to our non-employee directors. Non-employee directors can be granted any of the awards available under the Plan except ISOs, which are only available to employees. The Administrator shall from time to time determine the nature and number of awards to be granted to non-employee directors, subject to the Annual Director Limit.

Amendments and Termination. The duration of the Plan is intended to be ten (10) years. The Plan may be discontinued or amended by the Board, except that no amendment or discontinuation may adversely affect any outstanding award without the holder’s written consent. Amendments may be made without shareholder approval except as required to satisfy stock exchange or regulatory requirements.

Adjustment. In the case of certain changes in the Company’s structure affecting the common stock such that the Board determines that an adjustment is appropriate, in order to prevent dilution or enlargement of benefits, the Board will, in a manner as it deems equitable, adjust any or all of the number of shares reserved under the Plan, and the number of shares as to which awards can be granted to any individual in any fiscal year. In the case of certain changes in the Company’s structure affecting the common stock subject to an award outstanding under the Plan, the Board will appropriately and equitably adjust the number and kind of shares or other securities subject to the Plan or subject to awards then outstanding under the Plan and the exercise prices so as to maintain the proportionate number of shares or other securities without changing the aggregate exercise price. In addition, in connection with certain corporate transactions the Board may, in its discretion: (1) accelerate the vesting and/or payment date of awards, (2) cash-out outstanding awards, (3) provide for the assumption of outstanding awards by a surviving or transferee company, (4) provide that in lieu of shares of Company common stock, the award recipient will be entitled to receive the consideration he or she would have received for such shares in the transaction (or the fair market value of such consideration in cash), and/or (5) require stock options to be either exercised prior to the transaction or forfeited.

Certain Federal Income Tax Consequences

The following is a summary of certain federal income tax aspects of stock options which may be awarded under the Plan based upon the laws in effect on the date hereof.

Non-Qualified Stock Options. No income is recognized by the optionee at the time a non-qualified option is granted. Upon exercise of the option, the optionee recognizes ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the option price. At disposition of the shares, any appreciation after the date of exercise is treated as capital gain.

ISOs. No income is recognized by the optionee at the time an ISO is granted. An optionee generally will not recognize income upon the exercise of an ISO during the period of his or her employment with the Company or one of its subsidiaries or within three months after termination of employment (the optionee also will not recognize income upon the exercise of an ISO within 12 months after the optionee’s termination of employment by reason of permanent and total disability, or within the remaining term of the option following the optionee’s death). However, the “spread” between the fair market value of the shares at the time of exercise and the exercise price is includible in the calculation of alternative minimum taxable income for purposes of the alternative minimum tax. The exercise of an ISO after the expiration of the specified time periods results in such exercise being treated in the same manner as the exercise of a non-qualified stock option.

If the optionee holds the shares received throughout the “ISO holding period,” which is both the two-year period after the ISO was granted and the one-year period after the exercise of the ISO, the optionee will recognize capital gain or loss when he or she disposes of the shares. Such gain or loss will be measured by the difference between the exercise price and the amount received for the shares at the time of disposition.

If the shares acquired upon exercise of an ISO are disposed of before the end of the ISO holding period, the disposition is a “disqualifying disposition” which causes the optionee to recognize ordinary income in an amount generally equal to the lesser of (i) the excess of the value of the shares on the option exercise date over the exercise price or (ii) the excess of the amount received upon disposition of the shares over the exercise price. Any excess of the amount received upon disposition of the shares over the value of the shares on the exercise date will be taxed to the optionee as capital gain.

Company Deductions. As a general rule, the Company or one of its subsidiaries will be entitled to a deduction for federal income tax purposes at the same time and in the same amount that an employee or director recognizes ordinary income from awards under the Plan, to the extent such income is considered reasonable compensation under the Code. The Company will not, however, be entitled to a deduction with respect to payments which are contingent upon a change in control if such payments are deemed to constitute “excess parachute payments” pursuant to Section 280G of the Code and do not qualify as reasonable compensation pursuant to that Section. Such payments will subject the recipients to a 20% excise tax. In addition, the Company will not be entitled to a deduction to the extent compensation in excess of $1 million per individual per year is paid to certain current and former executive officers of the Company.

The Board of Directors recommends that shareholders vote “FOR” the approval of the 2021 Hill-Rom Holdings, Inc. Stock Incentive Plan.

Board Leadership

The Board is currently led by our non-executive, independent Chair, Mr. Dempsey. The Board has determined that the leadership of the Board is best conducted by an independent Chair which allows (i) the Chair to provide overall leadership to the Board in its oversight function and (ii) the president and CEO, Mr. Groetelaars, to provide leadership with respect to the day-to-day management and operation of our business. The separation of these offices enables Mr. Dempsey to focus on managing Board matters while letting Mr. Groetelaars focus on managing our business. We believe that the separation of these offices enhances the objectivity of the Board in its management oversight role and that this leadership structure is in the best interests of the Company and our shareholders.

During fiscal year 2018, and in anticipation of the departure of Mr. John J. Greisch (Hill-Rom’s previous president and CEO), effective March 6, 2018, the Board appointed Mr. Dempsey to serve as the Executive Chair of the Board. In that role, Mr. Dempsey provided executive leadership and guidance during the period of management transition and continued to provide leadership to the Board. At the time Mr. Dempsey was named the Executive Chair, the Board no longer deemed him independent and thereby named Mr. Malone to serve as the Board's independent Lead Director effective as of March 6, 2018 to maintain the Board’s independent oversight function. At the time Mr. Dempsey was appointed to serve as the Executive Chair of the Board, he ended his service as a member of the Audit Committee.

Mr. Dempsey continued to serve as Executive Chair of the Board from his appointment on March 6, 2018 through July 16, 2018, at which time the Board ended his service as Executive Chair of the Board. Mr. Dempsey earned $789,231 in base salary and $650,000 in Restricted Stock Units in his role as Executive Chair, as previously disclosed and in accordance with the terms set forth in the Form 8-K the Company filed with the SEC on March 7, 2018. At such time, and after the Board had determined Mr. Dempsey’s independence based on discussions with Mr. Dempsey and a review of his responses to questions about employment history, affiliation and family and other relationships with the Company, Mr. Dempsey resumed his prior role as independent Chair of the Board. In addition, effective July 16, 2018, the Board ended Mr. Malone’s service as independent Lead Director and Mr. Malone resumed his prior role as Board Member and Chair of the Nominating/ Corporate Governance Committee.

Assuming Mr. Dempsey is re-elected to the Board at the meeting, the Board plans to re-elect Mr. Dempsey as the Chair of the Board at the recommendation of the Nominating/Corporate Governance Committee.

Executive sessions (meetings of independent directors without management present) are held regularly at the beginning and end of Board meetings, and, depending on directors’ desire, from time to time during Board and committee meetings.  The Chair generally presides at executive sessions of non-management directors.

Board’s Role in Strategic Planning and Oversight of Risk Management

The Board is responsible for directing and overseeing the management of Hill-Rom’sHillrom’s business in the best interests of the shareholders and consistent with good corporate citizenship. The Board sets strategic direction and priorities for the Company, approves the selection of the senior management team and oversees and monitors risks and performance. At Board meetings during the year, members of senior management review their organizations and present their long-range strategic plans to the Board, and at the start of each fiscal year, the Board reviews and approves the Company’s operating plan and budget for the next fiscal year.

A fundamental part of setting Hill-Rom’sHillrom’s business strategy is the assessment of the risks Hill-RomHillrom faces and how they are managed. The Board oversees risk management with a focus on the most significant risks facing the Company, including strategic, operational, financial, cybersecurity, legal and compliance risks. In addition, each of the Board, the Nominating/ Corporate Governance Committee, and Audit Committee, as necessary, meet regularly throughout the year with our financial and treasury management teams and with our Chief Compliance Officer, Vice President - Internal Audit, Chief Legal Officer and Chief Information Officer to assess the strategic, operational, financial, legal and compliance risks throughout our businesses and to review our insurance and other risk management programs and policies. These regular meetings enable the Board to exercise its ultimate oversight responsibility for Hill-Rom’sHillrom’s risk management processes.

Communications with Directors

Shareholders of Hill-RomHillrom and other interested persons may communicate with the Chair of the Board, the chairs of the committees of the Board,Company's Nominating/Corporate Governance Committee, Audit Committee or Compensation and Management Development Committee, or the non-management directors of Hill-RomHillrom as a group by sending an email to investors@hill-rom.com.investors@Hillrom.com.  The email should specify which of the foregoing is the intended recipient.

All communications received in accordance with these procedures will be reviewed initially by the Company's Investor Relations Department and General Counsel. The Investor Relations Department will relay all such communications to the appropriate director or directors unless the Investor Relations Department and General Counsel determine that the communication:

The director or directors who receive any such communication will have discretion to determine whether the subject matter of the communication should be brought to the attention of the full Board or one or more of its committees and whether any response to the person sending the communication is appropriate. Any such response will be made through the Company's Investor Relations Department and only in accordance with the Company's policies and procedures and applicable law and regulations relating to the disclosure of information.

The Company's Investor Relations Department will retain copies of all communications received pursuant to these procedures for a period of at least one year.

The Nominating/Corporate Governance Committee of the Board of Directors will review the effectiveness of these procedures from time to time and, if appropriate, recommend changes.

Director Attendance at Annual Meetings

Hill-RomHillrom does not have a formal policy regarding director attendance at its annual meetings of shareholders, but Hill-Rom’sHillrom’s directors generally do attend the annual meetings. The Chair of the Board presides at the annual meeting of shareholders, and the Board holds one of its regular meetings in conjunction with the annual meeting of shareholders. All continuing members of the Board at the time of our 20182020 annual meeting of shareholders attended that meeting in person.

Corporate Governance Standards and Code of Ethics

The Board has adopted Corporate Governance Standards that provide the framework for the effective functioning of the Board. In addition, the Board has adopted a Global Code of Conduct that applies to everyone who conducts business for and with Hill-RomHillrom including all directors, officers and employees of Hill-Rom,Hillrom, as well as agents, vendors, suppliers and consultants worldwide, and which constitutes a “code of ethics” within the meaning of Item 406 of the SEC’s Regulation S-K. TheDuring fiscal year 2020, the Board reviewedapproved changes to the Global Code of Conduct to enhance the definition of sexual harassment to include sexual misconduct. Additionally, during fiscal year 20182020, the Compensation and did not recommend any changes.Management Development Committee approved an addendum to the Limited Recapture Agreement (entered into by each NEO) providing the Compensation and Management Development Committee with the ability to recoup both performance-based compensation and time-based long-term incentive awards received by an executive officer during the prior 24 months if such executive is terminated for a material violation of the Global Code of Conduct. Both the Corporate Governance Standards and the Global Code of Conduct are available via the Investor Relations section of the Company’s website at http:https://ir.hill-rom.com.ir.hill-rom.com/ir-home/default.aspx 

Determinations with Respect to Independence of Directors

The Board determines the independence for each member of the Board based on an annual evaluation performed and recommendations made by the Nominating/Corporate Governance Committee, consistent with the applicable rules of the New York Stock Exchange (“NYSE”).  

Based on these standards and all relevant facts and circumstances, the Board has determined that each current member of the Board and each nominee for the Board is independent, with the exception of John P. Groetelaars, who is not independent.

Transactions with Related Persons

The Company has written procedures regarding the review, approval, and preapprovalratification of transactions between the Company and related party transactions involvingpersons. The policy applies to any transaction in which Hillrom or a subsidiary is a participant, where the amount involved exceeds $120,000 and a related person has a direct or indirect material interest. A related person means any director or executive officers or directors.officer of the Company, any nominee for director, any shareholder known to the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities, and any immediate family member of any such persons. Under these procedures, our Nominating/Corporate Governance Committee is responsible for reviewing and preapproving all related person transactions. When reviewing and/or approving proposed related party transactions, the Nominating/Corporate Governance Committee will consider all of the relevant facts and circumstances, including: the benefits to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms available for similar transactions with unrelated third parties.

There were no related person transactions in fiscal year 2020.

Meetings, Committees and Board Skills Assessment of the Board of Directors

During the fiscal year ended September 30, 2018,2020, the Board held sevenfive meetings. During this period, noour incumbent membermembers of the Board attended fewer than 75%100% of the aggregate number of meetings of the full Board and the meetings of the committees on which he or she served, and our incumbent directors attended an average of 97% of the meetings of the Board and committees on which they served.

Per our Corporate Governance Standards, the Nominating/Corporate Governance Committee assessed the Board's effectiveness as a whole as well as the effectiveness of the individual directors and the Board's various Committees, including a review of the mix of skills, core competencies and qualifications (including independence under applicable standards) of members of the Board and its various committees, which reflect expertise in one or more of the following areas: chief executive officer experience, strong healthcare experience, financial acumen, international experience, regulatory experience, sales and marketing experience, product development/ design experience, payor and reimbursement experience, science/technology expertise with clinical applications, acute care provider experience, mergers and acquisitions and integration experience, and cybersecurity experience.

In order to make these assessments, the Nominating/Corporate Governance Committee solicited the opinions of each director regarding the foregoing matters and then presented its findings and recommendations to the Board. In addition to the above, the particular skills and talents of any director nominee should positively contribute to the diversity of the various skills and talents of the Board as a whole. 

The following table shows the current composition of the committees of the Board, all of which operate pursuant to written charters:

Director	Audit Committee	Nominating/ Corporate Governance Committee	Compensation and Management Development Committee	Mergers and Acquisitions Committee
William G. Dempsey (Board Chair) (I)				C
John P. Groetelaars
Gary L. Ellis (I)*	ü
Stacy Enxing Seng (I)			ü
Mary Garrett (I)	ü
James R. Giertz (I)	ü
Charles E. Golden (I)**	C	ü		ü
William H. Kucheman (I)			ü	ü
Ronald A. Malone (I)		C		ü
Nancy M. Schlichting (I)		ü	C
Number of Meetings in fiscal year 2018	9	5	7	0

I = Independent Director

C = Committee Chair

* Assuming Mr. Ellis is re-electedMalone informed the Board that he did not wish to stand for re-election to the Board and thus he has not been nominated for re-election at the meeting, the Board plans to elect Mr. Ellis as Chair of the Audit Committee at the recommendation of the Nominating/Corporate Governance Committee.

** Mr. Golden informed the Board of his decision to retire from the Board effective as of the date of the meeting.

The Audit Committee has general oversight responsibilities with respect to Hill-Rom’s(i) Hillrom’s corporate accounting, disclosure and reporting practices, (ii) the quality and integrity of the Company’s financial reportingstatements, (iii) the qualifications, independence and controls,performance of the Company’s internal audit department and legal, regulatory andindependent registered public accounting firm, (iv) ethical, compliance. It regularly reviews Hill-Rom’s financial reporting process, its system of internal control over financial reporting, legal, and regulatory compliance of the Company and ethics, and internal and external audit processes.(v) the Company’s enterprise-wide risk management framework. Each member of the Audit Committee is financially literate and is independent under Rule 10A-3 of the SEC and the NYSE listing standards and meets the financial literacy guidelines established by the Board in the Audit Committee Charter.standards. The Board of Directors has determined that each of Messrs. Golden, Ellis and Giertz is an “audit committee financial expert” as that term is defined in Item 407(d) of the SEC’s Regulation S-K.

The Compensation and Management Development Committee assists the Board in ensuring that the officers and key management personnel of Hill-RomHillrom are effectively compensated in a way that isterms of salaries, supplemental compensation and other benefits which are internally equitable, and externally competitive, and is responsible for approving our CEO compensation.advance the long term interests of the Company’s shareholders. The Compensation and Management Development Committee is also responsible for reviewing and assessing the talent development and succession management actions concerning the officers and key employees of Hill-Rom.

Hillrom, and for approving our CEO compensation.

The Nominating/Corporate Governance Committee assists the Board in ensuring(i) fulfilling its responsibility for assuring that Hill-RomHillrom is operated in accordance with prudent and practical corporate governance standards, ensuring that the Board achieves(ii) achieving its objective of having a majority of its members be independent, qualified persons in accordanceconformity with NYSE listing standards, and (iii) identifying and evaluating candidates for the Board. In identifying and evaluatingAdditional information about our identification of candidates for the Board can be found in the Nominating/Corporate Governance Committee considers each candidate’s experience, integrity, backgroundsection entitled “Process for identification and skills as well as other qualities that the candidate may possess and factors that the candidate may be able to bring to the Board. Although we do not have a formal policy with regard to the considerationEvaluation of diversity in identifying director candidates, the Board believes that it is essential that its members represent diverse viewpoints, with a broad array of experiences, professions, skills, geographic representation and backgrounds that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of our shareholders. The Nominating/Corporate Governance Committee also assists the Audit Committee with Hill-Rom’s non-financial compliance oversight.Director Candidates” below.

The Mergers and Acquisitions Committee assists the Board in reviewing and assessing potential mergers, acquisitions, divestitures and other similar strategic transactions and meets on an ad hoc basis.

Process for Identification and Evaluation of Director Candidates

The Nominating/Corporate Governance Committee considers candidates for nomination to the Board suggested by current directors, management, shareholders, or a third-party search firm engaged to assist with director recruitment. Although the Nominating/Corporate Governance Committee does not have specific minimum qualifications that must be met for a candidate to be nominated as a director, in identifying and evaluating candidates for the Board, the Nominating/Corporate Governance Committee assesses any skill gaps identified by the Board and considers each candidate’s experience, integrity, background and skills as well as other qualities that the candidate may possess and bring to the Board.

Although we do not have a formal policy with regard to the consideration of diversity in identifying director candidates, the Board considers and prioritizes the diversity characteristics of candidates for the Board and believes that it is essential that its members represent diverse backgrounds and viewpoints, including diversity in gender, ethnicity, race, experiences, professions, skills and geographic representation, that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of our shareholders. Diversity of gender, ethnicity, and race are specific criteria, among others, that are considered by the Nominating/Corporate Governance Committee in its search process for candidates for nomination to the Board.

When a potential candidate is brought to the Board’s attention, the Nominating/Corporate Governance Committee makes an initial determination as to whether to conduct a full evaluation of the individual. This initial determination is based on whether additional Board members are necessary or desirable, and whether, based on the information provided or otherwise available to the Nominating/Corporate Governance Committee, the prospective nominee is likely to satisfy the evaluation factors described above. If the Nominating/Corporate Governance Committee determines that additional consideration is warranted, it may request a third-party to gather additional information about the prospective director candidate. The Nominating/Corporate Governance Committee may also elect to interview a candidate. The Nominating/Corporate Governance Committee will consider the candidate against the criteria it has adopted and make a recommendation to the Board as to whether the candidate should be nominated for election. This procedure is the same for all candidates, including director candidates identified by shareholders.

Nomination of Directors for Election by Shareholders

The Nominating/Corporate Governance Committee considers director candidates recommended by shareholders, and any such recommendations should be communicated to the Chair of the Nominating/Corporate Governance Committee in the manner described above in “Communications with Directors” and should be accompanied by the same types of information as are required under our By-laws for shareholder nominees.

Our By-Laws provide that nominations of persons for election to the Board of Directors of Hill-RomHillrom may be made at any meeting of shareholders by or at the direction of the Board or by any shareholder entitled to vote for the election of members of the Board at the meeting. For nominations to be made by a shareholder, the shareholder must have given timely notice thereof in writing to the Corporate Secretary of Hill-RomHillrom and any nominee must satisfy the qualifications established by the Board.  To be timely, a shareholder’s nomination must be delivered to or mailed and received by the Corporate Secretary not later than (i) in the case of the annual meeting, 100 days prior to the anniversary of the date of the immediately preceding annual meeting which was specified in the initial formal notice of such meeting (but if the date of the forthcoming annual meeting is more than 30 days after such anniversary date, such written notice will also be timely if received by the Corporate Secretary by the later of 100 days prior to the forthcoming meeting date and the close of business 10 days following the date on which Hill-RomHillrom first makes public disclosure of the meeting date) and (ii) in the case of a special meeting, the close of business on the tenth day following the date on which Hill-RomHillrom first makes public disclosure of the meeting date. The notice given by a shareholder must set forth: (i)(1) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii)(2) a representation that the shareholder is a holder of record, setting forth the shares so held, and intends to appear in person or by proxy as a holder of record at the meeting to nominate the person or persons specified in the notice; (iii)(3) a description of all arrangements or understandings between such shareholder and each nominee proposed by the shareholder and any other person or persons (identifying such person or persons) pursuant to which the nomination or nominations are to be made by the shareholders; (iv)(4) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; (v)(5) the consent in writing of each nominee to serve as a director of Hill-RomHillrom if so elected; and (vi)(6) a description of the qualifications of such nominee to serve as a director of Hill-Rom.

Compensation and Management Development Committee Interlocks and Insider Participation

As of the fiscal year ended September 30, 2018, the following directors served on the Compensation and Management Development Committee: Nancy M. Schlichting, William H. Kucheman and Stacy Enxing Seng. The Compensation and Management Development Committee had no interlocks or insider participation.Hillrom.

Availability of Governance Documents

Copies of Hill-Rom’sHillrom’s Corporate Governance Standards, Global Code of Conduct and Board committee charters are available at http://ir.hill-rom.com under “Corporate Governance–Governance Documents” or in print to any shareholder who requests copies through Hill-Rom’sHillrom’s Investor Relations department. Also available on Hill-Rom’sHillrom’s website are position specificationsdescriptions adopted by the Board for the positions of Chief Executive Officer and Chair of the Board and its committees, and other members of the Board.

Corporate Responsibility

Corporate responsibility is integral to Hillrom’s strategic aspirations and supports both our vision of Advancing Connected Care^TM as well as our mission: Every day, around the word, we enhance outcomes for patients and their caregivers. This strategy is reflected in Hillrom’s annual Corporate Social Investment Report and briefly highlighted below.

Commitments

From patient-centered care at the core of our mission, to the way we interact with our employees, customers, communities and the environment, Hillrom has a commitment to responsible operations and corporate responsibility reporting. The Company believes that it has an obligation to ensure that these commitments are reflected in its global impact. Hillrom’s 2020 corporate responsibility commitments cover the following categories, many of which are represented by quantitative targets against which performance is assessed, tracked and disclosed in the Company’s Corporate Social Investment Report annually:

Achievements and Awards

Hillrom was named by Newsweek to its inaugural America's Most Responsible Companies 2020 list. This recognition is both an honor and an invitation for us to achieve more. In addition, we were pleased to have been recognized for a range of ESG achievements, including:

Management and Board Oversight

The full Board is regularly updated on corporate responsibility matters. Topics covered in these discussions in 2020 included the Company’s diversity, inclusion and belonging programs, environmental, health and safety matters, product quality matters, and global compliance efforts.

Annual Reporting

Hillrom is committed to sharing information about its corporate responsibility programs, priorities, goals and performance. Our annual Corporate Social Investment Report illustrates the Company’s commitment to sound governance and balanced, transparent disclosure. More information about Hillrom’s corporate responsibility efforts and initiatives, including our 2019 Corporate Social Investment Report, is available on Hillrom’s website at www.hillrom.com under “Company Overview — Corporate Social Investment.”  

Hill-RomHillrom maintains an independent Audit Committee that operates pursuant to a written charter adopted by the Board. The charter is available on Hill-Rom’sHillrom’s website at www.hill-rom.comhttp://ir.hill-rom.com under “Our Company–Company Overview–Board of Directors–Corporate“Corporate Governance–Documents & Charters.Governance Documents.” Each member of the Audit Committee is independent as defined in the NYSE listing standards and SEC rules, and the Board has determined that each of Messrs. Golden, Ellis and Giertz is an "audit committee financial expert" as that term is defined in Item 407(d) of the SEC’s Regulation S-K.

Management is responsible for Hill-Rom’sHillrom’s internal controls, financial reporting process (including quarterly earnings press releases), risk assessment policies, compliance with laws and regulations and ethical business standards. The independent registered public accounting firm is responsible for performing an integrated audit of Hill-Rom’sHillrom’s consolidated financial statements and its internal control over financial reporting in accordance with standards of the Public Company Accounting Oversight Board (“PCAOB”) and the issuance of a report thereon. The Audit Committee has the responsibility to monitor and oversee these processes.

As part of its oversight responsibilities, the Audit Committee meets separately at least twice each quarter (once to review the quarterly external financial reporting, and at least once in connection with regularly scheduled Board meetings). At these meetings, the Audit Committee meets with management, the Company’s Chief Compliance Officer and its Vice President of Internal Audit (solely with respect to regularly scheduled Board meetings) and Hill-Rom’sHillrom’s outside independent registered public accounting firm, as necessary (in each case, with and without management present, at the Audit Committee’s discretion) to discuss the adequacy and effectiveness of Hill-Rom’sHillrom’s internal controls and the quality of the financial reporting process. The Audit Committee also pre-approves all audit and non-audit services to be performed by the outside independent registered public accounting firm. The Audit Committee evaluates the performance of the independent registered public accounting firm, including senior audit engagement team members, on an annual basis and determines whether to reengage the current firm or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided, global capabilities and technical expertise, knowledge of the Company’s global operations and industry and the effectiveness of their communications in providing value-added advice, insights and candid feedback on risks, controls and compliance matters. The Audit Committee also considers how effectively the outside independent registered public accounting firm maintains its independence and employs its independent judgment, objectivity and professional skepticism. Based on our evaluation, the Audit Committee believes that it is in the best interests of the shareholders to approve the appointment of PricewaterhouseCoopers LLP (“PwC”) as Hill-Rom’sHillrom’s outside independent registered public accounting firm for fiscal year 2019.2021. PwC has been the independent registered public accounting firm used by Hill-RomHillrom since 1985.

In accordance with SEC rules, audit partners are subject to rotation requirements that limit the number of years an individual partner may provide service to any company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of Hill-Rom’sHillrom’s lead audit partner pursuant to this policy involves meetings between members of the Audit Committee and the candidates, as well as discussion and evaluation by the full Audit Committee and with Hill-RomHillrom management.

The Audit Committee has reviewed and discussed the audited consolidated financial statements with management and PwC. Management represented to the Audit Committee that Hill-Rom’sHillrom’s audited consolidated financial statements were prepared in accordance with generally accepted accounting principles. PwCThe Audit Committee discussed with PwC the Audit Committee matters required to be discussed by Auditing Standards No. 16.the applicable requirements of the PCAOB and the SEC. Management and PwC also made presentations to the Audit Committee throughout the year on specific topics of interest, current developments and best practices for audit committees.

PwC also provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee regardingconcerning independence and discussed the independent accountant’s independence. PwC informed the Audit Committee that it was independent with respect to Hill-RomHillrom within the meaning of the securities acts administered byrules and requirements of the SEC and the requirements of the PCAOB. The Audit Committee discussed this finding, and also considered whether non-audit consulting services provided by PwC could impair the auditors’ independence and concluded that such services have not done so.

Based upon the foregoing review and discussions, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in Hill-Rom’sHillrom’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018.2020.

Submitted by the Audit Committee

Charles E. Golden (Chair)

Gary L. Ellis (Chair)

Mary Garrett

James R. Giertz

Felicia F. Norwood

The following table setstables set forth information with respect to the beneficial ownership of our outstanding common stock as of the record date by:

Our common stock is our only class of equity securities outstanding. Except as otherwise noted in the footnotes below, the individual director or executive officer or their family members had sole voting and investment power with respect to such securities. None of the shares beneficially owned by our directors and executive officers are pledged as security. The number of shares beneficially owned includes, as applicable, directly and/or indirectly owned shares of common stock, common stock shares underlying stock options that are currently exercisable or will become exercisable within 60 days from the record date, and deferred stock share awards (otherwise known as restricted stock units or RSUs) that are vested or will vest within 60 days from the record date. Except as specified below, the business address of the persons listed is our headquarters, 130 East Randolph, Suite 1000, Chicago, Illinois 60601.

(1) Mr. Groetelaars joined the Company on May 14, 2018.

(2) Mr. Golden informed the Board of his decision to retire from the Board effective as of the date of the meeting.

(3) Mr. Shader left the Company on December 1, 2018.

(4) On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date.

(5) Mr. Greisch retired from the Company on May 14, 2018.

(6) Mr. Classon retired as Chair of the Board on March 6, 2018.

———————

* Less than 1% of the total shares outstanding.

Compensation Discussion and Analysis

Contents of the Compensation Discussion and Analysis

Named Executive Officers

This Compensation Discussion and Analysis (“CD&A”) describes our compensation program and how it applies to our NEOs, comprising:

Goals of Our Compensation Program

Hill-Rom’sHillrom’s compensation program is designed to:

In aggregate, the compensation of Hill-Rom’sHillrom’s executive officers is assessed against the compensation paid to comparable officers of companies with which Hill-RomHillrom competes for executives, with an initial market check and focus on the 50^th percentile of compensation opportunity provided to such executives. However, actual individual pay decisions are subjective and based on multiple factors. Hill-RomHillrom is guided by the belief that the compensation of executive officers should be competitive with the market, be aligned with the performance of the Company on both a short-term and long-term basis, take into consideration individual performance of the executive, be internally equitable among peers, and assist in retaining key executives critical to the Company’s long-term success. Hill-Rom’sHillrom’s use of performance-based compensation means that, in any given year, total compensation can vary when pre-established business and/or personal targets and objectives are exceeded or are not achieved. Accordingly, a significant portion of our executives’ compensation is at risk.

Further, Hillrom has a foundation of pay equity and fairness that is evident in compensation policies and practices for all Hillrom employees, including its executive officers, across the organization and that directly support Hillrom’s diversity and inclusion initiatives.

Role of the Compensation and Management Development Committee

The Board’s Compensation and Management Development Committee (for purposes of this CD&A, the(the “Committee”) is charged with ensuring that Hill-Rom’sHillrom’s compensation program meets the objectivesgoals outlined above. In thatthis role, the Committee assists the Board in fulfilling its responsibility for assuring that the officers and key management personnel of the Company are effectively compensated in terms of salaries, supplemental compensation and other benefits which are internally equitable, externally competitive, and advance the long-term interests of the Company’s shareholders. The Committee also regularly reviews and assesses the talentexecutive succession planning, leadership pipeline planning, diversity planning and management development and succession management actions concerning the officers and key employees of the Company, administers Hill-Rom’sHillrom’s compensation plans and keeps the Board informed regarding executive compensation matters.

The Committee has no authority to delegate its responsibilities to any subcommittee.

The Committee, in consultation with Hill-Rom’sHillrom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer. Additionally, the Chief Executive Officer makes recommendations to the Committee regarding the compensation of the senior executive team, including Hill-Rom’sHillrom’s other NEOs. From time to time, Hill-Rom’sHillrom’s management also provides recommendations to the Committee regarding changes to the elements and structure of Hill-Rom’sHillrom’s compensation program. In addition to the aforementioned recommendations, the Committee considers peer group data, survey data and other factors when determining the elements and amounts of compensation.

Compensation Consultant

The Committee engages nationally recognized outside compensation and benefits consulting firms to evaluate independently and objectively the effectiveness of and assist with implementation of Hill-Rom’sHillrom’s compensation and benefit programs and to provide the Committee with additional expertise in the evaluation of Hill-Rom’sHillrom’s compensation practices. During fiscal year 2018,2020, the Committee engaged Exequity LLP (“Exequity”) as its executive compensation consultant. Exequity has been asked by the Committee to provide guidance on compensation proposals, including changes to compensation levels, the design of incentive plans, as well as relevant information about market practices and trends.

Exequity is an independent compensation consultant that provided no other services to Hill-RomHillrom other than those services provided to the Committee. After considering the six independence factors discussed in Section 303A.05(c)(iv)(A)-(F) of the NYSE Listed Company Manual, the Committee determined that Exequity had no conflict of interest pursuant to Item 407(e)(3)(iv) of the SEC’s Regulation S-K.

Peer Group and Survey Data

As one of several factors in considering approval of elements of Hill-Rom’sHillrom’s compensation program, the Committee compares Hill-Rom’sHillrom’s compensation program and performance against an approved peer group of companies. The compensation peer group (the “Compensation Peer Group”), which is annually reviewed and updated by the Committee, consists of companies that are similar in revenue (typically 0.5x to 2.5x Hill-Rom’sHillrom’s revenue) and in similar industries as Hill-RomHillrom and with whom Hill-RomHillrom may compete for executive talent. For fiscal year 2018,2020, the Committee reviewed the Compensation Peer Group for appropriateness and made no changes. The companies that made up the Compensation Peer Group are as follows:

Links Between Executive Compensation and Company Performance

Overall, the Committee believes the Company’s compensation policies and programs are effective, market-appropriate, and in line with shareholder expectations.

The key components of our compensation program that link compensation and performance are as follows:

2018

2020 Advisory Vote

Last year’s Non-Binding Vote on Executive Compensation received support of approximately 94% of our shareholders (excluding abstentions and broker non-votes). Based on the results of the shareholder vote, we believe our overall executive compensation program is aligned with the interests of our shareholders. Accordingly, no significant changes to our executive compensation program took place in fiscal year 2018.2020 as a direct result of such shareholder vote.

CEO Compensation

While the Committee works to align the pay of all of our executives with the interests of our shareholders, the Committee believes that such alignment is especially important in the case of our Chief Executive Officer, John Groetelaars. Accordingly, the Committee has selected a mix of compensation opportunities for Mr. Groetelaars which is weighted towards annual bonus[es]bonus(es) and long-term equity basedequity-based compensation.

Components of CEO Compensation

The components of Mr. Groetelaars’sGroetelaars’ pay are as follows:

Performance-Based Pay

The Committee believes it is important to ensure that a meaningful portion of Mr. Groetelaars’sGroetelaars’ compensation is performance-based. In fiscal year 2018,2020, the majority of Mr. Groetelaars’sGroetelaars’ target total compensation was in the form of an annual cash incentive and long-term, equity-based incentives. In fiscal year 2018,2020, Mr. Groetelaars’sGroetelaars’ target annualized cash incentive comprised 17%16% of his target total compensation. Along with 67%69% long-term, equity-based compensation at target, 84%85% of Mr. Groetelaars’sGroetelaars’ fiscal year 20182020 annualized total compensation target was at risk. The chart below details Mr. Groetelaars’sGroetelaars’ target performance-based total compensation for fiscal year 2018.2020.

Total Percentage of Fiscal Year 20182020 Target Annualized Compensation that is Performance-Based: 84%85%

Key Governance Features Relating to Executive Compensation

The Board has instituted a number of corporate governance features related to executive compensation, which are highlighted below and described more fully on pages 3042 through 4154 of this proxy statement.

Elements of Executive Compensation

The major components of Hill-Rom’sHillrom’s executive officer compensation program are summarized below:

Base Salary

Hill-RomHillrom provides senior management a base salary that is competitive at a level consistent with their positions, skill levels, experience, and knowledge. Base salary is intended to aid in the attraction and retention of talent in a competitive market and is targeted at the market median, although actual salaries may be higher or lower as a result of various factors, including those given above as well as individual performance, internal pay equity within Hill-Rom,Hillrom, length of service with Hill-RomHillrom and the degree of difficulty in replacing the individual. The base salaries of senior management are reviewed by the Committee on an annual basis, as well as at the time of promotion or significant changes in responsibility.  The independent compensation consultant provides the Committee with benchmark data as part of the review process.  For fiscal year 2018,2020, the Committee granted the following increases which reflect its assessment of each of the NEO’s performance during the preceding year, as well as the consideration of market benchmarking for similarly placed executives:

Fiscal Year 2019No Changes to Base Salary.Salary for Fiscal Year 2021. Based on a review of the competitive market and individual performance, the Committee approved a salary increase forAll NEOs, including Mr. Groetelaars, of 2.00% increasing his salary to $1,020,0000. The Committee approveddeclined salary increases of approximately 3.08% for Mr. Strobel, 1.46% for Mr. Alonso and 10.00% for Mr. Johnson, increasing their base salaries to $535,000, $488,000, and $484,000, respectively. Mr. Shader did not receive a salary increase.

In line with the goals of our compensation program, as well as his performance during fiscal year 2018, Mr. Johnson received a base salary increase of 10% in each of fiscal year 2018 and fiscal year 2019 to ensure his salary is aligned to the competitive market.2021. 

Annual Cash Incentives

Overview.  All NEOsOur annual short-term incentive program is referred to as our Business Incentive for Growth plan (the “BIG Plan”). At the beginning of each fiscal year, employees eligible to participate in the annual cash incentive plan (the “Cash Incentive Plan”),BIG Plan are typically placed into differentiated funding pools according to the business unit(s) and geographic region(s) in which is designed to comply withsuch employees work (collectively, the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation. The Cash Incentive Plan provides for a maximum award equal to 2.0%“business unit pools”). Employees who work as part of our EBITDA (as adjusted pursuantcorporate functions rather than a specific business unit or geographic region participate in a separate Plan funding pool (the “corporate pool”). The BIG Plan usually differentiates the business unit pools by providing a pool funding percentage of up to 200% of aggregate target opportunities (versus up to 150% for the termscorporate pool). In order to increase line of the Cash Incentive Plan)sight and accountability for our CEObusiness unit performance and 1.0% for each other NEO.  However, in determining actual awards made under the Cash Incentive Plan, the Committee has the discretion to, and hasdrive growth, NEOs who are Presidents of business units participate equally in the past, paid actual awards which are lower than the maximum awards. The Committee exercisescorporate pool and their respective business unit pool; with each pool weighted 50%. However, for fiscal year 2020, we modified this negative discretion by reference to the Company-wide Short-Term Incentive Compensationfunding approach as described in more detail below in “COVID-19 Impact on BIG Plan (the “STIC Plan”), which is discussed herein. The objective of the STIC Plan is to align the annual cash compensation of an executive to the annual performance of the Company on key financial metrics.Funding Pools.”

Funding Pools and Measure Weightings

Each NEO receives a target award that can be adjusted upwards or downwards based on achieving Company-wide financial performance targets under such NEO’s respective funding pool(s) and individual performance targets.goals.

STIC Plan Payment CalculationFinancial Performance Targets. The STIC Plan paymentFinancial Performance Targets are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to any individual is calculated by multiplying (a) base salary by (b) STIC Plan target opportunity by (c) STIC Plan Funding Percentage (as defined hereinafter) by (d)year.  In addition, in order to encourage management to take actions in the Individual Performance Modifier (the “Individual Performance Modifier”).best interests of the Company, the Committee has the discretion to exclude nonrecurring special charges and amounts from the calculation of these targets.  

STIC Plan Funding PercentagePercentages.  UnderAs previously mentioned, under the terms of the STICBIG Plan, each year the Committee typically establishes a STICcorporate pool as well as business unit pools (except in fiscal year 2020, as described in more detail below in “COVID-19 Impact on BIG Plan Funding Pools”). The corporate pool each year that is funded based upon the achievement of pre-established performance objectives. The STIC Plan poolobjectives and is funded at between 0% and 150% of aggregate target opportunities (the “STIC Plan“corporate pool funding percentage”). The business unit pools are each funded based upon the achievement of pre-established performance objectives and are each funded at between 0% and 200% of aggregate target opportunities (the “business unit pool funding percentages” and together with the corporate pool funding percentage, make up the “Plan Funding Percentage”Percentages”).

Individual Performance Modifier. Under the terms of the STICBIG Plan, the Committee may apply a modifier to an executive’s award based on the achievement of individual performance objectives. To evaluate individual performance, individual goals are set each year for each NEO. These include shared financial and strategic objectives as well as objectives that are directly related to each NEO’s specific business function. Except with respect to his own performance, this assessment is based on our CEO’s recommendation to the Committee on how well the NEO performed his or her job, based on both qualitative and quantitative results. There is no specific weight given to any one individual goal or objective. This evaluation of the impact of the individual contributions on actual compensation is not a formula-based process resulting in a quantifiable amount of impact, but rather involves the exercise of discretion and judgment. This enables the Committee to differentiate among NEOs and emphasize the link between personal performance and compensation.  The Individual Performance Modifier is assigned between 0% and 150% of the NEO’s funded STIC award.

COVID-19 Impact on BIG Plan Funding Pools. While there were no changes to the overall structure of the BIG Plan during fiscal 2020, due to the varying degrees of impact to fiscal 2020 financial results related to COVID-19 on specific business units and geographic regions, in April 2020, the Company decided to include all participants (including all NEOs) in the corporate pool effective for the entire fiscal year and did not include any participants in the individual business unit pools. This change allowed the Company to stay true to the original design of the BIG Plan while acknowledging the uncertain nature of the impact of COVID-19 on the Company. Focusing all participants on the corporate pool enabled Hillrom to coalesce around one set of Company goals to better weather the COVID-19 pandemic, regardless of how the pandemic impacted an individual business unit or geographic region.

For fiscal year 2018,2020, the targets and achievements (in millions, except per share data) were as follows:

(1) Revenue as reported to investors was $2,848 million versus a STIC revenue of $2,851. The difference between the reported numbers and the numbers used to calculate STIC relates to divestiture activities and the impact of fluctuations in foreign exchange rates.

(2) Adjusted EPS as reported to investors was $4.75 versus a STIC Adjusted EPS of $4.25. Adjusted EPS as reported to investors excludes the impact of strategic developments, acquisition and integration costs, special charges, the one-time impact of U.S. tax reform legislation, significant litigation expenses and other unusual events. The difference between the Adjusted EPS and STIC Adjusted EPS relates to the exclusion for STIC Adjusted EPS of the ongoing benefit realized from U.S. tax reform legislation and the tax benefit from excess stock compensation deductions above amounts included in our plan.

(3) Free Cash Flow as reported to investors was $306 million versus STIC Free Cash Flow of $274 million. The differences between the reported numbers and the numbers used to calculate STIC relates to the cash flow impact of special items, U.S. tax reform legislation and excess stock compensation deductions above amounts included in our Plan.

(4) Following the completion of fiscal year 2018, the Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and determined that the Committee would exercise its negative discretion and set the aggregate corporate STIC Plan Funding Percentage at 110% and reallocate the difference to other business units in an effort to align business incentives.

The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year.  In addition, in order to encourage management to take actions in the best interests of Hill-Rom, the Committee has the discretion to exclude nonrecurring special charges and amounts from the calculation of these targets.  Further, the Committee considers the broader performance of the business to determine whether negative discretion should be applied to the financial performance of the STIC Plan Funding Percentage outlined above. Following the completion of fiscal year 2018, the Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and determined that based on the Company’s performance in fiscal year 2018, the Committee would exercise its negative discretion and set the aggregate STIC Plan Funding Percentage at 110%.

STIC Target Opportunity and Fiscal Year 2018 Payouts. The following chart shows the fiscal year 2018 STIC Plan Target Opportunity and fiscal year 2018 STIC Plan Payout for each NEO. The payouts reflect the Company’s adjusted performance of 110% of target plus the application of any Individual Performance Modifiers.

Fiscal Year 2019 Changes to Plan Design and Target Opportunity.In order to drive growth within the business, the Committee has rebranded the annual incentive program as Business Incentive for Growth (“BIG”), effective for

For fiscal year 2019. The structure of BIG will be similar to the STIC Plan. Employees eligible to participate in BIG will be placed into differentiated funding pools according to the business unit(s) and geographic region(s) in which such employees work (collectively, the “business unit pools”). Employees who work as part of our corporate function rather than a specific business unit will participate in a separate BIG funding pool (the “corporate pool”). The design of the corporate pool (in terms of the pooling percentage of 0% to 150%) will not change relative to our STIC Plan effective for fiscal year 2018. However, BIG differentiates the business unit pools by providing a pool funding percentage of 0% to 200% of aggregate target opportunities (versus 0% to 150% for the corporate pool). NEOs who are Presidents of business units will participate equally in the corporate pool and their respective business unit pool; with each pool weighted 50%. Business unit pool target opportunity measures will be (i) revenue, weighted 60% and (ii) operating income, weighted 40%. The Committee confirmed that the fiscal year 2018 target opportunity measures used in the STIC Plan remain appropriate for2020, the BIG corporate poolPlan payouts for fiscal year 2019.each NEO were as follows:

Long-Term Equity Based Incentive (LTI) Awards

Overview: Hill-Rom’sThe Company’s Stock Incentive Plan provides for the opportunity to grant stock options, restricted stock units (“RSUs”), PSUs and other equity-based incentive awards to officers, other key employees and non-employee directors to help align those individuals’ interests with those of shareholders, to help motivate executives to make sound strategic long-term decisions, and to better enable Hill-RomHillrom to attract and retain capable directors and executives.

Hill-Rom’sThe Company’s LTI program provides a portfolio approach to long-term incentives by providing:

In addition, the Committee considers the Stock Incentive Plan share usage rate, compensation expense, number of plan participants and potential aggregate target awards for participants when determining target award levels and the mix of long-term incentive awards.

Timing of Equity Grants. We generally make all equity grants to our executives on an annual basis (except in the case of a new hire or promotion), and these grants have historically been made at our November Board meeting. Fiscal year 2020 equity grants were made on November 6, 2019.

Target LTI Opportunity for Fiscal Year 20182020 Awards. Each NEO receives a target award that can be adjusted upwards or downwards based on individual performance goals.

Individual Performance Modifier. The Committee may apply a modifier to an executive’s award based on the achievement of individual performance objectives in the year prior to the year of grant. To evaluate individual performance, individual goals are set each year for each NEO. These include shared financial and strategic objectives as well as objectives that are directly related to each NEO’s specific business function. Except with respect to his own performance, this assessment is based on our CEO’s recommendation to the Committee on how well the NEO performed his or her job, based on both qualitative and quantitative results. There is no specific weight given to any one individual goal or objective. This evaluation of the impact of the individual contributions on actual compensation is not a formula-based process resulting in a quantifiable amount of impact, but rather involves the exercise of discretion and judgment. This enables the Committee to differentiate among NEOs and emphasize the link between personal performance and compensation.  The Individual Performance Modifier is assigned between 0% and 150% of the NEO’s target award.

The following chart shows the fiscal year 20182020 LTI Plan Target Opportunity and fiscal year 20182020 LTI Plan award for each NEO. In fiscal year 2020, no adjustment to target awards were made based on individual performance in 2019.

Stock Options. In fiscal year 2018,2020, a stock option grant was made to each of the NEOs equal to 25% of the target long-term equity award opportunity. Stock options vest in four equal annual installments.

installments over four years.

RSUs. In fiscal year 2018,2020, an RSU grant was made to each of the NEOs equal to 25% of the target long-term equity award opportunity. RSUs vest on a three-year cliff basis. For fiscal year 2019, we changed our vesting period for RSU Awards from a three-year cliff basis to anin three equal annual basisinstallments over three years.

PSUs.  In fiscal year 2018,2020, a PSU grant was made to each of the NEOs equal to 50% of the target long-term equity award opportunity. These awards provide the opportunity to earn a predefined number of shares based on achievement of performance objectives during a three-year performance period. The number of units earned can vary from no payout for below threshold performance to 225% of target for maximum performance.

Calculation of shares. The dollar value of an LTI award at grant is converted to RSUs and PSUs based on the average closing price of Hill-RomHillrom stock over a period of the 20 business days prior to the grant date. A binomial stock option valuation model is used to calculate the number of stock options awarded.

Prior performance unit plan payouts. For the PSU awards granted in fiscal year 2016,vesting wasVesting is based on a one-year Adjustedthree-year cumulative Free Cash Flow measure modified by relative TSR over a three-year period, in each case, subject to a minimum percentage payout of 0% of target for below threshold performance, and a maximum percentage payout of 150% of target for maximum performance (or a total of 225% of target for maximum performance of both Adjustedcumulative Free Cash Flow and relative TSR).

Fiscal Year 20162018 – 20182020 Performance Share Unit Program

* The fiscal year 2016 – 2018 Free Cash Flow measure’s performance was determined on September 30, 2016 and relative TSR was determined on September 30, 2018. Free Cash Flow as reported to investors was $197.6 million versus PSU Free Cash Flow of $200 million. The differences between the reported numbers and the numbers used to calculate the PSU Free Cash Flow relates to the impact of acquisition and integration costs, special charges, legislative changes and other unusual events.

Under the fiscal year 20162018 – fiscal year 20182020 PSU program, Mr. GreischGroetelaars earned 52,85316,913 shares of stock, Mr. StrobelJohnson earned 12,2543,919 shares of stock, Mr. ShaderFrank earned 11,054 shares of stock, Mr. Alonso earned 9,8113,099 shares of stock and Mr. JohnsonMs. Rasin earned 2,0013,677 shares of stock. At the time the fiscal year 20162018 PSU award was granted, Mr. GroetelaarsMs. Bodem was not employed by the Company.

Beginning with the fiscal year 2017 PSU award, the one-year Free Cash Flow measure was replaced by a three-year Free Cash Flow measure. This change means that payouts are subject to reduction to zero for the full three-year performance period. Mr. Groetelaars received his grant of PSUs under this program on his date of hire of May 14, 2018.

The TSR Peer Group used for the PSUs granted in fiscal year 20182020 includes the companies in the Compensation Peer Group as well as the companies that comprised the former Morgan Stanley Healthcare Products Index at the time it was delisted in 2015 with the exception of companies impacted by merger and acquisition activities: Heartware International (which was acquired by Medtronic), Sirona Dental Systems (which merged with Dentsply), C.R. Bard, Inc. (which was acquired by Becton, Dickinson and Company), Thoratic (which was acquired by St. Jude Medical) and St. Jude Medical (which was acquired by Abbott Laboratories), and six companies with lower overall business comparability: Align Technology, Cantel Medical Corp., Charles River Laboratories International, IDEXX Laboratories, Illumina and Mettler-Toledo International. To supplement this group with additional peers to establish a larger sample size, eightfour companies were added in fiscal year 2017 and four companies were added in fiscal year 2018. These companies all have similar revenue, market value and industry as Hill-Rom.

the Company. No changes to the peer group were made in fiscal year 2019 or 2020, as the 36-company peer group provides a robust sample size against which to measure the Company’s performance.

Fiscal Year 20192021 Changes to LTI Target Opportunity:Opportunity. TheIn addition to the increase to Mr. Groetelaars’ LTI target mentioned under the section CEO Compensation, the Committee confirmed thatincreased the fiscal year 2018 LTI Target Opportunities remain appropriate for all NEOs in fiscal year 2019 except for Mr. Groetelaars whose target increased from 400% to 417%targets of his fiscal year 2019 base salaryMs. Bodem and Mr. Johnson whose target increased from 175%Frank to 200% of his fiscal year 2019 base salary,align targets to the market based on the results of compensation benchmarking performed by the Committee’s independent compensation consultantconsultant. Ms. Bodem’s target increased from 275% to 300% of fiscal year 2021 base salary and Mr. Franks’s target increased from 200% to 225% of fiscal year 2021 base salary. The Committee confirmed that the fiscal year 2020 LTI Target Opportunity percentage for each of Mr. Johnson and Ms. Rasin remained appropriate as the base target opportunity for fiscal year 2021. Messrs. Johnson and Frank and Ms. Rasin received higher than target awards for fiscal year 2021 based on their individual performance and leadership displayed during fiscal year 2020 in line withguiding the goalsCompany through the challenges it faced in responding to the effects of our compensation program.the COVID-19 pandemic as well as to facilitate retention of these key individuals in a highly competitive market. Individual performance modifiers were applied in the amounts of 120%, 110% and 112% for Messrs. Johnson and Frank and Ms. Rasin, respectively.

Share Ownership Guidelines.  In order to align the interests of executives to the long-term performance of the Company, executive officers are required to own a certain amount of Hill-RomCompany stock within five years of joining the Company. The ownership requirements are as follows:

Shares owned outright and unvested RSUs count toward the required ownership level. This requirement, like the Executive Compensation RecoupmentClawback Policy discussed below, helps ensure long-term focus and appropriate levels of risk-taking by executive officers. Ms. Bodem, Messrs. Strobel, Shader, AlonsoJohnson and JohnsonFrank and Ms. Rasin have achieved their required ownership levels, and Mr. Groetelaars (who is on track to meet the required ownership level) has not been with the Company for more than five years, and therefore is not required to meet these guidelines until his five-year anniversary with the Company.

Hill-Rom’s Executive Compensation Recoupment Policy.Recoupment. Under ourThe Company maintains an Executive Compensation RecoupmentClawback Policy pursuant to which the Committee may recoup certain compensation from the Company’s executive officers in the event of certain misconduct or violation of Company policy.  Each executive officer is a party to a Limited Recapture Agreement which details both the circumstances under which compensation may be recouped as well as the types of compensation subject to recoupment.  Specifically, the Limited Recapture Agreement provides that the Committee can recoup from executive officers all performance-based compensation and any trading profits on trades in Hill-RomHillrom securities received during the prior 24 months in the event that there is a material restatement of financial results due to misconduct of the executive officer from whom recoupment is sought. The Executive Compensation Recoupment Policy givesFurther, during fiscal year 2020, the Committee approved an addendum to the Limited Recapture Agreement providing the Committee with the ability to recoup both performance-based compensation and time-based long-term incentive awards received by an executive officer during the prior 24 months if such executive officer is terminated for a material violation of the Global Code of Conduct. The Committee has discretion to determine whether and to what extent to seek recoupment based on specific facts and circumstances.

Timing of Equity GrantsAnti-Hedging/Anti-Pledging Provisions. We generally make all equity grants to our executives on an annual basis (except in the case of a new hire or promotion), and these grants have historically been made at our November Board meeting.

Anti-Hedging/Anti-Pledging Policy. Hill-RomHillrom has adopted an insider trading policy which incorporates anti-hedging and anti-pledging provisions. Consequently, no officer or director may enter into a hedge or pledge of Hill-Rom stock.provisions as more fully described as follows:

Re-pricing and Buybacks. With respect to each of our NEOs, Hill-RomHillrom does not re-price options, nor does it buy back shares (other than shares acquired by the Company at fair market value to cover tax withholding and option exercise).

Retirement and Change in Control Agreements

Overview.  Hill-RomHillrom believes that it is in the best interests of the Company and its shareholders to have the unbiased dedication of its executives, without the distractions of personal uncertainties such as retirement or a change in control.  Hill-RomHillrom has designed its senior management retirement and other post-employment benefit programs to reduce such distractions and align to competitive practices of other comparable companies.  

Retirement Guidelines for Executives.  With respect to executives hired before August 1, 2016, those who are at least 55 years of age and with 5 years’ length of service are eligible to receive certain benefits under Hill-Rom’sHillrom’s Stock Incentive Plan.  With respect to executives hired on or after August 1, 2016, those who are at least 55 years of age and with 10 years’ length of service are eligible to receive certain benefits under Hill-Rom’sHillrom’s Stock Incentive Plan. These guidelines are incorporated into each individual equity award agreement and have been approved by the Committee.  The following is allowed upon retirement:

Supplemental Executive Retirement Plan.  The Supplemental Executive Retirement Plan (the “SERP”) provides additional retirement benefits to certain employees selected by the Committee whose retirement benefits under our pension plan or 401(k) plan are reduced, curtailed or otherwise limited as a result of certain limitations under the Internal Revenue Code of 1986.Code.

Change in Control Agreements.  Hill-RomHillrom has a change in control agreement in place with each NEO.  These change in control agreements are of the form commonly referred to as “double-trigger” agreements, in that they are triggered only in the event that an executive is terminated in connection with a change in control, not merely if a change in control occurs. Moreover, they do not contain any 280G gross-up provisions. They are intended to encourage continued employment by Hill-RomHillrom of its key management personnel and to allow such personnel to be in a position to provide assessment and advice to the Board regarding any proposed change in control without concern that such personnel might be unduly distracted by the uncertainties and risks created by the proposed transaction. For information on the potential payments to executives on a change in control, see “Potential Payments Upon Termination or Change in Control” on pages 4861 and 49.62.

Other Personal Benefits

In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives. Hill-RomHillrom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-RomHillrom and its shareholders. None of our NEOs receive any excise tax or perquisite tax gross-ups, other than for reasonable relocation costs and housing allowance, as applicable.

Employment Agreements

WeIn addition to the Limited Recapture Agreements described under “Executive Compensation Recoupment” on page 52, we have entered into an employment agreement with each of our NEOs. We believe that it is appropriate for our senior executive officers to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information. Additionally, we believe that employment agreements are a useful tool in recruiting and retention ofretaining senior level employees. The current employment agreements set forth the basic duties of the senior executive officers and provide that each senior executive officer is entitled to receive, in addition to base salary, incentive compensation payable at our discretion and such additional compensation, benefits and perquisites as we may deem appropriate. The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60)180 days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement. See “Potential Payments Upon Termination or Change in Control” on pages 4861 and 4962 for further information regarding payments due upon termination. The employment agreements also contain non-competition and non-solicitation agreements of the senior executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the senior executive officer’s employment.

Fiscal Year 2018 Changes to Employment Agreements. The Committee approved certain changes to employment agreements effective in fiscal year 2019. The employment agreements are terminable by either us or the executive officer “without cause” on 180 days written notice. Further, the non-competition and non-solicitation agreements of the senior executive officers will continue for a period of 18 months for the CEO and 12 months for other officers.officers after the termination of the senior executive officer’s employment.

Risk Assessment of Compensation Policies and Practices

Assisted by its independent compensation consultant, the Committee reviewed our material compensation policies and practices applicable to our employees and executive officers. Following the independent consultant’s review and recommendation, the Committee concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Key features of the compensation program supporting this conclusion include:

The following tables and notes set forth compensation information for the fiscal years ended September 30, 2018, 2017,2020, 2019, and 20162018 for our NEOs.