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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

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HILLENBRAND, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held February 24, 2016

The Annual Meeting of the shareholders of Hillenbrand, Inc. (the “Company”) will be held at the Company’s headquarters at One Batesville Boulevard, Batesville, Indiana 47006, on Wednesday, February 24, 2016, at 10:00 a.m. Eastern Standard Time, for the following purposes:

(1)                                 to elect four members to the Board of Directors;

(2)                                 to approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers;

(3)                                 to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2016; and

(4)                                 to transact such other business as may properly come before the meeting and any postponement or adjournment of the meeting.

Important notice regarding the availability of proxy materials for the Annual Meeting of shareholders to be held on February 24, 2016:  This proxy statement and our 2015 Annual Report to Shareholders are available on the Internet at www.hillenbrand.com.

January 6, 2016

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HILLENBRAND, INC.

PROXY STATEMENT

This proxy statement relates to the solicitation by the Board of Directors of Hillenbrand, Inc. (the “Company” or “Hillenbrand”) of proxies for use at the Annual Meeting of the Company’s shareholders to be held at the Company’s headquarters at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 934-7500, on Wednesday, February 24, 2016, at 10:00 a.m. Eastern Standard Time, and at any postponements or adjournments of the meeting.  This proxy statement was first mailed to shareholders on or about January 6, 2016.

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

The following questions and answers will explain the purpose of this proxy statement and what you need to know to vote your shares.  Throughout these questions and answers and the proxy statement, we sometimes refer to Hillenbrand and the Company in terms of “we,” “us,” or “our.”

Q:                                  What is the purpose of this proxy statement?

A:                                   The Board of Directors of Hillenbrand (the “Board”) is soliciting your proxy to vote at the 2016 Annual Meeting of the shareholders of Hillenbrand because you were a shareholder at the close of business on December 18, 2015, the record date for the 2016 Annual Meeting, and are entitled to vote at the Annual Meeting.  The record date for the 2016 Annual Meeting was established by the Board in accordance with our Amended and Restated Code of By-laws (the “By-laws”) and Indiana law.

This proxy statement contains the matters that must be set out in a proxy statement according to the rules of the U.S. Securities and Exchange Commission (the “SEC”) and provides the information you need to know to vote at the Annual Meeting.  You do not need to attend the Annual Meeting to vote your shares.

Q:                                  What is the difference between holding shares as a “shareholder of record” and as a “beneficial owner”?

A:                                   If your shares are registered directly in your name with Hillenbrand’s transfer agent, Computershare Investor Services, you are the “shareholder of record” with respect to those shares, and you tell us directly how your shares are to be voted.

If your shares are held in a stock brokerage account or by a bank or other nominee, then your nominee is the shareholder of record for your shares and you are considered the “beneficial owner” of shares held in street name.  As the beneficial owner, you have the right to direct your broker, bank, or nominee how to vote your shares.

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Q:                                  What am I being asked to vote on?

A:                                   ·                       Election of four directors:  Gary L. Collar, Mark C. DeLuzio, Joy M. Greenway, and F. Joseph Loughrey;

·                       Approval, by a non-binding advisory vote, of the compensation paid to the Company’s Named Executive Officers,(1) as disclosed pursuant to SEC compensation disclosure rules in the “Compensation Discussion and Analysis” and “Executive Compensation Tables” sections of this proxy statement and in any related material herein (the “Say on Pay Vote”); and

·                       Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2016.

The Board recommends a vote FOR each of the director nominees; FOR approval of the compensation paid to the Named Executive Officers of the Company pursuant to the Say on Pay Vote; and FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2016.

Q:                                  What are the voting requirements to elect the directors and to approve the other proposals being voted on?

A:                                   The Articles of Incorporation of Hillenbrand provide that the directors are elected by a majority of the votes cast at the Annual Meeting.  This means that to be elected, the number of votes cast “for” a director nominee must exceed the number of votes “withheld” against that nominee.

The adoption of each of the proposals to approve, by a non-binding advisory vote, the compensation paid to the Named Executive Officers and to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2016 requires the affirmative vote of a majority of the votes cast for or against approval.

If you are present or represented by proxy at the Annual Meeting and you affirmatively elect to abstain, your abstention, as well as any broker non-votes, will not be counted as votes cast on any matter to which they relate.  See “How will my shares be voted?” below for more information about broker non-votes.

Q:                                  How many votes do I have?

A:                                   You are entitled to one vote for each share of Hillenbrand common stock that you held as of the record date.

(1)  Our Named Executive Officers are those officers specified by Item 402(a)(3) of the SEC’s Regulation S-K.  See the discussion under the heading “Introduction” in the “Compensation Discussion and Analysis” section of this proxy statement for more information regarding Named Executive Officers.

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Q:                                  How do I vote?

A:                                   The different ways that you (if you are a shareholder of record) or your nominee (if you are a beneficial owner) can tell us how to vote your shares depend on how you received your proxy statement this year.

For shareholders of record, many of you were not mailed a paper copy of proxy materials, including this proxy statement, a proxy card, and our 2015 Annual Report to Shareholders.  Instead, commencing on or about January 6, 2016, we sent you a Notice of Internet Availability of Proxy Materials (“Notice”) telling you that proxy materials are available at the web site indicated in that Notice, www.proxyvote.com, and giving you instructions for voting your shares at that web site.  We also told you in that Notice (and on the web site) how you can request us to mail proxy materials to you.  If you subsequently do receive proxy materials by mail, you can vote in any of the ways described below.  If not, you must vote via the Internet (and we encourage you to do so) at www.proxyvote.com or in person at the Annual Meeting as explained below.

With respect to shareholders of record who received proxy materials by mail, we commenced mailing on or about January 6, 2016.  You can vote using any of the following methods:

With respect to the beneficial owners of shares held by nominees, the methods by which you can access proxy materials and give voting instructions to your nominee may vary, depending on the nominee.  Accordingly, if you are such a beneficial owner, you should follow the instructions provided by your nominee.

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Q:                                  I share an address with another shareholder and we received only one Notice of Internet Availability of Proxy Materials or one paper copy of the proxy materials, as applicable.  How may I obtain an additional copy?

A:                                   The Company has adopted a procedure approved by the SEC called “householding.”  Under this procedure, the Company is delivering a single copy of either the Notice of Internet Availability of Proxy Materials or a paper copy of the proxy materials, as applicable, to multiple shareholders who share the same address, unless the Company has received contrary instructions from one or more of the shareholders.  This procedure reduces the Company’s printing costs, mailing costs, and fees.  Shareholders who participate in householding will continue to be able to access and receive separate proxy cards.  Upon written or oral request, a separate copy of the Notice of Internet Availability of Proxy Materials or a paper copy of the proxy materials or the annual report, as applicable, will be promptly delivered to any shareholder at a shared address to which the Company delivered a single copy.  To receive a separate copy, or a separate copy of future materials, shareholders may write or call the Company’s Investor Relations Department at One Batesville Boulevard, Batesville, Indiana, 47006, telephone (812) 931-6000 and facsimile (812) 931-5209.  Shareholders who hold shares in street name may contact their broker, bank, or other nominee to request information about householding.

Q:                                  How will my shares be voted?

A:                                   For shareholders of record, all shares represented by the proxies mailed to shareholders will be voted at the Annual Meeting in accordance with instructions given by the shareholders.  Where proxies are returned without instructions, the shares will be voted:  (1) FOR the election of each of the four nominees named above as directors of the Company; (2) FOR the approval, by a non-binding advisory vote, of the compensation paid to the Named Executive Officers pursuant to the Say on Pay Vote; (3) FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for fiscal year 2016; and (4) in the discretion of the proxy holders upon such other business as may properly come before the Annual Meeting.  Where a proxy is not returned, the shares will not be voted unless you attend the Annual Meeting and vote in person.

For beneficial owners, the brokers, banks, or nominees holding shares for beneficial owners must vote those shares as instructed.  If the broker, bank, or nominee has not received instructions from the beneficial owner, the broker, bank, or nominee generally has discretionary voting power only with respect to matters that are considered routine matters.  Under applicable New York Stock Exchange rules, Proposal No. 1 relating to the election of directors, and Proposal No. 2 relating to an advisory vote to approve Named Executive Officer compensation are deemed to be non-routine matters with respect to which brokers and nominees may not exercise their voting discretion without receiving instructions from the beneficial owners of the shares.  Proposal No. 3 relating to the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for fiscal year 2016 is a matter on which brokers holding stock for the accounts of their clients who have not been given specific voting instructions are allowed to vote client shares.  To avoid a broker non-vote of your shares on Proposals No. 1 and 2, you must send voting instructions to your bank,

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broker, or nominee or obtain a legal proxy and vote your shares in person at the Annual Meeting.

Q:                                  What can I do if I change my mind after I vote my shares prior to the Annual Meeting?

A:                                   If you are a shareholder of record, you may revoke your proxy at any time before it is voted at the Annual Meeting by:

·                  sending written notice of revocation to the Secretary of Hillenbrand at One Batesville Boulevard, Batesville, Indiana 47006;

·                  submitting a revised proxy by telephone, Internet, or paper ballot after the date of the revoked proxy; or

·                  attending the Annual Meeting and voting in person.

If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank, or nominee.  You may also vote in person at the Annual Meeting if you obtain a legal proxy as described under “How do I vote?” above.

Q:                                  Who will count the votes?

A:                                   Representatives of Broadridge Investor Communication Solutions, Inc. (“Broadridge”) will tabulate the votes and act as inspectors of election.

Q:                                  What constitutes a quorum at the Annual Meeting?

A:                                   As of the record date, 62,996,461 shares of Hillenbrand common stock were outstanding.  A majority of the outstanding shares must be present or represented by proxy at the Annual Meeting to constitute a quorum for the purpose of conducting business at the Annual Meeting.  Your shares will be considered part of the quorum if you submit a properly executed proxy or attend the Annual Meeting.

Q:                                  Who can attend the Annual Meeting in person?

A:                                   All shareholders as of the record date may attend the Annual Meeting in person but must have an admission ticket.  If you are a shareholder of record, the ticket attached to the proxy card or a copy of your Notice (whichever you receive) will admit you and one guest.  If you are a beneficial owner, you may request a ticket by writing to the Secretary of Hillenbrand at One Batesville Boulevard, Batesville, Indiana 47006, or by faxing your request to (812) 931-5185 or emailing it to investors@hillenbrand.com.  You must provide evidence of your ownership of shares with your ticket request, which you can obtain from your broker, bank, or nominee.  We encourage you or your broker to fax or

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email your ticket request and proof of ownership as soon as possible to avoid any mail delays.

Q:                                  When are shareholder proposals due for the 2017 Annual Meeting?

A:                                   For a shareholder proposal to be presented at the Company’s 2017 Annual Meeting of shareholders and to be considered for possible inclusion in the Company’s proxy statement and form of proxy relating to that meeting, it must be submitted to and received by the Secretary of Hillenbrand at its principal offices at One Batesville Boulevard, Batesville, Indiana 47006, not later than September 8, 2016.  Our By-laws describe certain information required to be submitted with such a proposal.

In addition, without regard to whether a proposal is or is not submitted in time for possible inclusion in our proxy statement for the 2017 Annual Meeting, our By-laws provide that for business to be brought before the Annual Meeting by a shareholder, or for director nominations to be made by a shareholder for consideration at the Annual Meeting, written notice thereof must be received by the Secretary of Hillenbrand at its principal offices not later than 100 days prior to the anniversary of the immediately preceding Annual Meeting, or not later than November 16, 2016, for the 2017 Annual Meeting of shareholders.  This notice must also provide certain information as set forth in our By-laws.  See the section of this proxy statement entitled “Committees of the Board of Directors” under “The Board of Directors and Committees” for additional details regarding shareholder nominees for director.

Q:                                  What happens if a nominee for director is unable to serve as a director?

A:                                   If any of the nominees becomes unavailable for election, which we do not expect to happen, votes will be cast for such substitute nominee or nominees as may be designated by the Board, unless the Board reduces the number of directors.

Q:                                  Can I view the shareholder list?  If so, how?

A:                                   A complete list of the shareholders entitled to vote at the Annual Meeting will be available to view during the Annual Meeting.  The list will also be available to view at the Company’s principal offices during regular business hours during the five business days preceding the Annual Meeting.

Q:                                  Who pays for the proxy solicitation related to the Annual Meeting?

A:                                   The Company pays for the proxy solicitation related to the Annual Meeting.  In addition to sending you these materials, some of our directors and officers, as well as management and non-management employees, may contact you by telephone, mail, email, or in person.  You may also be solicited by means of press releases issued by Hillenbrand and postings on our web site, www.hillenbrand.com.  None of our officers or employees will receive any additional compensation for soliciting your proxy.  We have retained Broadridge to assist us with proxy solicitation and related services for an estimated fee of

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$37,000, plus reasonable out of pocket expenses.  Such fees will be incurred after the mailing of the proxy materials.  Broadridge will ask brokers, banks, and other custodians and nominees whether they hold shares for which other persons are beneficial owners.  If so, we will supply them with additional copies of the proxy materials for distribution to the beneficial owners.  We will also reimburse banks, nominees, fiduciaries, brokers, and other custodians for their costs of sending proxy materials to the beneficial owners of Hillenbrand common stock.

Q:                                  How can I obtain a copy of the Annual Report on Form 10-K?

A:                                   A copy of Hillenbrand’s 2015 Annual Report on Form 10-K may be obtained free of charge by writing or calling the Investor Relations Department of Hillenbrand at its principal offices at One Batesville Boulevard, Batesville, Indiana, 47006, telephone (812) 931-6000 and facsimile (812) 931-5209.  The 2015 Annual Report on Form 10-K, as well as Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, are also available at Hillenbrand’s web site, www.hillenbrand.com.

Q:                                  How can I obtain the Company’s corporate governance information?

A:                                   The documents listed below are available on the Internet at the Company’s web site, www.hillenbrand.com.  You may also go directly to www.hillenbrand.com/CorpGov_overview.htm for those documents.  Printed copies are also available to any shareholder who requests them through our Investor Relations Department at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931-6000 and facsimile (812) 931-5209.  The available documents are:

·                  Hillenbrand, Inc. Corporate Governance Standards

·                  Hillenbrand, Inc. Committee Charters — Audit Committee, Nominating/Corporate Governance Committee, Compensation and Management Development Committee, and Mergers and Acquisitions Committee

·                  Position Descriptions for Chairperson of the Board, Members of the Board of Directors, and Committee Chairpersons

·                  Hillenbrand, Inc. Code of Ethical Business Conduct

·                  Hillenbrand, Inc. Global Anti-Corruption Policy

·                  Restated and Amended Articles of Incorporation of Hillenbrand, Inc.

·                  Amended and Restated Code of By-laws of Hillenbrand, Inc.

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PROPOSAL NO. 1 — ELECTION OF DIRECTORS

This section of the proxy statement introduces the current members of our Board of Directors, including the four directors in Class II who have been nominated to serve additional three-year terms.

The Restated and Amended Articles of Incorporation and the Amended and Restated Code of By-laws of Hillenbrand provide that members of the Board of Directors are classified with respect to the terms that they serve by dividing them into three equal (or near-equal) classes.  Each director is elected to serve a three-year term and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation, lawful removal, or failure to be re-elected in accordance with the Company’s By-laws.

The Board of Directors currently consists of eleven members, with four directors in Class I and Class II and three directors in Class III.

The terms of the directors expire as follows:

The four directors in Class II who are nominated for election to the Board at the 2016 Annual Meeting, each of whom has agreed to serve as a director if elected, are Gary L. Collar, Mark C. DeLuzio, Joy M. Greenway, and F. Joseph Loughrey.

The Board of Directors recommends that the shareholders vote FOR Proposal No. 1 to elect to the Board of Directors each of the four nominees.

The Articles of Incorporation of Hillenbrand provide that directors are elected by a majority of the votes cast at the Annual Meeting.  This means that to be elected, the number of votes cast “for” a director nominee must exceed the number of votes “withheld” against that nominee.  If you own shares through a bank, broker, or other holder of record, you must instruct your bank, broker, or other holder of record how to vote your shares in order for your vote to be counted on this Proposal.

Set forth below is information about all of our current directors, including the four nominees for election at the 2016 Annual Meeting of shareholders.  The biographical information provided for each person includes all directorships held by such person at any time during the past five years or earlier.

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Class II Nominees for Election as Directors with Terms Expiring in 2019

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Class I Directors with Terms Expiring in 2018

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Class III Directors with Terms Expiring in 2017

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THE BOARD OF DIRECTORS AND COMMITTEES

The Company’s business is managed under the direction of its Board of Directors.  In this section of the proxy statement we describe the general and certain specific responsibilities of the Board of Directors and its committees, our corporate governance, and how you can communicate with the Board or with individual directors.

Board’s Responsibilities

The Board of Directors is the ultimate decision-making body of the Company, except with respect to those matters reserved to the shareholders.  The Board acts as an advisor and counselor to senior management and oversees and monitors management’s performance.  The Board also oversees the Company’s management of risk involved or potentially involved in the Company’s business.

Board Leadership Structure and Role in Risk Oversight

The Corporate Governance Standards for our Board of Directors provide that the Company’s Chief Executive Officer (CEO) cannot also serve as the Chairperson of the Board.  At all times since the Company’s formation, the positions of CEO and Chairperson of the Board have been held by separate individuals.  Our Board believes that the separation of these two positions is the most appropriate leadership structure for the Company because it enables us to benefit from the expertise, experience, and strengths of both of the individuals holding those key leadership positions in the Company.  Our CEO, Joe A. Raver, has served as a director and as President and CEO of the Company since September 6, 2013.  He has served as President of the Company’s Process Equipment Group since March 2011.  Prior to that, he was President of Batesville Casket Company for several years and also held a variety of leadership positions at the Company’s former parent company.  The Chairperson of the Board, F. Joseph Loughrey, has extensive executive management and board of director experience, as further described in his biographical information set forth under the heading “Proposal No. 1” above.

The Board of Directors as a whole has direct responsibility for overseeing the Company’s exposures to risk and also performs its risk oversight responsibilities through the work of the Compensation and Management Development Committee (the “Compensation Committee”) and the Audit Committee of the Board.  As a part of its responsibility, the Board ensures that the risk management processes implemented by management are adapted to the Company’s strategy and are functioning as directed and that an appropriate culture of risk-adjusted decision making exists throughout the organization.  At each meeting of the Board of Directors, the Board discusses with management and evaluates any new material risks to the Company.  No less than once each year, management makes a formal presentation to the entire Board of Directors that describes all significant risks of the Company to ensure that the Board is apprised of the overall risk profile of the Company and that the risks are being properly mitigated and managed.

In addition, the Compensation Committee analyzes and manages risks related to our compensation policies and practices, and the Audit Committee performs the same role with respect to financial-related risks facing the Company.  The Compensation Committee’s risk management efforts are discussed under Part V of the “Executive Compensation” section of this proxy statement.  The Audit Committee, in accordance with its Charter, performs its risk management oversight by discussing with senior management “the Company’s guidelines and

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policies that govern the process by which the Company assesses and manages the Company’s exposure to risks… and the steps management has taken to monitor and control such exposure.”

Meetings of the Board and Committees

A proposed agenda for each regularly scheduled Board meeting is developed by the Chairperson of the Board and the Company’s CEO, together with the members of management that the Chairperson or CEO may select.  The proposed agenda is circulated to each member of the Board for review and comment before it is finalized.  Proposed agenda items that fall within the scope of responsibilities of a Board committee are initially developed by the chairperson of that committee with management assistance.  Each committee’s chairperson also develops, with the assistance of management, a proposed agenda for each regularly scheduled meeting of that committee.  Board and committee materials related to agenda items are provided to Board and committee members sufficiently in advance of meetings (typically approximately one week) to allow the directors to prepare for discussion of the items at the meetings.

At the invitation of the Board and its committees, members of senior management attend Board and committee meetings or portions thereof for the purpose of reporting to the Board and participating in discussions.  Generally, discussions of matters to be considered by the Board and its committees are facilitated by the manager responsible for that function or area of the Company’s operations.  In addition, Board members have free access to all other members of management and employees of the Company.  As necessary and appropriate in their discretion, the Board and its committees consult with independent legal, financial, human resource, compensation, and accounting advisors to assist in their duties to the Company and its shareholders.

The chairpersons of the committees of the Board preside over the portions of Board meetings in which the principal items to be considered are within the scope of the authority of their respective committees.

Executive sessions, which are meetings of non-employee directors without management present, are held after each Board meeting, and after each committee meeting as scheduled by the chairpersons of the committees.  The Chairperson of the Board generally presides at executive sessions of the Board, while the chairpersons of the committees of the Board preside at executive sessions of their committees or at Board executive sessions in which the principal items to be considered are within the scope of the authority of their respective committees.

Other Corporate Governance Matters

Both the Board of Directors and management of the Company firmly embrace good and accountable corporate governance and believe that an attentive, performing Board is a tangible competitive advantage.  Our Board has been constructed with an emphasis on independence and the mix of characteristics, experiences, and diverse perspectives and skills most appropriate for the Company.  The Board has established position specifications, including performance criteria, for its members, the Chairperson of the Board, and the chairpersons of the standing Board committees discussed below.  These position specifications are available on the Company’s web site at www.hillenbrand.com.

The Board of Directors has also taken other measures to ensure continued high standards for corporate governance.  Specifically, the Board has adopted Corporate Governance Standards

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for the Board of Directors and a Code of Ethical Business Conduct that is applicable to all employees of the Company and its subsidiaries, including the Company’s Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer.  No waivers of the requirements of our Code of Ethical Business Conduct were granted during fiscal year 2015.

The Board regularly discusses and reviews the Corporate Governance Standards and also general principles of corporate governance to evaluate whether it can improve upon the practices and procedures of the Company.  Among other important directives, the Corporate Governance Standards require independent directors to constitute at least 80 percent of the Board (this percentage was changed from 70 percent to 80 percent in fiscal 2015) and each non-employee director to hold shares of the Company’s common stock in an amount equal to five times the director’s annual cash compensation by the fifth anniversary of his or her election to the Board.

The Company’s Insider Trading and Disclosure Policy, which applies to all employees and directors, also promotes sound corporate citizenship and includes, among other provisions, an anti-hedging provision with respect to the Company’s stock.

The Company’s Corporate Governance Standards and Code of Ethical Business Conduct are available on the Company’s web site at www.hillenbrand.com or in print to any shareholder who requests copies through the Company’s Investor Relations Department at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931-6000 and facsimile (812) 931-5209.

Determinations with Respect to Independence of Directors

The Corporate Governance Standards adopted by the Board of Directors, in accordance with New York Stock Exchange listing standards, require the Board to make an annual determination regarding the independence of each of the Company’s directors and provide standards for making those determinations.  The Board made those determinations for each member of the Board in December 2015 based on an annual evaluation performed by and recommendations made by the Nominating/Corporate Governance Committee of the Board.

To assist in the Board’s determinations, each director completed materials designed to identify any relationships that could affect the director’s independence under the applicable New York Stock Exchange and SEC rules.  On the basis of these materials and the standards described above, the Board determined that each of Edward B. Cloues, II, Gary L. Collar, Helen W. Cornell, Mark C. DeLuzio, Joy M. Greenway, Thomas H. Johnson, F. Joseph Loughrey, Eduardo R. Menascé, Neil S. Novich, and Stuart A. Taylor, II is independent.  The Board determined that Joe A. Raver does not meet the director independence standards because of his current service as President and CEO of the Company.  Accordingly, Mr. Raver does not serve on the Audit, Compensation, or Nominating/Corporate Governance Committees of the Board of Directors.

Committees of the Board of Directors

It is the general policy of the Company that significant decisions be considered by the Board as a whole.  As a consequence, the standing (or permanent) committee structure of the Board is limited to those committees considered to be basic to, or required for, the operation of a publicly held company.  Currently those committees are the Audit Committee, Compensation Committee, Nominating/Corporate Governance Committee, and Mergers and Acquisitions Committee, each of which has a written charter adopted by the Board of Directors.  The

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Nominating/Corporate Governance Committee recommends the members and chairpersons of those committees to the Board.  The Audit Committee, Compensation Committee, and Nominating/Corporate Governance Committee are made up of only independent directors.  Membership on these committees as of December 2015, is shown in the following chart:

The current charter for each of the Board’s standing committees is available on the Company’s web site at www.hillenbrand.com and is available in print to any shareholder who requests it through the Company’s Investor Relations Department at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931-6000 and facsimile (812) 931-5209.

In furtherance of its policy of having significant decisions made by the Board as a whole, the Company has an orientation and continuing education process for Board members that includes the furnishing of educational and industry-specific materials, meetings with key management, and attendance at Company and industry events.  The Board attempts to hold at least one meeting per year at a Company facility outside of its headquarters in Batesville, Indiana.  The directors’ education includes, among other things, regular dedicated sessions regarding the Company’s businesses and operations, Audit Committee-sponsored financial literacy and legal and regulatory compliance training, and regular corporate and management governance presentations at Nominating/Corporate Governance and Compensation Committee meetings.  Throughout their terms, directors are expected to continue to deepen their experience in the industries and markets served by the Company and to remain generally apprised of trends and developments in corporate governance.

Audit Committee.  The Audit Committee has general oversight responsibilities with respect to the Company’s financial reporting and financial controls, as well as all financial-related risks facing the Company.  The Audit Committee annually reviews the Company’s financial reporting process, its system of internal controls regarding accounting, legal, and regulatory compliance and ethics that management or the Board has established, and the internal and external audit processes of the Company.  Each current member of the Audit Committee is independent under SEC Rule 10A-3 and New York Stock Exchange listing standards.  In accordance with the Audit Committee Charter, the Board has determined that the simultaneous service by Mr. Menascé on the audit committees of two other public companies does not impair his ability to serve on the Company’s Audit Committee.

Each member of the Audit Committee meets the financial literacy guidelines established by the Board in the Audit Committee Charter.  The Board interprets “financial literacy” to mean

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the ability to read and understand audited and unaudited consolidated financial statements (including the related notes) and monthly operating statements of the sort released or prepared by the Company, as the case may be, in the normal course of its business.  The Board of Directors has determined that each current member of the Audit Committee is an “audit committee financial expert” as that term is defined in Item 407(d) of SEC Regulation S-K.

Compensation and Management Development Committee.  The Compensation and Management Development Committee (the “Compensation Committee”) assists the Board in ensuring that the officers and key management of the Company are effectively compensated in terms of salaries, incentive compensation, and other benefits that are internally equitable and externally competitive.  As described in more detail in the “Compensation Discussion and Analysis” section of this proxy statement, the Compensation Committee is guided by its compensation philosophy — that executives should be fairly compensated for creating appropriate long-term returns for shareholders.  As noted above, the Compensation Committee also analyzes and determines the risks, if any, created by our compensation policies and practices.  In addition, the Compensation Committee is responsible for reviewing and assessing the talent development and succession management actions concerning the officers and key employees of the Company.  Each current member of the Compensation Committee is independent as defined by New York Stock Exchange listing standards and SEC rules.

Nominating/Corporate Governance Committee.  The Charter for the Nominating/ Corporate Governance Committee provides that the primary function of this Committee is to assist the Board of Directors in (i) ensuring that the Company is operated in accordance with prudent and practical corporate governance standards; (ii) ensuring that the Board consists of an appropriate number of independent directors, sufficient to satisfy the 80 percent threshold established by the Company’s Corporate Governance Standards and the majority threshold established by New York Stock Exchange listing standards and other regulations; and (iii) identifying candidates for the Board.  This Committee also assists the Audit Committee with oversight of the Company’s non-financial ethical, legal, and regulatory compliance.  Each current member of the Nominating/Corporate Governance Committee is independent as defined by New York Stock Exchange listing standards and SEC rules.

The Board has adopted position specifications applicable to members of the Board, and nominees for the Board recommended by the Nominating/Corporate Governance Committee must meet the qualifications set forth in those position specifications.  The specifications provide that a candidate for director should not ever have (i) been the subject of an SEC enforcement action in which he or she consented to the entry of injunctive relief, a cease and desist order, or a suspension or other limitation on the ability to serve as a corporate officer or supervisor; (ii) had any license suspended or revoked due to misconduct of any type; or (iii) violated any fiduciary duty to the Company or any provision of its Code of Ethical Business Conduct.  Additionally, each candidate for director should exhibit the following characteristics:

·                  Have a reputation for industry, integrity, honesty, candor, fairness, and discretion;

·                  Be an acknowledged expert in his or her chosen field(s) of endeavor, which area of expertise should have some relevance to the Company’s businesses or operations;

·                  Be knowledgeable, or willing and able to quickly become knowledgeable, in the critical aspects of the Company’s businesses and operations;

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·                  Be experienced and skillful in serving as a competent overseer of, and trusted advisor to, senior management of a substantial publicly held corporation; and

·                  For new non-employee directors, meet the New York Stock Exchange independence standards then in effect.

The Nominating/Corporate Governance Committee reviews incumbent directors against the position specifications applicable to members of the Board of Directors and independence standards set forth in New York Stock Exchange listing standards and SEC rules.  The Nominating/Corporate Governance Committee oversees a formal evaluation of the whole Board and its various committees on an annual basis, and it assesses the effectiveness of the individual directors at such intervals as it deems appropriate.  The Board typically engages and pays a fee to a third-party consultant to assist in performing the annual Board evaluation and also in identifying and evaluating potential director nominees.

While the Company does not have a formal policy regarding diversity among our directors, the Board believes that diversity in the broadest sense is good business, and it seeks talented people with diverse backgrounds, skills, and perspectives who can work together to lead the Company to long-term success.

The Nominating/Corporate Governance Committee’s policy with respect to the consideration of director candidates recommended by shareholders is that it will consider such candidates.  Any such recommendations should be communicated to the Chairperson of the Nominating/Corporate Governance Committee in the manner described below under the heading “How You Can Communicate with Directors” and should be accompanied by the information required under the Company’s By-laws for shareholder nominees.

The Company’s By-laws provide that nominations of persons for election to the Board of Directors may be made for any meeting of shareholders at which directors are to be elected 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 Secretary of the Company, and any nominee must satisfy the qualifications established by the Board from time to time as contained in the Company’s proxy statement for the immediately preceding Annual Meeting of shareholders or posted on the Company’s web site at www.hillenbrand.com.

To be timely, a shareholder’s nomination must be delivered to or mailed and received by the Secretary at the Company’s principal offices 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 that 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 Secretary by the later of (a) 100 days prior to the forthcoming meeting date, or (b) the close of business on the tenth day following the date on which the Company 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 the Company first makes public disclosure of the meeting date.  The notice given by a shareholder must set forth: (i) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii) 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) a description of all

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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) 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) the consent in writing of each nominee to serve as a director of the Company if so elected; and (vi) a description of the qualifications of such nominee to serve as a director of the Company.

Mergers and Acquisitions Committee.  The Mergers and Acquisitions Committee (the “M&A Committee”) provides advice and counsel to management and the Board with respect to the Company’s various strategic alternatives, the composition of the Company’s business portfolio, and the alignment of the portfolio with the Company’s strategy.  The M&A Committee also advises management with respect to the development and execution of the Company’s general acquisition and divestiture criteria, as well as its internal transactional processes and metrics.  While this Committee reviews significant transactions with management, the authority to approve such transactions rests with the full Board.

Certain Relationships and Related Person Transactions

The Corporate Governance Standards for the Board require that all transactions between the Company or its subsidiaries and any “related person” (as such term is defined in applicable securities regulation) must be reviewed and pre-approved pursuant to the terms of the Company’s Related Person Transaction Policy.  The Related Person Transaction Policy requires approval of such transaction by the Nominating/Corporate Governance Committee, in the case of material or disclosable transactions, or by the Chairperson of that Committee, in the case of immaterial and non-disclosable transactions.  The Related Person Transaction Policy requires that the Nominating/Corporate Governance Committee or its Chairperson, as applicable, consider all relevant facts and circumstances of the transaction, including the commercial reasonableness of the terms, the benefit and perceived benefit to the Company, the availability of alternative transactions, the materiality and character of the related person’s interest, and the actual or apparent conflict of interest of the related person.  If the related person is an independent director (or an immediate family member of an independent director), then the impact on the director’s independence shall also be considered.

Thomas H. Johnson, a director of the Company, through various companies owned by him or in which he owns an interest, owns (i) 100 percent of the Menke Funeral Home in Sun City, Arizona, and the Whitney & Murphy Funeral Home in Scottsdale, Arizona, and (ii) a 25 percent interest in the Weigel Funeral Home in Batesville, Indiana.  Those funeral homes purchase products from the Company’s Batesville subsidiary at market prices.  In fiscal year 2015, the total amount of purchases made from Batesville by those three funeral homes was $537,785, and purchases during fiscal 2016 are projected to remain consistent with prior years.

How You Can Communicate with Directors

Shareholders of the Company and other interested persons may communicate with the Chairperson of the Board, the chairpersons of the Board’s committees, or the non-management directors of the Company as a group, by sending an email to our Investor Relations Department at investors@hillenbrand.com.  The email should specify which of the foregoing is the intended recipient so that it can be forwarded accordingly.

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Attendance at Meetings

The upcoming Annual Meeting will be the eighth Annual Meeting of the Company’s shareholders.  It is anticipated that all Company directors will be in attendance at the Annual Meeting.  The Chairperson of the Board generally presides at the Annual Meetings of shareholders, and the Board holds one of its regular meetings in conjunction with each such Annual Meeting.  All of the directors attended the Company’s 2015 Annual Meeting of shareholders.

The Board held a total of seven meetings during the fiscal year ended September 30, 2015.  During that fiscal year, the Compensation Committee held five meetings, the Nominating/Corporate Governance Committee held four meetings, the Audit Committee met seven times, and the M&A Committee met three times.  No member of the Board of Directors attended fewer than 75 percent of the aggregate of the number of meetings of the full Board of Directors and the number of meetings of the committees on which he or she served during fiscal year 2015.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee had no interlocks or insider participation during fiscal year 2015.  Specifically in that regard, during fiscal year 2015, directors Collar, Cornell, DeLuzio, Loughrey, and Novich served on the Compensation Committee of the Company, and none of them:

·                  Is or has at any time been an officer or employee of the Company or any of its subsidiaries; or

·                  Has or has had at any time any direct or indirect interest in an existing or proposed transaction involving more than $120,000 in which the Company is, was, or was proposed to be a participant, or that is otherwise required to be disclosed by us under the proxy disclosure rules.

Also in that regard, during fiscal year 2015 none of our executive officers served as a member of the board of directors or on the compensation committee of any other company that had an executive officer who served on our Board of Directors or our Compensation Committee.

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SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT

We believe it is important for our directors and executive officers to own stock in the Company.  In that regard, each non-employee director is required, within five years after becoming a director, to own and maintain ownership of a minimum number of shares of our common stock equal in value to five times his or her annual cash compensation.  Such ownership includes shares of restricted stock and restricted stock units but not shares that underlie unexercised stock options.  In addition, non-employee directors are required to hold any vested shares of stock awarded as part of their annual equity compensation until the occurrence of one of the following:  a change in control of the Company, the director’s death or permanent and total disability, or one day after the date the director ceases to be a director of the Company.  Ownership requirements for our Named Executive Officers and other executive officers are detailed in the “Compensation Discussion and Analysis” section of this proxy statement.

The table below shows shares beneficially owned by all directors and executive officers as of December 18, 2015.

Security Ownership of Directors:

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Security Ownership of Named Executive Officers:

*                                         Ownership is less than one percent of the total shares outstanding.

(1)                                 The Company’s only class of equity securities outstanding is common stock without par value.  Except as otherwise indicated in these footnotes, the persons named have sole voting and investment power with respect to all shares shown as beneficially owned by them.  None of the shares beneficially owned by directors or executive officers is pledged as security.  Information regarding shares beneficially owned by Mr. Raver, our President and CEO, is included in the “Security Ownership of Directors” table above.

(2)                                 Includes 36,930 restricted stock units held on the books and records of the Company.

(3)                                 Includes 22,611 restricted stock units held on the books and records of the Company.

(4)                                 Includes 1,436 restricted stock units held on the books and records of the Company.

(5)                                 Includes 1,500 shares held by trust of which Ms. Cornell is trustee, and 16,008 restricted stock units held on the books and records of the Company.

(6)                                 Includes 32,753 restricted stock units held on the books and records of the Company and 21,439 shares acquired with deferred director fees and held on the books and records of the Company under the Board deferred compensation plan.

(7)                                 Includes 8,730 restricted stock units held on the books and records of the Company.

(8)                                 Includes 32,753 restricted stock units held on the books and records of the Company.

(9)                                 Includes 41,213 restricted stock units held on the books and records of the Company.

(10)                          Includes 23,443 restricted stock units held on the books and records of the Company and 2,918 shares acquired with deferred director fees and held on the books and records of the Company under the Board deferred compensation plan.

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(11)                          Includes 252,896 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 18, 2015.

(12)                          Includes 31,596 restricted stock units held on the books and records of the Company and 10,598 shares acquired with deferred director fees and held on the books and records of the Company under the Board deferred compensation plan.

(13)                          Includes 5,964 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 18, 2015, and 8,683 restricted stock units held on the books and records of the Company.

(14)                          Includes 154,196 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 18, 2015, and 9,557 restricted stock units held on the books and records of the Company.

(15)                          Includes 93,203 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 18, 2015, and 5,667 restricted stock units held on the books and records of the Company.

(16)                          Includes 111,324 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 18, 2015.

(17)                          Includes 702,528 shares that may be purchased pursuant to stock options that are exercisable within 60 days of December 18, 2015, 286,722 restricted stock units held on the books and records of the Company, 1,500 shares held by trust, and 34,955 shares acquired with deferred director fees and held on the books and records of the Company under the Board deferred compensation plan.

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SECURITY OWNERSHIP OF BENEFICIAL OWNERS OF MORE THAN 5 PERCENT OF THE COMPANY’S COMMON STOCK

The following table provides information regarding all persons or entities known to us that, as of the date indicated, were beneficial owners of more than 5 percent of the Company’s common stock.

(1)                                 This information is based on a Form 13F-HR filed by Franklin Resources, Inc. with the Securities and Exchange Commission on November 10, 2015; reflects shared investment discretion with respect to all shares; reflects sole voting power with respect to 4,670,968 shares, and no voting power with respect to 132,300 shares.

(2)                                 This information is based on a Form 13F-HR/A filed by Vanguard Group, Inc. with the Securities and Exchange Commission on November 12, 2015; reflects sole investment discretion with respect to 4,231,182 shares, and shared investment discretion with respect to 137,208 shares; reflects sole voting power with respect to 138,408 shares, shared voting power with respect to 4,100 shares, and no voting power with respect to 4,225,882 shares.

(3)                                 This information in based on a Form 13F-HR filed by BlackRock Fund Advisors with the Securities and Exchange Commission on November 13, 2015; reflects sole investment discretion and voting power with respect to all shares.

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EXECUTIVE COMPENSATION

Introduction

Part I of this “Executive Compensation” section presents a thorough discussion of our executive compensation philosophy, policies, actions, decisions (and the basis for such decisions), and procedures as they relate to our executive officers who are included in the compensation disclosures in this proxy statement pursuant to SEC rules — persons who are identified as our “Named Executive Officers.”  The discussion in this section is organized as follows:

·                  Our Executive Compensation Philosophy

·                  Process for Determining Compensation

·                  Compensation of Our Named Executive Officers for Fiscal Year 2015

·                  Retirement and Savings Plans

·                  Employment Agreements and Termination Benefits

·                  Other Personal Benefits

·                  Compensation-Related Policies

Part II of this “Executive Compensation” section is a report from the Compensation and Management Development Committee of our Board of Directors (the “Compensation Committee”).  Following that report, in Part III, we present numerous tables that report in detail the compensation of, and the potential amounts payable by the Company under certain contractual agreements with, the Named Executive Officers.  Part IV provides information regarding the engagement of Ernst & Young LLP, the independent compensation consultant engaged by the Compensation Committee.  Part V provides information relating to the compensation-related risk assessment and management strategies employed by the Company.

We have attempted to enhance the accessibility of the information presented by the use of tables and charts as much as possible.  We encourage you to keep two basic thoughts in mind as you read:

·                  First, the compensation of our Named Executive Officers is set by our Compensation Committee, which is a committee of independent directors.

·                  Second, a significant portion of each Named Executive Officer’s compensation is variable based on individual performance and the performance of the Company or its applicable business unit.  This structure is designed to align compensation with the interests of the shareholders of the Company.

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PART I:  COMPENSATION DISCUSSION AND ANALYSIS

Our Executive Compensation Philosophy

Our Compensation Committee has adopted the following Executive Compensation Philosophy, which describes the objectives and principles of our executive compensation program and which is used as the guide to our program design and compensation decisions.

Hillenbrand’s executives should be fairly compensated for creating appropriate long-term returns for shareholders.

The executive compensation program is designed to ensure officers and key management personnel are effectively compensated in terms of base salary, incentive compensation, and other benefits that advance the long-term interest of Hillenbrand’s shareholders.

The compensation program is based on the following principles:

·                  Reinforcing the absolute requirement for ethical behavior in all practices;

·                  Aligning management’s interests with those of shareholders;

·                  Motivating management to achieve superior results by paying for sustainable performance;

·                  Ensuring competitive compensation in order to attract and retain superior talent;

·                  Maintaining a significant portion of at-risk compensation (superior performance is rewarded with commensurate incentives, while little to no incentive is paid for underperformance);

·                  Delineating clear accountabilities; and

·                  Providing clarity and transparency in compensation structure.

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Our Named Executive Officers

SEC rules identify our “Named Executive Officers” as those persons who served as (i) our principal executive officer during the year ended September 30, 2015, (ii) our principal financial officer during the year ended September 30, 2015, and (iii) our other three most highly compensated executive officers for the year ended September 30, 2015.

Compensation Program Features and Best Practices.  Our compensation philosophy and the objectives and principles described above serve as the foundation for our executive compensation program.  Building on this foundation, our Compensation Committee and the full Board continually seek improvement and alignment with best practices — both in our compensation program itself and in our corporate governance practices that support it — by soliciting feedback from shareholders and consulting the Company’s independent compensation consultant and other advisors.  The result is a compensation program characterized by certain distinct features highlighted below that strengthen the performance orientation of our executive compensation program and reflect our ongoing commitment to aligning executive pay with long-term shareholder value.

(2)   Mr. Zerkle retired from his position as General Counsel effective as of the close of business on September 30, 2015.

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We Do

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We Do Not

Key Point: Our Focus on Performance-Based Compensation.  The central theme of the compensation philosophy of Hillenbrand and our Compensation Committee is that a significant portion of each Named Executive Officer’s compensation will be “performance-based” and, therefore, at risk.  This theme is highlighted in the table below, which summarizes the components of our executive compensation program.  A more detailed discussion of each of these components and the plans under which they are provided appears later in this “Compensation Discussion and Analysis” section.

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The first three compensation components shown in the above table (base salary, STIC, and LTIC) constitute what is generally referred to as an employee’s “core compensation.”  While the core compensation of our Named Executive Officers consists of both fixed and variable components, a significant portion is variable, or performance-based.  Each of the Named Executive Officers receives a base salary regardless of the performance of the Company in any individual year.  Any particular officer’s salary can be and is modified from year-to-year based on changes in the market and such officer’s individual performance and changes in responsibilities, as determined by the CEO and our Compensation Committee, as applicable.  Beyond base salary, each of our Named Executive Officers is eligible to receive STIC and LTIC, but those components of compensation are variable and at risk, dependent upon the performance of the relevant business(es) and the individual performance of the executive.  STIC payouts vary based on the annual performance of the Company or its applicable business unit and the individual officer, while LTIC payouts vary based on the performance of the Company or business unit over a three-year measurement period.  Detailed explanations of our performance-based STIC and LTIC programs are provided in the pages that follow.

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Our commitment to performance-based compensation is illustrated by the following chart, which shows the fixed (base salary) and variable (STIC and LTIC) core compensation at target levels for our President and CEO for fiscal year 2015:

This chart shows that 77 percent of the target core compensation of the Company’s President and CEO for the year was performance-based, and at risk, while 23 percent was fixed.  The Compensation Committee believes that this approach to compensating our President and CEO, and the similar approach taken with the other Named Executive Officers, aligns executive compensation appropriately with the interests of shareholders of the Company and creates incentives for executives to act in the best interests of the shareholders.

Target Core Compensation Mix.  The Compensation Committee’s approach to creating annual target STIC and LTIC awards for Named Executive Officers, and the principles driving that approach, are discussed in more detail below.  This approach generally produces a core compensation mix of approximately 25 percent base salary, 25 percent STIC, and 50 percent LTIC for our President and CEO, as reflected in the chart above.  A somewhat similar mix is produced with respect to our other Named Executive Officers, although the other executives have a higher percentage of base salary, and a lower percentage of STIC and LTIC, than our President and CEO.  Given the role of the CEO in ultimately driving results throughout the organization, the Compensation Committee believes it to be appropriate and in the best interests of shareholders for a higher percentage of the CEO’s compensation to be performance-based and at risk.

Process for Determining Compensation

Each year, prior to or shortly after the start of the new fiscal year, the Compensation Committee takes the following actions:

·                  It sets the base salaries of the Named Executive Officers for the coming calendar year.

·                  It adjusts, if deemed appropriate, the STIC target award formula for each Named Executive Officer and establishes the performance objectives that are to be used in the award formula for the new fiscal year.  See the discussion below under the heading “Annual Cash Incentive Awards” for more details regarding performance objectives and the STIC award formula.

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·                  With support from the Company’s internal audit team, it certifies performance and confirms the computation of the actual STIC awards to be paid to the Named Executive Officers with respect to the fiscal year ended on the preceding September 30.

·                  It makes LTIC grants to the Named Executive Officers and determines the performance objectives that are to be used in the award formula.  See the discussion below under the heading “Long-Term Incentive Compensation (LTIC)” for more details regarding performance objectives and the LTIC award formula.

·                  With support from the Company’s internal audit team, it certifies performance and confirms the computation of the actual award amounts to be paid to the Named Executive Officers with respect to performance-based LTIC awards whose three-year performance measurement period ended on the preceding September 30.

Factors Considered in Setting Compensation

General.  In establishing and adjusting the elements of our executive compensation program and the compensation packages for the Named Executive Officers, the Compensation Committee considers and analyzes a number of factors.  No single factor determines the outcome of the Compensation Committee’s work.  The Compensation Committee strives to establish compensation packages for the Named Executive Officers that enable the Company to attract, retain, and motivate the executive talent needed to operate the Company in a manner that is in the best interests of the shareholders.

Factors the Compensation Committee considers are discussed below.  They are not discussed in any order of priority, and no one factor standing alone is necessarily more important than the others.

Peer Group Data.  The Compensation Committee compares the components and levels of our compensation program to those of a selected peer group of companies.  Our Compensation Committee believes that we have to remain competitive in order to attract, retain, and motivate our executive talent and believes that when the Company exceeds expected performance targets, our Named Executive Officers should be rewarded accordingly.

Our Compensation Committee benchmarks the target compensation of our Named Executive Officers to the 50th percentile of the compensation paid by our peer group, although actual compensation paid in any given year may be above or below the benchmark, as a result of the performance-based nature of our executive compensation program and a variety of other factors that the Compensation Committee considers in setting compensation.

The Compensation Committee reviews the composition of the Company’s peer group on a quarterly basis and, as appropriate, updates the group to reflect changes among peer companies, industry consolidation, and the Company’s own evolution as a global diversified industrial company.  In developing our peer group, our Compensation Committee, aided by its independent compensation consultant, reviews various business attributes and financial metrics to assess whether additions or deletions to the current peer group are appropriate.  Qualitative factors considered in developing the peer group include the complexity of a company’s product line, extent of its global operations, and cyclicality of its business.  Quantitative factors include revenues, free cash flow, operating income, return on invested capital, and number of employees,

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among others.  In addition, various members of management provide input to the Compensation Committee relative to understanding the Company’s key financial metrics, key competitors for talent, key competitors in the markets we serve, the Company’s business plan, and other factors.  Notwithstanding the above, decisions regarding the composition of the peer group ultimately rest with the Compensation Committee.

The Compensation Committee conducted a detailed peer group review in fiscal 2015 but did not make any changes from the prior year; consequently, the peer group for fiscal year 2015 consisted of the following 16 companies:

Independent Compensation Consultant Expertise.  The Compensation Committee engages an independent compensation consultant to provide various items of relevant information and to perform various services for the Committee in connection with the establishment of the elements of our executive compensation program.  Ernst & Young LLP (“EY”) has been the Committee’s independent compensation consultant since 2008.  The Compensation Committee seeks and considers the expert advice and recommendations of the independent compensation consultant in connection with the administration of our compensation program and the establishment of appropriate compensation components and levels with respect to our Named Executive Officers.

The independent compensation consultant advises the Compensation Committee on an ongoing basis with regard to the general competitive landscape and trends in compensation matters, including (i) incentive plan design, (ii) peer group selection and competitive market analyses, (iii) compensation risk management, and (iv) developments in emerging trends and practices.  The consultant attends meetings of the Compensation Committee and at the request of the Chairperson participates in the Committee’s executive sessions.

See “Compensation Consultant Matters” in Part IV below for additional information regarding the Compensation Committee’s engagement of EY as its compensation consultant, as well as amounts paid to EY and its affiliates during fiscal year 2015 for executive compensation consulting and other services.

Survey Data.  In addition to peer group data, the Compensation Committee considers published compensation survey data provided by its independent compensation consultant, focusing on compensation data for companies in the manufacturing industry with revenues within a comparable range of the Company’s revenue.  The survey data provides additional compensation data targeted to the specific job responsibilities of our Named Executive Officers.

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External Market Conditions.  The Compensation Committee also considers external market conditions when establishing the total compensation of each Named Executive Officer.  Our headquarters is located in a relatively small rural community between Indianapolis, Indiana, and Columbus, Indiana, and Cincinnati, Ohio, all of which are home to other public companies, and we must compete with companies in those metropolitan areas for our executive talent.

Individual Factors.  Individual factors are also considered by the Compensation Committee in establishing the compensation packages of our Named Executive Officers.  These factors include the level and breadth of experience and responsibility of the officer, the complexity of the position, individual performance and growth potential, and the difficulty of replacement.  Individual performance of our Named Executive Officers is evaluated in large part based upon the achievement of group and personal goals that are established by management and approved by the Compensation Committee each year.  These goals for fiscal year 2015 are described below.  The Company’s Chief Executive Officer discusses with the Compensation Committee his review and analysis of the performance of the other Named Executive Officers and makes recommendations to the Committee regarding their respective compensation packages.

2015 Individual Performance Goals.  Management identified and the Compensation Committee approved five common objectives for all of our Named Executive Officers for fiscal year 2015.  They were as follows:

·                  Ensure successful operating company performance — provide oversight and resources needed to generate profitable organic and acquisition growth and strong cash flows.  This will be accomplished through the establishment of clear goals and objectives, appropriate oversight to ensure goal achievement, a transparent resource allocation process, and a commitment to the Hillenbrand Business System.

·                  Actively pursue acquisitions and integrate with success — identify prudent opportunities that provide attractive long-term returns for shareholders, generate revenue and earnings per share growth, meet our strategic criteria, and leverage our core competencies.  Ensure acquisition success by planning, preparing for, and executing due diligence and integration with excellence, focusing on the key areas of greatest value generation.

·                  Implement and expand the Hillenbrand Business System — combine the foundational core competencies of lean, talent development, and strategy planning into a standardized and prioritized system aimed at driving value for the organization.  Capture and enhance other core competencies within the Company to expand the Hillenbrand Business System and drive further value.

·                  Evolve our corporate capabilities to support the strategy and projected growth — make certain that resources, processes, procedures, and controls are aligned with the Company’s transformation (where it is today) and strategy (where it’s going).  This will be enhanced through the application of the Hillenbrand Business System.

·                  Maintain a strong and deep talent pool — ensure the experiences and skill sets necessary to support the corporate strategy are present in the organization.  This will be accomplished by creating an environment so compelling that we can attract, further develop, and retain top talent individuals.

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The following unique personal objectives were identified for each of the Named Executive Officers for fiscal year 2015:

·                  For Mr. Raver — develop and execute the Company’s strategy and business plan and achieve the Company’s financial and operational objectives; allocate capital to create shareholder value; lead the Company’s growth initiatives; oversee the Company’s acquisition activities; oversee efforts designed to strengthen the talent pool, capabilities, and competencies of the Company; and ensure that the Company engages in appropriate, meaningful, and transparent conversations with key stakeholders.

·                  For Ms. Cerniglia — provide financial leadership with excellence to the Company; ensure appropriate processes and procedures for the operation of the corporate financial function are in place; employ Lean throughout the finance function to increase efficiency and effectiveness; manage financial due diligence efforts and subsequent integration with respect to the Company’s acquisition activities; provide financial support where necessary to the Company’s subsidiaries; and ensure there is a high performing corporate finance team with the appropriate experiences and skill sets.

·                  For Ms. Ryan — develop and execute the strategic and resulting operating plan of Batesville; maintain the strong cash flow generation capabilities of Batesville; ensure the organization is sized appropriately to demand; continue to gain efficiencies and maintain margin through Lean; provide talent to the rest of the organization; and grow revenue, IBT and cash flow in the non-casket growth businesses.(3)

·                  For Mr. George — provide corporate development leadership with excellence to the Company; provide support to the Company’s operating subsidiaries and their staffs with respect to their corporate development activities; supervise and coordinate the work of multi-disciplinary teams involved in the Company’s acquisition and divestiture efforts, particularly as it relates to opportunity identification and analysis, due diligence, and integration; and ensure there is a high performing corporate development team with the appropriate experiences and skill sets.

·                  For Mr. Zerkle — provide general counsel with excellence to the Company; ensure appropriate processes and procedures for the legal function are in place; employ Lean throughout the legal function to increase efficiency and effectiveness; provide legal support where necessary to the Company’s subsidiaries; manage legal due diligence efforts and transaction documentation with respect to the Company’s acquisition activities and subsequent integration; manage all litigation involving the Company; and ensure there is a high performing legal team with appropriate experiences and skill sets.

Aggregate Compensation.  The Compensation Committee considers the aggregate value of the Named Executive Officers’ core compensation components of base salary, STIC at target

(3)   Because Ms. Ryan, currently President of Coperion, served as President of Batesville for the majority of fiscal year 2015, new personal objectives for her were not formally adopted in 2015 for her new role.  Her personal objectives for fiscal year 2016 will pertain to her role as President of Coperion.

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level, and LTIC at target level.  The Compensation Committee compares the aggregate amount of these elements for our Named Executive Officers to the aggregate amount of the same elements of executive officer compensation at other companies using peer group and survey data.

Our Compensation Committee benchmarks the target compensation of our Named Executive Officers to the 50th percentile of the compensation paid by our peer group, although actual compensation paid in any given year may be above or below the benchmark, due to the performance-based nature of our executive compensation program and a variety of other factors that the Committee considers in setting compensation.

Additionally, the Compensation Committee reviews “tally sheets” reflecting all compensation paid to our Named Executive Officers, including retirement and other benefits, perquisites, and amounts potentially payable to them upon a “change in control” of the Company.  The Compensation Committee also considers projections as to the potential future value of long-term equity awards made to the Named Executive Officers.

Shareholder Say on Pay Vote.  At each Annual Meeting of the Company’s shareholders since 2011, the Company has held a “Say on Pay Vote,” which is a non-binding advisory resolution stating that shareholders approve the compensation paid to the Company’s Named Executive Officers.  The Compensation Committee carefully considers the results of this vote each year.  Company shareholders have approved the Say on Pay Vote with over 96 percent support each year, except for three years ago at the 2013 Annual Meeting, where the Say on Pay Vote was approved with just over 80 percent support.  This lower rate of support, while still a clear majority, prompted the Compensation Committee to seek additional shareholder feedback and make certain changes with respect to the Company’s compensation practices and other corporate governance matters during 2013, as detailed in our proxy statement for our 2014 Annual Meeting of shareholders.  That year, the Say on Pay Vote was approved by 98 percent of the votes cast.  The following year, at the 2015 Annual Meeting, the Say on Pay Vote again received overwhelming support, as shareholders approved the matter with over 99 percent of the votes cast.  The Compensation Committee believes that the historical level of support for these votes, and specifically the recent 2014 and 2015 votes, reflects favorably on the Company’s executive compensation system as a whole and on the specific changes implemented in 2013.

Compensation of Our Named Executive Officers for Fiscal Year 2015

In considering fiscal year 2015 compensation, the Compensation Committee received from and reviewed in detail with the Committee’s independent compensation consultant an Executive Compensation Analysis reporting, among other things, the median compensation paid by members of our peer group to their highest-paid executive officers, as well as the 25th percentile and 75th percentile compensation levels of similar executive officers as determined from various published compensation surveys.

Mr. Raver provided to and discussed with the Compensation Committee his review and analysis of the performance of the other Named Executive Officers.  Mr. Raver also recommended to the Committee proposed compensation packages for the other Named Executive Officers for the year, which, at the request of the Committee, he had developed after reviewing the Executive Compensation Analysis provided to the Committee.  After discussing the recommendations, reviewing individual performance, and considering Company performance data and competitive benchmark information, the Committee approved the compensation for the Named Executive Officers.

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The Chair of the Compensation Committee and the Chairperson of the Board solicited feedback from each director regarding the CEO’s performance during the prior year.  Each director’s comments were based on his or her own independent evaluation, as well as a self-review provided by the CEO to the Board.  Both the Committee and the Board in executive session without the CEO present considered the total input, along with all other relevant factors, including the recommendations of the Committee’s independent compensation consultant, to determine the CEO’s compensation for the prior year.  A summary of these discussions was provided to the CEO and was also used to set the CEO’s compensation and leadership goals for the following year.

The individual components of our Named Executive Officers’ 2015 compensation packages are described in detail below.

Base Salaries.  Our Named Executive Officers were paid the following base salaries(4) during the fiscal year ended September 30, 2015:

The Compensation Committee believes these salaries are not only appropriate in light of available comparative data and the total mix of compensation for each of these officers, but also necessary in order to provide a base level of income and aid in the attraction and retention of talent in a competitive market.

Annual Cash Incentive Awards

Overview.  The payment of annual cash short-term incentive compensation (“STIC”) to our Named Executive Officers for fiscal year 2015 was formula-based and was governed by our Short-Term Incentive Compensation Plan for Key Executives (“STIC Plan”).

The STIC Plan is designed to motivate our Named Executive Officers to perform and to meet both company and individual objectives.  It is consistent with our philosophy that employees should share in the Company’s success when value is created for our shareholders.  The potential to be paid short-term cash incentive awards plays an important role in the attraction and retention of our Named Executive Officers.

STIC awards are calculated primarily using a formula (described in detail below) based on achievement of pre-established financial performance targets set by the Compensation Committee, with limited flexibility for the Committee to make adjustments on an officer-by-

(4)   The salary amounts shown in this table vary slightly from those shown in the “Summary Compensation Table” in Part III below because this table reflects salary actually paid during the fiscal year, while the “Summary Compensation Table” is presented based on salary earned during the fiscal year.

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officer basis to reflect individual performance.  The process by which an officer’s STIC award is determined is as follows:

·                  At the beginning of each fiscal year, the Compensation Committee approves a formula for calculating each officer’s STIC award and sets financial performance targets for the Company or its applicable business unit that underlie this formula.

·                  Following the end of the fiscal year, the Committee certifies the level of achievement of these performance targets, which achievement levels are then entered into the STIC formula for each officer.  More detail regarding achievement of performance targets is provided below under the headings “STIC Award Formula” and “Company Performance Factors.”

·                  After achievement levels are entered into the formula, the Committee then applies a Maximum Award Factor to determine the maximum, or “capped,” award that each officer is entitled to receive.  More detail regarding the determination of a maximum amount is provided below under the heading “STIC Award Formula.”

·                  Finally, the Committee evaluates the individual performance of the officer for the prior fiscal year and approves his or her actual award amount.  In approving the final award, the Committee has the authority to reduce, on an individual — not an aggregate — basis, that officer’s STIC award below the maximum, or “capped,” amount, if and to the extent deemed appropriate based on his or her individual performance.  The Committee determines whether or not such an adjustment is appropriate for our Named Executive Officers after considering individual performance reviews relating to the achievement of established goals, which are described above under the heading “Factors Considered in Setting Compensation.”

STIC Award Formula.  Our formula for calculating the maximum STIC awards potentially payable to our Named Executive Officers each year is as follows:

The formula components are described and quantified as follows:

·                  Base Salary:  the amount of salary paid to the Named Executive Officer during the applicable fiscal year.

·                  Individual Factor:  a pre-established percentage of base salary that varies among the Named Executive Officers.  Mr. Raver’s Individual Factor for fiscal year 2015 was 100 percent.  The Individual Factor for Ms. Ryan and Ms. Cerniglia was 75 percent.  The Individual Factor for each of Mr. George and Mr. Zerkle was 50 percent.  The Compensation Committee may adjust those percentages from year to year if deemed appropriate.

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·                  Company Performance Factor:  a percentage reflecting the Company’s or, as applicable, its business unit’s actual achievement level with respect to the pre-established financial performance targets set by the Compensation Committee for each fiscal year.  These financial performance targets are designated amounts of “Net Revenue,” “Core IBT,” and “Core Cash Flow,” each of which is further described below:

·                  Net Revenue:  this is a calculation of revenue(5), ignoring the effects of the following items:

·                  acquisitions made during the fiscal year (plan targets are adjusted accordingly);

·                  divestitures made during the fiscal year (plan targets are adjusted accordingly);

·                  changes in accounting pronouncements in accounting principles generally accepted in the United States (“GAAP”) or applicable international standards that cause an inconsistency in computation as originally designed; and

·                  the foreign exchange translation of income statements at exchange rates that differ from those assumed in the STIC Plan.

·                  Core IBT:  this is income before taxes, adjusted to eliminate the following selected unusual and infrequent items (adjustment items are determined in advance by the Compensation Committee each fiscal year):

·                  all professional fees, due diligence fees, expenses, and integration costs related to a specific acquisition;

·                  all professional fees, due diligence fees, expenses, and integration costs related to a specific divestiture;

·                  income, losses, or impairments from specific financial instruments transferred to the Company as part of our spin-off in 2008 (i.e., auction rate securities, equity limited partnerships, common stock, and promissory notes);

·                  stock compensation expense;

·                  external extraordinary legal costs;

·                  restructuring charges and other items related to a restructuring plan approved by the Company’s CEO;

(5)   For Coperion, order intake (defined as the value of firm orders received from customers, adjusted to eliminate the effects of certain extraordinary and non-recurring items) is used in lieu of revenue because of the length of its business cycles.

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·                  changes in accounting pronouncements in GAAP or applicable international standards that cause an inconsistency in computation as originally designed; and

·                  realized and unrealized transaction gains and losses caused by foreign exchange, gains and losses caused by foreign exchange translation of balance sheet accounts, and any effects of the foreign exchange translation of income statements at exchange rates that differ from those assumed in the STIC Plan.

·                  Core Cash Flow:  this is a calculation of cash flow, adjusted to eliminate the effects of certain selected extraordinary and non-recurring items, including the following (adjustment items are determined in advance by the Compensation Committee each fiscal year):

·                  purchase price and all professional fees, due diligence fees, expenses, and integration costs related to a specific acquisition (general costs associated with acquisition readiness and that are not a part of a specific acquisition will be included in the calculation);

·                  all professional fees, due diligence fees, expenses, and integration costs related to a specific divestiture;

·                  stock compensation expense;

·                  external extraordinary legal costs;

·                  restructuring charges and other items related to a restructuring plan approved by the Company’s CEO;

·                  Company directives or initiatives that influence cash flow position (e.g., directives to hold cash);

·                  Interest income and expense related to intercompany loans;

·                  changes in accounting pronouncements in GAAP or applicable international standards that cause an inconsistency in computation as originally designed;

·                  extraordinary actions that increase cash but are unrelated to ongoing operations (e.g., factoring of accounts receivable, sale-leaseback transactions, etc.); and

·                  realized and unrealized transaction gains and losses caused by foreign exchange, and gains and losses caused by foreign exchange translation of balance sheet accounts.

For a Named Executive Officer who has direct responsibility to a business unit other than Hillenbrand, Inc., the applicable performance targets track the performance of the relevant business unit.  Ms. Ryan, formerly the President of Batesville, was appointed President of Coperion late in fiscal year 2015.  Notwithstanding that

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appointment, it was decided that her performance targets would continue to track Batesville for the remainder of 2015, before changing to Coperion in 2016.  For all other Named Executive Officers, these targets track the performance of Hillenbrand, Inc. on a consolidated basis.  In calculating the Company Performance Factor for each of our relevant business units, the performance targets described above were weighted as follows in fiscal year 2015:

·                  For Hillenbrand, the achievement level with respect to target Core IBT was weighted at 50 percent of the Company Performance Factor, the achievement level with respect to target Net Revenue was weighted at 25 percent, and the achievement level with respect to target Core Cash Flow was weighted at 25 percent; and

·                  For Batesville, the achievement level with respect to target Core IBT was weighted at 40 percent of the Company Performance Factor, the achievement level with respect to target Net Revenue was weighted at 20 percent, and the achievement level with respect to target Core Cash Flow was weighted at 40 percent.

For Hillenbrand, the Company Performance Factor can range from zero (producing a zero formula amount for maximum potential STIC) to 200 percent.  The Company Performance Factor may not exceed 200 percent, even if Hillenbrand achieves greater than 200 percent of the targets.  The maximum Company Performance Factor for Batesville may not exceed 175 percent.  The Company Performance Factor will be zero if Hillenbrand or its relevant business unit does not achieve at least a threshold achievement level of any of the applicable performance targets.  The Committee establishes this threshold achievement level, which for fiscal year 2015 was 80 percent of each target.

·                  Maximum Award Factor:  a multiplier established by the Compensation Committee in order to provide a “cap” on the maximum STIC award payout amount.  The maximum factor was 1.2 for fiscal year 2015.  Including this factor within the STIC formula enables the Committee to reward exceptional individual performance and motivate executives by providing the opportunity to exceed targeted goals.

·                  The Committee considers this capped amount on an individual — not an aggregate — basis, in determining whether to reduce an individual officer’s maximum potential STIC award in any given year based on his or her performance.  Any such individual adjustment by the Committee does not by definition indicate substandard performance; instead, it reflects the Committee’s assessment of an individual against the high standard it sets for a maximum possible level of performance.

·                  For example:

·                  It is expected that the STIC award for an officer who achieves his or her performance goals at target level in a particular year will be reduced from the maximum award amount (reflecting a 1.2 multiplier) to an amount at or near the target award amount (reflecting a 1.0 multiplier).

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·                  It is expected that the STIC award for an officer who shows exceptional individual performance in exceeding all of his or her performance goals for the year will be an amount at or close to (but not in excess of) the maximum award amount.

Calculation of Company Performance Factor — 2015.  The financial performance objectives and threshold achievement percentages (as described above) that determine the applicable Company Performance Factor within our STIC formula are established annually by the Compensation Committee at levels that reflect strong financial performance under then-existing conditions.  The target objectives are intended to represent stretch goals based on the business plan of the Company or its applicable business unit, so that management must be diligent, focused, and effective in order to reach these goals.  The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year.

The following table sets forth the targeted financial performance objectives, the percentage of actual achievement, and the resulting Company Performance Factor for Hillenbrand and its relevant business units for fiscal year 2015:

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2015 STIC Awards.  For fiscal year 2015, the maximum, or “capped,” potential STIC awards payable, and the actual STIC awards paid, to our Named Executive Officers were as follows:

Long-Term Incentive Compensation (LTIC)

Overview.  We currently provide Long-Term Incentive Compensation to our Named Executive Officers and other employees by awarding them a combination of stock options and restricted stock units (RSUs).  Our Stock Incentive Plan (the “Stock Plan”) enables us to grant these and other equity-based awards.

The Compensation Committee makes and administers all awards to our Named Executive Officers under the Stock Plan.  During fiscal year 2014, our shareholders approved the amendment and restatement of our Stock Plan, which increased the number of shares available for equity awards in order to allow the Company to continue granting such awards to Named Executive Officers and other employees, consistent with our compensation philosophy.  As explained in further detail below, the majority of shares granted under our equity awards are performance-based and are eligible to ultimately vest, or pay out, within a range of zero to 175 percent of the target amount of the award, depending upon the level of achievement of certain established targets over a three-year measurement period.

Historically, actual achievement levels have dictated actual payout amounts for our performance-based equity awards in a range between no payout (zero percent) and approximately 125 percent of the targeted amount, meaning that we have in fact issued a number of shares that is significantly lower than the 175 percent maximum.  However, in order to ensure that we have sufficient shares available in the event of a maximum payout, and for certain administrative purposes, during the measurement period we reserve within the Stock Plan a number of shares equal to the maximum 175 percent potential payout.  Consequently, at any given time we maintain under our Stock Plan a number of shares that is significantly higher than the number that is likely to be issued with respect to then-outstanding awards.  Once the measurement period for a particular award ends and the award vests, the shares representing the excess of the amount reserved at 175 percent over the amount actually issued are returned to the Stock Plan to be again available for issuance.

As of the end of fiscal year 2015, a total of 5,146,937 shares of our common stock were available for equity awards under the Stock Plan.  The Stock Plan imposes annual limits on the

(6)   The salary amounts shown in this column vary slightly from those shown in the “Summary Compensation Table” in Part III below because that table is presented based on salary earned during the fiscal year, while STIC awards are calculated based on salary actually paid during the fiscal year.

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number of shares represented by stock options or RSUs that can be granted to any one employee each year.

Although the Company does not have a written policy regarding the timing or practices related to granting equity awards, neither the Company nor the Compensation Committee engages in spring-loading, back-dating, or other practices which “time” the grant of equity awards, and our Stock Plan expressly prohibits the direct re-pricing, exchanging, or cashing out of “underwater” stock options without shareholder approval.  Stock options and RSUs are generally granted at a regularly scheduled meeting of the Compensation Committee, acting as the administrative committee under the Stock Plan (referred to below as the “Administrator”), in the first quarter of each fiscal year (usually in December) after the Company publicly announces its financial results for the prior fiscal year.  Equity awards may also be made to new hires at the time of employment.

Available Awards.  Our Stock Plan enables us to grant several types of equity awards:  stock options, RSUs (both performance-based RSUs and time-based RSUs), restricted stock, stock appreciation rights, and bonus stock.  However, only stock options and RSUs were granted and outstanding under the Stock Plan during fiscal year 2015; these awards are described below:

·                  Stock Options.  Incentive (tax-qualified) and non-qualified stock options may be granted to such employees and (with respect to non-qualified options) directors and for such number of shares of our common stock as the Administrator determines, subject to applicable limits as set forth in the Stock Plan.  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 which may not be less than the fair market value of our common stock on the date the option is granted.  The Company has historically issued non-qualified stock option awards with a term of ten years, which vest (and become exercisable), subject to certain terms and conditions, at the rate of 33-1/3 percent of the shares covered by the option on each of the first three anniversaries of the grant date.  The Stock Plan prescribes a maximum ten-year term and a three-year vesting cycle, except as the Administrator may otherwise provide on an individual basis.

·                  Restricted Stock Units (RSUs).  An award of restricted stock units represents our agreement to deliver shares of common stock (or their cash equivalent) to the award recipient at a specified future time or upon a specified future event.  The Company generally favors granting RSU awards that are performance-based, meaning that the vesting and/or delivery of award shares is conditioned upon the attainment of specific performance goals or other criteria as established by the Administrator.  However, from time to time — typically with the goal of attracting or retaining a specific employee — the Administrator may approve the granting of an RSU award that is time-based, meaning that vesting and/or delivery of shares is conditioned upon the completion of a specified period of service.  The Stock Plan also allows the Administrator to grant RSU awards that provide for the unconditional delivery of shares (or their cash equivalent) on a specified date, but the Company historically has not granted such awards.  RSUs carry no voting rights until such time as the underlying shares of common stock are actually issued.  The Administrator has the right to determine whether and when dividend equivalents will be paid with respect to a restricted stock unit award.  Additional detail regarding whether and when dividend equivalents are paid on such awards is provided below in this section.

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Performance-Based Equity Awards.  The Administrator may designate and structure any awards under the Stock Plan as performance-based awards.  As a general rule, all annual LTIC awards are performance-based awards.  The Company from time to time also issues time-based equity awards in certain circumstances.

When an equity award is performance-based, either the granting or vesting (or both) of the award is made 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 as a whole and/or to one or more business units, and which the Administrator may use 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, and shareholder, economic or market value added.

Award Amounts.  In setting the amount of each annual LTIC award granted to our Named Executive Officers, the Compensation Committee bases its decision on comparative data from the Company’s peer group, benchmarked at the 50th percentile.  Annual awards to our Named Executive Officers typically consist of approximately 25 percent of the award value in stock options and approximately 75 percent in performance-based restricted stock units.  Compared to an average of our peer group’s mix of long-term incentive compensation awards, our annual LTIC grants to Named Executive Officers reflect a heavy emphasis on performance-based awards, as shown in the charts below.

                *  Source:  Proxy filings

Valuation of Awards.  Considering commonly used valuation models and advice from its independent compensation consultant, the Compensation Committee values stock option and RSU awards on the date of grant as follows, for purposes of assembling a total annual LTIC award to Named Executive Officers:

·                  Stock Options.  The Committee values stock options using the binomial option-pricing model.  The binomial model is driven by a variety of inputs and assumptions, including the Company’s stock price at grant date, the term of grant, vesting term, exercise price of the option, expected volatility of the stock price, dividend yield,

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risk-free interest rate, and early exercise and termination rates, plus an assumption factor based on a stock price at which early exercise will occur.  Additional details regarding these inputs and assumptions are set forth in Note 9 to our audited financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 18, 2015.

·                  Performance-Based RSUs.  The Committee values performance-based RSUs at the target share level, which is the number of shares that would ultimately be earned by a Named Executive Officer at the end of the performance measurement period if the targeted performance metrics were achieved at the 100 percent level.  These performance metrics are established by the Committee and applied within the applicable award formula as described in detail below.  Under each applicable award formula, the maximum number of shares that can potentially be earned at the end of the performance measurement period is 175 percent of the targeted number, and the minimum number is zero.  The number of shares to be awarded at the target level depends on the measurement formula being used for the performance-based RSUs.  These two formulas are the “shareholder value formula” and the relative “total shareholder return formula”:

·                  For the performance-based RSUs issued based on the shareholder value formula, the number of shares to be awarded at the target level is determined by dividing the portion of the total LTIC award dollar value attributable to those RSUs by the market price per share for our stock on the grant date of the award.

·                  For the performance-based RSUs issued based on relative total shareholder return (TSR), a Monte Carlo simulation approach is used to value the restricted stock units.  The simulation incorporates risk-free interest rates, historical stock prices and dividends, as well as volatilities and correlation of returns for the Company and peer group companies.  The Company’s TSR ranking is estimated and the unit value is calculated based on the Company’s performance level payout table.

2015 LTIC Awards.  Consistent with our compensation philosophy and historical practices, the Compensation Committee again awarded stock options and performance-based restricted stock units as equity awards to our Named Executive Officers for fiscal year 2015.  These awards consisted of approximately 25 percent of the target award value in stock options and approximately 75 percent in performance-based RSUs.  For fiscal year 2015, these performance-based RSUs were issued based on two different measurement formulas:

·                  approximately two-thirds of these performance-based RSUs were issued based on a shareholder value formula consistent with that used in prior years, and

·                  approximately one-third were issued based on a relative “total shareholder return” (TSR) formula.  Each such formula is described in detail below.

The award design described above resulted in equity awards to our Named Executive Officers in 2015 consisting of approximately 25 percent stock options, 25 percent performance-based RSUs based on relative TSR, and 50 percent performance-based RSUs based on shareholder value.

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The form and underlying details of the LTIC awards made to our Named Executive Officers dictate that the amount of compensation ultimately received by our executives will be tied to and conditioned on performance objectives for our Company and its business units.  Consistent with our Executive Compensation Philosophy as stated above, the Company’s management team is charged with increasing the long-term economic value of the Company in excess of the rate investors expect, which is primarily accomplished by growing the amount of cash generated by the Company over time through execution of the Company’s strategy and the initiatives that flow from that strategy.  We expect that such growth will favorably impact the value of the Company’s stock and the return earned by its shareholders.

The performance-based LTIC awards granted to our Named Executive Officers during fiscal year 2015 consisted of stock options and RSUs as follows:(7)

The stock options become exercisable ratably on the first, second, and third anniversaries of the grant date (1/3 on each grant date anniversary).

The performance-based restricted stock units — both those issued pursuant to the shareholder value formula and those issued pursuant to the relative TSR formula — measure performance over three consecutive fiscal years beginning on October 1, 2014.  Under each formula, the number of units that vests at the end of the three-year measurement period is a function of the level of achievement of the applicable established performance targets during that period.  We believe that by linking the pay of our Named Executive Officers to the achievement of targets over three years, our LTIC program shapes investment strategies that improve the Company’s value over the long term.

Details of the Shareholder Value Performance-Based RSU Awards.  For fiscal year 2015, RSUs representing approximately two-thirds of the value of the aggregate performance-based RSU award made to each Named Executive Officer were awarded based on the shareholder value formula (the “Shareholder Value RSUs”), which is substantially the same formula the Company has used in prior years.  The measurement tool in this formula is a shareholder value creation model, which is a discounted cash flow model that is designed to reflect the true economic return to investors.  The key inputs into the model are net operating profit after tax (“NOPAT”), free cash flow, and the established “hurdle rate,” which is a reflection of the weighted average cost of capital and targeted capital structure of the Company or its relevant

(7)  The number of RSUs shown in the table – both at the target and maximum levels – reflect the aggregate number of performance-based RSUs granted (i.e., those granted based on both the relative TSR formula and the shareholder value formula).  See the pages that follow for a detailed breakdown of these aggregate awards into their component parts.

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business unit, as applicable (the “Hurdle Rate”).  The applicable Hurdle Rate varies by business unit, but it is contemplated that each Hurdle Rate will typically equal or exceed the business unit’s weighted average cost of capital.  For a Named Executive Officer who has direct responsibility to a business unit other than Hillenbrand, Inc., the metrics used in this formula are tied to the performance of the relevant business unit.  For Ms. Ryan, this means that the metrics for her Shareholder Value RSU award are tied to the performance of Batesville, notwithstanding her appointment late in fiscal year 2015 as President of Coperion.  For all other Named Executive Officers, the metrics are tied to the performance of Hillenbrand, Inc. and its various business units on a consolidated basis.

For the Shareholder Value RSUs, the performance award earned by a Named Executive Officer at the end of the three-year measurement period will be based upon the actual shareholder value created during the period (referred to as “Shareholder Value Delivered”) above or below what was expected (referred to as “Shareholder Value Expected”).  In general, the Shareholder Value RSUs are designed to pay on the basis of the growth in value to an investor over three years, and the Company and its business units must earn a return that meets the applicable Hurdle Rate in order for a Named Executive Officer to earn the targeted award.  The return must exceed the Hurdle Rate to exceed the targeted award.  By linking the pay of our Named Executive Officers with the growth in the economic value of the Company and its business units, the Shareholder Value RSU award aligns the interests of the executive management team with those of the Company’s investors.

The table below sets forth the targeted and maximum amounts of the Shareholder Value RSU awards granted to our Named Executive Officers in fiscal year 2015:

The applicable award calculation formulas and performance objectives for these Shareholder Value RSU awards were as follows:

Award Formula.  The number of shares represented by restricted stock units (including dividends accrued thereon) that will vest and be earned is a function of the amount of Shareholder Value Delivered at the end of the measurement period as compared to the Shareholder Value Expected at the end of the measurement period.  Ms. Ryan’s award formula is based on the Shareholder Value Delivered with respect to Batesville.  The award formula for all other Named Executive Officers is based on the Shareholder Value Delivered with respect to Hillenbrand, Inc. consolidated.

Subject to applicable adjustment in the event of termination of employment prior to September 30, 2017, at the end of the measurement period all restrictions will lapse, and the shares will become fully vested and earned, with respect to the number of whole shares (rounded down) equal to the product of (i) the number of shares representing the target RSU award, times

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(ii) a multiplier, as provided in the following table, based on the ratio, expressed as a percentage, of Shareholder Value Delivered to Shareholder Value Expected:

The achievement levels and corresponding multipliers set forth above are expressed in further detail in the payout curve set forth below:

Dividend equivalent amounts are accrued on Shareholder Value RSUs during the measurement period as dividends are declared on the Company’s common stock.  These equivalent amounts are deemed to be reinvested in additional shares of Company common stock and then ultimately paid in the form of additional shares on the distribution date of the underlying award, in proportion to the number of shares that vest and are distributed in accordance with the payout curve set forth above.

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Calculation of Shareholder Value Expected.  The amount of Shareholder Value Expected as of the end of a measurement period is calculated as (i) the Adjusted NOPAT (defined below) for the Company or its relevant business unit (8) for the fiscal year last ended prior to the start of the measurement period, (ii) divided by the applicable Hurdle Rate, and (iii) multiplied by the cube of (1 + Hurdle Rate):

Acquired businesses are factored into the calculation of Shareholder Value Expected at financial performance levels that are expected from the acquired business and that are presented to and approved by the Company’s Board of Directors at the time the acquisition is made.

For the award granted in 2015, the amount of Shareholder Value Expected as of the end of the three-year measurement period with respect to each of Hillenbrand, Inc. and Batesville is set forth below.  These amounts reflect the targeted amount of growth in value for each such business unit over the three years ending on September 30, 2017.

Calculation of Shareholder Value Delivered.  The amount of Shareholder Value Delivered as of the end of a measurement period is calculated by adding two components: the NOPAT Component and the Cash Flow Component.

·                  The NOPAT Component of Shareholder Value Delivered is the Adjusted NOPAT (as defined below) for the Company or its applicable business unit for the last fiscal year of the measurement period, divided by the applicable Hurdle Rate.

·                  The Cash Flow Component of Shareholder Value Delivered is the sum of the following with respect to the Company or its applicable business unit:

·                  Adjusted Cash Flow (as defined below) for the third fiscal year in the measurement period;

·                  Adjusted Cash Flow for the second fiscal year in the measurement period, multiplied by (1 + Hurdle Rate); and

(8)   In establishing the Shareholder Value Expected with respect to Batesville for the fiscal year 2015 LTIC grant, the Adjusted NOPAT was adjusted to reflect a two percent decrease, in order to align Batesville more closely with the declining market trends in the industry in which it competes.

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·                  Adjusted Cash Flow for the first fiscal year in the measurement period, multiplied by the square of (1 + Hurdle Rate).

Definitions.

·                  “Adjusted NOPAT” means net operating profit after tax, as adjusted (net of tax where applicable) to exclude the effects of the following items:

·                  income, losses, or impairments from specific financial instruments transferred to the Company as part of our spin-off in 2008;

·                  interest income on corporate investments and interest expense on corporate debt;

·                  all professional fees, due diligence fees, expenses, and integration costs related to a specific acquisition;

·                  amortization expense of intangible long-lived assets where internally generated costs are not customarily capitalized in the normal course of the business (e.g., customer lists, patents, etc.);

·                  all adjustments made to net income related to changes in the fair value of contingent earn-out awards;

·                  external extraordinary, non-recurring, and material legal costs;

·                  restructuring charges and other items related to a restructuring plan approved by the Company’s CEO; and

·                  changes in accounting pronouncements in GAAP or applicable international standards that cause an inconsistency in computation as originally designed.

·                  “Adjusted Cash Flow” means net cash provided by operating activities (whether positive or negative) during a fiscal year, less capital expenditures net of proceeds on the disposal of property, all as shown on audited financial statements for that fiscal year, as adjusted (net of tax where applicable) to exclude the effects of the following items:

·                  cash receipts or disbursements from financial instruments transferred to the Company as part of our spin-off in 2008;

·                  interest income on corporate investments and interest expense on corporate debt;

·                  the difference between the cash pension payment for an active defined benefit plan actually made and the pension expense recorded;

·                  external extraordinary, non-recurring, and material legal disbursements;

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·                  changes in accounting pronouncements in GAAP or applicable international standards that cause an inconsistency in computation as originally designed; and

·                  the cost of consummated acquisitions, including the purchase price, all professional fees, due diligence fees, expenses, and integration costs.

Details of the Relative Total Shareholder Return (TSR) Performance-Based RSU Awards.  RSUs representing approximately one-third of the value of the aggregate performance-based RSU award made to each Named Executive Officer were awarded based on a relative total shareholder return (TSR) formula (the “Relative TSR RSUs”), which the Company utilized for the first time in fiscal year 2014.  Prior to 2014, the Company had awarded all performance-based RSUs under the shareholder value formula.

The relative TSR formula measures performance using the same three-year measurement period used with respect to our Shareholder Value RSUs.  The performance award earned by a Named Executive Officer at the end of the three years will be based on the change in the market price of the Company’s common stock, compared to the change in market price of the stock of the members of the Company’s compensation peer group(9) (referred to herein as the “Peer Group Companies”), taking dividends into account as further described below.  Unlike our Shareholder Value RSU awards, which for some of our Named Executive Officers are tied to the performance of one of the Company’s distinct business units, the Relative TSR RSU awards measure performance based solely on the performance of Hillenbrand, Inc. stock.

The table below sets forth the targeted and maximum amounts of the Relative TSR RSU awards granted to our Named Executive Officers in fiscal year 2015:

In general, the target award is earned if the Company’s stock performs as well as or better than approximately 50 percent of the Peer Group Companies during the measurement period, and the award pays out proportionately higher or lower if the stock performs above or below that mark, as illustrated in more detail below.  By linking the pay of our Named Executive Officers with the return earned by our shareholders relative to the return earned by investors in our peers, the Relative TSR RSU award aligns the interests of our executive management team with those of our shareholders.

(9)   The members of the Company’s compensation peer group are identified above under the heading “Factors Considered in Setting Compensation.”

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The key inputs and award calculation formula for these Relative TSR RSU awards were as follows:

Key Inputs.  The key inputs into the award formula, as defined below, are the Beginning Average Price of the stock of the Company and the Peer Group Companies; the Ending Average Price of the stock of the Company and the Peer Group Companies; the Dividend Reinvestment Multiplier applicable to each such company; and the Total Shareholder Return (TSR) of each such company during the measurement period.

·                  The Beginning Average Price of stock with respect to the Company and each of its Peer Group Companies is the average closing price of that company’s stock over the 20 trading days immediately preceding (but not including) the first day of the measurement period, adjusted for dividends by applying that company’s Dividend Reinvestment Multiplier.

·                  The Ending Average Price of stock with respect to the Company and each of its Peer Group Companies is the average closing price of that company’s stock over the 20 trading days immediately preceding (and including) the last day of the measurement period, adjusted for dividends by applying that company’s Dividend Reinvestment Multiplier.

·                  The Dividend Reinvestment Multiplier applicable to the Company and each of its Peer Group Companies is a calculation of the value of dividends paid out by that company, assuming reinvestment of those dividends in that company’s stock, calculated by dividing each dividend paid out by that company over the applicable period by its closing share price on the ex-dividend date.

·                  The Total Shareholder Return (TSR) of the Company and each of its Peer Group Companies during the measurement period is calculated by subtracting one from the quotient of (i) the Ending Average Price for that company, divided by (ii) the Beginning Average Price for that company:

Award Formula.  The number of shares represented by RSUs that will vest and be earned at the end of the measurement period is a function of the relative percentile ranking of the TSR achieved by the Company during the measurement period, as compared to the TSR achieved by the Peer Group Companies during the measurement period.  Subject to applicable adjustment in the event of termination of employment prior to September 30, 2017, at the end of the measurement period all restrictions will lapse, and the shares will become fully vested and earned, with respect to the number of whole shares (rounded down) equal to the product of (i) the number of shares representing the target RSU award, times (ii) a multiplier, as provided in the following table, based on the ranking, expressed as a percentile, of the Company’s TSR within the TSRs achieved by the Company and the Peer Group Companies as a group:

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For purposes of illustration only, if the TSR achieved by the Company for the measurement period were higher than the TSR achieved by ten of the Peer Group Companies, the Company’s raw ranking within the group would be 11 out of 17 (the percentile calculation includes the 16 Peer Group Companies plus the Company itself).(10)  Its percentile ranking would then be calculated by dividing 11 by 17, to arrive at a percentile figure of 64.7 percent and, therefore, a multiplier of 1.3 times the target award, per the table above.

Whereas dividends accrue during the measurement period with respect to shares underlying the Shareholder Value RSUs as described above, dividends do not accrue during the measurement period with respect to shares underlying Relative TSR RSUs, due to the manner in which the Relative TSR RSUs are valued on their grant date.

Vesting of Fiscal Year 2013 LTIC Awards.  On September 30, 2015, the three-year measurement period for the Company’s LTIC awards that were granted in fiscal year 2013 closed.  Those awards vested in accordance with our LTIC award formula then in effect, which was a shareholder value formula the same as the formula described above underlying the Shareholder Value RSUs granted in fiscal year 2015.  During the three-year measurement period (fiscal years 2013-2015), the Company achieved an actual shareholder value increase equal to 81.8 percent of the target for that measurement period, resulting in a vested award amount equal to 25.4 percent of the targeted number of shares (i.e., the number of shares that would be earned upon achievement in full of the target shareholder value increase).  Batesville achieved an actual shareholder value increase equal to 102.2 percent of the target for the measurement period, resulting in a vested award amount equal to 111.2 percent of the targeted number of shares.  The Process Equipment Group did not achieve the minimum shareholder value increase for the measurement period necessary to result in an award.  One-third of Mr. Raver’s total award was based on the achievement of the Company’s shareholder value increase and two-thirds of Mr. Raver’s total award was based on the achievement of the Process Equipment Group’s shareholder value increase.  This year, Mr. Raver earned a total vested award equal to 8.4 percent of the total targeted number of shares.  One-third of Ms. Ryan’s total award was based on the

(10)   In the event that a company included as a Peer Group Company when an award is granted is not publicly traded at the conclusion of the measurement period, it will not be included in the TSR ranking calculated following the measurement period; provided, however, that in the event such company is not publicly traded by reason of bankruptcy, liquidation, or similar proceeding, it will be included in the TSR ranking with an applicable TSR equal to negative 100 percent (-100%).

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achievement of the Company’s shareholder value increase and two-thirds of Ms. Ryan’s total award was based on the achievement of Batesville’s shareholder value increase.  This year, Ms. Ryan earned a total vested award equal to 82.5 percent of the total targeted number of shares.  Additional details regarding the LTIC awards granted in fiscal year 2013 are set forth under the heading “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis” section of our proxy statement for our 2014 Annual Meeting of shareholders, which was filed with the SEC on January 8, 2014.  See the “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2015” table in Part III below for additional detail regarding the vesting of the LTIC awards granted in fiscal 2013.

Retirement and Savings Plans

Pension Plan.  We sponsor a defined benefit pension plan (the “Pension Plan”).  The Pension Plan is closed to new salaried employees.  Mr. Zerkle has a frozen benefit in the Pension Plan.

The Pension Plan provides monthly retirement benefits based on a formula that takes into consideration the highest average annual compensation of a participant over a five-consecutive-year period and the participant’s years of service to the Company (including years of service to our former parent).  We are required to make annual contributions that are determined actuarially as the amount needed to adequately fund future benefits to be paid out to participants.

For information regarding the benefits potentially payable to our Named Executive Officers under the Pension Plan, see the “Pension Benefits at September 30, 2015” table in Part III below.

Savings Plan.  We maintain a tax-qualified defined contribution savings plan (the “Savings Plan”) in which substantially all our U.S.-domiciled employees, including all of the Named Executive Officers, are eligible to participate.  Employees may contribute up to 40 percent of their compensation on a pre-tax basis to the Savings Plan, subject to applicable limits.  The Company matches contributions in an amount equal to 50¢ for every dollar contributed by the employee until the employee contributions reach six percent of his or her compensation.  Additionally, whether or not employees contribute to the Savings Plan, the Company provides an automatic contribution per pay period to the Savings Plan for all eligible employees in an amount equal to four percent of compensation.  All contributions by employees and the automatic Company contribution are fully vested immediately.  The Company matching contributions do not vest until after three years of credited service; after that point Company matching contributions vest immediately when made.

For information regarding compensation paid to our Named Executive Officers under the Savings Plan, see footnote 5 to the “Summary Compensation Table” in Part III below.

Supplemental Retirement Plan.  We maintain a Supplemental Retirement Plan administered by Fidelity Management Trust Company (the “SRP”) that provides a defined contribution benefit to plan participants.  All of the Named Executive Officers participate in the SRP.  The SRP is designed to supplement the amount of retirement benefits that participants are entitled to receive from our Savings Plan.

The Internal Revenue Code establishes certain limits with respect to tax-qualified retirement plans like our Savings Plan, including a limit on the maximum amount of

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compensation that can be counted as earnings of the participant for purposes of calculating benefits.  The application of these tax law limits can reduce the amount that would otherwise be payable to a participant under the terms of a tax-qualified retirement plan.  Additionally, our Savings Plan excludes any cash bonus amounts from the definition of compensation for plan purposes, focusing the contribution formula only on base salary.

In general, the SRP is designed to “make whole” a participant by paying benefits otherwise lost under the Savings Plan due to the application of tax law limits and the exclusion of the annual cash bonus from the plan’s contribution formula.  The SRP annually accrues future benefits for the participants equal to the difference between (i) the benefit amount that is actually contributed for a participant under the Savings Plan, and (ii) the amount that would have been contributed if (a) the tax law limits were not applied, and (b) the participant’s targeted annual cash bonus amount were included as compensation (in addition to base salary) in the contribution formula under the plan.

Once benefits under the SRP have vested, they are generally payable following retirement or termination of employment.  However, if a participant’s employment is terminated for “cause” (as such term is defined in the SRP), contributions under the SRP may be forfeited.

Under the SRP, participants are permitted to direct the investment of their accrued accounts (on a hypothetical basis because this is non-cash “shadow” deferred compensation) into various Fidelity mutual funds and/or Company common stock.  The Company then actually makes those designated investments for the Company’s own account with funds contributed by the Company under a “Rabbi Trust” arrangement so that the Company can actually fund the earnings or losses experienced by each participant in his or her hypothetical investments when distributions are made.  The SRP also permits a participant to elect to defer all or a portion of his or her annual cash bonus for payment at a later time and to invest the deferred amounts in Fidelity mutual funds and/or Company common stock on a hypothetical basis.

For information concerning benefits payable to our Named Executive Officers under the SRP, see the table entitled “Nonqualified Deferred Compensation for Fiscal Year Ended September 30, 2015” in Part III below.

None of our Named Executive Officers participates in or has account balances in any non-qualified defined benefit plan sponsored by us.

Employment Agreements and Termination Benefits

Employment Agreements.  We have entered into employment agreements with each of the Named Executive Officers.  We believe that it is appropriate for our senior executives to have employment agreements because they provide the Company certain contractual protections that we might not otherwise have, including provisions relating to not competing with us, not soliciting our employees, and maintaining the confidentiality of our proprietary information.  The employment agreements we have with our Named Executive Officers contain non-competition and non-solicitation agreements that generally continue in effect for a period of one to two years after the termination of the Named Executive Officer’s employment.  Additionally, we believe that employment agreements are a useful tool in the recruiting and retention of senior-level executives.

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Termination Benefits Under Employment Agreements.  The employment agreements with our Named Executive Officers provide for employment “at will.”  They are terminable by either party without “cause” on 60 days’ written notice and are also terminable by the Company at any time (subject to certain cure rights) for “cause,” as such term is defined in each employment agreement.  The Named Executive Officers are also entitled to terminate their employment agreements for “good reason,” as such term is defined in their agreements.  If we terminate the employment of a Named Executive Officer without “cause,” or if his or her employment is terminated with “good reason,” then we are obligated to provide severance compensation in connection with such termination.  No severance compensation is payable under our employment agreements with the Named Executive Officers if we terminate with “cause,” if the executive terminates without “good reason,” or if the employment relationship is terminated on account of death or disability.

If the employment of a Named Executive Officer is terminated by us without cause or is terminated by the executive officer upon the occurrence, without the executive officer’s consent, of a good reason event, we are required under the officer’s employment agreement to provide severance compensation to such Named Executive Officer as follows:

·                  continuation of the officer’s base salary for 12 months (24 months for Mr. Raver), subject to required withholdings, which payments may need to be delayed for six months under certain provisions of the Internal Revenue Code;

·                  bearing the cost of continued group life and health coverage until the continuation of base salary period described above is complete; and

·                  limited out-placement counseling.

Post-Termination Payments of STIC and LTIC.  A Named Executive Officer whose employment terminates may or may not be entitled to the post-termination payment of a portion of the STIC or LTIC award that would have been payable to the Named Executive Officer if his or her employment had continued through the end of the applicable measurement period.  The amount payable, if any, depends on the performance of the Company or its applicable business unit throughout the measurement period in question and the circumstances under which employment terminates.

STIC.  Post-termination STIC is payable to a Named Executive Officer after the performance period in question has ended and only if it is determined under the applicable performance formula that an amount would have been payable to the former officer had his or her employment continued through the end of the performance period.  The amount, if any, that is payable depends upon the circumstances of the termination.

If employment terminates due to death, disability, retirement (after age 55 and five years of service), involuntary termination without “cause,” or voluntary termination for “good reason,” then the former officer is entitled to a pro-rata payment of his or her STIC award based on the portion of the fiscal year during which he or she remained employed, subject to a reduction of up to one-third of that amount at the discretion of the Compensation Committee.  No pro-rata STIC is payable to officers upon an involuntary termination with cause or a voluntary termination without good reason.

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LTIC.  Following termination, the RSU portion of an LTIC award is payable to a Named Executive Officer only after the measurement period in question has ended and only if it is determined under the applicable performance formula that an amount would have been payable to the former officer had his or her employment continued through the end of the measurement period.  Once the amount that would have been paid had employment continued (the “Full Period Award”) is determined, there are three possible outcomes to determine the portion of the Full Period Award, if any, that is payable to the former Named Executive Officer:

·                  if employment terminates due to death, disability, or retirement (after age 55 and five years of service), the Named Executive Officer is entitled to a pro-rata amount of the Full Period Award based on the portion of the measurement period during which he or she remained employed, plus 52 weeks (up to a maximum of the Full Period Award amount);

·                  if employment is terminated by the Company without “cause,” or by the executive for “good reason,” the Named Executive Officer is entitled to a pro-rata amount of the Full Period Award based solely on the portion of the measurement period during which he or she remained employed; and

·                  in any other circumstances, all outstanding RSUs are forfeited upon termination of employment.

With respect to stock options, all unvested options become fully vested upon a termination of employment due to death, disability, or retirement occurring more than one year after the grant date.  Unless otherwise expressly approved by the Compensation Committee, all unvested options are forfeited upon a termination of employment due to any other circumstance.

For more information regarding the severance benefits payable to our Named Executive Officers under their employment agreements and our STIC and LTIC compensation programs, see the tables under the heading “Potential Payments Upon Termination” in Part III below.

Change in Control Agreements.  We believe it is important that management be in a position to provide assessment and advice to the Company’s Board of Directors regarding any proposed business transaction without being unduly distracted by the uncertainties and risks that a proposed change in control of the Company creates with respect to management.  Accordingly, we have entered into personal change in control agreements with each of our Named Executive Officers and other key executives that provide compensation to the executive if his or her employment is terminated in connection with a change in the control of the Company.  Compensation paid upon an executive’s termination under a change in control agreement is in lieu of severance compensation provided under that executive’s employment agreement.

In connection with certain compensation and governance initiatives launched by the Company over the past two years, we standardized the change in control agreements we have with our executives to align them more closely with emerging trends and “best practices” and to eliminate certain legacy change in control practices that our Board deemed not in the best interests of our shareholders.  Thus, each of our Named Executive Officers is party to a change in control agreement that provides for the following:

·                  Vesting of benefits only upon a “double-trigger,” requiring not only a change in control but also a qualified termination of employment in order for benefits to be

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realized.  Qualified terminations are any termination in anticipation of or within two years after the occurrence of a change in control, including terminations without cause or for “good reason,” but excluding terminations on account of death, disability, retirement, or for “cause.”  These change in control agreements expressly supersede the Company’s Stock Plan, which provides for single-trigger vesting of equity awards as a default position.

·                  Vesting of benefits without any tax gross-up payments relating to the excise tax on excess “parachute payments” imposed by Section 4999 of the Internal Revenue Code.  If an executive is entitled to receive payments upon a change in control that may be subject to the excise tax, he or she will either be paid the full amount (and remain personally liable for the excise tax), or be paid a reduced amount that does not give rise to the excise tax, whichever is greater on an after-tax basis.

The benefits to be provided upon a qualified termination include:

·                  a lump sum payment in cash equal to two times the executive’s annual base salary (three times for Mr. Raver);

·                  bearing the cost of continued health insurance for the executive and his or her dependents for 24 months (36 months for Mr. Raver) and continued life insurance coverage for 24 months, with the right to purchase continued medical insurance (at COBRA rates) from the end of this period until the executive reaches Social Security retirement age;

·                  a lump sum payment equal to two times (three times for Mr. Raver) the amount of the additional amounts, if any, accrued during the last 12 months in the executive’s defined contribution accounts under the Company’s Supplemental Retirement Plan;

·                  a lump sum payment equal to his or her respective current year STIC award, assuming 100 percent achievement in that year of the relevant performance targets under the STIC Plan; and

·                  immediate vesting of all outstanding stock options and equity awards, assuming (where applicable) 100 percent achievement of the relevant performance targets.

Under the change in control agreements, a “change in control” is defined generally as:  (i) the acquisition of beneficial ownership of 35 percent or more of the voting power of all of the Company’s voting securities by a person or group; (ii) the consummation of certain mergers or consolidations; (iii) a change in the composition of a majority of the members of our Board of Directors; (iv) the consummation of a sale of substantially all of the Company’s assets; or (v) the approval by our shareholders of a plan of complete liquidation of the Company.

The amounts potentially payable to our Named Executive Officers in connection with a change in control are set forth in the tables under the headings “Potential Payments Upon Termination” and “Change in Control Benefits” in Part III below.

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Other Personal Benefits

In addition to the compensation components discussed above, we also provide our Named Executive Officers, as well as certain other employees and officers, with other benefits as described below.  We generally disfavor providing extensive perquisites but do provide modest benefits to enhance the highly variable, performance-oriented compensation components we utilize.  We also provide these benefits in order to remain competitive with the market and believe that these benefits help us to attract and retain qualified executives.

Executive Financial Planning, Estate Planning, and Tax Preparation Service Program.  Our Named Executive Officers and certain other officers are eligible for limited reimbursement of (i) financial and estate planning services and (ii) income tax preparation services.  Reimbursement is approved for up to $5,000 per calendar year.

Executive Physical.  We provide the Named Executive Officers and certain other officers with annual physicals.  We cover 100 percent of the cost of this program.  This program was developed to promote the physical well-being and health of our senior-level managers.  We believe that this program is in the best long-term interests of our shareholders.

Other Benefits.  Our Named Executive Officers also participate in other benefit plans that we fully or partially subsidize.  Their participation is on the same terms as other employees.  Some of the more significant of these benefits include medical, dental, life, disability, and vision insurance, as well as relocation reimbursement, tuition reimbursement, and holiday and vacation benefits.  Many employees, including all of our Named Executive Officers, participate in our group term life insurance program, which provides death benefit coverage of up to two times base salary or $500,000, whichever is less.  In addition, our Named Executive Officers and certain other employees are eligible to participate in our optional supplemental group term life insurance program, in which participants may purchase additional term life insurance at their own expense in amounts up to the lesser of five times base annual salary or $600,000.

Compensation-Related Policies

In connection with the Company’s compensation program, we have established certain policies that relate to executive compensation.  The most significant of these policies are described below.

Stock Ownership Requirement.  All of our Named Executive Officers, as well as certain other officers, are required to own a significant number of shares of Company common stock.  Specifically, the officers identified below, from and after the fifth anniversary of the date on which such individual first became such an officer, are required to hold shares of our common stock or equivalents (as further described below) with a minimum aggregate value at the following levels (“Required Ownership Level”):

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Shares owned outright and shares represented by RSUs or restricted stock awards, whether vested or unvested, including performance-based shares at the target award level, count as share equivalents toward the Required Ownership Level.  Unexercised stock options do not count toward the Required Ownership Level.  Failure to achieve or maintain the Required Ownership Level may result in (i) the applicable individual being required to hold all after-tax vested stock award shares and after-tax shares acquired upon exercise of stock options, or (ii) suspension of future equity awards, until the Required Ownership Level is achieved.  The Compensation Committee (or its designee) may make exceptions, in its sole discretion, in the event of disability or great financial hardship.

Clawback.  For STIC and LTIC awards made in fiscal year 2010 and beyond, the Company has adopted a “clawback” policy applicable to executive officers.  Specifically, if the Company is required, because of fraud or negligence, to restate financial results for any period (the “Restatement Period”) in a manner that would have adversely affected the amount of the payout of any STIC or LTIC awards, the Compensation Committee has the right during the three-year period following the Restatement Period to review the matter and determine what, if any, repayment executives will be required to submit.