Governance
We are committed to good corporate governance.
Good governance at Kimball Electronics has four key foundations: An Effective Board, Fair Compensation, Share Owner Engagement, and Financial Integrity.
Each of the four key foundations of governance above are anchored in our Guiding Principles. We demonstrate our commitment to governance by evolving our processes to reflect the latest developments in governance practices after careful consideration of what is best for our Company and stakeholders. We believe that good governance is being transparent in reporting and accounting, paying fair wages and benefits, enabling better decision-making through diversity, equity, and inclusion, and operating with integrity and honesty. We believe that good governance requires a commitment from our partners, too. That is why we apply our Code of Conduct, our occupational health and safety policy, our human rights policy, and other foundational governance policies not just to our operations, but also to our suppliers, our vendors, and our partners. Robust and effective governance makes a critical contribution to Kimball Electronics’ ability to deliver exceptional service to our customers, to enhance Share Owner value, and to support our strong company culture and purpose of Creating Quality for Life. Even amid the very challenging circumstances that have followed the outbreak of the Covid-19 pandemic, we have succeeded by measures both absolute (we experienced no information security breaches in the last three years before this report) and relative (we continued to improve our governance relative to the market and our peers, as measured by third party governance scores, and as illustrated by our Share Owners’ continued strong support of our Board).
As part of our constant examination of our governance practices and principles, our Board adopted important changes to our governing documents and enhanced key governance disclosures this year, including:
1. Clarifying our Intentions under the
Indiana Classified Board Statute
As an Indiana company, state corporate
statutes mandate a classified board
structure. This year, we amended our By-
Laws to indicate that we do not intend for
the provisions of these statutes to apply to
us. Our Board has concluded that a threetiered
classified board is the appropriate
governance structure for Kimball
Electronics and in the best interests of our
Share Owners. By changing our By-Laws,
we expressed our view that governance
structures like these are best determined
by the Company and its Share Owners.
2. Share Owner Amendment
of By-Laws
We also amended our Articles of
Incorporation and By-Laws to provide
Share Owners the right to amend our
By-Laws by majority vote. The Board
also retains its right to amend the
By-Laws. This change expands
flexibility in amending our governing
documents and provides additional
accountability to our Board, underscoring
our robust commitment to direct
engagement with our Share Owners
on corporate governance.
3. Adoption of a Formal Executive
Severance Plan
Our Board developed a formal severance
plan for our executives that is consistent
with current best practices for public
companies and eliminated individual
employment agreements. Not only did
the changes continue best practices on
matters such as long-term award vesting,
change-in-control payments, and other
areas tied to tenure and position, but
they also ensured that we can attract
and retain our top talent as we grow.
4. Additional Disclosures
As part of our focus on transparency in
our ESG practices, we adopted a formal
Global Human Rights Policy and expanded
our annual supply chain transparency
statement to supplement some of the
important disclosures we make in this
report each year. In our proxy, we provided
additional detail about our incentive
compensation programs and how we
benchmark our performance against those
of our industry peers. Finally, and most
importantly, our People are the Company,
so we went beyond the basic requirements
of a new SEC rule to share why we believe
our people are our competitive edge
for service, quality, and value. This new
section of our proxy statement shows
how we attract, develop, and retain
best-in-class teams while building and
maintaining an inclusive culture.
“We can only achieve our purpose of Creating Quality for Life through demonstrable good governance and transparent disclosures in their broadest senses.”
– Doug Hass, Chief Legal and Compliance Officer
