About the Board

The board of directors, which is elected by the shareholders, is the ultimate decision-making body of the company except with respect to those matters reserved to the shareholders. It selects the senior management team, which is charged with the conduct of the company's business. Having selected the senior management team, the board acts as an advisor and counselor to senior management and ultimately monitors its performance.

The Board's Role in Strategic Planning

The board of directors has the legal responsibility for overseeing the affairs of the company and, thus, an obligation to keep informed about the company's business and strategies. This involvement enables the board to provide guidance to management in formulating and developing plans and to exercise independently its decision-making authority on matters of importance to the company. Acting as a full board and through its four standing committees, the board is fully involved in the company's strategic planning process.

Each year, typically in the spring and summer, senior management sets aside specific periods to develop, discuss and refine the company's long-range operating plan and overall corporate strategy. Specific operating priorities are developed to effectuate the company's long-range plan. Some of the priorities are short-term in focus; others are based on longer-term planning horizons. Senior management reviews the insights and conclusions reached at its meetings with the board over the course of several board meetings and seeks approval of the overall corporate strategy and long-range operating plan at board meetings that usually occur in the summer and fall. These meetings are focused on corporate strategy and involve both management presentations and input from the board regarding the assumptions, priorities and objectives that will form the basis for management's strategies and operating plans.

At subsequent board meetings, the board continues to substantively review the company's progress against its strategic plans and to exercise oversight and decision-making authority regarding strategic areas of importance and associated funding authorizations.

In addition, board meetings held throughout the year target specific strategies and critical areas for extended, focused board input and discussion.

The role the board plays is inextricably linked to the development and review of the company's strategic plan. Through these processes, the board, consistent with good corporate governance, encourages the long-term success of the company by exercising sound and independent business judgment on the strategic issues that are important to the company's business.

The Functioning of the Board

The chairman of the board and chief executive officer, with other members of senior management they may select, set the agenda for board meetings with the understanding that certain items pertinent to the advisory and monitoring functions of the board be brought to it periodically by the chief executive officer for review and/or decision. For example, the board reviews the annual corporate budget. Agenda items that fall within the scope of responsibilities of a board committee are reviewed with the chair of that committee. Any member of the board may request that an item be included on the agenda. Board materials related to agenda items are provided to board members sufficiently in advance of board meetings to allow the directors to prepare for discussion of the items at the meeting.

At the invitation of the board, members of senior management invited by the board attend board meetings or portions thereof for the purpose of participating in discussions. Generally, presentations of matters to be considered by the board are made by the manager responsible for that area of the company's operations. In addition, board members have free access to all other members of management and employees of the company and, as necessary and appropriate in their discretion, the board and its committees may consult with independent legal, financial and accounting advisors to assist in their duties to the company and its shareholders.

The chairs of the committees of the board each preside over the portion of the meetings at which the principal items to be considered are within the scope of the authority of his or her committee. The chair of each committee determines the frequency, length and agenda of meetings of that committee. Sufficient time to consider the agenda items is provided. Materials related to agenda items are provided to the committee members sufficiently in advance of the meeting where necessary to allow the members to prepare for discussion of the items at the meeting.

Executive sessions, which are meetings of outside directors without management present, are held regularly after board and committee meetings. The chairman of the board generally presides at executive sessions of non-management directors, except that the chairs of the committees of the board preside at executive sessions of non-management directors held following meetings of their committees or at which the principal items to be considered are within the scope or authority of their committees.

Meetings and Committees of the Board of Directors

It is the general policy of the company that all significant decisions be considered by the board as a whole. As a consequence, the committee structure of the board is limited to those committees considered to be basic to, or required for, the operation of a publicly owned company. Currently these committees are the Compensation and Management Development Committee, Audit Committee, Nominating/Corporate Governance Committee and Mergers and Acquisitions Committee, each of which has a written charter adopted by the board of directors. The Nominating/Corporate Governance Committee recommends the members and chairs of these committees to the board. The Audit Committee, Compensation and Management Development Committee and Nominating/Corporate Governance Committee are made up of only independent directors. The Mergers and Acquisitions Committee must be made up of a majority of independent directors. 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 office.

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 extensive materials, meetings with key management, visits to company facilities and company and industry events. Moreover, as part of directors' education, which 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 participation in company and industry trade events, the board requires each director to attend an outside governance or director-related seminar at least once every three years.

The Audit Committee has general oversight responsibilities with respect to our financial reporting and financial controls. It reviews annually our financial reporting process, our 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 Hillenbrand, Inc. The Audit Committee consists of Neil S. Novich (chairperson), Joy M. Greenway, Daniel C. Hillenbrand, and Inderpreet Sawhney. Each member of the Audit Committee is independent under Rule 10A-3 of the Securities and Exchange Commission and NYSE listing standards and meets the financial literacy guidelines established by the board in the Audit Committee Charter. The board interprets “financial literacy” to mean the ability to read and understand audited and unaudited 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 of Mr. Novich, Ms. Greenway, and Mr. Hillenbrand is an “audit committee financial expert” as that term is defined in Item 407 of Regulation S-K of the Securities and Exchange Commission.

The Compensation and Management Development Committee assists the board in ensuring that our officers and key management are effectively compensated in terms of salaries, supplemental compensation and other benefits that are internally equitable and externally competitive. The committee also is responsible for reviewing and assessing the talent development and succession management actions concerning our officers and key employees. The Compensation and Management Development Committee consists of Gary Collar (chairperson), Helen W. Cornell, Joe Loughrey, Dennis W. Pullin, Jennifer Rumsey, and Stuart A. Taylor, II. Each member of the Compensation and Management Development Committee is independent as defined by the New York Stock Exchange listing standards.

The Mergers and Acquisitions Committee assists the board and management in reviewing and assessing potential acquisitions, strategic investments, joint ventures and divestitures and provides guidance to management with respect to the company's transaction strategies and the identification and evaluation of strategic transactions. The Mergers and Acquisitions Committee consists of Stuart A. Taylor, II (chairperson), Helen W. Cornell, and Neil S. Novich. The charter for the Mergers and Acquisitions Committee requires that the majority of members be independent as defined by the New York Stock Exchange listing standards.

The Nominating/Corporate Governance Committee assists the board in ensuring that the company is operated in accordance with prudent and practical corporate governance standards, ensuring that the board achieves its objective of having a majority of its members be independent in accordance with New York Stock Exchange and other regulations and identifying candidates for the board of directors. The Nominating/Corporate Governance Committee consists of Helen W. Cornell (chairperson), F. Joseph Loughrey, Gary Collar, Joy M. Greenway, Daniel C. Hillenbrand, Neil S. Novich, Dennis W. Pullin, Jennifer Rumsey, Inderpreet Sawhney, and Stuart A. Taylor, II. Each member of the Nominating/Corporate Governance Committee is independent as defined by the New York Stock Exchange listing standards.

The charter for the Nominating/Corporate Governance Committee of the board of directors provides that the primary function of this committee is to assist the board of directors in ensuring that the company is operated in accordance with prudent and practical corporate governance standards, ensuring that the board achieves its objective of having a majority of its members be independent in accordance with New York Stock Exchange and other regulations and identifying candidates for the board of directors. The charter provides that this committee must consist of at least three members of the board of directors, all of whom must be independent. The charter provides that, to fulfill its duties and responsibilities, the committee must take certain actions, including to review and assess from time to time and, as appropriate, make recommendations to the board regarding matters, such as:

• changes to the corporate governance standards and charters for the board of directors of the company and its committees;
• changes to the statement setting forth the responsibilities of directors, the chairman and the qualifications for new nominees for election to the board;
• the board's effectiveness as a whole, as well as the effectiveness of the individual directors and the board's various committees;
• the compensation package for the members of the board of directors; and
• the composition of board committees.

This committee also selects and recommends to the board director nominees, recommends to the board annually whether each director is independent, and reviews and makes recommendations to the board regarding shareholder proposals.

The board of directors has adopted position specifications applicable to members of the board of directors, and nominees for the board of directors recommended by the Nominating/Corporate Governance Committee must meet the qualifications set forth in these position specifications. The specifications provide that a candidate for director should not ever (i) have been the subject of a Securities and Exchange Commission 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 its Code of Ethical Business Conduct, and 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 of endeavor, which area of expertise should have some relevance to the company's businesses or operations;
• Be knowledgeable, or willing and able to become so quickly, in the critical aspects of the company's businesses and operations; and
• Be experienced and skillful in serving as a competent overseer of, and trusted advisor to, senior management of a substantial publicly held corporation.

In addition, as specified in the charter for the Nominating/Corporate Governance Committee, nominees for the board of directors recommended by the Nominating/Corporate Governance Committee should contribute to the mix of skills, core competencies and qualifications of the board through expertise in one or more of the following areas: accounting and finance; death care, process equipment or other industries in which the company is involved; manufacturing; lean business; international operations; mergers and acquisitions; public company governance; executive compensation design; risk management and oversight; and strategic planning.

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 the New York Stock Exchange Listing Standards. Additionally, the board as a whole, the board committees and individual incumbent directors are formally evaluated annually by the Nominating/Corporate Governance Committee, whose findings are reviewed with the board.

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 chairman of the Nominating/Corporate Governance Committee in the manner described above in "Communications with Directors" and should be accompanied by substantially the same types of information as are required under the Company's Amended and Restated Code of By-Laws for shareholder nominees.

The company's By-Laws provide that nominations of persons for election to the board of directors of the company may be made at any meeting of shareholders by or at the direction of the board of directors or by any shareholder entitled to vote for the election of members of the board of directors 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 of directors of the company from time to time as contained in the proxy statement of the company for the immediately preceding annual meeting or posted on the company's Web site www.Hillenbrandinc.com. To be timely, a shareholder's nomination must be delivered to or mailed and received by the secretary not later than (i) in the case of the annual meeting, 100 days prior to the anniversary of the date of the immediately preceding annual meeting 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 100 days prior to the forthcoming meeting date and the close of business 10 days 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 10th 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 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 Securities and Exchange Commission; (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.