La-Z-Boy (LZB) DEF 14ADefinitive proxy

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. )

NOTICE OF 2021 ANNUAL MEETING

OF SHAREHOLDERS

La-Z-Boy Incorporated

One La-Z-Boy Drive

Monroe, Michigan 48162-5138

July 8, 2021

To Our Shareholders:

La-Z-Boy Incorporated will hold its 2021 Annual Meeting of Shareholders (the “Annual Meeting”) on Thursday, August 19, 2021, beginning at 8:00 a.m., Eastern Daylight Time, in the Wright Room of The Westin Detroit Metropolitan Airport, 2501 Worldgateway Place, Detroit, Michigan. The purpose of the Annual Meeting is to:

Only shareholders of record at the close of business on June 25, 2021, are entitled to notice of and to vote at the Annual Meeting. We hope you will read the attached Proxy Statement, which contains detailed information about the matters we are asking you to vote on, and vote in accordance with the Board of Directors’ recommendations. Your vote is very important to us. Whether or not you attend the Annual Meeting, we urge you to promptly vote and submit your proxy via a toll-free number or over the Internet, as detailed below. If you received a paper copy of the proxy card by mail, you may submit your proxy by signing, dating and mailing the proxy card in the envelope provided. If you attend the Annual Meeting and prefer to vote in person, you will be able to do so and your vote at the Annual Meeting will revoke any proxy you have previously submitted.

Uzma Ahmad

Vice President, Deputy General Counsel and Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on August 19, 2021

PROXY STATEMENT SUMMARY

See Appendix A of this Proxy Statement for information regarding non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Agile Management of Shifting Near-term Priorities with Continued Focus on Long-term Growth

In FY 2021, we believe our financial performance reflected that we agilely and effectively managed our business as near-term operational priorities shifted due to the COVID-19 pandemic while maintaining our focus on long-term growth and success.

Despite a challenging year due to the COVID-19 pandemic, related macroeconomic uncertainty, and supply chain disruption, we closed the fiscal year with $1.7 billion in sales, generated $310 million in cash from operating activities, and returned $60.7 million to shareholders through share repurchases and dividends. The record demand across all of our business units coupled with the continuing challenges and uncertainty in the external environment required us to remain agile in managing our business. With the strong La-Z-Boy brand, the excellent performance of our Retail division, which validates the benefit of our integrated retail model, the growth of our Joybird business, and a solid financial foundation, our experienced and engaged leadership team is focused on remaining an industry leader and gaining additional market share.

Over the course of FY 2021, we remained focused on the priorities highlighted below to deliver on our fundamental goal of providing long-term value to our shareholders:

As shown below, the majority of the target total direct compensation for our chief executive officer and, on average, for our other named executive officers is performance-based and “at risk.”

Continued Commitment to Our Compensation Philosophy and Overall Incentive Program Design

Despite the uncertainty and disruption caused by the COVID-19 pandemic, the Compensation Committee did not make major structural executive compensation program changes with respect to FY 2021, reflecting its continued commitment to our pay for performance compensation philosophy and overall incentive program design. Please see the Compensation Discussion Analysis section of this Proxy Statement for detailed discussion of our FY 2021 executive compensation program, including the key changes summarized below:

Base Salary Reductions

As part of our COVID-19 Action Plan, the Compensation Committee approved temporary base salary reductions of 50% for our NEOs, which took effect on March 29, 2020, and remained in effect until August 1, 2020.

Delayed But Rigorous Performance Goal Setting

Performance goals are typically set for the Company’s annual incentive plan and long-term incentive equity awards at the beginning of the fiscal year, which was when the unprecedented and uncertain nature of the pandemic was still unfolding. The Compensation Committee made the annual grants in June but delayed setting the FY 2021 performance goals until August 2020 to allow for the impact of the COVID-19 pandemic to be more fully understood so that more meaningful and appropriately rigorous and challenging performance goals could be set.

Reduced Maximum Payout Opportunity Under the MIP

In order to reflect the severe impact of the COVID-19 pandemic in the first quarter of FY 2021 on the company's shareholders, employees, and other stakeholders and delayed goal setting, the Compensation Committee reduced the maximum payout opportunity under the FY 2021 MIP by 25%.

Long-term Incentive Equity Awards

In light of the uncertainty created by the COVID-19 pandemic, the Compensation Committee approved certain modest design changes to equity mix and relative weighting of performance metrics to better align the interests of our NEOs with shareholders.

TABLE OF CONTENTS

BOARD AND CORPORATE

GOVERNANCE MATTERS

The Board of Directors has nominated eleven director nominees to serve an annual term that will expire at the following annual meeting of shareholders. Each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal. The Board has determined, upon the recommendation of the Nominating and Governance Committee, to nominate the current eleven directors for election at the Annual Meeting. In addition, the Board remains committed to seeking additional expertise and fresh perspective to advance our strategy. The eleven director nominees are:

Each director nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. Mr. Darrow retired as our President and Chief Executive Officer effective April 25, 2021, after more than 42 years with the company. He will continue to serve as non-executive Chairman of the Board and as a director, subject to re-election at the 2021 Annual Meeting of Shareholders, for a transition period until the earlier of April 30, 2022, or his termination of service as a member of the Board for any reason (the "Transition Period"). Mr. Hackett, who was appointed as a director by our Board on February 11, 2021, was identified as a potential director candidate by our Chairman, Mr. Darrow. He was reviewed as a director candidate by our Nominating and Governance Committee, which recommended his election to the Board. If a director nominee is unable to stand for election, the Board may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders may vote shares subject to proxies for the substitute nominee.

In accordance with Michigan law, directors will be elected at the meeting by a plurality of votes cast from among those persons duly nominated, with separate balloting for each of the eleven positions. The director nominees who receive the highest through the eleventh highest number of votes will be elected, regardless of any votes that are not cast for the election of those nominees, including broker non-votes and withholding of authority. Under our Corporate Governance Guidelines, however, any director who does not receive a majority of the votes cast in an uncontested election must submit his or her resignation promptly following certification of the vote. Within 90 days following certification of the vote, the Board of Directors, excluding the director in question, will decide whether to accept the offered resignation and the company will promptly publicly disclose the Board’s decision. Any vacancy created by acceptance of an offered resignation could then be filled by the Board pursuant to our bylaws.

The Board of Directors, acting through its Nominating and Governance Committee, seeks directors who collectively possess the experience, skills, backgrounds, and qualifications necessary to effectively oversee our company in our current and evolving business circumstances. The Nominating and Governance Committee seeks directors with established records of significant accomplishments in business and areas relevant to our business strategies. In determining the slate of director nominees, the committee reviews the Board’s size and the qualifications, experience and skills of our current directors and director nominees.

The following chart summarizes each director nominee’s key qualifications, experience, and skills.

Set forth below is certain information concerning our director nominees. Unless otherwise indicated, the principal occupation of each director nominee has been the same for at least five years.

Our Board of Directors is committed to good governance practices that further the company’s strategic growth plans and enhance shareholder value over the long term, while also considering the interests of other stakeholders, including our employees, customers, vendors, and the communities we impact.

The Board oversees the company’s performance, including its strategic direction and critical corporate policies that have the largest impact on our operations. In exercising its oversight responsibility, the Board evaluates the performance of our President and Chief Executive Officer (“CEO”) and monitors our strategic plan, our performance against the plan, and management’s assessment and remediation of the company’s risks. As part of the strategic planning process, the Board reviews the company’s capital allocation plan and its investment in research and product development, information technology, and employee development, with a focus on promoting the company’s long-term growth. The Board regularly reviews our governance practices and processes to ensure they remain effective, making changes when appropriate. It also monitors the company’s culture to encourage a focus on sustainable growth and to ensure we maintain the highest levels of ethics and integrity, especially with respect to our financial statements and disclosures.

Our Board of Directors strongly supports the concept of director independence. Only Ms. Whittington, our President and CEO, is currently a company employee and Mr. Darrow, our non-executive Chairman, served as an employee in that role prior to April 25, 2021. Consistent with the New York Stock Exchange listed company manual requirements, our Corporate Governance Guidelines require that a substantial majority of our directors be independent, and we limit membership on each of our committees to independent directors. Our Board annually reviews and determines if any director has any material relationship with our company, our management, or our other directors that would impede the director’s independence. Following the New York Stock Exchange listed company manual requirements and our Corporate Governance Guidelines, our Board has determined that each of our current directors, other than Mr. Darrow and Ms. Whittington, is an independent director. Mr. Darrow and Ms. Whittington do not serve on any committees of the Board.

Following the retirement of Mr. Darrow as our President and CEO effective April 25, 2021, our current leadership structure incorporates a non-executive Chairman selected by a Board comprised of a substantial majority of independent directors, and working with a strong independent Lead Director. As the non-executive Chairman, Mr. Darrow has the duties normally assigned to a chairman of a publicly traded company and is providing transition and other related services to facilitate an effective transition of his executive responsibilities to Ms. Whittington. Pursuant to the Transition Agreement between Mr. Darrow and the company, he has agreed to serve as non-executive Chairman until April 30, 2022 or the earlier termination of his service as a director. While Mr. Darrow is not independent under the independence standards in our Corporate Governance Guidelines, our strong, effective independent Lead Director and independent committees ensure significant oversight over company management. The Board believes this structure is the appropriate structure for our company during the transition period.

Our Corporate Governance Guidelines require that we elect an independent Lead Director when the Chairman is not independent under the standards established in the guidelines. Our Lead Director serves as the principal liaison between our independent directors and our Chairman, facilitating a steady stream of communications between management and our independent directors. Among other duties, the Lead Director:

In light of our strong independent Lead Director structure, annual evaluations of the Lead Director’s performance, a Board composed almost solely of independent directors, ready access to management by the directors, and regular executive sessions and meetings of the independent directors, our Board exercises effective oversight of our non-executive Chairman, and the current leadership structure operates efficiently to protect and advance the interests of our shareholders.

Our Board is responsible for risk oversight and our management is responsible for the day-to-day assessment, monitoring and mitigation of the company’s risks.

Our Nominating and Governance Committee is responsible for recommending to the Board director candidates to fill current and anticipated Board vacancies. The committee identifies and evaluates potential candidates from recommendations from the committee’s own members, referrals from other Board members, management, shareholders, or other outside sources, including professional recruiting firms. Shareholders may recommend director nominees for election at an annual meeting of shareholders pursuant to the provisions of our bylaws, as described more fully on page 64 of this Proxy Statement. Our Corporate Governance Guidelines provide that all such director nominee recommendations by shareholders shall be brought to the attention of the Nominating and Governance Committee. In evaluating proposed candidates, the committee may review their resumes, obtain references, and conduct personal interviews.

Pursuant to our Corporate Governance Guidelines, the committee considers, among other factors, the Board’s current and future needs for specific skills and the candidate’s qualifications, integrity, independence, leadership qualities, ability to exercise sound judgment, independence, and ability to make the appropriate time commitment to the Board. Although we do not have a formal diversity policy, as stated in our Corporate Governance Guidelines, the Board believes that diversity helps to create a high-functioning Board. The Board strives to ensure that it reflects a diverse mix of relevant characteristics, including gender, race, ethnicity, culture, experience, expertise, skills, backgrounds and other characteristics, to address the company’s evolving needs, as reflected by our eleven director nominees:

Our Nominating and Governance Committee believes in the benefits of refreshing the Board on an ongoing basis through the nomination and election of new directors who can bring new ideas, perspectives and skills to the boardroom. In selecting director nominees, the Nominating and Governance Committee weighs the need for both director refreshment and institutional memory, and considers average tenure of the non-employee members of our Board as part of its holistic assessment of Board composition. It believes that the appropriate mix of varied levels of tenure and experience can help to mitigate risk.

Our Nominating and Governance Committee seeks to achieve a balance in director tenure through appropriate and deliberate Board refreshment and does not believe that it is appropriate at this time to set absolute term limits on the length of a director’s service. Directors who have served on the Board for an extended period of time are able to provide valuable insight into the operation and future of the company based on their experience with, and understanding of, our history, policies and objectives. The average tenure (through their current term of service) of the non-employee members of our Board standing for reelection at the Annual Meeting is approximately 9.7 years.

The company has had a seamless CEO transition that underscores the strength of both the Board's succession planning, as described above, and of our leadership team. Effective April 25, 2021, Melinda D. Whittington, formerly our Senior Vice President and Chief Financial Officer, was elected by the Board as our President and Chief Executive Officer. She succeeded Kurt L. Darrow, who retired effective on such date, after more than 42 years with the company.

As required by our Corporate Governance Guidelines, annually, the Board conducts a self-evaluation of its performance and effectiveness. In addition, each of the standing committees of the Board also conducts an annual self-evaluation of its performance and effectiveness and discusses the results of such assessment with the Board. The purpose of the self-evaluation process is to identify ways in which to enhance the effectiveness of the Board’s and committees’ oversight of the company’s business and financial performance and its corporate governance. As part of the self-evaluation process, each director completes written questionnaires developed by the Nominating and Governance Committee to provide feedback on the effectiveness of the Board and the committees on which they serve, including the performance of the Lead Director and committee chair, respectively. Given the Board's commitment to the creation of long-term shareholder value, each Board and

committee self-evaluation questionnaire begins with the topic of shareholder value creation. The Board self-evaluation questionnaire also covers the following topics, among others: the company's strategic plan; management performance and succession planning; oversight of risk management, diversity, inclusion and belonging efforts, the ethics and compliance program, sustainability efforts, and information security; and the Board's composition, structure, and effectiveness.

Our Code of Business Conduct, which applies to all of our employees, executive officers and directors, requires that any potential conflict of interest be either avoided or fully disclosed. Each year, we require our directors and executive officers to disclose any transactions between them or their immediate family members and the company. The Audit Committee reviews any reported transactions related to directors or executive officers and takes appropriate action. Since the beginning of FY 2021, there have been no related person transactions requiring approval or ratification under our Code of Business Conduct.

We encourage significant stock ownership by our Board Chairman, directors and executive management to align the interests of our leadership with those of our shareholders. We have established stock ownership guidelines that require each non-employee director to own La-Z-Boy equity equal in value to a multiple of their annual cash retainer. Our CEO and the other NEOs are required to own La-Z-Boy equity equal in value to a multiple of their respective base salary.

In determining compliance with the guidelines, we include shares owned directly, shares held in a family trust or qualified retirement program, performance-based shares contingently earned in completed performance periods but not yet paid out, and restricted share awards. However, we do not include stock options (whether vested or unvested) or unearned performance-based shares for such purposes.

Non-employee directors are required to meet this ownership level within five years of being elected to the Board. As of April 24, 2021, all our directors who have served on the Board for five or more years held sufficient equity of our company to satisfy the stock ownership guidelines. NEOs are required to meet this ownership level within five years of being subject to the guidelines. As of April 24, 2021, all our NEOs who have been subject to the stock ownership guidelines for five or more years held sufficient equity of our company to satisfy the stock ownership guidelines.

We prohibit directors, officers, or employees from hedging or pledging our shares or engaging in short-term speculative trading, including short sales, trading in puts and calls, and buying on margin.

We strive to provide our shareholders with important information about our sustainability-related governance and performance. In an effort to provide comparable information, last year, we adopted a framework through which we can hold ourselves accountable for the environmental and social impact of our business operations using the Sustainability Accounting Standards Board (SASB) Sustainable Industry Classification System (SICS) Standard for the Consumer Products – Building Products & Furnishings industry to guide our disclosure. In addition, we are working toward aligning our future reporting with the climate-specific recommendations developed by the Task Force on Climate-related Financial Disclosures (TCFD). We also recently committed to setting science-based targets to reach net-zero greenhouse gas emissions by no later than 2050, assuming advancements in technology, public policy, and customer behavior. In the coming year, we will continue to dedicate resources to measuring, reporting on, and reducing our environmental footprint.

We have presented additional information regarding certain of these categories below.

We understand the impact our operations have on the environment, both locally and globally. We are committed to integrating environmentally sound and sustainable business practices into everything we do and have adopted an environmental policy, which is available on our website at http://www.la-z-boy.com. Our goal is to craft high-quality products, while having the least environmental impact. We are focused on reducing waste, increasing recycling and energy efficiency, and consuming fewer resources.

As part of that responsibility, we have implemented the comprehensive environmental management program of Enhancing Furniture’s Environmental Culture (EFEC) at our manufacturing facilities. The EFEC program’s eleven elements establish measurable goals for reducing our environmental footprint. Our EFEC-registered facilities include the La-Z-Boy USA Branded manufacturing plants, La-Z-Boy Casegoods and our World Headquarters in Monroe, Michigan, which is also Leadership in Energy and Environmental Design (LEED)-certified. Located in Saltillo, Mexico, our La-Z-Boy Cut and Sew Center was the first international facility in our industry to be EFEC-registered.

We are committed to reducing our energy consumption, reducing cost, optimizing capital investment for energy efficiency, reducing environmental and greenhouse gas emissions, and conserving natural resources. A majority of the Scope 1 and 2 greenhouse gases we generate are produced through the burning of fossil fuels. As a result, we have implemented an effective energy management program to reduce the consumption of fossil fuels. We are working diligently to reduce and manage our environmental footprint, including greenhouse gases. Our energy management program consists of the following elements: senior management oversight, plant energy champions, analysis of energy data, energy audits, performance goals, energy action plans, energy monitoring, and success recognition.

We continue to utilize on-site generated renewable wood fuels for the generation of steam used in production operations, heating and absorption cooling, and we sell excess wood residuals for further reuse by other industries. Wood fuel from sustainably managed forests is a renewable resource that helps reduce our use of fossil fuels, reduces greenhouse gas emissions and also reduces the volume of waste going to a solid waste landfill.

Our company-owned La-Z-Boy Furniture Galleries® stores are reducing their carbon footprint by decreasing energy use and utilizing greener construction materials and eco-friendly light bulbs, paint and flooring.

In 2021, we entered into a 10-year resource-backed virtual power purchase agreement ("VPPA") with AEP Energy Partners, extending through the end of 2030. The VPPA is expected to support approximately 70,000 MWh of renewable energy per year from AEP Energy Partner’s principally owned Santa Rita East wind energy center for the term of the agreement. The company will receive renewable energy certificates (RECs) equivalent to the wind power capacity representing a significant portion of the company's current total annual domestic energy consumption. The VPPA is an example of the company's support of clean, renewable energy resources.

We have sourcing policies and processes in place to help us ensure we comply with the legal sourcing requirements of the Lacey Act and eliminate illegal logging activities. We obtain many of our wood materials and components from suppliers that have implemented sustainable forest management practices or from sustainable plantation-grown renewable rubber-wood. We also use many other wood- and fiber-based materials made with recycled or recovered paper. We are also constantly looking for ways to conserve water throughout our operations.

We demonstrate responsible environmental management by complying with applicable environmental laws, regulations and obligations in addition to working to reduce the environmental burden of waste generation and emissions to the air, water and land. We strive to ensure that any waste generated is properly disposed of in a safe and responsible manner and we also seek out opportunities for recycling, pollution prevention and efficient use of natural resources, including energy. We utilize our EFEC initiatives to develop and implement a rigorous reuse and recycling program.

Our waste management programs consist of the following elements: prevention and reduction at the source, environmentally sound recycling, proper disposal of hazardous waste, and environmentally sound disposal of non-hazardous waste. We either reuse or recycle as much packaging material as possible from our manufacturing locations, distribution warehouses or when furniture is delivered to our customers. Plastic, cardboard, metal and many other items are all recycled within our manufacturing facilities. The distribution centers have a packaging return program with our manufacturing facilities for many items (including cardboard boxes and plastic bags furniture is transported in). We recycle the packaging materials at the regional distribution centers that are not reused (including densifiers to recycle Styrofoam). Packaging associated with the furniture that our distribution centers deliver is removed prior to delivery (either reused or recycled) and re-usable furniture blankets are used to deliver furniture.

We have greatly reduced our use of landfills or other off-site disposal means since 2007, and eight of our facilities are zero waste to landfill. As part of our commitment to environmental stewardship, we continue to improve the efficiency of our operations, increase our use of recycled materials, and control raw material waste.

We continue to seek and embrace additional sustainable initiatives and best practices, including opportunities to incorporate renewable energy sources.

We are committed to transparent and active engagement with our shareholders to both share our perspectives and obtain valuable insight and feedback from shareholders on matters of mutual interest. Our shareholder engagement is a year-round process that may involve our Chairman, Lead Director, executive management, and members of our investor relations, corporate governance, environmental, and executive compensation teams. Throughout the year, we meet with institutional investors and analysts to inform and share our perspectives and to solicit their feedback on our performance. This includes participation in investor and industry conferences and other group and one-on-one meetings throughout the year. We also engage with the corporate governance teams of our major shareholders, through conference calls that occur during and outside of the proxy season. In FY 2021, we invited nine of our top shareholders representing over 50% of the company's outstanding common stock to engage with our Lead Director and certain members of management on various strategic and other matters, including company strategy and performance, the company's response to the COVID-19 pandemic, Board diversity and refreshment, executive compensation, human capital management, sustainability oversight and performance, and corporate governance practices. Feedback the Company receives from shareholders is regularly reported to the Board and its committees, as appropriate, and informs the Board’s deliberations on the company’s strategy, operations, governance practices, executive compensation program, and oversight of sustainability initiatives. For further discussion of our shareholder engagement on executive compensation matters, please see Shareholder Engagement and Say-on-Pay Vote on page 36.

Interested parties, including shareholders, may communicate with, or provide recommendations to, our Board, specified members or committees of the Board or the Lead Director by sending correspondence to our corporate secretary at La-Z-Boy Incorporated, One La-Z-Boy Drive, Monroe, MI 48162, and specifying in such correspondence the intended recipient or recipients of the communication or recommendation. The corporate secretary reviews and compiles all communications received, provides a summary of any lengthy or repetitive communications, and forwards them to the specified recipient director or directors. The complete communication is provided when requested by the relevant director, directors or committee.

We have three standing committees of the Board: the Audit, Compensation and Talent Management, and Nominating and Governance Committees. Each committee is composed of only independent directors. Each committee operates under a charter (which can be found at http://investors.la-z-boy.com, under “Corporate Governance”) and has the ability to engage independent consultants and advisors at the company’s expense to assist the committee in fulfilling its duties. Our current Lead Director serves on our Audit Committee and Compensation and Talent Management Committee and generally attends the meetings of the Nominating and Governance Committee. The current membership and chair of each of the committees are shown in the table below. To support smooth Board leadership transitions and refreshment, the Board intends to appoint Mr. Lawton as Lead Director, Ms. Peters as chair of the Audit Committee, and Mr. Hackett as chair of the Nominating and Governance Committee following the Annual Meeting, which will allow for overlap with the current directors serving in those leadership roles prior to their anticipated retirements over the next two years pursuant to the director retirement age provision of our Corporate Governance Guidelines. Following his proposed election as Lead Director, Mr. Lawton will continue to be a member of the Audit Committee.

The Audit Committee monitors the independence of the company’s independent registered public accounting firm, annually requests and reviews the firm’s written statement of relationships with the company, and reviews and limits our use of the firm for non-audit work. The committee reviews the staff assigned to our audit and ensures the lead partner is rotated at least once every five years. The committee discusses with management and our independent registered public accounting firm the quality and adequacy of our internal controls over financial reporting.

The Compensation and Talent Management Committee receives advice on executive compensation matters from outside compensation consultants. Each year, the committee reviews and discusses the independence of its independent compensation consultants and has determined that its independent compensation consultant, FW Cook, is independent and that their work for the committee does not raise any conflicts of interest.

The Nominating and Governance Committee makes recommendations on general corporate governance issues, including the size, structure, and composition of the Board and its committees. The committee also assists the Board in ensuring that all risks are monitored by the Board or the appropriate standing committee. See “Risk Oversight” above for further discussion of our risk oversight process.

Only our non-employee directors are compensated for service on the Board. Non-employee director compensation is determined by the Board, after considering the recommendation of the Compensation and Talent Management Committee. In February 2020, the committee asked its independent compensation consultant, Frederic W. Cook & Co., Inc., to provide an independent assessment of the director compensation program to evaluate its continued alignment with peer companies and sound governance practices. Based on such assessment and the recommendation of the Compensation and Talent Management Committee, the Board approved increasing the annual cash retainer from $80,000 to $85,000 and the annual equity grant value from $100,000 to $105,000 (as rounded up to provide for a whole number of restricted stock units), and made no other changes to director compensation.

For FY 2021, the Board approved as compensation for our non-employee directors a combination of cash and restricted stock units (“RSUs”), as shown below. As part of our action plan in response to the COVID-19 pandemic, the non-employee directors forewent their cash compensation (comprised of the annual cash retainer and, if applicable, committee chair cash retainer or lead director cash retainer) from March 29, 2020 to August 1, 2020. During FY 2021, Mr. Darrow was an executive of the company and was not compensated separately for his service on the Board.

The Audit Committee selects the company’s independent registered public accounting firm and manages all aspects of the relationship, including the firm’s compensation, retention, replacement, and scope of work. The Audit Committee conducts an annual evaluation of the independent registered public accounting firm’s qualifications, performance, and independence. In accordance with SEC rules, the lead partner overseeing the company's independent audit engagement rotates every five years and the Audit Committee and its chair are directly involved in the company's selection of the lead engagement partner. Such lead partner rotation occurred as of the beginning of FY 2021.

The Audit Committee has selected PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the company’s independent registered public accounting firm (“independent auditor”) for FY 2022. PricewaterhouseCoopers acted as our independent auditor for FY 2021 and has served as the company’s independent auditor since 1968. The Audit Committee and the Board believe that the continued retention of PricewaterhouseCoopers as the company’s independent auditor is in the best interests of the company and its shareholders. Representatives of PricewaterhouseCoopers will be available at the Annual Meeting to answer questions and will have the opportunity to make a statement.

We ask you to ratify the selection of PricewaterhouseCoopers as our independent auditor. Although ratification is not required by our bylaws or otherwise, the Board and the Audit Committee submit the selection of PricewaterhouseCoopers to you for ratification as a matter of good corporate practice. The Audit Committee may reconsider the selection if it is not ratified. In addition, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the company and its shareholders.

Our management will present the following resolution at the Annual Meeting:

RESOLVED, the Audit Committee’s selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for La-Z-Boy Incorporated for fiscal year 2022 is ratified.

In accordance with the charter adopted by the Board, the Audit Committee assists the Board of Directors in overseeing our financial reporting process, internal controls and procedures, and compliance with legal and regulatory requirements. Management is responsible for the company’s financial reporting process and related internal controls, while the independent registered public accounting firm is responsible for independently auditing the company’s financial statements and internal controls in accordance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”). The current Audit Committee charter, which provides more information regarding the committee’s responsibilities and processes, is available on the La-Z-Boy website at http://investors.la-z-boy.com, under “Corporate Governance.”

The Audit Committee selects the company’s independent registered public accounting firm and manages all aspects of the relationship, including the firm’s compensation, retention, replacement, and scope of work. In selecting PricewaterhouseCoopers LLP as the company’s independent registered public accounting firm for FY 2022, the committee evaluated the firm’s independence, including reviewing the written disclosures and letter from PricewaterhouseCoopers LLP required by the PCAOB, and discussed with PricewaterhouseCoopers LLP its independence. The committee also discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The committee also considered whether PricewaterhouseCoopers LLP’s provision of non-audit services to the company is compatible with the firm’s independence. The committee determined that PricewaterhouseCoopers LLP is independent of the company and management.

In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management and PricewaterhouseCoopers LLP the company’s audited financial statements for the fiscal year ended April 24, 2021.

The Audit Committee met nine times during FY 2021. The committee regularly meets with the senior members of the company’s financial management team and the company’s independent registered public accounting firm. The committee selectively met with key managers of the company to review or discuss potential financial risks related to the company. The committee also regularly met in executive sessions, in separate private sessions with PricewaterhouseCoopers LLP, the key members of the senior management team and the internal audit team. At these meetings, the committee discussed the company’s financial estimates and judgments, internal controls over financial reporting, accounting principles, and regulatory compliance.

Based on the reviews and discussions described above, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the audited financial statements in La-Z-Boy’s Annual Report on Form 10-K for the fiscal year ended April 24, 2021, for filing with the SEC.

The Audit Committee

Michael T. Lawton, Chair

James P. Hackett

W. Alan McCollough

Rebecca L. O'Grady

Lauren B. Peters

For professional services rendered to the company for FY 2020 and FY 2021, PricewaterhouseCoopers has billed us as follows:

The Audit Committee has a policy that all audit and non-audit services provided by our independent auditor must be approved in advance by the Audit Committee. Between meetings of the Audit Committee, the committee has delegated authority to review and approve such services to its chair. Any such approval by the chair must be reported to the entire Audit Committee at the next scheduled Audit Committee meeting. The Audit Committee approved all audit and non-audit services provided by the independent auditor, PricewaterhouseCoopers, in FY 2021 in accordance with its policy.

Pursuant to regulations under Schedule 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we ask you to approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC, including Item 402 of the SEC’s Regulation S-K.

As described in detail in the Compensation Discussion and Analysis, we seek to closely align the interests of our named executive officers with those of our shareholders. We have endeavored to design our compensation program to reward our named executive officers for individual and company-wide achievements without encouraging them to subject our company to excessive risks. Before voting on this proposal, please read the Compensation Discussion and Analysis and review the compensation disclosure tables and related narrative discussion. Those materials provide a detailed explanation of our executive compensation philosophy and practices.

The vote on this resolution is not intended to address any specific element of compensation but is instead a vote on approving the overall compensation of our named executive officers as described in this Proxy Statement. While the vote is non-binding, we value the opinion of our shareholders, and will consider the outcome of the vote when making future named executive officer compensation decisions.

Our management will present the following resolution at the Annual Meeting:

The Compensation and Talent Management Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on such review and discussions, the Compensation and Talent Management Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and be incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended April 24, 2021.

The Compensation and Talent Management Committee

Rebecca L. O'Grady, Chair

Sarah M. Gallagher

Janet E. Kerr

Michael T. Lawton

H. George Levy, M.D.

W. Alan McCollough

This section describes our executive compensation philosophy and the material components of our executive compensation program for our named executive officers (“NEOs”). We also explain how and why the Compensation and Talent Management Committee of our Board (or the "Compensation Committee") made the specific compensation decisions involving the NEOs for FY 2021, which ended on April 24, 2021.

See Appendix A of this Proxy Statement for information regarding non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Agile Management of Shifting Near-term Priorities with Continued Focus on Long-term Growth

In FY 2021, we believe our financial performance reflected that we agilely and effectively managed our business as near-term operational priorities shifted due to the COVID-19 pandemic while maintaining our focus on long-term growth and success.

Despite a challenging year due to the COVID-19 pandemic, related macroeconomic uncertainty, and supply chain disruption, we closed the fiscal year with $1.7 billion in sales, generated $310 million in cash from operating activities, and returned $60.7 million to shareholders through share repurchases and dividends. The record demand across all of our business units coupled with the continuing challenges and uncertainty in the external environment required us to remain agile in managing our business. With the strong La-Z-Boy brand, the excellent performance of our Retail division, which validates the benefit of our integrated retail model, the growth of our Joybird business, and a solid financial foundation, our experienced and engaged leadership team is focused on remaining an industry leader and gaining additional market share.

Over the course of FY 2021, we remained focused on the priorities highlighted on the following page to deliver on our fundamental goal of providing long-term value to our shareholders:

Following engaged and robust succession planning by our Board, Melinda D. Whittington was elected by the Board as our President and Chief Executive Officer, effective April 25, 2021. In connection with her election as President and Chief Executive Officer, Ms. Whittington’s annualized base salary was increased to $900,000, her short-term cash incentive target award opportunity under the terms of the Company’s 2017 Omnibus Incentive Plan will be 110% of her eligible earnings during fiscal year 2022, and her target long-term incentive equity award value at the time of grant for fiscal year 2022 will be $2,500,000. Ms. Whittington succeeded Kurt L. Darrow, who retired as our President and Chief Executive Officer effective on such date, after more than 42 years with the Company. Mr. Darrow will continue to serve as Chairman of the Board and as a director, subject to re-election at the 2021 Annual Meeting of Shareholders, for a transition period until the earlier of April 30, 2022, and his termination of service as a member of the Board for any reason (the "Transition Period"). In conjunction with his retirement as President and CEO, we entered into a Transition Agreement with Mr. Darrow, pursuant to which he provides transition advisory services to the Company during the Transition Period. Pursuant to the Transition Agreement, the Board approved the following compensation arrangements for Mr. Darrow's services as Chairman: (i) a supplemental annual cash retainer of $100,000, subject to pro ration for any partial quarters, and (ii) the annual compensation typically provided to the Company’s non-employee directors. This compensation was determined by the Board in consultation with its independent compensation consultant. The Board also elected Ms. Whittington as a director, with her initial Board term expiring at the 2021 Annual Meeting of Shareholders.

Our compensation philosophy is to provide a total direct compensation ("TDC") opportunity generally targeted to the median of the competitive market, with consideration of performance, skills, experience and other factors in setting individual pay levels. The majority of each NEO’s annual target compensation is at-risk with the amount realized, if any, based on company and stock price performance. The pay level and at-risk portion increases as an NEO assumes greater levels of responsibility with greater potential impact on the company. Accordingly, our CEO’s pay level and at-risk pay portion are higher than those of other officers due to his greater level of responsibility.

Our company’s performance drove our NEO compensation in FY 2021. Our annual Management Incentive Plan (“MIP”) and our performance-based shares for the FY 2019-2021 performance period utilized a subset of the following performance metrics: net sales, operating profit, operating cash flow, and relative total shareholder return ("rTSR"). Based on the company's performance, our NEOs earned the following incentive payouts:

The chart below compares the target versus realizable TDC for Mr. Darrow measured as of the end of FY 2021. Over the past three fiscal years, Mr. Darrow's realizable TDC was 125% of his target TDC, which we believe reflects both the rigor of the performance goals set by the Compensation Committee and the company's total shareholder return ("TSR") performance over the same time period.

The chart below compares the realizable TDC for Mr. Darrow relative to our peer group companies, with realizable pay for the past three fiscal years valued as of our fiscal year end, April 24, 2021.

For purposes of the above charts, we have included the following elements in calculating "realizable pay" for the company and our peer groups companies:

Our say-on-pay resolution with respect to the FY 2020 NEO compensation program received 95% support at our 2020 Annual Meeting of Shareholders. For a description of our on-going shareholder engagement efforts, please see page 24. In FY 2021, we invited nine of our top shareholders representing over 50% of the company's outstanding common stock to engage with our Lead Director, the chair of the Compensation Committee (for certain of these meetings), and selected members of management on various strategic and other matters, including company strategy and performance, the company's response to the COVID-19 pandemic, Board diversity and refreshment, executive compensation, human capital management, sustainability oversight and performance, and corporate governance practices.

The Compensation Committee and the Board reviewed a comprehensive summary of the shareholder feedback received over the past several years on executive compensation-related matters. While shareholders have been generally supportive of our executive compensation program and approved of the extent to which it is performance-based, the Compensation Committee made a change to the design of our FY 2021 executive compensation program that it believes is responsive to shareholder feedback we received in the prior two years: for the FY 2021 - 2023 performance-based share awards, approved a change to equally weight performance in each year of the three-year performance period for net sales and operating cash flow compared to the prior design of placing greater weighting in the first and second years of the three-year performance period (with rTSR performance continuing to be measured on a three-year cumulative basis).

Continued Commitment to Our Compensation Philosophy and Overall Incentive Program Design

Despite the uncertainty and disruption caused by the COVID-19 pandemic, the Compensation Committee did not make major structural executive compensation program changes with respect to FY 2021, reflecting its continued commitment to our compensation philosophy and overall incentive program design. For example, the performance metrics approved for the FY 2021 MIP and the FY 2021-2023 performance-based share awards remain unchanged from the prior year, when performance metrics were selected before the onset of the pandemic.

Base Salary Reductions

As part of our COVID-19 Action Plan, the Compensation Committee approved temporary base salary reductions of 50% for our NEOs, which took effect on March 29, 2020, and remained in effect until August 1, 2020.

Delayed But Rigorous Performance Goal Setting

Performance goals are typically set for the Company’s annual incentive plan and long-term incentive equity awards at the beginning of the fiscal year, which was when the unprecedented and uncertain nature of the pandemic was still unfolding. The Compensation Committee made the annual grants in June but delayed setting the FY 2021 performance goals until August 2020 to allow for the impact of the COVID-19 pandemic to be more fully understood so that more meaningful and appropriately rigorous and challenging performance goals could be set. The Compensation Committee approved the goals in August 2020.

Reduced Maximum Payout Opportunity Under the MIP

In order to reflect the severe impact of the COVID-19 pandemic in the first quarter of FY 2021 on the company's shareholders, employees, and other stakeholders and delayed goal setting, the Compensation Committee reduced the maximum payout opportunity under the FY 2021 MIP by 25% (i.e., payouts are capped at 150% of target as compared to the 200% maximum payout opportunity under the FY 2020 MIP). In addition, in setting the financial performance targets, the Compensation Committee considered the historical Q1 FY 2021 financial performance and the uncertainty in forecasted performance due to the COVID-19 pandemic, and determined that it was appropriate to reduce the maximum payout opportunity by 25%.

Long-term Incentive Equity Awards

The Compensation Committee will continue to evaluate our executive compensation program to align and incentivize our NEOs and other members of senior management with the company’s short and long-term goals.

We design our executive pay program to support our business strategy and provide meaningful award opportunities that are aligned with the achievement of strategic and financial objectives.

In line with our pay-for-performance philosophy, the majority of each NEO’s target TDC is performance-based and therefore, “at risk.” Target TDC is composed of base salary, target annual bonus, and the target value of annual long-term equity incentives. Target TDC is used in the competitive review of target pay opportunities for each NEO. The chart below shows the percentage of each element in the target TDC for our CEO and the average for our other NEOs.

To best achieve our objectives for the executive pay program, we provide a compensation package composed of the following primary elements:

The mechanics of these pay elements and our pay decisions are detailed below. In addition, we have change-in-control agreements with our NEOs, and they participate in a severance plan. Additional information regarding the change-in-control agreements and executive severance plan can be found on page 48. We believe these elements assist us in attracting and retaining quality executive talent and support continuity of our leadership.

Each year, the Compensation Committee reviews and approves the overall design of our executive pay program and all pay elements for the NEOs. The CEO, chief financial officer, and chief human resources officer provide input on program design (including goals and weighting) and information on the company’s and the furniture industry’s performance.

The Compensation Committee has sole authority to retain and terminate consultants used by the Compensation Committee to evaluate executive compensation. For FY 2021, the Compensation Committee retained Frederic W. Cook & Co., Inc. ("FW Cook") as its independent executive compensation consultant to advise the committee on matters related to executive compensation. Under the Compensation Committee’s direction, FW Cook interacted with members of the senior executive team to provide insight into company and industry practices, emerging best practices and market trends.

The Compensation Committee annually reviews the independence of its consultants by considering the factors specified in the NYSE’s rules related to compensation advisor independence. With respect to FY 2021, FW Cook provided a report addressing the following factors: (1) other services the consultant provided to us, if any; (2) the fees we paid as a percentage of the consultant’s total revenue; (3) the consultant’s policies and procedures designed to prevent a conflict of interest; (4) any business or personal relationship of the consultant with a member of the committee; (5) any company stock owned by the consultant; and (6) any business or personal relationships between our executive officers and the consultant. In FY 2021, the Compensation Committee discussed FW Cook’s independence along with these factors and concluded that FW Cook’s work did not present any conflict of interest.

For each NEO, we establish a salary range and the target annual and long-term incentive award opportunities after considering market median pay levels. In setting individual pay levels, we consider market pay data and company performance. We also consider each NEO’s duties and responsibilities, skills, experience, and performance, as well as our business needs, cost, and internal pay equity.

In setting individual NEO pay levels and opportunities, the Compensation Committee annually reviews compensation data and practices for a peer group of companies in sectors in which the company generally competes to attract talented, high-performing executives. Reflecting the company's business model, the company seeks executive talent with one or more of retail, wholesale, manufacturing and e-commerce experience. Because the company has few competitors comparable in terms of its vertically-integrated business model, its peer group includes a mix of such types of companies.

The Compensation Committee worked with FW Cook to review and approve the current peer group of companies. FW Cook screened for potential peers:

The Compensation Committee evaluates each peer company annually to determine whether its inclusion remains appropriate. Based on its review and the advice of FW Cook, the Compensation Committee initially made no changes to the peer group from the prior year. The Compensation Committee generally believes that peer group consistency from year to year maximizes year-over-year comparability. The peer group used to evaluate executive compensation decisions is composed of the following 16 publicly-traded companies:

During FY 2021, based on its review and the advice of FW Cook, the Compensation Committee approved the following changes to the peer group: removing Libbey Inc. and Pier 1 Imports, Inc., each of which have filed for bankruptcy, and replacing them with Helen of Troy Limited and iRobot Corporation.

To aid in its oversight of our executive compensation program, in November 2020, the Compensation Committee requested that FW Cook conduct a competitive review of target pay opportunities for each of the NEO positions. The analysis included base salary, short-term incentives, and long-term incentives and compared the compensation of the NEOs within the peer group companies, supplemented by data from third-party general industry surveys. The FY 2021 target TDC of our NEOs, on average, was aligned with the median TDC for corresponding executives among the peer companies.

In addition, the Compensation Committee annually reviews current and historical compensation for the NEOs, as well as estimated amounts to be paid to the NEOs under various employment termination situations, including severance and a change in control of the company. Periodically, we also review market practices for executive retirement benefits and deferred compensation plans.

Our process for setting compensation for our NEOs includes a formal, individual performance evaluation each year for each NEO. The independent members of our board of directors assess our CEO’s performance each year. This assessment includes an evaluation of critical areas, including customer relations, human capital, shareholder value, operating results, and strategic goals. Every third year, the committee’s independent compensation consultant coordinates the committee’s evaluation of the CEO’s performance focusing on the same criteria. The consultant compiles the evaluations provided by each board member and prepares a detailed report for the board. The CEO assesses the individual performance of the other NEOs each year based on their overall performance throughout the year, accomplishment of specific goals, and their future potential within the organization, which is used in determining their compensation.

We set base salaries for our NEOs based on their scope of responsibility, skills, experience, leadership, and performance. We consider market competitiveness, specific job responsibilities, internal pay relationships, and total cost. Consistent with our practices for all management employees, NEOs are eligible for annual merit salary increases based on individual performance, comparison with market levels, and the total salary budget.

Salary Changes in FY 2021

A two-year base salary history that does not reflect the temporary salary reductions for each of the NEOs is presented in the following table:

We award incentive compensation, including under the La-Z-Boy Incorporated 2017 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), to reward participants for achievement of both short-term and long-term company performance goals and to enhance our ability to attract and retain employees. The Compensation Committee believes that designing the incentive compensation program with multiple objectives and performance periods promotes behavior that creates shareholder value while mitigating incentives to pursue risky or unsustainable results.

Our annual cash bonus program, which we refer to as the Management Incentive Program or MIP, is a short-term incentive award plan that we designed to motivate and reward NEOs for achieving annual performance goals.

Reduced Maximum Payout Opportunity Under the MIP

As noted above, in order to reflect the severe impact of the COVID-19 pandemic in the first quarter of FY 2021 on the company's shareholders, employees, and other stakeholders, the Compensation Committee reduced the maximum payout opportunity under the FY 2021 MIP by 25% (i.e., payouts are capped at 150% of target as compared to the 200% maximum payout opportunity under the FY 2020 MIP).

Pay-for-Performance Linkage — FY 2021 MIP Payouts Were At Maximum, Reflecting Our Strong Financial Performance

Our FY 2021 company financial performance results, on a consolidated basis, were above the maximum performance goals for sales and operating profit, reflecting strong performance during the last three quarters of the fiscal year offset by the significant impact of the COVID-19 pandemic on sales and operating profit in the first quarter. In line with our compensation philosophy and commensurate with the achievement level of the pre-established performance goals, MIP payments to our NEOs for FY 2021 were at the maximum.

FY 2021 financial performance metrics were:

The Compensation Committee selected net sales and operating profit as the financial performance metrics to focus management on:

In setting the performance goals shown below, the Compensation Committee considered prior-year results and forecasted financial results at the time. Given the uncertainty on the COVID-19 pandemic and economic demand at the beginning of FY 2021, the Compensation Committee widened the overall operating performance range from threshold to target. Achievement between the threshold, target, and maximum performance levels is calculated using straight-line interpolation between the relevant two endpoints.

Despite the unprecedented and unforeseeable impact of the COVID-19 pandemic on the general economy, the retail and furniture industries, and the company's operations and financial performance during the first quarter of FY 2021, the company had strong execution in the last three quarters of FY 2021 against the net sales and operating profit performance goals.

FY 2021 NEO Target Awards and Payouts

For FY 2021, the Compensation Committee established target incentive awards, specified as a percentage of base salary earnings (without regard to temporary base salary reductions due to COVID-19), for each NEO using competitive market median data and the company’s historical compensation practices for employees in those salary grades. The Company did not increase the target incentive awards for the NEOs for FY 2021. The NEOs have the opportunity to earn awards between 50% of their target incentive award if we meet minimum performance goals to a maximum of 150% of their target incentive awards if we meet the relevant performance goals.

Our NEOs’ FY 2021 target awards, achieved performance levels, and actual MIP amount were as follows:

The long-term incentive award provisions of our Omnibus Incentive Plan provide for equity-based compensation (restricted shares, restricted stock units, stock options, or other forms of equity-based compensation) that we design to align NEO pay with long-term shareholder returns, motivate our NEOs to focus on long-term business objectives, and encourage long-term strategic thinking. The value our NEOs receive from these awards varies based on the company’s performance and the future price appreciation and TSR of our common stock.

FY 2021 Equity Grants

Each year, the Compensation Committee establishes long-term incentive award types, mix, and award levels for each eligible pay grade based on our objectives for the equity grants and after considering market median practices, total cost (including share usage, accounting, and tax impacts), and past practices. We review the accounting treatment of the relevant incentive award types, including stock options, performance-based share awards, and restricted share awards. The Compensation Committee approves annual equity-based awards that are generally granted in the first quarter of the fiscal year.

For the FY 2021 long-term incentive awards, the Compensation Committee approved a change in the mix of the equity awards to provide 50% stock options and 50% performance-based share awards. This change was made to more closely align the interests of our NEOs with the interests of our shareholders, who, at the time of grant, had experienced the negative impact of

the COVID-19 pandemic on TSR due to a lower stock price. Early in FY 2021, pursuant to the Omnibus Incentive Plan, we granted to our NEOs stock options and performance-based shares.

The Compensation Committee approved a change to the weighting of the performance-based shares after receiving shareholder feedback. The FY 2021-FY 2023 performance-based share awards have equal weighting of performance in each year of the three-year performance period for sales growth and operating cash flow compared to the prior design of placing greater weighting in the first and second years of the three-year performance period. Relative TSR performance continues to be measured on a three-year cumulative basis; however, the Compensation Committee increased the weighting of rTSR to 50% and reduced the sales growth and operating cash flow weighting to 25% each as listed in the table below. These changes were made to better align the performance-based share awards with the interests of our shareholders.

Stock Options (50% of total FY 2021 long-term incentive opportunity)

Stock options entitle NEOs to purchase stock at an exercise price equal to the closing price on date of grant, subject to the vesting terms applicable to the award. Options expire at the end of ten years if they have not been exercised by that time. Stock options deliver value to NEOs if the company’s stock price rises, directly aligning executive compensation with the value created for shareholders as reflected in stock price appreciation from the date of grant. The stock options we granted in FY 2021 vest in equal installments over four years (25% per year), subject to the recipient's continued employment.

Performance-Based Share Awards (50% of total FY 2021 long-term incentive opportunity)

Performance-based share awards provide our NEOs the opportunity to earn a defined number of shares of our common stock if we achieve pre-set performance goals and the NEO remains employed through the conclusion of the performance period. The value of any earned shares depends on La-Z-Boy’s future stock price. An NEO’s award opportunity ranges from 50% of the NEO’s target number of shares if we meet threshold performance goals to a maximum of 200% of the target number of shares. If the performance goals are not achieved, the performance-based share awards associated with that performance metric will not vest. Following the conclusion of the three-year performance period, we pay out the shares that our NEOs earned.

The number of shares our NEOs receive, if any, will depend on how the company performs against sales growth and operating cash flow performance goals for each of FYs 2021, 2022, and 2023, and against rTSR goals over the three-year performance period. TSR is measured cumulatively over the entire three-year performance period relative to the TSR of the constituents of the S&P 600 Consumer Durables and Apparel sub-index. For the overall payout, the weightings of each of the performance goals and the annual periods in the three-year performance period are shown in the table below. For the performance-based share awards, the Compensation Committee seeks to set target performance goals that are challenging but reasonably achievable with strong management performance.

The Compensation Committee utilized sales performance as an element in both the company’s FY 2021 MIP and FY 2021-2023 long-term equity incentive program in recognition that this measure is viewed as a core driver of the company’s performance and shareholder value creation. In designing the company’s executive compensation program, the Compensation Committee supplemented this measure with additional performance measures in order to strike an appropriate balance with respect to incentivizing top-line growth, profitability, liquidity and shareholder returns over both the short-term and long-term horizons.

Prior LTIP Equity Grant Performance Achievement and Payouts

Each of our NEOs earned payouts on the performance-based share awards granted in FY 2019 for the three-year performance period that ended with our FY 2021 year end, except for Mr. Krull, who joined the company after the FY 2019 award was granted. The design and structure of these performance-based shares was similar to those granted in FY 2020 and FY 2021, except for the changes to the relative weighting of the performance metrics made for the FY 2021 grant. The

following table shows how the company performed against the sales and operating cash flow goals for each of the three fiscal years, and the company’s rTSR versus the S&P 600 Consumer Durables and Apparel sub-index for the three-year performance period. Following the end of the three-year performance period, we paid out earned shares, the number and value of which are shown in the FY 2021 Option Exercises and Stock Vested table on page 53.

Performance Period FY 2019-2021 – Overall payout of 111% of target

The Compensation Committee includes certain pre-established adjustments to the performance metrics to provide NEOs with an incentive to take actions that are considered to be in the long-term interests of the business, but that might otherwise adversely affect payouts on the awards. In calculating FY 2021 performance for operating cash flow, pursuant to the pre-established adjustments, purchase accounting charges related to acquisitions and impacts from our supply chain optimization initiative and our business realignment were excluded.

Performance Period FY 2020-2022

The Compensation Committee includes certain pre-established adjustments to the performance metrics to provide NEOs with an incentive to take actions that are considered to be in the long-term interests of the business, but that might otherwise adversely affect payouts on the awards. In calculating FY 2020 performance for sales and operating cash flow, pursuant to the pre-established adjustments, purchase accounting charges related to acquisitions and impacts from our supply chain optimization initiative were excluded. Additionally, in calculating FY 2021 performance for operating cash flow, pursuant to the pre-established adjustments, impacts from our supply chain optimization initiative were excluded.

Performance Period FY 2021-2023

In calculating FY 2021 performance for operating cash flow, pursuant to the pre-established adjustments, impacts from our supply chain optimization initiative and business realignment, as well as the benefit of the CARES Act were excluded.

These awards for the grants made in FY 2020 and FY 2021 have been earned contingent on the NEO remaining with the company through the end of the respective three-year performance period, after which they will be paid. For information on the treatment of these awards at retirement, see Payments Made Upon Disability or Retirement on page 57.

Our LTI Payout History Demonstrates the Rigor of Our Performance Goals

We provide retirement benefit plans as an incentive for employees to remain with the company long-term and to assist with retirement planning. Our NEOs are eligible to participate in the same retirement benefit program that we offer to salaried employees at the corporate level.

Our NEOs are eligible to participate in our 401(k) plan to which the company may contribute. The match varies by operating unit and ranges from 0% to a maximum of 4% if the employee contributes at least 6% of his or her eligible compensation. As part of the company's response to the COVID-19 pandemic, the 401(k) plan match was suspended on March 29, 2020, and was reinstated effective August 1, 2020.

Our pay-for-performance compensation philosophy extends to our Performance Compensation Retirement Plan, in which our NEOs, executive management employees, and certain other key management employees designated by the Compensation Committee participate. This plan is designed so that contributions are only made to the plan to the extent the company achieves pre-set performance goals and, accordingly, contributions will fluctuate year to year based on company performance, thus creating another pay-for-performance element in the company's compensation program.

Key features of the plan are:

For FY 2021, the Compensation Committee set total operating income as the performance criterion. NEOs received contribution credits based on operating income performance relative to threshold and target performance levels and individual percentage factors as follows:

Our 2005 Executive Deferred Compensation Plan allows executives to defer pay they have earned. Participants may elect to defer up to 100% of their salaries and annual cash incentive awards made under the MIP (excluding any amounts attributable to the exercise of positive discretion by the Compensation Committee). In addition, the company may contribute to this plan any company 401(k) match that cannot be credited to executives’ accounts under the 401(k) plan due to the Internal Revenue

Code compensation limitations that apply to the tax-qualified retirement plans. Such limits may apply because the executive’s contributions and the company’s matching contributions were limited by either the annual contribution limit — $19,500 for 2021 — or the annual compensation limit — $290,000 for 2021. NEOs salary and bonus deferrals are detailed in the FY 2021 Non-Qualified Deferred Compensation table on page 55.

The Compensation Committee annually monitors compliance by our executive management with stock ownership guidelines. We establish a minimum fixed number of shares of company stock that we expect each executive to own based on a multiple of the executive’s annual base salary at the time we set the guideline. Executives are expected to achieve compliance with the initial guideline within five years. We reset the stock ownership requirement every three years and did so in June 2019 based on each executive’s salary and a representative share price at the end of FY 2019. The committee will reassess the share requirement again in 2022, and, subject to variation in our stock price, executives can expect their requirements to increase as their compensation increases. Current stock ownership guideline values and approximate share requirements for the NEOs are as follows:

We have change-in-control agreements with our NEOs to support continuity of our leadership in the event the company’s ownership changes. Under the agreements, a change in control generally occurs when a person, entity or group acquires ownership of 30% of a company’s stock, increases its holding to more than 50% of the value or voting power of a company’s stock, or acquires 40% or more of a company’s assets, or if a majority of a company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the directors who were serving before the date of the appointment or election.

The severance plan for the NEOs is designed to assist the company in attracting and retaining quality executive talent while providing the company some protection against competition and solicitation by former executives.

The severance plan requires the company to pay an NEO severance if the company discharges the executive other than “for cause” or if the NEO leaves the company with “good reason.” Following a qualifying termination of employment, the company would pay the CEO severance for 24 months and pay the other NEOs severance for 12 months at the level of their base salary when their employment ended. Discharge “for cause” includes employee acts of fraud, reckless misconduct, substandard performance that is not corrected, and similar acts or failures to act. Resignation for “good reason” includes a resignation triggered by a reduction in the executive’s pay unless similarly situated employees are similarly affected or a requirement that the executive relocate. NEOs will receive medical and dental benefits during the time they receive severance. If an NEO’s employment terminates following a change in control of the company, the NEO receives benefits under the severance plan only to the extent they exceed benefits the NEO receives pursuant to the NEO’s change-in-control agreement with the company. Information regarding the benefits payable under the severance plan and estimated termination payments to NEOs is presented on pages 56-59.

We established the severance periods of 24 and 12 months based on the market and peer company analysis. To receive severance, NEOs must execute a release of claims and comply with non-competition and non-solicitation covenants for the duration of the severance term. NEOs are entitled to receive and retain only that portion of the severance pay that is in excess of compensation they receive from other employment during the severance period.

In accordance with our policy, we will require a management employee to reimburse us for annual or long-term incentive payments we made to the employee, and we will rescind any contribution credits we made for the employee under the Performance Compensation Retirement Plan, to the extent our Board determines that the employee engaged in misconduct that resulted in a material inaccuracy in our financial statements or the performance metrics we used to make incentive payments or awards, and the employee received a higher payment as a result of the inaccuracies. If we determine that any contribution credits we made to the Performance Compensation Retirement Plan were based on erroneous financial statements or other financial errors or misstatements, we will adjust all participants’ accounts to reflect contribution credits calculated based on complete and accurate financial information.

The FY 2021 Summary Compensation Table presents FY 2019, 2020, and 2021 “total compensation” (see footnotes for the included pay elements) for the NEOs. Mr. Krull was not an NEO prior to FY 2020.

The following table provides details of all incentive plan-based awards granted to the NEOs during FY 2021, all of which were granted under the Omnibus Incentive Plan. Specifically, the table presents the following FY 2021 incentive awards:

The following table presents all outstanding stock options/stock appreciation rights and unvested stock awards (performance-based shares and restricted shares) held by the NEOs at the end of the fiscal year. Market values for the unvested stock awards are presented based on the closing price of the company’s stock on April 23, 2021, of $43.22.