Long-Term Performance Plan


    EXHIBIT
      10.3                                      


    
 

    HNI
      CORPORATION

            LONG-TERM
      PERFORMANCE
      PLAN


    (Adopted
      February 16, 2000. Amended January 1, 2004 and August 8, 2006.)

    


    HNI
      Corporation, an Iowa corporation (the "Corporation") hereby establishes this
      Long-Term Performance Plan (the "Performance Plan") effective as of January
      1,
      2003, and amended on January 1, 2004 and August 8, 2006.

    


    1. Purpose.
      The
      purpose of this Performance Plan is to promote the attainment of the
      Corporation's performance goals by providing incentive compensation for certain
      designated key executives and employees of the Corporation and its Subsidiaries.
      

    


    2. Definitions.
      The
      following terms have the following meanings when used in this Performance Plan
      with initial capital letters:

    


    (a) "Board"
      means the Board of Directors of the Corporation or, pursuant to any delegation
      by the Board to the Committee pursuant to Section 13, the
      Committee.

    


    (b) "Code"
      means the Internal Revenue Code of 1986, as amended from time to
      time.

    


    (c) "Committee"
      means the Human Resources and Compensation Committee of the Board as constituted
      at the relevant time, which shall consist of two or more "outside directors"
      within the meaning of Section 162(m) of the Code who are not eligible for
      participation in the Plan. 

    


    (d) "Disability
      or Disabled," with respect to a Participant, means that the Participant
      satisfies the requirements to receive long-term disability benefits under the
      Corporation-sponsored group long-term disability plan in which the Participant
      participates without regard to any waiting periods, or that the Participant
      has
      been determined by the Social Security Administration to be eligible to receive
      Social Security disability benefits. A Participant shall not be considered
      to be
      Disabled unless the Participant furnishes proof of the Disability to the
      Corporation in such form and manner as the Corporation may require.


    


    (e) "Earned
      Performance Award" means the award, if any, payable to a Participant at the
      end
      of the Performance Period.
      

    


    (f) "162(m)
      Employee," for any calendar year, means an employee of the Corporation who,
      as
      of the close of the calendar year, is: (a) the CEO (or an individual acting
      in
      such capacity); or (b) among the four highest compensated officers of the
      Corporation (other than the CEO). Whether an employee is the CEO or one of
      the
      four highest compensated officers of the Corporation is determined pursuant
      to
      the executive compensation rules of the Securities Exchange Act of
      1934.

     

    (g)
      "Operating Unit" means either:  (i) the
      Corporation as a whole; (ii) an individual subsidiary, division, store, or
      other
      business unit of the Corporation; or (iii) a grouping of business units, that
      employs individuals that have been approved to participate in this Performance
      Plan by the Board.

    


    (h) "Participant"
      means a person who is designated by the Board to receive benefits under this
      Performance Plan and who is at the time an officer, executive, or other employee
      of the Corporation or any one or more of its Subsidiaries, or who has agreed
      to
      commence serving in any such capacity.

    


    (i) "Performance
      Measure" means the level of performance for the Operating Unit, a division
      or
      other business unit of an operating unit,
      or any
      of them, for each Performance Period, in each case as established pursuant
      to
      Section 6. A Performance Measure may take into account such criteria as the
      Board determines to be appropriate.

     

    (j)
      "Performance Period" means a period of three
      consecutive fiscal years of the Corporation commencing on the first day of
      a
      fiscal year of the Corporation or other period as selected by the
      Board.

     

    (k) "Retirement,"
      of
      a
      Participant, means: (i) for Performance Periods commencing on or after January
      1, 2007, the Participant's termination of employment with the Corporation and
      its Subsidiaries after the attainment of age 65,
      or
      age
      55 with
      ten
      years of service with the Corporation or a Subsidiary, provided, however, that
      the Chief Executive Officer of the Corporation, in his or her discretion, may
      waive or reduce the ten-year service requirement with respect a Participant;
      and
      (ii) for Performance Periods commencing prior to January 1, 2007, the
      Participant's voluntary termination of employment with the Corporation on or
      after attainment of age 65, or when the Participant is at least 55 years old
      and
      the sum of the Participant's age and service equals at least 65.

     

    (l)
      "Target Performance Award" means the dollar award
      established for a Participant if the Performance Measures applicable to the
      Participant is achieved.

    


    (m) "Subsidiary"
      has the meaning specified in Rule 405 promulgated under the Securities Act
      of
      1933, as amended (or under any successor rule substantially to the same
      effect).

    


    3. Eligibility. 

    


    (a) Except
      as
      otherwise provided in this Section 3, an employee of the Corporation or one
      of
      its Subsidiaries will become a Participant for a particular Performance Period
      to the extent designated by the Board, or by the Chief Executive Officer of
      the
      Corporation if the Board delegates such authority to Chief Executive
      Officer.

    


    (b) An
      employee who first becomes eligible to participate after the beginning of a
      particular Performance Period will become a Participant for such Performance
      Period only in accordance with this Section 3(b). The Board, or the Chief
      Executive Officer of the Corporation if the Board delegates such authority
      to
      the Chief Executive Officer, may allow participation for a portion of such
      Performance Period for such employee on such terms and conditions as the Board
      (or the Chief Executive Officer) may determine.

     

    4. Earned
      Performance Award. 
Unless changed by the Board, each eligible Participant may earn an
      Earned Performance Award as hereinafter provided. The performance of the
      Operating Unit during a particular Performance Period will be measured using
      the
      Performance Measure established for that Performance Period by the Board in
      accordance with Section 6. In the event such performance for such Performance
      Period is below the minimum Performance Measure established therefor, no Earned
      Performance Award will be paid to Participants in respect thereof. In no event
      shall an Earned Performance Award exceed $3 million dollars.

     

    5.
      Target Performance Award.  Each
      Participant shall be assigned a Target Performance Award at the beginning of
      the
      Performance Period, as determined by the Board. The Target Performance Award
      will be expressed as a percentage of the Participant's base pay at the time
      the
      Target Performance Award is assigned. The actual award payable to a Participant
      at the end of the Performance Period will be determined by applying the
      percentage achievement of the Performance Measure and multiplying that result
      against the Target Performance Award to determine the Earned Performance
      Award.  

     

    6. Performance
      Measure.

    


    (a) The
      Board
      will approve for each Performance Period the applicable Performance Measure.
      Such Performance Measure may be adjusted during a Performance Period to prevent
      dilution or enlargement of an
      award
      as
      a result of extraordinary events or circumstances as determined by the Board
      or
      to exclude the effects of extraordinary, unusual or nonrecurring events, changes
      in accounting principles, discontinued operations, acquisitions, divestitures
      and material restructuring charges.

    


    (b) The
      Corporation will: (i) notify each eligible employee who has been selected to
      participate in this Performance Plan that he or she is a Participant under
      this
      Performance Plan for such Performance Period; and (ii) communicate in writing
      to
      each Participant the Target Performance Award granted to such Participant
      pursuant to Section 5 and the Performance Measure applicable to such Participant
      for such Performance Period.

    


    (c) In
      the
      case of a Participant who is a 162(m) Employee, a Performance Measure must
      be
      pre-established by the Committee, must be objective, and must state, in terms
      of
      an objective formula or standard, the method for computing the amount of
      compensation payable if the Performance Measure is attained. A Performance
      Measure is considered "pre-established" for purposes of this paragraph if it
      is
      established in writing by the Committee no later than 90 days after the
      commencement of a Performance Period, provided that the outcome is substantially
      uncertain at the time the Committee actually establishes the Performance
      Measure. However, in no event will a Performance Measure be considered to be
      pre-established if it is established after 25% of a Performance Period has
      elapsed. A Performance Measure is considered "objective" if a third party having
      knowledge of the relevant facts could determine whether the Performance Measure
      is met. A formula or standard is considered "objective" if a third party having
      knowledge of the relevant performance results could calculate the amount to
      be
      paid to the Participant.

     

    
      The
        Performance Measure may be based on
        one or more of the following criteria and may be based on attainment of a
        particular level of, or on a positive change in, a factor: revenue, revenue
        per
        employee, earnings before income tax (profit before taxes), earnings before
        interest and income tax, net earnings (profit after taxes), earnings per
        employee, tangible, controllable or total asset turnover, earnings per share,
        operating income, total shareholder return, market share, return on equity,
        return on invested capital, growth in earnings, before-tax return on net
        assets,
        after-tax return on net assets, distribution expense, inventory turnover,
        economic value added (economic profit). 

    

     

    7. Payment
      of Awards. 

    


    (a) Subject
      to Sections 8 and 9, the value of the Earned Performance Award with respect
      to a
      Performance Period will be paid on
      the
      15th
      day of
      the Corporation's February fiscal month following the end of the Performance
      Period (or as soon thereafter as is administratively reasonable),
      provided the Participant is employed by the Operating Unit as of the last day
      of
      such Performance Period, and such payment, if any is earned, shall be made
      in
      the following form:  (i) 50% of the value thereof in the form of cash; and
      (ii) 50% of the value thereof in the form of common stock of HNI Corporation
      as
      Bonus Stock or deferred shares, as elected by the Participant, and as granted
      by
      the Board under the 1995 Stock-Based Compensation Plan or the 2007 Stock-Based
      Compensation Plan, if approved by the shareholders of the Corporation.
For
      purposes hereof, an Earned Performance Award will be deemed to be paid as soon
      as administratively reasonable after the date specified above if it is paid
      within six months thereafter. All
      Earned Performance Awards that are paid in cash will be paid in U.S. dollars.
      The Corporation may deduct from any payment such amounts as may be required
      to
      be withheld under any federal, state, or local tax laws. In the case of a
      Participant who is a 162(m) Employee, the Committee shall certify the extent
      to
      which the Participant has satisfied each of his or her Performance Measure.
      

    


    (b)
       All
      Earned Performance Awards paid to the Chief Executive Officer and Chief
      Financial Officer of the Corporation under this Plan are subject to forfeiture
      as provided in Section 304 of the Sarbanes-Oxley Act of 2002, and the
      implementing rules and regulations. Notwithstanding anything in the Plan to
      the
      contrary, the Board may reduce the amount of, or completely eliminate, an Earned
      Performance Award otherwise payable to a Participant for a Performance Period
      if
      the Board determines that due to the Participant's performance or behavior
      during or immediately following such Performance Period the Participant should
      not be entitled to the Earned Performance Award.

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    8. Termination
      of Employment. 

    


    (a) 
      If a
      Participant terminates employment with the Corporation and its Subsidiaries
      due
      to death, Disability, or Retirement occurring before the last day of a
      Performance Period, the Participant's Earned Performance Award, if any, will
      be
      payable as soon as practicable after the end of such Performance Period, and
      the
      value of such Award shall be equal to a value, determined using the Performance
      Measure as of the end of the Performance Period, equal to the product of: (i)
      the number of the Target Performance Award; multiplied by (ii) a fraction,
      the
      numerator of which is the number of months in the Performance Period that
      occurred prior to such termination of employment, and the denominator of which
      is the total number of months in such Performance Period. For these purposes,
      a
      Participant will be credited with a month during a Performance Period only
      if he
      or she is employed for at least 15 days during the month. 

    


    (b)
       Except
      as
      provided in Section 9, if a Participant's employment with the Corporation and
      its Subsidiaries terminates for any reason other than death, Disability or
      Retirement before the last day of a Performance Period, the Participant will
      not
      be entitled to any payment or award under this Performance Plan unless otherwise
      determined by the Board. 

    


    9. Change
      in Control of the Corporation. 

    


    (a)
       In
      connection with a Change in Control of the Corporation, the value of each Target
      Performance Award shall be determined by the Board prior to the effective date
      of the Change in Control, and each Participant's Target Performance Award will
      become payable without proration within
      30
      days
      prior to
      such date. 

    


    (b) A
      "Change
      in Control of the Corporation" shall mean:

    


    (i)
      the
      acquisition by any individual, entity or group (with the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
      "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
      Rule 13d-3 promulgated under the Exchange Act) of 35%
      or more
      of either: (A) the then outstanding shares of common stock of the Corporation
      (the "Outstanding Corporation Common Stock"); or (B) the combined voting power
      of the then outstanding voting securities of the Corporation entitled to vote
      generally in the election of Directors (the "Outstanding Corporation Voting
      Securities"); provided, however, that for purposes of this subsection (i),
      the
      following acquisitions shall not constitute a Change in Control: (I) any
      acquisition directly from the Corporation; (II) any acquisition by the
      Corporation; (III) any acquisition by any employee benefit plan (or related
      trust) sponsored or maintained by the Corporation or any corporation controlled
      by the Corporation; or (IV) any acquisition by any corporation pursuant to
      a
      transaction which complies with clauses (A), (B) and (C) of subsection (iii)
      of
      this paragraph; or

    


    (ii)
      individuals who, as of the date hereof, constitute the Board (the "Incumbent
      Board") cease for any reason to constitute a
      majority
      of the
      Board; provided, however, that any individual becoming a Director subsequent
      to
      the date hereof whose election, or nomination for election by the Corporation's
      shareholders, was approved by a vote of a
      majority
      of the
      Directors then comprising the Incumbent Board shall be considered as though
      such
      individual were a member of the Incumbent Board, but excluding, for this
      purpose, any such individual whose initial assumption of office occurs as a
      result of an actual or threatened election contest with respect to the election
      or removal of Directors or other actual or threatened solicitation of proxies
      or
      consents by or on behalf of a Person other than the Board; or

    


    (iii)
      consummation of a reorganization, merger or consolidation or sale or other
      disposition of all or substantially all of the assets of the Corporation (a
      "Business Combination"), in each case, unless, following such Business
      Combination: (A) all or substantially all of the individuals and entities who
      were the beneficial owners, respectively, of the Outstanding Corporation Common
      Stock and Outstanding Corporation Voting Securities immediately prior to such
      Business Combination beneficially own, directly or indirectly, 50% or more
      of,
      respectively, the then outstanding shares of common stock and the combined
      voting power of the then outstanding voting securities entitled to vote
      generally in the election of Directors, as the case may be, of the corporation
      resulting from such Business Combination (including, without limitation, a
      corporation which as a result of such transaction owns the Corporation or all
      or
      substantially all of the Corporation's assets either directly or through one
      or
      more subsidiaries) in substantially the same proportions as their ownership,
      immediately prior to such Business Combination of the Outstanding Corporation
      Common Stock and Outstanding Corporation Voting Securities, as the case may
      be;
      (B) no Person (excluding any corporation resulting from such Business
      Combination or any employee benefit plan (or related trust) of the Corporation
      or such corporation resulting from such Business Combination) beneficially
      owns,
      directly or indirectly, 35%
      or more
      of, respectively, the then outstanding shares of common stock of the corporation
      resulting from such Business Combination or the combined voting power of the
      then outstanding voting securities of such corporation except to the extent
      that
      such ownership existed prior to the Business Combination; and (C) at least
      a
      majority of the members of the board of directors of the corporation resulting
      from such Business combination were members of the Incumbent Board at the time
      of the execution of the initial agreement, or of the action of the Board,
      providing for such Business Combination.

    


    10. Sale
      of Operating Unit. Except
      as
      provided in paragraph 9, in the event of the sale of substantially all of the
      stock or assets of an Operating Unit, with respect to each Participant employed
      by such Operating Unit on the date of such sale, the value of each Award shall
      be determined as of the date of such sale by the Board based on the percentage
      of the Performance Measure completed as of the date of sale, the number of
      months of the Performance Period completed at the time of sale, the actual
      purchase price of the Operating Unit and such other factors as the Board deems
      relevant in light of the circumstances of the sale. Payments pursuant to this
      Section 10 shall be made 60 days, or as soon thereafter as is administratively
      reasonable, following the date of the sale. For these purposes, a month will
      be
      considered to have been completed at the time of the sale only if the sale
      occurs later than the 14th
      day of
      the month. 

    


    11. Transfers
      and Changes in Responsibilities.

    


    (a) 
      If a
      Participant's responsibilities materially change or the Participant is
      transferred during a Performance Period to another Operating Unit or to a
      position that is not designated or eligible to participate in this Performance
      Plan, the Corporation may, as determined by the Board, either: (i) continue
      the Participant's participation in this Performance Plan and establish a new
      Target Performance Award and Performance Measure for the Participant with
      respect to his or her new position; or (ii) terminate the Participant's
      participation in this Performance Plan and, as of the date of such change or
      transfer, prorate the Participant's Target Performance Award on the basis of
      the
      ratio of the number of months of the Participant's participation during the
      Performance Period to which such Target Performance Award relates to the
      aggregate number of months in such Performance Period. For these purposes,
      a
      Participant will be considered to have participated for a month during a
      Performance Period only if he or she participated for at least 15 days during
      the month. 

    


    (b) If
      in the
      event of such a change or transfer and the Participant's participation in this
      Performance Plan is not terminated pursuant to Section 11(a)(ii), then the
      Participant's Earned Performance Award will be prorated on the basis of the
      number of months of service by the Participant at each Operating Unit during
      the
      Performance Period. For these purposes, a Participant will be credited with
      a
      month of service at an Operating Unit only if he or she was employed by the
      Operating Unit for at least 15 days during the month. 

    


    12. Security
      of Payment of Benefits.
      Unless
      otherwise determined by the Board, all Earned Performance Awards will be paid
      from the Corporation's general assets, and nothing contained in this Performance
      Plan will require the Corporation to set aside or hold in trust any funds for
      the benefit of any Participant, who will have the status of a general unsecured
      creditor of the Corporation.

    


    13. Administration
      of the Plan. 

    


    (a)
        This
      Performance Plan will be administered by the Board, which may from time to
      time
      delegate all or any part of its authority under this Performance Plan to the
      Committee. Notwithstanding the forgoing, in the case of any 162(m) Employee,
      the
      Committee shall have sole and exclusive authority to: (i) establish the
      Performance Measures for such employee; (ii) determine and certify the
      achievement of the Performance Measures for such employee, and (iii) make any
      other discretionary decision affecting such employee under the
      Plan.

    


    (b) The
      Board
      will take such actions as are required to be taken by it hereunder, may take
      the
      actions permitted to be taken by it hereunder, and will have the authority
      from
      time to time to interpret this Performance Plan and to adopt, amend, and rescind
      rules and regulations for implementing and administering this Performance Plan.
      All such actions will be in the sole discretion of the Board and, when taken,
      will be final, conclusive, and binding. Without limiting the generality or
      effect of the foregoing, the interpretation and construction by the Board of
      any
      provision of this Performance Plan or of any agreement, notification, or
      document evidencing the grant of benefits payable to Participants and any
      determination by the Board in its sole discretion pursuant to any provision
      of
      this Performance Plan or any provision of such agreement, notification, or
      document will be final and conclusive.

    


    (c) The
      existence of this Performance Plan or any right granted or other action taken
      pursuant hereto will not affect the authority of the Board or the Corporation
      to
      take any other action, including in respect of the grant or award of any annual
      or long-term incentive or other right or benefit, whether or not authorized
      by
      this Performance Plan, subject only to limitations imposed by other benefit
      plans of the Corporation and by applicable law.

    


    14. Miscellaneous. 

    


    (a)  
      This
      Performance Plan will not confer upon any Participant any right with respect
      to
      continuance of employment or other service with the Corporation or any
      Subsidiary, nor will it interfere in any way with any right the Corporation
      or
      any Subsidiary would otherwise have to terminate or modify the terms of such
      Participant's employment or other service at any time.

    


    (b) Except
      as
      otherwise provided in this Performance Plan, no right or benefit under this
      Performance Plan will be subject to anticipation, alienation, sale, assignment,
      pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell,
      assign, pledge, encumber, or charge such right or benefit will be void. No
      such
      right or benefit will in any manner be liable for or subject to the debts,
      liabilities, or torts of a Participant.

    


    (c) This
      Performance Plan may be amended or terminated from time to time by the Board.
      In
      the event this Performance Plan is terminated before the last day of a
      Performance Period, the Earned Performance Award otherwise payable for such
      Performance Period will be prorated on the basis of the ratio of the number
      of
      months in such Performance Period prior to such termination to the aggregate
      number of months in such Performance Period and will be paid only after the
      end
      of such Performance Period, which will be deemed to continue until the
      expiration thereof as if this Performance Plan had not been
      terminated.
      For
      these
      purposes, a month will be considered to have been completed at the time of
      the
      amendment or termination only if the amendment or termination is effective
      later
      than the 14th
      day of
      the month. Any
      such
      termination shall comply with the requirements of Section 409A of the
      Code.

    


    The
      Performance Plan will be terminated in the event the shareholders of the
      Corporation approve a complete liquidation or dissolution of the Corporation
      that will be taxed under Section 331 of the Code. In such case, the value of
      each Target Performance Award shall be determined by the Board prior to the
      effective date of the dissolution, and each Participant's Target Performance
      Award will become payable upon such dissolution.

    


    (d) If
      any
      provision in this Performance Plan is held to be invalid or unenforceable,
      no
      other provision of this Performance Plan will be affected thereby.

    


    (e) This
      Performance Plan will be governed by and construed in accordance with applicable
      United States federal law and, to the extent not preempted by such federal
      law,
      in accordance with the laws of the State of Iowa, without giving effect to
      the
      principles of conflict of laws thereof.

    


    15. Effective
      Date.
      The
      amendment and restatement of this Performance Plan set forth herein will become
      effective as of August 8, 2006.