UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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

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HILLENBRAND, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held February 24, 2010

The Annual Meeting of the shareholders of Hillenbrand, Inc. (the “Company”) will be held at the Company’s headquarters at One Batesville Boulevard, Batesville, Indiana 47006, on Wednesday, February 24, 2010, at 10:00 a.m. Eastern Standard Time, for the following purposes:

	(1)		to elect four members to the Board of Directors;
	(2)		to approve the Hillenbrand, Inc. Stock Incentive Plan (As of February 24, 2010);
	(3)		to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm; and
	(4)		to transact such other business as may properly come before the meeting and any postponement or adjournment of the meeting.

		By Order of the Board of Directors,
		John R. Zerkle
		Secretary

January 6, 2010

TABLE OF CONTENTS

		Page
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING			1
PROPOSAL NO. 1 — ELECTION OF DIRECTORS			7
THE BOARD OF DIRECTORS AND COMMITTEES			11
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT			19
SECURITY OWNERSHIP OF BENEFICIAL OWNERS OF MORE THAN 5% OF THE COMPANY’S COMMON STOCK			21
EXECUTIVE COMPENSATION			22
PART I: COMPENSATION DISCUSSION AND ANALYSIS			23
PART II: COMPENSATION COMMITTEE REPORT			47
PART III: EXECUTIVE COMPENSATION TABLES			48
COMPENSATION OF DIRECTORS			61
EQUITY COMPENSATION PLAN INFORMATION			63
AUDIT COMMITTEE REPORT			64
PROPOSAL NO. 2 — APPROVAL OF THE HILLENBRAND, INC. STOCK INCENTIVE PLAN (As of February 24, 2010)			66
PROPOSAL NO. 3 — RATIFICATION OF APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			73
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			74
APPENDIX A — HILLENBRAND, INC. STOCK INCENTIVE PLAN (As of February 24, 2010)			A-1

HILLENBRAND, INC.
PROXY STATEMENT

This proxy statement relates to the solicitation by the Board of Directors of Hillenbrand, Inc. (the “Company” or “Hillenbrand”) of proxies for use at the Annual Meeting of the Company’s shareholders to be held at the Company’s headquarters, One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 934-7500, on Wednesday, February 24, 2010, at 10:00 a.m., Eastern Standard Time, and at any postponements or adjournments of the meeting.

Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to Be Held on February 24, 2010.

•

This proxy statement and our 2009 Annual Report to Shareholders are available on the Internet at www.hillenbrandinc.com.

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

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

Q:

What is the purpose of this proxy statement?

A:		The Board of Directors of Hillenbrand is soliciting your proxy to vote at the 2010 Annual Meeting of the shareholders of Hillenbrand because you were a shareholder at the close of business on December 17, 2009, the record date, and are entitled to vote at the Annual Meeting. The record date was established by the Board of Directors as required by our By-laws and Indiana law.
		This proxy statement contains the matters that must be set out in a proxy statement according to the rules of the U.S. Securities and Exchange Commission (the “SEC”) and provides the information you need to know to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares.

Q:

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

A:		If your shares are registered directly in your name with Hillenbrand’s transfer agent, Computershare Investor Services, you are the “shareholder of record” with respect to those shares, and you tell us directly how your shares are to be voted.
		If your shares are held in a stock brokerage account or by a bank or other nominee, then your nominee is the shareholder of record for your shares and you are considered the “beneficial owner” of shares held in street name. As the beneficial owner, you have the right to direct your broker, bank, or nominee how to vote your shares.

Q:

What am I being asked to vote on?

A:

•

Election of four directors: Mark C. DeLuzio, James A. Henderson, Ray J. Hillenbrand, and F. Joseph Loughrey;

	•		Approval of the Hillenbrand, Inc. Stock Incentive Plan (As of February 24, 2010) (the “Amended Plan”); and
	•		Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2010.

The Board recommends a vote FOR each of the nominees to the Board of Directors, FOR the approval of the Amended Plan, and FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2010.

Q:

What is the voting requirement to elect the directors and to approve each of the proposals?

A:		Under Indiana law, corporate directors are elected by a “plurality” of the votes cast for the election of directors. A plurality means, in this case, that the four nominees receiving the most votes in their favor at the Annual Meeting will be elected to the Board.
		The proposals to approve the Amended Plan and to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm require the affirmative vote of a majority of the votes cast for or against approval. If you are present or represented by proxy at the Annual Meeting and you abstain, your abstention, as well as withheld votes for directors and broker non-votes, will not be counted as votes cast on any matter to which they relate.

Q:

How many votes do I have?

A:

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

Q:

How do I vote?

A:		The different ways that you can tell us (if you are a shareholder of record) or your nominee (if you are a beneficial owner) how to vote your shares depend on how you received your proxy statement this year.
		For shareholders of record, many of you were not mailed a hard copy of the Proxy Materials (this proxy statement and our 2009 Annual Report to Shareholders) and a proxy card. Instead, commencing on or about January 6, 2010, we sent you a Notice of Internet Availability of Proxy Materials (“Notice”) telling you that the Proxy Materials are available at the web site indicated in that Notice, www.proxyvote.com, and giving you instructions for voting your shares at that web site. We also told you in that Notice (and on the web site) how you could request us to mail the Proxy Materials to you. If you subsequently do receive the Proxy Materials by mail, you can vote in any of the ways described below. If not, you must vote via the Internet (and we encourage you to do so) at www.proxyvote.com or in person at the Annual Meeting as explained below.

With respect to shareholders of record who received the Proxy Materials by mail, we commenced mailing the Proxy Materials to you on or about January 6, 2010. You can vote using any of the following methods:

	•		Proxy card or voting instruction card. Be sure to complete, sign, and date the card and return it in the prepaid envelope. If you are a shareholder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote FOR the election of directors, FOR the approval of the Amended Plan, and FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2010.
	•		By telephone or the Internet. The telephone and Internet voting procedures established by Hillenbrand for shareholders of record are explained in detail on your proxy card and are designed to authenticate your identity, to allow you to give your voting instructions, and to confirm that these instructions have been properly recorded.
	•		In person at the Annual Meeting. You may vote in person at the Annual Meeting. You may also be represented by another person at the meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares and want to attend the meeting and vote in person, you must obtain a legal proxy from your broker, bank, or nominee and present it to the inspectors of election with your ballot when you vote at the meeting.
			With respect to the beneficial owners of shares held by nominees, the methods by which they can access the Proxy Materials and give the voting instructions to the nominee may vary, depending on the nominee. Accordingly, beneficial owners should follow the instructions provided by their nominees.

Q:

How will my shares be voted?

A:		For shareholders of record, all shares represented by the proxies mailed to shareholders will be voted at this meeting in accordance with instructions given by the shareholders. Where no instructions are given, the shares will be voted (1) in favor of the election of the Board of Directors’ nominees for four directors; (2) in favor of the approval of the Amended Plan; (3) in favor of the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company; and (4) in the discretion of the proxy holders upon such other business as may properly come before the meeting.
		For beneficial owners, the brokers, banks, or nominees holding shares for beneficial owners must vote those shares as instructed. If the broker, bank, or nominee has not received instructions from the beneficial owner, the broker, bank, or nominee generally has discretionary voting power only with respect to the ratification of the appointment of the independent registered public accounting firm, or may elect not to vote the shares on that proposal (referred to as a “broker non-vote”). Unlike in years past, however, a broker, bank, or nominee does not have discretion to vote for or against the election of directors or the approval of the Amended Plan. In order to avoid a broker non-vote of your shares on the election of directors and the approval of the Amended Plan, you must send voting instructions to your bank, broker, or nominee.

Q:

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

A:

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

	•		sending written notice of revocation to the Secretary of Hillenbrand at One Batesville Boulevard, Batesville, Indiana 47006;
	•		submitting a revised proxy by telephone, Internet, or paper ballot after the date of the revoked proxy; or
	•		attending the Annual Meeting and voting in person.

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

Q:

Who will count the votes?

A:

Representatives of Broadridge Investor Communication Solutions, Inc. will tabulate the votes and act as inspectors of election.

Q:

What constitutes a quorum at the Annual Meeting?

A:

As of the record date, 62,171,971 shares of Hillenbrand common stock were outstanding. A majority of the outstanding shares present or represented by proxy at the Annual Meeting constitutes a quorum for the purpose of adopting proposals at the Annual Meeting. If you submit a properly executed proxy, then your shares will be considered part of the quorum.

Q:

Who can attend the Annual Meeting?

A:

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

Q:

When are shareholder proposals due for the 2011 Annual Meeting?

A:		For shareholder proposals or director nominees to be presented at the Company’s 2011 Annual Meeting of shareholders and to be considered for possible inclusion in the Company’s proxy statement and form of proxy relating to that meeting, such proposals or nominations must be submitted to and received by the Secretary of Hillenbrand, at its principal offices at One Batesville Boulevard, Batesville, Indiana 47006, not later than September 8, 2010.
		In addition, with respect to proposals or nominations that will not be included in our proxy statement for the 2011 Annual Meeting, Hillenbrand’s Amended and Restated Code of By-laws provides that for business to be brought before a shareholders’ meeting by a shareholder, or for nominations to the Board of Directors to be made by a shareholder for consideration at a shareholders’ meeting, written notice thereof must be received by the Secretary of Hillenbrand at its principal offices not later than 100 days prior to the anniversary of the immediately preceding Annual Meeting, or not later than November 14, 2010, for the 2011 Annual Meeting of shareholders. This notice must also provide certain information set forth in the Amended and Restated Code of By-laws.

Q:

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

A:

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

Q:

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

A:

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

Q:

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

A:

We do. In addition to sending you these materials, some of our directors and officers as well as management and non-management employees may contact you by telephone, mail, email, or in person. You may also be solicited by means of press releases issued by Hillenbrand and postings on our web site, www.hillenbrandinc.com. None of our officers or employees will receive any additional compensation for soliciting your proxy. We have retained Broadridge Investor Communications Solutions, Inc. to assist us in soliciting proxies for an estimated fee of $35,800, plus reasonable out-of-pocket expenses. Broadridge will ask brokers, banks, and other custodians and nominees whether they hold shares for which other persons are beneficial owners. If so, we will supply them with additional copies of the Proxy Materials for distribution to the beneficial owners. We will also reimburse banks, nominees, fiduciaries, brokers, and other custodians for their costs of sending the Proxy Materials to the beneficial owners of Hillenbrand common stock.

Q:

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

A:

A copy of Hillenbrand’s 2009 Annual Report on Form 10-K may be obtained free of charge by writing or calling the Investor Relations Department of Hillenbrand at its main office at One Batesville Boulevard, Batesville, Indiana, 47006, telephone (812) 931-6000 and facsimile (812) 931-5184. The 2009 Annual Report on Form 10-K, as well as Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, are also available at Hillenbrand’s web site, www.hillenbrandinc.com.

Q:

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

A:

The documents listed below are available on the Internet at the Company’s web site which is www.hillenbrandinc.com. You may also go directly to www.hillenbrandinc.com/CorpGov_overview.htm for those documents. The documents are also available in print to any shareholder who requests copies through our Investor Relations Department at our main office at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931-6000 and facsimile (812) 931-5184. The available documents are:

	•		Hillenbrand, Inc. Corporate Governance Standards
	•		Hillenbrand, Inc. Committee Charters — Audit Committee, Nominating/Corporate Governance Committee, and Compensation and Management Development Committee
	•		Position Descriptions for Chairperson of the Board, Vice Chairperson of the Board, Members of the Board of Directors, Committee Chairpersons, and Committee Vice Chairpersons
	•		Hillenbrand, Inc. Code of Ethical Business Conduct
	•		Restated and Amended Articles of Incorporation of Hillenbrand, Inc.
	•		Amended and Restated Code of By-laws of Hillenbrand, Inc.

PROPOSAL NO. 1 — ELECTION OF DIRECTORS

This section of the proxy statement introduces the members of our Board of Directors, including the four directors who have been nominated for election to an additional three-year term at the 2010 Annual Meeting.

Nominees

The Restated and Amended Articles of Incorporation and the Amended and Restated Code of By-laws of Hillenbrand provide that members of the Board of Directors are classified with respect to the terms that they serve by dividing them into three equal (or near-equal) classes. Directors in each class are elected to serve a three-year term or until their successors have been duly elected and have qualified.

The Board of Directors currently consists of ten members, with three directors in Classes I and III, and four directors in Class II. The terms of the directors expire as follows:

Class		Term Expires at:
Class II		2010 Annual Meeting
Class III		2011 Annual Meeting
Class I		2012 Annual Meeting

The four directors in Class II, who are each nominated for election to the Board at the 2010 Annual Meeting to serve a three-year term ending at the 2013 Annual Meeting, and who each have agreed to serve as a director if elected, are Mark C. DeLuzio, James A. Henderson, Ray J. Hillenbrand, and F. Joseph Loughrey.

The Board of Directors recommends that shareholders vote FOR the election to the Board of Directors of each of the four nominees.

Set forth below is information about all of our directors, including the four nominees to be elected at the 2010 Annual Meeting of shareholders. The directors are listed alphabetically within each class.

Class I (Terms expire in 2012)

Name, Age, and Year First
Elected as a Director		Other Information
William J. Cernugel Age — 67 Director since 2008		William J. Cernugel has served as a director of the Company since March 31, 2008. Mr. Cernugel was Senior Vice President and Chief Financial Officer of Alberto-Culver Company from May 2000 until his retirement in March 2007. Prior to that, he served in various other financial capacities for Alberto-Culver Company including Senior Vice President, Finance. Mr. Cernugel also serves on several not-for-profit boards. He is currently a board member and chairman of the Audit and Finance Committee of the Rehabilitation Institute of Chicago. Mr. Cernugel is also a board member and Secretary-Treasurer of Gottlieb Memorial Foundation and until June 2008 was a board member of Gottlieb Health Resources, Inc. and chairman of its Audit and Finance Committee. Mr. Cernugel was on the Board of Directors and a member of the Audit Committee of the Illinois CPA Society from 2007 to 2009. Mr. Cernugel is a Certified Public Accountant.
Eduardo R. Menascé Age — 64 Director since 2008		Eduardo R. Menascé has served as a director of the Company since February 8, 2008. Mr. Menascé also is a director of Hill-Rom Holdings, Inc. (formerly Hillenbrand Industries, Inc.), the former parent corporation of the Company, having served on that board since 2004. He is the retired President of the Enterprise Solutions Group for Verizon Communications, Inc., New York City, New York. Prior to the merger of Bell Atlantic and GTE Corporation, which created Verizon Communications, he was the Chairman, President and Chief Executive Officer of CTI MOVIL S.A. (Argentina), a business unit of GTE Corporation, from 1996 to 2000. Mr. Menascé has also held senior positions at CANTV in Venezuela and Wagner Lockheed and Alcatel in Brazil, and from 1981 to 1992 served as Chairman of the Board and Chief Executive Officer of GTE Lighting in France. He earned a Bachelor’s degree in Industrial Engineering from Universidad Pontificia Catolica de Rio de Janeiro and a Master’s degree in Business Administration from Columbia University. Mr. Menascé currently serves on the boards of directors of Pitney Bowes Inc., a global provider of integrated mail and document management solutions, John Wiley & Sons, Inc., a developer, publisher and seller of products in print and electronic media for educational, professional, scientific, technical, medical, and consumer markets, and KeyCorp, one of the nation’s leading bank-based financial service companies.
Stuart A. Taylor, II Age — 49 Director since 2008		Stuart A. Taylor, II has served as a director of the Company since September 26, 2008. Mr. Taylor is the Chief Executive Officer of The Taylor Group LLC in Chicago, a private equity firm focused on creating and acquiring businesses in partnership with women and minority entrepreneurs. He has previously held positions as Senior Managing Director at Bear, Stearns & Co. Inc., and Managing Director and head of CIBC World Market’s Global Automotive Group and Capital Goods Group. He also served as Managing Director of the Automotive Industry Group at Bankers Trust following a 10 year position at Morgan Stanley & Co. Incorporated in Corporate Finance. Mr. Taylor has been a member of the board of directors for Ball Corporation since 1999, where he currently serves as Chairman of the Human Resources Committee.

Class II (Nominated for re-election this year)

Name, Age, and Year First
Elected as a Director		Other Information
Mark C. DeLuzio Age — 53 Director since 2008		Mark C. DeLuzio has served as a director of the Company since March 31, 2008. He is President and Chief Executive Officer of Lean Horizons Consulting, LLC, a global management consulting business which he founded in 2001. Prior to founding Lean Horizons, he served as Vice President, Danaher Business Systems for Danaher Corporation. Mr. DeLuzio serves as an advisory board member for Central Connecticut State University’s School of Engineering and Technology and the School of Business.
James A. Henderson Age — 75 Director since 2008		James A. Henderson has served as a director of the Company since March 31, 2008. Mr. Henderson was Chairman of the Board and Chief Executive Officer of Cummins Inc. prior to his retirement in December 1999. Mr. Henderson is a director of Nanophase Technologies Corporation. Mr. Henderson also currently serves as Chairman of The Culver Educational Foundation Board of Trustees and was a member of the Princeton University Board of Trustees and served as Chairman of the Executive Committee for the university. He has previously served as a director of AT&T Inc., International Paper Company, Rohm and Haas Company and Ryerson, Inc.
Ray J. Hillenbrand Age — 75 Director since 2008		Ray J. Hillenbrand has been Chairperson of the Board of the Company since February 8, 2008. He previously served as a director of Hillenbrand Industries, Inc., the former parent corporation of the Company, from 1970 until March 31, 2008. He served as that company’s Chairman of the Board from January 17, 2001 until March 31, 2006. He is engaged in the management of personal and family investments. Mr. Hillenbrand was employed by and active for 19 years in the management of Hillenbrand Industries prior to his resignation as Senior Vice President and member of the Office of the President in 1977. Mr. Hillenbrand is President of Dakota Charitable Foundation and serves as a member of the Board of Trustees of The Catholic University of America, Washington, D.C. Mr. Hillenbrand is a cousin of both W August Hillenbrand and Thomas H. Johnson.
F. Joseph Loughrey Age — 60 Director since 2009		F. Joseph Loughrey has served as a director of the Company since February 11, 2009. On April 1, 2009, he retired from Cummins, Inc. after serving at Cummins in a variety of roles for 35 years, most recently as Vice Chairman of the Board of Directors and the company’s President and Chief Operating Officer. Mr. Loughrey serves on a number of boards, including as Chairman for Conexus Indiana, Chairman for Energy System Network, and as a member of the boards of Sauer-Danfoss, AB SKF, Vanguard Group, Lumina Foundation for Education and the Columbus Community Education Coalition.

Class III (Terms expire in 2011)

Name, Age, and Year First
Elected as a Director		Other Information
Kenneth A. Camp Age — 64 Director since 2008		Kenneth A. Camp has served as a director and as President and Chief Executive Officer of the Company since February 8, 2008. Mr. Camp previously served as President of Batesville Casket Company, Inc. (“Batesville”) from May 1, 2001 until June 16, 2008. He continues to serve as Chairman and Chief Executive Officer of Batesville. Mr. Camp previously held various positions with our former parent corporation, Hillenbrand Industries, Inc., commencing October 8, 2001. He served as Senior Vice President of that company from October 1, 2006 until his resignation from that position on March 31, 2008. He also has held various positions at Batesville including Vice President/General Manager of Operations from 1995 to 2000; Vice President, Sales and Service; Vice President, Marketing; and Vice President, Strategic Planning. Mr. Camp also serves on the boards of the Manufacturers Alliance/MAPI and the Funeral Service Foundation.
W August Hillenbrand Age — 69 Director since 2008		W August Hillenbrand has served as a director of the Company since February 8, 2008. Mr. Hillenbrand also is a director of Hill-Rom Holdings, Inc., our former parent company (previously named Hillenbrand Industries, Inc.) having served on that board since 1972. He served as that company’s Chief Executive Officer from 1989 until 2000 and as President from 1981 until 1999. Prior to his retirement in December 2000, Hillenbrand Industries, Inc. had employed Mr. Hillenbrand throughout his business career. Mr. Hillenbrand is a board member of the Ocean Reef Medical Center and of the Ocean Reef Medical Center Foundation. Mr. Hillenbrand is the Chief Executive Officer of Hillenbrand Capital Partners, an unaffiliated family investment partnership. Mr. Hillenbrand is a cousin of Ray J. Hillenbrand.
Thomas H. Johnson Age — 59 Director since 2008		Thomas H. Johnson has served as a director of the Company since March 31, 2008. Mr. Johnson founded and currently serves as Chairman of Johnson Consulting Group, a consulting firm focused on the death care industry. Prior to founding Johnson Consulting, he founded and served as Chairman of Prime Succession. Before Prime Succession, he served in a variety of other capacities in the death care profession including as an executive of Batesville. Mr. Johnson is the sole owner of Johnson Investment Group, LLC, which company owns and operates two funeral homes in the Phoenix, Arizona vicinity. Mr. Johnson is also a 25% owner, and the managing member, of Fire and Stone Group, LLC which company owns and operates a funeral home in Batesville, Indiana. Mr. Johnson currently serves on the boards of the Funeral Service Foundation and Great Western Life Insurance. Mr. Johnson is a cousin of Ray J. Hillenbrand.

THE BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors is charged with overseeing the operations of the Company. In this section of the proxy statement we describe the overall responsibilities of the Board of Directors and its committees. These pages provide detailed information about the role of the Board of Directors, our Corporate Governance documents, and how you can communicate with the Board or with individual directors.

Board’s Responsibilities

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

Meetings of the Board and Committees

The Board agenda setting process generally involves the Chairperson of the Board, Vice Chairperson of the Board, Chief Executive Officer, and Secretary, who develop a proposed agenda for Board meetings. Proposed agenda items that fall within the scope of responsibilities of a Board committee are initially developed by the chairperson of that committee with management assistance. Board and committee materials related to agenda items are provided to Board members sufficiently in advance of meetings (typically one week) to allow the directors to prepare for discussion of the items at the meetings.

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

The chairpersons of the committees of the Board each preside over the portion of the Board meetings at which the principal items to be considered are within the scope of the authority of their respective committees. The chairperson of each committee, working with management, determines the frequency, length, and agenda of meetings of that committee. Sufficient time to consider the agenda items is provided. Materials related to agenda items are provided to the committee members sufficiently in advance of meetings (typically one week) to allow the members to prepare for discussion of the items at the meeting.

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

How You Can Communicate with Directors

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

Attendance at Annual Meetings

The upcoming Annual Meeting will be the second Annual Meeting of the Company’s shareholders. The Company’s directors are expected to attend the annual meetings of the shareholders. The Chairperson of the Board generally presides at the annual meetings of shareholders, and the Board of Directors holds one of its regular meetings in conjunction with the annual meetings of shareholders. All of the directors attended the 2009 Annual Meeting of the shareholders of the Company in person.

Other Corporate Governance Matters

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

The Board of Directors has also taken other measures to ensure continued high standards for corporate governance. Specifically, the Board has adopted Corporate Governance Standards for the Board of Directors of the Company, the current version of which can be found on the Company’s web site. The Board has also adopted a Code of Ethical Business Conduct that is applicable to all employees of the Company and its subsidiaries, including the Company’s chief executive officer, chief financial officer, and principal accounting officer. No waivers of the requirement of our Code of Ethical Business Conduct were granted during fiscal year 2009.

Consistent with the Company’s commitment to sound corporate governance, the Board and management believe that the foregoing measures, and others that have been taken, place the Company in compliance with listing and corporate governance requirements of the New York Stock Exchange, the Sarbanes-Oxley Act of 2002, and related rules of the SEC. Copies of the Company’s Corporate Governance Standards, Code of Ethical Business Conduct, and Board committee charters are filed or incorporated by reference as exhibits to the Company’s Annual Report on Form 10-K for the year ended September 30, 2009, and are available on the Company’s web site at www.hillenbrandinc.com or in print to any shareholder who requests copies through the Company’s Investor Relations Department at its main office at One Batesville Boulevard, Batesville, Indiana, 47006, telephone (812) 931-6000 and facsimile (812) 931-5184.

Determinations with Respect to Independence of Directors

The Corporate Governance Standards of the New York Stock Exchange adopted by the Board of Directors require the Board of Directors to make an annual determination regarding the independence of each of the Company’s directors and provide standards for making those determinations which are prescribed by the New York Stock Exchange. The Board made those determinations for each member of the Board on December 2, 2009, based on an annual evaluation performed by and recommendations made by the Nominating/Corporate Governance Committee.

To assist in the Board’s determinations, each director completed materials designed to identify any relationships that could affect the director’s independence. On the basis of these materials and the standards described above, the Board determined that each of William J. Cernugel, Mark C. DeLuzio, James A. Henderson, Ray J. Hillenbrand, Thomas H. Johnson, F. Joseph Loughrey, Eduardo R. Menascé, and Stuart A. Taylor, II is independent.

On the basis of the standards described above and the materials submitted by the directors, the Board determined that W August Hillenbrand does not meet the standards for director independence because of an agreement we have with him to provide certain benefits to him. That agreement was assumed by us from our former corporate parent in connection with our spin-off. Details concerning the agreement are described under the heading “Compensation of Directors” below. The Board has also determined that Kenneth A. Camp does not meet the director independence standards because of his current service as President and Chief Executive Officer of the Company. Accordingly, neither of these non-independent directors serves on the Audit, Compensation and Management Development, or Nominating/Corporate Governance Committees of the Board of Directors.

Committees of the Board of Directors

It is the general policy of the Company that all significant decisions be considered by the Board as a whole. As a consequence, the standing (permanent) committee structure of the Board is limited to those committees considered to be basic to, or required for, the operation of a publicly owned company. Currently those committees are the Compensation and Management Development Committee, Audit Committee, and Nominating/Corporate Governance Committee, each of which has a written charter adopted by the Board of Directors. (There are presently two other committees created for specific purposes that are not considered to be permanent committees.) The Nominating/Corporate Governance Committee recommends the members and chairpersons of those committees to the Board. The Audit Committee, Compensation and Management Development Committee, and Nominating/Corporate Governance Committee are made up of only independent directors. The current charter for each of the Board’s standing committees is available on the Company’s web site at www.hillenbrandinc.com and is available in print to any shareholder who requests it through the Company’s Investor Relations Department at One Batesville Boulevard, Batesville, Indiana 47006, telephone (812) 931-6000 and facsimile (812) 931-5184.

In furtherance of its policy of having significant decisions made by the Board as a whole, the Company has an orientation and continuing education process for Board members that includes extensive materials, meetings with key management, visits to Company facilities, and Company and industry events. Moreover, as part of directors’ education, which includes, among other things, regular dedicated sessions regarding the Company’s businesses and operations, Audit Committee sponsored financial literacy and legal and regulatory compliance training, and participation in Company and industry trade events, each director is expected to attend an outside governance or director related seminar at least once every three years.

Audit Committee. The Audit Committee has general oversight responsibilities with respect to the Company’s financial reporting and financial controls. It annually reviews the Company’s financial reporting process, its system of internal controls regarding accounting, legal, and regulatory compliance and ethics that management or the Board has established, and the internal and external audit processes of the Company. During fiscal year 2009, the Audit Committee consisted of Eduardo R. Menascé (Chairperson), William J. Cernugel, Thomas H. Johnson, and Stuart A. Taylor, II (Mr. Taylor was appointed to the Audit Committee on February 11, 2009). Each member of the Audit Committee is independent under Rule 10A-3 of the SEC and New York Stock Exchange listing standards and meets the financial literacy guidelines established by the Board in the Audit Committee Charter. The Board interprets “financial literacy” to mean the ability to read and understand audited and unaudited consolidated financial statements (including the related notes) and monthly operating statements of the sort released or prepared by the Company, as the case may be, in the normal course of its business. The Board of Directors has determined that each member of the Audit Committee is an “audit committee financial expert” as that term is defined in Item 407(d) of Regulation S-K of the SEC.

Mr. Menascé also serves on the audit committees of two other public companies. In accordance with our Audit Committee Charter, the Board of Directors has made a determination that his service on those other public company audit committees does not impair his ability to serve on our Audit Committee.

Compensation and Management Development Committee. The Compensation and Management Development Committee (the “Compensation Committee”) assists the Board in ensuring that the officers and key management of the Company are effectively compensated in terms of salaries, supplemental compensation, and other benefits that are internally equitable and externally competitive. The Compensation Committee is also responsible for reviewing and assessing the talent development and succession management actions concerning the officers and key employees of the Company. For fiscal 2009, the Compensation Committee consisted of James A. Henderson (Chairperson), Mark C. DeLuzio, Ray J. Hillenbrand, and F. Joseph Loughrey. (Stuart A. Taylor, II served on the Compensation Committee from December 18, 2008, until February 11, 2009, at which time he was appointed to the Audit Committee. Mr. Loughrey was appointed to the Compensation Committee on February 11, 2009.) Each member of the Compensation Committee is independent as defined by the New York Stock Exchange listing standards.

Nominating/Corporate Governance Committee. For fiscal 2009, the Nominating/Corporate Governance Committee consisted of all of the independent directors of the Company (being all directors except W August Hillenbrand and Kenneth A. Camp). Stuart A. Taylor, II was appointed to the Nominating/Corporate Governance Committee effective December 18, 2008. F. Joseph Loughrey was appointed to the Nominating/Corporate Governance Committee effective February 11, 2009. Each member of the Nominating/Corporate Governance Committee is independent as defined by the New York Stock Exchange listing standards.

The charter for the Nominating/Corporate Governance Committee provides that the primary function of this Committee is to assist the Board of Directors in ensuring that the Company is operated in accordance with prudent and practical corporate governance standards, ensuring that the Board achieves its objective of having a majority of its members be independent in accordance with New York Stock Exchange and other regulations, and identifying candidates for the Board of Directors.

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

	•		Have a reputation for industry, integrity, honesty, candor, fairness, and discretion;
	•		Be an acknowledged expert in his or her chosen field of endeavor, which area of expertise should have some relevance to the Company’s businesses or operations;
	•		Be knowledgeable, or willing and able to become so quickly, in the critical aspects of the Company’s businesses and operations; and
	•		Be experienced and skillful in serving as a competent overseer of, and trusted advisor to, senior management of a substantial publicly held corporation.

The Nominating/Corporate Governance Committee reviews incumbent directors against the position specifications applicable to members of the Board of Directors and independence standards set forth in the New York Stock Exchange listing standards. The Board as a whole, the Board committees, and the individual directors are formally evaluated annually by the Nominating/Corporate Governance Committee, whose findings are reviewed with the Board. The Nominating/Corporate Governance Committee retains a nationally recognized consulting firm to assist it with that evaluation process.

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

The Company’s Amended and Restated Code of By-laws provides that nominations of persons for election to the Board of Directors of the Company may be made for any meeting of shareholders at which directors are to be elected by or at the direction of the Board of Directors or by any shareholder entitled to vote for the election of members of the Board of Directors at the meeting. For nominations to be made by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Company, and any nominee must satisfy the qualifications established by the Board of Directors of the Company from time-to-time as contained in the proxy statement of the Company for the immediately preceding Annual Meeting of shareholders or posted on the web site of the Company at www.hillenbrandinc.com. To be timely, a shareholder’s nomination must be delivered to or mailed and received by the Secretary not later than (i) in the case of the Annual Meeting, 100 days prior to the anniversary of the date of the immediately preceding Annual Meeting which was specified in the initial formal notice of such meeting (but if the date of the forthcoming Annual Meeting is more than 30 days after such anniversary date, such written notice will also be timely if received by the Secretary by the later of 100 days prior to the forthcoming meeting date and the close of business 10 days following the date on which the Company first makes public disclosure of the meeting date); and (ii) in the

case of a special meeting, the close of business on the tenth day following the date on which the Company first makes public disclosure of the meeting date. The notice given by a shareholder must set forth: (i) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii) a representation that the shareholder is a holder of record, setting forth the shares so held, and intends to appear in person or by proxy as a holder of record at the meeting to nominate the person or persons specified in the notice; (iii) a description of all arrangements or understandings between such shareholder and each nominee proposed by the shareholder and any other person or persons (identifying such person or persons) pursuant to which the nomination or nominations are to be made by the shareholders; (iv) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; (v) the consent in writing of each nominee to serve as a director of the Company if so elected; and (vi) a description of the qualifications of such nominee to serve as a director of the Company.

Certain Relationships and Related Person Transactions

The Corporate Governance Standards for the Board require that all new proposed related party transactions involving executive officers or directors must be reviewed and approved by the Nominating/Corporate Governance Committee in advance. The Corporate Governance Standards do not specify the standards to be applied by the Nominating/Corporate Governance Committee in reviewing transactions with related persons. However, we expect that in general the Nominating/Corporate Governance Committee will consider all of the relevant facts and circumstances, including, if applicable, but not limited to: the benefits to us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director, or an entity in which a director is a partner, shareholder, or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms available for similar transactions with unrelated third parties.

In 2003, Batesville Casket Company entered into a contract with Nambé Mills, Inc. pursuant to which Batesville Casket purchases urn products from Nambé Mills. Purchases during the fiscal year ended September 30, 2009, were approximately $501,503, and purchases during fiscal 2010 are projected to remain consistent with prior years. John A. Hillenbrand, II, a director of Hillenbrand Industries, Inc. until February 8, 2008, serves as Chairman Emeritus of Nambé Mills. Mr. Hillenbrand’s children own substantially all of the equity of Nambé Mills. John A. Hillenbrand, II is the brother of our Board Chairperson, Ray J. Hillenbrand. We believe these purchases were made, and will continue to be made, on terms similar to those Batesville Casket, one of our operating subsidiaries, could obtain from an unrelated third party for these products.

Thomas H. Johnson, a director of the Company, through various companies owned by him or in which he owns an interest, owns (a) 100% of the Menke Funeral Home in Sun City, Arizona, and the Whitney & Murphy Funeral Home in Scottsdale, Arizona, and (b) a 25% interest in the Weigel Funeral Home in Batesville, Indiana. Those funeral homes purchase products from the Company’s subsidiary, Batesville Casket Company, at market prices. In fiscal 2009, the total amount of purchases made from Batesville Casket by those three funeral homes was $397,671.

W August Hillenbrand receives various benefits from us under an agreement he made with our former parent. See “Compensation of Directors” and footnote (6) under the tables in that section.

Attendance at Meetings

The following chart details the number of meetings of the Board and its three standing committees attended by each of the directors (as applicable to them) during the past fiscal year of the Company (a blank means not applicable):

										Nominating/				Compensation
										Corporate				and Management
						Audit				Governance				Development
		Board				Committee				Committee				Committee
		Meetings				Meetings				Meetings				Meetings
		Attended				Attended				Attended				Attended
Director		(8 held)				(8 held)				(4 held)				(4 held)
Kenneth A. Camp			8
William J. Cernugel			8				8				4
Mark C. DeLuzio			8								4				4
James A. Henderson			8								4				4
W August Hillenbrand			8
Ray J. Hillenbrand			7								4				4
Thomas H. Johnson			8				8				4
F. Joseph Loughrey (1)			4								2				2
Eduardo R. Menascé			8				8				4
Stuart A. Taylor II (2)			8				4				4				2

During the fiscal year ended September 30, 2009, no member of the Board of Directors attended fewer than 75% of the aggregate of the number of meetings of the full Board of Directors and the number of meetings of the standing committees on which he served.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee had no interlocks or insider participation during fiscal 2009. Specifically in that regard, during all or some portion of fiscal year 2009, Messrs. DeLuzio, Henderson, Loughrey, Taylor, and Ray J. Hillenbrand were the directors who served on the Compensation Committee of the Company. None of such directors:

•

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

•

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

Also in that regard, during fiscal year 2009 none of our executive officers served as a member of the board of directors or on the compensation committee of another company, which other company had an executive officer who served on our Board of Directors or our Compensation Committee.

SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT

We believe it is important that our directors and executive officers own stock in the Company. In that regard, our non-employee directors are required, within four years after becoming a director, to own and maintain ownership of a minimum of 12,000 shares of our Common Stock (including shares of deferred stock but not including shares that may be acquired upon the exercise of stock options). Ownership requirements for our Named Executive Officers are detailed in the Compensation Discussion and Analysis section of this proxy statement.

The table below shows shares beneficially owned by all directors and executive officers at December 17, 2009.

Security Ownership of Directors:

		Shares (1)				Percent Of
		Beneficially Owned As Of				Total Shares
Name		December 17, 2009				Outstanding
Kenneth A. Camp			817,493	(2)			1.30	%
William J. Cernugel			5,902	(3)			*
Mark C. DeLuzio			11,605	(4)			*
James A. Henderson			9,902	(3)			*
W August Hillenbrand			1,148,544	(5)			1.84	%
Ray J. Hillenbrand			761,240	(6)			1.22	%
Thomas H. Johnson			10,902	(3)			*
F. Joseph Loughrey			7,947	(7)			*
Eduardo R. Menascé			12,876	(8)			*
Stuart A. Taylor II			7,657	(9)			*

Security Ownership of Named Executive Officers:

		Shares (1)				Percent Of
		Beneficially Owned As Of				Total Shares
Name		December 17, 2009				Outstanding
Joe A. Raver			127,289	(10)			*
Cynthia L. Lucchese			109,850	(11)			*
P. Douglas Wilson			86,986	(12)			*
John R. Zerkle			126,716	(13)			*
All directors and executive officers of the Company as a group, consisting of 17 persons			3,314,193				5.26	%

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

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

		Shares				Percent Of
		Beneficially Owned As Of				Total Shares
Name		December 17, 2009				Outstanding
Barclays Global Investors UK Holdings Limited			3,954,266	(1)			6.36	%
1 Churchill Place
Canary Wharf
London
Breeden Capital Management, LLC			3,973,470	(2)			6.39	%
100 Northfield Street
Greenwich, CT 06830-4618
Franklin Mutual Advisers, LLC			3,373,205	(3)			5.43	%
101 John F. Kennedy Parkway
3rd Floor
Short Hills, NJ 07078-2716

EXECUTIVE COMPENSATION

Letter from the Chairperson of the Compensation and Management Development Committee:

Over the past fiscal year, the Compensation and Management Development Committee continued its comprehensive review and design of the Company’s compensation plan for executives. This work, done with the help of an independent outside advisor and management input, resulted in the Committee reaffirming the Company’s previously adopted compensation philosophy, an update of the compensation peer group, the execution and monitoring of the new performance-based long-term incentive award program, and the continuation of a short-term incentive plan that supports the achievement of the long-term goals of the Company. The performance-based long-term incentive award program is of particular note as it is a change from time-based restricted stock to performance-based restricted stock, thereby more directly aligning the Company’s economic value and executive compensation.

While the design of the compensation program is significantly performance-based, it also reflects our perspective not to encourage excessive risk-taking. The design rewards the senior executives with a blend of base salary, short-term incentives, long-term rewards, and required share ownership. We believe that this blend of components provides the Company’s leadership team with the appropriate incentives to create long-term value for shareholders while taking thoughtful and prudent risks to grow the value of the Company. The Compensation Committee and Audit Committee work closely to ensure that there is a shared risk assessment view.

In addition, the Committee devoted significant time over this past year to the tasks of ensuring that the Company is well prepared and positioned to achieve its goals for Batesville Casket Company and to be successful in acquisitions. This included a particular focus on talent management, succession planning for critical roles throughout the Company, and reviewing other key “people initiatives.”

For the Company to be successful in achieving its goal of generating appropriate long-term returns for shareholders, it is essential to attract, retain, and develop high-quality, passionate, and committed executive leadership. The Committee recognizes that while this is essential, it alone is not sufficient. In addition, the members of the executive management team must exercise their commitment and passion with the highest standards of ethical behavior at all times and in all situations.

Thank you for your investment in Hillenbrand, Inc. It is our expectation to continue to demonstrate that the trust you have placed in us is well deserved and well earned.

		Respectfully,
		James A. Henderson
		Vice Chairperson, Board of Directors
		Chairperson, Compensation and Management Development Committee

PART I: COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Part I of this section on Executive Compensation presents a thorough discussion of our executive compensation philosophy, policies, and procedures as they relate to our executive officers named in the discussion (the SEC rules specify which officers should be reported, and they are identified as our “Named Executive Officers”). Part II is a report from the Compensation Committee. Following that report, in Part III, we present numerous tables that report in detail the compensation of, and the potential amounts payable by the Company under certain contractual agreements with, the Named Executive Officers.

We have attempted to assist you in your understanding of the information presented by the use of tables and charts as much as possible. We encourage you to keep two basic thoughts in mind as you read this section:

•

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

•

Second, a significant portion of all Named Executive Officers’ compensation is variable and based on their individual performance and the performance of the Company. This is designed to align their compensation with the interests of the shareholders of the Company.

Our Named Executive Officers

The five Named Executive Officers of the Company whose compensation information is being discussed and reported in this proxy statement, and their positions with the Company, are as follows:

Kenneth A. Camp		President and Chief Executive Officer
Joe A. Raver		Senior Vice President and President of Batesville Casket Company
Cynthia L. Lucchese		Senior Vice President and Chief Financial Officer
P. Douglas Wilson		Senior Vice President, Human Resources
John R. Zerkle		Senior Vice President, General Counsel and Secretary

A Brief Historical Perspective

The Spin. Prior to April 1, 2008, the Company was a wholly owned subsidiary of a public company named Hillenbrand Industries, Inc. (now named Hill-Rom Holdings, Inc.) (“HHI”). At that time, HHI conducted two separate businesses — it manufactured and sold hospital beds and other medical devices under the brand name Hill-Rom, and it manufactured and sold burial caskets and related products under the brand name Batesville Casket. On April 1, 2008, the shares of the Company’s stock were distributed to HHI’s shareholders in a spin-off transaction (the “Spin”), resulting in HHI and the Company becoming separate public companies.

Engaging a Compensation Consultant. The Company engaged Ernst & Young LLP to be the Compensation Committee’s independent compensation and benefits consulting firm (the “Compensation Consultant”) to (1) evaluate independently and objectively the effectiveness of and assist with implementation of our compensation and benefit programs, and (2) provide the Compensation Committee with additional expertise in the evaluation of our compensation practices and of the recommendations developed by management and firms engaged by us. The Committee’s Compensation Consultant also provides information and insights relative to current and emerging compensation and benefits practices. Ernst & Young was the independent compensation consultant of HHI immediately prior to the Spin, and the selection of that firm to continue as the Compensation Consultant for the Company provided desirable continuity to our compensation program administration through and following the Spin.

Establishing Compensation Programs. In conjunction with the Spin, the Company established compensation and benefit programs that were identical in all material respects to the compensation and benefit programs of HHI. This fact, together with the engagement of Ernst & Young as the Committee’s independent compensation advisor, provided a seamless transition of compensation and benefit payments from HHI to our Company as far as our employees were concerned.

Employing the Named Executive Officers. The Spin necessitated the filling of five new positions as executive officers of the Company. Mr. Camp, who had been the President and CEO of Batesville Casket Company prior to the Spin, assumed that same position with the Company. Likewise, Mr. Zerkle moved up from his position as General Counsel of Batesville Casket Company to become the general counsel of the Company.

The other three Named Executive Officers were hired from outside the Company as new employees. Mr. Raver was hired shortly after the Spin as the chief operating officer of Batesville Casket Company to assume the majority of the duties that Mr. Camp had been performing. Ms. Lucchese was hired in January 2008, in anticipation of the occurrence of the Spin, as the Company’s chief financial officer. Mr. Wilson was hired a week before the Spin as the chief human resources officer of the Company. The Committee’s Compensation Consultant worked closely with the Committee in developing relevant market compensation data that was utilized in our searches to fill these positions.

Building Upon the Established Foundation of Executive Compensation; New Philosophy. Following the Spin, the newly formed Compensation Committee, in conjunction with management and the Committee’s independent compensation advisor, began a comprehensive review of executive compensation programs. The Committee approved several changes to these programs; the most significant was a move from the use of time-based restricted stock awards as part of the annual long-term incentive compensation to using performance-based restricted stock awards. The Committee also adopted a new Executive Compensation Philosophy, again focusing on the alignment of our executive compensation program with the interests of shareholders.

Our Executive Compensation Philosophy

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

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

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

The compensation program is based on the following principles:

	•		Reinforcing the absolute requirement for ethical behavior in all practices;
	•		Aligning management’s interests with those of shareholders;
	•		Motivating management to achieve superior results by paying for sustainable performance;
	•		Ensuring competitive compensation in order to attract and retain superior talent;
	•		Maintaining a significant portion of at-risk compensation (superior performance is rewarded with commensurate incentives, while little to no incentive is paid for underperformance);
	•		Delineating clear accountabilities; and
	•		Providing clarity and transparency in compensation structure.

Components of Total Compensation

The components of our executive compensation program are shown in the following table. A more detailed discussion of these components and the plans under which they are provided appears later in this Compensation Discussion and Analysis section.

Component		Description and Purpose
Base Salary		Fixed compensation intended to provide a base level of income and aid in the attraction and retention of talent in a competitive market.
Short-Term Incentive Compensation (“STIC”)		Variable annual cash bonus designed to motivate and reward individuals based on achieving both company-wide and individual performance goals for a given fiscal year. Also aids in the attraction and retention of talent in a competitive market.
Long-Term Incentive Compensation (“LTIC”)		Variable annual equity grant designed to reward executives for creating shareholder value and for their individual contributions to the Company’s performance as well as to motivate future contributions and decisions aimed at increasing shareholder value. Also aids in the attraction and retention of talent in a competitive market. Our Named Executive Officers are required to retain a certain amount of Company equity or stock as described in the section below entitled “Stock Ownership Requirement.”
Retirement and Other Benefits		Fixed component of compensation intended to protect against catastrophic expenses (healthcare, disability, and life insurance) and provide opportunity to save for retirement (pension and 401(k)).
Post-Termination Compensation (Severance and Change in Control)		Severance program designed to provide protection that allows executives to focus on acting in the best interests of shareholders regardless of the impact on their own employment.

Key Point: Focus on Performance-Based Compensation

Referring to the previous chart, the first three elements (base salary, STIC, and LTIC) make up what is generally referred to as an employee’s “core compensation.” It is important to note that a key element of the compensation philosophy of Hillenbrand and our Compensation Committee is that a significant portion of each of the Named Executive Officers’ core compensation will be “performance-based” and therefore “at risk.” Stated another way, each of the Named Executive Officers receives a base salary regardless of the performance of the Company in any individual year. Any particular officer’s salary can be and is modified from year-to-year based on such officer’s individual performance and changes in responsibilities, as determined by the Compensation Committee. Beyond base salary, each of our Named Executive Officers is eligible to receive STIC and LTIC, but those components of compensation are variable and at risk, dependent on the performance of the Company and the individual performance of each of the officers.

This point is illustrated by the following pie chart, which shows the fixed (base salary) and variable (STIC and LTIC) compensation at target levels for our President and CEO, Kenneth A. Camp, for the fiscal year 2009:

As shown in the above chart, 80% of Mr. Camp’s target core compensation for the year was performance-based, and at risk, and 20% was fixed. The Compensation Committee believes that this approach to compensating our Named Executive Officers aligns their compensation packages appropriately with the interests of the shareholders of the Company and creates incentives for them to act in the best interest of the shareholders.

Target Core Compensation Mix

Subject to discretionary deviations deemed by the Committee to be appropriate, the Compensation Committee generally follows guidelines for the STIC and LTIC target awards that are tied to the base salaries of the Named Executive Officers. Those guidelines are discussed in more detail below. The application of those guidelines produces a core compensation mix of approximately 20% base salary, 20% STIC, and 60% LTIC for Mr. Camp, and a mix of approximately 30% base salary, 20% STIC, and 50% LTIC for the other Named Executive Officers.

Process for Determining Compensation

Timing of Compensation Decisions. In December of each year, the Compensation Committee takes the following actions:

•

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

•

It adjusts, if deemed appropriate, the STIC target award formula for each Named Executive Officer and establishes the Company performance objectives that are to be used in the award formula for the current fiscal year.

•

It makes LTIC awards to the Named Executive Officers and determines the Company performance period (usually three years) and Company performance objectives that are to be used in the award formula.

•

It establishes the actual STIC awards to be paid to the Named Executive Officers for the fiscal year ended on the past September 30.

Factors Considered in Setting Compensation.

In General. In establishing and adjusting our executive compensation programs and the compensation packages for the Named Executive Officers, the Compensation Committee considers and analyzes a number of factors, each of which is informative but none of which is individually determinative of the outcome of the Committee’s work. The Committee acts with informed judgment to establish compensation packages for the Named Executive Officers that are appropriate under all the circumstances and that are designed to enable the Company to attract, motivate, and retain the executive talent needed to operate the Company, including the implementation of its announced intention to grow and diversify through business acquisitions, in a manner in the best interests of the shareholders.

The factors the Compensation Committee considers are discussed below. They are not discussed in any order of priority; no one factor standing alone is necessarily more important than all the others.

Peer Group Data. As one of several factors in considering approval of elements of our compensation programs and appropriate levels of compensation of our Named Executive Officers, the Compensation Committee compares our compensation programs and levels to those of a selected peer group of companies. Our Compensation Committee believes that we have to remain competitive in order to attract, retain, and motivate our executive talent and believes that our Named Executive Officers should be rewarded appropriately when the Company exceeds expected performance targets. We do not, however, rigidly target any of the core compensation components of our Named Executive Officers to any specific percentile of our peer group compensation levels. As a general rule, our Compensation Committee seeks to target the core compensation of our Named Executive Officers within the range between the 50th and 75th percentiles of the average total core compensation amounts paid by our peer group.

The Committee and its Compensation Consultant review various financial metrics and business attributes in selecting the companies to be included in, and in periodically making additions to or deletions from, our peer group of companies. (In 2009, Tredegar Corporation was added to our peer group to replace a company in the group that was acquired and no longer met the peer group qualification standards.) In developing our peer group, our Compensation Committee reviews various financial metrics and business attributes (i.e., free cash flow, operating income, return on invested capital, etc.) to assess whether additions or deletions to the current peer group are appropriate. In addition, various members of management provide input relative to understanding the Company’s key financial metrics, key competitors for talent, key competitors with whom the Company competes in the market, the business plan, and other factors. The following qualitative factors are also considered in developing the peer group:

•		Non-cyclical versus cyclical companies;
•		Companies with an internal distribution method and a supply chain management focus versus those with external distribution methods;
•		Companies focusing on continuous improvement in all aspects of their business versus those that do not apply a continuous improvement model;

•		Companies that manufacture products with wood and/or metal versus those that manufacture products using other materials;
•		Companies that are product leaders, manufacturing a quality end product; and
•		Companies that are primarily domestic versus those that are global.

The peer group currently consists of the following sixteen companies:

Acuity Brands, Inc.		Sealy Corporation
American Woodmark Corporation		Service Corporation International
Ethan Allen Interiors Inc.		Simpson Manufacturing Co., Inc.
Herman Miller, Inc.		Spartech Corporation
HNI Corporation		Stewart Enterprises, Inc.
Kimball International		Tempur-Pedic International Inc.
Matthews International Corporation		The Middleby Corporation
Roper Industries		Tredegar Corporation

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

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

Individual Factors. Individual factors are also considered by the Compensation Committee in establishing the compensation packages of our Named Executive Officers. These factors include the level and breadth of experience and responsibility of the officer, the complexity of the position, individual performance and growth potential, and the difficulty of replacement. Individual performance of our Named Executive Officers is evaluated in large part based upon the achievement of group and personal goals that are established by management and approved by the Compensation Committee each year.

2009 Individual Performance Goals. We identified four common personal objectives for the Named Executive Officers for fiscal year 2009. They are as follows:

	•		Strengthen our separate company capabilities by ensuring that resources, processes, procedures, and controls necessary to be a successful, compliant, efficient, and well controlled public company are in place. This will be accomplished through the application of the principles of continuous improvement across the enterprise.
	•		Support the Batesville Casket core business by providing Batesville Casket with necessary and sufficient resources to continue to generate strong, predictable cash flows. This will be accomplished through a transparent resource allocation process and a commitment to a lean organization... both at the corporate and operating company levels.

	•		Actively pursue acquisitions by identifying prudent opportunities that provide long-term revenue and earnings per share growth, meet our strategic criteria, and leverage our core competencies. This will be accomplished through an active screening process that engages the senior-most leadership in the identification of targets and the broader organization in evaluation.
	•		Ensure acquisition success by planning and preparing for due diligence and integration with a specific focus on our areas of competency, including continuous improvement, logistics, and developing talent. This will be accomplished through (a) attracting, developing, deploying, and retaining high performance individuals who are resources for today and tomorrow, and (b) training internal resources for due diligence and integration.

The following unique personal objectives were identified for each of the Named Executive Officers for fiscal year 2009:

•

For Mr. Camp, executing the Company’s strategy and business plan; managing pending litigation; leading our new growth initiatives and overseeing the Company’s acquisition activities; and achieving the Company’s financial objectives;

•

For Mr. Raver, developing and executing the business plan of Batesville Casket Company; growing core revenue and income before taxes; growing revenue in under-penetrated segments; improving the Company’s cost structure; actively pursuing strategic acquisitions and alliances; and strengthening core capabilities;

•

For Ms. Lucchese, establishing appropriate processes and procedures for the operation of the Company as a separate, stand-alone public company; providing financial support with excellence to the Company as a newly formed public company; managing financial due diligence efforts with respect to the Company’s acquisition activities; and providing financial support where necessary to the Company’s subsidiaries and their finance staff;

•

For Mr. Wilson, establishing appropriate processes and procedures for the operation of the Company as a separate, stand-alone public company; providing human resources support with excellence to the Company as a newly formed public company; providing support where necessary to the Company’s subsidiaries and their staff; managing human resources, compensation, and benefit due diligence efforts with respect to the Company’s acquisition activities; and building the talent pool to strengthen the capabilities and competencies of the Company; and

•

For Mr. Zerkle, establishing appropriate processes and procedures for the operation of the Company as a separate, stand-alone public company; providing general legal counsel with excellence to the Company as a newly formed public company; providing legal support where necessary to the Company’s subsidiaries and their general counsel; managing legal due diligence efforts and transaction documentation with respect to the Company’s acquisition activities; managing all litigation involving the Company; and supervising and coordinating the responsibilities of other attorneys in the Company’s legal department.

Internal Pay Equity. The Compensation Committee considers the differentials between the compensation levels of our Named Executive Officers in light of their respective positions and responsibilities and seeks to maintain those differentials at equitable levels, considering peer group and survey data with respect to comparable differentials at other companies.

Aggregate Compensation. For our Named Executive Officers, the Compensation Committee considers the aggregate value of their core compensation components of base salary, STIC at target level, and the estimated value of LTIC at target level. The Compensation Committee compares the aggregate amount of these elements of core compensation for our Named Executive Officers to the aggregate amount of the same elements of executive officer compensation at other companies using peer group and survey data. Additionally, the Compensation Committee reviews “tally sheets” reflecting all compensation paid to our Named Executive Officers, including retirement and other benefits, perquisites, and amounts potentially payable to them upon a “change in control” of the Company. Finally, the Compensation Committee considers projections as to the potential future value of long-term equity awards made to the Named Executive Officers.

Advice of Compensation Consultant. The Compensation Committee seeks and considers the expert advice and recommendations of the Compensation Consultant in connection with the administration of our compensation programs and the establishment of appropriate compensation components and levels with respect to our Named Executive Officers.

Fiscal 2009 Compensation Decisions

Base Salaries. Prior to fiscal 2009, as noted previously, the then current base salaries of Ms. Lucchese and Messrs. Raver and Wilson had been determined during 2008 as the result of arms’ length hiring processes with respect to each of them. With respect to Messrs. Camp and Zerkle, the HHI Compensation Committee, prior to the Spin, working with its independent compensation consultant (also Ernst & Young), recommended certain compensation adjustments for each of them in light of their increased responsibilities and new roles after the Spin. The Board of Directors of the Company agreed with those recommendations, and as a result new base salaries were implemented for each of them effective April 1, 2008.

In considering fiscal 2009 compensation, the Compensation Committee received from and reviewed in detail with the Committee’s Compensation Consultant an Executive Compensation Analysis reporting, among other things, the median compensation paid by our then current peer group to its top five executive officers (based on compensation) and the median compensation levels of similar executive officers as determined from various published compensation surveys. By comparison to our peer group, the base salaries of our Named Executive Officers ranged from a low of 84% to a high of 99% of the peer group median.

Mr. Camp provided to and discussed with the Committee his review of and comments with respect to the performance of the other Named Executive Officers. Mr. Camp also recommended to the Committee proposed compensation packages for the other Named Executive Officers (which he had developed in consultation with Ernst & Young and after review of the Executive Compensation Analysis report provided to the Committee in September). After discussing the recommendations and performance of the other Named Executive Officers, the Committee approved the compensation for this group.

The Compensation Committee, outside of Mr. Camp’s presence, also discussed Mr. Camp’s performance. This conversation included a review of Mr. Camp’s objectives as approved by the Committee for 2009 and the level of achievement of each of those objectives.

After assessing Mr. Camp’s performance for the year, the Committee, considering the impact of all relevant factors and considering the advice and recommendations of the Committee’s Compensation Consultant, determined Mr. Camp’s compensation for 2009.

The following adjustments were made to the Named Executive Officers’ base salaries:

		2008				2009				% Increase
Mr. Camp		$	650,000			$	675,000				3.8
Mr. Raver		$	400,000			$	415,000				3.8
Ms. Lucchese		$	300,000			$	312,000				4.0
Mr. Wilson		$	250,000			$	260,000				4.0
Mr. Zerkle		$	275,000			$	285,000				3.6

Annual Cash Incentives Awards (STIC).

Overview. The payment of annual short-term cash incentives to our Named Executive Officers for fiscal 2009 was formula-based, with adjustments for achievement of common and individual performance goals, and was governed by our Short-Term Incentive Compensation Plan for Key Executives (“STIC Plan”). The STIC Plan is designed to motivate our Named Executive Officers to perform and meet both Company and individual objectives. It is consistent with our philosophy that employees should share in the Company’s success when value is created for our shareholders. The potential to be paid significant awards plays an important role in the attraction and retention of our Named Executive Officers.

STIC Formula Design. Our Compensation Committee has approved a formula for calculating the maximum STIC awards potentially payable to our Named Executive Officers under the STIC Plan. At the end of each fiscal year, the Compensation Committee then exercises negative discretion, to the extent deemed appropriate and based primarily on individual performance reviews relating to the achievement of personal goals established for the Named Executive Officers, to reduce the maximum award amounts to the actual payout levels.

We have structured our formula to produce the maximum potential award, rather than a lesser targeted amount, in order to qualify our STIC payments for an income tax deduction without that deduction being limited in amount (or possibly denied in total) by Section 162(m) of the Internal Revenue Code. In order to avoid the limiting effects of Section 162(m), the Company must not have any discretion to increase the amount of the award produced by the award formula. However, the Company can exercise discretion to reduce the actual payout below the award formula amounts. Accordingly, we have designed our formula to calculate the maximum possible STIC amounts payable, with the understanding that the Compensation Committee has discretion to reduce the formula amounts to arrive at the actual STIC payment amounts to our Named Executive Officers.

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

		Individual Factor		Company		Maximum		Maximum
Base Salary	x		x	Performance	x	Award	=	Potential
				Factor		Factor		STIC Award

The formula components are described and quantified as follows:

	•		Base salary — the amount of salary paid to the Named Executive Officer during the fiscal year in question.
	•		Individual Factor — a predetermined percentage of base salary (90% for Mr. Camp, 75% for Mr. Raver, and 50% for the other Named Executive Officers). The Committee could adjust those percentages from year to year at the beginning of the fiscal year, if deemed appropriate.
	•		Company Performance Factor — a percentage reflecting the Company’s (or Batesville Casket’s with respect to Mr. Raver) achievement level with respect to the pre-established financial performance targets set by the Committee for each fiscal year. This percentage will be zero (producing a zero formula amount) if the Company (or Batesville Casket, if applicable) does not achieve at least a threshold achievement percentage level established by the Committee (which was 90% for fiscal 2009). The maximum achievement percentage possible is 200%. The pre-established financial performance targets currently used in the formula are designated amounts of “Net Revenues” and “Core IBT” for the Company and Batesville Casket, as applicable, which are calculated as follows:

•

Net Revenue — the amount established as the target amount is the same for both the Company and Batesville Casket since the Company itself has no revenue-producing operations. In determining the overall Company or Batesville Casket achievement level each year, the achievement level for Net Revenue is weighted at 20% of the total in determining the Company’s (or Batesville Casket’s) overall performance achievement level. In calculating Net Revenue, the effects of the following items are ignored:

	•		acquisitions made during the fiscal year;
	•		divestitures made during the fiscal year (corresponding adjustments will be made to the plan targets); and
	•		changes in accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed.

•

Core IBT — this is income before taxes, adjusted to eliminate selected extraordinary and non-recurring items as listed below. The adjustment items are determined in advance by the Compensation Committee during the first quarter of each fiscal year. Core IBT achievement is weighted at 80% of the total in determining the Company’s (or Batesville Casket’s) overall performance achievement level. In calculating Core IBT, the following items are excluded or their effects ignored:

	•		all professional fees, due diligence fees, expenses, and integration costs related to a specific acquisition;
	•		all professional fees, due diligence fees, expenses, and integration costs related to a specific divestiture;
	•		income, losses, or impairments from specific financial instruments transferred to the corporation as part of the Spin (i.e., auction rate securities, equity limited partnerships, common stock, and Forethought note);
	•		stock compensation expense;
	•		external extraordinary legal costs (e.g., antitrust litigation);
	•		Spin-related costs;
	•		restructuring costs; and
	•		changes in accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed.

•

Maximum Award Factor — a multiplier established by the Committee in order to produce the maximum award payout amount. It is currently 1.2. This factor serves two purposes. First, it provides a sufficient potential payout amount to reward above-average individual or Company performance. Second, it provides a cap on the award formula amount.

Company Performance Factors. The Company’s financial performance objectives and threshold achievement percentages are established annually at levels that typically reflect strong financial performance under then existing conditions. The target objectives are intended to represent stretch goals based on the business plan of the Company so that management must be diligent, focused, and effective in order to reach these goals. The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year. The Company has exceeded its threshold level but did not reach its targeted objective amount in each of its last two fiscal years.

The following table sets forth the Company’s and Batesville Casket’s targeted financial performance objectives and targeted threshold achievement percentages, and the actual amounts achieved, for fiscal year 2009:

		2009
						Batesville
		Company				Casket
		Targeted				Targeted												Batesville
		Objective				Objective								Company				Casket
Financial		Amount				Amount				Threshold				Achievement				Achievement
Criteria		(millions)				(millions)				Percentage				Percentage				Percentage
Net Revenue		$	715.6			$	715.6				90	%			90.7	%			90.7	%
Core IBT		$	173.7			$	195.0				90	%			94.3	%			94.7	%

For fiscal 2009, Mr. Raver’s STIC award formula was based on the financial objectives of Batesville Casket Company rather than those of the Company, while the award formulas for our other 2009 Named Executive Officers were based on the Company’s financial objectives.

2009 STIC Awards. For fiscal year 2009, the maximum STIC awards payable, and the actual STIC awards paid, to our Named Executive Officers were as follows:

		Fiscal								Company				Maximum				Maximum				Actual
Named Executive		Year Base				Individual				Performance				Award				STIC				STIC
Officer	x	Salary			x	Factor			x	Factor *			x	Factor			=	Award				Award Paid
Kenneth A. Camp		$	669,231				90	%			69.6	%			1.2			$	503,048			$	440,000
Joe A. Raver		$	411,539				75	%			69.6	%			1.2			$	257,788			$	215,000
Cynthia L. Lucchese		$	309,231				50	%			69.6	%			1.2			$	129,135			$	97,000
P. Douglas Wilson		$	257,692				50	%			69.6	%			1.2			$	107,612			$	103,000
John R. Zerkle		$	282,692				50	%			69.6	%			1.2			$	118,052			$	98,500

Long Term Incentive Compensation (LTIC).

Overview. We provide Long-Term Incentive Compensation to our Named Executive Officers (and other employees) by awarding them stock options, deferred stock awards, or restricted stock. Our Stock Incentive Plan (the “Stock Plan”) enables us to grant such equity-based awards.

The Compensation Committee makes and administers all awards made to our Named Executive Officers under the Stock Plan. A total of 4,635,436 shares of our common stock is available for equity awards under the Stock Plan. There are annual limits as to the number of options or shares of deferred or restricted stock that can be granted to any one employee or director each year. (Under Proposal No. 2, we are submitting our revised Stock Incentive Plan (the “Amended Plan”) for approval by our shareholders at the 2010 Annual Meeting. The Amended Plan submitted for approval increases the number of shares that are available for equity awards under the Amended Plan to 8,635,436 shares, an increase of 4,000,000 shares.)

Although the Company does not have a written policy regarding the timing or practices related to granting equity awards, neither the Company nor the Compensation Committee engages in spring-loading, back-dating, or bullet-dodging practices. Stock options and restricted stock awards are generally granted at a regularly scheduled meeting of the Compensation Committee in the first quarter of the fiscal year (usually in December), after the Company issues a press release announcing the results of the prior fiscal year. The Compensation Committee has delegated authority to the Chairperson of the Committee to make awards under the Stock Plan other than the regular annual awards (such as awards made to a new hire or in the case of a promotion, for example).

Available Awards. Our Stock Plan enables us to grant several types of equity awards — stock appreciation rights, restricted stock, bonus stock, stock options, and deferred stock units. However, only stock options, restricted stock, and deferred stock awards have been granted and are outstanding under the Stock Plan as of the end of fiscal year 2009.

Stock Options. Incentive (tax-qualified) and non-qualified stock options may be granted to such employees and directors and for such number of shares of our common stock as the Administrator determines. A stock option will be exercisable and vest at such times, over such term, and subject to such terms and conditions as the Administrator determines, at an exercise price which may not be less than the fair market value of the common stock on the date the option is granted.

Deferred Stock. A deferred stock award represents our agreement to deliver shares of common stock (or their cash equivalent) to the award recipient at a specified future time or upon a specified future event. Vesting of the award shares and/or delivery of them may be conditioned upon the completion of a specified period of service, the attainment of specific performance goals, or such other criteria as the Administrator may determine, or may provide for the unconditional delivery of shares (or their cash equivalent) on a specified date. Deferred stock awards carry no voting rights until such time as shares of common stock are actually issued. The Administrator has the right to determine whether and when dividend equivalents will be paid with respect to a deferred stock award. Generally, dividend equivalent amounts are accrued on deferred stock awards and are paid when the shares are distributed.

Restricted Stock. A grant of shares of restricted stock involves the actual issuance of shares of our common stock to the grant recipient. However, the right to retain the shares of restricted stock is conditioned upon whatever “vesting” conditions are specified as part of the grant. Until those vesting conditions are satisfied, the restricted stock cannot be sold, transferred, pledged, or assigned, and is subject to forfeiture if the vesting conditions are not satisfied.

Performance-Based Equity Awards. The Administrator may designate and structure any awards under the Stock Plan as performance-based awards. With respect to performance-based awards, either the granting or vesting (or both) of the award is made subject to the achievement of Company performance objectives specified by the Administrator. The performance objectives specified for a particular award may be based on one or more of the following criteria, which the Administrator may apply to our Company as a whole and/or to a subsidiary, and which the Administrator may use either as an absolute measure, as a measure of improvement relative to prior performance, or as a measure of comparable performance relative to a peer group of companies: sales, operating profits, operating profits before taxes, operating profits before interest expense and taxes, net earnings, earnings per share, return on equity, return on assets, return on invested capital, total shareholder return, cash flow, debt to equity ratio, market share, stock price, shareholder value added, and market value added.

LTIC Guidelines. The Compensation Committee, subject to deviations as appropriate in its discretion, generally follows guidelines it has established for annual LTIC awards to our Named Executive Officers. Those guidelines provide for an award at target value of three times base salary to Mr. Camp, and 1.5 times base salary to our other Named Executive Officers. Each award consists of approximately 25% of the award value in stock options and approximately 75% in deferred or restricted stock. Compared to an average of our peer group’s mix of long-term incentive compensation awards, the pie-charts below reflect our heavy emphasis on performance-based awards to our Named Executive Officers.

Valuation of Awards. Considering commonly used valuation models and advice from the Committee’s Compensation Consultant, stock options are assumed to have a present value equal to 25% of the then current share price for our Common Stock. The number of option shares to be granted is determined by dividing the total option portion of the award dollar value by 25% of the then current share price.

Awards for deferred or restricted stock are valued at the target share level, which is the number of shares that will ultimately be earned by the Named Executive Officers at the 100% achievement level of the targeted “Incremental Shareholder Value” established by the Compensation Committee under the award formula. (The maximum number of shares potentially issuable as fully earned or vested shares is 150% of the targeted number.) The number of shares to be awarded at the target level is determined by dividing the deferred or restricted stock value portion of the total award dollar value by the share price for our stock on the date of the award.

2009 LTIC Awards. The Compensation Committee decided for fiscal year 2009 to award restricted stock as performance-based equity awards rather than as time-based equity awards. Accordingly, the amount of compensation ultimately received by the award recipients (including our Named Executive Officers) will be tied to and conditioned on performance objectives for our Company rather than being conditioned merely on the passage of time and continued employment. As we have stated above in our compensation philosophy, the Company management team is charged with increasing the long-term economic value of the Company in excess of the rate investors expect. That is accomplished by growing the amount of cash generated by the Company over time through execution of the Company’s strategy and the initiatives that flow from that strategy.

The performance-based restricted stock awards and stock options granted to our Named Executive Officers during fiscal year 2009 were as follows:

						Target				Maximum
						Restricted				Restricted
Name		Option Shares				Stock Award				Stock Award
Kenneth A. Camp			135,997				101,997				152,996
Joe A. Raver			41,806				31,354				47,032
Cynthia L. Lucchese			31,430				23,572				35,359
P. Douglas Wilson1			28,569				21,427				32,140
John R. Zerkle2			36,209				27,157				40,735

The performance period for vesting of the restricted stock is the three-year period beginning October 1, 2008. The stock options become exercisable ratably on the first, second, and third anniversaries of the grant date (1/3 on each grant date anniversary).

Performance-Based Award Details.

For fiscal 2009, the measurement tool in the performance-based restricted stock award formula is a shareholder value creation model, which is a discounted cash flow model that measures the true economic return to investors. The key inputs into the model are net income, free cash flow, and the weighted average cost of capital. Each performance-based restricted stock grant to our Named Executive Officers will span the performance of three consecutive fiscal years, and the performance award at the end of the three years will be based upon the incremental shareholder value created over/under what was expected. To earn a full payout of the targeted award the Company must earn a return that meets the Company’s weighted average cost of capital.

The long-term incentive plan for the Named Executive Officers is designed to pay on the basis of the growth in shareholder value over a three-year period. By linking rewards with the growth in the economic value of the Company, the plan aligns the interests of the executive management team with those of the Company’s investors. Also, by using a three-year period, the plan shapes investment strategies that improve the value of the business over the long term.

The Company performance objectives and the award calculation formula for the performance-based LTIC awards (per the preceding chart showing their Target Restricted Stock awards) made to the Named Executive Officers in fiscal 2009 are as follows:

Award Information.

Measurement Period		October 1, 2008 through September 30, 2011
Base Shareholder Value (at the beginning of Measurement Period)		$1,194.3 million
Incremental Shareholder Value Expected		$341.7 million
Weighted Average Cost of Capital		8.75%

Award Formula.

The number of Shares of Restricted Stock that will vest at the end of the Measurement Period is a function of the amount of Incremental Shareholder Value Delivered over the Measurement Period as compared to the Incremental Shareholder Value Expected to be created over the Measurement Period. Except as otherwise provided in the award agreements in connection with a termination of employment prior to September 30, 2011, at the end of the Measurement Period all restrictions will lapse on, and the Shares will become fully vested with respect to, the number of whole Shares (rounded down) equal to the product of (a) the number of Shares comprising the Target Restricted Stock Award, and (b) a multiplier, as provided in the following table, based on the ratio, expressed as a percentage, of Incremental Shareholder Value Delivered for the Measurement Period (as determined below) to the Incremental Shareholder Value Expected for the Measurement Period:

Incremental Shareholder Value Delivered
as Percentage of
Incremental Shareholder Value Expected		Multiplier
(rounded down to nearest whole percent)		(rounded down to two decimal places)
Less than 50%		zero (no Shares vest)
At least 50% but less than 80%		.2 plus an additional .01 for each full percentage point realized above minimum for range
At least 80% but less than 100%		.5 plus an additional .025 for each full percentage point realized above minimum for range
At least 100% but less than 110%		1.0 plus an additional .025 for each full percentage point realized above minimum for range
At least 110% but less than 150%		1.25 plus an additional .00625 for each full point realized above minimum for range
At least 150%		1.5 (all Shares vest)

Calculation of Incremental Shareholder Value Delivered.

The amount of Incremental Shareholder Value Delivered during the Measurement Period is calculated by subtracting the Base Shareholder Value from the Shareholder Value Delivered, and the Shareholder Value Delivered is calculated by adding two components: the Net Income Component and the Cash Flows Component.

	•		The Net Income Component of Shareholder Value Delivered is the Company’s Adjusted Net Income for the last fiscal year of the Measurement Period, divided by the Weighted Average Cost of Capital.
	•		The Cash Flows Component of Shareholder Value Delivered is the sum of the following:

•

the Company’s Adjusted Cash Flows for the third fiscal year in the Measurement Period;

•

the Company’s Adjusted Cash Flows for the second fiscal year in the Measurement Period, multiplied by the sum of 100% and the Weighted Average Cost of Capital; and

•

the Company’s Adjusted Cash Flows for the first fiscal year in the Measurement Period, multiplied by the square of the sum of 100% and the Weighted Average Cost of Capital.

Definitions.

(a)

“Adjusted Net Income” means the Company’s “net income,” as shown on its audited financial statements, as adjusted (net of tax where applicable) to exclude the effects of the following items:

•

Income losses or impairments from specific financial instruments held by the Company immediately following its spin-off (the “Spin”) as a stand-alone company (i.e., auction rate securities, equity limited partnerships, common stock, and Forethought note);

•

Spin-related costs;

•

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

•

External extraordinary legal costs (e.g., antitrust litigation);

•

Restructuring charges and other items related to a restructuring plan approved by the CEO; and

•

Changes in accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed.

(b)

“Adjusted Cash Flows” means, with respect to each fiscal year in the Measurement Period, the Company’s net cash provided by operating activities (whether positive or negative) less its capital expenditures net of proceeds on the disposal of property, all as shown on its audited financial statements for the fiscal year, as adjusted (net of tax where applicable) to exclude the effects of the following items:

•

Cash receipts or disbursements from financial instruments held by the corporation immediately following the Spin (i.e., auction rate securities, limited partnerships, and Forethought note);

•

Spin-related disbursements;

•

External extraordinary legal disbursements (e.g., antitrust litigation);

•

Investments in non death-care related technologies and companies;

•

Changes in accounting pronouncements in United States GAAP or applicable international standards that cause an inconsistency in computation as originally designed; and

•

Acquisition of businesses, net of cash acquired, as follows:

	•		Acquisitions are included for the operating companies and corporate and are phased into the calculation of cash flow over 36 months;
	•		In the year of acquisition, the impact on the balance sheet is excluded from the respective working capital and other balance sheet items lines and netted on an “acquisitions” line on the cash flow statement; and
	•		A separate cash flow supporting statement is kept for LTIC purposes to adjust period cash flows for the acquisition amount spread over 36 months.

Stock Ownership Requirement

All of our Named Executive Officers are expected to own a significant number of shares of our common stock. Specifically, our Chief Executive Officer and the other Named Executive Officers, from and after the later of (i) April 1, 2013, or (ii) the fifth anniversary of the date on which any such individual first became an officer of Hillenbrand, Inc. or any of its subsidiaries, are required to hold shares of our common stock or equivalents described below at the following levels (“Required Ownership Level”):

Position		Required Ownership Level
Chief Executive Officer		4 x Base Annual Salary
Senior Vice Presidents of the Company		2 x Base Annual Salary
Vice Presidents of the Company and all subsidiaries		1 x Base Annual Salary

Shares owned outright and deferred or restricted stock shares, whether vested or unvested, count as share equivalents towards the Required Ownership Level. Failure to achieve or maintain the Required Ownership Level may result in (1) the applicable individual being required to hold all after-tax vested deferred stock shares and after-tax shares acquired upon exercise of stock options, or (2) suspension of future restricted stock or deferred stock awards, until the Required Ownership Level is achieved. The Compensation Committee (or its designee) may make exceptions, in its sole discretion, in the event of disability or great financial hardship.

Clawback Provisions

For STIC and performance-based LTIC awards made in fiscal year 2010 and beyond, the Company has adopted a “clawback” policy that authorizes the Compensation Committee, in its discretion, to require repayment from our Named Executive Officers of all or any portion of their STIC and LTIC awards paid if the Company is required to restate its financial statements as a result of fraud or negligence and such restated financial information would have produced a lesser amount of STIC or LTIC award payable (ignoring Committee negative discretion with respect to STIC awards) than was calculated per the original financial information.

Tax Deduction Management

Section 162(m) of the Internal Revenue Code limits the tax deductibility of certain executive compensation in excess of $1 million per year unless certain requirements are met. Performance-based compensation is generally not subject to the deductibility cap under Section 162(m). We seek to maximize the tax deductibility of both our STIC and performance-based LTIC awards under Section 162(m).

Retirement and Savings Plans

Pension Plan. We sponsor a defined benefit pension plan (the “Pension Plan”). The Pension Plan provides monthly retirement benefits based on a formula that takes into consideration the highest average annual compensation of a participant over a five consecutive year period and the participant’s years of service to the Company (including years of service to our former parent).

The Pension Plan is closed to new salaried employees. Mr. Camp is the only Named Executive Officer who is an active participant in the Pension Plan. Mr. Zerkle has a frozen benefit in the Pension Plan. We are required to make annual contributions that are determined actuarially as the amount needed to adequately fund future benefits to be paid out to participants.

For information regarding the benefits potentially payable to our Named Executive Officers under the Pension Plan, see the “Pension Benefits at September 30, 2009” table in Part III below.

Savings Plan. We maintain a tax-qualified defined contribution savings plan (the “Savings Plan”) in which substantially all of our employees, including the Named Executive Officers, are eligible to participate. Employees may contribute up to 40% of their compensation on a pre-tax basis to the Savings Plan. For those salaried participants who are not active participants in the Pension Plan, the Company matches their contributions in an amount equal to 50¢ on the dollar for their contributions up to 6% of their compensation. No matching contributions are made for employees who are active participants in the Pension Plan. Additionally, whether or not employees contribute to the Savings Plan, the Company provides an automatic Company contribution per pay period to the Savings Plan for all employees eligible to participate in an amount equal to 4% of their compensation if they are not active participants in the Pension Plan or 3% if they are active participants in the Pension Plan. All contributions by employees and the automatic Company contribution are fully vested immediately. The Company matching contributions do not vest until after three years of credited service; after that point Company matching contributions vest immediately when made.

For information regarding compensation paid to our Named Executive Officers under the Savings Plan, see footnote 6 to the Summary Compensation Table in Part III below.

Supplemental Executive Retirement Plan. We maintain and agree to pay future cash benefits under a Supplemental Executive Retirement Plan (the “SERP”) for certain of our executive officers who are selected to participate in the plan. All of our Named Executive Officers are participants in the SERP. The Compensation Committee can at any time choose to “freeze” the accrued benefits of a participant under the SERP and stop accruing additional benefits under the plan for that participant.

The SERP is an unfunded retirement benefit plan, and is not a tax qualified retirement plan under the Internal Revenue Code. No monies are actually “contributed” to the SERP by the Company to fund future benefit payouts. Under the SERP, future payout amounts are simply recorded in “accounts” set up for the participants to record the amounts the Company is obligated to pay them if and when they become entitled to payment of their accrued benefits. If a participant is ever terminated for “cause” (as such term is defined in the SERP), all benefits under the SERP are forfeited.

There are two components of the SERP — a defined contribution component (in which all Named Executive Officers participate) and a defined benefit component (in which only Mr. Camp participates). The SERP is designed to supplement the amount of retirement benefits that participants are entitled to receive from either or both of our Pension Plan and our Savings Plan. For tax qualified retirement plans, such as our Pension Plan and our Savings Plan, the Internal Revenue Code establishes various limitations that must be applied no matter what the terms of the plan might be. For example, the tax laws limit the maximum amount of annual benefits that can be paid to a participant under a defined benefit plan, limit the maximum amount that can be contributed for any particular year by or for a participant under a defined contribution plan, and limit the maximum amount of compensation that can be counted as earnings of the participant for purposes of calculating benefits or contributions under either type of plan. The application of these tax law limitations can result in a reduction in the amount of retirement benefits that would otherwise be payable to a participant under the terms of a tax qualified retirement plan. In general, the SERP is designed to pay benefits to a retiring participant that “make up” for any reduction in the benefits that would otherwise have been payable to the retiree under our Pension Plan, or a reduction in the contributions that the Company would have made for such retiree under the Savings Plan, on account of the application of those tax law limitations.

Under the defined contribution component, the SERP permits the Company to accrue an additional benefit amount equal to 3% of compensation for Mr. Camp and up to 4% of compensation for the other Named Executive Officers in the SERP each year. The Compensation Committee has also granted an additional 3% of compensation for Mr. Camp. The Compensation Committee selects which SERP participants, if any, shall receive this additional accrual each year. For this purpose, a participant’s compensation for a particular year is assumed to be an amount that uses the participant’s targeted STIC award.

For information concerning retirement benefits payable to certain of our Named Executive Officers under the SERP, see the table entitled “Pension Benefits at September 30, 2009” in Part III below.

Executive Deferred Compensation Program. Under our Executive Deferred Compensation Program certain executives, including the Named Executive Officers, who are chosen by the Compensation Committee may elect to defer all or a portion of their base salary, Short-Term Incentive Compensation, and certain other benefits, and elect to have them paid in a year or years later than when such amounts would otherwise be payable. As of September 30, 2009, none of the Named Executive Officers participate or have balances in the Executive Deferred Compensation Program.

Severance Benefits and Employment Agreements

We have entered into employment agreements with each of the Named Executive Officers. We believe that it is appropriate for our senior executives to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to not competing with us, not soliciting our employees, and maintaining the confidentiality of our proprietary information. Additionally, we believe that employment agreements are a useful tool in the recruiting and retention of senior-level executives.

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

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

•

continuation of the executive officer’s base salary for twelve months, subject to required withholdings, which payments may need to be delayed for six months under certain provisions of the Internal Revenue Code;

•

continuation of group life and health coverage until the payment described above has been made; and

•

limited out-placement counseling.

The employment agreements also contain non-competition and non-solicitation agreements of the executive officers, which continue in effect generally for a period of two years after the termination of the Named Executive Officer’s employment.

For information regarding the severance benefits payable to our Named Executive Officers under their employment agreements, see the Potential Payments Upon Terminations tables under “Compensation of Named Executive Officers” in Part III below.

Change in Control Agreements

We believe that it is important that management of Hillenbrand be in a position to provide assessment and advice to the Company’s Board of Directors regarding any proposed business transaction without being unduly distracted by the uncertainties and risks created by such a proposed change in control. Accordingly, we have entered into Change in Control Agreements with each of our Named Executive Officers (as well as with other key executives) that provide severance compensation to them if their employment is terminated on account of or under certain circumstances following a change in the control of the Company. Severance compensation under our Change in Control Agreements is in lieu of severance compensation provided under the Named Executive Officers’ employment agreements or our Severance Plan.

The Change in Control Agreements provide for payment of specified benefits upon the termination of a Named Executive Officer’s employment (other than on account of death, disability, retirement, or “cause”) in anticipation of or within two years after the occurrence of a “Change in Control” (three years for Mr. Camp), or upon the executive’s termination of employment for “good reason” within two years after a Change in Control (three years for Mr. Camp). Additionally, Mr. Camp is entitled to severance benefits under his agreement if he voluntarily terminates his employment at any time within the period of one year plus thirty days after the occurrence of a Change in Control. The severance benefits to be provided upon a termination of employment under any of the above circumstances are:

•

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

•

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

•

a lump sum payment equal to twice (three times in the case of Mr. Camp) the amount of the additional amounts accrued during the last 12 months in the executive’s “defined contribution” accounts under the Company’s SERP; and

•

an increase to the defined benefit pension benefit otherwise payable to the executive under the Pension Plan and the SERP component related to the Pension Plan, calculated by giving the executive credit for two additional years of service.

In addition, upon a Change in Control, with respect to executives whose employment is not terminated prior to or at the time of the Change in Control, all outstanding stock options and stock awards will become fully vested, and the executives will be deemed to have earned and will be entitled to payment, within 30 days after the occurrence of the Change in Control, of the current year’s Short-Term Incentive Compensation to the extent such STIC would have been earned if all performance targets for the relevant period were achieved at the 100% level.

The Change in Control Agreements also provide that if the executive receives payments that would be subject to the excise tax on excess parachute payments imposed by Section 4999 of the Internal Revenue Code, the executive will be entitled to receive an additional “gross-up” payment in an amount necessary to put him or her in the same after-tax position as if such excise tax had not been imposed. However, with respect to all of the Named Executive Officers other than Mr. Camp, if the value of all “parachute payments” to the executive does not exceed 120% of the maximum “parachute payment” that could be paid to him or her without giving rise to the excise tax, the payments otherwise called for by the Change in Control Agreement will be reduced (or “cut back”) to the maximum amount which would not give rise to the excise tax.

Under the Change in Control Agreements, a “Change in Control” is defined generally as: (1) the acquisition of beneficial ownership of 35% or more of the voting power of all of our voting securities by a person or group other than members of the Hillenbrand Family; (2) the consummation of certain mergers or consolidations; (3) the failure of a majority of the members of our Board of Directors to consist of Current Directors (defined as any director on the date of the Change in Control Agreement and any director whose election was approved by a majority of the then Current Directors); (4) the consummation of a sale of substantially all of our assets; or (5) the date of approval by our shareholders of a plan of complete liquidation of our Company.

The amounts potentially payable to our Named Executive Officers in connection with a Change in Control are set forth in the tables under the heading “Potential Payments Upon Termination” in Part III: Executive Compensation Tables below.

Other Personal Benefits

In addition to the elements of compensation discussed above, we also provide our Named Executive Officers with various other benefits as described below. We provide these benefits in order to remain competitive with the market and believe that these benefits help us to attract and retain qualified executives.

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

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

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

PART II: COMPENSATION COMMITTEE REPORT

Each member of the Compensation Committee of the Board of Directors of Hillenbrand, Inc. is “independent,” as that term is defined under (a) the New York Stock Exchange listing standards, (b) the non-employee director standards of Rule 16b-3 of the Securities Exchange Act of 1934, as amended, (c) the outside director requirements of Section 162(m) of the Code, and (d) the Company’s Corporate Governance Standards. The Compensation Committee currently consists of Mark C. DeLuzio, James A. Henderson, Ray J. Hillenbrand, and F. Joseph Loughrey.

As a committee, our primary function is to ensure Hillenbrand’s executive compensation program is competitive so that the Company can attract and retain executive personnel, and performance-based so that the interests of its management are aligned with both the short-term and long-term interests of its shareholders. We engage an independent executive compensation consulting firm to assist us in our review of the Company’s executive and director compensation programs to ensure these programs are competitive and consistent with our stated objectives. The executive compensation consultant is retained by and is directly accountable to us and we generally approve all related fees paid to the executive compensation consultant. We have no interlocks or insider participation and we engage in annual self-evaluations to determine our effectiveness as a committee. We have adopted a charter, which may be found on Hillenbrand’s web site at www.hillenbrandinc.com.

Under Section 162(m) of the Internal Revenue Code, the Company is not able to deduct for federal income tax purposes annual compensation in excess of $1 million paid to certain employees, generally its Named Executive Officers. However, compensation that is “performance-based” is not subject to that deduction limitation. We believe that certain performance-based compensation paid pursuant to the Company’s Stock Incentive Plan and the Company’s Short-Term Incentive Compensation Plan for Key Executives is not subject to the deduction limit, but no assurances can be made in this regard. While the Compensation Committee generally intends to structure and administer executive compensation plans and arrangements so that they will not be subject to the deduction limit, the Compensation Committee may from time-to-time approve payments that cannot be deducted in order to maintain flexibility in structuring appropriate compensation programs in the interest of shareholders.

The Compensation Committee of the Board of Directors of Hillenbrand, Inc. has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board of Directors that the preceding Compensation Discussion and Analysis be included in this proxy statement.

		Respectfully submitted,
		James A. Henderson (Chairperson)
		Mark C. DeLuzio
		Ray J. Hillenbrand
		F. Joseph Loughrey

PART III: EXECUTIVE COMPENSATION TABLES

Tabular Compensation Information

In the following pages we present numerous tables that set out various elements of compensation for our Named Executive Officers. No one table in and of itself presents the “total picture”; instead, you should review all the information carefully to understand the manner in which, and the amounts, our Named Executive Officers have been paid.

Compensation of Named Executive Officers

Summary Compensation Table

The following table summarizes the total compensation paid to or earned by each of the Named Executive Officers for the fiscal years ended September 30, 2009, 2008, and 2007. We have entered into employment agreements with each of the Named Executive Officers — see the “Severance Benefits and Employment Agreements” section of “Part I: Compensation Discussion and Analysis” for further discussion.

To understand all the numbers in the table below, you need to read the footnotes carefully, which explain the various assumptions and calculations that give rise to the dollar amounts in the tables. For example, you will note that in column (f) entitled “Option Awards,” the dollar amount under “Option Awards” is actually a calculation based on certain future assumptions about the Company’s performance. The actual amount ultimately paid to any executive, in particular, may be subject to significant change — up or down — based on whether the Company outperforms or underperforms the various metrics used in this methodology.

(a)		(b)		(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
																								Change in
																								Pension Value
																								and
																								Nonqualified
																				Non-Equity				Deferred
Name and Principal																Option				Incentive Plan				Compensation				All Other
Position				Salary				Bonus				Stock Awards				Awards				Compensation				Earnings				Compensation				Total
(as of September 30, 2009)		Year		$(1)				$				$(2)				$(3)				$(4)				$(5)				$(6)				$
Kenneth A. Camp		2009		$	669,315			$	—			$	1,484,275			$	634,190			$	440,000			$	1,251,951			$	75,464			$	4,555,195
President and		2008		$	543,198			$	—			$	1,253,685			$	733,105			$	400,000			$	341,329			$	65,735			$	3,337,052
Chief Executive Officer		2007		$	424,102			$	—			$	745,077			$	279,017			$	202,881			$	338,345			$	42,210			$	2,031,632
Cynthia L. Lucchese		2009		$	309,271			$	—			$	145,071			$	103,164			$	97,000			$	—			$	23,862			$	678,368
Senior Vice President and		2008		$	218,852			$	—			$	33,773			$	52,037			$	95,000			$	—			$	8,308			$	407,970
Chief Financial Officer
Joe A. Raver		2009		$	411,589			$	—			$	186,632			$	104,249			$	215,000			$	—			$	75,009			$	992,479
Senior Vice President and President of Batesville Casket Company		2008		$	115,847			$	100,000			$	15,972			$	17,692			$	70,000			$	—			$	17,061			$	336,572
P. Douglas Wilson		2009		$	257,726			$	—			$	119,295			$	72,251			$	103,000			$	—			$	28,788			$	581,060
Senior Vice President		2008		$	129,781			$	—			$	15,262			$	22,186			$	55,000			$	—			$	8,462			$	230,691
Human Resources
John R. Zerkle		2009		$	282,726			$	—			$	215,577			$	163,525			$	98,500			$	3,179			$	25,407			$	788,914
Senior Vice President,		2008		$	244,400			$	25,000			$	201,252			$	71,419			$	100,000			$	—			$	16,678			$	658,749
General Counsel and Secretary		2007		$	207,404			$	—			$	76,284			$	37,776			$	56,337			$	22			$	14,550			$	392,373

		Change in				Above Market
		Actuarial Present				Nonqualified
		Value of				Deferred
		Accumulated				Compensation
Name		Pension Benefit (a)				Earnings (b)				Total
Kenneth A. Camp (c)		$	1,251,951			$	—			$	1,251,951
Joe A. Raver		$	—			$	—			$	—
Cynthia L. Lucchese		$	—			$	—			$	—
P. Douglas Wilson		$	—			$	—			$	—
John R. Zerkle		$	3,179			$	—			$	3,179

(a)		See the Pension Benefits Table below for additional information, including present value assumptions used in this calculation.
(b)		SEC rules characterize earnings in excess of the “Applicable Federal Rate” as “above market” earnings and require the separate disclosure of those amounts. There were no above market earnings to be reported for fiscal 2009.
(c)		The pension benefit for Mr. Camp includes the effect of the supplemental benefits he may earn under the agreement dated March 15, 2006, and more fully described in footnote 4 to the Pension Benefits Table below.

		Company Contribution								Other Personal
		401(K)				Supp 401(K)				Benefits				Total
Kenneth A. Camp		$	3,919			$	69,339			$	2,206			$	75,464
Joe A. Raver		$	21,743			$	34,277			$	18,989			$	75,009
Cynthia L. Lucchese		$	15,532			$	8,330			$	—			$	23,862
P. Douglas Wilson		$	18,038			$	5,600			$	5,150			$	28,788
John R. Zerkle		$	17,885			$	6,912			$	610			$	25,407

Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2009

The following table summarizes the grants of plan-based awards to each of the Named Executive Officers for the fiscal year ended September 30, 2009.

(a)		(b)		(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
																All
																Other				All Other
																Stock				Option
																Awards:				Awards:
																Number				Number								Closing
				Estimated Future Payouts Under												of				of				Exercise				Market				Grant Date
				Non-Equity Incentive Plan Awards (1)												Shares				Securities				or Base				Price on				Fair Value of
								Initial									of Stock			Underlying				Price of				Grant				Stock and
		Grant		Threshold				Target				Maximum				or Units				Options				Option Awards				Date				Option Awards
Name		Date		$				$				$				# (2)				# (3)				$/sh				$/sh				$ (4)
Kenneth A. Camp				$	—			$	602,308			$	1,445,539
		12/18/2008																			135,997			$	14.89			$	14.98			$	539,949
		12/18/2008															101,997															$	1,518,735
Joe A. Raver				$	—			$	308,654			$	740,770
		12/18/2008																			41,806			$	14.89			$	14.98			$	165,982
		12/18/2008															31,354															$	466,861
Cynthia L. Lucchese				$	—			$	154,615			$	371,076
		12/18/2008																			31,430			$	14.89			$	14.98			$	124,787
		12/18/2008															23,572															$	350,987
P. Douglas Wilson					—			$	128,846			$	309,230
		12/18/2008																			28,569	(5)		$	14.89			$	14.98			$	113,428
		12/18/2008															21,427	(5)														$	319,048
John R. Zerkle				$	—			$	141,346			$	339,230
		12/18/2008																			36,209	(6)		$	14.89			$	14.98			$	143,761
		12/18/2008															27,157	(6)														$	404,368