21 Kemper Corporation 2022 Proxy Statement 28
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| | Compensation Discussion and Analysis |
of our Common Stock was lower than the price on each of the grant dates for those years.Stock options make up 25% of the NEO’s long term incentive award and their value directly aligns to shareholder value.
In addition, lower operating performance resulted in reduced vesting of PSUs as compared to prior years.As illustrated in the following table, with a decline in Relative TSR, the total percentage of PSUs awarded in prior years that vested for our NEOs based on 2021 performance was substantially lower than in prior years.
Kemper believes that these results illustrate the alignment of pay with performance and reflect an appropriate overall compensation program design.
Executive Compensation Outcomes—2021 and in the Future
Kemper’s HR & Compensation Committee have long believed that the Company’s executive compensation program effectively links pay and performance and aligns with shareholder interests.We believe that our history of strong shareholder “say-on-pay" votes, including 97% of the votes cast in 2021, support this conclusion.In addition and for the reasons described above, the Company believes the executive compensation program performed effectively during the challenges in 2021 caused by the COVID-19 pandemic.
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| | Executive Compensation Program |
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◦ | The multi-year cash incentive program in place in prior years was eliminated, with the funds used to provide additional resources for annual cash incentives while controlling total compensation expenses. |
Summary of Executive Compensation Elements
The 2016 equity-basedCompany provides both fixed (salary) and performance-based (cash and equity incentives) compensation programto NEOs. Most compensation awarded to each NEO in 2021 was revised“at risk” to the executive because it was contingent on Company and individual performance and, for the PSU component, the number of shares ultimately paid out could vary from past years,the initial award. Additionally, the value of the PSUs and while continuingstock options granted will change commensurate with the price of the Company’s Common Stock. The amount of “at risk” compensation based on performance is designed to be entirelysignificantly more than salary. The following charts show each element of 2021 target NEO compensation, including the mix of annual cash and long-term equity incentives, as well as the overall percentages of fixed versus performance-based is focused on key objectives as follows:
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◦ | Performance-based restricted stock units (“RSUs”) are used to motivate achievement measured by: |
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▪ | Kemper’s relative total shareholder return versus a peer group of insurance companies over a three-year performance period (“Relative TSR”), an important measure for shareholders; and |
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▪ | Adjusted return on equity (“ROE”) achievement, also over a three-year performance period (“Three-Year Adjusted ROE”), which will be a key measure of the overall success of efforts to improve Kemper’s financial performance. |
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◦ | Stock options continue to be used to motivate the achievement of absolute gains in share price, thereby aligning interests of employees with shareholders. |
Each of the current incentive programs is discussed in more detail in this CD&A, along with legacy programs granted in past years. Any earnings under cash incentive awards granted prior to 2016 will be determined by the end of 2017 and paid out in early 2018.
2016 Executive Pay Decisions
As discussed below, 2016 represented a transitional year in terms of significant executive personnel changes, various management actions to resolve outstanding legacy issues, and investments and other steps intended to result in improved performance in future years. Management and the Compensation Committee gave due consideration to these transitional factors in making incentive compensation decisions with respect to 2016. These transitional factors included the following:
The executive team changeover, with some executives exiting and others joining the Company:
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◦ | The executives exiting Kemper received severance pay; and |
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◦ | The incoming executives were provided with compensation designed to attract them to Kemper, including equity-based awards upon joining the Company and, in some cases, cash payments and/or guaranteed incentives for specific timeframes. |
Partial work years for the newly-recruited executives.CEO and for the other NEOs (on average):
Kemper Corporation 2022 Proxy Statement 29
Recognition that 2016 was a year of transition in which certain actions were taken to address prior-year issues, including the important steps taken toward resolving certain significant legal and regulatory matters confronting the Company’s life insurance business.
Outstanding multi-year cash incentive awards held by continuing executives, which were determined in accordance with formulas established prior to the Company’s change in leadership.
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Recent Executive Officer Changes |
As noted above, there were significant changes to the executive management team in 2016 as the Company hired the following individuals to lead the Company’s two business segments and to run the Company’s information technology, human resources and financial operations:
Charles Brooks joined in May 2016 as Senior Vice President & Chief Information Officer;
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| | Executive Compensation Discussion and Analysis |
Mark Green joined in May 2016 as President of the Company’s Life & Health Division;
Chip Dufala joined in July 2016 as President of the Company’s Property & Casualty Division;
Christine Mullins joined in October 2016 as Senior Vice President & Chief Human Resources Officer; and
James McKinney joined in November 2016 as Senior Vice President & Chief Financial Officer.
In addition to performing his duties as Chief Accounting Officer, Richard Roeske served as Interim Chief Financial Officer for the Company starting in September 2016 in place of Frank Sodaro and ending when Mr. McKinney joined the Company in November.
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Executive Compensation Program Features |
Important features of the executive compensation program and related Company policies continue to include:
Incentive plans with significant at-risk compensation based on a mix of short-term and long-term goals:
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◦ | Performance-based cash incentives; |
| What We Do |
◦ü | Equity-basedPay-for-Performance: The majority of NEO total compensation programis tied to Company, business unit and individual performance and is considered “at risk” by the Company, with stock optionsactual value contingent upon performance results. | ü | Independence of Executive Compensation Consultant: The HR & Compensation Committee has engaged an executive compensation advisor who is independent in accordance with SEC and three-year performance-based RSUs; |
NYSE rules and has no personal relationships with our NEOs or Board members.
Grant agreements with executive officers that include:
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◦ü | Clawback clauses for the recoupment or forfeiture of compensationRights: Our cash incentive and equity programs include clawback rights on paid incentives in the event of certain accounting restatements or as otherwise required by applicable law or Company policy; |
law. | ü | Independent Committee Members: All HR & Compensation Committee members are independent in accordance with SEC and NYSE requirements and guidelines. |
◦ü | A double-trigger standardDividend Equivalents Paid Only on Earned Awards: Since 2018, dividend equivalents accrue on performance shares during the performance period and are paid on shares earned when they vest. | ü | Double-Trigger Change-in-Control: Our Company policy provides for change in the eventcontrol benefits only on a qualified termination of terminationemployment in connection with a change in control;control. |
ü | Stock Ownership Guidelines: The Company maintains rigorous stock ownership guidelines for Directors, NEOs and other executive officers to reinforce the alignment of our executives with shareholder interests. | ü | Strive to Understand Shareholders’ Views on Executive Compensation: We believe the supportive shareholder vote on the Company’s annual Say-on-Pay proposal demonstrates that the program aligns with shareholder expectations. |
No excise tax gross-ups; and
Policies prohibiting directors and employees who receive equity-based compensation awards from participating in:
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◦What We Do Not Do |
û | No Tax Gross-Ups: NEOs and other executive officers are not entitled to excise tax gross-ups under any Company policies or compensation programs. | û | No Employment Contracts: The Company does not have employment contracts with its NEOs or other executive officers, who are all employees “at will.” |
û | No Hedging transactions limiting risksor Pledging: Directors and all employees who receive equity awards are prohibited from decreases in the pricehedging, pledging or otherwise encumbering shares of the Company’s Common Stock;Stock. | û | No Excessive Perquisites: Perquisites include annual executive physicals, financial planning services, additional insurance coverages, and limited personal aircraft use. |
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◦ | Pledging arrangements involving Company securities. |
Kemper Corporation 2022 Proxy Statement 30
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Allocation of Specific Elements of Compensation |
The basic objective of the Company’s executive compensation program is to attract, retain and motivate the performance of the Company’s executives by providing compensation packages that include reasonable and competitive direct compensation structured to reward its executives for increasing shareholder value. The Company’s executive officers receive a few perquisites and are eligible to participate in employee health and welfare benefits and retirement plans offered by the Company.
Appropriately calibrated salaries are important in achieving the Company’s objective of attracting and retaining superior executive talent. The executives’ responsibilities and experience are taken into account in determining their salaries, as is compensation paid by competitors for similar positions, as is the Company’s emphasis on performance-based incentive compensation. The Annual Incentive Program furthers the fundamental principle of linking compensation to Company performance and the creation of shareholder value.
Equity-based compensation is considered another key source of contingent compensation intended to further align management incentives with shareholder interests. The Compensation Committee strongly believes that equity-based incentives, including stock options and performance-based RSUs, provide an effective means of motivating shareholder-focused behavior by key executives. In addition, time-based RSUs have been granted to certain executives upon their joining the Company.
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| | Executive Compensation Discussion and Analysis |
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Compensation Strategy and Analysis |
General Strategy
In its deliberations on executive compensation, the HR & Compensation Committee considers whether the cash and equity-based compensation in light of their consistencyawards are consistent with the Company’s underlying principles and objectives, including long-term shareholder interests, the total value to individual executives and the cost to the Company. In addition, the committee endeavors to align executive compensation with long-term shareholder interests. Executive compensation decisions incorporateare designed to reflect the following approach by the HR & Compensation Committee:
•Obtain a clear understanding of the business strategies and objectives of the Company, and the reasoning and recommendations of senior management for motivating their key subordinates.management. The HR & Compensation Committee believes it is important and appropriatenecessary to give serious considerationsignificant weight to the views of the CEO and senior management who run the Company and supervise key managerial employees;management;
•Consider, with the assistance of its independent compensation consultant, industry data on compensation levels of executive compensation for similar positions at similar companies, particularly in the insurance industry, to assess the extent to whichcomparability of the Company’s pay practices may vary from industry practices and determine whetherif any noted variances are reasonable, appropriate and purposefully designed to successfully attract, motivate and retain skilled executives in a highly competitive marketplace;
•Provide executive officer salary adjustments only periodically or as appropriate to reflect significant changes to the Company’s profile or increased management responsibilities, or to address significant changes to competitive market conditions;
•Provide an annual cash incentive program structured to significantly incentincentivize and reward exceptional annual financial, business unit and operational performance; andindividual performance during the prior year;
•Reward longer-term results through equity-based long-term incentives, focusedincluding PSUs with three-year performance metrics based on the achievement of Relative TSR and Three-Year Adjusted ROE, and stock options that gain value based on absolute share price appreciation, while encouragingappreciation; and monitoring
•Monitor compliance by the senior management’smanagement team with Kemper’s stock retention.ownership policy.
The following table summarizes the material elements of the Company’s 2021 executive compensation program. Further details regarding each of the elements are provided in the discussion that follows the table.
Kemper Corporation 2022 Proxy Statement 31
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| | Compensation Discussion and Analysis |
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EXECUTIVE COMPENSATION PROGRAM |
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Element | Key Characteristics | Why We Pay this Element | How We Determine Amount | 2021 Decisions |
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Fixed Compensation |
Salary | Fixed compensation payable in cash | Provides competitive cash compensation to attract, retain and motivate performance by talented executives | Established using market data as a reference. Adjustments generally made periodically to reflect significant changes in profile of the Company, responsibilities or competitive market conditions | No salary increases were made to NEOs in 2021, other than to Mr. Boschelli. |
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Variable Performance-Based Compensation |
Annual Cash Incentive | Variable cash compensation | Aligns compensation program with annual adjusted performance results | Earned based on corporate, business unit and individual performance
Program is designed to allocate highest compensation to the highest performing and most impactful participants | Aggregate annual incentive pool was approximately 100 percent of target pool, based on adjusted 2021 financial performance of the Company and operational considerations |
Performance Share Units (PSUs) | Variable equity compensation
Earned based on results of performance metrics at the end of a three-year performance period (assuming continued employment)
Realizable value is variable based on multi-year Company financial performance and stock price appreciation | Align management’s interests with those of shareholders
Performance metrics driven by Company performance
Balance short-term focus of the Annual Cash Incentive by tying rewards to performance over multi-year periods
Along with stock options, provide mix of long-term incentives supporting business strategy | Based on job scope, market data and individual performance
Actual payouts can range from 0 to 200 percent of target shares, based on achievement of three-year performance goals | 75 percent of total annual equity award value was granted in form of PSUs
PSUs were split between two performance metrics, with 67 percent based on Relative TSR, and 33 percent based on Three-Year Adjusted ROE |
Stock Options | Variable equity compensation
Nonqualified stock options vest equally over three years (assuming continued employment) and expire in 10 years
Realizable value is variable based on long-term stock price appreciation | Align management’s interests with those of shareholders
Focus management on long-term stock price appreciation
Balance short-term focus of Annual Cash Incentive by tying rewards to long-term performance up to 10 years
Along with PSUs, provide a mix of long-term incentives that support business strategy | Based on job scope, market data and individual performance | Twenty-five percent of total annual value of equity award granted as stock options |
Restricted Stock Units (RSUs) | Variable equity compensation
Time-vested awards which generally vest equally over two to three years
RSUs are not part of the annual grant, but are used in limited circumstances | Generally used to encourage retention and serve as an inducement to join or remain with the Company under certain circumstances | Based on job scope, future potential assessment and/or to replace compensation “left on table” for candidates, which serves as an inducement to join the Company | No RSUs were granted to NEOs in 2021 |
Kemper Corporation 2022 Proxy Statement 32
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| | Compensation Discussion and Analysis |
Benchmarking Analysis
As part of its executive compensation review for 2016,2021, the HR & Compensation Committee considered twoa benchmarking analyses presentedanalysis provided by Exequity. The first analysis comparedFW Cook comparing the compensation components of salary, actual annual incentives, long-term incentives, and total compensation of the Company’s CEO Chief Financial Officer and General Counsel,other executive officers relative to an analysis of pay programs from the proxy statements filed byof a selected peer group (“Proxy Group”Peer Group”). The positions ofWhere possible, each Company position was compared to industry data using functional counterparts or executives with similar roles at the CEO, Chief Financial Officer and General Counsel were matched, to the extent these positions were disclosed by thepeer companies, in the Proxy Group, andas well as compensation data was based on disclosuresdisclosed in proxy statements filed in early 2015. Long-term incentives were annualized and valued using the Exequity valuation methodology.
2020.
The Proxy Group, selected by Exequity with input from management and approved by theHR & Compensation Committee did not make any changes for 2021 to the Peer Group used in 2020. The 2021 Peer Group consisted of eighteen16 publicly-traded companies in the insurance industry with profiles similar to the Company’s based on information disclosed in their annual reports and proxy statements. The ProxyPeer Group companies generally had a majority of operations in the property and casualty insurance industry, and the variations in their revenues, assets and market capitalization versus the Company were considered when the group was selected.
The following companies were included in the Proxy Group:
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American Equity Investment Life Holding Company | | Executive Compensation |
Erie Indemnity Company |
American Financial Group, Inc. | |
Alleghany Corporation | Horace Mann EducatorsFirst American Financial Corporation |
American National Insurance CompanyGroup, Inc. | Infinity Property and Casualty CorporationGlobe Life Inc. |
Argo Group International Holdings, Ltd. | Mercury General CorporationThe Hanover Insurance Group, Inc. |
W.R. BerkleyAssurant, Inc. | Markel Corporation | OneBeacon Insurance Group, Ltd. |
Cincinnati Financial Corporation | The ProgressiveMercury General Corporation |
FBL Financial Group, Inc. | RLI Corp. |
First AmericanCNA Financial Corporation | Selective Insurance Group, Inc. |
The Hanover Insurance Group, Inc. | Torchmark Corporation |
HCC Insurance Holdings, Inc. | White Mountains Insurance Group, Ltd. |
The second benchmarking analysis presented by Exequity considered the compensation components of salary, target bonus, long-term incentives and total compensation for the Company’s CEO, Chief Financial Officer, General Counsel, Chief Investment Officer and Group Executives with the compensation for comparable positions at companies within two peer groups of U.S.-based insurance companies participating in Equilar’s Top 25 Survey (“Equilar Survey”). The first insurance peer group consisted of all U.S.-based insurance companies in the Equilar Survey, excluding U.S.-based subsidiaries of foreign companies and mutual insurance companies without publicly-available size data (“All Insurance Peer Group”). The second insurance peer group consisted of a subset of the All Insurance Peer Group with book values of assets between one-third and three times the Company’s book value of assets (“All Insurance Peer Subgroup”).
The following companies were included in the All Insurance Peer Group; those designated with an asterisk comprise the All Insurance Peer Subgroup:
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Aflac Incorporated | Liberty Mutual Holding Company Inc. |
The Allstate Corporation | Lincoln National Corporation |
American Family Mutual Insurance Company | Markel Corporation |
Aon plc | Mercury General Corporation* |
Arthur J. Gallagher & Co.* | The Navigators Group, Inc.* |
Aspen Insurance Holding Limited* | New York Life Insurance Company |
Assurant, Inc.* | The Northwestern Mutual Life Insurance Company |
The Chubb Corporation | Primerica, Inc.* |
CNA Financial Corporation | Principal Financial Group Inc. |
CNO Financial Group, Inc.* | Prudential Financial, Inc. |
EMC Insurance Group Inc. | Reinsurance Group of America, Incorporated |
Erie Indemnity Company | RLI Corp.* |
First American Financial Corporation* | Symetra Financial Corporation* |
The Hanover Insurance Group, Inc.* | Torchmark Corporation* |
The Hartford Financial Services Group, Inc. | The Travelers Companies, Inc. |
HCC Insurance Holdings Inc.* | Unum GroupW.R. Berkeley Corporation |
FW Cook also compared Kemper’s executive compensation levels based on total direct compensation consisting of base salary, three-year average of actual bonus payouts, and long-term incentive grant guidelines against additional market references, including published survey data from similarly sized companies in the broader insurance industry. In addition, general industry data from Willis Tower Watson, Mercer, Aon, McLagan and Equilar executive pay surveys was evaluated for reasonableness after being scoped to the Company’s projected revenue and other considerations. The HR & Compensation Committee did not consider the individual companies included in these additional market references for the CEO and does not believe their identification to be material with respect to the compensation of the other NEOs.
The HR & Compensation Committee used the benchmarking data as ato test of the reasonabilityreasonableness of the compensation paid to the Company’s executive officers. In evaluating the benchmarking data, the HR & Compensation Committee did not follow a rigid process, establish specific pay objectives in evaluating the benchmarking data (such as, for example, targeting different elements of compensation at the median), or use the data as part of specific formulas when making compensation determinations for these executives. Instead, the HR & Compensation Committee considered the benchmarking analysis as a means of identifying any outliers and determining whether the levels of compensation provided to the CEO and other executive officers arewere within appropriate ranges in comparisonrelative to comparable companies.
The benchmarking data was also subjectively considered by the HR & Compensation Committee as an additional point of reference in its deliberations on compensation levels for these executives, along with other factors such as Company and business unit performance, individual performance, and the Company’s compensation philosophy and objectives. The HR & Compensation Committee believes the Company’s executive compensation program is fair, competitive with marketplace practices and effective in enhancing shareholder value.
Consideration of 2021 Say-on-Pay Vote
As part of its review of the Company’s executive compensation program, the HR & Compensation Committee considered the approval by approximately 97% of the votes cast for the Company’s say-on-pay vote at our 2021 annual meeting. Based on such high level of support, we did not make any changes to our compensation program.
Kemper Corporation 2022 Proxy Statement 33
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Annual Determination of Specific Compensation |
This section provides a discussionThe objective of the 2016 compensation provided to the Company’s executive officers whose compensation program is disclosedto attract, retain and motivate the performance of the Company’s executives. This is accomplished by providing competitive compensation structured to incentivize performance in support of the Company’s strategy, and reward executives for achieving the desired financial results and increased shareholder value.
The annual compensation program for the NEOs consists of a fixed salary component, an annual cash incentive award component that varies based on performance, and an equity award based on multi-year financial metrics and long-term stock price appreciation. For the NEOs other than the CEO, the equity award value is at a target percentage of salary. The equity award value may be increased or decreased on occasion at the discretion of the HR & Compensation Committee to recognize outsized performance, under performance or other significant factors.
As salary is the only component that is fixed and not based on performance, it represents a relatively small portion of total compensation, and is generally not adjusted annually. The HR & Compensation Committee believes compensation based on performance, including awards under the Annual Incentive Program, stock options and PSUs, provide the most effective means of driving successful and shareholder-focused performance. Time-based RSUs are used in limited circumstances, specifically in grants to certain executives to induce them to join or remain with the Company.
Salaries
The HR & Compensation Committee has adopted the philosophy of not providing annual adjustments to base salary compensation except as determined necessary or appropriate to reflect significant changes in the Summary Compensation Table on page 40 (“Named Executive Officers” or “NEOs”) and the additional compensation tables on subsequent pages.
Salaries
The Compensation Committee determined Mr. Lacher’s salary in connection with his retention as CEO in November 2015, considering available benchmarking information provided by Exequity. In connection with Messrs. Dufala, Green and McKinney joiningprofile of the Company, their salariesresponsibilities or competitive market conditions. In 2021, no increases to base salary were recommended by the CEO, authorized by the Compensation Committee Chair and approved by the committee. The Compensation Committee reviewed the salariesmade for theany NEOs other executive officers at its meeting in February 2016 and considered the recommendations made by the CEO based on his assessment of the individual’s job performance and contributions, relevant benchmarking analysis and observations of the committee with respect to the individual’s job performance. The executive officer performance assessments included certain subjective considerations and were not limited to specific formulaic goals or other objective factors, which were also considered. Following its review and discussion, the Compensation Committee approved salaries for Messrs. Boschelli, Roeske and Sodaro at their 2015 levels.
The annualized salaries approved for all NEOs in 2016 are shown in the following table:
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Name | Salary ($) |
Joseph P. Lacher, Jr | 750,000 |
James J. McKinney | 450,000 |
John M. Boschelli | 400,000 |
George D. “Chip” Dufala, Jr. | 485,000 |
Mark A. Green | 420,000 |
Richard Roeske | 371,000 |
Frank J. Sodaro | 450,000 |
than Mr. Boschelli.
Performance-Based Cash Incentives and Equity Awards
SinceBecause each NEO holds a position that provides strategic direction, requires critical decision-making, and affectsdrives the overallCompany’s performance and financial results, of the Company, theHR & Compensation Committee believes:
•A material percentage of theirthe NEO’s compensation should be linked to Company performance; and
•Greater responsibilities should lead to moregreater opportunities for incentive compensation.
Accordingly, cash incentives and equity-based awards linked to the outcome of Company financial metrics comprise a significant portion of each NEO’s compensation. As previously noted, the Annual Incentive Program differs from prior-year programs in terms of allocating a larger percentage ofprovides awards to the highest performing and most impactful participants, with a lesser emphasis on formulaic individual awards. In addition, multi-year cash incentive awards included in prior-year programs have been eliminated.
participants.
Annual Cash Incentives for 20162021
The Annual Incentive Program is a cash incentive program based on performance. Each year, a modeled pool is established for participating employee groups.For 2021, the modeled pool was based on historical target and payout values at each organizational level in an attempt to keep total compensation generally equivalent year over year. The modeled pool was adjusted for extenuating factors, partial year employment for new bonus-eligible participants, and achievement of key strategic projects.
Executive Performance Plan
Annual incentivesAwards made to Kemper’s NEOs under the Annual Incentive Program are made under Kemper’s Executive Performance Plan (“EPP”EPP”) are determined using a multi-step process:
A total incentive pool is determined under the formula approved by the Compensation Committee pursuant to the EPP, which is shareholder approved and designed to allow maximum tax deductibility of the incentive payouts; and
Maximum payouts to EPP participants are set based on pre-approved allocations of the incentive pool, with actual payouts to the NEOs determined in accordance with the Annual Incentive Program based on achievement against key performance results as well as the discretionary judgment of the Compensation Committee and, for the other executive officers, the CEO.
.The material terms of the performance goals under the EPP were approved by shareholders at the 2014 Annual Meeting. The EPP is intended to serveserves as an “umbrella” plan and potential funding vehicle for annual cash incentives for the NEOs.The HR & Compensation Committee intends to ensure full tax deductibilitycontinue the process of cash incentives paidapproving an annual EPP formula and resulting allocations to officers who are subjectplan participants as a good corporate governance practice even though the process was initially intended to comply with the performance-based requirements of Section 162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986 and its accompanying regulations(“Internal Revenue Code”Code”), which includesno longer apply. This approval process typically occurs at the Chief Executive Officer andHR & Compensation Committee’s first quarterly meeting of each year.
The 2021 annual incentives under the other three executive officers, other thanEPP were determined by the Chief Financial Officer, who are identified as NEOs in the proxy statement for the year following the end of the performance period based upon their compensation for the performance period. Annually, theHR & Compensation Committee approvesusing the formula determining the funding of themulti-step process followed in prior years:
Kemper Corporation 2022 Proxy Statement 34
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•The 2021 annual cash incentive pool (“EPP Incentive Pool”Pool”) forwas determined by the following year, and the maximum percentage of the pool that may be allocated to individual participantsperformance results under the plan.
At its meeting in February 2016, the Compensation Committee approved thepre-approved formula for 2016 annual incentive awards under the EPP based on adjusted pre-tax operating income from continuing operations for the performance period ending on December 31, 2016. 2021. Details on the adjustments to pre-tax operating income are described below.
•Maximum payouts to EPP participants were determined based on the pre-approved allocations of the EPP Incentive Pool to individual participants.
•Actual payouts to the NEOs were determined by the HR & Compensation Committee based on achievement of key performance results, with the CEO’s input for payouts to the NEOs other than the CEO.
•In the case of each of the NEOs, the HR & Compensation Committee exercised negative discretion in reducing the amounts available for award for 2021 under the EPP.
The formula approved for the 20162021 EPP Incentive Pool was set as follows:
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Formula for 20162021 EPP Incentive Pool |
7%7.5% of Income from Continuing Operations before Income Taxes as reported in the Company’s financial statements for 2016,the year ended December 31, 2021, modified as follows to take into account for items the HR & Compensation Committee deems not indicative of the Company’s core operating performance: |
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(a) adjust the amount of Actual Catastrophe Losses and LAE to equal Expected Catastrophe Losses and LAE (italicized terms defined below); |
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(b) adjust Net Realized Gains on Sales of Investments and Net Impairment Losses Recognized in Earnings (italicized terms as reported in the Company’s 20162021 financial statements) to equal Expected Net Realized Gains on Sales of Investments and Expected Net Impairment Losses Recognized in Earnings (italicized terms defined below); |
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(c) exclude significant unusual judgments or settlements in connection with the Company’s legal contingencies or defined benefit pension plans; and |
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(d) exclude additional significant unusual or nonrecurring items as permitted by the EPP. |
The terms as used above wereare defined as follows:
•“Actual Catastrophe Losses and LAE” means the actual Catastrophe Losses and associated Loss Adjustment Expenses (as described on page 38), including catastrophe reserve development, as reported in the Company’s management reports for the relevant time period.year.
•“Expected Catastrophe Losses,, ” “Expected Net Realized Gains on Sales of Investments,,” and “Expected Net Impairment Losses Recognized in Earnings means” mean the amounts specified in the Company’s management reports as “Planned”“Planned” or “
“Expected”Expected” for the 20162021 annual performance period for, respectively: (a) Catastrophe Losses and associated Loss Adjustment Expenses,, including catastrophe reserve development, (b) Net Realized Gains on Sales of Investments,, and (c) Net Impairment Losses Recognized in Earnings,. as such terms as defined in the 2021 Annual Report.
Also at its meeting in February 2016, the Compensation Committee approved theThe following allocations of any resulting 2016the 2021 EPP Incentive Pool were approved by the HR & Compensation Committee to determine the maximum annual cash incentive payable to theeach plan participants:participant:
40%•36 percent to the Chief Executive Officer; and
20%•16 percent to each of the other officers subject to Section 162(m).NEOs.
At its meeting in February 2017, the Compensation Committee certified the performance results under the 2016 EPP Incentive Pool formula and determined the amount of the 2016 EPP Incentive Pool to be $9,330,000. The HR & Compensation Committee determined the maximum incentive amounts for the participating NEOs pursuant to the previously-approved 2016previously approved 2021 EPP Incentive Pool allocations. The CEO exercised negative discretionallocations, subject to recommend awards less than the maximum amountsEPP Limit.
At its meeting in February 2022, the HR & Compensation Committee certified the performance results under the 2021 EPP Incentive Pool formula and determined the amount of the 2021 EPP Incentive Pool to Messrs. Boschelli, Dufalabe $30.5 million.In approving the actual EPP payouts for Mr. Lacher and Green, which awards were subsequently approved by the Compensation Committee. Likewise,other NEOs, the HR & Compensation Committee exercised negative discretion in approvingto reduce the award for Mr. Lacher.
2016 Annual Incentive Program
As previously noted,size of awards from the Annual Incentive Program is a cash incentive program that replaced the Company’s prior program that included both annual and multi-year components. Implementation of the new program began with the establishment of an initial pool for participating employee groups. The initial pool was established in an amount estimated to be comparable to amounts paid out under prior year plans for like performance. The initial pool was then adjusted for overall business performance, after consideration of qualitative and quantitative metrics and the achievement of strategic projects.
The adjusted pool was allocated to the participating groups and distributed in individual awards based on performance. Initial recommendations were reviewed for calibration across function, organizational level, sub-businesses and other relevant factors, with a goal of determining individual awards relative to results delivered and differentiated performance.
In determining awardsdetermined under the Annual Incentive ProgramEPP formula for the Company’s NEOs, the2021.The HR & Compensation Committee with the guidance of Pay Governance, considered both qualitative criteria and quantitative financial performance measures, as well as the transitional nature of the 2016 performance year. The Compensation Committee did not use a formula or assign any particular relative weighting to any performance measure. The committee believes a strictly formulaic approach to individual incentive payments is not appropriate in the insurance industry and not an appropriate
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substitute for the committee’s deliberation and business judgment. The level of achievement of any particular financial or operational measure indoes not mandate a given year neither guarantees nor precludesparticular payout under the payment of an annual cash incentive, but is considered by the Compensation Committee as a factorEPP.Instead, these items are weighed along with any additional information available to itthe committee at the time, including financial and economicgeneral market conditions in general.and individual performance.
TheIn establishing the 2021 EPP Incentive Pool and exercising negative discretion under the plan, the HR & Compensation Committee applied its judgmentdid not use a formula or assign any predetermined weighting to any single performance measure. Instead, in evaluating the following qualitative factorssenior executive performance, the committee considered in its overall assessment:
Progress on the strategic re-positioning of the Company, including progress toward achieving the Company’s objective of improvedoverall financial performance;results and certain qualitative factors.
Progress toward effecting the cultural change needed to sustain high performance levels going forward;
Progress toward resolving the significant regulatory matter confrontingIn assessing the Company’s life insurance business;
Progress toward improvingfinancial performance, the committee considered the Company’s nonstandard automobile business;
Effective management of risk and expenses; and
Overall performance of the executive, based upon the judgment of the committee and the Chairman of the Board in the case of the CEO, and of the CEO in the case of the other NEOs, including perceptions on leadership, teamwork and general organizational abilities.
The Compensation Committee also reviewed quantitative factors and management’s progress toward improved financial and operating performance in 2016. The quantitative factors that were reviewed include net income combined ratio,and return on equity, written and earned premiums and net investment income, by business segment and operating unit within each business segment. The committee analyzed reported results against plan, prior-year and industry results and also considered underlying trends. In addition, the committee reviewed results with various adjustments for items it deemed not indicative of the Company’s core operating performance.
The Compensation Committee reviewed results with and without certain adjustments, including the following:
reported results including Actual Catastrophe Losses and LAE, and Actual Catastrophe Losses and LAE adjusted to expected losses;
reported results with and without unusual charges or gains;
reported results including realized gains and losses and impairments, and results adjusted to expected gains, losses and impairments.
In determining award payouts for the individual NEOs under the Annual Incentive Program, the Compensation Committee took into account key business results and factors considered critical to the success of their respective business units and functional areas in addition to the qualitative and quantitative factors described above. Although the Compensation Committee generally weighs quantitative measures more heavily than more subjective, qualitative outcomes, given the transitional nature of 2016 and the partial-year employment of many NEOs, a heavier emphasis was placed on qualitative measures for 2016 awards.
The Compensation Committee considered net income, with and without certain adjustments, although that measure wasthese measures were not individually determinative nor given any particular weightdeterminative.As described above, these measures were significantly affected by the impact of the COVID-19 pandemic on Kemper’s businesses, which the committee took into consideration.
Qualitative factors considered by the HR & Compensation Committee for 2021 included the following:
•Leadership shown by the management team during the Company’s recovery and re-emergence from the COVID-19 pandemic;
•Implementation of operational measures that enabled the Company’s employees to adapt and perform effectively in comparisona post-pandemic environment;
•Recruitment and development of the executive talent considered necessary to respond to environmental challenges and deliver long-term growth; and
•Refinement of the Company’s philanthropic focus and development of a more comprehensive ESG framework.
In determining the award amount for each NEO under the EPP, the HR & Compensation Committee took into consideration the following factors with other measures considered in determining adjustmentsrespect to each individual:
•Mr. Lacher and his senior management team continued to lead the Company’s response to the initial poolpandemic and specific incentive awards for the 2016 Annual Incentive Program.shift to a hybrid operating model. Under Mr. Lacher’s leadership, the P&C business completed the second strategic acquisition during his tenure as CEO and continued to make substantial operational improvements, with the goal of enhancing claim outcomes effectiveness and improving long-term P&C profitability.In addition, Mr. Lacher led the L&H business in refining its strategic plan to improve performance. Mr. Lacher’s leadership across each of Kemper’s businesses was especially critical in 2021 given the economic headwinds and challenges caused by the prolonged nature of the COVID-19 pandemic.
•Mr. McKinney’s leadership in 2021 contributed to the Company maintaining a strong capital and liquidity position, providing financial flexibility. Mr. McKinney led a number of strategic initiatives intended to drive growth in book value and achieve efficient capital deployment, including the successful reduction in the Company’s pension liability risk exposure. Mr. McKinney directed the enhancement of the Company’s ERM framework and, in partnership with Mr. Sanders, was instrumental in the Company’s acquisition of American Access Casualty Company ("AAC”).
•Despite financial market volatility in 2021, Mr. Boschelli and his team achieved stable performance in the Company’s investment portfolio. In particular, Mr. Boschelli successfully executed the Company’s first renewable energy investment and expanded COLI deployment to enhance total returns. Under his leadership, the investment portfolio is well-diversified across high-quality assets, provides manageable exposures and supports the Company’s long-term business objectives.
•Mr. Sanders drove continued improvements to the P&C operations in 2021 and partnered with Mr. McKinney on the acquisition of AAC. For the Specialty P&C business, he focused on product sophistication and geographic expansion that yielded organic growth and increased market strength. The following table shows 2016 actual, 2016 targetPreferred P&C segment made further progress with continued product refinement and 2015 actual Net Income, as reportedexpanded use of technology platforms. Mr. Sanders led his team to enhance the claims operations by deploying process changes and as adjusted:other actions to improve and better assess performance. Mr. Sanders also focused on deployment of various tactics to successfully manage claim
Kemper Corporation 2022 Proxy Statement 36
|
| | | | | |
Net Income Comparisons ($ in Millions) |
| | | |
Measure | 2016 Actual | 2016 Target (1) |
| 2015 Actual |
|
Net Income | 16.8 | 110.8 | 85.7 |
| | | |
Adjusted Net Income (2) | 101.2 | 110.8 |
| 78.3 |
|
| | | | | | | | |
(1) | Target includes catastrophes at normalized levels | Compensation Discussion and does not include any plannedAnalysis |
positive or negative reserve development.
| |
(2) | This is a non-GAAP financial measure - See Appendix A for GAAP to Non-GAAP |
reconciliation.
staffing disruptions exacerbated by COVID-19 labor issues, enabling the organization to meet performance targets.
•Mr. Sternberg realigned and strengthened the Life and Health management teams during 2021. The aggregate total of incentive payouts forLife & Health business remains profitable and its long-term fundamentals remain solid, despite the Annual Incentive Program underchallenging macro environment in which it operates. Under his leadership, the EPP was $1,850,000, significantly less thanLife business launched initiatives to stabilize, strengthen and grow the maximum amounts allocated underLife agency force. Mr. Sternberg also adjusted the 2016 EPP Incentive Pool. As previously noted,product and pricing portfolio, strengthening offerings and de-emphasizing non-core products. Mr. Sternberg also successfully mitigated the EPP applies onlynon-mortality disruptions related to the Company’s officers subjectCOVID-19 pandemic, including deploying sales and premium collections tools to Section 162(m)minimize the business disruption associated with the pandemic and so does not apply to Messrs. McKinneyachieved positive operating earnings and Roeske.
new business growth.
The following table shows the 20162021 EPP Incentive Pool allocations and maximum amounts payable for 20162021 annual awards under the EPP and the actual 20162021 annual EPP award payouts approved for the EPP participants:
| | Annual Incentive Payouts - 2016 Annual EPP Awards | |
Annual Incentive Payouts - 2021 Annual EPP Awards | | Annual Incentive Payouts - 2021 Annual EPP Awards |
Name | Allocated Percentage of EPP Incentive Pool(%) | Maximum Award (Lower of EPP Incentive Pool Allocation or Plan Limit) ($) |
| | Actual Award Payout($) |
| Actual Award Payout as Percentage of Maximum (%) | Name | Allocated Percentage of EPP Incentive Pool (%)(1) | Maximum Award (Lower of EPP Incentive Pool Allocation or EPP Limit) ($)(Millions)(2) | | Actual Award Payout ($)(Millions) | Actual Award Payout as Percentage of Maximum (%) |
Joseph P. Lacher, Jr. | 40 | 3,000,000 |
| (1) | 1,000,000 |
| 33.3 | Joseph P. Lacher, Jr. | 36 | 6.0 | | 1.8 | 30.0 | |
James J. McKinney | | James J. McKinney | 16 | 4.9 | | 0.9 | 18.4 | |
John M. Boschelli | 20 | 1,866,000 |
| | 340,000 |
| 18.2 | John M. Boschelli | 16 | 4.9 | | 0.5 | 10.2 | |
George D. “Chip” Dufala, Jr. | 20 | 1,866,000 |
| | 250,000 |
| 13.4 | |
Mark A. Green | 20 | 1,866,000 |
| | 260,000 |
| 13.9 | |
Duane A. Sanders | | Duane A. Sanders | 16 | 4.9 | | 0.9 | 18.4 | |
Erich Sternberg | | Erich Sternberg | 16 | 4.9 | | 0.4 | 8.2 | |
(1) AlthoughThe amount of the maximum2021 EPP Incentive Pool was $30.5 million as determined by the HR & Compensation Committee.
(2) Maximum award payout to Mr. Lacher determined in accordance with the 20162021 EPP formula was $3,732,000, the maximum was reduced to the maximum of $3,000,000 provided under the EPPformula. Maximum award for an annual award to any participant.
The awards to Messrs. Dufala and Green reflect prorated reductions of 54 percent and 42 percent, respectively, to take into account their particular start dates midway through the year. The Compensation Committee believes, based on its judgment, that these awards reflect fairly the actual financial performance outcomes achieved during 2016 based on the factors considered by the Compensation Committee as described above and, more specifically, the following issues deemed most pertinent to the individual officer’s responsibilities:
Mr. Lacher withexceeded the Board’s direction and advice, assembled a new leadership team and quickly engaged its members in helping him shape the Company’s strategy, determine the path forward to improved financial performance, identify necessary cultural changes within the organization and plan for implementation across the enterprise, and directed his team in taking the initial steps needed toward achieving improved results in the nonstandard automobile business of the Company’s Property and Casualty segment and resolution of the significant regulatory issues facing its life insurance business.
Mr. Boschelli ran a solid investment group that continued to produce strong results, leveraged the structure of the Company’s two operational divisions and achieved industry-leading returns.
Mr. Dufala led the efforts to improve the performance of the Property & Casualty Division, with particular attention to the nonstandard automobile business, upgrading claims processes, refocusing resources and actively supporting its technology implementation projects.
Mr. Green focused on strategies to improve and grow the businesses of the Life & Health Division and drove the significant progress made toward resolving certain regulatory issues facing its life insurance business.
Mr. McKinney did not receive an annual incentive award for 2016 because he did not join the Company until November 2016. Mr. Roeske was awarded an annual incentive award of $200,000 for 2016. Mr. Roeske’s award was determined pursuant to the Company’s Annual Incentive Program, with the amount based on the Compensation Committee’s judgment, considering in particular his successful management of the chief financial officer transition and the financial accounting and reporting process and effective execution of the Company’s 2016 Sarbanes-Oxley efforts.
2014 Multi-Year Awards Under 2009 Performance Incentive Plan
In 2014, the Compensation Committee made a selection of the specific Company performance criteria that would apply to the 2014 multi-year incentive awards to the Company’s executive officers for the three-year performance period that ended on December 31, 2016 (“2014 Multi-Year PIP Awards”). These awards were granted pursuant to the 2009 Performance Incentive Plan (“PIP”), under which cash incentive awards were granted until the program was revised in 2016. Performance results and payouts under the 2014 Multi-Year PIP Awards were determined at the Compensation Committee’s meeting in February 2017, as described below.
Performance Levels, Target Bonus Percentages and Performance Criteria
At its meeting in February 2014, the Compensation Committee granted Multi-Year PIP Awards to the executive officers who were employed by the Company at that time, including Messrs. Boschelli, Roeske and Sodaro, and assigned a target incentive bonus percentage to each recipient representing a percentage of his annual salary (“Target Bonus Percentage”) for each award. The Target Bonus Percentage for the 2014 Multi-Year PIP Award was set at 50 percent for Messrs. Boschelli and Mr. Sodaro and at 40 percent for Mr. Roeske. The Compensation Committee established threshold, target and maximum performance levels. The threshold performance level is the minimum level of performance that must be met before a payout may occur, and the maximum performance level was set at twice the target level. Salary for these awards was the average of the recipient’s salary in effect as of the first pay period in April 2014, 2015 and 2016.
In determining the payout for each award, the actual results under the applicable performance criteria for the performance period were compared to the applicable performance grids previously approved by the Compensation Committee to determine a target multiplier percentage (“Target Multiplier”). The Target Multiplier was then applied to the NEO’s Target Incentive Percentage and salary to determine the amount of any payout. For performance above or below preapproved target levels, the Target Multiplier was interpolated on a straight-line basis. The weighted Target Multiplier for the applicable performance criteria was determined from the applicable performance grids.
Performance Results and Payouts
At its meeting in February 2017, the Compensation Committee certified the performance results for the Company Performance Criteria applicable to the 2014 Multi-Year PIP Awards to the NEOs for the 2014 - 2016 performance period. The Company Performance Criteria results are shown below, and definitions of the relevant terms are provided in Appendix A to this Proxy Statement. The actual performance results were as follows:
For Messrs. Roeske and Sodaro, 3-year average Consolidated Revenue Growth of -4.95 percent (weighted 20%) and 3-year average Return on Equity of 4.12 percent (weighted 80%) resulted in a weighted Target Multiplier of 0 percent.
For Mr. Boschelli, performance based on multiple criteria resulted in a weighted Target Multiplier of 87.2 percent as shown in the following table:
Determination of Weighted Target Multiplier
|
| | | | | | | |
Performance Criteria | Excess Return/NII Yield (%) |
| Target Multiplier for Metric (%) |
| Weighting (%) | Weighted Target Multiplier (%) |
|
3-Year Excess Return from Corporate Investments | 1.0 |
| 149.9 |
| 20 | 30.0 |
|
3-Year Excess Return from Pension Investments | -3.3 |
| — |
| 5 | — |
|
3-Year Pre-Tax Equivalent Net Investment Income Yield (NII) | 0.2 |
| 114.5 |
| 50 | 57.2 |
|
3-Year Average of Kemper Consolidated Revenue Growth and Return on Equity* | See results for Messrs. Roeske and Sodaro described above |
| — |
| 25 | — |
|
Weighted Average of Target Multipliers | | | | 87.2 |
|
*Subject to Catastrophe Loss Collar adjustment
The amounts paid to the applicable NEOs in February 2017 under the 2014 Multi-Year PIP Awards are shown in the following table:
Bonus Payouts - 2014 Multi-Year PIP Awards
|
| | | | | | | |
Employee Name | Target as a % of 3-Year Average Salary (%) |
| 3-Year Average Salary ($) | Total Bonus Payout ($) |
| Total Payout as % of 3-Year Average Salary (%) |
|
John M. Boschelli | 50 |
| 395,000 | 172,220 |
| 43.6 |
|
Richard Roeske | 40 |
| 367,500 | — |
| — |
|
Frank J. Sodaro | 50 |
| 441,667 | — |
| — |
|
$6.0 million EPP Limit.
Equity-Based Compensation Awards
Equity-based compensation continues to be an integral part of the Company’s executive compensation program. The HR & Compensation Committee believes the Company’s equity-based compensation program plays the principal role in the acquisitionincentivizes performance and retention of significant levels of Company stock ownedownership by its executive officers, thereby better aligning the interests of the Company’s management and shareholders.
Award Methodology
The 20162021 annual executive compensation program continued the prior year’s mix of equity-based, long-term incentive compensation awards consisting of both performance-based RSUsPSUs and stock options. The Compensation Committee approved a new fixed-value approach and allocation methodology beginning in 2016 for annual2021 equity awards to the executive officers other than Mr. Lacher, that determines the value of the equity component of each NEO’s annual compensation based on a set percentage of the officer’s annual salary. The value isfor all NEOs were allocated fifty25 percent in stock options and fifty75 percent in performance-based RSUs,PSUs, with the number of shares subject to each grant determined with reference to the Common Stock price on the date of grant. The HR & Compensation Committee approved an equity award for Mr. Lacher with a total value and methodology of $5.25 million. For the NEOs other than Mr. Lacher, the HR & Compensation Committee followed a target-value approach, with the equity award value based on 180 percent of their respective base salaries.
Mr. Lacher’s 2016 annual equity2021 award was determined by the HR & Compensation Committee, with input from the Lead Director, based on, among other factors, his November 2015 offer letter that providedoverall performance in 2020, performance on the 2020 objectives, as approved by the Board, and total compensation for equity-based awards valued at $2 million and allocated one-thirdcomparable CEOs, in stock options and two-thirds in performance-based RSUs.
The valuelight of the long-term incentive awards granted on March 1, 2016 was set at 65 percent of salary for Messrs. Boschelli and Sodaro and 40 percent of salary forCompany’s philosophy that Mr. Roeske. The value of the long-term incentive awards granted to the other NEOs who joined the Company after March 1, 2016 was set at 90 percent of salary. The NEOs who joined the Company during 2016 also received additional “new hire” equity grants that were determined in connection with their joining the Company and outside of the annual long-term incentive award methodology.Lacher’s total compensation should be heavily weighted towards performance-based compensation.
Kemper Corporation 2022 Proxy Statement 37
Performance-Based RSU | | | | | | | | |
| | Compensation Discussion and Analysis |
PSU Awards Granted in 20162021
Fifty percentTwo-thirds of the performance-based RSUPSU awards granted to the NEOs on March 1, 2016in February 2021 were based on Relative TSR and fifty percent wereone-third was based on Three-yearThree-Year Adjusted ROE. These awards are subject to forfeiture and transfer restrictions until vesting on the date that the HR & Compensation Committee certifies the performance results (“Vesting Date”Date”) in accordance with the award agreements. The number of RSUPSU shares granted to each NEO on March 1, 2016in February 2021 (“Target Shares”Shares”) that will vest and be issued as Common Stock, if any, and the number of additional shares of Common Stock, if any, that will be granted on the Vesting Date (“Additional Shares”Shares”), will be determined based on the applicable performance results for the performance period, as described in detail below.
Shares Based on Relative TSR
For the fifty-percent of performance-based RSUs that arePSUs based on Relative TSR, the determination of vesting will be based on the Company’s total shareholder return (“TSR”TSR”) over a three-year performance period ending on February 28, 2019January 31, 2024 relative to a peer group comprised of all companies in the S&P 1500 Supercomposite Insurance Index (“PSU Peer Group”Group”). In accordance with the award agreements, the TSR is calculated based on the average of the closing stock prices for 20 consecutive trading
days prior to the beginning and end of the performance period, and assumes all dividends issued over the performance period are reinvested. The award agreements provide for grants of Additional Shares to the award recipient if the Company’s relative performance exceeds the “target” performance level, which is the 50th percentile based on TSR relative to the PSU Peer Group (“Relative TSR Percentile Rank”Rank”). The number of Target Shares that will vest, if any, and the number of Additional Shares, if any, that will be granted, will be determined in accordance with the following table:
|
| | | | |
Kemper’s Relative TSR Percentile Rank | Total RSUsPSUs to Vest and/or Shares to be Granted on Vesting Date as Percentage of Target Shares (%) |
At least 90 th 90th | 200 |
75th | 150 |
75th 50th | 150 | 100 |
50th
| 100 |
|
25th 25th | 50 |
|
Below 25th 25th | — | 0 |
Shares Based on Three-Year Adjusted ROE
For the fifty-percent of performance-based RSUs that arePSUs based on Three-Year Adjusted ROE, the determination of vesting will be based on the Company’s adjusted return on equity over a three-year performance period ending on December 31, 2018.2023. The award agreements provide for grants of Additional Shares to the award recipient if the Company’s Three-Year Adjusted ROE exceeds the “target” performance level of 6.58.5 percent.
The number of Target Shares that will vest, if any, and the number of Additional Shares, if any, that will be granted, will be determined in accordance with the following table:
| | | | | |
Three-Year Adjusted ROE (%) | Total PSUs to Vest and/or Shares to be Granted on Vesting Date as Percentage of Target Shares (%) |
At least 10.0 | 200 |
8.5 | 100 |
7.0 | 50 |
Below 7.0 | — | |
|
| | |
Three-Year Adjusted ROE (%) | Total RSUs to Vest and/or Shares to be Granted on Vesting Date as Percentage of Target Shares (%) |
At least 7.8 | 200 |
|
6.5 | 100 |
|
5.2 | 50 |
|
Below 5.2 | — |
|
The applicable terms were definedare calculated as follows:
Three-Year Adjusted ROE is computed by dividing the sum of Adjusted Net Income for each of the three years in the performance period by the sum of the Adjusted Average Shareholders’ Equity for each of the three years.
Kemper Corporation 2022 Proxy Statement 38
| | | | | | | | |
| | Compensation Discussion and Analysis |
Adjusted Net Income is defined as Net Income as reported in the Company’s financial statements for the respective year, adjusted to take into account for the after-tax impacts of the following items, to the extent the HR & Compensation Committee deems them not indicative of the Company’s core operating performance:
•adjust the amount of Actual Catastrophe Losses and LAE to equal Expected Catastrophe Losses (italicized terms defined below);
•adjust Net Realized Gains on Sales of Investments and Net Impairment Losses Recognized in Earnings (italicized terms as reported in the Company’s financial statements) to equal Expected Net Realized Gains on Sales of Investments and Expected Net Impairment Losses Recognized in Earnings (italicized terms defined below);
•significant unusual judgments or settlements in connection with the Company’s legal contingencies or benefit plans; and
•additional significant unusual or nonrecurring items as permitted by the Omnibus Plan.
Adjusted Average Shareholders’ Equity is defined as the simple average of Total Shareholders’ Equity (as reported in the Company’s financial statements) for the beginning and end of year for each year in the performance period, adjusted to take into account for the after-tax impacts of the following items, to the extent the HR & Compensation Committee deems them not indicative of the Company’s core operating performance:
•Unrealized Gains and Losses on Fixed Maturity Securities from Adjusted Shareholders Equity (italicized terms as reported in the Company’s financial statements as defined above and below);
•the modifications made in calculating Adjusted Net Income; and
•additional significant, unusual or nonrecurring items as permitted by the Omnibus Plan.
Actual Catastrophe Losses and LAE means the actual Catastrophe Losses and associated Loss Adjustment Expenses, including catastrophe reserve development, as reported in the Company’s management reports for the relevant time period.
Expected Catastrophe Losses, Expected Net Realized Gains on Sales of Investments, and Expected Net Impairment Losses Recognized in Earnings means the amounts specified in the Company’s management reports as “Planned” or “Expected” for, respectively, (a) Catastrophe Losses and associated Loss Adjustment Expenses, including catastrophe reserve development, (b) Net Realized Gains on Sales of Investments, and (c) Net Impairment Losses Recognized in Earnings.
Unrealized Gains and Losses on Fixed Maturity Securities means the Unrealized Gains and Losses on Fixed Maturity Securities as reported in the Company’s management reports.
Additional Information
For performance falling between the percentile levels specified in the first column of each table above, the number of shares that will vest and be issued as Common Stock or be forfeited, and the number of Additional Shares, if any, that will be granted on the Vesting Date will be determined by straight-line interpolation from the percentages specified in the table. Any Target Shares that do not vest in accordance with the table above will be forfeited on the Vesting Date. Under the terms of the applicable equity-based compensation plans of the Company, outstanding2021 PSU award agreements, Target Shares of RSUs are entitled to receivePSUs accrue dividend equivalents during the vesting period on the same basis as dividends are paid to holders of outstanding shares of Common Stock.
Stock, but are paid out after vesting only on the total number of shares actually earned.
The March 1, 2016February 2, 2021 grant date fair value of the performance-based RSUsPSUs was estimated at $27.99$73.03 per share for the portion based on Relative TSR and $25.39$62.66 for the portion based on Three-Year Adjusted ROE. For a discussion of valuation assumptions, see Note 10, “Long-term17, Long-term Equity-based Compensation,” to the consolidated financial statements included in the Company’s 20162021 Annual Report.Report on Form 10-K.
Performance Results for 2014 Performance-Based RSU2019 PSU Awards
Messrs. Lacher, Boschelli, McKinney and Sanders received PSU awards for 2019, half of which were based on Relative TSR and half of which were based on Three-Year Adjusted ROE. Mr. Sternberg did not join the Company until 2020.
The Kemper Corporation 2022 Proxy Statement 39
| | | | | | | | |
| | Compensation Discussion and Analysis |
Shares Based on Relative TSR
On February 2, 2022, the HR & Compensation Committee certified the performance results of the Company’s Relative TSR for the 2014 - 2016 Performance Period2019 to 2021 performance period for the Performance-Based RSU Awards granted to the NEOs in 2014.2019 PSU awards based on Relative TSR. The TSR for Kemper and each company in the PSU Peer Group was calculated using the 20-day average trading price precedingfollowing the beginning and the end of the Performance Period.performance period. The Company’s TSR was determined to be 19.85(11.30) percent for the Performance Period.performance period. Relative to the PSU Peer Group, the Company ranked 4243 out of the 4852 companies, or at the 13th18th percentile. By comparison, performance atpeer companies closest to the 25th percentile (threshold level), 50th50th percentile (target level) and 75th25th percentile (maximum(threshold level), ranked 36th, 24thapproximately 26 and 12th,39, respectively, out of the 4852 companies. Since the Company’s performance was below the threshold level allfor payout, the final number of shares earned equals 0% of the Target Shares based on Relative TSR granted under the 2014 Performance-Based RSUs Awards were forfeitedin 2019. As a result, on the vesting date,Vesting Date, February 4, 2017, and2, 2022, no AdditionalTarget Shares were granted.
vested.
Performance of Kemper Common Stock Compared to S&P 1500 Supercomposite Insurance Index
The graph below shows relative TSR performance over the period from February 1, 2019 through January 31, 2022.
Shares Based on Three-Year Adjusted ROE
On February 2, 2022, the HR & Compensation Committee certified the performance results of the Company’s Three-Year Adjusted ROE for the 2019 PSU Awards. The Three-Year Adjusted ROE for the 2019 to 2021 Performance Period was calculated on the same basis as described above for the PSU awards granted in 2021 for the 2021 to 2023 performance period. Payouts were determined based on the following threshold, target and maximum levels:
| | | | | |
Three-Year Adjusted ROE (%) | Total PSUs to Vest and/or Shares to be Granted on Vesting Date as Percentage of Target Shares (%) |
At least 10.0 | 200 |
8.5 | 100 |
7.0 | 50 |
Below 7.0 | 0 |
The Company’s Three-Year Adjusted ROE was determined to be 12.1% for the 2019-2021 performance period. Since the Company’s performance was above the maximum level, the final number of shares earned equals 200 percent of the Target Shares granted in 2019. As a result, on the Vesting Date, February 2, 2022, all Target Shares vested and the same number of Additional Shares were granted. The NEOs received the following shares of Common Stock upon the vesting of their 2019 PSU Awards based on Three-Year Adjusted ROE certified on February 2, 2022: Lacher (29,508); McKinney (6,786); Boschelli (5,312); and Sanders (7,082).
Kemper Corporation 2022 Proxy Statement 40
| | | | | | | | |
| | Compensation Discussion and Analysis |
The graph below shows the Three-Year Adjusted ROE over the period from January 1, 20142019 through December 31, 2016.2021.
Kemper v. S&P Supercomposite Insurance Index (Peer Group)3-Year Total Shareholder Return (2014-2016)
Other Features and Practices Related to the Equity Incentive Program
Fungible Plan Design
The Omnibus Plan provides for fungible use of shares, with a fungible conversion factor of 3 to 1, so that the share authorization under the plan is reduced at two different rates, depending upon the type of award granted. Each stock option award reduces the share authorization by one share for each share of Common Stock subject to the option, while each “full value” award reduces the share authorization by three shares. “Full value” awards are awards other than stock options or tandem stock appreciation rights (“SARs”) that include or are settled by the issuance of shares of Common Stock, such as restricted stock and RSUs.
Equity-Based Compensation Vesting Terms for Retirement Eligible Employees
Beginning in 2013 for stock options and in 2014 for RSUs, annual equity awards provide for continued vesting following termination of employment (subject to applicable non-compete and claw-back clauses) if, at the time of termination, the award holder is “Retirement Eligible” as defined under the award agreements, i.e., has either attained age 65 with at least five years of service or age 60 with at least 10 years of service.
Equity-Based Compensation Granting Process
The HR & Compensation Committee follows an established Company process for the review, approval and timing of grants of equity-based compensation. The Compensation Committee believes that regular timing is necessary for effective operation of the Company’s long-term incentive program, and insists that, with the exceptions explained below for restorative options and awards by the CEO under his delegated authority, all original equity-based compensation awards occur at predictable cycles, with grant dates scheduled in advance. The Company’s practice with regard to timing of equity-based compensation grants is the same for all eligible employees of the Company, including its executive officers.
At its meeting in February 2017, the Compensation Committee approved a change in practice with regard to the grant date for its annual equity-based compensation awards. Beginning in 2017, the annual equity award grant date will be the date of the Committee’s first quarter meeting at which such awards are approved, the practice in place for such awards prior to 2016 when it was changed to a fixed-date of March 1 each year. The Compensation Committee approved the change in practice after considering information provided by the Company’s new management team indicating that the prior practice was more consistent with prevalent industry practice than the fixed-date approach adopted in 2016. The exercise price of each stock option award is the closing price of a share of Common Stock on the grant date.
In making his annual grant recommendations to the HR & Compensation Committee, the CEO follows thean established grant cycle, with the exception of off-cycle grants made in connection with key new hire, promotion or retention awards which may be made with HR & Compensation Committee approval or under the CEO’s delegated authority, as described below, in the next section. The Company’s executive officers play no role in the timing of option or other grants except with regard to such new hire, promotion or retention awards, (thethe timing of which is driven by the circumstances of the underlying personnel action), and to restorative option grants received by an executive officer (the timing of which is determined automatically on the date of exercise of the underlying option).
event.
The Company provides administration of the Company’s equity-based compensation plans. Following HR & Compensation Committee approval, the Company delivers award agreements for acceptance by the recipients. All forms of equity-based compensation award agreements are approved by the HR & Compensation Committee in advance of their initial use.
Delegated Authority
As previously mentioned, the HR & Compensation Committee has delegated authority to the CEO to grant up to an aggregatea limited number of 300,000 shares under the Omnibus Plan (determined in accordance with the plan’s fungible conversion factor, as described above under the heading Fungible Plan Design) in connection with new hire, promotional and retention awards to employees other than Section 16 Officers. A total of 15,130 RSUs and 10,390 stock options were awarded in 2016 pursuant to delegated authority under the Omnibus Plan.executive officers. The exercise price of each stock option award granted under the delegated authority is the closing price of a share of Common Stock on the grant date. The HR & Compensation Committee is periodically informed about the awards granted pursuant to the delegated authority.
Elimination of Restorative Option Program
The Company’s restorative optionauthority and periodically replenishes the share pool used in this program was discontinued for all new stock option awards granted beginning in 2009. However, outstanding options granted prior to 2009 had a restorative option feature providing for automatic grants to replace shares of previously-owned Common Stock that an exercising option holder surrenders to satisfyfrom the exercise price and/or related tax withholding obligations, so long as certain requirements are met at the time of exercise. Accordingly, restorative options may still be granted in accordance with the original award agreements until their final expiration or forfeiture. As restorative options are granted automatically at the time of the exercise of the underlying option under the express terms of the applicable option plans and award agreements previously approved by the Compensation Committee, they are deemed to have been approved by the Compensation Committee on their grant dates. In December 2016, Messrs. Boschelli and Mr. Roeske each exercised options that included the restorative feature and so received an automatic grant of options on the date of exercise for the numberpool of shares of Common Stock surrendered to payavailable in the exercise price and related income tax obligation. No remaining outstanding stock options are eligible to receive a grant of a restorative option.shareholder-approved Omnibus Plan.
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Policies Regarding Stock Ownership Policyof Directors and Executive Officers |
Consistent with its fundamental executive compensation principles, Company philosophy has always encouraged long-term ownership of Common Stock by its executive officers. Ownership Policy
The HR & Compensation Committee believes equity-based compensation awards to the executive officers, along with their subsequent retention of sharesthe acquired through the exercise of stock options and vesting of RSUs,shares, further align their interests with those of the Company’s shareholders.
The Company’s Stock Ownership Policy provides minimum ownership requirements for its non-employee directors and executive officers based on a multipleofficers. The value of their base compensation. Non-employee directors are required to maintain, at a
the minimum stock ownership level for the Company’s CEO is five times his
36 Kemper Corporation 2022 Proxy Statement 41
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| | |
| | Executive Compensation Discussion and Analysis |
annual salary, while the minimum level value for the other NEOs is two times their annual salaries. The minimum ownership of the number of shares valued atlevel for non-employee directors is five times the amountretainer for non-chair members. In calculating ownership for purposes of the annual non-chairman member cash retainer for board service,policy, RSUs and DSUs are included, but not including any fees paid for committee service and meeting attendance. Each executive officer is required to maintain, at a minimum, ownership of the number of shares valued at the following multiples of his or her annual salary:
|
| |
Officer | Salary Multiple |
CEO | 5.0 |
COO/President | 3.0 |
Executive Vice President | 2.5 |
Senior Vice President | 2.0 |
Vice President | 1.5 |
The Compensation Committee monitors shareholdings by executive officers annually, as of yearperformance-end. New non-employee directors and executive officers are provided a grace period of five years to reach the required ownership levels, and all covered executive officers and non-employeebased awards. Non-employee directors have three years to attain any increased level due to a salary or cash retainer increase, promotion or change in policy. The policy also allows the Compensation Committee to consider, in its discretion, possible modifications or exceptions to the policy as necessary in the event of extenuating circumstances. The amount of Common Stock beneficially owned by each NEO as of the Record Date is disclosed in the ownership table on page 58. As of December 31, 2016, the NEOs subject to the policy either exceeded the minimum levels required under the policy or were within the five-year grace period to attain their minimum ownership level. Executive officers are expected to make continuous progress on attaining their minimum ownership level and are subject to a retention ratio requiring them to hold a percentage of net shares received from equity awards until the minimum required share ownership level due to their recent hire dates.is attained. The retention ratio is 75 percent for the CEO and 50 percent for the other executive officers.
Also pursuant to the Stock Ownership Policy, each equity-based compensation award agreement for a grant to an executive officer imposes a holding period of one year for shares of Common Stock acquired in connection with the exercise of stock options or the vesting of other types of equity-based compensation awards, with the exception of shares sold, tendered or withheld to pay the exercise price or settle tax liabilities in connection with such exercise or vesting.
The Company has also adopted hedging and pledging policies prohibiting directors,HR & Compensation Committee monitors shareholdings by executive officers and other employeedirectors for compliance with the Stock Ownership Policy. As of December 31, 2021, each NEO either exceeded the minimum level required under the policy or was subject to the retention ratio requirement. The amount of Common Stock beneficially owned by each NEO as of the Record Date is disclosed in the table under the Ownership of Kemper Common Stock section beginning on page 60. Hedging and Pledging Prohibition
Directors and all employees who receive equity-based compensationequity awards are prohibited from participating in hedging, transactionspledging or otherwise encumbering shares of the Company’s Common Stock. Prohibited hedging instruments include, but are not limited to, prepaid variable forward contracts, equity swaps, put and call options, collars and exchange funds. Prohibited pledging arrangements involving any Company stock.involve providing Kemper securities as security, whether under a broker margin account, bank loan, line of credit or other financing arrangement.
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Changes Made to NEO Compensation for 2017 |
At its meeting on February 7, 2017, the Compensation Committee approved 2017 compensation packages for the NEOs that included changes to the equity-based compensation portion. The value and component allocation of the 2017 annual equity award to Mr. Lacher was changed to $2,500,000, allocated seventy-five percent in stock options and twenty-five percent in performance-based RSUs. The component allocation for the 2017 annual equity awards to the other NEOs remained fifty-percent in stock options and fifty-percent in performance-based RSUs, but the values were revised to 120% of salary for the NEOs other than Mr. Roeske, whose award value was unchanged from 2016, and Mr. Sodaro, who left the Company effective December 31, 2016. Pursuant to a letter agreement dated September 21, 2016 and a separation agreement executed January 13, 2017 that was included as an exhibit to the letter agreement, the Company agreed to provide Mr. Sodaro with a cash severance payment in the amount of $450,000 and outplacement services at the Company’s cost through a professional outplacement provider.
Consistent with the Company’s fundamental approach to executive compensation, executive officersThe NEOs receive a small number of perquisites, from the Company. The CEO and the executive officers who report directly to him receiveincluding financial planning services, and comprehensive annual physical examinations, new benefits effective in September 2016 and January 2017, respectively. The CEO is also providedairline lounge access, paid membership to an executive club, personal umbrella liability policy, identity theft protection policy, $250,000 supplemental death benefit associated with a business club providing dining facilitiesCorporate Owned Life Insurance (“COLI”) policy and business meeting services. In addition,limited use of the Company’s aircraft. The Board has approved use of the Company’s aircraft by Mr. Lacher to attend board meetings of an outside non-profit organization for which he serves as a director and reimbursement of his related expenses. NEOs receive paymentmay be reimbursed for applicable expenses under the Company’s relocation program and in connection with spousal travel when accompanying the officer to occasional off-site business
meetings when required for bona fide business reasons in accordance with Company policy, andreasons. NEOs may also have incidental personal use of cell phones, computer equipment and other resources provided primarily for business purposes. The Company does not
provide the NEOs with other personal benefits or perquisites, such as country club memberships, personal use of Company-provided automobiles or use of private airplanes for personal travel.
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| |
Employee Welfare Benefit and Retirement Plans |
The NEOs are eligible for employeethe following plans:
•Employee welfare benefits under plans generally available to all full-time salaried employees and which do not discriminate in scope, terms or operation in favor of executive officers. Under these plans, the NEOs:
receive at the Company’s cost basic life and accident insurance coverage in an amount equal to the individual’s annual salary up to a maximum of $750,000, effective in 2017 (an increase from the prior $400,000 maximum), business travel insurance in an amount based on the individual’s annual salary up to a maximum of $200,000, and short-term disability coverage for up to 26 weeks; and
are eligible to participate in the Company’s employee welfare benefit plans that provide typical offerings such as health and dental insurance, health and dependent care reimbursement accounts, health savings accounts, supplemental life, accident and long-term disability insurance.
|
|
Deferred Compensation Plan |
officers;The NEOs are eligible under the •Deferred Compensation Plan, which allows the NEOs to elect to defer a portion of their salaries and cash incentives. Information about the Deferred Compensation Plan in general, and more specific information about participation therein by the NEOs, is provided in the Executive OfficerNonqualified Deferred Compensation and BenefitsPlansection below beginning on page 49 under the heading Deferred Compensation Plan.52;
The NEOs are generally eligible for the following plans:
Tax-qualified defined contribution retirement plan •applicable to all full-time salaried employees, including executive officers, meeting age and service-based eligibility requirements. The plan was known as the Kemper Corporation Defined Contribution Retirement Plan until its merger with the Company’s 401(k) Savings Plan in September 2016. The merged plan was renamed the Kemper Corporation 401(k) and Retirement Plan (“401(k) and Retirement Plan”).Messrs. Boschelli, Roeske and Sodaro, who were hired prior to 2006, were eligible for benefit accruals under the Company’s defined benefit pension plan (“Pension Plan”) in lieu of the 401(k) and Retirement Plan until June 30, 2016 when Pension Plan benefit accruals were frozen for all participants.
Nonqualified supplemental defined contribution retirement plan (“Retirement SERP”), available to key employees designated annually by the Board of Directors to provide benefits using the same formulas used for the tax-qualified retirement plan but without regard to the limits imposed under the Internal Revenue Code; Messrs. Boschelli, Roeske and Sodaro, who were hired prior to 2006, were instead eligible for a benefit accrual under the Company’s nonqualified supplemental defined benefit pension plan (“Pension SERP”) in lieu of the Retirement SERP until June 30, 2016 when Pension SERP benefit accruals ceased as a result of the freezing of the Pension Plan accruals; and
Voluntary participation in the 401(k) portion of the Company’s 401(k) and Retirement Plan that includes a Company matching contribution feature offered to all full-time salaried employees, including executive officers, meeting age and service-based eligibility requirements.
Kemper Corporation 2022 Proxy Statement 42
| | |
Compensation Committee Report |
Additional information about the Company’s retirement plans and participation therein by the NEOs is provided in the Executive Officer Compensation and BenefitsRetirement Plans section below beginning on page 47 under the heading Retirement Plans.51.
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|
Other Post-Employment Compensation |
Change in control benefits applicable to the NEOs are described in more detail below under the section entitled Potential Payments Upon Termination or Change in Control. beginning on page 53. These benefits are provided under individual severance agreements with the NEOs and provisions in applicable equity and cash incentive award agreements under the Omnibus Plan and the Performance Incentive Plan included in agreements with all grant recipients in applicable equity award agreements under these plans.the Omnibus Plan. The NEOs are not entitled to other post-termination benefits except pursuant to the standard provisions of any of the plans discussed above. Except forPrior to the effective date of the Tax Cuts and Jobs Act of 2017 (“2017 Tax Reform Act”), Section 162(m) of the Code imposed a $1 million limitation on deductibility of compensation paid to a public company’s chief financial officer, Section 162(m) imposesthe Company’s NEOs other than its Chief Financial Officer, but provided an annual limit ofexemption for performance-based compensation. The 2017 Tax Reform Act eliminated the performance-based compensation exemption and extended the $1 million per person ondeductibility limitation to the corporate tax deduction for compensation paid by a company to its chiefCompany’s Chief Financial Officer and all employees who are “named executive officer and the other officers listedofficers” in itsany proxy compensation tables due to their compensation. Although Section 162(m) generally disallows a tax deductionstatement filed by the Company forafter 2017. As a result, the Company no longer expects any compensation in excess of $1 million paid to each such NEO, certain performance-based compensationbe tax deductible if awarded to any officer who is specifically exempt from the $1 million deduction limit.
To the extent practicablea “named executive officer” in connection with particular hiring and compensation decisions, and consistent with the objectives and underlying philosophy of its executive compensation program,any proxy statement filed by the Company generally intends most components of executive compensation to qualify as tax deductible for federal income tax purposes. Pursuant to Section 162(m), due to the guaranteed minimum annual 2016 bonus commitment made to Mr. Lacher when he joined the Company, approximately $750,000 of the 2016 annual incentive award he received will be nondeductible for federal income tax purposes. The EPP, as well as the Omnibus Plan and its predecessor equity plans, are designed to enable the Company to grant awards that qualify as performance-based compensation under Section 162(m). As required by Section 162(m), the Company obtained shareholder approval of the EPP in 2014 and of the Omnibus Plan in 2011 and 2016.after 2017.
Kemper Corporation 2022 Proxy Statement 43
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
| | |
Compensation Committee Report |
The HR & Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above. Based on such review and discussions, the HR & Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.Statement and incorporated by reference into the Company’s Annual Report for the year ended December 31, 2021.
HR & Compensation Committee of the Board of Directors of Kemper Corporation
Corporation:
Kathleen M. Cronin Chair
Douglas G. Geoga
Thomas M. GoldsteinJason N. Gorevic*
Lacy M. Johnson
David P. Storch
Susan D. Whiting, Chair
*Joined the HR & Compensation Committee effective February 2, 2022 Kemper Corporation 2022 Proxy Statement 44
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| | |
| | Executive Officer Compensation & Benefits |
Executive Officer Compensation & Benefits
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| |
2021 Summary Compensation Table |
The following table shows the compensation for fiscal year 2021 and, to the extent required by SEC compensation disclosure rules, fiscal years 2016, 20152020 and 20142019 for the NEOs serving during the year ended December 31, 2016,2021, which include the Company’s Chief Executive Officer, Chief Financial Officer and three other most highly compensatedhighly-compensated executive officers, interim Chief Financial Officerofficers:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2021 SUMMARY COMPENSATION TABLE |
Name and Principal Position (1) | Year | Salary ($)(2) | Bonus ($)(3) | Stock Awards ($)(4) | Option Awards ($)(4) | Non-Equity Incentive Plan Compen-sation ($)(5) | Change in Pension Value and Nonquali-fied Deferred Compen-sation Earnings ($)(6) | All Other Compen-sation ($)(7) | Total ($) |
Joseph P. Lacher, Jr., President and Chief Executive Officer | 2021 | 1,000,000 | | — | | 3,928,110 | | 1,450,880 | | 1,750,000 | | — | | 93,265 | | 8,222,255 | |
2020 | 1,038,462 | | — | | 4,144,105 | | 1,313,851 | | 2,700,000 | | — | | 42,767 | | 9,239,185 | |
2019 | 971,154 | | — | | 2,288,136 | | 2,455,441 | | 2,700,000 | | — | | 124,473 | | 8,539,204 | |
James J. McKinney, Executive Vice President and Chief Financial Officer | 2021 | 575,000 | | — | | 774,424 | | 286,032 | | 875,000 | | — | | 38,333 | | 2,548,789 | |
2020 | 597,115 | | — | | 817,035 | | 259,017 | | 1,100,000 | | — | | 37,694 | | 2,810,861 | |
2019 | 560,577 | | — | | 526,272 | | 564,761 | | 1,100,000 | | — | | 50,097 | | 2,801,707 | |
John M. Boschelli, Executive Vice President and Chief Investment Officer | 2021 | 496,154 | | — | | 673,404 | | 248,739 | | 450,000 | | — | | 38,833 | | 1,907,130 | |
2020 | 467,308 | | — | | 639,393 | | 202,716 | | 600,000 | | 216,884 | | 36,688 | | 2,162,989 | |
2019 | 444,231 | | — | | 411,892 | | 441,981 | | 600,000 | | 315,372 | | 42,065 | | 2,255,541 | |
Duane A. Sanders, Executive Vice President and President, Property & Casualty Division | 2021 | 600,000 | | — | | 808,101 | | 298,484 | | 875,000 | | — | | 33,963 | | 2,615,548 | |
2020 | 623,077 | | — | | 852,537 | | 270,289 | | 1,100,000 | | — | | 37,232 | | 2,883,135 | |
2019 | 586,731 | | — | | 549,138 | | 589,308 | | 1,100,000 | | — | | 43,798 | | 2,868,975 | |
Erich Sternberg, Executive Vice President and President, Life & Health Division | 2021 | 500,000 | | — | | 673,404 | | 248,739 | | 375,000 | | — | | 22,632 | | 1,819,775 | |
2020 | 394,231 | | 50,000 | | 710,524 | | 751,272 | | 500,000 | | — | | 335,418 | | 2,741,445 | |
| | | | | | | | |
(1) Amounts for each officer are shown only for years in which the individual served as an NEO.
(2) These amounts represent salary earned for each of the years an individual was an NEO. As a result, for any year in which an individual officer’s salary was increased or decreased, a portion of 2016the amount of salary shown for such year was earned at the rate in effect prior to the adjustment. Salary adjustments for 2019 were effective in February 2019. Mr. Boschelli’s 2021 salary adjustment was effective in February 2021. Generally, salaries are paid based on 26 pay periods per calendar year; in 2020, salaries were paid based on 27 pay periods.
(3) This amount represents a signing bonus granted to Mr. Sternberg in 2020.
(4) These amounts represent the aggregate grant date fair values of the equity awards (stock options and former Chief Financial Officer.
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SUMMARY COMPENSATION TABLE |
Name and Principal Position (1) | Year | Salary ($)(2) |
| Bonus ($)(3) |
| Stock Awards ($)(4) |
| Option Awards ($)(4) |
| Non-Equity Incentive Plan Compensation ($)(5) |
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) |
| All Other Compensation ($)(7) |
| Total ($) |
|
Joseph P. Lacher, Jr., President and Chief Executive Officer | 2016 | 750,000 |
| — |
| 1,284,269 |
| 416,821 |
| 1,000,000 |
| — |
| 25,272 |
| 3,476,362 |
|
2015 | 77,885 |
| — |
| — |
| 736,633 |
| — |
| — |
| — |
| 814,518 |
|
James J. McKinney, Senior Vice President and Chief Financial Officer | 2016 | 51,923 |
| 1,050,000 |
| 813,635 |
| 154,632 |
| — |
| — |
| 15,955 |
| 2,086,145 |
|
John M. Boschelli, Senior Vice President and Chief Investment Officer | 2016 | 400,000 |
| — |
| 125,229 |
| 142,574 |
| 512,220 |
| 213,758 |
| 19,401 |
| 1,413,182 |
|
2015 | 396,538 |
| — |
| 129,150 |
| 120,295 |
| 448,617 |
| 91,047 |
| 7,950 |
| 1,193,597 |
|
2014 | 367,500 |
| — |
| 121,500 |
| 149,514 |
| 370,643 |
| 297,598 |
| 7,800 |
| 1,314,555 |
|
George “Chip” D. Dufala, Jr., Senior Vice President and President, Property & Casualty Division | 2016 | 214,519 |
| 550,000 |
| 1,780,706 |
| 237,194 |
| 250,000 |
| — |
| 214,054 |
| 3,246,473 |
|
Mark A. Green, Senior Vice President and President, Life & Health Division | 2016 | 240,692 |
| 550,000 |
| 191,946 |
| 206,730 |
| 260,000 |
| — |
| 5,047 |
| 1,454,415 |
|
Richard Roeske, Vice President, Chief Accounting Officer and Former Interim Chief Financial Officer | 2016 | 371,000 |
| 200,000 |
| 71,476 |
| 138,822 |
| — |
| 315,838 |
| 15,887 |
| 1,113,023 |
|
2015 | 368,577 |
| — |
| 68,880 |
| 64,157 |
| 192,388 |
| 17,639 |
| 7,950 |
| 719,591 |
|
Frank J. Sodaro, Former Senior Vice President and Chief Financial Officer | 2016 | 450,000 |
| — |
| 140,870 |
| 91,442 |
| — |
| 165,118 |
| 482,939 |
| 1,330,369 |
|
2015 | 444,231 |
| — |
| 172,200 |
| 160,393 |
| 303,290 |
| 136,404 |
| 8,670 |
| 1,225,188 |
|
2014 | 406,250 |
| — |
| 162,000 |
| 199,353 |
| 231,480 |
| 328,176 |
| 9,420 |
| 1,336,679 |
|
| |
(1) | Amounts for each officer are shown only for years in which he served as an NEO. |
| |
(2) | These amounts represent base salary earned for each of the years that an individual was an NEO. Pursuant to the Company’s regular compensation cycle, salary adjustments for any particular year generally take effect in April of such year. As a result, for any year in which an individual officer’s salary was increased or decreased, a portion of the amount of salary shown for such year was earned at the rate in effect prior to the adjustment. |
| |
(3) | These amounts represent signing bonuses granted to Messrs. McKinney, Dufala and Green, and a performance incentive award for 2016 to Mr. Roeske. |
| |
(4) | These amounts represent the aggregate grant date fair values of the equity awards (stock options, performance-based RSUs and time-based RSUs) to the designated NEOs pursuant to the Omnibus Plan. The Black-Scholes option pricing model was used to estimate the fair value of each option (including its tandem SAR) on the grant date. A Monte Carlo simulation method was used to estimate the fair values on the grant date of the awards of the performance-based RSUs (“PBRSUs”) based on Relative TSR. PBRSUs based on ROE and time-based RSUs (“TBRSUs”) were valued using the closing price of a share of Common Stock on the grant date. For a discussion of valuation assumptions, see Note 10, “Long-term Equity-based Compensation,” to the consolidated financial statements included in the Company’s 2016 Annual |
PSUs) for the designated NEOs pursuant to the Omnibus Plan. The Black-Scholes option pricing model was used to estimate the fair value of each option (including its tandem SAR) on the grant date. A Monte Carlo simulation method was used to estimate the fair values on the grant date of the awards of the PSUs based on Relative TSR. PSUs based on ROE were valued using the closing price of a share of Common Stock on the grant date. For a discussion of valuation assumptions, see Note 17, “Long-term Equity-based Compensation,” to the consolidated financial statements included in the Company’s 2021 Annual Report. These RSUsequity awards are subject to forfeiture and transfer restrictions until they vest in accordance with their respective grant agreements.
If achievement of the performance conditions at the maximum performance level is assumed, the aggregate number and market value of the payouts of performance-based RSUsPSUs would be as follows under awards granted in 20162021 to each NEO:
Kemper Corporation 2022 Proxy Statement 45
|
| | | | | | | |
Name | Grant Date | Target Award issued on Grant Date (# of Shares) |
| Estimated Payout in Shares if Maximum Performance Level Achieved (# of Shares) |
| Estimated Value of Payout if Maximum Performance Level Achieved ($) |
|
Joseph P. Lacher, Jr. | 3/1/2016 | 48,118 |
| 96,236 |
| 2,568,539 |
|
James J. McKinney | 11/17/2016 | 5,038 |
| 10,076 |
| 457,350 |
|
John M. Boschelli | 3/1/2016 | 4,692 |
| 9,384 |
| 250,459 |
|
George “Chip” D. Dufala, Jr. | 7/21/2016 | 6,406 |
| 12,812 |
| 440,477 |
|
Mark A. Green | 6/3/2016 | 5,938 |
| 11,876 |
| 383,951 |
|
Richard Roeske | 3/1/2016 | 2,678 |
| 5,356 |
| 142,952 |
|
Frank J. Sodaro | 3/1/2016 | 5,278 |
| 10,556 |
| 281,740 |
|
| |
(5) | These amounts were earned under the Company’s annual cash incentive programs for 2016, 2015 and 2014 (and paid in 2017, 2016 and 2015, respectively), and for Mr. Boschelli, under his 2014 Multi-Year PIP Award (and paid in 2017), and for Messrs. Boschelli, Roeske and Sodaro, under their 2013 Multi-Year PIP Awards (and paid in 2016) and for Messrs. Boschelli and Sodaro, under their 2012 Multi-Year PIP Awards (and paid in 2015). |
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(6) | These amounts represent the change in actuarial present value for each participating NEO under the Company’s Pension Plan and Pension SERP as of December 31 of 2016, 2015 and 2014 from the end of the prior calendar year. No amounts are shown for Messrs. Lacher, McKinney, Dufala or Green because they were not eligible to participate in these plans in 2016 due to their hire dates with the Company, but will instead participate in the retirement portion of the Company’s 401(k) and Retirement Plan and Retirement SERP after meeting eligibility requirements. Messrs. Boschelli, Roeske and Sodaro became eligible to participate in the retirement portion of the Company’s 401(k) and Retirement Plan and Retirement SERP after the Pension Plan and Pension SERP were frozen as of June 30, 2016. For more information on these plans, see the narrative captioned Retirement Plans on page 47. For 2016, the year-to-year change in pension values is generally attributable to normal, annual retirement costs which incorporate annual changes in salary and bonus and an additional partial year of service (due to the Pension Plan freeze), but also include increases in the present values of future payments due to a decrease in the applicable discount rate.
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| |
(7) | The amounts shown for 2016 for each NEO include: (a) each perquisite and other personal benefit if the aggregate incremental cost to the Company for such benefits exceeds $10,000; and (b) the other types of compensation indicated in the table below with an X or, if in excess of $10,000, the cost: |
|
| | | | | | | | | | | | | | |
Name | Financial Planning Services |
| Relocation Expenses |
| Relocation Tax Reimbursement |
| Outplacement Services |
| Severance Payment |
| Dividend Equivalents Paid on TBRSUs and Certain PBRSUs (1) |
| Company Contributions to Defined Contribution Plans |
|
Joseph P. Lacher, Jr. | X |
| — |
| — |
| — |
| — |
| 17,322 |
| X |
|
James J. McKinney | 1,973 |
| 8,883 |
| 5,099 |
| — |
| — |
| — |
| — |
|
John M. Boschelli | X |
| — |
| — |
| — |
| — |
| X |
| 17,712 |
|
George "Chip" D. Dufala, Jr. | — |
| 132,561 |
| 53,343 |
| — |
| — |
| 25,537 |
| X |
|
Mark A. Green | X |
| — |
| — |
| — |
| — |
| X |
| X |
|
Richard Roeske | — |
| — |
| — |
| — |
| — |
| X |
| 14,923 |
|
Frank J. Sodaro | — |
| — |
| — |
| 14,400 |
| 450,000 |
| X |
| 16,459 |
|
| |
(1) | The amounts shown are dividend equivalents paid on TBRSUs and PBRSUs based on Three-Year Adjusted ROE. Dividend equivalents paid on PBRSUs based on Relative TSR are factored into their grant date fair values reported in the table. |
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| | Executive Officer Compensation & Benefits |
| | | | | | | | | | | | | | |
Name | Number of Shares at Target Level (# of Shares) | Fair Value on Grant Date ($ per share) | Estimated Payout in Shares if Maximum Performance Level Achieved (# of Shares) | Estimated Value of Payout if Maximum Performance Level Achieved ($) |
Joseph P. Lacher, Jr. | 56,460 | | 69.74 | 112,920 | | 7,875,041 | |
James J. McKinney | 11,131 | | 69.74 | 22,262 | | 1,552,552 | |
John M. Boschelli | 9,679 | | 69.74 | 19,358 | | 1,350,027 | |
Duane A. Sanders | 11,615 | | 69.74 | 23,230 | | 1,620,060 | |
Erich Sternberg | 9,679 | | 69.74 | 19,358 | | 1,350,027 | |
(5) These amounts were earned under the Company’s annual cash incentive programs. The amounts shown for the NEOs were made for 2021, 2020 and 2019 (and paid in 2022, 2021, and 2020, respectively), under the Annual Incentive Program and the EPP.
(6) These amounts represent the change in actuarial present value for Mr. Boschelli under the Company’s defined benefit pension plan (“Pension Plan”) and nonqualified supplemental defined benefit pension plan (“Pension SERP”) as of December 31 of 2021, 2020 and 2019 from the end of the prior calendar year. However, for 2021, no amount is shown for Mr. Boschelli because the change in actuarial present value was negative ($25,028). No amounts are shown for the other NEOs because they were not eligible to participate in these plans due to their hire dates with the Company. The other NEOs except for Mr. Sternberg (who did not join the Company until 2020) instead became participants in the retirement portion of the Company’s 401(k) Retirement Plan and a nonqualified supplemental defined contribution plan (“Retirement SERP”) after meeting initial eligibility requirements, as did Mr. Boschelli after the Pension Plan and Pension SERP were frozen as of June 30, 2016. The retirement portion of the 401(k) Retirement Plan and the Retirement SERP were discontinued as of January 1, 2019. For more information on these plans, see the narrative captioned Retirement Plansbeginning on page 51. The changes in pension values for 2020 and 2019 are generally attributable to an increase in the present value of future payments due to a slight decrease in the applicable discount rates in 2020 and 2019. (7) The amounts shown for 2021 for each NEO include perquisites and additional compensation of the types indicated in the following table:
| | | | | | | | | |
Name | Perquisites and Other Personal Benefits (a) | | Company Contributions to Defined Contribution Plans |
Joseph P. Lacher, Jr. | 78,765 | | | 14,500 | |
James J. McKinney | 23,833 | | | 14,500 | |
John M. Boschelli | 24,333 | | | 14,500 | |
Duane A. Sanders | 19,463 | | | 14,500 | |
Erich Sternberg | 8,132 | | | 14,500 | |
(a)The amounts in this column include the costs for each NEO of a membership to an executive club, an umbrella policy, an identity theft protection policy, for the NEOs other than Mr. Sanders, an executive physical and, for the NEOs other than Mr. Sternberg, financial planning services. For Messrs. Lacher, Boschelli, and Sanders, the amounts shown include the annual access fees to commercial airline airport lounges. For Mr. Lacher, the value also includes dues and associated expenses for a private club and the incremental costs for his use of the Company aircraft and reimbursement of travel expenses to attend board meetings of an outside non-profit organization for which he serves as a director, which include travel expenses of his spouse for her required attendance at one of the meetings. The value of Mr. Lacher’s usage of the Company aircraft and reimbursement of travel expenses was $33,425 in 2021.
Kemper Corporation 2022 Proxy Statement 46
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
| | |
Grants of Plan-Based Awards |
Restricted Stock Units
PSU Awards
The performance-based RSUs (“PBRSUs”)PSUs awarded to the NEOs under the Omnibus Plan on March 1, 2016in February 2021 are subject to forfeiture and transfer restrictions until their vesting date following the third anniversary of the grant datethree-year performance period in accordance with the terms of the award agreements. Determination of the number of shares of Common Stock that will vest or be forfeited, and of any Additional Shares that will be granted, will be based, for halftwo-thirds of the PBRSUs,PSUs, on the Company’s Relative TSR relative to the Peer Group, over a three-year performance period ending on February 28, 2019, and for the other halfone-third of the PBRSUs,PSUs, on the Company’s Three-Year Adjusted ROE, overeach based on a three-year performance period ending on December 31, 2018, as described in more detail above in the Compensation Discussion and Analysissection captionedunder the heading Performance-Based RSUPSU Awards Granted in 20162021 beginning on page 32.37.
Stock Options
The stock options awarded to the NEOs in 2016 were granted under the Omnibus Plan. Each of these awards is aFebruary 2021 are non-qualified optionoptions for federal income tax purposes, hashave an exercise price that isequal to the closing price of a share of Common Stock on the grant date and expiresexpire on the tenth10th anniversary of the grant date. The stock options awarded to the NEOs were coupled withinclude tandem SARs and become exercisable in fourthree equal, annual installments beginning on the six-monthone-year anniversary of the grant date. References to stock options in this proxy statement generally include tandem SARs.
Incentive Plan Awards
Annual incentive compensation awardsaward payouts for 20162021 were approved in February 2017and made under the Company’s EPP and Annual Incentive Program and payouts were made in February 2017.2022. The maximum potential amountsamount for awards under the EPP were determined byshown in the performance formula and allocation percentages established bytable below is the Compensation Committee in February 2016.maximum provided under the EPP for an annual award to any participant. The performance criteria and process of determining payouts under these awards are described in more detail in the Compensation Discussion and Analysis section under the heading Executive Performance Plan sectionbeginning on page 27.33.
Kemper Corporation 2022 Proxy Statement 47
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
The following table shows each grant to the NEOs in 20162021 under the Company plans as described above:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
GRANTS OF PLAN-BASED AWARDS IN 2021 |
| | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | | | |
Name |
Grant Date (1) | |
Award Type | | |
Maximum ($) | |
Threshold (#) |
Target (#) |
Maximum (#) | | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Awards ($/Sh) (5) | Grant Date Fair Value of Stock and Option Awards ($)(6) |
Joseph P. Lacher, Jr. | 2/2/2021 | | Stock Options | | | — | | | — | | — | | — | | | 75,280 | | 69.74 | | 1,450,880 | |
| 2/2/2021 | | PSU | | | — | | | 9,410 | | 18,820 | | 37,640 | | | — | | — | | 1,179,261 | |
| 2/2/2021 | | PSU | | | — | | | 18,820 | | 37,640 | | 75,280 | | | — | | — | | 2,748,849 | |
| | | Annual Incentive | | | 6,000,000 | | | — | | — | | — | | | — | | — | | — | |
James J. McKinney | 2/2/2021 | | Stock Options | | | — | | | — | | — | | — | | | 14,841 | | 69.74 | | 286,032 | |
| 2/2/2021 | | PSU | | | — | | | 1,855 | | 3,710 | | 7,420 | | | — | | — | | 232,469 | |
| 2/2/2021 | | PSU | | | — | | | 3,711 | | 7,421 | | 14,842 | | | — | | — | | 541,956 | |
| | | Annual Incentive | | | 4,880,000 | | | — | | — | | — | | | — | | — | | — | |
John M. Boschelli | 2/2/2021 | | Stock Options | | | — | | | — | | — | | — | | | 12,906 | | 69.74 | | 248,739 | |
| 2/2/2021 | | PSU | | | — | | | 1,613 | | 3,226 | | 6,452 | | | — | | — | | 202,141 | |
| 2/2/2021 | | PSU | | | — | | | 3,227 | | 6,453 | | 12,906 | | | — | | — | | 471,263 | |
| | | Annual Incentive | | | 4,880,000 | | | — | | — | | — | | | — | | — | | — | |
Duane A. Sanders | 2/2/2021 | | Stock Options | | | — | | | — | | — | | — | | | 15,487 | | 69.74 | | 298,484 | |
| 2/2/2021 | | PSU | | | — | | | 1,936 | | 3,871 | | 7,742 | | | — | | — | | 242,557 | |
| 2/2/2021 | | PSU | | | — | | | 3,872 | | 7,744 | | 15,488 | | | — | | — | | 565,544 | |
| | | Annual Incentive | | | 4,880,000 | | | — | | — | | — | | | — | | — | | — | |
Erich Sternberg | 2/2/2021 | | Stock Options | | | — | | | — | | — | | — | | | 12,906 | | 69.74 | | 248,739 | |
| 2/2/2021 | | PSU | | | — | | | 1,613 | | 3,226 | | 6,452 | | | — | | — | | 202,141 | |
| 2/2/2021 | | PSU | | | — | | | 3,227 | | 6,453 | | 12,906 | | | — | | — | | 471,263 | |
| | | Annual Incentive | | | 4,880,000 | | | — | | — | | — | | | — | | — | | — | |
|
| | | | | | | | | | | | | | | | | | | | |
GRANTS OF PLAN-BASED AWARDS IN 2016 |
Name |
Grant Date(3) | Grant Approval Date (3) |
Award Type | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
| | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Securities Under-lying Stock Awards(#)(4) |
| All Other Option Awards: Number of Securities Underly-ing Options($)(5) |
| Exercise or Base Price of Option Awards($/Sh) (6) |
| Grant Date Fair Value ($)(7) |
|
|
|
Maximum ($) |
| |
Threshold (#) |
|
Target (#) |
|
Maximum (#) |
|
Joseph P. Lacher, Jr. | 3/1/2016 | 2/28/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 96,235 |
| 27.71 |
| 416,821 |
|
| 3/1/2016 | 2/28/2016 | PBRSUs | — |
| | 12,030 |
| 24,059 |
| 48,118 |
| — |
| — |
| — |
| 673,411 |
|
| 3/1/2016 | 2/28/2016 | PBRSUs | — |
| | 12,030 |
| 24,059 |
| 48,118 |
| — |
| — |
| — |
| 610,858 |
|
|
| | Annual Incentive | 3,000,000 |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
James J. McKinney | 11/17/2016 | 11/1/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 20,150 |
| 40.20 |
| 154,632 |
|
| 11/17/2016 | 11/1/2016 | PBRSUs | — |
| | 1,260 |
| 2,519 |
| 5,038 |
| — |
| — |
| — |
| 136,580 |
|
| 11/17/2016 | 11/1/2016 | PBRSUs | — |
| | 1,260 |
| 2,519 |
| 5,038 |
| — |
| — |
| — |
| 92,095 |
|
| 11/17/2016 | 11/1/2016 | TBRSUs | — |
| | — |
| — |
| — |
| 16,000 |
| — |
| — |
| 584,960 |
|
|
| | Annual Incentive | — |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| | | | | | | | | | | | | | | | | | | | |
GRANTS OF PLAN-BASED AWARDS IN 2016 |
Name |
Grant Date(3) | Grant Approval Date (3) |
Award Type | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
| | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Securities Under-lying Stock Awards(#)(4) |
| All Other Option Awards: Number of Securities Underly-ing Options($)(5) |
| Exercise or Base Price of Option Awards($/Sh) (6) |
| Grant Date Fair Value ($)(7) |
|
|
|
Maximum ($) |
| |
Threshold (#) |
|
Target (#) |
|
Maximum (#) |
|
John M. Boschelli | 3/1/2016 | 2/28/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 18,766 |
| 27.71 |
| 81,281 |
|
| 12/6/2016 | 12/6/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 9,089 |
| 42.80 |
| 61,293 |
|
| 3/1/2016 | 2/28/2016 | PBRSUs | — |
| | 1,173 |
| 2,346 |
| 4,692 |
| — |
| — |
| — |
| 65,665 |
|
| 3/1/2016 | 2/28/2016 | PBRSUs | — |
| | 1,173 |
| 2,346 |
| 4,692 |
| — |
| — |
| — |
| 59,565 |
|
|
| | Annual Incentive | 1,866,000 |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
George “Chip” D. Dufala, Jr. | 7/21/2016 | 7/12/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 15,000 |
| 34.07 |
| 87,582 |
|
| 7/21/2016 | 7/12/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 25,624 |
| 34.07 |
| 149,613 |
|
| 7/21/2016 | 7/12/2016 | PBRSUs | — |
| | 1,602 |
| 3,203 |
| 6,406 |
| — |
| — |
| — |
| 120,241 |
|
| 7/21/2016 | 7/12/2016 | PBRSUs | — |
| | 1,602 |
| 3,203 |
| 6,406 |
| — |
| — |
| — |
| 99,966 |
|
| 7/21/2016 | 7/12/2016 | TBRSUs | — |
| | — |
| — |
| — |
| 50,000 |
| — |
| — |
| 1,560,500 |
|
|
| | Annual Incentive | 1,866,000 |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Mark A. Green | 6/3/2016 | 5/27/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 23,752 |
| 31.83 |
| 126,142 |
|
| 6/15/2016 | 6/14/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 15,000 |
| 32.20 |
| 80,588 |
|
| 6/3/2016 | 5/27/2016 | PBRSUs | — |
| | 1,485 |
| 2,969 |
| 5,938 |
| — |
| — |
| — |
| 105,370 |
|
| 6/3/2016 | 5/27/2016 | PBRSUs | — |
| | 1,485 |
| 2,969 |
| 5,938 |
| — |
| — |
| — |
| 86,576 |
|
|
| | Annual Incentive | 1,866,000 |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Richard Roeske | 3/1/2016 | 2/28/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 10,711 |
| 27.71 |
| 46,393 |
|
| 12/7/2016 | 12/7/2016 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 13,501 |
| 43.45 |
| 92,429 |
|
| 3/1/2016 | 2/28/2016 | PBRSUs | — |
| | 670 |
| 1,339 |
| 2,678 |
| — |
| — |
| — |
| 37,479 |
|
| 3/1/2016 | 2/28/16 | PBRSUs | — |
| | 670 |
| 1,339 |
| 2,678 |
| — |
| — |
| — |
| 33,997 |
|
Frank J. Sodaro (8) | 3/1/2016 | 2/28/16 | Stock Options | — |
| | — |
| — |
| — |
| — |
| 21,112 |
| 27.71 |
| 91,442 |
|
| 3/1/2016 | 2/28/16 | PBRSUs | — |
| | 1,320 |
| 2,639 |
| 5,278 |
| — |
| — |
| — |
| 73,866 |
|
| 3/1/2016 | 2/28/16 | PBRSUs | — |
| | 1,320 |
| 2,639 |
| 5,278 |
| — |
| — |
| — |
| 67,004 |
|
| |
(1) | The amounts shown are the maximum amounts that could have been paid under the EPP for 2016 for the respective officers as determined by the Compensation Committee at its meeting on February 7, 2017 based on the previously-approved formula and allocation percentages, except for the amount shown for Mr. Lacher that was reduced to the maximum amount payable for an annual award to any participant under the EPP. The maximum amounts could not have been determined at the beginning of the performance period. No threshold or target amounts were provided under the EPP or the Annual Incentive Program. The process for determining the awards for the NEOs and the amounts |
(1) The grant date is also the date of approval for all awards shown in the table.
(2) No threshold or target amounts are provided under the EPP or the Annual Incentive Program. The amounts shown represent the maximum annual incentive to the participants under the EPP, which for the NEOs other than Mr. Lacher is the amount determined by the HR & Compensation Committee at its meeting on February 1, 2022 based on the previously-approved EPP formula and allocation percentages for 2021. For Mr. Lacher, the amount shown represents the maximum amount payable under the terms of the EPP because the amount determined based on the previously-approved formula and allocation percentages exceeded the plan maximum. The maximum amounts payable to each participant under the formula and allocation percentages for the 2021 EPP Incentive Pool approved by the HR & Compensation Committee could not have been determined at the beginning of the performance period. The process for determining the awards for the NEOs and the amounts of the awards that were approved by the HR & Compensation Committee for 20162021 are detailed in the narrative descriptions about the EPP and the Annual Incentive Program in theCompensation Discussion and Analysis section beginning on pages 27 - 30page 33 and the table captioned Annual Incentive Payouts - 20162021 Annual EPP Awards on page 30.36. | |
(2) | These columns show a range of payouts possible under the performance-based RSU awards granted in 2016 under the Omnibus Plan. The amount shown in the “Target” column for each individual represents 100 percent of the RSUs granted, which equals the number of units that would vest if the “Target” performance level is achieved. The “Threshold” level is the minimum level of performance that must be met before any payout may occur, and the amount shown in the “Threshold” column is 50% of the “Target” payout amount. The amount shown in the “Maximum” column is 200 percent of the “Target” payout amount. Further information about these awards is provided under the heading Performance-Based RSU Awards Granted in 2016 on page 32.
|
| |
(3) | Awards granted on March 1, 2016 were approved by the Compensation Committee at its meeting on February 26, 2016. The other awards with grant dates that differ from their approval dates were grants approved by the Compensation Committee in connection with the start of the respective officer’s employment with the Company; the awards to Mr. McKinney were approved at the Committee’s regularly-scheduled meeting on November 1, 2016, and the awards to Messrs. Dufala and Green were approved by unanimous written consent. The grants to Mr. Boschelli on December 6, 2016 and Mr. Roeske on December 7, 2016 were restorative option grants deemed approved by the Compensation Committee on the grant dates pursuant to the original award agreements for the underlying stock option. The Company’s restorative option program was discontinued in 2009 as described under the heading Elimination of Restorative Option Program on page 36.
|
| |
(4) | These are time-based RSUs granted as “new hire” awards under the Omnibus Plan. |
| |
(5) | These are non-qualified stock options granted under the Omnibus Plan. |
| |
(6) | The exercise price of the stock option awards is equal to the closing price of a share of Common Stock on the grant date. |
| |
(7) | The amounts shown represent the aggregate grant date fair values of the 2016 stock option and RSU awards. For stock options, the grant date fair values were estimated based on the Black-Scholes option pricing model. For performance-based RSUs based on Relative TSR, the grant date fair values were estimated using the Monte Carlo simulation method. For performance-based RSUs based on ROE and time-based RSUs, the grant date fair values were based on the closing price of a share of Common Stock on the grant date. For a discussion of valuation assumptions, see Note 10, “Long-term Equity-based Compensation,” to the consolidated financial statements included in the Company’s 2016 Annual Report. |
| |
(8) | These awards were forfeited upon Mr. Sodaro’s departure from the Company on December 31, 2016. |
Kemper Corporation 2022 Proxy Statement 48
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
(3) These columns show a range of payouts possible under the PSU awards granted in 2021 under the Omnibus Plan. The amount shown in the “Target” column for each award represents 100 percent of the PSUs granted, which equals the number of units that would vest if the “Target” performance level is achieved. The “Threshold” level is the minimum level of performance that must be met before any payout may occur, and the amount shown in the “Threshold” column is 50 percent of the “Target” payout amount. The amount shown in the “Maximum” column is 200 percent of the “Target” payout amount. Further information about these awards is provided in the Compensation Discussion and Analysis section under the heading PSU Awards Granted in 2021 beginning on page 37. (4) These are non-qualified stock options with tandem SARs granted under the Omnibus Plan, which become exercisable in three equal, annual installments beginning on the one-year anniversary of the grant date.
(5) The exercise price of the stock option awards is equal to the closing price of a share of Common Stock on the grant date.
(6) The amounts shown represent the aggregate grant date fair values of the 2021 stock option and PSU awards. For stock options, the grant date fair values were estimated based on the Black-Scholes option pricing model. For PSUs based on Relative TSR, the grant date fair values were estimated using the Monte Carlo simulation method. For PSUs based on Three-Year Adjusted ROE, the grant date fair values were based on the closing price of a share of Common Stock on the grant date. For a discussion of valuation assumptions, see Note 11, “Long-term Equity-based Compensation,” to the consolidated financial statements included in the Company’s 2021 Annual Report.
| | |
Outstanding Equity Awards at 20162021 Fiscal Year-End |
The following table shows the unexercised stock option awards and unvested RSUPSU awards for each NEO granted under the Company’s Omnibus Plan and its predecessor plan that were outstanding as of December 31, 2016:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR-END |
| Option Awards | | Stock Awards |
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units of Other Rights That Have Not Vested($) |
Joseph P. Lacher, Jr. | 98,280 | | — | | | 40.70 | | 11/19/2025 | | | | | | | |
| 96,235 | | — | | | 27.71 | | 3/1/2026 | | | | | | | |
| 173,211 | | — | | | 43.30 | | 2/7/2027 | | | | | | | |
| 116,667 | | — | | | 60.00 | | 2/6/2028 | | | | | | | |
| 78,688 | | 39,345 | | (1) | 76.25 | | 2/5/2029 | | | | | | | |
| 22,613 | | 45,226 | (2) | 77.39 | 02/04/30 | | | | | | | |
| — | | 75,280 | (3) | 69.74 | 02/02/31 | | | | | | | |
| | | | | | | — | | | | 7,378 | | (4) | 433,753 | |
| | | | | | | — | | | | 29,508 | | (5) | 1,734,775 | |
| | | | | | | — | | | | 16,960 | | (6) | 997,078 | |
| | | | | | | — | | | | 33,918 | | (7) | 1,994,039 | |
| | | | | | | — | | | | 18,730 | | (8) | 1,101,137 | |
| | | | | | | — | | | | 37,640 | | (9) | 2,212,856 | |
James J. McKinney | 10,075 | | — | | | 40.20 | | 11/17/2026 | | | | | | | |
| 12,472 | | — | | | 43.30 | | 2/7/2027 | | | | | | | |
| 27,000 | | — | | | 60.00 | | 2/6/2028 | | | | | | | |
| 18,098 | | 9,050 | | (1) | 76.25 | | 2/5/2029 | | | | | | | |
| 4,458 | | 8,916 | | (2) | 77.39 | | 2/4/2030 | | | | | | | |
| — | | 14,841 | | (3) | 69.74 | | 2/2/2031 | | | | | | | |
44 Kemper Corporation 2022 Proxy Statement 49
| | | | | | | | |
| | |
| | Executive Officer Compensation & Benefits |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
|
| | | | | | | | | | | | |
OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR-END (continued) |
| Option Awards | | Stock Awards |
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units of Other Rights That Have Not Vested($) |
James J. McKinney | | | | | | | — | | | | 1,697 | | (4) | 99,767 | |
| | | | | | | — | | | | 6,786 | | (5) | 398,949 | |
| | | | | | | — | | | | 3,344 | | (6) | 196,594 | |
| | | | | | | — | | | | 6,686 | | (7) | 393,070 | |
| | | | | | | — | | | | 3,711 | | (8) | 218,170 | |
| | | | | | | — | | | | 7,420 | | (9) | 436,222 | |
John M. Boschelli | 14,164 | | 7,082 | | (1) | 76.25 | | 2/5/2029 | | | | | | | |
| 3,489 | | 6,978 | | (2) | 77.39 | | 2/4/2030 | | | | | | | |
| — | | 12,906 | | (3) | 69.74 | | 2/2/2031 | | | | | | | |
| | | | | | | — | | | | 1,328 | | (4) | 78,073 | |
| | | | | | | — | | | | 5,312 | | (5) | 312,292 | |
| | | | | | | — | | | | 2,617 | | (6) | 153,853 | |
| | | | | | | — | | | | 5,232 | | (7) | 307,589 | |
| | | | | | | — | | | | 3,227 | | (8) | 189,715 | |
| | | | | | | — | | | | 6,452 | | (9) | 379,313 | |
Duane A. Sanders | 15,699 | | — | | | 63.70 | | 2/1/2028 | | | | | | | |
| 29,100 | | — | | | 60.00 | | 2/6/2028 | | | | | | | |
| 18,885 | | 9,443 | | (1) | 76.25 | | 2/5/2029 | | | | | | | |
| 4,652 | | 9,304 | | (2) | 77.39 | | 2/4/2030 | | | | | | | |
| — | | 15,487 | | (3) | 69.74 | | 2/2/2031 | | | | | | | |
| | | | | | | — | | | | 1,771 | | (4) | 104,117 | |
| | | | | | | — | | | | 7,082 | | (5) | 416,351 | |
| | | | | | | — | | | | 3,489 | | (6) | 205,118 | |
| | | | | | | — | | | | 6,978 | | (7) | 410,237 | |
| | | | | | | — | | | | 3,872 | | (8) | 227,635 | |
| | | | | | | — | | | | 7,742 | | (9) | 455,152 | |
Erich Sternberg | 13,540 | | 27,083 | | (10) | 71.39 | | 4/1/2030 | | | | | | | |
| — | | 12,906 | | (3) | 69.74 | | 2/2/2031 | | | | | | | |
| | | | | | | — | | | | 3,152 | | (6) | 185,306 | |
| | | | | | | — | | | | 6,304 | | (7) | 370,612 | |
| | | | | | | — | | | | 3,227 | | (8) | 189,715 | |
| | | | | | | — | | | | 6,452 | | (9) | 379,313 | |
(1)These options vested on 2/5/2022.
(2)These options are scheduled to vest ratably in equal increments on 2/4/2022 and 2/5/2023.
(3)These options are scheduled to vest ratably in equal increments on 2/2/2022, 2/4/2023 and 2/4/2024.
(4)These PSUs vested on February 2, 2022, the date performance results were certified following completion of the three-year performance period for the 2019 PSU Awards based on Relative TSR that ended on January 31, 2022. The number shown represents the threshold number of PSUs that could be earned (because the performance results for the performance period through fiscal year 2021 were below the threshold level). Market value was
Kemper Corporation 2022 Proxy Statement 50
|
| | | | | | | | | | | | | | | | | | | | |
OUTSTANDING EQUITY AWARDS AT 2016 FISCAL YEAR-END |
| Option Awards | | Stock Awards |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable |
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
| | Option Exercise Price ($) |
| Option Expiration Date |
| | Number of Shares or Units of Stock That Have Not Vested (#) |
| | Market Value of Shares or Units of Stock that Have Not Vested ($) |
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#) |
| | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units of Other Rights That Have Not Vested($) |
|
Joseph P. Lacher, Jr. | 24,570 |
| 73,710 |
| (1) | 40.70 |
| 11/19/2025 |
| | — |
| | — |
| — |
| | — |
|
| 24,058 |
| 72,177 |
| (2) | 27.71 |
| 3/1/2026 |
| | — |
| | — |
| — |
| | — |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 48,118 |
| (3) | 2,131,628 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 24,049 |
| (4) | 1,065,370.7 |
|
James J. McKinney | — |
| — |
| | — |
| — |
| | 16,000 |
| (5) | 708,800 |
| — |
| | — |
|
| — |
| 20,150 |
| (6) | 40.20 |
| 11/17/2026 |
| | — |
| | — |
| — |
| | — |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 5,038 |
| (3) | 223,183 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 2,519 |
| (4) | 111,592 |
|
John M. Boschelli | 10,000 |
| — |
| | 49.79 |
| 2/6/2017 |
| | — |
| | — |
| — |
| | — |
|
| 11,250 |
| 3,750 |
| (7) | 36.47 |
| 2/4/2024 |
| | — |
| | — |
| — |
| | — |
|
| 7,500 |
| 7,500 |
| (8) | 36.17 |
| 2/4/2025 |
| | — |
| | — |
| — |
| | — |
|
| 4,691 |
| 14,075 |
| (2) | 27.71 |
| 3/1/2026 |
| | — |
| | — |
| — |
| | — |
|
| — |
| 9,089 |
| (9) | 42.8 |
| 2/5/2018 |
| | — |
| | — |
| — |
| | — |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 1,500 |
| (10) | 66,450 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 6,000 |
| (11) | 265,800 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 4,692 |
| (3) | 207,856 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 2,346 |
| (4) | 103,927.8 |
|
George “Chip” D. Dufala, Jr. | — |
| — |
| | — |
| — |
| | 50,000 |
| (12) | 2,215,000 |
| — |
| | — |
|
| — |
| 15,000 |
| (13) | 34.07 |
| 7/21/2026 |
| | — |
| | — |
| — |
| | — |
|
| — |
| 25,624 |
| (13) | 34.07 |
| 7/21/2026 |
| | — |
| | — |
| — |
| | — |
|
| — |
| — |
| |
|
| — |
| | — |
| | — |
| 6,406 |
| (3) | 283,786 |
|
| — |
| — |
| |
|
| — |
| | — |
| | — |
| 3,203 |
| (4) | 141,893 |
|
Mark A. Green | 5,938 |
| 17,814 |
| (14) | 31.83 |
| 6/3/2026 |
| | — |
| | — |
| — |
| | — |
|
| 3,750 |
| 11,250 |
| (15) | 32.20 |
| 6/15/2026 |
| | — |
| | — |
| — |
| | — |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 5,938 |
| (3) | 263,053 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 2,968 |
| (4) | 131,482.4 |
|
Richard Roeske | 15,000 |
| — |
| | 49.79 |
| 2/6/2017 |
| | — |
| | — |
| — |
| | — |
|
| 7,500 |
| — |
| | 23.65 |
| 2/2/2020 |
| | — |
| | — |
| — |
| | — |
|
| 8,000 |
| — |
| | 27.89 |
| 2/1/2021 |
| | — |
| | — |
| — |
| | — |
|
| 8,000 |
| — |
| | 29.77 |
| 1/31/2022 |
| | — |
| | — |
| — |
| | — |
|
| 8,000 |
| — |
| | 33.45 |
| 2/4/2023 |
| | — |
| | — |
| — |
| | — |
|
| 6,000 |
| 2,000 |
| (7) | 36.47 |
| 2/4/2024 |
| | — |
| | — |
| — |
| | — |
|
| 4,000 |
| 4,000 |
| (8) | 36.17 |
| 2/4/2025 |
| | — |
| | — |
| — |
| | — |
|
| 2,677 |
| 8,034 |
| (2) | 27.71 |
| 3/1/2026 |
| | — |
| | — |
| — |
| | — |
|
| — |
| 13,501 |
| (16) | 43.45 |
| 2/5/2018 |
| | — |
| | — |
| — |
| | — |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 800 |
| (10) | 35,440 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 3,200 |
| (11) | 141,760 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 2,678 |
| (3) | 118,635 |
|
| — |
| — |
| | — |
| — |
| | — |
| | — |
| 1,339 |
| (4) | 59,318 |
|
Frank J. Sodaro (17) | 6,000 |
| — |
| | 49.79 |
| 2/6/2017 |
| | — |
| | — |
| — |
| | — |
|
| |
(1) | These options are scheduled to vest ratably in equal increments on 5/19/2017, 5/19/2018 and 5/19/2019. |
| |
(2) | These options are scheduled to vest ratably in equal increments on 9/1/2017, 9/1/2018 and 9/1/2019. |
| | |
| | |
| | Executive Officer Compensation & Benefits |
| |
(3) | These performance-based RSUs are scheduled to vest on the date that performance results are certified following completion of the three-year performance period based on Relative TSR. The number shown represents the maximum number of RSUs that would be earned because the estimated performance results were above the target levels for the portion of the three-year performance period ending on February 28, 2019 that was completed as of December 31, 2016. Market value of these RSUs was determined using the closing price of $44.30 per share of Common Stock on December 31, 2016. |
| |
(4) | These performance-based RSUs are scheduled to vest on the date that performance results are certified based on the Three-Year Adjusted ROE. The number shown represents the target number of RSUs that would be earned because the estimated performance results were above the threshold levels for the portion of the three-year performance period ending on December 31, 2018 that was completed as of December 31, 2016. The market values were determined using the closing price of $44.30 per share of Common Stock on December 31, 2016. |
| |
(5) | These time-based RSUs are scheduled to vest in equal increments on 4/1/2018, 4/1/2019 and 4/1/2020. The market value was determined using the closing price of $44.30 per share of Common Stock on December 31, 2016. |
| |
(6) | These options are scheduled to vest ratably in equal increments on 5/17/2017, 5/17/2018, 5/17/2019 and 5/17/2020. |
| |
(7) | These options are scheduled to vest on 8/4/2017. |
| |
(8) | These options are scheduled to vest ratably in equal increments on 8/4/2017 and 8/4/2018. |
| |
(9) | These options are scheduled to vest on 6/6/2017. |
| |
(10) | These performance-based RSUs were scheduled to vest on 2/4/17 but were forfeited as of the vesting date as described under the caption Performance Results for 2014 Performance-Based RSU Awards on page 34. The number of shares shown represents the threshold number of shares that were granted because the actual performance results were below the threshold level. Market value of these shares was determined using the closing price of $44.30 per share of Common Stock on December 31, 2016.
|
| |
(11) | These performance-based RSUs are scheduled to vest on 2/4/2018. The number shown represents the maximum number of RSUs that were granted because the estimated performance results were at the target levels for the portion of the three-year performance period ending on December 31, 2017 that was completed as of December 31, 2016. Market value of these RSUs was determined using the closing price of $44.30 per share of Common Stock on December 31, 2016. |
| |
(12) | These are time-based RSUs scheduled to vest in equal increments on 7/21/2017 and 7/21/2018. The market value was determined using the closing price of $44.30 per share of Common Stock on December 31, 2016. |
| |
(13) | These options are scheduled to vest ratably in equal increments on 1/21/2017, 1/21/2018, 1/21/2019 and 1/21/2020. |
| |
(14) | These options are scheduled to vest ratably in equal increments on 12/3/2017, 12/3/2018 and 12/3/2019. |
| |
(15) | These options are scheduled to vest ratably in equal increments on 12/15/2017, 12/15/2018 and 12/15/2019. |
| |
(16) | These options are scheduled to vest on 6/7/2017. |
| |
(17) | These are vested options that were not forfeited upon Mr. Sodaro’s departure from the Company on December 31, 2016, in accordance with the provision on exercise rights following termination included in the award agreement. |
determined using the closing price of $58.79 per share of Common Stock on December 31, 2021, the last trading day of 2021.
(5)These PSUs vested on February 2, 2022, the date performance results were certified following completion of the three-year performance period for the 2019 PSU Awards based on Three-Year Adjusted ROE that ended on December 31, 2021. The number shown represents the maximum number of PSUs that could be earned (because the performance results for the performance period through fiscal year 2021 were above the target level). Market value was determined using the closing price of $58.79 per share of Common Stock on December 31, 2021.
(6)These PSUs are scheduled to vest on the date performance results are certified following completion of the three-year performance period for the 2020 PSU Awards based on Relative TSR that ends on January 31, 2023. The number shown represents the threshold number of PSUs that could be earned (because the performance results for the performance period through fiscal year 2021 was below the threshold). Market value was determined using the closing price of $58.79 per share of Common Stock on December 31, 2021.
(7)These PSUs are scheduled to vest on the date performance results are certified for the three-year performance period for the 2020 PSU Awards based on Three-Year Adjusted ROE that ends on December 31, 2022. The number shown represents the maximum number of PSUs that could be earned (because the performance results for the performance period through fiscal year 2021 were above the target level). Market value was determined using the closing price of $58.79 per share of Common Stock on December 31, 2021.
(8)These PSUs are scheduled to vest on the date performance results are certified following completion of the three-year performance period for the 2021 PSU Awards based on Relative TSR that ends on January 31, 2024 based on Relative TSR. The number shown represents the threshold number of PSUs that could be earned (because the performance results for the performance period through fiscal year 2021 was below the threshold level). Market value was determined using the closing price of $58.79 per share of Common Stock on December 31, 2021.
(9)These PSUs are scheduled to vest on the date performance results are certified following completion of the three-year performance period for the 2021 PSU Awards based on Three-Year Adjusted ROE that ends on December 31, 2023. The number shown represents the maximum number of PSUs that could be earned (because the performance results for the performance period through fiscal year 2021 were above the target level). Market value was determined using the closing price of $58.79 per share of Common Stock on December 31, 2021.
(10) These options are scheduled to vest ratably in equal increments on 4/1/2022 and 4/1/2023.
OPTION EXERCISES AND STOCK VESTED IN 20162021
| | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
Name | Number of Shares Acquired on Exercise (#)(1) | Value Realized on Exercise ($)(2) | | Number of Shares Acquired on Vesting (#)(3) | Value Realized on Vesting ($)(4) |
Joseph P. Lacher, Jr. | — | | — | | | 47,250 | | 3,295,215 | |
James J. McKinney | — | | — | | | 10,935 | | 762,607 | |
John M. Boschelli | 13,543 | | 356,115 | | | 9,720 | | 677,873 | |
Duane A. Sanders | — | | — | | | 11,785 | | 821,886 | |
Erich Sternberg | — | | — | | | — | | — | |
(1) This is the total number of shares subject to the exercise transactions without deduction of any shares surrendered or withheld to satisfy the exercise price and/or tax withholding obligations related thereto.
(2) This is the difference between the exercise price of the shares acquired and the market price of such shares on the date of exercise, without regard to any related tax obligations.
Kemper Corporation 2022 Proxy Statement 51
|
| | | | | | | | | |
| Option Awards | | Stock Awards |
Name | Number of Shares Acquired on Exercise (#)(1) |
| Value Realized on Exercise ($)(2) |
| | Number of Shares Acquired on Vesting (#)(3) |
| Value Realized on Vesting ($)(4) |
|
Joseph P. Lacher, Jr. | — |
| — |
| | — |
| — |
|
James J. McKinney | — |
| — |
| | — |
| — |
|
John M. Boschelli | 20,000 |
| 170,000 |
| | — |
| — |
|
George “Chip” D. Dufala, Jr. | — |
| — |
| | — |
| — |
|
Mark A. Green | — |
| — |
| | — |
| — |
|
Richard Roeske | 15,000 |
| 94,500 |
| | — |
| — |
|
Frank J. Sodaro | 34,278 |
| 174,507 |
| | 375 |
| 12,866 |
|
| |
(1) | This is the gross number of shares subject to the exercise transactions without deduction of any shares surrendered or withheld to satisfy the exercise price and/or tax withholding obligations related thereto. |
| |
(2) | This is the difference between the exercise price of the shares acquired and the market price of such shares on the date of exercise, without regard to any related tax obligations. |
| |
(3) | This is the gross number of shares that vested without deduction for any shares withheld to satisfy tax withholding obligations. |
| |
(4) | This is the market value on the vesting date of the shares that vested, without regard to any related tax obligations. Market value was determined using the closing price per share of Common Stock on the vesting date. |
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
(3) This is the gross number of shares that vested without deduction for any shares withheld to satisfy tax withholding obligations.
(4) This is the market value on the vesting date of the shares that vested, without regard to any related tax obligations. Market value was determined using the closing price per share of Common Stock on the vesting date.
The Company sponsors two tax-qualified retirement plans, the Pension Plan and the 401(k) and Retirement Plan (as defined on page 38 above). In addition to other requirements, eligibilityPlan. Eligibility for the Pension Plan had required a hire date prior to January 1, 2006, and those employees hired on or after January 1, 2006 instead are eligible to participate inMr. Boschelli is the retirement portion ofonly NEO who met the 401(k) and Retirement Plan.eligibility requirement. Effective June 30, 2016, the Pension Plan was frozen and its participants, including Mr. Boschelli, became eligible for the retirement portion of the 401(k) and Retirement Plan. In general, eligibility under the 401(k) and Retirement Plan requires employees to be at least 21 years old with at least one year of service with the Company (as defined in the plan). Based on their hire dates, Messrs. Boschelli, Roeske and Sodaro were participants in the Pension Plan through June 30, 2016 when their benefits were frozen and they became eligible for the retirement portion of the 401(k) and Retirement Plan. Mr. Lacher became a participant in the retirement portion of the 401(k) and Retirement Plan in November 2016, and the other NEOs will be eligible to participate after completing one year of service with the Company. The NEOs are also eligible to defer on a voluntary basis a portion of their salaries under the 401(k) portion of the 401(k) and Retirement Plan that includes a Company-matching contribution feature offered to all employees meeting the age and service-based eligibility requirements.
Under the Pension Plan, a participant earned a benefit in an amount equal to a specified percentage of “Average Monthly Compensation” plus an additional specified percentage of “Average Monthly Compensation” above the monthly “Social Security Covered Compensation,” multiplied by the participant’s eligible years of service, up to a maximum of 30 years. “Average Monthly Compensation” is generally equal to the average of a participant’s highest monthly compensation over a 60-consecutive-month period during the 120-month period that ends three calendar months prior to a participant’s termination date, or for 2016, the date that the Pension Plan was frozen. The “Social Security Covered Compensation” amount is determined from tables published by the Internal Revenue Service and changes each year. Messrs.Mr. Boschelli Roeske and Sodaro areis vested in the Pension Plan, as participants arewere vested after completing five years of service with the Company.
UnderEmployees hired on or after January 1, 2006 had been eligible to participate in the retirement portion of the 401(k) and Retirement Plan, as were employees hired prior to 2006 after the Pension Plan was frozen, as noted above. As a result, until 2019, each of the NEOs other than Mr. Sternberg, who did not join the Company will makeuntil March 2020, were participants in the retirement portion of the 401(k) Retirement Plan. Effective January 1, 2019, the 401(k) Retirement Plan was amended to discontinue the retirement portion in favor of an enhanced matching contribution for all employees, including the NEOs, under the 401(k) portion, and all employee retirement accounts were fully vested. In March 2019, a final annual contribution generally in February ofwas made under the following year,401(k) Retirement Plan on behalf of each participant with a participantretirement account in an amount equal to the participant’s “Annual Compensation” multiplied by a specified contribution percentage based on the participant’s years of vesting service with the Company (as such terms are defined in the plan). The first contribution on behalf of the Pension Plan participants who became eligible for the retirement portion of the 401(k) and Retirement Plan as of June 30, 2016 was made in February 2017, and is based on a half-year of service for 2016. Messrs. Boschelli, Roeske and Sodaro are vested under the retirement portion of the 401(k) and Retirement Plan, as participants are vested after completing three years of service with the Company.Plan).
Compensation covered by both the Pension Plan and the retirement portion of the 401(k) and Retirement Plan includes the participant’s base salary and annual bonus. The normal retirement age under the qualified retirement plans is age 65. The normal form of distribution under the Pension Plan is a life annuity for a single retiree, or a joint and fifty-percent50-percent survivor annuity for a married retiree. Other forms of annuity are available to participants, but all forms of payment are actuarially equivalent in value. The normal form of distribution under the retirement portion of the 401(k) and Retirement Plan is a lump-sum payout.
Mr. Roeske Age 65 is currently eligible for early retirement under the Pension Plan. A participant is eligible for early retirement benefits upon attaining age 55 with five years of service with the Company. The early retirement benefit payable to a participant under the Pension Plan is the retirement benefit that would have been payable at the normal retirement age of 65 actuarially reduced to give effect tounder the participant’s age at the time of early retirement.qualified retirement plans.
The Company had established the Pension SERP and Retirement SERP (as defined on page 38 above) were establishedas nonqualified supplemental plans to provide benefits to certain individuals in excess of the limitations imposed on the Pension Plan and the retirement portion of the 401(k) and Retirement Plan, respectively, under the Internal Revenue Code. The Pension SERP was effectively frozen as of June 30, 2016 when the Pension Plan was frozen. Thefrozen, and the Retirement SERP benefit is,was effectively frozen as of January 1, 2019, when the retirement portion of the 401(k) Retirement Plan was discontinued. The Pension SERP and the PensionRetirement SERP benefit previously was,benefits were computed using the same formula used for the respective tax-qualified retirement plan,plans, without regard to the compensation limits imposed under the Internal Revenue Code. An employee who earnsearned compensation over the qualified plan limitation may bewas determined eligible to participate in the Retirement SERP, or previously the Pension SERP, by designation of the Board of Directors. For 2016, compensation
The NEOs are also eligible to determine the benefitdefer on a voluntary basis a portion of their salaries under the Pension Plan and the retirement portion of the 401(k) and Retirement Plan was limitedthat includes a matching contribution feature offered by the Company to $265,000.all employees meeting the age and service-based eligibility requirements.
Kemper Corporation 2022 Proxy Statement 52
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
As noted above, only Messrs.Mr. Boschelli Roeske and Sodaro werewas eligible to participate in the Pension Plan and Pension SERP due to their dateshis date of hire.
The following table shows the years of credited service and the present values of the accumulated benefits under the Pension Plan and Pension SERP for
eachMr. Boschelli, our only participating NEO, as of December 31,
2016:2021: |
| | | | | | | |
PENSION BENEFITS |
Name | Plan Name | Number of Years Credited Service (#)(1) |
| Present Value of Accumulated Benefit ($)(2) |
| Payments During Last Fiscal Year ($) |
|
Joseph P. Lacher, Jr. | Pension Plan | — |
| — |
| — |
|
| Pension SERP | — |
| — |
| — |
|
James J. McKinney | Pension Plan | — |
| — |
| — |
|
| Pension SERP | — |
| — |
| — |
|
John M. Boschelli | Pension Plan | 18.5 |
| 487,430 |
| — |
|
| Pension SERP | 18.5 |
| 540,327 |
| — |
|
George “Chip” D. Dufala, Jr. | Pension Plan | — |
| — |
| — |
|
| Pension SERP | — |
| — |
| — |
|
Mark A. Green | Pension Plan | — |
| — |
| — |
|
| Pension SERP | — |
| — |
| — |
|
Richard Roeske | Pension Plan | 24.5 |
| 946,343 |
| — |
|
| Pension SERP | 24.5 |
| 759,244 |
| — |
|
Frank J. Sodaro | Pension Plan | 19.5 |
| 518,169 |
| — |
|
| Pension SERP | 19.5 |
| 460,853 |
| — |
|
| |
(1) | A participant’s initial year of service as an employee is not used to determine credited service under the Pension Plan and Pension SERP. In addition, benefits for all participants under the Pension Plan were frozen as of June 30, 2016. |
| | | | | | | | | | | | | | |
2021 PENSION BENEFITS |
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) |
Joseph P. Lacher, Jr. | Pension Plan | — | | — | | — | |
| Pension SERP | — | | — | | — | |
James J. McKinney | Pension Plan | — | | — | | — | |
| Pension SERP | — | | — | | — | |
John M. Boschelli | Pension Plan | 18.5 | | 690,123 | | — | |
| Pension SERP | 18.5 | | 765,016 | | — | |
Duane A. Sanders | Pension Plan | — | | — | | — | |
| Pension SERP | — | | — | | — | |
Erich Sternberg | Pension Plan | — | | — | | — | |
| Pension SERP | — | | — | | — | |
As a result,(1) A participant’s initial year of service as an employee was not used to determine credited service under the numbers shown differ from each participant’s actualPension Plan and Pension SERP. In addition, benefits for all participants under the Pension Plan were frozen as of June 30, 2016. The number of years of credited service by one year and six months. Forshown for Mr. Boschelli the number shown also differs fromare less than his actual years of service by an additional six years because ofdue to the Pension Plan freeze date and a lump-sum payout of six-years of accrued benefits that he received in connection withbecause of a break in his service with the Company in 1997. For Mr. Roeske,
(2) These accumulated benefit values are based on the number shown also differs from his actual years of credited service by an additional six months dueshown and the Average Monthly Compensation (as defined in the Pension Plan) as of June 30, 2016, as described above in the narrative preceding this table. These present value amounts were determined on the assumption that distribution of benefits under the plans will not begin until age 65, the age at which retirement may occur under the Pension Plan and Pension SERP without any reduction in benefits, using the same measurement date, discount rate and actuarial assumptions described in Note 15, “Pension Benefits,” to the initial effective dateconsolidated financial statements included in the Company’s 2021 Annual Report. The discount rate assumption was derived from the Aon AA Bond Universe Curve as of December 31, 2021 with a single equivalent rate of 2.68 percent and the plan that was six months after he joinedmortality assumptions were based on the Company.PRI-2012 Table for Employees and Healthy Annuitants, Projected Fully Generationally with Scale MP-2021 as adjusted through 2023 to reflect COVID-19.
| |
(2) | These accumulated benefit values are based on the years of credited service shown and the Average Monthly Compensation as of June 30, 2016, as described above in the narrative preceding this table. These present value amounts were determined on the assumption that distribution of benefits under the plans will not begin until age 65, the age at which retirement may occur under the Pension Plan and Pension SERP without any reduction in benefits, using the same measurement date, discount rate and actuarial assumptions described in Note 16, “Pension Benefits,” to the consolidated financial statements included in the Company’s 2016 Annual Report. The discount rate assumption was derived from the AON Hewitt AA Bond Universe Curve as of 12/31/2016 with a single equivalent rate of 4.08% and the mortality assumptions were based on the RP-2006 Table for Employees and Healthy Annuitants, Projected Generationally with Scale MP-2016.
|
|
|
Nonqualified Deferred Compensation |
Deferred Compensation Plan
The Deferred Compensation Plan was established to allow certain executives who are designated by the Board of Directors, as well as the non-employee members of the Board of Directors, to elect to defer a portion of their current-year compensation to a future period. The NEOs are eligible to participate in the Deferred Compensation Plan, but none elected to defer any of their 2021 compensation. The Deferred Compensation Plan is unfunded and exempt from certain provisions of the Employee Retirement Income Security Act of 1974, as amended. The Company does not fund or make profit-sharing or matching contributions under the Deferred Compensation Plan, and participants have an unsecured contractual commitment by the Company to pay the amounts deferred, adjusted to recognize earnings or losses determined in accordance with their elections under the plan.
To participate in the Deferred Compensation Plan, an eligible individual must make an annual irrevocable election. The form and timing of the distribution of deferrals made during a particularany given year is chosen when a participant elects to participate for that year and generally cannot be altered or revoked. The distribution for a particular year may be in the form of annual or quarterly installments payable up to a maximum of ten10 years or a single lump-sum payment. All
Kemper Corporation 2022 Proxy Statement 53
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
payments begin on January 1 of the year chosen by the participant when the election is made. A participant may elect to defer up to 60 percent of his or her regular annual base salary and up to 85 percent of each award earned under any annual or multi-year incentive plan award or annual discretionary bonus regardless of amount. Withdrawals are not permitted under the Deferred Compensation Plan other than regularly scheduled distributions or upon Death or Disability if so chosen by the participant at the time of the annual election.
Each participant’s bookkeeping account is deemed to be invested in the hypothetical investment choice(s) selected by the participant from the choices made available by the Company. Investment choices may be changed by participants on a daily basis. Generally, the hypothetical investment alternatives offered by the Company include a range of retail mutual funds selected bysimilar to the Plan Administrator, which isinvestment alternatives available to participants under the Compensation Committee of the Company’s Board of Directors.401(k) Retirement Plan. Investment choices selected by a participant are used only to determine the value of the participant’s account. The Company is not required to follow these investment selections in making actual investments of amounts deferred under the plan.
As employees designated by the Board of Directors, the NEOs are eligible to elect deferral of their cash salary and bonus under the Deferred Compensation Plan. Mr. Roeske is the only current NEO participant in the Deferred Compensation Plan, and he did not elect to defer any 2016 compensation under the plan. The fund selected for hypothetical investments in 2016 that would apply to Mr. Roeske’s balance under the Deferred Compensation Plan from prior deferrals (and the 2016 annual gain on investment) was the Wells Fargo Index Admin Fund (11.71 percent).
Retirement SERP
The Retirement SERP is discussed above in the narrative captioned Retirement Plans beginning on page 38. Messrs. Boschelli, Roeske and Sodaro became eligible participants51. As noted in that narrative, the Retirement SERP effective upon the Pension Plan freeze June 30, 2016, and initial contribution credits for 2016 were made to their Retirement SERP accounts in February 2017. The amountswas effectively frozen as of these contributions are shown in the table below. Mr. Lacher became an eligible participant in November 2016 and will be eligible for an initial contribution in February 2018 for 2017. The other NEOs will be eligible to participate after completing one year of service with the Company.January 1, 2019. The following table shows the aggregate earnings in 20162021 and the balances as of December 31, 20162021 for the NEOs under the Retirement SERP and Deferred Compensation Plan.Plan and Retirement SERP:
| | | | | | | | | | | | | | | | | | |
2021 NONQUALIFIED DEFERRED COMPENSATION |
Name | Plan Name | | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) |
Joseph P. Lacher, Jr. | Deferred Compensation Plan | | — | — | — | — |
| Retirement SERP | | — | 5,738 | — | 56,161 |
James J. McKinney | Deferred Compensation Plan | | — | (2,507) | (287,156) | — |
| Retirement SERP | | — | 1,857 | — | 13,842 |
John M. Boschelli | Deferred Compensation Plan | | — | — | — | — |
| Retirement SERP | | — | 5,844 | — | 57,200 |
Duane A. Sanders | Deferred Compensation Plan | | — | — | — | — |
| Retirement SERP | | — | — | — | — |
Erich Sternberg | Deferred Compensation Plan | | — | — | — | — |
| Retirement SERP | | — | — | — | — |
|
| | | | | | | |
NONQUALIFIED DEFERRED COMPENSATION |
Name | Plan Name | Registrant Contributions in Last Fiscal Year |
| Aggregate Earnings in Last Fiscal Year ($) |
| Aggregate Balance at Last Fiscal Year End ($)(1) |
|
Joseph P. Lacher, Jr. | Deferred Compensation Plan | — |
| — |
| — |
|
| Retirement SERP | — |
| — |
| — |
|
James J. McKinney | Deferred Compensation Plan | — |
| — |
| — |
|
| Retirement SERP | — |
| — |
| — |
|
John M. Boschelli | Deferred Compensation Plan | — |
| — |
| — |
|
| Retirement SERP | 5,787 |
| — |
| 5,787 |
|
George “Chip” D. Dufala, Jr. | Deferred Compensation Plan | — |
| — |
| — |
|
| Retirement SERP | — |
| — |
| — |
|
Mark A. Green | Deferred Compensation Plan | — |
| — |
| — |
|
| Retirement SERP | — |
| — |
| — |
|
Richard Roeske | Deferred Compensation Plan | — |
| 16,539 |
| 157,842 |
|
| Retirement SERP | 2,998 |
| — |
| 2,998 |
|
Frank J. Sodaro | Deferred Compensation Plan | — |
| — |
| — |
|
| Retirement SERP | 4,534 |
| — |
| 4,534 |
|
| |
(1) | The amounts shown represent the aggregate balance for Mr. Roeske in the Deferred Compensation Plan, and is based on prior deferrals plus earnings or losses accrued through December 31, 2016, and the Company’s contributions to the respective officer’s Retirement SERP account for 2016. |
|
|
Potential Payments Upon Termination or Change in Control |
The following narrative describes the applicable terms of the agreements or plans that would provide benefits to the NEOs if their employment had terminated on December 31, 2016.2021. The table below shows benefits that would have been payable to the NEOs as a direct result of either a change in control of the Company or the retirement, death or disability of the individual officer, had such an event occurred on December 31, 2016.2021. The amounts shown in the table would have been payable pursuant to individual severance agreements (“Severance Agreements”Agreements”) between the NEOs and the Company in connection withthe context of a “change in control” of the Company, as described below, or individual grant agreements executed with the Company in connection with cash bonus,incentive, stock option, PSU and/or RSU awards they received. Except for Mr. Sodaro, noneNone of the NEOs is a party to any other agreement with the Company that would have entitled him or her to receive any severance payments or other termination benefits from the Company as of December 31, 2016 . As previously noted, Mr. Sodaro entered into a separation agreement with the Company that provided for certain severance benefits described in the Compensation Discussion and Analysis section above under the heading Changes to NEO Compensation for 2017 on page 37, and subsequently left the Company effective December 31, 2016. As a result, the amounts shown for Mr. Sodaro in the table below are limited to the actual termination event that occurred and do not include a potential termination in connection with a change in control. 2021.
50 Kemper Corporation 2022 Proxy Statement 54
| | | | | | | | |
| | |
| | Executive Officer Compensation & Benefits |
Retirement Plans
In addition to the amounts shown in the table beginning on page 5356 below, the NEOs would have been entitled to receive benefits to which they have vested rights upon retirement under the Pension Plan and Pension SERP (or 401(k) and Retirement Plan and Retirement SERP), as described and/or quantified above under the heading Retirement Plans and in the Pension Benefits and Nonqualified Deferred Compensation tables and corresponding footnotes, as applicable. Any NEOs who had participated inwith balances under the Deferred Compensation Plan might have been entitled to receive distributions in accordance with their previously chosen elections under the plan, as described above under the caption Nonqualified Deferred Compensation. In addition, the NEOs would have been entitled to receive benefits that are generally available to employees of the Company and do not discriminate in scope, terms or operation in favor of executive officers. These include benefits payable: (a) upon termination of employment, such as payments of 401(k) and Retirement Plan distributions and accrued paid time off; and (b) upon death or disability, under life, business travel or long-term disability insurance. Messrs. Lacher, Boschelli and Sodaro had not reached early retirement age as None of December 31, 2016 and so would not have beenthe NEOs were eligible to begin receiving early retirement benefits as of December 31, 2016. Messrs. McKinney, Dufala and Green were not eligible to participate in the retirement portion of the 401(k) and Retirement Plan or Retirement SERP as of December 31, 2016 because they had not completed one year of service with the Company.2021.
Severance Agreements
The Severance Agreements would provide various severance benefits to the NEOs in the event their employment terminates under certain circumstances within two years after a “change in control.” Such benefits are also payable to such officers in the event their employment is involuntarily terminated (other than for cause, disability or death) or voluntarily terminated with “good reason,” in either case in anticipation ofconnection with a change in control. Under the Severance Agreements, a “change in control” is deemed to occur if any person (excluding certain defined persons) is or becomes, directly or indirectly, the beneficial owner of 25%25 percent or more of the voting power of the Common Stock, or the individuals who comprised the Company’s Board of Directors on the date of the Severance Agreement, or any of the individuals they nominate, cease to comprise a majority of the Board, or if, under the circumstances specified in the Severance Agreements, a merger or consolidation of the Company or sale of substantially all of the Company’s assets is consummated or a liquidation or dissolution plan is approved by the Company’s shareholders.
If applicable, each NEO other than Mr. Sodaro would be entitled under the Severance Agreements to receive the following, subject to execution of a release and other specified requirements:
a •lump-sum severance payment based on a multiple of three (for Mr. Lacher) or two (for the other NEOs) of such officer’s annualized salary and bonus,annual incentive award, determined as of the higher of such officer’s prior-year annual bonusincentive or a percentage of such officer’s baseannual salary (150%(150 percent for Mr. Lacher or 110%110 percent for the other NEOs) (“Annual Bonus”Incentive Award”) plus a pro-rata portion of the Annual BonusIncentive Award based on the number of months that such officer was employed during the year in which the change in control occurred;
•continuation for three years (for Mr. Lacher) or two years (for the other NEOs) of the life insurance benefits that were being provided by the Company to such NEO and his familyor her dependents immediately prior to termination;
a •lump-sum payment equal to the excess of cost for COBRA coverage over the employee-cost for health insurance benefits for thirty-six36 months (for Mr. Lacher) or twenty-four24 months (for the other NEOs) that were being provided by the Company to such NEO and his or her family immediately prior to termination, regardless of whether COBRA coverage is actually elected;elected by the NEO; and
•outplacement services at the Company’s expense for up to fifty-two52 weeks.
The Severance Agreements include a provision related to potential excise taxes payable by the NEOs under Sections 4999 and 280G of the Internal Revenue Code that would entitle them to receive either (a) the full benefits payable as a result of a qualifying termination related to a change of control, whether under the Severance Agreements, equity award agreements or other applicable provisions (subject to such potential excise taxes), or (b) a reduced amount that falls below the applicable safe harbor provided under Section 280G, whichever amount provides the greater after-tax value.
value to the NEO.
51 Kemper Corporation 2022 Proxy Statement 55
| | | | | | | | |
| | |
| | Executive Officer Compensation & Benefits |
Performance Incentive Plan Awards
If the employment of one of the NEOs had terminated as of December 31, 2016 due to a change in control of the Company (as defined under the applicable award agreements), the applicable performance period for any outstanding Multi-Year PIP Award would have ended on such date. The amount of the payout due under each such award would have been the greater of the payout due: (a) based on the actual results for the revised performance period relative to the applicable performance goal(s) for the award; or (b) at the target performance level for the award.
If the employment of one of the NEOs had terminated as of December 31, 2016 due to death or disability, the applicable performance period for any outstanding Multi-Year PIP Award would have ended on such date. The amount of the payout due under each such award would have been the amount due at the target performance level for such award, reduced pro-rata based on the number of months remaining in the performance period as of the date of termination.
If the employment of one of the NEOs had terminated as of December 31, 2016 and, as of such date, such officer was Retirement Eligible, the determination of any payouts under any outstanding Multi-Year PIP Award would have been based on the actual performance results determined at the end of the original performance period for the award, but the amount due would have been prorated based on the ratio of the number of months that such officer was employed during the performance period to the total number months in the performance period. The amount due would have been paid at the same time as the payouts under the respective Multi-Year PIP Awards to active plan participants.
If the employment of an NEO had terminated as of December 31, 2016 for any other reason, any outstanding Multi-Year PIP Award would have been forfeited on the termination date.
Equity-Based Awards
Stock Option Awards
If the employment of an NEO had terminated as of December 31, 20162021 due to death or disability or due to a change in control of the Company, any outstanding unvested stock option award would have vested on the termination date. For awards granted beginning in 2014, ifIf the employment of an NEO had terminated as of December 31, 20162021 and, as of such date, such officer was Retirement Eligible, any outstanding unvested stock option award would remain outstanding and continue to vest in accordance with the original vesting terms. If the employment of an NEO had terminated as of December 31, 20162021 for any other reason, such outstanding unvested stock option awards would have been forfeited on the termination date.
Time-Based RSU Awards
If the employment of an NEO had terminated as of December 31, 20162021, due to death or disability or due to a change in control of the Company, any outstanding unvested time-based RSU awards would have vested on the termination date. For awards granted beginning in 2014, ifIf the employment of an NEO had terminated as of December 31, 20162021, and, as of such date, such officer was Retirement Eligible, any outstanding unvested time-based RSU awards would remain outstanding and continue to vest in accordance with the original vesting terms. If the employment of an NEO had terminated as of December 31, 20162021, for any other reason, such outstanding unvested time-based RSU awards would have been forfeited on the termination date.
Performance-Based RSUPSU Awards
If the employment of an NEO had terminated as of December 31, 20162021, due to a change in control of the Company, the performance period for any outstanding performance-based RSUPSU awards held by such officer would have ended on the termination date. The shares granted under each award would have vested in an amount equal to the number of shares that would vest based on the greater of the target performance level or actual performance results for the truncated performance period.
If the employment of an NEO had terminated as of December 31, 20162021, due to death or disability, the performance period for any outstanding performance-based RSUPSU awards held by such officer would have ended on the termination date. The shares granted under each award would have vested in an amount equal to the number of shares that would vest at the target performance level, reduced pro-rata based on the ratio of the number of months in the truncated performance period to the total number months in the original performance period.
If the employment of an NEO had terminated as of December 31, 20162021, and, as of such date, such officer was Retirement Eligible, any outstanding performance-based RSUPSU awards would remain outstanding until the end of the original performance period and then vest or be forfeited as determined based on actual performance results, but reduced pro-rata based on the ratio of the number of months that such officer was employed during the performance period to the total number months in the performance period. If, as of such termination date, such officer was not Retirement Eligible, any outstanding unvested performance-based RSUPSU awards would have been forfeited on the termination date.
Kemper Corporation 2022 Proxy Statement 56
| | | | | | | | |
| | Executive Officer Compensation & Benefits |
The following table shows amounts that would have become payable to the NEOs in connection with their termination of employment as of December 31, 20162021, resulting from a change in control of the Company, retirement, death or disability of the individual officer:
POTENTIAL PAYMENTS UPON TERMINATION FROM A CHANGE IN CONTROL (“CIC”)
OR DEATH/DISABILITY AT DECEMBER 31, 2021 | | | | | | | | | | | | | | | | | | | | |
Name | Lump-Sum Severance Payments (1) | Accelerated Stock Options (2) | Accelerated RSUs (2)(3) | Accelerated PSUs (2)(4)(5)(6) | Services and Payments related to Welfare Benefits and Out-placement (7) | Total |
Joseph P. Lacher, Jr. | | | | | | |
Termination due to Change in Control | 13,800,000 | | — | | — | | 11,016,129 | | 162,695 | | 24,978,824 | |
Death or Disability | — | | — | | — | | 4,694,422 | | 250,000 | | 4,944,422 | |
Retirement | — | | — | | — | | — | | — | | — | |
Other Termination | — | | — | | — | | — | | — | | — | |
James J. McKinney | | | | | | |
Termination due to Change in Control | 4,450,000 | | — | | — | | 2,257,242 | | 76,702 | | 6,783,944 | |
Death or Disability | — | | — | | — | | 981,703 | | 250,000 | | 1,231,703 | |
Retirement | — | | — | | — | | — | | — | | — | |
Other Termination | — | | — | | — | | — | | — | | — | |
John M. Boschelli | | | | | | |
Termination due to Change in Control | 2,800,000 | | — | | — | | 1,842,420 | | 85,708 | | 4,728,128 | |
Death or Disability | — | | — | | — | | 786,213 | | 250,000 | | 1,036,213 | |
Retirement | — | | — | | — | | — | | — | | — | |
Other Termination | — | | — | | — | | — | | — | | — | |
Duane A. Sanders | | | | | | |
Termination due to Change in Control | 4,500,000 | | — | | — | | 2,355,421 | | 125,586 | | 6,981,007 | |
Death or Disability | — | | — | | — | | 1,024,378 | | 250,000 | | 1,274,378 | |
Retirement | — | | — | | — | | — | | — | | — | |
Other Termination | — | | — | | — | | — | | — | | — | |
Erich Sternberg | | | | | | |
Termination due to Change in Control | 2,650,000 | | — | | — | | 1,499,909 | | 85,708 | | 4,235,617 | |
Death or Disability | — | | — | | — | | 539,445 | | — | | 539,445 | |
Retirement | — | | — | | — | | — | | — | | — | |
Other Termination | — | | — | | — | | — | | — | | — | |
(1) The amounts shown represent cash severance payable under the Severance Agreements assuming no reduction would be made under the provision in the agreements related to potential excise taxes payable by the NEOs under Sections 4999 and 280G of the Code. Any such reduction would have been determined based on the specific facts of the actual termination event.
(2) The amounts shown for a hypothetical termination due to a change in control assume the acceleration of the vesting of outstanding stock options, PSUs and RSUs as of December 31, 2021. Acceleration of the vesting would occur automatically upon the death or disability of the individual officer.NEO pursuant to the terms of the applicable plans and grant agreements. The amounts shown represent the market value of PSUs and RSUs that would have been subject to accelerated vesting as of December 31, 2021. There is no value attributable to options since the exercise price of the outstanding options exceeded the closing stock price on December 31, 2021. The total numbers and market values of unvested PSUs and RSUs and the numbers of shares subject to outstanding stock options, and the exercise prices thereof, are set forth in the Outstanding Equity Awards at 2021 Fiscal Year-End table beginning on page 48. Kemper Corporation 2022 Proxy Statement 57
POTENTIAL PAYMENTS UPON TERMINATION
FROM A CHANGE IN CONTROL (“CIC”) OR DEATH/DISABILITY AT DECEMBER 31, 2016
|
| | | | | | | | | | | | | | |
Name | Lump-Sum Severance Payments(1) |
| Accelerated Stock Options (2) |
| Accelerated Time-Based RSUs (2)(3) |
| Accelerated Performance-Based RSUs (2)(4)(5) |
| Accelerated Multi-Year PIP Awards (6)(7) |
| Services and Payments related to Welfare Benefits and Out-placement(8) |
| Total |
|
Joseph P. Lacher, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination due to CIC | 6,750,000 |
| 1,462,772 |
| — |
| 3,197,441 |
| — |
| 83,059 |
| 11,493,272 |
|
Death or Disability | — |
| 1,462,772 |
| — |
| 710,542 |
| — |
| — |
| 2,173,314 |
|
Other Termination | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
James J. McKinney |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination due to CIC | 1,972,500 |
| 82,615 |
| 708,800 |
| 334,775 |
| — |
| 64,297 |
| 3,162,987 |
|
Death or Disability |
|
| 82,615 |
| 708,800 |
| 12,399 |
| — |
| — |
| 803,814 |
|
Other Termination | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
John M. Boschelli |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination due to CIC | 2,120,000 |
| 337,475 |
| — |
| 577,583 |
| 245,280 |
| 71,337 |
| 3,351,675 |
|
Death or Disability | — |
| 337,475 |
| — |
| 290,785 |
| 344,240 |
| — |
| 972,500 |
|
Other Termination | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
George “Chip” D. Dufala, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination due to CIC | 2,303,750 |
| 415,584 |
| 2,215,000 |
| 425,679 |
| — |
| 69,641 |
| 5,429,654 |
|
Death or Disability | — |
| 415,584 |
| 2,215,000 |
| 39,415 |
| — |
| — |
| 2,669,999 |
|
Other Termination | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Mark A. Green |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination due to CIC | 2,072,000 |
| 358,266 |
| — |
| 394,580 |
| — |
| 52,879 |
| 2,877,725 |
|
Death or Disability | — |
| 358,266 |
| — |
| 51,149 |
| — |
| — |
| 409,415 |
|
Other Termination | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Richard Roeske |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination due to CIC | 1,961,000 |
| 192,940 |
| — |
| 319,713 |
| 295,400 |
| 48,327 |
| 2,817,380 |
|
Death or Disability | — |
| 192,940 |
| — |
| 157,678 |
| 245,283 |
| — |
| 595,901 |
|
Other Termination | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Frank J. Sodaro (9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination due to CIC | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Death or Disability | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
Other Termination | 450,000 |
| — |
| — |
| — |
| — |
| 14,400 |
| 464,400 |
|
| |
(1) | The amounts shown represent cash severance payable under the Severance Agreements assuming that no reduction would be made under the provision in the agreements related to potential excise taxes payable by the NEOs under Sections 4999 and 280G of the Internal Revenue Code. Any such reduction would have been determined based on the specific facts of the actual termination event. |
| | | | |
| | |
| | Executive CompensationProposal 3 |
The accelerated values shown were calculated using the closing price of $58.79 per share of Common Stock on December 31, 2021.
| |
(2) | The amounts shown for a hypothetical termination due to a change in control assume that the Board of Directors elected to accelerate the vesting of outstanding stock options and RSU shares(3) The amounts shown represent the values of outstanding RSUs that would automatically vest from the hypothetical termination event. (4) The amounts shown for a hypothetical termination due to a change in control represent estimated values of payouts under the 2019, 2020 and 2021 PSUs resulting from such event as of December 31, 2021. In such event, the payout under outstanding PSUs would be based on the greater of performance at the target level or actual performance results for a truncated performance period ending on the date of the change in control. Except for the PSUs based on Relative TSR, the values included in the table represent a payout at the maximum performance level because the actual performance for the truncated period exceed the performance level necessary to obtain a maximum payout. For the PSUs based on Relative TSR, the values included in the table represent a payout at the target performance level because the actual performance for the truncated period was below the target performance level necessary to obtain a maximum payout. (5) The amounts shown for a hypothetical death or disability represent estimated values of payouts under the 2019, 2020 and 2021 PSU awards resulting from such event as of December 31, 2021. In such event, the amount of the payout for each award would have been determined at the target level but reduced pro-rata based on the number of months in the Performance Period during which the NEO was an active employee for at least fifteen days divided by the total number of months in the original Performance Period. (6) There are no amounts shown for a hypothetical retirement as none of the NEOs were retirement eligible under the equity-based program as of December 31, 2021. (7) The amounts shown for a hypothetical termination due to change in control are the estimated costs to the Company to provide continuation of life insurance benefits for up to three years (in the case of Mr. Lacher) or two years (for the other NEOs), lump-sum payments related to health insurance, and outplacement services for 52 weeks pursuant to the Severance Agreements, as of December 31, 2016. Acceleration of the vesting of stock options and RSUs would occur automatically upon the death or disability of the NEO pursuant to the terms of the applicable plans and grant agreements. The amounts shown represent the “in-the-money” value of the stock options and market value of RSUs that would have been subject to accelerated vesting as of December 31, 2016. The value shown for accelerated “underwater” stock options is zero. The total numbers and market values of unvested RSU awards and of shares subject to unvested stock options, and the exercise prices thereof, are set forth in the Outstanding Equity Awards at 2016 Fiscal Year-End table on page 45. The accelerated stock option and RSU values shown were calculated using the closing price of $44.30 per share of Common Stock on December 31, 2016. |
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(3) | The amounts shown represent the values of outstanding time-based RSUs that would automatically vest from the hypothetical termination event. |
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(4) | The amounts shown for a hypothetical termination due to a change in control represent estimated values of payouts under the 2014, 2015 and 2016 performance-based RSUs resulting from such event as of December 31, 2016. In such event, the payout under outstanding performance-based RSUs would be based on the greater of performance at the target level or actual performance results for a truncated performance period ending on the date of the change in control. Except for the 2016 performance-based RSUs based on Relative TSR, the values included in the table represent a payout at the target performance level because the actual performance for the truncated period were below the target performance level. For the 2016 performance-based RSUs based on Relative TSR, the values included in the table represent a payout at the maximum performance level because the actual performance for the truncated period exceeded the performance level necessary to obtain a maximum payout. |
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(5) | The amounts shown for a hypothetical death or disability represent estimated values of payouts under the 2014, 2015 and 2016 PBRSU awards resulting from such event as of December 31, 2016. In such event, the amount of the payout for each award would have been determined at the target level but reduced pro-rata based on the number of months in the Performance Period during which the NEO was an active employee for at least fifteen days divided by the total number of months in the original Performance Period. |
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(6) | The amounts shown for a hypothetical termination due to a change in control represent estimated values of payouts under the 2014 and 2015 Multi-Year PIP Awards resulting from such event as of December 31, 2016. In such event, the amount of the payout for each award would have been the greater of the payout due based on the actual performance results or at the target performance level. For the 2014 Multi-Year PIP Awards, for Messrs. Boschelli, Roeske and Sodaro, the payout due based on actual performance results was lower than the payout at the target performance level. Accordingly, the excess of the payout at the target performance level over the payout due based on actual performance results is included in the table for such NEOs. For Messrs. Boschelli, Roeske and Sodaro, the payout due based on actual performance results was lower than the payout at the target performance level. Accordingly, the amounts included in the table for the 2015 Multi-Year PIP Awards represent the amount of the payout for such awards at the target performance level for the truncated performance period ending on December 31, 2016. The processes for determining Multi-Year PIP Award payouts under possible termination events are described in the narrative preceding this table. |
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(7) | The amounts shown for a hypothetical death or disability represent estimated values of payouts under the 2014 and 2015 Multi-Year PIP Awards resulting from such event as of December 31, 2016. In such event, the amount of the payout for each award would have been determined at the target level but reduced pro-rata based on the number of full months in the Performance Period during which the NEO was an active employee divided by the total number of months in the original Performance Period. For the three-year performance period ending on December 31, 2016, the value included in the table represents 100 percent of a payout at the target performance level. For the three-year performance period ending on December 31, 2017, the value included in the table represents two-thirds of a payout at the target performance level. The processes for determining Multi-Year PIP Award payouts under possible termination events are described in the narrative preceding this table. |
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(8) | The amount shown for Mr. Sodaro was incurred by the Company for outplacement services. The amounts shown for the other NEOs other are the estimated costs to the Company to provide continuation of life insurance benefits for up to three years (in the case of Mr. Lacher) or two years (for the other NEOs), lump-sum payments related to health insurance, and outplacement services for fifty-two weeks pursuant to the Severance Agreements, as described in the |
narrative preceding this table. The lump-sum payment related to health insurance is equal to the amount that the COBRA-rate would exceed the active-employee rate for the officer’s coverage for 36 months for Mr. Lacher and 24 months for all other NEOs regardless of whether such officer would elect to continue coverage under COBRA.
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(9) | Because Mr. Sodaro was not serving as an executive officer on December 31, 2016, the amounts shown for him in this table are limited to his actual termination event on December 31, 2016 and were incurred pursuant to his letter agreement and related separation agreement with the Company as described on page 37 under the heading Changes Made to NEO Compensation for 2017.
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The amounts shown for a hypothetical death or disability would be paid under a supplemental death benefit in the event of the NEO’s death.
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| | Proposal 3Pay Ratio Disclosure |
Pay Ratio Disclosure
The Company determined our median employee from our entire employee population to provide a ratio comparison of the total compensation of Mr. Lacher, our CEO, with the total compensation of the median employee for 2021. In doing so, the Company annualized the compensation of all full-time and part-time employees. The median employee’s compensation was determined as of October 1, 2020, in accordance with the methodology and components used in the Summary Compensation Table for our NEOs. Since October 1, 2020, there have been no changes to the Company’s employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosure. The 2021 total compensation was determined to be $68,995 for our median employee, ($65,709 base salary plus retirement benefit costs of $3,286), and $8,222,255 for Mr. Lacher. Based on this information, the ratio of the annual total compensation of Mr. Lacher to that of the median employee is estimated to be 119 to 1. The applicable SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies and assumptions, and as a result, our estimated pay ratio may not be comparable to the pay ratios disclosed by other companies.
Kemper Corporation 2022 Proxy Statement 58
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Ownership of Kemper Stock |
Proposal 3: Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers
This proposal provides you with the opportunity to vote, on a non-binding, advisory basis, to approve the compensation of the NEOs as disclosed in this Proxy Statement in accordance with the applicable compensation disclosure rules (“Say-On-Pay Vote”Vote”). At the Company’s 20112021 Annual Meeting of Shareholders, the Company’s shareholders approved the Company’s first Say-On-Pay Vote by over 97% of the votes cast on the proposal, and voted in favor of having the Company provide future Say-On-Pay Votes every three years. At the Company’s 2014 Annual Meeting, the Company’s shareholders approved the Company’s second Say-On-Pay Vote by over 97% of the votes cast on the proposal.
In voting on Proposal 3, you will be voting whether to approve the following resolution:
“RESOLVED, that, the Company’s shareholders approve the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of SEC Regulation S-K in the Proxy Statement for the 20172022 Annual Meeting of Shareholders, including the section captioned Compensation Discussion and Analysis, the compensation tables and related narrative discussions.”
This proposal is not intended to address any specific element of compensation; rather, the vote relates to the compensation of the NEOs as described in this Proxy Statement in accordance with the compensation disclosure rules of the SEC. The vote is advisory, which means that the vote is not binding on the Company, the Board of Directors or the HR & Compensation Committee. However, the HR & Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The Compensation Discussion and Analysissection of this Proxy Statement that begins on page 2125 above provides an Executive Summary and detailed information on the executive compensation program and amounts paid to the Company’s NEOs for 2016.2021. The Company encourages you to review the Compensation Discussion and Analysis in considering whether to vote in favor of this proposal. The Company believes that the 20162021 executive compensation program has served as an effective means of attracting and retaining the new members of its leadership team and that the program’s components, including the Company’s Annual Incentive Program, will serveserves as a key supporting mechanism to drive the Company’s improved financial performance. If a quorum is present, Proposal 3 will be approved by the affirmative vote of the majority of votes cast, meaning the number of shares voted “FOR” the proposal exceeds the number of shares voted “AGAINST” the proposal. “Abstentions” and “broker non-votes” are not considered votes cast “FOR” or “AGAINST” the proposal and will have no effect on the proposal. |
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Recommendation of the Board of Directors |
The Board of Directors recommends that you vote “ForFOR” Proposal 3.
Kemper Corporation 2022 Proxy Statement 59
Proposal 4: Advisory Vote to Approve the Frequency of Future Advisory Votes on the Compensation of the Named Executive Officers
SEC regulations that took effect in 2011 require companies to provide shareholders with the opportunity every six years to vote on a non-binding, advisory basis for their preference about the frequency of future Say-On-Pay Votes. By voting with respect to this Proposal 4, shareholders may indicate whether they would prefer that the Company conduct future Say-On-Pay Votes once every one, two or three years. Shareholders may instead abstain from voting on this proposal.
The Board of Directors recommends that shareholders vote for a one-year frequency for future Say-On-Pay Votes. The Board considered factors in favor of longer intervals, including their focus on long-term business results instead of short-term aberrations and variations, and the alignment of three-year voting intervals with the three-year performance cycles in the Company’s equity-based compensation program. However, the Board believes that an annual Say-On-Pay Vote is the appropriate approach for the Company to adopt at this time, primarily due to the fact that annual Say-On-Pay Votes have become the practice of a majority of public companies over the past six years and are considered by a majority of institutions and other shareholder groups to be a preferred method for providing timely feedback on executive compensation.
This vote is advisory and not binding on the Company or the Board of Directors. The proxy card will provide shareholders with the opportunity to choose among three options as to their preferred frequency for future Say-On-Pay Votes. Shareholders may cast a vote on the voting frequency by selecting the option of one year, two years or three years, or may abstain from voting.
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Recommendation of the Board of Directors |
The Board of Directors recommends that you vote for the option of a “One Year” frequency in Proposal 4.
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Ownership of Kemper Stock |
Ownership of Kemper Common Stock
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Directors and Executive Officers |
On March 9, 2017,10, 2022, there were approximately 51,295,98063,777,819 shares of the Company’s Common Stock outstanding. The following table shows the beneficial ownership of the Common Stock as of March 9, 201710, 2022 (unless otherwise indicated) by: (a) each director; (b) each Named Executive Officer; and (c) all directors and executive officers as a group.
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Name of Beneficial Owner | Common Shares at March 10, 2022 (1) | Stock Options Exercisable/RSUs Vesting Through May 10, 2022 (2) | Total Shares Beneficially Owned | Percent of Class (3) | | | | | | |
Directors: | | | | | | | | | | |
Teresa A. Canida | 14,393 | | 1,670 | | 16,063 | | * | | | | | | |
George N. Cochran | 18,411 | | 1,670 | | 20,081 | | * | | | | | | |
Kathleen M. Cronin | 10,703 | | 1,670 | | 12,373 | | * | | | | | | |
Jason N. Gorevic | 6,000 | | — | | 6,000 | | * | | | | | | |
Lacy M. Johnson | 7,783 | | 1,670 | | 9,453 | | * | | | | | | |
Robert J. Joyce | 15,703 | | 1,670 | | 17,373 | | * | | | | | | |
Joseph P. Lacher, Jr. | 119,240 | | — | | 119,240 | | * | | | | | | |
Gerald Laderman | 2,007 | | 1,670 | | 3,677 | | * | | | | | | |
Stuart B. Parker | 26,024 | | 1,670 | | 27,694 | | * | | | | | | |
Christopher B. Sarofim | 11,703 | | 1,670 | | 13,373 | | * | | | | | | |
David P. Storch | 25,455 | | 1,670 | | 27,125 | | * | | | | | | |
Susan D. Whiting | 5,903 | | 1,670 | | 7,573 | | * | | | | | | |
NEOs (other than Mr. Lacher who is listed above): | | | | | | | | | | |
James J. McKinney | 44,160 | | — | | 44,160 | | * | | | | | | |
John M. Boschelli | 19,171 | | — | | 19,171 | | * | | | | | | |
Duane A. Sanders | 22,386 | | — | | 22,386 | | * | | | | | | |
Erich Sternberg | — | | 13,541 | | 13,541 | | * | | | | | | |
Directors, NEOs and Executive Officers as a Group (20 persons) | 425,154 | | 30,241 | | 455,395 | | * | | | | | | |
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Name of Beneficial Owner | Common Shares at March 9, 2017(1) |
| Stock Options Exercisable On or Before May 8, 2017(2) |
| Total Shares Beneficially Owned |
| Percent of Class(3) |
Directors: | | | | |
George N. Cochran | 4,628 |
| 9,179 |
| 13,807 |
| * |
Kathleen M. Cronin | 2,920 |
| 8,000 |
| 10,920 |
| * |
Douglas G. Geoga | 11,750 |
| 37,965 |
| 49,715 |
| * |
Thomas M. Goldstein | — |
| — |
| — |
| * |
Lacy M. Johnson | — |
| — |
| — |
| * |
Robert J. Joyce | 5,920 |
| 17,179 |
| 23,099 |
| * |
Joseph P. Lacher, Jr. | — |
| 48,628 |
| 48,628 |
| * |
Christopher B. Sarofim | 3,920 |
| 16,000 |
| 19,920 |
| * |
David P. Storch | 8,920 |
| 29,179 |
| 38,099 |
| * |
NEOs (other than Mr. Lacher who is listed above): | | | | |
James J. McKinney | — |
| — |
| — |
| * |
John M. Boschelli | 23,305 |
| 23,441 |
| 46,746 |
| * |
George "Chip" D. Dufala, Jr. | — |
| 10,156 |
| 10,156 |
| * |
Mark A. Green | 1,000 |
| 9,688 |
| 10,688 |
| * |
Richard Roeske | 48,172 |
| 44,177 |
| 92,349 |
| * |
Frank J. Sodaro (4) | 2,270 |
| — |
| 2,270 |
| * |
Directors, NEOs and Executive Officers as a Group (18 persons) | 198,935 |
| 273,293 |
| 472,228 |
| * |
(1) The shares shown for non-employee directors (i.e,(i.e., the directors other than Mr. Lacher) include outstanding DSUs, and the numbers of shares for NEOs and other executive officers include any shares of Common Stock indirectly held in a trust or the Company’s 401(k) and Retirement Plan. The shares shown for the non-employee directors include 2,920the following numbers of DSUs for Mr.outstanding on March 10, 2022, which are all fully vested: Cochran and Ms. Cronin and 3,920 DSUs for Messrs. Geoga,(7,220); Johnson (4,300), Joyce, Sarofim and Storch outstanding on March 9, 2017.(8,220); and Whiting (1,420). The PSUs and any RSUs held by executive officers are not included in the amounts shown in this table because they are not deemed beneficially owned shares of Common Stock under SEC rules applicable to this table unless they will vest within 60 days. Accordingly, the shares shown in this table for the NEOs and the Executive Officers as a Groupother executive officers do not include the following outstanding performance-based RSUs:PSUs: Lacher (62,553)(136,848); McKinney (11,274)(27,949); Boschelli (13,235)(22,841); Dufala (13,127)Sanders (29,164); Green (11,758); Roeske (5,992)Sternberg (19,135); and for all Directors, NEOs and Executive Officers as a Group (143,241); and the shares shown also do not include the following outstanding time-based RSUs: McKinney (16,000); Dufala (50,000); and for all the NEOs and Executive Officers as a Group (66,200)(296,299). To the Company’s knowledge, the beneficial owner has sole voting and sole dispositive power with respect to the shares listed opposite his or her name, unless otherwise indicated.
(2) The shares shown include Director RSUs and executive officer stock options outstanding as of March 9, 2017 that will be vested as of10, 2022 and vesting or becoming exercisable on or prior to May 8, 2017.10, 2021.
(3) The percentages shown for any individual and for the directorsDirectors, NEOs and executive officersExecutive Officers as a groupGroup are based on the 51,295,98063,777,819 shares of the Company’s Common Stock outstanding on March 9, 2017, plus shares that the respective individual or group has the right to acquire through DSU, RSU or stock option awards outstanding on March 9, 2017 that will be vested as of May 8, 2017.10, 2022. An asterisk in this column indicates a percentage of less than 1one percent.
(4) The shares shown are based on information provided to the Company by Mr. Sodaro. Kemper Corporation 2022 Proxy Statement 60
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Ownership of Kemper Stock |
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Certain Beneficial Owners |
The following table sets forth information about persons, other than the Company’s directors and executive officers shown above, known by the Company to be the beneficial owner of more than five percent of the Company’s Common Stock. To the Company’s knowledge, the beneficial owner has sole voting and sole dispositive power with respect to the shares listed opposite the beneficial owner’s name, unless otherwise indicated.
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Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (1) |
T. Rowe Price Associates, Inc. | 6,917,868 | | (2) | 10.8 | % |
100 East Pratt Street Baltimore, Maryland 21202 | | | |
The Vanguard Group, Inc. | 5,527,737 | | (3) | 8.7 | % |
100 Vanguard Boulevard Malvern, Pennsylvania 19355 | | | |
Fuller & Thaler Asset Management, Inc. | 4,897,437 | | (4) | 7.7 | % |
411 Borel Avenue, Suite 300 San Mateo, CA 94402 | | | |
BlackRock, Inc. | 4,856,273 | | (5) | 7.6 | % |
55 East 52nd Street New York, New York 10055 | | | |
(1) Percentages shown are based on the shares outstanding on March 10, 2022. |
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Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (1) |
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Singleton Group LLC | 8,334,520 |
| (2) | 16.2 | % |
3419 Via Lido, #630 Newport Beach, California 92663 | | | |
BlackRock, Inc. | 4,492,486 |
| (3) | 8.8 | % |
55 East 52nd Street New York, New York 10055 |
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Dimensional Fund Advisors LP | 4,327,451 |
| (4) | 8.4 | % |
Building One 6300 Bee Cave Road Austin, Texas 78746 |
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Fayez Sarofim and Fayez S. Sarofim & Co. | 3,517,757 |
| (5) | 6.9 | % |
Two Houston Center, Suite 2907 909 Fannin Street Houston, Texas 77010 |
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Vanguard | 3,273,845 |
| (6) | 6.4 | % |
100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
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T. Rowe Price Associates, Inc. | 2,655,551 |
| (7) | 5.2 | % |
100 East Pratt Street Baltimore, Maryland 21202 | | | |
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(1) | The percentages shown are based on the 51,295,980 shares outstanding on March 9, 2017. |
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(2) | Based on information reported in a Schedule 13D/A filed jointly with the SEC on December 31, 2015, the Singleton Group LLC (“LLC”), William W. Singleton, Christina Singleton Mednick and Donald E. Rugg, as managers of the LLC, the LLC directly owns 8,334,520 shares of Common Stock. William W. Singleton, Christina Singleton Mednick and Donald E. Rugg, as managers of the LLC, share voting and dispositive power with respect to the shares of Common Stock held by the LLC, and so(2) Based on information reported in a Schedule 13G/A filed with the SEC by T. Rowe Price Associates, Inc. (“T. Rowe Price ”) on February 14, 2022, T. Rowe Price may be deemed beneficial owners of all such shares, and Donald E. Rugg has sole voting and dispositive power with respect to 412 shares of Common Stock. As a result of these shares beneficially owned outside of the LLC and his role as a manager of the LLC, Donald E. Rugg may be deemed a beneficial owner of 8,334,932 shares of Common Stock. In a Form 4 filed with the SEC on May 8, 2014, William W. Singleton and Christina Singleton Mednick reported having indirect interests in these shares as trustees and beneficiaries of certain trusts holding membership interests in the LLC and as managers of the LLC and disclaimed beneficial interest of the shares of Common Stock held by the LLC except to the extent of their respective pecuniary interests therein. |
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(3) | Based on information reported in a Schedule 13G/A filed with the SEC on January 25, 2017, BlackRock, Inc. (“BlackRock”) beneficially owns an aggregate of 4,492,486 shares of Common Stock as of December 31, 2016, as to which BlackRock has sole dispositive power and which includes 4,398,387 shares as to which it has sole voting power. BlackRock also reported that it was filing as the parent holding company or control person of certain subsidiaries listed in an exhibit to the Schedule 13G/A. |
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(4) | Based on information reported in a Schedule 13G/A filed with the SEC on February 9, 2017, Dimensional Fund Advisors LP (“Dimensional”) beneficially owns an aggregate of 4,327,451 shares of Common Stock as of December 31, 2016, as to which Dimensional has sole dispositive power and which includes 4,285,678 shares as to which it has sole voting |
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Ownership of Kemper Stock |
power. According to the Schedule 13G/A, these shares are held by four investment companies to which Dimensional furnishes investment advice, and certain other commingled funds, group trusts and separate accounts for which Dimensional serves as investment manager or sub-adviser. Dimensional disclaimed beneficial ownership of these shares.
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(5) | Based on information reported in a Schedule 13G/A filed jointly with the SEC on February 10, 2017 by Fayez Sarofim, Fayez Sarofim & Co., Sarofim Trust Co. and Sarofim International Management Co., Fayez Sarofim may be deemed to be the beneficial owner of 3,517,757 shares of Common Stock as of December 31, 2016. Of such shares, Fayez Sarofim reported sole voting and dispositive power as to 2,469,070 shares, shared voting power as to 1,041,985 shares and shared dispositive power as to 1,048,687 shares. |
Fayez Sarofim & Co. (of which Fayez Sarofim is the Chairman of the Board, Chief Executive Officer, a director, and the majority shareholder) may be deemed to be the beneficial owner of 1,048,6876,917,868 shares of Common Stock as of December 31, 20162021. Of such shares, T. Rowe Price reported sole voting power as to which Fayez Sarofim & Co. has shared2,654,575 shares, sole dispositive power and which includes 1,041,985 shares as to which it has5,857,816 shares and no shared voting power. Accordingor dispositive power as to theany shares.
(3) Based on information reported in a Schedule 13G/A 308,567 shares are held in investment accounts that are managedfiled with the SEC by Fayez Sarofim & Co. for numerous clients as to which Fayez Sarofim & Co. has full investment discretion.
Sarofim Trust Co., a wholly-owned subsidiary of Fayez Sarofim & Co.,The Vanguard Group, Inc. (“Vanguard”) on February 10, 2022, Vanguard may be deemed to be the beneficial owner of 15,1005,527,737 shares of Common Stock as of December 31, 20162021. Of such shares, Vanguard reported sole voting power as to which it has0 shares, sole dispositive power as to 5,442,361, shared voting power as to 32,114 shares and shared dispositive power. Accordingpower as to 85,376 shares.
(4) Based on information reported in a Schedule 13G filed jointly with the Schedule 13G/A, all 15,100 shares are held in investment advisory accounts managedSEC on February 8, 2022, by Sarofim TrustFuller & Co.
Sarofim InternationalThaler Asset Management, Co.Inc. (“Fuller & Thaler”), a wholly-owned subsidiaryFuller & Thaler may be deemed the beneficial owner of Fayez Sarofim & Co., directly owns 725,0204,897,437 shares of Common Stock as of December 31, 20162021. Of such shares, Fuller & Thaler reported sole voting power as to which it has4,821,662 shares, sole dispositive power as to 4,897,437 shares, shared voting power as to 0 shares and shared dispositive power.power as to 0 shares.
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(6) | (5) Based on information reported in a Schedule 13G/A filed with the SEC by The Vanguard Group (“Vanguard”) on February 10, 2016, Vanguard may be deemed to be the beneficial owner of 3,273,845 shares of Common Stock as of December 31, 2016. Of such shares, Vanguard reported sole voting power as to 50,426 shares, sole dispositive power as to 3,220,106 shares, shared voting power as to 5,500 shares and shared dispositive power as to 53,739 shares. |
According to the Schedule 13G/A Vanguard’s wholly-owned subsidiary, Vanguard Fiduciary Trust Company, isfiled with the beneficial ownerSEC on February 1, 2022, by BlackRock, Inc. (“BlackRock”), BlackRock beneficially owns an aggregate of 48,2394,856,273 shares of Common Stock as a result of its servingDecember 31, 2021, as to which BlackRock has sole dispositive power. Of such shares, BlackRock reported sole voting power as to 4,715,379 shares, and no shared voting or dispositive power as to any shares. BlackRock also reported that it was filing as the investment managerparent holding company or control person of collective trust accounts. Additionally, Vanguard’s wholly-owned subsidiary, Vanguard Investments Australia, Ltd. iscertain subsidiaries listed in an exhibit to the beneficial owner of 7,687 shares of Common Stock as a result of its serving as an investment manager of Australian investment offerings.Schedule 13G/A.
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(7) | Based on information reported in a Schedule 13G/A filed with the SEC on February 7, 2017 by T. Rowe Price Associates, Inc. (“T. Rowe Price”), T. Rowe Price may be deemed to be the beneficial owner of 2,655,551 shares of Common Stock as of December 31, 2016 as to which T. Rowe Price has sole voting power as to 564,772 shares and sole dispositive power as to 2,655,551 shares. According to information provided to the Company by T. Rowe Price, these shares are owned by various individual and institutional investors to which T. Rowe Price serves as an investment adviser. T. Rowe Price disclaimed beneficial ownership of these shares. |
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Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports |
Section 16(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), requires the Company’s directors and executive officers and persons who beneficially own more than 10 percent of the registered class of the Company’s equity securities to file with the SEC reports of ownership and reports of changes in ownership of such securities. Based on the Company’s knowledge of stock transactions, its review of copies of reports filed under Section 16(a) and written
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| | Frequently Asked Questions |
representations furnished to the Company, the Company believes that all filing requirements applicable to its directors, executive officers and more than ten10 percent beneficial owners were complied with for the fiscal year ended December 31, 2016.
2021, except for the late filing of a Form 4 by Mr. Omiridis relating to the surrender of certain shares for tax withholding purposes. Kemper Corporation 2022 Proxy Statement 62
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| | Frequently Asked Questions |
Frequently Asked Questions
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Proxy and Proxy Statement |
A proxy is your legal appointment of another person to vote the stock you own. That other person is called a proxy. If you appoint someone as your proxy in a written document, that document is also called a proxy or a proxy card. We have designated Joseph P. Lacher, Jr., our PresidentChairman and Chief Executive Officer,CEO, and C. Thomas Evans, Jr., our SeniorExecutive Vice President, Secretary and General Counsel, to act as proxies for the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares if you provide a proxy in the manner described in this Proxy Statement.
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What is a Proxy Statement? |
A Proxy Statement is a document that sets forth the information required by the federal securities laws and regulations administered by the SEC which is intended to allow you to vote on an informed basis at the Annual Meeting.
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Who can vote at the Annual Meeting? |
You are entitled to vote at the Annual Meeting if you owned Common Stock at the close of business on the Record Date.
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How many votes do I have? |
Each share of Common Stock that you owned on the Record Date entitles you to one vote. Your proxy card indicates the number of shares of Common Stock that you owned on the Record Date that may be voted at the Annual Meeting.
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How many shares of Kemper stock are eligible to be voted at the Annual Meeting? |
At the close of business on the Record Date, there were 51,295,98063,777,819 shares of Common Stock issued and outstanding. Accordingly, 51,295,98063,777,819 shares of Common Stock are eligible to be voted at the Annual Meeting. Kemper had no other voting securities outstanding on the Record Date.
To conduct business at the Annual Meeting, a quorum must be present; that is, a majority of the shares of Common Stock outstanding and entitled to vote as of the Record Date must be represented in person or by proxy at the Annual Meeting. If you properly submit a proxy, your shares covered by that proxy will be counted toward a quorum.
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On what am I being asked to vote on? |
Shareholders are being asked to vote on the following proposals at the Annual Meeting:
Proposal 1: Election of the director Nominees listed beginning on page 10;12;
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Proposal 2: | Consider and vote on an advisory proposal on the ratification of the selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accountant for 2017; |
Proposal 2: Advisory vote to ratify the selection of Deloitte & Touche LLP as the Company’s Independent Registered Public Accountant for 2022; and
Proposal 3: Consider andAdvisory vote on an advisory proposal onto approve the compensation of the Company’s Named Executive
Officers, as disclosed in this Proxy Statement; andStatement.
Proposal 4: Consider and vote on an advisory proposal onWhat is the frequency of future advisory proposals on thedifference between a shareholder that holds shares as a “registered shareholder” or in “street name”?
compensation of the Company’s Named Executive Officers.
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| | Frequently Asked Questions |
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What is the difference between a shareholder that holds shares as a “registered shareholder” or in “street name”? |
The shares of a registered shareholder are registered with the Company’s transfer agent, Computershare Trust Company, N.A. (“Computershare”Computershare”), in the shareholder’s own name. Shares held in street name are registered with Computershare in the name of the stock brokerage firm or other institution (or the name of its nominee), but not in the shareholder’s own name. In this case, the institution maintains its own internal records showing the shareholder as the actual beneficial owner of the shares.
Kemper Corporation 2022 Proxy Statement 63
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What are the different methods that I can use to vote my shares of Common Stock? | | Frequently Asked Questions |
What are the different methods I can use to vote my shares of Common Stock?
Shares held by registered shareholders:
If you hold your shares of Common Stock as a registered shareholder, you may give a proxy to vote your shares by one of the following methods:
•Complete, sign and date your proxy card and return it no later than the commencement of the Annual Meeting in the postage-paid envelope provided;
•Call the toll-free telephone number on your proxy card and follow the recorded instructions no later than 10:59 p.m. Central Daylight Time on Tuesday,, May 2, 2017;3, 2022;
•Access the proxy voting website identified on your proxy card and follow the instructions no later than 10:59 p.m. Central Daylight Time on Tuesday,, May 2, 2017;3, 2022; or
•Attend the Annual Meeting in person and deliver your proxy card or ballot to one of the ushers when requested to do so.
Shares held in street name:
If you hold your shares of Common Stock in street name or through the Employee Stock Purchase Plan, your broker (or other institution holding your shares of Common Stock in street name) generally will supply you with its own form of proxy card requesting you to provide your voting instructions in writing or, in some cases, by telephone or over the Internet. Following its receipt of your voting instructions, the institution will be authorized to provide a proxy to the Company to vote your shares in accordance with any instructions you provide.
Shares held through the 401(k) and Retirement Plan:
If you hold your shares of Common Stock through the Company’s 401(k) and Retirement Plan, you may give a proxy to vote your shares by one of the following methods:
•Complete, sign, date and datereturn your proxy card, and return itwhich must be received by 1:00 a.m.10:59 p.m. Central Daylight Time on Monday,, May 1, 20172, 2022 (“401(k) Deadline”), for your voting instructions to be effective;
•Call the toll-free telephone number on your proxy card and follow the recorded instructions by the 401(k) Deadline, for your voting instructions to be effective; or
•Access the proxy voting website identified on your proxy card and follow the instructions by the 401(k) Deadline, for your voting instructions to be effective.
If you provide timely voting instructions for your 401(k) and Retirement Plan shares, the plan trustee will confidentially vote your shares in accordance with your voting instructions. In accordance with the terms of the 401(k) and Retirement Plan, if you do not vote your plan shares before the voting deadline, the plan trustee will vote your shares in the same proportion as all other shares were voted in accordance with timely voting instructions provided to the trustee by all other plan participants.
The telephone and Internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their voting instructions, and to confirm that shareholders’ instructions have been recorded properly. Shareholders who wish to give proxy voting instructions over the Internet should be aware that there may be costs associated with
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| | Frequently Asked Questions |
electronic access, such as usage charges from Internet service providers and telephone companies. In addition, in choosing among the available alternatives for proxy voting, shareholders should be aware that there may be some risk that a vote either by telephone or over the Internet might not be properly recorded or counted because of an unanticipated electronic malfunction. As described above, please note that the ability of shareholders of record to submit voting instructions by telephone and over the Internet ends at 10:59 p.m. Central Daylight Time on the day before the Annual Meeting, and, for 401(k) and Retirement Plan shares, by the 401(k) Deadline. The reason for this cut-off is to allow for the timely assembly and tabulation of voting instruction data.
�� Kemper Corporation 2022 Proxy Statement 64
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How do I vote my Common Stock in person? | | Frequently Asked Questions |
How do I vote my Common Stock at the Annual Meeting?
If you owned Common Stock in your own name on the Record Date, your name will appear on the list of registered shareholders of the Company and, if you wish to attend in person, you will be admitted to the Annual Meeting and may vote by written ballot or by delivering a signed proxy card. However, note that: (a) shares held through the 401(k) and Retirement Plan must be voted by the 401(k) Deadline and, accordingly, may not be voted in person at the Annual Meeting; and (b) if your shares are held in the name of a broker, bank or other institution, you must present written evidence at the Annual Meeting from the institution indicating that you were the beneficial owner of the shares on the Record Date and that you have been authorized by that institution to vote your shares in person. This written evidence is generally called a “Legal Proxy” and should be submitted to the Company’s Secretary, C. Thomas Evans, Jr., prior to the commencement of the Annual Meeting.
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If I plan to attend the Annual Meeting, should I give my proxy? |
Regardless of whether you plan to attend the Annual Meeting, we urge you to give a proxy. Returning your proxy card or giving voting instructions by telephone or over the Internet will not affect your right to attend the Annual Meeting and vote in person. However, giving a proxy will ensure that your shares are represented at the Annual Meeting in the event that you are unable to attend.
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How will my proxy be voted? |
If you (or your broker or other institution holding your shares held in street name) properly sign and timely return your proxy card, or timely deliver your voting instruction by telephone or over the Internet, the individuals designated as proxies on the proxy card will vote your shares as you have directed. With respect to Proposal 1, you may choose to vote “FOR” or “AGAINST” or to “ABSTAIN” from voting for each director Nominee. With respect to Proposals 2 and 3, you may choose to vote “FOR” or “AGAINST” or to “ABSTAIN” from voting. With respect to Proposal 4, you are given the choice of voting for a frequency of “ONE YEAR,”“TWO YEARS” or “THREE YEARS” or to “ABSTAIN” from voting. For specific information about a particular proposal, please refer to the section of this Proxy Statement that pertains to such proposal as indicated in the Table of Contents.
For shares held as a registered shareholder, if you sign the proxy card but do not make specific choices, the designated proxies will vote your shares as recommended by the Company’s Board of Directors. For shares held in street name, you should contact your broker (or other institution) to determine the method by which your shares will be voted if you sign the proxy card but do not make specific choices. The Board of Directors recommends that you vote “FOR” all of the director Nominees in Proposal 1 and “FOR” Proposals 2 and 3 and for a vote frequency of “ONE YEAR” in Proposal 4.3.
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What does it mean if I receive more than one proxy card? |
If your Kemper shares are held under different names or in more than one account, you will receive more than one proxy card. Each proxy card will indicate the number of shares you are entitled to vote on that particular proxy card.
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| | Frequently Asked Questions |
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What are broker non-votes and how might they affect voting? |
The applicable NYSE rules allow a stockbroker holding securities in street name for its customer to exercise discretionary voting power for those securities with respect to some matters (called “discretionary” matters) but not others (called “non-discretionary” matters), depending on the subject matter of the proposal being voted on. Broker non-votes can occur when a stockbroker does not receive voting instructions from its customer on a non-discretionary matter. Under the current NYSE rules, director elections and all matters related to executive compensation are considered non-discretionary matters for which brokers cannot vote undirected shares. Any shares you hold in street name will not be voted with regard to Proposals 1 3 and 43 unless you provide timely voting instructions to your broker. Under the NYSE rules, Proposal 2 is considered a discretionary matter for brokers, and a broker not receiving voting instructions from a customer will be free to cast a vote in its discretion as to this matter.
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How will voting on any other business be conducted? |
As of the date hereof, the Company’s management is aware of no business that will come before the Annual Meeting other than Proposals 1 through 43 as described in this Proxy Statement, and only the Board of Directors may introduce any additional business. However, if any other business should properly come before the Annual Meeting, your proxy card will authorize the persons designated as proxies to vote on any such matters in their discretion.
Kemper Corporation 2022 Proxy Statement 65
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| | Frequently Asked Questions |
Who will tabulate the votes, and how do I find out the voting results after the Annual Meeting?
Representatives of Broadridge Financial Solutions, Inc. will tabulate the votes and act as inspectors of election. The Company will report the voting results in a Current Report on Form 8-K that it will file with the SEC within four business days after the Annual Meeting.
May I revoke my proxy or change my voting instructions? |
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May I revoke my proxy or change my voting instructions? |
Shares held as a registered shareholder:
You may revoke your proxy or change your voting instructions for registered shares as follows:
•Deliver another signed proxy card with a later date anytimeany time prior to the commencement of the Annual Meeting;
•Notify the Company’s Secretary, C. Thomas Evans, Jr., in writing prior the commencement of the Annual Meeting that you have revoked your proxy;
•Call the toll-free telephone number, or access the proxy voting website, identified on the proxy card and re-vote any time prior to 10:59 p.m. Central Daylight Time on Tuesday,, May 2, 2017;3, 2022; or
•Attend the Annual Meeting in person and deliver a new, signed proxy card or ballot to one of the ushers when requested to do so.
Shares held through the 401(k) and Retirement Plan:
You may revoke your proxy or change your voting instructions for shares held through the 401(k) and Retirement Plan by completing any of the following:
•Deliver another signed proxy card with a later date prior to the 401(k) Deadline; or
•Call the toll-free telephone number, or access the proxy voting website, identified on the proxy card and re-vote anytimeany time prior to the 401(k) Deadline.
Shares held in street name:
You should contact your stockbroker (or other institution holding your shares) to determine the procedures, if any, for revoking or changing your voting instructions for shares held in street name.
name, including for shares held through the Employee Stock Purchase Plan. |
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Shareholder Proposals, Nominations and Communications |
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May a shareholder nominate someone at the Annual Meeting to be a director of Kemper or bring any other business before the 2017May a shareholder nominate someone at the Annual Meeting to be a director of Kemper or bring any other business before the 2022 Annual Meeting? |
The Company’s Bylaws require advance notice to the Company if a shareholder intends to attend an annual meeting of shareholders in person and to nominate someone for election as a director or to bring other business before the meeting. Such a notice may be made only by a shareholder of record who meets the requirements set forth in Article II, Section 1413 of the Company’s Bylaws and provides the required information in the notice within the time period described therein. Each year’s proxy statement states the applicable time period for providing such a notice for the next year’s annual meeting. The deadline for notices in relation to the 20172022 Annual Meeting has expired, and the Company did not receive any such notices that complied with the Bylaws requirements during the prescribed notice period. Accordingly, no such director nominations or other business proposed by shareholders from the floor of the 20172022 Annual Meeting will be in order. The procedures for shareholders to nominate directors or make other proposals relating to the 20182023 Annual Meeting are summarized below in the answers to the following two questions.
Kemper Corporation 2022 Proxy Statement 66
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How may a shareholder nominate someone to be a director of Kemper or bring any other business before the 2018 | | Frequently Asked Questions |
How may a shareholder nominate someone to be a director of Kemper or bring any other business before the 2023 Annual Meeting?
In accordance with the advance notice requirements of the Bylaws described above, if a shareholder of record wishes to nominate one or more directors or bring other business to be considered by shareholders at the 20182023 Annual Meeting, such proposals must be made in writing to the Company no earlier than February 2, 2018January 4, 2023 and no later than March 5, 2018.February 3, 2023. However, if the date of the 20182023 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the anniversary of the 20172022 Annual Meeting date (i.e., May 3, 2017)4, 2022), then such nominations and proposals must be delivered in writing to the Company no earlier than 90120 days prior to the 20182023 Annual Meeting and no later than the close of business on the later of (a) the 6090thday prior to the 20182023 Annual Meeting, or (b) the 10th day following the day on which public announcement of the date of the 20182023 Annual Meeting is first made.
In addition to satisfying the foregoing requirements under the Company’s Bylaws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than Kemper’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 5, 2023.
All shareholder proposals and notices should be submitted to the Secretary of Kemper Corporation, at One200 East Wacker Drive,Randolph Street, Suite 3300, Chicago, Illinois 60601.
Please note that these requirements relate only to matters intended to be proposed from the floor of the 20182023 Annual Meeting. They are separate from certain SEC requirements that must be met to have shareholder proposals included in the Company’s Proxy Statement, as described immediately below.
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When are shareholder proposals due so that they may be included in Kemper’s Proxy Statement for the 2018When are shareholder proposals due so that they may be included in Kemper’s Proxy Statement for the 2023 Annual Meeting? |
Pursuant to the regulations of the SEC that areregulation currently in effect, shareholders who intend to submit proposals for inclusion in the Company’s proxy materials for the 20182023 Annual Meeting must do so no later than November 22, 2017.23, 2022. Certain other SEC requirements must also be met to have a shareholder proposal included in the Company’s Proxy Statement. These requirements are independent of the advance notice requirements of the Company’s Bylaws described immediately above. Under SEC rules in effect on the date of this Proxy Statement, shareholder nominations of persons for election to the Board of Directors are not eligible for inclusion in the Company’s proxy materials. All shareholder proposals and notices should be submitted to the Secretary of Kemper Corporation, at One200 East Wacker Drive,Randolph Street, Suite 3300, Chicago, Illinois 60601.
How may a shareholder or other interested party communicate with the Board of Directors? |
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How may a shareholder or other interested party communicate with the Board of Directors? |
Shareholders and other interested parties may communicate with the Board of Directors, or with the non-management directors as a group, by calling the Kemper Corporate Responsibility Hotline at 888.695.3359 or by submitting a report or inquiry online at MyComplianceReport.com (enter access code KEMP).
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| | Frequently Asked Questions |
kemper.ethix360.com.
The hotline and the online reporting function are managed by an independent company, and reports can be made anonymously or confidentially. Communications will be directed to the Chair of the Nominating & Corporate Governance Committee if addressed to the non-management or independent directors as a group.
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Cost of Proxy Solicitation |
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What are the costs of soliciting these proxies and who pays them? |
The Company has retained the services of Innisfree M&A Incorporated (“Innisfree”) to aid in the solicitation of proxies and will pay Innisfree a base fee of $15,000 for these services, plus its related costs and expenses. The Company will bear the total expense of the solicitation that will include, in addition to the amounts paid to Innisfree, amounts paid for printing and postage and to reimburse banks, brokerage firms and others for their expenses in forwarding proxy solicitation material. Although the principal distribution of proxy materials will be through the Internet, solicitation of proxies will also be made by mail. Additional proxy solicitation may be made by telephone or other direct communication with certain shareholders or their representatives by directors, officers and employees of the Company and its subsidiaries, who will receive no additional compensation for such solicitation.
Kemper Corporation 2022 Proxy Statement 67
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Additional Information about Kemper and Householding Requests |
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Where can I find more information about Kemper? |
The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments thereto are accessible free of charge through its website, kemper.com, as soon as reasonably practicable after such materials are filed with or furnished to the SEC. You may also obtain at no charge a copy of the Company’s most recent Annual Report on Form 10-K, other materials filed with the SEC and additional information regarding Kemper as follows:
•Contact Kemper Investor Relations by telephone at 312.661.4930, or by e-mail at investors@kemper.com; or
•Write to Kemper at One200 East Wacker Drive,Randolph Street, Suite 3300, Chicago, Illinois 60601, Attention: Investor Relations.
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How may shareholders with the same address request delivery of either single or multiple copies of the Company’s Proxy Statement? |
If you and another shareholder who shares your address received multiple copies of this Proxy Statement, you may contact the Company as described above and request that a single copy be sent to your address for future deliveries of Company communications. This is commonly referred to as “householding.” If your proxy statement was “householded” but you prefer to receive separate copies, you may contact the Company as described above to request separate copies now or for future deliveries of Company communications.
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| | Incorporation by Reference |
Incorporation by Reference
Notwithstanding any general statement to the contrary set forth in any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate this Proxy Statement into such filings, the Audit Committee Report and the HR & Compensation Committee Report contained in this Proxy Statement are not to be incorporated by reference into any such filings, nor are they to be deemed soliciting material or deemed to be filed under such Acts.
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This Proxy Statement and the form of proxy are being mailed and delivered to the Company’s shareholders by the authority of the Board of Directors.
C. Thomas Evans, Jr.
Secretary
Supplement to Compensation Discussion and Analysis
The following table supplements the information in the table captioned Net Income Comparisons2021 Performance under the heading 20162021 Annual Incentive ProgramIncentives for 2021 on page 28:33:
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Non-GAAP Reconciliation |
($ in Millions) |
| 2016 Actual |
| | 2016 Target |
| | 2015 Actual |
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Net Income - As Reported | 16.8 |
| | 110.8 |
| | 85.7 |
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Adjustments, After-tax: | | | | | |
Normalize Catastrophe Losses and LAE including Development, from Reported to Expected | 27.5 |
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Normalize Realized Gains and Losses on Sales of Investments and Other-than-temporary Impairment Losses, from Reported to Expected | 6.2 |
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Remove: Initial Impact of Voluntarily Using Death Verification Databases (1) | 50.6 |
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Total Adjustments, After-tax | 84.4 |
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Adjusted Net Income | 101.2 |
| | 110.8 |
| | 78.3 |
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(1) Discussed in the Summary of Results section of Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2016 Annual Report. |
The following supplements the information included in the section about the 2014 Multi-Year Awards under 2009 Performance Incentive Plan under the subheading Performance Results and Payouts, beginning on page 31:
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Company Performance Criteria under 2014 Multi-Year PIP Awards to Messrs. Roeske and Sodaro: |
The Performance Criteria are the three-year(1) Calculated using average of Kemper’s consolidated (1) Revenue Growth (weighted 20%); and (2) Return on Equity (weighted 80%), as defined below. The Performance Criteria are subject to a Catastrophe Loss Collar as defined below:
Revenue Growth is defined as the three-year compound annual growth rate, calculated as [(A/B)^(1/3)-1], where A = Total Revenues excluding Net Realized Gains on Salesbeginning of Investments and Net Impairment Losses Recognized in Earnings as reported in the Company’s 2016 Annual Report and B = Total Revenues excluding Net Realized Gains on Sales of Investments and Net Impairment Losses Recognized in Earnings as reported in the Company’s 2013 Annual Report.
Return on Equity is defined as the return on average shareholders’ equity, which shall be computed by dividing the sum of GAAP Net Income, subject to the Catastrophe Loss Collar, as reported in the Company’s Annual Reports for each of the three years in the Performance Period by the sum of the Average Shareholders’ Equity for each of the three years.
Average Shareholders’ Equity is defined as the simple average of Total Shareholders’ Equity as reported in the Company’s Annual Reports, subject to the Catastrophe Loss Collar, for the beginningyear and end of year for each year.shareholders’ equity.
The
Catastrophe Loss Collar shall be computed as follows:
(a) If Catastrophe Losses and Loss Adjustment Expenses (“LAE”) (including Catastrophe reserve development) reported by the Property & Casualty Insurance segment (“Reported Catastrophe Losses and LAE”) are greater than 1.5 times the “Expected Catastrophe Losses and LAE” (as defined below) for the Property & Casualty Insurance segment (“Maximum Catastrophe Losses and LAE”), Net Income shall be increased by an amount equal to the after-tax difference between the Reported Catastrophe Losses and LAE and the Maximum Catastrophe Losses and LAE;
(b) If Reported Catastrophe Losses and LAE are less than 0.5 times the Expected Catastrophe Losses and LAE for the Property & Casualty Insurance segment (“Minimum Catastrophe Losses and LAE”), Net Income shall be reduced by an amount equal to the after-tax difference between the Minimum Catastrophe Losses and LAE and the Reported Catastrophe Losses and LAE; or
(c) If Reported Catastrophe Losses and LAE are less than the Maximum Catastrophe Losses and LAE and greater than the Minimum Catastrophe Loss and LAE, no adjustment shall be made to Net Income.
Expected Catastrophe Losses means the amounts specified in the Company’s management reports as “Planned” or “Expected” for the performance period for Catastrophe Losses and associated Loss Adjustment Expenses, including catastrophe reserve development.
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Definitions of Company Performance Criteria under 2014 Multi-Year PIP Award for Mr. Boschelli: |
The Target Multiplier applicable to the 2014 Multi-Year PIP Award to Mr. Boschelli was determined by computing a weighted average of the Target Multipliers derived for the following four performance criteria for the three-year performance period ending December 31, 2016 (“Performance Period”):
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Performance Criterion 1 | 3-Year Excess Return from Corporate Investments (v. WAPR)
(weighted 20%). This is determined by comparing the 3-year Kemper Total Investment Return to the results of a “Weighted Average Peer Return” (“WAPR”) for the Performance Period. Excess Return is expressed in basis points. A simple average was calculated of the return for each year in the Performance Period.
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Performance Criterion 2 | 3-Year Excess Return from Pension Investments (v. Benchmark) (weighted 5%). This was determined by comparing the 3-year Kemper Total Pension Return for Kemper’s Pension Portfolio to the 3-Year Strategic Portfolio Return for the Performance Period. Excess Return is expressed in basis points. A simple average was calculated of the return for each year in the Performance Period.
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Performance Criterion 3 | 3-Year Pre-Tax Equivalent Net Investment Income Yield
(weighted 50%) was computed by taking a simple average of the Pre-Tax Equivalent Net Investment Income Yield for the Performance Period. The calculation was determined as follows:
(a) Pre-Tax Equivalent Net Investment Income, divided by
(b) an average of Total Investments for the Performance Period.
Pre-Tax Equivalent Net Investment Income was computed by dividing:
(a) Net Investment Income on an after-tax basis taking into
consideration tax deductions for tax-preferenced net investment income by
(b) the sum of 100% minus Kemper's federal income tax rate.
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Performance Criterion 4 | 3-Year Kemper Consolidated Revenue Growth (20%) and Return on Equity (80%)(collectively weighted 25%). See definitions of key performance criteria under 2014 Multi-Year PIP Awards for Messrs. Roeske and Sodaro.
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Kemper Corporation
Notice of 20172022 Annual Meeting and Proxy Statement
kemper.com