Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on Wednesday, May 22, 2019. The Proxy Statement and Annual Report and Form 10-K (the “Proxy Materials”) are available at proxyvote.com. This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Horace Mann Educators Corporation (“HMEC,” the “Company” or “Horace Mann”) of proxies (that is, the authority to vote shares) from holders of the Company’s common stock, par value $.001 per share (“Common Stock”). The proxies will be voted at the Annual Meeting of Shareholders to be held on Wednesday, May 22, 2019 at 9:00 a.m. Central Daylight Saving Time at the Horace Mann Lincoln Auditorium, 1 Horace Mann Plaza, Springfield, Illinois 62715 and at any adjournment or postponement thereof (the “Annual Meeting”). The mailing address of the Company is 1 Horace Mann Plaza, Springfield, Illinois 62715-0001 (telephone number217-789-2500). This Proxy Statement and the proxy card are first being made available to Shareholders of the Company (“Shareholders”) on or about April 5, 2019. The Board has fixed the close of business on March 26, 2019 as the record date (the “Record Date”) for determining the Shareholders entitled to receive notice of and to vote at the Annual Meeting. At the close of business on the Record Date, an aggregate of 41,141,933 shares of Common Stock were issued and outstanding, each share entitling the holder thereof to one vote on each matter to be voted upon at the Annual Meeting. The presence, in person or by proxy, of the holders of a majority of such outstanding shares entitled to vote at the Annual Meeting is necessary to constitute a quorum for the transaction of business at the Annual Meeting. The Company, through bankers, brokers or other persons, also intends to make a solicitation of beneficial owners of Common Stock. At the Annual Meeting, Shareholders will be asked to: (1) elect 10 Directors named in the Proxy Statement to hold office forone-year terms continuing until the next Annual Meeting of Shareholders and until their respective successors have been duly elected and qualified; (2) approve the advisory resolution to approve Named Executive Officers’ (as defined on page 19 below) compensation; and (3) ratify the appointment of KPMG LLP, an independent registered public accounting firm, as the Company’s auditors for the year ending December 31, 2019. Shareholders may also be asked to consider and take action with respect to such other matters as may properly come before the Annual Meeting. Copies of the Company’s Annual Report and Form10-K for the year ended December 31, 2018 (“Annual Report”), including the Company’s audited consolidated financial statements, were made available to known Shareholders on or about March 1, 2019.
Your Proxy Vote How to Vote Go to www.proxyvote.com
| (1) | Via Internet: Go to proxyvote.com to vote via the Internet. You will need to follow the instructions on your Notice of Internet Availability of Proxy Materials (“Notice”) or proxy card and the website. If you vote via the Internet, you may incur telephone and Internet access charges. | | Phone
Call the toll-free telephone number on the proxy card or the website to vote by telephone. You will need to follow the instructions and the voice prompts.
| | Mail
Request, complete and return a paper proxy card, following the instructions on your Notice.
| | In Person
Attend the Annual Meeting, or send a personal representative with an appropriate proxy, to vote by ballot.
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Voting Matters and Board Recommendation
| | | Proposal | | Board Vote Recommendation | Elect Directors (page 3)
| | FOR each Director Nominee | Advisory Resolution to Approve Named Executive Officers’ Compensation
(page 11)
| | FOR | Advisory vote on the frequency of future advisory votes on Named Executive Officers’ compensation (page 12)
| | ONE YEAR | Ratification of Independent Registered Public Accounting Firm (page 34)
| | FOR |
Fiscal Year 2016 Business Highlights
The company delivered solid underlying financial results across all three segments of its business in 2016. Full year operating income was $1.97 per diluted share. Book value per share* increased 4% in 2016 driven by the solid operating results and positive contributions from investment portfolio performance. In addition, we achieved broad-based increases in new business sales and solid policy retentions during the past year. Total Shareholder Return was 32.9% in 2016 outperforming key insurance and general market indices.
*Excluding | the fair value adjustment for investments |
These results reflect significant progress on numerous strategic initiatives, including:
Increased sales levels year-over-year in all lines of business excluding retirement
New auto and property sales premium increased 6% and 5%, respectively
Strong auto and property retention ratios
Increased annuity assets under management by 7%
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HMEC’s 2016 Annual Report onForm 10-K for a more detailed description of these financial results.
Corporate and Executive Compensation Governance Highlights
Director Term: One year
Director Election Standard: Majority vote
Board Meetings in 2016: 5
Board Committees (Meetings in 2016):
Audit (12), Compensation (5), Executive (0); Investment & Finance (4), Nominating & Governance (4), Customer Experience & Technology (4)
Corporate Governance Materials: www.horacemann.com - Investors - Corporate Overview - Governance Documents
Board Communication:By mail to: Board of Directors, c/o Corporate Secretary, 1 Horace Mann Plaza, Springfield, Illinois 62715. By email to: hmecbofd@horacemann.com
Executive Compensation Governance:
Hedging transactions and pledging shares prohibited for all Directors and Executive Officers
Clawback provisions applicable to all Executive Officers for both cash and equity awards
Stock Ownership Requirements for all Directors and Executive Officers
Stock Option holding requirement post exercise
ANNUAL MEETING OF SHAREHOLDERS
Proxy Statement
Contents
General Information
| Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on Wednesday, May 24, 2017. The Proxy Statement and Annual Report to Shareholders and Form10-K (the “Proxy Materials”) are available at www.proxyvote.com.
|
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Horace Mann Educators Corporation (“HMEC”, the “Company” or “Horace Mann”) of proxies (that is, the authority to vote shares) from holders of the Company’s common stock, par value $.001 per share (“Common Stock”). The proxies will be voted at the Annual Meeting of Shareholders to be held on Wednesday, May 24, 2017 at 9:00 a.m. Central Daylight Saving Time at the Horace Mann Lincoln Auditorium, 1 Horace Mann Plaza, Springfield, Illinois 62715 and at any adjournment or postponement thereof (the “Annual Meeting”).
The mailing address of the Company is 1 Horace Mann Plaza, Springfield, Illinois 62715-0001 (telephone number217-789-2500). This Proxy Statement and the proxy card are being first made available to shareholders of the Company (“Shareholders”) on or about April 7, 2017.
The Board has fixed the close of business on March 28, 2017 as the record date (the “Record Date”) for determining the Shareholders entitled to receive notice of and to vote at the Annual Meeting. At the close of business on the Record Date, an aggregate of 40,472,265 shares of Common Stock were issued and outstanding, each share entitling the holder thereof to one vote on each matter to be voted upon at the Annual Meeting. The presence, in person or by proxy, of the holders of a majority of such
outstanding shares entitled to vote at the Annual Meeting is necessary to constitute a quorum for the transaction of business at the Annual Meeting. The Company, through bankers, brokers or other persons, also intends to make a solicitation of beneficial owners of Common Stock.
At the Annual Meeting, Shareholders will be asked to: (1) elect nine Directors named in the Proxy Statement to hold office until the next Annual Meeting of Shareholders and until their respective successors have been duly elected and qualified; (2) approve the advisory resolution to approve Named Executive Officers’ compensation; (3) provide an advisory vote on the frequency of future advisory votes on Named Executive Officers’ compensation; and (4) ratify the appointment of KPMG LLP, an independent registered public accounting firm, as the Company’s auditors for the year ending December 31, 2017.
Shareholders may also be asked to consider and take action with respect to such other matters as may properly come before the Annual Meeting.
Copies of the Company’s Annual Report on Form10-K for the year ended December 31, 2016 (“Annual Report”), including the Company’s audited consolidated financial statements, were made available to known Shareholders on or about March 1, 2017.
| | | 2017 Proxy Statement • General Information | | 1 |
Your Proxy Vote
How to Vote
(1) | Via Internet: Go to www.proxyvote.com to vote via the Internet. You will need to follow the instructions on your Notice of Internet Availability of Proxy Materials (“Notice”) or proxy card and the website. If you vote via the Internet, you may incur telephone and Internet access charges. |
| (2) | By Telephone: Call the toll-free telephone number on the proxy card or the website to vote by telephone. You will need to follow the instructions and the voice prompts. |
| (3) | By Mail: Request, complete and return a paper proxy card, following the instructions on your Notice. |
| (4) | In Person: Attend the Annual Meeting, or send a personal representative with an appropriate proxy, to vote by ballot. |
If you vote via the Internet or by telephone, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned your proxy card.If you vote via the Internet or by telephone, do not return your proxy card. If your shares are held in “street name” (that is, in the name of a bank, broker or other holder of record), you will receive a Notice containing instructions from the holder of record that you must follow in order for your shares to be voted. Internet and/or telephone voting also will be offered to Shareholders owning shares through most banks and brokers. Participants in the Company’s stock fund within the Horace Mann Service Corporation Supplemental Retirement and Savings 401(k) Plan can direct the trustee to vote their shares via the Internet as directed in the Notice, by telephone as provided on the website or proxy card, or by signing and returning a proxy card. Voting Rules Solicitation and Revocation Your proxy is being solicited by and on behalf of the Board. The persons named in the Form of Proxy have been designated as proxies by the Board. Such persons are Directors of the Company. Shares of Common Stock represented at the Annual Meeting by a properly executed and returned proxy will be voted at the Annual Meeting in accordance with the instructions noted thereon, or if no instructions are noted, the proxy will be voted in favor of the proposals set forth in the Notice of Annual Meeting. A submitted proxy is revocable by a Shareholder at any time prior to it being voted, provided that such Shareholder gives written notice to the Corporate Secretary at or prior to the Annual Meeting that such Shareholder intends to vote in person or by submitting a subsequently dated proxy. Attendance at the Annual Meeting by a Shareholder who has given a proxy shall not in and of itself constitute a revocation of such proxy. Further solicitation may be made by officers and other employees of the Company personally, by telephone or otherwise, but such persons will not be specifically compensated for such services. Banks, brokers, nominees and other custodians and fiduciaries will be reimbursed for their reasonableout-of-pocket expenses in forwarding soliciting material to their principals, the beneficial owners of Common Stock. The costs of soliciting proxies will be borne by the Company. It is estimated these costs will be nominal. Shareholder Approval Shareholders are entitled to one vote per share of Common Stock on all matters submitted for consideration at the Annual Meeting. Under the Company’s Bylaws, the affirmative vote of a majority of the shares of Common Stock represented in person or by proxy at the Annual Meeting is required for the election of Directors, approval of the advisory resolution to approve Named Executive Officers’ compensation, the advisory vote on the frequency of future advisory votes on Named Executive Officers’ compensation and the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017.2019. Abstentions have the same effect as a vote “against” approval of the matter. Please note that under New York Stock Exchange (“NYSE”) rules, brokers who hold | | | | 2 | | 2019 Proxy Statement • Your Proxy Vote |
shares of Common Stock in street name for customers have the authority to vote on certain items when they have not received instructions from beneficial owners. With respect to the matters to come before the Annual Meeting, if brokers are not entitled to vote without instructions and therefore cast brokernon-votes, the brokernon-votes will have no direct effect on the outcome of the vote. However, because each matter requires a majority vote of the outstanding shares present and entitled to vote, a brokernon-vote will indirectly work against the matter for which a brokernon-vote is cast. For this Annual Meeting, if you do not give specific instructions, your broker may cast your vote in its discretion on only Proposal No. 43 - Ratification of Independent Registered Public Accounting Firm. Other Matters Other than the matters set forth below, the Board has not received any Shareholder proposal by the deadline prescribed by the rules of the SEC,Securities and Exchange Commission (“SEC”), and otherwise knows of no other matters to be brought before the Annual Meeting. However, should any other matters properly come before the meeting, the persons named in the Form of Proxy will vote or refrain from voting thereon at their discretion. | | | 2 | | 20172019 Proxy Statement • Your Proxy Vote | | 3 |
Proposals and Company Information PROPOSAL NO. 1 - ELECTION OF NINE10 DIRECTORS The Bylaws of the Company provide for the Company to have not less than five or more than fifteen15 Directors. The following nine persons currently are serving as Directors of the Company (“Directors”): Daniel A. Domenech, Stephen J. Hasenmiller, Ronald J. Helow, Perry G. Hines, Beverley J. McClure, H. Wade Reece, Gabriel L. Shaheen, Robert Stricker, Steven O. Swyers and Marita Zuraitis. The terms of these Directors expire at the Annual Meeting. Board Qualifications The Board of Directors believes it is necessary for each of the Company’s Directors to possess a variety of qualities and skills. The Nominating & Governance Committee conducts all necessary and appropriate inquiries into the background and qualifications of Board candidates, including the determination of their independence. In addition, the Nominating & Governance Committee has identified areas of expertise that it believes support the Company’s business strategy in the short and long-term, enable the Board to exercise its oversight function and contribute to a well-rounded Board. The list below highlights certain key qualifications and experience of our current Board. | | | | | ✓ Education | | ✓ Technology | | ✓ Leadership | ✓ Niche Market | | ✓ Financial Services | | ✓ Financial Expert | ✓ Insurance Operations | | ✓ Customer Experience | | ✓ Investments | ✓ Agency Management | | ✓ Insurance Brokerage | | ✓ Brand & Marketing |
Board Diversity, Age and Tenure The Nominating & Governance Committee believes that it is important that the Board be comprised of individuals with expertise in fields relevant to the Company’s business, experience from different professions, a diversity of age, ethnicity and gender, and a range of tenures. The Nominating & Governance Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of new Board members as well as the composition of the Board as a whole. This assessment includes members’ qualifications as independent,consideration of experience, perspective, background, skill sets, age, ethnicity, and gender makeup of the current Board as well as considerationthe candidate’s individual qualities in leadership, character judgment and ethical standards. It also assesses the effectiveness of skills, experience, diversity and ageour interest in the context of the needs of the Board. diverse candidates. | | | | 4 | | 2019 Proxy Statement • Proposals and Company Information |
The Nominating & Governance Committee does not havebelieves our Board Nominees (as identified below) represent a formaldiverse base of perspectives and reflect the diversity policy; however,of the Company’s employees, customers and Shareholders, as well as an appropriate level of age and tenure, as further illustrated below. 
Board Refreshment The Board and Nominating & Governance Committee regularly consider the long-term makeup of the Board and how the members of the Board change over time. The Board and Nominating & Governance Committee understand the importance of Board refreshment and strive to balance the knowledge that comes from longer-term service on the Board with the new experience, ideas and energy that can come from adding directors to the Board. Directors who are 75 years of age or older may not stand for election in the absence of a specific finding by the Board that there are special circumstances to justify an exception, which supports Board refreshment. Mr. Helow has reached 75 years of age and is, therefore, not standing for election. As Horace Mann continues to focus on profitable growth across all lines of business, the integration of Benefit Consultants Group, Inc. (“BCG”), which closed in January, and NTA Life Enterprises, LLC (“NTA”), which we anticipate will close in the middle of this year following required regulatory approvals, and the ongoing transformation of its technology and operations, we continue to consider Board refreshment opportunities. Indeed, in light of Ron Helow’s retirement from the Board and in order to ensure the Board has the background skills necessary to support Horace Mann’s continued growth, the Nominating & Governance Committee believe that it is essential thatrecommended, and the Board approved, the addition of two new Board members, represent diverse viewpoints. The Nominating & Governance Committee assessesMark Konen and Mark Casady. Mr. Konen has extensive experience in the effectivenessinsurance industry, specifically in the life and annuity business. Most recently, Mr. Konen served as President of the criteria described above when evaluating new Board candidatesInsurance and when assessingRetirement Solutions division of Lincoln Financial Group. Mr. Casady is a general partner with Vestigo Ventures, a FinTech venture capital fund. He has significant experience with technology and innovation. He served as the compositionChairman of the Board as a whole.and Chief Executive Officer of LPL Financial, one of the nation’s leading independent broker dealers. | | | | 2019 Proxy Statement • Proposals and Company Information | | 5 |
Board Nominees Upon the recommendation of the Nominating & Governance Committee, the Board nominated Mr. Casady, Dr. Domenech, Mr. Hasenmiller, Mr. Helow,Hines, Mr. Konen, Ms. McClure, Mr. Reece, Mr. Shaheen, Mr. Stricker, Mr. Swyers and Ms. Zuraitis (the “Board Nominees”) to hold office as Directors. The proxies solicited by and on behalf of the Board will be voted “FOR” the election of the Board Nominees unless you specify otherwise. The Company has no reason to believe that any of the foregoing Board Nominees is not available to serve or will not serve if elected, although in the unexpected event that any such Board Nominee should become unavailable to serve as a Director, full discretion is reserved to the persons named as proxies to vote for such other persons as may be nominated, or the Board may reduce the size of the Board. Each Director will serve until the next Annual Meeting of Shareholders and until his or her respective successor is duly elected and qualified. Board Nominees
The following information, as of March 15, 2017,2019, is provided with respect to each Board Nominee: | | | | | | | | |  | | Mark S. Casady Age: 58 Board Nominee | | Mr. Casady was Chairman and Chief Executive Officer of LPL Financial Holdings, Inc. (“LPL Financial”), an independent broker dealer, until his retirement in 2017. He joined LPL Financial as Chief Operating Officer in 2002, became President in 2003 and Chairman and Chief Executive Officer at the end of 2005. Before joining LPL Financial, Mr. Casady was managing director of the mutual fund group for Deutsche Asset Management, Americas - formerly Scudder Investments, which he joined in 1994. In 2016, heco-founded Vestigo Ventures, a venture capital firm, which focuses on financing FinTechstart-ups. He is General Partner and Chairman of the Advisory Board of Vestigo Ventures. Mr. Casady currently serves on the Board of Directors of Citizens Financial Group, Inc. He previously served on the Board of Directors of Eze Software Group and the Financial Industry Regulatory Authority (FINRA) Board of Governors. Mr. Casady also served as the former Chairman of the Insured Retirement Institute. Mr. Casady’sin-depth knowledge of data management and technology, including cybersecurity, will bring a unique perspective and assist the Board with its oversight responsibilities. |
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| | | | | | | |  | | Daniel A. Domenech Age: 7173 Director Since: 2015 Horace Mann Committees: Customer Experience & Technology Nominating & Governance | | Dr. Domenech has served as the Executive Director of American Association of School Administrators, (“AASA”), The School Superintendents Association, a professional organization for educational leaders, since July 2008. He is currently Chairman of the Board of the Communities in Schools of Virginia and the National Student Clearinghouse Research Center and is a member of the Board of Directors of Learning First Alliance, America’s Promise, the Center for Naval Analyses, ACT and Universal Service Administrative Company (“USAC”).where he Chairs the Schools and Libraries Committee. Dr. Domenech is also a past President of the New York State Council of School Superintendents, the Suffolk County Superintendents Association and the Suffolk County Organization for Promotion of Education, and was the first President and cofounderco-founder of the New York State Association for Bilingual Education. In addition, he has previously served on the U.S. Department of Education’s National Assessment Governing Board, on the Advisory Board for the Department of Defense schools, on the Board of Directors for the Baldrige Award and on the National Board for Professional Teaching Standards. Dr. Domenech has more than 40 years of experience in public education. Dr. Domenech’s experience in public education provides the Board with valuable insight into the Company’s niche market and the challenges and opportunities within that market. |
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| | Stephen J. Hasenmiller Age: 6769 Director Since: 2004 Horace Mann Committees: Compensation (Chair) ExecutiveAudit
Nominating & GovernanceExecutive
| | Mr. Hasenmiller retired in March 2001 after 24 years of service at The Hartford Financial Services Group, Inc., an investment and insurance company, as Senior Vice President - Personal Lines. Mr. Hasenmiller’s prior affiliations include his tenure as Chairman of the Personal Lines Committee of the American Insurance Association (1999-2001) and membership on the Boards of Directors of the Institute for Business & Home Safety (1996-2001) and the Insurance Institute for Highway Safety (1995-2001). Mr. Hasenmiller’s seasoned insurance background in the personal lines business, including both direct sales and agency distribution, as well as his understanding and experience in dealing with complex insurance issues, provides the Board with a valuable perspective. |
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| | | | | | | |  | | Ronald J. HelowPerry G. Hines
Age: 7256 Director Since: 20092018 Horace Mann Committees: Customer Experience & Technology (Chair) AuditTechnology
ExecutiveInvestment & Finance
| | Mr. HelowHines is managing directora retired corporate marketing executive and is the principal and owner of New Course Advisors, a consulting firm he founded in 2008 to advise companies on how to use advanced technologies to create a competitive advantage. Mr. Helow served from 2001 to 2008 as Partner and Chief Technology Officer at NxtStar Ventures,The Hines Group, LLC, a firm providinghe formed in 2006 specializing in marketing, communications and strategic planning. He has over 27 years of cross-sector experience in general management, brand, communications and marketing. Mr. Hines previously served as Senior Vice President, Chief Marketing and Communications Officer for Irwin Mortgage Corporation, a position he held from 2002 to 2007, Senior Vice President, Chief Marketing and Sales Officer of Lincoln Reinsurance Corporation from 1998 to 2002 and Vice President of Marketing & Communications of Safeco from 1995 to 1998. He has held numerous management roles and stewarded well-known household brands. In addition to his consulting services to life insurance and retail financial services businesses, and founded Registry Systems Corporation in 1990 to custom design and implement mission critical projects using advanced computer technologiespractice, he currently serves as the Director of Advancement for insurance companies.Covenant Christian High School. Mr. Helow’s past experienceHines’ cross-sector expertise in developinggeneral management, brand building and securing solutions to insurance company operating challenges through technologystrategic marketing brings unique perspective and insight to the Board unique knowledge and perspective.Board. | | | |  | | Mark E. Konen Age: 60 Board Nominee | | Mr. Konen retired from Lincoln Financial Group, a financial services company, in February 2017 as President of the Insurance and Retirement Solutions division, a position he had held since 2008. He was responsible for all aspects of strategic leadership, product development, and client services as well as profitability management of the individual life insurance, group protection and retirement plan services businesses. He oversaw Lincoln Financial Group’s individual life and annuity business as President, Individual Markets, from 2006 to 2008. Prior to its merger with Lincoln Financial Group in 2006, he served in various senior management positions with Jefferson Pilot Financial. Mr. Konen is currently a member of the Board of Directors of Lincoln Life & Annuity Company of New York. Mr. Konen’s35-year insurance career, extensive background and proven leadership in the life and retirement business will provide the Board with a valuable perspective. |
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| | | | | | | |  | | Beverley J. McClure Age: 6264 Director Since: 2013 Horace Mann Committees: Nominating & Governance (Chair) Audit Compensation Customer Experience & Technology | | Ms. McClure retired in 2007 after a 35 year35-year career with United Services Automobile Association, (“USAA”),a diversified financial services group, as Senior Vice President, Enterprise Operations. She is the owner of Fresh Perspectives LLC, a firm she founded in 2007 which specializes in executive coaching and small business consulting. Ms. McClure previously served as Senior Advisor of Endeavor Management, a consulting firm specializing in service culture creation, leadership coaching, business transformation, operational execution, and customer experience management, a position she held from 2010 to 2013. She holds the Chartered Life Underwriter and Fellow and Life Management Institute designations and is a certified executive coach through the International Coach Federation.designations. Ms. McClure’s broad experience in the areas of service excellence, customer experience, culture creation, employee engagement and quality management provides the Board with a valuable perspective. |
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| | H. Wade Reece Age: 6062 Director Since:2016 Horace Mann Committees: Customer ExperienceExecutive (Chair)
Compensation Nominating & Technology Investment & FinanceGovernance
| | Mr. H. Wade Reece retired in 2015 after a 37 year37-year career with BB&T Corporation (“BB&T”) where he served as the Chairman of the Board and Chief Executive Officer of BB&T Insurance Services, Inc. and BB&T Insurance Holdings, Inc., the sixth largest insurance broker globally. Until his retirement in 2015, Mr. Reece served as Vice Chairman of the Foundation of Agency Management Excellence (“FAME”) Board of Directors and a member of the Executive Committee of The Institutes (American Institute for Chartered Property Casualty Underwriters and Insurance Institute of America). He was also a past Chairman of the Council of Insurance Agents & Brokers and past Chairman of the Board of Trustees of The Institutes. Mr. Reece currently is a member of the Board of Directors of the North Carolina State University Foundation and the Blue Ridge Conservancy. Mr. Reece’sin-depth knowledge of the insurance industry, leadership skills and broad experience with agency management will provideprovides the Board with industry insight and perspective. |
| | | 
2019 Proxy Statement • Proposals and Company Information | | Gabriel L. Shaheen
Age: 63
Director Since: 2007
Chairman Since: 2010
Horace Mann Committees:
Executive (Chair)
Nominating & Governance (Chair)
Compensation9
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| | Mr. Shaheen retired in 1999 after 22 years of service with Lincoln National Corporation, including service as President and Chief Executive Officer of Lincoln National Life Insurance Company, Managing Director of Lincoln UK, and President and Chief Executive Officer of Lincoln National Reinsurance Companies. Since 2000, he has been Chief Executive Officer of GLS Capital Ventures, LLC and Partner of NxtStar Ventures, LLC, firms providing consulting services to life insurance and retail financial services businesses. He is currently a member of the Board of Directors of M Financial Holdings Incorporated and of Steel Dynamics, Inc., one of the largest steel producers and metals recyclers in the United States. Mr. Shaheen holds the Fellow of the Society of Actuaries designation.
Mr. Shaheen’s insurance experience, technical insurance expertise and leadership background are valuable Board resources and contribute to Board discussion of issues impacting the Company.
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| | Robert Stricker Age: 7072 Director Since: 2009 Horace Mann Committees: Investment & Finance (Chair) Customer Experience & Technology | | Mr. Stricker retired from Shenkman Capital Management, Inc., an investment management firm, in March 2009 as Senior Vice President and Principal. Prior to joining Shenkman, he served as Managing Director, Head of U.S. Fixed Income, Citigroup Asset Management at Citigroup, Inc. from 1994 to 2001. Mr. Stricker has over 40 years of experience in the financial services industry. He currently serves as a Director of the CQS Directional Opportunities Feeder Fund Ltd. and on the OPEB Trust Board of the town of Greenwich, Connecticut. Mr. Stricker holds the Chartered Financial Analyst designation. Mr. Stricker’s investment knowledge and financial services industry experience provide the Board with financial insights and assist the Board in its oversight responsibilities. |
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| | Steven O. Swyers Age: 6668 Director Since: 2014 Horace Mann Committees: Audit (Chair) Executive Investment & Finance | | Mr. Swyers retired in 2013 after a 40 year40-year career with PricewaterhouseCoopers LLP (“PwC”), a public accounting firm. During this time with PwC, he served as the lead engagement partner on many national and international companies, including those in the financial services industry. He has also held various leadership positions at PwC, including leader of the Central Region’s consumer and industrial products business segment and managing partner of theirits St. Louis practice. He is currently a member of the Board of Directors of Mercy Health East Communities and Webster University.Communities. Mr. Swyers holds the Certified Public Accountant designation. Mr. Swyers has an extensive audit and accounting background and is recognized as a financial expert. His knowledge in these areas assists the Board in its oversight responsibilities. |
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| | Marita Zuraitis Age: 5658 Director Since: 2013 Horace Mann Committees: Customer Experience & Technology Executive Investment & Finance | | Ms. Zuraitis was appointed to her present position as President and Chief Executive Officer of the Company in September 2013. She joined2013 after joining the Company in May 2013 as President and Chief ExecutiveOfficer-Elect. Ms. Zuraitis joinedcame to Horace Mann from The Hanover Insurance Group where she was an Executive Vice President and a member of The Hanover’s Executive Leadership Team. From 2004 to 2013, she served as President, Property and Casualty Companies, responsible for the personal and commercial lines operations at Citizens Insurance Company of America, The Hanover Insurance Company and their affiliates.Group. Prior to 2004, Ms. Zuraitis was with The St. Paul/Travelers Companies for six years, where she achieved the position of President and Chief Executive Officer, Commercial Lines. She also held a number of increasingly responsible underwriting and field management positions with United States Fidelity and Guaranty Company and Aetna Life and Casualty. She is a member of the Board of Directors of LL Global, Inc., a trade association with operating divisions LIMRA and LOMA, and a member of the Board of Trustees of The Institutes, the leading provider of risk management and property-casualty insurance education, whose offerings include the premier CPCU® designation.designation, and a past member of the Board of Directors of LL Global, Inc., a trade association with operating divisions LIMRA and LOMA. She is also a member of the Board of Directors of Citizens Financial Group, Inc. Ms. Zuraitis has over 30 years of experience in the insurance industry. Ms. Zuraitis’s knowledge of and extensive background in the insurance industry contribute to Board discussion and understanding of issues impacting the Company. |
All of the Board Nominees were elected Directors at the last Annual Meeting of Shareholders of the Company held on May 25, 2016.23, 2018, with the exception of Mr. Casady and Mr. Konen, who were recommended for nomination as Directors by the Company’s Nominating and Governance Committee. The Board recommends that Shareholders vote FOR the election of these nine10 nominees as Directors. | | | 6 | | 20172019 Proxy Statement • Proposals and Company Information | | 11 |
Board of Directors and Committees There were nine members on the Board as of March 15, 2017.2019. The Board met fivesix times during 2016.2018. No Director of the Company attended fewer than 75% of the Board meetings and the committee meetings to which he or she was appointed and served during 2016.2018. The Chairman of the Board presides over all executive sessions of the Board, including executive sessions ofnon-employee Directors, and may be contacted as described in “Corporate Governance - Communications with Directors”.Directors.” The members of the Board are expected to be present at the Annual Meeting. The following eightnine Directors serving on the Board at the time of last year’s Annual Meeting attended the meeting: Dr. Domenech, Mr. Hasenmiller, Mr. Helow, Ms. McClure, Mr. Reece, Mr. Shaheen, Mr. Stricker, Mr. Swyers and Ms. Zuraitis. Committees of the Board The standing committees of the Board consist of the Executive Committee, Compensation Committee, Nominating & Governance Committee, Investment & Finance Committee and Audit Committee. Each standing committee is governed by a charter that defines its role and responsibilities which are available on the Company’s website at www.horacemann.cominvestors.horacemann.com under “Investors - Corporate“Corporate Overview - Committee Composition and Charters”.Charters.” A printed copy of these charters may be obtained by Shareholders upon written request addressed to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza,C-120,C-738, Springfield, Illinois 62715-0001. The Board may also form ad hoc committees from time to time. TheExecutive Committee exercises certain powers of the Board during intervals between meetings of the Board and, as requested by the Chief Executive Officer, acts as a sounding board for discussing strategic and operating issues. TheCompensation Committee approves and recommends to the Board the compensation, salaries, bonuses and awards applicable to the Executive Officers and Directors of the Company and oversees the process of Executive Officer leadership development and succession. Each of the current members of this Committee isare independent under the listing standards of the NYSE applicable to compensation committee members. The Compensation Committee receives recommendations from management regarding compensation matters and has unrestricted access to the Company’s personnel documents and to reports or evaluations of any independent compensation consultants, specialists or advisors who are retained by the Company or the Compensation Committee to analyze the compensation of the Executive Officers and members of the Board. The Compensation Committee also has access to any other resources which it needs to discharge its responsibilities, including selecting, retaining and/or replacing, as needed, compensation consultants and other outside consultants to provide independent advice to the Compensation Committee. Additional information regarding the processes and procedures for the consideration and determination of Executive Officer compensation is provided in the “Compensation Discussion and Analysis”.Analysis.” TheNominating & Governance Committee develops and recommends to the Board corporate governance principles applicable to the Company, oversees the Board succession planning process, and recommends Director candidates to the Board. The Nominating & Governance Committee will consider Director candidates recommended by Shareholders. Candidates may be submitted in writing to the Corporate Secretary, Horace Mann Educators Corporation, 1 Horace Mann Plaza, Springfield, Illinois 62715-0001. There are no differences between the evaluation of candidates recommended by Shareholders and the evaluation of candidates recommended by members of the Nominating & Governance Committee. The Committee does not have any specific, minimum qualifications that nominees must meet, but evaluates possible nominees to the Board on the basis of the factors it deems relevant, including the following: high standards of personal character, conduct and integrity; | | | | 12 | | 2019 Proxy Statement • Proposals and Company Information |
an understanding of the interests of the Company’s Shareholders, clients, employees, agents, suppliers, communities and the general public; the intention and ability to act in the interest of all Shareholders; a position of leadership and substantial accomplishment in his or her field of endeavor, which may include business, government or academia; the ability to understand and exercise sound judgment on issues related to the goals of the Company; a willingness and ability to devote the time and effort required to serve effectively on the Board, including preparation for and attendance at Board and committee meetings; the absence of interests or affiliations that could give rise to a biased approach to directorship responsibilities and/or a conflict of interest, and the absence of any significant business relationship with the Company except for the employment relationship of an employee Director; and the needs of the Board, including skills, experience, diversity and age. TheInvestment & Finance Committee approves investment strategies, monitors the performance of investments made on behalf of the Company and its subsidiaries, and oversees issues and decisions relating to the Company’s capital structure. | | | 2017 Proxy Statement • Proposals and Company Information | | 7 |
TheAudit Committee oversees the accounting and financial reporting process, audits of the financial statements, and internal operating controls of the Company. It meets with both the Company’s management and the Company’s independent registered public accounting firm. Each of the current members of this Committee is independent under the independence standards of the NYSE applicable to audit committee members. No Audit Committee member serves on the audit committee of more than three other publicly traded companies. The Board has determined that Mr. Swyers, the Chair of our Audit Committee, is a financial expert. Mr. Swyers retired in 2013 from PricewaterhouseCoopers LLP,PwC, a public accounting firm, after a 40 year40-year career where he served as the lead engagement partner on many national and international companies, including those in the financial services industry. He has also held various leadership positions including leader of the PwC Central Region’s consumer and industrial products business segment and managing partner of theirPwC’s St. Louis practice. TheCustomer Experience & Technology Committeeis an ad hoc committee formed by the Board during 2013. The Committee oversees the Company’s goals and strategies related to improving and managing the customer experience, as well as the development and implementation of the Company’s technology strategies. Considering the importance of technology advancement, this ad hoc Committee will be replaced by a formal Technology Liaison role to ensure continued focus on cybersecurity and technology issues, which we believe are important to Horace Mann’s ongoing success. The Technology Liaison will be a Board member that has experience and expertise with respect to cybersecurity and technology issues. Fundamentally, the Technology Liaison’s role will be to ensure effective Board oversight on cybersecurity and technology issues in light of the increasing costs and risks associated with technology investment and cybersecurity. Horace Mann anticipates the Board will nominate Mark Casady to this role following the Annual Meeting of Shareholders. | | | | 2019 Proxy Statement • Proposals and Company Information | | 13 |
The following table identifies membership and the Chairman of each of the current committees of the Board, as well as the number of times each committee met during 2016.2018. | | | | | | | | | | | | | | | | | Director | | Executive
Committee | | Compensation Committee | | Nominating & Governance
Committee | | Investment & Finance
Committee | | Audit
Committee | | Customer
Experience & Technology
Committee (1) | | Executive
Committee | | Compensation Committee | | Nominating & Governance
Committee | | Investment & Finance
Committee | | Audit
Committee | | Customer
Experience & Technology
Committee (1) | | | | | | | | | | Daniel A. Domenech | | | | | | X | | | | | | X | | | | | | X | | | | | | X | | | | | | | | | | Stephen J. Hasenmiller | | X | | Chair | | X | | | | | | | | X | | Chair | | | | | | X | | | Ronald J. Helow | | X | | | | | | | | X | | Chair | | | | | | | | | | | Perry G. Hines | | | | | | | | | X | | | | X | | | | | | | | | | Beverley J. McClure | | | | X | | | | | | X | | X | | | | X | | Chair | | | | X | | X | | | | | | | | | | H. Wade Reece | | | | | | | | X | | | | X | | Chair | | X | | X | | | | | | | Gabriel L. Shaheen | | Chair | | X | | Chair | | | | | | | | | | | | | | | | | Robert Stricker | | | | | | | | Chair | | | | X | | | | | | | | Chair | | | | X | | | | | | | | | | Steven O. Swyers | | | | | | | | X | | Chair | | | | X | | | | | | X | | Chair | | | | | | | | | | | | Marita Zuraitis | | X | | | | | | X | | | | X | | X | | | | | | X | | | | X | Meetings in 2016 | | 0 | | 5 | | 4 | | 4 | | 12 | | 4 | | | | | | | | | | | | Meetings in 2018 | | | 2 | | 6 | | 4 | | 4 | | 12 | | 4 |
Chair - Committee Chair X - Committee member | (1) | The Customer Experience & Technology Committee is an ad hoc committee. |
| | | 814 | | 20172019 Proxy Statement • Proposals and Company Information |
Director Compensation The Compensation Committee (the “Committee”) reviews compensation to be paid to the Company’snon-employee Directors. The Committee retained Compensation Advisory Partners LLC (“CAP”) as independent compensation consultants to provide information and advice to the Committee regardingnon-employee Director compensation. CAP analyzes each element of director compensation for the same peer group of companies that is used to evaluate executive compensation. See “Compensation levels should be market competitive” in the Compensation Discussion & Analysis for a list of these peer companies. CAP also considersnon-employee Director compensation in the insurance industry and the broader general industry, as appropriate. The Committee reviews CAP’s report of competitive Director compensation and determines whether to recommend to the Board a change in the Company’snon-employee Director compensation. If such a change is recommended by the Committee, the full Board would then determine whether to ratify the change. The Compensation Committee’s current practice is to reviewnon-employee Director compensation every other year. In 2018, the Compensation Committee did not recommended any changes tonon-employee Director compensation. The compensation program fornon-employee Directors is shown in the following table: | | | | | Compensation Element | | Non-Employee Director Compensation (1)(2) | | | Board Chairman Annual Retainer | | $115,000 | | | Board Member Annual Retainer
(other than Board Chairman) | | $60,000 | | | Committee Chairman Annual Retainer | | $25,000 Audit Committee $15,000 Compensation Committee $12,000 Nominating & Governance Committee $15,000 Customer Experience & Technology Committee
$10,000 all other Committees (3)15,000 Investment & Finance Committee $12,000 Nominating & Governance Committee | | | Committee Member Annual Retainer
(other than Committee Chairman) | | $10,000 Audit Committee $ 7,500 all other Committees (3) | | | Share-based Compensation | | Fair value on the date of the respective awards is used to determine the number of Restricted Stock Units (“RSUs”) awarded. An annual award of $95,000 in RSUs following the Annual Shareholder Meeting. $95,000 in RSUs if joining the Board within 6six months after the prior Annual Shareholder Meeting, $47,500 in RSUs if joining more than 6six months after the prior Annual Shareholder Meeting but before the next Annual Shareholder Meeting. All awards have a 1 year1-year vesting period. | | | Basic Group Term Life Insurance | | Premium for $10,000 face amount | | | Business Travel Accident Insurance | | Premium for $100,000 coverage |
| (1) | Annual retainer fees are paid following the Annual Shareholder Meeting each year. The annual retainer fees are prorated to the extent that anon-employee Director joins the Board after the Annual Shareholder Meeting. |
| (2) | Non-employee Directors may elect to defer cash compensation into Common Stock equivalent units (“CSUs”).RSUs. |
| (3) | All other Committees except for the Executive Committee, which is not paid an Annual Retainer. |
| | | | 2019 Proxy Statement • Proposals and Company Information | | 15 |
| | | Non-employee Directors are required to hold shares of HMEC Common Stock with a book value equal to five times their annual cash retainer. | | |
Untilnon-employee Directors meet this ownership requirement, they must retain all Common Stock equivalent units and Restricted Stock UnitsRSUs granted as share-based compensation (net of taxes). AllAs of December 31, 2018, allnon-employee Directors have met the guidelines with the exception of Mr. Swyers,Reece, due to his tenure and elevation to Chairman in 2018, and Mr. Hines, who joined the Board in 2014, Dr. Domenech, who joined the Board in 2015, and Mr. Reece, who joined the Board in 2016.2018. They have 5five years to meet this requirement. Employee Directors do not receive compensation for serving on the Board and are subject to separate stock ownership guidelines. See “Compensation Discussion and Analysis – Stock–Stock Ownership and Holding Requirements”.Requirements.” | | | 2017 Proxy Statement • Proposals and Company Information | | 9 |
The following table sets forth information regarding compensation earned by, or paid to, thenon-employee Directors during 2016:2018: | | | | | | | | | | | | | | | Director | | Fees Earned
or Paid in Cash ($) | | | Stock Awards
($) (1) | | | All Other
Compensation
($) (2) | | | Total
($) | | | Fees Earned
or Paid in Cash ($) | | Stock Awards
($) (1) | | All Other
Compensation
($) (2) | | | Total
($) | | | | | | | Daniel A. Domenech | | | 0 | | | | 170,000 | | | | 204 | | | | 170,204 | | | 75,000 | | | 95,000 | | | 204 | | | | 170,204 | | | | | | | Stephen J. Hasenmiller | | | 82,500 | | | | 95,000 | | | | 204 | | | | 177,704 | | | 85,000 | | | 95,000 | | | 204 | | | | 180,204 | | | | | | | Ronald J. Helow | | | 85,000 | | | | 95,000 | | | | 204 | | | | 180,204 | | | 82,500 | | | 95,000 | | | 204 | | | | 177,704 | | | | | | | Perry G. Hines | | | 75,000 | | | 95,000 | | | 51 | | | | 170,051 | | | | | | | Beverley J. McClure | | | 85,000 | | | | 95,000 | | | | 51 | | | | 180,051 | | | 97,000 | | | 95,000 | | | 51 | | | | 192,051 | | | | | | | H. Wade Reece | | | 75,000 | | | | 95,000 | | | | 35 | | | | 170,035 | | | 130,000 | | | 95,000 | | | 51 | | | | 225,051 | | Gabriel L. Shaheen | | | 134,500 | | | | 95,000 | | | | 51 | | | | 229,551 | | | | | | | | Robert Stricker | | | 77,500 | | | | 95,000 | | | | 204 | | | | 172,704 | | | 82,500 | | | 95,000 | | | 204 | | | | 177,704 | | | | | | | Steven O. Swyers | | | 92,500 | | | | 95,000 | | | | 204 | | | | 187,704 | | | 92,500 | | | 95,000 | | | 204 | | | | 187,704 | |
| (1) | Represents fees deferred in 20162018 pursuant to the HMEC 2010 Comprehensive Executive Compensation Plan, as well as $95,000 in RSUs (awarded May 25, 2016)23, 2018). As of December 31, 2016,2018, each Director had 2,8952,169 unvested RSUs. |
| (2) | Represents insurance premiums provided by the Company for group term life insurance and business travel accident insurance for each Director. The group term life insurance premiums areage-banded and this is reflected in the lower premiums for Mr. Hines, Ms. McClure Mr. Reece and Mr. Shaheen. In addition, Mr. Reece’s premiums werepro-ratedReece. based on the date that he joined the Board. |
Corporate Governance Director Independence The Company’s Corporate Governance Principles require that the Board consist of a majority of directors who meet the criteria for independence required by the listing standards of the NYSE. Based on the independence requirements of the NYSE and after reviewing any relationships between the Directors and the Company or its management (either directly or indirectly, including as a partner, shareholder or officer of an organization that has a relationship with the Company or its management) that could impair, or appear to impair, the Director’s ability to make independent judgments, the Board determined that none of itsnon-employee Directors have a material relationship with the Company, and therefore all of these Directors are independent. These independence determinations are analyzed at least annually in both fact and appearance to promote arms-length oversight. The currentnon-employee Directors are Dr. Domenech, Mr. Hasenmiller, Mr. Helow, Mr. Hines, Ms. McClure, Mr. Reece, Mr. Shaheen, Mr. Stricker and Mr. Swyers. Mr. Casady and Mr. Konen, Board Nominees, are also independent. Mr. Shaheen, who did not stand forre-election at the 2018 Annual Meeting, was independent during his service. | | | | 16 | | 2019 Proxy Statement • Proposals and Company Information |
Board Leadership Structure The Board is committed to strong, independent Board leadership and believes that objective oversight of management is a critical aspect of effective corporate governance. Accordingly, the Board currently has two separate individuals holding the offices of Chairman and Chief Executive Officer, and the position of Chairman is held by an independent Director. The Board of Directors believes that having an independent Director serve as Chairman is in the best interest of the Company at this time as this structure provides a greater role for the independent Directors in the oversight of the Company. However, as described in the Company’s Corporate Governance Principles, this situation can change in the future to permit one individual to hold both positions, if the Board deems it to be in the best interests of the Company at a given time. Board’s Role in Risk Oversight The Board of Directors is responsible for overseeing the processes that management has established for assessing and managing risk. In addition, the Board has delegated oversight of certain categories of risk to designated Board committees. In performing their oversight responsibilities, the Board and relevant committees regularly discuss with management the Company’s policies with respect to risk assessment and risk management. The committees report to the Board regularly on matters relating to the specific areas of risk the committees oversee. In addition, the Company has established an internal Enterprise Risk Management (“ERM”) Committee, which is composed of certain members of senior management including the President and Chief Executive Officer; Chief Financial Officer; Chief Human Resources Officer; Chief Information Security Officer; General Counsel and Chief Compliance Officer; and the heads of Field Operations and Distribution, Business Development and the Life & Retirement and Property & Casualty divisions. The ERM Committee is chaired by the Chief Financial Officer of the Company. | | | 10 | | 2017 Proxy Statement • Proposals and Company Information |
Throughout the year, the Board and the relevant Board committees receive regular reports from the Enterprise Risk ManagementERM Committee and its chairman regarding major risks and exposures facing the Company and the steps management has taken to monitor and control such risks and exposures. In addition, throughout the year, the Board and the relevant Board committees dedicate a portion of their meetings to review and discuss specific risk topics in greater detail. Also, in light of ongoing threats to corporate cybersecurity, the Board and relevant Board Committees receive regular reports from the Chief Information Security Officer of the Company regarding cybersecurity risks and the steps management has taken to monitor and control such risks. The Audit Committee dedicates a portion of their meetings to review and discuss the Company’s cybersecurity program. Code of Ethics, Code of Conduct and Corporate Governance Principles The Company has adopted a Code of Ethics and a Code of Conduct applicable to all employees, including the Chief Executive Officer, Chief Financial Officer, Controller and Directors (in their capacity as Directors of the Company). The Company has also adopted Corporate Governance Principles. The Codes and Principles are available on the Company’s website at www.horacemann.com,investors.horacemann.com, under “Investors - Corporate“Corporate Overview - Governance Documents”.Documents.” A printed copy of the Codes and Principles may be obtained by Shareholders upon written request, addressed to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza,C-120,C-738, Springfield, Illinois62715-0001. Corporate Social Responsibility Horace Mann works hard to be a responsible corporate citizen, and is guided by its high standards and mission to serve educators across the country. The Company continues to formalize its Corporate Social Responsibility (“CSR”) program in order to more clearly articulate areas of focus, increase transparency and encourage dialogue around environmental, social and governance (“ESG”) topics. In 2018, the Company completed its initial stakeholder engagement effort to identify relevant areas of interest for various stakeholder groups by conducting research and soliciting feedback through interviews and surveys. In 2018, President and CEO Marita Zuraitis joined | | | | 2019 Proxy Statement • Proposals and Company Information | | 17 |
hundreds of executives nationwide to sign the pledge for CEO Action for Diversity & Inclusion, designed to broaden awareness of unconscious bias and encourage difficult conversations about diversity and inclusion in the workplace. In addition, Horace Mann applied for and was selected as one of 230 companies in the 2019 Bloomberg Gender-Equality Index, which distinguishes companies committed to transparency in gender reporting and advancing women’s equality. For more information on corporate social responsibility at Horace Mann, visit horacemann.com/csr. Director Education Each Director is required to participate in at least one education program every two years and may choose to participate in up to two education programs in a two yeartwo-year period at the Company’s expense. All Directors are in compliance with this requirement. In addition, a schedule is developed, with input from the Directors, which covers a broad range of topics to enhance and strengthen the skills, knowledge and competencies of Directors. Examples of such topics include cybersecurity, crisis management, regulatory developments, corporate governance and industry trends. The program encompasses presentations from internal and external speakers as well as site visits and regular meetings with management. Directors are also encouraged to avail themselves of educational programs offered through recognized independent providers. Shareholder Engagement Horace Mann is committed to maintaining an open and productive dialogue with Shareholders to understand investor perspectives and share updates on the Company’s business and governance practices. In advance of the 2018 Annual Meeting, Horace Mann’s investor relations team reached out to the Company’s top 25 active and passive Shareholders, representing over 55% of our outstanding shares, with a tailored messaging to address corporate governance, say on pay and overall shareholder value creation, along with the first CSR report. Feedback was positive and Shareholders approved all proposals in the 2018 Proxy Statement by over 92%. Horace Mann’s CSR team engaged in additional discussions with selected investors from this group during the year to better understand their needs and identify priorities for future reporting. In addition, Horace Mann’s management and investor relations team discussed ESG and CSR topics with active investors during ongoing interactions at conferences and other venues over the course of the year. During 2018, the team met or spoke one or more times with active investors representing more than 32% of outstanding shares in addition to conversations with potential investors. In those meetings, management covers Horace Mann’s business strategy and performance. Investors react positively to updates on how corporate social responsibility initiatives support the Company’s business strategy. Communications with Directors The Company has established various processes to facilitate communications with the Board by Shareholders and other interested parties. Communications tonon-employee Directors as a group or to the Chairman of the Board or to an individual Director may be submitted via regular mail addressed to the Board of Directors, c/o the Corporate Secretary, Horace Mann Educators Corporation, 1 Horace Mann Plaza, Springfield, Illinois 62715-0001. Additionally, communications may be emailed to the Board of Directors, c/o the Corporate Secretary at hmecbofd@horacemann.com. Compensation Committee Interlocks and Insider Participation There are no Compensation Committee interlocks between the Company and other entities involving the Company’s Executive Officers and Directors who serve as executive officers or directors of such other entities. During 2016,2018, no member of the Compensation Committee was a current or former officer or employee of the Company. Review, Approval or Ratification of Transactions with Related Persons The Board reviews issues involving potential conflicts of interest of its members and is responsible for reviewing and approving all related party transactions. The Board does not | | | | 18 | | 2019 Proxy Statement • Proposals and Company Information |
have a formal related party transaction policy but it considers each related party transaction individually. Related Person Transactions Mark Casady, a Board Nominee, is a General Partner with a 50% interest in Vestigo Ventures, an early stage FinTech venture capital firm. On March 27, 2018, Horace Mann made a $5 million investment in a fund established by Vestigo Ventures, which represents an investment of less than 10% in the fund. The investment is not material to Vestigo Ventures. In addition, BlackRock, Inc. (“BlackRock”), which owns beneficially more than 5% of the issued and outstanding shares of Common Stock, provides investment risk management services to the Company and has done so for more than 10 years. In 2016,2018, the Company paid approximately $227,000$474,021 in fees to BlackRock associatedin connection with the Company’s use of analytical software owned by BlackRock. Other than the BlackRock relationship,relationships described above, the Company does not have any contracts or other transactions with related parties that are required to be reported under the applicable securities laws and regulations. PROPOSAL NO. 2 - ADVISORY RESOLUTION TO APPROVE NAMED EXECUTIVE OFFICERS’ COMPENSATION The Board is asking Shareholders to approve an advisory resolution to approve the compensation of the Company’s NamedChief Executive Officer, Chief Financial Officer and the other three highest compensated Executive Officers (“NEOs”employed at the end of 2018 (collectively the “Named Executive Officers” or “NEOs”) as reported in this Proxy Statement. The Compensation Committee has structured our NEOs’ compensation program as described below under “Compensation Discussion and Analysis”.Analysis.” The Board recommends that Shareholders read the “Compensation Discussion and Analysis” (“CD&A”) included in this Proxy Statement, which describes in more detail how our Executive Compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the “Summary Compensation Table” and other related compensation tables and narrative included within the CD&A, which provide detailed information on the compensation of our NEOs. The Compensation Committee and the Board of Directors believe that the policies and procedures articulated in the CD&A are effective in achieving our goals. In accordance with Section 14(a) of the Securities Exchange Act, and as a matter of good corporate governance, the Board is asking Shareholders to approve the following advisory resolution at the 20172019 Annual Meeting: RESOLVED, that the Shareholders of Horace Mann Educators Corporation (the Company) approve, on an | | | 2017 Proxy Statement • Proposals and Company Information | | 11 |
advisory basis, the compensation of the Company’s Named Executive Officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 20172019 Annual Meeting of Shareholders. This advisory resolution, commonly referred to as a “Say on Pay” resolution, isnon-binding on the Board of Directors. Althoughnon-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding ourthe NEOs’ compensation program. The Board has adopted a policy providing for an annual advisory vote to approve NEOs’ compensation. Unless the Board modifies its policy on the frequency of holding such advisory votes, the next advisory vote will occur at the Company’s 20182020 Annual Meeting of Shareholders. The Board recommends that Shareholders vote FOR the approval of the advisory resolution to approve Named Executive Officers’ compensation. PROPOSAL NO. 3 - ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICERS’ COMPENSATION
Pursuant to Section 14(a) of the Exchange Act, the Board is asking Shareholders to vote on the frequency of future advisory votes on Named Executive Officers’ compensation of the nature reflected in Proposal No. 2 above. Specifically, whether such votes should occur every year, every two years or every three years.
After careful consideration, the Board of Directors has determined that holding an advisory vote on Named Executive Officers’ compensation every year is the most appropriate policy for the Company at this time, and recommends that Shareholders vote for future advisory votes on Named Executive Officers’ compensation to occur every year. While the Company’s Executive Compensation
programs are designed to promote a long-term connection between pay and performance, the Board recognizes that Named Executive Officers’ compensation disclosures are made annually. Holding an annual advisory vote on Named Executive Officers’ compensation provides the Company with more direct and immediate feedback on our compensation programs. However, Shareholders should note that because the advisory vote on Named Executive Officers’ compensation occurs well after the beginning of the compensation year, and because the different elements of our Executive Compensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change our Executive Compensation programs in consideration of any one year’s advisory vote on Named Executive Officers’ compensation by the time of the following year’s annual meeting of Shareholders. Requesting an annual advisory vote on Named Executive Officers’ compensation also is consistent with the Company’s practice of having all Directors elected annually and providing Shareholders an annual opportunity to ratify the Audit Committee’s selection of an independent registered public accounting firm.
The Board understands that the Company’s Shareholders may have different views as to what is an appropriate frequency for advisory votes on Named Executive Officers’ compensation, and will carefully review the voting results on this proposal. Shareholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years, or abstain. Shareholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes on Named Executive Officers’ compensation isnon-binding on the Board of Directors. Notwithstanding the Board’s recommendation and the outcome of the Shareholder vote, the Board may in the future decide to conduct advisory votes on a less frequent basis and may vary its practice based on factors such as discussions with Shareholders and the adoption of material changes to Executive Compensation programs.
The Board recommends that you vote to conduct future advisory votes on Named Executive Officers’ compensation every year.
| | | 12 | | 20172019 Proxy Statement • Proposals and Company Information | | 19 |
Compensation Discussion and Analysis | | | | | In this section, we describe the material components of our executive compensation program for our Named Executive Officers (“NEOs”), whose compensation is displayed in the 20162018 Summary Compensation Table and the other compensation tables contained in this Proxy Statement. We also provide an overview of our executive compensation philosophy and we explain how and why the Compensation Committee of our Board (the “Committee”) arrives at specific compensation policies and decisions. Our 20162018 NEOs are our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the three other most highly compensated Executive Officers employed at the end of 2016:2018: Marita Zuraitis, President and CEO; Dwayne D. Hallman,Bret A. Conklin, Executive Vice President and CFO*;CFO;
Matthew P. Sharpe, Executive Vice President, Life & Retirement;Strategy and Business Development; William J. Caldwell, Executive Vice President, Property & Casualty;Casualty and Customer Engagement; and Kelly J. Stacy, Senior Vice President, Field Operations and Distribution.
*Note Regarding Chief Financial Officer
On Feb. 3, 2017, ourBret L. Benham, Executive Vice President, and Chief Financial Officer, Dwayne D. Hallman, passed away. Bret A. Conklin was named Acting CFO. As of our Proxy Statement filing date, a permanent CFO had not been named. Because Mr. Hallman was our CFO for the entire 2016 fiscal year, we will include the compensation and pay decisions made with respect to him when discussing the compensation of our NEOs throughout this section. We believe that this approach provides our shareholders with a representative view of our pay programs with respect to our executive team.Life & Retirement
| | |
Executive Summary This summary highlights information from this Compensation Discussion and Analysis section and may not contain all the information that is necessary to gain a full understanding of our policies and decisions. Please read the entire Compensation Discussion and Analysis section and compensation tables for a more complete understanding of our compensation program. Our Business We are a personal insurance and financial services business with approximately $10.6$11.0 billion of assets and approximately $1.1$1.2 billion in total revenue as of December 31, 2016.2018.Founded by Educators for Educators®, we offer our products and services primarily toK-12 teachers, administrators, and other public school employees and their families. We underwrite personal lines of auto, property and life insurance, as well as retirement products in the United States. 20162018 Business Highlights
We made important progress on strategic initiatives that will drive long-term improvement in our return on equity. This progress included a 2.6 point improvement in the underlying 2018 auto loss ratio and a 1.0 point improvement in the underlying 2018 property loss ratio. The Company delivered solid underlyingCompany’s 2018 financial results across all three segmentswere significantly impacted by an unprecedented level of its businesscatastrophe costs and a challenging investment environment. Our unadjusted core earnings were $28.4 million. When we adjust for Property and Casualty catastrophes greater than plan, costs related to the recently announced acquisitions, Retirement and Life deferred acquisition costs (“DAC”) unlocking and change in 2016. Fullguaranteed minimum death benefit (“GMDB”) due to capital gains and losses and market performance different from Plan, core earnings increased to $95.6 million. We make these adjustments when calculating our annual incentive as in any single year operating income was $1.97 per diluted share.they can be highly volatile and outside the control of management. We do not make adjustments for these items in our long-term incentives, as over the long-term management should be held accountable for these outcomes and has more ability to manage through some of theone-time items over a longer period of time. Book value per share* increased 4%decreased 1.3% in 20162018 driven by a decline in the solid operating results and positive contributionsunrealized gain from the | | | | 20 | | 2019 Proxy Statement • Compensation Discussion and Analysis |
investment portfolio performance. In addition, we achieved broad-based increases in new business sales and solid policy retentions duringresulting from wider credit spreads across most asset classes, with the past year.10-year U.S. Treasury rate rising 31 basis points to 2.71%. Total Shareholder Return was 32.9%-12.8% in 20162018, outperforming keylife insurance indices and underperforming property and casualty insurance and general market indices. 
*Excluding | *Excluding the fair value adjustment for investments |
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In the fourth quarter of 2018, the Company announced plans to acquire NTA Life Enterprises, LLC (“NTA”) and Benefit Consultants Group, Inc. (“BCG”). These results reflectacquisitions bring exciting capabilities to expand our product set, enhance our distribution channels, and further improve our infrastructure, enhancing our long-term view. While uncontrollable andone-time events impacted our core earnings, we do believe we had a strong overall year and are well positioned for future success. We made significant progress on numerous strategic initiatives, including: Increased6% growth in retirement sales levels year-over-yeardeposits, with strong market response tofee-based product offerings Double digit growth in all linesLife sales (19.8%) Continued solid earnings contributed from Life and Retirement P&C earnings impacted by significant adverse weather/catastrophes - Achieved 2.6 points of business excluding retirement Newunderlying auto andloss ratio improvement- Achieved 1 point of underlying property sales premium increased 6% and 5%, respectively Strong auto and property retention ratios
Increased annuity assets under management by 7%
loss ratio improvementPlease see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HMEC’s 20162018 Annual Report onForm 10-K for a more detailed description of these financial results. 2016
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2018 Executive Compensation Highlights | | | | | These elements of the executive compensation program are described more fully below. • Pay mix comprised of base salary, cash annual incentives under the Annual Incentive Plan (“AIP”), and equity-based long-term incentives under the Long-term Incentive Plan (“LTIP”) • Over 70% of the CEO’s target compensation and over 60% of all other NEOs’ target compensation linked to performance-based or service-vested incentives • Balanced performance measures designed with a focus on shareholderShareholder return, both absolute and relative, and incenting operating growth while managing risk • Performance incentives tied to multiple overlapping performance periods • Annual Cash Incentivescash incentives tied to Company and business line performance measures • Long-term Incentivesincentives entirely equity based: ➣ Performance-based RSUs vest following a3-year period, based on both relative measures (relative total shareholder return and relative operating return on equity) and an absolute measure (totaltotal written premium growth)growth measure ➣ Service-vested stock options with a4-year vesting period ➣ Service-vested RSUs with a3-year vesting period • One-time, provisional strategic equity grants of performance-based RSUs to promote continuity of leadership
• Stock ownership guidelines for NEOs ➣ Twelve-month post-exercise holding requirement for stock options ➣ Minimum 12-month vesting for all equity awards • Clawback policy applicable to both cash and equity awards • Executive change in control plan excludes “taxgross-up” provision • Limited perks and executive benefits | | |
Pay Governance Oversight The Committee oversees our executive compensation program. The current members of the Committee are Mr. Hasenmiller, Ms. McClure, and Mr. Shaheen.Reece. Mr. Hasenmiller serves as the Committee Chair. Consistent with the listing standards of the NYSE, the Committee is composed entirely of independent Directors. The Committee retained Compensation Advisory Partners LLC (“CAP”) as independent compensation consultants. CAP provides information and advice on the competitive market for executive talent, evolving market practices in our industry and the general employment market, regulatory and other external developments, and our executive compensation philosophy and incentive program design. In this way, CAP assists the Committee with ongoing education. Also, Committee members comply with Directors’ education requirementrequirements to help ensure each remains up to date on current issues relevant to the Company and its business. The CAP consultants report directly to the Committee, attend the Committee meetings and portions of executive sessions of the Committee at the Chair’s request (generally with the Board’s outside legal counsel, but without management present). CAP serves at the pleasure of the Committee, and performs no services for management. CAP works with management to obtain necessary data and perspectives on the Company’s strategic objectives, business environment, corporate culture, performance, and other relevant factors. This information is used by CAP to formulate its recommendations related to | | | 14 | | 2017 Proxy Statement • Compensation Discussion and Analysis |
competitive compensation performance targets and overall design. CAP’s findings and recommendations are reported directly to the Committee. The services provided by CAP during 20162018 are described in more detail throughout this analysis. Pursuant to regulatory requirements, | | | | 22 | | 2019 Proxy Statement • Compensation Discussion and Analysis |
the Committee assessed CAP’s independence (along with that of its other direct and indirect consultants and advisors) in 2018 and concluded that CAP’s work did not raise any conflict of interest. In addition, the Committee has the authority to hire other experts and advisors as it deems necessary. Management also supports the Committee by providing analysis and recommendations. When setting levels of executive compensation, the Committee requests, receives, and considers the recommendations of the CEO regarding the performance of her direct reports and other Executive Officers. Members of management also attend and contribute to Committee meetings as relevant to the Committee agenda. The Committee discusses its fundamental views on compensation and guiding principles, as well as its expectations of the CEO’s performance and annual goals, with the CEO and subsequently proposes the CEO’s goals to the Board for approval. The Committee does not include the CEO or other members of management in its discussions with CAP on the CEO’s compensation, nor does the CEO or management participate in the Committee’s recommendation to the Board on the CEO’s compensation. Favorable Say on Pay
At our 2016the 2018 Annual Meeting of shareholders, we received substantial support forShareholders, 98.2% of Shareholders voted, on an advisory basis, to ratify the compensationNEO compensation. This “Say on Pay” vote reflected a significant increase over the 70.3% Shareholder vote from the 2017 Annual Meeting of our NEOs, with 97.2% ofShareholders. In response to the votes cast in favor of the2017 “Say on Pay” advisory vote and at the direction of the Committee, Company management solicited, and received, feedback from certain proxy advisory firms and our Shareholders regarding the 2017 NEO compensation. Based on the feedback received, we made several changes to our executive compensation. compensation disclosure, including disclosing the peer group we use when making executive compensation decisions, and disclosing the threshold, target, and maximum performance levels for our AIP and LTIP programs. The Committee welcomes the opportunity to provide additional insight into our executive compensation practices and appreciates the Board were gratified bypositive support from our Shareholders. We continue to believe that the favorable vote and value the viewsoverall structure of our shareholders. The Committee was pleased that a significant majority of our shareholders approved the proposal, showing strong support for the structure of the compensation plans, the absence of excessive perquisites, theand our demonstratedpay-for-performance practices andreflect the strength of the Company’s executive compensation processes and practices.programs. Executive Compensation Program Guiding Principles The Committee has established a set of core principles that underlie our executive compensation program. These core principles provide guidance to the Committee and management in making decisions while administering the program or when considering changes. These core principles include strong alignment between pay and performance, incentive to drive shareholderShareholder value, and market competiveness.competitiveness. Strong pay for performance alignment We target compensation around the median of the competitive market, with executives earning more or less than median, generally based on the performance of the Company and value delivered to shareholders.Shareholders. Our core executive compensation program includes base salary, an annual cash incentive plan (the “Annual Incentive Plan” or “AIP”)(AIP), and long-term equity awards (the “Long-Term Incentive Plan” or “LTIP”)(LTIP). Both AIP and LTIP are administered under the shareholder-approvedShareholder-approved 2010 Comprehensive Executive Compensation Plan, as amended and restated effective May 20, 2015 (“CECP”). Incentive awards are earned upon the achievement of short-term and long-term business goals that are reviewed and approved by the Committee at the beginning of each performance period. Performance goals are structured to reward business growth, profitability, relative total shareholder return, balanced with productivity and risk and capital management. Executive interests should be aligned with shareholders’
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To encourage the long-term view, the Committee grants equity awards with multi-year performance periods and multi-year vesting. In 2016, Ms. Zuraitis received approximately 46% of her target compensation in equity. With respect to the other NEOs, approximately 40% to 44% of their compensation was equity-based.
Incentive compensation should drive long-term value creation and reward strong performance The AIP performance goals are based on premiums and adjusted operating income to reward strong performance.which drive long-term value and are metrics management can control. The LTIP performance goals are directly linked to multi-year growth and return measures to keep executives focused on value creation.creation, with multiple metrics based on performance versus peers to focus on outperforming our peers. A significantSignificant portion of compensation should be “at risk” based on the Company’s performance and aligned with Shareholders’ interests
For 2016,2018, over 70% of the CEO’s target total pay (base salary, plus target annual incentive, plusand target long-term incentive) and over 60% of target total pay for all other NEOs is at risk, and is variable from year to year, and for muchthe majority of it, the level of payout is dependent on the Company’s performance. To encourage executive performance on a long-term basis, and to align executive interests with Shareholders’, the Committee grants equity awards with multi-year performance periods and multi-year vesting. In 2018, Ms. Zuraitis received approximately 49% of her target compensation in equity. With respect to the other NEOs, approximately 32% to 45% of their compensation was equity-based. | | | 2017 Proxy Statement • Compensation Discussion and Analysis | | 15 |
Compensation levels should be market competitive The Committee sets total direct compensation for the NEOs – salary and target annual and long-term incentive opportunities – within a reasonable range of the median of the competitive market, while providing the ability to decrease or increase compensation if warranted by performance.performance and experience. To determine competitive pay levels, we use comparable survey market data provided by CAP and from published survey sources including Mercer, LOMA, Towers Watson, and proxy data for similaran established peer group of similarly sized insurance companies in the Russell 20003000® Index. The Committee worked with CAP to select our peer insurance companies for 2018 (charted below), based upon assets under management and revenue. The peer group does not include reinsurance or insurance brokers. We supplement this information with survey market data from published sources including Equilar, Towers Watson, and Korn Ferry. The data from these surveys is scaled to our size by CAP based on revenues or asset ranges. Annually, CAP provides the Committee with a comparison of the base salary, annual incentives and long-term incentives of the CEO with those of other chief executive officersChief Executive Officers based on the peer group and survey data.data obtained. The Committee does not seek to benchmark or set executive compensation at any specific level relative to the peer group. Instead, the Committee uses this information primarily as a general reference point for seeking to determine pay levels and forms of plan design that effectively recognize favorable executive performance and experience, and ensure executive retention. For 2018, CAP’s analysis demonstrated that overall core total direct compensation for Ms. Zuraitis was consistent with target pay positioning at the median of the market. The other NEOs are assessed against comparable functional matches in the insurance industry and the broader general industry, as appropriate. Based on the data received, and CAP’s analysis, the Committee deliberates in executive session to determine its recommendation for approval by the Board of Directors. For 2016, CAP’s analysis demonstrated that our overall core total direct compensation was consistent with target pay positioning at the median of the market. Core total direct compensation is comprised of salary, annual incentive, and our ongoing long-term incentive. In 2016, we also made a strategic incentive grant, which we do not anticipate making on a regular basis, and therefore have not included in the comparison to market data.Board. | | | | | 2018 Peer Group | | | | Ambac Financial Group, Inc. | | Kemper Corporation | | Primerica, Inc. | | | | American Equity Investment Life Holding Co | | MBIA, Inc. | | RLI Corporation | | | | Argo Group International Holdings, Ltd. | | National General Holdings Corporation | | Selective Insurance Group, Inc. | | | | CNO Financial Group, Inc. | | National Western Life Group, Inc. | | State Auto Financial Corporation | | | | Employers Holdings, Inc. | | Navigators Group, Inc. | | United Fire Group, Inc. | | | | FBL Financial Group, Inc. | | | | |
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Compensation Mix Our NEOs’ annual compensation consists of base salary, annual incentives and long-term incentives. The targeted compensation mix of total direct compensation for the NEOs for 20162018 is illustrated below. The mix of 20162018 actual compensation varied as a result of actual incentives earned. 
Base Salary Competitive base salaries are critical to attracting and retaining high performing executive talent. The Committee seeks to pay salaries that approximate median salaries for executives of similar companies in like positions. However, in recruiting new executives, we sometimes exceedvary from these guidelines to attract qualified candidates. There may also be instances wheredesired talent. Additionally, an existing executive’s compensation deviatesmay deviate from the median up or down, due to experience, performance, responsibilities, compensation history, internal equity, or retention risk. | | | 16 | | 2017 Proxy Statement • Compensation Discussion and Analysis |
Salaries for the NEOs and other executive officers are reviewed every 12 months in connection with the review of financial results for the prior fiscal year and the annual performance review discussed under Annual“Annual Performance and Pay Review.Review” below. In 2016,2018, Ms. Zuraitis, Mr. Conklin, Mr. Sharpe, and Mr. HallmanCaldwell received base salary increases to move overall compensation closer to the market median. The other NEOsMr. Benham was hired in late-November 2017 and did not receive a base salary increasesincrease in 2016.2018. Base salary adjustments for 20162018 are shown in the chart below. | | Named Individual | | 2015 Annualized Salary | | | 2016 Annualized Salary | | | Percent Increase | | 2017
Annualized
Salary | | | 2018
Annualized
Salary | | | Percent
Increase | Marita Zuraitis | | | $750,000 | | | | $800,000 | | | 6.7% | | | $850,000 | | | | $900,000 | | | 5.9% | Dwayne D. Hallman | | | $444,000 | | | | $460,000 | | | 3.6% | | Bret A. Conklin | | | | $320,000 | | | | $350,000 | | | 9.4% | Matthew P. Sharpe | | | $400,000 | | | | $400,000 | | | 0.0% | | | $415,000 | | | | $425,000 | | | 2.4% | William J. Caldwell | | | $350,000 | | | | $350,000 | | | 0.0% | | | $375,000 | | | | $385,000 | | | 2.7% | Kelly J. Stacy | | | $300,000 | | | | $300,000 | | | 0.0% | | Bret L. Benham | | | | $350,000 | | | | $350,000 | | | 0.0% |
Annual Incentive Plan Our Annual Incentive Plan (AIP)AIP is a cash incentive plan, administered under the CECP, and designed to drive and reward strong performance over aone-year period. Annually, the Committee establishes the performance | | | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 25 |
objectives, threshold, target and maximum performance levels, and the related threshold, target and maximum AIP opportunities for each NEO, expressed as a percentage of base salary. Target incentive opportunity levels for the NEOs are intended to approximate the median of the target bonus potential for similarly situated executives in comparable companies. Maximum incentive opportunities are set at 200% of target. For 2016,2018, there were four performance measures, with 50% of the award based on Company-wide net operating income,adjusted core earnings, and the remaining 50% divided among specific sales and premiums metrics of the different business lines: P&C net written premium (20%), annuitiesretirement sales (20%), and life sales (10%), as shown in the chart below. This provides a balance between shareholder return and growth, while complementing the longer-term LTIP metrics, which focus on long-term shareholder value creation. 20162018 Annual Incentive Plan Performance Measures
| | |   | | Adjusted Operating IncomeCore Earnings - Operating income (GAAP net income afterbefore tax, excluding realized investment gains and losses other than those for Fixed Indexed Annuity related options and embedded derivatives) adjusted for Property & Casualty (“P&C”)&C catastrophe costs different than the annual Plan, Annuity & Life deferred acquisition costs (“DAC”)DAC unlocking and change in guaranteed minimum death benefit (“GMDB”)GMDB reserve due to capital gains and losses and market performance different than Plan, the impact on investment income of share repurchases different than Plan, and debt structure/costs including debt retirement different than Plan P&C Net Premium Written (GAAP) - Amount charged for property and casualty policies issued during the year. (Portionsyear (portions of such amounts may be earned and included in financial reports over future periods.)periods) AnnuityRetirement Sales - The amount of new business from the sales of Horace Mann annuityretirement products, from Horace Mann and independent agents, as measured by premiums and deposits to be collected over the 12 months following the sale
Life Sales - The amount of new Horace Mann individual life insurance products sold during the year, as measured by premiums and deposits to be collected over the 12 months following the sale |
All the NEOs’ 20162018 annual incentive amounts are based on the same corporate and business line objectives to promote cooperation. The targets for the operating income and sales or premium measures were based on a review of market conditions and expectations of other companies in the industry as well as our financial plan for 20162018 (“20162018 Plan”). The 2016 | | | 2017 Proxy Statement • Compensation Discussion and Analysis | | 17 |
2018 Plan was the basis of our 20162018 earnings guidance, which was publicly disclosed in February 20162018 in connection with our releasethe announcement of earningsresults for the year ended December 31, 2015.2017. The Committee believes that tying the AIP to overall Company performance provides appropriate alignment for an executive’s compensation as it recognizes that the Company as a whole must perform well in order to deliver value | | | | 26 | | 2019 Proxy Statement • Compensation Discussion and Analysis |
to our Shareholders. Further, tying all the NEOs’ AIP awards to the performance of specificall business lines incentivizes cooperation among the business line leaders. It is the goal of the Committee to establish measurements and targets that are reasonable, but not easily achieved. The measures and targets are discussed with the CEO, other NEOs, other members of the Board and CAP before they are set. Each March, the Committee also certifies performance and determines annual incentive awardAIP payouts for the prior year. Based on the 20162018 results of 112.28%108.4% of target for Ms. Zuraitis and the other NEOs, the 20162018 AIP payouts (paid in March 2017)2019) were as follows: | | 2016 AIP Measures | | Target
(in $M) | | Actual
(in $M) | | Results | | Weighting | | Payout | | Adjusted Operating Income | | | | 92.4 | | | | | 96.5 | | | | | 142 | % | | | | 50 | % | | | | 70.88 | % | | 2018 AIP Measures (in $M) | | | Threshold | | Target | | Maximum | | Actual | | Results | | Weighting | | Payout | | Adjusted Core Earnings | | | | 85.3 | | | | 91.7 | | | | 101.4 | | | | 95.6 | | | | 140.2% | | | | 50% | | | | 70.1% | | P&C Net Premium Written | | | | 633.6 | | | | | 634.3 | | | | | 107 | % | | | | 20 | % | | | | 21.40 | % | | | 689.3 | | | | 699.8 | | | | 713.8 | | | | 688.3 | | | | 0.0% | | | | 20% | | | | 0.0% | | Horace Mann Annuity Sales | | | | 380.8 | | | | | 356.9 | | | | | 0 | % | | | | 20 | % | | | | 0.00 | % | | Retirement Sales | | | | 524.5 | | | | 535.2 | | | | 556.6 | | | | 533.4 | | | | 91.7% | | | | 20% | | | | 18.3% | | Horace Mann Life Sales | | | | 12.6 | | | | | 15.5 | | | | | 200 | % | | | | 10 | % | | | | 20.00 | % | | | 19.3 | | | | 19.5 | | | | 19.8 | | | | 21.1 | | | | 200.0% | | | | 10% | | | | 20.0% | | Total | | | | | | | | | | 100 | % | | | | 112.28 | % | | | 100% | | | | 108.4% | |
| | Named Individual | | 2016 Target
AIP Opportunity | | 2016 Actual
AIP Payout | | 2016 Actual AIP Payout
as a % of Base Salary | | 2018 Target
AIP Opportunity | | 2018 Actual
AIP Payout | | 2018 Actual AIP Payout
as a % of Base Salary | Marita Zuraitis | | 100% | | $898,240 | | 112.28% | | 100% | | $966,746 | | 107.4% | Dwayne D. Hallman | | 60% | | $308,096 | | 66.98% | | Bret A. Conklin | | | 60% | | $224,430 | | 64.1% | Matthew P. Sharpe | | 60% | | $269,472 | | 67.37% | | 60% | | $375,3871 | | 88.3% | William J. Caldwell | | 50% | | $196,490 | | 56.14% | | 60% | | $249,366 | | 64.8% | Kelly J. Stacy | | 40% | | $134,736 | | 44.91% | | Bret L. Benham | | | 50% | | $189,735 | | 54.2% |
(1) Includes additional $100,000 related to NTA acquisition 
 | | | 18 | | 20172019 Proxy Statement • Compensation Discussion and Analysis | | 27 |
Long-term Incentive Plan The intent of our Long-term Incentive Plan (LTIP)LTIP is to focus executives on shareholderShareholder value and key strategic objectives, while promoting retention. 20162018 LTIP Aggregate Target Opportunity
In setting the dollar values of the 20162018 opportunities under LTIP for each NEO, the Committee targeted amounts that would achieve the Company’s overall objective of positioning total compensation at approximately the market median. The 20162018 target grant values for the NEOs were as follows: | | | | | Named Individual | | 20162018 LTIP
Target
| | Marita Zuraitis | | | $1,400,000 1,700,000 | | Dwayne D. HallmanBret A. Conklin
| | | $500,000 325,000 | | Matthew P. Sharpe | | | $500,000 550,000 | | William J. Caldwell | | | $350,000 400,000 | | Kelly J. StacyBret L. Benham
| | | $300,000 250,000 | |
20162018 LTIP Award Vehicles
For 2016,2018, the LTIP is comprised of three vehicles, as illustrated in the chart below: (1) performance-based RSUs; (2) service-vested RSUs; and (3) service-vested stock options. | | |   | | Performance-based RSUs - Earned over a three-year period, based upon Relative (80%) and Absolute Measures.Measures (20%). If any shares are earned at the end of the three-year performance period, the executive fully vests in the award | | | Service-vested RSUs - Vest 1/3 per year afterratably over three years 1, 2 and 3 | | | Stock options - Granted at fair market value with a 10 year life; options vest ratably over 4four years |
Performance-Based RSUs (PBRSUs) The Committee believes that PBRSUs provide an effective vehicle for rewarding executives based on a three-year performance period. Each year, a new three-year period starts, partially overlapping the periods that started the prior two years. PBRSUs were granted on March 9, 20166, 2018 for the 2016-20182018-2020 performance period and comprise 50% of the 20162018 LTIP opportunity. These RSUs will be earned and vested on December 31, 2018,2020, if at all, based on the level of achievement. From the date of grant, PBRSUs accrue dividend equivalents at the same rate as dividends paid to our shareholders,Shareholders, but the dividend equivalents are only paid on the corresponding shares that are earned. If no shares are earned, the dividend equivalents are forfeited. Earned dividend equivalents are converted into additional RSUs. Service-vested RSUs The Committee believes that service-vested RSUs assist in the retention of key executive talent. Service-vested RSUs were granted on March 9, 20166, 2018 and comprise 20% of the 20162018 LTIP opportunity. Service-vested RSUs vest 33% after the first year, vest an additional 33% after the second year and vest the final 34% after the third year from the grant date, and are subject to continued employment tothrough the vesting date. From the date of the grant, the RSUs accrue dividend equivalents at the same rate as dividends paid to our shareholders.Shareholders. These dividend equivalents are converted into additional RSUs and vest when the underlying RSUs vest. | | | | 28 | | 2019 Proxy Statement • Compensation Discussion and Analysis |
Stock Options The Committee believes thatnon-qualified stock options (NQSO) provide strong alignment with shareholderShareholder interests, as participants do not realize any value unless our stock price appreciates. They also promote retention. Stock options granted under the LTIP have an exercise price equal to the closing stock price of our Common Stock on the date of grant, vest ratably over a four-year period subject to continued employment on each vesting date and have aten-year term. Stock options were granted on March 9, 20166, 2018 and comprise 30% of the 20162018 LTIP opportunity. The number of options granted was determined using the Black-Scholes valuation method. For additional information regarding assumptions used for these valuations, see the Company’s 20162018 Annual Report on Form10-K “Notes to Consolidated Financial Statements – | | | 2017 Proxy Statement • Compensation Discussion and Analysis | | 19 |
Note 1 – Summary of Significant Accounting Policies – Share-Based Compensation.” Upon exercise, Executive Officers are required to hold shares equivalent to any proceeds (net of exercise price and related taxes and the costs of the exercise) for a minimum of twelve months. Timing of Equity Grants The Committee has granted long-term incentives only at its regularly scheduled Board meetings. The grant date is the applicable resolution as approved or a future date as otherwise specified in the resolution. 2016-20182018-2020 Performance-based RSUs
The Performance-based RSUs granted in 20162018 have three performance measures as shown below: | | |   | | Relative Total Shareholder Return - Relative Total Shareholder Return for the three-year period measured against a peer group of companiescompanies. Relative Operating Return on Equity - Average annual relative Operating Income return on average equity for the three-year period measured against a peer group of companiescompanies. Total Revenue Growth - Measured as the CAGR over the period 12/31/2017 to 12/31/2020 for Written Premium Growth - Written premium growth measured as the compound annual growth rate from 2016 to 2018 for Auto, Property, AnnuityHMN auto, property, and Life.life and total retirement sales for annuity (HMN, RIA and institutional platform) and Horace Mann General Agency (“HMGA”). |
Prior Years PBRSU Grants 2015-20172017-2019 PBRSUs
The PBRSUs granted in 20152017 will not mature until December 31, 2017.2019. Since the applicable3-year three-year performance period has not yet ended, actual performance against targets is not yet known. Additional information on these targets and actual performance will be provided at the end of the performance period. | | | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 29 |
2014-20162016-2018 PBRSUs
The performance-based RSUs granted in 20142016 matured and vested as of December 31, 2016.2018. The performance measures, targets and payout levels for the PBRSUs granted in 20142016 are as follows: | | | | | | | 2014-2016 Relative
Performance Measures(1) | | Weighting | | 2014-2016
Target (2) | | Result
(as of 12/31/2016) | Operating Return on Equity | | 50% | | 50th | | 53% | Total Shareholder Return | | 50% | | 50th | | 52% | Total | | 100% | | | | 105% |
| | | | | | | | | | | | | | | 2016-2018 Performance
Measures | | Threshold (2) | | Target (2) | | Maximum (2) | | Weighting | | | Result | | Relative (1)Measures | | | | | | | | | | | | | | | TSR (3) | | 25th Percentile
Ranking vs Peer Companies | | 50th Percentile Ranking vs Peer Companies | | 90th Percentile Ranking vs Peer Companies | | | 40% | | | | 43 | % | Operating ROE (4) | | | 40% | | | | 39 | % | Absolute Measure | | | | | | | | | | | | | | | Total Written Premium Growth (5) | | 2% | | 3% | | 4% | | | 20% | | | | 13 | % | | | | | | | | | | Total | | | | 95 | % |
Notes: | (1) | The Performance Measures, as defined under the Long-term Incentive Plan, include:
|
| • | | Operating Return on Equity – Relates to the average annual Operating Income return on average equity for the three-year period measures against a peerPeer group comprised of companies in the Russell 2000® Index insurance companies excluding brokerage, reinsurance, financial guarantee, and health companies. |
| (2) | •Threshold award (25th percentile) is 50% of target LTIP opportunity; Target award (50th percentile) is 100% of target; Maximum (90th percentile) is 200% of target. Awards for results between Threshold-Target and Target-Maximum are interpolated. |
| (3) | | Total Shareholder Return – Relates to the Total Shareholder Return for the three-year period. Measured from the average price five trading days before and five trading days after the beginning of the measurement period measured against a peer group(1/1/16) to the average price five trading days before and five trading days after the end of companies in the Russell 2000® Indexmeasurement period (12/31/18).Source: Bloomberg |
| (2)(4) | 50th Percentile of Peer GroupAverage annual Operating Income Return on Average Equity (excluding the fair value adjustment for investments) for the three-year performance period.Source: SNL.
|
| (5) | Total Written Premium Growth is measured as the CAGR over the period from 12/31/2015 to 12/31/2018. |
Strategic Incentive Grants Working with CAP, we designed an incentive program to achieve both (i) corporate financial goals,As disclosed in our 2016, 2017, and (ii) strategic individual goals which, while closely aligned with, transcend short and long-term financial measures. Specifically,2018 Proxy Statements, in March 2016, we made strategic equity grants to key executives, including four of the 2018 NEOs, under our CECP. The Company’s success makes our leadership team more vulnerable to recruitment by competitors. The Committee believes the grants promote continuity of leadership as we pursue our long-term vision, and also strengthen management’s alignment with shareholder interest. We believe if the management team is successful in achieving these specific strategic objectives, it will drive incremental value for shareholders. These awards were specifically designed to address key priorities during this strategic transition in our Company’s evolution, and are not expected to be an ongoing component of our compensation.
Each NEOexecutive received a provisional equity grant of PBRSUs contingent on a corporate financial Performance Goal, EPS,performance goal (50%) and individual strategic goals. Ifgoals (50%). These awards were specifically designed to address key priorities during the Performance Goal is satisfied, 50%Company’s strategic evolution and are not an ongoing component of our executive compensation program. The Committee believes that successful achievement of these strategic objectives drives incremental value for Shareholders. Each executive’s entire award was subject to satisfaction of an objective threshold Company-wide performance goal, Earnings per Share (EPS), for any portion of the award shall be earned and vestedto vest. During the period beginning on January 1, 2016, and ending on December 31, 2018, the Company must have achieved an aggregate of at least $4.00 of core earnings per diluted share. The Company exceeded this goal, and 50% of each award vested as of January 1, 2019. The remaining 50% of the award shall be eligible for vestingwas based on January 1, 2019 subject to achievement of individual strategic goals. goals, which were disclosed in the 2017 Proxy Statement for Ms. Zuraitis, Mr. Sharpe and Mr. Caldwell. Upon his promotion to CFO, Mr. Conklin assumed the goals of our prior CFO, Dwayne Hallman. Mr. Hallman’s goals were also disclosed in the 2017 Proxy Statement. In addition, Mr. Conklin had individual goals based on his prior role of Senior Vice President & Controller, including improvements to our internal controls over financial reporting, the financial close process, and external audit processes. | | | 2030 | | 20172019 Proxy Statement • Compensation Discussion and Analysis |
The Individual Goal-Basedindividual goal-based PBRSUs: Do not vest unless the established individual strategic goals discussed below, are achieved during the performance period beginning on January 1, 2016, and ending on December 31, 2018; Are reduced to zero, if the corporate Performance Goal$4 EPS goal is not achieved; Cannot exceed the number of shares granted (except through accrued dividend equivalents); and Will be reduced if all individual strategic goals and their components are partially met. The grant valueCommittee reviewed progress toward these goals throughout the performance period. Following a thorough review at the conclusion of the Strategic Equity Grant for each NEO is listed below. Because we do not anticipate these types of awards being a regular component of pay, these amounts were not explicitly includedperformance period, the Committee, and the full Board in the comparison to market pay data. | | | | | | | | | | Named Individual | | PBRSU
Grant Value | | | | | Marita Zuraitis | | $ | 1,600,000 | | | | | Dwayne D. Hallman | | $ | 666,000 | | | | | Matthew P. Sharpe | | $ | 600,000 | | | | | William J. Caldwell | | $ | 525,000 | | | | | Kelly J. Stacy | | $ | 300,000 | |
For all PBRSUs, the NEO must be an employeecase of the Company asCEO’s award, agreed with the CEO’s assessment that each of the vesting date for the awards to vest, except as otherwise provided with regard to death, disability,executives met or in the event of a change in control, or as otherwise provided under a severance or consulting arrangement. The NEO will forfeitexceeded their individual goals. Therefore, the entire award if she or he retires prior to the endvested as of the performance period. Upon vesting, such units are converted into an equivalent number of shares of Common Stock.
Ms. Zuraitis’ individual goals are based on execution of strategic plans related to our long-term vision and leading the execution of the management team’s critical strategic initiatives, expanding the Company’s external exposure, and leveraging the Company’s unique industry position and enhancing the overall customer value proposition.
Mr. Hallman’s individual goals are based on establishing efficient and optimized Capital Management, Enterprise Risk Management, Investor Relations and Rating Agency Relations, and Investment Management strategies, providing strategic support to ensure the Company achieves our aggressive long-term vision, and leading business development and partnership opportunities.
Mr. Sharpe’s individual goals are based on refining and implementing an effective household acquisition strategy, leading the implementation strategy and execution of the DOL/SEC fiduciary standard transition, and continuing to expand the Company’s life insurance platform.
Mr. Caldwell’s individual goals are based on development of a strategy to modernize the Company’s property and casualty infrastructure, execution of a customer and agent experience strategy, and implementation of advanced pricing segmentation.
Mr. Stacy’s individual goals are based on building, establishing and achieving a long-term sales plan, building an agency framework that establishes clear standards and assessing agents against those standards, and designing an optimal field structure to deliver improved results.
Achievement of the individual strategic goals will be determined by the Board of Directors, with input from the CEO (except for her own award). The CEO will provide, periodic updates to the Board illustrating progress by each individual.
The entire award is subject to satisfaction of an objective threshold company-wide performance goal, which must be met during the performance period beginning on January 1, 2016 and ending on December 31, 2018 (Performance Period). If an unexpected event occurs triggering a significant loss, the awards could be eliminated entirely. With the objective threshold company-wide performance goal, the awards qualify for the performance-based compensation exception to the deduction limit in Section 162(m) of the Internal Revenue Code.2019.
Additional Pay Practices Stock Ownership & Holding Guidelines The CEO is required to accumulate and maintain beneficial stock ownership with a book value of at least 500% of base salary and all other NEOsOur Executive Officers are required to accumulate and maintain beneficial stock ownership with– calculated as a book value of at least 350%percentage of base salary. Given recent market volatility, wesalary - as displayed in the table below:
| | | Position | | Stock
Ownership
Target % | CEO | | 500% | Executive Vice President | | 350% | Senior Vice President | | 300% | Controller | | 200% |
We use book value to measure the value of the shares we require the NEOs to own. Bookown because book value is less volatile than stock price. For this purpose, the Company’s book value per share is determined by dividing total shareholders’Shareholders’ equity, less the fair value adjustment for investments, by the number of outstanding shares of common stock. | | | 2017 Proxy Statement • Compensation Discussion and Analysis | | 21 |
The NEOs must satisfy stock ownership guidelines within five years of attaining their position. Stock ownership may be achieved by direct ownership or beneficial ownership through a spouse, child, or trust. The following types of beneficial ownership are considered in determining stock ownership: direct ownership, shares held through our Horace Mann 401(k) Plan, deferred common stock equivalent units (only Mr. Hallman has these) and RSUs (vested and unvested). Outstanding stock options are not used in determining stock ownership. Our executives are required to defer earned and vested RSU awards until their stock ownership guidelines are met. Beginning with the March 9, 2011 stock option grants themade in 2011, NEOs are required to hold shares equivalent to any proceeds from a long-term incentive stock option exercise, net of exercise price and related taxes and the costs of the exercise, for a minimum of twelve12 months after the date of exercise. As part of its 20162017 overall review of the executive compensation program, the Committee determinedreviewed the existing multiples of base salary stock ownership guidelines for the Executive Officers, and determined they were appropriate and wouldwill be continued in 2016.2018.
| | | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 31 |
As indicated in the following chart, all NEOs have met or exceeded their stock ownership guidelines except for Mr. Caldwell andBenham. Mr. Stacy. Mr. Caldwell has been withBenham joined the Company less than four yearsin November 2017 and Mr. Stacy has been with the Company less than two years. Mr. Caldwell and Mr. Stacy areis on target to meet the requirement by their respective deadlines.the deadline.  
| | Named Individual | | 2016 Stock
Ownership
Target | | 2016 Stock
Ownership
Actual | | | 2016 Stock
Ownership | | | 2016 Book
Value (1) | | | Stock Ownership Target % | | Stock Ownership Actual % | | Stock Ownership (1) | | Book Value (2) | | Marita Zuraitis | | 500% | | | 1032 | % | | | 296,955 | | | $ | 8,252,375 | | | 500% | | | 1142% | | | | 352,771 | | | | $10,276,225 | | Dwayne D. Hallman | | 350% | | | 1130 | % | | | 187,011 | | | $ | 5,197,045 | | | Bret A. Conklin | | | 350% | | | 586% | | | | 70,433 | | | | $ 2,051,722 | | Matthew P. Sharpe | | 350% | | | 686 | % | | | 98,774 | | | $ | 2,744,928 | | | 350% | | | 916% | | | | 133,648 | | | | $ 3,893,172 | | William J. Caldwell | | 350% | | | 339 | % | | | 42,632 | | | $ | 1,184,755 | | | 350% | | | 456% | | | | 60,296 | | | | $ 1,756,412 | | Kelly J. Stacy | | 350% | | | 241 | % | | | 25,984 | | | $ | 722,099 | | | Bret L. Benham | | | 350% | | | 83% | | | | 9,981 | | | | $ 290,760 | | HMN Stock Price @ 12/31/2018 = | | | $37.45 | | HM Book Value @ 12/31/2018 = | | | $29.13 | | | | | | |
| (1) | Represents share ownership as of 12/31/2018 |
| (2) | Represents book value per share excluding the fair value adjustment for investments |
HMN | Stock Price @ 12/31/2016 = $42.80
Minimum Vesting Period In 2017, through an amendment approved by the Board, the Company updated the CECP to reflect a minimum vesting period of one year for all equity grants. No portion of any equity grant, including Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, will become vested before the first anniversary of the grant date except in the cases of death or disability. |
HM | Book Value @ 12/31/2016 = $27.79
|
Annual Performance and Pay Review To further reinforce a performance-based culture and the tie between Company results and compensation, the Committee reviews each executive officer’sExecutive Officer’s performance annually, coinciding with the review of corporate performance results. Each executive officerExecutive Officer is reviewed not only on prior year business results but also on the individual’s demonstration of leadership skills and progress on specific strategic initiatives and other key priorities. The Committee also considers any adjustments to base salary, annual incentive opportunity, and long-term incentive opportunity at this review. The Committee recognizes the need to have market-competitive compensation opportunities to attract, retain, and reward high performing executive talent. | | | 2232 | | 20172019 Proxy Statement • Compensation Discussion and Analysis |
Risk Assessment Our programs are structured to discourage excessive risk-taking through a balanced use of compensation vehicles and metrics with an overall goal of delivering sustained long-term shareholderShareholder value while aligning our executives’ interests with those of our shareholders.Shareholders. To this end, management and CAP conduct, and the Committee and the Board’s outside legal counsel reviews, an annual risk analysis of the compensation plans and incentive metrics. Our programs requireexecutive compensation program requires that a substantial portion of each executive officer’sExecutive Officer’s compensation isbe contingent on delivering performance results. In addition, a significant portion of our NEOs’ compensation is delivered in equity over a multi-year timeframe. The Committee has been advised by the Board’s outside legal counsel and agrees that no unreasonable risk exists that a compensation policy or incentive plan would have a material adverse impact on the Company. Succession Planning Process To mitigate enterprise risk and leadership gaps, the Committee oversees and monitors the Company’s succession planning process on a regular basis. This process identifies candidates that have the skill sets, background, training, and industry knowledge to assume critical positions on an emergency basis and also for the long-term, if necessary. The Company’s succession plan is also reviewed by the full Board annually. Minimal Use of Employment Agreements The Company does not have any individual employment agreements with any executive officerExecutive Officer and intends to continue to minimize their use, while recognizing that in isolated situations an agreement may be needed for attraction and retention of key executive talent. Executive Severance and Change in Control Plans To maintain market competitiveness and allow for the successful recruitment of key executives, the Company maintains the Horace Mann Service Corporation Executive Severance Plan (“Executive Severance Plan”) and the Horace Mann Service Corporation Executive Change in Control Plan (“CIC Plan”). The Executive Severance Plan provides benefits due to loss of position with or without a change in control. Currently, all NEOs participate in the Executive Severance Plan. The CIC Plan is intended to provide a level of security consistent with market practices, mitigate some of the conflicts an executive may be exposed to in a potential acquisition or merger situation, and serve to insureensure a more stable transition if a corporate transaction were to occur. The CIC Plan provides for benefits only in the event of the loss of position following a change in control, as defined in the CIC Plan. Participants in the CIC Plan are designated by position. This plan does not have taxgross-up provisions. Currently, Ms. Zuraitis, Mr. Sharpe, Mr. Caldwell, and Mr. Stacyall of the NEOs participate in the Executive Severance and CIC Plan.Plans. The CIC Plan does not permit duplicate benefits under the Executive Severance Plan. The Company had an individual severance agreement with Mr. Hallman, which was entered into at the time of his employment in 2003. The agreement provided payments, benefits and taxgross-up provisions only if both a change in control of the Company and Mr. Hallman’s actual or constructive termination of employment occurred (“double trigger”). Multiple ofmultiple is based on the sum of salary plus target annual incentive, payable in the form of salary continuation (for the Executive Severance)Severance Plan), and payable in a lump sum (for CIC)the CIC Plan), based on the following table:
| | | | | | | | | | | | | | | | | | Multiple | | | | Named Individual | | Executive Severance | | Change In Control | | | | Marita Zuraitis | | | | 2.0 | | | | | 2.5 | | | | | Dwayne D. Hallman* | | | | N/A | | | | | N/A | | | | | Matthew P. Sharpe | | | | 1.5 | | | | | 2.0 | | | | | William J. Caldwell | | | | 1.5 | | | | | 2.0 | | | | | Kelly J. Stacy | | | | 1.0 | | | | | 1.0 | |
| | | | | | | | | | | | Multiple | | | | Named Individual | | Executive Severance | | Change In Control | | | | Marita Zuraitis | | 2.0 | | 2.5 | | | | | | | | | Bret A. Conklin | | 1.5 | | 2.0 | | | | | | | | | Matthew P. Sharpe | | 1.5 | | 2.0 | | | | | | | | | William J. Caldwell | | 1.5 | | 2.0 | | | | | | | | | Bret L. Benham | | 1.5 | | 2.0 |
| *Following | his death in February 2017, Mr. Hallman is no longer a participant in our Executive Severance Plan or CIC Plan. | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 33 |
Retirement Plans The NEOs participate in our Company-wide Supplemental Retirement & SavingsHorace Mann 401(k) Plan – 401(k) – and a nonqualified supplemental defined contribution plan designed to provide benefits that cannot be provided under ourtax-qualified defined contribution plan because of certain limitations imposed by the Internal Revenue Code.Code (“IRC”). Each of these two plans includes a Company contribution. The amounts contributed for each NEO are included in the “Summary Compensation Table.” These types of plans are customarily offered within our industry. No NEO participates in the Company’s defined benefit plan or supplemental defined benefit retirement plan because participation in those plans was limited to individuals hired prior to | | | 2017 Proxy Statement • Compensation Discussion and Analysis | | 23 |
January 1, 1999 and all of our NEOs were hired after that date. We formerly maintained a money purchase pension plan, which was terminated in 2014 and all assets were distributed by the end of 2016. Deferred Compensation Prior to 2009, the LTIP permitted certain elective deferrals.Pre-2009 account balances are maintained in notional deferred Common Stock equivalent units, which accrue dividend equivalents at the same rate as dividends paid to our shareholders.Shareholders. These dividend equivalents are converted into additional deferred Common Stock equivalent units. Mr. Hallman wasConklin is the only NEO with an account balance under this arrangement. Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans The Company offered a nonqualified deferred compensation plan to executives, which allowed them to defer receipt of Long-term Incentive cash compensation prior to 2009 when cash was a component of the Long-term Incentive Plan. Executives were allowed to defer up to 100% of their earned long-term cash incentive into HMEC’s deferred Common Stock equivalent units. All the NEOs except Mr. Hallman were hired after 2009 and do not have an account in the plan. The Company also sponsors an unfunded excess pensionnonqualified supplemental defined contribution plan, the Nonqualified Supplemental Defined Contribution Plan (“NQDCP”), which covers only the base salary compensation in excess of the IRC Section 415401(a)(17) limit, which in 20162018 was $265,000.$275,000. The NQDCP accounts are established for the executives at the time their compensation exceeds the IRC Section 415401(a)(17) limit and the NEOs are credited with an amount equal to 5% of the excess. In addition, the NQDCP accounts are credited with the same rate of return as the stable value fund available as an investment option under the qualified plan sponsored by the Company for all employees.
The Company offered a nonqualified deferred compensation plan to executives, which allowed them to defer receipt of long-term incentive cash compensation prior to 2009 when cash was a component of the LTIP. Executives were allowed to defer up to 100% of their earned long-term cash incentive into HMEC’s deferred Common Stock equivalent units. All the NEOs except Mr. Conklin were hired after 2009 and do not have an account in the plan. Clawbacks The Committee believes that our compensation program should reward performance that supports the Company’s culture of integrity through compliance with applicable laws and regulations and our codes of ethics and conduct. As a further step to support that belief, the Committee has determined that all executive officersExecutive Officers are subject to the same standards as the CEO and CFO regarding cash compensation clawbacks as defined under Section 304 of the Sarbanes-Oxley Act of 2002. In addition, under the CECP, the Company is entitled to recover any cash or equity award if it is determined that an executive’s own misconduct contributed materially to the executive’s receipt of an award. If changes are made in future applicable legislative or regulatory guidance, the Company will modify the current clawback provisions to comply. Hedging, Pledging Prohibitions NEOs and other executive officersExecutive Officers are prohibited from engaging in hedging transactions in our common stock. They are also prohibited from pledging their shares of our common stock.Common Stock. Perquisites and Personal Benefits The only perquisites we provide are financial planning services and an executive physical program, both of which are commonly provided among our peer companies. Please see the “Summary Compensation Table” for further details. Our NEOs do not receive other personal benefits. | | | | 34 | | 2019 Proxy Statement • Compensation Discussion and Analysis |
Tax Implications Favorable accounting and tax treatment of the various elements of the Company’s total compensation program is an important, but not the sole, consideration in the design of the compensation program. On December 22, 2017, legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”) was enacted that significantly impacts the tax treatment of executive compensation. Historically, Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporationsprovided an exemption from taxation for compensation overin excess of $1,000,000 paid to certain Executive Officers pursuant to a plan that was approved by our Shareholders, and is performance-related andnon-discretionary. The Tax Act eliminated the exception for performance-based compensation, and provides that any fiscal year toindividual identified as a Covered Employee (CEO, CFO and the corporation’s CEO and three other most highly compensated Executive Officers (other thanOfficers) beginning after December 31, 2016 remains a Covered Employee for all future years, and applies the CFO)$1,000,000 limitation to any compensation paid to such Covered Employees after employment ends or death. The Tax Act also included a transition rule according to which the deduction limitation as described above, does not apply to compensation arrangements in place pursuant to a written binding contract that was in effect on November 2, 2017 as long as it is not materially modified after that date. To the extent applicable to our existing contracts and awards, the Committee may avail itself of this transition rule. However, due to uncertainties as to the application and interpretation of Section 162(m), including the scope of the endtransition relief, we expect that compensation paid to our Executive Officers in excess of the fiscal year. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met.$1,000,000 generally will not be deductible. The AIP and LTIP are designed to permit full deductibility and the Committee expects all compensation to be fully deductible. However, the Committee believes that shareholderShareholder interests are best served by not restricting the Committee’s discretion and flexibility in developing compensation programs, even though such programs may result in certainnon-deductible compensation expenses. In order to satisfy the Section 162(m) qualification requirements, the Committee allocated an incentive pool equal to 5.4% of adjusted operating income to certain individuals under the Company’s compensation program. Once the amountexpenses as a result of the poolTax Act, and the specific allocations are determined at the end of the year, the Committee can apply “negative discretion”still intends to reduce (but not increase) the amount of any award payable from the incentive pool to individuals, as determined by the amount payable to each individual based on performance criteria and actual results.utilize performance-based compensation programs. | | | 24 | | 20172019 Proxy Statement • Compensation Discussion and Analysis | | 35 |
Compensation Tables Summary Compensation Table The following table sets forth information regarding compensation of the Company’s Chief Executive Officer, Chief Financial Officer,CEO, CFO, and the three other most highly compensated executive officers during 2016, 2015,2018, 2017, and 2014.2016. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name & Principal
Position | | Year | | | Salary ($) (1) | | | Bonus ($) (2) | | | Stock Awards ($) (3) | | | Option Awards ($) (4) | | | Non-Equity
Incentive Plan
Compensation
($) (5) | | | All Other Compensation ($) | | | Total ($) | | Marita Zuraitis President & Chief Executive Officer | | | 2016 | | | | 800,000 | | | | 0 | | | | 2,580,000 | | | | 420,000 | | | | 898,240 | | | | 57,593 | | | | 4,755,833 | | | | | 2015 | | | | 742,333 | | | | 0 | | | | 770,000 | | | | 330,000 | | | | 749,809 | | | | 55,587 | | | | 2,647,729 | | | | | 2014 | | | | 690,500 | | | | 0 | | | | 700,000 | | | | 300,000 | | | | 929,068 | | | | 45,609 | | | | 2,665,177 | | Dwayne D. Hallman Executive Vice President & Chief Financial Officer | | | 2016 | | | | 457,333 | | | | 0 | | | | 1,016,000 | | | | 150,000 | | | | 308,096 | | | | 22,225 | | | | 1,953,654 | | | | | 2015 | | | | 444,000 | | | | 0 | | | | 350,000 | | | | 150,000 | | | | 298,981 | | | | 28,000 | | | | 1,270,981 | | | | | 2014 | | | | 440,502 | | | | 0 | | | | 350,000 | | | | 150,000 | | | | 329,275 | | | | 30,200 | | | | 1,299,977 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew P. Sharpe Executive Vice President, Life & Retirement | | | 2016 | | | | 400,000 | | | | 0 | | | | 950,000 | | | | 150,000 | | | | 269,472 | | | | 40,927 | | | | 1,810,399 | | | | | 2015 | | | | 394,000 | | | | 0 | | | | 350,000 | | | | 150,000 | | | | 265,312 | | | | 41,508 | | | | 1,200,820 | | | | | 2014 | | | | 354,252 | | | | 0 | | | | 280,000 | | | | 120,000 | | | | 264,803 | | | | 36,053 | | | | 1,055,108 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William J. Caldwell Executive Vice President, Property & Casualty | | | 2016 | | | | 335,417 | | | | 0 | | | | 770,000 | | | | 105,000 | | | | 196,490 | | | | 39,885 | | | | 1,446,792 | | | | | 2015 | | | | 325,000 | | | | 0 | | | | 210,000 | | | | 90,000 | | | | 164,136 | | | | 22,929 | | | | 812,065 | | | | | 2014 | | | | 254,174 | | | | 0 | | | | 122,500 | | | | 52,500 | | | | 136,163 | | | | 25,142 | | | | 590,479 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Kelly J. Stacy Senior Vice President, Field Operations & Distribution | | | 2016 | | | | 300,000 | | | | 0 | | | | 510,000 | | | | 90,000 | | | | 134,736 | | | | 18,950 | | | | 1,053,686 | | | | | 2015 | | | | 130,769 | | | | 200,000 | | | | 310,000 | | | | 90,000 | | | | 134,676 | | | | 44,287 | | | | 909,732 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name & Principal
Position | | Year | | | Salary ($) (1) | | | Bonus ($) (2) | | | Stock Awards ($) (3) | | | Option Awards ($) (4) | | | Non-Equity
Incentive Plan
Compensation ($) (5) | | | All Other Compensation ($) | | | Total ($) | | Marita Zuraitis President & Chief Executive Officer | | | 2018 | | | | 891,667 | | | | 0 | | | | 1,190,000 | | | | 510,000 | | | | 966,745 | | | | 68,578 | | | | 3,626,990 | | | | | 2017 | | | | 841,667 | | | | 0 | | | | 1,085,000 | | | | 465,000 | | | | 803,455 | | | | 60,261 | | | | 3,255,383 | | | | | 2016 | | | | 800,000 | | | | 0 | | | | 2,580,000 | | | | 420,000 | | | | 898,240 | | | | 57,593 | | | | 4,755,833 | | Bret A. Conklin Executive Vice President & Chief Financial Officer | | | 2018 | | | | 345,000 | | | | 0 | | | | 227,500 | | | | 97,500 | | | | 224,429 | | | | 25,354 | | | | 919,783 | | | | | 2017 | | | | 308,126 | | | | 0 | | | | 226,000 | | | | 54,000 | | | | 134,200 | | | | 18,079 | | | | 740,405 | | | | | 2016 | | | | 270,842 | | | | 0 | | | | 372,500 | | | | 52,500 | | | | 106,436 | | | | 17,201 | | | | 819,479 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew P. Sharpe Executive Vice President, Strategy & Business Development | | | 2018 | | | | 423,333 | | | | 0 | | | | 385,000 | | | | 165,000 | | | | 375,387 | | | | 43,724 | | | | 1,392,444 | | | | | 2017 | | | | 412,500 | | | | 0 | | | | 395,500 | | | | 169,500 | | | | 236,264 | | | | 41,696 | | | | 1,255,460 | | | | | 2016 | | | | 400,000 | | | | 0 | | | | 950,000 | | | | 150,000 | | | | 269,472 | | | | 40,927 | | | | 1,810,399 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William J. Caldwell Executive Vice President, Property & Casualty | | | 2018 | | | | 383,333 | | | | 0 | | | | 280,000 | | | | 120,000 | | | | 249,366 | | | | 42,162 | | | | 1,074,861 | | | | | 2017 | | | | 370,833 | | | | 0 | | | | 252,000 | | | | 108,000 | | | | 212,398 | | | | 41,080 | | | | 984,311 | | | | | 2016 | | | | 350,000 | | | | 0 | | | | 770,000 | | | | 105,000 | | | | 196,490 | | | | 39,885 | | | | 1,461,375 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bret L. Benham Executive Vice President, Life & Retirement | | | 2018 | | | | 350,000 | | | | 100,000 | | | | 175,000 | | | | 75,000 | | | | 189,735 | | | | 81,085 | | | | 970,820 | | | | | 2017 | | | | 34,551 | | | | 0 | | | | 250,000 | | | | 0 | | | | 16,491 | | | | 0 | | | | 301,042 | | | | | 2016 | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | n/a | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Represents each NEO’s actual base salary earnings as of December 31, 2016, 20152018, 2017 and 2014,2016, respectively. Mr. StacyBenham was hired in 2015.2017. |
| (2) | For 20152018 this represents asign-on award signing bonus for Mr. Stacy.Benham. |
| (3) | Represents the grant date fair value of service-based and performance-based RSUs granted in 2014 & 2015.2016, 2017, and 2018. Performance-based RSUs are valued based on the probable performance of Target with the potential of 50% to 200% being earned based on performance results. For 2015, this includes an additionalsign-on award for Mr. Stacy. In 2016, it represents the grant date fair value of service based and performance based RSUs, and performance based RSUs based on strategic initiatives. In 2017, it represents the grant date fair value of service based and performance based RSUs. In 2018, it represents the grant date fair value of service based and performance based RSUs. |
| (4) | Represents the grant date fair value of $7.13 per share for stock options granted on March 6, 2018, the grant date fair value of $6.60 per share for stock options granted on March 7, 2017, and the grant date fair value of $5.01 per share for stock options granted on March 9, 2016. For Mr. Stacy, it represents the grant date fair value of $11.52 per share for stock options granted on September 29, 2015. |
| (5) | Represents the cash payout for the AIP earned in each year. Mr. Sharpe’s AIP includes an additional $100,000 related to NTA acquisition. |
| | | 201736 | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 25 |
Detail of All Other Compensation The following table sets forth information regarding all other compensation paid to, or earned by, the NEOs in 2016.2018. | | | | | | | | | | | | | | | | Name & Principal Position | | Perquisites &
Other Personal
Benefits ($) (1) | | | Relocation ($) | | | Company
Contributions to
Defined
Contribution
Plans ($) | | | Total ($) | Marita Zuraitis President and Chief Executive Officer | | | 14,560 | | | | 0 | | | | 43,033 | | | 57,593 | Dwayne D. Hallman Executive Vice President and Chief Financial Officer | | | 0 | | | | 0 | | | | 22,225 | | | 22,225 | Matthew P. Sharpe Executive Vice President, Life & Retirement | | | 14,560 | | | | 0 | | | | 26,367 | | | 40,927 | William J. Caldwell Executive Vice President, Property & Casualty | | | 14,560 | | | | 0 | | | | 25,325 | | | 39,885 | Kelly J. Stacy Senior Vice President, Field Operations and Distribution | | | 0 | | | | 0 | | | | 18,950 | | | 18,950 |
| | | | | | | | | | | | | | | | | | | | | | | Name & Principal Position | | Perquisites &
Other Personal
Benefits
($) (1) | | | Relocation | | | Company
Contributions to Defined Contribution
Plans ($) | | | Total
($) | | | | | | | | Marita Zuraitis
President and Chief Executive
Officer | | | 15,745 | | | �� | 0 | | | | 52,833 | | | | 68,578 | | | | | | | | Bret A. Conklin
Executive Vice President
and Chief Financial Officer | | | 0 | | | | 0 | | | | 25,354 | | | | 25,354 | | | | | | | | Matthew P. Sharpe
Executive Vice President, Strategy &
Business Development | | | 15,745 | | | | 0 | | | | 27,979 | | | | 43,724 | | | | | | | | William J. Caldwell
Executive Vice President, Property &
Casualty | | | 15,745 | | | | 0 | | | | 26,417 | | | | 42,162 | | | | | | | | Bret L. Benham Executive Vice President, Life & Retirement | | | 13,760 | | | | 44,388 | | | | 22,938 | | | | 81,085 | |
| | (1) | Includes the use of a financial planning service to help minimize distractions and help ensure appropriate focus on his or her Company responsibilities. |
CEO Pay Ratio Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we calculate a ratio of total pay for our CEO compared to total pay for our median employee (“CEO Pay Ratio”). To identify our median employee, we use total cash at target(annualized base salary as of 12/31/2018 plus annual bonus target), as we believe this is the most representative measure of annual compensation for our broader employee population. Once the median employee is identified, we compile the same pay elements for the median employee that we do for the NEOs as displayed in the Summary Compensation Table. We then compare total pay of our CEO (as displayed in the “Total $” column of the Summary Compensation Table) to total pay of our median employee. The following table sets forth information regarding CEO Pay Ratio. | | | | | | | | | | | | Total
Pay | | | Pay
Ratio | | Chief Executive Officer | | $ | 3,626,990 | | | | 56:1 | | Median Employee | | $ | 64,357 | |
| | | 26 | | 20172019 Proxy Statement • Compensation Discussion and Analysis | | 37 |
Grants of Plan Based Awards The following table sets forth information concerning the grant of the 20162018 Annual Incentive and the grant of the 20162018 Long-term Incentive for the 20162018 – 20182020 performance period, and the strategic incentive grants.period. Actual payouts under the 20162018 AIP are included in the “Summary Compensation Table.” Payouts for the 20162018 Long-term incentive grant and the determination of the actual RSUs earned will not occur until after the completion of the 20162018 – 20182020 performance period. | | Named Individual | | Grant
Date | | | | | | Estimated Future Payouts UnderNon-Equity Incentive Plan Awards (1) | | | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other
Stock
Awards:
Number
of
Shares
of
Stock
or Units
(#) (3) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) (4) | | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | | Grant
Date
Fair
Value
of
Stock
Option
Awards
($) (5) | | | Grant
Date | | | | | | Estimated Future Payouts
UnderNon-Equity Incentive
Plan Awards (1) | | | | | | Estimated Future Payouts
Under Equity Incentive Plan
Awards (2) | | | All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or Units
(#) (3) | | All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#) (4) | | Exercise
or Base
Price
of
Option
Awards
($/Sh) | | Grant
Date
Fair
Value
of
Stock
Option
Awards
($) (5) | | | | | Incentive
Plan | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | Incentive
Plan | | Threshold
($) | | Target
($) | | Maximum
($) | | | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | Marita Zuraitis | | AIP | | | 400,000 | | | 800,000 | | | 1,600,000 | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | AIP | | | 445,834 | | | 891,667 | | | 1,783,334 | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 37,086 | | | 74,171 | | | 148,342 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 9,030 | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 83,916 | | | $31.01 | | | 420,001 | | | Dwayne D. Hallman | | | | AIP | | | 137,200 | | | 274,400 | | | 548,800 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 14,770 | | | 29,539 | | | 59,078 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 3,225 | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 29,972 | | | $31.01 | | | 150,010 | | | Marita Zuraitis | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 9,896 | | | 19,791 | | | 39,582 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 7,917 | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 71,532 | | | $ | 42.95 | | | 510,000 | | | | | | AIP | | | 103,500 | | | 207,000 | | | 414,000 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | Bret A. Conklin | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 1,892 | | | 3,784 | | | 7,568 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 1,515 | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 13,676 | | | $ | 42.95 | | | 97,500 | | | | | | AIP | | | 120,000 | | | 240,000 | | | 480,000 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | | | AIP | | | 127,000 | | | 254,000 | | | 508,000 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 13,706 | | | 27,411 | | | 54,822 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 3,225 | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 29,972 | | | $31.01 | | | 150,010 | | | Matthew P. Sharpe | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 3,202 | | | 6,403 | | | 12,806 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 2,562 | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 23,144 | | | $ | 42.95 | | | 165,000 | | | | | | AIP | | | 83,854 | | | 167,708 | | | 335,416 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | | | AIP | | | 115,000 | | | 230,000 | | | 460,000 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 11,288 | | | 22,575 | | | 45,150 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 2,259 | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 20,980 | | | $31.01 | | | 105,005 | | | Kelly J. Stacy | | | | AIP | | | 60,000 | | | 120,000 | | | 240,000 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 7,257 | | | 14,513 | | | 29,026 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 1,935 | | | N/A | | | N/A | | | N/A | | | | | | 3/9/2016 | | | LTI | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | 17,984 | | | $31.01 | | | 90,010 | | | William J. Caldwell | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 2,329 | | | 4,657 | | | 9,314 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 1,863 | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | N/A | | | 16,832 | | | $ | 42.95 | | | 120,000 | | | | | | AIP | | | 87,500 | | | 175,000 | | | 350,000 | | | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | Bret L. Benham | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | 1,456 | | | 2,911 | | | 5,822 | | | N/A | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | | | N/A | | | N/A | | | N/A | | | 1,167 | | | N/A | | | N/A | | | N/A | | | | | 3/6/2018 | | | LTI | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | 10,520 | | | $ | 42.95 | | | 75,000 | |
N/A
| (1) | Represents performance-based 20162018 Annual Incentive. |
| (2) | Represents the performance-based portion of the 20162018 Long-term Incentive grant, as well as a performance based RSU grant based on strategic initiatives.grant. |
| (3) | Represents the service-based RSU portion of the 20162018 Long-term Incentive grant. |
| (4) | Represents the stock option portion of the 20162018 Long-term Incentive grant. |
| (5) | Totals equate to each NEO’s 20162018 Long-term Incentive amount. The fair value of stock options was determined using the Black-Scholes model. |
| | | 201738 | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 27 |
Outstanding Equity Awards at Fiscal Year End The following table sets forth information regarding the exercisable and unexercisable stock options, as well as the unvested RSUs held by each NEO at December 31, 2016.2018. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | | Stock Awards (Restricted Stock Units) | | | | Named Individual | | Number of
Securities
Underlying
Unexercised
Options Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) (1) | | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | | Option
Exercise
Price
($) | | | Grant
Date | | | Option
Expiration
Date | | | | | | Number of
Shares or
Units of
Stock that Have
Not Vested (#) (2) | | | Market
Value of
Shares or
Units of
Stock that Have
Not Vested
($) (3) | | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units, or
Other
Rights
that Have Not Vested
(#) (4) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units, or
Other
Rights that Have
Not Vested
($) (3) | | | | | Marita Zuraitis | | | 20,157 | | | | 6,719 | | | | 0 | | | $ | 22.69 | | | | 05/22/13 | | | | 05/22/20 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 16,648 | | | | 16,648 | | | | 0 | | | $ | 28.88 | | | | 03/05/14 | | | | 03/05/24 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7,399 | | | | 22,197 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | 26,919 | | | $ | 1,152,133 | | | | 113,344 | | | $ | 4,851,123 | | | | | | | | 0 | | | | 83,916 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | | | | | | | | | | | | | | | | | | Dwayne D. Hallman | | | 9,545 | | | | 0 | | | | 0 | | | $ | 17.01 | | | | 03/09/11 | | | | 03/09/18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,464 | | | | 0 | | | | 0 | | | $ | 17.32 | | | | 03/07/12 | | | | 03/07/19 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,872 | | | | 4,624 | | | | 0 | | | $ | 20.60 | | | | 03/05/13 | | | | 03/05/20 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,324 | | | | 8,324 | | | | 0 | | | $ | 28.88 | | | | 03/05/14 | | | | 03/05/24 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,363 | | | | 10,089 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 29,972 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | 14,978 | | | $ | 641,058 | | | | 48,080 | | | $ | 2,057,824 | | | | | Matthew P. Sharpe | | | 14,976 | | | | 0 | | | | 0 | | | $ | 17.32 | | | | 03/07/12 | | | | 03/07/19 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,325 | | | | 2,775 | | | | 0 | | | $ | 20.60 | | | | 03/05/13 | | | | 03/05/20 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,660 | | | | 6,660 | | | | 0 | | | $ | 28.88 | | | | 03/05/14 | | | | 03/05/24 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,363 | | | | 10,089 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | 12,061 | | | $ | 516,211 | | | | 43,996 | | | $ | 1,883,029 | | | | | | | | 0 | | | | 29,972 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | | | | | | | | | | | | | | | | | | William J. Caldwell | | | 2,391 | | | | 797 | | | | 0 | | | $ | 30.24 | | | | 12/11/13 | | | | 12/11/20 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,914 | | | | 2,914 | | | | 0 | | | $ | 28.88 | | | | 03/05/14 | | | | 03/05/24 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,018 | | | | 6,054 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | 5,587 | | | $ | 239,124 | | | | 31,480 | | | $ | 1,347,344 | | | | | | | | 0 | | | | 20,980 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | | | | | | | | | | | | | | | | | | Kelly J. Stacy | | | 0 | | | | 5,862 | | | | 0 | | | $ | 33.41 | | | | 09/29/15 | | | | 09/29/25 | | | | | | | | 5,323 | | | $ | 227,824 | | | | 19,607 | | | $ | 839,180 | | | | | | | | 0 | | | | 17,984 | | | | 0 | | | $ | 31.01 | | | | 03/09/15 | | | | 03/9/26 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | | | | Stock Awards (Restricted Stock Units) | | | Named Individual | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) (1) | | | Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | | Option
Exercise
Price
($) | | | Grant
Date | | | Option
Expiration
Date | | | | | | Number of
Shares or
Units of
Stock
that Have
Not Vested
(#) (2) | | | Market
Value of
Shares or
Units of
Stock
that Have
Not Vested
($) (3) | | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units, or
Other
Rights
that
Have
Not Vested
(#) (4) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units, or
Other
Rights
that Have
Not Vested
($) (3) | | Marita Zuraitis | | | 9,248 | | | | 0 | | | | 0 | | | $ | 22.69 | | | | 05/22/13 | | | | 05/22/20 | | | | | | | | | | | | | | | | | | | | | | | | | | 33,296 | | | | 0 | | | | 0 | | | $ | 28.88 | | | | 03/05/14 | | | | 03/05/24 | | | | | | | | | | | | | | | | | | | | | | | | | | 22,197 | | | | 7,399 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | 19,344 | | | $ | 724,433 | | | | 120,466 | | | $ | 4,511,452 | | | | | | 41,958 | | | | 41,958 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | | | | | | | | | | | | | | | | | | | 17,606 | | | | 52,818 | | | | 0 | | | $ | 41.95 | | | | 03/07/17 | | | | 03/07/27 | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 71,532 | | | | 0 | | | $ | 42.95 | | | | 03/06/18 | | | | 03/06/28 | | | | | | | | | | | | | | | | | | | | | | ��Bret A. Conklin | | | 7,488 | | | | 0 | | | | 0 | | | $ | 17.32 | | | | 03/07/12 | | | | 03/07/19 | | | | | | | | | | | | | | | | | | | | | | | | | | 5,552 | | | | 0 | | | | 0 | | | $ | 20.60 | | | | 03/05/13 | | | | 03/05/20 | | | | | | | | | | | | | | | | | | | | | | | | | | 5,828 | | | | 0 | | | | 0 | | | $ | 28.88 | | | | 03/05/14 | | | | 03/05/24 | | | | | | | | | | | | | | | | | | | | | | | | | | 3,534 | | | | 1,178 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | 3,892 | | | $ | 145,755 | | | | 19,243 | | | $ | 720,650 | | | | | | 5,246 | | | | 5,246 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | | | | | | | | | | | | | | | | | | | 2,045 | | | | 6,135 | | | | 0 | | | $ | 41.95 | | | | 03/07/17 | | | | 03/07/27 | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 13,676 | | | | 0 | | | $ | 42.95 | | | | 03/06/18 | | | | 03/06/28 | | | | | | | | | | | | | | | | | | | | | | Matthew P. Sharpe | | | 4,813 | | | | 0 | | | | 0 | | | $ | 28.88 | | | | 03/05/14 | | | | 03/05/24 | | | | | | | | | | | | | | | | | | | | | | | | | | 10,089 | | | | 3,363 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | 6,788 | | | $ | 254,211 | | | | 43,486 | | | $ | 1,628,551 | | | | | | 14,986 | | | | 14,986 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | | | | | | | | | | | | | | | | | | | 6,418 | | | | 19,254 | | | | 0 | | | $ | 41.95 | | | | 03/07/17 | | | | 03/07/27 | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 23,144 | | | | 0 | | | $ | 42.95 | | | | 03/06/18 | | | | 03/06/28 | | | | | | | | | | | | | | | | | | | | | | William J. Caldwell | | | 3,880 | | | | 2,018 | | | | 0 | | | $ | 32.35 | | | | 03/04/15 | | | | 03/04/25 | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 10,490 | | | | 0 | | | $ | 31.01 | | | | 03/09/16 | | | | 03/09/26 | | | | | | | | | | | | | | | | | | | | | | | | | | 4,090 | | | | 12,270 | | | | 0 | | | $ | 41.95 | | | | 03/07/17 | | | | 03/07/27 | | | | | | | | 4,411 | | | $ | 165,192 | | | | 33,855 | | | $ | 1,267,870 | | | | | | 0 | | | | 16,832 | | | | 0 | | | $ | 42.95 | | | | 03/06/18 | | | | 03/06/28 | | | | | | | | | | | | | | | | | | | | | | Bret L. Benham | | | 0 | | | | 10,520 | | | | 0 | | | $ | 42.95 | | | | 03/06/18 | | | | 03/06/28 | | | | | | | | 3,990 | | | $ | 149,426 | | | | 5,781 | | | $ | 216,498 | |
| (1) | Long-term Incentive stock option grants are service-based and all unexercisableexercisable options vest on each anniversary of the grant date at a rate of 25% of the original grant. |
| (2) | Represents the unvested service-based RSUs granted in 2012, 2013, 2014, 2015, 2016, 2017, and 2016.2018. |
| (3) | Represents the value of the RSUs based on the closing stock price of $42.80our Common Stock ($37.45) at December 31, 2016.2018. |
| (4) | The performance-based RSUs granted in 2014 will not be earned until the end of the 2014-2016 performance period. RSUs earned at the end of the performance period will vest 100% in 2017. The performance-based RSUs granted in 2015 will not be earned until the end of the 2015-2017 performance period. RSUs earned at the end of the performance period will vest 100% in 2018. The performance-based RSUs granted in 2016 will not be earned until the end of the 2016-2018 performance period. RSUs earned at the end of the performance period will vest 100% in 2019. The performance-based RSUs granted in 2017 will not be earned until the end of the 2017-2019 performance period. RSUs earned at the end of the performance period will vest 100% in 2020. The performance-based RSUs granted in 2018 will not be earned until the end of the 2018-2020 performance period. RSUs earned at the end of the performance period will vest 100% in 2021. |
| | | 28 | | 20172019 Proxy Statement • Compensation Discussion and Analysis | | 39 |
Option Exercises and Stock VestVesting The following table sets forth information regarding options exercised and stock awards acquired on vesting by the NEOs in 2016.2018. | | | | | | | | | | | | | | | | | | | | | | | | Named Individual | | Option Awards | | | | | Stock Awards | | | | | Number of Shares
Acquired on
Exercise
(#) | | | Value Realized
on Exercise
($) | | | | | Number of
Shares
Acquired
on Vesting
(#) | | | Value
Realized
on
Vesting
($) (1) | | | | | Marita Zuraitis | | | 0 | | | | 0 | | | | | | 2,311 | | | | 73,004 | | | | | Dwayne D. Hallman | | | 18,475 | | | | 449,121 | | | | | | 14,746 | | | | 458,900 | | | | | Matthew P. Sharpe | | | 0 | | | | 0 | | | | | | 1,051 | | | | 33,201 | | | | | William J. Caldwell | | | 0 | | | | 0 | | | | | | 4,757 | | | | 169,989 | | | | | Kelly J. Stacy | | | 1,954 | | | | 18,696 | | | | | | 1,608 | | | | 52,444 | |
| | | | | | | | | | | | | | | | | | | Named Individual | | Option Awards | | | | | Stock Awards | | | | Number of Shares
Acquired on
Exercise
(#) | | | Value Realized
on Exercise
($) | | | | | Number of
Shares
Acquired
on Vesting
(#) | | | Value
Realized on
Vesting ($) (1) | | | | | | | | | Marita Zuraitis | | | 0 | | | | 0 | | | | | | 32,827 | | | | 1,411,913 | | | | | | | | | Bret A. Conklin | | | 7,100 | | | | 183,131 | | | | | | 6,029 | | | | 258,960 | | | | | | | | | Matthew P. Sharpe | | | 16,400 | | | | 324,281 | | | | | | 14,236 | | | | 612,088 | | | | | | | | | William J. Caldwell | | | 19,289 | | | | 267,367 | | | | | | 7,928 | | | | 341,218 | | | | | | | | | Bret L. Benham | | | 0 | | | | 0 | | | | | | 0 | | | | 0 | |
| (1) | The value realized on vesting of stock awards is determined by multiplying the number of shares vested by the closing stock price on the date of vesting. The actual amounts realized from vested stock awards will depend upon the sale price of the shares when they are actually sold. |
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans The following table sets forth information regarding participation by the NEOs in the Company’s NQDCP and the nonqualified deferred compensation plan as of December 31, 2016.2018. | | | | | | | | | | | | | | | | | | | | | | | | Named Individual | | Account Name | | Executive
Contributions in
Last FY
($) | | | Registrant
Contributions in
Last FY
($) (1) | | | Aggregate
Earnings
in Last FY
($) (2) | | | Aggregate
Balance
at Last FYE
($) | | | | | Marita Zuraitis | | NQDCP Account | | | 0 | | | | 26,750 | | | | 726 | | | | 62,412 | | | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | Dwayne D. Hallman | | NQDCP Account | | | 0 | | | | 9,617 | | | | 792 | | | | 60,074 | | | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 78,086 | | | | 315,735 | | | | | Matthew P. Sharpe | | NQDCP Account | | | 0 | | | | 6,750 | | | | 238 | | | | 21,867 | | | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | William J. Caldwell | | NQDCP Account | | | 0 | | | | 4,250 | | | | 46 | | | | 7,296 | | | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | Kelly J. Stacy | | NQDCP Account | | | 0 | | | | 1,750 | | | | 0 | | | | 1,750 | | | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | Named Individual | | Account Name | | Executive
Contributions in
Last FY
($) | | | Registrant
Contributions in
Last FY
($) (1) | | | Aggregate
Earnings
in Last FY
($) (2) | | | Aggregate
Balance
at Last FYE
($) | | | | | | | | | | Marita Zuraitis | | NQDCP Account | | | 0 | | | | 30,833 | | | | 1,817 | | | | 124,684 | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | Bret A. Conklin | | NQDCP Account | | | 0 | | | | 3,500 | | | | 194 | | | | 14,449 | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | -51,224 | | | | 350,156 | | | | | | | | | | Matthew P. Sharpe | | NQDCP Account | | | 0 | | | | 7,417 | | | | 536 | | | | 37,270 | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | William J. Caldwell | | NQDCP Account | | | 0 | | | | 5,417 | | | | 232 | | | | 18,105 | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | Bret L. Benham | | NQDCP Account | | | 0 | | | | 3,750 | | | | 7 | | | | 3,757 | | | | | Deferred Compensation Account | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| (1) | Represents the 20162018 NQDCP registrant Company contributions. These contributions are included in the All Other Compensation column of the “Summary Compensation Table” for 2016.2018. |
| (2) | Represents (a) the gainsgains/losses in the NQDCP in 20162018 and (b) the change in the deferred compensation account balance reflecting changes in the closing stock price of HMEC Common Stock from December 31, 20152017 to December 31, 2016,2018, each excluding contributions reflected in the first two columns. |
| | | 201740 | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 29 |
Illustration of Potential Payments upon Termination or Change in Control The following table presents the estimated payments and benefits that would have been payable as of the end of 20162018 in the event of separation due to disability or death, cause, voluntary termination of employment, retirement, involuntary termination of employment without cause, and a change of control of the Company. Consistent with SEC requirements, these estimated amounts have been calculated as if the NEOs’ employment had been terminated as of December 30, 2016,31, 2018, the last business day of 2016,2018, using the closing market price of our Common Stock on that date ($42.80)37.45). The amounts reported in the following table are hypothetical amounts based on the disclosure of compensation information about the NEOs. Actual payments will depend on the circumstances and timing of any termination of employment or other triggering event. | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Payments ($) Assuming Termination as of December 31, 2016 (1)(2) | | | | | Name & Benefits | | Disability or Death | | | For Cause | | | Voluntary | | | Involuntary
Termination w/o Cause | | | Change in
Control | | | | | Marita Zuraitis | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 3,200,000 | | | | 4,000,000 | | | | | AIP | | | 800,000 | | | | 0 | | | | 0 | | | | 800,000 | | | | 800,000 | | | | | Acceleration of Stock Options | | | 989,370 | | | | 0 | | | | 0 | | | | 0 | | | | 989,370 | | | | | Acceleration of RSUs | | | 3,362,596 | | | | 0 | | | | 0 | | | | 0 | | | | 5,721,504 | | | | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 38,019 | | | | 38,019 | | | | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | | TOTAL | | | 5,151,966 | | | | 0 | | | | 0 | | | | 4,038,019 | | | | 11,548,893 | | | | | Dwayne D. Hallman | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | AIP | | | 329,275 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | Acceleration of Stock Options | | | 353,370 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | Acceleration of RSUs | | | 1,229,273 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | TaxGross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | | TOTAL | | | 1,911,918 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | Matthew P. Sharpe | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 960,000 | | | | 1,280,000 | | | | | AIP | | | 240,000 | | | | 0 | | | | 0 | | | | 240,000 | | | | 240,000 | | | | | Acceleration of Stock Options | | | 353,370 | | | | 0 | | | | 0 | | | | 0 | | | | 353,370 | | | | | Acceleration of RSUs | | | 1,089,046 | | | | 0 | | | | 0 | | | | 0 | | | | 1,981,426 | | | | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 38,019 | | | | 38,019 | | | | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | | TOTAL | | | 1,682,416 | | | | 0 | | | | 0 | | | | 1,238,019 | | | | 3,892,815 | | | | | William J. Caldwell | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 787,500 | | | | 1,050,000 | | | | | AIP | | | 175,000 | | | | 0 | | | | 0 | | | | 175,000 | | | | 175,000 | | | | | Acceleration of Stock Options | | | 247,354 | | | | 0 | | | | 0 | | | | 0 | | | | 247,354 | | | | | Acceleration of RSUs | | | 809,491 | | | | 0 | | | | 0 | | | | 0 | | | | 1,519,786 | | | | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 10,887 | | | | 10,887 | | | | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | | TOTAL | | | 1,231,845 | | | | 0 | | | | 0 | | | | 973,387 | | | | 3,003,027 | | | | | Kelly J. Stacy | | | | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 420,000 | | | | 630,000 | | | | | AIP | | | 120,000 | | | | 0 | | | | 0 | | | | 120,000 | | | | 120,000 | | | | | Acceleration of Stock Options | | | 212,031 | | | | 0 | | | | 0 | | | | 0 | | | | 212,031 | | | | | Acceleration of RSUs | | | 554,688 | | | | 0 | | | | 0 | | | | 0 | | | | 1,032,849 | | | | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 17,408 | | | | 17,408 | | | | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | | TOTAL | | | 886,719 | | | | 0 | | | | 0 | | | | 557,408 | | | | 2,012,288 | |
| | | | | | | | | | | | | | | | | | | | | Estimated Payments ($) Assuming Termination as of December 31, 2018 (1)(2) | | Name & Benefits | | Disability or Death | | | For Cause | | | Voluntary | | | Involuntary Termination w/o Cause | | | Change in Control | | Marita Zuraitis | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 3,600,000 | | | | 4,500,000 | | AIP | | | 900,000 | | | | 0 | | | | 0 | | | | 900,000 | | | | 900,000 | | Acceleration of Stock Options | | | 307,944 | | | | 0 | | | | 0 | | | | 0 | | | | 307,944 | | Acceleration of RSUs | | | 4,130,425 | | | | 0 | | | | 0 | | | | 0 | | | | 4,856,479 | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 23,175 | | | | 23,175 | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | TOTAL | | | 5,338,369 | | | | 0 | | | | 0 | | | | 4,523,175 | | | | 10,587,598 | | Bret A. Conklin | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 840,000 | | | | 1,120,000 | | AIP | | | 210,000 | | | | 0 | | | | 0 | | | | 210,000 | | | | 210,000 | | Acceleration of Stock Options | | | 39,792 | | | | 0 | | | | 0 | | | | 0 | | | | 39,792 | | Acceleration of RSUs | | | 669,238 | | | | 0 | | | | 0 | | | | 0 | | | | 805,625 | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 34,032 | | | | 34,032 | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | -346,094 | | TOTAL | | | 919,030 | | | | 0 | | | | 0 | | | | 1,084,032 | | | | 1,863,355 | | Matthew P. Sharpe | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 1,020,000 | | | | 1,360,000 | | AIP | | | 255,000 | | | | 0 | | | | 0 | | | | 255,000 | | | | 255,000 | | Acceleration of Stock Options | | | 113,661 | | | | 0 | | | | 0 | | | | 0 | | | | 113,661 | | Acceleration of RSUs | | | 1,498,462 | | | | 0 | | | | 0 | | | | 0 | | | | 1,742,848 | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 31,630 | | | | 31,630 | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | TOTAL | | | 1,867,123 | | | | 0 | | | | 0 | | | | 1,306,630 | | | | 3,503,139 | | William J. Caldwell | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 924,000 | | | | 1,232,000 | | AIP | | | 231,000 | | | | 0 | | | | 0 | | | | 231,000 | | | | 231,000 | | Acceleration of Stock Options | | | 77,847 | | | | 0 | | | | 0 | | | | 0 | | | | 77,847 | | Acceleration of RSUs | | | 1,160,420 | | | | 0 | | | | 0 | | | | 0 | | | | 1,330,561 | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 21,674 | | | | 21,674 | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | TOTAL | | | 1,469,267 | | | | 0 | | | | 0 | | | | 1,176,674 | | | | 2,893,082 | | Bret L. Benham | | | | | | | | | | | | | | | | | | | | | Cash Severance | | | 0 | | | | 0 | | | | 0 | | | | 787,500 | | | | 1,050,000 | | AIP | | | 175,000 | | | | 0 | | | | 0 | | | | 175,000 | | | | 175,000 | | Acceleration of Stock Options | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Acceleration of RSUs | | | 248,376 | | | | 0 | | | | 0 | | | | 0 | | | | 354,951 | | Health and Welfare | | | 0 | | | | 0 | | | | 0 | | | | 23,151 | | | | 23,151 | | Modified Cap Adjustment (3) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | TOTAL | | | 423,376 | | | | 0 | | | | 0 | | | | 985,651 | | | | 1,603,102 | |
N/A – Not applicable | | (1) | All AIP and LTI earned payouts are assumed to be at target. |
| | (2) | None of the NEOs were retirement eligible at December 31, 2016.2018. |
| | (3) | Benefit reduction to avoid the imposition of a “golden parachute” tax. |
| | | 30 | | 20172019 Proxy Statement • Compensation Discussion and Analysis | | 41 |
Compensation Committee Report The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on our review of, and the discussions with management with respect to, the Compensation Discussion and Analysis, wethe Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. COMPENSATION COMMITTEE STEPHEN J. HASENMILLER,Chairman BEVERLEY J. MCCLURE and GABRIEL L. SHAHEEN,H. WADE REECE,Members Equity Compensation Plan Information The following table provides information as of December 31, 20162018 regarding outstanding awards and shares remaining available for future issuance under the Company’s equity compensation plans (excluding the Horace Mann 401(k) plan): | | | | | | | | | | | | | | | | | | Equity Compensation Plans | | Securities to be
Issued Upon the
Exercise of
Outstanding
Options,
Warrants and
Rights | | | Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights | | | Securities Available for
Future Issuance Under Equity
Compensation Plans (4) | | | | | Plans Approved by Shareholders | | | | | | | | | | | | | | | | Stock Incentive Plans (1) | | | | | | | | | | | | | | | | Stock Options | | | 747,032 | | | $ | 19.05 | | | | N/A | | | | | Restricted Stock Units (2) | | | 1,419,268 | | | | N/A | | | | N/A | | | | | Subtotal | | | 2,166,300 | | | | N/A | | | | N/A | | | | | Deferred Compensation (2)(3) | | | 125,560 | | | | N/A | | | | N/A | | | | | Subtotal | | | 2,291,860 | | | | N/A | | | | 2,882,735 | | | | | Plans Not Approved by Shareholders | | | N/A | | | | N/A | | | | N/A | | | | | Total | | | 2,291,860 | | | | N/A | | | | 2,882,735 | |
| | | | | | | | | | | | | | | | | | Equity Compensation Plans | | Securities to be
Issued Upon the
Exercise of
Outstanding
Options,
Warrants and
Rights | | | Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights | | | Securities Available for
Future Issuance Under Equity
Compensation Plans (4) | | | | | Plans Approved by Shareholders | | | | | | | | | | | | | | | | Stock Incentive Plans (1) | | | | | | | | | | | | | | | | Stock Options | | | 774,821 | | | $ | 36.65 | | | | N/A | | | | | Restricted Stock Units (2) | | | 1,008,249 | | | | N/A | | | | N/A | | | | | Subtotal | | | 1,783,070 | | | | N/A | | | | N/A | | | | | Deferred Compensation (2)(3) | | | 56,786 | | | | N/A | | | | N/A | | | | | Subtotal | | | 1,839,856 | | | | N/A | | | | 1,826,449 | | | | | Plans Not Approved by Shareholders | | | N/A | | | | N/A | | | | N/A | | | | | Total | | | 1,839,856 | | | | N/A | | | | 1,826,449 | |
N/A – Not applicable | | (1) | Includes grants under the HMEC 2010 Comprehensive Executive Compensation Plan, as amended, (“CECP”).CECP. |
| | (2) | No exercise price is associated with the shares of Common Stock issuable under these rights. |
| | (3) | The CECP permits Directors and participants in certain cash incentive programs to defer compensation in the form of Common Stock equivalent units,deferred cash RSUs, which can be settled in cash at the end of the specified deferral period. For purposes of the CECP, Common Stock equivalent unitsdeferred cash RSUs are valued at 100% of the fair market value of Common Stock on the date of crediting to the participant’s deferral account. There are 4544 senior executives of the Company currently eligible to participate in the CECP. The CECP does not reserve a specific number of shares for delivery in settlement of Common Stock equivalent unitsdeferred cash RSUs but instead provides that shares will be available to the extent needed for such settlements. Further information on the CECP appears in the “Compensation Discussion and Analysis”.Analysis.” |
| | (4) | Excludes securities reflected in the Securities to be Issued column and represents shares remaining as part of a fungible share pool. The pool of shares is reduced by 2.5 shares for every “full-value” Awardaward that is granted. |
| | | 201742 | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 31 |
Executive Officers The following is certainprovides biographical information, as of March 15, 2017,2019, with respect to the executive officersExecutive Officers of the Company and its subsidiaries who are not Directors of the Company (together with Marita(Marita Zuraitis, President and Chief Executive Officer, whois a Director and is discussed above under “Board Nominees”, the “Executive Officers”). Dwayne D. Hallman, who was the Chief Financial Officer for fiscal year 2016, is also included. However, Mr. Hallman passed away on February 3, 2017 and Bret A. Conklin, was named Acting Chief Financial Officer as noted below. Dwayne D. Hallman, Deceased55
Executive Vice President and Chief Financial Officer Mr. HallmanConklin was appointed to his present position asof Executive Vice President and Chief Financial Officer in October 2010.April 2017. He joined the Company in January 2003 as Senior Vice President Finance. From September 2000 to December 2002, heand Controller in January 2002. Mr. Conklin previously served as the Chief Financial OfficerVice President of AcceptanceKemper Insurance Companies,from January 2000 through January 2002, where he was responsible for all corporate financial reporting investor relations, the treasury and investment management functions and property-casualty operations. From July 1995 to August 2000, Mr. Hallman served as Vice President, Finance and Treasurer at Highlands Insurance Group, where he was responsible for financial reporting, treasury, planning and office services. He served asaccounting operations; Vice President and Controller of Ranger Insurancethe Company from 1988 to 1995. From 1984 to 1988, Mr. Hallman was associatedJuly 1998 through January 2000; and Vice President and Controller of Pekin Insurance from September 1992 through June 1998. He has seven years of public accounting experience with KPMG Peat Marwick from 1985 to 1992, specializing in its insurance industry practice. Mr. Hallman hadConklin has over 30 years of experience in the insurance industry. Matthew P. Sharpe, 55Bret L. Benham, 58
Executive Vice President, Life & Retirement Mr. SharpeBenham joined the Company in January 2012November 2017 as Executive Vice President, Annuity and Life. Mr. Sharpe was previously with Genworth Financial, Inc. from 1999Life & Retirement. Prior to 2011 wherethat, he most recently served as Senior Vice President. During his tenurePresident of Retirement at Genworth,Ameritas, a position he gainedheld since 2013, and also held executive positions at TIAA-CREF and Fidelity Investments. Mr. Benham has served on multiple industry boards, including the American Council of Life Insurers (ACLI), Insurance Information Institute and Retirement Income Industry Association. He has a proven track record of delivering profitable growth, driving operational excellence, and has an extensive annuityinnovative approach to products and life background while leading a variety of successful growth, product development, strategic, marketing and sales initiatives.distribution. Mr. SharpeBenham has 30over 35 years of experience in the insurance and financial services industry. William J. Caldwell, 4648 Executive Vice President, Property & Casualty Mr. Caldwell was appointed to his present position of Executive Vice President, Property and Casualty in July 2015. He joined the Company in November 2013 as Senior Vice President, Personal Lines, and was appointed Senior Vice President, Property & Casualty in October 2014. Mr. Caldwell previously served as Head of Property Products at QBE North America from June 2011 through November 2013, Senior Vice President of Bank of America from August 2007 to June 2011 and Vice President of Unitrin from June 2001 to August 2007. Mr. Caldwell has over 2025 years of experience in the insurance industry. Kelly J. Stacy, 58Allan C. Robinson, 57
SeniorExecutive Vice President, Field Operations and Distribution& Sales Management
Mr. StacyRobinson was appointed to his present position of Executive Vice President in March 2018 and assumed responsibility for Field Operations and Sales Management in May 2017. He joined the Company in July 2015 as Senior Vice President Field Operations and Distribution. Mr. Stacy previously served as Northeast Regional President with The Hanover Insurance Group, a position he held since 2011. He served as Regional President and led Travelers Select commercial field operations from 2007of Claims. Prior to 2011 and he served as Senior Vice President of marketing and field operations at the Main Street America Group from 1998 to 2007. Mr. Stacy has more than 30 years of property and casualty industry experience leading field operations, distribution and sales. Bret A. Conklin, 53
Senior Vice President, Acting Chief Financial Officer and Controller
Mr. Conklin joinedjoining the Company, as Senior Vice President and Controller in January 2002. He was named the Acting Chief Financial Officer on January 30, 2017. Mr. Conklin previouslyRobinson served as Vice President of KemperClaims at Hanover Insurance Group, an insurance provider, since 2010, and spent 27 years at the Allstate Corporation holding a variety of roles in their claims organization including Vice President. He holds the Chartered Property Casualty Underwriter designation. Mr. Robinson has more than 35 years of experience in the insurance industry.
Matthew P. Sharpe, 57 Executive Vice President, Strategy & Business Development Mr. Sharpe was appointed to his present position as Executive Vice President, Strategy and Business Development in November 2017. He took on that role after modernizing our Life & Retirement suite and infrastructure as Executive Vice President, Life & Retirement, a position he | | | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 43 |
held since joining the Company in January 2012. Prior to joining the Company, Mr. Sharpe was with Genworth Financial, Inc. from January 2000 through January 2002,1999 to 2011 where he was responsible for all corporate financial reportingmost recently served as Senior Vice President. During his tenure at Genworth, he gained an extensive annuity and accounting operations; Vice Presidentlife background while leading a variety of successful growth, product development, strategic, marketing and Controllersales initiatives. He is a member of the Company from July 1998 through January 2000;Board of Directors of the Illinois Life Insurance Council and Vice President and Controller of Pekin Insurance from September 1992 through June 1998. He has seven years of public accounting experience with KPMG Peat Marwick from 1985 to 1992, specializing in its insurance industry practice.Central Illinois Foodbank. Mr. ConklinSharpe has over 30 years of experience in the insurance industry. Sandra L. Figurski, 53
Senior Vice President and Chief Information Officer
Ms. Figurski was appointed to her present position as Senior Vice President and Chief Information Officer in November 2014. She joined the Company in September 2013 as Chief Technology Officer. Ms. Figurski was previously with Allstate Insurance Company from 1981 to 2013 where she most recently served as Vice President and Divisional Chief Information Officer. Ms. Figurski has over 30 years of experience in the insurance industry.
John P. McCarthy, 61
Senior Vice President and Chief Human Resources Officer
Mr. McCarthy joined the Company in May 2014 as Senior Vice President and Chief Human Resources Officer. Mr. McCarthy’s previous experience includes Guardian Life Insurance Company where he worked from December 2008 through March 2014, joining the company as Executive Vice President, Human Resources where he helped build a high-performing organization focusing on talent, leadership and culture. He was with Wachovia Corporation from December 1998 to December 2008, where he held multiple positions including Senior Managing Director. Mr. McCarthy has over 30 years of experience in the financial services and insurance industries.industry.
Donald M. Carley, 4951 Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer Mr. Carley joined the companyCompany in January 2016 as General Counsel. He assumed the additional responsibilities of Corporate Secretary and Chief Compliance Officer in May 2016 and was appointed Senior Vice President in November 2016. Mr. Carley previously served as Associate General Counsel at State Farm Mutual Automobile Insurance Company, a position he heldan insurance provider, since 2008. Prior to that, he spent 10 years in private practice at Sonnenschein Nath & Rosenthal LLP (now known as Dentons), most recently as partner of the firm. Mr. Carley has more than 25 years of private practice and corporate experience with a focus on insurance industry litigation, legislative, regulatory, claims and operational issues. Elizabeth P. Moore, 55 Vice President and Chief Human Resources Officer Ms. Moore was appointed to her present position of Vice President and Chief Human Resources Officer in November 2018. She joined the Company in December 2014 as Vice President, Talent Management. Ms. Moore previously served as Vice President, Talent Management of Guardian Life Insurance from April 2009 through November 2014, Senior Manager HRBP Team of Wells Fargo/Wachovia from 1996 through 2009, and HR Generalist of Northrop Grumman (formerly TRW, Inc.) from 1996 through 1998. She has held roles both as a Human Resources Business Partner and in centers of expertise with a focus on delivering business performance through strategic human capital management. Ms. Moore has over 20 years of experience primarily within the financial services industry. Kimberly A. Johnson, 52 Vice President and Controller Ms. Johnson was appointed to her present position as Vice President and Controller in April of 2017. She joined the Company in 2002 as Assistant Controller. Prior to that, she was with MSI Insurance from 1991 to 2002 where she held multiple positions, including Vice President and Controller, responsible for financial planning and all property and casualty accounting and reporting functions. Ms. Johnson has over 25 years of experience in the insurance industry. | | | 3244 | | 20172019 Proxy Statement • Compensation Discussion and Analysis |
Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding beneficial ownership of shares of Common Stock by each person who is known by the Company to own beneficially more than 5% of the issued and outstanding shares of Common Stock, and by each of the Company’s Directors, Board Nominees and the Company’s Chief Executive Officer, Chief Financial Officer and the other three highest compensated Executive Officers employed at the end of 2016 (collectively the “Named Executive Officers”),NEOs, and by all Directors and Executive Officers of the Company as a group. Information in the table is as of March 15, 2017,2019, except that the ownership information for the 5% beneficial owners is as of December 31, 20162018 based on information reported by such persons to the SEC. Except as otherwise indicated, to the Company’s knowledge all shares of Common Stock are beneficially owned, and investment and voting power is held solely by the persons named as owners. | | | | | | | | | | | | Common Stock Ownership | | Beneficial Ownership Amount | | Percent of Class | | | | | 5% Beneficial Owners | | | | | | | | | | BlackRock, Inc. (1) | | 4,796,814 | | | 11.9 | % | | | | The Vanguard Group, Inc (2) | | 3,494,893 | | | 8.7 | % | | | | Dimensional Fund Advisors LP (3) | | 3,455,373 | | | 8.6 | % | | | | Silvercrest Asset Management Group, LLC (4) | | 2,278,509 | | | 5.7 | % | | | | Hotchkis and Wiley Capital Management, LLC (5) | | 2,100,881 | | | 5.2 | % | | | | Directors, Board Nominees and Executive Officers | | | | | | | | | | Daniel A. Domenech (6) | | 7,050 | | | * | | | | | Stephen J. Hasenmiller | | 31,194 | | | * | | | | | Ronald J. Helow (7) | | 31,813 | | | * | | | | | Beverley J. McClure (8) | | 13,312 | | | * | | | | | H. Wade Reece | | 0 | | | 0.0 | % | | | | Gabriel L. Shaheen (9) | | 52,587 | | | * | | | | | Robert Stricker (10) | | 37,720 | | | * | | | | | Steven O. Swyers (11) | | 6,057 | | | * | | | | | Marita Zuraitis (12) | | 265,449 | | | * | | | | | Dwayne D. Hallman (13) | | 272,342 | | | * | | | | | Matthew P. Sharpe (14) | | 106,553 | | | * | | | | | William J. Caldwell (15) | | 27,258 | | | * | | | | | Kelly J. Stacy (16) | | 7,494 | | | * | | | | | All Directors and Executive Officers as a group (17 persons) (17) | | 977,496 | | | 2.4 | % |
| | | | | | | | | | | | Common Stock Ownership | | Beneficial Ownership Amount | | Percent of Class | | | | | 5% Beneficial Owners | | | | | | | | | | BlackRock, Inc. (1) | | 5,962,193 | | | 14.6 | % | | | | The Vanguard Group, Inc. (2) | | 4,253,013 | | | 10.4 | % | | | | Dimensional Fund Advisors LP (3) | | 3,429,725 | | | 8.4 | % | | | | Victory Capital Management Inc. (4) | | 2,125,555 | | | 5.2 | % | | | | Franklin Mutual Advisers, LLC (5) | | 2,056,363 | | | 5.0 | % | | | | Silvercrest Asset Management Group, LLC (6) | | 2,049,073 | | | 5.0 | % | | | | Directors, Board Nominees and Executive Officers | | | | | | | | | | Mark S. Casady | | 0 | | | 0.0 | % | | | | Daniel A. Domenech (7) | | 15,082 | | | * | | | | | Stephen J. Hasenmiller | | 24,664 | | | * | | | | | Ronald J. Helow (8) | | 39,242 | | | * | | | | | Perry G. Hines | | 0 | | | 0.0 | % | | | | Mark Konen | | 0 | | | 0.0 | % | | | | Beverley J. McClure (9) | | 15,961 | | | * | | | | | H. Wade Reece (10) | | 5,663 | | | * | | | | | Robert Stricker (11) | | 34,828 | | | * | | | | | Steven O. Swyers (12) | | 12,056 | | | * | | | | | Marita Zuraitis (13) | | 491,969 | | | 1.2 | % | | | | Bret A. Conklin (14) | | 96,671 | | | * | | | | | Matthew P. Sharpe (15) | | 168,733 | | | * | | | | | William J. Caldwell (16) | | 72,263 | | | * | | | | | Bret L. Benham (17) | | 3,283 | | | * | | | | | All Directors and Executive Officers as a group (17 persons) (18) | | 1,059,067 | | | 2.5 | % |
* Less than 1% | (1) | BlackRock Inc. (“BlackRock”) has a principal place of business at 55 East 52nd Street, New York, New York 10055. BlackRock has sole voting power with respect to 4,696,4025,850,577 shares and sole investment power with respect to 4,796,8145,962,193 shares. The foregoing is based on Amendment No. 810 to Schedule 13G filed by BlackRock on January 12, 2017.28, 2019. |
| (2) | The Vanguard Group, Inc. (“Vanguard”) has a principal place of business at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Vanguard has sole voting power with respect to 48,32240,068 shares, sole investment power with respect to 3,442,9434,210,859 shares, shared voting power with respect to 5,830 shares and shared investment power with respect to 51,95042,154 shares. The foregoing is based on Amendment No. 58 to Schedule 13G filed by Vanguard on February 13, 2017.12, 2019. |
| (3) | Dimensional Fund Advisors LP (“Dimensional”) has a principal place of business at Building One, 6300 Bee Cave Road, Austin, Texas 78746. Dimensional has sole voting power with respect to 3,348,0873,315,312 shares and sole investment power with respect to 3,455,3733,429,725 shares. Dimensional disclaims beneficial ownership of such securities. The foregoing is based on Amendment No. 1013 to Schedule 13G filed by Dimensional on February 9, 2017.8, 2019. |
| (4) | Victory Capital Management Inc. (“Victory”) has a principal place of business at 4900 Tiedeman Road, 4th Floor, Brooklyn, Ohio 44144. Victory has sole voting power with respect to 2,084,655 shares and sole investment power with respect to 2,125,555 shares. The foregoing is based on the Schedule 13G filed by Victory on February 1, 2019. |
| (5) | Franklin Mutual Advisers, LLC (“Franklin”) has a principal place of business at 101 John F. Kennedy Parkway, Short Hills, New Jersey 07078. Franklin has sole voting power with respect to 1,894,512 shares and sole investment power with respect to 2,056,363 shares. The foregoing is based on the Schedule 13G filed by Franklin on January 30, 2019. |
| (6) | Silvercrest Asset Management Group, LLC (“Silvercrest”) has a principal place of business at 1330 Avenue of the Americas, 38th Floor, New York, New York 10019. Silvercrest has shared voting and investment power with respect to 2,278,5092,049,073 shares. The foregoing is based on Amendment No. 35 to Schedule 13G filed by Silvercrest on February 14, 2017.2019. |
(5) | Hotchkis and Wiley Capital Management, LLC (“Hotchkis and Wiley”) has a principal place of business at 725 South Figueroa Street, 39th Floor, Los Angeles, California 90017. Hotchkis and Wiley has sole voting power with respect to 1,728,861 shares and sole investment power with respect to 2,100,881 shares. Hotchkis and Wiley disclaims beneficial ownership of such securities. The foregoing is based on Amendment No. 2 to Schedule 13G filed by Hotchkis and Wiley on February 10, 2017. |
(6) | Consists entirely of 4,370 CSUs and 2,680 vested RSUs pursuant to the CECP. |
(7) | Consists entirely of 31,813 vested RSUs pursuant to the CECP. |
(8) | Consists entirely of 3,320 CSUs and 9,992 vested RSUs pursuant to the CECP. |
(9) | Consists entirely of 14,628 CSUs and 37,959 vested RSUs pursuant to the CECP. |
(10) | Includes 9,897 CSUs and 24,991 vested RSUs pursuant to the CECP. |
(11) | Consists entirely of 6,057 vested RSUs pursuant to the CECP. |
(12) | Includes 80,906 vested stock options and 182,951 vested RSUs pursuant to the CECP. |
(13) | Includes 120,832 vested stock options, 7,377 CSUs and 125,150 vested RSUs pursuant to the CECP. |
(14) | Includes 50,285 vested stock options and 55,544 vested RSUs pursuant to the CECP. |
(15) | Includes 16,043 vested stock options and 5,649 vested RSUs pursuant to the CECP. |
(16) | Includes 4,496 vested stock options and 1,282 vested RSUs pursuant to the CECP. |
(17) | Includes 332,864 vested stock options, 48,451 CSUs and 530,956 vested RSUs pursuant to the CECP. |
| | | 20172019 Proxy Statement • Compensation Discussion and Analysis | | 3345 |
| (7) | Consists entirely of 6,671 deferred cash RSUs and 8,411 vested share-based RSUs pursuant to the CECP. |
| (8) | Consists entirely of 39,242 vested share-based RSUs pursuant to the CECP. |
| (9) | Includes 12,056 vested share-based RSUs pursuant to the CECP. |
| (10) | Consists entirely of 5,663 vested share-based RSUs pursuant to the CECP. |
| (11) | Includes 10,446 deferred cash RSUs and 12,719 vested share-based RSUs pursuant to the CECP. |
| (12) | Consists entirely of 12,056 vested share-based RSUs pursuant to the CECP. |
| (13) | Includes 188,172 vested stock options and 259,845 vested share-based RSUs pursuant to the CECP. |
| (14) | Includes 31,470 vested stock options, 9,350 deferred cash RSUs and 43,382 vested share-based RSUs pursuant to the CECP. |
| (15) | Includes 51,873 vested stock options and 81,398 vested share-based RSUs pursuant to the CECP. |
| (16) | Includes 23,531 vested stock options and 27,383 vested share-based RSUs pursuant to the CECP. |
| (17) | Includes 2,630 vested stock options and 396 vested share-based RSUs pursuant to the CECP. |
| (18) | Includes 345,845 vested stock options, 26,468 deferred cash RSUs and 532,724 vested share-based RSUs pursuant to the CECP. |
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act requires the Company’s Executive Officers and Directors and other persons who beneficially own more than ten10 percent of HMEC’s outstanding Common Stock, whom the Company refers to collectively as the “Reporting Persons”,Persons,” to file reports of ownership and changes in ownership with the SEC. The Company has established procedures by which Reporting PersonsDirectors and Executive Officers provide relevant information regarding transactions in Common Stock to a Company representative, and the Company prepares and files the required ownership reports. Based on a review of those reports and other written representations, the Company believes that all suchin the most recent fiscal year the Reporting Persons filed the required reports wereon a timely filed in 2016.basis under Section 16(a). PROPOSAL NO. 43 - RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee is directly responsible for the selection, compensation, retention, performance and evaluation of the Company’s independent registered public accounting firm. The Audit Committee considers the independence and evaluates the selection of the independent registered public accounting firm each year. KPMG LLP has been the Company’s independent registered public accounting firm for the past 2730 years (since the Company’s 1989 leveraged buyout). After careful consideration of a number of factors, including length of time the firm has served in this role, the firm’s past performance, and an assessment of the firm’s qualifications and resources, the Audit Committee selected KPMG LLP to serve as the independent registered public accounting firm for the year ending December 31, 2017.2019. As a matter of good corporate governance, the Audit Committee submits its selection of the auditors to the Shareholders for ratification. If the selection of KPMG LLP is not ratified, the Audit Committee will review its future selection of an independent registered public accounting firm in light of the vote result.result, but may nonetheless appoint KPMG LLP if it determines doing so to be in the best interest of the Company and Shareholders. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its Shareholders. A representative from KPMG LLP is expected to be present at the Annual Meeting. The representative will be given an opportunity to make a statement to Shareholders and is expected to be available to respond to appropriate questions from Shareholders. The Board recommends that Shareholders vote FOR the ratification of KPMG LLP, an independent registered public accounting firm, as the Company’s auditors for the year ending December 31, 2017.2019. | | | | 46 | | 2019 Proxy Statement • Compensation Discussion and Analysis |
Report of the Audit Committee Acting under a written charter, the Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. The Audit Committee is comprised of three directors, each of whom is independent as defined by the New York Stock Exchange listing standards. Management has the primary responsibility for the Company’s financial statements and its reporting process, including the Company’s systems of internal controls. In fulfilling its oversight responsibilities, prior to the filing, the Audit Committee reviewed the audited consolidated financial statements in the Annual Report on Form10-K with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and clarity of disclosures in the financial statements. The Audit Committee has discussed with the Company’s independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited consolidated financial statements with United States generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required by applicable requirements of the Public Company Accounting Oversight Board. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and discussed with them their independence from the Company and its management taking into account the potential effect of anynon-audit services provided by the independent registered public accounting firm. The Audit Committee discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their audits, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held twelve meetings during fiscal year 2016.2018. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report on Form10-K for the year ended December 31, 20162018 for filing with the Securities and Exchange Commission. The Audit Committee approved the selection of the Company’s independent registered public accounting firm. AUDIT COMMITTEE STEVEN O. SWYERS,Chairman RONALDSTEPHEN J. HELOW andHASENMILLER AND BEVERLEY J. MCCLURE,Members
| | | 34 | | 20172019 Proxy Statement • Compensation Discussion and Analysis | | 47 |
The Company’s Independent Registered Public Accounting Firm The independent registered public accounting firm selected by the Audit Committee to serve as the Company’s auditors for the year ending December 31, 20172019 is KPMG LLP. KPMG LLP served in that capacity for the year ended December 31, 2016.2018. Fees of KPMG LLP The following were the fees of KPMG LLP for the years ended December 31, 20162018 and 2015.2017. | | | | | | | | | | | | | | | | | | Fees | | 2016 | | | | | | 2015 | | | | | Audit (1) | | | $ 2,229,300 | | | | | | | | $ 2,188,900 | | | | | Audit-Related (2) | | | $ 256,400 | | | | | | | | $ 256,000 | | | | | Tax (3) | | | 0 | | | | | | | | 0 | | | | | All Other (4) | | | 0 | | | | | | | | 0 | |
| | | | | | | | | | | | | Fees | | 2018 | | | 2017 | | Audit (1) | | $ | 3,405,200 | | | $ | 3,405,100 | | Audit-Related (2) | | $ | 110,400 | | | $ | 277,500 | | Tax (3) | | | 0 | | | | 0 | | All Other (4) | | $ | 939,800 | | | | 0 | |
| | (1) | Represents the aggregate fees billed for professional services rendered by KPMG LLP for the audit of the Company’s annual financial statements for the years ended December 31, 20162018 and 2015,2017, the audit of the Company’s internal control over financial reporting as of December 31, 20162018 and 2014,2017, the reviews of the financial statements included in the Company’s quarterly reports on Forms10-Q for the years ended December 31, 20162018 and 20142017 and services in connection with the Company’s statutory and regulatory filings for the years ended December 31, 20162018 and 2015. Fees in 2015 included $148,500 related to the Company’s issuance of its 4.50% Senior Notes due 2025.2017. |
| | (2) | Represents the aggregate fees billed for assurance and related services rendered by KPMG LLP that are reasonably related to the audit and review of the Company’s financial statements for the years ended December 31, 20162018 and 2015,2017, exclusive of the fees disclosed under “Audit Fees”.Fees.” In 20162018 and 2015,2017, KPMG LLP audited the Company’s employee benefits plans. Also in 2016 and 2015,2017, KPMG LLP prepared SOC1 reportsreported on the Company’s SOC1 reports over annuity operations. |
| | (3) | Represents the aggregate fees billed for tax compliance, consulting and planning services rendered by KPMG LLP during the years ended December 31, 20162018 and 2015.2017. |
| | (4) | Represents the aggregate fees billed for all other services, exclusive of the fees disclosed above relating to audit, audit-relatedmerger and taxacquisition due diligence services rendered by KPMG LLP during the yearsyear ended December 31, 2016 and 2015.2018. |
Pre-Approval of Services Provided by the Independent Registered Public Accounting Firm The Audit Committee approves in advance any significant audit and allnon-audit engagements or services between the Company and the independent registered public accounting firm. As a practice, the Audit Committee does not allow “prohibitednon-auditing services” as defined by regulatory authorities to be performed by the same firm that audits the Company’s annual financial statements. The Audit Committee may delegate to one or more of its members the authority to approve in advance all significant audit and allnon-audit services to be provided by the independent registered public accounting firm so long as it is presented to the full Audit Committee at the next regularly scheduled meeting.Pre-approval is not necessary for de minimis audit services as long as such services are presented to the full Audit Committee at the next regularly scheduled meeting. The Audit Committee approved all of the above listed expenses. KPMG LLP did not provide anynon-audit related services during the years ended December 31, 20162018 and 2015. 2017. | | | 201748 | | 2019 Proxy Statement • Compensation Discussion and Analysis | | 35 |
Other Matters Delivery of Proxy Materials Electronic Access to Proxy Materials and Annual Report As we did last year, we are delivering a Notice of Internet Availability of Proxy Materials to Shareholders in lieu of a paper copy of the Proxy Statement and related materials and the Company’s Annual Report to Shareholders and Form10-K. If you received a Notice by mail, you will not receive a paper copy of the Proxy Materials unless you request one. Instead, the Notice will instruct you as to how you may access and review the Proxy Materials and cast your vote. If you received a Notice by mail and would like to receive a paper copy of our Proxy Materials, please follow the instructions included in the Notice. Shareholders also can elect to receive an email message that will provide a link to the Proxy Materials on the Internet. By opting to access your Proxy Materials via email, you will save the Company the cost of producing and mailing documents to you, reduce the amount of mail you receive and help preserve environmental resources. Shareholders who have enrolled previously in the electronic access service will receive their Proxy Materials via email this year. If you received a Notice by mail and would like to receive your Proxy Materials via email, please follow the instructions included in the Notice. Copies of Annual Report onand Form10-K | The Company will furnish, without charge, a copy of its most recent Annual Report onand Form10-K filed with the SEC to each person solicited hereunder who mails a written request to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza,C-120, C-738, Springfield, Illinois, 62715-0001. |
The Company also will furnish, upon request to the Investor Relations address above, a copy of all exhibits to the Annual Report onand Form10-K. In addition, the Company’s Annual Report onand Form10-K, Quarterly Reports on Form10-Q, Current Reports on Form8-K, Proxy Statements and all amendments to those reports are available free of charge through the Company’s Internet website, www.horacemann.com,horacemann.com, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. The EDGAR filings of such reports are also available at the SEC’s website, www.sec.gov.sec.gov. Eliminating Duplicative Proxy Materials If you are a beneficial owner, your bank or broker may deliver a single Proxy Statement and Annual Report, along with individual proxy cards, or individual Notices to any household at which two or more shareholdersShareholders reside unless contrary instructions have been received from you. This procedure, referred to as householding, reduces the volume of duplicate materials shareholdersShareholders receive, and reduces mailing expenses.expenses and helps preserve environmental resources. Shareholders may revoke their consent to future householding mailings or enroll in householding by contacting the Company’s facilitator for distribution of Proxy Materials, Broadridge Financial Solutions, Inc., at1-800-542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Alternatively, if you wish to receive a separate set of Proxy Materials for this year’s Annual Meeting, we will deliver them promptly upon request to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza,C-120,C-738, Springfield, Illinois, 62715-0001 or217-789-2500. Submitting Shareholder Proposals for the 20182020 Annual Meeting of Shareholders Any proposals of Shareholders submitted under Rule14a-8 of the Securities Exchange Act, of 1934, as amended, for inclusion in the Company’s Proxy Statement and Form of Proxy for the next Annual Meeting of Shareholders scheduled to be held in 20182020 must be received in writing by the Corporate Secretary, Horace Mann Educators Corporation, 1 Horace Mann Plaza, Springfield, Illinois, 62715-0001 not later than the close of business on December 12, 20176, 2019 in order for such proposal to be considered for inclusion in the Company’s Proxy Statement and Form of Proxy relating to the 20182020 Annual Meeting of Shareholders. | | | | 2019 Proxy Statement • Other Matters | | 49 |
In the event that a Shareholder intends to present any proposal at the 20182020 Annual Meeting of Shareholders other than in accordance with the procedures set forth inRule14a-8, the Shareholder must give written notice to the Corporate Secretary no less than 45 days prior to the date of the Annual Meeting setting forth the business to be brought before the meeting. Accordingly, proxies solicited by the Board for the 20182020 Annual Meeting will confer upon the proxy holders discretionary authority to vote on any matter so presented of which the Company does not have notice prior to April 8, 2018,5, 2020, which is 45 days prior to the anticipated Annual Meeting date of May 23, 2018.20, 2020. | | | 3650 | | 20172019 Proxy Statement • Other Matters |
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HA-C00385 (Mar. 19) 
| | | | |  | | | | VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 05/21/2019 for shares held directly and by 11:59 P.M. ET on 05/19/2019 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | HORACE MANN EDUCATORS CORPORATION 1 HORACE MANN PLAZA SPRINGFIELD, IL 62715-0001 | | | | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | | | | | VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 05/21/2019 for shares held directly and by 11:59 P.M. ET on 05/19/2019 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
HORACE MANN EDUCATORS CORPORATION 1 HORACE MANN PLAZA SPRINGFIELD, IL 62715-0001 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees For Against Abstain 1a Daniel A. Domenech 0 0 0 The Board of Directors recommends you vote FOR Proposal 2. For Against Abstain 1b Stephen J. Hasenmiller 0 0 0 2 Approval of the advisory resolution to approve 0 0 0 Named Executive Officers’ compensation. 1c Ronald J. Helow 0 0 0 The Board of Directors recommends you vote 1 YEAR on Proposal 3. 1 year 2 years 3 years Abstain 1d Beverley J. McClure 0 0 0 3 Advisory vote on the frequency of future 0 0 0 0 advisory votes on Named Executive Officers’ Compensation. 1e H. Wade Reece 0 0 0 1f Gabriel L. Shaheen 0 0 0 The Board of Directors recommends you vote FOR Proposal 4. For Against Abstain 1g Robert Stricker 0 0 0 4 Ratification of the appointment of KPMG LLP, an 0 0 0 independent registered public accounting firm, as the company’s auditors for the year ending 1h Steven O. Swyers 0 0 0 December 31, 2017. 1i Marita Zuraitis 0 0 0 NOTE: Such other business as may properly come R1.0.1.15 before the meeting or any adjournment thereof. 1 _ Materials Election - Check this box if you want to 0 Please sign exactly as your name(s) appear(s) hereon. When signing as receive a complete set of future proxy materials by attorney, executor, administrator, or other fiduciary, please give full mail, at no extra cost. If you do not take action title as such. Joint owners should each sign personally. All holders must you may receive only a Notice to inform you of the sign. If a corporation or partnership, please sign in full corporate or 0000326554 Internet availability of proxy materials. partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FORthe following: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees | | For | | Against | | Abstain | | | | | | | | | |
| The Board of Directors recommends you vote FOR
proposals 2 and 3. | | For | | Against | | Abstain | | | | | 1a | | Mark S. Casady | | ☐ | | ☐ | | ☐ | | | | | | | | | 1b | | Daniel A. Domenech | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 2 | | | Approval of the advisory resolution to approve Named Executive Officers' compensation. | | ☐ | | ☐ | | ☐ | | | | | 1c | | Stephen J. Hasenmiller | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | 1d | | Perry G. Hines | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 3 | | | Ratification of the appointment of KPMG LLP, an independent registered public accounting firm, as the company's auditors for the year ending December 31, 2019. | | ☐ | | ☐ | | ☐ | | | | | 1e | | Mark E. Konen | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | 1f | | Beverley J. McClure | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | 1g | | H. Wade Reece | | ☐ | | ☐ | | ☐ | | | | | | | | | |
| NOTE:Such other business as may properly come
before the meeting or any adjournment thereof.
| | | | | | | | | | | 1h | | Robert Stricker | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | 
| | | | 1i | | Steven O. Swyers | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | 1j | | Marita Zuraitis | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full
title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or
partnership name by authorized officer. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | | | | | | | | | | | | Signature (Joint Owners) | | Date | | | | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, Form 10-K/Annual Report is/are available atwww.proxyvote.com HORACE MANN EDUCATORS CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 24, 2017 The undersigned Shareholder of Horace Mann Educators Corporation (the “Company”) hereby appoints Gabriel L. Shaheen and Marita Zuraitis, or any of them, with full power of substitution, proxies to vote at the Annual Meeting of Shareholders of the Company (the “Meeting”), to be held on May 24, 2017 at 9:00 a.m. Central Daylight Saving Time, at the Horace Mann Lincoln Auditorium, 1 Horace Mann Plaza, Springfield, Illinois, and at any adjournment thereof and to vote all shares of Common Stock of the Company held or owned by the Undersigned as directed on the reverse side and in their discretion upon such other matters as may come before the Meeting. THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSALS 2 AND 4, FOR 1 YEAR ON PROPOSAL 3, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. R1.0.1.15 _ 2 0000326554 Continued and to be signed on reverse side — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | HORACE MANN EDUCATORS CORPORATION | | | | | | | | | | | PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | | | | | | | | | | | FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 22, 2019 | | | | | | | | | | | | | | | | | | | | The undersigned Shareholder of Horace Mann Educators Corporation (the “Company”) hereby appoints H. Wade Reece and Marita Zuraitis, or any of them, with full power of substitution, proxies to vote at the Annual Meeting of Shareholders of the Company (the “Meeting”), to be held on May 22, 2019 at 9:00 a.m. Central Daylight Saving Time, at the Horace Mann Lincoln Auditorium, 1 Horace Mann Plaza, Springfield, Illinois, and at any adjournment thereof and to vote all shares of Common Stock of the Company held or owned by the Undersigned as directed on the reverse side and in their discretion upon such other matters as may come before the Meeting. | | | | | | | 
| | | | THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSALS 2 AND 3, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. | | | | | | Continued and to be signed on reverse side | | |
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