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1. | To elect three directors for terms expiring in 2018; |
2. | To vote to approve the compensation of the Company’s named executive officers on a non-binding, advisory basis; |
3. | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent auditor for the fiscal year ending December 31, 2015; and |
4. | To transact such other business as may properly come before the meeting. |
REINSURANCE GROUP OF AMERICA, INCORPORATED | |
By | |
J. Cliff Eason Chairman of the Board | |
William L. Hutton Secretary |
Page No. | |
Board Nominees (page 4) |
Name | Director Since | Independent | Election for Term Ending | Committee Memberships |
Frederick Sievert | 2010 | Yes | 2018 | Compensation; Nominating & Governance |
Stanley Tulin | 2012 | Yes | 2018 | Compensation; Finance, Investment and Risk Management |
Greig Woodring | 1993 | No | 2018 | Finance, Investment and Risk Management |
Our Board and Its Committees (page 17) |
Number of Members | Percent Independent | Number of Meetings in 2014 | |
Full Board | 10 | 90% | 6 |
Audit | 4 | 100% | 8 |
Compensation | 5 | 100% | 6 |
Finance, Investment, Risk Management | 5 | 80% | 5 |
Nominating & Governance | 5 | 100% | 5 |
Governance Facts (page 14) |
Size of Board | 10 |
Number of Independent Directors | 9 |
Audit and Compensation Committees Comprised Entirely of Independent Directors | Yes |
Independent Presiding Director | Yes |
Separate Chairman and CEO | Yes |
Majority Voting for Directors in Uncontested Elections | Yes |
Advisory Vote on Executive Compensation | Annual |
Annual Board and Committee Self-Evaluations | Yes |
Stock Ownership Guidelines for Directors and Executive Officers | Yes |
Restrictions on Hedging and Pledging of Company Shares for Directors and Employees | Yes |
Executive Incentive Recoupment (Clawback) Policy | Yes |
Shareholder Rights Plan (Poison Pill) | No |
• | Our stock price increased 13% from December 31, 2013 through December 31, 2014. |
• | Our net premiums increased $415.8 million, or 5%, compared to 2013. |
• | Our net operating income for 2014 increased 78% to $638.0 million, for a total of $9.12 per diluted share.* |
• | Our full year operating return on equity was 13% for 2014.* |
• | Our book value per share, excluding AOCI, increased 12% in 2014. |
2014 Executive Compensation Highlights (page 20) |
Annual Bonus Plan (based only on overall Company financial performance) | ||
Payout | 194.6% of target | |
Metric | Actual Results | % of Target Payout |
Operating Income Per Share* (50%) | $9.12/share | 200.0% |
Book Value Per Share (25%) | $78.03/share | 178.5% |
New Business Embedded Value (15%) | $695 million | 200.0% |
Annual Consolidated Revenue (10%) | $10.9 billion | 200.0% |
2012-2014 Performance Contingent Share Program | ||
Payout | To be determined late April 2015 | |
Metric | Actual Results | % of Target Payout |
Three-Year Cumulative Revenue Growth Rate | 8.2% | 108.9% |
Three-Year Operating Return on Equity* | 10.5% | 62.6% |
Three-Year Relative Return on Equity | To be determined late April 2015 | To be determined late April 2015 |
*See "Use of Non-GAAP Financial Metrics" on page 58 for reconciliations to GAAP figures. |
Five Elements of Executive Compensation (page 26) |
Element | Form | Key Features | |||
1. | Base Salary | Cash | ● | Intended to attract and retain top talent | |
● | Generally positioned near the 50th percentile of our pay level peer group, but varies with individual skills, experience, responsibilities and performance | ||||
● | Represents approximately 30.2% of named executive officer (NEO) target total compensation for 2014 | ||||
2. | Annual Bonus Plan | Cash | ● | Tied to one or more of the following factors: overall Company performance, performance of the participant’s division or business unit and/or individual performance | |
● | Performance goals established at the beginning of each fiscal year | ||||
● | Payouts range from 0% of target payout to 200% of target payout, depending on performance | ||||
● | Intended to motivate annual performance with respect to key financial and other measures | ||||
● | Represents approximately 26.6% of NEO target total compensation for 2014 | ||||
3. | Performance Contingent Shares | Equity | ● | Tied to cumulative revenue growth rate, ROE and relative ROE performance over a three-year period | |
● | Performance goals established at the beginning of each 3-year cycle | ||||
● | Payouts range from 0% of target payout to 200% of target payout, depending on performance | ||||
● | Intended to motivate intermediate performance with respect to key financial measures and align our NEOs’ interests with those of our shareholders | ||||
● | Represents approximately 30.5% of NEO target total compensation for 2014 | ||||
4. | Stock Appreciation Rights | Equity | ● | Fully vests on December 31 of the fourth year of grant (25% per year) | |
● | Intended to motivate long-term performance, promote appropriate risk-taking, align our NEOs’ interests with shareholders’ interests and promote retention | ||||
● | Represents approximately 12.7% of NEO target total compensation for 2014 | ||||
5. | Retirement and Pension Benefits | Cash | ● | Savings Plan with 401(k) (pre-tax) and Roth 401(k) (after-tax) plan components that provide Company matching contributions in compliance with IRS limitations | |
● | Qualified pension plan that is a broad-based retirement plan that is intended to provide a source of income during retirement | ||||
● | Nonqualified restoration savings and pension plans, that provides contributions without regard to IRS limitations | ||||
● | Nonqualified savings plan in which deferrals are made on a pre-tax basis without regard to qualified plan limitations |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Company’s Notice of Annual Meeting, 2015 Proxy Statement and 2014 Annual Report to Shareholders are available on the Company’s website at www.rgare.com. Information on our website does not constitute part of this Proxy Statement. | |||||
• | Vote again by telephone or at the Internet website. |
• | Mail a revised proxy card or voting instruction form that is dated later than the prior one. |
• | Vote in person at the Annual Meeting. |
• | Notify the Company’s Corporate Secretary in writing that a prior proxy is revoked or voting instructions are changed. |
2015 PROPOSALS AND VOTING INFORMATION | |||||
Proposal | Voting Options | Vote Required to Adopt the Proposal | More Information | Board Recommendation | |
1. | Election of Directors | For, against, or abstain for each nominee | If a quorum is present, the vote required to elect each director is a majority of the common stock represented in person or by proxy at the Annual Meeting. | page 4 | FOR each nominee |
2. | Shareholders’ Advisory Vote on Executive Compensation | For, against, or abstain | If a quorum is present, the vote required to approve Item 2 is a majority of the common stock represented in person or by proxy at the Annual Meeting. | page 50 | FOR |
3. | Ratification of Appointment of Independent Auditor | For, against, or abstain | If a quorum is present, the vote required to approve Item 3 is a majority of the common stock represented in person or by proxy at the Annual Meeting. | page 51 | FOR |
● | This Proxy Statement and our 2014 Annual Report to Shareholders; |
● | Our Principles of Ethical Business Conduct, Directors’ Code of Conduct and Financial Management Code of Professional Conduct (see page 14); |
● | Our Board’s Corporate Governance Guidelines and charters for the Audit, Compensation, Nominating and Governance and Finance, Investment and Risk Management Committees. The committee charters include a detailed description of the roles and responsibilities of each committee (see page 17); |
● | The process by which interested parties and shareholders can communicate with our directors and the Board; and |
● | Additional financial information can be found in the Quarterly Financial Supplement on the Investor Relations portion of the website in the "Quarterly Results" tab in the "Featured Report" section. |
Shareholder Request | RGA Contact |
A copy of any of the codes of conduct or governance documents described above | Investor Relations |
A copy of our Articles of Incorporation, Bylaws, this Proxy Statement, form of proxy card and our Annual Report to Shareholders | Corporate Secretary |
Interested parties and shareholders may communicate directly with our Chairman of the Board, Mr. Eason | General Counsel |
Frederick J. Sievert | |
Business Experience: Mr. Sievert was President of New York Life Insurance Company from 2002 through 2007. Mr. Sievert shared responsibility for overall company management in the Office of the Chairman from 2004 until his retirement in 2007. He joined New York Life in 1992 as Senior Vice President and Chief Financial Officer. In 1995, he was promoted to Executive Vice President and was elected to the Board of Directors in 1996. In addition, he was President and a member of the board of New York Life Insurance and Annuity Corporation, served as Chairman of the Board of NYLIFE Insurance Company of Arizona, and served on the Board of Directors for Max New York Life, the company’s joint venture in India, Siam Commercial New York Life, the joint venture in Thailand and the company’s South Korea operation. Prior to joining New York Life, Mr. Sievert was a senior vice president for Royal Maccabees Life Insurance Company, a subsidiary of the Royal Insurance Group of London, England. Mr. Sievert currently serves as a director of CNO Financial Group, Inc. | |
Retired President of New York Life Insurance Company | Skills and Qualifications: Experience as an executive officer of a major U.S.-based life insurance company with international operations; life insurance business and insurance regulation; investments; risk management |
Age: 67 Director since: 2010 Independent | |
Stanley B. Tulin | |
Business Experience: Mr. Tulin joined AXA Equitable in 1996 as Senior Executive Vice President and CFO. He served on the AXA Group Executive Committee from 2000 through 2006. Since his retirement in 2006, Mr. Tulin has regularly consulted for AXA Financial, Inc. In his position at AXA, he gained extensive experience in acquisitions and divestitures, consolidated risk management and financial communications. In 1998, he was named Vice Chairman and a director of AXA Equitable, while remaining CFO of AXA Financial. Prior to that position, he was Executive Vice President and CFO of AXA Financial. Prior to joining AXA Equitable, Mr. Tulin served as Co-Chairman of Coopers & Lybrand’s Insurance Industry Practice group and was part of the Actuarial and Strategic Planning Group at Milliman & Robertson, Inc. for 17 years. Mr. Tulin is a fellow of the Society of Actuaries and a member of the American Academy of Actuaries. | |
Retired Vice Chairman and CFO of AXA Financial, Inc. and its principle insurance subsidiary, AXA Equitable Life Insurance Company | Skills and Qualifications: Experience as an executive officer of a major global financial services company; risk management, actuarial and mergers and acquisitions consulting experience; life insurance business; insurance regulation |
Age: 65 Director since: 2012 Independent | |
A. Greig Woodring | |
Business Experience: Mr. Woodring has been President and Chief Executive Officer of the Company since 1993. Mr. Woodring headed the reinsurance business at General American Life Insurance Company from 1986 until the Company’s formation in December 1992. He also serves as a director and officer of a number of Company subsidiaries. | |
President and Chief Executive Officer of the Company | Skills and Qualifications: RGA’s President and Chief Executive Officer since 1993; extensive knowledge of the Company’s business, operations and customers; extensive knowledge and relationships in the global financial services and life insurance business |
Age: 63 Director since: 1993 Not Independent |
William J. Bartlett | |
Business Experience: Mr. Bartlett was an accountant and consultant with Ernst & Young for over 35 years and advised numerous clients in the global insurance industry. He was appointed a partner of Ernst & Young in Sydney, Australia in July 1980, a position he held until his retirement in June 2003. He served as chairman of the firm’s global insurance practice from 1991 to 2000, and was chairman of the Australian insurance practice group from 1989 to 1998. Mr. Bartlett currently serves as an independent, non-executive director of Suncorp Group Limited, GWA Limited and the Abacus Property Trust, all of which are listed on the Australian Stock Exchange. He previously served as a member of the Australian Life Insurance Actuarial Standards Board and as a consultant to the Australian Financial Reporting Council on Auditor Independence. He holds several professional memberships in Australia (ACPA and FCA), South Africa (CASA), and the United Kingdom (FCMA). | |
Retired partner, Ernst & Young Australia | Skills and Qualifications: Public accounting experience in global insurance accounting practice; audit committee experience; financial services and life insurance business; international business |
Age: 65 Director since: 2004 Independent | |
Christine R. Detrick | |
Business Experience: Ms. Detrick served as a Director/Partner, Leader of Americas Financial Services Practice, and Senior Advisor of Bain & Company, Inc., a global management consulting firm, from 2002 to 2012. Before joining Bain, Ms. Detrick served for 10 years at A.T. Kearney, Inc., a global management consulting firm, including as Director, Global Leader of Financial Services Practice, and as Leader, Eastern U.S. Profit Center. Prior to those roles, she was a founding partner of First Financial Partners, a venture capital firm specializing in savings and loan institutions, from 1988 to 1992, and served as Chief Executive Officer for St. Louis Bank for Savings. Ms. Detrick formerly served on the board of Forethought Financial Group, Inc. a private life insurance carrier and currently serves as an independent director and member of the Nominating & Corporate Governance Committee of the board of Forest City Enterprises, a public real estate company. | |
Former Director and Head of Americas Financial Services Practice of Bain & Company, Inc. | Skills and Qualifications: Corporate finance and financial reporting; investments; financial services and life insurance business; mergers and acquisitions; management and business consulting experience |
Age: 56 Director since: 2014 Independent | |
Alan C. Henderson | |
Business Experience: Mr. Henderson was President and Chief Executive Officer of RehabCare Group, Inc. ("RehabCare") from June 1998 until June 2003. Prior to becoming President and Chief Executive Officer, he was Executive Vice President, Chief Financial Officer and Secretary of RehabCare from 1991 through May 1998. Mr. Henderson was a director of RehabCare from June 1998 to December 2003, Angelica Corporation from March 2001 to June 2003, and General American Capital Corp., a registered investment company, from October 1989 to April 2003. | |
Retired President and Chief Executive Officer of RehabCare Group, Inc. | Skills and Qualifications: Audit committee experience; experience as CEO and CFO of a public company; public company accounting and finance |
Age: 69 Director since: 2002 Independent |
Joyce A. Phillips | |
Business Experience: Ms. Phillips is Chief Executive Officer, Global Wealth, Group Managing Director, and Management Board member at Australia and New Zealand Banking Group Limited (ANZ). Prior to joining ANZ in 2009, Ms. Phillips was President and Chief Operating Officer at American Life Insurance Company (ALICO), a subsidiary of American International Group, Inc. (AIG), which had operations in 55 countries. She joined ALICO from Citigroup, where she was head of International Retail Banking, responsible for strengthening product distribution and expansion in Citigroup’s global retail banking franchise in 42 countries. Her previous roles include various senior positions in Citigroup Japan and GE Capital. | |
CEO, Global Wealth, Group Managing Director, and Management Board member at Australia and New Zealand Banking Group Limited | Skills and Qualifications: Experience as an executive officer of major global financial services companies; financial services and life insurance business; risk management |
Age: 52 Director since: 2014 Independent |
Arnoud W.A. Boot | |
Business Experience: Mr. Boot has been a professor of Corporate Finance and Financial Markets at the University of Amsterdam and director of the Amsterdam Center for Law & Economics since 2002. He is the founder and director of the Amsterdam Center for Corporate Finance. Prior to his current positions, Mr. Boot was a partner in the Finance and Strategy Practice at McKinsey & Company from 2000 through 2001, was the Vice Dean, Faculty of Economics and Econometrics at the University of Amsterdam from 1998 through 2000 and president of the European Finance Association in 2008. Mr. Boot serves as Chairman of the Bank Council of the Dutch Central Bank and is a member of the Dutch Scientific Council for Government Policy and the Dutch Social Economic Council. He is a member of the Advisory Scientific Committee of the European Systemic Risk Board in Frankfurt and he also serves as a research fellow at the Centre for Economic Policy Research in London and the Davidson Institute at the University of Michigan. | |
Professor of Corporate Finance and Financial Markets at the University of Amsterdam and Director of the Amsterdam Center for Law & Economics | Skills and Qualifications: Management and business consulting experience; corporate finance; investments; risk management; international business, markets and operations |
Age: 55 Director since: 2009 Independent |
John F. Danahy | |
Business Experience: Mr. Danahy was previously the Chairman and Chief Operating Officer of May Merchandising Company and May Department Stores International, subsidiaries of The May Department Stores Company (MDSC). Mr. Danahy served in various positions within MDSC for 38 years until his retirement in 2006. Mr. Danahy previously served as corporate-wide Senior Vice President of Information Technology and as Chairman and Chief Operating Officer of The Famous-Barr Co. for five years. Mr. Danahy has an Executive Master of Business Administration degree from the Olin Business School at Washington University in St. Louis. | |
Retired Chairman and Chief Operating Officer of May Merchandising Company and May Department Stores International | Skills and Qualifications: Information technology; international business; management and business experience; public company management experience |
Age: 68 Director since: 2009 Independent | |
J. Cliff Eason (Chair) | |
Business Experience: Mr. Eason is Chairman of the Company’s Board of Directors and was President and CEO of Southwestern Bell Telephone, SBC Communications, Inc. ("SBC") from September 2000 through January 2001. Mr. Eason previously served as President, Network Services from 1999 through 2000; President, SBC International, from 1998 until 1999; President and CEO of Southwestern Bell Telephone Company ("SWBTC") from 1996 until 1998; President and CEO of Southwestern Bell Communications, Inc. from 1995 through 1996; President of Network Services of SWBTC from 1993 through 1995; and President of Southwestern Bell Telephone Company of the Midwest from 1992 to 1993. He held various other positions with SBC and its subsidiaries prior to 1992. Mr. Eason was a director of Williams Communications Group, Inc. until his retirement in January 2001. | |
Retired President and CEO of Southwestern Bell Telephone, SBC Communications, Inc. | Skills and Qualifications: Information technology; international business; management and business experience; public company management experience |
Age: 67 Director since: 1993 Independent |
DIRECTOR QUALIFICATION CRITERIA | |
Director Qualification | Description |
Financial Literacy | Such person should be "financially literate" as such qualification is interpreted by the Board in its business judgment. |
Leadership Experience | Such person should possess significant leadership experience, such as experience in business, finance/accounting, law, education or government, and shall possess qualities reflecting a proven record of accomplishment and ability to work with others. |
Commitment to Our Values | Such person shall be committed to promoting our financial success and preserving and enhancing our business and ethical reputation, as embodied in our codes of conduct and ethics. |
Absence of Conflicting Commitments | Such person should not have commitments that would conflict with the time requirement commitments of a director. |
Reputation and Integrity | Such person shall be of high repute and recognized integrity and not have been convicted in a criminal proceeding (excluding traffic violations and other minor offenses). Such person shall not have been found in a civil proceeding to have violated any federal or state securities or commodities law and shall not be subject to any court or regulatory order or decree limiting his or her business activity, including in connection with the purchase or sale of any security or commodity. |
Knowledge and Experience | Such person should possess knowledge and experience that will complement that of other directors and promote the creation of shareholder value. |
Other Factors | Such person shall have other characteristics considered appropriate for membership on the Board, including an understanding of marketing and finance, sound business judgment, significant experience and accomplishments and educational background. |
2014 DIRECTOR COMPENSATION STRUCTURE | ||
Annual Retainer | ||
Chairman of the Board | $83,000 | |
Audit Committee Chair | $62,000 | |
Other Committee Chairs | $58,000 | |
All other independent directors | $50,000 | |
Payments Per Meeting | ||
Chairman of the Board | $4,000 for attending in person | |
$2,000 for telephonic meetings | ||
All other independent directors | $3,000 for attending in person | |
$1,500 for telephonic meetings | ||
Annual Stock Grants | ||
Chairman of the Board | 2,125 shares | |
All other independent directors | 1,725 shares |
2014 DIRECTOR COMPENSATION | ||||
Name | Fees Earned or Paid in Cash1 | Stock Awards2 | All Other Compensation3 | Total |
William J. Bartlett | $113,000 | $128,185 | $90,2034 | $331,388 |
Arnoud W.A. Boot | $102,500 | $128,185 | $529 | $231,214 |
John F. Danahy | $110,500 | $128,185 | --- | $238,685 |
Christine Detrick | $101,000 | $128,185 | --- | $229,185 |
J. Cliff Eason | $138,000 | $157,909 | $4,579 | $300,488 |
Alan C. Henderson | $106,000 | $128,185 | $2,927 | $237,112 |
Joyce Phillips | $98,000 | $128,185 | --- | $226,185 |
Fred J. Sievert | $109,000 | $128,185 | $4,870 | $242,055 |
Stanley B. Tulin | $97,8005 | $128,185 | $6,647 | $232,632 |
1. | This column reflects the retainer and fees earned in 2014 for Board and committee service. The 2014 retainer was paid in January 2014 and the 2014 Board and committee meeting fees were paid in January 2015. |
2. | This column reflects the award of 1,725 shares (2,125 shares in the case of Mr. Eason) of common stock on February 20, 2014, at a closing market price of $74.31. The stock was issued as part of the directors’ annual compensation. For additional information on the valuation assumptions, refer to note 16 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2014, as filed with the SEC. Mr. Eason elected to defer his stock awards under the Flexible Stock Plan. |
3. | This column includes 2014 reimbursement to the director for spousal travel expenses incurred in connection with attending the October meeting of the Board of Directors which is usually held in one of the Company’s global offices outside the United States. Under U.S. tax laws, the amount of such reimbursement for spousal travel must be included on the Form 1099-MISC that is issued annually by the Company to each director. Directors are responsible for payment of any taxes they incur because of the reimbursement for spousal travel expenses. |
4. | Represents compensation for services as a director of our Australian holding and operating companies. Australian dollars converted to U.S. dollars using an annualized currency exchange rate. |
5. | Mr. Tulin is reimbursed for certain personal travel expenses he incurs to attend Board and Committee meetings. Those expenses exceed the amounts reimbursable under the Company’s travel expense reimbursement policy. Mr. Tulin is reimbursed for the travel expenses in lieu of receiving the annual cash retainer. The net expense to the Company is approximately equal to the amount Mr. Tulin would have received if he was paid the annual retainer and reimbursed for travel as permitted in the travel expense reimbursement policy. |
2015 DIRECTOR COMPENSATION STRUCTURE | ||
Board Members | Chairman of the Board | |
Annual Retainer | $100,000 | $180,000 |
Committee Chair | ||
Audit Committee | $25,000 | |
Compensation Committee | $15,000 | |
Finance, Investment and Risk Management Committee | $8,000 | |
Nominating & Governance Committee | $8,000 | |
Stock Grant* | $140,000 | $240,000 |
PHANTOM OR DEFERRED SHARE OWNERSHIP | |
Name | Phantom or Deferred Shares |
William Bartlett | 5,631 |
Cliff Eason | 24,883 |
Alan Henderson | 1,086 |
RISK OVERSIGHT | |||||
Committee of the Board | Areas of Risk Oversight | Additional Information | |||
Finance, Investment and Risk Management ("FIRM") | Financial risks, investment risks and overall enterprise risk management | Reviews, monitors and, when appropriate, approves the Company’s programs, policies and strategies relating to financial and investment risks | |||
Audit | Accounting and financial reporting risk, ethics and compliance matters | Reviews reports on ethics and compliance matters each quarter | |||
Compensation | Risks relating to the Company’s employee compensation policies, practices, plans and arrangements | Oversees the management of compensation risks, including executive retention | |||
Nominating and Governance | Risks associated with the independence of the Board of Directors, leadership development and CEO succession planning | Oversees risks related to succession planning and board retention, refreshment and development |
Risk Balancing Practices and Policies | ||
Annual Bonus Plan | ● | Our Annual Bonus Plan ("ABP") is designed to reinforce our pay-for-performance culture by making a significant portion of management’s annual compensation variable. |
● | ABP awards are based solely on Company results or on a combination of Company, business unit and/or individual performance. | |
● | The ABP aligns annual cash bonus compensation with our short-term business strategies and the targets reflect our short-term goals for operating earnings per share, book value per share, revenue and new business embedded value. | |
● | The Compensation Committee sets award levels with a minimum level of performance that must be met before any payment can be made. | |
● | To further ensure that there is not a significant incentive for unnecessary risk-taking, we cap the payout of these awards at 200% of the target. | |
Performance Contingent Share Grants | ● | Our performance contingent share ("PCS") grants are a three-year performance-driven incentive program that reinforces our intermediate-term strategic, financial and operating goals. |
● | The Compensation Committee sets award levels with a minimum level of performance that must be met before any payment can be made. | |
● | To further ensure that there is not a significant incentive for unnecessary risk-taking, we cap the payout of these awards at 200% of target. | |
● | We measure performance for the PCS grants based 33.5% on operating return on equity, 33.5% on relative return on equity compared to an established peer group and 33.0% on a cumulative revenue growth rate, all calculated as of the end of the applicable three-year performance period. | |
Stock Appreciation Rights | ● | We believe that Stock Appreciation Rights ("SARs") provide the most appropriate vehicle for providing long-term value to management because of the economic tie to shareholder value. |
● | We believe annual grants of SARs allow us to reward the achievement of long-term goals and are based on our desire to achieve an appropriate balance between the overall risk and reward for short, intermediate and long-term incentive opportunities. | |
● | The vesting schedule for SARs grants is four years, 25% of which vests at the end of each of the first four years. Upon vesting, the SARs are settled in the equivalent value of unrestricted shares of common stock. | |
Share Ownership Guidelines | ● | Our share ownership guidelines require members of senior management to hold a specified number of shares of Company stock which is based on the level of their role and responsibility in the organization. |
● | Share ownership requirements ensure that our senior management will have a significant amount of value tied to long-term holdings in Company stock and align their interests with those of our shareholders. | |
Executive Incentive Recoupment Policy | ● | Our Executive Incentive Recoupment Policy permits the Company to recoup all or a portion of incentive awards paid to certain executives upon the occurrence of certain recoupment events. |
● | Such events include: (i) a financial restatement due to the material noncompliance with any financial reporting requirement under the federal securities laws; (ii) receiving an incentive award based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria; (iii) causing injury to the interests or business reputation of the Company or of a business unit whether due to violations of law, regulatory sanctions or otherwise; and (iv) a material violation of the Company’s Principles of Ethical Business Conduct. | |
● | The Compensation Committee has express authority to interpret and administer the policy, implement various remedies based on the circumstances triggering the recoupment and make all determinations with respect to the policy in its sole discretion. | |
Combination of Performance Metrics | ● | We use a combination of performance metrics in determining our executives’ performance-based compensation that motivate our executives to achieve performance that is in line with the best interests of the Company and our shareholders. |
● | By using a variety of performance metrics in our Annual Bonus Plan and our intermediate and long-term performance programs, we mitigate the risk that our executives would be motivated to pursue results with respect to one performance measure to the detriment of the Company as a whole. | |
Independent Compensation Consultant | ● | The Compensation Committee benefits from its use of an independent compensation consulting firm which provides no other services to the Company. |
BOARD COMMITTEE MEMBERSHIP | ||||
Director | Audit | Compensation | Finance, Investment and Risk Management | Nominating and Governance |
William Bartlett* | chair | member | ||
Arnoud Boot* | member | member | ||
Christine Detrick* | member | member | ||
John Danahy* | member | chair | ||
Cliff Eason* | member | member | ||
Alan Henderson* | chair | member | ||
Joyce Phillips* | member | member | ||
Frederick Sievert* | member | chair | ||
Stanley Tulin* | member | member | ||
Greig Woodring | member | |||
Number of Meetings in 2014 | 8 | 6 | 5 | 5 |
AUDIT COMMITTEE | ||
Roles and Responsibilities | ||
● | Responsible for the appointment, compensation, retention and oversight of the work of our independent auditor. | |
● | Oversees our accounting and financial reporting processes and policies and the integrity of our financial statements. | |
● | Supervises the adequacy of our internal controls over financial reporting and disclosure controls and procedures. | |
● | Pre-approves audit, audit-related and non-audit services to be performed by the Company’s independent auditor. | |
● | Reviews reports concerning significant legal and regulatory matters. | |
● | Reviews the plans and performance of our internal audit function. | |
● | Reviews and discusses our filings on Forms 10-K and 10-Q, including the financial information in those filings. | |
Independence and Financial Literacy | ||
● | The Board has determined that the members are "independent" within the meaning of SEC regulations applicable to audit committees and the NYSE listing standards. | |
● | The Board has determined that all of the members have accounting and related financial management expertise within the meaning of the NYSE listing standards. | |
● | The Board has determined that all the members are qualified as audit committee financial experts within the meaning of SEC regulations. |
COMPENSATION COMMITTEE | ||
Roles and Responsibilities | ||
● | Establishes and oversees our general compensation and benefits programs. | |
● | Reviews and approves the performance and compensation of the CEO, other named executive officers and members of our senior management. | |
● | Sets performance measures and goals and verifies the attainment of performance goals under performance-based incentive compensation plans. | |
Independence | ||
● | The Board of Directors has determined, in its judgment, that all of the Committee’s members are independent within the meaning of the NYSE listing standards. | |
● | For purposes of its independence determination, the Board considered the enhanced independence standards for compensation committees under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 which are required by the SEC for the listing standards of national securities exchanges. | |
Interlocks and Insider Participation | ||
● | The members of the Compensation Committee are not and have never been officers or employees of the Company or any of its subsidiaries. | |
● | No directors or executive officers of our Company serve on the compensation committee of another company of which a member of our Compensation Committee is an officer. |
FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE | ||
Roles and Responsibilities | ||
● | Assists the Board in connection with its oversight responsibilities for the Company’s risk, investment and finance policies, programs, procedures and strategies. | |
● | Reviews, monitors, and when appropriate, approves the Company’s programs, policies and strategies relating to financial and investment risks and overall enterprise risk management Governance Guidelines. |
NOMINATING & GOVERNANCE COMMITTEE | ||
Roles and Responsibilities | ||
● | Develops and implements policies and practices relating to corporate governance. | |
● | Reviews and monitors implementation of our Corporate Governance Guidelines. | |
● | Identifies individuals qualified to become members of the Board, consistent with the criteria established by the Board; develops and reviews background information on candidates for the Board; and makes recommendations to the Board regarding such candidates. | |
● | Prepares and supervises the Board’s annual review of director independence and the performance of self-evaluations conducted by the Board and committees. | |
● | Oversees the succession planning process for our CEO, which includes reviewing development plans for potential successors, evaluating potential internal and external successors for executive and senior management positions, and development and periodic review of the Company’s plans for CEO succession in various circumstances. | |
Independence | ||
● | The Board of Directors has determined, in its judgment, that all of the Committee’s members are independent within the meaning of the NYSE listing standards. |
• | director, |
• | nominee for director, |
• | executive officer, |
• | holder of more than 5% of our voting securities, |
• | immediate family member of such a person, as that term is defined in the policy, and |
• | charitable entity or organization affiliated with such person or any immediate family member of such person. |
2014 NAMED EXECUTIVE OFFICERS | |
Name | Title |
A. Greig Woodring | President and Chief Executive Officer |
Jack B. Lay | Senior Executive Vice President and Chief Financial Officer |
Paul A. Schuster | Senior Executive Vice President, Head of Europe / Middle East / South Africa Markets |
Donna H. Kinnaird | Senior Executive Vice President and Chief Operating Officer |
Allan E. O’Bryant | Executive Vice President, Head of Asia Markets |
• | Create incentives that will focus executives on, and reward for, increasing long-term shareholder value; |
• | Reinforce our pay for performance culture by making a significant portion of compensation variable and based on Company and business unit performance; |
• | Align the long-term financial interests of our executives with that of our shareholders through equity-based incentives and by building executive ownership in the Company; and |
• | Provide competitive total compensation opportunities that will attract, retain and motivate high-performing executives. |
What We Do | |
ü | Pay-for-Performance. We have a pay-for-performance executive compensation structure that provides an appropriate mix of short, intermediate and long-term performance incentives, with emphasis on shareholder value. We heavily link our executive compensation to financial performance by having the majority of the total compensation for our executives earned only upon the achievement of corporate, divisional and/or individual performance goals. Other than base salary, we do not provide any fixed compensation. |
ü | Use of Multiple Performance Metrics. Our incentive compensation programs utilize multiple performance metrics, including revenue, operating income, book value and new business embedded value for our Annual Bonus Plan and cumulative revenue growth rate, return on equity and relative return on equity for our Performance Contingent Shares. These metrics are focused on performance and creation of long-term shareholder value. |
ü | Compensation Benchmarking. The Compensation Committee reviews publicly available information of peer companies to evaluate how our named executive officers’ compensation compares to executives in similar positions at other companies and considers that information when establishing compensation. We align our executive compensation levels with the market median in order to retain current talent and attract new talent. |
ü | Compensation Recoupment Policy. We have an Executive Incentive Recoupment Policy which permits the Company to recoup all or a portion of an incentive award paid to certain executives upon the occurrence of a specified recoupment event, including a financial restatement. We have incorporated the provisions of this policy into our incentive plans. |
ü | Stock Ownership Guidelines. To further align the long-term interests of our executives and our shareholders, we have robust stock ownership requirements for our executive officers. |
ü | Independent Compensation Consultant. The Compensation Committee benefits from its use of an independent compensation consulting firm which provides no other services to the Company. |
ü | Annual Shareholder "Say on Pay." Because we value our shareholders’ input on our executive compensation programs, our Board has chosen to provide shareholders with the opportunity each year to vote to approve, on a nonbinding, advisory basis, the compensation of the named executive officers in our proxy statement. |
ü | Compensation Committee Discretion. We give our Compensation Committee full discretion to reduce or eliminate any cash incentive award. |
What We Don't Do | |
X | No Employment Contracts. We do not have any employment or contractual pre-employment severance agreements for our executives and we only offer limited benefits on termination of employment. |
X | No Perquisites. We do not offer our executives personal-benefit perquisites, such as aircraft, cars or apartments and we do not reimburse our executives for personal-benefit perquisites such as club dues or other social memberships, except in some foreign countries where such perquisites are required to maintain a local competitive position. |
X | No Preferential Payments. We do not pay preferential or above market returns on executive deferred compensation. |
X | Limited Benefits Upon Change in Control. We have limited benefits upon change in control and our Flexible Stock Plan includes a double-trigger for the acceleration of awards upon a change in control. |
X | No Golden Parachutes or Gross-Ups. We do not have any golden parachute agreements or tax gross-ups for severance payments with our executives. |
X | No Speculative Trading. Our Insider Trading Policy prohibits employees from short-selling Company stock, buying or selling puts and calls of Company stock, or engaging in any other transaction that reflects speculation about the Company’s stock price or that might place their financial interests against the financial interests of the Company. |
X | No Repricing of Grants. Our Flexible Stock Plan prohibits repricing for underwater stock options and stock appreciation rights. |
X | No Unapproved Hedging. Our Insider Trading Policy prohibits employees from engaging in hedging or monetization transactions, which can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Exemptions to general ban may be sought from the General Counsel on a case-by-case basis and will be subject to pre-clearance procedures. |
X | No Pledging. Our Insider Trading Policy strongly discourages employees from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. None of our directors or executive officers have pledged any shares of Company stock. |
Element of Compensation | Purpose | |
1. | Base Salary | Our base salaries are designed to provide a competitive component of the total compensation package that will attract, retain and motivate high-performing executives. Adjustments to base salary are made periodically to recognize competitive changes and personal performance. |
2. | Annual Bonus Plan | Our Annual Bonus Plan ("ABP") awards are designed to reinforce our pay-for-performance culture and align incentive compensation with our short-term business strategies by making an executive’s entire ABP award variable and based on Company, business unit and/or individual performance. |
3. | Performance Contingent Shares | Our Performance Contingent Share ("PCS") grants focus participants on our strategic and intermediate-term financial and operating goals. PCS grants are awarded to participants with equity if we achieve the rate of cumulative revenue growth rate, return on equity and relative return on equity measures that are approved each year by the Compensation Committee when it considers annual grants. The PCS grants are ongoing and each year a new three-year cycle begins, giving us the opportunity to review and update performance measures for new grants. The three-year performance and reward period shifts participant focus and effort toward intermediate and longer-term sustained results. |
4. | Stock Appreciation Rights | Stock Appreciation Rights ("SARs") are granted annually, and the number of SARs granted is based on the grant recipient’s position within the Company. The vesting schedule for SARs grants is four years, 25% of which vests at the end of each of the first four years. Upon vesting, the SARs are settled in the equivalent value of unrestricted shares of common stock. The SARs expire 10 years after the grant date. |
5. | Retirement and Pension Benefits | Our retirement and pension benefits are designed to provide another component of a competitive total compensation package that permits us to attract and retain key members of our management. |
See "Five Elements of Compensation" (page 26) for additional information. |
• | Our net premiums increased $415.8 million, or 5%, compared to 2013. |
• | Our net operating income for 2014 increased 78% to $638.0 million, or $9.12 per diluted share.* |
• | Our full year operating return on equity was 13% for 2014.* |
• | Our book value per share, excluding Accumulated Other Comprehensive Income, increased 12% in 2014.* |
ABP COMPANY-WIDE PERFORMANCE METRICS | ||||
Metric | Weight | Target | 2014 Result | Performance level |
Operating Income Per Share* | 50% | $7.90/share | $9.12/share | 200.0% |
Book Value Per Share | 25% | $74.89/share | $78.03/share | 178.5% |
New Business Embedded Value | 15% | $350 million | $695 million | 200.0% |
Annual Consolidated Revenue | 10% | $10.4 billion | $10.9 billion | 200.0% |
Weighted Average | 194.6% | |||
* See "Use of Non-GAAP Financial Measures" on page 58 for reconciliations to GAAP figures. |
PCS COMPANY-WIDE PERFORMANCE METRICS | ||||
Metric | Weight | Target | 2014 Result | Performance level |
Cumulative Revenue Growth Rate | 33.0% | 8.0% | 8.2% | 108.9% |
Three-Year Operating Return on Equity* | 33.5% | 12.0% | 10.5% | 62.6% |
Three-Year Relative Return on Equity | 33.5% | 50th | Our performance for the relative return on equity metric for the 2012-2014 PCS grants will not be available until late April 2015. | Our performance for the relative return on equity metric for the 2012-2014 PCS grants will not be available until late April 2015. |
* See "Use of Non-GAAP Financial Measures" on page 58 for reconciliations to GAAP figures. |
Compensation element | Purpose | How We Determine This Amount | |||
1. | Base Salary | ● | Our base salaries establish a pay foundation at competitive levels as part of a total compensation package that will attract, retain and motivate talented executives. | ● | The Compensation Committee considers our executives' base salary compensation compared to that of the Pay Level Peer Group and published surveys. |
● | The Compensation Committee also reviews the recommendations submitted by our Chief Executive Officer for the other named executive officers. | ||||
2. | Annual Bonus Plan ("ABP") | ● | Our ABP awards are designed to motivate and reward executives for performance on key financial, strategic and/or individual objectives over the year. | ● | ABP awards for executives are based on annual Company results or on a combination of Company, business unit and individual performance results. |
● | This element of compensation holds our executives accountable for Company performance, with payouts varying from target based on actual performance against pre-established and communicated performance goals. | ● | Our ABP program utilizes multiple performance metrics. | ||
● | Target awards for executives are based on competitive market pay data for their position and expressed as a percent of salary. | ||||
● | Overall Company operating earnings per share performance must meet certain minimum levels, as determined in advance by the Compensation Committee, before any awards are made. | ||||
3. | Performance Contingent Shares ("PCS") | ● | Our PCS program is designed to focus executives on our strategic and intermediate-term financial and operating goals. | ● | The PCS units are granted at the beginning of the performance period. |
● | PCS grants are awarded to participants with equity if we achieve the established performance metrics for the year. | ● | The Compensation Committee sets award levels with a minimum level of Company performance that must be met before any payment to the individual can be made, as well as a target and a maximum. | ||
● | The PCS grants are ongoing and each year a new three-year cycle begins, giving us the opportunity to review and update performance measures for new grants. | ● | If we do not meet minimum performance goals, the awards will not be made, and if we exceed those performance goals, the award can be as much as 200% of the targeted award opportunity. | ||
● | The three-year performance and reward period shifts participant focus and effort toward intermediate and longer-term sustained results. | ||||
4. | Stock Appreciation Rights ("SARs") | ● | SARs are designed to align the interests of executives with our shareholders' by focusing the executives on long-term objectives over a multi-year period, including stock price growth. | ● | SARs are granted to executives at an award value divided by Black-Scholes’ value of the Company’s stock price. |
● | SARs are granted annually and are based on the recipient’s position. | ● | The strike price for the SAR is determined by the Company’s closing stock price on the award date. | ||
● | SARs vest over a period of four years and upon vesting they are settled in the equivalent value of unrestricted shares of common stock. | ● | The awards vest 25% per year on December 31 of the year granted until fully vested and remain exercisable for up to 10 years from the award date. | ||
5. | Retirement and Pension Benefits | ● | Provided as another competitive component of the total compensation package that permits us to attract and retain key members of our management. | ● | Retirement and pension benefits are paid under separate plans, primarily due to plan design and tax requirements. The RGA Savings Plan and Pension Plan are tax-qualified defined benefit plans that provide benefits for eligible employees on the United States payroll. |
● | The Augmented Savings Plan and Augmented Pension Plan provide benefits that eligible employees would have received under the qualified retirement plans if IRS limitations were not imposed. |
COMPANY-WIDE ANNUAL BONUS PLAN METRICS | ||
Component | Weight | Definition |
Operating Income Per Share | 50% | Operating income per share is our net income per share from continuing operations less realized capital gains and losses and certain other non-operating items. |
Book Value Per Share | 25% | Book value per share is the company's total equity divided by total common stock outstanding. |
New Business Embedded Value | 15% | New business embedded value ("NBEV") is a measure of the value of the profits expected to emerge from new business net of the cost of supporting capital. NBEV is a forward-looking calculation that reflects the lifetime value created through new business sales. |
Annual Consolidated Revenues | 10% | Annual consolidated revenues is total revenues earned by the Company during the annual performance period. |
COMPANY-WIDE PERFORMANCE CONTINGENT SHARE PROGRAM METRICS | ||
Component | Weight | Definition |
Return on Equity ("ROE") | 33.5% | ROE is calculated as operating income divided by average shareholders’ equity excluding Accumulated Other Comprehensive Income for the three-year performance period. Operating income is a non-GAAP financial measure.* |
Relative Return on Equity ("Relative ROE") | 33.5% | Relative ROE is the percentile ranking of the Company’s ROE relative to the ROE of competitor companies in the Performance Peer Group over the same three-year performance period. |
Cumulate Revenue Growth Rate | 33.0% | Cumulative revenue growth rate is the compounded average growth rate of the Company’s consolidated revenue over the three-year performance period using the Company’s annual consolidated revenue for the fiscal year immediately preceding the date of grant as the base year. |
* See "Use of Non-GAAP Financial Measures" on page 58 for reconciliations to GAAP figures. |
PERFORMANCE PENSION ACCOUNT BENEFITS | |
Age on January 1 of the Plan Year in which the Year of Service is Earned | Percentage of Final Average Annual Compensation Credited |
Up to 35 | 2% |
35 – 44 | 4% |
45 – 54 | 6% |
55 or over | 8% |
ADDITIONAL PERFORMANCE PENSION ACCOUNT BENEFITS | |
Age on January 1 of the Plan Year in which the Year of Service is Earned | Additional Credits |
Up to 35 | 1% |
35 – 44 | 2% |
45 – 54 | 3% |
55 or over | 4% |
• | evaluating employee performance; |
• | recommending business performance targets, goals and objectives; and |
• | recommending salary levels, cash bonus and equity incentive award targets. |
• | background information regarding our strategic objectives; |
• | his evaluation of the performance of the senior management and his direct reports; and |
• | compensation recommendations as to senior management and his direct reports. |
2014 PAY LEVEL PEER GROUP | ||
Purpose: | We use the Pay Level Peer Group to evaluate the overall competitiveness of our compensation packages, as well as individual elements of compensation. | |
How Peer Companies are Chosen: | We use a group comprised of companies based on industry and size and are appropriate comparators for purposes of evaluating the competitiveness of our pay levels. The selected companies are publicly-traded insurers and reinsurers (life and property-casualty) and other financial services companies, including direct competitors. | |
Last Evaluated: | In 2014, SH&P performed a comprehensive assessment of this group to determine the continued appropriateness of each constituent. | |
Peer Group Members: | American Financial Group, Inc. | PartnerRe Ltd. |
American National Insurance | Phoenix Companies, Inc. | |
Assurant, Inc. | Principal Financial Group, Inc. | |
CNO Financial Group, Inc. | Protective Life Corp. | |
Everest Re Group Ltd. | StanCorp Financial Group, Inc. | |
Genworth Financial, Inc. | Torchmark Corp. | |
Lincoln National Corp. | Unum Group |
2014 PAY DESIGN PEER GROUP | ||
Purpose: | The Pay Design Peer Group is used to evaluate market practices with respect to types of pay vehicles utilized, incentive compensation program designs, performance metrics and pay mix. | |
How Peer Companies are Chosen: | We use the companies in the Pay Level Peer Group, as well as eight additional companies that were deemed inappropriate comparators for purposes of evaluating pay levels due to size, but which the Compensation Committee believes are useful sources of competitive intelligence regarding pay design and practices. | |
Last Evaluated: | In 2014, SH&P performed a comprehensive assessment of this group to determine the continued appropriateness of each constituent. | |
Peer Group Members: | Aflac, Inc. | Munich Re |
American Financial Group, Inc. | PartnerRe Ltd. | |
American National Insurance | Phoenix Companies, Inc. | |
Assurant, Inc. | Principal Financial Group, Inc. | |
CNO Financial Group, Inc. | Protective Life Corp. | |
Everest Re Group Ltd. | Prudential Financial, Inc. | |
Genworth Financial, Inc. | StanCorp Financial Group, Inc. | |
Kemper Corporation | Sun Life Financial, Inc. | |
Lincoln National Corp. | Swiss Reinsurance Co. Ltd. | |
Manulife Financial Corp. | Torchmark Corp. | |
Metlife, Inc. | Unum Group |
2014 PERFORMANCE PEER GROUP | ||
Purpose: | The Performance Peer Group is used to evaluate our relative performance for purposes of determining incentive compensation paid. | |
How Peer Companies are Chosen: | For comparisons of our performance among companies in the life insurance and reinsurance industry, we exclude most companies in the property and casualty business because their return profile is not a good comparator; however, we retain two large, global multi-line (property-casualty and life) competitors because they are among the companies against whom we measure our performance and returns. | |
Last Evaluated: | In 2014, SH&P performed a comprehensive assessment of this group to determine the continued appropriateness of each constituent. | |
Peer Group Members: | Aflac, Inc. | Phoenix Companies, Inc. |
American National Insurance | Principal Financial Group, Inc. | |
Assurant, Inc. | Protective Life Corp. | |
CNO Financial Group, Inc. | Prudential Financial, Inc. | |
Genworth Financial, Inc. | StanCorp Financial Group, Inc. | |
Lincoln National Corp. | Sun Life Financial, Inc. | |
Manulife Financial Corp. | Swiss Reinsurance Co. Ltd. | |
Metlife, Inc. | Torchmark Corp. | |
Munich Re | Unum Group |
2014/2015 NAMED EXECUTIVE OFFICER BASE SALARIES | ||||
Name | 2014 Percentage Increase | 2014 Base Salary | 2015 Percentage Increase | 2015 Base Salary |
Greig Woodring | 2% | $1,060,000 | 2% | $1,080,000 |
Jack Lay | 3% | $601,950 | 3% | $621,950 |
Paul Schuster | 2% | $549,500 | 2% | $560,500 |
Donna Kinnaird | 3% | $550,000 | 3% | $566,500 |
Allan O'Bryant | 2% | $465,400 | 3% | $480,400 |
2014 COMPANY ANNUAL BONUS PLAN RESULTS | ||||||
Performance Measure | Weight | Minimum | Target | Maximum | Actual Results | Percentage of Target Payout |
Operating Income Per Share | 50% | $7.55 | $7.90 | $8.25 | $9.12 | 200.0% |
Book Value Per Share | 25% | $70.89 | $74.89 | $78.89 | $78.03 | 178.5% |
New Business Embedded Value (dollars in millions) | 15% | $263 | $350 | $438 | $695 | 200.0% |
Revenues (dollars in millions) | 10% | $9,896 | $10,396 | $10,896 | $10,904 | 200.0% |
Weighted Average | 194.6% |
2014 INDIVIDUAL ANNUAL BONUS PLAN RESULTS | |||||
Name | 2014 Bonus at Threshold | 2014 Bonus at Target | 2014 Bonus at Maximum | Actual Bonus Percentage for 2014 | Actual Bonus Payment for 2014 |
Greig Woodring | 65% | 130% | 260% | 253.0% | $2,681,927 |
Jack Lay | 45% | 90% | 180% | 175.2% | $1,054,388 |
Paul Schuster | 40% | 80% | 160% | 148.3% | $814,826 |
Donna Kinnaird | 40% | 80% | 160% | 155.7% | $856,350 |
Allan O'Bryant | 40% | 80% | 160% | 156.4% | $727,914 |
2015 ANNUAL BONUS PLAN OPPORTUNITIES | |||
Name | 2015 Bonus at Threshold | 2015 Bonus at Target | 2015 Bonus at Maximum |
Greig Woodring | 65% | 130% | 260% |
Jack Lay | 50% | 100% | 200% |
Paul Schuster | 40% | 80% | 160% |
Donna Kinnaird | 50% | 100% | 200% |
Allan O'Bryant | 40% | 80% | 160% |
2012-2014 PCS RESULTS | ||||||
Performance Measure | Weight | Threshold | Target | Maximum | Actual | Percentage of Target Payout |
Cumulative Revenue Growth Rate (3 Year) | 33.0% | 6.0% | 8.0% | 10.0% | 8.2% | 108.9% |
ROE (3 Year) | 33.5% | 10.0% | 12.0% | 14.0% | 10.5% | 62.6% |
Relative ROE (3 Year) | 33.5% | 25th Percentile | 50th Percentile | 75th Percentile | TBD | TBD |
Weighted Average | TBD | TBD |
2014-2016 PERFORMANCE CONTINGENT SHARE GRANTS | ||||
Performance Measure | Weight | Threshold | Target | Maximum |
Cumulative Revenue Growth Rate (3 Year) | 33.0% | 3.0% | 5.0% | 7.0% |
ROE (3 Year) | 33.5% | 9.5% | 11.5% | 13.5% |
Relative ROE (3 Year) | 33.5% | 25th percentile | 50th percentile | 75th percentile |
Name and Principal Position | Year | Salary1 | Bonus | Stock Awards2 | Option Awards3 | Non-Equity Incentive Plan Compensation4 | Change in Pension Value and Nonqualified Deferred Compensation Earnings5 | All Other Compensation6 | Total | ||||||||||||||
Greig Woodring President and CEO | 2014 | $1,056,154 | --- | $2,499,745 | $1,046,343 | $2,681,927 | $2,119,230 | $66,916 | $9,470,315 | ||||||||||||||
2013 | $1,035,385 | --- | $1,400,019 | $1,267,843 | $479,482 | $105,030 | $85,059 | $4,372,818 | |||||||||||||||
2012 | $995,615 | --- | $1,149,995 | $1,060,923 | $1,470,000 | $1,751,444 | $86,662 | $6,514,639 | |||||||||||||||
Jack Lay Sr. EVP and CFO | 2014 | $598,104 | --- | $541,747 | $226,764 | $1,054,388 | $396,351 | $63,628 | $2,880,982 | ||||||||||||||
2013 | $579,994 | --- | $349,153 | $316,213 | $201,227 | $138,916 | $90,178 | $1,675,681 | |||||||||||||||
2012 | $562,692 | --- | $344,999 | $318,271 | $622,912 | $357,821 | $99,080 | $2,305,775 | |||||||||||||||
Paul Schuster Sr. EVP - Head of Europe/Middle East/South Africa Markets | 2014 | $547,865 | --- | $521,970 | $218,495 | $814,826 | $331,358 | $47,196 | $2,481,710 | ||||||||||||||
2013 | $538,594 | --- | $341,983 | $309,710 | $166,282 | $66,241 | $52,873 | $1,475,683 | |||||||||||||||
2012 | $518,402 | --- | $335,991 | $309,979 | $509,747 | $317,582 | $53,658 | $2,045,359 | |||||||||||||||
Donna Kinnaird Sr. EVP and COO | 2014 | $535,750 | --- | $397,815 | $166,527 | $856,350 | $80,401 | $57,764 | $2,094,607 | ||||||||||||||
2013 | $513,269 | --- | $257,471 | $233,198 | $158,290 | $117,660 | $477,823 | $1,757,711 | |||||||||||||||
2012 | $365,385 | --- | $250,024 | $235,270 | $490,000 | --- | $126,572 | $1,467,251 | |||||||||||||||
Allan O'Bryant EVP - Head of Asia Markets | 2014 | $463,631 | --- | $352,532 | $147,555 | $727,914 | $94,527 | $97,804 | $1,883,963 | ||||||||||||||
2013 | $454,665 | --- | $230,026 | $208,282 | $362,702 | $78,552 | $339,977 | $1,674,204 | |||||||||||||||
2012 | $441,412 | --- | $225,014 | $207,563 | $442,373 | $64,488 | $272,404 | $1,653,254 |
1. | This column includes any amounts deferred at the election of the executive officers under the RGA Reinsurance Company Executive Deferred Savings Plan. The 2012 salary for Ms. Kinnaird was prorated based on her start date of April 2, 2012. |
2. | This column represents the grant date fair value of PCS units granted in such year, using probable outcomes of performance conditions, in accordance with Accounting Standards Codification: 718 – Compensation – Stock Compensation ("ASC 718"). For additional information on the valuation assumptions, refer to note 16 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2014, as filed with the SEC. See also "Grants of Plan-Based Awards in 2014" for information on awards made in 2014. These amounts reflect the grant date fair value for these awards, and do not correspond to the actual value that may be recognized by the named executive officers. |
3. | This column represents the grant date fair value of SARs granted in such year, in accordance with ASC 718. For additional information on the valuation assumptions, refer to note 16 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2014, as filed with the SEC. See also "Grants of Plan-Based Awards in 2014" for information on SARs granted in 2014. These amounts reflect the grant date fair value for these awards and do not correspond to the actual value that may be recognized by the named executive officers. |
4. | Includes for all named executive officers, cash incentives earned for performance during each fiscal year and paid in March of the following year (including any incentives deferred at the election of the executive officers) under the Annual Bonus Plan. |
5. | This column represents the sum of the change in pension value in each fiscal year for each of the named executive officers. The increase in Mr. Woodring’s change in pension value is attributed to his tenure with the Company and his age. The pension benefit increases in value as a participant nears the age of 65. The decrease in the pension value for 2013, relative to prior years is due to an increase in the interest rate assumptions, thus reducing the present value. We do not pay above-market or preferential earnings on any account balances; therefore, this column does not reflect any amounts relating to nonqualified deferred compensation earnings. See the "Pension Benefits in 2014" and "Nonqualified Deferred Compensation in 2014" tables for additional information. |
6. | Amount includes contributions by RGA Reinsurance Company to the officers’ accounts in qualified and non-qualified plans for the 2014 plan year. Includes life insurance premiums paid by RGA Reinsurance Company on behalf of Messrs. Woodring, Lay, Schuster, O'Bryant and Ms. Kinnaird. Also includes Company match contributions for 2014 under the Savings Plan of $18,200, for Messrs. Woodring, Lay, Schuster, O'Bryant and Ms. Kinnaird. In 2013, Messrs. Woodring, Lay, Schuster, O'Bryant, and Ms. Kinnaird received qualified contributions of $17,850. For 2014, Mr. O'Bryant received reimbursement of trailing tax liabilities on compensation received while on a prior expatriate assignment in Japan of $55,136. In 2013, Mr. O'Bryant received reimbursement for trailing Japanese tax liabilities of $273,794. For Ms. Kinnaird, the amounts for 2013 include reimbursement of relocation costs (sale of a home). |
GRANTS OF PLAN-BASED AWARDS IN 2014 | |||||||||||||
Name | Grant Date | Estimated Future Payments Under Non-Equity Incentive Plan Awards¹ | Estimated Future Payments Under Equity Incentive Plan Awards (Number of Shares)² | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options3 | Exercise of Base Price of Option Awards4 | Grant Date Fair Value of Stock and Option Awards5 | ||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||
Greig Woodring | $689,000 | $1,378,000 | $2,756,000 | --- | --- | --- | --- | --- | --- | --- | |||
3/7/2014 | --- | --- | --- | 15,926 | 31,852 | 63,704 | --- | --- | --- | $2,499,745 | |||
--- | --- | --- | --- | --- | --- | --- | 39,101 | $ | 78.48 | $1,046,343 | |||
Jack Lay | $270,878 | $541,755 | $1,083,510 | --- | --- | --- | --- | --- | --- | --- | |||
3/7/2014 | --- | --- | --- | 3,452 | 6,903 | 13,806 | --- | --- | --- | $541,747 | |||
--- | --- | --- | --- | --- | --- | --- | 8,474 | $ | 78.48 | $226,764 | |||
Paul Schuster | $219,800 | $439,600 | $879,200 | --- | --- | --- | --- | --- | --- | --- | |||
3/7/2014 | --- | --- | --- | 3,326 | 6,651 | 13,302 | --- | --- | --- | $521,970 | |||
--- | --- | --- | --- | --- | --- | --- | 8,165 | $ | 78.48 | $218,495 | |||
Donna Kinnaird | $220,000 | $440,000 | $880,000 | --- | --- | --- | --- | --- | --- | --- | |||
3/7/2014 | --- | --- | --- | 2,535 | 5,069 | 10,138 | --- | --- | --- | $397,815 | |||
--- | --- | --- | --- | --- | --- | --- | 6,223 | $ | 78.48 | $166,527 | |||
Allan O'Bryant | $186,160 | $372,320 | $744,640 | --- | --- | --- | --- | --- | --- | --- | |||
3/7/2014 | --- | --- | --- | 2,246 | 4,492 | 8,984 | --- | --- | --- | $352,532 | |||
--- | --- | --- | --- | --- | --- | --- | 5,514 | $ | 78.48 | $147,555 |
1. | These columns reflect the potential value of the payment for 2014 performance under the ABP for each named executive if the minimum, target or maximum goals are satisfied. The potential payments are performance-driven and are therefore completely at risk. The performance measures, salary and bonus multiples for determining the payments are described in the CD&A. The bonus amount for actual 2014 performance was determined in March 2015 based on the metrics described in the CD&A and is included in the "Summary Compensation Table" in the column titled "Non-Equity Incentive Plan Compensation." |
2. | This column reflects the number of PCS units granted in March 2014 under our Flexible Stock Plan, which may convert into shares of Company stock at the end of the three-year performance period if the specified performance levels are achieved. The performance period commenced January 1, 2014 and ends December 31, 2016. If the threshold level of performance is met, the award of shares starts at 50% (target is 100% and maximum is 200%). See discussion of PCS awards in the CD&A. |
3. | This column reflects the number of SARs granted in March 2014. The SARs vest and become exercisable in four equal annual installments of 25%, beginning on December 31, 2014. |
4. | This column reflects the strike price per share of common stock for the SARs granted, which is the closing price of the common stock on March 7, 2014, the date the Compensation Committee approved the grants. |
5. | This column reflects the full grant date fair value of PCS units under ASC 718 and the full grant date fair value of SARs under ASC 718 granted to the named executive officers in 2014. See notes 2 and 3 of the "Summary Compensation Table" for a discussion of fair value calculation related to the PCS and SARs respectively. For PCS units with the grant date of March 7, 2014, fair value is calculated using the closing price of Company stock of |
OUTSTANDING EQUITY AWARDS AT 2014 YEAR END | |||||||||
Option Awards1 | Stock Awards | ||||||||
Grant Date | Number of Securities of Underlying Unexercised Options (Exercisable)2 | Number of Securities Underlying Unexercised Options (Unexercisable) | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units or Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested3 | Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested3 |
Greig Woodring | |||||||||
2/21/2006 | 37,911 | $47.48 | 2/21/2016 | ||||||
2/20/2007 | 31,058 | $59.63 | 2/20/2017 | ||||||
2/20/2008 | 32,225 | $56.03 | 2/20/2018 | ||||||
2/18/2009 | 30,127 | $32.20 | 2/18/2019 | ||||||
2/19/2010 | 46,392 | $47.10 | 2/19/2020 | ||||||
2/22/2011 | 34,061 | $59.74 | 2/22/2021 | ||||||
2/28/2012 | 40,493 | 13,498 | $56.65 | 2/28/2022 | |||||
2/21/2013 | 34,118 | 34,119 | $58.77 | 2/21/2023 | 23,822 | $2,087,284 | |||
3/7/2014 | 9,775 | 29,326 | $78.48 | 3/7/2024 | 31,852 | $2,790,872 | |||
Jack Lay | |||||||||
2/20/2007 | 11,119 | $59.63 | 2/20/2017 | ||||||
2/20/2008 | 15,022 | $56.03 | 2/20/2018 | ||||||
2/18/2009 | 23,298 | $32.20 | 2/18/2019 | ||||||
2/19/2010 | 13,743 | $47.10 | 2/19/2020 | ||||||
2/22/2011 | 12,489 | $59.74 | 2/22/2021 | ||||||
2/28/2012 | 12,147 | 4,050 | $56.65 | 2/28/2022 | |||||
2/21/2013 | 8,509 | 8,510 | $58.77 | 2/21/2023 | 5,941 | $520,550 | |||
3/7/2014 | 2,118 | 6,356 | $78.48 | 3/7/2024 | 6,903 | $604,841 | |||
Paul Schuster | |||||||||
2/19/2010 | 13,743 | $47.10 | 2/19/2020 | ||||||
2/22/2011 | 12,489 | $59.74 | 2/22/2021 | ||||||
2/28/2012 | 11,831 | 3,944 | $56.65 | 2/28/2022 | |||||
2/21/2013 | 8,334 | 8,335 | $58.77 | 2/21/2023 | 5,819 | $509,861 | |||
3/7/2014 | 2,041 | 6,124 | $78.48 | 3/7/2024 | 6,651 | $582,761 | |||
Donna Kinnaird | |||||||||
4/2/2012 | 8,398 | 2,800 | $59.36 | 4/2/2022 | |||||
2/21/2013 | 6,275 | 6,276 | $58.77 | 2/21/2023 | 4,381 | $383,863 | |||
3/7/2014 | 1,555 | 4,668 | $78.48 | 3/7/2024 | 5,069 | $444,146 | |||
Allan O’Bryant | |||||||||
2/28/2012 | 7,922 | 2,641 | $56.65 | 2/28/2022 | |||||
2/21/2013 | 5,605 | 5,605 | $58.77 | 2/21/2023 | 3,914 | $342,945 | |||
3/7/2014 | 1,378 | 4,136 | $78.48 | 3/7/2024 | 4,492 | $393,589 |
1. | Prior to February 2011, the Company granted stock options as the form of our long-term equity incentive awards. The terms and conditions of the stock option grants are substantially similar to our SARs grants. The option awards also used an exercise price that was set at the closing price on the day of the award (the date of the February Committee meeting) and also expire 10 years after grant. The vesting schedule for grants of stock options was five years, no portion of which vested in the first year, and 25% of which vested at the end of each of the four remaining years. |
2. | Options granted in 2004 and subsequent years vest and become exercisable in four equal annual installments of 25%, on December 31 of the second, third, fourth and fifth years. SARs, which were first granted in 2011, vest over four years (25% of which vests at the end of each of the first four years). |
3. | These columns reflect the number of shares and estimated market value of grants of PCS. Because the relative return on equity measure is dependent upon public availability of financial results from our peer companies, our performance for the relative return on equity metric will not be approved by the Compensation Committee until late April 2015, after the filing of this Proxy Statement. Payments will be made in May 2015. These payments will be fully disclosed in our 2016 Proxy Statement. See "SARs and Option Exercises and Stock Vested in 2014" for more information on the payout of those awards. SEC rules require disclosure of the number of shares and estimated market value of PCS grants based on the next higher performance measure (target or maximum) that exceeds the previous fiscal year’s performance. Accordingly, the number of shares and estimated market value for the PCS grants made in 2013 are disclosed assuming they are awarded at the target (100%) level and the 2014 are disclosed assuming they are awarded at the target (100%) level. The market or payout value is estimated using the closing price, $87.62, of our common stock on December 31, 2014. The performance period for the 2012-2014 PCS grant was January 1, 2012 through December 31, 2014. The performance period for the 2013-2015 PCS grant is January 1, 2013 through December 31, 2015. The performance period for the 2014-2016 PCS grant is January 1, 2014 through December 31, 2016. |
2014 SARS AND OPTION EXERCISES | ||||
Name | Option and SARs Awards | Stock Awards | ||
Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting1 | Value Realized on Vesting1 | |
Greig Woodring2 | 49,492 | $1,809,816 | --- | --- |
Jack Lay | --- | --- | --- | --- |
Paul Schuster2 | 27,765 | $1,178,500 | --- | --- |
Donna Kinnaird | --- | --- | --- | --- |
Allan O'Bryant | --- | --- | --- | --- |
1. | Since the relative return on equity measure is dependent upon public availability of financial results from our peer companies, our performance for the relative return on equity metric will not be approved by the Compensation Committee until late April 2015, after the filing of this Proxy Statement. The settlement of PCS awards for the 2012-2014 performance period will not be made until May 2015, so this information is not currently available. |
2. | Mr. Woodring exercised 29,492 options on February 18, 2014 with an average market value for the shares of $74.63, 19,627 options on August 26, 2014 with an average market value for the shares $82.64 and 373 options on August 27, 2014 with an average market value for the shares of $82.50. Mr. Schuster exercised 27,765 options on October 31, 2014 with an average market value for the shares of $83.84. |
2011-2013 PERFORMANCE CONTINGENT SHARE PAYOUT | ||||
Name | Percentage Payout | Number of Shares Acquired on Payout | Value Realized on Payout | |
Greig Woodring | 52.9% | 7,975 | $618,860 | |
Jack Lay | 52.9% | 2,924 | $226,902 | |
Paul Schuster | 52.9% | 2,924 | $226,902 | |
Donna Kinnaird | --- | --- | --- | |
Allan O'Bryant | 52.9% | 1,949 | $151,242 |
RETIREMENT PLAN ACCUMULATED BENEFITS | ||||
Name | Plan Names | Years of Service Credited | Present Value of Accumulated Benefit1 | Payments During Last Fiscal Year |
Greig Woodring | Performance Pension Plan | 35 | $1,243,643 | --- |
Augmented Benefit Plan | 35 | $10,758,080 | --- | |
Supplemental Plan2 | 35 | $491,921 | --- | |
Jack Lay | Performance Pension Plan | 23 | $577,023 | --- |
Augmented Benefit Plan | 23 | $2,109,351 | --- | |
Paul Schuster | Performance Pension Plan | 23 | $577,579 | --- |
Augmented Benefit Plan | 23 | $1,878,383 | --- | |
Donna Kinnaird | Performance Pension Plan | 2 | $56,184 | --- |
Augmented Benefit Plan | 2 | $141,877 | --- | |
Allan O'Bryant | Performance Pension Plan | 4 | $89,349 | --- |
Augmented Benefit Plan | 4 | $202,297 | --- |
1. | The accumulated benefit for the U.S. plans is based on service and compensation (as described above) considered by the plans for the period through December 31, 2014. The present value has been calculated assuming the earliest retirement age at which the participant can elect an unreduced benefit. For additional discussion of the assumptions, see note 10 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2014, as filed with the SEC. As described in such note, the interest assumption is 3.75%. |
2. | Until January 1, 1994, we also maintained an Executive Supplemental Retirement Plan (the "Supplemental Plan"), a nonqualified defined benefit plan pursuant to which eligible executive officers are entitled to receive additional retirement benefits. Benefits under the Supplemental Plan were frozen as of January 1, 1994. The frozen annual benefit payable upon retirement at age 65 is $3,060 for Mr. Woodring. Retirement benefits under the Supplemental Plan are payable at age 65 in the form of a 15-year certain life annuity, with no direct or indirect integration with Social Security benefits. |
2014 NONQUALIFIED DEFERRED COMPENSATION | |||||
Name | Executive Contributions in Last FY1 | Registrant Contributions in Last FY2 | Aggregate Earnings in Last FY3 |