UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
(Amendment No. )
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| ý | | Filed by the Registrant |
| ¨ | | Filed by a Party other than the Registrant |
Filed by the Registrant ý
Filed by a Party other than the Registrant ¨
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¨ | | Preliminary Proxy Statement |
| ¨ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ý | | Definitive Proxy Statement |
| ¨ | | Definitive Additional Materials |
| ¨ | | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
Torchmark CorporationGLOBE LIFE INC.
(Name of Registrant as specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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¨ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(14) and 0-11. |
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¨ | | Fee paid previously with preliminary materials. |
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March 19, 201818, 2024
To the Shareholders of
TORCHMARK CORPORATIONGLOBE LIFE INC. (the Company):
Torchmark Corporation’s 2018Globe Life Inc.'s 2024 Annual Meeting of Shareholders (Annual Meeting) will be held at Company headquarters, 3700 South Stonebridge Drive, McKinney, Texas 75070in a virtual meeting format, via live audio webcast at 10:00 a.m.,00am, Central Daylight Time, on Thursday, April 26, 2018.25, 2024. The Annual Meeting will be conducted using Robert’s Rules of Order and Torchmark Corporation’s ShareholderGlobe Life Inc.'s Shareholders' Rights Policy. This policy is posted on the Company’s website at http:https://www.torchmarkcorp.cominvestors.globelifeinsurance.com under the Corporate Governance heading,or you may obtain a printed copy by writing to the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
The accompanying Notice and Proxy Statement discuss proposals which will be submitted to a stockholdershareholder vote. If you have any questions or comments about the matters discussed in the Proxy Statement or about the operations of the Company, we will be pleased to hear from you.
It is important that your shares be voted at the Annual Meeting. Please mark, date, sign, and return your proxy or vote over the telephone or onvia the Internet. If you attend the Annual Meeting, you may withdrawchange your proxy and vote your stock in personduring the meeting if you desire to do so.
We hope that you will take this opportunity to meet withjoin us to discussat the results of operations of the Company during 2017.virtual Annual Meeting.
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| Sincerely, |
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Gary L. ColemanJ. Matthew Darden
Co-Chairman and Chief Executive Officer |
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LarryFrank M. HutchisonSvoboda
Co-Chairman and Chief Executive Officer |
Notice of Annual Meeting of Shareholders
to be held April 26, 2018
NOTICE OF 2024 ANNUAL MEETING OF SHAREHOLDERS | | | | | | | | | | | | | | | | | |
| DATE: | | Thursday, April 25, 2024 | Voting Matters | Page |
| TIME: | | 10:00am Central Daylight Time | ☑ | Election of Directors | 5 |
| PLACE: | | Online via live audio webcast
Register to attend the meeting at register.proxypush.com/GL | ☑ | Ratification of Appointment of Independent Registered Public Accounting Firm | 11 |
| | | ☑ | Advisory Vote to Approve Executive Compensation | 11 |
Shareholders will also be asked to consider and act upon other business that properly comes before the meeting.
To the Holders of Common Stock of
TORCHMARK CORPORATION
TheVirtual Annual Meeting of Shareholders of Torchmark Corporation
The 2024 Annual Meeting will be held at Company Headquarters, 3700 South Stonebridge Drive, McKinney, Texas 75070in a virtual meeting format, online via live audio webcast. We believe that a virtual meeting will help to facilitate attendance and participation by shareholders from any geographic location with internet connectivity.
You may register for and attend the virtual meeting online using a smartphone, tablet or computer. You will need the latest version of Chrome, Safari, Edge or Firefox. Please ensure that your browser is compatible. As a shareholder, in order to register you will need to visit register.proxypush.com/GL and enter the control number included on Thursday, April 26, 2018 at 10:00 a.m.,your proxy card or voting instruction form. After registering, you will receive a confirmation email and another email approximately one hour prior to the start of the meeting (10:00am Central Daylight Time.Time), at the email address provided during registration, with a unique link to access the virtual meeting. Registration support is available via an email address displayed on the registration page. Meeting access support may be obtained via a toll-free number listed on the email pre-registered shareholders will receive one hour prior to the start of the meeting. Shareholders will be able to participate in the virtual meeting, securely vote, submit questions or comments to management in accordance with the Company's Shareholders' Rights Policy, and access a copy of the shareholder list (by clicking on an active link), just as one could at an in-person meeting.Guests will also be able to access the meeting and listen to the live webcast. Directions on how to attend the virtual Annual Meeting where you may vote in person can be found on our website: www.torchmarkcorp.com. The meeting will be conducted in accordance with Robert’s Rules of Order and our Shareholder Rights Policy. You will be asked to:
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1. | Elect the fourteen nominees shown in the proxy statement as directors to serve for one-year terms or until their successors have been duly elected and qualified. |
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2. | Ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company. |
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3. | Approve the Torchmark Corporation 2018 Incentive Plan. |
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4. | Approve on an advisory basis the compensation of our named executive officers, as described in the Compensation Discussion and Analysis, executive compensation tables and accompanying narrative in the Proxy Statement. |
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5. | Transact any other business that properly comes before the meeting. |
website at https://investors.globelifeinsurance.com under the Calls & Meetings heading.
The Board of Directors recommends that you vote FOR Proposals 1, 2, 3 and 4 above. These matters are more fully discussed in the accompanying proxy statement.
The close of business on Friday, March 2, 2018 is the record date for determining shareholders who are entitled to notice of and to vote at the Annual Meeting. You are requested to mark, date, sign, and return the enclosed form of proxy in the accompanying envelope, whether or not you expect to attend the Annual Meeting in person. You may also choose to vote your shares over the telephone or on the Internet. You may revoke your proxy at any time before it is voted at the meeting.
The Annual Meetingmeeting may be adjourned from time to time (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication) without further notice other than by an announcement at the meeting or at any adjournment. Any business described in this notice may be transacted at any adjourned meeting.
Record Date
The close of business on Friday, March 1, 2024 is the record date for determining shareholders who are entitled to notice of and to vote at the Annual Meeting.
How to Vote
Your vote is important. We urge you to vote and submit your proxy in advance of the meeting. You are requested to mark, date, sign and return the enclosed form of proxy in the accompanying envelope, whether or not you expect to attend the virtual Annual Meeting. You may also choose to vote your shares by internet or telephone. You may revoke your proxy at any time before it is voted at the meeting. If you are a beneficial shareholder and wish to vote during the meeting, you must first have obtained a legal proxy from your bank, broker or other nominee which must be submitted, via email, either in advance of the meeting to EQSS-ProxyTabulation@equiniti.com or along with the voting ballot during the meeting.
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| By Order of the Board of Directors |
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 Christopher T. Moore |
Carol A. McCoy |
Corporate Senior Vice President, Associate Counsel & and Corporate Secretary
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McKinney, Texas
March 19, 201818, 2024
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on April 26, 2018:
25, 2024: The Company’s Proxy Statement and 20172023 Annual Report are available at: http:https://www.torchmarkcorp.com/investors/annualreports.investors.globelifeinsurance.com/annual-reports.
TABLE OF CONTENTS
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| OTHER BUSINESS | | |
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| Board Oversight of Cybersecurity Risk | | |
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| Board Diversity | | |
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| Elements of Compensation | | |
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| Annual Cash Bonuses | | |
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| Stock Ownership/Retention Guidelines | | |
| Prohibition on Hedging and Pledging of Company Stock | | |
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| Savings Plans | | |
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| Restricted Stock Units and Termination of Employment | | |
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Note: The Company cautions you that this Proxy Statement may contain forward-looking statements within the meaning of the federal securities law. These prospective statements reflect management's current expectations, but are not guarantees of future performance. Accordingly, please refer to the Company's cautionary statement regarding forward-looking statements and the business environment in which the Company operates, contained in the Company's Form 10-K for the period ended December 31, 2023, found on file with the Securities and Exchange Commission. The Company specifically disclaims any obligation to update or revise any forward-looking statement because of new information, future developments, or otherwise.
PROXY STATEMENT
PROXY SUMMARY
Company
Performance Highlights
2017 was another goodGlobe Life Inc. (the "Company") had a strong year for the Company. Return on equity, excluding net unrealized gains on fixed maturities, was 14.3%in 2023. We continued to grow both total underwriting margins and total premiums grew 5%. Agencypremium during the year. Total sales grew 8%by 6%, driven by increases in bothprimarily due to strong agent count and productivity.growth. We have had sales growth in each of our exclusive agencies now for four years in a row. Weare optimistic about the future and believe the Company is well positioned to continue to create sustainable growth and build shareholder value for years to come.consistent growth. The charts below highlight what we consider to be the most importantkey financial metrics we use to evaluate our business. Refer to APPENDIX A—Non-GAAP Reconciliations for definitions of non-GAAP measures, and Results of Operations in our 2023 Annual Report on Form 10-K for a reconciliation of such non-GAAP measures.
*In 2017, tax legislation revised the corporate income tax rate from 35% to 21% effective Jan. 1, 2018, among other modifications.
**The results included in this proxy statement reflect the adoption of ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The Company implemented the standard on January 1, 2023 on a modified retrospective basis as of the transition date of January 1, 2021. For additional information, please refer to our 2023 Annual Report on Form 10-K.
1 GL 2024 Proxy Statement
*In 2017, tax legislation revised the corporate income tax rate from 35% to 21% effective Jan. 1, 2018, among other modifications.
**The results included in this proxy statement reflect the adoption of ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The Company implemented the standard on January 1, 2023 on a modified retrospective basis as of the transition date of January 1, 2021. For additional information, please refer to our 2023 Annual Report on Form 10-K.
2 GL 2024 Proxy Statement
Executive Compensation Highlights
Our executive compensation programs are designed to motivate the achievement of our business goals in a manner that is consistent with the long-term risks inherent in our business. They reward the sustained annual performance that produces shareholder wealth over the long term. Specific highlights include:
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| Pay for Performance | • | Consistent with our business horizon, executive compensation is long-term in its focus, with a strong emphasis on share accumulation to best align management interests with those of our shareholders |
| • | Aggregate equity awards are made as a percentage of market capitalization to provide maximum alignment with shareholders |
| • | Realizable pay continues to be well-aligned with the Company's total shareholder return (TSR) |
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| Equity Plan Features | • | No single trigger change of control vesting |
| • | No discounted stock options or stock appreciation rights (SARs) |
| • | Prohibition on stock option and SAR repricing |
| • | No tax gross-ups |
| • | No liberal share recycling on stock options and SARs |
| • | Awards subject to both minimum vesting requirements and the Company’s Clawback Policy |
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| Compensation Governance | • | The Board’s independent Compensation Committee oversees the compensation program |
| • | The Compensation Committee retains an independent compensation consultant that reports only to that committee |
| • | Maximum payout caps for annual incentive compensation; limited to 150% of each named executive officer’s (NEOs) target opportunity |
| • | No dividend equivalents on performance share units |
| • | Robust stock ownership guidelines for directors and executives |
| • | Clawback policy applicable to current and former executive officers in the event we are required to prepare an accounting restatement of our financial statements due to our material non-compliance with any financial reporting requirement under securities laws |
| • | NEOs (including the Co-CEOs) do not have employment contracts or severance agreements |
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| Shareholder Support | • | In 2023, we received strong support for our executive compensation programs, with 84% of votes cast approving our advisory say-on-pay resolution |
| • | Over the last five years, our say-on-pay voting results have averaged a 91% approval rate |
The compensation recommendations and decisions for 20172023 of our management, the Compensation Committee with(with the aid of its independent compensation consultant, Board Advisory, Inc. (formerly Board Advisory, LLC),) and the independent members of the Board with respect to the persons who served as Co-CEOs during 2017, are summarized in the separate executive summaryExecutive Summary of the Compensation Discussion and Analysis on page 26 section of this Proxy Statement. Corporate Governance
Highlights
Corporate governance remainsremained a focus of our Board and Company management. In 2017, our efforts for improvementsmanagement in 2023. Our corporate governance continued, ledpractices are overseen by the Co-CEOs of the Company, our independent Lead Director and the Governance and Nominating Committee. We launched a search for new directors as a part of our Board refreshment process, resulting in the February 2018 election to the Board of Directors, its standing committees, and our Co-Chief Executive Officers. Cornerstones of Linda L. Addison, Cheryl D. Alston and Mary E. Thigpen. Our comprehensive project for succession planning at all levels of Company management using both internal and external resources continued in 2017. We continued to file annual reports under the Risk Management and Own Risk Solvency Assessment (ORSA) regulation with state insurance regulators on behalf of the Company and its insurance subsidiaries in a process actively overseen by the senior management level Enterprise Risk Management Committee. Finally, in 2017, we issued an Environmental, Social and Governance (ESG) Report, a copy of which is posted on the Company's website at http://www.torchmarkcorp.com/investors, reflecting our ongoing commitment to sustainable business practices. corporate governance framework include:
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| Independent Board Oversight | • | Strong independent Lead Director |
| • | 100% independent Board committees |
| • | Regular executive sessions of the independent members of the Board |
| • | 10 of 12 Board members are independent |
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| Good Corporate Governance Practices | • | Appropriate mix of diversity and tenure on Board |
| • | Director Retirement Age and Tenure Policy |
| • | Annual Board and Board committee evaluations, including periodic individual Director evaluations |
| • | Director and executive officer stock ownership requirements |
| • | Policies that prohibit hedging and pledging and provide for clawbacks |
3 GL 2024 Proxy Statement
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| Shareholders' Rights | • | Shareholders' Rights Policy |
| • | Proxy access |
| • | No supermajority voting provisions |
| • | Annual election of Directors |
| • | Majority voting standard for uncontested Director elections |
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| People and Culture | • | Succession planning and leadership development for executive officers and senior management positions |
| • | Succession planning and education for the Board and Board leadership |
| • | Oversight of programs, policies and initiatives designed to foster an engaged, stable, and diverse workforce |
| • | Work environment based on accountability, standards of integrity and ethical business conduct |
| • | Oversight of corporate culture that aligns with the Company's long-term goals and objectives |
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| Focus on Sustainability | • | Oversight of sustainability by the Board and its standing committees, which assist the Board by monitoring Environmental, Social & Governance (ESG) related issues |
| • | Senior management-led ESG Committee responsible for setting the Company's sustainability agenda, pursuant to a charter adopted by the Board of Directors |
| • | Business practices designed to further good corporate citizenship and reflect sound fiscal management |
| • | ESG Report published annually |
Board Composition Highlights*
Meeting Actions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gender Diversity (50%) | | | Tenure | |
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| Racial/Ethnic Diversity (25%) | | | | 5-9 years | llll | |
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| | 5 | | Directors departed the Board since 2021 | |
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*As of March 18, 2024
4 GL 2024 Proxy Statement
Voting Matters
At Torchmark Corporation’s 2018Globe Life Inc.'s 2024 Annual Meeting of Shareholders, you are being asked to:
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1. | Elect Directors – Fourteen | | Eleven of our current directors are standing for re-election (Linda L. Addison, Marilyn A. Alexander, Cheryl D. Alston, Mark A. Blinn, James P. Brannen, Alice S. Cho, J. Matthew Darden, Steven P. Johnson, David A. Rodriguez, Frank M. Svoboda and Mary E. Thigpen), each to a one-year term based upon a majority voting standard: Charles E. Adair, Linda L. Addison, Marilyn A. Alexander, Cheryl D. Alston, David L. Boren, Jane M. Buchan, Gary L. Coleman, Larry M. Hutchison, Robert W. Ingram, Steven P. Johnson, Darren M. Rebelez, Lamar C. Smith, Mary E. Thigpenstandard.
Information about the director nominees’ qualifications and Paul J. Zucconi. |
Information about the director nominees’ qualifications and tenure on the Board is located on pages 3 to 7 of this Proxy Statement.
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Approve Auditors – | | Deloitte and& Touche LLP, who have served as Torchmark Corporation’sGlobe Life Inc.'s registered independent public accountants since 1999, are proposed to be ratified to continue in that role for 2018. |
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| 3. | Approve the Torchmark Corporation 2018 Incentive Plan – You are being asked to approve a new 2018 equity incentive plan to replace the existing 2011 Incentive Plan, which will be frozen.
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4.Advise
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Executive
Compensation | | Advise on Executive Compensation – You are being asked to approve, on a non-binding advisory basis, the executive compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis, the various compensation tables and accompanying narrative compensation disclosures found on pages 26 to 48in the Compensation Discussion and Analysis section of this Proxy Statement. |
PROPOSAL NUMBER 1
Election of Directors
The Company’s By-laws provide that there will be not less than seven nor more than fifteen directors with the exact number to be fixed by the Board of Directors. Effective February 26, 2018, the number of directors was set at fifteen persons. At that time, the Board also determined to reduce the number of directors to fourteen persons effective upon the retirement of Lloyd W. Newton, as discussed below.
The Board of Directors proposes the election of Charles E. Adair, Linda L. Addison, Marilyn A. Alexander, Cheryl D. Alston, David L. Boren, Jane M. Buchan, Gary L. Coleman, Larry M. Hutchison, Robert W. Ingram,Mark A. Blinn, James P. Brannen, Alice S. Cho, J. Matthew Darden, Steven P. Johnson, DarrenDavid A. Rodriguez, Frank M. Rebelez, Lamar C. Smith,Svoboda, and Mary E. Thigpen and Paul J. Zucconi as directors, each to hold office for a one-year term, expiring at the close of the Annual Meeting of Shareholders to be held in 20192025, and until his or her successor is elected and qualified. Upon their re-nomination as directors, allAll directors tendered an irrevocable contingent resignation letter pursuant to the Company’s Director Resignation Policy. Lloyd W. NewtonJane Buchan will retire from the Board, with 12over 18 years of Board service immediately prior toService, at the Annual Meeting of Shareholders on April 26, 2018.25, 2024.
Non-managementThe Company’s By-laws provide that there will be not less than seven nor more than 15 directors first electedwith the exact number to be fixed by the Board. Effective as of the Annual Meeting of Shareholders on April 27, 2023, the number of directors was set at 12 persons. On February 28, 2024, the Board priordetermined to April 28, 2005 must retirereduce the number of directors from 12 to 11 persons upon the retirement of Jane Buchan from the Board, at the annual meeting of shareholders which immediately follows their 78th birthday. Non-management directors first elected to the Board after April 28, 2005 must retire from the Board at the annual meeting of shareholders immediately following their 74th birthday. Directors who are employees/officers of the Company must retire from active service as directors at the annual meeting of shareholders immediately following their 70th birthday.
discussed above.
If any of the nominees becomes unavailable for election, the directors’ proxies will vote for the election of any other person recommended by the Board unless the Board reduces the number of directors.
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| Proposal | | The Board recommends that shareholders vote “FOR” the proposal. |
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The Board recommends that the shareholders vote FOR the election of all of the nominees.
Profiles of Director Nominees
5 GL 2024 Proxy Statement
Director Nominee Profiles
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| Linda L. Addison | |
| Lead Director |
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| | Charles E. Adair | |
| Independent Director | Chair,Member, Governance and Nominating Committee |
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| Principal Occupation: President of Kowaliga Capital, Montgomery, Alabama, an investment management company since December 1993.
He is also a director of Tech Data Corporation and of Rayonier Advanced Materials, Inc. He formerly served as a director of PSS World Medical, Inc. (2002-2013).
Mr. Adair holds a B.S. in Accounting from the University of Alabama and participated in the Advanced Management Program at Harvard Business School.
He brings to the Board extensive corporate governance experience developed from more than 20 years of experience as the former President and Chief Operating Officer of a NASDAQ-listed pharmaceutical and medical supplies distributor. Additionally, Mr. Adair has served on both public and private company boards, participating in acquisitions, divestitures and debt and equity financings.
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Director since April 2003 | |
Age 70 | |
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| | Linda L. Addison | |
| Independent Director | Member, Compensation Committee |
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| Principal occupation: Immediate Past Managing Partner, and Former Chair of the Management Committee of Norton Rose Fulbright US LLP, since January 2017. (Formerly Managing Partner and Chair of the Management Committee of Norton Rose Fulbright US LLP, 2013-2016; Global Head of Dispute Resolution and Litigation of Norton Rose Fulbright, 2013-2014; Partner-in-Charge of New York office of Fulbright & Jaworski LLP, 2009-2013). SheMs. Addison is also a director of Catalyst,Lexitas and serves on the Kay Bailey Hutchison Center for Energy, Law and Business,non-profit boards of Catalyst and the M.D. Anderson Center Board of Visitors. Additionally, she serves asShe is a Senior Trustee of the University of Texas Law School Foundation. She formerly served as an independent director of KPMG LLP, the U.S. audit, tax and advisory firm (2018 - 2023).
Ms. Addison earnedreceived a B.A. from the University of Texas at Austin and a J.D. from the University of Texas School of Law. She earned the Certification in Climate Leadership from Diligent Institute, the CERT Certificate in Cybersecurity Oversight from Carnegie Mellon University's Software Engineering Institute, and is an NACD Board Leadership Fellow. As a global business leader and chief executive with more than three decades of practical experience, including as former Managing Partner and Chair of the Management Committee of Norton Rose Fulbright US LLP, Ms. Addison brings a broad array of management skills and operational experience to the Board, including expertise in corporate governance, accounting, technology,climate leadership oversight, cybersecurity oversight, strategic planning, risk assessment andenterprise risk management, compensation/benefits oversightregulatory/compliance, compensation, mergers and marketing.acquisitions, and human capital management.
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Director since FebruaryFeb. 2018 | |
Age 66 | 72 |
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| | Marilyn A. Alexander | |
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| Independent Director | Member, Governance and NominatingCompensation Committee |
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| Principal occupation: Self-employed management consultant since November 2003, and Principal in Alexander & Friedman, LLC, Laguna Beach, California, a management consultancy practice focusing on business planning, brand strategy and development, communications, process and organizational issues, since January 2006. SheMs. Alexander is also serves as a director of DCT Industrial Trust,McCarthy Holdings, Inc. She formerly served as a director of Tutor Perini Corporation (2008-2016). Additionally, she is a member of the Board of Governors,Trustees, Chapman University, Orange, California.
Ms. AlexanderShe has an A.B. in Philosophy from Georgetown University and an M.B.A. from the Wharton Graduate School atof the University of Pennsylvania.
Pennsylvania and holds a CPA license in the Commonwealth of Virginia. Ms. Alexander contributes to the Board from her extensive expertise in finance, marketing and strategic planning based upon more than 35 years of experience at top corporations including Disneyland Resort, where she was Senior Vice President and Chief Financial Officer, Walt Disney World Resort, Marriott Corporation and Towers Perrin, as well as in her own consultancy practice. |
Director since FebruaryFeb. 2013 | |
Age 66 | 72 |
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| | Cheryl D. Alston | |
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| Independent Director | Member, Compensation Committee |
| | Independent DirectorMember, Audit Committee |
| | (Effective April 2018) |
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| Principal occupation: Executive Director and Chief Investment Officer of the Employees' Retirement Fund of the City of Dallas, Texas ("ERF")(ERF), a $3.6$4 billion pension plan for the City's civilian employees, since October 2004. Ms. Alston also serves on the Board of CHRISTUS Health and Blue Cross Blue Shield of Kansas City and is a Director on the Federal Home Loan Bank of Dallas.Janus Henderson Mutual Fund Board. She formerly served as a director of Mercy Health in St. Louis, MO and as a memberthe Federal Home Loan Bank of the Pension Benefit Guaranty Corporation Advisory Committee.
Dallas (2017-2021).
She receivedholds a B.S. in Economics from the Wharton School of Business at the University of Pennsylvania and aan M.B.A. from the Leonard N. Stern School of Business at New York University.
With a career spanning more than 20 years in the financial services industry, including positions at ERF, Cigna Corporation and Chase Global Securities, Ms. Alston brings to the Board significant experience in the areas of strategic planning, investment management, asset allocation, corporate governance, finance and budget administration.
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Director since FebruaryFeb. 2018 | |
Age 51 | 57 |
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| Mark A. Blinn | |
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| Independent Director | Member, Compensation Committee |
| |
Principal occupation: Retired executive. He serves on the Boards of Texas Instruments Incorporated, Emerson Electric Co., and Leggett & Platt, Incorporated. He is an Executive Board Member of the Southern Methodist University (SMU) Cox Executive Board. Mr. Blinn holds a B.S., M.B.A. and J.D. from Southern Methodist University, as well as a charter financial analyst (CFA) designation. As President and Chief Executive Officer, and formerly Chief Financial Officer, of Flowserve Corporation and through his senior leadership roles at FedEx Kinko’s Office and Print Services, Inc. and Centex Corporation, Mr. Blinn developed a well-rounded set of business skills and knowledge that significantly benefits the Board, including extensive expertise in business operations, organizational design, accounting/finance and experience running a large complex international organization. He also possesses a thorough understanding of legal and governance matters through his time spent as a practicing attorney. |
| Director since Nov. 2021 |
| Age 62 |
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6 GL 2024 Proxy Statement
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| | | |
| James P. Brannen | | David L. Boren |
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| Independent Director | Member,Chair, Governance and Nominating Committee |
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| |
| Principal occupation: PresidentOccupation: Retired executive (Formerly Chief Executive Officer of The University of Oklahoma, Norman, Oklahoma since November 1994.
FBL Financial Group Inc., West Des Moines, Iowa, then a public financial services company, August 2012-December 2019).
He also serves as Chairman, Oklahoma Foundation for Excellence Boardon the Boards of Trustees (1984-Present)First Interstate BancSystem and as a Trustee for Bloomberg Family Foundation (2010-Present).Amerisure Mutual Insurance Company. He formerly served as Co-Chair, President’s Intelligence Advisory Board, U.S. Government (2009-2014). Additionally, he formerly served as a director for Great Western Bancorp, Inc. (2015-2022), FBL Financial Group Inc. (2012-2019), the Greater Des Moines Partnership (2012-2019), and the Property Casualty Insurers Association of Continental Resources, Inc. (2009-2017)America (2012-2019).
Mr. BorenBrannen holds a B.A. from Yale University, a MastersB.B.A. in Politics, Philosophy and Economics from Oxford University and a J.D.Accounting from the University of Oklahoma CollegeIowa and is a member of Law.the American Institute of Certified Public Accountants and the Iowa Society of Certified Public Accountants. HeWith nearly 30 years of relevant experience in the insurance and financial services industry, and having held a variety of C-suite positions during his distinguished career, Mr. Brannen brings to the Board extensive expertise in finance and executive management.
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| Director since Nov. 2021 |
| Age 61 |
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| Alice S. Cho | |
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| Independent Director | Member, Audit Committee |
|
Principal Occupation: Senior Advisor for The Boston Consulting Group, a diverse setglobal management consulting firm providing strategic advice to C-suite leaders and boards, since 2021 (Formerly Advisor of skills withVaro Money, Inc., a focusdigital bank startup, 2017-2020). Ms. Cho is also an independent director of First Interstate BancSystem and serves on governance, human resources and compensation issues from his experiences as an Oklahoma state legislator, a former Governor of and U.S. Senator from Oklahoma and his present position as the President ofdean's advisory council at the University of Oklahoma, where he oversees 13,000 employees and an annual operating budgetChicago Harris School of $1.6 billion. |
Director since April 1996 | |
Age 76 | |
| |
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| | | |
| | Jane M. Buchan | |
| Independent Director | Member, Compensation Committee |
| | |
| |
| Principal Occupation: Chief Executive Officer and Managing Director of Pacific Alternative Asset Management Company, LLC, Irvine, California, an institutional fund of funds for pension plans of corporations, state governments and foreign retirement trusts, since March 2000; Co-CEO of PAAMCO Prisma Holdings since June 2017.
Ms. Buchan is a director of AGF Management Limited. She formerly served as Chairwoman and Director of the Chartered Alternative Investment Association (CAIA). She is a Trustee of Reed College, Portland, Oregon and University of California Irvine Foundation.
Public Policy.
She earned a B.A. in Economics from YaleWhitman College and earned an A.M. from the University of Chicago, where she was a Sloan fellow. Through her advisory and an M.A.management positions at Promontory Financial Group, BITS (Bank Policy Institute), the Federal Reserve Board, and a Ph.D. in Business Economics/Finance from Harvard University. the U.S. Executive Office of the President, Ms. Buchan's 30+ year career as an investment professional, including experience as an analyst at J.P. Morgan Investment Management, various positions (including Director of Quantitative Analysis and Chief Investment Officer of Non-Directional Strategies) at Collins Associates, an institutional fund of funds and consulting firm, and as founder, Managing Director and CEO of Pacific Alternative Asset Management Company providesCho brings to the Board with a broad range of investmentextensive experience in financial services, public policy, and corporate boards, including advising boards and top executives on risk management, skills.regulatory compliance, corporate governance, and digital technology issues. |
Director since October 2005 | Feb. 2023 |
Age 54 | 57 |
| |
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| | | |
| J. Matthew Darden | | Gary L. Coleman |
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| Co-Chairman and Chief Executive Officer |
| | |
| |
| Principal occupation: Co-Chairman of the Company since April 20142023 and Co-Chief Executive Officer since June 2012.Jan. 2023 (Formerly Senior Executive Vice President and Chief FinancialStrategy Officer of Company September 1999-May 2012)April 2022 - Dec. 2022; Executive Vice President and Chief Strategy Officer of Company Jan. 2017-April 2022; President of subsidiary American Income Life Insurance Company July 2018-Dec. 2022).
Mr. ColemanDarden received a B.B.A. and an M.B.A from Baylor University and is also a member of the BoardAmerican Institute of Directors,Certified Public Accountants and the Texas Rangers Baseball Foundation.
Society of Certified Public Accountants.
He has a B.B.A. from the University of Texas at Austin. Mr. Coleman's 43 years of experience, which includes seven years at KPMG where he primarily served insurance clients and 33 years in various accounting, financial and investment positions at the Company and its subsidiaries, including service as the Chief Financial Officer of the Company for 13 years, provides the Board with a host of relevant and broad-based skills gained from more than 29 years of direct insurance industry experience, including expertise in marketing, finance, accounting, consulting, technology, business combinations and capital market transactions. Through his managerial roles at the Company, most recently serving as its Chief Strategy Officer, and his 16+ years of public accounting experience at Deloitte & Touche LLP and Ernst and Young LLP, Mr. Darden brings a wealth of highly-valued managerial, financial, operational and operating perspectives from both management and independent accounting.
strategic experience to the Board.
|
Director since August 2012 | Apr. 2023 |
Age 65 | 53 |
| |
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| | | |
| Steven P. Johnson | | Larry M. Hutchison |
| | Co-Chairman and Chief Executive Officer |
| | |
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| Principal occupation: Co-Chairman of the Company since April 2014 and Co-Chief Executive Officer since June 2012. (Formerly Executive Vice President and General Counsel of the Company, September 1999-May 2012).
Mr. Hutchison received a B.B.A. in Economics from the University of Iowa and a J.D. from Drake University.
He contributes valuable legal, human resources, and governmental and industry relations perspectives to the Board from his 37 years of experience as an in-house corporate attorney and business executive, including six years at two different insurers prior to joining the Company and its subsidiaries as a staff attorney more than 32 years ago and culminating in 15 years of service as the General Counsel of the Company.
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Director since August 2012 | |
Age 64 | |
| |
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| | | |
| | Robert W. Ingram | |
| Independent Director | Member, Audit Committee |
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| |
| Principal Occupation: Retired Accounting Educator. (Formerly Senior Associate Dean, 2004-May 2008, and Ross-Culverhouse Professor of Accounting in Culverhouse College of Commerce, University of Alabama, Tuscaloosa, Alabama, 2002-July 2009).
He has a B.A. in English from Eastern New Mexico University, a M.A. in English from Abilene Christian University and Ph.D. in Accounting from Texas Tech University.
Mr. Ingram’s background of 32 years as an accounting educator at the undergraduate and graduate collegiate levels at four different universities and his experience as Director of the Culverhouse School of Accountancy and Senior Associate Dean of the Culverhouse College of Commerce at the University of Alabama provides the Board with extensive accounting, financial reporting and management expertise.
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Director since October 2005 | |
Age 69 | |
| |
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| | | |
| | Steven P. Johnson | |
| Independent Director | Member, Audit Committee |
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| |
| Principal occupation: Financial Consultant and Advisor for Boulder Creek Development, LLC, a developer of office/warehouse buildings, primarily for smaller businesses, and its affiliated companies since June 2013. (Formerly Senior Partner for Deloitte & Touche, LLP, 2010-2013).
He earned a B.B.A. from the University of Wisconsin-Eau Claire. Mr. Johnson brings to the Board considerable expertise in accounting, auditing, regulatory, corporate governance, Sarbanes-Oxley compliance and enterprise risk management, as well as insurance industry experience as an external auditor, stemming from his 41 year41-year career with Deloitte & Touche LLP, where he held a variety of senior firm leadership and client service positions, including Worldwide Lead Client Service Partner for several prominent firm clients and six years as Deputy Managing Partner - Operations. |
Director since NovemberNov. 2016 | |
Age 67 | 73 |
| |
7 GL 2024 Proxy Statement
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| David A. Rodriguez | |
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| Independent Director | Member, Governance and Nominating Committee |
| | | |
| | Darren M. Rebelez | |
| Independent Director | Chair, Compensation Committee |
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| |
| Principal Occupation: PresidentRetired executive (Formerly Global Chief Human Resources Officer of Marriott International, HouseBethesda, MD, August 2006 - December 2021). He also serves on the Board of Pancakes, LLC (IHOP)American Woodmark Corporation and the Board of Glendale, California,Trustees of the SIOP Foundation. Mr. Rodriguez earned a leading family dining brand with franchise locations throughoutB.A. in Psychology and an M.A. and Ph.D. in Industrial/Organizational Psychology from New York University. He brings to the United StatesBoard extensive experience in human resource management, including organizational culture and internationally,inclusion, through a 36-year career at companies including Marriott International, Citicorp/Citibank and Avon Products, and his service on the Board of American Woodmark Corporation and the Board of Trustees of the SIOP Foundation. |
Director since May 2015.Feb. 2023 |
| Age 65 |
|
| Frank M. Svoboda | |
|
| Co-Chairman and Chief Executive Officer |
|
Principal occupation: Co-Chairman of the Company since April 2023 and Co-Chief Executive Officer since Jan. 2023 (Formerly Senior Executive Vice President and Chief OperatingFinancial Officer of 7-Eleven, Inc. (7-Eleven), Dallas,Company April 2022-Dec. 2022; Executive Vice President and Chief Financial Officer of Company June 2012 - April 2022; President of subsidiary Globe Life And Accident Insurance Company July 2018-Dec. 2022). He received a B.A. degree in Accounting and Finance from Nebraska Wesleyan University and is a member of the American Institute of Certified Public Accountants and the Texas the world’s largest convenience store chain, August 2007-October 2014).
Society of Certified Public Accountants.
Mr. Rebelez also servesSvoboda has more than 36 years of direct insurance industry experience, including in the areas of tax, accounting, consulting, compensation and benefits, business combination and capital market transactions. As the Company's Chief Financial Officer for more than a decade, with overall responsibility for various accounting, financial and investment functions at the Company and its subsidiaries, and through his service as a directorthe Company's Vice President of Children of Fallen Patriots Foundation.
He has a B.S.Tax for nine years prior thereto, as well as the 19 years he spent in General Engineering from the United States Military Academy and an M.B.A. from the University of Houston.
Through his rolespublic accounting at IHOP and 7-Eleven, companies which also target the middle income market, Mr. Rebelez brings to the Board experience in store development, franchising, information technology and business transformation. His prior work at ExxonMobil and Thornton Oil CorporationKPMG LLP, he provides the Board with expertise in merchandising, strategic planning, managementsignificant financial and marketing.
operational expertise.
|
Director since February 2010 | Apr. 2023 |
Age 52 | 62 |
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| | | |
| Mary E. Thigpen | | Lamar C. Smith |
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| Independent Director | Member,Chair, Audit Committee |
| | |
| |
| Principal Occupation: Retired Financial Services Executive. Director and majority owner of Coles Bay Capital LLC, Forth Worth, Texas, a private holding company acquiring and operating other companies, since February 2013. (Formerly Owner and Chief Executive Officer, Vista Commercial Technologies, LLC, Fort Worth, Texas, a supplier of custom fabricated components for defense equipment, December 2011-December 2013).
He is also a National Association of Corporate Directors (NACD) Governance Fellow and serves as Chairman of the Board of Trustees, Search Ministries, Inc. and as a board member of Christian Prayer Breakfast of Fort Worth & Tarrant County, Inc.
Mr. Smith holds a B.S./B.B.A. from Georgia State University.
He gained valuable experience over a 30-year career at First Command Financial Services, a financial planning company providing insurance, mutual funds and banking services to middle income families including current and former military officers, as its President and Chief Operating Officer for seven years and as its Chairman and Chief Executive Officer for 15 years. Mr. Smith furnishes a perspective on insurance marketing issues and the operations of a large independent insurance and financial services agency.
|
Director since October 1999 | |
Age 70 | |
| |
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| | | |
| | Mary E. Thigpen | |
| Independent Director | Member, Audit Committee |
| | (Effective April 2018) |
| |
| Principal occupation: Chief Executive OfficerSelf-employed Consultant providing advisory services in digital transformation strategies, technology and Directorcybersecurity assessments, and systemic risk mitigation competencies since February 2019 and September 2015-October 2017. (Formerly CEO of OpsDataStore, LLC, , Johns Creek, Georgia, a big data analytics, AI, and visualization software company, since October 2017. (Formerly self-employed consultant providing advisory services in strategy development, technology assessments and global go-to-market operational competencies, Sept. 2015 - October 2017 and February 2011 - November 2013; Chief Executive Officer of North Plains, LLC, Toronto, Canada, a global digital marketing software company, April 2014 - August 2015)2017-January 2019). Ms. Thigpen also serves as a director of Achievelt Online, LLC.LLC and Hope Bancorp, Inc. and its affiliate Bank of Hope. She formerly served as a director of Opus Bank (2019-2020). She received a B.S. in Mathematical and Computer Sciences from Clemson University. Ms. Thigpen provides the Board with expertise in technology, cybersecurity, strategic planning, corporate governance, enterprise and systemic risk management, international business, digital sales and marketing developed as a result of her time as a Chief Executive Officer atCEO of OpsDataStore and as CEO of North Plains, LLC and through senior leadership positions at Cox Communications, BearingPoint, Arthur Andersen LLP and Hewlett-Packard Company, as well as through her consultancy practice. |
Director since FebruaryFeb. 2018 | |
Age 58 | 64 |
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8 GL 2024 Proxy Statement
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| | | |
| | Paul J. Zucconi | |
| Independent Director | Chair, Audit Committee |
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| Principal occupation: Business Consultant, Plano, Texas, since January 2001.
Mr. Zucconi formerly served as a director of Affirmative Insurance Holdings, Inc. (2004-2015) and American Beacon Funds (26 funds) (2008-2013). He is a former member of the North Texas Board of Directors, National Kidney Foundation.
He holds a B.S. and a M.B.A. from Cornell University.
Mr. Zucconi brings to the Board extensive experience in accounting, financial reporting and auditing (both internal and independent) from work as an internal auditor in the U.S. Air Force Auditor General’s office and his 33 year career with KPMG, where he was a partner for 25 years and very active in professional practice areas with significant emphasis on financial services, including 17 years as a SEC Reviewing Partner. Since his retirement from KPMG in 2001, he has worked as a business consultant using his accounting expertise.
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Director since July 2002 | |
Age 77 | |
| |
Director Nominee Skills and Qualifications
The following table provides an overviewBoard has emphasized the importance of relevantidentifying and proposing for shareholder approval Director Nominees who possess a well-rounded range of skills, qualifications, professional experiences and perspectives. It is the Board’s belief that a Board comprised of individuals with diverse skills and experience broughtviewpoints will enhance its ability to effectively oversee the Company’s business operations and guide management’s efforts to achieve long-term strategic objectives. The chart below outlines those skills and qualifications the Board believes are most relevant to our business.
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| Skills and Qualifications | | Relevance to Globe Life Inc. |
| Accounting/Financial | | An understanding of accounting and financial concepts is fundamental to the oversight of our financial affairs, as well as for reviewing our operational and financial results. |
| Business Operations | | Helpful for understanding the myriad issues affecting our extensive business operations, which include sales, marketing, customer service, claims, underwriting, financial reporting, accounting and other support-oriented functions. |
| Capital Markets | | Beneficial for appraising and offering guidance on our capital structure and financial strategies, including with respect to dividends, stock repurchases and prospective mergers/acquisitions. |
| CEO/Other High-Level Senior Management Running Large Organizations | | Experience managing and leading large complex businesses is important for gaining a practical understanding of how organizations such as ours function and the decisions and actions required to drive sustainable financial and operational results. |
| Enterprise Risk Management | | Important for exercising risk oversight and for informing management's views as to current and emerging risks which, if not properly managed/mitigated, could have a material adverse impact on our business and ultimately shareholder value. |
| Human Capital Management | | Helps the Board guide the Company's efforts to recruit, retain and develop talented professionals, and to seamlessly integrate them into our corporate culture, in order to drive performance. |
| Information Technology/Information Security | | Can better inform the Board regarding technical risks and issues associated with information systems, upon which we are highly dependent, and associated technology in order to ensure our business continues to operate in an efficient and resilient manner. |
Insurance Industry/
Financial Services | | Experience in the insurance industry or financial services sector contributes to the Board's understanding of the distinct financial, legal and regulatory issues we regularly encounter as an insurance holding company with multiple insurance subsidiaries. |
| Investments | | We manage a substantial portfolio of invested assets. A general understanding of investment management concepts is essential for overseeing our investment management activities. |
| Legal/Regulatory/Compliance | | We operate in a heavily regulated environment in which compliance with applicable laws and regulations is necessary to enable our businesses to function. An understanding of our legal risks/obligations is crucial for the Board to be able to exercise its oversight role. |
| Marketing/Advertising | | Marketing/advertising experience, including social media and digital marketing, can provide expertise directly relevant to us as a consumer-driven business and can help to ensure that our marketing and branding efforts are properly aligned with our long-term strategic objectives. |
Other Public Company
Board Service | | Service on public company boards and committees provides valuable perspectives on good corporate governance practices and knowledge about key issues affecting public companies such as ours. |
| Sales Management | | Enhances the Board’s ability to evaluate our sales programs and initiatives aimed at developing and maintaining our various sales distribution systems in order to grow sales and profits. |
| Strategic Planning | | Valuable for offering guidance and oversight related to management's development of our long-term corporate strategy and for assessing the best approaches for implementing our strategic priorities. |
9 GL 2024 Proxy Statement
While not an exhaustive list, the skills matrix below reflects some of the qualifications and attributes possessed by eachthe Director Nominees that the Board believes are relevant to our business. Also listed are certain voluntarily self-identified demographic characteristics of the Director Nominees:Nominees.
10 GL 2024 Proxy Statement
DIRECTOR SKILLS MATRIX
PROPOSAL NUMBER 2
Approval of Auditors
A proposal to ratify the appointment of the firm of Deloitte & Touche LLP (Deloitte) as the independent registered public accounting firm of the Company for the year ending December 31, 20182024 will be presented to the shareholders at the Annual Meeting. Deloitte served as the Company’s independent registered public accounting firm, auditing the financial statements of the Company and its subsidiaries for the fiscal year ended December 31, 20172023, and has served in this capacity since 1999.
In 2017, in addition to its annual After review and evaluation, of Deloitte, the Audit Committee of the Board engaged in a comprehensive process to solicit information from multiple independent accounting firms, including Deloitte, to enable the Audit Committee to evaluate whether a change in the Company’s independent registered public accounting firm might be appropriate. This process focused on an assessment of the depth of insurance experience of the respective engagement teams of each of the participating firms as well as an evaluation of the quality of the audits performed by such firms. As part of this process, with assistance from senior accounting personnel at the Company, the Audit Committee critically assessed each of the participating firms, focusing on the depth of insurance experience of their respective audit engagement teams and on evaluations of the quality of their audits by the Public Company Accounting Oversight Board (PCAOB). Based upon its annual evaluation of Deloitte and the foregoing assessment process, the Audit Committee of the Board has concluded thatappointed Deloitte should be retainedto serve as the Company’s independent registered public accounting firm has appointed Deloitte to serve in such capacity for 2018,2024, and has recommended that the shareholders ratify Deloitte'sthe appointment of Deloitte for 2018.
2024.
A representative of Deloitte is expected to be present at the meeting and will be available to respond to appropriate questions and, although the firm has indicated that no statement will be made, anDeloitte will have the opportunity forto make a statement will be provided.
should the firm desire to do so.
If the shareholders do not ratify the appointment of Deloitte, the selection of an independent registered public accounting firm will be reconsidered by the Audit Committee of the Board of Directors.
| | | | | | | | |
| Proposal | | The Board recommends that shareholders vote “FOR” the proposal. |
| 2 | |
The Board recommends that stockholders vote FOR the proposal.
PROPOSAL NUMBER 3
Approval of Torchmark Corporation 2018 Incentive Plan
On February 26, 2018, the Board of Directors of the Company adopted, subject to stockholder approval, the Torchmark Corporation 2018 Incentive Plan (the “2018 Plan").
We currently maintain the Torchmark Corporation 2011 Incentive Plan (the “Prior Plan”) under which new equity awards may be granted. As of the record date, March 2, 2018 there were approximately 8,766,000 shares of our common stock subject to outstanding awards under the Prior Plan. As of such date, there were approximately 184,000 shares of our common stock reserved and available for future awards under the Prior Plan which will be made available under the 2018 Plan. If our stockholders approve the 2018 Plan, all future equity awards will be made from the 2018 Plan, and we will not grant any additional awards under the Prior Plan.
The following table presents certain information regarding outstanding awards and shares available for grant under the Prior Plan as of March 2, 2018:
|
| |
Total stock options outstanding | 7,852,338 |
Weighted-average exercise price of stock options outstanding | 60.06 |
Weighted-average remaining duration of stock options outstanding | 5.41 |
Total full value awards outstanding1
| 914,122 |
Shares available for grant under the Prior Plan2
| 183,604 |
Total shares of common stock outstanding | 113,851,304 |
1Assumes outstanding performance share awards vest at the maximum level.
2These shares will be made available under the 2018 Plan. No future awards will be granted under the Prior Plan if stockholders approve the 2018 Plan.
A summary of the 2018 Plan is set forth below. This summary is qualified in its entirety by the full text of the Torchmark Corporation 2018 Incentive Plan, which is attached to this Proxy Statement as APPENDIX B.
Background for Request to Approve Additional Shares under 2018 Plan
Significant Historical Award Information. Common measures of a stock plan’s cost include burn rate, dilution and overhang. The burn rate, or run rate, refers to how fast a company uses the supply of shares authorized for issuance under its stock plan. Over the last three years, the Company has maintained an average equity run rate of only 1.5% of shares outstanding per year. Dilution measures the degree to which the Company’s stockholders’ ownership has been diluted by stock-based compensation awarded under the Company’s various equity plans and also includes shares that may be awarded under the Company’s various equity plans in the future (“overhang”).
The following table shows how the Company’s key equity metrics have changed over the past three years:
|
| | | | | | | | | |
| Key Equity Metrics | | 2017 | | 2016 | | 2015 |
Equity Run Rate1 | | 1.83 | % | | 1.49 | % | | 1.27 | % |
Overhang2 | | 9.0 | % | | 10.6 | % | | 12.5 | % |
Dilution3 | | 6.4 | % | | 6.3 | % | | 6.8 | % |
1Equity run rate is calculated by dividing the number of shares subject to equity awards granted during the year by the weighted-average number of shares outstanding during the year.
2Overhang is calculated by dividing (a) the sum of (x) the number of shares subject to equity awards outstanding at the end of the year and (y) the number of shares available for future grants, by (b) the number of shares outstanding at the end of the year.
3Dilution is calculated by dividing the number of shares subject to equity awards outstanding at the end of the fiscal year by the number of shares outstanding at the end of the fiscal year. For the purpose of these calculations, shares are counted on the basis of the method utilized in the current plan.
Number of Shares Requested. The Company considered several factors in determining to request 8.8 million shares for the 2018 Plan:
Assuming stockholder approval of the 2018 Plan, 8,984,000 shares (8,800,000 new shares and approximately 184,000 shares which will be made available under the 2018 Plan from the Prior Plan) will be available for future grants. The Company expects this amount to last for approximately 4 years of awards. This estimate is based on a run rate average of 1.77%. While the Company believes this modeling provides a reasonable estimate of how long such a share reserve would last, there are a number of factors that could impact the Company’s future equity share usage.
The total overhang resulting from the share request, including awards outstanding under all of the Company’s equity plans, represents approximately 13.5% of the shares outstanding as of the Record Date.
Share Counting. The Company considered the dilutive effect of the different awards that could be granted under the 2018 Plan. The counting mechanism included in the 2018 Plan reflects the relative Shareholder Value Transfer (SVT) of each award type. SVT is calculated as the total value of equity grants divided by the market capitalization of the Company. This approach utilizes a true “fungible” count between award types. The one exception is the fact that we count time-based restricted stock at 125% of the rate used for performance-based awards. While this differential is not supported purely from a SVT perspective, it does reflect a suitable shareholder focus by counting these awards at a higher rate.
Summary of the 2018 Plan
Purpose. The purpose of the 2018 Plan is to promote the Company’s success and enhance the value of the Company by linking the personal interests of the Company’s employees, officers, directors and consultants to those of its stockholders, and by providing participants with an incentive for outstanding performance. The 2018 Plan is also intended to enhance the Company’s ability to motivate, attract, and retain the services of employees, officers, directors and consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.
Administration. The 2018 Plan will be administered by the Compensation Committee. The Compensation Committee will have the authority to:
designate participants;
grant awards;
determine the type or types of awards to be granted to each participant and the number, terms and conditions thereof;
establish, adopt or revise any rules and regulations as it may deem advisable to administer the 2018 Plan; and
make all other decisions and determinations that may be required under the 2018 Plan.
The full Board may at any time elect instead to administer the 2018 Plan. If it does so, it will have all the powers of the Compensation Committee under the 2018 Plan.
Eligibility. The 2018 Plan permits the grant of incentive awards to employees, officers, directors, and consultants of the Company and its affiliates as selected by the Compensation Committee. As of March 2, 2018, the number of eligible participants was approximately 180. The number of eligible participants may increase over time based upon our future growth.
Awards to Non-Employee Directors. Awards granted under the 2018 Plan to our non-employee directors will be made only in accordance with the terms, conditions and parameters of a plan, program or policy for the compensation of non-employee directors as in effect from time to time. The Compensation Committee may not make discretionary grants under the 2018 Plan to non-employee directors.
Permissible Awards. The 2018 Plan authorizes the granting of awards in any of the following forms:
options to purchase shares of our common stock, which may be nonstatutory stock options or incentive stock options under the Internal Revenue Code of 1986, as amended, which we refer to as the “Code”;
stock appreciation rights (SARs), which give the holder the right to receive the difference (payable in cash or stock, as specified in the award certificate) between the fair market value per share of common stock on the date of exercise over the base price of the award;
restricted stock, which is subject to restrictions on transferability and subject to forfeiture on terms set by the Compensation Committee;
restricted or deferred stock units, which represent the right to receive shares of our common stock (or an equivalent value in cash or other property, as specified in the award certificate) in the future, based upon the attainment of stated vesting or performance criteria in the case of restricted stock units;
performance awards which are awards payable in cash or stock upon the attainment of specified performance goals (any award that may be granted under the 2018 Plan may be granted in the form of a performance award);
dividend equivalents, which entitle the holder of a full-value award to cash payments (or an equivalent value payable in stock or other property) equal to any dividends paid on the shares of stock underlying the full-value award;
other stock-based awards in the discretion of the Compensation Committee, including unrestricted stock grants; and
cash-based awards, including performance-based annual bonus awards.
Shares Available for Awards. Subject to adjustment as provided in the 2018 Plan, the aggregate number of shares of our common stock reserved and available for issuance pursuant to awards granted under the 2018 Plan is 8,800,000, plus a number of additional shares of common stock (not to exceed 184,000) available for awards as of March 2, 2018 under the Prior Plan that thereafter terminate or expire unexercised, or are cancelled, forfeited or lapse for any reason.
Share Counting. Awards of options and SARs with up to a seven-year term count against the number of shares remaining available for issuance under the 2018 Plan as .85 shares for each share covered by such awards. Awards of options and SARs with seven to ten-year terms count against the number of shares remaining available for issuance under the 2018 Plan as one (1) share for each share covered by such awards. Full-value awards that vest based on performance criteria other than continued service count against the number of shares remaining available for issuance under the 2018 Plan as 3.1 shares for each share covered by such awards. Full-value awards that vest solely on continued service count against the number of shares remaining available for issuance under the 2018 Plan as 3.88 shares for each share covered by such awards.
The full number of shares subject to an option or SAR shall count against the number of shares remaining available for issuance under the 2018 Plan, even if fewer shares are actually delivered to a participant as a result of a net settlement or withholding of shares to satisfy the exercise price or tax.
Shares withheld from an award to satisfy tax withholding requirements shall count against the number of shares remaining available for issuance under the 2018 Plan, and shares delivered by a participant to satisfy tax withholding requirements shall not be added to the 2018 Plan share reserve.
To the extent that an award is canceled, terminates, expires, is forfeited or lapses for any reason, any unissued or forfeited shares subject to the award will be added back to the plan share reserve and again be available for issuance pursuant to awards granted under the 2018 Plan.
To the extent that the full number of shares subject to a full-value award is not issued for any reason, including by reason of failure to achieve maximum performance goals, the unissued shares originally subject to the award will be added back to the plan share reserve and again be available for issuance under the 2018 Plan.
Limitations on Individual Awards. The maximum aggregate number of shares of common stock subject to stock-based awards that may be granted under the 2018 Plan within a single calendar year to any one participant is as follows:
options, 300,000;
stock appreciation rights, 300,000;
restricted stock or stock units, 100,000; and
other stock-based awards, 150,000.
The maximum aggregate amount that may be paid with respect to cash-based awards under the 2018 Plan to any one participant in any fiscal year of the Company shall be $4,000,000. The maximum dollar amount of awards that may be granted under the 2018 Plan to any non-employee director within a single calendar year is $450,000.
Performance Goals. The Committee is authorized to grant any award under the Plan, including cash-based award, with performance-based vesting criteria as determined by the Compensation Committee. The Compensation Committee may establish performance goals for performance awards based on any criteria selected by the Compensation Committee. Such performance goals may be based on Company-wide objectives or objectives that relate to the performance of a participant, an affiliate of the Company, or a division, region, department or function within the Company or an affiliate. The Compensation Committee may provide in any performance award, at the time the performance goals are established, that any evaluation of performance may exclude or otherwise be objectively adjusted for any specified unusual circumstance or event that occurs during a performance period, including by way of example but without limitation the following: (a) litigation or claim judgments or settlements; (b) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (c) accruals for reorganization and restructuring programs; and (d) foreign exchange gains and losses.
Limitations on Transfer; Beneficiaries. A participant may not assign or transfer an award other than by will or the laws of descent and distribution; provided, however, that the Compensation Committee may permit other transfers (other than transfers for value) where it concludes that such transferability does not result in accelerated taxation, does not cause any option intended to be an incentive stock option to fail to qualify as such, and is otherwise appropriate and desirable, taking into account any factors deemed relevant, including without limitation, any state or federal tax or securities laws or regulations applicable to transferable awards. A participant may, in the manner determined by the Compensation Committee, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant’s death.
Treatment of Awards upon a Participant’s Termination of Service. Unless otherwise provided in an award certificate or any special plan document governing an award, upon the termination of a participant’s service due to death or disability:
all of that participant’s outstanding options and SARs will become fully vested and exercisable;
all time-based vesting restrictions on that participant’s outstanding awards will lapse as of the date of termination; and
the payout opportunities attainable under all of that participant’s outstanding performance-based awards will vest based on target or actual performance (depending on the time during the performance period in which the date of termination occurs) and the awards will pay out on a prorata basis, based on the time elapsed prior to the date of termination.
Treatment of Awards upon a Change in Control. Unless otherwise provided in an award certificate or any special plan document governing an award:
(A) upon the occurrence of a change in control of the Company (as defined in the 2018 Plan) in which awards are not assumed by the surviving entity or otherwise equitably converted or substituted in connection with the change in control in a manner approved by the Committee or the Board:
all outstanding options and SARs will become fully vested and exercisable;
all time-based vesting restrictions on outstanding awards will lapse as of the date of termination; and
the payout opportunities attainable under all outstanding performance-based awards will vest based on target or actual performance (depending on the time during the performance period in which the change in control occurs) and the awards will pay out on a prorata basis, based on the time elapsed prior to the change in control, and
(B) with respect to awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a change in control, if within two years after the effective date of the change in control, a participant’s employment is terminated without Cause or the participant resigns for Good Reason (as such terms are defined in the 2018 Plan), then:
all of that participant’s outstanding options and SARs will become fully vested and exercisable;
all time-based vesting restrictions on that participant’s outstanding awards will lapse as of the date of termination; and
the payout opportunities attainable under all of that participant’s outstanding performance-based awards will vest based on target or actual performance (depending on the time during the performance period in which the date of termination occurs) and the awards will pay out on a prorata basis, based on the time elapsed prior to the date of termination.
In addition, subject to limitations applicable to certain qualified performance-based awards, the Compensation Committee may, in its discretion accelerate awards upon the termination of service of a participant or the occurrence of a change in control. The Compensation Committee may discriminate among participants or among awards in exercising such discretion.
Clawbacks. Awards made under the 2018 Plan will be subject to the Clawback Provisions described on page 33 of this Proxy Statement and may be recaptured by the Company upon the occurrence of certain specified events.
Adjustments. In the event of a transaction between us and our stockholders that causes the per-share value of our common stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering or large nonrecurring cash dividend), the share authorization limits and annual award limits under the 2018 Plan will be adjusted proportionately, and the Compensation Committee shall make such adjustments to the 2018 Plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend, or a combination or consolidation of the outstanding shares of our common stock into a lesser number of shares, the authorization limits and annual award limits under the 2018 Plan will automatically be adjusted proportionately, and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price.
Termination and Amendment. Our Board or the Compensation Committee may, at any time and from time to time, terminate or amend the 2018 Plan, but if an amendment would constitute a material amendment requiring stockholder approval under applicable listing requirements, laws, policies or regulations, then such amendment will be subject to stockholder approval. In addition, our Board or the Compensation Committee may condition any amendment on the approval our stockholders for any other reason. No termination or amendment of the 2018 Plan may, without the written consent of the participant, reduce or diminish the value of an outstanding award.
The Compensation Committee may amend or terminate outstanding awards. However, such amendments may require the consent of the participant and, unless approved by our stockholders, the exercise price of an outstanding option may not be reduced, directly or indirectly, and the original term of an option may not be extended.
Prohibition on Repricing. As indicated above under “Termination and Amendment,” outstanding stock options cannot be repriced, directly or indirectly, without stockholder approval. The exchange of an “underwater” option (i.e., an option having an exercise price in excess of the current market value of the underlying stock) for another award would be considered an indirect repricing and would, therefore, require stockholder approval.
Certain U.S. Federal Income Tax Effects
The U.S. federal income tax discussion set forth below is intended for general information only and does not purport to be a complete analysis of all of the potential tax effects of the 2018 Plan. It is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change. State and local income tax consequences are not discussed, and may vary from locality to locality.
Nonstatutory Stock Options. There will be no federal income tax consequences to the optionee or to the Company upon the grant of a nonstatutory stock option under the 2018 Plan. When the optionee exercises a nonstatutory option, however, he or she will recognize ordinary income in an amount equal to the excess of the fair market value of the stock received upon exercise of the option at the time of exercise over the exercise price, and the Company will be allowed a corresponding federal income tax deduction. Any gain that the optionee realizes when he or she later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.
Incentive Stock Options. There will be no federal income tax consequences to the optionee or to the Company upon the grant or exercise of an incentive stock option. If the optionee holds the option shares for the required holding period of at least two years after the date the option was granted and one year after exercise, the difference between the exercise price and the amount
realized upon sale or disposition of the option shares will be long-term capital gain or loss, and the Company will not be entitled to a federal income tax deduction. If the optionee disposes of the option shares in a sale, exchange, or other disqualifying disposition before the required holding period ends, he or she will recognize taxable ordinary income in an amount equal to the excess of the fair market value of the option shares at the time of exercise over the exercise price, and the Company will be allowed a federal income tax deduction equal to such amount. While the exercise of an incentive stock option does not result in current taxable income, the excess of the fair market value of the option shares at the time of exercise over the exercise price will be an item of adjustment for purposes of determining the optionee’s alternative minimum taxable income.
SARs. A participant receiving a SAR under the 2018 Plan will not recognize income, and the Company will not be allowed a tax deduction, at the time the award is granted. When the participant exercises the SAR, the amount of cash and the fair market value of any shares of stock received will be ordinary income to the participant and the Company will be allowed a corresponding federal income tax deduction at that time (subject to a possible limitation on deductibility under revised Code Section 162(m)).
Restricted Stock. Unless a participant makes an election to accelerate recognition of the income to the date of grant as described below, a participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a restricted stock award is granted, provided that the award is nontransferable and is subject to a substantial risk of forfeiture. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the stock as of that date (less any amount he or she paid for the stock), and the Company will be allowed a corresponding federal income tax deduction at that time. If the participant files an election under Code Section 83(b) within 30 days after the date of grant of the restricted stock, he or she will recognize ordinary income as of the date of grant equal to the fair market value of the stock as of that date (less any amount paid for the stock), and the Company will be allowed a corresponding federal income tax deduction at that time (subject to a possible limitation on deductibility under revised Code Section 162(m)). Any future appreciation in the stock will be taxable to the participant at capital gains rates. However, if the stock is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the Code Section 83(b) election.
Restricted or Deferred Stock Units. A participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a stock unit award is granted. Upon receipt of shares of stock (or the equivalent value in cash or other property) in settlement of a stock unit award, a participant will recognize ordinary income equal to the fair market value of the stock or other property as of that date (less any amount he or she paid for the stock or property), and the Company will be allowed a corresponding federal income tax deduction at that time (subject to a possible limitation on deductibility under revised Code Section 162(m)).
Cash-Based Performance Awards. A participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a cash-based performance award is granted (for example, when the performance goals are established). Upon receipt of cash in settlement of the award, a participant will recognize ordinary income equal to the cash received, and the Company will be allowed a corresponding federal income tax deduction at that time(subject to a possible limitation on deductibility under revised Code Section 162(m)).
Tax Withholding. The Company has the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including employment taxes) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the 2018 Plan.
Internal Revenue Code Section 162(m). The Tax Cuts and Jobs Act was enacted on December 22, 2017. Among other things, the Tax Cuts and Jobs Act substantially modifies Section 162(m) of the Code to eliminate the performance-based exception to the $1 million deduction limit effective as of January 1, 2018. This means that beginning in 2018, all compensation paid to certain executive officers in excess of $1 million will generally be nondeductible regardless of whether such compensation was performance-based.
Additionally, beginning in 2018, executive officers subject to Section 162(m) (the “Covered Employees”) will include any individual who served as the CEO or CFO at any time during the taxable year and the three other most highly compensated officers (other than the CEO and CFO) for the taxable year. Once an individual becomes a Covered Employee for any taxable year beginning after December 31, 2016, that individual will remain a Covered Employee for all future years, including following any termination of employment.
Pursuant to the Tax Cuts and Jobs Act transition rules, the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date. The Compensation Committee may avail itself of this transition rule to the extent it is available. However, because of uncertainties as to the application and interpretation of the transition rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the transition rule. The Compensation
Committee will not limit its decisions with respect to executive compensation to preserve deductibility under Section 162(m) if the Committee determines that doing so is in the best interests of the company.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information as of December 31, 2017 regarding compensation plans under which the Company’s equity securities are authorized for issuance. The following table does not include any shares which may be added by the adoption of the 2018 Plan in the event that Proposal 3 is approved by the stockholders of the Company.
|
| | | | | | |
| Plan Category | | Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Shares Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
| | | (a) | | (b) | | (c) |
| | | | | | | |
| Equity compensation plans approved by shareholders | | 6,753,801 | | $43.79 | | 2,964,320 |
Equity compensation plans not approved by shareholders1 | | — | | — | | — |
| Total | | 6,753,801 | | $43.79 | | 2,964,320 |
1The Company does not maintain any equity compensation plans that have not been approved by its shareholders.
Recommendation of the Board
The Board of Directors recommends that you vote “FOR” the proposal to approve the Torchmark Corporation 2018 Incentive Plan.
The Board recommends that stockholders vote FOR the proposal.
PROPOSAL NUMBER 4
Advisory Vote on Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer ProtectionIn accordance with Section 14A of the Securities Exchange Act of 2010 (the Dodd-Frank Act), enacted in July 2010, enables Company shareholders to vote to approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers as disclosed in this Proxy Statement in accordance with SEC rules.
We1934, we are asking for shareholder approval of the compensation of our named executive officers, as disclosed on pages 26 to 48 of this Proxy Statement in accordance with SEC rules, which includes the disclosures under “Executive Compensation—Compensation Discussion and Analysis,” the compensation tables and the related narrative compensation disclosures.officers. This vote is not intended to address any specific item of compensation, but rather this vote relates to the overall compensation of our named executive officers and the compensation policies and practices described in this Proxy Statement.
The compensation of our executive officers is based on a philosophy that emphasizes and rewards the attainment of performance measures that the Compensation Committee believes promote the creation of long-term shareholder value and therefore align management’s interests with the interests of long-term shareholders. As described more fully in the Compensation Discussion and Analysis, the mix ofOur compensation elements, the terms of the Management Incentive Plan and the terms of long-term equity incentive awards are allprogram is designed to enable the Company to attract, motivate, reward and retain key executives while, at the same time, creating a close relationship between performance and compensation. The Compensation Committee believes that the design of the compensation program and the compensation of named executive officers under the program fulfill this objective. Shareholders are urged to read the Compensation Discussion and Analysissection of this Proxy Statement entitled “Executive Compensation—Compensation Discussion and Analysis," for a detailed discussion of how our compensation policies and practices implement our compensation philosophy. This vote is advisory and therefore not binding on the Company, the Board, or the Compensation Committee. The Board and the Compensation Committee value the opinions of Company shareholders and to the extent there is any significantwill take such vote against the namedinto account when making future executive officer compensation as disclosed in this Proxy Statement, we will consider those shareholders' concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.decisions.
Accordingly, the Company is asking shareholders to approve the following resolution at the Annual Meeting:
“RESOLVED,“RESOLVED, that the Company’s shareholders hereby approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 20182024 Annual Meeting of Shareholders pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, which disclosure includes the Compensation Discussion and Analysis, the compensation tables and related compensation disclosures.”
| | | | | | | | |
| Proposal | | The Board recommends that shareholders vote “FOR” advisory approval of our executive compensation. |
| 3 | |
Recommendation of the Board 11 GL 2024 Proxy Statement
The Board recommends that shareholders vote “FOR” advisory approval of the resolution set forth above.
OTHER BUSINESS
The directors are not aware of any other matters which may properly be and are likely to be brought before the Annual Meeting. If any other proper matters are brought before the Annual Meeting, the persons named in the proxy, Gary L. ColemanJ. Matthew Darden and LarryFrank M. Hutchison,Svoboda, will vote in accordance with their judgment on these matters.
INFORMATION REGARDING DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS
Executive Officers
The following table shows certain information concerning each person deemed to be an executive officer of the Company, except those persons also serving as directors. Each executive officer is appointed by the Board of the Company or its subsidiaries annually and serves at the pleasure of that board. There are no arrangements or understandings between any executive officer and any other person pursuant to which the officer was selected.
| | | | | | | | |
| Name | | | | |
Name | Current
Age | Current
Age
| | Principal Occupation and Business Experience for the Past Five Years1* |
J. Matthew DardenJennifer A. Haworth | 50 | 47 | | Executive Vice PresidentEVP and Chief StrategyMarketing Officer of Company since January 2017; President of Family Heritage since January 2017. (Executive Vice President-Innovations & Business Development of Company Oct. 2014 - Dec. 2016; Partner of Deloitte & Touche LLP Aug. 2006 - Oct. 2014) |
Steven J. DiChiaro | | 51 | | Chief Executive Officer, LNL AgencyJan. 2020; Division of Liberty since January 2018. (President of LNL Agency Division Jan. 2017 - Dec. 2017, President Jan. 2015 - Dec. 2016, Executive Vice President and Chief Agency Officer of Liberty Dec. 2011 - Dec. 2014) |
Steven K. Greer | | 45 | | Chief Executive Officer, AIL Agency Division of American Income since January 2018. (President of AIL Agency Division Jan. 2017 - Dec. 2017, President Jan. 2016 - Dec. 2016, State General Agent of American Income for the State of Texas May 2001 - Dec. 2015) |
Jennifer A. Haworth | | 44 | | Vice President, Marketing of Company since Jan. 2018; Senior Vice President,SVP, Marketing of Globe since Sept. 2019. (Corporate SVP, Marketing of Company Nov. 2019 - Dec. 2011.2019; VP, Marketing of Company Jan. 2018 - Nov. 2019; SVP, Marketing of Globe Dec. 2011 - Sept. 2019) |
MaryRobert E. HendersonHensley | 56 | 54 | | Vice President, Enterprise Lead GenerationEVP and Chief Investment Officer of Company since Jan. 2018; Senior Vice PresidentJuly 2021; Divisional SVP, Investments of American Income, Family Heritage, Globe, Liberty and United American since Apr. 2017. (Senior ViceFeb. 2021. (Vice President of Globe Feb. 2011for Provident Investment Management LLC, Chattanooga, TN, Nov. 1999 - Apr. 2017)Nov. 2020) |
Vern D. HerbelThomas P. Kalmbach | 59 | 60 | | Executive Vice PresidentEVP and Chief AdministrativeFinancial Officer of Company since Apr. 2006;Jan. 2023; President of Liberty since Jan. 2017. (Chief Executive Officer July 2004 - Feb. 2015, President of United American Dec. 2011 - Feb. 2015; Executive Vice President of Globe and American Income May 2002 - Feb. 2015) |
Bill E. Leavell | | 55 | | President and Chief Executive Officer, Globe Life Direct Response of Globe since Jan. 2017. (President Nov. 2013 - Dec. 2016, Senior Vice2023; President of Globe Aug. 2005 - Nov. 2013) |
Ben W. Lutek | | 59 | | Executive Vice PresidentFamily Heritage since Apr. 2022. (EVP and Chief Actuary of Company since Jan. 2013.2019 - Dec. 2022; SVP and Chief Actuary of American Income, Globe, Liberty and United American Aug. 2018 - Dec. 2022) |
| Michael C. Majors | 61 | 55 | | Vice President, Investor RelationsEVP, Policy Acquisition and Chief Strategy Officer of Company since May 2008;Jan. 2023; President of United American since Mar. 2015. (EVP - Administration and Investor Relations of Company July 2018 - Dec. 2022) |
Kenneth J. Matson | | 50 | | President and Chief Executive Officer, FHL Agency Division of Family Heritage since January 2017. (President Mar. 2014 - Dec. 2016, Executive Vice President of Family Heritage Nov. 2012 - Mar. 2014) |
Carol A. McCoy | | 63 | | Vice President, Associate Counsel and Corporate Secretary of Company since Apr. 2001. |
James E. McPartland | | 51 | | Executive Vice President and Chief Information Officer of Company since Nov. 2014. (Vice President, Information Systems Enterprise Planning & Analytics Mar. 2013 - Nov. 2014; Vice President, Applications Mar. 2011 - Mar. 2013 of Tenet Healthcare Corporation, Dallas, Texas, an owner and operator of hospitals and ancillary health care facilities) |
| R. Brian Mitchell | 60 | 54 | | Executive Vice PresidentEVP and General Counsel of Company since June 2012; Chief Risk Officer of Company since May 2017; President of GlobeAmerican Income since Jan. 2017. (Senior Vice2023; President of Liberty since July 2018. |
| Dolores L. Skarjune | 58 | EVP and Chief Administrative Officer of Company since Jan. 2023; Divisional SVP, Administration of Family Heritage since June 2023; Divisional SVP, Sales and Administration of American Income, Globe, Liberty, and United American Nov. 2006since Sept. 2019. (Corporate SVP, Sales Administration of Company Jan. 2021 - Dec. 2016; Senior Vice President2022; SVP of Family Heritage July 2015 - Dec. 2016; General CounselSales Administration of American Income, Globe, Liberty and United American Aug. 2012 - Sept. 2019) |
| Christopher K. Tyler | 50 | EVP and SecretaryChief Information Officer of United AmericanCompany since June 20102022. (Chief Information Officer of Magellan Health Feb. 2020 - May 2022; Chief Information Officer of Lifecare Health Partners May 2018 - Dec. 2016; General Counsel of Family Heritage July 2015 - Dec. 2016; Secretary of Globe and Liberty May 2012 - Dec. 2016; Secretary of Family Heritage July 2015 - Dec. 2016)2019) |
W. Michael PressleyRebecca E. Zorn | 52 | 66 | | Executive Vice PresidentEVP and Chief InvestmentTalent Officer of Company since Jan. 2013. |
Frank M. Svoboda | | 56 | | Executive Vice President2021; Divisional SVP and Chief FinancialTalent Officer of American Income, Family Heritage, Globe, Liberty and United American since Sept. 2019. (Corporate SVP and Chief Talent Officer of Company since June 2012; PresidentNov. 2019 - Dec. 2020; VP and Chief Talent Officer of American Income sinceCompany Jan. 2017. |
Rebecca E. Zorn | | 45 | | 2019 - Nov. 2019; Assistant Secretary and Director of Human Resources of Company since Jan. 2018. (Assistant General Counsel2018 - Dec. 2018; SVP and Chief Talent Officer of American Income, Family Heritage, Globe, Liberty and United American Apr. 2015June 2019 - Dec. 2016; Assistant General Counsel of Globe Jan. 2017 - Dec. 2017)Sept. 2019) |
1*American Income, Family Heritage, Globe, Liberty, and United American, as used in this Proxy Statement, refer to American Income Life Insurance Company, Family Heritage Life Insurance Company of America, Globe Life And Accident Insurance Company, Liberty National Life Insurance Company and United American Insurance Company, subsidiaries of the Company.
12 GL 2024 Proxy Statement
Stock Ownership
The following table shows certain information about stock ownership as of January 31, 20182024 for the directors, nominees and named executive officers of the Company, including shares with respect to which they have the right to acquire beneficial ownership on or prior to April 1, 2018.2024.
| | | | | | | | |
| | Company Common Stock or Options Beneficially Owned as of January 31, 20241 |
| Name | Directly2 | Indirectly3 |
| Linda L. Addison | 17,689 | 0 |
| Marilyn A. Alexander | 20,337 | 0 |
| Cheryl D. Alston | 21,755 | 0 |
| Mark A. Blinn | 4,518 | 0 |
| James P. Brannen | 5,020 | 0 |
| Jane Buchan | 98,384 | 0 |
| Alice S. Cho | 2,835 | 0 |
| J. Matthew Darden | 211,862 | 1,476 |
| Steven P. Johnson | 1,959 | 13,447 |
| David A. Rodriguez | 2,687 | 0 |
| Frank M. Svoboda | 295,870 | 141,793 |
| Mary E. Thigpen | 12,543 | 0 |
| Thomas P. Kalmbach | 97,571 | 847 |
| Michael C. Majors | 127,515 | 0 |
| R. Brian Mitchell | 134,320 | 48,690 |
| Robert E. Hensley | 18,850 | 0 |
All Directors, Nominees and Executive Officers as a group (20 persons):4 | 1,279,329 | 210,265 |
|
| | | | | |
| | | Company Common Stock or Options Beneficially Owned as of January 31, 2018 1 |
| Name and City of Residence | | Directly 2 | | Indirectly 3 |
Charles E. Adair Montgomery, AL | | 36,910 |
| | 0 |
Linda L. Addison Houston, TX | | 0 |
| | 0 |
Marilyn A. Alexander Laguna Beach, CA | | 13,831 |
| | 0 |
Cheryl D. Alston Frisco, TX | | 0 |
| | 0 |
David L. Boren Norman, OK | | 16,612 |
| | 0 |
Jane M. Buchan Newport Coast, CA | | 91,908 |
| | 0 |
Gary L. Coleman Plano, TX | | 1,208,125 |
| | 59,257 |
Larry M. Hutchison Duncanville, TX | | 1,087,092 |
| | 45,598 |
Robert W. Ingram Gulf Breeze, FL | | 29,211 |
| | 0 |
Steven P. Johnson Plano, TX | | 5,245 |
| | 0 |
Darren M. Rebelez Glendale, CA | | 21,966 |
| | 0 |
Lamar C. Smith Fort Worth, TX | | 66,120 |
| | 0 |
Mary E. Thigpen Alpharetta, GA | | 0 |
| | 0 |
Paul J. Zucconi Plano, TX | | 48,203 |
| | 0 |
J. Matthew Darden Dallas, TX | | 39,250 |
| | 0 |
Steven J. DiChiaro Frisco, TX | | 45,860 |
| | 2,215 |
Steven K. Greer The Woodlands, TX | | 19,542 |
| | 0 |
Jennifer A. Haworth Yukon, OK | | 30,250 |
| | 1,354 |
Mary E. Henderson McKinney, TX | | 24,250 |
| | 0 |
Vern D. Herbel McKinney, TX | | 143,750 |
| | 170,535 |
Bill E. Leavell Pottsboro, TX | | 76,750 |
| | 26,987 |
Ben W. Lutek McKinney, TX | | 125,000 |
| | 46,725 |
Michael C. Majors Allen, TX | | 33,260 |
| | 0 |
Kenneth J. Matson McKinney, TX | | 54,056 |
| | 0 |
|
| | | | | | |
| | | Company Common Stock or Options Beneficially Owned as of December 31, 2017 1 |
| Name and City of Residence | | Directly 2 | | Indirectly 3 |
Carol A. McCoy Plano, TX | | 171,543 |
| | 17,095 |
|
James E. McPartland Allen, TX | | 23,885 |
| | 0 |
|
R. Brian Mitchell McKinney, TX | | 83,041 |
| | 8,620 |
|
W. Michael Pressley Parker, TX | | 143,448 |
| | 1,334 |
|
Frank M. Svoboda Grapevine, TX | | 344,453 |
| | 1,700 |
|
Rebecca E. Zorn McKinney, TX | | 0 |
| | 0 |
|
All Directors, Nominees and Executive Officers as a group:4 | | 3,983,561 |
| | 381,420 |
|
1 No individual director, nominee, or executive officer other than Gary L. Coleman (1.07%) beneficially owns 1% or more of the common stock of the Company.
2 Includes: for Adair, 25,541Alston, 14,017 shares; for Buchan, 11,667 shares; for Coleman, 578,750 shares; for Hutchison, 578,750 shares; for Rebelez, 5,26918,100 shares; for Darden, 35,500185,660 shares; for DiChiaro, 37,500Svoboda, 292,500 shares; for Greer, 17,500 shares; for Haworth, 30,250 shares; for Henderson, 24,250 shares; for Herbel, 125,000 shares; for Leavell, 76,750 shares; for Lutek, 125,000Kalmbach, 87,500 shares; for Majors, 24,000 shares; for Matson, 45,000 shares; for McCoy, 76,500 shares; for McPartland, 22,00092,500 shares; for Mitchell, 57,000133,000 shares; for Pressley, 90,000Hensley, 16,500 shares; for Svoboda, 259,500 shares and for all directors, nominees and executive officers and nominees as a group, 2,245,727 shares,1,021,327 shares, that are subject to presently exercisable Company stock options.
Ms. Addison, Ms. Alston and Ms. Thigpen were first elected to the Board on February 26, 2018 and each owned no Company common stock at January 31, 2018. Upon their initial election to the Board, each was awarded 1,142 shares of restricted stock, which will vest in full on August 26, 2018.
3 Indirect beneficial ownership includes shares (a) owned by the director, named executive officer or spouse as trustee of a trust or executor of an estate, (b) held in a trust in which the director, named executive officer or a family member living in his home has a beneficial interest, (c) owned by the spouse or a family member living in the director’s, named executive officer’s or nominee’s home or (d) owned by the director or named executive officer in a personal corporation or limited partnership. Indirect beneficial ownership also includesincludes: for Darden, approximately 59,257 shares, 45,598 shares, 2,215 shares, 1,354 shares, 42,451 shares, 4,198 shares, 17,095 shares, 8,620 shares, 1,334 shares1,476 shares; for Kalmbach, approximately 847 shares; for Mitchell, approximately 11,311 shares; and 1,700for Svoboda, approximately 1,895 shares, calculated based upon conversion of stock unit balances held in thetheir respective accounts of Coleman, Hutchison, DiChiaro, Haworth, Herbel, Leavell, McCoy, Mitchell, Pressley, and Svoboda, respectively, in the Company Savings and Investment Plan to shares. Indirect ownership for Mr. Herbel alsoSvoboda includes 64,041 shares held in his living trust and 64,043 shares held in his spouse’s living trust. Indirect ownership for Mr. Leavell includes 22,789139,898 shares held in his family living trust. Indirect ownership for Mr. LutekMitchell includes 46,72536,151 shares held in his family living trust.trust and 1,228 shares held in a trust for the benefit of his son.
4 All directors, nominees and executive officers as a group, beneficially own 3.68%1.51% of the common stock of the Company.
CORPORATE GOVERNANCE
Director Independence Determinations
The New York Stock Exchange (NYSE) rules require that the Company have a majority of independent directors. The rules provide that no director will qualify as “independent” unless the Board of Directors affirmatively determines that the director has no material relationship with the Company and its subsidiaries (collectively, the Company)"Company"), either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. In order to assist in the making of these determinations, theThe Board adopted the categorical standards prescribed by the NYSE as well as eleven12 additional categorical standards to assist it in making determinations of independence. All directors other than those deemed not “independent” under these standards will be deemed to be “independent” upon a Board determination.
These independence standards are available on the Company’s website by going to www.torchmarkcorp.com and clicking on the Investors page. They are located at https://investors.globelifeinsurance.com under the Board of Directors heading at Director Independence Criteria.Criteria. You may also obtain a printed copy of the independence standards at no charge by writing to the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
Based on these categorical standards and after evaluation of the directors’ responses to an annual questionnaire, which includes questions based on the above-described independence criteria as well as any related party transactions disclosable pursuant to Item 404(a) of SEC Regulation S-K, the Governance and Nominating Committee makes recommendations to the Board of Directors regarding director independence. After review of suchthe Committee's recommendations regarding director independence, the Board
13 GL 2024 Proxy Statement
determined on February 26, 201828, 2024 that the following directors continued as of such date to meet the categorical standards prescribed by the New York Stock Exchange and set by the Board, and are “independent”: Charles E. Adair, Marilyn A. Alexander, David L. Boren, Jane M. Buchan, Robert W. Ingram, Steven P. Johnson, Darren M. Rebelez, Lamar C. Smith and Paul J. Zucconi. Directors Linda L. Addison, Cheryl D. Alston and Mary E. Thigpen were determined to be "independent" upon their election to the Board on February 26, 2018.
| | | | | | | | | | | | | | | | | |
| • | Linda L. Addison | • | Mark A. Blinn | • | Steven P. Johnson |
| • | Marilyn A. Alexander | • | James P. Brannen | • | David A. Rodriguez |
| • | Cheryl D. Alston | • | Alice S. Cho | • | Mary E. Thigpen |
The Board determined that J. Matthew Darden and Gary L. Coleman and LarryFrank M. HutchisonSvoboda (as Company employees) were not considered “independent”."independent.”
Board Leadership Structure
Management
For a number of years,Since June 1, 2012, the Company has chosensuccessfully operated with two principal executive officers, most recently with J. Matthew Darden and Frank M. Svoboda serving as Co-Chief Executive Officers (“Co-CEOs”) of the Company since January 1, 2023.
While this leadership structure may be non-traditional and less common among the Company’s peers, the Board has determined that having Co-CEOs remains the most appropriate strategic leadership choice for the Company, as currently constituted. In appointing Messrs. Darden and Svoboda as Co-CEOs, the Board observed that such leadership structure has proven highly effective for the Company for over a decade; allowing compatible, experienced executives with complementary skill sets to operatepartner together to manage the complex and varied corporate functions attendant to our business. The Company does not have a President or Chief Operating Officer, opting instead for the Co-CEOs to perform the functions typically associated with such roles.
While both Co-CEOs are ultimately responsible for all aspects of the Company’s day-to-day business operations and jointly oversee the management of the Company, they have separated their duties in a manner designed to leverage the prior experience and expertise of each, while collaborating to set forth their strategic vision for the Company, consistent with guidance from the Board.
The Board believes this leadership structure allows for a valuable mix of backgrounds, expertise and perspectives at the Company’s most senior-level executive position, enabling more informed decision-making and enhanced business judgment by those principally charged with leading the organization into the future. The Board has determined that maintaining a Co-CEO structure, premised upon a shared commitment by both individuals to successfully execute the Company’s strategy, serves to best position the Company for continued growth and shareholder value creation.
Board of Directors
The Board does not have a fixed policy regarding the separation of the Board Chair and Chief Executive Officer (CEO) positions. It is the Board's position that such determination should be part of the regular succession planning process and should be made based on the best interests of the Company at a given time. The Company currently operates with the roles of Chairman of the Board Chair and CEO combined, believing that it could operate effectively with these roles combined while continuing to provideprovides the appropriate level of corporate governance for shareholders, policyholders, regulators and our other constituent groups.
Although the Board is not currently chaired by an independent director, the Company's Corporate Governance Guidelines provide for the position of a lead independent director (Lead Director) and define the qualifications and duties of that Lead Director. The Board has conducted frequent executive sessions of only the independent directors for a number of years, with all of such executive sessions presided over by a lead independent director. On January 26, 2010, the Board amended the Corporate Governance Guidelines in order to formally provide for the position of a lead independent director (the Lead Director), to define the qualifications and duties of that Lead Director and to elect a director to serve as the Lead Director. As definedset forth in Section H. of the Corporate Governance Guidelines, the Lead Director is elected annually by and from the independent directors then serving on the Board; provided, however, that a director must have served a minimum of one year in order to qualify for election as the Lead Director and that a person may not serve as the Lead Director for more than three one-year terms in succession without express agreement of the Board.
14 GL 2024 Proxy Statement
The Lead Director has duties including,which include, but are not limited to:to, the following:
| | | | | | | | |
| Lead Director Duties |
| • | Acting as the principal liaison between the independent directors and the Board Chair(s) and facilitating the flow of quality and timely information between the independent directors and Company management | |
| • | Identifying important issues for Board consideration and coordinating the scheduling of and preparation for Board meetings and executive sessions of the Board, including approval of meeting agendas and schedules to assure adequate time for discussion | |
| • | Ensuring that directors are encouraged to share their viewpoints and raise questions at Board meetings, facilitating discussion around core issues and helping to achieve consensus | |
| • | Leading executive sessions of the Board that encourage open and candid conversations and provide useful feedback for the Board Chair(s) | |
| • | Leading Board meetings if the Board Chair(s) is/are not present | |
| • | Assisting the Committee Chairs and individual Board members in fulfilling their roles and responsibilities, upon request | |
| • | Working with the Governance and Nominating Committee to ensure that a strong executive development and succession planning process operates continuously in the Company and that independent Board members are fully informed of the process and properly fulfill their roles | |
| • | Leading the Board through the Co-CEO/Chair succession planning process, including overall timing and candidate identification, selection and leadership transition | |
| • | Working with the Governance and Nominating Committee to ensure that: (1) a robust Board and individual director evaluation process occurs regularly; (2) underperforming directors, if any, are identified and offered assistance for improvement; and (3) the Board has the appropriate set of skills and experiences to fulfill its responsibilities | |
| • | Approving retention of Board consultants, except consultants explicitly retained pursuant to Committee responsibilities | |
| • | Calling special purpose meetings of the independent directors | |
| • | Being available for consultation and communication with shareholders upon request of the Board Chair(s) | |
| • | Assisting in a crisis situation by coordinating communication with the Board and providing other assistance as requested by management | |
| • | Performing other duties consistent with the Lead Director role as requested by the Board or management | |
Should the Lead Director be unable to meet any of the Board;
leading Board meetings if neitherresponsibilities of the Co-Chairmen is present and leading all executive sessionsposition, the independent members of the independent directors;
acting as the principal liaison between the independent directors and the Co-Chairmen and CEOs;
advising the committee chairs in fulfilling their roles and responsibilities;
defining the scope, quality and timelinessBoard may select one or more of the information flow between management andother independent members to fulfill those responsibilities as they determine to be necessary until the Board;Lead Director is able to do so or until another Lead Director is elected.
leading the process of employing, evaluating and compensating the Co-Chairmen and CEOs;
coordinating Co-Chairman and CEO, director and Board performance evaluations;
approving retention of Board consultants;
having authority to call meetings of the independent directors; and
being available for consultation and communication with shareholders upon request.
Lloyd W. NewtonLinda L. Addison was elected as Lead Director in April 2017 to serve for a term beginning in April 2023 and expiring April 26, 2018.25, 2024. The independent members of the Board have determined that, upon the completion of such term, Ms. Addison will continue to serve as Lead Director until the close of the 2025 Annual Meeting of Shareholders.
Board Oversight of Strategy A key responsibility of the Board is the oversight of management’s development and execution of the Company’s strategy. The Board’s Roleoversight of strategy is a continuous process in Risk Oversightwhich elements of the strategy are discussed at each regularly-scheduled Board meeting. Annually, the Board and management engage in a discussion regarding the Company’s long-term strategy, operational priorities and annual operating plan.
The Company’s strategic plan establishes priorities, aligns resources and ensures the organization is working toward common goals. The strategic plan includes an assessment of the competitive environment and details the operational priorities necessary to increase shareholder value while successfully managing risk.
WhileThe Board reviews the Audit Committee regularly monitorsCompany’s primary objectives for attaining short and reportslong-term success, including financial and operational goals. The Board assesses management’s progress in achieving objectives through discussion of strategic business activities and performance measures. The Company’s risk management program (including ERM and ESG topics) is also evaluated by the Board. The varied skills and experiences of the Board members are essential to the Board onBoard’s ability to meet its strategic planning oversight responsibility, including monitoring and providing guidance related to management’s execution of the Company’s major financialbusiness strategy.
Board Oversight of Risk
The Company’s Board is committed to a corporate culture that aligns day-to-day decision making with risk exposuresawareness and the Compensation Committee examines and reports to the Board onhelps assure that the Company’s compensation programs and policies to ensure that they do not operate to incent Company executives to take risks which would adversely affectlong-term strategic initiatives are consistent with its risk appetite. As a part of its general oversight responsibilities, the Company, the
Company’s Board has determined that overall responsibility for oversight ofoverseeing enterprise risk management at the Company isrests with the full Board of Directors as opposed to any specific Board-level committee. The Board recognizes the importance of identifying, assessing and monitoring risks that ofmay have a material adverse effect on the entire Board. Accordingly,Company, including operational, financial, compliance/legal and strategic risks. In
15 GL 2024 Proxy Statement
fulfilling its risk oversight function, the Board has not chosendelegated certain oversight responsibilities to establish a separately designatedits three standing committees – Audit Committee, Compensation Committee, and Governance and Nominating Committee – who assist the Board by monitoring and evaluating risks that fall within their respective purviews and overseeing management’s implementation of associated mitigation activities. Although the Board has delegated certain oversight responsibilities to its standing committees, these committees regularly report to the Board on specified risk committee ofareas, and the Board. Instead,Board maintains primary responsibility for risk oversight. The organization's most significant risks are assessed and reported to the full Board on an annual basis, as well as to the applicable standing committee(s) as necessary. The Audit Committee receives a quarterly risk report from the Chief Risk Officer, which includes results from recently conducted risk assessments. The "Emerging Risk Assessment" and scenario-based risk assessments for the Company's top risks are conducted annually and the results are reported to the Audit Committee and, subsequently, to the full Board.
Risk Oversight Responsibilities
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| Board of Directors |
•Strategic Planning & Resource Allocation Risk •Credit Risk •Capital Risk •Financial Market Risk •Market Dynamics Risk
| | | | •IT & Systems Risk •Reputation & Communications Risk •Distribution Risk
| | | | •Business Resiliency Risk •Third-Party Risk •Key Relationship Management Risk |
|
| | | | | | | | | | |
| | | | | | | | | | |
Audit
Committee | Compensation
Committee | Governance and
Nominating Committee |
•Financial Reporting Risk •Tax Risk •Legal Risk •Compliance Risk •Insurance Product Risk •Asset-Liability Matching Risk •Information Security Risk •Fraud Risk •Data Governance Risk | •Talent Risk (including Compensation and Benefits Risk and Incentive Risk) | •Health & Safety Risk •Governance Risk •Talent Risk
|
| | |
The Board oversees risk, in part, by regularly monitoring, receiving, and reviewing written and oral reports from and interacting with a senior management level Enterprise Risk Management (ERM) Committee (ERM Committee). The ERM Committee is chaired by the Company’s General Counsel and Chief Risk Officer and is currently consists of: the Company’s Chief Financial Officer; General Counsel and Chief Risk Officer; Chief Administrative Officer; Chief Actuary; Chief Investment Officer; Chief Information Officer; Chief Information Security Officer; Chief Strategy Officer; Chief Compliance Officer; Vice President, Investor Relations; Director of Internal Audit; Director of Human Resources; the designated ORSA liaison for the Company and the CEOs of the Agency/Marketing Divisions of the principal insurance subsidiaries. The Company's Co-Chairmen and CEOs may also participate as non-voting ex officio members of the ERM Committee.Officer. The Chair of the Audit Committee serves as the Board’s official liaison to the ERM Committee and attends all its meetings.quarterly meetings as a non-voting member. Other Board members are encouraged tomay attend such meetings and may submit matters and issues to be considered and reported on by the ERM Committee.
Each of the Company’s insurance subsidiaries has a Subsidiary Risk Committee that provides information on key risks to the ERM Committee. These committees are responsible for implementing the Company’s ERM framework, maintaining a culture of risk management, and establishing risk-related policies and procedures at each subsidiary.
The Company's ERM Department aids the ERM Committee’s efforts to identify, assess and prioritize the Company’s most significant risks, while working directly with "risk owners" on mitigation, monitoring and reporting of such risks. This Department also supports the Company’s operational business units in evaluating and managing risk in their respective areasthrough facilitation of a variety of annual risk assessments. The "Emerging Risk Assessment" process begins with the ERM Department compiling emerging risk data from industry resources, then conducting workshops with leaders at various levels of management to discuss and identify the Company's top emerging risks. The results and proposed action plans are discussed with the ERM Committee and then shared with the Audit Committee. The ERM Committee operates within and functions as a partDepartment also coordinates the "Core Risk Assessment" process, which begins by hosting workshops with leaders at various levels of management to identify the most significant (or “core”) risks to the organization. Each of the enterprisecore risks is scoped into a scenario-based risk assessment process with risk owners to determine risk scenarios and associated risk ratings, existing and planned mitigation, and key risk metrics. The risk assessments include collaboration with other internal departments principally focused on risk management governance structureas well as the department with primary responsibility for strategic planning. The core risks are also assessed in relation to the Company’s strategic priorities and objectives. The risk assessment results are reported to the Board at least annually to obtain their insight and guidance.
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Risk Assessment Process
The Company has created a "risk liaison" network, consisting of key employees and leaders throughout the organization who have been designated as "risk liaisons." These individuals (numbering nearly 40 in 2023) are asked to participate in risk assessments and to report to senior management on current and emerging risks about which they become aware through the performance of their day-to-day job responsibilities, resulting in a bottom-up or mid-level-up enterprise-wide risk reporting environment.
The Company also has a Chief Compliance Officer who oversees the Regulatory Compliance Department, which is charged with tracking, reviewing and interpreting state, federal and international laws and regulations relevant to the Company's business operations. Through active management of periodic regulatory examinations of the Company's insurance subsidiaries, this department is well-positioned to identify regulatory risks that may need to be brought to the attention of the ERM Committee.
The Company togetherhas an Operational Risk Committee (formerly the "Security Risk Committee"), a sub-committee of the ERM Committee, that is chaired by the Chief Security Officer. This committee supports the ERM Committee's efforts, and in turn, the Board's efforts, to establish and authorize strategies for managing compliance and operational risks, in accordance with the Board, the various Subsidiary Risk Committees at the insurance companies and the Company’s Risk Management Team, in order to comply with allapplicable legal and regulatory requirements relatedand in alignment with the Company's business and strategic needs. Part of the committee's responsibilities include reviewing and evaluating risks associated with the confidentiality, integrity and availability of critical business systems and sensitive customer and Company data.
The Board believes the Company’s risk reporting structure, as discussed herein and illustrated in the following graphic, serves to ensure that the Board, its standing committees, and management maintain the communication and understanding necessary to cultivate a corporate culture in which risk awareness is pervasive and integral to management’s efforts to achieve the Company’s short-term operational and long-term strategic objectives.
17 GL 2024 Proxy Statement
Risk Reporting Structure
More information on the risks facing the Company may be found in Item 1A. Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as updated by subsequent SEC filings made by the Company.
Board Oversight of Cybersecurity Risk
The Board considers information security to be an enterprise-wide risk management issue and oversees material information security risks through the Audit Committee. The Company’s General Counsel and Chief Risk Officer, who chairs the ERM Committee, oversees the Company-wide ERM Program and execution of the Company's risk strategy, including cybersecurity risk. The Chief Information Security Officer (CISO), who reports to the General Counsel, spearheads the Company's efforts with respect to information security strategy, governance, risk and incident management. The Operational Risk Committee also provides executive-level direction with respect to implementation of the Company’s Information Security program.
The Audit Committee of the Board of Directors is briefed by the CISO on a quarterly basis. These quarterly briefings focus on relevant cybersecurity issues, including compliance with applicable regulations and current or planned changes to such regulations, an overview of current cyber threats, risk management activities, and discussion of cyber incident investigations that warrant the attention of the Board. The CISO also provides an annual update to the full Board on changes in cybersecurity, top threats facing the Company, key risks and mitigation efforts, and any material cybersecurity incidents. On a quarterly basis, the Chair of the Audit Committee updates the full Board on any information security topics brought before the Audit Committee.
Board Oversight of Sustainability and ESG
As part of their general responsibility for overseeing the Company’s corporate strategy and approach to enterprise risk management, that may be imposed on the Company, includingBoard and its standing committees monitor and guide management’s implementation of ESG initiatives. The Board has emphasized the Risk Managementimportance of considering ESG factors when management develops and Own Risk Solvency Assessment (ORSA) regulation. The ERM Committee regularly meetsimplements the Company’s strategic objectives, underscoring the need to identify, evaluate and prioritize risks faced byensure the sustainability of the Company and its insurance subsidiaries,business operations and to create long-term value for its shareholders and other stakeholders. To ensure adequate Board-level attention is devoted to relevant ESG-related issues, the Board’s standing committees have assumed oversight of specific ESG topics that fall within their respective areas of responsibility, as described below.
To enable the Company to appropriately respond to ESG-related risks and opportunities, the Board and its committees regularly engage with senior management on ESG-related issues. Recent discussions have centered on topics such as: data privacy; cybersecurity; executive compensation; corporate culture; employee engagement; employee health and wellness; diversity, equity, and inclusion (DEI); talent acquisition and development; succession
18 GL 2024 Proxy Statement
planning; risks associated with the Company's information assets; investment portfolio risks; regulatory developments; and other considerations, as further discussed under Sustainable Business Practices. The Company's independent Lead Director has earned the Climate Leadership Certificate from Diligent Corporation, which is an asset in facilitating discussions at the Board level to address climate-related issues.
Since 2018, the Company has had an ESG Committee, a sub-committee of the ERM Committee, comprised of a cross-functional group of key leaders and internal subject matter experts, including but not limited to strategic, financial, investment, credit, market, liquidity, operational, legalthe Company’s Executive Vice President, General Counsel and regulatory, compliance, information, technological, human capital, fraud, reputationalChief Risk Officer; Executive Vice President, Policy Acquisition and external risks,Chief Strategy Officer; Executive Vice President and Chief Investment Officer; Executive Vice President and Chief Talent Officer; Corporate Senior Vice President, Associate Counsel and Corporate Secretary; Divisional Senior Vice President, Risk and Chief Security Officer; Divisional Vice President, Enterprise Risk; Director of Facilities; and the Director of ESG. The ESG Committee typically meets quarterly and reports its activities regularly to consider mitigationthe ERM Committee. The Company's Chief Risk Officer and Chair of such risks. In its four meetings held in 2017, the ERM Committee, continuedin turn, provides quarterly updates to focus on ORSA,the Board with respect to risk-related topics and initiatives, including conducting an emerging risks survey,those that are ESG-related. This role facilitates a high level risk assessment andtargeted ESG discussion with the Board at least annually.
The Company has a regulatory risk assessment; reviewformal ESG function (the "ESG team") within the Enterprise Risk Management department, in support of the Company's informationongoing commitment to embed ESG considerations into its business decision-making and risk appetite statement;management processes. The ESG team is responsible for helping to facilitate the Company’s ESG strategy and other work necessary to submission ofinitiatives consistent with guidance provided by the ORSA Report and enhancement of ORSA processes. Additionally, in 2017, the ERMESG Committee conducted a focused examination of mortality risk and reputation risk and received updates on the information security risk acceptance process, the all hazards security risk program and the regulatory compliance program.Board. The ERM Committee reported on all of their workESG team also supports efforts to enhance the full Board.
Executive Sessions of the Board and Communications with the Board of Directors
Company's ESG disclosures.
The Company’s independent directors have met in regularly scheduled executive sessions without any participation by Company officers or employee directors since October 2002. These executive sessionsESG reporting structure to the Board is illustrated below. This structure is designed to allow for Board oversight of ESG-related issues that are currently held either before or after the Board’s regularly scheduled, physical meetings. Additional executive sessions can be scheduled at the request of the independent directors. The Lead Director presided over the executive sessions during 2017. If that director had not been present, another independent director would have been chosen by the independent directorsmaterial to preside.
Security holders of the Company and other interested parties may communicate withfacilitates the full Boardopen communication and informed guidance necessary for diligent consideration and risk mitigation of Directors, the Lead Director, the independent directors or a specific director or directors by writing to them in care of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.ESG issues.
ESG Reporting Structure
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Board of Directors | |
| | | | | | | | | |
Audit
Committee | | | Compensation
Committee | | | Governance and
Nominating Committee |
•Enterprise Risk Management •Data Privacy & Cybersecurity •Financial Accountability & Transparency •Climate Change Impact on Financial Risks | | | •Compensation & Benefits •Executive Compensation •Pay Equity •Diversity, Equity & Inclusion
| | | •Board/Committee Composition •Employee Health, Safety & Wellness •Corporate Culture, Employee Engagement •Employee Learning & Development •Leadership Development & Succession •Diversity, Equity & Inclusion •Human Rights •Ethical Business Practices |
| | | | | | | | | |
| | | | ERM Committee | | | | |
| | | | | | | |
| | | | | | | | | |
| | | | ESG Committee | | | | |
Governance Guidelines and Codes of Ethics
The Company has adopted Corporate Governance Guidelines, a Code of Ethics for the Co-CEOs and Senior Financial Officers, and a Code of Business Conduct and Ethics for its directors, officers, employees and contractors, all of which comply with the requirements of securities law, applicable regulations and New York Stock Exchange rules. These documents are available on the Company’s website by going to www.torchmarkcorp.com and clicking on the Investors page. They are locatedat https://investors.globelifeinsurance.com under the Corporate Governance heading. Printed copies of these documents may be obtained at no charge by writing to the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
19 GL 2024 Proxy Statement
Insider Trading Policy
The Company has adopted an Insider Trading Policy that governs the purchase, sale and other disposition of the Company’s securities by its directors, officers and employees. The Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations and the NYSE Listing Standards.
Shareholder Engagement
We recognize that open and steady communication with our shareholders can allow us to better understand and remain responsive to the issues they prioritize and to gain valuable feedback on our corporate governance, performance and strategic initiatives.
We regularly engage with our shareholders. Our investor relations team routinely communicates with shareholders and investment analysts throughout the year through calls, meetings, investor conferences and other means. Such discussions regularly include senior executives, such as the Company’s Co-CEOs and the Chief Financial Officer, and conversations primarily focus on financial and operating performance, capital management and corporate strategy.
In addition to the foregoing discussions, in 2023 we reached out to the Company’s 25 largest shareholders, representing approximately 55% of our total outstanding shares, in order to solicit their feedback, if any, related to operational and governance issues pertinent to the Company. Of the nine shareholders who responded, six declined the engagement offer and we engaged in meaningful discussions with three shareholders.
Information about our outreach efforts and the feedback received from our investors was subsequently shared with the Company’s Board of Directors for its consideration.
Communications with the Board of Directors
Security holders of the Company and other interested parties may communicate with the full Board of Directors, the Lead Director, the independent directors, or a specific director or directors by writing to them in care of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
Executive Sessions of the Board
The Company’s independent directors meet in regularly-scheduled executive sessions without any participation by Company officers or employee directors. These executive sessions are currently held either before or after the Board’s regularly-scheduled physical meetings. Additional executive sessions can be scheduled at the request of the independent directors. The Lead Director presided over each of the executive sessions during 2023. If that director had not been present, another independent director would have been chosen by the independent directors to preside.
Board and Annual Shareholder Meeting Attendance
During 2023, the Board held four physical meetings, one videoconference meeting, and acted two times by unanimous written consent. In 2023, all of the directors attended at least 75% of the meetings of the Board and the committees on which they served.
The Company has a long-standing policy that the members of its Board be present at the Annual Meeting of Shareholders, unless they have an emergency, illness or an unavoidable conflict. At the April 27, 2023 Annual Meeting of Shareholders, all but one of the directors were present.
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Committees of the Board of Directors
The Board has the following standing committees more fully described below: Audit, Compensation, and Governance and Nominating. The Board may also, from time to time, establish additional special committees. In November 2017, the Pricing Committee, a special committee established by the Board comprised of Messrs. Adair, Coleman, Hutchison, Johnson and Zucconi met to fix the terms and provisions of the Company's offering of $125,000,000 of its 5.275% Junior Subordinated Debentures due 2057.
The Board's Audit, Compensation, and Governance and Nominating Committees are currently comprised of the following members, each of whom is independent under the applicable rules and regulations of the SEC, the NYSE, (including the NYSE’s additional independence requirements for Compensation Committee members),and Section 16 of the Securities Exchange Act of 1934 and Section 162(m) of the Internal Revenue Code:1934:
| | | | | | | | | | | |
| Director | Board Committees |
| Audit Committee | Compensation Committee | Governance and Nominating Committee |
| Linda L. Addison (L) | | | |
| Cheryl D. Alston | | | |
| Marilyn A. Alexander | | | |
| Mark A. Blinn | | | |
| James P. Brannen | | | |
Jane Buchan1 | | | |
| Alice S. Cho | | | |
| Steven P. Johnson | | | |
| David A. Rodriguez | | | |
| Mary E. Thigpen | | | |
Number of Meetings Held in 20232 | 11 | 5 | 4 |
(L) - Lead Director; C - Chair; M | | |
(L) - Lead Director;  - Chair;  - Member 1 Scheduled to retire from the Board at the Annual Meeting on April 25, 2024. 2 The Audit Committee held 4 physical meetings and 7 teleconference meetings in 2023; the Compensation Committee held 5 physical meetings in 2023; and the Governance and Nominating Committee held 4 physical meetings in 2023. |
1 Committee service will commence with the April 2018 committee meetings.
2 Scheduled to retire immediately prior to the Annual Meeting of Shareholders on April 26, 2018.
3 Physical meetings indicated except in the case of the Audit Committee, which held 5 physical meetings and 6 teleconference
meetings in 2017.
Each of the Board's Audit, Compensation, and Governance and Nominating Committees has a written charter, which is reviewed annually reviewed and updated ifas necessary. Copies of the committee charters are posted on the Company's website and can be viewed by going to www.torchmarkcorp.com, clicking on the Investors page and looking for the applicable committee listing at https://investors.globelifeinsurance.com under the Board of Directors heading.heading at Board Committees. You may also obtain a printed copy of any of these committee charters at no charge by writing the office of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
Audit Committee
The Audit Committee:
reviews and discusses with management and the independent registered public accounting firm the Company’s audited financial statements and quarterly financial statements prior to filing, the Company’s earnings press releases and financial information and earnings guidance, and the Company’s policies for financial risk assessment and management;
selects, appoints, reviews and, if necessary, discharges the independent auditors;
reviews the scope of the independent auditors’ audit plan and pre-approves audit and non-audit services; reviews the adequacy of the Company’s system of internal controls over financial reporting;
periodically reviews pending litigation and regulatory matters;
reviews the performance of the Company’s internal audit function;
reviews related party disclosures to assure that they are adequately disclosed in the Company’s financial statements and other SEC filings;
reviews and appropriately treats complaints and concerns regarding accounting, internal accounting controls or auditing matters pursuant to a confidential “whistleblower” policy;
discusses the Company’s major financial risk exposures and the steps that management has taken to monitor and control such exposures;
monitors and periodically reports to the Board regarding management’s enterprise risk management processes;
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| | | | | |
| Committee | Committee Responsibilities |
|
Audit
Committee | •Reviews and discusses with management and the independent registered public accounting firm the Company’s audited financial statements and quarterly financial statements prior to filing, the Company’s earnings press releases and financial information and earnings guidance, and the Company’s policies for financial risk assessment and management; •Selects, appoints, reviews and, if necessary, discharges the independent auditors; •Reviews the scope of the independent auditors’ audit plan and pre-approves audit and non-audit services; •Reviews the adequacy of the Company’s system of internal controls over financial reporting; •Periodically reviews pending litigation and regulatory matters; •Reviews the performance of the Company’s internal audit function; •Reviews related party disclosures to assure they are adequately disclosed in the Company’s financial statements and other SEC filings; •Reviews and appropriately treats complaints and concerns regarding accounting, internal accounting controls or auditing matters pursuant to a confidential “whistleblower” policy; •Discusses the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures; •Monitors and periodically reports to the Board regarding management’s enterprise risk management processes; •Meets with the Company’s independent auditors and internal auditors both with and without management present at each of its regular quarterly meetings; •Evaluates the Company’s internal auditors and performs an annual evaluation of the independent auditor utilizing the external auditor evaluation tool developed by the Center for Audit Quality and several other governance organizations; and •Reviews information security and technology risks and provides guidance to management with respect to information security and privacy policies. |
|
| Current Committee Members |
|
| Mary E. Thigpen, Chair |
| Alice S. Cho |
| Steven P. Johnson |
|
|
meets with the Company’s independent auditors and internal auditors both with and without management present at each of its physically-held meetings; and
evaluates the Company’s internal auditors and performs an annual evaluation of the independent auditor utilizing the external auditor evaluation tool developed by the Center for Audit Quality and several other governance organizations.
Compensation Committee
The Compensation Committee:
determines the Company’s stated general compensation philosophy and strategy;
reviews and determines the compensation of senior management of the Company and its subsidiaries at certain levels, including establishing goals and objectives for the Co-CEOs’ compensation, evaluating each Co-CEO’s performance in light thereof, and recommending their total compensation to the independent directors for their approval;
establishes the annual bonus pool;
administers the Company’s Management Incentive Plan, retirement and other employee benefit plans and equity incentive plans;
makes recommendations to the Board with respect to executive compensation, incentive compensation plans and equity-based plans;
reviews and recommends to the Board non-management director compensation;
reviews | | | | | |
| Compensation Committee | •Determines the Company's stated general compensation philosophy and strategy; •Reviews and determines the compensation of senior management of the Company and its subsidiaries at certain levels, including establishing goals and objectives for the Co-CEOs’ compensation, evaluating each Co-CEO’s performance in light thereof, and recommending their total compensation to the independent directors for their approval; •Establishes the annual bonus pool; •Administers the Company’s Management Incentive Plan and stock incentive plans; •Makes recommendations to the Board with respect to executive compensation, incentive compensation plans and equity-based plans; •Reviews and recommends to the Board non-management director compensation; •Reviews and discusses with Company management the Compensation Discussion and Analysis section and recommends to the Board that it be included in the annual Proxy Statement; and oversees preparation of the Compensation Committee Report in the annual Proxy Statement.
The Compensation Committee is authorized to retain its own independent compensation consultant and has retained Board Advisory, Inc. (formerly Board Advisory, LLC) as its independent compensation consultant. The Compensation Committee receives input and recommendations from the Co-CEOs and other members of Company management on compensation matters more fully described in the Compensation Discussion and Analysis section and recommends to the Board that it be included in the annual Proxy Statement; and
•Oversees preparation of the Compensation Committee Report in the annual Proxy Statement.
The Compensation Committee is authorized to retain its own independent compensation consultant. The Compensation Committee receives input and recommendations from the Co-CEOs and other members of Company management on compensation matters, as more fully described in the Compensation Discussion and Analysis section of this Proxy Statement, and delegates day-to-day administrative functions for implementation of its compensation decisions and programs to Company officers. |
|
| Current Committee Members |
|
| Jane Buchan, Chair |
| Marilyn A. Alexander |
| Cheryl D. Alston |
| Mark A. Blinn |
|
22 GL 2024 Proxy Statement and delegates certain day-to-day administrative functions for implementation of its compensation decisions and programs to Company officers.
| | | | | |
| Governance and Nominating Committee | •Receives and evaluates qualifications of potential director candidates; •Identifies individuals qualified to become Board members consistent with criteria set by the Board and recommends director nominees to the Board; •Reviews, assesses and recommends to the Board an 'independence' determination with respect to each of the directors for purposes of Board membership (or committee membership, where applicable); •Recommends the directors to be appointed to Board committees, the committee chairs and the Lead Director; •Develops and recommends to the Board a set of governance guidelines and codes of business conduct and ethics for the Company; •Monitors and annually evaluates how effectively the Board and Company have implemented the Governance Guidelines; •Assesses and monitors, throughout the organization, issues related to the Company's corporate governance risk, corporate culture risk and human capital risk; •Oversees the development and monitors the implementation of succession planning, both long term and emergency, for the Board, the Co-CEOs and executive management; and •Oversees evaluations of the performance of the Board, individual Board members, Board committees, and the Co-CEOs, as coordinated by the Lead Director
The Governance and Nominating Committee will receive, evaluate, and consider the names and qualifications of any potential director candidates from all sources, including shareholders of the Company. Recommendations of potential director candidates and supporting material may be directed to the Governance and Nominating Committee in care of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070. Additionally, any Company shareholder entitled to vote at a shareholder meeting at which election of directors will be considered may use the director nomination procedures contained in Article III, Section 2 of the Company’s By-laws. The Company has also adopted proxy access, as set forth in Article III, Section 3 of the Company's By-laws. These procedures are described more fully in Procedures for Director Nominations by Shareholders of this Proxy Statement. |
|
| Current Committee Members |
|
| James P. Brannen, Chair |
| Linda L. Addison |
| David A. Rodriguez |
|
|
Compensation Committee Interlocks and Insider Participation—The Company has no compensation committee interlocks or insider participation as defined by Item 407(e)(4) of SEC Regulation S-K.
Governance and Nominating Committee
The Governance and Nominating Committee:
receives and evaluates the names and qualifications of potential director candidates;
identifies individuals qualified to become Board members consistent with criteria set by the Board and recommends to the Board director nominees;
recommends the directors to be appointed to Board committees, the committee chairs and the Lead Director;
develops and recommends to the Board a set of governance guidelines and codes of business conduct and ethics (Governance Guidelines) for the Company;
monitors and annually evaluates how effectively the Board and Company have implemented the Governance Guidelines;
oversees the development and monitors the implementation of succession planning, both long term and emergency, for the Board, the Co-CEOs and Company management; and
oversees evaluations of the performance of the Board and Co-CEOs as coordinated by the Lead Director and monitoring the Co-CEOs’ evaluations of senior Company management.
The Governance and Nominating Committee will receive, evaluate and consider the names and qualifications of any potential director candidates from all sources, including shareholders of the Company. Recommendations of potential director candidates and supporting material may be directed to the Governance and Nominating Committee in care of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070. Additionally, any Company shareholder entitled to vote at a shareholder meeting in which election of directors will be considered may use the director nomination procedures contained in Article III, Section 2 of the Company’s By-Laws, which are described on page 24 of this Proxy Statement under Procedures for Director Nominations by Shareholders.
Risk Assessment of Compensation PoliciesBoard and PracticesAnnual Shareholder Meeting Attendance
The Compensation Committee, with input from its independent compensation consultant, has reviewed an inventoryDuring 2023, the Board held four physical meetings, one videoconference meeting, and acted two times by unanimous written consent. In 2023, all of the Company’s compensation programs, plans and practices applicable to all of its employees as they relate to risk management and
risk-taking initiatives to ascertain if they serve to incent risks which are “reasonably likely to have a material adverse effect” on the Company. As a result of this process, the Compensation Committee has concluded and informed the Board that any risks arising from these programs, plans and practices are not reasonably likely to have a material adverse effect on the Company.
In connection with its evaluation of risks which may rise to the level of impacting the Company’s financial statements and financial reporting, the Audit Committee has also considered the Company’s employee compensation programs, plans and practices as they may serve to incent risk-taking behavior impacting the Company’s financial statements and financial reporting. In the course of this examination, the Audit Committee has determined that there were no compensation risks which would rise to the level of materially adversely impacting the Company’s financial statements and financial reporting.
Succession Planning
The Board is responsible for the succession planning process for both the Chief Executive Officer (CEO) position and directors. The Board reviews and regularly discusses with the Co-Chief Executive Officers potential candidates which the Co-CEOs have identified from among senior management as possible successors for the CEO position. The Board and the Co-CEOs also have the authority to examine persons outsidedirectors attended at least 75% of the Company as a partmeetings of the process to ultimately select a successor to a CEO. The Board may determine to retain outside professionals including consultants or search firms to assist in the CEO succession planning process. Candidates to succeed a CEO upon his retirement as well as in the event of any emergency involving, or the incapacity of, a CEO are considered and after discussion at the Board level, a successor to the CEO is determined. A written Emergency CEO Succession Plan has been developed, approved by the Board and is currently in place. A similar process is followed by the Co-CEOs, consulting with senior management, to identify successors for key Company positions, such as Chief Financial Officer, Chief Administrative Officer, Chief Investment Officer, Chief Actuary, Chief Legal Officer, Chief Information Officer, Chief Strategy Officer, Director of Human Resources and the heads of the agency/marketing divisions of the principal insurance subsidiaries. These potential successors are discussed with the Board and the Board’s concurrence is obtainedcommittees on which they served.
The Company has a long-standing policy that the designated successors. Themembers of its Board has engagedbe present at the servicesAnnual Meeting of Shareholders, unless they have an unaffiliated consulting firm to assist inemergency, illness or an unavoidable conflict. At the developmentApril 27, 2023 Annual Meeting of a more formalized structure for identifying immediate and long-term successors for key personnel atShareholders, all levelsbut one of the Company and its subsidiaries. The Emergency CEO Succession Plan is reviewed at least annually by the Governance and Nominating Committee and discussed by the full Board in executive session.directors were present.
20 GL 2024 Proxy Statement
Succession planning for directors is a principal focus
Committees of the Governance and Nominating Committee as well as the full Board. Using the standards for director independence set forth by the NYSE and the additional categorical standards adopted by the Board, the director qualification standards in the Corporate Governance Guidelines, and the Board-adopted statements on Qualifications of Directors and Procedures for Identifying and Evaluating Director Candidates, as the basis for beginning the director succession process, the Governance and Nominating Committee and the Board conduct extensive discussions regarding the qualities and characteristics to be sought in a successor to a departing director or in a nominee to fill a newly-created directorship. They evaluate potential director candidates from all sources, including shareholders and other security holders of the Company, working to develop a broad-based, inclusive pool of potential director candidates and may retain consultants or professional director search firms to assist them in the process. After compiling a list of potential director candidates, a search committee, comprised of members of the Board, including independent directors, the Co-CEOs and the Lead Director, meets with these candidates and makes recommendations for successor directors to the Governance and Nominating Committee and the full Board for decision.
In 2017 and continuing into 2018, succession planning at all levels of management at the Company and its subsidiaries as well as at the Board of Directors has been a focus using both internal and external resources.
Director Qualification Standards
The Company’s Corporate Governance Guidelines discussBoard has the following director qualification standards:standing committees more fully described below: Audit, Compensation, and Governance and Nominating. The Board may also, from time to time, establish additional special committees.
Board Membership Criteria, including independence, limits on the number of boards on which a director serves, a former chief executive officer’s Board membershipThe Board's Audit, Compensation, and directors who change their present job responsibilities;
Size of the Board;
Director Terms;
Retirement Policy; and
Selection of the Chairman of the Board.
Additionally, the Governance and Nominating CommitteeCommittees are currently comprised of the following members, each of whom is independent under the applicable rules and regulations of the Board have adoptedSEC, the NYSE, and Section 16 of the Securities Exchange Act of 1934:
| | | | | | | | | | | |
| Director | Board Committees |
| Audit Committee | Compensation Committee | Governance and Nominating Committee |
| Linda L. Addison (L) | | | |
| Cheryl D. Alston | | | |
| Marilyn A. Alexander | | | |
| Mark A. Blinn | | | |
| James P. Brannen | | | |
Jane Buchan1 | | | |
| Alice S. Cho | | | |
| Steven P. Johnson | | | |
| David A. Rodriguez | | | |
| Mary E. Thigpen | | | |
Number of Meetings Held in 20232 | 11 | 5 | 4 |
| | |
(L) - Lead Director; - Chair; - Member 1 Scheduled to retire from the Board at the Annual Meeting on April 25, 2024. 2 The Audit Committee held 4 physical meetings and 7 teleconference meetings in 2023; the Compensation Committee held 5 physical meetings in 2023; and the Governance and Nominating Committee held 4 physical meetings in 2023. |
Each of the Board's Audit, Compensation, and Governance and Nominating Committees has a statementwritten charter, which is reviewed annually and updated as necessary. Copies of the committee charters are posted on Qualifications of Directors containing factors which should at a minimum be considered in the nomination or appointment of Board members. You can learn more about these factors by going to the Company’sCompany's website at www.torchmarkcorp.com and clicking on Director Qualification Standards https://investors.globelifeinsurance.com under the heading of Board of Directors on the Investors page.
One of the factors considered by the heading at Board in the nomination or appointment of directors, as set out in the Board-adopted statement on Qualifications of Directors, addresses diversity. The Company does not have representational directors; the director nomination and selection process involves consideration of the Board as a collective group. The Board as an entirety should reflect appropriate diversity, and such diversity encompasses a wide range of personal and professional experiences, backgrounds, skill sets, age, gender, race, national origin and other demographic characteristics. The Governance and Nominating Committee has the primary responsibility to see that this and all of the other Qualifications of Directors are implemented. As a part of the annual self-evaluation process, one of a number of factors that the Board and the Governance and Nominating Committee consider is whether the Board as a whole reflects appropriate diversity. In evaluating potential director candidates, the Governance and Nominating Committee also examines broadly-defined diversity in identifying and recommending director nominees.
Director Identification and Evaluation Procedures
The Governance and Nominating Committee and the Board utilize the following procedures for identifying and evaluating director candidates:
The Board identifies the need (a) to add a new Board member meeting certain criteria or (b) to fill a vacancy on the Board;
The Governance and Nominating Committee initiates a search, working with Company staff support and seeking input from other Board members and senior Company management. The Governance and Nominating CommitteeCommittees. You may also engageobtain a professional search firm or other consultants to assist in identifying director candidates if necessary;
In making its selection, the Governance and Nominating Committee will evaluate candidates proposed by shareholders under criteria similar to those used for the evaluationprinted copy of other candidates;
Candidates that will satisfy any specified criteria and otherwise qualify for membership on the Board are identified and presented to the Governance and Nominating Committee for consideration;
The Lead Director, the Co-CEOs and at least one member of the Governance and Nominating Committee, along with other directors, will interview prospective candidate(s);
The Governance and Nominating Committee meets to consider and approve final candidate(s); and
The Governance and Nominating Committee seeks full Board endorsement of selected candidate(s).
Procedures forDirector Nominations by Shareholders
Article III, Section 2 of the Company’s By-Laws provides for procedures pursuant to which Company shareholders may nominate candidates for election as a director of the Company. To provide timely notice of a director nomination for an annual meeting of shareholders, the shareholder's notice must be received at the principal offices of the Company (3700 South Stonebridge Drive, McKinney, Texas 75070) not later than the close of business on the 75th day or earlier than the 120th day prior to the first anniversary of the preceding year’s annual meeting and must contain the information specified in the Company's By-Laws.
You may find the Company’s By-Laws by going to the Company’s website at www.torchmarkcorp.com and clicking on the Investors page. The Company By-Laws are located under the Corporate Governance heading. Printed copies of the By-Laws may also be obtainedthese committee charters at no charge by writing tothe office of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
21 GL 2024 Proxy Statement
| | | | | |
| Committee | Committee Responsibilities |
|
Audit
Committee | •Reviews and discusses with management and the independent registered public accounting firm the Company’s audited financial statements and quarterly financial statements prior to filing, the Company’s earnings press releases and financial information and earnings guidance, and the Company’s policies for financial risk assessment and management; •Selects, appoints, reviews and, if necessary, discharges the independent auditors; •Reviews the scope of the independent auditors’ audit plan and pre-approves audit and non-audit services; •Reviews the adequacy of the Company’s system of internal controls over financial reporting; •Periodically reviews pending litigation and regulatory matters; •Reviews the performance of the Company’s internal audit function; •Reviews related party disclosures to assure they are adequately disclosed in the Company’s financial statements and other SEC filings; •Reviews and appropriately treats complaints and concerns regarding accounting, internal accounting controls or auditing matters pursuant to a confidential “whistleblower” policy; •Discusses the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures; •Monitors and periodically reports to the Board regarding management’s enterprise risk management processes; •Meets with the Company’s independent auditors and internal auditors both with and without management present at each of its regular quarterly meetings; •Evaluates the Company’s internal auditors and performs an annual evaluation of the independent auditor utilizing the external auditor evaluation tool developed by the Center for Audit Quality and several other governance organizations; and •Reviews information security and technology risks and provides guidance to management with respect to information security and privacy policies. |
|
| Current Committee Members |
|
| Mary E. Thigpen, Chair |
| Alice S. Cho |
| Steven P. Johnson |
|
|
| | | | | |
| Compensation Committee | •Determines the Company's stated general compensation philosophy and strategy; •Reviews and determines the compensation of senior management of the Company and its subsidiaries at certain levels, including establishing goals and objectives for the Co-CEOs’ compensation, evaluating each Co-CEO’s performance in light thereof, and recommending their total compensation to the independent directors for their approval; •Establishes the annual bonus pool; •Administers the Company’s Management Incentive Plan and stock incentive plans; •Makes recommendations to the Board with respect to executive compensation, incentive compensation plans and equity-based plans; •Reviews and recommends to the Board non-management director compensation; •Reviews and discusses with Company management the Compensation Discussion and Analysis section and recommends to the Board that it be included in the annual Proxy Statement; and •Oversees preparation of the Compensation Committee Report in the annual Proxy Statement.
The Compensation Committee is authorized to retain its own independent compensation consultant. The Compensation Committee receives input and recommendations from the Co-CEOs and other members of Company management on compensation matters, as more fully described in the Compensation Discussion and Analysis section of this Proxy Statement, and delegates day-to-day administrative functions for implementation of its compensation decisions and programs to Company officers. |
|
| Current Committee Members |
|
| Jane Buchan, Chair |
| Marilyn A. Alexander |
| Cheryl D. Alston |
| Mark A. Blinn |
|
22 GL 2024 Proxy Statement
| | | | | |
| Governance and Nominating Committee | •Receives and evaluates qualifications of potential director candidates; •Identifies individuals qualified to become Board members consistent with criteria set by the Board and recommends director nominees to the Board; •Reviews, assesses and recommends to the Board an 'independence' determination with respect to each of the directors for purposes of Board membership (or committee membership, where applicable); •Recommends the directors to be appointed to Board committees, the committee chairs and the Lead Director; •Develops and recommends to the Board a set of governance guidelines and codes of business conduct and ethics for the Company; •Monitors and annually evaluates how effectively the Board and Company have implemented the Governance Guidelines; •Assesses and monitors, throughout the organization, issues related to the Company's corporate governance risk, corporate culture risk and human capital risk; •Oversees the development and monitors the implementation of succession planning, both long term and emergency, for the Board, the Co-CEOs and executive management; and •Oversees evaluations of the performance of the Board, individual Board members, Board committees, and the Co-CEOs, as coordinated by the Lead Director
The Governance and Nominating Committee will receive, evaluate, and consider the names and qualifications of any potential director candidates from all sources, including shareholders of the Company. Recommendations of potential director candidates and supporting material may be directed to the Governance and Nominating Committee in care of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070. Additionally, any Company shareholder entitled to vote at a shareholder meeting at which election of directors will be considered may use the director nomination procedures contained in Article III, Section 2 of the Company’s By-laws. The Company has also adopted proxy access, as set forth in Article III, Section 3 of the Company's By-laws. These procedures are described more fully in Procedures for Director Nominations by Shareholders of this Proxy Statement. |
|
| Current Committee Members |
|
| James P. Brannen, Chair |
| Linda L. Addison |
| David A. Rodriguez |
|
|
Board and Annual Shareholder Meeting Attendance
During 2017, 2023, the Board held four physical meetings, and one teleconferencevideoconference meeting, and also acted four timesacted two times by unanimous written consent. In 2017, 2023, all of the directors attended at least 75% of the meetings of the Board and the committees on which they served.
The Company has a long-standing policy that the members of its Board be present at the Annual Meeting of Shareholders, unless they have an emergency, illness or an unavoidable conflict. At the April 27, 20172023 Annual Meeting of Stockholders,Shareholders, all but one of the directors were present.
20 GL 2024 Proxy Statement
Committees of the Board of Directors
The Board has the following standing committees more fully described below: Audit, Compensation, and Governance and Nominating. The Board may also, from time to time, establish additional special committees.
The Board's Audit, Compensation, and Governance and Nominating Committees are currently comprised of the following members, each of whom is independent under the applicable rules and regulations of the SEC, the NYSE, and Section 16 of the Securities Exchange Act of 1934:
| | | | | | | | | | | |
| Director | Board Committees |
| Audit Committee | Compensation Committee | Governance and Nominating Committee |
| Linda L. Addison (L) | | | |
| Cheryl D. Alston | | | |
| Marilyn A. Alexander | | | |
| Mark A. Blinn | | | |
| James P. Brannen | | | |
Jane Buchan1 | | | |
| Alice S. Cho | | | |
| Steven P. Johnson | | | |
| David A. Rodriguez | | | |
| Mary E. Thigpen | | | |
Number of Meetings Held in 20232 | 11 | 5 | 4 |
| | |
(L) - Lead Director; - Chair; - Member 1 Scheduled to retire from the Board at the Annual Meeting on April 25, 2024. 2 The Audit Committee held 4 physical meetings and 7 teleconference meetings in 2023; the Compensation Committee held 5 physical meetings in 2023; and the Governance and Nominating Committee held 4 physical meetings in 2023. |
Each of the Board's Audit, Compensation, and Governance and Nominating Committees has a written charter, which is reviewed annually and updated as necessary. Copies of the committee charters are posted on the Company's website at https://investors.globelifeinsurance.com under the Board of Directors heading at Board Committees. You may also obtain a printed copy of any of these committee charters at no charge by writing the office of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
21 GL 2024 Proxy Statement
| | | | | |
| Committee | Committee Responsibilities |
|
Audit
Committee | •Reviews and discusses with management and the independent registered public accounting firm the Company’s audited financial statements and quarterly financial statements prior to filing, the Company’s earnings press releases and financial information and earnings guidance, and the Company’s policies for financial risk assessment and management; •Selects, appoints, reviews and, if necessary, discharges the independent auditors; •Reviews the scope of the independent auditors’ audit plan and pre-approves audit and non-audit services; •Reviews the adequacy of the Company’s system of internal controls over financial reporting; •Periodically reviews pending litigation and regulatory matters; •Reviews the performance of the Company’s internal audit function; •Reviews related party disclosures to assure they are adequately disclosed in the Company’s financial statements and other SEC filings; •Reviews and appropriately treats complaints and concerns regarding accounting, internal accounting controls or auditing matters pursuant to a confidential “whistleblower” policy; •Discusses the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures; •Monitors and periodically reports to the Board regarding management’s enterprise risk management processes; •Meets with the Company’s independent auditors and internal auditors both with and without management present at each of its regular quarterly meetings; •Evaluates the Company’s internal auditors and performs an annual evaluation of the independent auditor utilizing the external auditor evaluation tool developed by the Center for Audit Quality and several other governance organizations; and •Reviews information security and technology risks and provides guidance to management with respect to information security and privacy policies. |
|
| Current Committee Members |
|
| Mary E. Thigpen, Chair |
| Alice S. Cho |
| Steven P. Johnson |
|
|
| | | | | |
| Compensation Committee | •Determines the Company's stated general compensation philosophy and strategy; •Reviews and determines the compensation of senior management of the Company and its subsidiaries at certain levels, including establishing goals and objectives for the Co-CEOs’ compensation, evaluating each Co-CEO’s performance in light thereof, and recommending their total compensation to the independent directors for their approval; •Establishes the annual bonus pool; •Administers the Company’s Management Incentive Plan and stock incentive plans; •Makes recommendations to the Board with respect to executive compensation, incentive compensation plans and equity-based plans; •Reviews and recommends to the Board non-management director compensation; •Reviews and discusses with Company management the Compensation Discussion and Analysis section and recommends to the Board that it be included in the annual Proxy Statement; and •Oversees preparation of the Compensation Committee Report in the annual Proxy Statement.
The Compensation Committee is authorized to retain its own independent compensation consultant. The Compensation Committee receives input and recommendations from the Co-CEOs and other members of Company management on compensation matters, as more fully described in the Compensation Discussion and Analysis section of this Proxy Statement, and delegates day-to-day administrative functions for implementation of its compensation decisions and programs to Company officers. |
|
| Current Committee Members |
|
| Jane Buchan, Chair |
| Marilyn A. Alexander |
| Cheryl D. Alston |
| Mark A. Blinn |
|
22 GL 2024 Proxy Statement
| | | | | |
| Governance and Nominating Committee | •Receives and evaluates qualifications of potential director candidates; •Identifies individuals qualified to become Board members consistent with criteria set by the Board and recommends director nominees to the Board; •Reviews, assesses and recommends to the Board an 'independence' determination with respect to each of the directors for purposes of Board membership (or committee membership, where applicable); •Recommends the directors to be appointed to Board committees, the committee chairs and the Lead Director; •Develops and recommends to the Board a set of governance guidelines and codes of business conduct and ethics for the Company; •Monitors and annually evaluates how effectively the Board and Company have implemented the Governance Guidelines; •Assesses and monitors, throughout the organization, issues related to the Company's corporate governance risk, corporate culture risk and human capital risk; •Oversees the development and monitors the implementation of succession planning, both long term and emergency, for the Board, the Co-CEOs and executive management; and •Oversees evaluations of the performance of the Board, individual Board members, Board committees, and the Co-CEOs, as coordinated by the Lead Director
The Governance and Nominating Committee will receive, evaluate, and consider the names and qualifications of any potential director candidates from all sources, including shareholders of the Company. Recommendations of potential director candidates and supporting material may be directed to the Governance and Nominating Committee in care of the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070. Additionally, any Company shareholder entitled to vote at a shareholder meeting at which election of directors will be considered may use the director nomination procedures contained in Article III, Section 2 of the Company’s By-laws. The Company has also adopted proxy access, as set forth in Article III, Section 3 of the Company's By-laws. These procedures are described more fully in Procedures for Director Nominations by Shareholders of this Proxy Statement. |
|
| Current Committee Members |
|
| James P. Brannen, Chair |
| Linda L. Addison |
| David A. Rodriguez |
|
|
Risk Assessment of Compensation Policies and Practices
The Compensation Committee, with input from its independent compensation consultant, has reviewed an inventory of the Company’s compensation programs, plans and practices applicable to all of its employees as they relate to risk management and risk-taking initiatives to ascertain if they serve to incent risks which are “reasonably likely to have a material adverse effect” on the Company. As a result of this process, the Compensation Committee has concluded and informed the Board that any risks arising from these programs, plans and practices are not reasonably likely to have a material adverse effect on the Company.
In connection with its evaluation of risks which may rise to the level of impacting the Company’s financial statements and financial reporting, the Audit Committee also has considered the Company’s employee compensation programs, plans and practices as they may serve to incent risk-taking behavior impacting the Company’s financial statements and financial reporting. In the course of this examination, the Audit Committee has determined that there were no compensation risks which would rise to the level of materially adversely impacting the Company’s financial statements and financial reporting.
Succession Planning and Leadership Development
The Board is responsible, with the assistance of the Governance and Nominating Committee, for the succession planning process for director, Board Chair and Chief Executive Officer (CEO) positions. Succession planning for directors is a principal focus of the Governance and Nominating Committee as well as the full Board. As the basis for beginning the director succession process, the Committee uses the standards for director independence set forth by the NYSE and the additional categorical standards adopted by the Board, the director qualification standards in the Corporate Governance Guidelines, and the Board-adopted statements on Qualifications of Directors and Procedures for Identifying and Evaluating Director Candidates. The Governance and Nominating Committee and the Board conduct extensive discussions regarding the qualities and characteristics to be sought in a successor to a departing director or in a nominee to fill a newly-created directorship. They evaluate potential director candidates from all sources, including shareholders and other security holders of the Company, working to develop a broad-based, inclusive pool of potential director candidates and may retain consultants or professional director search firms to assist them in the process. After compiling a list of potential director candidates, a search committee comprised of the Lead Director, the Co-CEOs, and at least one member of the Governance and Nominating Committee, along with other directors, meets with these candidates and makes recommendations for successor or new directors to the Governance and Nominating Committee and the full Board for decision.
The Board also reviews and regularly discusses with the Co-CEOs potential candidates which the Co-CEOs have identified from among senior management as possible successors for the CEO position. The Board and the Co-CEOs also have the authority to examine persons outside of the Company as a part of the process to ultimately
23 GL 2024 Proxy Statement
select a successor to a CEO. The Board may elect to retain outside professionals, including consultants or search firms, to assist in the CEO succession planning process. Candidates to succeed a CEO upon the CEO's retirement are considered and, after discussion at the Board level, a successor to the CEO is determined. The Board has also adopted a written Emergency Succession Plan for an absence event involving one or both of the Co-CEOs that is reviewed at least annually by the Governance and Nominating Committee and periodically discussed by the full Board.
A similar process is followed by the Co-CEOs, consulting with senior management, to identify successors for key positions, such as Chief Financial Officer, Chief Investment Officer, Chief Actuary, General Counsel, Chief Information Officer, Chief Strategy Officer, Chief Administrative Officer, Chief Talent Officer, Chief Accounting Officer, Chief Marketing Officer and the heads of the sales divisions of the principal insurance subsidiaries.
The Company has worked, using both internal and external resources, to integrate succession planning with leadership development in an effort to ensure that high-potential employees obtain the experience, skills and development opportunities necessary to assume, and succeed in, future leadership roles at the Company. These efforts include the identification of key performance indicators for effective team management, the establishment of a defined learning path for managers, and internal collaboration to identify and support managers in need of learning and development opportunities. In 2023, succession planning and leadership development at all levels of management at the Company and its subsidiaries, as well as at the Board of Directors, remained a focus.
Qualifications of Directors
The Governance and Nominating Committee and the Board have adopted a statement on Qualifications of Directors containing factors which should, at a minimum, be considered in the nomination or appointment of Board members:
Board Diversity
A diverse, effective, and experienced Board of Directors is key to the Company's governance and business success. One of the factors considered by the Board in the nomination or appointment of directors, as set out in the Board-adopted statement on Qualifications of Directors, addresses diversity. The Company does not have representational directors; the director nomination and selection process involves consideration of the Board as a collective group. The Board as an entirety should reflect appropriate diversity, and such diversity encompasses a wide range of personal and professional experiences, backgrounds, skill sets, age, gender, race, national origin and
24 GL 2024 Proxy Statement
other demographic characteristics. The Governance and Nominating Committee has the primary responsibility to see that this and all of the other Qualifications of Directors are considered. As a part of the annual self-evaluation process, one of a number of factors the Board and the Governance and Nominating Committee consider is whether the Board as a whole reflects appropriate diversity. In evaluating potential director candidates, the Governance and Nominating Committee also examines broadly-defined diversity in identifying and recommending director nominees.
More information regarding the Company's director qualification standards may be found on the Investors page of the Company's website under the Board of Directors heading at Qualifications of Directors. The information contained on, or that can be accessed through, our website is not incorporated by reference into this Proxy Statement or considered to be part of this document.
Director Identification and Evaluation Procedures
The Governance and Nominating Committee and the Board utilize the following procedures for identifying and evaluating director candidates, based in part on their evaluations of the skills matrix, included in the Director Nominee Skills and Qualificationssection of this Proxy Statement, and an assessment of the skills and attributes considered most beneficial to furthering the Company's governance and strategy: | | | | | | | | |
Board Identification of a Need | | The Board identifies the need to add a new Board member meeting certain criteria, or to fill a vacancy on the Board. |
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| Initiation of Search | | The Governance and Nominating Committee initiates a broad-based, inclusive search, seeking input from other Board members and senior management, and may engage a professional search firm or other consultants to assist in identifying potential director candidates if necessary. |
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| Consideration by Governance and Nominating Committee | | Candidates who satisfy any specified criteria and otherwise qualify for membership on the Board are identified and presented to the Governance and Nominating Committee for consideration. |
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| Evaluation of Shareholder-Proposed Candidates | | The Governance and Nominating Committee will evaluate candidates proposed by shareholders under criteria similar to those used for the evaluation of other candidates. |
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Interview Process | | The Lead Director, the Co-CEOs and at least one member of the Governance and Nominating Committee, along with other directors, will interview prospective candidates. |
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Committee Approval of Final Candidates | | The Governance and Nominating Committee meets to consider and approve final candidates. |
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Board Approval of Selected Candidate(s) | | The Governance and Nominating Committee seeks full Board endorsement of selected candidate(s). |
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Procedures forDirector Nominations by Shareholders
Article III, Section 2 of the Company’s By-laws provides for procedures pursuant to which Company shareholders may nominate candidates for election as a director of the Company. To provide timely notice of a director nomination for an annual meeting of shareholders, the shareholder's notice must be received at the principal offices of the Company (3700 South Stonebridge Drive, McKinney, Texas 75070) not later than the close of business on the 75th day or earlier than the 120th day prior to the first anniversary of the preceding year’s annual meeting and must contain the information specified in the Company's By-laws.
25 GL 2024 Proxy Statement
Article III, Section 3 of the Company's By-laws includes a proxy access provision, pursuant to which an eligible shareholder (or group of shareholders) may nominate and include in our proxy materials a prescribed number of director nominees, subject to such shareholder(s) and the nominee(s) meeting the requirements set forth in our By-laws. Notice of proxy access director nominees must be delivered to or mailed and received by the Corporate Secretary at the principal offices of the Company not less than one hundred twenty (120) days nor more than one hundred fifty (150) days prior to the anniversary of the date that the Company first distributed its proxy statement to shareholders for the preceding year's annual meeting.
In addition to satisfying the foregoing requirements under our By-laws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the information required by Rule 14a-19 of the Exchange Act no later than February 24, 2025.
You may find the Company’s By-laws on the Company’s website at https://investors.globelifeinsurance.com under the Corporate Governance heading. Printed copies of the By-laws may also be obtained at no charge by writing to the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
Sustainable Business Practices
The Company's Board and its management recognize the importance of sustainability and believe that sound sustainabilitysustainable business practices are an important component of both good corporate citizenship and sound fiscal management.management, as well as a key driver of long-term success. Our primary focus with respect to sustainability includes:
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Human
Capital Management | | Corporate Culture
and
Engagement | | Data Protection
and
Cybersecurity | | Operational Efficiency
and
Transparent ESG Reporting and Disclosure |
We continue to advance our sustainable business practices by further enhancing our ESG strategy and disclosures. To this end, we have aligned our ESG disclosures with Sustainability Accounting Standards Board (SASB) standards and Task Force on Climate-related Financial Disclosures (TCFD) recommendations. A variety of environmental, social,materiality assessment, completed in 2022, serves as a foundational element to our approach and governance (ESG) initiatives have been implemented at the Company through upgradeshas helped to home office facilities, information technology systems and a general focus on increasing employee awareness.
In 2017, the Company issued a sustainability report on ESG issues. A copyfacilitate an understanding of the Environmental, Social,ESG topics that are most important to our Company and Governanceare likely to drive long-term performance. Our consideration of these key areas of potential ESG impact, risk, and opportunity help to inform our business decisions and risk management processes. Additional information on our ESG progress and efforts to enhance our ESG strategy may be found in our ESG Report, which is posted on the Investors page of the Company's website andwebsite. The information contained on or that can be viewedaccessed through our website, including our ESG Report, is not incorporated by goingreference into this Proxy Statement or considered to www.torchmarkcorp.com and clicking on the Investors page.be part of this document.
Human Capital Management
The Board believes effective human capital management is essential to attracting, motivating, rewarding, and retaining the key talent necessary to successfully execute on our business strategy and to maintain sustainable business operations. To this end, the Board oversees management’s development and implementation of the Company’s strategy with respect to its people, culture and community. Management periodically reports to the Board and Board-level committees on human capital-related issues. We endeavor to cultivate and maintain an environment that allows our employees and independent sales agents to thrive by creating community, recognizing and celebrating accomplishments, and encouraging well-being.
We believe in continuous learning and seek to provide opportunities for Company has formedemployees to further their professional development. We have developed a sustainability committee comprisedrobust multi-track learning ecosystem to guide and foster talent development for the Company’s next generation of leaders. We offer a diverse slate of courses with options for personal and professional development, with planned future enhancements to include a mentoring program to provide employees with the opportunity to connect in a more focused way. The curriculum catalog includes self-directed as well as instructor-led courses in formats catering to in-person and hybrid employees. An education
26 GL 2024 Proxy Statement
assistance program is also offered to encourage employee growth in areas related to their current responsibilities and career aspirations.
To support our employees’ development, employees and managers participate in an annual performance review process. We believe that performance reviews align an employee’s role and responsibilities with the Company’s larger vision.Employees are also asked to set measurable goals on a yearly basis together with their manager. We work to integrate succession planning and talent development throughout all levels of the organization to facilitate the growth of the Company’s next generation of leaders.
We strive to provide a safe and healthy work environment. The Company prescribes certain safety and health rules and practices, reminding employees of their responsibility to report accidents, injuries and unsafe equipment, practices or conditions. Employees are also furnished with tools and training providing information to help enable them to safely engage with co-workers, customers and third parties.
In support of the physical, financial and emotional well-being of our employees, we offer a comprehensive employee benefits package that includes competitive monetary benefits inclusive of a 401(k) and/or pension benefits, fitness center reimbursement, paid-time-off (based on years of service), health insurance, dental and vision insurance, an employee assistance program, health savings and flexible spending accounts, family leave, and tuition assistance. We also recognize that allowing our employees time away from work to relax and tend to personal matters is critical to maintaining their exceptional performance. As such, we offer various membersbenefits designed to ensure our employees have the opportunity to live balanced lives. We also have adopted various time-off and leave policies, and provide our employees with flexible connections, flexible schedules, and flexible locations, as appropriate. We believe that maintaining and strengthening the physical and mental health of management,our workforce will drive resilience and excellence in our operations.
In March 2023, we hosted a 'month of financial wellness,' highlighting the range of benefits surrounding employees’ financial needs and featuring an open forum with our retirement team.
Corporate Culture and Engagement
We are focused on fostering a culture that is inclusive and attractive for all of our employees and independent sales agents, and in which individual voices are heard and workers are recognized, celebrated and empowered, while being valued as assets for business growth.We are likewise committed to maintaining a business atmosphere and working environment based on honesty, fair dealing and sound business ethics. We believe in the importance of maintaining a culture of accountability by clearly specifying expectations and standards for all of our employees.
Biennially, we conduct a confidential employee engagement survey (most recently conducted in 2023) to give our employees the opportunity to provide input about their experiences with the Company, including but not limited to, confidence in the Company and its leadership, competitiveness of our compensation and benefit package, and departmental relationships. We utilize the survey results to identify opportunities for improvement and to create action plans based on employee feedback.
We believe that an inclusive culture is necessary to unlock the benefits of diversity, including increased innovation and insight from differences in thought, background and experiences. We work hard to provide an inclusive and welcoming work environment – one that ensures that employment, promotion, workplace advancement decisions, and agent contracting decisions are based solely on an individual’s abilities and qualifications. Our commitment to diversity starts with our Board of Directors; the Company believes a diverse, effective, and experienced Board of Directors is key to the Company's governance and success. Our Board counts six individuals who identify as women among its twelve members (three of whom serve in leadership positions). Additionally, one Board member identifies as African American/Black, one identifies as Asian, and one as Hispanic/Latino. Of the Company's employee population, 68% identify as women and 48% identify as racial/ethnic minorities.1
We recognize the importance of increasing organizational awareness about all aspects of DEI. In 2023, the Company continued its series of heritage-based forums, workshops and communications to raise awareness of the nature and value of diversity in our complex, modern work environment and highlight the importance of providing a safe space to teach and learn about cultural history. To this end, during the year, we acknowledged a number of notable diversity-themed months, including Black History Month, Women’s History Month, Arab American Heritage Month, Asian American & Pacific Islander Heritage Month, Pride Month, National Hispanic Heritage Month, Global Diversity Awareness Month, and Native American History Month.
1As of December 31, 2023
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We have established an enterprise-wide DEI program called Mosaic@Globe Life, that focuses on awareness, influence and advocacy. This platform aims to support a corporate culture in which everyone feels safe to be their full, authentic selves.
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Mosaic@Globe Life Mission Statement We are committed to maintaining a diverse workforce that reflects the communities where we live and serve. We believe employee engagement starts with feeling included, respected and appreciated.
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Through Mosaic@Globe Life, employees are empowered to join or establish voluntary, employee-led groups called Employee Resource Groups (ERGs). ERGs help to engage and retain employees, while offering mentoring and development opportunities. ERG members gather to discuss and share lived experiences and resources centered around a common interest, experience, or trait. As of year-end 2023, Globe Life employees had established six ERGs with the support of Mosaic@Globe Life.
Since its launch, thirteen cohorts have graduated from the Mosaic@Globe Life Leadership Development Program, a six-week learning experience. This voluntary program equips leaders with tools and support as they expand their ability to identify and mitigate bias, respect differences, build empathetic relationships, proactively identify potential areas of conflict, and bring out the best in others. The program enables its graduates, referred to as Mosaic@Globe Life Coaches, to become more effective leaders, drive change, and develop a culture of increased openness, respect for differences, and understanding. Mosaic@Globe Life Coaches have the opportunity to continue their DEI learning journey with quarterly Coaches meetings. Meeting topics include: How to be an Ally, Inclusion Nudges and How We Make Decisions, Psychological Safety, and Equipping Leaders to Adopt Inclusive Leadership Behaviors.
The Company offers various types of DEI training for employees. Topics include, but are not limited to, workplace inclusion, improving group dynamics, dimensions of culture, emotional intelligence, and empathy. In addition, our Learn@Globe Life Portal course catalog currently features 51 training courses, including on-demand and in-class learning opportunities, within the Mosaic@Globe Life category. Since its implementation, 5,007 DEI training courses have been completed.
Our purpose-driven mission is to help families Make Tomorrow Better by working to protect their financial future. We are committed to supporting the communities where we live, work and visit, and proudly partner with non-profit organizations that support youth/family, veterans/military, education, health, and seniors. Within these areas of focus, the non-profit organizations we partner with support underserved communities, individuals facing food insecurity, at-risk youth, and health advocacy. The Company, our employees and independent sales agents collectively donated more than $4.1 million in 2023.
We also supported tax credit scholarship programs in Arizona, Florida, Mississippi, South Dakota and Virginia. Our contribution of $2.3 million to these programs helped provide over 200 scholarships that give children access to specialized educational services and materials.
Our employees are encouraged to get involved. In 2023, volunteer employee groups included service to:
•Greater Cleveland-area Food Bank
•Meals on Wheels
•Mission Waco
•NewView Oklahoma
•North Texas Food Bank
To engage our employees in charitable giving, the Company selects non-profit organizations to feature quarterly. Our 2023 Quarterly Charitable Giving Partners included Alex’s Lemonade Stand Foundation, American Heart Association, Make-A-Wish and Special Olympics.
The Company also supports employees by offering dependent scholarships. Access to quality education is a value that is important for the Company to help families and develop younger generations. In 2023, we awarded ten $2,500 higher education scholarships to dependents of Company employees.
Our charitable giving extends throughout the organization. Independent sales agents from our respective sales divisions of subsidiaries American Income Life Insurance Company, Family Heritage Life Insurance Company of
28 GL 2024 Proxy Statement
America, and Liberty National Life Insurance Company also helped Make Tomorrow Better through hands-on volunteering and financial support. In 2023, they collectively donated $581,861 to various 501(c)(3) organizations located in areas both domestic and international.
Data Protection and Cybersecurity
As a life insurance company, we collect, process and store personal private information of our policyholders and prospective customers. Our information security program is designed to leverage recognized cybersecurity frameworks and practices to protect critical business operations and the confidentiality, integrity and availability of sensitive customer information from cyberattacks. We routinely monitor the current threat environment and adjust our information security program as appropriate to address new or changing risks.
Cybersecurity is an intrinsic part of corporate governance and enterprise risk management, supporting the leadership, organizational structures and processes which safeguard the Company’s Chief Investment Officer, Chief Risk Officer, Investor Relations officerinformation, operations, market position and Director of Facilities. This committee,reputation. Information security risk is evaluated and managed in a sub-committeecomprehensive fashion and not with a singular focus on information technology. Information security is treated as a business risk issue and governance of the Enterpriseinformation security function is structured to support that posture. Information security is governed and supported by an executive management level Operational Risk Management Committee, whose overall mission is responsible for setting the Company’s corporate sustainability agenda. The committee meets no less than semi-annually and reports regularlyto provide direction in regards to the Enterprise Risk Management CommitteeCompany's risk appetite and tolerance, approve strategic security plans, authorize projects based upon business risk, and review information regarding topics discussedsecurity status and issues consideredbusiness impact.
Operational Efficiency and Transparent ESG Reporting and Disclosure
Environmental responsibility and sustainability are part of our long-term business strategy. We recognize the potential impacts of climate change and the importance of this issue to investors, the communities we serve, and the health of our planet. We strive to reduce our impact on the environment by implementing various green building initiatives at committee meetings,our corporate facilities, continuing our Company-wide emphasis on recycling and waste reduction efforts, prioritizing the reduction of our paper and water usage, and developing processes to collect data on our greenhouse gas emissions. We intend to continue to identify opportunities to improve our energy efficiency and address climate change in ways that will be both sustainable and cost-effective.
We are committed to the ongoing enhancement of environmental responsibility and sustainability practices throughout our operations, and we will continue to consider ways in which we can preserve invaluable natural resources, reduce waste, and address climate change. We believe that such a commitment is necessary to our continued success, as well as other committee activities.to the well-being of our communities and planet. Additional information on our efforts to improve our environmental efficiency may be found in the Company’s ESG Report available on the Company’s website. The information contained on or that can be accessed through our website, including our ESG Report, is not incorporated by reference into this Proxy Statement or considered to be part of this document.
29 GL 2024 Proxy Statement
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Named Executive Officers
The Company’s financial performanceIn this section, we provide a detailed overview of our executive compensation philosophy, objectives and processes, including the sequential steps taken by the Compensation Committee in structuring and setting executive compensation, with a particular focus on the compensation of our Named Executive Officers (collectively NEOs) for 2023:
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| Name |
Title |
| Frank M. Svoboda | Co-Chairman and Chief Executive Officer |
| J. Matthew Darden | Co-Chairman and Chief Executive Officer |
| Thomas P. Kalmbach | Executive Vice President and Chief Financial Officer |
| Michael C. Majors | Executive Vice President, Policy Acquisition and Chief Strategy Officer |
| R. Brian Mitchell | Executive Vice President, General Counsel and Chief Risk Officer |
| Robert E. Hensley | Executive Vice President and Chief Investment Officer |
2023 Performance
Globe Life performed well in 2023 and we believe the Company is well positioned to continue to create sustainable growth and build shareholder value for years into the future. Below are a few examples of Globe Life’s accomplishments during 2017 improved over 2016. the year. Refer to APPENDIX A – Non-GAAP Reconciliations for definitions of non-GAAP measures utilized herein.
•Net operating income per share increased 10%, primarily due to the strength of our underwriting margins, and net operating income as a return on equity, excluding AOCI (net operating income ROE), was 14.7%.
•Net operating income surpassed $1 billion, a 7% increase from continuing operations2022.
•Book value per share, excluding AOCI, increased 11% to $76.21.
•Total premium in force increased over 4% to $4.6 billion.
•Total life and health net sales of our exclusive agencies (American Income Division, Liberty National Division and Family Heritage Division) increased by approximately 8% (6% life and 14% health), while the average producing agent count grew during the year by 17% to over 15,850 average producing agents in the fourth quarter.
•Net investment income increased by 6.6%.
•We returned approximately $464 million to our shareholders during 2023 through a combination of dividend distributions and share buybacks.
Changes to Compensation Program
The Committee implemented various changes to the executive compensation program in 2023 that were consistent with our compensation philosophy, including:
•We revised the metrics used for performance shares to better align this pay element with how investors assess Company performance. The two measures focus on profitable long-term growth reflecting a book value per share, excluding AOCI, target (and inclusive of accumulated dividends per share paid over the performance period) and the 3-year average of annual net operating income ROE over the measurement period.
•We focused the annual bonus plan on tactical goals, significant for that year, which over time will produce long-term profitable growth. For 2023, these consisted of net operating income earnings per diluted common share increased 7.3% over(Operating EPS) and total premium targets.
•We introduced annual grants of restricted stock units with time-based vesting to provide an additional retention tool for new and existing executives and key employees and to better align management's interests with those of our shareholders.
30 GL 2024 Proxy Statement
•We reset the previous year versus 8.7% in 2016. Overall performance, as measured relativepay components for the new Co-CEO’s, Messrs. Darden and Svoboda, consistent with their assumption of new and expanded roles.
•The 2024 Management Incentive Plan was modified to utilize a market-based upper limit for the performance framework inbonuses, and participation has been expanded to include all of the annual bonus plan, increased from 120.1% to 145.2% (on a scale of 0% to 150%, with target or expected performance at 100%). Consistent with our payCompany's Executive Officers. The upper limit for performance philosophy, the Compensation Committee reflected Company performance during 2017 in annual bonus and 2018 long-term incentive (LTI) awards made to the Company’s executive management.1
Annualframework bonuses for the Co-CEOs increased by 38.6% – Approximately 60%NEOs is 150% of the increase resulted from improved corporate performance and the balance from an increase in the competitivetheir respective target award. Total bonuses for the other continuing members of executive management increased by 15.7% from the awards made for 2016 performance.
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• | Long-term awards made to the Co-CEOs in early 2018, based on 2017 performance did not change on a share equivalent basis.2 LTI awards for the other continuing members of executive management, based on 2017 performance and other factors, increased by 6.4% from the 2017 awards on a share equivalent basis.
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bonus amounts.
Compensation Philosophy
The Company’s executive compensation philosophy is consistentproperly aligned with ourits business philosophy. Our compensation philosophy emphasizesphilosophy: emphasizing and rewardsrewarding consistent, steady growth in netpremiums, operating income earnings, book value per share, underwriting income and return on equity, which we believeefficient use of capital. This approach provides long-term value to our shareholders and therefore aligns management’s interests with our shareholders’ interests. Our compensation philosophy also considers competitive remuneration practices in the insurance and financial services sector asBecause we seek to attract, motivate, reward and retain key executives at both the holding company and subsidiary levels. Ourlevels, our compensation philosophy is also structured to consider competitive remuneration practices in the insurance and financial services sector. This has historically resulted in executive compensation at the Company which generally emphasizes equity and equity-linked compensation, while placing less emphasis on cash compensation.Given the long-term nature of the insurance policies we issue, our mix of pay elements aligns executive compensation with the long-term success of the business and aligns management to common goals.
Our pay plans are centered around four primary tenets, consistent with shareholder value creation:
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| 1 | Long-Term Equity Accumulation |
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| 2 | Longevity |
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| 3 | Consistent Financial Performance |
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| 4 | Retention |
We set executive compensation annually based on internal practices and processes that reflect the Company's business strategy, financial results and focus on building teamwork and the executives' ownership interests in the Company. Although we reference market practices in setting guidelines, we do not attempt to match any specific level of competitive total compensation. We set individual components of compensation based on these practices and processes and then test the results relative to a number of market benchmarks to ensure that the decisions made provide reasonable cash compensation and long-term incentive opportunities consistent with performance.
Roles in Compensation Decisions
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| Compensation Committee | • | The Compensation Committee is responsible for determining the compensation of our senior executives at the Company and its subsidiaries in accordance with our stated compensation philosophy and strategy. |
| • | The Committee sets, or recommends to the independent directors in the case of the Co-CEOs, the total compensation payable in various forms to the executive management team (including the NEOs) which, in 2023, consisted of the Co-CEOs plus 12 officers of the Company and its various subsidiaries. |
| • | The Compensation Committee ensures that the mix of compensation among various elements is appropriately balanced, fair, reasonable and competitive. |
The Compensation Committee is responsible for determining the compensation of our senior executives at the Company and its subsidiaries in accordance with our stated compensation philosophy and strategy. With certain input from the Co-CEOs and other members of senior management and the assistance of its independent compensation consultant, the Compensation Committee sets the total compensation in various forms for the executive management team (including named executive officers—i.e., the Co-CEOs, Chief Financial Officer (CFO) and the other executives listed in the compensation tables in this | | | | | | | | |
| Management | • | Members of Company management support the Compensation Committee, attend portions of its meetings, make recommendations to the Committee and perform various day-to-day administrative functions on its behalf in connection with our cash and equity compensation programs and plans. |
| • | Our Co-CEOs provide input to the Compensation Committee to assist in the design and modification of our compensation programs and to enable the Committee to assess the effectiveness of our compensation philosophy and programs. |
| • | Our Co-CEOs make specific recommendations regarding potential bonus awards and the amount and mix of the cash and equity compensation to be paid to certain levels of officers, including the NEOs (except themselves). |
31 GL 2024 Proxy Statement collectively, the NEOs). The Compensation Committee ensures that the mix of compensation among various elements is appropriately balanced and also considers the retirement and other benefits available to our NEOs in order to ensure that their compensation is fair, reasonable and competitive. Our mix of pay elements is based on the principle that the Company’s business is inherently long-term in nature and not generally subject to dramatic year-over-year variances in performance. Accordingly, our pay plans emphasize long-term equity accumulation (e.g., option grants), longevity (e.g., pension), consistent financial performance (e.g., performance shares3) and, on a very targeted basis, stability (e.g., restricted stock grants).
Company management, including our Co-CEOs, CFO, General Counsel and the Director of Human Resources, support the Compensation Committee, attend portions of its meetings at its request, make recommendations to the Compensation Committee and perform various day-to-day administrative functions on behalf of the Compensation Committee in connection with our cash and equity compensation programs and plans. Specifically, our Co-CEOs provide input to assess the effectiveness of the existing compensation philosophy and programs, assist in the design of new compensation programs and the modification of existing programs and make specific recommendations regarding the potential bonus awards and the amount and mix of the cash and equity compensation to be paid to certain levels of officers, including all NEOs except themselves.
1 In 2017, the executive management team consisted of the Co-CEOs plus fourteen officers of the Company and its various subsidiaries.
2 We define share equivalents as the number of shares counted under the Torchmark Corporation 2011 Incentive Plan, as amended.
3 We define performance share unit awards as performance shares for the purposes of this discussion.
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| Independent Compensation Consultant | • | The Compensation Committee has retained Board Advisory, Inc. ("Board Advisory"), an independent compensation consulting firm, since 2010. In 2023, the lead consultant for Board Advisory expressed an intention to retire in 2024, and the Committee commenced a search for a successor firm. After a deliberative and thorough interview process, which included input from Board Advisory and members of Company management, each of whom participated in the interview process, the Committee selected and retained Pay Governance LLC as its new independent compensation consultant in February 2024. |
| • | In 2023, at the request of the Compensation Committee, Board Advisory: |
| | – | conducted a review of the competitiveness of the total compensation paid to the NEOs; |
| | – | made recommendations regarding compensation increases for the NEOs; |
| | – | provided reports and analyses, including recommendations regarding changes to the peer group, director compensation, and various executive compensation issues; and |
| | – | recommended 2024 cash and equity compensation to be paid to the new Co-CEOs. |
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The Compensation Committee has the authority to retain outside advisors, experts and other professionals to assist it. Since 2010, the Compensation Committee has retained Board Advisory, Inc. (formerly Board Advisory, LLC), an independent compensation consulting firm. Neither Board Advisory nor any of its affiliates provides any consulting services to the Company. In 2017, at the request of the Compensation Committee, Board Advisory conducted a review of the competitiveness of the total cash and equity-based compensation paid to the Co-CEOs and the other NEOs; made recommendations regarding compensation increases for the NEOs; and provided certain special reports and analyses requested by the Compensation Committee, such as recommendations for a peer group, a discussion of annual and long-term performance measures, a discussion of various executive compensation issues including the anticipated impact of the new tax law on executive compensation, recommendations regarding long-term incentive grant guidelines and analysis of historical share usage in the long-term incentive plan.
Setting Executive Compensation
In order toTo retain the quality of insurance executivesexecutive talent necessary tofor the successful operation of the Company, the Compensation Committee considers market compensation comparisons as it determines the elements, appropriate levels and mix of compensation to be paid to the executive officers. The Compensation Committee does not operate with rigid standards for the level and mix of the compensation elements it awards. Rather, it works usinguses this market analysis and other inputs from Company management and its compensation consultant. As mentioned, the historic emphasis and conscious design of the Company’s compensation philosophy has been to deliver a largean above-market portion of pay in a variable format as long-term incentive awards, typically in the form of stock options and performance share awards, rather than primarily through annual cash bonuses.
The Compensation Committee’s process for setting executive compensation follows a number of well-defined steps (described in detail below) that occur sequentially during a pay review cycle:
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Initial Pay Discussion (January) |
| •Perform preliminary calculation of corporate performance under annual bonus plan (subject to audit) •Review and approve the Co-CEO’s recommendations on pay for members of executive management (i.e., prior-year’s bonus, new base salary and new bonus target) •Discuss potential decisions regarding Co-CEO pay for recommendation to the Board •Conduct preliminary discussion with management of performance measures and goals for the new year |
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Final Pay Decisions (February) |
| •Finalize a formal recommendation to the Board on Co-CEO pay •Approve long-term incentive (LTI) awards for all employees other than the Co-CEOs •Approve performance measures and goals for annual and long-term plans |
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Peer Group Review (April) |
| •Review peer group periodically, with an extensive review conducted every third year (most recently in 2022) •Compare peer size based on Total Enterprise Value (market capitalization of common equity plus book value of debt minus cash) |
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Pay & Performance Review (August) |
| •Compare Globe Life performance to peers on measures utilized in the Company’s incentive plans •Compare Co-CEOs’ pay to the average of the peer CEOs and second-highest paid executive •Compare total pay of our top five NEOs to the top five of our peers (which avoids the inequitable result in which six of our officers are compared to five officers of our peers) •Review grant date fair value and realizable pay |
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Update of Guidelines (November) |
| •Adjust executive salary ranges and bonus targets based on surveys and trend data •Conduct an extensive analysis of peer LTI grants based on Shareholder Value Transfer (SVT) and shares granted as a percentage of the peer companies’ diluted shares outstanding at the beginning of the year •Adjust guidelines annually to reflect peer practices for Co-CEOs, NEOs and all members of executive management, as well as all employees |
Compensation Benchmarking
The Compensation Committee periodically conducts an extensive review ofreviews the composition of the peer group we use for purposes of our executive compensation analysis ("Compensation Peer Group"), considering such factors as labor market competitors, capital competitors (companies considered peers by stock analysts), market competitors, peers of existing peers, peers utilized for strategic planning and peers used by proxy advisory firms. The last extensive study was conducted during 2016 when the peer group was significantly expanded. The Committee reviewed the peer group in 2017 and decided that no changes were warranted. In considering such a peer group, the Compensation Committee wasis mindful of the effect of company scope on executive pay. SinceBecause the Company’s business model does not place a great deal of emphasis onemphasize capital accumulation products (e.g., annuities) that produce significant investment income (as a percentage of revenue), the Compensation Committee decidedhas determined that the most relevant comparison of size wasis based on Total Policy Income, which largely reflects premiumsEnterprise Value, reflecting the Company's capitalization – a very important metric for financial companies. Some peers are selected based on the similarity of their products and fees. Enterprise Value1 was useddistribution models, rather than purely as a secondary measureresult of size. The revisedsize considerations.
In 2023, the Compensation Committee considered whether changes to the peer group were warranted, and concluded that no changes were necessary.
The Company's Compensation Peer Group is shown inas follows:
| | | | | | | | | | | | | | | | | |
| • | AFLAC Inc. | • | CNO Financial Group Inc. | • | Old Republic International Corp. |
| • | American Financial Group Inc. | • | Erie Indemnity Company | • | Primerica, Inc. |
| • | Assurant, Inc. | • | Fidelity National Financial, Inc. | • | Reinsurance Group of America, Inc. |
| • | Cincinnati Financial Corp. | • | First American Financial Corp. | • | Unum Group |
| • | CNA Financial Corp. | • | Lincoln National Corporation | • | W.R. Berkley Corp. |
Because the following table:
|
| | | | | | | | |
| Company Name | | Ticker | | 2016 Total Policy Income (dollar amounts in millions) ($) | | Total Enterprise Value at 12-31-16 (dollar amounts in millions) ($) |
| AFLAC | | AFL | | 19,225 |
| | 28,745 |
|
| American Financial Group | | AFG | | 4,352 |
| | 6,839 |
|
| American National Insurance Company | | ANAT | | 2,304 |
| | 3,210 |
|
| Assurant, Inc. | | AIZ | | 5,007 |
| | 5,230 |
|
| Cincinnati Financial | | CINF | | 4,710 |
| | 12,521 |
|
| CNO Financial Group Inc. | | CNO | | 2,601 |
| | 7,072 |
|
| Erie Indemnity | | ERIE | | 1,597 |
| | 5,716 |
|
| Fidelity National Financial | | FNG | | 4,723 |
| | 431 |
|
| Hanover Insurance Group | | THG | | 4,628 |
| | 4,363 |
|
| Kemper | | KMPR | | 2,220 |
| | 2,907 |
|
| Lincoln National Corporation | | LNC | | 8,231 |
| | 17,836 |
|
| Old Republic | | ORI | | 5,333 |
| | 6,375 |
|
| Primerica | | PRI | | 844 |
| | 3,825 |
|
| Principal Financial Group, Inc. | | PFG | | 5,994 |
| | 17,274 |
|
| Unum Group | | UNM | | 8,358 |
| | 12,995 |
|
| W. R. Berkley | | WRB | | 6,293 |
| | 9,787 |
|
| 75th Percentile | | | | 5,252 |
| | 11,159 |
|
| Median | | | | 4,669 |
| | 6,046 |
|
| 25th Percentile | | | | 2,378 |
| | 3,960 |
|
| Torchmark Corporation | | TMK | | 3,137 |
| | 10,027 |
|
1 Enterprise Value is market capitalization of common equity plus book value of debt minus cash.
Part of the Compensation Committee’s process of structuring and setting executive compensation includes conducting annually, with the assistance of its consultant, a detailed pay and performance analysis of compensation for the Company’s executive officers relative to the pay and performance of executives occupying similar positions in its peer group. The results of these analyses, including the analyses done in 2017 for 2014 to 2016 performance, show that the Company’s financial performance during this three-year period (which includes various metrics) as measured for compensation purposes was generally at or above the peer group's median. Total compensation levels as compared to the Company’s peer group are consistent with this performance and each officer’s tenure.
For 2016, the cash compensation (salary plus annual bonus) paid to theCompany has Co-CEOs, was at about the median of the peer group’s cash compensation. Long-term incentive awards were benchmarked on a grant basis, using expected values (i.e., similar to the values shown in a Summary Compensation Table). This analysis showed that long-term awards were also about equal to the median of the market, slightly below our benchmarking positioning. It should be noted that our analysis of Co-CEO compensation measureswe benchmark their compensation relative toagainst the average of the compensation provided to the peer company CEO and second highestthat company's second-highest paid executive. This approach produces a benchmark that is typically 20% to 30% below the peer CEOs, (dependingdepending on the component of pay examined)examined. Since the Co-CEOs share the responsibility of leading the Company, we believe this method provides a fairer benchmark of competitive pay than a comparison of their pay to peer CEOs. It should be noted that some proxy advisory firms utilize comparison methodologies that combine the compensation of our two Co-CEOs when benchmarking against peer companies. Because we have Co-CEOs, we are required to annually report a total of six NEOs. To enable a fair comparison of our NEO compensation to that of our peers, we consider only the compensation of our top five NEOs (i.e., the Co-CEOs and three others).
This approach avoids an inequitable result in which six of our officers are compared to five officers at our peers.
The pay forCommittee's benchmarking also includes an analysis of the Company's performance relationship was further examined by looking atversus its peers relative to the metrics utilized in the annual bonus plan and the performance share awards. The Committee also reviews relative realizable pay forversus the CEOrelative TSR performance on a rolling three-year basis. Since the introduction of new SEC-required pay versus total shareholder return forperformance disclosures in 2023, the period 2012 to 2016. This is shown in the “Pay for Performance” graph below. The horizontal axisCommittee has considered this new dimension of the graph is the percentile ranking of total shareholder return for 2012 to 2016. The vertical axis of the graph is the percentile ranking of realizable pay earned for 2012 to 2016. Realizable pay is definedcomparison as cash payments received (e.g., salary, bonuses, etc.) plus pension value increases and the value of “other” compensation plus realized value of options exercised or shares that vest plus the change in unrealized value of all outstanding equity awards. In contrast to the information reported in the Summary Compensation Table, which for Stock Awards reflects the grant date fair value of the award, we believe that realizable pay provides a better picture of the amounts actually earned. The graph shows that although the Company’s realizable compensation of the Co-CEOs was at the 46th percentile, total shareholder return (TSR) performance was at the 62nd percentile of the peer group. A company’s placement on the graph will vary with the incidence of TSR and realizable pay. Here, the Company’s position is within a “normal” range (+/- 25%) where pay is consistent with performance.
Pay for Performance
well.
33 GL 2024 Proxy Statement
Assessment of 20172023 Advisory Vote on Executive Compensation
The Company conducted a non-binding, advisory shareholder vote on executive compensation as disclosed in the 2017 Proxy Statement (known as a “Say-on-Pay” vote), as disclosed in the 2023 Proxy Statement, at its Annual Meeting held on April 27, 2017.2023. At that meeting, the voting shareholders who cast votes overwhelmingly approved (84%) on an advisory basis the executive compensation disclosed in the 20172023 Proxy Statement (96.6%). Statement.
The Company has considered the results of the “Say-on-Pay” vote in determining its compensation policies and decisions. Company management evaluated the support levels in these advisory votes in making its recommendations to the Compensation Committee regarding 20182024 salaries, 20172023 bonus decisions and 2024 equity awards to the NEOs following a “pay for performance” model. The Compensation Committee also reviewed these 20172023 voting results and considered them in fixingestablishing the compensation levels for the NEOs other than the Co-CEOs in 20182024 and in making its recommendations to the full Board regarding Co-CEO compensation in 2018.2024. It should be noted that, with the changes in Company leadership that occurred at the Co-CEO and Chief Financial Officer ("CFO") positions effective as of January 1, 2023 (due to the retirement of our former Co-CEOs), the aggregate target value of compensation for the six named executive officers declined by 29% in 2023, compared to 2022.
Elements of Compensation
The total compensation package for all executives at the Company and its subsidiaries, including the NEOs, consists of multiple elements. In 2023, these elements included the following:
| | | | | | | | | | | |
| Pay Element | Purpose | Form | Performance Element |
| Base Salary | Attract and retain executive talent | Cash | Individual Performance Evaluation |
| Annual Incentive | Motivate achievement of Company’s annual performance goals relative to growth and profit | Cash | Operating EPS Growth |
| Total Premium Growth |
| Long-Term Incentive | Align with shareholders' interests, aid retention, and provide a focus on the long-term nature of the life insurance business | Performance Shares | 3-yr Growth of Book Value per Share, excl. AOCI, plus accumulated dividends and net operating income ROE |
| Stock Options | Stock Price Appreciation |
| Restricted Stock Units (RSUs) |
Some of these elements focus on compensation paid during the executive’sexecutive's active working career, while others focus on compensation and benefits paid onupon or related to retirement. Executives may also receive certain limited perquisites and personal benefits.
When the Committee annually reviews compensation, it primarily focuses on the "Target Pay" of the executive - the salary, target bonus and grant date fair value of long-term incentives. The following graphs show the relative importance of these elements, included in compensation availableillustrating that 80% of the 2023 target pay mix for the Co-CEOs and 70% of the 2023 target pay mix for the other NEOs (on average) is linked to executives during fiscal year 2017 included:
Base salaries;
Cash bonuses;
Long-term equity incentives inperformance. Annual cash bonuses and performance share awards are determined based on the formattainment of certain prescribed performance metrics. The value of stock options performance shares and restricted shares;is solely dependent on appreciation of the Company's stock price over time – a reflection of investors' views of the Company's performance. Accordingly, it is the Committee's position that each of these awards is properly categorized as "performance-linked."
Retirement and other benefits, including a defined benefit pension plan; and 34 GL 2024 Proxy Statement
Perquisites and personal benefits.
Base Salaries
The Compensation Committee fixessets (or, in the case of a Co-CEO, recommends to the independent members of the Board) base salaries for our NEOs. Factors considered included competitive pay ranges, the officer’s timeofficer's experience in the position, pay relative to organizational peers, and individual performance. Effective January 17, 2018,22, 2024, the Compensation Committee fixedcommittee set salaries for the NEOs, with the exclusionexception of Mr. ColemanMessrs. Darden and Mr. HutchisonSvoboda (whose salaries were fixedset by the independent members of the Board on February 26, 2018)28, 2024), as shown in the table below: |
| | | | |
| | | 2017 Salary ($) | | 2018 Salary ($) |
| Gary L. Coleman | | 900,000 | | 925,000 |
| Larry M. Hutchison | | 900,000 | | 925,000 |
| Frank M. Svoboda | | 520,000 | | 540,000 |
Roger C. Smith1 | | 600,000 | | N/A |
| W. Michael Pressley | | 520,000 | | 530,000 |
| J. Matthew Darden | | 510,000 | | 530,000 |
| | | | | | | | |
| Name | 2023 Salary ($) | 2024 Salary ($) |
| Frank M. Svoboda | 850,000 | 900,000 |
| J. Matthew Darden | 850,000 | 900,000 |
| Thomas P. Kalmbach | 520,000 | 572,000 |
| Michael C. Majors | 495,000 | 515,000 |
| R. Brian Mitchell | 495,000 | 515,000 |
| Robert E. Hensley | 485,000 | 510,000 |
1Mr. Smith retired as of December 31, 2017.
Annual Cash Bonuses
Annual cash bonuses are a key component of our executive compensation program and are competitively positioned as a percentage of salary between the 25th percentile and median. To ensuremedian relative to the tax deductibility of bonuses paid to executives,Company's peers. In 2023, we haveoperated using an annual Management Incentive Plan (MIP Plan)(MIP),2 under which we may pay annual cash bonuses were paid to the Co-CEOs and the other NEOs. This plan utilizes a “Plan within a Plan” approach where the criteria set by the Compensation Committee under this plan stipulate the maximum bonus that can be paid to each NEO1. The Compensation Committee is also authorized to pay discretionary bonuses to executives outside ofUnder the MIP, Plan.
As noted, the MIP Plan establishes an upper limit for bonuses to covered employees. The actual bonuses paid are developed using an annual incentive plan framework that determines an initial award, subject to adjustment asby the Compensation Committee. For 2023, the Compensation Committee deems appropriate. For 2017, the Compensation Committee establishedtied the annual incentive plan framework tied to threetwo metrics, assigning 40% weightequal weights to neteach: (i) operating income earnings per share (EPS) growth (ranging from 2% at threshold, 4% at targetEPS and 6.5% at maximum); 30% weight to underwriting income growth (ranging from -2% at threshold, 0% at target and 2.5% at maximum); and 30% weight to return on equity (ROE) (ranging from 13.3% at threshold, 13.9% at target and 14.5% at maximum),(ii) total premium, subject to the exercise ofCommittee's discretion on the part of the Compensation Committee to further adjust the bonuses based upon consideration of subjective factors.
For 2017, net The targets for operating income EPS grew 7.3%, underwriting income grew 4.5% and ROE from continuing operations was 14.38%, yielding a total framework bonus for the NEOs equal to 145.2% of their target bonus amount. This is shown in the following table. The bonuses for Messrs. Svoboda, R. Smith and Pressleypremium were determined based on recommendationsprojected growth over 2022 results (restated for long-duration targeted improvements accounting changes). The actual award determined under the incentive plan framework is contingent upon the attainment of threshold metrics and is subject to a maximum payout of 150% of the Co-CEOs. The bonuses showntarget bonus amount. Refer to APPENDIX A – Non-GAAP Reconciliations for Mr. Coleman and Mr. Hutchison were recommendeddefinitions of non-GAAP measures utilized herein.
2That plan utilized a “Plan within a Plan” approach in which the criteria set by the Compensation Committee and approved bystipulated the independent members ofmaximum bonus that could be paid to each NEO covered under the Board. The Compensation Committee approved the other bonuses.
|
| | | | | | | | | | | |
| | | Target Bonus as a % of Salary | | Target Bonus Amount2 ($) | | Framework Bonus3 ($) | | Actual Bonus Paid ($) |
| Gary L. Coleman | | 140% | | 1,260,000 |
| | 1,830,000 |
| | 1,830,000 |
|
| Larry M. Hutchison | | 140% | | 1,260,000 |
| | 1,830,000 |
| | 1,830,000 |
|
| Frank M. Svoboda | | 60% | | 312,000 |
| | 453,000 |
| | 445,000 |
|
| Roger C. Smith | | 60% | | 476,000 |
| | 691,000 |
| | 360,000 |
|
| W. Michael Pressley | | 60% | | 312,000 |
| | 453,000 |
| | 400,000 |
|
| Total | | | | 3,620,000 |
| | 5,257,000 |
| | 4,865,000 |
|
1MIP. The criteria established by the Compensation Committee specify that net operating income per share must increase by 2% from the prior year for any bonuses to be payable and that, in such case, a bonus pool equal to 3%2% of pre-tax net operating income will be established. For 2017,2023, this pool was $24,635,000.$25.3 million. Per the terms of the MIP, Plan, the bonus payable to the each of the Co-CEOs cannot exceed 30% of the pool ($7.3907.6 million for 2017)2023) and the bonus paid to each of the other covered employees cannot exceed 10% of the pool ($2.4632.5 million for 2017)2023). Effective January 1, 2024, the "Plan within a Plan" approach was eliminated.
2 Reflects 35 GL 2024 Proxy Statement
| | | | | | | | | | | | | | |
| Operating EPS (50%) ($) |
Earned Premium (50%) ($ in Millions) |
| Threshold | 50 | % | | 10.00 | 4,350 |
| Target | 100 | % | | 10.35 | 4,450 |
| Maximum | 150 | % | | 10.70 | 4,550 |
For 2023, operating EPS of $10.65 grew 9.7% over the 2022 operating EPS (restated for long-duration targeted improvements accounting changes) and total premium grew 3.4% to $4,456 million, yielding a total framework bonus for the NEOs equal to 120.4% of their target bonus amount, based on targeted EPS growth, underwriting income growthor $4,515,000. The bonuses shown for the Co-CEOs, Messrs. Darden and ROESvoboda, were recommended by the Compensation Committee and approved by the independent members of the Board. The bonuses for the other NEOs were recommended by the Co-CEOs and approved by the Compensation Committee, in 2017.accordance with the MIP. The degree to which these objectiveCo-CEOs, Messrs. Darden and Svoboda, were paid the framework bonus. Objective and subjective criteria were achieved, along with subjective criteria considered byused to determine the committee, were used in determining (or, inamount payable to the case ofremaining NEOs. The total bonus paid to the NEO group ($4,515,000) was equal to the framework bonus. Effective January 1, 2024, the MIP provides that the Compensation Committee, at its discretion, may reduce the bonus amounts for the Co-CEOs, as calculated, but may not increase such amounts, prior to recommending to the independent members of the Board) the amount by which the maximum bonus amount payable to each participating NEO would be reduced. The threshold bonus amount is equal to half the target. The maximum bonus is equal to the lesser of 150% of target or the amount allowed by the MIP Plan.Board for final approval.
3 Bonus earned based on the 2017 performance framework, before Compensation Committee discretion. Equal to 145.2% of Target Bonus. | | | | | | | | | | | |
| Name | Target
Bonus as a %
of Salary | Target Bonus Amount* ($) | Actual
Bonus
Paid
($) |
| Frank M. Svoboda | 150% | 1,275,000 | | 1,535,000 | |
| J. Matthew Darden | 150% | 1,275,000 | | 1,535,000 | |
| Thomas P. Kalmbach | 65% | 338,000 | | 405,000 | |
| Michael C. Majors | 65% | 321,750 | | 380,000 | |
| R. Brian Mitchell | 50% | 247,500 | | 300,000 | |
| Robert E. Hensley | 60% | 291,000 | | 360,000 | |
| Total | | 3,748,250 | | 4,515,000 | |
| | |
| * Established by the Compensation Committee at the beginning of the year as a percentage of the executive's annual salary. |
Mr. Darden's 2017 bonus was not paid pursuant to the MIP Plan. The Compensation Committee awarded him a bonus of $270,000 based upon the Co-CEOs' assessment of his performance as the Chief Strategy Officer of the Company, utilizing objective goals related to performance metrics comparable to those of the MIP Plan.
Long-Term Equity Incentives
The principal vehicle we use to distributeWe award long-term incentive compensation to our Company and subsidiary executives, officers and key employees is stock options, which we first began awarding in 1984. Beginning in 2006, we used annual grants of time-vested restricted stock awards to certain senior executives for retention purposes as an incentive to work beyond the established early retirement age of 55. In 2012, we began granting performance shares, the vesting of which is directly tied to performance goals outlined in the Company’s strategic plan. In 2013 and 2014, we expanded this practice by replacing all annual grants of restricted stock to executive officers (i.e., roughly the top 15 executives of the Company and its subsidiaries) with annual awardsmanagement primarily in the form of performance shares. shares and stock options. We also grant restricted stock units, with time-based vesting, which comprise the remaining 10% to 20% of total long-term incentive compensation. Subsidiary senior-level officers' long-term incentive compensation is primarily in the form of stock options. Subsidiary officers and key employees also receive restricted stock units with time-based vesting to align management and shareholder interests and provide an incentive vehicle that promotes retention.
| | | | | | | | |
| Stock Options | • | Granted at market price |
| • | Granted to the executive management team and Company and Subsidiary senior-level officers |
| • | Options have a 7-year term, vesting 50% on 2nd-year anniversary of grant date and remaining 50% on 3rd-year anniversary |
| | |
| Performance Shares | • | Performance-based vesting |
| • | Awards granted based on cumulative performance over a 3-year period |
| • | Granted only to members of the executive management team |
| | |
| Restricted Stock Units | • | Time-based vesting |
| • | Granted to the executive management team, Company and subsidiary officers, and key employees |
| • | These awards generally vest after 3 years of continued employment |
The performance shares awarded on February 21, 201722, 2023 will be earned and issued following the end of the three-year performance period from January 1, 20172023 through December 31, 2019,2025, based on the extent to which the Company achieves variouscertain performance goals established by the Compensation Committee: 40% weight to three-yearCommittee, including: (i) cumulative growth in EPS (ranging from 2%book value per share, excluding AOCI, plus accumulated dividends per share paid over the
36 GL 2024 Proxy Statement
performance period3 and (ii) the average of the annual net operating income ROE for the years 2023, 2024 and 2025. Each metric is calculated using the tax rate in effect at threshold, 6% at target and 10% at maximum), 30% weightthe time the award was issued. Refer to growth in underwriting income (ranging from -1% at threshold, 2.4% at target and 5.5% at maximum) and 30% weight to average ROE over the period 2016 to 2018 (ranging from 12.7% at threshold, 13.7% at target and 14.7% at maximum). Since 2013, it has been the Compensation Committee’s intention to only award time-vested restricted stock among these officers on a select basis where it is felt there is a needAPPENDIX A – Non-GAAP Reconciliations for further retention. In this case, these awards will utilize vesting after five years, with no partial vesting or vesting for early retirement. No time-vested restricted stock awards were made to NEOs in 2017.definitions of non-GAAP measures utilized herein.
| | | | | | | | | | | | | | | | | |
| Book Value, excl. AOCI, plus Accumulated Dividends (50%) | Average Net Operating Income ROE (50%) |
| Threshold | 50 | % | | $86 | | 11.5% |
| Target | 100 | % | | $93 | | 13.5% |
| Maximum | 200 | % | | $101 | | 15.5% |
The incentive plan under which stock options, performance shares and restricted stock units were awarded in 20172023 was the Torchmark Corporation 2011 Incentive2018 Plan (the 2011 Plan)(as defined herein). The purposes of the 20112018 Plan are to promote the success and enhance the value of the Company by linking the personal interests of employees, officers and directors of the Company and its subsidiaries to our shareholders and to provide these persons with an incentive forincentivize outstanding individual performance.
In making individual long-term incentive awards, we do not follow the common industry practice of determining a competitive annual grant value and then calculating a number of shares to be awarded based on that value. That approach produces the counterintuitive result of larger share grants when stock prices decline and smaller grants when prices increase. It also distorts the relative value of options versus full-value share awards (e.g., restricted stock and performance shares) during times of market turmoil. Instead it has been our practice to set award guidelines by position and keep those share levels relatively constant over
successive award cycles. Individual awards are then made relative to the guidelines, reflecting the individual’s performance and retention needs. For the Co-CEOs and aggregate awards, the guidelines are expressed as a percentage of the shares outstanding at the beginning of the year. This approach ensures that ongoing buybacks of shares do not automatically produce larger relative awards. The awards made in 2017 were made using the grant guidelines that were developed in 2016, based on an analysis of peer grant practices, measured in terms of dollar value and peer dilution rather than just dollar value. This approach minimizes differences in stock performance between companies and was based on our longer-term assessment of the relative value of the various incentive vehicles utilized as reflected in the fungible counting of shares under the 2011 Plan.
Based upon recommendations from the Co-CEOs, the Compensation Committee, as the administrator of the plan, selected the NEOs (other than the Co-CEOs), other officers and key employees (a total of 167 persons) who received non-qualified stock option grants and/or performance share awards on February 21, 2017. In a February 21, 2017 meeting, the independent members of the Board acted upon the recommendation from the Compensation Committee and awarded Co-CEOs Gary L. Coleman and Larry M. Hutchison each 35,000 performance shares (at target) and non-qualified options on 150,000 shares with an exercise price equal to the market closing price on that date and a term of seven years. In making the 2017 grants, the Compensation Committee considered the Co-CEOs’ recommendations for all persons other than themselves, individual performance and the Company’s succession planning and retention needs.
The 20112018 Plan authorizes the Compensation Committee to set the performance metrics and goals for performance share awards as well as the restrictions on restricted sharesstock unit awards, if any, and their vesting periods. The Compensation Committee also is charged with determining the type of stock options they awardit awards or recommend,recommends, the time and conditions of exercise of options and the methods of acceptable payment to exercise stock options. All stock options are granted with exercise prices equal to the fair market value of the Company’s common stock, which is defined by the 20112018 Plan as the NYSE market closing price on the grant date. The grant date for stock options, performance share awards, and restricted stock awards and performance shareunit awards is the date of the Compensation Committee or Board meeting at which the Compensation Committee or the independent members of the Board review and determine the persons to receive options, restricted stock units, stock options and/or performance shares and the number of options, restricted stock and/units, stock options and performance shares awarded.
For 2023, the Committee began the use of annual grants of restricted stock units with time-based vesting to replace some or performance shares.all of the annual stock option grants to executive officers, subsidiary officers and key employees. These grants of restricted stock units serve to align management and shareholder interests and promote retention.
TheExcept for equity grants that may be made with respect to new hires, it is the long-standing practice of the Compensation Committee and the independent members of the Board do not time theto grant of stock options, performance shares, restricted stock, or performance shares in consideration of the release of material non-public information, whether or not that information may favorably or unfavorably impact the price of Company common stock. The consideration and grant of equity incentive awards to participants in the 2011 Plan, whether in the form of options, restricted stock and/or performance shares, normallyunits to officers and key employees only one time per year at the Compensation Committee’s quarterly meeting in February, which occurs during the window period of each year which opens following the release of the prior year’s reported earnings.4 The Compensation Committee does not take material non-public information into account when determining the timing or the terms of such equity awards. The Company has not timed the release of material non-public information for the purpose of affecting the value of executive compensation.
The awards made in 2023 were made using grant guidelines developed by the Committee, based in part on an analysis of peer grant practices, measured in terms of both the dollar value of the awards and the impact on share dilution.
Based upon recommendations from the Co-CEOs, the Compensation Committee, as the administrator of the plan, determined the NEOs (other than the Co-CEOs), other officers and key employees (a total of 176 persons) who received non-qualified stock option grants, performance share awards and/or restricted stock unit awards on February 22, 2023. In making the 2023 grants, the Committee considered the Co-CEOs' recommendations for all persons other than themselves, individual performance and the Company's succession planning and retention needs. The Co-CEOs also granted restricted stock unit awards to four newly-hired employees on May 5, 2023 (two employees), June 5, 2023 (one employee), and June 26, 2023 (one employee), pursuant to authority granted by the Board to the Co-CEOs, as members of the Board, under Section 4.4(b) of the 2018 Plan. In a February 22, 2023 meeting, the independent members of the Board acted upon the recommendation from the Compensation Committee and awarded the Co-CEOs, J. Matthew Darden and Frank M. Svoboda, each 13,300 performance shares (at target); non-qualified options on 62,500 shares with an exercise price equal to the market closing price on that date and a term of seven years; and 3,370 restricted stock units with time-based vesting.
3 For reference, year-end 2022 book value per share, excluding AOCI, was $77.40. For purposes of determining the total performance shares awarded for a given year, the figure is adjusted to include accumulated dividends per share paid over the performance period.
4 Equity grants to the Co-CEOs are recommended by the Compensation Committee and approved by the independent members of the Board at its quarterly meeting in February each year.
37 GL 2024 Proxy Statement
Stock Ownership/Retention Guidelines
We have formal guidelines that require the following minimum stock ownership levels:
| | | | | |
| Position | Stock Ownership
Level |
| |
| Chief Executive Officer(s) of Company | 6 x Annual Salary |
| |
| Executive Vice Presidents of Company | 3 x Annual Salary |
| |
| Chief Executive Officers of Agency/Marketing Divisions of Principal Insurance Subsidiaries | 2 x Annual Salary |
| |
| Other Officers of Company and its Subsidiaries designated by Governance and Nominating Committee | 1 x Annual Salary |
| |
| Non-Management Directors of Company | 5 x Annual Cash Retainer |
| |
The directors, Co-CEOs and other officers who are subject to the above-described stock ownership guidelines that provide:
Any person serving as the CEO of the Company must hold shares of the Company stock with a market value equal to at least six times his annual salary;
Executive Vice Presidents of the Company must hold Company stock with a market value equal to at least three times their respective annual salaries;
Chief Executive Officers of the Agency/Marketing Divisions of the Company’s principal insurance subsidiaries must hold Company stock with a market value of at least two times their respective annual salaries;
Executive officers of the Company and its principal subsidiaries designated from time to time by the Governance and Nominating Committee must acquire and hold Company stock with a market value at least equal to their respective annual salaries; and
Non-management directors of the Company must acquire and hold Company stock with a market value equal to at least five times that portion of their respective annual retainers which may be paid in cash (Annual Cash Retainer).
All such directors, the Co-CEOs and the executive officers have a five-yearseven-year period from the January 1, 2007 inception of these guidelines, their initial election as a director (if first elected after January 1, 2007) or their initial inclusion in the above-described categories of executive officerspositions to attain minimum stockmeet the ownership levels.guidelines. For such purposes, of meeting these ownership guidelines, common shares deemed owned, either directly or indirectly, for reporting purposes pursuant to Section 16(a) of the Securities Exchange Act of 1934, junior subordinated debentures of the Company, shares held in unitized stock funds in the Company’s thrift/401(k) plan, time-vested restricted stock and restricted stock units are counted. Stock options and performance share awards are not counted toward attainment or continued satisfaction of the ownership guidelines.
Until the minimum ownership levels arelevel is attained, within the requisite period, the director or executive cannotofficer may not sell any shares owned outright sell any restricted stock when vestedand the director or performance shares when issued other than those shares necessary to pay withholding taxes, or execute a “cashless” option exercise where more shares are sold than are necessary to pay the option exercise
price and withholding taxes. The executive or directorofficer must retain allat least fifty percent (50%) of “profit shares” (the(i.e., the net shares remaining after payment of the option exercise price and taxes owed at the time of an option exercise, earnout of performance shares, or vesting of restricted stock or earnout of performance shares) until minimum ownership levels are met; provided, however, thatstock). Notwithstanding the foregoing, in exceptional circumstances, upon obtaining an advance and specifically-defined waiver of the guidelines from the Governance and Nominating Committee of the Board, additional profit shares may be sold. The determination regarding the director and officers' attainment of their minimum ownership levels shall be made annually based upon the greater of the then-current NYSE stock price or average market closing price of the Company's common stock over the preceding twelve (12) month period. Upon a director's or officer's attainment of their minimum ownership level, and contingent upon their continued retention of the number of shares required to meet such ownership level, the director or officer will not be required to acquire additional shares in the event of a decline in stock price or increase in annual salary or annual retainer. The director's or officer's minimum stock ownership level will not change unless there is a change in these guidelines or an officer is promoted to a position with a higher minimum ownership level.
We haveThe Company has no formal stock retention policy for shares derived from stock options or other equity grants after the stock ownership guidelines have been met. The Company believes the decisions regarding when to exercise options and whether to retain stock should be each individual award recipient’s decision if that award recipient is in compliance with the stock ownership guidelines. Our insider trading policy
Prohibition on Hedging and Pledging of Company Stock
The Company's Insider Trading Policy prohibits executivesdirectors, officers, and employees of the Company and its subsidiaries who are subject to Section 16 reporting requirements from trading and/purchasing financial instruments (such as prepaid variable contracts, equity swaps, collars, and exchange funds) or writing put and call options and other derivative vehiclesotherwise engaging in ordertransactions that hedge or offset, or are designed to hedge positions or speculateoffset, any decrease in the market value of Company stock.equity securities granted to any such director or officer by the Company or held, directly or indirectly, by the director or officer. The policy further provides that such individuals may not pledge, hypothecate, or otherwise encumber shares of Company securities as collateral for indebtedness.
Retirement and Other Benefits
Retirement benefits provided to executives consist of a defined benefit pension plan benefit, a group term life insurance benefit, additional life insurance under Retirement Life Insurance Agreements, post-employment health coverage and, in the case of certain executives, benefits under a supplemental executive retirement plan (SERP). While some of these retirement benefits are available to all eligible employees (e.g., pension plan benefit, group term life insurance and post-employment health coverage), other benefits are only available to designated executives when they retire (e.g., Retirement Life Insurance Agreements and benefits under the SERP). The Company has chosen to provide suchcertain retirement benefits, either broadly or to specific individuals, to attract and retain employees and executives by enabling retirement savings and planning. planning, as shown in the following table:
| | | | | | | | | | | |
| All Employees | Designated Executives |
| • | Defined Benefit Pension Plan | • | Retirement Life Insurance Agreements |
| • | Group Term Life Insurance | • | Supplemental Executive Retirement Plan (SERP) |
| • | Post-Employment Health Coverage | | |
38 GL 2024 Proxy Statement
The SERP was put in place to encourage executives at certain levels to continue to work past the Company’s established early retirement age of 55. Messrs. Coleman, Hutchison, Svoboda, Smith,Pressley and DardenOur NEOs are among the 3021 persons designated in 20172023 by the Compensation Committee as participants in the SERP.
Savings Plans
Eligible executives and employees may choose to participate in the Torchmark CorporationGlobe Life Inc. Savings and Investment Plan (the Thrift Plan)"Thrift Plan"), a funded tax-qualified defined contribution plan. During 2006 and earlier years, they could elect to contribute a designated percentage up to 16% of their after-tax salary to the Thrift Plan and select an investment fund or funds from a menu offered by the plan. The Company would match on a 50% basis all employee contributions up to 6% of the employee’s salary. Investment vehicles included a unitized Company common stock fund and a broad spectrum of unaffiliated mutual funds.
Based upon the recommendations of the Compensation Committee as well as Company management, the Board of Directors approved a series of amendments to the Thrift Plan, effective January 1, 2007, which inserted provisions under Section 401(k) of the Code for pre-tax contributions commencing on that date. No additional after-tax contributions were permitted to the Thrift Plan after December 31, 2006. The Company matches the employee’s pre-tax contributions at 100% on the first 1% of salary and at 50% on the next 5% of salaryContributions up to a maximum annual match of $9,450. The employee may contribute additional amounts, whichamount ($22,500 in 2023) are not matched by the Company, up to the maximum amount allowed by the Internal Revenue Code (the Code) annually (in 2017, $18,000) and if he or sheService. An annual "catch-up" contribution (up to an additional $7,500 in 2023) is permitted for employees age 50 or older, theolder. The Company matches employee may make an annual “catch-up” contribution ofpre-tax contributions up to an additional $6,000, which is also not subject to Company matching. These contributions can be directed tospecified amounts, as shown in the same type of investment funds as previously available.table below. Each of the NEOs participates in this plan.
| | | | | |
Company Match1 | Pre-Tax Contributions |
| 100% | First 1% of Salary |
| 50% | Next 5% of Salary |
1 Maximum annual Company match is $11,550. Deferred Compensation Plan
The Company has historically provided a traditional unfunded, deferred compensation plan to certain eligible executive officers and directors who may elect to defer all or any part of their compensation into an interest-bearing memorandum deferred compensation account until they terminate their elections. Elections must indicate the payment commencement date and the method of distribution, either in a lump sum or equal monthly installments (not to exceed 120). Interest on the account is paid at a rate equal to the average yield for Corporate Aa bonds per Moody’s Bond Survey, less a 0.5% expense allowance. Officers eligible to participate in the SERP (which would include the Co-CEOs and the other NEOs) are also eligible to participate in the deferred compensation plan. None of the NEOs participates in this plan.
Retirement Life Insurance Agreements
The Company provides retirement life insurance benefit agreements to a closed group comprised of certain of its executives, including some of the NEOs, and certain executives of its subsidiary companies. These retirement life insurance benefit agreements replace an insurance payment program to that same group of executives which was terminated in 2001. The agreements provide a life insurance benefit to a participating executive, effective upon the later of theirthe executive's 65th birthday or their retirement date, with coverage equal to a designated percentage which(which will vary based upon the employee’sexecutive’s age at the nearest birthday to theirthe executive's date of retirement, retirement—from 65% at age 55 to 100% at agesage 62 or over,over) of an amount equal to two times the employee’sexecutive’s salary and bonus in
their the executive's final year of employment prior to retirement, less $5,000. Such insurance benefits, which are payable on the participating executive’s death, for certain executives may not exceed $1,995,000 and for other executives may not exceed $495,000. Messrs. Coleman, HutchisonMajors and R. Smith eachMitchell have a Retirement Life Insurance Agreement with a $1,995,000$495,000 maximum benefitbenefit. Messrs. Darden, Svoboda, Kalmbach and Messrs. Svoboda, Pressley and DardenHensley do not have Retirement Life Insurance Agreements.
Perquisites and Personal Benefits
Termination of Employment and Change in Control
All employees, including the NEOs, holding Company stock options have option grant agreements which provide for varying exercise periods after termination of employment depending on the circumstances of the termination (voluntary termination, involuntary termination without cause, early retirement, retirement at or after age 60, normal retirement , disability and death). Generally, currently outstanding stock options provide for post-termination exercise periods ranging from one month for voluntary terminations to the longer of the remaining option term or one year from the date of death in the case of the optionee’s death. Any unvested options immediately vest in full upon retirement at or after age 65, on disability or on death. Termination of employment for cause results in expiration of all options on the date of the termination notice.
Change in control provisions are contained in various Company plans applicable to executives as well as to all Company employees. Options granted under the Company’s 2011 Plan provide that such options become fully exercisable if the executive’s employment is terminated without cause or the executive resigns for good reason within two years after the effective date of a change in control. The MIP Plan requires that the plan must be assumed by a successor to the Company and that bonus payouts accelerate if an executive is terminated without cause or the executive resigns for good reason following a change in control of the Company.
Our executives are subject to post-termination obligations for confidentiality pursuant to confidentiality agreements which they sign while employed. These post-termination confidentiality obligations do not relate to any compensation or benefits payable or to be payable upon certain triggering events. Beginning in 2015, all executives receiving performance share awards and certain executives receiving stock options are subject to non-solicitation, non-competition and confidentiality provisions contained in the respective grant agreements.
The Company and its subsidiaries do not enter into employment contracts, severance agreements, salary continuation agreements or severance plans with executivesour NEOs that provide for post termination or directors atchange-in-control benefits. Potential payments and benefits are available in certain circumstances following termination of employment or a change-in-control under the timeterms of outstanding stock options, performance shares, and restricted stock units held by our NEOs.In addition, all of our NEOs are participants in the Company’s Supplemental Executive Retirement Plan (SERP) and certain NEOs have a Retirement Life Insurance Agreement with the Company.See the section of this Proxy Statement entitled Potential Payments Upon Termination or Change of Control for a full summary of the various payments and benefits available to our NEOs upon termination of their employment or election, respectively. Toupon a change-in-control. Clawback Policy
On November 8, 2023, our Board of Directors adopted the extent that executives negotiate oral or written severance arrangements or other post-termination payments for current cash compensation, benefits and perquisites and outstanding equity compensation (outsideGlobe Life, Inc. Clawback Policy, compliant with Rule 10D-1 of the provisionsExchange Act and Section 303A.14 of the NYSE Listed Company Manual. The Clawback Policy is administered by our Compensation Committee (the “Administrator”).
The Clawback Policy applies to (i) Covered Executives:our current and former executive officers, as determined by the Administrator in accordance with applicable stock incentive plan), this is done on an individual basis at law; and (ii) Excess Incentive Compensation:the timeamount of their contemplated departure. Perquisites and other personal benefits are not extended on a post-termination basis.
Clawback Provisions
BonusesIncentive Compensation paid to executives pursuant toa Covered Executive that exceeds the MIP Plan are subject to “clawback” provisions. If the Company’s financial results are materially restated, theIncentive Compensation Committee has the authority to determine whether and which executives will be required to forfeit the right to receive any future payments under the plan and/or to recapture prior payments they determine to have been inappropriately received by an executive. Additionally, if the Company’s financial results are restated due to fraud or material noncompliance by the Company, as a result of misconduct, with any financial reporting requirements of the federal securities laws, any executive participating in the plan who the Compensation Committee determines participated in or was responsible for the fraud or material noncompliance causing the restatement must repay any amounts paid to him in excess of those that would have been paid to the Covered Executive had it been based on the restated results.
“Incentive Compensation” means any compensation that is granted, earned or vested based wholly or in part on the attainment of a financial reporting measure. “Financial reporting measure” is any measure determined and
39 GL 2024 Proxy Statement
presented in accordance with the accounting principles used in preparing our financial statements and any measure that is derived wholly or in part from such measure.
The Clawback Policy is triggered if the Company is required to prepare an accounting restatement of its financial statements due to any material noncompliance with a financial reporting requirement under the restated resultssecurities laws. Once the Clawback Policy is triggered, the Administrator will require recoupment of any Excess Incentive Compensation received by any Covered Executive during the three completed fiscal years immediately preceding the date we are required to prepare an accounting restatement. The Clawback Policy is a “no-fault” policy and forfeitsrecoupment is required regardless of whether a Covered Executive contributed to the rightrestatement.
The Administrator will determine the timing and method of recoupment of Excess Incentive Compensation in its sole discretion. Recoupment is required unless recovery would be impracticable, as set forth in our Clawback Policy. We shall not indemnify any Covered Executive against the loss of any Excess Incentive Compensation, including payment or reimbursement of any insurance purchased by any Covered Executive to receive any future paymentsfund potential clawback obligations under our Clawback Policy.
The Company's rights under the plan.
Awards madeClawback Policy are in addition to, and not in lieu of, any other remedies or rights of recoupment or other legal remedies that may be available to the Company pursuant to the 2011 Plan may be recaptured by the Company on the occurrenceterms of certain specified events if the Compensation Committee so specifiesany similar policy in any equity award agreement or similar agreement, including provisions for recoupment of payments or benefits in the award certificate or grant agreement. Such specified events may include, but are not limited to,event of a termination of employment for cause;cause, violation of material Company policies;policies, breach of non-competition, non-solicitation, confidentiality or other restrictive covenants, that may apply to the award recipient;or other conduct by the award recipient detrimental to the business or reputation of the Company or its subsidiaries; or a later determination thatCompany. Our 2018 Plan permits such recoupment on the vestingoccurrence of or amount realized
from, a performance award was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, whether or notsuch events if the Compensation Committee specifies such recoupment in the award recipient causedcertificate or contributed to the material inaccuracy.grant agreement.
Tax and Accounting Implications of Compensation
As one of the factors considered in performing its duties, the Compensation Committee evaluates the anticipated tax treatment to the Company and its subsidiaries, as well as to the executives, of various structures, payments, and benefits. The deductibility of some types of compensation depends upon the timing of an executive’s vesting or exercise of previously-granted rights. Deductibility may also be affected by interpretations of and changes in tax laws such as Section 162(m) of the Code, which generally provides that the Company may not deduct compensation of more than $1,000,000 paid to certain executives. Compensation paid pursuant to the MIP Plan of the Company, as well as certain awards under the 2011 Plan, were intended to qualify as “performance-based compensation” which was not subject toexempt from the limits of Section 162(m). However, on December 22, 2017 the Tax Cuts and Jobs Act (tax legislation) was signed into law, generally eliminating the performance-based compensation exception under Section 162(m) with respect to compensation paid after December 31, 2017. The tax legislation includes a transition provision providingprovides that compensation paid after 2017 may continue to be considered performance-based compensation not subject to the limits of Section 162(m)is grandfathered if the compensation is with respectpaid pursuant to a binding written agreement that was in effect on November 2, 2017. As a result, performance-based compensation arrangements which were grantedentered into prior to November 2, 2017 may continue to be considered performance-based compensation not subject to the limits of Section 162(m). However, becauseSince 2018, new awards of uncertainties regarding the interpretation of the transition rule, no assurances can be given at this time that existing contractsperformance-based bonuses and awards will meet the requirements of the transition rule. Payments made and stock-based awards that doequity compensation have not qualifybeen eligible for the transition rule will no longer be deductible by the Company if the executive’s total compensation exceeds $1,000,000 in a given year.performance-based exemption under Section 162(m). The Compensation Committee will not limit its decisions with respect to executive compensation to that which is deductible under Section 162(m) if the Compensation Committee determines that doing so is in the best interests of the Company. Because of the importance of linking pay and performance, we expect that annual bonus opportunities and certain equity awards will continue to impose performance conditions. Therefore, we do not anticipate that the changes to Section 162(m) will materially impact the design of our compensation program.
40 GL 2024 Proxy Statement
The tax legislation may also have an impact on the attainment of certain performance goals for performance share awards granted in 2016 and 2017. Although the Compensation Committee may adjust performance goals for future awards under the 2011 Plan as warranted by certain external factors such as the tax legislation, it has been its practice to avoid making such adjustments to previously granted awards, regardless of whether advantageous or disadvantageous to executives. In accordance with this historic practice, the Compensation Committee does not intend to adjust the performance goals for the 2016 and 2017 awards in response to the tax legislation, as our analysis indicates that making such adjustments would reduce shareholder value.
The Company designs, awards and implements its non-qualified deferred compensation arrangements to fully comply with Code Section 409A and accompanying regulations. We amended our non-qualified deferred compensation plans to comply with Section 409A, effective January 1, 2009.
On January 1, 2006, the Company began accounting for stock-based payments, including stock option grants and restricted stock awards in accordance with the requirements of ASC 718, Compensation — Stock Compensation in the consolidated GAAP financial statements.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of TorchmarkGlobe Life Inc. has reviewed and discussed the Compensation Discussion and Analysisrequired by Item 402(b) of SEC Regulation S-K with Company management. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. Darren M. Rebelez, Chairman
Jane M. Buchan, Chair
Lloyd W. NewtonMarilyn A. Alexander
Cheryl D. Alston
Mark A. Blinn
February 26, 201828, 2024
The foregoing Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, or subject to Regulation 14A or the liabilities of Section 18 of the Securities Exchange Act of 1934.
41 GL 2024 Proxy Statement
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes various categories of compensation earned in 20172023 by the persons who served as the Company’s Co-Chief Executive Officers,Co-CEOs, its Chief Financial OfficerCFO and the three next most highly compensated executive officers of the Company. The six named executive officers had 20172023 salaries and bonuses (as reflected in the Non-Equity Incentive Plan Compensation column or the Bonus column below) in the aggregate which represented 31.79%32.18% of their total compensation in 2017.2023. None of the executive officers listed in the table has a written or unwritten employment agreement or arrangement with the Company or any of its subsidiaries.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and
Principal Position | Year | Salary
($) | Bonus
($) | Stock Awards1,2,3 ($) | Option Awards4 ($) | Non-Equity
Incentive Plan
Compensation
($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings5 ($) | All Other Compensation6 ($) | Total
($) |
| Frank M. Svoboda* | 2023 | 850,000 | 0 | 2,008,568 | 2,015,625 | 1,535,000 | | 733,218 | | 63,660 | | 7,206,071 |
| Co-Chairman & Chief Executive Officer | 2022 | 650,000 | 0 | 1,135,530 | 1,432,600 | 535,000 | | 0 | | 32,036 | | 3,785,166 |
| 2021 | 590,058 | 0 | 1,081,520 | 1,170,650 | 410,000 | | 462,324 | | 28,736 | | 3,743,288 |
| J. Matthew Darden* | 2023 | 850,000 | 0 | 2,008,568 | 2,015,625 | 1,535,000 | | 399,676 | | 52,027 | | 6,860,896 |
| Co-Chairman & Chief Executive Officer | 2022 | 650,000 | 0 | 1,135,530 | 1,432,600 | 535,000 | | 0 | | 26,586 | | 3,779,716 |
| 2021 | 590,077 | 0 | 884,880 | 900,500 | 410,000 | | 248,794 | | 23,949 | | 3,058,200 |
| Thomas P. Kalmbach | 2023 | 520,000 | 0 | 804,873 | 809,475 | 405,000 | | 251,152 | | 31,747 | | 2,822,247 |
| Executive Vice President and Chief Financial Officer | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Michael C. Majors | 2023 | 495,000 | 0 | 781,980 | 786,900 | 380,000 | | 749,141 | | 16,199 | | 3,209,220 |
| Executive Vice President, Policy Acquisitions and Chief Strategy Officer | 2022 | 465,000 | 0 | 722,610 | 815,480 | 234,000 | | 0 | | 15,090 | | 2,252,180 |
| 2021 | 445,038 | 0 | 688,240 | 666,370 | 245,000 | | 297,698 | | 11,743 | | 2,354,089 |
| R. Brian Mitchell | 2023 | 495,000 | 0 | 773,546 | 774,000 | 300,000 | | 585,923 | | 30,917 | | 2,959,386 |
| Executive Vice President, General Counsel and Chief Risk Officer | | | | | | | | | | | | |
| | | | | | | | | | | |
| Robert E. Hensley | 2023 | 485,000 | 0 | 837,406 | 561,150 | 360,000 | | 195,386 | | 13,496 | | 2,452,438 |
| Executive Vice President and Chief Investments Officer | | | | | | | | | | | | |
| | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards1,2,3 ($) | | Option Awards4 ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings5 ($) | | All Other Compensation6 ($) | | Total ($) |
| Gary L. Coleman | | 2017 | | 896,154 |
| | 0 | | 2,704,100 |
| | 1,708,500 |
| | 1,830,000 |
| | 1,178,214 |
| | 49,888 |
| | 8,366,856 |
|
| Co-Chairman and Chief Executive Officer | | 2016 | | 870,865 |
| | 0 | | 1,519,200 |
| | 1,497,500 |
| | 1,320,000 |
| | 981,809 |
| | 18,619 |
| | 6,207,993 |
|
| 2015 | | 845,192 |
| | 0 | | 2,010,375 |
| | 1,561,500 |
| | 1,151,000 |
| | 218,403 |
| | 45,992 |
| | 5,832,462 |
|
| | | | | | | | | | | | | | | | | | | |
| Larry M. Hutchison | | 2017 | | 896,154 |
| | 0 | | 2,704,100 |
| | 1,708,500 |
| | 1,830,000 |
| | 1,133,382 |
| | 39,810 |
| | 8,311,946 |
|
| Co-Chairman and Chief Executive Officer | | 2016 | | 870,865 |
| | 0 | | 1,519,200 |
| | 1,497,500 |
| | 1,320,000 |
| | 931,569 |
| | 18,619 |
| | 6,157,753 |
|
| 2015 | | 845,192 |
| | 0 | | 2,010,375 |
| | 1,561,500 |
| | 1,151,000 |
| | 194,789 |
| | 34,764 |
| | 5,797,620 |
|
| | | | | | | | | | | | | | | | | | | |
| Frank M. Svoboda | | 2017 | | 519,615 |
| | 0 | | 849,860 |
| | 706,180 |
| | 445,000 |
| | 808,533 |
| | 21,962 |
| | 3,351,150 |
|
Executive Vice President & Chief Financial Officer | | 2016 | | 499,692 |
| | 0 | | 607,680 |
| | 407,400 |
| | 330,000 |
| | 552,832 |
| | 22,706 |
| | 2,420,310 |
|
| 2015 | | 477,692 |
| | 0 | | 643,320 |
| | 624,600 |
| | 250,000 |
| | 215,347 |
| | 24,780 |
| | 2,235,739 |
|
| | | | | | | | | | | | | | | | | | | |
Roger C. Smitha | | 2017 | | 599,904 |
| | 0 | | 0 |
| | 1,309,850 |
| | 360,000 |
| | 1,133,512 |
| | 25,571 |
| | 3,428,837 |
|
| Chief Executive Officer, AIL and LNL Agency Divisions | | 2016 | | 594,846 |
| | 0 | | 911,520 |
| | 583,940 |
| | 475,000 |
| | 1,026,586 |
| | 15,147 |
| | 3,607,039 |
|
| 2015 | | 583,846 |
| | 0 | | 964,980 |
| | 936,900 |
| | 430,000 |
| | 658,087 |
| | 15,068 |
| | 3,588,881 |
|
| | | | | | | | | | | | | | | | | | | |
| W. Michael Pressley | | 2017 | | 519,615 |
| | 0 | | 772,600 |
| | 740,350 |
| | 400,000 |
| | 661,825 |
| | 22,945 |
| | 3,117,335 |
|
| Executive Vice President & Chief Investment Officer | | 2016 | | 499,692 |
| | 0 | | 607,680 |
| | 407,400 |
| | 330,000 |
| | 581,532 |
| | 21,910 |
| | 2,448,214 |
|
| 2015 | | 478,462 |
| | 0 | | 643,320 |
| | 624,600 |
| | 250,000 |
| | 429,218 |
| | 13,820 |
| | 2,439,420 |
|
| | | | | | | | | | | | | | | | | | | |
| J. Matthew Darden | | 2017 | | 509,615 |
| | 270,000 | | 540,820 |
| | 432,820 |
| | 0 |
| | 213,888 |
| | 9,450 |
| | 1,976,593 |
|
| Executive Vice President & Chief Strategy Officer | | 2016 | | 489,538 |
| | 250,000 | | 253,200 |
| | 258,020 |
| | 0 |
| | 145,207 |
| | 9,275 |
| | 1,405,240 |
|
| 2015 | | 459,885 |
| | 230,000 | | 268,050 |
| | 343,530 |
| | 0 |
| | 101,375 |
| | 9,275 |
| | 1,412,115 |
|
aMr. Smith retired as of December 31, 2017.
1 Amounts shown in this column for Messrs. Coleman, Hutchison,2023 represent the grant date fair value of awards of performance shares and restricted stock units, which are calculated in accordance with ASC 718, Compensation – Stock Compensation (ASC 718), using the NYSE market closing price on the grant date of such awards. The amounts included in this column for performance share awards were computed based on the probable outcome of the performance conditions as of the February 22, 2023 grant date, which were target levels on that date. The fair values of such performance shares at maximum levels of the grant date were for Svoboda Pressley($3,205,034), Darden ($3,205,034), Kalmbach ($1,277,194), Majors ($1,253,096), Mitchell ($1,228,998), and Hensley ($1,108,508).
2 Amounts shown in this column for Svoboda, Darden, and Majors for 20172022 are performance share awards valued based upon the probable outcome of the performance conditions as of the February 21, 201723, 2022 grant date, which were target levels on that date. The fair values of performance shares are calculated in accordance with ASC 718, Compensation – Stock Compensation (ASC 718), using the NYSE market closing price on the grant date of the performance share awards. The fair values of such performance shares at maximum levels of the grant date were for Coleman ($5,408,200), Hutchison ($5,408,200), Svoboda ($1,699,720)1,703,295), Pressley ($1,545,200) and Darden ($1,081,640)1,703,295), and Majors ($1,083,915).
23 Amounts shown in this column for Messrs. Coleman, Hutchison, Svoboda, Smith, PressleyDarden, and DardenMajors for 20162021 are performance share awards valued based upon the probable outcome of the performance conditions as of the February 24, 20162021 grant date, which were target levels on that date. The fair values of performance shares are calculated in accordance with ASC 718, Compensation – Stock Compensation (ASC 718), using the NYSE market closing price on the grant date of the performance share awards. The fair values of such performance shares at maximum levels of the grant date were for Coleman ($3,038,400), Hutchison ($3,038,400), Svoboda ($1,215,360)1,622,280), Smith ($1,823,040), Pressley ($1,215,360) and Darden ($506,400)1,327,320), and Majors ($1,032,360).
3 Amounts shown in this column for Messrs. Coleman, Hutchison, Svoboda, Smith, Pressley and Darden for 2015 are performance share awards valued based upon the probable outcome of the performance conditions as of the February 25, 2015 grant date, which were target levels on that date. The fair values of performance shares are calculated in accordance with ASC 718, Compensation – Stock Compensation (ASC 718), using NYSE market closing price on the grant date of the performance share awards. The fair values of such performance shares at maximum levels of the grant date were for Coleman ($4,020,750), Hutchison ($4,020,750), Svoboda ($1,286,640), Smith ($1,929,960), Pressley ($1,286,640) and Darden ($536,100).
4 Assumptions used in calculating the aggregate grant date fair value in accordance with ASC 718 are set out in FootnoteNote 1 to the Company’s audited financial statements contained in the Form 10-K for the fiscal year ended December 31, 2017.2023.
42 GL 2024 Proxy Statement
5 Reflects the change in the actuarial estimate of potential future Pension Plan and SERP benefits, driven in large part by benchmark interest rates. None of the NEOs received any direct compensation related to the Pension Plan or SERP in 2021, 2022 or 2023, and no benefits will be paid until after retirement from the Company.
5 Change in Pension Value and Non-Qualified Deferred Compensation Earnings: | | | | | | | | | | | | | | | | | |
| Name | Year | Increase
in Present
Value Pension
Plan
($) | Decrease
in Present Value Pension
Plan
($) | Increase
in Present
Value
SERP
($) | Decrease
in Present
Value
SERP
($) |
| Frank M. Svoboda | 2023 | 265,005 | | | 468,213 | | |
| | 2022 | | 300,214 | | | 819,103 | |
| | 2021 | 106,189 | | | 356,135 | | |
| J. Matthew Darden | 2023 | 107,677 | | | 291,999 | | |
| | 2022 | | 148,544 | | | 344,767 | |
| | 2021 | 63,659 | | | 185,135 | | |
| Thomas P. Kalmbach | 2023 | 107,863 | | | 143,289 | | |
| | | | | |
| | | | | |
| Michael C. Majors | 2023 | 267,792 | | | 481,349 | | |
| 2022 | | 408,053 | | | 322,601 | |
| 2021 | 82,715 | | | 214,983 | | |
| R. Brian Mitchell | 2023 | 264,470 | | | 321,453 | | |
| | | | | | |
| | | | | |
| Robert E. Hensley | 2023 | 84,582 | | | 110,804 | | |
| | | | | |
| | | | | |
|
| | | | | | | | | | | | |
| Executive | | Year | | Increase in Present Value Pension Plan ($) | | Decrease in Present Value Pension Plan ($) | | Increase in Present Value SERP ($) | | Decrease in Present Value SERP ($) |
| Gary L. Coleman | | 2017 | | 323,420 |
| | | | 854,794 |
| | |
| | | 2016 | | 267,849 |
| | | | 713,960 |
| | |
| | | 2015 | | 75,525 |
| | | | 142,878 |
| | |
| | | | | | | | | | | |
| Larry M. Hutchison | | 2017 | | 307,790 |
| | | | 825,592 |
| | |
| | | 2016 | | 251,752 |
| | | | 679,817 |
| | |
| | | 2015 | | 66,476 |
| | | | 128,313 |
| | |
| | | | | | | | | | | |
| Frank M. Svoboda | | 2017 | | 204,301 |
| | | | 604,232 |
| | |
| | | 2016 | | 154,370 |
| | | | 398,462 |
| | |
| | | 2015 | | 37,078 |
| | | | 178,269 |
| | |
| | | | | | | | | | | |
| Roger C. Smith | | 2017 | | 228,248 |
| | | | 905,264 |
| | |
| | | 2016 | | 198,409 |
| | | | 828,177 |
| | |
| | | 2015 | | 99,327 |
| | | | 558,760 |
| | |
| | | | | | | | | | | |
| W. Michael Pressley | | 2017 | | 153,771 |
| | | | 508,054 |
| | |
| | | 2016 | | 162,083 |
| | | | 419,449 |
| | |
| | | 2015 | | 106,610 |
| | | | 322,608 |
| | |
| | | | | | | | | | | |
| J. Matthew Darden | | 2017 | | 71,734 |
| | | | 142,154 |
| | |
| | | 2016 | | 50,191 |
| | | | 95,016 |
| | |
| | | 2015 | | 37,935 |
| | | | 63,440 |
| | |
6 Includes Company matching contribution to each executive's 401(k) Plan account; excess premiums for additional life insurance for Messrs. Coleman, Hutchison, Svoboda, R. SmithKalmbach, Majors, Mitchell and Pressley;Hensley; and the categories and quantified amounts (if required) of perquisites and personal benefits required to be reported by SEC Regulation S-K, Item 402 (c)(2)(ix) for executives.
| | | | | | | | | | | | | | | | | | | | |
| Name | Perquisites*
($) | 401(k) Match
($) | Excess Premiums for Additional Life Insurance ($) | Total
($) |
| Frank M. Svoboda | 43,628 | | 11,550 | 8,482 | | 63,660 |
| J. Matthew Darden | 40,477 | | 11,550 | | | 52,027 |
| Thomas P. Kalmbach | 18,509 | | 11,350 | 1,888 | | 31,747 |
| Michael C. Majors | | | 11,500 | 4,699 | | 16,199 |
| R. Brian Mitchell | 14,700 | | 11,550 | 4,667 | | 30,917 |
| Robert E. Hensley | | | 11,052 | 2,444 | | 13,496 |
|
| | | | | | | | |
| Name | | Perquisitesa ($)
| | 401(k) Match ($) | | Excess Premiums for Additional Life Insurance ($) | | Total ($) |
| Gary L. Coleman | | 30,688 | | 9,450 | | 9,750 | | 49,888 |
| Larry M. Hutchison | | 20,610 | | 9,450 | | 9,750 | | 39,810 |
| Frank M. Svoboda | | 10,644 | | 9,450 | | 1,868 | | 21,962 |
| Roger C. Smith | | | | 9,450 | | 16,121 | | 25,571 |
| W. Michael Pressley | | | | 9,450 | | 13,495 | | 22,945 |
| J. Matthew Darden | | | | 9,450 | | | | 9,450 |
| | |
a
| *For Messrs. Coleman and Hutchison,Mr. Svoboda, the total amount listed reflects the aggregate incremental cost of personal use of corporate aircraft. For Mr. Svoboda, the amount reflects fitness center dues,aircraft ($27,304) and Company-purchased tickets, country club dues, and a holiday charitable contribution. For Mr. Darden, the amount reflects the aggregate incremental cost of personal use of certaincorporate aircraft and Company-purchased tickets.tickets, country club dues, and a holiday contribution. For Mr. Kalmbach, the amount reflects country club dues and fitness center dues. For Mr. Mitchell, the amount reflects country club dues. |
The Company occasionally allows executives the personal use of tickets for sporting and special events previously acquired by the Company for business entertainment purposes. For certain tickets acquired by the Company, there is no incremental cost to the Company for such use.
For purposes of compensation disclosure, the value of personal use of Company aircraft is calculated using the actual variable costs incurred by the Company associated with such flights, including fuel, maintenance of the planes, "dead head" flights, pilot travel expenses, on-board catering, landing and parking fees, and other variable costs. Fixed costs, such as pilots' salaries, are not included since they do not change with usage.
43 GL 2024 Proxy Statement
CEO PAY RATIO
The Pay Ratio Disclosure Rule, codified in Item 402(u) of Regulation S-K and adopted pursuant to Section 953(b) of the Dodd-Frank Act, requires the Company to calculate and disclose the ratio of the annual total compensation of its CEO to the median of the annual total compensation of its employees. For 2017, our last completed fiscal year:
| |
• | The annual total compensation of the Company's Co-CEO1 was $8,373,156, consisting of the total compensation reported for him in the Summary Compensation Table included elsewhere in this Proxy Statement plus non-cash compensation in the form of Company-paid healthcare benefits; and
|
The median of the annual total compensation of all employees of the Company(other than the Co-CEOs) was $80,680.
Based on this information, for 2017, the ratio of the annual total compensation of the Company's Co-CEO to the median of the annual total compensation of all employees was 104 to 1.2 The Company believes however that, since companies may employ different methodologies and assumptions to determine such a ratio, this pay ratio should not be relied upon for comparison purposes with the Company's peers.
Methodology
To identify the Company's employee population and its “median employee” and to determine the annual total compensation of the Company's Co-CEO and its “median employee”, the following methodology was utilized:
Identification of Employee Population
| |
• | We selected October 1, 2017 as the determination date for purposes of identifying the employee population from which the “median employee” was identified. The employee population on that date consisted of 3,032 employees, which included all of the full-time, part-time and temporary employees of the Company and its consolidated subsidiaries.3
|
Identification of Median Employee
| |
• | To identify our “median employee”, we utilized existing payroll records to compare the total cash compensation of our employees over the period from January 1, 2017 through September 30, 2017. This compensation measure, which was believed to reasonably reflect the annual compensation of our employees, was consistently applied to all employees in the employee population.4 Use of a partial-year measurement period, as opposed to the full 2017 fiscal year, was also believed to reasonably reflect the annual compensation of our employees. Since all of our employees are located in the United States, no cost-of-living adjustments were made in identifying the “median employee”. Because the employee population consisted of an even number of employees (3,032), two “median employees” were originally identified.
|
| |
• | A significant component of the total compensation of Company employees in the employee population consists of employee benefits that vary by business unit, bargaining group and individual elections. As employees of the Company’s wholly-owned union subsidiary, however: (i) neither of the originally identified “median employees” was eligible to participate in the Company’s Defined Benefit Plan, although 79% of employees in the employee population were eligible to and did participate in such plan; (ii) neither of such individuals was eligible to participate in the Company’s Thrift Plan, although 82% of employees in the employee population were eligible to and 62% of employees did participate in such plan; and (iii) one of such individuals did not elect to participate in the Company’s health insurance program and received no Company-paid healthcare benefits5, although 100% of employees in the employee population were eligible to and 71% of employees did participate in such program, to which the Company partially contributed on behalf of such employees.
|
Since each of the originally identified "median employees" was determined to have anomalous compensation characteristics not reasonably reflective of the employee population—namely, non-participation in certain benefit programs—which would have significantly impacted the pay ratio, another employee with substantially similar compensation to that of the originally identified "median employees", based on the same compensation measure (total cash compensation), was substituted as the “median employee”. The replacement “median employee” participated in each of the above-described employee benefit programs in 2017.
Calculation of Annual Total Compensation and CEO Pay Ratio
| |
• | To determine the annual total compensation of the Company's Co-CEO, we used the total compensation amount ($8,366,856) reflected in the 2017 Summary Compensation Table included in this Proxy Statement, then added non-cash compensation consisting of Company-paid healthcare benefits.6
|
| |
• | We then combined all of the elements of the “median employee’s” compensation for 2017, in accordance with requirements of Item 402(c)(2)(x) of Regulation S-K, and added non-cash compensation consisting of Company-paid healthcare benefits7, in order to arrive at the “median employee’s” annual total compensation amount ($80,680).
|
Finally, we calculated the ratio of the annual total compensation paid to the Company's Co-CEO to that of the median employee (CEO pay ratio) based upon these results. The resulting ratio is a reasonable estimate calculated in a manner consistent with 402(u) of Regulation S-K.
1 Since the Company operated with Co-CEOs during 2017, the annual total compensation of Co-CEO Gary L. Coleman (referred to herein as "the Company's Co-CEO"), which was moderately higher than that of Co-CEO Larry M. Hutchison, was utilized for the purpose of calculating the CEO pay ratio.
2The annual total compensation of Mr. Hutchison, the other Co-CEO, would have resulted in a ratio of 103 to 1.
3 Independent contractors were excluded from the employee population. The Company, which utilizes various widely recognized tests, including standards set forth by the U.S. Dept. of Labor under the Fair Labor Standards Act, guidance from the IRS, as well as common law, to determine whether its workers are employees, applied the same criteria for purposes of the pay ratio rule. Another basis for exclusion from the employee population consisted of workers whose compensation was determined by an unaffiliated third party but who provided services to the Company or its consolidated subsidiaries as independent contractors, in accordance with Item 402(u)(3) of Reg. S-K.
4With respect to 414 permanent employees who were employed for less than the full nine-month measurement period, their total cash compensation was credited to include the portion of the measurement period they were not employed. No full-time equivalent adjustments were made.
5 Such benefits vary by health plan type, employee salary, and plan participation by employee family members.
6 Company-paid healthcare benefits, totaling $6,300, were included in the calculation of the annual total compensation of the Company's Co-CEO for 2017.
7Company-paid healthcare benefits, totaling $4,104, were included in the calculation of the median employee’s annual total compensation for 2017.
20172023 GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | Estimated Future Payouts Under Equity Incentive Plan Awards2 | All Other Stock Awards: Number of Shares of Stock or Units3 (#) | All Other Option Awards: Number of Securities Underlying Options4 (#) | Exercise or Base Price
of Option
Awards
($/Sh) | Grant Date Fair Value of Stock and Option Awards5 ($) |
| Name | Award Type | Grant
Date | Threshold
($) | Target
($) | Maximum
($) | Threshold
(#) | Target
(#) | Maximum
(#) |
| Frank M. Svoboda | Options | 2/22/2023 | | | | | | | | 62,500 | | 120.49 | 2,015,625 |
| Performance
Shares | 2/22/2023 | | | | 6,650 | 13,300 | | 26,600 | | | | 1,602,517 | |
| Restricted Stock Units | 2/22/2023 | | | | | | | 3,370 | | | 406,051 | |
| Annual Cash | | 637,500 | | 1,275,000 | | 1,912,500 | | | | | | | | |
| J. Matthew Darden | Options | 2/22/2023 | | | | | | | | 62,500 | | 120.49 | 2,015,625 | |
| Performance
Shares | 2/22/2023 | | | | 6,650 | 13,300 | | 26,600 | | | | 1,602,517 | |
| Restricted Stock Units | 2/22/2023 | | | | | | | 3,370 | | | 406,051 | |
| Annual Cash | | 637,500 | 1,275,000 | 1,912,500 | | | | | | | |
| Thomas P. Kalmbach | Options | 2/22/2023 | | | | | | | | 25,100 | | 120.49 | 809,475 |
| | Performance
Shares | 2/22/2023 | | | | 2,650 | 5,300 | | 10,600 | | | | 638,597 | |
| Restricted Stock Units | 2/22/2023 | | | | | | | 1,380 | | | 166,276 | |
| | Annual Cash | | 169,000 | | 338,000 | | 507,000 | | | | | | | | |
| Michael C. Majors | Options | 2/22/2023 | | | | | | | | 24,400 | | 120.49 | 786,900 | |
| | Performance
Shares | 2/22/2023 | | | | 2,600 | 5,200 | | 10,400 | | | | 626,548 | |
| Restricted Stock Units | 2/22/2023 | | | | | | | 1,290 | | | 155,432 | |
| | Annual Cash | | 160,875 | 321,750 | 482,625 | | | | | | | |
| R. Brian Mitchell | Options | 2/22/2023 | | | | | | | | 24,000 | | 120.49 | 774,000 | |
| Performance
Shares | 2/22/2023 | | | | 2,550 | 5,100 | | 10,200 | | | | 614,499 | |
| Restricted Stock Units | 2/22/2023 | | | | | | | 1,320 | | | 159,047 | |
| Annual Cash | | 123,750 | 247,500 | 371,250 | | | | | | | |
| Robert E. Hensley | Options | 2/22/2023 | | | | | | | | 17,400 | | 120.49 | 561,150 | |
| Performance
Shares | 2/22/2023 | | | | 2,300 | 4,600 | | 9,200 | | | | 554,254 | |
| Restricted Stock Units | 2/22/2023 | | | | | | | 2,350 | | | 283,152 | |
| Annual Cash | | 145,500 | | 291,000 | | 436,500 | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | | Estimated Future Payouts Under Equity Incentive Plan Awards2 | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | All Other Option Awards: Number of Securities Underlying Options3 (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards4 ($) |
| Name | | Award Type | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | |
Gary L. Coleman | | Options | | 2/21/2017 | | |
| | |
| | |
| | |
| | |
| | |
| | | | 150,000 |
| | 77.26 |
| | 1,708,500 |
|
| | | Performance Shares | | 2/21/2017 | | | | | | | | 17,500 |
| | 35,000 |
| | 70,000 |
| | | | |
| | |
| | 2,704,100 |
|
| | | Annual Cash | | | | 630,000 |
| | 1,260,000 |
| | 1,890,000 |
| | |
| | |
| | |
| | | | |
| | |
| | |
|
Larry M. Hutchison | | Options | | 2/21/2017 | | |
| | |
| | |
| | |
| | |
| | |
| | | | 150,000 |
| | 77.26 |
| | 1,708,500 |
|
| | | Performance Shares | | 2/21/2017 | | |
| | |
| | |
| | 17,500 |
| | 35,000 |
| | 70,000 |
| | | | |
| | |
| | 2,704,100 |
|
| | | Annual Cash | | | | 630,000 |
| | 1,260,000 |
| | 1,890,000 |
| | |
| | |
| | |
| | | | |
| | |
| | |
|
Frank M. Svoboda | | Options | | 2/21/2017 | | |
| | |
| | |
| | |
| | |
| | |
| | | | 62,000 |
| | 77.26 |
| | 706,180 |
|
| | | Performance Shares | | 2/21/2017 | | |
| | |
| | |
| | 5,500 |
| | 11,000 |
| | 22,000 |
| | | | |
| | |
| | 849,860 |
|
| | | Annual Cash | | | | 156,000 |
| | 312,000 |
| | 468,000 |
| | |
| | |
| | |
| | | | |
| | |
| | |
|
Roger C. Smith | | Options | | 2/21/2017 | | |
| | |
| | |
| | |
| | |
| | |
| | | | 115,000 |
| | 77.26 |
| | 1,309,850 |
|
| | | Annual Cash | | | | 180,000 |
| | 360,000 |
| | 540,000 |
| | |
| | |
| | |
| | | | |
| | |
| | |
|
| W. Michael Pressley | | Options | | 2/21/2017 | | |
| | |
| | |
| | |
| | |
| | |
| | | | 65,000 |
| | 77.26 |
| | 740,350 |
|
| | | Performance Shares | | 2/21/2017 | | |
| | |
| | |
| | 5,000 |
| | 10,000 |
| | 20,000 |
| | | | |
| | |
| | 772,600 |
|
| | | Annual Cash | | | | 156,000 |
| | 312,000 |
| | 468,000 |
| | |
| | |
| | |
| | | | |
| | |
| | |
|
| J. Matthew Darden | | Options | | 2/21/2017 | | | | | | | | | | | | | | | | 38,000 |
| | 77.26 |
| | 432,820 |
|
| | | Performance Shares | | 2/21/2017 | | | | | | | | 3,500 |
| | 7,000 |
| | 14,000 |
| | | | | | | | 540,820 |
|
1 Estimated future payouts under non-equity incentive plan awards are calculated pursuant to the Company’s MIP Plan.annual bonus plan. This plan provides a single estimated bonus payout at the maximum level available to the participating executive if objectives are met, subject to the Compensation Committee’s discretion to reduce the amount pursuant to an incentive plan framework and subjective criteria as described on pages 29 and 30.in the Annual Cash Bonusessection of this Proxy Statement. On January 17, 2018, 22, 2024, the Compensation Committee certifiedreceived certification of attainment of the bonus objectives for Messrs. Svoboda, R. SmithKalmbach, Majors, Mitchell and PressleyHensley, who were paid the bonusesbonus shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Tableshortly thereafter. On February 26, 2018,28, 2024, the independent members of the Board approved the payment of the bonuses as shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table to Messrs. ColemanSvoboda and HutchisonDarden, based upon receipt ofby the Compensation Committee’sCommittee on January 17, 201822, 2024 of the certification of attainment of their bonus objectives. 2 Performance shares awarded February 21, 2017,22, 2023, pursuant to the Company’s 20112018 Plan, and to be issued upon vesting following completion of the three yearthree-year performance period commencing January 1, 20172023 and ending December 31, 20192025, and certification of attainment of specified targets for cumulativeBook Value per Diluted Shares Outstanding and average net operating income earnings per share, underwriting income and average return on equityROE for the performance period. See Potential Payments upon Termination or Change-in-Control for additional details regarding vesting of performance shares upon termination of employment under certain circumstances or in connection with a change-in-control. 3Restricted stock units (RSUs) awarded February 22, 2023 generally vest on the third anniversary of the grant date, based on continuous employment. See Potential Payments upon Termination or Change-in-Controlfor additional details regarding vesting of RSUs upon termination of employment under certain circumstances or in connection with a change-in-control. 44 GL 2024 Proxy Statement
4 Non-qualified stock options granted February 21, 2017 to Messrs. Svoboda, R. Smith, Pressley and Darden22, 2023 have a seven-year term and a grant price equal to the NYSE market closing price of Company common stock on the date awarded by the Compensation Committee. Non-qualified stock options granted February 21, 2017 to Messrs. Coleman and Hutchison have a seven-year term and a grant price equal to the NYSE market closing price of Company common stock on the date awarded by the independent members of the Board.awarded. All of the options granted on the above date vest as to 50% of the shares on the second anniversary of the grant date and as to the remaining 50% of the shares on the third anniversary of the grant date. See Potential Payments upon Termination or Change-in-Control for additional details regarding vesting of stock options upon termination of employment under certain circumstances or in connection with a change-in-control. 45 The values included in this column represent the grant date fair value of option awards, performance share awards and restricted stock and optionunit awards, computed in accordance with ASC 718. The assumptions utilized for options are set out in FootnoteNote 1 to the Company’s audited financial statements contained in the Form 10-K for the fiscal year ended December 31, 2017.2023.
45 GL 2024 Proxy Statement
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
| Name | Grant
Date | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | Option
Exercise
Price
($) | Option
Expiration
Date | Grant
Date | Number
of Shares
or Units
of Stock
That Have
Not Vested
(#) | Market
Value of Shares
or Units
of Stock
That Have Not Vested
($) | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That Have Not Vested
(#) | Equity
Incentive
Plan
Awards:
Market or
Payout Value of Unearned
Shares, Units or Other Rights
That Have
Not Vested
($) |
| Frank M. Svoboda | 02/22/23 | | 62,500 | | 1 | | 120.49 | | 02/22/30 | | | | | | | | | |
| 02/23/22 | | 65,000 | | 1 | | 103.23 | | 02/23/29 | | | | | | | | | |
| 02/24/21 | 32,500 | 32,500 | 1 | | 98.32 | | 02/24/28 | | | | | | | | | |
| 02/26/20 | 65,000 | | | | | 100.74 | | 02/26/27 | | | | | | | | | |
| | 02/28/19 | 65,000 | | | | | 82.56 | | 02/28/26 | | | | | | | | | |
| | 02/26/18 | 65,000 | | | | 87.60 | | 02/26/25 | | | | | | | | | |
| | | | | | | | 02/22/23 | 3,370 | | 2 | 410,196 | | 4 | | | | |
| | | | | | | | 02/22/23 | | | | | 26,600 | | 5 | 3,237,752 | | 4 |
| | | | | | | | 02/23/22 | | | | | 11,000 | | 6 | 1,338,920 | | 4 |
| | | | | | | | | 02/24/21 | 12,582 | 3 | 1,531,481 | 4 | | | | |
| J. Matthew Darden | 02/22/23 | | 62,500 | 1 | | 120.49 | | 02/22/30 | | | | | | | | | |
| 02/23/22 | | 65,000 | 1 | | 103.23 | | 02/23/29 | | | | | | | | | |
| 02/24/21 | 25,000 | 25,000 | 1 | | 98.32 | | 02/24/28 | | | | | | | | | |
| 02/26/20 | 45,000 | | | | 100.74 | | 02/26/27 | | | | | | | | | |
| 02/28/19 | 33,270 | | | | 82.56 | | 02/28/26 | | | | | | | | | |
| 02/26/18 | 24,890 | | | | 87.60 | | 02/26/25 | | | | | | | | | |
| | | | | | | | 02/22/23 | 3,370 | | 2 | 410,196 | | 4 | | | | |
| | | | | | | | 02/22/23 | | | | | 26,600 | | 5 | 3,237,752 | | 4 |
| | | | | | | | 02/23/22 | | | | | 11,000 | | 6 | 1,338,920 | | 4 |
| | | | | | | | 02/24/21 | 10,295 | 3 | 1,253,107 | 4 | | | | |
| Thomas P. Kalmbach | 02/22/23 | | 25,100 | | 1 | | 120.49 | | 02/22/30 | | | | | | | | | |
| 02/23/22 | | 35,000 | 1 | | 103.23 | | 02/23/29 | | | | | | | | | |
| 02/24/21 | 17,500 | 17,500 | 1 | | 98.32 | | 02/24/28 | | | | | | | | | |
| 02/26/20 | 35,000 | | | | 100.74 | | 02/26/27 | | | | | | | | | |
| | | | | | | | 02/22/23 | 1,380 | | 2 | 167,974 | | 4 | | | | |
| | | | | | | | 02/22/23 | | | | | 10,600 | | 5 | 1,290,232 | | 4 |
| | | | | | | | 02/23/22 | | | | | 7,000 | | 6 | 852,040 | | 4 |
| | | | | | | | 02/24/21 | 7,435 | 3 | 904,988 | 4 | | | | |
46 GL 2024 Proxy Statement
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 20172023 (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
| Name | Grant
Date | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | Option
Exercise
Price
($) | Option
Expiration
Date | Grant
Date | Number
of Shares
or Units
of Stock
That Have
Not Vested
(#) | Market
Value of Shares
or Units
of Stock
That Have Not Vested
($) | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That Have Not Vested
(#) | Equity
Incentive
Plan
Awards:
Market or
Payout Value of Unearned
Shares, Units or Other Rights
That Have
Not Vested
($) |
| Michael C. Majors | 02/22/23 | | 24,400 | | 1 | | 120.49 | | 02/22/30 | | | | | | | | | |
| 02/23/22 | | 37,000 | 1 | | 103.23 | | 02/23/29 | | | | | | | | | |
| 02/24/21 | 18,500 | | 18,500 | | 1 | | 98.32 | | 02/24/28 | | | | | | | | | |
| 02/26/20 | 37,000 | | | | | 100.74 | | 02/26/27 | | | | | | | | | |
| | | | | | | | 02/22/23 | 1,290 | | 2 | 157,019 | | 4 | | | | |
| | | | | | | | 02/22/23 | | | | | 10,400 | | 5 | 1,265,888 | | 4 |
| | | | | | | | 02/23/22 | | | | | 7,000 | | 6 | 852,040 | | 4 |
| | | | | | | | 02/24/21 | 8,007 | 3 | 974,612 | 4 | | | | |
| R. Brian Mitchell | 02/22/23 | | 24,000 | | 1 | | 120.49 | | 02/22/30 | | | | | | | | | |
| 02/23/22 | | 38,000 | 1 | | 103.23 | | 02/23/29 | | | | | | | | | |
| 02/24/21 | 19,000 | | 19,000 | 1 | | 98.32 | | 02/24/28 | | | | | | | | | |
| 02/26/20 | 38,000 | | | | | 100.74 | | 02/26/27 | | | | | | | | | |
| 02/28/19 | 38,000 | | | | | 82.56 | | 02/28/26 | | | | | | | | | |
| | | | | | | | 02/22/23 | 1,320 | | 2 | 160,670 | | 4 | | | | |
| | | | | | | | 02/22/23 | | | | | 10,200 | | 5 | 1,241,544 | | 4 |
| | | | | | | | 02/23/22 | | | | | 6,500 | | 6 | 791,180 | | 4 |
| | | | | | | | 02/24/21 | 7,435 | 3 | 904,988 | 4 | | | | |
| Robert E. Hensley | 02/22/23 | | 17,400 | | 1 | | 120.49 | | 02/22/30 | | | | | | | | | |
| 02/23/22 | | 33,000 | 1 | | 103.23 | | 02/23/29 | | | | | | | | | |
| | | | | | | | 02/22/23 | 2,350 | | 2 | 286,042 | | 4 | | | | |
| | | | | | | | 02/22/23 | | | | | 9,200 | | 5 | 1,119,824 | | 4 |
| | | | | | | | 02/23/22 | | | | | 5,000 | | 6 | 608,600 | | 4 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Option Expiration Date | | Grant Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |
| Gary L. Coleman | | 02/21/17 | | | | 150,000 |
| 2 | | | 77.2600 |
| | 02/21/24 | | | | | | | | |
| | |
| |
| | | 02/24/16 | | | | 125,000 |
| 1 | | | 50.6400 |
| | 02/24/26 | | | | | | | | | | | |
| | | 02/25/15 | | 75,000 |
| | 75,000 |
| 2 | | | 53.6100 |
| | 02/25/22 | | | | | | | | | | | |
| | | 02/24/14 | | 150,000 |
| | | | | | 50.6934 |
| | 02/24/21 | | | | | | | | |
| | |
| |
| | | 02/27/13 | | 150,000 |
| | | | | | 37.4000 |
| | 02/27/20 | | | | | | | | |
| | |
| |
| | | 01/23/12 | | 97,500 |
| | | | | | 30.3267 |
| | 01/23/19 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 02/21/17 | | | | | | 70,000 |
| 5 | 6,349,700 |
| 4 |
| | | | | | | | | | | | | | | 02/24/16 | | | | | | 60,000 |
| 6 | 5,442,600 |
| 4 |
| | | | | |
| | |
| | | | |
| | | | 02/25/15 | | 33,261 | 3 | 3,017,105 | 4 | | | | |
| Larry M. Hutchison | | 02/21/17 | | | | 150,000 |
| 2 | | | 77.2600 |
| | 02/21/24 | | | | | | | | | | | |
| | | 02/24/16 | | | | 125,000 |
| 1 | | | 50.6400 |
| | 02/24/26 | | | | | | | | | | | |
| | | 02/25/15 | | 75,000 |
| | 75,000 |
| 2 | | | 53.6100 |
| | 02/25/22 | | | | | | | | | | | |
| | | 02/24/14 | | 150,000 |
| | | | | | 50.6934 |
| | 02/24/21 | | | | | | | | | | | |
| | | 02/27/13 | | 150,000 |
| | | | | | 37.4000 |
| | 02/27/20 | | | | | | | | | | | |
| | | 01/23/12 | | 97,500 |
| | | | | | 30.3267 |
| | 01/23/19 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 02/21/17 | | | | | | 70,000 |
| 5 | 6,349,700 |
| 4 |
| | | | | | | | | | | | | | | 02/24/16 | | | | | | 60,000 |
| 6 | 5,442,600 |
| 4 |
| | | | | | | | | | | | | | | 02/25/15 | | 33,261 | 3 | 3,017,105 | 4 | | | | |
| Frank M. Svoboda | | 02/21/17 | | | | 62,000 |
| 2 | | | 77.2600 |
| | 02/21/24 | | | | | | | | | | | |
| | | 02/24/16 | | | | 60,000 |
| 2 | | | 50.6400 |
| | 02/24/23 | | | | | | | | | | | |
| | | 02/25/15 | | 30,000 |
| | 30,000 |
| 2 | | | 53.6100 |
| | 02/25/22 | | | | | | | | |
| | |
| |
| | | 02/24/14 | | 60,000 |
| | | | | | 50.6934 |
| | 02/24/21 | | | | | | | | |
| | |
| |
| | | 02/27/13 | | 60,000 |
| | | | | | 37.4000 |
| | 02/27/20 | | | | | | | | |
| | |
| |
| | | 01/23/12 | | 49,500 |
| | | | | | 30.3267 |
| | 01/23/19 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 02/21/17 | | | | | | 22,000 |
| 5 | 1,995,620 |
| 4 |
| | | | | | | | | | | | | | | 02/24/16 | | | | | | 24,000 |
| 6 | 2,177,040 |
| 4 |
| | | | | | | | | | | | | | | 02/25/15 | | 10,644 | 3 | 965,517 | 4 | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Option Expiration Date | | Grant Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |
| Roger C. Smith | | 02/21/17 | | | | 115,000 |
| 2 | | | 77.2600 |
| | 02/21/24 | | | | | | | | | | | |
| | | 02/24/16 | | | | 86,000 |
| 2 | | | 50.6400 |
| | 02/24/23 | | | | | | | | | | | |
| | | 02/25/15 | | 45,000 |
| | 45,000 |
| 2 | | | 53.6100 |
| | 02/25/22 | | | | | | | | | | | |
| | | 02/24/14 | | 90,000 |
| | | | | | 50.6934 |
| | 02/24/21 | | | | | | | | | | | |
| | | 02/27/13 | | 90,000 |
| | | | | | 37.4000 |
| | 02/27/20 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 02/24/16 | | | | | | 36,000 |
| 6 | 3,265,560 |
| 4 |
| | | | | | | | | | | | | | | 02/25/15 | | 15,966 | 3 | 1,448,276 | 4 | | | | |
| W. Michael Pressley | | 02/21/17 | | | | 65,000 |
| 2 | | | 77.2600 |
| | 02/21/24 | | | | | | | | | | | |
| | | 02/24/16 | | | | 60,000 |
| 2 | | | 50.6400 |
| | 02/24/23 | | | | | | | | | | | |
| | | 02/25/15 | | 30,000 | | 30,000 |
| 2 | | | 53.6100 |
| | 02/25/22 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 02/21/17 | | | | | | 20,000 | 5 | 1,814,200 | 4 |
| | | | | | | | | | | | | | | 02/24/16 | | | | | | 24,000 |
| 6 | 2,177,040 |
| 4 |
| | | | | | | | | | | | | | | 02/25/15 | | 10,644 | 3 | 965,517 | 4 | | | | |
| J. Matthew Darden | | 02/21/17 | | | | 38,000 |
| 2 | | | 77.2600 |
| | 02/21/24 | | | | | | | | | | | |
| | | 02/24/16 | | | | 38,000 |
| 2 | | | 50.6400 |
| | 02/24/23 | | | | | | | | | | | |
| | | 02/25/15 | | 16,500 |
| | 16,500 |
| 2 | | | 53.6100 |
| | 02/25/22 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 02/21/17 | | | | | | 14,000 |
| 5 | 1,269,940 |
| 4 |
| | | | | | | | | | | | | | | 02/24/16 | | | | | | 10,000 |
| 6 | 907,100 |
| 4 |
| | | | | | | |
| | | | | | | | 02/25/15 | | 4,435 | 3 | 402,299 | 4 | | | | |
1 Stock options vest at the rate of 25% per year over a four-year period commencing on the second anniversary of the grant date, with a ten-year term.
2 Stock options vest at the rate of 50% on second and third anniversaries of grant date, with a seven-year term.
2 Restricted stock units are subject to cliff vesting and vest in full on the 3-year anniversary of the grant date; provided, that if a named executive officer has attained age 60 and retires prior to such date, the restricted stock units will vest upon such retirement at a rate of one-third per year.
3 Performance shares to be issued with respect to a three yearthree-year performance period commencing January 1, 20152021 and ending December 31, 20172023, based upon the degree of satisfaction of three performance criteria. Shares shown reflect actual performance attained during the period and will vest in 20182024 upon certification of achievement of performance objectives by the Compensation Committee.
4 Calculated using 20172023 year-end closing market price of $90.71$121.72 per share.
5 Performance shares to be issued when vested upon certification following the completion of a three-year performance period commencing January 1, 20172023 and ending December 31, 2019,2025, if at all, based upon the degree of satisfaction of threetwo performance criteria. Number of shares reflects next higher performance level, target or maximum, projected at fiscal year-end 2023.
6 Performance shares to be issued when vested upon certification following the completion of a three-year performance period commencing January 1, 20162022 and ending December 31, 2018,2024, if at all, based upon the degree of satisfaction of three performance criteria. Number of shares reflects next higher performance level, target or maximum, projected at fiscal year-end 2023.
47 GL 2024 Proxy Statement
OPTION EXERCISES AND STOCK VESTED
DURING FISCAL YEAR ENDED DECEMBER 31, 20172023
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | Stock Awards |
| Executive | Number of
Shares
Acquired
on Exercise
(#) | Value Realized on Exercise1 ($) | Number of
Shares
Acquired on
Vesting
(#) | Value Realized on Vesting2 ($) |
| Frank M. Svoboda | 62,000 | | 2,494,017 | | 6,690 | | 5 | 806,078 | | 10 |
| J. Matthew Darden | 19,551 | 3 | 823,592 | | 4,866 | | 6 | 586,304 | | 11 |
| Thomas P. Kalmbach | 30,000 | 4 | 1,168,792 | | 2,737 | | 7 | 329,781 | | 12 |
| Michael C. Majors | 31,000 | | 1,159,073 | | 4,257 | | 8 | 512,926 | | 13 |
| R. Brian Mitchell | 38,000 | | 1,293,556 | | | 3,953 | | 9 | 476,297 | | 14 |
| Robert E. Hensley | 0 | | 0 | | 0 | | 0 | |
|
| | | | | | | | | | | | |
| | Option Awards | | Stock Awards | |
| Name | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise1 ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting2,3 ($) | |
| Gary L. Coleman | 112,500 |
| | 5,581,757 |
| | 26,644 |
| 4 | 2,058,515 |
| |
| Larry M. Hutchison | 112,500 |
| | 5,580,096 |
| | 26,644 |
| 5 | 2,058,515 |
| |
| Frank M. Svoboda | 0 |
| | 0 |
| | 8,975 |
| 6 | 691,757 |
| 9 |
| Roger C. Smith | 112,500 |
| | 5,948,817 |
| | 16,988 |
| 7 | 1,301,483 |
| 10 |
| W. Michael Pressley | 52,500 |
| | 1,742,225 |
| | 10,925 |
| 8 | 835,258 |
| 11 |
Mr. Darden had no option exercises or stock vested during 2017.
1“Value Realized on Exercise” represents the difference between the fair value per share less brokerage commissions in broker-assisted “cashless” or “modified cashless” option exercises and the exercise price per share, multiplied by the number of shares underlying each option exercised.
2 “Value Realized on Vesting” represents the value of restricted stock or performance shares calculated by multiplying the number of vested shares by the closing price of Company common stock on the NYSE on the vesting date or, if vesting occurred on a day upon which the NYSE was closed for trading, the preceding trading day.
3 Vesting Dates for Shares of Restricted Stock: Executive retained 2,000 shares in "modified cashless" option exercises.
4 Executive retained 5,838 shares in a "modified cashless" option exercise. |
| | | | | | |
| Executive | | Jan 23, 2017 | | Feb 21, 2017 |
| Gary L. Coleman | | | | |
| Larry M. Hutchison | | | | |
| Frank M. Svoboda | | 450 |
| | |
| Roger C. Smith | | 3,000 |
| | 1,200 |
|
| W. Michael Pressley | | 2,400 |
| | |
45Executive acquired 26,644 shares on February 21, 201722, 2023 vesting and issuance of performance shares upon certification by the Compensation Committee of attainment of performance objectives at a payout level below target with respect to the 20142020 - 20162022 performance period. Executive surrendered to the Company 2,622 of such vested performance shares in payment of withholding taxes due.
56 Executive acquired 26,644 shares on February 21, 201722, 2023 vesting and issuance of performance shares upon certification by the Compensation Committee of attainment of performance objectives at a payout level below target with respect to the 20142020 - 20162022 performance period. Executive surrendered to the Company 1,877 of such vested performance shares in payment of withholding taxes due.
67 Executive acquired 450 shares on vesting of restricted stock and 8,525 shares on February 21, 201722, 2023 vesting and issuance of performance shares upon certification by the Compensation Committee of attainment of performance objectives at a payout level below target with respect to the 20142020 - 20162022 performance period. Executive surrendered to the Company 2,0251,070 of such vested performance shares in partial payment of withholding taxes due.
78 Executive acquired 4,200 shares on vesting of restricted stock and 12,788 shares on February 21, 201722, 2023 vesting and issuance of performance shares upon certification by the Compensation Committee of attainment of performance objectives at a payout level below target with respect to the 20142020 - 20162022 performance period. Executive surrendered to the Company 1,200 of such vested restricted stock shares and 4,9661,037 of such vested performance shares in payment of withholding taxes due.
89 Executive acquired 2,400 shares on vesting of restricted stock and 8,525 shares on February 21, 201722, 2023 vesting and issuance of performance shares upon certification by the Compensation Committee of attainment of performance objectives at a payout level below target with respect to the 20142020 - 20162022 performance period. Executive surrendered to the Company 3,525963 of such vested performance shares in partial payment of withholding taxes due.
9 $33,115.50 for restricted stock and $658,641.50 for performance shares. Shares surrendered to the Company in partial payment of withholding taxes due on vested performance shares were valued at $156,452.
10$313,482 for restricted stock and $988,001 for performance shares. Shares surrendered to the Company in payment of withholding taxes due on vested restricted stockperformance shares were valued at $89,515 and shares$315,925.
11 Shares surrendered to the Company in payment of withholding taxes due on vested performance shares were valued at $383,673.$226,160.
11$176,616 for restricted stock and $658,642 for performance shares.12 Shares surrendered to the Company in partial payment of withholding taxes due on vested performance shares were valued at $272,342.$128,924.
13 Shares surrendered to the Company in payment of withholding taxes due on vested performance shares were valued at $124,948.
14 Shares surrendered to the Company in payment of withholding taxes due on vested performance shares were valued at $116,032.
48 GL 2024 Proxy Statement
PENSION BENEFITS AT DECEMBER 31, 2017
2023
The table below shows the present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each such NEO under the Torchmark CorporationGlobe Life Inc. Pension Plan (Pension Plan) and the Torchmark CorporationGlobe Life Inc. Supplemental Executive Retirement Plan (effective January 1, 2007) (the SERP)(SERP), formerly the Torchmark Corporation SERP, determined using interest rates and mortality rate assumptions consistent with those used in the Company’s financial statements. No benefits are payable under the SERP to persons retiring prior to age 55.
| | | | | | | | | | | | | | | | | |
| Name | Plan Name | Number of
Years Credited
Service
(#) | Present Value of Accumulated Benefit1 ($) | Payments
During Last
Fiscal Year
($) |
| Frank M. Svoboda | Pension Plan | 20 | 1,629,723 | | 0 |
| SERP | 20 | 4,200,355 | | 0 |
| J. Matthew Darden | Pension Plan | 9 | 451,365 | | 0 |
| SERP | 9 | 1,179,115 | | 0 |
| Thomas P. Kalmbach | Pension Plan | 5 | 366,511 | | 0 |
| | SERP | 5 | 443,772 | | 0 |
| Michael C. Majors | Pension Plan | 29 | 1,758,730 | | 0 |
| | SERP | 29 | 2,378,184 | | 0 |
| R. Brian Mitchell | Pension Plan | 35 | 1,751,660 | | 0 |
| SERP | 35 | 2,282,107 | | 0 |
| Robert E. Hensley | Pension Plan | 3 | 198,831 | | 0 |
| SERP | 3 | 242,538 | | 0 |
|
| | | | | | | | | |
| Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit1 ($) | | Payments During Last Fiscal Year ($) |
| Gary L. Coleman | | Torchmark Corporation Pension Plan | | 36 | | 2,518,336 |
| | 0 |
| | | Torchmark Corporation Supplemental Executive Retirement Plan | | 36 | | 7,887,941 |
| | 0 |
| Larry M. Hutchison | | Torchmark Corporation Pension Plan | | 32 | | 2,265,914 |
| | 0 |
| | | Torchmark Corporation Supplemental Executive Retirement Plan | | 32 | | 7,109,200 |
| | 0 |
| Frank M. Svoboda | | Torchmark Corporation Pension Plan | | 14 | | 1,029,912 |
| | 0 |
| | | Torchmark Corporation Supplemental Executive Retirement Plan | | 14 | | 1,909,014 |
| | 0 |
| Roger C. Smith | | Torchmark Corporation Pension Plan | | 18 | | 1,365,288 |
| | 0 |
| | | Torchmark Corporation Supplemental Executive Retirement Plan | | 18 | | 5,647,634 |
| | 0 |
| W. Michael Pressley | | Torchmark Corporation Pension Plan | | 15 | | 1,474,819 |
| | 0 |
| | | Torchmark Corporation Supplemental Executive Retirement Plan | | 15 | | 2,796,391 |
| | 0 |
| J. Matthew Darden | | Torchmark Corporation Pension Plan | | 3 | | 159,860 |
| | 0 |
| | | Torchmark Corporation Supplemental Executive Retirement Plan | | 3 | | 300,610 |
| | 0 |
1 Present value of accumulated benefits is calculated using the December 31, 2017 FAS 872023 ASC 715 disclosure assumptions as follows: (a) discount rate of 3.76%5.40% for the Torchmark Corporation Pension Plan benefits; (b) discount rate of 3.72%5.42% for Torchmark Corporation Supplemental Executive Retirement Planthe SERP benefits; (c) Optional Combined Tablesseparate annuitant and non-annuitant tables for males and females based onupon the RP-2014Pri-2012 Mortality Table projected generationally from 20062012 with Scale BB (male);MP-2020; (d) the calculated present value at age 65 is discounted with interest only to the current ageage; and (e) no pre-retirement mortality or termination assumed prior to age 65.
The Torchmark Corporation Pension Plan (the Pension Plan) is a non-contributory defined benefits pension plan which covers substantially all eligible employees at the Company and each of its subsidiaries except for American Income (which maintains a separate plan) and a limited number of Globe employees.. Eligible employees must be 21 years of age or older and have one or more years of credited service. Benefits at age 65 under the Pension Plan will be determined based upon the calculation formulas applicable to employees of various participating employers prior to the January 1, 2004 merger of the pension plan of the Company and two pension plans of a subsidiary. The NEOs are subject to the Torchmark Pension Plan formula, which determines benefits by multiplying the average of the participant’s earnings in the five consecutive years in which they were highest during the ten10 years before the participant’s retirement by a percentage equal to 1% for each of the participant’s first 40 years of credited service plus 2% for each year of credited service after the participant’s 45th birthday and then reducing that result by a Social Security offset and by other benefits from certain other plans of affiliates. Benefits under the Pension Plan vest 100% at five years.years of credited service. Upon the participant’s retirement, Pension Plan benefits are payable as an annuity or certain portions thereof may be paid in a lump sum.
If the participant retires between the ages ofat or after age 55 and 64,but before age 65, the amount of the accrued Pension Plan benefits is reduced so that if he retiresto a designated percentage based on the participant's age at age 55, the participant will be entitled to 50% of the accrued benefits. Each of the named executive officers isretirement. Messrs. Svoboda, Majors and Mitchell are eligible for early
retirement benefits under the Pension Plan. Messrs. Darden, Hensley and Kalmbach are not eligible for early retirement benefits under the Pension Plan. It is not possible for a participant’s credited service under the Pension Plan to exceed his or her actual years of service with the Company and its subsidiaries.
Laws limit to a fixed amount per year the benefits that a qualified plan such as the Pension Plan can pay (in 2017, $215,000)2023, $265,000). Benefits that are actually paid under the Pension Plan are also based upon the covered compensation of the participant as defined by the Code (in 2017, $270,000)2023, $330,000), not on actual final average earnings of the participant.
After evaluation of the retirement benefits potentially payable to its executives relative to its peer companies, the Board of Directors, based upon a recommendation from the Compensation Committee, implemented a supplemental executive retirement plan,Supplemental Executive Retirement Plan, effective January 1, 2007. This non-qualified SERP is funded by a Rabbi trust and will pay a supplemental benefit to a participating executive upon retirement in the amount of that portion of the executive’s retirement benefit, calculated under the Pension Plan or a subsidiary’s pension plan using the formulas from the Torchmark Pension Plan, which cannot be paid from the Pension Plan or a subsidiary’s pension plan because of the IRS limits requiring the pension calculation to be based on a much lower covered compensation figure and the fixed amount annual limit on qualified pension plan benefits. NoGenerally, no benefits will be paid out under the SERP
49 GL 2024 Proxy Statement
unless the participant is 55 years old and has at least ten years of service with the Company and/or its subsidiaries. Participants meeting these requirements will receive benefits which range from 15% of the benefit that they would have ultimately received on retirement at age 65 if they choose to retire at age 55 to 98% of the benefit that they would have ultimately received on retirement at age 65 if they choose to retire at age 64. However, the Compensation Committee may on a case-by-case basis, in its discretion and upon the written request of the Co-CEOs, establish the early retirement reduction factors, the minimum age for benefit eligibility, the number of full or partial years for Vesting Service (as defined in the Pension Plan), and the attained age necessary to be eligible for a pre-retirement death benefit. Benefits will be paid in the form of an annuity selected by the participant. The Compensation Committee designated 3021 executives of the Company and its subsidiaries, including each of the NEOs, to participate in the SERP on February 20, 2017.22, 2023.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The Company and its subsidiaries do not have employment contracts, severance agreements, salary continuation agreements or severance plans with the NEOs. Potential payments and benefits not generally available to all salaried employees may be made to the NEOs:
upon termination of their employment in connection with stock options issued to them under the Company’s various incentive plans;
upon termination of employment in connection with performance shares awarded to them under the 2011 Plan;
at age 65 in the form of an insurance policy under a Retirement Life Insurance Benefit Agreement; and
upon termination of their employment in the executive’s chosen form of annuitized payment under the SERP.
| | | | | | | | | | | |
| | | |
| • | upon termination of their employment, in connection with stock options issued under the Company’s various incentive plans; | |
| • | upon termination of employment, in connection with performance shares awarded under the 2018 Plan; | |
| • | upon termination of employment, in connection with restricted stock units awarded under the 2018 Plan; | |
| • | at age 65, in the form of an insurance policy under a Retirement Life Insurance Benefit Agreement; and | |
| • | upon termination of their employment in the executive’s chosen form of annuitized payment under the SERP. | |
Additionally, in the case of a change in control of the Company, stock options, and performance shares and restricted stock units held by the NEOs would be subject to vesting and those executive officers would have potential payments as a result. For purposes of the following disclosures, the assumptions used in making the calculations are:
| | | | | | | | | | | |
| | | |
| • | the triggering event (termination of employment, retirement, or change-in-control) occurred on December 31, 2023; | |
| • | the per share price of Company stock is $121.72, which was the closing price of the stock on December 31, 2023; | |
| • | the ages of the NEOs as of December 31, 2023 were Frank M. Svoboda (age 62), J. Matthew Darden (age 52); Thomas P. Kalmbach (age 59); Michael C. Majors (age 61); R. Brian Mitchell (age 60); and Robert E. Hensley (age 56); and | |
| • | | |
the triggering event (termination of employment, retirement, or change-in-control) occurred on December 31, 2017;
the per share price of Company stock is $90.71, which was the closing price of the stock on December 31, 2017;
the ages of the NEOs as of December 31, 2017 were Gary L. Coleman (age 64), Larry M. Hutchison (age 63), Frank M. Svoboda (age 56), Roger C. Smith (age 65), W. Michael Pressley (age 66) and J. Matthew Darden (age 46); and
the NEOs’ salaries and non-equity incentive plan compensation are what is reflected for them in the Summary Compensation Table.
Stock Options and Termination of Employment
The Company's currently outstanding stock options provide that the options may be exercised for a period of time after termination of employment, that varies with the circumstances of the termination:termination, or upon disability or death:
| | | | | | | | | | | | | | | | | | | | | | | |
Voluntary Termination1 | Involuntary Termination without Cause1 | Termination for Cause2 | Early Retirement
at or after age 55 but before
age 60 | Retirement
at or after age 60 but before
age 65 | Normal Retirement at or after age 65 | Disability | Death |
one month after termination of employment or expiration of stated option term, whichever
is shorter | three
months after termination of employment or expiration of stated option term, whichever
is shorter | all outstanding
options forfeited
upon termination of
employment | three years from retirement date or expiration of stated option term, whichever is shorter | five years from retirement date or expiration of stated option term, whichever is shorter | remaining balance of option term, and all options remaining unvested vest in full on retirement date | remaining balance of
option term, and all options remaining unvested immediately vest in full | remaining balance of option term or one year from date of death, whichever is longer, and all options remaining unvested at date of death immediately vest in full |
on a voluntary termination—one month after termination of employment or the expiration of the stated term of the option, whichever is shorter;1Under Age 55
on an involuntary termination without cause—three months after termination of employment or the expiration of the stated term of the option, whichever is shorter;
on an early retirement (defined to be at or after age 55)—three years from the date of retirement or the expiration of the stated term of the option whichever is shorter;
on retirement at or after age 60 —five years from the date of retirement or the expiration of the stated term of the option whichever is shorter;
on a normal retirement (defined to be at or after age 65)—the remaining balance of the term of the option, and all options remaining unvested upon the exercise of the option vest in full on the retirement date;
on disability—the remaining balance of the term of the option, and all options remaining unvested immediately vest in full; and
on death—the remaining balance of the term of the option or one year from the date of death, whichever is longer, and all options remaining unvested at the date of death immediately vest in full.
If employment is terminated for cause, there is no post-termination exercise, as all outstanding options are forfeited to the Company. “Cause”2“Cause” is defined by thethe 2011 Plan as a reason for a plan participant’s termination of employment as thatand the 2018 Plan to have the meaning assigned to such term may be defined in the employment, severance or similar agreement, if any, between the participant and the Company or a subsidiary. If there is no employment, severance or similarsuch agreement and if the grant agreement does not define that term (which(as is the case forin all awards currently outstanding under the 2011 Plan)such Plans), “cause” is defined asmeans any of the following acts by the plan participant, as determined by the Compensation Committee or the Board of Directors:
Board: gross neglect of duty,
prolonged absence from duty without the consent of the Company,
intentionally engaging in any activity in conflict with, or adverse to, the business or other interests of the Company, or
willful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental to the Company.
50 GL 2024 Proxy Statement
Additionally, stockStock options awarded beginning in 2015 to executives age 5554 and above (54 and above beginning in 2018) on the grant date generally contain provisions requiring the executive to have held the option for one year following the grant date to be entitled to any abilityable to exercise after termination of employment, except in the case of disability or death.
Performance Shares and Termination of Employment
The Company’s currently outstanding performance share awards provide that if the executive’s employment terminates during the three yearthree-year performance measurement period because of death or disability, the executive is deemed to have earned the target award without the application of any performance multiplier. Performance share awards provide for the payment of a prorated target level award upon confirmation of attainment of the performance objectives in the case of the executive’executive’s early retirement based upon age at early retirement (Age 60 - 10% of target award, Age 61 - 20% of target award, Age 62 - 40% of target award, Age 63 - 60% of target award, and Age 64 - 80% of target award). Beginning with the 2015 awards,Currently, performance share awards contain non-competition, non-solicitation and confidentiality provisions applicable upon the award recipient's separation from employment for any reason for a two-year period from the date of separation, or in the event of termination due to early retirement or normal retirement, during the remaining vesting period prior to the vesting date, whichever is longer.
Restricted Stock Units and Termination of Employment
The Company's currently outstanding restricted stock unit awards provide that if the executive's employment terminates prior to the vesting date (the third anniversary of the grant date) because of death or disability, the executive's restricted stock units will vest and become non-forfeitable on such date. Restricted Stock Unit awards provide for the payment of a prorated award in the case of the executive's retirement after the Grantee has attained the age of 60 (33.33% of the restricted stock units vesting upon retirement after the first anniversary of the grant date and 66.67% of the restricted stock units vesting upon retirement after the second anniversary of the grant date). Currently, the executive's restricted stock unit awards contain non-competition, non-solicitation and confidentiality provisions applicable upon the executive's separation from employment for any reason for a two-year period from the date of separation.
Termination of Employment – Stock Options, Performance Share Awards and Restricted Stock Unit Awards
The following table sets out values for outstanding “in the money” stock options, and performance share awards, and restricted stock unit awards that would have been realized by the NEOs as of December 31, 20172023 in the termination of employment situations discussed above. Only those termination of employment situations applicable to each individual NEO based upon the foregoing assumptions are shown.
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | Award Type | Voluntary Termination ($) | Involuntary Termination Without Cause ($) | Early Retirement ($) | Retirement at or after Age 60 ($) | Normal Retirement ($) | Disability/Death ($) |
| Frank M. Svoboda | Stock Options | | | | 8,926,625 | | | 8,926,625 |
| Performance Shares | | | | 1,718,686 | | | 4,296,716 |
| Restricted Stock Units | | | | | | 410,196 |
| J. Matthew Darden | Stock Options | 3,681,200 | 4,867,125 | | | | 5,544,925 |
| Performance Shares | | | | | | 4,053,276 |
| Restricted Stock Units | | | | | | 410,196 |
| Thomas P. Kalmbach | Stock Options | | | 2,231,313 | | | | 2,231,323 |
| | Performance Shares | | | | | | 2,288,336 |
| Restricted Stock Units | | | | | | 167,974 |
| Michael C. Majors | Stock Options | | | | 2,356,202 | | | 2,356,202 |
| Performance Shares | | | | 467,405 | | | 2,337,024 |
| Restricted Stock Units | | | | | | 157,019 |
| R. Brian Mitchell | Stock Options | | | | 3,906,660 | | | 3,906,660 |
| Performance Shares | | | | 220,313 | | | 2,203,132 |
| Restricted Stock Units | | | | | | 160,670 |
| Robert E. Hensley | Stock Options | | | 631,572 | | | | 631,572 |
| Performance Shares | | | | | | 1,168,512 |
| Restricted Stock Units | | | | | | 286,042 |
51 GL 2024 Proxy Statement
Termination of Employment—Stock Options and Performance Share Awards
|
| | | | | | | | | | | | | | |
| Name | | Award Type | | Voluntary Termination ($) | | Involuntary Termination Without Cause ($) | | Early Retirement ($) | | Retirement at or after Age 60 ($) | | Normal Retirement ($) | | Disability/Death ($) |
| Gary L. Coleman | | Stock Options | | | | | | | | 30,460,112 | | | | 32,477,612 |
| | | Performance Shares | | | | | | | | 7,438,220 | | | | 9,297,775 |
| | | | | | | | | | | | | | | |
| Larry M. Hutchison | | Stock Options | | | | | | | | 30,460,112 | | | | 32,477,612 |
| | | Performance Shares | | | | | | | | 5,578,665 | | | | 9,297,775 |
| | | | | | | | | | | | | | | |
| Frank M. Svoboda | | Stock Options | | | | | | 13,218,769 | | | | | | 14,052,669 |
| | | Performance Shares | | | | | | | | | | | | 3,174,850 |
| | | | | | | | | | | | | | | |
| Roger C. Smith | | Stock Options | | | | | | | | | | 15,184,414 | | 16,731,164 |
| | | Performance Shares | | | | | | | | | | 3,265,560 | | 3,265,560 |
| | | | | | | | | | | | | | | |
| W. Michael Pressley | | Stock Options | | | | | | | | | | 4,630,200 | | 5,504,450 |
| | | Performance Shares | | | | | | | | | | 3,084,140 | | 3,084,140 |
| | | | | | | | | | | | | | | |
| J. Matthew Darden | | Stock Options | | 612,150 | | 1,985,630 | | | | | | | | 3,258,060 |
| | | Performance Shares | | | | | | | | | | | | 1,542,070 |
| | | | | | | | | | | | | | | |
Retirement Life Insurance Agreements
The Company will provide a life insurance benefit to eachcertain of the NEOs during their respective lifetimes, effective in each instance upon the later of histhe executive's 65thbirthday or his retirement date, with coverage equal to the designated percentage shown below of an amount equal to two times the executive’s salary and bonus earned in his final year of employment prior to retirement, less $5,000; provided, however, that the insurance benefit will in no case exceed $1,995,000.$495,000.
| | Employee’s Age Nearest Birthday at date of Retirement | Percentage of Benefit Amount |
Employee’s Age Nearest Birthday at Date of Retirement | | Employee’s Age Nearest Birthday at Date of Retirement | Percentage of Benefit Amount |
| 55 | 65% | 55 | 65% |
| 56 | 70% | 56 | 70% |
| 57 | 75% | 57 | 75% |
| 58 | 80% | 58 | 80% |
| 59 | 85% | 59 | 85% |
| 60 | 90% | 60 | 90% |
| 61 | 95% | 61 | 95% |
| 62 or over | 100% | 62 or over | 100% |
Based upon an assumeda hypothetical retirement date of December 31, 2017,2023, Messrs. Majors and Mitchell would each executive would have the following$495,000 in life insurance coverage under his Retirement Life Insurance Agreement: Messrs. Coleman, Hutchison and R. Smith, $1,995,000.Agreement. Each of themsuch individual would be issued an insurance policy by a Company subsidiary with a face amount equal to his insurance coverage. Messrs. Darden, Svoboda, PressleyKalmbach and DardenHensley are not covered by a Retirement Life Insurance Agreement.
Supplemental Executive Retirement Plan
The Globe Life Inc. Supplemental Executive Retirement Plan (SERP), formerly the Torchmark Corporation Supplemental Executive Retirement Plan, became effective January 1, 2007. NoGenerally, no benefits will be paid under this plan upon retirement unless the participant is 55 years old and has at least ten years of service with the Company or its subsidiaries.subsidiaries (56 years old and at least seven years of service, in the case of Mr. Hensley). However, for employees becoming participants on or after November 1, 2020, the Compensation Committee may on a case-by-case basis, at its discretion and upon the written request of the Co-CEOs, establish the early retirement reduction factors, the minimum age for benefit eligibility, the number of full or partial years for Vesting Service (as defined in the Pension Plan), and the attained age necessary to be eligible for a pre-retirement death benefit. Assuming the NEOs retired on December 31, 2017, since2023, Messrs. Coleman, Hutchison, Svoboda, R. SmithMajors, and Pressley were at least age 55 on that date, theyMitchell would be entitled to receive benefits under the SERP. Mr. Darden is not eligible to retire under the terms of the SERP.SERP since they were at least age 55 and had at least ten years of service with the Company or its subsidiaries on that date, but Messrs. Darden, Kalmbach, and Hensley would not be eligible to receive SERP benefits. The annual benefits payable as of December 31, 20172023 for the NEOs listed below are as follows:
| | | | | | | | |
| Name | SERP Benefits as of December 31, 2023 ($) |
| Frank M. Svoboda | | 388,942 |
| Michael C. Majors | | 245,080 |
| R. Brian Mitchell | | 258,321 |
|
| | | |
| Gary L. Coleman | $ | 546,324 |
|
| Larry M. Hutchison | $ | 506,220 |
|
| Frank M. Svoboda | $ | 28,705 |
|
| Roger C. Smith | $ | 353,563 |
|
| W. Michael Pressley | $ | 208,115 |
|
Change-in-Control—Change-in-Control – Stock Options, and Performance Share Awards
and Restricted Stock Unit Awards
The 2018 Plan (and the 2011 Plan, as applicable) provides that: (1) in case of a change in controlchange-in-control where the new controlling person does not assume or equitably substitute stock options, or performance shares, or restricted stock units, all outstanding options become fully exercisable, and 100% of the target awards of performance shares are deemed earned and are paid out on a pro-rata basis based upon the length of time within the performance period prior to the change in control, and restricted stock units will vest and become non-forfeitable; and (2) in the case of a change in controlchange-in-control where the new controlling person assumes or equitably substitutes stock options, or performance shares, or restricted stock units, if a participant’s employment is terminated without cause or the participant terminates for good reason within two years (three years in the case of restricted stock units) after the effective date of the change in control,change-in-control, all outstanding options are fully exercisable, and 100% of the target awards of performance
52 GL 2024 Proxy Statement
shares are deemed earned and are paid out on a pro-rata basis based upon the length of time within the performance period prior to the date of termination.
termination, and restricted stock units will vest and become non-forfeitable.
For purposes of the 2018 Plan (and the 2011 Plan Plan), a “change in control”“change-in-control” generally consists of any one of the following events:
| |
(i) | An acquisition of 25% or more of the Company’s voting securities, but not including:
|
(i)An acquisition of 25% or more of the Company’s voting securities, but not including:
•an acquisition by a person who on the plan’s effective date (April 26, 2018 for the 2018 Plan, April 28, 2011 for the 2011 Plan) was the beneficial owner of 25% or more the Company’s voting securities;
•an acquisition of securities by or from the Company;
•an acquisition of securities by a Company employee benefit plan; or
•an acquisition of securities by a successor corporation pursuant to a transaction which complies with the exception to clause (iii) below.
| |
(ii) | Individuals serving on the Company’s Board on the effective dates of the 2011 Plan cease to constitute a majority of the Board (with an exception for individuals whose election or nomination was approved by a majority of the then incumbent board, outside the context of an election contest). |
| |
(iii) | A reorganization, merger or consolidation of the Company, or a sale of all or substantially all of the Company’s assets, unless, following any such transaction: |
(ii)Individuals serving on the Company’s Board on the effective dates of the 2018 Plan (or the 2011 Plan, as applicable) cease to constitute a majority of the Board (with an exception for individuals whose election or nomination was approved by a majority of the then incumbent board, outside the context of an election contest).
(iii)A reorganization, merger or consolidation of the Company, or a sale of all or substantially all of the Company’s assets, unless, following any such transaction:
•all or substantially all of the Company’s shareholders prior to the transaction own more than 50% of the voting stock of the Company or its successor in substantially the same proportions as their ownership of the Company’s voting stock prior to the transaction; and
•no person (excluding any successor corporation or any employee benefit plan of the Company or a successor corporation) acquires 25% or more of the voting securities of the Company or its successor as a result of the transaction, except to the extent that such ownership existed prior to the transaction,transaction; and
•a majority of the members of the Board of the Company or its successor following the transaction were members of the Company’s Board prior to the transaction.
| |
(iv) | The Company’s stockholders approve a complete liquidation or dissolution of the Company. |
(iv)The Company’s shareholders approve a complete liquidation or dissolution of the Company.
Assuming that the change in controlchange-in-control occurred on December 31, 2017,2023, the NEOs would have the following intrinsic option values and values for their unvestedunissued performance shares and restricted stock units awarded under the 2018 Plan (or 2011 Plan:Plan, as applicable):
| | | | | | | | | | | | | | |
| Name | Stock
Options
($) | Unissued Performance Shares
($) | Restricted Stock Units ($) |
| Frank M. Svoboda | 8,926,625 | | 4,296,716 | 410,196 |
| J. Matthew Darden | 5,544,925 | | 4,053,276 | 410,196 |
| Thomas P. Kalmbach | 2,231,323 | | 2,288,336 | 167,974 |
| Michael C. Majors | 2,356,202 | | 2,337,024 | 157,019 |
| R. Brian Mitchell | 3,906,660 | | 2,203,132 | 160,670 |
| Robert E. Hensley | 631,572 | | 1,168,512 | 286,042 |
53 GL 2024 Proxy Statement
|
| | | | |
| Name | | Stock Options ($) | | Unvested Performance Shares ($) |
| Gary L. Coleman | | 30,460,112 | | 9,297,775 |
| Larry M. Hutchison | | 30,460,112 | | 9,297,775 |
| Frank M. Svoboda | | 13,218,769 | | 3,174,850 |
| Roger C. Smith | | 15,184,414 | | 3,265,560 |
| W. Michael Pressley | | 4,630,200 | | 3,084,140 |
| J. Matthew Darden | | 2,746,960 | | 1,542,070 |
PAY VERSUS PERFORMANCE
The following information is intended to show the relationship between the executive compensation actually paid by our Company and our financial performance. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | Summary Compensation Table Total for PEO-11 ($) | Summary Compensation Table Total for PEO-21 ($) | Compensation Actually Paid to PEO-12 ($) | Compensation Actually Paid to PEO-22 ($) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers2,3 ($) | Average Compensation Actually Paid to Non-PEO Named Executive Officers2,3 ($) | Value of Initial Fixed $100 Investment
Based On: | Net Income (in 000s) ($)6 | Operating EPS ($)6 |
Total Shareholder Return ($)4 | Peer Group Total Shareholder Return ($)4,5 |
| | | | | | | | | | |
| | | | | | | | | | |
| 2023 | 7,206,071 | 6,860,896 | 5,959,091 | 6,043,409 | 2,860,823 | 2,177,294 | 170 | 176 | 970,755 | 10.65 |
| 2022 | 8,905,419 | 8,871,217 | 19,165,333 | 19,247,538 | 3,081,295 | 6,745,194 | 167 | 168 | 894,386 | 9.71 |
| 2021 | 8,353,754 | 8,323,666 | 6,084,819 | 6,060,050 | 2,906,877 | 2,237,094 | 129 | 152 | 1,031,114 | 9.63 |
| 2020 | 9,158,910 | 8,443,364 | 2,393,755 | 2,405,315 | 3,315,803 | 1,441,879 | 130 | 112 | 731,773 | 6.88 |
| 2019 | 8,342,279 | 8,337,263 | 23,790,020 | 23,757,342 | 3,119,663 | 6,932,031 | 142 | 123 | 760,790 | 6.75 |
20171 Amounts shown are reported in the Summary Compensation Table(SCT)for the Principal Executive Officers (PEOs), Frank M. Svoboda (PEO-1) and J. Matthew Darden (PEO-2). Effective January 1, 2023, Messrs. Svoboda and Darden succeeded Gary L. Coleman and Larry M. Hutchinson as the Company's Co-CEOs and were designated as the PEOs for 2023. Messrs. Coleman and Hutchison were designated as PEO-1 and PEO-2 for the years 2019 through 2022.2 Amounts shown represent compensation actually paid (CAP) and include adjustments for changes in the fair value of performance share awards, stock option awards and restricted stock unit awards, as well as adjustments for the aggregate change in the actuarial present value of accumulated benefits and actuarially-determined service costs for services rendered under all defined benefit and actuarial pension plans reported in the SCT for Messrs. Svoboda (PEO-1) and Darden (PEO-2) for 2023; for Messrs. Coleman (PEO-1) and Hutchinson (PEO-2) for 2019 to 2022; and for the average of the Non-PEO Named Executive Officers (NEOs): Thomas P. Kalmbach, R. Brian Mitchell, Robert E. Hensley, and Michael C. Majors for 2023; Messrs. Svoboda, Darden, Majors, and Steven K. Greer for 2021 and 2022; and Messrs. Svoboda, Darden, Greer, and W. Michael Pressley for 2019 and 2020. To calculate CAP, the following amounts were deducted or added to the SCT Total:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PEO-1 |
| Year | | | | | SCT Total | Equity Award-related Additions (Deductions) to CAP | Pension-related Additions (Deductions) to CAP | CAP |
| | | | Adjustment for the Fair Value of Equity Awards as of Year-End | Adjustment for the Change in the Fair Value of the Prior Years' Awards, Unvested as of Year-End | Adjustment for the Change in the Fair Value of the Prior Years' Awards that Vested during the Year | Adjustment for the Aggregate Change in the Present Value of the Accumulated Benefit under the Pension Plans | Adjustment for the Service Cost |
| | | | | | | | | | | |
| 2023 | | | | | 7,206,071 | 504 | (487,847) | (216,287) | (733,218) | 189,868 | 5,959,091 |
| 2022 | | | | | 8,905,419 | 3,119,560 | 6,499,470 | 692,092 | — | (51,208) | 19,165,333 |
| 2021 | | | | | 8,353,754 | (321,200) | (1,700,782) | (309,130) | — | 62,177 | 6,084,819 |
| 2020 | | | | | 9,158,910 | (154,340) | (4,084,180) | (654,480) | (1,939,280) | 67,125 | 2,393,755 |
| 2019 | | | | | 8,342,279 | 3,086,150 | 11,905,345 | 1,110,430 | (717,872) | 63,688 | 23,790,020 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PEO-2 |
| Year | | | | | SCT Total | Equity Award-related Additions (Deductions) to CAP | Pension-related Additions (Deductions) to CAP | CAP |
| | | | Adjustment for the Fair Value of Equity Awards as of Year-End | Adjustment for the Change in the Fair Value of the Prior Years' Awards, Unvested as of Year-End | Adjustment for the Change in the Fair Value of the Prior Years' Awards that Vested during the Year | Adjustment for the Aggregate Change in the Present Value of the Accumulated Benefit under the Pension Plans | Adjustment for the Service Cost |
| | | | | | | | | | | |
| 2023 | | | | | 6,860,896 | 504 | (433,019) | (153,923) | (399,676) | 168,627 | 6,043,409 |
| 2022 | | | | | 8,871,217 | 3,119,560 | 6,499,470 | 692,092 | — | 65,199 | 19,247,538 |
| 2021 | | | | | 8,323,666 | (321,200) | (1,700,782) | (309,130) | — | 67,496 | 6,060,050 |
| 2020 | | | | | 8,443,364 | (154,340) | (4,084,180) | (654,480) | (1,210,731) | 65,682 | 2,405,315 |
| 2019 | | | | | 8,337,263 | 3,086,150 | 11,905,345 | 1,110,430 | (745,486) | 63,640 | 23,757,342 |
54 GL 2024 Proxy Statement
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Average Non-PEO NEOs |
| Year | | | | | SCT Total | Equity Award-related Additions (Deductions) to CAP | Pension-related Additions (Deductions) to CAP | CAP |
| | | | Adjustment for the Fair Value of Equity Awards as of Year-End | Adjustment for the Change in the Fair Value of the Prior Years' Awards, Unvested as of Year-End | Adjustment for the Change in the Fair Value of the Prior Years' Awards that Vested during the Year | Adjustment for the Aggregate Change in the Present Value of the Accumulated Benefit under the Pension Plans | Adjustment for the Service Cost |
| | | | | | | | | | | |
| 2023 | | | | | 2,860,823 | 889 | (241,319) | (90,722) | (445,400) | 93,023 | 2,177,294 |
| 2022 | | | | | 3,081,295 | 1,102,060 | 2,083,150 | 242,997 | — | 235,692 | 6,745,194 |
| 2021 | | | | | 2,906,877 | (98,330) | (420,168) | (103,374) | (289,742) | 241,831 | 2,237,094 |
| 2020 | | | | | 3,315,803 | (45,053) | (1,106,602) | (192,601) | (737,316) | 207,648 | 1,441,879 |
| 2019 | | | | | 3,119,663 | 949,864 | 2,946,444 | 448,501 | (693,092) | 160,651 | 6,932,031 |
3 Amounts shown represent the total average reported in the Summary Compensation Tablefor the Non-PEO NEOs. The Company’s Non-PEO NEOs for 2023 were Thomas P. Kalmbach, R. Brian Mitchell, Robert E. Hensley, and Michael C. Majors. For 2021 and 2022, the Non-PEO NEOs were Messrs. Svoboda, Darden, Majors and Steven K. Greer. Finally, the Non-PEO NEOs for 2019 and 2020 were Messrs. Svoboda, Darden, Greer, and W. Michael Pressley. 4 Calculated based on $100 invested as of market close on December 31, 2018, including the reinvestment of dividends, for each fiscal year.
5 The Company’s peer group consists of the Standard & Poor’s (S&P) Life and Health Insurance Index and is set forth in Part II, Item 5 of the Form 10-K for the fiscal year ended December 31, 2023.
6 As a result of the adoption of ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, net income and operating EPS for 2021 and 2022 have been retrospectively adjusted as of January 1, 2021. The Company implemented the standard on January 1, 2023. Refer to the 2023 Form 10-K for additional information.
The charts below reflect the compensation actually paid (CAP) for each of the Company’s PEOs and the average CAP for the Non-PEO NEOs, respectively, and their relation to the Company’s Total Shareholder Return (TSR) over the referenced years, along with the Company’s TSR versus our peer group’s TSR.
55 GL 2024 Proxy Statement
In summary, the Company’s compensation actually paid (CAP) fluctuates largely with its performance in several key metrics, notably TSR. This is primarily a result of the equity-based portion of the individuals’ compensation being dependent on share price. As such, we would expect CAP to vary with changes in share price.
In 2019, CAP increased significantly when compared to compensation presented in the SCT, largely as a result of a 42% increase in TSR, thus increasing the fair value of equity-based awards for those periods. The reason for the increase in CAP from 2020 to 2021, despite a lack of corresponding increase in TSR over such period, is due to the COVID-19 pandemic and the resulting fluctuations in the fair value of the equity-based compensation of our NEOs. As a result of the pandemic, the stock market dropped significantly, with the Company’s stock declining in value approximately 10% over the course of 2020 before staying largely flat through 2021. In addition to the impact the decreased share price had on CAP, the pandemic resulted in lower net income for the Company given its primary focus on providing mortality-based insurance products. As a result of the pandemic, the Company incurred approximately $60 million of additional life insurance losses in 2020, $140 million in 2021, and $49 million in 2022, which impacted the performance objectives underlying equity awards issued prior to March of 2020 and the non-equity incentive compensation for 2020. This, however, primarily only impacted CAP in 2020, as compared to subsequent years in which the Compensation Committee adjusted the performance objectives on new awards to exclude the effect of COVID-19 related life claims due to the inherent difficulty in reasonably estimating such life claims, and in order to avoid an inequitable result of the pandemic impacting the awards. The impact of this exclusion, along with a 30% increase in TSR for the year, resulted in a significant increase in CAP for 2022. With TSR staying relatively flat in 2023, the resulting CAP figure came in-line with compensation reported on the SCT. This was to be anticipated, as we would not expect the year-end valuations to change significantly during a period with little to no change in TSR due to the significance share price has in the underlying calculation of fair value.
The charts below reflect CAP for each of the Company's PEOs and the average CAP for the non-PEO NEOs, respectively, and their relation to net income as well as the Company’s selected measure, operating EPS. Refer to APPENDIX A – Non-GAAP Reconciliations for definitions of non-GAAP measures utilized herein.
56 GL 2024 Proxy Statement
In 2019, CAP to the PEOs and non-PEO NEOs increased significantly when compared to the figure provided in the SCT, primarily a result of changes in the Company's reported net income and operating EPS. Net income increased 8% and operating EPS increased 10% in 2019, thus increasing the value of the share-based awards for that year. As previously noted, this was to be anticipated given the significance net operating income, a key component of net income and operating EPS, has in determining management compensation on an annual basis. In 2020, CAP decreased when compared to the SCT total, primarily a result of declining net income. The decline in net income was a result of the impact of COVID-19 as discussed above. In 2021 and 2022, as a result of the adoption of ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI),net income and operating EPS have been retrospectively restated, thus affecting the comparability of prior periods. Additional information regarding the impacts of the adoption is contained in the Company's Form 10-K. Using current figures, CAP as a percent of the SCT total increased significantly in 2021 and 2022, when compared to 2020, which is in-line with the increases seen in net income and operating EPS over these periods. In 2023, CAP remained in-line with the figure provided on the SCT, despite the increased operating EPS and net income during 2023 since CAP is more impacted by changes in share price, which remained relatively unchanged.
57 GL 2024 Proxy Statement
The three items listed below represent the most important non-GAAP financial measures utilized to link the executive compensation actually paid (to all of its NEOs) to Company performance during the most recently completed fiscal year. Our reasoning for these measures is further discussed in the Compensation Philosophysub-section of the Compensation Discussion and Analysis section of this Proxy Statement. Refer to APPENDIX A – Non-GAAP Reconciliations for definitions of non-GAAP measures utilized herein. | | | | | | | | |
| | | |
| Book Value Per Share, excluding AOCI* | | | | | | |
| Total Premium | | | |
| Net Operating Income ROE | | | | | | |
| | | | | | |
| *For purposes of determining the total performance shares awarded for a given year, the figure is adjusted to include accumulated dividends per share paid over the performance period. | | | | | | |
CEO PAY RATIO
The Pay Ratio Disclosure Rule, codified in Item 402(u) of Regulation S-K and adopted pursuant to Section 953(b) of the Dodd-Frank Act, requires the Company to calculate and disclose the ratio of the annual total compensation of its CEO to the median of the annual total compensation of its employees. For 2023, our last completed fiscal year:
•The annual total compensation of the Company's Co-CEO5 was $7,219,409, consisting of the total compensation reported for him in the Summary Compensation Table included in this Proxy Statement plus non-cash compensation in the form of Company-paid healthcare benefits; and •The median of the annual total compensation of all employees of the Company(other than the Co-CEOs) was $61,022.
Based on this information, for 2023, the ratio of the annual total compensation of the Company's Co-CEO to the median of the annual total compensation of all employees was 118 to 1.6 The Company believes, however, that since companies may employ different methodologies and assumptions to determine such a ratio, this pay ratio should not be relied upon for comparison purposes with the Company's peers.
To identify the Company's employee population and its "median" employee and to determine the annual total compensation of the Company's Co-CEO and its "median employee," the following methodology was utilized:
Identification of Employee Population
•We selected October 1, 2023 as the determination date for purposes of identifying the employee population from which the "median employee" was identified. The employee population on that date consisted of 3,589 employees, which included all of the full-time, part-time and temporary employees of the Company and its consolidated subsidiaries.7
Identification of Median Employee
•To identify our "median employee," we utilized existing payroll records to determine the total cash compensation of our employees over the period from January 1, 2023 through September 30, 2023. This compensation measure, which was believed to reasonably reflect the annual compensation of our employees, was consistently applied to all employees in the employee population.8 Use of a partial-year measurement period, as opposed to the full 2023 fiscal year, was also believed to reasonably reflect the annual compensation of our employees.
•No cost-of-living adjustments were made in identifying the "median employee."
5 Because the Company operated with Co-CEOs during 2023, the annual total compensation of Co-CEO Frank M. Svoboda ("the Company's Co-CEO"), which was higher than that of Co-CEO J. Matthew Darden, was utilized for purposes of calculating the CEO pay ratio.
6 Using the annual total compensation of Mr. Darden, the other Co-CEO, for calculation purposes would have resulted in a ratio of 113 to 1.
7Six Canadian employees were excluded from the employee population under the de minimis exemption. Independent contractors were likewise excluded from the employee population. The Company, which utilizes various widely recognized tests, including standards set forth by the U.S. Department of Labor under the Fair Labor Standards Act, guidance from the IRS, as well as common law, to determine whether its workers are employees, applied the same criteria for purposes of the pay ratio rule. Another basis for exclusion from the employee population consisted of workers whose compensation was determined by an unaffiliated third party but who provided services to the Company or its consolidated subsidiaries as independent contractors, in accordance with Item 402(u)(3) of Reg. S-K.
8With respect to 577 permanent employees who were employed for less than the full nine-month measurement period, their total cash compensation was credited to include the portion of the measurement period they were not employed. No full-time equivalent adjustments were made.
58 GL 2024 Proxy Statement
•Ranking all of the employees in the employee population, based on total cash compensation, enabled us to identify the Company's median employee.
Calculation of Annual Total Compensation and CEO Pay Ratio
•To determine the annual total compensation of the Company's Co-CEO, we used the total compensation amount ($7,206,071) reflected in the 2023 Summary Compensation Table included in this Proxy Statement, then added non-cash compensation consisting of Company-paid healthcare benefits.9 •We then combined all of the elements of the “median employee’s” compensation for 2023, in accordance with requirements of Item 402(c)(2)(x) of Regulation S-K, and added non-cash compensation consisting of Company-paid healthcare benefits,10 in order to arrive at the “median employee’s” annual total compensation amount ($61,022).
•Finally, we calculated the ratio of the annual total compensation paid to the Company's Co-CEO to that of the median employee based upon these results. The resulting CEO pay ratio is a reasonable estimate calculated in a manner consistent with 402(u) of Regulation S-K.
9 Company-paid healthcare benefits, totaling $13,338, were included in the calculation of the annual total compensation of the Company's Co-CEO for 2023.
10 Company-paid healthcare benefits, totaling $6,084, were included in the calculation of the median employee's annual total compensation for 2023.
59 GL 2024 Proxy Statement
2023 DIRECTOR COMPENSATION
The table below summarizes the compensation paid by the Company to non-employee directors during the fiscal year ended December 31, 2017.2023.
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | Fees
Earned or
Paid in
Cash
($) | Stock Awards1 ($) | Option Awards2 ($) | Non-Equity
Incentive Plan
Compensation
($) | Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings
($) | All Other
Compensation
($) | Total
($) |
| Linda L. Addison | 45,000 | 270,034 | 0 | 0 | 0 | 0 | 315,034 | |
| Marilyn A. Alexander | 106,667 | 170,057 | 0 | 0 | 0 | 0 | 276,724 | |
| Cheryl D. Alston | 100,000 | 170,057 | 0 | 0 | 0 | 0 | 270,057 | |
| Mark A. Blinn | 104,167 | 170,057 | 0 | 0 | 0 | 0 | 274,224 | |
| James P. Brannen | 113,333 | 170,057 | 0 | 0 | 0 | 0 | 283,390 | |
| Jane Buchan | 125,000 | 170,057 | 0 | 0 | 0 | 0 | 295,057 | |
| Alice S. Cho | 96,250 | 145,502 | 0 | 0 | 0 | 0 | 241,752 | |
Robert W. Ingram3 | 0 | 90,051 | 0 | 0 | 0 | 0 | 90,051 | |
| Steven P. Johnson | 120,000 | 170,057 | 0 | 0 | 0 | 0 | 290,057 | |
Darren M. Rebelez3 | 33,333 | 56,686 | 0 | 0 | 0 | 0 | 90,019 | |
| David A. Rodriguez | 85,556 | 145,480 | 0 | 0 | 0 | 0 | 231,036 | |
| Mary E. Thigpen | 127,500 | 170,057 | 0 | 0 | 0 | 0 | 297,557 | |
|
| | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($) | | Stock Awards1 ($) | | Option Awards2,3 ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) |
| Charles E. Adair | | 112,500 |
| | 0 |
| | 135,002 |
| | 0 | | 0 | | 0 | | 247,502 |
|
| Marilyn A. Alexander | | 103,125 |
| | 135,052 |
| | 0 |
| | 0 | | 0 | | 0 | | 238,177 |
|
| David L. Boren | | 100,000 |
| | 135,052 |
| | 0 |
| | 0 | | 0 | | 0 | | 235,052 |
|
| Jane M. Buchan | | 0 |
| | 235,066 |
| | 0 |
| | 0 | | 0 | | 0 | | 235,066 |
|
| Robert W. Ingram | | 109,375 |
| | 135,052 |
| | 0 |
| | 0 | | 0 | | 0 | | 244,427 |
|
| Steven P. Johnson | | 112,500 |
| | 135,052 |
| | 0 |
| | 0 | | 0 | | 0 | | 247,552 |
|
| Lloyd W. Newton | | 140,000 |
| | 135,052 |
| | 0 |
| | 0 | | 0 | | 0 | | 275,052 |
|
| Darren M. Rebelez | | 112,500 |
| | 135,052 |
| | 0 |
| | 0 | | 0 | | 0 | | 247,552 |
|
| Lamar C. Smith | | 112,500 |
| | 135,052 |
| | 0 |
| | 0 | | 0 | | 0 | | 247,552 |
|
| Paul J. Zucconi | | 135,000 |
| | 0 |
| | 135,002 |
| | 0 | | 0 | | 0 | | 270,002 |
|
1 The amounts presented in this column are computed in accordance with ASC 718 and represent the grant date fair values for 1,8271,422 shares of restricted stock awarded to each of Ms.Mses. Alexander, Alston, and Thigpen and Messrs. Ingram,Blinn and Johnson Rebelez and Lamar Smith; 1,827on January 3, 2023; 2,258 restricted stock units (RSUs) awarded to Messrs. BorenMs. Addison, 1,422 RSUs awarded to each of Ms. Buchan and NewtonMr. Brannen, 753 RSUs awarded to Mr. Ingram, and 3,180474 RSUs awarded to Mr. Rebelez on January 3, 2023; 1,205 RSUs awarded to Mr. Rodriguez on March 6, 2023; and 1,352 RSUs awarded to Ms. Buchan, all awardedCho on January 3, 2017.March 15, 2023.
2 Aggregate outstanding option awards at fiscal year end 2017:2023 are as follows: for Ms. Alston, 14,017 shares; and for Ms. Buchan, 18,100 shares. For Mses. Addison, Alexander, Cho and Thigpen, and Messrs. Blinn, Brannen, Ingram, Johnson, Rebelez, and Rodriguez, 0 shares.
3 Messrs. Ingram and Rebelez retired from the Board on April 27, 2023.
|
| | |
Director | No. of Options |
|
Charles E. Adair | 25,541 |
|
Marilyn A. Alexander | 0 |
|
David L. Boren | 0 |
|
Jane M. Buchan | 11,667 |
|
Robert W. Ingram | 0 |
|
Steven P. Johnson | 0 |
|
Lloyd W. Newton | 9,231 |
|
Darren M. Rebelez | 5,269 |
|
Lamar C. Smith | 0 |
|
Paul J. Zucconi | 0 |
|
3The amount presented in this column is computed in accordance with ASC 718 and represents the grant date fair value of the 9,643 stock options with an exercise price of $73.92 per share awarded on January 3, 2017 to each of Messrs. Adair and Zucconi.
DIRECTOR COMPENSATION PHILOSOPHY
The Company seeks to compensate its non-management directors by paying market-based compensation designed to attract the desired caliber of directors to the Board and to align those directors’ interests with shareholders' interests, focusing on results and the long-term by emphasizing equity compensation in the form of restricted stock, restricted stock units, and stock options.
PAYMENTS TO DIRECTORS
In 2017,2023, non-management directors of the Company were compensated on the basis of cash compensation and equity compensation:
Cash Compensation
•Directors are paid $100,000 of their annual retainer in cash in quarterly installments unless a timely election is made under the non-managementnon-employee director sub-plan of the 20112018 Plan to receive an equivalent amount of market value stock options, restricted stock or RSUs or to defer the cash to an interest-bearing account under the terms of that sub-plan of the 2011 Plan;plan;
•The Lead Director receives an additional $40,000 $45,000annual retainer in cash, payable in quarterly installments;
•Annual Board committee chairChair retainers, payable in quarterly installments in cash, are $35,000 for the Audit Committee Chair, and $12,500$25,000 for each of the Chairs of the Compensation Committee Chair, and $20,000 for the Governance and Nominating Committee;Committee Chair; and
•All members of the Audit Committee (excluding the Audit Committee Chair) receive an additional annual Audit Committee member retainer of $12,500, payable in quarterly installments.
Equity Compensation
•Directors are paid $135,000$180,000 of their annual retainer in equity, either in the form of market value stock options, restricted stock or RSUs, based on the director’s timely election, with the equity issued on the first
60 GL 2024 Proxy Statement
NYSE trading day of January of each calendar year valued at the NYSE market closing price of Company common stock on that date; and
•If no timely election is made, the non-management director receives his or her annual equity compensation in the form of $135,000$180,000 of market value stock options awarded on the first NYSE trading day of each year.
Newly elected non-management directors receive cash compensation and equity compensation which has been prorated for the period of their service during the year. Pursuant to the non-management director sub-plan of the 2011 Plan, upon the date of their initial election to the Board, newly elected non-management directors receive $100,000 of restricted stock valued at the market closing price of Company common stock on that date.
Directors do not receive meeting fees or fees for the execution of written consents in lieu of Board meetings or in lieu of Board committeeCommittee meetings. They receive reimbursement for their travel and lodging expenses. Directors who are employees of the Company or its subsidiaries receive no compensation for Board service.
Non-management directors receive very limited perquisites and other personal benefits, which may include holiday gifts and costs associated with spouses’ travel to Board meetings. In 2017,2023, no non-management director received perquisites or any other personal benefits with an aggregate incremental cost to the Company in excess of $10,000 or any other personal benefits.
$10,000.
Non-management directors may currently elect to defer all or a designated portion of their cash-based annual director compensation into an interest-bearing account pursuant to a timely election made under the non-managementnon-employee director sub-plan of the 20112018 Plan. These accounts bear interest at non-preferential rates set from time to time by the Compensation Committee. The amounts in such accounts are paid to the director in a lump sum or equal monthly installments for up to 120 months, as elected by the director, with payments commencing on the earliest of: (i) December 31 of the fifth year after the year for which the deferral was made; (ii) the first business day of the fourth month after the director’s death; or (iii) the director’s termination as a non-management director of the Company or any of its subsidiaries for a reason other than death. No non-management director chose to defer any compensation pursuant to these provisions in 2017.2023.
RELATED PARTY TRANSACTION POLICY AND TRANSACTIONS
On October 25, 2006, theThe Board has adopted a written policy statement with respect to related party transactions. This policy provides that a related party transaction may be consummated or may continue only if: (i) the disinterested members of the Board have approved or ratified the transaction in accordance with the guidelines in the policy and the transaction is on terms comparable
to those that could be obtained in arm’s length dealings with an unrelated third party; or (ii) the transaction involves compensation approved by the Compensation Committee of the Board. In situations where a significant opportunity is presented to management or a member of the Board which might result in the diversion of a corporate opportunity for their personal gain, that Related Party (other than an otherwise unaffiliated 5%five percent shareholder) must obtain the consent of the Board.
At their February 20, 201722, 2023 meeting, the disinterested members of the Board determined that there were no related party transactions to be reviewed under the Related Party Transaction Policy for 2017.2023.
You may find the Related Party Transaction Policy by going to the Company’s website at www.torchmarkcorp.com and clicking on the Investors page.https://investors.globelifeinsurance.com. The Policy is located under the Corporate Governance heading. Printed copies of the Related Party Transaction Policy may be obtained at no charge by writing to the Corporate Secretary at 3700 South Stonebridge Drive, McKinney, Texas 75070.
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Under the securities laws of the United States, the Company’s directors, its executive officers, and any persons holding more than ten percent10% of the Company’s common stock are required to report their initial ownership of the Company’s common stock and other equity securities and any subsequent changes in that ownership to the Securities and Exchange Commission and the NYSE and to submit copies of these reports to the Company. To the Company’s knowledge, basedBased solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 2017,2023, the Company believes that all required Section 16(a) filings applicable to its executive officers, directors, and greater than ten percent10% beneficial owners were filed on a timely basis, except one late Form 4 filing was made on behalf of each of Linda L. Addison, Marilyn A. Alexander, Cheryl D. Alston, Mark A. Blinn, James P. Brannen, Jane Buchan, Robert W. Ingram, Steven P. Johnson, Darren M. Rebelez and correctly made except:
| |
(i) | Late Form 4 filings were made to reflect acquisition of director equity grants by Charles E. Adair, Marilyn A. Alexander, David L. Boren, Jane M. Buchan, Steven P. Johnson, Robert W. Ingram, Lloyd W. Newton, Darren M. Rebelez, Lamar C. Smith and Paul J. Zucconi (one form each). |
| |
(ii)
| Amended Form 4 filings were made to include previously-omitted shares acquired through dividend reinvestment by Marilyn A. Alexander (one form); to include omitted indirect beneficial ownership through a family trust by Ben W. Lutek (one form); to correctly reflect no shares remaining in an option grant by Steven J. DiChiaro (one form ); and to correct the balance of options remaining outstanding by John H. Rogers (one form). |
Mary E. Thigpen, each of which was filed two business days late due to an administrative error. 61 GL 2024 Proxy Statement
PRINCIPAL SHAREHOLDERS
The following table lists all persons known to be beneficial owners of more than five percent of the Company’s outstanding common stock as of December 31, 2017,2023, as indicated from the most recent Schedule 13F and 13G filings with the Securities and Exchange Commission.
| | | | | | | | |
| Name and Address | Number of Shares | Percent of Class |
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, Pennsylvania 19355 | 10,828,866 1 | 11.51% |
BlackRock, Inc. 50 Hudson Yards New York, New York 10001 | 6,695,570 2 | 7.10% |
1 According to a Schedule 13G/A filed with the SEC on February 13, 2024, the Vanguard Group, Inc. reports sole voting power for 0 shares, shared voting power for 114,261 shares, sole dispositive power for 10,460,271 shares, and shared dispositive power for 368,595 shares. 2 According to a Schedule 13G/A filed with the SEC on January 26, 2024, BlackRock, Inc. reports sole voting power for 6,168,868 shares, shared voting power for 0 shares, sole dispositive power for 6,695,570 shares, and shared dispositive power for 0 shares. |
62 GL 2024 Proxy Statement
|
| | | | |
| Name and Address | | Number of Shares | | Percent of Class |
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | | 12,263,952 | 1 | 10.62% |
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | | 7,738,856 | 2 | 6.7% |
1 The Vanguard Group reports the sole power to vote or direct the vote of 156,458 shares, shared power to vote or direct the vote of 26,165 shares, the sole power to dispose of or direct the disposition of 12,090,087 shares and shared power to dispose or to direct the disposition of 173,865 shares. Vanguard Fiduciary Trust Company (VFTC), a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 118,840 shares, or .10%, of the common stock outstanding of the Company as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd. (“VIA”), a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 91,908 shares, or .07%, of the common stock outstanding of the Company as a result of its serving as investment manager of Australian investment offerings.
2 BlackRock, Inc. reports the sole power to vote or direct the vote of 6,713,835 and the sole power to dispose or to direct the disposition of 7,738,856 shares. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the Company’s common stock. No one person’s interest in the common stock of the Company is more than 5% of the total outstanding common shares.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board is currently comprised of fourthree directors, all of whom are presently independent as that term is defined in the rules of the New York Stock Exchange: Paul J. Zucconi,Mary E. Thigpen, who currently serves as Committee Chairman; Robert W. Ingram,Chair, Steven P. Johnson, and Lamar C. Smith.Alice S. Cho. All members of the Audit Committee, who served during 2017,2023, are financially literate as that qualification has been interpreted by the Company’s Board in its business judgment, and at least one member of the Audit Committee has accounting or related financial management expertise. On February 26, 2018,28, 2024, after review and deliberation, the Board formally reaffirmed the status of Ms. Thigpen (since February 2020) and Mr. Johnson (since February 2017) as the designated audit committee financial experts serving on the Audit Committee of Mr. Zucconi (since October 2003) and Mr. Johnson (since February 2017),designated Alice S. Cho as an additional audit committee financial expert, in accordance with the definition and qualifications for an audit committee financial expert set out in SEC Regulation S-K, Item 407(d)(5).
The Audit Committee assists the Board in fulfilling its oversight responsibilities by reviewing the Company’s consolidated financial reports, its internal financial and accounting controls, and its auditing, accounting and financial reporting processes generally. The Audit Committee evaluates the Company’s independent auditor prior to determining the firm which it will appoint, subject to stockholdershareholder ratification, to perform the audit of the Company and its subsidiaries each year. Additionally, the Audit Committee and the Company's senior accounting and financial reporting personnel perform further annual evaluation of Deloitte & Touche LLP (Deloitte), utilizing the external auditor evaluation tool developed by the Center for Audit Quality and several other governance organizations. On a 10-year cycle, the Audit Committee also engages in a comprehensive process in which it solicits information from multiple independent accounting firms, enabling the Audit Committee to evaluate whether a change in the Company’s independent registered public accounting firm may be appropriate. In 2017, the Audit Committee solicited information from several firms, including Deloitte. As part of thisThis evaluation process with assistance from senior accounting personnel at the Company, the Audit Committee critically assessed each of the participating firms, focusing on the depth of insurance experience of their respective audit engagement teams and on evaluations of the quality of their audits by the Public Company Accounting Oversight Board (PCAOB). Based upon this assessment, the Audit Committee has concluded that Deloitte should be retained as the Company’s independent registered public accounting firm.most recently occurred in 2017.
In discharging its oversight responsibilities regarding the audit process, the Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 20172023 with Company management and Deloitte, the independent registered public accounting firm of the Company. The Audit Committee received the written disclosures and the letter from Deloitte required by PCAOBPublic Company Accounting Oversight Board (PCAOB) Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, discussed with Deloitte any relationships which might impair that firm’s independence from management and the Company, and satisfied itself as to the auditors’ independence. The Audit Committee discussed with Deloitte all matters required to be discussed by auditing standards generally accepted in the United Statesapplicable requirements of America, includingthe PCAOB Auditing Standard No.16, Communications withAudit Committees (as may be modified or amended).
and the Securities and Exchange Commission.
Based upon these reviews and discussions, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20172023 for filing with the Securities and Exchange Commission.
Mary E. Thigpen, Chair
Paul J. Zucconi, Chairman
Robert W. IngramAlice S. Cho
Steven P. Johnson
Lamar C. Smith
February 26, 201828, 2024
The foregoing Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934.
63 GL 2024 Proxy Statement
PRINCIPAL ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees, including out-of-pocket expenses, billed to the Company for the fiscal years ended December 31, 20172023 and 20162022 by the Company’s independent registered public accounting firm, Deloitte & Touche LLP.
| | | | | | | | | | | | | | |
| 2023 ($) | 2022 ($) |
Audit Fees1 | 5,999,007 | | 5,660,741 | |
Audit Related Fees2 | 4,103 | | | 4,103 | |
Tax Fees3 | 0 | | | 0 | | |
All Other Fees4 | 31,156 | | | 27,700 | |
| Total Fees | 6,034,266 | | 5,692,544 | |
|
| | | | | |
| | | 2017 ($) | | 2016 ($) |
Audit Fees1 | | 3,874,429 |
| | 3,956,833 |
Audit Related Fees2 | | 161,325 |
| | 187,000 |
| Tax Fees | | 0 |
| | 0 |
All Other Fees3 | | 0 |
| | 24,737 |
| Total Fees | | 4,035,754 |
| | 4,168,570 |
| | |
1 Fees for audit services billed in 2023 and 2022 consisted of: (i) Audit of Company’s annual financial statements and insurance subsidiaries’ statutory financial statements; (ii) Review of the Company’s quarterly financial statements; and (iii) Services related to Securities and Exchange Commission filings and regulatory matters. 2 Fees for audit related fees consisted of: (i) Services related to the adoption and implementation of accounting standards. 3 Fees for tax fees consisted of: (i) None. 4 Fees for assistance with subsidiary fund review in 2023 and 2022. |
1 Fees for audit services billed in 2017 and 2016 consisted of:
(i) Audit of Company’s annual financial statements and insurance subsidiaries’ statutory financial statements;
(ii) Review of the Company’s quarterly financial statements; and
(iii) Services related to Securities and Exchange Commission filings and regulatory matters.
2 Fees for audit related fees consisted of:
(i) comfort letters for debt transactions in 2017 and 2016;
(ii) assistance with Insurance Department examinations in 2016.
3 Fees for assistance with subsidiary fund review in 2016.
PRE-APPROVAL POLICY FOR ACCOUNTING FEES
All audit and non-audit services performed by Deloitte in 20172023 were pre-approved in accordance with the Policy Regarding the Approval of Audit and Non-Audit Services Provided by the Independent Auditor adopted by the Audit Committee at its April 23, 2003 meeting, as amended at its October 13-14, 2003 and April 27, 2011 meetings. The Policy requires that all services provided by Deloitte, both audit and non-audit, must be pre-approved by the Audit Committee or a Designated Member thereof except for certain de minimus exceptions. After discussions with Deloitte and Company management, the Audit Committee has determined that the provision of certain designated audit-related, tax and all other services do not impair the independence of Deloitte. The Policy describes the permitted audit, audit-related, tax and all other services (collectively, the Disclosure Categories)"Disclosure Categories") that Deloitte may perform. Pre-approvals of audit and non-audit services may be given at any time up to a year before commencement of a specific service.
A description of the services expected to be provided by Deloitte in each of the Disclosure Categories (a Service List) is presented to the Audit Committee annually for approval. Upon receipt of approval of these services by the Audit Committee or a Designated Member, the services are provided by Deloitte for the duration of the pre-approved period. Any requests for audit, audit-related, tax and other services not on the pre-approved Service List must be separately pre-approved by the Audit Committee or the Designated Member and cannot be commenced until such pre-approval is obtained. If the Designated Member pre-approves permitted services, a report of this specific pre-approval must be made to the Audit Committee at its next regularly-scheduled meeting. The Chief Financial Officer (CFO)CFO or his designee may engage Deloitte to provide any permitted service if the expected fee does not exceed $50,000, after obtaining approval of the Chair of the Audit Committee as the Designated Member. In order to engage Deloitte to provide any permitted services where the expected fee exceeds $50,000, a written proposal must be submitted to the Audit Committee or its Designated Member for approval. The Audit Committee may also periodically establish fee thresholds for pre-approved services.
At each regularly-scheduled Audit Committee meeting, the Audit Committee reviews a summary of the services provided, including fees, a listing of new pre-approved services since the Audit Committee’s lastprevious meeting, a list of any de minimus services approved by the CFO and the Audit Committee Chair and an updated projection for the current fiscal year of estimated annual fees to be paid to Deloitte.
64 GL 2024 Proxy Statement
PROCEDURAL MATTERS
Solicitation of Proxies
The Board of Torchmark CorporationGlobe Life Inc. solicits your proxy for use at the 20182024 Annual Meeting of Shareholders and at any adjournment of the meeting. The Annual Meeting will be held at the Company Headquarters, 3700 South Stonebridge Drive,
McKinney, Texas 75070in a virtual format via live webcast at 10:00 a.m.,00am Central Daylight Time on Thursday, April 26, 2018. Gary L. Coleman25, 2024. J. Matthew Darden and LarryFrank M. HutchisonSvoboda are named as proxies on the proxy/direction card. They have been designated as directors’ proxies by the Board.
If the enclosed proxy/direction card is returned, properly executed, in time for the meeting, your shares will be voted at the meeting. All proxies will be voted in accordance with the instructions set forth on the proxy/direction card. If proxies are executed and returned which do not specify a vote on the proposals considered, those proxies will be voted FOR Proposals 1, 2 3 and 4.3. You have the right to revoke your proxy by giving written notice of revocation addressed to the Corporate Secretary of the Company at 3700 South Stonebridge Drive, McKinney, Texas 75070 at any time before the proxy is voted at the meeting.
The proxy/direction card shall constitute voting instructions furnished to the trustees of the Torchmark CorporationGlobe Life Inc. Savings and Investment Plan, and the American Income Life Insurance Company Agent Stock Purchase Plan and the Family Heritage Life Agent Incentive Plan with respect to shares allocated to individuals’ accounts under this plan. If the account information is the same, participants who are also stockholdersshareholders of record will receive a single card representing all their shares. If a plan participant does not return a proxy/direction card to the Company, the trustee of the plan in which shares are allocated to the participant’s individual account will vote those shares in the same proportion as the total number of shares in the plan for which directions have been received.
Record Date, Voting Stock and Quorum
The record date fixed by the Board of Directors for the determination of stockholders entitled to notice of and to vote at the 20182024 Annual Meeting is March 2, 20181, 2024 (the Record Date)"Record Date"). At the close of business on the Record Date, there were 113,851,30494,036,897 shares of the Company’s common stock outstanding and eligible to vote at the Annual Meeting. At the Annual Meeting, shareholders will be entitled to one vote for each share of common stock owned at the close of business on the Record Date. There is no cumulative voting of the common stock. Pursuant to a policy adopted by the Board, voting is confidential, with exceptions made to allow the Company to contact shareholders so as to reach quorum for meetings, in the event of a contested election and in the event comments are included on a proxy/direction card.
The presence at the 20182024 Annual Meeting, in personpersonally or by proxy, of the holders of a majority of the outstanding shares of common stock entitled to vote at the meeting will constitute a quorum for consideration of the matters expected to be voted on at the meeting. Abstentions and broker non-votes will be included in the calculation of the number of the shares present at the meeting for the purposes of determining a quorum. “Broker non-votes” means shares held of record by a broker that are not voted on a matter because the broker has not received voting instructions from the beneficial owner of the shares and lacks the authority to vote the shares in its discretion. In tabulating the voting results for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal and will not affect the outcome of any matter being voted on at the meeting.
Required Vote on Proposals
Proposal 1– Election of Directors: Under the Company’s By-Laws, a nominee will be elected to the Board of the Company at the 2018 Annual Meeting if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee’s election, with abstentions not counting as votes “for” or “against.” If you donot instruct your broker how to vote with respect to this item, your broker is not permitted to vote your shares withrespect to the election of directors. Abstentions and broker non-votes will not be taken into account in determining the outcome of the election of directors.
An uncontested incumbent director is required to submit a contingent letter of resignation to the Board at the time of his/her nomination for consideration by the Governance and Nominating Committee of the Board. If such a director does not receive a majority of votes cast “for” his or her election, the Governance and Nominating Committee is required to consider on an expedited basis such director’s tendered resignation and make a recommendation to the Board concerning the acceptance or rejection of the tendered resignation. The Board is required to take formal action on the Governance and Nominating Committee’s recommendation expeditiously following the date of certification of the election results. The Company will publicly disclose the Board’s decision and its reasoning with regard to the tendered resignation.
Proposal 2– Ratification of Appointment of Independent Registered Public Accounting Firm: Under the Company’s By-Laws, in order to be approved, this proposal requires an affirmative vote of a majority of the votes cast affirmatively or negatively. This means that the votes that shareholders cast “for” this proposal must exceed the votes that shareholders cast “against” this proposal at the meeting. Abstentions and broker non-votes are not counted as votes cast “for” or “against” and will not be taken into account in determining the outcome of this proposal.
Proposal3– Approval of the Torchmark Corporation 2018 Incentive Plan: Under NYSE rules, the affirmative vote of at least a majority of the votes cast on this proposal is required for the approval of this proposal, provided that the total number of votes cast on this proposal represents a majority of the votes entitled to be cast on this proposal. If you do not instruct your broker how to vote with respect to this item, your broker may not vote with respect to this proposal. Votes “for” and “against” and abstentions count as votes cast, while broker non-votes do not count as votes cast. Thus, the total sum of votes “for,” plus | | |
| Proposal 1 – Election of Directors |
Under the Company’s By-laws, a nominee will be elected to the Board of the Company at the 2024 Annual Meeting if the votes cast “for” the nominee’s election exceed the votes cast “against” the nominee’s election, with abstentions not counting as votes “for” or “against.” If you donot instruct your broker how to vote with respect to this item, your broker is not permitted to vote your shares withrespect to the election of directors. Abstentions and broker non-votes will not be taken into account in determining the outcome of the election of directors. An uncontested incumbent director is required to submit a contingent letter of resignation to the Board at the time of his/her nomination for consideration by the Governance and Nominating Committee of the Board. If such a director does not receive a majority of votes cast “for” his or her election, the Governance and Nominating Committee is required to consider on an expedited basis such director’s tendered resignation and make a recommendation to the Board concerning the acceptance or rejection of the tendered resignation. The Board is required to take formal action on the Governance and Nominating Committee’s recommendation expeditiously following the date of certification of the election results. The Company will publicly disclose the Board’s decision and its reasoning with regard to the tendered resignation. |
65 GL 2024 Proxy Statement
| | |
| Proposal 2 – Ratification of Appointment of Independent Registered Public Accounting Firm |
| Under the Company’s By-laws, in order to be approved, this proposal requires an affirmative vote of a majority of the votes cast affirmatively or negatively. This means that the votes that shareholders cast “for” this proposal must exceed the votes that shareholders cast “against” this proposal at the meeting. Abstentions and broker non-votes are not counted as votes cast “for” or “against” and will not be taken into account in determining the outcome of this proposal. |
votes “against,” plus abstentions in respect of this proposal (referred to as the NYSE Votes Cast) must be greater than 50% of the total of the Company’s outstanding shares of common stock. Once the NYSE Votes Cast requirement is satisfied, the number of votes cast “for” this proposal must represent a majority of the NYSE Votes Cast with respect to the proposal in order for it to be approved. Accordingly, broker non-votes can make it difficult to satisfy the NYSE Votes Cast requirement, and abstentions have the effect of a vote against the proposal.
Proposal 4 – Advisory Vote to Approve Executive Compensation: Our Board is seeking a non-binding advisory vote regarding the compensation of our named executive officers, as described in the Compensation Discussion and Analysis section, executive compensation tables and accompanying narrative disclosures contained in this Proxy Statement. Under the Company’s By-Laws, in order to be approved, this proposal requires an affirmative vote of a majority of the votes cast affirmatively or negatively at the meeting. This means that the votes that shareholders cast “for” this proposal must exceed the votes that shareholders cast “against” this proposal at the meeting. The vote is advisory and non-binding in nature but our Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. If you do not instruct your broker how to vote with respect to this item, your broker may not vote with respect to this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this proposal.
| | |
| Proposal 3 – Advisory Vote to Approve Executive Compensation |
Our Board is seeking a non-binding advisory vote regarding the compensation of our named executive officers, as described in the Compensation Discussion and Analysis section, executive compensation tables and accompanying narrative disclosures contained in this Proxy Statement. Under the Company’s By-laws, in order to be approved, this proposal requires an affirmative vote of a majority of the votes cast affirmatively or negatively at the meeting. This means that the votes that shareholders cast “for” this proposal must exceed the votes that shareholders cast “against” this proposal at the meeting. The vote is advisory and non-binding in nature but our Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. If you do not instruct your broker how to vote with respect to this item, your broker may not vote with respect to this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this proposal. |
Following the Annual Meeting, we will file a Form 8-K with the Securities and Exchange Commission disclosing the results of voting on each proposal as required by applicable rules.
MISCELLANEOUS INFORMATION
Shareholder Proposals of Shareholders
and Director Nominations for our 2025 Annual Meeting
In order for a proposal (including nominations of candidates for the Board of Directors) by a shareholder of the Company to be eligible to be included in the Proxy Statement and proxy form for the Annual Meeting of Shareholders in 20192025 pursuant to the proposal process mandated by Securities and Exchange Commission Rule 14a-8, the proposal must be received by the Corporate Secretary of the Company at 3700 South Stonebridge Drive, McKinney, Texas 75070, on or before November 18, 2024.
Our Board has adopted proxy access, which permits an eligible shareholder (or a group of no more than 20 shareholders) owning at least 3% of the outstanding shares of the Company's common stock continuously for at least three years prior to the date the Notice of Proxy Access Nomination is received at the principal executive offices of the Company, to submit director nominees constituting up to the greater of 20% of the Board or two directors, for inclusion in our proxy statement if the shareholder(s) and the nominee(s) meet the requirements in our By-laws. Notice of director nominations submitted under this proxy access By-law provision must be delivered to or mailed and received by the Corporate Secretary of the Company at 3700 South Stonebridge Drive, McKinney, Texas 75070, not earlier than October 19, 2018. 2024, nor later than November 18, 2024.
If a shareholder proposal is submitted outside the proposal process mandated by this Securities and Exchange Commission rule, and is submitted instead under the Company’s advance notice By-LawBy-law provision (Article II, Section 10 of the By-Laws),By-laws) for presentation directly at an Annual Meeting rather than for inclusion in our proxy statement, the proposal must be received by the Corporate Secretary of the Company at 3700 South Stonebridge Drive, McKinney, Texas 75070 not earlier than December 27, 201826, 2024, nor later than February 10, 2019,9, 2025, together with the necessary supporting documentation required under that By-LawBy-law provision.
In addition to satisfying the foregoing requirements under our By-laws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the information required by Rule 14a-19 of the Exchange Act no later than February 24, 2025.
66 GL 2024 Proxy Statement
General
General
The cost of this solicitation of proxies will be paid by the Company. The Company is requesting that certain banking institutions, brokerage firms, custodians, trustees, nominees, and fiduciaries forward solicitation material to the underlying beneficial owners of the shares of the Company they hold of record. The Company will reimburse all reasonable forwarding expenses. The Company has retained Okapi Partners LLC to assist with the solicitation of proxies for a fee not to exceed $8,000 $10,250 plus reimbursement for out-of-pocket expenses.
The Annual Report of the Company for 2017,2023, which accompanies this Proxy Statement, includes a copy of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 20172023, and the financial statements and schedules thereto. Upon written request and payment of copying costs, the exhibits to the Form 10-K will be furnished. These written requests should be directed to the Investor Relations Department of Torchmark CorporationGlobe Life Inc. at 3700 South Stonebridge Drive, McKinney, Texas 75070.
By Order of the Board of Directors
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| By Order of the Board of Directors |
|
Christopher T. Moore Corporate Senior Vice President, Associate Counsel and Corporate Secretary
|
Carol A. McCoyMarch 18, 2024
Vice President, Associate Counsel & Corporate Secretary 67 GL 2024 Proxy Statement
March 19, 2018
APPENDIX A
Non-GAAP Reconciliation
NON-GAAP RECONCILIATION
The chart below reflects non-GAAP financial measures utilized by Management which are included in the Proxy Statement. TorchmarkGlobe Life Inc. includes non-GAAP measures to enhance investors' understanding of management's view of the business. The non-GAAP measures are not a substitute for GAAP, but rather a supplement to increase transparency by providing broader perspective. Torchmark'sGlobe Life Inc.'s definitions of non-GAAP measures may differ from other companies' definitions.
| | | | | | | | |
| | | | |
| Non-GAAP financial measure as referenced within Proxy Statement | | Full Non-GAAP reference | | Comparable GAAP financial measure |
Net operating income1 | Net operating income | Net income |
| Operating EPS | Net operating income earnings per diluted common share (EPS) | | Net operating income from continuing operations per diluted common share (EPS) |
| | |
Underwriting margin1 | Insurance underwriting margin | Earnings per share (EPS)Income before income taxes |
Operating income1
| | Net operating income from continuing operations | | Net income |
Underwriting income or margin1ROE2
| | Insurance underwriting income or margin | | Net income |
Return on Equity (ROE)2
| | Net operating income as a return on shareholders' equity, (ROE) excluding net unrealized gains on fixed maturitiesAOCI | | Net income as a ROEreturn on equity (ROE) |
Book value per share2
| | Book value per share, excluding net unrealized gains on fixed maturitiesAOCI2 | Shareholders' equity per share, excluding AOCI | Book value per share |
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| | |
1 Net operating income from continuing operations is the consolidated total of segment profits after tax and as such is considered a Non-GAAPnon-GAAP measure. Underwriting incomemargin is a component of net operating income. See 10-K Refer to Results of Operations in our 2023 Annual Report on Form 10-K (pages 21 through 26) for a reconciliation to the most directly comparable GAAP measure and for a discussion ofon the usefulness and purpose of this measure.
2 Shareholders' equity per share, excluding net unrealized gains on fixed maturities, andAOCI, or book value per share, excluding net unrealized gains on fixed maturities, areAOCI, is a non-GAAP measures that aremeasure utilized by management to view the business without the effect of unrealized gains or losseschanges in AOCI, which are primarily attributable to fluctuation in interest rates on the fixed maturity available for sale portfolio. Net unrealized gains on fixed maturities referred to above are net of tax.rates. Management views the business in this manner because the Company has the ability, and generally the intent, to hold investments to recovery or maturity and meaningful trends can more easily be identified without the fluctuations. Shareholders' equity andper share, or book value per share, areis the most directly comparable GAAP measures.measure. Refer to Results of Operations in our 2023 Annual Report on Form 10-K (pages 21 through 26) for discussion of the usefulness and purpose of this measure.
APPENDIX B
TORCHMARK CORPORATION
2018 INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 GENERAL. The purpose of the Torchmark Corporation 2018 Incentive Plan (the “Plan”) is to promote the success, and enhance the value, of Torchmark Corporation (the “Company”), by linking the personal interests of employees, officers, directors and consultants of the Company or any Affiliate (as defined below) to those of Company stockholders and by providing such persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, officers, directors and consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent. Accordingly, the Plan permits the grant of incentive awards from time to time to selected employees, officers, directors and consultants of the Company and its Affiliates.
ARTICLE 2
DEFINITIONS
2.1 DEFINITIONS. When a word or phrase appears in this Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be given the meaning ascribed to it in this Section or in Section 1.1 unless a clearly different meaning is required by the context. The following words and phrases shall have the following meanings:
(a)“Affiliate” means (i) any Subsidiary or Parent, or (ii) an entity that directly or through one or more intermediaries controls, is controlled by or is under common control with, the Company, as determined by the Committee.
(b)“Award” means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Deferred Stock Units, Performance Awards, Dividend Equivalents, Other Stock-Based Awards, or any other right or interest relating to Stock or cash, granted to a Participant under the Plan.
(c)“Award Certificate” means a written document, in such form as the Committee prescribes from time to time, setting forth the terms and conditions of an Award. Award Certificates may be in the form of individual award agreements or certificates or a program document describing the terms and provisions of an Award or series of Awards under the Plan. The Committee may provide for the use of electronic, internet or other non-paper Award Certificates, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.
(d)“Beneficial Owner” shall have the meaning given such term in Rule 13d-3 of the General Rules and Regulations under the 1934 Act.
(e)“Board” means the Board of Directors of the Company.
(f)“Cause” as a reason for a Participant’s termination of employment shall have the meaning assigned such term in the employment, severance or similar agreement, if any, between such Participant and the Company or an Affiliate, provided, however, that if there is no such employment, severance or similar agreement in which such term is defined, and unless otherwise defined in the applicable Award Certificate, “Cause” shall mean any of the following acts by the Participant, as determined by the Committee or the Board: gross neglect of duty, prolonged absence from duty without the consent of the Company, intentionally engaging in any activity that is in conflict with or adverse to the business or other interests of the Company, or willful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental to the Company. With respect to a Participant’s termination of directorship, “Cause” means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law. The determination of the Committee as to the existence of “Cause” shall be conclusive on the Participant and the Company.
(g)“Change in Control” means and includes the occurrence of any one of the following events:
(1)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 25% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (1), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition by a Person who is on the Effective Date the beneficial owner of 25% or more of the Outstanding Company Voting Securities, (ii) any acquisition directly from the Company, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition; or
(2)Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(3)Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
(4)approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
(h)“Code” means the Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.
(i)“Committee” means the committee of the Board described in Article 4.
(j)“Company” means Torchmark Corporation, a Delaware corporation, or any successor corporation.
(k)“Continuous Service” means the absence of any interruption or termination of service as an employee, officer, director or consultant of the Company or any Affiliate, as applicable; provided, however, that for purposes of an Incentive Stock Option “Continuous Service” means the absence of any interruption or termination of service as an employee of the Company or any Parent or Subsidiary, as applicable, pursuant to applicable tax regulations. Continuous Service shall not be considered interrupted in the following cases: (i) a Participant transfers employment between the Company and an Affiliate or between Affiliates, or (ii) in the discretion of the Committee as specified at or prior to such occurrence, in the case of a spin-off, sale or disposition of the Participant’s employer from the Company or any Affiliate, or (iii) any leave of absence authorized in writing by the Company prior to its commencement; provided, however, that for purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 91st day of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Whether military, government or other service or other leave of absence shall constitute a termination of Continuous Service shall be determined in each case by the Committee at its discretion, and any determination by the Committee shall be final and conclusive; provided, however, that for purposes of any Award that is subject to Code Section 409A, the determination of a leave of absence must comply with the requirements of a “bona fide leave of absence” as provided in Treas. Reg. Section 1.409A-1(h).
(l)“Deferred Stock Unit” means a right granted to a Participant under Article 9 to receive Shares (or the equivalent value in cash or other property if the Committee so provides) at a future time as determined by the Committee, or as determined by the Participant within guidelines established by the Committee in the case of voluntary deferral elections.
(m)“Disability” of a Participant means that the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer. If the determination of Disability relates to an Incentive Stock Option, Disability means Permanent and Total Disability as defined in Section 22(e)(3) of the Code. In the event of a dispute, the determination of whether a Participant is Disabled will be made by the Committee and may be supported by the advice of a physician competent in the area to which such Disability relates.
(n)“Dividend Equivalent” means a right granted to a Participant under Article 11.
(o)“Effective Date” has the meaning assigned such term in Section 3.1.
(p)“Eligible Participant” means an employee (including a leased employee), officer, director or consultant of the Company or any Affiliate.
(q)“Exchange” means any national securities exchange on which the Stock may from time to time be listed or traded.
(r)“Fair Market Value,” on any date, means (i) if the Stock is listed on a securities exchange, the closing sales price on the principal such exchange on such date or, in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported, or (ii) if the Stock is not listed on a securities exchange, the mean between the bid and offered prices as quoted by the applicable interdealer quotation system for such date, provided, that if the Stock is not quoted on an interdealer quotation system or it is determined that the fair market value is not properly reflected by such quotations, Fair Market Value will be determined by such other method as the Committee determines in good faith to be reasonable and in compliance with Code Section 409A.
(s)“Full-Value Award” means an Award other than in the form of an Option or SAR, and which is settled by the issuance of Stock (or at the discretion of the Committee, settled in cash valued by reference to Stock value).
(t)“Good Reason” (or a similar term denoting constructive termination) has the meaning, if any, assigned such term in the employment, consulting, severance or similar agreement, if any, between a Participant and the Company or an Affiliate; provided, however, that if there is no such employment, consulting, severance or similar agreement in which such term is defined, “Good Reason” shall have the meaning, if any, given such term in the applicable Award Certificate. If not defined in either such document, the term “Good Reason” as used herein shall not apply to a particular Award.
(u)“Grant Date” of an Award means the first date on which all necessary corporate action has been taken to approve the grant of the Award as provided in the Plan, or such later date as is determined and specified as part of that authorization process. Notice of the grant shall be provided to the grantee within a reasonable time after the Grant Date.
(v)“Incentive Stock Option” means an Option that is intended to be an incentive stock option and meets the requirements of Section 422 of the Code or any successor provision thereto.
(w)“Independent Directors” means those members of the Board of Directors who qualify at any given time as (a) an “independent” director under the applicable rules of each Exchange on which the Shares are listed, and (b) a “non-employee” director under Rule 16b-3 of the 1934 Act.
(x)“Non-Employee Director” means a director of the Company who is not a common law employee of the Company or an Affiliate.
(y)“Nonstatutory Stock Option” means an Option that is not an Incentive Stock Option.
(z)“Option” means a right granted to a Participant under Article 7 of the Plan to purchase Stock at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.
(aa)“Other Stock-Based Award” means a right, granted to a Participant under Article 12, that relates to or is valued by reference to Stock or other Awards relating to Stock.
(bb) “Parent” means a corporation, limited liability company, partnership or other entity which owns or beneficially owns a majority of the outstanding voting stock or voting power of the Company. Notwithstanding the above, with respect to an Incentive Stock Option, Parent shall have the meaning set forth in Section 424(e) of the Code.
(cc) “Participant” means an Eligible Participant who has been granted an Award under the Plan; provided, that in the case of the death of a Participant, the term “Participant” refers to a beneficiary designated pursuant to Section 13.4 or the legal guardian or other legal representative acting in a fiduciary capacity on behalf of the Participant under applicable state law and court supervision.
(dd) “Performance Award” means any award granted under the Plan pursuant to Article 10.
(ee) “Person” means any individual, entity or group, within the meaning of Section 3(a)(9) of the 1934 Act and as used in Section 13(d)(3) or 14(d)(2) of the 1934 Act.
(ff) “Plan” means the Torchmark 2018 Incentive Plan, as amended from time to time.
(gg) “Restricted Stock” means Stock granted to a Participant under Article 9 that is subject to certain restrictions and to risk of forfeiture.
(hh) “Restricted Stock Unit” means the right granted to a Participant under Article 9 to receive shares of Stock (or the equivalent value in cash or other property if the Committee so provides) in the future, which right is subject to certain restrictions and to risk of forfeiture.
(ii) “Retirement” means a Participant’s termination of employment with the Company or an Affiliate with the Committee’s approval after attaining any normal retirement age specified in any pension, profit sharing or other retirement program sponsored by the Company, or, in the event of the inapplicability thereof with respect to the Participant in question, as determined by the Committee in its reasonable judgment.
(jj) “Shares” means shares of the Company’s Stock. If there has been an adjustment or substitution pursuant to Article 14, the term “Shares” shall also include any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted pursuant to Article 14.
(kk) “Stock” means the $1.00 par value common stock of the Company and such other securities of the Company as may be substituted for Stock pursuant to Article 14.
(ll) “Stock Appreciation Right” or “SAR” means a right granted to a Participant under Article 8 to receive a payment equal to the difference between the Fair Market Value of a Share as of the date of exercise of the SAR over the base price of the SAR, all as determined pursuant to Article 8.
(mm) “Subsidiary” means any corporation, limited liability company, partnership or other entity, domestic or foreign, of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company. Notwithstanding the above, with respect to an Incentive Stock Option, Subsidiary shall have the meaning set forth in Section 424(f) of the Code.
(nn) “1933 Act” means the Securities Act of 1933, as amended from time to time.
(oo) “1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.
ARTICLE 3
EFFECTIVE TERM OF PLAN
3.1 EFFECTIVE DATE. Subject to the approval of the Plan by the Company’s stockholders within 12 months after the Plan’s adoption by the Board, the Plan will become effective on the date that it is adopted by the Board (the “Effective Date”).
3.2 TERMINATION OF PLAN. Unless earlier terminated as provided herein, the Plan shall continue in effect until the tenth anniversary of the Effective Date or, if the stockholders approve an amendment to the Plan that increases the number of Shares subject to the Plan, the tenth anniversary of the date of such approval. The termination of the Plan on such date shall not affect the validity of any Award outstanding on the date of termination, which shall continue to be governed by the applicable terms and conditions of the Plan.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by a Committee appointed by the Board (which Committee shall consist of at least two directors) or, at the discretion of the Board from time to time, the Plan may be administered by the Board. It is intended that at least two of the directors appointed to serve on the Committee shall be Independent Directors and that any such members of the Committee who do not so qualify shall abstain from participating in any decision to make or administer Awards that are made to Eligible Participants who at the time of consideration for such Award are persons subject to the short-swing profit rules of Section 16 of the 1934 Act. However, the mere fact that a Committee member shall fail to qualify as an Independent Director or shall fail to abstain from such action shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan. The members of the Committee shall be appointed by, and may be changed at any time and from time to time in the discretion of, the Board. Unless and until changed by the Board, the Compensation Committee of the Board is designated as the Committee to administer the Plan. The Board may reserve to itself any or all of the authority and responsibility of the Committee under the Plan or may act as administrator of the Plan for any and all purposes. To the extent the Board has reserved any authority and responsibility or during any time that the Board is acting as administrator of the Plan, it shall have all the powers and protections of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1) shall include the Board. To the extent any action of the Board under the Plan conflicts with actions taken by the Committee, the actions of the Board shall control.
4.2 ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering the Plan, the Committee may from time to time adopt rules, regulations, guidelines and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Committee may deem appropriate. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent it deems necessary to carry out the intent of the Plan. The Committee’s interpretation of the Plan, any Awards granted under the Plan, any Award Certificate and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s or an Affiliate’s independent certified public accountants, Company counsel or any executive compensation consultant or other professional retained by the Company or the Committee to assist in the administration of the Plan. No member of the Committee will be liable for any good faith determination, act or omission in connection with the Plan or any Award.
4.3 AUTHORITY OF COMMITTEE. Except as provided in Section 4.1 and 4.5 hereof, the Committee has the exclusive power, authority and discretion to:
(a) Grant Awards;
(b) Designate Participants;
(c) Determine the type or types of Awards to be granted to each Participant;
(d) Determine the number of Awards to be granted and the number of Shares or dollar amount to which an Award will relate;
(e) Determine the terms and conditions of any Award granted under the Plan;
(f) Prescribe the form of each Award Certificate, which need not be identical for each Participant;
(g) Decide all other matters that must be determined in connection with an Award;
(h) Establish, adopt or revise any rules, regulations, guidelines or procedures as it may deem necessary or advisable to administer the Plan;
(i) Make all other decisions and determinations that may be required under the Plan or as the Committee deems necessary or advisable to administer the Plan;
(j) Amend the Plan or any Award Certificate as provided herein; and
(k) Adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of the United States or any non-U.S. jurisdictions in which the Company or any Affiliate may operate, in order to assure the viability of the benefits of Awards granted to participants located in the United States or such other jurisdictions and to further the objectives of the Plan. Notwithstanding the foregoing, grants of Awards to Non-Employee Directors hereunder shall be made only in accordance with the terms, conditions and parameters of a plan, program or policy for the compensation of Non-Employee Directors as in effect from time to time, and the Committee may not make discretionary grants hereunder to Non-Employee Directors.
4.4 DELEGATION.
(a) Administrative Duties. The Committee may delegate to one or more of its members or to one or more officers of the Company or an Affiliate or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan.
(b) Special Committee. The Board may, by resolution, expressly delegate to a special committee, consisting of one or more directors who may but need not be officers of the Company, the authority, within specified parameters as to the number and terms of Awards, to (i) designate officers and/or employees of the Company or any of its Affiliates to be recipients of Awards under the Plan, and (ii) to determine the number of such Awards to be received by any such Participants; provided, however, that such delegation of duties and responsibilities to an officer of the Company may not be made with respect to the grant of Awards to eligible participants who are subject to Section 16(a) of the 1934 Act at the Grant Date. The acts of such delegates shall be treated hereunder as acts of the Board and such delegates shall report regularly to the Board and the Compensation Committee regarding the delegated duties and responsibilities and any Awards so granted.
4.5 INDEMNIFICATION. Each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated in accordance with this Article 4 shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment as provided in Sections 5.2 and 14.1, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted under the Plan shall be 8,800,000 Shares, plus a number of additional Shares (not to exceed 184,000) available for awards as of the Effective Date under the Company’s 2011 Long-Term Compensation Plan (the “Prior Plan”) that thereafter terminate or expire unexercised, or are cancelled, forfeited or lapse for any reason. The maximum number of Shares that may be issued upon exercise of Incentive Stock Options granted under the Plan shall be 8,984,000. From and after the Effective Date, no further awards shall be granted under the Prior Plan and the Prior Plan shall remain in effect only so long as awards granted thereunder shall remain outstanding.
5.2 SHARE COUNTING. Shares covered by an Award shall be subtracted from the Plan share reserve as of the Grant Date, but shall be added back to the Plan share reserve in accordance with this Section 5.2.
(a) Awards of Options and Stock Appreciation Rights with up to a seven-year term shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan as .85 of a Share for each Share covered by such Awards, Options and Stock Appreciation Rights with a term of seven to ten years shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan as one (1) Share for each Share covered by such Awards, Full Value Awards that vest based on performance criteria other than continued service shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan as 3.1 Shares for each Share covered by such Award, and Full Value Awards that vest solely on continued service shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan as 3.88 Shares for each Share covered by such Awards.
(b) The full number of Shares subject to the Option shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan, even if the exercise price of an Option is satisfied through net-settlement or by delivering Shares to the Company (by either actual delivery or attestation).
(c) Upon exercise of Stock Appreciation Rights that are settled in Shares, the full number of Stock Appreciation Rights (rather than the net number of Shares actually delivered upon exercise) shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan.
(d) Shares withheld from an Award to satisfy tax withholding requirements shall count against the number of Shares remaining available for issuance pursuant to Awards granted under the Plan, and Shares delivered by a participant to satisfy tax withholding requirements shall not be added to the Plan share reserve.
(e) To the extent that an Award is canceled, terminates, expires, is forfeited or lapses for any reason, any unissued or forfeited Shares subject to the Award will be added back to the Plan share reserve and again be available for issuance pursuant to Awards granted under the Plan.
(f) Shares subject to Awards settled in cash will be added back to the Plan share reserve and again be available for issuance pursuant to Awards granted under the Plan.
(g) To the extent that the full number of Shares subject to Full Value Award is not issued for any reason, including by reason of failure to achieve maximum performance goals, the unissued Shares originally subject to the Award will be added back to the Plan share reserve and again be available for issuance pursuant to Awards granted under the Plan.
(h) Substitute Awards granted pursuant to Section 13.10 of the Plan shall not count against the Shares otherwise available for issuance under the Plan under Section 5.1.
(i) Subject to applicable Exchange requirements, shares available under a stockholder-approved plan of a company acquired by the Company (as appropriately adjusted to Shares to reflect the transaction) may be issued under the Plan pursuant to Awards granted to individuals who were not employees of the Company or its Affiliates immediately before such transaction and will not count against the maximum share limitation specified in Section 5.1.
5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.
5.4 LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Article 14):
(a) Options. The maximum aggregate number of Shares subject to Options granted under the Plan within a single calendar year to any one Participant shall be 300,000.
(b) SARs. The maximum number of Shares subject to Stock Appreciation Rights granted under the Plan within a single calendar year to any one Participant shall be 300,000.
(c) Restricted Stock or Restricted Stock Units. The maximum aggregate number of Shares underlying Awards of Restricted Stock or Restricted Stock Units under the Plan within a single calendar year to any one Participant shall be 100,000.
(d) Other Stock-Based Awards. The maximum aggregate grant with respect to Other Stock-Based Awards under the Plan within a single calendar year to any one Participant shall be 150,000 Shares at the target level.
(e) Cash-Based Awards. The maximum aggregate amount that may be paid with respect to cash-based Awards under the Plan to any one Participant within a single calendar year shall be $4,000,000.
(f) Non-Employee Director Awards. The maximum dollar amount of Awards that may be granted under this Plan to any one (1) Non-Employee Director as part of their compensation in any single calendar year is $450,000 for any director in such year. The value of all Awards shall be calculated based upon the grant date fair value for financial reporting purposes.
5.5 MINIMUM VESTING REQUIREMENTS. Except in the case of substitute Awards granted pursuant to Section 13.10, Full-Value Awards granted under the Plan to an Eligible Participant shall either (i) be subject to a minimum vesting period of three years (which may include graduated vesting within such three-year period), or one year if the vesting is based on performance criteria other than continued service, or (ii) be granted solely in exchange for foregone cash compensation. Notwithstanding the foregoing, (i) the Committee may permit and authorize acceleration of vesting of such Full-Value Awards in the event of the Participant’s death, Disability, or Retirement, or the occurrence of a Change in Control, and (ii) the Committee may grant Full-Value Awards without the above described minimum vesting requirements, or may permit and authorize acceleration of vesting of Full-Value Awards otherwise subject to the above-described minimum vesting requirements, with respect to Awards covering 10% or fewer of the total number of Shares authorized under the Plan.
ARTICLE 6
ELIGIBILITY
6.1 GENERAL. Awards may be granted only to Eligible Participants. Incentive Stock Options may be granted only to Eligible Participants who are employees of the Company or a Parent or Subsidiary as defined in Section 424(e) and (f) of the
Code. Eligible Participants who are service providers to an Affiliate may be granted Options or SARs under this Plan only if the Affiliate qualifies as an “eligible issuer of service recipient stock” within the meaning of §1.409A-1(b)(5)(iii)(E) of the final regulations under Code Section 409A.
ARTICLE 7
STOCK OPTIONS
7.1 GENERAL. The Committee is authorized to grant Options to Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per Share under an Option shall be determined by the Committee, provided, that the exercise price for any Option (other than an Option issued as a substitute Award pursuant to Section 13.10) shall not be less than the Fair Market Value as of the Grant Date.
(b) PROHIBITION ON REPRICING. Except as otherwise provided in Section 14.1, the exercise price of an Option may not be reduced, directly or indirectly by cancellation and re-grant or otherwise, without the prior approval of the stockholders of the Company.
(c) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, subject to Section 7.1(e), including a provision that an Option that is otherwise exercisable and has an exercise price that is less than the Fair Market Value of the Stock on the last day of its term will be automatically exercised on such final date of the term by means of a “net exercise,” thus entitling the optionee to Shares equal to the intrinsic value of the Option on such exercise date, less the number of Shares required for tax withholding. The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised or vested.
(d) PAYMENT. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, and the methods by which Shares shall be delivered or deemed to be delivered to Participants. As determined by the Committee at or after the Grant Date, payment of the exercise price of an Option may be made, in whole or in part, in the form of (i) cash or cash equivalents, (ii) delivery (by either actual delivery or attestation) of previously-acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised, (iii) withholding of Shares from the Option based on the Fair Market Value of the Shares on the date the Option is exercised, (iv) broker-assisted market sales, or (iv) any other “cashless exercise” arrangement.
(e) EXERCISE TERM. Except for Nonstatutory Options granted to Participants outside the United States, no Option granted under the Plan shall be exercisable for more than ten years from the Grant Date.
(f) NO DEFERRAL FEATURE. No Option shall provide for any feature for the deferral of compensation other than the deferral of recognition of income until the exercise or disposition of the Option.
(g) NO DIVIDEND EQUIVALENTS. No Option shall provide for Dividend Equivalents.
7.2 INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options granted under the Plan must comply with the requirements of Section 422 of the Code. Without limiting the foregoing, any Incentive Stock Option granted to a Participant who at the Grant Date owns more than 10% of the voting power of all classes of shares of the Company must have an exercise price per Share of not less than 110% of the Fair Market Value per Share on the Grant Date and an Option term of not more than five years. If all of the requirements of Section 422 of the Code (including the above) are not met, the Option shall automatically become a Nonstatutory Stock Option.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 GRANT OF STOCK APPRECIATION RIGHTS. The Committee is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a SAR, the Participant has the right to receive, for each Share with respect to which the SAR is being exercised, the excess, if any, of:
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(1) | The Fair Market Value of one Share on the date of exercise; over |
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(2) | The base price of the SAR as determined by the Committee and set forth in the Award Certificate, which shall not be less than the Fair Market Value of one Share on the Grant Date. |
(b) PROHIBITION ON REPRICING. Except as otherwise provided in Section 14.1, the base price of a SAR may not be reduced, directly or indirectly by cancellation and regrant or otherwise, without the prior approval of the stockholders of the Company.
(c) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at which a SAR may be exercised in whole or in part, including a provision that a SAR that is otherwise exercisable and has a base price that is less than the Fair Market Value of the Stock on the last day of its term will be automatically exercised on such final date of the term, thus entitling the holder to cash or Shares equal to the intrinsic value of the SAR on such exercise date, less the cash or number of Shares required for tax withholding. Except for SARs granted to Participants outside the United States, no SAR shall be exercisable for more than ten years from the Grant Date.
(d) NO DEFERRAL FEATURE. No SAR shall provide for any feature for the deferral of compensation other than the deferral of recognition of income until the exercise or disposition of the SAR.
(e) NO DIVIDEND EQUIVALENTS. No SAR shall provide for Dividend Equivalents.
ARTICLE 9
RESTRICTED STOCK, RESTRICTED STOCK UNITS
AND DEFERRED STOCK UNITS
9.1 GRANT OF RESTRICTED STOCK, RESTRICTED STOCK UNITS AND DEFERRED STOCK UNITS. The Committee is authorized to make Awards of Restricted Stock, Restricted Stock Units or Deferred Stock Units to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. An Award of Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be evidenced by an Award Certificate setting forth the terms, conditions, and restrictions applicable to the Award.
9.2 ISSUANCE AND RESTRICTIONS. Restricted Stock, Restricted Stock Units or Deferred Stock Units shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, for example, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the time of the grant of the Award or thereafter. Except as otherwise provided in an Award Certificate or any special Plan document governing an Award, a Participant shall have none of the rights of a stockholder with respect to Restricted Stock Units or Deferred Stock Units until such time as Shares of Stock are paid in settlement of such Awards.
9.3 DIVIDENDS ON RESTRICTED STOCK. In the case of Restricted Stock, the Committee may provide that ordinary cash dividends declared on the Shares before they are vested (i) will be forfeited, (ii) will be deemed to have been reinvested in additional Shares or otherwise reinvested (subject to Share availability under Section 5.1 hereof), or (iii) in the case of Restricted Stock that is not subject to performance-based vesting, will be paid or distributed to the Participant as accrued (in which case, such dividends must be paid or distributed no later than the 15th day of the 3rd month following the later of (A) the calendar year in which the corresponding dividends were paid to stockholders, or (B) the first calendar year in which the Participant’s right to such dividends is no longer subject to a substantial risk of forfeiture). Unless otherwise provided by the Committee, dividends accrued on Shares of Restricted Stock before they are vested shall, as provided in the Award Certificate, either (i) be reinvested in the form of additional Shares, which shall be subject to the same vesting provisions as provided for the host Award, or (ii) be credited by the Company to an account for the Participant and accumulated without interest until the date upon which the host Award becomes vested, and any dividends accrued with respect to forfeited Restricted Stock will be reconveyed to the Company without further consideration or any act or action by the Participant.
9.4 FORFEITURE. Subject to the terms of the Award Certificate and except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of Continuous Service during the applicable restriction period or upon failure to satisfy a performance goal during the applicable restriction period, Restricted Stock or Restricted Stock Units that are at that time subject to restrictions shall be forfeited.
9.5 DELIVERY OF RESTRICTED STOCK. Shares of Restricted Stock shall be delivered to the Participant at the Grant Date either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees) designated by the Committee, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing shares of Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 10
PERFORMANCE AWARDS
10.1 GRANT OF PERFORMANCE AWARDS. The Committee is authorized to grant any Award under this Plan, including cash-based Awards, with performance-based vesting criteria, on such terms and conditions as may be selected by the Committee. Any such Awards with performance-based vesting criteria are referred to herein as Performance Awards. The Committee shall have the complete discretion to determine the number of Performance Awards granted to each Participant, subject to Section 5.4, and to designate the provisions of such Performance Awards as provided in Section 4.3. All Performance Awards shall be evidenced by an Award Certificate or a written program established by the Committee, pursuant to which Performance Awards are awarded under the Plan under uniform terms, conditions and restrictions set forth in such written program.
10.2 PERFORMANCE GOALS. The Committee may establish performance goals for Performance Awards which may be based on any criteria selected by the Committee. Such performance goals may be described in terms of Company-wide objectives or in terms of objectives that relate to the performance of the Participant, an Affiliate or a division, region, department or function within the Company or an Affiliate. If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or an Affiliate conducts its business, or other events or circumstances render performance goals to be unsuitable, the Committee may modify such performance goals in whole or in part, as the Committee deems appropriate. If a Participant is promoted, demoted or transferred to a different business unit or function during a performance period, the Committee may determine that the performance goals or performance period are no longer appropriate and may adjust, change or eliminate the performance goals or the applicable performance period as it deems appropriate to make such goals and period comparable to the initial goals and period. The Committee may provide in any Performance Award, at the time the performance goals are established, that any evaluation of performance shall exclude or otherwise be objectively adjusted for any specified unusual circumstance or event that occurs during a performance period, including by way of example but without limitation the following: (a) litigation or claim judgments or settlements; (b) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (c) accruals for reorganization and restructuring programs; and (d) foreign exchange gains and losses.
ARTICLE 11
DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend Equivalents with respect to Full-Value Awards granted hereunder, subject to such terms and conditions as may be selected by the Committee. Dividend Equivalents shall entitle the Participant to receive payments equal to ordinary cash dividends or distributions with respect to all or a portion of the number of Shares subject to a Full- Value Award, as determined by the Committee. The Committee may provide that Dividend Equivalents (i) will be deemed to have been reinvested in additional Shares or otherwise reinvested, or (ii) except in the case of Performance Awards, will be paid or distributed to the Participant as accrued (in which case, such Dividend Equivalents must be paid or distributed no later than the 15th day of the 3rd month following the later of (A) the calendar year in which the corresponding dividends were paid to stockholders, or (B) the first calendar year in which the Participant’s right to such Dividends Equivalents is no longer subject to a substantial risk of forfeiture). Unless otherwise provided by the Committee, Dividend Equivalents accruing on unvested Full-Value Awards shall, as provided in the Award Certificate, either (i) be reinvested in the form of additional Shares, which shall be subject to the same vesting provisions as provided for the host Award, or (ii) be credited by the Company to an account for the Participant and accumulated without interest until the date upon which the host Award becomes vested, and any Dividend Equivalents accrued with respect to forfeited Awards will be reconveyed to the Company without further consideration or any act or action by the Participant.
ARTICLE 12
STOCK OR OTHER STOCK-BASED AWARDS
12.1 GRANT OF STOCK OR OTHER STOCK-BASED AWARDS. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including without limitation (but subject to the last sentence of Section 5.5) Shares awarded purely as a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, and Awards valued by reference to book value of Shares or the value of securities of or the performance of specified Parents or Subsidiaries. The Committee shall determine the terms and conditions of such Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1 AWARD CERTIFICATES. Each Award shall be evidenced by an Award Certificate. Each Award Certificate shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee.
13.2 FORM OF PAYMENT FOR AWARDS. At the discretion of the Committee, payment of Awards may be made in cash, Stock, a combination of cash and Stock, or any other form of property as the Committee shall determine. In addition, payment of Awards may include such terms, conditions, restrictions and/or limitations, if any, as the Committee deems appropriate, including, in the case of Awards paid in the form of Stock, restrictions on transfer and forfeiture provisions.
13.3 LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or restricted Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or an Affiliate, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or an Affiliate. No unexercised or restricted Award shall be assignable or transferable by a Participant other than by will or the laws of descent and distribution; provided, however, that the Committee may (but need not) permit other transfers (other than transfers for value) where the Committee concludes that such transferability (i) does not result in accelerated taxation, (ii) does not cause any Option intended to be an Incentive Stock Option to fail to be described in Code Section 422(b), and (iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including without limitation, state or federal tax or securities laws applicable to transferable Awards.
13.4 BENEFICIARIES. Notwithstanding Section 13.3, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Certificate applicable to the Participant, except to the extent the Plan and Award Certificate otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been designated or survives the Participant, any payment due to the Participant shall be made to the Participant’s estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant, in the manner provided by the Company, at any time provided the change or revocation is filed with the Committee.
13.5 STOCK TRADING RESTRICTIONS. All Stock issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock certificate or issue instructions to the transfer agent to reference restrictions applicable to the Stock.
13.6 ACCELERATION UPON DEATH OR DISABILITY. Except as otherwise provided in the Award Certificate or any special Plan document governing an Award, upon the termination of a person’s Continuous Service by reason of death or Disability:
(1) all of that Participant’s outstanding Options and SARs shall become fully exercisable;
(2) all time-based vesting restrictions on that Participant’s outstanding Awards shall lapse as of the date of termination; and
(3) the payout opportunities attainable under all of that Participant’s outstanding performance-based Awards shall be deemed to have been fully earned as of the date of termination as follows:
(A) if the date of termination occurs during the first half of the applicable performance period, all relevant performance goals will be deemed to have been achieved at the “target” level, and
(B) if the date of termination occurs during the second half of the applicable performance period, the actual level of achievement of all relevant performance goals against target will be measured as of the end of the calendar quarter immediately preceding the date of termination, and
(C) in either such case, there shall be a prorata payout to the Participant or his or her estate within thirty (30) days following the date of termination (unless a later date is required by Section 16.3 hereof), based upon the length of time within the performance period that has elapsed prior to the date of termination.
To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be Nonstatutory Stock Options.
13.7 EFFECT OF A CHANGE IN CONTROL. The provisions of this Section 13.7 shall apply in the case of a Change in Control, unless otherwise provided in the Award Certificate or any special Plan document or separate agreement with a Participant governing an Award.
(a)Awards not Assumed or Substituted by Surviving Entity. Upon the occurrence of a Change in Control, and except with respect to any Awards assumed by the Surviving Entity or otherwise equitably converted or substituted in connection with the Change in Control in a manner approved by the Committee or the Board: (i) outstanding Options, SARs, and other Awards in the nature of rights that may be exercised shall become fully exercisable, (ii) time-based vesting restrictions on outstanding Awards shall lapse, and (iii) the target payout opportunities attainable under outstanding performance-based Awards shall be deemed to have been fully earned as of the effective date of the Change in Control based upon (A) an assumed achievement of all relevant performance goals at the “target” level if the Change in Control occurs during the first half of the applicable performance period, or (B) the actual level of achievement of all relevant performance goals against target measured as of the date of the Change in Control, if the Change in Control occurs during the second half of the applicable performance period, and, in either such case, subject to Section 16.3, there shall be a prorata payout to Participants within thirty (30) days following the Change in Control (unless a later date is required by Section 16.3 hereof), based upon the length of time within the performance period that has elapsed prior to the Change in Control. Any Awards shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Certificate. To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be Nonstatutory Stock Options.
(b)Awards Assumed or Substituted by Surviving Entity. With respect to Awards assumed by the Surviving Entity or otherwise equitably converted or substituted in connection with a Change in Control: if within two years after the effective date of the Change in Control, a Participant’s employment is terminated without Cause or the Participant resigns for Good Reason, then (i) all of that Participant’s outstanding Options, SARs and other Awards in the nature of rights that may be exercised shall become fully exercisable, (ii) all time-based vesting restrictions on the his or her outstanding Awards shall lapse, and (iii) the payout level under all of that Participant’s performance-based Awards that were outstanding immediately prior to effective time of the Change in Control shall be determined and deemed to have been earned as of the date of termination based upon (A) an assumed achievement of all relevant performance goals at the “target” level if the date of termination occurs during the first half of the applicable performance period, or (B) the actual level of achievement of all relevant performance goals against target (measured as of the end of the calendar quarter immediately preceding the date of termination), if the date of termination occurs during the second half of the applicable performance period, and, in either such case, there shall be a prorata payout to such Participant within thirty (30) days following the date of termination of employment (unless a later date is required by Section 16.3 hereof), based upon the length of time within the performance period that has elapsed prior to the date of termination of employment. With regard to each Award, a Participant shall not be considered to have resigned for Good Reason unless either (i) the Award Certificate includes such provision or (ii) the Participant is party to an employment, severance or similar agreement with the Company or an Affiliate that includes provisions in which the Participant is permitted to resign for Good Reason. Any Awards shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Certificate. To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Code Section 422(d), the excess Options shall be deemed to be Nonstatutory Stock Options.
13.8 ACCELERATION FOR OTHER REASONS. Regardless of whether an event has occurred as described in Section 13.6 or 13.7 above and subject to Section 5.5 as to Full-Value Awards, the Committee may in its sole discretion at any time determine that, upon the termination of service of a Participant for any reason, or the occurrence of a Change in Control, all or a portion of such Participant’s Options, SARs and other Awards in the nature of rights that may be exercised shall become fully or partially exercisable, that all or a part of the restrictions on all or a portion of the Participant’s outstanding Awards shall lapse, and/or that any performance-based criteria with respect to any Awards held by that Participant shall be deemed to be wholly or partially satisfied, in each case, as of such date as the Committee may, in its sole discretion, declare. The Committee may discriminate among Participants and among Awards granted to a Participant in exercising its discretion pursuant to this Section 13.8.
13.9 FORFEITURE EVENTS. The Committee may specify in an Award Certificate that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, (i) termination of employment for cause, (ii) violation of material Company or Affiliate policies, (iii) breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, (iv) other conduct by the Participant that is detrimental to the business or reputation of the Company or any Affiliate, or (v) a later determination that the vesting of, or amount realized from, a Performance Award was based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, whether or not the Participant caused or contributed to such material inaccuracy.
13.10 SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in substitution for stock and stock-based awards held by employees of another entity who become employees of the Company or an Affiliate as a result of a merger or consolidation of the former employing entity with the Company or an Affiliate or the acquisition by the Company or an Affiliate of property or stock of the former employing corporation. The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1 MANDATORY ADJUSTMENTS. In the event of a nonreciprocal transaction between the Company and its stockholders that causes the per-share value of the Stock to change (including, without limitation, any stock dividend, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the authorization limits under Section 5.1 and 5.4 shall be adjusted proportionately, and the Committee shall make such adjustments to the Plan and Awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. Action by the Committee may include: (i) adjustment of the number and kind of shares that may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards or the measure to be used to determine the amount of the benefit payable on an Award; and (iv) any other adjustments that the Committee determines to be equitable. Notwithstanding the foregoing, the Committee shall not make any adjustments to outstanding Options or SARs that would constitute a modification or substitution of the stock right under Treas. Reg. Sections 1.409A-1(b)(5)(v) that would be treated as the grant of a new stock right or change in the form of payment for purposes of Code Section 409A. Without limiting the foregoing, in the event of a subdivision of the outstanding Stock (stock-split), a declaration of a dividend payable in Shares, or a combination or consolidation of the outstanding Stock into a lesser number of Shares, the authorization limits under Section 5.1 and 5.4 shall automatically be adjusted proportionately, and the Shares then subject to each Award shall automatically, without the necessity for any additional action by the Committee, be adjusted proportionately without any change in the aggregate purchase price therefor.
14.2 DISCRETIONARY ADJUSTMENTS. Upon the occurrence or in anticipation of any corporate event or transaction involving the Company (including, without limitation, any merger, reorganization, recapitalization, combination or exchange of shares, or any transaction described in Section 14.1), the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Stock, (ii) that Awards will become immediately vested and non-forfeitable and exercisable (in whole or in part) and will expire after a designated period of time to the extent not then exercised, (iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over the exercise or base price of the Award, (v) that performance targets and performance periods for Performance Awards will be modified or (vi) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated.
14.3 GENERAL. Any discretionary adjustments made pursuant to this Article 14 shall be subject to the provisions of Section 15.2. To the extent that any adjustments made pursuant to this Article 14 cause Incentive Stock Options to cease to qualify as Incentive Stock Options, such Options shall be deemed to be Nonstatutory Stock Options.
ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1 AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan without stockholder approval; provided, however, that if an amendment to the Plan would, in the reasonable opinion of the Board or the Committee, either (i) materially increase the number of Shares available under the Plan, (ii) expand the types of awards under the Plan, (iii) materially expand the class of participants eligible to participate in the Plan, (iv) materially extend the term of the Plan, or (v) otherwise constitute a material change requiring stockholder approval under applicable laws, policies or regulations or the applicable listing or other requirements of an Exchange, then such amendment shall be subject to stockholder approval; and provided, further, that the Board or Committee may condition any other amendment or modification on the approval of stockholders of the Company for any reason, including by reason of such approval being necessary or deemed advisable (i) to comply with the listing or other requirements of an Exchange, or (ii) to satisfy any other tax, securities or other applicable laws, policies or regulations.
15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the Committee may amend, modify or terminate any outstanding Award without approval of the Participant; provided, however:
(a) Subject to the terms of the applicable Award Certificate, such amendment, modification or termination shall not, without the Participant’s consent, reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment or termination (with the per-share value of an Option or SAR for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment or termination over the exercise or base price of such Award);
(b) The original term of an Option or SAR may not be extended without the prior approval of the stockholders of the Company;
(c)Except as otherwise provided in Section 14.1, the exercise price of an Option or base price of a SAR may not be reduced, directly or indirectly, without the prior approval of the stockholders of the Company; and
(d)No termination, amendment, or modification of the Plan shall adversely affect any Award previously granted under the Plan, without the written consent of the Participant affected thereby. An outstanding Award shall not be deemed to be “adversely affected” by a Plan amendment if such amendment would not reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment (with the per-share value of an Option or SAR for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment over the exercise or base price of such Award).
15.3 COMPLIANCE AMENDMENTS. Notwithstanding anything in the Plan or in any Award Certificate to the contrary, the Board may amend the Plan or an Award Certificate, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or Award Certificate to any present or future law relating to plans of this or similar nature (including, but not limited to, Section 409A of the Code), and to the administrative regulations and rulings promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 15.3 to any Award granted under the Plan without further consideration or action.
ARTICLE 16
GENERAL PROVISIONS
16.1 RIGHTS OF PARTICIPANTS.
(a) No Participant or any Eligible Participant shall have any claim to be granted any Award under the Plan. Neither the Company, its Affiliates nor the Committee is obligated to treat Participants or Eligible Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Eligible Participants who receive, or are eligible to receive, Awards (whether or not such Eligible Participants are similarly situated).
(b) Nothing in the Plan, any Award Certificate or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company or any Affiliate to terminate any Participant’s employment or status as an officer, or any Participant’s service as a director, at any time, nor confer upon any Participant any right to continue as an employee, officer, or director of the Company or any Affiliate, whether for the duration of a Participant’s Award or otherwise.
(c) Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company or any Affiliate and, accordingly, subject to Article 16, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company or an of its Affiliates.
(d) No Award gives a Participant any of the rights of a stockholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.
16.2 WITHHOLDING. The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company or such Affiliate, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company or such Affiliate will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. Unless otherwise determined by the Committee at the time the Award is granted or thereafter, any such withholding requirement may be satisfied, in whole or in part, by withholding from the Award Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes. All such elections shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
16.3 SPECIAL PROVISIONS RELATED TO SECTION 409A OF THE CODE.
(a) General. It is intended that the payments and benefits provided under the Plan and any Award shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. The Plan and all Award Certificates shall be construed in a manner that effects such intent. Nevertheless, the tax treatment of the benefits provided under the Plan or any Award is not warranted or guaranteed. Neither the Company, its Affiliates nor their respective directors, officers, employees or advisers (other than in his or her capacity as a Participant) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant or other taxpayer as a result of the Plan or any Award.
(b) Definitional Restrictions. Notwithstanding anything in the Plan or in any Award Certificate to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable, or a different form of payment (e.g., lump sum or installment) would be effected, under the Plan or any Award Certificate by reason of the occurrence of a Change in Control, or the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant, and/or such different form of payment will not be effected, by reason of such circumstance unless the circumstances giving rise to such Change in Control, Disability or separation from service meet any description or definition of “change in control event”, “disability” or “separation from service”, as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). This provision does not prohibit the vesting of any Award upon a Change in Control, Disability or separation from service, however defined. If this provision prevents the payment or distribution of any amount or benefit, or the application of a different form of payment of any amount or benefit, such payment or distribution shall be made at the time and in the form that would have applied absent the Change in Control, Disability or separation from service, as applicable, as applicable.
(c) Allocation Among Possible Exemptions. If any one or more Awards granted under the Plan to a Participant could qualify for any separation pay exemption described in Treas. Reg. Section 1.409A-1(b)(9), but such Awards in the aggregate exceed the dollar limit permitted for the separation pay exemptions, the Company determine which Awards or portions thereof will be subject to such exemptions.
(d) Six-Month Delay in Certain Circumstances. Notwithstanding anything in the Plan or in any Award Certificate to the contrary, if any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Plan or any Award Certificate by reason of a Participant’s separation from service during a period in which the Participant is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Committee under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):
(1)the amount of such non-exempt deferred compensation that would otherwise be payable during the six-month period immediately following the Participant’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following the Participant’s separation from service (or, if the Participant dies during such period, within 30 days after the Participant’s death) (in either case, the “Required Delay Period”); and
(2)the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period. For purposes of this Plan, the term “Specified Employee” has the meaning given such term in Code Section 409A and the final regulations thereunder; provided, however, that, as permitted in such final regulations, the Company’s Specified Employees and its application of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by the Board or any committee of the Board, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of the Company, including this Plan.
(e) Installment Payments. If, pursuant to an Award, a Participant is entitled to a series of installment payments, such Participant’s right to the series of installment payments shall be treated as a right to a series of separate payments and not to a single payment. For purposes of the preceding sentence, the term “series of installment payments” has the meaning provided in Treas. Reg. Section 1.409A-2(b)(2)(iii) (or any successor thereto).
16.4 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Certificate shall give the Participant any rights that are greater than those of a general creditor of the Company or any Affiliate. In its sole discretion, the Committee may authorize the creation of grantor trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or payments in lieu of Shares or with respect to Awards. This Plan is not intended to be subject to ERISA.
16.5 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company or any Affiliate unless provided otherwise in such other plan. Nothing contained in the Plan will prevent the Company from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
16.6 EXPENSES. The expenses of administering the Plan shall be borne by the Company and its Affiliates.
16.7 TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.
16.8 GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
16.9 FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down.
16.10 GOVERNMENT AND OTHER REGULATIONS.
(a) Notwithstanding any other provision of the Plan, no Participant who acquires Shares pursuant to the Plan may, during any period of time that such Participant is an affiliate of the Company (within the meaning of the rules and regulations of the Securities and Exchange Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i) pursuant to an effective registration statement under the 1933 Act, which is current and includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated under the 1933 Act.
(b) Notwithstanding any other provision of the Plan, if at any time the Committee shall determine that the registration, listing or qualification of the Shares covered by an Award upon any Exchange or under any foreign, federal, state or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the purchase or receipt of Shares thereunder, no Shares may be purchased, delivered or received pursuant to such Award unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Committee. Any Participant receiving or purchasing Shares pursuant to an Award shall make such representations and agreements and furnish such information as the Committee may request to assure compliance with the foregoing or any other applicable legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to the Committee’s determination that all related requirements have been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign law or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.
16.11 GOVERNING LAW. To the extent not governed by federal law, the Plan and all Award Certificates shall be construed in accordance with and governed by the laws of the State of Delaware.
16.12 SEVERABILITY. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.
16.13 NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or with respect to any person. If the Committee so directs, the Company may issue or transfer Shares to an Affiliate, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Affiliate will transfer such Shares to a Participant in accordance with the terms of an Award granted to such Participant and specified by the Committee pursuant to the provisions of the Plan.
The foregoing is hereby acknowledged as being the Torchmark Corporation 2018 Incentive Plan as adopted by the Board on February 26, 2018 and by the stockholders on ____________, 2018.
TORCHMARK CORPORATION
By: ______________________________________
Its: ______________________________________
