Proposals and Company Information

PROPOSAL NO. 1 - ELECTION OF NINE DIRECTORS

The By-LawsBylaws of the Company provide for the Company to have not less than five or more than fifteen Directors. The following nine persons currently are serving as Directors of the Company (“Directors”): Daniel A. Domenech, Mary H. Futrell, Stephen J. Hasenmiller, Ronald J. Helow, Beverley J. McClure, H. Wade Reece, Gabriel L. Shaheen, Robert Stricker, Steven O. Swyers and Marita Zuraitis. The terms of these Directors expire at the Annual Meeting. Dr. Futrell will be retiring from the

Board as of the Annual Meeting, and the Board has nominated H. Wade Reece to serve as a new Director of the Company. We thank Dr. Futrell for her exemplary service.Qualifications

The Board of Directors believes it is necessary for each of the Company’s Directors to possess a variety of qualities and skills. The Nominating & Governance Committee conducts all necessary and appropriate inquiries into the background and qualifications of Board candidates including the determination of independence. In addition, the Nominating & Governance Committee has identified areas of expertise that it believes support the Company’s business strategy in the short and long-term, enable the Board to exercise its oversight function and contribute to a well-rounded Board.

The list below highlights certain key qualifications and experience of our current Board.

Board Diversity, Age and Tenure

The Nominating & Governance Committee does not have a formal diversity policy; however, the Board and the Nominating & Governance Committee believe that it is important that the Board be comprised of individuals with expertise in fields relevant to the Company’s business, experience from different professions, a diversity of age, ethnicity and gender, and a range of tenures.

The Nominating & Governance Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of new Board members as well as the composition of the Board as a whole. This assessment includes members’ qualifications as independent,consideration of experience, perspective, background, skill sets, age, ethnicity, and gender makeup of the current Board as well as consideration of skills, experience, diversitythe candidate’s individual qualities in leadership, character judgment and ethical standards.

Diversity age in the context of the needs of the Board. tenure

The Nominating & Governance Committee does not havebelieves our Board Nominees (as identified below) represent a formaldiverse base of perspectives and reflect the diversity policy; however,of the Company’s employees, customers and Shareholders, as well as an appropriate level of age and tenure, as further illustrated below.

Board Refreshment

The Board and the Nominating & Governance Committee believe that it is essential thatregularly consider the long-term make up of the Board and how the members represent diverse viewpoints.of the Board change over time. The Board and Nominating & Governance Committee assessesunderstand the effectivenessimportance of Board refreshment and strive to balance the criteria described above when evaluating new Board candidates and when assessing the composition ofknowledge that comes from longer-term service on the Board aswith the new experience, ideas and energy that can come from adding directors to the Board. Directors who are 75 years of age or older may not stand for election in the absence of a whole.specific finding by the Board that there are special circumstances to justify an exception, which supports Board refreshment.

As Horace Mann continues to focus on profitable growth across all lines of business, the ongoing transformation of its technology and operations, and exploring inorganic growth opportunities, we will continue to consider Board refreshment opportunities.

Board Nominees

Upon the recommendation of the Nominating & Governance Committee, the Board nominated Dr. Domenech, Mr. Hasenmiller, Mr. Helow, Mr. Hines, Ms. McClure, Mr. Reece, Mr. Shaheen, Mr. Stricker, Mr. Swyers and Ms. Zuraitis (the “Board Nominees”) to hold office as Directors. The proxies solicited by and on behalf of the Board will be voted “FOR” the election of the Board Nominees unless you specify otherwise. The Company has no reason to believe that any of the foregoing Board Nominees is not available to serve or will not serve if elected, although in the unexpected event that any such Board Nominee should become unavailable to serve as a Director, full discretion is reserved to the persons named as proxies to vote for such other persons as may be nominated, or the Board may reduce the size of the Board. Each Director will serve until the next Annual Meeting of Shareholders and until his or her respective successor is duly elected and qualified.

Board Nominees

The following information, as of March 15, 2016,2018, is provided with respect to each Board Nominee:

		Daniel A. Domenech   Age: 7072 Director Since: 2015   Horace Mann Committees: Customer Experience & Technology InvestmentNominating & FinanceGovernance		Dr. Domenech has served as the Executive Director of American Association of School Administrators (“AASA”), The School Superintendents Association, a professional organization for educational leaders, since July 2008. He is currently Chairman of the Board of the Communities in Schools of Virginia and the National Student Clearinghouse Research Center and is a member of the Board of Directors of Learning First Alliance, America’s Promise, the Center for Naval Analyses, ACT and Universal Service Administrative Company (“USAC”). where he Chairs the Schools and Libraries Committee. Dr. Domenech is also a past President of the New York State Council of School Superintendents, the Suffolk County Superintendents Association and the Suffolk County Organization for Promotion of Education, and was the first President and cofounder of the New York State Association for Bilingual Education. In addition, he has served on the U.S. Department of Education’s National Assessment Governing Board, on the Advisory Board for the Department of Defense schools, on the Board of Directors for the Baldrige Award and on the National Board for Professional Teaching Standards. Dr. Domenech has more than 40 years of experience in public education.   Dr. Domenech’s experience in public education provides the Board with valuable insight into the Company’s niche market and the challenges and opportunities within that market.

		Marita Zuraitis   Age: 5557 Director Since: 2013   Horace Mann Committees: Customer Experience & Technology Executive Investment & Finance		Ms. Zuraitis was appointed to her present position as President and Chief Executive Officer in September 2013. She joined the Company in May 2013 as President and Chief Executive Officer-Elect. Ms. Zuraitis joined Horace Mann from The Hanover Insurance Group where she was an Executive Vice President and a member of The Hanover’s Executive Leadership Team. From 2004 to 2013, she served as President, Property and Casualty Companies, responsible for the personal and commercial lines operations at Citizens Insurance Company of America, The Hanover Insurance Company and their affiliates. Prior to 2004, Ms. Zuraitis was with The St. Paul/Travelers Companies for six years, where she achieved the position of President and Chief Executive Officer, Commercial Lines. She also held a number of increasingly responsible underwriting and field management positions with United States Fidelity and Guaranty Company and Aetna Life and Casualty. She is a member of the Board of Directors of LL Global, Inc., a trade association with operating divisions LIMRA and LOMA, and a memberVice Chair of the Board of Trustees of The Institutes, the leading provider of risk management and property-casualty insurance education, whose offerings include the premier CPCU® designation.designation, and a past member of the Board of Directors of LL Global, Inc., a trade association with operating divisions LIMRA and LOMA. She is also a member of the Board of Directors of Citizens Financial Group, Inc. Ms. Zuraitis has over 30 years of experience in the insurance industry.   Ms. Zuraitis’s knowledge of and extensive background in the insurance industry contribute to Board discussion and understanding of issues impacting the Company.

All of the Board Nominees were elected Directors at the last Annual Meeting of Shareholders of the Company held on May 20, 2015,24, 2017, with the exception of Mr. Reece,Hines, who was identified by a retained executive search firm working with the Directors of the Company and recommended for nomination as a Director by the Company’s Nominating and Governance Committee.

The Board recommends that Shareholders vote FOR the election of these nine nominees as Directors.

The following table identifies membership and the Chairman of each of the current committees of the Board, as well as the number of times each committee met during 2015.2017.

        Chair - Committee Chair

        X - Committee member

Director Compensation

The compensation program fornon-employee Directors is shown in the following table:

The following table sets forth information regarding compensation earned by, or paid to, thenon-employee Directors during 2015:2017:

Corporate Governance

Also, in light of ongoing threats to corporate cybersecurity, the Board and relevant Board Committees receive regular reports from the Chief Information Officer of the Company regarding cybersecurity risks and the steps management has taken to monitor and control such risks. The Audit Committee dedicates a portion of their meetings to review and discuss the Company’s cybersecurity program.

Compensation Discussion and Analysis

Executive Summary

This summary highlights information from this Compensation Discussion and Analysis section and may not contain all the information that is necessary to gain a full understanding of our policies and decisions. Please read the entire Compensation Discussion and Analysis section and compensation tables for a more complete understanding of our compensation program.

Our Business

We are a personal insurance and financial services business with approximately $10.1$11.2 billion of assets and approximately $1.2 billion in total revenue as of December 31, 2015.2017.Founded by Educators for Educators^®, we offer our products and services primarily toK-12 teachers, administrators, and other employees of public schoolsschool employees and their families. We underwrite personal lines of auto, property and life insurance, andas well as retirement annuitiesproducts in the United States of America.States.

2015

2017 Business Highlights

The Company delivered solid underlying financial results across all three segments of its multiline insurance platformbusiness in 2015.2017. Full year Operating Income was $2.00core earnings were $1.74 per diluted share. Book value per share* increased 6%6.2% in 20152017 driven by the solid operating results and positive contributions from investment portfolio performance.performance as well as the benefit related to the passage of the Tax Cuts and Jobs Act of 2017. In addition, we achieved broad-based increases in new business sales and solid policy retentions were achieved during the past year. Total Shareholder Return was 3.0%5.9% in 2015.2017 underperforming key insurance and general market indices that the Company outperformed the prior year.

These results reflect significant progress on numerous strategic initiatives, including:

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HMEC’s 20152017 Annual Report on andForm 10-K for a more detailed description of these financial results.

2017 Executive Compensation Highlights of Pay Practice and Governance

Pay PracticeGovernance

Oversight

The Committee oversees our executive compensation program. The current members of the Committee are Mr. Hasenmiller, Ms. McClure, and Mr. Shaheen. Mr. Hasenmiller serves as the Committee Chair. Consistent with the listing standards of the NYSE, the Committee is composed entirely of independent Directors.

The Committee retained Compensation Advisory Partners LLC (“CAP”) as independent compensation consultants. CAP provides information and advice on the competitive market for executive talent, evolving market practices in our industry and the general employment market, regulatory and other external developments, and our executive compensation philosophy and incentive program design. In this way, CAP assists the Committee with ongoing education. Also, Committee members comply with Directors’ education requirement to help ensure each remains up to date on current issues relevant to the Company and its business.

The CAP consultants report directly to the Committee, attend the Committee meetings and portions of executive sessions of the Committee at the Chair’s request (generally with the Board’s outside legal counsel, but without management present). CAP serves at the pleasure of the Committee, and performs no services for management. CAP works with management to obtain necessary data and perspectives on the Company’s strategic objectives, business environment, corporate culture, performance, and other relevant factors. This information is used by CAP to formulate its recommendations related to competitive compensation performance targets and overall design. CAP’s findings and recommendations are reported directly to the Committee. The services provided by CAP during 2017 are described in more detail throughout this CD&A. Pursuant to regulatory requirements, the Committee assessed CAP’s independence (along with that of its other direct and indirect

consultants and advisors) in 2017 and concluded that CAP’s work did not raise any conflicts of interest. In addition, the Committee has the authority to hire other experts and advisors as it deems necessary.

Management also supports the Committee by providing analysis and recommendations. When setting levels of executive compensation, the Committee requests, receives, and considers the recommendations of the CEO regarding the performance of her direct reports and other Executive Officers. Members of management also attend and contribute to Committee meetings as relevant to the Committee agenda.

The Committee discusses its fundamental views on compensation and guiding principles, as well as its expectations of the CEO’s performance and annual goals, with the CEO and subsequently proposes the CEO’s goals to the Board for approval. The Committee does not include the CEO or other members of management in its discussions with CAP on the CEO’s compensation, nor does the CEO or management participate in the Committee’s recommendation to the Board on the CEO’s compensation.

Say on Pay

At the 2017 Annual Meeting of Shareholders, 70.3% of Shareholders voted, on an advisory basis, to ratify the NEOs’ compensation. This “Say on Pay” advisory vote reflected a significant decrease from the near-unanimous Shareholder support received from the 2011 through 2016 “Say on Pay” advisory votes (average of 97% in favor). The percentage of Shareholders who voted in favor of the 2017 NEO compensation was lower than the Committee and Board desired. Accordingly, we wanted to provide our Shareholders with additional information and context on how we are addressing the reduced 2017 affirmative “Say on Pay” advisory vote.

We take this decline in our “Say on Pay” advisory vote seriously. Fundamentally, our goal is to link our executive compensation programs to long-term value creation and we believe we have had a long-standing record of accomplishing this goal. In response to the 2017 “Say on Pay” advisory vote and at the direction of the Committee, Company management solicited, and received, feedback from certain proxy advisory firms regarding the 2017 NEO compensation. In addition, through regular Shareholder outreach, Company management provided the opportunity for feedback regarding the 2017 “Say on Pay” advisory vote. Shareholders and proxy advisory firms were generally supportive of the Company’s overall compensation program in 2017. However, one advisory firm expressed a concern with executive compensation, based fundamentally onone-time strategic incentive grants provided to our NEOs in 2016, and recommended that the Company disclose threshold performance levels under the AIP and LTIP.

Based on the feedback we received, we are making several changes and including additional disclosure in our CD&A. First, in an effort to ensure the Company’s executive compensation practices are closely aligned with the expectations of our Shareholders and provide additional insight to both our Shareholders and proxy advisory firms, the Committee is disclosing, annually, the peer group it considers when making executive compensation decisions. (See “Compensation levels should be market competitive” below for additional information).

Second, the strategic incentive grants, which were described in depth in both the 2016 and 2017 Proxy statements, were designed to incentivize the achievement of both corporate financial goals and strategic individual goals in order to promote continuity of leadership as the Company pursues its long-term vision, and also strengthen management’s alignment with Shareholder interest. These awards were specifically designed to address key priorities during the Company’s strategic evolution, and are not an ongoing component of our executive compensation program. If the management team is successful in achieving these specific strategic objectives, the Committee believes it will drive incremental value for Shareholders.

Third, threshold, target, and maximum performance levels for our 2017 AIP and 2015-2017 LTIP are discussed in more detail in the “Annual Incentive Plan” and “2015-2017 PBRSUs” sections below. For our 2018 Proxy, we are disclosing threshold levels for our AIP and LTIP.    We consistently have disclosed, and will continue to disclose, our performance goals at the end of each respective performance cycle.

The Committee continues to believe that the overall structure of our executive compensation plans, the absence of excessive perquisites, and our demonstratedpay-for-performance practices reflect the strength of the Company’s executive compensation programs.

Frequency of “Say on Pay” Advisory Votes

Pursuant to Section 14(a) of the Securities Exchange Act, the Board asked Shareholders to vote on the frequency of future “Say on Pay” advisory votes on NEOs’ compensation. Specifically, the Board asked whether “Say on Pay” advisory votes should occur every year, every two years or every three years. 76% of the Shareholder votes cast were in favor of annual “Say on Pay” advisory votes. The next vote on the frequency of future “Say on Pay” advisory votes will be conducted in 2023.

Executive Compensation Program

Guiding Principles

The Committee has established a set of core principles that underlie our executive compensation program. These core principles provide guidance to the Committee and management in making decisions while administering the program or when considering changes. These core principles include strong alignment between pay and performance, incentive to drive Shareholder value, and market competiveness.

Strong Paypay for Performanceperformance alignment

We target compensation around the median of the competitive market, with executives earning more or less than median, generally based on the performance of the Company and value delivered to Shareholders. The overallOur core executive compensation program includes base salary, an annual cash incentive plan under the AIP, and long-term equity awards under the LTIP. Both the AIP and annual cash incentives.LTIP are administered under the Shareholder-approved 2010 Comprehensive Executive Compensation Plan, as amended (“CECP”). Incentive awards are earned upon the achievement of short-term and long-term business goals that are reviewed and approved by the Committee at the beginning of each performance period. Performance goals are structured to reward for business growth, profitability, and profitability,relative total shareholder return, balanced with productivity and risk and capital management.

Executive interests should be aligned with Shareholders’

To encourage executive performance on a long-term basis, the Committee grants equity awards with multi-year performance periods and multi-year vesting. In 2017, Ms. Zuraitis received approximately 48% of her target compensation in equity. With respect to the other NEOs, approximately 37% to 46% of their compensation was equity-based.

Incentive compensation should drive long-term value creation and reward strong performance

The AIP performance goals are based on premiums and adjusted operating income to reward strong performance. The LTIP performance goals are directly linked to multi-year growth and return measures to keep executives focused on value creation.

A significant portion of compensation should be “at risk” based on the Company’s performance

For 2017, over 70% of the CEO’s target total pay (base salary, target annual incentive, and target long-term incentive) and over 60% of target total pay for all other NEOs is at risk, and is variable from year to year, and for much of it, the level of payout is dependent on the Company’s performance.

Compensation levels should be market competitive

The Committee sets total direct compensation for the NEOs – salary and target annual and long-term incentive opportunities – within a reasonable range of the median of the competitive market, while providing the ability to decrease or increase compensation if warranted by performance and experience. To determine competitive pay levels, we use an established peer group of similarly sized insurance companies in the Russell 2000^® Index. The Committee worked with CAP to select our peer insurance companies for 2017, based upon assets under management and revenue. The peer group includes the property and casualty, life and health, and multi-line insurance companies charted below. The peer group does not include reinsurance or insurance brokers. We supplement this information with survey market data from published sources including LOMA, Towers Watson, and Mercer. The data from these surveys is scaled to our size by CAP based on revenues or asset ranges. Annually, CAP provides the Committee with a comparison of the base salary, annual incentives and long-term incentives of the CEO with those of other Chief Executive Officers based on the peer group and survey data obtained.

The Committee does not seek to benchmark or set executive compensation at any specific level relative to the peer group. Instead, the Committee uses this information primarily as a general reference point for seeking to determine pay levels and forms of plan design that effectively recognize favorable executive performance and experience, and ensure executive retention. For 2017, CAP’s analysis demonstrated that Ms. Zuraitis’s overall core total direct compensation was consistent with target pay positioning at the median of the market. The other NEOs are assessed against comparable functional matches in the insurance industry and the broader general industry, as appropriate. Based on the data received, and CAP’s analysis, the Committee deliberates in executive session to determine its recommendation for approval by the Board.

Compensation Mix

Our NEOs’ annual compensation consists of base salary, annual incentives and long-term incentives. The targeted compensation mix of total direct compensation for the NEOs for 2017 is illustrated below. The mix of 2017 actual compensation varied as a result of actual incentives earned.

Base Salary

Competitive base salaries are critical to attracting and retaining high performing executive talent. The Committee seeks to pay salaries that approximate median salaries for executives of similar companies in like positions. However, in recruiting new executives, we sometimes exceed these guidelines to attract qualified candidates. There may also be instances where an existing executive’s compensation deviates from the median, up or down, due to experience, performance, responsibilities, compensation history, internal equity, or retention risk.

Salaries for the NEOs and other executive officers are reviewed every 12 months in connection with the review of financial results for the prior fiscal year and the annual performance review discussed under “Annual Performance and Pay Review” below. In 2017, Ms. Zuraitis, Mr. Sharpe, and Mr. Caldwell received base salary increases to move overall compensation closer to the market median. Mr. Conklin received a base salary increase to recognize his promotion to EVP and CFO. Mr. Carley did not receive a base salary increase in 2017. Base salary adjustments for 2017 are shown in the chart below.

Annual Incentive Plan

Our AIP is a cash incentive plan, administered under the CECP, and designed to drive and reward strong performance over aone-year period. Annually, the Committee establishes the performance objectives, threshold, target and maximum performance levels, and the related threshold, target and maximum AIP opportunities for each NEO, expressed as a percentage of base salary. Target incentive opportunity levels for the NEOs are intended to approximate the median of the target bonus potential for similarly situated executives in comparable companies. Maximum incentive opportunities are set at 200% of target.

For 2017, there were four performance measures, with 50% of the award based on Company-wide net operating income, and the remaining 50% divided among specific sales and premiums of the different business lines: P&C net written premium (20%), retirement sales (20%), and life sales (10%), as shown in the chart below. This provides a balance between shareholder return and growth, while complementing the longer-term LTIP metrics, which focus on long-term shareholder value creation.

2017 Annual Incentive Plan Performance Measures

		Adjusted Operating Income - Operating income (GAAP net income after tax, excluding realized investment gains and losses other than those for Fixed Indexed Annuity related options and embedded derivatives) adjusted for P&C catastrophe costs different than the annual Plan, Annuity & Life deferred acquisition costs (“DAC”) unlocking and change in guaranteed minimum death benefit (“GMDB”) reserve due to capital gains and losses and market performance different than Plan, the impact on investment income of share repurchases different than Plan, and debt structure/costs including debt retirement different than Plan. P&C Net Premium Written (GAAP) - Amount charged for property and casualty policies issued during the year. (Portions of such amounts may be earned and included in financial reports over future periods.) Retirement Sales - The amount of new business from the sales of Horace Mann annuity products, from Horace Mann and independent agents, as measured by premiums and deposits to be collected over the 12 months following the sale. Life Sales - The amount of new Horace Mann individual life insurance products sold during the year, as measured by premiums and deposits to be collected over the 12 months following the sale.

All the NEOs’ 2017 annual incentive amounts are based on the same corporate and business line objectives to promote cooperation. The targets for the operating income and sales or premium

measures were based on a review of market conditions and expectations of other companies in the industry as well as our financial plan for 2017 (“2017 Plan”). The 2017 Plan was the basis of our 2017 earnings guidance, which was publicly disclosed in February 2017 in connection with our release of earnings for the year ended December 31, 2016. The Committee believes that tying the AIP to Company performance provides appropriate alignment for an executive’s compensation as it recognizes that the Company as a whole must perform well in order to deliver value to our Shareholders. Further, tying all the NEOs’ AIP awards to the performance of specific business lines incentivizes cooperation among the business line leaders. It is the goal of the Committee to establish measurements and targets that are reasonable, but not easily achieved. The measures and targets are discussed with the CEO, other NEOs, other members of the Board and CAP before they are set.

Each March, the Committee certifies performance and determines AIP payouts for the prior year. Based on the 2017 results of 95.46% of target for Ms. Zuraitis and the other NEOs, the 2017 AIP payouts (paid in March 2018) were as follows:

(1) Mr. Conklin’s Target AIP Opportunity was increased to 50% upon his promotion to EVP & CFO

Long-term Incentive Plan

Our Long-term IncentiveThe intent of our LTIP is comprisedto focus executives on shareholder value and key strategic objectives, while promoting retention.

2017 LTIP Aggregate Target Opportunity

In setting the dollar values of three vehicles, performance-based RSUs, service-based RSUs and stock options,the 2017 opportunities under LTIP for each NEO, the Committee targeted amounts that would achieve the Company’s overall objective of positioning total compensation at approximately the market median. The 2017 target grant values for the NEOs were as described below. The performance-based RSUs provide an effective vehicle for rewarding executives based on a three-year performance period and have a high value in promoting executive retention. The performance-based RSUs, along with the service-based RSUs and stock options provide strong alignment with Shareholder interests and assist in the retention of key executive talent.

Long-term Incentive Vehiclesfollows:

Named Individual		2017 LTIP Target
Marita Zuraitis			$1,550,000
Bret A. Conklin			$280,000
Matthew P. Sharpe			$565,000
William J. Caldwell			$360,000
Donald M. Carley			$285,000

2017 LTIP Award Vehicles

For 2017, LTIP is comprised of three vehicles, as illustrated in the chart below: (1) performance-based RSUs; (2) service-vested RSUs; and (3) service-vested stock options.

		Performance-based RSUs - Earned over a three-year period, based upon Relative and Absolute Measures. If any shares are earned at the end of the three-year performance period, the executive fully vests in the award
		Service-basedService-vested RSUs - Vest 1/ratably over 3 per year after years 1, 2 and 3
		Stock options - Granted at fair market value with a 10 year life; options vest ratably over 4 years

Performance-Based RSUs (PBRSUs)

Long-term Incentive Plan Performance-based Measures

Our Long-term Incentive performance-based measures coverThe Committee believes that PBRSUs provide an effective vehicle for rewarding executives based on a three yearthree-year performance period. Each year, a new three yearthree-year period starts, partially overlapping the periods that started the prior two years. PBRSUs were granted on March 7, 2017 for the 2017-2019 performance period, and comprise 50% of the 2017 LTIP opportunity. These RSUs will be earned and vested on December 31, 2019, based on the level of achievement, though no RSUs will be earned if threshold level of performance is not achieved. From the date of grant, PBRSUs accrue dividend equivalents at the same rate as dividends paid to our shareholders, but the dividend equivalents are only paid on the corresponding shares that are earned. If no shares are earned, the dividend equivalents are forfeited. Earned dividend equivalents are converted into additional RSUs.

Service-vested RSUs

The Committee may alterbelieves that service-vested RSUs assist in the performance measuresretention of key executive talent. Service-vested RSUs were granted on March 7, 2017 and comprise 20% of the 2017 LTIP opportunity. Service-vested RSUs vest 33% after the first year, vest an additional 33% after the second year and vest the final 34% after the third year from the grant date, and are subject to continued employment to the vesting date. From the date of the grant, the RSUs accrue dividend equivalents at the same rate as any new three year period starts. The performance measures adopted have been:

2013-2015 Performance-based RSU Measuresdividends paid to our Shareholders. These dividend equivalents are converted into additional RSUs and vest when the underlying RSUs vest.

28		2018 Proxy Statement • Compensation Discussion and Analysis

Stock Options

The Committee believes that stock options provide strong alignment with Shareholder interests, as executives do not realize any value unless our stock price appreciates. They also promote retention. Stock options granted under the LTIP have an exercise price equal to the closing stock price on the date of grant, vest ratably over a four-year period subject to continued employment on each vesting date and have aten-year term. Stock options were granted on March 7, 2017 and comprise 30% of the 2017 LTIP opportunity. Beginning with the 2017 LTIP grant, the Company transitioned from a blend of Incentive Stock Options (ISO) andNon-qualified Stock Options (NQSO) to all NQSOs. The number of options granted was determined using the Black-Scholes valuation method. For additional information regarding assumptions used for these valuations, see the Company’s 2017 Annual Report and Form10-K “Notes to Consolidated Financial Statements – Note 1 – Summary of Significant Accounting Policies – Share-Based Compensation.” Upon exercise Executive Officers are required to hold shares equivalent to any proceeds (net of exercise price and related taxes and the costs of the exercise) for a minimum of twelve months.

Timing of Equity Grants

The Committee has granted long-term incentives only at its regularly scheduled Board meetings. The grant date is the applicable resolution as approved or a future date as otherwise specified in the resolution.

2017-2019 Performance-based RSUs

The Performance-based RSUs granted in 2017 have three performance measures as shown below:

		Relative Total Shareholder Return - Relates to theRelative Total Shareholder Return for the three-year period measured against a peer group of companiescompanies.   Relative Operating Return on Equity - Relates to the averageAverage annual relative Operating Income return on average equity for the three-year period measured against a peer group of companiescompanies. Operating Earnings per Share Growth - Relates to the total percentage increase or decrease in Operating Earnings per share for the three-year period measured against a peer group of companies

2014-2016 Performance-based RSU Measures

		Total Shareholder ReturnRevenue Growth - RelatesMeasured as the CAGR over the period 12/31/2016 to the Total Shareholder Return12/31/2019 for the three-year period measured against a peer group of companies Operating Return on Equity - Relates to the average annual Operating Income return on average equityWritten Premium Growth for the three-year period measured against a peer group of companiesHMN auto, property, and life and total retirement sales for annuity (HMN, RIA and institutional platform) and HMGA.

Prior Years PBRSU Grants

2015-2017 Performance-based RSU Measures2016-2018 PBRSUs

The PBRSUs granted in 2016 will not mature until December 31, 2018. Since the applicable3-year performance period has not yet ended, actual performance against targets is not yet known.

2018 Proxy Statement • Compensation Discussion and Analysis		Total Shareholder Return - Relates to29

2015-2017 PBRSUs

The performance-based RSUs granted in 2015 matured and vested as of December 31, 2017. The performance measures, targets and payout levels for the PBRSUs granted in 2015 are as follows:

Notes:

These three measuresStrategic Incentive Grants

As disclosed in our 2016 and 2017 Proxy Statements, in March 2016, we made strategic equity grants to key executives, including four of the 2017 NEOs, under our CECP.

Each executive received a provisional equity grant of PBRSUs contingent on a corporate financial performance goal, earnings per share, and individual strategic goals. If the Performance Goal is satisfied, 50% of the award will be earned and vested on January 1, 2019. The remaining 50% of the award will also be eligible for the 2015-2017 period focusvesting on the effective useJanuary 1, 2019 subject to achievement of capital and delivering on growth objectives while retaining our strong alignment with Shareholder interests.

Annual Incentive Planindividual strategic goals.

The Annual Incentiveindividual goal-based PBRSUs:

The entire award is subject to satisfaction of an objective threshold Company-wide performance goal, which must be met during the performance period beginning on January 1, 2016 and ending on December 31, 2018. If an unexpected event occurs triggering a significant loss, the awards could be eliminated entirely. These 2016 awards are reflected in the 2016 data in the Summary Compensation Table. No strategic incentive equity awards were made in 2017.

Additional Pay Practices

Stock Ownership & Holding Guidelines

Our Executive Officers are required to accumulate and maintain beneficial stock ownership – calculated as a percentage of base salary - 50%) and growth (sales and revenues - 50%). Further, these measures were designed to complementas displayed in the metrics of the Long-term Incentive which focus on long-term shareholder value creation. The performance measures correspond to our financial plan (“Plan”) objectives approved by the Committee. The Annual Incentive is paid in cash.

2015 Annual Incentive Performance Measurestable below:

Pay GovernancePosition

Committee Oversight

The Committee oversees the compensation program for our NEOs. The compensation program is designed to provide a direct and clear link between the performance of the Company and executive pay. To assist in the construct of the compensation program design, the assessment of the program’s relevance to current market trends and the analysis of the program’s effectiveness, the Committee retained Compensation Advisory Partners LLC (“CAP”) as independent compensation consultants who report directly to the Committee. CAP attends Committee meetings, including portions of executive sessions, and serves solely at the pleasure of the Committee.

As will be discussed in more detail in next year’s proxy statement, in March 2016, the Company made performance-based Restricted Stock Unit (RSUs) grants to key executives, including the NEOs, under our 2010 Comprehensive Executive Compensation Plan (as amended and restated effective May 20, 2015) (“CECP”). All such grants are subject to satisfaction of certain objective threshold company-wide performance standards. The Company’s success makes our leadership team more vulnerable to recruitment by competitors. The Committee believes the grants promote continuity and retention of our strong leadership team as we pursue our aggressive 20/20 Vision, and also strengthen management’s alignment with Shareholder interests.

In addition, the Committee believes its oversight of executive compensation is strongly enhanced by the on-going education of each Committee member on emerging legislation, regulatory guidelines and industry best practices. This is done through review of topical publications, participation in webcasts, attendance at seminars and conferences on executive compensation and formal updates by CAP and other external experts during Committee meetings. Committee members provide management and CAP with topics for presentation and discussion prior to each meeting. During the Committee meetings, Committee members, the Board’s outside legal counsel, management and CAP discuss executive compensation, benefits and related issues and their relevancy to the Company, its Shareholders and its executive compensation program. The Committee has an executive session, without management present, during each of its meetings.

levelsWe use book value to measure the value of the shares we require the NEOs to own because book value is less volatile than stock price. For this purpose, the Company’s book value per share is determined by dividing total Shareholders’ equity, less the fair value adjustment for investments, by the number of outstanding shares of common stock.

The NEOs must satisfy stock ownership guidelines within five years of attaining their position. Stock ownership may be achieved by direct ownership or beneficial ownership, including shares held through the Horace Mann 401(k) Plan and RSUs (vested and unvested), as well as beneficial ownership through a spouse, child, or trust. Outstanding stock options are not used in determining stock ownership.

Beginning with the March 9, 2011 stock option grants themade in 2011, NEOs are required to hold shares equivalent to any proceeds from a long-term incentive stock option exercise, net of exercise price and related taxes and the costs of the exercise, for a minimum of twelve months after the date of exercise. AllAs part of its 2017 overall review of the executive compensation program, the Committee reviewed the stock ownership guidelines for the Executive Officers, and determined they were appropriate and will be continued in 2018.

As indicated in the following chart, all NEOs have met or areexceeded their stock ownership guidelines except for Mr. Carley. Mr. Carley joined the Company in January 2016, and is on target to meet the requirement by the deadline.

Annual Incentive Plan

Our programsAIP is a cash incentive plan, administered under the CECP, and designed to drive and reward strong performance over aone-year period. Annually, the Committee establishes the performance objectives, threshold, target and maximum performance levels, and the related threshold, target and maximum AIP opportunities for each NEO, expressed as a percentage of base salary. Target incentive opportunity levels for the NEOs are structuredintended to discourage excessive risk-taking throughapproximate the median of the target bonus potential for similarly situated executives in comparable companies. Maximum incentive opportunities are set at 200% of target.

For 2017, there were four performance measures, with 50% of the award based on Company-wide net operating income, and the remaining 50% divided among specific sales and premiums of the different business lines: P&C net written premium (20%), retirement sales (20%), and life sales (10%), as shown in the chart below. This provides a balanced use of compensation vehiclesbalance between shareholder return and growth, while complementing the longer-term LTIP metrics, with an overall goal of delivering sustainedwhich focus on long-term shareholder value while aligning our executives’ interests with those of our Shareholders. To this end, management and CAP conduct, and the Committee and the Board’s outside legal counsel reviews, an annual risk analysis of the compensation plans and incentive metrics. Our programs require that a substantial portion of each executive officer’s compensation be contingent on delivering performance results that benefit our Shareholders. In addition, a significant portion of our NEOs’ compensation is delivered in equity over a multi-year timeframe and each executive is expected to satisfy meaningful stock ownership requirements as well as comply with holding requirements. Furthermore, incentive compensation is subject to clawbacks. Similarly, we have stock ownership requirements for our non-employee Directors which are described under “Director Compensation.” The Committee has been advised by the Board’s outside legal counsel and agrees that no unreasonable risk exists that a compensation policy or incentive plan would have a material adverse impact on the Company.creation.

2017 Annual Incentive Plan Performance Measures

14		2016 Proxy Statement • Compensation Discussion Adjusted Operating Income - Operating income (GAAP net income after tax, excluding realized investment gains and Analysislosses other than those for Fixed Indexed Annuity related options and embedded derivatives) adjusted for P&C catastrophe costs different than the annual Plan, Annuity & Life deferred acquisition costs (“DAC”) unlocking and change in guaranteed minimum death benefit (“GMDB”) reserve due to capital gains and losses and market performance different than Plan, the impact on investment income of share repurchases different than Plan, and debt structure/costs including debt retirement different than Plan. P&C Net Premium Written (GAAP) - Amount charged for property and casualty policies issued during the year. (Portions of such amounts may be earned and included in financial reports over future periods.) Retirement Sales - The amount of new business from the sales of Horace Mann annuity products, from Horace Mann and independent agents, as measured by premiums and deposits to be collected over the 12 months following the sale. Life Sales - The amount of new Horace Mann individual life insurance products sold during the year, as measured by premiums and deposits to be collected over the 12 months following the sale.

Succession Planning Process

To further mitigate enterprise riskAll the NEOs’ 2017 annual incentive amounts are based on the same corporate and ensure the Company does not suffer sustained gaps in leadership, the Committee approves, oversees and monitors the Company’s succession planning process. This process identifies candidates that have the skill sets, background, training, and industry knowledgebusiness line objectives to assume critical positions on an emergency basis and alsopromote cooperation. The targets for the long-term executive succession plan. The Company’s succession plan is reviewed by the full Board annually.

Minimal Use of Employment Agreements

As of the time of this Proxy Statement, the Company did not have any individual employment agreements with any executiveoperating income and intends to continue to minimize their use, while recognizing that in isolated situations they may be needed for attraction and retention of key executive talent.

Change in Control and Elimination of Prospective Gross-ups

Four of the NEOs are covered under the Horace Mann Service Corporation Executive Change in Control Plan (“Executive CIC Plan”). This plan provides “double trigger” benefits and does not contain a tax gross-up provision. The Company does have an individual change in control severance agreement with Mr. Hallman, which provides severance pay, including a “parachute tax” gross-up payment, in the event of an actualsales or constructive termination of employment within a fixed time after a change in control of the Company, as defined in the agreement (a “double trigger”). The Committee has determined that, while it cannot change unilaterally any existing change in control severance agreements with current executives, it does not plan to include tax gross-up provisions in any future agreements.

Clawbacks

The Committee further believes that our compensation program should reward performance that supports the Company’s culture of integrity through compliance with applicable laws and regulations and our codes of ethics and conduct. As a further step to support that belief, the Committee has determined that all executive officers are subject to the same standards as the CEO and CFO regarding cash compensation clawbacks as defined under Section 404 of the Sarbanes-Oxley Act of 2002. In addition, under the CECP, the Company has the right to recover any cash or equity award if it is determined that an executive’s own misconduct contributed materially to the executive’s receipt of an award. New guidance under the Dodd-Frank Act related to clawbacks has been proposed by the Securities and Exchange Commission and the Company will modify the current clawback provisions to comply with the guidance when finalized.

Favorable Say on Pay

At our 2015 Annual Meeting of Shareholders, we received substantial support for the compensation of our NEOs, with 97.27% of the votes cast in favor of the “Say on Pay” advisory vote on executive compensation. The Compensation Committee and the Board appreciate and value the views of our Shareholders. In considering the results of this advisory vote, the Compensation Committee was pleased that a significant majority of our Shareholders approved the proposal, showing strong support for the structure of the compensation plans, the absence of excessive perquisites, the demonstrated pay-for-performance practices and the strength of the Company’s compensation processes and practices.

Hedging Prohibition

NEOs and other executive officers are prohibited from engaging in hedging transactions in HMEC common stock.

Pledging Prohibition

Beginning in 2013, NEOs and other executive officers have been prohibited from pledging their HMEC common stock shares.

Perquisites and Personal Benefits

We provide limited perquisites, which are commonly provided among our peer companies. Please see the “Summary Compensation Table” for further details.

measures were based on a review of market conditions and expectations of other companies in the industry as well as our financial plan for 2017 (“2017 Plan”). The 2017 Plan was the basis of our 2017 earnings guidance, which was publicly disclosed in February 2017 in connection with our release of earnings for the year ended December 31, 2016. The Committee believes that tying the AIP to Company performance provides appropriate alignment for an executive’s compensation as it recognizes that the Company as a whole must perform well in order to deliver value to our Shareholders. Further, tying all the NEOs’ AIP awards to the performance of specific business lines incentivizes cooperation among the business line leaders. It is the goal of the Committee to establish measurements and targets that are reasonable, but not easily achieved. The measures and targets are discussed with the CEO, other NEOs, other members of the Board and CAP before they are set.

Each March, the Committee certifies performance and determines AIP payouts for the prior year. Based on the 2017 results of 95.46% of target for Ms. Zuraitis and the other NEOs, the 2017 AIP payouts (paid in March 2018) were as follows: