DEF 14A of Horace Mann Educators Corp /De/
Filed Apr 9, 2024 · FY20230001628280-24-015471
Board Nominees
Board Nominees Upon the recommendation of the Nominating & Governance Committee, the Board nominated Mr. Bradley, Mr. Fetter, Mr. Hines, Mr. Konen, Ms. McClure, Mr. Reece, Dr. Samuel, Ms. Sarsynski and Ms. Zuraitis (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 their respective successor is duly elected and qualified.
Board Nominees
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 5 |
Board Nominees
The following information, as of March 15, 2024, is provided with respect to each Board Nominee:
Board Nominees
| | Thomas A. Bradley Age: 66 Director Since: 2021 Horace Mann Committees: Audit (Chair) Executive Investment & Finance | Mr. Bradley served as acting Chief Executive Officer and Chairman of the Board of Argo Group International Holdings, Ltd., an international underwriter of specialty insurance and reinsurance products in the property and casualty market, from August 2018 to November 2023. He retired from Allied World Assurance Company Holdings, AG, an insurance holding company, in July 2018 as Executive Vice President and Chief Financial Officer, a position he had held since 2012. He previously served as the Executive Vice President and Chief Financial Officer for both Fair Isaac Corporation and the St. Paul Companies. Mr. Bradley also held senior financial and operational positions at Zurich Insurance Group, including Chief Financial Officer for North America and Chief Executive Officer of the Universal Underwriters Group. Mr. Bradley has an extensive finance and accounting background and is recognized as a financial expert. His knowledge in these areas assists the Board in its oversight responsibilities. | | | Victor P. Fetter Age: 55 Director Since: 2023 Horace Mann Committees: Audit | Mr. Fetter is the Global Chief Information Officer of Fortive, an industrial technology company, a position he has held since January 2020. He previously served as Chief Digital Officer at Vertiv, a critical infrastructure provider, from 2017 to 2019. Prior to that, he served as Chief Information Officer for LPL Financial and Dell’s online division. He is National Association of Corporate Directors (NACD) Directorship Certified and has completed the NACD Cyber-Risk Oversight Program. Mr. Fetter’s extensive experience in digital transformation, cybersecurity and technology risk management brings a unique perspective and assists the Board with its oversight responsibilities. | | | Perry G. Hines Age: 61 Director Since: 2018 Horace Mann Committees: Investment & Finance Nominating & Governance | Mr. Hines is a retired corporate marketing executive and is the President and CEO of The Hines Group, LLC, a firm he formed in 2006 specializing in marketing, communications and strategic planning. He has nearly three decades of cross-sector experience in general management, brand, communications and marketing with a specific focus on financial services. Mr. Hines previously served as Senior Vice President, Chief Marketing and Communications Officer for Irwin Mortgage Corporation, a position he held from 2002 to 2007, Senior Vice President, Chief Marketing and Sales Officer of Lincoln Reinsurance Corporation and its subsequent successor Swiss Reinsurance Corporation from 1998 to 2002 and Vice President of Marketing & Communications of Safeco from 1995 to 1998. He has held previous management and senior marketing roles with General Mills, Target, Pfizer and Canadian-based Imasco, Inc., where he stewarded well known household brands. Mr. Hines’ cross-sector expertise in general management, brand building and strategic marketing brings unique perspective and insight to the Board. |
Board Nominees
| 6 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Board Nominees
| | Mark E. Konen Age: 65 Director Since: 2019 Horace Mann Committees: Compensation (Chair) Audit Executive | Mr. Konen retired from Lincoln Financial Group, a financial services company, in February 2017 as President of the Insurance and Retirement Solutions division, a position he had held since 2008. He was responsible for all aspects of strategic leadership, product development, and client services, as well as profitability management of the individual life insurance, group protection and retirement plan services businesses. He oversaw Lincoln Financial Group’s individual life and annuity business as President, Individual Markets, from 2006 to 2008. Prior to its merger with Lincoln Financial Group in 2006, he served in various senior management positions with Jefferson Pilot Financial. Mr. Konen is currently a member of the Board of Directors of Lincoln Life & Annuity Company of New York. Mr. Konen’s 35-year insurance career, extensive background and proven leadership in the life and retirement business provides the Board with a valuable perspective on these topics. | | | Beverley J. McClure Age: 69 Director Since: 2013 Horace Mann Committees: Nominating & Governance (Chair) Compensation | Ms. McClure retired in 2007 after a 35-year career with United Services Automobile Association, a diversified financial services group, as Senior Vice President, Enterprise Operations. In 2007, she founded Fresh Perspectives LLC, an executive coaching and small business consulting firm, which was dissolved in 2019. Ms. McClure previously served as Senior Advisor of Endeavor Management, a consulting firm specializing in service culture creation, leadership coaching, business transformation, operational execution, and customer experience management, a position she held from 2010 to 2013. She holds the Chartered Life Underwriter and Fellow and Life Management Institute designations. Ms. McClure’s broad experience in the areas of service excellence, customer experience, culture creation, employee engagement and quality management provides the Board with a valuable perspective on these topics. | | | H. Wade Reece Chairman of the Board Age: 67 Director Since: 2016 Horace Mann Committees: Executive (Chair) Compensation Nominating & Governance | Mr. Reece retired in 2015 after a 37-year career with BB&T Corporation, a bank holding company, where he served as the Chairman of the Board and Chief Executive Officer of BB&T Insurance Services, Inc. and BB&T Insurance Holdings, Inc. Until his retirement in 2015, Mr. Reece served as Vice Chairman of the Foundation of Agency Management Excellence Board of Directors and a member of the Executive Committee of The Institutes (American Institute for Chartered Property Casualty Underwriters and Insurance Institute of America). He was also a Chairman of the Council of Insurance Agents & Brokers and Chairman of the Board of Trustees of The Institutes. Mr. Reece currently is a member of the Board of Directors of the North Carolina State University Foundation. Mr. Reece’s in-depth knowledge of the insurance industry, leadership skills and broad experience with agency management provides the Board with industry insight and perspective. |
Board Nominees
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 7 |
Board Nominees
| | Aaliyah A. Samuel, EdD Age: 45 Director Since: 2023 Horace Mann Committees: Investment & Finance | Dr. Samuel is the President and Chief Executive Officer of CASEL, a nonpartisan, nonprofit organization dedicated to making evidence-based social and emotional learning an essential part of education for all students, a position she has held since January 2022. Prior to joining CASEL, she served as Deputy Assistant Secretary, of Local, State and National Engagement at the U.S. Department of Education, a position she held from February 2021 to December 2021. Prior to her role in the Department of Education, she was with NWEA, a research based not-for-profit that creates academic assessments, including service as Executive Vice President of Government Affairs & Partnerships and Vice President, Policy & Advocacy, from January 2019 to February 2021. She served as Director of Education at the National Governors Association from November 2015 to December 2018. Dr. Samuel currently serves as a Senior Fellow at the Center on the Developing Child at Harvard University, a research center to drive innovation in early childhood education practice and policy. Dr. Samuel’s extensive experience in public education and educational policy development provides the Board with valuable insight into the Company’s niche market and the challenges and opportunities within that market. | | | Elaine A. Sarsynski Age: 68 Director Since: 2021 Horace Mann Committees: Investment & Finance (Chair) | Ms. Sarsynski was Chairwoman, Chief Executive Officer and President of Mass Mutual International, an insurance company, until her retirement in 2017. She joined Mass Mutual Life Insurance Company in 2005 as Managing Director at Babson Capital Management LLC, a MassMutual subsidiary. She became Executive Vice President, Chief Administrative Officer, Chief Executive Officer and President of MassMutual International in 2006 and Executive Vice President, member of the Office of the Chief Executive Officer and President of MassMutual Retirement Services, as well as Chairwoman of MassMutual International, in 2008. Prior to joining Babson Capital, she served two elected terms as First Selectman for the town of Suffield, Connecticut. In 1998, she founded Sun Consulting Group LLC, offering consulting services to the real estate industry. Ms. Sarsynski previously spent 17 years at Aetna where she held multiple senior management positions overseeing segments of the company’s Investments Division and leading the Corporate Finance Department. She currently serves on the Board of Directors of Genworth Financial, Inc., TI Fluid Systems PLC and Horizon Technology Finance Corporation. Ms. Sarsynski’s extensive knowledge in managing institutional investments and proven strategic leadership is a valuable asset to the Board. |
Board Nominees
| 8 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Board Nominees
| | Marita Zuraitis Age: 63 Director Since: 2013 Horace Mann Committees: Executive Investment & Finance | Ms. Zuraitis was appointed to her present position as President and Chief Executive Officer of the Company in September 2013 after joining the Company in May 2013 as President and Chief Executive Officer-Elect. Ms. Zuraitis came to Horace Mann from The Hanover Insurance Group where she was an Executive Vice President and a member of The Hanover’s Executive Leadership Team. From 2004 to 2013, she served as President, Property and Casualty Companies, of The Hanover Insurance Group. Prior to 2004, Ms. Zuraitis was with The St. Paul/Travelers Companies for six years, where she achieved the position of President and Chief Executive Officer, Commercial Lines. She also held a number of increasingly responsible underwriting and field management positions with United States Fidelity and Guaranty Company and Aetna Life and Casualty. She is the 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, 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. |
Board Nominees
All of the Board Nominees were elected Directors at the last Annual Meeting of Shareholders of the Company held on May 24, 2023. The Board recommends that Shareholders vote FOR the election of these nine nominees as Directors. Board of Directors and Committees There were nine members on the Board as of March 15, 2024. The Board met seven times during 2023. No incumbent Director of the Company attended fewer than 95% of the Board meetings and the committee meetings to which they were appointed and served during 2023. The Board Chair presides over all executive sessions of the Board, including executive sessions of non-employee Directors, and may be contacted as described in “Corporate Governance - Communications with Directors.” The members of the Board are expected to be present at the Annual Meeting. The following nine Directors serving on the Board at the time of last year’s Annual Meeting attended the meeting: Mr. Bradley, Mr. Casady, Dr. Domenech, Mr. Hines, Mr. Konen, Ms. McClure, Mr. Reece, Ms. Sarsynski and Ms. Zuraitis.
Committees of the Board
| Compensation Element | Non-Employee Director Compensation(1) | | Board Chair Annual Retainer | $145,000 | | Board Member Annual Retainer (other than Board Chair) | $75,000 | | Committee Chair Annual Retainer | $25,000 Audit Committee $15,000 all other Committees(2) | | Technology Liaison Annual Retainer | $10,000 | | Share-based Compensation | Fair value on the date of the respective awards is used to determine the number of Restricted Stock Units (RSUs) awarded. An annual award of $115,000 in RSUs following the Annual Shareholder Meeting. $115,000 in RSUs if joining the Board within six months after the prior Annual Shareholder Meeting, $57,500 in RSUs if joining more than six months after the prior Annual Shareholder Meeting but before the next Annual Shareholder Meeting. All awards have a 1-year vesting period. | | Basic Group Term Life Insurance | Premium for $10,000 face amount | | Business Travel Accident Insurance | Premium for $100,000 coverage |
Committees of the Board
| Director | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation ($) (2) | Total ($) | | Thomas A. Bradley | 100,000 | 115,000 | 204 | 215,204 | | Victor P. Fetter | 85,000 | 115,000 | 30 | 200,030 | | Perry G. Hines | 75,000 | 115,000 | 51 | 190,051 | | Mark E. Konen | 90,000 | 115,000 | 51 | 205,051 | | Beverley J. McClure | 90,000 | 115,000 | 204 | 205,204 | | H. Wade Reece | 145,000 | 115,000 | 204 | 260,204 | | Aaliyah A. Samuel, EdD | 75,000 | 115,000 | 30 | 190,030 | | Elaine A. Sarsynski | 90,000 | 115,000 | 204 | 205,204 |
2023 Business Highlights
2023 Executive Compensation Highlights These elements of the executive compensation program are described more fully below. •Pay mix comprised of base salary, cash annual incentives under the Annual Incentive Plan (AIP), and equity-based long-term incentives under the Long-term Incentive Plan (LTIP) •84% of the CEO’s target compensation and in aggregate over 62% of all other NEOs’ target compensation linked to performance-based or service-vested incentives •Balanced performance measures designed with a focus on shareholder return, both absolute and relative, and incenting operating growth while managing risk •Performance incentives tied to multiple overlapping performance periods •Annual cash incentives tied to company performance measures •Long-term incentives entirely equity-based: –50% Performance-based RSUs vest following a 3-year period, based on relative measures (TSR and operating return on equity) –30% Service-vested stock options with a 4-year vesting period –20% Service-vested RSUs with a 3-year vesting period •Our rigorous goal setting and incentive plan design hold our executives accountable for performance as indicated by our annual incentive paying out below target the last two years as well as tying our performance-based RSUs entirely to relative performance •Recognizing the challenges in the Property and Casualty industry, our annual incentive paid out 71.6% and our performance-based RSUs were earned at 71.5% for 2023 •Stock ownership guidelines for NEOs: –Twelve-month post-exercise holding requirement for stock options –Minimum 12-month vesting for all equity awards •Revised clawback policy applicable to both cash and equity awards to comply with new regulatory guidance •Executive change in control plan excludes “tax gross-up” provision •Limited perks and executive benefits Pay Governance
Strong pay for performance alignment
Strong pay for performance alignment We target compensation around the median of the competitive market, with executives earning more or less than median, based on their experience, the performance of the Company and value delivered to Shareholders and their individual performance. Our core executive compensation program includes base salary, an annual cash incentive plan, and long-term equity awards. Both AIP and LTIP are administered under the Shareholder-approved 2010 Comprehensive Executive Compensation Plan, as amended and restated, March 9, 2021. Incentive awards are earned upon the achievement of short-term and long-term business goals that are reviewed and approved by the Committee at the beginning of each performance period. Performance goals are structured to reward business growth, profitability, and relative TSR, balanced with productivity and risk and capital management.
Incentive compensation should drive long-term value creation and reward strong performance
Incentive compensation should drive long-term value creation and reward strong performance The AIP performance goals are based on premiums and AIP adjusted operating income which drive long-term value and are metrics management can control. The LTIP performance goals are directly linked to multi-year growth and return measures to focus executives on value creation, with multiple metrics based on performance versus peers to focus on outperforming our peers.
Incentive compensation should drive long-term value creation and reward strong performance
| 28 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Significant portion of compensation should be “at risk” based on the Company’s performance and aligned with Shareholders’ interests
Significant portion of compensation should be “at risk” based on the Company’s performance and aligned with Shareholders’ interests For 2023, 84% of the CEO’s target total pay (base salary, target annual incentive, and target long-term incentive) and in aggregate 62% of target total pay for all other NEOs is at risk, and is variable from year to year, and for the majority of the compensation, the level of payout is dependent on the Company’s performance. To encourage executive performance on a long-term basis, and to align executive interests with Shareholders’, the Committee grants equity awards with multi-year performance periods and multi-year vesting. In 2023, Ms. Zuraitis received approximately 60% of her target compensation in equity. With respect to the other NEOs, approximately 37% to 41% of their compensation was equity-based.
Compensation levels should be market competitive
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. The Committee worked with CAP to select our peer insurance companies for 2023 (noted below), based upon assets under management and revenue. We supplement this information with survey market data from published sources including Equilar, Towers Watson, and Korn Ferry. The data from these surveys is scaled to our size by CAP based on revenues or asset ranges. Annually, CAP provides the Committee with a comparison of the base salary, annual incentives and long-term incentives of the CEO with those of other Chief Executive 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 to determine pay levels and forms of plan design that effectively recognize favorable executive performance and experience, and ensure executive retention. For 2023, CAP’s analysis demonstrated that overall core total direct compensation for Ms. Zuraitis was consistent with target pay positioning within competitive range of market median, considering her tenure and performance. Based on the data received, and CAP’s analysis, the Committee deliberates in executive session to determine its recommendation for approval by the Board. The other NEOs are assessed against comparable functional matches in the insurance industry and the broader general industry, as appropriate.
Compensation levels should be market competitive
| 2023 Peer Group | | | | Ambac Financial Group, Inc. | Kemper Corporation | Selective Insurance Group, Inc. | | American Equity Investment Life Holding Co | National Western Life Group, Inc. | The Hanover Insurance Group | | Argo Group International Holdings, Ltd. | Primerica, Inc. | United Fire Group, Inc. | | CNO Financial Group, Inc. | ProAssurance Corporation | White Mountains Insurance Group | | Employers Holdings, Inc. | RLI Corporation | |
Annual Incentive Plan
Annual Incentive Plan Our AIP is a cash incentive plan, administered under the Comprehensive Executive Compensation Plan (CECP), and designed to drive and reward strong performance over a one-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. In addition to the NEOs, the vast majority of our employees are eligible to participate in the annual incentive plan. 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 2023, there were three performance measures, with 50% of the award based on company-wide AIP adjusted core earnings, and the remaining 50% divided equally among AIP adjusted return on equity (25%) and insurance premiums and contract charges earned (25%), as defined below and shown in the chart. This provides a balance between shareholder return and growth, while complementing the longer-term LTIP metrics, which focus on long-term shareholder value creation.
2023 Annual Incentive Plan Performance Measures
2023 Annual Incentive Plan Performance Measures AIP Adjusted Core Earnings - Core earnings (GAAP net income after tax, excluding net investment gains and losses) adjusted for Property and Casualty catastrophe costs different than the annual Plan, annuity market risk benefit adjustment different than Plan, the impact on investment income of share repurchases different than Plan, debt structure/costs including debt retirement different than Plan, and impact of changes to the statutory tax rate different than Plan. AIP Adjusted Return on Equity - Company’s annual return (AIP adjusted core earnings) divided by the value of its total Shareholders’ equity (excluding the fair value adjustment for investments). Insurance Premiums & Contract Charges Earned - The amount of ratably earned insurance premiums and contract charges from Horace Mann products. The vast majority of employees, in addition to the NEOs, are eligible to participate in the annual incentive program with measures based on corporate objectives to promote alignment. The targets were based on a review of market conditions and expectations of other companies in the industry as well as our financial plan for 2023 (2023 Plan). The 2023 Plan was the basis of our 2023 earnings guidance, which was publicly disclosed in February 2023 in connection with the announcement of results for the year ended December 31, 2022. The Committee believes that tying the AIP to overall company performance provides appropriate alignment for an executive’s compensation as it recognizes that the Company as a whole must perform well in order to deliver value to our Shareholders. 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, CAP, and other members of management and the Board before they are set.
2023 Annual Incentive Plan Performance Measures
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 31 |
2023 Annual Incentive Plan Performance Measures
Each February, the Committee certifies performance and determines AIP payouts for the prior year. Based on the 2023 results of 71.6% of target for Ms. Zuraitis and the other NEOs, the 2023 AIP payouts (paid in March 2024) were as follows:
2023 Annual Incentive Plan Performance Measures
| 2023 AIP Measures | Threshold | Target | Maximum | Actual | Results | Weighting | Payout | | AIP Adjusted Core Earnings ($M) | 83 | 98 | 114 | 86 | 58.3% | 50% | 29.2% | | AIP Adjusted Return on Equity (%) | 5.5 | 6.5 | 7.5 | 5.7 | 60.1% | 25% | 15.0% | | Insurance Premiums and Contract Charges Earned ($M) | 1,040 | 1,055 | 1,077 | 1,057 | 109.5% | 25% | 27.4% | | Total | | | | | | 100% | 71.6% |
2023 Annual Incentive Plan Performance Measures
| Named Individual | 2023 Target AIP Opportunity | 2023 Actual AIP Payout ($) | 2023 Actual AIP Payout as a % of Base Salary | | Marita Zuraitis | 150% | 1,109,490 | 106.7% | | Bret A. Conklin | 70% | 263,057 | 50.1% | | Matthew P. Sharpe | 60% | 216,172 | 42.8% | | Stephen J. McAnena(1) | 60% | 139,168 | 27.8% | | Donald M. Carley | 50% | 149,722 | 35.6% |
2023 Annual Incentive Plan Performance Measures
(1) Mr. McAnena joined the company in May 2023.
2023 Annual Incentive Plan Performance Measures
| 32 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Long-term Incentive Plan
Long-term Incentive Plan The intent of our LTIP is to focus executives on shareholder value and key strategic objectives, while promoting retention.
2023 LTIP Aggregate Target Opportunity
2023 LTIP Aggregate Target Opportunity In setting the dollar values of the 2023 opportunities under the LTIP for each NEO, the Committee targeted amounts that would achieve the Company’s overall objective of positioning total compensation within competitive range of the market median with flexibility to recognize individual performance and tenure. The 2023 target grant values for the NEOs were as follows:
2023 LTIP Aggregate Target Opportunity
| Named Individual | 2023 LTIP Target ($) | | Marita Zuraitis | 3,848,000 | | Bret A. Conklin | 600,000 | | Matthew P. Sharpe | 550,000 | | Stephen J. McAnena | 500,000 | | Donald M. Carley | 375,000 |
2023 LTIP Award Vehicles
2023 LTIP Award Vehicles For 2023, the LTIP is comprised of three vehicles, as illustrated in the chart: (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 100% Relative Measures that are equally weighted. For each Relative Measure, the threshold is the 25th percentile, target is the 50th percentile, and maximum is the 90th percentile of the peer group. The Company believes utilizing all Relative Measures holds management accountable for the Company’s performance versus peers on TSR and ROE, which benefits our Shareholders. If any shares are earned at the end of the three-year performance period, the executive fully vests in the award Service-vested RSUs - Vest ratably over three years Stock options - Granted at fair market value with a 10 year life; options vest ratably over four years
2023 LTIP Award Vehicles
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 33 |
Performance-based RSUs (PBRSUs)
Performance-based RSUs (PBRSUs) The Committee believes that PBRSUs provide an effective vehicle for rewarding executives based on a three-year performance period. Each year, a new three-year period starts, partially overlapping the periods that started the prior two years. PBRSUs were granted on March 8, 2023 for the 2023-2025 performance period and comprise 50% of the 2023 LTIP opportunity. These RSUs will be earned and vested on January 1, 2026, if at all, based on the level of achievement. From the date of grant, PBRSUs accrue dividend equivalents at the same rate as dividends paid to our Shareholders, 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. As discussed in more detail in the “Commitment to transparency and dialogue around ESG topics” section, Horace Mann is committed to being a good corporate citizen and to having a positive impact on our stakeholders. Horace Mann demonstrates its commitment to operating responsibly through the security it provides customers, the initiatives and investments the Company deploys in the communities it serves, the claims it pays and the grants it gives in times of need. For 2023, the Company continued to include an ESG modifier (+/- 10%) into the PBRSUs to hold designated key executives accountable for achieving our ESG initiatives utilizing a scorecard approach. The scorecard consists of key metrics for each component: •Environment (25%) - focused on reducing its carbon footprint, as well as monitoring and managing climate change risks that affect our stakeholders •Social (50%) - focused on the strategy and progress related to diversity, equity, and inclusion and enhancing employee engagement to make a positive social impact on America’s educational community, our employees, and the communities in which we live and work •Governance (25%) - focused on board diversity, succession planning, and risk management policies and procedures to ensure a financially strong company that operates ethically To ensure the company is progressing on these efforts, the Compensation Committee and Board receive regular updates related to the scorecard metrics.
Service-Vested RSUs
Service-Vested RSUs The Committee believes that service-vested RSUs assist in the retention of key executive talent. Service-vested RSUs were granted on March 8, 2023 and comprise 20% of the 2023 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 through the vesting date. From the date of the grant, the RSUs accrue dividend equivalents at the same rate as dividends paid to our Shareholders. These dividend equivalents are converted into additional RSUs and vest when the underlying RSUs vest.
Stock Options
Stock Options The Committee believes that non-qualified stock options (NQSOs) provide strong alignment with shareholder interests, as participants do not realize any value unless our stock price appreciates. They also promote retention. Stock options granted under the LTIP have an exercise price equal to the closing price of our Common Stock on the date of grant, vest ratably over a four-year period subject to continued employment on each vesting date and have a ten-year term. Stock options were granted on March 8, 2023 and comprise 30% of the 2023 LTIP opportunity. The number of options granted was determined using the Black-Scholes valuation method. For additional information regarding assumptions used for these valuations, see the Company’s 2023 Annual Report “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.
Stock Options
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Timing of Equity Grants
Timing of Equity Grants The Committee has granted long-term incentives only at its regularly scheduled Board meetings. The grant date is the date the applicable resolution as approved or a future date as otherwise specified in the resolution. 2023-2025 Performance-based RSUs The Performance-based RSUs granted in 2023 have two equally weighted performance measures: Relative TSR - TSR for the three-year period (from the average price five trading days before and five trading days after the beginning of the measurement period (1/1/23) to the average price five trading days before and five trading days after the end of the measurement period (12/31/25) measured against a peer group of companies. Relative Core Return on Equity - Average annual core earnings return (net income excluding net investment gains and losses) on average equity (excluding the fair value adjustment for investments) for the three-year period measured against a peer group of companies.
Prior Years PBRSU Grants
| 2021-2023 Performance Measures | Threshold (2) | Target (2) | Maximum (2) | Weighting | Result | | Relative (1) Measures | | | | | | | TSR (3) | 25th Percentile Ranking vs Peer Companies | 50th Percentile Ranking vs Peer Companies | 90th Percentile Ranking vs Peer Companies | 50% | 28.5% | | Core ROE (4) | 25th Percentile Ranking vs Peer Companies | 50th Percentile Ranking vs Peer Companies | 90th Percentile Ranking vs Peer Companies | 50% | 43.0% | | | | | Total | | 71.5% |
Prior Years PBRSU Grants
(1) Peer group comprised of Russell 2000® Index insurance companies excluding brokerage, reinsurance, financial guarantee, and health companies. (2) Threshold award (25th percentile) is 50% of target LTIP opportunity; Target award (50th percentile) is 100%; Maximum (90th percentile) is 200% of target. Awards for results between Threshold-Target and Target-Maximum are interpolated. (3) TSR for the three-year period. Measured from the average price five trading days before and five trading days after the beginning of the measurement period (1/1/21) to the average price five trading days before and five trading days after the end of the measurement period (12/31/23). Source: S&P Market Intelligence (4) Average annual Core Earnings return (net income excluding net investment gains and losses) for the three-year performance period. Source: S&P Market Intelligence
Minimum Vesting Period
Minimum Vesting Period In 2017, through an amendment approved by the Board, the Company updated the CECP to reflect a minimum vesting period of one year for all equity grants. No portion of any equity grant, including Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, will become vested before the first anniversary of the grant date except in the cases of death or disability.
Annual Performance and Pay Review
Annual Performance and Pay Review To further reinforce a performance-based culture and the tie between company results and compensation, the Committee reviews each Executive Officer’s performance annually, coinciding with the review of corporate performance results. Each Executive Officer is reviewed not only on prior year business results but also on the individual’s demonstration of leadership skills and progress on specific strategic initiatives and other key priorities. The Committee also considers any adjustments to base salary, annual incentive opportunity, and long-term incentive opportunity at this review. The Committee recognizes the need to have market-competitive compensation opportunities to attract, retain, and reward high performing executive talent.
Minimal Use of Employment Agreements
Minimal Use of Employment Agreements Standard practice for the Company is to not have any individual employment agreements with any Executive Officer and intends to continue to minimize their use, while recognizing that in isolated situations an agreement may be needed for succession planning, attraction and retention of key executive talent.
Executive Severance and Change in Control Plans
Executive Severance and Change in Control Plans To maintain market competitiveness and allow for the successful recruitment of key executives, the Company maintains the Horace Mann Service Corporation Executive Severance Plan (Executive Severance Plan) and the Horace Mann Service Corporation Executive Change in Control Plan (CIC Plan). The Executive Severance Plan provides benefits due to loss of position with or without a change in control. The CIC Plan is intended to provide a level of security consistent with market practices, mitigate some of the conflicts an executive may be exposed to in a potential acquisition or merger situation, and serve to ensure a more stable transition if a corporate transaction were to occur. The CIC Plan provides for benefits only in the event of the loss of position following a change in control (double trigger), as defined in the CIC Plan. Participants in the CIC Plan are designated by position. This plan does not have tax gross-up provisions. The CIC Plan does not permit duplicate benefits under the Executive Severance Plan.
Executive Severance and Change in Control Plans
| 38 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Executive Severance and Change in Control Plans
The multiple is based on the sum of salary plus target annual incentive, payable in the form of salary continuation (for the Executive Severance Plan), and payable in a lump sum (for the CIC Plan), based on the following table:
Executive Severance and Change in Control Plans
| | Multiple | | | Named Individual | Executive Severance | Change In Control | | Marita Zuraitis | 2.0 | 2.5 | | Bret A. Conklin | 1.5 | 2.0 | | Matthew P. Sharpe | 1.5 | 2.0 | | Stephen J. McAnena | 1.5 | 2.0 | | Donald M. Carley | 1.5 | 2.0 |
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans The Company sponsors an unfunded nonqualified supplemental defined contribution plan, the Nonqualified Supplemental Defined Contribution Plan (NQDCP), which covers only the base salary compensation in excess of the IRC Section 401(a)(17) limit, which in 2023 was $330,000. The NQDCP accounts are established for the executives at the time their compensation exceeds the IRC Section 401(a)(17) limit and the NEOs are credited with an amount equal to 5% of the excess. In addition, the NQDCP accounts are credited with the same rate of return as the stable value fund available as an investment option under the qualified plan sponsored by the Company for all employees. The Company offered a nonqualified deferred compensation plan to executives, which allowed them to defer receipt of long-term incentive cash compensation prior to 2009 when cash was a component of the LTIP. Executives were allowed to defer up to 100% of their earned long-term cash incentive into HMEC’s deferred Common Stock equivalent units. All the NEOs except Mr. Conklin were hired after 2009 and do not have an account in the plan.
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding compensation of the Company’s CEO, CFO, and the three other most highly compensated executive officers during 2023, 2022, and 2021.
Summary Compensation Table
| Name & Principal Position | Year | Salary ($) (1) | Bonus ($) (2) | Stock Awards ($) (3) | Option Awards ($) (4) | Non-Equity Incentive Plan Compensation ($) (5) | All Other Compensation ($) (6) | Total ($) | | Marita Zuraitis President & Chief Executive Officer | 2023 | 1,033,333 | — | 2,693,600 | 1,154,400 | 1,109,490 | 144,707 | 6,135,530 | | | 2022 | 1,000,000 | — | 2,100,000 | 900,000 | 942,500 | 139,205 | 5,081,705 | | | 2021 | 995,833 | — | 1,890,000 | 810,000 | 2,276,266 | 146,877 | 6,118,977 | | Bret A. Conklin Executive Vice President & Chief Financial Officer | 2023 | 525,000 | | 420,000 | 180,000 | 263,057 | 36,408 | 1,424,465 | | | 2022 | 520,833 | — | 420,000 | 180,000 | 203,125 | 36,892 | 1,360,850 | | | 2021 | 491,667 | — | 420,000 | 180,000 | 518,699 | 39,604 | 1,649,970 | | Matthew P. Sharpe Executive Vice President, Supplemental & Group Benefits and Corporate Strategy | 2023 | 503,333 | — | 420,000 | 180,000 | 216,172 | 56,088 | 1,375,593 | | | 2022 | 490,833 | — | 420,000 | 180,000 | 191,425 | 47,045 | 1,329,303 | | | 2021 | 466,667 | — | 385,000 | 165,000 | 492,324 | 70,700 | 1,579,691 | | Stephen J. McAnena Executive Vice President & Chief Operating Officer | 2023 | 324,039 | 250,000 | 350,000 | 150,000 | 139,168 | 25,627 | 1,238,834 | | | 2022 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | | 2021 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | Donald M. Carley Executive Vice President & General Counsel | 2023 | 418,333 | — | 262,500 | 112,500 | 149,722 | 51,604 | 994,659 | | | 2022 | 406,667 | — | 280,000 | 120,000 | 132,167 | 38,601 | 977,435 | | | 2021 | 387,500 | — | 262,500 | 112,500 | 340,671 | 50,473 | 1,153,644 |
Summary Compensation Table
(1) Represents each NEO’s actual base salary earnings as of December 31, 2023, 2022 and 2021, respectively. (2) Represents a sign-on bonus for Mr. McAnena in 2023. (3) Represents the grant date fair value of service-based and performance-based RSUs granted in 2023, 2022, and 2021. Performance-based RSUs are valued based on the probable performance of Target with the potential of 50% to 200% being earned based on performance results. (4) Represents the grant date fair value of $8.59 per share for stock options granted on March 8, 2023, the grant date fair value of $8.51 per share for stock options granted on March 9, 2022, and the grant date fair value of $7.73 per share for stock options granted on March 3, 2021. The grant date fair value for Mr. McAnena is $7.67 per share for stock options granted on May 23, 2023. (5) Represents the cash payout for the AIP earned in each year. (6) Components of All Other Compensation are set forth on the following page.
Summary Compensation Table
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 41 |
Pay Versus Performance
Pay Versus Performance The following table sets forth information regarding the relationship between compensation of the Company’s Principal Executive Officer (PEO) and its non-PEO named executive officers, the total shareholder return of the Company and its peer group and the Company’s AIP adjusted core earnings during 2023, 2022, 2021 and 2020.
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs (1) (3) | Average Compensation Actually Paid to Non-PEO NEOs (2) (3) | Value of Initial Fixed $100 Investment Based On: | | Net Income/(Loss) (6) | AIP Adjusted Core Earnings (7) | | | | | | | Total Shareholder Return (4) | Peer Group Total Shareholder Return (4) (5) | | | | 2023 | 6,135,530 | 4,161,252 | 1,258,388 | 1,004,322 | 86.04 | 158.28 | 45.00 | 85.50 | | 2022 | 5,081,705 | 5,124,209 | 1,095,571 | 1,099,614 | 94.31 | 144.86 | (2.60) | 133.00 | | 2021 | 6,118,977 | 5,555,002 | 1,299,216 | 1,197,525 | 94.37 | 131.54 | 142.80 | 161.70 | | 2020 | 5,415,976 | 5,978,424 | 1,395,125 | 1,509,021 | 99.37 | 99.56 | 133.30 | 165.20 |
Pay Versus Performance
(1) Represents the total compensation for our PEO, Ms. Zuraitis, and the average total compensation for our non-PEO NEOs from the Summary Compensation Table for 2023, 2022, 2021 and 2020. (2) Represents the total compensation from the Summary Compensation Table for our PEO and the average total compensation for our non-PEO NEOs during 2023, 2022, 2021 and 2020 as adjusted to reflect changes in the fair value of outstanding stock and option awards in accordance with Item 402(v) of Regulation S-K.
Pay Versus Performance
| 42 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Pay Versus Performance
| Reconciliation of Summary Compensation Table and Compensation Actually Paid | | PEO | | | | | | | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table | | 6,135,530 | 5,081,705 | 6,118,977 | 5,415,976 | | Stock and Option Awards (a) | | (3,848,000) | (3,000,000) | (2,700,000) | (2,200,000) | | Equity Award Adjustments (b) | Fair Value at Year End of Outstanding and Unvested Equity Awards Granted in the Applicable Year | 3,188,263 | 3,013,866 | 2,605,028 | 2,579,334 | | | Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | (1,706,428) | (290,878) | (605,669) | 258,548 | | | Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | (52,628) | 160,589 | (13,771) | (221,493) | | | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | 444,515 | 158,927 | 150,437 | 146,060 | | Compensation Actually Paid | | 4,161,252 | 5,124,209 | 5,555,002 | 5,978,424 |
Pay Versus Performance
| Reconciliation of Summary Compensation Table and Compensation Actually Paid | | Average Non-PEO NEOs | | | | | | | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table | | 1,258,388 | 1,095,571 | 1,299,216 | 1,395,125 | | Stock and Option Awards (a) | | (518,750) | (456,250) | (431,250) | (475,000) | | Equity Award Adjustments (b) | Fair Value at Year End of Outstanding and Unvested Equity Awards Granted in the Applicable Year | 447,408 | 458,634 | 416,695 | 556,967 | | | Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | (236,456) | (52,691) | (111,510) | 40,623 | | | Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year | (7,603) | 27,426 | (2,725) | (40,217) | | | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | 61,335 | 26,924 | 27,099 | 31,523 | | Compensation Actually Paid | | 1,004,322 | 1,099,614 | 1,197,525 | 1,509,021 |
Pay Versus Performance
(a) Represents the aggregate grant date fair value of all equity awards in the Stock Awards and Stock Option Awards columns in the Summary Compensation Table for the applicable year. (b) Represents the equity award adjustments which include: the year-end fair value of any stock and option awards granted in the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year; the amount of the change as of the end of the covered fiscal year (from the end of the prior fiscal year) in fair value of any stock or option awards granted in prior years that are outstanding and unvested as of the end of the covered fiscal year; for stock and option awards granted in prior years that vest in the covered fiscal year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; and the dollar value of any dividends or other earnings paid on stock awards in the covered fiscal year prior to the vesting date that are not otherwise reflected in the fair value of such stock award or included in any other component of total compensation for the covered fiscal year. (3) Our non-PEO NEOs include the following individuals for each year: for 2023, Mr. Conklin, Mr. Sharpe, Mr. McAnena, and Mr. Carley; for 2022, Mr. Conklin, Mr. Sharpe, Mr. Carley, and Mr. Desrochers; for 2021, Mr. Conklin, Mr. Sharpe, Mr. Carley, and Mr. Desrochers; and for 2020, Mr. Conklin, Mr. Sharpe, Mr. Rugenstein, and Mr. Carley. (4) Total Shareholder Return for each fiscal year is based on a $100 common equity investment at the close of December 31, 2019 measuring through and including the end of the applicable year. (5) Represents the Total Shareholder Return for S&P 500 Insurance Industry peer group. (6) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. Result is rounded to the nearest million dollars. (7) Represents the most important financial performance measure not otherwise reported in the above table that is used by the Company to link actual compensation paid during the most recent fiscal year to the Company’s performance, as required pursuant to Item 402(v) of Regulation S-K. The Company-selected measure is AIP adjusted core earnings, which is the Company’s net income calculated in accordance with GAAP adjusted to exclude the items described in the CD&A. Result is rounded to the nearest million dollars.
Pay Versus Performance
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 43 |
Pay Versus Performance
The Compensation Committee considers the following financial measures to be the most important in aligning the long- and short-term incentive compensation of our PEO and other named executive officers with performance: •AIP adjusted core earnings •AIP adjusted return on equity •Total shareholder return •Insurance premiums and contract charges earned
Pay Versus Performance
| 44 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
CEO Pay Ratio
CEO Pay Ratio Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we calculate a ratio of total pay for our CEO compared to total pay for our median employee (CEO Pay Ratio). To identify our median employee, we use total cash at target (annualized base salary as of 12/31/2023 plus annual bonus target), as we believe this is the most representative measure of annual compensation for our broader employee population. Once the median employee is identified, we compile the same pay elements for the median employee that we do for the NEOs as displayed in the Summary Compensation Table. We then compare total pay of our CEO (as displayed in the Total $ column of the Summary Compensation Table) to total pay of our median employee. The following table sets forth information regarding CEO Pay Ratio.
CEO Pay Ratio
| | Total Pay ($) | Pay Ratio | | Chief Executive Officer | 6,135,530 | 82:1 | | Median Employee | 74,515 | |
CEO Pay Ratio
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 45 |
Grants of Plan Based Awards
Grants of Plan Based Awards The following table sets forth information concerning the grant of the 2023 Annual Incentive and the grant of the 2023 Long-term Incentive for the 2023 – 2025 performance period. Actual payouts under the 2022 AIP are included in the Summary Compensation Table. Payouts for the 2023 Long-term incentive grant and the determination of the actual RSUs earned will not occur until after the completion of the 2023 – 2025 performance period.
Grants of Plan Based Awards
| Named Individual | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | All Other Option Awards: Number of Securities Underlying Options (#) (4) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock Option Awards ($) (5) | | | | Incentive Plan | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Marita Zuraitis | | AIP | 775,000 | 1,550,000 | 3,100,000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | 26,738 | 53,475 | 106,950 | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | 21,390 | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 134,432 | $35.98 | 1,154,400 | | Bret A. Conklin | | AIP | 183,750 | 367,500 | 735,000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | 4,169 | 8,338 | 16,676 | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | 3,336 | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 20,964 | $35.98 | 180,000 | | Matthew P. Sharpe | | AIP | 151,000 | 302,000 | 604,000 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | 4,169 | 8,338 | 16,676 | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | 3,336 | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 20,964 | $35.98 | 180,000 | | Stephen J. McAnena | | AIP | 97,212 | 194,423 | 388,846 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | | 5/23/2023 | LTI | N/A | N/A | N/A | 3,891 | 7,781 | 15,562 | N/A | N/A | N/A | N/A | | | 5/23/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | 3,114 | N/A | N/A | N/A | | | 5/23/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 19,564 | $32.13 | 150,000 | | Donald M. Carley | | AIP | 104,583 | 209,167 | 418,334 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | 2,606 | 5,212 | 10,424 | N/A | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | 2,085 | N/A | N/A | N/A | | | 3/8/2023 | LTI | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 13,104 | $35.98 | 112,500 |
Grants of Plan Based Awards
N/A - Not applicable (1) Represents performance-based 2023 Annual Incentive. (2) Represents the performance-based portion of the 2023 Long-term Incentive grant. (3) Represents the service-based RSU portion of the 2023 Long-term Incentive grant. (4) Represents the stock option portion of the 2023 Long-term Incentive grant. (5) Totals equate to each NEO’s 2023 Long-term Incentive amount. The fair value of stock options was determined using the Black-Scholes model.
Grants of Plan Based Awards
| 46 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth information regarding the exercisable and unexercisable stock options, as well as the unvested RSUs held by each NEO at December 31, 2023.
Outstanding Equity Awards at Fiscal Year End
| Named Individual | Option Awards | | | | | | Stock Awards (Restricted Stock Units) | | | | | | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1)(5) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Grant Date | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#)(2)(5) | Market Value of Shares or Units of Stock that Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#)(4)(5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested ($)(3) | | Marita Zuraitis | 32,430 | 0 | 0 | 28.88 | 03/05/14 | 03/05/24 | 37,973 | 1,241,717 | 132,316 | 4,326,733 | | | 29,596 | 0 | 0 | 32.35 | 03/04/15 | 03/04/25 | | | | | | | 83,916 | 0 | 0 | 31.01 | 03/09/16 | 03/09/26 | | | | | | | 70,424 | 0 | 0 | 41.95 | 03/07/17 | 03/07/27 | | | | | | | 71,532 | 0 | 0 | 42.95 | 03/06/18 | 03/06/28 | | | | | | | 93,756 | 0 | 0 | 38.99 | 03/05/19 | 03/05/29 | | | | | | | 82,236 | 27,412 | 0 | 41.83 | 03/04/20 | 03/04/30 | | | | | | | 52,362 | 52,362 | 0 | 40.10 | 03/03/21 | 03/03/31 | | | | | | | 26,449 | 79,347 | 0 | 41.39 | 03/09/22 | 03/09/32 | | | | | | | 0 | 134,432 | 0 | 35.98 | 03/08/23 | 03/08/33 | | | | | | Bret A. Conklin | 5,828 | 0 | 0 | 28.88 | 03/05/14 | 03/05/24 | 6,727 | 219,973 | 24,839 | 812,235 | | | 4,712 | 0 | 0 | 32.35 | 03/04/15 | 03/04/25 | | | | | | | 10,492 | 0 | 0 | 31.01 | 03/09/16 | 03/09/26 | | | | | | | 8,180 | 0 | 0 | 41.95 | 03/07/17 | 03/07/27 | | | | | | | 13,676 | 0 | 0 | 42.95 | 03/06/18 | 03/06/28 | | | | | | | 21,636 | 0 | 0 | 38.99 | 03/05/19 | 03/05/29 | | | | | | | 20,559 | 6,853 | 0 | 41.83 | 03/04/20 | 03/04/30 | | | | | | | 11,636 | 11,636 | 0 | 40.10 | 03/03/21 | 03/03/31 | | | | | | | 5,290 | 15,870 | 0 | 41.39 | 03/09/22 | 03/09/32 | | | | | | | 0 | 20,964 | 0 | 35.98 | 03/08/23 | 03/08/33 | | | | | | Matthew P. Sharpe | 25,672 | 0 | 0 | 41.95 | 03/07/17 | 03/07/27 | 6,633 | 216,899 | 24,145 | 789,542 | | | 23,144 | 0 | 0 | 42.95 | 03/06/18 | 03/06/28 | | | | | | | 26,444 | 0 | 0 | 38.99 | 03/05/19 | 03/05/29 | | | | | | | 20,559 | 6,853 | 0 | 41.83 | 03/04/20 | 03/04/30 | | | | | | | 10,666 | 10,666 | 0 | 40.10 | 03/03/21 | 03/03/31 | | | | | | | 5,290 | 15,870 | 0 | 41.39 | 03/09/22 | 03/09/32 | | | | | | | 0 | 20,964 | 0 | 35.98 | 03/08/23 | 03/08/33 | | | | | | Stephen J. McAnena | 0 | 19,564 | 0 | 32.13 | 05/23/23 | 05/23/33 | 3,216 | 105,163 | 8,036 | 262,777 | | Donald M. Carley | 14,988 | 0 | 0 | 31.01 | 03/09/16 | 03/09/26 | 4,294 | 140,414 | 15,851 | 518,328 | | | 12,952 | 0 | 0 | 41.95 | 03/07/17 | 03/07/27 | | | | | | | 11,572 | 0 | 0 | 42.95 | 03/06/18 | 03/06/28 | | | | | | | 14,424 | 0 | 0 | 38.99 | 03/05/19 | 03/05/29 | | | | | | | 13,083 | 4,361 | 0 | 41.83 | 03/04/20 | 03/04/30 | | | | | | | 7,274 | 7,274 | 0 | 40.10 | 03/03/21 | 03/03/31 | | | | | | | 3,527 | 10,581 | 0 | 41.39 | 03/09/22 | 03/09/32 | | | | | | | 0 | 13,104 | 0 | 35.98 | 03/08/23 | 03/08/33 | | | | |
Outstanding Equity Awards at Fiscal Year End
(1) Long-term Incentive stock option grants are service-based and all exercisable options vest on each anniversary of the grant date at a rate of 25% of the original grant. (2) Represents the unvested service-based RSUs granted in 2021, 2022, and 2023. (3) Represents the value of the RSUs based on the closing price of our Common Stock ($32.70) at December 31, 2023.
Outstanding Equity Awards at Fiscal Year End
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 47 |
Outstanding Equity Awards at Fiscal Year End
(4) The performance-based RSUs granted in 2021 will not be earned until the end of the 2021-2023 performance period. RSUs earned at the end of the performance period will vest 100% in 2024. The performance-based RSUs granted in 2022 will not be earned until the end of the 2022-2024 performance period. RSUs earned at the end of the performance period will vest 100% in 2025. The performance-based RSUs granted in 2023 will not be earned until the end of the 2023-2025 performance period. RSUs earned at the end of the performance period will vest 100% in 2026. (5) To support proactive succession planning efforts, Mr. Sharpe’s 2023 performance-based agreement allows for full continued vesting if he retires in good standing after December 31, 2024 but before the end of the performance period. The award will vest at the end of the performance period based on actual performance. For Mr. Sharpe’s time-based awards, his agreements allow for full vesting if he retires in good standing prior to the end of the vesting period, but remains active until at least January 1, 2025. The awards will vest in full as of the retirement date.
Outstanding Equity Awards at Fiscal Year End
| 48 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Option Exercises and Stock Vesting
Option Exercises and Stock Vesting The following table sets forth information regarding options exercised and stock awards acquired on vesting by the NEOs in 2023.
Option Exercises and Stock Vesting
| Named Individual | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | | Marita Zuraitis | 866 | 3,789 | 45,314 | 1,634,259 | | Bret A. Conklin | 0 | 0 | 10,954 | 395,071 | | Matthew P. Sharpe | 0 | 0 | 10,865 | 391,803 | | Stephen J. McAnena | 0 | 0 | 0 | 0 | | Donald M. Carley | 0 | 0 | 5,442 | 196,512 |
Option Exercises and Stock Vesting
(1) The value realized on vesting of stock awards is determined by multiplying the number of shares vested by the closing stock price on the date of vesting. The actual amounts realized from vested stock awards will depend upon the sale price of the shares when they are actually sold.
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans The following table sets forth information regarding participation by the NEOs in the Company’s NQDCP and the nonqualified deferred compensation plan as of December 31, 2023.
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans
| Named Individual | Account Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) (1) | Aggregate Earnings in Last FY ($) (2) | Aggregate Balance at Last FYE ($) | | Marita Zuraitis | NQDCP Account | 0 | 35,167 | (1,562) | 308,252 | | | Deferred Compensation Account | 0 | 0 | 0 | 0 | | Bret A. Conklin | NQDCP Account | 0 | 9,750 | 216 | 60,589 | | | Deferred Compensation Account | 0 | 0 | (34,586) | 361,330 | | Matthew P. Sharpe | NQDCP Account | 0 | 8,667 | 846 | 83,882 | | | Deferred Compensation Account | 0 | 0 | 0 | 0 | | Stephen J. McAnena | NQDCP Account | 0 | 0 | 0 | 0 | | | Deferred Compensation Account | 0 | 0 | 0 | 0 | | Donald M. Carley | NQDCP Account | 0 | 4,417 | (304) | 26,511 | | | Deferred Compensation Account | 0 | 0 | 0 | 0 |
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans
(1) Represents the 2023 NQDCP registrant Company contributions. These contributions are included in the All Other Compensation column of the Summary Compensation Table for 2023. (2) Represents (a) the gains/losses in the NQDCP in 2023 and (b) the change in the deferred compensation account balance reflecting changes in the closing stock price of HMEC Common Stock from December 31, 2022 to December 31, 2023, each excluding contributions reflected in the first two columns.
Nonqualified Supplemental Defined Contribution and Other Nonqualified Deferred Compensation Plans
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 49 |
Illustration of Potential Payments upon Termination or Change in Control
Illustration of Potential Payments upon Termination or Change in Control The following table presents the estimated payments and benefits that would have been payable as of the end of 2023 in the event of separation due to disability or death, cause, voluntary termination of employment, retirement, involuntary termination of employment without cause, and a change of control of the Company. Consistent with SEC requirements, these estimated amounts have been calculated as if the NEOs’ employment had been terminated as of December 31, 2023, the last business day of 2023, using the closing price of our Common Stock on that date ($32.70). The amounts reported in the following table are hypothetical amounts based on the disclosure of compensation information about the NEOs. Actual payments will depend on the circumstances and timing of any termination of employment or other triggering event.
Illustration of Potential Payments upon Termination or Change in Control
| Estimated Payments ($) Assuming Termination as of December 31, 2023 (1)(2)(4) | | | | | | | Name & Benefits | Disability or Death | For Cause | Voluntary | Involuntary Termination w/o Cause | Change in Control | | Marita Zuraitis | | | | | | | Cash Severance | 0 | 0 | 0 | 5,200,000 | 6,500,000 | | AIP | 1,560,000 | 0 | 0 | 1,560,000 | 1,560,000 | | Acceleration of Stock Options | 0 | 0 | 0 | 0 | 0 | | Acceleration of RSUs | 3,636,963 | 0 | 0 | 0 | 5,201,429 | | Health and Welfare | 0 | 0 | 0 | 31,980 | 31,980 | | Modified Cap Adjustment (3) | N/A | N/A | N/A | N/A | N/A | | TOTAL | 5,196,963 | 0 | 0 | 6,791,980 | 13,293,409 | | Bret A. Conklin | | | | | | | Cash Severance | 0 | 0 | 0 | 1,338,750 | 1,785,000 | | AIP | 367,500 | 0 | 0 | 367,500 | 367,500 | | Acceleration of Stock Options | 0 | 0 | 0 | 0 | 0 | | Acceleration of RSUs | 698,818 | 0 | 0 | 0 | 960,289 | | Health and Welfare | 0 | 0 | 0 | 42,072 | 42,072 | | Modified Cap Adjustment (3) | N/A | N/A | N/A | N/A | N/A | | TOTAL | 1,066,318 | 0 | 0 | 1,748,322 | 3,154,861 | | Matthew P. Sharpe | | | | | | | Cash Severance | 0 | 0 | 0 | 1,212,000 | 1,616,000 | | AIP | 303,000 | 0 | 0 | 303,000 | 303,000 | | Acceleration of Stock Options | 0 | 0 | 0 | 0 | 0 | | Acceleration of RSUs | 675,663 | 0 | 0 | 0 | 937,116 | | Health and Welfare | 0 | 0 | 0 | 42,072 | 42,072 | | Modified Cap Adjustment (3) | N/A | N/A | N/A | N/A | N/A | | TOTAL | 978,663 | 0 | 0 | 1,557,072 | 2,898,188 | | Stephen J. McAnena | | | | | | | Cash Severance | 0 | 0 | 0 | 1,200,000 | 1,600,000 | | AIP | 300,000 | 0 | 0 | 300,000 | 300,000 | | Acceleration of Stock Options | 11,151 | 0 | 0 | 0 | 11,151 | | Acceleration of RSUs | 186,409 | 0 | 0 | 0 | 356,267 | | Health and Welfare | 0 | 0 | 0 | 42,325 | 42,325 | | Modified Cap Adjustment (3) | N/A | N/A | N/A | N/A | -60,484 | | TOTAL | 497,560 | 0 | 0 | 1,542,325 | 2,249,259 | | Donald M. Carley | | | | | | | Cash Severance | 0 | 0 | 0 | 945,000 | 1,260,000 | | AIP | 210,000 | 0 | 0 | 210,000 | 210,000 | | Acceleration of Stock Options | 0 | 0 | 0 | 0 | 0 | | Acceleration of RSUs | 446,022 | 0 | 0 | 0 | 612,763 | | Health and Welfare | 0 | 0 | 0 | 40,067 | 40,067 | | Modified Cap Adjustment (3) | N/A | N/A | N/A | N/A | N/A | | TOTAL | 656,022 | 0 | 0 | 1,195,067 | 2,122,830 |
Illustration of Potential Payments upon Termination or Change in Control
N/A – Not applicable (1) All AIP and LTI earned payouts are assumed to be at target. (2) As of December 31, 2023, Marita Zuraitis, Bret A. Conklin, and Matthew P. Sharpe are the only NEO’s who are retirement eligible. (3) Benefit reduction to avoid the imposition of a “golden parachute” tax. (4) The amounts reflected for Pro Rata Short-Term (Annual) Incentive Compensation represent the entire value of the estimated liability at target, even though the actual value has also been disclosed in the Summary Compensation Table within this Proxy Statement as earned in 2023.
Illustration of Potential Payments upon Termination or Change in Control
| 50 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement | Horace Mann Educators Corporation |
Illustration of Potential Payments upon Termination or Change in Control
Compensation Committee Report The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on our review of, and the discussions with management with respect to, the Compensation Discussion and Analysis, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. COMPENSATION COMMITTEE MARK E. KONEN, Chairman BEVERLEY J. MCCLURE and H. WADE REECE, Members Equity Compensation Plan Information The following table provides information as of December 31, 2023 regarding outstanding awards and shares remaining available for future issuance under the Company’s equity compensation plans (excluding the Horace Mann 401(k) plan):
Illustration of Potential Payments upon Termination or Change in Control
| Equity Compensation Plans | Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights | Weighted-Average Exercise Price of Outstanding Options and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (4) | | Plans Approved by Shareholders | | | | | Stock Incentive Plans (1) | | | | | Stock Options | 1,402,514 | 38.85 | | | Restricted Stock Units (2) | 925,230 | | | | Subtotal | 2,327,744 | | 0 | | Deferred Compensation Plan for Directors (2) & Employees (3) | 27,430 | | 0 | | Subtotal | 2,355,174 | | 1,067,611 | | Total: | 2,355,174 | | 1,067,611 |
Illustration of Potential Payments upon Termination or Change in Control
(1) Includes grants under the CECP. (2) No exercise price is associated with the shares of Common Stock issuable under these rights. (3) The CECP permits Directors and participants in certain cash incentive programs to defer compensation in the form of deferred cash RSUs, which can be settled in cash at the end of the specified deferral period. For purposes of the CECP, deferred cash RSUs are valued at 100% of the fair market value of Common Stock on the date of crediting to the participant’s deferral account. There are 71 senior executives of the Company currently eligible to participate in the CECP. The CECP does not reserve a specific number of shares for delivery in settlement of deferred cash RSUs but instead provides that shares will be available to the extent needed for such settlements. Further information on the CECP appears in the Compensation Discussion and Analysis. (4) Excludes securities reflected in the Securities to be Issued column and represents shares remaining as part of a fungible share pool. The pool of shares is reduced by 2.5 shares for every “full-value” award that is granted.
Illustration of Potential Payments upon Termination or Change in Control
| Horace Mann Educators Corporation | 2024 Annual Meeting of Shareholders Meeting Notice & Proxy Statement 51 |
Illustration of Potential Payments upon Termination or Change in Control
Executive Officers The following provides biographical information, as of March 15, 2024, with respect to the Executive Officers of the Company and its subsidiaries who are not Directors of the Company (Marita Zuraitis, President and Chief Executive Officer, is a Director and is discussed under Board Nominees).