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Timing and Key Features of the Program
The revised process for determining the CEO’s compensation, as was used in 2014, is as follows:
Element
Timing of Decision
Base Salary*
Established in December 2013 and paid during 2014
Annual Incentive Award (MIP)
Paid in cash in March of the following year after the Compensation Committee’s
review of performance
p
arameters set in February of the performance year
(e.g., fiscal
2014 MIP award paid in March 2015)
Long-term Incentives (LTI)
Two phases:
Contingent PBRS grant made in February (equal to 60% of prior year’s total
LTI grant date award value)
Final “true up” PBRS award (additional PBRS grant or reduction of contingent
February PBRS grant) made based upon current year performance to-date at
time of the Compensation Committee decision
Details regarding the base salary determination are included in the section titled “Base Salary” of this CD&A.
Annual Incentive Award (MIP)
The CEO’s annual cash incentive award is based on
the metrics and weightings detailed above in the section
titled “Management Incentive Plan (MIP)” of this CD&A.
As is the case with the other NEOs, parameters for
each of the goals are established in February of each
year and are prospective in nature (i.e., goals are set in
February 2014 for 2014 performance). The MIP
opportunity for the CEO is capped at 200% of his target
opportunity. The CEO’s MIP award for 2014
performance was $4,829,415.
Long-term Equity Incentive (LTI) Award
The CEO’s LTI award is made 100% in performance-
based restricted stock (PBRS) contingent upon, for
2014, the Company’s performance over a three-year
period on three metrics: RBC, SMR, and OROE, similar
to the PBRS awards granted to our other NEOs. The
metrics and their associated weightings for the PBRS
awards to the CEO are the same as those disclosed
previously in the section titled ”Long-term Equity
Incentives” beginning on page 34.
Similar to prior years, the size of the CEO’s 2014 LTI
award was based upon the Company’s relative
performance against its peers across the metrics shown
in the table below. In previous years, the Company’s
prior year’s relative performance to its peers was used
to set the CEO’s LTI award after information regarding
the compensation and financial performance for the
prior year was available for the peers. As the year-end
relative performance was used, the timing of the
process resulted in total compensation for a given year
being reported over two proxy statement cycles.
For 2014, the performance period for all non-total
shareholder return (TSR) metrics was the trailing twelve
month period ending September 30, 2014; for the two
TSR metrics, the Company’s TSR was compared
against the peers as of December 31, 2014. As
summarized below, the contingent grant to the CEO in
February 2014 was trued-up on December 31, 2014.
These modifications to the program relative to the
approach used in prior years help to better align the
CEO’s 2014 LTI grant and overall compensation with
our relative performance for the current year (i.e., 2014)
and removes the timing disconnect (i.e., amounts being
granted and reported over two years) that existed under
the previously-used approach.
Performance Metric
Weighting
Performance Metric
Weighting
Revenue Growth
1
Return on Average Equity
2
Net Income Growth
1
Return on Average Assets
2
Premium Income Growth
1
1-year Total Shareholder Return (2014)
4
EPS Growth
1
3-year Total Shareholder Return (2012 – 2014)
4
Return on Revenues
2
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