UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
¨ | Definitive Proxy Statement |
x | Definitive Additional Materials |
¨ | Soliciting Material Pursuant to §240.14a-12 |
Unum Group
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which the transaction applies: |
(2) | Aggregate number of securities to which the transaction applies: |
(3) | Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of the transaction: |
(5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
Proxy
Solicitation Discussion Unum Group | May 2013 |
Unums Human Capital Committee and Board of Directors adhere to a philosophy
and demonstrated practice of pay for performance and believe that the
Companys executive compensation programs are fully aligned with the
interests of shareholders. Executive pay is targeted at the median of the
appropriate comparison groups that include companies Unum competes with in
the marketplace. In evaluating performance, the Committee considers total
shareholder return over the short and long-term, operating performance
and the overall strength and strategic position of the Company. The
Committees compensation decisions for 2012 reflect this.
While calendar year 2012 total shareholder returns lagged proxy peers and resulted
in lower incentive awards for the CEO, the Companys total shareholder
return has significantly exceeded its peers and the overall market during
his ten-year tenure as CEO. Further, total shareholder return in
the first quarter of 2013, as well as for the trailing twelve months, also
exceeded peers and the market. The Company had strong performance relative to
peers in 2012 in a number of important metrics including EPS growth, return
on equity, and book value growth. Executive Summary
2 |
In 2012, the Committee and
management completed a review of our executive compensation program. As part of the
process, we evaluated the reports of proxy advisory
firms
as
well
as
feedback
from
our
shareholder
outreach
program
to
institutional investors conducted in the first half of 2012.
Based on the feedback received, the Committee has taken or authorized the following
principle actions to be taken in 2013 to better align the interests of shareholders and
executives:
established new performance goals for our long-term incentive plan to reduce overlap with the
performance goals in our short-term incentive plan
introduced performance share units which are based on three-year prospective goals with a
modifier tied to relative total shareholder return
enhanced
our
disclosure
of
short-
and
long-term
performance
metrics
by
including
threshold,
maximum and actual performance for each metric
Shareholder Outreach
3 |
Decisions the Committee made in 2013 for the CEOs 2012 performance reflected
both Company performance and total shareholder return.
His short-term incentive award was down 25.5% year-over-year; payout
was 68% of target His long-term incentive award was down 22%; payout was 91% of target
Calendar year 2012 was a transition year for the changes in the long-term
incentive plans. While the CEOs grant for 2012 performance (made
in early 2013) reflects the new mix of performance shares and
performance-based restricted stock units, the changes are not yet
reflected in the Summary Compensation table. By
2014,
these
changes
will
be
fully
incorporated
in
the
Summary
Compensation
table
which forms the basis for quantitative analysis by proxy advisory firms.
2012 Compensation Decisions
4 |
The
two
pay
for
performance
elements
the
Committee
decided
in
February
2013,
based
on
2012
performance,
are
the
annual
incentive
award
and
the
long
term
incentive
award.
A
comparison
of
proxy
peers
shows
our
CEO
incentive
compensation
to
be
well
aligned.
2012 Compensation Decisions
CEO INCENTIVE COMPENSATION COMPARISON
Annual Incentive Award
Long Term Incentive Award
$5,463
$5,000
$1,489
$2,291
$s in thousands
$s in thousands
* See Appendix for list of Unums Proxy Peers and details related to the
calculation of peer median 5
Unum
Peer Median *
Unum
Peer Median *
Unum CEO at 21 percentile
Unum CEO at 53 percentile
st
rd |
We
acknowledge that total shareholder return for calendar year 2012 lagged our Proxy
peers and the Committee considered this in its decision making process and
reflected it in the award made.
Unums cumulative total shareholder return over the last 10 years have
exceeded those of our proxy peers and the broader market.
Total Shareholder Return
CONSISTENT VALUE CREATION
* Through 3/31/2013
*
*
Cumulative Total Shareholder Returns
250.0%
200.0%
150.0%
100.0%
50.0%
0.0%
YTD2013
1-Year
FY2012
3-Year
5-Year
10-Year
Proxy Peer Average
S&P 500
UNM
6 |
Unums strong performance through a difficult economic period reflects the
Companys commitment to disciplined risk management and shareholder
value creation. Total Shareholder Return
CONSISTENT VALUE CREATION
140
120
100
80
60
40
20
-
2007
2008
2009
2010
2011
2012
2013*
Unum Group
S&P 500
Proxy Peer Median
7
Indexed Total Shareholder Returns
* Through 3/31/2013 |
Operating Earnings Per Share
Company Performance
Years 2004-2007 do not reflect the impact of ASU 2010-26 and special
items * EPS Compound Annual Growth Rate
Operating earnings per share, which we define as operating earnings or loss per
diluted common share, is a non-GAAP financial measure. Refer to the Appendix for a
reconciliation of this measure to net income or loss per share, the most directly
comparable GAAP measure. 9.6%
SOLID PROFITABILITY
$4.00
8
$3.00
$2.00
$1.00
$0.00
2004
2005
2006
2007
2008
2009
2010
2011
2012
1Q12
1Q13
$0.73
$0.80
|
(Excluding AOCI)
Balance Sheet
BUILDING BOOK VALUE
11.9%
Book Value Per Share
Book
value
per
share,
excluding
accumulated
other
comprehensive
income
(AOCI),
is
a
non-GAAP
financial
measure.
Refer
to
the
Appendix
for
a
reconciliation
of
this
measure
to net income or loss per share, the most directly comparable GAAP measure.
$30.24
$27.03
$23.20
$25.69
$26.33
$29.55
12/31/2009
12/31/2010
12/31/2011
12/31/2012
3/31/2012
3/31/2013
9 |
Capital
Management CONSISTENT RETURN OF CAPITAL TO SHAREHOLDERS
*
Projection for 2013
This forward-looking statement is not based on historical information and is
subject to numerous assumptions, risks and uncertainties, many of which are
beyond
our
control.
For
a
discussion
of
factors
that
could
cause
actual
results
to
differ
from
those
contained
in
this
forward-looking
statement,
see
Part
1,
Item
1A
of
our
annual
report on Form 10-K for the year ended December 31, 2012 and our subsequently
filed Form 10-Q. TOTAL
$2,676 million
$578 million
Share Repurchases
2008
2009
$700 million
---
2010
2011
$356 million
$620 million
Dividend Increase
---
+10%
+12%
+14%
2012
$500 million
+24%
2013
$500* million
TBD
Rating Agency
Actions
S&P Upgrade
Moodys Upgrade
Fitch Upgrade
A.M. Best Upgrade
S&P Upgrade
Moodys Upgrade
10 |
Both
Glass
Lewis
and
ISS
have
issued
reports
recommending
a
FOR
vote
on
all
items
being
voted
on
at
the
annual
meeting
with
one
exception
ISS
has
recommended
an
against
vote on Say-on-Pay.
Glass Lewis noted favorably the changes the Company made after soliciting
shareholder input. In its analysis, Glass Lewis acknowledged the
Company outperformed its peers in several important operating metrics such
as EPS growth and ROE. It did note the underperformance in 2012
TSR. It viewed CEO compensation to be in line with peers using a three
year weighted average. Overall, it raised its pay for performance grade for
the Company.
ISS acknowledged the changes the Company made but felt the Company was not
sufficiently responsive to shareholder concerns. The Company disagrees with
this conclusion as our direct dialogue with shareholders indicated two
primary concerns which the Company has addressed: a preference for three
year goals in the long term incentive plan and a reduction in the overlap of
goals in the short term and long term incentive plans.
We
have
a
distinctly
different
proxy
peer
group
from
that
used
by
ISS
only
35%
overlap. We believe that our proxy peer group is the most appropriate given
who we compete with for talent and capital.
As we have done in the past, we will continue to reach out to shareholders as well
as proxy advisory firms for feedback and input on our executive compensation
programs. Proxy Advisory Firms
11 |
The
Board and the Human Capital Committee strongly believe that Unums
compensation programs have been designed and implemented in the best interests of
shareholders and tightly align pay to Company performance. Therefore,
the Board urges shareholders to vote FOR
all the voting items, including Say-on-Pay.
Even if you have already voted, you can change your vote at any time before the
2013 Annual meeting as described in more detail in the 2013 Proxy
Statement. For assistance in changing your vote, contact Innisfree
M&A Incorporated toll-free at 1-888-750-5834.
Voting Recommendations
12 |
Appendix |
Proxy Peers include the
following companies: Peer Median Compensation based on most current compensation disclosed in
2013 proxy filing or subsequent Form 4/8-K filings, noting the following:
Aetna:
Aggregate annual incentive includes value of both RSUs and cash awards.
Genworth:
Excluded for purposes of determining peer median for annual incentive because no
bonus data available for new CEO effective January 2013. For purposes of determining
peer median LTI includes 3-year annualized value of 1,000,000 SARs and 100,000 RSUs
granted upon hire.
Humana:
New CEO effective in January 2013; annual incentive based on performance in prior role.
Marsh & McLennan:
New CEO effective in January 2013; annual incentive based on performance in prior role.
Prudential:
Aggregate annual incentive includes value of both deferred Book Value Units and cash awards.
Proxy Peers
Aetna
Lincoln
Aflac
Marsh & McLennan
Aon
Metlife
Assurant
Principal Financial
Cigna
Protective Life
CAN Financial
Prudential Financial
Genworth Financial
Stancorp Financial
Hartford Financial Services
Torchmark
Humana
14 |
Reconciliation of Non-GAAP Financial Measures
15 |