Horace Mann Educators (HMN) DEF 14ADefinitive proxy

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. )

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18 Horace Mann Educators Corporation Annual Meeting of Shareholders& Proxy Statement AUTO HOME LIFE RETIREMENT

Springfield, Illinois

April 6, 2020

Dear Shareholder,

You are cordially invited to virtually attend the Annual Meeting of Horace Mann Educators Corporation to be held at 9:00 a.m. Central Daylight Saving Time on Wednesday, May 20, 2020. We are pleased to announce that this year’s Annual Meeting will be via live webcast on the Internet. You will be able to attend the Annual Meeting and vote during the live webcast by visiting www.virtualshareholdermeeting.com/HMN2020 and entering the 16-digit control number included in our Notice of Internet Availability of Proxy Materials, on your proxy card or in the instructions that accompanied your proxy materials.

We will be taking questions from Shareholders only in advance of the meeting to reduce the risk of technology problems. If you have questions, please email them to 2020ShareholderMeeting@horacemann.com by May 15, 2020. As time permits, we will answer as many questions as possible.

We encourage you to read the Proxy Statement and vote your shares as soon as possible. You may vote online, by telephone or by completing and returning a proxy card. Specific voting instructions are set forth in the Proxy Statement, the Notice of Internet Availability of Proxy Materials and the proxy card. You may revoke your voted proxy at any time prior to the meeting or vote electronically during the virtual meeting.

We look forward to having you join us for the virtual meeting. If you vote by proxy and do not plan to attend, let us know your thoughts about Horace Mann either by letter or by comment on the proxy card.

Sincerely,

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider. You should read the entire Proxy Statement carefully before voting.

The meeting will be available at www.virtualshareholdermeeting.com/HMN2020. To join the meeting, you will need the 16-digit control number included on your Notice, on your proxy card or on the instructions that accompanied your proxy materials. Voting will be available during the meeting, but if you have previously voted your shares, you do not need to vote during the meeting.

To determine annual compensation incentive awards, the Compensation Committee makes adjustments to core earnings for items that are highly volatile and outside the control of management. On that basis, core earnings would have increased to $104.7 million, as discussed in the Compensation Discussion and Analysis beginning on page 17.

Although broader global issues are creating new challenges, by continuing to build on a strong foundation, the Company expects to make progress over the course of 2020 toward its long-term goals of significantly increasing education market share and reaching a double-digit return on equity.

(Highlights of 2019 performance include:

Acquiring NTA accelerated progress on each component of Horace Mann’s initiatives to improve its products, distribution and infrastructure:

Other actions that supported product, distribution and infrastructure initiatives over the course of the year included the acquisition of Benefit Consultants Group, Inc. (“BCG”), which improves Horace Mann’s business-to-business value proposition, and the second phase launch of the Guidewire P&C implementation in Illinois. The new administration system provides substantial customer experience improvements, as well as improved data segmentation and analysis, digital capabilities and ease of use. Over the course of 2020, the Company plans to on-board its largest states, representing about 60% of customers.

2019 results also reflected steps taken to streamline the Company’s organizational structure, as well as implementations of expense synergies and efficiency projects. These are expected to reduce the operating expense rate by at least $15 million in 2020 and beyond.

In line with the Business Roundtable’s statement on the purpose of a corporation, Horace Mann believes companies have a fundamental commitment to each of their stakeholder groups: customers, employees, suppliers, communities and shareholders. The statement emphasizes a commitment to transparency and effective engagement with shareholders, which Horace Mann aims to achieve through the financial reporting process, as well as additional disclosures and dialogue around incorporating environmental, social and governance (“ESG”) factors into business decisions.

Actions are based on the following goals:

For more information, view the 2018-2019 Corporate Social Responsibility Report, which is not part of this Proxy Statement, at csr.horacemann.com.

For Horace Mann, 2019 was particularly rewarding, with a number of projects coming to fruition. The Company’s transformative efforts and multi-year initiatives focused on improving its products, distribution and infrastructure have resulted in a larger, more diverse company with a strong long-term outlook. The Company is better positioned than ever to achieve its corporate vision: To be the company of choice to help all educators achieve lifelong financial success.

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Horace Mann Educators Corporation (“HMEC,” the “Company” or “Horace Mann”) of proxies (that is, the authority to vote shares) from holders of the Company’s common stock, par value $.001 per share (“Common Stock”). The proxies will be voted at the Annual Meeting of Shareholders to be held on Wednesday, May 20, 2020 at 9:00 a.m. Central Daylight Saving Time via live webcast at www.virtualshareholdermeeting.com/HMN2020 and at any adjournment or postponement thereof (the “Annual Meeting”).

The mailing address of the Company is 1 Horace Mann Plaza, Springfield, Illinois 62715-0001 (telephone number 217-789-2500). This Proxy Statement and the proxy card are first being made available to Shareholders of the Company (“Shareholders”) on or about April 6, 2020.

The Board has fixed the close of business on March 24, 2020 as the record date (the “Record Date”) for determining the Shareholders entitled to receive notice of and to vote at the Annual Meeting. At the close of business on the Record Date, an aggregate of 41,277,498 shares of Common Stock were issued and outstanding, each share entitling the holder thereof to one vote on each matter to be voted upon at the Annual Meeting. The presence, in person or by proxy, of the holders of a majority of such issued and outstanding shares entitled to vote at the Annual Meeting is necessary to constitute a quorum for the transaction of business at the Annual Meeting. The Company, through bankers, brokers or other persons, also intends to make a solicitation of beneficial owners of Common Stock.

At the Annual Meeting, Shareholders will be asked to: (1) elect nine Directors named in the Proxy Statement to hold office for one-year terms continuing until the next Annual Meeting of Shareholders and until their respective successors have been duly elected and qualified; (2) approve the advisory resolution to approve Named Executive Officers’ (as defined on page 16 below) compensation; and (3) ratify the appointment of KPMG LLP, an independent registered public accounting firm, as the Company’s auditors for the year ending December 31, 2020.

Shareholders may also be asked to consider and take action with respect to such other matters as may properly come before the Annual Meeting.

Copies of the Company’s Annual Report and Form 10-K for the year ended December 31, 2019 (“Annual Report”), including the Company’s audited consolidated financial statements, were made available to known Shareholders on or about March 2, 2020.

Safe Harbor Statement and Non-GAAP Measures

Statements included in this document that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties. Horace Mann is not under any obligation to (and expressly disclaims any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the company's past and future filings and reports filed with the Securities and Exchange Commission for information concerning the important factors that could cause actual results to differ materially from those in forward-looking statements.  

The historical financial information contained in this document includes measures (marked with * the first time they are presented within this document) that are not based on accounting principles generally accepted in the U.S. (“non-GAAP”) such as core earnings, core earnings per share, and book value per share excluding some components of accumulated other comprehensive income. An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 in our most recent Form 10-K and Form 10-Q filed with the SEC and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) in the Appendix on page 45.

If your shares are held in “street name” (that is, in the name of a bank, broker or other holder of record), you will receive a Notice containing instructions from the holder of record that you must follow in order for your shares to be voted. Internet and/or telephone voting also will be offered to Shareholders owning shares through most banks and brokers.

Participants in the Company’s stock fund within the Horace Mann 401(k) Plan can direct the trustee to vote their shares via the Internet as directed in the Notice, by telephone as provided on the website or proxy card, or by signing and returning a proxy card.

Your proxy is being solicited by and on behalf of the Board. The persons named in the Form of Proxy have been designated as proxies by the Board. Such persons are Directors of the Company.

Shares of Common Stock represented at the Annual Meeting by a properly executed and returned proxy will be voted at the Annual Meeting in accordance with the instructions noted thereon, or if no instructions are noted, the proxy will be voted in favor of the proposals set forth in the Notice of Annual Meeting. A submitted proxy is revocable by a Shareholder at any time prior to it being voted, provided that such Shareholder gives written notice to the Corporate Secretary at or prior to the Annual Meeting that such Shareholder intends to vote during the meeting or by submitting a subsequently dated proxy. Participation in the Annual Meeting by a Shareholder who has given a proxy shall not in and of itself constitute a revocation of such proxy.

Further solicitation may be made by officers and other employees of the Company personally, by telephone or otherwise, but such persons will not be specifically compensated for such services. Banks, brokers, nominees and other custodians and fiduciaries will be reimbursed for their reasonable out-of-pocket expenses in forwarding soliciting material to their principals, the beneficial owners of Common Stock. The costs of soliciting proxies will be borne by the Company. It is estimated these costs will be nominal.

Shareholders are entitled to one vote per share of Common Stock on all matters submitted for consideration at the Annual Meeting. Under the Company’s Bylaws, the affirmative vote of a majority of the shares of Common Stock represented in person or by proxy at the Annual Meeting is required for the election of Directors, approval of the advisory resolution to approve Named Executive Officers’ compensation, and the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020.

Abstentions have the same effect as a vote “against” approval of the matter.

Please note that under New York Stock Exchange (“NYSE”) rules, brokers who hold shares of Common Stock in street name for customers have the authority to vote on certain items when they have not received instructions from beneficial owners. With respect to the matters to come before the Annual Meeting, if brokers are not entitled to vote without instructions and therefore cast broker non-votes, the broker non-votes will have no direct effect on the outcome of the vote. However, because each matter requires a majority vote of the outstanding shares present and entitled to vote, a broker non-vote will indirectly work against the matter for which a broker non-vote is cast.

For this Annual Meeting, if you do not give specific instructions, your broker may cast your vote in its discretion on only Proposal No. 3 - Ratification of Independent Registered Public Accounting Firm.

Other than the matters set forth below, the Board has not received any Shareholder proposal by the deadline prescribed by the rules of the Securities and Exchange Commission (“SEC”), and otherwise knows of no other matters to be brought before the Annual Meeting. However, should any other matters properly come before the meeting, the persons named in the Form of Proxy will vote or refrain from voting thereon at their discretion.

The Bylaws of the Company provide for the Company to have not less than five or more than 15 Directors. The following ten persons currently are serving as Directors of the Company (“Directors”): Mark S. Casady, Daniel A. Domenech, Stephen J. Hasenmiller, Perry G. Hines, Mark E. Konen, Beverley J. McClure, H. Wade Reece, Robert Stricker, Steven O. Swyers and Marita Zuraitis. The terms of these Directors expire at the Annual Meeting. Mr. Hasenmiller, who has served on the Board for 15 years, is not standing for election. We thank Mr. Hasenmiller for his exemplary service.

The Board of Directors believes it is necessary for each of the 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 their 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 matrix below highlights certain key qualifications and experience of the Board Nominees.

The Nominating & Governance Committee believes 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 consideration of experience, perspective, background, skill sets, age, ethnicity, and gender makeup of the current Board as well as the candidate’s individual qualities in leadership, character judgment and ethical standards. It also assesses the effectiveness of our interest in diverse candidates.

The Nominating & Governance Committee believes our Board Nominees (as identified below) represent a diverse base of perspectives and reflect the diversity of the Company’s employees, customers and Shareholders, as well as an appropriate level of age and tenure, as further illustrated below.

Upon the recommendation of the Nominating & Governance Committee, the Board nominated Mr. Casady, Dr. Domenech, Mr. Hines, Mr. Konen, Ms. McClure, Mr. Reece, 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.

The following information, as of March 15, 2020, is provided with respect to each Board Nominee:

All of the Board Nominees were elected Directors at the last Annual Meeting of Shareholders of the Company held on May 22, 2019. The Board recommends that Shareholders vote FOR the election of these nine nominees as Directors.

There were ten members on the Board as of March 15, 2020. The Board met eight times during 2019. No Director of the Company attended fewer than 75% of the Board meetings and the committee meetings to which he or she was appointed and served during 2019.

The Chairman of the Board 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: Dr. Domenech, Mr. Hasenmiller, Mr. Hines, Ms. McClure, Mr. Reece, Mr. Shaheen, Mr. Stricker, Mr. Swyers and Ms. Zuraitis.

The standing committees of the Board consist of the Executive Committee, Compensation Committee, Nominating & Governance Committee, Investment & Finance Committee and Audit Committee. Each standing committee is governed by a charter that defines its role and responsibilities which are available on the Company’s website at investors.horacemann.com under “Corporate Overview - Committee Composition and Charters.” A printed copy of these charters may be obtained by Shareholders upon written request addressed to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza, C-738, Springfield, Illinois 62715-0001. The Board may also form ad hoc committees from time to time.

The Executive Committee exercises certain powers of the Board during intervals between meetings of the Board and, as requested by the Chief Executive Officer, acts as a sounding board for discussing strategic and operating issues between Board meetings.

The Compensation Committee approves and recommends to the Board the compensation, salaries, bonuses and awards applicable to the Executive Officers and Directors of the Company and oversees the process of Executive Officer leadership development and succession. Each of the current members of this Committee are independent under the listing standards of the NYSE applicable to compensation committee members. The Compensation Committee receives recommendations from management regarding compensation matters and has unrestricted access to the Company’s personnel documents and to reports or evaluations of any independent compensation consultants, specialists or advisors who are retained by the Company or the Compensation Committee to analyze the compensation of the Executive Officers and members of the Board. The Compensation Committee also has access to any other resources which it needs to discharge its responsibilities, including selecting, retaining and/or replacing, as needed, compensation consultants and other outside consultants to provide independent advice to the Compensation Committee. Additional information regarding the processes and procedures for the consideration and determination of Executive Officer compensation is provided in the “Compensation Discussion and Analysis.”

The Nominating & Governance Committee develops and recommends to the Board corporate governance principles applicable to the Company, oversees the Board succession planning process, and recommends Director candidates to the Board. The Nominating & Governance Committee will consider Director candidates recommended by Shareholders. Candidates may be submitted in writing to the Corporate Secretary, Horace Mann Educators Corporation, 1 Horace Mann Plaza, Springfield, Illinois 62715-0001. There are no differences between the evaluation of candidates recommended by Shareholders and the evaluation of candidates recommended by members of the Nominating & Governance Committee.

The Committee does not have any specific, minimum qualifications that nominees must meet, but evaluates possible nominees to the Board on the basis of the factors it deems relevant, including the following:

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 2019.

The Compensation Committee (the “Committee”) reviews compensation to be paid to the Company’s non-employee Directors. The Committee retained Compensation Advisory Partners LLC (“CAP”) as independent compensation consultants to provide information and advice to the Committee regarding non-employee Director compensation. CAP analyzes each element of director compensation for the same peer group of companies that is used to evaluate executive compensation. See “Compensation levels should be market competitive” in the Compensation Discussion & Analysis for a list of these peer companies. CAP also considers non-employee Director compensation in the insurance industry and the broader general industry, as appropriate. The Committee reviews CAP’s report of competitive Director compensation and determines whether to recommend to the Board a change in the Company’s non-employee Director compensation. If such a change is recommended by the Committee, the full Board would then determine whether to ratify the change. The Compensation Committee’s current practice is to review non-employee Director compensation every other year. In order to simplify the non-employee Director compensation structure, in 2019 the Compensation Committee recommended, and the Board approved, changes to non-employee Director compensation including the elimination of the Committee Member annual retainer, an increase to the Board Member and Board Chairman annual retainers, and the addition of an annual retainer for the Technology Liaison role, as reflected in the table below.

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

Non-employee Directors are required to hold shares of HMEC Common Stock with a book value equal to five times their annual cash retainer.

Until non-employee Directors meet this ownership requirement, they must retain all RSUs granted as share-based compensation (net of taxes). As of December 31, 2019, all non-employee Directors have met the guidelines with the exception of Mr. Reece, due to his tenure and elevation to Chairman in 2018, Mr. Hines, who joined the Board in 2018, and Mr. Casady and Mr. Konen, who joined the Board in 2019. They have five years to meet this requirement. Employee Directors do not receive compensation for serving on the Board and are subject to separate stock ownership guidelines. See “Compensation Discussion and Analysis – Stock Ownership & Holding Requirements.”

The following table sets forth information regarding compensation earned by, or paid to, the non-employee Directors during 2019:  

The Company’s Corporate Governance Principles require that the Board consist of a majority of directors who meet the criteria for independence required by the listing standards of the NYSE. Based on the independence requirements of the NYSE and after reviewing any relationships between the Directors and the Company or its management (either directly or indirectly, including as a partner, shareholder or officer of an organization that has a relationship with the Company or its management) that could impair, or appear to impair, the Director’s ability to make independent judgments, the Board determined that none of its non-employee Directors have a material relationship with the Company, and therefore all of these Directors are independent. These independence determinations are analyzed at least annually in both fact and appearance to promote arms-length oversight. The current non-employee Directors are Mr. Casady, Dr. Domenech, Mr. Hasenmiller, Mr. Hines, Mr. Konen, Ms. McClure, Mr. Reece, Mr. Stricker and Mr. Swyers.

The Board is committed to strong, independent Board leadership and believes that objective oversight of management is a critical aspect of effective corporate governance. Accordingly, the Board currently has two separate individuals holding the offices of Chairman and Chief Executive Officer, and the position of Chairman is held by an independent Director. The Board of Directors believes that having an independent Director serve as Chairman is in the best interest of the Company at this time as this structure provides a greater role for the independent Directors in the oversight of the Company. However, as described in the Company’s Corporate Governance Principles, this situation can change in the future to permit one individual to hold both positions, if the Board deems it to be in the best interests of the Company at a given time.

The Board of Directors is responsible for overseeing the processes that management has established for assessing and managing risk. In addition, the Board has delegated oversight of certain categories of risk to designated Board committees. In performing their oversight responsibilities, the Board and relevant committees regularly discuss with management the Company’s policies with respect to risk assessment and risk management. The committees report to the Board regularly on matters relating to the specific areas of risk the committees oversee.

In addition, the Company has established an internal Enterprise Risk Management (“ERM”) Committee, which is composed of certain members of senior management, including the President and Chief Executive Officer; Chief Financial Officer; Chief Human Resources Officer; General Counsel and Chief Compliance Officer; and the heads of Operations, Distribution, Business Strategy and the Life & Retirement and Property & Casualty divisions. The ERM Committee is chaired by the Chief Financial Officer of the Company. Throughout the year, the Board and the relevant Board committees receive regular reports from the ERM Committee and its chairman regarding major risks and exposures facing the Company and the steps management has taken to monitor and control such risks and exposures. In addition, throughout the year, the Board and the relevant Board committees dedicate a portion of their meetings to review and discuss specific risk topics in greater detail.

Also, in light of ongoing threats to corporate cybersecurity, the Board and relevant Board Committees receive regular reports from the Chief Information Security 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.

The Company has adopted a Code of Ethics and a Code of Conduct applicable to all employees, including the Chief Executive Officer, Chief Financial Officer, Controller and Directors (in their capacity as Directors of the Company). The Company has also adopted Corporate Governance Principles. The Codes and Principles are available on the Company’s website at investors.horacemann.com, under “Corporate Overview - Governance Documents.” A printed copy of the Codes and Principles may be obtained by Shareholders upon written request, addressed to Investor Relations, Horace Mann Educators Corporation, 1 Horace Mann Plaza, C-738, Springfield, Illinois 62715-0001.

The Board of Directors oversees the corporate social responsibility function. On an annual basis, the ERM Committee discusses ESG risk and the corporate social responsibility team briefs the board on ESG initiatives and developments. The full board reviews and approves the corporate social responsibility report.

Horace Mann is committed to maintaining an open and productive dialogue with shareholders to understand investor perspectives and share updates on the Company’s business and governance practices.

In advance of the 2020 Annual Meeting, Horace Mann’s investor relations team reached out to the Company’s top 25 active and passive shareholders, representing approximately 80% of outstanding shares, with information regarding the Company’s most recent CSR report. The outreach provides these shareholders with the opportunity to learn more about the Company’s stance on corporate governance, say on pay and overall shareholder value creation. Feedback to similar outreach in the past has been positive and shareholders approved all proposals in the 2019 Proxy Statement by over 93%.

In addition, Horace Mann’s management and investor relations team regularly discuss ESG and CSR topics with active investors during ongoing interactions at conferences and other venues. During late 2018 and throughout 2019, the team met or spoke one or more times with active investors representing more than 30% of outstanding shares, in addition to conversations with potential investors. In those meetings, management covers Horace Mann’s business strategy and performance. Investors react positively to updates on how corporate social responsibility initiatives support the Company’s business strategy.

Each Director is required to participate in at least one education program every two years and may choose to participate in up to two education programs in a two-year period at the Company’s expense. All Directors are in compliance with this requirement. In addition, a schedule is developed, with input from the Directors, which covers a broad range of topics to enhance and strengthen the skills, knowledge and competencies of Directors. Examples of such topics include cybersecurity, crisis management, regulatory developments, corporate governance and industry trends. The program encompasses presentations from internal and external speakers as well as site visits and regular meetings with management. Directors are also encouraged to avail themselves of educational programs offered through recognized independent providers.

The Company has established various processes to facilitate communications with the Board by Shareholders and other interested parties. Communications to non-employee Directors as a group or to the Chairman of the Board or to an individual Director may be submitted via regular mail addressed to the Board of Directors, c/o the Corporate Secretary, Horace Mann Educators Corporation, 1 Horace Mann Plaza, Springfield, Illinois 62715-0001. Additionally, communications may be emailed to the Board of Directors, c/o the Corporate Secretary at hmecbofd@horacemann.com.

There are no Compensation Committee interlocks between the Company and other entities involving the Company’s Executive Officers and Directors who serve as executive officers or directors of such other entities. During 2019, no member of the Compensation Committee was a current or former officer or employee of the Company.

The Board reviews issues involving potential conflicts of interest of its members and is responsible for reviewing and approving all related party transactions. The Board does not have a formal related party transaction policy but it considers each related party transaction individually.

Mark Casady, a Board member, is a General Partner with a 50% interest in Vestigo Ventures, an early stage FinTech venture capital firm. On March 27, 2018, Horace Mann made a $5 million investment in a fund established by Vestigo Ventures, which represents an investment of less than 10% in the fund. The investment is not material to Vestigo Ventures.

BlackRock, Inc. (“BlackRock”), which owns beneficially more than 5% of the issued and outstanding shares of Common Stock, provides investment risk management services to the Company and has done so for more than 10 years. In 2019, the Company paid approximately $378,681 in fees to BlackRock in connection with the Company’s use of analytical software owned by BlackRock. In addition, the Company is invested in two Limited Partnership funds managed by BlackRock Capital Investment Advisors, LLC with total commitments of $40 million. The investments are not material to BlackRock.

Other than the relationships described above, the Company does not have any contracts or other transactions with related parties that are required to be reported under the applicable securities laws and regulations.

The Board is asking Shareholders to approve an advisory resolution to approve the compensation of the Company’s Chief Executive Officer, Chief Financial Officer and the other three highest compensated Executive Officers employed at the end of 2019 (collectively the “Named Executive Officers” or “NEOs”) as reported in this Proxy Statement. The Compensation Committee has structured our NEOs’ compensation program as described below under “Compensation Discussion and Analysis.”

The Board recommends that Shareholders read the “Compensation Discussion and Analysis” (“CD&A”) included in this Proxy Statement, which describes in more detail how our Executive Compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the “Summary Compensation Table” and other related compensation tables and narrative included within the CD&A, which provide detailed information on the compensation of our NEOs. The Compensation Committee and the Board of Directors believe that the policies and procedures articulated in the CD&A are effective in achieving our goals.

In accordance with Section 14(a) of the Securities Exchange Act, and as a matter of good corporate governance, the Board is asking Shareholders to approve the following advisory resolution at the 2020 Annual Meeting:

RESOLVED, that the Shareholders of Horace Mann Educators Corporation (“the Company”) approve, on an advisory basis, the compensation of the Company’s Named Executive Officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2020 Annual Meeting of Shareholders.

This advisory resolution, commonly referred to as a “Say on Pay” resolution, is non-binding on the Board of Directors. Although non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding the NEOs’ compensation program.

The Board has adopted a policy providing for an annual advisory vote to approve NEOs’ compensation. Unless the Board modifies its policy on the frequency of holding such advisory votes, the next advisory vote will occur at the Company’s 2021 Annual Meeting of Shareholders.

Our 2019 NEOs are our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the three other most highly compensated Executive Officers employed at the end of 2019:

Horace Mann had a strong 2019, with net income up more than core earnings because of $107 million in after-tax realized gains on assets transferred as consideration in the annuity reinsurance transaction. Core earnings of $92.2 million increased three-fold over prior year and core return on equity improved by five points. These results illustrated the potential of the company’s strategic initiatives as well as the three significant transactions completed during the year. Segment results included:

To determine annual compensation incentive awards, we make adjustments to core earnings for items that are highly volatile and outside the control of management. On that basis, core earnings would have increased to $104.7 million, reflecting 2019 adjustments for:

The Committee does not make adjustments for these items in long-term incentives, as management should be held accountable for these outcomes, and has more ability to manage through one-time items over a longer period of time.

Book value per share* increased 11% in 2019, primarily reflecting the realized gain on assets transferred in the annuity reinsurance transaction, as well as strong earnings. Total Shareholder Return was 19.8% in 2019, under-performing property and casualty and life insurance indices.

Driving long-term shareholder value creation remains a priority for the Company. In 2020, the Board approved a shareholder dividend increase for the 12th consecutive year. The company returned $47 million to shareholders in 2019 through dividends. The Company has $23 million remaining on its buyback authorization and continues to evaluate the potential for opportunistic buyback of shares. Since 2011, repurchases have totaled $77 million.

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HMEC’s 2019 Annual Report on Form 10-K for a more detailed description of these financial results.

These elements of the executive compensation program are described more fully below.

The Committee oversees our executive compensation program. The current members of the Committee are Mr. Hasenmiller, Mr. Konen, Ms. McClure, and Mr. Reece. 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 requirements 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 related to executive compensation. 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 2019 are described in more detail throughout this analysis. Pursuant to regulatory requirements, the Committee

assessed CAP’s independence (along with that of its other direct and indirect consultants and advisors) in 2019 and concluded that CAP’s work did not raise any conflict 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 unless specifically invited by Committee Chair 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.

At the 2019 Annual Meeting of Shareholders, 98.0% of Shareholders voted, on an advisory basis, to ratify the NEO compensation. The Committee welcomes the opportunity to provide additional insight into our executive compensation practices and appreciates the positive support from our Shareholders. We continue to believe that the overall structure of our compensation plans, the absence of excessive perquisites, and our demonstrated pay-for-performance practices reflect the strength of the Company’s executive compensation programs.

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 competitiveness.

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. Our core executive compensation program includes base salary, an annual cash incentive plan (“AIP”), and long-term equity awards (“LTIP”). Both AIP and 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 business growth, profitability, relative total shareholder return, balanced with productivity and risk and capital management.

The AIP performance goals are based on premiums and 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 keep executives focused on value creation, with multiple metrics based on performance versus peers to focus on outperforming our peers.

For 2019, over 75% of the CEO’s target total pay (base salary, target annual incentive, and target long-term incentive) and in aggregate over 60% 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 2019, Ms. Zuraitis received approximately 49% of her target compensation in equity. With respect to the other NEOs, approximately 32% to 45% of their compensation was equity-based.

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 2019, CAP’s analysis demonstrated that overall core total direct compensation for Ms. Zuraitis was consistent with target pay positioning at the median of the market. 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.

Competitive base salaries are critical to attracting and retaining high performing executive talent. The Committee seeks to pay salaries that approximate median for executives of similar companies in like positions. However, in recruiting new executives, we vary from these guidelines to attract desired talent. Additionally, an existing executive’s compensation may deviate from median due to experience, performance, responsibilities, compensation history, internal equity, or retention risk.

Our AIP is a cash incentive plan, administered under the 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. 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 2019, there were five performance measures, with 50% of the award based on Company-wide adjusted core earnings, and the remaining 50% divided among specific sales and premiums metrics of the different business lines: P&C net written premium (17.5%), retirement sales (17.5%), life sales (10%), and supplemental premium (5%), as shown in the chart below. Supplemental was added effective July 1, 2019 with the close of the National Teachers Associates acquisition. This provides a balance between shareholder return and growth, while complementing the longer-term LTIP metrics, which focus on long-term shareholder value creation. For 2020, the performance measures will include an additional focus on Return on Equity.

All the NEOs’ 2019 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 2019 (“2019 Plan”). The 2019 Plan was the basis of our 2019 earnings guidance, which was publicly disclosed in February 2019 in connection with the announcement of results for the year ended December 31, 2018. 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, other members of the Board and CAP before they are set.

In setting the dollar values of the 2019 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 2019 target grant values for the NEOs were as follows:

The Committee believes that service-vested RSUs assist in the retention of key executive talent. Service-vested RSUs were granted on March 5, 2019 and comprise 20% of the 2019 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.

The Committee believes that non-qualified stock options (“NQSO”) 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 5, 2019 and comprise 30% of the 2019 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 2019 Annual Report on Form 10-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.

The performance-based RSUs granted in 2017 matured and vested as of January 1, 2020. The performance measures, targets and payout levels for the PBRSUs granted in 2017 are as follows:

For 2019, book value was used to measure the value of the shares we require the NEOs to own. 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 through a spouse, child, or trust. The following types of beneficial ownership are considered in determining stock ownership: direct ownership, shares held through our Horace Mann 401(k) Plan, and RSUs (vested and unvested). Outstanding stock options are not used in determining stock ownership.

As indicated in the following chart, all NEOs have met or exceeded their stock ownership guidelines except for Mr. Rugenstein. Mr. Rugenstein joined the Company in July 2019 and is on target to meet the requirement by the deadline.

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.

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.

Our programs are structured to discourage excessive risk-taking through a balanced use of compensation vehicles and metrics with an overall goal of delivering sustained 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 executive compensation program requires that a substantial portion of each Executive Officer’s compensation be contingent on delivering performance results. In addition, a significant portion of our NEOs’ compensation is delivered in equity over a multi-year timeframe. 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.

To mitigate enterprise risk and leadership gaps, the Committee oversees and monitors the Company’s succession planning process on a regular basis. This process identifies candidates that have the skill sets, background, training, and industry knowledge to assume critical positions on an emergency basis and also for the long-term, if necessary. The Company’s succession plan is also reviewed by the full Board annually.

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 attraction and retention of key executive talent. As part of the acquisition of NTA, Mr. Rugenstein’s offer included a special trigger for Change in Control tied to the departure of the CEO within two years of his employment date.

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, as defined in the CIC Plan. Participants in the CIC Plan are designated by position. This plan does not have tax gross-up provisions. Currently, all of the NEOs participate in the Executive Severance and CIC Plans. The CIC Plan does not permit duplicate benefits under the Executive Severance Plan.

The NEOs participate in our Horace Mann 401(k) Plan and a nonqualified supplemental defined contribution plan designed to provide benefits that cannot be provided under our tax-qualified defined contribution plan because of certain limitations imposed by the Internal Revenue Code (“IRC”). Each of these two plans includes a Company contribution. The amounts contributed for each NEO are included in the “Summary Compensation Table.” These types of plans are customarily offered within our industry. No NEO participates in the Company’s defined benefit plan or supplemental defined benefit retirement plan because participation in those plans was limited to individuals hired prior to January 1, 1999 and all of our NEOs were hired after that date.

Prior to 2009, the LTIP permitted certain elective deferrals. Pre-2009 account balances are maintained in notional deferred Common Stock equivalent units, which accrue dividend equivalents at the same rate as dividends paid to our Shareholders. These dividend equivalents are converted into additional deferred Common Stock equivalent units. Mr. Conklin is the only NEO with an account balance under this arrangement.

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 2019 was $280,000. 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.

The Committee 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 304 of the Sarbanes-Oxley Act of 2002. In addition, under the CECP, the Company is entitled 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. If changes are made in future applicable legislative or regulatory guidance, the Company will modify the current clawback provisions to comply.

The Board, NEOs and other Executive Officers are prohibited from engaging in hedging transactions or from pledging their shares of our Common Stock. Any employee granted shares by the Company is prohibited from engaging in hedging transactions. No other employees are subject to hedging or pledging prohibitions.

The only perquisites we provide are financial planning services and an executive physical program, both of which are commonly provided among our peer companies. Please see the “Summary Compensation Table” for further details. Our NEOs do not receive other personal benefits.

Favorable tax treatment of the various elements of the Company’s total compensation program is an important, but not the sole, consideration in the design of the compensation program. On December 22, 2017, legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”) was enacted that significantly impacted the tax treatment of executive compensation.

Historically, Section 162(m) of the Internal Revenue Code provided an exemption from taxation for compensation in excess of $1,000,000 paid to certain Executive Officers pursuant to a plan that is approved by our Shareholders, and is performance-related and non-discretionary. The Tax Act eliminated the exception for performance-based compensation, and provides that any individual identified as a Covered Employee (CEO, CFO and the three other most highly compensated Executive Officers) beginning after December 31, 2016 remains a Covered Employee for all future years, and applies the $1,000,000 limitation to any compensation paid to such Covered Employees after employment ends or death. The Tax Act also included a transition rule according to which the deduction limitation as described above, does not apply to compensation arrangements in place pursuant to a written binding contract that was in effect on November 2, 2017 as long as it is not materially modified after that date. To the extent applicable to our existing contracts and awards, the Committee may avail itself of this transition rule. However, due to uncertainties as to the application and interpretation of Section 162(m), including the scope of the transition relief, we expect that compensation paid to our Executive Officers in excess of $1,000,000 generally will not be deductible.

The Committee believes that Shareholder interests are best served by not restricting the Committee’s discretion and flexibility in developing compensation programs, even though such programs may result in certain non-deductible compensation expenses as a result of the Tax Act, and still intends to utilize performance-based compensation programs.

The following table sets forth information regarding compensation of the Company’s CEO, CFO, and the three other most highly compensated executive officers during 2019, 2018, and 2017.

The following table sets forth information regarding all other compensation paid to, or earned by, the NEOs in 2019.

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 12/31/2019 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.

The following table sets forth information concerning the grant of the 2019 Annual Incentive and the grant of the 2019 Long-term Incentive for the 2019 – 2021 performance period. Actual payouts under the 2019 AIP are included in the “Summary Compensation Table.” Payouts for the 2019 Long-term incentive grant and the determination of the actual RSUs earned will not occur until after the completion of the 2019 – 2021 performance period.

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, 2019.

The following table presents the estimated payments and benefits that would have been payable as of the end of 2019 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.

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

STEPHEN J. HASENMILLER, Chairman

MARK E. KONEN, BEVERLEY J. MCCLURE and H. WADE REECE, Members

The following table provides information as of December 31, 2019 regarding outstanding awards and shares remaining available for future issuance under the Company’s equity compensation plans (excluding the Horace Mann 401(k) plan):

The following provides biographical information, as of March 15, 2020, 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 above under “Board Nominees”).

Mr. Conklin was appointed to his present position of Executive Vice President and Chief Financial Officer in April 2017. He joined the Company as Senior Vice President and Controller in January 2002. Mr. Conklin previously served as Vice President of Kemper Insurance from January 2000 through January 2002, where he was responsible for all corporate financial reporting and accounting operations; Vice President and Controller of the Company from July 1998 through January 2000; and Vice President and Controller of Pekin Insurance from September 1992 through June 1998. He has seven years of public accounting experience with KPMG Peat Marwick from 1985 to 1992, specializing in its insurance industry practice. Mr. Conklin has 35 years of experience in the insurance industry.

Mr. Caldwell was appointed to his present position of Executive Vice President, Property & Casualty and Life & Retirement in November 2019. He previously served as Executive Vice President, Property & Casualty, a position he held since July 2015. Mr. Caldwell joined the Company in November 2013 as Senior Vice President, Personal Lines, and was appointed Senior Vice President, Property & Casualty in October 2014. Prior to joining the Company, he served as Head of Property Products at QBE North America from June 2011 through November 2013, Senior Vice President of Bank of America from August 2007 to June 2011 and Vice President of Unitrin from June 2001 to August 2007. Mr. Caldwell has over 25 years of experience in the insurance industry.

Mr. Rugenstein joined the Company in July 2019 as Executive Vice President, Supplemental and Operations. Mr. Rugenstein is President and Chief Executive Officer of National Teachers Associates Life Insurance Company and its affiliates (“NTA”), positions he has held since 2015. He served as Vice President, Chief Information Officer and Chief Operating Officer of the NTA companies from 2013 to 2015. Prior to joining NTA, he served as Vice President, Information Technology and Chief Information Officer of The Republic Group, an insurance group located in Dallas, Texas. His previous experience includes extensive technology and leadership roles across varied industries, including service with Greyhound Lines and Ernst & Young, LLP. Mr. Rugenstein has over 15 years of experience in the insurance industry.

Mr. Sharpe was appointed to his present position as Executive Vice President, Distribution and Business Strategy in November 2019. He took on the Business Strategy role in November 2017 after modernizing our Life & Retirement suite and infrastructure as Executive Vice President, Life & Retirement, a position he held since joining the Company in January 2012. Prior to joining the Company, Mr. Sharpe was with Genworth Financial, Inc. from 1999 to 2011, where he most recently served as Senior Vice President. During his tenure at Genworth, he gained an extensive annuity and life background while leading a variety of successful growth, product development, strategic, marketing and sales initiatives. He is Board President of the Central Illinois Foodbank. Mr. Sharpe has over 30 years of experience in the insurance and financial services industry.

Ms. Moore was appointed to her present position as Senior Vice President in November 2019. She joined the Company in December 2014 as Vice President, Talent Management, and was appointed to the Chief Human Resources Officer position in November 2018. Ms. Moore previously served as Vice President, Talent Management of Guardian Life Insurance from April 2009 through November 2014, Senior Manager HRBP Team of Wells Fargo/Wachovia from 1996 through 2009, and HR Generalist of Northrop Grumman (formerly TRW, Inc.) from 1996 through 1998. She has held roles both as a Human Resources Business Partner and in centers of expertise with a focus on delivering business performance through strategic human capital management. Ms. Moore has over 20 years of experience primarily within the financial services industry.

Ms. Johnson was appointed to her present position as Senior Vice President in November 2019. She joined the Company in 2002 as Assistant Controller and was appointed Vice President and Controller in April 2017. Prior to joining the Company, she was with MSI Insurance from 1991 to 2002 where she held multiple positions, including Vice President and Controller, responsible for financial planning and all property and casualty accounting and reporting functions. Ms. Johnson has over 25 years of experience in the insurance industry.

The following table sets forth certain information regarding beneficial ownership of shares of Common Stock by each person who is known by the Company to own beneficially more than 5% of the issued and outstanding shares of Common Stock, and by each of the Company’s Directors, Board Nominees and NEOs, and by all Directors and Executive Officers of the Company as a group. Information in the table is as of March 15, 2020. Except as otherwise indicated, to the Company’s knowledge all shares of Common Stock are beneficially owned, and investment and voting power is held solely by the persons named as owners.

Section 16(a) of the Securities Exchange Act requires the Company’s Executive Officers and Directors and other persons who beneficially own more than 10 percent of HMEC’s outstanding Common Stock, whom the Company refers to collectively as the “Reporting Persons,” to file reports of ownership and changes in ownership with the SEC.

The Company has established procedures by which Directors and Executive Officers provide relevant information regarding transactions in Common Stock to a Company representative, and the Company prepares and files the required ownership reports. Based on a review of those reports and other written representations, the Company believes that in the most recent fiscal year the Reporting Persons filed the required reports on a timely basis under Section 16(a).

KPMG LLP has been the Company’s independent registered public accounting firm for the past 30 years (since the Company’s 1989 leveraged buyout). After careful consideration of a number of factors, including length of time the firm has served in this role, the firm’s past performance, and an assessment of the firm’s qualifications and resources, the Audit Committee selected KPMG LLP to serve as the independent registered public accounting firm for the year ending December 31, 2020. As a matter of good corporate governance, the Audit Committee submits its selection of the auditors to the Shareholders for ratification. If the selection of KPMG LLP is not ratified, the Audit Committee will review its future selection of an independent registered public accounting firm in light of the vote result, but may nonetheless appoint KPMG LLP if it determines doing so to be in the best interest of the Company and Shareholders. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its Shareholders. A representative from KPMG LLP will attend the Annual Meeting.

The Board recommends that Shareholders vote FOR the ratification of KPMG LLP, an independent registered public accounting firm, as the Company’s auditors for the year ending December 31, 2020.

Acting under a written charter, the Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. The Audit Committee is comprised of four directors, each of whom is independent as defined by the New York Stock Exchange listing standards. Management has the primary responsibility for the Company’s financial statements and its reporting process, including the Company’s systems of internal controls. In fulfilling its oversight responsibilities, prior to the filing, the Audit Committee reviewed the audited consolidated financial statements in the Annual Report on Form 10-K with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and clarity of disclosures in the financial statements.

The Audit Committee has discussed with the Company’s independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited consolidated financial statements with United States generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required by applicable requirements of the Public Company Accounting Oversight Board. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and discussed with them their independence from the Company and its management taking into account the potential effect of any non-audit services provided by the independent registered public accounting firm.

The Audit Committee discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their audits, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held twelve meetings during fiscal year 2019.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the Securities and Exchange Commission. The Audit Committee approved the selection of the Company’s independent registered public accounting firm.

AUDIT COMMITTEE

STEVEN O. SWYERS, Chairman

STEPHEN J. HASENMILLER, PERRY G. HINES AND MARK E. KONEN, Members

The independent registered public accounting firm selected by the Audit Committee to serve as the Company’s auditors for the year ending December 31, 2020 is KPMG LLP. KPMG LLP served in that capacity for the year ended December 31, 2019.

The Audit Committee approves in advance any significant audit and all non-audit engagements or services between the Company and the independent registered public accounting firm. As a practice, the Audit Committee does not allow “prohibited non-auditing services” as defined by regulatory authorities to be performed by the same firm that audits the Company’s annual financial statements. The Audit Committee may delegate to one or more of its members the authority to approve in advance all significant audit and all non-audit services to be provided by the independent registered public accounting firm so long as it is presented to the full Audit Committee at the next regularly scheduled meeting. Pre-approval is not necessary for de minimis audit services as long as such services are presented to the full Audit Committee at the next regularly scheduled meeting. The Audit Committee pre-approved all of the above listed expenses.