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
Filed by the Registrant
x
|
Filed by a Party other than the Registrant
o
|
Check the appropriate box:
|
o
|
Preliminary Proxy Statement
|
o
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
x
|
Definitive Proxy Statement
|
o
|
Definitive Additional Materials
|
o
|
Soliciting Material Pursuant to §240.14a-12
|
INDEPENDENCE
HOLDING COMPANY
|
(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.
|
o
|
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 transaction applies:
|
|
(2)
|
Aggregate number of securities to which transaction applies:
|
|
(3)
|
Per unit price or other underlying value of 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 transaction:
|
|
(5)
|
Total fee paid:
|
o
|
Fee paid previously with preliminary materials.
|
o
|
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:
|
Certain statements and information contained
in this document may be considered “forward-looking statements,” such as statements relating to our views with respect
to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from historical experience or from future results expressed or implied by
such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the
markets in which we operate, new federal or state governmental regulation, our ability to effectively operate, integrate and leverage
any past or future strategic acquisitions, and other factors that may be found in our filings with the Securities and Exchange
Commission. We expressly disclaim any duty to update these forward-looking statements unless required by applicable law.
INDEPENDENCE HOLDING COMPANY
___________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 10, 2017
___________________________________________________________
Dear Stockholders:
We cordially invite
you to attend the 2017 Annual Meeting of Stockholders (“2017 Annual Meeting” or “Annual Meeting”) of Independence
Holding Company (“IHC” or the “Company”). Our 2017 Annual Meeting will be held on Friday, November 10,
2017 at 10:00 a.m. Eastern and will be our fourth completely virtual meeting of stockholders. You will be able to attend the
2017 Annual Meeting, vote, and submit your questions during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/IHC2017.
To enter the meeting, you must have your sixteen-digit control number that is shown on the proxy card accompanying this Proxy Statement.
You will not be able to attend the Annual Meeting in person.
Details regarding
logging onto and attending the meeting over the website and the business to be conducted are described in the Proxy Card included
with this Proxy Statement. We have also made available a copy of our 2016 Annual Report with this Proxy Statement. We encourage
you to read our Annual Report. It includes our audited financial statements and provides information about our business and products.
The purpose of the meeting
is to:
|
1.
|
elect nine directors, each for a term of one year;
|
|
2.
|
ratify the appointment of RSM US LLP as IHC’s independent
registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
3.
|
conduct an advisory vote on the compensation of IHC’s
named executive officers;
|
|
4.
|
conduct an advisory vote regarding the frequency of future
advisory votes on the compensation of IHC’s named executive officers; and
|
|
5.
|
transact any other business that may properly come before
the meeting.
|
Only stockholders of
record at the close of business on September 15, 2017 may vote at the meeting or any postponements or adjournments of the meeting.
|
By order of the Board of Directors,
|
|
Loan Nisser
|
|
Vice President – Legal and Secretary
|
|
September 26, 2017
|
|
|
HOW TO VOTE
:
Your vote is important. Whether or not you plan to attend the meeting, we hope you will vote as soon as possible. You may vote
over the Internet, as well as by telephone or, if you requested to receive printed proxy materials, by mailing a proxy or voting
instruction card. Please review the instructions on each of your voting options described in this Proxy Statement as well as in
the proxy card. Your vote is important, no matter how many shares you owned on the record date. A return envelope is enclosed for
your convenience and needs no postage if mailed in the United States.
2017 PROXY STATEMENT
____________________
TABLE OF CONTENTS
INDEPENDENCE HOLDING COMPANY
96 Cummings Point Road
Stamford, Connecticut 06902
(203) 358-8000
www.ihcgroup.com
2017 PROXY STATEMENT
The Board of Directors (the “Board”)
of Independence Holding Company (“IHC”) is furnishing you this proxy statement in connection with the solicitation
of proxies on its behalf for the 2017 Annual Meeting of Stockholders to be held via live webcast on the Internet at www.virtualshareholdermeeting.com/IHC2017.
The meeting will take place on Friday, November 10, 2017 at 10:00 a.m. Eastern.
At the online meeting, stockholders will
vote on the following proposals:
|
1.
|
elect nine directors, each for a term of one year;
|
|
2.
|
ratify the appointment of RSM US LLP as IHC’s independent
registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
3.
|
conduct an advisory vote on the compensation of IHC’s
named executive officers;
|
|
4.
|
conduct an advisory vote regarding the frequency of future
advisory votes on the compensation of IHC’s named executive officers; and
|
|
5.
|
transact any other business that may properly come before
the meeting.
|
Stockholders also will consider any other
matter that may properly come before the meeting, although we know of no other business to be presented.
By submitting your proxy (via the Internet,
telephone or mail), you authorize Ms. Teresa A. Herbert, IHC’s Chief Financial Officer and Senior Vice President, and Ms.
Loan T. Nisser, IHC’s Vice President - Legal and Secretary, to represent you and vote your shares at the meeting in accordance
with your instructions. They also may vote your shares to adjourn the meeting and will be authorized to vote your shares at any
postponements or adjournments of the meeting.
IHC’s 2016 Annual Report, which includes
IHC’s audited financial statements, is being made available to IHC’s stockholders concurrently herewith (the “Annual
Report”). Although the Annual Report is being made available concurrently with this proxy statement, it does not constitute
a part of the proxy solicitation materials and is not incorporated by reference into this proxy statement.
We are first sending the proxy statement,
form of proxy and accompanying materials to stockholders on or about September 26, 2017.
We will be hosting
the 2017 Annual Meeting live via the Internet. A summary of the information you need to attend the meeting online is provided below:
|
•
|
Any stockholder can attend the 2017 Annual Meeting live
via the Internet at www.virtualshareholdermeeting.com/IHC2017;
|
|
•
|
Webcast starts at 10:00 a.m. Eastern;
|
|
•
|
Stockholders may vote and submit questions while attending
the 2017 Annual Meeting on the Internet; and
|
|
•
|
Stockholders need a sixteen-digit control number to join
the 2017 Annual Meeting.
|
YOUR VOTE IS
IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY VOTE YOUR SHARES OVER THE INTERNET, BY TELEPHONE OR BY
MAIL.
INFORMATION ABOUT THE ANNUAL MEETING
OF STOCKHOLDERS
What is the purpose of the 2017 Annual
Meeting and why is it being held over the Internet?
At the 2017 Annual Meeting, the stockholders
will be asked to:
|
1.
|
elect nine directors, each for a term of one year;
|
|
2.
|
ratify the appointment of RSM US LLP as IHC’s independent
registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
3.
|
conduct an advisory vote on the compensation of IHC’s
named executive officers;
|
|
4.
|
conduct an advisory vote regarding the frequency of future
advisory votes on the compensation of IHC’s named executive officers; and
|
|
5.
|
transact any other business that may properly come before
the meeting.
|
The 2017
Annual Meeting is being held on a virtual-only basis in order to reach the broadest number of stockholders possible and to save
costs relative to holding a physical meeting. A number of prominent publicly-traded Delaware companies have held virtual-only meetings.
Who is entitled to vote?
The record date for the meeting is September
15, 2017. Only stockholders of record at the close of business on that date are entitled to vote at the meeting. The only class
of stock entitled to be voted at the meeting is IHC common stock. Each outstanding share of common stock is entitled to one vote
for all matters before the meeting. At the close of business on the record date, there were 14,934,136 shares of IHC common stock
outstanding.
How do I vote by proxy?
If you properly complete, sign and date
the accompanying proxy card or voting instruction card and return it in the enclosed envelope, it will be available for examination
on the Internet through the virtual web conference during the annual meeting.
Please note that there are separate telephone
and Internet arrangements depending on whether you are a registered stockholder (that is, if you hold your stock in your own name)
or you hold your shares in “street name” (that is, in the name of a brokerage firm or bank that holds your securities
account). In either case, you must follow the procedures described in the proxy card.
Am I entitled to vote if my shares
are held in “street name”?
If your shares are held by a bank, brokerage
firm, trustee or other nominee, you are considered the “beneficial owner” of shares held in “street name.”
If your shares are held in street name, the proxy materials are being made available to you by your bank, brokerage firm, trustee
or other nominee (the “record holder”), along with voting instructions. As the beneficial owner, you have the right
to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with
your instructions. If you do not give instructions to your record holder, it will nevertheless be entitled to vote your shares
in its discretion on the ratification of the appointment of the independent registered public accounting firm (Proposal 2), but
not on the election of directors, advisory vote on the compensation of IHC’s named executive officers, or advisory vote regarding
the frequency of future advisory votes on the compensation of IHC’s named executive officers (Proposal 1, Proposal 3 and
Proposal 4, respectively).
As the beneficial owner of shares, you
are invited to attend the annual meeting. If you are a beneficial owner, however, you may not vote your shares at the meeting unless
you obtain a legal proxy, executed in your favor, from the record holder of your shares.
How many shares must be present to
hold the online meeting?
A quorum must be present at the meeting
for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares
of common stock outstanding on the record date will constitute a quorum. Proxies received but marked as abstentions or treated
as broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.
What if a quorum is not present at the
online meeting?
If a quorum is not present or represented
at the meeting, the holders of a majority of the shares entitled to vote at the meeting who are present in person or represented
by proxy, or the chairman of the meeting, may adjourn the meeting until a quorum is present or represented. The time and place
of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given.
What do I need in order to be able to
attend the online meeting?
The Company will be hosting the 2017 annual
meeting live online. You can attend the 2017 annual meeting live online at www.virtualshareholdermeeting.com/IHC2017. The webcast
will start at 10:00 a.m. Eastern. You may vote and submit questions while attending the meeting online. You will need the sixteen-digit
control number included on your proxy card in order to be able to enter the meeting.
How can I vote my shares during the
online meeting?
Shares held in your name as the stockholder
of record may be voted by you, while the polls remain open, at www.virtualshareholdermeeting.com/IHC2017 during the meeting. You
will need your sixteen-digit control number found in the proxy card. Shares held beneficially in street name may be voted by you
at the meeting only if you obtain a legal proxy from the brokerage firm, bank, trustee or other nominee that holds your shares
giving you the right to vote the shares. Even if you plan to attend the online meeting, we recommend that you also submit your
proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the online
meeting.
How can I vote my shares without attending
the online meeting?
Whether you hold shares directly as the
stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the online meeting.
If you are a stockholder of record, you may vote by proxy. You can vote by proxy over the Internet or telephone by following the
instructions provided on the proxy card. If you hold shares beneficially in street name, you may also vote by proxy over the Internet,
telephone or by mail by following the voting instruction card provided to you by your brokerage firm, bank, trustee or other nominee.
Is there a deadline for submitting proxies
electronically or by telephone or mail?
Proxies submitted electronically or by
telephone as described above must be received by 11:59 pm Eastern on November 9, 2017. Proxies submitted by mail should be received
before 10:00 a.m. Eastern on November 9, 2017.
Can I revoke my proxy and change my
vote?
You may change your vote at any time prior
to the taking of the vote at the online meeting. If you are the stockholder of record, you may change your vote by (1) granting
a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and
until the applicable deadline for each method), (2) providing a written notice of revocation to IHC’s Secretary at Independence
Holding Company, 485 Madison Avenue, 14
th
Floor, New York, New York 10022 prior to your shares being voted, or (3) attending
the online meeting and voting. Attendance at the online meeting will not cause your previously granted proxy to be revoked unless
you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting
instructions to your brokerage firm, bank, trustee or other nominee following the instructions they provided, or, if you have obtained
a legal proxy from your brokerage firm, bank, trustee or other nominee giving you the right to vote your shares, by attending the
online meeting and voting.
Who can participate in the online
meeting?
Only stockholders eligible to vote or their
authorized representatives in possession of a valid sixteen-digit control number will be admitted as participants to the online
meeting.
Will my vote be kept confidential?
Yes, your vote will be kept confidential
and not disclosed to IHC unless:
|
•
|
you expressly request disclosure on your proxy; or
|
|
•
|
there is a proxy contest.
|
Who will count the votes?
Broadridge Financial Solutions, an independent
third party, will tabulate and certify the votes. A representative of Broadridge Financial Solutions will serve as the inspector
of election.
How does the Board recommend I vote
on the proposals?
The Board recommends that you vote:
|
•
|
FOR the election of the nine nominees to the Board;
|
|
•
|
FOR the ratification of the appointment of RSM US LLP
as IHC’s independent registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
•
|
FOR endorsing the compensation of IHC’s named executive
officers; and
|
|
•
|
FOR a triennial advisory vote on the compensation of
IHC’s named executive officers.
|
What if I do not specify how my shares
are to be voted?
If you submit a proxy but do not indicate
any voting instructions, your shares will be voted:
|
•
|
FOR the election of the nine nominees to the Board;
|
|
•
|
FOR the ratification of the appointment of RSM US LLP
as IHC’s independent registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
•
|
FOR endorsing the compensation of IHC’s named executive
officers; and
|
|
•
|
FOR a triennial advisory vote on the compensation of
IHC’s named executive officers.
|
Will any other business be conducted
at the meeting?
IHC’s by-laws require stockholders
to give advance notice of any proposal intended to be presented at the meeting. The deadline for this notice has passed and we
have not received any such notices. If any other matter properly comes before the stockholders for a vote at the meeting, however,
the proxy holders will vote your shares in accordance with their best judgment.
How many votes are required to elect
the director nominees?
The affirmative vote of a plurality of
the votes cast at the online meeting is required to elect the nine nominees as directors. This means that the nine nominees will
be elected if they receive more affirmative votes than any other person. The proxy card enables you to vote FOR all nominees proposed
by the Board, to WITHHOLD authority for all nominees or to vote FOR ALL EXCEPT one or more of the nominees being proposed. Voting
for all nominees except those you list on the proxy card is the equivalent of withholding your vote for those directors you have
listed. If you vote “Withheld” with respect to one or more nominees, your shares will not be voted with respect to
the person or persons indicated.
What happens if a nominee is unable
to stand for election?
If a nominee is unable to stand for election,
the Board may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected,
the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority.
How many votes are required to ratify
the appointment of IHC’s independent registered public accounting firm for the fiscal year ending December 31, 2017?
The ratification
of the appointment of RSM US LLP as IHC’s independent registered public accounting firm for the fiscal year ending December
31, 2017 requires the affirmative vote of a majority of the shares present at the online meeting or by proxy and entitled to vote.
The proxy card enables you to vote FOR or AGAINST the proposal or ABSTAIN from voting on the proposal. Abstentions will have the
same practical effect as votes against the proposal.
How many votes are required to endorse
the compensation of IHC’s named executive officers?
The endorsement of the compensation of IHC’s
named executive officers requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy
and entitled to vote. The vote on this matter is advisory, and therefore the results are not binding on IHC. The proxy card enables
you to vote FOR or AGAINST the proposal or ABSTAIN from voting on the proposal. Abstentions will have the same practical effect
as votes against the proposal.
How many votes are required to endorse
the frequency of future advisory votes on the compensation of IHC’s named executive officers?
The affirmative vote of a plurality of the
votes cast at the meeting in person or by proxy is required to select among the three frequency options: “annually,”
“biennially,” or “triennially.” The vote on this matter is advisory, and therefore the results are not
binding on IHC.
How will abstentions be treated?
Abstentions will be treated as shares present
for quorum purposes and entitled to vote, and will have the same practical effect as votes against a proposal.
How will broker non-votes be treated?
Broker non-votes will be treated as shares
present for quorum purposes. Your broker will be entitled to vote your shares in its discretion on the ratification of the appointment
of the independent registered public accounting firm for the fiscal year ending December 31, 2017 (Proposal 2) without your voting
instructions, but not on the election of directors (Proposal 1), advisory vote on the compensation of IHC’s named executive
officers (Proposal 3) or advisory vote regarding the frequency of future advisory votes on the compensation of IHC’s named
executive officers (Proposal 4).
STOCK OWNERSHIP
Directors and Executive Officers
The following table
sets forth certain information concerning the number of shares of our common stock beneficially owned based on 14,934,136 issued
and outstanding shares of common stock as of September 15, 2017 (the “Record Date”) by: (i) each of our directors and
nominees, and (ii) each of our named executive officers.
Beneficial ownership
is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Other
than as described in the notes to the table, we believe that all persons named in the table have sole voting and investment power
with respect to shares beneficially owned by them. All share ownership figures include shares issuable upon exercise of options
or warrants exercisable within sixty (60) days of the Record Date, which are deemed outstanding and beneficially owned by such
person for purposes of computing his or her percentage ownership, but not for purposes of computing the percentage ownership of
any other person.
The address of each
individual named below is c/o IHC at 96 Cummings Point Road, Stamford, Connecticut 06902.
Name of Beneficial Owner
|
|
Number of Shares
|
|
|
|
Percent of Class
|
|
|
|
|
|
|
|
|
|
Mr. Gary J. Balzofiore
|
|
|
69,473
|
|
(1)
|
|
|
*
|
|
Mr. Larry R. Graber
|
|
|
100,285
|
|
(2)
|
|
|
*
|
|
Ms. Teresa A. Herbert
|
|
|
131,987
|
|
(3)
|
|
|
*
|
|
Mr. David T. Kettig
|
|
|
158,185
|
|
(4)
|
|
|
*
|
|
Mr. Allan C. Kirkman
|
|
|
27,126
|
|
(5)
|
|
|
*
|
|
Mr. John L. Lahey
|
|
|
23,100
|
|
(5)
|
|
|
*
|
|
Mr. Steven B. Lapin
|
|
|
122,162
|
|
(6)
|
|
|
*
|
|
Mr. Ronald I. Simon
|
|
|
40,825
|
|
(7)
|
|
|
*
|
|
Mr. James G. Tatum
|
|
|
39,126
|
|
(5)
|
|
|
*
|
|
Mr. Roy T. K. Thung
|
|
|
525,898
|
|
(8)
|
|
|
3.5%
|
|
All directors, nominees for director and executive officers as a group (10 persons)
|
|
|
1,238,167
|
|
|
|
|
8.0%
|
|
|
*
|
Represents less than 1% of the outstanding common stock.
|
|
(1)
|
Includes 44,000 shares of common stock underlying stock
options exercisable within sixty (60) days from the Record Date.
|
|
(2)
|
Includes 55,000 shares of common stock underlying stock
options exercisable within sixty (60) days from the Record Date above.
|
|
(3)
|
Includes 74,800 shares of common stock underlying stock
options exercisable within sixty (60) days from the Record Date. Includes 410 shares of common stock held by Ms. Herbert’s
children of which shares Ms. Herbert disclaims beneficial ownership. Excludes the 9,145,226 shares of common stock held by Geneve
Holdings, Inc., of which the named individual is an officer.
|
|
(4)
|
Includes 66,300 shares of common stock underlying stock
options exercisable within sixty (60) days from the Record Date. Includes 110 shares of common stock held by Mr. Kettig’s
children of which shares Mr. Kettig disclaims beneficial ownership.
|
|
(5)
|
Includes 825 shares of common stock underlying restricted share units vesting within sixty (60)
days from the Record Date above.
|
|
(6)
|
Excludes the 9,145,226 shares of common stock held by
Geneve Holdings, Inc., of which the named individual is an officer.
|
|
(7)
|
Includes 825 shares of common stock underlying restricted
share units vesting within sixty (60) days from the Record Date. Includes 30,000 shares of common stock held by the Simon Family
Trust and 2,000 shares of
|
|
|
common stock held in Mr. Simon’s wife’s IRA account, all of which shares Mr. Simon disclaims
beneficial ownership.
|
|
(8)
|
Includes 258,500 shares of common stock underlying stock
options exercisable within sixty (60) days from the Record Date. Excludes the 9,145,226 shares of common stock held by Geneve
Holdings, Inc., of which the named individual is an officer.
|
Significant Stockholders
The following table
sets forth certain information concerning the number of IHC shares of common stock beneficially owned, based on 14,934,136 issued
and outstanding shares of common stock as of the Record Date, by certain persons known by IHC to beneficially own more than five
percent of the outstanding shares of IHC common stock.
Beneficial ownership
is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Other
than as described in the notes to the table, we believe that all persons named in the table have sole voting and investment power
with respect to shares beneficially owned by them. All share ownership figures include shares issuable upon exercise of options
or warrants exercisable within sixty (60) days of the Record Date, which are deemed outstanding and beneficially owned by such
person for purposes of computing its percentage ownership, but not for purposes of computing the percentage ownership of any other
person.
Name
|
|
Number
of Shares
|
|
|
Percent of Class
|
|
Geneve Holdings, Inc. (1)
|
|
|
9,145,226
|
|
|
|
61.24
|
%
|
Dimensional Fund Advisors LP. (2)
|
|
|
990,861
|
|
|
|
6.63
|
%
|
|
(1)
|
According to information disclosed in Amendment No. 35
to Schedule 13D dated May 9, 2001 of Geneve Holdings, Inc. (“GHI”), a private diversified financial holding company.
GHI is a member of a group consisting of itself and certain of its affiliates that together hold the shares of common stock of
IHC. The address of GHI is 96 Cummings Point Road, Stamford, Connecticut 06902.
|
|
(2)
|
According to information disclosed in Form 13F, reporting
as of June 30, 2017 (the “Form 13F”), Dimensional Fund Advisors LP, an investment adviser registered under Section
203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (such investment
companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional
Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or
manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) possess voting and/or investment
power over the securities of IHC that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of IHC
held by the Funds. However, all shares of IHC’s common stock reported in the Form 13F are owned by the Funds. Dimensional
disclaims beneficial ownership of such securities. In addition, its filing of the Form 13F shall not be construed as an admission
that it or any of its affiliates is the beneficial owner of any securities covered by the Form 13F for any other purposes than
Section 13(g) of the Securities Exchange Act of 1934, as amended. The address of Dimensional Fund Advisors LP is Palisades West,
Building 1, 6300 Bee Cave Road, Austin, Texas 78746.
|
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires directors and certain officers of IHC and persons who own more than ten
percent (10%) of IHC common stock to file with the U.S. Securities and Exchange Commission (“SEC”) initial reports
of beneficial ownership (Form 3) and reports of subsequent changes in their beneficial ownership (Form 4 or Form 5) of IHC’s
common stock. Such directors, officers and greater-than-ten-percent stockholders are required to furnish IHC with copies of the
Section 16(a) reports they file. The SEC has established specific due dates for these reports, and IHC is required to disclose
in this proxy statement any late filings or failures to file.
Based
solely upon a review of the copies of the Section 16(a) reports (and any amendments thereto) furnished to IHC and written representations
from certain reporting persons that no additional reports were required, IHC believes that its
directors, reporting officers and
greater-than-ten-percent stockholders complied with all these filing requirements for the fiscal year ended December 31, 2016,
except for the Form 3 that Mr. Simon filed in October of 2016 that was late due to an administrative oversight.
CORPORATE GOVERNANCE MATTERS
Corporate Governance Documents
In furtherance of its
longstanding goals of providing effective governance of IHC’s business and affairs for the long-term benefit of stockholders
and promoting a culture and reputation of the highest ethics, integrity and reliability, the Board has adopted:
|
·
|
a Code of Business Ethics that applies to IHC’s Chief Executive Officer, President, Chief
Operating Officer, Chief Financial Officer, controller and other IHC employees performing similar functions (the “Code of
Ethics”);
|
|
·
|
a Corporate Code of Conduct that applies to all employees, officers and directors of IHC and its
subsidiaries and affiliates (the “Code of Conduct”);
|
|
·
|
Corporate Governance Guidelines (“Guidelines”) to advance the functioning of the Board
and its committees and set forth the Board’s expectations as to how it should perform its functions; and
|
|
·
|
written charters for its Audit and Compensation Committees of the Board (collectively, the “Charters”).
|
The Code of Ethics,
Code of Conduct, Guidelines and Charters can be found on IHC’s website at www.ihcgroup.com, and are also available in print
to any stockholder who requests them. The information on IHC’s website, however, is not incorporated by reference in, and
does not form part of, this proxy statement. The Board does not anticipate modifying the Code of Ethics or the Code of Conduct,
or granting any waivers to either, but were any such waiver or modification to occur, it would promptly be disclosed on IHC’s
website.
Director Independence
As a company listed
on the New York Stock Exchange (“NYSE”), IHC uses the definition of independence prescribed in the NYSE Listed Company
Manual (the “Manual”). Each of Messrs. Kirkman, Tatum, Lahey and Simon met such independence requirements. The Board
has affirmatively determined that none of them had any material relationship described in Item 407(a) of Regulation S-K promulgated
by the SEC with IHC at all applicable times during 2016.
IHC qualifies as a
“controlled company,” as defined in Section 303A.00 of the Manual, because more than 50% of IHC’s voting power
is held by Geneve Holdings, Inc. (“GHI”). Therefore, IHC is not subject to certain NYSE requirements that would otherwise
require IHC to have: (i) a majority of independent directors on the Board (Manual Section 303A.01); (ii) compensation of IHC’s
executive officers determined by a compensation committee composed solely of independent directors (Manual Section 303A.04); or
(iii) director nominees selected, or recommended for the Board’s selection, by a nominating committee composed solely of
independent directors (Manual Section 303A.05).
Of IHC’s directors,
none of Ms. Herbert or Messrs. Graber, Kettig, Lapin or Thung is independent under the NYSE’s standards.
For each independent
director, after reasonable investigations and in reliance on representations by such independent director to IHC, IHC believes
there is no material transaction, relationship or arrangement described in Item 407(a) of Regulation S-K promulgated by the SEC
between each such director not disclosed in this annual report under the caption “Certain Relationships and Related Transactions.”
Board Leadership Structure
The Board understands
that there is no single, generally accepted approach to providing Board leadership and that given the dynamic and competitive environment
in which we operate, the right Board leadership structure may vary as circumstances warrant. To this end, the Board has no policy
mandating the combination or separation of the roles of Chairman and CEO and believes the matter should be discussed and considered
from time to time as circumstances change. Currently, Mr. Roy T.K. Thung is both our CEO and Chairman.
Board Role in Risk Oversight
The Board administers
its risk oversight function directly and through its Audit Committee. The Board and the Audit Committee regularly discuss with
management, and the Company’s independent auditors and internal auditor, our major risk exposures, their potential financial
impact on the Company, and the steps we take to manage these risks.
In general, management
is responsible for the day-to-day management of the risks the Company faces, while the Board, acting as a whole and through the
Audit Committee, has responsibility for the oversight of risk management. In its risk oversight role, the Board has the responsibility
to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
Senior management attends the regular quarterly meetings of the Board and is available to address questions and concerns raised
by the Board on risk management-related and other matters.
The Audit Committee
assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting,
internal controls and compliance with legal and regulatory requirements. In addition, the Audit Committee discusses policies with
respect to risk assessment and risk management with management, internal audit and the independent auditors.
The Audit Committee
assists the Board with oversight of risk management by reviewing the Company’s financial statements and meeting with the
Company’s independent auditors and internal auditor at regularly scheduled meetings of the Audit Committee, to review their
reports on the adequacy and effectiveness of our internal audit and internal control systems, and discusses with management the
Company’s major financial risks and exposures and the steps management has taken to monitor and control such risks and exposures.
Audit Committee Financial Expert
The Board has determined
that at least one member of the Audit Committee, Mr. Tatum, is an audit committee financial expert as such term is defined in Item
407(d)(5)(ii) of Regulation S-K promulgated by the SEC.
Executive Sessions of Non-Management
Directors
Non-management Board
members meet without management present at least twice annually, at regularly scheduled executive sessions. At least once a year,
such meetings include only the independent members of the Board. Mr. Kirkman presides over meetings of the non-employee and independent
directors.
Communications with Directors
You may communicate
directly with any member or committee of the Board by writing to: IHC Board of Directors, c/o Corporate Secretary, 485 Madison
Avenue, 14
th
Floor, New York, New York 10022. Please specify to whom your letter should be directed. The Corporate Secretary
of IHC will review all such correspondence and regularly forward to the Board a summary of all such correspondence and copies of
all correspondence that, in her opinion, deals with the functions of the Board or its committees or that she otherwise determines
requires the attention of any member, group or committee of the Board. Board members may, at any time, review a log of all correspondence
received by IHC that is addressed to Board members and request copies of any such correspondence.
Interested parties
who wish to communicate with non-management IHC directors, or with the presiding director of the Board’s executive sessions,
may do so by writing to IHC Board of Directors, c/o Corporate Secretary, Attn: Non-management Directors or the Presiding Director
for Executive Sessions, as applicable, 485 Madison Avenue, 14
th
Floor, New York, New York 10022. All such mail received
will first be opened and screened for security purposes.
Nomination of Director Candidates
In light of GHI’s
majority voting power, the Board has determined that the Board, rather than a nominating committee, is the most appropriate body
to identify director candidates and select nominees for presentation at the annual meeting of stockholders. In making nominations,
the Board seeks candidates with outstanding business experience who will bring such experience to the management and direction
of IHC. The minimum criteria employed by the Board in its selection
of candidates are set forth in the Guidelines, along with certain
other factors that inform the selection process. All directors serving on the Board participate in the consideration of director
nominees. Furthermore, in light of GHI’s voting power, the Board has determined that no policy with respect to consideration
of candidates recommended by security holders other than GHI’s would be appropriate.
The Board does not
have a formal policy with respect to diversity. However, the Board seeks to have a Board that reflects an appropriate balance of
knowledge, experience, skills, expertise and diversity, as applicable to our industry. The Board assesses its achievement of diversity
through the review of Board composition as part of the Board’s annual self-assessment process.
MEETINGS AND COMMITTEES OF THE BOARD
OF DIRECTORS
Meetings
During 2016, the Board
held eight formal meetings. Each director attended at least 75% of the aggregate of: (i) the total number of meetings of the Board;
and (ii) the total number of meetings held by all committees of the Board on which he or she served, during the applicable period.
Committees
The Board has standing
Audit and Compensation Committees. Committee memberships are as follows:
Audit Committee
|
|
Compensation Committee
|
Mr. James G. Tatum (Chairman)
|
|
Mr. Allan C. Kirkman (Chairman)
|
Mr. Allan C. Kirkman
|
|
Mr. John L. Lahey
|
Mr. John L. Lahey
|
|
Mr. James G. Tatum
|
Audit Committee
.
The principal functions of the Audit Committee are to: (i) select an independent registered public accounting firm; (ii) review
and approve management’s plan for engaging IHC’s independent registered public accounting firm during the year to perform
non-audit services and consider what effect these services will have on the independence of IHC’s independent registered
public accounting firm; (iii) review IHC’s annual financial statements and other financial reports which require approval
by the Board; (iv) oversee the integrity of IHC’s financial statements, IHC’s systems of disclosure controls and internal
controls over financial reporting and IHC’s compliance with legal and regulatory requirements; (v) review the scope of audit
plans of IHC’s internal audit function and independent registered public accounting firm and the results of their audits;
and (vi) evaluate the performance of IHC’s internal audit function and independent registered public accounting firm.
The Audit Committee
met eleven times in 2016. Each of its members meets the independence requirements of the NYSE and applicable SEC rules and regulations.
The Audit Committee and the Board have determined that each member of the Audit Committee is financially literate and that Mr.
Tatum qualifies as an “audit committee financial expert,” as such term is defined in Item 401(h)(2) of Regulation S-K
promulgated by the SEC.
Compensation
Committee
.
The Compensation Committee assists the Board in fulfilling its responsibilities with regard to compensation
matters, is responsible for determining or ratifying (as the case may be) the compensation of IHC’s executive officers, and
administers IHC’s 2006 Stock Incentive Plan and 2016 Stock Incentive Plan. The Compensation Committee met three times in
2016. The Compensation Committee has sole authority to determine the compensation for IHC’s Chief Executive Officer and President.
Attendance at Annual Meeting of Stockholders
Each IHC director is
expected to be online for the Annual Meeting of Stockholders. At last year’s annual meeting, every IHC director except one
attended online.
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE
Director Independence
As a company listed
on the New York Stock Exchange (“NYSE”), IHC uses the definition of independence prescribed in the NYSE Listed Company
Manual (the “Manual”). Each of Messrs. Kirkman, Tatum, Simon and Lahey met such independence requirements. The Board
has affirmatively determined that none of them had any material relationships described in Item 407(a) of Regulation S-K promulgated
by the SEC with IHC at all applicable times during 2016.
IHC qualifies as a
“controlled company,” as defined in Section 303A.00 of the Manual, because more than 50% of IHC’s voting power
is held by GHI. Therefore, IHC is not subject to certain NYSE requirements that would otherwise require IHC to have: (i) a majority
of independent directors on the Board (Manual Section 303A.01); (ii) compensation of IHC’s executive officers determined
by a compensation committee composed solely of independent directors (Manual Section 303A.04); or (iii) director nominees selected,
or recommended for the Board’s selection, by a nominating committee composed solely of independent directors (Manual Section
303A.05).
Of IHC’s directors,
none of Ms. Herbert or Messrs. Graber, Kettig, Lapin or Thung is independent under the NYSE’s standards.
For each independent
director, after reasonable investigations and in reliance on representations by such independent director to IHC, IHC believes
there is no transaction, relationship or arrangement described in Item 407(a) of Regulation S-K promulgated by the SEC between
each such director not disclosed in the annual report under the caption “Certain Relationships and Related Transactions.”
Compensation Committee Interlocks and
Insider Participation
Messrs. Kirkman, Lahey
and Tatum served on the Compensation Committee of the Board during fiscal year 2016.
Transactions with Management and Other
Relationships
With Geneve Holdings,
Inc.
IHC and Geneve Holdings,
Inc. (“GHI”), IHC’s controlling stockholder, operate under cost-sharing arrangements pursuant to which certain
items are allocated between the two companies. During 2016, IHC paid GHI (or accrued for payment thereto) approximately $439,000
under such arrangements, and paid or accrued an additional $225,000 for the first six months of 2017. Such cost-sharing arrangements
include GHI’s providing IHC with the use of office space as IHC’s corporate headquarters for annual consideration of
$160,000 in 2016. The foregoing arrangement is subject to the annual review and approval of the Audit Committee, and IHC’s
management believes that the terms thereof are no less favorable than could be obtained by IHC from unrelated parties on an arm’s-length
basis.
Review, Approval,
or Ratification of Transactions with Related Persons
Section 5.7 of IHC’s
by-laws provide that no contract or transaction between IHC and one or more of its directors or officers (or their affiliates)
is
per se
void (or voidable) if, among other things, the material facts as to the relevant relationships and interests were
disclosed to the Board (or the relevant committee thereof) and the transaction in question was approved by a majority of the disinterested
directors voting on the matter. The Audit Committee’s charter requires the Audit Committee to review and approve all interested-party
transactions, and IHC’s other governance documents specifically prohibit various conflicts of interest and impose disclosure
requirements in connection with any potential conflict of interest.
The Audit Committee
has reviewed and approved each of the related-party transactions set forth above. IHC is not aware of any transaction reportable
under paragraph (a) of Item 404 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, in respect
of 2016, that was not so reviewed and approved.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board currently
consists of nine members. All of IHC’s directors are elected at each annual meeting of stockholders and hold office until
the next annual meeting of stockholders. The Board proposes that each of the nine current directors be re-elected to the Board.
Each of the directors elected at this annual meeting will hold office until the annual meeting of stockholders to be held in 2018
and until his or her successor is duly elected and qualified. The Company believes that its Board as a whole should encompass a
range of talent, skill, diversity, and expertise enabling it to provide sound guidance with respect to the Company's operations
and interests. In addition to considering a candidate's background and accomplishments, candidates are reviewed in the context
of the current composition of the Board and the evolving needs of our businesses.
Each nominee has consented
to being named in this proxy statement and has agreed to serve if elected. If a nominee is unable to stand for election, the Board
may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the
proxy holders will vote your shares for the substitute nominee, unless you have withheld authority.
The following table
sets forth, with respect to each nominee, his or her name, age, principal occupation, employment during at least the past five
years, the year he or she was first elected an IHC director and directorships held in other public companies.
NOMINEES FOR ELECTION TO THE BOARD
Director,
Year First Elected as Director
|
|
Age
|
|
Principal Occupation, Business and Directorships
and Qualifications
|
|
|
|
|
|
Mr. Larry R. Graber
2000
|
|
68
|
|
Since March 2012, Chief Life and Annuity
Actuary and Senior Vice President of IHC; for more than five years prior thereto, Senior Vice President — Life and Annuities
of IHC; for more than the past five years, a director and President of Madison National Life Insurance Company, Inc., a wholly
owned subsidiary of IHC (“Madison National Life”); for more than the past five years, a director and President of Southern
Life and Health Insurance Company, an insurance company with principal offices in Homewood, Alabama and a wholly owned subsidiary
of Geneve Holdings, Inc., a private diversified holding company that is the controlling stockholder of IHC (“GHI”);
for more than the past five years, a director of Standard Security Life Insurance Company of New York, a wholly owned subsidiary
of IHC(“Standard Security Life”).
The experiences, qualifications, attributes
or skills that led the Board to conclude that Mr. Graber should serve as one of IHC’s directors are his extensive experience
in many facets of the insurance business, particularly relating to the acquisition and administration of blocks of life insurance.
|
|
|
|
|
|
Director,
Year First Elected as Director
|
|
Age
|
|
Principal Occupation, Business and Directorships
and Qualifications
|
|
|
|
|
|
Ms. Teresa A. Herbert
2016
|
|
56
|
|
Since November 2016, a director of IHC;
for more than the past five years, Chief Financial Officer and Senior Vice President of IHC; for more than the past five years,
Vice President of Geneve Corporation (“Geneve”), a private company controlled by GHI; for more than the past five years
until August 2016, Chief Financial Officer and Senior Vice President of American Independence Corp., formerly a public company
traded on Nasdaq and a majority-owned subsidiary of the Company that was merged out of existence on August 31, 2016 (“AMIC”);
from March 2011 to August 2016, a director of AMIC.
The experiences, qualifications, attributes
or skills that led the Board to conclude that Ms. Herbert should serve as one of IHC’s directors are her extensive financial
and accounting experience and her experience with companies with complex organizational structures, intercompany transactions,
diverse and complex business transactions, the insurance industry, and public companies.
|
|
|
|
|
|
Mr. David T. Kettig
2011
|
|
58
|
|
Since September 2017, President of IHC;
from April 1, 2016 to September 2017, Executive Vice President of IHC; since February 2015, Chief Operating Officer and Acting
General Counsel of IHC; from April 2009 to April 1, 2016, Chief Operating Officer and Senior Vice President of IHC; from August
2013 to August 2016, President of AMIC; from April 2009 to March 2012, Chief Operating Officer and Senior Vice President of AMIC;
from March 2011 to August 2016, a director of AMIC; for more than the past five years, President and a director of Independence
American Insurance Company, an indirect wholly owned subsidiary of IHC (“IAIC”); from March 2012 to March 2016, President
of Standard Security Life; since April 2016, Chairman and Chief Executive Officer of Standard Security Life; for more than the
past five years, a director of Standard Security Life.
The experiences, qualifications, attributes
or skills that led the Board to conclude that Mr. Kettig should serve as one of IHC’s directors are his extensive experience
in diverse, complex businesses and transactions, corporate governance, legal affairs, risk management, and insurance.
|
|
|
|
|
|
Mr. Allan C. Kirkman
1980
|
|
73
|
|
For more than the past five years, a member
of each of the Audit Committee and the Compensation Committee of IHC and Chairman of the Compensation Committee of IHC; for more
than five years prior to his retirement in October 2005, Executive Vice President of Mellon Bank, N.A., a national bank.
The experiences, qualifications,
attributes or skills that led the Board to conclude that Mr. Kirkman should serve as one of IHC’s directors are his extensive
experience in diverse, complex businesses and transactions, including that involving public companies in the financial services
fields.
|
|
|
|
|
|
Director,
Year First Elected as Director
|
|
Age
|
|
Principal Occupation, Business and Directorships
and Qualifications
|
|
|
|
|
|
Mr. John L. Lahey
2006
|
|
71
|
|
For more than the past five years, a member
of the Audit Committee and the Compensation Committee of IHC; since March 1987, President of Quinnipiac University, a private university
located in Hamden, Connecticut; since 1995, a member of the Board of Trustees of Yale-New Haven Hospital, a hospital located in
New Haven, Connecticut; between 1994 and December 2015, a director of the UIL Holdings Corporation, a publicly-held utility holding
company with principal offices in New Haven, Connecticut; since December 2015, a director, Audit and Compliance Committee member,
and Executive Committee member of Avangrid, Inc., a diversified energy and utility company with principal offices in New Haven,
Connecticut that is the successor-in-interest by merger to UIL Holdings Corporation; since 2004, a director of Alliance for Cancer
Gene Therapy, the only national non-profit organization committed exclusively to cancer gene and cell therapy research; since June
2006, a director of Standard Security Life Insurance. Mr. Lahey also serves as a director and Chairman of the Board of the
New York City St. Patrick’s Day Parade, Inc.
The experiences, qualifications, attributes
or skills that led the Board to conclude that Mr. Lahey should serve as one of IHC’s directors are his extensive executive
experience in major organizations and valuable expertise in management and corporate governance.
|
|
|
|
|
|
Mr. Steven B. Lapin
1991
|
|
72
|
|
For more than the past five years, Vice
Chairman of the Board of Directors of IHC; for more than the past five years, Chairman, Chief Executive Officer, President and
a director of GHI; for more than the past five years, Chairman, Chief Executive Officer, President and a director of Geneve; for
more than five years prior to August 2016, a director of AMIC; for more than the past five years, a director of Madison National
Life; for more than the past five years, a director of Standard Security Life.
The experiences, qualifications, attributes
or skills that led the Board to conclude that Mr. Lapin should serve as one of IHC’s directors are his extensive experience
in diverse, complex businesses and transactions, corporate governance of public companies, risk management and insurance.
|
|
|
|
|
|
Director,
Year First Elected as Director
|
|
Age
|
|
Principal Occupation, Business and Directorships
and Qualifications
|
|
|
|
|
|
Mr. Ronald I. Simon
2016
|
|
78
|
|
Since November 2016, a director of IHC;
from August 1997 until April 1999, Chairman of the Board of AMIC; from April 1999 to February 2001, Vice Chairman of the Board
of AMIC; from February 2001 through May 2001, Acting Chairman of the Board, Chief Executive Officer and Chief Financial Officer
of AMIC; from January 2003 to August 2016, Chairman of the Compensation Committee of AMIC; from January 2005 to August 2016, a
member of the Audit Committee of AMIC; from 2011 to August 2016, Chairman of the Audit Committee of AMIC; from May 1997 through
April 2000, Executive Vice President and Chief Financial Officer, and from September 1999 to September 2001, a director, of Western
Water Company, which owned and developed water rights in the western United States; from May 1999 through July 2002, when the company
was acquired by Schering, AG, a director of Collateral Therapeutics, Inc., a developer of non-surgical gene therapy procedures
for the treatment of cardiovascular diseases; from January 2006 through January 2009, a director of Cardium Therapeutics, a company
formed to acquire and further develop the procedures originally developed by Collateral Therapeutics; from August 2001 through
June 2002, Chief Financial Officer of Wingcast, Inc., a joint venture of Ford Motor Company and Qualcomm, Inc.; from April 2003
through April 2005, director of BDI Investment Corp., a closely held regulated investment company; from March 2003 through February
2006, a director of WFS Financial, Inc., one of the nation’s largest independent automobile finance companies; since August
2007, a director and member of the Audit and Compensation Committees, and Chairman of the Corporate Governance Committee, of Ellington
Financial, LLC, a specialty finance company specializing in acquiring and managing mortgage-related assets; since May 2013, a director
and member of the Audit and Compensation Committees, and Chairman of the Corporate Governance Committee, of Ellington Residential
Mortgage REIT.
The experiences, qualifications, attributes
or skills that led the Board to conclude that Mr. Simon should serve as one of IHC’s directors are his extensive experience
in finance and senior management, and in growing successful organizations with entrepreneurial company cultures.
|
|
|
|
|
|
James G. Tatum, C.F.A.
2000
|
|
75
|
|
Since June 2002, Chairman of the Audit
Committee of IHC; for more than the past five years, member of the Compensation Committee of IHC; for more than the past five years,
a director of Standard Security Life; for more than the past five years, sole proprietor of J. Tatum Capital, LLC, a registered
investment advisor, located in Birmingham, Alabama, managing funds primarily for individual and trust clients; Chartered Financial
Analyst for more than twenty-five years; from March 2011 until August 2016, a director of AMIC; from March 2011 until August 2016,
a member of the Audit Committee of AMIC.
The experiences, qualifications, attributes
or skills that led the Board to conclude that Mr. Tatum should serve as one of IHC’s directors are his extensive executive
experience in major organizations and valuable expertise with financial issues, risk management and oversight.
|
|
|
|
|
|
Director,
Year First Elected as Director
|
|
Age
|
|
Principal Occupation, Business and Directorships
and Qualifications
|
|
|
|
|
|
Mr. Roy T.K. Thung
1990
|
|
73
|
|
Since September 2017, Chief Executive Officer
and Chairman of the Board of IHC; since March 2011, Chief Executive Officer, President and Chairman of the Board of IHC; since
January 2000, Chief Executive Officer of IHC; since July 1999, President of IHC; for more than five years prior to July 1999, Executive
Vice President and Chief Financial Officer of IHC; for more than the past five years, Executive Vice President of Geneve; from
July 2002 until August 2016, a director of AMIC; from November 2002 until March 2012, Chief Executive Officer and President of
AMIC; from March 2012 until August 2016, Chief Executive Officer of AMIC; for more than five years prior to April 2016, Chief Executive
Officer and Chairman of the Board of Standard Security Life; for more than the past five years, director of Standard Security Life;
for more than the past five years, Chairman of the Board of Madison National Life.
The experiences, qualifications, attributes
or skills that led the Board to conclude that Mr. Thung should serve as one of IHC’s directors are his extensive experience
in diverse, complex businesses and transactions, including involving public companies in the insurance industry, and executive
and management experience.
|
EXECUTIVE OFFICERS
IHC’s officers are elected by the Board, each to serve
until his or her successor is elected and has qualified, or until his or her earlier resignation, removal from office or death.
Gary Balzofiore (Age 60)
Since March 2012, Corporate Vice President
– Accounting and Finance of IHC; from March 2012 until August 2016, Corporate Vice President – Accounting and Finance
of American Independence Corp., formerly a public company traded on Nasdaq and majority-owned subsidiary of IHC that was merged
out of existence on August 31, 2016; since March 2016, President of Standard Security Life Insurance Company of New York, a wholly
owned subsidiary of IHC (“Standard Security”); for more than the past five years until March 2016, Executive Vice President
and Chief Financial Officer of Standard Security; for more than the past five years, Chief Financial Officer and Senior Vice President
of Independence American Insurance Company, an indirect wholly owned subsidiary of IHC.
DIRECTORS’ COMPENSATION
The general policy
of the Board is that compensation for independent directors should be a mix of cash and equity. IHC does not pay management directors
for Board service in addition to their regular employee compensation. The Compensation Committee has the primary responsibility
for reviewing and considering any revisions to director compensation.
During 2017, each non-employee
(outside) director will be paid:
|
•
|
an annual retainer of $36,000;
|
|
•
|
$1,500 for each Board or committee meeting attended;
|
|
•
|
$9,000 for service as chairman of a Board committee;
and
|
|
•
|
2,475 restricted share units of IHC common stock, vesting
ratably over the three annual anniversaries of the award, and contingent upon continuing service as a director.
|
The following table
summarizes compensation paid to IHC’s directors during 2016, except for Mr. Roy T.K. Thung, IHC’s Chief Executive Officer
and Chairman of the Board, Mr. David T. Kettig, President, Chief Operating Officer and Acting General Counsel, Mr. Larry R. Graber,
Chief Life and Annuity Actuary and Senior Vice President, and Teresa A. Herbert, Chief Financial Officer and Senior Vice President,
for whom compensation is disclosed elsewhere herein.
Director
Summary Compensation
Name
|
|
Fees Earned or Paid in Cash
($)
|
|
Stock Awards
($)
|
|
Total
($)
|
Mr. Allan C. Kirkman
|
|
78,000
|
|
47,396
|
|
125,396
|
Mr. John L. Lahey
|
|
69,000
|
|
47,396
|
|
116,396
|
Mr. Steven B. Lapin (1)
|
|
-
|
|
-
|
|
-
|
Mr. Ronald I. Simon
|
|
11,300 (2)
|
|
47,396
|
|
58,696
|
Mr. James G. Tatum
|
|
76,500
|
|
47,396
|
|
123,896
|
|
(1)
|
Mr. Lapin received no compensation in connection with
his service as an IHC director during 2016.
|
|
(2)
|
Mr. Simon was newly-elected at the 2016 Annual Meeting
of Stockholders and thus was only paid fees for the fourth quarter of 2016.
|
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
“Say-on- Pay” and “Say-on-Frequency”
The Compensation Committee
considered the voting results of the advisory, non-binding “say-on-pay” vote at IHC’s 2014 Annual Meeting of
Stockholders in connection with the discharge of its responsibilities. IHC’s stockholders expressed their support of the
compensation for our CEO, CFO and the three other most-highly compensated officers in respect of 2013, with a substantial majority
of the votes cast voting to approve the compensation of IHC’s named executive officers described in IHC’s 2014 proxy
statement. Following the Compensation Committee’s review and consideration of this stockholder support, as well as the other
factors discussed in more detail below, we determined to make no changes to our approach to executive compensation. The next advisory,
non-binding “say-on-pay” vote will occur at IHC’s 2017 Annual Meeting of Stockholders.
At IHC’s 2011
Annual Meeting of Stockholders, a majority of IHC’s stockholders voted for “say-on-pay” proposals to occur every
three years. In light of this voting result on the frequency of “say-on-pay” proposals, the Board decided that IHC
will present “say-on-pay” proposals every three years until the next required vote on the frequency of stockholder
votes on named executive officer compensation. Accordingly, we held a say on frequency of “say-on-pay” vote at our
2011 Annual Meeting of Stockholders. The next stockholder vote on the frequency of stockholder votes on named executive officer
compensation will occur at IHC’s 2017 Annual Meeting of Stockholders.
Compensation Objectives
Compensation of each
of IHC’s executive officers is intended to be based on performance of IHC and the executive. The Compensation Committee has
responsibility for establishing and reviewing the compensation of IHC’s CEO and for reviewing the compensation for all of
IHC’s executive officers.
In establishing executive
officer compensation, the following are among the Compensation Committee’s objectives:
|
·
|
attract and retain individuals of superior ability and managerial talent;
|
|
·
|
ensure compensation is aligned with IHC’s corporate strategies, business objectives and the
long-term interests of IHC’s stockholders; and
|
|
·
|
enhance incentives to increase IHC’s stock price and maximize stockholder value by providing
a portion of total compensation in IHC equity and equity-related instruments.
|
IHC’s overall
compensation program is structured to attract, motivate and retain highly qualified executive officers by paying them competitively,
consistent with IHC’s success and their contributions to such success. To this end, base salary and bonus are designed to
reward annual achievements and to be commensurate with an executive’s scope of responsibilities, demonstrated leadership
abilities and management experience and effectiveness. Other elements of compensation focus on motivating and challenging IHC’s
executive officers to achieve superior, long-term, sustained results.
Implementation of Objectives
Salaries
The salary of an IHC
executive officer is based on his or her level of responsibility, experience and qualifications and recent performance. Adjustments
to salary are made in response to changes in any of the foregoing factors and changes in market conditions. Executive officer salaries
are typically reviewed by the Compensation Committee every twelve months. The Compensation Committee has sole authority to determine
the compensation for IHC’s Chief Executive Officer. Neither the Compensation Committee nor IHC has retained a compensation
consultant or similar organization for assistance in reviewing or setting executive officer salaries or other compensation.
Cash Bonuses
Following the close
of each fiscal year, IHC’s Chief Executive Officer makes determinations that are communicated to the Compensation Committee
as to cash bonuses for IHC’s executive officers (excluding himself), based on an analysis of: (i) any contractual commitments
set forth in an employment agreement; (ii) IHC’s performance in the year ended versus IHC’s plan for such year; and
(iii) a subjective evaluation of a variety of factors as to each executive officer’s individual contribution during the year.
The Compensation Committee then convenes outside the presence of the Chief Executive Officer and, following appropriate deliberation,
approves or ratifies bonuses for all IHC executive officers.
The salaries paid and
annual bonuses awarded to IHC’s named executive officers in respect of 2016 are set forth in the Summary Compensation Table.
Equity Awards
IHC’s 2006 Stock
Incentive Plan (the “2006 Plan”) provided the opportunity for the Compensation Committee to make equity incentive awards
to, among others, IHC’s executive officers. While there are outstanding grants under the 2006 Plan, it has expired and no
new grants may be made under it. The Board of Directors approved a 2016 Stock Incentive Plan (the “2016 Plan”) that
contains substantially the same terms as the 2006 Plan and submitted it for stockholder approval at the 2016 Annual Meeting of
Stockholders. A majority of the shares present at that meeting in person or by proxy approved the 2016 Plan. The following is a
description of the 2016 Plan.
The types of equity
awards that may be granted under the 2016 Plan are: (i) options; (ii) share appreciation rights (“SARs”); (iii) restricted
shares, restricted share units (which are shares granted after certain vesting conditions are met) and unrestricted shares; (iv)
deferred share units; and (v) performance awards. The Compensation Committee determines the type and amount of the award with reference
to factors that include the present value of the award relative to the executive officer’s salary and anticipated cash bonus,
the anticipated importance of the executive’s position to IHC’s future results, and the size of the executive’s
total compensation relative both to other executives within IHC and to compensation levels at other companies.
Within the limitations
of the 2016 Plan, the Compensation Committee may modify an award to: (i) accelerate the rate at which an option or SAR may be exercised
(including, without limitation, permitting an option or SAR to be exercised in full without regard to the installment or vesting
provisions or whether the option or SAR is at the time exercisable); (ii) accelerate the vesting of any award; (iii) extend or
renew outstanding awards; or (iv) accept the cancellation of outstanding awards. However, the Compensation Committee may not, without
stockholder approval, cancel an outstanding option that is underwater for the purpose of reissuing the option to a grantee within
six months thereafter at a lower exercise price, or granting a replacement award of a different type. Notwithstanding the foregoing
provision, no modification of an outstanding award can materially and adversely affect a grantee’s rights thereunder, unless
the grantee provides written consent, there is an express 2016 Plan provision permitting the Compensation Committee to act unilaterally
to make the modification, or the Compensation Committee reasonably concludes that the modification is not materially adverse to
the grantee.
Options
Incentive stock options
(“ISOs”) and non-incentive stock options (“Non-ISOs”) may be granted under the 2016 Plan. At the sole discretion
of the Compensation Committee, any option may be exercisable, in whole or in part, immediately upon the grant thereof, or only
after the occurrence of a specified event, or only in installments, which installments may vary. The term of any option may not
exceed ten years from the grant date;
provided, however,
that in the case of an ISO granted to an employee of IHC or any
of its affiliates who owns stock representing more than ten percent (10%) of the voting stock on the grant date (“Employee
Ten Percent Holder”), the term of the ISO shall not exceed five years from the grant date. The exercise price of an option
is determined by the Compensation Committee in its sole discretion;
provided, however,
that if an ISO is granted to an Employee
Ten Percent Holder, the per share exercise price shall not be less than 110% of the closing price per share on the NYSE on the
grant date (“Fair Market Value”); and
provided further
that for all other options, the per share exercise price
shall not be less than 100% of the Fair Market Value on the grant date. Neither IHC nor the Compensation Committee can allow for
a repricing without stockholder approval.
Each of IHC’s
named executive officers holds stock options, having varying exercise prices and expiration dates (based on the date granted).
Please see the information set forth in the tables below for additional information. IHC does not have a target level of stock
ownership applicable to any of its employees, including the named executive officers.
Share Appreciation
Rights (SARs)
The Compensation Committee
may grant SARs either concurrently with the grant of an option or with respect to an outstanding option (in which case the SAR
will extend to all or a portion of the shares covered by the related option, the exercise price is the same as the exercise price
of the related option, and the SAR is exercisable at such time or times, and to the extent, that the related option will be exercisable),
or independent of any option. The Compensation Committee may also grant SARs that are exercisable only upon or in respect of a
change in control (as defined in the 2016 Plan) or any other specified event. The per share exercise price of a SAR cannot be less
than 100% of the Fair Market Value, and the SARs may only be exercised when the Fair Market Value of the shares underlying the
SAR exceeds the exercise price of the SAR. Neither IHC nor the Compensation Committee can allow for a repricing without stockholder
approval.
Restricted Shares,
Restricted Share Units and Unrestricted Shares
Subject to applicable
law, an award of 2,475 restricted shares (or such other amount that the Board may determine on a prospective basis) will be granted
to each non-employee director of IHC following each annual meeting of IHC’s stockholders. One-third of those restricted shares
will vest on each of the next three annual anniversaries of the date the restricted shares were awarded. In the event that a non-employee
director terminates his or her membership on the Board for any reason, the director will immediately forfeit any unvested restricted
shares.
At any time within
the thirty-day period (or other shorter or longer period that the Compensation Committee selects in its sole discretion) in which
a grantee who is a member of a select group of management or highly compensated employees receives an initial award of either restricted
shares or restricted share units, the Compensation Committee may permit the grantee to irrevocably elect to defer the receipt of
all or a percentage of the shares that would otherwise be transferred to the grantee upon the vesting of such award.
Deferred Share Units
The Compensation Committee
may permit any director, consultant or member of a select group of management or highly compensated employees to irrevocably elect
to forego the receipt of cash or other compensation (including shares), and in lieu thereof to have IHC credit to an internal 2016
Plan account a number of deferred share units having a Fair Market Value equal to the shares and other compensation deferred.
Performance Awards
The Compensation Committee
may grant a performance award based on one or more of the following to measure IHC, affiliate, and/or business unit performance
during a specified performance period: (i) gross or net premiums; (ii) profit margin; (iii) number of insured lives; (iv) basic,
diluted, or adjusted earnings per share; (v) sales or revenue; (vi) earnings before interest, taxes, and other adjustments (in
total or on a per share basis); (vii) basic or adjusted net income; (viii) returns on equity, assets, capital, revenue or similar
measure; (ix) economic value added; (x) working capital; (xi) total stockholder return; and (xii) product development, product
market share, research, licensing, litigation, human resources, information services, mergers, acquisitions, or sales of assets
of affiliates or business units. Performance measures may vary from performance period to performance period and from grantee to
grantee.
A grantee will be eligible
to receive payment in respect of a performance award only to the extent that the performance measure(s) for such award is achieved,
and it is determined that all or some portion of such grantee’s award has been earned for the performance period. The Compensation
Committee reviews whether, and to what extent, the performance measure(s) for a particular performance period (of not less than
one fiscal year) have been achieved and, if so, determines the amount of the performance award to be paid. The Compensation Committee
may use negative discretion to decrease, but not increase, the amount of the award otherwise payable based upon such performance.
At any time prior to
the date that is at least six months before the close of a performance period (or shorter or longer period that the Compensation
Committee selects), the Compensation Committee may permit a grantee who is a member of a select group of management or highly compensated
employees to irrevocably elect to defer the receipt of all or a percentage of the cash or shares that would otherwise be transferred
to the grantee upon the vesting of a performance award.
Termination, Rescission
and Recapture of Awards
Each award under the
2016 Plan granted to an employee is intended to align such employee’s long-term interest with those of IHC. Therefore, if
the employee discloses confidential or proprietary information of IHC, provides services to a competitor of IHC, solicits a non-administrative
employee of IHC, or has engaged in activities which conflict with IHC’s interests (including any breaches of fiduciary duty
or the duty of loyalty), the employee is acting contrary to IHC’s long-term interests. Accordingly, except as otherwise expressly
provided in an award agreement, IHC may terminate any outstanding, unexercised, unexpired, unpaid, or deferred awards, rescind
any exercise, payment or delivery pursuant to the award, or recapture any common stock (whether restricted or unrestricted) or
proceeds from the employee’s sale of shares issued pursuant to the award. Notwithstanding the foregoing, IHC may, in its
sole and absolute discretion, choose not to terminate, rescind or recapture upon the occurrence of any of the foregoing events.
Tax Implications
The Patient Protection
and Affordable Care Act amended the Tax Code to add Section 162(m)(6), which limits the amount that certain health care insurers,
including the Company, may deduct for tax years starting after 2012. Section 162(m)(6) limits the tax deduction to $500,000 per
individual, and makes no exception for performance-based compensation or commissions. In addition, the limit applies to compensation,
including deferred compensation, paid to all current and former employees and most independent contractors, not just to compensation
paid to a narrow group of current top executives. The rule became effective for employer tax years beginning after December 31,
2012. Consequently, the Company is limited to a $500,000 deduction for compensation paid to each named executive officer.
Section 162(m)(1) of
the Tax Code limits the amount a publicly-held corporation may deduct for compensation paid to the CEO and certain named executive
officers to $1 million per year per executive, makes an exception for performance-based compensation and commissions, and excludes
the compensation paid to former covered executives once they are no longer covered. Since the Company is subject to Section 162(m)(6),
the performance-based exclusion available under Section 162(m)(1) is not available to the Company.
Compensation Committee Report
The Compensation Committee
assists the Board in fulfilling its responsibilities with regard to compensation matters, and is responsible for establishing and
approving the compensation of IHC’s executive officers. The Compensation Committee has sole authority to determine the compensation
for IHC’s Chief Executive Officer. The Compensation Committee has reviewed and discussed the “Compensation Discussion
and Analysis” section of the Form 10-K for IHC’s fiscal year ended December 31, 2016 with management, including our
Chief Executive Officer and our Chief Financial Officer.
Compensation Committee
|
|
Mr. Allan C. Kirkman (Chairman)
|
Mr. John L. Lahey
|
Mr. James G. Tatum
|
Compensation Risk Assessment
The Compensation Committee
considered the Company's compensation policies and practices and concluded that they did not need to be modified.
Summary Compensation Table
The following table
lists the annual compensation for IHC’s CEO, CFO and its three other most highly compensated executive officers in 2016 for
the years 2016, 2015 and 2014.
Name
and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
|
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Roy T.K. Thung
|
|
2016
|
|
|
|
461,767
|
|
|
|
338,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,717,963
|
(2)
|
|
|
149,722
|
(3)
|
|
|
19,049
|
(4)
|
|
|
4,687,301
|
|
Chief Executive Officer
|
|
2015
|
|
|
|
452,737
|
|
|
|
338,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
804,000
|
(2)
|
|
|
141,247
|
(3)
|
|
|
19,932
|
|
|
|
1,756,716
|
|
and Chairman
|
|
2014
|
|
|
|
443,885
|
|
|
|
338,000
|
|
|
|
-
|
|
|
|
158,400
|
(1)
|
|
|
855,000
|
(2)
|
|
|
133,252
|
(3)
|
|
|
28,583
|
|
|
|
1,957,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Teresa A. Herbert
|
|
2016
|
|
|
|
291,571
|
|
|
|
623,250
|
(5)
|
|
|
-
|
|
|
|
51,193
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
21,456
|
(7)
|
|
|
987,470
|
|
Chief Financial Officer
|
|
2015
|
|
|
|
275,821
|
|
|
|
173,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,252
|
|
|
|
471,323
|
|
|
|
2014
|
|
|
|
270,436
|
|
|
|
157,500
|
|
|
|
-
|
|
|
|
42,570
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
23,871
|
|
|
|
494,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. David T. Kettig
|
|
2016
|
|
|
|
374,946
|
|
|
|
775,000
|
(5)
|
|
|
-
|
|
|
|
58,323
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
24,599
|
(8)
|
|
|
1,232,868
|
|
President and Chief
|
|
2015
|
|
|
|
352,728
|
|
|
|
275,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,217
|
|
|
|
652,945
|
|
Operating Officer
|
|
2014
|
|
|
|
345,456
|
|
|
|
250,000
|
|
|
|
-
|
|
|
|
47,520
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
19,448
|
|
|
|
662,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Larry R. Graber
|
|
2016
|
|
|
|
295,873
|
|
|
|
143,000
|
|
|
|
-
|
|
|
|
37,775
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
32,122
|
(9)
|
|
|
508,770
|
|
Chief Life and Annuity
|
|
2015
|
|
|
|
279,091
|
|
|
|
293,120
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,863
|
|
|
|
604,074
|
|
Actuary
|
|
2014
|
|
|
|
273,619
|
|
|
|
130,000
|
|
|
|
-
|
|
|
|
24,750
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
33,072
|
|
|
|
461,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Gary J. Balzofiore (10)
|
|
2016
|
|
|
|
264,359
|
|
|
|
625,000
|
(5)
|
|
|
-
|
|
|
|
44,540
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
11,601
|
(11)
|
|
|
945,500
|
|
Corporate
Vice President –
Accounting
and Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Michael Kemp
|
|
2016
|
(12)
|
|
|
106,184
|
|
|
|
1,102,209
|
(13)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
609,550
|
(14)
|
|
|
1,817,943
|
|
Chief Underwriting
|
|
2015
|
|
|
|
328,079
|
|
|
|
325,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26,030
|
|
|
|
679,109
|
|
Officer
|
|
2014
|
|
|
|
321,295
|
|
|
|
376,680
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23,533
|
|
|
|
721,508
|
|
|
(1)
|
Represents the modification of fully vested options during 2014 to extend their expiration date.
The amount reported is the incremental fair value of the modified award as of the modification date.
|
|
(2)
|
Represents strategic and long-term incentive earnings as a result of Mr. Thung’s Employment
Agreement with IHC for the year indicated. IHC is party to the Officer Employment Agreement by and between IHC and Mr. Roy T.K.
Thung, IHC’s Chief Executive Officer and Chairman of the Board of Directors, dated as of May 11, 2011. Under the agreement,
Mr. Thung is entitled to an incentive payment upon the disposition of a strategic asset of IHC equal to 3% of the amount above
which the consideration received by IHC for such disposition exceeds the book value of such asset as of March 31, 2011. In addition,
any termination of the agreement other than for “cause” triggers an incentive payment to Mr. Thung in respect of such
appreciation in the overall book value of IHC. The initial term of Mr. Thung’s employment agreement was two years from the
date it was entered into, but, by its terms, will be automatically extended for successive two-year periods unless one hundred
twenty days’ prior notice of non-renewal is given by IHC. In accordance with the terms of the agreement, Mr. Thung received
cash incentive payments of $3,013,235 and $288,728 in 2016 and 2015, respectively, as a result of the Risk Solutions sale and coinsurance
transaction with Swiss Re in 2016 and the Madison National Life coinsurance and sale transaction with National Guardian Life Insurance
Company in 2015. Had the strategic and long-term incentive provisions of Mr. Thung’s agreement been triggered on December
31, 2016, Mr. Thung would have received $3,075,000.
|
|
(3)
|
Represents the increase (decrease) in the value of Mr. Thung’s Retirement Benefits Agreement
with IHC for the year indicated. Refer to Potential Payments to Named Executive Officers for additional information regarding this
agreement.
|
|
(4)
|
The amount shown for 2016 represents reimbursements related to the use of an automobile, employer-matching
contributions to Mr. Thung’s 401(k) account, and group life insurance premiums paid on Mr. Thung’s behalf.
|
|
(5)
|
Includes the transactional bonus paid in connection with the sale of IHC Risk Solutions to Swiss
Re.
|
|
(6)
|
Represents the grant date fair value of options granted during 2016 and the incremental fair value
of fully vested option awards modified during 2016, as of the modification date.
|
|
(7)
|
The amount shown for 2016 represents reimbursements related to the use of an automobile, employer-matching
contributions to Ms. Herbert’s 401(k) account, group life insurance premiums paid on Ms. Herbert’s behalf, and employer
contributions to Ms. Herbert’s disability insurance.
|
|
(8)
|
The amount shown for 2016 represents reimbursements related to the use of an automobile, employer-matching
contributions to Mr. Kettig’s 401(k) account, group life insurance premiums paid on Mr. Kettig’s behalf, and employer
contributions to Mr. Kettig’s disability insurance.
|
|
(9)
|
The amount shown for 2016 represents reimbursements related to the use of an automobile, employer-matching
contributions to Mr. Graber’s 401(k) account, and group life insurance premiums paid on Mr. Graber’s behalf.
|
|
(10)
|
Mr. Balzofiore was not a named executive officer during 2014 and 2015. Thus, compensation for Mr.
Balzofiore in such years is not included in the table.
|
|
(11)
|
The amount shown for 2016 represents employer-matching contributions to Mr. Balzofiore’s
401(k) account, group life insurance premiums paid on Mr. Balzofiore’s behalf, and employer contributions to Mr. Balzofiore’s
disability insurance.
|
|
(12)
|
Mr. Kemp was
not serving as an executive officer of IHC at
the end of the last completed fiscal year
. However, had he served as an executive officer at the end of the last fiscal
year, he would have been one of the
three most highly compensated executive officers
.
Therefore, pursuant to Item 402(a)(4) of Regulation S-K promulgated by the SEC, compensation for Mr. Kemp is provided for the full
2016 fiscal year.
|
|
(13)
|
Represents the transactional bonus paid in connection with the sale of IHC Risk Solutions to Swiss
Re.
|
|
(14)
|
The amount shown for 2016 represents reimbursements related to the use of an automobile, employer-matching
contributions to Mr. Kemp’s 401(k) account, group life insurance premiums paid on Mr. Kemp’s behalf, employer contributions
to Mr. Kemp’s disability insurance, and a severance payment to Mr. Kemp.
|
Outstanding
Equity Awards at Fiscal Year-End
The following table
sets forth for each named executive officer certain information about unexercised stock options and unvested shares of restricted
stock held as of December 31, 2016.
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities Underlying Unexercised Options
(#)
Exercisable
|
|
|
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
|
|
|
Option Exercise Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
|
|
Market Value of Shares or Units of Stock That Have Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roy T.K. Thung
|
|
|
176,000
|
|
|
|
-
|
|
|
$
|
9.09
|
|
|
January 4, 2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
16,500
|
|
|
|
-
|
|
|
$
|
7.11
|
|
|
March 16, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
82,500
|
|
|
|
-
|
|
|
$
|
9.99
|
|
|
March 19, 2018
|
|
|
|
-
|
|
|
|
-
|
|
Teresa A. Herbert
|
|
|
47,300
|
|
|
|
-
|
|
|
$
|
9.09
|
|
|
January 4, 2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
11,000
|
|
|
|
-
|
|
|
$
|
7.11
|
|
|
March 16, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
27,500
|
|
|
|
-
|
|
|
$
|
9.99
|
|
|
March 19, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
12,000
|
|
|
$
|
19.95
|
|
|
December 1, 2021
|
(1)
|
|
|
-
|
|
|
|
-
|
|
David T. Kettig
|
|
|
38,800
|
|
|
|
-
|
|
|
$
|
9.09
|
|
|
January 4, 2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
11,000
|
|
|
|
-
|
|
|
$
|
7.11
|
|
|
March 16, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
27,500
|
|
|
|
-
|
|
|
$
|
9.99
|
|
|
March 19, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
15,000
|
|
|
$
|
19.95
|
|
|
December 1, 2021
|
(1)
|
|
|
-
|
|
|
|
-
|
|
Larry R. Graber
|
|
|
27,500
|
|
|
|
-
|
|
|
$
|
9.09
|
|
|
January 4, 2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
11,000
|
|
|
|
-
|
|
|
$
|
7.11
|
|
|
March 16, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
27,500
|
|
|
|
-
|
|
|
$
|
9.99
|
|
|
March 19, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
10,000
|
|
|
$
|
19.95
|
|
|
December 1, 2021
|
(1)
|
|
|
-
|
|
|
|
-
|
|
Gary J. Balzofiore
|
|
|
44,000
|
|
|
|
-
|
|
|
$
|
9.09
|
|
|
January 4, 2019
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
8,800
|
|
|
|
-
|
|
|
$
|
7.11
|
|
|
March 16, 2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
10,000
|
|
|
$
|
19.95
|
|
|
December 1, 2021
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Kemp
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
Stock options granted on December 1, 2016 vest in three equal installments beginning on December 1, 2017.
|
Grants of Plan-Based Awards
The following table
sets forth information about the number and value of plan-based awards granted during the year 2016.
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
Grant
|
|
|
|
Grant
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Exercise
|
|
|
Date
|
|
Name
|
|
Date
|
|
Granted (#)
|
|
|
Granted (#)
|
|
|
Price ($)
|
|
|
Fair Value ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roy T.K. Thung
|
|
December 1, 2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Teresa A. Herbert
|
|
December 1, 2016
|
|
|
-
|
|
|
|
12,000
|
|
|
|
19.95
|
|
|
|
31,800
|
|
David T. Kettig
|
|
December 1, 2016
|
|
|
-
|
|
|
|
15,000
|
|
|
|
19.95
|
|
|
|
39,750
|
|
Larry R. Graber
|
|
December 1, 2016
|
|
|
-
|
|
|
|
10,000
|
|
|
|
19.95
|
|
|
|
26,500
|
|
Gary J. Balzofiore
|
|
December 1, 2016
|
|
|
-
|
|
|
|
10,000
|
|
|
|
19.95
|
|
|
|
26,500
|
|
Michael Kemp
|
|
December 1, 2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Option Exercises and Stock Vested
The following table
sets forth information about the number and value of option exercises and vested stock awards for each named executive officer
during the year 2016.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of shares acquired on exercise (#)
|
|
|
Value realized on exercise ($)
|
|
|
Number of shares acquired on vesting (#)
|
|
|
Value realized on vesting ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roy T.K. Thung
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Teresa A. Herbert
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
David T. Kettig
|
|
|
6,500
|
|
|
|
45,184
|
|
|
|
-
|
|
|
|
-
|
|
Larry R. Graber
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Gary J. Balzofiore
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Michael Kemp
|
|
|
-
|
|
|
|
382,564
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
Mr. Kemp exercised 45,000 SARs that were payable in cash.
|
Potential Payments to Named Executive Officers
With Mr. Thung
IHC is party to a Retirement
Benefits Agreement with Mr. Roy T.K. Thung, dated as of September 30, 1991, and amended by amendments dated as of December 20,
2002, June 17, 2005 and December 31, 2008, respectively, pursuant to which Mr. Thung is entitled to a lump-sum cash payment upon
a “separation from service” from IHC of $1,659,557, increasing on a cumulative, compounding basis of 6% per annum from
December 31, 2008. “Separation from service” is as defined under U.S. Treasury Regulations 1.409A-1(h)(1), and would
generally include Mr. Thung’s death, retirement or any other termination of employment, including permanent disability. For
example, had this provision been triggered on December 31, 2016, Mr. Thung would have been entitled to receive a payment of $2,645,082.
IHC is party to the
Officer Employment Agreement by and between IHC and Mr. Roy T.K. Thung, IHC’s Chief Executive Officer and Chairman of the
Board of Directors, dated as of May 11, 2011. Under this employment agreement, if Mr. Thung’s employment by IHC or its affiliate
were to cease under certain circumstances, Mr. Thung would be entitled to receive a lump-sum severance amount equal to the average
annual aggregate total compensation received by Mr. Thung during the preceding five years, adjusted
pro rata
for the applicable
severance period. The applicable severance period would be the longer of: (i) twelve months; and (ii) a number of months equal
to the aggregate number of years of service of Mr. Thung to IHC and its affiliates. The circumstances under which such severance
would be paid are: (i) Mr. Thung’s
employment by IHC
being involuntarily terminated under circumstances that would not constitute “cause” (examples of “cause”
being Mr. Thung’s material failure to follow IHC’s lawful directions, material failure to follow IHC’s corporate
policies, breach of the non-compete covenants in the employment agreement or his engaging in unlawful behavior that would damage
IHC or its reputation); (ii) such employment being voluntarily terminated under circumstances that would constitute “good
reason” (examples of “good reason” being in connection with IHC’s material breach of its obligations under
the employment agreement, IHC’s non-renewal of the employment agreement or change in control of IHC or its ultimate parent);
or; (iii) upon Mr. Thung’s death or permanent disability. In addition, under the agreement, Mr. Thung is also entitled to
strategic and long-term incentive payments which are included in the Summary Compensation Table above. The initial term of Mr.
Thung’s employment agreement is two years from the date it was entered into, but, by its terms, it will be automatically
extended for successive two-year periods unless one hundred twenty days’ prior notice of non-renewal is given by IHC. For
example, had the severance provisions of Mr. Thung’s agreement been triggered on December 31, 2016, Mr. Thung would have
been entitled to receive approximately $66,146 per month for forty months ($2,645,840 in the aggregate).
With Ms. Herbert
IHC is party to the
Officer Employment Agreement, by and between IHC and Ms. Teresa A. Herbert, IHC’s Chief Financial Officer and Senior Vice
President, dated as of April 18, 2011. Under this employment agreement, if Ms. Herbert’s employment by IHC or its affiliate
were to cease under certain circumstances, Ms. Herbert would be entitled to receive a severance amount equal to the average annual
aggregate total compensation received by Ms. Herbert during the preceding five years, adjusted
pro rata
for the applicable
severance period. The applicable severance period would be the longer of: (i) twelve months; and (ii) a number of months equal
to the aggregate number of years of service of Ms. Herbert to IHC and its affiliates, not to exceed twenty-four months. The circumstances
under which such severance would be paid are (i) Ms. Herbert’s employment by IHC being involuntarily terminated under circumstances
that would not constitute “cause” (examples of “cause” being Ms. Herbert’s material failure to follow
IHC’s lawful directions, material failure to follow IHC’s corporate policies, breach of the non-compete covenants in
the employment agreement or her engaging in unlawful behavior that would damage IHC or its reputation), or (ii) such employment
being voluntarily terminated under circumstances that would constitute “good reason” (examples of “good reason”
being in connection with IHC’s (or its successor’s) material breach of its obligations under the employment agreement
or upon IHC’s non-renewal of the employment agreement). The initial term of Ms. Herbert’s employment agreement is two
years from the date it was entered into, but, by its terms, it will be automatically extended for successive two-year periods unless
one hundred twenty days’ prior notice of non-renewal is given by IHC. For example, had the severance provision in Ms. Herbert’s
agreement been triggered on December 31, 2016, Ms. Herbert would have been entitled to receive approximately $45,068 per month
for twenty-four months ($1,081,632 in the aggregate).
With Mr. Kettig
IHC is party to the
Officer Employment Agreement, by and among IHC, Standard Security Life (which subsequently assigned the agreement to its affiliate
AMIC Holdings, Inc.), and Mr. David T. Kettig, IHC’s President, Chief Operating Officer and Acting General Counsel, dated
as of April 18, 2011. Under this employment agreement, if Mr. Kettig’s employment by Standard Security Life or its affiliate
were to cease under certain circumstances, Mr. Kettig would be entitled to receive a severance amount equal to the average annual
aggregate total compensation received by Mr. Kettig during the preceding five years, adjusted
pro rata
for the applicable
severance period. The applicable severance period would be the longer of: (i) twelve months; and (ii) a number of months equal
to the aggregate number of years of service of Mr. Kettig to IHC and its affiliates, not to exceed twenty-four months. The circumstances
under which such severance would be paid are (i) Mr. Kettig’s employment by Standard Security Life being involuntarily terminated
under circumstances that would not constitute “cause” (examples of “cause” being Mr. Kettig’s material
failure to follow Standard Security Life’s or IHC’s lawful directions, material failure to follow Standard Security
Life’s or IHC’s corporate policies, breach of the non-compete covenants in the employment agreement or his engaging
in unlawful behavior that would damage Standard Security Life, IHC or their respective reputations), or (ii) such employment being
voluntarily terminated under circumstances that would constitute “good reason” (examples of “good reason”
being in connection with Standard Security Life’s (or its successor’s) material breach of its obligations under the
employment agreement or upon Standard Security Life’s non-renewal of the employment agreement). The initial term of Mr. Kettig’s
employment agreement is two years from the date it was entered into, but, by its terms, it will be automatically extended for successive
two-year periods unless one hundred twenty days’ prior notice of non-renewal is given by Standard Security Life. For example,
had the severance provision in Mr. Kettig’s agreement been triggered on December 31, 2016, Mr. Kettig would have been
entitled to receive approximately $59,330 per month for twenty-four months ($1,423,920 in the aggregate).
With Mr. Graber
IHC is party to the
Officer Employment Agreement, by and among IHC, Madison National Life, and Mr. Larry R. Graber, IHC’s Chief Life and Annuity
Actuary and Senior Vice President, dated as of April 18, 2011. Under this employment agreement, if Mr. Graber’s employment
by Madison National Life or its affiliate were to cease under certain circumstances, Mr. Graber would be entitled to receive
a severance amount equal to the average annual aggregate total compensation received by Mr. Graber during the preceding five years,
adjusted
pro rata
for the applicable severance period. The applicable severance period would be the longer of: (i) twelve
months; and (ii) a number of months equal to the aggregate number of years of service of Mr. Graber to IHC and its affiliates,
not to exceed twenty-four months. The circumstances under which such severance would be paid are (i) Mr. Graber’s employment
by Madison National Life being involuntarily terminated under circumstances that would not constitute “cause” (examples
of “cause” being Mr. Graber’s material failure to follow Madison National Life’s or IHC’s lawful
directions, material failure to follow Madison National Life’s or IHC’s corporate policies, breach of the non-compete
covenants in the employment agreement or his engaging in unlawful behavior that would damage Madison National Life, IHC or their
respective reputations), or (ii) such employment being voluntarily terminated under circumstances that would constitute “good
reason” (examples of “good reason” being in connection with Madison National Life’s (or its successor’s)
material breach of its obligations under the employment agreement or upon Madison National Life’s non-renewal of the employment
agreement). The initial term of Mr. Graber’s employment agreement is two years from the date it was entered into, but, by
its terms, it will be automatically extended for successive two-year periods unless one hundred twenty days’ prior notice
of non-renewal is given by Madison National Life. For example, had the severance provision in Mr. Graber’s agreement been
triggered on December 31, 2016, Mr. Graber would have been entitled to receive approximately $39,088 per month for twenty
months ($781,760 in the aggregate).
With Mr. Balzofiore
IHC is party to the
Officer Employment Agreement, by and among IHC, Standard Security Life, and Mr. Gary J. Balzofiore, IHC’s Corporate Vice
President – Accounting and Finance, dated as of May 25, 2011. Under this employment agreement, if Mr. Balzofiore’s
employment by Standard Security Life or its affiliate were to cease under certain circumstances, Mr. Balzofiore would be entitled
to receive a severance amount equal to the average annual aggregate total compensation received by Mr. Balzofiore during the preceding
five years, adjusted
pro rata
for the applicable severance period. The applicable severance period would be the longer of:
(i) twelve months; and (ii) a number of months equal to the aggregate number of years of service of Mr. Balzofiore to IHC and its
affiliates, not to exceed twenty-four months. The circumstances under which such severance would be paid are (i) Mr. Balzofiore’s
employment by Standard Security Life being involuntarily terminated under circumstances that would not constitute “cause”
(examples of “cause” being Mr. Balzofiore’s refusal to perform his duties, material failure to follow Standard
Security Life’s corporate policies, breach of the non-compete covenants in the employment agreement or his committing a crime
involving financial or accounting fraud), or (ii) such employment being voluntarily terminated under circumstances that would constitute
“good reason” (examples of “good reason” being in connection with Standard Security Life’s or IHC’s
material breach of its obligations under the employment agreement or upon Standard Security Life’s non-renewal of the employment
agreement). The initial term of Mr. Balzofiore’s employment agreement is two years from the date it was entered into, but,
by its terms, it will be automatically extended for successive two-year periods unless one hundred twenty days’ prior notice
of non-renewal is given by Standard Security Life. For example, had the severance provision in Mr. Balzofiore’s agreement
been triggered on December 31, 2016, Mr. Balzofiore would have been entitled to receive approximately $41,722 per month for
twenty-four months ($1,001,328 in the aggregate).
Stock Incentive Plans
Under the terms of
IHC’s stock incentive plans, the Compensation Committee may make appropriate provision for the holders of awards thereunder
in the event of a change in control of IHC or similar event. The specifics of such an occurrence cannot be anticipated, and thus
the prospective effect upon IHC cannot reliably be quantified.
Equity Compensation Plan Information
The following table
sets forth certain information as of the end of the most recently completed fiscal year with respect to compensation plans under
which shares of IHC common stock may be issued.
Equity Compensation Plan Information
Plan Category
|
|
Number of Shares to be Issued Upon Exercise of Outstanding Options
|
|
|
Weighted-Average Exercise Price of Outstanding Options
|
|
|
Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in the First Column)
|
|
Equity compensation plans approved by stockholders
|
|
|
697,180
|
|
|
$
|
11.75
|
|
|
|
1,133,100
|
|
REPORT OF THE AUDIT COMMITTEE
The Audit Committee
assists the Board in oversight of the financial reporting process, including the effectiveness of internal accounting and financial
controls and procedures, and controls over the accounting, auditing and quality of financial reporting practices of IHC. The Audit
Committee operates under a written charter adopted by the Board.
Management of IHC has
primary responsibility for the financial reporting process, the preparation of financial statements in conformity with U.S. generally
accepted accounting principles, the system of internal controls and the establishment of procedures designed to insure compliance
with accounting standards and applicable laws and regulations. RSM US LLP was responsible for auditing IHC’s financial statements
for its fiscal year ended December 31, 2016. The Audit Committee’s responsibility is to monitor and review these processes
and procedures. Audit Committee members are not professionally engaged in the practice of accounting or auditing. The Audit Committee
relies on the information provided to it, including the representations of management that the financial statements have been prepared
with integrity and objectivity, and the representations of management and the opinion of RSM that such financial statements are
fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles.
The Audit Committee
also reviewed the Report of Management on Internal Control over Financial Reporting contained in IHC’s Annual Report on Form
10-K for the fiscal year ended December 31, 2016 prior to filing such report with the SEC, as well as RSM’s Reports of Independent
Registered Public Accounting Firm (also included in IHC’s Annual Report on Form 10-K) and RSM’s reports related to
the audit of IHC’s consolidated financial statements. The Audit Committee continues to oversee IHC’s efforts related
to its internal control over financial reporting and management’s preparations for the evaluation in 2017.
The Audit Committee
met with management periodically during the year to consider the adequacy of IHC’s internal controls and the objectivity
of its financial reporting. The Audit Committee discussed these matters with appropriate IHC financial and internal audit personnel
and with RSM. The Audit Committee also discussed with IHC’s senior management the process used for certifications by IHC’s
chief executive officer and chief financial officer which are required for certain filings with the SEC.
The Audit Committee
appointed RSM as IHC’s independent registered public accounting firm for the year ended 2016 after reviewing the firm’s
performance and independence from management.
The Audit Committee
reviewed with management and RSM, IHC’s audited financial statements and met separately with both management and RSM to discuss
and review those financial statements and reports prior to issuance. Management has represented to the Audit Committee that the
financial statements were prepared in conformity with U.S. generally accepted accounting principles. RSM’s report states
the firm’s opinion that such financial statements are fairly presented, in all material respects, in conformity with U.S.
generally accepted accounting principles.
The Audit Committee
reviewed with RSM, which is responsible for auditing IHC’s financial statements and for expressing an opinion on the conformity
of those audited financial statements with accounting principles generally accepted in the United States, its judgment as to the
quality, not just the acceptability, of IHC’s accounting principles and such other matters as are required to be discussed
with the Audit Committee under Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16, Communications with
Audit Committees. In addition, the Audit Committee has received from RSM written disclosures regarding the auditors’ independence
required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed
with RSM its independence from the Company and its management. In concluding that RSM is independent, the Audit Committee considered
whether the non- audit services provided by the independent auditors in 2016 were compatible with its independence.
Based on these reviews
and discussions, the Audit Committee recommended to the Board that IHC’s audited financial statements be included in IHC’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
Audit Committee Members
Mr. James G. Tatum (Chairman)
Mr. Allan C. Kirkman
Mr. John L. Lahey
AUDIT AND NON-AUDIT FEES
The following table
sets forth fees for services that RSM US LLP and KPMG LLP provided to IHC during 2016 and 2015:
|
|
2016
|
|
|
2015
|
|
Audit fees (1)
|
|
$
|
1,763,000
|
(2)
|
|
$
|
2,725,000
|
|
Audit-related fees
|
|
|
-
|
|
|
|
177,000
|
|
Tax fees
|
|
|
-
|
|
|
|
-
|
|
All other fees
|
|
|
21,000
|
(3)
|
|
|
-
|
|
Total
|
|
$
|
1,784,000
|
|
|
$
|
2,902,000
|
|
|
(1)
|
Audit Fees
. Represents fees for professional services provided for the audit of IHC’s
annual financial statements, the review of IHC’s quarterly financial statements and audit services provided in connection
with other statutory or regulatory filings.
|
|
(2)
|
As disclosed in the Company’s Form 8-K filed on September 16, 2016, IHC dismissed KPMG as
its independent registered accounting firm and engaged RSM as its independent registered accounting firm. Audit fees listed above
include $204,000 related to audit services provided by KPMG and $1,559,000 related to audit services provided by RSM.
|
|
(3)
|
All other fees for 2016 represent fees paid to RSM for the audit of the Company’s 401(k)
plan.
|
Vote Required For the Election of
Directors
The affirmative vote
of a plurality of the votes cast at the meeting is required to elect the nine nominees as directors. This means that the nine nominees
will be elected if they receive more affirmative votes than any other person.
THE BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE “FOR” THE ELECTION OF EACH OF THE NINE NOMINEES.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Appointment of Independent Registered
Public Accounting Firm
KPMG audited IHC’s
annual financial statements for the year ended December 31, 2015. On September 13, 2016, the Audit Committee dismissed KPMG as
IHC’s independent registered public accounting firm. On October 3, 2016, the Audit Committee appointed RSM US LLP (“RSM”)
to be IHC’s independent registered public accounting firm for the fiscal year ending December 31, 2016, which was
ratified by stockholders at the 2016 Annual Meeting of Stockholders. On May 9, 2017, the Audit Committee appointed RSM to be IHC’s
independent registered public accounting firm for the fiscal year ending December 31, 2017. The stockholders are asked to ratify
this appointment at the annual meeting. Representatives of RSM will be present at the meeting.
Vote Required For Ratification
The Audit Committee
is responsible for selecting IHC’s independent registered public accounting firm. Accordingly, stockholder approval is not
required to appoint RSM as IHC’s independent registered public accounting firm for 2017. The Board believes, however, that
submitting the appointment of RSM to the stockholders for ratification is a matter of good corporate governance. If the stockholders
do not ratify the appointment, the Audit Committee will review its future selection of the independent registered public accounting
firm.
The ratification of
the appointment of RSM as IHC’s independent registered public accounting firm requires the affirmative vote of a majority
of the shares present at the meeting in person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
PROPOSAL 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer
Protection Act, enacted in July 2010, requires that IHC provide its stockholders with the opportunity to vote to approve, on a
nonbinding, advisory basis, the compensation of IHC’s named executives officers as disclosed in this proxy statement in accordance
with the compensation disclosure rules of the SEC.
As described in detail under the heading
“Executive Compensation – Compensation Discussion and Analysis,” IHC seeks to closely align the interests of
its named executive officers with the interests of its stockholders. IHC’s compensation programs are designed to reward its
named executive officers for the achievement of short-term and long-term strategic and operational goals and the achievement of
increased total stockholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.
The Compensation Committee considered
the voting results of the advisory, non-binding “say-on-pay” vote at IHC’s 2014 Annual Meeting of Stockholders
in connection with the discharge of its responsibilities. IHC’s stockholders expressed their support of the compensation
for our CEO, CFO and the three other most-highly compensated officers in respect of 2013 (“named executive officers”),
with a majority of the votes cast voting to approve the compensation of IHC’s named executive officers described in IHC’s
2014 proxy statement. Following the Compensation Committee’s review and consideration of this stockholder support, as well
as the other factors discussed in more in the Compensation Discussion and Analysis section hereof, we determined to make no changes
to our approach to executive compensation.
The vote on this resolution is not intended
to address any specific element of compensation. Rather, the vote relates to the compensation of IHC’s named executive officers,
as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. The vote is advisory, which
means that the vote is not binding on IHC or the Board. The vote will not be construed to create or imply any change to the fiduciary
duties of the Board, or to create or imply any additional fiduciary duties for the Board. However, the Board and the Compensation
Committee will review and consider the voting results when evaluating future compensation decisions relating to our named executive
officers.
Accordingly, IHC is asking its stockholders
to vote on the following resolution at the Annual Meeting of Stockholders:
“
RESOLVED,
that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K,
including Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
YOUR BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
PROPOSAL 4
ADVISORY VOTE ON THE FREQUENCY OF AN
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer
Protection Act also provides that stockholders be given the opportunity to vote, on a non-binding, advisory basis, for their preference
as to how frequently IHC should seek future advisory votes on the compensation of its named executive officers as disclosed in
accordance with the compensation disclosure rules of the SEC. By voting with respect to this Proposal 4, stockholders may indicate
whether they would prefer that we conduct future advisory votes on executive compensation annually, biennially or triennially.
Stockholders also may, if they wish, abstain from casting a vote on this proposal.
IHC’s Board of Directors has determined
that an advisory vote on executive compensation that occurs triennially is the most appropriate alternative for the Company and
therefore the Board recommends that you vote for a three-year interval for the advisory vote on executive compensation. In determining
to recommend that shareholders vote for a frequency of once every three years, the Board considered how an advisory vote at this
frequency will provide IHC stockholders with sufficient time to evaluate the effectiveness of IHC’s overall compensation
philosophy, policies and practices in the context of IHC’s long-term business results for the corresponding period, while
avoiding over-emphasis on short term variations in compensation and business results. An advisory vote occurring once every three
years will also permit IHC’s stockholders to observe and evaluate the impact of any changes to IHC’s executive compensation
policies and practices which have occurred since the last advisory vote on executive compensation, including changes made in response
to the outcome of a prior advisory vote on executive compensation.
The vote is advisory, which means that
the vote is not binding on IHC
.
Stockholders may cast a vote on
the preferred voting frequency by selecting the option of one year, two years, or three years (or abstain) when voting in response
to the resolution set forth below:
“RESOLVED, that the shareholders
determine, on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Company’s
named executive officers as set forth in the Company’s proxy statement should be every year, every two years, or every three
years.”
The proxy card provides stockholders with
the opportunity to choose among four options (holding the vote every one, two or three years, or abstaining).
YOUR BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE
FOR A FREQUENCY OF “THREE YEARS.”
OTHER MATTERS
IHC’s by-laws
require stockholders to give advance notice of any proposal intended to be presented at the annual meeting. The deadline for this
notice has passed and IHC has not received any such notice. If any other matter properly comes before the stockholders for a vote
at the meeting, however, the proxy holders will vote your shares in accordance with their best judgment.
ADDITIONAL INFORMATION
Proxy Solicitation
IHC will bear all costs
of this proxy solicitation. In addition to soliciting proxies by this mailing, IHC expects that its directors, officers and regularly
engaged employees may solicit proxies personally or by mail, telephone, facsimile or other electronic means, for which solicitation
they will not receive any additional compensation. IHC will reimburse brokerage firms, custodians, fiduciaries and other nominees
for their out-of-pocket expenses in forwarding solicitation materials to beneficial owners upon our request.
Stockholder Proposals for 2018 Annual
Meeting
Stockholder proposals
intended to be presented at IHC’s 2018 annual meeting must be received by IHC no later than a reasonable time in advance
of the date of the 2018 Annual Meeting, which would be no less than 120 days before that date (pursuant to Rule 14a-8 of the Exchange
Act) to be eligible for inclusion in IHC’s proxy statement and form of proxy for next year’s meeting. IHC has yet to
determine the date of its 2018 Annual Meeting. Proposals should be addressed to Independence Holding Company, Attention: Corporate
Secretary, 485 Madison Avenue, 14
th
Floor, New York, New York 10022.
For any proposal that
is not submitted for inclusion in next year’s proxy statement (as described in the preceding paragraph), but is instead sought
to be presented directly at the 2018 annual meeting, the federal securities laws require stockholders to give advance notice of
such proposals. The required notice must (pursuant to Rule 14a-4 of the Exchange Act) be given no less than a reasonable time in
advance of the date of the 2018 Annual Meeting, which would be no less than 45 days before that date. IHC has yet to determine
the date of its 2018 annual meeting. Any such notice must be provided to Independence Holding Company, Attention: Corporate Secretary,
485 Madison Avenue, 14
th
Floor, New York, New York 10022. If a stockholder fails to provide timely notice of a proposal
to be presented at the 2018 Annual Meeting, the chairman of the meeting will declare it out of order and disregard any such matter.
|
By order of the Board of Directors,
|
|
Loan Nisser
|
|
Vice President – Legal and Secretary
|
|
Independence (NYSE:IHC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Independence (NYSE:IHC)
Historical Stock Chart
From Sep 2023 to Sep 2024