Executive Officers
| | | | | | | | |
Name | Age | Position with the Company and Business Experience |
Anant Bhalla* | 44 | •Our President (January 27, 2020 – Present), and our Chief Executive Officer (March 1, 2020 – Present) •Partner of Bhalla Capital Partners, a private capital and asset management firm (March 2019 - January 2020) •Executive Vice President and Chief Financial Officer of Brighthouse Financial, a life insurance company (2016 – 2019) •Chief Financial Officer of Retail Business for MetLife, an insurance and financial services company (2014 – 2016) •Prior to MetLife, Mr. Bhalla served in numerous senior roles including Chief Risk Officer, Treasurer and other management roles at Fortune 500 companies, including American International Group (AIG), Lincoln National Corporation, and Ameriprise Financial, each an insurance and financial services company. •Mr. Bhalla has over 20 years of experience in the life insurance industry. |
Axel André* | 46 | •Our Executive Vice President and Chief Financial Officer (September 7, 2021 – Present) •Executive Vice President and Chief Financial Officer of Jackson National, an insurance and financial services company (February 2020 – February 2021) •Previously Mr. André spent nearly 7 years at AIG. •Mr. André joined AIG initially as Chief Risk Officer for Individual Retirement, Group Retirement, and Institutional Markets. He was promoted to Chief Financial Officer of Individual Retirement at AIG, where he was responsible for overseeing all aspects of the finance and actuarial value chain for the Individual Retirement business, including asset-liability management, hedging, reporting and capital management. Prior to his time at AIG, Mr. André served as a Managing Director on the Global Insurance Strategies team at Goldman Sachs, a financial services firm. |
Ronald J. Grensteiner* | 59 | •President of American Equity Investment Life Insurance Company, our primary wholly-owned life insurance subsidiary (AE Life Insurance) (2009 – Present) •Our Executive Vice President (June 2011 – Present) •Mr. Grensteiner has more than 35 years of experience in the life insurance industry. |
James L. Hamalainen* | 57 | •Our Executive Vice President and Chief Investment Officer, Insurance (January 2021 – Present) •AE Life Insurance Chief Client Solutions Officer (July 2020 – Present) •Executive Vice President, Chief Risk Officer of Brighthouse Financial (December 2016 - May 2020) •Senior Vice President, Treasury and Investment Management at Ameriprise Financial (September 1991 - May 2016) •Mr. Hamalainen has over 25 years of experience in financial services. |
Jeffrey D. Lorenzen*
| 56 | •Our Executive Vice President and Chief Risk Officer (January 2021 – Present), Executive Vice President and Chief Investment Officer (June 2015 – January 2021), and Senior Vice President and Chief Investment officer (2009 - June 2015) •Mr. Lorenzen has more than 30 years of experience in the life insurance industry. |
Dewayne Lummus | 52 | •Our Senior Vice President and Chief Accounting Officer (November 30, 2021 – Present) •Managing Director and Corporate Controller of Equitable Financial Life Insurance Company (November 2019 – November 2021) •Chief Financial Officer, Retail Financial Products at Teachers Insurance and Annuity Association of America (TIAA) (2015-2019) •Before 2015, Mr. Lummus was the deputy controller at TIAA and, prior to that, held various financial accounting and reporting positions with Voya (formerly ING), an insurance and financial services company. |
Phyllis Zanghi | 49 | •Our Executive Vice President, Chief Legal Officer and Secretary (April 1, 2021 – Present), Senior Vice President and General Counsel, U.S. Life Companies (October 2020 – Present), and Executive Officer (following the end of the fiscal year ended December 31, 2020) •Head of Tax and Associate General Counsel of Brighthouse Financial (August 2017 - October 2020) •Various positions including Senior Vice President of Tax and ERISA of Metropolitan Life Insurance Company (September 1998 - August 2017) •Ms. Zanghi has over 20 years of experience as a legal advisor in the life insurance industry. |
Each executive's term of office with us ends no later than our Board meeting immediately following the Annual Shareholder Meeting. *Named executive officers. As required by SEC rules, our former executives Ted M. Johnson and Tolga Uzuner are also named executive officers. |
Compensation and Talent Management Committee Report
This report is furnished by the Company's Compensation and Talent Management Committee. The committee has reviewed the Compensation Discussion and Analysis (CD&A) in the Company’s 2022 proxy Statement and discussed it with management. Based on such review and discussion, the committee approved the CD&A and recommended that it be included in the 2022 proxy statement.
No portion of this report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (Securities Act), or the Securities Exchange Act of 1934, as amended (Exchange Act), through any general statement incorporating by reference in its entirety the proxy statement in which this report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be "soliciting material" or to be "filed" under either the Securities Act or the Exchange Act.
Respectfully submitted,
Compensation and Talent Management Committee
A. J. Strickland, III, Chair
Joyce A. Chapman
Brenda J. Cushing
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Compensation Discussion and Analysis
1.What is our compensation philosophy?
We design our compensation policies and programs to:
•attract and retain high-performing executive officers and employees;
•motivate and reward achievement of our annual and long-term goals in pursuit of our business strategies; and
•align executive officers and employees interests with shareholders through stock-based compensation and stock ownership requirements.
2.What are our compensation practices?
☑ We have a pay-for-performance culture. We determine our executives' compensation awards and payouts by our corporate and individual performance against financial and other goals aligned with our business strategies.
☑ We base most of our executives' incentive awards on the value of our common stock.
☑ We require our executives to continue in service over the course of years to receive long-term incentive payments.
☑ We require our executives to own stock at amounts determined by their management level; they may not sell most of the net shares we have paid them until they do so.
☑ We have a repayment policy that provides for clawback of executive incentive compensation overpayment when we have restated our financial statements due to wrongdoing.
☒ We do not provide incentives for our employees to take excessive risk; we use multi-year performance to determine long-term incentive payouts, and we have limits for payouts above maximum levels of returns.
☒ We do not allow employees to pledge, hedge, or borrow against our common stock.
☒ We do not provide defined benefit pension benefits or any supplemental executive retirement plan.
☒ We do not reprice or exchange underwater stock options, and may not do so without shareholder approval.
☒ We do not provide for any excise tax payment or tax gross-up for change-in-control related payments or provide tax gross-up for any perquisites or in-kind benefits.
☒ We do not offer our executives excessive perquisites.
3.What are the elements of our executives' compensation, and why?
•We use base salary as a fixed form of compensation, and determine it using scope of responsibilities, individual performance and experience, and competitive data. We consider competitive data, each executive’s performance, length of service in the position and experience in determining base salaries. We increased Mr. Hamalainen's salary rate by 10%, effective January 1, 2022. We did not increase any of the other named executive officers' salary rates at that time.
•We use our American Equity Investment Life Holding Company Amended and Restated Short-Term Incentive Plan (STIP) to motivate and reward performance relative to American Equity and individual goals during the performance year that contribute to our long-term strategic success. We pay STIP awards in cash.
•We use long-term incentives to reward executives for enduring success against key financial measures over time. We also use them to encourage executives to remain with us, as each vests only over the course of years. We pay most long-term incentives in shares of our common stock, which further directly aligns executives' interests with our shareholders.
•We use severance pay and related benefits to obtain a release of claims and smoother talent transitions.
•We use change-in-control benefits to retain key executives during potential corporate transactions and promote their focus on maximizing shareholder value during and after such a transaction.
•We provide executives with limited perquisites, principally in the form of transportation that maximizes their availability to provide services to us and to lead our business, or in the form of benefits to facilitate their relocation to our Des Moines, Iowa area headquarters.
•We use a broad-based 401(k) program to provide all of our eligible employees with an opportunity to save a portion of current compensation for retirement and other future needs and incent such savings with a company matching contribution. We also use a broad-based employee stock ownership plan (ESOP) to provide all of our eligible employees a stake in our common stock. All employees are eligible for health, dental, long-term disability, and life insurance in order to help them manage these risks for themselves and their families, and in order for us to compete for talent with other employers offering such benefits.
4.What mix of compensation elements do we use, and why?
We use a mix of compensation for executives in order to promote a balance of retention, reward, and alignment. We allocated the overwhelming majority of our compensation for active named executive officers related to 2021 performance and service to incentive compensation rather than fixed pay. See the Executive Compensation section of "American Equity At-a-Glance," incorporated by reference into this CD&A, for an illustration. The value of the overwhelming majority of 2022 long-term incentive opportunities are subject to achievement of performance goals. A like overwhelming majority of these opportunities are stock-based. See the Executive Compensation section of the "American Equity At-a-Glance," incorporated by reference into this CD&A, for an illustration. We do not determine our 401(k) or ESOP benefits in relation to any of these compensation elements. Nor does compensation we granted for prior periods generally influence our decisions on new grants.
5.What were our key executive compensation measures for 2021, and why?
We set 2021 goals for:
•annuity deposits because we emphasize the quality of new business originated. Our strategy emphasizes our fixed index annuity business, and this goal helped strengthen that focus;
•operating income per share, which excludes items that fluctuate unrelated to our core operational performance, such as the impact of fair value accounting for our fixed index annuity business that are not economic in nature but rather impact the timing of reported results, in order to emphasize profitable growth and to strengthen alignment with our shareholders (we also excluded index credits to reduce market-driven volatility unconnected from management decisions and efforts and notable items in order to better reflect our ongoing, underlying earnings potential, to provide an appropriate incentive for management actions and performance without factors that could exaggerate or reduce results for unrelated reasons, and to better align with investor expectations);
•investment spreads, which motivates senior leaders to manage the cost of money through rate setting on the one hand, and to manage book yield through investment activities on the other hand; and
•individual goals that allow us to incent management behaviors particular to each executive that contribute to our overall performance.
6.What was our performance in 2021 against key compensation measures, and how did it produce performance factors for 2021 performance-based compensation payouts?
•Our annuity deposits were $5.97 billion. We delivered operating income available to common stockholders, excluding index credits, of $2.62 billion and investment spread of $1.186 billion.
•We produced this strong performance by, among other things, increasing fixed income annuity sales, investment portfolio private assets, and reinsurance. See the Executive Compensation section of American Equity At-a-Glance, incorporated by reference into this CD&A, for more details on our 2021 performance. •The three financial metrics above accounted for 70% of each executive's STIP opportunity. The remaining 30% was based on personal objectives, as summarized below:
| | | | | | | | |
Executive Officer | Key Individual Performance Results | Resulting Individual Performance Factor |
Anant Bhalla | •Closed critical reinsurance transaction with Brookfield’s Cayman-based reinsurer with reserves split across in–force and new business. Set up captive insurance company in Vermont and closed reinsurance transaction with Hannover related to restructuring of legacy redundant reserve financing. •Demonstrated ability to operate and execute in multiple regulatory jurisdictions (Iowa, Vermont, Bermuda, Cayman). •In excess of $3.4 billion of 2021 sourced private assets on balance sheet, generated above maximum revenue goal while de-risking the portfolio in aggregate at the same time. •AEL CARES program implemented, providing a greater emphasis on donating to Diversity, Equity and Inclusion Initiatives. •Hired a new Chief Financial Officer and Chief Legal Officer and oversaw successful talent transitions for the Chief Investment Officer and Chief Risk Officer. | 200% of target |
Axel André | •Fast assimilation into the role and organization as a leader with fast transition from CEO / Interim-CFO. •Quickly assessed talent and made necessary talent decisions (e.g. Treasurer change, Chief Accounting Officer hire, Financial Planning & Analysis change). •Built out internal controls capability. | 133.3% of target |
James L. Hamalainen | •Launched three new competitive products that generated over $800 million in sales. •Executed a significant outsourcing project by taking on a $45 billion migration of assets from an internal team to Blackrock, in a seamless manner and putting more than $4 billion of cash to work with Blackrock. •In excess of $3.4 billion of 2021 sourced private assets on balance sheet, generated above maximum revenue goal while de-risking the portfolio in aggregate at the same time. | 183.3% of target |
Jeffrey D. Lorenzen | •$358M single family rental established with block trade + $1 billion Anchor loan block trade against a $500 million target. •Bermuda reinsurance entity fully executed and three capital efficient structured asset classes models developed and structure stress-tested. | 133.3% of target |
Ronald J. Grensteiner | •Focused on quality of sales. •Added 165 new Million Dollar Producers. | 100.0% of target |
•Because we exceeded our annual performance targets, and in light of their individual performance against their own goals, we made our Chief Executive Officer a STIP payout of 179% of his target, and we made payouts to our other active named executive officers of 149%-174% of their respective target amounts.
7.What compensation measures will we use for 2022-2024 long-term incentives, and why?
We set goals for 2022-2024 Performance Restricted Stock Units (Performance RSUs) for:
•observable increased fee revenue or capital release from reinsured liabilities, in order to ensure a focus on this key measure of growth of capital-light recurring fee-based revenues; and
•operating return on average equity (excluding all other comprehensive income and Statement of Financial Accounting Standards (FAS) 133), because our management team's effective use of investors' capital is critically important.
We selected reinsured liabilities to focus our executives on our critical strategy to grow capital-light recurring fee-based revenues. We selected return on equity to focus our executives on profitable and efficient growth and align them with shareholders' interests. We will weigh each metric at 50% of the total opportunity.
We make the same exclusions to produce operating income to calculate return on equity for the same reasons we do so for annual performance. We exclude all other comprehensive income and FAS 133 from stockholders' equity to reduce market-driven volatility unconnected from management decisions and efforts.
We set goals for 2022-2024 Deferred Long-Term Incentive Cash Plan awards for the return on 2022 private asset investments to encourage management to select private asset investments to produce strong medium- and long-term returns.
We expect to disclose our performance against these long-term compensation measures in our first CD&A following the end of the three-year performance period.
8.What is a holistic view of the Committee's compensation decisions related to 2021 performance?
We report this information on a basis different from the Summary Compensation Table, which shows information in the manner required of all companies by SEC rules.
The Compensation and Talent Management Committee valued each element of compensation for each executive, and considered those elements in relation to one another, in February 2022 as follows:
| | | | | | | | | | | | | | |
Name | Salary ($) | Short-Term Incentive ($) | Long-Term Incentive Opportunity ($) | Total Compensation ($) |
Anant Bhalla | 1,000,000 | | 2,684,702 | | 4,500,000 | | 8,184,702 | |
Axel André | 600,000 | | 530,515 | | 1,200,000 | | 2,330,515 | |
James L. Hamalainen | 550,000 | | 608,930 | | 990,000 | | 2,148,930 | |
Jeffrey D. Lorenzen | 508,000 | | 565,333 | | 635,000 | | 1,708,333 | |
Ronald J. Grensteiner | 500,000 | | 670,411 | | 625,000 | | 1,795,411 | |
We report the salary rate effective early 2022; we increased only Mr. Hamalainen's rate at that time. We report the STIP award for 2021 performance. We prorated Mr. André's award based on time in role in 2021. The long-term incentive amounts:
•are the committee's compensation value of long-term incentive opportunities, the dollar amount that the committee divided among initial value of shares under stock-based awards and initial deferred cash award.
•are unvested and may never be paid, and are subject to performance goals or stock value, or both.
•are not reflected in the Summary Compensation Table for 2021. Rather, the stock-based awards will appear at Grant Date Fair Value in the 2023 proxy statement (for those executives named in that document), and the deferred cash long-term incentives will appear after determined.
The total above is not calculated on the same basis as the "Total" column in the Summary Compensation Table.
9.What performance factors did we determine and apply for 2019-2021 performance-based long-term incentive compensation payouts?
•As we illustrate in American Equity At-a-Glance (incorporated in this CD&A by this reference), our overall performance was, in aggregate, above target. •Our performance for operating return on average equity was between threshold and target, and between target and maximum for average annual book value per share growth, for a total performance factor of 113.98%. (Target performance in both measures would have generated a performance factor of 100%, and at maximum would have generated 150%.) We excluded notable items from operating return on average equity; see the answer to question 5 above. We also excluded accumulated other comprehensive income (AOCI) from book value per share because it fluctuates unrelated to our core operational performance due to unrealized changes in the fair value of available-for-sale securities, in order to emphasize profitable growth and to strengthen alignment with our shareholders.
•As a result, Mr. Grensteiner and Mr. Lorenzen, each earned 113.98% of the shares in their award. As we hired Mr. Bhalla, Mr. André, and Mr. Hamalainen after 2019, we had not granted them any 2019-2021 Performance RSUs.
10.What sign-on and other one-off compensation do we pay, and why?
From time to time, we use sign-on payments and grants to attract the talent we need to reach our business goals. When we use cash payments, we require the executive to repay the full amount unless the executive remains with us for a prescribed term of at least one year. When we use grants of stock-based awards, we require the executive to remain with us for up to three years for the award to fully vest; in many cases, we use stock options, which have no value whatsoever unless our common stock price increases. In so doing, we create a retention incentive and align the executive's interests with those of shareholders.
Some of our executives received "Special Performance Vesting Stock Option Grants" in early 2021. For information on those grants, see our 2021 Proxy Statement.
11.What are our arrangements related to severance and change-in-control, and why?
We use severance pay and related benefits to obtain a release of claims and smoother talent transitions. Our severance plan applies only in the case of involuntary termination of employment, which encourages retention. It determines severance pay based on a fixed formula that takes account of the employee's salary rate and either management level or number of years of employment, which rewards lengthier service. Depending on whether the employee has served a sufficient portion of the performance year, severance may also include a pro rata portion of STIP opportunity.
We use change-in-control benefits to retain key executives during potential corporate transactions and promote their focus on maximizing shareholder value during and after such a transaction. Such severance is payable only in connection with the end of an executive's employment following a change in control. In no event is any executive's payment grossed-up on account of any excise or income taxes.
12.What are our stock ownership guidelines, and why?
In order to further align our executives' interests with those of our shareholders, we require them to own a meaningful stake in our common stock. Our Chief Executive Officer must own five (5) times base salary rate, and must retain at least 75% of net shares acquired from settlement of stock awards or stock option exercises until meeting that requirement. Other executives must own three (3) times base salary rate and retain at least 50% of such net shares in like circumstances. We include time-based RSUs (Time RSUs) and one-third of exercisable stock options among the forms of stock ownership, and measure it annually at year-end using the highest price within the past twelve (12) months.
As of April 12, 2022, our Chief Executive Officer's ownership, and each of our other active named executive officers' ownership, was above the required ownership level (except for Mr. André, who joined us in 2021).
13.What are our policies on hedging, pledging, and recoupment, and why?
We prohibit our executives from pledging, hedging, or similar arrangements for our common stock that lock in value without the full risks and rewards of stock ownership. We also prohibit them from buying our common stock on margin or borrowing against any account in which they own our common stock. In so doing, we aim to preserve the shareholder alignment from executive stock ownership.
Our incentive compensation repayment policy applies if we should restate our financial statements due to material non-compliance with any financial reporting requirements under the federal securities laws due to embezzlement, fraud, breach of fiduciary duty, misconduct or gross negligence, and if it includes the restatement of a material incentive performance measure or target. In such a case, we may recalculate any amount of incentive compensation of current or former employees who were executives at the time covered by the restatement, forfeit such unearned amounts, and require reimbursement of such paid amounts. This policy advances our pay for performance practices by clawing-back unearned incentive compensation.
14.What are our stock-based award timing practices?
We do not grant awards to current or new employees in anticipation of the release of non-public information about us or any other company.
We grant our executives annual stock-based awards in late February or early March. In doing so, we divide a compensation dollar value by the grant date closing price of our stock to determine the number of shares underlying the award and any stock option exercise price. We release our fourth quarter and full year financial results by mid-February, giving the market several days' time to digest this information before we make grants.
On the rare occasions when we grant awards in connection with hiring an executive, we do so coincident with the hiring.
15.What are our compensation risk management practices?
Each year, we analyze our compensation practices to ensure they do not provide incentives to take excessive risk. For 2022, we reviewed our corporate incentive compensation, including each of the compensation programs in which our executives participated and compensation specifically for employees who focus on sales origination. For each, we considered factors such as the performance measures, how payments are determined, the length of performance periods, and management controls designed to monitor and mitigate risks. As a result, we concluded that our compensation programs are not reasonably likely to have a materially adverse effect on us. We discussed our review and conclusions with our Compensation and Talent Management Committee.
16.How do we make our compensation decisions?
In preparation for each year's compensation decisions:
•Late in each year, our Chief Executive Officer proposes total STIP and long-term incentive opportunities for each executive for the following fiscal year to our Compensation and Talent Management Committee, based on budget, business conditions, and competitive compensation considerations. The committee, advised by our Chief Executive Officer, and its own independent consultant, considers the proposal and, if it agrees, approves it.
•Early each year, our Chief Executive Officer meets with our Chief Financial Officer and others to determine the corporate financial goals for that fiscal year and for the coming three-year period in light of our strategy and other factors, such as business conditions, regulatory conditions, and market conditions, and discusses those goals with our Board. Based on those goals, our Chief Financial Officer proposes the corporate financial goals applicable to each executive for STIP and long-term incentive opportunities for that fiscal year and three-year period to our Compensation and Talent Management Committee. The committee, advised by our Chief
Executive Officer, Chief Financial Officer, Chief Legal Officer, and its own independent consultant, considers the proposal and, after make any changes it determines, approves it.
•Our Chief Executive Officer prepares a draft of his or her own individual goals for that fiscal year in light of the executive's particular role, our strategy and other factors, such as business conditions, regulatory conditions, and market conditions. The Compensation and Talent Management Committee, advised by our Chief Human Resources Officer and its own independent consultant, considers the proposal and, after making any changes it determines, approves it.
•Our Chief Executive Officer also meets with each executive early in each year to set individual goals for that executive for that fiscal year in light of the executive's particular role, our strategy, and other factors such as business conditions, regulatory conditions, and market conditions. Our Chief Human Resources Officer advises our Chief Executive Officer and other executives as they determine these goals.
In order to make each year's compensation decisions:
•Following each year, our Chief Financial Officer presents our performance results against corporate financial goals for that fiscal year and for the three-year period just ended, and the performance factors produced under STIP and each long-term incentive program by those results. The committee, advised by our Chief Financial Officer and its own independent consultant, considers the performance factor results and, if it agrees they are accurate, approves them.
•Also following each year, our Chief Executive Officer reviews and rates the performance of each of our officers for the prior year, except for himself. Our Chief Human Resources Officer advises our Chief Executive Officer in this, except with respect to the performance of the Chief Human Resources Officer him or herself. Our Chief Executive Officer also meets with our Compensation and Talent Management Committee to discuss these ratings and the bases for them. The committee, advised by our Chief Executive Officer, the Chief Human Resources Officer (except with respect to his or her rating) and its own independent consultant, considers the ratings and, if it agrees, approves them. We use those individual ratings, as well as the corporate financial performance, to determine each executive's STIP award for that year.
•In addition, following each year, our Chief Executive Officer reviews his or her own performance and drafts a description of accomplishments. The Compensation and Talent Management Committee, advised by our Chief Human Resources Officer and its own independent consultant, considers the description and a performance rating our Chief Human Resources Officer proposes, and changes it or approves it as proposed. We use that individual rating, as well as the corporate financial performance, to determine the Chief Executive Officer's STIP award for that year.
Our Chief Human Resources Officer and the committee's independent consultant also discuss survey and benchmarking data related to executive compensation and other topics of interest from time to time. No executive has the authority to approve his or her own compensation or to grant STIP or long-term incentive awards to any executive officer.
17.What compensation market data do we review, and why?
•Our Compensation and Talent Management Committee reviews and considers external market data provided by its independent consultant. For 2021, the committee asked its independent consultant, Pearl Meyer, to conduct a study and provide advice and data with respect to compensation benchmarking and market practices for our executives. Pearl Meyer provided a new complete study and report in the fourth quarter of 2020 for use with all 2021 compensation decisions.
•To develop a blended market consensus on base salary, target total cash compensation and target total direct compensation for the position of each named executive officer, Pearl Meyer used data from thirteen publicly traded companies, with a focus on financial services and insurance companies, that it considers appropriate, and reviewed this list with the Compensation and Talent Management Committee. The thirteen companies it included were:
| | | | | | | | |
AllianceBernstein Holding L.P. | | Horace Mann Educators Corporation |
American Financial Group, Inc. | | Invesco Ltd. |
American National Group, Inc. | | Kemper Corporation |
Athene Holding Ltd. | | Primerica, Inc. |
Brighthouse Financial, Inc. | | Reinsurance Group of America, Incorporated |
CNO Financial Group, Inc. | | Voya Financial, Inc. |
Globe Life Inc. | | |
•Pearl Meyer also used a variety of surveys with industry specific pay data for companies of similar size that it considers appropriate, without direction from management.
•Our Compensation and Talent Management Committee anchored its pay positioning strategy at the 50th percentile of market consensus for base salary, target total cash compensation and target total direct compensation. For target total cash compensation and target total direct compensation, the committee set competitive ranges of 90-110% of the 50th percentile for base salary and 80%-120% of the 50th percentile for target total cash compensation and target total direct compensation. The competitive ranges allow for various levels of experience and tenure.
•The committee's strategy helps achieve pay and performance alignment with pay above the 50th percentile when performance goals are exceeded and below the 50th percentile when performance goals are not achieved.
•Our Compensation and Talent Management Committee reviews many factors in considering compensation decisions, this external market data being just one of them. The committee also considers factors such as company performance, individual executive performance, individual executive experience, internal pay equity, executive retention, and succession planning. Accordingly, the committee does not necessarily set every pay element or pay level for each executive at the targeted market level.
18.What were our on say-on-pay results, and how did we consider them?
At our 2021 annual shareholder meeting, our shareholders approved the compensation of the named executive officers we disclosed in our 2021 Proxy Statement by an affirmative vote of 96.9% of the votes cast. The vote was advisory and non-binding. However, our Compensation and Talent Management Committee discussed and considered the vote in connection with its annual compensation decisions.
Summary Compensation Table
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Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) |
Anant Bhalla Chief Executive Officer & President, and former interim Chief Financial Officer | 2021 | 1,000,000 | | — | | 2,267,068 | | 1,596,052 | | 2,684,702 | | 78,004 | | 7,625,826 | |
2020 | 795,512 | | 1,107,681 | | 2,854,608 | | 2,914,434 | | 1,716,537 | | 28,388 | | 9,417,160 | |
Axel André Chief Financial Officer | 2021 | 191,527 | | 200,000 | | — | | 400,000 | | 530,515 | | 9,649 | | 1,331,692 | |
Jeffrey D. Lorenzen Executive Vice President & Chief Risk Officer | 2021 | 508,000 | | — | | 569,600 | | 324,035 | | 565,333 | | 12,972 | | 1,979,941 | |
2020 | 508,000 | | — | | 753,698 | | 489,950 | | 464,304 | | 22,678 | | 2,238,630 | |
2019 | 493,000 | | — | | 682,881 | | — | | 575,947 | | 13,012 | | 1,764,840 | |
Ronald J. Grensteiner President, American Equity Investment Life Insurance Company | 2021 | 500,000 | | — | | 485,901 | | 296,130 | | 670,411 | | 13,521 | | 1,965,964 | |
2019 | 566,000 | | — | | 781,448 | | — | | 661,229 | | 13,855 | | 2,022,532 | |
James L. Hamalainen Executive Vice President, Chief Investments Officer & Chief Client Solutions Officer | 2021 | 500,000 | | — | | 560,980 | | 181,247 | | 608,930 | | 11,887 | | 1,863,044 | |
2020 | 242,939 | | 107,412 | | 480,081 | | 1,224,896 | | 497,096 | | 12,562 | | 2,564,986 | |
Ted M. Johnson Former Chief Financial Officer | 2021 | 311,864 | | — | | 639,987 | | 207,711 | | — | | 9,937 | | 1,169,498 | |
2020 | 573,000 | | — | | 847,924 | | 489,953 | | 536,247 | | 15,383 | | 2,462,507 | |
2019 | 556,000 | | — | | 767,960 | | — | | 649,546 | | 13,772 | | 1,987,278 | |
Tolga Uzuner Former Chief Investment Officer | 2021 | 319,070 | | — | | 721,880 | | 1,380,626 | | — | | 537,748 | | 2,959,324 | |
See the consolidated explanatory text following the Grants of Plan-Based Awards table.
Grants of Plan-Based Awards in 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or base price of option awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) |
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) |
Anant Bhalla | 2/25/2021 | — | | — | | — | | | — | | — | | — | | 27,372 | | — | | — | | 749,993 | |
2/25/2021 | — | | — | | — | | | 27,373 | | 54,745 | | 109,490 | | — | | — | | — | | 1,500,013 | |
| 1/4/2021 | — | | — | | — | | | — | | 43,724 | | — | | — | | — | | 26.72 | | 418,439 | |
| 1/4/2021 | — | | — | | — | | | — | | 43,723 | | — | | — | | — | | 26.72 | | 427,611 | |
| 2/25/2021 | — | | — | | — | | | — | | — | | — | | — | | 96,246 | | 27.40 | | 750,003 | |
| 6/30/2021 | — | | — | | — | | | — | | — | | — | | 528 | | — | | — | | 17,062 | |
| 1/1/2021 | 750,000 | | 1,500,000 | | 3,000,000 | | | — | | — | | — | | — | | — | | — | | — | |
Axel André | 9/7/2021 | — | | — | | — | | | — | | — | | — | | — | | 43,909 | | 32.35 | | 400,000 | |
| 9/7/2021 | 166,849 | | 333,699 | | 667,397 | | | — | | — | | — | | — | | — | | — | | — | |
Jeffrey D. Lorenzen | 2/25/2021 | — | | — | | — | | | — | | — | | — | | 6,721 | | — | | — | | 184,155 | |
2/25/2021 | — | | — | | — | | | 6,721 | | 13,442 | | 26,884 | | — | | — | | — | | 368,311 | |
| 6/2/2021 | — | | — | | — | | | — | | 5,650 | | — | | — | | — | | 31.63 | | 68,930 | |
| 6/2/2021 | — | | — | | — | | | — | | 5,649 | | — | | — | | — | | 31.63 | | 70,951 | |
| 2/25/2021 | — | | — | | — | | | — | | — | | — | | — | | 23,632 | | 27.40 | | 184,154 | |
| 6/30/2021 | — | | — | | — | | | — | | — | | — | | 462 | | — | | — | | 14,944 | |
| 12/31/2021 | — | | — | | — | | | — | | — | | — | | 56 | | — | | — | | 2,191 | |
| 1/1/2021 | 177,800 | | 355,600 | | 711,200 | | | — | | — | | — | | — | | — | | — | | — | |
Ronald J. Grensteiner | 2/25/2021 | — | | — | | — | | | — | | — | | — | | 5,703 | | — | | — | | 156,262 | |
2/25/2021 | — | | — | | — | | | 5,703 | | 11,405 | | 22,810 | | — | | — | | — | | 312,497 | |
| 6/2/2021 | — | | — | | — | | | — | | 5,650 | | — | | — | | — | | 31.63 | | 68,930 | |
| 6/2/2021 | — | | — | | — | | | — | | 5,649 | | — | | — | | — | | 31.63 | | 70,951 | |
| 2/25/2021 | — | | — | | — | | | — | | — | | — | | — | | 20,051 | | 27.40 | | 156,249 | |
| 6/30/2021 | — | | — | | — | | | — | | — | | — | | 455 | | — | | — | | 14,709 | |
| 12/31/2021 | — | | — | | — | | | — | | — | | — | | 63 | | — | | — | | 2,434 | |
| 1/1/2021 | 225,000 | | 450,000 | | 900,000 | | | — | | — | | — | | — | | — | | — | | — | |
James L. Hamalainen | 2/25/2021 | — | | — | | — | | | — | | — | | — | | 6,615 | | — | | — | | 181,251 | |
2/25/2021 | — | | — | | — | | | 6,615 | | 13,230 | | 26,460 | | — | | — | | — | | 362,502 | |
| 2/25/2021 | — | | — | | — | | | — | | — | | — | | — | | 23,259 | | 27.40 | | 181,247 | |
| 6/30/2021 | — | | — | | — | | | — | | — | | — | | 379 | | — | | — | | 12,257 | |
| 12/31/2021 | — | | — | | — | | | — | | — | | — | | 128 | | — | | — | | 4,970 | |
| 1/1/2021 | 175,000 | | 350,000 | | 700,000 | | | — | | — | | — | | — | | — | | — | | — | |
Ted M. Johnson | 2/25/2021 | — | | — | | — | | | — | | — | | — | | 7,581 | | — | | — | | 207,719 | |
2/25/2021 | — | | — | | — | | | 7,581 | | 15,161 | | 30,322 | | — | | — | | — | | 415,411 | |
| 2/25/2021 | — | | — | | — | | | — | | — | | — | | — | | 26,655 | | 27.40 | | 207,711 | |
| 6/30/2021 | — | | — | | — | | | — | | — | | — | | 522 | | — | | — | | 16,856 | |
| 1/1/2021 | 200,550 | | 401,100 | | 802,200 | | | — | | — | | — | | — | | — | | — | | — | |
Tolga Uzuner | 2/25/2021 | — | | — | | — | | | — | | — | | — | | 8,782 | | — | | — | | 240,627 | |
2/25/2021 | — | | — | | — | | | 8,782 | | 17,564 | | 35,128 | | — | | — | | — | | 481,254 | |
| 1/15/2021 | — | | — | | — | | | — | | 50,000 | | — | | — | | — | | 30.50 | | 562,500 | |
| 1/15/2021 | — | | — | | — | | | — | | 50,000 | | — | | — | | — | | 30.50 | | 577,500 | |
| 2/25/2021 | — | | — | | — | | | — | | — | | — | | — | | 30,879 | | 27.40 | | 240,626 | |
| 1/11/2021 | 220,000 | | 440,000 | | 880,000 | | | — | | — | | — | | — | | — | | — | | — | |
See the consolidated explanatory text following this table.
Understanding the Summary Compensation Table and
Grants of Plan-Based Awards Table
As SEC rules require, we have reported in the Summary Compensation Table a number of 2021 elements that the executives have not earned and may never be paid to them. Some or all of the Performance RSUs, Time RSUs, and stock options may never become payable or may ultimately have a value that differs substantially from what is reported here. The same is the case, in whole or in part, for awards reported for 2020 and 2019.
In the text below, we refer to the Summary Compensation Table above as the Summary Table and Grants of Plan-Based Awards in 2021 table as the Grants Table. We have reported in the Summary Table information for each executive for each of the past three year(s) each was a named executive officer in the proxy statement immediately following that year. We have reported 2021 information in the Grants Table for each executive named in this proxy statement.
Salary
We have reported the amount of base salary each executive earned in each year indicated in the Summary Table.
Bonus
We have reported Mr. André's cash sign-on payment for 2021 in the Summary Table. Mr. André must repay this amount if he voluntarily leaves us before his first anniversary. See our earlier proxy statements for information on "Bonus" amounts reported in the Summary Table for earlier years.
Non-Equity Incentives
We have reported each executive's STIP threshold, target, and maximum potential awards for 2021 in the Grants Table. The Summary Table shows each executive's actual resulting 2021 STIP award. See our earlier proxy statements for non-equity incentive information we have reported in the Summary Table for earlier years.
Stock Awards
We have reported the aggregate Grant Date Fair Value of all stock awards granted to each executive in each year indicated in the Summary Table. See our earlier proxy statements for more information on Stock Awards we have reported in the Summary Table for earlier years.
We have included the following Stock Awards for each executive on the Summary Table:
•Performance RSUs at a 2021 Grant Date Fair Value of $27.40 per share using target performance. The February 25, 2021 rows of the Estimated Future Payouts Under Equity Incentive Plan Awards columns of the Grants Table show the threshold, target, and maximum potential number of shares the executive may earn, depending on our three-year performance against established performance goals. Executives holding Performance RSUs accrue cash-payable dividend equivalents, payable if and when the award vests. We granted Performance RSUs under the American Equity Investment Life Holding Company Amended and Restated Equity Incentive Plan (the Equity Plan).
•Time RSUs at a Grant Date Fair Value of $27.40 per share. We have reported the number of shares in these awards in the February 25, 2021 rows of the Grants Table All Other Stock Awards column. All Time RSUs vest in full on the third anniversary of their grant date. Executives holding Time RSUs accrue cash-payable dividend equivalents, payable if and when the award vests. We granted Performance RSUs under the Equity Plan.
•ESOP shares at Grant Date Fair Value of $32.32 per share for awards in the June 30, 2021 rows, and $38.92 per share for awards in the December 31, 2021 rows, the closing prices of a share of our common stock on the dates in 2021 the shares were deposited into that plan for each executive.
To the extent the Grant Date Fair Value of any of these awards is based on assumptions, see Note 13 to the Consolidated Financial Statements in our 2021 10-K for more information.
Option Awards
We have reported the Grant Date Fair Value of each stock option granted to each executive in each year indicated in the Summary Table. The Grants Table also shows the exercise price of each stock option we granted in 2021, which in each case was the closing price of a share of our common stock on the grant date. We granted all 2021 stock options under the Equity Plan. See our earlier proxy statements for more information on Option Awards we have reported in the Summary Table for earlier years.
We have included the following Option Awards for each executive on the Summary Table:
•Special Performance Vesting Stock Options at a Grant Date Fair Value per option indicated in the January 4 ($9.57 and $9.78), January 15 ($11.25 and $11.55), and June 2 ($12.20 and $12.56) rows of the Estimated Future Payouts Under Equity Incentive Plan Awards columns of the Grants Table, which show the number of stock options the executive may be able to exercise if we meet the performance conditions. For information on those grants, see our 2021 proxy statement. We granted these stock options under the Equity Plan.
•Time-Based Stock Options at a Grant Date Fair Value per option indicated in the February 25 ($7.79) and September 7 ($9.11) rows of the All Other Option Awards column of the Grants Table, which show the number of stock options the executive may be able to exercise. All Time-Based Stock Options vest in thirds on the first three anniversaries of their grant date. We granted Performance RSUs under the Equity Plan.
For information on the assumptions on which the Grant Date Fair Value of these stock options are based, see Note 13 to the Consolidated Financial Statements in our 2021 10-K.
All Other Compensation
We have reported the following 2021 All Other Compensation for each executive, as applicable:
•employer matching contributions of up to $11,600 to each executive's 401(k) plan accounts;
•holiday gift payments of up to $2,000 we gave each of our employees based on length of service with us, including amounts for each employee to produce a targeted amount net of taxes;
•severance pay of approximately $410,000 to Mr. Uzuner in exchange for a final separation agreement, in accordance with our severance plan;
•a cash relocation allowance of approximately $33,000 to Mr. Uzuner; and
•perquisites and personal benefits for each executive for whom the company's aggregate incremental cost for all such items exceeded $10,000 in 2021 in accordance with SEC rules, including:
◦limited personal air travel on a plane we lease, which we provide to executives in order to promote availability to colleagues and external business contacts and other business use of travel time during the trip, as well as conservation of travel time;
◦personal commercial air travel, primarily for an executive hired from outside the U.S. who retained a foreign residence and family, in order to attract the executive and facilitate working for us until relocation to U.S. could have been arranged (at a cost of $83,928 for Mr. Uzuner; Mr. Uzuner's other perquisites and personal benefits cost approximately $500);
◦relocation services in order to facilitate executives moving themselves and their families to the Des Moines area (at a cost of $57,363 for Mr. Bhalla; Mr. Bhalla's other perquisites and personal benefits cost approximately $8,700), and
◦no reportable perquisites for Mr. André, Mr. Lorenzen, Mr. Grensteiner, Mr. Hamalainen, and Mr. Johnson.
Outstanding Equity Awards at Year-End 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | | Stock awards |
Name | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
Anant Bhalla | 50,000 | | 26.70 | 01/27/2030 | | | | | |
| | 122,025 | 27.05 | 11/19/2030 | | | | | |
| | 122,025 | 27.05 | 11/19/2030 | | | | | |
| | 43,724 | 26.72 | 01/04/2031 | | | | | |
| | 43,723 | 26.72 | 01/04/2031 | | | | | |
| 96,246 | | 27.40 | 02/25/2031 | | | | | |
| | | | | | 54,179 | 2,108,647 | | |
| | | | | | | | 214,154 | 8,334,874 |
Axel André | 43,909 | | 32.35 | 09/07/2031 | | | | | |
Jeffrey D. Lorenzen | 23,632 | | 27.40 | 02/25/2031 | | | | | |
| | 24,783 | | 27.05 | 11/19/2030 | | | | | |
| | 24,782 | | 27.05 | 11/19/2030 | | | | | |
| | 5,650 | | 31.63 | 06/02/2031 | | | | | |
| | 5,649 | | 31.63 | 06/02/2031 | | | | | |
| | | | | | 16,424 | 639,222 | | |
| | | | | | | | 85,101 | 3,312,111 |
Ronald J. Grensteiner | 20,051 | | 27.40 | 02/25/2031 | | | | | |
| | 5,650 | | 31.63 | 06/02/2031 | | | | | |
| | 5,649 | | 31.63 | 06/02/2031 | | | | | |
| | | | | | 16,374 | 637,276 | | |
| | | | | | | | 86,841 | 3,379,832 |
James L. Hamalainen | 36,249 | | 21.98 | 07/07/2030 | | | | | |
| 23,259 | | 27.40 | 02/25/2031 | | | | | |
| | 49,565 | 27.05 | 11/19/2030 | | | | | |
| | 49,564 | 27.05 | 11/19/2030 | | | | | |
| | | | | | 17,535 | 682,462 | | |
| | | | | | | | 42,840 | | 1,667,333 | |
Tolga Uzuner | | 50,000 | | 30.50 | 11/15/2031 | | | | | |
| | 50,000 | | 30.50 | 11/15/2031 | | | | | |
Option Awards
None of these stock options was exercisable as of December 31, 2021. In each case, the stock option's expiration date is the tenth anniversary of its grant date and its exercise price is the closing price of a share of our common stock on the grant date. Except as otherwise provided below, each executive must maintain continued service in order to attain and retain the right to exercise each option, unless we agree otherwise.
The stock options in the "Equity Incentive Plan Awards" column are "Special Performance Vesting Stock Option Grants" in 2020 or early 2021. For information on those grants, see our 2021 proxy statement. As of December 31, 2021, we had not yet met the performance conditions for executives to exercise those stock options. We subsequently met the performance condition in early 2022. Awardholders forfeit these options upon end of employment, unless the termination is (i) due to death, Disability (as defined in the Equity Plan), Retirement (as defined in that plan), or a termination we initiate other than for Cause (as defined in that plan), or (ii) we offer the awardholder a separation agreement that becomes final.
The right to exercise the other stock options is scheduled to vest on the following schedule:
| | | | | |
Expiration Date | Vesting Schedule |
January 27, 2030 | 100% on fifth anniversary of grant date |
September 7, 2031 | 1/3 on each of the first three anniversaries of grant date |
February 25, 2031 | 1/3 on each of the first three anniversaries of grant date |
July 7, 2030 | 100% on third anniversary of grant date |
Stock Awards
None of these awards were vested or paid as of December 31, 2021, and remained subject to continued service (in some cases through a 2024 date), unless we agree otherwise. In each case, the hypothetical market value of the unvested awards is based on the closing price of a share of our common stock on December 31, 2021.
Each of these awards accrued dividend equivalents in 2021 payable in cash if and when the award vests:
| | | | | |
Executive | 2021 Accrued Dividend Equivalent ($) |
Anant Bhalla | 96,270 | |
Jeffrey D. Lorenzen | 48,250 | |
Ronald J. Grensteiner | 51,672 | |
James L. Hamalainen | 21,882 | |
The awards in the "Equity Incentive Plan Awards" column are Performance RSUs granted in one or more of 2019, 2020, and 2021, depending on the executive and when he began employment with us. Each is scheduled to vest at the end of a three-year performance period beginning in the year of grant, subject to continued service and our Compensation and Talent Management Committee's determination of our performance against set goals for the period. Each is reported assuming the maximum performance factor will apply.
The other awards are Time RSUs granted in one more of 2019, 2020, and 2021, depending on the executive and when he began employment with us. Each is scheduled to vest, subject to continued service, in thirds on the first three anniversaries of grant date.
Option Exercises and Stock Vested in 2021
| | | | | | | | | | | |
| | Stock Awards |
Name | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Anant Bhalla | | 9,364 | | 274,084 | |
Jeffrey D. Lorenzen | | 19,116 | | 528,175 | |
Ronald J. Grensteiner | | 21,963 | | 606,838 | |
Ted M. Johnson | | 21,557 | | 595,620 | |
We have reported the "Value Realized on Vesting" at the number of shares of our common stock that vested for each executive in 2021 multiplied by the closing price per share on the vesting date (or, if the vesting date was not a business day, the immediately prior business day). No stock awards vested for Mr. André, Mr. Hamalainen, or Mr. Uzuner in 2021.
None of the named executive officers exercised any stock options during 2021.
Nonqualified Deferred Compensation in 2021
| | | | | | | | | | | |
Name | Plan Name | Aggregate Earnings in Last FY ($) | Aggregate Balance at Last FYE ($) |
Ronald J. Grensteiner | American Equity Marketing Officers Deferred Compensation Agreement | 50,670 | | 175,140 | |
Under a 1998 agreement, Mr. Grensteiner has a stock-payable deferred bonus. The "aggregate earnings" in 2021 are the change in the market price of our common stock during the year of the 4,500 shares payable (the result of a 3-for-1 stock split since the date of the agreement). The shares are payable upon the end of Mr. Grensteiner's employment.
Consistent with SEC rules, none of the earnings or aggregate balance have appeared in our previous Summary Compensation Tables.
Potential Payments Upon Termination or Change in Control
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Severance Benefits | | Change in Control Severance Benefits |
Name | Salary-Based ($) | STIP-Based ($) | COBRA Subsidy ($) | Out-placement ($) | | Salary-Based ($) | STIP-Based ($) | Stock Options ($) | RSUs ($) | Group Benefits ($) |
Anant Bhalla | 1,000,000 | 1,500,000 | 15,000 | 30,000 | | 3,000,000 | 4,500,000 | 5,683,481 | 10,443,521 | 60,234 |
Axel André | 600,000 | 1,050,000 | 15,000 | 30,000 | | 1,200,000 | 2,100,000 | 288,482 | — | 10,087 |
Jeffrey D. Lorenzen | 508,000 | 355,600 | 15,000 | 30,000 | | 1,524,000 | 1,066,800 | 942,947 | 3,951,333 | 51,598 |
Ronald J. Grensteiner | 500,000 | 450,000 | 15,000 | 30,000 | | 1,500,000 | 1,350,000 | 313,357 | 4,017,108 | 60,234 |
James L. Hamalainen | 550,000 | 825,000 | 15,000 | 30,000 | | 1,100,000 | 1,650,000 | 2,058,663 | 2,349,795 | 35,837 |
Severance Benefits
The left side of table above shows the Severance Benefits each active named executive officer would have received if we had involuntarily terminated his employment with eligibility on December 31, 2021 and any required separation agreement had become final. In light of the hypothetical completion of 2021 performance, we assume we would have paid 2021 STIP in the normal course and do not include any such amounts in the table above. All payments would have been made net of tax withholding; none of the named executive officers is entitled to a tax gross-up.
Under the terms of his offer letter, Mr. Bhalla is eligible for severance if he is terminated other than for Cause, death or disability. "Cause" generally includes (i) willful and continued failure to substantially perform Mr. Bhalla's duties (other than due to incapacity due to physical or mental illness); (ii) conviction of, or entering of a guilty plea or a plea of no contest to, a felony; (iii) willful engagement in illegal conduct or gross misconduct; or (iv) material failure to comply with the Company’s policies or rules, or any agreement between the Company and Mr. Bhalla. Mr. Bhalla is not eligible for such severance benefits if he fails to sign a general release and waiver of claims as part of a termination agreement that contains standard provisions including a non-disparagement provision and/or if he does not allow the release and waiver to become fully effective. The severance payable under Mr. Bhalla’s offer letter would have equaled (a) twenty-four (24) months of salary and (b) 2021 STIP target opportunity.
Each of the other named executive officers are eligible for severance under our American Equity Transition Benefit Plan (the Transition Plan) if we determined that we had involuntarily terminated the executive due to job elimination, job modification, or poor fit. The Severance Benefits would have been equal to 52 weeks of salary, plus the executive's COBRA benefits continuation contribution rate for the first 12 months after termination of employment, plus outplace assistance at our cost of no more than $30,000.
Change in Control Severance Benefits
The right side of the table above shows the Change in Control Severance Benefits each active named executive officer would have received if we had suffered a change in control on December 31, 2021 and each named executive officer had ended employment with severance eligibility on that date.
We entered into change in control agreements with a small group of senior executives, including each of the active named executive officers. Each is filed as an exhibit to our 2021 10-K. Under these agreements, we would have provided payments and benefits upon end of employment under certain circumstances following a change in control. Such circumstance would have included discharge without Cause or voluntary resignation by the executive for Good Reason. Active named executive officers who had received Change in Control Severance would not receive severance under the Transition Plan.
Under the agreements:
•a "change in control" includes certain concentrations of our ownership, certain changes in a majority of our Board members, certain mergers with another entity, and certain sales of substantially all of our assets.
•"Cause" generally includes (i) the executive’s willful and continued failure to substantially perform the executive’s duties (other than a failure resulting from the executive’s incapacity due to physical or mental illness), after a written demand for substantial performance from the Board of Directors; (ii) the final conviction of the executive of, or an entering of a guilty plea or a plea of no contest by the executive to, a felony; or (iii) the
willful engaging by the executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.
•"Good Reason" generally means any of the following without the executive’s consent and subject to certain notice and cure periods: (i) subject to certain exceptions, the assignment to the executive of any duties inconsistent with the executive’s position, including any change in status, authority, duties or responsibilities or any other action that results in a material diminution in such status, authority, duties or responsibilities; (ii) a reduction in the executive’s base salary; (iii) the relocation of the executive’s office to a location more than 50 miles from West Des Moines, Iowa; (iv) unless a plan providing a substantially similar compensation or benefit is substituted, (a) the Company’s failure to continue in effect any fringe benefit or compensation plan, retirement plan, life insurance plan, health and accident plan or disability plan in which the executive is participating prior to the change in control which adversely affects the executive’s total compensation in a material manner, or (b) the Company’s action that adversely affects the executive’s participation in or materially reduces or deprives him of his benefits under, such plans; or (v) the Company’s failure to obtain the assumption of the change in control agreement in writing by a successor.
During the term of the agreement and the period in which the executive would have been entitled to receive salary-based payments, the executive would have been prohibited from (i) soliciting or enticing any other employee to leave us or our affiliates to go to work for any competitor, or (ii) requesting or advising a customer or client of ours or our affiliates to curtail or cancel its business relationship with us or our affiliates.
Change in Control Severance Benefits would have included:
•salary payments equal to three years (or two years, for Mr. André and Mr. Hamalainen);
•a cash lump sum equal to three times (or two times, for Mr. André and Mr. Hamalainen) the executive’s target STIP award;
•automatic vesting of unvested stock options (we reported these at year-end 2021 closing stock price less option exercise price), unvested shares of Time RSUs and Performance RSUs at target performance levels (we report these at year-end 2021 closing stock price); and
•continuation of health, dental and life insurance benefits during the salary continuation period, which we report at our estimated cost.
All payments would have been made net of tax withholding; none of the named executive officers is entitled to a tax gross-up. If an executive's payments and benefits would have been an "excess parachute payment" for purposes of Section 280G of the Code, we would have reduced Change in Control Severance Benefits to the highest amount that could be paid without triggering Section 280G of the Code or, if greater, receive the after-tax amount of the payment taking into account the excise tax imposed under Section 4999 of the Code and any applicable federal, state and local taxes. None of the amounts above includes the impact of any such reduction.
Mr. Johnson
We entered into a separation agreement with our former Chief Financial Officer, Ted M. Johnson in 2021. Under the agreement, Mr. Johnson separated from employment effective July 16, 2021 and released employment-related claims. The agreement includes various other provisions beneficial to us, including: (i) 18-month non-solicitation of our employees, contractors, and others; (ii) 18-month non-compete, limited to specified firms; (iii) cooperation on our matters; (iv) non-disparagement of us and our associates (we also agreed to inform our officers and directors not to disparage Mr. Johnson); (v) maintaining confidentiality; and (vi) no assistance to a third party in a dispute with us, except as required by law or pursued by a regulator. Mr. Johnson did not meet his obligations under the agreement, which resulted in non-payment of the benefits of his agreement.
Mr. Uzuner
We entered into a separation agreement with our former Chief Investment Officer, Asset Management, Tolga Uzuner, under the Transition Plan in 2021. We offered and paid Mr. Uzuner benefits as determined under the Transition Plan and his Special Performance Vesting Stock Options.
CEO Pay Ratio
SEC rules require that we disclose the ratio of the total compensation of our Chief Executive Officer to that of the median employee. We and other companies use reasonable estimates, assumptions, and methods consistent with SEC rules to prepare information that we believe best fits our circumstances, rather than a rigid, uniform approach. As a result, we believe that comparisons between this information and other companies' disclosure will not necessarily be useful.
Since we added a significant number of employees in 2021, our median employee is different from whom we used to calculate our pay ratio for 2020. To identify our median employee, we identified everyone we consider an employee under relevant U.S. tax rules during 2021, which covered approximately 930 entirely U.S.-based employees. We totaled each employee's salary earnings in 2021 and cash incentives paid during 2021, and annualized for employees who served for only part of 2021. We did not make any cost-of-living adjustments or account for any regional pay differences.
We calculated our median employee’s total compensation under the SEC rules required for our Chief Executive Officer on the Summary Compensation Table. We then added $18,073, our cost for company-provided group medical insurance for our Chief Executive Officer, and $17,124 on the same basis for our median employee. Using this methodology, our median employee’s total compensation for 2021 was $104,681 and our Chief Executive Officer’s 2021 total compensation was $7,643,899. The resulting ratio of our Chief Executive Officer’s total compensation to the median employee total compensation was approximately 73:1.
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Additional Information
2022 Shareholder Meeting Information
Accessing Proxy Materials
We are mailing a hard copy Notice of Internet Availability of Proxy Materials (the Notice) to our shareholders on or about April 28, 2022. We are making this proxy statement and our Annual Report to Shareholders available on the Internet instead of mailing a printed copy to each shareholder. The Notice includes instructions to access and review all of the information contained in these documents on the Internet, as well as how to submit a proxy on the Internet.
To request a printed copy of our proxy materials, follow the Notice instructions. Shareholders may request to receive either hard copy proxy materials or electronically by email, and either choice will remain in effect until the shareholder terminates it. Choosing to receive proxy materials by email will save paper, printing costs, and mailing costs, and will conserve resources.
Voting
Only shareholders as of the close of business on the record date, April 12, 2022, will be entitled to vote at the 2022 Annual Shareholder Meeting.
If you vote by proxy, the individuals named on the proxy card will vote your shares in the manner you indicate.
If you are a registered shareholder (that is, you own shares in your own name and not through a bank, broker, or another record holder), you may vote without attending the meeting in person by telephone, through the Internet, or by completing a paper proxy card and returning it by mail. Please see the Notice of Annual Meeting in this document or your proxy card for instructions on how to access the telephone and Internet voting systems.
If you hold your shares in "street name" through a bank, broker, or other record holder, including through our ESOP, your record holder will advise you how you can vote without attending the meeting in person.
You may revoke your proxy at any time prior to the close of voting at the Annual Shareholder Meeting, either in person at the Annual Shareholder Meeting, by writing delivered to our Corporate Secretary, by telephone, or through the Internet, by withdrawing your proxy or granting a proxy bearing a later date.
If you return the proxy card without indicating your instructions on how to vote your shares, the proxies will vote your shares as follows:
•FOR the election of the three director nominees;
•FOR the ratification of the appointment of EY as our independent registered public accounting firm for 2022; and
•FOR the approval of the compensation of our named executive officers as disclosed in this proxy statement.
If any other matter is presented at the Annual Shareholder Meeting, your proxies will vote in accordance with their best judgment. At the time this proxy statement was printed, we knew of no other matters to be addressed at the Annual Shareholder Meeting.
If you attend the Annual Shareholder Meeting in person, you may either vote by proxy in advance as described above or you may vote in person at the Annual Shareholder Meeting.
We encourage you to vote by telephone or through the internet using the instructions in the Notice of Internet Availability of Proxy Materials and on your proxy card.
Attending the Annual Shareholder Meeting in Person
Shareholders may attend the Annual Shareholder Meeting in person. If you or your proxy plan to attend the Annual Shareholder Meeting in person and your share ownership is registered in your own name (i.e., you are a "record holder"), you may indicate your plans to do so when you submit your proxy in advance. We maintain a list of record holders entitled to be present and vote at the Annual Shareholder Meeting, which will be available for inspection by record holders at our principal executive offices beginning approximately two days after we provide notice of that meeting and at the Annual Shareholder Meeting. If you plan to attend the meeting, please bring proof of identity; feel free to also bring documentation of your ownership, e.g., printout of Computershare records, in case need arises.
If you plan to attend in person and you hold your shares in "street name" through a bank, broker, or other record holder, including through our ESOP, contact the bank, broker or other record holder in whose name your shares are registered to obtain a broker’s proxy card and bring it with you to the Annual Shareholder Meeting.
Householding
The SEC permits companies and intermediaries, such as a brokerage firm or a bank, to satisfy the delivery requirements for Notices and proxy materials with respect to two or more shareholders sharing the same address by delivering only one Notice or set of proxy materials to that address. This "householding" saves paper, printing costs, and mailing costs, and conserves resources. Certain of our shareholders whose shares are held in street name and who have consented to householding will receive only one Notice or set of proxy materials per household.
If you would like to receive a separate set of proxy materials now or in the future, or if your household is currently receiving multiple copies of the same items and you would like to receive only a single copy at your address in the future, please contact Investor Relations, at 6000 Westown Parkway, West Des Moines, Iowa 50266 (1-888-221-1234, ext. 3602) and indicate your name, the name of each of your brokerage firms or banks where your shares are held, and your account numbers.
Quorum and Votes Required
We will have a quorum at our Annual Shareholder Meeting if a majority of the shares issued and outstanding and entitled to cast votes on at least one matter at the meeting is present in person or by proxy. Shares whose vote is abstained, withheld for any director, and broker non-votes, will count for quorum purposes. We have appointed Alliance Advisors, L.L.C. inspector of the election. Our by-laws provide for confidential voting. In accordance with our articles of incorporation, stockholders do not have the right to cumulate their votes for the election of directors.
If you hold shares in the name of a bank, broker or another record holder, your record holder will provide instructions on how to vote your shares. Your record holder may exercise discretion to vote your shares on Proposal 2, a "routine matter," even if you provide no instructions. Proposals 1 and 3 are not "routine matters;" record holders may not vote your shares on these matters unless you give them voting instructions.
Assuming a quorum is present, directors will be elected (Proposal 1) by a plurality of the votes cast by the shares entitled to vote, and each of the other proposals will be approved if the votes cast in favor exceed the votes cast opposing. In each case, any abstentions and broker non-votes will have no effect on the outcome.
We expect to announce preliminary voting results at the Annual Shareholder Meeting and publish preliminary or final voting results in a Form 8-K within four business days following the meeting. If only preliminary voting results are available for reporting in the Form 8-K, the Company will amend the Form 8-K to report final voting results within four business days after the final voting results are known.
Supplementary Information
Shares Outstanding
We have a single class of voting common stock, $1 par value per share, of which 94,316,132 shares were outstanding at close of business on the record date, and therefore entitled to vote at the Annual Shareholder Meeting. Each share is entitled to one vote.