Compensation Discussion & Analysis ◾ Executive Summary
Executive Summary
Response to COVID-19 Pandemic and 2020 Performance Overview
As a company that has been in business for more than 115 years, we recognize that a focus on long-term value creation and purpose is what will keep us in the business of
servicing our customers, employees, communities and shareholders for the next century and beyond. At our core, our purpose is to provide advice and solutions that help empower people to take charge of their financial lives with confidence and
optimism. We continue to deliver on this mission and our promises.
To protect the health and safety of our employees and their loved ones during the COVID-19 pandemic, we took early action, implementing comprehensive measures to safeguard employees in the locations in which we operate. Starting in February 2020, we implemented travel restrictions, visitor
vetting, social distancing and enhanced cleaning requirements. Soon after, in mid-March 2020, we moved to 99% work-from-home for our employees, efficiently moving to a virtual sales environment across all of
our distribution channels. For the small population of essential employees who remain working in our offices, we have implemented robust health and safety protocols, including providing masks, enhanced cleaning and requiring social distancing and in-office location tracking for each individual. We are working to develop a return to work and client site strategy that protects both our employees and our customers.
During the pandemic, we also implemented several policies and programs to enhance support for our employees, including emergency leave time, which provides additional
time off for employees if needed, related to the impacts of COVID-19. We also waived insurance co-payments for COVID-19 testing
and telemedicine visits. Additionally, we increased internal communication regarding many of our existing benefits and programs that could help employees during this challenging time such as our free mental health and wellness resources,
including access to our employee assistance program for employees and members of their households.
In addition, we supported our customers and communities during
this unprecedented time. We waived eligible withdrawal and loan initiation fees for retirement savers, extended premium payment grace periods, and remain committed to working with those with financial hardships. In 2020, we donated over
$10 million to those impacted by COVID-19, and our employees discovered new ways to volunteer virtually in their local communities.
During 2020, management responded well to the immediate health, economic and capital markets challenges. We also took steps to enhance our product portfolio, pivot our
distribution workforce to a virtual model, improve cost effectiveness and strengthen the balance sheet. From an operational perspective, over the course of an unpredictable year, we focused on ensuring we maintained our competitive advantages and
capitalized on opportunities to become stronger. We successfully achieved these objectives by prioritizing three initiatives:
Our
reprice, shift, and add new product strategy
During 2020, we accelerated a plan already in place to address the low interest rate environment by repricing
certain products to achieve appropriate returns, continued to shift our sales mix toward shorter-duration products that are less sensitive to interest rates, and developed new products that are more capital efficient while increasing consumer choice
and expanding customer value propositions.
Achieving expense savings, while improving the customer experience
We focused on actions to increase productivity across our manufacturing and distribution organizations that also enhance the customer and partner experience. The
accelerated implementation and acceptance of digital tools during 2020 created more opportunities for additional expense savings and improvements to the customer experience.
Maintaining a strong balance sheet to maximize our financial flexibility
We took several actions during 2020 to preserve and enhance our liquidity and capital position in response to the COVID-19
pandemic and ensuing economic environment conditions. Debt financing transactions in the first half of 2020 allowed us to redeem our 2021 and prefund our 2022 senior debt maturities, with our next debt maturity not until 2023. We also added a new
source of contingent capital to our sources of liquidity.
34 Lincoln National Corporation 2021 Proxy Statement