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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-12 |
FBL Financial Group, Inc.
(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):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Aggregate number of securities to which transaction applies: |
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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): |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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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
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
5400 University
Avenue
West Des Moines, IA
50266
NOTICE OF ANNUAL
MEETING
Dear Shareholder:
The Annual Meeting of Shareholders of FBL Financial Group, Inc.
will begin at 9:00 a.m. Central Daylight Time on
Wednesday, May 16, 2007, at the auditorium of our corporate
headquarters, 5400 University Avenue, West Des Moines, Iowa.
Only shareholders who owned stock at the close of business on
March 15, 2007 can vote at this meeting or any adjournments
that may take place. At the meeting we will ask you to:
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1.
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Elect a Board of Directors;
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2.
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Approve an amendment to increase shares available through the
Director Compensation Plan;
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3.
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Ratify the appointment of our Independent Registered Public
Accounting Firm for 2007; and
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4.
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Attend to other business that may properly come before the
meeting.
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YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF
THE THREE PROPOSALS OUTLINED IN THIS PROXY STATEMENT.
At the meeting we will also report on FBLs 2006 business
results and other matters of interest to shareholders.
Enclosed with the mailing of this Proxy Statement is the 2006
Annual Report to Shareholders, which includes the 2006 Annual
Report on
Form 10-K
as filed with the Securities and Exchange Commission. The
approximate date of mailing for this proxy statement, plus the
proxy card and Annual Report, is March 30, 2007.
By Order of the Board of Directors
Stephen M. Morain
Senior Vice President,
Secretary and General Counsel
March 30, 2007
TABLE OF
CONTENTS
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A-1
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2
QUESTIONS
AND ANSWERS
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1.
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Q:
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What may I vote on?
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A:
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1) the election of eight
Class A directors;
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2) the approval of an
additional 50,000 shares available for issue under the
Directors Compensation Plan; and
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3) the ratification of the
appointment of our Independent Registered Public Accounting Firm
for 2007.
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2.
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Q:
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How does the Board recommend I
vote on the proposals?
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A:
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The Board recommends a vote FOR
each of the nominees for Class A directors, and FOR each of
the other proposals.
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3.
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Q:
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Who is entitled to
vote?
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A:
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Shareholders as of the close of
business on March 15, 2007 (the record date) are entitled
to vote at the annual meeting.
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4.
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Q:
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How do I vote?
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A:
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Sign and date each proxy card you
receive and return it in the pre-paid envelope. Or, depending on
the form of proxy card or voting instruction card you receive,
you may follow directions on the card to cast your vote by
telephone or over the internet. If you return your signed proxy
card but do not mark the box as showing how you wish to vote,
your shares will be voted FOR the three proposals. Regardless of
the method of voting you use, you have the right to revoke your
proxy at any time before the meeting by: 1) notifying
FBLs corporate secretary, 2) voting in person, or
3) returning a later dated proxy card.
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5.
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Q:
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Who will count the
votes?
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A:
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Mellon Investor Services LLC
(Mellon), our transfer agent, will receive the proxy cards and
tabulate the results. Mellons report will be verified by
an employee of our legal department who will be appointed as the
inspector of election.
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6.
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Q:
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Is my vote
confidential?
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A:
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Proxy cards, ballots and voting
tabulations that identify individual shareholders are mailed or
returned directly to Mellon. They are forwarded to us after the
meeting. We do not receive any identifying information regarding
how employees vote Class A shares held in their 401(k)
accounts.
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7.
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Q:
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What shares are included in the
proxy cards?
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A:
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The shares on your proxy cards
represent all of your shares, including those in FBLs
Direct Stock Purchase and Dividend Reinvestment Plan. Shares
held in custody by Wells Fargo for the 401(k) plan for employees
are represented by a separate voting instruction card. If you do
not vote by telephone or internet or return your proxy cards,
your shares will not be voted. If employees do not vote by
internet or return their voting instruction card, their shares
in the 401(k) plan will be voted in proportion to the votes
instructed by other employees.
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8.
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Q:
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What does it mean if I get more
than one proxy card?
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A:
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If your shares are registered
differently and are in more than one account, you will receive
more than one card. Sign and return all proxy cards to insure
that all your shares are voted. We encourage you to have all
accounts registered in the same name and address (whenever
possible). You can accomplish this by contacting our transfer
agent, Mellon, at
(866) 892-5627.
Employees will receive a separate voter instruction card for
shares in the 401(k) plan, in addition to a proxy card for any
shares owned directly.
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3
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9.
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Q:
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How many shares can
vote?
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A:
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As of the record date,
March 15,
2007, shares
of Class A common stock, 1,192,990 shares of
Class B common stock and 5,000,000 shares of
Series B preferred stock were issued and outstanding. Every
shareholder of common stock is entitled to one vote for each
share held. Each share of Series B preferred stock is
entitled to two votes. In summary, there were a total
of eligible
votes as of the record date. The Class A common
shareholders and the Series B preferred shareholders vote
together to elect the Class A directors; the Class B
common shareholders elect the Class B directors, and all
shareholders vote on other proposals.
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10.
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Q:
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What is a
quorum?
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A:
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A quorum is a majority
of the outstanding votes that may be present at the meeting or
represented by proxy. There must be a quorum for the meeting to
be held. Directors must receive a plurality of votes cast to be
elected. Other proposals at this meeting must receive more than
50% of the votes cast to be adopted. If you submit a properly
executed proxy card, even if you abstain from voting, then you
will be considered part of the quorum. However, abstentions are
not counted in the tally of votes FOR or AGAINST a proposal. A
WITHHELD vote is the same as an abstention.
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11.
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Q:
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Who can attend the annual
meeting?
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A:
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Your directors and management look
forward to personally greeting any shareholders who are able to
attend. However, only persons who were shareholders on
March 15, 2007 can vote.
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12.
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Q:
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How will voting on any other
business be conducted?
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A:
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Although we do not know of any
business to be conducted at the 2007 annual meeting other than
the proposals described in this proxy statement, if any other
business is presented at the annual meeting, your signed proxy
card gives authority to Craig Lang, FBLs Chairman, and Jim
Noyce, FBLs Chief Executive Officer, to vote on such
matters at their discretion.
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13.
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Q:
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Who are the largest principal
shareholders?
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A:
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Iowa Farm Bureau Federation is the
principal shareholder as of March 15, 2007. It owned
14,694,157 shares of Class A common stock
( % of that class),
761,855 shares of Class B common stock (63.9% of that
class), and 5,000,000 shares of Series B preferred
stock (100% of that class). Those shares
represent % of the total potential
votes. Farm Bureau Mutual Insurance Company (Farm Bureau Mutual)
held 727,362 shares of Class A common stock
( % of that class) and
213,590 shares of Class B common stock, being 17.9% of
that class; in total, % of the
total potential votes. Both Iowa Farm Bureau Federation and Farm
Bureau Mutual share our corporate headquarters address,
5400 University Avenue, West Des Moines, Iowa 50266. In
addition, Dimensional Fund Advisors Inc.
(Dimensional) has informed us by filing
Schedule 13G that it is the beneficial owner of
2,106,631 shares of Class A common stock as of
December 31, 2006, % of that
class. Its address is 1299 Ocean Ave., 11th Floor, Santa Monica,
CA 90401. Dimensional has indicated that it has sole dispositive
power with respect to the shares as a result of acting as an
investment advisor to four investment companies and acting as
investment manager to certain other commingled group trusts and
separate accounts. Dimensional disclaims beneficial ownership,
noting that the various investment companies and managed
accounts are the owners of the shares.
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14.
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Q:
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How are the Class B
directors elected?
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A:
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Only Farm Bureau organizations may
own Class B common stock. Farm Bureau federations or their
affiliates in 15 Midwestern and Western states, and a Farm
Bureau affiliated reinsurance company, own Class B shares.
By agreement, only presidents of the 15 state Farm Bureau
federations, and one officer of a state Farm Bureau federation,
are eligible for nomination as the five Class B directors.
The Class B nominating committee is made up of all of the
Class B directors, who meet annually with representatives
of the other Class B shareholders to determine the
nominees. Their determinations are made based on the voting
power of the organizations they represent. All of the
Class B owners have agreed they will vote to elect the
named nominees as Class B directors. It is expected that
the President and an officer of the Iowa Farm Bureau Federation
will both be Class B directors, as long as that
organization retains more than 50% of the Class B shares.
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15.
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Q:
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When are shareholder proposals
for the next annual meeting due?
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A:
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All shareholder proposals to be
considered for inclusion in next years proxy statement
must be submitted in writing to Stephen M. Morain, Senior Vice
President, Secretary and General Counsel, FBL Financial Group,
Inc., 5400 University Avenue, West Des Moines, Iowa 50266 by
December 2, 2007. Additionally, FBLs advance notice
bylaw provisions require that any shareholder proposal to be
presented from the floor of the annual meeting must be submitted
to the Corporate Secretary at the above address not less than
45 days before the first anniversary of mailing of this
years proxy statement. That would be February 15,
2008. That notice needs to be accompanied by the name, residence
and business address of the shareholder, a representation that
the shareholder is a record holder of FBL shares or holds FBL
shares through a broker and the number and class of shares held,
and a representation that the shareholder intends to appear in
person or by proxy at the 2008 annual meeting to present the
proposal.
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16.
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Q:
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Can a shareholder nominate
someone as a director of the Company?
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A:
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As a shareholder of record, you
may recommend any person as a nominee for Class A director.
Recommendations are made by writing to the Secretary of the
Company not less than 45 days prior to the first
anniversary of the mailing of this years proxy statement.
Your notice needs to set forth your name and address, and the
name, address, age and principal occupation or employment of the
person to be nominated, a representation that you are a record
holder of Class A common stock, and intend to appear in
person or proxy at the meeting to nominate the person specified,
the number and class of shares you own, and the number and class
of shares, if any, owned by the nominee. You also need to
describe any arrangements between you and the nominee and other
information as required by the Securities Exchange Act,
including the nominees written consent to being named in a
proxy statement and to serve as a director if nominated.
Nominations for Class B directors are governed by an
agreement between all the holders of Class B common stock.
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5
CORPORATE
GOVERNANCE
Corporate
Governance Principles
The Board of Directors adopted governance principles to provide
guidelines for the Company and the Board to ensure effective
corporate governance. The governance principles are summarized
below, and the full text of the governance principles is posted
on the Companys website at www.fblfinancial.com. We
will also provide a copy of the governance principles to
shareholders upon request.
Objective
of the Board of Directors
The business of FBL is managed under the direction of the Board.
The Board is to represent the interests of the shareholders; as
such it is to oversee the strategic direction and conduct of the
Companys business activities so as to enhance the long
term value of the Company. One of the Boards principal
roles is to select and oversee a well qualified and responsible
Chief Executive Officer and management team to run the Company
on a daily basis.
In addition to serving the long-term interests of the
shareholders, the Board has responsibility to the Companys
customers, policyholders, employees and the communities where it
operates. These responsibilities are founded upon the successful
perpetuation of the business and the promotion of the highest
ethical standards.
Board and
Board Committee Responsibilities Include:
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Nominate Board candidates for election by the shareholders;
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Oversee management, including the selection, monitoring,
evaluation and compensation of the Chief Executive Officer and
other senior executives;
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Oversee compliance with laws, regulations and ethical behaviors;
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Understand the major risks in the business and available risk
management techniques and confirm that control procedures are
adequate;
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Promote integrity and candor in the audit of the Companys
financial statements and operations, and in all financial
reporting and disclosure;
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Review and approve managements strategic and business
plans;
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Review and approve major transactions, financial plans,
objectives and actions, including significant capital
allocations and expenditures;
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Monitor managements performance of its plans and
objectives and advise management on significant
decisions; and
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Assess its own effectiveness.
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Board
Organization
The Board consists of a majority of independent directors, even
though the Company is a controlled company which is
not required to have an independent majority. Eight Class A
directors include the Chief Executive Officer and seven
independent directors who are elected by the holders of the
Class A common stock and the Series B preferred stock,
voting as a single class. The Class B common stockholders
elect five Class B directors. The Board should make its own
determination from time to time of what leadership works best
for the Company. However, as long as the Company has a single
shareholder owning a significant voting block, it is expected
that a representative of that shareholder will be Chairman of
the Board, and that the Board will not choose to have the same
individual serve as Chairman and Chief Executive Officer of the
Company. So long as the Chairman of the Board is affiliated with
the majority shareholder, the Board, by action of the
independent directors, will appoint a Lead Director who will
conduct any separate meetings of
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non-management and independent directors and have such other
duties and responsibilities as are set by the Board from time to
time. Under this arrangement, Craig Lang, President of the Iowa
Farm Bureau Federation, is the Chairman. The independent
directors have elected Jerry Chicoine as the Lead Director. He
was also elected Vice Chairman of the Board and appointed to the
Executive Committee, as well as remaining a member of the Audit
Committee. The Lead Director, among other matters, facilitates
communications among directors, works with the Chief Executive
Officer to ensure appropriate information flow to the Board and
chairs an executive session of the non-management directors, and
of the independent directors, at each formal Board meeting.
The Board also maintains three standing committees comprised
solely of independent directors the Audit Committee,
the Management Development and Compensation Committee, and the
Class A Nominating and Corporate Governance Committee. The
Class B Nominating Committee is made up of all the
Class B directors. The Finance Committee and the Executive
Committee consist of both Class A and Class B members.
Assignments to, and chairs of, the committees are recommended by
the Class A Nominating and Corporate Governance Committee
and selected by the Board. All committees report on their
activities to the Board. See Further Information
Concerning the Board of Directors for more information
regarding membership on and workings of the various committees.
Board
Operation
The Board normally has four regularly scheduled meetings each
year and special meetings as needed. Committee meetings are
normally held in conjunction with Board meetings, plus
additional meetings as needed. The Chairman, the Board and the
committee chairs are responsible for conducting meetings and
informal consultations in a fashion that encourages
communication, meaningful participation and timely resolution of
issues. Directors receive the agenda and materials in advance of
meetings and may ask for additional information from, or meet
with, senior managers at any time. Strategic planning and
succession planning sessions are held annually at regular Board
meetings.
Board
Advisors
The Board and its committees (consistent with their respective
charters) may retain their own advisors and consultants as they
determine necessary to carry out their responsibilities.
Board
Evaluation
The Class A Nominating and Corporate Governance Committee
coordinates an annual evaluation process by the directors of the
Boards performance and procedures, including evaluation of
committee performance. The Board and each of the standing
committees have conducted annual evaluations of their
performance and procedures, including the adequacy of their
charters, as established in the bylaws and charter documents.
Board
Compensation
The Management Development and Compensation Committee, in
accordance with the policies and principles set forth in its
charter, will review and make recommendations to the full Board
with respect to compensation of directors. As part of such
review, the Management Development and Compensation Committee
shall periodically review director compensation (including
additional compensation for committee members) in comparison to
companies that are similarly situated to ensure that such
compensation is reasonable, competitive and customary.
Director
Share Ownership Guidelines
As part of a directors total compensation and to more
closely align the interests of directors and the Companys
stockholders, the Board believes that a meaningful portion of a
directors compensation should be paid in the form of
common stock of the Company. Directors receive stock options
annually under the Companys existing stock option plan and
may choose to receive some or all director fees in shares or in
share equivalent units under the Directors Compensation Plan. In
2004, the Board determined that directors are
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required to own FBL stock worth three times their annual
retainer by the latter of year end 2009 or within five years of
becoming a director.
Charitable
Contributions
The Board shall also review charitable contributions by the
Company to organizations with which any director is affiliated.
In addition, the Board shall review all consulting contracts
with, or other arrangements that provide other indirect forms of
compensation to, any director or former director.
Corporate
Conduct
We have adopted the FBL Corporate Compliance Manual, which
applies to all employees, officers and directors of the company.
An extract from the manual titled the Code of Conduct meets the
requirements of a code of business conduct and ethics under the
listing standards of the New York Stock Exchange
(NYSE). We have also adopted a Code of Ethics for
CEO and Senior Financial Officers. The Code of Ethics meets the
requirements of a code of ethics as defined by
Item 406 of
Regulation S-K.
Both the Code of Conduct and the Code of Ethics are posted on
our website at www.fblfinancial.com under the heading
Corporate Governance Governance Library.
We will also provide copies of these documents, and the
Corporate Compliance Manual, to shareholders upon request. Any
amendments to the Code of Conduct or Code of Ethics are promptly
incorporated into the website posting. We intend to disclose any
waivers of the Codes for executive officers or directors on our
website.
Communications
with the Board of Directors
The Board has established a process for shareholders and other
interested parties to communicate with members of the Board,
including the Lead Director. If you have any concern, question
or complaint regarding our compliance with any policy or law, or
would otherwise like to contact the Board, you can mail
materials c/o Secretary, FBL Financial Group, Inc., 5400
University Avenue, West Des Moines, IA 50266, or
e-mail
Contact.Board@FBLFinancial.com.
PROPOSAL NUMBER
ONE ELECTION OF DIRECTORS
There are eight nominees for election as Class A directors,
to be elected by the vote of the Class A common
shareholders and holders of the Series B preferred stock,
voting together as a single class. One nominee is the Chief
Executive Officer of the Company, and seven nominees are
independent of management. The Board of Directors, based on
information received in questionnaires and in personal
interviews, has determined that all nominees are qualified to
serve, and the seven independent nominees
Messrs. Chicoine, Gill, Hanson, Larson, Mehrer and Walker,
and Ms. Robak possess the degree of
independence from management and from the Company mandated by
the Securities and Exchange Commission (SEC) and the
NYSE.
In making its independence determinations, the board
specifically reviewed information that director Paul E. Larson
is also a director of Wellmark, Inc., a mutual insurance company
which provides Blue Cross-Blue Shield health insurance policies
sold by agents of the Companys insurance affiliates in
Iowa and South Dakota. The Companys managed affiliate,
Farm Bureau Mutual, received in excess of $17,000,000 of
commission income for such sales in 2006, the bulk of which was
in turn paid to the selling agents. Mr. Larson is not an
officer or shareholder of Wellmark, Inc. The amounts involved
are substantially below 3% of revenues of the affected
companies. Mr. Larson is also a director of GuideOne Mutual
Insurance Company and GuideOne Specialty Mutual Insurance
Company. Based on these facts, the Board determined that these
relationships are not material and do not affect the
independence of Mr. Larson. The Board also reviewed Kim
Robaks position as a director of Fiserv, Inc. which has
been a supplier of a modest amount of software to the company.
She is also a director of First Ameritas Life Insurance Company
of New York. The Board determined these relationships are not
material and do not affect the independence of Ms. Robak.
There were no other relationships involving the independent
directors and the Company that required an assessment of
independence by the Board. Biographical information on each
nominee, including the five Class B director
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nominees, is in the following pages. All directors are elected
annually, and serve a one year term until the next annual
meeting. If any director is unable to stand for election, the
Board will designate a substitute. In that case, proxies voting
for the original director candidate will be cast for the
substituted candidate.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THESE
NOMINEES FOR CLASS A DIRECTORS.
Nominees
for Class A Director
Jerry L. Chicoine is the Lead Director of the independent
directors, Vice Chairman of the Board, and serves on the
Executive Committee and the Audit Committee. He has been named
by the Board of Directors as one of our audit committee
financial experts. Mr. Chicoine retired effective
January 1, 2001 as Chairman and Chief Executive Officer of
Pioneer Hi-Bred International, Inc. He had served in those
capacities since 1999, and was Pioneers Executive Vice
President and Chief Operating Officer since 1997. From 1988 to
1997 he had served as Senior Vice President and Chief Financial
Officer. He was named a director of Pioneer
Hi-Bred in
March 1998. He was a partner in the accounting firm of
McGladrey & Pullen from 1969 to 1986, and also holds a
law degree. He is a member of the board of directors of several
non-public companies, including Ruan Holdings and The Weitz
Company.
Member: Audit and Executive Committees
Class A Director since 1996 Age: 64
Tim H. Gill has been President and Chief Executive
Officer of Montana Livestock Ag Credit, Inc. since 1986. The
company specializes in agricultural finance throughout the state
of Montana, underwrites long term real estate loans and has its
own investment offerings. Mr. Gill is on the finance
committee of Montana Stockgrowers; a trustee and finance
chairman of the Montana Stockgrowers Research and Education
Foundation; a member of the tax and credit committee of the
National Cattlemens Beef Association; a director and past
chairman of the Montana Council on Economic Education, and a
director of the Carroll College Athletic Association and a
member of the Animal Bio-Science Committee for Montana State
University College of Agriculture. He is chair of the
Class A Nominating and Capital Governance Committee.
Member: Class A Nominating and Corporate Governance,
and Management Development and Compensation Committees
Class A Director since 2004 Age: 54
Robert H. Hanson was an investment banker with Merrill
Lynch, Pierce Fenner & Smith in New York from 1965 to
1989, since 1972 as a Vice President, specializing in providing
corporate finance services to the regulated utilities and
telecommunications industries. In 1990 he relocated to Cody,
Wyoming, where he was employed by Dean Witter Reynolds, Inc. as
an Account Executive, and later by D.A. Davidson & Co.,
as Vice President and Office Manager of that firms Cody
office. In 1993 he joined GST Telecommunications, Inc.,
initially as Senior Vice President Corporate
Development, and subsequently as Chief Financial Officer,
retiring from those positions in 1999. Mr. Hanson is a past
member of the Wyoming Telecommunications Council and current
Vice Chairman of the Cody Economic Development Council. In
addition, he is a director and trustee of two national
conservation organizations, for which he has the responsibility
for financial and investment management. Mr. Hanson is a
graduate of Yale University. He is chair of the Finance
Committee, and has been named by the Board of Directors as one
of our audit committee financial experts..
Member: Finance and Audit Committees
Class A Director since 2004 Age: 65
Paul E. Larson is the chair of the Audit
Committee. He has been named by the Board of
Directors as one of our audit committee financial
experts. He retired in 1999 as President of Equitable Life
of Iowa and its subsidiary, USG Annuity and Life, after
22 years with the companies. Mr. Larson holds both a
law degree and a certified public accountant designation. He was
named Outstanding CPA in Business and Industry by the Iowa
Society of CPAs in 1999, and inducted into the American
Institute of CPAs Business and Industry Hall of Fame in
2000. He is a member of the board of directors of non-public
companies Wellmark, Inc., GuideOne Mutual Insurance Company and
GuideOne Specialty Mutual Insurance Company. He was also a board
member of EquiTrust Mutual Funds (which is managed by one of our
subsidiaries), where he was chair of the Audit
9
Committee and the committees financial expert. He resigned
from the EquiTrust Mutual Funds board upon election to our Board
in 2004.
Member: Audit and Management Development and Compensation
Committees
Class A Director since 2004 Age: 54
Edward W. Mehrer is currently a member of the board of
directors, and the audit and compensation committees of NovaStar
Financial, and the audit committee of MGI Pharma. He served as
Interim Chief Executive Officer of CyDex, Inc., a drug delivery
company, from late 2002 to mid 2003, and as its Chief Financial
Officer from November 1996 to December 2003. Prior to joining
CyDex in 1996, Mr. Mehrer was Executive Vice President and
Chief Financial and Administrative Officer of Marion Merrell Dow
and a Director and member of its executive committee. From 1976
to 1986, Mr. Mehrer served as
partner-in-charge
of audit and accounting for KPMG Peat Marwick in Kansas City,
Missouri.
Member: Finance and Class A Nominating and Corporate
Governance Committees
Class A Director since 2004 Age: 68
James W. Noyce, CPA, FCAS, ASA, FLMI, MAAA, became Chief
Executive Officer of FBL and its major subsidiaries effective
January 1, 2007, and of Farm Bureau Mutual and its
subsidiaries, in February 2007. He was elected to the Board in
February 2007. He had been Chief Financial Officer since January
1996, and Chief Administrative Officer since July 2002.
Additionally, from January 2000 to July 2002 he was Executive
Vice President and General Manager of the property-casualty
companies managed by FBL. Mr. Noyce has been employed by
the Company and its affiliates since 1985. He is also a director
of Berthel Fisher & Company and two of its
subsidiaries. Mr. Noyce is vice chair of the Grandview
College Board of Trustees and a director of Special Olympics
Iowa, United Way of Central Iowa, the Greater Des Moines
Partnership and the Mid-Iowa Council of Boy Scouts of America.
Member: Executive and Investment Committees
Class A Director since February 2007 Age: 51
Kim M. Robak is a partner in the Lincoln, Nebraska law
firm Ruth Mueller Robak LLC. Previously, Ms. Robak was Vice
President for External Affairs and Corporation Secretary at the
University of Nebraska from 1999 to 2004. Ms. Robak served
the State of Nebraska as Lieutenant Governor from 1993 to 1999,
as Chief of Staff from 1992 to 1993, and as Legal Counsel from
1991 to 1992. She is a member of the board of directors of
Fiserv, Inc. and non-public companies Union Bank &
Trust Company and First Ameritas Life Insurance Corporation of
New York. Ms. Robak is also a trustee of Doane College,
Crete, NE, and a member of the board of directors of the
Nebraska Foundation for the Humanities, Lincoln Community
Foundation, the Lincoln Partnership for Economic Development and
the Strategic Air and Space Museum in Ashland, NE.
Member: Class A Nominating and Corporate Governance,
and Management Development and Compensation Committees
Class A Director since July 2006 Age: 50
John E. Walker is the chair of the Management Development
and Compensation Committee. He retired January 1, 1996 from
Business Mens Assurance (BMA), Kansas City, Missouri,
where he had been the Managing Director of Reinsurance
Operations since 1979. He had been a member of the board of
directors of BMA for 11 years before his retirement, and a
member of its executive committee.
Member: Management Development and Compensation, and
Class A Nominating and Corporate Governance Committees
Class A Director since 1996 Age: 68
Nominees
for Class B Director
Craig A. Lang is the Chairman of the Board, and chair of
the Executive Committee. He has been a director of the Iowa Farm
Bureau Federation since 1992 and was its Vice President for six
years beginning in 1995. He has been a director of Farm Bureau
Mutual and Farm Bureau Life Insurance Company (Farm Bureau Life)
since 1993. In December 2001 he was elected President of the
Iowa Farm Bureau Federation and director and President of its
subsidiary, Farm Bureau Management Corporation. He was also then
named President of
10
Farm Bureau Life and Farm Bureau Mutual (until 2003), a director
and president of EquiTrust Life and a director of Western
Agricultural Insurance Company (Western Ag). In 2003
Mr. Lang was elected to the Board of Directors of the
American Farm Bureau Federation. He is also a director of FB
BanCorp. He served as the Iowa governors appointed
chairman of the Grow Iowa Values Fund, within the Iowa
Department of Economic Development, in 2003 and 2006.
Mr. Lang is the lead director of Iowa Telecom, and chairman
of its Compensation Committee. Mr. Lang has farmed since
1973 in partnership with his father and brother on
1,200 acres near Brooklyn, Iowa where they have a 500 head
dairy operation.
Member: Executive and Class B Nominating Committees
Class B Director since 2001 Age: 55
Steve L. Baccus became a Class B Director in May
2002 after being named President of the Kansas Farm Bureau
Federation. He is also Chairman of the Board of Directors of
Farm Bureau Mutual, and a director of Farm Bureau Life,
EquiTrust Life, Western Ag and FB BanCorp. He is also a member
of the Board of Trustees of Kansas Wesleyan University in
Salinas, Kansas. In 2004 Mr. Baccus was elected to the
Board of Directors of the American Farm Bureau Federation. His
family farm in Ottawa County, Kansas produces wheat, milo,
soybeans, sunflower and irrigated corn. Mr. Baccus earned
bachelors and masters degrees in psychology from Washburn
University and Chapman College, respectively.
Member: Executive and Class B Nominating Committees
Class B Director since 2002 Age: 57
Craig D. Hill was elected a Class B Director in
February 2007 and previously served as a Class B Director
from 2002 to 2004. He is Vice President of the Iowa Farm Bureau
Federation and has served on its board of directors since 1989.
He has served on the boards of Farm Bureau Life and Farm Bureau
Mutual since 1989, and in 2001 was named to the board of
GROWMARK, a multi state regional cooperative. Mr. Hill
farms 1,200 acres of row crops and has a 260 sow
farrow-to-finish
hog operation near Milo, Iowa.
Member: Executive and Class B Nominating Committees
Class B Director 2002 to 2004, 2007 Age:
51
G. Steven Kouplen previously served as a
Class B Director from February 2000, following his
late-1999
election as President of the Oklahoma Farm Bureau Federation, to
May 2003. He was re-elected as a Class B Director in 2006.
Mr. Kouplen has a commercial Hereford cow-calf operation on
2,000 acres near Beggs, Oklahoma, which also includes a
small grain operation consisting of wheat, milo and alfalfa. He
is a director of Farm Bureau Life and Western Ag, and was
elected to the board of directors of American Farm Bureau
Federation in 2000.
Member: Finance and Class B Nominating Committees
Class B Director 2000 to 2003, and since 2006 Age: 56
Keith R. Olsen is a nominee for election as a
Class B Director. He previously served as a Class B
Director from 2002 to 2004. Mr. Olsen was elected President
of the Nebraska Farm Bureau Federation in 2002, and has been a
member of its Board of Directors since 1992. He was elected to
the Board of Directors of the American Farm Bureau Federation in
2004. He is also a director of Farm Bureau Life, Farm Bureau
Mutual and Western Ag. In February 2003 he became a director of
Blue Cross-Blue Shield of Nebraska. Mr. Olsen received a
Bachelor of Science Degree in Agricultural Economics in 1967,
and since then has been raising dryland wheat and corn on
3,000 acres in southwest Nebraska. He is also a producer
and marketer of certified seed wheat, and was a self employed
tax practitioner for a number of years.
Class B Director 2002 to 2004 Age: 62
11
COMPENSATION
OF NON-EMPLOYEE DIRECTORS
Class A directors and Class B directors receive annual
retainers of $24,000 and $10,000, respectively, plus a fee of
$1,250 for each Board meeting attended ($500 for telephonic
meetings). Members of the Audit Committee receive
$1,000 per meeting; members of the Class B Nominating
Committee receive $500 per meeting; members of the other
committees receive $1,000 per meeting ($500 per telephonic
meeting). The chairpersons of the Audit, Management Development
and Compensation, Class A Nominating and Corporate
Governance, and Finance committees receive 200% of the fee paid
to the members. Directors may elect to receive their fees in
cash, in shares, or in deferred stock equivalent units pursuant
to the Director Compensation Plan. All directors are reimbursed
for travel expenses incurred in attending Board or committee
meetings, and are reimbursed for travel expenses of their spouse
for one Board meeting per year. The non-employee directors each
annually receive nonqualified stock options to purchase
4,000 shares at the date of grant fair market value. The
directors are also subject to stock ownership guidelines they
adopted in late 2004. Under the guidelines, the directors are to
own company stock worth three times the directors annual
retainer by the latter of year end 2009 or within five years of
the date they joined the board.
Director
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned/
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
Name(1)
|
|
Paid in Cash $
|
|
|
Awards(5) $
|
|
|
Compensation $
|
|
|
Total $
|
|
|
Steve Baccus
|
|
|
21,500
|
|
|
|
29,871
|
|
|
|
145
|
|
|
|
51,516
|
|
Jerry Chicoine
|
|
|
46,500
|
(4)
|
|
|
29,871
|
|
|
|
|
|
|
|
76,371
|
|
John Creer(2)
|
|
|
29,500
|
(4)
|
|
|
29,871
|
|
|
|
|
|
|
|
59,371
|
|
Jerry Downin(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Tim Gill
|
|
|
46,000
|
(4)
|
|
|
29,871
|
|
|
|
|
|
|
|
75,871
|
|
Robert Hanson
|
|
|
51,000
|
(4)
|
|
|
29,871
|
|
|
|
|
|
|
|
80,871
|
|
G. Steven Kouplen
|
|
|
15,250
|
(4)
|
|
|
|
|
|
|
112
|
|
|
|
15,362
|
|
Craig Lang(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
Paul Larson
|
|
|
55,000
|
(4)
|
|
|
29,871
|
|
|
|
|
|
|
|
84,871
|
|
Edward Mehrer
|
|
|
41,000
|
|
|
|
29,871
|
|
|
|
|
|
|
|
70,871
|
|
Frank Priestley
|
|
|
22,000
|
|
|
|
29,871
|
|
|
|
158
|
|
|
|
52,029
|
|
Kim Robak
|
|
|
15,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
John Walker
|
|
|
52,250
|
(4)
|
|
|
29,871
|
|
|
|
|
|
|
|
82,121
|
|
|
|
|
(1) |
|
Excludes employee director Oddy, who received compensation
including equity awards from the company (see Summary
Compensation Table) and was not separately compensated for his
service as a director. Mr. Oddy resigned as a director
February 21, 2007. |
|
(2) |
|
Mr. Creer resigned from the Board June 30, 2006. |
|
(3) |
|
Mr. Downin (until March 2007) and Mr. Lang are
executive officers of the company and employees of Farm Bureau
Management Corporation, a subsidiary of Iowa Farm Bureau
Federation, the companys largest stockholder. As officers
they received option awards in 2006 and earlier years. The
company recognized for financial statement reporting purposes
under FAS 123(R) calendar year 2006 expenses of $118,790
for Mr. Downin, and $63,357 for Mr. Lang. They are not
otherwise directly compensated by the company for their services
as directors, although the company does pay a management fee to
Farm Bureau Management Corporation which includes an allocation
of their compensation based on estimates of time spent for the
company. Mr. Downin resigned as a director
February 21, 2007. |
|
(4) |
|
Various directors have elected to defer various amounts of
earned fees to the Directors Compensation Plan, a nonqualified
deferred compensation vehicle which accumulates share
equivalents based on the market price on the date of fee
payments. The Directors Compensation Plan also accumulates
dividend equivalent shares on account balances at the same rate
as dividend payments on outstanding shares. |
|
(5) |
|
Amounts equal compensation expense of the options in 2006 as
described in FAS 123(R). Since there is no service element
to these immediately vested options, their date of grant fair
value is the same as the compensation expense. For a list of
options held by the directors, see footnote (a) of Stock
Ownership of Directors and Executive Officers, on page 15. |
12
FURTHER
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors met six times during 2006, including one
telephone conference meeting. All of the current directors
attended at least 75% of the Board meetings and committee
meetings of which they were members, except for Ms. Robak,
who was elected in mid year. The Company has adopted a formal
policy that attendance of directors at the annual shareholder
meeting is expected; all directors then in office did attend the
last annual meeting in May 2006.
The committees of the Board of Directors and the number of
meetings held by each committee in 2006 were:
|
|
|
|
|
|
|
Number of Meetings
|
|
Committee Name
|
|
Held During 2006
|
|
|
Executive Committee
|
|
|
6
|
|
Audit Committee
|
|
|
9
|
|
Finance Committee
|
|
|
6
|
|
Management Development and
Compensation Committee
|
|
|
8
|
|
Class A Directors Nominating
and Corporate Governance Committee
|
|
|
8
|
|
Class B Directors Nominating
Committee
|
|
|
1
|
|
The Executive Committee is composed of Lang (Chairman), Baccus,
Chicoine, Hill and Noyce, with Stephen M. Morain, Senior Vice
President, Secretary and General Counsel, serving as an
ex-officio member. The Executive Committee may exercise all
powers of the Board of Directors during intervals between
meetings of the Board, except for matters reserved to the Board
by the Iowa Business Corporation Act, and except for removal or
replacement of the Chairman or Chief Executive Officer.
The Audit Committee consists of Class A directors Chicoine,
Hanson and Larson, with Mr. Larson serving as chair. The
Audit Committee must include only Class A directors who are
independent of management and free from any relationships that
would interfere with the exercise of independent judgment. The
Board of Directors has determined that all members of the Audit
Committee meet such standards, and further that all members are
financially literate and have accounting or
related financial management expertise, as required by the
NYSE Listed Company Manual. Further, the Board of Directors has
determined that all members are audit committee financial
experts, as that term is defined in SEC regulations.
The Audit Committee hires FBLs Independent Registered
Public Accounting Firm and reviews the professional services to
be provided by the firm and its independence from our
management. The Audit Committee also reviews the scope of the
audit by the Independent Registered Public Accounting Firm and
its fees, our annual and quarterly financial statements and
related filings with the Securities and Exchange Commission,
system of internal accounting controls and other matters
involving the accounting, auditing and financial reporting
practices and procedures of the Company as it may find
appropriate or as may be brought to its attention, and meets
quarterly with members of the internal audit staff. The Audit
Committee is required to review with the Independent Registered
Public Accounting Firm and management any material transaction
or series of similar transactions to which FBL was, within the
past year, or is currently expected to be, a party, and with
respect to which a director, executive officer, or holder of
more than five percent of any class of voting stock of the
Company is a party. Additionally, if the Audit Committee
determines that any transaction or proposed transaction between
FBL and Farm Bureau Mutual may be unfair to FBL, the Board is
required to submit the matter to a coordinating committee for
resolution. The Board of Directors approved an Audit Committee
Charter in 2001 and approves revisions to the charter as needed.
A copy of the revised Audit Committee Charter is available on
our website, www.fblfinancial.com, or upon written
request.
The Finance Committee is designated by the Chairman of the Board
and composed of directors Hanson, Kouplen, Mehrer and Priestley,
with Mr. Hanson as chair. The Finance Committee reviews
capital adequacy
13
and all budgets proposed by management and makes recommendations
regarding them to the Board of Directors, and oversees the
companys risk management process.
The Management Development and Compensation Committee is
composed of Class A directors Gill, Larson, Robak and
Walker, with Mr. Walker serving as chair. The
Committees basic responsibilities are to assure that the
executive officers of the Company and its wholly-owned
affiliates are compensated effectively in a manner consistent
with the shareholders interests and consistent with the
compensation strategy of the Company, internal equity
considerations, competitive practice, and the requirements of
the appropriate regulatory bodies, to oversee hiring, promotion
and development of executive talent within the Company,
including management succession planning and review, and to
administer any benefit plans involving the Companys equity
securities. The committee has full responsibility for
determining the compensation of the Chief Executive Officer, in
conjunction with the Boards review of the Chief Executive
Officers performance. The committee has adopted a
Management Development and Compensation Committee Charter which
can be found on our website, www.fblfinancial.com, or can
be received upon written request.
The responsibilities of the Class A Directors Nominating
and Corporate Governance Committee include to assist the Board
(i) in identifying qualified individuals to become
Class A Board members, consistent with criteria approved by
the Board, (ii) in determining the composition of the Board
of Directors and its committees, (iii) in monitoring a
process to assess board effectiveness and (iv) in
developing and implementing the Companys corporate
governance guidelines. Current members are Gill, Mehrer, Robak
and Walker, with Mr. Gill as chair. The committees
charter and the corporate governance guidelines are available at
our website, www.fblfinancial.com, or by written request.
The committee identifies potential Board candidates from its own
network of business and industry contacts, and from
recommendations from other directors, Class B shareholders
and management. The committee will consider nominations made by
Class A shareholders, as explained in question 16 at the
beginning of this Proxy Statement. In 2006 director John Creer
resigned. The committee established a search process to locate
his successor. Kim Robak was recommended to the committee by
executives of the Nebraska Farm Bureau Federation, one of our
Class B shareholders. The committee will review
candidates qualifications to determine if they possess
several of the following characteristics: business and financial
acumen, knowledge of the insurance and financial services
industries, knowledge of agriculture and agricultural
businesses, and prior experience as a director. The committee
also reviews the candidates independence from the Company
and its management, based on responses to written questions,
background checks and personal interviews. The Class A
Directors Nominating and Corporate Governance Committee also
takes the lead in preparing and conducting annual assessments of
Board and Board Committee performance, and makes recommendations
to the Board for improvements in the Boards operations. It
also periodically reviews matters involving the Companys
corporate governance, including director education, the size of
the Board and the corporate governance guidelines, and
recommends appropriate changes to the Board.
The Class B Directors Nominating Committee reviews
nominations for election to the Board as Class B directors
pursuant to the Class B Shareholders Agreement, and
nominates candidates to fill vacancies among the Class B
directors. The Committee members are the five Class B
directors, who meet with the presidents of the other eleven
state Farm Bureau organizations which are Class B
shareholders, to determine nominees for election. In addition to
the Board committees, we have established several operational
committees the activities of which are reported to the Board.
These include an Investment Committee which consists of
Mr. Noyce and five additional executive officers, and an
Advisory Committee composed of certain executives of Farm Bureau
affiliated property-casualty insurance companies in the Farm
Bureau Life market territory. The Board may establish other
committees in its discretion.
14
STOCK
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows how many shares of Class A common
stock were beneficially owned by each director, director nominee
and the named executive officers, as of February 28, 2007.
The table excludes retired CEO William Oddy and retired officer
and director Jerry Downin, and includes our new CFO, James P.
Brannen. The totals in the table include ownership by five
additional executives. The percentage of FBL Class A common
shares beneficially owned by any director or any officer does
not exceed 1%, and by all directors and officers as a group,
does not exceed 3%.
|
|
|
|
|
|
|
Shares
|
|
|
|
Beneficially
|
|
Name
|
|
Owned
|
|
|
Steve L. Baccus
|
|
|
16,000
|
(a)
|
James P. Brannen
|
|
|
39,221
|
(c)(d)(e)
|
Jerry L. Chicoine
|
|
|
42,008
|
(a)(b)
|
Tim H. Gill
|
|
|
13,712
|
(a)(b)
|
Robert H. Hanson
|
|
|
16,576
|
(a)(b)
|
Craig D. Hill
|
|
|
15,000
|
(a)
|
G. Steven Kouplen
|
|
|
12,292
|
(a)(b)
|
Craig A. Lang
|
|
|
27,960
|
(c)(d)
|
Paul E. Larson
|
|
|
14,123
|
(a)(b)
|
Edward W. Mehrer
|
|
|
14,000
|
(a)
|
Stephen M. Morain
|
|
|
84,171
|
(c)(d)
|
James W. Noyce
|
|
|
120,199
|
(c)(d)
|
Keith R. Olsen
|
|
|
14,800
|
(a)
|
Frank Priestley
|
|
|
23,000
|
(a)
|
Kim M. Robak
|
|
|
4,410
|
(a)(b)
|
JoAnn W. Rumelhart
|
|
|
17,780
|
(c)(d)
|
Bruce A. Trost
|
|
|
14,157
|
(c)(d)(e)
|
John E. Walker
|
|
|
40,129
|
(a)(b)
|
All directors, nominees and
executive officers as a group (23 persons)
|
|
|
707,193
|
|
|
|
|
(a) |
|
Includes shares subject to options exercisable within
60 days for the following non-management directors or
director nominees: Baccus, 16,000; Chicoine, 23,000; Gill,
12,000; Hanson, 12,000; Hill, 15,000; Kouplen, 12,000; Larson,
12,000; Mehrer, 12,000; Olsen, 14,000; Priestley, 22,000; Robak,
4,000; and Walker, 23,000. |
|
(b) |
|
Includes deferred units in Director Compensation Plan equivalent
to the following shares: Chicoine, 14,008; Gill, 1,712; Hanson,
3,576; Kouplen, 292; Larson, 2,123; Robak, 410; and Walker,
11,429. |
|
(c) |
|
Includes share units held in Company 401(k) Savings Plan
equivalent to the following shares: Brannen, 5,135; Lang, 1,330;
Morain, 10,236; Noyce, 6,280; Rumelhart, 12,081; and Trost,
1,336. |
|
(d) |
|
Includes shares subject to options exercisable within
60 days for the following executive officers: Brannen,
28,642; Lang, 26,630; Morain, 44,381; Noyce, 70,028; Rumelhart,
0; and Trost, 8,471. |
|
(e) |
|
Includes share equivalent units held in the Executive Salary and
Bonus Deferred Compensation Plan for the following officers:
Brannen, 1,096 and Trost, 4,265. |
15
EQUITY
COMPENSATION PLAN INFORMATION
The following table provides information about our Class A
common stock that may be issued upon the exercise of options,
warrants and rights, or granted as restricted stock, under our
existing equity compensation plans, as of December 31,
2006. These plans include a stock compensation plan, a deferred
compensation plan for executives and a deferred compensation
plan for directors. Details regarding these plans can be found
in Notes 1 and 9 to the consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
(a) Number of
|
|
|
(b) Weighted
|
|
|
Available for
|
|
|
|
Securities to
|
|
|
Average
|
|
|
Future Issuance
|
|
|
|
be Issued Upon
|
|
|
Exercise
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Price of
|
|
|
Compensation
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Plans (Excluding
|
|
|
|
Options,
|
|
|
Options,
|
|
|
Securities
|
|
|
|
Warrants and
|
|
|
Warrants and
|
|
|
Reflected in
|
|
Plan Category
|
|
Rights
|
|
|
Rights
|
|
|
Column (a))
|
|
|
Equity compensation plans approved
by shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation plan
|
|
|
2,092,835
|
|
|
$
|
24.22
|
|
|
|
4,995,614
|
|
Executive deferred compensation
plan
|
|
|
11,959
|
|
|
|
|
|
|
|
238,041
|
|
Directors deferred
compensation plan
|
|
|
41,272
|
|
|
|
|
|
|
|
7,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,146,066
|
|
|
|
|
|
|
|
5,240,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not
approved by shareholders:
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the
officers and directors of a public company, and persons who own
more than ten percent of a registered class of a public
companys equity securities, to file reports of beneficial
ownership and changes in beneficial ownership with the
Securities and Exchange Commission. Based solely on our review
of the copies of such reports received by us, or upon written
representations received from certain reporting persons, we
believe that during 2006 our officers, directors and ten-percent
shareholders complied with all section 16(a) filing
requirements applicable to them, except that by administrative
error, the report of an option grant to Mr. Noyce in
January 2006 was delayed, and reports of Mr. Trosts
monthly payroll deduction investments into the FBL Direct Stock
Purchase Plan from October 2004 to October 2006 were not filed
until November 2006.
EXECUTIVE
OFFICERS
Most of our executive and other officers devote all of their
time to the affairs of the Company. Services performed for
affiliates are charged to the affiliates on the basis of a time
allocation and the affiliates are required to reimburse the
Company for the cost of services. As explained in the section
Certain Relationships and Related Party
Transactions Management and Marketing
Agreements, we receive management fees for managing
certain affiliates. One officer, Mr. Lang, is employed by
Farm Bureau Management Corporation, a wholly owned subsidiary of
the Iowa Farm Bureau Federation, and with the exception of
option grants, he is compensated by Farm Bureau Management
Corporation which is subsequently reimbursed by us for an
allocated portion of his compensation.
16
The current executive officers of the Company are as follows:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Craig A. Lang
|
|
|
55
|
|
|
Chairman of the Board and Director
|
James W. Noyce
|
|
|
51
|
|
|
Chief Executive Officer and
Director
|
James P. Brannen
|
|
|
44
|
|
|
Chief Financial Officer, Chief
Administrative Officer and Treasurer
|
Douglas W. Gumm
|
|
|
52
|
|
|
Vice President, Information
Technology
|
Stephen M. Morain
|
|
|
61
|
|
|
Senior Vice President, Secretary
and General Counsel
|
John M. Paule
|
|
|
50
|
|
|
Executive Vice
President EquiTrust Life
|
JoAnn W. Rumelhart
|
|
|
53
|
|
|
Executive Vice
President Farm Bureau Life
|
Lou Ann Sandburg
|
|
|
58
|
|
|
Vice President, Investments
|
David T. Sebastian
|
|
|
54
|
|
|
Vice President, Sales and Marketing
|
Donald J. Seibel
|
|
|
43
|
|
|
Vice President, Finance
|
Bruce A. Trost
|
|
|
51
|
|
|
Executive Vice
President Property-Casualty Companies
|
The following describes the business experience, principal
occupation and employment during the last five years of the
executive officers:
Biographical information for Messrs. Lang and Noyce is
found above under Election of Directors.
James P. Brannen, CPA, became Chief Financial Officer and
Chief Administrative Officer of FBL and its major operating
subsidiaries January 1, 2007, and was additionally named
Treasurer of all companies in February 2007. He had been Vice
President, Finance of FBL and of its major operating
subsidiaries since January 2002, after serving as Vice
President, Controller beginning in January 2000. He is a
director of non-profit enterprises Children & Families
of Iowa, and the Iowa Chapter of the American Parkinsons
Disease Association. Mr. Brannen has been employed by FBL
and its affiliates since 1991.
Douglas W. Gumm has been Vice President, Information
Technology since January 2000. He had served as Information
Systems Vice President since joining FBL on January 1,
1999. Mr. Gumm had been employed by Principal Financial
Group in its Information Services division since 1975, his last
five years serving as Director of Information
Systems Technical Services.
Stephen M. Morain is Senior Vice President, Secretary and
General Counsel, and an ex-officio member of the Executive
Committee. He also serves as General Counsel and Assistant
Secretary of the Iowa Farm Bureau Federation; General Counsel,
Secretary and director of Farm Bureau Management Corporation,
and Senior Vice President and General Counsel of FBLs
major operating subsidiaries and of Farm Bureau Mutual.
Mr. Morain is also chairman and a director of Edge
Technologies, Inc. He is chairman of the Iowa Life &
Health Insurance Guaranty Association, and a member of the life
and health guaranty funds in Colorado and Wyoming. He is a
trustee and treasurer of Des Moines University and a director
and vice president of the Des Moines Public Library Foundation.
Mr. Morain has been employed by the Company and its
affiliates since 1977.
John M. Paule is Executive Vice President of EquiTrust
Life Insurance Company, a position he has held since 2003.
Mr. Paule joined FBL in 1997 as Vice President
Information Technology and was promoted to Vice
President Corporate Administration in 1998, before
being named Chief Marketing Officer in 2000, a title he held
until January 2007. Mr. Paule had been employed by IBM
Corporation from 1978 until he joined FBL in 1997. During his
last five years with IBM he was its manager of the North
American general business insurance segment and its senior state
executive in Iowa. Mr. Paule is on the Board of Directors
of privately held MSI System Integrators, Inc. and the West Des
Moines Development Corporation. He is past president of the
Board of Directors of the West Des Moines Community School
District, the West Des Moines Chamber of Commerce and the West
Des Moines Rotary Club.
JoAnn W. Rumelhart, FSA, MAAA, has been Executive Vice
President Farm Bureau Life Insurance Company since
2000. She was Vice President Life Operations of FBL
and its major operating subsidiaries
17
from 1994. She began working for FBL in 1978, and served as Vice
President Client Services from 1991.
Ms. Rumelhart is a member of the Executive Development
Committee Task Force for LIMRA International, and a member of
the Deans Advisory Council for Iowa State
Universitys College of Liberal Arts and Sciences. She is
also a member of the board of directors of the
Make-A-Wish
Foundation of Iowa.
Lou Ann Sandburg, CFA, FLMI, has been Vice President,
Investments since January 1998. She joined the Company in 1980
as the portfolio manager of the EquiTrust Money Market Fund, and
later assumed the management of the tax-exempt bonds and
mortgage-backed securities portfolios. Ms. Sandburg was
named Securities Vice President in 1993 and Investment Vice
President, Securities, in 1994. She is a member of the board of
directors of Berthel Fisher & Company. She is past
president and a board member of the Iowa Society of Financial
Analysts.
David T. Sebastian was named Vice President, Sales and
Marketing January 1, 2007, after acting as Vice President,
Sales since November 1, 2004. He has over 20 years of
executive management consulting experience as an independent
consultant, including several years of acting as a consultant to
FBL. His projects included business strategy development,
business planning and design, marketing and sales planning, and
other executive level projects for a diverse group of clients,
both private and public. He was Vice President, Planning,
Development and Administration for NCS Pearson, a subsidiary of
Pearson, PLC, from 2002 until 2004.
Donald J. Seibel, CPA, has been Vice President, Finance
of FBL and its major operating subsidiaries since January 2007,
after serving as Vice President, Accounting beginning in January
2002. He is a director of non-profit enterprise West Des Moines
Public Library Friends Foundation, an officer of the Saint
Francis of Assisi Knights of Columbus and past president of the
Sertoma Club of Des Moines. Mr. Seibel has been employed by
FBL and its affiliates since 1996.
Bruce A. Trost became Executive Vice President of the
Companys managed property-casualty operations in November
2004. Mr. Trost has been employed by companies associated
with Farm Bureau interests throughout his career. He was
Executive Vice President and CEO of Nodak Mutual Insurance
Company, Fargo, ND, beginning in 2003 through 2004, and Vice
President Property Casualty Operations of the
COUNTRY Companies, Bloomington, IL, from 1999 to 2003. He began
working for COUNTRY in 1976, and from 1994 to 1999 he was Senior
Vice President of United Farm Family Mutual Insurance Company,
Indianapolis, IN.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
and Profitability
We sell individual life insurance and annuity products through
an exclusive distribution channel and individual annuity
products through independent agents and brokers. Our exclusive
agency force consists of 2,011 Farm Bureau agents and managers
operating in the Midwestern and Western sections of the United
States. Our fast growing independent channel, which we began in
2003, consists of 18,849 independent agents and brokers
operating throughout the United States. In addition to writing
direct insurance business, we assume business through various
coinsurance agreements. Several subsidiaries support various
functional areas of our life insurance companies and other
affiliates, by providing investment advisory, marketing and
distribution, and leasing services. In addition, we manage three
Farm Bureau affiliated property-casualty companies for a fee but
do not include their financial results in our consolidated
financial results.
Our profitability is primarily a factor of the following:
|
|
|
|
|
The volume of our life insurance and annuity business in force,
which is driven by the level of our sales, the volume of
business assumed through coinsurance agreements and the
persistency of the business written.
|
|
|
|
The amount of spread (excess of net investment income earned
over interest credited/option costs) we earn on contract
holders general account balances.
|
18
|
|
|
|
|
The amount of fees we earn on contract holders separate
account balances.
|
|
|
|
Our ability to price our life insurance products to earn
acceptable margins over the cost of providing benefits and the
expenses of acquiring and administering the products.
Competitive conditions, mortality experience, persistency,
investment results and our ability to maintain expenses in
accordance with pricing assumptions drive our margins on the
life products. On many products, we have the ability to mitigate
adverse experience through adjustments to credited interest
rates, policyholder dividends or cost of insurance charges.
|
|
|
|
Our ability to manage our investment portfolio to maximize
investment returns while providing adequate liquidity for
obligations to policyholders and minimizing the risk of defaults
or impairments of invested assets.
|
|
|
|
Our ability to manage the level of our operating expenses.
|
|
|
|
Changes in fair value of derivatives and embedded derivatives
relating to our index annuity business.
|
Reimbursement
of compensation expenses by managed affiliates
We manage three affiliated property-casualty companies whose
operating and underwriting results and owners equity are
separate from ours. We receive a management fee for our work in
managing Farm Bureau Mutual Insurance Company, Western
Agricultural Insurance Company and KFB Insurance Company and we
are reimbursed for all compensation and other expenses required
to provide the services to those companies. The compensation
expenses of our executives and employees are allocated between
us and our subsidiaries on the one hand, and the
property-casualty companies on the other hand, based on time and
responsibilities estimates and studies. For the named executive
officers, the property-casualty companies are reimbursing us for
the following percentage of their 2006 total compensation
expense: Mr. Oddy, 42.5%; Mr. Noyce, 30%;
Mr. Trost, 100%; Ms. Rumelhart, 0%, and
Mr. Morain, 42.5%.
Enterprise wide, the managed property-casualty companies are
reimbursing us for approximately 68% of our total compensation
expenses, 44% of our annual cash incentives, and 44% of our long
term incentives. As a result, the property-casualty companies
are paying their proportionate share of our total salaries, cash
incentives and long term incentives, as well as all other forms
of compensation and benefits. These allocations and
reimbursements should be considered in any analysis of
FBLs compensation costs, executive compensation costs, and
costs and uses of equity incentives.
We value good relationships with the state and local Farm Bureau
entities which sponsor and allow us and our property-casualty
affiliates to do business in their geographic areas. Among other
benefits, we believe that attention to the property-casualty
business allows us to do a more effective job of cross selling
life insurance products to property-casualty customers, and our
cross sales are consistently above industry averages. We further
emphasize this relationship by including various
property-casualty goals in our annual company wide incentive
plan.
In addition, several of our executives and employees provide
certain services to the Iowa Farm Bureau Federation and its
affiliates, and a portion of their compensation expense is also
reimbursed based on allocation estimates. See, Certain
Relationships and Related Party Transactions.
Executive
Compensation Philosophy and Goals
We expect that the FBL Financial Group, Inc. compensation
program will help us to attract and retain highly qualified and
motivated employees at all levels, encourage and reward
achievement of our annual and long term goals and operating
plans, and encourage officers and employees to become
shareholders with interests aligned with those of other
shareholders, all in an effort to increase shareholder value.
We have specific expectations regarding our named executive
officers. We intend that our executive compensation program will
effectively and appropriately compensate our executives and will
guide their activities in response to targeted incentives we
provide, both over the short and long term. We measure
appropriateness of the compensation package by comparing it to
payments made by peer group companies in
19
the insurance and financial services industries. Our target is
to have all elements of executive compensation, and overall
executive compensation, at approximately the median level of the
peer group for comparable positions and normal performance.
We use a variety of compensation elements to reach these goals.
These include base salary, annual cash performance based
incentives, long term equity awards of options and performance
based restricted stock, retirement, termination and change in
control arrangements, general employee benefits, and executive
benefits and perquisites.
The Management Development and Compensation Committee (the
compensation committee, or committee) of
the Board of Directors is in charge of all aspects of executive
compensation, and oversees all general compensation programs of
the company. The committee consists of four independent
directors. See Further Information Regarding the Board of
Directors for additional information regarding the
committee.
What our
compensation program is designed to reward
To create shareholder value, we want to reward performance that
is measurable against targets established in our base salary
program and in annual and long term incentive programs. Many of
the targets are derived from the profitability factors listed
above, see, Overview and Profitability. The targets
act as drivers of company improvement and are proxies for
company performance. Achievement of the targets will result in
company growth and profitability and will support company
objectives and promote shareholder interests. The combination of
compensation elements used is meant to provide, in total,
compensation that can be measured against the companies we have
selected as a peer group.
Peer Group
Our peer group for this measurement purpose was revised after a
survey and study in 2005 to identify insurance and financial
services companies with characteristics similar to us, including
industry classification, revenues, public company status, market
capitalization, assets under management and level of complexity
of the business, including both life and property-casualty
operations in the group. GAAP revenues of these organizations in
2004 averaged $1.462 billion compared to
$1.459 billion for FBL and the managed property-casualty
companies; median assets at year end 2004 were
$7.434 billion compared to $10.709 billion by FBL and
the managed property-casualty companies.
The peer group approved by the Board of Directors in September
2005 is as follows:
*Allmerica Financial Corp.
*AmerUs Group
Harleysville Group
Horace Mann Educators Corp.
National Western Life Insurance Company
The Phoenix Companies
Protective Life Corporation
United Fire and Casualty Co.
Unitrin, Inc.
Universal American Financial Corp.
*Subsequently Allmerica Financial changed its name to Hanover
Insurance Group in late 2005 upon disposal of its life
insurance, annuity, trust and retirement plan products
businesses; AmerUs was purchased by Aviva plc in 2006 and is no
longer a stand alone publicly held company. Changes in the peer
group will occur from time to time, with resulting adjustments
by the committee.
The peer group was selected with the assistance of Mercer Human
Resources Consulting, which has been retained by the
compensation committee as an independent consultant. Mercer in
prior years had been a consultant to the company. Its only
continuing relationship to the company is to receive license
fees from the company for its compensation management software.
20
The policy of the compensation committee is to request survey
data of peer group companies, with recommendations from the CEO
and from the committees consultant as to ranges of
elements of compensation, cash and non cash, that will attempt
to match median salary, annual cash incentives and long term
compensation to approximately the median level of comparable
positions and performance in the peer group companies.
Why we
chose to pay each element of compensation
Our compensation decisions start from an examination of the
competitive marketplace for insurance executive talent, based in
large part upon our survey of peer group companies and other
broad based published industry surveys, together with our review
of company goals and objectives and review of tally sheets
listing present total compensation available to our named
executive officers. We find that the combination of base
salaries, annual cash incentives and longer term equity grants,
some level of benefits and perquisites, together with retirement
and change of control benefits, is normal in our universe of
insurance and financial services firms. Competitive base
salaries assist in our ability to attract and retain executives.
Performance based incentive elements, both annual cash and long
term equity, encourage executives towards realization of company
short and long term goals. We balance the elements so our
executives (a) can achieve fair compensation, which we
define as being at approximately the median level of comparable
pay levels of the composite peer group, and (b) have the
ability to achieve above market compensation for above average
company performance of goals. The committee looks for
information from its outside consultants to determine if any
element of compensation needs adjustment, including material
change, to continue within the companys strategy of aiming
to target executive compensation at approximately the median
level of peer companies.
How we
determine amounts under each element of compensation
The
role of executive officers in the compensation
process
The companys executives make compensation assumptions
every year in the process of preparing budgets for the following
year. Then, management through the CEO makes specific
recommendations to the compensation committee of company
compensation, including compensation for the named executive
officers, covering salary, bonus and long term incentives. Other
elements of compensation are reviewed periodically. The
recommendations start with salary ranges established for various
positions based on survey and comparable company data, and
include objective and subjective evaluations. The
recommendations are measured against the peer group surveys and
recommendations of the compensation committees independent
consultants to stay within the companys policy of aiming
at the median peer group level for executive compensation. The
committee makes its own determination of the CEOs
compensation, with the assistance of its consultant. Within the
executive group the CEO attempts to achieve a level of internal
pay equity among the executives, with the review of the
committee. The process typically occurs in the late fall of the
year, with compensation increases effective at the beginning of
the calendar year.
Base
salaries
In addition to the CEOs recommendations, the policy of the
compensation committee is to request recommendations of
executive compensation ranges from its outside consultant,
Mercer Human Resources Consulting. The recommendations are based
upon surveys of compensation paid to peer group companies. The
objective is to sync up both current compensation and incentive
compensation to the median level of payments experienced by the
peer group. In the current compensation portion, the midpoint of
the base salary ranges are targeted at the peer company median
amounts paid to comparable positions, as is overall cash
compensation. To determine recommendations of a specific salary
within a range, the compensation committee considers management
input regarding the officers length of service in the
position, experience, and management skills in handling short
and long range operational and strategic issues. In addition,
the compensation committee has established specific goals, the
CEOs balanced scorecard, which assist in
determining compensation within the CEOs salary range. In
turn, the CEO uses the same or similar goals with various of his
direct reports, with the goal progress being important in
determining individual compensation within the executives
salary range. Current goals in the CEOs balanced scorecard
are in the areas of strategic planning, management
21
succession, risk mitigation, operational and market share
benchmarking and communications with stakeholders. Annual
reviews of the performance of the other named executive officers
are performed by the CEO, and by the compensation committee in
regard to performance of the CEO.
Annual Cash Incentives
The compensation committee believes that a significant portion
of annual cash compensation for the executive officers should be
at risk and tied to the Companys operational and financial
results. Our annual management performance plan establishes five
to eight business goals with a balance between expense control,
production targets aimed at revenue growth and profitability.
The goals are identical to those utilized in determining annual
cash incentives to all employees.
For 2006, the annual goals were set in the following eight areas:
2006
Management Performance Plan
|
|
|
|
|
Title of Goal
|
|
Threshold
|
|
Target Goal
|
|
1. Property-casualty
membership accounts
|
|
2005 actual membership accounts
|
|
Increase 2.5%
|
2. Farm Bureau Life production
|
|
2005 actual life production
|
|
Increase 5%
|
3. Property-casualty premiums
|
|
2005 actual property-casualty
premiums
|
|
Increase 8.5%
|
4. Life expenses
|
|
2006 budgeted life expenses
|
|
1.65% below budget
|
5. Property-casualty expenses
|
|
2006 budgeted property-casualty
expenses
|
|
1.65% below budget
|
6. Earnings per share (year
ending
9/30/06)
|
|
2006 budgeted earnings per share
|
|
Increase 5.2%
|
7. Property-casualty ratios
|
|
|
|
|
A. Loss ratio
|
|
2006 budgeted loss ratio
|
|
4.5% below budget
|
B. Expense ratio
|
|
2006 budgeted expense ratio
|
|
1.0% below budget
|
8. EquiTrust premiums
collected
|
|
2005 actual premiums
|
|
Increase 14.3%
|
Although it is generally difficult to maximize all of the annual
goals because of their counterbalance (that is, achieving one
goal might mean making some sacrifices on other goals), they are
designed to align with factors that will allow for the overall
success of the company on both a short and long term basis.
The named executive officers had the following percentages of
base salary under the 2006 Management Performance Plan available
to be paid as annual incentive payments for achievement of the
annual goals.
2006
Cash Incentives as a Percentage of Base Salary*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Actual
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
as % of Base
|
|
Name
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Salary
|
|
|
William J. Oddy
|
|
|
40
|
%
|
|
|
80
|
%
|
|
|
160
|
%
|
|
|
78.3
|
%
|
James W. Noyce
|
|
|
27.5
|
%
|
|
|
55
|
%
|
|
|
110
|
%
|
|
|
53.9
|
%
|
Bruce A. Trost
|
|
|
25
|
%
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
49.0
|
%
|
JoAnn W. Rumelhart
|
|
|
25
|
%
|
|
|
50
|
%
|
|
|
100
|
%
|
|
|
49.0
|
%
|
Stephen M. Morain
|
|
|
17.5
|
%
|
|
|
35
|
%
|
|
|
70
|
%
|
|
|
34.3
|
%
|
|
|
* |
For 2007, cash incentive ranges have been adjusted for
Mr. Noyce in his new role as CEO, to 40%, 80% and 160% of
base salary, and for James P. Brannen, CFO, to 25%, 50% and
100%; the percentages for the other continuing named executive
officers remain the same.
|
As part of the compensation committees desire to make
short term incentives more at risk to the executives, the range
of payments between a threshold level and a maximum level are
broader for this group and for the FBL management team, as
compared to all other employees. The target percentage
represents an
22
amount available if a goal is met at a 100% level. These
officers realize no payment unless a threshold level of
achievement is attained, a payment of 50% of target when the
performance threshold is met, rising proportionately to a
payment of 200% of the target if the goal is met at a maximum
level. Other employees realize payments of 75% of target at the
threshold, up to 150% of target at the maximum. Currently the
compensation committee has a policy of limiting maximum annual
cash incentives to any individual to not more than
$1,000,000 per year.
Long
Term Incentives; Options and Restricted Stock
The Class A Common Stock Compensation Plan provides for the
grant of stock options (nonqualified and incentive stock
options) and shares of restricted stock, among other forms of
equity. The plan is administered by the compensation committee
which consists solely of independent directors. The committee
has adopted a formula which covers supervisory and management
personnel, and bases annual awards on their position and salary.
Generally, the awards increase with the level of the position.
The compensation committee remains of the view that option
grants are an effective and important tool in both the
compensation of management and in tying the goals and interests
of management more closely to the goals and interests of the
shareholders. In addition, the board of directors has adopted
stock ownership guidelines for itself and for the executive
officers; see Stock Ownership Guidelines, below.
We have tied long term goals to equity compensation, both
through issuance of stock options without specific performance
targets, and through issuance of performance based restricted
stock. Prior to 2004 the company only utilized stock options for
this purpose, with the number of shares in the grants determined
by dividing the scheduled dollar value for each particular
executives award by the closing stock price on the date of
grant. Starting in 2004 we substituted grants of performance
based restricted stock for a portion of the option awards to the
eleven person management team of executive officers. This
change, based on recommendations of the committees
consultants, was designed to create more long-term incentives
for this key group. Performance measures to date have included
earnings per share and return on equity targets. These targets
have been selected because of their importance to the creation
of long term shareholder value and the financial health of the
company, and their importance to rating agencies and analysts
who follow the company.
The earnings per share and return on equity goals disclosed
below represent expectations of the Company at particular points
in time and may not necessarily represent managements
current view of potential operating results in future periods.
In addition, they are not comparable to earnings per share as
used in the companys guidance releases or as presented in
its audited consolidated financial statements, both of which
follow GAAP, or to return on equity computations outside of the
formula used in the award agreements. Rather, the definitions of
earnings per share and return on equity in the restricted stock
agreements vary from GAAP by attempting to focus on core
operations which are more within the control of management. For
instance, the 2006 grant agreements contained the following
definition of Restricted Stock Agreement Earnings Per
Share (RSAEPS):
RSAEPS means earnings per common share, as reported in the FBL
Consolidated Statement of Income, net of realized/unrealized
gains or losses on investments, net unrealized gains or losses
on derivatives, and other changes in accounting principles that
impact the 2006, 2007 and 2008 Consolidated Statements of Income
that are not now contemplated in determining the RSAEPS.
Additionally, the 2006 grant agreements contained the following
definition of Restricted Stock Agreement Return on Equity
(RSAROE):
RSAROE means the percentage return on equity, as computed by
dividing operating income (net income as found in the FBL
Consolidated Statement of Income for the year ended
December 31, 2008, adjusted to eliminate the impact of
realized/unrealized gains or losses on investments, net
unrealized gains or losses on derivatives, and other changes in
accounting principles that impact operating income that are not
now contemplated in determining the RSAROE) by the average of
total stockholders equity at the end of each of the five
calendar quarters ending December 31, 2008.
23
For the 2004 grant, we determined a target level of equity
incentive awards to the executives, then divided it by value,
50% in stock options and 50% in performance based restricted
stock. The 2004 grant of restricted stock required 2006 earnings
per share, as defined, from $2.29 to $2.49. The awards were
subject to forfeiture in whole or part in early 2007 if the
maximum goals for 2006 were not met. For the 2004 grants which
vested in February 2007, 100% of the original award was earned
by all participants, as the defined RSAEPS for 2006 was $2.58.
This computation differs markedly from the companys
audited financial statements which indicated record net income
for 2006 of $3.01 per share, and from the companys
commonly used non-GAAP measure of operating income, which was
$2.78 per share, also a one year record.
For the 2005 equity grants, the committee divided equity
incentive awards to the executives by value, 50% in stock
options and 50% in performance based restricted stock, but
adjusted how the restricted stock is earned by adding a return
on equity component. The 2005 restricted stock grants are
subject to forfeiture in whole or part if earnings per share and
return on equity goals for 2007 are not met. The earnings per
share, as defined, goals are from $2.40 to $2.74, and the return
on equity, as defined, goals are from 9% to 10%. The goals are
weighted 75% earnings per share and 25% return on equity.
In 2006 the restricted stock grants were extended to an
additional executive group of 20 persons at a vice president
level. For the 2006 equity grants, the committee again divided
equity incentive awards to the group by value, 50% in stock
options and 50% in performance based restricted stock, and
further adjusted the formula for earning the restricted stock by
making the earnings per share goal a multi year goal. The 2006
restricted stock grants are subject to forfeiture in whole or in
part if the earnings per share goal for the three years ending
December 31, 2008, and the return on equity goal for 2008,
are not met, with the same weighting of 75% earnings per share
and 25% return on equity. The earnings per share, as defined,
goals for the three years ended December 31, 2008 are from
$7.33 to $8.74, and the return on equity, as defined, goals for
2008 are from 9% to 11%.
The compensation committee has annually set the performance
criteria at levels where expected performance would result in
the executives earning 50% of the restricted shares. However,
actual results could result in none, some, or all of the shares
being earned. The executives will have voting rights during the
period of restriction, and will receive accumulated dividends on
the shares actually earned when the period of forfeiture lapses.
We intend to continue this usage of performance based restricted
stock in the future for this group. Currently the committee has
a policy of limiting grants of restricted stock to not more than
$1,000,000 grant date fair market value per year.
In order to further align managements interests with the
interest of shareowners and support good governance practices,
at its December 2006 meeting the compensation committee adopted
a clawback policy applicable to performance-based incentive
awards to the executives. In the event the company is required
to prepare an accounting restatement due to material
noncompliance with any financial reporting requirement as
determined by the independent directors, each of the
companys executive officers may be required to reimburse
the company for the excess value received from any incentive
award made to him or her over the value actually earned based on
the restated performance, regardless of the executives
lack of misconduct. The policy also allows the company to seek
recoupment of benefits from any employee whose misconduct was
the cause of the restatement, along with legal recourse.
Benefits
FBL offers benefit plans such as retirement, 401(k), vacation,
medical, life and disability insurance to executive officers on
the same basis as offered to all employees. Additional benefits
of this type available to the executives include: (1) A
deferred compensation plan for the portion of the company match
from the 401(k) plan which would be in excess of ERISA
limitations. The amounts are accrued in an unfunded plan and
bear interest at the rate credited on FBLs flexible
premium deferred annuity, currently 4.2%, payable upon
termination of employment. (2) An executive disability
policy which will provide benefits in case of covered disability
up to full salary. (3) An executive life insurance program
through which the executives are provided funds with which they
may purchase a universal life policy in the amount of twice
salary and bonus, less $50,000, paid up at age 65.
24
In its continuing reexamination of all facets of executive
compensation, the committee has determined to freeze the
executive life insurance program after 2006. This was done in
part because this benefit was over and above what peer companies
were offering. Executives will retain the face amount of
universal life policies currently issued, and will receive
payments in future years sufficient to maintain that amount.
They will be eligible to receive additional group life insurance
coverage under the companys all employee plan to maintain
insurance coverage for future compensation increases on the same
basis as all other employees.
Perquisites
The Company provides executives with an automobile allowance, an
executive disability policy, club initiation fees and dues,
annual physicals, the availability of limited reimbursement for
financial planning services and tax return assistance, and
preferential use of company box seats at four sporting and
entertainment venues. Surveys by the committees
independent consultant indicate the level of perquisites is
within an acceptable range of what is offered by the peer group
companies.
Retirement
and termination benefits
Like many companies we have reduced defined retirement benefits
several times in the last 15 years. The reduction in
defined benefit plan payments has been based on benchmarking
studies of other companies within our industry and geographic
location, and in part from recognition that the existence of a
stock option plan and defined contribution plan (401(k)
accounts) with a company match available, together with the
companys excess 401(k) plan, can replace a portion of a
retirement plan that began before the company became publicly
traded and which was designed for a non-public company. See
further description of the companys retirement plans at
footnote 2 to the Pension Plan table, below.
Change
in Control Agreements
In establishing
change-in-control
agreements with executives in 2002, we deliberately determined
to use a version of agreement that was plain vanilla
and similar to that of many other companies. We believe
establishing a base line agreement for compensation in a change
of control event was appropriate as we continued to announce
that we were seeking acquisitions as a part of our growth
strategy. The change in control agreements have a double trigger
before payments are required; i.e., the defined change in
control must occur, and the executive must have a discernable
change in working conditions. Apart from the change in control
agreements, our stock compensation plan under which stock
options are issued has provisions that upon a change in control
unvested options will vest. Similarly, the form of restricted
stock agreement presented to participants has provisions that
upon a change in control unearned restricted stock will be free
from forfeiture. In other words, a single trigger of change in
control accelerates both the options and the restricted stock
without a change in the executives working conditions.
We have entered into change in control agreements with each of
the named executive officers, and with the other officers named
in our Executive Officers list (except for
Mr. Lang, whose employer is the Farm Bureau Management
Corporation). The forms of agreements were filed with the SEC as
exhibits to our
Form 10-Q
in August 2002.
In entering into these agreements, the Board determined that it
is in the best interests of the Company and its stockholders to
ensure that we will have the continued dedication of the
executives notwithstanding the possibility, threat or occurrence
of a termination of the Executives employment in certain
circumstances, including following a change of control. Further,
the Board stated that it believes it is imperative to
diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or
threatened termination of the Executives employment in
such circumstances and to provide the Executive with
compensation and benefits arrangements upon such a termination
which ensure that the compensation and benefits expectations of
the Executive will be satisfied and which are competitive with
those of other corporations who may seek to employ the
Executive.
Please see Potential Payments Upon Termination or Change
in Control Payments Made Upon a Change in
Control, at page 36, for additional information
regarding the change in control agreements.
25
The agreements are effective for three years after a change in
control, at a multiple of salary and bonus of three times for
Messrs. Oddy, Noyce, Morain, Paule, Trost and Brannen, and
for Ms. Rumelhart, and for two years after a change of
control, and a multiple of salary and bonus of two times, for
Messrs. Gumm, Sebastian and Seibel, and Ms. Sandburg.
Timing of
grants of equity awards
The compensation committee adopted a stock option policy at the
time of the companys initial public offering in 1996 which
covers administrative matters, and at the same time instituted a
practice of setting once a year grant dates at January 15 (or
next weekday if January 15 falls on a weekend). That policy has
been followed since that time. The company does not time its
grants in coordination with the release of material non-public
information, and executives receive their grants at the same
time as other participants.
Annual equity awards are recommended by management to the
committee in the fall of each year; the compensation committee
reviews and approves or revises the recommendations at a meeting
late in the year, typically in November or December.
Managements recommendations are formula driven and result
in grants that can be computed by salary and salary grade of
eligible individuals, who are all in the supervisory and
management ranks of the company. The grant date is January 15 of
the following year. The dollar value of the awards to the
executives are then translated into the number of stock options
resulting from dividing the dollar value of the award by the
Black-Scholes value of the shares on the grant date . The
committee also annually preapproves interim grants of options to
new hires, and to persons receiving promotions, during the year.
The hire date, or promotion date, automatically becomes the
grant date of the option, the prorated value of which is derived
from the formula adopted by the committee at the end of the
prior year.
Similarly, the grants of performance based restricted stock in
the last three years have followed the same schedule for
recommendations, review and establishment of grant date.
However, the actual performance terms of the restricted stock
grants were not determined until after completion of the prior
years financial statements in February. FAS 123(R)
required the shares to be revalued at the closing stock price of
the date the performance goals were established. Since the
number of shares subject to the grants had been computed based
on the January 15 closing stock price, the valuation of the
shares at the closing stock price on the date of determination
of terms resulted in the value of the shares varying from what
the compensation committee had first determined. To avoid this
situation in the future, annual restricted stock grants will not
be computed or measured until all performance terms are
determined by the compensation committee.
How each
element of compensation, and our decisions about each element,
fit into our compensation objectives
The compensation objectives described earlier include attracting
and retaining executives who can aid in creating shareholder
value, and effectively and appropriately compensating the
executives and guiding their activities in response to targeted
incentives, both short and long term. The amount of
compensation, both in individual elements and in the aggregate,
is targeted at the median levels of a peer group of insurance
and financial services companies.
We utilize base salary as a building block towards these
objectives, establishing a salary range for particular positions
based on survey data and job responsibilities. Being competitive
in base salary is a minimum requirement to obtain and retain
skilled insurance executives in the Des Moines, Iowa area,
because of the significant number of home offices of insurers
located there.
Annual cash incentives keyed to short term objectives provide a
second step in appropriate compensation. The performance
targets, which are used to determine annual cash incentives for
all employees, emphasize expense control, growth in company
operations and profitability. Pay for performance
for the named executive officers has been significantly enhanced
in recent years by putting a larger part of their potential
compensation at risk in the annual cash incentive program.
Long term objectives are enhanced by the use of equity grants in
the form of stock options and performance based restricted
stock. The stock options, which vest over five years, attain
value in the hands of
26
the executives as increases in the companys stock price
exceed the option exercise price. This creates a direct
correlation to shareholder value. The performance based
restricted stock requires that the company meet earnings per
share and return on equity targets over a three year time frame;
both metrics are commonly used measures of performance and
comparison by analysts and investors.
The compensation committee reviews all elements of compensation,
including executive benefits and perquisites, from time to time.
In 2006 it determined to freeze the universal life policies
provided to the executives with the executives then eligible to
receive additional group life insurance coverage under the
companys all employee plan to maintain insurance coverage
for future compensation increases. This was done because the
benefit provided was determined to be above life insurance
programs provided by the peer group.
Retirement and termination benefits are also part of the
executives compensation package, under the companys
defined benefit retirement plans and change in control
agreements.
Stock
ownership guidelines
The compensation committee believes that a fundamental goal of
executive compensation is to encourage and create opportunities
for long-term executive stock ownership which will tie the
efforts of the executives to goals of increasing shareholder
value. The compensation committee expects that over time,
executive officers will establish ownership positions that are
of significant value at a multiple of their annual salary.
To encourage ownership, the compensation committee in late 2004
established Executive Ownership Guidelines. The Guidelines
require the CEO within five years of January 1, 2005 (or
within five years of start date, if later) to own FBL common
stock worth three times annual base salary, and within ten years
to own FBL common stock worth five times annual base salary. The
CFO, Executive Vice Presidents and Senior Vice Presidents are to
own shares worth two times annual base pay in five years, and
three times annual base pay in ten years, in FBL common stock.
All other members of the executive group (25 additional persons)
are required to own shares worth at least one time annual base
pay in FBL common stock within five years.
After two years most of the officers have made significant
progress towards the ownership guidelines. Four of 10 management
team officers and three of 19 other executives were fully
compliant at year end 2006.
If the guidelines are not met, the annual cash incentive of the
particular officer, net of tax, could be required to be used to
purchase FBL common stock for the account of the officer. If
available, the required purchases will be made through the
Executive Salary and Bonus Deferred Compensation Plan. The
ownership guidelines do not recognize beneficial ownership of
shares through performance based restricted stock grants until
they are earned, or through grants of stock options until they
are exercised, but will recognize as beneficial ownership the
share equivalents in unit accounts in the deferred compensation
plan and in the 401(k) plan.
The company has not established policies regarding hedging
economic risks of company stock ownership by its executives and
directors.
Tax and
regulatory matters
Internal
Revenue Code § 162(m)
Internal Revenue Code § 162(m) limits the
deductibility of compensation paid to the CEO and the next four
most highly paid executives of a public company to
$1,000,000 per individual, subject to exceptions for
performance based pay, among other items. All compensation paid
to our named executive officers in 2006 will be deductible
because we have not exceeded the § 162(m) limits. We
take performance based pay exceptions into account in
structuring executive compensation. We received shareholder
approval at the 2004 annual meeting of the material terms used
in performance based compensation to qualify for appropriate
162(m) treatment.
27
Nonqualified
Deferred Compensation
The American Jobs Creation Act of 2004 changed the tax rules
applicable to nonqualified deferred compensation arrangements.
While the final regulations have not become effective yet, the
company believes it is operating in good faith compliance with
the statutory provisions which were effective January 1,
2005. See page 34 for a more detailed discussion of the
Companys nonqualified deferred compensation arrangements.
Accounting
for Stock-Based Compensation
The company began accounting for stock-based payments in
accordance with the requirements of FASB Statement 123(R)
January 1, 2006.
COMPENSATION
COMMITTEE REPORT
The Management Development and Compensation Committee of FBL
Financial Group, Inc. has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Proxy Statement.
John Walker, Chair
Tim Gill
Paul Larson
Kim Robak
28
SUMMARY
COMPENSATION TABLE
The following table summarizes total compensation paid to or
earned by each of the named executive officers for the year
ended December 31, 2006. Among other matters, the committee
reviewed tally sheets representing total compensation, including
equity and non-equity based compensation to the officers, in
setting the total compensation arrangements for each of the
officers.
No payments were made which would be reportable in the
Bonus column, representing discretionary payments.
Payments which in past years have been labeled as bonuses are
now found in the Non-Equity Incentive Plan
Compensation column, representing annual payments made
pursuant to pre-existing company performance criteria.
Compared to total compensation, including the fair value of
equity awards and the non-equity incentive plan compensation,
base salary of the named executive officers represented from 20%
(Mr. Oddy) to 36% (Mr. Morain) of the officers
total compensation for 2006. There were no discretionary bonuses
paid. These results are consistent with the companys
philosophy that a significant amount of compensation for the
senior executives should be variable and at risk of performance.
It also reflects that Mr. Oddy, as CEO, was awarded
performance based incentive grants incrementally larger than
those received by the other officers.
Summary
Compensation Table
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(h)Change in
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Pension
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Value and
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Non-Qualified
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(g)Non-Equity
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Deferred
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(e)Stock
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(f)Option
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Incentive-Plan
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Compensation
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(i)All Other
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(c)Salary
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Awards(1)
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Awards(1)
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Compensation(2)
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Earnings(3)
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Compensation(4)(5)
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(j)Total
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(a)Name & Position
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(b)Year
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($)
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($)
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($)
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($)
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($)
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$
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$
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William Oddy
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2006
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682,500
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363,282
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(6)
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467,038
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534,602
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1,073,989
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257,451
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3,378,862
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Chief Executive Officer and Director
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James Noyce
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2006
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461,100
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257,731
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196,692
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248,311
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236,422
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92,115
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1,492,371
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Chief Financial Officer &
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Chief Administrative Officer
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Bruce Trost
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2006
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355,100
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(7)
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74,263
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51,320
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173,844
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310,508
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77,509
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1,042,544
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Executive VP Property
Casualty
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Companies
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JoAnn Rumelhart
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2006
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348,400
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165,600
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145,161
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170,564
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298,329
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78,062
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1,206,116
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Executive VP Farm
Bureau Life
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Stephen M. Morain
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2006
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428,168
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99,240
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126,821
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146,731
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287,211
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109,293
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1,197,464
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Senior VP & General
Counsel
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(1) |
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Amounts in columns (e) and (f) reflect the dollar
amount recognized for financial statement reporting purposes for
the year ended December 31, 2006, in accordance with
FAS 123(R), of awards of restricted stock and stock options
and include amounts from awards granted in and prior to 2006.
Assumptions used in the calculation of these amounts are
included in footnotes 1 and 9 to the companys audited
consolidated financial statements for the year ended
December 31, 2006 included in the companys Annual
Report on
Form 10-K
filed with the Securities and Exchange Commission on
February 23, 2007. |
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(2) |
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Non-equity incentive plan compensation of the named executive
officers by its terms is paid between February 1 and February 15
of the year following performance. See Annual
Cash Incentives beginning on page 22 for further
detail regarding payments under the Management Performance Plan. |
|
(3) |
|
All amounts in column (h) represent actuarial increases in
the present value of the benefits to the named executive
officers under the companys pension plans determined using
interest rate and mortality rate assumptions consistent with
those used in the companys financial statements and
include amounts which |
29
|
|
|
|
|
the named executive officer may not currently be entitled to
receive because such amounts are not vested. |
|
|
|
(4) |
|
Column (i), Other Annual Compensation, in 2006 includes for each
of the named executive officers the costs of an executive life
insurance program through which the executives may purchase a
universal life insurance policy of up to twice salary and bonus,
less $50,000, with a schedule of payments that will make the
policy paid up at age 65; under this program payments were
made to Oddy, $170,483; Noyce, $25,422; Trost, $11,998,
Rumelhart, $21,756 and Morain, $45,981. Each named executive
officer received company contributions to defined contribution
plans, being matching contributions to the executives
401(k) account up to ERISA limits, and under the excess 401(k)
deferred compensation plan matching contributions in an amount
equal to the 401(k) plan percentage match times compensation as
defined in the plan, less the ERISA limitation of $220,000;
together these amounted to: Oddy, $35,054, Noyce, $21,537,
Trost, $18,872, Rumelhart, $16,506 and Morain, $17,829. |
|
(5) |
|
Column (i) also includes for the named executive officers
perquisites valued at: Oddy, $31,267; Noyce, $30,382; Trost,
$30,035; Rumelhart, $29,449, and Morain, $27,282. No perquisites
or personal benefits were received by any one of the named
executive officers with a value in excess of the greater of
$25,000 or 10% of such persons total perquisites. Items of
value received by the various named executive officers in 2006
that do not reach the required perquisite disclosure level
include (in aggregate dollars descending order)
(i) automobile allowance, (ii) club memberships,
(iii) the costs of an executive disability program through
which the executives may purchase with after tax dollars a
disability policy to replace salary to stated limits,
(iv) physical exams, (v) preferential usage of company
box seats for certain sporting and entertainment events and
(vi) personal use of corporate aircraft. The perquisites
are valued at incremental cost to the company. |
|
(6) |
|
Because Mr. Oddy retired March 1, 2007, he forfeited
22,985 shares of restricted stock. The stock awards expense
does not include expense for the forfeited shares. |
|
(7) |
|
Includes $24,857 of salary and $57,051 of non-equity incentive
plan awards deferred by Mr. Trost into the Executive Salary
and Bonus Deferred Compensation Plan. See Mr. Trosts
entry at Grant of Plan Based Awards. |
Grants
of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Option
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
Future Payouts
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Awards:
|
|
|
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Estimated Future
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Payouts Under Equity Incentive
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Stock and
|
|
|
|
|
|
|
Date of
|
|
|
Plan Awards
|
|
|
Plan Awards(3)
|
|
|
Stock
|
|
|
Underlying
|
|
|
of Option
|
|
|
Option
|
|
|
|
Grant
|
|
|
Board
|
|
|
Threshold(2)
|
|
|
Target
|
|
|
Max
|
|
|
Threshold
|
|
|
Target
|
|
|
Max
|
|
|
or Units
|
|
|
Options(4)
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
Action(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($/Sh)
|
|
|
William Oddy
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
273,000
|
|
|
|
546,000
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2006
|
|
|
|
2/21/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
15,356
|
|
|
|
30,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,043,594
|
|
|
|
|
1/16/2006
|
|
|
|
12/6/2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,630
|
|
|
|
32.56
|
|
|
|
227,142
|
|
James Noyce
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
126,803
|
|
|
|
253,605
|
|
|
|
507,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2006
|
|
|
|
2/21/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
7,789
|
|
|
|
15,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
529,340
|
|
|
|
|
1/16/2006
|
|
|
|
12/6/2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,589
|
|
|
|
32.56
|
|
|
|
253,557
|
|
Bruce Trost
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
88,775
|
|
|
|
177,550
|
|
|
|
355,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2006
|
|
|
|
2/21/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
5,453
|
|
|
|
10,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
370,586
|
|
|
|
|
1/16/2006
|
|
|
|
12/6/2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,215
|
|
|
|
32.56
|
|
|
|
177,518
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,719
|
(5)
|
|
|
|
|
|
|
|
|
|
|
91,409
|
|
JoAnn Rumelhart
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
87,100
|
|
|
|
174,200
|
|
|
|
348,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2006
|
|
|
|
2/21/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
5,350
|
|
|
|
10,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
363,586
|
|
|
|
|
1/16/2006
|
|
|
|
12/6/2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,890
|
|
|
|
32.56
|
|
|
|
126,131
|
|
Stephen Morain
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
74,929
|
|
|
|
149,859
|
|
|
|
299,718
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/21/2006
|
|
|
|
2/21/2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,288
|
|
|
|
6,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
223,419
|
|
|
|
|
1/16/2006
|
|
|
|
12/6/2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,378
|
|
|
|
32.56
|
|
|
|
47,497
|
|
|
|
|
(1) |
|
Cash and long term incentive equity awards are determined by the
compensation committee at meetings late in the year based on
formulas which provide an amount of dollars to be awarded to
each recipient. For stock option awards, the dollars are divided
by the Black-Scholes value on a subsequent measuring |
30
|
|
|
|
|
date, the date of grant, which determines the number of shares
in the grant. Restricted stock grants are not finalized until
performance terms are set by the committee in the first quarter
of the year. |
|
|
|
(2) |
|
Amounts indicated as threshold payments represent the total
payable if each performance goals minimum requirements
were met. Actual amounts payable for a goal would be zero if a
threshold for a goal is not met. See How we determine
amounts under each element of compensation Annual
Cash Incentives, above, for information regarding
performance based conditions of the annual cash incentives. |
|
(3) |
|
Amounts in this column relate to performance based restricted
stock issued to the named executive officers in the last three
years. Information regarding the performance targets for these
awards is at How we determine amounts under each element
of compensation Long Term Incentives; Options and
Restricted Stock, above. Participants through 2006
received dividends on the restricted stock at the same rate per
share as other stockholders. Starting in 2007, they will receive
accrued dividends on shares when they vest. They can vote the
shares from the date of grant. |
|
(4) |
|
The Companys grants of stock options are effective
January 15 (or next week day) of each year, with the
exercise price equal to that grant date closing price. The
options vest 20% per year over a five year period and
expire ten years from date of grant. For the named executive
officers, the options are computed by a formula keyed to a
percentage of annual base salary, which increases with the
position and seniority of the officer. |
|
(5) |
|
Mr. Trost was credited with 2,719 deferred units in the
Executive Deferred Salary and Bonus Plan for salary and
non-equity incentive plan compensation deferred during 2006. The
units are payable one for one in shares of common stock at a
future date. |
31
Outstanding
Equity Awards at Year End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number
|
|
|
Market Value
|
|
|
Equity Incentive
|
|
|
Plan Awards:
|
|
|
|
Number
|
|
|
Number of
|
|
|
Securities
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
of Shares
|
|
|
Plan Awards:
|
|
|
Market or Payout
|
|
|
|
of Securities
|
|
|
Securities
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
or Units of
|
|
|
or Units of
|
|
|
Number of
|
|
|
Value of Unearned
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock that
|
|
|
Stock that
|
|
|
Unearned Shares,
|
|
|
Shares, Units or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
have Not
|
|
|
have not
|
|
|
Units, or Other
|
|
|
Or Other Rights that
|
|
|
|
Options
|
|
|
Option #
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Rights that have
|
|
|
Have not Vested
|
|
Name
|
|
# Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
#
|
|
|
$
|
|
|
Not Vested(6) #
|
|
|
$
|
|
|
William Oddy
|
|
|
1,412
|
|
|
|
|
|
|
|
|
|
|
|
16.56
|
|
|
|
03/01/10
|
|
|
|
|
|
|
|
|
|
|
|
60,540
|
|
|
|
2,365,903
|
|
|
|
|
6,065
|
|
|
|
|
|
|
|
|
|
|
|
15.50
|
|
|
|
01/15/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,016
|
(1)
|
|
|
|
|
|
|
17.97
|
|
|
|
01/15/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,677
|
(2)
|
|
|
|
|
|
|
19.50
|
|
|
|
01/15/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,715
|
|
|
|
26,574
|
(3)
|
|
|
|
|
|
|
25.60
|
|
|
|
01/15/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,210
|
|
|
|
36,844
|
(4)
|
|
|
|
|
|
|
26.35
|
|
|
|
01/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,630
|
(5)
|
|
|
|
|
|
|
32.56
|
|
|
|
01/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Noyce
|
|
|
3,628
|
|
|
|
|
|
|
|
|
|
|
|
18.25
|
|
|
|
01/15/08
|
|
|
|
|
|
|
|
|
|
|
|
31,930
|
|
|
|
1,247,824
|
|
|
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
23.00
|
|
|
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,024
|
|
|
|
|
|
|
|
|
|
|
|
15.75
|
|
|
|
01/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,094
|
|
|
|
|
|
|
|
|
|
|
|
15.50
|
|
|
|
01/15/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,989
|
|
|
|
3,969
|
(1)
|
|
|
|
|
|
|
17.97
|
|
|
|
01/15/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,265
|
|
|
|
8,473
|
(2)
|
|
|
|
|
|
|
19.50
|
|
|
|
01/15/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,448
|
|
|
|
14,173
|
(3)
|
|
|
|
|
|
|
25.60
|
|
|
|
01/15/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,181
|
|
|
|
20,724
|
(4)
|
|
|
|
|
|
|
26.35
|
|
|
|
01/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,589
|
(5)
|
|
|
|
|
|
|
32.56
|
|
|
|
01/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce Trost
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
25.60
|
|
|
|
01/15/14
|
|
|
|
|
|
|
|
|
|
|
|
13,752
|
|
|
|
537,428
|
|
|
|
|
574
|
|
|
|
861
|
(3)
|
|
|
|
|
|
|
27.06
|
|
|
|
10/01/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,727
|
|
|
|
6,908
|
(4)
|
|
|
|
|
|
|
26.35
|
|
|
|
01/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,215
|
(5)
|
|
|
|
|
|
|
32.56
|
|
|
|
01/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JoAnn Rumelhart
|
|
|
|
|
|
|
2,249
|
(1)
|
|
|
|
|
|
|
17.97
|
|
|
|
01/15/12
|
|
|
|
|
|
|
|
|
|
|
|
20,706
|
|
|
|
809,190
|
|
|
|
|
|
|
|
|
6,363
|
(2)
|
|
|
|
|
|
|
19.50
|
|
|
|
01/15/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,859
|
(3)
|
|
|
|
|
|
|
25.60
|
|
|
|
01/15/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,435
|
(4)
|
|
|
|
|
|
|
26.35
|
|
|
|
01/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,890
|
(5)
|
|
|
|
|
|
|
32.56
|
|
|
|
01/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Morain(7)
|
|
|
1,249
|
|
|
|
|
|
|
|
|
|
|
|
18.25
|
|
|
|
01/15/08
|
|
|
|
|
|
|
|
|
|
|
|
12,351
|
|
|
|
482,677
|
|
|
|
|
408
|
|
|
|
|
|
|
|
|
|
|
|
23.00
|
|
|
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,040
|
|
|
|
|
|
|
|
|
|
|
|
15.75
|
|
|
|
01/15/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,662
|
|
|
|
|
|
|
|
|
|
|
|
15.50
|
|
|
|
01/15/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,873
|
|
|
|
1,719
|
(1)
|
|
|
|
|
|
|
17.97
|
|
|
|
01/15/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,940
|
|
|
|
3,294
|
(2)
|
|
|
|
|
|
|
19.50
|
|
|
|
01/15/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,542
|
|
|
|
5,316
|
(3)
|
|
|
|
|
|
|
25.60
|
|
|
|
01/15/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,727
|
|
|
|
6,908
|
(4)
|
|
|
|
|
|
|
26.35
|
|
|
|
01/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,378
|
(5)
|
|
|
|
|
|
|
32.56
|
|
|
|
01/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Vests January 15, 2007 |
|
(2) |
|
Vests in equal portions January 15, 2007 and 2008 |
|
(3) |
|
Vests in equal portions January 15, 2007, 2008 and 2009 |
|
(4) |
|
Vests in equal portions January 15, 2007, 2008, 2009 and
2010 |
|
(5) |
|
Vests in equal portions January 15, 2007, 2008, 2009, 2010
and 2011. |
|
(6) |
|
Equity grants of performance based restricted stock vest, if at
all, three years after grant to the extent performance goals
have been met. Grants in this category have been made in 2004,
2005 and 2006, and will vest in 2007, 2008 and 2009, if earned. |
|
(7) |
|
Pursuant to a qualified domestic relations order entered into in
April 2003, Mr. Morain transferred options to purchase an
aggregate of 79,653 shares of common stock, of which 74,233
options have been exercised. |
32
Option
Exercises and Stock Vested in 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
on Exercise
|
|
|
on Exercise
|
|
|
on Vesting
|
|
|
on Vesting
|
|
Name
|
|
#
|
|
|
$
|
|
|
#
|
|
|
$
|
|
|
William Oddy
|
|
|
14,317
|
|
|
|
216,882
|
|
|
|
|
|
|
|
|
|
James Noyce
|
|
|
19,878
|
|
|
|
379,437
|
|
|
|
|
|
|
|
|
|
Bruce Trost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JoAnn Rumelhart
|
|
|
13,841
|
|
|
|
180,763
|
|
|
|
|
|
|
|
|
|
Stephen Morain
|
|
|
1,406
|
|
|
|
30,884
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
The table below shows the present value of accumulated benefits
payable to each of the named executive officers, including the
number of years of service credited to each such named executive
officer, under the Retirement Plan and the Supplemental
Retirement Plan determined using interest rate and mortality
rate assumptions consistent with those used in the
companys financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Payments
|
|
|
|
|
|
Years Credited
|
|
|
Accumulated
|
|
|
During Last
|
|
Name
|
|
Plan Name(1)(2)
|
|
Service #
|
|
|
Benefit $
|
|
|
Fiscal Year $
|
|
|
William Oddy
|
|
Qualified Retirement Plan
|
|
|
35
|
|
|
|
1,719,869
|
|
|
|
|
|
|
|
Supplemental Retirement Plan
|
|
|
35
|
|
|
|
5,814,828
|
|
|
|
|
|
James Noyce
|
|
Qualified Retirement Plan
|
|
|
21
|
|
|
|
569,069
|
|
|
|
|
|
|
|
Supplemental Retirement Plan
|
|
|
21
|
|
|
|
1,015,674
|
|
|
|
|
|
Bruce Trost
|
|
Qualified Retirement Plan
|
|
|
2
|
|
|
|
36,230
|
|
|
|
|
|
|
|
Supplemental Retirement Plan
|
|
|
2
|
|
|
|
46,630
|
|
|
|
|
|
|
|
Non-qualified Plan for Prior
Service(3)
|
|
|
29.8
|
|
|
|
903,715
|
|
|
|
|
|
JoAnn Rumelhart
|
|
Qualified Retirement Plan
|
|
|
28
|
|
|
|
908,974
|
|
|
|
|
|
|
|
Supplemental Retirement Plan
|
|
|
28
|
|
|
|
970,667
|
|
|
|
|
|
Stephen Morain
|
|
Qualified Retirement Plan
|
|
|
30
|
|
|
|
141,260
|
|
|
|
|
|
|
|
Supplemental Retirement Plan
|
|
|
30
|
|
|
|
2,328,346
|
|
|
|
|
|
|
|
|
(1) |
|
For a description of valuation methods and material assumptions
used in accounting for pension obligations, see note 9,
Retirement and Compensation Plans, to the companys audited
consolidated financial statements for the year ended
December 31, 2006 included in the companys Annual
Report on
Form 10-K
filed with the Securities and Exchange Commission on
February 23, 2007. |
|
(2) |
|
Employees are generally covered under the FBL Financial Group
Retirement Plan and the FBL Financial Group Supplemental
Retirement Plan (together, the plan). The two plans
operate as a single plan to provide total benefits to all
participants. The former is a qualified plan under
Section 401(a) and the latter plan is a nonqualified plan
which provides benefits according to the overall plan formulas,
but includes compensation exceeding $220,000 under
Section 401(a)(17) and provides benefits provided by the
formula which are otherwise limited by Section 415 of the
Internal Revenue Code. The plan is generally available to all
employees and officers and provides for the same method of
allocation of benefits between management and non-management
participants. Active participants include employees over
age 21 who have worked at least one year and provided at
least 1,000 hours of service during the year. |
The plan is a defined benefit plan which provides monthly income
(or lump sum option) to retirees who have worked for at least
10 years and attained age 55. The amount provided is a
percentage of high 36 consecutive month average salary and bonus
calculated according to the following formula: for service prior
to 1998, 2% per year for the first 10 years of
service, plus 2.5% for each year in excess of 10 years
33
of service, up to 30 years of service; for service after
1997, 1.675% per year of service, plus 0.325% per year
of service times the average salary less social security covered
compensation. Unreduced early retirement benefits are provided
when age plus years of service equal 85 on the benefit earned
before 2002. Reduced early retirement benefits are generally
provided with reductions of 3% per year before age 65.
Mr. Oddy used the early retirement features of the plan
when he retired effective March 1, 2007, and
Mr. Morain is also eligible for early retirement.
The plan formula provides a monthly benefit for life with a
guarantee of 120 monthly payments. There is an automatic
annual cost of living adjustment not to exceed 4.0% on the
benefit earned before 2002.
Years of service include all years in which an individual first
exceeds 1,000 hours of service and any year thereafter in
which the person exceeds 500 hours of service. The
compensation covered by the plan is calculated based upon total
salary and bonuses paid to the participant during the given year.
|
|
|
(3) |
|
As an inducement to employment, Mr. Trost was provided a
similar benefit to the benefits provided in the qualified
pension plan and the excess ERISA plan through a nonqualified
deferred compensation plan where he was given prior service
credits for years of service with other Farm Bureau affiliated
organizations. Payments under his plan will be offset by
benefits he receives from plans of the prior employers. |
Non-Qualified
Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
Balance as
|
|
Name
|
|
Plan(1)(2)
|
|
in Last FY $
|
|
|
in Last FY(3) $
|
|
|
Last FY $
|
|
|
Distributions $
|
|
|
Last FYE $
|
|
|
William Oddy
|
|
Employer Match
|
|
|
|
|
|
|
28,454
|
|
|
|
4,144
|
|
|
|
|
|
|
|
114,731
|
|
James Noyce
|
|
Employer Match
|
|
|
|
|
|
|
14,937
|
|
|
|
2,170
|
|
|
|
|
|
|
|
61,224
|
|
Bruce Trost
|
|
Employer Match
|
|
|
|
|
|
|
12,272
|
|
|
|
298
|
|
|
|
|
|
|
|
16,285
|
|
|
|
Salary Deferred Comp(4)
|
|
|
81,908
|
|
|
|
|
|
|
|
1,091
|
|
|
|
|
|
|
|
106,259
|
|
JoAnn Rumelhart
|
|
Employer Match
|
|
|
|
|
|
|
9,906
|
|
|
|
1,261
|
|
|
|
|
|
|
|
36,688
|
|
Stephen Morain
|
|
Employer Match
|
|
|
|
|
|
|
11,229
|
|
|
|
1,983
|
|
|
|
|
|
|
|
56,269
|
|
|
|
|
(1) |
|
Employer Match Deferred Compensation Plan Employees
are eligible to participate in this plan if their income exceeds
the compensation dollar limit in the 401(k) plan ($220,000 in
2006) or if they are deferring compensation under the
Executive Salary and Bonus Deferred Compensation Plan and they
elect to defer the maximum amount to their 401(k) plan ($15,000
in 2006). The company contributes to each employees
account the amount of the 401(k) match that exceeds the maximum
matching contribution that can be made to the 401(k) plan. If
the employee is deferring amounts under the Executive Salary and
Bonus Deferred Compensation Plan the company will contribute the
amount that would have been the matching contribution to the
401(k) plan based on the compensation deferred. There are no
employee contributions made to the plan. Earnings on the
contributions are based on an investment fund. Earnings are
credited and debited as if the contributions were invested in
that fund. Distributions are made in lump sum within
90 days of employee termination or if approved for an
unforeseen financial hardship, subject to restrictions under
§409(A) of the Internal Revenue Code. |
|
(2) |
|
Executive Salary and Bonus Deferred Compensation
Plan Employees at the vice president level and above
are eligible to participate in this plan. Employees may elect to
defer a portion of their compensation and bonus in exchange for
the right to receive shares of FBL Financial Group common stock
at a future date. The deferred compensation is recorded in units
that represent shares of stock. As dividends are paid on the
stock, equivalent earnings are added to the units for each
employee in the plan. Distributions are in shares of FBL
Financial Group stock equal to the number of units in the
employees account. Employees may elect to receive
distributions in lump sum or five or ten annual installments and
choose to receive distributions upon termination or another
specified future date. |
|
(3) |
|
Company contributions in Last FY were calculated by multiplying
the executives salary over $220,000 by the company match
for the 401(k) of 3%. |
34
|
|
|
(4) |
|
The table includes $24,857 of 2006 salary and $57,051 of
non-equity plan compensation received in 2006 for 2005
performance for Mr. Trost which he elected to defer to the
Executive Salary and Bonus Deferred Compensation Plan.
Mr. Trosts aggregate balance includes $8,375
previously reported as compensation to him in prior years. |
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The text and tables below reflect the amount of compensation to
each of the named executive officers in the event of termination
of employment at December 31, 2006. The amount of
compensation payable to each named executive officer upon
voluntary termination or termination for cause, involuntary not
for cause termination, termination following a change in control
and in the event of retirement, disability or death of the
executive is shown below. The value of restricted stock and
stock options was calculated using the year end closing stock
price, $39.08. It was also assumed that all of the restricted
stock goals were met for the 2004 grant of restricted stock and
that half of the goals were met for the 2005 and 2006 grants in
calculating the value vested for retirement or disability.
William Oddy and Stephen Morain were currently eligible for
retirement as of year end 2006, and Mr. Oddy retired at
February 28, 2007. If Mr. Morain should voluntarily
terminate or be terminated for cause the compensation received
will be the same as received for retirement.
Payments
Made Upon Voluntary Termination or Termination for
Cause
Regardless of the manner in which a named executive
officers employment terminates, he or she is entitled to
receive amounts earned during the term of employment. Such
amounts would apply to a voluntary termination, and to a
termination for cause, and would include
|
|
|
|
|
Base salary to the termination date
|
|
|
|
Non-equity incentive compensation earned during the year
|
|
|
|
Stock options which have vested, with 30 days to exercise
|
|
|
|
Executives 401(k) account, including company matching
contributions, plus company contributions and earnings under the
401(k) excess plan
|
|
|
|
Amounts contributed by the executive to the Executive Salary and
Bonus Deferred Compensation Plan
|
|
|
|
Executives accrued and vested retirement benefits
|
|
|
|
COBRA benefits are available for the purchase of medical and
dental insurance
|
|
|
|
Group life insurance may be converted to an individual policy
without proof of insurability, at executives ongoing
expense
|
|
|
|
Executive universal life policy may be maintained, by executive
paying ongoing premium expense
|
Payment
Made Upon Involuntary Termination Not for
Cause
For the named executive officers, upon an involuntary
termination not for cause, the company will provide
a severance package of base salary, bonus, retirement plan
service credits and similar benefits for the lesser of two years
or until the date the executive reaches the rule of
85, i.e., combined age and years of service, at which time
unreduced benefits are available under the companys
retirement plans. Oddy and Morain met tests of the rule of 85 at
December 31, 2006.
In addition, Oddy, Noyce, Rumelhart and Morain have individual
retirement agreements that provide in the event they are
involuntarily terminated not for cause between the ages of 60
and 64, they will receive retirement benefits equivalent to what
they would receive if they had worked until 65.
|
|
|
|
|
Base salary for two years or until rule of 85 eligibility
|
|
|
|
Target bonus for two years or until rule of 85 eligibility
|
35
|
|
|
|
|
Forfeit unvested stock options unless eligible for retirement
(see Payment Made Upon Retirement)
|
|
|
|
Forfeit unvested restricted stock unless eligible for retirement
(see Payment Made Upon Retirement)
|
|
|
|
Enhanced benefit of early retirement agreement or two years
severance benefits
|
|
|
|
Medical, dental, group life and executive universal life all
continue for two years or until rule of 85 eligibility
|
Payments
Made Upon a Change in Control
The Company has entered into Change in Control Agreements with
each of the named executive officers. These agreements provide
that if an executives employment is terminated following a
change of control (other than for cause) or if the executive
terminates his employment in defined circumstances constituting
good reason, in addition to the benefits listed
under Payments Made Upon Termination:
The named executive officer will receive:
|
|
|
|
|
Salary continuation payments for three years
|
|
|
|
A lump sum payment of three times the executives target
bonus
|
|
|
|
An amount equal to the excise tax charged to the named executive
officer as a result of the receipt of any change in control
payments
|
|
|
|
Continuation of health, dental and life insurance benefits
during the salary continuation period
|
|
|
|
Acceleration of vesting and continued accrual of years of
service under the companys defined benefit retirement
plans during the salary continuation period
|
All stock options held by the executive will
automatically vest and become exercisable, and
All restricted stock grants will vest immediately
without reference to performance goals.
Under the agreements, a change in control is defined as
occurring when any person acquires 35% of the combined voting
power of the Company, or when during two consecutive years a
majority of the directors originally on the board (and certain
designated successors) cease to constitute a majority of the
Board. The payments required by the agreements with the named
executive officers are triggered if during the three years after
a change of control (i) the executives duties are
changed or diminished inconsistent with his or her position,
(ii) the executives base salary is reduced,
(iii) the executives office is relocated more than
50 miles from West Des Moines, Iowa, (iv) existing
employee plans are not continued or (v) the agreements are
not assumed by the Companys successor.
Payments
Made Upon Retirement
In the event of the retirement eligibility of a named executive
officer, in addition to the payments and transfers listed above:
|
|
|
|
|
All unvested stock options would vest and all options can be
exercised during the shorter of the remainder of the outstanding
ten year term, or three years from retirement
|
|
|
|
Restricted stock would vest on the lapse date as to a pro rata
portion of the shares that would be available according to the
goals set in the restricted stock agreement. The pro rata
portion is measured as the time from the grant date to the
retirement date divided by the period from the grant date to the
lapse date.
|
|
|
|
Amounts accrued and vested under the companys Retirement
Plan and Supplemental Retirement Plan
|
|
|
|
The executive at his expense may participate in the retiree
group health plan for medical coverage; the executive may elect
to purchase dental coverage under COBRA
|
|
|
|
The executive receives a $15,000 group term life policy
|
36
|
|
|
|
|
The executive receives a lump sum payment for the executive
universal life policy sufficient for it to be paid up at 65, to
endow at age 95
|
Payments
Made Upon Disability or Death
In the event of the death or disability of a named executive
officer, in addition to the benefits listed above at Payments
Made Upon Termination, and Payments Made Upon Retirement, the
named executive officer will receive benefits under the
companys disability plan or payments under the
companys life insurance plan, as appropriate.
The disability benefits to executives are in two pieces. First,
coverage under the companys group disability plan at 50%
of pre-disability earnings with a maximum annual benefit of
$240,000 (on $480,000 earnings). This is taxable income to the
recipient. Second, coverage under an individual policy issued to
the executives to cover an additional 25% of pre-disability
earnings with a maximum annual benefit of $90,000 (on $360,000
earnings). Executives recognize taxable income equal to the
premium payment on this policy, resulting in the disability
payments from the individual policy being not taxable income.
In the event of death of an executive, restricted stock grants
would vest immediately as to a pro rata portion of the shares
measured from the grant date to date of death, divided by the
period from the grant date to the lapse date. Vesting in the
event of death is not subject to performance goals.
In the event of death of an executive, the group life death
benefit, and the executive universal life death benefit, would
be paid to the beneficiary.
Potential
Payments Upon Termination or Change of Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change-in-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
not for Cause
|
|
|
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination -
|
|
|
(Including
|
|
|
(Involuntary &
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
for Cause
|
|
|
Good Reason)
|
|
|
Good Reason)
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
William Oddy
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,047,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,638,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the money value of
unexercisable options
|
|
|
1,526,043
|
|
|
|
1,526,043
|
|
|
|
1,526,043
|
|
|
|
1,526,043
|
|
|
|
1,526,043
|
|
|
|
1,526,043
|
|
|
|
1,526,043
|
|
Outstanding Unvested Restricted
Stock
|
|
|
970,226
|
|
|
|
970,226
|
|
|
|
970,226
|
|
|
|
2,365,903
|
|
|
|
970,226
|
|
|
|
970,226
|
|
|
|
1,368,008
|
|
Retirement Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Benefit
|
|
|
|
|
|
|
|
|
|
|
1,108,107
|
|
|
|
1,148,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Term Life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
Executive UL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,237,461
|
|
Excise tax gross up for change in
control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,259,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,496,269
|
|
|
|
2,496,269
|
|
|
|
3,604,476
|
|
|
|
12,032,288
|
|
|
|
2,496,269
|
|
|
|
2,496,269
|
|
|
|
5,181,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination -
|
|
|
Change-in-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
not for Cause
|
|
|
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination -
|
|
|
(Including
|
|
|
(Involuntary &
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
for Cause
|
|
|
Good Reason)
|
|
|
Good Reason)
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
James Noyce
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
|
922,200
|
|
|
|
1,383,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
507,210
|
|
|
|
760,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the money value of
unexercisable options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
864,876
|
|
|
|
864,876
|
|
|
|
864,876
|
|
|
|
864,876
|
|
Outstanding Unvested Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,247,824
|
|
|
|
518,031
|
|
|
|
518,031
|
|
|
|
730,731
|
|
Retirement Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Benefit
|
|
|
|
|
|
|
|
|
|
|
453,776
|
|
|
|
575,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
22,629
|
|
|
|
33,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Term Life
|
|
|
|
|
|
|
|
|
|
|
351
|
|
|
|
527
|
|
|
|
|
|
|
|
|
|
|
|
1,466,000
|
|
Executive UL
|
|
|
|
|
|
|
|
|
|
|
51,536
|
|
|
|
77,304
|
|
|
|
|
|
|
|
|
|
|
|
1,366,071
|
|
Excise tax gross up for change in
control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,957,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
1,957,702
|
|
|
|
6,901,111
|
|
|
|
1,382,907
|
|
|
|
1,382,907
|
|
|
|
4,427,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change-in-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Not for Cause
|
|
|
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination -
|
|
|
(Including Good
|
|
|
(Involuntary &
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
for Cause
|
|
|
Reason)
|
|
|
Good Reason)
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
JoAnn Rumelhart
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
|
522,594
|
|
|
|
1,045,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
261,300
|
|
|
|
522,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the money value of
unexercisable options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
559,904
|
|
|
|
559,904
|
|
|
|
559,904
|
|
|
|
559,904
|
|
Outstanding Unvested Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
809,190
|
|
|
|
327,256
|
|
|
|
327,256
|
|
|
|
463,684
|
|
Retirement Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Benefit
|
|
|
|
|
|
|
|
|
|
|
1,153,387
|
|
|
|
1,264,799
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
6,726
|
|
|
|
13,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Term Life
|
|
|
|
|
|
|
|
|
|
|
274
|
|
|
|
548
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
Executive UL
|
|
|
|
|
|
|
|
|
|
|
32,969
|
|
|
|
65,937
|
|
|
|
|
|
|
|
|
|
|
|
1,027,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise tax gross up for change in
control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,810,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
1,977,249
|
|
|
|
6,092,617
|
|
|
|
887,160
|
|
|
|
887,160
|
|
|
|
2,100,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change-in-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Not for Cause
|
|
|
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination -
|
|
|
(Including
|
|
|
(Involuntary &
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
for Cause
|
|
|
Good Reason)
|
|
|
Good Reason)
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
Bruce Trost
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
|
710,200
|
|
|
|
1,065,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
355,100
|
|
|
|
532,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the money value of
unexercisable options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210,530
|
|
|
|
210,530
|
|
|
|
210,530
|
|
|
|
210,530
|
|
Outstanding Unvested Restricted
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
537,428
|
|
|
|
108,108
|
|
|
|
108,108
|
|
|
|
216,217
|
|
Retirement Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Benefit
|
|
|
|
|
|
|
|
|
|
|
173,837
|
|
|
|
391,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
22,629
|
|
|
|
33,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Term Life
|
|
|
|
|
|
|
|
|
|
|
333
|
|
|
|
499
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
Executive UL
|
|
|
|
|
|
|
|
|
|
|
24,514
|
|
|
|
36,771
|
|
|
|
|
|
|
|
|
|
|
|
495,270
|
|
Excise tax gross up for change in
control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,226,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
1,286,612
|
|
|
|
4,035,509
|
|
|
|
318,638
|
|
|
|
318,638
|
|
|
|
972,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Change-in-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Not for Cause
|
|
|
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination -
|
|
|
(Including
|
|
|
(Involuntary &
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
for Cause
|
|
|
Good Reason)
|
|
|
Good Reason)
|
|
|
Retirement
|
|
|
Disability
|
|
|
Death
|
|
Stephen Morain
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Base Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,284,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
449,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the money value of
unexercisable options
|
|
|
328,048
|
|
|
|
328,048
|
|
|
|
328,048
|
|
|
|
328,048
|
|
|
|
328,048
|
|
|
|
328,048
|
|
|
|
328,048
|
|
Outstanding unvested restricted
stock
|
|
|
194,403
|
|
|
|
194,403
|
|
|
|
194,403
|
|
|
|
482,677
|
|
|
|
194,403
|
|
|
|
194,403
|
|
|
|
274,303
|
|
Retirement Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Benefit
|
|
|
|
|
|
|
|
|
|
|
108,251
|
|
|
|
311,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Term Life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
462
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
Executive UL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,110.040
|
|
Excise tax gross up for change in
control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,075,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
522,451
|
|
|
|
522,451
|
|
|
|
630,702
|
|
|
|
3,989,664
|
|
|
|
522,451
|
|
|
|
522,451
|
|
|
|
1,762,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Review,
approval or ratification of transactions with related
parties
Pursuant to our Corporate Compliance Manual and Code of Conduct,
all employees (including our named executive officers) who have,
or whose immediate family members have, any direct or indirect
financial or other participation in any business that supplies
goods or services to, or is a customer of FBL Financial Group,
are required to disclose to us prior to transacting such
business. Our employees are expected to make reasoned and
impartial decisions in the work-place. As a result, approval of
the business is denied if we believe that the employees
interest in such business could influence decisions relative to
our business, or have the potential to adversely affect our
business or the objective performance of the employees
work. Our Corporate Compliance Committee and Corporate
Compliance Officer implement our Code of Conduct and related
policies, and the Audit Committee of our Board is responsible
for overseeing our Ethics and Compliance Program. Our Board
members are also subject to compliance with our Code of Conduct.
Our Code of Conduct is in writing. To obtain a copy, please see
the Corporate Governance section above in this Proxy
Statement.
The charter of the Audit Committee requires that it review with
the independent accountants and management at each of its
regular quarterly meetings any company transactions involving
more than $120,000 where a direct or indirect material interest
in the transaction is held by any director, executive officer,
nominee for director, 5% shareholder, immediate family member of
such person, or companies managed by the Company. The Audit
Committee is directed to refer to the Board any transactions
which it deems unfair to the Company. Additionally, the
Companys practice is that if the Audit Committee or Board
believes a transaction with Farm Bureau Mutual is unfair to the
Company, that a committee consisting of two independent
directors of the Company and two independent directors of Farm
Bureau Mutual will determine whether the transaction should be
completed, and on what terms. The transactions listed below
represent continuing relationships and contracts which have been
reviewed by the Audit Committee from time to time over a period
of years.
Organization
of the Company
FBL is a holding company which markets individual life insurance
policies and annuity contracts through distribution channels of
our life insurance subsidiaries. The Farm Bureau Life
distribution channel markets to Farm Bureau members and other
individuals and businesses in the Midwestern and Western
sections of the United States. EquiTrust Life markets individual
annuity products through independent agents and brokers. In
addition to writing direct insurance, we assume business through
various coinsurance agreements. Our life insurance operations
are complemented by non-insurance services we provide to third
parties and affiliates. These include investment advisory,
leasing, marketing and distribution services. In addition, we
provide management and administrative services to three Farm
Bureau affiliated property-casualty companies.
Management
and Marketing Agreements
We have management agreements with Farm Bureau Mutual and other
affiliates under which we provide general business,
administrative and management services. For insurance companies,
the management fee is equal to a percentage of premiums
collected. For non-insurance companies, the management fee is
equal to a percentage of expenses incurred. Fee income from Farm
Bureau Mutual for these services during 2006 totaled $2,056,000.
In addition, Farm Bureau Management Corporation, a wholly-owned
subsidiary of the Iowa Farm Bureau Federation, provides certain
management services to us under a separate arrangement. During
2006 we incurred related expenses totaling $1,070,000.
We have marketing agreements with the Farm Bureau
property-casualty companies operating within our marketing
territory, including Farm Bureau Mutual and another affiliate.
Under the marketing agreements, the property-casualty companies
are responsible for the development and management of our agency
force for a fee. We paid $4,887,000 to Farm Bureau Mutual under
this arrangement during 2006.
40
Relationship
with Farm Bureau Organizations
American Farm Bureau Federation is a national federation of
member organizations having as a major objective and purpose to
promote, protect and represent the business, economic, social
and educational interests of farmers and ranchers of the nation,
and to develop agriculture, and a further objective to correlate
Farm Bureau activities and strengthen member state Farm Bureau
federations. Through a membership agreement, the Iowa Farm
Bureau Federation (our principal shareholder) and similar state
Farm Bureau federations throughout the country agree to
cooperate in reaching these objectives.
American Farm Bureau Federation is the owner of the Farm
Bureau and FB designations and related
trademarks and service marks including the FB design
which has been registered as a service mark with the
U.S. Patent and Trademark Office. Under the state
membership agreements, use of such trade names and marks in each
state is restricted to members of the federation and their
approved affiliates. We are licensed by the Iowa Farm Bureau
Federation to use the Farm Bureau and FB
designations in Iowa, and pursuant thereto, incurred royalty
expense of $440,000 for 2006. Our subsidiaries have similar
arrangements with Farm Bureau organizations in the other states
of the market territory. Royalty expense incurred pursuant to
these arrangements totaled $1,162,000. Royalty payments in 2006
in excess of $120,000 were made to the Farm Bureau organization
in Kansas ($249,000).
Other
Services, Transactions and Guarantees
We lease our home office properties under a
15-year
operating lease from a wholly-owned subsidiary of the Iowa Farm
Bureau Federation. Rent expense for the lease totaled $2,999,000
for 2006. This amount is net of $1,395,000 in amortization of
the deferred gain on the exchange of our home office properties
for common stock that took place on March 31, 1998.
During 2006, Farm Bureau Life sold its equity investment in
Western Agricultural Insurance Company, an affiliate, at its
fair market value of $7,856,000 to Farm Bureau Mutual. A
realized gain of $1,932,000 was recognized on this transaction.
We provide a number of services to, and receive certain services
from, other Farm Bureau organizations, including the Iowa Farm
Bureau Federation and Farm Bureau Mutual and their affiliates.
The company providing such services is reimbursed based on an
allocation of the cost of providing such services.
Farm Bureau Life and FBL Leasing Services, Inc. own aircraft
that are available for use by our affiliates. In 2006, Farm
Bureau Mutual paid us approximately $1,570,000 for use of such
aircraft.
Through our subsidiary, FBL Leasing Services, Inc., we lease
computer equipment, furniture and automobiles to other Farm
Bureau organizations. In 2006, Farm Bureau Mutual paid
approximately $9,692,000 and the Iowa Farm Bureau Federation
paid approximately $967,000 under these leases.
Through our investment advisor subsidiary, EquiTrust Investment
Management Services, Inc., we provide investment advice and
related services. Farm Bureau Mutual paid us approximately
$1,127,000 for these services.
Farm Bureau Mutual and other Farm Bureau organizations will, on
occasion, enter into structured settlement arrangements with
EquiTrust Assigned Benefit Company (ETABC), one of our indirect
wholly-owned subsidiaries. For a fee, ETABC relieves Farm Bureau
Mutual of its contractual obligations relating to a policyholder
and funds payments to the policyholder with an annuity contract
purchased from Farm Bureau Life. Premiums paid to us during 2006
under this arrangement totaled $3,001,000 from Farm Bureau
Mutual and $1,247,000 from other Farm Bureau organizations.
41
PROPOSAL NUMBER
TWO AMENDMENT TO THE DIRECTOR COMPENSATION
PLAN
The Board of Directors recommends that Class A common
shares reserved for the Director Compensation Plan be increased
from 50,000 to 100,000. The Plan was established in 1998 with an
initial 10,000 shares reserved, to allow non-employee
directors to participate in the ownership of FBL by acquiring
shares or deferred stock units, and to defer all or a portion of
their compensation for their service as directors. In 2001 we
amended the Plan by increasing the reserved shares to 50,000. A
majority of the Directors have utilized the Plan, to the point
that reserved shares will soon be exhausted. In the last two
years the Plan has issued approximately 7,600 units per
year.
We believe this Plan promotes incentives for good performance by
the directors who choose to participate by allowing them to
acquire additional shares of stock and by allowing them to defer
receipt of their taxable fees until a later date of their
choosing. The Board has concluded that preserving and extending
the Plan would assist in continuing to align the interests of
directors with shareholders.
The Plan applies only to directors who are not employees of FBL
or of any of its affiliates. There are 10 persons eligible to
participate in the Plan, and seven of those do currently
participate. The Plan permits electing directors to receive any
director fees either in shares or to defer receipt of the fees
to a unit account which will be paid in shares after the
director leaves the board, either in a lump sum or in up to ten
installments. Holdings in the Plan as of December 31, 2006
were as follows:
|
|
|
|
|
|
|
Number of Units
|
|
|
|
Outstanding
|
|
|
|
December 31, 2006
|
|
|
|
(Each Equivalent
|
|
Name of Director
|
|
to One Share)
|
|
|
Jerry Chicoine
|
|
|
14,008
|
|
John Creer, former director
|
|
|
7,722
|
|
Tim Gill
|
|
|
1,712
|
|
Robert Hanson
|
|
|
3,576
|
|
Steve Kouplen
|
|
|
292
|
|
Paul Larson
|
|
|
2,123
|
|
Kim Robak
|
|
|
410
|
|
John Walker
|
|
|
11,429
|
|
Total Units
Outstanding
|
|
|
41,272
|
|
Units Previously
Utilized
|
|
|
1,502
|
|
Number of Units available at
December 31, 2006
|
|
|
7,226
|
|
Directors electing to participate in the Plan receive their
compensation payments quarterly in arrears, and Class A
common stock is issued to them (or units deferred for them) at
the closing price of the shares on the New York Stock Exchange
the last business day of each quarter. Each unit in an account
is equivalent to one share of Class A common stock.
Deferred accounts are credited with additional units on dividend
payment dates equal to the dividend that would be paid on the
share equivalents in such persons account, divided by the
closing market price on such date.
The deferred units are counted towards the directors share
ownership requirements, as discussed above.
The dollar amount of benefits receivable under the Plan are not
determinable and therefore no tabular presentation of plan
benefits is available. The Plan may be amended or terminated at
any time, by the Board of Directors or by its compensation
committee, but not in a manner that would adversely affect the
right of a participant to receive shares issuable or cash
payable that the participant has in any unit account at the
effective date of the amendment or termination. However, we at
our option may accelerate the payment of all deferred and other
benefits payable under the Plan at its termination.
The Plan was amended by the Board of Directors in 2006 to
conform the plan to new Internal Revenue Code deferred
compensation regulations. A copy of the plan as amended is
Exhibit A to this Proxy Statement.
42
YOUR
BOARD UNANIMOUSLY RECOMMENDS YOUR VOTE FOR THE APPROVAL
OF THE AMENDMENT TO THE DIRECTOR COMPENSATION PLAN.
REPORT OF
THE AUDIT COMMITTEE
The purpose of the Audit Committee is to assist the Board in its
general oversight of FBLs financial reporting, internal
controls, compliance and audit functions. The Audit Committee
Charter describes in greater detail the full responsibilities of
the Committee. The Charter is available on the Companys
website, www.fblfinancial.com. The Audit Committee is
comprised solely of independent directors as defined by the
listing standards of the NYSE.
The Audit Committee is responsible for hiring the independent
registered public accounting firm. Ernst & Young LLP
has served as such for a number of years. The engagement letter
with Ernst & Young LLP for 2007 states that
disputes between the parties will be resolved by mediation or
arbitration, as opposed to litigation, and prohibits awards of
punitive damages by arbitrators.
The Audit Committee has reviewed and discussed the consolidated
financial statements with management and Ernst & Young
LLP. Management is responsible for the preparation, presentation
and integrity of FBLs financial statements, accounting and
financial reporting principles, establishing and maintaining
disclosure controls and procedures, establishing and maintaining
internal control over financial reporting, evaluating the
effectiveness of disclosure controls and procedures, evaluating
the effectiveness of internal control over financial reporting,
and evaluating any change in internal control over financial
reporting that has materially affected, or is reasonably likely
to materially affect, internal control over financial reporting.
Ernst & Young LLP is responsible for performing an
independent audit of the consolidated financial statements and
expressing an opinion on the conformity of those financial
statements with U.S. generally accepted accounting
principles, as well as expressing an opinion on
(i) managements assessment of the effectiveness of
internal control over financial reporting and (ii) the
effectiveness of internal control over financial reporting.
During the course of 2006, management continued the
documentation, testing and evaluation of FBLs system of
internal control over financial reporting in response to the
requirements set forth in Section 404 of the Sarbanes-Oxley
Act of 2002 and related regulations. The Audit Committee was
kept apprised of the progress of the evaluation and provided
oversight and advice to management during the process. In
connection with this oversight, the Committee received periodic
updates provided by management and Ernst & Young LLP at
each regularly scheduled Committee meeting. At the conclusion of
the process, the Committee reviewed managements report on
the effectiveness of the Companys internal control over
financial reporting.
The Committee also reviewed the report of management contained
in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2006 filed with the SEC, as
well as Ernst & Young LLPs Report of Independent
Registered Public Accounting Firm on Internal Controls Over
Financial Reporting and its Report of Independent Registered
Public Accounting Firm on Consolidated Financial Statements,
both included in the Companys Annual Report on
Form 10-K
related to its audit of (i) managements assessment of
the effectiveness of internal control over financial reporting,
(ii) the effectiveness of internal control over financial
reporting and (iii) the consolidated financial statements
and financial statement schedules. The Committee continues to
oversee FBLs efforts related to its internal control over
financial reporting and managements preparations for the
evaluation in fiscal year 2007.
The Audit Committee has discussed with Ernst & Young
LLP the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended, Communication
with Audit Committees and PCAOB Auditing Standard
No. 2, An Audit of Internal Control Over Financial
Reporting Performed in Conjunction with an Audit of Financial
Statements. In addition, Ernst & Young LLP has
provided the Audit Committee with the written disclosures and
the letter required by the Independence Standards Board Standard
No. 1, as amended, Independence Discussions with
Audit Committees, and the Audit Committee has discussed
with Ernst & Young LLP the firms independence.
Based on the committees review of the consolidated
financial statements and discussions with and representations
from management and Ernst & Young LLP referred to
above, the Audit Committee recommended
43
to the Board of Directors that FBLs audited consolidated
financial statements be included in FBLs Annual Report on
Form 10-K
for fiscal year 2006, for filing with the Securities and
Exchange Commission.
AUDIT COMMITTEE
Paul E. Larson, Chair
Jerry L. Chicoine
Robert H. Hanson
PROPOSAL NUMBER
THREE RATIFICATION OF THE APPOINTMENT OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed, and the Board has approved,
Ernst & Young LLP as our Independent Registered Public
Accounting Firm for 2007. You are being asked to ratify this
action of the Audit Committee. Should you not ratify the Audit
Committees action, it will review the matter, and may make
such decision as it believes appropriate, consistent with its
role as the sole body responsible for appointing the Independent
Registered Public Accounting Firm. That decision may include
retaining the Independent Registered Public Accounting Firm
despite not receiving your ratification, or dismissing the firm
at any time if conditions warrant.
Ernst & Young LLP provided audit and other services
during 2006 and 2005 for fees totaling $1,388,000 and
$1,398,445, respectively. This included the following fees:
Audit Fees: $1,230,000 and $1,289,445,
respectively, for the annual audit of the Companys
consolidated financial statements and review of interim
financial statements in the Companys Reports on
Form 10-Q;
Audit Related Fees: $57,000 and $71,000,
respectively, primarily for employee benefit plan audits;
Tax Related Fees: $22,000 and $38,000,
respectively, for tax compliance, tax consulting and tax
planning;
All Other Fees: $0 and $0, respectively.
The Companys policy as reflected in the Audit Committee
Charter which can be found on our website at
www.fblfinancial.com, is that all services provided by
the Companys Independent Registered Public Accounting
Firm, and fees for such services, must be approved in advance by
the Audit Committee. The committee has determined to grant
general pre-approval authority for tax services that are routine
and recurring, and would not impair the independence of the
Independent Registered Public Accounting Firm, of
$5,000 per engagement and $35,000 in total for the calendar
year, and for other services that are routine and recurring, and
would not impair the independence of the Independent Registered
Public Accounting Firm, of $10,000 per engagement and
$40,000 in total for audit services, and $10,000 per
engagement and $40,000 in total for audit related services.
Engagements exceeding those limits require specific
pre-approval. The Audit Committee reviews with Ernst &
Young LLP whether the non-audit services to be provided are
compatible with maintaining their independence. Permissible
non-audit services are usually limited to fees for tax services,
accounting assistance or audits in connection with acquisitions,
and other services specifically related to accounting or audit
matters such as audits of employee benefit plans.
Representatives of Ernst & Young LLP will be present at
the meeting, will be available to respond to questions and may
make a statement if they so desire.
YOUR
BOARD UNANIMOUSLY RECOMMENDS YOUR VOTE FOR
THE RATIFICATION OF ERNST & YOUNG LLP AS THE
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2007.
Abstentions or votes withheld on any of the proposals will be
treated as present at the meeting for purposes of determining a
quorum, but will not be counted as votes cast.
44
EXHIBIT
A
FBL Financial Group,
Inc.
Director Compensation
Plan
(As amended and restated, approved by shareholders May 15,
2001, and further amended May 17, 2006.)
A-1
FBL
FINANCIAL GROUP, INC.
DIRECTOR COMPENSATION PLAN
PURPOSE. This Director Compensation Plan is
established to allow the non-employee directors of FBL Financial
Group, Inc. (FBL) to participate in the ownership of FBL through
ownership of shares of the FBL common stock or deferred stock
units. In addition, the Plan is intended to allow non-employee
directors to defer all or a portion of their compensation for
their service as directors.
DEFINITIONS. The following words have the
definitions given them below:
Affiliate means any corporation, company limited by
shares, partnership, limited liability company, business trust,
other entity, or other business association that is controlled
by FBL.
Applicable Guidance means Treasury Regulations
issued pursuant to Code §409A, including proposed Treasury
Regulations published at 70 Fed. Reg. 57930 (Oct. 4, 2005),
or other written Treasury or IRS guidance regarding Code
§409A, including IRS Notice
2005-1.
Board means the board of directors of FBL.
Business Day means a day on which FBLs
executive offices in West Des Moines, Iowa, are open for
business and on which trading is conducted on the New York Stock
Exchange.
Change in Control of FBL means a change: (1) in
the ownership of FBL; (2) in the effective control of FBL;
or (3) in the ownership of a substantial portion of the
assets of the assets of the FBL, within the meaning of Notice
2005-1,
Q&A&
11-14 and in
Applicable Guidance.
Code means the Internal Revenue Code of 1986, as
amended.
Common Stock means the Class A Common Stock, no
par value per share, of FBL.
Compensation Date means the last Business Day of
each calendar quarter.
Director means any director of FBL who is not an
employee of FBL or an Affiliate.
Distribution Date means the date on which a Director
ceases to be a director of FBL and has incurred a
separation from service from FBL pursuant to the
Applicable Guidance.
Fair Market Value means, as to any particular day,
the closing price quoted for a share of Common Stock trading on
the New York Stock Exchange on that day, or if no such prices
were quoted for the shares of Common Stock on the New York Stock
Exchange for that day, the closing price quoted on the last
Business Day on which prices were quoted. The closing price for
the shares of Common Stock shall be that published in the
edition of The Wall Street Journal or any successor publication
for the next Business Day.
Plan Year means each
12-month
period beginning on each January 1 and ending on each
December 31.
Retainer means the amount of compensation set by the
Board from time to time as payable to a Director in each Plan
Year, including a fixed portion and a portion that is variable
depending on the number of Board and committee meetings
attended, including any portion thereof that a Director elects
to defer as provided in this Plan.
Shares means shares of the Common Stock.
Special Ledger means a record established and
maintained by FBL in which the Unit Accounts for the Directors
and the Units credited to the accounts are noted.
Taxable Year means the 12 consecutive month period
ending each December 31.
Unit Account shall mean the account maintained in
the Special Ledger for a Director to which Units allocable to
the Director under this Plan are credited.
Unit means a credit in a Unit Account representing
one Share.
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ANNUAL RETAINER. During each Plan Year in
which a person is a Director during the existence of this Plan,
the Director will be eligible to receive the Retainer payable as
follows:
A. At the Directors option, any percentage up to 100%
of the Retainer will be (1) payable to the Director in
Shares, or (2) at the Directors option, deferred by
FBL crediting Units to a Unit Account maintained for the
Director as provided in this Plan.
B. The balance of the Retainer shall be payable in cash.
The Retainer will be payable in arrears in equal quarterly
installments on each Compensation Date unless deferred as
provided below. Each quarterly installment will consist of
one-fourth of the fixed annual amount, plus the amount
determined by the number of Board and committee meetings
attended in that quarter, if any, for each Director.
ELECTIONS. Each Director who was a Director
during the prior Plan Year must elect by no later than
December 31 of the prior Plan Year how he or she will
receive the Retainer. Each Director who becomes a Director
during a Plan Year must elect within 30 days after becoming
a Director how he or she will receive the Retainer. Each
election must be made by the Director filing an election form
with the Secretary of FBL. If a Director does not file an
election form for each Plan Year by the specified date, the
Director will be deemed to have elected to receive the entire
Retainer in cash. Any person who becomes a Director during a
Plan Year and does not file the required election within
30 days thereafter will be deemed to have elected to
receive the entire Retainer in cash. Any election to defer a
portion of the Retainer made by a person who becomes a Director
during a Plan Year will be valid as to the portion of the
Retainer received after the election is filed with the Secretary
of FBL. When an election is made for a Plan Year, the Director
may not revoke or change that election.
THE SHARES. If a Director elects to receive
Shares in payment of all or any part of the Directors
Retainer, the number of Shares to be issued on any Compensation
Date shall equal the amount of the Retainer then payable,
divided by the Fair Market Value of a Share on the Compensation
Date, with any fraction of a Share to be paid in cash. Any
Shares issued under this Plan will be registered under the
Securities Act of 1933, as amended, and, so long as shares of
the Common Stock are listed for trading on the New York Stock
Exchange, will be listed for trading on the New York Stock
Exchange.
THE UNITS. If a Director defers any portion of
the Retainer in the form of Units, then on each Compensation
Date, FBL will credit a Unit Account maintained for the Director
with a number of Units equal to (1) the dollar amount of
the Retainer then payable that the Director has elected to defer
in the form of Units, divided by (2) the Fair Market Value
on the Compensation Date, rounded to the nearest one-thousandth
of a Unit. If the Common Stock is the subject of a stock
dividend, stock split, or a reverse stock split, the number of
Units will be increased or decreased, as the case may be, in the
same proportion as the outstanding shares of Common Stock. FBL
will credit to the Directors Unit Account on the date any
dividend is paid on the Common Stock, an additional number of
Units equal to (1) the aggregate amount of the dividend
that would be paid on a number of Shares equal to the number of
Units credited to the Directors Unit Account on the date
the dividend is paid, divided by (2) the Fair Market Value
on that date, rounded to the nearest one-thousandth Unit. A
Director shall be fully vested in the Units credited to his or
her Unit Account.
DISTRIBUTION OF THE AMOUNTS IN A UNIT
ACCOUNT. If a Director defers any portion of his
or her Retainer in the form of Units, the Director shall, at the
same time, elect the form of payment of the Directors Unit
Account. A Directors election with respect to the form of
payment shall apply only to the Units credited to a
Directors Unit Account with respect to the Retainer
deferred under the corresponding deferral election. A Director
may elect to receive payment of Shares equal to the Units
credited to the Unit Account at one time or in up to 10 annual
installments. If the Director elects to receive the Shares at
one time, FBL will issue the Shares as soon as administratively
practicable after the Directors Distribution Date,
provided that such time of distribution does not result in tax
pursuant to Code section 409A. Any fractions of a Share
shall be paid in cash. If the Director elects to receive the
Shares equal to the Units credited to the Unit Account in
installments, FBL will issue a pro rata number of Shares for
each installment plus any additional Shares equal to the Units
credited to the Unit Account respecting dividends paid on the
Common
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Stock since the last installment was made. FBL will issue the
first installment of Shares as soon as administratively
practicable after the Directors Distribution Date. The
remaining installments of Shares will be issued on each
anniversary of the Directors Distribution Date.
A Director may make a change in the initial election or in a
subsequent changed election of the form of payment applicable to
amounts in the Directors Unit Account. A Director must
make any change to the form of payment on a form FBL
provides for such purpose. A Directors change in election:
(1) may not take effect until at least 12 months
following the date of the election change; (2) must result
in the first payment under the election change being made not
earlier than five years following the date upon which the
originally-elected payment would have been made; and
(3) the Director must make the election change not less
than 12 months prior to the date of the first scheduled
payment under the initial election.
If a Director does not make a valid election with respect to the
distribution of the amounts in his or her Unit Account, the
Director shall receive all of the Shares at one time, as soon as
administratively practicable after the Directors
Distribution Date, with any fractions of a Share to be paid in
cash. Until the Plan completely distributes a Directors
Unit Account, the Plan will continue to credit the
Directors Unit Account with any dividends paid on the
Common Stock.
A Director, on or before December 31, 2006, may make a new
payment election as to the form of payment applicable to amounts
in the Directors Unit Account. Any such election must be a
permissible election under this section. A new payment election
made under this paragraph is not treated as a change in the
timing or form of distribution and need not meet the
requirements that a Directors change in election:
(1) may not take effect until at least 12 months
following the date of the election change; (2) must result
in the first payment under the election change being made not
earlier than five years following the date upon which the
originally-elected payment would have been made; and
(3) the Director must make the election change not less
than 12 months prior to the date of the first scheduled
payment under the initial election. Notwithstanding any
provision to the contrary, a Director cannot in 2006 change his
or her payment elections with respect to any payments that the
Director would otherwise receive in 2006, or cause any payments
to be made from the Directors Unit Account in 2006.
DISTRIBUTION IN THE EVENT OF A DIRECTORS
DEATH. Each Director who defers any part of the
Retainer payable to him or her in any Plan Year must designate
one or more beneficiaries of the Directors Unit Account,
who may be changed from time to time. The designation of a
beneficiary must be made by filing with FBLs Secretary a
form prescribed by FBL. If no designation of a beneficiary is
made, any deferred benefits under this Plan will be paid to the
Directors or former Directors estate. If a Director
dies while in office or a former Director dies during the
installment payment period, FBL will issue the Shares and pay
the amounts of cash that are issuable and payable to the
Director or former Director at one time as soon as
administratively practicable after the death of the Director or
the former Director.
DISTRIBUTION UPON SEPARATION. Notwithstanding
a Directors distribution election, the Plan will
distribute in a one time payment the number of Shares equal to
the number of Units with which the Directors Unit Account
is credited, with any fractions of a Share to be paid in cash,
to a Director who ceases to be a director of FBL where the Fair
Market Value of the Directors Unit Account does not exceed
$10,000. FBL will make any payment under this section on or
before the later of: (1) the December 31 of the
Taxable Year in which the Director ceases to be a director of
FBL; or
(2) 21/2
months following the Director ceasing to be a director of FBL.
TIMING OF ELECTION TO RECEIVE DEFERRED BENEFITS IN
INSTALLMENTS. If the Director wants the benefits
distributed in installments, the election to receive payments in
installments must be on file for a period of at least 12 full
months prior to the Director ceasing to be a director of FBL.
The last valid election on file with FBLs Secretary for at
least 12 full months will be the given effect by FBL in
distributing the benefits.
WITHHOLDING FOR TAXES. FBL will withhold the
amount of cash and Shares necessary to satisfy FBLs
obligation to withhold federal, state, and local income and
other taxes on any benefits received by the Director, the former
Director or a beneficiary under this Plan.
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NO TRANSFER OF RIGHTS UNDER THIS PLAN. A
Director or former Director shall not have the right to
transfer, grant any security interest in, or otherwise encumber
rights he or she may have under this Plan or any Unit Account
maintained for the Director or former Director or any interest
therein. No right or interest of a Director or a former Director
in a Unit Account shall be subject to any forced or involuntary
disposition or to any charge, liability, or obligation of the
Director or former Director, whether as the direct or indirect
result of any action of the Director or former Director or any
action taken in any proceeding, including any proceeding under
any bankruptcy or other creditors rights law. Any action
attempting to effect any transaction of that type shall be null,
void, and without effect.
UNFUNDED PLAN. This Plan will be unfunded for
federal tax purposes. The Deferral Accounts and the Unit
Accounts are entries in the Special Ledger only and are merely a
promise to make payments in the future. FBLs obligations
under this Plan are unsecured, general contractual obligations
of FBL.
AMENDMENT AND TERMINATION OF THE PLAN. The
Board or Compensation Committee of the Board may amend or
terminate this Plan at any time. An amendment or the termination
of this Plan will not adversely affect the right of a Director,
former Director, or Beneficiary to receive Shares issuable or
cash payable at the effective date of the amendment or
termination of any rights that a Director, former Director, or a
Beneficiary has in any Unit Account at the effective date of the
amendment or termination. The Board or Compensation Committee of
the Board may also amend the Plan at any time to comply with
Code §409A and Applicable Guidance provided that such
amendment will not result in taxation to any Director, former
Director, or Beneficiary under Code §409A.
The Board or Compensation Committee of the Board may terminate
the Plan and distribute Plan Unit Accounts: (1) upon a
Change in Control (provided FBL distributes all Plan Unit
Accounts within 12 months following the Change in Control)
and (2) as Applicable Guidance otherwise may permit.
GOVERNING LAW. This Plan shall be governed by
the laws of the State of Iowa. FBL has the right to interpret
this Plan, and any interpretation by FBL shall be conclusive as
to the meaning of this Plan.
NO ACCELERATION. Neither FBL nor the Director
may accelerate the time or schedule of any Plan payment except
as Applicable Guidance may permit.
EFFECTIVE DATE AND RESERVED SHARES. The
original effective date of this Plan is January 1, 1998,
and the Plan became operative and in effect on that date,
subject only to the ratification of the Plan by the stockholders
of FBL at FBLs 1998 annual stockholders meeting. The
Board has reserved and authorized for issuance, pursuant to the
terms and conditions of this Plan, 50,000 shares of Common
Stock.
Chairman of the Board
Dated: May 17, 2006
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FBL Financial Group, Inc.
March 30, 2007
Dear Shareholder:
The annual meeting of Shareholders of FBL Financial Group, Inc. will be held at the principal
executive offices of the Corporation at 5400 University Avenue, West Des Moines, Iowa at 9:00 a.m.
on Wednesday, May 16, 2007. At the meeting the Class A Shareholders will elect eight directors,
Class B Shareholders will elect five directors, and the shareholders will act on two other
proposals which your Board of Directors believes are important to the continued progress of the
Company.
It is important that your shares are represented at this meeting. Whether or not you plan to
attend the meeting, please review the enclosed proxy materials, complete the attached proxy form
below, and return it promptly in the envelope provided.
(Detach Proxy Form Here)
This proxy will be voted FOR items 1, 2 and 3 if no instruction to the contrary is
indicated. If any other business is presented at the meeting, this proxy will be voted in
accordance with the recommendation of Management.
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Dated , 2007 |
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Please sign name or names as appearing on this
proxy. If signing as a representative, please
indicate capacity. |
(Detach Proxy Form Here)
PROXY
CLASS A COMMON SHAREHOLDERS
FBL FINANCIAL GROUP, INC.
Annual Meeting May 16, 2007
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION
The undersigned Class A shareholder of FBL Financial Group, Inc., an Iowa corporation,
appoints Craig A. Lang and James W. Noyce, or either of them, with full power to act alone, the
true and lawful attorneys-in-fact of the undersigned, with full power of substitution and
revocation, to vote all shares of stock of said Corporation which the undersigned is entitled to
vote at the annual meeting of its shareholders to be held at the principal executive offices of the
Corporation at 5400 University Avenue, West Des Moines, Iowa, on May 16, 2007, at 9:00 a.m. and at
any adjournment thereof, with all powers the undersigned would possess if personally present, as
follows:
1. Election of Class A Directors:
o FOR all nominees listed below (except as marked to the contrary below)
o WITHHOLD AUTHORITY to vote for all nominees listed below
Jerry L. Chicoine, Tim H. Gill, Robert H. Hanson, Paul E. Larson, Edward W. Mehrer, James W. Noyce,
Kim M. Robak, John E. Walker
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that nominees
name in the space below.
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Approve Amendment to the Directors Compensation Plan. |
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o FOR
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o AGAINST
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o ABSTAIN |
3. |
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Proposal to ratify the appointment of Ernst & Young LLP as independent auditors for the
Company. |
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o FOR
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o AGAINST
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o ABSTAIN |
4. |
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On any other matter that may be submitted to a vote of shareholders. |
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY)