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
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MetLife, Inc.
(Name of Registrant as Specified In Its Charter)
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MetLife, Inc.
200 Park Avenue, New York, NY 10166
April 26, 2018
Fellow Shareholders:
I am writing to you for the first time in my role as MetLifes Lead Director to share the Boards perspective on MetLifes performance in 2017 and how the Company is progressing with its ongoing transformation.
As Directors, we are responsible for ensuring the Companys business strategy is sound and management is executing it effectively. We plan for the Companys future by evaluating management talent against anticipated needs and we play the unique role of acting as advocates for shareholders to ensure your interests are represented in all major decisions affecting MetLife.
The feedback the Board received from shareholders during 2017 has proven invaluable as we continue to focus on creating value for shareholders. MetLife made important progress last year in several areas. The Brighthouse Financial separation opened a new chapter in MetLifes history. As the Company focuses on less capital-intensive businesses with greater cash-generating potential, it has the opportunity to change how it is viewed and valued by investors.
MetLife achieved a ratio of Core Free Cash Flow to Core Adjusted Earnings of 75 percent last year, hitting the top end of the Companys projected range. This made it possible to return a record $4.6 billion to shareholders through share repurchases and dividends. In January, MetLife won its long-running legal battle to remove the Companys Systemically Important Financial Institution (SIFI) designation when the federal government dropped its appeal of the court ruling in our favor. The Board fully supported this effort because we believed it was necessary to preserve MetLifes ability to compete on a level playing field against other insurers.
We believe MetLifes management team has also continued to make significant progress in transforming the Company into a business that can perform well and deliver significant value to shareholders in a wide range of economic environments. Part of that transformation will be completing the expense initiative now underway to deliver $800 million of pre-tax run rate annual savings, net of stranded overhead, to the bottom line by 2020.
While these were positive events and trends, we were disappointed with two instances where the Company failed to live up to its own high standards. These involved the tracking of certain group annuity beneficiaries, and the release of reinsurance reserves for Japanese variable annuities in our MetLife Holdings segment. While the Company discovered and proactively reported these errors on its own, they should not have occurred. In response, the Company has made it a priority to strengthen its financial controls and enhance its practices and procedures for communicating with policyholders.
MetLife benefits from a diverse and independent Board, ten of whose eleven members who are nominated for election come from outside the Company. The Directors bring a depth of financial and management expertise to the Company, along with experience that spans financial and nonfinancial industries, government and the nonprofit sector. We remain focused on ensuring the Board has the right mix of skills and experiences to oversee MetLifes business strategy and operating environment. Last year we enhanced a matrix of the relevant qualifications to guide us in Board succession planning and refreshment. This is discussed in more detail in this Proxy Statement. We will continue to evaluate this matrix as MetLifes transformation and business needs evolve.
We continue to recruit new Directors who will deliver great value to the Company. We were pleased to have Gerald L. Hassell, the former Chairman and CEO of The Bank of New York Mellon Corporation, join our ranks in February. Alfred F.
Kelly, Jr. will leave the Board in June because of his responsibilities as Visas CEO, a role he assumed in December 2016. We are grateful to Al for his many contributions to the Board since he joined us in 2009.
One of the most notable aspects of our 150-year history has been our strong commitment to the quality of life in the communities we serve. We recognize that how companies perform in this area (generally referred to as Corporate Responsibility or Environmental, Social and Governance (ESG) matters) is a topic of growing interest to many investors. We intend MetLife to continue its leadership in this area, including by consolidating our efforts under a new leader to increase efficiency and impact.
Finally, I want to share my view on how we structure the relationship between the Board and MetLifes CEO. Because the Lead Directors role is independent and wide-ranging, I believe it provides strong and effective oversight while also enabling the most productive interaction between the Board, the Companys senior leaders and its shareholders. While some investors believe in always separating the roles of Chairman and CEO, I believe shareholders interests are best served when a Board is able to consider all appropriate leadership options in selecting the best qualified Chairman to address the Companys circumstances and needs.
We are grateful for your continued engagement with, and support of, our Board and MetLife as we continue to transform our business and improve our operations.
Sincerely,
R. Glenn Hubbard
Lead Director
MetLife, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Place: 200 Park Avenue New York, New York 10166
Date: June 12, 2018
Time: 2:30 p.m., Eastern Time
Record Date: April 13, 2018
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ITEMS OF BUSINESS:
1. The election of 11 Directors, each for a one-year term; 2. The ratification of the appointment of Deloitte & Touche LLP as MetLife, Inc.s independent auditor for 2018; 3. An advisory (non-binding) vote to approve the compensation paid to MetLife, Inc.s Named Executive Officers; 4. A shareholder proposal to adopt a policy that the Chairman of the Board be an independent Director; and 5. Such other matters as may properly come before the meeting.
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Information about the matters to be acted upon at the meeting is contained in the accompanying Proxy Statement.
MetLife, Inc. common stock shareholders of record at the close of business on April 13, 2018 will be entitled to vote at the meeting or any adjournment or postponement thereof.
By Order of the Board of Directors,
Jeannette N. Pina
Vice President and Secretary
New York, New York
April 26, 2018
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on June 12, 2018:
The accompanying Proxy Statement, the MetLife, Inc. 2017 Annual Report to Shareholders, the Chairmans Letter, and directions to the location of the 2018 annual meeting of shareholders are available at http://investor.metlife.com by selecting the appropriate link under Related Links.
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Table of Contents
This Proxy Statement contains information about the 2018 annual meeting of shareholders (Annual Meeting) of MetLife, Inc. (MetLife or the Company). We are providing proxy materials to solicit proxies on behalf of the MetLife Board of Directors. We are sending certain of our shareholders a Notice of Internet Availability of Proxy Materials (Notice) on or about April 26, 2018. The Notice includes instructions on how to access our Proxy Statement, 2017 Annual Report to Shareholders, and Chairmans Letter online. Shareholders who have previously requested a printed or electronic copy of the proxy materials will continue to receive such a copy of the proxy materials, which will be sent on or about April 26, 2018. Please see Accessing your proxy materials on page 108 for additional information.
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2018 Proxy Statement
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A Note About Non-GAAP Measures
A NOTE ABOUT NON-GAAP MEASURES
In this Proxy Statement, MetLife presents certain measures of its performance that are not calculated in accordance with accounting principles generally accepted in the United States of America (GAAP). Non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:
($ in millions, except per share data and as otherwise indicated) |
2015
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2016
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2017
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Net income (loss) available to MetLife, Inc.s common shareholders |
$ | 5,163 | $ | 627 | $ | 3,643 | ||||||||||||||||||||||||
Net income (loss) available to MetLife, Inc.s common shareholders per diluted common share |
$ | 0.57 | $ | 3.38 | ||||||||||||||||||||||||||
Premiums, fees and other revenues |
$ | 44,370 | $ | 45,843 | ||||||||||||||||||||||||||
Return on MetLife, Inc.s common stockholder equity |
0.9 | % | 5.9 | % | ||||||||||||||||||||||||||
Book value per common share |
$ | 59.35 | $ | 53.57 | ||||||||||||||||||||||||||
MetLife, Inc.s stockholders equity |
$ | 67,087 | $ | 57,968 | ||||||||||||||||||||||||||
MetLife, Inc.s net cash provided by (used in) operating activities ($ in billions) |
$ | 1.6 | $ | 3.7 | $ | 6.5 | ||||||||||||||||||||||||
MetLife presented the amounts above for 2017 and 2016 in its quarterly financial supplement furnished on Form 8-K on February 13, 2018. Each of the amounts presented above exclude the impact of the release of reserves related to variable annuity guarantees from a former operating joint venture in Japan.
This Proxy Statement refers to Core financial measures, including
| Core Adjusted Earnings; |
| Core Adjusted Earnings Per Share (or Core Adjusted EPS); |
| Core Adjusted Return on Equity (or Core Adjusted ROE); |
| Core Adjusted Expense Ratio; and |
| Core Free Cash Flow. |
Core financial measures (except Core Free Cash Flow) are based on Adjusted measures. All Core financial measures, including Core Free Cash Flow, are modified for:
| Notable Items; and |
| historical results for Brighthouse Financial, which separated from MetLife during 2017 (the Separation or Brighthouse Financial Separation), are included in the results of discontinued operations. |
Core Adjusted Return on Equity has also been modified for:
| MetLifes net equity of assets and liabilities of disposed subsidiary, as well as MetLifes equity investment in Brighthouse Financial, Inc. common stock from the Separation through 2017 year-end; and |
| Separation-related items (e.g., transaction costs). |
Core Free Cash Flow has also been modified for Separation-related items (e.g., transaction costs).
Core Adjusted ROE excludes accumulated other comprehensive income (AOCI) other than foreign currency translation adjustment (FCTA).
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2018 Proxy Statement
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A Note About Non-GAAP Measures
MetLifes Business Plan (Business Plan) measures are on a Core basis, except:
| Business Plan goals for purposes of the MetLife Annual Variable Incentive Plan (AVIP) for 2017 were based on Adjusted Earnings excluding historical Brighthouse Financial results but not modified for Notable Items or other Core modifications; and |
| 2017 Business Plan goals for purposes of Performance Shares were based on Adjusted Earnings excluding historical Brighthouse Financial results, MetLifes equity investment in Brighthouse Financial from the Separation through year-end 2017 and Separation-related items, but not modified for Notable Items. |
Notable Items reflect the unexpected impact of events that affect the Companys results, but that were unknown and that the Company could not anticipate when it devised its Business Plan. Notable items also include certain items, regardless of the extent anticipated in the Business Plan, to help investors have a better understanding of Company results and to evaluate and forecast those results. Notable Items are identified in the Companys Quarterly Financial Supplements as: (1) variable investment income; (2) catastrophe experience and prior year development, net; (3) actuarial assumption review and other insurance adjustments; (4) litigation reserves & settlement costs; (5) expense initiative costs; (6) other expense-related items; and (7) tax adjustments. Notable Items represent a positive or negative impact to adjusted earnings available to common shareholders.
Book Value Per Share excludes AOCI other than FCTA. Book Value Per Share is not presented in Core form.
See Appendix B for further information.
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2018 Proxy Statement
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Proxy Summary
This summary provides highlights of information contained elsewhere in this Proxy Statement and does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully before voting.
Voting Your Shares
Record date |
April 13, 2018 | |||||
Voting |
Shareholders as of the record date are entitled to vote. Each share of MetLife common stock (a Share) is entitled to one vote for each Director nominee and one vote for each of the other proposals. |
Your vote is important. Shareholders of record may vote their Shares in person at the Annual Meeting or by using any of the following methods. Beneficial owners whose Shares are held at a brokerage firm or by a bank or other nominee should follow the voting instructions received from such nominee. Participants in the MetLife 401(k) Plan should refer to voting instructions on pages 109.
Internet | Telephone | |||||||||||
www.investorvote.com/MET no later than 10:00 a.m., Eastern Time, June 12, 2018. |
1-800-652-8683 until 10:00 a.m., Eastern Time, June 12, 2018. |
Complete, sign and return your proxy card by materials) so that it is received by MetLife c/o Computershare prior to the Annual Meeting. | ||||||||||
Proposals for Your Vote
Proposal |
Directors Recommendation
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Vote Required |
Page
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Proposal 1 Election of 11 Directors to one-year terms |
FOR each nominee | Majority of Shares voted | 11 | |||||||||||||||||||
Proposal 2 Ratification of appointment of Deloitte & Touche LLP |
FOR | Majority of Shares voted | 37 | |||||||||||||||||||
Proposal 3 Advisory vote to approve compensation paid to the Companys Named Executive Officers |
FOR | Majority of Shares voted | 41 | |||||||||||||||||||
Proposal 4 Shareholder proposal to adopt a policy that the Chairman of the Board be an independent Director |
AGAINST | Majority of Shares voted | 113 | |||||||||||||||||||
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2018 Proxy Statement
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Proxy Summary
Company Strategy
The Company has taken, and continues to take, numerous actions to maximize shareholder value. MetLife is executing the most dramatic transformation in its history.
Refreshed Enterprise Strategy
MetLifes refreshed enterprise strategy prioritizes businesses with strong risk-adjusted internal rates of return, lower capital intensity, and higher ratio of Free Cash Flow to Adjusted Earnings.
One MetLife, Digital, and Simplified are the key enablers of our strategy
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2018 Proxy Statement
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Proxy Summary
Company Initiatives
MetLifes Board of Directors remains supportive of the Companys strategy and its ability to drive shareholder value, while holding management accountable for consistent execution.
Separation of Brighthouse Financial, the centerpiece of our refreshed strategy:
| Allows MetLife to operate with greater focus |
| Increases MetLifes predictability of distributable cash flows, and reduces its balance sheet and income statement volatility, by lowering exposure to market-sensitive products |
| Moves MetLifes mix of U.S. business toward shorter-tail liabilities |
| Diversifies MetLifes Adjusted Earnings across multiple markets |
| Contributes to improved Adjusted ROE |
| Reduces MetLifes cost of capital |
| Preserves common dividend at pre-Separation level |
Prevailed in Litigation to Rescind Systemically Important Financial Institution (SIFI) Designation
| Maintains level competitive playing field with rest of industry |
Returning Capital to Shareholders, including:
| Returned a MetLife record $4.6 billion in 2017 by generating a 75% ratio of Core Free Cash Flow to Core Adjusted Earnings |
| New $2 billion common stock repurchase authorization |
| 2018 goal to return almost $5 billion |
Operational Excellence, our top focus in 2018:
| Maintain strict capital budgeting to drive profitable growth |
| Demonstrate the same discipline in execution, including efforts to remediate material weaknesses in internal control over financial reporting |
| Re-set the bar to best-in-class customer service |
| Commit to unit cost initiative goal of $800 million in pre-tax run rate annual savings, net of stranded overhead, to the bottom line by 2020 |
| Accelerate the pace of digital transformation by building out core technology and developing new digital platforms |
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2018 Proxy Statement
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Proxy Summary
Executive Pay for Performance
The Company maintained its pay for performance practices in 2017. The vast majority of Named Executive Officers Total Compensation for 2017 performance was variable and depended on performance. In addition, the Compensation Committee allocated a greater portion of variable compensation to stock-based long-term incentives (LTI) than to annual cash incentives. Key highlights of performance the Compensation Committee considered in making Total Compensation decisions for the Executive Officers, and how it aligned those decisions with performance, are described in the Compensation Discussion and Analysis beginning on page 43, and include:
| The Company met or exceeded key Core financial performance goals for 2017, as reflected on page 47. |
| The Committee approved total AVIP funding for 2017 awards to all eligible employees at 111.2% of target. |
| The Committee exercised informed judgment beyond the formulaic funding in determining AVIP awards for the Named Executive Officers for 2017 performance. All AVIP awards were flat or lower compared to 2016 in consideration of factors such as low relative Total Shareholder Return (TSR) and operational challenges, except the award to the Named Executive Officer promoted in 2017. The awards to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) were 25% lower than 2016 awards. |
| The Committees LTI grants to Executive Officers in 2018 reflect confidence in the management team and recognize progress with the refreshed strategy. The Company meaningfully increased two Named Executive Officers responsibilities during 2017, with corresponding increases in LTI. |
| Following the Companys discussions with several large investors, the Committee increased the portion of LTI for the CEO and the other most senior executives of the Company (the Executive Officers or Executive Group) delivered in Performance Shares to 70% to further improve alignment with the value returned to shareholders. The realized value of Performance Shares will depend on future Company performance and stock price performance (both absolute and relative to peers). |
Total Compensation comprises AVIP awards for 2017 performance, award value of LTI granted in 2018 based on performance and expectations of future contributions to performance, and base salary earned during 2017.
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2018 Proxy Statement
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Proxy Summary
Executive Compensation Practices with Strong Corporate Governance Features, including:
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2018 Proxy Statement
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Proxy Summary
Shareholder Engagement
In 2017, Company executives, as well as the Independent Lead Director and the Governance and Corporate Responsibility Committee Chair, engaged with shareholders to solicit and better understand their views on a number of issues, including the Companys business strategy, corporate governance practices, talent management, corporate responsibility initiatives and the 2017 say-on-pay vote results (86% of Shares voted favorably).
With regard to executive compensation, shareholders generally:
| praised the quality of the Companys disclosure, consistency in program design, performance metrics, and articulation of business strategy. |
| supported the Companys executive compensation program design and its alignment with the Companys business strategy. |
| urged management to execute consistently and improve TSR performance. |
| agreed that the Committees selective use of discretion in the design and administration of incentive plans is reasonable, so long as it aligns pay with performance. |
The Compensation Committee, after considering this feedback, increased the portion of Executive Group members LTI awarded in Performance Shares from 50% to 70% of the total award value and reduced the percentage of Stock Options and Restricted Stock Units. Because TSR relative to competitors and Adjusted Return on Equity relative to Business Plan drive the ultimate number of Shares each executive earns for Performance Shares, the Committee is confident that this change will reinforce and further strengthen the link between shareholder interests and executive rewards.
Corporate Responsibility
Through the Companys shareholder engagement, shareholders have also expressed growing interest in the Companys environmental, social and governance practices, as well as its corporate responsibility initiatives. MetLife is committed to being a responsible corporate citizen by building a more secure future for individuals, families and communities around the world and investing in the communities we serve and our broader economy. MetLife takes a strategic approach to corporate responsibility consistent with its mission, as described in more detail in Corporate Responsibility on page 34. To ensure this strategic focus, the Company is creating and filling a new role to manage all corporate responsibility and social impact initiatives, and has created its first global pay equity statement, which will be published in its upcoming Corporate Responsibility report.
To learn more about our corporate responsibility efforts and view our annual Corporate Responsibility report, visit https://www.metlife.com/about/corporate-responsibility/.
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2018 Proxy Statement
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Proxy Summary
Best Practices in Corporate Governance
The Company has a proven track record of implementing best practices in corporate governance.
Governance Best Practices |
Sound Policies | |||
Independent Lead Director and Board Committees
Frequent Board executive sessions
Comprehensive annual Board and
Publicly disclosed political contributions
Committee Chair rotation practices
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Share ownership requirements for executives and Directors
Policy prohibiting hedging or pledging Company securities
Performance-based compensation recoupment policy | ||
Robust Shareholder Rights
Shareholder right to call special meeting
Shareholder proxy access
Majority vote standard
No poison pill
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Board Oversight of Risk Management
The Companys Board of Directors has active and robust practices in risk management oversight:
| Finance and Risk Committee oversees assessment, management, and mitigation of material risks, as well as capital and liquidity management practices. |
| Other committees also have significant risk management oversight: |
✓ | Audit: legal and regulatory compliance and internal controls; |
✓ | Governance and Corporate Responsibility: ethics, compliance programs and sales practices; |
✓ | Investment: investment portfolio risks; and |
✓ | Compensation: compensation plan risks, e.g. avoiding incentives to take excessive risk. |
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2018 Proxy Statement
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Proxy Summary
Director Nominees Experience, Tenure, Independence and Diversity
The Company has nominated highly-qualified, independent leaders to continue to serve on its Board of Directors.
91% Independent
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Accountable All Directors elected annually Robust independent Lead Director role Majority voting standard
Gender Diversity 27% women |
Ongoing Board Refreshment
Retirement Age + Annual Board Evaluation + Commitment to Ongoing Refreshment
Six new Directors since 2013 Average tenure 6.6 years |
Diversity of Tenure
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2018 Proxy Statement
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Proxy Summary
The following table provides summary information about each Director nominee. The designations below will be effective June 12, 2018 immediately following the Annual Meeting, provided that each Director is re-elected.
Committee Membership
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Nominee
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Primary Qualifications
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Independent
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Audit
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Compensation
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Executive
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Finance and Risk
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Governance and
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Investment
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Cheryl W. Grisé Former Executive Vice President, Northeast Utilities |
- Executive Leadership - Corporate Governance / Public Company Board - Regulated Industry / Government - Corporate Affairs
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Û | Û | Û | Û | CHAIR | ||||||||||||||||||||||||||||||||||||||||||||||
Carlos M. Gutierrez Co-Chair, The Albright Stonebridge Group |
- Executive Leadership - Corporate Governance / Public Company Board - Global Literacy - Consumer Insight / Analytics
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Û | Û | Û | ||||||||||||||||||||||||||||||||||||||||||||||||
Gerald L. Hassell Former Chairman of the Board and Chief Executive Officer, The Bank of New York Mellon Corporation |
- Executive Leadership - Regulated Industry / Government - Financial Expertise, CFO and Audit - Risk Management
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Û | Û | Û | Û | |||||||||||||||||||||||||||||||||||||||||||||||
David L. Herzog Former Chief Financial Officer and Executive Vice President, American International Group |
- Executive Leadership - Financial Services - Global Literacy - Financial Expertise, CFO and Audit
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Û | CHAIR | Û | Û | Û | ||||||||||||||||||||||||||||||||||||||||||||||
R. Glenn Hubbard, Ph.D. Lead Director Dean and Russell L. Carson Professor of Economics and Finance, Graduate School of Business, Columbia University |
- Corporate Governance / Public Company Board - Regulated Industry / Government - Investments - Corporate Affairs
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Û | Û | Û | Û | |||||||||||||||||||||||||||||||||||||||||||||||
Steven A. Kandarian Chairman of the Board, President and Chief Executive Officer, MetLife, Inc. |
- Executive Leadership - Financial Services - Regulated Industry / Government - Investments
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CHAIR | ||||||||||||||||||||||||||||||||||||||||||||||||||
Edward J. Kelly, III Former Chairman, Institutional Clients Group, Citigroup Inc. |
- Executive Leadership - Corporate Governance / Public Company Board - Financial Services - Global Literacy |
Û | Û | Û | Û | CHAIR | ||||||||||||||||||||||||||||||||||||||||||||||
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2018 Proxy Statement
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Proxy Summary
Committee Membership
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Nominee
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Primary Qualifications
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Independent
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Audit
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Compensation
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Executive
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Finance and Risk
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Governance and
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Investment
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William E. Kennard Former U.S. Ambassador to the European Union |
- Corporate Governance / Public Company Board - Global Literacy - Regulated Industry / Government - Investments
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Û | Û | Û | CHAIR | |||||||||||||||||||||||||||||||||||||||||||||||
James M. Kilts Founding Partner, Centerview Capital |
- Executive Leadership - Corporate Governance / Public Company Board - Global Literacy - Consumer Insight / Analytics
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Û | CHAIR | Û | Û | Û | ||||||||||||||||||||||||||||||||||||||||||||||
Catherine R. Kinney Former President and Co-Chief Operating Officer, New York Stock Exchange, Inc. |
- Executive Leadership - Corporate Governance / Public Company Board - Financial Services - Regulated Industry / Government
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Û | Û | Û | ||||||||||||||||||||||||||||||||||||||||||||||||
Denise M. Morrison President and Chief Executive Officer, Campbell Soup Company |
- Executive Leadership - Corporate Governance / Public Company Board - Global Literacy - Consumer Insight / Analytics
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Û | Û | Û | ||||||||||||||||||||||||||||||||||||||||||||||||
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2018 Proxy Statement
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PROPOSAL 1 Election of Directors for a One-Year Term Ending at the 2019 Annual Meeting of Shareholders
PROPOSAL 1 ELECTION OF DIRECTORS FOR A ONE-YEAR TERM ENDING AT THE 2019 ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors recommends that you vote FOR the election of each of the Director nominees. |
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2018 Proxy Statement
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Board Composition and Refreshment
Board Composition and Refreshment
The Company believes that an effective, experienced and diverse Board of Directors is crucial to the Companys governance framework and business success. The Governance and Corporate Responsibility Committee (in this discussion, also referred to as the Committee), which is principally responsible for identifying and recommending director candidates, looks for candidates with sound judgment and character, who are committed to MetLifes values and can effectively oversee the Companys business. To assist with candidate assessment, the Committee utilizes a matrix of the relevant skills and experiences that evolve as the Companys business and strategy shift. With this in mind, the Board, led by the Governance and Corporate Responsibility Committee Chair, identified the following skills and experiences as most relevant for the Companys Board at this time:
Executive Leadership. Public company CEO or senior executive experience managing a complex organization. |
Financial Expertise, CFO and Audit. Experience as financial expert and/or a public company CFO or audit partner. |
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Corporate Governance / Public Company Board. Experience in public company corporate governance related issues, policies and best practices. |
Risk Management. Experience in risk management with oversight of different types of risk. |
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Financial Services. Experience working as a senior finance executive or insurance industry expertise. |
Consumer Insight / Analytics. Experience in marketing and interpreting consumer behaviors. |
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Global Literacy. Experience as a senior executive working for an international company or working or living in countries outside of the U.S. |
Technology. Experience with innovative technology, digital generation and technology-driven issues, and the regulatory landscape. |
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Regulated Industry / Government. Experience in operating businesses in similar, highly regulated industries, interacting with regulators and policymakers and/or working in government. |
Corporate Affairs. Experience in corporate affairs, philanthropy, community development, and environmental or corporate responsibility. |
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Investments. Experience in financial investments markets and investment decisions and strategy. |
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The Committee and the Board regularly discuss Board succession planning in light of the Boards collective skills, experiences, backgrounds and cognitive diversity. The Committee is particularly focused on ensuring that the candidates for key Board positions, such as Lead Director and Committee Chairs, have the appropriate skills and experiences.
In February 2018, the Company welcomed Gerald L. Hassell to its Board. As described in his biography on page 15, Mr. Hassell brings extensive financial expertise and risk management experience, having successfully led a major public financial institution as a Chief Executive Officer. In the last five years, the Company has refreshed approximately half of the Board. |
Six new directors in last five years |
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2018 Proxy Statement
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Director Nominees
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Cheryl W. Grisé age 65, Former Executive Vice President, Northeast Utilities
Director since 2004 Ms. Grisés experience as the Chief Executive Officer of a major enterprise subject to complex regulations has provided her with a substantive understanding of the challenges of managing a highly regulated company such as MetLife. With her executive experience and her experience as a General Counsel and Corporate Secretary, Ms. Grisé brings a unique perspective on the Boards responsibility for overseeing the management of a regulated enterprise and the effective functioning of the Companys corporate governance structures.
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Primary Qualifications
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Executive Leadership Regulated Industry / Government |
Corporate Governance / Public Company Board Corporate Affairs |
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2018 Proxy Statement
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Director Nominees
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Carlos M. Gutierrez age 64, Co-Chair, The Albright Stonebridge Group
Director since 2013 As Chairman and Chief Executive Officer of Kellogg, Secretary Gutierrez gained deep insight into the complex challenges of guiding a large enterprise in a competitive global economy. As Secretary of Commerce, he worked with government and business leaders to promote Americas economic interests. Secretary Gutierrezs unique mix of experience gives him a valuable perspective and ability to oversee managements efforts to grow and develop MetLifes global business and its interactions with domestic and foreign governments and regulators.
|
|||||
Primary Qualifications
|
Executive Leadership Global Literacy |
Corporate Governance / Public Company Board Consumer Insight / Analytics |
|
2018 Proxy Statement
|
14
|
Director Nominees
|
Gerald L. Hassell age 66, Former Chairman of the Board and Chief Executive Officer, The Bank of New York Mellon Corporation
Director since 2018 A seasoned executive in financial services, Mr. Hassell brings extensive financial services expertise to MetLife. As the Chairman and Chief Executive Officer of The Bank of New York Mellon Corporation (BNY Mellon), he successfully led a large and complex financial institution and oversaw risk management in a highly regulated industry, with a sophisticated understanding of shareholder value creation. These experiences and expertise are important to the Boards oversight of the Companys design and approach to risk management. In addition, his commitment to social responsibility and community development makes him a valuable resource for MetLifes corporate and social responsibility initiatives.
|
|||||
Primary Qualifications
|
Executive Leadership Financial Expertise, CFO and Audit |
Regulated Industry / Government Risk Management |
|
2018 Proxy Statement
|
15
|
Director Nominees
|
David L. Herzog age 58, Former Chief Financial Officer and Executive Vice President of American International Group
Director since 2016 Mr. Herzog brings more than three decades of life insurance and financial services expertise to MetLife. His experience as the Chief Financial Officer of a global insurance company uniquely positions him to enhance shareholder value by leveraging his financial and risk management expertise, executive leadership experience, and deep understanding of the insurance business. These qualities and his broad knowledge of and experience in accounting are valuable to the Boards oversight of the management of MetLife.
|
|||||
Primary Qualifications
|
Executive Leadership Global Literacy |
Financial Services Financial Expertise, CFO and Audit |
|
2018 Proxy Statement
|
16
|
Director Nominees
|
R. Glenn Hubbard, Ph.D. age 59, Dean and Russell L. Carson Professor of Economics and Finance, Graduate School of Business, Columbia University
Lead Director Director since 2007 As an economic policy advisor to the highest levels of government and financial regulatory bodies, Dr. Hubbard has an unparalleled understanding of global economic conditions and emergent regulations and economic policies. This expertise contributes to the Boards understanding of how shifting economic conditions and developing regulations and economic policies may impact MetLifes investments, businesses, and operations worldwide.
|
|||||
Primary Qualifications
|
Corporate Governance / Public Company Board Investments | Regulated Industry / Government Corporate Affairs |
|
2018 Proxy Statement
|
17
|
Director Nominees
|
Steven A. Kandarian age 66, Chairman of the Board, President and Chief Executive Officer, MetLife, Inc.
Director since 2011 Mr. Kandarians leadership and financial acumen, as well as his Company experience, including as President and Chief Executive Officer and his earlier responsibilities for Investments, Global Brand and Marketing Services, and enterprise-wide corporate strategy, have provided him with a deep understanding of the Companys businesses and global operations and the Companys strategic direction and leadership selection.
|
|||||
Primary Qualifications
|
Executive Leadership Regulated Industry / Government |
Financial Services Investments |
|
2018 Proxy Statement
|
18
|
Director Nominees
|
Edward J. Kelly, III age 64, Former Chairman, Institutional Clients Group, Citigroup Inc.
Director since 2015 Mr. Kellys extensive leadership experience as an executive in the financial services industry further strengthens the Boards strong qualifications to oversee the execution of MetLifes strategies in complex legal and regulatory environments. His experience includes key roles in building a client-centric model and managing the global operations of a major financial institution. Further, Mr. Kellys deep knowledge of investments and financial products and services makes him a valuable asset to MetLife and its shareholders.
|
|||||
Primary Qualifications
|
Executive Leadership Financial Services |
Corporate Governance / Public Company Board Global Literacy |
|
2018 Proxy Statement
|
19
|
Director Nominees
|
William E. Kennard age 61, Former U.S. Ambassador to the European Union
Director since 2013 Mr. Kennards career has provided him with public policy and global investment expertise. As United States Ambassador to the European Union, Mr. Kennard worked to promote transatlantic trade and investment and reduce regulatory barriers to commerce. In his years of public service, Mr. Kennard advanced access of underserved populations to technology. Mr. Kennards extensive regulatory and international experience enhances the Boards ability to oversee MetLifes strategies.
|
|||||
Primary Qualifications
|
Corporate Governance / Public Company Board Regulated Industry / Government |
Global Literacy Investments |
|
2018 Proxy Statement
|
20
|
Director Nominees
|
James M. Kilts age 70, Founding Partner, Centerview Capital
Director since 2005 As a private equity firm founding partner and as a senior executive of several major consumer product companies with global sales and operations, Mr. Kilts brings an in-depth understanding of the business challenges and opportunities of diversified global enterprises and the related financial, risk management, talent management, and shareholder value creation considerations. These experiences and knowledge enhance the Boards ability to oversee MetLife management.
|
|||||
Primary Qualifications
|
Executive Leadership Global Literacy |
Corporate Governance / Public Company Board Consumer Insight / Analytics |
|
2018 Proxy Statement
|
21
|
Director Nominees
|
Catherine R. Kinney age 66, Former President and Co-Chief Operating Officer, New York Stock Exchange, Inc.
Director since 2009 Ms. Kinneys experience as a senior executive and Chief Operating Officer of a multinational, regulated entity, her key role in transforming the New York Stock Exchange (NYSE) to a publicly held company, and her leadership in developing and establishing the NYSE corporate governance standards for its listed companies (including MetLife) demonstrate her knowledge of and experience with issues of corporate development, transformation and governance. These qualities are relevant to ensuring that the Board establishes and maintains effective governance structures appropriate for a global provider of insurance and financial products and services.
|
|||||
Primary Qualifications
|
Executive Leadership Financial Services |
Corporate Governance / Public Company Board Regulated Industry / Government |
|
2018 Proxy Statement
|
22
|
Director Nominees
|
Denise M. Morrison age 64, President and Chief Executive Officer, Campbell Soup Company
Director since 2014 Ms. Morrison has a long and distinguished track record of building strong businesses and growing iconic brands. Her experience as Chief Executive Officer of a global company provides her with a strong understanding of the key strategic challenges and opportunities of running a large, complex business, including financial management, operations, risk management, talent management and succession planning. Ms. Morrisons strong commitment to corporate social responsibility and civic engagement make her a valuable resource for MetLife and its shareholders.
|
|||||
Primary Qualifications
|
Executive Leadership Global Literacy |
Corporate Governance / Public Company Board Consumer Insight / Analytics |
|
2018 Proxy Statement
|
23
|
Corporate Governance
|
2018 Proxy Statement
|
24
|
Corporate Governance
|
2018 Proxy Statement
|
25
|
Corporate Governance
|
2018 Proxy Statement
|
26
|
Corporate Governance
|
2018 Proxy Statement
|
27
|
Corporate Governance
|
2018 Proxy Statement
|
28
|
Corporate Governance
|
2018 Proxy Statement
|
29
|
Corporate Governance
|
2018 Proxy Statement
|
30
|
Corporate Governance
|
2018 Proxy Statement
|
31
|
Corporate Governance
|
2018 Proxy Statement
|
32
|
Corporate Governance
|
2018 Proxy Statement
|
33
|
Corporate Responsibility
1 | Reprinted with permission from Catalyst, Diversified Search, The Executive Leadership Council, the Hispanic Association on Corporate Responsibility, and Leadership Education for Asian Pacifics, Inc. Published on February 6, 2017. |
2 | From FORTUNE Magazine, February 1, 2018. ©2018 Time Inc. FORTUNE and The Worlds Most Admired Companies are registered trademarks of Time Inc. and are used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, MetLife. |
|
2018 Proxy Statement
|
34
|
Director Compensation in 2017
Director Compensation in 2017(1)
Name |
Fees Earned or Paid in Cash
|
Stock Awards ($)(1) |
All Other Compensation ($) |
Total ($) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cheryl W. Grisé
|
|
$ 87,500
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$164,191
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Carlos M. Gutierrez
|
|
$ 75,000
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$151,691
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
David L. Herzog
|
|
$ 95,000
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$171,691
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Glenn Hubbard, Ph.D.
|
|
$100,000
|
|
$
|
75,071
|
|
|
$6,620
|
|
|
$181,691
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Alfred F. Kelly, Jr.
|
|
$ 75,000
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$151,691
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Edward J. Kelly, III
|
|
$ 92,500
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$169,191
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
William E. Kennard
|
|
$ 87,500
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$164,191
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
James M. Kilts
|
|
$ 90,000
|
|
$
|
75,071
|
|
|
$6,620
|
|
|
$171,691
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Catherine R. Kinney
|
|
$ 75,000
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$151,691
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Denise M. Morrison
|
|
$ 75,000
|
|
$
|
75,071
|
|
|
$1,620
|
|
|
$151,691
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Kenton J. Sicchitano(2)
|
|
$ 0
|
|
$
|
0
|
|
|
$ 828
|
|
|
$ 828
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Lulu C. Wang(2)
|
|
$ 0
|
|
$
|
0
|
|
|
$ 828
|
|
|
$ 828
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | MetLifes annual rate of non-management director fees is $300,000, plus committee chair fees. The Fees Earned or Paid in Cash and Stock Awards in this table reflect approximately one-half of this amount because the Company is in transition from paying such fees once per calendar year (in 2016, for service through the 2017 annual shareholders meeting) to four installments per calendar year (two of which MetLife paid in the period from June through the end of 2017). |
2 | Mr. Sicchitano and Ms. Wang served on the Board of Directors through the Companys 2017 annual meeting of shareholders, at which time each retired from service. Each was paid fees in 2016 for service through that meeting. |
|
2018 Proxy Statement
|
35
|
Director Compensation in 2017
|
2018 Proxy Statement
|
36
|
Proposal 2 Ratification of Appointment of the Independent Auditor
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF THE INDEPENDENT AUDITOR
The Board of Directors recommends that you vote FOR the ratification of the appointment of Deloitte & Touche LLP as MetLifes independent auditor for the fiscal year ending December 31, 2018.
|
|
2018 Proxy Statement
|
37
|
Proposal 2 Ratification of Appointment of the Independent Auditor / Independent Auditors Fees for 2017 and 2016
|
2018 Proxy Statement
|
38
|
Independent Auditors Fees for 2017 and 2016 / Audit Committee Report
|
2018 Proxy Statement
|
39
|
Audit Committee Report
|
2018 Proxy Statement
|
40
|
Proposal 3 Advisory Vote to Approve the Compensation Paid to the Companys Named Executive Officers
PROPOSAL 3 ADVISORY VOTE TO APPROVE THE COMPENSATION PAID TO THE COMPANYS NAMED EXECUTIVE OFFICERS
|
The Board of Directors recommends that you vote FOR this proposal: RESOLVED, that the compensation paid to the Companys Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
|
|
2018 Proxy Statement
|
41
|
Compensation Committee Report
This report is furnished by the Compensation Committee of the MetLife Board of Directors. The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that is set forth on pages 43 through 77 of the Companys 2018 Proxy Statement and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that such Compensation Discussion and Analysis be included in the 2018 Proxy Statement.
No portion of this Compensation Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the Securities Act), or the Securities Exchange Act of 1934, as amended (the Exchange Act), through any general statement incorporating by reference in its entirety the proxy statement in which this Report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be soliciting material or to be filed under either the Securities Act or the Exchange Act.
Respectfully,
James M. Kilts, Chair
Cheryl W. Grisé
Gerald L. Hassell
David L. Herzog
Edward J. Kelly, III
Denise M. Morrison
|
2018 Proxy Statement
|
42
|
Compensation Discussion and Analysis
Compensation Discussion and Analysis
The Compensation Discussion and Analysis describes the objectives and policies underlying MetLifes executive compensation program for the Named Executive Officers and the rest of the Executive Group. It also describes the key factors that the Compensation Committee (in this discussion, also referred to here as the Committee) considered in determining the compensation of the CEO and other members of the Executive Group.
Key Highlights
In 2017, MetLife:
✓ | completed the Separation of its U.S retail business, the centerpiece of the Companys strategy to become simpler and less capital intensive with stronger Free Cash Flow. |
✓ | met or exceeded its key Core financial metrics. |
✓ | generated 75 cents of Core Free Cash Flow for every dollar of Core Adjusted Earnings. |
✓ | identified errors that resulted in material weaknesses in internal control over financial reporting, and is dedicating the resources necessary to remediate them and to achieve operational excellence. |
✓ | reinforced commitment to achieve $800 million of pre-tax run-rate annual savings, net of stranded overhead, by 2020; currently on target through year-end 2017. |
MetLifes Compensation Committee ensured continued alignment between performance and pay by:
✓ | considering the Companys operational challenges and poor TSR compared to peer companies balanced with confidence in the executive team and progress on refreshed strategy. |
✓ | reducing the CEOs annual incentive award for 2017 by $1 million (25%) from 2016 while modestly increasing LTI from prior grant to reinforce alignment with shareholders. |
✓ | decreasing the CFOs annual incentive award for 2017 by 25% from 2016 and also decreasing LTI from prior grant. |
✓ | holding the annual incentive award for two other Named Executive Officers flat, while increasing LTI from prior grant to reflect individual performance as well as expanded responsibilities in 2017. |
✓ | approving the distribution of 2015-2017 Performance Shares at 46.3%, a below-target payout resulting largely from TSR that while positive was in the bottom quartile relative to peers resulting in zero credit for that metric. |
✓ | increasing the portion of new LTI granted in Performance Shares to 70% of the total award value (formerly 50%) to further enhance executive alignment with shareholders; consistent with prior awards, the performance metrics for Performance Shares are 3-year TSR performance relative to peers and 3-year Adjusted Return on Equity against the Business Plan. |
MetLifes Compensation Programs:
✓ | provide the largest portion of executives Total Compensation in variable, performance-dependent awards. |
✓ | align executives interests with shareholders through Share-based awards and Share ownership requirements. |
✓ | incorporate sound risk management through appropriate financial metrics, non-formulaic performance assessment, and Chief Risk Officer program review. |
|
2018 Proxy Statement
|
43
|
Compensation Discussion and Analysis
|
2018 Proxy Statement
|
46
|
Compensation Discussion and Analysis
The below presentation reflects the Compensation Committees and Boards review of the 2017 Business Plan and 2017 MetLife performance results for purposes of determining the Executive Group members Total Compensation, including its assessment of the CEOs 2017 performance. The 2017 Business Plan anticipated significant macroeconomic headwinds.
See A Note About Non-GAAP measures on pages ii-iii.
|
2018 Proxy Statement
|
47
|
Compensation Discussion and Analysis
The Committees and Boards review excluded the 2017 positive financial impact of the release of reserves related to variable annuity guarantees assumed from a former operating joint venture in Japan. The reserve release slightly decreased (by 10 basis points) 2017 Core Adjusted ROE and slightly increased (by $0.68) 2017 Book Value Per Share. The 2016 results presented above also do not include the impact of this reserve release. However, the Board discussed the operational problems that led to the release of the reserves.
The 2017 results, on an unmodified basis, including the assumed variable annuity guarantees reserve release, for Adjusted Earnings, Adjusted EPS, Adjusted ROE, Adjusted Expense Ratio, and Free Cash Flow as a Percentage of Adjusted Earnings were $4,235 million, $3.93, 8.4%, 20.3%, and 134%, respectively. See Appendix B for definitions of these non-GAAP measures and reconciliations to the most directly comparable measures that are based on GAAP.
Core Adjusted ROE and Book Value Per Share each exclude accumulated other comprehensive income (AOCI) other than foreign currency translation adjustment (FCTA). The percentage presented for the Core Free Cash Flow Business Plan is the mid-point of the Business Plan range.
For Adjusted Earnings and Adjusted ROE results the Committee used to determine performance factors for certain incentive compensation purposes, see pages 63-64, 68-69, and Appendix A.
|
2018 Proxy Statement
|
48
|
Compensation Discussion and Analysis
|
2018 Proxy Statement
|
49
|
Compensation Discussion and Analysis
The following table presents a holistic view of the incentive compensation decisions for AVIP and LTI the Compensation Committee approved in early 2018 based on 2017 performance. It is not a substitute for the Summary Compensation Table on page 78.
Compensation Committee Performance-Year Incentive Decisions |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017
|
2017 versus 2016
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Base Salary Earned |
AVIP Award(1) |
LTI(2) | Total Compensation(3) |
AVIP Award | LTI | Total Compensation(4) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven A. Kandarian |
$1,550,000 | $3,000,000 | $11,000,000 | $15,550,000 | (25)% |
5% |
(3)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John C.R. Hele |
$ 811,250 | $1,500,000 | $ 2,800,000 | $ 5,111,250 | (25)% | (7)% | (12)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michel Khalaf(5) |
$ 740,169 | $2,100,000 | $ 3,500,000 | $ 6,340,169 | n/a | n/a |
n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Martin J. Lippert |
$ 847,500 | $2,100,000 | $ 3,500,000 | $ 6,447,500 | 0% | 17% |
10% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven J. Goulart |
$ 761,250 | $1,500,000 | $ 3,000,000 | $ 5,261,250 | 0% | 20% |
11% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | Reflects the AVIP award for 2017 performance, paid in 2018. |
2 | Reflects the award value for LTI granted in 2018, not the grant date fair value calculated in accordance with the applicable accounting standard, ASC 718. The grant date fair values will be disclosed for Named Executive Officers reported in the Grants of Plan-Based Awards Table in the Companys 2019 Proxy Statement. |
3 | Total Compensation for 2017 comprises base salary earned during 2017, AVIP awards for 2017 performance, and award value of LTI granted in 2018. |
4 | Reflects Total Compensation for 2017, as described in note 3 above, compared to Total Compensation for 2016. |
5 | Michel Khalaf was not a Named Executive Officer for 2016. |
|
2018 Proxy Statement
|
50
|
Compensation Discussion and Analysis
|
2018 Proxy Statement
|
51
|
Compensation Discussion and Analysis
Compensation:
The Committee approved an AVIP award for Mr. Kandarian for 2017 that was down 25% from 2016 (a decrease of $1,000,000), reflecting the Committees review of Mr. Kandarians 2017 contributions to the Companys achievements in financial performance and progress on strategic objectives, and also the Companys operational challenges and trailing relative shareholder returns. Mr. Kandarians compensation for 2017 performance was balanced with an increase in LTI granted in 2018, to recognize progress toward long-term strategic objectives and confidence in Mr. Kandarians ability to achieve them. The shift to a greater portion of LTI delivered in Performance Shares ensures that Mr. Kandarian will need to re-earn most of the award value with improved relative TSR performance as well as strong Adjusted ROE performance over the next 3 years. This table is not a substitute for the Summary Compensation Table on page 78.
Year | AVIP(1) | LTI(2) | Rationale | |||||||||||||||||||||||||||||||||||||
2017 | $ | 3,000,000 | $ | 11,000,000 | Reduced cash incentive to reflect operational challenges and trailing TSR performance, while LTI recognizes financial, strategic and regulatory progress. Total Compensation down from prior year. | |||||||||||||||||||||||||||||||||||
2016 | $ | 4,000,000 | $ | 10,500,000 | Reduced cash incentive to reflect financial performance. LTI reflected progress toward long-term strategic objectives. | |||||||||||||||||||||||||||||||||||
2015 | $ | 4,500,000 | $ | 10,500,000 | Shifted incentive awards from cash to LTI to reflect operational performance consistent with plan and reinforce progress toward longer-term strategic objective while managing regulatory uncertainties. | |||||||||||||||||||||||||||||||||||
2014 | $ | 5,000,000 | $ | 10,000,000 | Reflected a strong year of operational performance, consistent with plan, in the face of strong regulatory headwinds. | |||||||||||||||||||||||||||||||||||
1 | Reflects the AVIP award paid for performance in the indicated year. Each is as reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table in the MetLife Proxy Statement for the indicated year. |
2 | Reflects the LTI award value for awards granted shortly after the end of the indicated year, not the grant date fair value calculated in accordance with the applicable accounting standard, ASC 718. The grant date fair value is, or will be, reported for Named Executive Officers in the Grants of Plan-Based Awards Table in MetLifes Proxy Statement for the year of grant. |
The Committee approved no base salary increase for Mr. Kandarian for 2017 performance or for 2016 performance.
The Committee believes Mr. Kandarians total compensation appropriately reflects the Companys performance at this point in the Companys transformation, which is laying the foundation for significant improvement in future Share price performance.
The CEOs 2016-2018 and 2017-2019 Performance Share awards continue to vest, subject to performance metrics that are consistent with recent awards. As a result, later Performance Share payments will also be below target unless MetLifes TSR improves. In addition, the CEO exceeds his Share ownership requirement of 7 times his annual base salary rate, further ensuring shareholder alignment.
|
2018 Proxy Statement
|
52
|
Compensation Discussion and Analysis
CEO Value Realized From Performance Shares Vested in 2017
The table below illustrates that the CEO and all other awardholders realized less than half of the 2015-2017 Performance Share award value at grant. Positive, though bottom quartile, TSR performance resulted in zero credit for that metric, driving this result.
2015-2017 Performance Shares | ||||||||||||||||||||||||||||||||||||||||||||||
Target Award Value at Grant(1) |
Company Performance |
Realized Value |
Change in Value from Target to Realized |
|||||||||||||||||||||||||||||||||||||||||||
Adjusted ROE Goal (Versus Business Plan) |
TSR Goal (Relative to Peers) |
Performance Factor(2) |
Share Price Appreciation(3) |
($)
|
(%)
|
|||||||||||||||||||||||||||||||||||||||||
$4,999,966 |
98% |
<25th percentile |
46.3% (average of components) |
(0.9)% | $2,294,292 | $(2,705,674) | (54)% | |||||||||||||||||||||||||||||||||||||||
Performance Factor Components |
92.5% |
0% | ||||||||||||||||||||||||||||||||||||||||||||
1 | Reflects the LTI award value using target performance, as adjusted by MetLife in light of the Brighthouse Financial Separation to maintain the awards intrinsic value. This is not the grant date fair value calculated in accordance with the applicable accounting standard, ASC 718, which was disclosed in the Grants of Plan-Based Awards Table in the Companys 2016 Proxy Statement. |
2 | See Performance Shares on pages 66-69 for how the performance factor is tied to Company performance. |
3 | Reflects change in Share price from grant on February 24, 2015 to distribution at March 2, 2018, including the adjustment for the Brighthouse Financial Separation described on pages 80-81. |
|
2018 Proxy Statement
|
53
|
Compensation Discussion and Analysis
|
2018 Proxy Statement
|
54
|
Compensation Discussion and Analysis
|
2018 Proxy Statement
|
55
|
Compensation Discussion and Analysis
The amounts in the chart above, and in the charts for the other Named Executive Officers in this section entitled Aspects of Individual Performance reflect the base salary earned in 2017, the AVIP awards for 2017 performance, and the LTI granted in 2018.
Some of the performance measures in this section entitled Aspects of Individual Performance are not calculated based on GAAP. They should be read in conjunction with the information in Non-GAAP and Other Financial Disclosures in Appendix B of this Proxy Statement, which includes non-GAAP financial information, definitions and/or reconciliations to the most directly comparable measures that are based on GAAP. See also A Note About Non-GAAP Measures on pages ii-iii.
|
2018 Proxy Statement
|
56
|
Compensation Discussion and Analysis
|
2018 Proxy Statement
|
59
|
Compensation Discussion and Analysis
Components of Compensation and Benefits
The primary components of the Companys regular executive compensation and benefits program play various strategic roles:
Description
|
Strategic Role
|
|||||||||
Total Compensation
|
||||||||||
Base Salary is determined based on position, scope of responsibilities, individual performance, and competitive data.
|
Provides fixed compensation for services during the year. | |||||||||
Annual Incentive Awards are: variable based on performance relative to Company and individual goals and additional business challenges or opportunities that arose during the year. determined through the Compensation Committee assessment of all of these factors as a whole.
|
Serve as the primary compensation vehicle for recognizing and differentiating individual performance each year. Motivate Executive Group members and other employees to achieve strong annual business results that will contribute to the Companys long-term success, without creating an incentive to take excessive risk. |
|||||||||
Stock-Based Long-Term Incentive Awards are: based on the Compensation Committees assessment of individual responsibility, performance, relative contribution, and potential for assuming increased responsibilities and future contributions. dependent on the value of Shares (Restricted Stock Units), increases in the price of Shares (Stock Options), or a combination of MetLifes performance as well as the value of Shares (Performance Shares). Cash-paid equivalents are used outside the U.S. granted each year to provide overlapping vesting and performance cycles. for awards to Executive Group members made as part of Total Compensation for prior year performance and in expectation of contributions to future performance granted in these proportions, beginning with awards for 2017 performance: |
Ensure that Executive Group members have a significant continuing stake in the long-term financial success of the Company (see Executive Share Ownership on page 76). Align executives interests with those of shareholders. Encourage decisions and reward performance that contribute to the long- term growth of the Companys business and enhance shareholder value. Motivate Executive Group members to outperform MetLifes competition. Encourage executives to remain with MetLife. |
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Stock-Based Long-Term Incentive Mix for CEO and other Executive Group Members
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Benefits
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Retirement Program and Other Benefits include post-retirement income (pension) or the opportunity to save a portion of current compensation for retirement and other future needs (401(k) program and nonqualified deferred compensation).
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Attract and retain executives and other employees. | |||||||||
Potential Termination Payments
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Severance Pay and Related Benefits include transition assistance if employment ends due to job elimination or, in limited circumstances, performance.
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Encourage focus on transition to other opportunities and allow the Company to obtain a release of employment-related claims.
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Change-in-Control Benefits include: double-trigger severance pay and related benefits, if the Executive Group members employment is terminated without cause or the Executive Group member resigns with good reason following a change-in-control. replacement or vesting of LTI.
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Retain Executive Group members during a change-in-control. Promote the unbiased efforts of the Executive Group members to maximize shareholder value during and after a change-in-control. Keep executives whole in situations where Shares may no longer exist or awards otherwise cannot or will not be replaced. |
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2018 Proxy Statement
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Compensation Discussion and Analysis
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2018 Proxy Statement
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Compensation Discussion and Analysis
The Committees methodology to determine the AVIP Performance Funding Level is outlined in the following chart, indicating how the Performance Funding Level changes relative to Adjusted Earnings performance against the Business Plan goal:
Total AVIP Funding for Awards to All Eligible Employees
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See Appendix A for further details.
The Compensation Committee used the same formula for 2017 to determine total AVIP funding for awards to all eligible employees, based on Adjusted Earnings compared to Business Plan, as it has used for the past several years.
The Committees approach avoids providing incentives for employees to take excessive risk
| Adjusted Earnings excludes net investment gains and losses and net derivative gains and losses. |
| The formula excludes VII that is more than 10% higher or lower than the Business Plan goal. This avoids excessive rewards or penalties due to volatile investment returns. As a result, it does not create an incentive to take excessive risk in the Companys investment portfolio and so facilitates prudent risk management. As VII for 2017 was within this range, the Committee did not make such a modification to Adjusted Earnings. |
| Nor is this approach an unlimited function of revenues. Rather, this approach caps the amount that can be generated for AVIP awards, and is a function of financial measures that take account of the Companys costs and liabilities. |
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2018 Proxy Statement
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Compensation Discussion and Analysis
The Adjusted Earnings that the Committee used for AVIP Performance Funding was above the 2017 Business Plan target. This performance reflected favorable business performance primarily from underwriting and expense management, as well as favorable market factors including foreign exchange impact. The 2017 Business Plan that the Committee used for this purpose excluded Brighthouse Financial results in anticipation of the Company separating those businesses during 2017.
For purposes of determining 2017 AVIP Adjusted Earnings, the Committee increased and decreased Adjusted Earnings for certain items (in millions). The net result was a less than 2% increase to Adjusted Earnings.
Reason for Increase/Decrease |
Increase (Decrease) |
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Prior period revisions (taking in 2017 the full impact from prior periods of the missing or unresponsive group annuitants matter) | ($ | 222 | ) | |||||||||||||||||
Reversal of the Australia reinsurance claim | ($ | 44 | ) | |||||||||||||||||
Impact of U.S. tax reform | $ | 298 | ||||||||||||||||||
Asbestos litigation expense | $ | 39 | ||||||||||||||||||
Net increase to Adjusted Earnings | $ | 71 | ||||||||||||||||||
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2018 Proxy Statement
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Compensation Discussion and Analysis
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2018 Proxy Statement
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65
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Compensation Discussion and Analysis