SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
REINSURANCE GROUP OF AMERICA, INCORPORATED
(Name of Registrant as Specified in Its Charter)
(Name of Person Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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REINSURANCE
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[RGA LOGO] GROUP OF AMERICA,
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INCORPORATED(SM)
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NOTICE OF THE ANNUAL MEETING OF
THE SHAREHOLDERS OF
REINSURANCE GROUP OF AMERICA, INCORPORATED
Chesterfield, Missouri
April 11, 2007
TO THE SHAREHOLDERS OF
REINSURANCE GROUP OF AMERICA, INCORPORATED
The Annual Meeting of the Shareholders of Reinsurance Group of America,
Incorporated will be held at the Company's offices located at 1370 Timberlake
Manor Parkway, Chesterfield, Missouri on May 23, 2007, commencing at 2:00 p.m.,
at which meeting only holders of record of the Company's common stock at the
close of business on March 23, 2007 will be entitled to vote, for the following
purposes:
1. To elect three directors for terms expiring in 2010;
2. To approve an amendment to the Company's Flexible Stock Plan;
3. To authorize the sale of certain types of securities from time to
time to MetLife, Inc., the beneficial owner of a majority of the
Company's common shares, or affiliates of MetLife, Inc.; and
4. To transact such other business as may properly come before the
meeting.
REINSURANCE GROUP OF AMERICA, INCORPORATED
By /s/ Steven A. Kandarian
Steven A. Kandarian
Chairman of the Board
/s/ James E. Sherman
James E. Sherman
Secretary
TABLE OF CONTENTS
PAGE NO.
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Notice of the Annual Meeting of Shareholders ................................... i
Information About the 2007 Annual Meeting and Proxy Voting ..................... 1
Proxy Statement ................................................................ 1
Item 1 - Election of Directors ................................................. 2
Corporate Governance ...................................................... 4
Board of Directors and Committees ......................................... 6
Compensation Discussion and Analysis ...................................... 7
Compensation Committee Report ............................................. 16
Summary Compensation Table ................................................ 16
Grants of Plan-Based Awards in 2006 ....................................... 17
Outstanding Equity Awards at 2006 Fiscal Year-End ......................... 19
Option Exercises and Stock Vested During Fiscal 2006 ...................... 22
Pension Benefits in Fiscal 2006 ........................................... 23
Nonqualified Deferred Compensation in Fiscal 2006 ......................... 24
Potential Payments Upon Termination or Change of Control .................. 25
Director Compensation for Fiscal 2006 ..................................... 26
Securities Ownership of Directors, Management and Certain Beneficial Owners 27
Certain Relationships and Related Person Transactions ..................... 30
Independent Auditor ....................................................... 32
Item 2 - Approval of Amendment to the Flexible Stock Plan ...................... 33
Item 3 - Sale of Securities to MetLife or Its Affiliates ....................... 38
Equity Compensation Plan Information ........................................... 42
Additional Information ......................................................... 42
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INFORMATION ABOUT THE 2007 ANNUAL MEETING AND PROXY VOTING
EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK,
DATE, AND EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. A POSTAGE-PAID RETURN
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
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REINSURANCE
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[RGA LOGO] GROUP OF AMERICA,
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INCORPORATED(SM)
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1370 TIMBERLAKE MANOR PARKWAY, CHESTERFIELD, MISSOURI 63017-6039
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PROXY STATEMENT
FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD MAY 23, 2007
AT RGA'S OFFICES IN CHESTERFIELD, MISSOURI
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This proxy statement is furnished to the holders of common stock of
Reinsurance Group of America, Incorporated (the "Company" or "RGA") in
connection with the solicitation of proxies for use in connection with the
Annual Meeting of the Shareholders to be held at 2:00 p.m. May 23, 2007, and all
adjournments and postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of the Shareholders. Such holders are
hereinafter referred to as the "Shareholders." The Company is first mailing this
proxy statement and the enclosed form of proxy to Shareholders on or about April
11, 2007.
Whether or not you expect to be present in person at the meeting, you are
requested to complete, sign, date, and return the enclosed form of proxy. If you
attend the meeting, you may vote by ballot. If you do not attend the meeting,
your shares of common stock can be voted only when represented by a properly
executed proxy.
Any person giving such a proxy has the right to revoke it at any time
before it is voted by giving written notice of revocation to the Secretary of
the Company, by duly executing and delivering a proxy bearing a later date, or
by attending the Annual Meeting and voting in person.
The close of business on March 23, 2007 has been fixed as the record date
for the determination of the Shareholders entitled to vote at the Annual Meeting
of the Shareholders. As of the record date, approximately 61,691,090 shares of
common stock were outstanding and entitled to be voted at such meeting, with
approximately 71 holders of record. Shareholders will be entitled to cast one
vote on each matter for each share of common stock held of record on the record
date.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2006 accompanies this proxy statement.
The Board of Directors of the Company makes this proxy solicitation. The
solicitation will primarily be by mail and the expense thereof will be paid by
the Company. In addition, proxies may be solicited by telephone or telefax by
directors, officers, or regular employees of the Company.
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ITEM 1 - ELECTION OF DIRECTORS
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The first item to be acted upon at the Annual Meeting is the election of
three directors of the Company for terms expiring at the Annual Meeting in 2010,
or until their respective successors have been elected and have qualified.
Proxies cannot be voted for a greater number of persons than the number of
nominees named.
NOMINEES AND CONTINUING DIRECTORS
The Board of Directors is divided into three classes, each of which
generally contains either two or three directors, with the terms of office of
each class ending in successive years. Lisa M. Weber resigned from the Board on
January 25, 2006. In anticipation of Ms. Weber's departure from the Board, the
management of MetLife, Inc. ("MetLife"), the Company's principal shareholder,
suggested Georgette A. Piligian as a director candidate to fill the vacancy
created by Ms. Weber's resignation. Following consideration by the Nominating
and Corporate Governance Committee, on January 26, 2006, the Board elected Ms.
Piligian to fill the vacancy. Leland C. Launer, Jr. resigned from his position
at MetLife, and as chairman of the Company's Board, on January 18, 2007.
Following Mr. Launer's resignation, the management of MetLife suggested Steven
A. Kandarian as a candidate to fill the vacancy created by Mr. Launer's
resignation. Following consideration by the Nominating and Corporate Governance
Committee, on January 25, 2007, the Board elected Mr. Kandarian a director and
chairman of the Board.
Currently, the Board has eight directors, with two vacancies. Certain
information with respect to the nominees for election as directors proposed by
the Company and the other directors whose terms of office as directors will
continue after the Annual Meeting is set forth below. Each of the directors has
served in his or her principal occupation for the last five fiscal years, unless
otherwise indicated.
Should any one or more of the nominees be unable or for good cause is
unwilling to serve (which is not expected), the proxies (except proxies marked
to the contrary) will be voted for such other person or persons as the Board of
Directors of the Company may recommend. All of the nominees are currently
directors of the Company. All of the nominees for director have agreed to serve
if elected. The Company recommends a vote FOR the nominees for election to the
Board.
TO BE ELECTED AS DIRECTORS FOR TERMS ENDING 2010: DIRECTOR SINCE
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WILLIAM J. BARTLETT, 57 2004
Retired partner, Ernst & Young Australia. Mr. Bartlett was an accountant
and consultant with Ernst & Young for over 35 years and advised numerous
clients in the global insurance industry. Mr. Bartlett was appointed a
partner of Ernst & Young in Sydney, Australia in July 1980, a position he
held until his retirement in June 2003. He served as chairman of the
firm's global insurance practice from 1991 to 2000, and was chairman of
the Australian insurance practice group from 1989 to 1998. He holds
several professional memberships in Australia (ACPA and FCA), South Africa
(CASA), and the United Kingdom (FCMA). Mr. Bartlett is a member of the
Australian Life Insurance Actuarial Standards Board and is a consultant to
the Australian Financial Reporting Council on Auditor Independence.
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ALAN C. HENDERSON, 61 2002
Retired President and Chief Executive Officer of RehabCare Group, Inc.
from June 1998 until June 2003. Prior to becoming President and Chief
Executive Officer, Mr. Henderson was Executive Vice President, Chief
Financial Officer and Secretary of RehabCare from 1991 through May 1998.
Mr. Henderson was a director of RehabCare Group, Inc. from June 1998 to
December 2003, Angelica Corporation from March 2001 to June 2003, and
General American Capital Corp., a registered investment company, from
October 1989 to April 2003.
A. GREIG WOODRING, 55 1993
President and Chief Executive Officer of the Company since 1993. Mr.
Woodring headed the reinsurance business at General American Life
Insurance Company ("General American") from 1986 until the Company's
formation in December 1992. He also serves as a director and officer of a
number of subsidiaries of the Company.
TO CONTINUE IN OFFICE UNTIL 2009:
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STUART I. GREENBAUM, 70 1997
Professor emeritus at the John M. Olin School of Business at Washington
University since January 2007. Mr. Greenbaum served as Dean of the Olin
School of Business from July 1995 to July 2005 and as professor from July
2005 to January 2007. Prior to joining the Olin School of Business, he
spent 20 years at the Kellogg Graduate School of Management at
Northwestern University where he was Director of the Banking Research
Center and Norman Strunk Distinguished Professor of Financial
Institutions. Mr. Greenbaum has served on the Federal Savings and Loan
Advisory Council and the Illinois Task Force on Financial Services, and
has been a consultant for the American Bankers Association, the Bank
Administration Institute, the Comptroller of the Currency, the Federal
Reserve System, and the Federal Home Loan Bank System, among others.
STEVEN A. KANDARIAN, 54 2007
Executive Vice President and Chief Investment Officer of MetLife since
April 2005. From March 2004 to April 2005, he was an independent financial
consultant. Prior to that he was Executive Director of the Pension Benefit
Guaranty Corporation ("PBGC") from December 2001 to February 2004. Before
joining the PBGC, he held positions of increasing responsibility at
various firms and companies involving private equity, investment banking
and corporate mergers and acquisitions.
GEORGETTE A. PILIGIAN, 42 2006
Senior Vice President and Chief Information Officer, Institutional
Business Metropolitan Life Insurance Company ("Metropolitan Life") since
February 2006. Ms. Piligian joined MetLife in 1987 and has led various
transformation efforts and technology departments within the Company. In
September of 1999, she was appointed as a Vice President, in 2002 became
the Chief Information Officer for Corporate Systems and in 2003 became a
Senior Vice President. Ms. Piligian received her Bachelors Degree in
Business Computer Information Systems from Hofstra University.
3
TO CONTINUE IN OFFICE UNTIL 2008:
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J. CLIFF EASON, 59 1993
Retired President and CEO of Southwestern Bell Telephone, SBC
Communications, Inc. ("SBC"), a position he held from September 2000
through January 2001. He served as President, Network Services, SBC from
October 1999 through September 2000; President, SBC International of SBC,
from March 1998 until October 1999; President and CEO of Southwestern Bell
Telephone Company ("SWBTC") from February 1996 until March 1998; President
and CEO of Southwestern Bell Communications, Inc. from July 1995 through
February 1996; President of Network Services of SWBTC from July 1993
through June 1995; and President of Southwestern Bell Telephone Company of
the Midwest from 1992 to 1993. He held various other positions with
Southwestern Bell Communications, Inc. and its subsidiaries prior to 1992,
including President of Metromedia Paging from 1991 to 1992. Mr. Eason was
a director of Williams Communications Group, Inc. until his retirement in
January 2001.
JOSEPH A. REALI, 54 2002
Senior Vice President and Tax Director of Metropolitan Life since 1999.
Mr. Reali has served as the MetLife liaison with RGA since July 2002. As
Tax Director, Mr. Reali is responsible for corporate tax issues at
Metropolitan Life and issues with respect to its holdings in RGA. Mr.
Reali joined MetLife in 1977 as an attorney in the Law Department, and in
1985 he became a Vice President in the Tax Department. In 1993 he was
appointed Vice President and Corporate Secretary, and in 1997 he became a
Senior Vice President. Mr. Reali received a J.D. degree, cum laude, from
Fordham University School of Law and an LL.M degree in taxation from New
York University Law School. Mr. Reali serves as Counsel and Secretary of
the Metropolitan Life Foundation.
CORPORATE GOVERNANCE
We have adopted an Employee Code of Business Conduct and Ethics (the
"Employee Code"), a Directors' Code of Conduct (the "Directors' Code"), and a
Financial Management Code of Professional Conduct (the "Financial Management
Code"). The Employee Code applies to all employees and officers of RGA and its
subsidiaries. The Directors' Code applies to directors of RGA and its
subsidiaries. The Financial Management Code applies to our chief executive
officer, chief financial officer, corporate controller, primary financial
officers in each business unit, and all professionals in finance and
finance-related departments. We intend to satisfy our disclosure obligations
under Item 5.05 of Form 8-K by posting on our website information about
amendments to, or waivers from, any provision of the Financial Management Code
that applies to our chief executive officer, chief financial officer, and
corporate controller.
In March 2004, the Board of Directors adopted Corporate Governance
Guidelines, a revised Audit Committee Charter, charters for the Compensation
Committee and Nominating and Corporate Governance Committee, and Policies on
Communications (collectively "Governance Documents"). The Codes and Governance
Documents referenced above are available on our website at www.rgare.com.
Information on our website does not constitute part of this proxy statement. We
will provide without charge, upon written or oral request, a copy of any of the
Codes of Conduct or Governance Documents. Requests should be directed to
Investor Relations, Reinsurance Group of America, Incorporated, 1370 Timberlake
Manor Parkway, Chesterfield, Missouri 63017 by electronic mail
(investrelations@rgare.com) or by telephone (636-736-7243).
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DIRECTOR INDEPENDENCE
In accordance with the Corporate Governance Guidelines, the Board
undertook reviews of director independence in February 2006 and February 2007.
During each of these reviews, the Board received a report from the Law
Department noting that there were no transactions or relationships between RGA
or its subsidiaries and Messrs. Bartlett, Eason, Greenbaum, or Henderson, nor
any member of their immediate family. The purpose of this review was to
determine whether any of those directors had a material relationship with us
that would preclude such director from being independent under the listing
standards of the NYSE or our Corporate Governance Guidelines.
As a result of this review, the Board affirmatively determined, in its
judgment, that each of the four directors named above are independent of us and
our management under the applicable standards. Messrs. Kandarian and Reali and
Ms. Piligian are considered non-independent directors because of their status as
senior executives or officers of MetLife or its subsidiaries and affiliates. Mr.
Woodring is a non-independent director because he is our Chief Executive
Officer.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors has adopted Policies on Communications, which
describe the process for interested parties and shareholders to communicate with
our directors and the Board. The Policies on Communications are available on our
website at www.rgare.com. Information on our website does not constitute part of
this proxy statement. Interested parties and shareholders may communicate
directly with our directors, including the presiding director, Mr. Kandarian, or
with the lead independent director, Mr. Greenbaum, by sending a written
communication as follows:
General Counsel
Reinsurance Group of America, Incorporated
1370 Timberlake Manor Parkway
Chesterfield, MO 63017
The Communications Policy provides that the General Counsel will make a
record of the receipt of any such communications. All properly addressed
communications will be delivered to the specified recipient(s) not less than
once each calendar quarter, and will not be directed to or reviewed by
management prior to receipt by such persons.
CONTROLLED COMPANY EXEMPTION
The listing standards of the NYSE require listed companies to have a Board
of Directors that has a majority of independent directors. There is an
exemption from this requirement for "controlled companies," which means a
company of which more than 50% of the voting power is held by an individual, a
group or another company. Controlled companies need not comply with the
requirement to have a majority of independent directors or Compensation
Committee and Nominating and Corporate Governance Committee, respectively,
composed entirely of independent directors. As of February 1, 2007, MetLife
beneficially owns approximately 52.5% of our outstanding shares; therefore, we
qualify as a "controlled company" under the NYSE listing standards. We rely on
the controlled company exemption in connection with the requirement to have a
majority of independent directors. However, we have chosen not to rely on the
exemption for the Compensation Committee and Nominating and Corporate Governance
Committee and, as of February 20, 2007, the Board determined that, in its
judgment, those two Committees were composed entirely of independent directors.
OTHER MATTERS
In February 2007, the Board designated Mr. Kandarian as the presiding
director, whose primary responsibility is to preside over periodic executive
sessions of the Board in which the management director
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(Mr. Woodring) does not participate. In February 2007, the Board also named Mr.
Greenbaum as lead independent director.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held a total of four regular meetings and one
special meeting during 2006. Each incumbent director attended at least 75% of
the meetings of the Board and committees on which he or she served during 2006.
We do not have a policy with regard to attendance by Directors at the annual
meeting of shareholders. None of the non-management directors attended the 2006
annual meeting of shareholders. The Board of Directors has an Audit Committee, a
Compensation Committee, and a Nominating and Corporate Governance Committee.
AUDIT COMMITTEE
The Audit Committee met eight times in 2006, and consisted of Messrs.
Bartlett (Chairman), Eason, Greenbaum, and Henderson. The Audit Committee is
directly responsible for the appointment, compensation, retention and oversight
of the work of our independent auditor. The Committee oversees our accounting
and financial reporting processes, the adequacy of our internal control over
financial reporting and of our disclosure controls and procedures, and the
integrity of our financial statements, pre-approves all audit and non-audit
services to be provided by the independent auditor, reviews reports concerning
significant legal and regulatory matters, and reviews the performance of our
internal audit function. The Committee also reviews and discusses our filings on
Forms 10-K and 10-Q and the financial information in those filings. The Audit
Committee works closely with management as well as our independent auditor and
internal auditor. A more detailed description of the role and responsibilities
of the Audit Committee is set forth in a written charter, adopted by the Board
of Directors, which is available on our website (www.rgare.com). Information on
our website does not constitute part of this proxy statement. The Audit
Committee has established procedures for the receipt, retention, and treatment
of complaints regarding accounting, internal accounting controls, or auditing
matters. Please see the Policies on Communications, which is available on our
website.
The Board of Directors has determined, in its judgment, that all of the
members of the Audit Committee are independent within the meaning of SEC
regulations applicable to audit committees and the listing standards of the New
York Stock Exchange ("NYSE"). The Board of Directors has determined, in its
judgment, that Messrs. Bartlett, Greenbaum and Henderson are qualified as audit
committee financial experts within the meaning of SEC regulations and the Board
has determined that each of them has accounting and related financial management
expertise within the meaning of the listing standards of the NYSE. The Audit
Committee Charter provides that members of the Audit Committee may not
simultaneously serve on the audit committee of more than two other public
companies.
COMPENSATION COMMITTEE
Our Compensation Committee meets as often as necessary to perform its
duties and responsibilities which include establishing and overseeing our
general compensation policies, reviewing and approving the performance and
compensation of the CEO and certain other executive officers, and reviewing and
recommending compensation for other executives and employees to the Board of
Directors. During 2006, the Compensation Committee consisted of Messrs.
Henderson (Chairman), Bartlett, Eason, and Greenbaum. The Committee met six
times in 2006 to discuss our compensation programs, as follows:
o January 2006: Recommend profit sharing award for 2005; discuss
compensation summary report; review management incentive plan
("MIP") weights for 2006; and review the executive compensation
report provided by Watson Wyatt Worldwide ("Watson Wyatt").
o February 2006: Our Committee met twice to approve the 2005 MIP
awards; consider management's recommendations on targets for the
2006 MIP and intermediate term bonus program ("ITB") grants;
consider management's recommendations on 2006 base salaries for
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executive officers; approve 2006 grants of stock options and
performance contingent restricted stock ("PCRS") for our executive
officers; approve the 2006 MIP measures with respect to executive
officers; and approve the 2006 base salary for our chief executive
officer.
o April 2006: Review compensation summary; discuss executive stock
ownership; discuss MIP goals and targets; discuss compensation of
certain new hires; and discuss present state of our pension benefit
program.
o July 2006: Review executive equity and ownership report; and review
executive benefit report.
o October 2006: Discuss new SEC reporting requirements with respect to
executive compensation; approve 2007 guidelines with respect to
merit increases, promotions, and salary structure adjustments;
discuss compensation of certain new hires; and discuss retention of
an independent compensation consultant.
A more detailed description of the role and responsibilities of the
Compensation Committee is set forth in a written charter adopted by the Board of
Directors, which is available on our website (www.rgare.com). Information on our
website does not constitute part of this proxy statement. The Board of Directors
has determined, in its judgment, that all of the Committee's members are
independent within the meaning of the listing standards of the NYSE.
Messrs. Henderson, Bartlett, Eason or Greenbaum are not and have never
been officers or employees of RGA or any of its subsidiaries. None of our inside
directors or officers serve on the compensation committee of another company of
which a member of the Compensation Committee is an officer.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee met once in 2006, and
consisted of Messrs. Greenbaum (Chairman), Bartlett, Eason, and Henderson. This
Committee is responsible for developing and implementing policies and practices
relating to corporate governance, including reviewing and monitoring
implementation of our Corporate Governance Guidelines. In addition, the
Committee identifies individuals qualified to become members of the Board,
consistent with the criteria established by the Board; develops and reviews
background information on candidates for the Board; and makes recommendations to
the Board regarding such candidates. The Committee also will prepare and
supervise the Board's annual review of director independence and the performance
of self-evaluations to be conducted by the Board and Committees. A more detailed
description of the role and responsibilities of the Compensation Committee is
set forth in a written charter adopted by the Board of Directors, which is
available on our website (www.rgare.com). Information on our website does not
constitute part of this proxy statement. The Board of Directors has determined,
in its judgment, that all of the Committee's members are independent within the
meaning of the listing standards of the NYSE. Shareholders wishing to propose
nominees to the Committee for consideration should notify in writing our
Secretary in accordance with the process described in "Shareholder Nominations
and Proposals." The Secretary will inform the members of the Committee of such
nominees.
COMPENSATION DISCUSSION AND ANALYSIS
Our Board of Directors has delegated to the Compensation Committee (the
"Committee") the authority to establish and oversee our general compensation
policies, to review the performance and approve the compensation of our CEO, and
to review and recommend compensation to the Board of Directors for other
executives and employees. The Committee also produces an annual report on
executive compensation for inclusion in our proxy statement. In 2006, the
Compensation Committee consisted of Messrs. Henderson (Chairman), Bartlett,
Eason, and Greenbaum. RGA Reinsurance Company, one of our wholly owned
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indirect subsidiaries, employs all of our "executive officers," including the
seven officers who were reporting persons for purposes of Section 16 of the
Exchange Act on December 31, 2006, except for Graham Watson, who is employed by
RGA International Corporation.
COMPENSATION PHILOSOPHY AND OBJECTIVES
We design our compensation philosophy and objectives to:
o provide competitive total compensation opportunities that will
attract, retain and motivate high-performing executives;
o align the compensation plans to our business strategies;
o reinforce our pay for performance culture by making a significant
portion of compensation variable and based on company, business unit
and individual performance; and
o align the financial interests of our executives and shareholders
through stock-based incentives and by building executive ownership
in us.
We use two key financial performance measures and weights designed to add
emphasis to operating earnings to align our compensation plans to our business
strategies, reinforce our pay for performance culture using variable
compensation based on performance, and align the financial interests of our
executives (in the case of the ITB). We measure our performance under our MIP
based 75% on annual operating earnings (net income from continuing operations
less realized capital gains and losses and certain other non-operating items)
per share and 25% on annual consolidated revenues. For the ITB, we measure
performance based 67% on a compounded annual growth rate for operating earnings
per share and 33% on a compounded annual growth rate for revenue, both
calculated as of the end of the three-year performance period.
ELEMENTS OF COMPENSATION
Our compensation program consists of base salary, MIP, ITB, stock options,
and retirement and pension benefits. Our base salaries are designed to provide a
part of a competitive total compensation package that will attract, retain and
motivate high-performing executives. The MIP is designed to reinforce our pay
for performance culture by making a significant portion of an executive's
compensation variable and based on company, business unit and individual
performance. The MIP also aligns compensation with our short-term business
strategies. Our ITB and stock options are designed to reinforce our pay for
performance culture, align the financial interests of our executives and
shareholders, align compensation with our intermediate and long-term business
strategies, and provide a significant equity component as part of the total
compensation package. Finally, our retirement and pension benefits are designed
to provide another part of a competitive total compensation package that permits
us to attract and retain key members of our management team.
COMPENSATION CONSULTANT
In forming its recommendations on our overall compensation program, the
Committee has from time to time engaged an independent consulting firm to
provide advice about competitive compensation practices and determine how our
executive compensation compares to that of other comparable companies, including
publicly held insurance and reinsurance companies. Prior to 2005, we had
retained Watson Wyatt, a nationally recognized consulting firm, to perform a
variety of compensation consulting services with respect to non-executive
positions and executive compensation analysis. Beginning in 2005, the Committee
approved the engagement of Watson Wyatt to review our compensation policies and
to provide relevant
8
recommendations to the Committee. Watson Wyatt provided the results of
its study in early 2006, which results were used to establish executive
compensation in 2006.
MANAGEMENT PARTICIPATION AND INVOLVEMENT
Pursuant to the Compensation Committee charter, the Committee makes all
compensation decisions and approves the compensation of our executive officers,
and makes compensation recommendations for approval by our Board for all other
employees. Management plays a significant role in the compensation-setting
process. The most significant aspects of management's role are:
o evaluating employee performance;
o establishing business performance targets, goals and objectives; and
o recommending salary levels and option awards.
Our chief executive officer works with the Committee chair to establish
the agenda for Committee meetings. Management also prepares relevant information
and reports for each Compensation Committee meeting. Our chief executive officer
also participates in Committee meetings at the Committee's request to provide:
o background information regarding our strategic objectives;
o his evaluation of the performance of the executive officers; and
o compensation recommendations as to executive officers (other than
himself).
Our executive officers and other members of management are also available
to Watson Wyatt or any other compensation consultant to provide information
regarding position descriptions, compensation history and other information as
requested and to review draft results provided by the Committee's compensation
consultant.
Three of our directors are senior executives of MetLife, Inc., the
beneficial owner of approximately 52.5% of our outstanding common stock as of
February 1, 2007. The MetLife directors are invited to attend and participate in
Compensation Committee meetings, although they are not voting members of the
Committee. From time to time the MetLife directors provide recommendations or
suggestions with respect to our executive compensation arrangements and with
respect to the setting of our chief executive officer's compensation.
BENCHMARKING OF COMPENSATION
In 2005, Watson Wyatt performed an analysis of all elements of our total
direct compensation, including a competitive market assessment of the pay levels
for our executives at the Senior Vice President level and above, which at that
time included 26 positions. The analysis studied multiple published surveys of
executive compensation practices and included publicly-available information
relating to a peer group of 12 publicly-traded insurance companies.
The analysis also included a review of five published surveys, two of
which were insurance-specific and three of which were general executive
compensation surveys. The scope of the survey review focused on our size in
terms of premiums, revenues, and asset levels, and also assessed published
survey data with respect to all 26 executive positions. Survey data was
collected on companies that were similar to our size based on premiums, revenues
and assets, and included specific data for the insurance industry when
available.
9
The study of our peers focused on publicly-available information, and thus
focused on pay levels for their top five executives, as this is the information
that is publicly disclosed. Pay levels for our top five executives were compared
to peers based on highest-paid ranking, using total cash compensation. As
available, position specific comparisons also were made.
The peer companies studied in 2006 included:
Amerus Group Co PartnerRe Ltd.
Berkley (WR) Corp. Phoenix Companies Inc.
Everest Re Group Ltd. Protective Life Corp.
Jefferson-Pilot Corp. Renaissance Re Holdings Ltd.
Nationwide Financial Services Scottish Re Group Ltd.
Odyssey Re Holdings Corp. XL Capital Ltd.
The Committee defined the peer group based on various metrics, including
industry and size. The Committee determined that the peer companies should
consist of publicly-traded reinsurers (life and property-casualty) and financial
services companies, including direct competitors, that were approximately
one-half to 2.5 times our size (based on revenues, assets, and other similar
measures). We expect it will be necessary to update the list periodically in
order to maintain an appropriate list of companies for pay comparisons as a
result of mergers and acquisitions, divestitures, growth in our size and the
size of those companies in the peer group, and other changes.
We used the analysis of Watson Wyatt as a starting point for our
compensation determinations relating to base salary, total cash compensation,
long-term incentives and total direct compensation. We considered individual
performance, internal pay equity among positions and levels, and the relative
importance of positions to us. We also considered our financial performance as
demonstrated by revenue and earnings per share and various other factors that
differentiate us from our peers. After reviewing Watson Wyatt's recommendations
as compared to our overall performance and our future growth targets, we
established a compensation strategy that we believe aligns our compensation with
the market median in order to allow us to retain our current talent and attract
new talent.
The Committee determines a total compensation package for each of the five
executives who are identified in the Summary Compensation Table (whom we refer
to as our "named executive officers") that includes base salary, MIP bonus,
equity awards, and pension benefits. In determining the targeted overall
compensation for our chief executive officer, we considered not only the factors
described above, but also our performance over the previous two years. We used a
similar analysis to establish the targeted overall compensation for our other
named executive officers for 2006.
COMPANY COMPENSATION POLICIES
BASE SALARIES
In determining the base salaries of our named executive officers, the
Committee considers our compensation compared to that of the relevant market, as
determined by a review of published surveys. The Committee also considers
recommendations submitted to it by our chief executive officer, who provides the
Committee with details as to executive performance as compared to Company
performance and the executive's individual and divisional results. In February
2006, based upon an analysis of executive compensation and the recommendations
of our chief executive officer, our Committee approved salary increases for the
named executive officers that averaged 8.8%. The purpose of this increase was to
align the named executive officers' base compensation with the market median.
Based on our compensation strategy, our goals for and analysis of targeted
overall compensation, and Company performance during the previous two years, we
increased the 2006 base salary for Greig Woodring, our chief executive officer,
by 6.5% to $700,000. This amount reflects a level that we concluded was
appropriate based on our review of his performance and leadership, and our
consideration of factors relating
10
to motivation and retention. We used a similar process to establish the
following base salaries for 2006 for the other named executive officers, as
follows: Jack B. Lay, Senior Executive Vice President and Chief Financial
Officer - $395,000; David B. Atkinson, Executive Vice President and Chief
Operating Officer - $420,000; Paul A. Schuster, Senior Executive Vice President,
U.S. Operations - $395,000; and Graham Watson, Senior Executive Vice President,
International - $450,000.
ANNUAL MANAGEMENT INCENTIVES
Our management and professional level associates are eligible to
participate in our MIP, which provides annual cash incentive compensation based
on one or more of the following factors: our overall performance, the
performance of the participant's division or business unit, and individual
performance during the previous year. Under the MIP, participants may receive a
cash bonus each year.
We generally set MIP objectives during February of each year, and
determine results and awards the following February. MIP objectives are not tied
to our peer group, and are instead tied solely to our performance. Our results
in 2006 were measured 75% on annual operating earnings (net income from
continuing operations less realized capital gains and losses and certain other
non-operating items) per share and 25% on annual consolidated revenues.
Divisional results are based on each division's revenues and operating earnings.
Individual performance results are measured by successful completion of major
projects, production, client development, personal development or similar-type
goals in which the employee played a major role. While we intend to tie
individual performance to clearly articulated and objective measures, it is
necessary, and at times prudent, for management to use a certain degree of
discretion in evaluating individual results. Based on these criteria, the
Committee approves a schedule of participants, which includes individual
incentive allocations, a minimum performance level that must be met before any
payment to the individual can be made, and a target and a maximum. In addition,
overall Company performance must meet certain minimum levels, which we refer to
as "trigger," as determined in advance by the Committee, before any awards
(including any portion of an award based solely on individual performance) are
made under the MIP. Awards are based on a specified percentage of salary, which
varies for each participant.
The MIP award is designed to serve as a short-term incentive. Targets
reflect our short-term goals for operating earnings per share and revenue
growth. The allocation of MIP awards between individual, division and
company-wide performance varies for each participant based on his or her job
responsibilities. In general, allocations for divisional and individual
performance are weighted more heavily for employees with less company-wide
responsibility, and allocations for company-wide performance are weighted more
heavily for executives with more company-wide responsibility. The MIP allocation
for all of the named executive officers generally is based solely on overall
company results with no specific allocation for divisional or individual
performance. We do, however, consider divisional and individual performance when
evaluating an executive officer's total compensation, and may from time to time
establish a specific MIP allocation for a particular business objective or
project.
In February 2006, the Compensation Committee approved the performance
goals and business criteria for the 2006 named executive officers under the MIP
for 2006, including the minimum, target and maximum bonus opportunities, as a
percentage of base salary. In February 2007, the Committee approved the MIP
awards for our named executive officers for 2006 performance. The Committee
determined that our operating earnings and revenue growth in fiscal 2006 both
exceeded the amount for target bonus awards but neither measure reached the
amount for maximum bonus awards. The average MIP award for 2006 performance as a
percentage of salary for our named executive officers was approximately 135%.
The following table describes the minimum, target and maximum bonus
opportunities, as a percentage of base salary, as approved by the Committee in
February 2006, and the MIP payments for 2006 performance, as approved by the
Committee in February 2007:
11
2006 BONUS AT 2006 BONUS AT 2006 BONUS AT MIP PAYMENT
NAME MINIMUM TARGET MAXIMUM FOR 2006
A. Greig Woodring 0% 100% 200% $ 947,590
David B. Atkinson 0% 80% 160% $ 454,843
Jack B. Lay 0% 80% 160% $ 427,769
Paul A. Schuster 0% 80% 160% $ 411,780
Graham Watson 0% 80% 160% $ 493,380
INTERMEDIATE AND LONG-TERM INCENTIVES
In 2006, we made equity incentive grants under our ITB consisting of
shares of PCRS and long-term equity incentive grants consisting of stock
options. Shares of PCRS and stock options are issued under our Flexible Stock
Plan.
Our Flexible Stock Plan, which was established in 1993, provides for the
award of various types of long-term equity incentives, including stock options,
stock appreciation rights, restricted stock, performance shares, and other stock
based awards, to officers at the vice president level and above who have the
ability to favorably affect our stock price and financial results. The face
value of the annual award as a multiple of base salary varies depending on the
individual's position, and ranges from 0.5 to 4.0 times. The value of each
annual equity incentive grant is evenly split between grants of stock options
and PCRS. We believe this allocation allows us to reward the achievement of
intermediate and long-term goals equally, and was based both on comparisons to
the market and the overall risk/reward tradeoff. The number of shares for the
portion of the annual equity grant represented by PCRS is determined using the
Black-Scholes pricing model.
The PCRS grants are designed to allow us to reward the achievement of
specific intermediate-term corporate financial performance goals with equity
that is earned on the basis of performance. The stock options are designed to
focus attention on accomplishment of long-term goals and do not have performance
criteria. We implemented the PCRS program because we believe it is consistent
with our pay-for-performance compensation philosophy and focuses on financial
performance. We continue to evaluate the appropriate mix of long-term pay
elements (i.e., stock options vs. PCRS or restricted shares) in comparison to
the market and to best support our strategy. We believe that stock options
provide the most appropriate vehicle for providing long-term value to management
because of the tie to shareholder value, while the PCRS grants add an additional
performance expectation for our management to focus on growth in earnings per
share and revenue over the intermediate-term.
INTERMEDIATE-TERM BONUS PROGRAM
Our ITB program is a performance-driven incentive program implemented in
January 2004 under our Flexible Stock Plan. We believe this program reinforces
our strategic and intermediate-term financial and operating goals. Incentive
awards are intended to reflect management's involvement in our performance and
to encourage their continued contribution to our future. We view incentive
awards as an important means of aligning the economic interests of management
and shareholders.
Our management employees are eligible to participate in this program. The
purpose of the ITB is to reward participants if we achieve the rate of growth in
revenue and earnings per share that is approved each year by the Compensation
Committee when it considers annual grants. The ITB is an ongoing program with
three-year performance periods. Each year, a new three-year cycle begins, giving
us the opportunity to alter ITB performance measures as appropriate. The
three-year performance and reward period shifts attention toward intermediate
and longer-term sustained results.
12
The ITB consists of PCRS units that are granted at the beginning of the
performance period at target. The Compensation Committee also sets award levels
with a minimum level of performance that must be met before any payment to the
individual can be made, as well as a target and a maximum. If we do not meet
certain performance goals, the awards will not be made, and if we exceed those
performance goals, the award can be as much as 200% of the targeted award
opportunity. PCRS grants are not treated as outstanding shares until the
performance goals are met and awards are made, as determined and approved by the
Compensation Committee. Awards are made in shares of fully vested, unrestricted
common stock. The awards also are contingent upon the participant's employment
status with us at the end of the 3-year performance period.
We use compounded annual growth rates for revenue and operating earnings
per share as the performance measures for the ITB, calculated at the end of the
three-year performance period. When we establish the ITB targets for a
particular performance period, we may adjust those targets up or down so they
are set at amounts or ranges that are generally consistent with our publicly
disclosed intermediate-term growth rate goals. Our revenue and operating
earnings per share in 2005 did not reach the target amounts and, in the case of
operating EPS, did not achieve even the minimum level of the established range.
We established the ITB target and range for revenue growth for the period
beginning in 2006 at levels that are consistent with our publicly disclosed
intermediate-term goal for that measure. In contrast, we adjusted upward the ITB
target and range for the same period for earnings per share growth to a level
significantly above our publicly disclosed intermediate-term goal for that
measure. As a result, achievement of the target earnings per share growth rate
will require a high level of financial and operating performance. We believe the
goals and ranges we established for the 2006 grants of PCRS under the ITB are
challenging but achievable.
Upon retirement of a holder of a PCRS grant made pursuant to this plan,
provided that the holder has attained a combination of age and service, not to
exceed 10 years of service, that equals at least 65, the units will be pro-rated
based on the number of months of the holder's participation during the
three-year performance period and the number of shares earned.
STOCK OPTIONS
Stock options are granted annually, and the number of options granted is
based on position level. Stock options are granted as part of a total
compensation package for our management. The Committee considers compensation
data of the peer group in determining the amount of options granted to our named
executive officers and considers market data from published surveys in
determining the amount of options granted to other employees.
The vesting schedule for recent grants of stock options is five years, no
portion of which vests in the first year, and 25% of which vests in the four
remaining years. Upon retirement of a holder of stock options pursuant to this
plan, provided that the holder has attained a combination of age and service,
not to exceed 10 years of service, that equals at least 65, the options continue
to vest in accordance with the vesting schedule.
Beginning in 2006, our Compensation Committee makes the annual stock
option grants at its February meeting. The options are granted with an exercise
price equal to the fair market value on the grant date, which is the date of the
Committee meeting. The fair market value of a share of our common stock on a
particular date is the closing price of the shares on the NYSE on the given
date. The options expire 10 years after grant.
2006 GRANTS AND AWARDS OF PCRS AND OPTIONS
In February 2006, we approved grants of 144,097 PCRS units, including
37,329 to our named executive officers. The performance period for the 2006 PCRS
grant began on January 1, 2006 and will end on December 31, 2008. We also
granted a total of 336,725 options for common stock, including 83,195 to our
named executive officers. The grants were made pursuant to the terms of the
Flexible Stock Plan and award agreements.
13
In February 2007, the Compensation Committee approved the awards for the
named executive officers for the 2004 grants of PCRS. The 2004 grants used a
three-year performance period that ended December 31, 2006. The Compensation
Committee determined that our operating earnings and revenue growth for the
three-year performance period attained the level for maximum awards of 200% and
approved the PCRS awards for the named executive officers for the 2004 grants.
See "Grants of Plan-Based Awards in 2006" for a description of the 2006 grants
of PCRS and stock options, and "Option Exercises and Stock Vested During Fiscal
2006" for a description of the PCRS awards for the 2004-2006 grants.
EXECUTIVE STOCK OWNERSHIP GUIDELINES
In February 2004, in order to further align the interests of our
management and our shareholders, we revised the executive stock ownership
guidelines initially adopted in October 1996. The revised guidelines increased
the market value of our shares that executives should seek to hold, based on a
multiple of the executive's base salary, as follows: our Chief Executive Officer
(four times), Senior Executive Vice Presidents and Executive Vice Presidents
(three times), and Senior Vice Presidents (two times). The market value of
shares includes only those shares of common stock and restricted shares that are
directly or beneficially owned by the executive. Executives who are subject to
the guidelines must retain the net shares (net of applicable taxes and, for
options, the exercise cost) from any stock option exercise or award of PCRS
until they satisfy their respective stock ownership requirement.
As of February 2007, each of our named executive officers has met his
stock ownership requirements through holdings of shares of our common stock,
including restricted stock.
TIMING OF REGULAR EQUITY GRANTS
We typically release earnings for the fourth quarter in late January of
the following year. The Compensation Committee meets in mid-February of each
year to approve regular grants of stock options and PCRS. Equity grants are
effective on and have a grant date of the same day as the Committee meeting, and
the exercise price for the stock option grants is the closing price of our
common stock on the New York Stock Exchange on the day of the Committee meeting
in February. This timing and process ensure that our fourth quarter earnings
information is fully disseminated to the market by the time the stock option
grants and related exercise price are determined. The PCRS awards are measured
by financial performance over a three-year period and the market price of our
common stock is not a factor in those calculations or measures. In 2005 and
prior years, we made annual equity incentive grants on the date of the board and
committee meetings in late January.
PERQUISITES
We compensate our executive officers in the form of cash and equity.
Accordingly, we do not provide executive officers or their families with
perquisites such as planes, cars, or apartments, and we do not reimburse
executive officers or any of our employees for personal-benefit perquisites such
as club dues or other social memberships. Executive officers and other employees
may seek reimbursement for business related expenses in accordance with our
business expense reimbursement policy.
PROFIT SHARING PLAN
All employees of RGA Reinsurance Company who meet the eligibility
requirements participate in the profit sharing plan. Effective January 1, 2001,
we adopted a safe harbor design for the plan that provides for a match of up to
4% of compensation. All eligible employees also are entitled to receive a profit
sharing award ranging from 0% to 6% of compensation depending on whether we meet
or exceed our minimum performance level and targets, regardless of their 401(k)
participation. A minimum performance level must be met before the profit sharing
award can be made. The minimum performance level and targets for each year are
established at the beginning of the year. To the extent that the participant's
cash compensation is less than limits set by the IRS ($220,000 for 2006), a
participant may elect to defer up to one-half of his profit sharing award to the
plan, while the other one-half is automatically contributed to the plan.
14
As stated above, we exceeded the target amounts for operating earnings per
share and revenue growth but did not meet the amounts for maximum awards in
fiscal 2006. Based on these results, in January 2007 the Board of Directors
approved a profit sharing award of 4.0% for 2006.
RETIREMENT PLANS
Some of our employees, including our executive officers, participate in
the RGA Performance Pension Plan, or our "Pension Plan," a qualified defined
benefit plan. The Pension Plan is a broad-based retirement plan that is intended
to provide a source of income during retirement for full-time employees in the
U.S. Some of our employees, including certain executive officers, also
participate in the RGA Reinsurance Company Augmented Benefit Plan, or the "RGA
Augmented Plan," a non-qualified plan under which eligible employees are
entitled to additional retirement benefits not paid under the Pension Plan and
the RGA Profit Sharing Plan due to Internal Revenue Code limits on the amount of
benefits that may accrue and be paid under the Pension Plan and the RGA Profit
Sharing Plan. The RGA Augmented Plan provides benefits based on an employee's
total compensation and without regard to certain limitations that apply to
broad-based, qualified retirement plans, in order for a participant's retirement
income provided under the plans to be based on his or her total eligible
compensation. The Augmented Plan is generally only available to the associates
at the vice president level and above who earn more than the compensation limits
under the qualified plans ($220,000 for 2006).
Additionally, employees at the vice president level and above are eligible
to participate in our Executive Deferred Savings Plan, a non-qualified plan
which allows participants to defer income, including bonuses and incentive
compensation, and to defer matching contributions without regard to qualified
plan limitations. Base pay and regular annual incentive awards, but not
long-term compensation, are treated as eligible pay under the terms of our
retirement plans. We sponsor tax-qualified pension and savings plans, as well as
non-qualified "parity" pension and savings plans providing benefits to all
employees whose benefits under the tax-qualified plans are limited by the Code.
The Committee periodically reviews our retirement benefits to ensure that the
benefits are appropriate and cost effective as part of an overall compensation
program intended to provide basic economic security for our highly skilled and
qualified workforce and at a level consistent with competitive practices.
Messrs. Woodring, Atkinson, Lay and Schuster participate in the Pension
Plan and the RGA Augmented Plan. Mr. Watson is not eligible to participate in
the U.S. pension plans. To provide a similar retirement benefit, he participates
in a supplemental executive retirement plan sponsored by RGA International
Corporation, which has the same benefit structure as the related plan for our
executives at our Canadian operating company. For additional details regarding
executive participation in our retirement plans, see "Pension Benefits in Fiscal
2006."
NO EMPLOYMENT AND SEVERANCE AGREEMENTS
Consistent with our pay-for-performance compensation philosophy, we do not
provide employment or severance agreements to any of our named executive
officers.
DEDUCTIBILITY OF COMPENSATION
The goal of the Committee is to comply with the requirements of Code
Section 162(m), to the extent deemed practicable, with respect to options and
annual and long-term incentive programs in order to avoid losing the deduction
for compensation in excess of $1.0 million paid to our chief executive officer
and four other highest-paid executive officers. We generally structure our
performance-based compensation plans with the objective that amounts paid under
those plans and arrangements are tax deductible, including having the plans
approved by our shareholders. However, a portion of certain ITB Awards may not
be tax deductible but we believe those awards are appropriate to achieve our
compensation objectives. We generally do not consider the accounting treatment
of various items when making compensation decisions.
15
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation
Disclosure and Analysis with management. Based on its review and discussions
with management, the Compensation Committee recommended to the Board of
Directors that the Compensation Disclosure and Analysis be included in our
Annual Report on Form 10-K for 2006 and our 2007 Proxy Statement. This report is
provided by the following independent directors, who comprise the Committee.
Alan C. Henderson, Chairman
William J. Bartlett
J. Cliff Eason
Stuart I. Greenbaum
SUMMARY COMPENSATION TABLE
--------------------------
FISCAL YEAR 2006 COMPENSATION
-----------------------------
----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN
PENSION
NON- VALUE AND
EQUITY NONQUALIFIED
INCENTIVE DEFERRED ALL
PLAN COMPEN- OTHER
NAME AND STOCK OPTION COMPEN- SATION COMPEN-
PRINCIPAL POSITION YEAR SALARY(1) BONUS AWARDS(2) AWARDS(3) SATION(4) EARNINGS(5) SATION(6) TOTAL
----------------------------------------------------------------------------------------------------------------------------------
A. Greig Woodring
President and CEO 2006 $695,038 0 $1,648,767 $1,119,629 $951,990 $356,410 $37,896 $4,809,730
----------------------------------------------------------------------------------------------------------------------------------
Jack B. Lay
Sr. EVP and CFO 2006 $389,231 0 $ 581,113 $ 219,969 $432,169 $ 85,595 $29,906 $1,737,983
----------------------------------------------------------------------------------------------------------------------------------
David B. Atkinson
EVP and COO 2006 $419,077 0 $ 677,184 $ 295,737 $459,243 $116,839 $32,902 $2,000,982
----------------------------------------------------------------------------------------------------------------------------------
Paul A. Schuster
Sr. EVP - U.S. Ops 2006 $389,231 0 $ 557,541 $ 220,145 $416,180 $ 89,530 $29,906 $1,702,533
----------------------------------------------------------------------------------------------------------------------------------
Graham Watson
Sr. EVP - Int'l 2006 $445,385 0 $ 812,770 $ 376,423 $513,208 $154,472(7) $ 8,148 $3,700,661
----------------------------------------------------------------------------------------------------------------------------------
-------------
1. For Messrs. Woodring, Atkinson, Lay and Schuster, includes any amounts
deferred at the election of the executive officers under the RGA
Reinsurance Company Executive Deferred Savings Plan. Mr. Watson is not a
U.S. citizen, and is not eligible to participate in the deferred savings
plan.
2. This column represents the dollar amount recognized for financial
statement reporting purposes with respect to the 2006 fiscal year for the
fair value of PCRS units granted in 2006, as well as grants of PCRS units
and restricted stock made in prior fiscal years, in accordance with SFAS
123R. Pursuant to SEC rules, the amounts shown disregard estimated
forfeitures related to service-based vesting conditions. For additional
information on the valuation assumptions, refer to note 17 of the RGA
financial statements in the Form 10-K for the year ended December 31,
2006, as filed with the SEC. See also the Grants of Plan-Based Awards
Table for information on awards made in 2006. These amounts reflect our
accounting expense for these awards, and do not correspond to the actual
value that will be recognized by the named executive officers.
3. This column represents the dollar amount recognized for financial
statement reporting purposes with respect to the 2006 fiscal year for the
fair value of stock options granted to each of the named executive
officers, in 2006 as well as prior fiscal years, in accordance with SFAS
123R. Pursuant to SEC rules, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting conditions. For
additional information on the valuation assumptions, refer to note 17 of
the RGA financial statements in the Form 10-K for the year ended December
31, 2006, as filed with the SEC. See also the Grants of Plan-Based Awards
Table for information on options granted in 2006. These amounts reflect
our accounting expense for these awards, and do not correspond to the
actual value that will be recognized by the named executive officers.
4. Includes, for all named executive officers, cash bonuses earned for 2006
performance and paid in March 2007 (including any bonuses deferred at the
election of the executive officers) under the cash bonus portion of the
MIP, which we describe in the "Compensation Discussion and Analysis"
("CD&A"). The cash bonus payments for 2006 performance were $947,590 for
Mr. Woodring, $427,769 for Mr. Lay, $454,843 for Mr. Atkinson, $411,780
for Mr. Schuster, and $493,380 for Mr. Watson. Also includes amounts paid
in cash or deferred at the officer's election each year under the RGA
Reinsurance Company Profit Sharing Plan for Messrs. Woodring, Atkinson,
16
Lay and Schuster, which totaled $4,400 for 2006, and includes $19,828 paid
to Mr. Watson in lieu of an award under the RGA Reinsurance Company Profit
Sharing Plan, in which he is not eligible to participate.
5. This column represents the sum of the change in pension value in 2006 for
each of the named executive officers. We do not pay above-market or
preferential earnings on any account balance, therefore, this column does
not reflect any amounts relating to nonqualified deferred compensation
earnings. See the Pension Benefits and Nonqualified Deferred Compensation
Tables for additional information.
6. For Messrs. Woodring, Atkinson, Lay, and Schuster, amount includes profit
sharing and matching contributions made by RGA Reinsurance Company in 2006
to the officers' accounts in the RGA Reinsurance Company Profit Sharing
Plan and the RGA Reinsurance Company Augmented Benefit Plan. Amount for
Mr. Watson represent contributions made to his account by RGA
International under its retirement plan.
7. Represents Canadian $180,099 converted to US dollars using the spot
currency exchange rate of 0.857706 in effect on December 29, 2006, the
last business day of the 2006 fiscal year.
GRANTS OF PLAN-BASED AWARDS IN 2006
The following table provides information about equity and non-equity
awards granted to the named executive officers in 2006: (1) the grant date; (2)
the estimated future payouts under non-equity incentive plan awards, which
consist of potential payouts under the MIP award granted in 2006 for the 2006
performance period; (3) estimated future payouts under equity incentive plan
awards, which consist of potential payouts under the PCRS grants in 2006 for the
2006 - 2008 performance period; (4) all other option grants, which consist of
the number of shares underlying stock options granted to the named executive
officers in 2006; (5) the exercise price of the stock options granted, which
reflects the closing price of RGA stock on the date of grant, and (6) the grant
date fair value of each equity grant computed under SFAS 123R.
------------------------------------------------------------------------------------------------------------------------------------
ALL OTHER ALL OTHER
STOCK OPTION
ESTIMATED FUTURE PAYOUTS ESTIMATED FUTURE PAYOUTS AWARDS: AWARDS: EXERCISE
UNDER NON-EQUITY UNDER EQUITY INCENTIVE PLAN NUMBER NUMBER OF OR BASE
INCENTIVE PLAN AWARDS(1) AWARDS (NUMBER OF SHARES)(2) OF SHARES SECURITIES PRICE OF
GRANT -------------------------------------------------------------------- OF STOCK UNDERLYING OPTION
NAME DATE THRESHOLD TARGET MAXIMUM THRESHOLD TARGET MAXIMUM OR UNITS OPTIONS(3) AWARDS(4)
------------------------------------------------------------------------------------------------------------------------------------
Woodring 2/21/2006 0 $700,000 $1,400,000 -- -- -- -- -- --
-- -- -- 0 15,998 31,996 -- -- --
-- -- -- -- -- -- -- 37,911 $47.48
------------------------------------------------------------------------------------------------------------------------------------
Lay 2/21/2006 0 $316,000 $ 632,000 -- -- -- -- -- --
-- -- -- 0 4,777 9,554 -- -- --
-- -- -- -- -- -- -- 11,321 $47.48
------------------------------------------------------------------------------------------------------------------------------------
Atkinson 2/21/2006 0 $336,000 $ 672,000 -- -- -- -- -- --
-- -- -- 0 4,777 9,554 -- -- --
-- -- -- -- -- -- -- 11,321 $47.48
------------------------------------------------------------------------------------------------------------------------------------
Schuster 2/21/2006 0 $316,000 $ 632,000 -- -- -- -- -- --
-- -- -- 0 4,777 9,554 -- -- --
-- -- -- -- -- -- -- 11,321 $47.48
------------------------------------------------------------------------------------------------------------------------------------
Watson 2/21/2006 0 $360,000 $ 720,000 -- -- -- -- -- --
-- -- -- 0 7,000 14,000 -- -- --
-- -- -- -- -- -- -- 11,321 $47.48
------------------------------------------------------------------------------------------------------------------------------------
--------------------------
GRANT DATE
FAIR VALUE
OF STOCK
AND OPTION
NAME AWARDS(5)
--------------------------
Woodring --
$759,585
$608,851
--------------------------
Lay --
$226,812
$181,815
--------------------------
Atkinson --
$226,812
$181,815
--------------------------
Schuster --
$226,812
$181,815
--------------------------
Watson --
$332,360
$181,815
--------------------------
-------------
1. These columns reflect the potential value of the payment for 2006
performance under the MIP for each named executive if the threshold,
target or maximum goals are satisfied for both performance measures. The
potential payments are performance-driven and therefore completely at
risk. The performance measurements, salary and bonus multiples for
determining the payments are described in the CD&A. The 2007 bonus payment
for 2006 performance has been made based on the metrics described at
approximately 135 percent of target, and is included in the Summary
Compensation Table in the column titled "Non-Equity Incentive Plan
Compensation."
2. This column reflects the number of PCRS units granted in 2006, which will
convert into shares of RGA stock at the end of the three-year performance
period if RGA achieves the specified performance. The performance period
commenced January 1, 2006 and ends December 31, 2008. If the "trigger" is
not met, no award will be made. If the minimum level of performance is
met, the award of shares starts at 50% (target is 100% and maximum is
200%). See discussion of MIP and ITB awards in CD&A.
3. This column reflects the number of stock options granted in 2006 to the
named executive officers. These options vest and become exercisable in
four equal annual installments of 25%, beginning on December 31, 2007.
4. This column reflects the exercise price per share of common stock for the
stock options granted, which is the closing price of the common stock on
February 21, 2006, the date the Compensation Committee approved the grant.
17
5. This column reflects the full grant date fair value of PCRS units under
SFAS 123R and the full grant date fair value of stock options under SFAS
123R granted to the named executive officers in 2006. Generally, the full
grant date fair value is the amount that we would expense in our financial
statements over the award's vesting schedule. See note 2 of the Summary
Compensation Table for a discussion of fair value calculation related to
the PCRS. For PCRS units, fair value is calculated using the closing price
of RGA stock on the grant date of $47.48. For stock options, fair value is
calculated using the Black-Scholes value on the date of grant of $16.06.
The fair value shown for stock awards and option awards are accounted for
in accordance with SFAS 123R. For additional information on the valuation
assumptions, refer to note 17 of RGA's financial statements in the Form
10-K for the year ended December 31, 2006, as filed with the SEC. These
amounts reflect our accounting expense, and do not correspond to the
actual value that will be recognized by the named executive officers. For
example, the PCRS units are subject to specified performance objectives
over the performance period, with one-third tied to growth in revenue and
two-thirds tied to growth in operating earnings. In addition, the value of
options, if any, realized by the optionee will not be determined until
exercise.
SALARY AND NON-EQUITY INCENTIVE PLAN COMPENSATION
Salaries paid to our named executive officers are set forth in the 2006
Summary Compensation Table. For 2006, salaries paid to our named executive
officers accounted for the following percentages of their total compensation:
Mr. Woodring (14.5%), Mr. Lay (22.4%), Mr. Atkinson (20.9%), Mr. Schuster
(22.9%), and Mr. Watson (19.3%).
Non-equity incentive plan compensation paid to our named executive
officers also is set forth in the 2006 Summary Compensation Table. For 2006,
non-equity incentive plan compensation paid to our named executive officers
accounted for the following percentages of their total compensation: Mr.
Woodring (19.8%), Mr. Lay (24.9%), Mr. Atkinson (23.0%), Mr. Schuster (24.4%),
and Mr. Watson (22.3%).
INTERMEDIATE-TERM INCENTIVE AWARDS
The Compensation Committee approved grants of target awards of PCRS on
February 21, 2006. The grants were made pursuant to the terms of the Flexible
Stock Plan and a grant agreement. The Compensation Committee has established as
performance goals annual operating earnings (net income from continuing
operations less realized capital gains and losses and certain other
non-operating items) per share and annual consolidated revenues. At the
beginning of each three-year performance period, the Compensation Committee
grants to each named Executive Officer a target award of shares of our common
stock. The Compensation Committee also sets performance levels with a minimum,
target and maximum levels of performance. If we do not meet the minimum
performance goals, the restricted stock will not be awarded, and if we exceed
those performance goals, the award can be as much as 200% of the targeted award
opportunity. Grants of performance-contingent restricted stock are not treated
as outstanding shares until the performance goals are met and awards are made,
as determined and approved by the Compensation Committee. Awards are made in
shares of fully-vested, unrestricted common stock. The awards also are
contingent upon the recipient's continued employment with us at the end of the
three-year performance period.
STOCK OPTIONS
The options become exercisable in 25% increments on each of December 31,
2007, 2008, 2009 and 2010. Vesting will be accelerated upon the officer's death
or disability and upon a change in control of us (as such terms are defined in
the Flexible Stock Plan and option agreements). All stock option grants were
approved by the Compensation Committee on February 21, 2006.
EMPLOYMENT AGREEMENTS. None of the named executive officers have written
employment agreements with us.
18
OUTSTANDING EQUITY AWARDS AT 2006 FISCAL YEAR-END
The following table provides information on the 2006 year-end holdings of
stock options, restricted stock and PCRS by our named executive officers. This
table also includes unexercised and unvested option awards, unvested restricted
stock and unvested PCRS grants with performance conditions that have not yet
been satisfied. Each equity grant is shown separately for each named executive.
The vesting schedule for each grant is described in the footnotes following this
table, based on the option or stock award grant date. The market value of the
stock awards is based on the closing market price of RGA stock as of December
29, 2006, the last business day of the year, which was $55.70. The PCRS grants
are subject to specified performance objectives over the performance period,
with 67% tied to growth in operating earnings per share and 33% tied to growth
in consolidated revenues. For additional information about the option awards and
stock awards, see the description of equity incentive compensation in the CD&A.
A. GREIG WOODRING, PRESIDENT AND CEO
-------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
-------------------------------------------------------------------------------------------------------------------------
EQUITY
INCENTIVE PLAN
AWARDS: NUMBER MARKET
NUMBER OF OF SHARES VALUE OF
NUMBER OF SECURITIES SECURITIES OR UNITS SHARES OR
UNDERLYING UNEXERCISED UNDERLYING OF STOCK UNITS OF
OPTIONS UNEXERCISED OPTION OPTION THAT STOCK THAT
GRANT --------------------------------- UNEARNED EXERCISE EXPIRATION HAVE NOT HAVE NOT
DATE EXERCISABLE(1) UNEXERCISABLE OPTIONS PRICE DATE VESTED(2) VESTED
-------------------------------------------------------------------------------------------------------------------------
1/1/1998 31,994 $26.33 1/1/2008
1/1/1998 15,000 $835,500
-------------------------------------------------------------------------------------------------------------------------
1/1/1999 25,261 $36.00 1/1/2009
-------------------------------------------------------------------------------------------------------------------------
1/1/2000 49,596 $23.19 1/1/2010
-------------------------------------------------------------------------------------------------------------------------
1/1/2001 67,086 $29.81 1/1/2011
-------------------------------------------------------------------------------------------------------------------------
1/1/2002 56,157 14,040 $31.91 1/1/2012
-------------------------------------------------------------------------------------------------------------------------
1/29/2003 49,248 32,833 $27.29 1/29/2013
-------------------------------------------------------------------------------------------------------------------------
1/28/2004 17,167 17,168 $39.61 1/28/2014
-------------------------------------------------------------------------------------------------------------------------
1/27/2005 7,373 22,119 $47.47 1/27/2015
1/27/2005
-------------------------------------------------------------------------------------------------------------------------
2/21/2006 37,911 $47.48 2/21/2016
2/21/2006
-------------------------------------------------------------------------------------------------------------------------
----------------------------------------------
STOCK AWARDS
----------------------------------------------
EQUITY INCENTIVE PLAN
AWARDS
--------------------------
MARKET OR
PAYOUT
NUMBER OF VALUE OF
UNEARNED UNEARNED
SHARES, SHARES,
UNITS OR UNITS OR
OTHER OTHER
RIGHTS THAT RIGHTS THAT
GRANT HAVE NOT HAVE NOT
DATE VESTED(3) VESTED(3)
----------------------------------------------
1/1/1998
1/1/1998
----------------------------------------------
1/1/1999
----------------------------------------------
1/1/2000
----------------------------------------------
1/1/2001
----------------------------------------------
1/1/2002
----------------------------------------------
1/29/2003
----------------------------------------------
1/28/2004
----------------------------------------------
1/27/2005
1/27/2005 24,892 $1,386,484
----------------------------------------------
2/21/2006
2/21/2006 15,998 $891,089
----------------------------------------------
19
JACK B. LAY, SENIOR EXECUTIVE VICE PRESIDENT AND CFO
----------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
----------------------------------------------------------------------------------------------------------------------------
EQUITY
INCENTIVE PLAN
AWARDS: NUMBER MARKET
NUMBER OF OF SHARES VALUE OF
NUMBER OF SECURITIES SECURITIES OR UNITS SHARES OR
UNDERLYING UNEXERCISED UNDERLYING OF STOCK UNITS OF
OPTIONS UNEXERCISED OPTION OPTION THAT STOCK THAT
GRANT --------------------------------- UNEARNED EXERCISE EXPIRATION HAVE NOT HAVE NOT
DATE EXERCISABLE(1) UNEXERCISABLE OPTIONS PRICE DATE VESTED(2) VESTED
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
1/1/1999 6,548 $364,724
----------------------------------------------------------------------------------------------------------------------------
1/1/2001 19,287 $29.81 1/1/2011
----------------------------------------------------------------------------------------------------------------------------
1/1/2002 15,356 3,839 $31.91 1/1/2012
----------------------------------------------------------------------------------------------------------------------------
1/29/2003 16,215 10,810 $27.29 1/29/2013
----------------------------------------------------------------------------------------------------------------------------
1/28/2004 6,075 6,075 $39.61 1/28/2014
----------------------------------------------------------------------------------------------------------------------------
1/27/2005 2,633 7,900 $47.47 1/27/2015
1/27/2005
----------------------------------------------------------------------------------------------------------------------------
2/21/2006 11,321 $47.48 2/21/2016
2/21/2006
----------------------------------------------------------------------------------------------------------------------------
--------------------------------------------
STOCK AWARDS
--------------------------------------------
EQUITY INCENTIVE PLAN
AWARDS
---------------------------
MARKET OR
PAYOUT
NUMBER OF VALUE OF
UNEARNED UNEARNED
SHARES, SHARES,
UNITS OR UNITS OR
OTHER OTHER
RIGHTS THAT RIGHTS THAT
GRANT HAVE NOT HAVE NOT
DATE VESTED(3) VESTED(3)
--------------------------------------------
--------------------------------------------
1/1/1999
--------------------------------------------
1/1/2001
--------------------------------------------
1/1/2002
--------------------------------------------
1/29/2003
--------------------------------------------
1/28/2004
--------------------------------------------
1/27/2005
1/27/2005 8,890 $495,173
--------------------------------------------
2/21/2006
2/21/2006 4,777 $266,079
--------------------------------------------
DAVID B. ATKINSON, EXECUTIVE VICE PRESIDENT AND COO
-------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
-------------------------------------------------------------------------------------------------------------------------
EQUITY
INCENTIVE PLAN
AWARDS: NUMBER MARKET
NUMBER OF OF SHARES VALUE OF
NUMBER OF SECURITIES SECURITIES OR UNITS SHARES OR
UNDERLYING UNEXERCISED UNDERLYING OF STOCK UNITS OF
OPTIONS UNEXERCISED OPTION OPTION THAT STOCK THAT
GRANT --------------------------------- UNEARNED EXERCISE EXPIRATION HAVE NOT HAVE NOT
DATE EXERCISABLE(1) UNEXERCISABLE OPTIONS PRICE DATE VESTED(2) VESTED
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
1/1/1999 15,158 $36.00 1/1/2009
1/1/1999 6,548 $364,724
-------------------------------------------------------------------------------------------------------------------------
1/1/2001 29,350 $29.81 1/1/2011
-------------------------------------------------------------------------------------------------------------------------
1/1/2002 23,064 5,767 $31.91 1/1/2012
-------------------------------------------------------------------------------------------------------------------------
1/29/2003 20,886 13,925 $27.29 1/29/2013
-------------------------------------------------------------------------------------------------------------------------
1/28/2004 7,290 7,290 $39.61 1/28/2014
-------------------------------------------------------------------------------------------------------------------------
1/27/2005 3,160 9,480 $47.47 1/27/2015
1/27/2005
-------------------------------------------------------------------------------------------------------------------------
2/21/2006 11,321
2/21/2006 $47.48 2/21/2016
-------------------------------------------------------------------------------------------------------------------------
------------------------------------------------
STOCK AWARDS
------------------------------------------------
EQUITY INCENTIVE PLAN
AWARDS
--------------------------
MARKET OR
PAYOUT
NUMBER OF VALUE OF
UNEARNED UNEARNED
SHARES, SHARES,
UNITS OR UNITS OR
OTHER OTHER
RIGHTS THAT RIGHTS THAT
GRANT HAVE NOT HAVE NOT
DATE VESTED(3) VESTED(3)
------------------------------------------------
------------------------------------------------
1/1/1999
1/1/1999
------------------------------------------------
1/1/2001
------------------------------------------------
1/1/2002
------------------------------------------------
1/29/2003
------------------------------------------------
1/28/2004
------------------------------------------------
1/27/2005
1/27/2005 10,668 $594,208
------------------------------------------------
2/21/2006
2/21/2006 4,777 $266,079
------------------------------------------------
20
PAUL A. SCHUSTER, SENIOR EXECUTIVE VICE PRESIDENT - U.S. OPERATIONS
---------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
---------------------------------------------------------------------------------------------------------------------------
EQUITY
INCENTIVE PLAN
AWARDS: NUMBER MARKET
NUMBER OF OF SHARES VALUE OF
NUMBER OF SECURITIES SECURITIES OR UNITS SHARES OR
UNDERLYING UNEXERCISED UNDERLYING OF STOCK UNITS OF
OPTIONS UNEXERCISED OPTION OPTION THAT STOCK THAT
GRANT --------------------------------- UNEARNED EXERCISE EXPIRATION HAVE NOT HAVE NOT
DATE EXERCISABLE(1) UNEXERCISABLE OPTIONS PRICE DATE VESTED(2) VESTED
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
1/1/1999 9,377 $36.00 1/1/2009
---------------------------------------------------------------------------------------------------------------------------
1/1/2000 17,251 $23.19 1/1/2010
---------------------------------------------------------------------------------------------------------------------------
1/1/2001 18,029 $29.81 1/1/2011
---------------------------------------------------------------------------------------------------------------------------
1/1/2002 16,609 4,153 $31.91 1/1/2012
---------------------------------------------------------------------------------------------------------------------------
1/29/2003 15,115 10,077 $27.29 1/29/2013
---------------------------------------------------------------------------------------------------------------------------
1/28/2004 6,075 6,075 $39.61 1/28/2014
---------------------------------------------------------------------------------------------------------------------------
1/27/2005 2,633 7,900 $47.47 1/27/2015
1/27/2005
---------------------------------------------------------------------------------------------------------------------------
2/21/2006 11,321 $47.48 2/21/2016
2/21/2006
---------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------
STOCK AWARDS
-----------------------------------------------
EQUITY INCENTIVE PLAN
AWARDS
---------------------------
MARKET OR
PAYOUT
NUMBER OF VALUE OF
UNEARNED UNEARNED
SHARES, SHARES,
UNITS OR UNITS OR
OTHER OTHER
RIGHTS THAT RIGHTS THAT
GRANT HAVE NOT HAVE NOT
DATE VESTED(3) VESTED(3)
-----------------------------------------------
-----------------------------------------------
1/1/1999
-----------------------------------------------
1/1/2000
-----------------------------------------------
1/1/2001
-----------------------------------------------
1/1/2002
-----------------------------------------------
1/29/2003
-----------------------------------------------
1/28/2004
-----------------------------------------------
1/27/2005
1/27/2005 8,890 $495,173
-----------------------------------------------
2/21/2006
2/21/2006 4,777 $266,079
-----------------------------------------------
GRAHAM WATSON, SENIOR EXECUTIVE VICE PRESIDENT - INTERNATIONAL
------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
------------------------------------------------------------------------------------------------------------------------
EQUITY
INCENTIVE PLAN
AWARDS: NUMBER MARKET
NUMBER OF OF SHARES VALUE OF
NUMBER OF SECURITIES SECURITIES OR UNITS SHARES OR
UNDERLYING UNEXERCISED UNDERLYING OF STOCK UNITS OF
OPTIONS UNEXERCISED OPTION OPTION THAT STOCK THAT
GRANT --------------------------------- UNEARNED EXERCISE EXPIRATION HAVE NOT HAVE NOT
DATE EXERCISABLE(1) UNEXERCISABLE OPTIONS PRICE DATE VESTED(2) VESTED
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
1/1/1999 10,616 $36.00 1/1/2009
------------------------------------------------------------------------------------------------------------------------
1/1/2001 17,778 $29.81 1/1/2011
------------------------------------------------------------------------------------------------------------------------
1/1/2002 13,788 3,448 $31.91 1/1/2012
------------------------------------------------------------------------------------------------------------------------
1/29/2003 13,379 18,198 $27.29 1/29/2013
------------------------------------------------------------------------------------------------------------------------
1/28/2004 6,075 6,075 $39.61 1/28/2014
------------------------------------------------------------------------------------------------------------------------
1/27/2005 2,633 7,900 $47.47 1/27/2015
1/27/2005
------------------------------------------------------------------------------------------------------------------------
2/21/2006 11,321
2/21/2006 $47.48 2/21/2016
------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------
STOCK AWARDS
-------------------------------------------------
EQUITY INCENTIVE PLAN
AWARDS
---------------------------
MARKET OR
PAYOUT
NUMBER OF VALUE OF
UNEARNED UNEARNED
SHARES, SHARES,
UNITS OR UNITS OR
OTHER OTHER
RIGHTS THAT RIGHTS THAT
GRANT HAVE NOT HAVE NOT
DATE VESTED(3) VESTED(3)
-------------------------------------------------
-------------------------------------------------
1/1/1999
-------------------------------------------------
1/1/2001
-------------------------------------------------
1/1/2002
-------------------------------------------------
1/29/2003
-------------------------------------------------
1/28/2004
-------------------------------------------------
1/27/2005
1/27/2005 14,000 $779,800
-------------------------------------------------
2/21/2006
2/21/2006 7,000 $389,900
-------------------------------------------------
21
-------------
1. Options with a grant date from 1998 through 2003 vest and become
exercisable in five equal annual installments of 20%, on December 31 of
the first, second, third, fourth and fifth years following the grant.
Options granted in 2004 and subsequent years vest and become exercisable
in four equal annual installments of 25%, on December 31 of the second,
third, fourth and fifth calendar years following the year of the grant.
2. Mr. Woodring was granted 15,000 shares of restricted stock effective
January 1, 1998, which vest on January 1, 2008. Messrs. Lay and Atkinson
were granted 6,548 shares of restricted stock effective January 1, 1999,
which vest on January 1, 2009.
3. These columns reflect the number of shares and estimated market value of
grants of PCRS. In February 2007, the Compensation Committee determined
that the 2004 PCRS award would be made at the maximum level, or 200% of
target. In accordance with SEC rules, the number of shares and estimated
market value for the PCRS grants made in 2005 are disclosed assuming they
are awarded at the maximum (200%) level, and the amounts for the PCRS
grants made in 2006 are disclosed assuming they are awarded at target
(100%) level. The market or payout value is estimated using the closing
price, $55.70, of our common stock on December 29, 2006, the last business
day of the year. The performance period for the 2005 PCRS grant is January
1, 2005 through December 31, 2007. The performance period for the 2006
PCRS grant is January 1, 2006 through December 31, 2008.
OPTION EXERCISES AND STOCK VESTED DURING FISCAL 2006
The following table provides information, for the named executive
officers, on (1) stock option exercises during 2006, including the number of
shares acquired upon exercise and the value realized, and (2) the number of
shares awarded for the PCRS grants in 2004 (three-year performance period ending
December 31, 2006) and the value realized, each before payment of any applicable
withholding tax and broker commissions.
---------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
---------------------------------------------------------------------------------
NUMBER OF NUMBER OF
SHARES ACQUIRED VALUE REALIZED SHARES ACQUIRED VALUE REALIZED
NAME ON EXERCISE ON EXERCISE ON VESTING ON VESTING
---------------------------------------------------------------------------------
Woodring(1) 36,900 $ 1,155,782 28,980 $ 1,614,766
---------------------------------------------------------------------------------
Lay(2) 46,419 $ 1,093,014 10,260 $ 571,687
---------------------------------------------------------------------------------
Atkinson(3) 29,111 $ 931,988 12,300 $ 685,356
---------------------------------------------------------------------------------
Schuster(4) 7,880 $ 188,072 10,260 $ 571,687
---------------------------------------------------------------------------------
Watson(5) -- -- 14,000 $ 780,080
---------------------------------------------------------------------------------
-------------
1. Mr. Woodring exercised 36,900 options on August 18, 2006, with an exercise
price of $20.28 and a market price for 27,000 shares he sold of $51.60.
Mr. Woodring retained the remaining 9,900 shares. He acquired 28,980
shares with a market price of $55.72 on March 8, 2007, the payout date for
the 2004 PCRS grant.
2. Mr. Lay exercised 46,419 options on August 11, 2006, with exercise prices
as follows: 3,100 @ $20.28; 14,003 @ $26.33; 10,340 @ $36.00; and 18,976 @
$23.19. The market price for 34,600 shares he sold was $50.34. Mr. Lay
retained the remaining 11,819 shares. He acquired 10,260 shares with a
market price of $55.72 on March 8, 2007, the payout date for the 2004 PCRS
grant.
3. Mr. Atkinson exercised 29,111 options on November 29, 2006, with an
exercise price of $23.19. He sold 15,000 of the shares at a market price
of $55.22 and 14,111 shares at a market price of $55.18. He acquired
12,300 shares with a market price of $55.72 on March 8, 2007, the payout
date for the 2004 PCRS grant.
4. Mr. Schuster exercised 7,880 options on August 10, 2006, with an exercise
price of $26.33 and a market price for 5,595 shares he sold of $50.20. Mr.
Schuster retained the remaining 2,285 shares. He acquired 10,260 shares
with a market price of $55.72 on March 8, 2007, the payout date for the
2004 PCRS grant.
5. Mr. Watson acquired 14,000 shares with a market price of $55.72 on March
8, 2007, the payout date for the 2004 PCRS grant.
22
PENSION BENEFITS IN FISCAL 2006
Some of our employees participate in the RGA Performance Pension Plan (the
"Pension Plan"), a qualified defined benefit plan. Some of our employees also
participate in the RGA Reinsurance Company Augmented Benefit Plan (the "RGA
Augmented Plan"), a non-qualified plan under which eligible employees are
entitled to additional retirement benefits not paid under the Pension Plan and
the RGA Profit Sharing Plan due to Internal Revenue Code limits on the amount of
benefits that may accrue and be paid under the Pension Plan and the RGA Profit
Sharing Plan.
Messrs. Woodring, Atkinson, Lay and Schuster participate in the Pension
Plan and the RGA Augmented Plan. The monthly benefit payable for life at age 65
for each individual is the sum of (a) and (b) below:
(a) The sum of (1) 1.05% of Final Average Monthly Compensation,
multiplied by the number of years of service earned as of December
31, 1995, plus (2) .65% of the excess, if any, of Final Average
Monthly Compensation minus one-twelfth of the Social Security
Maximum Wage Average, multiplied by the number of years of service
earned as of December 31, 1995; plus
(b) The actuarial equivalent of a lump sum benefit equal to the sum of
the amounts determined below for each full year of service completed
after December 31, 1995:
AGE ON JANUARY 1 OF THE PLAN PERCENTAGE OF FINAL
YEAR IN WHICH THE YEAR OF SERVICE AVERAGE ANNUAL PERCENTAGE OF EXCESS
IS EARNED COMPENSATION CREDITED COMPENSATION CREDITED
Up to 35 2% 1%
35 - 44 4% 2%
45 - 54 6% 3%
55 or over 8% 4%
Social Security Maximum Wage Average means the average of the Social
Security Wage Bases in effect for each calendar year during the 35-year period
ending with the calendar year in which a participant attains the Social Security
retirement age. Social Security Wage Base means the maximum amount of
compensation that may be considered wages for FICA tax, or $94,200 for 2006.
Breakpoint means 60% of the Social Security Wage Base raised to the next highest
$100 increment. Excess Compensation means the excess, if any, of Final Average
Annual Compensation minus the Breakpoint. Final Average Annual Compensation
means the highest average Benefit Salary for the five consecutive years during
the preceding ten years. Benefit Salary means actual base salary, eligible
bonuses and pre-tax salary deferrals made to the profit sharing plan or a
cafeteria plan and the CODA portion of the profit sharing award. Final Average
Monthly Compensation is one-twelfth of Final Average Annual Compensation.
Payment of the specified retirement benefits is contingent upon
continuation of the plans in their present form until the officer retires. RGA
International Corporation maintains a Canadian Supplemental Executive Retirement
Plan, a non-qualified defined benefit plan pursuant to which eligible executive
officers are entitled to receive additional retirement benefits. Mr. Watson
participates in this plan and is not eligible to participate in the Pension Plan
or the RGA Augmented Plan.
Until January 1, 1994, we also maintained an Executive Supplemental
Retirement Plan (the "RGA Supplemental Plan"), a non-qualified defined benefit
plan pursuant to which eligible executive officers are entitled to receive
additional retirement benefits. Benefits under the RGA Supplemental Plan were
frozen as of January 1, 1994. The frozen annual benefit payable upon retirement
at age 65 is $36,719 for Mr. Woodring and $7,770 for Mr. Atkinson. Retirement
benefits under the RGA Supplemental Plan are
23
payable at age 65 in the form of a 15-year certain life annuity, with no direct
or indirect integration with Social Security benefits.
--------------------------------------------------------------------------------------------------
NUMBER OF PAYMENTS
YEARS PRESENT VALUE DURING
CREDITED OF ACCUMULATED LAST FISCAL
NAME PLAN NAME SERVICE BENEFIT(1) YEAR
--------------------------------------------------------------------------------------------------
Performance Pension Plan 27 $ 487,467 --
Woodring Augmented Benefit Plan 27 $ 2,315,429 --
Supplemental Plan 15 $ 231,055
--------------------------------------------------------------------------------------------------
Performance Pension Plan 15 $ 228,173 --
Lay Augmented Benefit Plan 15 $ 314,441 --
--------------------------------------------------------------------------------------------------
Performance Pension Plan 19 $ 306,193
Atkinson Augmented Benefit Plan 19 $ 620,382 --
Supplemental Plan 7 $ 43,925 --
--------------------------------------------------------------------------------------------------
Performance Pension Plan 15 $ 228,777 --
Schuster Augmented Benefit Plan 15 $ 312,131 --
--------------------------------------------------------------------------------------------------
RGA International Supplemental Executive 11 $ 1,133,887(2) --
Watson Retirement Plan
--------------------------------------------------------------------------------------------------
-------------
1. The accumulated benefit is based on service and compensation (as
described above) considered by the plans for the period through December
31, 2006. The present value has been calculated assuming the earliest
retirement age at which the participant can elect an unreduced benefit.
For additional discussion of the assumptions, see note 9 of RGA's
financial statements in the Form 10-K for the year ended December 31,
2006, as filed with the SEC. As described in such note, the interest
assumption is 5.75%.
2. Represents Canadian $1,322,000 converted to US dollars using the spot
currency exchange rate of 0.857706 in effect on December 29, 2006, the
last business day of the 2006 fiscal year.
NONQUALIFIED DEFERRED COMPENSATION IN FISCAL 2006
The table below provides information on the non-qualified deferred
compensation of the named executive officers in 2006. Employees who hold the
office of vice president and above are able to defer up to 50% of their base
salary and up to 100% of their cash bonus payments under our Executive Deferred
Savings Plan (EDSP). With respect to distributions, participants may elect to
receive either a lump sum payment or 1 to 15 annual installments. In addition,
we also maintain the RGA Augmented Plan, a non-qualified plan under which
eligible employees are entitled to receive profit sharing and matching
contributions not paid to the employee under the RGA Profit Sharing and 401(k)
Plan due to Internal Revenue Code limits or a reduction in compensation pursuant
to the employee's participation in the EDSP. The contributions made into the
employee's non-qualified deferred compensation account are based upon the
maximum matching contribution rate we provide to other employees in connection
with our profit sharing and 401(k) savings plan.
The investment fund alternatives under the RGA Augmented Plan and EDSP
mirror those in our profit sharing plan/401(k), and we credit the participant's
non-qualified deferred compensation account(s) with the returns he or she would
have received in accordance with the investment alternatives selected from time
to time by the participant. We do not pay above-market or preferential earnings,
compensation or returns under the EDSP or Augmented Plan, or any other plan.
The named executive officers cannot withdraw any amounts from their
deferred compensation balances until they either terminate employment or reach
the designated distribution date selected by the executive at the time of their
deferral election (in the case of benefits held in the executive's EDSP
account). No withdrawals or distributions were made in 2006.
24
---------------------------------------------------------------------------------------
EXECUTIVE REGISTRANT AGGREGATE AGGREGATE AGGREGATE
CONTRIBUTIONS CONTRIBUTIONS EARNINGS IN WITHDRAWALS/ BALANCE
NAME IN LAST FY(1) IN LAST FY(1) LAST FY(2) DISTRIBUTIONS AT LAST FYE(3)
---------------------------------------------------------------------------------------
Woodring -- $ 7,385 $ 29,320 -- $ 239,708
---------------------------------------------------------------------------------------
Lay $ 41,312 $ 15,679 $ 47,672 -- $ 394,989
---------------------------------------------------------------------------------------
Atkinson $ 5,529 $ 18,118 $ 297,665 -- $ 1,925,218
---------------------------------------------------------------------------------------
Schuster -- $ 11,652 $ 14,672 -- $ 111,798
---------------------------------------------------------------------------------------
Watson -- -- -- -- --
---------------------------------------------------------------------------------------
-------------
1. The amounts in this column are also included in the Summary Compensation
Table in the salary or other compensation columns (i.e., contributions to
the RGA Reinsurance Company Augmented Benefit Plan).
2. Reflects earnings credited to the participant's account during 2006 in
connection with the investment selections chosen from time to time by the
participant.
3. All of the executive and registrant contributions for 2006 are reported in
the Summary Compensation Table. In addition, the aggregate balance at last
fiscal year-end column reflects the following amounts that were reported
in the Summary Compensation Table in previous years: Woodring, $188,815;
Lay, $261,722; Atkinson, $1,429,197; and Schuster, $82,065.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
As described in the CD&A, our named executive officers do not have
employment, severance or change of control agreements with our Company. The
information below describes and quantifies certain compensation that may or will
become payable under existing plans and agreements if the named executive
officer's employment had terminated on December 31, 2006, given his or her
compensation and service levels as of such date and, where applicable, based on
our closing stock price on that date. These benefits are in addition to benefits
available generally to salaried employees such as distributions under the 401(k)
and pension plans, retiree medical benefits, disability benefits and accrued
vacation pay.
Change of Control. Upon the occurrence of a change of control (as defined
below), any unvested stock options granted before the date of that event could
become exercisable if the Compensation Committee decided to maintain the named
executive officer's rights following a change in control. Our Flexible Stock
Plan and stock option grant agreements provide that the Compensation Committee
may accelerate the vesting periods or arrange for us to purchase the options so
the named executive officer receives the value that he or she would have
attained had the option been currently exercisable. In addition, our Flexible
Stock Plan and PCRS grant agreements provide that upon a change of control, as
soon as practicable following the end of the applicable three-year performance
period, we must deliver to the named executive officer the number of shares that
coincides with the target award for each outstanding grant of PCRS.
Disability or Death. If one of the named executive officers were to become
disabled or die, any unvested stock options granted before the date of such
event would immediately vest and become exercisable. In addition, he or she
would receive a pro rata proportion of the shares of common stock that would
have been issued under any award of PCRS at the end of the three-year
performance period. The pro rata proportion is determined based on the number of
calendar months in the performance period during which he or she was employed,
divided by 36 months (the total number of months in the three-year performance
period).
Retirement. Upon the "retirement" (as defined below) of a named executive
officer, unvested stock options do not accelerate but continue to vest in
accordance with the vesting schedule and provisions specified in the respective
option grant agreement(s). Upon his or her retirement, the pro rata distribution
provisions described above under "Disability or Death" apply to any PCRS grants.
Due to the number of factors that affect the nature, amount and timing of the
vesting and exercise of stock options, or the actual
25
award following a PCRS performance period, the amounts paid to or received by
the named executive officer may differ and are undeterminable until actually
realized.
The named executive officers may participate in deferred compensation
plans that permit deferral of certain compensation. They also participate in our
defined contribution and defined benefit retirement plans. The last column of
the Nonqualified Deferred Compensation Table reports each named executive's
aggregate balance at December 31, 2006, under each nonqualified deferred
compensation or defined contribution plan. The named executive officers are
entitled to receive the amount in their deferred compensation account in the
event of termination of employment or retirement. The Pension Benefits Table
describes the general terms of each pension plan in which the named executive
officers participate, the years of credited service and the present value of
each named executive officer's accumulated pension benefit.
Definitions. "Change of control" is defined in our Flexible Stock Plan
and, for this discussion, means (i) the acquisition, without Board approval, of
more than twenty percent (20%) of our outstanding common shares through a tender
offer, exchange offer or otherwise, (ii) our liquidation or dissolution
following a sale or other disposition of all or substantially all of our assets,
(iii) a merger or consolidation involving us which results in us not being the
surviving corporation, or (iv) a change in the majority of the members of our
Board of Directors during any two-year period not approved by at least
two-thirds of the Directors who were members at the beginning of the two-year
period.
"Retirement" is defined in the respective equity incentive grant
agreements and means disability, death or termination of employment due to
retirement of a named executive officer who has attained a combination of age
and years of service that equals at least sixty-five (65), provided that, the
maximum number of years of service considered for this calculation is ten (10).
Thus, named executive officers who attain age 55 and have 10 years of service
(which at December 31, 2006 includes Messrs. Woodring and Watson) satisfy the
definition and are eligible for the benefits described above associated with
retirement.
The following table provides the value of equity awards that would
accelerate and become exercisable or vested upon the occurrence of a change of
control or if the named executive officer had become disabled or died as of
December 31, 2006. The value calculations are based upon our stock price as of
December 29, 2006 ($55.70), the last business day of the year, and in the case
of options reflect the payment of the respective option exercise price.
----------------------------------------------------------------------------------------
CHANGE OF CONTROL DISABILITY OR DEATH
-------------------------------------------------------------
PCRS PCRS
NAME OPTIONS (FULL AWARD AT TARGET) OPTIONS (PRO RATA)
----------------------------------------------------------------------------------------
Woodring $2,036,698 $ 1,584,331 $2,036,698 $ 759,191
----------------------------------------------------------------------------------------
Lay $ 654,264 $ 513,665 $ 654,264 $ 253,751
----------------------------------------------------------------------------------------
Atkinson $ 821,181 $ 563,183 $ 821,181 $ 286,762
----------------------------------------------------------------------------------------
Schuster $ 640,910 $ 513,665 $ 640,910 $ 253,751
----------------------------------------------------------------------------------------
Watson $ 854,855 $ 779,800 $ 854,855 $ 389,900
----------------------------------------------------------------------------------------
DIRECTOR COMPENSATION FOR FISCAL 2006
Directors who also serve as officers of our Company, MetLife, or any
subsidiaries of such companies do not receive any additional compensation for
serving our Company as members of the Board of Directors or any of our
committees. During 2006 this group of directors consisted of Messrs. Launer,
Reali, and Woodring, and Ms. Weber. Effective January 1, 2005, the Board revised
the compensation for directors who are not employees of our Company, MetLife, or
any subsidiaries of such companies ("non-employee directors"), and that
compensation arrangement continued in 2006. In 2006, non-employee directors were
paid an annual retainer fee of $50,000 (except the chair of the Audit Committee,
who received an annual
26
retainer fee of $62,000, and the chair of any other Committee, who received an
annual retainer fee of $58,000). Non-employee directors were paid $3,000 for
each Board and Committee meeting attended in person, and $1,500 for
participating in a telephonic Board or Committee meeting. If applicable, a
non-employee director serving as Chairman of the Board would receive an annual
retainer of $83,000, a $4,000 fee for each Board meeting attended in person and
$2,000 for participating in a telephonic Board meeting, and an annual grant of
1,600 shares of stock. We also reimburse directors for out-of-pocket expenses
incurred in connection with attending Board and Committee meetings. Mr. Bartlett
also serves as a director of our Australian holding and operating companies, and
receives an annual retainer of AUS $52,500 and superannuation pension benefits
AUS $4,725 for those services.
During 2006, the group of non-employee directors consisted of Messrs.
Bartlett, Eason, Greenbaum and Henderson. Each non-employee director is issued
1,200 shares of stock effective on the date of the February Board meeting.
Non-employee directors may elect to receive phantom shares in lieu of
their annual retainer (including the stock portion) and meeting fees. A phantom
share is a hypothetical share of our common stock based upon the fair market
value of the common stock at the time of the grant. Phantom shares are not
distributed until the director ceases to be a director by reason of retirement
as a director, at which time we will issue cash or shares of common stock in an
amount equal to the value of the phantom shares.
All such stock and options are issued pursuant to the Flexible Stock Plan
for Directors, which was amended and restated at the annual meeting held May 28,
2003. Phantom shares are granted under the Phantom Stock Plan for Directors,
which was last amended at the annual meeting held May 28, 2003.
-----------------------------------------------------------------------------------------------------------------------
CHANGE IN
PENSION
VALUE AND
NONQUALIFIED
FEES EARNED NON-EQUITY DEFERRED
OR PAID IN STOCK OPTION INCENTIVE PLAN COMPENSATION ALL OTHER
NAME CASH(1) AWARDS(2) AWARDS(3) COMPENSATION EARNINGS COMPENSATION TOTAL
-----------------------------------------------------------------------------------------------------------------------
William J. Bartlett $ 120,500 $ 56,976 -- -- -- $ 43,117(4) $ 220,593
-----------------------------------------------------------------------------------------------------------------------
J. Cliff Eason $ 108,500 $ 56,976 -- -- -- -- $ 165,476
-----------------------------------------------------------------------------------------------------------------------
Stuart I. Greenbaum $ 118,000 $ 56,976 -- -- -- -- $ 174,976
-----------------------------------------------------------------------------------------------------------------------
Alan C. Henderson $ 118,000 $ 56,976 -- -- -- -- $ 174,976
-----------------------------------------------------------------------------------------------------------------------
-------------
1. This column reflects the amount of compensation earned in 2006 for Board
and committee service.
2. This column reflects the award of 1,200 shares of common stock on
February 21, 2006, at a closing market price of $47.48. The aggregate
grant date fair value computed in accordance with FAS 123R is $56,976.
The stock is issued as part of the directors' annual compensation. We
ceased granting shares of restricted stock to directors in 2005, however,
800 shares of the final grant on January 27, 2005 were unvested as of
December 31, 2006 (400 of those shares vested January 1, 2007, and the
remaining 400 vest January 1, 2008).
3. We ceased granting stock options to directors in 2003. The following
directors have outstanding option awards at 2006 fiscal year-end: Eason -
10,500; Greenbaum - 17,933; and Henderson - 6,000.
4. Represents compensation for services as a director of our Australian
holding and operating companies. Converted to U.S. dollar amount using
the average AUD/USD exchange rate for 2006.
SECURITIES OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
OWNERSHIP OF SHARES OF RGA
--------------------------
The following table sets forth, as of February 1, 2007, certain
information with respect to: (1) each person known by us to be the beneficial
owner of 5% or more of our outstanding common stock, and (2) the
27
ownership of common stock by (i) each of our directors and nominees, (ii) each
of our named executive officers, and (iii) all directors, nominees, and
executive officers as a group.
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER(2) BENEFICIAL OWNERSHIP(1) CLASS(2)
------------------- -------------------- -----
SIGNIFICANT SHAREHOLDERS:
MetLife, Inc.
200 Park Avenue
New York, New York 10166-0188 32,243,539(3) 52.5%
Barclay's Global Investors, NA
45 Fremont Street
San Francisco, CA 94105 3,343,911(4) 5.5%
Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109 3,360,768(5) 5.5%
-------------------------------------------------------------------------------------------------------
DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS:
A. Greig Woodring, Director,
President and Chief Executive Officer 389,355(6)
William J. Bartlett, Director 3,100(7)
J. Cliff Eason, Director 16,350(8)
Stuart Greenbaum, Director 22,233(9)
Alan C. Henderson, Director 10,596(10)
Steven A. Kandarian, Director(3) --
Joseph A. Reali, Director(3) --
Georgette A. Piligian, Director(3) --
David B. Atkinson,
Executive Vice President and Chief Operating Officer 148,185(11)
Jack B. Lay,
Senior Executive Vice President and Chief Financial Officer 92,174(12)
Paul A. Schuster,
Senior Executive Vice President - U.S. Operations 114,461(13)
Graham Watson,
Senior Executive Vice President - International 111,668(14)
All directors and executive officers as a group (14 persons) 961,359(15) 1.55%
-------------
1. Unless otherwise indicated, each named person has sole voting and
investment power over the shares listed as beneficially owned. None of the
shares held by directors, nominees or named executive officers are pledged
as security.
28
2. For purposes of this table, "beneficial ownership" is determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), pursuant to which a person or group of persons
is deemed to have "beneficial ownership" of any shares of common stock
that such person has the right to acquire within 60 days. For computing
the percentage of the class of securities held by each person or group of
persons named above, any shares which such person or persons has the right
to acquire within 60 days (as well as the shares of common stock
underlying fully vested stock options) are deemed to be outstanding for
the purposes of computing the percentage ownership of such person or group
but are not deemed to be outstanding for the purposes of computing the
percentage ownership of any other person or group. No director, nominee or
named executive officer owns more than one percent of our outstanding
common stock.
3. The amount in the table reflects the total beneficial ownership of
MetLife, Metropolitan Life, GenAmerica Financial, LLC, and General
American Life Insurance Company and contained in a Schedule 13D/A filed
with the Securities and Exchange Commission on April 25, 2005. Each of the
filing companies shares voting and dispositive power with each other. Mr.
Kandarian is an executive officer, and Mr. Reali and Ms. Piligian are
senior officers, of MetLife. Each of them disclaims beneficial ownership
of the shares beneficially owned by MetLife and its subsidiaries.
4. As reported on a Schedule 13G filed January 23, 2007, Shares are owned by
the reporting person and in accounts managed by Barclays Global Fund
Advisors, an investment advisor. The reporting group has sole voting power
over 2,947,341 shares and sole dispositive power over all of its shares.
5. As reported on a Schedule 13G/A filed February 14, 2007. Wellington
Management Company, LLP ("WMC") is an investment adviser. Shares are owned
of record by clients of WMC, none of which is known to have beneficial
ownership of more than five percent of our outstanding shares. WMC has
shared voting power of 2,337,126 shares and shared dispositive power of
3,340,568 shares.
6. Includes 334,338 shares of common stock subject to stock options that are
exercisable within 60 days. Also includes 15,000 shares of restricted
common stock that are subject to forfeiture in accordance with the terms
of the specific grant, as to which Mr. Woodring has no investment power.
7. Includes 400 restricted shares of common stock that are subject to
forfeiture in accordance with the terms of the specific grant, as to which
Mr. Bartlett has no investment power.
8. Includes 10,500 shares of common stock subject to stock options that are
exercisable within 60 days. Also includes 400 restricted shares of common
stock that are subject to forfeiture in accordance with the terms of the
specific grant, as to which Mr. Eason has no investment power.
9. Includes 17,933 shares of common stock subject to stock options that are
exercisable within 60 days. Also includes 400 restricted shares of common
stock that are subject to forfeiture in accordance with the terms of the
specific grant, as to which Mr. Greenbaum has no investment power.
10. Includes 6,000 shares of common stock subject to stock options that are
exercisable within 60 days. Also includes 400 restricted shares of common
stock that are subject to forfeiture in accordance with the terms of the
specific grant, as to which Mr. Henderson has no investment power.
11. Includes 111,637 shares of common stock subject to stock options that are
exercisable within 60 days and 30,000 shares for which Mr. Atkinson shares
voting and investment power with his spouse. Also includes 6,548
restricted shares of common stock that are subject to forfeiture in
accordance with the terms of the specific grant, as to which Mr. Atkinson
has no investment power.
12. Includes 68,810 shares of common stock subject to stock options that are
exercisable within 60 days and 16,816 shares for which Mr. Lay shares
voting and investment power with his spouse. Also includes 6,548
restricted shares of common stock that are subject to forfeiture in
accordance with the terms of the specific grant, as to which Mr. Lay has
no investment power.
13. Includes 94,280 shares of common stock subject to stock options that are
exercisable within 60 days, and 20,181 shares for which Mr. Schuster
shares voting and investment power with his spouse.
14. Includes 76,816 shares of common stock subject to stock options that are
exercisable within 60 days and 6,187 shares owned by Intercedent Limited,
a Canadian corporation of which Mr. Watson has a majority ownership
interest.
15. Includes a total of 763,527 shares of common stock subject to stock
options that are exercisable within 60 days; and 29,696 shares of
restricted common stock that are subject to forfeiture in accordance with
the terms of the specific grant, as to which the holder has no investment
power.
OWNERSHIP OF SHARES OF METLIFE
------------------------------
The following table sets forth, as of February 1, 2007, certain
information with respect to the following individuals to the extent they own
shares of common stock of MetLife, our parent: (i) each of our directors and
nominees; (ii) each of our executive officers; and (iii) all directors,
nominees, and executive officers as a group.
29
PERCENT
BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1) OF CLASS
---------------- ----------------------------------------- --------
DIRECT INDIRECT (2)
------ ------------
Steven A. Kandarian, Director 11,667(3) -- *
Joseph A. Reali, Director 120,506(4) 170(5) *
Georgette A. Piligian, Director 62,784(6) 20(7) *
A. Greig Woodring, Director, President & CEO 90 -- *
Jack B. Lay, Senior EVP and CFO 200(8) -- *
David B. Atkinson, EVP and COO -- -- *
Paul A. Schuster, Senior EVP - U.S. Operations 200(8) -- *
Graham Watson, Senior EVP - International -- -- *
All directors and executive officers as a group (14 persons) 195,447(9) 190 *
-------------
* Less than one percent.
1. Unless otherwise indicated, each named person has sole voting and
investment power over the shares listed as beneficially owned.
2. Unless otherwise noted, represents shares held through the MetLife
Policyholder Trust, which has sole voting power over such shares.
3. Includes 11,667 shares of MetLife common stock subject to stock options
that are exercisable within 60 days.
4. Includes 99,178 shares of MetLife common stock subject to stock options
that are exercisable within 60 days, and 18,328 deferred share units
payable in shares of MetLife common stock under MetLife's Deferred
Compensation Plan for Officers.
5. Includes 10 shares jointly held with Mr. Reali's spouse with whom Mr.
Reali shares investment power.
6. Includes 54,542 shares of MetLife common stock subject to stock options
that are exercisable within 60 days and 8,142 deferred share units payable
in shares of MetLife common stock under MetLife's Deferred Compensation
Plan for Officers.
7. Includes 20 shares jointly held with Ms. Piligian's spouse, with whom she
shares investment power.
8. Includes 200 shares of MetLife common stock subject to stock options that
are exercisable within 60 days.
9. Includes a total of 165,787 shares of MetLife common stock subject to
stock options that are exercisable within 60 days and 26,470 deferred
share units payable in shares of MetLife common stock under MetLife's
Deferred Compensation Plan for Officers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers, and persons who beneficially own more than ten percent of a registered
class of our equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC and the NYSE. Directors, executive
officers, and greater than 10% shareholders are required by SEC regulation to
furnish us with copies of all Forms 3, 4, and 5 they file.
Based solely on our review of the copies of such forms we have received or
that were filed wit the SEC, or written representations from certain reporting
persons, we believe that all our directors, executive officers, and greater than
10% beneficial owners complied with all filing requirements applicable to them
with respect to transactions during 2006.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review and Approval of Related Person Transactions. We do not have any
agreements, transactions or relationships with related persons such as
directors, nominees, executive officers, or immediate family members of such
individuals. At least annually we review all relationships between our Company
and our directors and executive officers and their immediate family members to
determine whether such persons have a direct or indirect material interest in
any transaction with us. Our legal staff is primarily responsible for the
development and implementation of processes and controls to obtain information
from the directors, nominees and executive officers with respect to related
person transactions. If such a transaction arose, our legal staff would
determine, based on the facts and circumstances, whether we or a related person
has a direct or indirect material interest in the transaction. As required under
SEC rules, related person transactions that are determined to be directly or
indirectly material to us are disclosed in our proxy statement and other SEC
filings.
The current related person transactions to which we or our subsidiaries
are parties are reinsurance agreements, administrative service agreements, and a
product license, all of which are with MetLife, our majority shareholder. The
charges for reinsurance, administrative and corporate services and the license
fee are based on arms-length negotiations and pricing that we believe is
comparable to the fees that would be charged to our other clients or incurred
for services provided by a third party vendor. Any agreements between RGA
Reinsurance Company, our primary operating company which is a Missouri insurance
company, and another subsidiary or
30
affiliate of MetLife, must be filed for review and approval by the Missouri
Department of Insurance ("MDOI"). The MDOI requires that the fees be fair,
reasonable and less than or equal to the cost for such services from a third
party.
In July 2002, our Board of Directors adopted a policy that requires
advance approval from the Board before any director knowingly enters into any
contract, arrangement, understanding, relationship or transaction with our
Company or any of its subsidiaries or affiliates through which the director, a
member of the director's family, or any entity or organization affiliated with
the director, receives any direct or indirect financial, economic, or other
similar benefit.
On January 6, 2000, MetLife acquired 100% of GenAmerica Financial
Corporation, our predecessor parent, including its beneficial ownership of RGA
shares, which was approximately 48% at December 31, 1999. This acquisition,
together with direct investments in our Company in 1999, 2002 and 2003, made
MetLife our majority shareholder with beneficial ownership of approximately
52.5% of all outstanding shares as of February 1, 2007. Currently, three of our
eight directors are executives or senior officers of MetLife.
Reinsurance Business. We have arms-length direct policies and reinsurance
agreements with MetLife and some of its affiliates. Under these agreements, we
had net premiums of approximately $227.8 million in 2006, $226.7 million in 2005
and $164.4 million in 2004. The net premiums reflect the net business assumed
from and ceded to such affiliates of MetLife. Our pre-tax income (loss),
excluding interest income allocated to support the business, was approximately
$10.9 million in 2006, ($11.3) million in 2005, $22.4 million in 2004. Our
reinsurance treaties with MetLife are generally terminable by either party on 90
days written notice, but only with respect to future new business; existing
business generally is not terminable, unless the underlying policies terminate
or are recaptured. Under these treaties, MetLife is permitted to reassume all or
a portion of the risk formerly ceded us after an agreed-upon period of time, or
in some cases, due to changes in our financial condition or ratings. Recapture
of business previously ceded does not affect premiums ceded prior to the
recapture of such business, but would reduce premiums in subsequent periods.
Registration Rights. On November 24, 2003, our Company, MetLife,
Metropolitan Life, General American and Equity Intermediary Company, which is
now dissolved, entered into a registration rights agreement, which superseded
then existing agreements with General American and Equity Intermediary Company.
Under the terms of the agreement, MetLife and its affiliates were entitled,
subject to certain limitations and conditions, to "piggyback" and demand
registration rights and we were required to bear certain expenses associated
with the registration of any shares held by MetLife or its affiliates. In March
2005, we registered the shares held by MetLife on a Form S-3 registration
statement, which was renewed in a Form S-3 filing in February 2006. We paid a
registration fee to the SEC of approximately $173,200 in connection with the
original registration, and incurred certain other legal and accounting expenses
to register the shares. Although the MetLife shares are now registered, various
other provisions of the agreement remain operable.
Administrative Services. General American Life Insurance Company, which is
referred to as "General American," and MetLife have historically provided our
Company and its subsidiary, RGA Reinsurance Company, with certain limited
administrative services, such as corporate risk management and corporate travel
services. The cost of these services was approximately $2.5 million in 2006,
$1.7 million in 2005 and $1.0 million in 2004.
Effective January 1, 1997, General American entered into an administrative
services agreement with RGA Reinsurance Company whereby General American
provides services necessary to handle the policy and treaty administration
functions for certain bank-owned life insurance policies. RGA Reinsurance
Company paid General American approximately $30,000 in 2005 and $385,000 in
2004. The agreement has been terminated and no amounts were paid in 2006.
Product License Agreement. RGA Reinsurance Company has a product license
and service agreement with MetLife, which is terminable by either party on 30
days notice. Under this agreement, we
31
have licensed the use of our electronic underwriting product to MetLife and
provide Internet hosting services, installation and modification services for
the product. Revenue under this agreement from MetLife was approximately $0.7
million in 2006, $1.6 million in 2005 and $3.5 million in 2004.
INDEPENDENT AUDITOR
Deloitte & Touche LLP ("Deloitte") was our independent auditing firm for
the fiscal year ended December 31, 2006, and we expect to select this firm again
for the year ending December 31, 2007. A representative of Deloitte is expected
to be present at the 2007 Annual Meeting to respond to appropriate questions and
to make a statement if he or she so desires.
The aggregate fees billed to us for the fiscal years ending December 31,
2006 and 2005 by our principal accounting firm, Deloitte & Touche, LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, the "Deloitte Entities") are as follows:
FISCAL YEAR
2006 2005
Audit Fees(a) $3,710,709 $3,250,971
Audit Related Fees(b) 380,834 412,762
---------- ----------
Total audit and audit-related fees 4,091,543 3,663,733
Tax Fees(c) 192,278 231,399
All Other Fees(d) 14,273 0
---------- ----------
Total Fees $4,298,094 $3,895,132
========== ==========
-------------
a. Includes fees for the audit of our Company's and its subsidiaries' annual
financial statements, reviews of our quarterly financial statements, and
Sarbanes-Oxley Section 404 attestation.
b. Includes fees for services rendered by the Deloitte Entities for matters
such as employee benefit plan audits, assistance with internal control
reporting requirements, and services associated with SEC registration
statements, periodic reports and securities offerings.
c. Includes fees for tax services rendered by the Deloitte Entities, such as
consultation related to tax planning and compliance.
d. De minimis fees for other types of permitted services.
All audit related services, tax services and other services were
pre-approved by the Audit Committee, which concluded that the provision of such
services by the Deloitte Entities was compatible with the maintenance of that
firm's independence in the conduct of its auditing functions. The Audit
Committee has adopted a Pre-Approval Policy which provides for pre-approval of
audit, audit-related and tax services on an annual basis and, in addition,
individual engagements anticipated to exceed pre-established thresholds must be
separately approved. The policy authorizes the Committee to delegate to one or
more of its members pre-approval authority with respect to permitted services.
32
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed our 2006 audited financial
statements with management. The Audit Committee also discussed with the
independent accountants the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standard, AU 380). The Audit Committee
has received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1, and has
discussed with those accountants their independence. Based on those reviews and
discussions, the Audit Committee recommended to our Board of Directors that the
audited financial statements be included in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2006, for filing with the SEC. This report is
provided by the following independent directors, who comprise the Committee:
William J. Bartlett, Chairman
J. Cliff Eason
Stuart I. Greenbaum
Alan C. Henderson
--------------------------------------------------------------------------------
ITEM 2 - APPROVAL OF AMENDMENT TO THE FLEXIBLE STOCK PLAN
--------------------------------------------------------------------------------
The second item to be acted upon at the Annual Meeting is a proposal to
approve an amendment to our Flexible Stock Plan ("Plan") to increase the number
of shares authorized for issuance under the Plan. The Board of Directors
originally adopted the Plan in February 1993 and, on March 31, 1993, our
shareholders approved the Plan. The Plan was amended and restated effective July
1, 1998. On May 24, 2000 and May 28, 2003, our shareholders approved amendments
to the Plan that increased the number of shares under the Plan for which
options, stock appreciation rights, restricted stock, performance shares and
other stock based awards are granted. On May 26, 2004, our shareholders approved
an amendment to eliminate the "evergreen" provision that provided for an
automatic increase of 5% each year in the number of authorized shares available
for issuance under the Plan.
The Plan provides for the grant of stock options, stock appreciation
rights, restricted stock, performance shares and other stock based awards to our
employees, employees and owners of entities that have a direct or indirect
ownership interest in us or in which we have a direct or indirect ownership
interest, individuals who are employed by or owners of our client companies or
suppliers, and individuals who are employed by or owners of companies that
render services to us (collectively, the "Participants"). As of March 15, 2007,
approximately 156 employees currently participate in the Plan.
Under the Plan, a maximum of 6,260,077 shares are presently authorized for
issuance from treasury stock or authorized but unissued shares. As of March 15,
2007, equity-based awards to purchase or receive 3,320,719 shares of common
stock were granted to Participants and outstanding under the Plan, 2,810,859
shares have been exercised by, awarded to or received by Participants, and
3,449,218 shares are available for future grants. The amended Plan increases the
total number of shares authorized for issuance by 3,000,000, for a total of
9,260,077. The proposed amendment will amend Section 3.1 of the Plan, which, if
approved, will read as follows:
3.1 NUMBER OF SHARES. The number of Shares which may be issued or sold or
for which Options, SARs or Performance Shares may be granted under the
Plan shall be 9,260,077 Shares. Such Shares may be authorized but unissued
Shares, Shares held in the treasury, or both.
The Board of Directors believes that the increase in the number of shares
authorized for issuance under the amended Plan is appropriate and will enhance
our ability to continue to reward and provide incentives to our key employees as
well as to attract and retain qualified employees. Presently, the total number
of shares represented by equity-based awards granted and outstanding and shares
available for future
33
grants (if ultimately issued) represent approximately 5.6% of our current shares
outstanding under the current Plan. If the amendment is approved, the total
number of shares represented by equity-based awards granted and outstanding and
shares available for future grants (if ultimately issued) will represent
approximately 10.4% of our current shares outstanding.
The principal features of the Plan, as amended, are described below. This
description is subject to and qualified in its entirety by the full text of the
Plan, which was filed as Exhibit 10.12 to our Form 10-K for the year ended
December 31, 2003 (filed with the SEC on March 12, 2004), and incorporated
herein by reference. The Form 10-K and exhibits are available through our
website (www.rgare.com) or at the SEC website (www.sec.gov/edgar). Information
on our website does not constitute part of this proxy statement.
DESCRIPTION OF THE PLAN
The Plan provides for benefits to be awarded to eligible Participants in
the form of stock options, stock appreciation rights, restricted stock,
performance shares, cash awards and other stock based awards. If any benefit
expires or is terminated, surrendered, cancelled or forfeited, the shares
covered by such benefit will be added back to the shares available for use under
the Plan. In addition, shares delivered to us in payment of the exercise price
of an option will be available for use under the Plan.
If our stock is changed by reason of any stock dividend, spin-off,
split-up, spin-out, recapitalization, merger, consolidation, reorganization,
combination or exchange of shares, then the number and class of shares available
for benefits, the number of shares subject to any outstanding benefits and the
price thereof will be appropriately adjusted.
The Compensation Committee of the Board of Directors administers the Plan
(the "Committee"). The Committee consists of four of our outside directors. The
Committee, by majority action, is authorized to determine the individuals to
whom the benefits will be granted, the type and amount of such benefits and the
terms of the benefit grants, as well as to interpret the Plan and to make all
other determinations necessary or advisable for the administration of the Plan
to the extent not contrary to the provisions of the Plan. The Committee makes
its determinations under the Plan based upon the recommendations of our Chief
Executive Officer and management, information made available to the Committee
and its judgment as to the best interests of RGA and our shareholders. In
certain circumstances, the Committee may delegate all or any part of its
authority under the Plan to our employees or another committee.
Under the Plan, the Committee may award: (a) stock options exercisable
into shares of our common stock which may or may not qualify as incentive stock
options within the meaning of Section 422 of the Internal Revenue Code, as
amended; (b) stock appreciation rights; (c) restricted shares of our common
stock; (d) performance shares, (e) cash awards, and (f) other stock based awards
and benefits. As provided in the Plan, the Committee has complete discretion to
determine the type and number of benefits granted to any Participant and the
terms and conditions that attach to each grant. Such terms and conditions are
not necessarily uniform among different Participants. The receipt by a
Participant of one type of grant under the Plan does not entitle the Participant
to receipt of any other type of grant. Payment for shares of common stock
purchased upon exercise of any option or any other benefit granted under the
Plan that requires payment by a Participant to us will be made in cash, or with
the consent of the Committee, by the tender of shares of common stock having a
fair market value equal to the purchase price, or in other property, rights and
credits, to the extent permitted by law, or any combination of the foregoing.
Stock Options. The Committee may grant stock options, which entitle the
Participant to purchase our common stock at a price established by the
Committee, and that price will not be less than the Fair Market Value of our
common stock on the date of the grant. "Fair Market Value" means the closing
price of shares on the New York Stock Exchange on a given date. The Committee
determines the term of the stock options, including the times and conditions
under which the options become exercisable. The maximum number of shares with
respect to which incentive stock options are issuable under the Plan is 150,000
shares. The maximum number of shares with respect to which options may be
granted to any Participant in any one-year
34
period may not exceed 200,000 shares. For purposes of the preceding sentence,
shares of common stock covered by an option that is cancelled will count against
the maximum number of shares that may be granted to any Participant in any
one-year period, and if the exercise price under an option is reduced, the
transaction will be treated as a cancellation of the option and a grant of a new
option.
Stock Appreciation Rights ("SARs"). The Committee may grant SARs, which
gives the Participant a right to receive payment in an amount equal to the
appreciation, if any, in the Fair Market Value of a share from the date of the
grant to the date of its payment. Such payment is made in cash, in common stock
or in any combination of cash and common stock, as the Committee may determine.
The maximum number of SARs that may be granted to any Participant in any
one-year period is 15,000. For purposes of the preceding sentence, any SARs that
are cancelled will count against the maximum number of SARs that may be granted
to any Participant in any one-year period and if the fair market value of a
share on which appreciation under a SAR is calculated is reduced, the
transaction will be treated as a cancellation of the SAR and the grant of a new
SAR.
Restricted Stock. The Committee may grant benefits under the Plan in the
form of Restricted Stock. Shares of Restricted Stock are issued and delivered at
the time of the grant but are subject to forfeiture as provided in the grantee's
individual agreement. The grantee is entitled to full voting and dividend rights
with respect to all shares of Restricted Stock from the date of grant, but
cannot transfer such shares until all restrictions have been satisfied. Grants
are made at a per share cost equal to the par value.
Performance Shares. Performance Shares are the right of an individual to
whom a grant of such shares is made to receive shares or cash equal to the Fair
Market Value of such shares at a future date in accordance with the terms of
such grant. Generally, such right is based upon the attainment of targeted
profit and/or performance objectives.
Cash Awards. Cash Awards are benefits payable in cash. The Committee may
grant Cash Awards at such times and in such amounts as it deems appropriate.
Other Stock Based Awards. An Other Stock Based Award is an award that is
valued in whole or in part by reference to, or is otherwise based on, Company
common stock.
In the event of a "change in control" (as defined below) the Committee may
provide such protection as it deems necessary to maintain a Participant's
rights. The Committee may, among other things, (i) accelerate the exercise or
realization of any benefit, (ii) purchase a benefit upon the Participant's
request for cash equal to the amount which could have been attained upon the
exercise or realization of the benefit had it been currently exercisable or
payable, (iii) adjust the benefit as the Committee deems appropriate, and (iv)
cause the benefit to be assumed by the surviving corporation. A "change of
control" generally means (i) the acquisition, without the approval of the Board,
by any person or entity, other than us and certain related entities, of more
than 20% of the outstanding shares of common stock through a tender offer,
exchange offer or otherwise; (ii) the liquidation or dissolution of us following
a sale or other disposition of all or substantially all of our assets; (iii) a
merger or consolidation involving us which results in our not being the
surviving parent corporation; or (iv) a change in the majority of the members of
the Board of Directors during any two-year period not approved by at least
two-thirds of the Directors who were members at the beginning of the two-year
period.
The Plan will remain in effect until terminated by the Board of Directors.
The Board, in its sole discretion, may terminate the Plan at any time and from
time to time may amend or modify the Plan. However, the Board may not amend the
Plan, without obtaining shareholder approval in a manner (i) which would cause
options which are intended to qualify as incentive stock options to fail to
qualify, (ii) which would cause the Plan to fail to meet the requirements of
Rule 16b-3 of the Securities Exchange Act of 1934 or Internal Revenue Code
Section 162(m), or (iii) which would violate applicable law. No amendment,
modification or termination of the Plan will adversely affect a Participant's
right to any benefit granted under the Plan prior to such amendment or
termination.
35
BENEFITS GRANTED UNDER THE PLAN
Non-qualified stock options, grants of PCRS units and restricted stock are
the forms of benefits that have been granted under the Plan. The following table
summarizes the options, restricted shares and PCRS units granted for each of the
enumerated categories of individuals from the first grant under the Plan on
May 4, 1993, through the most recent grants and awards on February 20, 2007.
EQUITY AWARDS GRANTED AND OUTSTANDING UNDER THE FLEXIBLE STOCK PLAN
-------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
WEIGHTED-
TOTAL OPTIONS AVG. PCRS
---------------------- EXERCISE -----------------------
PRICE OF POTENTIAL
OUTSTANDING AWARD RESTRICTED
NAME AND POSITION GRANTED OUTSTANDING OPTIONS GRANTED(1) (AT TARGET) STOCK
--------------------------------------------------------------------------------------------------------------------
A. Greig Woodring
President and CEO 790,945 459,011 $ 34.41 67,145 38,165 15,000
--------------------------------------------------------------------------------------------------------------------
Jack B. Lay
Sr. EVP and CFO 192,446 110,630 $ 37.12 22,962 12,702 6,548
--------------------------------------------------------------------------------------------------------------------
David B. Atkinson
EVP and COO 435,345 155,956 $ 35.64 25,311 13,011 6,548
--------------------------------------------------------------------------------------------------------------------
Paul A. Schuster,
Sr. EVP-U.S. Operations 242,677 126,357 $ 35.37 22,962 12,702 --
--------------------------------------------------------------------------------------------------------------------
Graham S. Watson
Sr. EVP - International 186,415 122,330 $ 36.83 35,000 21,000 --
--------------------------------------------------------------------------------------------------------------------
Executive Officer Group 1,969,756 1,049,064 $ 35.48 190,595 106,875 28,096
--------------------------------------------------------------------------------------------------------------------
Non-Executive Officer
Employee Group 3,813,674 1,899,691 $ 38.30 433,813 265,089 650
--------------------------------------------------------------------------------------------------------------------
Non-Executive Director Group -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------
Total 5,783,430 2,948,755 $ 37.30 624,408 371,964 28,746
--------------------------------------------------------------------------------------------------------------------
1. Column reflects 2004-2006 award of shares at maximum (200%), as determined
and awarded by the Compensation Committee in February 2007. The 2005-2007
and 2006-2008 grants of PCRS units are reflected at target.
FEDERAL INCOME TAX CONSEQUENCES
Stock Options. No income will be realized by a Participant on the grant of
a stock option, and we will not be entitled to a deduction at such time. If a
Participant exercises an incentive stock option and does not dispose of the
shares acquired within two years from the date of the grant, or within one year
from the date of exercise of the option, no income will be realized by the
Participant at the time of exercise. We will not be entitled to a deduction by
reason of the exercise.
If a Participant disposes of the shares acquired pursuant to an incentive
stock option within two years from the date of grant of the option or within one
year from the date of exercise of the option, the Participant will realize
ordinary income at the time of disposition which will equal the excess, if any,
of the lesser of (a) the amount realized on the disposition, or (b) the Fair
Market Value of the shares on the date of exercise, over the Participant's basis
in the shares. We generally will be entitled to a deduction in an amount equal
to such income in the year of the disqualifying disposition. If a Participant
disposes of the shares acquired pursuant
36
to an incentive stock option following the later of the date (a) two years from
the date of grant of the option or (b) one year from the date of exercise of the
option, the difference, if any, between the amount realized from the sale and
the exercise price will be taxed as a capital gain or capital loss.
Upon the exercise of a non-qualified option, the excess, if any, of the
Fair Market Value of the stock on the date of exercise over the purchase price
is ordinary income to the holder as of the date of exercise. We generally will
be entitled to a deduction equal to such excess amount in the year of exercise.
SARs. No income will be realized by a Participant upon the grant of an
SAR, and we will not be entitled to a deduction at such time. Upon the exercise
of a SAR, the excess, if any, of the Fair Market Value of the stock on the date
of exercise over the Fair Market Value of the stock on the date of grant is
ordinary income to the holder as of the date of exercise. We generally will be
entitled to a deduction equal to such excess amount in the year of exercise.
Restricted Stock. Unless a timely 83(b) election is made, as described in
the following paragraph, a Participant generally will not recognize taxable
income upon the grant of restricted stock because the restricted stock generally
will be nontransferable and subject to a substantial risk of forfeiture. A
Participant will recognize ordinary income when the restrictions that impose a
substantial risk of forfeiture of the shares of common stock or the transfer
restrictions (collectively, the "Restrictions") lapse. The amount recognized
will be equal to the difference between the fair market value of the shares at
the time the Restrictions lapse and the original purchase price paid for the
shares, if any. The ordinary income recognized by a Participant with respect to
restricted stock will be subject to applicable tax withholding by us. If a
timely 83(b) election has not been made, any dividends received with respect to
common stock subject to the Restrictions will be treated as additional
compensation income and not as dividend income.
A Participant may elect, pursuant to Section 83(b) of the Internal Revenue
Code ("Code"), to recognize as ordinary income the fair market value of the
restricted stock upon grant, notwithstanding that the restricted stock would
otherwise not be includable in gross income at that time. If the election is
made within 30 days of the date of grant, then the Participant would include in
gross income an amount equal to the difference between the fair market value of
the restricted stock on the date of grant and the purchase price paid for the
restricted stock, if any. Any change in the value of the shares after the date
of grant will be taxed as a capital gain or capital loss only if and when the
shares are disposed of by the Participant. If the Section 83(b) election is
made, the Participant's holding period for capital gains begins on the date of
grant.
The Section 83(b) election is irrevocable. If a Section 83(b) election is
made and the Participant then forfeits the restricted stock, the Participant may
not deduct as a loss the amount previously included in gross income. A
Participant's tax basis in shares of restricted stock received will be equal to
the sum of the amount (if any) the Participant paid for the common stock and the
amount of ordinary income recognized by the Participant as a result of making
Section 83(b) election or upon the lapse of the Restrictions. Unless a Section
83(b) election is made, the Participant's holding period for the shares for
purposes of determining gain or loss on a subsequent sale will begin on the date
the Restrictions on the shares lapse. In general, we will be entitled to a
deduction at the same time, and in an amount equal to, the ordinary income
recognized by a Participant with respect to shares of restricted stock. If,
subsequent to the lapse of the Restrictions on the shares, the Participant sells
the shares, the difference, if any, between the amount realized from the sale
and the tax basis in the shares of the Participant will be taxed as a capital
gain or capital loss.
Performance Shares. A Participant generally will not recognize taxable
income upon the grant of performance shares. Instead, a Participant will
recognize as ordinary income, and we will have as a corresponding deduction, any
cash delivered and the fair market value of any common stock delivered in
payment of an amount due under the performance share award. The ordinary income
the Participant recognizes will be subject to applicable tax withholding by us.
Upon selling any shares of common stock received by a Participant in payment of
an amount due under a performance share award, the Participant generally will
recognize a capital gain or loss in an amount equal to the difference between
the sale price of the shares of common stock and the Participant's tax basis in
the shares of common stock.
37
Cash Awards. Awards payable in cash are includible in the Participant's
gross income when paid and deductible by us when paid or accrued.
Other Stock Based Awards. The tax consequences associated with any other
stock based award will vary depending on the specific terms of the award,
including whether the award has a readily ascertainable fair market value,
whether or not the award is subject to forfeiture provisions or restrictions on
transfer, the nature of the property to be received by the Participant under the
award, the applicable holding period and the Participant's tax basis.
The foregoing statement is only a summary of certain federal income tax
consequences of the Flexible Stock Plan and is based on our understanding of
present federal tax laws and regulations.
VOTE REQUIRED
The vote required to approve this Item 2 is a majority of the common stock
represented in person or by proxy at the Annual Meeting, provided the total vote
cast represents over 50% of the shares entitled to vote. As a holder of common
stock, MetLife is entitled to vote on this proposal. MetLife beneficially owns
and has shared voting power with respect to approximately 52.5% of our
outstanding shares. MetLife has informed us that it intends to vote for this
Item 2; therefore, approval of this Item 2 by the shareholders is assured.
RECOMMENDATION OF THE BOARD
In accordance with its charter, the Compensation Committee of the Board of
Directors recommended to the Board of Directors that it approve the proposal
regarding the amendment to our Flexible Stock Plan. On February 20, 2007, the
Board of Directors approved the proposal regarding future sales of Equity
Securities from time to time to MetLife and recommends that shareholders vote
FOR the proposal.
--------------------------------------------------------------------------------
ITEM 3 - SALE OF SECURITIES TO METLIFE OR ITS AFFILIATES
--------------------------------------------------------------------------------
The third item to be acted upon at the Annual Meeting is a proposal to
authorize future sales of our equity securities, including common stock,
preferred stock, depository shares, warrants, purchase contracts, units,
convertible debt, or other securities convertible into or exercisable for common
stock or preferred stock ("Equity Securities"), from time to time to MetLife or
its affiliates (collectively "MetLife") upon the terms and conditions described
below.
BACKGROUND
MetLife is our principal beneficial shareholder. See "Item 1 - Election of
Directors - Securities Ownership of Directors, Management and Certain Beneficial
Owners." We desire to have the flexibility to allow MetLife to participate in
equity capital fund-raising activities which we may undertake from time to time
in the future. By participating in such activities, MetLife would be able to
maintain all or a part of its relative ownership percentage in us, if it so
desired. NYSE rules generally require approval by our shareholders of any
issuance of Equity Securities to MetLife, due to the current level of beneficial
ownership of MetLife (approximately 52.5% of the total common stock).
We may decide to raise equity capital at various times in the future in
order to enhance our capital structure, to fund growth opportunities or for
other corporate purposes. As part of any capital raising plan, we may undertake
either to privately place Equity Securities to MetLife and other investors, or
sell Equity Securities to MetLife and other investors pursuant to a public
offering. The terms of any potential sale to MetLife have not been determined,
but in any event would be expected to approximate the current market value of
such securities at the time of sale, as described below. The Board of Directors
will determine the terms of any such sale and the securities offered therein at
the time of the transaction. Any private sales would not be registered under the
Securities Act of 1933 and such shares could not be offered or sold in the
38
United States absent registration or an applicable exemption from registration
requirements. Any public offering would only be made by means of a prospectus.
Although we do not currently have any definite capital-raising plans or
commitments, we have filed a registration statement covering the issuance of up
to $1.0 billion of Equity Securities, which has become effective, of which
$300,000 was issued in a recent debt offering. In November 2003, we completed
the offering of approximately $427,575,000 (net of underwriters discount), or
12,075,000 shares of common stock pursuant to this registration statement, of
which MetLife and its affiliates purchased $109,950,000, or 3,000,000 shares of
common stock. This proxy statement shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities law of any such state.
As of February 1, 2007, our authorized capital stock consists of
140,000,000 shares of common stock and 10,000,000 shares of preferred stock. The
Board of Directors has the authority to issue authorized shares of the preferred
stock in series and to fix the number, designation, preferences, limitations and
relative rights of the shares of each series, subject to applicable law and the
provisions of any outstanding series of preferred stock. Depository shares would
represent an interest in shares of a series of preferred stock deposited under a
deposit agreement by us with a bank or trust company. Subject to the terms of
the deposit agreement, each owner of a depository share would be entitled,
proportionately, to all the rights, preferences and privileges of the preferred
stock represented by such depository share. Similarly, the terms of any purchase
contracts, units, convertible debt securities or warrants or other securities,
whether convertible into or exercisable for debt securities, common stock or
preferred stock, would be determined by the Board of Directors.
REASONS FOR THE PROPOSAL
Our Board of Directors believes it is in our best interest to maintain the
flexibility to facilitate possible further investments in us by MetLife or its
affiliates for the reasons described below. Although the Board of Directors has
not committed to issue any Equity Securities to MetLife, it believes it is
desirable to have the flexibility to do so from time to time without having to
first seek shareholder approval for each particular transaction if and when the
Board of Directors determines the issuance would be in the best interests of
shareholders.
Since the Board of Directors has not determined at this time to issue any
Equity Securities to MetLife, it has not fully assessed all aspects of any such
transaction. Any decision to issue shares to MetLife or otherwise will be based
on the facts and circumstances at that time. In general, the Board of Directors
believes it may be desirable to issue Equity Securities to MetLife in order to
maintain a strong relationship for the following reasons:
Continuity. In the event the Board of Directors decides we should issue
Equity Securities to MetLife, MetLife may avoid dilution to its voting control.
Such an issuance may therefore reduce the risk of a disruption in the continuity
of our long-term plans and objectives that might otherwise result if MetLife
were no longer to maintain control.
Key Employees. Maintenance of control by MetLife may allow key employees
to continue to concentrate on their responsibilities without undue concern that
our future might be affected by an unwanted takeover that could otherwise be
triggered. As a result, we may be better able to preserve its ability to attract
and retain qualified key employees.
Business Relationships. The issuance of Equity Securities to MetLife may
enhance our existing and potential business relationships with parties who may
in the future have concern about changes in control of RGA in the event the
holdings of MetLife are ever diluted. We may be better able to attract joint
venture and marketing partners if we are perceived not to be vulnerable to a
takeover or disruption due to uncertainty concerning our ownership.
Financing Flexibility. The Board of Directors believes that MetLife, as
our principal shareholder, may be willing to invest under circumstances when
public investors might not. Although we believe we
39
currently have reasonable access to public and private capital markets, the
Board of Directors believes it is in the best interests of shareholders that we
have ready access to all sources of capital, including MetLife.
NEW YORK STOCK EXCHANGE RULES
Under the applicable rules of the NYSE, our shareholders generally must
approve any significant issuance of common equity, or securities convertible
into or exercisable for common equity, by us to a substantial shareholder, such
as MetLife. In order to comply with such rules, the NYSE requires that our
shareholders approve the various terms of the proposed sales, such as the
identity of the substantial shareholder, the price for the shares, the amount of
shares to be sold, the length of time during which sales would be made, the use
of proceeds from the sales and the reasons for the sales.
TERMS OF SALES
Because the exact terms of any sale of Equity Securities to MetLife are
not known at this time, we propose that the shareholders vote in favor of this
Item 3 to approve the sale of shares subject to certain specific terms and
conditions. Under the proposal, the Board of Directors would be authorized to
approve, during the next three years, any sale of our Equity Securities to
MetLife in which the number of such shares, including shares into which such
Equity Securities are convertible or exercisable, would not exceed the number of
shares that would enable MetLife to maintain its then current ownership
percentage of our voting securities, which currently includes only our common
stock. Any such sale would be on substantially the same terms as a sale to
unaffiliated parties.
While the terms of a sale to MetLife would be substantially the same as a
sale to unaffiliated parties, it may be appropriate in certain situations to
reduce the sale price, based on expected expenses of the sale and the
availability of other sources of capital. For example, in connection with a
private placement of Equity Securities, we may pay a reduced sales commission.
Based on current costs associated with capital raising transactions, we do not
expect any reduction in sale price to exceed 3%. The number and kind of Equity
Securities issuable to MetLife under the proposal will be appropriately adjusted
by us in the event of any increase or decrease in the number of shares
outstanding as a result of a reorganization, merger, recapitalization,
reclassification, stock dividend, stock split, combination of shares or other
similar transaction.
The amount of Equity Securities and the sale price, conversion price or
exercise price per share, as applicable, for such shares sold to MetLife
pursuant to any sale authorized by this Item 3 will be determined by the Board
of Directors or a committee of the Board of Directors specifically authorized to
make such determination, within the parameters of the proposal contained in this
Item 3. Such a committee will include directors who are not affiliated with
MetLife.
Shareholders should note that the pricing of preferred stock, depository
shares, purchase contracts, units, warrants, convertible debt or other
securities convertible or exercisable for common stock is typically dependent on
the other terms and provisions of the securities, including, without limitation,
dividend rate, redemption price, liquidation rights, sinking fund provisions,
conversion rights and voting rights, and other terms and restrictions, and any
corresponding effect on other shareholders, in the case of preferred stock or
any related depository share; interest rates, redemption price, conversion
rights, sinking fund procedures, terms and covenants or other restrictions, in
the case of debt securities; and exercise price, terms and covenants or other
restrictions, in the case of other securities, such as purchase contracts, units
or warrants. Such terms and effects could include restrictions on dividends on
the common stock if dividends on the preferred stock or any related depository
share, or interest payments on any debt securities, are in arrears, dilution of
the voting power of other shareholders to the extent a series of the preferred
stock or any related depository share has voting rights, and reduction of
amounts available on liquidation as a result of any obligations created by any
debt securities or liquidation preference granted to any series of preferred
stock or any related depository share. Accordingly, shareholders will have to
rely on our Board of Directors, if such a transaction is ultimately approved, to
ensure that the overall terms and conditions of the securities are in our best
interest.
40
In the event any proposed sale of Equity Securities to MetLife materially
differs from the terms described above, we would expect to seek shareholder
approval of such proposed sale to the extent required under applicable NYSE
rules.
Because we have not made a decision at this time to sell any Equity
Securities to MetLife, it cannot identify the uses of any proceeds from any sale
of such shares. We, however, may use any such proceeds, among other things, to
fund our continuing growth, to enhance our capital structure, to finance
acquisitions, for general working capital purposes or for other corporate
purposes.
Any issuance of preferred stock, depository shares, purchase contracts,
units, warrants, convertible debt or other convertible securities may have the
result of making it more difficult for any persons or group of persons, other
than the current principal shareholders and management, to acquire control of us
by expanding our ability to issue shares and thereby dilute the voting power of
any person or group that might accumulate shares in order to attempt to effect a
change in control. We are not aware of any present effort to accumulate shares
of common stock or to attempt to change control of RGA.
Our articles of incorporation and bylaws provide, among other things, for
a classified board of directors; limit the right of shareholders to remove
directors or change the size of the board of directors; limit the right of
shareholders to fill vacancies on the board of directors; limit the right of
shareholders to act by written consent and to call a special meeting of
shareholders or propose other actions; require a higher percentage of
shareholders than would otherwise be required to amend, alter, change or repeal
the provisions of the articles of incorporation or bylaws; and provide that the
bylaws may be amended only by the majority of the board of directors. These
provisions may have an anti-takeover effect.
INTERESTS OF CERTAIN PERSONS IN THE PROPOSAL
Some of our officers and directors are also officers and directors of
MetLife. See "Item 1 - Election of Directors - Securities Ownership of
Directors, Management and Certain Beneficial Owners." As a result, such officers
and directors, as well as MetLife, may be deemed to have an interest in the
proposal that differs from those of other shareholders. For more information
regarding the relationships between us and MetLife, see "Certain Relationships
and Related Person Transactions."
CERTAIN POTENTIAL DISADVANTAGES OF THE PROPOSAL
While the Board of Directors has determined that adoption of the proposal
is in the best interests of us and our shareholders, the Board recognizes that
the implementation of the proposal may result in certain disadvantages. For
example, since MetLife currently has voting control over us, implementation of
the proposal would allow the Board of Directors to permit MetLife to maintain
its voting control of RGA. Consequently, the proposal might prevent our
shareholders from selling their shares at a premium over prevailing market
prices in response to a takeover proposal and make it more difficult to replace
our current Board of Directors and management. We are not aware of any such
takeover proposal at this time.
Under NYSE rules, we are required to submit certain proposals to sell
stock to substantial shareholders to a vote at a meeting of all shareholders.
Under the proposal, future decisions to sell stock to MetLife would be made by
the Board of Directors without a further vote of shareholders, including, among
other things, with respect to the pricing and terms of any such sale.
Accordingly, shareholders will not have an opportunity to consider or vote upon
any such sales, to the extent the terms are consistent with those described
herein.
PROPOSAL TO APPROVE SALES TO METLIFE
Our Board of Directors has approved, and recommends that our shareholders
approve, the authorization of the Board of Directors to approve any future sales
of Equity Securities to MetLife during the next three years, commencing on the
date of the Annual Meeting, in which the number of shares, including shares into
which such Equity Securities are convertible or exercisable, will not exceed
such number of
41
shares (subject to adjustment, as described above) which would enable MetLife to
maintain its then current beneficial ownership percentage of our securities
having voting power, currently our common stock. Any such sale would be made on
substantially the same terms as a sale to unaffiliated parties. The number of
shares and price per share for such a sale will be determined by the Board of
Directors or a committee thereof in accordance with the terms of this proposal.
VOTE REQUIRED
The vote required to approve this Item 3 is a majority of the outstanding
common stock represented in person or by proxy at the Annual Meeting and
entitled to vote. Under the NYSE rules, the matter must also receive the
affirmative vote of a majority of the votes cast on the matter, provided that
the total votes cast represent more than 50% of the shares entitled to vote. As
a holder of common stock, MetLife is entitled to vote on this proposal. MetLife
beneficially owns and has shared voting power with respect to approximately
52.5% of our outstanding shares. MetLife has informed us that it intends to vote
for this Item 3; therefore, approval of this Item 3 by the shareholders is
assured.
RECOMMENDATION OF THE BOARD
The Board of Directors has approved the proposal regarding future sales of
Equity Securities from time to time to MetLife and recommends that shareholders
vote FOR the proposal.
EQUITY COMPENSATION PLAN INFORMATION
The following table presents Equity Compensation Plan information as of
December 31, 2006:
--------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE NUMBER OF SECURITIES
BE ISSUED UPON EXERCISE EXERCISE PRICE OF REMAINING AVAILABLE FOR
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, ISSUANCE UNDER EQUITY
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS COMPENSATION PLANS
--------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans Approved
by Security Holders 3,221,197(1) $34.39(2,3) 553,835(4)
--------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans Not
Approved by Security Holders
--------------------------------------------------------------------------------------------------------------------
TOTAL 3,221,197 $34.39(2,3) 553,835
--------------------------------------------------------------------------------------------------------------------
-------------
1. Includes the number of securities to be issued upon exercises under the
following plans: Flexible Stock Plan - 3,153,291; Flexible Stock Plan for
Directors - 38,433; and Phantom Stock Plan for Directors - 29,473.
2. Does not include 392,180 PCRS units to be issued under the Flexible Stock
Plan, or 29,473 phantom units to be issued under the Phantom Stock Plan
for Directors because those securities do not have an exercise price
(i.e., a unit is a hypothetical share of our common stock with a value
equal to the fair market value of our common stock).
3. Reflects the blended weighted-average exercise price of outstanding
options under the Flexible Stock Plan ($34.43) and Flexible Stock Plan for
Directors ($31.55).
4. Includes the number of securities remaining available for future issuance
under the following plans: Flexible Stock Plan - 413,799; Flexible Stock
Plan for Directors - 108,653; and Phantom Stock Plan for Directors -
31,383.
ADDITIONAL INFORMATION
VOTING
The affirmative vote of the holders of a majority of the shares of our
common stock entitled to vote which are present in person or represented by
proxy at the 2007 Annual Meeting is required to approve Items 1, 2 and 3 and to
act on any other matters properly brought before the meeting (other than the
other specified proposals), provided, in the case of Items 2 and 3, the total
votes cast represents over 50% of the shares entitled to vote. Voting results
will be disclosed in our Form 10-Q for the period ending June 30, 2007.
42
Shares represented by proxies which are marked "withhold authority" with respect
to the election of any one or more nominees for election as directors and
proxies which are marked "abstain" or which deny discretionary authority on
other matters will be counted for the purpose of determining the number of
shares represented by proxy at the meeting. Such proxies will thus have the same
effect as if the shares represented thereby were voted against such nominee or
nominees and against such other matters, respectively. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter (i.e., a "broker non-vote"), those shares will not
be considered as present and entitled to vote with respect to that matter,
unless they result in a failure to obtain total votes cast of more than 50% of
the shares entitled to vote. If no specification is made on a duly executed
proxy, the proxy will be voted FOR Items 1, 2 and 3, and in the discretion of
the persons named as proxies on such other business as may properly come before
the meeting.
As of February 1, 2007, MetLife beneficially owned approximately 52.5% of
the shares of RGA common stock entitled to vote at the meeting. MetLife has
indicated its intention to vote its shares FOR each of the proposals to be voted
upon at the meeting, and the vote of MetLife will be sufficient to approve all
items.
We know of no other matters to come before the meeting. If any other
matters properly come before the meeting, the proxies solicited hereby will be
voted on such matters in accordance with the judgment of the persons voting such
proxies.
SHAREHOLDER NOMINATIONS AND PROPOSALS
As described in our Corporate Governance Guidelines, the Nominating and
Corporate Governance Committee will consider shareholder nominations for
Directors that meet the notification, timeliness, consent and information
requirements of our Articles of Incorporation. The Committee makes no
distinctions in evaluating nominees for positions on the Board based on whether
or not a nominee is recommended by a shareholder, provided that the procedures
with respect to nominations referred to above are followed. Potential candidates
for nomination as Director candidates must provide written information about
their qualifications and participate in interviews conducted by individual Board
members, including the Chairs of the Audit or Nominating and Governance
Committees. Candidates are evaluated using the criteria adopted by the Board to
determine their qualifications based on the information supplied by the
candidates and information obtained from other sources. The Committee will
recommend candidates for election as Director only if the Committee determines,
in its judgment, that they have the following specific, minimum qualifications
that have been recommended by the Nominating and Governance Committee to, and
approved by, the Board:
o Financial Literacy. Such person should be "financially literate" as
such qualification is interpreted by the Board of Directors in its
business judgment.
o Leadership Experience. Such person should possess significant
leadership experience, such as experience in business,
finance/accounting, law, education or government, and shall possess
qualities reflecting a proven record of accomplishment and ability
to work with others.
o Commitment to Our Values. Such person shall be committed to
promoting our financial success and preserving and enhancing our
business and ethical reputation, as embodied in our Codes of
Conduct.
o Absence of Conflicting Commitments. Such person should not have
commitments that would conflict with the time commitments of a
Director of RGA.
o Reputation and Integrity. Such person shall be of high repute and
recognized integrity and not have been convicted in a criminal
proceeding (excluding traffic violations and other minor offenses).
Such person shall not have been found in a civil proceeding to have
violated any
43
federal or state securities or commodities law, and shall not be
subject to any court or regulatory order or decree limiting his or
her business activity, including in connection with the purchase or
sale of any security or commodity.
o Other Factors. Such person shall have other characteristics
considered appropriate for membership on the Board of Directors,
including an understanding of marketing and finance, sound business
judgment, significant experience and accomplishments and educational
background.
Shareholder proposals submitted under the process prescribed by the SEC
(in Rule 14a-8 of the Exchange Act) for presentation at the 2008 Annual Meeting
must be received by us by December 13, 2007 for inclusion in our proxy statement
and proxy relating to that meeting. Upon receipt of any such proposal, we will
determine whether or not to include such proposal in the proxy statement and
proxy in accordance with regulations governing the solicitation of proxies.
In order for a Shareholder to nominate a candidate for director, under our
Restated Articles of Incorporation, timely notice of the nomination must be
given to us in advance of the meeting. Ordinarily, such notice must be given not
less than 60 nor more than 90 days before the meeting (but if we give less than
70 days notice of the meeting, or prior public disclosure of the date of the
meeting, then the Shareholder must give such notice within 10 days after notice
of the meeting is mailed or other public disclosure of the meeting is made,
whichever occurs first). The shareholder filing the notice of nomination must
describe various matters as specified in our Amended and Restated Articles of
Incorporation, including such information as name, address, occupation, and
number of shares held.
In order for a shareholder to bring other business before a Shareholder
meeting, timely notice must be given to us within the time limits described
above. Such notice must include a description of the proposed business, the
reasons therefore, and other matters specified in our Amended and Restated
Articles of Incorporation. The Board or the presiding officer at the Annual
Meeting may reject any such proposals that are not made in accordance with these
procedures or that are not a proper subject for shareholder action in accordance
with applicable law. The foregoing time limits also apply in determining whether
notice is timely for purposes of rules adopted by the SEC relating to the
exercise of discretionary voting authority. These requirements are separate from
and in addition to the requirements a shareholder must meet to have a proposal
included in our proxy statement.
In each case, the notice must be given to our Secretary, whose address is
1370 Timberlake Manor Parkway, Chesterfield, Missouri 63017-6039. Any
Shareholder desiring a copy of our Restated Articles of Incorporation or Bylaws
will be furnished a copy without charge upon written request to the Secretary.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries such as
brokers to satisfy delivery requirements for proxy statements with respect to
two or more shareholders sharing the same address by delivering a single proxy
statement addressed to those shareholders. This process, which is commonly
referred to as "householding," potentially provides extra convenience for
shareholders and cost savings for companies. Some brokers household proxy
materials, delivering a single proxy statement to multiple shareholders sharing
an address unless contrary instructions have been received from the affected
shareholders. Once you have received notice from your broker that they will be
householding materials to your address, householding will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in householding and would prefer to receive a
separate proxy statement or if your household currently receives multiple copies
and would like to participate in householding in the future, please notify your
broker.
44
AMENDMENT TO THE
REINSURANCE GROUP OF AMERICA, INCORPORATED
FLEXIBLE STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE JULY 1, 1998
WHEREAS, Reinsurance Group of America, Incorporated (the "Company")
established the Reinsurance Group of America, Incorporated Flexible Stock Plan
(the "Plan") to enhance the ability of the Company to reward and provide stock
based incentives to its key employees; and
WHEREAS, the Company's shareholders previously approved the Plan and
amendments thereto; and
WHEREAS, on January 25, 2007, the Board of Directors of the Company
approved an amendment to the Plan, subject to shareholder approval, to
increase the total number of shares authorized for issuance under the Plan by
3,000,000 shares.
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1. Effective upon the date of approval of this amendment by the
Company's shareholders, Section 3.1 of the Plan is amended in its entirety to
read as follows:
3.1 Number of Shares. The number of Shares which may be
issued or sold or for which Options, SARs or Performance Shares may
be granted under the Plan shall be 9,260,077 Shares. Such Shares may
be authorized but unissued Shares, Shares held in the treasury, or
both.
2. Capitalized terms used herein shall have the same meanings
ascribed to them in the Plan.
IN WITNESS WHEREOF, Reinsurance Group of America, Incorporated hereby
adopts the foregoing amendment this 23rd day of May, 2007.
REINSURANCE GROUP OF AMERICA,
INCORPORATED
/s/ A. Greig Woodring
-------------------------------------
A. Greig Woodring
President and Chief Executive Officer
Appendix A
AMENDMENT TO THE
REINSURANCE GROUP OF AMERICA, INCORPORATED
FLEXIBLE STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE JULY 1, 1998
WHEREAS, Reinsurance Group of America, Incorporated (the "Company")
established the Reinsurance Group of America, Incorporated Flexible Stock Plan
(the "Plan") to enhance the ability of the Company to reward and provide stock
based incentives to its key employees; and
WHEREAS, the Company's shareholders previously approved the Plan and
amendments thereto; and
WHEREAS, on January 28, 2004, the Board of Directors of the Company
approved an amendment to the Plan, subject to shareholder approval, to
eliminate the provision for a 5% annual increase in the number of Shares
allocated to the Plan.
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1. Effective upon the date of approval of this amendment by the
Company's shareholders, Section 3.1 of the Plan is amended in its entirety to
read as follows:
3.1 Number of Shares. The number of Shares which may be
issued or sold or for which Options, SARs or Performance Shares may
be granted under the Plan shall be 6,260,077 Shares. Such Shares may
be authorized but unissued Shares, Shares held in the treasury, or
both.
2. Capitalized terms used herein shall have the same meanings
ascribed to them in the Plan.
IN WITNESS WHEREOF, Reinsurance Group of America, Incorporated hereby
adopts the foregoing amendment this 26th day of May, 2004.
REINSURANCE GROUP OF AMERICA,
INCORPORATED
/s/ A. Greig Woodring
------------------------------------
A. Greig Woodring
President and Chief Executive Officer
SECOND AMENDMENT TO THE
REINSURANCE GROUP OF AMERICA, INCORPORATED
FLEXIBLE STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE JULY 1, 1998
WHEREAS, Reinsurance Group of America, Incorporated (the "Company")
established the Reinsurance Group of America, Incorporated Flexible Stock Plan
(the "Plan") to enhance the ability of the Company to reward and provide stock
based incentives to its key employees; and
WHEREAS, the Company's shareholders previously approved the Plan and
an amendment thereto; and
WHEREAS, on March 15, 2000, the Board of Directors of the Company
approved an amendment to the Plan, subject to shareholder approval, to
increase the total number of shares authorized for issuance under the Plan by
1,500,000 shares; and
WHEREAS, the Company's shareholders approved the amendment on May 24,
2000; and
WHEREAS, on January 29, 2003, the Compensation Committee of the Board
of Directors of the Company approved a second amendment to the Plan, subject
to shareholder approval, to increase the total number of shares authorized for
issuance under the Plan by 1,500,000 shares.
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1. Effective upon the date of approval of this amendment by the
Company's shareholders, Section 3.1 of the Plan is amended in its entirety to
read as follows:
3.1 Number of Shares. The number of Shares which may be
----------------
issued or sold or for which Options, SARs or Performance
Shares may be granted under the Plan shall be 6,260,077
Shares. Such number of Shares shall increase annually,
effective as of the first day of each Fiscal Year, by the
number of Shares equal to 5% of the number of Shares
allocated to this Plan as of the first day of such Fiscal
Year. Such Shares may be authorized but unissued Shares,
Shares held in the treasury, or both.
2. Capitalized terms used herein shall have the same meanings
ascribed to them in the Plan.
IN WITNESS WHEREOF, Reinsurance Group of America, Incorporated hereby
adopts the foregoing amendment this 28th day of May, 2003.
REINSURANCE GROUP OF AMERICA, INCORPORATED
By: /s/ A. Greig Woodring
-------------------------------------
A. Greig Woodring, President and
Chief Executive Officer
AMENDMENT TO THE
REINSURANCE GROUP OF AMERICA, INCORPORATED
FLEXIBLE STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE JULY 1, 1998
WHEREAS, Reinsurance Group of America, Incorporated (the "Company")
established the Reinsurance Group of America, Incorporated Flexible Stock Plan
(the "Plan") to enhance the ability of the Company to reward and provide stock
based incentives to its key employees; and
WHEREAS, the Company's shareholders previously approved the Plan and
an amendment thereto; and
WHEREAS, on March 15, 2000, the Board of Directors of the Company
approved a second amendment to the Plan, subject to shareholder approval, to
increase the total number of shares authorized for issuance under the Plan by
1,500,000 shares.
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1. Effective upon the date of approval of this amendment by the
Company's shareholders, Section 3.1 of the Plan is amended in its entirety to
read as follows:
3.1 Number of Shares. The number of Shares which may be
----------------
issued or sold or for which Options, SARs or Performance
Shares may be granted under the Plan shall be 3,486,564
Shares. Such number of Shares shall increase annually,
effective as of the first day of each Fiscal Year,
commencing with the Fiscal Year beginning in 2001, by the
number of Shares equal to 5% of the number of Shares
allocated to this Plan as of the first day of such Fiscal
Year. Such Shares may be authorized but unissued Shares,
Shares held in the treasury, or both.
2. Capitalized terms used herein shall have the same meanings
ascribed to them in the Plan.
IN WITNESS WHEREOF, Reinsurance Group of America, Incorporated hereby
adopts the foregoing amendment this 16th day of March, 2000.
REINSURANCE GROUP OF AMERICA, INCORPORATED
By: /s/ A. Greig Woodring
-------------------------------------
A. Greig Woodring, President and
Chief Executive Officer
REINSURANCE GROUP OF AMERICA, INCORPORATED
FLEXIBLE STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE JULY 1, 1998
REINSURANCE GROUP OF AMERICA, INCORPORATED
FLEXIBLE STOCK PLAN
TABLE OF CONTENTS
Page
----
ARTICLE I - NAME AND PURPOSE
1.1 Name 1
1.2 Purpose 1
ARTICLE II - DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
2.1 General Definitions 1
(a) Affiliate 1
(b) Agreement 1
(c) Benefit 1
(d) Board 1
(e) Cash Award 1
(f) Change of Control 1
(g) Code 1
(h) Company 1
(i) Committee 1
(j) Common Stock 2
(k) Effective Date 2
(l) Employee 2
(m) Employer 2
(n) Exchange Act 2
(o) Fair Market Value 2
(p) Fiscal Year 2
(q) ISO 2
(r) NQSO 2
(s) Option 2
(t) Other Stock Based Award 2
(u) Parent 2
(v) Participant 2
(w) Performance Share 2
(x) Plan 2
(y) Restricted Stock 3
(z) Rule 16b-3 3
(aa) SEC 3
(bb) Share 3
(cc) SAR 3
(dd) Subsidiary 3
2.2 Other Definitions 3
2.3 Conflicts in Plan 3
ARTICLE III - COMMON STOCK
3.1 Number of Shares 3
3.2 Reusage 3
3.3 Adjustments 3
ARTICLE IV - ELIGIBILITY
4.1 Determined By Committee 4
ii
ARTICLE V - ADMINISTRATION
5.1 Committee 4
5.2 Authority 4
5.3 Delegation 5
5.4 Adjudication of Claims 5
ARTICLE VI - AMENDMENT
6.1 Power of Board 5
6.2 Limitation 5
ARTICLE VII - TERM AND TERMINATION
7.1 Term 6
7.2 Termination 6
ARTICLE VIII - MODIFICATION OR TERMINATION OF BENEFITS
8.1 General 6
8.2 Committee's Right 6
ARTICLE IX - CHANGE OF CONTROL
9.1 Right of Committee 6
ARTICLE X - AGREEMENTS AND CERTAIN BENEFITS
10.1 Grant Evidenced by Agreement 7
10.2 Provisions of Agreement 7
10.3 Certain Benefits 7
ARTICLE XI - REPLACEMENT AND TANDEM AWARDS
11.1 Replacement 7
11.2 Tandem Awards 7
ARTICLE XII - PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING
12.1 Payment 7
12.2 Dividend Equivalents 8
12.3 Deferral 8
12.4 Withholding 8
ARTICLE XIII - OPTIONS
13.1 Types of Options 8
13.2 Shares for ISOs 8
13.3 Grant of ISOs and Option Price 8
13.4 Other Requirements for ISOs 8
13.5 NQSOs 8
13.6 Determination by Committee 8
13.7 Limitation Shares Covered by Options 9
ARTICLE XIV - SARS
14.1 Grant and Payment 9
14.2 Grant of Tandem Award 9
14.3 ISO Tandem Award 9
14.4 Payment of Award 9
14.5 Limitation on SARs. 9
iii
ARTICLE XV - RESTRICTED STOCK
15.1 Description 9
15.2 Cost of Restricted Stock 9
15.3 Non-Transferability 10
ARTICLE XVI - PERFORMANCE SHARES
16.1 Description 10
16.2 Grant 10
ARTICLE XVII - CASH AWARDS
17.1 Grant 10
17.2 Limitation on Amount 10
17.3 Restrictions 10
ARTICLE XVIII - OTHER STOCK BASED AWARDS AND OTHER BENEFITS
18.1 Other Stock Based Awards 10
18.2 Other Benefits 10
ARTICLE XIX - MISCELLANEOUS PROVISIONS
19.1 Underscored References 10
19.2 Number and Gender 11
19.3 Governing Law 11
19.4 Purchase for Investment 11
19.5 No Employment Contract 11
19.6 No Effect on Other Benefits 11
iv
REINSURANCE GROUP OF AMERICA, INCORPORATED
FLEXIBLE STOCK PLAN
ARTICLE I
---------
NAME AND PURPOSE
----------------
1.1 Name. The name of this Plan is the "Reinsurance Group of
----
America, Incorporated Flexible Stock Plan."
1.2 Purpose. The Company has established this Plan to attract,
-------
retain, motivate and reward Employees and other individuals, to encourage
ownership of the Company's Common Stock by Employees and other individuals,
and to promote and further the best interests of the Company by granting cash
and other awards.
ARTICLE II
----------
DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
----------------------------------------------
2.1 General Definitions. The following words and phrases, when
-------------------
used in the Plan, unless otherwise specifically defined or unless the context
clearly otherwise requires, shall have the following respective meanings:
(a) Affiliate. A Parent or Subsidiary of the Company.
---------
(b) Agreement. The document which evidences the grant of any
---------
Benefit under the Plan and which sets forth the Benefit and the
terms, conditions and provisions of, and restrictions relating to, such
Benefit.
(c) Benefit. Any benefit granted to a Participant under the
-------
Plan.
(d) Board. The Board of Directors of the Company.
-----
(e) Cash Award. A Benefit payable in the form of cash.
----------
(f) Change of Control. The acquisition, without the approval of
-----------------
the Board, by any person or entity, other than the Company or a Related
Entity, of more than 20% of the outstanding Shares through a tender offer,
exchange offer or otherwise; the liquidation or dissolution of the Company
following a sale or other disposition of all or substantially all of its
assets; a merger or consolidation involving the Company which results in the
Company not being the surviving parent corporation; or any time during any
two-year period in which individuals who constituted the Board at the start of
such period (or whose election was approved by at least two-thirds of the then
members of the Board who were members at the start of the two-year period) do
not constitute at least 50% of the Board for any reason. A Related Entity is
the Parent, a Subsidiary or any employee benefit plan (including a trust
forming a part of such a plan) maintained by the Parent, the Company or a
Subsidiary.
(g) Code. The Internal Revenue Code of 1986, as amended. Any
----
reference to the Code includes the regulations promulgated pursuant to the
Code.
(h) Company. Reinsurance Group of America, Incorporated.
-------
(i) Committee. The Committee described in Section 5.1.
---------
1
(j) Common Stock. Any class of the Company's common stock.
------------
(k) Effective Date. The date that the Plan is approved by the
--------------
shareholders of the Company which must occur within one year before or after
approval by the Board. Any grants of Benefits prior to the approval by the
shareholders of the Company shall be void if such approval is not obtained.
(l) Employee. Any person employed by the Employer.
--------
(m) Employer. The Company and all Affiliates.
--------
(n) Exchange Act. The Securities Exchange Act of 1934, as
------------
amended.
(o) Fair Market Value. The closing price of Shares on the New
-----------------
York Stock Exchange on a given date, or, in the absence of sales on a given
date, the closing price on the New York Stock Exchange on the last day on
which a sale occurred prior to such date.
(p) Fiscal Year. The taxable year of the Company which is the
-----------
calendar year.
(q) ISO. An Incentive Stock Option as defined in Section 422 of
---
the Code.
(r) NQSO. A Non-Qualified Stock Option, which is an Option that
----
does not qualify as an ISO.
(s) Option. An option to purchase Shares granted under the Plan.
------
(t) Other Stock Based Award. An award under ARTICLE XVIII that
-----------------------
is valued in whole or in part by reference to, or is otherwise based on,
Common Stock.
(u) Parent. Any corporation (other than the Company or a
------
Subsidiary) in an unbroken chain of corporations ending with the Company, if,
at the time of the grant of an Option or other Benefit, each of the
corporations (other than the Company or a Subsidiary) owns stock possessing
50% or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. The Company's present Parent is
General American Life Insurance Company.
(v) Participant. An individual who is granted a Benefit under
-----------
the Plan. Benefits may be granted only to Employees, employees and owners of
entities which are not Affiliates but which have a direct or indirect
ownership interest in an Employer or in which an Employer has a direct or
indirect ownership interest, individuals who, and employees and owners of
entities which, are customers and suppliers of an Employer, individuals who,
and employees and owners of entities which, render services to an Employer,
and individuals who, and employees and owners of entities which, have
ownership or business affiliations with any individual or entity previously
described.
(w) Performance Share. A Share awarded to a Participant under
-----------------
ARTICLE XVI of the Plan.
(x) Plan. The Reinsurance Group of America, Incorporated
----
Flexible Stock Plan and all amendments and supplements to it.
2
(y) Restricted Stock. Shares issued under ARTICLE XV of the
----------------
Plan.
(z) Rule 16b-3. Rule 16b-3 promulgated by the SEC under the
----------
Exchange Act, as amended, or any successor rule in effect from time to time.
(aa) SEC. The Securities and Exchange Commission.
---
(bb) Share. A share of Common Stock.
-----
(cc) SAR. A Stock Appreciation Right, which is the right to
---
receive an amount equal to the appreciation, if any, in the Fair Market Value
of a Share from the date of the grant of the right to the date of its payment.
(dd) Subsidiary. Any corporation, other than the Company, in an
----------
unbroken chain of corporations beginning with the Company if, at the time of
grant of an Option or other Benefit, each of the corporations, other than the
last corporation in the unbroken chain, owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
2.2 Other Definitions. In addition to the above definitions,
-----------------
certain words and phrases used in the Plan and any Agreement may be defined in
other portions of the Plan or in such Agreement.
2.3 Conflicts in Plan. In the case of any conflict in the terms
-----------------
of the Plan relating to a Benefit, the provisions in the ARTICLE of the Plan
which specifically grants such Benefit shall control those in a different
ARTICLE.
ARTICLE III
-----------
COMMON STOCK
------------
3.1 Number of Shares. The number of Shares which may be issued
----------------
or sold or for which Options, SARs or Performance Shares may be granted under
the Plan shall initially be 825,000 Shares. Such number of Shares shall
increase annually, effective as of the first day of each Fiscal Year,
commencing with the Fiscal Year beginning in 1994, by the number of Shares
equal to 5% of the number of Shares allocated to this Plan as of the first day
of such Fiscal Year. Such Shares may be authorized but unissued Shares, Shares
held in the treasury, or both.
3.2 Reusage. If an Option or SAR expires or is terminated,
-------
surrendered, or cancelled without having been fully exercised, if Restricted
Shares or Performance Shares are forfeited, or if any other grant results in
any Shares not being issued, the Shares covered by such Option or SAR, grant
of Restricted Shares, Performance Shares or other grant, as the case may be,
shall again be available for use under the Plan.
3.3 Adjustments. If there is any change in the Common Stock of
-----------
the Company by reason of any stock dividend, spin-off, split-up, spin-out,
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares, the number of SARs and number and class of shares
available for Options and grants of Restricted Stock, Performance Shares and
Other Stock Based Awards and the number of Shares subject to outstanding
Options, SARs, grants of Restricted Stock and Performance Shares which are not
vested, and Other Stock Based Awards, and the price thereof, as applicable,
shall be appropriately adjusted by the Committee.
3
ARTICLE IV
----------
ELIGIBILITY
-----------
4.1 Determined By Committee. The Participants and the Benefits
-----------------------
they receive under the Plan shall be determined solely by the Committee. In
making its determinations, the Committee shall consider past, present and
expected future contributions of Participants and potential Participants to
the Employer, including, without limitation, the performance of, or the
refraining from the performance of, services.
ARTICLE V
---------
ADMINISTRATION
--------------
5.1 Committee. The Plan shall be administered by the Committee.
---------
The Committee shall consist of three or more members of the Board each of whom
is a "Non-Employee Director" as defined in Rule 16b-3 and who is an "outside
director" as defined in Code Section 162(m)(4)(C)(i). The members of the
Committee shall be appointed by and shall serve at the pleasure of the Board,
which may from time to time appoint members in substitution for members
previously appointed and fill vacancies, however caused, in the Committee. The
Committee may select one of its members as its Chairman and shall hold its
meetings at such times and places as it may determine. A majority of its
members shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members. Any decision or determination reduced to
writing and signed by a majority of the members shall be fully as effective as
if it had been made by a majority vote at a meeting duly called and held.
5.2 Authority. Subject to the terms of the Plan, the Committee
---------
shall have discretionary authority to:
(a) determine the individuals to whom Benefits are granted, the
type and amounts of Benefits to be granted and the time of all such grants;
(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Benefit granted;
(c) interpret and construe the Plan and all Agreements;
(d) prescribe, amend and rescind rules and regulations relating
to the Plan;
(e) determine the content and form of all Agreements;
(f) determine all questions relating to Benefits under the Plan;
(g) maintain accounts, records and ledgers relating to Benefits;
(h) maintain records concerning its decisions and proceedings;
(i) employ agents, attorneys, accountants or other persons for
such purposes as the Committee considers necessary or desirable;
4
(j) take, at anytime, any action permitted by Section 9.1
irrespective of whether any Change of Control has occurred or is imminent; and
(k) do and perform all acts which it may deem necessary or
appropriate for the administration of the Plan and carry out the purposes of
the Plan.
5.3 Delegation. Except as required by Rule 16b-3 with respect to
----------
grants of Options, Stock Appreciation Awards, Performance Shares, Other Stock
Based Awards, or other Benefits to individuals who are subject to Section 16
of the Exchange Act or as otherwise required for compliance with Rule 16b-3,
Code Section 162(m), or other applicable law, the Committee may delegate all
or any part of its authority under the Plan to any Employee, Employees or
committee.
5.4 Adjudication of Claims. The Committee shall have full and
----------------------
complete discretionary authority to make all determinations as to the right to
Benefits under the Plan. In the event that a Participant believes he has not
received the Benefits to which he is entitled under the Plan, a claim shall be
made in writing to the Committee. The claim shall be reviewed by the
Committee. If the claim is approved or denied, in full or in part, the
Committee shall provide a written notice of approval or denial within 90 days
with, in the case of a denial, the specific reasons for the denial and
specific reference to the provisions of the Plan and/or Agreement upon which
the denial is based. A claim shall be deemed denied if the Committee does not
take any action within the aforesaid 90 day period. If a claim is denied or
deemed denied and a review is desired, the Participant shall notify the
Committee in writing within 60 days of the receipt of notice of denial or the
date on which the claim is deemed to be denied, as the case may be. In
requesting a review, the Participant may review the Plan or any document
relating to it and submit any written issues and comments he may deem
appropriate. The Committee shall then review the claim and provide a written
decision within 60 days. This decision, if adverse to the Participant, shall
state the specific reasons for the decision and shall include reference to
specific provisions of the Plan and/or Agreement on which the decision is
based. The Committee's decision on review shall be final and binding.
ARTICLE VI
----------
AMENDMENT
---------
6.1 Power of Board. Except as hereinafter provided, the Board
--------------
shall have the sole right and power to amend the Plan at any time and from
time to time.
6.2 Limitation. The Board may not amend the Plan, without
----------
approval of the shareholders of the Company:
(a) in a manner which would cause Options which are intended to
qualify as ISOs to fail to qualify;
(b) in a manner which would cause the Plan to fail to meet the
requirements of Rule 16b-3 or Code Section 162(m); or
(c) in a manner which would violate applicable law.
5
ARTICLE VII
-----------
TERM AND TERMINATION
--------------------
7.1 Term. The Plan shall commence as of the Effective Date and,
----
subject to the terms of the Plan, including those requiring approval by the
shareholders of the Company and those limiting the period over which ISOs or
any other Benefits may be granted, shall continue in full force and effect
until terminated.
7.2 Termination. The Plan may be terminated at any time by the
-----------
Board.
ARTICLE VIII
------------
MODIFICATION OR TERMINATION OF BENEFITS
---------------------------------------
8.1 General. Subject to the provisions of Section 8.2, the
-------
amendment or termination of the Plan shall not adversely affect a
Participant's right to any Benefit granted prior to such amendment or
termination.
8.2 Committee's Right. Any Benefit granted may be converted,
-----------------
modified, forfeited or cancelled, in whole or in part, by the Committee if and
to the extent permitted in the Plan or applicable Agreement or with the
consent of the Participant to whom such Benefit was granted.
ARTICLE IX
----------
CHANGE OF CONTROL
-----------------
9.1 Right of Committee. In order to maintain a Participant's
------------------
rights in the event of a Change in Control, the Committee, in its sole
discretion, may, in any Agreement evidencing a Benefit, or at any time prior
to, or simultaneously with or after a Change in Control, provide such
protection as it may deem necessary. Without, in any way, limiting the
generality of the foregoing sentence or requiring any specific protection, the
Committee may:
(a) provide for the acceleration of any time periods relating to
the exercise or realization of such Benefit so that such Benefit may be
exercised or realized in full on or before a date fixed by the Committee;
(b) provide for the purchase of such Benefit, upon the
Participant's request, for an amount of cash equal to the amount which could
have been attained upon the exercise or realization of such Benefit had such
Benefit been currently exercisable or payable;
(c) make such adjustment to the Benefits then outstanding as the
Committee deems appropriate to reflect such transaction or change; and/or
(d) cause the Benefits then outstanding to be assumed, or new
Benefits substituted therefor, by the surviving corporation in such change.
6
ARTICLE X
---------
AGREEMENTS AND CERTAIN BENEFITS
-------------------------------
10.1 Grant Evidenced by Agreement. The grant of any Benefit
----------------------------
under the Plan may be evidenced by an Agreement which shall describe the
specific Benefit granted and the terms and conditions of the Benefit. The
granting of any Benefit shall be subject to, and conditioned upon, the
recipient's execution of any Agreement required by the Committee. Except as
otherwise provided in an Agreement, all capitalized terms used in the
Agreement shall have the same meaning as in the Plan, and the Agreement shall
be subject to all of the terms of the Plan.
10.2 Provisions of Agreement. Each Agreement shall contain such
-----------------------
provisions that the Committee shall determine to be necessary, desirable and
appropriate for the Benefit granted which may include, but not be limited to,
the following with respect to any Benefit: description of the type of Benefit;
the Benefit's duration; its transferability; if an Option, the exercise price,
the exercise period and the person or persons who may exercise the Option; the
effect upon such Benefit of the Participant's death or termination of
employment; the Benefit's conditions; when, if, and how any Benefit may be
forfeited, converted into another Benefit, modified, exchanged for another
Benefit, or replaced; and the restrictions on any Shares purchased or granted
under the Plan.
10.3 Certain Benefits. Except as otherwise expressly provided in
----------------
an Agreement, any Benefit granted to an individual who is subject to Section
16 of the Exchange Act shall be not transferable other than by will or the
laws of descent and distribution and shall be exercisable during his lifetime
only by him, his guardian or his legal representative.
ARTICLE XI
----------
REPLACEMENT AND TANDEM AWARDS
-----------------------------
11.1 Replacement. The Committee may permit a Participant to
-----------
elect to surrender a Benefit in exchange for a new Benefit.
11.2 Tandem Awards. Awards may be granted by the Committee in
-------------
tandem. However, no Benefit may be granted in tandem with an ISO except SARs.
ARTICLE XII
-----------
PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING
--------------------------------------------
12.1 Payment. Upon the exercise of an Option or in the case of
-------
any other Benefit that requires a payment to the Company, the amount due the
Company is to be paid:
(a) in cash;
(b) by the tender to the Company of Shares owned by the optionee
and registered in his name having a Fair Market Value equal to the amount due
to the Company;
7
(c) in other property, rights and credits, including the
Participant's promissory note if permitted under applicable law; or
(d) by any combination of the payment methods specified in (a),
(b) and (c) above.
Notwithstanding, the foregoing, any method of payment other than (a) may be
used only with the consent of the Committee or if and to the extent so
provided in an Agreement. The proceeds of the sale of Common Stock purchased
pursuant to an Option and any payment to the Company for other Benefits shall
be added to the general funds of the Company or to the Shares held in
treasury, as the case may be, and used for the corporate purposes of the
Company as the Board shall determine.
12.2 Dividend Equivalents. Grants of Benefits in Shares or Share
--------------------
equivalents may include dividend equivalent payments or dividend credit
rights.
12.3 Deferral. The right to receive any Benefit under the Plan
--------
may, at the request of the Participant, be deferred for such period and upon
such terms as the Committee shall determine, which may include crediting of
interest on deferrals of cash and crediting of dividends on deferrals
denominated in Shares.
12.4 Withholding. The Company, at the time any distribution is
-----------
made under the Plan, whether in cash or in Shares, may withhold from such
distribution any amount necessary to satisfy federal, state and local income
tax withholding requirements with respect to such distribution. Such
withholding may be in cash or in Shares.
ARTICLE XIII
------------
OPTIONS
-------
13.1 Types of Options. It is intended that both ISOs and NQSOs
----------------
may be granted by the Committee under the Plan.
13.2 Shares for ISOs. The number of Shares for which ISOs may be
---------------
granted on or after the Effective Date shall not exceed 150,000 Shares.
13.3 Grant of ISOs and Option Price. Each ISO must be granted to
------------------------------
an Employee and granted within ten years from the Effective Date. The purchase
price for Shares under any ISO shall be no less than the Fair Market Value of
the Shares at the time the Option is granted.
13.4 Other Requirements for ISOs. The terms of each Option which
---------------------------
is intended to qualify as an ISO shall meet all requirements of Section 422 of
the Code.
13.5 NQSOs. The terms of each NQSO shall provide that such Option
-----
will not be treated as an ISO. The purchase price for Shares under any NQSO
shall be equal to or greater than the Fair Market Value of the Shares at the
time the Option is granted.
13.6 Determination by Committee. Except as otherwise provided in
--------------------------
Section 13.2 through Section 13.5, the terms of all Options shall be
determined by the Committee.
8
13.7 Limitation on Shares Covered by Options. The maximum number
---------------------------------------
of Shares with respect to which such Options may be granted to any Participant
in any 1 year period shall not exceed 200,000 shares. For purposes of the
preceding sentence, the Shares covered by an Option that is cancelled shall
count against the maximum number of Shares, and, if the exercise price under
an Option is reduced, the transaction shall be treated as a cancellation of
the Option and a grant of a new Option.
ARTICLE XIV
-----------
SARS
----
14.1 Grant and Payment. The Committee may grant SARs. Upon
-----------------
electing to receive payment of a SAR, a Participant shall receive payment in
cash, in Common Stock, or in any combination of cash and Common Stock, as the
Committee shall determine.
14.2 Grant of Tandem Award. The Committee may grant SARs in
---------------------
tandem with an Option, in which case: the exercise of the Option shall cause a
correlative reduction in SARs standing to a Participant's credit which were
granted in tandem with the Option; and the payment of SARs shall cause a
correlative reduction of the Shares under such Option.
14.3 ISO Tandem Award. When SARs are granted in tandem with an
----------------
ISO, the SARs shall have such terms and conditions as shall be required for
the ISO to qualify as an ISO.
14.4 Payment of Award. SARs shall be paid, to the extent payment
----------------
is elected by the Participant (and is otherwise due and payable), as soon as
practicable after the date on which such election is made.
14.5 Limitation on SARs. The maximum number of SARs which may be
------------------
granted to any Participant in any 1 year period shall not exceed 15,000 SARs.
For purposes of the preceding sentence, any SARs that are cancelled shall
count against the maximum number of SARs, and, if the Fair Market Value of a
Share on which the appreciation under a SAR will be calculated is reduced, the
transaction shall be treated as a cancellation of the SAR and a grant of a new
SAR.
ARTICLE XV
----------
RESTRICTED STOCK
----------------
15.1 Description. The Committee may grant Benefits in Shares
-----------
available under ARTICLE III of the Plan as Restricted Stock. Shares of
Restricted Stock shall be issued and delivered at the time of the grant but
shall be subject to forfeiture until provided otherwise in the applicable
Agreement or the Plan. Each certificate representing Shares of Restricted
Stock shall bear a legend referring to the Plan and the risk of forfeiture of
the Shares and stating that such Shares are nontransferable until all
restrictions have been satisfied and the legend has been removed. The grantee
shall be entitled to full voting and dividend rights with respect to all
shares of Restricted Stock from the date of grant.
15.2 Cost of Restricted Stock. Grants of Shares of Restricted
------------------------
Stock shall be made at a per Share cost to the Participant equal to par value.
9
15.3 Non-Transferability. Shares of Restricted Stock shall not
-------------------
be transferable until after the removal of the legend with respect to such
Shares.
ARTICLE XVI
-----------
PERFORMANCE SHARES
------------------
16.1 Description. Performance Shares are the right of an
-----------
individual to whom a grant of such Shares is made to receive Shares or cash
equal to the Fair Market Value of such Shares at a future date in accordance
with the terms of such grant. Generally, such right shall be based upon the
attainment of targeted profit and/or performance objectives.
16.2 Grant. The Committee may grant an award of Performance
-----
Shares. The number of Performance Shares and the terms and conditions of the
grant shall be set forth in the applicable Agreement.
ARTICLE XVII
------------
CASH AWARDS
-----------
17.1 Grant. The Committee may grant Cash Awards at such times
-----
and (subject to Section 17.2) in such amounts as it deems appropriate.
17.2 Limitation on Amount. The Amount of any Cash Award in any
--------------------
Fiscal Year to any Participant who is subject to Section 16 of the Exchange
Act shall not exceed the greater of $100,000 or 50% of his cash compensation
(excluding any Cash Award under this ARTICLE XVII) for such Fiscal Year.
17.3 Restrictions. Cash Awards may be subject or not subject to
------------
conditions (such as an investment requirement), restricted or nonrestricted,
vested or subject to forfeiture and may be payable currently or in the future
or both.
ARTICLE XVIII
-------------
OTHER STOCK BASED AWARDS AND OTHER BENEFITS
-------------------------------------------
18.1 Other Stock Based Awards. The Committee shall have the
------------------------
right to grant Other Stock Based Awards which may include, without limitation,
the grant of Shares based on certain conditions, the payment of cash based on
the performance of the Common Stock, and the grant of securities convertible
into Shares.
18.2 Other Benefits. The Committee shall have the right to
--------------
provide types of Benefits under the Plan in addition to those specifically
listed, if the Committee believes that such Benefits would further the
purposes for which the Plan was established.
ARTICLE XIX
-----------
MISCELLANEOUS PROVISIONS
------------------------
19.1 Underscored References. The underscored references
----------------------
contained in the Plan are included only for convenience, and they shall not be
construed as a part of the Plan or in any respect affecting or modifying its
provisions.
10
19.2 Number and Gender. The masculine and neuter, wherever used
-----------------
in the Plan, shall refer to either the masculine, neuter or feminine; and,
unless the context otherwise requires, the singular shall include the plural
and the plural the singular.
19.3 Governing Law. This Plan shall be construed and
-------------
administered in accordance with the laws of the State of Missouri.
19.4 Purchase for Investment. The Committee may require each
-----------------------
person purchasing Shares pursuant to an Option or other award under the Plan
to represent to and agree with the Company in writing that such person is
acquiring the Shares for investment and without a view to distribution or
resale. The certificates for such Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer. All
certificates for Shares delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem
advisable under all applicable laws, rules and regulations, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate references to such restrictions.
19.5 No Employment Contract. The adoption of the Plan shall not
----------------------
confer upon any Employee any right to continued employment nor shall it
interfere in any way with the right of the Employer to terminate the
employment of any of its Employees at any time.
19.6 No Effect on Other Benefits. The receipt of Benefits under
---------------------------
the Plan shall have no effect on any benefits to which a Participant may be
entitled from the Employer, under another plan or otherwise, or preclude a
Participant from receiving any such benefits.
11
REINSURANCE GROUP OF AMERICA, INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint Jack B. Lay, James E. Sherman and
William L. Hutton, or any of them, the true and lawful attorneys-in-fact,
agents and proxies of the undersigned to represent the undersigned at the
Annual Meeting of the Stockholders of REINSURANCE GROUP OF AMERICA,
INCORPORATED to be held May 23, 2007, commencing at 2:00 p.m., St. Louis time,
at the Company's offices at 1370 Timberlake Manor Parkway, Chesterfield,
Missouri 63017, and at any and all adjournments and postponements of said
meeting, and to vote all the shares of Common Stock of the Company standing on
the books of the Company in the name of the undersigned as specified and in
their discretion on such other business as may properly come before the
meeting.
PLEASE COMPLETE, SIGN AND DATE OTHER SIDE AND RETURN PROMPTLY.
------------------------------------------------------------------------
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------------
FOLD AND DETACH HERE
April 11, 2007
Dear Shareholder:
We invite you to attend the 2007 Annual Meeting of Stockholders of
Reinsurance Group of America, Incorporated, to be held on May 23, 2007 at
the Company's offices at 1370 Timberlake Manor Parkway, Chesterfield, Missouri
63017 at 2:00 p.m.
It is important that your shares are represented at the meeting. Whether
or not you plan to attend the meeting, please review the enclosed proxy
materials, complete the proxy form above, detach it, and return it promptly
in the envelope provided.
Please
Mark Here / /
for Address
Change or
Comments
SEE REVERSE SIDE
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING:
ELECTION OF DIRECTORS
1. To elect three directors for terms expiring in 2010;
01 William J. Bartlett
02 Alan C. Henderson
03 A. Greig Woodring
FOR all nominees WITHHOLD AUTHORITY
listed (except as marked to vote for all
to the contrary) nominees listed
/ / / /
2. To approve an amendment to the Company's FOR AGAINST ABSTAIN
Flexible Stock Plan; [ ] [ ] [ ]
3. To authorize the sale of certain types of FOR AGAINST ABSTAIN
of securities from time to time to MetLife, [ ] [ ] [ ]
Inc., the beneficial owner of a majority of
the Company's common shares, or affiliates
of MetLife, Inc.;
(INSTRUCTION: to withhold authority to vote for any individual nominee,
strike a line through the nominee's name on the list above.)
The undersigned hereby acknowledges receipt of the Notice of the
2007 Annual Meeting of Stockholders and the accompanying Proxy
Statement.
This proxy will be voted as specified. If no specification is made, this
proxy will be voted FOR Items 1, 2 and 3.
Dated:__________________________________________________________, 2007
______________________________________________________________________
Signature
______________________________________________________________________
Signature if held jointly
If Stock is owned in joint names, both owners must sign. If address at
left is incorrect, please write in the correct information.
PLEASE SIGN AS REGISTERED AND RETURN PROMPTLY TO:
REINSURANCE GROUP OF AMERICA, INCORPORATED, MIDTOWN STATION, PO BOX 870,
NEW YORK, NY 10138
------------------------------------------------------------------------------
FOLD AND DETACH HERE
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 11:59 PM EASTERN TIME
THE DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED,
SIGNED AND RETURNED YOUR PROXY CARD.
--------------------------------------- -----------------------------------------
INTERNET TELEPHONE
http://www.proxyvoting.com/rga 1-866-540-5760
Use the internet to vote your proxy. Use any touch-tone telephone to
Have your proxy card in hand when OR vote your proxy. Have your proxy
you access the web site. card in hand when you call.
--------------------------------------- -----------------------------------------
If you vote your proxy by Internet or by telephone, you do NOT need
to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and
return it in the enclosed postage-paid envelope.