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OMB APPROVAL |
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OMB Number:
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3235-0059 |
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Expires:
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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x Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
CONSECO, INC.
(Name of Registrant as Specified In Its Charter)
Conseco, Inc.
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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x No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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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): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o 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. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 23, 2006
Notice Is Hereby Given That
the Annual Meeting of Shareholders of Conseco, Inc. (the
Company), will be held at the Conseco Conference
Center, 530 College Drive, Carmel, Indiana, at
10:00 a.m., local time, on May 23, 2006, for the
following purposes:
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1. |
To elect eight directors, each for a one-year term ending in
2007; |
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2. |
To ratify the appointment of PricewaterhouseCoopers LLP as the
Companys independent registered public accounting firm for
2006; and |
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3. |
To consider such other matters, if any, as may properly come
before the meeting. |
Holders of record of outstanding shares of the common stock of
the Company as of the close of business on April 4, 2006,
are entitled to notice of and to vote at the meeting. Holders of
common stock have one vote for each share held of record.
Whether or not you plan to be present at the meeting, please
complete, sign and return the enclosed form of proxy. No
postage is required to return the form of proxy in the enclosed
envelope. The proxies of shareholders who attend the meeting in
person may be withdrawn, and such shareholders may vote
personally at the meeting.
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By Order of the Board of Directors |
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Karl W. Kindig, Assistant Secretary |
April 12, 2006
Carmel, Indiana
TABLE OF CONTENTS
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Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Conseco,
Inc. (Conseco or the Company) for the
Annual Meeting of Shareholders (the Annual Meeting)
to be held at the Conseco Conference Center, 530 College
Drive, Carmel, Indiana on May 23, 2006, at 10:00 a.m.,
local time. It is expected that this Proxy Statement and proxy
will be mailed to the shareholders on or about April 20,
2006. The enclosed proxy is solicited by our Board of
Directors. Proxies are being solicited principally by mail.
Directors, officers and regular employees of Conseco may also
solicit proxies in person, through the mail or by
telecommunications. All expenses relating to the preparation and
mailing to the shareholders of the Notice, Proxy Statement and
form of proxy are to be paid by Conseco.
If the enclosed form of proxy is properly executed and returned
in time for the meeting, the named proxy holders will vote the
shares represented by the proxy in accordance with the
instructions marked on the proxy. Proxies returned unmarked will
be voted for each of the nominees for director (Proposal 1)
and for the ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for 2006 (Proposal 2). A
shareholder may revoke a proxy at any time before it is
exercised by mailing or delivering to Conseco a written notice
of revocation or a later-dated proxy, or by attending the
meeting and voting in person.
Only holders of record of shares of Consecos common stock
as of the close of business on April 4, 2006, will be
entitled to vote at the meeting. On such record date, Conseco
had 152,826,798 shares of common stock outstanding and
entitled to vote. Each share of common stock will be entitled to
one vote with respect to each matter submitted to a vote at the
meeting. The presence in person or by proxy of the holders of a
majority of the outstanding shares of common stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum.
The election of directors (Proposal 1) will be determined
by the plurality of the votes cast by the holders of shares
represented (in person or by proxy) and entitled to vote at the
Annual Meeting provided a quorum is present. Consequently, the
eight nominees who receive the greatest number of votes cast
will be elected as directors of the Company. The vote required
to approve the ratification of the appointment of our
independent registered public accounting firm (Proposal 2)
is the affirmative vote of the holders of a majority of the
shares represented and entitled to vote at the Annual Meeting
provided a quorum is present. Shares present which are properly
withheld as to voting, and shares present with respect to which
a broker indicates that it does not have authority to vote
(broker non-votes), will not be counted for any
purpose other than determining the presence of a quorum at the
Annual Meeting. As a result, abstentions from voting or broker
non-votes will have the same legal effect as voting against
Proposal 2.
1
SECURITIES OWNERSHIP
The following table sets forth certain information concerning
the beneficial ownership of our common stock as of April 4,
2006 (except as otherwise noted) by each person known to us who
beneficially owns more than 5% of the outstanding shares of our
common stock, each of our directors, each of our current
executive officers that are named in the Summary Compensation
Table on page 14 and all of our directors and executive
officers as a group.
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Shares Beneficially Owned | |
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Title of Class |
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Name of Beneficial Owner |
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Percentage | |
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Common stock
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Lord, Abbett & Co., LLC(1) |
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11,113,513 |
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7.4 |
% |
Common stock
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Massachusetts Financial Services Company(2) |
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9,632,791 |
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6.3 |
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Common stock
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Hotchkis and Wiley Capital Management, LLC(3) |
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8,033,448 |
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5.3 |
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Common stock
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R. Glenn Hilliard(4) |
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1,107,802 |
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* |
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Common stock
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William S. Kirsch(5) |
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518,750 |
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Common stock
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Debra J. Perry(6) |
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13,173 |
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Common stock
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Philip R. Roberts(7) |
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20,032 |
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* |
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Common stock
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Neal C. Schneider(7) |
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20,032 |
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Common stock
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Michael S. Shannon(7) |
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30,032 |
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Preferred stock, Class B
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8,000 |
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Common stock
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Michael T. Tokarz(7) |
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20,032 |
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Common stock
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John G. Turner(7) |
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21,032 |
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Common stock
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Eugene M. Bullis(8) |
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318,589 |
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* |
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Common stock
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James E. Hohmann(9) |
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150,000 |
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* |
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Common stock
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Eric R. Johnson(10) |
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138,511 |
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* |
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Common stock
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John R. Kline(11) |
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92,341 |
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Common stock
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All directors and executive officers as a group
(12 persons)(12) |
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2,450,326 |
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1.6 |
% |
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(1) |
Based solely on the Amendment No. 1 to Schedule 13G
filed with the SEC on February 1, 2006 by Lord
Abbett & Co., LLC. The business address for Lord
Abbett & Co., LLC is 90 Hudson Street, Jersey
City, NJ 07302. |
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(2) |
Based solely on the Amendment No. 1 to Schedule 13G
filed with the SEC on February 14, 2006 by Massachusetts
Financial Services Company. Includes 142,365 shares
resulting from the assumed conversion of our
3.50% convertible debentures due 2035. The business address
for Massachusetts Financial Services Company is
500 Boylston Street, Boston, MA 02116. |
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(3) |
Based solely on the Schedule 13G filed with the SEC on
February 13, 2006 by Hotchkis and Wiley Capital Management,
LLC. The business address for Hotchkis and Wiley Capital
Management, LLC is 725 S. Figueroa Street,
39th Floor, Los Angeles, CA 90017. |
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(4) |
Includes 98,119 shares held by a charitable foundation, of
which Mr. Hilliard is a trustee. He disclaims beneficial
ownership of such shares. Also includes options, exercisable
currently or within 60 days of April 4, 2006, to
purchase 418,333 shares of common stock. |
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(5) |
Includes options, exercisable currently or within 60 days
of April 4, 2006, to purchase 118,750 shares of common
stock. |
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(6) |
Includes options, exercisable currently or within 60 days
of April 4, 2006, to purchase 6,034 shares of common
stock. |
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(7) |
Includes options, exercisable currently or within 60 days
of April 4, 2006, to purchase 9,367 shares of common
stock. |
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(8) |
Includes options, exercisable currently or within 60 days
of April 4, 2006, to purchase 125,000 shares of common
stock. |
2
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(9) |
Includes options, exercisable currently or within 60 days
of April 4, 2006, to purchase 50,000 shares of common
stock. |
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(10) |
Includes options, exercisable currently or within 60 days
of April 4, 2006, to purchase 75,000 shares of common
stock. |
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(11) |
Includes options, exercisable currently or within 60 days
of April 4, 2006, to purchase 50,000 shares of common
stock. |
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(12) |
Includes 1,038,213 shares of restricted stock which have
not yet vested and options, exercisable currently or within
60 days of April 4, 2006, to purchase an aggregate of
889,952 shares of common stock held by directors and
executive officers. |
3
PROPOSAL 1
ELECTION OF DIRECTORS
Our board of directors is currently comprised of eight members,
divided into two classes as follows: Messrs. Kirsch,
Roberts and Tokarz and Ms. Perry are Class I
Directors, and Messrs. Hilliard, Schneider, Shannon and
Turner are Class II Directors. The terms of office of the
current Class I Directors and the current Class II
Directors expire at our 2006 annual meeting of shareholders.
Other than the term of office of the initial Class II
Directors (which was two years), the term of office of each
class of directors will expire at the next succeeding annual
meeting of shareholders. Accordingly, all directors are now
elected annually for one-year terms. All directors will serve
until their successors are duly elected and qualified.
Unless authority is specifically withheld, the shares of common
stock represented by the enclosed form of proxy will be voted in
favor of all nominees. Should any of the nominees become unable
to accept election, the persons named in the proxy will exercise
their voting power in favor of such person or persons as the
board of directors of Conseco may recommend. All of the nominees
have consented to being named in this Proxy Statement and to
serve if elected. The board of directors knows of no reason why
any of its nominees would be unable to accept election.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
Set forth below is information regarding each person nominated
for election as a Class I or Class II Director.
Nominees for Election as Class I Directors:
William S. Kirsch, 49, has been president and
chief executive officer and director since August 2004. From
September 2003 until August 2004 he served as executive vice
president, general counsel and secretary of Conseco.
Mr. Kirsch was with the law firm of Kirkland &
Ellis LLP from 1981 until 2004. Mr. Kirsch also serves on
the Board of Trustees of Northwestern University, the Board of
Directors of Childrens Inner City Education Fund, the
Board of Advisors of Sun Capital, the Deans Circle and the
Board of Visitors of Stanford Law School and the Board of
Directors of Boise Cascade LLC.
Debra J. Perry, 54, has served as a director of
Conseco since June 2004. From 2001 until 2004, she served as
senior managing director of global ratings and research at
Moodys Investors Service. From 1999 until 2001,
Ms. Perry served as chief administrative officer of
Moodys Corporation and from 1992 until 1999 she served in
a variety of management positions with Moodys including
group managing director of the Finance, Securities and Insurance
Group (which rated all non-bank financial institutions
worldwide). Ms. Perry is also a director of MBIA Inc.
Philip R. Roberts, 64, joined our board of
directors in September 2003. Since 2000, Mr. Roberts has
been principal of Roberts Ventures L.L.C., consultant for merger
and acquisition and product development for investment
management firms. From 1996 until 2000, Mr. Roberts served
as chief investment officer of trust business for Mellon
Financial Corporation and headed its institutional asset
management businesses from 1990 to 1996.
Michael T. Tokarz, 56, joined our board of
directors in September 2003. Mr. Tokarz is the chairman of
MVC Capital, Inc. (a registered investment company). In
addition, he has been a managing member of the Tokarz Group, LLC
(venture capital investments) since 2002. He was a general
partner with Kohlberg Kravis Roberts & Co. from 1985
until he retired in 2002. Mr. Tokarz is also a director of
Walter Industries, Inc, Idex Corp., and Dakota Growers Pasta
Companies, Inc.
Nominees for Election as Class II Directors:
R. Glenn Hilliard, 63, has served as chairman
of our board of directors since September 2003. During the
period from August 2004 until September 2005, he served as
executive chairman and at all other times
4
since September 2003 he has served as non-executive Chairman.
Mr. Hilliard has been chairman and chief executive officer
of Hilliard Group, LLC, an investment and consulting firm, since
2003. From 1999 until his retirement in 2003, Mr. Hilliard
served as chairman, chief executive officer and a member of the
executive committee for ING Americas. From 1994 to 1999 he
was chairman and CEO of ING North America.
Mr. Hilliard is a director of Alea Group Holdings (Bermuda)
Ltd. and Trustee of Nations Separate Account Trust
(73 funds).
Neal C. Schneider, 61, joined our board of
directors in September 2003. Between 2002 and 2003,
Mr. Schneider was a partner of Smart and Associates, LLP, a
business advisory and accounting firm. Between 2000 and 2002, he
was an independent consultant. Until his retirement in 2000,
Mr. Schneider spent 34 years with Arthur
Andersen & Co., including service as partner in charge
of the Worldwide Insurance Industry Practice and the
North American Financial Service Practice.
Mr. Schneider has been chairman of the board of
PMA Capital Corporation since 2003.
Michael S. Shannon, 47, joined our board of
directors in September 2003. Mr. Shannon has served as
president and chief executive officer of KSL II Management
Operations, LLC, dba KSL Resorts (manager of golf
courses and destination resorts in the U.S.) since 2004,
and he has served as Managing Director of KSL Capital Partners
since 2005. He was
co-founder of
KSL Recreation Corporation and from 1992 to 2004 served as
its president and chief executive officer. Mr. Shannon was
lead director of ING Americas before joining our board.
Mr. Shannon is also a director of ING Direct.
John G. Turner, 66, joined our board of directors
in September 2003. Mr. Turner has been chairman of
Hillcrest Capital Partners, a private equity investment firm
since 2002. Mr. Turner served as chairman and CEO of
ReliaStar Financial Corp. from 1991 until it was acquired by ING
in 2000. After the acquisition he became vice chairman and a
member of the executive committee for ING Americas until
his retirement in 2002. Mr. Turner is a director of Hormel
Foods Corporation and ING Funds.
Board Committees
Audit and Enterprise Risk Committee. The Audit and
Enterprise Risk Committees functions, among others, are to
recommend the appointment of independent accountants; review the
arrangements for and scope of the audit by independent
accountants; review the independence of the independent
accountants; consider the adequacy of the system of internal
accounting controls and review any proposed corrective actions;
review and monitor the Companys compliance with legal and
regulatory requirements; and discuss with management and the
independent accountants our draft annual and quarterly financial
statements and key accounting and/or reporting matters. The
Audit and Enterprise Risk Committee currently consists of
Messrs. Schneider, Roberts and Turner and Ms. Perry,
with Mr. Schneider serving as chairman of the committee and
as audit committee financial expert, as defined
under Securities and Exchange Commission rules promulgated under
the Sarbanes-Oxley Act. All current members of the Audit and
Enterprise Risk Committee are independent within the
meaning of the regulations adopted by the Securities and
Exchange Commission and the listing requirements adopted by the
New York Stock Exchange regarding audit committee membership.
The current members also satisfy the financial literacy
qualifications of the New York Stock Exchange listing standards.
The committee met on 11 occasions in 2005. A copy of the Audit
and Enterprise Risk Committees charter is available on our
website at www.conseco.com.
Governance and Strategy Committee. The Governance
and Strategy Committee is responsible for, among other things,
establishing criteria for board membership; considering,
recommending and recruiting candidates to fill new positions on
the board; reviewing candidates recommended by shareholders; and
considering questions of possible conflicts of interest
involving board members, executive officers and key employees.
It is also responsible for developing principles of corporate
governance and recommending them to the board for its approval
and adoption, and reviewing periodically these principles of
corporate governance to insure that they remain relevant and are
being complied with. The Governance and Strategy Committee
currently consists of Messrs. Tokarz and Shannon and
Ms. Perry, with Mr. Tokarz serving as chairman of the
committee. All current members of the Governance and Strategy
Committee are
5
independent within the meaning of the listing
requirements adopted by the New York Stock Exchange
regarding nominating committee membership. The committee held
three meetings during 2005. A copy of the Governance and
Strategy Committees charter is available on our website at
www.conseco.com. The Governance and Strategy Committee
does not have a written policy regarding shareholder nominations
for director candidates. The Governance and Strategy Committee
will, however, consider candidates for director nominees put
forward by shareholders. See Shareholder Proposals for
2007 Annual Meeting for a description of the advance
notice procedures for shareholder nominations for directors.
Human Resources and Compensation Committee. The
Human Resources and Compensation Committee is responsible for,
among other things, approving overall compensation policy;
recommending to the board the compensation of the chief
executive officer and other senior officers; and reviewing and
administering our incentive compensation and equity award plans.
The Human Resources and Compensation Committee currently
consists of Messrs. Turner, Tokarz and Shannon, with
Mr. Shannon serving as chairman of the committee. All
current members of the Human Resources and Compensation
Committee are independent within the meaning of the
listing requirements adopted by the New York Stock Exchange
regarding compensation committee membership. The committee met
on 11 occasions in 2005. A copy of the Human Resources and
Compensation Committees charter is available on our
website at www.conseco.com.
Investment Committee. The Investment Committee is
responsible for, among other things, reviewing investment
policies, strategies and programs; reviewing the procedures
which Conseco utilizes in determining that funds are invested in
accordance with policies and limits approved by it; and
reviewing the quality and performance of our investment
portfolios and the alignment of asset duration to liabilities.
The Investment Committee currently consists of
Messrs. Kirsch, Schneider and Roberts, with
Mr. Roberts serving as chairman of the committee. The
committee met on five occasions in 2005. A copy of the
Investment Committees charter is available on our website
at www.conseco.com.
Executive Committee. Subject to the requirements
of applicable law, including our certificate of incorporation
and bylaws, the Executive Committee is responsible for
exercising, as necessary, the authority of the board of
directors in the management of our business affairs during
intervals between board meetings. The Executive Committee
currently consists of Messrs. Hilliard, Kirsch and Turner,
with Mr. Turner serving as chairman of the committee. A
copy of the Executive Committees charter is available on
our website at www.conseco.com.
Director Compensation
Our non-employee directors receive an annual cash retainer of
$70,000. The chairman of the Audit and Enterprise Risk Committee
receives an additional annual cash fee of $30,000, and directors
who serve as chairman of one of our other board committees
receive an additional annual cash fee of $20,000. Each member of
the Audit and Enterprise Risk Committee (including the chairman)
receives an additional annual cash retainer of $15,000. Cash
fees are paid quarterly in advance. Our non-employee directors
are also entitled to receive $70,000 in annual equity awards. In
addition, the directors (other than Mr. Kirsch and
Mr. Hilliard) were awarded a one-time equity grant for
joining the Board, consisting of 2,000 shares of restricted
common stock and an option to purchase 10,000 shares
of common stock. Directors are reimbursed for
out-of-pocket expenses
including first class airfare incurred in connection with the
6
performance of their responsibilities as directors. The
compensation paid in 2005 to our non-employee directors is
summarized in the table below:
Compensation of Non-Employee Directors
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Fees Paid | |
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All Other | |
Name |
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Total | |
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in Cash | |
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Stock Awards(1) | |
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Compensation | |
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R. Glenn Hilliard(2)
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$ |
175,996 |
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$ |
32,003 |
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$ |
104,993 |
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$ |
39,000 |
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Debra J. Perry
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154,995 |
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85,000 |
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69,995 |
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0 |
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Philip R. Roberts
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174,995 |
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105,000 |
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69,995 |
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0 |
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Neal C. Schneider
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184,995 |
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115,000 |
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69,995 |
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0 |
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Michael S. Shannon
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159,995 |
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90,000 |
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69,995 |
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0 |
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Michael T. Tokarz
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159,995 |
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90,000 |
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69,995 |
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0 |
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John G. Turner
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174,995 |
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105,000 |
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69,995 |
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0 |
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(1) |
On November 30, 2005, the non-employee directors received
shares of Conseco common stock in payment of the equity portion
of their annual director fee. All non-employee directors other
than Mr. Hilliard received 3,122 shares of common
stock with a market value on that date of $69,995. Effective
September 2005, for serving as non-executive chairman,
Mr. Hilliard receives an annual fee equal to 150% of the
annual fee paid to the other non-employee directors.
Accordingly, he received 4,683 shares of common stock on
November 30, 2005. |
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(2) |
The cash director fees and stock awards shown for
Mr. Hilliard were paid during the period from
September 10, 2005 through December 31, 2005 when he
served as non-executive chairman. See the description above
regarding the terms of Mr. Hilliards agreement with
the Company and see the Summary Compensation Table on
page 14 for information regarding compensation received by
Mr. Hilliard in all capacities during 2005. The other
compensation shown above for Mr. Hilliard represents the
amount paid to him as reimbursement for office expenses. |
Board Meetings and Attendance
During 2005, the board of directors met on 12 occasions. All
directors attended at least 75 percent of the aggregate
meetings of the board and the committees on which they served.
The non-management
directors regularly meet in executive session without the CEO or
any other member of management. Mr. Hilliard presides at
such executive sessions.
Director Independence
The Board annually determines the independence of directors
based on a review by the directors. Although the board of
directors has not adopted categorical standards of materiality
for independence purposes, no director is considered independent
unless the board has determined that he or she has no material
relationship with Conseco, either directly or as an officer,
shareholder or partner of an organization that has a material
relationship with Conseco. Material relationships can include
commercial, industrial, banking, consulting, legal, accounting,
charitable and familial relationships, among others. The board
considers the New York Stock Exchange guidelines in making its
determination regarding independence and the materiality of any
relationships with Conseco. The board has determined that all
current directors other than Mr. Kirsch and
Mr. Hilliard are independent.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that
applies to all officers, directors and employees regarding their
obligations in the conduct of the Companys affairs. A copy
of the Code of Business Conduct and Ethics is available on our
website at www.conseco.com.
7
Corporate Governance Guidelines
Conseco is committed to best practices in corporate governance.
Upon the recommendation of the Governance and Strategy
Committee, Conseco adopted a set of Conseco Board Governance
Operating Guidelines. A copy of the Conseco Board Governance
Operating Guidelines is available on our website at
www.conseco.com.
Communications with Directors
Shareholders wishing to communicate directly with Consecos
board of directors or any one or more individual members
(including the presiding director or the
non-management
directors as a group) are welcome to do so by writing to the
Conseco Corporate Secretary, 11825 North Pennsylvania
Street, Carmel, Indiana, 46032. The Corporate Secretary will
forward any communications to the director or directors
specified by the shareholder.
In addition, Conseco has a policy that all directors attend the
annual meeting of shareholders. All of our directors attended
the annual meeting of shareholders held in 2005.
Compensation Committee Interlocks
None of the members of the Human Resources and Compensation
Committee is or has been one of our officers or employees. None
of our executive officers serves, or served during 2005, as a
member of the board of directors or compensation committee of
any entity that has one or more executive officers serving on
our board of directors or Human Resources and Compensation
Committee.
Copies of Corporate Documents
In addition to being available on our website at
www.conseco.com, we will provide to any person, without charge,
a printed copy of our committee charters, Code of Ethics and
Board of Governance Operating Guidelines upon request to Conseco
Investor Relations, 11825 N. Pennsylvania Street,
Carmel, Indiana 46032; telephone
(317) 817-2893 or
email ir@conseco.com.
8
EXECUTIVE COMPENSATION
Report of the Human Resources and Compensation Committee on
Executive Compensation
Duties and Responsibilities
The Human Resources and Compensation Committee of Consecos
board of directors, which is composed entirely of independent
directors (the Compensation Committee), assists the
board in carrying out its responsibilities relating to the
compensation of the Companys executives. The Compensation
Committee has overall responsibility for approving and
evaluating the executive compensation and benefit plans,
policies and programs of the Company, including:
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Approving the overall compensation and benefits policy of the
Company; |
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Making recommendations to the board of directors with respect to
new cash-based and/or equity-based incentive plans; |
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Administering the Companys annual and long-term incentive
plans, and approving awards made thereunder; |
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Establishing annual and long-term performance goals and
objectives for our executive officers and key senior officers; |
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Evaluating the performance of the CEO, other executive officers
and key senior officers in light of performance goals and
objectives; |
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Recommending to the board of directors the compensation of the
CEO and approving the compensation of the other executive
officers and key senior officers based upon the evaluation of
the performance of the CEO and such other officers, respectively; |
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Approving appointments and promotions of executive officers and
key senior officers; and |
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Preparing an annual performance self-evaluation of the
Compensation Committee. |
The Compensation Committee has adopted a written charter. The
current charter was approved and adopted in March 2005 and is
available on the Companys website at
www.conseco.com. To assist in its duties, the
Compensation Committee engaged a compensation consulting firm to
provide information and advice with respect to the compensation
of executive officers and directors in the financial services
and insurance industries, as well as with regard to general
industry trends.
Compensation Philosophy
The Companys executive compensation program is designed to
enable the Company to attract, motivate and retain the executive
management needed for achieving the Companys goals. The
goal of the Compensation Committee is to align executive
compensation with shareholder value by rewarding achievement of
financial and other Company goals as well as recognizing
individual contributions. To ensure that the Company can attract
and retain the best talent, the Compensation Committee annually
reviews pay data for other companies of similar size and
industry focus. For executives, the market analysis is based
primarily on a review of 15 companies (the Peer
Group), supplemented by financial services and general
industry survey data. For 2005, the Peer Group included the
following companies: AFLAC Incorporated, Amerus Group Co.,
Assurant, Inc., AXIS Capital Holdings Limited, Delphi Financial
Group, Inc., Jefferson-Pilot Corporation, Genworth Financial,
Inc., Lincoln National Corporation, Nationwide Financial
Services, Inc., The Phoenix Companies, Inc., Protective Life
Corporation, StanCorp Financial Group, Inc., Torchmark
Corporation, UnumProvident Corporation and XL Capital Ltd. In
general, the Compensation Committee sets target
compensation (i.e., the expected compensation earned for target
performance) for executives at median competitive levels,
relative to the market data described above. The incentive
portions of the compensation package are leveraged so as to
generate top quartile competitive pay should performance
significantly outpace target expectations. As a result, a
substantial portion of each executive officers total
compensation is variable, based on the Companys
pay-for-performance system.
9
The Compensation Committee believes it is important to assess
each element of the executive pay package in relation to the
overall compensation and benefits program. As part of the
evaluation process, the Compensation Committee reviews tally
sheets for each of the executive officers. The tally sheets
provide the committee members with complete historical
information on each executive regarding promotions, pay
increases, bonus awards, equity grants, as well as current
in-the-money value of
all vested and unvested equity holdings, benefits and
perquisites, and estimates of contingent, event-based
compensation such as severance or
change-in-control
payments. The Compensation Committee considers all of this
information, in combination with market data, in making
decisions regarding changes to Company programs or individual
pay levels.
Components of Compensation
Base Salary. Base salaries are reviewed annually
and increased, as appropriate, based on individual performance,
company-wide pay levels, market factors and other data that the
Compensation Committee deems relevant. On average, the
Compensation Committee strives to manage executive salaries at
median competitive levels. However, individual salaries may be
set above or below median based on the executives
individual performance, experience and expertise.
Bonus Payments. The Company has adopted a
pay-for-performance incentive plan designed to reward the
Companys executive officers and other officers for the
achievement of specified individual and company goals that are
established at the beginning of the year. This plan, the 2005
Pay for Performance (P4P) Incentive Plan, was
approved by the shareholders at the 2005 annual meeting. As with
salaries, the Compensation Committee generally sets the P4P
target award levels such that the combination of salary and
target bonus approximates median competitive levels. P4P awards
are based on a combination of overall Company performance and,
where appropriate, business unit or individual performance. For
2005, the Company-wide performance measures used for the P4P
Plan were based on earnings per share, new annualized premiums
and expenses. The actual P4P bonuses earned by the named
executive officers for 2005 performance are shown in the Summary
Compensation Table on page 14, and were paid in the first
quarter of 2006. For each of the named executive officers other
than Mr. Johnson, the P4P bonus for 2005 performance was
based on a combination of the Company-wide performance measures
and individual performance. For Mr. Johnson, his P4P bonus
was based on earnings per share, statutory yield on the
investment portfolio, asset valuation reserve gains and losses
and individual performance. For 2006, the Compensation Committee
has again selected earnings per share, new annualized premiums
and expenses as the Company-wide P4P performance measures and
has selected investment related goals for Mr. Johnson
similar to 2005.
Equity-Based Compensation. The Compensation
Committee believes that equity compensation is an integral part
of the executive compensation package. Equity awards are made
under the 2003 Amended and Restated Long-Term Incentive Plan
(the 2003 Plan), which was approved by the
shareholders at the 2005 annual meeting. The 2003 Plan was
structured to give the Compensation Committee significant
flexibility to respond to the needs of the Company by permitting
a variety of equity vehicles, including stock options, stock
appreciation rights (SARs), restricted stock, restricted stock
units (RSUs) and performance shares and units. The 2003 Plan
does not permit repricing of options without prior shareholder
approval, nor does it permit the use of discounted options.
Upon its emergence from bankruptcy in 2003, the Company made a
number of multi-year up front grants to executives.
The Compensation Committee has determined that a program of
annual equity grants is more appropriate at the current time.
Consistent with the Compensation Committees
pay-for-performance philosophy and stated competitive
positioning, the equity program for executives will consist
primarily of:
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Stock Options. Stock options are granted with an
exercise price equal to the stock price on the date of grant.
The options generally have a
10-year term and vest
equally over four years. In general, annual stock option grant
levels are set to deliver total direct compensation (the sum of
salary, target bonus and the grant date Black-Scholes option
value) that approximates competitive median levels. |
10
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Performance Shares. Performance shares
(P-Shares)
are designed to provide top quartile total direct compensation
opportunity (when combined with salary, bonus and option value)
for the achievement of pre-determined goals.
P-Share vesting will be
contingent upon the achievement of multi-year performance goals.
For 2005, only Mr. Kirsch received
P-shares, as described
below. The Committee expects to extend the use of
P-Shares as part of the
2006 annual grant cycle. |
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Restricted Stock. The Committee expects that
time-vesting restricted stock may be used from time to time for
specific recruiting or retention situations. |
During 2005, the Compensation Committee approved total awards of
520,500 stock options, 75,000
P-Shares and 143,415
restricted shares to 42 individuals, including one of the
named executive officers. As of December 31, 2005, there
were 3,536,075 shares of common stock to be issued upon
exercise of outstanding options or units granted under the 2003
Plan, and an additional 4,246,802 shares remained available
for awards under the 2003 Plan. On such date there were
approximately 151 million shares of common stock
outstanding.
The Compensation Committee has approved a policy to conform to
Institutional Shareholder Services (ISS) burn
rate guidelines which limit annual equity grant levels. The
average annual burn rate for the three-year period of 2005, 2006
and 2007 will not exceed the greater of two percent of the
Companys shares outstanding or the mean of its Global
Industry Classification Standards Peer Group (4030 Insurance).
This policy will apply to shares issued under the 2003 Plan. The
burn rate will be calculated as (i) the number of shares
granted in each fiscal year by the Compensation Committee and
reported in the Companys periodic reports filed with the
Securities and Exchange Commission, including (a) stock
options, (b) stock-settled stock appreciation rights,
(c) restricted stock (units) and (d) performance
shares actually earned or deferred, to employees and directors
divided by (ii) the fiscal year end basic shares
outstanding. Stock appreciation rights, full value shares
settled in cash and performance shares or units will not be
included in the calculation of the burn rate. For the purpose of
the calculation, one full value share (such as a share of
restricted stock) may equal up to four option shares, as
calculated consistent with ISS policy regarding the volatility
of Conseco common stock, which may change from year to year.
Using ISS methodology, the Companys burn rate for
2005 was .72%.
Benefits and Perquisites. Executives participate
in the Companys health and welfare benefits (e.g.,
medical/dental plans, disability plans, life insurance, etc.).
The Company does not have any supplemental executive health and
welfare programs. Executives may participate in the
Companys 401(k) Plan. One of the named executive officers
(Mr. Bullis), has a supplemental retirement provision as
part of his employment contract. Employment contracts and change
in control provisions for the named executive officers are
described on pages 16-19 of this proxy statement.
Information regarding supplemental benefits and perquisites for
named executive officers is included in the Summary Compensation
Table on page 14 of this proxy statement.
Compensation of the Chief Executive Officer
On August 12, 2004, the Company entered into an employment
agreement with William Kirsch to serve as the Companys
Chief Executive Officer. The Company and Mr. Kirsch
recognized that the August 2004 agreement was an interim
agreement and agreed to negotiate in good faith to replace the
agreement in 2005, with a goal of adjusting
Mr. Kirschs compensation and terms to make them
competitive with those applicable to chief executive officers of
companies of like size and type. The Compensation Committee
engaged an independent compensation consulting firm to review
competitive CEO compensation levels. The Compensation
Committees goal was to provide Mr. Kirsch with
compensation that was approximately equal to the median CEO
compensation, with an opportunity through
performance-based
equity incentives to achieve total compensation in the top
quartile.
11
After analysis of competitive compensation data and negotiations
with Mr. Kirsch, the Compensation Committee and
Mr. Kirsch agreed to an amended and restated employment
agreement in September 2005 that included the following key
terms:
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an increase in the base salary for Mr. Kirsch from $800,000
to $975,000, effective May 1, 2005; |
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an increase in his target bonus from 100% of his base salary to
no less than 125% of his base salary, with a maximum bonus of
250% of his target bonus; and |
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an extension of the term of the agreement until
December 31, 2009 (previously August 12, 2009). |
As part of its review of the compensation for Mr. Kirsch
and in addition to the changes in annual cash compensation that
were reflected in his amended employment agreement, the
Compensation Committee reviewed the equity-based compensation
for Mr. Kirsch as compared to the peer CEO group. Based on
that review, the Compensation Committee made an additional award
of 75,000 options (vesting over four years) to Mr. Kirsch
in November 2005 in order to bring his equity compensation in
line with median equity compensation for the peer CEO group. In
order to provide Mr. Kirsch with an opportunity to achieve
total compensation in the top quartile of the peer CEO group,
the Compensation Committee also awarded 75,000 performance
units to him in November 2005 under the 2003 Plan. Each
performance unit represents the right to receive one share of
Conseco common stock upon satisfaction of the specified
performance goals based on the Companys operating return
on equity for the years 2006-2008. The performance share units
vest over the three year period only if targeted levels of
return on equity are achieved.
The Compensation Committee also recognized that most companies
other than Conseco provide some type of supplemental retirement
benefit for their CEO. In the amended and restated employment
agreement with Mr. Kirsch, the Company agreed to consider
in 2006, but is not obligated to adopt, a supplemental defined
contribution arrangement for Mr. Kirsch. Such an
arrangement is currently being analyzed.
Section 162(m)
The Compensation Committee is composed of the directors listed
below. The board has determined that each of the Compensation
Committee members is independent under the New York Stock
Exchange Corporate Governance Standards, as well as the
Companys Corporate Governance Guidelines. All Compensation
Committee determinations that are intended to comply with
Section 162(m) of the Internal Revenue Code (the
Code) are made by at least two Compensation
Committee members who qualify as outside directors
under Section 162(m) of the Code. The Compensation
Committee intends to seek to structure compensation arrangements
for executive officers in a manner that will generally avoid the
deduction limitation imposed by Section 162(m) of the Code.
However, the Compensation Committee and the board continue to
strongly believe that it is important and necessary that the
Compensation Committee continue to have the right, in the
exercise of its business judgment, to provide arrangements from
time to time that may not qualify under Section 162(m) if
such arrangements are, in the Compensation Committees
view, in the best interests of the Company and its stockholders,
and the Compensation Committee expressly retains that right.
Submitted by the Human Resources and Compensation Committee:
Michael S. Shannon, Chairman
Michael T. Tokarz
John G. Turner
12
Performance Graph
The Performance Graph below compares Consecos cumulative
total shareholder return on its common stock for the period from
September 12, 2003 (the first day of trading of the common
stock on the New York Stock Exchange after Consecos
emergence from bankruptcy) through December 31, 2005 with
the cumulative total return of the Standard &
Poors 500 Composite Stock Price Index (the
S&P 500 Index) and the Dow Jones Life
Insurance Index. The comparison for each of the periods assumes
that $100 was invested on September 12, 2003 in each of
Conseco common stock, the stocks included in the
S&P 500 Index and the stocks included in the Dow Jones
Life Insurance Index and that all dividends were reinvested. The
stock performance shown in this graph represents past
performance and should not be considered an indication of future
performance of Consecos common stock.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG CONSECO, S&P 500 INDEX AND DOW JONES LIFE INSURANCE
INDEX
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Cumulative Total Returns |
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9/12/03 |
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12/31/03 |
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12/31/04 |
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12/31/05 |
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DJ Life Insurance Index
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$ |
100 |
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$ |
113 |
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$ |
137 |
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$ |
168 |
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S&P 500 Index
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$ |
100 |
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$ |
110 |
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$ |
122 |
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$ |
128 |
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Conseco, Inc.
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$ |
100 |
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$ |
107 |
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$ |
98 |
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$ |
114 |
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13
Summary Compensation Table
The following Summary Compensation Table sets forth the cash
compensation and certain other compensation paid to our chief
executive officer and the other five most highly compensated
individuals who served as executive officers of Conseco in 2005
(collectively, the named executive officers) for
services rendered during 2005.
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Long-Term Compensation | |
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Annual Compensation | |
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Awards | |
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Number of | |
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Securities | |
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Restricted | |
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Underlying | |
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Stock | |
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Options/SARs | |
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All Other | |
Name and Principal Position |
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Year | |
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Salary | |
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Bonus(1) | |
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Other(2) | |
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Awards(3) | |
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(in shares)(4) | |
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Compensation(5) | |
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William S. Kirsch(6)(7)
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2005 |
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$ |
914,087 |
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$ |
1,466,380 |
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$ |
108,259 |
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75,000 |
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$ |
270 |
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President and Chief |
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2004 |
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296,923 |
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2,900,071 |
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$ |
6,480,000 |
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400,000 |
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517 |
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Executive Officer |
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Eugene M. Bullis
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2005 |
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600,000 |
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967,850 |
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3,418 |
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Executive Vice President |
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2004 |
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600,000 |
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1,140,073 |
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242,556 |
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250,000 |
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3,030 |
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and Chief Financial Officer |
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2003 |
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609,135 |
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2,400,000 |
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5,467,500 |
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162,090 |
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R. Glenn Hilliard(7)(8)
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2005 |
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845,329 |
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750,000 |
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842 |
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Chairman of the Board |
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2004 |
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1,000,000 |
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1,500,070 |
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4,556,850 |
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255,000 |
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297 |
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James E. Hohmann(7)(9)
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2005 |
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450,000 |
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620,888 |
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10,960 |
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Executive Vice President |
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2004 |
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8,654 |
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600,000 |
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1,940,000 |
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200,000 |
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and Chief Administrative Officer |
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Eric R. Johnson(10)
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2005 |
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500,000 |
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882,833 |
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658 |
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President, |
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2004 |
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500,000 |
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925,071 |
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150,000 |
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522 |
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40|86 Advisors, Inc. |
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2003 |
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505,961 |
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1,600,000 |
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1,640,250 |
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180 |
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John R. Kline
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2005 |
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275,000 |
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294,319 |
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6,570 |
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Senior Vice President |
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2004 |
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275,000 |
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404,602 |
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100,000 |
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416 |
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and Chief Accounting Officer |
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2003 |
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275,000 |
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171,875 |
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1,093,500 |
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270 |
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(1) |
Bonus amounts shown for 2003 include payments approved by the
Bankruptcy Court. |
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(2) |
A dash in this column means the total perquisites and personal
benefits for the named officer for the year indicated were less
than $50,000 and in accordance with applicable SEC rules are not
required to be included in the summary compensation table.
Includes for Mr. Kirsch in 2005 $103,367 of Company costs
(including vehicle lease, gasoline, vehicle maintenance and
driver costs) associated with providing transportation between
his residence and the Companys office in Chicago,
Illinois. Includes for Mr. Bullis in 2004 $242,556, which
represents the difference between the amount paid by the
executive for use of the Companys leased airplane in 2004
pursuant to the IRS stated rate for airplane usage and the
estimated cost of such usage to the Company. The Company
terminated its airplane lease in 2005 and no executives used the
airplane for personal travel in 2005. |
14
|
|
|
|
(3) |
The amounts shown in this column represent the value of the
award of shares of restricted stock based on the closing price
of the common stock on the dates of grant. The restricted stock
awards in this column to current executive officers are subject
to forfeiture of the unvested balance of the award if the
officers employment is terminated prior to vesting. The
table below shows the number of shares and the value of the
unvested restricted stock holdings at December 31, 2005,
based on the closing sales price for Conseco common stock on the
last business day of 2005: |
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of | |
|
Value of Unvested | |
Name |
|
Unvested Restricted Stock | |
|
Restricted Stock | |
|
|
| |
|
| |
William S. Kirsch
|
|
|
400,000 |
|
|
$ |
9,268,000 |
|
Eugene M. Bullis
|
|
|
125,000 |
|
|
|
2,896,250 |
|
R. Glenn Hilliard
|
|
|
336,667 |
|
|
|
7,800,574 |
|
James E. Hohmann
|
|
|
100,000 |
|
|
|
2,317,000 |
|
Eric R. Johnson
|
|
|
37,500 |
|
|
|
868,875 |
|
John R. Kline
|
|
|
25,000 |
|
|
|
579,250 |
|
|
|
|
Of the shares of restricted stock held by Mr. Kirsch,
one-half (200,000) vest on August 12, 2006 and one-fourth
(100,000) vest on each of August 12, 2007 and
August 12, 2008. The shares of restricted stock held by
Messrs. Bullis, Johnson and Kline vest on November 4,
2006. Of the shares of restricted stock held by
Mr. Hilliard 251,667 vest on September 10, 2006 and
the remaining 85,000 vest on September 10, 2007. One-half
(50,000) of the shares of restricted stock held by
Mr. Hohmann vest on December 20, 2006 and the
remaining 50,000 shares vest on December 20, 2007. The
officers are entitled to any cash dividends paid on the
restricted stock. No dividends have been paid on the Conseco
common stock. |
|
|
|
|
(4) |
No stock appreciation rights have been granted. |
|
|
(5) |
For 2005, the amounts reported in this column represent the
amounts paid for the named executive officers for: (i) the
cost of individual life insurance coverage, (ii) group life
insurance premiums and (iii) Company contributions to the
401(k) plan. The table below shows such amounts for each named
executive officer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Life | |
|
Group Life | |
|
|
|
|
Insurance | |
|
Insurance | |
|
401(k) Plan | |
Name |
|
Premiums | |
|
Premiums | |
|
Contributions | |
|
|
| |
|
| |
|
| |
William S. Kirsch
|
|
|
|
|
|
$ |
270 |
|
|
|
|
|
Eugene M. Bullis
|
|
$ |
2,230 |
|
|
|
1,188 |
|
|
|
|
|
R. Glenn Hilliard
|
|
|
|
|
|
|
842 |
|
|
|
|
|
James E. Hohmann
|
|
|
5,962 |
|
|
|
248 |
|
|
$ |
4,750 |
|
Eric R. Johnson
|
|
|
388 |
|
|
|
270 |
|
|
|
|
|
John R. Kline
|
|
|
|
|
|
|
270 |
|
|
|
6,300 |
|
|
|
|
|
(6) |
Mr. Kirsch was elected as President and Chief Executive
Officer in August 2004. His bonus for 2004 included a $1,700,000
signing bonus. |
|
|
(7) |
No compensation information is reported for years prior to the
year in which the named executive officer became an executive
officer of the Company. |
|
|
(8) |
Mr. Hilliard has served as Chairman of the Board since
September 2003, and he was an executive officer of the Company
from August 2004 until September 2005. The amounts shown include
payments he received during 2004 and 2005 in his capacity as
both Executive Chairman and Non-Executive Chairman, in
accordance with the terms of the agreement between
Mr. Hilliard and the Company described below. For
additional information concerning the amounts received by
Mr. Hilliard as Non-Executive Chairman during 2005, see
page 7 of this proxy statement. |
|
|
(9) |
Mr. Hohmann became an executive officer in December 2004. |
|
|
(10) |
Mr. Johnson became an executive officer in September 2003. |
15
Employment Agreements
Chief Executive Officer. We entered into an
employment agreement with William S. Kirsch, effective
August 12, 2004, pursuant to which he would serve as our
President and Chief Executive Officer for a term of five years.
The agreement provided for an annual base salary of $800,000, an
annual performance-based bonus with a target of 100% of base
salary and a maximum of 200% of base salary, a signing bonus of
$1,700,000 and a minimum bonus for 2004 equal to 150% of his
base salary. Under the agreement, we provided Mr. Kirsch
with an initial equity award comprised of options to
purchase 400,000 shares of common stock with an
exercise price equal to fair market value on the date of grant
and 400,000 shares of restricted stock, all of which are
subject to vesting, pursuant to the 2003 Plan.
On September 2, 2005, the Company entered into an Amended
and Restated Employment Agreement with Mr. Kirsch, as had
been contemplated at the time of his initial agreement. The
amended agreement provides for an annual salary of $975,000,
effective May 1, 2005, and an annual performance-based
bonus with a target of 125% of base salary and a maximum of 250%
of the target bonus. The term of the amended agreement expires
on December 31, 2009. We agreed to provide Mr. Kirsch
with a total of $2,000,000 of term life insurance coverage,
provided that the Company cost of the additional insurance
coverage for Mr. Kirsch shall not exceed $50,000 per
year. If Mr. Kirsch is terminated by the Company without
just cause or if he resigns for good reason (other than in
connection with a change of control termination), he is entitled
to receive his target bonus (prorated for the partial year
period ending on the date of termination), a cash payment equal
to two times his annual base salary (subject to reduction if
termination occurs prior to the first anniversary of the
effective date of the agreement) and a cash payment equal to two
times his target bonus. Any options or shares of restricted
stock Mr. Kirsch holds on the date of termination shall
vest only through such date according to the normal vesting
schedule applicable to such options or restricted stock,
provided that Mr. Kirsch shall receive additional vesting
credit with respect to his initial grant of 400,000 shares
of restricted stock and options to
purchase 400,000 shares of common stock as if he had
remained employed by the Company until the next succeeding
anniversary of the date of grant, with the restricted stock
being deemed to vest on the same dates as are applicable to the
options. If Mr. Kirsch is terminated by the Company (other
than for just cause) or if he resigns with good reason within
six months in anticipation of or within two years following a
change of control of the Company, he is entitled to receive his
target bonus (prorated for the partial year period ending on the
date of termination), a cash payment equal to three times his
annual base salary and a cash payment equal to three times his
target bonus. In addition, the initial grant of options and
restricted stock granted under the agreement shall fully vest in
connection with the change of control or, if later, the date of
termination. Under the agreement, Mr. Kirsch is entitled to
a gross-up for excise
tax payments under Section 280G of the Internal Revenue
Code. Mr. Kirsch is also subject to a one-year
non-solicitation and non-competition period after his employment
with the Company has ended.
Chief Financial Officer. We have entered into an
employment agreement, effective September 10, 2003, with
Eugene M. Bullis pursuant to which he would serve as our
Executive Vice President and Chief Financial Officer for a term
of three years. The agreement provides for an annual base salary
of $600,000, an annual performance-based bonus with a target of
100% of base salary and an emergence bonus of $1,200,000, which
was paid shortly after our emergence from bankruptcy.
Mr. Bullis is also entitled to a future success bonus of
$1,200,000 to be paid on the third anniversary of the agreement,
subject to acceleration triggers under which one-third of the
$1,200,000 future success bonus would be paid upon the
occurrence of each of: (i) the first refinancing of our
Class A Preferred Stock and senior credit facility,
(ii) our obtaining a financial strength rating from A.M.
Best of A- or higher, and (iii) achievement of
agreed upon expense reductions. Mr. Bullis has earned
acceleration of $800,000 of the $1,200,000 future success bonus
thus far. Under the agreement, we provided Mr. Bullis with
an initial equity award comprised of options to
purchase 250,000 shares of common stock and
250,000 shares of restricted stock, all of which are
subject to vesting, pursuant to the 2003 Plan. The agreement
also provides that Mr. Bullis will receive a supplemental
retirement benefit of $250,000 per year, commencing when he
attains age 65 and continuing until the later of his death
or the death of his spouse. One-third of the supplemental
retirement benefit vests on each anniversary of his employment
agreement. We have agreed to provide
16
Mr. Bullis a life insurance policy with a face amount of
$600,000. If Mr. Bullis is terminated by the Company
without just cause, the unpaid amount of his supplemental
retirement benefit will vest and any unpaid portion of the
$1,200,000 future success bonus will become due and payable. In
the event of a change of control of the Company, all previously
granted options and restricted stock will vest. In the event
that Mr. Bullis employment is terminated
6 months prior to or within 2 years after a change of
control, the unvested amount of his supplemental retirement
benefit will vest and any unpaid portion of the $1,200,000
future success bonus will become due and payable. In addition,
if Mr. Bullis employment is terminated 6 months
prior to a change of control, all of his unvested options and
restricted stock will vest, retroactive to the date of
termination, upon the occurrence of the change of control.
Mr. Bullis is subject to a non-solicitation and
non-competition clause throughout the term of the agreement and
for one year thereafter.
Chairman. On June 18, 2003, our predecessor
entered into an agreement with R. Glenn Hilliard pursuant to
which Mr. Hilliard provided consulting services to our
predecessor during the pendency of the Chapter 11 cases and
agreed to serve as our non-executive chairman for an initial
term of four years following our emergence from bankruptcy. This
agreement, which became effective upon our emergence from
bankruptcy on September 10, 2003, was negotiated with our
predecessors creditors committee and was approved by the
Bankruptcy Court in connection with the approval of the plan of
reorganization. The agreement provided for (i) an annual
directors fee of $1,000,000 for the first two years of the
term, and directors fees similar to those paid to
similarly situated non-executive chairmen for the latter two
years of the term; (ii) a signing bonus of
98,119 shares of common stock, which were issued shortly
after our emergence from bankruptcy; (iii) a retention
bonus of $1,500,000, which was paid following the first
anniversary of our emergence from bankruptcy; (iv) a
retention bonus of $750,000, which was paid following the second
anniversary of our emergence from bankruptcy; and (v) a fee
of $60,000 per month to be paid during the period from
May 15, 2003 until the Companys emergence from
bankruptcy on September 10, 2003 (this monthly fee was
waived by Mr. Hilliard on December 30, 2003 in order
to avoid any issues with his status as an independent director
at that time). Under the agreement negotiated with our
predecessors creditors committee, we also issued
Mr. Hilliard 500,000 shares of restricted stock and
options to purchase 500,000 shares of common stock,
all of which were subject to vesting, pursuant to the 2003 Plan.
By the terms of that agreement, Mr. Hilliard was also
entitled to receive on the one-year anniversary of our emergence
from bankruptcy shares of restricted stock and stock options,
each in an amount equal to .25% of the outstanding shares of
common stock on the one-year anniversary. In connection with the
agreement described in the following paragraph,
Mr. Hilliard agreed to receive 255,000 shares of
restricted stock and options to purchase an additional
255,000 shares (compared to the approximately
375,000 shares of restricted stock and 375,000 options to
which he would have been entitled to receive under his initial
agreement).
In August 2004, Mr. Hilliard was elected Executive
Chairman, and he entered into a revised agreement with Conseco
pursuant to which he agreed to serve as Executive Chairman
through September 10, 2005. The financial terms of
Mr. Hilliards agreement with the Company did not
change materially after he was elected Executive Chairman. The
revised agreement provided for Mr. Hilliard to receive an
annual salary of $1,000,000 and to receive retention bonuses of
$1,500,000 in September 2004 and $750,000 in September 2005, as
had been provided in his original agreement. Effective
September 10, 2005, Mr. Hilliard again became
Non-Executive Chairman and in accordance with his agreement now
receives directors fees comparable to those paid to
similarly situated non-executive chairs of other corporations as
determined by the Board. Under the agreement, Mr. Hilliard
is entitled to a
gross-up for excise tax
payments under Section 280G of the Internal Revenue Code.
In addition, upon a qualifying termination, vesting of
previously granted options and restricted stock will occur as if
Mr. Hilliard continued to serve through the next
anniversary of our emergence from bankruptcy following his
separation. Mr. Hilliard is subject to a non-solicitation
and non-competition clause throughout the term of the agreement
and for one year thereafter.
Chief Administrative Officer. Effective
November 29, 2004, we entered into an employment agreement
with James E. Hohmann, pursuant to which he would serve as our
Executive Vice President
17
and Chief Administrative Officer for an initial term ending
December 31, 2008, subject to automatic renewals for
successive one-year terms unless we or Mr. Hohmann provide
written notice of non-renewal at least 90 days prior to the
commencement of a renewal term. The agreement provides for an
annual base salary of $450,000, an annual performance-based
bonus with a target of 100% of base salary and a maximum of 200%
of base salary (with a minimum bonus of $450,000 for 2005) and
bonuses aggregating $600,000 that were paid in December 2004 and
January 2005. Under the agreement, we provided Mr. Hohmann
with an initial equity award comprised of options to
purchase 200,000 shares of common stock with an
exercise price equal to the fair market value on the date of
grant and 100,000 shares of restricted stock, all of which
are subject to vesting, pursuant to the 2003 Plan. In the event
of a change of control of the Company, all unvested options and
shares of restricted stock held by Mr. Hohmann will vest.
We also agreed to reimburse Mr. Hohmann for up to
$5,000 per year for premiums on term life insurance
policies in effect on his life, in lieu of any other life
insurance benefit. If Mr. Hohmann is terminated by the
Company without just cause or if he resigns with reason, he is
entitled to receive his base salary plus target bonus (in the
form of salary continuation on a pro rata basis) for the
12-month period
following his termination and a lump sum payment equal to the
pro rata portion of his target bonus for the year in which the
date of termination occurs. Any options or shares of restricted
stock Mr. Hohmann holds on the date of termination shall
vest only through such date according to the normal vesting
schedule applicable to such options or restricted stock,
provided that Mr. Hohmann shall receive additional vesting
credit with respect to his initial grant of options to
purchase 200,000 shares of common stock as if he had
remained employed by the Company until the next succeeding
anniversary of the date of grant. If Mr. Hohmann is
terminated by the Company for any reason within six months in
anticipation of or within two years following a change of
control of the Company, he is entitled to receive his base
salary and target bonus (in the form of salary continuation on a
pro rata basis) for the
24-month period
following his termination and a lump sum payment equal to the
pro rata portion of his target bonus for the year in which the
date of termination occurs. To the extent Mr. Hohmann is
terminated in anticipation of a change of control, any options
or shares of restricted stock he holds shall fully vest,
retroactive to the date of termination, upon the occurrence of
the change of control. Mr. Hohmann is subject to a two-year
non-solicitation period and one-year non-competition period
after his employment with the Company has ended.
President, 40|86 Advisors, Inc.
40|86 Advisors, Inc., a wholly-owned investment
management subsidiary of Conseco, Inc. that manages the
investment portfolios of our insurance subsidiaries, has entered
into an employment agreement, effective September 10, 2003,
with Eric R. Johnson pursuant to which he would serve as
40|86 Advisors President for a term of three
years. The agreement provides for an annual base salary of
$500,000, an annual performance-based bonus with a target of
100% of base salary and a maximum of 200% of base salary and a
bonus of $950,000 that was paid in January 2004.
Mr. Johnson is also entitled to a future success bonus of
$950,000 to be paid on the third anniversary of the agreement,
subject to acceleration triggers under which one-third of the
$950,000 future success bonus would be paid upon the occurrence
of each of: (i) the first refinancing of our Class A
Preferred Stock and senior credit facility, (ii) our
obtaining a financial strength rating from A.M. Best of
A- or higher, and (iii) the achievement of
mutually agreed-upon improvements in investment return and
quality. Mr. Johnson has earned acceleration of $633,333 of
the $950,000 future success bonus thus far. Under the agreement,
we provided Mr. Johnson with an initial equity award
comprised of options to purchase 150,000 shares of
common stock and 75,000 shares of restricted stock, all of
which are subject to vesting, pursuant to the 2003 Plan. We also
agreed to provide Mr. Johnson a life insurance policy with
a face amount of $500,000. If Mr. Johnson is terminated by
40|86 Advisors without just cause, any unvested
portion of the $950,000 future success bonus will become due and
payable. In the event of a change of control of the Company, all
previously granted options and restricted stock will vest. In
the event that Mr. Johnsons employment is terminated
6 months prior to or within 2 years after a change of
control, any unvested portion of the $950,000 future success
bonus will become due and payable. In addition, if
Mr. Johnsons employment is terminated 6 months
prior to a change of control, all of his unvested options and
restricted stock will vest, retroactive to the date of
termination, upon the occurrence of the change of control.
Mr. Johnson is subject
18
to a non-solicitation and non-competition clause throughout the
term of the agreement and for one year thereafter.
Chief Accounting Officer. Effective July 15,
2004, we entered into an employment agreement with John R. Kline
pursuant to which he would serve as our Senior Vice President
and Chief Accounting Officer for a term of three years. The
agreement provides for an annual salary of at least $275,000 and
an annual performance-based bonus with a target of 75% of base
salary and a maximum of 150% of base salary. Under the
agreement, we provided Mr. Kline with an initial equity
award comprised of options to purchase 100,000 shares
of common stock and 50,000 shares of restricted stock, all
of which are subject to vesting, pursuant to the 2003 Plan. In
the event of a change of control of the Company, all previously
granted options and restricted stock will vest. We also agreed
to provide Mr. Kline with a life insurance policy with a
face amount of $275,000. If Mr. Kline is terminated by the
Company without just cause, he is entitled to receive his base
salary and target bonus (in the form of salary continuation on a
pro rata basis) for the
12-month period
following his termination and a lump sum payment equal to the
pro rata portion of his target bonus for the year in which the
date of termination occurs. Any options or shares of restricted
stock Mr. Kline holds on the date of termination shall vest
only through such date according to the normal vesting schedule
applicable to such options or restricted stock, and
Mr. Kline shall not receive any accelerated or additional
vesting of such options or restricted stock on or after the date
of termination. If Mr. Kline is terminated by the Company
for any reason within six months in anticipation of or within
two years following a change of control of the Company, he is
entitled to receive his base salary and target bonus (in the
form of salary continuation on a pro rata basis) for the
12-month period
following his termination and a lump sum payment equal to the
pro rata portion of his target bonus for the year in which the
date of termination occurs. To the extent Mr. Kline is
terminated in anticipation of a change of control, any options
or shares of restricted stock he holds shall fully vest,
retroactive to the date of termination, upon the occurrence of
the change of control.
19
Stock Options
The following table sets forth certain information concerning
the exercise in 2005 of options to purchase common stock by the
named executive officers and the unexercised options to purchase
common stock held by such individuals as of December 31,
2005.
Aggregated Option Exercises in 2005 and Year-End Option
Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
|
|
Underlying Unexercised | |
|
Value of Unexercised | |
|
|
|
|
|
|
Options (in shares) at | |
|
In-the-Money Options at | |
|
|
Number of | |
|
|
|
December 31, 2005 | |
|
December 31, 2005(1) | |
|
|
Shares Acquired | |
|
Value | |
|
| |
|
| |
Name |
|
on Exercise | |
|
Realized | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
William S. Kirsch
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
375,000 |
|
|
$ |
697,000 |
|
|
$ |
2,246,250 |
|
Eugene M. Bullis
|
|
|
|
|
|
|
|
|
|
|
125,000 |
|
|
|
125,000 |
|
|
|
271,250 |
|
|
|
271,250 |
|
R. Glenn Hilliard
|
|
|
|
|
|
|
|
|
|
|
418,333 |
|
|
|
336,667 |
|
|
|
1,637,165 |
|
|
|
1,494,335 |
|
James E. Hohmann
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
150,000 |
|
|
|
188,500 |
|
|
|
565,500 |
|
Eric R. Johnson
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
75,000 |
|
|
|
162,750 |
|
|
|
162,750 |
|
John R. Kline
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
50,000 |
|
|
|
108,500 |
|
|
|
108,500 |
|
|
|
(1) |
The value is calculated based on the aggregate amount of the
excess of $23.17 (the last sale price of the common stock as
reported by the New York Stock Exchange for the last business
day of 2005) over the relevant exercise prices. |
The following table sets forth certain information concerning
options to purchase common stock granted in 2005 to the named
executive officers. As discussed in the Report of the Human
Resources and Compensation Committee, the Company made a number
of multi-year up front stock option grants to
executives after its emergence from bankruptcy in 2003. As a
result, most executive officers were not considered for stock
option grants in 2005, but the Compensation Committee intends to
consider annual equity awards beginning in 2006. The exercise
price of the options shown in the table was equal to the closing
sales price of the common stock on the New York Stock Exchange
on the date of grant.
Option Grants in 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants | |
|
|
| |
|
|
Number of | |
|
% of Total | |
|
Per Share | |
|
|
|
|
Securities Underlying | |
|
to Employees in | |
|
Exercise | |
|
Expiration | |
|
Grant Date | |
Name |
|
Options Granted | |
|
2005 | |
|
Price | |
|
Date | |
|
Present Value(1) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
William S. Kirsch(2)
|
|
|
75,000 |
|
|
|
14.4 |
% |
|
$ |
21.10 |
|
|
|
11/23/15 |
|
|
$ |
439,996 |
|
Eugene M. Bullis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Glenn Hilliard
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Hohmann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric R. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Kline
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Valued using a modified Black-Scholes option pricing model. The
exercise price of each option is equal to the fair market value
of the underlying common stock on the date of grant. The
assumptions used in the model were: expected volatility of
22 percent, risk free rate of return of 4.5 percent,
expected life of 6.0 years and a dividend rate of
0 percent. A discount of 15 percent was applied to the
option value yielded by the model to reflect the
non-transferability and the possibility of forfeiture of
employee options. Consecos use of this model does not
constitute an acknowledgement that the resulting values are
accurate or reasonable. The actual gain executives will realize
on the options will depend on the future price of common stock
and cannot be accurately forecasted by application of an option
pricing model. |
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(2) |
These are non-qualified stock options which vest in four equal
annual installments beginning May 1, 2006. |
20
Long-Term Incentive Plan Awards
The following table sets forth information concerning
performance units granted in 2005 to the named executive
officers. As discussed in the Report of the Human Resources and
Compensation Committee, the award to Mr. Kirsch in 2005 was
made in connection with a review of his compensation. Other
executive officers had previously received multi-year equity
awards and were not considered for performance units or similar
awards in 2005. The Committee intends to consider annual equity
awards, including
P-Shares or performance
units, beginning in 2006.
Long-Term Incentive Plans Awards In 2005
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William S. Kirsch
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75,000 |
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37,500 |
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75,000 |
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Eugene M. Bullis
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R. Glenn Hilliard
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James E. Hohmann
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Eric R. Johnson
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John R. Kline
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(1) |
On November 23, 2005, Conseco awarded 75,000 performance
units to William S. Kirsch under Consecos 2003 Amended and
Restated Long-Term Incentive Plan. Each performance unit
represents the right to receive one share of Conseco common
stock, plus dividend equivalents thereon subject to
satisfaction of the vesting criteria. The award to
Mr. Kirsch contains performance goals based on
Consecos operating return on equity for the years
2006-2008. For purposes of the award, Consecos operating
return on equity is calculated by dividing operating earnings by
average shareholders equity, excluding accumulated other
comprehensive income or loss. Operating earnings is defined for
purposes of the award as consolidated net income before
preferred stock dividends less (i) net realized gains
(losses) (net of the related amortization of the value of
policies inforce at the effective date of the bankruptcy
reorganization of Consecos predecessor and the cost of
policies produced and taxes) and (ii) the cumulative effect
of change in accounting principles. If the performance goals are
achieved, the payout of the award will be made following 2007
and/or 2008, subject to accelerated vesting under certain
circumstances in the event of a termination of
Mr. Kirschs employment by Conseco without Just
Cause or by him for Good Reason (as such terms
are defined in Mr. Kirschs employment agreement), or
in conjunction with a change in control. If Mr. Kirsch
satisfies the minimum performance threshold, he will be entitled
to 50% of the award, with the opportunity to vest in 100% of the
award if the highest performance goal is achieved or exceeded. |
21
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP served as our independent registered
public accounting firm for 2005 and has been selected by the
Audit and Enterprise Risk Committee to serve as our independent
registered public accounting firm for the fiscal year ending
December 31, 2006. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if
they so desire, and will be available to respond to appropriate
questions from the shareholders.
THE BOARD RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2006.
Fees Paid to PricewaterhouseCoopers LLP
Aggregate fees billed to the Company for the years ended
December 31, 2005 and 2004, by PricewaterhouseCoopers LLP
were as follows (dollars in millions):
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5.6 |
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.5 |
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.9 |
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All other fees
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Total
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Audit fees were for professional services rendered for the
audits of Consecos consolidated financial statements,
statutory and subsidiary audits, issuance of comfort letters,
consents, and assistance with review of documents filed with the
Securities and Exchange Commission. |
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Audit-related fees primarily include services provided for
advisory services for Sarbanes-Oxley Section 404, employee
benefit plan audits, and other assurance related services. |
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Tax fees primarily include services provided for tax compliance,
tax advice and tax planning. |
Pre-Approval Policy
The Audit and Enterprise Risk Committee has adopted a policy
requiring pre-approval of all audit and permissible non-audit
services provided by our independent registered public
accounting firm. These services may include audit services,
audit-related services, tax services and other services.
In 2004 and 2005, all new engagements of PricewaterhouseCoopers
LLP were pre-approved by the Audit and Enterprise Risk Committee
for all audit, audit-related, tax and other services.
22
Report of the Audit and Enterprise Risk Committee
In accordance with its written charter adopted by the Board of
Directors, the Audit and Enterprise Risk Committee provides
assistance to the Board of Directors in fulfilling its
responsibilities for oversight of the integrity of the financial
statements, public disclosures and financial reporting practices
of the Company. The Audit and Enterprise Risk Committee is
comprised entirely of independent directors meeting the
requirements of applicable rules of the Securities and Exchange
Commission and the New York Stock Exchange.
In order to discharge its oversight function, the Audit and
Enterprise Risk Committee works closely with management and with
Consecos independent registered public accounting firm,
PricewaterhouseCoopers LLP. Management is responsible for the
preparation and fair presentation of the Companys
financial statements and for maintaining effective internal
controls. Management is also responsible for assessing and
maintaining the effectiveness of internal controls over the
financial reporting process in compliance with the requirements
of Section 404 of the Sarbanes-Oxley Act. The independent
registered public accounting firm is responsible for auditing
the Companys annual financial statements and expressing an
opinion as to whether the statements are fairly stated in
conformity with generally accepted accounting principles. In
addition, the independent registered public accounting firm is
responsible for auditing the Companys internal controls
over financial reporting and for expressing opinions on both the
effectiveness of the controls and managements assertion as
to this effectiveness.
The Audit and Enterprise Risk Committee has implemented
procedures to ensure that during the course of each fiscal year
it devotes the attention that it deems necessary or appropriate
to each of the matters assigned to it under the Committees
charter. To carry out its responsibilities, the Audit and
Enterprise Risk Committee met 11 times during 2005. The members
identified below have served throughout 2005 and 2006.
In overseeing the preparation of the Companys financial
statements, the Audit and Enterprise Risk Committee has met with
management and the Companys independent registered public
accounting firm to review and discuss the consolidated financial
statements prior to their issuance and to discuss significant
accounting issues. The Audit and Enterprise Risk Committee also
discussed with the independent registered public accounting firm
all communications required by generally accepted auditing
standards, including those described in Statement on Auditing
Standards No. 61, as amended, Communications with
Audit Committees.
The Audit and Enterprise Risk Committee obtained from the
independent registered public accounting firm a formal written
statement consistent with Independence Standards Board Standard
No. 1, Independence Discussions with Audit
Committees and has discussed with such firm their
independence.
Based on the reviews and discussions referenced above, the Audit
and Enterprise Risk Committee recommended to the Board of
Directors that the Companys audited financial statements
be included in its Annual Report on
Form 10-K for the
year ended December 31, 2005 for filing with the Securities
and Exchange Commission.
Submitted by the Audit and Enterprise Risk Committee:
Neal C. Schneider, Chairman
Debra J. Perry
Philip R. Roberts
John G. Turner
23
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires Consecos directors and executive officers, and
each person who is the beneficial owner of more than
10 percent of any class of Consecos outstanding
equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes
in ownership of common stock and other equity securities of
Conseco. Specific due dates for these reports have been
established by the Securities and Exchange Commission, and
Conseco is required to disclose any failure by such persons to
file such reports for fiscal year 2005 by the prescribed dates.
Officers, directors and greater than 10 percent beneficial
owners are required to furnish Conseco with copies of all
reports filed with the Securities and Exchange Commission
pursuant to Section 16(a). To Consecos knowledge,
based solely on review of the copies of the reports furnished to
Conseco and written representations that no other reports were
required, all filings required pursuant to Section 16(a) of
the Securities Exchange Act of 1934 applicable to Consecos
officers, directors and greater than 10 percent beneficial
owners were timely made by each such person during the year
ended December 31, 2005.
SHAREHOLDER PROPOSALS FOR 2007 ANNUAL MEETING
Any proper proposal which a shareholder wishes to have included
in the Boards proxy statement and form of proxy for the
2007 Annual Meeting must be received by Conseco by
December 13, 2006. Such proposals must meet the
requirements set forth in the rules and regulations of the
Securities and Exchange Commission in order to be eligible for
inclusion in the proxy statement for the 2007 Annual Meeting. In
addition to the Securities and Exchange Commission rules
concerning shareholder proposals, the Companys Bylaws
establish advance notice procedures with regard to certain
matters, including shareholder nominations for directors, to be
brought before a meeting of shareholders at which directors are
to be elected. In the case of an annual meeting, notice must be
received by the Secretary of the Company not less than
60 days nor more than 90 days prior to the first
anniversary of the preceding years annual meeting. In the
case of a special meeting of stockholders at which directors are
to be elected, notice of a stockholder nomination must be
received by the Secretary of the Company no later than the close
of business on the 10th day following the earlier of the
day on which notice of the date of the meeting was mailed or
public disclosure of the meeting was made. A nomination will not
be considered if it does not comply with these notice procedures
and any additional requirements set forth in our bylaws. Please
note that these bylaw requirements are separate from the
Securities and Exchange Commissions requirements to have a
shareholder nomination or other proposal included in our proxy
statement. Any shareholder who wishes to submit a proposal to be
acted upon at the 2007 Annual Meeting or who wishes to nominate
a candidate for election as director should obtain a copy of
these bylaw provisions and may do so by written request
addressed to the Secretary of Conseco at 11825 North
Pennsylvania Street, Carmel, Indiana 46032.
ANNUAL REPORT
Consecos Annual Report for 2005 (which includes its annual
report on
Form 10-K as filed
with the Securities and Exchange Commission) is being mailed
with this proxy statement to all holders of common stock as of
April 4, 2006. The Annual Report is not part of the proxy
solicitation material. If you wish to receive an additional
copy of the Annual Report for 2005 or the
Form 10-K without
charge, please contact Conseco Investor Relations,
11825 North Pennsylvania Street, Carmel, Indiana 46032;
telephone
(317) 817-2893 or
email ir@conseco.com.
24
OTHER MATTERS
Management knows of no other matters which may be presented at
the Annual Meeting. If any other matters should properly come
before the meeting, the persons named in the enclosed form of
proxy will vote in accordance with their best judgment on such
matters.
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By Order of the Board of Directors |
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Karl W. Kindig |
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Assistant Secretary |
April 12, 2006
25
CONSECO, INC.
Annual Meeting of Shareholders
To Be Held on May 23, 2006
This Proxy is Solicited on Behalf of the Board of Directors
Each person signing this card on the reverse side hereby appoints, as proxies, Eugene M. Bullis,
John R. Kline, and Daniel J. Murphy, or any of them with full power of substitution, to vote all
shares of Common Stock which such person is entitled to vote at the Annual Meeting of Shareholders
of Conseco, Inc. to be held at the Conseco Conference Center, 530 College Drive, Carmel, Indiana at
10:00 a.m. local time on May 23, 2006, and any adjournments thereof.
This proxy card will be voted as directed. If no instructions are specified, the shares represented
by this proxy shall be voted for the election of all directors listed in item 1 and for the
ratification of the appointment of the independent registered public accounting firm in Item 2.
This proxy is continued on the reverse side.
Please sign on the reverse side and return promptly.
ANNUAL MEETING OF SHAREHOLDERS OF
CONSECO,
INC.
May 23, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
ê Please
detach along perforated line and mail in the envelope
provided. ê
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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FOR
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AGAINST
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ABSTAIN |
1. |
Election of Directors: Election of the nominees named below as
directors for one-year terms expiring in 2007.
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Ratification of the appointment of PricewaterhouseCoopers LLP
as independent registered public accounting firm of Conseco for the fiscal year ending December 31, 2006.
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NOMINEES: |
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FOR ALL NOMINEES |
¡ |
Debra J. Perry |
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Phillip R. Roberts |
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WITHHOLD
AUTHORITY
FOR ALL NOMINEES |
¡
¡ |
William S. Kirsch
Michael T. Tokarz |
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In their discretion, the proxies are authorized to vote upon such other matters as
may properly come before the meeting.
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¡ |
R. Glenn Hilliard |
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¡
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Michael S. Shannon |
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FOR ALL EXCEPT
(See Instructions below) |
¡ |
Neal C. Schneider |
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The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting and Proxy Statement dated April
12, 2006.
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¡ |
John G. Turner |
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INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT and fill in the circle next to each
nominee you wish to withhold, as shown here:
=
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MARK X HERE IF
YOU PLAN TO ATTEND THE MEETING. o
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To change the address on your account, please check the box
at right and indicate your new address in the address space
above. Please note that changes to the registered name(s)
on the account may not be submitted
via this method.
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Signature of Shareholder
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Date:
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Signature of Shareholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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