def14a
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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þ Definitive Proxy Statement
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o Soliciting Material Pursuant to 240.14a-12
Symetra Financial Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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SYMETRA
FINANCIAL CORPORATION
777 108th Avenue NE,
Suite 1200
Bellevue, Washington
98004-5135
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held May 12,
2010
To Our Stockholders:
The Annual Meeting of Stockholders of Symetra Financial
Corporation, a Delaware corporation (the Company),
will be held at The Benjamin Hotel in the Morrison Room located
at 125 East 50th Street, New York, NY 10022, on
May 12, 2010, at 9:30 a.m. Eastern Time, for the
following purposes:
(1) To elect three Class III Directors to serve until
the 2013 annual meeting of stockholders of the Company;
(2) To ratify the appointment of Ernst & Young
LLP as the Companys independent registered public
accounting firm; and
(3) To consider and act upon any other business as may
properly come before the Annual Meeting or any adjournment
thereof.
The Board of Directors has fixed March 19, 2010 as the
record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting.
We are furnishing our proxy materials to you under Securities
and Exchange Commission (SEC) rules that allow
public companies to deliver proxy materials to their
stockholders on the Internet. On or about April 2, 2010, we
sent you a Notice of Internet Availability of Proxy Materials
(Notice) and provided access to our proxy materials
over the Internet.
We encourage you to attend the Annual Meeting. However, it is
important that your shares be represented whether or not you
plan to attend. Even if you plan to attend the Annual Meeting,
please vote, as instructed in the Notice, via the Internet or by
telephone as promptly as possible to ensure that your vote is
recorded. Alternatively, you may follow the procedures outlined
in the Notice to request a paper proxy card to submit your vote
by mail. If you attend the meeting and your shares are
registered in your name, you may withdraw your proxy at that
time and vote your shares in person.
George C. Pagos
Senior Vice President, General Counsel and Secretary
Bellevue, Washington
April 2, 2010
TABLE OF
CONTENTS
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SYMETRA
FINANCIAL CORPORATION
2010
ANNUAL MEETING OF STOCKHOLDERS
PROXY
STATEMENT
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of the Company
to be voted at the Annual Meeting of Stockholders (the
Annual Meeting) to be held at The Benjamin Hotel in
the Morrison Room located at 125 East 50th Street, New
York, NY 10022, on May 12, 2010, at
9:30 a.m. Eastern Time, for the purposes set forth in
the Notice of Annual Meeting of Stockholders. Our principal
executive offices are located at 777 108th Avenue NE,
Bellevue, Washington
98004-5135.
In accordance with rules adopted by the Securities and Exchange
Commission (SEC), we have provided Internet access
to this Proxy Statement and our Annual Report on
Form 10-K
for the year ended December 31, 2009. Accordingly, a Notice
of Internet Availability of Proxy Materials (the
Notice) has been sent to our stockholders of record
and beneficial owners. All stockholders will have the ability to
access the proxy materials on a website referred to in the
Notice or request that a printed set of the proxy materials be
sent to them by following the instructions in the Notice. If you
request printed versions of these materials by mail, the
materials will include the proxy card for the Annual Meeting.
Also, the Notice provides you with instructions on how to inform
us to send our future proxy materials to you electronically by
email or in printed form by mail. If you choose to receive
future proxy materials by email, you will receive an email next
year with instructions containing a link to those materials and
a link to the proxy voting site. Your election to receive proxy
materials by email or printed form by mail will remain in effect
until you terminate it.
Choosing to receive your future proxy materials by email will
allow us to provide you with the information you need in a
timely manner and save us the cost of printing and mailing
documents to you.
PROXIES
Your vote is very important. If you are a stockholder of record,
you may vote your Common Stock in person at the Annual Meeting.
We will give you a ballot when you arrive. If you do not wish to
vote in person or if you will not be attending the Annual
Meeting, you may vote by proxy. You can vote by proxy over the
Internet by following the instructions provided in the Notice
or, if you request printed copies of the proxy materials by
mail, you can also vote by mail, Internet or telephone.
You may revoke the proxy before the Annual Meeting, whether
delivered by Internet, telephone or through the mail, by using
the Internet voting procedures, the telephone voting procedures
or by mailing a signed instrument revoking the proxy to: George
Pagos, Secretary, Symetra Financial Corporation, at the address
shown on the cover of this Proxy Statement. To be effective, a
mailed revocation must be received by the Secretary on or before
May 11, 2010. A stockholder may also attend the Annual
Meeting in person and withdraw the proxy and vote in person.
If a broker, bank or other nominee holds your Common Stock, you
will receive instructions from them that you must follow in
order to have your shares voted. Shares held by a broker, bank
or other nominee cannot be voted in person at the Annual Meeting.
VOTING
PROCEDURES
Stockholders of record at the close of business on
March 19, 2010 will be entitled to vote at the Annual
Meeting or any adjournment thereof. As of March 19, 2010,
there were 118,086,019 shares of Common Stock outstanding.
Each share of Common Stock is entitled to one vote at the Annual
Meeting. The holders of Common Stock will vote on all matters to
be considered at the Annual Meeting.
The presence, in person or by proxy, of a majority of the voting
power of our Common Stock issued and outstanding and entitled to
vote is necessary to constitute a quorum at the Annual Meeting.
The affirmative vote of the holders of a plurality of the voting
power of Common Stock represented in person or by proxy at the
Annual Meeting is required to elect directors and the
affirmative vote of the holders of a majority of the voting
power of
Common Stock represented at the Annual Meeting is required to
act on Proposal 2, as more fully set forth in this Proxy
Statement, and on any other matter properly brought before the
meeting.
Abstentions from voting for Proposal 2 will be included for
purposes of determining whether the requisite number of
affirmative votes is received on any matters other than the
election of directors submitted to the stockholders for vote
and, accordingly, will have the same effect as a vote AGAINST
such matters. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on
a particular matter, those shares will be considered as present
and entitled to vote, but will have no effect on the vote with
respect to that matter.
In voting by proxy with regard to the election of directors,
stockholders may vote in favor of all nominees, withhold their
votes as to all nominees or withhold their votes as to specific
nominees. Stockholders should specify their choices by using the
Internet or telephone voting procedures or on the proxy card, if
printed copies of the proxy materials are requested by mail. All
properly executed proxies delivered by stockholders to us and
not revoked will be voted at the Annual Meeting in accordance
with the directions given. For any stockholder of record, if no
specific instructions are provided for proxies given through the
Internet or telephone voting procedures, or if a signed proxy
card is returned without giving specific voting instructions,
the shares represented by the proxy will be voted
FOR the election of all directors in Proposal 1
and FOR the approval of Proposal 2, as more
fully set forth in this Proxy Statement. If any other matters
properly come before the Annual Meeting, the persons named as
proxies will vote upon such matters according to their judgment.
Under new rules adopted by the New York Stock Exchange (NYSE),
its member-brokers are allowed to vote shares held by them for
their customers only on matters the NYSE determines are routine,
unless the brokers have received voting instructions from their
customers. The NYSE currently considers Proposal 2 to be a
routine matter. Your broker, therefore, may vote your shares in
its discretion on Proposal 2, if you do not instruct your
broker how to vote on Proposal 2. Your broker is prohibited
from voting your shares on the election of directors unless you
have given voting instructions to your broker. The NYSE does not
consider the proposal to approve such other business as may
properly come before the Annual Meeting or any adjournment a
routine matter, so your broker may not vote on this proposal in
its discretion, though your shares will be counted for purposes
of determining whether a quorum is present. Your broker,
therefore, will need to return a proxy card without voting on
this non-routine matter if you do not give voting instructions
with respect to this matter. This is referred to as a
broker non-vote.
We encourage you to provide voting instructions to the
broker, bank or other nominee that holds your shares by
carefully following the instructions provided in the Notice from
such entity.
PROPOSAL 1
ELECTION OF DIRECTORS
Three directors are to be elected to each hold office for a
three-year term expiring at the annual meeting in 2013.
Proxies will be voted for the election of the nominees unless
the stockholder giving the proxy withholds such authority. If,
as a result of currently unforeseen circumstances, any of such
nominees shall be unable to serve as a director, proxies will be
voted for the election of such other person as the Board of
Directors may select. Information about the nominees and
directors continuing in office, including business experience
and service as a director for any SEC registered company for at
least the last five years and any involvement in certain
judicial or administrative proceedings for at least the last ten
years, is set forth below. There are no family relationships
among our executive officers and the nominees for director. Ages
are as of April 2, 2010.
Nominees
for Election as Directors with Terms Expiring in 2013
Each of the individuals named below is a nominee of the
Nominating & Governance Committee of the Board of
Directors and nominated by the full Board of Directors for
election as a director at the Annual Meeting. Ms. Grady is
independent, as defined in the listing standards of the NYSE.
Messrs. Foy and Talbot are not considered independent
directors. The current term of Ms. Grady and
Messrs. Foy and Talbot expires May 12, 2010.
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Lois W.
Grady, 65, Director since August 2004
Lois W. Grady has been a director of Symetra since August 2004
and has served as Vice Chairman of the Board since May 2009.
Ms. Grady served as Executive Vice President and Director
of Investment Products Services of Hartford Life, Inc. from 2002
until her retirement in April 2004 and as Senior Vice President
and Director of Investment Products Services of Hartford Life,
Inc. from 1998 through 2002. She began her career with Hartford
Life in 1983. She is also a director of OneBeacon Insurance
Group, Ltd. (NYSE: OB). Ms. Grady received her B.S. degree
from Southern Connecticut State University.
Ms. Grady is Vice Chairman of the Board of Directors and
Chair of the Compensation Committee.
Ms. Grady was selected to be a director of the Company, and
here now nominated to be a director of the Company, because of
the breadth of her experience and understanding of the financial
services industry and her decision-making abilities, which she
has applied in a variety of leadership roles in the financial
services industry.
David T.
Foy, 43, Director since March 2004
David T. Foy has been a director of Symetra since March 2004 and
served as Chairman of the Board from August 2004 until May 2009.
He has been Executive Vice President and Chief Financial Officer
of White Mountains Insurance Group, Ltd. since 2003. Previously,
he was Senior Vice President and Chief Financial Officer of
Hartford Life, Inc., which he joined in 1993. From 1989 to 1993,
Mr. Foy was with Milliman and Robertson, an actuarial
consulting firm. He is also a director of OneBeacon Insurance
Group, Ltd. (NYSE: OB). He received his B.S. degree from the
Rochester Institute of Technology.
Mr. Foy is Chair of the Finance Committee and a member of
the Audit Committee, Compensation Committee and
Nominating & Governance Committee and past member of
the IPO Committee.
Mr. Foy was selected to be a director of the Company, and
here now nominated to be a director of the Company, because of
his financial and analytical skills, which he has applied as a
Chief Financial Officer of a publicly traded insurance holding
company.
Randall
H. Talbot, 56, Director since August 2004
Randall H. Talbot has been a director, Chief Executive Officer
(CEO) and President of Symetra since August 2004 and director
and President of Symetra Life Insurance Company since February
1998. He is also an officer and director of various affiliates
of Symetra. From 1988 to 1998, he was Chief Executive Officer
and President of Talbot Financial Corporation. Mr. Talbot
is also a director of Concur Technologies, Inc. (NASDAQ: CNQR).
He received his B.S. degree from Arizona State University.
Mr. Talbot was a member of the IPO Committee.
Mr. Talbot was selected to be a director of the Company,
and here now nominated to be a director of the Company, because
of his over 30 years of experience in the life insurance
industry, his intimate understanding of the Companys
distributors and his proven leadership skills.
Recommendation
of the Board of Directors
We recommend a vote FOR Proposal 1 for the election of
each of the nominees listed herein.
INCUMBENT
DIRECTORS WITH TERMS EXPIRING IN 2011
Robert R.
Lusardi, 53, Director since August 2005
Robert R. Lusardi has been a director of Symetra since August
2005. In March 2010, Mr. Lusardi joined, as Senior Advisor,
Primus Guaranty, Ltd. (NYSE: PRS), where he has been a director
since 2002. He has been Chairman of Pentelia Ltd. and Eolia
Diamond Ltd., private investment funds, since 2007, and a
director at OneBeacon Insurance Group, Ltd. (NYSE: OB) from 2006
to 2010. He was President and Chief Executive Officer
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of White Mountains Financial Services LLC from 2005 to 2010.
Prior to joining White Mountains, Mr. Lusardi was an
Executive Vice President of XL Capital Ltd. from 1998 to 2005
and was a Managing Director at Lehman Brothers, where he was
employed from 1980 to 1998. He received his B.A. and M.A.
degrees from Oxford University and his M.B.A. from Harvard
University.
Mr. Lusardi was selected to be a director of the Company
because of his comprehensive understanding of financial
reporting requirements of a publicly traded financial services
company.
David I.
Schamis, 36, Director since August 2004
David I. Schamis has been a director of Symetra since August
2004. He has been Managing Director of
J.C. Flowers & Co. LLC since 2000. Previously, he
was with Salomon Smith Barney from 1995 to 2000. He received his
B.A. degree from Yale University. Mr. Schamis also serves
as the Chairman of the Board of Crump Group, Inc., and is a
director of Affirmative Insurance Holdings, Inc. (NASDAQ: AFFM)
and MF Global, Ltd. (NYSE: MF).
Mr. Schamis is a member of the Audit Committee and Finance
Committee.
Mr. Schamis was selected to be a director of the Company
because of the financial and analytical skills that he has
applied across diverse industries, such as life insurance,
non-standard automobile insurance, global cash and derivative
markets, global investment banking specializing in financial
services and multi-line wholesale insurance broker and
retirement services administration.
INCUMBENT
DIRECTORS WITH TERMS EXPIRING IN 2012
Sander M.
Levy, 48, Director since August 2004
Sander M. Levy has been a director of Symetra since August 2004.
He is a Managing Director of Vestar Capital Partners, a private
equity firm and was a founding partner at its inception in 1988.
He was previously a member of the Management Buyout Group of The
First Boston Corporation. He received his B.S. degree from the
Wharton School of the University of Pennsylvania, and his M.B.A.
degree from Columbia Business School. He is also a director of
Validus Holdings, Ltd. (NYSE: VR), Duff & Phelps
Corporation (NYSE: DUF) and Wilton Re Holdings Limited.
Mr. Levy is Chair of the Audit Committee and a member of
the Finance Committee and Nominating & Governance
Committee and past member of the IPO Committee.
Mr. Levy was selected to be a director of the Company
because of his accounting and financial background and his
advisory experience for both publicly traded and private
companies across various industries.
Lowndes
A. Smith, 70, Director since June 2007
Lowndes A. Smith has been a director of Symetra since June 2007
and has served as Chairman of the Board since May 2009.
Mr. Smith has served as Managing Partner of Whittington
Gray Associates since 2003. Mr. Smith formerly served as
Vice Chairman of The Hartford Financial Services Group, Inc.
(The Hartford) and President and CEO of Hartford
Life Insurance Company until his retirement in 2002. He joined
The Hartford in 1968. Mr. Smith also serves as Chairman of
OneBeacon Insurance Group, Ltd. (NYSE: OB) and is a director of
White Mountains Insurance Group, Ltd. (NYSE: WTM) and 72
investment companies in the mutual funds of The Hartford. He
received his B.S. degree from Babson College.
Mr. Smith is Chairman of the Board of Directors, Chair of
the Nominating & Governance Committee and a member of
the Audit Committee and Compensation Committee and past member
of the IPO Committee.
Mr. Smith was selected to be a director of the Company
because of his more than 40 years of experience in the
insurance industry, including property and casualty and the life
industry and his demonstrated leadership capabilities, as well
as his experience gained from having served on many publicly
traded and private company boards in various capacities,
including having served on the board of the American Council of
Life Insurers and as Chairman of the Connecticut Childrens
Medical Hospital.
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed
Ernst & Young LLP (E&Y) to serve as
the independent registered public accounting firm to audit the
Companys financial statements for 2010. E&Y also
served as the Companys independent registered public
accounting firm for our 2009 fiscal year. Our By-Laws do not
require that the stockholders ratify the appointment of E&Y
as our independent registered public accounting firm. The Board
of Directors is requesting the stockholders to ratify this
appointment as a means of soliciting stockholders opinions
and as a matter of good corporate practice. The Board of
Directors unanimously recommends that the stockholders of the
Company vote FOR the ratification of the appointment of
Ernst & Young LLP as the Companys independent
registered public accounting firm for the 2010 fiscal year.
Representatives of E&Y are expected to be present at the
Annual Meeting. The E&Y representatives will have an
opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions from
stockholders. The affirmative vote of a majority of the votes
present in person or by proxy and entitled to vote at the
meeting is required to ratify the appointment of
Ernst & Young LLP. If the stockholders do not ratify
the appointment, the Audit Committee will consider any
information submitted by the stockholders in determining whether
to retain E&Y as the Companys independent registered
public accounting firm for the 2010 fiscal year. Even if the
appointment is ratified, the Audit Committee in its discretion
may change the appointment at any time during the year if it
determines that a change would be in the best interests of the
Company and its stockholders.
Recommendation
of the Board of Directors
The Board of Directors recommends that stockholders vote FOR
Proposal 2 to appoint the Independent Registered Public
Accounting Firm.
DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors met six times in 2009.
Our Board of Directors has four standing committees. Each
standing committee is comprised of at least two independent
directors and operates under a written charter, which charters
are all available on our website www.symetra.com, by clicking on
Investors and then by clicking on Corporate
Governance.
During 2009, the Board of Directors also formed an ad hoc
committee, the IPO Committee, in connection with our initial
public offering.
Director
Independence
Our Board of Directors has examined the relationship between
each of our non-employee directors and the Company and has
determined that Messrs. Levy, Schamis and Smith and
Ms. Grady qualify as independent directors in
accordance with the published listing requirements of the NYSE.
In addition, the Board of Directors have determined that
Messrs. Foy and Lusardi are not independent directors due
to Mr. Foys current service as Executive Vice President
and Chief Financial Officer of White Mountains Insurance Group,
Ltd. and Mr. Lusardis recent service as President and
Chief Executive Officer of White Mountains Financial Services,
LLC, an affiliate of White Mountains Insurance Group, Ltd. White
Mountains Insurance Group, Ltd. is a beneficial owner of
26,887,872 shares of our Common Stock, which includes
warrants exercisable for 9,487,872 shares of our Common
Stock. A majority of our investments are managed by White
Mountains Advisors LLC, a wholly owned subsidiary of White
Mountains Insurance Group, Ltd. By January 22, 2011, all
members of the Audit Committee will be independent directors
according to the rules and regulations of the SEC and the NYSE
and at least one member will be an audit committee
financial expert, as such term is defined in Item 407
of
Regulation S-K.
Mr. Talbot does not qualify as independent director because
he is an employee of the Company.
No incumbent director attended fewer than 75% of the aggregate
of (1) the total number of meetings of the Board of
Directors and (2) the total number of meetings held by all
committees of the Board on which he or she served during 2009.
All of the incumbent directors except Messrs. Levy and
Schamis attended our May 13, 2009
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Annual Meeting of Stockholders. All directors are expected to
attend each meeting of our Board of Directors and the committees
on which they serve and are also expected to attend our annual
meetings of stockholders.
Audit
Committee
Our Audit Committee (Audit Committee) met nine times
in 2009.
The members of the Audit Committee are directors Levy, who
chairs the committee, Foy, Schamis and Smith.
The Audit Committee has the responsibility to assist the Board
in fulfilling its oversight responsibilities to the
Companys stockholders and the other important
constituencies the Board serves. The primary purposes of the
Committee are to: (1) assist Board oversight of the
integrity of the Companys financial statements, the
qualifications and independence of the Companys
independent auditors, the performance of the Companys
internal audit function and the independent auditors and the
Companys compliance with legal and regulatory
requirements; (2) provide an avenue of communication among
the independent auditors, management, the internal auditors and
the Board; and (3) prepare the Audit Committee Report
required by the rules of the SEC to be included in the
Companys annual proxy statement.
Effective March 4, 2010, the Audit Committee adopted the
Audit Committee Independent Auditor Services Pre-Approval Policy
for pre-approval of Audit, Audit-Related, Tax and Permissible
Non-Audit Services. This policy is attached as Appendix I
to this proxy statement and is also available on the
Companys website at www.symetra.com, click on
Investors Relations and then on Corporate
Governance. Among other things, this policy sets forth the
procedure for the Audit Committee to pre-approve all audit,
audit-related, tax and other permissible non-audit services,
other than the de minimus exception. Notwithstanding the
de minimus exception, it is the intent of the Audit
Committee that its standard practice will be to pre-approve all
permissible non-audit services. The Audit Committee delegated
the pre-approval authority to the Chairman of the Audit
Committee to approve any one or more individual audit,
audit-related, tax or permitted non-audit services.
Compensation
Committee
Our Compensation Committee (Compensation Committee)
met four times in 2009.
The members of the Compensation Committee are directors Grady,
who chairs the Compensation Committee, Foy and Smith.
Ms. Grady and Mr. Smith each meet the requirement of a
non-employee director under SEC rules.
The purpose of the Compensation Committee is to (i) review
and make recommendations on director compensation,
(ii) discharge the Boards responsibilities relating
to the compensation of executives, (iii) oversee the
administration of the Companys (and, to the extent the
Compensation Committee deems appropriate, the Companys
major subsidiaries) compensation plans, in particular the
incentive compensation and equity-based plans and
(iv) prepare the Annual Report on Executive Compensation
required by the rules and regulations of the SEC to be included
in the Companys annual proxy statement.
Nominating &
Governance Committee
The Nominating & Governance Committee was formed as of
January 21, 2010, which is the effective date of our
Registration Statement on
Form S-1.
The members of the Nominating & Governance Committee
are directors Smith, who chairs the Nominating &
Governance Committee, Foy and Levy. Its functions are to
consider and recommend to the Board all nominees for possible
election and re-election to the Board of Directors, and to
consider all matters relating to the size, composition and
governance of the Board and the general subject matter, size and
composition of Board committees.
The Nominating & Governance Committee is responsible
for assessing and annually reviewing with the Board, the
requisite skills and characteristics of new Board members as
well as the composition of the Board as a whole. The
Nominating & Governance Committee has not established
any specific minimum criteria or qualifications that a candidate
must possess. Rather, the Nominating & Governance
Committee considers a candidates independence, as well as
factors such as integrity, skills, expertise, breadth of
experience, knowledge about the
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Companys business or industry, ownership interest in the
Company and willingness to devote adequate time and effort to
Board responsibilities in the context of the existing
composition and needs of the Board and its committees. The
Nominating & Governance Committee also considers the
candidates experience in relation to that of the other
Board members and any other factors it deems appropriate,
including, among other things, diversity. The
Nominating & Governance Committee views diversity
broadly, encompassing differing viewpoints, professional
experience, industry background, education, geographical
orientation and particular skill sets, as well as race and
gender.
The Nominating & Governance Committee will also make
recommendations to the Board regarding nominees for director as
provided in its charter and in accordance with the provisions of
the Companys Corporate Governance Guidelines.
Consideration of a nominee for the Board of Directors involves a
series of internal discussions, review of a nominees
background and experience and interviews of the nominee. In
general, it is anticipated that nominees will be suggested by
members of the Board of Directors or our officers. The
Nominating & Governance Committee then will meet to
consider and approve the final nominees and either makes its
recommendation to the Board of Directors to fill a vacancy, add
an additional member or recommend a slate of nominees to the
Board of Directors for nomination and election to the Board of
Directors. Director candidates recommended by the
Nominating & Governance Committee for election at an
annual meeting are subject to approval by the full Board of
Directors.
Finance
Committee
Our Finance Committee met three times in 2009.
The members of the Finance Committee are directors Foy, who
chairs the Committee, Levy and Schamis. The purpose of the
Finance Committee is to assist the Board in fulfilling its
oversight responsibilities with respect to (i) the
Companys financial, investment and capital management
policies, (ii) the Companys financial risk
management, and (iii) mergers, acquisitions and
divestitures by the Company.
IPO
Committee
Our IPO Committee met three times in 2009.
The members of the IPO Committee were directors Foy, Levy, Smith
and Talbot. Upon the effective date of our Registration
Statement on
Form S-1,
the IPO Committee was disbanded. The IPO Committee was
constituted for matters related to our IPO.
CORPORATE
GOVERNANCE
We maintain corporate governance information on our website,
which includes key information about our corporate governance
initiatives, including our Corporate Governance Guidelines, Code
of Business Conduct and charters for the standing committees of
the Board of Directors. The corporate governance information can
be found at www.symetra.com by clicking on Investors
and then on Corporate Governance. The documents
noted above will also be provided without charge to any
stockholder who requests them by making a written request to the
Company, at the address shown on the cover of this Proxy
Statement. Any changes to these documents, and any waivers
granted by us with respect to our Code of Business Conduct, will
be posted on our website.
We also post on our website our 2009 Annual Report on
Form 10-K,
as filed with the SEC. The Annual Report on
Form 10-K
can be found at www.symetra.com by clicking on
Investors and then on SEC Filings. We
will also furnish, upon written request and without charge, a
printed copy of the 2009 Annual Report on
Form 10-K
to each person whose proxy is solicited and to each person
representing that, as of the record date of the Annual Meeting,
he or she was a beneficial owner of shares entitled to be voted
at the meeting. Such written request should be directed to the
Company at the address shown on the cover of this Proxy
Statement.
7
Our policies and practices reflect corporate governance
initiatives that are in compliance with the listing requirements
of the NYSE and the corporate governance requirements of the
Sarbanes-Oxley Act of 2002, including:
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The Board of Directors has adopted clear corporate governance
policies;
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A majority of the Board of Directors is independent of the
Company and its management;
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The non-management directors meet regularly without management
present;
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The charters of the Board standing committees clearly establish
their respective roles and responsibilities;
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We have a Code of Business Conduct that is monitored by the
Audit Committee and is annually affirmed by our directors and
executive officers;
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Our Code of Business Conduct applies to all directors, officers
and employees;
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We have a hotline available to all employees, and the Audit
Committee has procedures in place for the anonymous submission
of employee complaints on accounting, internal controls,
auditing or other matters; and
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Our internal audit function maintains critical oversight over
the key areas of our business and financial processes and
controls, and reports directly to the Audit Committee.
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Within a year of the completion of our initial public offering,
all members of the Audit Committee, Compensation Committee, and
Nominating & Governance Committee will be independent
directors.
Interested parties may communicate with the Board of Directors,
any of the Boards committees or any individual member of
the Board by writing to the addressee, in care of the Corporate
Secretary, at the address shown on the cover of this Proxy
Statement.
Board
Leadership Structure
The Boards current leadership structure separates the
position of Chairman of the Board and CEO. Randall H. Talbot
serves as our CEO, and Lowndes A. Smith serves as our Chairman
of the Board. We believe that separating these two positions is
in the best interest of the Company because it enables
Mr. Talbot to guide our newly public company and manage the
day-to-day
complexities of our business, while enabling Mr. Smith to
provide leadership at the Board level. Although the positions of
Chairman and CEO are currently separate, the Board believes
there is no single best organizational model for all
circumstances, and the Board retains the authority to combine
the positions of Chairman and CEO if it deems such action
appropriate in the future.
Board
Oversight of Risk Management
The Board believes that overseeing how management manages the
Companys risks is one of its most important
responsibilities. The Company faces risk in a variety of areas,
including: business strategy; government regulation; financial
condition; portfolio management; development of new products and
strategies; competition for talent; operational efficiency; and
reputation, among other areas. The Audit Committee, in
coordination with the Finance Committee, reviews the adequacy of
risk management and, on at least an annual basis, reviews
significant risks identified by the chief risk officer.
COMPENSATION
OF NON-EMPLOYEE DIRECTORS
In 2009, we paid all non-employee directors a $20,000 annual
retainer. The Chairman of the Board earned an additional annual
retainer of $300,000. The Vice-Chairman of the Board earned an
additional annual retainer of $40,000. The Chairman of the Audit
Committee, Compensation Committee and Finance Committee each
received a $15,000, $10,000 and $15,000 annual retainer,
respectively, for acting as such. Non-employee directors earned
$2,000 for each Board meeting participation and $1,000 for each
committee meeting participation. Non-employee directors are also
reimbursed for travel, hotel accommodations, meals, and other
necessary expenses.
8
In addition, members of the Board of Directors of First Symetra
National Life Insurance Co. of New York, one of our
subsidiaries, receive an annual retainer of $500, and fees of
$100 per board meeting and $50 per committee meeting attended.
None of our employees receive any compensation for acting as a
director.
The following table summarizes non-employee director
compensation earned in 2009:
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Total Fees
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Earned or Paid
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Name
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in Cash ($)
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David T. Foy(1)
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66,000
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Lois W. Grady(2)
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86,900
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Sander M. Levy(3)
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60,900
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Robert R. Lusardi(4)
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32,000
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David I. Schamis(5)
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42,900
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Lowndes A. Smith(6)
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339,800
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(1) |
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Includes Chairman of the Finance Committee retainer, annual
retainer and Board, Audit Committee, Compensation Committee,
Finance Committee and IPO Committee meeting fees. Mr. Foy
served as Chairman of the Board until May 2009. |
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(2) |
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Includes Vice Chairman of the Board retainer, Chairman of the
Compensation Committee retainer, annual retainer and Board and
Compensation Committee meeting fees. Ms. Grady also serves
on the First Symetra National Life Insurance Company of New York
Board of Directors and Audit Committee. |
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(3) |
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Includes Chairman of the Audit Committee retainer, annual
retainer and Board, Audit Committee, Finance Committee and IPO
Committee meeting fees. Mr. Levy also serves on the First
Symetra National Life Insurance Company of New York Board of
Directors and Audit Committee. All compensation is paid to
Vestar Capital Partners. |
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(4) |
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Includes annual retainer and Board meeting fees. |
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(5) |
|
Includes annual retainer and Board, Audit Committee and Finance
Committee meeting fees. Mr. Schamis also serves on the
First Symetra National Life Insurance Company of New York Board
of Directors and Audit Committee. All compensation is paid to
J.C. Flowers & Co. LLC. |
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(6) |
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Includes Chairman of the Board retainer, annual retainer and
Board, Compensation Committee and IPO Committee meeting fees.
Mr. Smith has served as Chairman of the Board since May
2009. Mr. Smith also serves on the First Symetra National
Life Insurance Company of New York Board of Directors. |
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of March 4,
2010, as to each person known by us to own beneficially more
than five (5) percent of the Common Stock of the Company.
Beneficial ownership is determined in accordance with the SEC
rules and includes voting or investment power with respect to
the securities. Shares of Common Stock subject to options and
warrants that are currently exercisable or exercisable within
60 days are deemed to be outstanding and beneficially owned
by the person holding such options and warrants. Such shares,
however, are not deemed to be outstanding for the purposes of
computing the percentage ownership of any other person.
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Beneficial Owner of 5% or More:
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Common Stock
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Percent of Class(1)
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Berkshire Hathaway Inc.(2)(3)
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26,887,872
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21.1
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%
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White Mountains Insurance Group, Ltd.(2)(4)
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26,887,872
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21.1
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Franklin Mutual Advisers, LLC(5)
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10,875,000
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9.2
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Vestar Capital Partners(6)
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6,089,999
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5.2
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Highfields Capital Management LP(7)
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6,089,998
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5.2
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9
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(1) |
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Percentage of beneficial ownership is based on
118,086,019 shares of our common stock outstanding as of
March 4, 2010. |
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(2) |
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Includes warrants exercisable for 9,487,872 shares. |
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(3) |
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Represents shares held by General Reinsurance Corporation
(Gen Re), a subsidiary of General Re Corporation
(General Re). General Re is a subsidiary of
Berkshire Hathaway Inc. (Berkshire). As General Re
and Berkshire are each in the chain of ownership of Gen Re, each
of Berkshire and General Re may be deemed to both beneficially
own and have a pecuniary interest in all shares of the
Companys common stock owned by Gen Re. Warren E. Buffett,
as the controlling stockholder of Berkshire, may be deemed to
beneficially own, but only to the extent he has a pecuniary
interest in, the shares of the Companys common stock owned
by Gen Re. Mr. Buffett disclaims beneficial ownership of
the reported securities except to the extent of his pecuniary
interest therein. The address of Berkshire is 3555 Farnam
Street, Omaha, NE 68131. |
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(4) |
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Represents shares held by White Mountains Holdings (NL) B.V.
White Mountains Holdings (NL) B.V. (WMNL) is a
subsidiary of White Mountains Insurance Group, Ltd. (White
Mountains). White Mountains may be deemed to both
beneficially own and have a pecuniary interest in all shares of
the Companys common stock owned by WMNL. The address of
White Mountains is 80 South Main Street, Hanover, NH 03755. |
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(5) |
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Represents 1,183,200 shares held by Franklin Mutual Beacon
Fund, 445,440 shares held by Franklin Mutual Recovery Fund,
255,780 shares held by Mutual Beacon Fund (Canada),
1,020,510 shares held by Mutual Financial Services Fund,
3,434,760 shares held by Mutual Quest Fund,
84,390 shares held by Mutual Recovery Fund, Ltd. and
4,450,920 shares held by Mutual Beacon Fund (collectively,
the Franklin Funds). The Franklin Funds are
investment advisory clients of Franklin Mutual Advisers, LLC
(FMA). None of the Franklin Funds owns more than 5%
of the Companys common stock. Pursuant to investment
advisory agreements with each of the Franklin Funds, FMA has
sole voting and investment power over all the securities owned
by the Franklin Funds, including the shares of the
Companys common stock. Peter Langerman, chairman,
president and chief executive officer of FMA, has overall
responsibility for exercising voting and investment control over
the Franklin Funds shares of the Companys common
stock. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, FMA and Peter Langerman are
deemed to be beneficial owners of the shares; however, FMA and
Peter Langerman each expressly disclaim beneficial ownership of
the shares of the Companys common stock because neither
Mr. Langerman nor FMA has any right to any economic
benefits in, nor any interest in, dividends or proceeds from the
sale of shares of the Companys common stock. The address
of FMA is 101 John F. Kennedy Parkway, Short Hills, NJ 07078. |
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(6) |
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Represents 128,424 shares held by Vestar Symetra LLC and
5,961,575 shares held by Vestar Capital Partners IV, LP,
entities that are affiliated with or managed by Vestar Capital
Partners. Sander M. Levy, one of the Companys directors,
is a managing director of Vestar Capital Partners. Mr. Levy
disclaims beneficial ownership in the shares of the
Companys common stock except to the extent of any
pecuniary interest therein. The address of Vestar Capital
Partners is 245 Park Avenue, 41st Floor, New York, NY 10167. |
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(7) |
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Represents 553,876 shares held by Highfields Capital I LP
(Highfields I), 1,306,426 shares held by
Highfields Capital II LP (Highfields II) and
4,229,696 shares held by Highfields Capital III L.P.
(Highfields III and together with Highfields I and
Highfields II, the Highfields Funds). Highfields
Capital Management LP (Highfields Capital
Management) serves as the investment manager to each of
the Highfields Funds. Highfields GP LLC (Highfields
GP) is the general partner of Highfields Capital
Management. Highfields Associates LLC (Highfields
Associates) is the general partner of each of the
Highfields Funds. Jonathon S. Jacobson and Richard L. Grubman
are Senior Managing Members of Highfields Associates and
Managing Members of Highfields GP. Each of Highfields I,
Highfields II, Highfields III, Highfields Capital Management,
Highfields GP, Highfields Associates, Mr. Jacobson and
Mr. Grubman disclaims beneficial ownership of any
securities owned beneficially or of record by any person or
persons other than itself or himself. The address of each of
Highfields I, Highfields II, Highfields Capital Management,
Highfields GP, Highfields Associates, Mr. Jacobson and
Mr. Grubman is
c/o Highfields
Capital Management LP, John Hancock Tower, 200 Clarendon Street,
59th Floor, Boston, Massachusetts 02116. The address of
Highfields III is
c/o Goldman
Sachs (Cayman) Trust, Limited, Suite 3307, Gardenia Court,
45 Market Street, Camana Bay, P.O. Box 906, Grand
Cayman KY1-1101, Cayman Islands. |
10
The following table sets forth information as to our Common
Stock beneficially owned as of March 4, 2010 by each
director and nominee, each of the named executive officers
listed in the Summary Compensation Table and by all directors
and named executive officers as a group:
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Directors and Executive Officers
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Common Stock
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Percent of Class
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Lowndes A. Smith
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10,000
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*
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Lois W. Grady
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7,000
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*
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Randall H. Talbot(1)
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196,708
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*
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Margaret A. Meister(2)
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22,030
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*
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Jennifer V. Davies(2)
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2,769
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*
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Richard J. Lindsay(2)
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3,476
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*
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Patrick B. McCormick(2)
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2,946
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*
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David T. Foy(3)
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26,987,872
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21.2
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%
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Sander M. Levy(4)
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6,089,999
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5.2
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Robert R. Lusardi(5)
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26,887,872
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|
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21.1
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David I. Schamis
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0
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*
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Directors and named executive officers as a group
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33,322,800
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28.2
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|
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* |
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Represents ownership of less than 1% |
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(1) |
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Includes 131,358 shares of restricted stock. |
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(2) |
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Represents shares of restricted stock. |
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(3) |
|
Represents 26,887,872 shares owned by affiliates of White
Mountains Insurance Group, Ltd., of which Mr. Foy is an
executive officer. Includes warrants exercisable by affiliates
of White Mountains Insurance Group, Ltd. for
9,487,872 shares. Mr. Foy disclaims beneficial
ownership of all such shares. Represents 100,000 shares
owned by Mr. Foy. |
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(4) |
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Represents shares owned by affiliates of Vestar Capital
Partners, of which Mr. Levy is a Managing Director.
Mr. Levy disclaims beneficial ownership of all such shares. |
|
(5) |
|
Represents shares owned by affiliates of White Mountains
Insurance Group, Ltd., of which Mr. Lusardi was an
executive officer until March 2010. Mr. Lusardi disclaims
beneficial ownership of all such shares. Includes warrants
exercisable by affiliates of White Mountains Insurance Group,
Ltd. for 9,487,872 shares. |
EXECUTIVE
COMPENSATION
Overview
Compensation
Discussion and Analysis
The discussion and analysis that follow provide an overview of
the Companys executive compensation program that existed
in 2009 and in years prior.
The Named
Executive Officers
The following Compensation Discussion and Analysis describes the
compensation earned by, awarded to or paid to our CEO, our Chief
Financial Officer (CFO) and our three other most highly paid
executive officers in 2009 as determined under the rules of the
SEC, collectively referred to as the Named Executive Officers
and listed below. Ages are as of April 2, 2010.
Randall H. Talbot, 56, has been a director, CEO and
President of Symetra since August 2004 and director and
President of Symetra Life Insurance Company since February 1998.
He is also an officer and director of various affiliates of
Symetra. From 1988 to 1998, he was CEO and President of Talbot
Financial Corporation. Mr. Talbot is
11
also a director of Concur Technologies, Inc. (NASDAQ: CNQR). He
received his B.S. degree from Arizona State University.
Margaret A. Meister, 45, has been Executive Vice
President and CFO of Symetra since February 2006 and Executive
Vice President and CFO of Symetra Life Insurance Company since
March 2006. She is also a director of Symetra Life Insurance
Company as well as an officer and director of various affiliates
of Symetra. Ms. Meister is a fellow of the Society of
Actuaries. She joined Symetra Life Insurance Company in 1988 and
served in a variety of positions, including Chief Actuary and
Vice President, prior to being promoted to her current position.
Ms. Meister received her B.A. degree from Whitman College.
Jennifer V. Davies, 51, has been Senior Vice President of
Symetra since June 2007 and of Symetra Life Insurance Company
since August 2004 and is responsible for Enterprise Development.
She is also a director of Symetra Life Insurance Company as well
as an officer and director of various affiliates of Symetra.
Ms. Davies joined Symetra Life Insurance Company in 1992,
and served in a variety of positions, including Vice President,
prior to being promoted to her current position. Ms. Davies
was employed by Sons of Norway from 1986 to 1992, and
ITT/Hartford Life Insurance Company from 1982 to 1986.
Ms. Davies received her B.A. degree from the University of
Minnesota and her M.A. degree from the University of Virginia.
Richard J. Lindsay, 53, has been Senior Vice President of
Symetra Life Insurance Company since August 2006 and is
responsible for the operations of its Life & Annuities
Division. He also serves as an officer and director of various
other affiliates of Symetra. Prior to joining Symetra Life
Insurance Company, Mr. Lindsay had worked for AIG VALIC
since 1998, where his last position was as an Executive Vice
President of AIG VALIC and as President of VALIC Financial
Advisors, an affiliated broker-dealer. Prior to joining AIG
VALIC, Mr. Lindsay spent 11 years with CoreStates
Financial Corp. Mr. Lindsay received his B.A. degree from
Brown University, his M.B.A. degree from Wharton School of the
University of Pennsylvania, and his J.D. degree from Temple
University.
Patrick B. McCormick, 53, has been Senior Vice President
of Symetra Life Insurance Company since June 1999 and is
responsible for Distribution. Mr. McCormick joined Symetra
Life Insurance Company in 1995, and served in a variety of
positions, including Vice President, prior to being promoted to
his current position. He is also an officer and director of
various other affiliates of Symetra.
Compensation
Philosophy
Our overall executive compensation program is designed to align
the financial interests of our executives with those of our
stockholders. We focus on
pay-for-performance
(both individual and company performance) by providing
incentives that emphasize long-term value creation, thereby
putting a large portion of our executives pay at risk.
Based on this philosophy, the Compensation Committee has
maintained base salaries that may be lower than those paid by
other financial services companies and life insurers and has
chosen not to provide pensions or other perquisites, choosing
instead to grant the largest portion of compensation as
long-term incentive compensation, which is based on the growth
of intrinsic business value per share.
Pay-for-performance. A
majority of our executive officers compensation is
directly linked to our short- and long-term financial goals,
thereby providing incentives for both short- and long-term
results. Our Annual Incentive Bonus Plan rewards performance
relative to short-term results based on a combination of meeting
company performance goals and individual performance goals. The
Symetra Financial Corporation Performance Share Plan (the
Performance Share Plan) rewards long-term performance relative
to financial goals set on three-year cycles.
Pay at risk. The pay at risk approach of our
incentive compensation is intended to align with the executive
officers impact on company performance over the short- and
long-term. All executive officers have a significant amount of
their total annual compensation at risk through company
performance-based incentives.
Competitive opportunities. As we grow and
strive to reach competitive financial goals, our need for
experienced executive talent will continue. Our compensation
opportunities must be competitive to allow us to attract and
retain talented executives in our field.
12
Compensation
Process
The Compensation Committee, according to its charter, is
responsible for approving all compensation for our Named
Executive Officers as well as our other executive officers and
for administering the Performance Share Plan with respect to all
participants.
The Compensation Committee relies on Randall H. Talbot, our CEO,
and Christine A. Katzmar Holmes, our Vice President of Human
Resources, to recommend compensation programs and awards for
executive officers, subject to Compensation Committee approval,
and to administer approved programs for all employees.
Mr. Talbot and Ms. Katzmar Holmes attend Compensation
Committee meetings and, at the committees request, present
managements analysis and recommendations regarding
compensation actions including our base salaries, Annual
Incentive Bonus Plan, Performance Share Plan and Equity Plan.
Compensation actions are typically considered at the first
meeting of the Compensation Committee of each year after
financial results for the prior year are available. In the
meeting, Mr. Talbot also presents a self-evaluation
outlining his performance to assist the Compensation Committee
in determining his total compensation for the year. The
Compensation Committee then holds a private session to discuss
and determine Mr. Talbots total compensation.
The Compensation Committee is comprised of members with
extensive business experience who have, based on their
experience, set compensation levels and performance targets at
what they believe to be appropriate levels.
In 2009, the Compensation Committee considered adding an equity
component to our long-term incentive plans and asked for a
review by a compensation consultant. Towers Perrin was
contracted for that review. The Compensation Committee
determined based on a variety of factors, including the
compensation consultants review, not to add an equity
component to our Performance Share Plan, although equity awards
were granted to our CEO and CFO in 2009.
Elements
of Compensation
We currently compensate our executives through a combination of
base salary, annual incentive compensation or, in the case of
our sales executive, sales incentive compensation, and long-term
incentive compensation.
Base salary. Our philosophy is to make base
salary a relatively smaller portion of the overall compensation
package of our executive officers relative to what we believe to
be common in the industry. While executive performance is
annually reviewed, base salaries for executives are not
regularly adjusted. Our practice of not adjusting base salaries
based on performance is consistent with our philosophy that the
majority of compensation should be variable based on our actual
long-term and short-term performance and that of the executive.
Annual incentive compensation. We pay annual
incentive cash awards to our Named Executive Officers, other
than Mr. McCormick, through the Annual Incentive Bonus Plan
in March of each year for performance in the prior calendar
year. The Annual Incentive Bonus Plan awards are based on our
fulfillment of performance goals set at the beginning of the
year and the executives individual role in that goal
fulfillment.
The Compensation Committee confirms the performance goals and
approves the target aggregate bonus pool for the Annual
Incentive Bonus Plan each year. The actual aggregate bonus pool
for the Annual Incentive Bonus Plan is determined by the sum of
all participants target awards and can range from 0% to
200% of this target, based on our fulfillment of performance
goals. The Annual Incentive Bonus Plan establishes the metric
used to determine the actual aggregate bonus pool as the growth
in our intrinsic business value per share, which is the average
of the growth of both our adjusted book value per share and
enterprise value per share during the plan year. For 2009, the
growth target was 13%.
After the aggregate bonus pool for the Annual Incentive Bonus
Plan is established, each executive is allocated a portion of
the pool based on his or her individual target and individual
performance. The individual target bonus for our CEO and CFO is
equal to 50% of his or her base salary while the individual
target bonus for Ms. Davies and Mr. Lindsay is 35% of
base salary. After reviewing the performance of each executive,
Mr. Talbot recommends to the Compensation Committee a
percentage of that executives individual target to be paid
for the performance year
13
based on that executives individual performance compared
to goals or expectations set by that executive and
Mr. Talbot. Mr. Talbots recommended annual
incentive bonus is subject to the total funding level for the
Annual Incentive Bonus Plan and the average percentage of target
bonuses paid to the executive team.
Mr. Talbots 2009 goals were based on the Symetra
vision statement and such goals included: meet or exceed a 13%
return on equity; be the go-to company by partnering
with advisors, brokers and financial institutions to deliver on
our promises to be easy to work with and provide products that
bring value; increase customer value by ensuring each
interaction reinforces their choice to do business with Symetra;
and manage expenses not only by monitoring the bottom line but
by also finding innovative ways to improve business processes
and procedures. Ms. Meisters 2009 goals included:
meet or exceed a 13% return on equity; balance pricing of our
products; control expenses to plan; and provide financial
leadership. Mr. Lindsays 2009 goals included achieve
significant sales growth and develop and implement product
management in the Life & Annuities division.
Ms. Davies 2009 goals included pursue enterprise
development opportunities and complete strategic projects.
While growth in Symetras intrinsic business value per
share during 2009 was below the threshold of 10%, the
Compensation Committee determined to fund a discretionary bonus
pool outside of the Annual Incentive Bonus Plan at 60% for
bonuses to be paid in March 2010. The level of funding for this
discretionary bonus pool was based on the Compensation
Committees evaluation of Symetras operating
performance for 2009. The Compensation Committee approved
payouts under this bonus pool to certain Named Executive
Officers based on each executives individual performance
during 2009. The total amounts of these bonus pool payouts for
Mr. Talbot, Ms. Meister, Mr. Lindsay and
Ms. Davies are set forth in the Summary Compensation Table
on page 17. These amounts are 100% of the target bonus
levels multiplied by the 60% funding level associated with the
Annual Incentive Bonus Plan for Mr. Talbot,
Ms. Meister, Mr. Lindsay and Ms. Davies.
Combining our overall company performance and individual
performance in determining the amount to be received by each
executive ensures that the interests of each executive are
aligned with our goals for financial success and that each
executive is rewarded for individual performance. In 2009, the
Annual Incentive Bonus target constitutes 5%, 9%, 11% and 10% of
total target compensation for Mr. Talbot, Ms. Meister,
Mr. Lindsay and Ms. Davies, respectively.
Sales incentive compensation. All sales
employees, including Mr. McCormick, participate in a sales
incentive program. The targets for Mr. McCormicks
Sales Incentive Plan are based on Sales and Distributions
financial plan and are designed to incentivize him to develop
new distribution relationships and expand existing
relationships. Mr. McCormick earns compensation based on a
percentage of sales for each product line for new net sales
volumes. The percentages decrease after a prescribed
sales-volume threshold is met. The percentages and thresholds
differ from product to product within each product line. The
range of percentages that applies before a sales threshold is
met is 0.000025%-0.002% and the range of sales thresholds is
$50,215,000-$1,000,000,000. The range of percentages that
applies after a sales threshold is met is 0.0000125%-0.001%. The
products to which this plan applies are individual life
products, fixed and variable annuities, income annuities and
bundled share products. Mr. McCormicks 2009 Sales
Incentive Plan also includes a Sales Effectiveness Payment
component pursuant to which he can earn up to $50,000 based on
the following criteria: 76% of the payment is based on sales
goals achievement per quarter and 24% is based on expense
management per quarter. Mr. McCormicks total sales
incentive target was 36% of his total target compensation for
2009. In 2009, Mr. McCormicks earned incentive
compensation was 96% of his goal.
The total 2009 incentive compensation for Mr. McCormick is
set forth in the Summary Compensation Table on page 17.
Long-Term
Incentive Compensation
The Performance Share Plan. We primarily
provide long-term incentives to our Named Executive Officers and
other executive officers through the Performance Share Plan.
This long-term incentive compensation is in the form of
unit-based performance awards. Awards are granted annually. Each
award period is typically three years, therefore overlapping
other award periods. At the time of grant, each target
performance unit has the financial value of $100.00. Thereafter,
each target performance unit has a notional value of $100.00 x
(1 + aggregate percentage growth per share). At the end of the
award period, the Compensation Committee determines the level of
attainment
14
of the performance target and assigns a performance percentage
of 0% to 200% of target based on that determination. The matured
performance units are paid in cash in an amount equal to the
then notional value of the target shares multiplied by the
performance percentage.
For the
2007-2009
and
2008-2010
cycles under the Performance Share Plan, the performance target
is 13% compound annualized growth in our intrinsic business
value per share with a threshold performance target of 10% and a
maximum performance target of 16%. Growth in our intrinsic
business value per share equals the average of the compound
annualized growth rates during the award period of the adjusted
book value per share and the enterprise value per share,
excluding unrealized gains or losses other than unrealized gains
or losses on the value of equities held as investments.
For the
2009-2011
cycle under the Performance Share Plan, the performance target
is 13% modified operating return on equity averaged over the
award period measured by modified operating income divided by
beginning of year adjusted book value with a threshold
performance target of 8% and a maximum performance target of
18%. Modified operating income equals net income less net
realized investment gains/losses less hedge funds investment
income, plus
30-year
Standard & Poors A rated bond investment income
substituted for equity and hedge fund performance (valued
quarterly) and net investment gains/(losses) on fixed index
annuity (FIA) options. The metrics used to calculate the
performance target were changed for the
2009-2011
cycle under the Performance Share Plan in order to focus
management on achieving core earnings goals that are within
their control and to mitigate the volatile effects of upward and
downward movements on equities and hedge funds.
The performance percentage ranges from 0% to 200% for all
currently running performance cycles, although the Board of
Directors retains the discretion to make an award outside the
Performance Share Plan if the threshold is not met. For the
2007-2009
and the
2008-2010
cycles, if the compound annualized growth is 10% or lower, the
performance percentage will be 0%. If the compound annualized
growth is 16% or higher, the maximum performance percentage of
200% applies. For annualized percentage growth between 10% and
16%, the performance percentage will be determined on the basis
of straight line interpolation.
While the compound annualized growth in Symetras intrinsic
business value per share during the
2007-2009
cycle was below the threshold performance level of 10%, the
Compensation Committee modified the terms of the Performance
Share Plan, as disclosed in our Registration Statement on
Form S-1/A,
dated January 15, 2010. The plan for the
2007-2009
cycle was modified so that the payout would be based on the
annualized growth of modified operating return on equity from
2007 through 2009. Modified operating return on equity for a
year equals modified operating income in each year divided by
Symetras adjusted book value as of the first day of such
calendar year. With respect to each of the Named Executive
Officers, the Compensation Committee approved a 75.6%
performance percentage based on the revised performance metrics.
The amounts of these payouts are set forth in the Summary
Compensation Table on page 17.
It is anticipated that the threshold performance targets will
not be met for the
2008-2010
cycle. The Compensation Committee has the discretion to modify
the terms of awards granted, and anticipates that after the end
of the award period for this cycle, it will approve a
discretionary payout based on the modified operating return on
equity over the three-year period using a performance percentage
in the range of 70%-110%.
For the
2009-2011
cycle, if the modified operating return on equity is 8% or
lower, the performance percentage will be 0%. If the modified
operating return on equity is 18% or higher, the maximum
performance percentage of 200% applies. For modified operating
return on equity between 8% and 18%, the performance percentage
will be determined on the basis of straight line interpolation.
The target grants for the
2009-2011
cycle under the Performance Share Plan constitute 61%, 72%, 60%,
45% and 53% of target total compensation for Mr. Talbot,
Ms. Meister, Mr. Lindsay, Mr. McCormick and
Ms. Davies, respectively. Although awards of performance
shares were not specifically set at these percentages, the
Performance Share Plan is designed such that our Named Executive
Officers have a substantial proportion of their target total
compensation linked to the achievement of company performance
targets.
The Grants of Plan-Based Awards in 2009 table on
page 18 sets forth the grants made under the Performance
Share Plan to each Named Executive Officer in 2009. For the
Performance Share Plan, our CEOs recommendations and our
Compensation Committees determinations with respect to the
size of awards to participants are subjective,
15
and no proportional or other mathematical formula is applied,
nor are any specific factors considered. Our CEO received the
largest grant because he is responsible for our companys
overall business and financial performance. Our CFOs
awards have increased each year to reflect her increased level
of responsibility. The Senior Vice President,
Life & Annuities received a significant grant because
Mr. Lindsay is accountable for the results of several
business segments. The grant awarded to our Senior Vice
President, Enterprise Development, Ms. Davies, is
reflective of her duties as head of enterprise development for
the company. Our Senior Vice President, Distribution, receives a
relatively smaller grant because his sales incentive plan, which
is also
performance-based,
already constitutes a significant component of his overall
compensation.
The Equity Plan. We maintain an Equity Plan to
provide long-term incentives to our Named Executive Officers and
other employees, our non-employee directors and any consultants.
Prior to 2009, we did not make grants under the Equity Plan. Our
Compensation Committee administers the Equity Plan and
determines which individuals are eligible to receive awards, the
number of shares or units to be granted, the exercise or
purchase price for awards, the vesting schedule for each award
and the maximum term of each award. Awards may consist of stock
options, stock appreciation rights, restricted stock, restricted
stock units, performance shares/units and other stock-based
awards. On August 24, 2009, pursuant to the Equity Plan,
our CEO and CFO received grants for 75,270 and 7,890 shares
of restricted stock, respectively, that are scheduled to vest on
December 31, 2011, subject to their continued employment
through such date. These grants of restricted stock to our CEO
and CFO were made to align the interests of these executives
directly with the interests of our stockholders. The grants for
the
2009-2011
cycle under the Equity Plan constitute 21% of target total
compensation for Mr. Talbot and 5% for Ms. Meister.
Employment/severance/change-in-control
arrangements. We have no employment agreements
with our executive officers. All of our executive officers are
at will employees. In the event of a termination of
an executive officers employment by us without cause or by
the executive due to a constructive termination, in either case
within 12 months (in the case of the Equity Plan) or within
24 months (in the case of the Performance Share Plan) of a
change in control, executives receive certain payments and
accelerated vesting under our Performance Share Plan and our
Equity Plan as described in more detail beginning on
page 14. We provide for this
change-in-control
benefit as an incentive and retention mechanism that provides
security to our executives in the event that we experience a
change in ownership.
Retirement benefits. All of our employees,
including our Named Executive Officers, may participate in our
qualified 401(k) plan, which includes a safe harbor employer
match. The safe harbor employer match is equal to 100% of the
employee contributions up to the first 6% of eligible
compensation. We have no defined benefit pension plans,
non-qualified deferred compensation plans or retiree medical
plans.
Perquisites. Our executive officers receive
the same benefits that are available to all employees. Benefits
such as medical and dental insurance, life insurance, short- and
long-term disability, vacation and sick leave, tuition
reimbursement and professional education funding, charitable
gift matching, employee referral program and relocation
assistance are available to all employees. All employees are
also eligible for several discount programs including fitness
club memberships, computers/software, wireless programs, office
supplies, rental cars and hotels for personal use.
Tax
and Accounting Implications of Executive Compensation
Programs
Section 162(m) of the Internal Revenue Code limits the
deductibility of executive compensation paid by publicly held
companies to certain of their executive officers to $1,000,000
per individual per year to the extent that such compensation is
not performance-based, as defined in
Section 162(m). We intend to rely on an exemption from
Internal Revenue Code Section 162(m) for compensation plans
adopted prior to a companys IPO. This transition exemption
for our compensation plans will no longer be available to us
after the date of our annual meeting that occurs after the third
calendar year following the year of our IPO (i.e., our annual
meeting in 2014), or if we materially modify the plan earlier.
We will continue to consider the implications of Internal
Revenue Code Section 162(m) and the limits of deductibility
of compensation in excess of $1,000,000 as we design our
compensation programs going forward.
16
Actions
taken in 2010
At the March 4, 2010 Compensation Committee meeting, the
named executive officers were granted performance unit awards
for the
2010-2012
award cycle and restricted stock awards under the Equity Plan.
Performance against the target governing the performance units
will be determined by the Compensation Committee following the
end of 2012. The restricted shares are scheduled to vest on
December 31, 2012 based on continued employment through
such date.
Compensation
Committee Report
We have reviewed and discussed the Compensation Discussion and
Analysis included in this Proxy Statement with management. Based
on this review and discussion, we have recommended to the Board
of Directors that the Compensation Discussion and Analysis be
included in the Companys Proxy Statement relating to the
Annual Meeting and in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009.
The Compensation Committee
Lois W. Grady, Chairman
David T. Foy
Lowndes A. Smith
Summary
Compensation Table
The following table presents compensation earned during 2008 and
2009 by the Companys CEO, CFO and its three most highly
compensated executive officers other than the CEO and CFO (the
Named Executive Officers):
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Plan
|
|
|
All Other
|
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|
Total
|
|
Name and
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)
|
|
|
Randall H. Talbot
|
|
|
2009
|
|
|
|
525,000
|
|
|
|
3,325,137
|
|
|
|
984,532
|
|
|
|
|
|
|
|
15,267
|
|
|
|
4,849,936
|
|
President and CEO
|
|
|
2008
|
|
|
|
525,000
|
|
|
|
2,131,403
|
|
|
|
|
|
|
|
|
|
|
|
14,461
|
|
|
|
2,670,864
|
|
Margaret A. Meister
|
|
|
2009
|
|
|
|
300,000
|
|
|
|
1,040,291
|
|
|
|
103,201
|
|
|
|
|
|
|
|
15,024
|
|
|
|
1,458,516
|
|
Executive Vice President and CFO
|
|
|
2008
|
|
|
|
295,962
|
|
|
|
535,451
|
|
|
|
|
|
|
|
|
|
|
|
14,173
|
|
|
|
845,586
|
|
Richard J. Lindsay
|
|
|
2009
|
|
|
|
285,000
|
|
|
|
429,408
|
|
|
|
|
|
|
|
|
|
|
|
15,008
|
|
|
|
729,416
|
|
Senior Vice President, Life & Annuities
|
|
|
2008
|
|
|
|
285,000
|
|
|
|
293,595
|
|
|
|
|
|
|
|
|
|
|
|
14,159
|
|
|
|
592,754
|
|
Patrick B. McCormick
|
|
|
2009
|
|
|
|
200,000
|
|
|
|
290,367
|
|
|
|
|
|
|
|
229,635
|
|
|
|
15,046
|
|
|
|
735,048
|
|
Senior Vice President, Distribution
|
|
|
2008
|
|
|
|
200,000
|
|
|
|
354,837
|
|
|
|
|
|
|
|
|
|
|
|
14,225
|
|
|
|
569,062
|
|
Jennifer V. Davies(1)
|
|
|
2009
|
|
|
|
235,000
|
|
|
|
418,908
|
|
|
|
|
|
|
|
|
|
|
|
9,238
|
|
|
|
663,146
|
|
Senior Vice President, Enterprise Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
(1) |
|
Ms. Davies was not a named executive officer in 2008. |
|
(2) |
|
For 2008, represents the discretionary amounts awarded for the
2008 Annual Incentive Bonus Plan and the
2006-2008
cycle under the Performance Share Plan paid in March 2009. |
|
|
|
For 2009, represents the discretionary amounts awarded for the
2009 Annual Incentive Bonus Plan and the
2007-2009
cycle under the Performance Share Plan paid in March 2010. |
|
|
|
The following discretionary amounts were approved for the 2009
Annual Incentive Bonus Plan: Mr. Talbot received $157,500;
Ms. Meister received $90,000; Mr. Lindsay received
$59,850 and Ms. Davies received $49,350. |
17
|
|
|
|
|
The following amounts were approved under the
2007-2009
cycle of Performance Share Plan: Mr. Talbot received
$3,167,637; Ms. Meister received $950,291; Mr. Lindsay
received $369,558; Mr. McCormick received $290,367 and
Ms. Davies received $369,558. |
|
(3) |
|
Represents the fair value of the restricted stock shares at the
date of grant, rather than an amount paid to or realized by the
named executive officer. |
|
(4) |
|
Represents the amount Mr. McCormick earned as of
December 31, 2009 for his 2009 Sales Incentive Plan. |
|
(5) |
|
Represents (i) employer contributions to the Symetra
Financial Retirement Savings Plan were $13,800 in 2008 and
$14,700 in 2009 for each of our Named Executive Officers except
for Ms. Davies whose employer contributions was $8,985 in
2009; and (ii) employer-paid life insurance premiums with
respect to each Named Executive Officer. |
Grants of
Plan-Based Awards
The following table summarizes the estimated future payouts
under grants made by us to the Named Executive Officers in 2009
under our incentive plans:
|
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|
|
|
|
|
|
|
|
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|
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|
|
|
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|
|
|
|
|
|
Non-Equity Incentive
|
|
|
Estimated Future Payouts Under
|
|
|
|
|
|
|
|
|
Plan Awards(1)
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
All Other Stock Awards(2)
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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Grant Date
|
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|
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|
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|
Number
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Fair Value
|
|
|
|
Type of
|
|
|
|
of Units
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Grant
|
|
|
of shares
|
|
|
of Stock
|
|
Name
|
|
Award
|
|
Cycle
|
|
Granted
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Date
|
|
|
of Stock
|
|
|
Awards ($)
|
|
|
Randall H. Talbot
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/24/2009
|
|
|
|
75,270
|
|
|
|
984,532
|
|
|
|
Annual
Incentive Plan
|
|
2009
|
|
|
n/a
|
|
|
|
8,750
|
|
|
|
262,500
|
|
|
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Share Plan
|
|
2009-2011
|
|
|
19,500
|
|
|
|
49,265
|
|
|
|
2,813,649
|
|
|
|
6,407,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margaret A. Meister
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/24/2009
|
|
|
|
7,890
|
|
|
|
103,201
|
|
|
|
Annual
Incentive Plan
|
|
2009
|
|
|
n/a
|
|
|
|
5,000
|
|
|
|
150,000
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Share Plan
|
|
2009-2011
|
|
|
9,900
|
|
|
|
25,012
|
|
|
|
1,428,468
|
|
|
|
3,253,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Lindsay
|
|
Annual
Incentive Plan
|
|
2009
|
|
|
n/a
|
|
|
|
3,325
|
|
|
|
99,750
|
|
|
|
199,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Share Plan
|
|
2009-2011
|
|
|
4,000
|
|
|
|
10,106
|
|
|
|
577,159
|
|
|
|
1,314,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick B. McCormick
|
|
Sales
Incentive Plan
|
|
2009
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
289,258
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Share Plan
|
|
2009-2011
|
|
|
2,750
|
|
|
|
6,948
|
|
|
|
396,797
|
|
|
|
903,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jennifer V. Davies
|
|
Annual
Incentive Plan
|
|
2009
|
|
|
n/a
|
|
|
|
2,742
|
|
|
|
82,250
|
|
|
|
164,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Share Plan
|
|
2009-2011
|
|
|
2,500
|
|
|
|
6,316
|
|
|
|
360,724
|
|
|
|
821,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On March 3, 2009, the 2009 targets of the Annual Incentive
Plan were approved for Mr. Talbot, Ms. Meister,
Mr. Lindsay and Ms. Davies. Mr. McCormicks
2009 Sales Incentive Plan was approved by Mr. Talbot on
March 20, 2009. On May 12, 2009, Mr. Lindsay,
Mr. McCormick and Ms. Davies were granted units in the
2009-2011
cycle under the Performance Share Plan. Each unit is initially
valued at $100.00. On August 24, 2009, Mr. Talbot and
Ms. Meister were granted units in the
2009-2011
cycle under the Performance Share Plan. |
|
(2) |
|
On August 24, 2009, Mr. Talbot and Ms. Meister
were granted restricted stock under the Equity Plan. The awards
vest on December 31, 2011. |
18
Outstanding
Equity Awards as of December 31, 2009
The following table summarizes outstanding equity awards to the
Named Executive Officers as of December 31, 2009:
Outstanding
Equity Awards as of December 31, 2009
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Plan Awards:
|
|
|
|
Number of
|
|
|
Market Value of
|
|
|
Number of Unearned
|
|
|
Market or Payout Value
|
|
|
|
Shares or Units
|
|
|
Shares or Units
|
|
|
Shares, Units or Other
|
|
|
of Unearned Shares,
|
|
|
|
of Stock
|
|
|
of Stock
|
|
|
Rights
|
|
|
Units or Other Rights
|
|
|
|
that Have not Vested
|
|
|
that Have not Vested
|
|
|
that Have not Vested
|
|
|
that Have not Vested
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
(#)(1)
|
|
|
($)(2)
|
|
|
Randall H. Talbot
|
|
|
|
|
|
|
|
|
|
|
75,270
|
|
|
|
984,532
|
|
Margaret A. Meister
|
|
|
|
|
|
|
|
|
|
|
7,890
|
|
|
|
103,201
|
|
Richard J. Lindsay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick B. McCormick
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jennifer V. Davies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the number of shares of restricted stock granted on
August 24, 2009 with a full vesting date of
December 31, 2011. Partial or full vesting may also occur
upon certain terminations as discussed on page 24 of
Potential Payments Upon Termination or Change
of Control. |
|
(2) |
|
Measured as the number of shares that have not vested multiplied
by the fair value of $13.08 per share as of December 31,
2009. |
Employee
Benefit Plans
The following is a summary of our primary employee benefit plans:
Annual
Incentive Bonus Plan
Annual incentive cash awards are paid to our Named Executive
Officers, other than Mr. McCormick, pursuant to the Annual
Incentive Bonus Plan. A description of the material terms of the
Annual Incentive Bonus Plan is on page 13 of
Elements of Compensation.
Sales
Incentive Plan
Our sales employees, including Mr. McCormick, receive
short-term incentive compensation through the Sales Incentive
Plan. A description of the material terms of the Sales Incentive
Plan, and the payout received by Mr. McCormick with respect
to 2009, is on page 14 of Elements of
Compensation.
Performance
Share Plan
We provide our Named Executive Officers with long-term incentive
compensation primarily through grants pursuant to the
Performance Share Plan. A description of the material terms of
the Performance Share Plan, and the terms of the awards
outstanding pursuant to the
2008-2010
and
2009-2011
performance cycles, are on page 14 of
Elements of Compensation.
Equity
Plan
Background. The purpose of the Symetra
Financial Corporation Equity Plan (the Equity Plan)
is to advance the Companys and our stockholders
interests by providing long-term incentives to our employees,
directors and consultants. The Equity Plan became effective in
2007 and has a ten-year term. Prior to 2009, we did not make
grants under the Equity Plan, and long-term incentive
compensation remains primarily provided by the Performance Share
Plan.
19
Administration. Our Compensation Committee
administers the Equity Plan, and determines which individuals
are eligible to receive awards, the type of awards and number of
shares or units to be granted, the exercise or purchase price
for awards, the vesting schedule for each award and the maximum
term of each award (subject to the limits set forth in the
Equity Plan). The Compensation Committee has authority to
interpret the Equity Plan, and any determination by the
Compensation Committee will be final.
Share Reserve. We have reserved
7,830,000 shares of our Common Stock for issuance under the
Equity Plan, of which, as of March 4, 2010, 7,649,786
remain available for issuance. This reserve, and all limits
referenced below, is subject to adjustment in the event of stock
splits or similar capitalization events.
Eligibility. The individuals eligible to
participate in the Equity Plan include our officers and other
employees, our non-employee directors and any consultants.
Limit on Awards. During any calendar year, the
maximum aggregate number of shares subject to awards granted to
any individual shall be 435,000.
Equity Awards. The Equity Plan permits us to
grant the following types of awards:
|
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|
|
Restricted Stock. A restricted stock award is
a grant of shares or an offer by us to sell shares of our Common
Stock subject to a risk of forfeiture
and/or a
right of repurchase by us upon the termination of employment of
the participant on such terms (including price and timing) as
may be determined by the Compensation Committee. This risk of
forfeiture
and/or right
of repurchase may lapse according to vesting conditions, which
may include performance conditions, a time-based schedule or a
combination thereof, to be determined in each case by the
Compensation Committee. In the event of death or disability of a
holder of restricted stock subject to vesting other than monthly
vesting, the risk of forfeiture
and/or our
right to repurchase such shares shall lapse with respect to a
pro rata portion of the restricted shares equal to the
percentage of the vesting period that has elapsed. The
Compensation Committee also has the discretion to waive all or a
portion of the risk of forfeiture
and/or our
right to repurchase shares of restricted stock in the event of a
participants voluntary resignation or retirement. In the
event of a change of control followed by termination without
cause or constructive termination of the participant within
twelve months, the restrictions on such participants
restricted stock will lapse.
|
|
|
|
Stock Options. The Equity Plan provides for
the grant of incentive stock options (commonly referred to as
ISOs) to employees and non-qualified stock options (commonly
referred to as NSOs) to employees, directors and consultants.
The Compensation Committee determines the terms of options,
provided that ISOs are subject to statutory limitations. The
Compensation Committee determines the exercise price for a stock
option, within the terms and conditions of the Equity Plan and
applicable law, provided that the exercise price of an ISO may
not be less than 100% (or 110% in the case of a recipient who is
a ten percent stockholder) of the fair market value of our
common stock on the date of grant.
|
Options granted under the Equity Plan will vest at the rate
specified by the Compensation Committee, with the vesting
schedule for each stock option to be set forth in the stock
option agreement for such option grant. Generally, the committee
determines the term of stock options granted under the Equity
Plan, up to a maximum term of 10 years.
After termination of an optionees employment, the optionee
may exercise the vested portion of each option for the period of
time stated in the option agreement to which such option
relates. The Compensation Committee also has the discretion to
permit exercise of the unvested portion of an option in the
event of voluntary resignation or retirement. Generally, if
termination is due to disability, the vested portion of each
option will remain exercisable for three years following the
date of disability, and in the event of death of an optionee,
the vested portion of each option will remain exercisable by
such optionees estate for one year. In all other cases,
the vested portion of each option will generally remain
exercisable for three months following termination of
employment. However, an option may not be exercised later than
its expiration date.
20
Notwithstanding the above, in the event of a change of control
of Symetra, followed by termination without cause or
constructive termination (as such terms are defined in the
Equity Plan) of an optionee within twelve months of the change
of control, such optionees stock options will become 100%
vested and exercisable for up to 30 days following such
termination.
|
|
|
|
|
Stock Appreciation Rights. Stock appreciation
rights provide for a payment or payments, in cash or shares of
Common Stock, to the participant based upon the difference
between the fair market value of our common stock on the date of
exercise and the stated exercise price. The exercise price of a
stock appreciation right may not be less than 100% of the fair
market value of our common stock on the date of grant of the
stock appreciation right. Stock appreciation rights are
otherwise generally subject to the same terms and limitations as
described above for stock options, including vesting
acceleration upon termination following a change of control.
|
|
|
|
Restricted Stock Units. Restricted stock units
represent the right to receive, without payment to the Company,
an amount of shares of our Common Stock equal to the number of
shares underlying the restricted stock units multiplied by the
fair market value of a share on the date of vesting of the
restricted stock units. The Compensation Committee may, at its
discretion, impose vesting conditions, which may include
performance conditions, a time-based vesting schedule or a
combination thereof, on the exercise of such units. A
participants restricted stock units generally terminate in
the event the participants employment terminates prior to
payment with respect to the units. However, in the event of
death or disability of a holder of restricted stock units that
are subject to vesting other than monthly vesting, the holder
will receive payment for a pro rata percentage of the unvested
units equal to the percentage of the vesting period that has
elapsed. The Compensation Committee also has the discretion to
make payment with respect to all or a portion of the unvested
restricted stock units held by a participant in the event of
such participants voluntary resignation or retirement. In
the event of a change of control followed by termination without
cause or constructive termination of the participant within 12
months, such participants restricted stock units that were
outstanding on the date of termination will be cancelled and
such participant will receive a cash payment equal to the
product of the number of restricted stock units and the fair
market value of a share of our common stock on the date of
termination.
|
|
|
|
Performance Shares/Units. A performance share
award entitles a participant to receive all or part of the value
of a specified number of hypothetical shares if specified
performance objectives, as determined by the Compensation
Committee, are satisfied during a specified award period. The
payout under a performance share award is the product of
(1) the target number of performance shares subject to
award, (2) the performance percentage and (3) the fair
market value of a share on the date the award is paid or becomes
payable to the participant.
|
Performance units are similar to performance shares, except that
the value is based on a fixed dollar value or formula specified
by the committee, rather than the fair market value of a share
on the date the award is paid or payable (as with performance
shares). The maximum value of performance units that may be
earned by a participant for any single award period of one year
or longer may not exceed $25 million.
At the end of the award period for performance shares or
performance units, the Compensation Committee assigns a
performance percentage that is between 0% and 200% depending on
the extent to which the applicable performance objectives were
met during the award period. Performance shares and units may be
settled in cash, shares of our Common Stock, other securities,
other awards, other property or any combination thereof, as
determined by the Compensation Committee.
A participants performance shares or units are cancelled
if the participants employment is terminated prior to end
of the award period. However, if a participant dies or becomes
disabled during the performance period, such award is paid to
such participant (or such participants estate) on a
pro-rata basis. In the event of a change of control followed by
termination without cause or constructive termination of the
participant within twelve months, the participants
performance share/unit award shall be paid out on a pro rata
basis according to the percentage of months during the award
period that have elapsed, with a performance percentage of 100%.
21
|
|
|
|
|
Other Stock-Based Awards. The Compensation
Committee also has the discretion to issue other equity-based
awards under the Equity Plan, including fully-vested shares of
common stock.
|
Awards Not Transferable. Awards under the
Equity Plan are generally non-transferable, except to a
participants estate in the event of the participants
death.
Adjustments. The Compensation Committee is
authorized to make adjustments to the terms and conditions of
awards in recognition of certain unusual or nonrecurring events,
including but not limited to extraordinary dividends, stock
splits, mergers or a change in control of Symetra. In such
events, the committee has the discretion to do what it
determines is appropriate or desirable, including providing for
the substitution or assumption of awards, accelerating the
vesting of or the lapse of restrictions on awards, terminating
the awards or making a cash payment in consideration for the
cancellation of the awards.
Amendment and Termination. The Equity Plan may
be amended or terminated at any time upon approval of our Board
of Directors, provided that no amendment or termination will
adversely affect outstanding awards. The Equity Plan will
terminate on the earlier of the termination of the Equity Plan
by our Board of Directors or ten years from the effective date
of the Equity Plan.
Employee
Stock Purchase Plan
Background. Our employee stock purchase plan
is designed to enable eligible employees to periodically
purchase shares of our Common Stock at a discount. Purchases are
accomplished through participation during discrete offering
periods. Our employee stock purchase plan is intended to qualify
as an employee stock purchase plan under section 423 of the
Internal Revenue Code of 1986, as amended. Our Board of
Directors adopted our employee stock purchase plan in October
2007.
Share Reserve. We have initially reserved
870,000 shares of our Common Stock for issuance under our
employee stock purchase plan. We anticipate the first offering
period will commence on or about August 15, 2010.
Administration. Our Compensation Committee
administers our employee stock purchase plan. Our employees
generally are eligible to participate in our employee stock
purchase plan if they are employed on a salaried basis by us, or
a subsidiary of ours that we designate, for 20 or more hours per
week and more than five months in a calendar year. Employees who
are 5% stockholders, or would become 5% stockholders as a result
of their participation in our employee stock purchase plan, are
ineligible to participate in our employee stock purchase plan.
We may impose additional restrictions on eligibility as well.
Under our employee stock purchase plan, eligible employees may
acquire shares of our Common Stock by accumulating funds through
payroll deductions. Our eligible employees may select a rate of
payroll deduction up to 15% of their cash compensation (or such
lower limit as determined by the Compensation Committee). We
also have the right to amend or terminate our employee stock
purchase plan, except that, subject to certain exceptions, no
such action may adversely affect any outstanding rights to
purchase stock under the plan. Our employee stock purchase plan
will remain in effect until terminated by our Compensation
Committee.
Purchase Rights. When an offering period
commences, our employees who meet the eligibility requirements
for participation in that offering period and who elect to
participate are granted a nontransferable option to purchase
shares in that offering period. An employees participation
automatically ends upon termination of employment for any
reason. An employee may withdraw from the plan at any time at
least five business days prior to a purchase date, and in such
event shall receive a refund of all of such employees
payroll deductions deposited to date into the plan.
Each offering period will be for approximately six months
(commencing on the first trading day on or immediately after
February 15 and August 15 of each year and terminating on the
trading day on or immediately preceding the next August 14 or
February 14, respectively). The duration and timing of
offering periods may be changed by the Compensation Committee
without stockholder approval if such change is announced prior
to the scheduled beginning of the offering period to be effected
thereafter.
No participant will have the right to purchase our shares at a
rate which, when aggregated with purchase rights under all our
employee stock purchase plans that are also outstanding in the
same calendar year(s), has a fair market value of more than
$25,000, determined as of the first trading day of the
applicable offering period, for each
22
calendar year in which such right is outstanding. The purchase
price for shares of our common stock purchased under our
employee stock purchase plan will be 85% of the closing trading
price per share of our common stock as reported by the NYSE on
the last date of each purchase period.
Change in Control. In the event of a change in
control of Symetra, the acquiring entity shall assume the
outstanding purchase rights. In the event the acquiring entity
refuses to do so, the purchase and offering periods then in
progress shall terminate prior to the date of closing of the
change of control transaction.
401(k)
Plan
We offer a qualified Section 401(k) plan to all employees
who meet specified eligibility requirements. Eligible employees
may contribute up to 100% of their eligible compensation,
subject to limitations established under Section 401(k). We
provide a safe harbor employer match and match participant
contributions
dollar-for-dollar,
up to 6% of their compensation. Participants are immediately
vested in their contributions.
Potential
Payments Upon Termination or Change in Control
We have no employment agreements with our Named Executive
Officers that would provide payments upon termination of
employment.
Annual
Incentive Bonus Plan
The Annual Incentive Bonus Plan requires that an executive be an
active employee on December 31 of the plan year, and remain
continuously employed by the Company through the award payout
date, in order to be eligible to receive a bonus award.
Exceptions to this include death, disability, retirement at
age 65 or older or position elimination. In these cases,
the bonus will be based on eligible earnings paid through the
executives last day of work within the plan year and is
modified by the funding level of the aggregate bonus pool.
Sales
Incentive Plan
Mr. McCormicks Sales Incentive Plan provides that if
he leaves his position for any reason, he will be paid for
production earned through the end of the last full month of
employment.
Performance
Share Plan
The Performance Share Plan provides that, except for the change
in control provision described below, the executive would
immediately forfeit all outstanding awards upon termination of
employment prior to the end of the applicable award period. The
Board of Directors, at its discretion, may provide that if an
executive dies, retires, is disabled or is granted a leave of
absence, or if the executive is otherwise terminated in a manner
reasonably judged to be not seriously detrimental to our
company, then all or a portion of the executives award, as
determined by the board, may be paid to the executive (or
beneficiary).
The Performance Share Plan includes a double trigger
change in control provision which provides that if a
participants employment is terminated without cause or
constructively terminated within 24 months after a change
in control of our company, each award held by the participant
prior to the change in control is cancelled and the participant
is entitled to receive an award payment equal to the product of
(a) the then financial value of 100% of the performance
shares and (b) the performance percentage, which is based
on the level of attainment of the performance goal as of the
last day of the calendar quarter ending prior to the date of the
termination event. Alternatively, following the change in
control, if the participant remains continuously employed
through the end of the award period, then the participant will
receive those awards for which the participant would have been
paid had the change in control not occurred. For purposes of the
Performance Share Plan, a change in control occurs when any
person or group, other than White Mountains or Berkshire
Hathaway, an underwriter or an employee benefit plan of the
Company, becomes the beneficial owner of 35% or more of the
Companys outstanding common stock.
Under the Performance Share Plan, a constructive
termination is defined as a termination of the
participants employment at the initiative of the
participant following a material decrease in salary or a
material diminution in the participants authority, duties
or responsibilities.
23
Restricted
Stock Agreements
Restricted Stock Agreements with Mr. Talbot and
Ms. Meister provide that the restricted stock will vest on
December 31, 2011, subject to their continued employment
through such date. In the event of the executives
voluntary termination or termination with cause (as defined in
the Equity Plan), all of the unvested shares will be forfeited.
If the executives employment is terminated by us without
cause or due to the executives death or disability, the
following amounts of restricted stock will become vested: if
such termination is on or after December 31, 2009 but prior
to December 31, 2010, one-third of the restricted stock
will vest. If such termination is on or after December 31,
2010 but prior to December 31, 2011, two-thirds of the
restricted stock will vest.
In the event of a change in control followed by termination
without cause or constructive termination (as defined in the
Equity Plan) of the executive within twelve months after the
change in control, the restrictions on all of the
executives restricted stock will lapse.
Potential
Payments Upon Termination
The following table shows the potential payments that would be
made by us to each of the Named Executive Officers assuming that
each executives employment was terminated due to death,
disability, retirement at age 65 or older or position
elimination on December 31, 2009 whether or not a change in
control has occurred.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Annual
|
|
2008-2010
|
|
2009-2011
|
|
|
|
|
|
|
Incentive Bonus
|
|
Performance
|
|
Performance
|
|
Restricted Stock
|
|
|
Executive
|
|
Plan ($)(1)
|
|
Share Plan ($)(2)
|
|
Share Plan ($)(3)
|
|
Awards ($)(4)
|
|
Total ($)
|
|
Randall H. Talbot
|
|
|
157,500
|
|
|
|
0
|
|
|
|
1,298,700
|
|
|
|
328,177
|
|
|
|
1,784,377
|
|
Margaret A. Meister
|
|
|
90,000
|
|
|
|
0
|
|
|
|
659,340
|
|
|
|
34,400
|
|
|
|
783,740
|
|
Richard J. Lindsay
|
|
|
59,850
|
|
|
|
0
|
|
|
|
266,400
|
|
|
|
0
|
|
|
|
326,250
|
|
Patrick B. McCormick
|
|
|
229,635
|
|
|
|
0
|
|
|
|
183,150
|
|
|
|
0
|
|
|
|
412,785
|
|
Jennifer V. Davies
|
|
|
49,350
|
|
|
|
0
|
|
|
|
166,500
|
|
|
|
0
|
|
|
|
215,850
|
|
|
|
|
(1) |
|
Represents the amount payable under the 2009 Annual Incentive
Bonus Plan, except with respect to Mr. McCormick, who would
instead receive payment under his Sales Incentive Plan. This
amount is payable in the event of death, disability, retirement
at age 65 or older or elimination of position, whether or
not a change in control of the Company has occurred. This figure
represents 100% of the executives individual target
modified by the funding level of the aggregate bonus pool which
was 60% for 2009. |
|
(2) |
|
No payment would have been made in respect of performance units
because performance goals were not met in 2008, which affected
the
2008-2010
Performance Share Plan as of December 31, 2009. The Board
of Directors, at its discretion, may elect to award all or a
portion of the grant to an executive in the event of such
executives death, retirement, disability or leave of
absence, or in the event of termination in a manner not
determined to be seriously detrimental to the Company. The
Compensation Committee also has the discretion to modify the
terms of awards granted and would consider a discretionary
payout based on the modified operating return on equity over the
two-year period of
2008-2009. |
|
(3) |
|
Payable in the event a Named Executive Officers employment
is terminated without cause or constructively terminated within
24 months following a change of control of the Company. In
addition, the Board of Directors, at its discretion, may elect
to award all or a portion of such amounts to an officer in the
event of such executives death, retirement, disability or
leave of absence, or in the event of termination in a manner not
determined to be seriously detrimental to the Company. This
amount represents a 60% performance percentage based on
performance as of December 31, 2009. |
|
(4) |
|
Represents the amount vested (based on a per share fair value as
of December 31, 2009 of $13.08) if Mr. Talbots
or Ms. Meisters employment is terminated without
cause or due to his or her death or disability. In the event of
a change in control followed by termination without cause or
constructive termination within twelve months, Mr. Talbot
would receive $984,532 and Ms. Meister would receive
$103,200. |
24
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Procedures
for Approval of Related Party Transactions
Prior to January 21, 2010, the effective date of our IPO,
we did not have a written policy relating to the approval of
related party transactions, which are those transactions that
involve any transaction or series of transactions in which the
Company or a subsidiary is a participant involving an amount in
excess of $120,000 and a related person has a direct or indirect
material interest. Under SEC rules, a related person is a
director, nominee for director, executive officer, owner of more
than 5% of our Common Stock or immediate family member of any of
the above. Any such transactions were reviewed with and approved
by our Board of Directors or Audit Committee.
Following our IPO, our Board of Directors adopted a written
Related Party Transaction Policy. Our Related Party Transaction
Policy sets forth policies and procedures for the review and
approval or ratification of related party transactions. On an
annual basis, each director, nominee for director, officers and
certain 5% or greater stockholders are required to complete a
Director and Officer Questionnaire that requires disclosure of
any transactions with us in which a related person has a direct
or indirect material interest. Our general counsel is primarily
responsible for the development and implementation of procedures
and controls to obtain information from these related persons.
Any related party transaction proposed to be entered into must
be reported to our general counsel. The related party
transactions are reviewed with and approved by the Audit
Committee of our Board of Directors. In addition, previously
approved or ongoing related party transactions are reviewed by
the Audit Committee annually.
The following is a summary of each transaction or series of
similar transactions for the twelve months ending
December 31, 2009 to which we were or are a party in which
the amount involved exceeded or exceeds $120,000 and in which
any of our directors or executive officers, any holder of 5% of
our capital stock or any member of the immediate family of any
of the foregoing persons had or will have a direct or indirect
material interest.
Investment
Management Agreement with White Mountains Advisors
LLC
A majority of our investments are managed by White Mountains
Advisors LLC (WM Advisors), a wholly owned
subsidiary of White Mountains Insurance Group, Ltd. White
Mountains Insurance Group, Ltd. beneficially owns
26,887,872 shares of our common stock, which includes
warrants exercisable for 9,487,872 shares. Mr. David
T. Foy, one of our directors, serves as Executive Vice President
and Chief Financial Officer of White Mountains Insurance Group,
Ltd. Mr. Lowndes A. Smith, Chairman of our Board of
Directors, serves as a director of White Mountains Insurance
Group, Ltd. Mr. Robert R. Lusardi, one of our directors,
until March 2010 served as President and Chief Executive Officer
of White Mountains Financial Services, LLC, an affiliate of
White Mountains Insurance Group, Ltd. The total fees incurred
with respect to WM Advisors under our existing investment
management agreements, or IMAs, with them for the year ended
December 31, 2009 was $14.0 million. Following
satisfaction of applicable prior notice/approval requirements of
insurance regulatory authorities, we and certain of our
subsidiaries intend to enter into an amended investment
management agreement, or the WMA Agreement, on substantially the
same terms including fees as our existing IMAs with WM Advisors
pursuant to which WM Advisors will continue to supervise and
direct the fixed income and alternative investment portion of
our investment portfolio.
The WMA Agreement will provide for an initial fixed term of one
year, which will be extendible by us for an additional year (a
second year) and, if so extended, for a second additional year
(a third year). Following the end of the initial term and any
extensions, the WMA Agreement may be terminated by either party
upon 60 days written notice.
WM Advisors also provides investment advisory services to White
Mountains Insurance Group, Ltd., its subsidiaries and a number
of its affiliates.
Investment
Management Agreement with Prospector Partners, LLC
Prospector is a registered investment adviser managing assets
for corporations, foundations, endowments and high net worth
individuals. Mr. John D. Gillespie, the founder and
Managing Member of Prospector Partners, LLC
(Prospector), is a director of White Mountains
Insurance Group, Ltd. As discussed above, White Mountains
25
Insurance Group, Ltd. beneficially owns shares of our Common
Stock and warrants and our chairman serves as a director and one
of our directors serves as an officer of White Mountains
entities. Historically, Prospector managed most of the publicly
traded common equity and convertible securities in our portfolio
through a
sub-advisory
agreement with WM Advisors. As of December 31, 2009,
Prospector served as a discretionary advisor to WM Advisors
under the
sub-advisory
agreement with respect to approximately $0.2 billion of
specified assets in our combined insurance and non-insurance
portfolios. For the year ended December 31, 2009, we
incurred $1.8 million in fees with respect to the
Prospector portfolio. These fees are included in the WM Advisor
fees mentioned above.
Following satisfaction of applicable prior notice/approval
requirements of insurance regulatory authorities, we intend to
enter into a separate investment management agreement with
Prospector, or the Prospector Agreement, pursuant to which
Prospector will agree to supervise and direct the publicly
traded common equity and convertible securities portion of our
investment portfolio.
The Prospector Agreement will have an initial fixed term of
three years, which will be extendible by us for an additional
year (a fourth year) at or prior to the end of the second year
of the term and, if so extended, for a second additional year (a
fifth year) at or prior to the end of the third year of the
term. The Prospector Agreement will be terminable by us only:
(i) for cause (including material non-performance by
Prospector); (ii) if either John D. Gillespie or
Richard P. Howard are no longer affiliated with Prospector; or
(iii) if there is a change in control of Prospector.
Following the end of the initial term and any extensions, the
Prospector Agreement may be terminated by either party on
60 days written notice. We will review periodically
the performance of and the fees paid to Prospector under the
Prospector Agreement.
Relationships
and Transactions with White Mountains Insurance Group, Ltd. and
its Affiliates
We are party to certain shareholders agreements, dated as of
March 8, 2004, March 19, 2004 and April 16, 2004,
with our stockholders. These shareholders agreements terminated
on the consummation of our IPO on January 21, 2009, other
than certain provisions, including provisions relating to
tag-along rights, transfer restrictions, registration rights,
confidentiality and competition. Regarding tag-along rights, for
one year following our IPO, if one or more stockholders party to
a shareholders agreement propose to transfer 10% or more of our
then outstanding Common Stock, they must afford each other
stockholder party to such shareholders agreement the opportunity
to participate proportionally in the transfer. Regarding
transfer restrictions, for one year following our initial public
offering, warrant transfers are generally restricted and for
18 months following our initial public offering, any
stockholder party to a shareholders agreement wishing to
transfer shares of our common stock or warrants must generally
require the transferee to agree to be bound by the terms of the
shareholders agreement. Regarding registration rights, for ten
years following our initial public offering, stockholders party
to a shareholders agreement holding in the aggregate 10% of all
registrable securities (as defined in the shareholders
agreements) then held by stockholders party to a shareholders
agreement may request that we effect the registration of such
securities through an underwritten public offering or the filing
of a shelf registration statement or permit the sale of such
securities already included in an effective shelf registration
statement pursuant to an underwritten public offering, subject
to certain limitations. During this
10-year
period, if we register common shares in connection with an
offering, stockholders party to a shareholders agreement will be
given an opportunity to include their registrable securities,
subject to certain limitations. With respect to confidentiality
provisions, the shareholders agreements provide that, for an
indefinite period of time, the stockholders party to a
shareholders agreement will keep confidential any non-public
information made available to them during the due diligence
process of any prior offering of our common stock. The
shareholders agreements provide that, for an indefinite period
of time, we will indemnify the holders of registrable securities
and any underwriters for losses or damages arising out of
material misstatements or omissions in the relevant registration
statement or prospectus or violations of law in connection with
the registration of registrable securities, and further provide
that the holders of registrable securities and any underwriters
will indemnify us for losses or damages arising out of material
misstatements or omissions in the relevant registration
statement or prospectus that was made in reliance on written
information furnished by such holders or underwriters. The
shareholders agreements also provide that the stockholders may
freely engage in, or invest in, businesses that are competitive
with ours and that there are no obligations for any stockholder
to refer any business opportunities to us. In addition,
following our initial public offering and so long as White
Mountains Insurance Group, Ltd. holds at least 20% of our
outstanding common stock, assuming exercise of any outstanding
26
warrants, each stockholder party to a shareholders agreement is
required to vote its shares for two board members designated by
White Mountains Insurance Group, Ltd., which will be reduced to
one nominee so long as White Mountains Insurance Group, Ltd.
holds at least 10%, but less than 20%, of our outstanding common
stock.
Symetra Life Insurance Company entered into an accident and
health reinsurance agreement with a related party, White
Mountains Re America, a subsidiary of White Mountains Insurance
Group, Ltd. White Mountains Group, Ltd. beneficially owns
26,887,872 shares of our Common Stock, which includes
warrants exercisable for 9,487,872 shares. This reinsurance
agreement is on substantially the same terms as agreements
entered into with other third parties. For the year ended
December 31, 2009, we recorded ceded premiums of
$2.5 million and recovered ceded losses of
$2.4 million.
One of our subsidiaries, Symetra Assigned Benefits Service
Company (SABSCO), in the ordinary course of business, accepted
the assignment of periodic payment obligations from a related
party, OneBeacon Insurance Group (OB). OB is an affiliated
company of White Mountains Insurance Group, Ltd. As discussed
above, White Mountains Group, Ltd. beneficially owns shares of
our Common Stock and warrants. These assignments were on
substantially the same terms as those provided to other third
parties. For the year ended December 31, 2009, SABSCO
purchased $1.2 million in structured settlement annuities
from Symetra Life Insurance Company to fund these obligations
for OB.
Relationships
and Transactions with Others
The following transactions involve the operations of our
subsidiary, Symetra Life Insurance Company, and were entered
into in the ordinary course of business.
Symetra Life Insurance Company entered into a coinsurance
reinsurance agreement with Wilton Reassurance Company, or Wilton
Re. This agreement is on substantially the same terms as
agreements entered into with other third parties. For the year
ended December 31, 2009, we recorded ceded premiums of
$1.8 million and recovered ceded losses of
$0.5 million. Vestar Capital Partners, which holds
6,089,999 shares of our common stock, has an investment
interest in Wilton Re. Mr. Sander M. Levy, one of our
directors and our Audit Committee Chairman, serves on the Board
of Directors of Wilton Re. Mr. Levy is not directly
involved in the business dealings between the two companies but
disclosed the relationship to our Audit Committee, which
ratified the relationship.
Symetra Life Insurance Company issued an insurance policy for
both specific and aggregate excess loss coverage to Essent
Healthcare with an effective date of January 1, 2009 with
substantially the same terms as those provided to other third
parties. Vestar Capital Partners, which holds
6,089,999 shares of our common stock, has an investment in
Essent Healthcare. We recorded premiums of $0.2 million and
paid losses of $0.1 million for the year ended
December 31, 2009.
Symetra Life Insurance Company is a party to several coinsurance
reinsurance agreements with General Re Life Corporation. General
Re Life Corporation is the North American life and health
reinsurance company of General Re Corporation, a subsidiary of
Berkshire Hathaway Inc. Berkshire Hathaway Inc. beneficially
owns 26,887,872 shares of our Common Stock, which includes
warrants exercisable for 9,487,872 shares. These agreements
are on substantially the same terms as agreements entered into
with other third parties. For the year ended December 31,
2009, we recorded ceded premiums of $0.4 million. No ceded
losses have been recovered under these agreements in 2009.
Symetra Life Insurance Company issued an insurance policy for
specific excess loss coverage to Nebraska Furniture Mart with an
effective date of January 1, 2009 with substantially the
same terms as those provided to other third parties. Nebraska
Furniture Mart is a subsidiary of Berkshire Hathaway Inc. As
discussed above, Berkshire Hathaway Inc. beneficially
owns shares of our Common Stock and warrants. We recorded
premiums of $0.6 million and recorded losses of
$0.3 million for the year ended December 31, 2009.
Symetra Life Insurance Company held $4.7 million in fair
value of Class B common stock in Berkshire Hathaway, Inc.
as of December 31, 2009. As discussed above, Berkshire
Hathaway Inc. beneficially owns shares of our Common Stock and
warrants. For the year ended December 31, 2009, we had
purchases of $1.5 million and no sales related to our
holdings in Berkshire Hathaway Inc.
27
Indemnification
Agreements with our Directors and Officers
Our certificate of incorporation and bylaws provide that we
shall indemnify our directors and officers to the fullest extent
permitted by law. In addition, as permitted by the laws of the
State of Delaware, we have entered into indemnification
agreements with each of our directors and officers. Under the
terms of our indemnification agreements, we are required to
indemnify each of our directors and officers, to the fullest
extent permitted by the laws of the State of Delaware, against
any and all (a) costs and expenses (including
attorneys and experts fees, expenses and charges)
actually and reasonably paid or incurred in connection with
investigating, defending, being a witness in or participating
in, or preparing to investigate, defend, be a witness in or
participate in, and (b) damages, losses, liabilities,
judgments, fines, penalties and amounts paid in settlement
relating to, resulting from or arising out of, in the case of
either (a) or (b), any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation that
such person determines might lead to the institution of any such
action, suit or proceeding, by reason of the fact that
(y) such person is or was a director, officer, employee or
agent of the Company
and/or a
subsidiary of the Company or (z) such person is or was
serving at our request as a director, officer, employee or agent
of another corporation, partnership, non-profit organization,
joint venture, trust or other enterprise. The indemnification
agreements also require us, if so requested, to advance within
20 business days any and all costs and expenses to the director
or officer which such person determines reasonably likely to be
payable, provided that such person will return any such advance
which remains unspent at the final conclusion of the claim to
which the advance related. Our bylaws also require that such
person return any such advance if it is ultimately determined
that such person is not entitled to indemnification by us as
authorized by the laws of the State of Delaware.
We are not required to provide indemnification under our
indemnification agreements for certain matters, including:
(1) indemnification beyond that permitted by the laws of
the State of Delaware; (2) indemnification in connection
with certain proceedings or claims initiated or brought
voluntarily by the director or officer; (3) indemnification
for settlements the director or officer enters into without the
Companys written consent; (4) indemnification related
to disgorgement of profits under Section 16(b) of the
Securities Exchange Act of 1934; (5) indemnification where
a final decision by a court having jurisdiction in the matter
shall determine that such indemnification is not lawful; or
(6) indemnification for liabilities for which the director
or officer has received payment under any insurance policy as
may exist for such persons benefit, our articles of
incorporation or bylaws or any other contract or otherwise. The
indemnification agreements require us, to the extent that our
Board of Directors determines it to be economically reasonable,
to maintain directors and officers liability
insurance.
28
RELATIONSHIP
WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On November 11, 2008, Ernst & Young LLP
(E&Y) was designated by the Audit Committee to
audit the consolidated financial statements of the Company for
the year ended December 31, 2008 and was subsequently
reappointed for the year ended December 31, 2009.
Representatives of E&Y are expected to be present at the
Annual Meeting and will be afforded the opportunity to make a
statement, if they desire to do so, and will be available to
respond to appropriate questions.
The Audit Committee pre-approves the scope and fees for all
services performed by E&Y. Annually, the Audit Committee
receives and pre-approves a written report from E&Y
describing the procedures expected to be performed in the course
of its audit of the Companys financial statements. All
other audit, audit-related and non audit-related services
rendered by E&Y also require pre-approval, which may be
granted at a meeting of the full Audit Committee.
It is the intent of the Audit Committee to assure that
E&Ys performance of audit, audit-related, tax and
non-audit services are consistent with all applicable rules on
auditor independence. As such, services expressly prohibited by
the Audit Committee include bookkeeping or other services
related to the accounting records or financial statements of the
Company or its subsidiaries; financial information systems
design and implementation; appraisal and valuation services;
fairness opinions;
contribution-in-kind
reports; certain actuarial services; internal audit outsourcing
services; management functions; human resources; broker-dealer,
investment advisor or investment banking services; legal
services; and expert services unrelated to the audit.
The services performed by Ernst & Young in 2009 and
2008 are described below. E&Y does not provide any services
to the Company prohibited under applicable laws and regulations.
From time to time, E&Y may perform permissible services for
the Company, provided they have been pre-approved in accordance
with the policy described above. To the extent services are
provided by E&Y, they are closely monitored and controlled
by both management and the Audit Committee to ensure that their
nature and extent do not interfere with the independence of
E&Y. The independence of E&Y is also considered
annually by the Audit Committee.
The following table sets forth the approximate aggregate fees
billed by E&Y for professional services provided in 2009
and 2008:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(in thousands)
|
|
|
Audit Fees(1)
|
|
$
|
2,867
|
|
|
$
|
2,072
|
|
Audit-Related Fees(2)
|
|
|
140
|
|
|
|
245
|
|
Tax Fees(3)
|
|
|
20
|
|
|
|
12
|
|
All Other Fees(4)
|
|
|
42
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
3,069
|
|
|
$
|
2,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The fees in this category were for professional services
rendered in connection with (1) the audits of the
Companys annual financial statements, which for 2009 also
included the Companys Annual Report on
Form 10-K,
(2) the review of the Companys quarterly financial
statements, (3) audits of the Companys subsidiaries
that are required by statute or regulation and (4) services
that generally only the Companys independent registered
public accounting firm reasonably can provide, such as consents
issuing in connection with our registration statements filed
with the SEC. The 2009 fees also include audit fees for
professional services rendered in connection with the
Companys IPO which closed January 27, 2010 and
included a review of registration statements, providing a
comfort letter to our underwriters and issuing consents. |
|
(2) |
|
The fees in this category were for professional services
rendered in connection with (1) internal control reviews
and (2) other regulatory requirements. |
|
(3) |
|
The fees in this category were for professional services
rendered in connection with tax strategy assistance and tax
compliance services. |
|
(4) |
|
The fees in this category were for other types of permitted
services including (1) advisory services in connection with
enterprise security assessment and (2) access to
E&Ys proprietary technical research software. |
* * * *
30
The Report of the Compensation Committee and Report of the
Audit Committee set forth above shall not be deemed to be
incorporated by reference into any filing made by the Company
under the Securities Act of 1933 (Securities Act) or
the Securities Exchange Act of 1934 (Exchange Act),
notwithstanding any general statement contained in any such
filing incorporating this proxy statement by reference, except
to the extent we incorporate such Reports by specific reference.
In addition, these Reports shall not be deemed to be filed under
either the Securities Act or the Exchange Act.
STOCKHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
Stockholder proposals, in accordance with SEC rules, to be
presented at the 2011 annual meeting must be received by us, at
the address shown on the cover of this Proxy Statement, sent by
registered, certified or express mail, to be considered for
inclusion in our Proxy Statement and form of proxy relating to
that meeting by December 3, 2010. Stockholders who want to
bring business before the 2011 annual meeting, other than
through a stockholder proposal in accordance with SEC rules,
must notify the Secretary of the Company in writing and provide
the information required by the provision of our By-Laws dealing
with stockholder proposals. The notice must be delivered to or
mailed and received at the address of the Company shown on the
cover of this Proxy Statement by December 3, 2010. The
requirements for such notice are set forth in our By-Laws, which
were filed as Exhibit 3.2 to our Registration Statement on
Form S-1
filed October 5, 2009. That document is located on our
website www.symetra.com can be found by clicking on
Investors and then on SEC Filings.
OTHER
MATTERS
The solicitation of and the related cost of the solicitation of
proxies will be borne by us. In addition to solicitation by
mail, some of our officers and regular employees may, without
extra remuneration, solicit proxies personally or by telephone,
electronic transmission or facsimile. We may also request
brokerage houses, nominees, custodians and fiduciaries to
forward proxy materials to the beneficial owners of stock held
of record and will reimburse such persons for their expenses.
31
Appendix I
Symetra Financial Corporation
Audit Committee
Independent Auditor Services Pre-Approval Policy
Statement of Principles
The Audit Committee is required to pre-approve the audit and non-audit services performed by the
independent auditor in order to assure that the provision of such services does not impair the
auditors independence. In general, classes of predictable and recurring audit and permitted
non-audit services shall be considered for general pre-approval by the full Audit Committee on an
annual basis in each fiscal year. Services as to which a general pre-approval shall have been
granted on an annual basis shall be effective for the applicable fiscal year. Unless a class of or
individual audit or permitted non-audit service shall have received a general pre-approval, it will
require specific pre-approval by the Audit Committee or its delegate. Any specific pre-approval of
an audit or permitted non-audit service may be provided up to one year prior to commencement of the
service. In any case in which a service is to be provided over a period of years, the approval
shall be reviewed for renewal on an annual basis. Any services which received general pre-approval
and are expected to exceed pre-approved cost levels will require specific pre-approval by the Audit
Committee or its delegate.
The Audit Committee shall review this policy annually for purposes of assuring its continued
appropriateness and compliance with applicable law and listing standards, including regulations of
the SEC and the Public Company Accounting Oversight Board (PCAOB).
Audit Services
The Audit Committee must pre-approve the annual audit services. The Audit Committee or its
delegate shall approve, if necessary, any changes in terms resulting from changes in audit scope,
Company structure, or other matters. In addition to the annual audit services engagement approved
by the Audit Committee, the Audit Committee or its delegate may grant pre-approval for other audit
services, which are those services that only the independent auditor reasonably can provide.
Audit-Related Services
Audit-related services, including internal control-related services, are assurance and related
services that are reasonably related to the performance of the audit or review of the Companys
financial statements and/or the Companys internal control over financial reporting and that are
traditionally performed by the independent auditor. The Audit Committee believes that the
provision of audit-related services does not impair the independence of the auditor. Audit-related
services must be pre-approved by the Audit Committee or its delegate.
Tax Services
The Audit Committee believes that the independent auditor can provide tax services to the Company
such as tax compliance, tax planning, and tax advice without impairing the auditors independence.
All tax services must be pre-approved by the Audit Committee or its delegate.
Other Services
The Audit Committee or its delegate may grant pre-approval to those permitted non-audit services
classified as other services that it believes would not impair the independence of the auditor,
including those that are routine and recurring services.
Delegation of Pre-Approval
The Audit Committee elects to delegate pre-approval authority to the Chairman of the Audit
Committee to approve any one or more individual audit or permitted non-audit services. The
Chairman shall report any pre-approval
1
Appendix I
granted at the next scheduled meeting of the Audit Committee. The Audit Committee does not
delegate to management its responsibilities to pre-approve services performed by the independent
auditor.
Prohibited Services
The Company may not engage the independent auditor to provide any service that is prohibited by
applicable law, including:
|
|
|
Bookkeeping or other services related to the accounting records or financial statements
of the audit client. |
|
|
|
|
Financial information systems design and implementation. |
|
|
|
|
Appraisal or valuation services, fairness opinions or contribution-in-kind reports. |
|
|
|
|
Actuarial services. |
|
|
|
|
Internal audit outsourcing services. |
|
|
|
|
Management functions. |
|
|
|
|
Human resources. |
|
|
|
|
Broker-dealer, investment advisor or investment banking services. |
|
|
|
|
Legal services. |
|
|
|
|
Expert services unrelated to the audit. |
|
|
|
|
Tax services to persons in a financial reporting oversight role or to an immediate
family member of any such person. |
|
|
|
|
Any other services prohibited by the PCAOB. |
Procedures
The Companys management shall inform the Audit Committee of each service performed by the
independent auditor pursuant to this Pre-Approval Policy. Requests to provide services that
require separate approval by the Audit Committee shall be submitted to the Audit Committee or its
delegate by the Controller, and shall include a statement as to whether the request is consistent
with rules on auditor independence.
De Minimis Exception
The Audit Committee recognizes that applicable law provides for an exception to the pre-approval
requirements for permissible non-audit services provided that (1) all such services do not, in the
aggregate, amount to more than 5% of the total fees paid by the Company to the independent auditor;
(2) such services were not recognized as non-audit services at the time of the relevant engagement;
and (3) such services were promptly brought to the attention of and approved by the Audit Committee
or its delegate at the next scheduled meeting of the Audit Committee and in all cases, prior to the
completion of the annual audit.
2
|
Fulfillment 70344 70325 FOLD AND DETACH HERE YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to take advantage of Internet or
telephone voting. Both are available 24 hours a day, 7 days a week. Internet and telephone voting is available through 11:59 p.m. Eastern
Time the day prior to the stockholder meeting date. OR If you vote your proxy by Internet or by telephone, you do NOT need to mail back your
proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. Your Internet or telephone
vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. INTERNET
http://www.proxyvoting.com/sya Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. TELEPHONE
1-866-540-5760 Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. Mark Here for Address Change or
Comments SEE REVERSE Signature Signature Date NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. Please mark your votes as indicated in this example X THIS PROXY
WILL BE VOTED AS DIRECTED, OR IF NO DIRECTIONS INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR ITEM 2. FOR ALL Nominees:
WITHHOLD FOR ALL *EXCEPTIONS FOR AGAINST ABSTAI1. ELECTION OF DIRECTORS N 01 Randall H. Talbot 02 Lois W. Grady 03 David T. Foy (INSTRUCTIONS:
To withhold authority to vote for any individual nominee, mark the Exceptions box above and write that nominees name in the space provided below.)
*Exceptions 2. Vote to ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for 2010 |
|
Fulfillment 70344 70325 You can now access your
Symetra Financial Corporation account online. Access your Symetra Financial Corporation
account online via Investor ServiceDirect® (ISD). BNY Mellon Shareowner Services, the transfer
agent for Symetra Financial Corporation, now makes it easy and convenient to get current information
on your stockholder account. View account status View payment history for dividends View certificate
history Make address changes View book-entry information Obtain a duplicate 1099 tax form Visit us on
the web at http://www.bnymellon.com/shareowner/isd For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time Investor ServiceDirect ® Available 24 hours per day, 7 days per week TOLL FREE NUMBER:
1-800-370-1163 Important notice regarding the Internet availability of proxy materials for the Annual Meeting of
Stockholders. The Proxy Statement and the 2009 Annual Report to Stockholders are available at: http://www.proxyvoting.com/sya
PROXY SYMETRA FINANCIAL CORPORATION Annual Meeting of Stockholders May 12, 2010 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY The undersigned hereby appoints Lowndes A. Smith and Sander M. Levy, and each of them, with power to act without the
other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided
on the other side, all the shares of Symetra Financial Corporation Common Stock which the undersigned is entitled to vote, and, in
their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the Company to
be held May 12, 2010 or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at
the Meeting. Address Change/Comments (Mark the corresponding box on the reverse side) BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 SOUTH
HACKENSACK, NJ 07606-9250 Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements,
tax documents and more. Simply log on to Investor ServiceDirect® at www.bnymellon.com/shareowner/isd where step-by-step instructions will
prompt you through enrollment. FOLD AND DETACH HERE (Continued and to be marked, dated and signed, on the other side) |