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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.            )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý


Definitive Proxy Statement

o


Definitive Additional Materials

o


Soliciting Material under §240.14a-12


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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No fee required.

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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  (2) Aggregate number of securities to which transaction applies:
        
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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 


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AMERICAN EQUITY
INVESTMENT LIFE HOLDING COMPANY

6000 Westown Parkway
West Des Moines, Iowa 50266



NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 1, 2017



Meeting Date: Thursday, June 1, 2017
Time: 1:30 p.m., Central Daylight Time
Location: 6000 Westown Parkway, West Des Moines, IA 50266

The Annual Meeting of Shareholders of American Equity Investment Life Holding Company will be held for the following purposes:

1.
To elect five directors to three-year terms and one director to a one-year term.

2.
To ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2017.

3.
To hold an advisory vote to approve the compensation of our named executive officers.

4.
To hold an advisory vote to recommend the frequency of holding future advisory votes on executive compensation.

5.
To transact such other business that may properly come before the meeting.

Shareholders of record at the close of business on the record date, April 6, 2017, are entitled to the notice of and to vote at the meeting. It is important that your shares be represented and voted at the meeting. Whether or not you plan to attend the meeting, please vote your shares in one of the following ways:

     Telephone Internet Mail
     GRAPHIC GRAPHIC GRAPHIC
By telephone; Through the Internet; or If you received a paper copy of the proxy statement, by completing, signing and promptly returning the enclosed proxy card in the enclosed postage-paid envelope.

By Order of the Board of Directors

GRAPHIC

Renee D. Montz
Secretary

West Des Moines, Iowa
April 19, 2017


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PROXY STATEMENT

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Annual Meeting of Shareholders
June 1, 2017



Table of Contents

Annual Meeting and Proxy Solicitation Information

1

A Notice Regarding the Availability of Proxy Materials

1

General Information

1

Voting Rights

1

Voting

2

Proposal 1—Election of Directors

3

Class II Directors Whose Terms Expire at the Annual Meeting

3

Class III Director Whose Term Expires at the Annual Meeting

4

Class III Directors Whose Terms Expire at the 2018 Annual Meeting

4

Class I Directors Whose Terms Expire at the 2019 Annual Meeting

5

Board and Corporate Governance Information

6

Corporate Governance

6

Board Leadership Structure

6

Board of Director's Oversight of Risk Management

6

Majority of Independent Directors

7

Meetings and Committees of the Board of Directors

7

Information Regarding the Company's Process for Identifying Director Nominees

9

Compensation Committee Interlocks and Insider Participation

9

Director Compensation

10

Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm

13

Audit Committee Disclosures

14

Executive Officers and Compensation

15

Executive Officers

15

Compensation Discussion and Analysis

15

Compensation Committee Report

23

Executive Compensation Tables

24

Option Exercises and Stock Vested

28

Non-Qualified Deferred Compensation

28

Potential Payments Upon Termination or a Change in Control

28

Payments Upon Retirement to Mr. Noble and Ms. Richardson

30

Proposal 3—Advisory Vote on Executive Compensation

31

Proposal 4—Advisory Vote on the Frequency of Holding Future Advisory Votes on Executive Compensation

32

Additional Information

33

Security Ownership of Management and Certain Beneficial Owners

33

Equity Plan Information

34

Related Person Transaction Disclosures

35

Section 16(a) Beneficial Ownership Reporting Compliance

36

Shareholder Proposals for the 2018 Annual Meeting

36

Shareholder Communications

36

Householding; Annual Report on Form 10-K

37

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Annual Meeting and Proxy Solicitation Information

A Notice Regarding the Availability of Proxy Materials

The Company is using "notice and access" to distribute proxy materials to shareholders, which means this Proxy Statement and the Company's Annual Report to Shareholders will be made available on the Internet instead of mailing a printed copy to each shareholder. Shareholders who receive a Notice of Internet Availability of Proxy Materials (the "Notice") by mail will not receive a printed copy of these materials other than as described below. The Notice contains instructions as to how shareholders may access and review all of the important information contained in the materials on the Internet, including how to submit proxies. The Notice is first being mailed on or about April 19, 2017.

If you would prefer to receive a printed copy of the Company's proxy materials, please follow the instructions for requesting printed copies included in the Notice.

General Information

This proxy statement is provided to the shareholders of American Equity Investment Life Holding Company, 6000 Westown Parkway, West Des Moines, Iowa 50266 (referred to in this proxy statement as the "Company" or as "we," "our" or "us"), in connection with the solicitation of proxies by the Board of Directors for the annual meeting of shareholders to be held on June 1, 2017 ("Annual Meeting"), at the time and place shown in the Notice of Annual Meeting of Shareholders, and at any adjournment. To obtain directions to the Annual Meeting, you may contact us at our toll-free number 1-888-221-1234.

We will bear all expenses in connection with this solicitation. Proxies may be solicited by the Board of Directors or management personally, telephonically or electronically.

Voting Rights

Only shareholders of record as of the close of business on April 6, 2017 will be entitled to the notice of and to vote at the Annual Meeting. We have a single class of voting common stock, $1 par value per share ("Common Stock"), of which 88,746,096 shares were outstanding and entitled to vote on such date. Each share is entitled to one vote.

Shares present in person or represented by proxy at the Annual Meeting will be tabulated to determine if a quorum is present. A quorum is present if a majority of the votes entitled to be cast on a matter are represented for any purpose at the Annual Meeting. Votes withheld for any director, broker non-votes and abstentions represented at the Annual Meeting will be counted for quorum purposes. Votes will be tabulated under the supervision of Alliance Advisors, L.L.C., which has been designated by the Board of Directors as inspector of the election.

If your shares of Common Stock are held in the name of a bank, broker or other holder of record, you will receive instructions from that holder to vote your shares at the Annual Meeting. Contact your bank, broker or other holder of record directly if you have any questions. Even if you do not provide instructions, your bank, broker or other holder of record may vote your shares on certain "routine matters". The New York Stock Exchange ("NYSE") considers Proposal 2 to be a "routine matter". As a result, without instructions from you, your broker is permitted to vote your shares on this matter at its discretion. A broker non-vote occurs when a broker does not vote on some matter because the broker has not received instructions from you and does not have discretionary voting power for that particular item. Proposals 1, 3 and 4 are considered "non-routine matters" and, therefore, brokers may not vote on the matter unless they receive specific voting instructions from you.

If you plan to attend the Annual Meeting and vote in person, you will have the opportunity to obtain a ballot when you arrive. If your shares of Common Stock are not registered in your own name and you plan to attend the Annual Meeting and vote your shares in person, you will need to contact the broker or agent in whose name your shares are registered to obtain a broker's proxy card. You will need to bring the broker's proxy card with you to the Annual Meeting in order to vote.

 

 

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Voting

If you vote by proxy, the individuals named on the proxy card (your proxies) will vote your shares in the manner you indicate. If you sign, date and return the proxy card without indicating your instructions on how to vote your shares, the proxies will vote your shares as follows:

"FOR" the election of the six director nominees;

"FOR" the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2017;

"FOR" the approval of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission ("SEC"); and

FOR the approval of a "1 YEAR" frequency for future advisory votes on the compensation of the Company's named executive officers.

If any other matter is presented at the Annual Meeting, your proxies will vote in accordance with their best judgment. At the time this proxy statement was printed, we knew of no other matters to be addressed at the Annual Meeting.

If you are a registered shareholder (that is, you own shares of Common Stock in your own name and not through a broker, nominee or in some other "street name"), you may vote by telephone, through the Internet or by obtaining a proxy card and returning it by mail. Please see the Notice for instructions on how to access the telephone and Internet voting systems. If you hold your shares in "street name," your broker or other nominee will advise you on whether you may vote by telephone or through the Internet as an alternative to voting by proxy card.

A proxy may be revoked at any time prior to the close of voting at the Annual Meeting. Such revocation may be made in person at the Annual Meeting, by notice in writing delivered to the Corporate Secretary of the Company, by voting by telephone or through the Internet at a later date or by a proxy bearing a later date.

The Board of Directors urges you to take advantage of Internet or telephone voting. Instructions are included in the Notice or the proxy card.

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Proposal 1—Election of Directors

The Board of Directors presently consists of thirteen members. Each member of the Board has been appointed to one of three Classes with three-year terms expiring on a staggered basis. The terms of the five directors presently serving as the Class II Directors expire at the Annual Meeting. The term of one director who was appointed as a Class III Director in March 2017 expires at the Annual Meeting.

The five nominees to serve as Class II Directors are Joyce A. Chapman, James M. Gerlach, Robert L. Howe, William R. Kunkel and Debra J. Richardson. Each is nominated for a term of three years expiring at the annual meeting of shareholders in 2020, or until their respective successors are elected and qualified, subject to their prior death, resignation or removal. The nominee to serve as a Class III Director is Brenda J. Cushing, and she is nominated for a term of one year expiring at the annual meeting of shareholders in 2018, or until her successor is elected and qualified, subject to her prior death, resignation or removal.

Ms. Richardson retired from the Company effective January 1, 2017, and Mr. Kunkel retired from the Company effective April 1, 2016. Ms. Chapman, Ms. Cushing, Mr. Gerlach and Mr. Howe are independent under the requirements of the Sarbanes-Oxley Act of 2002 ("SOX"), and rules adopted by the SEC, as well as the corporate governance listing standards of the NYSE ("NYSE Rules").

The Board of Directors anticipates the nominees will serve. In the event a nominee is unable to do so, proxies will be voted for such substitute nominee as the Board of Directors in its discretion may recommend. Proxies will be voted for the election of the nominees unless the shareholder giving the proxy withholds authority or votes against any nominee.

Directors are elected by a plurality of the votes cast by the shares entitled to vote at the Annual Meeting.

The Board of Directors unanimously recommends you vote FOR the nominees listed below.

Class II Directors Whose Terms Expire at the Annual Meeting

Joyce A. Chapman, 72, has served as a Director since 2008. She worked for over 35 years with West Bank, West Des Moines, Iowa until her retirement in 2006. While at West Bank, Ms. Chapman served in various capacities related to bank administration and operations. Ms. Chapman has served in numerous positions of leadership in philanthropic and banking industry organizations. Ms. Chapman also serves as a director for West Bank and West Bancorporation, Inc. Ms. Chapman's leadership experience in various organizations and her experience in the banking industry led the Board of Directors to conclude that Ms. Chapman should serve as a director of the Company.

James M. Gerlach, 75, has served as a Director since 1996. He served as Executive Vice President of the Company from 1996 until his retirement in 2011. Prior to joining us, Mr. Gerlach served as Executive Vice President of American Life and Casualty Insurance Company ("American Life and Casualty") and as Executive Vice President and Treasurer of Vulcan Life Insurance Company, a subsidiary of American Life and Casualty. Mr. Gerlach was active in the insurance industry for over 45 years. Mr. Gerlach's vast knowledge of the Company's operations as well as his years of experience in the insurance industry led the Board of Directors to conclude that Mr. Gerlach should serve as a director of the Company.

Robert L. Howe, 74, has served as a Director since 2005. He is our Lead Independent Director. He served the State of Iowa Insurance Division from 1964 to 2002 in various capacities. He was named Deputy Commissioner and Chief Examiner in 1985 and served in that position until his retirement in 2002. During this time, Mr. Howe was responsible for the financial oversight of 220 domestic insurance companies. Since his retirement, Mr. Howe has been a self-employed insurance consultant serving as a director of EMC National Life Company from 2003 until 2007, and, from 2007 to present, Mr. Howe has served as a director of EMC Insurance Group. He also serves as the designated financial expert on the board of directors of EMC Insurance Group. Mr. Howe is a certified financial examiner, certified insurance examiner, certified government financial manager and accredited insurance receiver. Mr. Howe's experience in the financial oversight of insurance companies and his expertise in finance led the Board of Directors to conclude that Mr. Howe should serve as a director of the Company.

 

 

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William R. Kunkel, 60, has served as a Director since June 2016. He has served as General Counsel of the Archdiocese of Chicago since November 2016. From 2012 through April 1, 2016, he served as the Company's Executive Vice President, Legal and General Counsel. Prior to joining the Company, Mr. Kunkel was a partner at the international law firm of Skadden, Arps, Slate, Meagher & Flom LLP for over 25 years, where he focused his practice on mergers and acquisitions, corporate finance and other corporate governance and securities matters. Mr. Kunkel's experience as an executive of the Company and as legal counsel to the Company as well as his expertise in corporate governance and corporate finance led the Board of Directors to conclude that Mr. Kunkel should serve as a director of the Company.

Debra J. Richardson, 60, has served as a Director since 2008. She served as Executive Vice President and Secretary of the Company from 2009 to June 30, 2016. Prior to that, Ms. Richardson served as Senior Vice President and Secretary of the Company since 1996. Ms. Richardson was employed by The Statesman Group, Inc. ("Statesman") from 1977 through 1996 serving in various positions including Vice President—Shareholder/Investor Relations. Ms. Richardson has been involved in the insurance industry for over 35 years. Ms. Richardson's experience as an executive of the Company and her years of involvement in the insurance industry led the Board of Directors to conclude that Ms. Richardson should serve as a director of the Company.

Class III Director Whose Term Expires at the Annual Meeting

Brenda J. Cushing, 53, has served as a Director since March 2017. Ms. Cushing has been an independent insurance consultant since August 2015. From August 2014 to August 2015, Ms. Cushing served as Executive Vice President and Chief Financial Officer of Athene Holding Ltd., a retirement services company that issues, reinsures and acquires retirement savings products, and from October 2013 to August 2014, Ms. Cushing served as Executive Vice President and Chief Financial Officer of Athene USA Corp., a subsidiary of Athene Holding. From 2008 until its acquisition by Athene in 2013, Ms. Cushing served as Executive Vice President and Chief Financial Officer of Aviva USA Corp., a diversified financial company that offered long-term savings, insurance and retirement income products. Ms. Cushing is a certified public accountant and has been involved in the insurance industry for over 20 years. Ms. Cushing's financial expertise and insurance company financial leadership over two decades led the Board of Directors to conclude that Ms. Cushing should serve as a director of the Company.

Members of Our Board Not Standing for Election This Year

Class III Directors Whose Terms Expire at the 2018 Annual Meeting

David S. Mulcahy, 64, has served as a Director since 2011. Mr. Mulcahy previously served as a member of the Company's Board of Directors from 1996 to 2006. Mr. Mulcahy currently serves as Chairman of the Board of Directors of Monarch Materials Group, Inc., a privately-owned company which manufactures residential, basement window systems and as President of MABSCO Capital, Inc., a privately-owned company which provides a selection of services including portfolio management, financial consulting and private placement, private equity and joint venture transactions. Mr. Mulcahy has served as a director of Workiva Inc. since its initial public offering in 2014. Mr. Mulcahy is a certified public accountant and was a partner in the Des Moines office of Ernst & Young LLP, where he was employed from 1976 through 1994. Mr. Mulcahy's financial expertise, knowledge and experience in accounting and business management led the Board of Directors to conclude that Mr. Mulcahy should serve as a director of the Company.

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David J. Noble, 85, has served as a Director since 1995. He has served as Chairman of the Board since July 2016, as Executive Chairman of the Board from 2009 until July 2016 and as Chairman, Chief Executive Officer, President and Treasurer of the Company from its formation in 1995 until 2009. Mr. Noble was Chief Executive Officer of Statesman from 1982 through 1994 and was a director of Statesman (from 1975) and its President (from 1979) until he left to form our Company at the end of 1995. Mr. Noble has been active in the insurance industry for over 60 years. Mr. Noble was a director of Twenty Services, Inc. until March 2014. Mr. Noble's service as Chief Executive Officer, President and Treasurer of the Company gives him unique insights into the Company's challenges, opportunities and operations. This, along with his years of experience in the insurance industry, led the Board of Directors to conclude that Mr. Noble should serve as a director of the Company.

A. J. Strickland, III, 75, has served as a Director since 1996. He has been the Thomas R. Miller Professor of Strategic Management in the Graduate School of Business at the University of Alabama since 1969. Dr. Strickland has been a director of United Security Bancshares, Inc. since February 2013, was a director of Twenty Services, Inc. until March 2014 and was a director of Statesman. Dr. Strickland is also the co-author of many strategic management books and texts used at universities worldwide. In addition, he conducts frequent industry and competitive analyses of domestic and international firms. Dr. Strickland's extensive knowledge of strategic management and the finance industry arising from his academic experience led the Board of Directors to conclude that Dr. Strickland should serve as a director of the Company.

Class I Directors Whose Terms Expire at the 2019 Annual Meeting

Alexander M. Clark, 83, has served as a Director since 2007. He has served as a Senior Managing Director in the Insurance Group at Griffin Financial Group, LLC since 2010. Mr. Clark was Managing Director—Insurance Investment Banking from 2008 to 2010 at Madison Williams & Company, Inc. Mr. Clark is a chartered financial analyst. He has served as a director of our New York life subsidiary since 2005 and also serves as a director of Pennsylvania National Insurance Group, Unity Financial Life Insurance Company and Penn Treaty American Corporation. Mr. Clark's investment banking activities have been focused primarily on insurance companies and he has been actively involved in the insurance industry for over 30 years. Mr. Clark's background in investment banking and his financial expertise and experience in the insurance industry led the Board of Directors to conclude that Mr. Clark should serve as a director of the Company.

John M. Matovina, 62, has served as a Director since 2000. He has served as Vice Chairman, Chief Executive Officer and President of the Company since 2012. He served as Vice Chairman, Chief Financial Officer and Treasurer of the Company from 2009 to 2012 and as our Vice Chairman since 2003. Mr. Matovina was a private investor and a financial consultant to us from 1997 to 2003. From 1983 through 1996, he was a senior financial officer of Statesman and many of its subsidiaries, and, prior to Statesman's acquisition in 1994, he served as Statesman's Chief Financial Officer, Treasurer and Secretary. Mr. Matovina is a certified public accountant and has more than 25 years experience in the life insurance industry. Mr. Matovina's role as Chief Executive Officer of the Company as well as his years of experience in and extensive knowledge of the insurance industry led the Board of Directors to conclude that Mr. Matovina should serve as a director of the Company.

Alan D. Matula, 56, has served as a Director since December 2015. He has served as the Chief Information Officer of Weber-Stephen Products LLC, a privately owned company which manufactures charcoal, gas and electric outdoor grills and accessories, since December 2015. Mr. Matula worked for the Royal Dutch Shell plc organization for over 30 years. During that time, he served in various information technology capacities for the parent company and several of its subsidiaries, including chief information officer for Royal Dutch Shell plc from 2006 to 2015. Mr. Matula's experience as chief information officer and overseeing technology and cyber-related risks as well as his deep business experience led the Board of Directors to conclude Mr. Matula should serve as a director of the Company.

Gerard D. Neugent, 65, has served as a Director since 2010. He has served as President and Chief Executive Officer of Knapp Properties, Inc., Des Moines, Iowa since 2014 and served as President and Chief Operating Officer of Knapp Properties, Inc. from 1993 until 2014. His primary duties include real estate transactions, development and management. Mr. Neugent received his law degree from Drake University. Mr. Neugent's experience in real estate and business management as well as his legal background led the Board of Directors to conclude that Mr. Neugent should serve as a director of the Company.

 

 

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Board and Corporate Governance Information

Corporate Governance

The Company is committed to the highest standards of business conduct in our relationships with each other and with our customers, distributors, agents, national marketing organizations, suppliers, shareholders and others. This requires conducting our business in accordance with all applicable laws and regulations and in accordance with the highest standards of business conduct. The Company has established a Code of Business Conduct and Ethics (the "Code of Ethics") to assure uniformity in standards of conduct. The Code of Ethics applies to the Company's directors, officers and employees. The Code of Ethics is available under "Corporate Governance" accessible through the "Investor Relations" link on the Company's website at www.american-equity.com. In addition, a copy of the Code of Ethics is available in print. Requests should be sent to the Corporate Secretary at 6000 Westown Parkway, West Des Moines, Iowa 50266.

Board Leadership Structure

Mr. Noble serves as Chairman of the Board of Directors. As Chairman of the Board, Mr. Noble's focus is on the strategic direction of the Company. Mr. Noble's history as our founder and his strategic experience make him the appropriate leader of the Board. Mr. Howe serves as Lead Independent Director and works with the Chairman, the Chief Executive Officer and other members of the Board of Directors to provide independent oversight of the Company. Among other things, Mr. Howe serves as principal liaison among the Chairman, the independent directors and senior management. Mr. Howe also chairs executive sessions of the independent and non-management directors.

Board of Director's Oversight of Risk Management

The Company's Board of Directors administers its risk oversight function directly and through its committees, including the Risk Committee. The Board of Directors participates in setting the Company's business strategy and plays a key role in the assessment of management's approach to risk. Through this process, the Board of Directors better understands and determines what level of risk is appropriate for the Company. While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board of Directors also have responsibility for risk management. For example, the Audit Committee focuses on financial risk, including internal controls. The Risk Committee focuses on strategic and liability risks, compliance risks and operational risks. Additionally, the Compensation Committee is responsible for creating incentives that encourage a level of risk-taking behavior consistent with the Company's business strategy. Finally, the Investment Committee manages the risks involving the Company's investments and investment policies and activities.

The responsibility for the day-to-day management of risk lies with the Chief Executive Officer and our management. The Company has an enterprise risk management (ERM) policy approved by the Board of Directors and implemented by an ERM Committee comprised of members of senior management who, among other things, review and discuss reports from other members of management regarding the Company's risk management activities, including the areas management has identified as our major risk exposures, and the steps taken to monitor and manage those exposures. The Chief Executive Officer and ERM Committee are responsible for reporting the risk profile, risk trends and key risk metrics to the Board of Directors on a regular basis and meet with the Risk Committee at least annually.

The Company has a Disclosure Committee comprised of (i) the Audit Committee Chair, who also serves as Chairman for the Disclosure Committee, (ii) the Chief Financial Officer, (iii) the Vice President-Accounting/Controller and (iv) the General Counsel and Secretary of the Company. The purpose of the Disclosure Committee is to assist senior officers of the Company to fulfill the Company's and their responsibilities regarding the identification and disclosure of material information about the Company and the accuracy, completeness and timeliness of the Company's financial reports, SEC reports and press releases. The Disclosure Committee is governed by a written charter approved by the Board of Directors which is available to any shareholder upon request.

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Majority of Independent Directors

Our Board of Directors includes thirteen members and it has affirmatively determined the following nine are independent under applicable requirements:

Joyce A. Chapman
Alexander M. Clark
Brenda J. Cushing
James M. Gerlach
Robert L. Howe
Alan D. Matula
David S. Mulcahy
Gerard D. Neugent
A. J. Strickland, III

Gerard D. Neugent is the President and Chief Executive Officer of Knapp Properties, Inc. which provides property management services to the owner of the building where the Company has its principal executive offices in West Des Moines, Iowa. The aggregate amount of fees paid to Knapp Properties, Inc. by the owner of the building with respect to the Company's offices is immaterial in amount both to the Company and to Knapp Properties, Inc. Mr. Neugent is a member/manager of William C. Knapp, L.C., which is a 50% owner of West Lake Properties, L.C. West Lake Properties, L.C. owns a warehouse building, a portion of which is leased to the Company. The aggregate amount of rent and expenses relating to the warehouse space is immaterial in amount to both the Company and William C. Knapp, L.C.

David S. Mulcahy is a director and shareholder of Workiva Inc. The Company has entered into a subscription agreement with Workiva Inc. to utilize certain software. The fees paid to Workiva Inc. in 2016 pursuant to the subscription agreement are immaterial to the Company and to Workiva.

The independent directors meet in executive session as a part of all regular quarterly meetings of the Board of Directors. At each executive session, the Lead Independent Director presides. The Board of Directors has adopted Corporate Governance Guidelines which are posted on our website at www.american-equity.com and are also available in print for any shareholder upon request.

Any interested parties desiring to communicate with a member (or all members) of the Board of Directors regarding the Company may directly contact such directors by mail or electronically. To communicate with the Board of Directors, any individual director or any group or committee of directors, correspondence should be addressed to the Board of Directors or any such individual director or group or committee of directors by either name or title. All mail correspondence should be sent to the Corporate Secretary at 6000 Westown Parkway, West Des Moines, Iowa 50266. All electronic correspondence should be sent to the Corporate Secretary at corpsecretary@american-equity.com. All correspondence received by the Corporate Secretary will be categorized and then forwarded to the Board of Directors, the individual director or any group or committee of directors.

Meetings and Committees of the Board of Directors

The Board of Directors met seven times in 2016, and each of the directors attended at least 75% of the meetings of the Board of Directors and the committee meetings for any committee on which he or she served during 2016. We currently have six permanent committees described below. Under our Corporate Governance Guidelines, a director

 

 

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is invited and encouraged to attend the Annual Meeting. All directors, with the exception of A. J. Strickland, III, attended the 2016 Annual Meeting of Shareholders.

Board Committee
Current Members
Meetings
During 2016

Audit(1)

Cushing, Howe, Mulcahy 9

Compensation

Chapman, Strickland 4

Nominating & Corporate Governance

Chapman, Neugent 3

Executive

Howe, Matovina, Mulcahy, Noble, Richardson 1

Investment

Clark, Gerlach, Matovina, Noble 1

Risk

Kunkel, Matula, Richardson 2
(1)
Ms. Cushing joined the Board of Directors and the Audit Committee in March 2017.

The Audit Committee performs the following functions, among others: (i) assists the Board of Director's oversight of (a) the integrity of our financial statements and systems of internal control over financial reporting; (b) our compliance with legal and regulatory requirements as they pertain to the financial statements and annual audit process; (c) our independent registered public accounting firm's qualifications and independence; and (d) the performance of our independent registered public accounting firm and our internal audit function; and (ii) prepares the annual report on audit disclosures required to be prepared by the Audit Committee pursuant to the rules of the SEC. The Audit Committee is governed by a written charter approved by the Board of Directors. The charter is posted on our website at www.american-equity.com and is also available in print for any shareholder upon request. The annual report of the Audit Committee is set forth below.

The Audit Committee must include only directors who satisfy the independence requirements under SOX and the NYSE Rules. In addition, all Audit Committee members must have the ability to read and understand financial statements. The Board of Directors has determined that all members of the Audit Committee meet the applicable standards. In addition, the Board of Directors has determined that Ms. Cushing, Mr. Howe and Mr. Mulcahy are "audit committee financial experts," as that term is defined under SOX.

The Compensation Committee performs the following functions, among others: (i) oversees our compensation and benefit plans and practices related to our Chief Executive Officer, and until July 2016 our Executive Chairman; (ii) makes recommendations to the Board of Directors with respect to other senior officers' compensation, incentive compensation and equity-based plans; and (iii) produces an annual report on executive compensation disclosures as required by the SEC. The Compensation Committee is governed by a written charter approved by the Board of Directors. The charter is posted on our website at www.american-equity.com and is also available in print for any shareholder upon request. The annual report of the Compensation Committee is set forth below.

The Compensation Committee has the authority to engage compensation consultants, independent legal counsel and other advisers as it deems necessary. The Compensation Committee has engaged Pearl Meyer & Partners, an independent compensation consultant ("Pearl Meyer"), to provide advice and data with respect to compensation benchmarking and market practices. In 2016, Pearl Meyer worked with the Compensation Committee to develop recommendations regarding (i) base salaries of executive officers, (ii) short-term incentive compensation awards and (iii) long-term incentive compensation awards. In performing the annual assessment of the compensation consultant's independence, the Compensation Committee has reviewed, among other items, a letter from Pearl Meyer addressing its independence and the independence of the members of the consulting team serving the Compensation Committee, including the following factors: (i) the nature of any services provided to the Company by Pearl Meyer other than as described above, (ii) the amount of fees paid by the Company in relation to Pearl Meyer's total revenue, (iii) Pearl Meyer's policies and procedures designed to prevent conflicts of interest and (iv) the existence of any business or personal relationship or stock ownership that could impact the adviser's independence. Pursuant to SEC and NYSE rules, the Compensation Committee assessed the independence of Pearl Meyer in March 2016 and determined Pearl Meyer is independent from the Company's management and that no conflict of interest exists that would prevent Pearl Meyer from serving as an independent consultant for the Compensation Committee.

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Under the NYSE Rules, the Compensation Committee must be composed entirely of independent directors. The Board of Directors has determined that all members of the Compensation Committee meet the applicable standard.

The Nominating and Corporate Governance Committee performs the following functions, among others: (i) identifies and recommends candidates to fill positions on the Board of Directors; (ii) screens qualifications and backgrounds of director candidates; (iii) develops and recommends corporate governance principles for the Company as required by law; and (iv) evaluates the Board of Directors as a whole. The Nominating and Corporate Governance Committee is governed by a written charter approved by the Board of Directors. The charter is posted on our website at www.american-equity.com and is also available in print for any shareholder upon request.

Under the NYSE Rules, the Nominating and Corporate Governance Committee must be composed entirely of independent directors. The Board of Directors has determined that all members of the Nominating and Corporate Governance Committee meet the applicable standard.

The Executive Committee performs the following functions, among others: (i) except as prohibited by applicable law, exercises, between meetings of our Board of Directors, all of the powers and authority of the Board of Directors in our direction and management; (ii) reviews corporate matters presented, or to be presented, to our Board of Directors; and (iii) makes recommendations to the Board of Directors on policy matters.

The Investment Committee performs the following functions, among others: (i) oversees our general investment strategies, objectives, standards and limitations; (ii) oversees our use of derivatives and general hedging strategy; and (iii) reviews and monitors investment performance.

The Risk Committee was formed in August 2016 and performs the following functions, among others: oversight of the Company's (i) risk management governance structure; (ii) risk management and risk assessment guidelines and policies regarding risks that could have a material impact on the Company; and (iii) risk tolerance. The Risk Committee is governed by a written charter approved by the Board of Directors.

Information Regarding the Company's Process for Identifying Director Nominees

The Company is committed to having a Board of Directors comprised of individuals who are accomplished in their fields, have the ability to make meaningful contributions to the Board of Directors' oversight of the business and affairs of the Company and have an impeccable record and reputation for honest and ethical conduct. The Nominating and Corporate Governance Committee will consider candidates recommended by shareholders. In considering candidates submitted by shareholders, the Nominating and Corporate Governance Committee will take into consideration the needs of the Board of Directors and the qualifications of the candidate. The Nominating and Corporate Governance Committee may also take into consideration the number of shares held by the recommending shareholder and the length of time the shares have been held.

To have a candidate considered by the Nominating and Corporate Governance Committee, a shareholder must submit the recommendation in writing and in accordance with the requirements of our Amended and Restated Bylaws.

The Nominating and Corporate Governance Committee may apply several criteria in identifying nominees. At a minimum, the committee shall consider (i) whether each such nominee has demonstrated, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board of Director's oversight of our business and affairs and (ii) the nominee's reputation for honesty and ethical conduct in his or her personal and professional activities. Additional factors which the Nominating and Corporate Governance Committee may consider include a candidate's specific experiences and skills, relevant industry background and knowledge, time availability in light of other commitments, potential conflicts of interest, material relationships with us and independence from management. The Nominating and Corporate Governance Committee also may seek to have the Board of Directors represent a diversity of backgrounds and experience.

Compensation Committee Interlocks and Insider Participation

The Board of Directors has affirmatively determined Ms. Chapman and Dr. Strickland are independent under the requirements of SOX and the NYSE Rules and do not have any relationships requiring disclosure under Item 404(a) of Regulation S-K. None of the Company's Compensation Committee members has ever been an officer or employee of the Company or any of our subsidiaries, and during our last fiscal year, none of our executive officers

 

 

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served on the compensation committee or board of directors of any company that had one or more executive officers who served on our Board of Directors or our Compensation Committee.

Director Compensation

Directors who are our employees receive no compensation for their service as directors. Beginning in July 2016, each member of the Board of Directors who is not an employee of the Company receives the following:

$12,500 per quarter ($10,000 per quarter through June 2016)

$1,500 per meeting for attending meetings of the Board of Directors, $1,000 per meeting if attended by phone and the meeting is otherwise an in-person meeting or $500 per meeting for telephonic meetings, plus reimbursement of expenses for attending such meetings

The Lead Independent Director receives an additional $5,000 per quarter.

The Chairs of our committees receive the following, all amounts per quarter:

Audit Committee—$10,500

Compensation Committee—$3,750 ($3,000 per quarter through June 2016)

Nominating and Corporate Governance Committee—$2,250 ($1,500 per quarter through June 2016)

Risk Committee—$2,250

Non-Chair members of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee receive an additional $3,000, $1,500 and $750 per quarter, respectively. Non-employee members of the Investment Committee, the Risk Committee and the Executive Committee receive an additional $750 per quarter.

In 2016, non-employee directors also received a grant of 4,750 shares of restricted stock under our 2013 Director Equity and Incentive Plan (the "2013 Director Plan"). Under the 2013 Director Plan, directors who are not employees may receive grants of options, stock appreciation rights, restricted stock and restricted stock units convertible into or based upon our Common Stock. The Board of Directors believes that, although there is no policy requiring the directors to have a specified level of share ownership, it is important for directors to each own a meaningful amount of Common Stock. Non-employee directors own not less than five times their respective annual cash retainer amount in Common Stock, except Mr. Matula, who was elected to the Board of Directors in December 2015 and Ms. Cushing who was elected to the Board of Directors in March 2017.

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The following table provides compensation information for 2016 for each member of the Board of Directors who was not an employee of the Company:

Name
Fees Earned or
Paid in Cash
($)

Restricted
Stock Awards
($)(1)

All Other
Compensation
($)(2)

Total
($)

Joyce A. Chapman

58,500 77,853 1,140 137,493

Alexander M. Clark

55,000 77,853 1,140 133,993

James M. Gerlach

55,500 77,853 1,140 134,493

Robert L. Howe

87,500 77,853 1,140 166,493

William R. Kunkel(3)

32,500 72,818 1,140 106,458

Alan D. Matula

53,500 77,853 1,140 132,493

David S. Mulcahy

96,000 77,853 1,140 174,993

Gerard D. Neugent

54,000 77,853 1,140 132,993

David J. Noble(4)

31,000 3,444 34,444

A. J. Strickland, III

65,500 77,853 1,140 144,493

Harley A. Whitfield, Sr.(5)

75,000 77,853 1,643 154,496
(1)
Amounts reflect for each restricted stock award, the aggregate grant date fair value pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718. For further information, please see Footnote 11 Retirement and Share-Based Compensation Plans in the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2016. On June 2, 2016, Ms. Chapman, Mr. Clark, Mr. Gerlach, Mr. Howe, Mr. Matula, Mr. Mulcahy, Mr. Neugent, Dr. Strickland and Mr. Whitfield were each granted 4,750 shares of time-based restricted stock, all of which remain outstanding as of December 31, 2016. The per share fair value at the grant date was $16.39. On June 15, 2016, Mr. Kunkel was granted 4,750 shares of time-based restricted stock which remain outstanding as of December 31, 2016. The per share fair value at the grant date was $15.33. The vesting period for the restricted stock is the earlier of (a) one year from the date of grant or (b) the date of the Annual Meeting. There was no other unvested restricted stock held by the non-employee directors as of December 31, 2016.

(2)
Amounts reflect dividends paid on unvested restricted stock awards and personal use of Company aircraft.

(3)
Mr. Kunkel joined the Board of Directors in June 2016, following his retirement from the Company, and was paid standard compensation for his service on the Board of Directors and the Risk Committee.

(4)
Mr. Noble retired from the Company effective July 1, 2016 and was paid standard compensation for his service on the Board of Directors and the Executive and Investment Committees following his retirement.

(5)
Mr. Whitfield served as a Director during 2016 and passed away in early 2017.

 

 

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The following table provides information about unexercised stock options to acquire our Common Stock held by each member of the Board of Directors who is not an employee of the Company as of December 31, 2016. There were no unexercisable options held by a non-employee director as of such date.

Name
Number of Shares
Underlying Unexercised
Options (#)

Joyce A. Chapman

49,000

Alexander M. Clark

29,000

James M. Gerlach

Robert L. Howe

36,500

William R. Kunkel

Alan D. Matula

David S. Mulcahy

Gerard D. Neugent

29,000

David J. Noble

65,000

A. J. Strickland, III

59,500

Harley A. Whitfield, Sr.(1)

39,500
(1)
Mr. Whitfield served as a Director during 2016 and passed away in early 2017.

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Proposal 2—Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee has appointed KPMG LLP ("KPMG") as our independent registered public accounting firm for 2017. The Board of Directors requests that the shareholders ratify the appointment of KPMG. If the appointment of KPMG is not ratified by shareholders, our Audit Committee may investigate the reasons and consider approving another independent registered public accounting firm.

Fees paid to KPMG during the last two fiscal years were:

 
2016
2015

Audit fees(1)

$ 1,680,000 $ 1,822,830

Audit-related fees(2)

75,500 210,075

Tax fees

All other fees

Total

$ 1,755,500 $ 2,032,905
(1)
Audit fees include fees associated with the annual consolidated financial statements audit, audit of internal control over financial reporting, the reviews of our quarterly reports on Form 10-Q, annual audits of certain of our subsidiaries and audits required by regulatory authorities.

(2)
Audit-related fees primarily include comfort letters and consents related to common stock offerings and registration statements and audits of employee benefit plans.

The Audit Committee is responsible for the appointment, retention, compensation and oversight of the independent registered public accounting firm. The Audit Committee has adopted policies and procedures for pre-approving services (audit and non-audit) and all fees for services performed by the independent registered public accounting firm. These policies were adopted in compliance with SOX and rules adopted by the SEC thereunder. In accordance with such policies and procedures, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting firm in order to assure that the provision of such services does not impair the auditors' independence. These services may include audit services, audit-related services, tax services and other services. Permissible non-audit services are usually limited to fees for accounting assistance or audits in connection with acquisitions and other services specifically related to accounting or audit matters such as comfort letters related to common stock or debt offerings, audits of employee benefit plans and tax services. Unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee. The Audit Committee has delegated to the Chairman of the Audit Committee specific pre-approval authority provided that the estimated fee for any such engagement does not exceed $25,000. The Chairman of the Audit Committee must report, for information purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. Requests to provide services that require separate approval by the Audit Committee will be submitted to the Audit Committee by both the independent registered public accounting firm and our Chief Financial Officer and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence. In fiscal year 2016, all of the services and fees described above were pre-approved by the Audit Committee.

We anticipate that representatives of KPMG will be present at the meeting, will be available to respond to questions concerning the 2016 audit and are permitted to make a statement if they so desire.

The affirmative vote of a majority of the shares of the Common Stock present in person or represented by proxy and entitled to be voted on the proposal at the Annual Meeting is required for approval of this proposal.

The Board of Directors unanimously recommends you vote FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2017.

 

 

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Audit Committee Disclosures

The responsibilities of the Audit Committee, which are set forth in the Audit Committee charter adopted by the Board of Directors, include providing oversight of the Company's financial reporting process on behalf of the Board of Directors. Management is responsible for the Company's financial reporting process, the preparation, presentation and integrity of the Company's financial statements and the systems of internal control, including disclosure controls and procedures and internal control over financial reporting. The Company's independent registered public accounting firm is responsible for performing an independent audit of the Company's consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and issuing an opinion on the fair presentation of those financial statements in conformity with U.S. generally accepted accounting principles, as well as issuing an opinion on the effectiveness of internal control over financial reporting. The Audit Committee is responsible for monitoring and overseeing the conduct of these activities, appointing the Company's independent registered public accounting firm and for supervising the relationship between the Company and the independent registered public accounting firm. In fulfilling its oversight responsibilities, the Audit Committee meets regularly with management and the independent registered public accounting firm, both jointly and separately.

The Audit Committee reviewed and discussed the Company's audited consolidated financial statements for the year ended December 31, 2016, with management and KPMG, the Company's independent registered public accounting firm. The Audit Committee also reviewed Management's Report on Internal Control over Financial Reporting and KPMG's Report of Independent Registered Public Accounting Firm included in the Company's Annual Report on Form 10-K for 2016 filed with the SEC.

The Audit Committee discussed with KPMG the matters required to be communicated to the Audit Committee by applicable Public Company Accounting Oversight Board standards. The Audit Committee received the written disclosures and letter from KPMG required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and has discussed with KPMG its independence. KPMG confirmed in its letter that it is independent of the Company under all relevant professional and regulatory standards.

Based on the review and discussions with management and KPMG referred to above, the Audit Committee recommended to the Board of Directors that the Company's audited consolidated financial statements for the year ended December 31, 2016 be included in the Company's Annual Report on Form 10-K for 2016 filed with the SEC.

As specified in the Audit Committee charter, the Audit Committee is not responsible for preparing or certifying financial statements, for planning or conducting audits or for determining that the Company's financial statements are complete and accurate and in accordance with U.S. generally accepted accounting principles. Such matters are the responsibility of management, and where applicable, the independent registered public accounting firm. In giving its recommendation to the Board of Directors, the Audit Committee has relied on (i) management's representation that such consolidated financial statements have been prepared with integrity and objectivity and in conformity with U.S. generally accepted accounting principles and (ii) the report of KPMG with respect to such consolidated financial statements.

AUDIT COMMITTEE

David S, Mulcahy, Chair
Robert L. Howe

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Executive Officers and Compensation

Executive Officers

Executive officers of the Company do not have fixed terms and serve at the pleasure of the Board of Directors. The executive officers of the Company are:

John M. Matovina (age 62) has served as Vice Chairman, Chief Executive Officer and President of the Company since 2012. He served as Vice Chairman, Chief Financial Officer and Treasurer of the Company from 2009 until 2012 and as our Vice Chairman since 2003. Mr. Matovina is a certified public accountant and has more than 25 years experience in the life insurance industry.

Ted M. Johnson (age 47) has served as Chief Financial Officer and Treasurer of the Company since 2012. He served as Vice President-Controller of the Company from 2001 to 2012. Mr. Johnson is a certified public accountant and has over 20 years of experience in the life insurance industry.

Ronald J. Grensteiner (age 54) has served as President of American Equity Investment Life Insurance Company, our primary wholly-owned life insurance subsidiary ("American Equity Life"), since 2009 and is an Executive Vice President of the Company. He has more than 25 years of experience in the life insurance industry.

Jeffrey D. Lorenzen (age 51) has served as Executive Vice President and Chief Investment Officer since June 2015 and served as Senior Vice President and Chief Investment Officer since 2009. Mr. Lorenzen has more than 20 years of experience in the life insurance industry.

Renee D. Montz (age 45) has served as Executive Vice President and General Counsel since April 2016 and as Corporate Secretary since July 2016. She previously served as Vice President and Deputy General Counsel since June 2014. Prior to joining the Company, Ms. Montz served in various roles at AEGON Asset Management, a global asset management company, from 2004 to 2014, including as General Counsel, AEGON USA Investment Management, LLC from January 2012 to June 2014. She has over 20 years of legal experience and 13 years of experience in the life insurance industry.

Scott A. Samuelson (age 44) has served as Vice President-Controller of the Company since 2012. Prior to that, Mr. Samuelson served as Assistant Vice President-Assistant Controller of the Company since 2010. Mr. Samuelson is a certified public accountant and has over 20 years experience in the life insurance industry.

Compensation Discussion and Analysis

For 2016, we have seven named executive officers for whom compensation disclosure is required in this proxy statement. We will discuss them in two groups:

Named executive officers continuing to serve the Company; and

Named executive officers who retired during 2016.

The named executive officers continuing to serve the Company are:

Name:
Title:
John M. Matovina Chief Executive Officer and President
Ted M. Johnson Chief Financial Officer and Treasurer
Ronald J. Grensteiner Executive Vice President and President, American Equity Life
Jeffrey D. Lorenzen Executive Vice President and Chief Investment Officer
Renee D. Montz Executive Vice President, General Counsel and Secretary

 

 

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The named executive officers who retired are:

Name:
Title:
David J. Noble Executive Chairman
Debra J. Richardson Executive Vice President and Secretary

Executive Summary

The Company continued its strong momentum in 2016 with annuity sales of $7.1 billion ($5.4 billion net of reinsurance), resulting in policyholder funds under management of $45.2 billion at the end of 2016. We delivered net income of $83.2 million for 2016, or $0.97 per common share—assuming dilution. Our net income and return on average equity for the year were not typical and were negatively impacted by revisions of assumptions used to determine deferred sales inducements and deferred policy acquisition costs and reserves held for lifetime income benefit riders. The year also presented a significant regulatory challenge for us. In April 2016, the Department of Labor ("DOL") released a conflict of interest fiduciary rule which, if implemented as planned, would adversely impact sales of our fixed index annuity products to individual retirement account holders particularly in the independent agent distribution channel. Despite these challenges and the uncertainty they caused for our financial outlook, we ended the year on a positive note with a strong fourth quarter and improved outlook for 2017 predicated on rising interest rates and potential delay or relief from the DOL fiduciary rule.

In 2016, we continued to highlight our pay for performance philosophy with our plan design for named executive officers. For 2016, no less than 48% of the compensation of any named executive officer continuing to serve the Company was performance based at target. The Board of Directors, Compensation Committee and the Company did not make significant changes to our plan design in 2016 but did address certain significant, one-time events including the retirement of our founder and our long-time Executive Vice President and Corporate Secretary.

Annual Compensation:    Annual compensation for our named executive officers continuing to serve the Company is comprised of base salary and an award under the Short-Term Performance Incentive Plan (the "Short-Term Plan"). Base salary increases for our named executive officers continuing to serve the Company during 2016 ranged from 3.5% to 4.6% (excluding Ms. Montz, who was promoted into the position of Executive Vice President, General Counsel and Secretary during 2016). Additionally, each named executive officer continuing to serve the Company was eligible to earn an award under the Short-Term Plan based on Company performance. For 2016, each named executive officer continuing to serve the Company had a threshold, target and maximum award opportunity equal to 12.5%, 50% and 100%, respectively, of base salary. The awards were tied to two metrics, each weighted 50% and measured independently: Invested Asset Growth and Return on Average Equity ("ROAE"), based on operating income and average stockholders' equity excluding accumulated other comprehensive income ("AOCI") and fair value changes in derivatives and embedded derivatives. Each named executive officer received an award under the Short-Term Plan equal to approximately 15.5% of his or her base salary, which reflects attainment of performance above threshold but below target for Invested Asset Growth and below threshold for ROAE, which outcomes were attributable to the factors described above.

Long-Term Compensation:    Long-term compensation for our named executive officers continuing to serve the Company consists of equity grants made under our 2016 Employee Incentive Plan (the "Incentive Plan"), which included restricted stock and restricted stock unit ("RSU") grants in 2016. RSUs were granted in March 2016 (subject to shareholder approval of the Incentive Plan, which was subsequently received) and are subject to performance-based vesting determined by the Company's performance in Invested Asset Growth, non-GAAP Operating Income and ROAE (based on operating income and average stockholders' equity excluding AOCI and fair value changes in derivatives and embedded derivatives) over a three-year period. Each of the metrics is weighted at 331/3% and measured independently. The number of RSUs granted to each named executive officer continuing to serve the Company was equal to 65% of his or her base salary, and 100% of the RSUs are earned if target achievement of all three metrics is obtained, and 50% of the RSUs are earned if threshold achievement of all three metrics is obtained. Additionally, in June 2016, each named executive officer continuing to serve the Company received a grant of time-based restricted stock equal to 10% of his or her base salary, which vests three years from the date of grant. Each named executive officer also received a grant of time-based restricted stock equal to the number of shares that would have been granted in 2015 that was canceled due to an administrative issue, which vests in February 2018 (or June 2018 for Ms. Montz).

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Compensation Program Highlights:

Pay for performance philosophy demonstrated through significant compensation opportunity in the form of a performance-based annual cash incentive and long-term, performance-based restricted stock units.

The Company adopted a robust anti-hedging policy in 2015 prohibiting our executive officers and directors from engaging in hedging or monetization transactions, purchasing our securities on margin or borrowing against accounts holding our securities.

The Company offers limited perquisites to named executive officers.

Compensation Program and Philosophy

Our compensation policies and programs are designed to:

attract and retain highly qualified and motivated executive officers and employees;

encourage and reward achievement of our annual and long-term goals; and

encourage executive officers and employees to own stock to align their interests with shareholders.

Say-on-Pay Vote.    At our annual meetings of shareholders, our shareholders cast an advisory vote (a "say-on-pay" vote) to approve the compensation of our named executive officers as disclosed in our proxy statement. Shareholders approved the say-on-pay proposal by the affirmative vote of 95.4% and 96.7% of the shares cast on that proposal at our annual meeting of shareholders in 2015 and 2016, respectively. The Compensation Committee believes this affirms shareholders' support of the Company's approach to executive compensation, and therefore the Compensation Committee did not materially change its approach to executive compensation in 2016. The Committee will continue to consider the outcome of the Company's say-on-pay votes when making future compensation decisions for our named executive officers.

General.    The primary elements of compensation for the named executive officers in this proxy statement include:

Base pay;

Short-term incentive compensation pursuant to the Short-Term Plan; and

Long-term equity incentive compensation through restricted stock and restricted stock units granted under our Incentive Plan.

Benchmarking.    In 2016, the Compensation Committee engaged Pearl Meyer to provide advice and data with respect to compensation benchmarking and market practices for our named executive officers. To develop a

 

 

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blended market consensus base salary for the position of each named executive, Pearl Meyer utilized proxy data from 12 insurance companies as follows:

Company
Total Assets
($ billions)

Market Cap
($ billions)

Alleghany Corporation

$22.8 $7.4

American Financial Group Inc.

$49.9 $6.3

American National Insurance Co.

$23.7 $2.8

CNO Financial Group, Inc.

$31.1 $3.6

FBL Financial Group Inc.

$  9.1 $1.6

Fidelity & Guaranty Life

$24.9 $1.5

Horace Mann Educators Corp.

$10.1 $1.4

National Western Life Group, Inc.

$11.6 $0.9

Reinsurance Group of America Inc.

$50.4 $5.6

StanCorp Financial Group Inc.

$23.2 $4.8

Torchmark Corporation

$19.9 $7.1

W.R. Berkley Corporation

$21.7 $6.8

For 2016, Kansas City Life Insurance Company (voluntarily delisted from NASDAQ) and Symetra Financial Corporation (acquired and taken private) were removed from the Company's peer group. Fidelity & Guaranty Life was added to the peer group and is a provider of life insurance and annuity products.

Pearl Meyer also utilized public and private survey data from 2015 for the financial service and insurance industries of companies having total assets targeted at $51.3 billion.

Base Salary.    In addition to peer group data, in determining specific salaries for individuals, the executive's length of service in the position and experience are also considered. In July 2016, the Compensation Committee awarded the following base salaries and increases to named executive officers continuing to serve the Company:

Name
Base Salary
Increase (%)

John M. Matovina

$ 740,000 3.5%

Ted M. Johnson

$ 510,000 4.1%

Ronald J. Grensteiner

$ 520,000 4.0%

Jeffrey D. Lorenzen

$ 455,000 4.6%

Renee D. Montz(1)

$ 395,000
(1)
Ms. Montz was promoted to Executive Vice President and General Counsel effective April 1, 2016 and was not an executive officer prior to assuming the role. She was appointed Corporate Secretary effective July 1, 2016.

The increases in base salary for our named executive officers continuing to serve the Company were at levels consistent with those offered to employees generally. Base salaries for our named executives are positioned approximately between the 25th and 50th percentile of the peer group levels with the objective of having salaries approximate the 50th percentile. In prior years, the Compensation Committee considered the combined salaries of the positions held by Mr. Noble and Mr. Matovina in its evaluation of their base salaries and incentive awards. This philosophy was also followed for Mr. Matovina's 2016 base salary adjustment, resulting in a base salary for Mr. Matovina below the 25th percentile.

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No base salary increases were awarded to executives who retired in 2016. Mr. Noble ceased receiving a salary effective July 1, 2016, and all payments to him following that date were made pursuant to the Amended and Restated Retirement Benefit Agreement between Mr. Noble and the Company dated April 4, 2016 (the "Noble Retirement Agreement"). Ms. Richardson's salary was reduced by half effective July 1, 2016 pursuant to the Retirement and Transition Agreement entered into between Ms. Richardson and the Company dated June 29, 2016 (the "Richardson Retirement Agreement"), and she ceased receiving a salary effective January 1, 2017. See "Change in Control, Separation and Retirement Arrangements" for additional information.

On March 10, 2016, the Compensation Committee approved the structure of the 2016 short-term incentive compensation program (the "2016 Program") pursuant to the Short-Term Plan. Under the 2016 Program, each named executive continuing to serve the Company had a threshold, target and maximum incentive opportunity expressed as a percentage of base salary as of December 31, 2016. These earning opportunities were tied to threshold, target and maximum performance goals established with respect to Invested Asset Growth and ROAE (based on operating income and average stockholders' equity excluding AOCI and fair value changes in derivatives and embedded derivatives) for fiscal 2016. The Compensation Committee believes the combination of growth and returns creates the proper focus and alignment for maximizing short-term and long-term shareholder value creation. For purposes of calculating any incentive awards under the 2016 Program, each metric was weighted at 50% and was measured independently. Each award earned under the 2016 Program was paid in cash.

For the named executives continuing to serve the Company, the 2016 Program created a threshold, target and maximum award opportunity equal to 12.5%, 50% and 100%, respectively, of base salary as of December 31, 2016. The target opportunity in the 2016 Program was designed to position the target total cash compensation for each named executive officer continuing to serve the Company between the 25th and 50th percentile of our peer group. The Compensation Committee believes these award opportunities are appropriate, competitive and do not create an incentive to take undue or unnecessary risk that could materially harm the Company. The following table shows our targets and achievement for the 2016 Program:

Metric
Threshold
Target
Maximum
Actual

ROAE

10% 11% 13% 6.39%

Invested Asset Growth

$ 4.0 billion $ 4.6 billion $ 5.2 billion $ 4.1 billion

The results under the 2016 Program resulted in an award to each named executive continuing to serve the Company equal to 15.48% of base salary as of December 31, 2016. Ms. Richardson also received an award equal to 15.48% of her base salary effective December 31, 2016 pursuant to the Richardson Retirement Agreement.

The Compensation Committee made two equity grants to named executive officers in 2016. On March 10, 2016, the Compensation Committee awarded restricted stock units under the Incentive Plan, subject to shareholder approval of the Incentive Plan (which was received on June 2, 2016), and on June 2, 2016, the Compensation Committee awarded shares of time-based restricted stock.

RSU Grant:    The restricted stock unit awards are tied to threshold and target performance goals for the three-year period ending December 31, 2018, established with respect to Invested Asset Growth, Operating Income and ROAE (based on operating income and average stockholders' equity excluding AOCI and fair value changes in derivatives and embedded derivatives), each weighted at 331/3% and measured independently. The number of restricted stock units granted was equal to 65% of then current base salary divided by the closing price of the Company's common stock on March 10, 2016. Ms. Montz received a supplemental RSU grant on June 28, 2016 as the grant made to her in March 2016 was made based on her salary prior to assuming the role of General Counsel. Following this supplemental grant, Ms. Montz's total RSU award for 2016 was equal to 65% of her base salary in effect following her promotion. 50% of the restricted stock units granted will be earned if the Company meets threshold for each performance goal and 100% of the restricted stock units will be earned if the Company meets target for each performance goal. This represented an increase in the award opportunity from 2015. The increased opportunity was based on analysis performed by the Compensation Committee in early 2016 which included the recommendation from Pearl Meyer to increase target long-term incentive opportunities in order to improve the

 

 

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competitiveness of target total direct compensation. That analysis showed that target total direct compensation (i.e. base salary plus target short-term incentive opportunity plus target long-term incentive opportunity plus long-term equity compensation) of most named executive officers was below the 25th percentile of our peer group. The increased long-term incentive opportunity for 2016 positioned the target total direct compensation closer to the 25th percentile of our peer group for two of our named executive officers and above the 25th percentile for the other three named executive officers. At the time the performance goals were approved by the Compensation Committee, the performance targets reflected an appropriate degree of stretch but were believed to be attainable based on successful execution of the Company's business plan and the realization of macro-economic and stock market conditions reasonably aligned with the Company's expectations.

Additionally, in March 2016, the Compensation Committee amended the restricted stock unit award agreements for awards made in 2015 to provide for their settlement in cash if earned. This amendment was due to an administrative issue related to the grant, which was made under an expired equity plan.

Restricted Stock Grant:    On June 2, 2016, the Compensation Committee granted shares of time-based restricted stock to the Company's named executive officers. The grant consisted of two parts: (a) each named executive officer was granted a number of shares equal to 10% of then current base salary divided by the closing price of the Common Stock on June 2, 2016 (the "2016 Grant"); and (b) each named executive officer was granted a number of shares equal to the number of shares of time-based restricted stock granted by the Compensation Committee in 2015 which were later canceled (the "Revised Grant"). In 2016, the number of shares of restricted stock granted to named executive officers was:

Name
2016
Grant

Revised
Grant

Grant Date
Fair Value

John M. Matovina

4,362 2,378 $ 110,469

Ted M. Johnson

2,990 1,602 $ 75,263

Ronald J. Grensteiner

3,051 1,516 $ 74,853

Jeffrey D. Lorenzen

2,654 1,413 $ 66,658

Renee D. Montz

2,196 1,018 $ 52,677

David J. Noble

2,722 $ 44,614

Debra J. Richardson

$

The 2016 Grant was subject to a three year cliff vesting period. The Revised Grant vests on February 24, 2018, except the grant to Ms. Montz, which vests on June 4, 2018, and the grant to Mr. Noble, which was immediately vested as he attained the age of 65 with at least 10 years of service to the Company. The value of the 2016 Grant and the Revised Grant is included in the Summary Compensation Table below in 2016.

In March 2016, the Compensation Committee authorized cancellation of time-based restricted stock grants to named executive officers made in 2015. Each named executive officer agreed to the cancellation of that grant. The grants were canceled due to an administrative issue related to the grant, which was made under an expired equity plan.

Vesting of 2014 RSUs:    In March 2017, the Compensation Committee certified the performance results for the restricted stock units granted to our named executive officers in March 2014 for the three-year performance period ended December 31, 2016. As indicated in the table that follows, the Company's actual performance was above target for Invested Asset Growth, below threshold for Operating Income and between threshold and target for ROAE. This resulted in vesting of 58.3% of the RSUs granted in 2014. The number of shares of Common Stock issued to each named executive officer in settlement of the restricted stock units was as follows: Mr. Matovina—5,060; Mr. Johnson—3,233; Mr. Grensteiner—3,195; Mr. Lorenzen—2,891; Mr. Noble—4,914 and

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Ms. Richardson—3,075. In addition, each named executive officer received a cash payment equivalent to the dividends on the RSUs earned for 2014-2016.

Metric
Threshold
Target
Actual

Invested Assets Growth (in millions)

$ 9,750 $ 11,930 $ 13,384

Operating Income (in millions)

$ 513.5 $ 533 $ 509

ROAE

10% 11% 10.5%

Short-Term Incentive Compensation:    In March 2017, the Compensation Committee approved the structure of the short-term incentive compensation program for 2017. The short-term incentive compensation for fiscal year 2017 will be paid, if earned, in cash and is tied to the achievement of certain individual goals and to threshold, target and maximum performance goals established with respect to annuity deposits, non-GAAP operating income, net investment income and other than temporary impairments and realized losses (the "Company Goals"). Each Company Goal is weighted at 25% for Mr. Matovina and Mr. Grensteiner and 18.75% for the other named executive officers, and attainment of each Company Goal is measured independently. For the named executive officers other than Mr. Matovina and Mr. Grensteiner, 25% of the award opportunity is based on individual goals. Target and maximum award opportunities for fiscal year 2017 are 100% and 200% of base salary, respectively, for the Company's Chief Executive Officer and 70% and 140% of base salary, respectively, for each other named executive officer continuing to serve the Company.

The specific performance goals for 2017 under the Short-Term Plan will be disclosed in next year's proxy statement. At the time the performance goals were approved by the Compensation Committee, it was believed that the performance targets reflected an appropriate degree of stretch but that they were attainable based on successful execution of the Company's business plan and the realization of macro-economic and stock market conditions reasonably aligned with the Company's near term expectations.

Performance-Based Equity Awards:    In March 2017, the Compensation Committee approved restricted stock unit grants to the named executive officers. The restricted stock unit grants will be tied to threshold, target and maximum performance goals for the three-year period ending December 31, 2019, established with respect to Book Value Per Share Growth and ROAE (based on operating income and average stockholders' equity excluding AOCI and fair value changes in derivatives and embedded derivatives), each weighted at 50% and measured independently. The number of restricted stock units granted to the named executive officers was equal to 60% of then current base salary divided by the closing price of the Common Stock on the grant date. 50% of the restricted stock units granted will be earned if the Company meets threshold for each performance goal, 100% of the restricted stock units will be earned if the Company meets target for each performance goal and 150% of the restricted stock units will be earned if the Company meets maximum for each performance goal.

The specific performance goals for the three-year period ending December 31, 2019 will be disclosed in the proxy statement for 2020. At the time the performance goals were approved by the Compensation Committee, they reflected an appropriate degree of stretch but are believed to be attainable based on successful execution of the Company's business plan and the realization of macro-economic and stock market conditions reasonably aligned with the Company's long-term expectations.

Time-Based Equity Awards:    On March 9, 2017, the Compensation Committee granted shares of time-based restricted stock to the named executive officers continuing to serve the Company. Each named executive officer continuing to serve the Company received a grant equal to 15% of then current base salary. The shares vest three years after the date of grant.

Discretionary Bonus Awards:    In March 2017, the Compensation Committee also awarded discretionary bonuses in an amount equal to (i) 25% of his or her base salary, payable in cash, to each of Mr. Johnson, Mr. Grensteiner, Mr. Lorenzen and Ms. Montz and (ii) 5% of his or her base salary in the form of a time-based restricted stock grant vesting one-year after the date of grant to each named executive officer continuing to serve the Company. The award of discretionary bonuses to named executive officers is rare; in fact, this is the first time such an award has been granted since the Company transitioned to performance-based annual incentive compensation in 2011. As indicated in the Executive Summary, 2016 was a challenging year for several reasons outside the control of the

 

 

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Company and its management. The Department of Labor fiduciary rule required significant investment of the Company's time and resources, and record low interest rates negatively impacted the Company's investment yield. The Compensation Committee determined, based on the recommendation of the Chief Executive Officer, that the short-term and long-term performance-based incentive compensation based upon 2016 results did not reflect several key contributions from the named executive officers, including leadership in opposing and preparing to comply with the Department of Labor's fiduciary rule, significantly improving the borrowing and reinsurance terms for the Company through refinancing the Company's credit facility and renegotiating an agreement with a reinsurer and maintenance of credit losses below 1.0% of average stockholders' equity. In light of these significant contributions, the Compensation Committee awarded discretionary bonuses as described above.

Stock Ownership.    We emphasize long-term equity compensation in our total compensation package for all employees and particularly for senior officers. We believe this helps align the interests of employees and officers with shareholders and creates an incentive to build our Common Stock value. Senior officers are encouraged to own shares of our Common Stock. In addition, long-term equity compensation has been provided in the form of stock options, restricted stock and restricted stock units granted under employee stock option and incentive plans. Although there is no policy requiring the named executive officers to have a specified level of share ownership, we note that our Chief Executive Officer owns approximately seven times his base salary in Common Stock and each of our named executive officers owns at least two times their respective base salaries in Common Stock, other than Ms. Montz, who became an executive officer in April 2016.

Hedging and Pledging Restrictions.    Our directors and executive officers are prohibited from engaging in forms of hedging or monetization transactions, such as certain types of forward contracts, equity swaps, collars, and exchange funds, which allow a shareholder to lock in much of the value of his or her stock holding without the full risks and rewards of stock ownership. In addition, directors and executive officers are prohibited from purchasing Company securities on margin or borrowing against any account in which shares of Common Stock are owned.

Change in Control, Separation and Retirement Arrangements.    We have no written employment contracts or separation agreements with any of our named executive officers who continue to serve the Company. To promote retention of senior officers, we have entered into change in control agreements with a small group of our executives including each named executive officer continuing to serve the Company. The terms of such agreements are described under "Potential Payments Upon Termination or a Change in Control".

Noble Retirement Agreement:    The Noble Retirement Agreement, which amended and restated the prior Retirement Benefit Agreement between the Company and Mr. Noble, provides certain retirement benefits to Mr. Noble in recognition of his past services to the Company and in consideration for his consent to certain post-termination obligations. Under the Noble Retirement Agreement, Mr. Noble retired as Executive Chairman of the Company effective July 1, 2016 and receives a monthly benefit equal to $67,083 (1/12th of his annual salary in effect at the time of retirement) for 60 months. If Mr. Noble dies before the end of the 60-month period, payment will be made during the balance of the period (or, if less, for 24 months) to a trust designated by Mr. Noble. Additionally, during his lifetime, Mr. Noble will have access to Company aircraft for his personal use for a limited number of hours per year at no expense to him (other than applicable taxes) and will continue to receive health benefits generally available to the Company's senior executive officers under various Company benefit plans. The Noble Retirement Agreement also contains confidentiality, non-competition and non-solicitation provisions which continue for two years following Mr. Noble's retirement. Mr. Noble continues to serve as Chairman of the Board of Directors.

Additionally, in May 2016, the Compensation Committee approved an amendment to the stock option agreements with Mr. Noble providing that the stock options would remain exercisable until the expiration date of such options.

Richardson Retirement Agreement:    The Richardson Retirement Agreement provides certain retirement benefits to Ms. Richardson in recognition of her past services to the Company and in consideration for her consent to certain post-termination obligations. Under the Richardson Retirement Agreement, Ms. Richardson resigned from her officer positions effective June 30, 2016 and retired from the Company as of January 1, 2017. Ms. Richardson received an amount equal to half of her then-current base salary from July 1, 2016 through December 31, 2016, and was entitled to receive an award under the Short-Term Plan based on that reduced base salary. The Richardson Retirement Agreement also provided that stock options held by Ms. Richardson would remain exercisable until the expiration date of such options. Ms. Richardson also receives a contribution towards her COBRA continuation coverage for health insurance premiums. The Richardson Retirement Agreement also contains confidentiality provisions during Ms. Richardson's retirement.

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Non-Qualified Deferred Compensation Arrangements.    We permit senior officers of the Company to defer on an elective basis a specified portion of their base salaries and incentive compensation. Any deferrals must be made pursuant to a non-qualified deferred compensation agreement between the officer and the Company with deferred amounts contributed to the American Equity Officers Rabbi Trust. Mr. Noble and Ms. Richardson, who are the only named executives who participate in the deferred compensation program, direct their investment of deferred amounts and the return on investments is added to their deferred account balances. No above market returns are paid on deferred amounts. Mr. Noble and Ms. Richardson have each invested a portion of their deferred compensation accounts in our Common Stock and dividends paid on our Common Stock have been credited to their accounts. The balance of the deferred compensation accounts will be distributed to each executive who has elected to make such deferrals upon his or her death, disability or separation from service. Mr. Noble and Ms. Richardson have retired from the Company and began, or will begin, receiving deferred compensation payouts in 2017.

Other Compensation.    We have a qualified 401(k) plan for all employees, who are eligible to participate after thirty days of employment and attainment of age 18. We match 100% of employee contributions to the plan up to 3% of the employee's total eligible compensation and match 50% of employee contributions up to the next 2% of the employee's total eligible compensation, subject to the limitations specified in the Internal Revenue Code of 1986 (the "Code"). In addition to the 401(k) plan, all employees participate in the Employee Stock Ownership Plan ("ESOP") as described below. We offer a package of insurance benefits to all employees including health, dental, long-term disability and life insurance. We offer limited perquisites to our named executive officers. The only perquisite available to our named executive officers in 2016 was limited personal use of the Company's aircraft.

The Company established the ESOP effective July 1, 2007. We make semi-annual discretionary contributions to the ESOP. The principal purpose of the ESOP is to provide each eligible employee with an equity interest in the Company. Employees become eligible once they have completed a minimum of six months of service. Employees become 100% vested after two years of service.

Tax Implications of Executive Compensation.    Federal income tax law limits deductibility of compensation in excess of $1 million paid to certain named executive officers unless this compensation qualifies as "performance-based compensation." While it is the general intent of the Company and the Compensation Committee to qualify the Company's executives' compensation for deductibility under applicable tax laws, where consistent with the Company's goals, the Compensation Committee may decide in certain circumstances to award compensation that is not tax deductible. We believe compensation awarded to our executive officers for 2016 that may not be tax deductible is not expected to be material to the Company's tax liability and expect such will not be material in periods when paid, if different than the period when awarded. There was no compensation paid in 2016 but awarded to our executive officers for prior years that was not tax deductible.

Compensation Committee Report

The Compensation Committee of American Equity Investment Life Holding Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

COMPENSATION COMMITTEE

A. J. Strickland, III, Chair
Joyce A. Chapman

 

 

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Executive Compensation Tables


Summary Compensation Table

Name and Principal Position
  Year
  Salary
($)

  Stock
Awards(1)(2)
($)

  Non-Equity
Incentive Plan
Compensation(3)
($)

  Change in
Pension
Value
and Non-
qualified
Deferred
Compensation
Earnings(4)
($)

  All Other
Compensation(5)
($)

  Total
($)

 

John M. Matovina

  2016   727,500   575,215   114,577     43,441   1,460,733  

Chief Executive Officer

    2015     702,500     276,009     584,951         36,099     1,599,559  

and President

  2014   677,500   265,995   499,998     27,585   1,471,078  

Ted M. Johnson

    2016     500,000     393,761     78,965         37,970     1,010,696  

Chief Financial Officer

  2015   477,500   185,989   400,875     35,505   1,099,869  

and Treasurer

    2014     445,000     169,993     336,955         25,868     977,816  

Ronald J. Grensteiner

  2016   510,000   399,851   80,513     38,606   1,028,970  

Exec. Vice President

    2015     470,000     176,006     409,056         32,100     1,087,162  

  2014   430,000   167,992   318,839     25,865   942,696  

Jeffrey D. Lorenzen

    2016     445,000     349,403     70,449         37,157     902,009  

Exec. Vice President and Chief Investment Officer

                                           

Renee D. Montz(6)

  2016   356,250   286,682   61,159     30,294   734,385  

Exec. Vice President, General Counsel and Secretary

                             

David J. Noble(7)

    2016     402,500     567,864             4,121,684     5,092,048  

Retired Executive

  2015   797,500   315,999   658,581     97,072   1,869,152  

Chairman

    2014     782,500     310,017     572,461         59,317     1,724,295  

Debra J. Richardson(8)

  2016   386,250   334,749   39,870     60,082   820,951  

Retired Exec. Vice

    2015     507,500     200,006     421,328         30,991     1,159,825  

President and Secretary

  2014   492,500   194,005   362,317     27,845   1,076,667  
(1)
Amounts for 2016 reflect grant date fair value pursuant to FASB ASC Topic 718 of restricted stock units (assuming target performance goals are met) and time-based restricted stock granted, each as previously described above under "Long-Term Equity Compensation for 2016" in the Compensation Discussion and Analysis. For further information, please see Footnote 11 Retirement and Share-Based Compensation Plans in the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2016. The per share fair value at the grant date was $13.89 for the restricted stock units and $16.39 for restricted stock. Amounts for 2016 include an award of restricted stock units with a grant date fair value (assuming payout at target) of $464,746 for Mr. Matovina, $318,498 for Mr. Johnson, $324,998 for Mr. Grensteiner, $282,745 for Mr. Lorenzen, $234,005 for Ms. Montz, $523,250 for Mr. Noble and $334,749 for Ms. Richardson. In addition, 2016 includes an award of time-based restricted stock of $71,494 for Mr. Matovina, $49,006 for Mr. Johnson, $50,006 for Mr. Grensteiner, $43,499 for Mr. Lorenzen and $35,992 for Ms. Montz and a Revised Grant of time-based restricted stock of $38,975 for Mr. Matovina, $26,257 for Mr. Johnson, $24,847 for Mr. Grensteiner, $23,159 for Mr. Lorenzen, $16,685 for Ms. Montz and $44,614 for Mr. Noble all based on the market price of our common stock on the date of grant.

(2)
Amounts for 2015 reflect grant date fair value pursuant to FASB ASC Topic 718 of restricted stock units granted under the long-term equity incentive compensation program applicable for 2015, which will be cash settled. Amounts for 2014 reflect grant date fair value pursuant to FASB ASC Topic 718 of time-based restricted stock and restricted stock units granted under the long-term equity incentive compensation programs applicable for 2014.

(3)
Amounts for 2016 consist of cash awards earned under the Short-Term Plan previously described above under "Short-Term Incentive Compensation for 2016" in the Compensation Discussion and Analysis. Amounts for 2015 and 2014 consist of cash awards earned under the short-term incentive compensation program applicable for 2015 and 2014.

(4)
The Company does not pay above-market earnings on deferred compensation. Therefore, no amounts are reported in this column for deferred compensation.

(5)
Mr. Matovina's amount in 2016 includes $25,093 for the ESOP. Mr. Johnson's amount in 2016 includes $24,760 for the ESOP. Mr. Grensteiner's amount in 2016 includes $24,843 for the ESOP. Mr. Lorenzen's amount in 2016 includes $24,301 for the ESOP. Ms. Montz's amount in 2016 includes $23,323 for the ESOP. Mr. Noble's amount in 2016 includes $17,586 for use of Company-owned aircraft, $25,093 for the ESOP, $36,590 for the present value of

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(6)
Ms. Montz was promoted to Executive Vice President and General Counsel on April 1, 2016 and Corporate Secretary on July 1, 2016.

(7)
Mr. Noble retired as Executive Chairman and from the Company effective July 1, 2016.

(8)
Ms. Richardson retired as Executive Vice President and Secretary effective June 30, 2016 and from the Company effective January 1, 2017.

 

 

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The following table provides information regarding grants of plan-based awards including restricted stock, restricted stock units and non-equity compensation granted to the named executives during 2016.


2016 Grant of Plan-Based Awards

 
 
Estimated Future
Payouts Under
Non-Equity Incentive Plan
Awards(1)

Estimated Future
Payouts Under
Equity Incentive Plan
Awards

All Other
Stock
Awards:
Number of
Shares of
Stock or

Grant
Date Fair
Value of
Stock

Name
Grant
Date

Threshold
($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

Units
(#)

Awards(5)
($)

John M. Matovina

3/10/2016 (2) 5,578 33,459 464,746

6/2/2016 (3) 4,362 71,494

6/2/2016 (4) 2,378 38,975

N/A 92,500 370,000 740,000

Ted M. Johnson

3/10/2016 (2) 3,822 22,930 318,498

6/2/2016 (3) 2,990 49,006

6/2/2016 (4) 1,602 26,257

N/A 63,750 255,000 510,000

Ronald J. Grensteiner

3/10/2016 (2) 3,900 23,398 324,998

6/2/2016 (3) 3,051 50,006

6/2/2016 (4) 1,516 24,847

N/A 65,000 260,000 520,000

Jeffrey D. Lorenzen

3/10/2016 (2) 3,393 20,356 282,745

6/2/2016 (3) 2,654 43,499

6/2/2016 (4) 1,413 23,159

N/A 56,875 227,500 455,000

Renee D. Montz

3/10/2016 (2) 2,145 12,869 178,750

6/2/2016 (3) 2,196 35,992

6/2/2016 (4) 1,018 16,685

6/28/2016 (2)       663 3,978     55,255

N/A 49,375 197,500 395,000

David J. Noble

3/10/2016 (2) 6,280 37,671 523,250

6/2/2016 (4) 2,722 44,614

N/A 100,625 402,500 805,000

Debra J. Richardson

3/10/2016 (2) 4,017 24,100 334,749

N/A 32,188 128,750 257,500
(1)
This award represents the estimated payout of the cash portion of the short-term incentive compensation program applicable for fiscal year 2016 previously described above under "Short-Term Incentive Compensation for 2016" in the Compensation Discussion and Analysis. The actual cash portion of the incentive compensation award amount is reflected above in the Summary Compensation Table under the heading "Non-Equity Incentive Plan Compensation."

(2)
This award represents the estimated payout of restricted stock units applicable for fiscal year 2016 previously described above under "Long-Term Equity Compensation for 2016" in the Compensation Discussion and Analysis. The restricted stock units awards are tied to threshold and target performance goals for the three-year period ending December 31, 2018. The amount of restricted stock units granted that will be earned is dependent on the achievement of certain performance goals over a three year period. The number of restricted stock units granted was equal to 65% of then current base salary divided by the closing price of the Company's common stock on the grant date. 50% of the restricted stock units granted will be earned if the Company meets threshold for each performance goal and 100% of the restricted stock units will be earned if the Company meets target for each performance goal. Amounts reflected in Grant Date Fair Value of Stock Awards column in the above table and amounts included in the Summary Compensation Table under the heading "Stock Awards" for the restricted stock units assume target performance goals will be met.

(3)
This award represents a restricted stock grant equal to 10% of then current base salary as previously described above under "Long-Term Equity Compensation for 2016" in the Compensation Discussion and Analysis. The restricted stock is reflected above in the Summary Compensation Table under the heading "Stock Awards" for the year 2016.

(4)
This award represents a restricted stock grant equal to the number of shares of restricted stock granted by the Compensation Committee in February 2015 which were later canceled as previously described above under "Long-Term Equity Compensation for 2016" in the Compensation Discussion and Analysis. The restricted stock is reflected above in the Summary Compensation Table under the heading "Stock Awards" for the year 2016.

(5)
Calculated based on the per share grant date fair value of the restricted stock and restricted stock units pursuant to FASB ASC Topic 718.

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The following table provides information about unvested restricted stock, unvested restricted stock units and unexercised stock options to acquire our Common Stock granted to named executives. The restricted stock vests in full on the date three years following the date the Compensation Committee approves the restricted stock award (except for the Revised Grant, as previously discussed in "Long-Term Equity Compensation for 2016" in the Compensation Discussion and Analysis), which is the grant date. Vesting for restricted stock will accelerate upon death or upon attainment of age 65 and following 10 years of service with the Company. The restricted stock units vest following the three-year performance period upon approval by the Compensation Committee of attainment of performance levels during the applicable three-year period.

 
Outstanding Equity Awards at December 31, 2016
 
 
 
Option Awards
Stock Awards
Name
Grant
Date

Vesting
Date

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Option
Exercise
Price ($)

Option
Expiration
Date

Number of
Shares or
Units of
Stock That
Have Not
Vested (#)

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1)

Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)

Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)(1)

John M. Matovina

6/11/2008 6/11/2011 40,000 10.85 6/11/2018

5/8/2009 5/8/2012 40,000 7.00 5/8/2019

6/11/2010 6/11/2013 27,750 9.27 6/10/2020

3/6/2014 3/6/2017 5,060 114,052

3/6/2014 3/6/2017 2,891 65,163

3/10/2016 (2)     33,459 754,166

6/2/2016 6/2/2019 (3) 4,362 98,319

6/2/2016 2/24/2018 (4) 2,378 53,600

Ted M. Johnson

5/8/2009 5/8/2012 20,000 7.00 5/8/2019

6/11/2010 6/11/2013 10,000 9.27 6/10/2020

3/6/2014 3/6/2017 3,233 72,873

3/6/2014 3/6/2017 1,848 41,654

3/10/2016 (2) 22,930 516,842

6/2/2016 6/2/2019 (3) 2,990 67,395    

6/2/2016 2/24/2018 (4) 1,602 36,109

Ronald J. Grensteiner

6/11/2008 6/11/2011 10,000 10.85 6/11/2018

5/8/2009 5/8/2012 20,000 7.00 5/8/2019

6/11/2010 6/11/2013 27,750 9.27 6/10/2020

3/6/2014 3/6/2017 3,195 72,015

3/6/2014 3/6/2017 1,826 41,158

3/10/2016 (2) 23,398 527,391

6/2/2016 6/2/2019 (3) 3,051 68,770

6/2/2016 2/24/2018 (4) 1,516 34,171

Jeffrey D. Lorenzen

3/6/2014 3/6/2017 2,891 65,163

3/6/2014 3/6/2017 1,652 37,236

3/10/2016 (2) 20,356 458,824

6/2/2016 6/2/2019 (3) 2,654 59,821

6/2/2016 2/24/2018 (4) 1,413 31,849

Renee D. Montz

3/10/2016 (2) 12,869 290,067

6/2/2016 6/2/2019 (3) 2,196 49,498

6/2/2016 6/4/2018 (4) 1,018 22,946

6/28/2016 (2) 3,978 89,664

David J. Noble

5/8/2009 5/8/2012 40,000 7.00 5/8/2019

6/11/2010 6/11/2013 25,000 9.27 6/10/2020

3/6/2014 </