DEF 14A 1 d664805ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
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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

 

 

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þ   Definitive Proxy Statement
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MetLife, Inc.

(Name of Registrant as Specified In Its Charter)

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LOGO

NOTICE OF

2014 ANNUAL MEETING

AND

PROXY STATEMENT

 

 


Table of Contents

 

LOGO

MetLife, Inc.

200 Park Avenue, New York, NY 10166

March 25, 2014

Dear Shareholder:

You are invited to attend MetLife, Inc.’s 2014 annual meeting of shareholders, which will be held on Tuesday, April 22, 2014 beginning at 11:30 a.m., Eastern Time, on the 23rd floor of 1095 Avenue of the Americas, New York, New York.

At the meeting you will vote on a number of important matters described in the attached Proxy Statement. You will also act on such other matters as may properly come before the meeting.

The vote of every shareholder is important. You can ensure that your shares will be represented and voted at the meeting by signing and returning the enclosed proxy card, or by voting on the Internet or by telephone. If you choose to vote by mail, we have included a postage-paid, pre-addressed envelope to make it convenient for you to do so. The proxy card also contains detailed instructions on how to vote on the Internet or by telephone.

 

  Sincerely yours,  
    LOGO    
  Steven A. Kandarian  
  Chairman of the Board,
President and Chief Executive Officer
 


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MetLife, Inc.

200 Park Avenue

New York, NY 10166

 

 

Notice of Annual Meeting of Shareholders

 

 

The 2014 annual meeting of the shareholders of MetLife, Inc. will be held on the 23rd floor of 1095 Avenue of the Americas, New York, New York on Tuesday, April 22, 2014 at 11:30 a.m., Eastern Time. At the meeting, shareholders will consider and vote on the following matters:

 

  1.

the election of 12 Directors, each for a one-year term;

 

  2.

the ratification of the appointment of Deloitte & Touche LLP as MetLife, Inc.’s independent auditor for 2014;

 

  3.

an advisory (non-binding) vote to approve the compensation paid to MetLife, Inc.’s Named Executive Officers;

 

  4.

the approval of the MetLife, Inc. 2015 Stock and Incentive Compensation Plan;

 

  5.

the approval of the MetLife, Inc. 2015 Non-Management Director Stock Compensation Plan; and

 

  6.

such other matters as may properly come before the meeting.

Information about the matters to be acted upon at the meeting is contained in the accompanying Proxy Statement.

Shareholders of record of MetLife, Inc. common stock at the close of business on February 28, 2014 will be entitled to vote at the meeting or any adjournment or postponement thereof.

 

  By Order of the Board of Directors,  
   

LOGO

   
 

Timothy J. Ring

 
 

Vice President and Secretary

 

New York, New York

March 25, 2014

 

 

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be Held on April 22, 2014

 

 

The accompanying Proxy Statement, the MetLife, Inc. 2013 Annual Report to Shareholders and directions to the location of the 2014 annual meeting of shareholders are available at http://investor.metlife.com by selecting the appropriate link under “Related Links.”


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Proxy Statement

 

 

This Proxy Statement contains information about the 2014 annual meeting of shareholders (Annual Meeting) of MetLife, Inc. (MetLife or the Company). Proxy materials, including this Proxy Statement and the accompanying proxy card, which are furnished in connection with the solicitation of proxies by MetLife’s Board of Directors, are being mailed and made available electronically to shareholders on or about March 25, 2014.

 

 

 

Table of Contents

 

 

 

Proxy Summary

     2   

Proposal 1 – Election of Directors

     5   

Corporate Governance

     12   

-Corporate Governance Guidelines

     12   

-Board and Committee Information

     12   

-Director Compensation in 2013

     19   

-Director Stock Ownership Guidelines; Anti-Hedging Policy; Restrictions on Pledging

     21   

-Director Retirement Policy

     21   

-Director Indemnity Plan

     21   

-Procedures for Reviewing Related Person Transactions

     21   

-Related Person Transactions

     22   

-Codes of Conduct

     22   

Proposal 2 – Ratification of Appointment of the Independent Auditor

     23   

Audit Committee Report

     25   

Proposal 3 – Advisory Vote to Approve the Compensation Paid to the Company’s Named Executive Officers

     26   

Compensation Committee Report

     27   

Compensation Discussion and Analysis

     28   

Summary Compensation Table

     44   

Grants of Plan-Based Awards in 2013

     51   

Outstanding Equity Awards at 2013 Fiscal Year-End

     53   

Option Exercises and Stock Vested in 2013

     55   

Pension Benefits at 2013 Fiscal Year-End

     56   

Nonqualified Deferred Compensation at 2013 Fiscal Year-End

     59   

Potential Payments upon Termination or Change-in-Control at 2013 Fiscal Year-End

     63   

Equity Compensation Plan Information at December 31, 2013

     67   

Proposal 4 – Approval of the MetLife, Inc. 2015 Stock and Incentive Compensation Plan

     69   

Proposal 5 – Approval of the MetLife, Inc. 2015 Non-Management Director Stock Compensation Plan

     76   

Security Ownership of Directors and Executive Officers

     79   

-Deferred Shares Not Beneficially Owned and Deferred Share Equivalents

     81   

-Section 16(a) Beneficial Ownership Reporting Compliance

     81   

Security Ownership of Certain Beneficial Owners

     82   

Information About the Annual Meeting and Proxy Voting

     83   

Other Information

     86   

Appendix A — Non-GAAP Financial Measures

     A-1   

Appendix B — MetLife, Inc. 2015 Stock and Incentive Compensation Plan

     B-1   

Appendix C — MetLife, Inc. 2015 Stock and Incentive Compensation Plan

     C-1   
 

 

MetLife 2014 Proxy Statement           1   


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Proxy Summary

 

 

This summary highlights information contained elsewhere in this Proxy Statement and does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully before voting.

Voting Your Shares

 

Record date

February 28, 2014.

 

 

Voting

Shareholders as of the record date are entitled to vote. Each share of MetLife common stock (Share) is entitled to one vote for each Director nominee and one vote for each of the other proposals.

 

 

Your vote is important. Shareholders of record may vote their shares in person at the Annual Meeting or by using any of the methods below. Beneficial owners whose Shares are held at a brokerage firm or by a bank or other nominee should follow the voting instructions received from such nominee. Participants in retirement and savings plans should refer to voting instructions on page 84.

 

Internet

www.investorvote.com/MET no later than 11:59 p.m., Eastern Time, April 21, 2014.

 

 

 

Telephone

1-800-652-8683 until 11:59 p.m., Eastern Time, April 21, 2014.

 

 

 

Mail

Complete, sign and return your proxy card by mail so that it is received by MetLife, c/o Computershare prior to the Annual Meeting.

Proposals for Your Vote

 

Proposal    Directors’
Recommendation
   Vote Required
(of Shares Voted)
   Page
Reference

1. Election of 12 Directors to one-year terms

   FOR each

nominee

   Majority    5

2. Ratification of appointment of Deloitte & Touche LLP as MetLife’s independent auditor for 2014

   FOR    Majority    23

3. Advisory vote to approve compensation paid to the Named Executive Officers

   FOR    Majority    26

4. Approval of the MetLife, Inc. 2015 Stock and Incentive Compensation Plan

   FOR    Votes in favor exceed votes against plus abstentions    69

5. Approval of the MetLife, Inc. 2015 Non-Management Director Stock Compensation Plan

   FOR    Votes in favor exceed votes against plus abstentions    76

 

2          MetLife 2014 Proxy Statement


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Director Nominees

The following table provides summary information about each Director nominee.

 

               Current Committee Membership
Nominee  

Experience and

Qualifications Highlights

  Independent   Audit   Compensation   Executive  

Finance

and

Risk

 

Governance

and Corporate

Responsibility

Cheryl W. Grisé

 

Retired Executive Vice President, Northeast Utilities

 

- Corporate Governance

- Executive Leadership

- Global Business Experience

- Business Operations

  ü   ü   ü   ü       C

Carlos M. Gutierrez

 

Co-Chair, Albright Stonebridge Group

 

- Executive Leadership

- Global Business Experience

- Business Operations

- Government Service

- Public Policy

- Civic Leadership

  ü                   ü

R. Glenn Hubbard, Ph.D.

 

Dean and Russell L. Carson

Professor of Economics and Finance, Graduate School of Business,

Columbia University

 

- Public Policy

- Academic Experience

- Investments

- Civic Leadership

- Executive Leadership

  ü           ü   ü    

Steven A. Kandarian

 

Chairman of the Board, President and Chief Executive Officer, MetLife, Inc.

 

- Knowledge of MetLife’s Business and Operations

- Executive Leadership

- Global Business Experience

- Business Operations

              C        

Gen. John M. Keane (ret.)

 

Retired General, United States Army; President, GSI, LLC

 

- Executive Leadership

- Government Service

- Operations Management

- Public Policy

  ü   ü               ü

Alfred F. Kelly, Jr.

 

Chairman of the Board, President and Chief Executive Officer, NY/NJ Super Bowl Host Company

 

- Executive Leadership

- Global Business Experience

- Business Operations

  ü   ü   ü   ü   C    

William E. Kennard

 

Senior Advisor, Grain Management, LLC

 

- Government Service

- Public Policy

- Global Business Experience

- Business Operations

- Investments

- Corporate Governance

  ü                   ü

James M. Kilts

 

Founding Partner, Centerview Capital

 

- Executive Leadership

- Global Business Experience

- Business Operations

- Investments

  ü       C   ü        

Catherine R. Kinney

 

Retired President and Co-Chief Operating Officer, New York Stock Exchange, Inc.

 

- Corporate Governance

- Executive Leadership

- Global Business Experience

- Business Operations

  ü   ü           ü    

Denise M. Morrison

 

President and Chief Executive Officer, Campbell Soup Company

 

- Executive Leadership

- Global Business Experience

- Business Operations

- Civic Leadership

  ü       ü           ü

Kenton J. Sicchitano

 

Retired Global Managing Director, PricewaterhouseCoopers LLP

 

- Accounting / Auditing

- Tax and Financial Advisory

- Executive Leadership

- Global Business Experience

- Risk Management

  ü   C   ü   ü   ü    

Lulu C. Wang

 

Chief Executive Officer and Founder, Tupelo Capital Management, LLC

 

- Investments

- Executive Leadership

- Global Business Experience

- Business Operations

- Civic Leadership

  ü                   ü
      C – Chair

Each of the current Directors who served during 2013 attended more than 75% of the aggregate number of meetings of the Board of Directors and the Committees on which he or she served. See “Board and Committee Information” beginning on page 12 for more information regarding Board Committees and Committee membership.

 

MetLife 2014 Proxy Statement           3   


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Executive Pay for Performance

The Company’s 2013 performance exceeded its 2012 performance in a number of key metrics.

LOGO

These performance measures are not based on accounting principles generally accepted in the United States of America (GAAP). They should be read in conjunction with the discussion of “Company Financial Performance Goals and Results” on page 35 and in Appendix A to this Proxy Statement, which includes definitions of these terms and reconciliations to the most directly comparable GAAP measures.

The Company also maintained its pay for performance practices, as illustrated below. A substantial portion of the Executive Group members’ Total Compensation for 2013 performance was variable and depended on performance or the value of Shares.

 

LOGO    LOGO

To align executive and shareholder interests, in determining Total Compensation for 2013 performance, and in expectation of future contributions to performance, the Compensation Committee allocated a greater portion of the Executive Group members’ variable compensation to long-term stock-based incentives than it allocated to annual cash incentives.

 

LOGO    LOGO

For more information, see the Compensation Discussion and Analysis, which begins on page 28.

 

4          MetLife 2014 Proxy Statement


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Proposal 1 — Election of Directors for a One-Year Term Ending at the 2015 Annual Meeting of Shareholders

 

 

 

The Board of Directors recommends that you vote FOR the election of each of the Director nominees.

 

The Company’s success and long-term value depend on the judgment, initiative and efforts of its Directors. As a Board, these individuals oversee MetLife’s business policies and strategies. They also oversee the Chief Executive Officer and the other most senior executives of the Company (Executive Officers or Executive Group) in their management of the Company’s business.

The Board of Directors currently has 13 members. One current member, Hugh Price, will retire from the Board as of the Annual Meeting. Prior to 2012, MetLife had a classified Board with each of three classes of Directors standing for election every third year to a three-year term of office. As of the Annual Meeting, the Board will be fully declassified and all nominees will stand for election to one-year terms of office.

Each of the Director nominees is currently serving as a Director of MetLife and has agreed to continue to serve if elected. The Board of Directors has no reason to believe that any nominee would be unable to serve if elected; however, if for any reason a nominee should become unable to serve at or before the Annual Meeting, the Board could reduce the size of the Board or nominate another candidate for election. If the Board were to nominate another candidate to stand for election at the Annual Meeting, the proxies could use their discretion to vote for that candidate. The proxies will not have authority to vote for a greater number of nominees than the number of nominees named on the proxy card, and will accordingly not have authority to fill the vacancy resulting from the retirement of Mr. Price.

Each of the Director nominees is also currently serving as a director of Metropolitan Life Insurance Company (MLIC), a direct, wholly-owned subsidiary of MetLife with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the Exchange Act), in connection with the issuance of certain insurance products. The common stock of MLIC is not publicly traded.

Cheryl W. Grisé, age 61

Retired Executive Vice President,

Northeast Utilities

 

 

Professional Highlights:

 

 

Northeast Utilities, a public utility holding company engaged in the distribution of electricity and natural gas (1980 – 2007)

 

   

Executive Vice President (December 2005 – July 2007)

 

   

Chief Executive Officer of principal operating subsidiaries (September 2002 – January 2007)

 

   

President, Utility Group, Northeast Utilities Service Company (May 2001 – January 2007)

 

   

President, Utility Group (May 2001 – December 2005)

 

   

Senior Vice President, Secretary and General Counsel (1998 – 2001)

Other Professional and Leadership Experience:

 

 

Member, Board of Trustees, Kingswood-Oxford School

 

 

Trustee Emeritus, University of Connecticut Foundation

 

 

Senior Fellow, American Leadership Forum

 

 

Other public company directorships: Pall Corporation; PulteGroup, Inc.; ICF International

 

 

Prior public company directorships (past five years): Dana Corp.

Education:

 

 

B.A., University of North Carolina at Chapel Hill

 

 

J.D., Thomas Jefferson School of Law

 

 

Executive Management Program, Yale University School of Organization and Management

Director since 2004

Ms. Grisé’s experience as the chief executive officer of a major enterprise subject to complex regulations has provided her with a substantive understanding of the challenges of managing a highly regulated company such as MetLife. With her executive experience and her experience as a general counsel and corporate secretary, Ms. Grisé brings a unique perspective on the Board’s responsibility for overseeing the management of a regulated enterprise and with respect to the effective functioning of the Company’s corporate governance structures.

 

 

MetLife 2014 Proxy Statement           5   


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Carlos M. Gutierrez, age 60

Co-Chair, The Albright Stonebridge Group

 

 

Professional Highlights:

 

 

The Albright Stonebridge Group, a consulting firm (April 2013 – present)

 

   

Co-Chair (February 2014 – Present)

 

   

Vice Chair (April 2013 – February 2014)

 

 

Vice Chairman, Institutional Client Group, Citigroup, a financial services corporation (January 2011 – February 2013)

 

 

Chairman and Founding Consultant of Global Political Strategies, a division of APCO Worldwide, Inc., a consulting firm (2010 – 2011)

 

 

Secretary of Commerce of the United States (February 2005 – January 2009)

 

 

Kellogg Company, a manufacturer of packaged food products

 

   

Chairman and Chief Executive Officer (2003 – 2005)

 

   

Chairman, President and Chief Executive Officer (2000 – 2003)

 

   

President and Chief Executive Officer (1999 – 2000)

 

   

President and Chief Operating Officer (1998 – 1999)

 

   

Various other positions (1975 – 1998)

Other Professional and Leadership Experience:

 

 

Chairman, Republicans for Immigration Reform, a political action committee

 

 

Member, Board of Directors, U.S.-Mexico Foundation

 

 

Member, Board of Trustees, Meridian International Center

 

 

National Trustee, University of Miami

 

 

Co-Chairman, Regional Migration Study Group

 

 

Other public company directorships: Occidental Petroleum Corporation; Time Warner, Inc.

 

 

Prior public company directorships (past five years): Corning, Inc.; Lighting Science Group Corporation; United Technologies Corporation

Education:

 

 

Instituto Tecnologico y de Estudios Superiores de Monterrey, Business Administration Studies

Director since 2013

As Chairman and Chief Executive Officer of Kellogg, Secretary Gutierrez gained deep insight into the complex challenges of guiding a large enterprise in a competitive global economy. As Secretary of Commerce, he worked with government and business leaders to promote America’s economic interests. Secretary Gutierrez’s unique mix of experience gives him a valuable perspective and ability to oversee management’s efforts to grow and develop MetLife’s global business and its interactions with domestic and foreign governments and regulators.

R. Glenn Hubbard, Ph.D., age 55

Dean and Russell L. Carson Professor of

Economics and Finance, Graduate School of Business, Columbia University

 

 

Professional Highlights:

 

 

Columbia University

 

   

Dean, Graduate School of Business (2004 – Present)

 

   

Russell L. Carson Professor of Economics and Finance, Graduate School of Business (1994 – Present)

 

   

Professor of Economics, Faculty of Arts and Sciences (1997 – Present)

 

 

Co-Chair, Committee on Capital Markets Regulation, an independent nonprofit research organization (2006 – Present)

 

 

Chairman, President’s Council of Economic Advisers, an agency within the Executive Office of the President of the United States (2001 – 2003)

 

 

Chairman of the Economic Policy Committee, Organization for Economic Cooperation and Development, an international economic and trade organization (2001 – 2003)

 

 

Deputy Assistant Secretary for Tax Policy, United States Department of the Treasury (1991 – 1993)

Other Professional and Leadership Experience:

 

 

Dr. Hubbard is a member of numerous professional and civic organizations, including:

 

   

Panel of Economic Advisors, Federal Reserve Bank of New York

 

   

Council on Foreign Relations

 

   

Advisory Board of the National Center on Addiction and Substance Abuse

 

 

Other public company directorships: Automatic Data Processing, Inc.; BlackRock Closed-End Funds; KKR Financial Holdings LLC

 

 

Prior public company directorships (past five years): Capmark Financial Corporation; Information Services Group, Inc.; Duke Realty Corporation; Dex Media, Inc.; R.H. Donnelley Corporation

Education:

 

 

B.A. and B.S., University of Central Florida

 

 

Ph.D. and M.A., Harvard University

Director since 2007

As an economic policy advisor to the highest levels of government and financial regulatory bodies, Dr. Hubbard has an unparalleled understanding of current global economic conditions and emergent regulations and economic policies. This expertise is relevant to the Board’s understanding of how shifting economic conditions and developing regulations and economic policies will likely impact MetLife’s investments, businesses and operations worldwide.

 

 

6          MetLife 2014 Proxy Statement


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Steven A. Kandarian, age 62

Chairman of the Board, President and

Chief Executive Officer, MetLife, Inc.

 

 

Professional Highlights:

 

 

MetLife, Inc.

 

   

Chairman of the Board (January 2012 – Present)

 

   

President and Chief Executive Officer (May 2011 –Present)

 

   

Executive Vice President and Chief Investment Officer (2005 – April 2011)

 

 

Executive Director, Pension Benefit Guaranty Corporation, a United States government agency (2001 – 2004)

 

 

Founder and Managing Partner, Orion Partners, LP, a private equity firm (1993 – 2001)

 

 

Founder and President, Eagle Capital Holdings, where Mr. Kandarian formed a private merchant bank to sponsor equity investments in small and mid-sized businesses (1990 – 1993)

 

 

Managing Director, Lee Capital Holdings, a private equity firm (1984 – 1990)

 

 

Mr. Kandarian began his career at Rotan Mosle, Inc., an investment bank

Other Professional and Leadership Experience:

 

 

Member of:

 

   

Board of Directors, Damon Runyon Cancer Research Foundation

 

   

Board of Directors, Lincoln Center for the Performing Arts

 

   

Business Council

 

   

Business Roundtable

 

   

Financial Services Forum

 

   

Partnership for New York City

 

 

 

Vice Chairman, Insurance Regulatory Committee of the Institute of International Finance (IIF)

Education:

 

 

B.A., Clark University

 

 

J.D., Georgetown University Law Center

 

 

M.B.A., Harvard Business School

Director since 2011

Mr. Kandarian’s leadership and financial acumen, as well as his experience with the Company, including as President and Chief Executive Officer and his earlier responsibilities for Investments, Global Brand and Marketing Services, and enterprise-wide corporate strategy, have provided him with a deep understanding of the Company’s businesses and global operations and the Company’s strategic direction and leadership selection.

Gen. John M. Keane (Ret.), age 71

Retired General, United States Army;

President, GSI, LLC

 

 

Professional Highlights:

 

 

President, GSI, LLC, a consulting firm (February 2004 – Present)

 

 

Senior Partner, SCP Partners, a venture capital firm (March 2009 – June 2012)

 

 

Co-Founder and Senior Managing Director, Keane Advisors, LLC, a private equity and consulting firm (2004 –2009)

 

 

Vice Chief of Staff and Chief Operating Officer, United States Army (1999 – October 2003)

 

 

Thirty-seven year service in the United States Army

Other Professional and Leadership Experience:

 

 

Chairman, Board of Directors, Knollwood Foundation

 

 

Chairman, Senior Executive Committee, Army Aviation Association of America

 

 

Chairman, Board of Directors, Institute for the Study of War

 

 

Member of:

 

   

Council on Foreign Relations

 

   

Advisory Council, American Corporate Partners

 

   

Board of Trustees, George C. Marshall Foundation

 

   

Board of Trustees, Fordham University

 

   

Board of Directors, Center for Strategic and Budgetary Assessments

 

   

Board, Welcome Back Veterans Foundation

 

 

Military Contributor and Analyst, Fox News

 

 

Other public company directorships: General Dynamics Corporation

 

 

Prior public company directorships (past five years): Cyalume Technologies Holdings, Inc.; M & F Worldwide Corp.

Education:

 

 

B.S., Fordham University

 

 

M.A., Western Kentucky University

 

 

Honorary Degrees: Fordham University; Eastern Kentucky University

Director since 2003

Through his tenure as chief operating officer of the United States Army, one of the world’s largest military organizations, and as advisor to the highest levels of government, General Keane has gained a deep understanding of the strategic leadership, organizational dynamics and managerial capabilities needed to operate a complex, global enterprise. These abilities are particularly relevant to the Board in its oversight of the Company’s process for selecting and developing senior leaders to ensure appropriate continuity in the Company’s business and operations.

 

 

MetLife 2014 Proxy Statement           7   


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Alfred F. Kelly, Jr., age 55

Chairman of the Board,

President and Chief Executive Officer,

NY/NJ Super Bowl Host Company

 

 

Professional Highlights:

 

 

Chairman of the Board, President and Chief Executive Officer, NY/NJ Super Bowl Host Company, a nonprofit fundraising and planning organization

 

 

American Express Company, a financial services corporation

 

   

President (July 2007 – April 2010), responsible for global consumer businesses, including consumer and small business cards, customer service, global banking, prepaid products, consumer travel, and risk and information management

 

   

Group President (2005 – 2007), responsible for several key businesses, including U.S. consumer and small business cards, U.S. customer service, and risk management

 

 

Head of Information Systems, White House (1985 – 1987), with oversight of the information processing functions for several government agencies that comprise the Executive Office of the President

Other Professional and Leadership Experience:

 

 

Chairman, Board of Directors, School of the Holy Child

 

 

Vice Chairman, Wall Street Charity Golf Classic (benefits the Cystic Fibrosis Foundation)

 

 

Member, Boards of Trustees, of:

 

   

New York-Presbyterian Hospital

 

   

St. Joseph’s Seminary and College

 

   

New York Catholic Foundation

 

 

Other public company directorships: Visa Inc.

 

 

Prior public company directorships (past five years): Affinion Group Holdings, Inc.; Hershey Company

Education:

 

 

B.A. and M.B.A., Iona College

Director since 2009

Through his roles as a senior executive of a global financial services business and as the head of information systems of the White House, Mr. Kelly brings significant experience in risk management and mitigation, marketing, information technology and data management, as well as a sophisticated understanding of the considerations of shareholder value creation. These experiences and expertise are relevant to the Board’s oversight of the Company’s design and approach to risk management.

William E. Kennard, age 57

Senior Advisor, Grain Management, LLC

 

 

Professional Highlights:

 

 

Senior Advisor, Grain Management, LLC, a private equity firm (November 2013 – Present)

 

 

Member of Operating Executive Board, Staple Street Capital, a private equity firm (February 2014 – Present)

 

 

United States Ambassador to the European Union (December 2009 – August 2013)

 

 

Managing Director, The Carlyle Group, an asset management firm (May 2001 – December 2009)

 

 

United States Federal Communications Commission (December 1993 – January 2001)

 

   

Chairman (November 1997 – May 2001)

 

   

General Counsel (December 1993 – November 1997)

 

 

Partner, Verner, Liipfert, Bernhard, McPherson and Hand (now DLA Piper), a law firm (April 1984 – December 1993)

Other Professional and Leadership Experience:

 

 

Other public company directorships: Duke Energy

 

 

Prior public company directorships (past five years): The New York Times Company

Education:

 

 

B.A., Phi Beta Kappa, Stanford University

 

 

J.D., Yale Law School

Director since 2013

Mr. Kennard’s career has given him public policy and global investment expertise. As United States Ambassador to the European Union, Mr. Kennard worked to promote transatlantic trade and investment and reduce regulatory barriers to commerce. In his years of public service, Mr. Kennard advanced access of underserved populations to technology. Mr. Kennard’s extensive regulatory and international experience enhances the Board’s ability to oversee MetLife’s strategies.

 

 

8          MetLife 2014 Proxy Statement


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James M. Kilts, age 66

Founding Partner, Centerview Capital

 

 

Professional Highlights:

 

 

Founding Partner, Centerview Capital, a private equity firm (October 2006 – Present)

 

 

Vice Chairman, Board of Directors, The Procter & Gamble Company, a consumer products company (October 2005 – October 2006)

 

 

The Gillette Company, a consumer products company

 

   

Chairman of the Board (January 2001 – October 2005)

 

   

Chief Executive Officer (February 2001 – October 2005)

 

   

President (November 2003 – October 2005)

 

 

President and Chief Executive Officer, Nabisco Group Holdings Corp.; President and Chief Executive Officer, Nabisco Holdings Corp. and Nabisco Inc., manufacturer and marketer of packaged food products (January 1998 –December 2000)

 

 

Executive Vice President, Worldwide Food, Philip Morris, a manufacturer and marketer of packaged food products (1994 – 1997)

 

 

Various positions, Kraft, a manufacturer and marketer of packaged food products (through 1994), including:

 

   

President, Kraft USA and Oscar Mayer

 

   

Senior Vice President, Strategy and Development

 

   

President, Kraft Limited in Canada

 

   

Senior Vice President, Kraft International

Other Professional and Leadership Experience:

 

 

Member of:

 

   

Board of Overseers, Weill Cornell Medical College

 

   

Board of Trustees, Knox College

 

   

Board of Trustees, University of Chicago

 

 

Founder and Member, Steering Committee, Kilts Center for Marketing, University of Chicago Booth School of Business

 

 

Other public company directorships: Pfizer, Inc.; MeadWestvaco Corporation; Non-Executive Director and Chairman of the Board of Nielsen Holdings N.V.

 

 

Prior public company directorships (past five years):

    The New York Times Company

Education:

 

 

B.A., Knox College

 

 

M.B.A., University of Chicago

Director since 2005

As a founding partner of a private equity firm and as a senior executive of several major consumer product companies with global sales and operations, Mr. Kilts brings an in-depth understanding of the business challenges and opportunities of diversified global enterprises and the related financial, risk management, talent management and shareholder value creation considerations. These experiences and knowledge are relevant to the Board’s oversight of the management of MetLife.

Catherine R. Kinney, age 62

Retired President and Co-Chief Operating Officer,

New York Stock Exchange, Inc.

 

 

Professional Highlights:

 

 

Retired from NYSE Euronext, a provider of financial services including securities exchange and clearing operations, in March 2009, after serving in Paris, France, with responsibility for overseeing the global listing program, marketing and branding (July 2007 – March 2009)

 

 

President and Co-Chief Operating Officer, New York Stock Exchange, Inc., a provider of financial services including securities exchange and clearing operations (merged with Euronext in 2008 to form NYSE Euronext) (2002 – 2008)

 

 

Ms. Kinney joined the New York Stock Exchange in 1974 and held management positions in several divisions, with responsibility for all client relationships (1996 – 2007), trading floor operations and technology (1987 – 1996), and regulation (2002 – 2004)

Other Professional and Leadership Experience:

 

 

Chair, Board of Trustees, Catholic Charities of the Archdiocese of New York

 

 

Member of:

 

   

Board of Directors, Sharegift USA

 

   

Economic Club of New York

 

 

Other public company directorships: NetSuite, Inc.; MSCI Inc.; QTS

Education:

 

 

B.A., magna cum laude, Iona College

 

 

Advanced Management Program, Harvard Graduate School of Business

 

 

Honorary Degrees: Georgetown University; Fordham University; Rosemont College

Director since 2009

Ms. Kinney’s experience as a senior executive and chief operating officer of a multinational, regulated entity, her key role in transforming the New York Stock Exchange (NYSE) to a publicly held company, and her leadership in developing and establishing the NYSE corporate governance standards for its listed companies (including MetLife) demonstrate her knowledge of and experience with issues of corporate development, transformation and governance. These qualities are relevant to ensuring that the Board establishes and maintains effective governance structures appropriate for a global provider of insurance and financial products and services.

 

 

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Denise M. Morrison, age 60

President and Chief Executive Officer,

Campbell Soup Company

 

 

Professional Highlights:

 

 

Campbell Soup Company, a food and beverage company (2003 – Present)

 

   

President and Chief Executive Officer (August 2011 – Present)

 

   

Executive Vice President and Chief Operating Officer (October 2010 – July 2011)

 

   

President, North America Soup, Sauces and Beverages (October 2007 – September 2010)

 

   

President, Campbell USA (June 2005 – September 2007)

 

   

President, Global Sales and Chief Customer Officer (April 2003 – May 2005)

 

 

Kraft Foods, Inc., a food and beverage company (1995 –2003)

 

   

Various leadership roles, including: Executive Vice President and General Manager, Kraft Snacks (2001 – 2003); Executive Vice President and General Manager, Kraft Confections (2001); Senior Vice President and General Manager, Nabisco Down the Street (2000); Senior Vice President, Nabisco Sales and Integrated Logistics (1998 – 2000)

 

 

Various senior marketing and sales positions, Nestlé USA, Inc., a food and beverage company (1984 – 1995)

 

 

Various trade and business development positions, PepsiCo, Inc., a food and beverage company (1982 – 1984)

 

 

The Procter & Gamble Company, a consumer products company (1975 – 1982)

Other Professional and Leadership Experience:

 

 

Member of President Barack Obama’s Export Council

 

 

Member, Boards of Directors, of:

 

   

Consumer Goods Forum (Co-Chair)

 

   

Catalyst, Inc., a nonprofit organization that strives to expand opportunities for women in business

 

   

Grocery Manufacturers Association (Chair, Health and Wellness Committee)

 

 

Founding Member, Healthy Weight Commitment Foundation

 

 

Other public company directorships: Campbell Soup Company

 

 

Prior public company directorships (past five years): The Goodyear Tire & Rubber Company

Education:

 

 

B.S., Boston College

Director since 2014

Ms. Morrison has a long and distinguished track record of building strong businesses and growing iconic brands. Her experience as chief executive officer of a global company provides her with a strong understanding of the key strategic challenges and opportunities of running a large, complex business, including financial management, operations, risk management, talent management and succession planning. Ms. Morrison’s strong commitment to corporate social responsibility and civic engagement make her a valuable resource for MetLife and its shareholders.

Kenton J. Sicchitano, age 69

Retired Global Managing Director,

PricewaterhouseCoopers LLP

 

 

Professional Highlights:

 

 

PricewaterhouseCoopers LLP, a provider of audit and assurance, tax and consulting services (1970 – 2001). Mr. Sicchitano joined Price Waterhouse LLP, a predecessor firm of PricewaterhouseCoopers LLP, in 1970, becoming a Partner in 1979. He held a variety of global leadership positions, including Global Managing Partner of Audit and Business Advisory Services and Global Managing Partner responsible for Audit and Business Advisory, Tax and Legal, and Financial Advisory Services.

Other Professional and Leadership Experience:

 

 

Director and Chair of the Finance Committee, New England Deaconess Hospital

 

 

Trustee, New England Aquarium

 

 

President, Harvard Business School Association of Boston

 

 

Director, Harvard Alumni Association and Harvard Business School Alumni Association

 

 

Other public company directorships: PerkinElmer, Inc.; Analog Devices, Inc.

Education:

 

 

B.A., Harvard College

 

 

M.B.A., Harvard Business School

Director since 2003

Mr. Sicchitano’s experience as a managing partner in a global advisory services firm has provided him with an understanding of the challenges and opportunities of managing a global business enterprise. His oversight of the firm’s audit practices and its Audit/Assurance, Business Advisory and Tax Services gave him broad knowledge of accounting and tax issues. This experience and knowledge are relevant to the Board’s oversight of the management of MetLife, a global insurance and financial services firm.

 

 

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Lulu C. Wang, age 69

Founder and Chief Executive Officer,

Tupelo Capital Management LLC

 

 

Professional Highlights:

 

 

Founder and Chief Executive Officer, Tupelo Capital Management LLC, an investment management firm (1997 – Present)

 

 

Director and Executive Vice President, Jennison Associates Capital Corporation, an investment management firm (1988 – 1997)

 

 

Senior Vice President and Managing Director, Equitable Capital Management, an investment management firm (1978 – 1988)

Other Professional and Leadership Experience:

 

 

Consulting Director, New York Community Trust

 

 

Member of:

 

   

Board of Overseers, Columbia Business School

 

   

Board of Trustees, Metropolitan Museum of Art

 

   

Board of Trustees, Rockefeller University

 

   

Board of Directors, Committee of 100

 

   

Board of Trustees, Asia Society

 

 

Trustee Emerita, Wellesley College

 

 

Trustee Emerita, WNYC Public Radio

Education:

 

 

B.A., Wellesley College

 

 

M.B.A., Columbia Business School

Director since 2008

Ms. Wang’s extensive experience in investment management and financial services, her knowledge and understanding of global capital markets, particularly in Asia, and her service on the boards and investment committees of major educational and civic organizations have given her a perspective that is particularly relevant to the Board’s oversight of the management of the Company and its investments, as well as a deep understanding of the importance of MetLife’s and MetLife Foundation’s contributions to community institutions.

 

 

MetLife 2014 Proxy Statement           11   


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Corporate Governance

 

 

 

The Board of Directors recognizes the importance of effective corporate governance in fulfilling its responsibilities to shareholders. This section describes some of MetLife’s key governance practices.

Corporate Governance Guidelines

The Board of Directors has adopted Corporate Governance Guidelines that set forth the Board’s policies on a number of governance-related matters, including:

 

 

Director qualifications, independence and responsibilities;

 

 

the identification of candidates for Board positions;

 

 

management succession;

 

 

Director access to management and outside advisors, including certain restrictions on the retention by Directors of an outside advisor that is otherwise engaged by the Company for another purpose;

 

 

Director compensation;

 

 

Director stock ownership guidelines;

 

 

the appointment of a Lead Director by the Independent Directors;

 

 

Director orientation and continuing education;

 

 

Annual evaluation of the Board’s performance; and

 

 

the Board’s majority voting standard in uncontested Director elections, which is also reflected in the Company’s By-Laws.

A printable version of the Corporate Governance Guidelines is available on MetLife’s website at www.metlife.com/corporategovernance under the link “Corporate Governance Guidelines.”

Board and Committee Information

Composition and Independence of the Board of Directors.    The Board currently consists of 12 Directors, 11 of whom are both Non-Management Directors and Independent Directors. A Non-Management Director is a Director who is not an officer of the Company or of any entity in a consolidated group with the Company. An Independent Director is a Non-Management Director who the Board of Directors has affirmatively determined has no material relationships with the Company or any of its consolidated subsidiaries and is independent within the meaning of the NYSE Corporate Governance Standards. An Independent Director for Audit and Compensation

Committee purposes meets additional requirements under the NYSE Corporate Governance Standards and Rules 10A-3 and 10C-1, as applicable, under the Exchange Act.

The Board of Directors has adopted categorical standards to assist it in making determinations regarding Director independence. The Independent Directors satisfy all applicable categorical standards. The categorical standards are included in the Corporate Governance Guidelines of the Company, which are available on MetLife’s website at www.metlife.com/corporategovernance under the link “Corporate Governance Guidelines.”

The Board has affirmatively determined that all of the Directors, other than Steven A. Kandarian, the Company’s Chairman of the Board, President and Chief Executive Officer, are Independent Directors. The Board affirmatively determined that Kurt M. Campbell, who served as a Director during portions of 2013 and 2014, was an Independent Director. The Board also affirmatively determined in 2013 that Sylvia Mathews Burwell and David Satcher, who were not Directors after the Company’s 2013 annual meeting of shareholders, were Independent Directors.

Board Leadership Structure.    After careful consideration, in 2006, the Board of Directors determined that the preferred leadership structure for MetLife would be a Chairman of the Board who also is the Company’s Chief Executive Officer, and a separate empowered Lead Director who also is an Independent Director. The successful partnership between the executive Chairman of the Board and the independent Lead Director has provided strong, independent oversight of management and reaffirms to the Board that this leadership structure continues to be the most appropriate and effective model for the Company.

Mr. Kandarian, as the Company’s Chief Executive Officer, is responsible for the day-to-day operations of the Company and for setting its strategic business direction. In the performance of his responsibilities, both in his role as Chief Executive Officer and in his prior role as Chief Investment Officer with oversight of MetLife’s enterprise-wide corporate strategy, he has demonstrated a deep understanding of the Company’s business, opportunities and challenges, and the capabilities and talents of the senior leadership team — all of which he brings to bear in the performance of his responsibilities as Chairman of the Board.

Cheryl W. Grisé, the Company’s independent Lead Director, was appointed as Lead Director by the

 

 

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Company’s Independent Directors, as provided by the Company’s Corporate Governance Guidelines. Pursuant to the Guidelines, her responsibilities as Lead Director include:

 

 

presiding at executive sessions of the Board of Directors;

 

 

conferring with the Chairman of the Board and Chief Executive Officer about Board meeting schedules, agendas and information to be provided to the Directors;

 

 

conferring with the Chairman of the Board and Chief Executive Officer on issues of corporate importance that may involve action by the Board;

 

 

participating in the Compensation Committee’s annual performance evaluation of the Chairman of the Board and Chief Executive Officer; and

 

 

in the event of the incapacity of the Chairman of the Board and Chief Executive Officer, directing the Secretary of the Company to take all necessary and appropriate action to call a special meeting of the Board as specified in the By-Laws to consider the action to be taken under the circumstances.

Having an independent Lead Director and an executive Chairman of the Board helps ensure that the Directors are provided with appropriate information about the Company’s businesses and operations and have direct access to senior management, which enables them to effectively oversee the management of the Company and perform their roles and responsibilities as Directors of a complex, highly regulated, global enterprise.

Executive Sessions of Independent Directors.    At each regularly scheduled meeting of the Board of Directors, the Independent Directors of the Company meet in executive session without the presence of the Company’s management. The Lead Director presides at the executive sessions of the Independent Directors.

Director Nomination Process.    Under the Company’s Corporate Governance Guidelines, the following specific, minimum qualifications must be met by any candidate whom the Governance and Corporate Responsibility Committee would recommend for election to the Board of Directors:

 

 

Financial Literacy.    Such person should be “financially literate,” as such qualification is interpreted by the Company’s Board of Directors in its business judgment.

 

Leadership Experience.    Such person should possess significant leadership experience, such as experience in business, finance, accounting, law, education or government, and shall possess qualities reflecting a proven record of accomplishment and an ability to work with others.

 

 

Commitment to the Company’s Values.    Such person shall be committed to promoting the financial success of the Company and preserving and enhancing the Company’s reputation as a global leader in business and shall be in agreement with the values of the Company as embodied in its codes of conduct.

 

 

Absence of Conflicting Commitments.    Such person should not have commitments that would conflict with the time commitments of a Director of the Company.

 

 

Reputation and Integrity.    Such person shall be of high repute and recognized integrity, and shall not have been convicted in a criminal proceeding or be named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses). Such person shall not have been found in a civil proceeding to have violated any federal or state securities or commodities law, and shall not be subject to any court or regulatory order or decree limiting his or her business activity, including in connection with the purchase or sale of any security or commodity.

 

 

Other Factors.    Such person shall have other characteristics considered appropriate for membership on the Board of Directors, including significant experience and accomplishments, an understanding of marketing and finance, sound business judgment, and an appropriate educational background.

In recommending candidates for election as Directors, the Governance and Corporate Responsibility Committee will take into consideration the need for the Board to have a majority of Directors that meet the independence requirements of the New York Stock Exchange Corporate Governance Standards, the ability of candidates to enhance the perspective and experience of the Board as a whole, and such other criteria as shall be established from time to time by the Board of Directors.

Potential candidates for nomination as Directors are identified by the Governance and Corporate Responsibility Committee and the Board of Directors through a variety of means, including search firms, Board members, Executive Officers and shareholders. Potential candidates for nomination as Director provide information about their qualifications and participate in interviews conducted by individual Board members.

 

 

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Candidates are evaluated based on the information supplied by the candidates and information obtained from other sources.

The Governance and Corporate Responsibility Committee will consider shareholder recommendations of candidates for nomination as Director. To be timely, a shareholder recommendation must be submitted to the Governance and Corporate Responsibility Committee, MetLife, Inc., 1095 Avenue of the Americas, New York, NY 10036, Attention: Corporate Secretary, not later than 120 calendar days prior to the first anniversary of the previous year’s annual meeting. Recommendations for nominations of candidates for election at MetLife’s 2015 annual meeting of shareholders must be received by the Corporate Secretary of MetLife, Inc. no later than December 23, 2014.

The Governance and Corporate Responsibility Committee makes no distinctions in evaluating nominees based on whether or not a nominee is recommended by a shareholder. Shareholders recommending a nominee must satisfy the notification, timeliness, consent and information requirements set forth in the Company’s By-Laws concerning Director nominations by shareholders.

The shareholder’s recommendation must set forth all the information regarding the recommended candidate that is required to be disclosed in solicitations of proxies for election of Directors pursuant to Section 14 of the Exchange Act and related regulations, and must include the recommended candidate’s written consent to being named in the Proxy Statement as a nominee and to serving as a Director if elected. The recommendation must also be accompanied by a completed disclosure questionnaire on a form posted on the Company’s website. In addition, the shareholder’s recommendation must include: (i) the name and address of, and class and number of shares of the Company’s securities owned beneficially and of record by, the recommending shareholder and any other person on whose behalf the shareholder is acting or with whom the shareholder is acting in concert; (ii) a description of all arrangements or understandings between any shareholder and the person being recommended and any other persons (naming them) pursuant to which the nominations are to be made by the shareholder; (iii) satisfactory evidence that each shareholder is a beneficial owner, or a representation that the shareholder is a holder of record, of the Company’s stock entitled to vote at the meeting, and a representation that the shareholder intends to appear in person or by a qualified representative at the meeting to propose the nomination; and (iv) if the recommending shareholder intends to solicit proxies, a statement to that effect.

Oversight of Risk Management by the Board of Directors.    The Board of Directors is responsible for overseeing management in the execution of its responsibilities and for overseeing the design and implementation of the Company’s approach to risk management.

In performing its risk management oversight functions, the Board oversees management’s development and execution of appropriate business strategies to mitigate the risk that such strategies will fail to generate long-term value for the Company and its shareholders or that such strategies will motivate management to take excessive risks.

The Board of Directors also oversees the development and implementation of processes and procedures to mitigate the risk of failing to ensure the orderly succession of the Chief Executive Officer and the senior executives of the Company. The Board believes that the continuing development of the Company’s managerial leadership is critically important to its success. The Board, in coordination with the Governance and Corporate Responsibility Committee, periodically reviews the skills, experience, and development plans of the Company’s senior leaders who may ultimately be candidates for senior executive positions. The Directors meet regularly with senior leaders in the context of Board business, giving them an opportunity to assess the qualifications of these individuals. In addition, the Board plans for executive succession to ensure that the Company will have managerial talent available to replace current executives when that becomes necessary.

The Board of Directors has allocated its oversight of risk management among the Board as a whole and to the Committees of the Board, which meet regularly and report back to the full Board. All Committees play significant roles in risk oversight.

The Finance and Risk Committee has broad oversight responsibilities for the Company’s risk management. The Committee reviews the Company’s assessment and management of material risks, including the Company’s policies and procedures regarding risk assessment and management and its performance against these policies and procedures and related benchmarks and target metrics. The Committee oversees the Company’s financial policies and strategies, capital planning and adequacy, certain capital actions, mergers and acquisitions projects, and other financial matters. The Committee coordinates its oversight with the efforts of the Chief Risk Officer (who oversees and coordinates risk assessment and mitigation enterprise-wide) and other members of management. It also coordinates its oversight of management with the Chairs of the other Board Committees.

 

 

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In addition to the Finance and Risk Committee’s oversight of the Company’s material risks, the Audit Committee, the Compensation Committee, the Governance and Corporate Responsibility Committee and the Investment Committee of MLIC also exercise direct oversight of aspects of the Company’s enterprise risk management. Specifically,

 

 

The Audit Committee reviews with management, the internal auditor and the independent auditor, the Company’s system of internal control over financial reporting that is relied upon to provide reasonable assurance of the integrity of the Company’s financial statements.

 

 

The Compensation Committee is responsible for reviewing the Company’s compensation practices and overseeing risk management with respect to the Company’s compensation arrangements.

 

 

The Governance and Corporate Responsibility Committee, in coordination with the Board, reviews the Company’s proposed succession and development plans for executive officers. It reviews the Company’s ethics and compliance programs and its sales practices to mitigate the risk of non-compliance, customer and regulatory complaints and other reputational risks. It also oversees the Company’s goals and strategies concerning legislative and regulatory initiatives that impact the interest of the Company.

 

At the request of MetLife, the Investment Committee of MLIC oversees the management and mitigation of risks associated with the investment portfolios of MetLife and certain of its subsidiaries, including credit risk; interest rate risk; portfolio allocation and diversification risk; derivatives risk; counterparty risk; duration mismatch risk; and compliance with insurance laws and regulations that govern insurance company investments.

For further discussion of the Committees’ responsibilities, see “Board Committees,” “Audit Committee,” “Compensation Committee,” “Finance and Risk Committee,” “Governance and Corporate Responsibility Committee” and “Investment Committee of MLIC” beginning on page 16.

Throughout the year, the Board and its Committees receive reports from the Chief Risk Officer and other senior management on enterprise risk management and specific risk topics. In particular, the Finance and Risk Committee reviews reports from the Chief Risk Officer and other senior management of the steps taken to measure, monitor and manage risk exposure in the enterprise. At each regularly scheduled meeting of the Finance and Risk Committee, the Chief Risk Officer meets in executive session of the independent Committee members without the Company’s Executive Officers to further discuss enterprise risk management.

 

 

Board Membership and Meetings. The following table describes the current membership of the Board and the Board Committees and the number of Board and Committee meetings held in 2013.

 

Director

   Board    Audit    Compensation    Executive    Finance and

Risk

   Governance

and

Corporate

Responsibility

   Investment

(MLIC)

Steven A. Kandarian

   Chairman          Chair         

Cheryl W. Grisé

   Lead Director    ü    ü    ü       Chair   

Carlos M. Gutierrez

                  ü    ü

R. Glenn Hubbard

            ü    ü       Chair

John M. Keane

      ü             ü   

Alfred F. Kelly, Jr.

      ü    ü    ü    Chair      

William E. Kennard

                  ü    ü

James M. Kilts

         Chair    ü          ü

Catherine R. Kinney

      ü          ü      

Denise M. Morrison

         ü          ü   

Hugh B. Price

      ü    ü            

Kenton Sicchitano

      Chair    ü    ü    ü      

Lulu C. Wang

                  ü    ü

Number of Meetings in 2013

   8    12    7    0    9    6    6

Board Meetings and Director Attendance.    In 2013, the Board held eight meetings and the Board Committees of MetLife held a total of 34 meetings. All of the current Directors attended more than 75% of the aggregate number of meetings of the Board of Directors and the MetLife Committees on which they served during 2013.

 

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Board Committees.    MetLife’s Board of Directors has designated five standing Board Committees: Audit; Compensation; Executive; Finance and Risk; and Governance and Corporate Responsibility. The Board of Directors has delegated authority to the Committees, as described in their charters, to assist the Board in overseeing the management of the Company. Certain Directors of MetLife also serve as members of the Investment Committee of MLIC, which, at the request of MetLife, oversees the management and mitigation of risks associated with the investment portfolios of MetLife and certain of its subsidiaries.

All Committees, other than the Executive Committee, are chaired by and consist entirely of Independent Directors. The Committees perform essential functions on behalf of the Board. The Committee Chairs review and approve agendas for all meetings of their respective Committees. The responsibilities of each Committee are defined in its respective charter and summarized below.

The charters for the Audit, the Compensation, and the Governance and Corporate Responsibility Committees incorporate the requirements of the Securities and Exchange Commission (SEC) and the NYSE to the extent applicable. Current, printable versions of these charters are available on MetLife’s website at www.metlife.com/corporategovernance.

Audit Committee.    The Audit Committee oversees:

 

 

the Company’s accounting and financial reporting processes and the audits of its financial statements;

 

 

the adequacy of the Company’s internal control over financial reporting;

 

 

the integrity of its financial statements;

 

 

the qualifications and independence of the independent auditor;

 

 

the appointment, retention, performance and compensation of the independent auditor and the performance of the internal audit function; and

 

 

the Company’s compliance with legal and regulatory requirements.

The Audit Committee periodically discusses the Company’s guidelines and policies with respect to the process by which the Company undertakes risk assessment and risk management. The Audit Committee meets at least six times a year, and meets regularly in executive session separately with management and with the Company’s internal and external auditors. The Audit Committee met 12 times in 2013. The Audit Committee’s activities during 2013 with respect to the oversight of the independent auditor are described in

more detail in “Proposal 2 — Ratification of the Appointment of the Independent Auditor” beginning on page 23. A more detailed description of the role and responsibilities of the Audit Committee is set forth in the Audit Committee Charter.

Independence, Financial Literacy and Audit Committee Financial Experts.    All six members of the Audit Committee are Independent Directors who meet the additional independence requirements of Rule 10A-3 under the Exchange Act and are financially literate, as such qualification is interpreted by the Board of Directors. The Board of Directors has determined that the following three members of the Audit Committee qualify as “audit committee financial experts,” as such term is defined by the SEC: Kenton J. Sicchitano (Chair), John M. Keane and Alfred F. Kelly, Jr.

Compensation Committee.

The Role and Responsibilities of the Compensation Committee. The Compensation Committee:

 

 

assists the Board in fulfilling its responsibility to oversee the development and administration of compensation programs for the Company’s executives and other employees of the MetLife enterprise;

 

 

approves the goals and objectives relevant to the Chief Executive Officer’s Total Compensation, evaluates the Chief Executive Officer’s performance in light of such goals and objectives, and endorses, for approval by the Independent Directors, the Chief Executive Officer’s Total Compensation level based on such evaluation;

 

 

reviews, and recommends for approval by the Board, the Total Compensation of each person who is an “executive officer” of the Company under the Exchange Act and related regulations or an “officer” of the Company under Section 16 of the Exchange Act and related regulations, as well as the Company’s Chief Risk Officer, including their base salaries, annual incentive compensation and long-term equity-based incentive compensation;

 

 

oversees management’s efforts to ensure that the Company’s compensation programs do not encourage excessive or inappropriate risk-taking; and

 

 

reviews and discusses with management the Compensation Discussion and Analysis to be included in the proxy statement (and incorporated by reference in the Annual Report on Form 10-K), and, based on this review and discussion, (1) recommends to the Board of Directors whether the Compensation Discussion and Analysis should be included in the proxy statement (and incorporated by reference in the

 

 

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Form 10-K), and (2) issues the Compensation Committee Report for inclusion in the proxy statement (the 2013 Compensation Committee Report appears on page 27 of this Proxy Statement).

The Compensation Committee also oversees: (1) the management and mitigation of risks associated with the development and administration of the Company’s compensation and benefit programs, and (2) efforts to ensure that the Company’s incentive plans do not encourage or reward excessive risk taking.

Under its charter, the Compensation Committee may delegate to a subcommittee or to the Chief Executive Officer or other officers of the Company any portion of its duties and responsibilities, if it believes such delegation is in the best interests of the Company and the delegation is not prohibited by law, regulation or the NYSE Corporate Governance Standards. Management’s delegated authority does not include granting salary increases or incentive compensation to any Executive Officer, officer subject to the reporting requirements under Section 16 of the Exchange Act, or to the Company’s Chief Risk Officer.

A more detailed description of the role and responsibilities of the Compensation Committee is set forth in the Compensation Committee Charter. The Company’s processes for consideration and determination of executive compensation, and the central role of the Compensation Committee in those processes, are further described in the Compensation Discussion and Analysis, beginning on page 28.

Executive Compensation Advisors.    The Compensation Committee has sole authority to retain or obtain the advice of a compensation consultant, independent legal counsel, or other advisor to the committee. It is not required to implement or act consistently with the advice or recommendations of any advisor, but retains discretion to act according to its own judgment. The Compensation Committee may retain or obtain the advice of an advisor only after taking into consideration factors related to that person’s independence from management that it determines are relevant, unless the retention of the advisor is exempt from this requirement under NYSE rules. The Compensation Committee is responsible for the appointment, compensation, and oversight of any advisor it retains. The Company is obligated to provide appropriate funding for reasonable compensation of any such advisor, as determined by the Compensation Committee.

To assist the Compensation Committee in carrying out its responsibilities, the Compensation Committee retained Meridian Compensation Partners, LLC (Meridian) as its

executive compensation consultant. Meridian has provided the Compensation Committee with competitive market compensation data and overall market trends about executive compensation, has advised the Compensation Committee about the overall design and implementation of MetLife’s executive compensation programs, including decisions made under the programs, and has advised the Committee about regulatory, governance and accounting developments that may affect the Company’s executive compensation programs.

The Compensation Committee believes that its compensation consultant must be able to provide it with candid, direct, independent and objective advice. In order to promote the objectivity, independence, and candor of Meridian’s advice:

 

 

Meridian has reported directly to the Committee about executive compensation matters;

 

 

Meridian has met with the Committee in executive sessions that were not attended by any of the Company’s Executive Officers;

 

 

Meridian has had direct access to the Chair and members of the Committee between meetings; and

 

 

the Committee has not directed Meridian to perform its services in any particular manner or under any particular method.

To help ensure that the Committee continues to receive independent and objective advice, the Company’s Corporate Governance Guidelines provide that any consultant retained by the Compensation Committee on executive compensation matters should not be retained to provide any other services to the Company. Meridian did not provide any such other services in 2013.

In addition, Meridian has provided the Compensation Committee with information regarding its relationship with MetLife and Meridian’s independence from management. This included information covering factors the Compensation Committee is required under NYSE rules to take into consideration before selecting an advisor. The Compensation Committee did not find that Meridian’s work raised any conflict of interest.

For information about the key factors that the Compensation Committee considers in determining the compensation of the members of the Executive Group, as well as the role of the Chief Executive Officer and the Executive Vice President and Chief Human Resources Officer in setting such compensation, see the Compensation Discussion and Analysis beginning on page 28. Also see the Compensation Discussion and Analysis for information about compensation paid to the persons listed in the Summary Compensation Table on page 44.

 

 

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Compensation Committee Interlocks and Insider Participation. No member of the Compensation Committee has ever been an officer or employee of MetLife or any of its subsidiaries. During 2013, no Executive Officer of MetLife served as a Director or member of the compensation committee (or other committee serving an equivalent function) of any other entity where one of the executive officers is or has been a Director of MetLife or a member of MetLife’s Compensation Committee.

Executive Committee.    The Executive Committee may exercise the powers and authority of the Board of Directors during intervals between meetings of the Board of Directors.

Finance and Risk Committee.    The Finance and Risk Committee oversees the Company’s financial policies and strategies; its capital structure, plans and policies, including capital adequacy, dividend policies and share repurchases; its proposals on certain capital actions and other financial matters; its assessment and management of material risks; and in consultation with the Compensation Committee, the appointment, retention and performance of the Chief Risk Officer. The Finance and Risk Committee has in the past and is likely from time to time in the future to engage external consultants to assess the alignment of the Company’s risk models and practices to industry best practices.

Specifically, the Finance and Risk Committee:

 

 

reviews the Company’s key financial and business metrics;

 

 

reviews and monitors all aspects of the Company’s capital plan, actions and policies (including the guiding principles used to evaluate all proposed capital actions), targets and structure (including the monitoring of capital adequacy and of compliance with the Company’s capital plan);

 

 

consistent with the Company’s capital plan, safety and soundness principles and applicable law, reviews proposals and reports concerning certain capital actions and other financial matters; and

 

 

reviews policies, practices and procedures regarding risk assessment and management.

For further discussion of the Finance and Risk Committee’s responsibilities for oversight of risk management, see “Oversight of Risk Management by the Board of Directors” beginning on page 14.

Governance and Corporate Responsibility Committee.    The Governance and Corporate Responsibility Committee assists the Board of Directors

in identifying individuals qualified to become members of the Company’s Board, consistent with the criteria established by the Board; proposing candidates to be nominated for election as Directors at annual or special meetings of shareholders or to be elected by the Board to fill any vacancies on the Board; developing and recommending to the Board of Directors for adoption corporate governance guidelines applicable to the Company; and reviewing proposed succession plans for the Chief Executive Officer and succession and development plans for the Company’s executive officers, and making recommendations to the Board of Directors with respect to such plans. It also oversees the Company’s compliance responsibilities and activities, including its legislative and regulatory initiatives, sales practices and ethics and compliance programs, as well as the Company’s policies concerning its corporate citizenship programs.

The Governance and Corporate Responsibility Committee also oversees the management and mitigation of risks related to failure to comply with required or appropriate corporate governance standards.

The Governance and Corporate Responsibility Committee also is responsible for reviewing the compensation and benefits of the Company’s non-employee Directors and recommending any changes to the Board. During 2013, Meridian provided the Board with an analysis of the competitiveness of the compensation program for Non-Management Directors, market observations, and relevant compensation trends. The Committee did not make any changes to Non-Management Director compensation in 2013.

A more detailed description of the role and responsibilities of the Governance and Corporate Responsibility Committee is set forth in the Governance and Corporate Responsibility Committee Charter.

Investment Committee of MLIC.    At the request of MetLife, the Investment Committee of MLIC oversees the management of investment assets of MetLife and certain of its subsidiaries and, in connection therewith, reviews reports from the investment officers on (i) the investment activities and performance of the investment portfolio of such companies and submits reports about such activities and performance to MetLife and (ii) the conformity of investment activities with the Investment Committee’s general authorizations, applicable laws, regulations and standards of care.

At the request of MetLife, the Investment Committee of MLIC oversees the management and mitigation of risks associated with the investment portfolios of MetLife and certain of its subsidiaries.

 

 

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Director Compensation in 2013

 

Name

   Fees Earned or
Paid in Cash

($)
     Stock
Awards
($)
     All Other
Compensation
($)
     Total
($)
 

Sylvia Mathews Burwell

   $ 0       $ 0        $ 563          $563   

Kurt M. Campbell

   $ 96,786       $ 96,811        $ 827        $ 194,424   

Cheryl W. Grisé

   $ 180,000       $ 130,014        $ 1,619        $ 311,633   

Carlos M. Gutierrez

   $ 146,429       $ 146,446        $ 1,355        $ 294,230   

R. Glenn Hubbard

   $ 155,000       $ 130,014        $ 6,619        $ 291,633   

John M. Keane

   $ 130,000       $ 130,014        $ 1,619        $ 261,633   

Alfred F. Kelly, Jr.

   $ 155,000       $ 130,014        $ 6,619        $ 291,633   

William E. Kennard

   $ 77,500       $ 77,514        $ 563        $ 155,577   

James M. Kilts

   $ 155,000       $ 130,014        $ 6,619        $ 291,633   

Catherine R. Kinney

   $ 130,000       $ 130,014        $ 4,119        $ 264,133   

Hugh B. Price

   $ 130,000       $ 130,014        $ 18,754        $ 278,768   

David Satcher

   $ 0       $ 0        $ 563        $ 563   

Kenton J. Sicchitano

   $ 155,000       $ 130,014        $ 4,119        $ 289,133   

Lulu C. Wang

   $ 130,000       $ 130,014        $ 1,619        $ 261,633   

The Non-Management Directors included in the 2013 Director Compensation table, and the discussion below pertaining to the table, are limited to those who served as Directors during the year. Ms. Burwell resigned from the Board of Directors prior to the Company’s 2013 Annual Meeting. Dr. Satcher retired from the Board of Directors as of the 2013 Annual Meeting.

Fees Earned or Paid in Cash and Stock Awards.    The Non-Management Directors’ annual retainer fees are reported under “Fees Earned or Paid in Cash” and “Stock Awards” in the Director Compensation table.

After the Company’s 2013 Annual Meeting, each active Non-Management Director was paid an annual retainer of $260,000 in advance for services through the 2014 Annual Meeting. Approximately 50% of the retainer, or $130,014, was paid through the grant of 3,445 Shares at a grant date fair value per share of $37.74, the closing price of a Share on the NYSE on the grant date. Fifty percent was paid in $130,000 cash.

In addition, the Company pays an annual cash retainer fee of $25,000 to each Non-Management Director who serves as Chair of a Board Committee (in 2013, Ms. Grisé, Mr. Kelly, Mr. Kilts, and Mr. Sicchitano) and the Non-Management Director who serves as Chair of the Investment Committee of MLIC (in 2013, Mr. Hubbard). The Company also pays an annual cash retainer of $25,000 to its Lead Director (in 2013, Ms. Grisé).

A Non-Management Director who is appointed to the Board of Directors in the interim period between annual meetings is paid a prorated annual retainer fee, including any Committee Chair or Lead Director fees, in advance (at the time of commencement of service) to reflect the period of such anticipated service. Interim prorated fees were paid in 2013 to the following directors:

 

      Cash      Shares
(#)
     Grant Date
Fair Value
Per Share

($)
     Grant Date  

Kurt M. Campbell

   $ 96,786         1,981       $ 48.87         July 25, 2013   

Carlos M. Gutierrez

   $ 16,429         421       $ 39.03         March 8, 2013   

William E. Kennard

   $ 77,500         1,554       $ 49.88         September 17, 2013   

 

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The MetLife, Inc. 2005 Non-Management Director Stock Compensation Plan (2005 Director Stock Plan), which was approved by the Company’s shareholders in 2004, authorizes the Company to issue Shares in payment of Director retainer fees. The dollar amounts reported under “Stock Awards” represent the grant date fair value of such Share awards as computed for financial statement reporting purposes in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (ASC 718). The grant date fair value represents the number of Shares granted multiplied by the closing price of the Shares on the NYSE on the grant date. Share awards granted to the Non-Management Directors as part of their annual retainer vest and become payable immediately upon their grant. As a result, no Share awards were outstanding for any of the Non-Management Directors as of December 31, 2013. None of the Non-Management Directors had any outstanding and unexercised Stock Options as of December 31, 2013.

A Non-Management Director may defer the receipt of all or part of his or her fees payable in cash or Shares (and any imputed dividends on those Shares) until a later date or until after he or she ceases to serve as a Director. From 2000 to 2004, such deferrals could be made under the terms of the MetLife, Inc. 2000 Directors Stock Plan (2000 Directors Stock Plan) (for share awards) or the MetLife Deferred Compensation Plan for Outside Directors (for cash awards). Since 2005, any such deferrals are made under the terms of the MetLife Non-Management Director Deferred Compensation Plan, which is intended to comply with Internal Revenue Code Section 409A (Section 409A).

All Other Compensation.    The Non-Management Directors’ 2013 benefits, gift programs, and reportable perquisites and other personal benefits are included under “All Other Compensation” in the Director Compensation table.

Life Insurance Programs.    MetLife paid $1,584 in premiums for each Non-Management Director who joined the Board on or after January 1, 2003, and who served the entirety of 2013, to receive $200,000 of group life insurance during 2013. The Company incurred a pro rata portion of that cost to provide coverage to Ms. Burwell (of $528), Mr. Campbell (of $792), Mr. Gutierrez (of $1,320), Mr. Kennard (of $528), and Dr. Satcher (of $528) for the portion of 2013 during which each served as a Director.

Non-Management Directors who joined the Board prior to January 1, 2003 receive $200,000 of individual life insurance coverage under policies then in existence.

Mr. Price is the only Non-Management Director eligible for this program. MetLife paid a program administration fee of $1,538 for Mr. Price’s coverage.

Business Travel Insurance Program.    MetLife provided each Non-Management Director with business travel accident insurance coverage for travel on MetLife business. MetLife’s per Director cost for this coverage in 2013 was $35.

Charitable and Matching Gifts Programs.    The MetLife Foundation provided up to $5,000 in matching contributions for each Non-Management Director’s contributions to colleges and universities in 2013 under a matching gift program for employees and Non-Management Directors. That foundation contributed $5,000 to match contributions made by each of Mr. Hubbard, Mr. Kelly, Mr. Kilts, and Mr. Price in 2013. It also contributed $2,500 to match a contribution made by Ms. Kinney in 2013. In addition, the MetLife Foundation provided a matching contribution of $5,000 for a contribution that Ms. Grisé made in 2012 and $2,500 each for contributions that Ms. Kinney and Mr. Sicchitano made in 2012.

In addition, Mr. Price participates in a charitable gift program for Non-Management Directors elected to the Board of MLIC prior to October 1, 1999. Under that program, Non-Management Directors may recommend one or more charitable or educational institutions to receive, in the aggregate, a $1 million contribution from MLIC in the name of the Director following the Director’s death. The proportionate share of a service fee paid by MLIC in 2013 to administer the program attributable to Mr. Price was $1,316. The premiums for the insurance policies under the program were paid in full prior to 2013.

Perquisites and Other Personal Benefits. The Company paid for personal expenses of certain Non-Management Directors or their guests in connection with Company business conferences or other events in 2013. The Company’s aggregate incremental cost to provide such items with respect to Mr. Price was $10,865. For each other Non-Management Director for whom such expenses were paid, the aggregate amount paid by the Company in 2013 was less than $10,000, and as a result is not reported.

Compensation of Mr. Kandarian.    Mr. Kandarian was compensated as an employee in 2013, and received no compensation in his capacity as a member of the Board of Directors. For information about compensation for Mr. Kandarian in 2013, see the Summary Compensation Table on page 44 and the accompanying discussion.

 

 

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Director Stock Ownership Guidelines; Anti-Hedging Policy; Restrictions on Pledging

Under the stock ownership guidelines established by the Board of Directors, each Non-Management Director is expected to own stock-based holdings equal in value to at least three times the cash component of the Non-Management Director’s annual retainer. Each Non-Management Director is expected to achieve this level of ownership by December 31 of the year in which the third anniversary of his or her election to the Board occurs. As of December 31, 2013, each Non-Management Director who had served beyond the third anniversary of his or her election to the Board had met these guidelines.

Pursuant to the Company’s Insider Trading Policy, Directors may not engage in short sales, hedging, or trading in put and call options with respect to the Company’s securities. Directors’ pledging of Company securities are also subject to restrictions under the Insider Trading Policy, as further discussed in the Compensation Discussion and Analysis beginning on page 28. No serving Director pledged any Company equity securities during 2013.

Director Retirement Policy

The retirement policy adopted by the Board of Directors provides that no Director may stand for election as a Board member after he or she reaches the age of 72, and that a Director may continue to serve until the annual meeting coincident with or immediately following his or her 72nd birthday. In addition, each Director must offer to resign from the Board upon a change or discontinuance of his or her principal occupation or business responsibilities. The Director’s retirement policy is set forth in the Company’s Corporate Governance Guidelines.

Director Indemnity Plan

The Company’s By-Laws provide for the Company to indemnify, and advance expenses to, a person who is threatened with litigation or made a party to a legal proceeding because of the person’s service as a Director of the Company. In addition, the Company’s Director Indemnity Plan affirms that a Director’s rights to this indemnification and expense advancement are contract rights. The indemnity plan also provides for expenses to be advanced to former Directors on the same basis as they are advanced to current Directors. Any amendment or repeal of the rights provided under the indemnity plan would be prospective only and would not affect a Director’s rights with respect to events that have already occurred.

Procedures for Reviewing Related Person Transactions

The Company has established written procedures for the review, approval or ratification of related person transactions. A related person transaction includes certain financial transactions, arrangements or relationships in which the Company is or is proposed to be a participant and in which a Director, Director nominee or Executive Officer of the Company or any of their immediate family members has or will have a material interest. Related person transactions may include:

 

 

Legal, investment banking, consulting or management services provided to the Company by a related person or an entity with which the related person is affiliated;

 

 

Sales, purchases and leases of real property between the Company and a related person or an entity with which the related person is affiliated;

 

 

Material investments by the Company in an entity with which a related person is affiliated;

 

 

Contributions by the Company to a civic or charitable organization for which a related person serves as an executive officer; and

 

 

Indebtedness or guarantees of indebtedness involving the Company and a related person or an entity with which the related person is affiliated.

Under the procedures, Directors, Director nominees and Executive Officers of the Company are required to report related person transactions in writing to the Company. The Governance and Corporate Responsibility Committee reviews, approves or ratifies related person transactions involving Directors, Director nominees and the Chief Executive Officer or any of their immediate family members. A vote of a majority of disinterested Directors of the Governance and Corporate Responsibility Committee is required to approve or ratify a transaction. The Chief Executive Officer reviews, approves or ratifies related person transactions involving Executive Officers of the Company (other than the Chief Executive Officer) or any of their immediate family members. The Chief Executive Officer may refer any such transaction to the Governance and Corporate Responsibility Committee for review, approval or ratification if he believes that such referral would be appropriate.

The Governance and Corporate Responsibility Committee or the Chief Executive Officer will approve a related person transaction if it is fair and reasonable to the Company and consistent with the best interests of the Company, taking into account the business purpose of the transaction, whether the transaction is entered into on an arm’s-length basis on terms fair to the Company,

 

 

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and whether the transaction is consistent with applicable codes of conduct of the Company. If a transaction is not approved or ratified, it may be referred to legal counsel for review and consultation regarding possible further action by the Company. Such action may include terminating the transaction if not yet entered into or, if it is an existing transaction, rescinding the transaction or modifying it in a manner that would allow it to be ratified or approved in accordance with the procedures.

Related Person Transactions

Executive Officers.    A Company affiliate employs a sibling of Maria R. Morris, Executive Vice President and member of the Executive Group for 2013. Ms. Morris’ sibling earned compensation of approximately $227,452 for 2013.

The employee is not an Executive Group member, does not report directly to any member of the Executive Group and does not report indirectly to the Executive Group member to whom the employee is related. The employee participates in compensation and benefit arrangements generally applicable to similarly-situated employees.

Codes of Conduct

Financial Management Code of Professional Conduct.    The Company has adopted the MetLife Financial Management Code of Professional Conduct, a “code of ethics” as defined under the rules of the SEC that applies to the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and all professionals in finance and finance-related departments. A current, printable version of the Financial Management Code of Professional Conduct is available on the Company’s website at www.metlife.com/corporategovernance by selecting Corporate Conduct and then the appropriate link under the heading “Codes of Conduct.”

Directors’ Code of Business Conduct and Ethics and Code of Conduct for MetLife Employees.    The Company has adopted the Directors’ Code of Business Conduct and Ethics, which is applicable to all members of the Company’s Board of Directors including the Chief Executive Officer, and the Code of Conduct, which applies to all employees of the Company and its affiliates, including the Executive Officers of the Company. Current, printable versions of the Directors’ Code and the Code of Conduct for MetLife employees are available on the Company’s website at www.metlife.com/corporategovernance by selecting Corporate Conduct and then the appropriate link under the heading “Codes of Conduct.”

 

 

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Proposal 2 — Ratification of Appointment of the Independent Auditor

 

 

 

The Board of Directors recommends that you vote FOR the ratification of the appointment of Deloitte & Touche LLP as MetLife’s independent auditor for the fiscal year ending December 31, 2014.

 

The Audit Committee has appointed Deloitte & Touche LLP (Deloitte) as the Company’s independent auditor for the fiscal year ending December 31, 2014. Deloitte’s long-term knowledge of MetLife and the MetLife group of companies, combined with its insurance industry expertise and global presence, has enabled it to carry out its audits of the Company’s financial statements with effectiveness and efficiency. The members of the Audit Committee believe that the continued retention of Deloitte to serve as the Company’s independent auditor is in the best interests of the Company and its shareholders.

The appointment of Deloitte by the Audit Committee is being presented to the shareholders for ratification. If the shareholders do not ratify the appointment, the Audit Committee will reconsider its decision and may continue to retain Deloitte. If the shareholders ratify the appointment, the Audit Committee continues to have the authority to and may change such appointment at any time during the year. The Audit Committee will make its determination regarding such retention or change in light of the best interests of MetLife and its shareholders.

In considering Deloitte’s appointment, the Audit Committee reviewed the firm’s qualifications and competencies, including the following factors:

 

 

Deloitte’s status as a registered public accounting firm with the Public Company Accounting Oversight Board (United States) (PCAOB) as required by the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the Rules of the PCAOB;

 

 

Deloitte’s independence and its processes for maintaining its independence;

 

 

the results of the independent review of the firm’s quality control system;

 

 

the global reach of the Deloitte network of member firms and its alignment with MetLife’s worldwide business activities;

 

 

the key members of the engagement team, including the lead audit partner, for the audit of the Company’s financial statements;

 

 

Deloitte’s performance during its engagement for the fiscal year ended December 31, 2013;

 

 

the quality of Deloitte’s communications with the Audit Committee regarding the conduct of the audit,

   

and with management with respect to issues identified in the audit, and the consistency of such communications with applicable auditing standards;

 

 

Deloitte’s approach to resolving significant accounting and auditing matters, including consultation with the firm’s national office; and

 

 

Deloitte’s reputation for integrity and competence in the fields of accounting and auditing.

Deloitte has served as independent auditor of the Company since 1999, and as auditor of affiliates of the Company for more than 75 years. Under current legal requirements, the lead or concurring auditor partner for the Company may not serve in that role for more than five consecutive fiscal years, and the Audit Committee ensures the regular rotation of the audit engagement team partners as required by law. The Chair of the Audit Committee is actively involved in the selection process for the lead and concurring partners.

The Audit Committee approves Deloitte’s audit and non-audit services in advance as required under Sarbanes-Oxley and SEC rules. Before the commencement of each fiscal year, the Audit Committee appoints the independent auditor to perform audit services that the Company expects to be performed for the fiscal year and appoints the auditor to perform audit-related, tax and other permitted non-audit services. The Audit Committee or a designated member of the Audit Committee to whom authority has been delegated may, from time to time, pre-approve additional audit and non-audit services to be performed by the Company’s independent auditor. Any pre-approval of services between Audit Committee meetings must be reported to the full Audit Committee at its next scheduled meeting.

The Audit Committee is responsible for approving fees for the audit and for any audit-related, tax or other permitted non-audit services. If the audit, audit-related, tax and other permitted non-audit fees for a particular period or service exceed the amounts previously approved, the Audit Committee determines whether or not to approve the additional fees.

Representatives of Deloitte will attend the Annual Meeting. They will have an opportunity to make a statement if they desire to do so, and they will be available to respond to appropriate questions.

 

 

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Independent Auditor’s Fees for 2013 and 2012

The table below presents fees for professional services rendered by Deloitte for the audit of the Company’s annual financial statements, audit-related services, tax services and all other services for the years ended December 31, 2013 and 2012. All fees shown in the table were related to services that were approved by the Audit Committee.

The fees that the Company incurs for audit, audit-related, tax and other professional services reflect the complexity and scope of the Company’s operations, including:

 

 

operations of the Company’s subsidiaries in multiple, global jurisdictions (approximately 40 during 2013);

 

 

the complex, often overlapping regulations to which the Company and its subsidiaries are subject in each of those jurisdictions;

 

 

the operating insurance companies’ responsibility for preparing audited financial statements; and

 

 

the applicability of SEC reporting requirements to several of the Company’s operating insurance subsidiaries, which are SEC registrants.

 

         2013              2012      
     ($ in millions)  

Audit Fees(1)

   $ 70.2       $ 71.0   

Audit-Related Fees(2)

   $ 8.1       $ 6.0   

Tax Fees(3)

   $ 4.3       $ 5.7   

All Other Fees(4)

   $ 0.8       $ 3.1   

 

(1)

Fees for services to perform an audit or review in accordance with auditing standards of the PCAOB and services that generally only the Company’s independent auditor can reasonably provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC. In 2013, Deloitte issued over 300 audit reports.

 

(2)

Fees for assurance and related services that are traditionally performed by the Company’s independent auditor, such as audit and related services for employee benefit plan audits, due diligence related to mergers, acquisitions and divestitures, accounting consultations and audits in connection with proposed or consummated acquisitions and divestitures, control reviews, attest services not required by statute or regulation, and consultation concerning financial accounting and reporting standards.

 

(3)

Fees for tax compliance, consultation and planning services. Tax compliance generally involves preparation of original and amended tax returns, claims for refunds and tax payment planning services. Tax consultation and tax planning encompass a diverse range of advisory services, including assistance in connection with tax audits and filing appeals, tax advice related to mergers, acquisitions and divestitures, advice related to employee benefit plans and requests for rulings or technical advice from taxing authorities. In 2013, tax compliance and tax preparation fees total $2.9 million and tax advisory fees total $1.4 million and in 2012, tax compliance and preparation fees total $2.7 million and tax advisory fees total $3.0 million.

 

(4)

Fees for other types of permitted services, including employee benefit advisory services, risk consulting services, financial advisory services and valuation services.

 

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Audit Committee Report

 

 

 

This report is submitted by the Audit Committee of the MetLife, Inc. (MetLife or the Company) Board of Directors. No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the Securities Act), or the Securities Exchange Act of 1934, as amended (the Exchange Act), through any general statement incorporating by reference in its entirety the proxy statement in which this Report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be “soliciting material” or to be “filed” under either the Securities Act or the Exchange Act.

The Audit Committee currently consists of six independent Directors who satisfy the audit committee independence standards of the SEC and the NYSE. The Audit Committee, on behalf of the Board, is responsible for overseeing management’s conduct of MetLife’s financial reporting processes and audits of the Company’s financial statements, the adequacy of the Company’s internal control over financial reporting and the appointment, retention, performance and compensation of the Company’s independent auditor. For more information on the Audit Committee and its qualifications and responsibilities, see “Corporate Governance — Board and Committee Information — Oversight of Risk Management by the Board of Directors” beginning on page 14, “Corporate Governance — Board and Committee Information — Audit Committee” on page 16, and the Audit Committee Charter on the Company’s website at www.metlife.com/corporategovernance.

Management is responsible for the preparation of MetLife’s consolidated financial statements and the reporting process. Deloitte & Touche LLP (Deloitte), as MetLife’s independent auditor, is responsible for auditing MetLife’s consolidated financial statements in accordance with auditing standards of the Public Company Accounting Oversight Board (United States) (PCAOB).

Deloitte has discussed with the Audit Committee those matters described in the PCAOB Standard, Communications with Audit Committees (AU 380), Statement on Auditing Standards No. 114, and Rule 2-07 of Regulation S-X promulgated by the Securities and Exchange Commission. Deloitte has also provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding Deloitte’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Deloitte its independence from MetLife.

During 2013, management updated its internal control documentation for changes in internal control and

completed its testing and evaluation of MetLife’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received updates provided by management and Deloitte at each regularly scheduled Audit Committee meeting and met in executive session separately with the internal and the independent auditor to discuss the results of their examinations, observations and recommendations regarding internal control over financial reporting. The Audit Committee also reviewed the report of management’s assessment of the effectiveness of internal control over financial reporting contained in the Company’s 2013 Annual Report on Form 10-K, which has been filed with the Securities and Exchange Commission (the 2013 Form 10-K). The Audit Committee also reviewed Deloitte’s report regarding its audit of the effectiveness of the Company’s internal control over financial reporting.

The Audit Committee reviewed and discussed with management and with Deloitte MetLife’s audited consolidated financial statements for the year ended December 31, 2013 and Deloitte’s Report of Independent Registered Public Accounting Firm dated February 26, 2014 regarding the 2013 audited consolidated financial statements included in the 2013 Form 10-K. The Deloitte report states that MetLife’s 2013 audited consolidated financial statements present fairly, in all material respects, the consolidated financial position of MetLife and its subsidiaries as of December 31, 2013 and 2012 and the results of their operations and cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. In reliance upon the reviews and discussions with management and Deloitte described in this Audit Committee Report, and the Board of Directors’ receipt of the Deloitte report, the Audit Committee recommended to the Board that MetLife’s 2013 audited consolidated financial statements be included in the 2013 Form 10-K.

Respectfully,

Kenton J. Sicchitano, Chair

Cheryl W. Grisé

John M. Keane

Alfred F. Kelly, Jr.

Catherine R. Kinney

Hugh B. Price

 

 

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Proposal 3 — Advisory Vote to Approve the Compensation

Paid to the Company’s Named Executive Officers

 

 

 

The Board of Directors recommends that you vote FOR this proposal: “RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

 

In accordance with Section 14A of the Exchange Act, this proposal will give shareholders the opportunity to endorse or not endorse the Company’s executive compensation programs and policies and the resulting compensation for the individuals listed in the Summary Compensation Table on page 44 (the Named Executive Officers), as described in this Proxy Statement.

The Compensation Committee will take into account the outcome of the vote when considering future compensation arrangements. However, because the vote is advisory, the result will not be binding on the Compensation Committee and it will not affect, limit, or augment any existing compensation or awards.

The Board has approved an annual frequency for shareholder votes to approve executive officer compensation. As a result, unless the Board determines otherwise, the next such vote will be held at the Company’s 2015 Annual Meeting. The Company also anticipates that, unless the Board determines otherwise, management will next ask shareholders in 2017 to vote on their preference for the frequency of such votes.

The following design features are key to the program’s success and promotion of shareholders’ interests:

 

 

paying for performance: most compensation is variable and dependent on achievement of business results.

 

 

aligning executives’ interests with those of shareholders: most incentive compensation is stock-based, and executives are expected to meet stock ownership guidelines.

 

 

encouraging long-term decision-making: Stock Options and Restricted Stock Units vest over three years, Stock Options may normally be exercised over 10 years, and the ultimate value of Performance Shares is determined by the Company’s performance over three years.

 

 

rewarding achievement of the Company’s business goals: amounts available for annual incentive awards are based on Company performance compared to its Business Plan; individual awards take account of individual executive performance relative to individual goals.

 

 

avoiding incentives to take excessive risk: the Company does not make formulaic awards as part of its normal program; uses Operating Earnings (which excludes net investment gains and losses and net derivative gains and losses) as a key performance indicator; and uses multiple-year performance to determine the ultimate value of stock-based awards.

At the same time, the Company’s executive compensation program excludes practices that would be contrary to the Company’s compensation philosophy and contrary to shareholders’ interests. For example, the Company’s executive compensation program:

 

 

does not offer a supplemental executive retirement plan that provides benefits under a different formula than the pension plan applicable to most U.S.-based employees, or that adds years of service or includes long-term incentive compensation in the benefits formula.

 

 

does not provide excessive perquisites.

 

 

does not allow repricing or replacing of Stock Options or stock appreciation rights without prior shareholder approval.

 

 

does not provide any “single trigger” change-in-control severance pay or any severance pay beyond two times average pay.

 

 

does not provide for “single trigger” vesting of stock-based awards upon a change-in-control without the opportunity for the Company or a successor to substitute alternative awards that remain subject to vesting.

 

 

does not provide for any excise tax payment or tax gross-up for change-in-control related payments, or for tax gross-up for any perquisites or benefits, other than in connection with relocation or other transitionary arrangements when an Executive Group member begins employment.

 

 

does not allow executives, or other associates, to engage in short sales, hedging, or trading in put and call options with respect to the Company’s securities.

 

 

restricts directors and employees, including executives, in how they may pledge MetLife securities.

The Company’s 2013 performance included increases from 2012 in the key financial measures of Operating Earnings (up 11%), Operating Earnings Per Share (up 7%), and Operating Return on Equity (up 70 basis points). These results also exceeded applicable 2013 Business Plan goals. The Compensation of the Named Executive Officers reflects these accomplishments as well as their individual accomplishments.

The Compensation Committee and Board of Directors believe that the Company’s compensation programs and policies, and the compensation of the Named Executive Officers, promote the Company’s business objectives with appropriate compensation delivered in appropriate forms. Accordingly, the Board of Directors recommends that you vote FOR this proposal.

 

 

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Compensation Committee Report

 

 

This report is furnished by the Compensation Committee of the MetLife, Inc. (MetLife or the Company) Board of Directors. The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis that is set forth on pages 28 through 43 of the Company’s 2014 Proxy Statement and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that such Compensation Discussion and Analysis be included in the 2014 Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

 

No portion of this Compensation Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the Securities Act), or the Securities Exchange Act of 1934, as amended (the Exchange Act), through any general statement incorporating by reference in its entirety the proxy statement in which this Report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be “soliciting material” or to be “filed” under either the Securities Act or the Exchange Act.

 

 

Respectfully,

James M. Kilts, Chair

Cheryl W. Grisé

Alfred F. Kelly, Jr.

Denise M. Morrison

Hugh B. Price

Kenton J. Sicchitano

 

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Compensation Discussion and Analysis

 

 

 

This Compensation Discussion and Analysis describes the objectives and policies underlying MetLife’s executive compensation program. It also describes key factors that the Compensation Committee considered in determining the compensation of the members of the Executive Group. The Executive Group includes the Named Executive Officers as well as the other Executive Officers of the Company. References to the Company’s “executive compensation” programs and policies refer to those that apply to the Executive Group.

Shareholders have the opportunity, at the 2014 Annual Meeting, to vote to endorse or not endorse the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to the SEC’s compensation disclosure rules, including this Compensation Discussion and Analysis and the compensation tables and narrative discussion. The Compensation Committee and the Board of Directors believe that this Compensation Discussion and Analysis, and the compensation tables and narrative discussion that follow, support their recommendation to approve that shareholder advisory resolution.

 

 

Executive Summary and Overview

Highlights of 2013 Business Results.    In 2013, under the leadership of Chief Executive Officer Steven A. Kandarian, the Company generated results that exceeded both Business Plan goals and 2012 results.

 

LOGO

 

(1)

The Company’s 2013 earnings per Share and return on equity goals were set in anticipation of the dilution of the Company’s equity that was to take place in 2013, when the holders of common equity units fulfilled their contractual obligation to buy Shares. Those purchases ultimately diluted the Company’s equity by increasing the number of Shares outstanding by almost 23 million.

 

2013 Say-on-Pay Vote and Shareholder Engagement. In 2013, the Company’s shareholders were given the opportunity to vote to approve or disapprove of the Company’s executive compensation programs and policies and the resulting compensation described in the 2013 Proxy Statement. Shareholders voted almost 93% of their Shares in approval of the Company’s actions (based on Shares voted). Because the vote was advisory, the result was not binding on the Compensation Committee. However, the Compensation Committee considered the vote to be an endorsement of the Company’s executive compensation programs and policies, and took into account the outcome of the vote in reviewing those programs and policies. The Company has also discussed the vote, along with aspects of its executive compensation and corporate governance practices, with a number of shareholders to gain a deeper understanding of their perspectives.

2013 Compensation Highlights.    MetLife maintained its commitment to its pay for performance philosophy, and

continued to emphasize variable performance-based compensation over fixed or guaranteed pay. The Company’s Chief Executive Officer was paid 92% of his Total Compensation for 2013 performance in a form that was variable rather than fixed. The Chief Executive Officer’s long-term stock-based incentive compensation was 64% of his total incentive compensation for 2013, based on MetLife’s compensation valuation methodology. The Compensation Committee allocated 85% of all other Executive Group members’ Total Compensation for 2013 to a variable form, and 59% of all their incentive compensation to stock-based long-term awards. For this purpose, Performance Shares, Performance Units, Restricted Stock Units, and Restricted Units were valued on the same basis as the valuation used for compensation planning purposes, using recently-prevailing Share prices as of the grant date. Stock Options were valued at one-third of that price valuation.

Given this mix of pay and other features of MetLife’s compensation programs, Executive Group members’ interests are aligned with those of shareholders. Much of

 

 

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the value of their compensation depends on the value of Shares. Further, the Company’s Share ownership guidelines are designed to align executives’ interests with those of shareholders and reinforce the focus on long-term shareholder value.

The Company determined the total amount of 2013 annual incentive compensation to management and other administrative employees in light of its Operating Earnings (excluding variable investment income in excess of 10% higher than target) compared to its Business Plan goal. For 2013, the Company exceeded its Business Plan goal by 8.5%, producing an above-target performance factor for annual incentive compensation.

The Company’s long-term performance, including changes to the price of Shares, has a significant impact on the Named Executive Officers’ compensation. For example, the performance factor for the 2010-2012 Performance Shares (paid out in 2013) was 92%, based on the Company’s three-calendar year performance relative to competition.

Risk Management.    MetLife’s compensation program aligns with Company strategies and has a number of features that contribute to prudent decision making and avoid providing executives with an incentive to take excessive risks. One important feature of Metlife’s program is its use of Operating Earnings as a metric in incentive programs. Operating Earnings excludes net investment gains and losses and net derivative gains and losses. This removes incentives to take excessive risk by removing incentives not to hedge exposures to various risks inherent in a number of products, incentives to use derivatives for speculative purposes, and incentives to disrupt the risk balance in MetLife’s investment portfolio by harvesting capital gains for the sole purpose of enhancing incentive compensation. In addition, the Company uses three-year overlapping performance periods and vesting for long-term incentive compensation, so that time horizons for compensation reflect the extended time horizons for the results of many business decisions.

Management has reviewed the employee incentive compensation programs to ensure that, in design and operation and taking into account all of the risk management processes in place, they do not encourage excessive risk taking. In doing so, it followed principles provided by the Company’s Chief Risk Officer regarding performance measures, performance periods, payment determination processes, management controls, and other aspects of the arrangements. As a result of this review and his own assessment of the programs, the Company’s Chief Risk Officer has concluded that risks arising from the compensation policies and practices for employees of the

Company and its affiliates are not reasonably likely to have a material adverse effect on the Company as a whole, in light of the features of those policies and practices and the controls in place to limit and manage risk. The Chief Risk Officer discussed aspects of his analysis with the Compensation Committee in 2013.

Compensation Philosophy and Objectives

MetLife’s executive compensation program is designed to:

 

 

provide competitive Total Compensation opportunities that will attract, retain and motivate high-performing executives;

 

 

align the Company’s compensation plans with its short- and long-term business strategies;

 

 

align the financial interests of the Company’s executives with those of its shareholders through stock-based incentives and stock ownership requirements; and

 

 

reinforce the Company’s pay for performance culture by making a significant portion of Total Compensation variable, and differentiating awards based on Company and individual performance.

Overview of Compensation Program

MetLife uses a competitive total compensation structure that consists of base salary, annual incentive awards and stock-based long-term incentive award opportunities. For purposes of this discussion and MetLife’s compensation program, Total Compensation for an Executive Group member means the total of those three elements. Items such as sign-on payments (discussed on page 42) and others that are not determined under the Company’s general executive compensation practices are approved by the Compensation Committee, but are generally not included in descriptions of Total Compensation.

The Compensation Committee recommends Total Compensation amounts for the Company’s Chief Executive Officer for approval by the Independent Directors, and Total Compensation amounts for each of the other Executive Group members for approval by the Board of Directors. When determining an Executive Group member’s Total Compensation, the Compensation Committee considers the three elements of Total Compensation together. As a result, decisions on the award or payment amount of one element impact the decisions on the amount of other elements. The Compensation Committee allocates a greater portion of the Executive Group members’ Total Compensation to variable components that depend on performance or the value of Shares rather than fixed components. It also allocates a greater portion of the Executive Group

 

 

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members’ variable compensation to stock-based long-term incentives than it allocates to annual cash incentives. For specific allocations for 2013 performance, see “Executive Pay for Performance” on page 4.

Each Executive Group member’s Total Compensation reflects the Compensation Committee’s assessment of the Company’s and the executive’s performance as well as competitive market data based on peer compensation comparisons. However, the Compensation Committee does not structure particular elements of compensation to relate to separate individual goals or performance.

The Compensation Committee also reviews other compensation and benefit programs, such as retirement benefits and potential payments that would be made if an Executive Group member’s employment were to end. Benefits such as retirement and medical programs do not impact Total Compensation decisions since they apply to substantially all employees. As a result, decisions about

those benefits do not vary based on decisions about an Executive Group member’s base salary or annual or stock-based awards.

The Compensation Committee’s independent executive compensation consultant, Meridian, assisted the Committee in its design and review of the Company’s compensation program. For more information on the role of Meridian regarding the Company’s executive compensation program, see “Corporate Governance —Board and Committee Information — Compensation Committee” beginning on page 16.

Generally, the forms of compensation and benefits provided to Executive Group members in the United States are similar to those provided to other U.S.-based officer-level employees. None of the Executive Group members based in the United States is a party to any agreement with the Company that governs the executive’s employment.

 

Peer Compensation Comparisons

The Compensation Committee periodically reviews the competitiveness of MetLife’s Total Compensation structure using data reflecting a comparator group of companies in the insurance and broader financial services industries with which MetLife competes for executive talent (the Comparator Group).

 

 

 
COMPARATOR GROUP
   

AEGON N.V.

Aflac Incorporated

The Allstate Corporation

American Express Company

AXA Financial, Inc.

Bank of America Corporation

Citigroup Inc.

The Hartford Financial Services Group, Inc.

HSBC Holdings plc

 

ING Groep N.V.

JPMorgan Chase & Co.

Manulife Financial Corporation

Morgan Stanley

Prudential Financial, Inc.

Sun Life Financial Inc.

The Travelers Companies, Inc.

U.S. Bancorp

Wells Fargo & Company

 

 

 

The Committee chose the members of the group based on the size of the firms relative to MetLife and the extent of their global presence, or their similarity to MetLife in the importance of investment and risk management to their business, or both. It reviews the composition of the Comparator Group from time to time to ensure that the group remains an appropriate comparison for the Company. The Compensation Committee last changed the group in 2012 in order to better reflect the Company’s competitors for executive talent and MetLife’s size, global scope and complexity. The resulting Comparator Group consists of the 18 financial services companies listed under “Comparator Group” above. In terms of its size, MetLife was between the 50th and 75th percentile of the Comparator Group as a whole in each of assets (as of 2012

year-end), revenue (for 2012), and market capitalization (as of 2013 year-end).

In determining the Executive Group member’s Total Compensation for 2013, the Compensation Committee considered the increasingly global nature of the Company’s business, the size of the Company’s assets, revenue, and market capitalization relative to its peers, the challenges the Executive Group faces, and the Committee’s expectations for the Company’s performance. MetLife’s competitive compensation philosophy is generally to provide Total Compensation around the size-adjusted median for like positions at Comparator Group companies, taking into account MetLife’s assets, revenue, and market capitalization

 

 

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relative to other companies in the Comparator Group. As a result, the Compensation Committee considered an Executive Group member’s Total Compensation to be competitive if it fell within a reasonable range of that size-adjusted median. However, Total Compensation for individual Executive Group members may vary based on individual factors such as experience, contributions to performance, and performance results. The Compensation Committee’s primary focus was on Total Compensation. It did, however, review individual elements of the executives’ Total Compensation in comparison to available Comparator Group data. For 2013 performance, each Named Executive Officer’s Total Compensation fell between 80% and 120% of the point representing the size-adjusted median for his position.

Setting Total Compensation for 2013 Performance

Chief Executive Officer Compensation.    Early in 2013, Mr. Kandarian and the Compensation Committee established goals and objectives that were designed to drive Company performance. For a description of these goals, see “Annual Incentive Awards” beginning on page 33.

In early 2014, the Compensation Committee approved and recommended Mr. Kandarian’s Total Compensation for 2013, including annual and stock-based long-term incentives, to the Independent Directors for their approval. The Committee’s Total Compensation recommendations for 2013 reflected its assessment of a number of factors.

 

 

Strong operational performance. MetLife’s performance in Operating Earnings, Operating Earnings Per Share (Operating EPS), and Operating Return on Equity (Operating ROE) exceeded both 2012 performance and 2013 Business Plan goals.

 

 

Strategic accomplishments. MetLife made substantial progress in implementing the strategy it devised in 2012. It achieved results in voluntary/worksite benefits and sponsored direct business in excess of its goal, and successfully kept variable annuity sales below the limit in its goal. MetLife also realized gross cash savings from its scale and simplicity initiative above its goal.

 

 

Talent development. MetLife improved its performance development to enhance talent retention, completed leadership summit training for officers, and increased its management bench strength.

 

 

External stakeholder engagement. MetLife continued to advance its thought leadership on policy and regulation affecting its business, including on the key

   

issue of the applicability and terms of systemically important financial institution regulation.

Compensation of Other Executive Group Members.    Early in 2013, Mr. Kandarian and each Executive Group member agreed on the respective executive’s goals for 2013. Similarly, Mr. Kandarian discussed goals and objectives with Executive Group members newly appointed to their roles in 2013 in connection with their appointments.

In early 2014, Mr. Kandarian provided to the Compensation Committee an assessment of the other Executive Group members’ performance during 2013 relative to their goals and the additional business challenges and opportunities that arose during the year. He also recommended to the Committee Total Compensation amounts for each Executive Group member, taking into account performance during the year as well as available competitive data and compensation opportunities for each position. The Committee reviewed these recommendations. It approved and endorsed the components of each Executive Group member’s Total Compensation for the Board of Directors’ approval.

The Executive Vice President and Chief Human Resources Officer of the Company provided the Compensation Committee with advice and recommendations on the form and overall level of executive compensation, and provided guidance and information to Mr. Kandarian to assist him in making recommendations to the Compensation Committee of Total Compensation amounts for each Executive Group member, other than himself. He also provided guidance to the Committee on the Committee’s general administration of the programs and plans in which Executive Group members, as well as other employees, participate.

Other than as described above, no Executive Group member played a role in determining the compensation of any of the other Executive Group members. No Executive Group member took part in the Board’s consideration of his or her own compensation.

Mr. Kandarian’s compensation is higher than other Executive Group members due to Mr. Kandarian’s broader responsibilities and higher levels of accountability as the most senior executive in the Company, as well as competitive market data.

 

 

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Components of Compensation and Benefits

The primary components of the Company’s regular executive compensation and benefits program play various strategic roles:

 

    

Description

 

  

Strategic Role

LOGO   

 

Base Salary is determined based on position, scope of responsibilities, individual performance, and competitive data.

 

  

 

Provides compensation for services during the year.

  

 

Annual Incentive Awards:

 

•  Amount of awards is variable based on performance relative to Company and individual goals and additional business challenges or opportunities that arose during the year that were not reflected in previously established goals.

 

•  The Compensation Committee determines awards using its judgment of all of these factors as a whole, and not by using a formula.

 

  

 

•  Serve as the primary compensation vehicle for recognizing and differentiating individual performance each year.

 

•  Motivate Executive Group members and other employees to achieve strong annual business results that will contribute to the Company’s long-term success, without creating an incentive to take excessive risk.

  

 

Stock-Based Long-Term Incentive Awards:

 

•  Awards are based on discretionary assessment of individual level of responsibility, performance, relative contribution, and potential for assuming increased responsibilities and future contributions.

 

•  Ultimate payout for awards depends exclusively on the value of Shares (Restricted Stock Units), increases in the price of Shares (Stock Options), or a combination of MetLife’s performance as well as the value of Shares (Performance Shares).

 

•  For awards to Executive Group members made as part of Total Compensation for 2013 performance and in expectation of contributions to future performance:

 

¡     Stock Options were 25% of Stock-Based Long-Term Incentive Awards to Executive Group members.

 

¡     Restricted Stock Units were 25% of such awards.

 

¡     Performance Shares were 50% of such awards.

 

Awards (including their cash-paid equivalents) are valued for this purpose using recently-prevailing Share prices as of the grant date, with Stock Options valued at one-third of that price valuation.

 

  

 

•  Ensure that Executive Group members have a significant continuing stake in the long-term financial success of the Company (see “Share Ownership” on page 39).

 

•  Align executives’ interests with those of shareholders; awards also encourage decisions and reward performance that contribute to the long-term growth of the Company’s business and enhance shareholder value.

 

•  Motivate Executive Group members to outperform MetLife’s competition.

 

•  Encourage executives to remain with MetLife.

LOGO   

 

Retirement Program and Other Benefits include post-retirement income (pension) or the opportunity to save a portion of current compensation for retirement and other future needs (savings and investment program and nonqualified deferred compensation).

 

  

 

Attract and retain executives and other employees.

 

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Description

  

Strategic Role

LOGO   

 

Severance Pay and Related Benefits include transition assistance if employment ends due to job elimination or, in limited circumstances, performance.

 

  

 

Encourage focus on transition to other opportunities and allow the Company to obtain a release of employment-related claims.

  

 

Change-in-Control Benefits:

 

• Terms include replacement or vesting of stock-based long-term incentive awards.

 

• Severance and related benefits are also paid if the Executive Group member’s employment is terminated without cause or the Executive Group member resigns with good reason following a change-in-control.

  

 

• Retain Executive Group members through a change-in-control and allow executives to act in the best interests of shareholders without distractions due to concerns over personal circumstances.

 

• Promote the unbiased and disinterested efforts of the Executive Group members to maximize shareholder value during and after a change-in-control.

 

• Keep executives whole in situations where Shares may no longer exist or awards otherwise cannot or will not be replaced.

 

 

The primary components of the Company’s executive compensation and benefits program are further discussed below.

Base Salary

The base salaries earned by the Named Executive Officers in 2013 are reported in the Summary Compensation Table on page 44. The Compensation Committee approved base salary increases for Mr. Kandarian of $150,000 and Mr. Lippert of $25,000 effective April 1, 2013. The increases were approved in light of their levels of responsibility, their performance, and the competitive market.

Annual Incentive Awards

The MetLife Annual Variable Incentive Plan (AVIP) provides eligible employees, including the Executive Group members, the opportunity to earn annual cash incentive awards. AVIP is administered as a Cash-Based Awards program under the MetLife, Inc. 2005 Stock and Incentive Compensation Plan (2005 Stock and Incentive Plan). The 2013 AVIP awards are reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 44.

Section 162(m) of the United States Internal Revenue Code (Section 162(m)) limits the deductibility of compensation paid to certain executives, but exempts certain “performance-based” compensation from those limits. For 2013, the Compensation Committee established limits and performance goals in order for AVIP awards to the Company’s Executive Group

members to be eligible for this exemption. As part of the Section 162(m) goal-setting process for 2013, the Committee set the maximum amount that any Executive Group member could be paid as $10 million. See “Non-Equity Incentive Plan Awards” on page 51 for more information about the individual maximums set for 2013 AVIP awards.

Determining the Amount Available for Awards.    Each year, the Compensation Committee approves the maximum aggregate amount available for AVIP awards to all covered employees. For 2013, this method was used globally for the annual incentive compensation of substantially all administrative (non-sales) employees around the world, applicable to approximately 33,000 employees.

Early in 2013, the Compensation Committee determined that the amount available for 2013 would be based on an AVIP Performance Factor multiplied by the total annual incentive compensation planning targets for all covered employees. The Compensation Committee determined that the AVIP Performance Factor for 2013 would be based on the Company’s Operating Earnings compared to the Company’s 2013 Business Plan, subject to the Compensation Committee’s discretionary assessment of overall performance and other relevant factors. As in past years, for this purpose, Operating Earnings would be adjusted to eliminate the impact of variable investment income on an after-tax basis that was higher than the Business Plan goal by 10% or lower than the Business Plan goal by 10%.

The Compensation Committee also determined that the threshold performance for the AVIP Performance Factor would be increased for 2013 from 40% of the Business

 

 

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Plan goal to 50%. The Compensation Committee did this to increase the level of performance required for the minimum amount to be made available for annual incentive compensation.

In addition, the Compensation Committee modified the AVIP Performance Factor formula to provide more upside and downside sensitivity to over- or under-performance in Operating Earnings relative to the Business Plan goal. For each 1% deviation in Operating Earnings within 3% above or below Business Plan, the AVIP Performance Factor would move 1% (up or down). However, for each 1% deviation outside of that 3% corridor, the Performance Factor would move 2.5% up or down, to a minimum funding level of 50% or maximum funding level of 150%.

In prior years, the AVIP Performance Factor formula included a potential increase if the Company exceeded its Business Plan goal for Operating ROE. An Operating ROE measure was added to the Performance Share and Performance Unit programs for the 2013-2015 performance period. As a result, the Compensation Committee eliminated that

element of the formula from AVIP for 2013 in order to avoid duplication. As a result, the maximum AVIP Performance Factor, which had been 165% in prior years, decreased to 150% for 2013.

This formula avoids providing employees with an incentive to take excessive risk through several of its features. Operating Earnings excludes net investment gains and losses and net derivative gains and losses. In addition, the impact of after-tax variable investment income is limited to no more than a 10% variation from the Business Plan. As a result, the formula does not provide an incentive to take excessive risk in the Company’s investment portfolio. Nor is the formula an unlimited function of revenues. Rather, the formula caps the amount that can be generated for AVIP awards, and is a function of financial measures that account for the Company’s costs and liabilities.

The Company’s adjusted Operating Earnings produced the AVIP Performance Factor and resulting amount available for all AVIP and annual incentive compensation awards shown below.

 

 

($ in millions)

  

Calculation of 2013 AVIP Performance Factor and Total Amount Available for Awards

  

Operating Earnings

   $ 6,340 (1) 

Less excess or shortfall of variable investment income, to the extent more than 10% higher or lower than the Business Plan target

   $ (147
  

 

 

 

Result is adjusted Operating Earnings

   $ 6,193   

Business Plan Operating Earnings Goal

   $ 5,710   

Adjusted Operating Earnings as a percentage of Business Plan Operating Earnings goal

     108.5

Performance Factor component attributable to meeting Business Plan goal results in 100% Performance Factor

     100

Performance Factor component attributable to first 3% of performance over Business Plan goal; each 1% over goal adds 1% to Performance Factor

     3

Performance Factor component attributable to performance of 5.5% over 3% over Business Plan goal; each 1% adds 2.5% to Performance Factor (5.5% X 2.5 rounded to nearest tenth)

     13.8
  

 

 

 

Total is AVIP Performance Factor

     116.8

Total target-performance planning amount of all employees’ AVIP (the AVIP Planning Target)

   $ 494   

Total amount available for all AVIP equals AVIP Performance Factor times AVIP Planning Target

   $ 577   

 

(1)

The amount of the Company’s Operating Earnings that was used to determine the AVIP Performance Factor for 2013 excluded $48 million in Operating Earnings from Administradora de Fondos de Pensiones Provida S.A. (ProVida), a private pension fund administration business in Chile and other countries. The Company acquired ProVida during 2013, and as a result that business had not been included in the 2013 Business Plan.

 

    

The amount of Operating Earnings used for this purpose also excluded a charge of $101 million recorded in the fourth quarter to increase the Company’s reserves for asbestos litigation. The Compensation Committee chose to exercise its discretion to exclude this charge because it relates to alleged activities in the 1920’s through the 1950’s and does not relate to the Company’s current operations or the consequences of any current management decisions. Rather, this charge reflects the fact that the frequency of severe claims relating to asbestos has not declined as the Company expected. It was the first such charge taken since 2002.

 

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MLIC is named as a defendant in asbestos litigation. MLIC has never engaged in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. Nor has MLIC issued liability or workers’ compensation insurance to companies in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. The lawsuits principally have focused on allegations with respect to certain research, publication and other activities during the period from the 1920’s through approximately the 1950’s and allege that MLIC learned or should have learned of certain health risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. MLIC believes that it should not have legal liability in these cases. The outcome of most asbestos litigation matters, however, is uncertain.

Performance Goals and Results.    The Compensation Committee determined the Executive Group members’ 2013 AVIP awards in consideration of the Company’s key financial performance goals and results. The Committee also considered aspects of each executive’s performance in light of their objectives, which aligned with the Company’s strategic goals.

Company Financial Performance Goals and Results.    The Executive Group members’ key shared financial performance goals for 2013 are below, each as set forth in the Business Plan. Under the leadership of Mr. Kandarian and the Executive Group, the Company achieved the results in 2013 compared below to its 2013 Business Plan and its 2012 results and Business Plan:

 

     2013     2013
Business Plan
    2012     2012
Business Plan
 

Operating Earnings ($ in millions)

   $ 6,287      $ 5,710      $ 5,686      $ 5,200   

Operating EPS

   $ 5.63      $ 5.13      $ 5.28      $ 4.86   

Operating ROE

     12.0     10.7     11.3     10.0

Operating Expense Ratio

     24.3     24.0     23.8     24.4

Book Value Per Share

   $ 48.49      $ 50.17      $ 46.73      $ 49.83   

These performance measures should be read in conjunction with Appendix A to this Proxy Statement, which includes definitions of these terms and, where applicable, reconciliations to the most directly comparable measures that are based on GAAP. For Book Value Per Share, which excludes accumulated other comprehensive income (loss) (AOCI), the most directly comparable GAAP measure is book value per common share, which excludes AOCI. For Operating Earnings, the most directly comparable GAAP measure is net income (loss) available to MetLife’s common shareholders. For Operating EPS, the most directly comparable GAAP measure is net income (loss) available to MetLife’s common shareholders per diluted common share. For Operating ROE, the most directly comparable GAAP measure is return on MetLife’s common equity excluding AOCI.

The Company’s 2013 earnings per Share and return on equity goals were set in anticipation of the dilution of the Company’s equity that was to take place in 2013, when the holders of common equity units fulfilled their contractual obligation to buy Shares. Those purchases ultimately diluted the Company’s equity by increasing the number of Shares outstanding by almost 23 million.

The Company did not successfully keep its Operating Expense Ratio below the 2013 Business Plan goal due to the charge recorded in the fourth quarter to increase the Company’s reserves for asbestos litigation (further discussed above) and other litigation related items. Excluding those items, the Company would have successfully kept its Operating Expense ratio below the 2013 Business Plan goal.

Book Value Per Share was below the 2013 Business Plan goal due in part to derivative losses. The Company uses derivatives to hedge certain risks, such as movements in interest rates and foreign currencies. The derivatives gains or losses generated by this hedging activity create fluctuations in net income and Book Value Per Share because the derivatives may not have the same GAAP accounting treatment as the risks they are hedging.

 

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Aspects of Individual Performance. Key aspects of each of the Named Executive Officers’ performance relative to their objectives are described below.

Steven A. Kandarian, Chief Executive Officer

 

 

Under Mr. Kandarian’s leadership, the Company maintained capital ratios in excess of capital adequacy ratio targets in areas such as risk-based capital, tier one capital, and Japan solvency margin.

 

 

Mr. Kandarian led MetLife’s successful efforts to execute against its strategic initiatives in Operating Earnings from emerging markets, voluntary/worksite benefits and sponsored direct business sales, and reductions in variable annuity sales, in each case exceeding the Company’s Business Plan targets. Under Mr. Kandarian’s leadership, MetLife also produced favorable results in bancassurance and direct marketing sales from emerging markets.

 

 

Mr. Kandarian led MetLife to build its Global Employee Benefits business, drive toward customer centricity and a global brand, strengthen the Company’s global leadership and enhance its global talent management framework. The Company achieved savings from its scale and simplicity and location planning initiatives above Business Plan goals.

 

 

Mr. Kandarian also engaged external stakeholders and led MetLife to advance its thought leadership on policy and regulatory issues affecting its business. The Company developed and implemented a strategy to address a possible designation as a non-bank Systemically Important Financial Institution (Non-Bank SIFI) as well as the regulatory regime that would apply to it if it were so designated, and to influence the public debate on those rules.

John C.R. Hele, Chief Financial Officer

 

 

Under Mr. Hele’s leadership, MetLife maintained capital ratios in excess of capital adequacy ratio targets in areas such as risk-based capital, tier one capital, and Japan solvency margin. The Company also exceeded its plan in cash generation and management of cash expenses.

 

 

Mr. Hele’s financial management supported execution of key strategic achievements such as a common stock dividend increase, the acquisition and integration of ProVida, and addressing reinsurance risks.

 

 

Mr. Hele spearheaded the effort to merge three direct writing insurance subsidiaries and one reinsurance subsidiary to achieve efficiencies in the management of collateral for derivatives that the Company uses to hedge variable annuity guarantee risks.

 

Mr. Hele led the Company’s Finance organization to implement a global operating model and expense reduction plan, achieve scale and simplicity savings, and advance its leadership development efforts.

William J. Wheeler, President, Americas

 

 

Under Mr. Wheeler’s leadership, Americas generated results exceeding its Business Plan for Operating Earnings, Operating ROE, and premiums, fees, and other revenues. It also produced strong performance in premiums, fees, and other revenues, and in limiting expenses. Americas also met its Business Plan goals in premiums, fees, and other revenues from voluntary and worksite benefits and sponsored direct channels, in reduction of variable annuity sales, and in achievement of cost savings.

 

 

Americas grew its capabilities in Latin America, including through the acquisition and integration of ProVida.

 

 

Americas produced multinational and expatriate sales that exceeded its Business Plan.

 

 

Mr. Wheeler also led Americas toward customer centricity through enhancements to the customer experience and a focus on increasing net promoter scores.

 

 

Americas established a new U.S. retail business headquarters in North Carolina to consolidate operations and enhance efficiency, and strengthened its talent development.

Martin J. Lippert, Executive Vice President, Global Technology & Operations

 

 

Under Mr. Lippert’s leadership, Global Technology & Operations delivered scale and simplicity savings that exceeded its Business Plan goal and maintained spending within budget, while producing call center premiums that exceeded that plan.

 

 

Mr. Lippert led Global Technology & Operations to finalize and implement its new strategy and enhanced MetLife’s customer centricity focus through new call center customer empathy, advocacy, and management programs.

 

 

Mr. Lippert successfully led Global Technology & Operations’ U.S. location planning efforts, which delivered savings and established the platform for future savings.

 

 

Under Mr. Lippert’s leadership, Global Technology & Operations deployed new software to improve the efficiency of call centers and payment transactions.

 

 

Mr. Lippert also conducted a global assessment of Global Technology & Operations to create a new

 

 

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organizational structure and strengthened its global leadership team.

Christopher G. Townsend, President, Asia

 

 

Under Mr. Townsend’s leadership, Asia achieved strong results in Operating Earnings and Operating ROE, and exceeded Operating Earnings targets in the key mature markets of Japan and Korea. Asia also produced above-plan earnings from emerging markets and employee benefits sales, and above-plan scale and simplicity expense savings.

 

 

Mr. Townsend actively led the analysis of key Asian emerging markets, the successful establishment of new business relationships in Vietnam, Myanmar, and Malaysia, and the reinvigoration of the Company’s strategy in China. Under Mr. Townsend’s leadership, Asia also strengthened the Company’s joint venture in India through the addition of new partners bringing greater distribution capability.

 

 

Mr. Townsend strengthened Asia’s leadership team by filling key regional and country-level positions and developed its talent and performance development programs.

Stock-Based Long-Term Incentive Awards

The Company awards Stock Options, Performance Shares, and Restricted Stock Units (and, in some cases with respect to Executive Group members outside the United States, cash-payable equivalents). It determines the amount of such awards as part of MetLife’s Total Compensation program.

Stock Options.    Stock Options are granted at an exercise price equal to the closing price of Shares on the grant date. The ultimate value of Stock Options depends exclusively on increases in the price of Shares. One-third of each award of Stock Options becomes exercisable on each of the first three anniversaries of the date of grant.

Restricted Stock Units.    Restricted Stock Units are units that may become payable in Shares at the end of a predetermined vesting period. Assuming that goals set for Section 162(m) purposes are met, awards generally vest and pay out in thirds on each of the first three anniversaries of the grant date. Prior to awards made in 2013, the Company did not use Restricted Stock Units as a regular part of its compensation program for Executive Group members.

From time to time, the Company grants Restricted Stock Units that vest and pay out on the third or later anniversary of their grant date. It does so in order to encourage a candidate to begin employment with MetLife (especially where the candidate would forfeit long-term compensation awards from another employer

by doing so) or as a means of reinforcing its retention efforts, particularly in cases of exceptional performance, skills, or talent.

Performance Shares.    Performance Shares are units that may become payable in Shares at the end of a three-year performance period, depending on Company performance, and assuming that goals set for Section 162(m) are met.

Performance Share Awards in 2013 and 2014.    The Compensation Committee has approved guidelines for the payout for awards made in 2013 and 2014 based on the Company’s annual Operating ROE compared to its business plan goals and total shareholder return (TSR) compared to a custom group of competitors, each with respect to the performance period. The Compensation Committee will determine the performance factor for these awards, and they will be paid out, in 2016 and 2017, respectively. The guidelines, and the Compensation Committee’s discretion to adjust them, are subject to the satisfaction of the applicable Section 162(m) goals and the overall limit of 175% as the maximum performance factor.

The guidelines to determine the Operating ROE component of the Performance Factor are:

 

     Annual Operating
ROE Performance
as a Percentage of
Business Plan Goal
  Performance
Factor

Below Threshold

       0-79 %       0 %

Threshold

       80 %       25 %

Target

       100 %       100 %

Maximum

       120 %       175 %

Above Maximum

       121 %+       175 %

With respect to the TSR component of the Performance Factor, the Compensation Committee intends to assess the Company’s performance on a global basis against competitors around the world. As a result, it determined it will use a group of competitors that is somewhat more globally diverse than the Comparator Group it uses for peer Total Compensation purposes.

For awards made in 2013 and 2014, the Compensation Committee intends to use the TSR of the following companies in comparison to the Company’s TSR:

 

 

Aegon N.V.

 

 

Aflac Incorporated

 

 

AIA Group Limited

 

 

Allianz SE

 

 

The Allstate Corporation

 

 

American International Group, Inc.

 

 

Assicurazioni Generali S.p.A.

 

 

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Aviva PLC

 

 

AXA S.A.

 

 

The Dai-ichi Life Insurance Company, Limited

 

 

The Hartford Financial Services Group Inc.

 

 

Legal & General Group PLC

 

 

Lincoln National Corporation

 

 

Manulife Financial Corporation

 

 

Ping An Insurance (Group) Company of China, Ltd.

 

 

Principal Financial Group, Inc.

 

 

Prudential Financial, Inc.

 

 

Prudential plc

 

 

The Travelers Companies, Inc.

 

 

Unum Group

 

 

Zurich Financial Services AG

The guidelines to determine the TSR component of the Performance Factor are:

 

   

TSR Performance as a

Percentile of Peers

      Performance    
Factor

Below Threshold

  0-24th %ile   0%

Threshold

  25th %ile   25%

Target

  50th %ile   100%

Maximum

  87.5th %ile   175%

Above Maximum

  87.5th - 99th %ile   175%

If the Company’s TSR for the performance period is negative, the entire performance factor will be capped at target.

The Compensation Committee has retained discretion to adjust these guidelines, or to consider other factors, should it find that it is appropriate to do so in light of factors such as significant unplanned acquisitions or dispositions, unplanned tax, accounting, and presentation changes, unplanned restructuring or reorganization costs, and others it finds appropriate.

Performance Share Awards in 2012 and Earlier.    For the payout for awards made in 2012 and earlier, Company performance was (and, for awards yet to be paid out, will be) compared to the Fortune 500® companies included in the Standard & Poor’s Insurance Index, excluding Berkshire Hathaway Inc. (Insurance Index Comparators). The Insurance Index Comparators were chosen to measure MetLife’s relative performance because insurance is the predominant portion of the Company’s overall business mix. The final number of Performance Shares paid for such awards is to be determined by the Company’s performance in TSR and change in annual net Operating EPS (as defined by the Company for each year) compared to the other Insurance Index Comparators. The amount paid can be as low as zero and as high as twice the number of Performance Shares granted. For awards made in 2009

through 2012, if the Company does not produce a positive TSR for the performance period, the number of Shares to be paid out, if any, will be reduced by 25%.

In 2010, Standard & Poor’s added Berkshire Hathaway Inc. (BHI) to its insurance index. The Compensation Committee excluded BHI from the Insurance Index Comparators beginning with Performance Share awards for the 2011-2013 performance period. Given the size of BHI, and the diversity of its business outside of insurance and financial services, the Committee determined that excluding BHI from the Insurance Index Comparators for future awards would maintain an appropriate peer comparison. Without this prospective change, BHI would comprise a disproportionate part of the Insurance Index Comparators.

The Performance Shares for the 2010-2012 performance period became payable during 2013. MetLife’s performance relative to the Insurance Index Comparators for that period, by itself, would have produced a performance factor of 123%. Because the Company’s TSR for the period was not positive, however, that figure was reduced by 25%, producing a performance factor of 92%. That performance factor was applied to all vested Performance Share awards to produce the number of Final Performance Shares payable.

For more information about these payments, see the table entitled “Option Exercises and Stock Vested in 2013” on page 55.

Phantom Stock-Based Awards.    The Company makes cash-settled stock-based awards (Phantom Awards) to employees outside the United States, if they are more appropriate in light of tax and other regulatory circumstances than stock-payable awards. Each Unit Option represents the right to receive a cash payment equal to the closing price of a Share on the surrender date chosen by the employee, less the closing price on the grant date. One-third of each award of Unit Options becomes exercisable on each of the first three anniversaries of the date of grant. Performance Units are units that, if they vest, are multiplied by the same performance factor used for Performance Shares for the applicable period to produce a number of final Performance Units, each of which is payable in cash equal to the closing price of a Share on or around the payment date. Restricted Units are units that vest on the same schedule as Restricted Stock Units and, if they vest, each is paid in cash equal to the closing price of a Share on or around the payment date. Payout of Performance Units and Restricted Units is contingent on achievement of goals set for Section 162(m) purposes.

Vesting.    Stock-based long-term incentive awards are normally forfeited if the executive leaves the Company

 

 

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voluntarily before the end of the applicable performance period or vesting period and is not Retirement Eligible or (except for Phantom Awards) Bridge Eligible. An employee is considered Retirement Eligible when the employee meets any one of the age and service combinations defined in the Metropolitan Life Retirement Plan for the United States Employees (the Retirement Plan) to begin payout of certain benefits immediately upon separation from service (or, for the Phantom Awards, meets equivalent age and service criteria). See “Pension Benefits for U.S.-Based Executives” beginning on page 56 for more information about the Retirement Plan. Bridge Eligibility is available to employees based on a combination of age and service who have a final separation agreement under a particular severance plan. Bridge Eligible employees are eligible for post-retirement medical benefits despite not being Retirement Eligible.

Tax Considerations.    The Company has designed Performance Shares, Stock Options and (with respect to awards to Executive Group members in 2013) Restricted Stock Units with the intention of making them eligible for the “performance-based compensation” exemption from Section 162(m) limits. However, the Committee reserves the right to grant compensation that does not meet Section 162(m) requirements if it determines it is appropriate to do so.

Accounting. Performance Shares granted in 2012 and earlier, Stock Options, and Restricted Stock Units qualify as equity-classified instruments whose fair value for determining compensation expense under current accounting rules is fixed on the date of grant. The Compensation Committee approved guidelines to determine the performance factor applicable to Performance Shares granted in 2013, and retained discretion to adjust them, or to consider other factors, should it find that it is appropriate to do so. As a result, these awards qualify for expense reporting on a liability, or variable, basis. Phantom Awards also qualify for expense reporting on a liability basis because they are paid in cash.

For information about the specific grants of stock-based long-term incentive awards to the Named Executive Officers in 2013, see the table entitled “Grants of Plan-Based Awards in 2013” on page 51.

Performance-Based Compensation Recoupment Policy

The Company’s performance-based compensation recoupment policy applies to all employees of the Company and its affiliates. The policy applies when an employee engages in or contributes to fraudulent or other wrongful conduct that causes financial or reputational harm to the Company or its affiliates. Under those circumstances, the policy provides that the

Company (and its affiliates or subsidiaries) may seek the recovery of performance-based compensation (including gains from sale of securities) purportedly earned by or paid to the employee during or after the period of the misconduct. The policy is part of the terms of all performance-based compensation granted or paid by the Company and its affiliates. It does not limit the Company or any of its affiliates in enforcing any other rights or remedies they may have. The policy reinforces the Company’s intent to consider recovering performance-based compensation under the circumstances it covers.

Equity Award Timing Practices

The Compensation Committee grants stock-based long-term incentive awards to the Executive Group members at its regularly scheduled meeting in February of each year. The amount of each grant is made with consideration of the Total Compensation for each Executive Group member, including annual cash incentive awards and any base salary increases. The exercise price of Stock Options or Unit Options is the closing price of a Share on the grant day. On the rare occasions when the Committee grants awards in connection with the hiring or change in responsibilities of an Executive Group member, or in order to encourage the executive to become or remain employed, it does so coincident with (or shortly after) the hiring, change in responsibilities, or other related changes. The Company has never granted, and has no plans to grant, any stock-based awards to current or new employees in coordination with the release of non-public information about the Company or any other company. The Chief Executive Officer does not have any authority to grant Share-based awards of any kind to any Executive Group members, the Chief Accounting Officer, the Chief Risk Officer, or Directors of the Company.

Share Ownership

To further promote alignment of management’s interests with shareholders, the Company has established minimum Share ownership guidelines for officers at the Senior Vice President level and above, including the Executive Group members. Each is expected to own Shares in an amount that is equal to a percentage or multiple of annual base salary rate depending on position, and to retain net Shares acquired from compensation awards until meeting the guideline.

Employees may count toward these guidelines the value of Shares they or their immediate family members own directly or in trust. They may also count Shares held in the Company’s savings and investment program, Shares deferred under the Company’s nonqualified deferred compensation program and deferred cash compensation or auxiliary benefits measured in Share value.

 

 

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Each employee subject to the guidelines is expected to retain the net Shares acquired through the exercise of Stock Options or from payments made for stock-based long-term incentive awards until the employee meets the guidelines.

The Share ownership of the active Named Executive Officers, rounded to the nearest whole multiple of their respective annual base salary rates, is reported below as of December 31, 2013:

 

Name

   Guideline    Ownership

Steven A. Kandarian

       7          6  

John C.R. Hele

       4          0  

William J. Wheeler

       4          17  

Martin J. Lippert

       4          0  

Christopher G. Townsend

       3          0  

Mr. Lippert joined the Company in 2011, and Mr. Hele and Mr. Townsend joined the Company in 2012. None of their compensation awards payable in Shares had yet become payable as of December 31, 2013. Each has significant outstanding awards payable in Shares which align his interests with those of shareholders and will allow him to increase his Share ownership over time. Mr. Kandarian has complied with the requirement to retain net Shares acquired from compensation awards until meeting the guideline.

Policy Prohibiting Hedging Company Securities

The Company’s policy prohibits all employees, including the Executive Group members, from engaging in short sales, hedging, and trading in put and call options, with respect to the Company’s securities.

Policy Restricting Pledging Company Securities

The Company’s Board of Directors adopted a policy in 2013 that restricts directors and employees in how they may pledge MetLife securities. The Board adopted this policy in light of emerging best practices and to address activity that could create a misalignment of interests with Company shareholders, or the appearance of such a misalignment. The policy prohibits pledging of Shares necessary to meet Share ownership guidelines, and prohibits pledging while the individual is aware of any non-public information that is material to Shares. Directors and employees are also prohibited from pledging MetLife securities in connection with a non-recourse loan, i.e., one in which the borrower’s liability is limited to the forfeiture of the securities.

In addition, the Company expects all Directors and employees who pledge MetLife securities to maintain adequate resources to repay the loan, aside from any

MetLife securities, in order to avoid the foreclosure or sale of the MetLife securities.

Retirement and Other Benefits

MetLife recognizes the importance of providing comprehensive, cost-effective employee benefits to attract, retain and motivate talented associates. The Company reviews its benefits program from time to time and makes adjustments to the design of the program to meet these objectives and to remain competitive with other employers.

Pension Program for U.S.-Based Executives.    The Company sponsors a pension program in which all eligible U.S. employees, including the Executive Group members employed in the U.S., participate after one year of service. The program includes the Retirement Plan and the MetLife Auxiliary Pension Plan (Auxiliary Pension Plan), an unfunded nonqualified plan.

The program rewards employees for the length of their service and, indirectly, for their job performance, because the amount of benefits increases with the length of employees’ service with the Company and the salary and annual incentive awards they earn. Benefits under the Company’s pension program are determined under two separate benefit formulas. For any given period of time, an employee’s benefit is determined under one or the other formula. In no event do benefits accrue for the same period under both formulas. The Traditional Formula is based on length of service and final average compensation. The Personal Retirement Account Formula is based on monthly contributions for each employee based on the employee’s compensation, plus interest.

The Auxiliary Pension Plan does not provide any pension benefits for any Executive Group members, other than those that would apply under the (qualified) Retirement Plan if U.S. tax limits on accruals did not apply. The same final average compensation formula is used for Traditional Formula pension benefits in both plans, for benefits accrued in 2010 and later.

For additional information about pension benefits for the Named Executive Officers, see the table entitled “Pension Benefits at 2013 Fiscal Year-End” on page 56.

Mr. Townsend did not participate in a defined benefit pension plan in 2013.

Savings and Investment Program.    The Company sponsors a savings and investment program for U.S. employees in which each Executive Group member employed in the U.S. is eligible to participate. The

 

 

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program includes the Savings and Investment Plan for Employees of Metropolitan Life and Participating Affiliates (Savings and Investment Plan), a tax-qualified defined contribution plan that includes pre-tax deferrals under Internal Revenue Code Section 401(k), and the Metropolitan Life Auxiliary Savings and Investment Plan (Auxiliary Savings and Investment Plan), an unfunded nonqualified deferred compensation plan.

Employee contributions to the Savings and Investment Plan may be made on a pre-tax 401(k), Roth 401(k) or after-tax basis. The Company also provides a contribution to employees after one year of service in order to encourage and reward such savings. The Auxiliary Savings and Investment Plan provides additional Company contributions to employees who elect to contribute to the Savings and Investment Plan and who have compensation beyond Internal Revenue Code limits. Company contributions for the Named Executive Officers are included in the “All Other Compensation” column of the Summary Compensation Table on page 28. Because the Auxiliary Savings and Investment Plan is a nonqualified deferred compensation plan, the Company’s contributions to the Named Executive Officers’ accounts, and the Named Executive Officers’ accumulated account balances and any payouts made during 2013, are reported in the table entitled “Nonqualified Deferred Compensation at 2013 Fiscal Year-End” on page 59.

Nonqualified Deferred Compensation.    The Company sponsors a nonqualified deferred compensation program for officer-level employees in the U.S., including the Executive Group members employed in the U.S. Participants may choose from a range of simulated investments, according to which the value of their deferrals may go up or down. See the table entitled “Nonqualified Deferred Compensation at 2013 Fiscal Year-End” on page 59 for amounts of nonqualified deferred compensation reported for the Named Executive Officers.

Employees choose in advance the amount they want to defer, the date on which payment of their deferred compensation will begin and whether they want to receive payment in a lump sum or in up to 15 annual payments. With respect to deferrals in 2013 and earlier, if the employee becomes Retirement Eligible or Bridge Eligible, the employee’s choice of form and timing of payment are honored. Otherwise, the Company generally pays out the employee’s deferred compensation in a single lump sum after the end of the employee’s service. The continued deferral of income taxation and pre-tax simulated investment earnings through the employee’s chosen payment dates encourage employees to remain with the Company.

Mandatory Provident Fund Applicable to Mr. Townsend.    Mr. Townsend participates in the Mandatory Provident Fund program for employees in Hong Kong. Applicable law requires employees to contribute a fixed portion of their eligible earnings to the program. An employer contribution at a rate based on the employee’s length of service is also made, as required by law. The program allows employees to make additional contributions from their earnings, with employer matching contributions on a limited basis. Employees choose from among a number of funds in which to invest contributions. The employer contributions vest over time through ten years of service. Because the rate and vesting of employer contributions are based on length of service, the program encourages employees to remain with the Company.

Perquisites

The Company provides its Executive Group members with limited perquisites.

 

 

The Company leases an aircraft for purposes of efficient business travel by the Company’s executives. While the Chief Executive Officer may occasionally use the Company’s aircraft for personal travel, Company policy does not require him to use the Company’s aircraft for all personal and business travel.

 

 

To maximize the accessibility of Executive Group members, the Company makes leased vehicles and drivers and outside car services available to U.S.-based executives for commuting and personal use.

 

 

For recordkeeping and administrative convenience of the Company, the Company pays certain other costs, such as those for travel and meals for family members accompanying Executive Group members on business functions.

 

 

The Company holds events to facilitate and strengthen its relationship with customers, potential customers, and other business partners, such as events at MetLife Stadium. The Company occasionally allows employees, including the Executive Group members, and their family members, personal use of its facilities at MetLife Stadium, to the extent space at such events is available or the facilities are not in use for business purposes.

 

 

The Company provides benefits to Mr. Townsend in connection with his overseas assignment that are common and typical for senior management in such circumstances, such as a subsidy of children’s education expenses and benefits related to housing.

Aside from any business travel tax equalization, each Executive Group member is responsible for any personal income taxes due as a result of receiving these benefits.

 

 

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The incremental cost of perquisites provided to the Named Executive Officers in respect of 2013 is included in the “All Other Compensation” column of the Summary Compensation Table on page 28, if the total cost of those perquisites for that executive exceeded $10,000.

Sign-On Payments

From time to time, the Company offers newly-hired Executive Group members sign-on payments and/or relocation benefits in order to encourage them to come to MetLife. On such occasions, the Company typically either delays the date the payment is earned and paid or requires repayment if the executive leaves MetLife before the first anniversary of beginning employment. Mr. Hele was paid a sign-on bonus in 2012. Mr. Townsend was paid a sign-on bonus in 2013 on the first anniversary of the date his employment began.

Business Travel Income Tax Equalization

As executives of a global insurance and employee benefits enterprise, MetLife Executive Group members are increasingly engaged in international business travel. Some executives are required by the demands of their roles to travel to jurisdictions that impose additional taxes on them beyond what they owe in their home jurisdiction. Providing such executives with “income tax equalization” to their home jurisdiction, by paying or reimbursing the executive for any excess income taxes the executive owes in other jurisdictions as a result of business travel, is a prevalent business practice. Doing so allows the executive to engage in business travel that is necessary to lead MetLife’s business efforts and perform job responsibilities without being financially penalized. It also prevents the additional personal income tax liability from being a disincentive to engage with associates, customers, or others outside of the executive’s home jurisdiction. In such cases, no taxes the executive owes as a result of travel taken solely for personal purposes are covered by these equalization arrangements. MetLife has established such arrangements only with Executive Group members who are based outside the United States. Mr. Townsend entered into such an agreement in 2013.

Severance Pay and Related Benefits

If the employment of an Executive Group member employed in the U.S. ends involuntarily due to job elimination or, in limited circumstances, due to performance, he or she may be eligible for the severance program available to substantially all salaried employees. The program generally provides employees with severance pay, outplacement services and other benefits.

Employees terminated for cause, as defined under the program, are not eligible. The amount of severance pay reflects the employees’ salary grade, base salary rate and length of service, with longer-service employees receiving greater payments and benefits than shorter-service employees given the same salary grade and base salary. Employees who are not Retirement Eligible or Bridge Eligible and who receive severance pay also receive a pro rata cash payment in consideration of their unvested Performance Shares and Performance Units. The Company also may enter into severance agreements that can differ from the general terms of the program, where business circumstances warrant.

Change-in-Control Arrangements

The Company has adopted arrangements that would impact the Executive Group members’ compensation and benefits upon a change-in-control of MetLife. None of the Executive Group members is entitled to any excise tax gross-up either on severance pay or on any other benefits payable in connection with a change-in-control of the Company.

Executive Severance Plan.     The Company established the MetLife Executive Severance Plan (Executive Severance Plan) in 2007 to apply to all Executive Group members and replace individual change-in-control agreements.

The Compensation Committee determined the terms of the plan on an overall program basis in light of its judgment of what is appropriate in order to maximize shareholder value should a change-in-control occur. The Company determined the elements of its definition of change-in-control in order to include each of the circumstances where effective control over the Company would be captured by interests that differ substantially from those of the broad shareholder base the Company now has, without impinging on the Company’s flexibility to engage in transactions that are unlikely to involve such a transformation. An Executive Group member who receives benefits under the Executive Severance Plan would not be eligible to receive severance pay under the Company’s severance plan that is available to substantially all salaried employees.

The Executive Severance Plan does not provide for any payments or benefits based solely on a change-in-control of MetLife. Rather, the Plan provides for severance pay and related benefits only if the executive’s employment also ends under certain circumstances.

Additional Change-in-Control Arrangements.    The Company’s stock-based long-term agreements also include change-in-control arrangements. Under these

 

 

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arrangements, MetLife or its successor may substitute an alternative award of equivalent value and vesting provisions no less favorable than the award being replaced. Unless such substitution occurs, the awards vest immediately upon a change-in-control.

For additional information about change-in-control arrangements, including the Company’s definition of change-in-control for these purposes, see “Potential Payments upon Termination or Change-in-Control at 2013 Fiscal Year-End” beginning on page 63.

 

 

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Summary Compensation Table

 

 

 

Name and Principal

Position

    Year       

 

Salary

($)

  

  

   

 

Bonus

($)(1)

  

  

   

 

 

Stock

Awards

($)(2)

  

  

  

   
 

 

Option
Awards

($)(2)

  
  

  

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

 

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings

($)(4)

 
 
 
 
 
 
  

  

   
 
 
All Other
Compensation
($)(5)
 
 
  
   

 

Total

($)

  

  

Steven A. Kandarian,

    2013      $ 1,212,500      $ 0      $ 5,854,539      $ 1,729,089      $ 5,000,000      $ 578,929      $ 239,281      $ 14,614,338   

Chairman of the Board,

    2012      $ 1,066,667      $ 0      $ 3,897,031      $ 3,760,313      $ 4,200,000      $ 431,984      $ 313,016      $ 13,669,011   

President and

    2011      $ 879,167      $ 0      $ 3,285,950      $ 3,343,800      $ 3,000,000      $ 0      $ 121,695      $ 10,630,612  

Chief Executive Officer

                                                                       

John C.R. Hele,

    2013      $ 600,000      $ 0      $ 585,460      $ 172,911      $ 1,500,000      $ 9,332      $ 19,397      $ 2,887,100   

Chief Financial Officer

    2012      $ 195,769      $ 450,000      $ 1,027,795      $ 967,105      $ 450,000      $ 0      $ 0      $ 3,090,669   

William J. Wheeler,

    2013      $ 750,000      $ 0      $ 2,122,270      $ 626,795      $ 3,250,000      $ 82,514      $ 124,430      $ 6,956,009   

President, Americas

    2012      $ 750,000      $ 0      $ 1,503,586      $ 1,450,836      $ 1,750,000      $ 587,801      $ 148,692      $ 6,190,915   
      2011      $ 650,000      $ 0      $ 2,817,459      $ 2,869,350      $ 2,000,000      $ 492,393      $ 139,285      $ 8,968,487   

Martin J. Lippert,

    2013      $ 618,750      $ 0      $ 1,756,381      $ 518,723      $ 1,750,000      $ 189,823      $ 0      $ 4,833,677   

Executive Vice

                 

President, Global

                 

Technology & Operations

                                                                       

Christopher G. Townsend,

    2013      $ 503,751      $ 200,000      $ 951,349      $ 280,973      $ 900,000      $ 0      $ 697,608      $ 3,533,681   

President, Asia(5)

                                                                       

 

(1)

Mr. Hele was paid a sign-on bonus in 2012. If Mr. Hele had left MetLife before the first anniversary of beginning employment, he would have owed repayment on a pro rata basis. The amount of the payment is 15% of the amount in the Total column for Mr. Hele, rounded to the nearest whole number. Mr. Townsend was paid a sign-on bonus in 2013 on the first anniversary of the date his employment began. The amount of the payment is 6% of the amount in the Total column for Mr. Townsend, rounded to the nearest whole number.

 

(2)

Mr. Kandarian’s 2011 Stock Awards and Option Awards included special grants in recognition of his appointment to Chief Executive Officer in addition to amounts determined under the Company’s general executive compensation practices. Mr. Wheeler’s 2011 Stock Awards and Option Awards included special grants in recognition of the critical nature of his role and to encourage him to continue to provide a high level of performance that will create value for the Company’s shareholders. These grants were in addition to amounts determined under the Company’s general executive compensation practices.

 

(3)

Mr. Wheeler’s 2012 AVIP award was lower than his 2011 AVIP award. However, his Total Compensation for 2012 performance, and in expectation of contribution to future performance, including base salary paid in 2012, annual incentive award for 2012, and stock-based long-term incentive awards granted in 2013, was higher than for 2011.

 

(4)

The present value of accumulated pension benefits for Mr. Kandarian declined by $32,633 in 2011. See the discussion of “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the narrative accompanying the Summary Compensation Table in the Company’s 2012 Proxy Statement. Mr. Hele began employment in 2012 and had no increase in present value of accumulated benefits as of December 31, 2012. Mr. Hele will not be eligible for pension benefits under the applicable pension plan until he has one year of service. Mr. Townsend did not participate in a defined benefit pension plan in 2013.

 

(5)

Amounts for Mr. Townsend that were denominated, accrued, earned, or paid in Hong Kong Dollars have been converted to U.S. dollars at a rate of H.K.$1 = U.S.$0.13.

 

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Basis for the information in the Summary Compensation Table

The amounts reported in the table above for 2013 include several elements that were not yet paid to the Named Executive Officers in 2013. The table includes items such as salary and cash incentive compensation that have been earned. It also includes the grant date fair value of Share-based long-term incentive awards granted in 2013 which may never become payable or may ultimately have a value that differs substantially from the values reported in this table. The table also includes changes in the value of pension benefits from prior year-end to year-end 2013 which will become payable only after the Named Executive Officer ends employment. The items and amounts reported in the table above for 2012 and 2011 bear a similar relationship to performance and amounts paid or payable in those years.

In addition, the amounts in the Total column do not represent “Total Compensation” as defined for purposes of the Company’s compensation structure and philosophy, and include elements that do not relate to 2013 performance. For additional information, see the Compensation Discussion and Analysis beginning on page 28.

The Named Executive Officers were determined as follows:

 

 

Mr. Kandarian served as Chief Executive Officer for 2013.

 

 

Mr. Hele served as Chief Financial Officer for 2013.

 

 

Mr. Wheeler, Mr. Lippert and Mr. Townsend are Named Executive Officers because their respective compensation amounts, determined using the rules that pertain to the Summary Compensation Table, excluding change in pension value, were the highest three among those serving as Executive Group members at the conclusion of 2013, excluding those who had served as Chief Executive Officer or Chief Financial Officer during 2013.

The Company is required to include compensation in the Summary Compensation Table for years prior to 2013 to the extent that it was disclosed in any of its prior Proxy Statements. Mr. Hele was not a Named Executive Officer in the Company’s 2012 Proxy Statement. As a result, his compensation for 2011 is not reported in the table above. Neither Mr. Lippert nor Townsend was a Named Executive Officer in the Company’s 2013 or 2012 Proxy Statements. As a result, neither of their respective compensation for 2012 or 2011 is reported in the table above.

The amounts in each of the columns of the Summary Compensation Table are further discussed below.

Salary

The amount reported in the Salary column is the amount of base salary earned by each Named Executive Officer in that year.

For 2013, the relationship of the amount of each Named Executive Officer’s base salary payments to the amount in the Total column, rounded to the nearest whole number, is:

 

Executive

   Base Salary Payments as a
Percentage of Total Column

Steven A. Kandarian

       8 %

John C.R. Hele

       21 %

William J. Wheeler

       11 %

Martin J. Lippert

       13 %

Christopher G. Townsend

       14 %

Stock Awards

Performance Shares and Performance Units.    Performance Share awards were made pursuant to the 2005 Stock and Incentive Plan. Performance Unit awards were made pursuant to the MetLife, Inc. Performance Unit Incentive Compensation Plan. No monetary consideration was paid by a Named Executive Officer for any awards. No dividends or dividend equivalents are earned on any awards. For a description of the effect on the awards of a termination of employment or change-in-control of MetLife, see “Potential Payments upon Termination or Change-in-Control at 2013 Fiscal Year-End” beginning on page 63.

Performance Shares are paid in Shares. The payout for Performance Units is determined in an identical manner to that of Performance Shares, but payout is made in cash using the price of Shares.

2013 Performance Share and Performance Unit Awards.    On February 26, 2013, the Compensation Committee granted Performance Units to Mr. Townsend and Performance Shares to each other Named Executive Officer.

The Performance Shares and Performance Units granted in 2013 are payable after the end of the three-year performance period from January 1, 2013 to December 31, 2015. In order for these Performance Shares and Performance Units to be eligible to be fully tax deductible under Section 162(m), the Compensation Committee established separate threshold goals. As a result, for those awards to become payable, the Company must generate either (1) positive income from continuing operations before provision for income tax, excluding net investment gains (losses) (defined in accordance with Section 3(a) of Article 7.04 of SEC Regulation S-X), which includes total net investment gains (losses) and net derivatives gains (losses), either for

 

 

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the third year of the performance period or for the performance period as a whole, or (2) positive TSR either for the third year of the performance period or for the performance period as a whole.

If any of the above income or TSR goals are met, the number of Shares or Units payable at the end of the performance period is calculated by multiplying the number of Performance Shares by a performance factor (from 0% to 175%). The performance factor is to be determined by the Compensation Committee in consideration of the Company’s annual Operating ROE compared to its three-year business plan and TSR during the performance period compared to the Company’s peers.

For a further discussion of the performance goals applicable to the Performance Share and Performance Unit awards in 2013, see the Compensation Discussion and Analysis beginning on page 28.

2012 and 2011 Performance Share Awards.    The Performance Shares granted to the Named Executive Officers in 2012 and 2011 are payable in Shares after the end of the three-year performance periods. In order for these Performance Shares to be eligible to be fully tax deductible under Section 162(m), the Compensation Committee established separate threshold goals. As a result, for those awards to become payable, the Company must generate either (1) positive income from continuing operations before provision for income tax, excluding net investment gains (losses) (defined in accordance with Section 3(a) of Article 7.04 of SEC Regulation S-X) either for the third year of the performance period or for the performance period as a whole, or (2) positive TSR either for the third year of the performance period or for the performance period as a whole.

If any of the above income or TSR goals are met, the number of Shares payable at the end of the performance period is calculated by multiplying the number of Performance Shares by a performance factor (from 0% to 200%). The performance factor is determined by reference to the Company’s performance relative to the Insurance Index Comparators. Such performance is measured on the basis of TSR and change in annual Operating EPS.

The Company’s Operating EPS is measured year over year for each year of the performance period, as compared to the other companies in the Insurance Index Comparators (other than companies which adopt International Financial Reporting Standards before the Company does). For each calendar year, Operating EPS will be defined in the Company’s Quarterly Financial

Supplement for the fourth quarter of the prior year. The determination of Operating Earnings starts with GAAP net income and generally excludes items such as after-tax net investment gains and losses, net derivative gains and losses, after-tax adjustments related to net investment gains and losses, after-tax discontinued operations other than discontinued real estate, and preferred stock dividends, and divides the result by the diluted weighted average number of Shares outstanding. The same definition applicable to each year is used both for purposes of comparing that year to the prior year and for purposes of comparing that year to the subsequent year. The results for each of the three years of the performance period are averaged.

The Company’s TSR is compared to the composite return of the Insurance Index Comparators during the performance period. TSR will be determined using the change (plus or minus) from the initial closing price of a Share to the final closing price of a Share, plus reinvested dividends, for the performance period, divided by the initial closing price of a Share. For this purpose, the initial closing price is the average of the closing prices for the 20 trading days before the performance period, and the final closing price is the average of the closing prices for the 20 trading days prior to and including the final trading day of the performance period.

The following are some significant performance percentiles and their corresponding performance factors:

 

MetLife TSR minus Insurance Index

Comparators TSR equals:

   TSR
Performance Factor

30% or above

   100%

0%

     50%

(25)%

     25%

(26)% or less

       0%

 

MetLife Rank in Change in Annual
Net Operating Earnings Per Share as a
Percentile of Insurance Index Comparators

   Operating Earnings
Per Share
Performance Factor

75th or Above

   100%

median

     50%

25th

     25%

below 25th

       0%

Each of the two performance elements (TSR and Operating EPS) is weighted equally and added together to produce a total performance factor.

If the Company’s TSR for the performance period is zero percent or less, the total performance factor will be multiplied by 0.75 before it is considered final.

Restricted Stock Unit and Restricted Unit Awards.    Restricted Stock Unit awards were made pursuant to the 2005 Stock and Incentive Plan. Restricted Unit awards were made pursuant to the

 

 

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MetLife, Inc. Restricted Unit Incentive Compensation Plan. No monetary consideration was paid by a Named Executive Officer for any awards. No dividends or dividend equivalents are earned on any awards. For a description of the effect on the awards of a termination of employment or change-in-control of MetLife, see “Potential Payments upon Termination or Change-in-Control at 2013 Fiscal Year-End” beginning on page 63.

2013 Restricted Stock Unit and Restricted Unit Awards.    One-third of each Restricted Stock Unit and Restricted Unit award made to the Named Executive Officers vests and becomes payable on each of the first three anniversaries of the grant date. In order for these awards to be eligible to be fully tax deductible under Section 162(m), the Compensation Committee established separate threshold goals. As a result, for those awards to become payable, the Company must generate either (1) positive income from continuing operations before provision for income tax, excluding net investment gains (losses) (defined in accordance with Section 3(a) of Article 7.04 of SEC Regulation S-X), which includes total net investment gains (losses) and net derivatives gains (losses), either for the third year of the performance period or for the performance period as a whole, or (2) positive TSR either for the third year of the performance period or for the performance period as a whole.

Restricted Stock Units are paid in Shares. Restricted Units are paid in cash using the price of Shares.

Method for Determining Amounts Reported.     The amounts reported in this column for Performance Shares and Performance Units were calculated by multiplying the number of shares or units by their respective grant date fair value:

 

 

$32.20 for February 26, 2013.

 

 

$31.34 for September 4, 2012.

 

 

$35.63 for February 28, 2012.

 

 

$41.97 for March 21, 2011.

 

 

$43.18 for February 28, 2011.

The amounts reported in this column for Restricted Stock Units and Restricted Units granted on February 26, 2013 were calculated by multiplying the number of units by their grant date fair value of $32.20 per unit.

Those amounts represent the aggregate grant date fair value of the awards under ASC 718 consistent with the estimate of aggregate compensation cost to be recognized over the service period. For Performance Shares and Performance Units, the amounts are based on target performance, which is a total performance factor of 100%. This is the “probable outcome” of the

performance conditions to which those awards are subject, determined under ASC 718. The grant date fair values of the Performance Shares and Performance Units granted in 2013 assuming the highest level of performance conditions would be 1.75 times the amounts reported in this column, as the same grant date fair value per share would be used but the total performance factor used would be 175%. The grant date fair values of the Performance Shares and Performance Units granted in 2012 and 2011 assuming the highest level of performance conditions would be double the amounts reported in this column, as the same grant date fair value per share would be used but the total performance factor used would be 200%.

For a description of the assumptions made in determining the expenses of Share awards, see Notes 1 and 16 to the Consolidated Financial Statements in the 2013 Form 10-K, and Notes 1 and 18 to those statements in the Company’s Annual Reports on Form 10-K for 2012 and 2011. In determining these expenses, it was assumed that each Named Executive Officer would satisfy any service requirements for vesting or payment of the award. As a result, while a discount for the possibility of forfeiture of the award was applied to determine the expenses of these awards as reported in the Company’s Annual Reports on Form 10-K, no such discount was applied in determining the expenses reported in this column.

Option Awards

Stock Option awards were made pursuant to the 2005 Stock and Incentive Plan. No monetary consideration was paid by a Named Executive Officer for any awards. For a description of the effect on the awards of a termination of employment or change-in-control of MetLife, see “Potential Payments upon Termination or Change-in-Control at 2013 Fiscal Year-End” beginning on page 63.

2013 Awards.    On February 26, 2013, the Compensation Committee granted Stock Options to each Named Executive Officer. Each of these awards had a per option exercise price equal to the closing price of a Share on the grant date: $34.86. The Stock Options will normally become exercisable at the rate of one-third of each grant on each of the first three anniversaries of the grant date, and expire on the day before the tenth anniversary of that grant date.

2012 and 2011 Awards.    The Stock Options granted to the Named Executive Officers in 2012 and 2011 had an exercise price equal to the closing price of a Share on the grant date ($38.29 and $45.79, respectively). The Stock Options will normally become exercisable at the rate of one-third of each grant on each of the first three anniversaries of that grant date, and expire on the day

 

 

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before the tenth anniversary of that grant date (except for the special grants of 112,500 Stock Options to Mr. Wheeler and 150,000 Stock Options to Mr. Kandarian in 2011, which will normally become exercisable on the third anniversary of their grant date, and which were discussed in further detail in the Company’s 2012 Proxy Statement).

Method for Determining Amounts Reported.    The amounts reported in this column were calculated by multiplying the number of Stock Options or Unit Options by a grant date fair value per option of:

 

 

$9.51 for the Stock Options granted on February 26, 2013.

 

 

$9.83 for September 4, 2012.

 

 

$11.46 for February 28, 2012.

 

 

$14.58 for the special grants to Mr. Wheeler and Mr. Kandarian on March 21, 2011.

 

 

$14.46 for February 23, 2011.

Those amounts represent the aggregate grant date fair value of the Stock Options granted in each year under ASC 718, consistent with the estimate of aggregate compensation cost to be recognized over the service period.

For a description of the assumptions made in determining the expenses, see Notes 1 and 16 to the Consolidated Financial Statements in the 2013 10-K, and Notes 1 and 18 to those statements in the Company’s Annual Reports on Form 10-K for 2011 and 2010. In determining these expenses, it was assumed that each Named Executive Officer would satisfy any service requirements for vesting or payment of the award. As a result, while a discount for the possibility of forfeiture of the award was applied to determine the expenses of these awards as reported in the Company’s Annual Reports on Form 10-K, no such discount was applied in determining the expenses reported in this column. In each case, the grant date of the awards was the date that the Compensation Committee approved the awards.

Non-Equity Incentive Plan Compensation

The amounts reported in the Non-Equity Incentive Plan Compensation column for each Named Executive Officer include the 2013 AVIP awards made in February 2014 by the Compensation Committee to each of the Named Executive Officers, which are based on 2013 performance. The AVIP awards are payable in cash by March 15, 2014. The factors considered and analyzed by the Compensation Committee in determining the

awards are discussed in the Compensation Discussion and Analysis. For a description of the maximum award formula that applied to the awards for tax deductibility purposes, see the table entitled “Grants of Plan-Based Awards in 2013” on page 51.

Amounts reported in this column for 2012 and 2011 are AVIP awards with a similar relationship to performance in those years. The basis of these awards is discussed further in the Company’s 2012 and 2011 Proxy Statements, respectively.

Change in Pension Value and Nonqualified Deferred Compensation Earnings

The amounts reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column for 2013 represent any aggregate increase during 2013 in the present value of accumulated pension benefits for each of the Named Executive Officers. These increases reflect additional service in 2013, any increase in base salary compensation rate in 2013, and (for U.S.-based Named Executive Officers) annual incentive awards payable in March 2013 for services in 2012.

Mr. Hele began employment in 2012 and had no increase in present value of accumulated benefits for 2013. Mr. Hele was not eligible for pension benefits under the applicable pension plan until he had completed one year of service. Mr. Townsend did not participate in a defined benefit pension plan in 2013.

The U.S.-based Named Executive Officers participate in the same retirement program that applies to other administrative employees in the U.S. For all employees in the Traditional Formula for their entire career who reach full benefit status, the program, when combined with social security benefits, generally replaces 60% of final average cash compensation upon retirement.

For a description of pension benefits, including the formula for determining benefits, see the table entitled “Pension Benefits at 2013 Fiscal Year-End” on page 56.

None of the Named Executive Officers’ earnings on their nonqualified deferred compensation in 2013, 2012, or 2011 were above-market or preferential. As a result, earnings credited on their nonqualified deferred compensation are not required to be, nor are they, reflected in this column. For a description of the Company’s nonqualified deferred compensation plans and the simulated investments used to determine earnings, see the table entitled “Nonqualified Deferred Compensation at 2013 Fiscal Year-End” on page 59.

 

 

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All Other Compensation

The amounts reported in this column for 2013 include all other items of compensation:

 

Executive

   Employer
Savings and
Investment
Program and
Mandatory
Provident Fund
Contributions
     Perquisites and
Other Personal
Benefits
     Life
Insurance
Above
Standard
Formula
     Health
Insurance
Above
Standard
Formula
     Tax
Equalization
Benefits
     Total  

Steven A. Kandarian

   $ 216,500       $ 22,781       $ 0       $ 0       $ 0       $ 239,281   

John C.R. Hele

   $ 3,750       $ 15,647       $ 0       $ 0       $ 0       $ 19,397   

William J. Wheeler

   $ 100,000       $ 19,282       $ 5,148       $ 0       $ 0       $ 124,430   

Martin J. Lippert(1)

   $ 0         —         $ 0       $ 0       $ 0       $ 0   

Christopher G. Townsend(2)

   $ 30,225       $ 219,194       $ 1,584       $ 18,665       $ 427,940       $ 697,608   

 

(1)

Mr. Lippert’s aggregate amount of perquisites and other personal benefits in 2013 was less than $10,000.

 

(2)

Amounts for Mr. Townsend that were denominated, accrued, earned, or paid in Hong Kong Dollars have been converted to U.S. dollars at a rate of H.K.$1 = U.S.$0.13.

 

Company Savings and Investment Program and Mandatory Provident Fund Contributions.    U.S. based eligible employees may make contributions to the Savings and Investment Plan, which is a tax-qualified 401(k) plan. Employer matching contributions are also made to that plan. In 2013, matching contributions to that plan of $10,200 were made for each of Mr. Kandarian and Mr. Wheeler, and of $3,750 for Mr. Hele. No contributions were made for Mr. Lippert, who did not participate in that plan.

Employer contributions are made to the Auxiliary Savings and Investment Plan due to U.S. Internal Revenue Code limits on the amount of compensation that is eligible for contributions to the Savings and Investment Plan.

Employer contributions are also made to the Mandatory Provident Fund, in which Mr. Townsend and other eligible employees in Hong Kong participate. These contributions match contributions made by employees up to limits determined under that fund.

The amount of contributions for each Named Executive Officer, other than those made to the Savings and Investment Plan, is also reflected in the “Registrant Contributions in Last FY” column of the Nonqualified Deferred Compensation table on page 59.

Perquisites and Other Personal Benefits.    The Company’s aggregate incremental cost to provide perquisites or other personal benefits to each Named Executive Officer in 2013 (other than for Mr. Lippert) is included in the “All Other Compensation” column for 2013. Mr. Lippert’s perquisites and other personal benefits in 2013 were less than $10,000, and as a result are not reported.

Goods or services provided to the Named Executive Officers are perquisites or personal benefits only if they confer a personal benefit on the executive. However, goods or services that are directly and integrally related to the executive’s job duties, or are offered generally to all employees, or for which the executive fully reimbursed the Company are not perquisites or personal benefits. Each type of perquisite or other personal benefit is discussed below.

Personal Car Service in the U.S.    These amounts include the cost paid by the Company for car service provided by vendors for personal travel. Where the Company used its own vehicles, the cost of tolls, fuel, and driver overtime compensation is included.

Personal Company Aircraft Use.    These amounts include the variable costs for personal use of aircraft that were charged to the Company by the vendor that operates the Company’s leased aircraft for trip-related crew hotels and meals, landing and ground handling fees, hangar and parking costs, in-flight catering and telephone usage, and similar items. Fuel costs were calculated based on average fuel cost per flight hour for each hour of personal use. Because the aircraft is leased primarily for business use, fixed costs such as lease payments are not included in these amounts. The Company does not require the Chief Executive Officer to use the Company’s aircraft for all personal and business travel.

Personal Conference, Event, and Travel.    These amounts include the costs incurred by the Company for personal items for the Named Executive Officer at a Company business conference or meeting, at MetLife Stadium or at other events, and for personal guests of the Named Executive Officer at such events. Costs for

 

 

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personal security on certain business trips outside the United States, and costs paid to a vendor to make personal travel reservations for the Named Executive Officers or their family members, are also included.

Overseas Assignment Benefits.    The Company provided Mr. Townsend $96,608 in housing, a subsidy of children’s education of $100,761, and tax preparation services in or for 2013 in connection with his assignment in Hong Kong. The Company’s incremental costs to provide these items are included in the table above.

Life Insurance Coverage Above Standard Formula.    In 2003, the Company discontinued its split-dollar life insurance programs in which a small group of senior officers and some other employees and agents participated. Former participants in those programs were given the opportunity to continue to receive group life insurance coverage at the levels that were provided under the program. The amounts shown in the table above for Mr. Wheeler reflect the additional cost to the Company in 2013 to provide group life insurance coverage at those former levels over and above the cost for the standard group life coverage.

Employees in Hong Kong, including Mr. Townsend, are provided life insurance at levels that vary based on compensation grade level. The cost of providing such coverage to Mr. Townsend in 2013 is reflected in the table above.

Health Insurance Above Standard Formula.    Employees in Hong Kong, including Mr. Townsend, are provided health benefits at levels that vary based on compensation grade level. The cost of providing such benefits to Mr. Townsend in 2013 is reflected in the table above.

Tax Equalization Benefits.    The Company will pay any income taxes Mr. Townsend owes as a result of 2013 travel on Company business in excess of what he would have owed had he provided the services in his home jurisdiction. The amount reflected in the table above is an estimate of such taxes, as Mr. Townsend’s precise liability has yet been determined. The estimate is based on extensive travel to multiple jurisdictions in Asia and elsewhere in furtherance of MetLife’s business. For further information, see “Business Travel Income Tax Equalization” on page 42.

 

 

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Grants of Plan-Based Awards in 2013

 

 

 

         Estimated
Possible
Payouts

Under Non-
Equity
Incentive Plan
Awards
  Estimated Future Payouts
Under Equity Incentive Plan
Awards
    All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
    All Other
Option
Awards:
Number of
Shares or
Units
Underlying
Options
(#)
    Exercise
Price of
Options
($/Sh)
    Grant Date
Fair Value of
Stock and
Option
Awards
($)
 

Name

  Grant Date   Maximum
($)
  Threshold
(#)
    Target
(#)
    Maximum
(#)
         

Steven A. Kandarian

  February 11, 2013   $10,000,000              
  February 26, 2013       30,303        121,212        212,121            $ 6,164,842   
  February 26, 2013             60,606          $ 1,951,513   
  February 26, 2013               181,818      $ 34.86      $ 1,729,089   
   

John C.R. Hele

  February 11, 2013   $10,000,000              
  February 26, 2013       3,030        12,121        21,212            $ 616,474   
  February 26, 2013             6,061          $ 195,164   
  February 26, 2013               18,182      $ 34.86      $ 172,911   
   

William J. Wheeler

  February 11, 2013   $10,000,000              
  February 26, 2013       10,985        43,939        76,893            $ 2,234,738   
  February 26, 2013             21,970          $ 707,434   
  February 26, 2013               65,909      $ 34.86      $ 626,795   
   

Martin J. Lippert

  February 11, 2013   $10,000,000              
  February 26, 2013       9,091        36,364        63,637            $ 1,849,473   
  February 26, 2013             18,182          $ 585,460   
  February 28, 2013               54,545      $ 34.86      $ 518,723   
   

Christopher G. Townsend

  February 11, 2013   $10,000,000              
  February 26, 2013       4,924        19,697        34,470            $ 1,001,789   
  February 26, 2013             9,848          $ 317,106   
  February 26, 2013               29,545      $ 34.86      $ 280,973   
   

 

Non-Equity Incentive Plan Awards

In February, 2013, the Compensation Committee made each Named Executive Officer eligible for an AVIP award for 2013 performance of up to $10 million, if the Company attained either of two Section 162(m) performance goals in 2013. Those goals were: (1) positive income from continuing operations before provision for income tax, excluding net investment gains (losses) (defined in accordance with Section 3(a) of Article 7.04 of SEC Regulation S-X), which includes total net investment gains (losses) and net derivatives gains (losses); or (2) positive TSR. These goals were established for the purpose of making AVIP awards to certain of the Company’s executives for 2013 eligible for the “performance-based” exemption from the limits on tax deductibility under Section 162(m). This limit is labeled “maximum” in this table. No amounts were established as minimum or target awards.

The amounts of the 2013 AVIP awards paid to the Named Executive Officers are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 44. The factors and analysis of results considered by the Compensation

Committee in determining the 2013 AVIP awards are discussed in the Compensation Discussion and Analysis.

Equity Incentive Plan Awards

The amounts in these columns reflect a range of potential payouts for Performance Shares or Performance Units granted to each Named Executive Officer in 2013. In each case, it is also possible that no payout will be made.

If the 25% threshold performance factor in the guidelines approved by the Compensation Committee applies, each Named Executive Officer would receive the number of Performance Shares (or Performance Units) reflected in the Threshold column of this table. If the target performance factor applies, each Named Executive Officer would receive the number of Performance Shares or Performance Units reflected in the Target column of the table. The maximum performance factor of 175% is reflected in the Maximum column of the table.

For a more detailed description of the material terms and conditions of these awards, see the Summary Compensation Table on page 44.

 

 

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All Other Stock Awards

The amounts in these columns reflect the potential payout for Restricted Stock Units or Restricted Units granted to each Named Executive Officer in 2013. In each case, it is also possible that no payout will be made.

For a more detailed description of the material terms and conditions of these awards, see the Summary Compensation Table on page 44.

All Other Option Awards

For a description of the material terms and conditions of these awards, see the Summary Compensation Table on page 44.

 

 

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Outstanding Equity Awards at 2013 Fiscal Year-End

 

 

This table presents information about:

 

 

Stock Options granted to the Named Executive Officers that were outstanding on December 31, 2013 because they had not been exercised or forfeited as of that date.

 

 

Performance Shares and Performance Units granted to the Named Executive Officers that were outstanding on December 31, 2013 because they had not vested or become payable as of that date (except for the Performance Shares for the performance period of January 1, 2011 to December 31, 2013, which vested on December 31, 2013, but for which the amounts payable are not yet known).

 

 

Restricted Stock Units and Restricted Units granted to the Named Executive Officers that were outstanding on December 31, 2013 because they had not vested or become payable as of that date.

The awards reported in this table include awards granted in 2013, which are also reported in the Summary Compensation Table on page 44 and the table entitled “Grants of Plan-Based Awards in 2013” on page 51.

 

    Option Awards(1)(2)(3)   Stock Awards  

Name

  Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
    Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
    Option
Exercise
Price
($)
    Option
Expiration
Date
  Number of
Shares or
Units of
Stock
That
Have Not
Vested
(#)(4)
    Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(5)
    Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have
Not Vested
(#)(6)
    Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares,  Units
or Other
Rights That
Have
Not Vested
($)(7)
 

Steven A. Kandarian

    35,000        $ 50.12      February 27, 2016        
    45,000        $ 62.80      February 26, 2017        
    43,500        $ 60.51      February 25, 2018        
    53,400        $ 23.30      February 23, 2019        
    106,800        $ 23.30      February 23, 2019        
    80,000        $ 34.84      February 22, 2020        
    53,334        26,666      $ 45.79      February 22, 2021        
      150,000      $ 44.59      March 20, 2021        
    109,375        218,750      $ 38.29      February 27, 2022        
      181,818      $ 34.86      February 25, 2023        
            60,606      $ 3,267,876       
                                                  585,871      $ 31,590,164   

John C.R. Hele

    32,795        65,588      $ 34.00      September 3, 2022        
      18,182      $ 34.86      February 25, 2023        
            6,061      $ 326,809       
                86,802      $ 4,680,350   
                                                             

William J. Wheeler

    35,000        $ 38.47      April 14, 2015        
    45,000        $ 50.12      February 27, 2016        
    50,000        $ 62.80      February 26, 2017        
    46,500        $ 60.51      February 25, 2018        
    65,000        $ 23.30      February 23, 2019        
    130,000        $ 23.30      February 23, 2019        
    84,000        $ 34.84      February 22, 2020        
    56,668        28,332      $ 45.79      February 22, 2021        
      112,500      $ 44.59      March 20, 2021        
    42,200        84,400      $ 38.29      February 27, 2022        
      65,909      $ 34.86      February 25, 2023        
            21,970      $ 1,184,622       
                                                  293,893      $ 15,846,724   

Martin J. Lippert

    25,000        12,500      $ 29.50      September 5, 2021        
    10,934        21,866      $ 38.29      February 27, 2022        
      54,545      $ 34.86      February 25, 2023        
            30,682      $ 1,654,373       
                                                  110,537      $ 5,960,155   

Christopher G. Townsend

    14,789        29,576      $ 30.43      July 31, 2022        
      29,545      $ 34.86      February 25, 2023        
            9,848      $ 531,004       
                                                  64,048      $ 3,453,455   

 

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(1)

Each of these Option Awards is a Stock Option. Each has an expiration date that is the day before the tenth anniversary of its grant date. Except as described in note 2 to this table, each of the Stock Options for each Named Executive Officer will become exercisable at a rate of one-third of each annual grant on each of the first three anniversaries of the grant date, subject to conditions.

 

(2)

Mr. Kandarian’s and Mr. Wheeler’s Stock Options that expire on March 20, 2021 will become exercisable on the third anniversary of their grant date, subject to conditions.

 

(3)

Portions of Mr. Kandarian’s outstanding Stock Options have been effectively transferred other than for value under a domestic relations order: 17,500 of those expiring in 2016; 19,125 of those expiring in 2017; 11,310 of those expiring in 2018; and 4,000 of those expiring in 2020.

 

(4)

Each of these Stock Awards are Restricted Stock Units, except for Mr. Townsend’s Stock Awards which are Restricted Units.

 

(5)

The hypothetical amount reflected in this column for each Named Executive Officer is equal to the number of Restricted Stock Units and Restricted Units reflected in the column entitled “Number of Shares or Units of Stock That Have Not Vested” multiplied by the closing price of a Share on December 31, 2013, the last business day of that year.

 

(6)

This column reflects outstanding Performance Shares and (for Mr. Townsend) Performance Units for the following performance periods for each Named Executive Officer:

 

     2011-2013      2012-2014      2013-2015  

Steven A. Kandarian

     77,500         109,375         121,212   

John C.R. Hele

     0         32,795         12,121   

William J. Wheeler

     66,300         42,200         43,939   

Martin J. Lippert

     12,500         10,950         36,364   

Christopher G. Townsend

     0         14,789         19,697   

None of these Performance Shares and Performance Units has been paid. If they are paid, the amount that is paid may be different than the amounts reflected in this table. Under the terms of the awards, the number of Shares (or their equivalent in cash) that will be paid, if any, will be determined using a performance factor based upon a three-year performance period.

The number of Performance Shares or Performance Units in this column for each Named Executive Officer is the maximum amount that could become payable. The amounts have been determined by (1) multiplying the aggregate Performance Shares or Performance Units awarded to each Named Executive Officer for the 2011-2013 and 2012-2014 performance periods described above by a hypothetical performance factor of 200%; and (2) multiplying the aggregate Performance Shares or Performance Units granted to each Named Executive Officer for the 2013-2015 performance period described above by a hypothetical performance factor of 175%. This hypothetical performance factor is the maximum performance factor that could be applied to the awards. The maximum performance factor has been used because it was not possible to determine the Company’s performance in 2013 or 2014 in comparison to the performance of other Insurance Index Comparators at the time this Proxy Statement was filed. See the Summary Compensation Table on page 44 for a description of the terms of the Performance Share and Performance Unit awards.

In each case, the Performance Shares and Performance Units vest on December 31 of the final calendar year of the performance period, subject to conditions. As a result, none of the Performance Shares and Performance Units reflected in this column has vested, with the exception of the Performance Shares or Performance Units for the performance period of 2011-2013. The final number of Performance Shares payable for the 2011-2013 period is not yet known, and will be determined by the Company’s performance in comparison to the performance of the Insurance Index Comparators over the three-year performance period and be payable in the second quarter of 2014. The amount that is payable may be different than the amounts reflected in this table.

 

(7)

The hypothetical amount reflected in this column for each Named Executive Officer is equal to the number of Performance Shares and Performance Units reflected in the column entitled “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” multiplied by the closing price of a Share on December 31, 2013, the last business day of that year.

 

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Option Exercises and Stock Vested in 2013

 

 

 

     Option Awards      Stock Awards  

Name

   Number of Shares
Acquired on Exercise
(#)
     Value Realized
on Exercise
($)
     Number of Shares
Acquired on Vesting
(#)
     Value Realized
on Vesting
($)
 

Steven A. Kandarian

     0       $ 0         24,840       $ 818,230   

John C.R. Hele

     0       $ 0         0       $ 0   

William J. Wheeler

     40,000       $ 626,344         25,760       $ 848,534   

Martin J. Lippert

     0       $ 0         0       $ 0   

Christopher G. Townsend

     0       $ 0         0       $ 0   

 

Option Awards

The amounts for value realized on exercise of Option Awards represent the aggregate value realized upon the exercise of vested Stock Options or Unit Options. The value realized upon the exercise of each award is the difference between the market value of Shares when the Stock Option or Unit Option was exercised and the exercise price of the Stock Option or Unit Option.

Stock Awards

These amounts reflect payouts of Performance Shares for the 2010-2012 performance period, which vested on December 31, 2012. The value realized on vesting was determined using the closing price of Shares on the last business day of 2012.

The number of Shares payable for this award was calculated by multiplying the number of Performance Shares by the performance factor that pertained to the awards, which was 92%. This factor was the total of the Operating EPS Performance Factor and the TSR Performance Factor, each of which could have been as low as 0% and as high as 100%.

The factor based on the Company’s Operating EPS was 91%. This was the average percentage determined by the Company’s year-over-year change in Operating EPS relative to other Standard and Poor’s Insurance Index comparators for each of the three years of the performance period:

 

Year

   Company
Performance
   Performance
Factor

2010

   above 75th percentile    100%

2011

   above 75th percentile    100%

2012

   61st percentile    72%

The factor based on the Company’s TSR was 32%. This was determined by comparing the Company’s performance relative to that of other Standard & Poor’s Insurance Index comparators with respect to TSR for the performance period. The TSR of the Insurance Index Comparators, less MetLife’s TSR, was (18%). That result produced a performance factor of 32%.

Under the terms of the 2010-2012 Performance Share awards, because the Company’s TSR for the performance period was negative, the resulting Performance Factor of 123% was reduced by 25%. The result was the 92% Performance Factor used to determine the payout.

Each Named Executive Officer who had a Performance Share award for the 2010-2012 performance period had the opportunity to defer the Shares payable for that award. Mr. Kandarian deferred receipt of 95% of the Shares payable to him.

The Performance Shares for the 2011-2013 performance period have vested, but the actual amounts payable are not yet known and are not reflected in this table. See the table entitled “Outstanding Equity Awards at 2013 Fiscal Year-End” on page 53 for more information about the Named Executive Officers’ Performance Shares for this performance period. The amounts payable for the 2011-2013 performance period will be reflected in the table entitled “Option Exercises and Stock Vested in 2014” in the Company’s 2015 Proxy Statement.

 

 

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Pension Benefits at 2013 Fiscal Year-End

 

 

 

Name

  

Plan Name

   Number of Years
Credited Service
(#)
     Present Value of
Accumulated Benefit
($)
 

Steven A. Kandarian

   Retirement Plan      8.75       $ 128,988   
     Auxiliary Pension Plan      8.75       $ 1,635,998   

John C.R. Hele

   Retirement Plan      1.333       $ 9,332   
     Auxiliary Pension Plan      1.333       $ 0   

William J. Wheeler

   Retirement Plan      16.25       $ 379,653   
     Auxiliary Pension Plan      16.25       $ 2,453,761   

Martin J. Lippert

   Retirement Plan      2.333       $ 30,027   
     Auxiliary Pension Plan      2.333       $ 169,310   

 

Pension Benefits for U.S.-Based Executives

The U.S.-based Named Executive Officers are eligible to participate in the Retirement Plan and the Auxiliary Pension Plan. Eligible employees qualify for pension benefits after one year of service and become vested in their benefits after three years of service.

Pension Plans.    Pension benefits are paid under two separate plans, primarily due to tax requirements. The Retirement Plan is a tax-qualified defined benefit pension plan that provides benefits for eligible employees on the United States payroll. The U.S. Internal Revenue Code imposes limitations on eligible compensation and on the amounts that can be paid under the Retirement Plan. The purpose of the Auxiliary Pension Plan is to provide benefits which eligible employees would have received under the Retirement Plan if these limitations were not imposed. Benefits under the Auxiliary Pension Plan are calculated in substantially the same manner as they are under the Retirement Plan. The Auxiliary Pension Plan is unfunded, and benefits under that plan are general promises of payment not secured by any rights to Company property.

Determination of Benefits.    An employee’s benefit is calculated under either one or a combination of two different formulas, only one of which applies to any given period of service. Mr. Wheeler’s benefit will be determined using the Traditional Formula for service prior to 2003 and the Personal Retirement Account Formula for service in 2003 and later. Each other Named Executive Officer’s respective benefit will be determined exclusively under the Personal Retirement Account Formula. Mr. Wheeler had sufficient service as of year-end 2013 to be fully vested in both his Traditional Formula benefit and Personal Retirement Account

Formula benefit. Mr. Kandarian had sufficient service as of year-end 2013 to be fully vested in his Personal Retirement Account Formula benefit.

The Personal Retirement Account Formula is based on amounts contributed or credited for each participant based on the participant’s eligible compensation, plus interest. All employees hired (or rehired) on or after January 1, 2002 accrue benefits for 2002 and later under the Personal Retirement Account Formula. Under the Personal Retirement Account Formula, an employee is credited each month with an amount equal to 5% of eligible compensation up to the Social Security wage base (for 2013, $113,700), plus 10% of eligible compensation in excess of that wage base. In addition, amounts credited to each employee earn interest at an approximation of the U.S. government’s 30-year Treasury securities rate.

The Traditional Formula is based on length of service and final average compensation. The Traditional Formula is used to calculate benefits for each eligible employee’s service before 2002. Employees hired before 2002 who remained employed throughout 2002 accrued benefits for 2002 under the Traditional Formula. These employees were given the opportunity to continue accruing their pension benefits under the Traditional Formula for service in 2003 and later or to begin accruing benefits for 2003 and later under the Personal Retirement Account Formula.

The annual benefit under the Traditional Formula is determined by multiplying the employee’s years of service (up to 35) by the sum of (1) 1.1% of the employee’s final average compensation up to the average Social Security wage base over the past 35 years, and (2) 1.7% of the employee’s final average

 

 

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compensation in excess of the average Social Security wage base over the past 35 years. Employees who served more than 35 years also receive 0.5% of final average compensation multiplied by years and months of service in excess of 35 years. An employee’s final average compensation is calculated by looking back at the 10-year period prior to retirement or termination of employment and determining the consecutive five-year period during which the employee’s eligible compensation (including base salary and eligible annual incentive awards) produces the highest average annual compensation.

Beginning January 1, 2010, the same final average compensation formula that applies to qualified Traditional Formula benefits for all eligible employees applies to Traditional Formula benefits for senior officers under the Auxiliary Pension Plan: by looking back at the 10-year period prior to retirement or termination of employment and determining the consecutive five-year period during which the employee’s eligible compensation (including base salary and eligible annual incentive awards) produces the highest average annual compensation. Benefits accrued through 2009 will not be affected by this change.

In early 2009, the final average compensation under the Auxiliary Pension Plan for each participant, including each Executive Group member, was capped at $4.6 million. The purpose of this limitation is to reduce expected future pension accruals, thus limiting future increases in benefits, and that has been its effect.

For pension benefit purposes, the 2009 annual incentive awards, which were paid outside of AVIP, are considered on the same basis as AVIP awards.

Form of Payment of Benefits.    Whether an employee’s pension benefit is determined under the Traditional Formula or (except with respect to amounts accrued under the Auxiliary Pension Plan during or after 2005) the Personal Retirement Account Formula, the employee may choose to receive the benefit as a life annuity, life annuity with term certain, contingent survivor annuity, or first-to-die annuity. Amounts accrued during or after 2005 under the Auxiliary Pension Plan that are determined by the Personal Retirement Account Formula are paid in a lump sum. Employees may choose a lump sum payout of any of the rest of their vested benefits under the Personal Retirement Account Formula at termination of their employment or later. The Named Executive Officer participants could also have selected, no later than December 31, 2008 and subject to the approval of the Compensation Committee or its designee, the timing and form of the Traditional Formula benefit payment under the Auxiliary Pension Plan,

including a lump sum payment. The actuarial value of all forms of payment is substantially equivalent.

Retirement Eligibility.    Normal Retirement Eligibility applies at age 65 with at least one year of service. An employee is eligible for early Retirement Eligibility beginning at age 55 with 15 years of service. Each year of age over age 57 1/2 reduces the number of years of service required to qualify for early retirement, until normal Retirement Eligibility at age 65 and at least one year of service.

The Traditional Formula benefit may not be paid to employees before they become Retirement Eligible. Early retirement payments for Traditional Formula participants are reduced from normal retirement benefits by an early retirement factor that depends on the employee’s age at the time payments begin and years of service at the end of employment. If an employee has 20 years of service or more and is Retirement Eligible, the factors range from 72% at age 55 to 100% at age 62. If an employee does not have 20 years of service at the end of employment, the factors range from 54.8% at age 55 to 100% at age 65.

However, attaining Retirement Eligibility does not affect Personal Retirement Account benefits. Personal Retirement Account participants qualify to be paid their full vested benefit when their employment ends. Because Personal Retirement Account benefits are based on total amounts credited for the employee and not final average compensation, those benefits are not reduced for any early retirement.

Attaining Retirement Eligibility also affects whether an employee retains stock-based long-term incentive awards. See the text accompanying the table entitled “Potential Payments upon Termination or Change-in-Control at 2013 Fiscal Year-End” on page 63 for a discussion of these effects as of 2013 year-end.

Of the Named Executive Officers based in the U.S., only Mr. Kandarian was Retirement Eligible during 2013.

Compliance with Section 409A Requirements.    Amounts that were vested in the Auxiliary Pension Plan after 2004 are subject to the requirements of U.S. Internal Revenue Code Section 409A (Section 409A). Participants had the opportunity in 2008 to choose their form of payment (including a lump sum) for their accrued benefit, so long as they did not begin receiving payments in the year of the election. Payments of amounts that are subject to the requirements of Section 409A to the top 50 highest paid officers in the Company that are due upon separation from service are delayed for six months following their separation, as required by Section 409A.

 

 

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Present Value Calculation Assumptions.    The present value of each Named Executive Officer participant’s accumulated pension benefits is reported in the table above using certain assumptions. In the case of each Named Executive Officer with a benefit determined in part under the Traditional Formula, the assumptions used in the determination of present value as of December 31, 2013 include assumed retirement at the earliest date the executive could retire with full pension benefits. This was the earlier of the date the executive reached at least age 62 with at least 20 years of service, or the normal retirement date (age 65). Otherwise, the assumptions used were the same as those used for financial reporting under GAAP. For a discussion of the assumptions made regarding this valuation, see Notes 1

and 18 to the Consolidated Financial Statements included in the 2013 Form 10-K.

In the case of each Named Executive Officer with a benefit determined exclusively under the Personal Retirement Account Formula, the present value of his benefit as of December 31, 2013 is equal to his Personal Retirement Account balance. Of those Named Executive Officers, only Mr. Kandarian was vested in his benefit as of that date. Vested Personal Retirement Account balances may be paid in full upon termination of employment at any time.

Mr. Townsend

Mr. Townsend did not participate in a defined benefit pension plan in 2013.

 

 

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Nonqualified Deferred Compensation at 2013 Fiscal Year-End

 

 

 

Name

  Plan Name   Executive
Contributions
in Last FY
($)(1)
    Registrant
Contributions
in Last FY
($)(2)
    Aggregate
Earnings
in Last FY
($)(3)
    Aggregate
Withdrawals/
Distributions
($)
    Aggregate
Balance at
Last FYE
($)(4)
 

Steven A. Kandarian

  Leadership Plan   $ 861,364      $ 0      $ 2,630,880      $ 0      $ 6,804,199   
    Auxiliary SIP   $ 0      $ 206,300      $ 17,065      $ 0      $ 665,457   

William J. Wheeler

  Leadership Plan   $ 0      $ 0      $ 4,580,386      $ 0      $ 11,388,163   
  Officers Plan   $ 0      $ 0      $        $ 0      $ 0   
    Auxiliary SIP   $ 0      $ 89,800      $ 22,701      $ 0      $ 836,192   

Christopher G. Townsend(5)

  Mandatory   $ 1,950      $ 30,225      $ (26   $ 0      $ 47,911   
  Provident          
    Fund                                        

 

(1)

The amount in this column for Mr. Kandarian reflects payout of Performance Shares for the 2010-2012 performance period less amounts withheld under tax rules or otherwise not deferred. The full payout amount is included in the table entitled “Option Exercises and Stock Vested in 2013” on page 55. The amounts reported in this column do not appear in the Summary Compensation Table. The amount in this column for Mr. Townsend reflects Mr. Townsend’s Relevant Income and salary payments that were credited as contributions to the Mandatory Provident Fund. These amounts were reported as salary in the Summary Compensation Table for 2013. No employee contributions are made under the Auxiliary SIP.

 

(2)

Amounts in this column are reported as components of the Company Savings and Investment Program and Mandatory Provident Fund Contributions for 2013 in the “All Other Compensation” column of the Summary Compensation Table on page 44.

 

(3)

None of the amounts in this column are reported for 2013 in the Summary Compensation Table. See the text pertaining to the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of that table on page 44.

 

(4)

A portion of the amounts reported in this column is attributable to Company Savings and Investment Program and Mandatory Provident Fund Contributions. These contributions are reflected in the “All Other Compensation” column of the Summary Compensation Tables in the Company’s previous Proxy Statements (beginning in 2007) for Named Executive Officers who appeared in those Proxy Statements: $442,617 for Steven A. Kandarian and $574,339 for William J. Wheeler.

 

(5)

Amounts for Mr. Townsend that were denominated, accrued, earned, or paid in Hong Kong Dollars have been converted to U.S. dollars at a rate of H.K.$1 = U.S.$0.13.

 

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Deferred Compensation Program for U.S.-Based Employees

The Company’s nonqualified deferred compensation program offers savings opportunities to the U.S.-based Named Executive Officers, as well as hundreds of other eligible employees.

The program for U.S.-based employees consists of a plan for amounts that are subject to the requirements of Section 409A (the MetLife Leadership Deferred Compensation Plan, or Leadership Plan) and a plan for amounts that were vested by December 31, 2004 and are not subject to the requirements of Section 409A (the MetLife Deferred Compensation Plan for Officers, or Officers Plan). Under this program, employees may elect to defer receipt of their base salary and incentive compensation. Income taxation on such compensation is delayed until the employee receives payment. Employees also receive Company contributions under the Auxiliary Savings and Investment Plan. In the table above, the Auxiliary Savings and Investment Plan is referred to as the Auxiliary SIP.

Leadership Plan and Officers Plan. Under the Company’s deferred compensation program for U.S.-based employees, Named Executive Officers based in the U.S. may elect to defer receipt of up to 75% of their base salary, all of their AVIP awards, and any payouts for Performance Share awards. These deferrals are voluntary contributions of the Named Executive Officers’ own earnings.

Payments that would have been made in Shares, but are deferred, remain payable in Shares. This includes deferred payments from Performance Shares, Restricted Stock Units, and the Share payments under the Long Term Performance Compensation Plan formerly maintained by the Company. Cash awards under the Long Term Performance Compensation Plan that were irrevocably deferred in the form of Shares are also payable in Shares. All other deferred compensation is payable in cash.

Participants may elect to receive compensation they have deferred at a specified date before, upon or after retirement. In addition, participants may elect to receive payments in a single lump sum or in up to 15 annual installments. However, despite a participant’s election, payment is generally made in full in a single lump sum

should the executive terminate employment with the Company before becoming Retirement Eligible or Bridge Eligible. Payments to the top 50 highest paid officers that are due upon separation from service are delayed for six months following their separation, in compliance with Section 409A.

The terms of the Officers Plan and the Leadership Plan are substantially similar, except that: (1) under the Officers Plan, participants may choose to receive amounts not subject to Section 409A at any time with a 10% reduction; and (2) payments under the Leadership Plan to the top 50 highest paid officers in the Company that are due upon separation from service are delayed for six months following their separation.

The Company offers a number of simulated investments under the deferred compensation program. Participants may generally choose the simulated investments for their deferred cash compensation at the time they elect to defer compensation, and may change the simulated investment selections for their existing account balances up to six times each calendar year. The table below reflects the simulated investment returns for 2013 on each of the alternatives offered under the program. The MetLife Deferred Shares Fund is available exclusively for deferred Shares. The MetLife Common Stock Fund is available for deferred cash compensation. Each of these two funds reflects changes in value of Shares plus the value of imputed reinvested dividends.

 

Simulated Investment

   2013 Return  

Auxiliary Fixed Income Fund

     2.89%   

Lord Abbett Bond Debenture Fund

     8.17%   

Oakmark Fund

     37.29%   

Small Cap Equity Fund

     38.33%   

Oakmark International Fund

     29.34%   

S&P 500© Index

     32.39%   

Russell 2000© Index

     38.82%   

MSCI EAFE© Index

     22.78%   

Barclays Capital U.S. Aggregate Bond Index

     (2.02)%   

BofA Merrill Lynch U.S. High Yield Index

     7.42%   

MSCI Emerging Markets Index

     (2.60)%   

MetLife Deferred Shares Fund

     67.28%   

MetLife Common Stock Fund

     67.28%   

Each simulated investment was available for the entirety of 2013.

 

 

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Auxiliary Savings and Investment Plan. Eligible U.S.-based Named Executive Officers and other eligible U.S.-based employees who elected to contribute a portion of their eligible compensation under the tax-qualified Savings and Investment Plan in 2013 received a Company contribution of their eligible compensation in that plan in 2013:

 

Employee Contribution

(as a percentage of eligible

compensation)

   Company Contribution
(as a percentage of eligible
compensation)

3%

   3%

4%

      3.5%

5% or more

   4%

The employee’s eligible compensation under the Savings and Investment Plan includes base salary and eligible annual incentive awards.

The U.S. Internal Revenue Code limits compensation that is eligible for employer contributions under the Savings and Investment Plan. In 2013, the Company could not make contributions based on compensation over $255,000. Named Executive Officers and other eligible employees who elected to participate in the Savings and Investment Plan during 2013 were credited with a percentage of their eligible compensation beyond that limit. The Company contribution was determined using the same employee contribution rate as applied under the Savings and Investment Plan. This Company contribution is credited to an account established for the employee under the nonqualified Auxiliary Savings and Investment Plan.

Employees receive their Auxiliary Savings and Investment Plan balances in a lump sum or in up to 15 annual installments, in either case beginning one year after termination of employment. Employees may elect during their employment to instead delay their payment, or the beginning of their annual payments, up to 10 years after termination of employment.

Amounts in the Auxiliary Savings and Investment Plan are subject to the requirements of Section 409A. Participants were able to elect the time and form of their payments through 2008, which was within the time period permitted for such elections under Section 409A. Participants may change the time and form of their payments after 2008, but the election must be made during employment, is not effective until 12 months after it is made, and must delay the start of benefit payments by at least five years. Payments to the top 50 highest paid officers that are due upon separation from service are delayed for six months following their separation, in compliance with Section 409A.

Employees may choose from a number of simulated investments for their Auxiliary Savings and Investment Plan accounts. These simulated investments were identical to the core funds offered under the Savings and Investment Plan in 2013, except that the rate set for the fixed income fund available under the Auxiliary Savings and Investment Plan cannot exceed 120% of the applicable federal long term rate under U.S. Internal Revenue Code Section 1274(d) at the time that rate is set. Employees may change the simulated investments for new Company contributions to their Auxiliary Savings and Investment Plan accounts at any time.

Employees could change the simulated investments for their existing Auxiliary Savings and Investment Plan accounts up to four times a month in 2013. Beginning in 2010, employees could not allocate more than 10% of their existing Auxiliary Savings and Investment Plan account balances to the MetLife Company Stock Fund (except for any account balance already in the MetLife Company Stock Fund as of January 1, 2010), and could not allocate more than 10% of future contributions to that fund. Fees are charged to employees for moving existing balances out of certain international simulated investments prior to the expiration of pre-established holding periods.

The table below reflects the simulated investment returns for 2013 on each of the alternatives offered under the Auxiliary Savings and Investment Plan.

 

Simulated Investment

   2013 Return  

Auxiliary Fixed Income Fund

     2.89%    

Bond Index Fund

     (2.13)%   

Balanced Index Fund

     7.76%    

Large Cap Equity Index Fund

     32.26%    

Large Cap Value Index Fund

     32.33%    

Large Cap Growth Index Fund

     33.41%    

Mid Cap Equity Index Fund

     33.34%    

Small Cap Equity Fund

     38.33%    

International Equity Fund

     17.04%    

MetLife Company Stock Fund

     66.96%    

The MetLife Company Stock Fund includes a limited proportion of simulated investments in instruments other than Shares.

The Balanced Index Fund was available from July 1, 2013 through December 31, 2013. Each other simulated investment was available for the entirety of 2013.

 

 

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Mandatory Provident Fund Applicable to Mr. Townsend

Under the Mandatory Provident Fund available to employees in Hong Kong, including Mr. Townsend, eligible employees must defer receipt of 5% of their Relevant Income up to the equivalent of $162.50 per month. Relevant Income refers to wages, salary, leave pay, commission, bonus, gratuity, perquisite, or allowance paid by the employer.

The monthly employer contribution is based on the employee’s years of service: 6% of salary if the employee has less than five years of service, then increasing by 2% at five years of service and by 2% for every five years of completed service thereafter. An employee may make additional, voluntary contributions of between 1% and 5% of monthly salary. If the employee does so, additional employer matching contributions equal to the employee’s contributions up to 2% of monthly salary will also be made.

The matching contribution vests at 10% per year of completed service and is completely vested at ten years of service. An employee who leaves employment or is lawfully dismissed from employment loses unvested matching contributions.

Payments of the employee’s account are generally made in a single lump sum when the employee leaves employment after age 60 or at age 65. If an employee leaves employment before age 60, the employee’s account generally remains in the program and may be transferred to another employer’s Mandatory Provident Fund.

The program offers a number of funds from among which participants may choose to invest some or all of their accounts. Participants may generally change the investments for their new contributions at any time. The table below reflects the investment returns for 2013 on each of the funds offered under the program.

Constituent Fund

   2013
Returns
 

Manulife MPF Japan Equity Fund

     34.78%    

Manulife MPF Healthcare Fund

     31.62%    

Manulife MPF North American Equity Fund

     30.36%    

Manulife MPF International Equity Fund

     23.77%    

Manulife MPF European Equity Fund

     22.69%    

Manulife MP Fidelity Growth Fund

     16.59%    

Manulife MPF Aggressive Fund

     16.09%    

Manulife MPF 2045 Retirement Fund

     15.38%    

Manulife MPF 2040 Retirement Fund

     15.32%    

Manulife MPF 2035 Retirement Fund

     15.18%    

Manulife MPF 2030 Retirement Fund

     14.68%    

Manulife MPF 2025 Retirement Fund

     13.18%    

Manulife MPF Growth Fund

     11.03%    

Manulife MPF Hong Kong Equity Fund

     10.75%    

Manulife MPF 2020 Retirement Fund

     10.13%    

Manulife MPF Fidelity Stable Growth Fund

     8.02%    

Manulife MPF 2015 Retirement Fund

     6.17%    

Manulife MPF Pacific Asia Equity Fund

     6.06%    

Manulife MPF China Value Fund

     5.73%    

Manulife MPF Hang Seng Index Tracking Fund

     4.72%    

Manulife MPF Stable Fund

     1.91%    

Manulife MPF Conservative Fund

     0.01%    

Manulife MPF Hong Kong Bond Fund

     (3.67)%   

Manulife MPF International Bond Fund

     (3.75)%   

Manulife MPF Pacific Asia Bond Fund

     (4.18)%   

Manulife MPF RMB Bond Fund

     0.07%    

Manulife MPF Interest Fund

     0.01%    

The Manulife RMB Bond Fund was available beginning December 16, 2013. Each other investment was available for the entirety of 2013.

Mr. Hele and Mr. Lippert

Mr. Hele and Mr. Lippert did not participate in a defined contribution nonqualified deferred compensation program in 2013.

 

 

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Potential Payments upon Termination or Change-in-Control at 2013 Fiscal Year-End

 

 

The table and accompanying narrative below reflect estimated additional payments or benefits that would have been earned or accrued, or that would have vested or been paid out earlier than normal, had any Named Executive Officer been terminated from employment or had a change-in-control of the Company occurred on the last business day of 2013 (the Trigger Date). The table reflects hypothetical payments and benefits. None of the payments or benefits has actually been made. The table and accompanying narrative also do not include payments or benefits under arrangements available on the same basis generally to all salaried employees in the jurisdiction in which the Named Executive Officer is employed. The Named Executive Officers’ pension benefits and nonqualified deferred compensation are described in the tables entitled “Pension Benefits at 2013 Fiscal Year-End” on page 56 and “Nonqualified Deferred Compensation at 2013 Fiscal Year-End” on page 59, respectively.

 

          Death     Qualifying Termination
(No Change-in-Control)
    Change-in-Control     Qualifying Termination
(Change-in-Control)
 
    Voluntary
Resignation
    Accelerated
Stock
Options
    Payout of
Share
Awards
    Severance
Pay
    Outplace-
ment
    Pro-Rata
Payout of
Share
Awards
    Accelerated
Stock
Options
    Payout of
Share
Awards
    Severance
Pay
    Benefits
Continuation
 
Steven A. Kandarian   $ 0      $ 8,500,808      $ 15,701,127      $ 865,385      $ 18,500      $ 0      $ 8,500,808      $ 15,701,127      $ 8,300,000      $ 179,551   
John C.R. Hele   $ 0      $ 1,653,062      $ 2,748,680      $ 334,615      $ 18,500      $ 884,200      $ 1,653,062      $ 2,748,680      $ 4,200,000      $ 87,134   

William J. Wheeler

  $ 0      $ 3,855,362      $ 5,829,237      $ 634,615      $ 18,500      $ 1,587,800      $ 3,855,362      $ 5,829,237      $ 5,333,333      $ 126,484   

Martin J. Lippert

  $ 0      $ 1,686,643      $ 4,205,544      $ 360,577      $ 18,500      $ 988,900      $ 1,686,643      $ 4,205,544      $ 3,900,000      $ 90,345   

Christopher G. Townsend

  $ 0      $ 1,257,868      $ 2,390,489      $ 280,938      $ 0      $ 528,900      $ 1,257,868      $ 2,390,489      $ 2,600,000      $ 71,146   

 

Voluntary Resignation

None of the Named Executive Officers has a preferential arrangement that calls for any severance pay in connection with a voluntary resignation from employment prior to a change-in-control. Nor in such a case would any additional preferential payments or benefits have been earned or accrued, or have vested or been paid out earlier than normal, in favor of any Named Executive Officer. Mr. Townsend would receive payments determined on the same basis as applies to all other employees in Hong Kong.

A Named Executive Officer who had resigned but was Retirement Eligible as of the Trigger Date would have continued to receive the benefit of the executive’s existing stock-based awards, unless the executive had been involuntarily terminated for cause. For this purpose, “cause” is defined as engaging in a serious infraction of Company policy, theft of Company property or services or other dishonest conduct, conduct otherwise injurious to the interests of the Company, or demonstrated unacceptable lateness or absenteeism. Each of the executive’s Performance Shares and Performance Units would have been paid after the conclusion of the performance period, the executive’s Restricted Stock Units and Restricted Units would have been paid after the

conclusion of the restriction period, and all of the executive’s unexercised Stock Options and Unit Options would have continued to vest and remain exercisable for the remainder of their full ten-year term. The executive would also have been eligible for an annual cash incentive award for 2013, at the discretion of the Compensation Committee. These terms apply to all employees who meet the age and service qualifications to become Retirement Eligible and have received such awards. See the table entitled “Outstanding Equity Awards at 2013 Fiscal Year-End” on page 53 for details on the Performance Shares and Stock Options. Of the Named Executive Officers, only Mr. Kandarian was Retirement Eligible as of the Trigger Date.

Any Named Executive Officer who had resigned but was not Retirement Eligible as of the Trigger Date would nevertheless have received any 2011-2013 Performance Shares previously granted to him, because these awards vested on December 31, 2013. The executive would have had 30 days from the Trigger Date to exercise any Stock Options that had vested as of the Trigger Date. Such a Named Executive Officer would have forfeited all other outstanding stock-based compensation awards.

Under the terms of Mr. Townsend’s employment offer letter, the Company could have imposed a Garden Leave

 

 

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on Mr. Townsend as of the Trigger Date. During such a period, which could not have exceeded three months, Mr. Townsend would have been excluded from working for the Company and would have been prohibited from working for any third party and from competing with the Company. The Company would have had to continue paying Mr. Townsend his compensation during the Garden Leave. Had the Company exercised its right to impose a three month Garden Leave on Mr. Townsend as of the Trigger Date, Mr. Townsend’s salary payments would have cost $167,917.

Death

In the unlikely event that a Named Executive Officer had died on the Trigger Date, that executive’s stock-based awards would have vested and become payable immediately. The Company would have paid the executive’s unvested Performance Shares and Performance Units using 100% of Performance Shares granted (Target Performance), and would have paid out the executive’s unvested Restricted Stock Units and or Restricted Units. All of the executive’s Stock Options would have become immediately exercisable. These terms apply to all employees of the Company who have been granted such awards. The payment on stock-based awards reflected in the table above was calculated using the closing price of Shares on the Trigger Date (the Trigger Date Closing Price).

Qualifying Termination (No Change-in-Control)

None of the Named Executive Officers has an employment agreement or other arrangement that calls for any severance pay in connection with a termination of employment for cause. If one of these Named Executive Officers had been terminated for cause, the executive’s unvested Performance Shares, Performance Units, and Restricted Stock Units, and all of the executive’s Stock Options, would have been forfeited and the executive would have received no annual award for 2013 performance. For the definition of cause for this purpose, see above under “Voluntary Resignation.”

Had such a Named Executive Officer been terminated from employment due to job elimination without a change-in-control having occurred, the executive would have been eligible for severance pay under a severance program for all officer-level employees (or, in Mr. Townsend’s case, equivalent terms promised to him in his employment offer letter). The severance pay would have been equal to 28 weeks base salary plus one week for every year of service, up to 52 weeks base salary. In order to receive any severance pay, the executive would have had to enter into a separation agreement that would have included a release of employment-related

claims against the Company (a Separation Agreement). Each executive would also have been entitled to outplacement services. The cost of these payments and services is reflected in the table above.

If such a Named Executive Officer’s termination had been due to performance, the amount of severance pay would have been one-half of what it would have been in the case of job elimination.

An employee who would have been Bridge Eligible had the employee been involuntarily terminated with severance pay on the Trigger Date would have received the benefit of all stock-based awards made in 2005 or later on the same basis as those who were Retirement Eligible. In order to be Bridge Eligible, an employee must enter into a Separation Agreement. None of the Named Executive Officers had the requisite age and service to qualify for Bridge Eligibility as of the Trigger Date.

Any of the Named Executive Officers whose employment was terminated with severance pay and who was neither Retirement Eligible nor Bridge Eligible as of the Trigger Date would have had 30 days from the Trigger Date to exercise any Stock Options that had vested as of the Trigger Date. Nevertheless, each would have received payout for his 2011-2013 Performance Shares and Performance Units, because these awards vested at the end of the performance period on December 31, 2013.

Such a Named Executive Officer would have been offered pro rata payments in consideration of any 2012-2014 and 2013-2015 Performance Shares and Performance Units, contingent on a Separation Agreement. The amount of payment for these Performance Shares and Performance Units would have been determined using the amount of time that had passed in the performance period through the date of the termination of employment, the number of Performance Shares or Performance Units granted, the lesser of the performance factor ultimately determined for that three-year performance period or target performance (100%), and the lesser of the closing price of Shares on the date of grant and the closing price of Shares on the date the Compensation Committee determined the performance factor for that performance period. Such payments would not have been made until after the end of the applicable performance period.

Such a Named Executive Officer would also have been offered pro rata payments in consideration of any unvested Restricted Stock Units and Restricted Units granted prior to 2013, contingent on a Separation Agreement. The amount of payment would have been determined using the amount of time that had passed in

 

 

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the performance period through the date of the termination of employment, the number of Restricted Stock Units and Restricted Units granted, and the closing price of Shares on the date of grant.

The estimated cost of these pro rata payments for each Named Executive Officer is reflected in the table above, using the closing price of Shares on the date of grant and a hypothetical 100% performance factor.

Change-in-Control

The Company’s definition of change-in-control is: any person acquires beneficial ownership of 25% or more of MetLife’s voting securities (for this purpose, persons include any group under Rule 13d-5(b) under the Exchange Act, not including MetLife, any affiliate of MetLife, any Company employee benefit plan, or the MetLife Policyholder Trust); a change in the majority of the membership of MetLife’s Board of Directors (other than any director nominated or elected by other directors) occurs within any 24-month period; or a completed transaction after which the previous shareholders of MetLife do not own the majority of the voting shares in the resulting company, or do not own the majority of the voting shares in each company that holds more than 25% of the assets of MetLife prior to the transaction.

Had a change-in-control occurred on the Trigger Date, the Company could have chosen to substitute an award with at least the same value and at least equivalent material terms that complies with Section 409A (an Alternative Award), rather than accelerate or pay out the existing stock-based award. Otherwise, the Company would have paid out the executive’s unvested Performance Shares and Performance Units in cash using Target Performance and the change-in-control price of Shares, and would have paid out the executive’s unvested Restricted Stock Units and Restricted Units using the change-in-control price of Shares. Payment would have been made within 30 days after the change-in-control, except that if the event did not qualify as a change-in-control as defined in Section 409A, then payment would have been made following the end of the th