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

SCHEDULE 14A

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

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

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

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

CNO Financial Group, Inc.

(Name of Registrant as Specified In Its Charter)

 

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

Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

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

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

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LOGO

CNO Financial Group, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 9, 2018

              NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of CNO Financial Group, Inc. (the "Company"), will be held at the CNO Conference Center, 11825 North Pennsylvania Street, Carmel, Indiana, at 8:00 a.m., Eastern Daylight Time, on May 9, 2018, for the following purposes:

    1.
    To elect nine directors, each for a one-year term ending in 2019;

    2.
    To approve the Company's Employee Stock Purchase Plan;

    3.
    To approve the adoption of the Amended and Restated Section 382 Shareholder Rights Plan;

    4.
    Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for 2018;

    5.
    To approve, by non-binding advisory vote, the executive compensation of the Company's named executive officers; and

    6.
    To consider such other matters, if any, as may properly come before the meeting and any adjournment or postponement thereof.

              Holders of record of outstanding shares of the common stock of the Company as of the close of business on March 12, 2018, are entitled to notice of and to vote at the meeting and any adjournment or postponement thereof. Holders of common stock have one vote for each share held of record.

              In accordance with the rules of the Securities and Exchange Commission (the "SEC"), on or about March 28, 2018, we either mailed you a Notice of Internet Availability of Proxy Materials ("Notice") notifying you how to vote online and how to electronically access a copy of this Proxy Statement and the Company's Annual Report to Shareholders (together referred to as the "Proxy Materials") or mailed you a complete set of the Proxy Materials and proxy card. If you have not received but would like to receive printed copies of these documents, including a proxy card in paper format, you should follow the instructions for requesting such materials contained in the Notice.

              Management and the Board of Directors respectfully request that (if you received a paper copy of the Proxy Materials) you date, sign and return the enclosed proxy card in the postage-paid envelope so that we receive the proxy card prior to the Annual Meeting, or, if you prefer, follow the instructions on your proxy card or Notice for submitting a proxy electronically or by telephone. If your shares are held in the name of a bank, broker or other holder of record, please follow the procedures as described in the voting form they send to you. If you attend the meeting in person you may withdraw your proxy and vote personally at the meeting.

    By Order of the Board of Directors

 

 

Karl W. Kindig, Senior Vice President and Secretary

March 28, 2018
Carmel, Indiana


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TABLE OF CONTENTS

 
  Page

Solicitation of Proxies

  1

Record Date and Voting

  1

Votes Required

  2

Securities Ownership

  4

Proposal 1 — Election of Directors

  6

Director Qualifications and Experience

  6

Board Nominees

  7

Board and Governance Matters

  10

Board Committees

  10

Director Compensation

  12

Board Leadership Structure

  12

Board Meetings and Attendance

  13

Director Independence

  13

Board's Role in Risk Oversight

  13

Relationship of Compensation Policies and Practices to Risk Management

  14

Approval of Related Party Transactions

  14

Code of Ethics

  15

Corporate Governance Guidelines

  15

Director Stock Ownership Guidelines

  15

Talent Management and Succession Planning

  15

Communications with Directors

  15

Compensation Committee Interlocks and Insider Participation

  15

Copies of Corporate Documents

  16

Executive Compensation

  16

Compensation Discussion and Analysis

  16

Compensation Committee Report

  34

Summary Compensation Table for 2017

  35

Grants of Plan-Based Awards in 2017

  37

Narrative Supplement to the Summary Compensation Table and the Grants of Plan-Based Awards in 2017 Table

  38

Outstanding Equity Awards at 2017 Fiscal Year-End

  40

Option Exercises and Stock Vested in 2017

  41

Nonqualified Deferred Compensation in 2017

  42

Potential Payments Upon Termination or Change in Control

  42

CEO Pay Ratio

  44

Proposal 2 — Approval of the Employee Stock Purchase Plan

  45

Proposal 3 — Approval of the Adoption of the Amended and Restated Section 382 Shareholder Rights Plan

  48

Proposal 4 — Ratification of the Appointment of Our Independent Registered Public Accounting Firm

  54

Fees Paid to PricewaterhouseCoopers LLP

  55

Pre-Approval Policy and Independence

  55

Report of the Audit and Enterprise Risk Committee

  55

Proposal 5 — Non-Binding Advisory Vote on Executive Compensation

  57

Section 16(a) Beneficial Ownership Reporting Compliance

  57

Shareholder Proposals for 2019 Annual Meeting

  58

Annual Report

  58

Householding of Proxy Materials

  58

Information Related to Certain Non-GAAP Financial Measures

  58

Other Matters

  60

Annex A — Employee Stock Purchase Plan

  A-1

Annex B — Amended and Restated Section 382 Shareholder Rights Plan

  B-1

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LOGO

CNO Financial Group, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032

PROXY STATEMENT

              This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of CNO Financial Group, Inc. ("CNO" or the "Company") for the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the CNO Conference Center, 11825 North Pennsylvania Street, Carmel, Indiana on May 9, 2018, at 8:00 a.m., Eastern Daylight Time. We are sending the Notice or the Proxy Materials and proxy to shareholders on or about March 28, 2018.

Solicitation of Proxies

              The proxies are solicited by the Board of Directors.    Proxies may be solicited by mail, telephone, internet or in person. Proxies may by solicited by the CNO Directors and officers. All expenses relating to the preparation and distribution to shareholders of the Notice, the Proxy Materials and the form of proxy are to be paid by CNO.

              If the form of proxy is properly executed and delivered in time for the Annual Meeting, the named proxy holders will vote the shares represented by the proxy in accordance with the instructions marked on the proxy. Each shareholder may appoint a person (who need not be a shareholder), other than the persons named in the proxy, to represent him or her at the Annual Meeting by properly completing a proxy. In either case, such completed proxy should be returned in the envelope provided to you for that purpose (if you have requested or received a paper copy of the Proxy Materials) for delivery no later than May 8, 2018. Proxies received that are unmarked will be voted for each of the Board's nominees for director (Proposal 1), for the approval of the Employee Stock Purchase Plan (Proposal 2), for the approval of the adoption of the Company's Amended and Restated Section 382 Shareholder Rights Plan (Proposal 3), for ratification of the appointment of the Company's independent registered public accounting firm (Proposal 4), and for approval of the compensation paid to our Named Executive Officers (Proposal 5). A shareholder may revoke a proxy at any time before it is exercised by mailing or delivering to CNO a written notice of revocation or a later-dated proxy, or by attending the Annual Meeting and voting in person.

Record Date and Voting

              Only holders of record of shares of CNO's common stock as of the close of business on March 12, 2018, will be entitled to vote at the Annual Meeting. On such record date, CNO had 167,525,578 shares of common stock outstanding and entitled to vote at the Annual Meeting. Each share of common stock will be entitled to one vote with respect to each matter submitted to a vote at the Annual Meeting. The presence in person or by proxy of the holders of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting is necessary to constitute a quorum.

              On or about March 28, 2018, we either mailed you a Notice notifying you how to vote online and how to electronically access a copy of the Proxy Materials or mailed you a complete set of the Proxy Materials. If you have not received but would like to receive printed copies of these documents, including a proxy card in paper format, you should follow the instructions for requesting such materials contained in the Notice.

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              The following sets forth how a shareholder can vote over the Internet, by telephone or by mail:

Voting By Internet

              If you hold your shares in street name (that is, if you hold your shares through a broker, bank or other holder of record), you can vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the 12-digit Control Number included on your Notice or your paper voting instruction form (if you received a paper copy of the Proxy Materials).

Voting By Telephone

              If you hold your shares in street name, you can vote using a touch-tone telephone by calling the toll-free number included on your paper voting instruction form (if you received a paper copy of the Proxy Materials), 24 hours a day, seven days a week. You will need the 12-digit Control Number included on your notice or your paper voting instruction form.

              If you hold your shares in street name, you may also submit voting instructions to your bank, broker or other holder of record. In most instances, you will be able to do this over the Internet, by telephone, or by mail. Please refer to the information from your bank, broker or other holder of record on how to submit voting instructions.

              The Internet and telephone voting procedures, which comply with Delaware law and the SEC rules, are designed to authenticate shareholders' identities, to allow shareholders to vote their shares and to confirm that their instructions have been properly recorded.

Voting By Mail

              If you have received a paper copy of the Proxy Materials by mail, you may complete, sign, date and return by mail the paper proxy card or voting instruction form sent to you in the envelope provided to you with your Proxy Materials or voting instruction form.

Deadline for Submitting Votes by Internet, Telephone or Mail

              If you hold your shares in street name, proxies submitted over the Internet or by telephone as described above must be received by 11:59 p.m., Eastern Daylight Time, on May 8, 2018.

              Proxies submitted by mail should be returned in the envelope provided to you with your paper proxy card or voting instruction form, and must be received no later than May 8, 2018.

              If you want to vote in person at the Annual Meeting and you hold your shares in street name, you must obtain a legal proxy from your bank, broker or other holder of record authorizing you to vote. You must then bring the legal proxy to the Annual Meeting.

              Please note that you may receive multiple copies of the Notice or Proxy Materials (electronically and/or by mail). These materials may not be duplicates as you may receive separate copies of the Notice or Proxy Materials for each type of account in which you hold shares. Please be sure to vote all of your shares in each of your accounts in accordance with the directions on the proxy card(s) and/or voting instruction form(s) that you receive. In the case of duplicate votes for shares in a particular account, your last vote is the one that counts.

Votes Required

              The election of each director (Proposal 1) will be determined by the vote of the majority of the votes cast (where the number of votes cast "for" a director exceeds the number of votes cast "against" that director) by the holders of shares represented (in person or by proxy) and entitled to vote on the subject matter provided a quorum is present. The vote required to approve the Employee Stock Purchase Plan (Proposal 2), to approve the

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adoption of the Amended and Restated Section 382 Shareholder Rights Plan (Proposal 3), to ratify the appointment of the Company's independent registered public accounting firm (Proposal 4), to approve, by non-binding advisory vote, the compensation of the Company's named executive officers (Proposal 5), and any other proposal properly brought before the Annual Meeting, is the affirmative vote of a majority of the shares represented (in person or by proxy) and entitled to vote on the applicable subject matter. Abstentions from voting will have no impact on the election of directors (Proposal 1) and will have the same legal effect as voting against each other proposal.

              Abstentions and shares represented by "broker non-votes", as described below, are counted as present and entitled to vote for the purpose of determining a quorum. A broker non-vote occurs if you hold your shares in street name and do not provide voting instructions to your broker, bank or other holder of record on a proposal and your broker, bank or other holder of record does not have discretionary authority to vote on such proposal. Under current New York Stock Exchange rules, your broker, bank or other holder of record will not have discretionary authority to vote your shares at the Annual Meeting with respect to Proposal 1 (election of nine directors as listed in this Proxy Statement), Proposal 2 (approval of the Employee Stock Purchase Plan), Proposal 3 (approval of the adoption of the Amended and Restated Section 382 Shareholder Rights Plan), and Proposal 5 (advisory vote to approve executive compensation). "Broker non-votes" will have no effect on the outcome of Proposals 1, 2, 3 and 5. Your broker, bank or other holder of record will have discretion to vote your uninstructed shares on Proposal 4 (ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for 2018).

              IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 9, 2018

              This Proxy Statement (including all attachments), the Company's Annual Report to Shareholders (which includes the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission ("SEC") on February 23, 2018) (which is not deemed to be part of the official proxy soliciting materials), and any amendments to the foregoing materials that are required to be provided to shareholders are available at www.proxyvote.com. Shareholders may obtain copies of the Proxy Statement, Annual Report to Shareholders (including financial statements and schedules thereto) and form of proxy relating to this or future meetings of the Company's shareholders, free of charge on our Internet website at www.CNOinc.com in the "Investors — SEC Filings" section, by calling 317-817-2893 or by sending the Company an email at ir@CNOinc.com. For directions to the Company's 2018 Annual Meeting, please call us at 317-817-2893.

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SECURITIES OWNERSHIP

              The following table sets forth certain information concerning the beneficial ownership of our common stock as of March 12, 2018 (except as otherwise noted) by each person known to us to beneficially own more than 5% of the outstanding shares of our common stock, each of our directors and nominees, each of the executive officers that are named in the Summary Compensation Table on page 35 and all of our directors and executive officers as a group. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of March 12, 2018 and restricted stock units that are scheduled to vest within 60 days of March 12, 2018, are deemed to be outstanding and to be beneficially owned by the person holding the options or restricted stock units for the purpose of computing the percentage ownership of that person or group of persons but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

 
   
  Shares Beneficially Owned  
Title of Class  
Name of Beneficial Owner
  Number   Percentage  
Common stock   BlackRock, Inc.(1)     16,378,021     9.8 %
Common stock   The Vanguard Group(2)     15,952,621     9.5  
Common stock   Dimensional Fund Advisors LP(3)     11,462,277     6.8  
Common stock   Gary C. Bhojwani(4)     247,910     *  
Common stock   Ellyn L. Brown     49,412     *  
Common stock   Robert C. Greving     59,064     *  
Common stock   Stephen N. David     5,000     *  
Common stock   Mary R. (Nina) Henderson     39,052     *  
Common stock   Charles J. Jacklin     21,194     *  
Common stock   Daniel R. Maurer     14,624     *  
Common stock   Neal C. Schneider     90,273     *  
Common stock   Frederick J. Sievert     64,624     *  
Common stock   Edward J. Bonach(5)     1,659,418     *  
Common stock   Bruce K. Baude(6)     267,464     *  
Common stock   Eric R. Johnson(7)     634,105     *  
Common stock   Erik M. Helding(8)     106,307     *  
Common stock   All directors, nominees and executive officers as a group (18 persons)(9)     3,813,712     2.3 %

*
Less than 1%.

(1)
Based solely on Amendment No. 4 to Schedule 13G filed with the SEC on February 1, 2018 by BlackRock, Inc. The Amendment No. 4 to Schedule 13G reports sole power to vote or direct the vote of 15,995,390 shares and sole power to dispose or direct the disposition of 16,378,021 shares. The business address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.

(2)
Based solely on Amendment No. 5 to Schedule 13G filed with the SEC on February 8, 2018 by The Vanguard Group. The Amendment No. 5 to Schedule 13G reports sole power to vote or direct the vote of 184,312 shares, shared power to vote or direct the vote of 22,688 shares, sole power to dispose or direct the disposition of 15,758,959 shares, and shared power to dispose or direct the disposition of 193,662 shares. The business address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.

(3)
Based solely on Amendment No. 6 to Schedule 13G filed with the SEC on February 9, 2018 by Dimensional Fund Advisors LP. The Amendment No. 6 to Schedule 13G reports sole power to vote or direct the vote of 11,335,210 shares and sole power to dispose or direct the disposition of 11,462,277 shares. The business address for Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746.

(4)
Includes options, exercisable currently or within 60 days of March 12, 2018, to purchase 45,300 shares of common stock and includes 4,630 restricted stock units scheduled to vest within 60 days of March 12, 2018.

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(5)
Includes (i) options, exercisable currently or within 60 days of March 12, 2018, to purchase 1,160,467 shares of common stock, (ii) 18,520 restricted stock units scheduled to vest within 60 days of March 12, 2018, and (iii) shares of common stock owned by Mr. Bonach as of December 31, 2017, the date of his retirement.

(6)
Includes options, exercisable currently or within 60 days of March 12, 2018, to purchase 192,320 shares of common stock and includes 3,240 restricted stock units scheduled to vest within 60 days of March 12, 2018.

(7)
Includes options, exercisable currently or within 60 days of March 12, 2018, to purchase 264,960 shares of common stock and includes 3,240 restricted stock units scheduled to vest within 60 days of March 12, 2018.

(8)
Includes options, exercisable currently or within 60 days of March 12, 2018, to purchase 74,990 shares of common stock and includes 5,558 restricted stock units scheduled to vest within 60 days of March 12, 2018.

(9)
Includes options, exercisable currently or within 60 days of March 12, 2018, to purchase an aggregate of 2,024,091 shares of common stock held by executive officers and includes an aggregate of 42,566 restricted stock units scheduled to vest within 60 days of March 12, 2018.

Director Deferred Stock Units

              Under the CNO Board of Directors Deferred Compensation Plan, the non-management directors may elect each year to defer some or all of their compensation, including the equity portion of the annual director fees. Any equity that is so deferred is represented by vested deferred stock units, on which dividend equivalents are paid during the deferral period. The deferred stock units are not entitled to vote. At the end of the deferral period selected by the director, one share of Common Stock will be issued for each deferred stock unit. As of March 12, 2018, the non-management directors held deferred stock units as set forth below (these units are in addition to the share ownership set forth above):

Name
  Number of
Deferred
Stock Units

Stephen N. David

  6,570

Mary R. (Nina) Henderson

  6,570

Daniel R. Maurer

  6,570

Neal C. Schneider

  13,140

Frederick J. Sievert

  6,570

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PROPOSAL 1

ELECTION OF DIRECTORS

              Nine individuals will be elected to the Board at the Annual Meeting for one-year terms expiring at the 2019 annual meeting of shareholders. Each nominee listed below is currently a member of the Board. All directors will serve until their successors are duly elected and qualified.

Director Qualifications and Experience

              In considering candidates for the Board, the Governance and Nominating Committee reviews the experience, skills, attributes and qualifications of the current Board members and other potential candidates to ensure that the Board has the skills and experience to properly oversee the interests of the Company. In doing so, the Governance and Nominating Committee considers the experience, skills, attributes and qualifications of candidates in these areas:

    Insurance and financial services industry;

    Accounting or other financial management;

    Investments and investment management;

    Legal and regulatory;

    Actuarial;

    Management including service as a chief executive officer or manager of business units or functions;

    Marketing;

    Technology;

    Talent management; and

    Experience as a director of other companies.

              The key experiences, qualifications, attributes and skills of each of the nominees are included in their individual biographies below.

              Consideration is also given to each nominee's independence, financial literacy, personal and professional accomplishments and experience in light of the needs of the Company. For incumbent directors, past performance on the Board and contributions to their respective committees are also considered. The Governance and Nominating Committee and the Board seek directors with qualities that will contribute to the goal of having a well-rounded, diverse Board that functions well as a unit and is able to satisfy its oversight responsibilities effectively. The Governance and Nominating Committee expects each of the directors to have proven leadership, sound judgment, high ethical standards and a commitment to the success of the Company.

              The Governance and Nominating Committee does not have a specific diversity policy with respect to Board candidates, but it strongly believes that the Board should have a variety of differences in viewpoints, professional experiences, educational background, skills, race, gender and age, and considers issues of diversity and background in its process of selecting candidates for the Board.

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Board Nominees

              Should any of the nominees become unable to accept election, the persons named in the proxy will have the right to exercise their voting power in favor of such person or persons as the Board may recommend. All of the nominees have consented to being named in this Proxy Statement and to serve if elected. The Board knows of no reason why any of its nominees would be unable to accept election.

              The Governance and Nominating Committee will consider candidates for director nominees put forward by shareholders. See "Shareholder Proposals for 2019 Annual Meeting" for a description of the advance notice procedures for shareholder nominations for directors.

              Set forth below is information regarding each person nominated by the Board for election as a director.

Nominees for Election as Directors:

GRAPHIC   Gary C. Bhojwani, 50, has been chief executive officer of CNO since January 1, 2018 and a director since May 2017. He served as president of CNO from April 2016 through December 2017. Mr. Bhojwani served as a Member of the Board of Management at Allianz SE, and as Chairman of Allianz of America, Allianz Life Insurance Company, and Fireman's Fund Insurance Company from 2012 to January 1, 2015. From 2007 to 2012, he served as Chief Executive Officer of Allianz Life Insurance Company of North America. From April 2015 until joining CNO, Mr. Bhojwani served as Chief Executive Officer of GCB, LLC, an insurance and financial services consulting company that he founded. He has been a director of Hormel Foods Corporation since 2014. With respect to Mr. Bhojwani's nomination for re-election, the Board and the Governance and Nominating Committee considered his experience as chief executive officer and president of the Company and his extensive insurance, sales and executive management experience.

GRAPHIC

 

Ellyn L. Brown, 68, joined our Board in May 2012. Until her retirement from full-time law practice, Ms. Brown practiced corporate and securities law, most recently as principal of Brown & Associates, a boutique law and consulting firm that provided operations, regulatory and governance services to financial services industry clients and other clients that operated in heavily regulated, high-scrutiny environments. Ms. Brown served as a member of the board of directors of NYSE Euronext (and predecessor entities) (NYSE:NYX) from 2005 until the acquisition of NYX by the Intercontinental Exchange in 2013, and also chaired the board of NYSE Regulation,  Inc., the entity that oversaw market regulation at the NYSE and its affiliated exchanges. She has been a member of the board of Brinker Capital Destinations Trust since January 2017. She was a member of the board of directors of Walter Investment Management Corp. from 2009 – 2017. Ms. Brown served as a governor of the Financial Industry Regulatory Authority from 2007 – 2012 and, from 2007 – 2011, was a trustee of the Financial Accounting Foundation, the parent entity of the Financial Accounting Standards Board and the Governmental Accounting Standards Board. With respect to Ms. Brown's nomination for re-election, the Board and the Governance and Nominating Committee considered her extensive financial industry, legal and regulatory experience.

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GRAPHIC   Stephen N. David, 69, joined our Board in May 2017. Mr. David has been a Senior Advisor with The Boston Consulting Group since 2005, providing strategic planning services in sales, marketing and technology to a variety of clients across multiple industries, including financial services. He retired in 2005 after 34 years with Procter & Gamble ("P&G"). During his P&G career Mr. David held multiple senior management positions including Chief Information Officer, Global Customer Development Officer, and Senior Vice President, Business Development. He served as a director of Checkpoint Systems, Inc., which provides merchandise availability solutions for the retail industry, encompassing loss prevention and merchandise visibility, from 2012 until the completion of the sale of the company in May 2016. He also served as a director of Iomega Corporation, a consumer technology company, from 2002 until its acquisition in 2008. With respect to Mr. David's nomination for re-election, the Board and the Governance and Nominating Committee considered his extensive leadership experience in technology, strategy, marketing and sales.

GRAPHIC

 

Robert C. Greving, 66, joined our Board in May 2011. Mr. Greving is the retired executive vice president, chief financial officer and chief actuary for Unum Group, having held those positions from 2005 to 2009. Mr. Greving also served as president of Unum International Ltd., Bermuda. Before becoming executive vice president and chief financial officer of Unum Group in 2003, he held senior vice president, finance, and chief actuary positions with Unum Group and with The Provident Companies, Inc., which merged with Unum Group. His duties prior to retirement included directing all aspects of the finance and actuarial responsibilities for the corporate and nine insurance subsidiary insurance companies of Unum Group. He previously held senior positions with PennCorp Dallas Operations, Southwestern Life Insurance Company, American Founders Insurance Company, Aegon USA and Horace Mann Life Insurance Company during his 35 years in the insurance industry. He is a Fellow of the Society of Actuaries. With respect to Mr. Greving's nomination for re-election, the Board and the Governance and Nominating Committee considered his extensive experience with the management of companies in the life, health, disability and annuity lines of business and in particular with the actuarial, financial and investment disciplines.

GRAPHIC

 

Mary R. (Nina) Henderson, 67, joined our Board in August 2012. Ms. Henderson is the managing partner of Henderson Advisory, a consulting practice providing marketing perspective and business evaluation to investment management firms on consumer products. She was a corporate vice president of Bestfoods and president of Bestfoods Grocery. During her 30-year career with Bestfoods, and its predecessor company CPC International, Ms. Henderson held a wide variety of international and North American general management and executive marketing positions. Ms. Henderson has been a director of IWG plc (formerly Regus plc) since May 2014 and has been a director of Hikma Pharmaceuticals plc since October 2016. She previously served as a director of Walter Energy, Inc. (2013 – 2016), Del Monte Foods Company (2002 – 2011), The Equitable Companies (1996 – 2000), AXA Financial (2001 – 2011), Pactiv Corporation (2000 – 2010), Royal Dutch Shell plc and its predecessor The Shell Transport and Trading Company (2001 – 2009) and the Hunt Corporation (1991 – 2002). She is a trustee of Drexel Univereity and a director of the Visiting Nurse Service of New York and the Foreign Policy Association. With respect to Ms. Henderson's nomination for re-election, the Board and the Governance and Nominating Committee considered her management leadership experience, consumer marketing background, and her experience as a director of companies in a variety of industries, including insurance.

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GRAPHIC   Charles J. Jacklin, 63, joined our Board in May 2015. Mr. Jacklin has more than 30 years of finance and investment experience. He served as Chief Executive Officer and President of Mellon Capital Management Corporation from 2006 until March 2011 and then served as Chairman until his retirement at the end of 2012. Mr. Jacklin also held several other executive management positions in his 18 years with Mellon Capital Management including chief investment strategist, where he was responsible for investment strategies and research, and director of asset allocation strategies, where he was responsible for portfolio management in domestic, international and global asset allocation strategies. He has also taught finance and investment strategy for 10 years at the University of Chicago and Stanford University Schools of Business. With respect to Mr. Jacklin's nomination for re-election, the Board and the Governance and Nominating Committee considered his extensive investment, investment risk management and finance experience.

GRAPHIC

 

Daniel R. Maurer, 61, joined our Board in May 2015. Mr. Maurer was a member of the senior management team at Intuit Inc. from 2006 until his retirement in 2014. In his most recent role at Intuit, he oversaw the Small Business Solutions Group (including QuickBooks payroll, DemandForce, and QuickBase), and previously led the TurboTax®, Mint, and Quicken brands. Mr. Maurer has extensive global consumer retail sales and marketing experience with over 20 years in executive management at Procter & Gamble ("P&G"), including 15 years internationally. As General Manager of Global Customer Development at P&G's headquarters, he was tasked with building an effective marketing strategy to achieve a competitive advantage with P&G's largest global customers including Wal-Mart, Costco, Ahold, Tessco, and Carrefour. Subsequent to his tenure at P&G, Mr. Maurer was Vice President of Strategy for Global Sales and US Business at Campbell's Soup. He has served since 2012 on the board of directors of Zagg Inc, which designs, produces and distributes mobile accessory solutions, and served as a director of Checkpoint Systems, Inc., which provides merchandise availability solutions for the retail industry, encompassing loss prevention and merchandise visibility, from January 2016 until the completion of the sale of the company in May 2016. Previously, Mr. Maurer served as a director of Iomega Corporation, a consumer technology company, from 2006 until its acquisition in 2008. With respect to Mr. Maurer's nomination for re-election, the Board and the Governance and Nominating Committee considered his extensive experience in marketing and marketing strategy, including the use of digital marketing strategies to reach the middle market.

GRAPHIC

 

Neal C. Schneider, 73, joined our Board in September 2003. Mr. Schneider served from 2003 until 2010 as the non-executive chairman of the board of PMA Capital Corporation, whose subsidiaries provide insurance products, including workers' compensation and other commercial property and casualty lines of insurance, as well as fee-based services. He also served on the executive, audit and governance committees for PMA Capital. Until his retirement in 2000, Mr. Schneider spent 34 years with Arthur Andersen & Co., including service as partner in charge of the Worldwide Insurance Industry Practice and the North American Financial Service Practice. Between 2000 and 2002, he was an independent consultant and between 2002 and 2003, Mr. Schneider was a partner of Smart and Associates, LLP, a business advisory and accounting firm. With respect to Mr. Schneider's nomination for re-election, the Board and the Governance and Nominating Committee considered his extensive knowledge and experience in accounting and financial matters, particularly with respect to insurance companies, and in corporate governance.

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GRAPHIC   Frederick J. Sievert, 70, joined our Board in May 2011. Mr. Sievert is the retired President of New York Life Insurance Company, having served in that position from 2002 through 2007. Mr. Sievert shared responsibility for overall company management in the Office of the Chairman, from 2004 until his retirement in 2007. Mr. Sievert joined New York Life in 1992 as senior vice president and chief financial officer of the individual insurance businesses. In 1995 he was promoted to executive vice president and was elected to the New York Life board of directors in 1996. Prior to joining New York Life, Mr. Sievert was a senior vice president for Royal Maccabees Life Insurance Company, a subsidiary of the Royal Insurance Group of London, England. Mr. Sievert is a Fellow of the Society of Actuaries. He has been a director of Reinsurance Group of America, Incorporated since 2010. With respect to Mr. Sievert's nomination for re-election, the Board and the Governance and Nominating Committee considered his extensive insurance, actuarial and executive management experience.

Voting for Directors; Required Vote

              The election of each director will be determined by the vote of the majority of the votes cast (where the number of votes cast "for" a director exceeds the number of votes cast "against" that director) by the holders of shares of common stock present in person, or represented by proxy, and entitled to vote on the proposal at the Annual Meeting.

              In an uncontested election of directors at which a quorum is present, any incumbent director who fails to receive a majority of the votes cast (where the number of votes cast "for" a director exceeds the number of votes cast "against" that director) shall offer to tender his or her resignation to the Board. In such event, the Governance and Nominating Committee will consider the offer and make a recommendation to the Board whether to accept or reject the resignation or whether other action should be taken. The Board will publicly disclose its decision and rationale within 90 days from the certification of the election results.

Recommendation of our Board of Directors

              OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION TO THE BOARD OF EACH OF THE COMPANY'S DIRECTOR NOMINEES LISTED ABOVE.


BOARD AND GOVERNANCE MATTERS

Board Committees

              Audit and Enterprise Risk Committee.    The Audit and Enterprise Risk Committee's functions, among others, are to recommend the appointment of independent accountants; review the arrangements for and scope of the audit by the independent accountants; review the independence of the independent accountants; consider the adequacy of the system of internal accounting controls and review any proposed corrective actions; provide oversight of the Company's internal audit department; review and monitor the Company's compliance with legal and regulatory requirements; discuss with management and the independent accountants our draft annual and quarterly financial statements and key accounting and/or reporting matters; and oversee management's processes for managing enterprise risk, including cyber security risk. The Audit and Enterprise Risk Committee itself does not prepare financial statements or perform audits and its members are not auditors or certifiers of the Company's financial statements. The Audit and Enterprise Risk Committee currently consists of Mr. Greving, Ms. Henderson, Mr. Jacklin and Mr. Schneider, with Mr. Greving serving as committee chair. Based on their experience, Mr. Greving and Mr. Schneider each qualify as an "audit committee financial expert," as defined under SEC rules promulgated under the Sarbanes-Oxley Act. All current members of the Audit and Enterprise Risk Committee are "independent" within the meaning of the regulations adopted by the SEC including Section 10A(m)(3) of the Securities Exchange Act of 1934 and the listing requirements adopted by the New York Stock Exchange regarding audit committee membership. The current members also satisfy the financial literacy

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qualifications of the New York Stock Exchange listing standards. The committee met on 16 occasions in 2017. The duties and responsibilities of the Audit and Enterprise Risk Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Governance and Nominating Committee.    The Governance and Nominating Committee is responsible for, among other things, establishing criteria for Board membership; considering, recommending and recruiting candidates to fill new positions on the Board; reviewing candidates recommended by shareholders; and considering questions of possible conflicts of interest involving Board members, executive officers and key employees. It is also responsible for developing principles of corporate governance and recommending them to the Board for its approval and adoption, and reviewing periodically these principles of corporate governance to insure that they remain relevant and are being complied with. The Governance and Nominating Committee currently consists of Ms. Brown, Mr. David, Mr. Maurer, Mr. Schneider and Mr. Sievert, with Ms. Brown serving as committee chair. All current members of the Governance and Nominating Committee are "independent" within the meaning of the listing requirements adopted by the New York Stock Exchange regarding nominating committee membership. The committee held four meetings during 2017. The duties and responsibilities of the Governance and Nominating Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Human Resources and Compensation Committee.    The Human Resources and Compensation Committee is responsible for, among other things, approving overall compensation philosophy and strategy; evaluating the performance of the chief executive officer and recommending to the Board the compensation of the chief executive officer; reviewing and approving on an annual basis the evaluation process and compensation structure for the Company's other executive officers as recommended by the chief executive officer; ensuring that appropriate programs and procedures are established to provide for the development, selection, retention and succession of officers and key personnel; and reviewing and administering our incentive compensation and equity award plans. The report of the Human Resources and Compensation Committee appears on page 34 of this Proxy Statement. The Human Resources and Compensation Committee currently consists of Mr. Sievert, Ms. Brown, Mr. David and Mr. Maurer, with Mr. Sievert serving as committee chair. All current members of the Human Resources and Compensation Committee are "independent" within the meaning of the listing requirements adopted by the New York Stock Exchange regarding compensation committee membership and qualify as "non-employee" directors for purposes of Rule 16b-3 of the Securities Exchange Act of 1934 and as "outside directors" for purposes of Section 162(m) of the Internal Revenue Code. The committee met on six occasions in 2017. The duties and responsibilities of the Human Resources and Compensation Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Investment Committee.    The Investment Committee is responsible for, among other things, reviewing investment policies, strategies and programs; reviewing the procedures which the Company utilizes in determining that funds are invested in accordance with policies and limits approved by it; and reviewing the quality and performance of our investment portfolios and the alignment of asset duration to liabilities. The Investment Committee currently consists of Mr. Jacklin, Mr. Bhojwani, Mr. Greving and Ms. Henderson, with Mr. Jacklin serving as committee chair. The committee met on four occasions in 2017. The duties and responsibilities of the Investment Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Executive Committee.    Subject to the requirements of applicable law, including our certificate of incorporation and bylaws, the Executive Committee is responsible for exercising, as necessary, the authority of the Board in the management of our business affairs during intervals between Board meetings. The Executive Committee currently consists of Mr. Schneider, Mr. Bhojwani and Mr. Greving, with Mr. Schneider serving as committee chair. The duties and responsibilities of the Executive Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

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Director Compensation

              Our non-employee directors currently receive an annual cash retainer of $88,000. Our non-executive chairman receives a fee equal to 200% of the base cash fees and equity awards paid to the other non-employee directors. The chairs of the Audit and Enterprise Risk Committee and the Human Resources and Compensation Committee each currently receive an additional annual cash fee of $30,000, and directors who chair one of our other Board committees (other than the Executive Committee) receive an additional annual cash fee of $20,000. Each member of the Audit and Enterprise Risk Committee (including the chair) receives an additional annual cash retainer of $15,000 and each member of the Human Resources and Compensation Committee (including the chair) receives an additional annual cash retainer of $10,000. Cash fees are paid quarterly in advance. In addition to the cash payments, our non-employee directors currently receive an annual equity award of $132,000, which vests immediately upon grant. The Board's policy is to review and set the compensation of the non-employee directors each year at the Board meeting that follows the Annual Meeting and to make equity awards to those directors at that time. Directors are reimbursed for out-of-pocket expenses, including first-class airfare, incurred in connection with the performance of their responsibilities as directors. The compensation earned or paid in 2017 to our non-employee directors is summarized in the table below:


DIRECTOR COMPENSATION IN 2017

Name
  Fees
Earned or
Paid
in Cash(1)
  Stock
Awards(2)
  Total

Ellyn L. Brown

  $110,857   $131,991   $242,848

Stephen N. David

  87,500   131,991   219,491

Robert C. Greving

  133,000   131,991   264,991

Mary R. (Nina) Henderson

  103,000   131,991   234,991

Charles J. Jacklin

  123,000   131,991   254,991

Daniel R. Maurer

  98,000   131,991   229,991

Neal C. Schneider

  191,000   263,983   454,983

Frederick J. Sievert

  128,000   131,991   259,991

Michael T. Tokarz(3)

  12,967   0   12,967

(1)
This column represents the amount of cash compensation earned or paid in 2017 for Board service, for service as non-executive chairman, for service on the Audit and Enterprise Risk Committee or the Human Resources and Compensation Committee, and for chairing a committee, as applicable.

(2)
The amounts in this column are computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 ("ASC 718") and represent the grant date fair values for shares of common stock awarded. On May 17, 2017, Mr. Schneider received an award of 13,140 restricted share units and each of the other directors listed (other than Mr. Tokarz) received an award of 6,570 restricted share units. These restricted share units vested immediately upon grant. Each restricted share unit entitles the director to receive one share of Common Stock. As described on page 5 of this Proxy Statement, several directors elected to defer receipt of the Common Stock pursuant to the Company's Board of Directors Deferred Compensation Plan.

(3)
Retired from the Board in 2017.

Board Leadership Structure

              CNO has a non-executive, independent director, who serves as chairman of the Board. Mr. Schneider has served in that capacity since 2011. The Board believes that its leadership structure, with a non-executive chairman position separate from the chief executive officer, provides appropriate, independent oversight of management and the Company. The non-executive chairman of the Board (1) presides at all meetings of the Board and shareholders; (2) presides during regularly held sessions with only the independent directors; (3) encourages and

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facilitates active participation of all directors; (4) develops the calendar of and agendas for Board meetings in consultation with the chief executive officer and other members of the Board; (5) determines, in consultation with the chief executive officer, the information that should be provided to the Board in advance of the meeting; and (6) performs any other duties requested by the other members of the Board.

              As discussed below, each member of our Board is independent other than Mr. Bhojwani, our chief executive officer. As CEO, Mr. Bhojwani, subject to the direction of the Board, is in charge of the business and affairs of CNO and is our chief policy making officer. Our Board and its committees play an active role in overseeing the Company's business. The directors bring a broad range of leadership, business and professional experience to the Board and actively participate in Board discussions. The Board believes that having a non-executive chairman and a Board comprised almost entirely of independent, non-employee directors best serves the interests of our shareholders and the Company.

Board Meetings and Attendance

              During 2017, the Board met on 12 occasions. Each director attended at least 75% of the aggregate meetings of the Board and Board committees on which he or she served. The independent directors regularly meet in executive session without the chief executive officer or any other member of management. The non-executive chairman presides at such executive sessions.

              In addition, CNO has a policy that all directors attend the annual meeting of shareholders. All of our directors attended the annual meeting of shareholders held in 2017.

Director Independence

              The Board annually determines the independence of directors based on a review by the directors. Although the Board has not adopted categorical standards of materiality for independence purposes, no director is considered independent unless the Board has determined that he or she has no material relationship with CNO, either directly or as an officer, shareholder or partner of an organization that has a material relationship with CNO. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others. The Board considers the Company's Corporate Governance Guidelines, the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange in making its determination regarding independence and the materiality of any relationships with CNO. The Board has determined that all current directors other than Mr. Bhojwani are independent.

Board's Role in Risk Oversight

              Enterprise risk management is integral to our business. The Board is responsible for overseeing the Company's risk profile and management's processes for managing risk. The oversight of certain risks, including those relating to the Company's capital structure and capital management, is done by the full Board. The Board has delegated primary responsibility for many aspects of the Board's risk oversight to the Audit and Enterprise Risk Committee. The Audit and Enterprise Risk Committee receives reports at its meetings and oversees management's processes for managing enterprise risk, including the risk management process associated with financial controls, insurance reserves, legal, regulatory and compliance risks, and the overall risk management structure, process and function. Other Board committees oversee risk management related to specific functions. The Investment Committee oversees investment and asset-liability management risk. The Human Resources and Compensation Committee oversees risks associated with our compensation programs so that incentives are not provided for inappropriate risk taking, as further discussed below.

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              Our leadership strongly supports an active and engaged risk management process. CNO has established an enterprise risk management committee comprised of senior management from business units and functions throughout the Company. This enterprise risk management committee meets at least once each quarter and is chaired by the chief financial officer. CNO also has an investment and asset-liability management committee comprised of senior management from various functions and the presidents of each business segment. This committee meets at least once each quarter and is chaired by the chief investment officer. The Company has a senior vice president who is responsible for the coordination of enterprise risk management activities. Reports on different aspects of the Company's enterprise risk management are provided to the Board, to the Audit and Enterprise Risk Committee, to the Investment Committee and to other Board committees, as appropriate, on a regular basis.

              As part of its risk oversight responsibilities, the Board and its committees review policies and processes that senior management uses to manage the Company's risk exposure. In doing so, the Board and its committees review the Company's risk appetite statement, overall risk function and senior management's establishment of appropriate systems and processes for managing insurance risk, interest rate and asset-liability management risk, credit and counterparty risk, liquidity risk, operational risk and reputational risk.

Relationship of Compensation Policies and Practices to Risk Management

              The Human Resources and Compensation Committee has reviewed our compensation programs and believes that they carefully and appropriately balance risks and rewards and do not incentivize inappropriate risk taking. Our incentive plans include multiple performance measures, most of which are financial in nature, and are designed to hold employees accountable for sustained improvement in the core operating performance of the Company. We structure our pay to include both fixed and variable compensation and our variable compensation is capped at no more than two times the target opportunities. In addition, our officers' compensation aligns them with shareholder interests through equity-based awards with multiple year vesting.

Approval of Related Party Transactions

              Under the Company's written policy, transactions and agreements with a Related Person (defined to include directors, director nominees and executive officers or members of their immediate families, or shareholders owning five percent or more of the Company's outstanding stock) that meet the minimum threshold for disclosure in the proxy statement under applicable SEC rules (generally transactions involving amounts of $120,000 or more in which a Related Person has a direct or indirect material interest) are required to be approved by the Board or by the Governance and Nominating Committee (or other designated committee comprised exclusively of independent directors). In considering whether to approve the transaction or agreement, the Board or committee will consider all relevant factors including the business reason for the transaction, available alternatives on comparable terms, actual or apparent conflicts of interest and the overall fairness of the transaction or agreement to the Company.

              A Related Person is required to report, in a timely manner, either to the chair of the Board or the chair of the Governance and Nominating Committee, any proposed transaction or agreement that could be considered a Related Person transaction or agreement. The two chairs will jointly determine if the proposed transaction or agreement should be considered by the Board or a Board committee, and whether any director should be recused from participating in that consideration because of conflict. The Board or Board committee will consider whether to approve the proposed transaction or agreement, taking into account the facts and circumstances enumerated above, in a timely manner. If such proposed transaction or agreement is not approved in advance, the Board or Board committee will take action in the manner described above as soon as practicable after it becomes aware of the transaction or agreement. There were no transactions or agreements involving the Company and a Related Person in 2017 or to date in 2018.

              Various Company policies and procedures, including the Code of Business Conduct and Ethics and the annual questionnaires that are completed by all Company directors, officers and employees, require disclosure of

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transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable SEC rules. Any Related Person transactions or agreements that are identified under these additional policies and procedures are to be considered under the process described above.

Code of Ethics

              We have adopted a Code of Business Conduct and Ethics that applies to all officers, directors and employees regarding their obligations in the conduct of the Company's affairs. A copy of the Code of Business Conduct and Ethics is available under Corporate Governance in the Investor Relations section of our website at www.CNOinc.com. Within the time period specified, and to the extent required, by the SEC and the New York Stock Exchange, we will post on our website any amendment to our Code of Business Conduct and Ethics and any waiver applicable to our principal executive officer, principal financial officer or principal accounting officer (there have been no such waivers).

Corporate Governance Guidelines

              CNO is committed to best practices in corporate governance. The Board, upon the recommendation of the Governance and Nominating Committee, has adopted a set of Board Governance Operating Guidelines. These are reviewed by the Governance and Nominating Committee and the Board and updated periodically to reflect the Board's view of current best practices. A copy of the CNO Board Governance Operating Guidelines is available under Corporate Governance in the Investor Relations section of our website at www.CNOinc.com.

Director Stock Ownership Guidelines

              The Board has adopted guidelines regarding ownership of CNO common stock by the directors. The amounts set forth in these guidelines provide for each director to own shares of common stock with a value of at least five times his or her annual base cash compensation. Directors are given five years from the date of their initial election to reach that level of ownership. Based on the current base cash compensation for directors of $88,000 per year, the ownership guidelines call for each director to own shares with a value of at least $440,000. As of March 12, 2018, all directors who have served on the Board for at least five years met these stock ownership guidelines, and each of the other directors met, or was on track to meet, these guidelines.

Talent Management and Succession Planning

              The Board is actively involved with the Company's talent management process. At least annually, the Board reviews the Company's leadership team, which includes a detailed discussion of succession plans for the chief executive officer and other members of executive and senior management. In addition, the Board regularly discusses the Company's plans for talent development, with a focus on high potential individuals who are in the position to make the most significant contributions to the Company and to serve as its future leaders.

Communications with Directors

              Shareholders and other interested parties wishing to communicate directly with the Board or any one or more individual members (including the chairman of the Board or the non-management directors as a group) are welcome to do so by writing to the CNO Corporate Secretary, 11825 North Pennsylvania Street, Carmel, Indiana, 46032. The Corporate Secretary will forward any communications to the director or directors specified by the shareholder or other interested party.

Compensation Committee Interlocks and Insider Participation

              Ms. Brown, Mr. Sievert and Mr. Maurer served on the Human Resources and Compensation Committee throughout 2017. Mr. David was appointed to the committee in May 2017 and Mr. Tokarz served on the committee until his retirement in May 2017. None of the members of the Human Resources and Compensation Committee during 2017 is or has been one of our officers or employees. None of our executive officers serves, or

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served during 2017, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Human Resources and Compensation Committee.

Copies of Corporate Documents

              In addition to being available under Corporate Governance in the Investor Relations section of our website at www.CNOinc.com, we will provide to any person, without charge, a printed copy of our committee charters, Code of Business Conduct and Ethics and Board Governance Operating Guidelines upon request being made to CNO Investor Relations, 11825 N. Pennsylvania Street, Carmel, Indiana 46032; or by telephone: (317) 817-2893 or email: ir@CNOinc.com.


EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

              This Compensation Discussion and Analysis ("CD&A") describes the Company's executive compensation program and explains how the Human Resources and Compensation Committee (the "Committee") made compensation decisions for the following Named Executive Officers (the "NEOs") in 2017:

Named Executive Officer   Position with the Company in 2017
Edward Bonach   Chief Executive Officer
Gary Bhojwani   President
Bruce Baude   Chief Operations & Technology Officer
Eric Johnson   Chief Investment Officer
Erik Helding   Chief Financial Officer

              Mr. Bhojwani became Chief Executive Officer on January 1, 2018, after being hired on April 18, 2016 and serving as President. Mr. Bhojwani succeeds Mr. Bonach who served as Chief Executive Officer from October 1, 2011 to December 31, 2017, after joining as Chief Financial Officer in 2007. Additional details on the Chief Executive Officer transition can be found on page 32.

EXECUTIVE SUMMARY

Our Business

              CNO Financial Group, Inc. is a Fortune 1000 company, with $4.3 billion in total revenues for the year ending December 31, 2017. CNO Financial provides health and life insurance, as well as retirement solutions, to middle-income Americans through our family of insurance brands: Bankers Life, Colonial Penn and Washington National.

              Our vision is to be the leader in meeting middle-income Americans' needs for financial security and readiness for the life of their retirement. Our strategic plan remains focused on top-line growth and delivering long-term value for all our stakeholders. In the last year, the insurance sector continued to experience change, including innovative technology, economic shifts, the Tax Cuts and Jobs Act (the "Tax Reform Act"), regulation changes and increased competition. These changes impact our associates, agents, customers and business. As we enter 2018, we continue to serve the middle-income market through a diverse set of distribution and products. We will continue to grow the franchise by introducing new products and services and expanding to attract younger and slightly more affluent customers that can also benefit from our product solutions. CNO also remains committed to reducing our relative long-term care exposure and deploying capital effectively.

2017 Business Highlights

              In 2017, CNO demonstrated continued financial strength, with a double-digit increase in operating earnings, asset growth in our accumulation businesses, and improvements in nearly all of our Growth Scorecard measures across the firm. Meaningful increases in first-year and total collected premiums were driven by strong

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annuity sales, expanded customer reach, and pricing discipline. Sustained in-force policy counts and increased annuity account values indicate our ability to achieve enterprise growth through sales and the retention of satisfied customers.

              Specific results included first-year collected premiums up 2% over 2016 to $1,374.1 million, total collected premiums up 2% to $3,688.3 million, net income per diluted share of $1.02 in 2017 compared to $2.01 in 2016, and net operating income per diluted share1 up 19% to $1.75. Results reflect the one-time unfavorable impact of $172.5 million related to the Tax Reform Act which was enacted in December 2017.

              The Tax Reform Act will be an ongoing benefit to the Company, with the estimated effective tax rate in the 21 to 23 percent range. Excluding the one-time unfavorable impacts of the Tax Reform Act, full year 2017 net income was $348.1 million, or $2.02 per diluted share.

              We returned $227 million to shareholders in 2017, with $167 million in common stock repurchases and $60 million in common stock dividends. From the initiation of our share buyback program in 2011, we have returned over $1.9 billion to shareholders.

              Our financial condition and capital generation continued to be strong in 2017. Our consolidated risk-based capital ratio was 446%, and book value per diluted share, excluding accumulated other comprehensive income (loss)1, decreased to $21.43 at the end of 2017 from $22.02 at the end of 2016, reflecting the one-time unfavorable impact of the Tax Reform Act. Our debt-to-total-capital ratio, excluding accumulated other comprehensive income1, at the end of 2017, was 20.1% compared to 19.1% at the end of 2016.

2017 Total Compensation Highlights

              Our compensation programs are designed to attract, retain and motivate the executives who lead our Company. The Committee has established programs and practices that align management's interests with those of the Company's shareholders, and thus help drive the creation of long-term shareholder value. We believe our compensation program supports our belief in pay for performance by providing a significant amount of compensation in the form of equity, by balancing both short- and long-term incentives that are tied to Company performance, and by delivering both fixed and variable compensation (pay-at-risk) in appropriate measure to retain and motivate our leaders, all of which are tied to our business results and market practices. In 2017, our executive compensation program consisted of:

Long-Term Incentive Compensation (LTI).    We believe performance-based equity compensation aligns our NEOs to shareholder interests and helps drive long-term shareholder value creation, while also facilitating the retention of key executive talent. In 2017, the Committee approved the following forms of equity compensation:

    Annual equity awards are delivered in the form of Performance Shares ("P-Shares"), stock options and restricted stock units ("RSUs"):

    One half of long-term compensation value was delivered in the form of P-Shares, which only pay out in Company stock if specific levels of performance relative to Operating Return on Equity ("Operating ROE") and Relative Total Shareholder Return ("TSR") are achieved.

    25 percent of long-term compensation value was delivered in the form of Stock Options, which allow executives to purchase Company stock at a specific market price on the date of grant, thus encouraging executives to actions leading to long-term increases in the Company's stock price.

   


1 For a definition and reconciliation of this measure to the corresponding measure under generally accepted accounting principles ("GAAP"), see "Information Related to Certain Non-GAAP Financial Measures" on page 58 of this Proxy Statement.

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      Beginning in 2017, 25 percent of long-term compensation value was delivered in the form of RSUs, which award stock to executives after time-based restrictions are met, serving as a retention vehicle and encouraging executives to drive long-term increases in the Company's stock price.

      Mr. Bonach's 2017 long-term equity compensation comprised 65% of his total target compensation, while equity compensation made up 47% for the other current NEOs, on average.

    Time-based RSUs have also been used in certain circumstances to recognize high performance, high potential, retention of specific leaders, or as an inducement to join our Company. In 2017:

    Mr. Helding was granted 5,560 RSUs in recognition of his contributions and to ensure retention of his skills, ability and leadership.

Annual Cash Incentive.    Our annual incentive plan, the Pay for Performance or "P4P" Plan, is designed to focus on and reward achievement of annual performance goals. It is the broadest of our management incentive programs, covering our NEOs and approximately 600 other key employees. All participants in the P4P plan, including our NEOs, are assigned target incentive opportunities expressed as a percentage of base salary (pay-at-risk).

    In 2017, Operating EPS and GAAP Revenue were metrics for all of our NEOs. Policies In-Force, Combined In-Force EBIT and Combined Value of New Business ("VNB") were metrics for Messrs. Bonach, Bhojwani, Baude and Helding. GAAP Investment Yield and GAAP Investment Income were metrics for Mr. Johnson only.
    In 2017, P4P payouts ranged from 158.8% to 167.8% of target for our NEOs.

Base Salary.    Base salary is the only fixed component of executive compensation and makes up the smallest percentage of total compensation.

    In 2017, base salary (fixed compensation) represented 13% of total target compensation for Mr. Bonach.
    For the remaining NEOs, base salary represented 26% (on average) of total target compensation.
    None of our NEOs received a merit base salary increase in 2017.

              These components delivered the following compensation for our NEOs in 2017:

NEO Compensation Delivered in 2017

 
   
   
   
   
   
   
   
 
  Named Executive Officer
  January 1, 2017
Base Salary

  December 31, 2017
Base Salary

  % Change
During 2017

  2017
P4P

  2017 Annual
LTI Grant(1)

   

 

 

Edward Bonach

  $ 1,000,000   $ 1,000,000     0.0%   $ 2,875,713   $ 5,016,594    

 

 

 

                                 

 

 

Gary Bhojwani

  $ 750,000   $ 750,000   0.0%   $ 1,573,194   $ 1,254,164  

 

 

 

                     

 

 

Bruce Baude

  $ 600,000   $ 600,000     0.0%   $ 964,114   $ 877,672    

 

 

 

                                 

 

 

Eric Johnson

  $ 500,000   $ 500,000   0.0%   $ 794,133   $ 877,672  

 

 

 

                     

 

 

Erik Helding(2)

  $ 400,000   $ 400,000     0.0%   $ 503,422   $ 1,120,284    

 

 

 

                                 
    (1)
    Expressed as the aggregate grant date fair value of stock options, performance shares and restricted stock units granted in 2017.

    (2)
    Mr. Helding received an additional 5,560 RSUs in recognition of his valuable contributions to the Company and for retention purposes.

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Maintaining Best Practices in Executive Compensation

              The Committee strives to maintain best practices in corporate governance in our executive compensation programs.

 

  What We Do    

 

       

Pay-for-Performance: The majority of NEO target total compensation is tied to Company, Business-segment and/or individual performance, and is therefore considered by the Company to be "Pay-at-Risk" (payouts contingent upon performance). For 2017, 87% of Mr. Bonach's target total compensation was at risk, as was 74% of all other NEOs target total compensation, on average.

   

 

       

Balanced View on Performance: We take a balanced approach to measuring our performance by using both relative and absolute performance measures in our compensation programs.

   

 

       

Stock Ownership Guidelines: In order to align our executives with shareholder interests, our CEO and all of his direct reports (including the other NEOs) are required to maintain ownership levels in accordance with Company policy. The CEO is required to maintain ownership equal to 5x his base salary, while all other NEOs are required to maintain ownership equal to 3x their base salaries. Until the guidelines are met, the officer is required to retain ownership of not less than one-half of the net shares of CNO common stock received, after payment of applicable taxes, upon the vesting or exercise of any equity award. As of December 31, 2017, all NEOs have met or are within their allowable timeframes for meeting these guidelines.

   

 

       

Double-Trigger Change-in-Control: All employment agreements and equity award agreements for NEOs require a qualified termination of employment in addition to a change in control of the Company in order for change in control benefits to be triggered.

   

 

       

Strong Clawback Rights: Our P4P and LTI plans have clawback provisions that include recapture rights of any incentive amount paid or vested in the event that the Committee determines that the achievement of performance goals was based on incorrect data, errors, omissions or fraud.

   

 

       

Independence of Executive Compensation Consultant (Aon Hewitt): The Committee has engaged an independent executive compensation advisor, taking SEC and NYSE guidelines into consideration. Aon Hewitt has no business or personal relationships with our NEOs or Board members.

   

 

       

Independence of Committee Members: All Committee Members are independent of the Company.

   

 

       

Ongoing Succession Planning: Throughout the year, the Committee regularly engages in in-depth discussions regarding succession planning and talent development of our executives.

   

 

       

Strive to Understand Our Shareholders Views on Executive Compensation: We had strong Say on Pay results from the 2017 Annual Meeting, at which approximately 98% of the votes cast were for approval of the Company's 2016 executive compensation as described in last year's proxy statement.

   

              Conversely, there are several practices which we do not consider representative of good corporate governance, and therefore do not do.

 

  What We Do Not Do    

 

       

No Supplemental Executive Retirement Plans: We do not offer SERPs to our current executives.

   

 

       

No Significant Perquisites: Our executives participate in broad-based Company-sponsored benefits programs on the same basis as other full-time associates.

   

 

       

No Re-pricing of Stock Options: Re-pricing of underwater stock options without shareholder approval is prohibited (except in the event of certain permissible corporate events).

   

 

       

No Hedging: Senior Executives, including NEOs are prohibited from hedging activities related to our equity securities, including holding shares in a margin account.

   

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Role of the Human Resources and Compensation Committee

              The Committee determines the components and amount of compensation for our executive officers and provides overall guidance for our employee compensation policies and programs. In addition, the Committee actively monitors our executive development and succession planning activities related to our senior executives and other officers. Currently, four members of our Board of Directors sit on the Committee, each of whom is an independent director under the New York Stock Exchange listing requirements, the exchange upon which our stock trades. From time to time, other Board members may also participate in the Committee's meetings, though these ad hoc participants do not participate in making pay decisions. The full Board of Directors receives regular reports of Committee deliberations and decisions and, at least once annually, the full Board reviews the Committee's written evaluation of the Chief Executive Officer's performance and compensation. The Committee's functions are more fully described in its charter, which can be found in the Investor Relations section of our website at www.CNOinc.com.

              In making executive compensation decisions, the Committee receives advice from its independent compensation consultant, Aon Hewitt. Although Aon Hewitt is retained directly by the Committee, Aon Hewitt personnel interact with our executive officers as needed, specifically the Chief Executive Officer, Chief Human Resources Officer, General Counsel and their staffs to provide the Committee with relevant compensation and performance data for our executives and the Company. In addition, Aon Hewitt personnel may interact with management to confirm information, identify data questions, and/or exchange ideas.

              As requested by the Committee, Aon Hewitt's services to the Committee in 2017 included:

    providing competitive analysis of total compensation components for our senior executive officers, including our NEOs;

    researching and presenting competitive and emerging compensation practices and regulatory issues;

    researching and reviewing CEO transition alternatives;

    attending Committee meetings, in person and telephonically; and

    reviewing and evaluating changes to the executive compensation philosophy and proposed plan changes.

              The Committee has the authority under its charter to retain outside consultants or other advisors. Part of that decision process is an assessment of the advisor's independence. Relative to Aon Hewitt's independence the Committee took into account the independence factors determined by the SEC and NYSE. Included in the Committee's assessment of Aon Hewitt's independence for 2017 was management's decision to engage Aon Risk Services to assist in the placement of an Agents Errors and Omissions policy. Aon Risk Services received an estimated commission of $200,000 from the carrier of the insurance policy. Aon Risk Services and Aon Hewitt are subsidiaries of Aon plc operating under separate management structures. The Committee considered that the brokerage services were provided by a related Aon plc entity noting that the estimated commission of $200,000 was less than .01% of Aon plc's revenues and that Aon Hewitt and Aon Risk Services are separately managed subsidiaries of Aon plc. Fees paid by CNO to Aon Hewitt for executive compensation advisory services were $244,335 in 2017. The Committee determined Aon Hewitt to be independent.

              In making its decisions, the Committee collects and considers input from multiple sources. The Committee may ask senior executive officers to attend Committee meetings where executive compensation, overall and individual performance are discussed and evaluated. During these meetings, executives provide insight, suggestions or recommendations regarding executive compensation. Deliberations generally occur with input from Aon Hewitt, members of management and other Board members. However, only the members of the Committee

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make decisions regarding executive compensation. In the case of the Chief Executive Officer's compensation, these decisions are submitted to the full Board for its review and approval.

Philosophy and Objectives

Philosophy

              The Committee, which is comprised solely of independent, non-employee Directors, has developed a philosophy and a comprehensive compensation strategy to reward overall and individual performance that drives long-term success for our shareholders.

              Our compensation philosophy consists of the following guiding principles:

    Pay for Performance:  Rewards will be differentiated based on Company, business segment and individual performance.

    Target Total Rewards Position:  The overall rewards will be competitive by targeting compensation at approximately the median of the relevant comparator group with additional compensation for achieving superior performance.

    Relevant Comparator Group:  We will utilize a relevant comparator group of companies in the insurance/financial services industry and general industry where appropriate, taking both asset size and revenue into consideration, which includes the best available data for comparison with our peers and companies with which we compete for executive talent.

Pay for Performance Objectives

              The Committee strives to provide a clear reward program that allows us to attract, motivate and retain seasoned executive talent with the significant industry experience required to continue to improve our performance and build long-term shareholder value. To achieve this, our programs are designed to:

    reward operational and productivity improvements which are sustainable. This means that (1) we set performance goals under our P4P plan at targeted performance levels for key financial metrics, and (2) we set multi-year performance goals for our P-Share (performance share) awards;

    align the interests of our executives with those of our shareholders by rewarding shareholder value creation;

    integrate with the Company-wide annual performance management program of individual goal setting and formal evaluation;

    provide for discretion to make adjustments and modifications based upon how well individual executives meet our performance standards for expected achievement of business results, as well as uphold our values and leadership behaviors; and

    offer the opportunity to earn additional compensation when overall and individual performances exceed expectations.

Target Total Rewards and Selection of the Comparator Groups

              In setting target executive compensation opportunities, the Committee looks at Base Salary, Total Annual Cash (which is comprised of base salary and target cash incentives) and Total Direct Compensation (which is the sum of Total Annual Cash and long-term incentives). Our long-term incentives may include a combination of P-Shares, stock option awards, and restricted stock units. The Committee intends to compensate our executives at

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approximately the 50th percentile (meaning within a range of +/- 15% of the 50th percentile dollar value) for total direct compensation, for the achievement of target performance, with additional compensation opportunities for the achievement of superior results.

              The Committee assesses "competitive market" compensation annually using a number of sources. In determining the competitive compensation levels, at the recommendation of the independent compensation consultant, the Committee reviews targeted proxy data from a select group of peer companies identified below for the NEOs, and also compares our other executives to the Diversified Insurance Study published by Willis Towers Watson. Both of these sources provide a more focused analysis of specific industry peers with whom the Company competes for talent. We continued to use our peer companies for the NEOs as the relevant comparator group and all other executives have been compared to the Willis Towers Watson Diversified Industry Study in 2017.

Peer Companies:

Aflac Incorporated   Primerica, Inc.    

American Financial Group, Inc.

 

Principal Financial Group, Inc.

 

 

Arch Capital Group Ltd.

 

Reinsurance Group of America, Incorporated

 

 

Assurant, Inc.

 

The Hanover Insurance Group, Inc.

 

 

Cincinnati Financial Corporation

 

Torchmark Corporation

 

 

Genworth Financial, Inc.

 

Universal American Corp.

 

 

Horace Mann Educators Corporation

 

Unum Group

 

 

Kemper Corporation

 

Voya Financial, Inc.

 

 

Lincoln National Corporation

 

 

 

 

              Although aggregate pay levels are generally consistent with our compensation philosophy, it is possible that pay levels for specific individuals may be above or below the targeted competitive benchmark levels based on a number of factors including: each individual's role and responsibilities within our Company, the individual's experience and expertise, the pay levels for peers within the Company, and the pay levels for similar job functions in the marketplace. The Committee is responsible for approving all compensation programs for our senior executive officers. In determining executive compensation, the Committee considers all forms of compensation and benefits, and uses appropriate tools and market studies to review the value delivered to each executive through each component of compensation.

              Our studies provide a way for the Committee to examine external market practices and compare them to our internal evaluations and decisions. These studies capture and report:

    Competitive external market data on a base salary, Total Annual Cash and Total Direct Compensation basis;

    Individual Total Annual Cash compensation including annual salary, target bonus opportunity, and actual bonus paid;

    Long-term equity grants and their vesting status and value at a hypothetically established share price; and

    Employment agreement terms and conditions.

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              Competitive market data is used as a reference point, and we avoid adjusting compensation based exclusively on a single year of competitive benchmarking data. We believe an executive's compensation should reflect Company-specific factors such as: the relative importance of the role within the organization, the compensation for other positions at the same level, and individual factors such as experience, expertise, and individual performance.

              In addition to the objective review of external factors, the Committee also considers internal equity among colleagues when determining executive compensation levels. This means that, although the Committee examines competitive pay data for specific positions, market data is not the sole factor considered in setting pay levels. The Committee also considers factors such as our organizational structure and the relative roles and responsibilities of individuals within that structure. The Committee believes that this approach fosters an environment of cooperation among executives that enhances sales growth, profitability and customer satisfaction.

              Realized total compensation in any year may be significantly above or below targeted compensation levels depending on whether our incentive goals were attained and whether shareholder value was created. In some cases, the amount and structure of compensation results from negotiations with executives at the time they were hired, which may reflect competitive pressures to attract and hire quality executive talent in the insurance industry. To help attract and retain such talent, the Committee also seeks to provide a level of benefits in line with those of comparable publicly traded companies without matching such benefits item by item.

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Compensation Components

              Our compensation program is composed of the following components:

    Executive Compensation Components




 

 

Type of
Compensation





 

Component




 

Description




 

Why We Pay This
Component





 

How We Determine
Amount




   
    Fixed Pay     Base Salary       Fixed Cash Compensation

May be adjusted each year based on individual performance and relevant market data

      To attract, motivate and retain top talent       Established using market data targeting 50th percentile of market

Adjusted up or down to reflect factors such as scope of position, responsibilities, experience level, unique skills and competencies

   
   
    Pay-At-Risk

(Annual)


 
  Annual Cash Incentive (P4P)       Variable Cash Compensation

Earned based on Company, business-segment and individual financial and operational performance

      To incentivize achievement of annual financial and operational performance goals       Established using market data targeting the 50th percentile of the market

Target incentive opportunities are expressed as a percentage of base salary

   
   
    Pay-At-Risk

(Long-Term)


 
  Performance Shares (P-Shares)       Equity Compensation

Earned based on achievement of performance goals at the end of a three-year performance period

Realizable value is variable based on long-term Company performance and stock price appreciation

      To focus management on long-term Company performance

To balance the short-term focus of P4P by tying rewards to performance achieved over multi-year periods

To align the interests of management with shareholders

      The Committee establishes compensation levels for equity compensation based on competitive market data

Individual awards may be adjusted up or down to reflect performance, potential and other individual considerations

P-Shares account for 50% of the annual grant target, and were divided evenly between those tied to (1) Operating ROE and (2) relative TSR

   
   
        Stock Options       Equity Compensation

Time-vested awards which generally vest over three years

Realizable value is variable based on long-term stock price appreciation

      To balance the short-term focus of P4P by tying rewards to performance achieved over multi-year periods

To focus management on long-term stock price appreciation

To align the interests of management with shareholders

      The Committee establishes compensation levels for equity compensation based on competitive market data

Individual awards may be adjusted up or down to reflect performance, potential and other individual considerations

Stock Options accounted for 25% of the annual target from a grant value perspective

   
   
        Restricted Stock Units (RSUs)       Equity Compensation

Time-vested awards which generally vest over three years

Realizable value is variable based on long-term stock price appreciation

In addition to the annual grant, used selectively for retention and recognition

      To encourage retention and reward for exceptional performance and/or potential

To balance the short-term focus of P4P by tying rewards to performance achieved over multi-year periods

To align the interests of management with shareholders

      The Committee establishes compensation levels for equity compensation based on competitive market data

Individual awards may be adjusted up or down to reflect performance, potential and other individual considerations

RSUs accounted for 25% of the annual target from a grant value perspective

   

              The table below summarizes information about the target level of 2017 Total Annual Cash (TAC) and Total Direct Compensation (TDC) for our NEOs. This table differs from the Summary Compensation Table on page 35 in that values generally represent target amounts and equity grants which are part of our normal long-term incentive program for 2017 only. Further detail about these compensation components can be found later in this section.

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Summary of Components of TDC in 2017 at Target(1)

Named Executive
Officer

  Base
Salary

  Target
Incentive
(% of
Salary)

  Target Total
Annual Cash

  Stock Option
Value(2)(3)

  P-Share
Value(2)

  RSU
Value(2)

  Total LTI
Value(2)

  Target TDC(4)
 

Edward Bonach

 
$

1,000,000
   
175%
 
$

2,750,000
 
$

1,097,391
 
$

2,749,109
 
$

1,170,094
 
$

5,016,594
 
$

7,766,594
 

% Change vs. 2016

 

0%

 



 


10%

 



 



 



 


9%

 


9%
 

% of TDC

   
13%
         
35%
                     
65%
       

Gary Bhojwani

 
$

750,000

 


125%

 

$

1,687,500

 

$

274,363

 

$

687,277

 

$

292,523

 

$

1,254,163

 

$

2,941,663
 

% Change vs. 2016

   
0%
         
0%
                     
-74%
   
-55%
 

% of TDC

 

25%

 



 


57%

 



 



 



 


43%

 


 
               

Bruce Baude

 
$

600,000
   
100%
 
$

1,200,000
 
$

192,023
 
$

480,946
 
$

204,703
 
$

877,672
 
$

2,077,672
 

% Change vs. 2016

 

0%

 



 


0%

 



 



 



 


-27%

 


-14%
 

% of TDC

   
29%
         
58%
                     
42%
       

Eric Johnson

 
$

500,000

 


100%

 

$

1,000,000

 

$

192,023

 

$

480,946

 

$

204,703

 

$

877,672

 

$

1,877,672
 

% Change vs. 2016

   
0%
         
0%
                     
2%
   
1%
 

% of TDC

 

27%

 



 


53%

 



 



 



 


47%

 


 
               

Erik Helding

 
$

400,000
   
75%
 
$

700,000
 
$

219,491
 
$

549,723
 
$

351,070
 
$

1,120,284
 
$

1,820,284
 

% Change vs. 2016

 

0%

 



 


0%

 



 



 



 


53%

 


27%
 

% of TDC

   
22%
         
38%
                     
62%
       
(1)
Annual Incentive expressed as Target levels as of award date; value of equity expressed as grant date fair value.

(2)
Represents stock option, performance share and restricted stock unit aggregate grant date fair values granted in 2017; actual value realized will depend on stock price appreciation and achievement of performance metrics at time of vesting. Valuation methodology is discussed later in this Proxy Statement.

(3)
The amounts shown for the 2017 stock option grants reflect the grant date fair value in accordance with ASC 718. See the explanation in the Impact of Tax and Accounting on Compensation section.

(4)
Target TDC includes Target TAC and the Total LTI Value provided at the time of the annual grant.

              In delivering total direct compensation to our NEOs, the Company provided both fixed (base salary) and variable (cash and equity incentives) compensation to the NEOs in 2017. The vast majority of compensation awarded to NEOs in 2017 is at risk to the executive because the compensation value that is actually paid may vary from the target compensation value that was awarded by the Compensation Committee and the payment is dependent on Company, business segment and individual performance. The amount of total target compensation at risk was significantly more than the amount of base salary. Also, the majority of total target compensation awarded in 2017 to each NEO was in the form of equity. The equity awarded to Mr. Bhojwani in 2017 was lower than the prior year due to the awards made in 2016 in connection with his hiring, while the equity awarded to Mr. Helding (who was promoted to CFO in April 2016) in 2017 was higher than the prior year, reflecting a full year of service in 2017 as CFO. The following charts show each element of 2017 target NEO compensation,

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including the mix of short-term and long-term incentives, as well as the amount of "Pay-at-Risk" for the CEO and for the other NEOs (on average):

GRAPHIC

Base Salaries

      Strategy

              Although the Committee begins by targeting the 50th percentile of the competitive market, base salaries may range from the 25th percentile (for recently promoted employees or those who otherwise have less experience in the current position) to the 75th percentile (for high performers with significant industry experience) of the competitive market data.

      2017 Merit Increases

              Annual reviews of executives' base salaries consider numerous factors, including:

    Comparison to market data;
    Mix of compensation;
    Job role and responsibility;
    Individual leadership, experience and expertise;
    Individual historical performance, retention, and future potential;
    Competitive labor market pressures; and
    Internal equity of peers.

              No specific weighting of these factors is used. However, given our desire for a performance-based culture, the Committee's use of discretion generally results in increases for our top performers and little or no increases in base salary for average or lower performing employees.

              There is no expectation on the part of the Committee for senior executives to receive base salary increases annually. In 2017 there were no base salary increases provided to our NEOs.

Annual Cash Incentives

      Strategy

              Our annual incentive plan, the "Pay for Performance" Plan (P4P) is the broadest of our management incentive programs, covering our NEOs and other key employees. All participants in the P4P plan, including our NEOs, are assigned target incentive opportunities expressed as a percentage of base salary.

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Table of Contents

      2017 Pay for Performance (P4P) Plan Design

              During February 2017, the Committee reviewed the P4P plan design for 2017 in order to ensure alignment between shareholder and participant interests, to keep senior executives focused on the financial performance of the enterprise, to improve alignment with financial metrics that participants influence and to select operational/business metrics that drive financial success, balancing between earnings and revenue growth. This review was accomplished by focusing on the selection of appropriate performance metrics and the determination of performance levels which would contribute to financial success. As a result of this review, most performance metrics and weightings remained the same. Metrics which continued to be part of the 2017 incentive plans applicable to all NEOs2 included:

    Operating Earnings Per Share (EPS), defined as operating income (net of tax) divided by the weighted average number of diluted shares outstanding. Operating earnings exclude the impact of realized gains (losses), loss on extinguishment or modification of debt, fair value changes due to fluctuations in the interest rates used to discount embedded derivatives related to our fixed index annuities, fair value changes related to the agent deferred compensation plan, changes to our valuation allowance for deferred taxes and other non-operating items consisting primarily of earnings attributable to variable interest entities. The Committee believes Operating EPS is a key measure of our operating performance, is less impacted by events that are unrelated to the underlying fundamentals of the business and is directly impacted by management during the calendar year.

    Combined and/or Business Segment In-force Earnings Before Interest and Taxes (EBIT), where Combined In-force EBIT is the sum of individual business segment In-force EBIT. In-force EBIT includes pre-tax revenues and expenses associated with the sales of insurance products that were completed more than one year before the end of the reporting period, but excludes the impact of realized gains (losses), and fair value changes due to fluctuations in the interest rates used to discount embedded derivatives related to our fixed index annuities. In the Committee's view, this metric enhances line of sight for our operating management and increases their focus on improving the longer-term core profitability of our operations. In-force EBIT excludes the impacts of activities related to the generation of New Business.

    Combined and/or Business Segment Value of New Business (VNB), which calculates the present value of expected profits from product sales. The selection of VNB is based on the Committee's desire to have a focus on growing through sales of profitable products as opposed to rewarding only top-line sales growth.

    GAAP Revenue, which is defined as reported revenue in CNO's 10-K, after elimination of items that are considered to be non-operating in nature (such as realized gains (losses)) and revenues that are offset by corresponding expenses (such as revenues related to call options associated with our fixed indexed annuities, the rabbi trust related to a deferred compensation plan and the transitional services agreement relating to the sale of a former subsidiary).

    Policies In-Force, which is defined as the number of policies for which a reserve has been established (and third party counts for policies sold by Bankers agents). This metric not only aligns P4P participants to CNO's strategic focus on customer growth, but also retention and persistency, as well as external stakeholders' expectations in this important growth area for the Company.

    GAAP Investment Yield, which is defined as period investment income (net of investment expenses) divided by average invested assets for the same period.

   


2 Operating EPS and GAAP Revenue were applicable to Mr. Johnson in common with the other NEOs; GAAP Investment Yield and GAAP Investment Income applied exclusively to him.

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    GAAP Investment Income, which is defined as the income earned on general account invested assets, net of investment expenses.

              Our P4P plan design rewards a threshold level of financial performance which corresponds to 50% of a target payout; target level of performance which provides 100% of target payout; and a maximum level of performance which provides a payout of 200% of target. Any payout between these financial performance goals is determined through straight line interpolation between the appropriate levels of performance. Consistent with our compensation philosophy, target annual incentive levels are established to generate Total Annual Cash compensation at competitive market median levels.

              The Committee administered the P4P and long-term incentive plans for 2017 so that payments qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code. However, the Committee does reserve the right to make awards that do not qualify as "performance-based compensation" under Section 162(m) to the extent it deems it advisable to do so.

              The table below summarizes the 2017 financial metrics and weightings for our NEOs under the P4P plan.

Summary of 2017 P4P Metrics and Weightings for NEOs

 
   
   
   
   
   
   
   
   

 

            Named Executive Officer    

 

 

Performance Measures

        Edward Bonach     Gary Bhojwani     Bruce Baude     Eric Johnson     Erik Helding    

 

 

Operating EPS

    40 % 40 % 30 % 40 % 40 %

 

 

Policies In-Force

        10 %   10 %   10 %   --     10 %  

 

 

GAAP Revenue

    20 % 20 % 20 % 15 % 20 %

 

 

Combined In-Force EBIT

        20 %   20 %   20 %   --     20 %  

 

 

Combined VNB

    10 % 10 % 20 % --   10 %

 

 

GAAP Investment Yield

        --     --     --     25 %   --    

 

 

GAAP Investment Income

    --   --   --   20 % --  

      2017 P4P Plan Performance Goals and Results

              The primary purpose of P4P is to reward for core annual operating performance. Under the terms of the Pay for Performance Plan (P4P Plan) as approved by shareholders, the Committee has the authority to adjust performance goals or results for various items as needed to properly reflect the year's operating results.

              The Committee takes into account a number of factors in setting incentive performance targets as well as the threshold and maximum levels. These factors include Company business plans and current forecasts, historical performance, incentive practices used by peer companies and analyst expectations. The Committee believes that the range of performance goals for the P4P metrics provide appropriate stretch. After reviewing these factors, the Committee determined that participants with corporate measures would have the same threshold and maximum performance levels.

              The table below provides a summary of 2017 performance targets and actual results for our NEOs under the P4P plan. The 2017 P4P plan had a minimum performance criteria in order to be funded – if the Company's Combined In-force EBIT for 2017 equaled or exceeded $287.5 million, excluding any gain or loss associated with any reinsurance or similar transaction involving the long-term care business, the maximum potential P4P award becomes funded for the NEOs under the purview of the Committee.

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Summary of 2017 P4P Performance Targets and Actual Results for NEOs

 
   
   
   
   
   
   

 

 

 

  Performance Targets

 

 

Performance Measures

  Threshold   Target   Maximum   2017 Results    

 

 

Operating EPS

  $1.25   $1.29   $1.58   $1.75  

 

 

Policies In-Force

  3,425,000   3,493,800   3,650,000   3,486,400    

 

 

GAAP Revenue

  $3,807.1 MM   $3,965.7 MM   $4,124.3 MM   $4,028.3 MM  

 

 

Combined In-Force EBIT

  $575.0 MM   $596.2 MM   $720.0 MM   $705.0 MM    

 

 

Combined VNB

  $69.0 MM   $72.3 MM   $80.0 MM   $74.5 MM  

 

 

GAAP Investment Yield

  5.45%   5.55%   5.85%   5.63%    

 

 

GAAP Investment Income

  $1,200.0 MM   $1,232.9 MM   $1,350.0 MM   $1,268.8 MM  

              The table below provides the threshold, target and maximum payouts for 2017 for each of our NEOs under the P4P plan.

Summary of 2017 P4P Opportunities for NEOs

 

 

Named Executive Officer

  Threshold Payout
(% of Salary)
  Target Payout
(% of Salary)
  Maximum Payout
(% of Salary)
   

 

 

Edward Bonach

  87.5%   175%   350%    

 

 

Gary Bhojwani

  62.5%   125%   250%  

 

 

Bruce Baude

  50.0%   100%   200%    

 

 

Eric Johnson

  50.0%   100%   200%  

 

 

Erik Helding

  37.5%   75%   150%    

              The table below sets forth the actual bonuses paid out for 2017 to the NEOs pursuant to our P4P plan.

2017 P4P Target and Actual Bonuses

 

 

Named Executive Officer

    Target Amount     Actual Amount    

 

 

Edward Bonach

  $ 1,713,699   $ 2,875,713    

 

 

Gary Bhojwani

  $ 937,500   $ 1,573,194  

 

 

Bruce Baude

  $ 600,000   $ 964,114    

 

 

Eric Johnson

  $ 500,000   $ 794,133  

 

 

Erik Helding

  $ 300,000   $ 503,422    

Long-term Equity Incentives

      Design and Strategy

              Under the Amended and Restated Long-Term Incentive Plan, the Committee may grant a variety of long-term incentive awards, including stock options, stock appreciation rights, restricted stock or restricted stock units, and performance shares or units, settled in cash or stock.

              Unless otherwise noted, grants to our NEOs have vesting schedules identical to those for other executives. To be eligible to vest in long-term equity incentive awards, associates must continue to work for us through the vesting dates or satisfy the definition of Retirement, Death or Disability.

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              The Committee assesses aggregate share usage and dilution levels in comparison to general industry norms. Through this method, the Committee believes it is mindful of total cost, grants awards that are competitive within the market, promotes internal equity and reinforces our philosophy of pay for performance.

              The Committee reviews and approves individual grants for the NEOs as well as all stock options, performance share (P-Share) grants and any restricted stock unit (RSU) awards made to other executives under the purview of the Committee. Annual grants for all officers are reviewed and approved at the Committee's scheduled meeting at approximately the same time each year. Stock options may be granted only with an exercise price at or above the closing market price of our common stock on the date of grant (Fair Market Value). Interim or off-cycle grants are reviewed and approved by the Committee as circumstances warrant. The Chief Executive Officer has been authorized by the Committee to utilize a designated number of shares each year to grant equity awards to non-Section 16 executives to attract, reward, motivate and/or retain such employees, as deemed appropriate by the CEO. Such awards are regularly reviewed by the Committee.

      Equity Grants in 2017

              The Committee established the annual target for all long-term equity incentive grants based on competitive market data. The approach was intended to deliver median Total Direct Compensation using a combination of stock options, P-Shares, and RSUs. In the 2017 annual grant, the Committee used a 30-day average of our stock price to calculate the number of shares granted to each executive and continued to use a Black-Scholes valuation model for stock options.

              RSUs were added to the annual long-term incentive grant in 2017. Utilizing RSUs is a prevalent market practice and aids in the retention and recognition of executives, while supporting long-term planning and strategic thinking. Providing RSUs in the annual grant helps align the interests of management with shareholders. In 2017, RSU awards to NEOs were payable only if the Company's Combined In-force EBIT equaled or exceeded $287.5 million, excluding any gain or loss associated with any reinsurance or similar transaction involving the long-term care business.

              In 2017, the Committee approved the mix of award grants as 50% P-Shares, 25% stock options and 25% RSUs. This mix of long-term equity incentives focuses on performance elements and better aligns our long-term compensation with generating shareholder value. The P-Shares awarded in 2017 required a threshold-level performance of 50% of the target award, and the upside opportunity for maximum performance was 200% of the target award. Dividends are paid on previously granted shares of restricted stock prior to vesting, and dividend equivalents are paid on P-Shares and RSUs upon vesting.

              The table below shows the annual equity awards granted to our NEOs in 2017.

2017 Annual Equity Grants

 
   
   
   
   
   

 

 

 

  2017 Equity Grant    

 

 

Named Executive Officer

  Stock Options (1)   Performance Shares   Restricted Stock Units    

 

 

Edward Bonach

  176,990   111,120   55,560  

 

 

Grant Date Fair Value

  $1,097,391   $2,749,109   $1,170,094    

 

 

Gary Bhojwani

  44,250   27,780   13,890  

 

 

Grant Date Fair Value

  $274,363   $687,277   $292,523    

 

 

Bruce Baude

  30,970   19,440   9,720  

 

 

Grant Date Fair Value

  $192,023   $480,946   $204,703    

 

 

Eric Johnson

  30,970   19,440   9,720  

 

 

Grant Date Fair Value

  $192,023   $480,946   $204,703    

 

 

Erik Helding (2)

  35,400   22,220   16,670  

 

 

Grant Date Fair Value

  $219,491   $549,723   $351,070    
(1)
The amounts shown for the 2017 stock option grants reflect the aggregate grant date fair value in accordance with ASC 718. See the explanation in the Impact of Tax and Accounting on Compensation Decisions section below.

(2)
Mr. Helding's 2017 grant included an additional grant of RSUs in recognition of his continued valuable contributions.

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Long-Term Incentive Program Performance for Awards Granted in 2015, 2016 and 2017

      2015 – 2017 P-Share Performance

              P-Shares for the 2015 – 2017 grant were evenly split (50% / 50%) between three-year average Operating ROE and relative TSR. The Committee believed that the combination of the two metrics would focus management on improving long-term earnings growth and creating value for shareholders. For the 2015 – 2017 grant, we intended to deliver compensation at the 50th percentile of the relevant comparator group at target performance.

              In calculating the Operating ROE for 2017, the Committee excluded the one-time unfavorable impact of $172.5 million incurred in the fourth quarter of 2017 related to the Tax Reform Act. This positively impacted the Company achievement of three-year average Operating ROE of 9.75% (the target was 9.25%). Three-year average TSR performance produced a result of 15.6%. The TSR P-Share results placed us at the 41st percentile of our peer group and the Operating ROE P-Share result was above target. Accordingly, 82% of the TSR P-Shares and 166% of the three-year average Operating ROE P-Shares vested from this grant. Mr. Bonach's Operating ROE P-Shares performance target was higher than the other NEOs – 9.43% – resulting in a payout of 156%, which was slightly below the result for other NEOs. His relative TSR P-Shares had the same performance target as the other NEOs.

              The table below shows actual Operating ROE and relative TSR P-Share vesting for NEOs related to the 2015 – 2017 award.

2015 – 2017 P-Share Award Vesting for NEOs

    Named Executive Officer   Measure     P-Shares Granted     P-Share
Opportunity Earned
(% of Target)
    P-Shares Vested    
    Edward Bonach   Operating ROE   54,420   156 % 84,653  
      Relative TSR   54,420   82 % 44,624  

 

 

Bruce Baude

 

Operating ROE

 

 

9,895

 

 

166

%

 

16,448

 

 
        Relative TSR     9,895     82 %   8,114    

 

 

Eric Johnson

 

Operating ROE

 


9,895

 


166

%


16,448

 

      Relative TSR   9,895   82 % 8,114  

 

 

Erik Helding

 

Operating ROE

 

 

2,805

 

 

166

%

 

4,663

 

 
        Relative TSR     2,805     82 %   2,300    

Note: Mr. Bhojwani was not employed by the Company and Mr. Helding was not an executive officer at the time of the 2015 – 2017 P-Share Grant.

      2016 – 2018 and 2017 – 2019 P-Share Performance Metrics and Targets

              The 2016 – 2018 grant was evenly split between three-year average Operating ROE, with a 9.5% target for all NEOs, and relative TSR for our comparator group, targeting the 50th percentile for target performance.

              The 2017 – 2019 grant was evenly split between three-year average Operating ROE, using an 8.25% target, and relative TSR for our comparator group, targeting the 50th percentile for target performance.

              Continuing the use of relative Total Shareholder Return in the 2016 – 2018 and 2017 – 2019 grants provides an incentive to CNO executives to deliver shareholder value by outperforming our peers. The Company's

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relative TSR will be ranked for the 2016 – 2018 and 2017 – 2019 performance periods against the following TSR performance peers, derived from common industry companies and those companies with competing products:

2016 – 2018 and 2017 – 2019 TSR Performance Peers
Aflac, Inc.   Kemper Corporation
American Financial Group, Inc.   Lincoln National Corp.
Arch Capital Group   Metlife, Inc.
Assurant, Inc.   Primerica, Inc.
Cincinnati Financial Corporation   Principal Financial Group, Inc.
Genworth Financial, Inc.   Prudential Financial, Inc.
Hanover Insurance Group, Inc.   Reinsurance Group of America. Incorporated
Hartford Financial Services   Torchmark Corporation
Horace Mann Educators   Unum Group
    Voya Financial, Inc.

              The table below shows the opportunities for NEOs related to P-Share vesting, depending on the level of performance achieved in relation to the associated grant metrics.

2016 – 2018 and 2017 – 2019 P-Share Opportunities for NEOs

 

 

Named Executive Officer

    Threshold (as a % of
Granted P-Shares)
    Target (as a % of Granted
P-Shares)
    Maximum (as a % of
Granted P-Shares)
   

 

 

Edward Bonach1

    50 %   100 %   200 %  

 

 

Gary Bhojwani2

 

50

%


100

%


200

%

 

 

Bruce Baude

   
50

%
 
100

%
 
200

%
 

 

 

Eric Johnson

 

50

%


100

%


200

%

 

 

Erik Helding

   
50

%
 
100

%
 
200

%
 
1
Under the terms of the P-Share awards, Mr. Bonach will be entitled to receive a pro rata payout of the 2016 – 2018 and 2017 – 2019 grants in connection with his retirement.

2
Mr. Bhojwani was not employed by the Company at the time of the 2016 – 2018 grant; he did receive a 2017 – 2019 grant.

Benefits

              Our NEOs are eligible to participate in all of the broad-based Company-sponsored benefits programs on the same basis as other full-time employees. These include our health and welfare benefits, such as our medical/dental plans, disability plans and life insurance. We do not offer any supplemental executive health and welfare programs. Executives may also participate in our 401(k) Plan. The Company also has a non-qualified deferred compensation plan. This plan is primarily intended as a "restoration" plan, giving participants the ability to defer their own compensation above the Internal Revenue Service limits imposed on the 401(k) Plan. P-Shares and RSUs may also be deferred into a deferred compensation plan. At present, we do not make annual contributions to the non-qualified deferred compensation plan in addition to the amounts contributed by our executives.

CEO Transition

              On December 31, 2017, Ed Bonach retired as CNO's Chief Executive Officer and was replaced by Gary Bhojwani who was serving as CNO's President. Mr. Bhojwani's appointment was the result of the Board's ongoing succession planning process. Mr. Bonach was awarded a bonus of $1,000,000 in recognition of the successful transition of his CEO responsibilities. Effective January 1, 2018, the Board increased Mr. Bhojwani's base salary to $1,000,000 and increased his target annual bonus to 150% of his annual base salary. In connection with his promotion to CEO, the Board also agreed to grant restricted stock units with a value of $2,000,000 in addition to the annual awards made under the Plan in 2018.

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Additional Information

      Prohibition against Trading in Derivatives

              It violates our policy for any senior personnel to purchase, sell or engage in any other transaction involving any derivative securities or hedging related to any of our equity securities. This prohibition does not, however, apply to any exercise of our stock options pursuant to our Amended and Restated Long-Term Incentive Plan or any other benefit plans that we may adopt from time to time, any sale of our stock in connection with any cashless exercise (if otherwise permitted), or payment of withholding tax upon the exercise, of any such stock option.

      Clawback Rights

              Our Amended and Restated Long-Term Incentive Plan contains a clawback provision relating to our long-term equity awards: stock options, P-Shares and restricted stock units. Under this clawback provision, if our financial statements are required to be restated as a result of errors, omissions, or fraud, the Committee may, at its discretion, based on the facts and circumstances surrounding the restatement, direct the recovery of all or a portion of an equity award from one or more executives with respect to any fiscal year in which our financial results are negatively affected by such restatement. To do this, we may pursue various ways to recover awards from one or more executives: (1) seek repayment from the executive; (2) reduce the amount that would otherwise be payable to the executive under another benefit plan; (3) withhold future equity grants, bonus awards, or salary increases; or (4) take any combination of these actions.

              Our Pay for Performance (P4P) Plan contains recapture rights of any incentive amount paid or vested in the event that the Committee determines that the achievement of performance goals was based on incorrect data.

      Impact of Tax and Accounting on Compensation Decisions

              As a general matter, the Committee considers the various tax and accounting implications of our compensation vehicles.

              When determining amounts of long-term equity incentive grants to executives and employees, the Committee considers the accounting cost associated with the grants. Under FASB ASC Topic 718, grants of stock options, restricted stock, restricted stock units and other share-based payments result in an accounting charge that is reflected in our financial statements.

              In 2017, Section 162(m) of the Internal Revenue Code generally prohibited any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the chief executive officer and the next three highest compensated officers excluding the chief financial officer. Exceptions are made for qualified performance-based compensation, among other things. It is the Committee's policy to maximize the effectiveness of our executive compensation plans in this regard. However, the Committee believes that compensation and benefits decisions should be primarily driven by the needs of the business, rather than by tax policy. Therefore, the Committee may make pay decisions (such as the determination of the Chief Executive Officer's base salary) that result in compensation expense that is not fully deductible under Section 162(m). The Committee administered our incentive plans for 2017 so that payments qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code.

      Termination and Change in Control Arrangements

              Under the terms of award agreements under our equity-based compensation plans and under our employment agreements, the NEOs are entitled to payments and benefits upon the occurrence of specified events including termination of employment for various reasons. The specific terms of these arrangements, as well as an estimate of the compensation that would have been payable had they been triggered as of fiscal year-end, are described in the section entitled "Potential Payments Upon Termination or Change in Control" on page 42. The terms of these arrangements were set through the course of employment agreement negotiations with each of the

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NEOs, with an emphasis on internal consistency. The potential payments upon a change in control for the CEO and his direct reports are three times and two times, respectively, their annual base salary plus target bonus, to align with market best practices. A double trigger, both change in control and termination, continues to be required before such payments are made.

              The termination of employment provisions of the employment agreements were entered into in order to address competitive concerns when the NEOs were recruited. Providing those individuals with a fixed amount of compensation offset the potential risk of leaving their prior employer or foregoing other opportunities in order to work for us. At the time of entering into these arrangements, the Committee considered our aggregate potential obligations in the context of the desirability of hiring the individual and the expected compensation upon joining us.

Compensation Committee Report

              The Human Resources and Compensation Committee has reviewed the Compensation Discussion and Analysis and has discussed it with management. Based on the Committee's review and discussions with management, the Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement. This report is provided by the following independent directors, who comprise the Committee:

      Frederick J. Sievert, Chair
      Ellyn L. Brown
      Stephen N. David
      Daniel R. Maurer

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Summary Compensation Table for 2017

              The following Summary Compensation Table sets forth compensation paid to (i) our chief executive officer, (ii) our chief financial officer, and (iii) the other three most highly compensated individuals who served as executive officers of CNO as of December 31, 2017 (collectively, the "Named Executive Officers") for services rendered during 2017, 2016 and 2015.

SUMMARY COMPENSATION TABLE FOR 2017

Name and Principal Position
  Year   Salary   Bonus(1)   Stock
Awards(2)
  Option
Awards(3)
  Non-Equity
Incentive
Plan
Compensation(4)
  All
Other
Compensation(5)
  Total

Edward Bonach(6)

  2017   $1,000,000   $1,000,000   $3,919,202   $1,097,391   $2,875,713   $69,812   $9,962,118

Chief Executive Officer

  2016   1,000,000     2,516,937   2,090,778   1,764,829   66,377   7,438,921

  2015   1,000,000     2,052,722   3,065,884   1,070,279   37,753   7,226,638

Gary Bhojwani(7)

  2017   750,000   750,000   979,801   274,363   1,573,194   95,276   4,422,634

President

  2016   517,307     4,312,620   520,705   751,579   74,843   6,177,054

Bruce Baude

  2017   600,000     685,649   192,023   964,114   22,469   2,464,255

Chief Operations &

  2016   559,487   800,000   813,702   390,122   635,149   28,683   3,227,143

Technology Officer

  2015   497,500     458,757   557,522   428,874   11,534   1,954,187

Eric Johnson

  2017   500,000     685,649   192,023   794,133   8,617   2,180,422

Chief Investment Officer

  2016   500,000     469,161   390,122   551,696   13,960   1,924,939

  2015   500,000     358,595   557,522   514,056   11,381   1,941,554

Erik Helding(8)

  2017   400,000     900,793   219,491   503,422   21,831   2,045,537

Chief Financial Officer

  2016   357,813     427,010   303,152   302,946   16,289   1,407,210

(1)
The amount in this column for Mr. Bonach in 2017 represents a payment in recognition of the successful CEO transition. The amount in this column for Mr. Bhojwani in 2017 represents an amount paid pursuant to the terms of his employment agreement in connection with his relocation to Chicago, Illinois. The amount in this column for Mr. Baude in 2016 represents a Company contribution to his account in the CNO deferred compensation plan. One half of that contribution vested on June 1, 2017 and the balance vests on June 1, 2018. Amounts paid to the Named Executive Officers under the Company's Pay for Performance Incentive Plan are included in the column "Non-Equity Incentive Plan Compensation."

(2)
This column represents the aggregate grant date fair value of restricted stock and performance share awards, in accordance with ASC 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. For additional information, see Note 11 to the CNO financial statements in the Form 10-K for the year ended December 31, 2017, as filed with the SEC. See the Grants of Plan-Based Awards table for information on awards made in 2017. The amounts in this column do not necessarily correspond to the actual value that will be recognized by the Named Executive Officers. The amounts in this column for 2017 include the grant date value of performance share awards based on the targeted amounts for each of the Named Executive Officers. Under the terms of those performance share awards, the officers are entitled to receive 200% of the targeted number of shares if the Company equals or exceeds the maximum performance levels set forth in those awards. If the maximum performance levels are achieved for the performance share awards made in 2017, the aggregate grant date value of the awards shown in this column would be as follows: Mr. Bonach, $6,668,311; Mr. Bhojwani, $1,667,078; Mr. Baude, $1,166,594; Mr. Johnson, $1,166,594; and Mr. Helding $1,450,516. The restricted stock awards to Mr. Bonach will continue to vest following his retirement, while the performance share awards for Mr. Bonach vest on a pro rata basis as a result of his retirement. The grant date value of his vested performance shares awarded in 2017 would be $1,832,739 if the maximum performance levels are achieved.

(3)
This column represents the aggregate grant date fair value of stock options granted to each of the Named Executive Officers, in accordance with ASC 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to the 2017 grants, refer to Note 11 of the CNO financial statements in the Form 10-K for the year ended December 31, 2017, as filed with the SEC. For information on the valuation assumptions with respect to grants made prior to 2017, refer to the note on stockholders' equity and stock-related information to the

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    CNO financial statements in the Form 10-K for the respective year-end. See the Grants of Plan-Based Awards table for information on options granted in 2017 and see Impact of Tax and Accounting on Compensation Decisions for additional discussion. The amounts in this column do not necessarily correspond to the actual value that will be recognized by the Named Executive Officers.

(4)
This column represents the dollar amount of payments made after year end to the Named Executive Officers based on performance for the specified year with respect to the targets established under the Company's Pay for Performance (P4P) Incentive Plan.

(5)
For 2017, the amounts reported in this column represent the amounts paid for: (i) group life insurance premiums; (ii) Company contributions to the 401(k) Plan; (iii) dividends paid on unvested shares of restricted common stock and dividend equivalents paid upon vesting of performance share awards; (iv) spousal travel; and (v) amounts paid as reimbursement for taxes paid on amounts related to spousal travel.

    The table below shows such amounts for 2017 for each Named Executive Officer:

Name
  Group
Life
Insurance
Premiums
  401(k) Plan
Contributions
  Dividends   Spousal
Travel
  Tax
Reimbursement

Edward Bonach

  $2,772   $8,100   $40,424   $9,965   $8,551

Gary Bhojwani

  630   8,100   65,702   10,797   10,047

Bruce Baude

  966   8,100   13,403    

Eric Johnson

  1,806     6,811    

Erik Helding

  630   8,100   13,101    
(6)
Mr. Bonach retired on December 31, 2017.

(7)
Mr. Bhojwani became President of CNO on April 18, 2016 and became Chief Executive Officer on January 1, 2018.

(8)
Mr. Helding became an executive officer of CNO upon his promotion to Chief Financial Officer on April 11, 2016.

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Grants of Plan-Based Awards in 2017

              The following table shows certain information concerning grants of plan-based awards in 2017 to the Named Executive Officers.

GRANTS OF PLAN-BASED AWARDS IN 2017

 
   
   
   
   
  Estimated Future Payouts
(in Shares of Common Stock)
Under Equity Incentive
Plan Awards(2)
  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3)
  All Other
Option
Awards:
Number of
Securities
Underlying
Options(4)
   
   
 
   
  Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
  Exercise
or Base
Price of
Option
Awards(5)
  Grant Date
Fair Value
of Stock
and Option
Awards(6)
 
  Grant
Date
Name
  Threshold   Target   Maximum   Threshold   Target   Maximum
Edward
Bonach
      $856,850   $1,713,699   $3,427,398                            
    2-23-17                               176,990   $21.06   $1,097,391
    2-23-17               55,560   111,120   222,240               2,749,109
    2-23-17                           55,560           1,170,094
Gary
Bhojwani
      468,750   937,500   1,875,000                            
    2-23-17                               44,250   21.06   274,363
    2-23-17               13,890   27,780   55,560               687,277
    2-23-17                           13,890           292,523
Bruce Baude       300,000   600,000   1,200,000                            
    2-23-17                               30,970   21.06   192,023
    2-23-17               9,720   19,440   38,880               480,946
    2-23-17                           9,720           204,703
Eric Johnson       250,000   500,000   1,000,000                            
    2-23-17                               30,970   21.06   192,023
    2-23-17               9,720   19,440   38,880               480,946
    2-23-17                           9,720           204,703
Erik Helding       150,000   300,000   600,000                            
    2-23-17                               35,400   21.06   219,491
    2-23-17               11,110   22,220   44,440               549,723
    2-23-17                           16,670           351,070

(1)
These amounts represent the threshold, target and maximum amounts that would have been payable for 2017 if the corresponding performance-based metrics under the CNO Pay for Performance Incentive Plan had been achieved. The amounts shown have been pro-rated to reflect the period of time during which the individual served as an officer during 2017 and to reflect any change during the year in the target as a percentage of base salary. The amounts paid for 2017 performance under the Pay for Performance Incentive Plan are listed in the Summary Compensation Table on page 35 of this Proxy Statement under the column heading "Non-Equity Incentive Plan Compensation."

(2)
These amounts represent the threshold, target and maximum number of shares that the Named Executive Officers can receive under the terms of the performance share awards made in 2017. See footnote (3) to the "Outstanding Equity Awards at 2017 Fiscal Year-End" table below for additional information regarding the 2017 performance share awards. As a result of his retirement at the end of 2017, Mr. Bonach will be entitled to a pro rata amount (one-third) of any payout on the performance shares granted in 2017 at the end of the three-year performance period.

(3)
The amount in this column represents the number of restricted stock units that were awarded to the Named Executive Officer during 2017 under the Amended and Restated Long-Term Incentive Plan. The restricted stock units granted to Mr. Bonach will continue to vest following his retirement.

(4)
The amounts in this column represent the number of stock options granted to the Named Executive Officers during 2017 under the Amended and Restated Long-Term Incentive Plan.

(5)
The exercise price equals the closing sales price of CNO common stock on the New York Stock Exchange on the date of grant.

(6)
The values included in this column represent the grant date fair value of restricted stock, performance share (at target) and option awards computed in accordance with ASC 718. A description of the assumptions used in calculating these values may be found in Note 11 to the CNO financial statements in the Form 10-K for the year ended December 31, 2017, as filed with the SEC.

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Narrative Supplement to the Summary Compensation Table and the Grants of Plan-Based Awards in 2017 Table

Employment Agreements

              Chief Executive Officer.    We have an employment agreement with Mr. Bhojwani pursuant to which he serves as Chief Executive Officer for a term ending on December 31, 2020. His employment agreement provides for an annual base salary (currently $1,000,000), with increases from time to time based on his performance, and an annual performance-based bonus with a target of 150% of base salary and a maximum of 300% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Bhojwani's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Bhojwani would be entitled to receive specified additional benefits. Mr. Bhojwani is subject to a non-solicitation and non-competition clause throughout the term of his agreement and for one year thereafter.

              Chief Operations and Technology Officer.    We have an employment agreement with Mr. Baude pursuant to which he serves as Executive Vice President and Chief Operations and Technology Officer, for a three-year term that expires on July 31, 2018. His employment agreement provides for an annual salary (currently $618,000), with increases from time to time based on his performance) and an annual performance-based bonus with a target of 100% of base salary and a maximum of 200% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Baude's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Baude would be entitled to receive specified additional benefits. Mr. Baude is subject to a non-solicitation clause throughout the term of the agreement and for one year thereafter.

              Chief Investment Officer.    We have an employment agreement with Mr. Johnson, pursuant to which he serves as Executive Vice President and Chief Investment Officer of CNO and President of 40|86 Advisors, Inc., a wholly owned subsidiary of CNO, for a three-year term ending on September 30, 2019. His employment agreement provides for an annual base salary (currently $525,000), with increases from time to time based on his performance, and an annual performance-based bonus with a target of 100% of base salary and a maximum of 200% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Johnson's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Johnson would be entitled to receive specified additional benefits. Mr. Johnson is subject to a non-solicitation clause throughout the term of his agreement and for one year thereafter.

              Chief Financial Officer.    We have an employment agreement with Mr. Helding, pursuant to which he serves as Executive Vice President and Chief Financial Officer, for a three-year term ending on April 11, 2019. His employment agreement provides for an annual base salary (currently $450,000), with increases from time to time based on his performance, and an annual performance-based bonus with a target of 100% of base salary and a maximum of 200% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Helding's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Helding would be entitled to receive specified additional benefits. Mr. Helding is subject to a non-solicitation clause throughout the term of his agreement and for one year thereafter.

              Retired Chief Executive Officer.    We had an employment agreement with Mr. Bonach, pursuant to which he served as our Chief Executive Officer, for a term that ended December 31, 2017. Mr. Bonach is subject to a non-solicitation and non-competition clause for one year after his retirement.

              See "Summary of Components of TDC in 2017 at Target" on page 25 of this Proxy Statement for information regarding the portion of total compensation for the Named Executive Officers represented by the salary and bonus payable under the executive employment agreements described above.

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Terms of Equity-Based Awards

Vesting Schedule

              Unless otherwise provided in the footnote disclosure to the table of Outstanding Equity Awards at 2017 Fiscal Year-End on pages 40 and 41 of this Proxy Statement, one-half of each option award vests on the second anniversary of the date of grant and the other one-half vests on the third anniversary of the date of grant. Options granted in 2015 – 2017 expire ten years from the date of grant, and options granted in 2010 – 2014 expire seven years from the date of grant.

              Awards of restricted stock generally vest in three equal annual installments beginning one year after the grant, subject to continued service through the vesting dates. Performance share awards are measured over a three-year performance period at which time they will vest only if the financial goals have been achieved, subject to continued service through the vesting dates. Unless otherwise noted, grants to the Named Executive Officers have vesting schedules identical to other officers.

Forfeiture and Post-Employment Treatment

              Holders of stock options generally have 90 days after termination of employment to exercise options to the extent they were vested on the date of termination. Unvested restricted stock and performance shares are generally forfeited upon termination of employment except upon retirement, disability or death. Awards outstanding under the Company's Amended and Restated Long-Term Incentive Plan will be treated as follows upon termination of employment due to an individual's retirement or disability (except as otherwise provided in the individual award agreement): (i) outstanding stock options will continue to vest on the original vesting schedule and the individual may exercise the options until the earlier of the expiration date for such options or five years after the date of retirement; (ii) any unvested restricted stock will continue to vest after retirement on the same vesting schedule as if the individual had remained employed by CNO; and (iii) a pro rata portion of any performance shares will vest and will be payable to the extent the performance criteria are met at the same time as others receive payments under such performance share award. For the purpose of the Amended and Restated Long-Term Incentive Plan, "retirement" means voluntary termination of employment after achieving either 62 years of age, or 60 years of age with at least 10 years of employment with the Company. Upon an individual's death: (i) outstanding stock options will vest and be exercisable for 12 months; (ii) restricted stock will vest; and (iii) a pro rata portion of any performance shares will vest and be payable to the extent the performance criteria are met at the same time as others receive payments under such performance share award.

Option Exercise Price

              Options granted under the Company's Amended and Restated Long-Term Incentive Plan have an exercise price equal to the closing price on the date of grant.

Dividends

              Holders of unvested restricted stock or restricted stock units granted prior to May 2017 are entitled to receive any cash dividends or dividend equivalents at the same times and in the same amounts per share as holders of the Company's common stock. For restricted stock units granted since May 2017, the recipient will be entitled to dividend equivalents upon vesting. The payments of cash dividends and dividend equivalents are taxed as compensation income to the holders of the restricted stock or restricted stock units. Holders of performance share awards are entitled to dividend equivalents on any performance shares that vest. Such dividend equivalents are payable in cash at the time of vesting of the performance shares to the extent that cash dividends are paid on the common stock underlying the performance shares after the award date and prior to the issuance of shares upon vesting.

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Outstanding Equity Awards at 2017 Fiscal Year-End

              The following table sets forth certain information concerning outstanding equity awards held by the Named Executive Officers as of December 31, 2017.

OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR-END

 
   
   
   
   
   
  STOCK AWARDS
 
   
   
   
   
   
   
   
   
  Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(4)
 
   
   
   
   
   
   
   
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(3)
 
   
   
   
   
   
  Number
of
Shares
or
Units of
Stock
That
Have
Not
Vested
   
 
   
  OPTION AWARDS    
 
   
  Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested(2)
Name
  Award
Date
  Number of
Securities
Underlying
Unexercised
Options
Exercisable
  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
  Option
Exercise
Price
  Option
Expiration
Date(1)

Edward Bonach

  2-28-12   207,900     $7.51   2-28-19     $—     $—

  2-27-13   271,900     10.88   2-27-20        

  3-20-14   207,290     19.15   3-20-21        

  2-25-15(5)   141,025   141,025   16.42   2-25-25        

  2-23-16(6)     382,653   17.38   2-23-26       61,963   1,529,866

  2-23-16(7)               123,926   3,059,733

  2-23-17(8)     176,990   21.06   2-23-27   55,560   1,371,776   55,560   1,371,776

  2-23-17(9)               111,120   2,743,553

Gary Bhojwani

  5-5-16(10)     90,600   18.43   5-5-26   156,000   3,851,640    

  2-23-17(8)     44,250   21.06   2-23-27   13,890   342,944   13,890   342,944

  2-23-17(9)               27,780   685,888

Bruce Baude

  2-27-13   65,200     10.88   2-27-20        

  3-20-14   40,130     19.15   3-20-21        

  2-25-15(5)   25,645   25,645   16.42   2-25-25   2,032   50,170    

  2-23-16(6)     71,400   17.38   2-23-26   13,215   326,278   11,550   285,170

  2-23-16(7)               23,100   570,339

  2-23-17(8)     30,970   21.06   2-23-27   9,720   239,987   9,720   239,987

  2-23-17(9)               19,440   479,974

Eric Johnson

  3-8-11   83,100     7.38   3-8-18        

  2-28-12   69,300     7.51   2-28-19        

  2-27-13   65,200     10.88   2-27-20        

  3-20-14   43,470     19.15   3-20-21        

  2-25-15(5)   25,645   25,645   16.42   2-25-25        

  2-23-16(6)     71,400   17.38   2-23-26       11,550   285,170

  2-23-16(7)               23,100   570,339

  2-23-17(8)     30,970   21.06   2-23-27   9,720   239,987   9,720   239,987

  2-23-17(9)               19,440   479,974

Erik Helding

  2-28-12   5,750     7.51   2-28-19        

  2-27-13   15,200     10.88   2-27-20        

  3-20-14   12,170     19.15   3-20-21        

  2-25-15(5)   7,265   7,265   16.42   2-25-25        

  9-2-15(11)           966   23,851    

  2-23-16(6)     17,300   17.38   2-23-26   3,532   87,205   2,800   69,132

  2-23-16(7)               5,600   138,264

  5-5-16(12)     36,300   18.43   5-5-26   12,000   296,280    

  2-23-17(8)     35,400   21.06   2-23-27   16,670   411,582   11,110   274,306

  2-23-17(9)               22,220   548,612

(1)
All options in this table that were granted in 2015 – 2017 have a 10 year expiration date, and options granted in 2010 – 2014 have a seven year expiration date. All options are subject to acceleration for certain events.

(2)
Based on the closing sales price of CNO common stock on December 29, 2017 ($24.69).

(3)
In accordance with SEC rules, the amounts included in this column represent the number of shares of CNO common stock to which the Named Executive Officer will be entitled if the Company achieves the maximum performance level with respect to the performance share awards made in 2016 and 2017 based on average operating return on equity and achieves the target level with respect to the performance share awards made in 2016 and 2017 based on total shareholder return. For the 2016 and 2017

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    performance share awards, one-half of the aggregate award is based on the Company's three-year average operating return on equity, with a target of 9.50% for 2016 and 8.25% for 2017. The other half of the performance share awards made in 2016 and 2017 is based on relative total shareholder return for a comparator group, targeting the 50th percentile. For purposes of these awards, average operating return on equity is calculated based on "Operating earnings", defined as net income applicable to common stock before: (i) loss on extinguishment of debt, net of income taxes; (ii) net realized investment gains or losses, net of related amortization and income taxes; (iii) fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to fixed index annuities, net of related amortization and income taxes; (iv) equity in earnings of certain non-strategic investments, earnings attributable to non-controlling interests and earnings from discontinued operations, in each case net of income taxes; (v) changes to the valuation allowance for deferred tax assets; (vi) the cumulative effect of change in accounting principles, net of income taxes; (vii) after-tax mark-to-market change in the agent deferred compensation liability; (viii) gain or loss related to any long-term care reinsurance transaction entered into after the grant date; and (ix) unusual income or expense items, net of income taxes, that are unlikely to recur as determined by the Human Resources and Compensation Committee.

(4)
The dollar amounts in this column equal the number of performance shares, calculated as described in footnote (3) above, multiplied by the closing sales price of CNO common stock on December 29, 2017 ($24.69).

(5)
One-half of these options vested on February 25, 2017 and the balance vested on February 25, 2018. Any remaining shares of restricted stock awarded on this date vest on March 25, 2018.

(6)
One-half of these options vested on February 23, 2018 and the balance vests on February 23, 2019. Any remaining shares of restricted stock awarded on this date vest in two equal installments beginning March 25, 2018. The performance share awards included in the last two columns are based on total shareholder return over the 2016 – 2018 performance period.

(7)
These are performance share awards based on average operating return on equity over the 2016 – 2018 performance period. See footnote (3) above for additional information.

(8)
One-half of these options vest on February 23, 2019 and the balance vests on February 23, 2020. The shares of restricted stock awarded on this date vest in three equal installments beginning March 25, 2018. The performance share awards included in the last two columns are based on total shareholder return over the 2017 – 2019 performance period.

(9)
These are performance share awards based on average operating return on equity over the 2017 – 2019 performance period. See footnote (3) above for additional information.

(10)
One-half of these options vest on May 5, 2018 and the balance vests on May 5, 2019. The remaining shares from this restricted stock award vest in two equal annual installments beginning May 5, 2018.

(11)
The remaining shares from this restricted stock award vest on September 2, 2018.

(12)
One-half of these options vest on May 5, 2018 and the balance vests on May 5, 2019. This restricted stock award vests on May 5, 2019.

Option Exercises and Stock Vested in 2017

              The following table provides information, for the Named Executive Officers, concerning (i) stock option exercises during 2017 and the value realized upon exercise (before payment of any applicable withholding tax) and (ii) the number of shares acquired upon the vesting of restricted stock awards in 2017 and performance share awards (for the 2015 – 2017 performance period) and the value realized upon vesting (in each case before payment of any applicable withholding tax).

OPTION EXERCISES AND STOCK VESTED IN 2017

 
  OPTION AWARDS   STOCK AWARDS
Name
  Number of
Shares
Acquired
On Exercise
  Value
Realized
Upon Exercise
  Number of
Shares
Acquired on
Vesting
  Value
Realized on
Vesting

Edward Bonach

    $   37,359   $786,781

Gary Bhojwani

        78,000   1,651,260

Bruce Baude

        15,875   326,895

Eric Johnson

  70,000     1,002,155   7,837   165,047

Erik Helding

        5,027   105,874

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Nonqualified Deferred Compensation in 2017

              The following table shows certain information concerning nonqualified deferred compensation activity in 2017 for our Named Executive Officers.

NONQUALIFIED DEFERRED COMPENSATION IN 2017

Name
  Executive
Contributions
in 2017
  CNO
Contributions
in 2017
  Aggregate
Earnings (Loss)
in 2017(1)
  Aggregate
Withdrawals/
Distributions
  Aggregate
Balance at
12/31/17(2)

Edward Bonach

  $   $   $24,657   $176,078   $

Gary Bhojwani

    750,000       4,830       754,830

Bruce Baude

          77,138   423,727     461,361

Eric Johnson

               

Erik Helding

    76,589       28,413       197,595

(1)
Amounts in this column are not required to be included in the Summary Compensation Table on page 35 of this Proxy Statement.

(2)
Amounts included in this column reflect the following amounts contributed under the deferred compensation plan by or on behalf of the Named Executive Officers, which amounts were in each case included in the summary compensation table for the year(s) to which the compensation relates: Mr. Bonach, $104,328; Mr. Bhojwani, $750,000; Mr. Baude, $800,000; and Mr. Helding, $146,810.

              The 2017 Nonqualified Deferred Compensation table presents amounts deferred under our Deferred Compensation Plan. Participants may defer up to 100% of their base salary and annual incentive plan payments under the Deferred Compensation Plan. Deferred Amounts are credited with earnings or losses based on the return of mutual funds selected by the executive, which the executive may change at any time. We do not make matching contributions to participants' accounts under the Deferred Compensation Plan. Distributions are made in either a lump sum or an annuity as chosen by the executive at the time of deferral.

Potential Payments Upon Termination or Change in Control

              Each of the Named Executive Officers listed below would be entitled to certain payments upon termination of employment arising under (i) benefit plans covering all employees such as group life insurance coverage, (ii) agreements covering awards made under the Company's Long-Term Incentive Plan and (iii) the terms of an employment agreement between the Named Executive Officer and the Company or one of its subsidiaries. See "Termination and Change in Control Arrangements" on page 33 of this Proxy Statement for additional information regarding these arrangements. The following table estimates the amounts that would have been payable to the Named Executive Officers upon termination of employment under each of the identified circumstances as of December 31, 2017:

Name
  Voluntary or
For Cause
Termination
  Disability   Death   Without
Cause or
With Good
Reason
  Involuntary
Termination
within 6 months
before or
2 years after
Change In
Control

Edward Bonach(1)

         

Gary Bhojwani(2)

    $937,500   $1,337,500   $3,276,158   $11,817,619

Bruce Baude(3)

    600,000   1,000,000   2,164,114   5,367,205

Eric Johnson(4)

    500,000   900,000   1,794,133   4,420,776

Erik Helding(5)

    300,000   700,000   1,203,422   3,539,672

(1)
Mr. Bonach retired on December 31, 2017.

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(2)
For Mr. Bhojwani, his employment agreement provides for payments upon termination of employment as follows: (i) due to disability, a pro rata portion of his target annual bonus ($937,500 as of December 31, 2017); (ii) upon death, an amount equal to his annual salary (in addition, he would be entitled to receive $400,000 under the Company's group life insurance plan); (iii) without "Just Cause" or "With Reason" (as defined in his agreement), an amount equal to the pro rata portion of his actual bonus ($1,573,194 for 2017) plus an amount equal to the sum of his target bonus and his annual salary plus continued participation for up to 12 months for Mr. Bhojwani and his family in all medical, health and life insurance plans at the same benefit level at which he and his family were participating on the date of his termination (the amount in the table includes $15,464 for 12 months of such benefits); and (iv) upon an involuntary termination within six months in anticipation of or within two years after a change in control, an amount equal to his pro rata actual bonus for the year of termination plus three times the sum of his salary and target bonus plus continued participation for up to 24 months for Mr. Bhojwani and his family in all medical, health and life insurance plans at the same benefit level at which he and his family were participating on the date of his termination (the amount in the table includes $30,928 for 24 months of such benefits). In the event of a termination upon a change in control, in addition to the amounts payable under his employment agreement, the vesting of his awards under the Company's Long-term Incentive Plan would be accelerated and the amount shown for Mr. Bhojwani includes the value as of December 31, 2017 of the accelerated vesting of options ($727,784), restricted stock ($4,194,584) and target performance shares ($228,629).

(3)
For Mr. Baude, his employment agreement provides for payments upon termination of employment as follows: (i) due to disability, a pro rata portion of his target annual bonus ($600,000 as of December 31, 2017); (ii) upon death, an amount equal to his annual salary (in addition, he would be entitled to receive $400,000 under the Company's group life insurance plan); (iii) without "Just Cause" or "With Reason" (as defined in his agreement), an amount equal to the pro rata portion of his actual bonus ($964,114 for 2017) plus an amount equal to the sum of his target bonus and his annual salary; and (iv) upon an involuntary termination within six months in anticipation of or within two years after a change in control, an amount equal to his pro rata actual bonus for the year of termination plus two times the sum of his salary and target bonus. In the event of a termination upon a change in control, in addition to the amounts payable under his employment agreement, the vesting of his awards under the Company's Long-term Incentive Plan would be accelerated and the amount shown for Mr. Baude includes the value as of December 31, 2017 of the accelerated vesting of options ($846,439), restricted stock ($616,435) and target performance shares ($540,217).

(4)
For Mr. Johnson, his employment agreement provides for payments upon termination of employment as follows: (i) due to disability, a pro rata portion of his target annual bonus ($500,000 as of December 31, 2017); (ii) upon death, an amount equal to his annual salary (in addition, he would be entitled to receive $400,000 under the Company's group life insurance plan); (iii) without "Just Cause" or "With Reason" (as defined in his agreement), an amount equal to the pro rata portion of his actual bonus ($794,133 for 2017) plus an amount equal to the sum of his target bonus and his annual salary; and (iv) upon an involuntary termination within six months in anticipation of or within two years after a change in control, an amount equal to his pro rata actual bonus for the year of termination plus two times the sum of his salary and target bonus. In the event of a termination upon a change in control, in addition to the amounts payable under his employment agreement, the vesting of his awards under the Company's Long-term Incentive Plan would be accelerated and the amount shown for Mr. Johnson includes the value as of December 31, 2017 of the accelerated vesting of options ($846,439), restricted stock ($239,987) and target performance shares ($540,217).

(5)
For Mr. Helding, his employment agreement provides for payments upon termination of employment as follows: (i) due to disability, a pro rata portion of his target annual bonus ($300,000 as of December 31, 2017); (ii) upon death, an amount equal to his annual salary (in addition, he would be entitled to receive $400,000 under the Company's group life insurance plan); (iii) without "Just Cause" or "With Reason" (as defined in his agreement), an amount equal to the pro rata portion of his actual bonus ($503,422 for 2017) plus an amount equal to the sum of his target bonus and his annual salary; and (iv) upon an involuntary

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    termination within six months in anticipation of or within two years after a change in control, an amount equal to his pro rata actual bonus for the year of termination plus two times the sum of his salary and target bonus. In the event of a termination upon a change in control, in addition to the amounts payable under his employment agreement, the vesting of his awards under the Company's Long-term Incentive Plan would be accelerated and the amount shown for Mr. Helding includes the value as of December 31, 2017 of the accelerated vesting of options ($542,285), restricted stock ($818,918) and target performance shares ($275,047).

CEO Pay Ratio

              The following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our other employees. We determined our median employee based on W-2 gross earnings of each of our 3,313 employees as of December 31, 2017. W-2 gross earnings data are readily available, consistently reported for our entire employee population and provide a fair representation of the total compensation an employee receives in a given year. Of the two potential median employees, we selected the exempt versus non-exempt employee due to the greater consistency expected in future years in the amount earned by the exempt employee. The annual total compensation of our median employee for 2017 was $59,021. As disclosed in the Summary Compensation Table appearing on page 35, the 2017 annual total compensation for Mr. Bonach (who served as Chief Executive Officer during 2017) was $9,962,118. He retired from the Company effective December 31, 2017. Additional details on the Chief Executive Officer transition can be found on page 32. Based on the information above, our estimate of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees is 169 to 1.

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PROPOSAL 2

APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN

              On March 8, 2018, the CNO Board of Directors approved the CNO Financial Group, Inc. Employee Stock Purchase Plan (the "ESPP"), to be effective upon the approval thereof by the shareholders at the Annual Meeting. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").

Reasons for Seeking Shareholder Approval

              The Company is seeking shareholder approval of the ESPP to meet requirements of the New York Stock Exchange. In addition, the Board regards shareholder approval of the ESPP as desirable and consistent with corporate governance best practices. The ESPP will not go into effect if shareholder approval is not obtained.

              The ESPP is intended to provide a convenient and practical means by which employees may participate in stock ownership of the Company. The Board believes that the ESPP benefits the Company and shareholders by encouraging employees to become shareholders, thereby aligning the interests of employees with those of shareholders. The Board also believes that providing employees with an opportunity to participate in the success of the Company through purchasing shares of the Company's common stock under the ESPP will enhance the Company's ability to attract, retain and motivate highly qualified employees.

Summary Description of the ESPP

              The description of the ESPP in this Proxy Statement is qualified in its entirety by reference to the text of the ESPP, which is attached hereto as Annex A and is incorporated by reference herein. You are urged to read carefully the ESPP in its entirety as the discussion in this Proxy Statement is only a summary.

              Shares Available. The number of shares of common stock that may be issued under the ESPP is 1,600,000, subject to adjustment in the event of a stock split, stock dividend and certain other dilutive changes in our common stock. The shares may consist of unissued shares, previously issued shares or shares purchased on the open market.

              Administration. The ESPP is administered by the Human Resources and Compensation Committee or such other committee as designated by the Board. The Human Resources and Compensation Committee has the authority to make rules and regulations for the administration of the ESPP, and its actions, interpretations and determinations made in good faith will be final and binding.

              Eligibility. Employees of the Company and its subsidiaries are eligible to participate in the ESPP, except that the Human Resources and Compensation Committee may exclude employees (1) who have been employed for less than a specified period (not to exceed two years), or (2) who are highly compensated employees under the Code. Employees will not be granted an option under the ESPP if, immediately after the grant, such employee would own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary. Employees whose customary employment is for less than 21 hours per week or for not more than five months per calendar year are not eligible to participate in the ESPP. As of the record date, approximately 3,300 employees of the Company and its subsidiaries were eligible to participate in the ESPP.

              Participation in the ESPP. Eligible employees may participate in the ESPP by electing to participate in a given offering period pursuant to procedures set forth by the Human Resources and Compensation Committee. A participant's participation in the ESPP will continue until the participant makes a new election or withdraws from an offering period or the ESPP.

              Payroll Deductions. Payroll deductions are made from the compensation paid to each participant for each offering period in such amounts, as elected by the participant, expressed as a whole number percentage or as a

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dollar amount but not to exceed the lesser of (i) 10% of the participant's base salary (or other base compensation) or bonus during the offering period or (ii) $15,000; provided that no participant will be entitled to purchase, during any calendar year, shares with an aggregate fair market value in excess of $25,000 (calculated as of the first day of the offering period). Following at least one payroll deduction, a participant may decrease the amount of payroll deductions only once during an offering period that has commenced. In addition, except to the extent provided by the Human Resources and Compensation Committee, a participant may not make any separate cash payments into the participant's account, and payment for shares purchased under the ESPP may not be made in any form other than by payroll deduction.

              Termination of Participation in the ESPP. A participant may cease payroll deductions during an offering period and elect to withdraw from the ESPP pursuant to procedures set forth by the Human Resources and Compensation Committee. A participant's participation in the ESPP will be terminated upon the participant ceasing to be eligible to participate in the ESPP for any reason, including the termination of such participant's employment. Upon a termination of participation in the ESPP, all payroll deductions (and other contributions to the extent provided by the Human Resources and Compensation Committee) credited to such former participant's plan account will be returned without interest to the former participant.

              Purchase of Shares. With respect to an offering period, each participant will be granted an option to purchase a number of shares equal to the lesser of (1) a maximum established by the Human Resources and Compensation Committee (which maximum, unless otherwise determined by the Human Resources and Compensation Committee, will be 5,000 shares) and (2) the number determined by dividing the amount in the participant's account during such offering period by the purchase price. On the last day of each offering period (each, a "purchase date"), the funds in each participant's account will be used to purchase shares. The purchase price will be 85% of the lesser of the fair market value of the shares on the purchase date or the first day of the offering period, or such greater percentage as may be set by the Human Resources and Compensation Committee prior to the commencement of the applicable offering period. As soon as practicable after each purchase date, the number of shares purchased by each participant will be either delivered to the participant or deposited in a brokerage account established in such participant's name.

              Transferability. A participant will not be permitted to (1) transfer his or her option to purchase shares of common stock under the ESPP or (2) transfer shares purchased pursuant to the ESPP for at least one year following the applicable purchase date unless otherwise determined by the Human Resources and Compensation Committee. In addition, each participant must notify the Company if he or she transfers any shares purchased pursuant to the ESPP, if such transfer is made within two years after the first day of the applicable offering period or within one year after the participant's receipt of such purchased shares.

              Amendment and Termination. Our Board may amend, suspend or terminate the ESPP; provided, however, that no amendment will be made which, without shareholder approval, would increase the number of shares authorized for the ESPP or change the designation or class of eligible employees.

              The ESPP will terminate upon the earliest of (1) the termination of the ESPP by our Board or (2) the issuance of all of the shares reserved for issuance under the plan (unless additional shares are authorized for issuance under the ESPP).

              Withholding. The Company reserves the right to withhold from shares or cash distributed to a participant any amounts which it is required by law to withhold.

Certain Federal Income Tax Consequences

              The following discussion of the U.S. federal income tax consequences relating to the ESPP is based on present federal tax laws and regulations and is not a complete description of the federal income tax laws. Participants may also be subject to certain state, local or non-U.S. taxes which are not described below.

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              Options to purchase shares of our common stock granted under the ESPP are intended to qualify for favorable federal income tax treatment associated with rights granted under an employee stock purchase plan that qualifies under the provisions of Section 423(b) of the Code. Under these provisions, no income will be taxable to a participant until the shares of common stock purchased under the ESPP are sold or otherwise disposed of. If the shares of common stock are disposed of within two years from the first day of the offering period, a transaction referred to as a "disqualifying disposition," the participant will realize ordinary income in the year of such disposition equal to the difference between the fair market value of the shares of common stock on the purchase date and the purchase price. The amount of such ordinary income will be added to the participant's basis in the shares of common stock, and any additional gain or resulting loss recognized on the disposition of the shares of common stock after such basis adjustment will be a capital gain or loss. A capital gain or loss will be long-term if the participant holds the shares of common stock for more than one year after the purchase date.

              If the shares of our common stock purchased under the ESPP are sold (or otherwise disposed of) more than two years after the first day of the offering period, then the lesser of (1) the excess of the fair market value of the stock at the time of such disposition over the purchase price and (2) 15% of the fair market value of the stock as of the first day of the offering period (or such lesser percentage corresponding to the relevant discount to fair market value under the ESPP calculated as of the first day of the offering period) will be treated as ordinary income. The amount of such ordinary income will be added to the participant's basis in the shares of our common stock, and any additional gain recognized on the disposition of the shares of common stock after such basis adjustment will be long-term capital gain. If the fair market value of the shares of common stock on the date of disposition is less than the purchase price, there will be no ordinary income and any loss recognized will be a capital loss.

              The Company will generally be entitled to a deduction in the year of a disqualifying disposition equal to the amount of ordinary income realized in the United States by the participant as a result of such disposition, subject to the satisfaction of any tax-reporting obligations. In all other cases, no deduction is allowed.

Equity Compensation Plan Information

              The following table provides information as of December 31, 2017 with respect to compensation plans (including individual compensation arrangements) under which the Company's equity securities are authorized for issuance. There are no plans that have not been approved by shareholders.

Plan Category
  Number of securities to
be issued upon exercise of
outstanding options,
warrants and rights
  Weighted-average exercise
price of outstanding
options, warrants and
rights
  Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
 
  (a)
  (b)
  (c)
Equity compensation plans approved by security holders   5,120,818   $15.95   7,488,231

Equity compensation plans not approved by security holders

 


 

N/A

 

N/A
Total   5,120,818   $15.95   7,488,231

Required Vote

              Approval of the ESPP requires the affirmative vote of the holders of a majority of the shares of common stock that are present in person, or represented by proxy, and entitled to vote on the proposal at the Annual Meeting.

Recommendation of our Board of Directors

              OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN.

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PROPOSAL 3

APPROVAL OF AMENDED AND RESTATED
SECTION 382 SHAREHOLDERS RIGHTS PLAN

Introduction

              On October 3, 2017, the Board adopted a Third Amended and Restated Section 382 Rights Agreement (the "Third Amended Rights Plan"), which became effective on November 13, 2017. The Board had previously declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock, par value $0.01 per share, of the Company (the "Common Stock") that was paid to the shareholders of record as of the close of business on January 30, 2009 pursuant to the Company's original Section 382 Rights Agreement, dated as of January 20, 2009 (the "Original Rights Plan"). The Original Rights Plan was amended and restated on December 6, 2011 (the "First Amended Rights Plan") and was approved by shareholders at the 2012 annual meeting. The First Amended Rights Plan was amended and restated on November 13, 2014 (the "Second Amended Rights Plan") and was approved by the shareholders at the 2015 annual meeting. The Second Amended Rights Plan expired on November 13, 2017.

              The Third Amended Rights Plan, among other things:

    extended the final expiration date of the Second Amended Rights Plan from November 13, 2017 to November 13, 2020;

    updated the purchase price of the Rights; and

    provided for a new series of preferred stock relating to the Rights that is substantially identical to the prior series of preferred stock.

              The Third Amended Rights Plan approval proposal is an opportunity for shareholders to approve the decision by the Board to adopt the Third Amended Rights Plan. If the shareholders do not approve the Third Amended Rights Plan at the Annual Meeting, the Third Amended Rights Plan will expire upon the adjournment of the Annual Meeting.

Purpose of the Third Amended Rights Plan

              The Third Amended Rights Plan is designed to prevent certain transfers of our Common Stock or other securities interests (collectively, "Company 382 Securities") that would be treated as our "stock" for purposes of Section 382 ("Section 382") of the Internal Revenue Code of 1986, as amended (the "Code"), which could adversely affect our ability to utilize tax net operating losses ("NOLs") and certain other tax losses (collectively, "Tax Benefits") to offset our taxable income for U.S. federal income tax purposes. As of December 31, 2017, we had approximately $2.3 billion of federal tax NOLs, resulting in deferred tax assets of approximately $490 million, expiring in years 2023 through 2035. Generally, the unexpired balance of our NOLs can be used to offset tax on income (if any). However, as discussed further below, the utilization of Tax Benefits to offset taxable income can be limited in certain circumstances. Because the amount and timing of our future taxable income cannot be accurately predicted, we cannot predict the amount of Tax Benefits that will ultimately be used to reduce our income tax liability. Although we are unable to quantify an exact value, we believe that the Tax Benefits are a very valuable asset and the Board believes it is in the Company's best interests to attempt to prevent the imposition of limitations on their use by adopting the Third Amended Rights Plan.

              The benefit of the Tax Benefits to the Company could be significantly reduced or eliminated if we experience an "ownership change" within the meaning of Section 382 of the Code (an "Ownership Change"). An Ownership Change can occur through one or more acquisitions of our stock, whether or not occurring pursuant to a single plan, by which shareholders or groups of shareholders, each of whom owns or is deemed to own directly or indirectly at least 5% of our stock, increase their aggregate ownership of our stock by more than 50 percentage

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points over their lowest aggregate percentage interest within a rolling three-year period. See "— Section 382 Ownership Change Calculations" below for additional detail. If that were to happen, we would only be allowed to use a limited amount of Tax Benefits to offset our taxable income subsequent to an Ownership Change (the "Annual 382 Limitation").

              The Annual 382 Limitation is obtained by multiplying (i) the aggregate value of our outstanding equity immediately prior to the Ownership Change (reduced by certain capital contributions made during the immediately preceding two years and certain other items) by (ii) the federal long-term tax-exempt rate (as defined by Section 382 of the Code and regularly published by the Internal Revenue Service (the "IRS")) in effect for the month of the Ownership Change. The Annual 382 Limitation is subject to certain adjustments and limitations. If we were to experience an Ownership Change at our current stock price levels, we believe we would be subject to an annual Tax Benefits limitation which would result in a material amount of NOLs expiring unused, resulting in a significant impairment to the Company's deferred tax assets. Additionally, the writedown of our deferred tax assets that would occur in the event of an Ownership Change for purposes of Section 382 could cause us to breach the debt to total capitalization covenant in our senior secured credit facility.

              If the Company were to have taxable income in excess of the Annual 382 Limitation following an Ownership Change, it would not be able to utilize Tax Benefits to offset the tax liability on the excess of taxable income over the Annual 382 Limitation. Although any Tax Benefits not used as a result of the Annual 382 Limitation would remain available to offset taxable income in future years (subject to the Annual 382 Limitation) until the expiration of such Tax Benefits, an Ownership Change could (i) significantly defer the utilization of such Tax Benefits, (ii) accelerate payment of tax liabilities and (iii) result in the expiration of certain Tax Benefits prior to their utilization. Because the aggregate value of our outstanding Common Stock and the federal long-term tax-exempt interest rate fluctuate, it is impossible to predict with any accuracy the Annual 382 Limitation which would apply upon an Ownership Change, but such limitation could be material.

              Currently, we do not believe that we have experienced an Ownership Change, but calculating whether an Ownership Change has occurred is subject to inherent uncertainty. This uncertainty results from the complexity of the Section 382 provisions, as well as limitations on the knowledge that any publicly traded company can have about the ownership of and transactions in its securities. However, we and our advisors have analyzed the information available, along with various scenarios of possible future changes of ownership. We believe that if no actions were taken it is possible that we would undergo an Ownership Change.

              In May 2016, the Company's shareholders approved an amendment to the Company's Amended and Restated Certificate of Incorporation (the "NOL Protective Amendment"). Although the NOL Protective Amendment is designed to assist in protecting the NOLs by preventing certain transfers of stock which would otherwise adversely affect our ability to use the Tax Benefits, there still remains a risk that certain changes in relationships among shareholders or other events would cause an Ownership Change. We also cannot assure you that the NOL Protective Amendment is enforceable under all circumstances, particularly against shareholders who did not vote in favor of the NOL Protective Amendment proposal at our 2016 Annual Meeting.

              The Third Amended Rights Plan is not designed to protect shareholders against the possibility of a hostile takeover. Instead, it is meant to protect shareholder value by attempting to preserve our ability to use the Tax Benefits. Because of the significant value of the Tax Benefits to the Company, the Board believes it is in the best interest of the Company and its shareholders to approve the adoption of the Third Amended Rights Plan. Our Board has unanimously approved the Third Amended Rights Plan and unanimously recommends that shareholders approve the Third Amended Rights Plan at the Annual Meeting.

              The description of the Third Amended Rights Plan in this Proxy Statement is qualified in its entirety by reference to the text of the Third Amended Rights Plan, which is attached hereto as Annex B and is incorporated by reference herein. You are urged to read carefully the Third Amended Rights Plan in its entirety as the discussion in this Proxy Statement is only a summary.

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Section 382 Ownership Change Calculations

              Generally, an Ownership Change can occur through one or more acquisitions by which one or more shareholders, each of whom owns or is deemed to own directly or indirectly 5% or more in value of a corporation's stock, increase their aggregate percentage ownership by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the preceding rolling three-year period. The amount of the increase in the percentage of stock ownership (measured as a percentage of the value of the company's outstanding shares rather than voting power) of each "5-percent shareholder" (within the meaning of Section 382) is computed separately, and each such increase is then added together with any other such increases to determine whether an Ownership Change has occurred.

              For example, if a single investor acquired 50.1% of our stock in a three-year period, an Ownership Change would occur. Similarly, if ten persons, none of whom owned our stock, each acquired slightly over 5% of our stock within a three-year period (so that such persons owned, in the aggregate, more than 50%), an Ownership Change would occur.

              In determining whether an Ownership Change has occurred, the rules of Section 382 are very complex and are beyond the scope of this summary discussion. Some of the factors that must be considered in determining whether an Ownership Change has occurred include the following:

    All holders who each own less than 5% of a company's Company 382 Securities are generally (but not always) treated as a single "5-percent shareholder." Transactions in the public markets among shareholders who are not "5-percent shareholders" are generally (but not always) excluded from the calculation.

    There are several rules regarding the aggregation and segregation of shareholders who otherwise do not qualify as "5-percent shareholders."

    Acquisitions by a person which cause that person to become a "5-percent shareholder" generally result in a five percentage (or more) point change in ownership, regardless of the size of the final purchase(s) that caused the threshold to be exceeded.

    Certain constructive ownership rules, which generally attribute ownership of Company 382 Securities owned by estates, trusts, corporations, partnerships or other entities to the ultimate indirect individual owner thereof, or to related individuals, are applied in determining the level of Company 382 Securities ownership of a particular holder. Special rules can result in the treatment of options (including warrants) or other similar interests as having been exercised if such treatment would result in an Ownership Change.

    The redemption or buyback of shares by an issuer will increase the ownership of any "5-percent shareholders" (including groups of shareholders who are not themselves "5-percent shareholders") and can contribute to an Ownership Change. In addition, it is possible that a redemption or buyback of shares could cause a holder of less than 5% to become a "5-percent shareholder," resulting in a five percentage (or more) point change in ownership.

              Shareholders are advised to carefully monitor their ownership of our Company 382 Securities and consult with their own legal advisors to determine whether their ownership of our Company 382 Securities approaches the proscribed level.

Description of Third Amended Rights Plan

              The Third Amended Rights Plan is intended to act as a deterrent to any person or group acquiring 4.99% or more of our outstanding Common Stock or any other class of Company 382 Securities then outstanding (an

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"Acquiring Person") without the approval of our Board of Directors. Shareholders who owned 4.99% or more of the Company's outstanding Common Stock as of the close of business on December 6, 2011 will not trigger the Third Amended Rights Plan so long as they do not (i) acquire additional shares of Common Stock or other interests in Company 382 Securities representing more than 1% of the Company 382 Securities then outstanding or (ii) fall under 4.99% ownership of the shares of Common Stock or any other class of Company 382 Securities and then re-acquire 4.99% or more of the Common Stock or any other class of Company 382 Securities. Any Rights held by a person who is or becomes an Acquiring Person are void and may not be exercised or transferred. The Board of Directors may, in its sole discretion, exempt any person or group from being deemed an Acquiring Person for purposes of the Third Amended Rights Plan.

              The Rights. Subject to the terms, provisions and conditions of the Third Amended Rights Plan, if the Rights become exercisable, each Right would initially represent the right to purchase from us one one-thousandth of a share of our Series D Junior Participating Preferred Stock, par value $0.01 per share (the "Series D Preferred Stock") for a purchase price of $90.00 (the "Purchase Price"). If issued, each fractional share of Series D Preferred Stock would give the shareholder approximately the same dividend, voting and liquidation rights as does one share of Common Stock. However, prior to exercise or exchange as provided in the Third Amended Rights Plan, a Right does not give its holder any rights as a shareholder, including without limitation any dividend, voting or liquidation rights.

              Exercisability. The Rights will not be exercisable until the earlier of (i) 10 business days after the first date of a public announcement that a person or group (other than an Exempted Person within the meaning of the Third Amended Rights Plan) has become an Acquiring Person and (ii) 10 business days (or such later date as may be determined by the Board by action prior to such person or group becoming an Acquiring Person) after the date of commencement of, or the first public announcement of an intention to commence, a tender offer or exchange offer, the consummation of which would result in any person (other than an Exempted Person) becoming an Acquiring Person. We refer to the date that the Rights become exercisable as the "Distribution Date." Until the Distribution Date, Common Stock certificates will evidence the Rights and may contain a notation to that effect. Any transfer of shares of Common Stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, the Rights may be transferred other than in connection with the transfer of the underlying shares of Common Stock.

              After the Distribution Date, each holder of a Right, other than Rights beneficially owned by any Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon exercise of a Right and payment of the Purchase Price, that number of shares of Common Stock and/or other securities or property having a market value of two times the Purchase Price.

              Exchange. After the Distribution Date, subject to certain limitations, the Board may exchange the Rights (other than Rights owned by an Acquiring Person which will have become void), in whole or in part, at an exchange ratio of one share of Common Stock or a fractional share of Series D Preferred Stock (or of a share of a similar class or series of our preferred stock having similar rights, preferences and privileges) of equivalent value, per Right (subject to adjustment).

              Expiration. The Rights and the Third Amended Rights Plan will expire on the earliest of (i) the close of business on November 13, 2020, (ii) the close of business on October 3, 2018 if shareholder approval of the Third Amended Rights Plan has not been received by or on such date, (iii) the adjournment of the 2018 Annual Meeting if shareholder approval of the Third Amended Rights Plan has not been received prior to such time, (iv) the repeal of Section 382 or any successor statute if the Board determines that the Third Amended Rights Plan is no longer necessary for the preservation of Tax Benefits or (v) the beginning of a taxable year of the Company to which the Board determines that no Tax Benefits may be carried forward.

              Redemption. At any time prior to the time an Acquiring Person becomes such, the Board may redeem the Rights in whole, but not in part, at a price of $0.01 per Right, subject to adjustment to reflect stock splits, stock

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dividends or similar transactions (the "Redemption Price") payable, at the option of the Company, in cash, shares of Common Stock or such other form of consideration as the Board may determine. The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

              Anti-Dilution Provisions. The Purchase Price payable, and the number of shares of Series D Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution that may occur as a result of certain events, including among others, a stock dividend, a stock split or a reclassification. Subject to certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in such Purchase Price.

              Amendments. Before the Distribution Date, the Company may, except with respect to the Redemption Price, amend or supplement the Third Amended Rights Plan without the consent of the holders of the Rights. After the Distribution Date, the Company may amend, except with respect to the Redemption Price, the Third Amended Rights Plan in any manner that does not adversely affect the interests of holders of the Rights.

Certain Considerations Relating to the Third Amended Rights Plan

              Our Board believes that attempting to protect the Tax Benefits described above is in the best interests of the Company and our shareholders. Nonetheless, we cannot eliminate the possibility that an Ownership Change will occur even if the Third Amended Rights Plan is approved. You should consider the factors below when making your decision.

              Continued Risk of Ownership Change. We cannot assure you that the Third Amended Rights Plan will be effective in deterring all acquisitions that could result in an Ownership Change. In particular, it will not protect against an Ownership Change resulting from purchasers of shares who become "5-percent shareholders" notwithstanding the Third Amended Rights Plan, either because the purchaser is unaware of the Third Amended Rights Plan or makes a conscious decision to discount the potential consequences under the Third Amended Rights Plan.

              Potential IRS Challenge to the Tax Benefits. The amount of the Tax Benefits has not been audited or otherwise validated by the IRS. The IRS could challenge the amount of the Tax Benefits, which could result in an increase in our liability in the future for income taxes. As discussed above, determining whether an Ownership Change has occurred is subject to uncertainty, both because of the complexity of the Section 382 provisions and because of limitations on the knowledge that any publicly traded company can have about the ownership of, and transactions in, its securities on a timely basis. Therefore, we cannot assure you that the IRS or other taxing authority will not claim that we experienced an Ownership Change and attempt to reduce or eliminate our utilization of Tax Benefits even if the Third Amended Rights Plan is in place.

              Potential Effects on Liquidity. The Third Amended Rights Plan is intended to deter persons or groups of persons from acquiring beneficial ownership of shares of our Common Stock in excess of the specified limitations. A shareholder's ability to dispose of our Common Stock may be limited if the Third Amended Rights Plan reduces the number of persons willing to acquire our Common Stock or the amount they are willing to acquire.

              Potential Impact on Value. It is possible that the Third Amended Rights Plan could deter certain buyers, including persons who wish to acquire more than 4.99% of our Common Stock, and that this could result in diminished demand for and, therefore, potentially decrease the value of our Common Stock. We believe, however, the value protected as a result of the preservation of the Tax Benefits would outweigh any such potential decrease in the value of our Common Stock.

              Potential Anti-Takeover Effect. The Third Amended Rights Plan is designed to preserve the long-term value of our accumulated Tax Benefits and is not intended to prevent a takeover of the Company. However, it could be

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deemed to have an "anti-takeover" effect because, among other things, it restricts the ability of a person, entity or group to accumulate our Common Stock above the applicable thresholds, without the approval of our Board. The Third Amended Rights Plan approval proposal is not part of a plan by us to adopt a series of anti-takeover measures, and we are not presently aware of any potential takeover transaction.

Required Vote

              Approval of this proposal will require the affirmative vote of the holders of a majority in voting power of the shares of Common Stock that are present, or represented by proxy, and entitled to vote on the proposal at the Annual Meeting. Abstentions will have the effect of a vote "against" this proposal. Broker non-votes will have no effect on the outcome of the vote with respect to this proposal because the shares subject to the broker non-vote will not be entitled to vote on this matter.

Recommendation of our Board of Directors

              OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE ADOPTION OF THE AMENDED AND RESTATED SECTION 382 SHAREHOLDER RIGHTS PLAN.

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PROPOSAL 4
RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

              PricewaterhouseCoopers LLP ("PwC") served as our independent registered public accounting firm for 2017 and has been selected to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2018. Representatives of the Company's independent registered public accounting firm are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they so desire, and will be available to respond to appropriate questions from the shareholders.

Required Vote

              Approval of the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 requires the affirmative vote of the majority of shares of common stock present in person, or represented by proxy, and entitled to vote on the proposal at the Annual Meeting.

Recommendation of our Board of Directors

              OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.

Evaluation of the Independent Registered Public Accounting Firm

              In considering the appointment of PwC as the Company's independent registered public accounting firm, the Audit and Enterprise Risk Committee (the "Audit Committee") considered the following factors:

    the appropriateness of the proposed audit fee in comparison to the fees reported by the CNO peer group;

    the professional qualifications of the firm and the lead audit partner assigned to CNO, including both industry experience and technical expertise in accounting and auditing;

    the quality and candor of the firm's communications with the Audit Committee and the Company during the prior audit;

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

    evidence supporting the firm's independence, objectivity, and professional skepticism;

    the quality and efficiency of the services provided by the firm during prior audits; and

    the firm's capability, technical expertise, and knowledge of the Company's operations and industry.

              The Audit Committee meets regularly with the independent registered public accounting firm ("independent auditor"), including attendance by the independent auditor at all regularly scheduled Audit Committee meetings and separate executive sessions at least four meetings per year. The Audit Committee uses these interactions, as well as the factors noted above, to assess the performance of the independent auditor.

              CNO undertakes an annual benchmarking of audit fees paid by our peers in the insurance industry. This data provides a reference point to the Audit Committee to judge the appropriateness of the audit fee. Additionally, the Audit Committee evaluates the scope of the audit, the complexity of the CNO environment, any

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history of prior issues and adjustments and the overall audit plan presented by the independent auditor in arriving at an appropriate fee.

Fees Paid to PricewaterhouseCoopers LLP

              Aggregate fees (including out-of-pocket expenses) billed to the Company for the years ended December 31, 2017 and 2016, by PwC were as follows (dollars in millions):

 
  Year Ended
December 31,
 
 
  2017   2016  

Audit fees(a)

  $ 5.2   $ 4.6  

Audit-related fees(b)

         

Tax fees

         

All other fees(c)

         

Total

  $ 5.2   $ 4.6  

(a)
Audit fees were for professional services rendered for the audits of CNO's consolidated financial statements, statutory and subsidiary audits, and assistance with review of documents filed with the SEC.

(b)
Audit-related fees primarily include services provided for employee benefit plan audits and other assurance-related services.

(c)
Fees for other permitted services.

Pre-Approval Policy and Independence

              The Audit Committee has adopted an auditor independence policy that, among other things, mandates pre-approval by the Audit Committee of all audit and permissible non-audit services performed by our independent registered public accounting firm and the related fees, and that the Audit Committee be provided each quarter with a summary of the services provided by and fees paid to, PwC. These services may include work associated with the following:

    internal control reviews and assistance with internal control reporting requirements;

    tax compliance, tax planning and related tax services; and

    due diligence work for potential transactions.

              Each proposed service is evaluated by the Audit Committee to ensure that it would not impair the independence of PwC under SEC and other applicable rules. In 2016 and 2017, all new engagements of PwC were pre-approved by the Audit Committee for all audit, audit-related, tax and other services.

Report of the Audit and Enterprise Risk Committee

              The Audit Committee provides assistance to the Board in fulfilling its responsibilities for oversight of the integrity of the financial statements, public disclosures and financial reporting practices of the Company, including the systems of internal controls. The Audit Committee has sole authority to appoint or replace the Company's independent registered public accounting firm. The independent registered public accounting firm reports directly to the Audit Committee.

              In overseeing the preparation of the Company's audited financial statements for the year ended December 31, 2017, the Audit Committee reviewed and discussed the audited financial statements with the Company's management and with PwC, the Company's independent registered public accounting firm. The Audit

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Committee also discussed with PwC the matters required to be discussed under Public Company Accounting Oversight Board ("PCAOB") Auditing Standard No. 1301.

              The Audit Committee has received from PwC and reviewed the written disclosures and the letter required by applicable PCAOB requirements regarding PwC's communications with the Audit Committee concerning independence, and the Audit Committee has discussed with PwC its independence from the Company. In addition, the Audit Committee has reviewed and discussed PwC's most recent PCAOB inspection report of the firm's internal quality controls.

              Based on the reviews and discussions referenced above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for filing with the Securities and Exchange Commission.

Submitted by the Audit and Enterprise Risk Committee:

      Robert C. Greving, Chair
      Mary R. (Nina) Henderson
      Charles J. Jacklin
      Neal C. Schneider

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PROPOSAL 5
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION

General

              In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act")) and the related rules of the SEC, we are including in these proxy materials a separate resolution subject to shareholder vote to approve, in a non-binding advisory vote, the compensation paid to our Named Executive Officers as discussed on pages 16 – 44. While the results of the vote are non-binding and advisory in nature, the Board and the Compensation Committee intend to carefully consider the results of this vote. The current frequency of non-binding advisory votes on executive compensation is an annual vote and we anticipate that the next vote will be at the next Annual Meeting. The language of the resolution is as follows:

                    "RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed in this Proxy Statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion, is hereby approved."

              The compensation of our executive officers is based on a philosophy and a comprehensive compensation and benefits strategy developed by the Compensation Committee designed to reward overall and individual performance that drives long-term success for our shareholders. The committee strives to provide a clear award program that allows us to attract, incentivize and retain seasoned executive talent with significant industry experience required to continue to improve our performance and build long-term shareholder value. In considering their vote, shareholders are urged to read the section of this Proxy Statement entitled "Executive Compensation", including the "Compensation Discussion and Analysis," for a detailed discussion of how our compensation policies and practices implement our compensation philosophy.

Required Vote

              The affirmative vote of the majority of shares of common stock present in person or represented by proxy and entitled to vote on the subject matter is required to approve the compensation paid to our Named Executive Officers. Abstentions will have the effect of a vote "against" this proposal. Broker non-votes will have no effect on the outcome of the vote with respect to this proposal because the shares subject to the broker non-vote will not be entitled to vote on this matter.

Recommendation of our Board of Directors

              OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

              Section 16(a) of the Securities Exchange Act of 1934 requires CNO's directors and executive officers, and each person who is the beneficial owner of more than 10 percent of any class of CNO's outstanding equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of CNO. Specific due dates for these reports have been established by the SEC, and CNO is required to disclose any failure by such persons to file such reports for fiscal year 2017 by the prescribed dates. Officers, directors and greater than 10 percent beneficial owners are required to furnish CNO with copies of all reports filed with the SEC pursuant to Section 16(a). To CNO's knowledge, based solely on review of the copies of the reports furnished to CNO and written representations that no other reports were required, all filings required pursuant to Section 16(a) of the Securities Exchange Act of 1934 applicable to CNO's officers, directors and greater than 10 percent beneficial owners were timely made by each such person during the year ended December 31, 2017.

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SHAREHOLDER PROPOSALS FOR 2019 ANNUAL MEETING

              Any proper proposal which a shareholder wishes to have included in the Board's proxy statement and form of proxy for the 2019 Annual Meeting must be received by CNO by November 30, 2018. Such proposals must meet the requirements set forth in the rules and regulations of the SEC in order to be eligible for inclusion in the proxy statement for the 2019 Annual Meeting. In addition to the SEC rules concerning shareholder proposals, the Company's Bylaws establish advance notice procedures with regard to certain matters, including shareholder nominations for directors, to be brought before a meeting of shareholders at which directors are to be elected. In the case of an annual meeting, notice must be received by the Secretary of the Company not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting. In the case of a special meeting of shareholders at which directors are to be elected, notice of a shareholder nomination must be received by the Secretary of the Company no later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure of the meeting was made. A nomination will not be considered if it does not comply with these notice procedures and the additional requirements set forth in our Bylaws. Please note that these bylaw requirements are separate from the SEC's requirements to have a shareholder nomination or other proposal included in our proxy statement. Any shareholder who wishes to submit a proposal to be acted upon at the 2019 Annual Meeting or who wishes to nominate a candidate for election as director should obtain a copy of these Bylaw provisions and may do so by written request addressed to the Secretary of CNO Financial Group, Inc. at 11825 North Pennsylvania Street, Carmel, Indiana 46032.


ANNUAL REPORT

              Access to CNO's Annual Report for 2017 (which includes its annual report on Form 10-K as filed with the SEC) is being provided with this Proxy Statement to all holders of common stock as of March 12, 2018. The Annual Report is not part of the proxy solicitation material. If you wish to receive an additional copy of the Annual Report for 2017, the Form 10-K, this Proxy Statement or the Notice without charge, please contact CNO Financial Group, Inc. Investor Relations, 11825 North Pennsylvania Street, Carmel, Indiana 46032; or by telephone (317) 817-2893 or email ir@CNOinc.com.


HOUSEHOLDING OF PROXY MATERIALS

              SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more shareholders sharing the same address by delivering a single proxy statement or a single notice addressed to those shareholders. This process, which is commonly referred to as "householding," provides cost savings for companies. Some brokers household proxy materials, delivering a single proxy statement or notice to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, or if you are receiving duplicate copies of these materials and wish to have householding apply, please notify your broker. You may also call (800) 542-1061 or write to: Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York, New York 11717, and include your name, the name of your broker or other nominee, and you account number(s). You can also request prompt delivery of a copy of the Proxy Statement and annual report by contacting CNO Financial Group, Inc. Investor Relations, 11825 North Pennsylvania Street, Carmel, Indiana 46032, (317) 817-2893 or email ir@CNOinc.com.


INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES

              Net operating income is defined as net income before: (i) net realized investment gains or losses, net of related amortization and taxes; (ii) fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities, net of related amortization and taxes; (iii) fair value changes and amendment related to the agent deferred compensation plan, net of taxes; (iv) loss on reinsurance transaction, net of taxes; (v) changes in the valuation allowance for deferred tax assets and other tax

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items; and (vi) other non-operating items consisting primarily of earnings attributable to variable interest entities, net of taxes. Management uses this measure to evaluate performance because the items excluded from net operating income can be affected by events that are unrelated to the Company's underlying fundamentals. A reconciliation from net income to net operating income (and related per share amounts) is as follows (dollars in millions, except per share amounts):

 
  Year ended
December 31,
 
 
  2017   2016  

Net income

  $ 175.6     $ 358.2    

Non-operating items:

             

Net realized investment gains, net of related amortization

    (49.3)     (7.6)  

Fair value changes in embedded derivative liabilities, net of related amortization

    2.5       (9.6)  

Fair value changes and amendment related to agent deferred compensation plan

    12.2       (3.1)  

Loss on reinsurance transaction

    —       75.4    

Other

    8.8       2.0    

Non-operating (income) loss before taxes

    (25.8)     57.1    

Income tax (expense) benefit:

             

On non-operating (income) loss

    (9.0)     20.0    

Valuation allowance for deferred tax assets and other tax items

    (142.1)     132.8    

Net non-operating (income) loss

    125.3       (95.7)  

Net operating income (a non-GAAP financial measure)

  $ 300.9     $ 262.5    

Per diluted share: