SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

In May 2011, the Company announced a securities repurchase program. In 2022, 2021 and 2020, we repurchased 7.6 million, 16.6 million and 14.5 million shares, respectively, for $180.0 million, $402.4 million and $263.0 million, respectively, under the securities repurchase program. The Company had remaining repurchase authority of $186.9 million as of December 31, 2022.

In 2022, 2021 and 2020, dividends declared on common stock totaled $65.0 million ($0.55 per common share), $66.1 million ($0.51 per common share) and $67.4 million ($0.47 per common share), respectively. In May 2022, the Company increased its quarterly common stock dividend to $0.14 per share from $0.13 per share. In May 2021, the Company increased its quarterly common stock dividend to $0.13 per share from $0.12 per share. In May 2020, the Company increased its quarterly common stock dividend to $0.12 per share from $0.11 per share.

The Company has a long-term incentive plan which permits the grant of CNO incentive or non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance shares or units and certain other equity-based awards to certain directors, officers and employees of the Company and certain other individuals who perform services for the Company (although no grants have been made to such other individuals). As of December 31, 2022, 2021 and 2020, there were 5.6 million shares, 7.8 million shares and 8.8 million shares, respectively, that were available for issuance under the plan. Our stock option awards are generally granted with an exercise price equal to the market price of the Company's stock on the date of grant and a maximum term of ten years. Our stock options granted in 2010 through 2014 generally vest on a graded basis over a three year service term and expire seven years from the date of grant. Our stock options granted in 2015 through 2019 generally vest on a graded basis over a three year service term and expire ten years from the date of grant. In 2018, one grant of 1.6 million of stock options vests on a graded basis over a five year service term and expires ten years from the date of grant. There have been no stock options granted since 2019. The vesting periods for our awards of restricted stock and restricted stock units (collectively "restricted stock") generally range from immediate vesting to a period of three years.

A summary of the Company's stock option activity and related information for 2022 is presented below (shares in thousands; dollars in millions, except per share amounts):

	Shares	Weighted average exercise price		Weighted average remaining life (in years)	Aggregate intrinsic value
Outstanding at the beginning of the year	3,411	$	19.28
Options granted	—	—
Exercised	(618)	(18.43)			$	3.8
Forfeited or terminated	(57)	(20.18)
Outstanding at the end of the year	2,736	19.45		4.7	$	15.1
Options exercisable at the end of the year	2,540			4.6	$	14.1

A summary of the Company's stock option activity and related information for 2021 is presented below (shares in thousands; dollars in millions, except per share amounts):

	Shares	Weighted average exercise price		Weighted average remaining life (in years)	Aggregate intrinsic value
Outstanding at the beginning of the year	4,544	$	19.01
Options granted	—	—
Exercised	(1,023)	(18.01)			$	7.8
Forfeited or terminated	(110)	(19.97)
Outstanding at the end of the year	3,411	19.28		5.0	$	19.2
Options exercisable at the end of the year	2,662			4.6	$	15.7

A summary of the Company's stock option activity and related information for 2020 is presented below (shares in thousands; dollars in millions, except per share amounts):

	Shares	Weighted average exercise price		Weighted average remaining life (in years)	Aggregate intrinsic value
Outstanding at the beginning of the year	6,015	$	18.59
Options granted	—	—
Exercised	(1,104)	(16.59)			$	9.0
Forfeited or terminated	(367)	(19.40)
Outstanding at the end of the year	4,544	19.01		5.6	$	27.5
Options exercisable at the end of the year	2,946			4.5	$	19.9

We recognized compensation expense related to stock options totaling $0.9 million ($0.7 million after income taxes) in 2022, $1.6 million ($1.3 million after income taxes) in 2021 and $2.6 million ($2.1 million after income taxes) in 2020. Compensation expense related to stock options reduced both basic and diluted earnings per share by one cent in each of 2022, 2021 and 2020. At December 31, 2022, the unrecognized compensation expense for non-vested stock options totaled $0.3 million which is expected to be recognized over a weighted average period of 0.4 years. Cash received by the Company from the exercise of stock options was $10.4 million, $18.4 million and $16.5 million during 2022, 2021 and 2020, respectively.

The following table summarizes information about stock options outstanding at December 31, 2022 (shares in thousands):

		Options outstanding			Options exercisable
Range of exercise prices	Number outstanding	Remaining life (in years)	Average exercise price		Number exercisable	Average exercise price
$15.08 - $21.06	2,412	4.7	$	18.93	2,216	$	18.80
$23.33	324	4.8	23.33		324	23.33
	2,736				2,540

During 2022, 2021 and 2020, the Company granted restricted stock of 0.5 million, 0.4 million and 0.5 million, respectively, to certain directors, officers and employees of the Company at a weighted average fair value of $23.59 per share, $23.53 per share and $18.28 per share, respectively. The fair value of such grants totaled $12.0 million, $10.5 million and $9.5 million in 2022, 2021 and 2020, respectively. Such amounts are recognized as compensation expense over the vesting period of the restricted stock. A summary of the Company's non-vested restricted stock activity for 2022 is presented below (shares in thousands):

	Shares	Weighted average grant date fair value
Non-vested shares, beginning of year	975	$	20.30
Granted	509	23.59
Vested	(418)	(19.79)
Forfeited	(43)	(23.52)
Non-vested shares, end of year	1,023	22.01

At December 31, 2022, the unrecognized compensation expense for non-vested restricted stock totaled $9.8 million which is expected to be recognized over a weighted average period of 1.9 years. At December 31, 2021, the unrecognized compensation expense for non-vested restricted stock totaled $8.7 million. We recognized compensation expense related to restricted stock awards totaling $9.9 million, $9.0 million and $8.7 million in 2022, 2021 and 2020, respectively. The fair value of restricted stock that vested during 2022, 2021 and 2020 was $8.3 million, $8.4 million and $6.8 million, respectively.

In 2022, 2021 and 2020, the Company granted performance units totaling 0.4 million, 0.4 million and 0.5 million, respectively, pursuant to its long-term incentive plan to certain officers of the Company. The criteria for payment for such awards are based on certain company-wide performance levels that must be achieved within a specified performance time (generally one to three years), each as defined in the award. The performance units granted in 2022, 2021 and 2020 provide for a payout of up to 200 percent of the award if certain performance thresholds are achieved. Unless antidilutive, the diluted weighted average shares outstanding would reflect the number of performance units expected to be issued, using the treasury stock method.

A summary of the Company's performance units is presented below (shares in thousands):

	Total shareholder return awards	Operating return on equity awards	Operating earnings per share awards
Awards outstanding at December 31, 2019	551	551	—
Granted in 2020	—	247	247
Additional shares issued pursuant to achieving certain performance criteria (a)	—	138	—
Shares vested in 2020	—	(281)	—
Forfeited	(212)	(74)	(8)
Awards outstanding at December 31, 2020	339	581	239
Granted in 2021	—	209	209
Additional shares issued pursuant to achieving certain performance criteria (a)	—	57	—
Shares vested in 2021	(81)	(178)	—
Forfeited	(55)	(34)	(23)
Awards outstanding at December 31, 2021	203	635	425
Granted in 2022	—	204	204
Additional shares issued pursuant to achieving certain performance criteria (a)	188	186	—
Shares vested in 2022	(389)	(390)	—
Forfeited	—	(24)	(25)
Awards outstanding at December 31, 2022	2	611	604

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(a) The performance units that vested in 2020, 2021 and 2022 provided for a payout of up to 200 percent of the award if certain performance levels were achieved.

The grant date fair value of the performance units awarded was $10.5 million and $9.9 million in 2022 and 2021, respectively. We recognized compensation expense of $13.8 million, $14.6 million and $12.5 million in 2022, 2021 and 2020, respectively, related to the performance units.

As further discussed in the footnote to the consolidated financial statements entitled "Income Taxes", the Company's Board of Directors adopted the Section 382 Rights Agreement in 2009 and has amended and extended the Section 382 Rights Agreement on four occasions. The Section 382 Rights Agreement, as amended, is designed to protect shareholder value by preserving the value of our tax assets primarily associated with NOLs. At the time the Section 382 Rights Agreement was adopted, the Company declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock. The dividend was payable on January 30, 2009, to the shareholders of record as of the close of business on that date and a Right is also attached to each share of CNO common stock issued after that date. Pursuant to the Section 382 Rights Agreement, as amended, each Right entitles the shareholder to purchase from the Company one one thousandth of a share of Series E Junior Participating Preferred Stock, par value $.01 per share (the "Junior Preferred Stock") of the Company at a price of $95.00 per one one-thousandth of a share of Junior Preferred Stock. The description and terms of the Rights are set forth in the Section 382 Rights Agreement, as amended. The Rights would become exercisable in the event any person or group

(subject to certain exemptions) becomes an owner of more than 4.99 percent of the outstanding stock of CNO (a "Threshold Holder") without the approval of the Board of Directors or an existing shareholder who is currently a Threshold Holder acquires additional shares exceeding one percent of our outstanding shares without prior approval from the Board of Directors.

A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

	2022		2021		2020
Net income for basic earnings per share	$	396.8	$	441.0	$	301.8
Shares:
Weighted average shares outstanding for basic earnings per share	115,733		128,400		142,096
Effect of dilutive securities on weighted average shares:
Amounts related to employee benefit plans	1,984		2,726		1,068
Weighted average shares outstanding for diluted earnings per share	117,717		131,126		143,164

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Restricted shares (including our performance units) are not included in basic earnings per share until vested.  Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options were exercised and restricted stock was vested.  The dilution from options and restricted shares is calculated using the treasury stock method.  Under this method, we assume the proceeds from the exercise of the options (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options (or the vesting of the restricted stock and performance units).