Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

The Company has evaluated the impact of subsequent events as defined by the accounting guidance through the date this report was issued.

The Harold E. Riley Trust ("Trust") is the beneficial owner of 100% of our Class B common stock. The Trust documents provided that upon Mr. Riley's death, which occurred in 2017, the Class B common stock would transfer from the Trust to the Harold E. Riley Foundation, a charitable organization established under 501(c)(3) of the Internal Revenue Code (the "Foundation"). Because the Class B common stock elects a simple majority of our Board of Directors, this transfer would constitute an acquisition of control by the Foundation, which requires regulatory approvals.

In April 2020, the Company was notified by the Colorado Division of Insurance that it was going to recommend that the Colorado Insurance Commissioner approve the Form A filing of the Trust and the Foundation that would allow the Trust to transfer ownership of all of its Class B common stock to the Foundation. Since Citizens, Inc. is domiciled in Colorado, we believe that once the Colorado Division of Insurance approves the transfer of the shares from the Trust to the Foundation, the insurance regulators in Louisiana, Texas and Mississippi, the states in which

our subsidiaries are domiciled, will also approve the transfer. The regulatory approval of the transfer of the Class B shares from the Trust to the Foundation triggers the first of two clauses constituting a “change in control” in the Employment Agreement by and between the Company and Geoffrey M. Kolander, our Chief Executive Officer and President. If Mr. Kolander is terminated by the Company without cause or resigns from the Company within 18 months following his receipt of written notice of the regulatory approval, he will be entitled to a cash severance totaling $8.8 million and full vesting of all outstanding Restricted Stock Units held by Mr. Kolander. See “Executive Employment Agreement” beginning on page 36 and “Potential Payments Upon Termination or Change-in-Control” beginning on page 38 of the Company’s definitive proxy statement on Schedule 14A, filed with the SEC on April 23, 2020 for a full description of Mr. Kolander’s employment agreement and the change-in-control payments.