2018 Guide to Effective Proxies

2.5 Checklists | 107 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES METLIFE, INC. NASDAQ, INC. PROLOGIS PRUDENTIAL FINANCIAL, INC. CompensationDiscussionandAnalysis What are our executive compensation practices? CompensationPhilosophy and Objectives ProvidecompetitiveTotalCompensationopportunitiestoattract, retain,engage,andmotivatehigh-performingexecutives Aligncompensationplanswithshort-andlong-termbusiness strategies Alignthefinancialinterestsofexecutiveswithshareholders’ throughLTIandShareownershiprequirements MakeavastmajorityofTotalCompensationvariableand subjecttoCompanyandindividualperformance. Key Features of MetLife’s Executive CompensationProgram MetLife’scompensationprogramhasmultiplefeatures thatpromotetheCompany’ssuccess,including: payingforperformance: vastmajorityofcompensationis variablewithoutguarantee,anddependentonachievement ofbusinessresults. aligningexecutives’interestswiththoseof shareholders: vastmajorityofincentivecompensationis Share-based,andexecutivesareexpectedtomeetShare ownershiprequirements. encouraginglong-termdecision-making: StockOptions andRestrictedStockUnitsvestoverthreeyears,Stock Optionsmaynormallybeexercisedover10years,andthe ultimatevalueofPerformanceSharesisdeterminedbythe Company’sperformanceoverthreeyears. rewardingachievementoftheCompany’sbusiness goals: amountsavailableforannualincentiveawardsare basedonCompanyperformancecomparedtoitsBusiness Plan;individualawardstakeaccountofindividual performancerelativetoindividualgoals. avoidingincentivestotakeexcessiverisk: theCompany doesnotmakeformulaicawardsaspartofitsnormal program,usesAdjustedEarnings(whichexcludesnet investmentgainsandlossesandnetderivativegainsand losses)asakeyperformanceindicator,avoidsincentivesto takeexcessiveriskintheCompany’sinvestmentportfolio,and usesmulti-yearperformancetodeterminethepayoutofLTI. maintainingaperformance-basedcompensation recoupment(clawback)policy: theCompanymayseek recoveryforemployeefraudulentorotherwrongfulconductthat harmedMetLife,includinganaccountingrestatementrequired bymaterialnoncompliancewithfinancialreporting requirements,andfromExecutiveGroupmembersbasedon materiallyinaccurateperformancemeasuresregardlessoffault. TheCompany’scompensationprogramexcludespractices thatwouldbecontrarytotheCompany’scompensation philosophyandcontrarytoshareholders’interests. Forexample,theCompany: doesnot offerExecutiveGroupmembersasupplemental executiveretirementplanthataddsyearsofserviceor includeslong-termincentivecompensationinthebenefits formula. doesnot provideexcessiveperquisites. doesnot allowrepricingorreplacingofStockOptions withoutpriorshareholderapproval. doesnot provideany“singletrigger”change-in-control severancepay,or“singletrigger”vestingofLTIupona change-in-controlwithouttheopportunityfortheCompany orasuccessortosubstitutealternativeawardsthatremain subjecttovesting. doesnot provideanychange-in-controlseverancepay beyondtwotimesaveragesalaryandannualcashincentive pay. doesnot provideforanyexcisetaxpaymentortaxgross-up forchange-in-controlrelatedpayments,orfortaxgross-up foranyperquisitesorbenefits,otherthaninconnectionwith relocationorothertransitionaryarrangementswhenan ExecutiveGroupmemberbeginsemployment. doesnot allowdirectors,executives,orotherassociates,to engageinpledging,hedging,shortsales,ortradinginput andcalloptionswithrespecttotheCompany’ssecurities. doesnot offeremploymentcontractstoU.S.-based ExecutiveGroupmembers. 2018ProxyStatement 57 Notice of 2018 Annual Meeting of Stockholders and Proxy Statement 56 TOTAL REWARDS PHILOSOPHY As the companymade a pivot in its strategic direction,we assessed and renewed our robust performance-based compensation philosophy to ensure it ismeeting the needs of not only the company but also the stockholders.On an annual basis, theManagement Compensation Committee reviewsNasdaq’s compensation philosophy, programs and practices. The following reflects our current total rewards philosophy. On an annual basis, theManagement CompensationCommittee reviewsNasdaq’s compensation philosophy, programs and practices. WhatWeDO Maintain robust stock ownership guidelines Maintain a long-standing incentive “clawback” policy Provide change in control protection that requires a “double trigger” Conduct a comprehensive annual risk assessment of our compensation program Conduct an annual executive talent review and discussion on succession planning Pay for performance;100% of annual incentives and annual long-term incentive grants are performance-based Provide only limited perquisites,which provide nominal additional assistance to allow executives to focus on their duties WhatWeDON’TDo Provide ongoing supplemental executive retirement plans; all benefits have been frozen Permit re-pricing of underwater stock optionswithout stockholder approval Accrue or pay dividends on unearned or unvested equity awards Pay tax gross-ups on severance arrangements and perquisites Award non-performance based stock options Allow hedging or pledging ofNasdaq stock Guarantee bonus payments for ourNEOs CompensationDiscussionandAnalysis:ExecutiveSummary WHAT WE DO WHAT WE DON’T DO Establishtargetandmaximumawards underourAnnualIncentive Program. CEOparticipationinourseveranceplan. Establishtargetawards inourLong-TermIncentiveProgram. Executiveofficerseverancepaymentsand benefitsexceeding2.99timessalaryand cashbonuswithoutshareholderapproval. Applyaformulaicframework basedontheCompany’sfinancial resultsrelativetopre-establishedtargetsforeachincentiveprogram. Exerciselimitedornodiscretion toincreaseformulaicincentive compensationawards. Excisetax“gross-ups”uponchangein control. Usebalancedperformancemetrics forannualincentiveand performanceshare/unitawardsthatconsiderboththeCompany’s absoluteperformanceanditsrelativeperformanceversuspeers. Discounting,reloadingorre-pricingof stockoptionswithoutshareholder approval. Rigorousgoalsetting alignedtoourexternallydisclosedannualand multi-yearfinancialtargets. “Single-trigger”acceleratedvestingofequity- basedawardsuponchangeincontrol. 90%ormoreofourNEOs’totaldirectcompensationisperformance based. Multi-yearguaranteedincentiveawardsfor seniorexecutives. Defer30%ofourNEOs’annualincentiveawards intotheBookValue PerformanceProgram. EmploymentagreementswithNEOs Imposestockownershiprequirements,andretentionof50%ofequity basedawards. Employeehedgingorpledgingof Companysecurities. Maintainanenhancedclawbackpolicy coveringallexecutiveofficer incentive-basedawardsformaterialfinancialrestatementsand misconduct. Limitperquisites toitemsthatserveareasonablebusinesspurpose. Closelymonitorrisks associatedwithourcompensationprogram andindividualcompensationdecisionstoensuretheydonot encourageexcessiverisktaking. Tielong-termdiversityimprovementtoourperformanceshareand unitawards. Consideration of Most Recent “Say on Pay” Vote Followingour2017AnnualMeetingofShareholders,theCommittee reviewedtheresultsoftheshareholderadvisoryvoteonexecutive compensation(the“SayonPay”Vote)thatwasheldatthemeeting withrespecttothe2016compensationactionsanddecisionsfor Mr.StrangfeldandtheotherNEOs.Approximately93%ofthevotes castontheproposalwerevotedinsupportofthecompensationofour NEOs.Aftercarefulconsideration,andgiventheextensivechangeswe havemadeintherecentpast,theCommitteedidnotmakeany changestoourexecutivecompensationprogramandpoliciesasa resultofthemostrecentSayonPayvote. of the votes cast on the proposalwere voted in support of the compensation of ourNEOs. 93 % NoticeofAnnualMeetingofShareholdersand2018ProxyStatement | 39 COMPENSATIONDISCUSSIONANDANALYSIS Change-in-control benefits OurNEOs’benefitsincludefairandreasonableseveranceinconnection withachangeincontroltoservethebestinterestsofstockholdersduringa threatenedoractualchangeincontrolby: – Providingforcontinuityofmanagementteam’sservices,aswellasproviding fortheirbesteffortsoveranytransitionperiod – Increasingobjectivityofourmanagementteaminanalyzingaproposed changeincontrolandadvisingtheBoardifsuchproposalisinthebest interestsofstockholders Suchbenefitsapplyonadouble-triggerbasis(changeincontrolhas occurredandNEO’semploymentstatusisimpacted)andconsistof: – Cashseverancepaymentsthatareamultipleofsalaryand/orcashbonus opportunitylevels(twotimessalaryandbonusforNEOs) – Acceleratedvestingofunvestedequityawards,availablethrough change-in-controlagreementsorlong-termequityincentiveplans Other considerations COMPENSATIONGOVERNANCEPOLICIES WhatWeDo ✓ Payalignswithperformance:performance measuresheavilyweightedtothree-yearrelative TSR ✓ Mostpayisat-riskandnotguaranteed ✓ Robuststockownershiprequirements: CEO:10xsalary OtherNEOs:3xsalary OtherSeniorOfficers:1xsalary Directors:5xannualcashretainer ✓ ClawbackpolicyforNEOs ✓ Double-triggerchange-in-controlprovisions ✓ Independentcompensationconsultant ✓ Annualcompensationrisk-relatedreview ✓ Minimalperquisites WhatWeDon’tDo ✘ Noguaranteedsalary/bonusincreases ✘ NoemploymentagreementsforNEOs guaranteeingcompensation ✘ Norepricingorbuyoutsofstockoptionswithout stockholderapproval ✘ Noexcisetaxgross-ups ✘ Nohedgingorpledgingofourcommonstock I 82