Notice of Annual Meeting of Shareholders

 

May 27, 2022 9:00 a.m. EDT				The Ritz-Carlton Hotel 10 Avenue of the Arts Philadelphia, Pennsylvania 19102

Mailing date: April 14, 2022

The purpose of the meeting is to:

 

1.	Elect thirteen directors for a one-year term expiring at the 2023 Annual Meeting of Shareholders;

 

2.	Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2022;

 

3.	Approve an advisory resolution on the compensation of our named executive officers;

 

4.	Approve an amendment to the Lincoln National Corporation 2020 Incentive Compensation Plan;

 

5.	Consider and vote upon up to two shareholder proposals if properly presented at the meeting; and

 

6.	Consider and vote upon any other matters that might come up at the meeting.

You may vote at the Annual Meeting if you were a shareholder of record at the close of business on March 21, 2022.

Please cast your votes by one of the following methods:

 

SIGNING AND RETURNING A PROXY CARD		TOLL-FREE TELEPHONE		THE INTERNET		IN PERSON AT THE ANNUAL MEETING

If, going forward, you would like to receive electronic delivery of future proxy materials, please see “Annual Meeting Information” in this proxy statement for more information.

 

IF	YOU PLAN TO ATTEND THE ANNUAL MEETING:

In order to protect the health and safety of our directors, employees, shareholders and the community, we are taking special precautions in connection with the Annual Meeting due to the health impact of COVID-19. If you are not feeling well, have had close contact with someone who has tested positive for, or think you may have been exposed to, COVID-19, we ask that you vote by proxy for the meeting. We will require all attendees to comply with the Company’s policies in place at the time of the meeting, which may include but not be limited to temperature checks, attendance limitations, social distancing, mask requirements and other safety protocols in accordance with any then-required federal, state and local guidelines. At least one week prior to the meeting, we will make available on www.proxydocs.com/lnc any COVID-19 related health and safety protocols that will be in place for the Annual Meeting. We also strongly encourage shareholders who plan to attend the Annual Meeting to review and follow the relevant guidance from public health authorities prior to attendance.

For the Board of Directors,

 

 

Nancy A. Smith

Senior Vice President & Secretary

Lincoln National Corporation

Radnor, Pennsylvania

 

Lincoln National Corporation 2022 Proxy Statement

 

Table of Contents

 

Proxy Summary			1
Governance of the Company			10
Agenda Item 1 – Election of Directors			24
◾  Nominees for Director			24
Compensation of Outside Directors			31
Agenda Item 2 – Ratification of Appointment of Independent Registered Public Accounting Firm			35
◾  Independent Registered Public Accounting Firm Fees and Services			35
◾  Audit Committee Pre-Approval Policy			36
◾  Other Information			36
◾  Audit Committee Report			36
Agenda Item 3 – Advisory Proposal on Executive Compensation			37
Compensation Discussion & Analysis			39
◾  Executive Summary			40
◾  Compensation Committee Report			67
Executive Compensation Tables			68
◾  Summary Compensation Table			68
◾  Grants of Plan-Based Awards			71
◾  Outstanding Equity Awards at Fiscal Year-End			73
◾  Option Exercises and Stock Vested			75
◾  Pension Benefits			76
◾  Nonqualified Deferred Compensation			77
◾  Potential Payments upon Termination or Change of Control			79
◾  CEO Pay Ratio			84
Agenda Item 4 – Approval of Amendment to LNC 2020 Incentive Compensation Plan			85
Agenda Item 5 – Shareholder Proposal Regarding Independent Board Chair			96
Agenda Item 6 – Shareholder Proposal Regarding Shareholder Ratification of Termination Pay			100
Compensation Committee Interlocks and Insider Participation			104
Related-Party Transactions			104
Security Ownership			105
Annual Meeting Information			107
General Information			111
◾  Shareholder Proposals for the 2023 Annual Meeting			111
◾  Incorporation by Reference			111
◾  Delinquent Section 16(a) Reports			111
◾  Annual Report			112
◾  Additional Voting Matters			112
Exhibit 1 – Reconciliation of Non-GAAP Measures			E-1
Exhibit 2 – Definitions for Incentive Compensation Programs			E-4
Exhibit 3 – LNC 2020 Incentive Compensation Plan and Amendment No. 1 Thereto			E-7

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON May 27, 2022:

This proxy statement and the accompanying annual report are available at: www.proxydocs.com/lnc.

 

Lincoln National Corporation 2022 Proxy Statement

Proxy Summary

 

Proxy Summary

This summary highlights certain information for your convenience. Since it does not contain all of the information you should consider, we encourage you to read the entire proxy statement carefully before voting.

Annual Meeting of Shareholders

 

Date / Time		Location		Voting
Friday, May 27, 2022 9:00 a.m. EDT   Record Date   March 21, 2022		The Ritz-Carlton Hotel 10 Avenue of the Arts Philadelphia, PA 19102		Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals.

Voting Matters

 

Agenda Item		Our Board’s Voting Recommendation				Where to Find More Information
1.  Election of thirteen directors for a one-year term expiring at the 2023 Annual Meeting of Shareholders.				FOR each director nominee		Page 24
2.  Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for 2022.				FOR the ratification		Page 35
3.  Approval of an advisory resolution on the compensation of our named executive officers.				FOR the resolution		Page 37
4.  Approval of an amendment to the Lincoln National Corporation 2020 Incentive Compensation Plan.				FOR the approval		Page 85
5.  Respond to an advisory shareholder proposal regarding the amendment of our governing documents to provide an independent chair of the board.				AGAINST the proposal		Page 96
6.  Respond to an advisory shareholder proposal regarding shareholder ratification of executive termination pay.				AGAINST the proposal		Page 100

 

Lincoln National Corporation 2022 Proxy Statement               1

Proxy Summary

 

Board of Director Nominees

 

Name Occupation		Age		Director Since		Selected Skills/Qualifications		Independent		Committee Memberships
Deirdre P. Connelly Retired President, North American Pharmaceuticals of GlaxoSmithKline		61		2016		◾  business operations/strategic planning ◾  finance and capital management ◾  corporate governance		Yes		◾  Audit ◾  Corporate Governance (Chair)
Ellen G. Cooper Current: EVP, Head of Enterprise Risk and Annuity Solutions, LNC Effective May 27, 2022: President and CEO, LNC		57		First-time Nominee		◾  business operations/strategic planning ◾  finance and capital management ◾  risk management ◾  talent management		No		N/A
William H. Cunningham Professor, University of Texas at Austin and James J. Bayless Chair for Free Enterprise at the University’s McCombs School of Business		78		2006		◾  finance and capital management ◾  marketing/public relations ◾  talent management ◾  corporate governance		Yes		◾  Compensation ◾  Corporate Governance ◾  Executive (Chair) ◾  Finance
Reginald E. Davis EVP and President of Banking, Flagstar Bank, FSB		59		2020		◾  financial services ◾  finance and capital management ◾  risk management ◾  talent management		Yes		◾  Audit ◾  Corporate Governance
Dennis R. Glass Current: President and CEO, LNC Effective May 27, 2022: Chair of the Board, LNC		72		2006		◾  business operations/strategic planning ◾  finance and capital management ◾  talent management		No		◾  Executive
Eric G. Johnson CEO, Baldwin Richardson Foods Company		71		1998		◾  business operations/strategic planning ◾  finance and capital management ◾  marketing/public relations		Yes		◾  Compensation ◾  Corporate Governance ◾  Executive ◾  Finance (Chair)
Gary C. Kelly Executive Chairman, Southwest Airlines Co.		67		2009		◾  business operations/strategic planning ◾  finance and capital management ◾  public accounting		Yes		◾  Audit ◾  Finance
M. Leanne Lachman President, Lachman Associates LLC and Executive in Residence, Columbia Graduate School of Business		79		1985		◾  business operations/strategic planning ◾  finance and capital management ◾  corporate governance ◾  risk management		Yes		◾  Audit (Chair)
Dale LeFebvre Founder and Chairman, 3.5.7.11		51		2021		◾  business operations/strategic planning ◾  finance and capital management ◾  risk management ◾  talent management		Yes		◾  Audit ◾  Corporate Governance
Janet Liang EVP, Group President and COO, Care Delivery, Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals		54		2021		◾  business operations/strategic planning ◾  finance and capital management ◾  marketing/public relations ◾  talent management		Yes		◾  Compensation ◾  Finance
Michael F. Mee Retired EVP and CFO, Bristol-Myers Squibb Company		79		2001		◾  finance and capital management ◾  public accounting ◾  business operations/strategic planning		Yes		◾  Compensation ◾  Executive ◾  Finance
Patrick S. Pittard CEO, BDI DataLynk, LLC		76		2006		◾  public accounting ◾  finance and capital management ◾  talent management ◾  corporate governance		Yes		◾  Compensation (Chair)
Lynn M. Utter Operating Partner, Atlas Holdings LLC		59		2017		◾  business operations/strategic planning ◾  risk management ◾  corporate governance		Yes		◾  Corporate Governance ◾  Finance

 

2               Lincoln National Corporation 2022 Proxy Statement

Proxy Summary

 

Our director nominees provide the Board with the comprehensive diversity of relative skill sets needed to provide effective oversight in light of the Company’s industry, risks and current and long-term strategic needs.

 

 

Financial Services/ Insurance (11)				Finance and Capital Management (12)				Business Operations and Strategic Planning (13)
Marketing/Public Relations (8)				Public Company CEO (5)				Corporate Governance (9)
Talent Management (11)				Risk Management (7)				Accounting (4)

The Board recognizes that diversity, including gender and ethnic diversity, adds to the overall mix of perspectives of our Board as a whole. We have added five new diverse independent directors in the past six years. The following charts present the diversity profile of our director nominees:

 

 

 

*	Directors considered to be ethnically or racially diverse are those who self-identified in one or more of the following categories: Hispanic, Latinx or Spanish Origin; Black or African American; American Indian or Alaska Native; Asian; Native Hawaiian or Other Pacific Islander; or Other.

 

Lincoln National Corporation 2022 Proxy Statement               3

Proxy Summary

 

Chief Executive Officer Transition

As we announced in August 2021, following the Annual Meeting on May 27, 2022, Dennis R. Glass will retire from his role as our President and Chief Executive Officer and will be succeeded by Ellen G. Cooper, currently Executive Vice President, Head of Enterprise Risk and Annuity Solutions. Mr. Glass will serve as non-executive Chair, and independent director Dr. William H. Cunningham will serve as Lead Independent Director beginning after the 2022 Annual Meeting. Assuming she is elected, Ms. Cooper will serve as a director but not as Chair. The Board believes that having Mr. Glass serve in the role of Chair for a period of time following the CEO transition will help provide for continuity for shareholders and employees alike.

 

2021 Performance Highlights   After moving to 99% work-from-home in mid-March 2020, efficiently moving to a virtual sales environment across all our distribution channels, we continued to monitor the COVID-19 pandemic throughout 2021 and adjusted our return-to-work plans as needed. We continued to operate our business without interruption throughout 2021 and have been able to continue to work effectively using this work-from-home model.   During 2021, management maintained its focus on the needs of our employees, customers and shareholders. We continued to innovate and enhance our product portfolio, pivot our distribution workforce to a virtual-first engagement model, improve cost effectiveness and strengthen the balance sheet. Over the course of an unprecedented year in the face of the ongoing pandemic, we focused on ensuring we maintained our competitive advantages and capitalized on opportunities to become stronger. We successfully achieved these objectives by prioritizing three initiatives:   ◾  our reprice, shift, and add new product strategy,   ◾  achieving expense savings, while enhancing the customer experience, and   ◾  maintaining a strong balance sheet to maximize our ability to grow operating earnings.   Our full year results for 2021 included the following highlights:   ◾  Solid underlying business performance with $19.2 billion in revenues;   ◾  Strong growth in net income and adjusted operating income;   ◾  Over $1.4 billion returned to shareholders through share repurchases and dividends;   ◾  A 20-basis point improvement in the expense ratio for 2021;   ◾  The introduction of our new expense savings program, the Spark Initiative, which is expected to provide an upside opportunity to our outlook for EPS growth; and   ◾  One-year total shareholder return that significantly outperformed the total shareholder return for the S&P 500 Index and our four-digit GICS Life & Health Insurance peers in 2021.
For more information on our 2021 performance, see “Compensation Discussion & Analysis – Executive Summary.”

 

4               Lincoln National Corporation 2022 Proxy Statement

Proxy Summary

 

Commitment to corporate social responsibility, sustainability and diversity, equity and inclusion

During 2021, we continued to be recognized for our good corporate citizenship and dedication to diversity, equity and inclusion (“DE&I”), as demonstrated by, among other accolades, our inclusion on major sustainability indices, including Dow Jones Sustainability North America and FTSE4Good, our 100 percent scores on the Corporate Equality Index and the Disability Equality Index, and our ranking among Newsweek’s 2021 America’s Most Responsible Companies. In addition, in the first quarter of 2022, we were included for the first time in the Bloomberg Gender-Equality Index and were recognized by Ethisphere as one of its 2022 World’s Most Ethical Companies.

 

 

During 2021, we continued to reduce ongoing energy usage across Lincoln’s facilities and operations and introduced new goals for reducing greenhouse gas emissions by 2025. This aligns with the science-based targets methodology for reducing direct emissions. Our targets are consistent with the international Paris Agreement’s goal to limit global temperatures from rising more than 1.5 degrees Celsius compared to preindustrial levels. Additionally, we enhanced our sustainability disclosures by reporting for the first time indices aligned to the Task Force for Climate-Related Financial Disclosure (“TCFD”) framework and the Sustainability Accounting Standards Board (“SASB”) reporting standards. Our 2020 Corporate Social Responsibility Report also included disclosure on our diversity statistics for our employees, including the breakdown of our workforce by gender, race, and ethnicity in our 2020 Human Capital Diversity Update, which includes our Equal Employment Opportunity-1 (“EEO-1”) Report. Our 2020 Corporate Social Responsibility Report can be found on our website at www.LincolnFinancial.com.

DE&I are intrinsic to Lincoln’s culture. In 2020, we expanded our strategy to include an eight-part action plan focused on actions to advance racial equity. As part of this plan, we accomplished the following actions during 2021:

 

◾

tied senior leaders’ compensation to DE&I objectives (as discussed further below);

 

◾

focused on increasing minority leadership representation at the officer level by 50% over the course of three years, with a special focus on the Black officer population;

 

◾

implemented sustainable and integrated practices in recruiting retention and development to increase Black populations, such as hiring dedicated diversity-focused recruiters;

 

◾

expanded the Company’s DE&I function to continue to support enterprise-wide and business-specific efforts;

 

◾

continued conversations about race across the organization;

 

◾

established our network of Black financial advisors and planners through launching the African-American financial advisors network;

 

◾

preserved the history of the Black experience through a $1 million contribution to The HistoryMakers, a non-profit institution committed to preserving and making accessible the untold personal stories of African Americans; and

 

◾

expanded the Lincoln Financial Foundation’s support to Black communities by giving to nonprofits with demonstrated success in advancing Black communities and engaging with leading philanthropic membership organizations.

For information on Board oversight of corporate social responsibility, sustainability and DE&I, see “Governance of the Company – Board’s Role in Risk Oversight.”

 

Lincoln National Corporation 2022 Proxy Statement               5

Proxy Summary

 

2021 Shareholder Engagement and Response to Feedback

During 2021, we once again expanded our proactive shareholder engagement program, which complements the ongoing dialogue throughout the year among our shareholders, CEO, CFO and Investor Relations team on financial and strategic performance. In the fall of 2021, we reached out to investors representing over 56% of our shares outstanding, and engaged with investors representing over 42% of our outstanding shares, which included participation by the Chair of our Corporate Governance Committee in select conversations. The engagement involved discussions on executive compensation as well as various other topics, including board refreshment and composition, our CEO succession plans, DE&I efforts and other areas of focus for our shareholders regarding environmental and social practices and disclosures. The feedback from these meetings was shared with the Compensation Committee and the Corporate Governance Committee, as well as the full Board, and strongly informed the Compensation Committee’s decisions with respect to certain elements of our 2022 compensation program and enhancements that were made to this proxy statement to further improve clarity and transparency. For more information about our 2021 shareholder engagement and response to shareholder feedback, see “Compensation Discussion & Analysis – Executive Summary.”

Governance Highlights

Sound governance is important to our Board, which regularly evaluates and implements policies that reflect corporate governance and compensation best practices. Some of these practices are:

 

 

6               Lincoln National Corporation 2022 Proxy Statement

Proxy Summary

 

2021 Executive Compensation Highlights

The key objectives of our executive compensation program are to:

 

◾

Pay compensation that varies based on performance

◾

Motivate our executives to increase profitability and shareholder return

◾

Attract and retain key executive talent, as this is critical to our success

 

 

We are asking you to cast an advisory, nonbinding vote to approve compensation awarded for 2021 to our named executive officers (“NEOs”) — our chief executive officer (“CEO”), chief financial officer (“CFO”), and three additional most highly paid executive officers as set forth on the first page of “Compensation Discussion & Analysis.”

Pay for Performance

We seek to align pay and performance by making a significant portion of our NEOs’ compensation dependent on:

 

◾

achieving specific annual and long-term strategic and financial goals; and

 

◾

increasing shareholder value.

2021 Pay Mix. NEO compensation is weighted toward variable compensation (annual and long-term incentives, or AIP and LTI), which is at risk because the actual amounts earned could differ from targeted amounts based on corporate and individual performance. As the following charts show, the vast majority of our CEO’s and other NEOs’ target direct compensation for 2021 could vary significantly based on company performance, including stock price performance, and is at risk.

 

 

Note, the amounts in these graphs are shown at target and therefore will not match the values reflected in the Summary Compensation Table in “Executive Compensation Tables.” Percentages may not total to 100% due to rounding.

 

Lincoln National Corporation 2022 Proxy Statement               7

Proxy Summary

 

2021 CEO Target Compensation and Increased Focus on PSAs in LTI Mix. For 2021, our CEO did not receive a pay increase and his target direct compensation has remained at the same level since 2019. In addition, for 2021, the Compensation Committee increased the alignment of CEO compensation with Company performance and shareholder interests by adjusting our CEO’s LTI equity award mix to decrease the percentage of equity granted as stock options (“Options”) from 30% to 20% and, for the second year in a row, increase the percentage granted as performance share awards (“PSAs”), from 40% to 50%, consistent with our fundamental pay for performance philosophy. A comparison of the 2020 and 2021 CEO LTI equity award mix (Options, PSAs and restricted stock units (“RSUs”)) is shown below.

 

 

2021 LTI DE&I Modifier. A DE&I goal related to growing minority representation at the Company’s officer level has been added as a new performance measure for the LTI program beginning with the 2021-2023 performance cycle. The performance measure, which applies to all program participants that receive PSAs, will act as a modifier that is applied after the results for the two other LTI performance measures have been calculated. For more information, see “Compensation Discussion & Analysis.”

For additional details about our executive compensation programs and our NEOs’ fiscal year 2021 compensation, see “Compensation Discussion & Analysis” and “Executive Compensation Tables.”

Looking Forward

With respect to 2022 compensation:

 

◾

The Compensation Committee approved the following target direct compensation for Ms. Cooper effective upon her succession to the role of President and CEO:

 

–

an annual cash base salary of $1,125,000,

 

–

an AIP target of 225% of her base salary, and

 

–

an LTI target of 575% of her base salary.

The Compensation Committee determined Ms. Cooper’s total target direct compensation as CEO for 2022 in August 2021, based on an evaluation of peer group and market data as well as other factors, including that she is new to the CEO role and the philosophy that recently promoted executives should have their initial compensation targeted below median market rates.

 

8               Lincoln National Corporation 2022 Proxy Statement

Proxy Summary

 

The 2022 LTI equity award mix for both our incoming and outgoing CEOs will be comprised of 60% PSAs. Set forth below is a comparison of the 2021 CEO LTI equity award mix for Mr. Glass and the 2022 CEO LTI equity award mix for Ms. Cooper, which reflects the increase in the percentage of equity granted as PSAs from 50% to 60%.

 

 

 

◾

In addition, the Compensation Committee adjusted the LTI equity award mix for each of our other NEOs for 2022 to increase to 50% the percentage of equity granted as PSAs. A comparison of the 2021 and 2022 LTI equity award mix for our NEOs other than our CEO is shown below.

 

 

 

◾

For the second year in a row, the Compensation Committee approved a modifier based on DE&I goals for our LTI program. The DE&I goals for the 2022-2024 performance cycle build on the goals established for the 2021-2023 performance cycle, and the modifier, when applied after the results for the other 2022-2024 LTI performance measures have been calculated, could increase or decrease the LTI payout by up to 16%.

 

Lincoln National Corporation 2022 Proxy Statement               9

Governance  ◾  Board Structure and Leadership

 

Proxy Statement

Annual Meeting of Shareholders | May 27, 2022

The Board of Directors (the “Board”) of Lincoln National Corporation (the “Company,” “we,” “us,” “LNC” or “Lincoln”) is soliciting proxies in connection with the proposals to be voted on at the 2022 Annual Meeting of Shareholders, which will be held beginning at 9:00 a.m. EDT on Friday, May 27, 2022, at The Ritz-Carlton Hotel, 10 Avenue of the Arts, Philadelphia, Pennsylvania 19102. This proxy statement and a proxy card or a notice of internet availability were sent to our shareholders on or about April 14, 2022. When we refer to our 2022 Annual Meeting of Shareholders (the “Meeting” or the “Annual Meeting”), we are also referring to any meeting that results from an adjournment of the Annual Meeting.

Governance of the Company

Integrity, respect and responsibility are not just guiding principles for us. They unify and inspire us to help people to take charge of their lives. Our Board is responsible for directing and overseeing the management of the Company’s business in the best interests of our shareholders and our many other stakeholders and consistent with good corporate citizenship. In carrying out its responsibilities, the Board provides oversight for the process of selecting and monitoring the performance of senior management, provides oversight for financial reporting and legal and regulatory compliance, determines the Company’s governance guidelines, and implements its governance policies. The Board, together with management, is responsible for establishing our values and code of conduct and for setting the Company’s strategic direction and priorities.

Board Structure and Leadership

Our Board currently has twelve members, eleven of whom are non-employees, or outside directors. The Board will increase to thirteen members after the Annual Meeting. The Board has determined that all eleven outside director nominees are independent, as discussed below.

The Board has no set policy requiring separation of the offices of CEO and Chair of the Board (“Chair”). It believes that the decision on whether or not to separate these roles should be part of the regular succession planning process and be made based on the best interests of the Company at the given time. Moreover, the Board believes in the importance of strong independent leadership on the Board. As such, the Board has implemented an independent Lead Director (“Lead Independent Director”) structure. Our Corporate Governance Guidelines require that the Board designate a Lead Independent Director with clearly delineated and comprehensive duties if the positions of Chair and CEO are combined or if the Chair is not otherwise independent. During our engagement with many of our largest shareholders over the past few years, many investors have expressed support for the Board’s position to retain flexibility to select the most appropriate board leadership structure.

In accordance with our governing documents, the CEO is responsible for setting the Company’s performance and strategic direction and for day-to-day leadership, while the duties of the Lead Independent Director (or independent non-executive Chair, as the case may be) include, but are not limited to, the following functions:

 

◾

Preside over meetings of the Board when the Chair of the Board is not available, chair regularly scheduled sessions of the outside directors and executive sessions of the independent directors, and communicate feedback to the CEO following executive sessions;

 

◾

Call additional meetings of the independent directors;

 

◾

At the standing invitation of the Board’s committees, attend meetings of Board Committees on which the Lead Independent Director does not already sit;

 

◾

Be available to the CEO for consultation on issues of corporate importance which may involve Board action and in general be a resource to the CEO;

 

10               Lincoln National Corporation 2022 Proxy Statement

Board Structure and Leadership  ◾  Governance

 

◾

For each Board meeting, review and approve Board meeting agendas and schedules and add agenda items in his or her discretion;

 

◾

For each Board meeting, have the opportunity to review, revise and approve Board meeting materials for distribution to and consideration by the Board;

 

◾

Refer and defer to appropriate Board committee chairs all matters within the scope of such committees as set forth in the respective committee charters;

 

◾

Be a key communicator, along with committee chairs, between the directors and the CEO on matters deemed appropriate by the Board;

 

◾

Be available to independent directors for discussion of Board issues or other matters;

 

◾

Be available for consultation or direct communication with major shareholders, as appropriate;

 

◾

Assist with and communicate the results of the Board’s evaluation of the CEO;

 

◾

In the event of the incapacitation of the CEO, call a meeting of directors to consider what action is appropriate, including the possible election of an acting CEO or a new CEO; and

 

◾

Perform such other duties and responsibilities as the Board may determine from time to time.

The Board elects its Chair annually, and, since 2007, our Board has opted to elect an independent director to serve as Board Chair. In August 2021, as part of the consideration and approval of our CEO succession plan, the Board decided to elect our outgoing CEO, Dennis Glass, to serve as Chair, and independent director Dr. William H. Cunningham to serve as Lead Independent Director beginning after the 2022 Annual Meeting. Ellen Cooper, the incoming CEO, will serve as a director but not as Chair. The Board believes that having Mr. Glass serve in the role of Chair for a period of time following the CEO transition will help provide for continuity for shareholders and employees alike.

 

Lincoln National Corporation 2022 Proxy Statement               11

Governance  ◾  Board’s Role in Risk Oversight

 

Board’s Role in Risk Oversight

Enterprise risk management is an integral part of our business processes. Senior management is primarily responsible for establishing policies and procedures designed to assess and manage the Company’s significant risks. We also have a Corporate Enterprise Risk and Capital Committee, made up of members of senior management and the Chief Risk Officer, which provides oversight of our enterprise-wide risk structure and of our processes to identify, measure, monitor and manage significant risks, including credit, market and operating risk. The Board’s role is regular oversight of the overall risk management process, including reviews of operational, financial, legal and regulatory, cybersecurity, compensation, strategic and competitive risks. The Board reviews the most significant risks the Company faces and the manner in which our executives manage these risks, which, since 2020, has involved oversight of the Company’s response to the risks related to the COVID-19 pandemic. The Board has also delegated certain of its risk oversight efforts to its committees, as shown below. This structure enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships. We believe that our Lead Independent Director structure supports the Board’s oversight role.

Board and Committees: Areas of Risk Oversight

 

 

Board Oversight of ESG Risks and DE&I

Our commitment to sustainability is formalized through Board and senior management oversight. The Corporate Governance Committee provides oversight of our governance, sustainability and corporate social responsibility strategy. As part of its oversight of the enterprise risk management function, our Audit Committee provides oversight of risks, which can include environmental, social and governance (“ESG”) risks, including climate risk. Our Office of Corporate Social Responsibility and Enterprise Risk Management team work together to screen for environmental risks across the enterprise through the Enterprise Risk Self-Assessment process. In addition, our Chief Sustainability Officer reports to the Corporate Governance Committee at least twice annually about ESG risks and opportunities, and collaborates with business units and functional areas to develop strategies, determine priorities, address issues and integrate ESG strategies aligned with the business. Since 2012, we have also had a Sustainability Advisory Group, which is a cross-functional team comprised of senior managers at the Company that meets quarterly with our Chief Sustainability Officer and team to consider market developments, societal trends and the potential impact, risk and opportunity for the company related to identified issues.

Our Board of Directors also provides executive oversight of stated priorities, progress and strategic plans to support DE&I across the enterprise, receiving executive management reports on a quarterly basis.

See “Proxy Summary” for more information on our commitment to corporate social responsibility, sustainability and DE&I.

 

12               Lincoln National Corporation 2022 Proxy Statement

Our Corporate Governance Guidelines  ◾  Governance

 

Our Corporate Governance Guidelines

The Board’s Corporate Governance Guidelines (the “Guidelines”) provide a framework for effective corporate governance and set expectations for how the Board should perform its functions. The Guidelines include the following key principles:

 

◾	A majority of our Board must at all times be “independent” as defined by Securities and Exchange Commission (“SEC”) rules and New York Stock Exchange (“NYSE”) listing standards.

 

◾	Our independent directors must meet in executive session at least once a year, with no members of management present. Our outside directors, all of whom are independent, meet in connection with each regularly scheduled Board meeting and at any other times they may choose.

 

◾	Only independent directors may serve on the Audit, Compensation, Corporate Governance and Finance Committees.

 

◾	The written charters of the Audit, Compensation, and Corporate Governance Committees comply with the NYSE’s listing standards and are reviewed at least once each year.

 

◾	Our Board conducts an annual review of the performance of the Board and the Audit, Compensation, Corporate Governance, and Finance Committees. Our directors also conduct an annual review of their individual performance.

 

◾	Our Board elects its Chair annually and, if it has not elected an independent Chair, designates a Lead Independent Director from among the Company’s independent directors who is empowered with the same functions.

 

◾

We have adopted a Code of Conduct, available on our website at www.LincolnFinancial.com, which includes our “code of ethics” for purposes of SEC rules and our “code of business conduct and ethics” for purposes of the NYSE listing standards. The Code of Conduct applies to, among others, our directors and our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. We will disclose amendments to or waivers from a required provision of the Code of Conduct that applies to our directors or executive officers by including such information on our website.

The full texts of our Guidelines and committee charters are available on the Corporate Governance page of our website at www.LincolnFinancial.com.

 

Lincoln National Corporation 2022 Proxy Statement               13

Governance  ◾  Our Corporate Governance Guidelines

 

ISG Corporate Governance Framework

We also follow the Investor Stewardship Group’s (ISG) Corporate Governance Framework for U.S. Listed Companies. The ISG Principles and our corresponding practices are as follows:

 

Principle 1: Boards are accountable to shareholders		◾		All Directors are elected annually by a majority of votes cast
		◾		We have proxy access with market terms
		◾		We have robust corporate governance disclosures
		◾		We have responded to all shareholder proposals that received majority support
Principle 2: Shareholders should be entitled to voting rights in line with their economic interest		◾   ◾		Each shareholder gets one vote per share on all matters   We have majority voting in uncontested director elections, and directors not receiving majority support must tender their resignation for consideration by the Board
Principle 3: Boards should be responsive to shareholders and be proactive in order to understand their perspectives		◾		We have a robust shareholder engagement program to discuss our business, corporate governance, executive compensation, and sustainability and DE&I efforts
		◾		In 2021, we reached out to institutional investors representing over 56% of our shares outstanding, and engaged with investors representing over 42% of our outstanding shares
		◾		Our Board considers the feedback received from shareholder engagement when structuring governance, compensation, and sustainability practices
Principle 4: Boards should have a strong independent leadership structure		◾		The current Chair of the Board, and incoming Lead Independent Director, is an independent, non-executive Director with a robust oversight role that has clearly defined duties that are disclosed to shareholders
		◾		Each Committee of the Board is chaired by an independent Director
		◾		The Board leadership structure is considered at least annually
Principle 5: Boards should adopt structures and practices that enhance their effectiveness		◾		Eleven of our thirteen director nominees are independent
		◾		The Board has taken actions to refresh its membership, with five new independent directors added in the past six years
		◾		Each Committee of the Board has an extensive detailed charter outlining the Committee’s duties and responsibilities
		◾		Board members have complete access to Company officers and counsel and may retain outside counsel, financial or other advisors as the Board deems appropriate
		◾		Board, Committee and individual director evaluations are conducted annually by an independent third party, as further discussed in the proxy statement
		◾		The number of public company boards on which a Director may serve is limited in order to ensure sufficient time to dedicate to Board duties
Principle 6: Boards should develop management incentive structures that are aligned with the long-term strategy of the company		◾		The Compensation Committee annually reviews and approves incentive compensation program design, goals and objectives for alignment with compensation and business strategies that further short- and long-term strategic objectives

 

14               Lincoln National Corporation 2022 Proxy Statement

Director Independence  ◾  Governance

 

Director Independence

Under our Guidelines, a majority of our directors must at all times be “independent” and meet the NYSE listing standards regarding independence as incorporated in our Guidelines. Among other things, these standards require the Board to determine that our independent directors have no material relationship with Lincoln other than as directors.

Applying these standards, the Corporate Governance Committee and the Board have reviewed the independence of each director and director nominee and the Board has determined that:

 

 

In conducting its independence review, the Board will consider, among other things, transactions and relationships between each outside director (or any member of his or her immediate family) and us or our subsidiaries and affiliates. The Board takes into account that in the ordinary course of business, we conduct transactions with companies at which some of our directors are or have been directors, employees or officers. Transactions that are in the ordinary course of business on terms substantially equivalent to those prevailing at the time for comparable transactions and that fall below the threshold levels set forth in our independence standards do not impact a director’s independence under our standards.

Director Nomination Process

Under our Guidelines, the Board is responsible for selecting its nominees. The Corporate Governance Committee is charged with:

 

◾	Identifying the competencies appropriate for the Board

 

◾	Identifying which, if any, of those competencies may be missing or underrepresented on the current Board

 

◾	Identifying individuals with appropriate qualifications and attributes

 

◾	Recommending to the Board the director nominees for the next annual meeting of shareholders

Director Qualifications

The Corporate Governance Committee reviews with the Board the appropriate skills and characteristics required of directors in the context of the Board’s current makeup and each director nominee’s ability to oversee the Company’s strategies and risks. In addition to considering a candidate’s background, experience and professional accomplishments, the Board looks for individuals with, among other attributes, integrity, business acumen, specific skills (such as an understanding of marketing, finance, accounting, regulation and public policy), and a commitment to our shared values.

In addition, although the Board does not have a formal diversity policy, our Guidelines specify that the Corporate Governance Committee should consider diversity in the director identification and nomination process. As a result, the Corporate Governance Committee seeks nominees with a broad diversity of backgrounds, experiences, professions, education and differences in viewpoints and skills in addition to diversity of gender, race and ethnicity. Its goal is to ensure that the directors, as a group, provide a substantive blend of experience, knowledge and ability that enables the Board to fulfill its responsibilities in a constructive environment. In the annual evaluation of the Board and committees, the Board considers whether the members of the Board reflect such diversity and whether such diversity contributes to a constructive environment.

As set forth in our Guidelines, Board refreshment over time is critical to ensuring that the Board as a whole maintains the appropriate balance of tenure, diversity, skills and experience needed to provide effective oversight in light of the Company’s current and long-term strategic needs. The Board does not believe that arbitrary term limits for directors based on age or years of service are appropriate, as they can result in the Company losing the valuable contribution of directors who have over time developed increased insight into the Company and its operations. The Company benefits from a mix of these experienced directors with a deep understanding of the Company and newer directors who bring fresh perspectives. However, a director’s service should not outlast his or her ability to contribute, and consequently the Board does not believe that directors should expect to be renominated continually. Each director’s continued tenure is reconsidered annually, taking into account the results of the Board’s annual self-evaluation, annual individual director peer evaluations, results of voting by shareholders in annual director elections and the Company’s needs.

 

Lincoln National Corporation 2022 Proxy Statement               15

Governance  ◾  Annual Board, Committee and Individual Director Evaluations

 

The Board regularly evaluates the need for Board refreshment and has retained an outside search firm to identify and evaluate potential director candidates. Five new diverse independent directors have been added to our Board in the past six years. The Board will continue to review its composition and structure, balancing the need for continuity and experience with fresh ideas and perspectives.

Director Nominee Selection Process

The Corporate Governance Committee begins the nomination process each year by deciding whether to renominate current directors, as all directors are up annually for nomination and election by our shareholders. This includes an individual assessment of each director who will be up for reelection the following year. The Corporate Governance Committee then reviews the results of the individual director assessments and considers for renomination those Board members whose skills and experience continue to be relevant to our business and whose performance for the most recent term has also been favorably assessed.

When identifying potential director candidates — whether to replace a director who has retired or resigned or to expand the Board to gain additional capabilities — the Corporate Governance Committee determines the skills, experience and other characteristics that a potential nominee should possess (in light of the composition and needs of the Board and its committees, including whether or not the nominee would be considered “independent” under SEC rules and NYSE listing standards) and seeks candidates with those qualifications. The Committee is also assisted in identifying potential candidates by an independent third-party search firm that recommends potential director candidates who meet the Board’s stated requirements.

Although not required to do so, the Corporate Governance Committee may consider candidates proposed by our directors or our management and has also retained an outside firm to help identify and evaluate potential nominees. The Corporate Governance Committee will also consider nominations from shareholders. Such nominations must be submitted in writing to our Corporate Secretary at our principal executive office, and must include the same information that would be required for a candidate to be nominated by a shareholder at a meeting of shareholders as described under “General Information – Shareholder Proposals for the 2023 Annual Meeting” and in our Amended and Restated Bylaws (“bylaws”), which can be found on our website at www.LincolnFinancial.com. Any such recommendation for next year’s director slate must be received by the Corporate Secretary no earlier than January 27, 2023, nor later than February 26, 2023.

Our proxy access bylaws permit a shareholder, (or a group of up to 20 shareholders) owning shares of our outstanding common stock representing at least 3% of the votes entitled to be cast on the election of directors, to nominate and include in our proxy materials director candidates constituting up to 20% of the Board. The nominating shareholder or group of shareholders must have owned their shares continuously for at least three years, and the nominating shareholder(s) and nominee(s) must satisfy other requirements specified in our bylaws.

If the Corporate Governance Committee determines that it should conduct a full evaluation of a prospective candidate, including an interview, one or more members of the Corporate Governance Committee will do so, and other directors may be asked to interview the candidate as well. Upon completing the evaluation and the interview, the Corporate Governance Committee recommends to the Board whether to nominate the candidate.

The nominee evaluation process is the same whether the nomination comes from a Board member, management or a shareholder. If the Corporate Governance Committee recommends a shareholder nominee to the Board, the Board may — as with any nominee — either accept or reject the recommendation.

Annual Board, Committee and Individual Director Evaluations

Our Board recognizes that a thorough, constructive evaluation process enhances our Board’s effectiveness and is an essential element of good corporate governance. Accordingly, every year, our Corporate Governance Committee oversees a Board, Committee and individual director evaluation process, which is designed to elicit feedback and recommendations from the directors that will improve the effectiveness of the Board.

 

16               Lincoln National Corporation 2022 Proxy Statement

Shareholder Engagement and Response to Feedback  ◾  Governance

 

In general, our Board evaluations cover a variety of topics, including the Company’s strategy, financial performance, risk management and succession planning, as well as:

 

 

Each year, the Corporate Governance Committee reexamines the evaluation process to ensure that the process allows directors the opportunity to provide actionable feedback on the functioning of the Board as a whole as well as the performance of individual directors. Since 2019, the Corporate Governance Committee has engaged an independent third party to conduct the annual self-evaluations to gain a different perspective and encourage even more candid participation and feedback. The Corporate Governance Committee plans to continue to use an independent third party for the evaluations going forward.

In 2021, the independent third party conducted individual interviews with each director, covering the topics discussed above, and, after aggregating and summarizing the responses, delivered a report to the Corporate Governance Committee highlighting comments and areas of future focus. Responses were not attributed to specific Board or Committee members to promote candor. Our Chair shared the report with the full Board and discussed the results of the Board and Committee evaluations with the full Board during executive session.

Each director also participates in an annual individual director peer evaluation through which the director assesses the performance of and provides feedback on his or her fellow directors. The peer evaluations were also conducted by the independent third party for 2021. As discussed above, the Corporate Governance Committee reviews the results of these individual director assessments, as well as of the Board Committee evaluation results, when considering each director’s continued service on the Board.

Shareholder Engagement and Response to Feedback

We appreciate and value the views and insights of our shareholders. As a result of the continued year-over-year decrease in say on pay support at our 2021 Annual Meeting, during 2021 we once again expanded our ongoing, proactive shareholder engagement program. This program complements the ongoing dialogue throughout the year among our shareholders, CEO, CFO and Investor Relations team on financial and strategic performance. Our engagement program is designed to reach out to our shareholders and hear their perspectives about issues that are important to them, both generally and with regard to the Company, and gather feedback. We believe this engagement program promotes transparency between our Board and our shareholders and builds informed and productive relationships. In the fall of 2021, we reached out to investors representing over 56% of our shares outstanding, and engaged with investors representing over 42% of our outstanding shares, which included participation by the Chair of our Corporate Governance Committee in select conversations. For more information about our 2021 shareholder engagement and response to shareholder feedback, see “Compensation Discussion & Analysis – Executive Summary.”

The Company has a history of being responsive to shareholder feedback. In addition to our most recent actions related to compensation discussed in “Compensation Discussion & Analysis,” in the past few years we have also taken the following actions in response to shareholder feedback:

 

◾

In 2021, we increased the size of the performance-based component of our CEO’s LTI mix to 50% and maintained his compensation flat with prior-year levels, added disclosure to our proxy statement regarding the gender and ethnic/racial diversity of our Board, and added disclosure to our 2020 Corporate Social Responsibility Report, including our EEO-1 report and indices aligned to the TCFD framework and SASB reporting standards;

 

◾

In 2020, we increased the size of the performance-based component of our CEO’s LTI mix to 40% and maintained his compensation flat with prior-year levels;

 

Lincoln National Corporation 2022 Proxy Statement               17

Governance  ◾  Board and Committee Meetings

 

◾

In 2019, we made available on our website and in our 2018 Corporate Social Responsibility Report a gender pay equity statement; and

 

◾

in 2018, based in part on feedback received, the Board took action to amend the Company’s bylaws to reduce to 10% the percentage of outstanding stock required for shareholders to call a special meeting.

Board and Committee Meetings

The Board met six times during 2021, and each director attended 75% or more of the aggregate of: (1) the total number of Board meetings and (2) the total number of meetings held by committees on which he or she served.    

Although the Board does not have a formal policy that requires directors to attend our Annual Meeting of Shareholders, directors are encouraged to attend. All of the Company’s directors attended the 2021 Annual Meeting.

Board Committees

The Board has six standing committees: the Audit Committee, the Compensation Committee, the Corporate Governance Committee, the Executive Committee, the Finance Committee, and the Committee on Corporate Action. The table below lists the directors who currently serve on these committees and the number of meetings each committee held during 2021. The Audit, Compensation, Corporate Governance, and Finance Committees conduct self-evaluations of their committee’s performance each year.

 

Current Committee Membership and Meetings Held During 2021 (C=Chair M=Member)

Audit

Compensation

Corporate Governance

Executive

Finance

Corporate Action1

Deirdre P. Connelly

M

C

William H. Cunningham

M

M

C

M

Reginald E. Davis

M

M

Dennis R. Glass

M

C

Eric G. Johnson

M

M

M

C

Gary C. Kelly

M

M

M. Leanne Lachman

C

Dale LeFebvre

M

M

Janet Liang

M

M

Michael F. Mee

M

M

M

Patrick S. Pittard

C

Lynn M. Utter

M

M

Number of Meetings in 2021

8

6

5

—

4

—

⬛  Shaded cells denote committee chair.

 

1	The Committee on Corporate Action takes all action by the unanimous written consent of the sole member of that Committee, and there were 15 such consents in 2021.

The functions and responsibilities of our Board’s standing committees are described on the following pages. Charters for the Audit, Compensation, Corporate Governance, Executive, and Finance Committees are available on the Corporate Governance page of our website at www.LincolnFinancial.com.

 

18               Lincoln National Corporation 2022 Proxy Statement

Board Committees  ◾  Governance

 

Audit Committee

Chair: Lachman

Members: Connelly, Davis, Kelly and LeFebvre

The primary function of the Audit Committee is oversight, including risk oversight. This includes:

 

 

The Board has determined that three of its Audit Committee members, Reginald E. Davis, Gary C. Kelly and Dale LeFebvre, qualify to be named as “audit committee financial experts” under SEC rules. The Audit Committee may obtain advice and assistance from internal or external legal, accounting or other advisers.

More information regarding the Audit Committee, including the Audit Committee Report, can be found under “Ratification of Appointment of Independent Registered Public Accounting Firm.”

 

Lincoln National Corporation 2022 Proxy Statement               19

Governance  ◾  Board Committees

 

Compensation Committee

Chair: Pittard

Members: Cunningham, Johnson, Liang and Mee

The principal functions of the Compensation Committee include:

 

 

The Compensation Committee may retain or obtain advice on executive compensation-related matters from a compensation consultant, outside legal counsel or other adviser. The committee is directly responsible for appointing, compensating and overseeing the work of any such advisers and must consider certain independence factors before hiring them. More information concerning the Compensation Committee, including the role of its compensation consultant and our executive officers in determining or recommending the amount or form of executive compensation, can be found in “Compensation Discussion & Analysis.”

 

20               Lincoln National Corporation 2022 Proxy Statement

Board Committees  ◾  Governance

 

Corporate Governance Committee

Chair: Connelly

Members: Cunningham, Davis, Johnson, LeFebvre and Utter

The principal functions of the Corporate Governance Committee include:

 

 

The Corporate Governance Committee may hire and terminate search firms; approve any search firm’s fees and terms of retention; and seek advice and assistance from internal or external legal, accounting or other advisers.

 

 

Executive Committee

Chair: Cunningham

Members: Glass, Johnson and Mee

The principal function of the Executive Committee is to act for the Board, when necessary, between Board meetings. In such instances, the Executive Committee may act for the Board in managing and directing the Company’s business and affairs, except for matters expressly delegated to another committee or the full Board. The Executive Committee reports any actions it takes to the Board as soon as practicable.

 

Lincoln National Corporation 2022 Proxy Statement               21

Governance  ◾  Board Committees

 

Finance Committee

Chair: Johnson

Members: Cunningham, Kelly, Liang, Mee and Utter

The principal functions of the Finance Committee include:

 

 

The Finance Committee may seek advice and assistance from internal or external legal, accounting or other advisers.

 

 

Committee on Corporate Action

The Committee on Corporate Action was formed to delegate to the sole member, the CEO, the authority to take certain actions on behalf of the Board in accordance with limits set by the Board. The principal functions that have been delegated to the Committee on Corporate Action include:

 

 

22               Lincoln National Corporation 2022 Proxy Statement

Director Orientation and Continuing Education  ◾  Governance

 

Director Orientation and Continuing Education

Director education is an ongoing, year-round process, which begins when a director joins our Board. Upon joining our Board, new directors are provided with a comprehensive orientation to our Company, including our business, strategy and governance. New directors participate in an orientation program with senior business and functional leaders from all areas of the Company, during which there is discussion of strategic priorities and key risks and opportunities. On an ongoing basis, directors receive presentations on a variety of topics related to their work on the Board and within the insurance and financial services industries, both from senior management and from experts outside of the Company, for example at our annual Board retreat. We also encourage directors to enroll in continuing education programs sponsored by third parties at our expense.

Communications with Directors

Shareholders and others who wish to communicate with the full Board or its outside (nonexecutive) directors may do so by sending a letter to either “The Board of Directors” or “The Outside Directors,” as appropriate, via email to:

independentdirectors@LFG.com

or by mail at our principal executive offices:

Lincoln National Corporation

150 N. Radnor-Chester Road

Radnor, PA 19087

Attention: Office of the Corporate Secretary

Our Corporate Secretary receives and processes all communications and will refer applicable communications to the Chair. If a communication relates to possible violations of our Code of Conduct or contains concerns or complaints regarding our accounting, internal auditing controls, auditing matters, potential violations of securities laws or other related concerns, it will be referred to the Audit Committee, which has a policy for the receipt and treatment of such reports. The policy can be found on our website at www.LincolnFinancial.com.

You may communicate with the Board anonymously and/or confidentially. However, if you submit your communication anonymously, we will not be able to contact you in the event we require further information. Also, while we will attempt to preserve your confidentiality whenever possible, we cannot guarantee absolute confidentiality.

 

Lincoln National Corporation 2022 Proxy Statement               23