From the
Board of Directors

Dear Shareholders:

As your Board of Directors, we take our responsibility to you and all of our constituencies seriously. We think it is important that you hear directly from us about key aspects of our work and our view on the company’s performance. We see a critical part of the Board’s role as ensuring a strong connection between execution of The Principal’s strategy and your interests as shareholders.

In 2014, The Principal again delivered very strong operating performance. More importantly, it continues to deliver strong performance since the financial crisis. As we have evolved the strategy of the company toward a strong focus on global investment management opportunities, we have seen assets under management grow by 13% per year since 2009. Assets under management are one of the best metrics to use in evaluating the overall performance of the company. In addition, we are very pleased with the company’s recognition by Pensions & Investments as the “Best Place to Work in Money Management” in our category for the third consecutive year.

Future Leadership

The Board believes that succession planning for the future leadership of the company is one of its most important roles. We are proud of the strong leadership team at The Principal, developed primarily from within the company, but with the prudent addition of external talent when needed. We continue to focus on executive succession planning at each Board meeting, with a more in-depth discussion once each year. The recent appointment of Dan Houston as president and chief operating officer is a result of a multi-year succession planning process.

In addition, the Board is focused on having a similar process to identify, recruit, and develop talent within our Board of Directors. We believe we have a great mix of experience and expertise on the Board, and we have a robust process for evaluating each Board member before they are re-nominated.

Strategy Oversight

Your Board is fully involved in evaluating and shaping the company’s long-term strategy. Each year, we hold a two-day special strategy meeting with the senior management team where we receive detailed information on the long-term possibilities for each business along with the requirements for success and possible risks involved. We think this has been an important part of the strong operating performance of the company. A special committee of the Board—with regularly rotating membership—oversees this strategic process. We ask senior management to provide their future vision of The Principal and we use that work to help inform the Board's deliberations over the next few years. In short, we are proud of the company’s strategic planning process, and we believe it will allow us to continue to drive long-term value for our shareholders.

We are always interested in the thoughts and opinions of our shareholders, whether on the performance of the company or other important governance matters. Together, we look forward to a successful future.