From the Board of Directors Dear shareholders:
On behalf of the Board of Directors, thank you for your continued investment in the Principal Financial Group. Your Board of Directors takes our responsibility to you and all of our constituencies seriously. As part of this oversight of the company on your behalf, I want to update you on four major areas of focus.
Management succession planning
Leadership continuity is critical to the ongoing effectiveness of any organization, and I wrote last year about our robust succession planning process. I am pleased that as a culmination of that process in August 2015, we named Dan Houston our new chief executive officer. Since joining the company in 1984, he held positions of ever increasing responsibility across the organization, including president of the company’s two largest operating segments—Retirement & Income Solutions and U.S. Insurance Solutions. Dan has played a critical role in the evolution of Principal from a domestic employee benefits company to a global leader in retirement, long-term savings and asset management. Your Board is confident in Dan’s ability to lead Principal, and we look forward to a period of continued success under his leadership.
Board refreshment
Consistent with Principal’s evolution as a company, we are committed to regular refreshment of our Board to introduce new perspectives into the boardroom while at the same time maintaining the experience and continuity that has served the Board well over the long term. In 2015, we added two new members. In March 2015, Roger Hochschild (president and chief operating officer, Discover Financial Services) joined the Board, bringing his expertise in wealth management, technology and consumer finance. In August 2015, Blair Pickerell (former chairman, Asia, Nikko Asset Management) joined the Board, bringing expertise in global asset management and many years of experience of living and working in Asia. We are pleased to welcome these talents to our Board, which now includes 10 independent directors with diverse viewpoints, experiences and skills. Our Nominating and Governance Committee will continue to identify and recommend qualified Board candidates who can bring insights to help the company advance and execute on its strategy.
2015 company performance
Your Board concurs with management’s characterization of the 2015 performance—it was a good year, particularly in light of the macroeconomic headwinds. But more important is looking at the results through the lens of long-term growth. Since 2011, the company has grown operating earnings per share at a compounded annual rate of 13 percent. The company has also increased assets under management by nearly $200 billion or 57 percent, to $527 billion at Dec. 31, 2015.
Strategic oversight
The Board is not only involved in evaluating strategy but also in collaborating with management to help shape it. A special committee of the Board oversees the strategic dialogue throughout the year, which includes a two-day strategy meeting with senior management. At our strategy meeting, we discussed and debated critical topics affecting the long-term success of our businesses, including cyber and other enterprise risks, capital deployment, talent management and regulatory developments, as well as macroeconomic influences, demographics and changing consumer demand. We believe this approach has and will continue to contribute to this company’s long-term success.
Our thanks to Larry Zimpleman
Finally, the Board would like to express our gratitude to Larry Zimpleman, non-executive chairman of the Board, who retired as CEO in 2015 after 44 years with the company. His vision, dedication and leadership helped position Principal for a strong and successful future. He was an outstanding leader who guided the company through difficult times and built Principal into the leading company it is today. In both his personal and professional life, Larry has set an example for each of us as a leader and teacher with strong ethical principles and a deep concern for the customers, shareholders and employees he served.
I also want to thank you, our shareholders, again for your support. I truly appreciate the opportunity to serve as your lead director. As always, I remain interested in your thoughts and opinions, and I encourage you to contact me at principal.com/contactliz.
Sincerely,
Elizabeth E. Tallett
Lead Director, Principal Financial Group
