Director Independence Criteria
The Board has adopted director independence criteria to assist in affirmatively determining that a director has no material relationship with Torchmark Corporation or a company that has a relationship with Torchmark Corporation that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The criteria conform to, or are more exacting than, the independence requirements in the New York Stock Exchange listing requirements (NYSE rules) and SEC rules. In addition to applying these criteria, the Board will also consider all relevant facts and circumstances in making an independence determination.
The categorical standards for independence determinations adopted by the Board of Directors of Torchmark Corporation pursuant to the NYSE rules are:
- A director who is an employee, or whose immediate family member is an executive officer, (as used herein, such term shall have the same meaning as the term “officer” in Rule 16a-1(f) under the Securities Exchange Act of 1934), of Torchmark is not "independent" until three years after the end of such employment relationship. An “immediate family member” includes a director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares the director’s home.
- A director who receives, or whose immediate family member receives, more than $120,000 in any twelve month period in direct compensation from Torchmark other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), is not "independent" until three years after he or she ceases to receive more than $120,000 in any twelve month period in such compensation.
- A director who is a current partner or employee of the firm that is Torchmark's internal or external auditor; a director who has an immediate family member who is a current partner of Torchmark's internal or external audit firms; a director who has an immediate family member who is a current employee at such a firm and who personally works on Torchmark's audit; or a director who has immediate family member who was within the last three years a partner or employee of such a firm and personally worked on Torchmark's audit during that time will not be deemed "independent".
- A director who is employed, or whose immediate family member is employed, as an executive officer of another company where any of Torchmark's present executive officers serve on that company's compensation committee is not "independent" until three years after the end of such service or the employment relationship.
- A director who is a current employee, or whose immediate family member is a current executive officer, of a company that makes payments to, or receives payments from, Torchmark for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company's consolidated gross revenues, is not "independent" until three years after falling below such threshold.
The Board of Directors further adopted the following additional categorical standards for determining director independence on February 23, 2005, which were reviewed, amended and restated on February 20, 2007, and further reviewed, amended and restated on November 6, 2018.
- An independent director does not directly or indirectly beneficially own more than 10% of any class of Torchmark's equity securities.
- If a Torchmark director is an executive officer of another company in which Torchmark owns a common stock interest in excess of 5% of total shareholder's equity, or where the other company owns a common stock interest in Torchmark in excess of 5% of total shareholder's equity, the director is not independent.
- An independent director is not and is not affiliated with (as used herein, “affiliated with” shall have the meaning set forth under Section 10A-3 of the Securities Exchange Act of 1934), a member of Torchmark's senior management or an entity that is an adviser or consultant to Torchmark that has received direct income from Torchmark in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such adviser or consultant’s consolidated gross revenues.
- An independent director has no personal services contract(s) with Torchmark or a member of senior management of Torchmark.
- An independent director is not affiliated with a not-for-profit entity that has received significant annual discretionary contributions from Torchmark (defined as the greater of $1 million or 2% of the not-for-profit entity's consolidated gross revenues received in any of the last three fiscal years).
- An independent director is not employed by a public company at which an executive officer of Torchmark serves as a director.
- If a Torchmark director or a member of his/her immediate family is an executive officer of another company that is indebted to Torchmark, or to which Torchmark is indebted, and the total amount of either company's indebtedness to the other is greater than 5% of the total consolidated assets of the company that he/she serves as an executive officer, the director is not independent.
- A director is not independent if he/she is elected pursuant to any arrangement or understanding with another person or group unless the Board has assessed such arrangement or understanding and affirmatively determined that such arrangement or understanding does not constitute a material relationship and does not impair the director’s independence.
- An independent director does not serve, and has no immediate family member who has served, as an executive officer or general partner of an entity that has received an investment from Torchmark or any of its subsidiaries, where such investment exceeds $1 million or 2% of such entity's invested capital, whichever is greater, in any of the last three years.
- An independent director does not have, nor may any immediate family member have, any direct or indirect material interest in a transaction or series of transactions to which Torchmark or a subsidiary is a party in which the transaction amount exceeds $120,000 (other than interests arising solely from an aggregate ownership interest of less than 10% of Torchmark or an entity furnishing services to Torchmark).
- An independent director has not, and his/her immediate family members have not, accepted or agreed to accept from Torchmark any consulting, advisory or other compensatory fee except fees received for service as a director.
- An independent director does not have any interest in an investment jointly acquired in conjunction with Torchmark.
Directors must notify the Chairman of the Board, the Chair of the Governance and Nominating Committee and the Corporate Secretary if they are considering a potential change in circumstances or relationships that might affect their independence (or be perceived as a conflict of interest) or their ability to comply with other provisions of these criteria. Such notice should be given, for example, before accepting an invitation to serve on the board or audit committee of another public company or as an officer or director (or comparable position) of any other business organization, whether public or private, and before engaging in any transaction involving Torchmark Corporation (or any subsidiary) in which the director would have a direct or indirect material interest.