Download stock options book value performance program

Compensation Discussion and Analysis:
Components of Our Executive Compensation Program
While the program allows the Committee to make a discretionary adjustment by up to 15% of the earned awards and units based
on quantitative and qualitative factors, the Committee has rarely exercised discretion and did not exercise discretion for 2014
awards.
STOCK OPTIONS
Stock options provide value based solely on stock price appreciation. Stock options are granted with a maximum term of ten
years. One-third of the option grants vest on each of the first three anniversaries of the date of grant. The exercise price is based
on the closing market price of a share of our Common Stock on the New York Stock Exchange on the date of grant.
BOOK VALUE PERFORMANCE PROGRAM
Our Book Value Performance Program is intended to link payments to a measure of book value per share — a key metric in
valuing insurance companies, banks, and investment firms that is closely followed by investors. Book value per share is
calculated by dividing our book value by the number of shares of our Common Stock outstanding. Our calculations of book value
and book value per share exclude certain balance sheet items that do not, and may never, flow through the income statement.
Unlike the financial measures based on AOI that are used in other aspects of our executive compensation program, the book
value per share metric takes into consideration realized gains and losses in our investment portfolio. The key features of the Book
Value Performance Program are:
• Awards are granted and denominated in book value units that are funded from two sources:
– the allocation of 20% of a participant’s long-term incentive award value for the year as determined by the Committee; and
– for the NEOs, a mandatory deferral of 30% of their annual incentive award.
• Once granted, the value of these book value units then tracks changes in book value per share for each participant.
• For purposes of the Book Value Performance Program, book value units are based on the equity attributable to our Financial
Services Businesses divided by the number of shares of our Common Stock outstanding at the end of the period, on a fully
diluted basis. For 2013 and thereafter, these units track the value of book value per share of Common Stock, excluding total
accumulated other comprehensive income and the non-economic effects as of December 31, 2012 and for subsequent
periods of foreign exchange remeasurement of non-yen liabilities and assets.
• One-third of a participant’s annual award of book value units is distributed in cash in each of the three years following the
year of grant.
BOOK VALUE
Book value per common share increases (or decreases) as
a result of the Company’s net income (or loss). Book value
per common share decreases when the Company pays
dividends on its Common Stock. Book value per common
share may also increase or decrease due to other items,
including share repurchase activity.
(1) Excluding total accumulated other comprehensive income and the
cumulative impact of gains and losses resulting from foreign currency
exchange rate remeasurement included in net income (loss).
(2) Does not include the impact of changes in share count.
(3) Includes realized investment gains and losses and related charges and
adjustments, and results from divested businesses.
(4) Excluding current year impact of gains and losses resulting from foreign
currency exchange rate remeasurement.
(5) Includes change in share count other than through share repurchases.
Calculating Change in 2014 Book Value Per Share(1)
Book Value Per Share 12/31/13
Adjusted Operating Income(2)
Other Items(3)
Net Income(2)(4)
($1.83)
$7.46
($2.17)
Share Repurchases
($0.58)
Change in 2014 Book Value Per Share
Book Value Per Share 12/31/14
48
$9.29
Dividends
Other Items(5)
=
$59.99
$0.05
$4.76
$64.75
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