Principal Financial Group 2013 Annual Report Download - page 7

FROM THE
BOARD OF DIRECTORS
Dear Shareholders:
We think it is important that you, as shareholders, have the
opportunity to hear directly from the Board. We represent you
and your interests as we carry out our responsibility to ensure
The Principal has the right long-term strategy, executes effec-
tively and is a good steward of capital operating at the highest
levels of integrity. I’d like to briefly discuss four areas:
Company Performance
The Board of Directors is pleased with 2013 results and the
record of execution since the financial crisis. The company
had record operating earnings in 2013 and has successfully
transitioned to an investment management leader. We remain
focused on maximizing the long-term interests of shareholders
and will continue to oversee the development of the company
as an asset manager in line with our stated strategy.
Engaged and Experienced Board
Given the speed with which markets and economic outlooks
change, it is critical that the Board and senior management
have frequent communication and interaction. The Board is
made up of qualified executives from a wide range of back-
grounds, many of whom have substantial Board experience
with The Principal itself. We believe that is especially import-
ant for a company like The Principal, which makes long-term
promises and needs the strategy and financial strength to be in
position to honor those promises.
We have regular interaction with senior management—
at quarterly Board meetings as well as through monthly
communications, real-time updates on important matters
and scheduled calls. We also hold executive sessions without
management at the beginning and end of each Board meeting
to ensure that all Board members are able to express their
views in an open manner. Finally, the Board of Directors holds
an annual strategic retreat to review and discuss the overall
company strategy as well as relevant topics at the time of
each retreat.
Enterprise Risk Management
As a financial services company, The Principal must deal effec-
tively with many economic and operational risks. Risk man-
agement has long been an essential element of the company’s
operations. The company uses an integrated risk management
framework to manage risks within limits discussed and
established by management and the Board. The oversight of
this important work is carried out by all Board committees as
well as the full Board.
Pay Practices and Executive Compensation
Ensuring sound compensation practices (pay for performance)
is one of the most critical roles the Board plays. We use a
compensation process that incorporates proper oversight,
benchmarking against investment management peers and
independent advice from an outside consultant. The Human
Resources Committee reviews all incentive compensation plans
to confirm they do not encourage inappropriate risk taking.
The Human Resources Committee also oversees a robust suc-
cession planning process for senior management.
The Board is always interested in shareholders’ thoughts, and
we welcome your views on important corporate governance
priorities. Your Board of Directors is proud to be associated
with The Principal because of its experienced leadership team,
the successful execution of its long-term strategy and its strong
commitment to shareholders.
Finally, the Board believes that diversity is an important factor
in its effectiveness. We feel honored by two recent, important
recognitions reflecting our diversity:
• Jocelyn Carter-Miller was an honoree at the 2013 NACD
Directorship 100 Gala, which recognizes the most influential
people in the boardroom community.
• In January 2014, The Women’s Forum of New York
recognized The Principal Board for the third consecutive
year for having 30 percent of its seats held by women.
We’re proud of these recognitions and feel they represent the
deep dedication of the entire Board.
Elizabeth E. Tallett
Principal, Hunter Partners, LLC
Lead Director, Principal Financial Group
PRINCIPAL FINANCIAL GROUP | 2013 YEAR IN REVIEW 5