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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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CNO Financial Group, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 10, 2019

              NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of CNO Financial Group, Inc. (the "Company"), will be held at the CNO Conference Center, 11825 North Pennsylvania Street, Carmel, Indiana, at 8:00 a.m., Eastern Daylight Time, on May 10, 2019, for the following purposes:

1.

To elect nine directors, each for a one-year term ending in 2020;



2.

To approve the Replacement NOL Protective Amendment to the Company's Amended and Restated Certificate of Incorporation to preserve the value of tax net operating losses and certain other tax losses;



3.

Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for 2019;



4.

To approve, by non-binding advisory vote, the executive compensation of the Company's named executive officers; and



5.

To consider such other matters, if any, as may properly come before the meeting and any adjournment or postponement thereof.

              Holders of record of outstanding shares of the common stock of the Company as of the close of business on March 12, 2019, are entitled to notice of and to vote at the meeting and any adjournment or postponement thereof. Holders of common stock have one vote for each share held of record.

              In accordance with the rules of the Securities and Exchange Commission (the "SEC"), on or about March 27, 2019, we either mailed you a Notice of Internet Availability of Proxy Materials ("Notice") notifying you how to vote online and how to electronically access a copy of this Proxy Statement and the Company's Annual Report to Shareholders (together referred to as the "Proxy Materials") or mailed you a complete set of the Proxy Materials and proxy card. If you have not received but would like to receive printed copies of these documents, including a proxy card in paper format, you should follow the instructions for requesting such materials contained in the Notice.

              Management and the Board of Directors respectfully request that (if you received a paper copy of the Proxy Materials) you date, sign and return the enclosed proxy card in the postage-paid envelope so that we receive the proxy card prior to the Annual Meeting, or, if you prefer, follow the instructions on your proxy card or Notice for submitting a proxy electronically or by telephone. If your shares are held in the name of a bank, broker or other holder of record, please follow the procedures as described in the voting form they send to you. If you attend the meeting in person you may withdraw your proxy and vote personally at the meeting.

March 27, 2019
Carmel, Indiana

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CNO Financial Group, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032

              This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of CNO Financial Group, Inc. ("CNO" or the "Company") for the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the CNO Conference Center, 11825 North Pennsylvania Street, Carmel, Indiana on May 10, 2019, at 8:00 a.m., Eastern Daylight Time. We are sending the Notice or the Proxy Materials and proxy to shareholders on or about March 27, 2019.

Solicitation of Proxies

              The proxies are solicited by the Board of Directors.    Proxies may be solicited by mail, telephone, internet or in person. Proxies may by solicited by the CNO Directors and officers. All expenses relating to the preparation and distribution to shareholders of the Notice, the Proxy Materials and the form of proxy are to be paid by CNO.

              If the form of proxy is properly executed and delivered in time for the Annual Meeting, the named proxy holders will vote the shares represented by the proxy in accordance with the instructions marked on the proxy. Each shareholder may appoint a person (who need not be a shareholder), other than the persons named in the proxy, to represent him or her at the Annual Meeting by properly completing a proxy. In either case, such completed proxy should be returned in the envelope provided to you for that purpose (if you have requested or received a paper copy of the Proxy Materials) for delivery no later than May 9, 2019. Proxies received that are unmarked will be voted for each of the Board's nominees for director (Proposal 1), for the approval of the amendment to the Company's Amended and Restated Certificate of Incorporation to preserve the value of tax net operating losses and certain other tax losses (the "Replacement NOL Protective Amendment") (Proposal 2), for ratification of the appointment of the Company's independent registered public accounting firm (Proposal 3), and for approval of the compensation paid to our Named Executive Officers (Proposal 4). A shareholder may revoke a proxy at any time before it is exercised by mailing or delivering to CNO a written notice of revocation or a later-dated proxy, or by attending the Annual Meeting and voting in person.

Record Date and Voting

              Only holders of record of shares of CNO's common stock as of the close of business on March 12, 2019, will be entitled to vote at the Annual Meeting. On such record date, CNO had 161,237,699 shares of common stock outstanding and entitled to vote at the Annual Meeting. Each share of common stock will be entitled to one vote with respect to each matter submitted to a vote at the Annual Meeting. The presence in person or by proxy of the holders of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting is necessary to constitute a quorum.

              On or about March 27, 2019, we either mailed you a Notice notifying you how to vote online and how to electronically access a copy of the Proxy Materials or mailed you a complete set of the Proxy Materials. If you have not received but would like to receive printed copies of these documents, including a proxy card in paper format, you should follow the instructions for requesting such materials contained in the Notice.

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              The following sets forth how a shareholder can vote over the Internet, by telephone or by mail:

Voting By Internet

              If you hold your shares in street name (that is, if you hold your shares through a broker, bank or other holder of record), you can vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the 12-digit Control Number included on your Notice or your paper voting instruction form (if you received a paper copy of the Proxy Materials).

Voting By Telephone

              If you hold your shares in street name, you can vote using a touch-tone telephone by calling the toll-free number included on your paper voting instruction form (if you received a paper copy of the Proxy Materials), 24 hours a day, seven days a week. You will need the 12-digit Control Number included on your notice or your paper voting instruction form.

              If you hold your shares in street name, you may also submit voting instructions to your bank, broker or other holder of record. In most instances, you will be able to do this over the Internet, by telephone, or by mail. Please refer to the information from your bank, broker or other holder of record on how to submit voting instructions.

              The Internet and telephone voting procedures, which comply with Delaware law and the Securities and Exchange Commission ("SEC") rules, are designed to authenticate shareholders' identities, to allow shareholders to vote their shares and to confirm that their instructions have been properly recorded.

Voting By Mail

              If you have received a paper copy of the Proxy Materials by mail, you may complete, sign, date and return by mail the paper proxy card or voting instruction form sent to you in the envelope provided to you with your Proxy Materials or voting instruction form.

Deadline for Submitting Votes by Internet, Telephone or Mail

              If you hold your shares in street name, proxies submitted over the Internet or by telephone as described above must be received by 11:59 p.m., Eastern Daylight Time, on May 9, 2019.

              Proxies submitted by mail should be returned in the envelope provided to you with your paper proxy card or voting instruction form, and must be received no later than May 9, 2019.

              If you want to vote in person at the Annual Meeting and you hold your shares in street name, you must obtain a legal proxy from your bank, broker or other holder of record authorizing you to vote. You must then bring the legal proxy to the Annual Meeting.

              Please note that you may receive multiple copies of the Notice or Proxy Materials (electronically and/or by mail). These materials may not be duplicates as you may receive separate copies of the Notice or Proxy Materials for each type of account in which you hold shares. Please be sure to vote all of your shares in each of your accounts in accordance with the directions on the proxy card(s) and/or voting instruction form(s) that you receive. In the case of duplicate votes for shares in a particular account, your last vote is the one that counts.

Votes Required

              The election of each director (Proposal 1) will be determined by the vote of the majority of the votes cast (where the number of votes cast "for" a director exceeds the number of votes cast "against" that director) by the holders of shares represented (in person or by proxy) and entitled to vote on the subject matter provided a

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quorum is present. The vote required to approve the Replacement NOL Protective Amendment (Proposal 2) is a majority of the outstanding shares. The vote required to ratify the appointment of the Company's independent registered public accounting firm (Proposal 3), to approve, by non-binding advisory vote, the compensation of the Company's named executive officers (Proposal 4), and any other proposal properly brought before the Annual Meeting, is the affirmative vote of a majority of the shares represented (in person or by proxy) and entitled to vote on the applicable subject matter. Abstentions from voting will have no impact on the election of directors (Proposal 1) and will have the same legal effect as voting against each other proposal.

              Abstentions and shares represented by "broker non-votes", as described below, are counted as present and entitled to vote for the purpose of determining a quorum. A broker non-vote occurs if you hold your shares in street name and do not provide voting instructions to your broker, bank or other holder of record on a proposal and your broker, bank or other holder of record does not have discretionary authority to vote on such proposal. Under current New York Stock Exchange rules, your broker, bank or other holder of record will not have discretionary authority to vote your shares at the Annual Meeting with respect to Proposal 1 (election of nine directors as listed in this Proxy Statement), Proposal 2 (approval of the Replacement NOL Protective Amendment), and Proposal 4 (advisory vote to approve executive compensation). "Broker non-votes" will have no effect on the outcome of Proposals 1 and 4, but will have the effect of voting against Proposal 2. Your broker, bank or other holder of record will have discretion to vote your uninstructed shares on Proposal 3 (ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for 2019).

              IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 10, 2019

              This Proxy Statement (including all attachments), the Company's Annual Report to Shareholders (which includes the Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 26, 2019) (which is not deemed to be part of the official proxy soliciting materials), and any amendments to the foregoing materials that are required to be provided to shareholders are available at www.proxyvote.com. Shareholders may obtain copies of the Proxy Statement, Annual Report to Shareholders (including financial statements and schedules thereto) and form of proxy relating to this or future meetings of the Company's shareholders, free of charge on our Internet website at www.CNOinc.com in the "Investors — SEC Filings" section, by calling 317-817-2893 or by sending the Company an email at ir@CNOinc.com. For directions to the Company's 2019 Annual Meeting, please call us at 317-817-2893.

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SECURITIES OWNERSHIP

              The following table sets forth certain information concerning the beneficial ownership of our common stock as of March 12, 2019 (except as otherwise noted) by each person known to us to beneficially own more than 5% of the outstanding shares of our common stock, each of our directors and nominees, each of the executive officers that are named in the Summary Compensation Table on page 48 and all of our directors and executive officers as a group. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of March 12, 2019 and restricted stock units that are scheduled to vest within 60 days of March 12, 2019, are deemed to be outstanding and to be beneficially owned by the person holding the options or restricted stock units for the purpose of computing the percentage ownership of that person or group of persons but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

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Director Deferred Stock Units

              Under the CNO Board of Directors Deferred Compensation Plan, the non-management directors may elect each year to defer some or all of their compensation, including the equity portion of the annual director fees. Any equity that is so deferred is represented by vested deferred stock units, on which dividend equivalents are paid during the deferral period. The deferred stock units are not entitled to vote. At the end of the deferral period selected by the director, one share of common stock will be issued for each deferred stock unit. As of March 12, 2019, the non-management directors held deferred stock units as set forth below (these units are in addition to the share ownership set forth above):

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PROPOSAL 1

ELECTION OF DIRECTORS

              Nine individuals will be elected to the Board at the Annual Meeting for one-year terms expiring at the 2020 annual meeting of shareholders. Each nominee listed below currently is a member of the Board. All directors will serve until their successors are duly elected and qualified.

Director Qualifications and Experience

              In considering candidates for the Board, the Governance and Nominating Committee reviews the experience, skills, attributes and qualifications of current Board members and other potential candidates to ensure that the Board can effectively guide the strategic future of our Company and oversee its management. In doing so, the Committee considers the depth of experiences and skills, in addition to the attributes and qualifications, of candidates in such areas as insurance and financial services, investment management, accounting and finance, legal and regulatory, actuarial, marketing, technology implementation and transformation, and talent management and compensation.

              Consideration also is given to each nominee's independence, financial literacy, personal and professional accomplishments and experience in light of the current and future needs of the Company. For incumbent directors, past performance on the Board and contributions to their respective committees are reviewed. The Governance and Nominating Committee and the Board seek directors with qualities that will contribute to the goal of having a well-rounded, diverse Board that functions well as a unit and is able to effectively fulfill its oversight responsibilities. The Committee expects each director to exercise leadership, sound judgment, high ethical standards and a commitment to the current and future success of the Company.

              Although the Governance and Nominating Committee does not have a specific diversity policy with respect to Board candidates, it strongly believes that the Board and the Company benefit from a variety of viewpoints, professional experiences, educational background and skills, and from the different perspectives that may be brought to the Board by individuals of different races, genders and ages. As such, the Committee and the Board consider issues of diversity and divergent backgrounds in the process of selecting candidates for the Board.

              The key experiences, qualifications, attributes and skills of each of the nominees are included in their individual biographies below.

              Over the past year, the Governance and Nominating Committee completed a comprehensive inventory of current directors' respective experiences and skills, assessed a timetable of anticipated Board member retirements, and put in place a plan for Board replenishment that is future-focused on the Company's growth and innovative development. The Committee has begun the process of working with a professional search firm to identify potential candidates who can bring the requisite skills and experience, in addition to diverse qualities and perspectives, to further enhance the Board's value to the Company and its shareholders.

Board Nominees

              Should any of the nominees become unable to accept election, the persons named in the proxy will have the right to exercise their voting power in favor of such person or persons as the Board may recommend. All nominees have consented to being named in this Proxy Statement and to serve if elected. The Board is not aware of any reason that any of its nominees would be unable to accept election.

              The Governance and Nominating Committee will consider candidates for director nominees put forward by shareholders. See "Shareholder Proposals for 2020 Annual Meeting" for a description of the proxy access and advance notice procedures for shareholder nominations for directors.

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              Set forth below is information regarding each person nominated by the Board for election as a director.

Nominees for Election as Directors:

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Voting for Directors; Required Vote

              The election of each director will be determined by the vote of the majority of the votes cast (where the number of votes cast "for" a director exceeds the number of votes cast "against" that director) by the holders of shares of common stock present in person, or represented by proxy, and entitled to vote on the proposal at the Annual Meeting.

              In an uncontested election of directors at which a quorum is present, any incumbent director who fails to receive a majority of the votes cast (where the number of votes cast "for" a director exceeds the number of votes cast "against" that director) shall offer to tender his or her resignation to the Board. In such event, the Governance and Nominating Committee will consider the offer and make a recommendation to the Board whether to accept or reject the resignation or whether other action should be taken. The Board will publicly disclose its decision and rationale within 90 days from the certification of the election results.

Recommendation of our Board of Directors

              OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION TO THE BOARD OF EACH OF THE COMPANY'S DIRECTOR NOMINEES LISTED ABOVE.

BOARD AND GOVERNANCE MATTERS

Board Committees

              Audit and Enterprise Risk Committee.    The Audit and Enterprise Risk Committee's functions, among others, are to recommend the appointment of independent accountants; review the arrangements for and scope of the audit by the independent accountants; review the independence of the independent accountants; consider the adequacy of the system of internal accounting controls and review any proposed corrective actions; provide oversight of the Company's internal audit department; review and monitor the Company's compliance with legal and regulatory requirements; discuss with management and the independent accountants our draft annual and quarterly financial statements and key accounting and/or reporting matters; and oversee management's processes for managing enterprise risk, including cyber security risk. The Audit and Enterprise Risk Committee itself does not prepare financial statements or perform audits and its members are not auditors or certifiers of the Company's financial statements. The Audit and Enterprise Risk Committee currently consists of Mr. Greving, Ms. Henderson, Mr. Jacklin and Mr. Schneider, with Mr. Greving serving as committee chair. Based on their experience, Mr. Greving and Mr. Schneider each qualify as an "audit committee financial expert," as defined under SEC rules promulgated under the Sarbanes-Oxley Act. All current members of the Audit and Enterprise Risk Committee are "independent" within the meaning of the regulations adopted by the SEC including Section 10A(m)(3) of the Securities Exchange Act of 1934 and the listing requirements adopted by the New York Stock Exchange regarding audit committee membership. The current members also satisfy the financial literacy qualifications of the New York Stock Exchange listing standards. The committee met on 11 occasions in 2018. The duties and responsibilities of the Audit and Enterprise Risk Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Governance and Nominating Committee.    The Governance and Nominating Committee is responsible for, among other things, establishing criteria for Board membership; considering, recommending and recruiting candidates to fill new positions on the Board; reviewing candidates recommended by shareholders; and considering questions of possible conflicts of interest involving Board members, executive officers and key employees. It is also responsible for developing principles of corporate governance and recommending them to the Board for its approval and adoption, and reviewing periodically these principles of corporate governance to ensure that they remain relevant and are being followed. The Governance and Nominating Committee currently consists of Ms. Brown, Mr. David, Mr. Schneider and Mr. Sievert, with Ms. Brown serving as committee chair. All current members of the Governance and Nominating Committee are "independent" within the meaning of the listing requirements adopted by the New York Stock Exchange regarding nominating committee membership. The

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committee held seven meetings during 2018. The duties and responsibilities of the Governance and Nominating Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Human Resources and Compensation Committee.    The Human Resources and Compensation Committee is responsible for, among other things, approving overall compensation philosophy and strategy; evaluating the performance of the chief executive officer and recommending to the Board the compensation of the chief executive officer; reviewing and approving on an annual basis the evaluation process and compensation structure for the Company's other executive officers as recommended by the chief executive officer; ensuring that appropriate programs and procedures are established to provide for the development, selection, retention and succession of officers and key personnel; and reviewing and administering our incentive compensation and equity award plans. The report of the Human Resources and Compensation Committee appears on page 47 of this Proxy Statement. The Human Resources and Compensation Committee currently consists of Mr. Sievert, Ms. Brown and Mr. David, with Mr. Sievert serving as committee chair. All current members of the Human Resources and Compensation Committee are "independent" within the meaning of the listing requirements adopted by the New York Stock Exchange regarding compensation committee membership and qualify as "non-employee" directors for purposes of Rule 16b-3 of the Securities Exchange Act of 1934 and as "outside directors" for purposes of Section 162(m) of the Internal Revenue Code. The committee met on eight occasions in 2018. The duties and responsibilities of the Human Resources and Compensation Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Investment Committee.    The Investment Committee is responsible for, among other things, reviewing investment policies, strategies and programs; reviewing the procedures which the Company utilizes in determining that funds are invested in accordance with policies and limits approved by it; and reviewing the quality and performance of our investment portfolios and the alignment of asset duration to liabilities. The Investment Committee currently consists of Mr. Jacklin, Mr. Bhojwani, Mr. Greving and Ms. Henderson, with Mr. Jacklin serving as committee chair. The committee met on four occasions in 2018. The duties and responsibilities of the Investment Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

              Executive Committee.    Subject to the requirements of applicable law, including our certificate of incorporation and bylaws, the Executive Committee is responsible for exercising, as necessary, the authority of the Board in the management of our business affairs during intervals between Board meetings. The Executive Committee currently consists of Mr. Maurer, Mr. Bhojwani and Mr. Greving, with Mr. Maurer serving as committee chair. The duties and responsibilities of the Executive Committee are set forth in its charter, which is available in the Investor Relations section of our website at www.CNOinc.com.

Director Compensation

              In general, the Board reviews the compensation of non-employee directors every other year, commencing with a study undertaken by the Governance and Nominating Committee ("Governance Committee"). The objective of this study, and the Board's subsequent review, is to provide fair and reasonable compensation in light of the demands and obligations placed upon directors, and also to align with director compensation at our peer companies. As one element of its compensation study in 2018, the Governance Committee considered data provided by the Board's independent compensation consultant. Prior to approval of the changes described below, Board compensation had not changed since 2015, either as to the amount or the structure of compensation.

              The following summarizes the elements of compensation approved and put in place as of May 2018 for our eight non-employee directors, and notes any changes both in compensation levels and compensation structure that was instituted at that time.

              With respect to our non-employee directors, base fees are paid 40% in cash and 60% in the stock of the Company. This remains unchanged from prior years. In May 2018, base compensation was increased by $20,000,

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which was consistent with market and peer trends that had increased since our previous consideration of this issue in 2015 and which was paid out on the 40%/60% basis. Cash fees are paid quarterly, in advance, and equity awards are granted annually, on the date of our Annual Meeting, and vest immediately. Following the change to base compensation made in May 2018, between cash payments of $96,000 and the value of the annual stock award ($144,000), the value of non-employee Board member base compensation currently is $240,000.

              No change was made as to additional compensation paid to Board members who chair a standing committee, although the Board revised the components of that compensation. (For example, the Chair of the Audit and Enterprise Risk Committee previously received a chair's fee of $30,000 and a member's fee of $15,000, but now receives a single fee of $45,000 per year.) Since 2015 and currently, the Chairs of Board committees receive the following additional annual cash fees: Audit and Enterprise Risk, $45,000; Human Resources and Compensation, $40,000; Investment, $20,000; Governance, $20,000.

              The members of all Board committees, other than the respective chairs, also now receive additional cash compensation for their service. This committee member compensation remains unchanged from 2015 for Audit and Enterprise Risk ($15,000 per year) and Human Resources and Compensation ($10,000 per year). Prior to May 2018, members of the Investment and Governance Committees, other than the respective chairs, did not receive additional compensation for service on those committees. In light of the increasingly complex and time-consuming work within the purview of those committees, the Board determined that, effective May 8, 2018, those committee members would receive a $5,000 additional annual cash fee.

              With respect to additional annual compensation for service as the Chair of our Board, in May 2018 the Board substantially changed the formula by which the Chair's compensation is calculated. Previously, the Chair had received additional compensation equal to two times the base fee paid to non-employee directors; in 2017, that formula resulted in additional compensation of $220,000 (also paid out 40% in cash and 60% in stock) over and above the base fee paid to directors. In May 2018, the Board eliminated the multiplier formula and decreased the Board Chair's additional annual compensation to a flat fee of $160,000, to be paid out on the same 40%/60% basis. In addition, the Board eliminated the payment of any additional fees to the Chair for service on a Board committee, and clarified that the Chair of the Board is an ex officio member of each committee. Thus, over and above the base compensation paid to non-employee directors, the Board Chair currently is entitled to an additional cash retainer of $64,000 and an additional annual equity award of $96,000.

              Directors are reimbursed for out-of-pocket expenses, including first-class airfare, incurred in connection with their responsibilities as Board members.

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              The compensation earned or paid in 2018 to our non-employee directors is summarized in the table below:

DIRECTOR COMPENSATION IN 2018

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Board Leadership Structure

              CNO has a non-executive, independent director, who serves as Chair of the Board. Mr. Maurer was elected Board Chair on May 9, 2018, succeeding Mr. Schneider who served as Chair in 2018 until that date. The Board believes that its leadership structure, with a non-executive Chair position separate from the chief executive officer, provides appropriate, independent oversight of management and the Company. The non-executive Chair of the Board (1) presides at all meetings of the Board and shareholders; (2) presides during regularly held sessions with only the independent directors; (3) encourages and facilitates active participation of all directors; (4) develops the calendar of and agendas for Board meetings in consultation with the chief executive officer and other members of the Board; (5) determines, in consultation with the chief executive officer, the information that should be provided to the Board in advance of the meeting; (6) unless otherwise determined by the Board, meets with each director to evaluate the Board and Board committees and reports this evaluation to the Governance and Nominating Committee; (7) participates as requested in meetings with shareholders; (8) receives, through the Corporate Secretary, communications from shareholders wishing to communicate with the Board; and (9) performs any other duties requested by the other members of the Board.

              As discussed below, each member of our Board is independent other than Mr. Bhojwani, our chief executive officer. As CEO, Mr. Bhojwani, subject to the direction of the Board, is in charge of the business and affairs of CNO and is our chief policy making officer. Our Board and its committees play an active role in overseeing the Company's business. The directors bring a broad range of leadership, business and professional experience to the Board and actively participate in Board discussions. The Board believes that having a non-executive Chair and a Board comprised almost entirely of independent, non-employee directors best serves the interests of our shareholders and the Company.

Board Meetings and Attendance

              During 2018, the Board met on 12 occasions. Each director attended at least 75% of the aggregate meetings of the Board and Board committees on which he or she served. The independent directors regularly meet in executive session without the chief executive officer or any other member of management. The non-executive Chair presides at such executive sessions.

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              In addition, CNO has a policy that all directors attend the annual meeting of shareholders. All of our directors except Ms. Henderson attended the annual meeting of shareholders held in 2018. Ms. Henderson was unable to attend the annual meeting due to a conflicting business commitment established prior to the setting of our annual meeting date.

Director Independence

              The Board annually determines the independence of directors based on a review by the directors. Although the Board has not adopted categorical standards of materiality for independence purposes, no director is considered independent unless the Board has determined that he or she has no material relationship with CNO, either directly or as an officer, shareholder or partner of an organization that has a material relationship with CNO. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others. The Board considers the Company's Corporate Governance Guidelines, the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange in making its determination regarding independence and the materiality of any relationships with CNO. The Board has determined that all current directors other than Mr. Bhojwani are independent.

Board's Role in Risk Oversight

              Enterprise risk management is integral to our business. The Board is responsible for overseeing the Company's risk profile and management's processes for managing risk. The oversight of certain risks, including those relating to the Company's capital structure and capital management, is done by the full Board. The Board has delegated primary responsibility for many aspects of the Board's risk oversight to the Audit and Enterprise Risk Committee. The Audit and Enterprise Risk Committee receives reports at its meetings and oversees management's processes for managing enterprise risk, including the risk management process associated with financial controls, insurance reserves, legal, regulatory and compliance risks, and the overall risk management structure, process and function. Other Board committees oversee risk management related to specific functions. The Investment Committee oversees investment and asset-liability management risk. The Human Resources and Compensation Committee oversees risks associated with our compensation programs so that incentives are not provided for inappropriate risk taking, as further discussed below.

              Our leadership strongly supports an active and engaged risk management process. CNO has established an enterprise risk management committee comprised of senior management from business units and functions throughout the Company. This enterprise risk management committee meets at least once each quarter and is chaired by the chief financial officer. CNO also has an investment and asset-liability management committee comprised of senior management from various functions and the presidents of each business segment. This committee meets at least once each quarter and is chaired by the chief investment officer. The Company has a senior vice president who is responsible for the coordination of enterprise risk management activities. Reports on different aspects of the Company's enterprise risk management are provided to the Board, to the Audit and Enterprise Risk Committee, to the Investment Committee and to other Board committees, as appropriate, on a regular basis.

              As part of its risk oversight responsibilities, the Board and its committees review policies and processes that senior management uses to manage the Company's risk exposure. In doing so, the Board and its committees review the Company's risk appetite statement, overall risk function and senior management's establishment of appropriate systems and processes for managing insurance risk, interest rate and asset-liability management risk, credit and counterparty risk, liquidity risk, operational risk and reputational risk.

Relationship of Compensation Policies and Practices to Risk Management

              The Human Resources and Compensation Committee has reviewed our compensation programs and believes that they carefully and appropriately balance risks and rewards and do not incentivize inappropriate risk taking. Our incentive plans include multiple performance measures, most of which are financial in nature, and are

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designed to hold employees accountable for sustained improvement in the core operating performance of the Company and to minimize the potential for any single indicator of performance to have an undue influence. We structure our pay to include both fixed and variable compensation and our variable compensation is capped at no more than two times the target opportunities, thus mitigating the risk of excessive rewards for temporary, unsustainable results. In addition, our officers' equity-based compensation aligns our officers' interests with those of shareholders. The multiple year vesting of such awards serves as a retention tool and mitigates the risk that executives can reap excessive rewards from temporary stock price increases. In addition, our executives are subject to stock ownership guidelines, requiring minimum stock holdings for the duration of the executives' employment, which encourage our executives to focus on sustaining long-term performance rather than maximizing performance in any single year. Further, our Annual Cash Incentive/Pay-for-Performance and Long-Term Incentive Plans have clawback provisions that include recapture rights of any incentive amount paid or vested in the event that the Committee determines that the achievement of performance goals was based on incorrect data, errors, omissions or fraud. See the "Compensation Discussion and Analysis" for more information.

Approval of Related Party Transactions

              Under the Company's written policy, transactions and agreements with a Related Person (defined to include directors, director nominees and executive officers or members of their immediate families, or shareholders owning five percent or more of the Company's outstanding stock) that meet the minimum threshold for disclosure in the proxy statement under applicable SEC rules (generally transactions involving amounts of $120,000 or more in which a Related Person has a direct or indirect material interest) are required to be approved by the Board or by the Governance and Nominating Committee (or other designated committee comprised exclusively of independent directors). In considering whether to approve the transaction or agreement, the Board or committee will consider all relevant factors including the business reason for the transaction, available alternatives on comparable terms, actual or apparent conflicts of interest and the overall fairness of the transaction or agreement to the Company.

              A Related Person is required to report, in a timely manner, either to the chair of the Board or the chair of the Governance and Nominating Committee, any proposed transaction or agreement that could be considered a Related Person transaction or agreement. The two chairs will jointly determine if the proposed transaction or agreement should be considered by the Board or a Board committee, and whether any director should be recused from participating in that consideration because of conflict. The Board or Board committee will consider whether to approve the proposed transaction or agreement, taking into account the facts and circumstances enumerated above, in a timely manner. If such proposed transaction or agreement is not approved in advance, the Board or Board committee will take action in the manner described above as soon as practicable after it becomes aware of the transaction or agreement. There were no transactions or agreements involving the Company and a Related Person in 2018 or to date in 2019.

              Various Company policies and procedures, including the Code of Conduct and the annual questionnaires that are completed by all Company directors, officers and employees, require disclosure of transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable SEC rules. Any Related Person transactions or agreements that are identified under these additional policies and procedures are to be considered under the process described above.

Code of Conduct

              We have adopted a Code of Conduct that applies to all officers, directors and employees regarding their obligations in the conduct of the Company's affairs. During 2018, the Company performed a comprehensive review of its Code of Business Conduct and Ethics, and adopted a revised Code of Conduct in February 2019. A copy of our current Code of Conduct is available under Corporate Governance in the Investor Relations section of our website at www.CNOinc.com. Within the time period specified, and to the extent required, by the SEC and the New York Stock Exchange, we will post on our website any amendment to our Code of Conduct and any

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waiver applicable to our principal executive officer, principal financial officer or principal accounting officer (there have been no such waivers).

Corporate Governance Guidelines

              CNO is committed to best practices in corporate governance. The Board, upon the recommendation of the Governance and Nominating Committee, has adopted a set of Corporate Governance Guidelines covering a number of significant matters, including director responsibilities, independence, selection and review. These guidelines are reviewed by the Governance and Nominating Committee and the Board and updated periodically to reflect the Board's view of current best practices. A copy of the CNO Corporate Governance Guidelines is available under Corporate Governance in the Investor Relations section of our website at www.CNOinc.com.

Director Stock Ownership Guidelines

              The Board has adopted guidelines regarding ownership of CNO common stock by the directors. The amounts set forth in these guidelines provide for each director to own shares of common stock with a value of at least five times his or her annual base cash compensation. Directors are given five years from the date of their initial election to reach that level of ownership. Based on the current base cash compensation for directors of $96,000 per year, the ownership guidelines call for each director to own shares with a value of at least $480,000. As of March 12, 2019, all directors who have served on the Board for at least five years met these stock ownership guidelines, and each of the other directors met, or was on track to meet, these guidelines.

Talent Management and Succession Planning

              The Board is actively involved with the Company's talent management process. At least annually, the Board in coordination with the Human Resources and Compensation Committee, reviews the Company's leadership team, which includes a detailed discussion of the succession plans for the chief executive officer and other members of executive management. In addition, the Board regularly discusses the Company's plans for talent development, with a focus on high potential individuals who are in the position to make the most significant contributions to the Company and to serve as its future leaders.

Communications with Directors

              Shareholders and other interested parties wishing to communicate directly with the Board or any one or more individual members (including the Chair of the Board or the non-management directors as a group) are welcome to do so by writing to the CNO Corporate Secretary, 11825 North Pennsylvania Street, Carmel, Indiana, 46032. The Corporate Secretary will forward any communications to the director or directors specified by the shareholder or other interested party.

Compensation Committee Interlocks and Insider Participation

              Ms. Brown, Mr. David, Mr. Sievert and Mr. Maurer served on the Human Resources and Compensation Committee throughout 2018. Mr. Maurer served on the committee until May 2018. None of the members of the Human Resources and Compensation Committee during 2018 is or has been one of our officers or employees. None of our executive officers serves, or served during 2018, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Human Resources and Compensation Committee.

Copies of Corporate Documents

              In addition to being available under Corporate Governance in the Investor Relations section of our website at www.CNOinc.com, we will provide to any person, without charge, a printed copy of our committee charters, Code of Conduct and Corporate Governance Guidelines upon request being made to CNO Investor

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Relations, 11825 N. Pennsylvania Street, Carmel, Indiana 46032; or by telephone: (317) 817-2893 or email: ir@CNOinc.com.

Corporate Social Responsibility

              Social responsibility is at the core of CNO's culture. Our products help millions of middle-income Americans gain access to financial protection to help them build more secure futures for themselves and their families. We realize that our success is intimately connected to the well-being of our customers, associates, neighbors and to the manner in which we conduct our business.

              In recognition of the increased importance that investors now place on environmental, social and governance ("ESG") matters, we have formed a management committee comprised of senior management and other leaders to formulate and drive the execution of the Company's social responsibility and sustainability strategy. The Board will review that committee's efforts and accomplishments on a regular basis.

              Our approach is focused on four key areas:

              Community Development and Philanthropy. CNO supports our communities, our associates and our customers through nonprofit organizations that address the health and financial wellness of middle-income Americans. From our executive leadership group to our individual associates, CNO is committed to making service in our communities a vital element of our corporate culture. In 2018, the value of all of our philanthropic efforts, which were aimed at the neighborhoods in which we live and work, totaled more than $2.4 million. Our Company, our associates and our insurance producers donated more than $2.2 million to our partner organizations, which include the American Cancer Society, the Alzheimer's Association and various scholarship programs, and we raised an additional $200,000 through our associates' participation in community fundraising. Our associates also contributed more than 11,200 hours to volunteer service in 2018, including donating time to our CNO Afternoon of Service projects in Indianapolis, Chicago and Philadelphia.

              Employee Well-being. Our associates' well-being is a key priority for the Company. We offer our employees a workplace that encourages diversity, fosters collaboration, values integrity and encourages professional growth. Corporate accomplishments in 2018 include new diversity and inclusion initiatives, an expanded incentive compensation program, one-time stock grants provided to all employees and the introduction of an employee stock purchase plan. In 2018 we were named to the Forbes Magazine World's Best Employers list and were recognized by the National Business Group on Health as having one of the top workforce well-being programs in the nation.

              CNO also provides its employees with wellness services including onsite clinics at each of its three primary locations. Preventive care visits, various medications and routine lab services generally are offered at no charge, as are health coaching, tobacco cessation programs and biometric screening services. In addition, the Company offers its associates wellness time off, wellness financial incentives and physical activity programs.

              Ethics and Governance. CNO maintains the highest standards for ethics, fairness and personal responsibility, and promotes a culture of honesty, integrity and transparency. These standards apply to the Board of Directors and to each individual employee. We manage our business with the goal of delivering protection and service to our customers and long-term value to all of our stakeholders.

              Environmental Responsibility and Enterprise Risk Management. Our commitment to operating responsibly includes aligning our ESG efforts with our broader business priorities. These initiatives include developing best-in-class cyber security protocols as well as exploring additional opportunities to reduce our environmental footprint and improve efficiencies.

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

              This Compensation Discussion and Analysis ("CD&A") describes the Company's executive compensation program and explains how the Human Resources and Compensation Committee (the "Board Compensation Committee") made compensation decisions for the following Named Executive Officers (the "NEOs") in 2018:

Executive Summary

Our Business

              CNO Financial Group, Inc. ("CNO") is a Fortune 1000 company, with $4.3 billion in total revenues for the year ending December 31, 2018. CNO provides health and life insurance, as well as retirement solutions, to middle-income Americans through our family of insurance brands: Bankers Life, Colonial Penn and Washington National.

              Our vision is to be the leader in meeting the needs of middle-income Americans for financial security and readiness for the life of their retirement. Our strategic plan is focused on top- and bottom-line growth while delivering long-term value for all of our stakeholders. We continue to serve the middle-income market through a diverse set of distribution channels and products. We will grow the franchise by introducing new products and services and expanding to attract younger and slightly more affluent customers who can also benefit from our product solutions. Due in large part to our strategic accomplishments in 2018, management and the Board are confident that we are taking the right steps to continue to drive profitable growth with an improved risk, earnings and return on equity ("ROE") profile.

2018 Business Highlights

              In 2018, CNO delivered solid underlying financial results and made significant progress against our strategic objectives. We generated strong production results in nearly every business line, grew our asset accumulation business, accelerated new product introductions, and increased operating earnings. Compared to the prior year, first year collected premiums were up 8%, total collected premiums were up 3%, and new annualized premium ("NAP") for life and health products was flat.

              On September 27, 2018, we completed a transformative long-term care risk-reduction transaction in which Bankers Life ceded all of its legacy (prior to 2003) comprehensive and nursing home long-term care policies to Wilton Reassurance Company through 100% indemnity coinsurance (the "LTC Reinsurance Transaction"). By completing this transaction, we achieved our stated objective to reduce our exposure to the most volatile portion of our long-term care business. In doing so, we have materially reduced the possibility of the need to incur a future reserve strengthening charge. Bankers Life paid a ceding commission of $825 million, which was funded through excess capital held in the insurance subsidiaries and the holding company. While this loss was material, the transaction significantly improved the Company's risk profile, long-term earnings growth prospects, and ROE.

              For 2018, CNO reported a net loss of $315 million, or $1.90 per diluted share, which compares to net income of $175.6 million, or $1.02 per diluted share in 2017. The 2018 results reflect a loss of $661 million, or $4.00 per diluted share, related to the LTC Reinsurance Transaction. The 2018 results also were unfavorably

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impacted by financial market volatility. The 2017 results included the one-time unfavorable impact of $172.5 million related to the federal Tax Cuts and Jobs Act ("Tax Reform") which was enacted in December 2017. Net operating income per share⁽¹⁾ in 2018 was $1.83, a 5% increase from 2017 net operating income per share⁽¹⁾ of $1.75.

Capital Management

              CNO remains committed to the deployment of 100% of our excess capital to its highest and best use. During 2018, the Company generated $259 million in free cash flow, spent $100.9 million on share repurchases, paid $64.8 million in common stock dividends, and used the balance to fund the ceding commission relating to the LTC Reinsurance Transaction.

              Since 2011, we have spent $2.1 billion to repurchase our common stock and have $284.6 million remaining on our current authorization to repurchase shares. Operating ROE excluding significant items⁽¹⁾, was 10.3% in 2018, which compares to 8.8% in 2017.

              We maintained a strong balance sheet with unrestricted cash and investments held by the holding company of $220 million at December 31, 2018 and an estimated consolidated risk-based capital ratio of 393%. Book value per diluted share, excluding accumulated other comprehensive income (loss)⁽¹⁾, decreased to $19.52 at the end of 2018 from $21.43 at the end of 2017, which reflected the impact of the LTC Reinsurance Transaction. Our debt-to-total-capital ratio at the end of 2018, excluding accumulated other comprehensive income, was 22.3%.

Management Highlights

              On January 1, 2018, Gary C. Bhojwani was promoted to the position of Chief Executive Officer, having served as President since he joined the Company in April 2016. Mr. Bhojwani's appointment was the result of the Board's ongoing succession planning process. On January 1, 2018, the Board increased Mr. Bhojwani's annual base salary to $1,000,000 and increased his target annual bonus to 150% of his annual base salary. In addition, upon assuming the role of CEO, Mr. Bhojwani was awarded a one-time promotion grant of 82,110 restricted stock units with a grant date fair value of $1.9 million, that will vest in equal installments in March 2020 and March 2021. The Committee is of the view that this stock grant was reasonable relative to market standards. All of these elements of Mr. Bhojwani's 2018 compensation were disclosed in last year's proxy.

CEO Compensation Philosophy

              Consistent with our pay-for-performance philosophy, whereby a significant portion of our executive officers' compensation varies with operating and share price performance, the Committee designed the majority of Mr. Bhojwani's annual and long-term incentives to be performance-based, that is, "Pay-at-Risk." In 2018, 83% of Mr. Bhojwani's target total compensation was at risk.

   

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1.

Net operating income per share; Operating ROE, excluding significant items; book value per diluted share, excluding accumulated other comprehensive income (loss); and debt-to-total capital ratio, excluding accumulated other comprehensive income, are non-GAAP financial measures. See "Information Related to Certain Non-GAAP Financial Measures" on page 72 for a description of these measures and a reconciliation to the corresponding GAAP measure.

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              The table below reflects the total direct compensation ("TDC") for Mr. Bhojwani. Further detail about these compensation components can be found on pages 24-25.

2018 CEO Total Direct Compensation (including one-time promotion grant)⁽¹⁾

              In determining target total direct compensation for our Chief Executive Officer, the Committee reviewed strategic business goals, peer group data, proprietary and publicly available compensation surveys and data, his experience, level of responsibility, individual job performance to date, contributions to corporate performance, job tenure and future potential. In doing so, the Committee confirmed that a regular target total direct compensation opportunity of $5.9 million for the Chief Executive Officer is at a market-competitive level.

              In order to further align the interests of the CEO with those of the Company and its shareholders, Mr. Bhojwani is subject to the Company's stock ownership guidelines, which specify CEO ownership of Company securities having a value of five times his base salary. Mr. Bhojwani is in full compliance with this requirement. His performance-based compensation also is subject to the Company's clawback policy, which enables the Company to recoup amounts of incentive compensation paid based on achievement of performance goals determined to be based on incorrect data, errors, omissions, or fraud.

2018 Shareholder Outreach

              Prior to 2018, our shareholder advisory vote to approve executive compensation had consistently exceeded 95%. In 2018, it passed with 53.9% support. This decline signaled to the Board and management that additional shareholder outreach was needed in order to discuss our executive compensation decisions. Throughout the fall of 2018, a team consisting of members of the Board and senior management conducted an extensive shareholder outreach effort to gain a better understanding of our investors' perspectives and to obtain feedback on our governance and compensation practices. This effort consisted of the following:

•

Each of our top 30 investors, representing 74% of our outstanding shares, were contacted.



•

Nine of these investors, representing 37% of our outstanding shares, accepted our invitation for engagement, and calls were held with each of those investors.



•

Another five investors, representing 7% of outstanding shares, responded that they did not wish to engage at that time and declined our offer to speak with Board members and management.



•

We received no response from the other 16 of our top 30 shareholders that we contacted.

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•

Calls also were held with the research teams at proxy advisory firms Institutional Shareholder Services Inc. and Glass, Lewis & Co., LLC, during which our investor feedback was shared and discussed.

              These calls were led by our Chair, with participation from the Board and management to ensure access to key participants in the executive compensation planning process and other decision-making. These other participants included the Chair of the Board Compensation Committee, the Chief Financial Officer, Chief Human Resources Officer, Corporate Secretary, Vice President of Total Rewards, and Vice President of Investor Relations.

              During these calls, Board members and management responded to questions and discussed our executive compensation programs, corporate governance practices, sustainability efforts and other topics of interest to our shareholders. Overall, shareholders told us that they appreciated the opportunity to engage, particularly with our directors, and our willingness to consider their input into our decision-making process. They generally spoke favorably about our governance practices and approach and provided constructive feedback and important insights on various aspects of our executive compensation programs and disclosure. All feedback received was shared and discussed with the Board. We found the shareholder engagement process to be highly valuable and intend to proactively seek and consider such input on an ongoing basis.

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              A number of common themes emerged in these conversations. The following table summarizes the consensus feedback that we received and the Board's actions in response to this shareholder input.

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2018 Key Compensation Items

              Our compensation programs are designed to attract, retain and motivate the executives who lead our Company. The Committee has established programs and practices that align management's interests with those of the Company's shareholders, and thus help drive the creation of long-term shareholder value. We believe that our compensation program supports our belief in pay-for-performance by providing a significant amount of compensation in the form of equity, by balancing both short- and long-term incentives that are tied to Company performance, and by delivering both fixed and "Pay-at-Risk" compensation in appropriate measure to retain and motivate our leaders, all of which are tied to our business results and market practices.

              Our executive compensation program consists of three primary components. Summarized below are the highlights of the key decisions and actions taken regarding the compensation of our NEOs in 2018. These actions were approved by the Board Compensation Committee with advice from Aon Consulting, the independent compensation consultant to the Committee, and are consistent with our stated compensation philosophy.

Base Salary

•

Base salary is the only fixed component of executive compensation. It comprises the smallest percentage of total executive compensation.



•

As a matter of Board Compensation Committee policy and practice, there is no expectation that senior executives will receive annual base salary increases. During 2018, however, in order to remain competitive with industry peer companies, each of our NEOs with the exception of Mr. Bhojwani received merit base salary increases, that ranged from 3% to 13%.



•

Concurrent with his promotion to CEO, Mr. Bhojwani's salary was increased from $750,000 to $1,000,000 on January 1, 2018.

Annual Cash Incentive

•

Our annual incentive plan, or "Annual Cash Incentive / P4P" plan, is designed to focus on and reward achievement of annual performance goals. It is the broadest of our management incentive programs, covering our NEOs and approximately 1,970 other employees.



•

This program was expanded by 1,370 employees in 2018. The expansion was made in response to the expected future benefits from Tax Reform, and to broaden the base of employees eligible for performance-based incentives. The Company is of the view that we benefit by further aligning the interests of a broader base of employees to the Company's long-term success.



•

These additional employees were added to the Annual Cash Incentive / P4P plan at an incremental cost of approximately $3 million.



•

All participants in the Annual Cash Incentive / P4P plan, including our NEOs, are assigned target incentive opportunities expressed as a percentage of base salary.



•

The 2018 target bonus opportunities were increased for Messrs. Bhojwani, Helding and Zimpfer. Mr. Bhojwani's target bonus increase was based on his new role and attendant increased responsibilities. Messrs. Helding's and Zimpfer's target bonus opportunities were increased to align them with internal and external peers.



•

The Annual Cash Incentive / P4P target metrics and weightings did not change from 2017 except that an additional metric was included for Mr. Johnson.

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•

Payouts ranged from 89% to 121% of target for our NEOs excluding our CEO, and 89% for our CEO.



•

In calculating the Annual Cash Incentive / P4P payouts based on 2018 performance, the Committee excluded the impacts of the LTC Reinsurance Transaction as it had not been considered in setting the 2018 operating plan or the Annual Cash Incentive / P4P targets. Additional information on this matter may be found on pages 38-39.

Long-Term Equity Incentive Compensation ("LTI")

•

We believe that "Pay-at-Risk" equity compensation aligns our NEOs to shareholder interests and helps to drive long-term shareholder value creation, while also facilitating the retention of key executive talent.



•

Annual equity awards are delivered in the form of Performance Shares ("P-shares"), stock options and restricted stock units ("RSUs") that are earned and vested over a three-year performance period.



•

The P-share allocation of the long-term equity incentive mix remained the same as in 2017, at 50%. The mix of RSUs and stock option grants shifted in 2018 in that RSUs were increased from 25% to 30% of the total awards, and the mix of stock option grants was decreased from 25% to 20%.



•

There was no change to the LTI target metrics and weightings.



•

For the 2016-2018 P-share performance period, the total P-share payout was 81%. There was a 161% payout for the P-shares that were based on Operating ROE and no payout for those based on relative TSR.



•

As noted above, Mr. Bhojwani received a one-time RSU grant at the time of his promotion to CEO.



•

Mr. Zimpfer received a one-time RSU grant for retention purposes, and an additional one-time RSU grant to recognize the key role that he played in managing and finalizing the LTC Reinsurance Transaction.

              The table below reflects the total 2018 compensation package delivered to our NEOs.

Regular NEO Compensation Delivered in 2018

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Key Practices in Corporate Governance and Executive Compensation

              The Board Compensation Committee strives to maintain best practices in corporate governance in our executive compensation programs.

 

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Compensation Program Structure and Decision-Making Process

              The chart below summarizes the key components of our executive compensation program and shows how and why the Board Compensation Committee arrived at compensation decisions involving NEOs in 2018. It also explains the roles of the Committee, Compensation Consultant, and influence of our Comparator Peer Companies.

              Our compensation program is composed of the following components:

Role of the Human Resources and Board Compensation Committee

              The Board Compensation Committee determines the components and amount of compensation for our executive officers and provides overall guidance for our employee compensation policies and programs. In addition, the Committee actively monitors our executive development and succession planning activities related to our senior executives and other officers. The Committee and the Board are fully cognizant of our overall executive talent. Reviews of our key managers and officers are conducted annually and discussed with the Board.

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              Currently, three of our Board members sit on the Committee, each of whom is an independent director as required by the New York Stock Exchange listing requirements, the exchange upon which our stock trades. From time to time, other Board members also participate in the Committee's meetings, though these ad hoc participants do not vote on decisions made at the Committee level. The Board receives regular reports of Committee deliberations and decisions and, at least once annually, the Board reviews the Committee's written evaluation of the Chief Executive Officer's performance and compensation. The Committee's functions are more fully described in its charter, which can be found in the Investor Relations section of our website at www.CNOinc.com.

Role of the Compensation Consultant

              In making executive compensation decisions, the Board Compensation Committee receives advice from its independent compensation consultant, Aon Consulting. Although Aon Consulting is retained directly by the Committee, its personnel may also interact with our executive officers as needed, particularly the Chief Executive Officer, Chief Human Resources Officer, General Counsel and their staffs to provide the Committee with relevant compensation and performance data for our executives and the Company. In addition, Aon Consulting personnel may interact with management to confirm information, identify data questions, and/or exchange ideas.

              As requested by the Committee, Aon Consulting's services to the Committee in 2018 included:

•

Providing competitive analysis of total compensation components for our senior executive officers, including our NEOs;



•

Researching and presenting competitive and emerging compensation practices and regulatory issues;



•

Recommending peer groups for compensation and performance;



•

Attending Committee meetings, in person and telephonically; and



•

Reviewing and evaluating changes to the executive compensation philosophy and proposed plan changes.

              The Board Compensation Committee has the authority under its charter to retain outside consultants or other advisors. One element of that decision process is the Committee's assessment of an advisor's independence. Relative to that determination, the Committee takes into account certain independence factors as enumerated by the SEC and New York Stock Exchange. Included in the Committee's assessment of Aon Consulting's independence for 2018 was management's decision in 2018 to engage Aon Risk Services to assist in the placement of an Agents Errors and Omissions policy and Aon Consulting to work on design of the Employee Stock Purchase Plan ("ESPP"), which was enacted in 2018. With respect to those activities, Aon Risk Services received an estimated commission of $200,000 from the carrier of the insurance policy and fees for the ESPP were $39,443. Aon Risk Services and Aon Consulting are subsidiaries of Aon plc and each operates under separate management structures. The Committee considered that the estimated commission of $200,000 paid to Aon Risk Services for its brokerage services was less than .01% of Aon plc's 2018 revenues. Fees paid by CNO to Aon Consulting for executive compensation advisory services were $287,930 in 2018. The Committee determined Aon Consulting to be independent.

              In making its decisions, the Board Compensation Committee collects and considers input from multiple sources. The Committee may ask senior executive officers to attend Committee meetings at which executive compensation and overall and individual performance is discussed and evaluated, during which time executives may provide insight, suggestions or recommendations regarding executive compensation. Deliberations generally occur with input from Aon Consulting, members of management and other Board members, however, only the members of the Committee vote on matters of executive compensation. All elements of the compensation of the CEO, however, are submitted to the Board for its review and approval.

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Philosophy and Objectives

Philosophy

              The Board Compensation Committee, which is comprised solely of independent, non-employee directors, has developed a philosophy and a comprehensive compensation strategy to reward overall and individual performance that drives long-term success for our shareholders.

              Our compensation philosophy consists of the following guiding principles:

•

Pay-for-Performance:    Rewards will be differentiated based on Company, business segment and individual performance.



•

Target Total Rewards Position:    The overall rewards will be competitive by targeting compensation at approximately the median of the relevant comparator group with additional compensation for achieving superior performance.



•

Relevant Comparator Group:    We utilize a relevant comparator group of companies in the insurance/financial services industry and general industry when appropriate, taking both asset size and revenue into consideration, which will include the best available data for comparison with our peers and companies with which we compete for executive talent.

Pay-for-Performance Objectives

              The Board Compensation Committee strives to provide a clear reward program that allows us to attract, motivate and retain seasoned executive talent with the significant industry experience required to continuously improve our performance and build long-term shareholder value. To achieve this, our programs are designed to:

•

Reward operational and productivity improvements that are sustainable. This means that we establish (1) performance goals under our Annual Cash Incentive / P4P plan at targeted performance levels for key financial metrics, and (2) multi-year performance goals for our P-share (performance share) awards;



•

Align the interests of our executives with those of our shareholders by rewarding shareholder value creation;



•

Integrate with the Company-wide annual performance management program of individual goal setting and formal evaluation;



•

Exercise appropriate discretion to make adjustments and modifications based upon how well individual executives meet our performance standards for expected achievement of business results, as well as the contribution that an executive may make to uphold our values, leadership behaviors, and overall corporate culture; and



•

Offer the opportunity to earn additional compensation when overall and individual performances exceed expectations.

Selection of the Comparator Groups

              In setting target executive compensation opportunities, the Board Compensation Committee looks at base salary, target total annual cash (comprised of base salary and target annual cash incentives / P4P) and total direct compensation (the sum of total annual cash and long-term incentives), and reviews this relative to a select group of peer companies ("Comparator Peer Companies"). Our long-term incentives may include a combination of P-shares, stock option awards, and RSUs. The Committee's general policy is to compensate our executives at approximately the 50th percentile level for total direct compensation, for the achievement of target performance, with additional compensation opportunities for the achievement of superior results.

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              The Committee annually assesses "competitive market" compensation using a number of sources. In determining the competitive compensation levels, in consultation with our independent compensation consultant, the Committee reviews proxy data, including assets, premiums, and market capitalization from our Comparator Peer Companies, identified below for the NEOs, and also compares our other executives to the Diversified Insurance Study published by Willis Towers Watson.

              The Comparator Peer Companies listed below were used as a reference point for 2018 compensation.

2018 Comparator Peer Companies

              Following feedback received from our shareholder outreach program as well as an extensive analysis of existing and potential peers, the Committee has decided to make changes to the Comparator Peer Companies beginning with the 2019 performance period. Changes will include the addition of two companies: Brighthouse Financial, Inc. and American Equity Investment Life Holding Company, and the exclusion of five companies: Aflac Incorporated, Arch Capital Group Ltd., Genworth Financial, Principal Financial Group, Inc., and Universal American Corp (now WellCare). The Committee is of the view that these peers more appropriately reflect our principal business competitors and those companies with which we currently compete for executive talent.

              Although aggregate pay levels generally are consistent with our compensation philosophy, it is possible that pay levels for specific individuals may be above or below the targeted competitive benchmark levels. Variances may arise from such factors as an individual's role and responsibilities within our Company, the individual's experience and expertise, the pay levels for peers within the Company, and the pay levels for similar job functions in the marketplace. The Committee is responsible for approving all compensation programs for our senior executive officers. In determining executive compensation, the Committee considers all forms of compensation and benefits, and uses appropriate tools and market studies to review the value delivered to each executive through each component of compensation.

              These studies provide the means by which the Committee can objectively examine external market practices and compare those practices to our internal evaluations and decisions. These studies capture and report:

•

Competitive external market data on a base salary, total annual cash incentive (including bonus) and total direct compensation basis;



•

Individual total annual cash incentive compensation including annual salary, target bonus opportunity, and actual bonus paid;



•

Long-term equity grants and the vesting status and value at a hypothetically established share price of such grants; and



•

Employment agreement terms and conditions.

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              Competitive market data is used as a reference point. We avoid adjusting compensation based exclusively on a single year of competitive benchmarking data. The Board Compensation Committee is of the view that an executive's compensation should reflect Company-specific factors such as the relative importance of the individual's role within the organization, the compensation for other positions at the same level, and individual factors such as experience, expertise, and performance.

              In addition to the objective review of external factors, the Committee also considers internal equity among colleagues when determining executive compensation levels. This means that, although the Committee examines competitive pay data for specific positions, market data are not the sole factor considered in setting pay levels. The Committee also considers factors such as our organizational structure and the relative roles and responsibilities of individuals within that structure. The Committee believes that this approach fosters an environment of cooperation among executives that enhances sales growth, profitability and customer satisfaction.

              Realized total compensation in any year may be above or below targeted compensation levels depending on whether our incentive goals were attained and whether shareholder value was created. In some instances the amount and structure of compensation results from negotiations with an executive at the time the individual was hired, which may reflect competitive pressures to attract and hire quality executive talent our industry. To attract and retain such talent, the Committee also seeks to provide benefit levels in line with those offered by comparable publicly-traded companies, although without necessarily matching on an item-by-item basis.

2018 Target Compensation

              The table below summarizes the target level of 2018 total annual cash and total direct compensation for our NEOs. This table differs from the Summary Compensation Table on page 48 in that values generally represent target amounts and equity grants that were granted but not yet earned or paid as such targets and grants are subject to certain three-year performance criteria, as one element of our normal long-term incentive program.

Summary of Components of Regular Total Direct Compensation in 2018 at Target⁽¹⁾

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              In delivering total direct compensation to our NEOs, the Company provided both fixed (base salary) and variable (cash and equity incentives) compensation to the NEOs in 2018. The vast majority of compensation awarded to NEOs in 2018 is "Pay-at-Risk" because the amount actually paid may vary from the target compensation value that was awarded by the Committee as such payments are dependent on Company, business segment and individual performance. Consistent with the Company's compensation policy for all NEOs, the percentage of total target compensation that is "Pay-at-Risk" was significantly greater than the amount of base salary.

2018 Actual Compensation

              The following charts show each element of 2018 target NEO compensation, including the mix of short-term and long-term incentives, as well as the amount of "Pay-at-Risk" for the CEO and for the other NEOs (on average):

Composition of 2018 CEO and NEO Total Incentive

Base Salaries

Overview

              Base salary is the single fixed component of executive compensation and comprises the smallest percentage of total compensation. Each senior executive's base salary is reviewed annually by the Board Compensation Committee, or more frequently in the event of a promotion, a change in job responsibilities, an assessment of level of expertise or performance, or based on market data or internal pay guidelines.

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Executive Compensation Policies

              The Committee generally initiates the formulation of executive compensation levels by targeting the 50th percentile of the competitive market. Annual reviews of executives' base salaries take into consideration numerous factors, including:

•

Mix of compensation;



•

Job role and responsibility;



•

Individual leadership, experience and expertise;



•

Individual historical performance, retention risk, and future potential;



•

Competitive labor market pressures;



•

Comparison to market data; and



•

Internal equity of peers.

              No specific weighting of these factors is employed. Given our Company's performance-based compensation culture, however, the Committee's analysis of the factors generally results in increases for our top performers and little or no increases in base salary for average or lower performing employees.

2018 Merit Increases

              The Committee does not anticipate that senior executives will receive annual base salary increases. To remain competitive with industry peer companies, however, all of our NEOs with the exception of Mr. Bhojwani received merit base salary increases during 2018 ranging from 3% to 13%. As previously noted herein, the Board increased Mr. Bhojwani's annual base salary from $750,000 to $1,000,000, effective January 1, 2018, in conjunction with his promotion to CEO.

Annual Cash Incentives

Overview

              Our annual incentive plan, the Annual Cash Incentive / P4P plan focuses on and rewards achievement of annual performance goals. It is the broadest of our management incentive programs, covering all of our NEOs. All participants in the Annual Cash Incentive / P4P plan are assigned target incentive opportunities expressed as a percentage of base salary.

              In 2018, we expanded the Annual Cash Incentive / P4P plan to include an additional 1,370 associates, up from 600 key employees in 2017. This added an incremental compensation cost of approximately $3 million in 2018. The Company is of the view that we benefit by further aligning the interests of a broader base of employees to the Company's long-term success.

Strategy

              In 2018, Operating EPS and GAAP Revenue were metrics for all of our NEOs. With respect to Messrs. Bhojwani, Helding, Baude, and Zimpfer, additional metrics applied, those being Policies In-Force, Combined In-Force EBIT and Combined Value of New Business ("VNB"). GAAP Investment Yield, GAAP Investment Income, and Corporate Development were additional metrics for Mr. Johnson only. See pages 35-36 for more information on these metrics.

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Payout Opportunities

              The table below provides the threshold, target and maximum payouts for 2018 for each of our NEOs under the Annual Cash Incentive / P4P plan.

Summary of 2018 Annual Cash Incentive / P4P Opportunities for NEOs

              The target percentages were based on external and internal factors applicable to the positions held by these individuals. The percentage of base salary that represented the threshold, target and maximum annual incentive opportunity was increased for Messrs. Bhojwani, Helding and Zimpfer. The increases reflect Mr. Bhojwani's expanded role and responsibilities, and, in the case of Messrs. Helding and Zimpfer, more closely align them with internal and external peers.

2018 Annual Cash Incentive / P4P Plan Design: Performance Metrics

              During February 2018, the Board Compensation Committee reviewed the Annual Cash Incentive / P4P plan design for 2018 in order to optimize alignment between shareholder and plan participant interests, keep senior executives focused on the financial performance of the enterprise, improve alignment with financial metrics that participants influence, and select operational/business metrics that are assessed to be the drivers of financial success. These targets align with our business objectives to drive strong operational performance, deliver consistent yet disciplined growth and improved profitability, generate strong investment returns, and manage risk effectively. Our plan also is designed to establish performance levels that are challenging yet achievable, and that appropriately balance risk and reward. These metrics also align with the day-to-day metrics that we use to run the Company. As a result of this review, most performance metrics and weightings remained consistent with those used in 2017. Metrics that previously were employed in 2017 and continued as elements of the 2018 incentive plans applicable to all NEOs are:

•

Operating Earnings Per Share (EPS), defined as Operating Income (net of tax) divided by the weighted average number of diluted shares outstanding.


The Committee is of the view that Operating EPS is a key measure of our operating performance, is less effected by events that are unrelated to the underlying fundamentals of our business, and is directly impacted by management during the calendar year. Operating EPS is a key metric that is widely employed by analysts and investors to gauge our performance and value our shares.

•

Combined and/or Business Segment In-Force Earnings Before Interest and Taxes (EBIT), whereby Combined In-Force EBIT is the sum of individual business segment In-force EBIT. In-Force EBIT includes pre-tax revenues and expenses associated with the sales of insurance products that were completed more than one year before the end of the reporting period.


The bulk of an insurer's earnings typically are generated from policies sold in prior periods, or "policies in-force," so it is important to distinguish those earnings from new business earnings. In addition, in the Committee's view, this metric enhances "line of sight" for our operating management and increases their focus on improving the longer-term profitability of our core operations.

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•

Combined and/or Business Segment Value of New Business (VNB) which calculates the present value of expected profits from product sales. The selection of VNB as an important metric is based on the Committee's view of the importance of growing through sales of profitable products versus rewarding only top-line sales growth.



•

GAAP Revenue is defined as revenues from our operating segments (included in operating earnings) in CNO's Form 10-K, excluding items that are considered to be non-operating in nature and certain revenues generally representing the change in fair value of certain investments that are substantially offset by a corresponding amount included in benefits and expenses. This metric measures the growth and competitiveness of the business and aligns with our focus on topline growth.



•

Policies In-Force means the number of policies for which a reserve has been established (and third party counts for policies sold by Bankers Life agents). This metric not only aligns Annual Cash Incentive / P4P participants to CNO's strategic focus on customer growth, but also measures retention and persistency, as well as external stakeholders' expectations in this important growth area for the Company.



•

GAAP Investment Yield is defined as period investment income (net of investment expenses) divided by average invested assets for the same period.



•

GAAP Investment Income is defined as the income earned on general account invested assets, net of investment expenses.



•

Corporate Development, a qualitative metric, is an element of the Annual Cash Incentive / P4P plan for Mr. Johnson, the Chief Investment Officer. In addition to his continuing CIO responsibilities, Mr. Johnson also is leading efforts to further advance the Company's investment capabilities by establishing and deepening external relationships, refining protocols and processes, as well as evaluating potential opportunities and overseeing the successful execution of opportunistic transactions, as appropriate.

2018 Annual Cash Incentive / P4P Plan Design: Metric Weightings

              Our Annual Cash Incentive / P4P plan design rewards a threshold level of financial performance that corresponds to 50% of a target payout, to a target level of performance that provides 100% of target payout, and to a maximum level of performance that provides a payout of 200% of target. Any payout between these financial performance goals is determined through straight line interpolation between the appropriate levels of performance. Consistent with our compensation philosophy, target annual incentive levels are established to generate total annual cash compensation at competitive market median levels.

              The table below summarizes the 2018 financial metrics and weightings for our NEOs under the Annual Cash Incentive / P4P plan.

Summary of 2018 Annual Cash Incentive / P4P Metrics and Weightings for NEOs

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              The Committee established the above weightings to prioritize the generation of Operating EPS, followed by GAAP Revenue and Combined In-Force EBIT, for all but one of the NEOs. These weightings are consistent with the Company's strategy over the last several years as we have sought to de-risk and deploy our capital largely to repurchase shares. Mr. Johnson's weightings recognize his role as Chief Investment Officer and his focus on investment returns and portfolio optimization.

2018 Annual Cash Incentive / P4P Plan: Targets and Results

              Consistent with our investor feedback, we are providing more transparency surrounding the target setting process and the manner in which we treat unusual or non-recurring events that may impact our targets or actual results. In this section, we explain how we set our 2018 targets, what types of ranges we set and how, if at all, the actual results were adjusted.

              The primary purpose of the Annual Cash Incentive / P4P plan is to reward executive officers for delivering targeted financial results. For the reasons set forth below, the Committee set the targets for each of the performance metrics at levels that it considered rigorous and challenging as compared to normalized 2017 results. The Committee set the applicable financial objectives based on the Board-approved business plan for fiscal year 2018, which entailed a detailed vetting process prior to presentation and approval by the Board. The Committee historically has considered a number of factors in setting incentive performance targets, as well as the threshold level and the maximum level, to require strong performance to achieve targets. These factors include Company business plans and current forecasts, historical performance, incentive practices used by peer companies, and analyst expectations. Consistent with our compensation philosophy, target annual cash incentive levels are established to generate total annual cash compensation at competitive market median levels.

              The table below summarizes the normalizations that were made to 2017 reported results to account for various unusual and non-recurring items that impacted 2017 performance, both favorably and unfavorably. By normalizing, the Committee was able to establish a baseline level of performance from which we were then able to set 2018 targets that reflected a proper balance between ambition and achievability, while removing the unusual and non-recurring events from 2017 that were not expected to continue.

Baseline for 2018 Annual Cash Incentive / P4P Target Setting

•

2017 Operating EPS, GAAP Revenue, and Combined In-Force EBIT were normalized to adjust for the impact of approximately $49 million of unusual 2017 pretax investment outperformance which was considered non-recurring. Strong equity market performance drove higher than anticipated returns within our Company-owned life insurance ("COLI") policy, and market interest rate expectations triggered record corporate debt refinancing activity that generated significant unanticipated prepayment income. This was not expected to, and did not, recur in 2018.

   

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1.

Operating EPS is a non-GAAP measure. See "Information Related to Certain Non-GAAP Financial Measures" for a reconciliation to the corresponding GAAP measure.

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•

In addition to the aforementioned investment income outperformance, 2017 Operating EPS and Combined In-Force EBIT were normalized to exclude the impact of other insurance margin and expense items that were determined to be unusual and/or non-recurring. In the aggregate, these normalizing items reduced pre-tax income by an additional $9 million.



•

2017 GAAP Yield and GAAP Investment Income were normalized to adjust for the impact of the significant and unanticipated prepayment income that was not expected to, and did not recur in 2018.

              Certain 2018 performance targets were set below the 2017 normalized results. On a comparable basis, when both periods are normalized for unusual and non-recurring events, or items associated with strategies deemed to be in the best interests of shareholders such as the cessation of sales of certain products that are now in run-off, the 2018 targets incorporate growth over 2017 levels. As an example, the 2018 targets for Operating EPS, Policies In-Force, GAAP Revenue, Combined In-Force EBIT and GAAP Investment Income were set higher than 2017 actual results to reflect business growth, but were partially offset by continued run-off of certain closed blocks. The 2018 GAAP Yield and GAAP Investment Income targets also reflected the continued low interest rate environment that pressured average investment portfolio yields.

              The Committee determined that 2018 targets were sufficiently rigorous, notwithstanding the fact that some were set below 2017 target and actual performance levels.

              The table below summarizes the threshold, target and maximum performance targets for the 2018 Annual Cash Incentive / P4P plan.

2018 Annual Cash Incentive / P4P Target Performance Levels

              The Board Compensation Committee has authority to adjust performance goals or results for the impact of certain industry, market, or company-specific special items from year to year. The Board takes very seriously the consideration of any such adjustments and generally prefers to avoid any such modifications. Nonetheless, the Board is responsible for ensuring that management acts in the best interests of shareholders, regardless of the impact to its incentives. Therefore, we believe any adjustment that may be applied must be (1) material, (2) non-recurring or unusual in nature, and (3) reflect items that management either cannot control, or if controllable, has determined to be in the long-term best interests of shareholders. These adjustments may vary from year to year and may have either a favorable or unfavorable impact on the funding of the Annual Cash Incentive / P4P plan.

   

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1.

Operating EPS is a non-GAAP measure. See "Information Related to Certain Non-GAAP Financial Measures" for a reconciliation to the corresponding GAAP measure.

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              The table below summarizes the adjustments that were made to 2018 results on account of the LTC Reinsurance Transaction, and the overall payout percentages for each metric.

LTC Reinsurance Transaction Adjustments to 2018 Annual Cash Incentive / P4P Targets and Payout Percentages

              As originally established, the 2018 business plan did not contemplate the LTC Reinsurance Transaction. That transaction, which had the effect of improving our risk, earnings and ROE profiles, also reduced our reported 2018 results relative to all performance metrics except Combined VNB. The Board Compensation Committee viewed this transaction as a critical step in serving the long-term best interests of shareholders. Thus, so as not to penalize management for taking actions that were vitally important to the Company's long-term results, but which were not built into the 2018 Annual Cash Incentive / P4P plan, the Board and Board Compensation Committee adjusted our 2018 results by removing the impact of the LTC Reinsurance Transaction, as shown in the table above.

              The table below sets forth the actual 2018 cash bonuses paid out to the NEOs pursuant to our Annual Cash Incentive / P4P plan. These figures combine the individual performance opportunities, weightings and targets previously discussed.

Summary of 2018 Annual Cash Incentive / P4P Overall Payouts

Long-Term Equity Incentives

Overview

              We are strongly of the view that performance-based equity compensation aligns our NEOs interests to those of our shareholders and helps to drive long-term shareholder value creation while also facilitating the retention of key executive talent.

   

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1.

Operating EPS is a non-GAAP measure. See "Information Related to Certain Non-GAAP Financial Measures" for a reconciliation to the corresponding GAAP measure.

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Design and Strategy

              Annual long-term equity incentive awards are delivered in the form of P-shares, stock options and RSUs. The Board Compensation Committee establishes the annual target for all long-term equity incentive grants based on competitive market data. This approach is intended to deliver median total direct compensation using a combination of P-shares, stock options and RSUs. In the 2018 annual grant, the Committee used a 30-day average of our stock price to calculate the number of shares to be granted to each executive and continued, as it previously has, to use a Black-Scholes valuation model for stock options.

              RSUs were added to the annual long-term incentive grant in 2017. Utilizing RSUs as incentives is a prevalent market practice that aids in the retention and recognition of executives while supporting long-term planning and strategic thinking. Providing RSUs in the annual grant also continues our policy of aligning the interests of management and shareholders.

              The Committee reviews and approves individual grants for the NEOs, as well as all stock options, P-share grants and any RSU awards made to other executives under the purview of the Committee. Annual grants for all officers are reviewed and approved at the Committee's scheduled meeting at approximately the same time each year. Stock options may be granted only with an exercise price at or above the closing market price of our common stock on the date of grant ("Fair Market Value"). Interim or off-cycle grants are reviewed and approved by the Committee as circumstances warrant. The Chief Executive Officer is authorized by the Committee to utilize a designated number of shares each year to grant equity awards to non-executive officers to attract, reward, motivate and/or retain such employees, as deemed appropriate by the CEO. Such awards are regularly reviewed by the Committee.

              Unless otherwise noted, grants to our NEOs have vesting schedules identical to those for other executives. To be eligible to vest in long-term equity incentive awards, associates must continue to be employed by us through the vesting dates or satisfy the definitions of "Retirement, Death or Disability" in our award agreements.

              The Committee assesses aggregate share usage and dilution levels in comparison to general industry norms. This enables the Committee to be mindful of total cost, grants awards that are competitive in the market, a policy of internal equity, and reinforcement of our philosophy of pay-for-performance.

              In 2018, the Committee approved the mix of award grants as 50% P-shares, 20% stock options and 30% RSUs. This mix of long-term equity incentives focuses on performance elements and better aligns our long-term compensation with shareholder value creation.

Target Setting

              Multi-year performance periods are used to determine LTI awards in order to encourage long-term sustainable performance. The Committee chose two performance metrics for setting LTI P-share awards.

              The first metric is an absolute measure, Operating ROE, which is directly linked to the Company's business plan and is one of the principal tools used by our management and the investment community to evaluate our performance and assess valuation. Operating ROE is a key indicator of our ongoing operational performance and profitability, and it focuses management on the efficient use of capital.

              Operating ROE is defined as net operating earnings divided by average equity. In calculating average equity, we exclude accumulated other comprehensive income or loss ("AOCI") and net operating loss carryforwards ("NOLs"). The Committee has chosen to exclude AOCI from the equity component of the Operating ROE calculation as it can be highly volatile due to changes in general market interest rates rather than a result of the business decisions made by management. Our NOLs are excluded as these assets do not provide any return to shareholders until after NOLs are realized as a reduction to taxes that otherwise would be due.

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              The second metric is a relative measure of Total Shareholder Return ("TSR") based on our stock price performance relative to a group of industry peers against which we compete for business, capital, and executive talent. We believe that relative TSR provides a strong alignment between the interests of management with those of our shareholders. The Committee believes that targeting the 50th percentile of stock price performance is consistent with typical market practices and provides sufficient rigor.

              Similar to the Annual Cash Incentive / P4P plan award measurements, the Board Compensation Committee has the authority to adjust results for events that are (1) material, (2) non-recurring or unusual, and (3) that management cannot control or, if controllable, has determined to be in the long-term best interests of shareholders. These adjustments may vary from year to year and may have either a favorable or unfavorable impact on the funding of long-term equity incentives.

Long-Term Incentive Program Grants in 2018

              The P-shares awarded in 2018 required a threshold-level performance of 50% of the target award, and the upside opportunity for maximum performance was 200% of the target award, based on a three-year performance period ending in 2020. RSUs vest ratably over the three-year period. Stock options vest 50% at the second anniversary of the grant date and 50% at the third anniversary. Dividends are paid on previously granted shares of restricted stock prior to vesting, and dividend equivalents are paid on P-shares and RSUs upon vesting.

              The table below shows grant date fair value of the annual equity awards granted to our NEOs in 2018, which are subject to a three-year performance period.

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Certain One-Time Grants

              In the course of the shareholder engagement that the Company initiated last fall, the Board Compensation Committee learned that investors desire more fulsome disclosure concerning any one-time or unusual payments to NEOs, including the terms, rationale, and context therefor, and also including any contractual obligation pursuant to which payment was made. Accordingly, going forward, the Company will enhance disclosures of such compensation.

              Upon assuming the role of Chief Executive Officer on January 1, 2018, Mr. Bhojwani was awarded a one-time promotion grant of 82,110 restricted stock units with a grant date fair value of $1.9 million, that will vest in equal installments in March 2020 and March 2021. The Committee is of the view that this stock grant was reasonable relative to market standards.

              One of the Company's key strategic accomplishments in 2018 was the completion of the LTC Reinsurance Transaction. Mr. Zimpfer was the Company's leader on this transaction. In recognition of the successful execution of this transformational transaction, the Committee granted Mr. Zimpfer 17,592 RSUs, which vest in three equal annual installments beginning on September 28, 2019. In addition, as Mr. Zimpfer's skills and experience are considered to be highly valuable and his future contributions are expected to be instrumental in driving the Company's long-term success, he was granted a retention incentive in the form of 8,210 RSUs that will vest on March 25, 2021.

              The Committee views these grants as special and unusual rewards in recognition of new roles and responsibilities undertaken, outstanding work effort, or made in order to retain exemplary talent. The Committee continues to prudently and carefully evaluate our compensation program, including one-time grants, to ensure that our decisions align with the interests of our shareholders, the Company, and our executive officers, and in all instances, links our NEOs' compensation to the Company's performance.

Long-Term Incentive Program Performance for Awards Granted in 2016, 2017, and 2018

2016 – 2018 P-Share Performance

•

P-share awards for the 2016-2018 grant were evenly split between two performance goals: (1) a three-year average Operating ROE with an 8.80% threshold, a 9.5% target, and 10.25% maximum for all NEOs, and (2) relative TSR for comparator group ("TSR Performance Peers"), targeting the 50^th percentile for target performance.



•

The Operating ROE targets were established in late 2015/early 2016, based on our strategic goals and internal projections at that time, and their respective impacts on the components of the Operating ROE calculation. The threshold value reflects the Committee's view of the minimum acceptable result deemed worthy of a payout, the determination that the target value aligns with our strategic plan, and the premise that the maximum value signifies exceptional performance. The Committee believes that the combination of the two metrics will continue to focus management on improving long-term earnings growth and creating value for shareholders.



•

The Company reported Operating ROE⁽¹⁾ of 8.7%, 9.2% and 9.8% for the years 2016, 2017, and 2018, respectively.

   

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Operating ROE is a non-GAAP financial measure. See "Information Related to Certain Non-GAAP Financial Measures" for a reconciliation to the corresponding GAAP measure.

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•

For the 2016 period, the Committee approved two adjustments to the reported Operating ROE related to the following:



o

Loss on reinsurance recapture of $53 million on closed block long-term care liabilities, which was reported as a non-operating item in the Company's financial statements for the period ending December 31, 2016; and



o

Gain on tax settlements with the IRS of $118.7 million, which was reported as a non-operating item in the Company's financial statements for the period ending December 31, 2016.



•

As a result, Operating ROE in 2016 as adjusted, was 10.84%.



•

For the 2017 and 2018 periods, there were no adjustments made to the Operating ROE calculations.



•

For the 2016 – 2018 grant, the Company's three-year average Operating ROE was 9.96%, which was above the target of 9.5% and generated a 161% payout. Three-year average Relative TSR performance produced a result of –4.8%. This placed us below the 25^th percentile relative to TSR Performance Peers, resulting in no payout for that metric.

              The table below shows actual Operating ROE and relative TSR P-share vesting for NEOs related to the 2016 – 2018 award.

2017 – 2019 P-Share Performance Metrics and Targets

              Continuing the use of average Operating ROE in the 2017 - 2019 P-share grants encourages decisions and rewards performances that contribute to the long-term growth of the Company. Continuing the use of relative Total Shareholder Return provides an incentive to CNO executives to deliver shareholder value by outperforming our peers.

              The 2017 – 2019 P-share grant was evenly split between three-year average Operating ROE, with an 8.25% target for all NEOs, and relative TSR for our TSR Performance Peers, targeting the 50^th percentile for target performance.

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•

The 2017-2019 three-year average Operating ROE target was set below the 2016-2018 three-year average Operating ROE target for the following reasons:



•

When the Operating ROE target was established in late 2016 /early 2017, 2017 earnings were expected to be below 2016 levels due to:



o

Expected incremental costs associated with new regulatory requirements (including the costs of compliance with new cyber security regulations and the expected costs of implementing and complying with the Department of Labor's Fiduciary Standards related to sales and marketing of certain insurance products).



o

Macro-economic challenges including (1) continued low interest rates and (2) a strong labor market, which impacted our ability to recruit and retain agents, both of which were expected to have a significant impact on earnings growth rates.



o

Other unusual items that positively impacted 2016 results but were not expected to (and did not) impact 2017 results, including (1) final payments of transition service income paid to CNO by Wilton Re as part of the agreement to sell Conseco Life Insurance Company to Wilton Re in 2014, and (2) reserve releases related to policyholder actions following notification of rate increases on certain long-term care policies.



•

At the time that the targets were set, the pressures on 2017 earnings were not expected to abate in 2018 or 2019.

2018 – 2020 P-Share Performance Metrics and Targets

              The 2018 - 2020 P-share grant was evenly split between three-year average Operating ROE and relative TSR for our TSR Performance Peers, targeting the 50^th percentile for target performance. With the higher Operating ROE in 2017 and signs of growth reinvigorating in 2018, the 2018 - 2020 Operating ROE target was set at 10.4%.

Total Shareholder Return Performance Peers

              TSR Performance Peers are selected by the Committee on the basis of many factors, including market capitalization, premiums, revenue, assets, and lines of business, among others. The Committee reviews the TSR Performance Peers annually and obtains feedback from Aon Consulting on their continued appropriateness. The Committee believes these companies are appropriate for TSR benchmarking because each is a competitor in one or more of our core business units and/or competes directly with us for talent and distribution of our products.

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              The TSR Performance Peers have remained consistent year-over-year except when a company has been acquired or has experienced a significant change in business conditions, scope of business, or operations. Below are the TSR Performance Peers that the Committee referenced for 2018 TSR benchmarking:

              Following feedback received from our shareholder outreach program, as well as an extensive analysis of existing and potential peers, the Committee has determined that changes to our TSR Performance Peers will be appropriate beginning with our 2019 performance period. Changes will include the addition of two companies: American Equity Investment Life Holding Company and Brighthouse Financial, Inc., and the exclusion of two companies: Arch Capital Group and Genworth Financial, Inc.

              The table below shows the opportunities for NEOs related to P-share vesting, depending on the level of performance achieved in relation to the associated grant metrics.

Benefits

              Our NEOs are eligible to participate in all of the broad-based Company-sponsored benefits programs on the same basis as other full-time employees. These include our health and welfare benefits, such as our medical/dental plans, disability plans and life insurance. We do not offer any form of supplemental executive health or welfare programs. Executives also may participate in our 401(k) Plan. In addition, the Company has a non-qualified deferred compensation plan that primarily is intended as a "restoration" plan that provides participants the ability to defer their own compensation above the Internal Revenue Service limits imposed on the 401(k) Plan. P-shares and RSUs also may be deferred into a deferred compensation plan. We do not make annual contributions to non-qualified deferred compensation plans in addition to the amounts contributed by our executives.

Additional Information

Prohibition Against Trading in Derivatives

              It is a violation of Company policy for any senior executives to purchase, sell or engage in any other transaction involving any derivative securities or hedging related to any of our equity securities. This prohibition

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does not apply, however, to any exercise of our stock options pursuant to our Amended and Restated Long-Term Incentive Plan or any other benefit plans that we may adopt from time to time, any sale of our stock in connection with any cashless exercise (if otherwise permitted), or payment of withholding tax upon the exercise, of any such stock option.

Clawback Rights

              The Company's Amended and Restated Long-Term Incentive Plan contains a clawback provision relating to our long-term equity awards, that is, stock options, P-shares and RSUs. Under this provision, if our financial statements are restated because of incorrect data, errors, omissions, or fraud, the Board Compensation Committee may, at its discretion and based on the facts and circumstances surrounding the restatement, direct the recovery of all or a portion of any equity award from one or more executives with respect to any fiscal year in which our financial results are negatively affected by such restatement. To effect this provision, we may pursue various means of recovery of awards from one or more executives, including (1) seeking repayment from the executive; (2) offsetting the recovery from an amount that otherwise would be payable to the executive under another benefit plan; (3) withholding of future equity grants, bonus awards, or salary increases; or (4) any combination of these actions.

              Our Annual Cash Incentive / P4P Plan contains recapture rights of any incentive amount paid or vested in the event that the Committee determines that the achievement of performance goals was based on incorrect data.

Impact of Tax and Accounting on Compensation Decisions

              As a general matter, the Committee considers the various tax and accounting implications of our compensation vehicles.

              When determining the awards of long-term equity incentive grants to executives and employees, the Committee considers the accounting costs associated with the grants. Under FASB ASC Topic 718, grants of stock options, restricted stock, RSUs, and other share-based payments result in an accounting charge that is reflected in our financial statements.

              Section 162(m) of the Internal Revenue Code generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the chief executive officer and the three most highly compensated corporate officers, excluding the chief financial officer. Exceptions are made for qualified performance-based compensation, among other things. It is the Committee's policy to maximize the effectiveness of our executive compensation plans in this regard. Notwithstanding the consideration of tax issues, however, the Committee is of the view that compensation and benefits decisions should be driven primarily by the needs of the business, rather than by tax policy. Therefore, the Committee may make pay decisions (such as the determination of the Chief Executive Officer's base salary) that result in a compensation expense that is not fully deductible under Section 162(m). The Committee administers our incentive plans for 2018 so that payments qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code.

Termination and Change in Control Arrangements

              Pursuant to the terms of award agreements made in accordance with our equity-based compensation plans and our employment agreements, NEOs are entitled to payments and benefits upon the occurrence of certain specified events, including termination of employment for various reasons. The specific terms of these arrangements, as well as an estimate of the compensation that would have been payable had they been triggered as of fiscal year-end, are described in the section entitled "Potential Payments Upon Termination or Change in Control" on page 57. The terms of these arrangements were set through the course of respective employment negotiations with each NEO, with an emphasis on internal consistency. In order to align with market best practices, the payments triggered by a change in control for the CEO and his direct reports are three times and

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two times, respectively, their annual base salary plus target bonus. A "double trigger," constituting both a change in control and termination, is required before such payments are necessary.

              The termination of employment provisions of the agreements with NEOs were negotiated and entered into in order to address competitive concerns in the NEO recruitment process. Providing highly qualified and skilled individuals with a fixed amount of compensation offsets the potential risk of their departure from a prior employer and/or foregoing other opportunities in order to join our Company. At the time of entering into each such arrangement, the Committee carefully considers both the desirability of hiring the particular individual at the proposed compensation and also the Company's aggregate potential obligations to our NEOs as a group.

Compensation Committee Report

              The Human Resources and Compensation Committee has reviewed the Compensation Discussion and Analysis and has discussed it with management. Based on the Committee's review and discussions with management, the Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. This report is provided by the following independent directors, who comprise the Committee:

Frederick J. Sievert, Chair
Ellyn L. Brown
Stephen N. David

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Summary Compensation Table for 2018

              The following Summary Compensation Table sets forth compensation paid to (i) our chief executive officer, (ii) our chief financial officer, and (iii) the other three most highly compensated individuals who served as executive officers of CNO as of December 31, 2018 (collectively, the "Named Executive Officers") for services rendered during 2018, 2017 and 2016.

SUMMARY COMPENSATION TABLE FOR 2018

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Grants of Plan-Based Awards in 2018

              The following table shows certain information concerning grants of plan-based awards in 2018 to the Named Executive Officers.

GRANTS OF PLAN-BASED AWARDS IN 2018

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Narrative Supplement to the Summary Compensation Table and the Grants of Plan-Based Awards in 2018 Table

Employment Agreements

              Chief Executive Officer.  We have an employment agreement with Mr. Bhojwani pursuant to which he serves as Chief Executive Officer for a term ending on December 31, 2020. His employment agreement provides for an annual base salary (currently $1,000,000), with increases from time to time based on his performance, and an annual performance-based bonus with a target of 150% of base salary and a maximum of 300% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Bhojwani's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Bhojwani would be entitled to receive specified additional benefits. Mr. Bhojwani is subject to a non-solicitation and non-competition clause throughout the term of his agreement and for one year thereafter.

              Chief Financial Officer.  We have an employment agreement with Mr. Helding, pursuant to which he serves as Executive Vice President and Chief Financial Officer. On March 18, 2019, the Company announced that Paul H. McDonough has been appointed Chief Financial Officer of the Company, effective April 1, 2019 and that Mr. Helding will remain Chief Financial Officer through March 29, 2019. Mr. Helding's employment agreement provides for an annual base salary (currently $465,000), with increases from time to time based on his performance, and an annual performance-based bonus with a target of 100% of base salary and a maximum of 200% of base salary. In addition, Mr. Helding's employment agreement entitles him to receive specified additional benefits if his employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement). See "Potential Payments Upon Termination or Change in Control" for the amounts that would have been payable under each circumstance as of December 31, 2018. Mr. Helding is subject to a non-solicitation clause throughout the term of his employment and for one year thereafter.

              Chief Operations and Technology Officer.  We have an employment agreement with Mr. Baude pursuant to which he serves as Executive Vice President and Chief Operations and Technology Officer, for a term ending on July 31, 2019. His employment agreement provides for an annual salary (currently $635,000), with increases from time to time based on his performance) and an annual performance-based bonus with a target of 100% of base salary and a maximum of 200% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Baude's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Baude would be entitled to receive specified additional benefits. Mr. Baude is subject to a non-solicitation clause throughout the term of the agreement and for one year thereafter.

              Chief Investment Officer.  We have an employment agreement with Mr. Johnson, pursuant to which he serves as Executive Vice President and Chief Investment Officer of CNO and President of 40--86 Advisors, Inc., a wholly owned subsidiary of CNO, for a term ending on September 30, 2019. His employment agreement provides for an annual base salary (currently $550,000), with increases from time to time based on his performance, and an annual performance-based bonus with a target of 100% of base salary and a maximum of 200% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Johnson's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Johnson would be entitled to receive specified additional benefits. Mr. Johnson is subject to a non-solicitation clause throughout the term of his agreement and for one year thereafter.

              General Counsel.  We have an employment agreement with Mr. Zimpfer, pursuant to which he serves as Executive Vice President and General Counsel, for a term ending on June 30, 2020. His employment agreement provides for an annual base salary (currently $583,000), with increases from time to time based on his performance, and an annual performance-based bonus with a target of 100% of base salary and a maximum of

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200% of base salary. As described more fully in "Potential Payments upon Termination or Change in Control," if Mr. Zimpfer's employment is terminated by us without "Cause" or if he resigns "With Reason" (as defined in his employment agreement), or his employment is terminated by reason of his death or "Disability" (as defined in his employment agreement), Mr. Zimpfer would be entitled to receive specified additional benefits. Mr. Zimpfer is subject to a non-solicitation clause throughout the term of his agreement and for one year thereafter.

              See "Summary of Components of Regular Total Direct Compensation in 2018 at Target" on page 32 of this Proxy Statement for information regarding the portion of total compensation for the Named Executive Officers represented by the salary and bonus payable under the executive employment agreements described above.

Terms of Equity-Based Awards

Vesting Schedule

              Unless otherwise provided in the footnote disclosure to the table of Outstanding Equity Awards at 2018 Fiscal Year-End on pages 54 and 55 of this Proxy Statement, one-half of each option award vests on the second anniversary of the date of grant and the other one-half vests on the third anniversary of the date of grant. Options granted in 2015 – 2018 expire ten years from the date of grant, and options granted in 2012 – 2014 expire seven years from the date of grant.

              Awards of restricted stock generally vest in three equal annual installments beginning one year after the grant, subject to continued service through the vesting dates. Performance share awards are measured over a three-year performance period at which time they will vest only if the financial goals have been achieved, subject to continued service through the vesting dates. Unless otherwise noted, grants to the Named Executive Officers have vesting schedules identical to other officers.

Forfeiture and Post-Employment Treatment

              Holders of stock options generally have 90 days after termination of employment to exercise options to the extent they were vested on the date of termination. Unvested restricted stock and performance shares are generally forfeited upon termination of employment except upon retirement, disability or death. Awards outstanding under the Company's Amended and Restated Long-Term Incentive Plan will be treated as follows upon termination of employment due to an individual's retirement or disability (except as otherwise provided in the individual award agreement): (i) outstanding stock options will continue to vest on the original vesting schedule and the individual may exercise the options until the earlier of the expiration date for such options or five years after the date of retirement; (ii) any unvested restricted stock will continue to vest after retirement on the same vesting schedule as if the individual had remained employed by CNO; and (iii) a pro rata portion of any performance shares will vest and will be payable to the extent the performance criteria are met at the same time as others receive payments under such performance share award. For the purpose of the Amended and Restated Long-Term Incentive Plan, "retirement" means voluntary termination of employment after achieving either 62 years of age, or 60 years of age with at least 10 years of employment with the Company. Upon an individual's death: (i) outstanding stock options will vest and be exercisable for 12 months; (ii) restricted stock will vest; and (iii) a pro rata portion of any performance shares will vest and be payable to the extent the performance criteria are met at the same time as others receive payments under such performance share award.

Option Exercise Price

              Options granted under the Company's Amended and Restated Long-Term Incentive Plan have an exercise price equal to the closing price on the date of grant.

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Dividends

              Holders of unvested restricted stock or restricted stock units granted prior to May 2017 are entitled to receive any cash dividends or dividend equivalents at the same times and in the same amounts per share as holders of the Company's common stock. For restricted stock units granted since May 2017, the recipient will be entitled to dividend equivalents upon vesting. The payments of cash dividends and dividend equivalents are taxed as compensation income to the holders of the restricted stock or restricted stock units. Holders of performance share awards are entitled to dividend equivalents on any performance shares that vest. Such dividend equivalents are payable in cash at the time of vesting of the performance shares to the extent that cash dividends are paid on the common stock underlying the performance shares after the award date and prior to the issuance of shares upon vesting.

Outstanding Equity Awards at 2018 Fiscal Year-End

              The following table sets forth certain information concerning outstanding equity awards held by the Named Executive Officers as of December 31, 2018.

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OUTSTANDING EQUITY AWARDS AT 2018 FISCAL YEAR-END