Morning. I'm Bill Cunningham, the Chairman of the Board of Lincoln National Corporation, and I will be chairing today's meeting. On behalf of the board, our management team, and employees, we are delighted that you have come to the 44th annual meeting of the shareholders of Lincoln National Corporation. I would also like to acknowledge those listening via webcast. I am pleased to convene the meeting. If you did not register or receive an agenda as you entered, would you please raise your hand? Has anyone been missed? The agenda sets forth the rules and procedures for today's meeting. As provided in the agenda, we will first conduct the formal business of the annual meeting as set forth in our notice of meeting and proxy statement and the notice of internet availability of those materials. After we adjourn the formal business of the meeting, Dennis R.
Glass, the President and Chief Executive Officer, will make a few remarks, after which there will be question and answer period. At that time, we invite you to ask questions on the matters relating to the operations of Lincoln National Corporation. Today's meeting is being webcast and recorded. The audio recording of today's meeting will be available for replay through Monday, June 27, 2011. Should you need assistance during or after the meeting, please see one of the people at the registration desk. I would like to introduce the other members of our board of directors sitting in the audience today. Will each director please stand when your name is called? Mr. William J. Avery. Mr. Dennis R. Glass. Mr. George W. Henderson III. Mr. Eric G. Johnson. Mr. Gary C. Kelly. Ms. M. Leanne Lachman. Mr. Michael F. Mee. Mr. William Porter Payne. Mr. Patrick S.
Pittard, and Mr. Isaiah Tidwell. These are our excellent directors. Will you please give them a hand? Representatives from our independent registered public accounting firm, Ernst & Young LLP, are also in attendance. Although they have declined to make a statement, they will be available to answer appropriate questions regarding the 2010 audit during the question and answer session later this morning. The Inspector of Election for this meeting, BNY Mellon Shareholder Services, has in its possession an affidavit of mailing, attesting to the mailing of the notice of meeting, proxy statement, proxy and annual report, or notice of internet availability of these materials to shareholders. The Inspector of Election has also reported that more than the majority of shares required for quorum, as specified in the bylaws, are present either in person or by proxy. Accordingly, a quorum is present, and the meeting is in order to proceed.
I ask Charlie Braly, Secretary of the Corporation, to serve as Secretary of this meeting. The minutes of our last annual meeting, held May 27, 2010, are available for inspection by shareholders. Accordingly, may I have a motion to waive the reading of such minutes and to approve them as proceed?
Chairman, I so move.
I second the motion.
All those in favor? Opposed? The motion's passed. The minutes are duly approved. As set forth in the meeting notice, there are five items to be voted on at this meeting. The first item to be considered today is the election of directors. The board has nominated Dennis R. Glass, Gary C. Kelly, and Michael F. Mee as directors to serve for three-year terms to expire at the 2014 annual meeting or until their successors shall be elected and shall qualify. No other written notice of nomination was received by the corporate secretary in accordance with the bylaws. Mr. Braly, do you have a motion relating to the election of directors?
Yes, Mr. Chairman. I move that Messrs. Glass, Kelly, and Mee be nominated as members of the Board of Directors of Lincoln National Corporation for the term specified in the proxy statement.
Is there a second?
Second.
The names of such persons have been placed in nomination. Because the secretary has not received any notice of shareholder nominees, I declare the nominations are closed. The second item to be considered today is the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2011. Mr. Braly, do you have a motion relating to the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2011?
Yes, Mr. Chairman. I move that the ratification of the appointment of Ernst & Young be approved.
Is there a second?
Second.
The third item to be considered today is the approval of an amendment to the restatement articles of incorporation of Lincoln National Corporation to allow shareholders to amend the bylaws as further described in the proxy statement. Mr. Braly, do you have a motion relating to the approval of the amendment to the restated articles of incorporation of Lincoln National Corporation to allow shareholders to amend bylaws as further described in the proxy statement?
Yes, Mr. Chairman. I move that the amendment to the restated articles of incorporation of Lincoln National Corporation to allow shareholders to amend the bylaws as further described in the proxy statement be approved.
Is there a second?
I second the motion.
The fourth item to be considered today is the non-binding advisory proposal seeking approval of the 2010 compensation for our named executive officers as described in the proxy statement. Mr. Braly, would you introduce the motion?
Yes, Mr. Chairman. I move that the following resolution be adopted. Resolved, that the shareholders approve the compensation of executives of the company as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables regarding named executive officer compensation, together with the accompanying narrative disclosure in the proxy statement for the 2011 annual meeting of shareholders.
The last item to be considered today is the non-binding advisory proposal regarding the frequency of future advisory proposals on the compensation of our named executive officers. Mr. Braly, would you introduce the motion?
Yes, Mr. Chairman. I move that the following resolution be adopted. Resolved, that the shareholders be requested to recommend in an advisory vote whether an advisory vote to approve the compensation of the company's named executive officers should occur every one, two, or three years.
Are there any questions related specifically to the five items presented? Seeing no questions, let's proceed with the voting. If you have already sent in your proxy, you do not have to take any further action as your proxy will be voted in the manner you directed. If you wish to vote in person, please raise your hand and keep it raised until the attendant has provided you a ballot. Remember, to change your vote, you must have been a shareholder of record on March 21st, 2011, or a beneficial owner on such date with an appointment of an agent or proxy from the record owner. You should complete and sign the ballot. When you have marked and signed the ballot, please raise your hand so that it may be collected. I see no one wishing to vote by ballot.
As there's no further business to come before the meeting, the polls will now close. Mr. Braly, do you have the preliminary results of the voting?
Yes, Mr. Chairman. The Inspector of Election has determined that based on the votes cast and received, that each of the directors has been elected. The appointment of Ernst & Young has been ratified, the amendment to the restated articles of incorporation, and the compensation of named executive officers have been approved, and a majority of the shares were voted in favor of an annual frequency for future advisory votes on executive compensation.
Thank you. This now concludes the formal business of the meeting. Therefore, I declare the meeting is adjourned. I would now like to turn to Dennis Glass, President and Chief Executive Officer of the corporation, to give his remarks about the performance of the company since our last annual meeting.
Thank you, Bill. Before I get started, an administrative point. My comments may contain forward-looking statements and references to non-GAAP measures. Please refer to our website, precautionary statements, and a GAAP reconciliation. Note that we are posting a handout to the website with a number of slides that illustrate the remarks I am making today. With that, I'd like to welcome the shareholders in the audience and participating via webcast to our annual meeting. Thank you for your investment and confidence in our company. I'd also like to thank our chairman and all of our board members. It takes a variety of resources to make a company successful, and having a dedicated group of directors who are willing to give their advice and time is a great advantage to us, and it's greatly appreciated by me and my management team.
Of course, I can't talk about the success of our company without recognizing my management team who supports this and drives it year in and year out. Thank you for the work you do and the contributions you make. Of course, it's not just the management team, but it's every employee at Lincoln that comes to work every day trying to do a better job for our shareholders and for our clients, a better job for our clients so we can deliver better results to our shareholders. This morning, I want to focus mostly why I believe Lincoln is well-positioned for further growth and actions that we're taking to make that happen. Let's first talk about what's most important, and that is how did our shareholders do last year. As you can see here, we delivered good performance for shareholders in 2010.
Our stock price was up 12%, and importantly, we also announced a dividend increase from $0.04 to $0.20 per share. Finally, we returned more capital to shareholders by repurchasing, in the last 12 months, almost $150 million worth of shares. With respect to share repurchases, we have ample capital today and continue to generate strong cash flows. Given the recent softness in the markets, we have accelerated our planned share buybacks more so into the first half of the year and still expect to buy stock opportunistically as conditions allow in the second half. In 2010, we took several actions to position Lincoln for growth. We invested in new products, expanded distribution and increased sales productivity, and importantly, recapitalized the company, putting us in our strongest financial position for some time.
Our first quarter results demonstrate the momentum we're seeing from some of these actions, as well as from successive quarters of consistent performance. As you can see, we have strong account balances driven by solid increases in deposits, net flows, and helped by rising equity markets. Growth in income from operations was strong, helped by good investment performance and a healthy increase in operating revenues. Finally, and importantly, a much higher return on shareholders' equity. Looking forward, I'm confident that Lincoln's growth Its strategy is a good one. Why do I think that? First and foremost, we are serving growing markets. Over the next 10 years, the U.S. population in the cohorts we serve and the wealth controlled by these age bands will grow significantly.
With our focus on products that meet the pressing financial needs of consumers from accumulation and income protection in their working years to retirement income and wealth transfer later in their lives, this demographic trend is a significant catalyst for growth for Lincoln. We have a comprehensive set of solutions and strong market positions in all of our core product lines. We have the scale to lower our cost, attract top talent, and expand distribution support. Our consistency in the market leads to better returns over time and over business cycles. Importantly, this consistency and reliability makes Lincoln an important and attractive partner to those who distribute our products. Finally, we are making targeted strategic investments to position each of our businesses for long-term sustainable growth. We have leading industry distribution.
Lincoln's three distribution platforms, each of them valuable in their own right, are a clear competitive advantage when viewed in the aggregate. Over the course of the financial crisis, we were able to increase the number of advisors recommending Lincoln solutions to their clients by more than 14% to over 61,000 people. Again, right through the most difficult environment that America has experienced since the Great Depression. Finally, our dominant position across multiple sales channels allow us, along with this talented distribution force we have, to sell products on our value proposition and on our terms, which benefit both the customers as well as our shareholders. Finally, we've taken a number of steps to reduce risk in our investment portfolio, to strengthen our balance sheet, and to accelerate our return on equity.
Importantly, we've lowered our credit risk exposure in the general account by decreasing credit concentration, and we are investing new money today in higher-rated securities. We changed our capital management policies to hold a net positive cash position and modestly deleverage the balance sheet, better preparing us to manage through challenging markets. Finally, we are focusing our efforts on actions that will lead to higher return on equity over time, such as shifting our earnings mix to higher ROE businesses, selling higher ROE products, especially in life insurance, and improving our loss ratio experience in group benefits. Also, as I mentioned already, we're redeploying excess capital as attractive opportunities come up. As we combine these things, we expect to increase our ROE by 25 to 30 basis points over the course of the next three years.
Given our ability to execute in different market cycles and our simple and compelling strategy, we believe there are multiple ways for Lincoln shareholders to win, and we are confident that we will continue to enhance value creation for shareholders in 2011. In closing, let me thank you again for your confidence and commitment to Lincoln. Now I'll turn the meeting back to Bill.
Dennis, thank you very much. I know that Dennis will be very pleased to take any questions. Are there any questions? Since there are no questions, we thank you for attending today's meeting, and we wish you well as we go through this next year. Thank you very much for attending.