Everybody quiet down very quickly. Good morning, everyone.
Good morning.
My name is Tom Watjen. I'm the Chairman of the Board of Unum Group. On behalf of the entire Board of Directors, I'd like to welcome you to the 2016 annual meeting of shareholders. We're pleased to be joined today by certainly those here in Portland, Maine, but also on the webcast as well. Again, welcome to those that have joined us through the webcast. I've asked Lisa Iglesias, our General Counsel, to assist with the conduct of this meeting and serve as parliamentarian. A representative of our transfer agent, Computershare Trust Company, is present and serving as the inspector of elections. I'd now like to ask Lisa to give her report, which will begin the formal part of our meeting.
Thank you, Tom. I'd like to remind everyone that the annual meeting rules are printed on the back of the agenda for this meeting, which was available to you at the registration desk when you entered. Later, I'll highlight some of those rules before we take questions from shareholders at the end of today's presentation. Any shareholder who has not already voted in person or by proxy is invited to do so now. If you need a ballot, please raise your hand and we'll give one to you. If you hold your shares in street name and wish to vote, you must submit the legal proxy provided to you by your broker with the ballot.
At this time, I'd like to present an affidavit establishing that notice of the meeting was duly given, and a proxy statement or notice of internet availability of proxy materials was furnished on or about April 14th, 2016, to each of our shareholders of record as of the record date March 28th, 2016. I also report that the inspector of election has filed with me an oath of office and certificate stating that a total of 213,330,207 shares of common stock of the company, or approximately 90% of outstanding shares, are represented in person or proxy by this meeting. Therefore, a quorum is present.
Thank you, Lisa. With that, I'll now call the meeting to order. The polls are open for voting on the items of business. If you are voting in person, please deliver your completed ballot to the inspector of election prior to the conclusion of this meeting. The first item of business is the election of directors. Before naming the nominees, I'd like to first recognize two directors who are retiring from our board. Bill Ryan and Pat McMillan have both reached the mandatory retirement age for board members and will therefore be stepping off the board. They have both served the company and its shareholders with distinction and made a tremendous contribution to our company over their time with us. Pat McMillan is our longest-tenured board member. Not oldest, Pat, excuse me. Freudian, I apologize. Longest-tenured, very important distinction.
Having served over 20 years dating back to the Provident Life and Accident board. As you know, the company has changed an awful lot over those 20 years, Pat has not only helped us navigate through some difficult times, but played an important role in helping us shape the organization we are today. Throughout, he has provided invaluable counsel and guidance to both the board and to me personally. Pat, thank you so much for your service to our company. Bill Ryan has served on our board for 12 years, and I can't thank him enough for his leadership during that time, particularly in his role as chairman and now as lead independent director. Through his leadership, we have accomplished a very smooth and seamless transition of both the CEO and board leadership over the last few years.
Bill is someone we've all relied upon for his sound judgment and wise counsel. Bill, thank you too for what you've done for this company and your consistent support of us as a board and the company. We're going to do this again because I asked the two of you, they're both present here, obviously. Ask them to please stand and be recognized by our shareholders and those of our company that benefit from your leadership. Again, Bill and Pat, thank you for your service and your leadership and support of this company, and I can assure you're going to be missed. As noted in our proxy materials, our board has developed a very solid succession plan for Bill's departure and named Kevin Kabat to succeed him as lead independent director after this meeting.
We have a great deal of confidence in Kevin's leadership abilities, and we know he'll do an excellent job in this new role. Kevin, we look forward to working with you more closely in the years to come. Continuing with our current business, the director nominees are as follows. I'll ask them to stand and face the audience, please, and remain standing as I read your names. Theo Bunting, Group President of Utility Operations at Entergy Corporation. Michael Caulfield, former President of Mercer Human Resource Consulting. Joe Echevarria, former CEO of Deloitte LLP, and Joe is our newest director, and this is his first annual meeting with the company. Cynthia Egan, former President of T. Rowe Price Retirement Plan Services. Pam Godwin, President of Change Partners, Inc. Kevin Kabat, former President and CEO of Fifth Third Bank.
Tim Keaney, former Vice Chairman of The Bank of New York Mellon Corporation. Gloria Larson, President of Bentley University. Rick McKenney, our President and CEO here at Unum Group. Ed Mull, the former partner and national leader of the Insurance Regulatory Advisory Practice of PricewaterhouseCoopers. Ron O'Hanley, President and CEO of State Street Global Advisors. Fran Shammo, CFO of Verizon Communications Inc., and this is also Fran's first annual meeting with Unum after having joined the board last July. Again, I'm Tom Watjen, former President and CEO and current chairman of Unum Group. You always need to be seated. Thank you very much. Lisa, can you please introduce the first resolution?
Tom, I'd like to move that the following resolution be adopted. Resolved that each of the board nominees designated in Unum's proxy statement for this annual meeting be elected as directors for a one-year term expiring in 2017, and until their successors are elected. I second that.
There are no other nominations made in accordance with our bylaws. Lisa, please give us the report of the inspector.
The Inspector of Election reports that each director nominee has been elected by approximately 98% or more of the total numbers of votes cast. We will publish the final vote results for this item and all other voting items within four business days after the Inspector of Election having certified us of the final vote results.
Good. The second item of business is the advisory vote on executive compensation, commonly noted Say on Pay.
I move that the following resolution be adopted. Resolved that the shareholders approve, on an advisory basis, the compensation of the company's named executive officers as disclosed in the company's proxy statement for this annual meeting.
I second that.
Lisa, please give us a report of the inspector.
The Inspector of Election reports that the Say on Pay resolution was approved by approximately 97% of the shares represented and entitled to vote at this meeting.
The third item of business is to ratify the appointment of Ernst & Young LLP as the company's independent auditor for 2016.
I move that the following resolution be adopted. Resolved that the appointment of Ernst & Young LLP as the company's independent auditor for 2016 is hereby ratified.
I second.
Lisa, please give us the report of the inspector.
The Inspector of Election reports that the appointment of Ernst & Young LLP as the company's independent auditor was ratified by approximately 99% of the shares represented and entitled to vote at this meeting.
Mark Thomas and Phil Moore, both from Ernst & Young LLP, are here with us today and are certainly prepared to answer your questions during the question and answer session. The final item of business is to approve a stock purchase plan for our U.K. employees.
I move that the following resolution be adopted. Resolved that the Unum European Holding Company Limited Savings Related Share Option Scheme 2016 be approved.
I second.
Lisa, will you please give us the report of the inspector?
The Inspector of Election reports that the U.K. plan was approved by approximately 99% of the shares represented and entitled to vote at the meeting.
Thank you. The polls are now closed. On behalf of the board, I want to thank you for your support of all the voting items. This concludes the business portion of today's presentation, and the annual meeting of shareholders of Unum Group is now officially completed. For our next agenda item, a discussion of the company's results, I'll turn things over to Richard McKenney, our President and Chief Executive Officer. Almost forgot who you were.
Thanks for that kind introduction, Tom. Welcome, everybody, this morning. It's good to have you here, and we're going to take a few minutes to talk about where we are from a state of the business perspective. I want to talk to you about some of the great things that are going on here at Unum both today and the things we're looking forward to tomorrow, and Jack will give you some views of our results. Let me start out and talk about where we are today, the things that make us very strong on where we position ourselves today and how we're positioning the company for tomorrow. You start out with that strong track record of success, and Jack will take you through some of the dimensions, some of the metrics.
We are a company that has performed year in and year out, serving our customers very well, and we'll continue to do that as we look to the future. What's important as we think about our company, particularly for our employees here, is we deliver a great purpose in the market. The things that we do take care of people in difficult stages of their lives. When we come back to that as a fundamental tenet of our company, it brings us forward to thinking about the future, thinking about how we protect more people here in the U.S. and as well as in the U.K.
When we think about tomorrow, when we think about the future, it's about how do we capitalize on the trends that are existing today, both at the workplace, what's happening in demographics here in America and the U.K., and what we think about as the opportunity to protect more people across the board. You also should think we're a company that does not rest on our laurels. We have a strong track record that is only as good as the history that it provides. We are thinking about the future, and we're going to be flexible and positioning ourselves and being responsive to what is a very changing environment. I'll touch on that in a few minutes. Our environment is changing, we recognize that, and we will shift our responsibilities as we look forward.
We start with the basis of very strong fundamentals, and we think about all of our stakeholders when we think about that. We're here at the annual shareholder meeting. Our shareholders are incredibly important to us. We go back, and we think first about our customers. Who are the people that we're taking care of? Our company is based on that premise that it's about taking good care of our customers first. If we do a good job there, we can then leverage our distribution partners to reach more people, and then ultimately our shareholders will be rewarded for that. Make no mistake, it is our people that set us apart. We are a people-based business. We manufacture promises that we actually bring out to customers.
It's about the strength of our 10,000 people, how they think about their customers, how they think about serving people here in the U.S. and the U.K., and it is our people that sets us apart. If you bring all that together, and the financial results, I think, bear that out. If you look over the last 10 years, and we are a company that thinks about our responsibilities on a very long-term basis, in those 10 years, we've generated returns for our shareholders of almost 150%, and that compares to a broader market, which is right around 100%, and in our space, in our broader life and health space, more in the 30% range. You can see that those results and those focuses that we have today can also generate very strong returns for our shareholders.
Let me take you back to that purpose, because that is our rally cry around the company and what we do and how we excite our people every day in terms of how we take that forward. You think about the benefits we paid last year, $6.8 billion that we paid to people at time of need. These are not just payments that people withdraw from their bank account. These are people that are in need in a moment in their lives. That $6.8 billion actually comes in very handy, and we think about those people as one by one. We protect 33 million people today, so we're there for them and their families, and our employee base thinks often about how we're going to actually grow that base. How can we protect more people here, do what we do so well for more people?
Part of that actually is delivering people to return to work, and so it's one of the things that we do very well, and if you look at the number of people, a third of a million people that we brought back to work last year through some of the advice we've done, through some of the vocational work that we've done with individuals, getting them back to work, it's good for them, it's good for the companies they work for, and I think it's good for everybody involved. Then lastly, we think about the employers that actually where we distribute. We are solely at the workplace. That is where we bring our products out there today, 180,000 workplace, actually work sites and employers value what we do.
How do we reach more people through that work site, getting more employers to protect more people at a site? You can see with this purpose, we protect people when they need it most. It's so important what we do, it's the basis of our company, and we will continue to take that forward as we think about growing as a company overall. You have to step back, though, in terms of that purpose and how can we reach more people. There are challenges that we see in our country today. You'll know these stats. You'll hear about them, 40% of Americans living paycheck to paycheck, similar statistics in the U.S. People are pressured in their daily lives in terms of what they do.
With a small piece of what they do at the workplace, they can protect those needs, so that when they run into challenges, we'll be there to help protect them. When you think about also the protection gaps we have today, 70% of people don't have any kind of disability protection. They have not protected their paycheck in the unfortunate event that they become disabled. 30% have not covered their paycheck in terms of a life event they might have. There's real need out there that's not being covered today, and it's an opportunity for us to continue to grow, to continue to protect more people going forward. The last piece, as I mentioned, we're at the workplace. That's solely where we participate today. Employers want their employees to be protected. It's good for them. It's good for the morale of their employee base.
70% of employers still want to actually offer some type of coverage. It does not necessarily mean that they're paying for it, which would be a fully insured policy. It actually could be offering voluntary benefits, which has been a big growth area for us as a company, and it's a big opportunity for the future, where people are actually having access to the type of protection benefits they need at the workplace. They'll pay for it themselves, but it gives it a very reasonable risk-adjusted way that somebody can buy that at the workplace. The latest stat that came out last week, and you may not have seen this actually, which is important, that two-thirds of Americans would actually have difficulty covering a $1,000 emergency. Right? That gives you the state of our economy today.
If you think about that person at the workplace who actually is spending that $5 a week, $5 a month to actually protect an accident-type policy, we cover that whole spectrum. Somebody that has a child, in playing little league, breaks their arm, that we'll actually be there to help pay for that. If they've taken that small step ahead of time to make sure that they've covered their paycheck, we can be there for that. It's really the dynamics of the world we see today. It's actually where we find energy to think about how we can protect more and more people for these life-changing type events. We do that from a position of strength. When you think about our company today, we have market-leading positions across the board.
Whether we are a disability leader, which we have been for 30-plus years, or you think about the voluntary benefits space, both at our Colonial Life business as well as through our Unum US business, we're there with market-leading positions today that we've invested in over many years to be able to provide these benefits as we look forward. It's important to have those positions. Our distribution partners understand that today, we will be able to take those going forward. Once again, the workplace is where we distribute these products today. When you think about where these type of products are actually distributed today, 78% of the life products and over 90% of disability products are there today.
How do we actually continue to increase the share of business that's being written at the workplace today because it's a great place for people to continue to insure themselves combined with their employer's need to take care of them. We are positioned incredibly well for the future, the question is how you take that forward. The reality is in the market today, the pace of change is accelerating, we talk to our workforce a lot about that. Consumer choice is changing, not just in our space, in every space. Technology's changing, our competitive environment, particularly in our space, continues to change. Employers and consumers in general have more choice, we need to make sure that we're there for them as part of that.
Technology changes that we see out there today provides great opportunity for education, how do we bring streamlined products out to people much more quickly, once again, using that workplace as a point of distribution. The reality is the economy is changing. You hear about the gig economy, new ways of working. People are actually changing their employment. We have opportunities to adjust how we adapt to this marketplace to what's a changing economy. That provides real opportunity for us to be different, to be nimble, and to be able to take that forward. Lastly, our traditional competition is out there. They're still strong and competitive in terms of what we do. There are new entrants, new people trying to serve the same market today.
We want to make sure that we're adapting quickly to adjust to the world as we see it today, as the world we see it 5 to 10 years from now, so we can continue to be that strong company that we've been able to leverage. What are we doing about that today? It's all about capturing the opportunity. The first is executing for our customers today. In a changing world, we have to consider the customers that have our products today, that like our products today, understand what we do. We have to execute for them every day. That's the basis. We start there, that's a position that we can continue to leverage off of. The second is emphasizing growth. That's something within our company that we're focused on, is how do we protect more people?
Our annual report this year, we focused on that in terms of how we take people forward and actually protect more individuals here in the U.S., in the U.K., and other parts of the world. I think that that's a great opportunity that we have when we think about it at that basic level, one by one, more people that we can protect and protecting more tomorrows. The second is investing in technology. We are spending an enormous amount of money today investing in a technology, not just for today, but for tomorrow, and making sure that as we look out 5 years, 10 years, as the world changes, that we have the ability to adapt to those technologies that we have out there. It's a key focus of what we have going on today.
The amount of money we're spending on technology, the amount of time, the amount of resource we're putting into our technology platforms is incredibly focused today, and we'll continue to take that as we look out over the next several years in terms of the investment that we're going to continue to make in that technology. Lastly, as I mentioned at the beginning, it's all about the people. How do we attract and retain the best talent out there? People that are customer-focused, people that are driving, that are leaning into the changes they're seeing around them. We have to be a company that's attracting this talent, but also looking to our 10,000 strong workforce and making sure that we're engaging and that we're developing them every day as well. We're pretty excited about the opportunity we have.
I'd wrap on saying that our people make the difference. These are some of the awards we've gotten over time. This isn't about a company, this is about 10,000 individuals making up a culture of a very strong company that we have today. We're involved in our communities, we're involved in actually development of individuals, and we see ourselves as having the strength, and we're going to continue to nurture this as we look forward. Changing, adapting, yes, but certainly recognizing that our people are the ones that make the difference. With that, I'd like to thank you, I'd like to thank the board, on behalf of the management team. I'd like to thank our shareholders, our customers, and pretty much everybody in terms of the confidence that you put in us every day.
We take it very seriously what we do to protect Americans across the board as well as in the U.K. We're going to continue to do that, and we're very thankful for the trusted confidence that you place in our management team to always do the right thing, to always take the company at a more accelerated pace to fulfill those goals. With that, let me turn it over to Jack McGarry to talk about some of our financials. Jack?
Thank you, Rick, and good morning, everyone. I want to take a few minutes to review the key financial highlights of the company during 2015. At Unum, we pride ourselves on consistent, predictable performance, and I'm happy to report that in 2015, we continued to deliver on that expectation. Earnings per share growth in 2015 was 3.7%. That was at the high end of our outlook of 2%-4% for the year. Over the 8-year period, we've produced compound annual growth rate of 5.3%. We have grown in every single one of those years. There have been no dips during that period. What makes this more remarkable is we've been able to achieve it in a relatively difficult environment. We've faced persistent low interest rates and a very sluggish economy. That affects both profit margins as well as growth prospects.
Despite those pressures, we've been able to produce that kind of growth and performance. That growth and performance is a result of our commitment to disciplined underwriting, pricing, and risk management, as well as prudent capital management. I'm also happy to report that in 2016, we've continued that excellent growth with a 6.7% earnings per share growth over the prior year period. Very strong results from an earnings per share perspective. As encouraging as the earnings per share growth is, it's a return of growth of our top line. In 2013, you see a dip in our overall premiums as a company. That was a result of the Affordable Care Act. Now, the Affordable Care Act didn't affect the products we sell, but it had a major effect on the markets that we sell to.
Both brokers and employers were frozen trying to understand and interpret this enormous act and determine what their options were going forward. That overhang lifted going into 2014, and we took great advantage of it. We began to see significant growth in sales and premiums going into 2014, and that growth continued into 2015, as well as the first quarter of 2016. Moreover, this actual growth probably understates it as a company because the total premium in our company includes the closed block, which are businesses that we no longer actively market. That block is actually shrinking. If you looked at the core growth of our company, the businesses that we're continuing to sell, our growth for the last few years has actually been over 5%. Another key element of our performance as a company and our shareholder returns is our consistent free cash flow generation.
This has allowed us to strengthen our balance sheet over the past decade. It supported earnings per share growth through share repurchases, and we've been able to maintain financial flexibility to take advantage of opportunities in the marketplace as they arise. Good examples of this, is the acquisition of National Dental Plan, a U.K. dental company in 2015, as well as the more recent acquisition of Starmount, a dental company that was announced just last month. Starmount is a strong regional dental player in the Southern U.S. Their performance has been characterized by steady operating earnings, as well as a reputation for excellent customer service. What Starmount brings to this company is a platform in the dental business that we can build off of. It's been very successful in its region, and it's robust enough to build nationally.
Taking that platform and combining it with our national distribution prowess, we are committed to becoming a major dental player in the very near future. In addition, we've had strong capital management over the past decade. Over the past eight years, we've returned $4.4 billion to our shareholders, both in the forms of a steadily increasing dividend as well as share repurchase. We've been able to repurchase a third of our float over that period. I'm happy to announce today that we will be increasing our dividend from $0.185 per quarter to $0.20 per quarter to continue that steady performance of returning capital to shareholders. In addition to the return of capital, we've seen steady growth in our book value per share.
We've been able to maintain that steady growth in book value per share while maintaining our returns in the marketplace, our return on equity. Growing book value per share with a steady return on equity is a well-worn recipe for shareholder appreciation. Our stock has followed that line up very nicely. Rick talked about our total shareholder performance. It bears repeating. We outperformed the broad market indices over the last 10 years. We have significantly outperformed the S&P Life & Health Index over that same period. That strong performance has been the result of our dedication to discipline, our consistent results, as well as prudent capital management. In closing, we have a strong history of consistent performance. That consistent performance has allowed us to both strengthen our organization and create shareholder value. We continue to invest in the growth of our businesses.
We continue to create shareholder value through share repurchases and earnings per share growth. Finally, we continue to maintain the financial flexibility to take advantages of opportunities in the marketplace. A very strong 2015, an excellent start to 2016. With that, I'll turn it back to Tom.
Thanks, Jack. Thank you, Rick and Jack. What Rick and Jack obviously described is a very special business. A business, when you think about it, has an enormous purpose. Delivering things that we deliver to our customers each and every day at a time when they have a desperate need for help and support is an honorable business to be in. I think you can see that from the things that we do, that this starts with that. It's also a business, though, if we consistently perform and operate, we'll produce solid capital and solid financial results, which gives us the latitude to do a lot of things. It gives us the latitude to invest in our businesses. It gives us the latitude to make acquisitions, which we've obviously been doing very selectively but very strategically.
It allows us to do things like Jack just reported, which is raise our dividend and continue to buy back shares. It's nice to have those two elements, but it's also nice to have the element that Rick closed with, which is the opportunity to build and grow. There's tremendous opportunity that lies ahead. Even though there's always challenges out there, it's nice to know there's a market out there that has a need for the things that we do and puts that marker out there for us to seek, which is how do you build and expand a business as a market leader. I will say, as a board, I think we feel the company's in a very unique position right now.
We're as strong as we've ever been, and I can assure you that we as management and we as the board are going to continue to take the actions necessary to continue to deliver value for our customers and for our shareholders. You have that commitment from us. This now brings us to the question and answer portion of our agenda. Before taking shareholder questions, I'd like to ask Lisa to review the process with everyone.
Thank you, Tom. If you wish to ask a question, please raise your hand and a microphone will be brought to you. Please speak directly into the microphone so that everyone can hear your question. We ask that you begin by stating your name and confirming that you're a shareholder. Questions should be relevant and as brief as possible so that all shareholders wishing to speak may do so. Remarks should be limited to no more than three minutes, and questions should be addressed to the chairman. Thank you for your cooperation.
Thank you, Lisa. We have microphones around the room. Do we have any questions? Given the excellent report from both Rick and Jack, we have no questions, apparently. Well done, the two of you in many respects. I'd like to thank all of you for joining us today. Also, most importantly, thank you for your support. We recognize we've got to earn your support each and every day through performance, and I think we're very much up to the task. Again, thank you very much for joining us, and we'll see you again next year.