2018 Horace Mann Educators Corporation Annual Meeting of Shareholders Meeting Notice & Proxy Statement AUTO HOME LIFE RETIREMENT

You are cordially invited to attend the Annual Meeting of Horace Mann Educators Corporation to be held at 9:00 a.m. Central Daylight Saving Time on Wednesday, May 23, 2018, at the Horace Mann Lincoln Auditorium, 1 Horace Mann Plaza, Springfield, Illinois 62715.

We will present a report on Horace Mann’s current affairs, and Shareholders will have an opportunity for questions and comments.

We encourage you to read the Proxy Statement and vote your shares as soon as possible. You may vote via the Internet, by telephone or by completing and returning a proxy card. Specific voting instructions are set forth in the Proxy Statement, the Notice of Internet Availability of Proxy Materials and the proxy card. You may revoke your voted proxy at any time prior to the meeting or vote in person if you attend the meeting.

We look forward to seeing you. If you vote by proxy and do not plan to attend, let us know your thoughts about Horace Mann either by letter or by comment on the proxy card.

Sincerely,

		Gabriel L. Shaheen
		Chairman of the Board
		Marita Zuraitis
		President & Chief Executive Officer

ANNUAL MEETING OF SHAREHOLDERS

Meeting Notice

Horace Mann Educators Corporation

1 Horace Mann Plaza

Springfield, Illinois 62715-0001

HORACE MANN EDUCATORS CORPORATION

2018 Proxy Statement — Summary

Fiscal Year 2017 Business Highlights

The Company delivered solid underlying financial results across all three segments of its business in 2017. Full year core earnings were $1.74 per diluted share. Book value per share* increased 6.2% in 2017 driven by the solid operating results and positive contributions from investment portfolio performance as well as the benefit related to the passage of the Tax Cuts and Jobs Act of 2017. In addition, Horace Mann achieved broad-based increases in new business sales and solid policy retentions in 2017. However, Total Shareholder Return was 5.9% in 2017 underperforming key insurance and general market indices that the Company outperformed the prior year.

*Excluding the fair value adjustment for investments and including, for 2017, a $1.20 benefit related to the passage of the Tax Cuts and Jobs Act of 2017.

how to vote online proxyvote.com phone 800-690-6903 mail request a paper proxy card in person attend the annual meeting or send a representative Book value per share* Total shareholder return

These results reflect significant progress on numerous strategic initiatives, including:

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HMEC’s 2017 Annual Report and Form 10-K for a more detailed description of these financial results.

Corporate and Compensation Governance Highlights

Director Term: One year

Director Election Standard: Majority vote

Board Meetings in 2017: 7

Board Committees (Meetings in 2017):

Audit (12), Compensation (5), Executive (0), Investment & Finance (4), Nominating & Governance (4), Customer Experience & Technology (4)

Corporate Governance Materials: www.horacemann.com–Investors - Corporate Overview - Governance Documents

Board Communication: By mail to: Board of Directors, c/o Corporate Secretary, 1 Horace Mann Plaza, Springfield, Illinois 62715. By email to: hmecbofd@horacemann.com

Compensation Governance:

ANNUAL MEETING OF SHAREHOLDERS

Proxy Statement

Contents

General Information

Proposals and Company Information

PROPOSAL NO. 1 - ELECTION OF NINE DIRECTORS

The Bylaws of the Company provide for the Company to have not less than five or more than fifteen Directors. The following nine persons currently are serving as Directors of the Company (“Directors”): Daniel A. Domenech, Stephen J. Hasenmiller, Ronald J. Helow, Beverley J. McClure, H. Wade Reece, Gabriel L. Shaheen, Robert Stricker, Steven O. Swyers and Marita Zuraitis. The terms of these Directors expire at the Annual Meeting.

Board Qualifications

The Board of Directors believes it is necessary for each of the Directors to possess a variety of qualities and skills. The Nominating & Governance Committee conducts all necessary and appropriate inquiries into the background and qualifications of Board candidates including the determination of independence. In addition, the Nominating & Governance Committee has identified areas of expertise that it believes support the Company’s business strategy in the short and long-term, enable the Board to exercise its oversight function and contribute to a well-rounded Board.

The list below highlights certain key qualifications and experience of our current Board.

Board Diversity, Age and Tenure

The Nominating & Governance Committee does not have a formal diversity policy; however, the Board and the Nominating & Governance Committee believe that it is important that the Board be comprised of individuals with expertise in fields relevant to the Company’s business, experience from different professions, a diversity of age, ethnicity and gender, and a range of tenures.

The Nominating & Governance Committee is responsible for reviewing with the Board, on an annual basis, the requisite skills and characteristics of new Board members as well as the composition of the Board as a whole. This assessment includes consideration of experience, perspective, background, skill sets, age, ethnicity, and gender makeup of the current Board as well as the candidate’s individual qualities in leadership, character judgment and ethical standards.

Diversity age tenure

The Nominating & Governance Committee believes our Board Nominees (as identified below) represent a diverse base of perspectives and reflect the diversity of the Company’s employees, customers and Shareholders, as well as an appropriate level of age and tenure, as further illustrated below.

Board Refreshment

The Board and Nominating & Governance Committee regularly consider the long-term make up of the Board and how the members of the Board change over time. The Board and Nominating & Governance Committee understand the importance of Board refreshment and strive to balance the knowledge that comes from longer-term service on the Board with the new experience, ideas and energy that can come from adding directors to the Board. Directors who are 75 years of age or older may not stand for election in the absence of a specific finding by the Board that there are special circumstances to justify an exception, which supports Board refreshment.

As Horace Mann continues to focus on profitable growth across all lines of business, the ongoing transformation of its technology and operations, and exploring inorganic growth opportunities, we will continue to consider Board refreshment opportunities.

Board Nominees

Upon the recommendation of the Nominating & Governance Committee, the Board nominated Dr. Domenech, Mr. Hasenmiller, Mr. Helow, Mr. Hines, Ms. McClure, Mr. Reece, Mr. Stricker, Mr. Swyers and Ms. Zuraitis (the “Board Nominees”) to hold office as Directors. The proxies solicited by and on behalf of the Board will be voted “FOR” the election of the Board Nominees unless you specify otherwise. The Company has no reason to believe that any of the foregoing Board Nominees is not available to serve or will not serve if elected, although in the unexpected event that any such Board Nominee should become unavailable to serve as a Director, full discretion is reserved to the persons named as proxies to vote for such other persons as may be nominated, or the Board may reduce the size of the Board. Each Director will serve until the next Annual Meeting of Shareholders and until his or her respective successor is duly elected and qualified.

The following information, as of March 15, 2018, is provided with respect to each Board Nominee:

		Daniel A. Domenech   Age: 72 Director Since: 2015   Horace Mann Committees: Customer Experience & Technology Nominating & Governance		Dr. Domenech has served as the Executive Director of American Association of School Administrators (“AASA”), The School Superintendents Association, a professional organization for educational leaders, since July 2008. He is currently Chairman of the Board of the Communities in Schools of Virginia and is a member of the Board of Directors of Learning First Alliance, the Center for Naval Analyses, ACT and Universal Service Administrative Company (“USAC”) where he Chairs the Schools and Libraries Committee. Dr. Domenech is also a past President of the New York State Council of School Superintendents, the Suffolk County Superintendents Association and the Suffolk County Organization for Promotion of Education, and was the first President and cofounder of the New York State Association for Bilingual Education. In addition, he has served on the U.S. Department of Education’s National Assessment Governing Board, on the Advisory Board for the Department of Defense schools, on the Board of Directors for the Baldrige Award and on the National Board for Professional Teaching Standards. Dr. Domenech has more than 40 years of experience in public education.   Dr. Domenech’s experience in public education provides the Board with valuable insight into the Company’s niche market and the challenges and opportunities within that market.

		Marita Zuraitis   Age: 57 Director Since: 2013   Horace Mann Committees: Customer Experience & Technology Executive Investment & Finance		Ms. Zuraitis was appointed to her present position as President and Chief Executive Officer in September 2013. She joined the Company in May 2013 as President and Chief Executive Officer-Elect. Ms. Zuraitis joined Horace Mann from The Hanover Insurance Group where she was an Executive Vice President and a member of The Hanover’s Executive Leadership Team. From 2004 to 2013, she served as President, Property and Casualty Companies, responsible for the personal and commercial lines operations at Citizens Insurance Company of America, The Hanover Insurance Company and their affiliates. Prior to 2004, Ms. Zuraitis was with The St. Paul/Travelers Companies for six years, where she achieved the position of President and Chief Executive Officer, Commercial Lines. She also held a number of increasingly responsible underwriting and field management positions with United States Fidelity and Guaranty Company and Aetna Life and Casualty. She is Vice Chair of the Board of Trustees of The Institutes, the leading provider of risk management and property-casualty insurance education, whose offerings include the premier CPCU® designation, and a past member of the Board of Directors of LL Global, Inc., a trade association with operating divisions LIMRA and LOMA. She is also a member of the Board of Directors of Citizens Financial Group, Inc. Ms. Zuraitis has over 30 years of experience in the insurance industry.   Ms. Zuraitis’s knowledge of and extensive background in the insurance industry contribute to Board discussion and understanding of issues impacting the Company.

All of the Board Nominees were elected Directors at the last Annual Meeting of Shareholders of the Company held on May 24, 2017, with the exception of Mr. Hines, who was recommended for nomination as a Director by the Company’s Nominating and Governance Committee.

The Board recommends that Shareholders vote FOR the election of these nine nominees as Directors.

The following table identifies membership and the Chairman of each of the current committees of the Board, as well as the number of times each committee met during 2017.

        Chair - Committee Chair

        X - Committee member

Director Compensation

The compensation program for non-employee Directors is shown in the following table:

The following table sets forth information regarding compensation earned by, or paid to, the non-employee Directors during 2017:

Corporate Governance

Compensation Discussion and Analysis

Executive Summary

This summary highlights information from this Compensation Discussion and Analysis section and may not contain all the information that is necessary to gain a full understanding of our policies and decisions. Please read the entire Compensation Discussion and Analysis section and compensation tables for a more complete understanding of our compensation program.

Our Business

We are a personal insurance and financial services business with approximately $11.2 billion of assets and approximately $1.2 billion in total revenue as of December 31, 2017. Founded by Educators for Educators^®, we offer our products and services primarily to K-12 teachers, administrators, and other public school employees and their families. We underwrite personal lines of auto, property and life insurance, as well as retirement products in the United States.

2017 Business Highlights

The Company delivered solid underlying financial results across all three segments of its business in 2017. Full year core earnings were $1.74 per diluted share. Book value per share* increased 6.2% in 2017 driven by the solid operating results and positive contributions from investment portfolio performance as well as the benefit related to the passage of the Tax Cuts and Jobs Act of 2017. In addition, we achieved broad-based increases in new business sales and solid policy retentions during the past year. Total Shareholder Return was 5.9% in 2017 underperforming key insurance and general market indices that the Company outperformed the prior year.

*Excluding the fair value adjustment for investments and including, for 2017, a $1.20 benefit related to the passage of the Tax Cuts and Jobs Act of 2017.

These results reflect significant progress on numerous strategic initiatives, including:

-  Achieved 1 point of underlying auto combined ratio improvement

-  Property reported combined ratio of 97.0 despite record catastrophes

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HMEC’s 2017 Annual Report and Form 10-K for a more detailed description of these financial results.

2017 Executive Compensation Highlights

Pay Governance

Oversight

The Committee oversees our executive compensation program. The current members of the Committee are Mr. Hasenmiller, Ms. McClure, and Mr. Shaheen. Mr. Hasenmiller serves as the Committee Chair. Consistent with the listing standards of the NYSE, the Committee is composed entirely of independent Directors.

The Committee retained Compensation Advisory Partners LLC (“CAP”) as independent compensation consultants. CAP provides information and advice on the competitive market for executive talent, evolving market practices in our industry and the general employment market, regulatory and other external developments, and our executive compensation philosophy and incentive program design. In this way, CAP assists the Committee with ongoing education. Also, Committee members comply with Directors’ education requirement to help ensure each remains up to date on current issues relevant to the Company and its business.

The CAP consultants report directly to the Committee, attend the Committee meetings and portions of executive sessions of the Committee at the Chair’s request (generally with the Board’s outside legal counsel, but without management present). CAP serves at the pleasure of the Committee, and performs no services for management. CAP works with management to obtain necessary data and perspectives on the Company’s strategic objectives, business environment, corporate culture, performance, and other relevant factors. This information is used by CAP to formulate its recommendations related to competitive compensation performance targets and overall design. CAP’s findings and recommendations are reported directly to the Committee. The services provided by CAP during 2017 are described in more detail throughout this CD&A. Pursuant to regulatory requirements, the Committee assessed CAP’s independence (along with that of its other direct and indirect

consultants and advisors) in 2017 and concluded that CAP’s work did not raise any conflicts of interest. In addition, the Committee has the authority to hire other experts and advisors as it deems necessary.

Management also supports the Committee by providing analysis and recommendations. When setting levels of executive compensation, the Committee requests, receives, and considers the recommendations of the CEO regarding the performance of her direct reports and other Executive Officers. Members of management also attend and contribute to Committee meetings as relevant to the Committee agenda.

The Committee discusses its fundamental views on compensation and guiding principles, as well as its expectations of the CEO’s performance and annual goals, with the CEO and subsequently proposes the CEO’s goals to the Board for approval. The Committee does not include the CEO or other members of management in its discussions with CAP on the CEO’s compensation, nor does the CEO or management participate in the Committee’s recommendation to the Board on the CEO’s compensation.

Say on Pay

At the 2017 Annual Meeting of Shareholders, 70.3% of Shareholders voted, on an advisory basis, to ratify the NEOs’ compensation. This “Say on Pay” advisory vote reflected a significant decrease from the near-unanimous Shareholder support received from the 2011 through 2016 “Say on Pay” advisory votes (average of 97% in favor). The percentage of Shareholders who voted in favor of the 2017 NEO compensation was lower than the Committee and Board desired. Accordingly, we wanted to provide our Shareholders with additional information and context on how we are addressing the reduced 2017 affirmative “Say on Pay” advisory vote.

We take this decline in our “Say on Pay” advisory vote seriously. Fundamentally, our goal is to link our executive compensation programs to long-term value creation and we believe we have had a long-standing record of accomplishing this goal. In response to the 2017 “Say on Pay” advisory vote and at the direction of the Committee, Company management solicited, and received, feedback from certain proxy advisory firms regarding the 2017 NEO compensation. In addition, through regular Shareholder outreach, Company management provided the opportunity for feedback regarding the 2017 “Say on Pay” advisory vote. Shareholders and proxy advisory firms were generally supportive of the Company’s overall compensation program in 2017. However, one advisory firm expressed a concern with executive compensation, based fundamentally on one-time strategic incentive grants provided to our NEOs in 2016, and recommended that the Company disclose threshold performance levels under the AIP and LTIP.

Based on the feedback we received, we are making several changes and including additional disclosure in our CD&A. First, in an effort to ensure the Company’s executive compensation practices are closely aligned with the expectations of our Shareholders and provide additional insight to both our Shareholders and proxy advisory firms, the Committee is disclosing, annually, the peer group it considers when making executive compensation decisions. (See “Compensation levels should be market competitive” below for additional information).

Second, the strategic incentive grants, which were described in depth in both the 2016 and 2017 Proxy statements, were designed to incentivize the achievement of both corporate financial goals and strategic individual goals in order to promote continuity of leadership as the Company pursues its long-term vision, and also strengthen management’s alignment with Shareholder interest. These awards were specifically designed to address key priorities during the Company’s strategic evolution, and are not an ongoing component of our executive compensation program. If the management team is successful in achieving these specific strategic objectives, the Committee believes it will drive incremental value for Shareholders.

Third, threshold, target, and maximum performance levels for our 2017 AIP and 2015-2017 LTIP are discussed in more detail in the “Annual Incentive Plan” and “2015-2017 PBRSUs” sections below. For our 2018 Proxy, we are disclosing threshold levels for our AIP and LTIP.    We consistently have disclosed, and will continue to disclose, our performance goals at the end of each respective performance cycle.

The Committee continues to believe that the overall structure of our executive compensation plans, the absence of excessive perquisites, and our demonstrated pay-for-performance practices reflect the strength of the Company’s executive compensation programs.

Frequency of “Say on Pay” Advisory Votes

Pursuant to Section 14(a) of the Securities Exchange Act, the Board asked Shareholders to vote on the frequency of future “Say on Pay” advisory votes on NEOs’ compensation. Specifically, the Board asked whether “Say on Pay” advisory votes should occur every year, every two years or every three years. 76% of the Shareholder votes cast were in favor of annual “Say on Pay” advisory votes. The next vote on the frequency of future “Say on Pay” advisory votes will be conducted in 2023.

Executive Compensation Program

Guiding Principles

The Committee has established a set of core principles that underlie our executive compensation program. These core principles provide guidance to the Committee and management in making decisions while administering the program or when considering changes. These core principles include strong alignment between pay and performance, incentive to drive Shareholder value, and market competiveness.

Strong pay for performance alignment

We target compensation around the median of the competitive market, with executives earning more or less than median, generally based on the performance of the Company and value delivered to Shareholders. Our core executive compensation program includes base salary, an annual cash incentive plan under the AIP, and long-term equity awards under the LTIP. Both the AIP and LTIP are administered under the Shareholder-approved 2010 Comprehensive Executive Compensation Plan, as amended (“CECP”). Incentive awards are earned upon the achievement of short-term and long-term business goals that are reviewed and approved by the Committee at the beginning of each performance period. Performance goals are structured to reward business growth, profitability, and relative total shareholder return, balanced with productivity and risk and capital management.

Executive interests should be aligned with Shareholders’

To encourage executive performance on a long-term basis, the Committee grants equity awards with multi-year performance periods and multi-year vesting. In 2017, Ms. Zuraitis received approximately 48% of her target compensation in equity. With respect to the other NEOs, approximately 37% to 46% of their compensation was equity-based.

Incentive compensation should drive long-term value creation and reward strong performance

The AIP performance goals are based on premiums and adjusted operating income to reward strong performance. The LTIP performance goals are directly linked to multi-year growth and return measures to keep executives focused on value creation.

A significant portion of compensation should be “at risk” based on the Company’s performance

For 2017, over 70% of the CEO’s target total pay (base salary, target annual incentive, and target long-term incentive) and over 60% of target total pay for all other NEOs is at risk, and is variable from year to year, and for much of it, the level of payout is dependent on the Company’s performance.

Compensation levels should be market competitive

The Committee sets total direct compensation for the NEOs – salary and target annual and long-term incentive opportunities – within a reasonable range of the median of the competitive market, while providing the ability to decrease or increase compensation if warranted by performance and experience. To determine competitive pay levels, we use an established peer group of similarly sized insurance companies in the Russell 2000^® Index. The Committee worked with CAP to select our peer insurance companies for 2017, based upon assets under management and revenue. The peer group includes the property and casualty, life and health, and multi-line insurance companies charted below. The peer group does not include reinsurance or insurance brokers. We supplement this information with survey market data from published sources including LOMA, Towers Watson, and Mercer. The data from these surveys is scaled to our size by CAP based on revenues or asset ranges. Annually, CAP provides the Committee with a comparison of the base salary, annual incentives and long-term incentives of the CEO with those of other Chief Executive Officers based on the peer group and survey data obtained.

The Committee does not seek to benchmark or set executive compensation at any specific level relative to the peer group. Instead, the Committee uses this information primarily as a general reference point for seeking to determine pay levels and forms of plan design that effectively recognize favorable executive performance and experience, and ensure executive retention. For 2017, CAP’s analysis demonstrated that Ms. Zuraitis’s overall core total direct compensation was consistent with target pay positioning at the median of the market. The other NEOs are assessed against comparable functional matches in the insurance industry and the broader general industry, as appropriate. Based on the data received, and CAP’s analysis, the Committee deliberates in executive session to determine its recommendation for approval by the Board.

Compensation Mix

Our NEOs’ annual compensation consists of base salary, annual incentives and long-term incentives. The targeted compensation mix of total direct compensation for the NEOs for 2017 is illustrated below. The mix of 2017 actual compensation varied as a result of actual incentives earned.

Base Salary

Competitive base salaries are critical to attracting and retaining high performing executive talent. The Committee seeks to pay salaries that approximate median salaries for executives of similar companies in like positions. However, in recruiting new executives, we sometimes exceed these guidelines to attract qualified candidates. There may also be instances where an existing executive’s compensation deviates from the median, up or down, due to experience, performance, responsibilities, compensation history, internal equity, or retention risk.

Salaries for the NEOs and other executive officers are reviewed every 12 months in connection with the review of financial results for the prior fiscal year and the annual performance review discussed under “Annual Performance and Pay Review” below. In 2017, Ms. Zuraitis, Mr. Sharpe, and Mr. Caldwell received base salary increases to move overall compensation closer to the market median. Mr. Conklin received a base salary increase to recognize his promotion to EVP and CFO. Mr. Carley did not receive a base salary increase in 2017. Base salary adjustments for 2017 are shown in the chart below.

Annual Incentive Plan

Our AIP is a cash incentive plan, administered under the CECP, and designed to drive and reward strong performance over a one-year period. Annually, the Committee establishes the performance objectives, threshold, target and maximum performance levels, and the related threshold, target and maximum AIP opportunities for each NEO, expressed as a percentage of base salary. Target incentive opportunity levels for the NEOs are intended to approximate the median of the target bonus potential for similarly situated executives in comparable companies. Maximum incentive opportunities are set at 200% of target.

For 2017, there were four performance measures, with 50% of the award based on Company-wide net operating income, and the remaining 50% divided among specific sales and premiums of the different business lines: P&C net written premium (20%), retirement sales (20%), and life sales (10%), as shown in the chart below. This provides a balance between shareholder return and growth, while complementing the longer-term LTIP metrics, which focus on long-term shareholder value creation.

2017 Annual Incentive Plan Performance Measures

		Adjusted Operating Income - Operating income (GAAP net income after tax, excluding realized investment gains and losses other than those for Fixed Indexed Annuity related options and embedded derivatives) adjusted for P&C catastrophe costs different than the annual Plan, Annuity & Life deferred acquisition costs (“DAC”) unlocking and change in guaranteed minimum death benefit (“GMDB”) reserve due to capital gains and losses and market performance different than Plan, the impact on investment income of share repurchases different than Plan, and debt structure/costs including debt retirement different than Plan.   P&C Net Premium Written (GAAP) - Amount charged for property and casualty policies issued during the year. (Portions of such amounts may be earned and included in financial reports over future periods.)   Retirement Sales - The amount of new business from the sales of Horace Mann annuity products, from Horace Mann and independent agents, as measured by premiums and deposits to be collected over the 12 months following the sale.   Life Sales - The amount of new Horace Mann individual life insurance products sold during the year, as measured by premiums and deposits to be collected over the 12 months following the sale.

All the NEOs’ 2017 annual incentive amounts are based on the same corporate and business line objectives to promote cooperation. The targets for the operating income and sales or premium

measures were based on a review of market conditions and expectations of other companies in the industry as well as our financial plan for 2017 (“2017 Plan”). The 2017 Plan was the basis of our 2017 earnings guidance, which was publicly disclosed in February 2017 in connection with our release of earnings for the year ended December 31, 2016. The Committee believes that tying the AIP to Company performance provides appropriate alignment for an executive’s compensation as it recognizes that the Company as a whole must perform well in order to deliver value to our Shareholders. Further, tying all the NEOs’ AIP awards to the performance of specific business lines incentivizes cooperation among the business line leaders. It is the goal of the Committee to establish measurements and targets that are reasonable, but not easily achieved. The measures and targets are discussed with the CEO, other NEOs, other members of the Board and CAP before they are set.

Each March, the Committee certifies performance and determines AIP payouts for the prior year. Based on the 2017 results of 95.46% of target for Ms. Zuraitis and the other NEOs, the 2017 AIP payouts (paid in March 2018) were as follows:

(1) Mr. Conklin’s Target AIP Opportunity was increased to 50% upon his promotion to EVP & CFO

Long-term Incentive Plan

The intent of our LTIP is to focus executives on shareholder value and key strategic objectives, while promoting retention.

2017 LTIP Aggregate Target Opportunity

In setting the dollar values of the 2017 opportunities under LTIP for each NEO, the Committee targeted amounts that would achieve the Company’s overall objective of positioning total compensation at approximately the market median. The 2017 target grant values for the NEOs were as follows:

2017 LTIP Award Vehicles

For 2017, LTIP is comprised of three vehicles, as illustrated in the chart below: (1) performance-based RSUs; (2) service-vested RSUs; and (3) service-vested stock options.

		Performance-based RSUs - Earned over a three-year period, based upon Relative and Absolute Measures. If any shares are earned at the end of the three-year performance period, the executive fully vests in the award
		Service-vested RSUs - Vest ratably over 3 years
		Stock options - Granted at fair market value with a 10 year life; options vest ratably over 4 years

Performance-Based RSUs (PBRSUs)

The Committee believes that PBRSUs provide an effective vehicle for rewarding executives based on a three-year performance period. Each year, a new three-year period starts, partially overlapping the periods that started the prior two years. PBRSUs were granted on March 7, 2017 for the 2017-2019 performance period, and comprise 50% of the 2017 LTIP opportunity. These RSUs will be earned and vested on December 31, 2019, based on the level of achievement, though no RSUs will be earned if threshold level of performance is not achieved. From the date of grant, PBRSUs accrue dividend equivalents at the same rate as dividends paid to our shareholders, but the dividend equivalents are only paid on the corresponding shares that are earned. If no shares are earned, the dividend equivalents are forfeited. Earned dividend equivalents are converted into additional RSUs.

Service-vested RSUs

The Committee believes that service-vested RSUs assist in the retention of key executive talent. Service-vested RSUs were granted on March 7, 2017 and comprise 20% of the 2017 LTIP opportunity. Service-vested RSUs vest 33% after the first year, vest an additional 33% after the second year and vest the final 34% after the third year from the grant date, and are subject to continued employment to the vesting date. From the date of the grant, the RSUs accrue dividend equivalents at the same rate as dividends paid to our Shareholders. These dividend equivalents are converted into additional RSUs and vest when the underlying RSUs vest.

Stock Options

The Committee believes that stock options provide strong alignment with Shareholder interests, as executives do not realize any value unless our stock price appreciates. They also promote retention. Stock options granted under the LTIP have an exercise price equal to the closing stock price on the date of grant, vest ratably over a four-year period subject to continued employment on each vesting date and have a ten-year term. Stock options were granted on March 7, 2017 and comprise 30% of the 2017 LTIP opportunity. Beginning with the 2017 LTIP grant, the Company transitioned from a blend of Incentive Stock Options (ISO) and Non-qualified Stock Options (NQSO) to all NQSOs. The number of options granted was determined using the Black-Scholes valuation method. For additional information regarding assumptions used for these valuations, see the Company’s 2017 Annual Report and Form 10-K “Notes to Consolidated Financial Statements – Note 1 – Summary of Significant Accounting Policies – Share-Based Compensation.” Upon exercise Executive Officers are required to hold shares equivalent to any proceeds (net of exercise price and related taxes and the costs of the exercise) for a minimum of twelve months.

Timing of Equity Grants

The Committee has granted long-term incentives only at its regularly scheduled Board meetings. The grant date is the applicable resolution as approved or a future date as otherwise specified in the resolution.

2017-2019 Performance-based RSUs

The Performance-based RSUs granted in 2017 have three performance measures as shown below:

		Relative Total Shareholder Return - Relative Total Shareholder Return for the three-year period measured against a peer group of companies.   Relative Operating Return on Equity - Average annual relative Operating Income return on average equity for the three-year period measured against a peer group of companies.   Total Revenue Growth - Measured as the CAGR over the period 12/31/2016 to 12/31/2019 for Written Premium Growth for HMN auto, property, and life and total retirement sales for annuity (HMN, RIA and institutional platform) and HMGA.

Prior Years PBRSU Grants

2016-2018 PBRSUs

The PBRSUs granted in 2016 will not mature until December 31, 2018. Since the applicable 3-year performance period has not yet ended, actual performance against targets is not yet known.

2015-2017 PBRSUs

The performance-based RSUs granted in 2015 matured and vested as of December 31, 2017. The performance measures, targets and payout levels for the PBRSUs granted in 2015 are as follows:

Notes:

Strategic Incentive Grants

As disclosed in our 2016 and 2017 Proxy Statements, in March 2016, we made strategic equity grants to key executives, including four of the 2017 NEOs, under our CECP.

Each executive received a provisional equity grant of PBRSUs contingent on a corporate financial performance goal, earnings per share, and individual strategic goals. If the Performance Goal is satisfied, 50% of the award will be earned and vested on January 1, 2019. The remaining 50% of the award will also be eligible for vesting on January 1, 2019 subject to achievement of individual strategic goals.

The individual goal-based PBRSUs:

The entire award is subject to satisfaction of an objective threshold Company-wide performance goal, which must be met during the performance period beginning on January 1, 2016 and ending on December 31, 2018. If an unexpected event occurs triggering a significant loss, the awards could be eliminated entirely. These 2016 awards are reflected in the 2016 data in the Summary Compensation Table. No strategic incentive equity awards were made in 2017.

Additional Pay Practices

Stock Ownership & Holding Guidelines

Our Executive Officers are required to accumulate and maintain beneficial stock ownership – calculated as a percentage of base salary - as displayed in the table below:

We use book value to measure the value of the shares we require the NEOs to own because book value is less volatile than stock price. For this purpose, the Company’s book value per share is determined by dividing total Shareholders’ equity, less the fair value adjustment for investments, by the number of outstanding shares of common stock.

The NEOs must satisfy stock ownership guidelines within five years of attaining their position. Stock ownership may be achieved by direct ownership or beneficial ownership, including shares held through the Horace Mann 401(k) Plan and RSUs (vested and unvested), as well as beneficial ownership through a spouse, child, or trust. Outstanding stock options are not used in determining stock ownership.

Beginning with stock option grants made in 2011, NEOs are required to hold shares equivalent to any proceeds from a long-term incentive stock option exercise, net of exercise price and related taxes and the costs of the exercise, for a minimum of twelve months after the date of exercise. As part of its 2017 overall review of the executive compensation program, the Committee reviewed the stock ownership guidelines for the Executive Officers, and determined they were appropriate and will be continued in 2018.

As indicated in the following chart, all NEOs have met or exceeded their stock ownership guidelines except for Mr. Carley. Mr. Carley joined the Company in January 2016, and is on target to meet the requirement by the deadline.

Minimum Vesting Period

In 2017, through an amendment approved by the Board, the Company updated the CECP to reflect a minimum vesting period of one year for all equity grants. No portion of any equity grant, including stock options, stock appreciation rights, restricted stock or RSUs, will become vested before the first anniversary of the grant date except in the cases of death or disability.

Annual Performance and Pay Review

To further reinforce a performance-based culture and the tie between Company results and compensation, the Committee reviews each Executive Officer’s performance annually, coinciding with the review of corporate performance results. Each Executive Officer is reviewed not only on prior year business results but also on the individual’s demonstration of leadership skills and progress on specific strategic initiatives and other key priorities. The Committee also considers any adjustments to base salary, annual incentive opportunity, and long-term incentive opportunity at this review. The Committee recognizes the need to have market-competitive compensation opportunities to attract, retain, and reward high performing executive talent.

Risk Assessment

Our programs are structured to discourage excessive risk-taking through a balanced use of compensation vehicles and metrics with an overall goal of delivering sustained long-term Shareholder value while aligning our executives’ interests with those of our Shareholders. To this end, management and CAP conduct, and the Committee and the Board’s outside legal counsel reviews, an annual risk analysis of the compensation plans and incentive metrics. Our executive compensation program requires that a substantial portion of each Executive Officer’s compensation be contingent on delivering performance results. In addition, a significant portion of our NEOs’ compensation is delivered in equity over a multi-year timeframe. The Committee has been advised by the Board’s outside legal counsel that no unreasonable risk exists that a compensation policy or incentive plan would have a material adverse impact on the Company, and the Board agrees with this risk assessment.

Succession Planning Process

To mitigate enterprise risk and leadership gaps, the Committee oversees and monitors the Company’s succession planning process on a regular basis. This process identifies candidates that have the skill sets, background, training, and industry knowledge to assume critical positions on an emergency basis and also for the long-term, if necessary. The Company’s succession plan is also reviewed by the full Board annually.

Minimal Use of Employment Agreements

The Company does not have any individual employment agreements with any Executive Officer and intends to continue to minimize their use, while recognizing that in isolated situations an agreement may be needed for attraction and retention of key executive talent.

Executive Severance and Change in Control Plans

To maintain market competitiveness and allow for the successful recruitment of key executives, the Company maintains the Horace Mann Service Corporation Executive Severance Plan (“Executive Severance Plan”) and the Horace Mann Service Corporation Executive Change in Control Plan (“CIC Plan”). The Executive Severance Plan provides benefits due to loss of position with or without a change in control. The CIC Plan is intended to provide a level of security consistent with market practices, mitigate some of the conflicts an executive may be exposed to in a potential acquisition or merger situation, and serve to ensure a more stable transition if a corporate transaction were to occur. The CIC Plan provides for benefits only in the event of the loss of position following a change in control (i.e., double trigger), as defined in the CIC Plan. Participants in the CIC Plan are designated by position. This plan does not have tax gross-up provisions. Currently, all of the NEOs participate in the Executive Severance and CIC Plans. The CIC Plan does not permit duplicate benefits under the Executive Severance Plan.

The multiple of the sum of salary plus target annual incentive, payable in the form of salary continuation (for the Executive Severance Plan), and payable in a lump sum (for the CIC Plan), is set forth in the following table:

Retirement Plans

The NEOs participate in our Horace Mann 401(k) Plan and a supplemental defined contribution plan designed to provide benefits that cannot be provided under our tax-qualified defined contribution plan because of certain limitations imposed by the Internal Revenue Code. Each of these two plans includes a Company contribution. The amounts contributed for each NEO are included in the “Summary Compensation Table.” These types of plans are customarily offered within our industry. No NEO participates in the Company’s defined benefit plan or supplemental defined benefit retirement plan because participation in those plans was limited to individuals hired prior to January 1, 1999 and all of our NEOs were hired after that date.

Deferred Compensation

Prior to 2009, the LTIP permitted certain elective deferrals. Pre-2009 account balances are maintained in notional deferred Common Stock equivalent units, which accrue dividend equivalents at the same rate as dividends paid to our Shareholders. These dividend equivalents are converted into additional deferred Common Stock equivalent units. Mr. Conklin is the only NEO with an account balance under this arrangement.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

The Company previously offered a nonqualified deferred compensation plan to executives, which allowed them to defer receipt of long-term incentive cash compensation earned prior to 2009 when

cash was a component of the LTIP. Executives were allowed to defer up to 100% of their earned long-term cash incentive into HMEC’s deferred Common Stock equivalent units. All the NEOs except Mr. Conklin were hired after 2009 and do not have an account in the plan.

The Company also sponsors an unfunded excess pension plan, the Nonqualified Defined Contribution Plan (“NQDCP”), which covers only the base salary compensation in excess of the Section 415 limit, which in 2017 was $270,000. The NQDCP accounts are established for the executives at the time their compensation exceeds the Section 415 limit and the NEOs are credited with an amount equal to 5% of the excess. In addition, the NQDCP accounts are credited with the same rate of return as the qualified plan sponsored by the Company for all employees.

Clawbacks

The Committee believes that our compensation program should reward performance that supports the Company’s culture of integrity through compliance with applicable laws and regulations and our codes of ethics and conduct. As a further step to support that belief, the Committee has determined that all Executive Officers are subject to the same standards as the CEO and CFO regarding cash compensation clawbacks as defined under Section 304 of the Sarbanes-Oxley Act of 2002. In addition, under the CECP, the Company is entitled to recover any cash or equity award if it is determined that an executive’s own misconduct contributed materially to the executive’s receipt of an award. If changes are made in future applicable legislative or regulatory guidance, the Company will modify the current clawback provisions to comply.

Hedging, Pledging Prohibitions

NEOs and other Executive Officers are prohibited from engaging in hedging transactions in our common stock. They are also prohibited from pledging their shares of our common stock.

Perquisites and Personal Benefits

The only perquisites we provide are financial planning services, which are commonly provided among our peer companies. Please see the “Summary Compensation Table” for further details. Our NEOs do not receive other personal benefits.

Tax Implications

Favorable tax treatment of the various elements of the Company’s total compensation program is an important, but not the sole, consideration in the design of the compensation program. On December 22, 2017, legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”) was enacted that significantly impacts the tax treatment of executive compensation.

Section 162(m) of the Internal Revenue Code was revised and generally disallows a tax deduction to public corporations for compensation over $1,000,000 paid for any fiscal year to the corporation’s CEO, CFO, and three other most highly compensated Executive Officers (the Covered Employees). In addition, the Tax Act eliminates the exception for performance-based compensation subject to a transition rule for pre-existing contracts, provides that any individual identified as a Covered Employee beginning after December 31, 2016 remains a Covered Employee for all future years, and applies the $1,000,000 limitation to any compensation paid to such Covered Employees after employment ends or death.

The Committee believes that Shareholder interests are best served by not restricting the Committee’s discretion and flexibility in developing compensation programs, even though such programs may result in certain non-deductible compensation expenses as a result of the Tax Act.

Compensation Tables

Summary Compensation Table

The following table sets forth information regarding compensation of the Company’s Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated executive officers during 2017, 2016, and 2015.

Detail of All Other Compensation

The following table sets forth information regarding all other compensation paid to, or earned by, the NEOs in 2017.

CEO Pay Ratio

Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we calculate a ratio of total pay for our Chief Executive Officer compared to total pay for our median employee (“CEO Pay Ratio”). To identify our median employee from among our employees as of 12/31/2017, we use total cash at target (annualized base salary as of 12/31/2017 plus annual bonus target), as we believe this is the most representative measure of annual compensation for our broader employee population.

Once the median employee is identified, we compile the same pay elements for the median employee that we do for the NEOs as displayed in the Summary Compensation Table. We then compare total pay of our CEO (as displayed in the “Total $” column of the Summary Compensation Table) to total pay of our median employee.

The following table sets forth information regarding CEO Pay Ratio.

Grants of Plan Based Awards

The following table sets forth information concerning the grant of the 2017 annual incentive and the grant of the 2017 long-term incentive for the 2017 – 2019 performance period. Actual payouts under the 2017 AIP are included in the “Summary Compensation Table.” Payouts for the 2017 long-term incentive grant and the determination of the actual RSUs earned will not occur until after the completion of the 2017 – 2019 performance period.