📄 What This Document Is

This is a DEF 14A, or Definitive Proxy Statement. Think of it as a formal "meet-up guide" and report card for the company's owners (shareholders). It explains what will be voted on at the upcoming annual meeting and provides key information about the company's performance, leadership, and pay.

👉 Why it matters: It's your window into how the company is run, who's in charge, and whether management is being rewarded appropriately for the job they're doing.

🏢 What The Company Does

In simple terms, Principal Financial Group (PFG) is a global financial security company. They help people and businesses plan for retirement, manage investments, and protect against risks like disability or life events.

👉 Their business model focuses on three main areas: the retirement ecosystem (managing 401(k)s and pensions), providing services to small and mid-sized businesses (SMBs), and global asset management (investing money for clients). They serve about 75 million customers.

🚀 A Year of Transition & Strategy

2025 was a pivotal year marked by a smooth CEO transition and strategic execution.

• New Leadership: Deanna Strable-Soethout became CEO in January 2025 and then added the role of Board Chair in September 2025 after the retirement of Dan Houston.
• Strategic Focus: The company doubled down on its three "profit pools": retirement, SMBs, and global asset management. Key wins include strong deposit growth in retirement plans, a 50% jump in private market sales, and above-market growth with SMB clients.
• Operational Efficiency: They deployed over 100 AI use cases to drive savings and expanded company-wide training. Enterprise margins improved by 0.8% to 31%.

💰 Financial Highlights (2025)

The company hit its financial targets for the year.

• Assets: Managed $781 billion in assets and administered $1.8 trillion.
• Capital Strength: Maintained a strong capital position with $1.6 billion in excess capital and a healthy insurance subsidiary risk-based capital (RBC) ratio of 406%.
• Shareholder Returns: Returned over $1.5 billion to shareholders through $851 million in stock buybacks and $684 million in dividends. Total shareholder return was 18%, beating the S&P 500.

👥 The Board & Governance

The board oversees the company on your behalf. Here’s what you need to know.

• Independence: The board is overwhelmingly independent (11 out of 12 directors). All key committees are made up solely of independent directors.
• Skill Mix: Directors bring deep experience in financial services, technology, international business, risk management, and more—critical skills for overseeing a complex financial company.
• Board Refreshment: Half of the independent directors have been appointed in the last six years, balancing fresh perspectives with valuable experience.
• Leadership Structure: After the transition, the CEO and Board Chair roles were combined. This is supported by a strong Lead Independent Director (Scott M. Mills) who leads sessions of only independent directors.

🗳️ What You're Voting On

Shareholders will vote on four main proposals at the May 19, 2026, meeting.

1. Elect Directors: Vote on five nominees to the board.
2. Approve Executive Pay ("Say-on-Pay"): An advisory vote on the compensation of top executives.
3. Ratify Auditors: Approve Ernst & Young LLP as the independent accounting firm for 2026.
4. Approve a New Stock Plan: The 2026 Stock Incentive Plan, which is used to attract and retain talent through equity awards.

👉 The Board recommends a "FOR" vote on all four proposals.

💼 Executive Compensation

The proxy details how top executives are paid, aiming to link pay to company performance.

• Philosophy: The goal is to incentivize long-term growth and shareholder value. A significant portion of pay is "at-risk" (bonuses and stock), not just a fixed salary.
• CEO Pay: For 2025, CEO Deanna Strable-Soethout's total compensation was $14.5 million. This is detailed in a required table later in the document.
• Other Named Executives: The "Summary Compensation Table" on page 37 breaks down pay for the other four top-paid executives, with total 2025 compensation ranging from $5.1 million to $8.7 million.

⚖️ Big Picture

👍 Strengths:

• Clear strategy focused on attractive, growing markets.
• Strong execution and financial discipline, hitting targets.
• Successful leadership transition and deep board expertise.
• Robust capital return to shareholders.

⚠️ Risks to Watch:

• Operating in a "volatile macro environment."
• Intense competition in the retirement and asset management industries.
• Reliance on market performance and interest rates, which can affect investment returns and insurance profits.

🧠 The Analogy

Think of this proxy statement as the annual report for a major league sports team's ownership group. The "team" (Principal) had a great season (strong financial results), successfully brought in a new head coach (CEO), and has a clear game plan (strategy). The "ownership group" (shareholders) is now being asked to vote on keeping the same "team managers" (the board), approve the "coach's contract" (executive pay), and sign off on the "team accountants" (auditors).

🧩 Final Takeaway

Principal Financial Group is a well-run, stable company with a refreshed leadership team that is executing a clear strategy. The board appears independent and skilled, and the company is returning significant cash to shareholders. Your vote is a chance to endorse the current direction and governance.