PRINCIPAL FINANCIAL GROUP INC

​

The Committee uses this information to analyze the value of compensation actually delivered versus the compensation opportunities established by the Committee. The information is also used in making compensation and compensation plan design decisions.

2025 executive compensation decisions

As stated above, the Company’s pay philosophy is to target the market median of the Peer Group for a Named Executive Officer’s total compensation, with actual compensation varying based on performance and tenure.

The Committee made compensation decisions for the Named Executive Officers based on:

•

The Company’s strategic and human resources objectives;

​

•

Competitive data for the Peer Group and for a broader group of diversified financial services companies (see Appendix A for a complete list of these companies);

​

•

Corporate and individual performance on key initiatives;

​

•

Corporate performance compared to our competitors;

​

•

Economic conditions;

​

•

Retirement benefits;

​

•

The CEO’s compensation recommendations for Named Executive Officers;

​

•

Advice of the Committee’s compensation consultant; and

​

•

How the elements of compensation contribute to and interrelate with total compensation.

​

The Committee also considers the tax and accounting consequences of each element of compensation. Following changes in the tax laws in 2017, we generally cannot deduct annual compensation paid to certain covered employees in excess of $1 million for each such employee, subject to limited grandfathered arrangements. Accordingly, these and other factors often result in compensation opportunities that will not be fully tax deductible. To attract, retain, and reward executives who help us realize our strategic initiatives and objectives, the Committee believes that it should consider all relevant factors in the design of our compensation program. While the Committee considers the tax consequences of compensation decisions, the Committee’s primary focus is designing competitive and effective compensation programs.

Key elements of fiscal 2025 compensation program

The charts below show the 2025 target total compensation for our Named Executive Officers, as well as the proportion of their compensation tied to Company performance. Most compensation paid to our Named Executive Officers is variable and at-risk, linked to meeting our short-term and long-term financial and strategic goals and to the performance of the Company’s stock over time.