UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.      )

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Soliciting Material under §240.14a-12

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PRINCIPAL FINANCIAL GROUP, INC.​

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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From our CEO

Dan Houston
Chairman, President, and Chief Executive Officer
Principal Financial Group®

2023 was a strong year for Principal®. With discipline and focus we continued to execute our strategy as we navigated a dynamic market environment full of challenges and opportunities. Our diversified and integrated business portfolio continued to prove resilient as we delivered on our ambitious outlook for the year, while serving the needs of our 62 million customers1. I’m proud of our persistent focus and execution, intent on maximizing your investment as a Principal shareholder.

Our business model is a true differentiator for us. Few competitors have our combination of businesses, expertise, and success across high growth markets. This unique mix positions us to meet customers’ evolving needs in ways that add value for them and set us apart from our competitors.

In 2023 we continued to strengthen our three growth drivers: asset management, retirement, and benefits and protection. We focused on opportunities for growth both within and between our lines of business—​leaning into our strengths and expertise.

Evolving our asset management business

In 2023, we integrated our global capabilities across Principal Global Investors and Principal International to further strengthen our asset management business. We added key talent across our business, including our investment engine, while continuing to invest in private market and specialist public market capabilities to meet evolving client needs.

It was undoubtedly a challenging year for asset managers as retail investors navigated away from risk assets. Principal continued to benefit from our strategic diversification—across developed markets, client segments, and relationships with long-term partners in emerging markets.

We bolstered our investment capabilities and continued to innovate in the face of changing client demands. Our offerings continue to resonate with investors. For example:

•

Thanks to strong synergy between our multi-asset investment team and our retirement business, assets under management in our target date funds reached an all-time high of  $91 billion, with over $1 billion in positive net cash flow in 2023. These investment solutions remain important for our retirement clients, as they offer a professionally managed portfolio that navigates the markets, with active and passive management and active asset allocation—all aligned with their investment objectives.

​

•

By year end, the capital committed to our Principal Alternative Credit business surpassed $2 billion since it launched in 2020. We have generated an 11% gross internal rate of return in those three years, and the current portfolio yield is 13%—a compelling offering for our clients2.

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1

As of December 31, 2023

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2

IRR is unlevered and is the aggregate weighted average IRR of all loans made by the Principal Alternative Credit team from July 2020 to December 2023. The Net IRR for the three years mentioned is 10.22%, reflecting the application of the top tier management fee of the portfolio. Yield is weighted average yield to maturity at time of close. Principal Alternative Credit is an investment team within Principal Global Investors.

​

At the start of 2024, we announced a new president of asset management. Kamal Bhatia stepped into the role in February, after five years with Principal and significant previous experience in investment solutions, business strategy, client engagement, and product development. He succeeds Pat Halter, who retires in April 2024 after 40 years with Principal. Pat guided Principal Asset Management through significant growth and change, including expansion and diversification of its active, specialty investment capabilities into private markets and new geographies. Pat’s leadership and wisdom will be missed, but I am confident the organization is in excellent hands, and I’m excited for all that’s ahead.

Delivering comprehensive retirement solutions

Retirement is a significant and growing opportunity for Principal as the U.S. population ages and more Americans retire. We continue as a top three retirement provider3 in the U.S. and one of only a few brands to offer a comprehensive set of retirement and income solutions—from defined contribution to complete pension solutions, non-qualified deferred compensation, stock plans and equity compensation, trust and custody solutions, and investment management.

To meet the needs of our employer customers—large and small—and individual participants in our retirement plans, we continued to invest in the solutions and support that help generate positive, long-term financial outcomes and drove strong sales in the business. At the same time, we carefully managed our expenses in line with revenue—which helped drive our full year margin toward the top end of our targeted range. Notable highlights include:

•

Strong sales across our retirement franchise, up 9% from 2022, were driven in part by a 17% increase in fee-based transfer deposits and a 50% increase in pension risk transfer sales. We also experienced strong revenue retention and profitable growth within our existing customer base.

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•

Worth specifically noting: Growth within our annuity products exceeded expectations, largely because of nearly $3 billion in pension risk transfer sales (increasing from $1.9 billion in 2022) and the launch of our first Registered Index-Linked Annuity (RILA), Principal® Strategic Outcomes. This timely annuity solution helps individuals nearing retirement to manage investment risk, particularly as market uncertainty persists.

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Leveraging our benefits expertise in the workplace

The small to midsize business (SMB) market segment continues to represent a sizeable opportunity for Principal, and it’s a place where we win. We’ve captured our position as a market leader through decades of focus—developing rich expertise and insight into the needs of growing businesses, designing and delivering SMB-tailored solutions in retirement and insurance, and creating broad distribution partnerships to reach this market. Today, 40% of total company earnings are generated by our SMB customers. And, despite the macroeconomic challenges of 2023, the SMB market proved resilient.

This resilience helped us deliver key results, including:

•

Our strategic shift to focus on the business market paid off. Within Life Insurance, premium and fees increased 20% for this block, outpacing runoff from our legacy individual life business.

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•

Our Specialty Benefits business ended 2023 with market leading 9% growth in premium and fees compared to year-end 2022. Contributing to this result were record full year sales, as well as strong retention and employment and wage growth.

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•

We added to our worksite offerings in April 2023 with the launch of our hospital indemnity product, complementing our existing core workplace benefits and rounding out our voluntary product portfolio. We’ve seen positive reaction to this product since launch, with our worksite solutions sales up 31% over 2022.

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3

Based on number of 401(k) plan participants, 2023 PLANSPONSOR Recordkeeping Survey, July 2023.

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Achieving strong results

We delivered strong results in 2023, ending the year with momentum across our diverse portfolio of businesses. Despite a challenging environment, results were largely in-line with or better than the guidance provided in our March 2023 outlook call.

Key results include:

•

$1.6 billion of full year 2023 non-GAAP operating earnings, or $6.55 per diluted share. Excluding significant variances, earnings per share increased 6% over 2022—at the high end of our 2023 guidance range.

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•

$695 billion of total company managed assets under management at the end of 2023, up over 9% from 2022.

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Our strong capital position and full year free capital flow enabled us to deliver on our capital deployment strategy—investing for growth in our businesses and returning more than $1.3 billion of capital to shareholders through share repurchases and common stock dividends.

Our three-year total shareholder return is 77%, higher than our peers4 in both insurance (52%) and asset management (22%).

Our success reflects the power of our distinct strategy as well as the deliberate execution by our talented employees around the world. They enabled us to effectively work through challenges and seize emerging opportunities.

Looking ahead

Thank you for your belief and investment in Principal. Our responsibility to deliver on the promises we’ve made to you—and all of our stakeholders—remains top of mind across the organization.

In 2024 I’ll celebrate my 40th anniversary with Principal, and I’ve personally never known a time when we were more aligned around our enterprise strategy and guided by our purpose. I credit this fully to our nearly 20,000 global employees who take great pride in the opportunity to make a meaningful difference in people’s lives each and every day.

I’m excited about the growth opportunities before us, the synergies we’re finding between our businesses, and the diligent work being done in all areas to add value for customers. And I’m so proud of the difference we’re making to increase access to financial security—for our customers and communities, in ways large and small. This includes the Principal and Principal® Foundation global community investment of more than $18 million in 2023. I encourage you to read more about this and other ways we’re making a difference in our Sustainability Report at principal.com/sustainability.

As we enter the 145th year in our company’s history, I remain confident the best is ahead.

4

3-year TSR for PFG stock as of 12/31/2023. Insurance peers include AMP, EQH, LNC, MET, PRU, UNM, VOYA. Asset Management peers include AMG, BK, BEN, IVZ, STT, TROW.

​

From our Board of Directors

Scott Mills
Lead Director
Principal Financial Group®

Principal® delivered strong results in 2023—reflecting management’s clear focus on execution and growth, the power of their complementary businesses, and the efficacy of the company’s overarching strategic framework. Senior management is committed to ensuring everyone at Principal is aligned around the company’s direction and goals. This alignment, coupled with the keen focus on execution, is enabling the company to deliver on promises to stakeholders, including increasing total shareholder return and returning excess capital to our shareholders.

I’m excited about the future for Principal. In 2023, the Board and senior management focused on the work to be done to further drive growth through parts of the business where Principal has unique capabilities and positional advantages. This is a collaborative process, propelled by management’s expertise and the Board’s input and oversight. I’m proud of the work we’ve done together to capitalize on the potential that exists within and between the company’s core lines of business.

Board strength and commitment

It is the Board’s role to provide strategic oversight for Principal, ensuring the company delivers on its commitments and meets its targets. We do this through frequent and thoughtful engagements between the Board and the management team—working together to tackle strategic challenges and opportunities, identify areas of high growth potential, and bring our combined expertise together in service to Principal shareholders. Our directors are generous with their time and eager to make a difference.

One of my key responsibilities as lead director is to assist in building and maintaining a strong bench of talent for Board refreshment. Our Nominating and Governance Committee actively seeks a variety of skills and perspectives, representing different backgrounds, industries, and expertise.

As of April 8, 2024, 67% of the members on our Board of Directors are diverse in gender, race, or national origin. Three of our four committees are chaired by women, one of whom is a person of color. Additionally, 50% of our directors have joined the Board within the past six years. Our average tenure is approximately seven years.

Delivering for you

Dan summarized key financial results well, and I want to note the confidence these results instill in the Board, especially because they were delivered in the face of challenging macroeconomic and market conditions. These results are a testament to the company’s strategy, focus, and discipline and the diligent work done day in and day out by employees around the globe.

As the lead director charged with maximizing your investment in Principal, I’m proud to once again report that the company fulfilled its commitment to creating long-term shareholder value—evident in 2023 through strong total shareholder return and returning $1.3 billion of capital to shareholders, in the form of dividends and stock buybacks.

More to come

Looking ahead, the Board remains steadfast in helping to ensure Principal pursues opportunities that best leverage the company’s strengths and competitive advantages, while keeping customers at the center of everything they do. This, coupled with earnings growth across our business, will help generate returns in excess of cost of capital and make it possible for Principal to return more of that excess capital to you. We appreciate the opportunity to do this work on your behalf.

Notice of Annual Meeting of Shareholders

​	Proposals:​					​	​	​	Our Board’s Recommendation:	​
​	1.	​	​	​	Election of four Directors for three-year terms	​	​	​	FOR each See page 10	​
​	2.	​	​	​	Advisory approval of the compensation of our named executive officers	​	​	​	FOR See page 66	​
​	3.	​	​	​	Ratification of the appointment of Ernst & Young LLP as the Company’s independent auditors for 2024	​	​	​	FOR See page 67	​

​	Meeting Information​					​
​		​	​	​	Meeting date:​ Tuesday, May 21, 2024	​
​		​	​	​	Time:​ 9:00 a.m., Central Daylight Time	​
​		​	​	​	Location:​ This will be a virtual only meeting which you can join at: www.meetnow.global/MVC9L9P.	​
​	Voting​					​
​	Your vote is important! Please take a moment to vote by internet, telephone, or proxy or voting instruction card as explained in the How Do I Vote sections of this proxy statement.					​
​		​	​	​	Through the internet: visit the website noted in the notice of internet availability of proxy materials that you received by mail, on the proxy or voting instruction card, or in the instructions in the email message that notified you of the availability of the proxy materials.	​
​		​	​	​	By telephone: call the toll-free telephone number shown on the proxy or voting instruction card or the instructions in the email message that notified you of the availability of the proxy materials.	​
​		​	​	​	Mail Complete, sign, and promptly return a proxy or voting instruction card in the postage paid envelope provided.	​

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON May 21, 2024:

The 2024 Proxy Statement, Annual Report on Form 10-K and other proxy materials are available at www.principal.com/annualmeeting

Table of Contents

​	Notice of Annual Meeting of Shareholders​	​	​	​	​	1	​	​
​		​	​	​	​		​	​
​	Table of Contents​	​	​	​	​	2	​	​
​		​	​	​	​		​	​
​	Proxy Summary​	​	​	​	​	3	​	​
​		​	​	​	​		​	​
​	Corporate Snapshot​	​	​	​	​	3	​	​
​		​	​	​	​		​	​
​	Year Over Year Performance Highlights​	​	​	​	​	4	​	​
​		​	​	​	​		​	​
​	Industry Recognition​	​	​	​	​	5	​	​
​		​	​	​	​		​	​
​	Director Qualifications, Director Tenure, Process for Identifying and Evaluating Director Candidates, and Diversity of the Board​	​	​	​	​	6	​	​
​		​	​	​	​		​	​
​	Proposal One—Election of Directors​	​	​	​	​	10	​	​
​		​	​	​	​		​	​
​	Corporate Governance​	​	​	​	​	19	​	​
​	Board Leadership Structure	​	​	​	​	19	​	​
​	Role of the Board in Strategic Planning	​	​	​	​	20	​	​
​	Role of the Board in Risk Oversight	​	​	​	​	20	​	​
​	Board Oversight of Cybersecurity Risk	​	​	​	​	21	​	​
​	Succession Planning and Talent Development	​	​	​	​	21	​	​
​	Majority Voting Standard and Director Resignation Policy	​	​	​	​	21	​	​
​	Director Independence	​	​	​	​	21	​	​
​	Certain Relationships and Related Party Transactions	​	​	​	​	22	​	​
​	Board Meetings	​	​	​	​	22	​	​
​	Global Corporate Code of Conduct	​	​	​	​	22	​	​
​	Board Committees and Responsibilities	​	​	​	​	22	​	​
​	Sustainability at Principal	​	​	​	​	25	​	​
​		​	​	​	​		​	​
​	Compensation of Non-Employee Directors​	​	​	​	​	28	​	​
​	Fees Earned by Non-Employee Directors in 2023	​	​	​	​	29	​	​
​	Non-Employee Directors’ Deferred Compensation Plan	​	​	​	​	29	​	​
​	Restricted Stock Unit Grants	​	​	​	​	29	​	​
​	Other Compensation	​	​	​	​	30	​	​
​	Directors’ Stock Ownership Guidelines	​	​	​	​	30	​	​
​	Audit Committee Report	​	​	​	​	30	​	​
​		​	​	​	​		​	​
​	Executive Compensation​	​	​	​	​	32	​	​
​	Compensation Discussion and Analysis (“CD&A”)	​	​	​	​	33	​	​
​	Executive Summary	​	​	​	​	33	​	​
​	Our Compensation Program Philosophy	​	​	​	​	33	​	​
​	Our Compensation Principles	​	​	​	​	33	​	​
​	Compensation Policies	​	​	​	​	34	​	​
​	2023 Company Performance Highlights	​	​	​	​	35	​	​
​	2023 Compensation Highlights	​	​	​	​	36	​	​
​	Summary of Compensation Elements	​	​	​	​	37	​	​
​	How We Make Compensation Decisions	​	​	​	​	38	​	​
​	2023 Executive Compensation Decisions	​	​	​	​	40	​	​
​	Key Elements of Fiscal 2023 Compensation Program	​	​	​	​	40	​	​
​	Base Salary	​	​	​	​	41	​	​

​	Annual Incentive Compensation	​	​	​	​	41	​	​
​	Long-Term Incentive Compensation	​	​	​	​	44	​	​
​	Timing of Stock Option Awards and Other Equity Incentives	​	​	​	​	46	​	​
​	Benefits	​	​	​	​	46	​	​
​	Change of Control and Separation Pay	​	​	​	​	47	​	​
​	Stock Ownership Guidelines	​	​	​	​	47	​	​
​	Hedging and Pledging Policy	​	​	​	​	48	​	​
​	Repricing Policy	​	​	​	​	48	​	​
​	Clawback Policy	​	​	​	​	48	​	​
​	Gross-Up Policy	​	​	​	​	48	​	​
​	Human Resources Committee Report	​	​	​	​	48	​	​
​	Risk Assessment of Employee Incentive Plans	​	​	​	​	49	​	​
​	Summary Compensation Table	​	​	​	​	50	​	​
​	Grants of Plan-Based Awards for Fiscal Year End December 31, 2023	​	​	​	​	52	​	​
​	Outstanding Equity Awards at Fiscal Year End December 31, 2023	​	​	​	​	53	​	​
​	Option Exercises and Stock Vested	​	​	​	​	54	​	​
​	Pension Plan Information	​	​	​	​	54	​	​
​	Pension Distributions	​	​	​	​	56	​	​
​	Pension Benefits	​	​	​	​	56	​	​
​	Non-Qualified Deferred Compensation	​	​	​	​	57	​	​
​	Qualified 401(k) Plan and Excess Plan	​	​	​	​	57	​	​
​	Severance Plans	​	​	​	​	59	​	​
​	Change of Control Employment Agreements	​	​	​	​	59	​	​
​	Potential Payments Upon Termination Related to a Change of Control	​	​	​	​	62	​	​
​	2023 CEO Pay Ratio	​	​	​	​	62	​	​
​	Pay Versus Performance Table	​	​	​	​	63	​	​
​	Pay Versus Performance—Tabular List of Most Important Financial Performance Measures	​	​	​	​	64	​	​
​	Pay Versus Performance Relationship Disclosure	​	​	​	​	64	​	​
​		​	​	​	​		​	​
​	Proposal Two—Advisory Vote to Approve Executive Compensation​	​	​	​	​	66	​	​
​		​	​	​	​		​	​
​	Proposal Three—Ratification of Appointment of Independent Public Accounting Firm​	​	​	​	​	67	​	​
​	Audit Fees	​	​	​	​	67	​	​
​	Audit-Related Fees	​	​	​	​	67	​	​
​	Tax Fees	​	​	​	​	67	​	​
​	All Other Fees	​	​	​	​	67	​	​
​		​	​	​	​		​	​
​	Security Ownership of Certain Beneficial Owners and Management​	​	​	​	​	69	​	​
​	Delinquent Section 16(a) Reports	​	​	​	​	70	​	​
​		​	​	​	​		​	​
​	Questions and Answers About the Annual Meeting	​	​	​	​	71	​	​
​		​	​	​	​		​	​
​	Appendix A Executive Compensation Benchmarking Study Participants​	​	​	​	​	A-1	​	​
​		​	​	​	​		​	​
​	Appendix B Non-GAAP Financial Measure Reconciliations	​	​	​	​	B-1	​	​

Proxy Summary

Voting Proposals Overview

Proposals

Corporate Snapshot

Full year 2023 net income attributable to Principal Financial Group, Inc. (PFG) of  $623 million, or $2.55 per diluted share, includes $892 million of loss from exited business.

This Proxy Statement contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words “expect,” “may,” “could,” “believe,” “would,” “might,” “anticipates,” or similar words. The principal forward-looking statements in this Proxy Statement include our sustainability goals, commitments, and programs; and our business plans, initiatives, and objectives. Although we believe there is a reasonable basis for these forward-looking statements, our actual results could be significantly different. The most important factors that could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in our annual report on Form 10-K. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

This Proxy Statement contains references to certain Non-GAAP financial measures, including “Non-GAAP operating earnings” and “Non-GAAP return on equity.” These are not measures of financial performance under generally accepted accounting principles (GAAP) and may not be defined and calculated by other companies using the same or similar terminology. For reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure, please see Appendix B to this Proxy Statement.

1

Non-GAAP operating earnings is defined as Net income attributable to PFG less Net realized capital gains (losses), as adjusted less Income (loss) from exited business. See non-GAAP financial measure reconciliations in Appendix B.

​

Year over Year Performance Highlights

1

Excludes Corporate.

​

Industry Recognition

Director Qualifications, Director Tenure, Process for Identifying and Evaluating Director Candidates and Diversity of the Board

Skills and Experience of Our Independent Directors

The following chart shows areas central to the Company’s strategy, initiatives, and operations for which independent Directors have specific training and executive level experience that assists them in their Board responsibilities.

Diversity of Our Board

The Company believes that Board diversity is an integral part of effective corporate governance, as well as our values. Diversity on our Board has been a longstanding objective of the Company as reflected in our Board composition and in our Diversity Policy. In addition to other considerations, including skills and expertise, the Nominating and Governance Committee reviews the Board’s diversity in terms of backgrounds, experiences, gender, generation, national origin, and race when recruiting new Directors.

Our current Board reflects these values, with our independent Board members comprising 42% women and 33% people of color.

The below chart provides the details of the entire Board as of April 8, 2024.

​

1

Mary E. “Maliz” Beams, Jocelyn Carter-Miller, H. Elizabeth Mitchell, Diane C. Nordin, and Clare S. Richer

​

2

Jonathan S. Auerbach, Roger C. Hochschild, Dan J. Houston, Scott M. Mills, Claudio M. Muruzabal, Blair C. Pickerell, and Alfredo Rivera

​

3

Ms. Carter-Miller

​

4

Mr. Mills

​

5

Messrs. Muruzabal and Rivera

​

6

Mses. Beams, Mitchell, Nordin, and Richer

​

7

Messrs. Auerbach, Hochschild, Houston, and Pickerell

​

Board Refreshment

Our Board’s effectiveness benefits from a thoughtful Board refreshment. Since 2019, the Board has appointed six new Directors, all of whom are independent and half of whom are female Directors, increasing the gender diversity of our Board. The following reflects the tenure of our independent directors:

As reflected below, 50% of our independent Directors were appointed within the last six years, and the average tenure of our independent Directors as of April 8, 2024, is approximately seven years.

Proposal One—Election of Directors

Our Board has three classes of Directors, each having a three-year term. Each Director nominee is currently a member of our Board. The Board has nominated Roger C. Hochschild, Daniel J. Houston, Diane C. Nordin, and Alfredo Rivera to stand for election for three-year terms that expire in 2027. We expect that all the nominees will be able and willing to serve if elected. However, if, prior to the 2024 Annual Shareholders Meeting (the “2024 Annual Meeting”), any nominee should become unable or unwilling to serve, proxies may be voted at the 2024 Annual Meeting for another candidate nominated as a substitute by the Board, or the Board may reduce the number of Directors that constitute the Board.

The Board of Directors recommends that shareholders vote “For” all the nominees for election at the 2024 Annual Meeting.

Nominees for Class II Directors with Terms Expiring in 2024

Continuing Class III Directors with Terms Expiring in 2025

Continuing Class I Directors with Terms Expiring in 2026

Corporate Governance

We believe that good corporate governance promotes the long-term interests of our shareholders. The Board and management regularly review best practices for corporate governance and modify our policies and practices as warranted. Our current best practices include:

•

Super-majority of independent Directors (11 out of 12);

​

•

Proxy access for shareholders owning 3% or more of the Company’s common stock for a minimum of three years;

​

•

All key committees (i.e., Audit, Finance, Human Resources, and Nominating and Governance Committees) are composed entirely of independent Directors;

​

•

Strong independent Lead Director;

​

•

Director resignation policy if the support of a majority vote of shareholders is not achieved;

​

•

Policy regarding Directors’ service on other public company boards;

​

•

Board and committee self-assessments conducted annually;

​

•

Director evaluations conducted no less frequently than in connection with Director nomination process;

​

•

Robust stock ownership guidelines for Directors;

​

•

Board Diversity Policy and a diverse and inclusive Board membership in terms of age, background, experience, gender, ethnicity, and tenure;

​

•

Robust shareholder engagement program to obtain valuable feedback on our compensation and governance programs;

​

•

Annual review of CEO succession plan by the independent Directors with and without the CEO present;

​

•

Annual Board review of senior management long-term and emergency succession plans;

​

•

Multiple executive sessions involving solely independent Directors at each regularly scheduled Board meeting; and

​

•

Robust policies and procedures concerning the identification of and monitoring for conflicts of interest across the organization.

​

Board Leadership Structure

The Board exercises flexibility in establishing a leadership structure that works best for the Company at any given time. Having the flexibility to select the structure that best serves the Company’s business is critical and is in the long-term interest of our shareholders.

The Board believes that its current leadership structure, in which the roles of Chairman and CEO are combined, an independent Lead Director is appointed, and Board committees are led by independent directors, strikes the appropriate balance between effective Company leadership and strong oversight and safeguards by independent Directors. The Board reviews the effectiveness of this shared leadership and decides the appropriate structure based on factors such as the tenure and experience of the CEO and the broader economic and operating environment of the Company. Currently, Daniel J. Houston is our Chairman, President, and CEO. Scott Mills, the current independent Lead Director, was appointed by the independent Directors and assumed that role in 2020. The Nominating and Governance Committee reviews the appointment of Lead Director annually.

The Lead Director and the Chairman jointly determine the Board’s agenda for each regular quarterly meeting, with input from the other independent Directors. The Lead Director and Chairman share the duties of presiding at each Board meeting. The Chairman presides when the Board is meeting as a full Board. The Lead Director presides when the Chairman is not present, plans and leads Executive Sessions of independent Directors, leads the Board’s annual self-evaluation, calls special Board meetings if the Chairman is unable to act, and leads the Board’s CEO succession planning discussions. Executive Sessions generally occur at the start

and end of each regularly scheduled Board meeting and were held in conjunction with each regularly scheduled Board meeting during 2023.

Role of the Board in Strategic Planning

As part of its oversight responsibilities, our Board takes an active role in management’s process of formulating and reviewing our long-term corporate strategy. The Board frequently engages management at regularly scheduled Board meetings in which strategic initiatives are discussed. In addition, each year during the fall, senior management has an extensive two-day strategy session with the Board during which in-depth strategic reviews are conducted. In these engagements, the Board offers its independent judgment and experience in informing the strategic direction of our business priorities that are aimed at delivering long-term success for the Company.

Role of the Board in Risk Oversight

Risk management is an essential component of our culture and business model. Our Board recognizes that effective risk oversight is in the best interests of the Company and our shareholders. The Company’s Enterprise Risk Management program includes a Chief Risk Officer whose team operates independently from the business units. The program also includes an Enterprise Risk Management Committee, composed of members from the executive management team, that provides enterprise-wide oversight for material risks. While management is responsible for the day-to-day risk management functions, our Board oversees management’s responsibilities of monitoring and providing appropriate risk mitigation strategies and how the Company addresses specific risks that the Company faces, including finance risk; product and pricing risk; operational and business risk; and strategic risk.

The Board oversees our risk management both directly and indirectly through its standing committees as described below.

Board Oversight of Cybersecurity Risk

The Board’s role in our risk management includes its oversight of risks related to cybersecurity threats. The full Board receives at least one cybersecurity report every quarter from our Chief Information Officer, our Chief Information Security Officer, our Chief Risk Officer, or other professionals regarding the state of our cybersecurity program. The Board also reviews and approves the business resiliency and information security programs intended to guard against cybersecurity and related risks. Also, the Board receives input on cybersecurity matters from external entities such as our independent auditor, regulators, and consultants. Each of these steps furthers the Board’s efforts to ensure that we have established and are proactively maintaining an enterprise-wide cybersecurity risk program with appropriate policies, practices, and controls designed to ensure resiliency in the face of emerging threats.

Succession Planning and Talent Development

The Board believes that succession planning for future leadership of the Company is one of its most important roles. The Board is actively engaged and involved in talent management and reviews succession at least annually for our senior executives. This includes a detailed discussion of our global leadership and succession plans with a focus on CEO succession planning, as well as succession planning for all key executive positions.

In addition, the Human Resources Committee regularly discusses the talent pipeline for critical roles at a variety of organizational levels, including CEO. A comprehensive review of executive talent, including assessments by an independent consulting firm engaged by the Human Resources Committee, determines an executive’s readiness to take on additional leadership roles and identifies the developmental and coaching opportunities needed to prepare executives for greater responsibilities. High-potential leaders are given exposure and visibility to Board members through formal presentations and informal events. The Human Resources Committee also receives regular updates on key talent indicators for the overall workforce, including diversity, recruiting, and development programs. In addition, the Company has an emergency succession plan for the CEO that is reviewed by the Board annually.

Majority Voting Standard and Director Resignation Policy

In uncontested Director elections, Directors are elected by the majority of votes cast. If an incumbent Director is not elected and no successor is elected, the Director must submit a resignation to the Board, which will decide whether to accept the resignation. The Board’s decision and reasons for its decision will be publicly disclosed within 90 days of certification of the election results.

Director Independence

The Board determines at a Director’s initial appointment, and thereafter at least annually, whether each Director is independent, using its independence standards in these determinations. These independence standards include the Nasdaq standards for independence and are on the Company’s website, www.principal.com. The Board considers all commercial, banking, consulting, legal, accounting, charitable, family, and other relationships (either individually or as a partner, shareholder, or officer of an organization) a Director (or Director candidate) has with the Company or any affiliate. The Board most recently made these determinations for each Director in February 2024 based on:

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A review of relationships and transactions between Directors, their immediate family members, and other organizations with which a Director is affiliated and the Company, its subsidiaries, or executive officers;

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•

Questionnaires completed by each Director regarding any relationships or transactions that could affect the Director’s independence;

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•

The Company’s review of its purchasing, investment, charitable giving, and other records; and

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•

Recommendations of the Nominating and Governance Committee.

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The Board affirmatively determined that the following Directors have no material relationship with the Company and are independent: Mr. Auerbach, Ms. Beams, Ms. Carter-Miller, Mr. Hochschild, Mr. Mills, Ms. Mitchell, Mr. Muruzabal, Ms. Nordin, Mr. Pickerell, Ms. Richer, and Mr. Rivera. The Board also determined that all current members of the Audit, Finance, Human Resources, and Nominating and Governance Committees are independent. No Director other than Mr. Houston has been employed by the Company at any time.

Certain Relationships and Related Party Transactions

As of December 31, 2023, the Vanguard Group, Inc. managed funds holding in the aggregate approximately 12.09% of the Company’s common stock. During 2023, Principal paid the Vanguard Group $71,619.39. Principal Life accounts held approximately $49,256,330 in privately placed debt issued by Vanguard. Principal Life and affiliates hold or manage accounts holding securities issued by Vanguard funds and common stock of Vanguard Group, Inc.

As of December 31, 2023, BlackRock, Inc. (together with its affiliates “BlackRock”) and certain subsidiaries collectively owned or managed funds holding in the aggregate approximately 7.98% of the Company’s common stock. During 2023, Principal Global Investors, LLC paid BlackRock Financial Management $1,568,420.15 in sub-advisor management fees. In 2023, Principal affiliates paid BlackRock $4,419,872 for fees for consulting services and software. Principal Life and affiliates hold, or manage accounts holding, securities issued by BlackRock, Inc. BlackRock affiliates manage investment funds in which affiliates of the Company invest for their own or managed accounts.

As of December 31, 2023, Nippon Life Insurance Company (“Nippon Life”) held approximately 7.67% of the Company’s common stock. Nippon Life is the parent company of Nippon Life Insurance Company of America (“NLICA”). Nippon Life, NLICA and Principal Life have had business relationships for more than 20 years. In 2023, Nippon Life and NLICA paid the following amounts to Principal Life or its affiliates: $282,724 for pension services for defined contribution plans maintained by NLICA and an affiliate (mostly paid by plan participants) and $6,321,796.59 for investment management and other service fees. The Company owns common stock of NLICA and received $611,656 in dividends in 2023. Principal Life general and separate accounts hold privately placed bonds and common stock issued by Nippon Life Americas, Inc. Nippon Life, directly or through affiliates, holds a minority interest in Post Advisory Group, LLC (“Post”), an affiliate of the Company. During 2023, Post paid an aggregate of $2,013,095.03 in dividends. The Company’s affiliates hold and manage accounts holding securities issued by Nippon Life, and Nippon Life invests in funds managed by the Company’s affiliates.

Dwight Soethout, Vice President-Chief Actuary, is the spouse of Deanna D. Strable-Soethout, Executive Vice President and Chief Financial Officer. Mr. Soethout has been an employee since 1993. In 2023, he received $738,787 in base salary, bonuses, and long-term incentive compensation. His compensation is commensurate with that of his peers. His employment and compensation were approved by the Human Resources Committee.

The Company maintains robust policies and procedures for the identification and monitoring of arrangements with related parties. The Nominating and Governance Committee or its Chair must approve or ratify all transactions with related parties that are not preapproved by or exempted from the Company’s Related Party Transaction Policy (the “Policy”). At each quarterly meeting, the Nominating and Governance Committee reviews transactions with related parties and ratifies any transaction that is subject to the Policy if it determines it is appropriate and may attach conditions to that approval. Transactions involving employment of a relative of an executive officer or Director must be approved by the Human Resources Committee. The Company’s Related Party Transaction Policy is publicly available at www.principal.com.

Board Meetings

The Board held nine meetings in 2023, five of which were two-day meetings. No Director then in office attended less than 75% of the aggregate of the meetings of the Board and the committees of which the Director was a member. While Director attendance is not mandatory, the Company’s annual shareholder meeting is scheduled on a date that coincides with a regularly scheduled quarterly Board meeting. In 2023, all Directors then on the Board except for one Director attended the annual shareholders meeting virtually.

Global Corporate Code of Conduct

The Company has adopted a Global Code of Conduct that applies to the Company’s Directors and employees, including our Named Executive Officers. A waiver of the Code for a Director or a Named Executive Officer requires a review by the Audit Committee, an approval by the Board, and compliance with applicable laws and rules, including a publication on our website. The Code is available on our website at https://investors.principal.com/investor-relations/our-business/corporate-governance/default.aspx.

Board Committees and Responsibilities

Only independent Directors may serve on the Audit, Human Resources, and Nominating and Governance Committees. While it is not required by its charter, the Board’s Finance Committee currently is composed of

only independent Directors. The Committees review their charters and performance annually. Committee charters of the Audit, Finance, Human Resources, and Nominating and Governance Committees are publicly available on the Company’s website, www.principal.com.

Membership and responsibilities of each of the Board Committees:

Compensation Committee Interlocks and Insider Participation:

None of the members who served on the Human Resources Committee was or had ever been one of our officers or employees. During the last fiscal year, no member of the Human Resources Committee had a relationship that must be described under the SEC rules relating to disclosure of Related Person Transactions. In addition, during the last fiscal year, none of our executive officers served as a member of the Board of Directors or the compensation committee of any other entity that has one or more executive officers serving on our Board or Human Resources Committee.

Sustainability at Principal

We know to foster a secure world for all, we must be mindful of our impact. Our sustainability vision is rooted in the belief that being a responsible company can both inspire positive change and drive business success. We aim to grow a resilient, inclusive, and secure society, helping people enjoy a shared prosperity today and creating opportunities for future generations. In pursuit of this vision, we deliver innovative products and services to meet the diverse needs of our customers around the globe, integrate sustainable practices across our business, and provide an inclusive and rewarding experience for our global employees.

Our sustainability strategy is governed by the Sustainability Task Force, which is made up of members appointed by Chairman, President, and CEO Daniel Houston. The members are leaders across the organization, and the task force reports quarterly to the Nominating and Governance Committee of the Company’s Board of Directors.

Our sustainability strategy is informed by material sustainability factors that are important to our stakeholders and contribute to positive social and environmental impact. The Company advances this work by focusing on the following topics: sustainable investing, consumer and product impact, financial inclusion, environmental impact, sustainable sourcing, governance, ethics and risk, global inclusion, and employee engagement.

We share progress on our performance and outcomes in our sustainability reports, which are released annually. The 2023 Sustainability Report will be released in April 2024.

A summary of our 2023 key initiatives and resulting outcomes are below.

Sustainable investing

Our commitment to sustainable investing revolves around a key factor—our fiduciary responsibility to our clients and investors. Acting in their best interests comes first and foremost. Our approach to sustainable investing is driven by that priority. We provide clients with sustainable investment options that offer competitive, risk-adjusted returns and utilize a holistic view of factors influencing risk and return to create added value for clients, the environment, and society over time.

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Principal Asset Management1 investment teams align with the Sustainable Investing Oversight Committee’s categorization methodology of Foundational, Enhanced, Thematic or Impact to define the level of sustainable investing principles integrated within actively managed portfolios, as well as abiding by client-directed mandates. The Committee classifies, reviews, approves, and assures implementation of products and strategies we actively market are in accordance with appropriate sustainability-related definitions. Our general account established a proprietary set of sustainable guidelines for its portfolio of corporate bonds, commercial mortgage loans, and private real estate equity. These guidelines utilize internal scoring and scores from external sources where applicable and cover approximately 66% of our portfolio.

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Consumer and product impact

We are committed to enabling greater access to relevant insurance, investment, and savings products and services for individuals and businesses around the globe to build a more inclusive economy.2 We originally set a five-year goal to double the number of diverse small and midsized businesses (“SMBs”) we support

1

Principal Asset ManagementSM is a trade name of Principal Global Investors, LLC.

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2

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. ©2024 Principal Financial Services, Inc.

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through product access, investments in third-party organizations that provide capital access, community development, and financial education by 2025. This strategy was developed in collaboration with Principal® Foundation.3

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In 2023, we reached 100% of our five-year goal, enabling us to support more diverse SMBs with financial products, resources, and education to meet their diverse needs.

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We also supported more than 4,700 diverse entrepreneurs and small businesses through coaching, technical assistance, financial planning, and our investments in third-party organizations that provide capital access.

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Financial inclusion

We exist to enable financial security and strive to reach more people every day. We are committed to advancing financial inclusion by helping ensure individuals and businesses have access to the necessary financial products, resources, and education to meet their diverse needs.

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In 2023, we released the second edition of the Global Financial Inclusion Index (“Index”) in partnership with the Centre for Economics and Business Research (Cebr). The Index ranks more than 40 markets on three clearly defined pillars of financial inclusion—government support, financial system support, and employer support. Now in its second year, the report provides a comprehensive and comparative evaluation of financial inclusion on a global scale, enabling the identification and analysis of regions making the most progress and those facing the greatest challenges.

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Environmental impact

We recognize our vision of a more secure world is intertwined with the health and wellbeing of the planet. As such, we continue to promote environmental stewardship across our company by managing our use of resources and working to preserve the planet for future generations.

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Between 2019 and 2023, we’ve reduced greenhouse gas (GHG) emissions by approximately 11.5% each year, exceeding the annual reduction glidepath target of 4.3%. We’ve also achieved our 2023 target against our 2019 baseline with a 46% reduction in scope 1 and market-based scope 2 emissions.

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We aim to reduce our global scope 1 and market-based scope 2 GHG emissions by 65% by 2034 and achieve net zero by 2050, which aligns with the Science Based Targets initiative’s 1.5° Celsius scenario.

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Sustainable sourcing

Including qualified, diverse businesses in our procurement process is an important aspect of our commitment to diversity, equity, and inclusion. We are committed to improving our screening, evaluation, and review of new and existing suppliers against sustainability criteria and incorporating our findings into our supplier selection process to build a traceable and resilient supply chain.

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We annually set appropriate diverse business spend goals within our U.S. operations, working to grow our diverse supplier pipeline and advocating for supplier diversity among our entire supply chain.

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We remain an active member of the Financial Services Roundtable for Supplier Diversity, a group dedicated to building strong supplier diversity practices in the financial services industry.

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Governance, ethics, and risk

After more than 140 years of doing right by our customers, employees, and investors, we remain committed to the highest level of ethical standards; ensuring good and responsible governance; managing compounding legal, regulatory, financial, reputational, and climate-related risks; protecting personal information; and upholding the safety and security of our workers. We were named to the Ethisphere World’s most Ethical Companies list for the thirteenth time.

3

Principal Financial Group Foundation, Inc. (“Principal® Foundation”) is a duly recognized 501(c)(3) entity focused on providing philanthropic support to programs that build financial security in the communities where Principal Financial Group, Inc. (“Principal”) operates. While Principal Foundation receives funding from Principal, Principal Foundation is a distinct, independent, charitable entity. Principal Foundation does not practice any form of investment advisory services and is not authorized to do so. © 2024 Principal Foundation.

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The Nominating and Governance Committee monitors risks and mitigation related to our material sustainability topics, as well as our political contribution activities. The committee also monitors whether the Board and its committees have the collective skills and experience necessary to monitor the risks facing Principal.

Global inclusion

We work to create and maintain a work environment where all employees feel valued, respected, and included, and where they can be their authentic self.

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We measure a culture of belonging, respect, learning, and trying new things through our Global People Inclusion Index (“GPII”), a proprietary survey administered to global employees three times per year. We exceeded our annual goal of 80% on our GPII with a score of 82%.

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To measure diversity, our proprietary U.S. Diversity Index is comprised of 17 metrics and measures progress and areas of opportunity. Consistent with our regulatory obligations as a federal contractor and our talent strategy, we strive for employee representation that aligns with market availability. Our progress relative to these employee representation goals account for 85% of the weighted score, with the remaining weight focused on areas like employee education and supplier diversity. We exceeded our annual goal of 100% on our U.S. Diversity Index with a score of 104.9%.

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Employee engagement

We are committed to cultivating a rewarding workplace experience centered on learning, development, and employee wellbeing to attract and nurture exceptional talent and foster an engaged workforce.

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In 2023, we maintained a strong level of employee satisfaction with a 79% Employee Engagement Index score.

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We were named a member of the 2023 Bloomberg Gender-Equality Index, which emphasizes gender pay equity, strong diversity metrics, and talent management.

Looking forward

For decades, we have embraced sustainability as a core strategy to manage risk, strengthen our business, and fulfill our purpose. As we continue to adapt and evolve this strategy, we will listen to and learn from our stakeholders, including clients, customers, investors, and employees. A full review of our enterprise sustainability practices, programs, and commitments can be found on our website at www.principal.com/sustainability.

Compensation of Non-Employee Directors

Our Directors serve on the Boards of Principal Financial Group, Inc., Principal Life Insurance Company, and Principal Financial Services, Inc. The Company provides competitive compensation to attract and retain high-quality, non-employee Directors. A substantial proportion of non-employee Director compensation is provided in the form of equity to help align their interests with the interests of our shareholders. Mr. Houston, our Chairman, President, and Chief Executive Officer, does not receive additional compensation for his service on the Board.

The Nominating and Governance Committee, comprised solely of independent directors, has primary responsibility for our non-employee compensation program. The Committee works with the Board’s independent compensation consultant in administering the program. During 2023, Compensation Advisory Partners conducted an annual comprehensive review and assessment of non-employee Director compensation.

The Company targets non-employee Director compensation at approximately the median of the peer group used for executive compensation comparisons (“Peer Group”) (see page 39), which aligns with its Executive compensation philosophy. As a result of Compensation Advisory Partners’ November 2023 review and the Committee’s discussion, the grant date fair value of the Directors’ annual Restricted Stock Unit (“RSU”) retainer increased from $185,000 to $200,000. These changes position our Directors’ compensation at the median Company’s Peer Group.

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1

Paid in two semiannual payments, in May and November, on a forward-looking basis.

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2

Grants are made at the time of the annual meeting.

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Fees Earned by Non-Employee Directors in 2023

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1

These amounts reflect the grant date fair value of awards made in 2023 determined in accordance with FASB Accounting Standards Codification (“ASC”) Topic 718. These awards do not reflect actual amounts realized or that may be realized by the recipients. While the Principal Financial Group, Inc. 2021 Stock Incentive Plan (which was approved by shareholders) allows some discretion in determining the value of RSUs that may be awarded annually, it imposes a maximum limit for stock awards plus fees and retainers of  $750,000 ($1,000,000 for an Independent Chairman) on the size of the annual award that may be made.

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2

Mr. Dan retired from service on our Board at the conclusion of the Company’s annual meeting of shareholders held on May 16, 2023. Fees paid to Mr. Dan reflect a pro-rated portion of the annual cash retainer for his service in 2023.

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Non-Employee Directors’ Deferred Compensation Plan

Non-employee Directors may defer the receipt of their cash compensation under the Deferred Compensation Plan for Non-employee Directors of Principal Financial Group, Inc. This Plan has four investment options, and each option represents “phantom” units tied to the funds listed in the table below (parenthesized information indicates share class):

Restricted Stock Unit Grants

Non-employee Directors receive an annual grant of time-based RSUs under the Principal Financial Group, Inc. 2021 Stock Incentive Plan, as amended and restated Effective November 20, 2023 (the “2021 Stock Incentive Plan”). RSUs are granted at the time of the annual meeting, vest at the next annual meeting, and are deferred at least until the date the Director leaves the Board. At payout, the RSUs are converted to shares of Common Stock. Dividend equivalents become additional RSUs, which vest and are converted to Common Stock at the same time and to the same extent as the underlying RSUs. The Nominating and Governance Committee has the discretion to make a prorated grant of RSUs to Directors who join the Board at a time other than at the annual meeting. The 2021 Stock Incentive Plan, (which was approved by shareholders) imposes a combined maximum limit for stock awards plus fees and retainers of  $750,000 ($1,000,000 for an Independent Chairman).

As of December 31, 2023, each non-employee Director had the following aggregate number of outstanding RSUs, including additional RSUs received as the result of dividend equivalents:

Other Compensation

Principal Life matches charitable gifts up to $16,000 per non-employee Director per year. These matching contributions are available during a Director’s term and for three years thereafter. Principal Life receives the charitable contribution tax deductions for the matching gifts.

Directors are reimbursed for travel and other business expenses they incur while performing services for the Company and are allowed the use of corporate owned or leased aircraft when traveling to in-person meetings of the Board and its Committees. When Directors’ spouses/partners accompany them to the annual Board strategic retreat, Principal pays for some of the travel expenses and amenities for Directors and their spouses/​partners, such as meals and social events. Directors are also covered under the Company’s Business Travel Accident Insurance Policy and Directors’ and Officers’ insurance coverage. The Human Resources Committee has approved Directors’ participation in Principal Asset Management investment products on a reduced or no-fee basis. In 2023, the total amount of perquisites provided to non-employee Directors was less than $10,000 per Director.

Directors’ Stock Ownership Guidelines

To encourage Directors to accumulate a meaningful ownership level in the Company, the Board has had a “hold until retirement” stock ownership requirement since 2005. All RSU grants must be held while a Director is on the Board and may only be converted to Common Stock when the Director’s Board service ends. The Board has a guideline that Directors own interests in Common Stock equal to five times the annual Board cash retainer within five years of joining the Board. Directors have been able to achieve this level of ownership through the RSU hold until retirement requirement. All Directors with a tenure of a minimum of five years have satisfied the requirement, and those with a tenure of less than five years are on schedule to satisfy the requirement as well. Once this guideline is met, Directors do not need to buy additional stock if the guideline is no longer met due to a reduction in stock price, if the Director’s ownership level is not reduced because of share sales.

Audit Committee Report

The Audit Committee, comprised solely of the independent Directors identified below, oversees the Company’s financial reporting process on behalf of the Board. The Committee’s functions are described in greater detail in its Charter, which can be found in the Corporate Governance section on our website at www.principal.com. Our management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. Ernst & Young LLP, the Company’s independent registered public accounting firm, is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with accounting principles generally accepted in the United States of America and on the Company’s internal control over financial reporting.

In this context, the Audit Committee has reviewed and discussed with management the Company’s audited financial statements for the year ended December 31, 2023. The Audit Committee also discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission. The Audit Committee also received from Ernst & Young LLP, the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent registered accounting firm’s communications with the Committee concerning independence, and the Committee has discussed with Ernst & Young LLP its independence.

Based on its review and discussion noted above, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Diane C. Nordin, Chair
Mary E. “Maliz” Beams
Scott M. Mills
H. Elizabeth Mitchell
Clare S. Richer
Alfredo Rivera

Executive Compensation

Compensation Discussion and Analysis (“CD&A”)

Executive Summary

Focusing on our Named Executive Officers, this CD&A describes our compensation philosophy and program, the compensation decisions made under the program, and the factors considered in making those decisions. For 2023, our “Named Executive Officers” were:

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Daniel J. Houston, Chairman, President, and Chief Executive Officer;

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Deanna D. Strable-Soethout, Executive Vice President and Chief Financial Officer;

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Patrick G. Halter, Division President1;

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Amy C. Friedrich, President, Benefits and Protection; and

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Vivek Agrawal, Executive Vice President and Chief Growth Officer.

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Our Compensation Program Philosophy

We design our executive compensation program to align the interests of executives and shareholders. We maintain a culture of pay for performance, in which we tie a significant portion of our Named Executive Officers’ total compensation to Company and individual performance in achieving short- and long-term financial and strategic goals that serve the long-term interests of our shareholders.

We design our compensation program to attract and retain high-caliber, diverse executive officers to deliver sustained high performance for our customers and shareholders. Consistent with the philosophy underlying our compensation program, we target the market median of our Peer Group for an executive’s total compensation, with actual compensation varying based on performance and tenure. The primary principles that guide our compensation program are summarized below.

Our Compensation Principles

1

Mr. Halter served as Chief Executive Officer and President of Principal Asset Management until February 10, 2024.

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Compensation Policies

The Company’s executive compensation program incorporates the following best practices:

2023 Company Performance Highlights

The previous year was a great one for Principal, delivering on our ambitious outlook for the enterprise despite some macroeconomic headwinds, including geopolitical events and global inflation, which resulted in elevated market and interest rate volatility and increased allocations to cash and cash equivalents. Margins across the enterprise remained strong as we took actions to reduce expenses to align with revenue while investing for growth and increasing scalability.

In 2023, Principal reported $623 million of net income attributable to Principal Financial Group, or $2.55 per diluted share. Reported net income attributable to Principal Financial Group included an unfavorable impact from exited business, which is non-economic and driven by the change in the fair value of the funds withheld embedded derivative. This does not impact our capital or free cash flow and can be very volatile.

Non-GAAP operating earnings2 was $1.6 billion, or $6.55 per diluted share3 (EPS)—a 3% increase in reported EPS compared to 2022. At the end of the year, we reported $695 billion of assets under management (AUM) managed by Principal, a 9% increase from 2022, and $1.6 trillion of assets under administration (AUA), which includes AUM.

Our diversified and integrated business model continued to prove resilient and delivered strong results in 2023. Our strong capital position and free capital flow conversion reflect actions we took to increase capital efficiency and enabled us to deliver on our capital deployment strategy—investing for growth in our businesses and returning more than $1.3 billion of capital to shareholders through share repurchases and common stock dividends. We are in a strong position to drive long-term growth for our shareholders through our growth drivers of retirement, asset management, and benefits and protection.

2

Non-GAAP operating earnings is defined as Net income attributable to PFG less Net realized capital gains (losses), as adjusted less Income (loss) from exited business. See non-GAAP financial measure reconciliations in Appendix B.

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3

Non-GAAP operating earnings per diluted share.

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4

Non-GAAP return on equity (“ROE”) is defined as non-GAAP operating earnings divided by average stockholders’ equity available to common stockholders excluding cumulative change in fair value of funds withheld embedded derivative and accumulated other comprehensive income other than foreign currency translation adjustment.

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The three-year and five-year total shareholder returns were positioned well ahead of our asset management and insurance peers. One-year total shareholder return lagged our peers.

1-, 3- and 5-Year Total Shareholder Return1: PFG vs. Peers

Financial Services, Insurance, and Asset Manager Peers are listed on page 39.

2023 Compensation Highlights

In 2023, the Company’s shareholders voted to approve the compensation program for our Named Executive Officers with approximately 97% of the shares voting in support of the program. The Company considered the strong shareholder support of the compensation program to be approval of the Company’s compensation philosophy, which has not changed since that vote.

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In March 2023, Mr. Houston’s base salary increased from $1,000,000 to $1,050,000. Additionally, his annual incentive target remained at 375% of his eligible earnings, and the grant date fair value of his long-term incentive award was $9,450,000. His Principal Financial Group Incentive Pay Plan (PrinPay Plan) payout for 2023 was $3,310,096.

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Based on the Company’s 2023 annual performance achievements, many of which are outlined above, our 2023 PrinPay score in the annual incentive program was earned at 85% of target. Individual modifiers for our Named Executive Officers ranged between 95% and 110% of the PrinPay score.

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Based on the Company’s two-year average non-GAAP return on equity (“ROE”) and two-year average non-GAAP book value per share2 performance, the 2021-2023 Performance Based RSUs (“PSUs”) vested on December 31, 2023, and 114% of the target number of shares were paid out in February 2024, according to the established performance scale, and approved by the Human Resources Committee.

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1

Our total shareholder return methodology includes the share price return and cash dividends paid during the time period December 31, 2022, through December 31, 2023 (1-year TSR), December 31, 2020, through December 31, 2023 (3-year TSR) and December 31, 2018, through December 31, 2023 (5-year TSR).

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2

Non-GAAP book value (“Book Value”) per share is defined as total ending common equity excluding cumulative change in fair value of funds withheld embedded derivative and accumulated other comprehensive income divided by the number of common shares outstanding end of year. See non-GAAP financial measure reconciliations in Appendix B.

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Summary of Our Compensation Elements:

1

Operating Margin is defined as non-GAAP pre-tax operating earnings, divided by non-GAAP gross profit. Non-GAAP gross profit is defined as total non-GAAP operating revenues less benefits, claims, and settlement expenses less dividends to policyholders. See non-GAAP financial measure reconciliations in Appendix B.

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How We Make Compensation Decisions

Human Resources Committee Involvement

The Human Resources Committee, which is comprised entirely of independent Directors, oversees our overall compensation program, including compensation of our Named Executive Officers. In carrying out its responsibility for the 2023 compensation design, the Human Resources Committee retained the advisory services of Compensation Advisory Partners. Compensation Advisory Partners also advises the Nominating and Governance Committee on compensation for non-employee Directors (see pages 28-30). Compensation Advisory Partners receives compensation from the Company only for its work in advising these Committees. Compensation Advisory Partners does not and would not be allowed to perform services for management. The Committee assessed the independence factors in applicable SEC rules and Nasdaq Listing Standards and other facts and circumstances and concluded that the services performed by Compensation Advisory Partners did not raise any conflict of interest.

Members of management, including the CEO, do not have a role in determining their own compensation. The CEO is not present when the Committee determines his compensation. The Committee consults with the independent Directors regarding the CEO’s performance and then determines the CEO’s compensation for the current year and the CEO’s compensation opportunity for the following year.

Each year, the CEO—with input from our Human Resources Department and the compensation consultant—​recommends the amount of base salary increase (if any), annual incentive award, and long-term incentive award for our Named Executive Officers other than himself. These recommendations are based on the Named Executive Officer’s performance, performance of the business areas for which the Named Executive Officer

2

Relative Total Shareholder Return is defined as the Company’s Total Shareholder Return during the Performance Period as compared to the Total Shareholder Return of the S&P Financial Sector Index constituents during the Performance Period.

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is responsible (if applicable), and other considerations such as retention. The Human Resources Committee reviews these recommendations and approves compensation decisions for each Named Executive Officer.

The Role of the Independent Compensation Consultant and Interaction with Management

The Human Resources Committee has the sole authority to hire, approve the compensation of, and terminate the engagement of the compensation consultant.

The compensation consultant usually conducts an annual competitive review of compensation opportunities for each of the Named Executive Officers compared to the pay opportunities of similarly situated executives at the peer group companies (the “Peer Group”). A comprehensive review of compensation programs for the CEO and all of his direct reports is typically conducted every other year. In the years in which the compensation consultant does not conduct a compensation study, the Human Resources Committee makes compensation decisions—in part based on survey data provided by the Human Resources Department and input provided by the compensation consultant. The last comprehensive review of executive compensation was conducted in 2022. That review covered all aspects of the incentive program design and structure of the Company’s overall compensation program for the Named Executive Officers, including:

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A competitive review of compensation opportunities for each of the Named Executive Officers compared to the pay opportunities of similarly situated executives at Peer Group companies;

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An analysis to ensure that total share dilution and the economic costs of long-term incentives are reasonable and affordable for the Company; and

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A comprehensive market analysis of termination-related benefits related to cash severance and equity termination provisions.

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The compensation consultant:

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Attended eight meetings of the Human Resources Committee in 2023, as requested by the Committee Chair; and

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Reviewed and commented on drafts of the Compensation Discussion & Analysis and related compensation tables for the proxy statement.

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Use of Compensation Data

The Human Resources Committee determines the Peer Group of companies it uses to compare the Named Executive Officers’ compensation as part of the compensation consultant’s biennial study. The compensation consultant recommends an appropriate Peer Group of public, similarly sized, diversified financial services, insurance, and asset management companies, considering the Company’s and the Peer Group companies’ strategy, mix of business, and size, as measured primarily by annual revenues, market capitalization, and total assets. These companies are the major competitors in one or more of the Company’s businesses, but none represent the exact business mix of the Company. Principal targets compensation for the Named Executive Officers at the median compensation of the named executive officers at the Peer Group companies. The Human Resources Committee reviewed companies in the Peer Group in 2022 as part of our biennial compensation review, and Bank of New York Mellon and State Street were added based on the size of their revenue, market capitalization, operating profit, and significant global operations relative to the Company. Manulife and SunLife were removed based on differing pay practices of Canadian companies. The Peer Group used for 2023 compensation decisions included the following companies:

The Committee also uses annual data from third-party industry surveys for its compensation decisions.1

Our executives participate in the same broad-based employee benefit programs as other employees. Every two to three years, the Company’s non-cash employee benefit programs are compared to a custom peer group representing both proxy peer group members and select employers with which we believe we compete for talent, including several local employers.

Each year, the Committee reviews the total compensation paid to the Named Executive Officers by reviewing tally sheets, which include base salaries, annual and long-term incentive awards earned, deferred compensation, outstanding equity awards, benefits, perquisites, and potential payments under various termination scenarios.

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.

2023 Executive Compensation Decisions

In general, 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:

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The Company’s strategic and human resources objectives;

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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);

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Corporate and individual performance on key initiatives;

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Corporate performance compared to our competitors;

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Economic conditions;

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Retirement benefits;

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The CEO’s compensation recommendations for Named Executive Officers;

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Advice of the Committee’s compensation consultant; and

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

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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 2023 Compensation Program

The charts below show the 2023 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.

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The surveys used were the McLagan Investment Management survey, Towers Watson U.S. Financial Services Studies Executive Database, revenue greater than $7 billion, and the Towers Watson Diversified Insurance Study of Executive Compensation, 0.5x – 2.0x revenue. The names of the companies participating in these surveys are included in Appendix A.

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Base Salary

When determining base salary for each Named Executive Officer, the Committee considers the Peer Group median for comparable executive positions, as well as the survey data referenced above, the Named Executive Officer’s performance and work experience, the importance of the position to the Company, and how difficult it would be to replace the Named Executive Officer. The table below provides the historical base salaries of the Named Executive Officers. The 2023 salary increases for Messr. Houston and Mses. Strable-Soethout and Friedrich were made to better align their compensation with the median compensation levels among our peer companies.

Annual Incentive Compensation

Named Executive Officers participate in the PrinPay Plan, the Company’s broad-based annual incentive compensation plan for employees. Awards are calculated based on eligible earnings during the plan year. The PrinPay Plan links annual incentive pay to individual employee results and overall Company performance and profitability as measured by:

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Non-GAAP operating earnings: Non-GAAP operating earnings is revenue less expenses and taxes. It continues to be a primary indicator of our organization’s financial performance.

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Customer revenue growth: This metric focuses on revenue growth from customer-driven actions rather than market/macro conditions.

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Managed net cash flow: This metric represents net cash flows (deposits less withdrawals) we’re managing within Principal. Managed net cash flow can contribute to customer growth and, if positive, increases assets under management.

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Diversity index: The metrics included in the diversity index contribute to our ability to create a more diverse, equitable, and inclusive workforce, culture, and supplier base. Specific measures cover: hiring, promotion, and turnover rates; supporting and participating in employee resource groups and other inclusion-related learning opportunities and events; benchmarking; supplier diversity; and new employee education and awareness.

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Free capital flow payout ratio: Used as a modifier, free capital flow payout as a ratio to net income is an indicator of using capital wisely to drive growth and be seen as an industry leader in driving shareholder value. Free capital flow is the capital generated by each business operation that flows to the enterprise and enables organic reinvestment for growth and external deployment to drive shareholder value.

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After establishing the Company score, an employee’s individual performance is assessed to determine the individual performance score. The Company performance component emphasizes the importance of overall corporate results. The Human Resources Committee may also consider factors that could not have been anticipated when corporate goals were established and adjust the corporate score up or down.

The Committee set and approved the following target awards for our Named Executive Officers in 2023:

Target Annual Incentive Percentages (as a percentage of base salary)

In establishing the target award opportunity for Messrs. Houston and Halter, and Mses. Strable-Soethout and Friedrich, the Committee considered the median incentive targets for comparable executive positions in the Peer Group companies, as well as the survey data referenced above. The Committee considered internal equity when establishing Mr. Agrawal’s target award opportunity.

Performance Goal Setting

In setting performance goals for our compensation program,

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In September: The Board meets to review the Company’s long-term strategy.

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In November: The CEO, CFO, and Division Presidents recommend preliminary financial goals for the Company and business units and strategic initiatives for the next year. The Board Finance Committee reviews the proposed goals, underlying assumptions of the goals and initiatives, key drivers of financial performance, trends, and business opportunities, and advises the Board and Human Resources Committee on the appropriateness of the financial goals.

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In February: The Committee reviews and approves the final goals for the Company and the CEO, as well as reviews the goals for the other Named Executive Officers, each with input from the Finance Committee and Board based on prior year-end financial results. All employees develop individual performance goals with their leaders that support the Company’s goals.

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Final Annual Incentive Pay Award Determination

In determining final awards for PrinPay participants, the Committee uses the following approach:

Step 1: Review the PrinPay performance measures and modifier results compared to PrinPay Plan goals to determine initial award payout.