Paul H. McDonough
CNO Financial GroupAbout Paul H. McDonough
CFO of CNO Financial Group since March 2019, with nearly 30 years of public-company finance experience and 20 years in insurance; previously CFO of OneBeacon Insurance (2005–2017), CFO of BJ’s Wholesale Club (2005), treasury leadership at The St. Paul Companies, plus earlier roles at Sears and Chevron; U.S. Navy officer; BA, Georgetown; MBA (Finance/Accounting), Kellogg/Northwestern . Under current leadership, CNO reported FY2024 revenues of $4.4B and net income of $404.0M (vs. $276.5M in 2023), with strong operating EPS/ROE performance and record sales across divisions . Shareholder value creation has been notable: a $100 investment at 12/31/2019 grew to $231.28 by 12/31/2024, outpacing the S&P Life & Health Insurance Index ($171.87) and S&P MidCap 400 ($163.54) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| CNO Financial Group | Chief Financial Officer | 2019–present | Enterprise finance leadership during business model transformation, capital deployment, and sales growth |
| OneBeacon Insurance Group | EVP & Chief Financial Officer | 2005–2017 | Public company CFO for P&C carrier; capital markets, reporting, and M&A support |
| BJ’s Wholesale Club | Chief Financial Officer | 2005 | Retail finance leadership |
| The St. Paul Companies | Treasurer; Assistant Treasurer | 2001–2004; 1999–2001 | Treasury and capital markets leadership at large insurer |
| Sears; Chevron | Finance/strategic planning roles | Not disclosed | Corporate finance and planning experience |
| U.S. Navy & Navy Reserve | Officer | 6 years | Leadership and operations experience |
External Roles
- No public-company board roles were disclosed for Mr. McDonough in the 2025 proxy; director biographies in the proxy cover Board nominees rather than executives .
Fixed Compensation
| Component | 2024 | 2023 | 2022 |
|---|---|---|---|
| Base salary ($) | 698,167 | 680,167 | 653,833 |
| All other compensation ($) | 45,995 (GLI 2,772; 401k 13,800; tax reimbursement 5,314; perqs 24,109) | 115,424 | 76,250 |
Notes:
- As of 12/31/2024, Mr. McDonough’s formal base salary was $701,000 (program target table); merit increase approved in 2024 .
Performance Compensation
Annual cash incentive (P4P) and LTI overview
- Target annual cash incentive: 100% of base salary (threshold 50%, max 200%) .
- 2024 non-equity incentive paid: $1,002,031 .
- LTI design: 55% performance shares (P-shares) and 45% time-vested RSUs; P-shares: 1-year Operating ROE (50%) + 1-year Operating EPS (50%), then 3-year relative TSR modifier (+/−25% at ≥75th/≤25th percentile), 3-year cliff; RSUs vest in three annual installments .
2024 P4P metrics and targets (McDonough weightings)
| Metric | Weight | 2024 Target | Notes |
|---|---|---|---|
| Operating Earnings Before Interest, Taxes and Non-Deferred Acquisition Expenses ($MM) | 30% | 608.1 | Threshold 425.7; Max 790.6 ($MM) |
| Combined Total Life & Health Collected Premium ($MM) | 10% | 2,570.8 | Threshold 2,442.3; Max 2,699.3 ($MM) |
| Annuity Collected Premium ($MM) | 10% | 1,649.5 | Threshold 1,484.6; Max 1,814.5 ($MM) |
| Combined Total Fee Revenue ($MM) | 10% | 175.6 | Threshold 149.3; Max 201.9 ($MM) |
| Investment Metrics (see below) | 20% | Multiple targets | Effective Yield (40%); Pre-tax C1/AUM (35% target 1.60%); Total Return vs. benchmark (15%); Responsible Investment (10% target 6.55) |
| Individual qualitative | 20% | — | Leadership/culture KPIs; capped if core earnings under threshold |
Investment sub-metrics (weight within investment bucket): Effective Yield (40%), Pre-tax C1/AUM (35%), Total Return vs. Benchmark (15%), Responsible Investment (10%) .
2024 aggregate plan results: Company-level performance 146% of target; NEO payouts ranged 143%–149% of target .
2024 equity grants to McDonough (grant date: 2/12/2024)
| Award | Shares/Target | Grant-date fair value ($) |
|---|---|---|
| P-shares (Operating ROE/EPS 2024, TSR-modified 2024–2026) | 37,200 target | 1,049,412 |
| RSUs (time-vested) | 32,800 | 898,392 |
| Total 2024 stock awards | — | 1,947,804 |
Multi-year compensation summary (NEO table)
| Year | Salary ($) | Stock awards ($) | Non-equity incentive ($) | All other comp ($) | Total ($) |
|---|---|---|---|---|---|
| 2024 | 698,167 | 1,947,804 | 1,002,031 | 45,995 | 3,693,997 |
| 2023 | 680,167 | 1,818,581 | 710,629 | 115,424 | 3,324,801 |
| 2022 | 653,833 | 1,424,080 | 743,967 | 76,250 | 2,898,130 |
Equity Ownership & Alignment
Outstanding equity (as of 12/31/2024)
| Instrument | Details |
|---|---|
| Stock options | 31,800 options @ $16.50, granted 4/1/2019, expiring 4/1/2029 |
| Unvested RSUs | 8,316 (2022 grant, vest 3/25/2025); 20,658 (2023 grant, vesting in three installments begun 3/25/2024); 32,800 (2024 grant, vest in three equal annual installments beginning 3/25/2025) |
| Unearned P-shares (at target) | 18,500 (2023–2025, ROE); 18,500 (2023–2025, EPS); 37,200 (2024–2026, ROE); 37,200 (2024–2026, EPS) |
| Recently settled P-shares | 13,105 (2022 ROE) and 13,428 (2022 EPS) settled on 2/11/2025; 2022–2024 payout at 85.1%/87.2% of target; no TSR adjustment |
Market values in the proxy (for outstanding awards) used $37.21/share at 12/31/2024 .
Ownership alignment policies
- Executive stock ownership guideline: 3× base salary for executives reporting to CEO; all NEOs in compliance as of 12/31/2024 .
- Hedging/pledging prohibited; no holding in margin accounts permitted .
- RSU vesting: in 3 equal installments starting one year post-grant (2024 grant begins 3/25/2025). P-shares vest based on 1-year Operating ROE/EPS with 3-year TSR modifier, cliff-vesting after 3 years .
Vesting-driven selling pressure
- Near-term vesting: 2024 and 2023 RSUs begin/continue vesting on March 25 annually; taxes on RSU/P-share settlements can necessitate open-market sales or net share withholding (monitor Form 4s around these dates) .
Employment Terms
Severance and change-in-control (CIC) economics (Executive Severance Plan; CFO is a covered executive)
| Scenario (as of 12/31/2024) | Pro-rata bonus | Cash severance | Outplacement | Tax/financial services | Welfare benefit subsidy | Equity treatment |
|---|---|---|---|---|---|---|
| Resignation “With Reason” (non-CIC) | 1,002,031 | 2,103,000 (1.5× salary+target bonus) | 25,000 | 10,000 | 23,096 | RSUs/P-shares per “good leaver” at HRCC discretion; table assumes pro-rata/continue vesting, see note |
| Termination Without “Just Cause” (non-CIC) | 1,002,031 | 2,103,000 | 25,000 | 10,000 | 23,096 | Pro-rata RSUs next tranche; P-shares pro-rata for performance period |
| CIC termination (within 6 months before to 2 years after CIC) | 1,002,031 | 2,804,000 (2× salary+target bonus) | 25,000 | 10,000 | 23,096 | RSUs vest in full; P-shares vest pro-rata (performance-based) |
Other contractual protections and policies
- Non-solicitation: 1 year beyond termination (Executive Agreements for executives reporting to CEO) .
- Clawback: Expanded policy (10/2/2023) mandates recoupment for restatements and allows discretionary recoupment for detrimental conduct causing material harm; LTIP/P4P plans also include recapture/forfeiture provisions .
- No SERP; no excise tax gross-ups; no option repricing without shareholder approval; no hedging/pledging .
Performance & Track Record Context (during current leadership period)
| Metric | 2023 | 2024 |
|---|---|---|
| Revenues ($B) | — | 4.4 |
| Net Income ($M) | 276.5 | 404.0 |
| Net Operating Income ($M) | 356.1 | 429.3 |
| Operating EPS (non-GAAP) | 2.72 (restated) | 3.80 (used for P-share performance) |
| 5-year TSR value of $100 invested (12/31/2019–12/31/2024) | — | CNO: $231.28; S&P Life & Health: $171.87; S&P MidCap 400: $163.54 |
Note: CNO highlights record sales across Consumer and Worksite, fee revenue growth, and operating efficiency (expense ratio ex-significant items down 20 bps) in 2024 .
Compensation Structure Analysis
- Greater at-risk pay: Target TDC for CFO is 58% LTI, with 100% of annual bonus at risk and LTI split 55% P-shares/45% RSUs, reinforcing performance alignment .
- Strong metric rigor: P4P balances growth (premiums, fee revenue), profitability (core operating earnings), and investment discipline (yield, credit risk C1/AUM, relative total return, responsible investment rating) with transparent targets and symmetric thresholds/maximums .
- No problematic features: No SERP, no tax gross-ups, prohibition on hedging/pledging, double-trigger CIC for accelerated vesting; robust clawback .
- Governance of compensation: HRCC uses a peer group to target median pay levels; external consultant WTW is deemed independent annually, though the company discloses significant non-executive-compensation services/fees to WTW subsidiaries; independence assessed by HRCC .
- Shareholder support: Say-on-pay approval exceeded 93% in 2024 .
Equity Ownership & Pledging
- Stock ownership guideline: 3× base salary for CFO; McDonough is in compliance .
- Pledging/hedging: Prohibited (including margin accounts and derivatives) .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay support >93% .
- The company conducts recurring investor outreach, with ~45% of shares engaged in 2024; proxy includes expanded disclosures in response to feedback .
Compensation Peer Group (benchmarking)
- Peer set includes life/health and diversified insurers (e.g., Unum, Lincoln, Voya, Globe Life, RGA, Assurant, Primerica, among others). The HRCC targets ~50th percentile for TDC at target performance .
Risk Indicators & Red Flags (observed)
- Positive controls: Strong clawback; double-trigger CIC; no repricing; no SERP; no hedging/pledging .
- Consultant conflicts mitigated via independence review, but magnitude of other WTW fees ($36.32M in 2024) warrants continued monitoring, as disclosed .
Investment Implications
- High alignment: Significant at-risk pay with multi-factor operating and investment metrics plus a TSR modifier anchors incentives to value creation; ownership guidelines and anti-hedging/pledging policies reinforce alignment .
- Vesting calendar: Annual RSU tranches (beginning March 25) and three-year P-share cliffs can create episodic liquidity needs around vesting/settlement; monitor Form 4s near vesting dates for potential selling pressure .
- Retention/CIC protection: 1.5× cash severance (non-CIC) and 2× (CIC) with pro‑rata bonus and benefit subsidies provide continuity without excessive golden parachutes; performance-contingent equity treatment tempers windfalls .
- Performance backdrop: 2024 delivered strong operating results and five-year TSR outperformance versus peers/indices, supporting pay-for-performance narrative through the cycle .