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ObjectId: 201843199349309689 - Submission: 2018-11-15
TIN: 03-0372512
Schedule J
(Form 990)
Department of the Treasury
Internal Revenue Service
Compensation Information
For certain Officers, Directors, Trustees, Key Employees, and Highest
Compensated Employees
Complete if the organization answered "Yes" on Form 990, Part IV, line 23.
Attach to Form 990.
Go to
www.irs.gov/Form990
for instructions and the latest information.
OMB No. 1545-0047
20
17
Open to Public Inspection
Name of the organization
HILLS INSURANCE COMPANY INC
C/O FRANCISCAN ALLIANCE INC
Employer identification number
03-0372512
Part I
Questions Regarding Compensation
Yes
No
1a
Check the appropiate box(es) if the organization provided any of the following to or for a person listed on Form
990, Part VII, Section A, line 1a. Complete Part III to provide any relevant information regarding these items.
First-class or charter travel
Housing allowance or residence for personal use
Travel for companions
Payments for business use of personal residence
Tax idemnification and gross-up payments
Health or social club dues or initiation fees
Discretionary spending account
Personal services (e.g., maid, chauffeur, chef)
b
If any of the boxes in line 1a are checked, did the organization follow a written policy regarding payment or reimbursement or provision of all of the expenses described above? If "No," complete Part III to explain
.........
1b
2
Did the organization require substantiation prior to reimbursing or allowing expenses incurred by all
directors, trustees, officers, including the CEO/Executive Director, regarding the items checked in line 1a?
..
2
3
Indicate which, if any, of the following the filing organization used to establish the compensation of the
organization's CEO/Executive Director. Check all that apply. Do not check any boxes for methods
used by a related organization to establish compensation of the CEO/Executive Director, but explain in Part III.
Compensation committee
Written employment contract
Independent compensation consultant
Compensation survey or study
Form 990 of other organizations
Approval by the board or compensation committee
4
During the year, did any person listed on Form 990, Part VII, Section A, line 1a, with respect to the filing organization or a related organization:
a
Receive a severance payment or change-of-control payment?
.............
4a
No
b
Participate in, or receive payment from, a supplemental nonqualified retirement plan?
.........
4b
Yes
c
Participate in, or receive payment from, an equity-based compensation arrangement?
.........
4c
No
If "Yes" to any of lines 4a-c, list the persons and provide the applicable amounts for each item in Part III.
Only 501(c)(3), 501(c)(4), and 501(c)(29) organizations must complete lines 5-9.
5
For persons listed on Form 990, Part VII, Section A, line 1a, did the organization pay or accrue any
compensation contingent on the revenues of:
a
The organization?
....................
5a
No
b
Any related organization?
.......................
5b
No
If "Yes," on line 5a or 5b, describe in Part III.
6
For persons listed on Form 990, Part VII, Section A, line 1a, did the organization pay or accrue any
compensation contingent on the net earnings of:
a
The organization?
..................
6a
No
b
Any related organization?
......................
6b
No
If "Yes," on line 6a or 6b, describe in Part III.
7
For persons listed on Form 990, Part VII, Section A, line 1a, did the organization provide any nonfixed
payments not described in lines 5 and 6? If "Yes," describe in Part III
............
7
No
8
Were any amounts reported on Form 990, Part VII, paid or accured pursuant to a contract that was
subject to the initial contract exception described in Regulations section 53.4958-4(a)(3)? If "Yes," describe
in Part III
..........................
8
No
9
If "Yes" on line 8, did the organization also follow the rebuttable presumption procedure described in Regulations section 53.4958-6(c)?
.........................
9
For Paperwork Reduction Act Notice, see the Instructions for Form 990.
Cat. No. 50053T
Schedule J (Form 990) 2017
Page 2
Schedule J (Form 990) 2017
Page
2
Part II
Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees.
Use duplicate copies if additional space is needed.
For each individual whose compensation must be reported on Schedule J, report compensation from the organization on row (i) and from related organizations, described in the
instructions, on row (ii). Do not list any individuals that are not listed on Form 990, Part VII.
Note.
The sum of columns (B)(i)-(iii) for each listed individual must equal the total amount of Form 990, Part VII, Section A, line 1a, applicable column (D) and (E) amounts for that individual.
(A)
Name and Title
(B)
Breakdown of W-2 and/or 1099-MISC compensation
(C)
Retirement and other deferred compensation
(D)
Nontaxable
benefits
(E)
Total of columns
(B)(i)-(D)
(F)
Compensation in column (B) reported as deferred on prior Form 990
(i)
Base
compensation
(ii)
Bonus & incentive
compensation
(iii)
Other
reportable compensation
1
KEVIN D LEAHY
DIRECTOR, PRESIDENT
(i)
(ii)
0
-------------
1,788,442
0
-------------
0
0
-------------
7,464,323
0
-------------
27,362
0
-------------
256,961
0
-------------
9,537,088
0
-------------
7,360,559
2
DANIEL CONNER
VICE PRESIDENT
(i)
(ii)
0
-------------
344,626
0
-------------
0
0
-------------
36,938
0
-------------
8,100
0
-------------
21,785
0
-------------
411,449
0
-------------
0
Schedule J (Form 990) 2017
Page 3
Schedule J (Form 990) 2017
Page
3
Part III
Supplemental Information
Provide the information, explanation, or descriptions required for Part I, lines 1a, 1b, 3, 4a, 4b, 4c, 5a, 5b, 6a, 6b, 7, and 8, and for Part II. Also complete this part for any additional information.
Return Reference
Explanation
SCHEDULE J, PART I, LINE 3
HILLS INSURANCE COMPANY, INC. DOES NOT COMPENSATE ITS PRESIDENT.
SCHEDULE J, PART I, LINE 4B
CERTAIN OFFICERS OF HILLS INSURANCE COMPANY, INC. ("HILLS") ARE COMPENSATED BY A RELATED ORGANIZATION, FRANCISCAN ALLIANCE, INC. ("FRANCISCAN"). FOR ALL FRANCISCAN EMPLOYEES, INCLUDING THOSE LISTED ON SCHEDULE J, FRANCISCAN'S GOAL IS TO OFFER COMPETITIVE SALARIES IN ORDER TO ATTRACT, HIRE, AND RETAIN QUALIFIED AND TALENTEND INDIVIDUALS. FRANCISCAN MAINTAINS A COMPENSATION COMMITTEE WHICH USES A NUMBER OF METHODS TO ESTABLISH COMPENSATION FOR NONEXECUTIVES, EXECUTIVES, OFFICERS, AND KEY EMPLOYEES (E.G. COMPENSATION STUDIES AND SURVEYS, INDEPENDENT COMPENSATION CONSULTANTS, USE OF FORM 990 OF OTHER HEALTH CARE ORGANIZATIONS, ETC.). AS PART OF THE TOTAL COMPENSATION ARRANGEMENT FOR A SPECIFIED GROUP OF PARTICIPANTS, FRANCISCAN HAD MAINTAINED A NONQUALIFIED, SUPPLEMENTAL RETIREMENT PLAN ("SERP"). THE SERP WAS DESIGNED TO RESTORE CERTAIN BENEFITS THAT ARE LIMITED AS A RESULT OF TAX RESTRICTIONS ON BENEFITS PAYABLE FROM THE TAX-QUALIFIED DEFINED BENEFIT RETIREMENT PLAN. IN DECEMBER 2017, AS A RESUL OF CERTAIN TAX LAW CHANGES, THE SERP WAS TERMINATED AND THOSE WHO WERE ELIGIBLE AS A RESULT OF THAT DATE WERE VESTED IN THEIR ACCUMULATED BENEFITS. SUCH VESTED AMOUNTS FOR ELIGIBLE PARTICIPANTS ARE REPORTED AS A COMPONENT OF THE PART II COLUMN (B)(III). IRS REGULATIONS REQUIRE ORGANIZATIONS TO ADD DEFERRED INCOME, THAT WAS PREVIOUSLY REPORTED ON THE FORM 990, TO THE CURRENT YEAR FORM 990 PART II COLUMNS (B)(III), (E), AND (F). THE DUPLICATE REPORTING OF PREVIOUS YEARS DEFERRED INCOME DOES NOT REPRESENT INCOME EARNED IN 2017 WHICH AMOUNTED TO DEFERRED INCOME OF $7,360,599 OF THE $7,464,323 REPORTED FOR LEAHY. THE 2017 FORM 990 REPORTS ALL OF THE DEFERRED INCOME EARNED OVER THE COURSE OF THIS EXECUTIVES CAREER OF 39 YEARS FOR LEAHY. THIS EXECUTIVE ELECTED TO ACCUMULATE THIS DEFERRED INCOME, WHICH HAD A SUBSTANTIAL RISK OF FORFEITURE, RATHER THAN TO TAKE THESE FUNDS IN PREVIOUS YEARS. THE ACTUAL INCOME AND BENEFITS FOR 2017 NOT PREVIOUSLY REPORTED IN OTHER YEARS IS $2,176,529 FOR LEAHY.
SCHEDULE J, PART II, COLUMN (C)
DEFERRED COMPENSATION FROM A RELATED ORGANIZATION INCLUDES CHANGE IN PRESENT VALUE OF THE QUALIFIED DEFINED BENEFIT PLAN. CHANGES IN THE AMOUNT REFLECTED BETWEEN YEARS IS PRIMARILY A FUNCTION OF THE FLUCTUATION IN THE ACTUARIAL DISCOUNT RATE USED TO MEASURE THIS FUTURE LIABILITY.
Schedule J (Form 990) 2017
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