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Operating earnings excluding the impact of foreign currency metric is one of the principal financial measures used
to evaluate management’s performance, and we believe it continues to be a key driver of shareholder value.
●●
Consolidated operating earnings per diluted share exceeded the original guidance range of $6.40 to $6.65
and came in at $6.91, which was the high end of the Company’s revised currency-neutral guidance of $6.75
to $6.95, driven by strong overall insurance margins, investment results in Japan and the U.S. and disciplined
capital management.
In 2017, the Company advanced the vision of offering high-quality voluntary products, solutions and service
through diverse distribution outlets, building upon the Company’s market-leading position to drive long-term
shareholder value.
●●
In Japan, management continued to strengthen relationships with sales channels and to enhance the product
line with a revised medical insurance policy to ensure we continue to meet the needs of our policyholders.
These actions were instrumental in maintaining the Company’s status as the leading provider of both medical
and cancer insurance in Japan. Despite the competitive market for cancer and medical products and the
persistent low interest rate environment in Japan, the Company exceeded financial objectives driving pretax
operating profit margins to exceed the high end of the forecasted range.
●●
In the U.S., strong new annualized premium sales growth across all channels and record persistency drove
record pretax operating income margins, despite stepped-up investments in the platform. While investments in
the platform drove elevated expenses, these investments are intended to drive growth and long term efficiencies.
Management and the Board are committed to comprehensive risk management and safeguarding the financial
strength of the Company. In 2017, core capital strength measures remained very strong. The Company’s strong
capital and cash flow positions continue to support our financial strength ratings, which are among the highest in
the industry, and our 35-year track record of increased common stock dividends.
Response to Say-on-Pay Vote
The Company has a history and a well-earned reputation with its shareholders as a transparent organization. That
commitment to transparency on all levels was a driving force behind our decision in 2008 to allow shareholders a
“say-on-pay” advisory vote, years before such votes became mandatory for most public companies. In 2017, 81%
of our shareholders voted in favor of our executive compensation program.
Consistent with our approach in prior years, the Company engaged in shareholder outreach efforts throughout
2017. The feedback from these conversations, together with a thorough analysis of best practices and guidance
from our compensation consultant, was incorporated into the Compensation Committee’s regular review of our
compensation programs. This review has prompted several changes for 2017.
We continually analyze our compensation program to ensure that we remain current in our approaches, a leader in
executive compensation best practices, and cognizant of shareholder concerns. Moreover, we pride ourselves on
incorporating ethics and transparency into everything we do, including compensation disclosure. Accordingly, we
will continue our review and dialogue with investors to determine if additional changes are warranted.
2017
The Compensation Committee made the following changes:
•
The Management Incentive Program (“MIP”) was simplified to
align performance metrics and modified to increase the level of
performance required to achieve maximum goals.
•
Our Chairman and CEO received his entire target long-term
incentive award in performance-based restricted stock
(“PBRS”) in February 2017 at a market-competitive level in
relation to our peers.
•
The long-term incentive awards for all NEOs were granted
exclusively in the form of PBRS.
•
The PBRS program was modified to include both upside and
downside payout leverage, two additional performance metrics
(Operating Return on Equity and Solvency Ratio Margin) and a
relative TSR modifier to better align the PBRS awards with our
strategic and operational goals and shareholders’ interests.
Compensation Discussion & Analysis
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Executive Summary: 2017 Business Overview
AFLAC INCORPORATED
2018 PROXY STATEMENT
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