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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) section provides a detailed description of our executive
compensation philosophy and programs, the compensation decisions made by the Compensation Committee related to
those programs, and the factors considered in making those decisions. This CD&A focuses on our NEOs for 2014, who
were:
Named Executive Officer
Title
Daniel P. Amos
Chairman & Chief Executive Officer
Kriss Cloninger III
President, Chief Financial Officer & Treasurer
Paul S. Amos II
President, Aflac
Eric M. Kirsch
Executive Vice President, Global Chief Investment Officer, Aflac
Tohru Tonoike
President & Chief Operating Officer, Aflac Japan
Overview
The Company’s compensation philosophy is to provide
pay-for-performance that is directly linked to the
Company’s results. We believe this is the most effective
method for creating shareholder value, and that it has
played a significant role in making the Company an
industry leader. Importantly, the performance-based
elements of our compensation programs apply to all
levels of Company management, not just the executive
officers. In fact, pay-for-performance components
permeate every employee level at the Company. The
result is that we are able to attract, retain, motivate and
reward talented individuals who have the necessary
skills to manage our growing global business on a day-
to-day basis, as well as for the future.
Our executive compensation program is designed to
drive shareholder value via the following guiding
principles:
a pay-for-performance philosophy that directly
links an executive’s potential wealth
accumulation to the achievement of our annual
and long-term strategic and operational goals;
compensation elements that help us attract and
retain high-caliber talent to lead the Company in
its execution of its business plan; and
best practices with respect to corporate
governance policies, such as stock ownership
guidelines, clawback provisions, and no
change-in-control excise tax gross-ups.
Summary of 2014 Results
The Company delivered strong financial and operating
results in 2014. Notable achievements that contributed
to shareholder value creation included:
growing total operating revenues, excluding foreign
currency effect, by 1.0% to $23.8 billion;
meeting our operating earnings objective for the 25
th
consecutive year as operating earnings per diluted
share rose 3.9% (excluding impact from foreign
currency);
generating more than $2.5 billion in total combined
new annualized premium sales in the United States
and Japan;
increasing the quarterly dividend by 5.4% to $.39
per quarter and the annual dividend by 5.6% to
$1.50, marking the 32
nd
consecutive year in which
the dividend has been increased;
generating an industry-leading return on equity of
17.9%; additionally, our operating return on
shareholders’ equity excluding foreign currency
effect (“OROE”) for the full year was 22.9%;
enhancing our capital ratios, as of December 31,
2014:
o
Risk-based capital (“RBC”) ratio was 945%;
o
Solvency margin ratio (“SMR”), the principal
capital adequacy measure in Japan, was 857%;
and
repurchasing $1.2 billion (19.7 million) of the
Company’s shares due to the strength of our capital
ratios and liquidity position.
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