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Stock Ownership Guidelines; Hedging and Pledging Restrictions
The Company believes that its executive officers and
Board members should have a significant equity
interest in the Company. The Board first established
stock ownership guidelines for officers and Board
members in 1998. In November 2012, the Board
amended the stock ownership guidelines, which define
stock ownership value as a multiple of base salary, and
set the levels as follows:
Officer Level
Guideline (Multiple of
Base Salary)
Chairman, CEO, &
President
5.0x
President of Aflac
5.0x
Executive Vice
President
3.0x
All other Executive
Officers
3.0x
Officers have four years from date of hire or promotion
to satisfy their respective stock ownership guidelines.
Non-employee Directors must own four times the
annual retainer and have five years from the date first
elected to the Board to satisfy these guidelines.
Ownership includes all shares held by the officer or
Board member and their spouse as well as tenure-
based, unvested restricted shares. Shares pledged as
collateral for a margin account or other loan,
performance-based restricted shares, and stock options
(vested or unvested) do not count toward these stock
ownership guidelines.
Each of the Company’s NEOs has stock ownership that
exceeds ownership guidelines or is working toward
meeting respective ownership guidelines within the
allowed four-year time frame.
Progress toward meeting
the guidelines is reviewed regularly and reported to the
Board.
The Company's insider trading policy prohibits our
Board members, officers and other covered persons
from selling our Common Stock “short,” engaging in
option trading (puts, calls, or other derivative securities)
relating to our Common Stock, entering into a 10b5-1
plan (unless approved by the Compensation
Committee) or hedging. In addition, at its February 2013
meeting, the Board adopted a policy prohibiting future
pledging of the Company’s stock by executive officers
and Board members. All other covered persons under
the Company's insider trading policy must pre-clear with
the policy’s compliance officer before pledging
Company stock as collateral for a margin account or
other loan.
Employment Agreements
The Company has employment agreements with the
NEOs and certain other executives in key roles. The
agreements generally address: role and responsibility;
rights to compensation and benefits during active
employment; termination in the event of death, disability
or retirement, and termination for cause or without
cause; and resignation by the employee. Some
agreements also contain termination and related pay
provisions in the event of a change in control. For the
applicable change-in-control provisions in the
employment agreements to apply, there must be both
(i) a change in control and (ii) a termination by the
Company without cause or a resignation by the
executive for good reason. This is commonly
referenced as a “double trigger” requirement. Further,
the contracts stipulate that the executive may not
compete with the Company for prescribed periods
following termination of employment or disclose
confidential information.
The payments that may be made under each NEO’s
employment agreement upon termination
of
employment under specified circumstances are
described in more detail below under “Potential
Payments Upon Termination or Change in Control.”
In the case of Mr. Tonoike’s employment agreement,
the Company has a unique retirement obligation. For
the years 2007 through 2014, the Company was
obligated to provide for a special retirement benefit
equal to one- half of his MIP increased by 10%. This
amount is payable upon termination as a lump sum
retirement benefit and the annual accrual for this
obligation has been included in the non-equity incentive
plan compensation column of the Summary
Compensation Table and in the Nonqualified Deferred
Compensation Table. Mr. Tonoike’s employment
agreement ended December 31, 2014. Beginning on
January 1, 2015, Mr. Tonoike became the Vice
Chairman of Aflac Japan.
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