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(in millions)
Revenue
(1)
Total Assets
(2)
Market Value
(3)
Aflac Incorporated
$23,181
(4)
$124,381
(4)
$25,562
Peer Median
$20,609
$102,110
$24,048
(1)
For the trailing 12 months ending September 30, 2015
(2)
As of September 30, 2015
(3)
As of December 31, 2015 when data was compiled for the performance review by the Compensation Committee
(4)
Figures are net of foreign currency effect
The assessment of the Company’s 2015 performance relative to the peer group can be found below in the “CEO and
President Compensation and Pay-for Performance” section of this CD&A.
ELEMENTS OF EXECUTIVE COMPENSATION PROGRAM
Base Salary
The primary purpose of the base salary component of
our executive compensation program is to provide the
recipient with a steady stream of income consistent with
his or her level of responsibility, qualifications and
contribution over time. The Consultant annually gathers
comparative market data on salaries for (i) the
Compensation Committee to use in reviewing and
determining the CEO’s salary and (ii) the CEO to use in
making recommendations for the salaries of all other
executive officers.
In the aggregate, the total base salaries of all of the
Company’s executive officers are near the 50
th
percentile of the survey results for these same positions
at peer group companies. Virtually all executive officers,
including NEOs, receive salaries that are within a plus
or minus range of 20% from the survey median for their
positions. Only Mr. Cloninger’s salary is above this
range, which we consider appropriate given his tenure
with the Company, his current important role of
President, as well as his experience gained through
serving in other executive level roles while with the
Company (e.g., CFO and Treasurer). In general,
executive officers who are new to their role are likely to
be below the median and executive officers who have
been in their jobs for extended periods are more likely
to be above the median.
In 2015, Messrs. Daniel P. Amos and Cloninger did not
receive salary increases; Mr. Daniel P. Amos has not
received a salary increase in the last four years. Mr.
Crawford was hired in 2015 and his base salary was set
at an annualized level of $700,000 upon his hiring.
Messrs. Paul S. Amos and Kirsch received
approximately a 1.5% base salary increase for 2015.
Management Incentive Plan (MIP)
All of the NEOs are eligible to participate in an annual
non-equity incentive plan sponsored by the Company,
referred to as the MIP, which was submitted to and
approved by shareholders in 2012 (the Amended and
Restated 2013 Management Incentive Plan).
The Board of Directors believes that it is important for
the Company to manage the business for the long-term
value of its shareholders. Therefore, performance
goals are tailored to metrics that drive shareholder
returns such as sales growth, earnings growth, and
return on equity.
The MIP payout is entirely dependent upon the level of
achievement of performance goals. This methodology
for setting MIP goals has been consistent for many
years:
MIP segment metrics for Aflac U.S. and Aflac
Japan are consistent with assumptions used in
developing segment financial projections
(described below) based on the Company’s
best estimates for the coming year.
The segment projections are then consolidated
into the corporate financial projection used to
develop earnings per share guidance.
The Company’s CEO, President, and CFO recommend
to the Compensation Committee the specific Company
performance objectives and their ranges. In
recommending the incentive performance objectives to
the Compensation Committee, the Company’s CEO,
President, and CFO take into consideration past
performance results and scenario tests of the
Company’s financial outlook as projected by a complex
financial model. The model projects the impact on
various financial measures using different levels of total
new annualized premium sales, investment returns,
budgeted expenses, morbidity, and persistency. This
enables the Company to set ranges around most
performance objectives.
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