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Long-term Equity Incentives
In 2015, LTI awards were provided in the form of
performance-based restricted stock (“PBRS”) (for
executive officers including all NEOs) and stock options
(for all officers, except the CEO and the President).
The targeted LTI mix for 2015 for officer group (except
the CEO and the President) is 80% PBRS and 20%
stock options. For 2015, the CEO’s and President’s
long-term incentive awards were made entirely in
PBRS.
PBRS awards will be reduced or cancelled if
management fails to maintain appropriate risk-based
capital levels. In addition, in such case, the value of
existing awards and other shares held by our
executives likely will decline, providing strong economic
incentive to manage capital and risk. Options only
provide value if our share price appreciates and the
option vests.
Mr. Crawford was not employed at the time the 2015
LTI granted in February 2015. In connection with the
commencement of his employment, Mr. Crawford
received an award of 13,583 shares of performance
based restricted stock which vests on the third
anniversary if performance metrics are met and a grant
of options to purchase 21,348 shares of common stock
which vest on the third anniversary.
LTI targets as a percent of base salary for the NEOs were as follows:
Named Executive Officer
Target LTI
(as Percent of Base Salary)
Daniel P. Amos (Chairman & CEO)
Performance-based
Kriss Cloninger III (President)
Performance-based
Paul S. Amos II (President, Aflac)
250%
Eric M. Kirsch (EVP, Global Chief Investment Officer, Aflac)
250%
For PBRS awards that were granted in 2015, the
performance period is January 1, 2015 through
December 31, 2017 (including Mr. Crawford’s grant).
The sole performance measure for determining vesting
for these awards is based on the achievement of
specified RBC ratios as determined on a U.S. statutory
accounting basis at each calendar year end. This
performance measure was selected because of the
Company’s belief that capital adequacy is a significant
concern for the financial markets and shareholder
confidence. The RBC demonstrates Aflac’s
achievement in managing the capital level of the
consolidated insurance operations of Aflac Japan and
Aflac U.S. as reported to U.S. regulatory authorities.
This capital measure reflects the Company’s ability to
both satisfy its obligations to policyholders and generate
returns for shareholders. Therefore, RBC was
determined to be the best metric to measure and
assess management’s long-term performance for our
PBRS awards.
For each calendar year, participants will earn total
PBRS credit based on the RBC credit earned. For
performance between the minimum and target goal and
between the target goal and maximum goal, a pro-rata
calculation will be used to determine the percentage of
credit achieved. The final three-year PBRS award
percentage will be the arithmetic average of the PBRS
credits earned in each of the individual three years
comprising the performance period, provided however,
that the PBRS award credit will not exceed 100%. If the
performance measures are achieved, the PBRS awards
are settled (a participant will receive one share of
Company common stock for each earned PBRS
award).
Minimum
Goal
Target
Goal
Maximum
Goal
Risk-Based
Capital Ratio
500%
625%
750%
Annual Credit
50%
100%
150%
Stock options are awarded to all NEOs, except Messrs.
Daniel P. Amos and Cloninger. These options are
granted based on the closing price on the date of grant
and vest over a three-year period.
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