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Executive Compensation Highlights
Our compensation philosophy, which extends to every employee level at the Company, is to provide pay 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.
The Company’s executive compensation programs reflect our corporate governance best practices principles:
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The Board’s independent Compensation Committee
oversees the program.
●●
The Compensation Committee retains an
independent compensation consultant that
reports only to that committee.
●●
For the past nineteen years, all of the CEO’s total
direct compensation has been determined based
on the Company’s financial performance and total
shareholder return performance compared to our
peers. The Compensation Committee regularly
evaluates this formula to ensure it remains appropriate.
●●
The independent compensation consultant reports
annually to the full Board of Directors on CEO pay
and performance alignment.
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We were the first public company in the U.S.
to voluntarily provide shareholders with a
say-on-pay vote–three years before such votes
became mandatory.
●●
Executive officers and Directors may not enter into
10b5-1 plans (unless approved by the Compensation
Committee) or hedge or pledge the Company’s stock.
●●
Executive officers and Directors have been subject to
stock ownership guidelines for almost two decades.
●●
We have had a clawback policy since 2007.
●●
We do not pay change-in-control excise tax
gross-ups.
●●
All employment agreements contain double trigger
change-in-control requirements.
Executive Compensation Program Changes
From our first voluntary “say-on-pay” advisory vote in 2008 until 2013, the Company received endorsement rates
from our shareholders that averaged more than 96%.
In recent years the support for our executive compensation program has been less favorable; approximately 86%
of our shareholders voted in favor of our 2016 say-on-pay proposal. In addition, consistent with past practice, the
Company engaged in shareholder outreach efforts throughout 2016. The Compensation Committee incorporated
the feedback from these conversations into its regular review of compensation practices, and also conducted a
thorough analysis of best practices. As a result, the Compensation Committee has modified our compensation
plans, as further discussed in this proxy statement.
Based on the feedback resulting from the Company’s shareholder engagement and analysis, in 2016 the LTI award
for the CEO continued under the current structure and process: the contingent PBRS grant made in February 2016
was trued up as of December 31, 2016, based on the Company’s relative financial and relative TSR performance
versus our peers. Beginning in 2017, the Company will grant the CEO’s entire annual LTI award at a competitive
level considering peer market data, the Company’s performance, and the tenure and performance of the CEO.
The Compensation Committee also has approved changes to the management incentive program and the LTI
award program for executives other than the CEO. The management incentive program will reflect fewer metrics,
taking into account a new definition of operating earnings. Additionally, the Aflac Japan direct premium metric will
focus on third sector business in Japan. The 2017 LTI program will follow a simplified approach recommended by
our independent compensation consultant that is consistent with long-term incentive plans offered by our peers.
See “Program Changes for 2017,” which begins on page 42.
We work hard to ensure we remain current, continue to lead in executive compensation best practices, and remain
focused on shareholder concerns. Accordingly, we will continue our review to determine if additional changes
should be made in 2017.
Pay-for-Performance
Our compensation program targets market median positioning and delivers the majority of that compensation
through performance-based compensation elements. This ensures proper alignment with our shareholders and
ties the ultimate value delivered to named executive officers (“NEOs”) to the Company’s performance.
Proxy Summary
AFLAC INCORPORATED
2017 PROXY STATEMENT
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