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Directors who also serve as employees of the Company or its subsidiaries do not receive
compensation as Board members. The Compensation Committee reviews the policy regarding
total compensation for Non-employee Directors at least every other year, and recommends
compensation to the Board consistent with that policy. The Board makes final determinations
regarding Non-employee Director compensation. In 2016, cash compensation for the Non-
employee Directors was as follows:
All Non-employee directors
$115,000 annually
Audit and Risk Committee members
Additional $10,000 annually
Chairs—Corporate Governance, Sustainability,
Corporate Development
Additional $15,000 annually
Chairs—Compensation, Finance and Investment
Additional $20,000 annually
Chair—Audit and Risk
Additional $25,000 annually
Lead Non-Management Director
Additional $25,000 annually
Upon joining the Board, every Non-employee Director is granted an award of nonqualified
stock options, stock appreciation rights, restricted stock, or a combination thereof, with
an aggregate value as determined by the Board of Directors not in excess of the value of a
nonqualified stock option covering 10,000 shares of Common Stock. In every year thereafter,
the Non-employee Directors may, at the discretion of the Board, receive restricted stock,
nonqualified stock options, stock appreciation rights, or a combination thereof with an
aggregate dollar value that approximates $135,000. The values of these stock options and
stock appreciation rights are determined based upon the most current Black-Scholes-Merton
three-year period valuation price of option shares as determined by the Compensation
Committee’s independent compensation consultant. If the Board grants restricted stock, it
may permit Non-employee Directors to elect to receive nonqualified stock options instead.
In 2016, one Non-employee Director elected to receive nonqualified stock options covering
19,425 options of Common Stock, one Non-employee Director elected to receive half the grant
in nonqualified stock options covering 9,713 options of Common Stock, and the remaining
eight received all restricted stock. Grants of restricted stock made to Non-employee Directors
in 2016 at the annual meeting become vested at the next annual meeting if the Non-employee
Director continues to serve on the Board. Upon retirement, a Non-employee Director becomes
immediately vested in all outstanding stock options and awards that have not yet expired.
Retirement is defined as either (1) after ten years of service on the Board of Directors or (2) as
of the date of the first annual Shareholders’ meeting of the Company on or after the date the
Participant attains age 75, and is no longer eligible to stand for reelection as per the Bylaws
of the Company. Beginning in 2017, these retirement provisions will no longer be included
in award agreements. Upon death or disability or a change in control of the Company, Non-
employee Directors will become 100% vested in all outstanding options and stock awards.
Non-employee Directors, with the exception of those who are, or within one year will become,
retirement eligible, may elect to have all or a portion of their Board annual retainer paid in the
form of immediately vested nonqualified stock options, restricted stock that vests after one
year of continued service, or a combination thereof as determined by the Board of Directors.
In 2016, one of the Non-employee Directors elected to receive restricted stock in lieu of a cash
annual retainer.
The Company maintains a retirement plan for Non-employee Directors who have attained age
55 and completed at least five years of service on the Board, but that plan was closed to new
participants effective 2002. The dollar value and length of payment of the annual retirement
benefits were frozen effective May 3, 2010. The Non-employee Directors do not participate in
any nonqualified deferred compensation plans.
For additional information, please see “Stock Ownership Guidelines; Hedging and Pledging
Restrictions” beginning on page 44.
Director Compensation
AFLAC INCORPORATED
2017 PROXY STATEMENT
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