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Summary of Our Executive Compensation Program
As a leader in our industry segment, we recognize that a sound management compensation program is a part of
what makes us an employer of choice.
Base salary is the smallest component of compensation for the NEOs. We consider annual and long-term incentive
compensation to be the most important compensation awarded: these pay elements represent the largest part
of total rewards for executives and provide the strongest link to Company results and shareholder value creation.
Moreover, incentive compensation enables us to attract, retain, motivate and reward talented individuals who have
the necessary skills to manage our growing global enterprise on a day-to-day basis, as well as for the future. As
shown below, our executive compensation program directly links compensation incentives with our business goals
and shareholder interests.
KEY ELEMENTS OF OUR 2016 EXECUTIVE COMPENSATION PROGRAM
Element
Terms
Performance Measure
Objective
Base salary
The fixed amount of annual
cash compensation for
performing day-to-day
responsibilities. Levels set
based on market data, job
scope, responsibilities and
experience. Generally reviewed
biennially for potential increase
based on a number of factors,
including market levels,
performance and internal
equity
—
Attract and retain talent
Management
Incentive Plan
(“MIP”)
Annual variable cash
compensation based on the
achievement of predetermined
annual performance goals
Annual incentive award performance metrics
align with our business strategy, geographic
segment goals, and key value drivers:
⊲⊲
Corporate Goals:
Operating Earnings per
share, OROE, Solvency Margin Ratio (SMR),
Net Investment Income
⊲⊲
U.S. Goals:
increase in new annualized
premiums, increase in premium income,
increase in pretax operating earnings
⊲⊲
Japan Goals:
new annualized premiums,
increase in premium income, increase in
pretax operating earnings
⊲⊲
Global Investments:
credit losses/
impairments.
Performance goals are rigorous and set with the
expectation of achieving target performance
⊲⊲
Motivate executives and reward
achievement toward annual
operational and strategic goals
⊲⊲
Focus on key short-term value
drivers for our business
⊲⊲
Retain key talent
⊲⊲
Exercise sound risk
management practices
Long-term
incentives
(“LTI”)
Long-term variable equity
awards granted annually as
a combination of PBRS and
stock options. PBRS vests
based on three-year financial
performance, and options cliff
vest after three years of service
⊲⊲
PBRS
(100% of LTI for CEO and President;
80% of LTI for other NEOs)
Risk-based capital (RBC) ratio metric
represents key industry performance measure
that aligns with creation of long-term value
⊲⊲
Stock Options
(0% of LTI for CEO and
President; 20% of LTI for other NEOs)
⊲⊲
Motivate executives and reward
achievement toward long-term
operational and strategic goals
⊲⊲
Focus on key long-term value
drivers for our business
⊲⊲
Align executives’ interests with
shareholder interests; stock
options only provide value if
share price increases
⊲⊲
Retain key talent
⊲⊲
Exercise sound risk
management practices
Compensation Discussion & Analysis
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Executive Summary
AFLAC INCORPORATED
2017 PROXY STATEMENT
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