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Timing and Key Features of the Program
The process used to determine the CEO’s and President’s total direct compensation in 2016 is shown in the
following chart:
FIXED
Base Salary
Established in
November 2015 and
paid during 2016
Total Direct
Compensation (TDC)
Value of final annual
compensation package
determined based on
the Company’s relative
performance versus peers.
+
+
=
VARIABLE
Annual Incentive
Award (MIP)
Long-term
Incentives (LTI)
Paid in cash in March
following the performance
year after the Compensation
Committee reviews
performance results set in
February of the performance
year (e.g., for 2016 MIP
awards, the Committee
reviewed performance
results in February 2017)
Two phases
⊲⊲
Contingent PBRS
grant made in February
(equal to 100% of prior
year’s total LTI grant date
award value)
⊲⊲
Final “true up” PBRS
award (additional PBRS
grant or reduction of
contingent February
PBRS grant) made based
upon current year-to-date
performance at time
of the Compensation
Committee decision
February
December
STEP 1
Contingent
PBRS grant
issued based
on prior year’s
performance
STEP 2
Determine the
Company’s
relative financial
and TSR
performance
against its peers
STEP 3
Assess
total direct
compensation
for CEOs at
peer companies
Grant vests contingent on RBC performance over next three years;
thus, CEO and President have to earn award twice
STEP 4
Calculate
total direct
compensation for
the Company’s
CEO based upon
the Company’s
performance
percentile
ranking versus
peers
STEP 5
Determine
CEO’s final PBRS
grant based on
prior steps—
adjust contingent
PBRS grant
from February
to reflect
actual relative
performance
ranking
STEP 6
Determine
President’s final
PBRS grant—
adjust contingent
PBRS grant from
February so
that President’s
total direct
compensation
equals 55% of
CEO’s total direct
compensation
Long-term Equity Incentive (LTI) Award
The Compensation Committee’s process for making PBRS grants to the CEO and the President is
summarized below.
Each of these steps, and the corresponding action for 2016, is summarized on the following pages.
Compensation Discussion & Analysis
|
CEO and President Compensation and Pay-for-Performance
AFLAC INCORPORATED
2017 PROXY STATEMENT
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