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STEP 1
CONTINGENT PBRS GRANT BASED ON PRIOR YEAR’S PERFORMANCE
In this step, the Compensation Committee determines the February LTI award for the CEO and President. The
contingent award was equal to 100% of the prior year’s total LTI grant date award value. The contingent grant for
2016 totaled 80,075 shares for the CEO and 50,055 shares for the President. See “2016 Grants of Plan-based
Awards” table for additional information.
STEP 2
DETERMINE THE COMPANY’S RELATIVE FINANCIAL AND TSR PERFORMANCE
At the end of the calendar year, the Compensation Committee reviews the Company’s actual results for the year
using the following metrics to determine the final total PBRS grants for the CEO and the President.
Relative financial performance
(total weight:
56%)
, measured by:
●●
Revenue growth
●●
Net income growth
●●
Premium income
growth
●●
EPS growth
●●
Return on revenues
●●
Return on average
equity
●●
Return on average
assets
Relative TSR performance
(total weight: 44%)
,
measured by:
●●
1-year TSR
●●
3-year TSR
STEP 3
ASSESS CEO COMPENSATION AT PEER
COMPANIES
In conjunction with the relative performance
assessment, the Compensation Committee evaluates
total compensation levels for the CEO relative to
the peer group with the help of the compensation
consultant. The highest and lowest paid CEOs among
the peers are removed from the data set to mitigate the
effect of the outliers.
STEP 4
CALCULATE TOTAL DIRECT
COMPENSATION FOR THE CEO BASED
UPON THE COMPANY’S PERFORMANCE
PERCENTILE RANKING VERSUS PEERS
The Company’s relative performance percentile ranking
(for 2016, 5 out of 18, or 77th percentile ranking) is
applied to the peer CEO compensation data compiled
in Step 3 for the applicable year to derive an implied
total compensation amount for the Company’s CEO.
The Company’s rank in comparison to our peer group
on each of these metrics is shown in the table to the
left. The lower the total weighted composite score, the
higher a company’s overall ranking.
Based upon an analysis of the Company’s relative
financial performance and TSR, the Company ranked
5. The Company’s performance rank significantly
improved compared to the prior year’s assessment
of relative performance when the Company ranked
10 out of 18 companies.
(1) For the trailing twelve months ending September 30, 2016.
(2) As of September 30, 2016.
(3) As of December 31, 2016, when data was compiled for the performance
review by the Compensation Committee.
(4) A weighting of “1” means the related metric is worth approximately 5.56%
of the total score, and a weighting of “4” means a worth of approximately
22.22% of the total.
Aflac Incorporated
Relative Ranking
(out of 18
companies)
Weightings
(4)
Totals
Revenue 1-Year Growth(1)
9
1
9
Net Income 1-Year Growth(1)
6
1
6
Premium Income 1-Year Growth(1)
11
1
11
EPS 1-Year Growth(1)
5
1
5
Return on Revenues 2016(1)
1
2
2
Return on Average Equity 2016(2)
3
2
6
Return on Average Assets 2016(2)
7
2
14
1-Year Indexed TSR
(12/31/15–12/31/16)
(3)
7
4
28
3-Year Indexed TSR
(12/31/13–12/31/16)
(3)
16
4
64
Composite Score
— —
145
Performance Rank
— —
5
2016 FINANCIAL PERFORMANCE RANKING MATRIX: AFLAC INCORPORATED RELATIVE
RANKING AMONG PEER GROUP
Compensation Discussion & Analysis
|
CEO and President Compensation and Pay-for-Performance
AFLAC INCORPORATED
2017 PROXY STATEMENT
40