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AFLAC INCORPORATED
2017 PROXY STATEMENT
65
The 2004 Aflac Incorporated Long-Term Incentive Plan (the “LTIP”) was originally approved by our
shareholders at their annual meeting held on May 3, 2004. At their annual meeting held on May 7,
2012, our shareholders approved an amendment and restatement that extended the term of the
LTIP and made certain other amendments.
The Compensation Committee (for purposes of this Proposal 5 and Proposal 6, the “Committee”)
and the Board of Directors have approved an amendment and restatement of the LTIP (as amended
and restated, the “2017 LTIP”) to make certain amendments, subject to shareholder approval. You
are being asked to approve the 2017 LTIP, which includes approval of the performance goals for use
in regard to performance-based awards under the 2017 LTIP. If this proposal is not adopted, the
LTIP will have expired on April 30, 2017 and the 2017 LTIP will be null and void.
Proposed Amendments
If this proposal is adopted, the 2017 LTIP will include the following amendments to the LTIP,
among others.
EXTENSION OF TERM
The term of the LTIP will be extended from April 30, 2017 to February 13, 2027. Awards
outstanding upon expiration would remain in effect according to their terms. Absent extension,
the LTIP will have expired on April 30, 2017 (although, again, awards outstanding upon expiration
would remain in effect according to their terms).
SHARES SUBJECT TO THE LTIP
The Company previously reserved (and shareholders previously approved) 25,000,000 shares of
Common Stock available for issuance under the LTIP, including 12,000,000 shares that may be
awarded in respect of awards other than options or stock appreciation rights. As of December 31,
2016, 8,770,662 shares remained available for issuance under the LTIP.
If this proposal is adopted, there will be 37,500,000 shares of Common Stock available for
issuance under the 2017 LTIP, including shares previously issued or reserved for issuance under
the LTIP. The number of shares that may be awarded under the 2017 LTIP in respect of awards
other than options or stock appreciation rights will be increased to 24,500,000, including shares
previously issued or reserved for issuance in respect of such awards under the LTIP, such that
18,704,634 shares would be available for such awards under the 2017 LTIP. We are therefore
asking for shareholder approval of an additional 12,500,000 shares to be available for grant under
the 2017 LTIP, all of which would be available for grants of all award types, including incentive
stock options within the meaning of Section 422 of the IRC.
Our long-term incentive program aligns the interests of our employees, consultants and Non-
Management Directors with those of our shareholders. In furtherance of this objective, our
Compensation Committee has considered, among other things, the following two metrics in
making equity grants under our plans: “historical burn rate” and “overhang.” Our historical burn
rate is equal to the number of shares subject to equity awards granted during a period, assuming
the target payout for performance-based awards, in proportion to our weighted average number
of outstanding shares during such year. Our burn rate for fiscal year 2016 was .37%, and our
three-year average burn rate for fiscal years 2014 through 2016 was .34%. Our overhang is the
number of shares subject to equity awards outstanding at fiscal year-end plus the number of
shares available for future grants in proportion to our shares outstanding at fiscal year-end. As of
the end of fiscal year 2016, our overhang was 4.13%.
PERFORMANCE GOALS
Section 162(m) of the IRC generally limits the deductibility for federal income tax purposes of
annual compensation paid to any “covered employee” in excess of $1 million. For purposes of
Section 162(m), the term “covered employee” for any year includes our chief executive officer
and the three other most highly compensated executive officers (other than the chief financial
officer) who are serving as executive officers at year end and whose compensation is subject
to disclosure in the proxy statement for that year’s annual meeting of shareholders. Certain
Proposal 5:
Proposal to Approve the Aflac
Incorporated Long-Term Incentive Plan
(As Amended and Restated February 14, 2017)