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AFLAC INCORPORATED
2017 PROXY STATEMENT
72
The Company presently has in effect a Management Incentive Plan (“MIP”) that was initially
approved by the Board of Directors in 1985, and amended and restated in 1994, 1999, for
years beginning 2004 and 2009 and, most recently, effective beginning 2013.
The Committee and the Board of Directors have approved an amendment and restatement of
the MIP (as amended and restated, the “2018 Management Incentive Plan,” hereinafter referred
to as the “2018 MIP”), subject to shareholder approval. You are being asked to approve the
2018 MIP, which includes approval of the performance goals for use under the 2018 MIP. If this
proposal is not adopted, the MIP will expire at the end of 2017 and the 2018 MIP will be null
and void.
Proposed Amendments
The Board of Directors’ principal purpose in adopting the 2018 MIP was to continue and to
enhance the effectiveness of the MIP by extending the MIP through 2022 and modifying the
circumstances under which the Committee may provide that the achievement of performance
goals shall be determined.
If this proposal is adopted, the term of the MIP will be extended to the end of 2022. Awards
outstanding upon expiration would remain in effect according to their terms. Absent extension,
the MIP will expire at the end of 2017 (although, again, awards outstanding upon expiration
would remain in effect according to their terms).
The 2018 MIP is designed to ensure that any compensation that may be payable under it may
qualify as performance-based compensation within the meaning of Section 162(m) of the
IRC. As noted above in Proposal 5, Section 162(m) of the IRC generally denies deductions
by an employer for compensation in excess of $1 million per year that is paid to “covered
employees” (i.e., the chief executive officer and the three other most highly compensated
executive officers, other than the chief financial officer, serving at the end of the year).
However, performance-based compensation is excluded from this deduction limit, provided
that, among other requirements, the material terms pursuant to which the compensation is
to be paid, including the employees eligible to receive the compensation, a description of the
business criteria on which the performance goals are based and the maximum amount of
compensation that could be paid to any covered employee, are disclosed to and approved by
the shareholders in a separate vote prior to the payment. Accordingly, the 2018 MIP is being
submitted to shareholders for approval at the Annual Meeting.
The 2018 MIP makes certain other changes to the MIP as described below.
If shareholders approve the 2018 MIP: it will take effect for performance awards, if any, payable
with respect to performance periods commencing on or after January 1, 2018; no awards will
be made under the existing MIP after 2017; and no awards will be made under the 2018 MIP
after 2022 (although awards then outstanding will be settled in accordance with their terms).
Summary of the 2018 MIP
The description of the 2018 MIP summarized below is qualified, in its entirety, by reference to
the text of the 2018 MIP as set forth in Appendix B.
The purposes of the 2018 MIP are to reinforce corporate, organizational and business-
development goals; to promote the achievement of year-to-year and long-range financial
and other business objectives; to directly tie a portion of participant compensation to the
performance of the Company; and to reward the performance of individual officers and other
employees in fulfilling their personal responsibilities for long-range achievement. To this end,
the 2018 MIP provides for the granting of performance awards to employees of the Company
and its subsidiaries (including employees who are also executive officers and Directors) who
possess a capacity for contributing in substantial measure to the successful performance of
the Company.
Proposal 6:
Proposal to Approve an Amended and
Restated 2018 Management Incentive Plan