NOTICE AND PROXY STATEMENT
AFLAC INCORPORATED
Worldwide Headquarters
1932 Wynnton Road
Columbus, Georgia 31999
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, MAY 5, 1997
The Annual Meeting of Shareholders of AFLAC Incorporated (the
"Company") will be held on Monday, May 5, 1997, at 10:00 a.m. at the
Columbus Museum (in the Patrick Theatre), 1251 Wynnton Road, Columbus,
Georgia, for the following purposes, all of which are described in the
accompanying Proxy Statement:
1. To elect seventeen Directors of the Company to serve until the next
Annual Meeting and until their successors are duly elected and
qualified;
2. To consider and act upon a proposal to amend Article IV of the
Company's Articles of Incorporation, to increase the Company's
authorized shares of $.10 par value Common Stock from 175,000,000
shares to 400,000,000 shares;
3. To consider and act upon the proposed AFLAC Incorporated 1997 Stock
Option Plan;
4. To consider and act upon the ratification of the appointment of KPMG
Peat Marwick LLP as independent auditors of the Company for the year
ending December 31, 1997; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The accompanying proxy is solicited by the Board of Directors of the
Company. The Proxy Statement and the Company's Annual Report for the year
ended December 31, 1996, are enclosed.
The record date for the determination of shareholders entitled to vote
at the meeting is February 25, 1997, and only shareholders of record at the
close of business on that date will be entitled to vote at this meeting, and
any adjournment thereof.
YOUR VOTE IS IMPORTANT! WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN
THE ENCLOSED PREPAID ENVELOPE SO THAT WE MAY BE ASSURED OF A QUORUM TO
TRANSACT BUSINESS. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE IN PERSON.
By order of the Board of Directors,
/s/ Joey M. Loudermilk
-----------------------------------
Columbus, Georgia Joey M. Loudermilk
March -, 1997 Secretary
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AFLAC INCORPORATED
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, MAY 5, 1997
SOLICITATION AND REVOCATION OF PROXY
This Proxy Statement is furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors of AFLAC Incorporated
(the "Company") for use at the Annual Meeting of Shareholders to be held on
Monday, May 5, 1997, and any adjournment thereof, for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareholders and described
in detail herein. The meeting will be held at 10:00 a.m. at the Columbus
Museum (in the Patrick Theatre), 1251 Wynnton Road, Columbus, Georgia.
All properly executed proxies will be voted in accordance with the
instructions contained thereon, and if no choice is specified, the proxies
will be voted FOR the election of all nominees named elsewhere in this Proxy
Statement and FOR approval of each other proposal set forth in the Notice of
Meeting. Any proxy may be revoked by the shareholder at any time before it
is exercised by giving written notice to that effect to the Secretary of the
Company or by signing a later-dated proxy. Shareholders who attend the
meeting may revoke any proxy previously granted and vote in person.
This Proxy Statement and the accompanying proxy are being mailed to the
shareholders on or about March 10, 1997.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be paid by the Company. The
Company will make arrangements with brokerage firms, custodians and other
fiduciaries to send proxy materials to their principals, and the Company
will reimburse them for their mailing and related expenses. In addition to
solicitation by mail, certain officers and other employees of the Company,
who will receive no compensation for their services other than their regular
compensation, may solicit proxies by telephone and by personal contacts. In
addition, the Company has retained D. F. King & Co., Inc. to assist in the
solicitation of proxies for a fee of $10,500, plus reimbursement of
reasonable out-of-pocket expenses.
DESCRIPTION OF VOTING RIGHTS
In accordance with the Company's Articles of Incorporation, shares of
the Company's Common Stock, par value $.10 per share (the "Common Stock"),
are entitled to one vote per share until they have been held by the same
beneficial owner for a continuous period of greater than 48 months prior to
the record date of the meeting, at which time they become entitled to 10
votes per share. Any transferee of a share of Common Stock where such share
was transferred to the transferee by gift, devise or bequest, or otherwise
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through the laws of inheritance, descent or distribution from the estate of
the transferor, or by distribution to a beneficiary of shares held in trust
for such beneficiary, is deemed to be the same beneficial owner as the
transferor. Shares acquired as a direct result of a stock split, stock
dividend or other distribution with respect to existing shares ("dividend
shares") are deemed to have been acquired and held continuously from the
date on which the shares with regard to which the issued dividend shares
were acquired. Shares of Common Stock acquired pursuant to the exercise of
a stock option are deemed to have been acquired on the date the option was
granted.
Shares of Common Stock held in "street" or "nominee" name are presumed
to have been held for less than 48 months and are entitled to one vote per
share unless this presumption is rebutted by providing evidence to the
contrary to the Board of Directors of the Company. Shareholders desiring to
rebut this presumption should complete and execute the affidavit appearing
on the reverse side of their proxy. The Board of Directors reserves the
right to require evidence to support the affidavit.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of Common Stock at the close of business on February
25, 1997, will be entitled to vote at the meeting. At that date, the number
of outstanding shares of Common Stock entitled to vote was ---,---,---.
According to the Company's records, this represents the following voting
rights:
---,---,--- Shares @ 1 Vote Per Share = ---,---,--- Votes
--,---,--- Shares @ 10 Votes Per Share = ---,---,--- Votes
----------- ------------
---,---,--- Shares Total ---,---,--- Votes
Shareholders with one vote per share shown above can rebut the
presumption that they are entitled to only one vote as outlined in
"Description of Voting Rights" above. If all of the outstanding shares were
entitled to 10 votes per share, the total votes available would be -,---,---
,---. However, for the purposes of this Proxy Statement, it is assumed that
the total votes available to be cast at the meeting will be ---,---,---.
The holders of a majority of the voting rights entitled to vote at the
meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of such business as shall come before the
meeting. Directors are elected by an affirmative vote of a plurality of
voting rights cast. In the case of the election of directors, under
applicable Georgia law, in tabulating the vote, abstentions will be
disregarded and will have no effect on the outcome of the vote. Pursuant to
Georgia law, the amendment to the Company's Articles of Incorporation must
be adopted by the affirmative vote of a majority of the outstanding voting
rights entitled to vote thereon. In determining whether such proposal has
received the requisite number of affirmative votes, abstentions and broker
non-votes will have no effect on the outcome of the vote. Approval of all
other matters to be considered at the meeting requires the affirmative vote
of holders of a majority of the voting rights present in person or
represented by proxy at the meeting. with respect to any such proposal,
abstentions will be treated as votes cast and therefore, will have the same
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effect as a vote against the proposal and broker non-votes will not be
counted as votes cast and therefore, will have no effect on the outcome of
the vote.
No person, as of February 25, 1997, was the owner of record or, to the
knowledge of the Company, beneficially owned 5% or more of the outstanding
shares of Common Stock or of the available votes of the Company other than
as shown below:
Percent
Name and Per- of
Address of Amount of cent Avail-
Beneficial Title of Class Beneficial Ownership of able
Owner Common Stock Shares Votes Class Votes
- ---------- -------------- ---------- --------- ----- ------
Oppenheimer Group, Inc.* 1 Vote Per Share 17,895,990 17,895,990 -.- -.-
Oppenheimer Tower
World Financial Center
New York, NY 10281
Daniel P. Amos** 10 Votes Per Share 1,794,746 17,947,460
1932 Wynnton Road 1 Vote Per Share 942,149 942,149
Columbus, GA 31999 --------- ----------
2,736,895 18,889,609 2.0 5.0
(*) This information is derived from Amendment No. 9 to Schedule 13G,
dated February 4, 1997, filed with the Securities and Exchange Commission by
Oppenheimer Group, Inc. Oppenheimer Group, Inc. filed the Schedule 13G as a
parent holding company on behalf of itself, Oppenheimer & Co., L.P. (its
parent company), certain of its subsidiaries and certain investment advisory
clients and discretionary accounts of such subsidiaries. Oppenheimer Group,
Inc. and Oppenheimer & Co., L.P. disclaim beneficial ownership of the shares
listed above.
(**) Includes options to purchase 1,283,407 shares (and 8,784,061
available votes) which are exercisable within 60 days.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 25, 1997, the number of
shares and percentage of outstanding Common Stock beneficially owned by
certain of the executive officers named in the "Summary Compensation Table"
below (the "Named Executive Officers"), and Directors and executive officers
as a group. The beneficial ownership of directors and of the remaining
Named Executive Officers is set forth below in the information provided for
director nominees under the caption "Election of Directors." The number of
shares of Common Stock shown are those deemed "beneficially owned," as
determined under Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rule, beneficial
ownership includes any shares as to which a person, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise,
has sole or shared voting power or investment power, and also any shares
that the person has the right to acquire within 60 days through the exercise
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of any option, warrant or right, through conversion of any security, or
pursuant to the automatic termination or power of revocation of a trust,
discretionary account or similar arrangement.
Common Stock Beneficially Owned and
Approximate Percentage of Class
as of February 25, 1997
Percent Percent
Name Shares (1) of Shares Votes(1) of Votes
- ---- --------- --------- -------- --------
Kriss Cloninger, III 191,689 .1 697,939 .2
Hidefumi Matsui 167,682 .1 796,359 .2
All Directors and executive
officers as a group
(33 persons) -,---,--- -.- --,---,--- --.-
* Percentage not listed if less than .1%
(1) Includes options to purchase shares (and available votes), which are
exercisable within 60 days, for Kriss Cloninger, III, 191,250 (697,500);
Hidefumi Matsui, 151,250 (725,000); and for all Directors and executive
officers as a group, -,---,--- (--,---,---).
1. ELECTION OF DIRECTORS
The Company proposes that the following seventeen individuals be
elected to the Board of Directors of the Company. The persons named in the
following table have been nominated by the Nominating Committee of the Board
of Directors for election as Directors and, if elected, are willing to serve
as such until the next Annual Meeting of Shareholders and until their
successors have been elected and qualified. It is intended that the persons
named in the accompanying proxy, or their substitutes, will vote for the
election of these nominees (unless specifically instructed to the contrary).
However, if any nominee at the time of the election is unable or unwilling
to serve or is otherwise unavailable for election, and in consequence
another nominee is designated, the persons named in the proxy, or their
substitutes, will have discretionary authority to vote or refrain from
voting in accordance with their judgment on such other nominees. The Board
of Directors has no reason to believe that any of the persons nominated will
be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF EACH OF THE BELOW-LISTED NOMINEES AS DIRECTORS
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The following information is provided with respect to the nominees:
<CAPTION>
Shares of
Common Stock Voting
Beneficially Rights
Owned on Percent on Feb- Percent
Year February 25, of Out- ruary 25, of
First 1997 standing 1997 Available
Name Principal Occupation (1) Age Elected (2) (3) Shares (2) Votes
- ---- ------------------------ --- ------- ------------ -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul S. Amos Chairman, the Company and AFLAC** 70 1956 934,600 .7 7,466,431 2.0
Daniel P. Amos Chief Executive Officer, the Company 45 1983 2,736,895 2.0 18,889,609 5.0
and AFLAC; President, the Company
and AFLAC; Director, Synovus
Financial Corp., Columbus, GA
J. Shelby Amos, II Alabama/West Florida State Sales 44 1983 352,652 .3 3,060,500 .8
Coordinator, AFLAC
Michael H. Armacost President, The Brookings Institution, 59 1994 12,450 * 12,450 *
Washington DC, since October 1995;
Professor, Asia/Pacific Research
Center, Stanford University, Stanford,
CA, from 1993 until September 1995;
U.S. Ambassador to Japan,
from 1989 until 1993
M. Delmar Edwards, M.D. Vice President and Assistant to the 70 1990 44,175 * 315,300 .1
Chairman, Columbus Regional
Healthcare System, Inc., Columbus,
GA, since July 1993; Practicing
Physician, Columbus, GA, until July
1993; Director, First Union National
Bank of Georgia, Columbus, GA;
Trustee, Morehouse School of
Medicine, Atlanta, GA
George W. Ford, Jr. Chairman of the Board, Progressive 73 1986 9,750 * 43,500 *
Funeral Home, Columbus, GA; Retired
Director, Columbus Bank & Trust
Company, Columbus, GA
Joe Frank Harris Professor, Georgia State University, 61 1991 42,937 * 296,062 .1
Atlanta, GA, since December 1993;
Chairman of the Board, Harris
Georgia Corp., Cartersville, GA;
Director, Bankhead Enterprises, Inc.,
Atlanta, GA; Former Governor of the
State of Georgia
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Shares of
Common Stock Voting
Beneficially Rights
Owned on Percent on Feb- Percent
Year February 25, of Out- ruary 25, of
First 1997 standing 1997 Available
Name Principal Occupation (1) Age Elected (2) (3) Shares (2) Votes
- ---- ------------------------ --- ------- ------------ -------- ---------- ---------
Elizabeth J. Hudson Senior Vice President, Corporate 47 1990 41,830 * 294,955 .1
Communications, The Readers Digest
Association, Inc., since May 1996;
Executive Producer, NBC Productions,
from February 1993 until May 1996;
Senior Vice President, Corporate
Communications, NBC Inc., until
February 1993
Kenneth S. Janke, Sr. President; Chief Executive Officer, 62 1989 44,161 * 147,661 *
National Association of Investors
Corp., Madison Heights, MI; President
and Director, NAIC Growth Fund,
Madison Heights, MI
Charles B. Knapp President, The University of Georgia, 50 1990 41,625 * 294,750 .1
Athens, GA; President elect of the
Aspen Institute, Washington, DC
Hisao Kobayashi Senior Advisor, The Dai-Ichi Bank, 61 1994 1,884,000 1.4 1,884,000 .5
Ltd., Tokyo, Japan; Chairman, CIT
Group Holdings Inc., Livingston, NJ;
Director, Nippon Light Metal Co.,
Ltd., Tokyo
Yoshiki Otake Chairman, AFLAC Japan, since January 57 1986 593,280 .4 4,323,528 1.2
1995; President, AFLAC Japan, until
December 1994; Vice Chairman, AFLAC
International, Inc.
E. Stephen Purdom Executive Vice President, AFLAC, since 49 1987 236,280 .2 1,019,406 .3
October 1994; Medical Director,
Columbus Clinic, Columbus, GA, until
September 1994; Senior Vice President
and Medical Director, AFLAC, until
October 1994; Director, Trust
Company Bank, Columbus, GA
Barbara K. Rimer Director, Cancer Control Research, 48 1995 6,200 * 6,200 *
Duke Comprehensive Cancer Center,
Durham, NC; Chair, National Cancer
Advisory Board
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Shares of
Common Stock Voting
Beneficially Rights
Owned on Percent on Feb- Percent
Year February 25, of Out- ruary 25, of
First 1997 standing 1997 Available
Name Principal Occupation (1) Age Elected (2) (3) Shares (2) Votes
- ---- ------------------------ --- ------- ------------ -------- --------- ---------
Henry C. Schwob Owner, Schwob Realty Company, 69 1965 423,162 .3 3,771,927 1.0
Columbus, GA; Director, First Union
National Bank of Georgia, Columbus, GA
J. Kyle Spencer President, Spencer Investment 70 1968 450,373 .3 4,394,830 1.2
Company, Columbus, GA; Director,
First Union National Bank of Georgia,
Columbus, GA; Retired Chairman of the
Board, Bank South N.A., Columbus, GA
Glenn Vaughn, Jr. Retired Chairman of the Board, 67 1990 36,134 * 249,290 .1
Columbus Ledger-Enquirer,
Columbus, GA
(*) Percent not listed if less than .1%
(**) American Family Life Assurance Company of Columbus ("AFLAC") is a wholly owned subsidiary of the Company.
(1) Unless specifically noted, the respective Director or nominee has held the occupation for at least five years.
(2) Includes options to purchase shares (and available votes), which are exercisable within 60 days, for Paul S. Amos,
184,581 (184,581); Daniel P. Amos, 1,283,407 (8,784,061); J. Shelby Amos, II, 12,000 (12,000); Michael H. Armacost,
10,440 (10,440); M. Delmar Edwards, 40,125 (293,250); George W. Ford, Jr., 6,000 (6,000); Joe Frank Harris, 40,125
(293,250); Elizabeth J. Hudson, 40,125 (293,250); Kenneth S. Janke, Sr., 12,000 (12,000); Charles B. Knapp, 40,125
(293,250); Hisao Kobayashi, 9,000 (9,000); Yoshiki Otake, 394,883 (3,161,330); E. Stephen Purdom, 169,515 (581,391);
Barbara K. Rimer 6,000 (6,000); Henry C. Schwob, 12,000 (12,000); J. Kyle Spencer, 87,000 (762,000); and Glenn
Vaughn, Jr., 32,625 (218,250).
Excludes options to purchase 3,000 shares (and 3,000 available votes), which will vest and be exercisable upon the
reelection of the following Directors: J. Shelby Amos, II, Michael H. Armacost, M. Delmar Edwards, George W.
Ford, Jr., Joe Frank Harris, Elizabeth J. Hudson, Kenneth S. Janke, Sr., Charles B. Knapp, Hisao Kobayashi,
Barbara K. Rimer, Henry C. Schwob, J. Kyle Spencer and Glenn Vaughn, Jr.
(3) All stock is owned solely and directly by the nominee except as follows:
Paul S. Amos, 107,418 shares owned by spouse; 10,023 shares owned by his minor grandchild with Mr. Amos as custodian;
139,950 shares owned by trusts with Mr. Amos as trustee; and l,l25 shares owned by the Paul S. Amos Education
Foundation.
Daniel P. Amos, 60,882 shares owned by spouse; 683,423 shares owned by a partnership of which Mr. Amos is a partner;
249,569 shares owned by trusts with Mr. Amos as trustee; 10,023 shares owned by his son of which Mr. Amos disclaims
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beneficial ownership;110,354 shares owned by Daniel P. and Shannon Amos Foundation, Inc.; and 1,125 shares owned by the
Paul S. Amos Education Foundation. Does not include 4,938 shares owned by a trust with his wife as trustee of which
Mr. Amos disclaims beneficial ownership.
Shelby Amos, II, 120,777 shares owned by his minor children with Mr. Amos as trustee; and 12,214 shares owned by a
corporation of which Mr. Amos is a controlling shareholder.
Elizabeth J. Hudson, 1,705 shares owned jointly with spouse.
Kenneth S. Janke, Sr., 11,275 shares owned by a trust with Mr. Janke as trustee; 2,828 shares owned by a trust with his
wife as trustee; 14,100 shares owned by a partnership of which Mr. Janke is a partner; 3,750 shares owned by the NAIC
Growth Fund of which Mr. Janke is President; and 208 shares owned by an investment club of which Mr. Janke is a member.
Charles B. Knapp, 1,500 shares owned by spouse.
Hisao Kobayashi, 1,875,000 shares owned by The Dai-Ichi Kangyo Bank, Ltd.; Mr. Kobayashi shares the power to vote these
shares.
Stephen Purdom, 5,625 shares owned jointly with spouse; and 2,550 shares owned by his minor child with Mr. Purdom as
custodian.
Barbara K. Rimer, 200 shares owned jointly with spouse.
Henry C. Schwob, 28,147 shares owned by spouse; and 34,580 shares owned by his children with spouse as custodian.
J. Kyle Spencer, 48,004 shares owned by spouse.
Glenn Vaughn, Jr., 2,572 shares owned jointly with spouse; and 937 shares owned by spouse.
Daniel P. Amos is the son of Paul S. Amos. J. Shelby Amos, II is the nephew of Paul S. Amos. Daniel P. Amos and
J. Shelby Amos, II are cousins. Kenneth S. Janke, Sr. is the father of Kenneth S. Janke Jr., an executive officer
of the Company. No other family relationships exist among any other executive officers or Directors.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended, officers, directors and holders of more than 10% of the Common
Stock are required to file reports of their trading in Company equity
securities with the Securities and Exchange Commission.
Based solely on its review of the copies of such reports received by
the Company, or written representations from certain reporting persons that
no reports on Form 5 were required for those persons, the Company believes
that during the last fiscal year all Section 16 filing requirements
applicable to its reporting persons were complied with, and the Company is
not aware of any filing delinquencies from prior fiscal years, except as set
forth below.
Mr. Nobuo Kawamura failed to file on a timely basis one Form 4 relating
to one transaction in the Company's Common Stock. Mr. Daniel P. Amos failed
to file on a timely basis two Form 4 reports each relating to one
transaction in the Company's Common Stock. Mr. J. Kyle Spencer failed to
file on a timely basis five Form 4 reports each relating to one transaction
in the Company's Common Stock. All such transactions have now been reported
on Forms 5.
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BOARD AND COMMITTEE MEETINGS AND DIRECTORS' COMPENSATION
During 1996, the Board of Directors met five times, and all Directors
attended more than 75% of the meetings of the Board and of the Board
Committees on which they served.
THE FOLLOWING DIRECTORS WERE MEMBERS OF THE RESPECTIVE COMMITTEES DURING THE
PAST YEAR:
AUDIT COMPENSATION NOMINATING
J. Kyle Spencer Gov. Joe Frank Harris Paul S. Amos
George W. Ford, Jr. M. Delmar Edwards, M.D. Daniel P. Amos
Cesar E. Garcia Cesar E. Garcia J. Shelby Amos, II
Elizabeth J. Hudson Glenn Vaughn, Jr. Kenneth S. Janke, Sr.
Henry C. Schwob Charles B. Knapp
The Audit Committee, which met four times during 1996, is charged with
the duties of assuring that proper guidelines are established for the
dissemination of financial information; meeting periodically with, and
reviewing recommendations of, the Company's independent and internal
auditors; meeting periodically with management with respect to the Company's
system of internal controls and accounting systems used by the Company;
determining that no restrictions are placed on the scope of the examination
of the financial statements by the independent auditors; reviewing
consolidated financial statements; and performing any other duties or
functions deemed appropriate by the Board. The Committee also recommends to
the Board of Directors the appointment of the Company's principal
independent auditors. At least annually, the Committee reviews the services
performed and the fees charged by the independent auditors.
The independent auditors have direct access to the Committee and may
discuss any matters that arise in connection with their audits, the
maintenance of internal controls and any other matters relating to the
Company's financial affairs. The Committee may authorize the independent
auditors to investigate any matters that the Committee deems appropriate and
may present its recommendations and conclusions to the Board.
The Nominating Committee met once during 1996 to recommend nominees for
election as Directors at the Annual Meeting of Shareholders. The Committee
will consider, as potential nominees, persons recommended by shareholders in
accordance with the procedures set forth in the Company's By-Laws. The
Company's By Laws provide that a shareholder nominating persons for election
to the Board, in general, must give notice thereof in writing to the
Secretary of the Company not less than 60 nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of
shareholders; provided, however, that in the event that the annual meeting
is called for a date that is not within 30 days before or after such
anniversary date, notice by the shareholder to be timely must be so received
not later than the close of business on the 10th day following the day on
which such notice of the date of the annual meeting was mailed or such
public disclosure was made, whichever first occurs.
Each Director of the Company receives $1,500 per month for service as
such. A Director serving on one or more committees who is not an officer of
the Company receives an additional $600 per month for that service ($200 if
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an officer). Each Director also receives $2,000 for attendance at each
meeting of the Board of Directors. In addition, the chairmen of the
Compensation and Audit Committees receive $10,000 and $12,000 respectively.
During 1996 Mr. Henry C. Schwob received $48,237 for providing
consulting services to AFLAC's Investment Committee.
Directors who are not also employees of the Company or its subsidiaries
have been granted non-qualified stock options pursuant to the Amended 1985
Stock Option Plan (the "1985 Plan"). The exercise price for the options is
the fair market value of the Common Stock on the date of grant. In years
prior to 1993, aggregate stock options, ranging from 15,000 to 40,000 per
Director, were granted by the Directors' Stock Option Committee, which
determined the value of each Director's continuing service to the Company
based on experience gained from the number of years already served. The
stock options granted prior to 1993 vest over a four-year period, contingent
upon the shareholders re-electing the Director to the Board of Directors.
Options vest in full upon the death or disability of the Director. The
number of options that will vest upon each Director's re-election by the
shareholders at the May 5, 1997, meeting are set forth in footnote - on page
- - of this Proxy Statement. In addition, pursuant to amendments to the 1985
Plan approved by shareholders at the 1994 annual meeting, each new non-
employee Director, including any Advisory Director, will be granted an
option to purchase 10,000 shares of Common Stock as of the earlier of the
date such individual is appointed to the Board or the date of the first
annual meeting of shareholders at which such Director is elected to the
Board. Options granted to each non-employee Director will become
exercisable in cumulative installments of 20% of the shares of Common Stock
covered thereby as of the date of the grant, and an additional 20% as of
each of the next four anniversaries of the date of the option grant to the
extent the non-employee Director continues to be a Director as of that date,
provided, however, that upon cessation of service by reason of retirement, a
non-employee Director will become immediately vested in all outstanding
options that have not yet expired. The exercise price of all shares of
Common Stock subject to options granted to non-employee Directors will be
100% of the fair market value of such shares as of the date of grant.
The Company maintains a retirement plan for non-employee directors who
have attained age 55 and completed at least five years of service as a non-
employee director. The annual benefit paid to a non-employee director upon
retirement (or to his or her spouse in the event of death prior to
retirement or prior to completion of payments under the plan) is equal to
the director's compensation in the twelve months preceding retirement,
including retainer and regular Board member fees, but excluding committee
fees, paid for a period of time equal to the number of completed years
served as a non-employee director.
COMPENSATION COMMITTEE REPORT
This report on the compensation policies, components and decisions of
the Company for 1996 with respect to the Company's executive officers is
presented by the Compensation Committee of the Company, which was made up of
three members, consisting of Governor Joe Frank Harris, Chairman of the
Compensation Committee, Mr. Glenn Vaughn Jr., and Dr. M. Delmar Edwards.
All such members of the Compensation Committee are outside Directors as
defined by ("Section 162 (m)") of the Internal Revenue Code of 1986 (the
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"Code"). The function of the Compensation Committee is to approve current
compensation arrangements for executive officers of the Company who are also
members of the Board of Directors, including among the executive officers
named in the accompanying compensation tables, Messrs. Daniel P. Amos, Paul
S. Amos and Yoshiki Otake. The Compensation Committee determines all
aspects of compensation for executive officers who are members of the Board
with respect to stock options, and under the Company's Management Incentive
Plan with respect to executive officers (as defined therein and including
the Named Executive Officers). Other compensation decisions for executive
officers are made by the Chief Executive Officer, Mr. Daniel P. Amos. The
Compensation Committee met a total of four times over the past fiscal year.
COMPENSATION POLICIES AND GOALS
The Company's goal is to retain, motivate and reward management of the
Company through its compensation policies and awards, while aligning their
interests more closely with that of the Company and its shareholders. With
respect to the retention of management, the Company seeks to attract and
retain the highest caliber of management by offering, in addition to other
intangible non-monetary benefits, total compensation that is comparable to
that offered by its competitors. The Company believes that it is also
important to provide compensation components that accrue to the benefit of,
and provide security to, its management over the long term, such as pension
benefits, to promote the retention of management. To align the interest of
management more closely with that of the Company and to motivate and reward
individual initiative and effort, the Company seeks to promote performance-
based compensation so that contribution to the Company as a whole, as well
as the attainment of individual performance goals, is rewarded. Through the
use of performance-based plans that reward attainment of division or Company
goals, the Company seeks to foster an attitude of teamwork, and the use of
tools like equity ownership is important to ensure that the efforts of
management are consistent with the objectives of shareholders. Through the
use of stock options the Company seeks to promote increased equity ownership
by management in the Company.
COMPENSATION COMPONENTS
At present, the compensation of the executive officers of the Company
consists of a combination of salary, incentive bonuses, stock options,
contributions to or accruals for benefit plans, and participation in various
other plans, such as the Company's 401(k) plan, as well as medical and other
personal benefits typically offered to executives at large corporations.
SALARIES. In 1996, salaries for executive officers generally were
increased at an average rate of 4.5% to reflect both a cost-of-living
increase and to recognize the Company's favorable performance in fiscal
1995. With respect to Mr. Daniel P. Amos, a reduction of his salary to
$995,000 was made, despite a 1996 report (the "Hewitt Report") prepared for
purposes of compensation evaluation by Hewitt Associates LLC ("Hewitt
Associates") which compared the Company with a group of 12 other insurance
companies in the areas of annualized growth rate in assets and revenues,
return on assets, return on equity, and total shareholder return, and found
that the Company consistently outperformed the group in four of these five
areas. These insurance companies were identified by the Committee as
-12-
<PAGE>
appropriate to compare to the Company from a business standpoint and for
executive talent (this group included each of the companies that constitute
the S&P Life Insurance Index, which is one of the indices used in the
Company's "Stock Performance Graph" (see page --), but also includes a
broader group of companies viewed by the Company as its most direct
competitors, as deemed appropriate for comparative compensation purposes).
Despite the superior comparative performance of the Company, the decision
was made to reduce Mr. Daniel P. Amos' salary to reflect a greater emphasis
on long term equity compensation in his overall compensation and because of
the deductibility considerations under Section 162(m). The salary for Mr.
Paul S. Amos was increased by 4.5% in 1996 based in part on a provision in
his employment agreement providing that he is to receive salary increases
comparable to those received by other executive officers, financial results
of the Company (excluding the effects of currency fluctuations) and stock
price performance of the Company over the prior fiscal year, and projected
1996 salary increases of 4.4% for insurance industry executives as reported
in Hewitt Associates' 1995-1996 Salary Increase Survey Report. Given that
Mr. Paul S. Amos is relatively near to retirement age, the Compensation
Committee determined that a salary increase in his case was appropriate,
despite the deductibility considerations of Section 162(m), rather than an
option grant or the use of other long-term compensation.
BONUSES. Under the Company's Management Incentive Plan, cash bonuses in an
amount equal to 15% to 70% of salary, for 1996, with respect to the
Company's and subsidiaries executive officers generally, with respect to
Messrs. Daniel P. Amos and Paul S. Amos pursuant to their employment
agreements, are paid on the basis of the attainment of target annual
performance goals for the Company and, generally speaking, personal goals.
None of the Named Executive Officers, however, have personal goals. In the
event that maximum performance goals are achieved, Messrs. Daniel P. Amos
and Paul S. Amos may earn up to 105% of salary and other Named Executive
Officers may earn up to 90% of salary. The establishment of the percentage
of salary that such bonus may constitute upon the attainment of target goals
for Messrs. Daniel P. Amos and Paul S. Amos was based on the recognition by
the Compensation Committee that the bonus goals are set very aggressively,
that such performance-based compensation should account for a substantial
proportion of the total compensation for these top two executives of the
Company, and with respect to Mr. Daniel P. Amos, that a reduction was made
in his salary in order to increase the proportion of his compensation based
on performance of the Company.
The performance goals are established on the basis of recommendations
by management, and the awards, if attained, are paid in the following year.
With respect to 1996, the Compensation Committee established Company
performance goals for executive officers, including the CEO, based on, among
other things, earnings per share, increases in premiums, increases in new
sales, specified operating expense controls, pretax operating earnings, and,
in the case of most executive officers other than the Named Executive
Officers, personal goals. (In connection with compliance with Section
162(m), the Compensation Committee deemed it appropriate that the bonus
components of the Named Executive Officers were based on objective Company
performance goals rather than more subjective personal goals.) With respect
to Messrs. Daniel P. Amos and Paul S. Amos, 50% of the target award was
attributed to the earnings-per-share goal, while the other Company
performance goals accounted for 50% of the total possible award in 5% to 15%
increments. With respect to the other executive officers, 10% to 50% of the
target award was attributed to the earnings-per-share goal, while the other
Company performance goals each accounted for 5% to 20% of the total possible
-13-
<PAGE>
award, generally up to 90%. Generally, personal goals constituted the
remainder of the performance award for the other executive officers. With
respect to each Company performance goal, a minimum, target and maximum
performance level is specified, the attainment of which determines the
amount paid with respect to each performance goal. The bonus percentage is
decreased or increased to the extent the Company performance levels meet the
minimum levels or exceed target levels as the case may be, up to the maximum
performance levels. Performance levels with respect to personal goals are
not considered for purposes of this percentage adjustment. Personal goals
may be achieved in whole or in part with an appropriate payment adjustment
to reflect partial achievement; however, no additional payments are made if
such goals are exceeded. Payment on attainment of any particular
performance goal may occur independently of (i.e., is not contingent upon)
attainment of any other performance goal. For the year ended December 31,
1996, all of the Named Executive Officers achieved bonus levels over the
target bonus levels but slightly below maximum bonus levels.
OTHER BENEFITS AND ACTIONS. The Company maintains (i) its Amended 1985
Stock Option Plan (the "1985 Plan") pursuant to which officers and other
employees are granted options to purchase Company stock; (ii) its
Retirement Plan for Senior Officers (the "Retirement Plan"), which provides
lifetime retirement and medical benefits to plan participants, and (iii) its
Supplemental Executive Retirement Plan (the "Supplemental Plan") for certain
key executives of the Company and certain subsidiaries who do not
participate in the Retirement Plan, which provides for certain pension
benefits in the event of termination (other than for cause), upon death,
after age 55 or in certain change-in-control situations. Certain of the
Named Executive Officers are participants in the Retirement Plan or in the
Supplemental Plan, but not both. The executive officers of the Company may
also participate in the nondiscriminatory AFLAC Incorporated 401(k)
Retirement Plan and a noncontributory defined benefit pension plan covering
substantially all employees.
In 1996, Mr. Daniel P. Amos received a grant of options exercisable for
300,000 shares at fair market value as part of the Compensation Committee's
decision to shift a greater portion of his compensation to long-term stock-
based compensation with consideration of the Compensation Committee's
decision to reduce Mr. Daniel P. Amos' salary and the fact that option
grants were not made to Mr. Daniel P. Amos in 1995 and 1994 (historically,
grants to Mr. Daniel P. Amos have occurred only every three years). Messrs.
Yoshiki Otake, Kriss Cloninger, III and Hidefumi Matsui, received options
exercisable for 37,500, 67,501 and 37,500 shares respectively at fair market
value.. These grants implemented the Company's policy of granting options to
its Named Executive Officers every third year as an element of performance
based compensation. In the case of Yoshiki Otake and Hidefumi Matsui these
option grants are also intended to address the effect of profit repatriation
from Japan in bonuses awarded to Japan-based Named Executive Officers
pursuant to the Management Incentive Plan. The Compensation Committee also
decided to add a definition of "retirement" under the 1985 Plan, to avoid
ambiguity in the administration of the 1985 Plan. With the exception of the
foregoing, no decisions with respect to any of the 1985 Plan, the
Supplemental Plan and the Retirement Plan were made by the Compensation
Committee in 1996. The Compensation Committee believes that the executive
compensation policies serve the best interests of the shareholders and the
Company. The bonus and stock option components of compensation for Company
executives are intended to be directly related to and commensurate with
Company performance.
-14-
<PAGE>
In connection with making decisions with respect to executive
compensation, the Compensation Committee will take into account, as one of
the factors which it considers, the provisions of Section 162(m), which
limits the deductibility by the Company of certain categories of
compensation in excess of $1,000,000 paid to certain executive officers.
The Compensation Committee may (and, as described above, has), however,
determine to authorize compensation arrangements that exceed the $1,000,000
deductibility cap imposed by Section 162(m). In this connection, the 1985
Plan and the Management Incentive Plan (as well as the AFLAC Incorporated
1997 Stock Option which shareholders are being asked to approve at the next
annual meeting, as further described in "3. Proposal to Aprove the AFLAC
Incorporated 1997 Stock Option Plan" below) presently conform to the
requirements of Section 162(m) so that stock option grants are performance
based and not subject to the deduction limitation contained in Section
162(m).
Compensation Committee
Governor Joe Frank Harris - Chairman
M. Delmar Edwards
Glenn Vaughn, Jr.
-15-
<PAGE>
<TABLE>
Annual Compensation Long-Term Compensation Awards
<CAPTION>
Other Restricted
Annual Stock LTIP All Other
Name and Compensation Award(s) Payouts Compensation
Principal Position Year Salary($) Bonus($)(1) ($) (2) ($) Options(#) ($) ($)(3)
- ------------------ ---- --------- ----------- ------------ ---------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel P. Amos 1996 1,056,963 1,044,216 -0- -0- 300,000 -0- 6,131
President and CEO 1995 1,026,210 757,631 -0- -0- -0- -0- 5,456
1994 980,862 744,958 -0- -0- -0- -0- 6,666
Paul S. Amos 1996 1,159,841 l,118,805 -0- -0- -0- -0- 24,804
Chairman 1995 1,095,984 828,709 -0- -0- -0- -0- 15,840
1994 1,047,539 815,131 86,442 -0- -0- -0- 16,467
Yoshiki Otake 1996 720,149 370,938 -0- -0- 37,500 -0- 26,312
Chairman, 1995 793,408 291,471 -0- -0- -0- -0- 29,936
AFLAC Japan 1994 667,808 296,452 -0- -0- -0- -0- 10,012
Kriss Cloninger, III 1996 406,887 351,600 -0- -0- 67,501 -0- 6,066
Exec. Vice President 1995 377,054 208,534 -0- -0- -0- -0- 6,066
and CFO 1994 350,801 203,206 -0- -0- -0- -0- 6,990
Hidefumi Matsui 1996 377,021 278,052 -0- -0- 37,500 -0- 14,797
President, 1995 415,314 226,941 -0- -0- -0- -0- 16,311
AFLAC Japan 1994 363,974 161,575 -0- -0- -0- -0- 5,787
(1) Includes cash bonuses paid in 1995, 1996 and 1997 under the Management Incentive Plan for services rendered during
1994, 1995 and 1996 and other cash bonus payments.
(2) Includes medical expenses of $45,063 and payments for tax services of $27,000 for Mr. Paul S. Amos. No other
Named Executive Officer received benefits in the aggregate in excess of $50,000.
(3) Includes premiums paid in 1996 for term life insurance in the amount of $1,631, $20,304, $26,312, $1,566, and
$14,797 for Mr. Daniel P. Amos, Mr. Paul S. Amos, Mr. Yoshiki Otake, Mr. Kriss Cloninger, III and Mr. Hidefumi
Matsui, respectively, and Company-matching contributions to the 401(k) retirement plan in the amount of $4,500 for
each of Mr. Daniel P. Amos, Mr. Paul S. Amos and Mr. Kriss Cloninger, III. Includes premiums paid in 1995 for
term life insurance in the amount of $956, $11,340, $29,936, $1,566, and $16,311 for Mr. Daniel P. Amos, Mr. Paul
S. Amos, Mr. Yoshiki Otake, Mr. Kriss Cloninger, III and Mr. Hidefumi Matsui, respectively, and Company-matching
contributions to the 401(k) retirement plan in the amount of $4,500 for each of Mr. Daniel P. Amos, Mr. Paul S.
Amos and Mr. Kriss Cloninger, III. Includes premiums paid in 1994 for term life insurance in the amount of
$2,169, $11,970, $10,012, $2,493, and $5,787 for Mr. Daniel P. Amos, Mr. Paul S. Amos, Mr. Yoshiki Otake, Mr.
Kriss Cloninger, III and Mr. Hidefumi Matsui, respectively, and Company-matching contributions to the 401(k)
retirement plan in the amount of $4,497 for each of Mr. Daniel P. Amos, Mr. Paul S. Amos and Mr. Kriss Cloninger,
III.
-16-
</TABLE>
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the five-year performance of the Company's
Common Stock to the Dow Jones Industrial Average (Dow Jones), and the
Standard & Poor's Life Insurance Index (S&P Life). The Standard & Poor's
Life Insurance Index includes: Aetna, Inc. Providian Corp., Jefferson-Pilot
Corp., Lincoln National Corp., Torchmark Corp., UNUM Corp. and USLIFE Corp.
The graph assumes that the value of the investment in the Company's Common
Stock and each index was $100 at December 31, 1991, and that all dividends
were reinvested.
(Stock Performance graph inserted here.)
Performance Graph Index
DECEMBER 31
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
AFLAC INCORPORATED 100 113 119 135 186 277
DOW JONES 100 107 126 132 181 232
S&P LIFE 100 134 136 113 162 198
(All performance data provided by STAR Services, Inc., San Francisco, CA
94120)
-17-
<PAGE>
RETIREMENT PLANS FOR KEY EXECUTIVES
Participants in the Retirement Plan for Senior Officers receive full
compensation for the first 12 months after retirement. Thereafter, the
participants may elect to receive annual lifetime retirement benefits equal
to 60% of their final compensation, or 54% of such compensation with 1/2 of
such amount to be paid to their spouses for a specified period after death
of the participant. Final compensation is deemed to be the higher of (i)
the compensation paid during the last 12 months of active employment with
the Company, or (ii) the highest compensation received in any calendar year
of the last three years preceding the date of retirement. Compensation
under this plan is defined to be base salary plus bonus. All benefits are
subject to annual cost-of-living increases as the Compensation Committee may
approve. Retired participants and their spouses are also entitled to
receive full medical expense benefits for their lifetimes. The benefits
payable under the plan are not subject to Social Security or defined benefit
pension plan offsets.
Generally, no benefits are payable until the participant accumulates 10
years credited service at age 60 or 20 years credited service. Reduced
benefits may be paid to a participant who retires (other than for
disability) before age 65 with less than 20 years credited service.
Mr. Daniel P. Amos and Mr. Paul S. Amos are covered by this plan. AFLAC
has entered into a similar agreement with Mr. Yoshiki Otake. Mr. Daniel P.
Amos, Mr. Paul S. Amos, and Mr. Yoshiki Otake have 23, 42, and 22 years,
respectively, of credited service.
RETIREMENT PLAN FOR SENIOR OFFICERS TABLE
YEARS OF SERVICE
($ in thousands)
COMPENSATION 20 25 30 35
------------ ---- ---- ---- ----
$ 500 $ 300 $ 300 $ 300 $ 300
750 450 450 450 450
1,000 600 600 600 600
1,250 750 750 750 750
1,500 900 900 900 900
1,750 1,050 1,050 1,050 1,050
2,000 1,200 1,200 1,200 1,200
2,250 1,350 1,350 1,350 1,350
2,500 1,500 1,500 1,500 1,500
The Company maintains a Supplemental Executive Retirement Plan for
certain key executives of the Company and its subsidiaries who do not
participate in the Retirement Plan for Senior Officers. Participation in
the Supplemental Executive Retirement Plan is limited to key employees of
the Company (and its subsidiaries) designated by the Board of Directors of
the Company from time to time. On August 11, 1992, the Plan was amended to
require 15 years of service in order for a participant to be qualified under
the Plan, provided that said requirement not affect those individuals who
were participating in the Plan prior to this amendment. Under the Plan,
participants who terminate their employment for any reason other than
"cause" or death (i) between the ages of 55 to 65, are entitled to an annual
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<PAGE>
pension that, when combined with the retirement income payable under the
Company's Defined Benefit Pension Plan (assuming benefits thereunder are
paid as a single life annuity), will equal 50% of their final pay, or (ii)
at the age of 65 or older, are entitled to an annual pension that, when
combined with the retirement income payable under the Company's Defined
Benefit Pension Plan (assuming benefits thereunder are paid as a single life
annuity), will equal 65% of their final pay. For purposes of the
Supplemental Executive Retirement Plan, final pay means the highest annual
base salary paid to a participant during any calendar year in the three-
calendar-year period preceding the participant's termination of employment.
Benefits are generally payable in the form of an annuity for the life
of the participant. However, a participant may elect a joint and survivor
annuity pursuant to which he or she will receive reduced benefits during his
or her lifetime and, after his or her death, his or her surviving spouse
will receive a monthly benefit equal to 50% of the amount that had been paid
to the participant. No benefits are payable to a participant whose
employment is terminated before age 55 except for certain terminations
following a "change in control." If a participant dies after age 55 but
before benefits are paid under the plan, his or her spouse will receive a
death benefit equal to 50% of the benefits that the participant would have
been entitled to receive had he or she retired on the day preceding the date
of his or her death. If a participant's employment is terminated for
"cause," he or she immediately forfeits all rights and entitlements under
the plan. The benefits payable under the plan are not subject to Social
Security offset; benefits are subject to offset for amounts paid under the
Company's Defined Benefit Pension Plan. See "Employment Agreements and
Termination of Employment Arrangements" for additional information regarding
the Supplemental Executive Retirement Plan.
Kriss Cloninger, III participates in the Supplemental Executive
Retirement Plan. The estimated annual benefit payable upon a retirement age
of 55 for Mr. Cloninger is $---,---.
For retirement benefits to Mr. Hidefumi Matsui see "Employment
Agreements and Termination of Employment Arrangements" below.
DEFINED BENEFIT PENSION PLAN
The Company has a noncontributory defined benefit pension plan covering
substantially all U.S. employees who satisfy the eligibility requirements.
Benefits are calculated in accordance with the following formula: l% of
average monthly compensation times years of credited service not in excess
of 25 years, plus .5% of average monthly compensation times years of
credited service in excess of 25 years. Participants are eligible to
receive normal retirement benefits upon attaining their normal retirement
age of 65. Participants with 15 years of credited service are eligible to
receive reduced normal retirement benefits upon reaching their early
retirement age of 55. After attaining the early retirement age of 55, a
participant can be eligible for full normal retirement benefits when the
participant's years of credited service plus their attained age equals or
exceeds 85. For purposes of the plan, average monthly compensation is
deemed to be the participant's highest average compensation during any five
consecutive years of service within the 10 consecutive plan years of service
immediately preceding retirement. Compensation generally means salaries and
annual incentive bonuses. The benefits payable under the plan as amended are
not subject to adjustment for Social Security benefits or other offsets.
The benefits payable under the plan may be paid monthly over the life of the
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<PAGE>
participant (with joint and survivor options available at reduced rates).
The maximum retirement benefit is limited in accordance with section 415 of
the Internal Revenue Code of 1986 (the "Code") to $120,000 for 1996. The
maximum compensation that may be taken into account in the calculation of
retirement benefits is limited in accordance with section 401(a) (17) of the
Code to $150,000 for 1996. These limitation amounts for future years will
be indexed for cost-of-living adjustments, but only increase when a new
$5,000 increment is reached. The following table reflects annual benefits
as determined by the above formula.
DEFINED BENEFIT PENSION PLAN TABLE
YEARS OF SERVICE
COMPENSATION 15 20 25 30 35
- ------------ ---- ---- ---- ---- ----
$25,000 $ 3,750 $ 5,000 $ 6,250 $ 6,875 $ 7,500
50,000 7,500 10,000 12,500 13,750 15,000
75,000 11,250 15,000 18,750 20,625 22,500
100,000 15,000 20,000 25,000 27,500 30,000
125,000 18,750 25,000 31,250 34,375 37,500
150,000 22,500 30,000 37,500 41,250 45,000
Mr. Daniel P. Amos and Mr. Kriss Cloninger, III have 23 years and 5
years, respectively, of credited service in the plan.
Messrs. Otake and Matsui have waived their rights to participate in the
Company's retirement or pension plans. See "Employment Agreements and
Termination of Employment Arrangements."
-20-
<PAGE>
<TABLE>
OPTION GRANTS IN 1996
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants(1) for Option Term(2)
________________________________________________________________________ ____________________________________________
Number of % of Total If Stock If Stock
Securities Options Grant At At
Underlying Granted to Date $--.-- $--.--
Options Employees Exercise Market
Granted in Fiscal Price Price Expiration
Name (#) Year ($/Sh) ($/Sh) Date 5%($) 10%($)
- -------------- ------------- ---------- ---------- --------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock Appreciation N/A N/A N/A N/A N/A -,---,--- --,---,---
For All Shareholders (3)
Daniel P. Amos, CEO 300,000 16.5 33.9375 33.9375 8-13-06 6,402,933 16,226,290
Yoshiki Otake 37,500 2.1 31.6667 31.6667 2-13-06 746,813 l,892,571
Kriss Cloninger, III 67,501 3.7 31.6667 31.6667 2-13-06 1,344,284 3,406,679
Hidefumi Matsui 37,500 2.1 31.6667 31.6667 2-13-06 746,813 1,892,571
(1) All option grants shown above vest 1/3 at each three following anniversaries of the option grant date.
(2) The annual rates of stock price appreciation(shown at the assumed rates of 5% and 10% for the option term of 10
years), as required by the Securities and Exchange Commission, are compounded annually and therefore are shown
at the compound appreciation rates of 63% and 159%, respectively.
(3) For "Stock Appreciation For All Shareholders," the Potential Realizable Value is calculated based on $--.--, the
average market price of a share of Company Common Stock on the date of options reported in this table were granted,
and the number of shares outstanding on February 25, 1997.
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AS OF DECEMBER 31, 1996
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares 12-31-96(#) 12-31-96($)
Acquired Value
Name on Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel P. Amos, CEO 194,000 6,157,875 1,283,407 300,000 39,742,690 2,643,750
Paul S. Amos 224,319 6,327,658 225,001 -0- 5,381,281 -0-
Yoshiki Otake -0- -0- 382,383 37,500 12,730,439 415,624
Kriss Cloninger, III -0- -0- 168,751 67,501 4,251,590 748,134
Hidefumi Matsui 3,000 66,900 138,750 37,500 3,786,765 415,624
-21-
</TABLE>
<PAGE>
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
On August 1, 1993, the Company entered into an employment agreement
with Mr. Daniel P. Amos. This agreement replaced a prior employment
agreement with Mr. Amos that expired on July 31, 1993. The new agreement
provides for a three-year term commencing August 1, 1993, with automatic
extensions of one-year periods to the term of the agreement occurring on an
annual basis beginning August 1, 1994, unless written notice of termination
is given prior to such annual extensions. Pursuant to the agreement as
currently in effect, Mr. Amos is entitled to receive an annual base salary
of $995,000 subject to annual increases in the same general proportion as
provided to other senior executive officers of the Company.
The agreement provides that Mr. Amos (referred to hereafter as the
"Executive") will continue to participate in the Company's Management
Incentive Plan, the Retirement Plan for Senior Officers and the 1985 Plan,
and will participate in all other fringe benefit plans applicable to
employees generally or provided to senior executives of the Company. The
Executive may receive other benefits as determined from time to time by the
Compensation Committee.
Pursuant to the agreement, the Company remains obligated to continue
compensation and benefits to the Executive for the scheduled term of the
agreement if the employment of the Executive is terminated by the Company
without "good cause." If the Executive's employment is terminated by the
Company for "good cause," or by the Executive without "good reason," the
Company is generally obligated to pay compensation and benefits only to the
date of termination (except that the Executive is entitled to benefits under
the Retirement Plan for Senior Officers if the termination is not for "good
cause"). "Good cause" generally means (i) the willful failure by the
Executive to substantially perform his management duties for more than 60
days, (ii) intentional conduct by the Executive causing substantial injury
to the Company, or (iii) the conviction or plea of guilty by the Executive
of a felony crime involving moral turpitude. "Good reason" is defined to
include a breach of the agreement, a diminution or change in the Executive's
title, duties or authority, or a relocation of the Company's principal
offices. Upon voluntary termination without "good reason" or termination by
the Company for "good cause," the Executive is prohibited for a two-year
period from directly or indirectly competing with the Company.
The agreement provides that compensation and benefits continue for
certain specified periods in the event that the Executive becomes totally
disabled. Upon death of the Executive, his estate is to be paid an amount,
payable over a three-year period, equal to the Executive's base salary and
any bonus actually paid during the last three years of his life.
Upon a "change in control" of the Company, the agreement is extended
for an additional three-year period. If, following a change in control, the
Executive's employment with the Company is terminated by the Company without
"good cause," or by the Executive for "good reason," the Company must pay to
the Executive, among other payments but in lieu of any further salary
payments subsequent to the date of termination, a lump sum severance payment
equal to three times the sum of the Executive's base salary and bonus under
the Management Incentive Plan (as paid during periods specified in the
agreement).
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<PAGE>
A "change in control" is generally deemed to occur when: (i) a person
or group acquires beneficial ownership of 30% or more of the Common Stock of
the Company; (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board cease for any
reason to constitute a majority of the Board; or (iii) the shareholders
approve a liquidation or sale of substantially all of the assets of the
Company or certain mergers or consolidation of the Company.
On August 1, 1995, the Company entered into an employment agreement
with Mr. Paul S. Amos. This agreement provides for a three-year term
commencing August 1, 1995, with automatic extensions of one-year periods to
the term of the agreement occurring on an annual basis beginning August 1,
1996, unless written notice of termination is given prior to such annual
extensions. Pursuant to the agreement as currently in effect, Mr. Amos is
entitled to receive an annual base salary of $1,140,079 subject to annual
increases in the same general proportion as provided to other senior
executive officers of the Company.
Pursuant to an employment agreement between the Company and Mr. Kriss
Cloninger, III, as amended, Mr. Cloninger is employed as Chief Financial
Officer of the Company. The term of the agreement is subject to automatic
two-year extensions on an annual basis beginning March 16, 1994, unless
written notice that such extension will not occur is given prior to such
annual date by either party. Mr. Cloninger is entitled to a base salary per
year of $400,000, which shall be increased annually during the term of the
agreement and any extensions thereof, as determined by the Company's CEO.
The Company shall also pay Mr. Cloninger, as performance bonus compensation,
an amount each year under the Company's Management Incentive Plan with a
target level based on at least 60% of base salary.
Mr. Cloninger will be eligible to participate in all fringe benefit
programs applicable to employees generally, and shall receive such other
"fringe" or employee benefits (including awards of stock options) as are
provided to key executive employees of the Company and that are appropriate
to his responsibilities as Chief Financial Officer.
Other material terms of Mr. Cloninger and Mr. Paul S. Amos' employment
agreements relating to termination, disability, death and changes in control
of the Company are substantially similar to such provisions in Mr. Daniel P.
Amos' employment agreement, as described above.
The Company maintains a Supplemental Executive Retirement Plan for
certain key executives of the Company and its subsidiaries who do not
participate in the Retirement Plan for Senior Officers. Mr. Kriss
Cloninger, III is a participant in the Plan. Under the plan, as amended,
in the event that a participant's employment with the Company is terminated
within two years of a "change in control" of the Company other than for
death, disability or cause, or a participant terminates his employment
during such period for "good reason," the participant becomes 100% vested in
his retirement benefits and is entitled to receive a lump-sum amount equal
to the greater of: (i) the present value of the retirement benefit, which
(a) he is entitled to receive upon the date of such termination, or (b) he
would have received had he remained in the employ of the Company until he
attained age 55 (for participants who had not yet attained age 55 as of the
date of termination); and (ii) three times the participant's final pay (as
defined). A "change in control" shall generally occur under the same
circumstances described as a "change in control" in Mr. Daniel P. Amos'
employment agreement. "Cause" shall mean generally: (i) the participant's
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willful failure to substantially perform his duties with the Company (other
than that resulting from illness or after a participant gives notice of
termination of employment for "good reason") after a written demand for
substantial performance is delivered to the participant by the Board, or
(ii) the willful engaging by the participant in materially injurious conduct
to the Company. "Good reason" is defined to include various adverse changes
in employment status, duties and/or compensation and benefits following a
"change in control." Benefits may be reduced to the extent that they are
not deductible by the Company for income tax purposes.
Pursuant to an employment agreement between AFLAC and Mr. Yoshiki
Otake, Mr. Otake is to serve as Chairman of AFLAC Japan (or, upon his
removal, the position of a senior officer of AFLAC Japan) through 2004,
subject to annual renewals thereafter by the mutual consent of the parties.
He shall receive compensation in 1997 of ---------- yen and shall be
eligible for a short-term management incentive bonus with a target amount of
at least 35% of the base salary. Pursuant to the agreement, Mr. Otake shall
be considered for salary increases in the same manner and time as the senior
executive officers of AFLAC. Mr. Otake shall participate in the Company's
stock option plan in the same manner as most AFLAC senior officers and
directors.
Under the agreement, Mr. Otake is eligible for full retirement benefits
at age 65 and may take voluntary early retirement with reduced benefits upon
the approval of AFLAC. Mr. Otake is entitled to full retirement benefits
upon total and permanent disability prior to age 65. His full retirement
benefits (which are subject to annual adjustment for cost-of-living
increases proportionate to those granted to Senior Officers of AFLAC Japan)
consist of a choice between (i) 60% of the higher of his total compensation
(defined under this agreement as base salary and bonus) for the last 12
months of employment, or the highest total compensation received in any
calendar year during the agreement term, during the remainder of Mr. Otake's
life, or (ii) 54% of such compensation, paid to Mr. Otake during the
remainder of his life, with 1/2 of such amount to be paid to his spouse for
a specified period of time after his death. After retirement, Mr. Otake and
his spouse shall receive medical benefits for the remainder of their lives.
After 1995 and until Mr. Otake reaches 65, where mutual consent to renew the
agreement is not obtained but where Mr. Otake remains mentally and
physically sound, he shall be allowed to continue his employment with such
stature as deemed appropriate by AFLAC with a starting salary equivalent to
70% of his last salary, subject to annual cost-of-living increases. Mr.
Otake has agreed not to engage in any activity competitive with AFLAC while
any benefits (including retirement benefits) are being paid to him by AFLAC.
In consideration of the benefits contained in his agreement, Mr. Otake has
waived any rights to participate in any other AFLAC or AFLAC Japan
retirement or pension plans.
On January l, l995, AFLAC entered into an employment agreement with Mr.
Hidefumi Matsui. Mr. Matsui is to serve as President of AFLAC Japan (or,
upon his removal, the position of a Senior Officer of AFLAC Japan) through
2004, subject to annual renewals thereafter by the mutual consent of the
parties. He shall receive compensation in 1997 of ---------- yen with
annual adjustments thereafter in keeping with adjustments made in base
salaries of other senior executive officers and shall be eligible for a
short-term management incentive bonus with a target amount of at least 35%
of the base salary. Mr. Matsui shall participate in the Company's Stock
Option Plans in the same manner as most AFLAC senior officers.
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Under the agreement, Mr. Matsui is eligible for full retirement
benefits upon age 65 and may take voluntary early retirement with reduced
benefits upon the approval of AFLAC. He shall be eligible for early
retirement from ages 55 to 65 and may receive 50% of base salary as
calculated on the day before retirement. Mr. Matsui is entitled to
retirement benefits of 50% of base salary as calculated on the day before
his retirement for total and permanent disability prior to age 65. His full
retirement benefits (which are subject to annual adjustment for cost-of-
living increases proportionate to those granted to senior officers of AFLAC
Japan) consist of a choice between (i) 65% of his base salary on the day
before retirement, during the remainder of Mr. Matsui's life, or (ii) 90% of
the amount specified in (i) above, paid to Mr. Matsui during the remainder
of his life, with 1/2 of such amount to be paid to his spouse after his
death, provided that if, at the time of his death his spouse is 55 or older,
benefits shall be paid for her lifetime. If, however, his spouse is younger
than 55, benefits shall be paid only for the shorter of 20 years or the
surviving spouse's life. Mr. Matsui has agreed not to engage in any
activity competitive with AFLAC while any benefits (including retirement
benefits) are being paid to him by AFLAC. In consideration of the benefits
contained in his agreement, Mr. Matsui has waived any rights to participate
in any other AFLAC or AFLAC Japan retirement or pension plans. The
estimated annual benefit payable upon a retirement age of 55 for Mr. Matsui
is 23,751,571 yen.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Information is provided with respect to executive officers, Directors
and/or members of their immediate families who were indebted to the Company
or its subsidiaries, at any time since January 1, 1996, in excess of
$60,000, as follows:
Largest
Aggregate Amount
Amount Outstanding
Outstanding Rate as of
Since Nature of of January 31,
Name (1) January 1, 1996 Indebtedness Interest 1997
- ----------------------------------------------------------------------------
Daniel P. Amos $2,000,000 Term Stock Note(2) 6.00% $2,000,000
Joey M. Loudermilk $ 36,45l Stock Option Note(3) 5.58% $ 36,346
$ 36,563 Stock Option Note(3) 5.47% $ 36,435
Minoru Nakai $ 235,530 Stock Option Note(3) 5.54% $ 115,467
Gary Stegman $ 65,163 Stock Option Note(3) 4.83% $ 32,407
(1) All of the named individuals were executive officers of the Company or
one of its subsidiaries during 1996.
(2) Collateralized note accepted by the Company and secured by stock of
the Company.
(3) Collateralized notes accepted by the Company in payment of stock
options exercised.
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J. Shelby Amos, II, a Director of the Company, has been associated with
AFLAC since 1973 and presently serves as Alabama/West Florida State Sales
Coordinator. In 1996, he earned renewal and first-year commissions of
$719,159 (before expenses) on collected premiums of $27,271,421, and he
received $60,818 in 1997 in lieu of shares earned in 1996 under the AFLAC
Associates' Stock Bonus Plan.
In 1996, $250,265 was paid by AFLAC to a corporation of which Maria
Theresa Amos Land, the sister of J. Shelby Amos, II, is the sole
shareholder. This amount was earned as renewal commissions before expenses,
on collected premiums of $9,167,644 by W. Donald Land, the deceased husband
of Maria Theresa Amos Land, who served as Florida State Sales Coordinator
with AFLAC from 1975 until May 1990.
State Sales Coordinators are not salaried employees but are
compensated on a commission basis and are required to pay their own expenses
that include travel, office expenses, incentives for district and regional
sales coordinators and associates in their state, and recruiting and
training costs. The compensation arrangements with J. Shelby Amos, II and
W. Donald Land were similar when contracted, to those of other State Sales
Coordinators.
2. AMENDMENT OF ARTICLES OF INCORPORATION TO
INCREASE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
Description of the Proposed Amendment
The proposed amendment to Article IV of the Articles of Incorporation
being submitted for shareholder approval would increase the number of shares
of Common Stock which the Company is authorized to issue from one hundred
seventy five (l75) million to four hundred (400) million. The full text of
the proposed amendment is attached to this proxy statement as Appendix A and
should be read carefully.
Purposes and Effects of Increasing the Number
of Authorized Shares of Common Stock
As of February 25, 1997, there were ---,---,--- shares of Common Stock
outstanding; ---,--- shares of Common Stock held in Treasury; ---,--- shares
of Common Stock reserved for issuance pursuant to the 1982 and 1985 Stock
Option Plans; ---,--- shares of Common Stock reserved for issuance pursuant
to the AFLAC Incorporated 1997 Stock Option Plan (assuming that the proposed
Plan is approved); and, ---,---,--- shares of Common Stock authorized,
unissued and unreserved. The additional two hundred twenty five (225)
million shares of Common Stock to be authorized if this amendment is
approved would increase the number authorized, unissued and unreserved to --
- -,---,---. The additional shares would be a part of the existing class of
Common Stock and, if an when issued, would have the same rights and
privileges as the shares of Common Stock presently outstanding. See
"Description of Voting Rights".
The Board of Directors believes that it is desirable to have the
additional authorized shares of Common Stock available for possible future
financing and acquisition transactions, stock dividends or splits and other
general corporate purposes. However, at the date of this proxy statement,
the Company has no agreements, commitments or plans with respect to the sale
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or issuance of any of the additional shares of Common Stock as to which
authorization is sought.
The additional shares of Common Stock would be available for issuance
without further action by the shareholders and without the accompanying
delay and expense involved in calling a special meeting of shareholders,
unless such action is required by applicable law or the rules of any stock
exchange on which the Company's securities may be listed. The New York
Stock Exchange (the "NYSE"), on which the issued shares of the Company's
Common Stock are presently listed, generally requires shareholder approval
as a prerequisite to listing shares when the present or potential issuance
of shares could result in an increase in the number of shares of Common
Stock outstanding of at least 20%. A failure to comply with the NYSE
requirements could result in the delisting of the Company's Common Stock.
The Company is also listed on the Pacific and Tokyo Stock Exchanges which
have similar rules.
It should be noted that the issuance of additional shares of Common
Stock could be disadvantageous to existing shareholders since such issuance
might serve to dilute their percentage interest in the Company. Holders of
Common Stock do not have preemptive rights to purchase and additional shares
of Common Stock which may be issued.
Vote Required
The affirmative vote of the holders of a majority of the outstanding
voting rights of Common Stock entitled to vote at the Annual Meeting of the
Shareholders is required to approve the proposed amendment (see "Description
of Voting Rights").
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A
VOTE "FOR" THE INCREASE OF AUTHORIZED
SHARES OF COMMON STOCK
3. PROPOSAL TO APPROVE THE AFLAC INCORPORATED
1997 STOCK OPTION PLAN
The Board has placed on the agenda of the annual meeting of
shareholders a proposal for the shareholders of the Company to approve the
AFLAC Incorporated 1997 Stock Option Plan (the "1997 Plan"). The 1997 Plan
was adopted by the Board on February 11, 1997, subject to approval by the
shareholders of the Company.
The stock option plans of the Company are a principal component of the
Company's executive compensation program. Stock options tie executive
compensation directly to an increase in shareholder value, specifically the
market price of the Common Stock. In this way options further align the
interests of managers and shareholders and provide a meaningful incentive
for management to maximize shareholder value.
The 1997 Plan is being submitted for shareholder approval so that,
among other reasons, options granted under the 1997 Plan that are intended
to qualify as "performance-based compensation" under Section 162(m), defined
in Compensation Committee report, may so qualify. Section 162(m) denies a
deduction by an employer for certain compensation in excess of $1 million
per year paid by publicly traded corporations to the following individuals
who are employed at the end of the employer's taxable year ("Covered
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<PAGE>
Employees"): the chief executive officer, and the four most highly
compensated executive officers (other than the chief executive officer) for
whom compensation disclosure is required under the proxy rules. Certain
compensation, including compensation based on the attainment of performance
goals, is excluded from this deduction limit if certain requirements are
met. One of these requirements is that the material terms pursuant to which
the compensation is to be paid be disclosed to and approved by the
shareholders prior to payment. Accordingly, if the 1997 Plan is approved by
shareholders and the other conditions of Section 162(m) relating to the
exclusion for performance-based compensation are satisfied, certain
compensation paid to Covered Employees pursuant to the 1997 Plan will not be
subject to the deduction limit of Section 162(m).
The 1997 Plan has been adopted to continue and enhance the
effectiveness of the 1985 Stock Option Plan, which expired for the granting
of options on February 1, 1997. The following description of the 1997 Plan
is qualified in its entirety by reference to the complete text of the 1997
Plan, attached hereto as Exhibit B. Capitalized terms used herein will,
unless otherwise defined, have the meanings assigned to them in the text of
the 1997 Plan.
GENERAL
The purposes of the 1997 Plan are to (i) encourage stock ownership in
the Company by key employees and Directors of the Company and its Subsidiary
Companies, (ii) afford an incentive to such individuals to further the
growth and prosperity of the Company and its Subsidiary Companies, (iii)
recruit and maintain such individuals and (iv) build a proprietary interest
in the Company among the Company's non-employee Directors.
PLAN ADMINISTRATION
The 1997 Plan will be administered by the Board (including the
Executive Committee of the Board as to matters which such committee may
lawfully exercise the powers of the Board) or a committee(s) of the Board
(the "Committee"), the composition of which will at all times satisfy the
provisions of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended, and Section 162(m), except as otherwise determined by the
Board. The 1997 Plan provides that no member of the Board will be liable
for any action or determination taken or made in good faith with respect to
the 1997 Plan and provides for indemnification of the Board members by the
Company in connection with actions under the 1997 Plan.
The Board shall determine all questions of interpretation of the 1997
Plan or any options granted thereunder and such determinations shall be
final and binding. Subject to the terms of the Plan, the Board or Committee
has the right, among other things, to determine which eligible individuals
will be granted options, whether such grants will be incentive stock options
(ISOs) under Section 422 of the Code or non-qualifying options (NQ options),
the number of shares that may be purchased under each option, the Fair
Market Value of the Common Stock at the time of an option grant, the
exercise price of options granted, and the terms and provisions of
individual option agreements (which need not be identical). The Board or
Committee may also make any other determinations and establish any rules or
policies consistent with the terms of the 1997 Plan as are necessary or
advisable for administering such plan.
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<PAGE>
SHARES SUBJECT TO THE PLAN
The maximum number of shares of Common Stock reserved for the grant of
options under the Plan is 7,000,000, subject to adjustment as provided in
the 1997 Plan, in the form of either ISOs or NQ options. Shares subject to
an option grant that expires or is cancelled, surrendered or otherwise
terminated before being exercised or otherwise ceases to be exercisable (and
without regard as to whether such grant was an NQ option or ISO), will again
be available for issuance under the 1997 Plan to the extent of such
expiration, cancellation, surrender or termination, unless the 1997 Plan
shall have been terminated.
The 1997 Plan provides that the aggregate number of shares of Common
Stock available for options under the plan, the shares subject to any option
and the price per share shall be proportionately adjusted for any increase
or decrease in the number of shares of Common Stock issued after the
effective date of the 1997 Plan or of any shareholder approved increase in
the number of shares issuable under the plan resulting form the occurrence
of certain changes in the capital structure of the Company.
ELIGIBILITY
Discretionary grants may be made to any full-time employee of the
Company or a Subsidiary Company who is determined by the Committee to be
eligible for participation in the 1997 Plan, consistent with the purposes of
the 1997 Plan. All full-time employees of the Company and the Subsidiary
Companies.are eligiable to participate. Automatic grants are made to non-
employee Directors (including advisory Directors) pursuant to Article XIII
of the 1997 Plan. Grants to any individual shall be limited to options to
purchase no more than 700,000 shares of Common Stock during any three
consecutive calendar year period. Such number shall be subject to
adjustment upon the occurrence of certain changes in the capital structure
of the Company. The aggregate Fair Market Value of stock for which ISOs may
be granted to an individual that are exercisable for the first time in any
one year may not exceed $100,000. Options may not be granted to employees
or non-employee Directors who own more than 10% of the voting power of the
Company or any subsidiary Company. Options may be granted for up to ten
years after the adoption of the 1997 Plan by the Board.
NON-EMPLOYEE DIRECTOR GRANTS
The 1997 Plan will automatically make initial option grants for 10,000
shares of Common Stock to each non-employee Director (including any advisory
Director) who is currently serving as a member of the Board of Directors on
August 1, 1997. A second automatic grant will take place on August 1, 2002
to each non-employee Director (including any advisory Director) as of such
date. In addition to these two automatic grants, any new non-employee
Director after August l, 1997, including any advisory Director, will be
automatically granted an option to purchase 10,000 shares of Common Stock
upon appointment to the Board or upon election at any annual or special
meeting of shareholders, if earlier. Options granted to non-employee
Directors shall be NQ options with an exercise price equal to the Fair
Market Value of a share of Common Stock on the date of grant, and will
become exercisable with respect to 20% of the shares of Common Stock covered
thereby as of the date of the grant, with an additional 20% of the grant
becoming exercisable as of each of the next four anniversaries of the date
of grant to the extent the non-employee Director continues to be a Director
as of such date; provided, however, that upon cessation of service by reason
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of retirement, a non-employee Director will become immediately vested in all
outstanding options that have not yet expired. Each option granted to a
non-employee Director shall have a term of 10 years; provided that upon
cessation of membership on the Board for any reason other than retirement,
options granted to such non-employee Director not then exercisable shall
expire and options then exercisable may be exercised until the end of their
respective terms. The exercise price of options automatically granted to
non-employee Directors may be paid in cash or with the tender of shares of
Common Stock (valued at current Fair Market Value).
OPTION TERMS FOR DISCRETIONARY GRANTS
The exercise price of options granted must be no less than 100% of the
Fair Market Value of the Common Stock on the date granted. The date of
Board action approving a grant shall be deemed the date of grant. Except as
provided for otherwise, options granted are exercisable for up to ten years
from the date of grant, are exercisable in their entirety immediately, and
may be exercised all at one time or in parts. The exercise price of shares
subject to an option may be paid in cash or, (if allowed by the terms of the
grant,) in shares of Common Stock (valued at current Fair Market Value) or
with a note from the option holder. Subject to such rules as may be adopted
by the Committee, an option holder (other than a non-employee Director) who
will incur federal, state or local income tax liability as a result of the
exercise of an NQ option may, at his or her option, elect to have the
Company withhold shares, or to transfer shares of Common Stock to the
Company, to satisfy tax liabilities arising from the exercise of such
options. These shares will be valued at Fair Market Value.
In addition to the terms and conditions governing NQ options, ISOs
awarded under the 1997 Plan must comply with the requirements set forth in
Section 422 of the Code.
Upon termination of employment, an employee to whom an ISO has been
granted may, at any time within three months after the date of termination
but not later than the date of expiration of the option, exercise the option
and still retain the tax benefits accorded such options. If an employee
holding such an option terminates employment by reason of death or
disability, the period for such exercise is twelve months. Options not
exercised within these periods after termination of employment remain
exercisable until their original expiration date unless provided for
otherwise in the option agreement under rules adopted by the Committee, but
no longer qualify for special tax treatment.
AMENDMENT; TERMINATION
The Board or Committee by resolution may terminate, suspend, amend or
revise the 1997 Plan with respect to any shares of Common Stock as to which
options have not been granted; provided, however, that except for certain
automatic anit-dilution amendments provided for in the 1997 Plan no such
amendment shall be effective without shareholder approval where such
approval is required to comply with any law, regulation or stock exchange
rule. Except as expressly authorized in the 1997 Plan, the Board may not
alter or impair rights under any option previously granted under the 1997
Plan without the consent of the grantee of the option.
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MISCELLANEOUS
In the event of (i) a liquidation of the Company, (ii) a
reorganization, merger or consolidation of the Company resulting in the
conversion or exchange of outstanding Common Stock for cash or property or
securities not issued by the Company, (iii) a sale, exchange or transfer of
all or substantially all of the property of the Company or one of its
business units to another party or (iv) the acquisition of all or
substantially all of the outstanding voting shares of the Company by another
party, the Board may arrange for the assumption by the acquiring entity of
the Company's rights and obligations under outstanding options or the
substitution of options for the acquiring entity's stock for such
outstanding options. If the acquiring entity fails to make such assumption,
the Board may allow the unexercisable portion of outstanding options to
become fully exercisable prior to such corporate transaction. Options which
are neither assumed nor substituted nor exercised prior to the date of the
corporate transaction shall terminate as of the date of consummation of the
corporate transaction.
Options are not transferable by an optionee except by transfer pursuant
to domestic relations orders and by will or the laws of descent and
distribution. During the optionee's lifetime the options are exercisable
only by the optionee.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of certain federal income tax
consequences relating to grants of options that may be made pursuant to the
1997 Plan.
NON-QUALIFIED STOCK OPTIONS
In the case of an NQ option, an optionee generally will not be taxed
upon the grant of an option. Rather, at the time of exercise of such NQ
option (and in the case of an untimely exercise of an ISO), the optionee
will generally recognize ordinary income for federal income tax purposes in
an amount equal to the excess of the then fair market value of the shares
purchased over the purchase price. The Company will generally be entitled
to a tax deduction at the time and in the amount that the optionee
recognizes as ordinary income.
INCENTIVE STOCK OPTIONS
In the case of an ISO, an optionee will generally be in receipt of
taxable income upon the disposition of the shares acquired upon exercise of
the ISO, rather than upon the grant of the ISO or upon its timely exercise;
in such event, the Company will not be entitled to a tax deduction. If
certain holding period requirements have been satisfied with respect to
outstanding shares so acquired, taxable income will constitute long-term
capital gain. The tax consequences of any untimely exercise of an ISO will
be determined in accordance with the rules applicable to NQ options. The
amount by which the fair market value of the stock on the exercise date of
an ISO exceeds the option price will generally be an item of tax preference
for purposes of the "alternative minimum tax" imposed by Section 55 of the
Code.
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EXERCISE WITH SHARES
An optionee who pays the purchase price upon exercise of an option, in
whole or in part, by delivering already owned shares of Common Stock will
generally not recognize gain or loss on the shares surrendered at the time
of such delivery, except under certain circumstances relating to ISOs.
Rather, such gain or loss recognition will generally occur upon disposition
of the shares acquired in substitution for the shares surrendered.
The foregoing summary constitutes a brief overview of the principal
federal income tax consequences relating to options which may be granted
under the 1997 Plan based upon current federal income tax laws. This
summary is not intended to be exhaustive and does not describe state, local
or foreign tax consequences.
OPTION BENEFITS UNDER THE PLAN
With respect to grants other than those made automatically to non-
employee Directors of the Company, because participation in the 1997 Plan
and the amount and terms of grants under the 1997 Plan are at the discretion
of the Board or Committee (subject to the terms of the 1997 Plan), benefits
under the 1997 Plan are not presently determinable. Compensation paid and
other benefits (including options) granted to named executive officers of
the Company for 1996 fiscal year are set forth in the Summary Compensation
Table appearing on page __ of this Proxy Statement. With respect to
automatic grants to non-employee Directors which would occur pursuant to the
1997 Plan, Messrs. J. Shelby Amos, Michael H. Armacost, M. Delmar Edwards,
George W. Ford, Joe Frank Harris, Elizabeth J. Hudson, Kenneth S. Janke,
Sr., Charles B. Knapp, Hisao Kobayashi, Barbara K. Rimer, Henry C. Schwob,
J. Kyle Spencer and Glenn Vaughn, Jr. would each be eligible to receive a
grant of 10,000 shares if they continue to serve as non-employee Directors
of the Company as of August l, 1997, with receipt of a second grant of
10,000 shares on August l, 1002, if they continue to serve as non-employee
Directors of the Company as of that date (in each case such grants would
also be received by any other non-employee Directors serving at such date).
The per share market value of the Common Stock was _______ on _____, 1997.
SHAREHOLDER APPROVAL; BOARD RECOMMENDATION
Approval of the proposal requires the affirmative vote of holders of a
majority of voting rights present in person or represented by proxy at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE "FOR"
THE AFLAC INCORPORATED 1997 STOCK OPTION PLAN
4. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors of the Company, in accordance with the
recommendation of its Audit Committee, none of whom is an employee of the
Company, has reappointed KPMG Peat Marwick LLP, Certified Public
Accountants, as independent auditors for the Company, subject to
ratification by the shareholders.
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In connection with its audit of the Company's financial statements for
the year ended December 31, 1996, included in the Company's Annual Report to
Shareholders, KPMG Peat Marwick LLP reviewed the Company's filings with the
Securities and Exchange Commission, the Tokyo Stock Exchange and the
Ministry of Finance of Japan and conducted timely reviews of quarterly
reports to shareholders.
Representatives of KPMG Peat Marwick LLP are expected to be present at
the 1997 Annual Meeting of Shareholders with the opportunity to make a
statement if they so desire. Such representatives are expected to be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE "FOR"
RATIFICATION OF THE SELECTION OF SUCH FIRM
AS THE COMPANY'S INDEPENDENT AUDITORS
5. OTHER MATTERS
Management does not intend to bring any other matter before the
meeting, and does not know of any other matter that is proposed to be
brought before the meeting. However, should any other matter properly come
before the meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies in accordance with their
judgment on such matter.
SHAREHOLDER PROPOSALS
For a shareholder's proposal to be included in the Company's Proxy
Statement for the 1998 Annual Meeting of Shareholders, the shareholder must
follow the procedures of Rule 14a-8 under the Exchange Act and the proposal
must be received by the Secretary of the Company by ------- --, 1997.
ANNUAL REPORT
The Company has mailed a copy of its Annual Report to each shareholder
entitled to vote at the 1997 Annual Meeting of Shareholders. A copy of the
Company's Form 10-K is available at no charge to all shareholders. For a
copy write to:
Kenneth S. Janke Jr.
Senior Vice President, Investor Relations
AFLAC Incorporated
Worldwide Headquarters
Columbus, Georgia 31999
By Order of the Board of Directors,
/s/ Joey M. Loudermilk
-----------------------------
Joey M. Loudermilk
Secretary
March -, 1997
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APPENDIX A
The first sentence of Article IV shall be amended to read in its
entirety as follows:
The corporation shall have authority to issue four hundred million
(400,000,000) shares of common stock having a par value of $.10 per share
(the "Common Stock").
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APPENDIX B
AFLAC INCORPORATED
1997 STOCK OPTION PLAN
I. ESTABLISHMENT OF THE 1997 PLAN
AFLAC Incorporated (hereinafter called the "Company") hereby
establishes the 1997 Stock Option Plan (hereinafter called
"1997 Plan") upon the terms and conditions hereinafter stated.
II. PURPOSES OF THE 1997 PLAN
The purposes of the 1997 Plan are: (1) to encourage stock
ownership by selected key employees and directors of the Company;
(2) to provide an incentive for such employees to expand and
improve the growth and prosperity of the Company and its Subsid-
iary Companies; (3) to assist the Company and its Subsidiary
Companies in obtaining and retaining such employees and directors;
and (4) to build a proprietary interest among the Company's
Non-Employee Directors and thereby secure for the Company's
shareholders the benefits associated with common stock ownership
by those who will oversee the Company's future growth and success.
III. DEFINITIONS
A. "Advisory Director" means a director of the Company
appointed as such by the Board pursuant to the by-laws of the
Company.
B. "Board" means the Board of Directors of the Company, and
includes the Executive Committee of the Board as to any
matter in regard to which the Executive Committee may
lawfully exercise the powers of the full Board.
C. "Capital Stock" means shares of the common stock ($.10 par
value), of the Company.
D. "Code" means the Internal Revenue Code of 1986 (or any
successor federal tax law) as from time to time amended.
E. "Committee" means with respect to all Options, the
Compensation Committee or any successor committee or other
committee established by the Board pursuant to Article V(A)
hereof, or the Board acting in lieu of the Compensation
Committee or such other committee.
F. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
G. "Fair Market Value" means the fair market value of the
shares of Capital Stock as determined by the Committee in
its sole discretion; provided, however, that if the shares
of Capital Stock are admitted to trading on national
securities exchanges, the Fair Market Value on any date
shall be the average of the high and low sale prices as
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reported in the Wall Street Journal for the shares of
Capital Stock on such date or on the last day preceding
such date on which a sale was reported.
H. "Grantee" means an individual to whom an Option is granted
under the 1997 Plan.
I. "Non-Employee Director" means a director (including an
Advisory Director) of the Company who is not an employee
of the Company or any Subsidiary Company.
J. "Option" means a right granted to purchase Capital Stock
under the 1997 Plan. An Option may be either an
Incentive Option or a Non-Qualifying Option (as both terms
are defined in Article IV hereof).
K. "Retirement" means the voluntary termination of employment,
of an employee of the Company or one of its subsidiary
companies, who has accrued at least fifteen (15) years of
credited service as defined in the Company's pension and
health plans and who will be eligible for the payment of
retirement benefits upon obtaining a certain age as defined
by the pension plans of the Company. In the case of a
Non-Employee Director, retirement means the termination of
active participation as a member of the Board of Directors
due to attainment of the mandatory retirement age as
reflected in the AFLAC Incorporated Retirement Plan for Non-
Employee Directors.
L. "Subsidiary Company" means a subsidiary of the Company
that, at the time of granting the Option in question,
meets the definition of a "subsidiary corporation" in
Section 424(f) of the Code.
IV. TYPES OF OPTION
The 1997 Plan provides for both:
A. "Incentive Options"; that is, options intended to qualify
as "incentive stock options" under the provisions of
Section 422 of the Code, and
B. "Non-Qualifying Options"; that is, non-qualified stock
options that do not qualify as incentive stock options
under the provisions of Section 422 of the Code.
V. ADMINISTRATION OF THE 1997 PLAN
A. The 1997 Plan shall be administered by the Board of Directors
of the Company ("the Board") and/or by a duly appointed
committee or committees of the Board having such powers as
shall be specified by the Board. The Committee shall be
comprised of not fewer than two directors of the Company who
shall be appointed by and shall serve at the pleasure of the
Board, each of whom shall meet all requirements for
qualification as a "non-employee director" within the meaning
of Rule 16b-3, promulgated under the Exchange Act ("Rule
16b-3") and shall meet the requirements for qualification as
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"outside directors" within the meaning of section 162(m) of
the Code, in each case except as otherwise determined by the
Board. All questions of interpretation of the 1997 Plan or
of any Options granted under the 1997 Plan shall be
determined by the Board, and such determinations shall be
final and binding upon all persons having an interest in the
1997 Plan, and/or any Option. Any subsequent references
herein to the Board shall also mean the committee(s) if such
committee(s) has been appointed.
B. The Board may grant Options under the 1997 Plan and shall
have the authority, within the limitations of the 1997 Plan,
to determine:
1. which of the eligible individuals will be granted Options
under the 1997 Plan,
2. whether Incentive Options or Non-Qualifying Options are
to be granted in a particular case,
3. the number of shares that may be purchased under each
Option,
4. the Fair Market Value at the time of grant of the shares
subject to each Option,
5. the exercise price to be paid for shares subject to
Options, such exercise price to be determined in
accordance with Article IX, and
6. the terms and provisions of individual option agreements
(which need not be identical).
C. The Board shall also have the power to make all other
determinations, and to establish any rules, regulations, or
policies consistent with the terms of the 1997 Plan,
necessary or advisable for administering the 1997 Plan,
including policies concerning whether interruption of service
for military or public service, leaves of absence, temporary
assignment to other employment, or similar reasons shall
constitute a termination or interruption of employment
for purposes of the 1997 Plan.
D. The decisions of the Board shall be final and binding. The
date of Board action approving a grant of an Option shall be
deemed the date of grant. No member of the Board shall be
liable for any action taken, or determination made in good
faith related to the 1997 Plan, and the Company shall
indemnify, to the fullest extent permitted by law, any Board
member for any expenses borne by him or her (including costs
of any proceeding or threatened proceeding), or claim made
against him or her, arising out of actions related to the
1997 Plan.
VI. ELIGIBILITY
The individuals to whom Options may be granted shall be full-time
employees (including Directors who are employees), of the
Company or of a Subsidiary Company. Pursuant to Article XIII
hereof, automatic awards shall be granted to Non-Employee
Directors. No Options shall be granted to an employee or
director of the Company or of a Subsidiary Company who owns,
directly or indirectly, more than 10% of the voting power of
all classes of stock of either (i) the Company or (ii) any
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Subsidiary Company, and no Options shall be granted to any
person who is not a Director of the Company or a full-time
salaried employee of the Company or of a Subsidiary Company.
VII. CAPITAL STOCK SUBJECT TO OPTION
The aggregate number of shares of Capital Stock that may be issued
pursuant to Options granted under the 1997 Plan shall not exceed
7,000,000 shares, subject to adjustments as hereinafter provided
in Article XIX. If an Option as to any shares is surrendered
before exercise, or expires, or is canceled, surrendered, or
otherwise terminates for any reason without having been exercised
in full, or for any reason ceases to be exercisable, the number of
unpurchased shares covered thereby shall, unless the 1997 Plan
shall have been terminated, again become available for the
granting of Options under the 1997 Plan within the aggregate
maximum stated above, without regard to whether the expired or
terminated option was an Incentive Option or a Non-Qualifying
Option. Notwithstanding the foregoing, grants of Options under
the 1997 Plan, to any individual, shall be limited to Options to
purchase no more than 700,000 shares of Capital Stock during any
three consecutive calendar year period, which number of shares is
subject to adjustment as hereinafter provided in Article XIX
VIII. DURATION AND TERM OF PLAN
Subject to the other provisions of the 1997 Plan, all Options
shall be granted, if at all, within ten (10) years from the date
the 1997 Plan is adopted by the Board. Termination of the 1997
Plan either by reason of this Article or Board resolution under
Article XX shall not affect any Options previously granted and
such Options shall remain in effect until they have been fully
exercised, are surrendered, or expire by their terms.
IX. EXERCISE PRICE
The price to be paid on exercise for each share of Capital Stock
purchasable under any Option granted under the 1997 Plan
shall not be less than the Fair Market Value thereof at the time
the Option is granted. In determining such Fair Market Value the
Board shall comply with such rules and regulations as may be
promulgated by the Internal Revenue Service for such
determinations concerning "incentive stock options," as defined in
Section 422 of the Code.
X. TERMS AND CONDITIONS OF THE OPTIONS
Subject to the provisions of the 1997 Plan, the Board shall
determine for each Option (which need not be identical) the
number of shares of Capital Stock that may be purchased under
the Option, which number shall also be subject to adjustment as
hereinafter provided in Article XIX, the option exercise price of
the Option, the timing and terms of exercisability and vesting of
the Option, whether the Option is to be treated as an Incentive
Option or as a Non-Qualifying Option and all other terms
and conditions of the Option not inconsistent with the 1997
Plan. Subject to the limitations of the 1997 Plan, as amended or
modified from time to time, all Options granted under the 1997
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Plan shall be evidenced by written stock option agreements
specifying the number of shares of Capital Stock covered thereby,
in such a form as the Board shall from time to time establish. The
Board may condition the grant of any Option on execution by the
Grantee of such written documents as it judges appropriate to
evidence the Grantee's acceptance of such written stock option
agreements, limits and conditions.
XI. SPECIAL RULES FOR INCENTIVE OPTIONS
Notwithstanding any other provision of the 1997 Plan, in the case
of any Incentive Option granted under the 1997 Plan:
A. The aggregate Fair Market Value (determined as of the time
the Option is granted) of the shares of Capital Stock with
respect to which Incentive Options (or other options
qualifying as "incentive stock options" under Section 422
of the Code) are exercisable for the first time by the
Grantee during each calendar year (under all option plans
of the Company and its Subsidiary Companies) shall not
exceed $100,000 as computed in accordance with Section 422
of the Code and the regulations thereunder.
B. If any Grantee disposes of shares of Capital Stock acquired
on the exercise of an Incentive Option by sale or exchange
either:
1. within two years after the date of the grant of the
Option under which such shares were acquired, or
2. within one year after the transfer of the shares so
acquired,
such Option will no longer qualify for the favorable tax
treatment provided to an "incentive stock option" (within the
meaning of Section 422 of the Code). In such event, the
Grantee shall promptly notify the Company of such disposition
and of the amount realized and of the adjusted basis in such
shares.
XII. EXERCISABILITY AND DURATION OF OPTIONS
A. Exercisability. Unless an Option provides otherwise, each
Option granted under the 1997 Plan shall be exercisable
in its entirety immediately on the date of grant.
B. Duration of Exercisability. Unless an Option provides
otherwise, the unexercised portion of any Option granted
under the 1997 Plan shall automatically and without notice
terminate and become null and void on the earliest to occur
of the following:
1. Ten years from the date of grant or the expiration of
such shorter period of time as the Option may provide;
2. a. In the case of an Incentive Option, three months
following the date of termination of the
Grantee's employment with the Company, or twelve
months in the case of:
(i) an employee who is disabled (within the
meaning of Section 422(c)(6) of the Code) on
the date of termination, or
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(ii) an employee whose death occurs during his or
her employment with the Company.
b. Unless an Option provides otherwise, Incentive
Options not exercised prior to the dates specified
in Article XII(B)(2)(a) remain exercisable until the
date determined in accordance with Article
XII(B)(1), but will not qualify for the favorable
tax treatment provided for incentive stock options
within the meaning of Section 422 of the Code.
XIII. NON-EMPLOYEE DIRECTOR OPTIONS
Notwithstanding any of the other provisions of the 1997 Plan
to the contrary, the provisions of this Article XIII shall
apply only to grants of Options to Non-Employee Directors.
Except as set forth in this Article XIII, the other provisions
of the 1997 Plan shall apply to grants of Options to Non-Employee
Directors to the extent not inconsistent with this Article.
For purposes of interpreting the applicable provisions of the
1997 Plan, a Non-Employee Director's service as a member of the
Board shall be deemed to be employment with the Company or its
Subsidiary Companies.
A. General. Non-Employee Directors shall receive
Non-Qualifying Options in accordance with this Article and
may not be granted Incentive Options under the 1997 Plan.
The purchase price per share of Capital Stock purchasable
under Options granted to Non-Employee Directors shall be the
Fair Market Value of a share of Capital Stock on the date of
grant. No Option agreement with any Non-Employee Director
may alter the provisions of this Article and no Option
granted to a Non-Employee Director may be subject to a
discretionary acceleration of exercisability.
B. Initial Grants. As of August 1, 1997 and August 1, 2002,
each Non-Employee Director as of such dates shall be
granted automatically, without action by the Board, an
Option to purchase 10,000 shares of Capital Stock.
C. Grants to New Non-Employee Directors. Each Non-Employee
Director who, after August 1, 1997, is elected to the
Board for the first time by the stockholders of the
Company at any special or annual meeting of stockholders
or, if earlier, is appointed to the Board, will, at the
time such Non-Employee Director is elected or appointed
(as the case may be) and duly qualified, be granted as of
said date automatically, without action by the Committee, an
Option to purchase 10,000 shares of Capital Stock.
D. Vesting. Each Option shall be exercisable as to 20% of the
shares of Capital Stock covered by the Option as of the
date the Option is granted, and an additional 20% of
the shares of Capital Stock covered by the Option on each
of the first four anniversaries of the date the Option is
granted; provided, however, that upon a Non-Employee
Director's cessation of service by reason of retirement,
such Non-Employee Director's Option shall be 100% vested
and immediately exercisable. To the extent not exercised,
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installments shall accumulate and be exercisable, in whole
or in part, at any time after becoming exercisable, but not
later than the date the Option expires.
E. Duration. Subject to the immediately following sentence,
each Option granted to a Non-Employee Director shall be for
a term of 10 years. Upon the cessation of a Non-Employee
Director's membership on the Board for any reason other than
retirement, Options granted to such Non-Employee Director not
then exercisable shall expire, and Options to the extent then
exercisable may be exercised until the expiration of the
respective terms of such Options. The Board may not provide
for an extended exercise period beyond the periods set
forth in this Article XIII(E).
XIV. NON-ASSIGNABILITY
Options shall not be transferable by a Grantee except by transfers
pursuant to domestic relations orders, by will, or by the laws of
descent and distribution, and during a Grantee's lifetime shall be
exercisable only by such Grantee. In the case of transfers
pursuant to domestic relations orders, due to the non-employment
by the Company of such spouse, both ISO and NQ Options covered by
such orders will not be surrendered to the Company, but will be
amended by such orders and that the spouse's portion of such
Options, which are covered by such Orders, will be treated as NQ
Options, but will not be available for the withholding of shares
for the payment of federal and state taxes as pursuant to Article
XV. Options that are transferred by will or by the laws of
descent and distribution may be exercised after the Grantee's
death only by his or her executors or administrators, or by the
person who acquired the right to exercise such Options by bequest
or inheritance or by reason of the death of the Grantee.
XV. PAYMENT FOR SHARES
A. Payment in full of the purchase price for the shares
purchased pursuant to the exercise of any Option shall be
made, in accordance with Article XVI, upon exercise of
the Option. All shares sold under the 1997 Plan shall be
fully paid and non-assessable.
B. The terms of any Option granted under the 1997 Plan
(other than Options granted to Non-Employee Directors
pursuant to Article XIII hereof), may, but need not,
include an arrangement whereby the Grantee may, upon
exercise of an Option, borrow all or an established part of
the purchase price from the Company on such terms described
in the Option agreement, consistent with applicable law or
regulations, as the Board shall from time to time determine.
The principal amount of any such loan shall bear interest at
a rate such that there is neither a necessity to avoid
"imputed interest" under section 483 of the Code, nor
"foregone interest" under Section 7872 of the Code.
C. The terms of the Options granted to Non-Employee Directors
pursuant to Article XIII hereof shall permit Non-Employee
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Directors, upon exercise of their Options, to pay the
purchase price by tender of shares of Capital Stock of the
Company owned by such Non-Employee Directors. The terms of
any Option granted under the 1997 Plan to any other Grantee,
may, but need not, permit the Grantee, under procedures
established by the Committee, upon exercise of an Option, to
pay the purchase price by tender of shares of Capital Stock
of the Company owned by the Grantee. In either case, the
current Fair Market Value of the shares tendered as of the
date of the Company's receipt of notice of exercise, given
pursuant to Article XVI(A), shall be treated as payment of
the corresponding amount of the purchase price of the shares
being acquired under the Option.
D. Subject to such rules as may be adopted by the Committee,
a Grantee (other than a Non-Employee Director) who will
incur federal, state or local income tax liability as a
result of the exercise of a Non-Qualifying Option may, at
his or her option, elect to have the Company withhold, or
to transfer to the Company, on the date that the amount
of such tax liability is determined, shares of Capital
Stock of the Company equal in market value to an amount not
exceeding the maximum amount payable under federal,
state and local marginal tax rates applicable to the Grantee
and the particular Option exercise transaction. The election
must be made on or before the date that the amount of tax
to be withheld is determined. The value of the shares of
Capital Stock to be withheld by, or transferred to, the
Company shall be valued at Fair Market Value as of the date
that the amount of the tax is determined.
XVI. MANNER OF EXERCISE
A. To exercise an Option granted under the 1997 Plan as to all
or part of the shares covered thereby, a Grantee (or after
his or her death, the person authorized to exercise the
Option, as provided in Article XII) if unable to do so in
person, shall deliver written notice of such exercise to the
Company official designated by the Board (or, in the absence
of such designation, to the Secretary of the Company). The
notice shall identify the Option being exercised and
specify the number of shares then being purchased. The
date of receipt of such notice shall be deemed the date of
exercise.
B. The notice of exercise shall be accompanied by payment of
the amount of the aggregate purchase price of the shares
being purchased under the Option being exercised in one of
the following forms:
1. A check, wire transfer, or money order payable to the
order of the Company for such amount;
2. If the terms of the Option being exercised expressly
permit borrowing from the Company for exercise of the
Option, the Grantee's note for such amount, such note
to include such terms, including terms related to time
of payment and interest, and to be in such form, as is
prescribed by the Board, consistent with the terms
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of the Option; or
3. If the terms of the Option being exercised expressly
permit payment with shares of Capital Stock for
exercise of the Option, tender of shares of Capital
Stock of the Company with Fair Market Value on the
date of exercise equal to or exceeding such amount,
such tender to be made in conformity with the
applicable terms of the Option and with such
requirements as the Board may prescribe. In the case of
an exercise of a Non-Qualifying Option, the tender of
such shares may be performed by:
(a) The actual delivery of Capital Stock in certificate
form, or in the case of the grantee being a
registered shareholder of record holding his or her
shares in certificate form or deposited in the
Dividend Reinvestment or Stock Purchase plans of
the Company,
(b) the execution of a written statement of
such ownership of said shares; whereby the exercise
of the Option may be performed by a net issue
transaction of the net new shares from the Option
into the Capital Stock Transfer System of the
Company.
C. The Board shall have full authority to direct the proper
officers of the Company to issue or transfer shares of
Capital Stock pursuant to the exercise of an Option
granted under the 1997 Plan. As soon as practicable after
its receipt of such notice and payment, the Company shall
cause the shares so purchased to be issued to the Grantee or
to the person authorized to exercise the Option after his or
her death, as the case may be, and shall promptly thereafter
cause one or more certificates for such shares to be
delivered to such Grantee or other person. The holding
periods referred to in Article XI(B)(1) and (2) shall be
measured from the date of issuance.
XVII. VOTING AND DIVIDEND RIGHTS
No Grantee of any Option shall have any voting or dividend
rights or any other rights of a stockholder in respect of any
shares of Capital Stock covered by an Option prior to the time
that his or her name is recorded on the Company's stockholder
ledger as the holder of record of such shares acquired pursuant
to an exercise of an Option.
XVIII. CONDITIONS ON GRANTEE'S SALE OF SHARES
A. Unless the Company has filed an effective Registration
Statement, pursuant to the Securities Act of 1933, covering
the shares offered under the 1997 Plan, each Grantee
purchasing shares shall be required to represent to the
Company at that time that he or she is acquiring such shares
for investment purposes and not with a view to their sale or
distribution, and each certificate for such shares shall have
printed or stamped thereon appropriate language, as
determined by the Board, stating such restriction.
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B. The Board may in its discretion require the Grantee, on
any exercise of an Option granted hereunder or any portion
thereof and as a condition to the Company's obligation
to accept the notice of exercise and to deliver
certificates representing the shares subject to exercise,
to take such action as is, in its sole judgment, necessary
or prudent to insure that issuance of the shares of Capital
Stock pursuant to exercise of the Option will be in
compliance with applicable law.
XIX. EFFECT OF CHANGE IN CAPITAL STOCK
The aggregate number of shares of Capital Stock available for
Option under the 1997 Plan, the shares subject to any Option,
the maximum number of shares subject to Options granted to any
individual during any three consecutive year period pursuent to
Article VII, and the price per share, shall all be proportionately
adjusted for any increase or decrease in the number of shares of
Capital Stock issued subsequent to the effective date of the 1997
Plan or the effective date of any shareholder approved increase in
the number of shares available for issuance under Options granted
under the 1997 Plan, in either case, resulting from a subdivision
or consolidation of shares or any other capital adjustment, the
payment of a stock dividend or other increases or decreases in
such shares effected without receipt of consideration by the
Company. A change in the number of shares, and/or a change in the
price per share, subject to an Option shall also be made in order
to reflect any reduction in the Fair Market Value of shares
subject to an Option in any case in which (a) such reduction
arises on account of a "corporate transaction" as defined in
Treasury Regulations Section 1.425-1(a)(1)(ii), (b) the excess of
the aggregate Fair Market Value (determined immediately after such
corporate transaction) of the shares subject to the Option
immediately after such change over the aggregate new Option
exercise price of such shares is not more than the excess of the
aggregate Fair Market Value of the shares subject to the Option
immediately before the transaction over the aggregate former
Option price of such shares, (c) the ratio of the Option exercise
price to the Fair Market Value of the stock subject to the Option
immediately after the corporate transaction is not more favorable
to the Grantee on a share-by-share comparison than the ratio of
the old Option exercise price to the Fair Market Value of the
stock subject to the Option immediately before such transaction,
(d) the Option after such change does not give the Grantee
additional benefits that he or she did not have before such
change, and (e) in the case of an Incentive Option, such change
does not constitute a modification of the Option within the
meaning of Section 424 of the Code. If the Company or a
Subsidiary Company issues or assumes a stock option in a
transaction to which Section 424(a) of the Code applies, the per
share Option price, the date or dates of exercise and the other
provisions of such Option shall be fixed by the Board so as to
meet the requirements of that section.
XX. AMENDMENT AND DISCONTINUANCE
The Board or the Compensation Committee established by the Board
or any subsequent Committee appointed pursuant to Article V(A)
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hereof, by resolution, may terminate, suspend, amend or revise the
1997 Plan with respect to any shares of Capital Stock, as to which
Options have not been granted; provided, however, that, no
amendment shall be effective unless approved by the stockholders
of the Company where stockholder approval of such amendment is
required to comply with any law, regulation or stock exchange
rule. The Board or Committee may not, without the consent of the
Grantee of an Option, alter or impair rights under any Option
previously granted under the 1997 Plan except as expressly
authorized herein.
XXI. EMPLOYMENT RIGHTS
Neither the 1997 Plan, nor the grant of any Options hereunder nor
any action taken by the Board or any Committee in connection with
the 1997 Plan, shall create any right on the part of any person to
continue in the employ of (or as a director of) the Company or a
Subsidiary Company, or affect the right of the Company to
terminate a Grantee's employment (or directorship) at any time,
subject to the provisions of law or any contract of employment
between the Company and the Grantee.
XXII. GOVERNING LAW
A. All references to a provision of a statute or regulation
incorporate subsequent amendments and apply also to
corresponding successor provisions, however denominated.
B. The 1997 Plan and all Options granted under the 1997 Plan
shall be governed by, and construed in accordance with, the
laws of the State of Georgia, except to the extent that
federal law is controlling, and provided that the terms of
the 1997 Plan and all Options granted under it, shall be
construed so as to qualify for exemption under Rule
16b-3 and, in the case of any Incentive Options, for
treatment as an incentive stock option under Section 422 of
the Code.
XXIII. Corporate Reorganization
In the event of (a) a liquidation of the Company, (b) a
reorganization, merger, or consolidation of the Company as a
result of which the outstanding Capital Stock of the Company is
changed into or exchanged for cash or property or securities not
of the Company's issue, (c) a sale, exchange, or transfer of all
or substantially all of the property of the Company, or one of its
business units, to another person or corporation, or (d) the
direct or indirect acquisition of all or substantially all of the
outstanding voting shares of the Company by another person or
corporation, the Board may, in its sole discretion, arrange with
the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "Acquiring
Corporation"), for the Acquiring Corporation to assume the
Company's rights and obligations under outstanding Options or
substitute options for the Acquiring Corporation's stock for such
outstanding Options. In the event the Acquiring Corporation
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elects not to assume the Company's rights and obligations under or
substitute for such outstanding Options, the Board may, in its
sole discretion, provide that any unexercised portion of the
outstanding Options shall be fully exercisable as of a date prior
to such corporate transaction, as the Board so determines. Any
Options which are neither assumed or substituted for by the
Acquiring Corporation in connection with the corporate transaction
nor exercised as of the date of the corporate transaction shall
terminate and cease to be outstanding effective as of the date of
the consummation of the corporate transaction.
XXIV. EFFECTIVE DATE OF THE PLAN
The 1997 Plan will become effective on February 11, 1997,
the date of adoption by the Board of Directors, subject,
however, to the approval by the Company's shareholders
within twelve (12) months thereafter, such approval to be
manifested by a vote sufficient to satisfy the federal tax
requirements then in effect related to shareholder approval
of stock option plans under the rules for incentive stock
options and any stock exchange requirements, respectively.
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APPENDIX C
AFLAC INCORPORATED
PROXY
Worldwide Headquarters
1932 Wynnton Road, Columbus, Georgia 31999
__________________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul S. Amos, Daniel P. Amos and Joey M.
Loudermilk as Proxies or any one of them, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of AFLAC Incorporated held
of record by the undersigned on February 25, 1997, at the Annual Meeting of
the Shareholders to be held on Monday, May 5, 1997, at 10:00 a.m., or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS
The following proposals are being submitted to the Shareholders:
1. Election of seventeen Directors of the Company.
To vote your Shares for ALL Director nominees, mark the "For" box. To
withhold voting for all nominees, mark the "Withheld" box. If you do
not wish your Shares voted "For" a particular nominee, mark the
"exceptions" box.
*EXCEPTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW.
For Withheld Exceptions*
_____ _____ _____
1. Paul S. Amos 7. Joe Frank Harris 13. E. Stephen Purdom
2. Daniel P. Amos 8. Elizabeth J. Hudson 14. Barbara K. Rimer
3. J. Shelby Amos, II 9. Kenneth S. Janke, Sr. 15. Henry C. Schwob
4. Michael H. Armacost 10. Charles B. Knapp 16. J. Kyle Spencer
5. M. Delmar Edwards, M.D. 11. Hisao Kobayashi 17. Glenn Vaughn, Jr.
6. George W. Ford, Jr. 12. Yoshiki Otake
2. Amendment of Article IV of the Company's For Against Abstain
Articles of Incorporation, to increase
the Company's authorized shares of
Common Stock from 175,000,000 shares
to 400,000,000 shares. _____ _____ _____
3. Adoption of the AFLAC Incorporated 1997 For Against Abstain
Stock Option Plan. _____ _____ _____
4. Ratification of appointment of KPMG Peat For Against Abstain
Marwick LLP as independent auditors. _____ _____ _____
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1, 2, 3, AND 4.
(PLACE LABEL HERE)
Sign here as name(s) appears on account:
X ___________________________________________
X ___________________________________________
Date _________________________________, 1997
Complete the proxy, Please sign exactly as name appears on account.
turn the proxy over, When shares are held by joint tenants, both
read description of must sign. When signing as attorney, executor,
voting rights and administrator, trustee or guardian, please give
complete, sign and full title as such. If a corporation, please
date the affidavit sign in full corporate name by President or
if applicable. other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
DESCRIPTION OF VOTING RIGHTS
In accordance with the Company's Articles of Incorporation, shares of
Common Stock are entitled to one vote per share until they have been held by
the same beneficial owner for a continuous period of greater than 48 months
prior to the record date of the meeting, at which time they become entitled
to ten votes per share. Any transferee of a share of Common Stock where
such share was transferred to the transferee by gift, devise or bequest or
otherwise through the laws of inheritance, descent or distribution from the
estate of the transferor or by distribution to a beneficiary of shares held
in trust for such beneficiary, is deemed to be the same beneficial owner as
the transferor. Shares acquired as a direct result of a stock split, stock
dividend or other distribution with respect to existing shares ("dividend
shares") are deemed to have been acquired and held continuously from the
date on which the shares with regard to which the dividend shares were
issued were acquired. Shares of Common Stock acquired pursuant to the
exercise of a stock option are deemed to have been acquired on the date the
option was granted.
Shares of Common Stock held in "street" or "nominee" name are presumed
to have been held for less than 48 months and are entitled to one vote per
share UNLESS this presumption is rebutted by providing evidence to the
contrary to the Board of Directors of the Company. SHAREHOLDERS DESIRING TO
REBUT THIS PRESUMPTION SHOULD COMPLETE AND EXECUTE THE AFFIDAVIT BELOW. THE
BOARD OF DIRECTORS RESERVES THE RIGHT TO REQUIRE EVIDENCE TO SUPPORT THIS
AFFIDAVIT.
AFFIDAVIT
Under the penalties of perjury, I do solemnly swear that I am entitled to
the number of votes set forth below because
____________________________________________________________________________
____________________________________________________________________________
I agree to provide evidence to _____ Shares @ 1 Vote/Share = _____ Votes
support this statement at the _____ Shares @ 10 Votes/Share = _____ Votes
request of the Company. Total = _____ Votes
Sign here X ___________________________
X ___________________________ Date _________________, 1997
<PAGE>
AFLAC INCORPORATED
PROXY
Worldwide Headquarters
1932 Wynnton Road, Columbus, Georgia 31999
__________________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul S. Amos, Daniel P. Amos and Joey M.
Loudermilk as Proxies or any one of them, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of AFLAC Incorporated held
of record by the undersigned on February 25, 1997, at the Annual Meeting of
the Shareholders to be held on Monday, May 5, 1997, at 10:00 a.m., or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS
The following proposals are being submitted to the Shareholders:
1. Election of seventeen Directors of the Company.
To vote your Shares for ALL Director nominees, mark the "For" box. To
withhold voting for all nominees, mark the "Withheld" box. If you do
not wish your Shares voted "For" a particular nominee, mark the
"exceptions" box.
*EXCEPTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW.
For Withheld Exceptions*
_____ _____ _____
1. Paul S. Amos 7. Joe Frank Harris 13. E. Stephen Purdom
2. Daniel P. Amos 8. Elizabeth J. Hudson 14. Barbara K. Rimer
3. J. Shelby Amos, II 9. Kenneth S. Janke, Sr. 15. Henry C. Schwob
4. Michael H. Armacost 10. Charles B. Knapp 16. J. Kyle Spencer
5. M. Delmar Edwards, M.D. 11. Hisao Kobayashi 17. Glenn Vaughn, Jr.
6. George W. Ford, Jr. 12. Yoshiki Otake
2. Amendment of Article IV of the Company's For Against Abstain
Articles of Incorporation, to increase
the Company's authorized shares of
Common Stock from 175,000,000 shares
to 400,000,000 shares. _____ _____ _____
3. Adoption of the AFLAC Incorporated 1997 For Against Abstain
Stock Option Plan. _____ _____ _____
4. Ratification of appointment of KPMG Peat For Against Abstain
Marwick LLP as independent auditors. _____ _____ _____
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1, 2, 3, AND 4.
<PAGE>
ACCT.# PROXY # TOTAL SHARES
According to the records Sign here as name(s) appears on account:
of the Company you are X ____________________________________________
entitled to the following X ____________________________________________
number of votes: Date _________________________________, 1997
Please sign exactly as name appears on account.
VOTING RIGHTS When shares are held by joint tenants, both must
sign. When signing as attorney, executor, admin-
istrator, trustee or guardian, please give full
________________ title as such. If a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.
If you do not agree with the voting rights,
check here ____ and complete, sign and date the
reverse side.
DESCRIPTION OF VOTING RIGHTS
In accordance with the Company's Articles of Incorporation, shares of
Common Stock are entitled to one vote per share until they have been held by
the same beneficial owner for a continuous period of greater than 48 months
prior to the record date of the meeting, at which time they become entitled
to ten votes per share. Any transferee of a share of Common Stock where
such share was transferred to the transferee by gift, devise or bequest or
otherwise through the laws of inheritance, descent or distribution from the
estate of the transferor or by distribution to a beneficiary of shares held
in trust for such beneficiary, is deemed to be the same beneficial owner as
the transferor. Shares acquired as a direct result of a stock split, stock
dividend or other distribution with respect to existing shares ("dividend
shares") are deemed to have been acquired and held continuously from the
date on which the shares with regard to which the dividend shares were
issued were acquired. Shares of Common Stock acquired pursuant to the
exercise of a stock option are deemed to have been acquired on the date the
option was granted.
Shares of Common Stock held in "street" or "nominee" name are presumed
to have been held for less than 48 months and are entitled to one vote per
share UNLESS this presumption is rebutted by providing evidence to the
contrary to the Board of Directors of the Company. SHAREHOLDERS DESIRING TO
REBUT THIS PRESUMPTION SHOULD COMPLETE AND EXECUTE THE AFFIDAVIT BELOW. THE
BOARD OF DIRECTORS RESERVES THE RIGHT TO REQUIRE EVIDENCE TO SUPPORT THIS
AFFIDAVIT.
ONLY IF YOU DO NOT AGREE WITH THE VOTING RIGHTS shown on the front of
this Proxy should you complete the following:
AFFIDAVIT
Under the penalties of perjury, I do solemnly swear that I am entitled to
the number of votes set forth below because
____________________________________________________________________________
____________________________________________________________________________
I agree to provide evidence to _____ Shares @ 1 Vote/Share = _____ Votes
support this statement at the _____ Shares @ 10 Votes/Share = _____ Votes
request of the Company. Total = _____ Votes
Sign here X ___________________________
X ___________________________ Date _________________, 1997
5
