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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 4, 1998
The Annual Meeting of Shareholders of AFLAC Incorporated (the
"Company") will be held on Monday, May 4, 1998, 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 the ratification of the appointment of KPMG
Peat Marwick LLP as independent auditors of the Company for the year ending
December 31, 1998; and
3. 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, 1997, are enclosed.
The record date for the determination of shareholders entitled to vote at
the meeting is February 24, 1998, 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 9, 1998 Secretary
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AFLAC INCORPORATED
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, MAY 4, 1998
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 4, 1998, 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 13, 1998.
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 Georgeson & Co., Inc. to assist in the
solicitation of proxies for a fee of $10,000, 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
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
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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
24, 1998, will be entitled to vote at the meeting. At that date, the number
of outstanding shares of Common Stock entitled to vote was 133,395,311.
According to the Company's records, this represents the following voting
rights:
108,066,354 Shares @ 1 Vote Per Share = 108,066,354 Votes
25,328,957 Shares @ 10 Votes Per Share = 253,289,570 Votes
----------- -----------
133,395,311 Shares Total 361,355,924 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
1,333,953,110. However, for the purposes of this Proxy Statement, it is
assumed that the total votes available to be cast at the meeting will be
361,355,924.
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, votes withheld will be
disregarded and 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
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.
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No person, as of February 24, 1998, 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 Capital* 1 Vote Per Share 17,393,231 17,393,231 13.0 4.8
Oppenheimer Tower
World Financial Center
New York, NY 10281
Daniel P. Amos** 10 Votes Per Share 2,592,920 25,929,200
1932 Wynnton Road 1 Vote Per Share 135,640 135,640
Columbus, GA 31999 --------- ----------
2,728,560 26,064,840 2.0 7.1
(*) Based on information provided by Oppenheimer Capital, a Delaware
general partnership. Includes shares held by certain investment advisory
clients and discretionary accounts of Oppenheimer Capital.
(**) Includes options to purchase 940,113 shares (and 8,216,136
available votes) which are exercisable within 60 days.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 24, 1998, 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 in "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 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.
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Common Stock Beneficially Owned and
Approximate Percentage of Class
as of February 24, 1998
Percent Percent
Name Shares (1) of Shares Votes(1) of Votes
- ---- --------- --------- ------- ---------
Joseph P. Kuechenmeister 26,011 * 120,232 *
Kriss Cloninger, III 214,768 .2 1,733,527 .5
All Directors and executive
officers as a group
(33 persons) 9,526,508 7.0 72,223,283 18.5
* Percentage not listed if less than .1%
(1) Includes options to purchase shares (and available votes), which are
exercisable within 60 days, for Joseph P. Kuechenmeister, 14,475
(54,750); Kriss Cloninger, III, 213,751 (1,732,510); and for all
Directors and executive officers as a group, 3,311,029 (28,649,890).
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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<TABLE>
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 24, OF OUT- RUARY 24, OF
FIRST 1998 STANDING 1998 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** 71 1956 867,256 .6 8,629,128 2.4
Daniel P. Amos Chief Executive Officer, the Company 46 1983 2,728,560 2.0 26,064,840 7.1
and AFLAC; President, the Company
and AFLAC; Director, CIT Group Inc.,
Livingston, NJ; Director, Georgia
Power Company, Atlanta, GA
J. Shelby Amos, II Alabama/West Florida State Sales 45 1983 354,523 .3 3,443,622 1.0
Coordinator, AFLAC
Michael H. Armacost President, The Brookings Institution, 60 1994 17,450 * 138,410 *
Washington D.C., 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. Retired Vice President and 71 1990 38,713 * 350,338 .1
Assistant to the Chairman,
Columbus Regional Healthcare
System, Inc., Columbus, GA;
Practicing Physician, Columbus, GA,
until July 1993; Retired Director,
First Union National Bank of Georgia,
Columbus, GA; Trustee, Columbus State
University, Columbus, GA; Trustee,
Morehouse School of Medicine,
Atlanta, GA
George W. Ford, Jr. Chairman of the Board, Progressive 74 1986 14,750 * 129,500 *
Funeral Home, Columbus, GA; Retired
Director, Columbus Bank & Trust
Company, Columbus, GA
<PAGE>
SHARES OF
COMMON STOCK VOTING
BENEFICIALLY RIGHTS
OWNED ON PERCENT ON FEB- PERCENT
YEAR FEBRUARY 24, OF OUT- RUARY 24, OF
FIRST 1998 STANDING 1998 AVAILABLE
NAME PRINCIPAL OCCUPATION (1) AGE ELECTED (2) (3) SHARES (2) VOTES
- ---- ------------------------ --- ------- ------------ -------- --------- --------
Joe Frank Harris Distinguished Executive Fellow, 62 1991 47,937 * 461,370 .1
Georgia State University, 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
Elizabeth J. Hudson Director, Spencer Stuart, New York, 48 1990 46,830 * 450,300 .1
NY, since January 1998; Senior Vice
President, Corporate Communications,
The Readers Digest Association, Inc.,
from May 1996 until December 1997;
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, 63 1989 45,694 * 321,639 .1
National Association of Investors
Corp., Madison Heights, MI; President
and Director, NAIC Growth Fund,
Madison Heights, MI
Charles B. Knapp President, Aspen Institute, 51 1990 46,625 * 448,250 .1
Washington, D.C., since July 1997;
President, The University of Georgia,
Athens, GA, until July 1997
Hisao Kobayashi Senior Adviser, The Dai-Ichi Kangyo 62 1994 1,892,000 1.4 1,892,000 .5
Bank Ltd., Tokyo, Japan; Chairman,
CIT Group Inc., Livingston, NJ;
Director, Nippon Light Metal Co.,
Ltd., Tokyo
Yoshiki Otake Chairman, AFLAC Japan, since January 58 1986 607,343 .5 5,202,064 1.4
1995; President, AFLAC Japan, until
December 1994; Vice Chairman, AFLAC
International, Inc.
<PAGE>
SHARES OF
COMMON STOCK VOTING
BENEFICIALLY RIGHTS
OWNED ON PERCENT ON FEB- PERCENT
YEAR FEBRUARY 24, OF OUT- RUARY 24, OF
FIRST 1998 STANDING 1998 AVAILABLE
NAME PRINCIPAL OCCUPATION (1) AGE ELECTED (2) (3) SHARES (2) VOTES
- ---- ------------------------ --- ------- ------------ -------- --------- ---------
E. Stephen Purdom Executive Vice President, AFLAC, 50 1987 227,496 .2 1,456,239 .4
since 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 and 49 1995 11,200 * 11,200 *
Population Sciences, National
Cancer Institute,. Bethesda,
MD, since December 1997; Director,
Cancer Control Research, Duke
Comprehensive Cancer Center,
Durham, NC, until December 1997
Henry C. Schwob Owner, Schwob Realty Company, 70 1965 394,637 .3 3,832,811 1.1
Columbus, GA; Director, First Union
National Bank of Georgia, Columbus, GA
J. Kyle Spencer President, Spencer Investment 71 1968 441,318 .3 4,394,280 1.2
Company, Columbus, GA; Retired
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, 68 1990 41,009 * 388,040 .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, 100,000 (1,000,000); Daniel P. Amos, 940,113 (8,216,136); J. Shelby Amos, II, 17,000 (152,000); Michael H.
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Armacost, 15,440 (136,400); M. Delmar Edwards, 27,000 (252,000); George W. Ford, Jr., 11,000 (92,000); Joe Frank
Harris, 45,125 (433,250); Elizabeth J. Hudson, 45,125 (433,250); Kenneth S. Janke, Sr., 17,000 (152,000);
Charles B. Knapp, 45,125 (433,250); Hisao Kobayashi, 17,000 (17,000); Yoshiki Otake, 407,383 (3,848,830);
E. Stephen Purdom, 192,016 (1,110,160); Barbara K. Rimer 11,000 (11,000); Henry C. Schwob, 17,000 (152,000);
J. Kyle Spencer, 17,000 (152,000); and Glenn Vaughn, Jr., 37,625 (358,250).
(3) All stock is owned solely and directly by the nominee except as follows:
Paul S. Amos, 107,418 shares owned by spouse; 10,486 shares owned by his minor grandchild with Mr. Amos as
custodian; 139,950 shares owned by trusts with Mr. Amos as trustee; and 6,250 shares owned by the Paul S. Amos
Education Foundation.
Daniel P. Amos, 61,251 shares owned by spouse; 683,423 shares owned by a partnership of which Mr. Amos is a
partner; 453,358 shares owned by trusts with Mr. Amos as trustee; 10,486 shares owned by his son as to which
shares Mr. Amos disclaims beneficial ownership; 172,054 shares owned by Daniel P. and Shannon Amos Foundation,
Inc.; and 6,250 shares owned by the Paul S. Amos Education Foundation. Does not include 4,984 shares owned by
a trust with his wife as trustee of which Mr. Amos disclaims beneficial ownership.
J. Shelby Amos, II, 118,644 shares owned by his minor children with Mr. Amos as trustee; and 11,518 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., 11,379 shares owned by a trust with Mr. Janke as trustee; 2,854 shares owned by a trust
with his wife as trustee; 10,500 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 211 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.
E. Stephen Purdom, 2,550 shares owned by minor child with Mr. Purdom as custodian.
Barbara K. Rimer, 200 shares owned jointly with spouse.
Henry C. Schwob, 28,408 shares owned by spouse; and 793 shares owned by his children with spouse as custodian.
J. Kyle Spencer, 48,469 shares owned by spouse.
Glenn Vaughn, Jr., 2,447 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.
</TABLE>
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Exchange Act, as amended, executive
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.
Messrs. William J. Bugg, Jr., Norman P. Foster and Joey M. Loudermilk
failed to file on a timely basis one Form 4 relating to one transaction each
in the Company's Common Stock. Mr. Daniel P. Amos failed to file on a timely
basis three Form 4 reports relating to four transactions in the Company's
Common Stock. Mr. Paul S. Amos failed to file on a timely basis two Form 4
reports relating to three transactions in the Company's Common Stock. Mr. E.
Stephen Purdom failed to file on a timely basis four Form 4 reports relating
to four transactions in the Company's Common Stock. With one exception all
of such transactions were gifts; all such transactions have now been
reported on Form 5 reports.
BOARD AND COMMITTEE MEETINGS AND DIRECTORS' COMPENSATION
During 1997, 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 except Mr. Michael J. Armacost who missed
three meetings.
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
Elizabeth J. Hudson Glenn Vaughn, Jr. J. Shelby Amos, II
Henry C. Schwob Kenneth S. Janke, Sr.
Charles B. Knapp
The Audit Committee, which met three times during 1997, 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.
<PAGE>
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 1997 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
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 annually $10,000 and $12,000,
respectively.
During 1997, 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") and the 1997 Stock Option Plan (the
"1997 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
vested 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. Pursuant to amendments to the 1985 Plan
approved by shareholders at the 1994 annual meeting, each new non-employee
director, including any advisory director, was granted an option to purchase
10,000 shares of Common Stock as of the earlier of the date such individual
was appointed to the Board or the date of the first annual meeting of
shareholders at which such Director was elected to the Board. In addition to
grants from the 1985 Plan, the 1997 Plan, approved by shareholders at the
1997 annual meeting, provides for two automatic grants of 10,000 shares each
as of August 1, 1997, and August 1, 2002, as well as the first-time grant to
newly appointed or elected non-employee directors. 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
<PAGE>
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 1997 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) ("Section 162 (m)") of the Internal Revenue Code
of 1986 as amended (the "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 Named Executive Officers, 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 all executive officers (as defined therein and including the
Named Executive Officers other than Mr. Joseph P. Kuechenmeister, who does
not participate in that Plan). Other compensation decisions for executive
officers are made by the Chief Executive Officer, Mr. Daniel P. Amos. The
Compensation Committee met a total of three 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
<PAGE>
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 1997, 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 1996
(as described below). With respect to Mr. Daniel P. Amos, no change in
salary was made, despite a 1997 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 asset and revenue size, total shareholder return,
return on assets, and return on equity, and found that the Company's total
return to shareholders for 1996 and 1995 were the highest of the group, and
that total return to shareholders in 1996 was more than double the average
of the comparator group. The Company also compared well on its return on
equity, with the second highest ranking among the group. The comparator
insurance companies were identified to the Compensation Committee by Hewitt
Associates as appropriate comparators 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 14), but
also includes a broader group of companies viewed by the Company as its most
direct competitors, as deemed appropriate for comparative compensation
purposes).
Although the average salary increase for Chief Executive Officer
("CEO") in the comparator group used in the Hewitt Report was 4.7% over the
prior year (with a high of 15%) and despite the superior comparative
performance of the Company, in light of limits on tax deductibility for
executive compensation under Section 162(m) and the desire to emphasize
stock compensation in lieu of cash compensation, the Compensation Committee
determined that a salary increase for Mr. Daniel P. Amos at this time was
not appropriate. Instead, the decision was made to maintain Mr. Daniel P.
Amos' salary and to increase the emphasis on long term equity compensation
in his overall compensation through the use of a stock option grant
(described below) as additional compensation. In 1997 the salary for Mr.
Paul S. Amos was increased by 6% based on the Company's comparative superior
performance in 1996 and projected 1997 salary increases of 4.1% for
insurance industry executives as compiled from the Hewitt Associates' annual
salary survey. Given that Mr. Paul S. Amos is relatively near 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 for 1997, cash
bonuses in an amount equal to 15% to 70% of salary, with respect to the
Company and its subsidiaries' executive officers generally, and 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
<PAGE>
performance goals for the Company and, generally speaking, personal goals.
None of the Named Executive Officers, however, have personal goals. In the
event that specified performance goals are achieved, the participating Named
Executive Officers, including Messrs. Daniel P. Amos and Paul S. Amos, may
earn up to 100% of salary as a cash bonus. 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, the
limitations on his salary under Section 162(m) which have resulted in an
increase in 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 1997, the Compensation Committee established Company
performance goals for executive officers, including the CEO, based on, among
other things, earnings per share (excluding effects of currency
fluctuations), premium income, increases in new sales, 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 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.
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, 1997, all of the Named
Executive Officers achieved bonus levels over the target bonus levels but
below maximum bonus levels, reflecting the fact that Company performance
levels generally exceeded target levels.
OTHER BENEFITS AND ACTIONS. The Company maintains (i) its 1985 and 1997
Plan pursuant to which officers and other employees are or have been 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
Companys nondiscriminatory 401(k) plan and a noncontributory defined benefit
pension plan covering substantially all employees.
In 1997, the Compensation Committee approved option grants exercisable
for a total of 238,775 shares of Common Stock under the 1997 Plan to
<PAGE>
officers of the Company, including a grant of options to Mr. Daniel P. Amos
exercisable for 95,000 shares at fair market value on the date of grant. As
noted above, this reflects the Compensation Committee's decision to shift a
greater portion of his compensation to long-term stock-based compensation
and as well as (a) the Company's comparative superior performance in 1996,
(b) the Compensation Committee's decision not to increase Mr. Daniel P.
Amos' salary in 1997, (c) the fact that compensation in the form of stock
options contains a higher level of risk to the executive (compared to a cash
salary increase) and (d) Mr. Daniel P. Amos' option exercises over the past
year, and the desire to maintain Mr. Daniel P. Amos' equity position in the
Company (given that the Company does not provide for an automatic reload of
options upon exercise). No grants under the 1997 Plan were made to other
Named Executive Officers in 1997 or any senior officers who were
participants in the Supplemental Plan.
In 1997, the Compensation Committee adopted certain technical
amendments to the Supplemental Plan, including amendments to alter the
definitions of "Pay" and "Final Pay" (see description of the Supplemental
Plan under "Retirement Plans for Key Executives" below), to modify the
benefit accrual occurring under the Supplement Plan and to allow the CEO to
modify the benefit accruals of plan participants other than board members as
long as the CEO does not participate in the plan (modification of benefit
accruals for board members may only occur with board approval). The changes
were made upon the recommendation of Hewitt Associates, with the first three
changes intended to make the Supplemental Plan consistent with similar
retirement plans at other large companies, while the addition of the
discretionary benefit accrual feature will provide the CEO with increased
compensation flexibility in dealing with personnel issues involving the
timing of retirement. The Compensation Committee also determined to add Mr.
Kenneth S. Janke Jr. as a participant to the Supplemental Plan in
recognition of the contributions of Mr. Janke to the Company.
With the exception of the foregoing, no decisions with respect to any
of the 1985 Plan, the 1997 Plan, the Supplemental Plan and the Retirement
Plan were made by the Compensation Committee in 1997.
In order to facilitate retirement planning by Mr. Paul S. Amos, on July
15, 1997, the Company entered into a deferred compensation agreement with
Mr. Paul S. Amos, as described below under "Employment Agreements and
Termination of Employment Arrangements."
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.
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 $1,000,000
deductibility cap imposed by Section 162(m). In this connection, the 1985
Plan, the 1997 Plan and the Management Incentive Plan presently conform to
the requirements of Section 162(m) so that stock option grants and
Management Incentive Plan awards are performance-based and not subject to
the deduction limitation contained in Section 162(m).
<PAGE>
Compensation Committee
Governor Joe Frank Harris - Chairman
M. Delmar Edwards
Glenn Vaughn, Jr.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
AWARDS PAYOUTS
NAME AND OTHER RESTRICTED SECURITIES
PRINCIPAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
($)(1) ($)(2) ($) (3) ($) (#) ($) ($)(4)
- ------------------ ---- --------- ----------- ------------ ---------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel P. Amos 1997 1,043,400 995,000 84,159 -0- 95,000 -0- 6,316
President and CEO 1996 1,056,963 1,044,216 -0- -0- 300,000 -0- 6,131
1995 1,026,210 757,631 -0- -0- -0- -0- 5,456
Paul S. Amos 1997 1,216,981 1,157,039 -0- -0- -0- -0- 22,879
Chairman 1996 1,159,841 l,135,765 -0- -0- -0- -0- 24,804
1995 1,095,984 828,709 -0- -0- -0- -0- 15,840
Joseph P. Kuechenmeister 1997 262,420 773,744 -0- -0- -0- -0- 9,650
Sr. Vice President, 1996 251,575 347,000 -0- -0- 15,001 -0- 6,772
Director of Marketing 1995 225,000 314,876 -0- -0- -0- -0- 6,044
Yoshiki Otake 1997 683,328 276,341 -0- -0- -0- -0- 23,741
Chairman, 1996 720,149 370,938 -0- -0- 37,500 -0- 26,312
AFLAC Japan 1995 793,408 291,471 -0- -0- -0- -0- 29,936
Kriss Cloninger, III 1997 430,719 475,000 -0- -0- -0- -0- 7,364
Exec. Vice President 1996 406,887 410,200 -0- -0- 67,501 -0- 6,066
and CFO 1995 377,054 208,534 -0- -0- -0- -0- 6,066
(1) Includes $551,038 deferred salary in 1997 for Mr. Paul S. Amos.
(2) Includes for all Named Executive Officers other than Mr. Joseph P. Kuechenmeister cash bonuses paid in 1996, 1997
and 1998 under the Management Incentive Plan and other cash bonus payments. Includes as to Mr. Joseph P.
Kuechenmeister Marketing Bonus for services rendered during 1995, 1996 and 1997. Includes $1,140,079 deferred
bonus in 1997 for Mr. Paul S. Amos.
(3) Includes medical expenses of $7,569, tax services of $31,000, aircraft expenses of $19,273 and consulting services
of $26,317 for Mr. Daniel P. Amos. No other Named Executive Officer received benefits in the aggregate in excess
of $50,000.
(4) Includes premiums paid in 1997 for term life insurance in the amount of $1,566, $18,129, $4,900, $23,741, and $2,614
for Mr. Daniel P. Amos, Mr. Paul S. Amos, Mr. Joseph P. Kuechenmeister, Mr. Yoshiki Otake, and Mr. Kriss Cloninger,
III, respectively, and Company-matching contributions to the 401(k) retirement plan in the amount of $4,750 for each
of Mr. Daniel P. Amos, Mr. Paul S. Amos, Mr. Joseph P. Kuechenmeister and Mr. Kriss Cloninger, III. Includes
premiums paid in 1996 for term life insurance in the amount of $1,631, $20,304, $2,272, $26,312 and $1,566 for Mr.
Daniel P. Amos, Mr. Paul S. Amos, Mr. Joseph P. Kuechenmeister, Mr. Yoshiki Otake, and Mr. Kriss Cloninger, III,
respectively, and Company-matching contributions to the 401(k) retirement plan in the amount of $4,500 for each of
<PAGE>
Mr. Daniel P. Amos, Mr. Paul S. Amos, Mr. Joseph P. Kuechenmeister and Mr. Kriss Cloninger, III. Includes premiums
paid in 1995 for term life insurance in the amount of $956, $11,340, $1,544, $29,936 and $1,566, for Mr. Daniel P.
Amos, Mr. Paul S. Amos, Mr. Joseph P. Kuechenmeister, Mr. Yoshiki Otake, and Mr. Kriss Cloninger, III, 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, Mr. Joseph P. Kuechenmeister and Mr. Kriss Cloninger, III.
</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., Conseco, Inc., Jefferson-Pilot
Corp., Lincoln National Corp., Torchmark Corp., and UNUM Corp. The graph
assumes that the value of the investment in the Company's Common Stock and
each index was $100 at December 31, 1992, and that all dividends were
reinvested.
(Stock Performance graph inserted here.)
Performance Graph Index
DECEMBER 31
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
AFLAC INCORPORATED 100 105 119 164 244 295
DOW JONES 100 117 123 168 217 270
S&P LIFE 100 101 84 121 147 184
(All performance data provided by Research Data Group,Inc., San Francisco,
CA 94107)
<PAGE>
RETIREMENT PLANS FOR KEY EXECUTIVES
Participants in the Retirement Plan 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 24, 43 and 23 years,
respectively, of credited service.
RETIREMENT PLAN FOR SENIOR OFFICERS TABLE
YEARS OF SERVICE
($ in thousands)
COMPENSATION 20 25 30 35
------------ ---- ---- ---- ----
$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
2,750 1,650 1,650 1,650 1,650
3,000 1,800 1,800 1,800 1,800
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. 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. In 1992 the plan was amended to require 15 years of service in
order for a participant to be qualified under the plan, provided that this
requirement does not affect those individuals who were participating in the
plan prior to this amendment. In 1997, the Compensation Committee amended
the terms of the plan to alter the benefit formula in the plan and the
definition of "pay". The previous two-tiered benefit formula was 50% of
final pay for retirement at ages 55 though 64 and 65% of final pay at ages
65 and over. The new three-tiered benefit formula provides for a 40% benefit
<PAGE>
upon retirement between the ages of 55 to 59, a 50% benefit upon retirement
between the ages 60 to 64 and a 60% benefit upon retirement for ages 65 and
over. Additionally, rather than basing the benefit calculations on the
participant's highest annual base salary during the three-year period
proceeding termination of employment ("Final Pay"), the new benefit formula
computes benefits calculation on "Average Compensation." Under the terms of
the plan, all benefit calculations are subject to offset for amounts paid
under the Company's Defined Benefit Pension Plan.
Average Compensation is determined by using the average of annual
compensation for the three consecutive calendar years out of the ten
consecutive calendar years of employment which yields the highest average.
Average compensation is calculated using "Annual Compensation," which is
defined to include both base salary and bonuses paid in a calendar year.
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.
Mr. 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 $383,000.
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 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 participant (with joint and
<PAGE>
survivor options available at reduced rates). The maximum retirement benefit
is limited in accordance with section 415 of the Code to $125,000 for 1997.
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 $160,000 for 1997. 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
160,000 24,000 32,000 40,000 44,000 48,000
Mr. Daniel P. Amos, Mr. Joseph P. Kuechenmeister and Mr. Kriss
Cloninger, III have 24 years, 10 years and 6 years, respectively, of
credited service in the plan.
Mr. Otake has waived his rights to participate in the Company's
retirement or pension plans. See "Employment Agreements and Termination of
Employment Arrangements."
<TABLE>
OPTION GRANTS IN 1997
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(1)
________________________________________________________________________________ ________________________________
<CAPTION>
Number of Percent of IF STOCK IF STOCK
Securities Options AT AT
Underlying Granted to Exercise $99.51 $158.45
Options Employees of Base
Granted in 1997 Price Expiration
Name (#) ($/Sh) Date 5%($) 10%($)
- -------------- ----------- ---------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
STOCK APPRECIATION N/A N/A N/A N/A 5,125,000,000 12,987,000,000
FOR ALL SHAREHOLDERS (2)
Daniel P. Amos, CEO (3) 95,000 16.0 53.2500 8-12-07 3,181,421 8,062,345
(1) The assumed 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.
(2) For "Stock Appreciation For All Shareholders," the potential realizable value is calculated based on $61.09, the
average market price of a share of Common Stock on February 24, 1998, and the number of shares outstanding on
that date.
(3) Mr. Amos' option grant will vest in equal 1/3 amounts at each of the first three anniversaries of the option grant
date.
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION VALUES AS OF DECEMBER 31, 1997
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares 12-31-97(#) 12-31-97($)
Acquired Value
Name on Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel P. Amos, CEO 474,960 19,694,686 940,114 263,333 31,480,919 3,387,500
Paul S. Amos 76,160 1,733,608 148,841 -0- 4,769,119 -0-
Joseph P. Kuechenmeister 47,089 1,676,558 9,474 10,002 239,409 192,121
Yoshiki Otake -0- -0- 394,883 25,000 16,077,404 480,208
Kriss Cloninger, III -0- -0- 191,250 45,002 6,054,860 864,412
</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 which provided 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 Management Incentive Plan,
the Retirement Plan and the 1997 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 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).
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;
(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
<PAGE>
liquidation or sale of substantially all of the assets of the Company or
certain merger and consolidation transactions.
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.
Other material terms of Mr. Paul S. Amos' employment agreement 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.
On July 15, l997, the Company entered into a deferred compensation
agreement with Mr. Paul S. Amos. Pursuant to the agreement, Mr. Amos may
elect to defer up to 100% of his salary and annual bonus for each calendar
year commencing with 1998 (and up to 100% of salary and bonus from July 1,
1997 to December 31, 1997), such deferred amounts to be credited to an
account to be maintained by the Company. The Company has established a trust
to satisfy its obligations to pay such deferred amounts at the time elected
by Mr. Amos at the time of each deferral, but Mr. Amos will have no prior
claim to the assets of the trust over the general creditors of the Company
in the event of the insolvency of the Company. Deferred amounts credited to
Mr. Amos' account will receive interest annually at a rate equal to earnings
for the calendar year on investments made by the trust with amounts
contributed by the Company.
Payments of deferred amounts may occur in lump-sum or in annual
installments, or as otherwise determined by the Company and elected by Mr.
Amos at the time of the deferral. Lump-sum distributions may occur in
advance of the elected time of pay-out in the event of (i) medical hardship,
as determined by the Company (limited to the amount necessary to meet such
hardship), (ii) certain defined changes in control of ownership of the
Company (consisting of (a) the acquisition of 30% or more of the Company's
outstanding shares or voting power by a person, entity or group, (b)
approval by the Company's shareholders of a reorganization, merger or
consolidation where at least 50% of the share ownership of the Company
following such event is not held by persons who were shareholders of the
Company prior to such event or (c) the liquidation or dissolution of the
Company or the sale of all or substantially all of the Company's assets) or
(iii) the termination of employment of the CEO 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 $425,000, 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. In the
event that specified goals are achieved, he may earn up to 100% of base
salary as a cash bonus.
<PAGE>
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's employment agreement 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.
Mr. Kriss Cloninger, III is a participant in the Supplemental 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 actuarial equivalent of the annual
retirement benefit to which he would have been entitled had he remained in
the employ of the Company until (i) age 55 (in the case of a participant who
is not yet 55); (ii) age 60 (in the case of a participant who is at least
55, but not yet 60); or (iii) age 65 (in the case of a participant who is at
least 60, but not yet 65), as the case may be. 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 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 is entitled to receive compensation in 1998 of 83,002,500 yen and is
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 will
be considered for salary increases in the same manner and time as the senior
executive officers of AFLAC. Mr. Otake also participates 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
<PAGE>
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.
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
is 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.
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, 1997, 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, 1997 Indebtedness Interest 1998
- ----------------------------------------------------------------------------
Daniel P. Amos $2,000,000 Term Stock Note(2) 6.00% $2,000,000
Joey M. Loudermilk $ 36,346 Stock Option Note(3) 5.58% $ 36,218
$ 36,435 Stock Option Note(3) 5.47% $ 36,275
$ 19,503 Stock Option Note(3) 5.94% $ 19,437
Minoru Nakai $ 115,467 Stock Option Note(3) 5.54% $ -0-
Gary Stegman $ 32,407 Stock Option Note(3) 4.83% $ -0-
$ 99,978 Stock Option Note(3) 6.20% $ 92,615
$ 37,667 Stock Option Note(3) 6.65% $ 37,625
$ 84,750 Stock Option Note(3) 6.21% $ 84,702
$ 82,867 Stock Option Note(3) 6.16% $ 82,783
$ 265,079 Stock Option Note(3) 5.86% $ 265,067
(1) All of the named individuals were executive officers of the Company or
one of its subsidiaries during 1997.
(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.
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 1997, he earned renewal and first-year commissions of
<PAGE>
$786,593 (before expenses) on collected premiums of $24,485,019, and he
received $53,781 in 1998 in lieu of shares earned in 1997 under the AFLAC
Associates' Stock Bonus Plan.
In 1997, $234,817 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 $8,606,646 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. 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.
In connection with its audit of the Company's financial statements for
the year ended December 31, 1997, 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 1998 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
3. 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 1999 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 November 8, 1998.
<PAGE>
ANNUAL REPORT
The Company has mailed a copy of its Annual Report to each shareholder
entitled to vote at the 1998 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 9, 1998
<PAGE>
APPENDIX A PROXY
AFLAC INCORPORATED
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 24, 1998, at the Annual Meeting of
the Shareholders to be held on Monday, May 4, 1998, 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. Ratification of appointment of KPMG Peat For Against Abstain
Marwick LLP as independent auditors. _______ _______ _______
3. 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, AND 3.
<PAGE>
(PLACE LABEL HERE)
Sign here as name(s) appears on account:
X ___________________________________________
X ___________________________________________
Date _________________________________, 1998
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 _________________, 1998
<PAGE>
APPENDIX B PROXY
AFLAC INCORPORATED
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 24, 1998, at the Annual Meeting of
the Shareholders to be held on Monday, May 4, 1998, 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. Ratification of appointment of KPMG Peat For Against Abstain
Marwick LLP as independent auditors. _______ _______ _______
3. 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, AND 3.
<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 _________________________________, 1998
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 _________________, 1998
5
