<PAGE>
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 3, 1999
The Annual Meeting of Shareholders of AFLAC Incorporated (the
"Company") will be held on Monday, May 3, 1999, 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 adopt an Amended and Restated Management Incentive Plan;
3. To consider and act upon the ratification of the appointment of KPMG LLP
as independent auditors of the Company for the year ending December 31,
1999; and
4. 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, 1998, are enclosed.
The record date for the determination of shareholders entitled to vote
at the meeting is February 23, 1999, 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 11, 1999 Secretary
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AFLAC INCORPORATED
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, MAY 3, 1999
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 3, 1999, 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 17, 1999.
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 Corporate Investor Communications, Inc.
to assist in the solicitation of proxies for a fee of $8,500, 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
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
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<PAGE>
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
23, 1999, will be entitled to vote at the meeting. At that date, the number
of outstanding shares of Common Stock entitled to vote was 266,111,059.
According to the Company's records, this represents the following voting
rights:
219,695,360 Shares @ 1 Vote Per Share = 219,695,360 Votes
46,415,699 Shares @ 10 Votes Per Share = 464,156,990 Votes
----------- -----------
266,111,059 Shares Total 683,852,350 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
2,661,110,590. However, for the purposes of this Proxy Statement, it is
assumed that the total votes available to be cast at the meeting will be
683,852,350.
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. Broker-non-votes and abstentions are
counted as "shares present" at the meeting in determining whether a quorum
exists. Broker-non-votes, if any, have the effect of a vote to withhold
authority in connection with the election of directors while broker-non-
votes, if any, and abstentions have the effect of a vote against other
proposals at the meeting.
No person, as of February 23, 1999, 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:
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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 26,664,302 26,664,302 10.0 3.9
Oppenheimer Tower
World Financial Center
New York, NY 10281
FMR Corp.** 1 Vote Per Share 16,641,594 16,641,594 6.3 2.4
82 Devonshire Street
Boston, MA 02109
Daniel P. Amos*** 10 Votes Per Share 4,299,059 42,990,590
1932 Wynnton Road 1 Vote Per Share 625,666 625,666
Columbus, GA 31999 --------- ----------
4,924,725 43,616,256 1.8 6.3
(*) This information is derived from Schedule 13G, dated February 9,
1999, filed with the Securities and Exchange Commission by Oppenheimer
Capital, a Delaware general partnership. Includes shares held by certain
investment advisory clients and discretionary accounts of Oppenheimer
Capital.
(**) This information is derived from Schedule 13G, dated February 1,
1999, filed with the Securities and Exchange Commission by FMR Corp.
According to the Schedule 13G, FMR Corp. may be deemed to be controlled by
Edward C. Johnson 3d and Abigail P. Johnson and family members. Includes
shares beneficially owned by various subsidiaries of FMR Corp.
(***) Includes options to purchase 1,546,362 shares (and 9,832,626
available votes) which are exercisable within 60 days.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 23, 1999, the number of
shares and percentage of outstanding Common Stock beneficially owned by
certain 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 23, 1999
Percent Percent
Name Shares (1) of Shares Votes(1) of Votes
- ---- --------- --------- ------- ---------
Joseph P. Kuechenmeister 65,529 * 265,338 *
Kriss Cloninger, III 440,488 .2 2,794,006 .4
All Directors and executive
officers as a group
(32 persons) 15,744,773 5.8 126,848,680 17.4
* 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, 38,952
(119,502); Kriss Cloninger, III, 369,818 (2,108,168); and for all
Directors and executive officers as a group, 5,989,429 (44,714,485).
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 23, OF OUT- RUARY 23, OF
FIRST 1999 STANDING 1999 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** 72 1956 1,657,524 .6 16,481,610 2.4
Daniel P. Amos Chief Executive Officer, the Company 47 1983 4,924,725 1.8 43,616,256 6.3
and AFLAC; President, the Company
and AFLAC; Director, The CIT Group,
Inc., Livingston, NJ; Director,
Georgia Power Company, Atlanta, GA
J. Shelby Amos, II Alabama/West Florida State Sales 46 1983 709,158 .3 6,896,869 1.0
Coordinator, AFLAC
Michael H. Armacost President, The Brookings Institution, 61 1994 38,900 * 317,000 *
Washington D.C., since October 1995;
Professor, Asia/Pacific Research
Center, Stanford University, Stanford,
CA, from 1993 until September 1995;
Former U.S. Ambassador to Japan
M. Delmar Edwards, M.D. Retired Vice President and 72 1990 61,640 * 544,400 .1
Assistant to the Chairman, Columbus
Regional Healthcare System, Inc.,
Columbus, GA; Retired Director, First
Union National Bank of Georgia,
Columbus, GA; Trustee, Columbus State
University, Columbus, GA; Trustee,
Morehouse School of Medicine,
Atlanta, GA
Joe Frank Harris Distinguished Executive Fellow, 63 1991 99,874 * 926,740 .1
Georgia State University, Atlanta,
GA; Chairman of the Board, Harris
Georgia Corp., Cartersville, GA;
Director, Bankhead Enterprises, Inc.,
Atlanta, GA; Former Governor of the
State of Georgia
6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK VOTING
BENEFICIALLY RIGHTS
OWNED ON PERCENT ON FEB- PERCENT
YEAR FEBRUARY 23, OF OUT- RUARY 23, OF
FIRST 1999 STANDING 1999 AVAILABLE
NAME PRINCIPAL OCCUPATION (1) AGE ELECTED (2) (3) SHARES (2) VOTES
- ---- ------------------------ --- ------- ------------ -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Elizabeth J. Hudson Director, Spencer Stuart, New York, 49 1990 97,660 * 904,600 .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,
until May 1996
Kenneth S. Janke, Sr. President, Chief Executive Officer, 64 1989 95,622 * 653,900 .1
National Association of Investors
Corp., Madison Heights, MI; President
and Director, NAIC Growth Fund,
Madison Heights, MI
Charles B. Knapp President, Aspen Institute, 52 1990 97,250 * 900,500 .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 63 1994 1,538,000 .6 1,808,000 .3
Bank Ltd., Tokyo, Japan; Chairman, The
CIT Group, Inc., Livingston, NJ; Director,
Nippon Light Metal Co., Ltd., Tokyo
Yoshiki Otake Chairman, AFLAC Japan, since January 59 1986 993,569 .4 9,250,489 1.3
1995; President, AFLAC Japan, until
December 1994; Vice Chairman, AFLAC
International, Inc.
E. Stephen Purdom Executive Vice President, AFLAC, 51 1987 453,270 .2 2,942,688 .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
7
</TABLE>
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<TABLE>
<CAPTION<
SHARES OF
COMMON STOCK VOTING
BENEFICIALLY RIGHTS
OWNED ON PERCENT ON FEB- PERCENT
YEAR FEBRUARY 23, OF OUT- RUARY 23, OF
FIRST 1999 STANDING 1999 AVAILABLE
NAME PRINCIPAL OCCUPATION (1) AGE ELECTED (2) (3) SHARES (2) VOTES
- ---- ------------------------ --- ------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Barbara K. Rimer Director, Cancer Control and 50 1995 32,400 * 35,298 *
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 President, Schwob Realty Company, 71 1965 631,894 .2 6,056,068 .9
Columbus, GA; Director, First Union
National Bank of Georgia, Atlanta, GA
J. Kyle Spencer President, Spencer Investment Company, 72 1968 861,736 .3 8,545,360 1.2
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, 69 1990 76,018 * 688,180 .1
Columbus Ledger-Enquirer,
Columbus, GA
Robert L. Wright President and CEO, Dimensions 61 (4) 6,000 * 6,000 *
International, Alexandria, VA;
Director, Riggs Bank, Washington, D.C.
(*) 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, 200,000 (2,000,000); Daniel P. Amos, 1,546,362 (9,832,626); J. Shelby Amos, II, 38,000 (308,000); Michael
H. Armacost, 34,880 (276,800); M. Delmar Edwards, 38,000 (308,000); Joe Frank Harris, 94,250, (870,500);
Elizabeth J. Hudson, 94,250 (870,500); Kenneth S. Janke, Sr., 38,000 (308,000); Charles B. Knapp, 94,250
(870,500); Hisao Kobayashi, 38,000 (308,000); Yoshiki Otake, 764,040 (6,965,400); E. Stephen Purdom, 384,178
(2,251,768); Barbara K. Rimer 32,000 (32,000); Henry C. Schwob, 38,000 (308,000); J. Kyle Spencer, 38,000
(308,000); Glenn Vaughn, Jr., 69,250 (620,500); and Robert L. Wright 2,000 (2,000).
8
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(3) All stock is owned solely and directly by the nominee except as follows:
Paul S. Amos, 214,836 shares owned by spouse; 21,750 shares owned by his minor grandchild with Mr. Amos as
custodian; 279,900 shares owned by trusts with Mr. Amos as trustee; and 10,000 shares owned by the Paul S. Amos
Family Foundation, Inc.
Daniel P. Amos, 123,106 shares owned by spouse; 1,559,779 shares owned by a partnership of which Mr. Amos is a
partner; 542,039 shares owned by trusts with Mr. Amos as trustee; 143,530 shares owned by trusts with his wife
as trustee; and 10,000 shares owned by the Paul S. Amos Family Foundation Inc.. Does not include 10,050 shares
owned by a trust with his wife as trustee of which Mr. Amos disclaims beneficial ownership.
J. Shelby Amos, II, 233,467 shares owned by his children with Mr. Amos as trustee; and 22,368 shares owned by a
corporation of which Mr. Amos is a controlling shareholder.
M. Delmar Edwards, 17,080 shares owned by a trust with Dr. Edwards as trustee.
Elizabeth J. Hudson, 3,410 shares owned jointly with spouse.
Kenneth S. Janke, Sr., 22,942 shares owned by a trust with Mr. Janke as trustee; 5,755 shares owned by a trust
with his wife as trustee; 21,000 shares owned by a partnership of which Mr. Janke is a partner; 7,500 shares
owned by the NAIC Growth Fund of which Mr. Janke is President; and 424 shares owned by an investment club of
which Mr. Janke is a member.
Charles B. Knapp, 3,000 shares owned by spouse.
Hisao Kobayashi, 1,500,000 shares owned by The Dai-Ichi Kangyo Bank, Ltd.; Mr. Kobayashi shares the power to
vote these shares.
E. Stephen Purdom, 5,100 shares owned by minor child with Mr. Purdom as custodian.
Barbara K. Rimer, 400 shares owned jointly with spouse.
Henry C. Schwob, 57,276 shares owned by spouse; and 1,600 shares owned by his children with spouse as custodian.
J. Kyle Spencer, 96,938 shares owned by spouse; 43,063 shares owned by a trust with Mr. Spencer's son as
trustee; 25,000 shares owned by a partnership of which Mr. Spencer is a partner.
Glenn Vaughn, Jr., 4,894 shares owned jointly with spouse; and 1,874 shares owned by spouse.
(4) First year nominated.
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.
9
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<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, except as set forth
below.
Mr. Shioichi Matsumoto failed to file on a timely basis two Form 4's
relating to two transactions each in the Company's Common Stock.
10
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BOARD AND COMMITTEE MEETINGS AND DIRECTORS' COMPENSATION
During 1998, the Board of Directors met six 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.
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 1998, 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 1998 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
11
<PAGE>
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 1998, 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
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 1998 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.
12
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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 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 those 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 1998, 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 1997
(as described below). With respect to Mr. Daniel P. Amos, no change in
salary was made, despite the findings of a 1998 report (the "Consultant
Report") prepared for purposes of compensation evaluation by an independent
compensation consultant (the "Consultant") as to the favorable comparative
performance of the Company. The Consultant had been retained by the
Compensation Committee to evaluate the total compensation of the Company's
top five compensated executives, to critique the Company's executive
compensation program in relation to data from other companies and to
identify trends in executive compensation. The Consultant Report compared
13
<PAGE>
the Company with a peer group of 17 generally successful industry-related
companies of relative size (generally one-third to three times the Company's
sales size) in the areas of asset and revenue size, net income, premium
income, earnings per share, return on average equity, return on average
assets and total shareholder return, and found that the Company's
performance significantly exceeded that of the peer group on virtually all
bottom line and return measures, ranking the Company second in composite
performance (and first if the effect of the yen/dollar currency exchange
rate were excluded). The comparator insurance companies were identified to
the Compensation Committee by the Consultant as appropriate comparators to
the Company from a business standpoint and for executive talent. The peer
group included members of the S&P Life Insurance Index, which is one of the
indices used in the Company's "Stock Performance Graph" (see page 19), but
also includes a broader group of companies including those historically
viewed by the Company as its most direct competitors and certain other
insurers generally having an A.M. Best rating of A or higher, as deemed
appropriate for comparative compensation purposes.
Despite the Company's superior comparative performance, 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 1998
the salary for Mr. Paul S. Amos was increased by 10% based on the Company's
comparative superior performance in 1997 and the desire to adequately
compensate him for his value to the Company. 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 1998, cash
bonuses in an amount equal to 15% to 100% 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
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 "Capped Amount"). 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 1998, the Compensation Committee established Company
performance goals for executive officers, including the CEO, based on, among
14
<PAGE>
other things, operating 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 20% 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, 1998, 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.
In its evaluation of executive compensation, the Consultant Report
found that, despite the Company's superior performance compared to the
comparison group, total compensation for the Company's five highest paid
executives is significantly below the 50th percentile of their counterparts
in the comparison group, primarily due to the Company's conservative use of
long-term incentives. As defined by the Consultant, total compensation
includes total cash compensation plus the annualized value of long-term
incentives. Based on its analysis of the Consultant Report findings, the
Compensation Committee approved and recommended for shareholder approval an
amendment to the Management Incentive Plan to increase the Capped Amount to
not more than three times annual base salary. (See Proposal 2 at page 28.)
The amendment will provide greater flexibility to the Compensation Committee
to determine total executive compensation for the Company's executives and
ensure full-deductibility of long-term incentives, while furthering the
Company's goal to ensure that its management compensation structure
emphasizes the successful long-term performance of the Company for the
benefit of its shareholders.
Other Benefits and Actions. The Company maintains (i) its 1985 and
1997 Plans 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 "SERP") 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 Named Executive Officers are
participants in the Retirement Plan or in the SERP, but not both. The
executive officers of the Company may also participate in the Company's
nondiscriminatory 401(k) plan and a noncontributory defined benefit pension
plan covering substantially all employees.
In 1998, the Compensation Committee approved option grants exercisable
for a total of 1,518,750 shares of Common Stock under the 1997 Plan to
15
<PAGE>
officers of the Company, including a grant of options to Mr. Daniel P. Amos
exercisable for 297,000 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 1997,
(b) the Compensation Committee's decision not to increase Mr. Daniel P.
Amos' salary in 1998, (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), (d) the Consultant Report finding that the annualized
present value of Mr. Daniel P. Amos' stock options was 191% of his salary, a
level well below the 349% median for his counterparts in the comparison
companies, and (e) 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). In addition Mr. Kriss Cloninger, III and Mr. Joseph
P. Kuechenmeister received grants of 125,000 and 25,000 shares,
respectively.
The Compensation Committee also determined to add Ms. Diane P. Orr, Ms.
Angela S. Hart, and Messrs. Allan E. O'Bryant, Thomas A. Hartsfield and
Kermitt L. Cox as participants to the SERP in recognition of their
respective contributions to the Company.
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 on 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 $1,000,000 deductibility
cap imposed by Section 162(m). In this connection, the 1985 Plan, the 1997
Plan and the Management Incentive Plan presently conform to the requirements
of Section 162(m) so that stock option grants and Management Incentive Plan
awards are performance-based and not subject to the deduction limitation
contained in Section 162(m).
Compensation Committee
Governor Joe Frank Harris - Chairman
M. Delmar Edwards
Glenn Vaughn, Jr.
16
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
AWARDS PAYOUTS
NAME AND OTHER RESTRICTED SECURITIES
PRINCIPAL ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
($)(1) ($)(2) ($) (3) ($) (#) ($) ($)(4)
- ------------------ ---- --------- ----------- ------------ ---------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel P. Amos 1998 995,000 995,000 134,616 -0- 297,000 -0- 6,366
President and CEO 1997 995,000 995,000 132,559 -0- 190,000 -0- 6,316
1996 1,008,563 1,044,216 93,624 -0- 600,000 -0- 6,131
Paul S. Amos 1998 1,258,839 1,225,444 89,654 -0- -0- -0- 21,583
Chairman 1997 1,168,581 1,157,039 95,150 -0- -0- -0- 22,879
1996 1,111,441 l,135,765 84,664 -0- -0- -0- 24,804
Joseph P. Kuechenmeister 1998 262,000 789,620 33,091 -0- 25,000 -0- 7,410
Sr. Vice President, 1997 262,000 773,744 4,900 -0- -0- -0- 9,650
Director of Marketing 1996 250,000 347,000 16,966 -0- 30,002 -0- 6,772
Yoshiki Otake 1998 634,120 310,766 28,400 -0- -0- -0- 37,207
Chairman, 1997 652,928 276,341 30,400 -0- -0- -0- 23,741
AFLAC Japan 1996 691,749 370,938 28,400 -0- 75,000 -0- 26,312
Kriss Cloninger, III 1998 450,000 450,000 20,826 -0- 125,000 -0- 7,414
Exec. Vice President 1997 425,000 475,000 10,314 -0- -0- -0- 7,364
and CFO 1996 400,000 410,200 15,830 -0- 135,002 -0- 6,066
(1) Includes $1,258,839 and $551,038 deferred salary in 1998 and 1997, respectively, for Mr. Paul S. Amos.
(2) Includes for all Named Executive Officers other than Mr. Joseph P. Kuechenmeister cash bonuses paid in 1997, 1998
and 1999 under the Management Incentive Plan and other cash bonus payments. Includes as to Mr. Joseph P.
Kuechenmeister Marketing Bonus for services rendered during 1996, 1997 and 1998. Includes $1,208,484 and $1,140,079
deferred bonus in 1998 and 1997, respectively, for Mr. Paul S. Amos.
(3) Includes aircraft expenses of $33,676 in 1998 for Mr. Daniel P. Amos. Includes Board and Committee fees of $32,400,
30,400 and 30,400 in 1998, 1997 and 1996, respectively, for Mr. Daniel P. Amos and Mr. Paul S. Amos and tax services
of $27,000 for 1998, 1997 and 1996, for Mr. Paul S. Amos.
(4) Includes premiums paid in 1998 for term life insurance in the amount of $1,566, $21,583, $2,610, $37,207 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 $4,800 for each
of Mr. Daniel P. Amos, Mr. Joseph P. Kuechenmeister and Mr. Kriss Cloninger, III. 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,
17
<PAGE>
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 Mr. Daniel P. Amos,
Mr. Paul S. Amos, Mr. Joseph P. Kuechenmeister and Mr. Kriss Cloninger, III.
18
</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: Conseco, Inc., Jefferson-Pilot Corp.,
Lincoln National Corp., Provident Companies, Inc., 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, 1993, and that all
dividends were reinvested.
(Stock Performance graph inserted here.)
Performance Graph Index
DECEMBER 31
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
AFLAC INCORPORATED 100 114 157 234 282 488
DOW JONES 100 105 144 185 231 273
S&P LIFE 100 83 119 146 182 192
(All performance data provided by Research Data Group, Inc., San Francisco,
CA 94107)
19
<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 25, 44 and 24 years,
respectively, of credited service.
RETIREMENT PLAN FOR SENIOR OFFICERS TABLE
(all $ in thousands)
YEARS OF SERVICE
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 the SERP for certain key executives of the
Company and its subsidiaries who do not participate in the Retirement Plan.
Participation in the SERP is limited to key employees of the Company (and
its subsidiaries) designated by the Board of Directors of the Company from
time to time. Participants generally must be employed with the Company or a
subsidiary at age 55, and with respect to participants who began
participating in the SERP after August 11, 1992, must also complete at least
15 years of employment with the Company or a subsidiary and participate in
the SERP for at least 5 years to be eligible to receive benefits under the
SERP. In 1997, the Compensation Committee amended the terms of the plan to
alter the benefit formula in the plan and the definition of "pay" taken into
account under the plan. 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
20
<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 for 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 SERP.
Mr. Kriss Cloninger, III participates in the SERP. The estimated annual
benefit payable upon a retirement age of 55 for Mr. Cloninger is $389,577.
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. A participant can be eligible for full normal retirement benefits
when the participant's years of credited service plus attained age equals or
exceeds 80. 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 survivor options available at reduced rates).
21
<PAGE>
The maximum retirement benefit is limited in accordance with section 415 of
the Code to $130,000 for 1998. 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 1998. 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 25 years, 11 years and 7 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."
22
<PAGE>
<TABLE>
OPTION GRANTS IN 1998
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(1)
________________________________________________________________________________ ________________________________
Number of Percent of IF STOCK IF STOCK
Securities Options AT AT
Underlying Granted to Exercise $75.74 $120.61
Options Employees of Base
Granted in 1998 Price Expiration
Name (#) ($/Sh) Date 5%($) 10%($)
- -------------- ----------- ---------- --------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
STOCK APPRECIATION N/A N/A N/A N/A 7,781,000,000 19,721,000,000
FOR ALL SHAREHOLDERS (2)
Daniel P. Amos, CEO (3) 297,000 15.2 30.0938 6/24/08 5,620,947 14,244,606
Joseph P. Kuechenmeister 25,000 1.3 30.0938 6/24/08 473,144 1,199,041
Kriss Cloninger, III 125,000 6.4 30.0938 6/24/08 2,365,718 5,995,205
(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 $46.50, the
average market price of a share of Common Stock on February 23, 1999, and the number of shares outstanding on
that date.
(3) Option grants for Daniel P. Amos and Kriss Cloninger vest 1/3 on the date of grant and 1/3 each on the next two
anniversaries of the option grant date. The option grant for Joseph P. Kuechenmeister vests at the end of a three-
year period from the option grant date.
23
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1998
AND OPTION VALUES AS OF DECEMBER 31, 1998
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
Shares 12-31-98(#) 12-31-98($)
Acquired Value -------------------------- --------------------------
Name on Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel P. Amos, CEO 466,973 14,500,642 1,775,587 461,334 55,289,866 9,202,429
Paul S. Amos 97,682 1,462,290 200,000 -0- 6,891,660 -0-
Joseph P. Kuechenmeister -0- -0- 28,950 35,002 869,234 625,002
Yoshiki Otake -0- -0- 814,766 25,000 31,339,731 701,040
Kriss Cloninger, III 144,352 4,087,811 324,816 128,336 9,753,572 2,410,371
24
</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.
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
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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, as of August
1, 1998, Mr. Amos is entitled to receive an annual base salary of
$1,329,332.
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, 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 $475,000, 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.
Mr. Cloninger will be eligible to participate in all fringe benefit
programs applicable to employees generally, and shall receive such other
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"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 SERP. 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 a base salary in 1999 of 86,320,000 yen ($749,957
at the 1998 year-end exchange rate) 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
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
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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, 1998, 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, 1998 Indebtedness Interest 1999
- ----------------------------------------------------------------------------
Daniel P. Amos $2,094,911 Term Stock Note(2) 6.00% $2,085,294
Joey M. Loudermilk $ 36,218 Stock Option Note(3) 5.58% $ -0-
$ 36,275 Stock Option Note(3) 5.47% $ -0-
$ 19,437 Stock Option Note(3) 5.94% $ -0-
Gary Stegman $ 92,615 Stock Option Note(3) 6.20% $ 53,294
$ 37,625 Stock Option Note(3) 6.65% $ 37,536
$ 84,702 Stock Option Note(3) 6.21% $ 84,495
$ 82,783 Stock Option Note(3) 6.16% $ 82,588
$ 265,067 Stock Option Note(3) 5.86% $ 264,535
(1) All of the named individuals were executive officers of the Company or
one of its subsidiaries during 1998.
(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 1998, he earned renewal and first-year commissions of
$790,114 (before expenses) on collected premiums of $28,220,620, and he
received $80,871 in 1999 in lieu of shares earned in 1998 under the AFLAC
Associates' Stock Bonus Plan.
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In 1998, $202,243 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 $8,154,666 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 including
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. PROPOSAL TO ADOPT AN AMENDED AND RESTATED
MANAGEMENT INCENTIVE PLAN
In order to continue and to enhance the effectiveness of the Management
Incentive Plan (the "Management Incentive Plan"), which was initially
approved by the Board of Directors in 1985, and subsequently amended and
restated in 1994, the Board of Directors, in accordance with the
recommendation of its Compensation Committee, has amended and restated the
Management Incentive Plan (as amended and restated, the "1999 Management
Incentive Plan"), subject to approval by shareholders at the annual meeting
as required by its terms.
Prior to its amendment and restatement, the Management Incentive Plan
terminated at the end of the 1998 fiscal year, but payments with respect to
all awards previously granted thereunder will be paid out pursuant to its
terms. The 1999 Management Incentive Plan will terminate at the end of the
2003 fiscal year, but payments with respect to all awards previously granted
thereunder will be paid out pursuant to its terms.
In addition, prior to its amendment and restatement under the
Management Incentive Plan any participant who was a "covered employee," as
defined in section 162(m) of the Code, generally the chief executive officer
and the four most highly compensated executive officers other than the chief
executive officer, at the end of the fiscal year, could not receive an award
for any fiscal year that exceeded 100% of his or her annual base salary. As
amended under the 1999 Management Incentive Plan, this limitation would be
increased so that any participant who was a covered employee could not
receive an award for any fiscal year that exceeds the lesser of 300% of his
or her annual base salary and four million dollars.
The 1999 Management Incentive Plan is designed to ensure that
compensation that may be payable under the 1999 Management Incentive Plan
will continue to qualify as performance based compensation within the
meaning of section 162(m) of the Code, and therefore will be fully tax-
deductible by the Company. Specifically, Section 162(m) of the Code denies
deductions by an employer for certain compensation in excess of $1 million
per year. Certain other compensation, including compensation based on
performance goals, is excluded from this deduction limit. Among the
requirements for compensation to qualify for this exception, are the
following: (1) the material terms pursuant to which the compensation is to
be paid, including the employees eligible to receive compensation, a
description of the business criteria on which the performance goals are
based and the maximum amount of compensation that could be paid to any
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<PAGE>
covered employee, must be disclosed to and approved by the shareholders in a
separate vote prior to the payment, and (2) prior to payment, the
Compensation Committee must certify that the performance goals and any other
material terms have been satisfied. Accordingly, the 1999 Management
Incentive Plan is being submitted to the shareholders for approval at the
1999 Annual Meeting.
If the shareholders approve the 1999 Management Incentive Plan, it will
take effect for performance awards, if any, payable with respect to fiscal
years of the Company commencing on or after January 1, 1999. If the
required shareholder approval is not obtained, the 1999 Management Incentive
Plan will be null and void for performance awards, if any, payable with
respect to fiscal years of the Company commencing on or after January 1,
1999.
DESCRIPTION OF PLAN
The description of the 1999 Management Incentive Plan summarized below
is qualified, in its entirety, by reference to the text of the 1999
Management Incentive Plan as set forth in Exhibit A.
The purposes of the 1999 Management Incentive Plan are to reinforce
corporate, organizational and business-development goals, to promote the
achievement of year-to-year and long-range financial and other business
objectives, and to reward the performance of individual officers and other
employees in fulfilling their personal responsibilities for long-range
achievement.
The 1999 Management Incentive Plan provides for the granting of
performance awards to employees of the Company and its subsidiaries,
including employees who are also executive officers and Directors, and who
possess a capacity for contributing in substantial measure to the successful
performance of the Company. As of February 23, 1999, approximately 111
employees were eligible to participate in the 1999 Management Incentive
Plan.
The 1999 Management Incentive Plan is administered by the Compensation
Committee of the Board of Directors, which is composed entirely of directors
who are not employees of the Company. The Compensation Committee selects
the employees who participate in the 1999 Management Incentive Plan and
grants all awards under the 1999 Management Incentive Plan, determines the
terms and provisions, including the performance goals, of such awards and
the respective award agreements between the Company and each participant
(which need not be identical), certifies whether the performance goals have
been attained, makes adjustments in the performance goals in recognition of
unusual or non-recurring events that affect the Company or the financial
statements of the Company, or in response to certain changes in applicable
laws, regulations or accounting principles, construes and interprets the
1999 Management Incentive Plan and award agreements, makes rules and
regulations in connection with the administration and operation of the 1999
Management Incentive Plan and makes all other determinations necessary or
desirable in administering the 1999 Management Incentive Plan.
For each fiscal year commencing with 1999, the Compensation Committee
will establish the performance goals that must be met during the fiscal year
as a condition of receipt of awards under the 1999 Management Incentive
Plan. Performance goals may include any or all of the following: (1)
attainment of an amount of "consolidated net earnings" (as defined below),
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(2) attainment of a percentage of "return on equity" (as defined below), (3)
attainment of amounts of "operating earnings per share" (as defined below),
excluding all or a portion of the effects of translating foreign currency of
business segments to U.S. dollars for financial reporting purposes; (4)
increases in the market price of Company Common Stock or levels of total
return to shareholders; and (5) attainment of goals established based on the
financial performance of the Company or the Company together with its
subsidiaries or individual subsidiaries or business segments of the Company
relating to increases in premium income, investment income, total revenues,
operating expenses, pretax operating earnings, premiums in force, number of
policies in force, new sales and policy conversions (i.e., issuance of
current policy contracts to existing policyholders in exchange for surrender
of policies issued in prior years). With respect to participants who are
not executive officers of the Company, performance goals may also include
personal performance goals. Performance goals for "executive officers" (as
defined) will not include personal goals.
For purposes of the 1999 Management Incentive Plan, "consolidated net
earnings" means the net earnings of the Company for the fiscal year
determined in accordance with generally accepted accounting principles and
reported in the Company's audited financial statements for such fiscal year,
but before any provision for the cumulative effect of accounting changes
required to be adopted by generally accepted accounting principles in
respect of such fiscal year; "operating earnings per share" means net
earnings per share of Common Stock, excluding (i) the effects of realized
gains or losses on investments; (ii) the cumulative effect of adopting
required accounting changes and (iii) unusual charges or credits not
directly related to normal business operations and as identified in the
Company's reports to shareholders and accounted for in accordance with
Accounting Principles Board Opinion No. 30; and "return on equity" means the
quotient obtained by dividing (i) net operating earnings for a fiscal year
by (ii) the average of common shareholders' equity of the Company as of the
beginning and the end of the fiscal year. Such common shareholders' equity
will exclude the effect of unrealized gains and losses recognized in a
separate equity component under Financial Accounting Standards Board
Statement No. 115.
The Compensation Committee will specify with respect to a fiscal year
the performance goals applicable to each award and minimum, target and
maximum levels applicable to each performance goal. The minimum level
reflects the level of performance at which 50% of the performance goal is
achieved and below which no payment will be made; the target level reflects
the level at which 100% of the performance goal is achieved; and the maximum
level reflects the level of performance at which 200% of the performance
goal is achieved. Awards for any fiscal year may be expressed as a dollar
amount or as a percentage of the participant's "annual base salary."
"Annual base salary" means: (i) with respect to any executive officer, the
annual rate of base salary of such executive officer in effect as of the
first day of any fiscal year (or, if an executive officer was not employed
as of the first day of a fiscal year, the annual rate of base salary in
effect as of such executive officer's first day of employment); and (ii)
with respect to any other participant, unless otherwise determined by the
Company, the base salary paid to such participant during any fiscal year.
Unless otherwise provided by the Compensation Committee in connection
with specified terminations of employment, or upon the occurrence of a
"change in control" (as defined), awards will be made only if and to the
extent the performance goals established for the particular fiscal year have
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<PAGE>
been attained. Notwithstanding the foregoing, any participant who is a
covered employee may not receive an award for any fiscal year that exceeds
the lesser of 300% of his or her annual base salary and four million
dollars. Awards will be paid to participants, in cash, within a reasonable
period of time following the end of the fiscal year to which the awards
relate. With respect to participants who are covered employees, unless
otherwise determined by the Compensation Committee, payment will be made
only after achievement of the applicable performance goals has been
certified by the Compensation Committee.
Notwithstanding any other provision of the 1999 Management Incentive
Plan to the contrary, if a change in control occurs while any awards remain
outstanding under the 1999 Management Incentive Plan, then the performance
period (i.e., the fiscal year) outstanding at the time of such change in
control will be deemed to have been completed, the maximum level of
performance with respect to the applicable performance goals will be deemed
to have been attained and a pro rata portion (based on the number of full
and partial months that have elapsed with respect to the performance period)
of each outstanding award granted will become payable in cash to each
participant.
The 1999 Management Incentive Plan may be amended, suspended or
terminated at any time by the Board of Directors or the Compensation
Committee, provided, however, that no amendment that requires shareholder
approval in order for the 1999 Management Incentive Plan to comply with
section 162(m) of the Code will be effective unless the amendment is so
approved.
The 1999 Management Incentive Plan will terminate at the end of the
2003 fiscal year, but payment with respect to all awards previously granted
under the 1999 Management Incentive Plan will be paid out pursuant to its
terms.
Inasmuch as performance goal criteria may vary from year to year, and
awards may vary from participation to participation, benefits under the 1999
Management Incentive Plan are not determinable. Bonuses paid to the Named
Executive Officers in respect of the 1998 fiscal year, however, are noted in
the Summary Compensation Table on page 17. Bonuses paid with respect to the
executive officers in respect of the 1998 fiscal year are approximately
equal to $4,372,803, and with respect to the all other plan participants is
approximately equal to $2,613,818. The non-employee director group is not
eligible to participate in the 1999 Management Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS UNANIMOUSLY A VOTE "FOR"
APPROVAL OF THE AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
3. 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 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, 1998, included in the Company's Annual Report to
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Shareholders, KPMG 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 LLP are expected to be present at the 1999
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
4. 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 2000 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 12, 1999. To
be timely, shareholder proposals submitted outside the processes of Rule
14a-8 must be received by the Secretary of the Company after February 2,
2000, and before March 5, 2000.
ANNUAL REPORT
The Company has mailed a copy of its Annual Report to each shareholder
entitled to vote at the 1999 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 11, 1999
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EXHIBIT A
AFLAC INCORPORATED
AMENDED AND RESTATED
MANAGEMENT INCENTIVE PLAN
1. PURPOSES
The purposes of the AFLAC Incorporated Amended and Restated Management
Incentive Plan are to reinforce corporate, organizational and business-
development goals; to promote the achievement of year-to-year and long-
range financial and other business objectives; and to reward the
performance of individual officers and other employees in fulfilling
their personal responsibilities for long-range achievements.
2. DEFINITIONS
The following terms, as used herein, shall have the following meanings:
(a) "AFLAC" shall mean AFLAC Incorporated, a Georgia corporation.
(b) "Annual Base Salary" shall mean: (i) with respect to any Executive
Officer, the annual rate of base salary of such Executive Officer
in effect as of the first day of any Performance Period (or, if an
Executive Officer was not employed as of the first day of a
Performance Period, the annual rate of base salary in effect as of
such Executive Officer's first day of employment); and (ii) with
respect to any other Participant, unless otherwise determined by
the Company, the base salary paid to such Participant during any
Performance Period.
(c) "Award" shall mean an annual incentive compensation award, granted
pursuant to the Plan, which is contingent upon the attainment of
Performance Goals with respect to a Performance Period.
(d) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document between AFLAC and a Participant
evidencing an Award.
(e) "Board" shall mean the Board of Directors of AFLAC.
(f) "Change in Control" shall mean the occurrence of an event described
in Section 6(f) hereof.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Committee" shall mean the Compensation Committee of the Board.
(i) "Company" shall mean, collectively, AFLAC and its subsidiaries.
(j) "Consolidated Net Earnings" shall mean the net earnings of the
Company for the Performance Period determined in accordance with
generally accepted accounting principles and reported in the
Company's audited financial statements for such Performance Period,
but before any provision for the cumulative effect of accounting
changes required to be adopted by generally accepted accounting
principles in respect of such Performance Period.
(k) "Covered Employee" shall have the meaning set forth in Section
162(m)(3) of the Code.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Executive Officer" shall mean (i) the president, the chief
executive officer, the chairman and vice chairman of the Board and
the executive vice presidents of AFLAC, (ii) the president, the
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chairman and vice chairman and the executive vice presidents of
American Family Life Assurance Company of Columbus, Japan Branch,
(iii) the president, the chairman and vice chairman of the Board of
Directors and the executive vice presidents of American Family Life
Assurance Company of Columbus, (iv) the president, the chairman and
vice chairman of the Board of Directors and the executive vice
presidents of AFLAC International, Inc. and (v) all members of the
Board who are employees of the Company.
(n) "Operating Earnings Per Share" shall mean net earnings per share of
Stock, excluding (i) the effects of realized gains or losses
on investments, (ii) the cumulative effect of adopting required
accounting changes and (iii) unusual charges or credits not
directly related to normal business operations and as identified in
the Company's reports to shareholders and accounted for in
accordance with Accounting Principles Board Opinion No. 30.
(o) "Participant" shall mean an officer or other employee of the
Company who is, pursuant to Section 4 of the Plan, selected to
participate herein.
(p) "Performance Goal" shall mean the criteria and objectives,
determined by the Committee, which must be met during the
applicable Performance Period as a condition of the Participant's
receipt of payment with respect to an Award. Performance Goals may
include any or all of the following: (i) attainment of an amount
of Consolidated Net Earnings during a Performance Period; (ii)
attainment of a percentage of Return on Equity for a Performance
Period; (iii) attainment of amounts of Operating Earnings Per Share
of the Company, excluding all or a portion of the effect of
translating foreign currency of business segments to U.S. dollars
for financial reporting purposes, for a Performance Period; (iv)
increases in the market price of Stock or levels of total return to
shareholders during the Performance Period; and (v) attainment of
goals established based on the financial performance of AFLAC, the
Company or individual subsidiaries or business segments of the
Company relating to increases in premium income, investment income,
total revenues, operating expenses, pretax operating earnings,
premiums in force, number of policies in force, new sales and
policy conversions (i.e., issuance of current policy contracts to
existing policyholders in exchange for surrender of policies issued
in prior years). With respect to Participants who are not
Executive Officers, Performance Goals shall also include such
personal performance goals as the Committee shall, from time to
time, establish.
(q) "Performance Period" shall mean the Company's fiscal year.
(r) "Plan" shall mean the AFLAC Incorporated Amended and Restated
Management Performance Plan.
(s) "Return on Equity" shall mean the quotient obtained by dividing (i)
Net Operating Earnings for a Performance Period by (ii) the
average of common shareholders' equity of the Company as of the
beginning and the end of the Performance Period. Such common
shareholders' equity shall exclude the effect of unrealized gains
and losses recognized in a separate equity component under
Financial Accounting Standards Board Statement No. 115.
(t) "Stock" shall mean shares of common stock, par value $.10 per
share, of AFLAC.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall
have the authority in its sole discretion, subject to and not
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inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority
to grant Awards; to determine the persons to whom and the time or times
at which Awards shall be granted; to determine the terms, conditions,
restrictions and performance criteria, including Performance Goals,
relating to any Award; to certify whether the Performance Goals have
been attained; to determine whether, to what extent, and under what
circumstances an Award may be settled, cancelled, forfeited, or
surrendered; to make adjustments in the Performance Goals in
recognition of unusual or non-recurring events affecting the Company or
the financial statements of the Company, or in response to changes in
applicable laws, regulations, or accounting principles; to construe and
interpret the Plan and any Award; to prescribe, amend and rescind rules
and regulations relating to the Plan; to determine the terms and
provisions of Award Agreements; and to make all other determinations
deemed necessary or advisable for the administration of the Plan.
The Committee shall consist of two or more persons each of whom shall be
an "outside director" within the meaning of Section 162(m) of the Code.
The Committee may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall
deem advisable, and shall keep minutes of its meetings. All
determinations of the Committee shall be made by a majority of its
members either present in person or participating by conference
telephone at a meeting or by written consent. The Committee may
delegate to one or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or
more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. All decisions,
determinations and interpretations of the Committee shall be final and
binding on all persons, including the Company, the Participant (or any
person claiming any rights under the Plan from or through any
Participant) and any shareholder.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or
any Award granted hereunder.
4. ELIGIBILITY.
Awards may be granted to officers and other employees of the Company in
the sole discretion of the Committee. Subject to Section 5(b) below, in
determining the persons to whom Awards shall be granted and the
Performance Goals relating to each Award, the Committee shall take into
account such factors as the Committee shall deem relevant in connection
with accomplishing the purposes of the Plan.
5. TERMS OF AWARDS.
Awards granted pursuant to the Plan shall be evidenced by an Award
Agreement in such form as the Committee shall from time to time approve.
(a) IN GENERAL. The Committee shall specify with respect to a
Performance Period the Performance Goals applicable to each Award
and minimum, target and maximum levels applicable to each
Performance Goal. The minimum level reflects the level of
36
<PAGE>
performance at which 50% of the performance goal is achieved and
below which no payment shall be made; the target level reflects the
level of performance at which 100% of the Performance Goal is
achieved; and the maximum level reflects the level of performance
at which 200% of the Performance Goal is achieved. Awards for any
Performance Period may be expressed as a dollar amount or as a
percentage of the Participant's Annual Base Salary. Unless
otherwise provided by the Committee in connection with specified
terminations of employment, or except as set forth in Section 6(f)
hereof, payment in respect of Awards shall be made only if and to
the extent the Performance Goals with respect to such Performance
Period have been attained.
(b) SPECIAL PROVISIONS REGARDING AWARDS. Notwithstanding anything to
the contrary contained in this Section 5, in no event shall payment
in respect of Awards granted for a Performance Period be made to a
Participant who is a Covered Employee in an amount that exceeds the
lesser of (i) 300% of such Participant's Annual Base Salary and
(ii) four million dollars.
(c) TIME AND FORM OF PAYMENT. Unless otherwise determined by the
Committee, all payments in respect of Awards granted under this
Plan shall be made, in cash, within a reasonable period after the
end of the Performance Period. In the case of Participants who are
Covered Employees, unless otherwise determined by the Committee,
such payments shall be made only after achievement of the
Performance Goals has been certified by the Committee.
6. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL REQUIREMENTS. The Plan and the granting and
payment of Awards, and the other obligations of the Company under
the Plan and any Award Agreement or other agreement shall be
subject to all applicable federal and state laws, rules and
regulations, and to such approvals by any regulatory or
governmental agency as may be required.
(b) NONTRANSFERABILITY. Awards shall not be transferable by a
Participant except by will or the laws of descent and distribution.
(c) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan or in any
Award granted or any Award Agreement or other agreement entered
into pursuant hereto shall confer upon any Participant the right to
continue in the employ of the Company or to be entitled to any
remuneration or benefits not set forth in the Plan or such Award
Agreement or other agreement or to interfere with or limit in any
way the right of the Company to terminate such Participant's
employment.
(d) WITHHOLDING TAXES. The Company shall have the right to withhold
the amount of any taxes that the Company may be required to
withhold before delivery of payment of an Award to the Participant
or other person entitled to such payment, or to make such other
arrangements for the withholding of taxes that the Company deems
satisfactory.
(e) AMENDMENT, TERMINATION AND DURATION OF THE PLAN. The Board or the
Committee may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part; PROVIDED THAT,
no amendment that requires shareholder approval in order for the
Plan to continue to comply with Code Section 162(m) shall be
effective unless the same shall be approved by the requisite vote
of the shareholders of the Company. Notwithstanding the foregoing,
no amendment shall affect adversely any of the rights of any
37
<PAGE>
Participant, without such Participant's consent, under any Award
theretofore granted under the Plan. The Plan shall terminate at
the completion of the Performance Period that ends in 2003;
provided, however, that all payments with respect to Awards
previously granted under the Plan shall be paid out pursuant to the
terms of the Plan.
(f) CHANGE IN CONTROL. Notwithstanding any other provision of the Plan
to the contrary, if, while any Awards remain outstanding under the
Plan, a "Change in Control" of AFLAC (as defined in this Section
6(f)) shall occur, the Performance Period outstanding at the time
of such Change in Control shall be deemed to have been completed,
the maximum level of performance set forth under the respective
Performance Goals shall be deemed to have been attained and a pro
rata portion (based on the number of full and partial months that
have elapsed with respect to each Performance Period) of each
outstanding Award granted to each Participant for the outstanding
Performance Period shall become payable in cash to each
Participant.
For purposes of this paragraph 6(f), a Change in Control of AFLAC
shall occur upon the happening of the earliest to occur of the
following:
(i) any "person," as such term is used in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and
14(d) of the Exchange Act (other than (1) AFLAC, or any of
its subsidiaries, (2) any trustee or other fiduciary holding
securities under a benefit plan of AFLAC or any of its
subsidiaries, (3) any underwriter temporarily holding
securities pursuant to an offering of such securities, or (4)
any corporation owned, directly or indirectly, by the
shareholders of AFLAC in substantially the same
proportions as their ownership of Stock), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of AFLAC
(not including in the securities beneficially owned by such
person any securities acquired directly from AFLAC or its
affiliates) representing 30% or more of the combined voting
power of AFLAC's then outstanding voting securities;
(ii) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute
the Board, and any new director (other than a director
designated by a person who has entered into an agreement with
AFLAC to effect a transaction described in clause (i), (iii),
or (iv) of this paragraph (f)) whose election by the Board or
nomination for election by AFLAC's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority thereof;
(iii) the shareholders of AFLAC approve a merger or consolidation
of AFLAC with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities
of AFLAC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
38
<PAGE>
plan of AFLAC, at least 75% of the combined voting power of
the voting securities of AFLAC or such surviving entity
outstanding immediately after such merger or consolidation or
(B) a merger or consolidation effected to implement a
recapitalization of AFLAC (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than
50% of the combined voting power of AFLAC's then outstanding
securities; or
(iv) the shareholders of AFLAC approve a plan of complete
liquidation of AFLAC or an agreement for the sale or
disposition by AFLAC of all or substantially all of AFLAC's
assets (or any transaction having a similar effect).
(g) PARTICIPANT RIGHTS. No Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for
uniformity of treatment for Participants.
(h) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to
an Award, nothing contained in the Plan or any Award shall give any
such Participant any rights that are greater than those of a
general creditor of the Company.
(i) GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of
Georgia without giving effect to the conflict of laws principles
thereof.
(j) EFFECTIVE DATE. The Plan shall take effect upon its adoption by
the Board; PROVIDED, HOWEVER, that the Plan shall be subject to the
requisite approval of the shareholders of the Company in order to
comply with Section 162(m) of the Code. In the absence of such
approval, the Plan (and any Awards made pursuant to the Plan with
respect to the 1999 fiscal year or thereafter) shall be null and
void.
(k) BENEFICIARY. A Participant may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by
the Committee and may, from time to time, amend or revoke such
designation. If no designated beneficiary survives the
Participant, the executor or administrator of the Participant's
estate shall be deemed to be the grantee's beneficiary.
(l) INTERPRETATION. The Plan is designed and intended to comply, to
the extent applicable, with Section 162(m) of the Code, and all
provisions hereof shall be construed in a manner to so comply.
39
<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 23, 1999, at the Annual Meeting of
the Shareholders to be held on Monday, May 3, 1999, 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. Elizabeth J. Hudson 13. Barbara K. Rimer
2. Daniel P. Amos 8. Kenneth S. Janke, Sr. 14. Henry C. Schwob
3. J. Shelby Amos, II 9. Charles B. Knapp 15. J. Kyle Spencer
4. Michael H. Armacost 10. Hisao Kobayashi 16. Glenn Vaughn, Jr.
5. M. Delmar Edwards, M.D. 11. Yoshiki Otake 17. Robert L. Wright
6. Joe Frank Harris 12. E. Stephen Purdom
2. To consider and adopt an Amended and Restated Management Incentive Plan.
For Against Abstain
_______ _______ _______
3. Ratification of appointment of KPMG For Against Abstain
LLP as independent auditors. _______ _______ _______
4. 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>
(PLACE LABEL HERE)
Sign here as name(s) appears on account:
X ___________________________________________
X ___________________________________________
Date _________________________________, 1999
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 _________________, 1999
<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 23, 1999, at the Annual Meeting of
the Shareholders to be held on Monday, May 3, 1999, 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. Elizabeth J. Hudson 13. Barbara K. Rimer
2. Daniel P. Amos 8. Kenneth S. Janke, Sr. 14. Henry C. Schwob
3. J. Shelby Amos, II 9. Charles B. Knapp 15. J. Kyle Spencer
4. Michael H. Armacost 10. Hisao Kobayashi 16. Glenn Vaughn, Jr.
5. M. Delmar Edwards, M.D. 11. Yoshiki Otake 17. Robert L. Wright
6. Joe Frank Harris 12. E. Stephen Purdom
2. To consider and adopt an Amended and Restated Management Incentive Plan.
For Against Abstain
_______ _______ _______
3. Ratification of appointment of KPMG For Against Abstain
LLP as independent auditors. _______ _______ _______
4. 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 _________________________________, 1999
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 _________________, 1999
