AFLAC INC
For the period ended May 5, 2025. Filed Mar 20, 2025.
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May 5, 2025 · Filed Mar 20, 2025
AFL$124.06-1.7%Stored close · as of Nov 6, 2026
Contents
MIP Target-Setting
| EXECUTIVE COMPENSATION | 2025 PROXY STATEMENT | 45 |
|---|
MIP Target-Setting
In addition to currency neutrality, the Compensation Committee considers the prior year’s results, current business operating environment and the forecasts emerging from the Company’s strategic planning process when setting objectives for each MIP metric. For 2024, the majority of the MIP performance metrics were structurally consistent with the 2023 performance objectives, including weightings with specific “sloping” targets, with ranges adjusted for the 2024 financial plan. For all NEOs and MIP participants who are Executive Vice Presidents or Senior Vice Presidents, the new metric added for costs savings resulting from Transformation Initiatives in 2023 was removed for 2024. As our sustainability goals were tied to business strategy, the MIP modifier was continued in 2024 to further incentivize progress on key goals. In 2020, the Company discontinued the practice of providing adjusted earnings guidance, but as set forth below the Company continues to utilize an outlook of adjusted earnings per share in setting MIP goals. The goals for these metrics are generally consistent with the Company’s public disclosure during the fourth quarter 2023 earnings release and conference call.
| Metric | PerformanceMeasures | Factors Considered in Setting Goal Levels |
|---|---|---|
| Corporate Metric | •Adjusted EPS | In 2023, the Company generated $4.7 billion in net earnings, up 5.5% for the year, or $ 7.78 per diluted share. The Company also reported a 3.3% increase in adjusted earnings for the year, which were $3.7 billion, and adjusted earnings per diluted share on a currency-neutral basis of $6.43, which was up 13.4%. This increase was supported by the repurchasing of $2.8 billion (38.9 million) of the Company’s shares and higher adjusted earnings. Higher adjusted earnings were primarily driven by higher net investment income and actuarial assumption unlocks in third quarter 2023 resulting in a lower benefit ratio in the U.S., partially offset by a loss related to the novation of a reinsurance treaty with a third party that has been ceded back to the company. When looking at the Company’s currency-neutral adjusted EPS estimates for 2024 and normalizing for roughly $0.39 per share of items identified and called out in 2023, the lower 2024 adjusted earnings outlook included headwinds to revenue resulting from lower earned premium in the Japan segment mainly from paid-up impact and higher benefit ratio in the U.S. and Japan. The estimated higher benefit ratio in the U.S. segment was driven by continued initiatives to provide better value for the customer. |
| U.S. and Japan Segment Metrics | •New Annualized Premium•Net Earned Premium•Total Adjusted Expense Ratio•Pretax Adjusted Earnings | In 2023, Aflac U.S. sales increased 5.0% to $1.6 billion, reflecting significant contributions from both our existing voluntary business and our more recently acquired growth properties. Persistency increased to 78.6% at the end of 2023. This was a function of poor persistency quarters falling out of the metric and stabilization across numerous product categories. Moving into 2024, our business focus continued to be building out our growth properties, while continuing to strengthen our distribution reach for our core voluntary products. The Company expected sales growth in 2024 and the Compensation Committee set a range of 2% to 12% increase in sales for the year. After considering current economic volatility, our expected sales growth and persistency initiatives, the Company expected net earned premium growth in the 1.5% to 5.5% range. Given the focus on improving expense efficiency and the impact of the third quarter unlock in 2023 to pretax earnings in Aflac U.S., the adjusted expense ratio metric range was set to 38.1% to 40.1% along with a pretax adjusted earnings metric range of -19.0% to 1.8% for 2024. Similarly, in Japan, the focus was on post-pandemic recovery and realization of investment in product development. In 2023, Aflac Japan sales increased 10.9% to ¥60.7 billion, which was largely driven by an increase in cancer insurance sales with very significant contributions from Japan Post Company and Japan Post Insurance, as well as other alliances, Dai-ichi Life and Daido Life. Moving into 2024, the Compensation Committee decided to increase a range in sales for the year by focusing on promoting sales of cancer insurance, the newest medical insurance product sold in 2023, and the new asset-building product that was expected to be launched in June 2024 in addition to the recovery of Japan Post group. Additionally, net earned premium was expected to decline largely due to limited pay third sector policies becoming paid-up and the impacts of reinsurance. The Compensation Committee set a range of approximately ¥58.0 billion to ¥68.0 billion for sales including Japan Post and set a range of -6.26% to -4.87% for net earned premium. |
| 46 | AFLAC INCORPORATED | EXECUTIVE COMPENSATION |
| Metric | PerformanceMeasures | Factors Considered in Setting Goal Levels |
|---|---|---|
| Global Investment Metrics | •Net Investment Income•Credit Losses/ Impairments | For 2024, Aflac Japan net investment income including hedge costs was expected to be lower than the prior year, primarily driven by the lower assets from the reinsurance transaction with Aflac Re in 2023. Expected lower yields were largely offset by lower hedge costs. The Company expected net investment income for Aflac U.S. to decrease in 2024, reflecting lower yields. Our planning assumed a positive 10% return for variable net investment income for both Aflac Japan and Aflac U.S.Target levels for credit losses and impairments are determined with consideration of current asset quality, current and expected market conditions, and potential trading activity to improve the overall health of the portfolio. In order to properly balance income and risk, targets for 2024 were expressed as a range around budget based on a bottom-up review of asset allocation and cash flows. As in 2023, we continued to slope the ranges for Net Investment Income to require above budget targeted performance for maximum payout, while not encouraging excessive risk-taking. |
| MIP Modifier | •Responsible Investing•Climate: Net Zero•Diversity of Leadership (Japan)•Diversity of Leadership (U.S.) | We maintained four objectives for the MIP Modifier in 2024 that balanced purpose and profit. First, the Company maintained its target for responsible investing of the general account (portfolio) by continuing to allocate at least 10% of available investable cash, which excludes funding to existing commitments, to investments with environmental and social impact. As part of our longer-term objective to source 100% of electricity for our owned and controlled facilities from sustainable sources, the Company continued to target improvement in 2024 by setting a minimum target of sourcing 17.25% of electricity from sustainable sources. In addition, the Company continued to develop its leadership in both Japan and the U.S., which included better reflecting, connecting with, and meeting the needs of those communities. For Japan, this translated into women filling at least 28% of Manager or General Manager positions with staff within Aflac Life Insurance Japan (ALIJ), which is part of ALIJ’s path to reach 30% or more by the end of 2025. Originally, the Company aimed to increase overall diversity (i.e., female or person of color) of senior management 5% in the U.S. by 2026, which was achieved in 2023. Having achieved this level ahead of 2026 and given the dynamic nature of its workforce, the Company aimed to maintain at least 48% diverse senior management in 2024. |
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