Risk & Compliance

Insurer to Give Investors ”Say on Pay”

What's the name of that insurance company, the one with the duck, that's going to put executive compensation to a shareholder vote? Aflac!
Stephen TaubFebruary 14, 2007

Insurance company Aflac announced on Wednesday that it will become the first major company to provide shareholders with a non-binding vote on executive pay packages.

The disability insurer, well-known for television ads featuring a very persistent duck, reportedly came to its decision in response to behind-the-scenes discussions with union activists. “Our goal at Aflac has always been to be responsive to our shareholders,” said chairman and chief executive officer Dan Amos, in a statement.

The first advisory vote take place in 2009, according to the company, since that will be the first year that the executive compensation tables in Aflac’s proxy statement will contain three years of data, reflecting the Securities and Exchange Commission’s new disclosure rules.

“Our shareholders, as owners of the company, have the right to know how executive compensation works,” added Amos, in a statement. “The board’s action is in keeping with Aflac’s longstanding pay-for-performance compensation policy and our commitment to transparency at all levels.

The “say on pay” movement, as these advisory votes are collectively known, reflects growing investor concern with executive compensation.

Last year, AFSCME became the first shareholder to submit such a proposal; it received 44 percent support at Sun Microsystems and Countrywide Financial, 43 percent support at Sara Lee, 41 percent at US Bancorp, and 40 percent at Home Depot, according to the union.

So far in 2007, according to Institutional Shareholder Services, investors have filed at least 129 proposals dealing with executive pay, including at least 38 that call for an advisory vote to ratify the compensation of named executive officers.

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