Aflac Chairman and Chief Executive Officer Dan Amos will forgo a $2.8 million bonus he earned last year, the company announced Monday.
“The board’s compensation committee accepted his proposal recognizing that, although Aflac delivered a strong operating performance in 2008, it is not reflected in the company’s stock price given the current turbulence in the stock markets,” the company said in a news release after trading on the New York Stock Exchange closed.
Kriss Cloninger III, Aflac’s president and chief financial officer, voluntarily reduced his bonus by $477,000 or 35 percent. That means Cloninger was due a bonus of more than $1.35 million and took about $900,000.
The announcement comes as the company’s stock has been getting hammered over the last month amid concerns about investments in European banks.
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The stock closed at $15.80 Monday, down $1.21 on a day both the Dow Jones Industrial Average and Nasdaq took another beating. Aflac’s stock price is down more than 60 percent since the first of the year.
When it comes to executive compensation issues, Amos has been ahead of the curve, said analyst Steven Schwartz with Raymond James & Associates based in Chicago.
“Dan understands that there are a lot of shareholders in Columbus and in Georgia who are hurting, not only because of the declining value of Aflac, but other Georgia-based stocks,” Schwartz said. “I think he appreciates his community. He also gets the symbolic value of this. Not every CEO does.”
Amos and Cloninger still did well despite giving up the bonuses.
Amos’ salary was $1.3 million last year, according to the release. That does not include total compensation and stock options, which will be released Monday. In 2007, Amos’ total package was $14.8 million.
Cloninger’s salary last year was $857,700, according to the company. His total compensation package in 2007 was $7.5 million.It is the third major compensation initiative Amos has taken in recent years. He was one of the first CEOs to give shareholders a say in his compensation, and the first non-binding vote was last year. He also volunteered to take a “golden-parachute” clause — he would have been entitled to nearly $14 million if he left the company — out of his contract.
Ken Janke Jr., Aflac Senior Vice President for Investor Relations, said this was an extension of those previous moves.
“Dan is atune to compensation,” Janke said. “He is also atune to what the shareholders are saying and thinking. He has understood for several years that compensation is a big issue.”
Aflac, which sells policies in the U.S. and Japan, made $1.3 billion in profit last year, hitting its performance goals.
Aflac Inc. board member Robert B. Johnson chaired the compensation committee that had the ultimate say on the bonuses.
“Even though Mr. Amos and Mr. Cloninger were entitled to their full operating bonuses — and in 2008 Aflac outperformed the S&P 500, the S&P Life Index and the Dow — the board agreed to accept their proposals,” Johnson said in a prepared statement. “We support their decision to voluntarily reduce their personal compensation as a demonstration of their commitment to our shareholders.”
Schwartz, who has been following Aflac longer than any other analyst, said the move was interesting.
“The question is, who’s asking Dan to give up his bonus?” Schwartz said. “Aflac is not taking government money and the company has had good earnings. The answer is probably no one asked him. He just did it.”