Summary
Aflac Incorporated (AFL) announced on June 9, 2023, through its Compensation Committee, that it is freezing benefit accruals under two key executive retirement plans: the Supplemental Executive Retirement Plan (SERP) and the American Family Corporation Retirement Plan for Senior Officers (SORP). This freeze will be effective as of December 31, 2023. While all retirement benefit accruals will cease, active participants in the SERP may continue to accrue service towards early or delayed early retirement eligibility, based on their final average earnings as of the freeze date. Accruals related to office use and medical benefits under the SORP will also continue. In conjunction with the freeze, impacted executives will become eligible for "Executive Employer Contributions" under the Aflac Incorporated Executive Deferred Compensation Plan. The specific contribution rates will be determined by the Compensation Committee based on post-freeze compensation. This move signals a shift in how the company provides retirement benefits to its senior executives, moving away from defined benefit structures towards a more deferred compensation model for benefits earned after the freeze date.
Key Highlights
- 1Aflac Incorporated is freezing all retirement benefit accruals under the Supplemental Executive Retirement Plan (SERP) and the American Family Corporation Retirement Plan for Senior Officers (SORP) effective December 31, 2023.
- 2The freeze applies to defined benefit pension plan accruals for eligible executives.
- 3Actively employed participants in the SERP can still accrue service towards early or delayed early retirement benefits, calculated on their final average earnings as of the freeze date.
- 4Office use and medical benefit accruals under the SORP will not be frozen.
- 5Executives affected by the SERP/SORP freeze will be eligible for "Executive Employer Contributions" under the Aflac Incorporated Executive Deferred Compensation Plan.
- 6The Compensation Committee will determine the contribution rates for the Executive Deferred Compensation Plan.
- 7This action indicates a potential shift in executive retirement compensation strategy for Aflac.