small shareholder wanted the US health insurer to give investors a vote on
executive pay. In his 16 years in charge of the Georgia-based company, Mr
Amos had never been faced with such a request.
Having presided over a huge expansion in the company's profits and the
share price during his tenure, Mr Amos found it almost offensive that a
shareholder would quibble over his compensation.
"My first reaction was: what have we done wrong? What don't you like about
us?" he recalls.
But Mr Amos' attitude quickly changed from defensiveness to curiosity.
In the ensuing months, he set out to ask leading shareholders whether they
would favour a non-binding annual vote on executive compensation, as in
His findings led him to a groundbreaking move: on May 5, Aflac will be the
first US-listed company to hold an investor vote on executive pay.
Aflac's vote will be a test case that has the potential to shape the
debate on the increasingly controversial issue of how much say investors
should have on executive compensation.
Activist shareholders and other "socially-responsible" investors, which
have filed requests for similar votes at over 100 companies, hope the
insurer's example will trigger a domino effect across corporate America.
Opponents of the measure argue that Aflac's decision is a dangerous
cave-in to a coalition of union-funded shareholders that want to wrestle
control away from management.
Mr Amos is at pains not to take sides. Although investors had never raised
executive compensation with him before that fateful proposal, he says none
of Aflac's large shareholders opposed the measure when he asked them.
"We weren't being naïve. We realised that was ground-breaking for the US,"
Mr Amos says. "But I did not want people to think we were scared it."
But he also concedes that not every company would follow the path blazed
"I don't think it is right for every other company: I just think you have
got to listen to your shareholders," he says. "This isn't a popularity
contest. No matter what America at large feels, the only things that
matter are shareholders' opinions."
For his part, Mr Amos says he will listen to shareholders' views on
executive pay on May 5, even though the vote is non-binding.
He expresses confidence that investors who have seen Aflac's shares rise
more than 36 per cent in 2007 will approve of his $14.8m total
compensation package - a 5 per cent increase over the previous year.
Some may have problems with Mr Amos' retirement benefits which were worth
more than $50m at the end of 2007 but others may regard them as just
reward for 34 years of service.
Mr Amos says he would be "very disappointed" if more than 40 per cent of
the votes were cast against his pay and would overhaul the company's pay
structure if a majority of shareholders rejected it.
"Let me be clear: this is an election, if you get 50.1 per cent you win
the election," he says. "But if shareholders really say 'no', we have to
go back to the drawing board because it means that something is wrong."
In practice, Aflac's executives are likely to survive the vote unscathed,
partly because large institutional investors are loath to vote against
management on such a sensitive issue unless there are serious problems
with the company.
Indeed, Mr Amos' likely victory in the vote has led other companies'
executives to question the motives for his surprise decision to grant
shareholders a vote on compensation.
He dismisses suggestions that the move was a clever ruse to pre-empt a
shareholder campaign and position the company as a model corporate
governance citizen in the eye of potential opponents.
"I didn't start this process. If it was a publicity stunt I would have
thought about it myself and done it. But I only did it after I got the
proposal," Mr Amos argues. But he does admit that the move has raised
Aflac's profile - the company's previous claim to fame was a US
advertising campaign featuring ducks - and benefited the company's public