You may know it as the company with the famous duck commercials, but AFLAC has been making headlines for another reason. The CEO of the giant insurance company recently announced AFLAC would become the first company in the nation to let its shareholders vote up or down on the pay packages of its top executives. The announcement comes as public outrage over excessive CEO pay has reached a boiling point, particularly after revelations earlier this month that Home Depot CEO Bob Nardelli collected a $210 million exit check after being fired for poor performance.
Our Business Correspondent Betsy Stark spoke to AFLAC CEO Dan Amos about this and other issues in an exclusive interview for ABCnews.com. Here are her Ten Questions for Dan Amos.
1. You made headlines recently saying you would let AFLAC shareholders cast a vote on executive pay. Why did you do that?
We had a proposal and it was brought about by Boston Common Group (a large institutional shareholder) ...to vote on executive compensation. I took it to our board.... I interviewed some of our large shareholders, both individuals and institutions, and after studying all the issues...we made a decision that since the shareholders wanted it, I felt like we should go ahead and do it.
2. Were you influenced at all by some of the stories that have been in the news about CEO's who have walked away with excessive pay packages and led their companies poorly?
Well, you know, the only person that really influenced me are the shareholders themselves... I think it came to the forefront with a lot of people because of compensation issues at other companies. But I think ultimately that's the way I have to look at things.
3. But are you personally offended by those kinds of stories, of CEO's who lead poorly and leave richly? Does this violate your own personal code of what's moral or fair?
All I can tell you is that the way it works at AFLAC is that it's pay for performance. In fact, it could never happen at AFLAC, you could never have terrible years of performance and walk away with a lot of money.
4. Is extravagant pay OK if extravagant profits come with it? I mean, Lee Raymond (the former CEO of Exxon Mobil) retired with a $357 million pay package but he also on his watch led his company to record profits.
Well, I think that in every area that you deal with, whether it be a janitor or a celebrity or a baseball star or a CEO, I think it goes back to what the job is worth. What is the standard that is out there? What does it take to hire that person or to keep that person and that ultimately is market driven.
5. I hear you making two arguments. One is, what the position is worth. The other is, what the market will bear.
Well, I think it's both...I can give you an example. The South is famous for its college football and the University of Alabama coach just became the highest paid NCC coach....well, I can tell you right now the salaries and bonuses of all the other NCC coaches is going up because they don't want to lose their coach to somewhere else and they're going to hold him. I don't know what the position is worth, I just simply know it's a supply and demand issue.