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EPISODE 262

Aflac CEO Dan Amos on the Duck, Managing Risk, and Leading on Social Responsibility

53 minutes · October 4, 2021

Dan Amos, Chairman and CEO of Aflac Inc. (NYSE: AFL), deploys deceptively simple principles of risk management: Don’t risk a lot for a little. Never risk more than you can afford to lose. Consider the odds. Those are the north stars that guide the company Dan’s father and uncles founded. He tells the story of growing his family firm into a Fortune 200 company by trusting people and encouraging diversity, constantly evolving to meet client needs, and putting his faith in a brand campaign built around a duck.

Speaker 1 (00:03):

From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision in global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome Inside the ICE House, here's your host, Josh King of Intercontinental Exchange.

Josh King (00:46):

Way back, a number of years ago, I got my start in corporate public relations working for an insurance company. It was the first job after I left my roles in government and consulting in Washington, D.C. I was cautioned by a few friends that the world of risk management might not have as much personality and adventure as the world of the White House and how mistaken they all were. I was working at the Hartford, the company known for its distinctive stag mascot, making the same walk down asylum avenue to work in Hartford, that the great American poet Wallace Stevens made while dreaming up the lines that would win him the Pulitzer Prize in 1955.

Josh King (01:26):

Across the street was Aetna, which was bought by CVS Health, that's ticker symbol CVS in 2018. Nearby was Cigna, ticker symbol CI, downtown was Travelers, TRV, known for its distinct red umbrella, the old St. Paul Fire & Marine, when it was founded in 1853, situated among a whole community of insurers and reinsurance and brokers like Excel and Hartford Steam Boiler that gave the Connecticut capital the nickname, the Insurance City.

Josh King (01:56):

I then went to Willis Group working for the legendary Joe Plumeri and learned a ton more about how the global brokers like Marsh and Aon and some of the smaller players distribute the products and services offered by the global carriers. But it's been more the names that are outside Hartford, State Farm and Allstate in Illinois, Liberty Mutual in Boston, Progressive in Ohio, Geico in Maryland, USAA in Texas, Farmers in California, and of course, Aflac in Columbus, Georgia, that are really top of mind given their consumer focus and the competitive branding efforts that dominate the insurance industry.

Josh King (02:31):

I mean, when you have supplemental insurance coverage with premiums deducted from your paycheck, that pays benefits when you or a family member have an accident or illness, you don't think about filing a claim with American Family Life Assurance Company, you think about that duck running across your TV screen, making the call right away to Aflac, that's NYSE ticker symbol, AFL. Our guest today, Dan Amos, chairman and CEO of Aflac Incorporated has seen the industry evolve over the decades and has been one of the longest serving CEOs of any company listed on the New York Stock Exchange.

Josh King (03:08):

Dan's joining us to talk all about the company that his father and uncles founded, his long tenure leading a public company, risk management in business and insurance, and of course that duck, our conversation with Dan Amos is coming up right after this.

Speaker 3 (03:25):

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Speaker 3 (04:32):

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Josh King (04:53):

Our guest today, Dan Amos is chairman and CEO of Aflac Incorporated, NYSE ticker symbol AFL. Dan joined the company in 1973, and was named president of Aflac in 1983, became CEO in 1990, named chairman of the board in 2001. His long tenure as CEO has been recognized by his peers and the industry with dozens of awards, including being named one of the 100 best performing CEOs in the world by the Harvard Business Review for five times, and under his 31 year tenure as CEO, Aflac shareholders have seen a return of, well, 9422%, if you're counting, as of the end of the second quarter of 2021. Significantly outperforming the S&P 500. Welcome, Dan, Inside the ICE House.

Dan Amos (05:43):

Well, thank you for having me.

Josh King (05:45):

So today Aflac has an unparalleled brand identification, thanks to its mascot, we're going to get more into the duck later, but how did a coin flip determine the company acronym would rhyme with quack?

Dan Amos (05:59):

Well, sometimes in life, things just fall your way, and what actually happened is John Amos, who was my uncle was CEO, and at that time we were in just three states, and we had American Family Life Insurance up in Wisconsin, and we were American Family Life Insurance in Columbus, Georgia. Well, both could not go nationwide, so we met, and according to John, they flipped the coin. Some people say, "Well, he lost." I always say, "Oh, no, he won because AFLIC would have never worked." So Aflac ended up working. So there's a case where it worked to our advantage, and now you know the rest of the story because of the Aflac duck.

Josh King (06:50):

Aflac began as this family business, you mentioned Dan, after your father, Paul, started the company in 1955, the same year Wallace Stevens was getting his Pulitzer Prize with his brothers, John and Bill. What was the personal reason that drew the Amos family to cancer coverage, and where did the three get their entrepreneurial spark?

Dan Amos (07:10):

Well, my dad was always the salesman and understood business. My uncle Bill was the person that watched the purse strengths, and then John was the attorney and the entrepreneur that wanted to come up with the idea of getting in the insurance business. We got in it for the first few years, and then unfortunately my grandfather was diagnosed with cancer. When he was, as a family, we saw the bills and the cost associated with it, and how it's really a family disease, it's not an individual disease because everyone is involved. From that, we decided we were going to sell a policy that covered cancer, and we ended up doing that and it took off, and then of course, the big jump was when we got licensed in Japan in 1974, and that took us to even another level.

Josh King (08:07):

You were only four years old when Aflac was founded, and you're talking about the distinctive nature of your dad and his two brothers and how the different skills that they brought to the table, were you aware at the time of the work that it took to establish and run a company like this?

Dan Amos (08:25):

Here's the thing, we were, in my opinion, a great example of the American dream. We didn't have any money. In fact, the way we ended up raising the capital was, they went door to door and sold the stock to people in the community. We ended up being in Columbus, Georgia. People ask, "Why Columbus, Georgia?" It was the largest city in the south that didn't have an insurance company. That tells you how many insurance companies were out there. So the community ended up buying the stock, and as you can imagine, they did very well. In fact, if you bought a 1000 shares, which was $1,100, today would be worth over $200 million.

Josh King (09:10):

A year after graduating college, you head to Wall Street, not to get a job in a back office or an entry level finance position, Dan, but to list Aflac on the New York Stock Exchange, how did listing on an exchange impact the company and how does your experiences on June 14th, 1974, compare to some of your other memorable accomplishments?

Dan Amos (09:33):

I'm not saying this because you're having me speak today, I say this all the time, because it's true. It was one of the most memorable things I can ever remember in my life. I can remember everything I had on, I can remember watching from the ground, watching John Amos up there with a ticker tape and what all was going on. I really felt like country come to town. I mean, we were just from Southern Georgia boys or Florida boys where we were brought up and to be up there, you realized it was the Mecca of finance and what was going on, and it was so exciting. It was just unbelievable. I'll just never forget it.

Josh King (10:20):

I think you said, as you described Paul and his brothers, that Paul was the salesman, why did you decide that sales was the right place to begin your career after college?

Dan Amos (10:30):

When we get out of school, and we were still small at the time, we were about 100 million in assets or so, I knew that everybody was going to say, well, he's "sonny boy." He's the nephew of the CEO or whatever. I said, "Okay, I want to go where it's an objective way of looking at me." Subjectively, if I went into accounting or I went into law, you could debate whether or not I was doing a good job or not.

Dan Amos (11:00):

But one thing about sales is, it's objective. You either make your number, you don't make your number, and I was very fortunate. I ended up choosing the sales path. Was there 10 years on commissions? Took my area from 600,000 in premium to 11.5 million over that 10 year period. So I was very fortunate to have great salespeople to work with. One thing I tell people all the time is, I loved my sales job as much as I love my job now.

Dan Amos (11:34):

Now, I wouldn't want to go back because I enjoy what I do, but I can't say that I have more fun now than I did back then. I really enjoyed it because it was just, you were doing a service to help people to cover them because people were on commission, you had to help them make a living, and it was just a lot of fun, and it still is today.

Josh King (11:57):

The same year, Dan, that the shares began trading on the NYSE, your uncle expanded the company's operations into Japan, you mentioned that earlier, this quickly became and really continues to be a core part of the company's business. What did uncle John see about the Japanese insurance market that others had missed, and how has that business evolved?

Dan Amos (12:18):

Well, there's a great example of keeping your eyes and ears opened. He was in Osaka at the world's fair, I believe it was 1968 or so, and he saw a thriving economy and he said, "This would be a good place to do business." But then all of a sudden he noticed people were wearing surgical masks, now because of the pandemic, we were wearing them, but before that, we never ever wore one, and he couldn't figure it out, and the people came up and he finally asked somebody and they said, "Well, we have a cold and we don't want to spread it to others. It's a crowded area."

Dan Amos (13:00):

And he went just like that. He snapped his finger and he said, "Anybody that'll wear a surgical mask will buy insurance. I have got to get licensed there." And he spent five years working on getting a license, and finally we became the first company after the war, foreign company, to become licensed, to do business in Japan. From that day on, it changed us forever, because today, in terms of profits, revenue, we're anywhere from 70 to 75% of our business is from Japan, which most people do not know.

Josh King (13:43):

Now. I mean, how did you become involved to the international side of the firm, and what did you learn about the cultural differences to prepare you to successfully navigate the customer needs and nurture a global company?

Dan Amos (13:57):

Well, I had majored in college in risk management and insurance, and so the University of Georgia had a good risk management insurance program. It helped me a lot, and I ended up writing training schools. So many of our things that we had done was not the normal way of doing business because of the way we started up. So we were adding some professionalism to it, with how we recruited, how we trained, and so I wrote the training program for the United States. Then when we got licensed in Japan, a few years later, I started and helped write the program for Japan.

Dan Amos (14:37):

Now, you had to adapt it to the Japanese way, but it became very effective of giving them site sellers and showing them, back then we didn't have computers to make presentations. So we had site sellers, or would be a pamphlet that you'd go through and show them how to do it, and we would do that, and I went around the country doing that for a year, working with them, and then went back to my regular job, which was running sales in the U.S.

Josh King (15:07):

So from that regular job, Dan, your named president to the company following the loss of your uncle to cancer, did you feel ready at that point for the challenge and how did seeing the company's growth under your uncles and your father's leadership prepare you for that moment?

Dan Amos (15:22):

I became president in 1983. I was young, I was 30 years old. Again, I had numbers that supported taking a chance. It was the youth that was against me, but I worked under my uncle and my dad, Bill Amos had retired in 1978. So I worked under the two of them and learned many things. Then in 1990, John passed away, because he'd been ill for a little bit of time, they had made me deputy CEO for a year or so to see how I would do. I had picked up the slack because of his illness, then became CEO in 1990 at a young age of 39, and back today, only Warren Buffet has more tenure of the Fortune 500 than I do.

Josh King (16:18):

That's right. I mean, between you and Mr. Buffet, how is risk management part of both of your secrets to longevity, you and Warren?

Dan Amos (16:25):

Well, I believe that in life, specifically in the business world, it isn't whether or not to take risk or not, you have to take it, it's how much risk are you willing to take on, and do you have parameters to protect and not go outside that? And if you do that, then you're pretty much protected. I majored in risk management and insurance, and there were three principles of risk management and insurance that I always used and still use it to this day, and that is, don't risk a lot for a little, don't risk more than you can afford to lose, and consider the odds. And in every decision I make, I use those three principles of risk management and insurance, and they have been very helpful to me over the years.

Josh King (17:18):

I think back to 1990, Dan, you were named CEO just as the U.S. is entering recession, Japan was also embarking on what would become a really stagnant decade for its economy. One of your first actions was to streamline the company to focus solely on Japan and the U.S. How did that help the company enjoy a hyper growth phase despite the headwinds that were going on right at the beginning of your tenure?

Dan Amos (17:45):

One of the things that I've always felt like is, as a CEO, you get all of these opportunities as people call it when they come to see you. But I think what you're really seeing most of the time are distractions. To get from point A to point B, if you've got a good strategic plan, you can't let things get in the way. Now, you've got to be open to what those ideas are, but most of the time, if you had a good idea, stick with it. The one thing I found out as I became CEO is, there was more life insurance force in the United States and Japan than the rest of the world combined. We didn't have numbers on health insurance.

Dan Amos (18:35):

So we were licensed in six other countries, and so, we weren't making money in any of those countries, and I felt like that we should sell the operations or close the operations and take that money and invest in the U.S. and Japan. So I started the national advertising campaign as a way of moving forward and trying to concentrate on building our business. That worked very well, and our business, both in the U.S. and Japan continued to grow, and has grown since then.

Josh King (19:12):

I read somewhere, Dan, that I think you took about $8 million that the company saved through this streamlining effort to launch this campaign. Maybe the idea came from the conversations you had with your dad all the way back in 1974, when he talked to you about Coca-Cola that made you realize that brand recognition was paramount. Bring us back to that moment when you were thinking about this campaign.

Dan Amos (19:39):

We were actually at the New York Stock Exchange, we had finished, we had the afternoon free, late afternoon free, and then we were going back the next morning. So we walked in the streets of New York City, and all of a sudden there is a shop with Coca-Cola, but it is not just the sale of Coca-Cola, it is the branding of Coca-Cola. You could buy a hat or a t-shirt. My dad grabs my arm and stops me. He says, "Stop." "So what?" He said, "Look at this store." I said, "Yeah, it's Coca-Cola here in Georgia. It's in Georgia." "Yeah, yeah, yeah. That what I want you to see." I said, "What do you want me to see?" He said, "I want you to see that you have arrived when people will pay money to ware your brand." I said, "I never thought about that, but you're absolutely right."

Dan Amos (20:36):

We went on. That was 1974. Now it is 19 ... I'm sorry, it is 2000. We have introduced the Aflac duck. We got more hits the first week that we ran the Aflac duck than the entire year before 1999. People were calling and saying, "I'd like to buy one of those ducks." We never dreamed of selling a duck. By the way, since then we probably sold 40 million of them in Japan and the U.S. So, I run straight up to my dad's office and I said, "Well, we've arrived." He said, "What do you mean?" I said, "Do you remember the day we were in New York at the stock exchange?" "Oh yeah. Oh yeah." "Do you remember going to the Coca-Cola?" "Yeah, and I told you that when people will buy your product to wear it or wear your name, you've arrived."

Dan Amos (21:44):

I always called him pop. I said, "Pop, we have arrived. People are calling us wanting to buy the Aflac stuff duck." He said, "You don't have the stuff duck." I said, "As soon as I get out of here, we are going to make one." So, we jumped on it, got started, had a duck within three months, and that started the whole thing.

Josh King (22:08):

Bring us into this pitch meeting. I mean, who will you have to give credit to, to say American family is now going to be known as this bird that flies overhead. What did the board say when you said you were going to invest it all in a single animal?

Dan Amos (22:23):

I laugh because, again, sometimes I think the good Lord just protects you, because we weren't sure of what we were doing. We had gone into uncharted water. We had backed into something we had no idea how big it was. I mean, that's just the fact. So, we had done advertising for 10 years. We only had recognition of about 4%, and after 10 years we had 10%, and we realized that we were never going to move the needle until we did something big. So at that time, my wife had worked for the company and I had told her that she needed to go look and see if we could find a new advertising agency, that we need something bold and big.

Dan Amos (23:16):

And she came back with a firm, two women owned it. Linda Kaplan Thaler was the primary one who drove this, and she in turn, came up with the idea with two guys that worked for her of the Aflac duck. Now, the first commercial is really what happened. The first commercial was set in New York City on a park bench, and two guys were on the bench seat, which were two creative guys instead of the way it showed up in there, and they heard ducks quacking, and they said, "That sounds like Aflac. So from that, they developed this commercial.

Dan Amos (24:02):

Now, when you hear that and you think of the commercials, it sounds like that might make sense, but let me just tell you that when we finally saw it and we ended up doing it, and I tried to explain to somebody that we had this commercial and a duck was going to quack Aflac, there was the blankest look on people's faces. They thought I had lost my mind, and I had the statistics to back it up, that it was going to be a winner. We had done research from all of our commercials. Financial services is about the hardest area to get name recognition. That's the reason you see the property casualty insurers, so many of them using humor, because it's very hard, and in fact, we were the first one to use humor.

Dan Amos (25:05):

So, what we in essence did was, is we tested, and the average score is a 12, just to give you an idea, and insurance does worse than financial services. So, we had one commercial that had tested a 12, only one. So it was very hard for us to get the recognition. This is where the problem came in, back then Ray Romano had the number one TV show called Everybody Loves Raymond, and Ray Romano in this example that we were going to use was playing with building blocks with a child or several children. And in the end, it formed Aflac, and that tested an 18, that tested an 18, higher than any commercial we had ever tested, but not only higher, but 50% higher.

Dan Amos (26:07):

The Aflac duck tested a 27, through the roof, almost three times what we had ever done. Here was the problem. Do you go with a traditional commercial that you don't have to worry about or do you step out and make a decision to go with something wild and crazy? I had said all along that I would go with the wild and crazy one. But when I went to my board, I had already tested this with people, and I had said all along, if it was in good taste, I'd go with it. So we went with it, but knowing that we were making fun of our name, and if it didn't work, what would we do? But I went with those three principles of risk management and insurance, don't risk a lot for a little. Well, I knew I was risking a little for a lot.

Dan Amos (27:10):

That commercial was in fact going to be the most expensive commercial we ever made. Normally they were 500,000. This was a million dollars. Don't risk more than you can afford to lose. Well, I could afford to lose the million dollars. Wouldn't like it, but I could afford to lose. And then what were the odds? And the odds were very good that it would work. So we decided to go with it on millennial day, that's January 1st, 2000, and remember they thought they were going to be all these programs, Y2K, and that it was going to shut down everything. Well, nothing shut down.

Dan Amos (27:51):

And so, they didn't have anything to do on the news stations. So our commercials ran over and over and over again. As I said earlier, we ended up having more hits on the internet the first week than the entire 52 weeks of 1999. What was the results? Well, the results were that we were going to pull those commercials after a day if we got adverse or negative publicity. To the opposite, it went through the roof. In three years, our sales just about doubled in the United States, and our name recognition went from about 8-9% to almost above 80%, and it runs about in the high 80s, low 90s now, all the time.

Dan Amos (28:50):

And to give you an idea, our budget is very low compared to the property casualty insurers. Our budget is about $140 million. Some of the major property casualty insurers spend over a billion dollars every year. And so, the brand really made a difference.

Josh King (29:15):

So from those modest beginnings, these two copywriters on a bench in Central Park, the brainchild of Linda Kaplan there and the agency, and figuring out that, well, that humor could work well in the United States market. But a few episodes ago on this show, we talked to the Financial Times editor, Gillian Tett, about how American brands were often lost in translation when they get exported into Japanese culture.

Josh King (29:43):

She talked about how the Kit Kat found a way to integrate itself into the long standing Japanese social customs to become a cultural phenomenon. I read a fascinating Harvard Business Review piece about how the duck had a similar experience. How did the duck first help Aflac become the largest insurance company in Japan and lead to what's called maneki neko Aflac duck becoming a Japanese pop culture sensation.

Dan Amos (30:10):

The first thing you have to understand is, in Japan, our name recognition was about 60%. In the U.S. there were over 200 insurance companies that started with the name American, there were 50 that had family in it, and you had one that was the American Family Life Insurance Company, and we are assurance company. In Japan there was no other real American other than AIG, so our name recognition was much easier to get in Japan than it was in the United States.

Dan Amos (30:48):

So that was the first thing is, I didn't feel that I had to push Japan that hard, but I asked them, "I thought that the idea of a duck would be something they would like in Japan." I said, "Let's try this." My director of sales and marketing was not that excited about it, but he said, "Okay." And he dubbed it, and it was a disaster. It was a disaster. So I pulled it, and I didn't know what to do, but my heart said, "This thing will work."

Dan Amos (31:23):

So, I said to him one day, I said, "I got a deal for you." He said, "What's that?" I said, "If you'll try again with the Aflac duck and try creativity, not trying to just dub it, I think it'll work. I'll give you a $50,000 bonus if you make it work." God came down that night and touched him and he decided he would try. Well, he made a commercial with the group and it was a great commercial, but it had two things that separated us from the U.S. and Japan.

Dan Amos (32:06):

Number one is, in the United States, what was popular about him is, is the duck itself, but in addition to that, we found in research that most people felt like they weren't being heard. And as you know in the commercial, he would get louder and louder, screaming saying, "Listen to me, listen to me." And everybody identified with that. In Japan, they wanted a quieter, softer tone. We had used Gilbert Gottfried and that's another story. But in doing so, he made it softer. The other thing he did is, it's considered rude to not be noticed. Well, probably true here too in the United States, but nobody seems to care, but in Japan they did not. They made sure that you saw the duck from day one.

Dan Amos (33:05):

And those two things took off and the duck took off and it became extremely popular. After a few years of the duck taking off, someone came up with the idea of the maneki neko duck. Now, the symbol of prosperity is this particular cat. And you've all seen it. You may not think you have, but he holds his paw in the air and they wanted to combine it into a cat duck. Well, as you can imagine, this is where you have to say, "I'm going with the culture." If you ask me what has made me successful, I would tell you that it is number one, hiring great people, and number is not getting in their way, but designing boundaries that they have to stay in.

Dan Amos (34:06):

Well, there's no way that anybody I know in America would've ever come up with a cat duck, but in fact, they came up with a jingle and this cat duck that became so popular, that it became the number one download on cell phones for almost a year. It skyrocketed our sales and every aspect of us. Today we don't use it as much, but it was a fabulous marketing campaign. So the message is, you have to let people culturally do what they want to do, but at the same time, discuss the issues and then let them go with it. And they did, and they were right, and I would've been wrong, and you know the rest of the story, the sales were there.

Josh King (35:01):

Your most recent commercials in the U.S. now, 20 years or 21 years after the duck first debut feature the coach of Alabama Crimson Tide, Nick Saban, Jackson State coach, Deion Sanders, Aflac CMO, Shannon Watkins had this to say about the most recent trials and tribulation of the duck on the gridiron trying to cover two of the brightest stars in football. She said, "By partnering with Coach Prime, we will shine a bright spotlight on the rich legacy of HBCU football, and the role of these amazing colleges and universities play in the lives of so many promising students on and off the field. Is this an example of the duck at its best selling Aflac's important products with humor, but also focusing on topics that are far larger than any one company?

Dan Amos (35:50):

Absolutely. It is exactly what it does. But it goes back to the roots on the beginning. When it became obvious that we could sell these little stuffed ducks, we didn't want to be in the business of selling ducks. We were in the business of selling insurance. So, over 25 years ago, we did a sponsorship which ended up being called the Aflac Cancer Center. It's a children's healthcare of Atlanta, and we have the Aflac Cancer Center and Blood Disorders. And it is ranked in the top six cancer centers for children or pediatric cancer centers in America today, and we donate all the proceeds from the sale of the ducks to the cancer center.

Dan Amos (36:44):

And when we have sponsored balloons in the Macy's Day Parade, they sell the ducks at the Macy's stores and we donate those proceeds to wherever the location is of the store. So, we've used it if you want to ... We copied, we used the Ronald McDonald concept of turning the duck into our philanthropic arm, and it has worked very well. Well, now we're using it also as what we call My Special Aflac Duck, and the My Special Aflac Duck is this little computer driven duck. They're not cheap, they're over $200 each, and we have given them to every child in America that is diagnosed with cancer, not just the Aflac Cancer Center, but any place in America.

Dan Amos (37:45):

And we've now taken it to sickle cell because sickle cell at the Aflac Cancer Center and Blood Disorders is the number one sickle cell hospital in the United States. Far as that goes in the world, we have taken the Aflac duck and extended its reach to be more than just about insurance. I think our company today is more than just insurance. I think we're about branding and insurance and profit. If you don't do that, you don't get to keep your job. But next is this, how can you give back to the community and make it a better place?

Dan Amos (38:29):

And over the years, we've donated over $150 million to the center, not our company, but over half of it has come from our agents and their commission statements. So they do that, our employees, they give, but they also go up there and help at the cancer centers do anything they ever want us to do. So it has brought us together as a team, a unit to do something to better society, and we're giving back interestingly enough, because we made money in cancer insurance.

Josh King (39:07):

Making money in cancer insurance and giving back to society, such great themes, Dan, we're going to explore more of that in the second part of our program when you and I are going to talk about the mission that drives the company today and how Aflac has been focused on doing the right thing before ESG even entered the business vernacular, that's all coming up right after this.

Speaker 6 (39:32):

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Speaker 6 (40:00):

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Josh King (40:37):

Welcome back. Before the break, Dan Amos, chairman and CEO of Aflac, and I were talking about his early career and the introduction of the Aflac duck. So Dan, May 7th, 2001, your father, Paul, retired as chairman of the board, which was a position that you assumed, and this made you president, CEO and chairman of Aflac. What are some of the lessons that you learned in building strong management teams that allowed you to successfully operate a global Fortune 200 company? You talked earlier about if they've got a creative idea, let them go with it. What's some of the other secret sauce that drives Aflac today?

Dan Amos (41:11):

I believe in evolution not revolution. And so I think it's important to constantly remind people where we're going and how we're getting there to where they are not shocked. People love job security. The other way you create job security is, I personally want to be read. I want someone to say, "Oh, I know what Dan's going to think." And within that scope is one of the things Dan's going to say is, "Look, try new ideas, try new things." But at the same time he's going to say, "If it doesn't work, shut it down and move on, do not waste time and effort. It is not a problem to fail. It is a problem to have a failing issue and not address it." So those are the things that come to mind with me that are very important, that you stay focused on what you're doing, which is what I said earlier.

Josh King (42:18):

I mean, scrolling through Aflac's executive management webpage, you also realize that diversity is clearly a big part of your vision for the company. Why is diversity and inclusion so important to you and Aflac?

Dan Amos (42:30):

Well, it's a smart thing to do. I think men and women are equal, and frankly, I've had enormous success working with women over the years. I would say that our track record speaks for itself. Our president of our U.S. operation is an African American female. You mentioned Shannon as head of marketing. She's brilliant. She's African American female. Our general council is an African American female. Culturally, most difficult things I ever dealt with was almost 25 years ago. I've been CEO for 31 years, but I decided to take on the Japanese and discuss promoting women, and culturally that just wasn't done, 25 years ago. There was not a single woman in the financial services in Japan, and I felt like it was time that we do that.

Dan Amos (43:31):

I tell this story, knowing that today 30% of our top management team are female in Japan. So we have achieved the objective, but this little story will give you an idea of how difficult it was at the time. Remember first about Japan is, they work under the concept of a team. So you wait your time. So tenure makes a real difference. So, all of these men were waiting their time and all of a sudden to them to throw women into the situation made some of them go backwards, because they couldn't get in.

Dan Amos (44:11):

But we had to explain to them that this is the thing that we have to do. Men and women are equal. They were somewhat reluctant. So, the story goes that I called them together and I said, "Look, I think it's time that we promote a woman. I'm sure we've got a good person. I can think of a couple, but I'd like your recommendation." And they said to me, "Look, that sounds like a good idea, but how about giving us a year to choose someone?" I thought, "Well that's not unreasonable. Okay. I'll give you a year." So the year passes and I said, "Okay, who do you want to promote?"

Dan Amos (44:48):

Well, they said, "We've been thinking about this and we really think that two is better than one." And I said, "Well, they only hire everybody one time a year, they tell them that they're going to be up for the job and they may go temporary, but everyone's hired and you're in a recruiting class and that's the way it goes." So anyway, so I said, "Okay, I'll wait the two years." So the two years finishes, I said, "Okay, who do you want to promote?" They said, "We've been thinking about it, and culturally, there are no Japanese women in financial services, and we just aren't comfortable with that being a foreign company." I said, "Okay, then you don't have to."

Dan Amos (45:41):

So they were shocked because I tend to be vocal, and so about a week later is when they send the promotions. So they send me the promotions and I get a big old red pen and I write across it, "Rejected." They call me and they say, "What's wrong? You don't like these people?" I said, "Did I ever turn anybody down before?" They said, "No." I said, "Well, here's the deal. I don't know how the Japanese culture works, but I know one thing, I don't have to promote anybody until a woman is promoted. So I'm not going to promote anybody until we get a woman. That's my answer."

Dan Amos (46:25):

So the next day they submit a woman at the top of the page and that broke the barrier and it took off. But there is a lesson here, and the lesson is, is that in anything we're doing as a corporation, it takes top management to push. And once I convinced the top management, they took off and now we've got 30%, but somebody has to break that barrier and push it through. That applies to everything we're doing in the United States, it applies to what we're doing in Japan, and I just can't imagine having a company that didn't have the officers of color and the women in the positions we've got, we would not be anywhere as near a company as we are today without that, because I'm selling to that group.

Dan Amos (47:22):

I'm selling to a multicultural group of people. Why wouldn't I want that in there? I always say that when I walk into my staff meeting, why would I want nothing but 60 year old white folks? I mean, I won't learn anything. I want young, old, people of color, Caucasian. I want a mix, because that's what makes America great, and that's what I want to do.

Josh King (47:52):

And that is something that so many people spend so much time focused at the very top level of the management ranks that you've just been talking about, Dan. There's another level that you also have a good deal of experience based on your 30 years of tenure, and that's at the board of directors level. The New York stock Exchange through our NYSE board advisory council has been focused on making sure that public company boards reflect the communities they serve. Before you even get to the hires of the people that work in the building, how do they accomplish this at Aflac at the board level?

Dan Amos (48:27):

Well, we have had a woman on our board for 40 years. So we were one of the first to do that. Today, you just have to be on the lookout, and what I've found is, is the best recruiter for board members is board members themselves. It's not recruiting firms. They can do a good job too, but to build comradery and understanding, I think our board members help us in a lot of ways of looking for people. So, it's been very positive for us over a period of time.

Dan Amos (49:06):

Our actual board, if you look at it that way, is about over 60% minority, from that standpoint. One's an IT specialist, one is dean of the business school, one of the major universities, Florida State, and prior to that was at Syracuse, and the list goes on. So we've got great, great people serving on the board, and there's no difference between this and a sports team. You're always looking for that superstar out there that you can recruit, whether it's at the board level or it's at the officer level, and we're constantly looking for that.

Josh King (49:46):

Another area where you were a leader for ESG was the adoption of the first say-on-pay vote in the history of American public companies. For our audience, what is that, and why did you decide to move the board in a direction that would reveal your own salary to the public, before that was what everyone did?

Dan Amos (50:05):

Well, that was back in 2008. Right about the time of the financial crisis, and when I got the request to vote on that pay, I wanted to know what we'd done wrong, because I couldn't figure it out. Because stock was at an all time high, earnings, revenues, everything was doing great. The people that brought the request said, "We just think you ought to be able to vote on it."

Dan Amos (50:35):

Again, going back to objective versus subjective, my stuff is pretty objective. You make your numbers or you don't, they're not sales numbers necessarily, but their earnings, their revenues, and I thought I don't have a problem with that. So I took it to the board and said, "Is there anything I'm missing here? I think we all let them do it." So we did become the first company to ever vote on say-on-pay. I'm proud to say we did it, never had a problem with that to this day, and I thought it was the right thing, and so I'm glad we did it.

Josh King (51:15):

Dan, you and I have been on this long journey, going back in your history from your father and uncle starting the business, to you taking over, to the watershed moment in 2000 when the duck debuts all the charitable things that have been linked to the duck since. As we wrap up, Dan, you're coming up on the 50th anniversary of listing just a couple of years, can I invite you and your team and perhaps the duck to come back to ring the New York Stock Exchange bell to celebrate?

Dan Amos (51:40):

Oh, that would be wonderful. I can't think of anything I'd rather do than to come back after 50 years. So, you got a date. We'll be there. You just tell us and we'll be there.

Josh King (51:51):

Looking forward to it in 2024, Dan. Thanks so much for joining us Inside the ICE House.

Dan Amos (51:57):

Thank you. Bye-bye.

Josh King (51:58):

And that's our conversation for this week. Our guest was Dan Amos, chairman and CEO of Aflac Incorporated, NYSE tickers symbol, AFL. If you like what you heard, please rate us on iTunes so other folks know where to find us, and if you've got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @icehousepodcast. Our show is produced by Pete Asch with production assistance from [Kent Able 00:52:27] and Ian Wolf. I'm Josh King, your host, signing off from the library of New York Stock Exchange. Thanks for listening, we'll talk to you next week.

Speaker 1 (52:37):

Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content here in, all of which is presented solely for informational and educational purposes. Nothing here [inaudible 00:52:59] solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.

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Information contained in this podcast was obtained in part from publicly available sources, and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice.