In June 2020, the Company transitioned from E*Trade Financial Corporate Services, Inc. to Fidelity Management Trust Company as the trustee and recordkeeper of the Company's long-term share-based compensation plans.

As of December 31, 2020, the Company has outstanding share-based awards under the Aflac Incorporated Long-Term Incentive Plan (the Plan). Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors.

The Plan, as amended on February 14, 2017, allows for a maximum number of shares issuable over its term of 75 million shares including 38 million shares that may be awarded in respect of awards other than options or stock appreciation rights. If any awards granted under the Plan are forfeited or are terminated before being exercised or settled for any reason other than tax forfeiture, then the shares underlying the awards will again be available under the Plan.

The Plan allows awards to Company employees for incentive stock options (ISOs), non-qualifying stock options (NQSOs), restricted stock, restricted stock units, and stock appreciation rights. Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights. As of December 31, 2020, approximately 38.0 million shares were available for future grants under this plan. The ISOs and NQSOs have a term of 10 years, and the share-based awards generally vest upon time-based conditions or time and performance-based conditions. Time-based vesting generally

occurs after three years. Performance-based vesting conditions generally include the attainment of goals related to Company financial performance. As of December 31, 2020, the only performance-based awards issued and outstanding were restricted stock awards and units.

Stock options and stock appreciation rights granted under the amended Plan have an exercise price of at least the fair market value of the underlying stock on the grant date and have an expiration date no later than 10 years from the grant date. Time-based restricted stock awards, restricted stock units and stock options granted after January 1, 2017 generally vest on a ratable basis over three years, and awards granted prior to the amendment vest on a three-year cliff basis. The Compensation Committee of the Board of Directors has the discretion to determine vesting schedules.


(In millions, except for per-share amounts)	2020			2019			2018
Impact on earnings from continuing operations		$	61		$	59		$	57
Impact on earnings before income taxes		61			59			57
Impact on net earnings		48			46			45
Impact on net earnings per share:
Basic		$	.07		$	.06		$	.06
Diluted		.07			.06			.06


(In thousands of shares)	Stock Option Shares		Weighted-Average Exercise Price Per Share
Outstanding at December 31, 2017		7,304		$	28.03
Granted in 2018		67		44.59
Canceled in 2018		(167)		32.11
Exercised in 2018		(1,874)		26.78
Outstanding at December 31, 2018		5,330		28.54
Granted in 2019		0		0.00
Canceled in 2019		(40)		27.28
Exercised in 2019		(1,584)		25.97
Outstanding at December 31, 2019		3,706		29.65
Granted in 2020		59		35.75
Canceled in 2020		(82)		26.31
Exercised in 2020		(638)		27.82
Outstanding at December 31, 2020		3,045		$	30.25

The Company estimates the fair value of each stock option granted using the Black-Scholes-Merton multiple option approach. Expected volatility is based on historical periods generally commensurate with the estimated terms of the options. The Company uses historical data to estimate option exercise and termination patterns within the model. Separate groups of employees that have similar historical exercise patterns are stratified and considered separately for valuation purposes. The expected term of options granted is derived from the output of the Company's option model and represents the weighted-average period of time that options granted are expected to be outstanding. The Company bases the risk-free interest rate on the Treasury note rate with a term comparable to that of the estimated term of the options. The weighted-average fair value of options at their grant date was $6.33 in 2020 and $8.81 in 2018. There were no options granted in 2019. The following table presents the assumptions used in valuing options granted during the years ended December 31.


(In thousands of shares)						Options Outstanding							Options Exercisable
	Range of Exercise Prices Per Share					Stock Option Shares Outstanding		Wgtd.-Avg. Remaining Contractual Life (Yrs.)		Wgtd.-Avg. Exercise Price Per Share			Stock Option Shares Exercisable		Wgtd.-Avg. Exercise Price Per Share
	$	0.00	-	$	24.75		633		1.6		$	23.73		633		$	23.73
	24.75		-	28.97			640		3.6		28.84			640		28.84
	28.97		-	31.21			902		3.7		30.77			902		30.77
	31.21		-	36.21			721		5.7		34.42			662		34.30
	36.21		-	44.59			149		6.8		40.57			149		40.57
	$	0.00	-	$	44.59		3,045		3.9		$	30.25		2,986		$	30.14

The aggregate intrinsic value in the following table represents the total pretax intrinsic value, and is based on the difference between the exercise price of the stock options and the quoted closing common stock price of $44.47 as of December 31, 2020, for those awards that have an exercise price currently below the closing price. As of December 31, 2020, the aggregate intrinsic value of stock options outstanding was $43 million, with a weighted-average remaining term of 3.9 years. The total number of in-the-money stock options exercisable as of December 31, 2020, was 3.0 million shares. The aggregate intrinsic value of stock options exercisable at that same date was $43 million, with a weighted-average remaining term of 3.8 years.


(In millions)	2020			2019			2018
Total intrinsic value of options exercised		$	11		$	38		$	34
Cash received from options exercised		18			40			48
Tax benefit realized as a result of options exercised and restricted stock releases		18			34			25

Under the Plan, the Company grants selected executive officers performance-based restricted stock awards (PBRS) each February whose vesting is contingent upon meeting various performance goals. PBRS are generally granted at-the-money and contingently cliff vest over a period of three years, generally subject to continued employment. In February 2020, the Company granted 409 thousand performance-based stock awards, which are contingent on the achievement of the Company's financial performance metrics and its market-based conditions. On the date of grant, the Company

estimated the fair value of restricted stock awards with market-based conditions using a Monte Carlo simulation model. The model discounts the value of the stock at the assumed vesting date based on a risk-free interest rate. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter. Actual performance, including modification for relative total shareholder return, may result in the ultimate award of 0% to 200% percent of the initial number of PBRS issued, with the potential for no award if company performance goals are not achieved during the three-year period. PBRS subject to accelerated vesting at the date of retirement eligibility is recognized over the implicit service period.

The Company also granted selected executive officers performance-based restricted stock units (PSUs) throughout the year whose vesting is contingent upon meeting various performance goals. PSUs are generally granted at-the-money and contingently cliff vest over a period of three years, generally subject to continued employment. In November 2020, the Company granted 9 thousand performance-based stock units, which are contingent on the achievement of certain Company determined metrics. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter. Actual performance may result in the ultimate award of 0% to 200% percent of the initial number of PSUs issued, with the potential for no award if the Company determined metrics are not achieved during the three-year period. PSUs subject to accelerated vesting at the date of retirement eligibility is recognized over the implicit service period.

The Company uses third-party analyses to assist in developing the assumptions used in, as well as calibrating, a Monte Carlo simulation model. The Company is responsible for determining the assumptions used in estimating the fair value of its share-based payment awards.


(In millions)	2020
Expected volatility (based on Aflac Inc. and peer group historical daily stock price)		16.13	%
Expected life from grant date (years)		2.9
Risk-free interest rate (based on U.S. Treasury yields at the date of grant)		1.42	%

The value of restricted stock awards and restricted stock units is based on the fair market value of the Company's common stock at the date of grant. The following table summarizes restricted stock activity during the years ended December 31.


(In thousands of shares)	Shares		Weighted-Average Grant-Date Fair Value Per Share
Restricted stock at December 31, 2017		3,634		$	32.40
Granted in 2018		1,121		44.27
Canceled in 2018		(105)		34.39
Vested in 2018		(1,243)		31.64
Restricted stock at December 31, 2018		3,407		36.52
Granted in 2019 (1)		1,070		49.68
Canceled in 2019 (1)		(39)		41.60
Vested in 2019 (1)		(1,723)		32.50
Restricted stock at December 31, 2019 (1)		2,715		43.74
Granted in 2020		1,544		45.88
Canceled in 2020		(119)		49.27
Vested in 2020		(1,560)		35.23
Restricted stock at December 31, 2020		2,580		$	48.57