def14a
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
|
|
|
o
|
|
Preliminary Proxy Statement |
þ
|
|
Definitive Proxy Statement |
o
|
|
Definitive Additional Materials |
o
|
|
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
o
|
|
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
CIGNA Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|
|
|
þ
|
|
No fee required. |
o
|
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
|
|
|
|
|
|
|
|
|
|
(1 |
) |
|
Title of each class of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2 |
) |
|
Aggregate number of securities to which transaction applies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was
determined): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4 |
) |
|
Proposed maximum aggregate value of transaction: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5 |
) |
|
Total fee paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
Fee paid previously with preliminary materials: |
|
|
|
|
|
|
|
|
|
o
|
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
|
Amount Previously Paid: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2 |
) |
|
Form, Schedule or Registration Statement No.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
Filing Party: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4 |
) |
|
Date Filed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIGNA Corporation
Two Liberty Place
1601 Chestnut Street
Philadelphia, PA
19192-1550
March 19,
2009
NOTICE OF 2009 ANNUAL MEETING
OF SHAREHOLDERS
|
|
|
TIME AND DATE:
|
|
3:30 p.m. on Wednesday, April 22, 2009.
|
PLACE:
|
|
Pennsylvania Academy of Fine Arts
Samuel M.V. Hamilton Auditorium
118 128 North Broad Street
Philadelphia, Pennsylvania
|
ITEMS OF BUSINESS:
|
|
Elect four directors for terms expiring
in April 2012.
|
|
|
Ratify the appointment of
PricewaterhouseCoopers LLP as the independent registered public
accounting firm for 2009.
|
|
|
Consider any other business properly
brought before the meeting.
|
RECORD DATE:
|
|
Friday, February 27, 2009. CIGNA shareholders of record at the
close of business on that date are entitled to vote at the
meeting.
|
PROXY VOTING:
|
|
Your vote is important, even if you do not own many shares. We
urge you to mark, date, sign and return the enclosed
proxy/voting instruction card or, if you prefer, to vote by
telephone or by using the Internet.
|
|
|
H. EDWARD HANWAY
Chairman and Chief Executive Officer
|
|
|
|
|
|
By order of the Board of Directors,
|
|
|
NICOLE S. JONES
Corporate Secretary and Deputy General Counsel
|
CIGNA
CORPORATION
2009 ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
7
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
10
|
|
|
|
|
10
|
|
|
|
|
10
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
16
|
|
|
|
|
16
|
|
|
|
|
19
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
21
|
|
|
|
|
22
|
|
|
|
|
22
|
|
|
|
|
23
|
|
|
|
|
23
|
|
|
|
|
24
|
|
|
|
|
24
|
|
|
|
|
25
|
|
|
|
|
26
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
|
|
30
|
|
|
|
|
32
|
|
|
|
|
32
|
|
|
|
|
34
|
|
|
|
|
40
|
|
|
|
|
41
|
|
|
|
|
41
|
|
|
|
|
42
|
|
|
|
|
43
|
|
|
|
|
43
|
|
1
|
|
|
|
|
|
|
Page
|
|
|
|
|
43
|
|
|
|
|
44
|
|
|
|
|
46
|
|
|
|
|
46
|
|
Grants of Plan-Based Awards Table
|
|
|
49
|
|
|
|
|
51
|
|
|
|
|
54
|
|
|
|
|
55
|
|
|
|
|
58
|
|
|
|
|
58
|
|
|
|
|
69
|
|
|
|
|
69
|
|
|
|
|
70
|
|
|
|
|
70
|
|
|
|
|
70
|
|
|
|
|
71
|
|
|
|
|
71
|
|
|
|
|
A-1
|
|
2
CIGNA
CORPORATION
Two
Liberty Place
1601 Chestnut Street
Philadelphia, PA
19192-1550
CIGNA is providing these proxy materials in connection with its
2009 annual meeting of shareholders. This proxy statement, the
accompanying proxy card and CIGNAs 2008 Annual Report on
Form 10-K
were first mailed to shareholders on or about Thursday,
March 19, 2009. As used in this proxy statement,
CIGNA and the Company may refer to CIGNA
Corporation itself, one or more of its subsidiaries, or CIGNA
Corporation and its consolidated subsidiaries.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON APRIL 22, 2009.
This
proxy statement and CIGNAs Annual Report to shareholders
are available at
http://www.cigna.com/about us/investor relations/recent disclosures.html.
ABOUT THE
ANNUAL MEETING
Why did I
receive this proxy statement?
You are receiving a proxy statement because you owned shares of
CIGNA common stock on Friday, February 27, 2009, the record
date, and that entitles you to vote at the annual meeting. The
Board of Directors of CIGNA Corporation is soliciting your proxy
to vote at the scheduled 2009 annual meeting or at any later
meeting should the scheduled annual meeting be adjourned or
postponed for any reason.
Your proxy will authorize specified peoplecalled
proxiesto vote on your behalf at the annual meeting. By
use of a proxy, you can vote, whether or not you attend the
meeting. This proxy statement describes the matters on which
CIGNA would like you to vote, provides information on those
matters, and provides information about CIGNA that must be
disclosed when your proxy is solicited.
What will
I be voting on?
|
|
|
|
|
Election of four directors for terms expiring in April 2012 (see
page 7).
|
|
|
|
Ratification of the appointment of PricewaterhouseCoopers LLP as
the Companys independent registered public accounting firm
for 2009 (see page 19).
|
What are
the Board of Directors recommendations?
The Board recommends a vote:
|
|
|
|
|
for the election of the director nominees; and
|
|
|
|
for the ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for 2009.
|
Could
other matters be decided at the annual meeting?
We do not know of any other matters that will come before the
shareholders during the annual meeting. The chairman of the
meeting may refuse to allow presentation of a proposal or a
nomination for the Board from the floor at the annual meeting if
the proposal or nomination was not properly submitted.
CIGNAs 2008 proxy statement described the requirements for
properly submitting proposals and nominations from the floor at
this years annual meeting. The requirements are similar to
those described on page 71 for the 2010 annual meeting. The
proxies will vote for or against other matters that come before
the annual meeting as those persons deem advisable.
3
How many
votes can be cast by all shareholders?
Each share of CIGNA common stock is entitled to one vote on each
of the four directors to be elected and one vote on each other
matter that is properly presented at the annual meeting. We had
270,934,706 shares of common stock outstanding and entitled
to vote on Friday, February 27, 2009.
How many
votes must be present to hold the annual meeting?
At least two-fifths of the issued and outstanding shares
entitled to vote, or 108,373,882 votes, present in person or by
proxy, are needed to hold the annual meeting. We urge you
to vote by proxy even if you plan to attend the annual meeting.
This will help us know that enough votes will be present to hold
the meeting.
How many
votes are needed to approve each proposal?
|
|
|
|
|
The number of votes cast for a director nominee must
exceed the number of votes cast against the nominee
for that nominee to be elected to the Board.
|
|
|
|
The affirmative vote of a majority of the issued and outstanding
stock of the Company must be cast in favor of the ratification
of the appointment of PricewaterhouseCoopers LLP as the
Companys independent registered public accounting firm for
2009.
|
What if I
vote to abstain?
A vote to abstain as to the election of directors
will have no effect on the outcome of that proposal. A vote to
abstain as to the ratification of the appointment of
PricewaterhouseCoopers LLP will have the effect of a vote
against. However, in either case, your shares will be counted as
present for purposes of determining whether enough votes are
present to hold the annual meeting.
How do I
vote if I hold shares as a record holder?
If your name is registered on CIGNAs shareholder records
as the owner of shares, you are the record holder.
If you hold shares as a record holder, there are four ways that
you can vote your shares.
|
|
|
|
|
Over the Internet. Vote at
http://www.proxyvoting.com/ci.
The Internet voting system is available 24 hours a day
until 11:59 p.m. E.D.T. on Tuesday, April 21, 2009.
Once you enter the Internet voting system, you can record and
confirm (or change) your voting instructions.
|
|
|
|
By telephone. Use the telephone number
shown on your proxy card. The telephone voting system is
available 24 hours a day in the United States until
11:59 p.m. E.D.T. on Tuesday, April 21, 2009.
Once you enter the telephone voting system, a series of prompts
will tell you how to record and confirm (or change) your voting
instructions.
|
|
|
|
By mail. Mark your voting instructions
on the proxy card, and sign and date it. Then, return the proxy
card in the postage-paid envelope provided. For your mailed
proxy card to be counted, we must receive it before the polls
close at the meeting on Wednesday, April 22, 2009.
|
|
|
|
In person. Attend the annual meeting,
or send a personal representative with an appropriate proxy, in
order to vote.
|
How do I
vote if a bank, broker, or other nominee holds my
shares?
If you hold shares in street name, that means a
bank, broker or other nominee is actually the record holder
entitled to vote those shares under New York Stock Exchange
rules. In this case, follow the voting instructions you receive
from the record holder. If you want to vote in person at the
annual meeting, you must obtain in advance of the meeting a
legal proxy from the bank, broker or other nominee that holds
your shares and bring that proxy to the meeting.
4
If you do not submit voting instructions to your bank, broker or
other nominee, the institution may still be permitted to vote
your shares. It will have discretionary authority to vote on the
election of directors and ratification of the appointment of
PricewaterhouseCoopers LLP.
How do I
vote if my CIGNA shares are held by Mellon Investor Services in
my Employee Stock Accounts?
Employee Stock Accounts maintained by Mellon Investor Services
hold restricted stock that has not yet vested, restricted stock
that has vested, and shares acquired through an option exercise.
If you have these kinds of shares, you should follow the rules
above for voting shares held as a record holder.
Can I
vote if I have money in the CIGNA Stock Fund of the CIGNA or
Intracorp 401(k) plans?
If you have money invested in the CIGNA Stock Fund of the CIGNA
401(k) Plan or the Intracorp 401(k) Performance Sharing Plan,
the plan trustees have the legal authority to vote those shares.
Under the plans, however, you have pass-through voting rights
based on your interest in the CIGNA Stock Fund. You may exercise
pass-through voting rights in almost the same way that record
holders may vote their shares, but you have an earlier deadline.
Specifically, you may vote over the Internet, by telephone, or
by mail as described on page 4 but you may
not vote in person at the annual meeting. Your
voting instructions must be received by
11:59 p.m. E.D.T. on Friday, April 17,
2009, in order for the trustee to submit a proxy that
reflects your instructions.
Your voting instructions will be kept confidential under the
terms of the plans. If you do not give voting instructions (or
they are received after 11:59 p.m. E.D.T. on Friday,
April 17, 2009), the trustees will vote your interest in
the CIGNA Stock Fund of the CIGNA 401(k) Plan or the Intracorp
401(k) Performance Sharing Plan as instructed by CIGNAs
Corporate Benefit Plan Committee.
Can I
change my vote?
Yes, if you are a record holder, you may:
|
|
|
|
|
Enter new instructions on either the telephone or Internet
voting system before 11:59 p.m. E.D.T. on Tuesday,
April 21, 2009.
|
|
|
|
Send a new proxy card with a later date than the card previously
submitted. We must receive your new proxy card before the polls
close at the meeting on Wednesday, April 22, 2009.
|
|
|
|
Write to the Corporate Secretary at the address listed on
page 10. Your letter should contain the name in which your
shares are registered, the date of the proxy you wish to revoke
or change, your new voting instructions, if applicable, and your
signature. Your letter must be received by the Corporate
Secretary before the annual meeting begins on Wednesday,
April 22, 2009.
|
|
|
|
Attend the annual meeting on Wednesday, April 22, 2009 and
vote in person (or send a personal representative with an
appropriate proxy).
|
If you hold your shares in street name, you may submit new
voting instructions in the manner provided by your broker, bank
or other holder of record.
What if I
do not indicate my vote for one or more of the matters on my
proxy card?
If you sign and mail your proxy card without marking any
choices, your proxy will be voted:
|
|
|
|
|
for the election of the director nominees; and
|
|
|
|
for the ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for 2009.
|
If any other matters are properly presented for a vote, the
people named as proxies will have discretionary authority, to
the extent permitted by law, to vote on such matters according
to their best judgment.
5
Is my
vote confidential?
If you want your vote to be confidential, you must indicate that
when you submit your proxy. If you choose confidential voting,
your voting records will not be disclosed to us except as
required by law or in contested Board elections.
Who will
count the votes?
Mellon Investor Services has been appointed Inspector of
Election for the annual meeting. The Inspector will determine
the number of shares outstanding and voting power of each, the
shares represented at the annual meeting, the existence of a
quorum, and the validity of proxies and ballots, and will count
all votes and ballots.
How do I
attend the annual meeting? What do I need to bring?
If you are a shareholder of record, your admission card for the
annual meeting is attached to your proxy card. You will need to
bring your admission card with you to the meeting. Regardless of
how you hold your shares, you must bring a valid photo ID to be
admitted to the meeting. In addition, if you own shares in
street name, bring your most recent brokerage statement or a
letter from your broker or other nominee with you to the meeting
so that we can verify your ownership of common stock and admit
you to the meeting; however, you will not be able to vote your
shares at the annual meeting without a legal proxy from the
record holder as described on page 4.
Please note that no cameras, recording equipment, electronic
devices, large bags, briefcases or packages will be permitted in
the Samuel M.V. Hamilton Auditorium.
Who pays
for the proxy solicitation and how will CIGNA solicit
votes?
CIGNA pays the cost of preparing proxy materials and soliciting
your vote. Proxies may be solicited on our behalf by our
directors, officers, employees and agents by telephone,
electronic or facsimile transmission or in person. We will
enlist the help of banks and brokerage houses in soliciting
proxies from their customers and reimburse them for their
related out-of-pocket expenses. In addition, we have engaged
Georgeson Shareholder Communications, Inc. (Georgeson) to assist
in soliciting proxies. CIGNA will pay Georgeson a fee of
approximately $15,000 and reimburse Georgeson for its reasonable
out-of-pocket expenses associated with this work.
How do I
find out the annual meeting voting results?
The final voting results of the annual meeting will be published
no later than Monday, August 10, 2009 in CIGNAs
second quarter 2009 report on
Form 10-Q
which will be available online at
http://www.cigna.com/about us/investor relations/sec filings.html.
6
INFORMATION
ABOUT ITEM 1. ELECTION OF DIRECTORS
At this meeting, four directors are seeking election for terms
expiring in 2012. CIGNAs Board is currently set at 12 and
is divided into three classes, each with a three-year term.
All nominees have consented to serve, and the Board does not
know of any reason why any would be unable to serve. If a
nominee becomes unavailable or unable to serve before the annual
meeting, the Board can either reduce its size or designate a
substitute nominee. If the Board designates a substitute,
proxies cast for the original nominee will be deemed cast for
the substitute nominee.
The Board
of Directors Nominees for Terms to Expire in April
2012
|
|
|
|
|
|
|
|
H. Edward Hanway (57) has been a Director of CIGNA since
1999. Mr. Hanway has served as Chairman of the Board of CIGNA
since December 2000, Chief Executive Officer since January 2000,
and President from 1999 until 2008. He has been associated with
CIGNA since 1978. His term as a Director of CIGNA expires in
2009.
|
|
|
|
|
|
John M. Partridge (58) has been a Director of CIGNA since
January 2009. Mr. Partridge has served as Chief Operating
Officer of Visa Inc. (consumer credit company) and Interim
President of VISA USA since July 2007. He joined VISA USA in
October 1999 and has served as President and Chief Executive
Officer of Inovant (a VISA subsidiary) since November 2000. His
term as a Director of CIGNA expires in 2009.
|
|
|
|
|
|
James E. Rogers (61) has been a Director of CIGNA since
2007. Mr. Rogers has served as Chairman of Duke Energy
Corporation (an electric power company) since 2007 and as the
President, Chief Executive Officer and a director since 2006. He
was formerly the Chairman, President and Chief Executive Officer
of CINERGY Corp., (which merged with Duke Energy Corporation in
2006) from 1994 until 2006. Mr. Rogers is a Director of Applied
Materials, Inc. His term as a Director of CIGNA expires in 2009.
|
|
|
|
|
|
Eric C. Wiseman (53) has been a Director of CIGNA since
2007. Mr. Wiseman has served as Chairman of VF Corporation (an
apparel manufacturer) since August 2008, as Chief Executive
Officer since January 2008, and as President and a Director
since 2006. Prior to that he served as Chief Operating Officer
of VF Corporation from 2006 to 2007; Executive Vice President,
Global Brands from 2005 to 2006; Vice President and Chairman,
Sportswear and Outdoor Coalitions from 2004 until 2005; and Vice
President and Chairman, Global Intimates and Sportswear
Coalition from 2003 until 2004. His term as a Director of CIGNA
expires in 2009.
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE NOMINEES LISTED ABOVE.
7
Directors
Who Will Continue in Office
|
|
|
|
|
|
|
|
Robert H. Campbell (71) has been a Director of CIGNA
since 1992. Mr. Campbell served as Chairman of Sunoco, Inc. (a
domestic refiner and marketer of petroleum products) from 1992
until 2000, and as Chief Executive Officer from 1991 until
2000. Mr. Campbell is a Director of Vical, Inc. His term as a
Director of CIGNA expires in 2010.
|
|
|
|
|
|
Isaiah Harris, Jr. (56) has been a Director of CIGNA
since 2005. Mr. Harris served as President and Chief Executive
Officer of AT&T Advertising & PublishingEast
(formerly BellSouth Advertising & Publishing Group, a
communications services company) from 2005 until 2007; as
President, BellSouth Enterprises, Inc. from 2004 until 2005; and
as President, BellSouth Consumer Services and Customer Markets
Group from 2000 until 2004. Mr. Harris is a Director of
Deluxe Corporation and a nominee to be an Independent Trustee of
Wells Fargo Advantage Funds. His term as a Director of CIGNA
expires in 2010.
|
|
|
|
|
|
Jane E. Henney, M.D. (61) has been a Director of
CIGNA since 2004. Dr. Henney is a professor of Medicine at
the University of Cincinnati College of Medicine. She served as
Senior Vice President and Provost, Health Affairs at University
of Cincinnati Academic Health Center (an educational
institution) from 2003 until January 2008. Dr. Henney is a
Director of AmerisourceBergen Corporation and AstraZeneca PLC.
Her term as a Director of CIGNA expires in 2010.
|
|
|
|
|
|
Peter N. Larson (69) has been a Director of CIGNA since
1997. Mr. Larson served as Chairman and Chief Executive Officer
of Brunswick Corporation (a producer of recreational consumer
products) from 1995 until 2000. His term as a Director of CIGNA
expires in 2011.
|
|
|
|
|
|
Roman Martinez IV (61) has been a Director of CIGNA
since 2005. Mr. Martinez has been a private investor since
2003. Mr. Martinez is a Director of Alliant Techsystems Inc.
and Bacardi Limited. His term as a Director of CIGNA expires in
2011.
|
|
|
|
|
|
Carol Cox Wait (66) has been a Director of CIGNA since
1995. Ms. Wait has been President of Boggs, Atkinson, Inc. (a
real estate company) since 2003 and is also the General Manager
for Artesia, Bellflower and Ramona Senior Centers, a Managing
Member of Lakewood Towers LLC and Manager of VCB Bluebird LLC
and VCB Palm LLC. Ms. Wait also served as a Director, President
and Chief Executive Officer of the Committee for a Responsible
Federal Budget (a bi-partisan, educational, non-profit
organization) from 1981 until 2003. Her term as a Director of
CIGNA expires in 2011.
|
8
|
|
|
|
|
|
|
|
Donna F. Zarcone (51) has been a Director of CIGNA since
2005. Ms. Zarcone is President and Chief Executive Officer of D.
F. Zarcone & Associates LLC, a strategic advisory
consulting firm. She served as the President and Chief Operating
Officer of Harley-Davidson Financial Services, Inc. (a provider
of wholesale and retail financing, insurance and credit card
programs), a wholly-owned subsidiary of Harley-Davidson, Inc.,
from 1998 until 2006. Ms. Zarcone is a Director of Jones
Apparel Group, Inc., a member of the Board of Managers of
Wrightwood Capital, a privately held company, and is a Certified
Public Accountant. Her term as a Director of CIGNA expires in
2010.
|
|
|
|
|
|
William D. Zollars (61) has been a Director of CIGNA
since 2005. Mr. Zollars has served as Chairman, President and
Chief Executive Officer of YRC Worldwide, Inc. (formerly Yellow
Roadway Corporation, a holding company whose subsidiaries
provide regional, national and international transportation and
related services) since 1999. Mr. Zollars is a Director of
ProLogis Trust and Cerner Corporation. His term as a Director of
CIGNA expires in 2011.
|
9
CORPORATE
GOVERNANCE
CIGNA
Corporations Corporate Governance Policies
The Board and its committees regularly review their corporate
governance policies and practices and recommend modifications to
those policies and practices to implement developing best
practices that the Board has determined are appropriate for
CIGNA. Many of these policies and practices are embodied in the
Board Practices and the charters of the Audit, Corporate
Governance, Finance, and People Resources Committees. The Board
Practices, committee charters and CIGNAs Code of Ethics
are posted at
http://www.cigna.com/about_us/governance/index.html.
They also are available in print to any shareholder who submits
a written request to the Corporate Secretary at our principal
executive offices at:
CIGNA Corporation
Two Liberty Place, TL17
1601 Chestnut Street
Philadelphia, PA
19192-1550
Board
Structure and Composition
CIGNAs By-Laws require the Board to have at least eight
directors, but no more than 16. The Board and its Corporate
Governance Committee (CGC) each periodically consider the
appropriate size of the Board. There is a strong commitment to a
Board composed principally of independent, non-employee
Directors. CIGNA Corporation currently has one, and has never
had more than two, employee directors.
Process
and Criteria for Nominating Directors
Director Selection Policy and
Criteria. The CGC, in consultation with the
Board, develops specific criteria to guide director searches.
The criteria are as follows:
|
|
|
|
|
Directors should represent all shareholders.
|
|
|
|
Directors must be free of conflicts of interest.
|
|
|
|
Directors must possess good judgment and the ability to analyze
complex business and public issues.
|
|
|
|
Directors must have demonstrated a high degree of achievement in
their respective fields.
|
|
|
|
Diversity, in its many forms, is actively pursued.
|
|
|
|
Governing CIGNA effectively requires a wide range of
capabilities and professional attributes, among them:
|
|
|
|
|
|
financial acumen;
|
|
|
|
insight into the process of developing employees, as well as
developing and delivering high-quality products and services
that respond directly to customer needs and expectations;
|
|
|
|
familiarity with channels of distribution;
|
|
|
|
awareness of consumer market trends;
|
|
|
|
insight into government relationships and processes;
|
|
|
|
familiarity with processes for developing and implementing
effective human resources policies and practices; and
|
|
|
|
familiarity with the challenges of operating businesses in the
international marketplace.
|
The chair of the CGC and other members of the Board, as
appropriate, interview director candidates prior to the CGC
making its recommendation to the Board in the case of a director
vacancy or nomination of a candidate by shareholders.
10
The Board may nominate for election and appoint to vacant or new
Board positions only persons who agree to adhere to the
Companys majority voting standard. The standard requires a
director to tender his or her resignation to the Company in case
of failure to achieve more for votes than
against votes at any future meeting at which he or
she faces an uncontested election. The Board has discretion to
accept or reject the tendered resignation following the election.
That tender of resignation cannot be withdrawn unless the Board
eliminates the majority voting standard. The CGC will act on an
expedited basis to determine whether to accept the resignation
and will submit the recommendation for prompt consideration by
the Board. The Board expects the director whose resignation is
under consideration to abstain from participating in any
decision regarding that resignation.
Consideration of Shareholder Suggestions for Director
Selection. The CGC is responsible for
reviewing, advising and reporting to the Board regarding the
Boards membership and director selection. The CGC welcomes
shareholder suggestions for Board nominees. Shareholders who
wish the CGC to consider their suggestions for Board nominees
should submit their suggestions together with appropriate
biographical information and qualifications to the CGC.
Correspondence may be addressed to:
Corporate Secretary
CIGNA Corporation
Two Liberty Place, TL17
1601 Chestnut Street
Philadelphia, PA,
19192-1550
The CGC generally considers nominees in October for the
following annual meeting. Accordingly, suggestions for Board
nominees should be submitted by October 1st to ensure
consideration for the following annual meeting. Shareholder
suggestions for Board nominees are evaluated using the same
criteria described under Director Selection Policy and
Criteria on page 10.
Third-Party Director Search Firm. The
CGC retains SpencerStuart, a third party search firm, to assist
the CGC in identifying and evaluating candidates for Board
membership who best match CIGNAs director recruitment
criteria as described on page 10. SpencerStuart played a
key role in identifying many of the Companys current
directors as qualified candidates for Board membership,
including Messrs. Partridge, Rogers and Wiseman.
Shareholder
Communications to the Board
The Board maintains an address for receipt of shareholder and
interested party communications. Shareholders and interested
parties may contact the Board of Directors, the non-employee
directors, or specific individual directors by writing to them
at:
Director Access
Attn: Corporate Secretary
CIGNA Corporation
Two Liberty Place, TL17
1601 Chestnut Street
Philadelphia, PA
19192-1550
All communications other than routine commercial solicitations
and opinion surveys will be compiled by the Corporate Secretary
and periodically submitted to the Board or, if addressed only to
individual directors, to such individual directors. The
Corporate Secretary also will promptly advise the appropriate
member of management of any concerns relating to CIGNAs
products or services, and the Corporate Secretary will notify
the Board of the resolution of those concerns.
11
Other
Board Practices
Limit on Directorships. Each director
who is also a chief executive officer of a public company should
not serve on more than one public company board in addition to
CIGNAs Board and the board of his or her employer (for a
total of three public company directorships). Each director who
is not a chief executive officer of a public company should
serve on no more than four boards of public companies in
addition to CIGNAs Board (for a total of five such
directorships). CIGNAs directors serving on
October 24, 2007, the effective date of this provision of
the Board Practices, have until October 24, 2012 to comply
with this requirement.
Board Meetings. The Board meeting
schedule and agenda are developed with direct input from
directors. The duration of each meeting varies as business needs
dictate. The Board has the opportunity to meet in executive
session without the Chief Executive Officer at the conclusion of
every Board meeting and, at least twice a year, meets in an
extended executive session without the Chief Executive Officer.
In 2008, the independent directors met in executive session
without the Chief Executive Officer at all of the in-person
Board meetings.
Access to Management and Independent
Advisors. Independent directors have regular
access to senior managers and employees. In addition, the Board
and its committees are able to access and retain appropriate
independent advisors as they deem necessary or appropriate.
Continuing Education and
Self-Evaluation. The Board and its committees
regularly devote time to continuing director education. The
Board is regularly updated on CIGNAs businesses,
strategies, customers, operations and employee matters, as well
as external trends and issues that affect the Company. Directors
are also encouraged to attend continuing education courses
relevant to their service on CIGNAs Board. Directors are
reimbursed by CIGNA for expenses incurred in connection with
such continuing education courses. The Board and each of its
committees regularly discuss their performance, and annually
conduct a self-assessment, and the CGC annually conducts a
review of each individual directors performance. On an
ongoing basis, directors offer suggestions and alternatives
intended to further improve Board performance.
Rotating Presiding Director
Structure. Each committee has a chairperson
who is an experienced independent director. In order to maintain
its balanced approach to governance, facilitate the effective
functioning of the Board, and benefit from the skills, strengths
and experience of its committee chairpersons, CIGNA has
established a rotating presiding director structure whereby the
chairperson of each committee presides over regularly scheduled
non-management executive sessions of his or her committee
meetings and, on a rotating basis, executive sessions of board
meetings, determined by reference to the subject matter being
discussed. Committee chairpersons regularly communicate with the
staff officer assigned to his or her committee, and coordinate
with their respective staff officers to develop meeting agendas
and materials.
Resignation and Retirement. If a
directors principal position at the time of appointment to
the Board is discontinued, that director is required to tender
his or her resignation to the CGC. The CGC will then recommend
to the Board the action, if any, to be taken with respect to the
resignation. In any event, a director is required to retire no
later than the annual meeting of shareholders coinciding with or
following his or her
72nd birthday.
Board of
Directors and Committee Meetings, Membership, Attendance and
Independence
Meetings and Membership. The full Board
held 12 meetings during 2008. From time to time, the Board or
its committees act by unanimous written consent when it is
impracticable for them to meet.
12
The following table shows the current membership, summary of
responsibilities and number of meetings in 2008 for each of the
committees. Additional information about the committees can be
found in the committee charters which are posted at
http://www.cigna.com/about_us/governance/committees.html.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
of
|
Committees
|
|
|
2008 Membership**
|
|
|
Primary Responsibilities
|
|
|
Meetings
|
Audit
|
|
|
R. H. Campbell* (Chair)
J. E. Henney, M.D.*
R. Martinez*
E. C. Wiseman*
D. F. Zarcone*
|
|
|
Representing and assisting the Board in fulfilling its oversight responsibilities regarding the adequacy of internal controls, integrity of financial statements, compliance with legal requirements, adherence to ethical standards and review and evaluation of enterprise risk management.
Assessing qualification and independence of, appointing, compensating, overseeing the work of and removing, when appropriate, CIGNAs independent registered public accounting firm.
|
|
|
10
|
Corporate
Governance
|
|
|
C. C. Wait* (Chair)
R. H. Campbell*
I. Harris*
J. E. Henney, M.D.*
P. N. Larson*
E. C. Wiseman*
|
|
|
Reviewing, advising, and reporting to the Board regarding the Boards membership, structure, organization, governance practices and performance.
Reviewing committee assignments annually.
Director selection and compensation, including developing specific director recruitment criteria.
|
|
|
6
|
Finance
|
|
|
P. N. Larson* (Chair)
R. Martinez*
J. E. Rogers*
D. F. Zarcone*
W. D. Zollars*
|
|
|
Overseeing and advising the Board regarding: the
structure and use of CIGNAs capital; long-term financial
objectives and progress against those objectives; CIGNAs
annual operating plan and budget; investments; and information
technology strategy and execution.
|
|
|
7
|
People
Resources
|
|
|
I. Harris* (Chair)
J. E. Rogers*
C. C. Wait*
W. D. Zollars*
|
|
|
Overseeing the policies and processes for people
development, including the succession plan for the principal
executive officers.
Evaluating the Chief Executive Officer annually and
sharing its assessment with the Board when reporting on
compensation actions for the Chief Executive Officer.
Reviewing and approving executive compensation plans
and equity-based plans, subject to applicable Board and
shareholder approvals.
|
|
|
7
|
Executive
|
|
|
H. E. Hanway (Chair)
R. H. Campbell*
I. Harris *
P. N. Larson*
C. C. Wait*
|
|
|
Acting on matters requiring Board action when
convening a full meeting of the Board is difficult or
impractical.
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Meets independence standards
described below.
|
|
**
|
|
In January 2009, Mr. Partridge
joined the Audit and Finance Committees. Also in January 2009,
Mr. Martinez became a member of the People Resources
Committee and ended his membership on the Audit Committee.
|
All members of the Audit Committee meet the New York Stock
Exchange standard for qualifying as financially
literate as determined by CIGNAs Board. The Board of
Directors has determined that Donna Zarcone is the audit
committee financial expert, as defined in the applicable
rules of the Securities and Exchange Commission, and meets the
qualifications for independence as described below.
Attendance. During 2008, Board and
committee attendance averaged 97% for the Board as a whole. Each
incumbent director attended at least 92% of the combined total
meetings of the Board and committees on which he or she served
during 2008. The Board encourages independent directors to
attend the annual meeting of shareholders. Nine directors
attended the 2008 annual meeting, including Robert H. Campbell,
Isaiah Harris, Jr., Peter N. Larson, Roman Martinez IV,
James E. Rogers, Carol Cox Wait, Eric C. Wiseman, Donna F.
Zarcone, and H. Edward Hanway, who chaired the meeting.
Independence. CIGNAs Board has
adopted director independence standards that can be found in the
Board Practices posted on CIGNAs website at
http://www.cigna.com/aboutus/governance/boardpractices.html.
CIGNAs director independence standards provide that a
director is not independent if:
|
|
|
|
|
the director is, or has been within the last three years, an
employee of CIGNA, or an immediate family member (defined as a
spouse, parent, child, sibling, mother or
father-in-law,
son or
daughter-in-law,
|
13
|
|
|
|
|
brother or
sister-in-law
or anyone (other than a domestic employee) who shares the
directors home) is, or has been within the last three
years, an executive officer of CIGNA;
|
|
|
|
|
|
the director has received, or has an immediate family member who
has received, during any
twelve-month
period within the last three years, more than $120,000 in direct
compensation from CIGNA, other than director and Committee fees
and pension or other forms of deferred compensation for prior
service (provided such compensation is not contingent in any way
on continued service);
|
|
|
|
the director is a current partner or employee of CIGNAs
external auditor or an employee of CIGNAs internal audit
department, or an immediate family member is a current partner
of CIGNAs external auditor or an employee of CIGNAs
internal audit department;
|
|
|
|
the director or an immediate family member was within the last
three years (but is no longer) a partner or employee of
CIGNAs external auditor or an employee of CIGNAs
internal audit department and personally worked on CIGNAs
audit within that time;
|
|
|
|
the director or an immediate family member is, or has been
within the last three years, employed as an executive officer of
another company where any of CIGNAs present executives at
the same time serves or served on that companys
compensation committee; or
|
|
|
|
the director is a current employee, or an immediate family
member is a current executive officer, of a company that has
made payments to, or received payments from, CIGNA for property
or services in an amount which, in any of the last three fiscal
years, exceeds the greater of $1 million, or two percent of
the other companys consolidated gross revenue.
|
The Companys director independence standards further
provide that certain relationships are not material and do not
impair a directors independence. In particular, a
directors independence will not be impaired if:
|
|
|
|
|
a director is an executive officer of another company in which
CIGNA owns a common stock interest, and the amount of
CIGNAs common stock interest is less than five percent of
the total shareholders equity of the company for which the
director serves as an executive officer;
|
|
|
|
a director is an executive officer of another company in which
CIGNA owns debt securities and the amount of the debt holdings
is less than five percent of the total outstanding securities of
that company;
|
|
|
|
a director serves as a member of the board of directors or
serves in a position with similar duties and responsibilities
(such as a trustee) of another organization that makes payments
to or receives payments from CIGNA in the ordinary course of
business;
|
|
|
|
a directors immediate family member serves as an employee
or director (but does not serve as an executive officer, or
partner or in another position with principal policy-making
responsibilities) of an organization that makes payments to or
receives payments from CIGNA in the ordinary course of business;
|
|
|
|
a director is an executive officer of another company that owns
less than five percent of the total shareholders equity of
CIGNA;
|
|
|
|
a director,
his/her
spouse or anyone (other than domestic employees) sharing the
home of a CIGNA director serves as an executive officer,
director or trustee (or equivalent) of a charitable
organization, and CIGNAs discretionary charitable
contributions to the organization during the past year are less
than the greater of $100,000 or two percent of that
organizations annual gross revenue (CIGNAs automatic
matching of employee charitable contributions will not be
included in the amount of CIGNAs contributions for this
purposes);
|
|
|
|
a director or his immediate family members purchases insurance,
services or other products of CIGNA, or uses CIGNAs
financial services, all on terms and conditions similar to those
available to other similarly situated persons;
|
|
|
|
a director is a member in the same professional association,
social, fraternal or religious organization or club as an
executive officer or other director of CIGNA;
|
14
|
|
|
|
|
a director currently or previously attended the same educational
institution as an executive officer or other director of CIGNA;
|
|
|
|
a director serves on the board of directors of another public
company on which an executive officer or other director of CIGNA
also serves as a director, except for prohibited compensation
committee interlocks; or
|
|
|
|
a director serves as an executive officer of a public company
that also uses CIGNAs registered independent public
accounting firm.
|
For any relationship outside the guidelines described above, the
determination of whether the relationship is material or not,
and therefore whether the director would be independent or not,
shall be made by the directors who satisfy the independence
guidelines set forth above.
The standards of independence described above meet the
independence standards specified in the listing standards of the
New York Stock Exchange. Based on the standards described above
and the Boards review, the Board affirmatively determined
that:
|
|
|
|
|
the following directors, comprising all of the directors and
director nominees, except for Mr. Hanway, are independent:
Messrs. Campbell, Harris, Larson, Martinez, Partridge,
Rogers, Wiseman and Zollars, Dr. Henney, and Mses. Wait and
Zarcone; and
|
|
|
|
all members of the Audit Committee, Corporate Governance
Committee, Finance Committee and People Resources Committee are
independent.
|
In assessing directors independence, the Board and CGC
reviewed directors responses to a questionnaire that
solicited information about their relationships (and the
relationships of their immediate family members) with CIGNA and
other entities (affiliated entities), as well as material
provided by management related to CIGNAs transactions with
and investments in those entities. In applying the independence
standards, the Board and the CGC considered that from time to
time during the past three years, CIGNA and its subsidiaries
engaged in arms-length, ordinary course business transactions
with corporations or organizations with which
Messrs. Harris, Martinez, Partridge, Rogers, Wiseman and
Zollars, Ms. Zarcone and Dr. Henney, or their
immediate family members, serve as an executive officer, trustee
or partner. In each case, the amount paid to or received from
these companies in each of the last three years was
significantly less than 2% of annual gross revenue or the
$1 million threshold as described in CIGNAs director
independence standardsand in all cases was less than 1% of
total revenue of the other organization.
Enterprise Risk Management. The Audit
Committee has oversight of Enterprise Risk Management (ERM),
which is a company-wide initiative that involves the Board,
management and CIGNAs Chief Risk Officer and internal
audit function in an integrated effort to (1) identify,
assess, prioritize and monitor (as each of their roles dictates)
a broad range of risks (e.g., financial, operational,
business, reputational, governance and managerial), and
(2) formulate and execute plans to monitor and to the
extent possible, mitigate the effect of those risks.
CIGNAs Chief Risk Officer reports to the Audit Committee
at least on a quarterly basis (and generally six times a year)
on the Companys ERM activities and progress made against
established ERM goals for the year. Beginning in 2009, the
People Resources Committee (PRC) of the Board began being
briefed on ERM activities and key areas of focus to assist that
Committee in evaluating the role that risk management does and
should play in the design and awarding of compensation.
People Development Matters. The PRC is
responsible for overseeing the policies and processes for people
development, including the succession plan for executive
officers. In fulfilling that responsibility, the PRC reviews and
considers an annual assessment of executive officers and key
senior management presented by the Chief Executive Officer,
including a discussion of those employees that are considered to
be potential successors to executive and senior level positions
and a review of their readiness and developmental needs. The
assessment is presented to the full Board at the PRCs
direction.
15
Certain
Transactions
The Company has not implemented a written policy concerning the
review of related party transactions, but compiles information
about transactions between CIGNA and its directors and officers,
their immediate family members, and their affiliated entities,
including the nature of each transaction and the amount
involved. The CGC annually reviews and evaluates this
information, with respect to directors, as part of its
assessment of each directors independence and presents its
assessment to the full Board of Directors. The Company reviews
the transaction information with respect to both directors and
executive officers to determine whether any transaction may be
subject to disclosure under applicable rules regarding
transactions with related persons, and submits a description of
any transaction subject to such disclosure to the Corporate
Governance Committee for review.
In addition, all directors, officers and employees of CIGNA are
subject to the Companys Conflict of Interest Policy, which
requires directors to inform the Corporate Secretary, and
employees to inform their supervisors, of any existing or
proposed relationship, financial interest or business
transaction that could, or might appear to be, a conflict of
interest. Any reported transactions are to be brought to the
attention of the CIGNAs general auditor for review and
disposition.
Based on a review of the transactions between CIGNA and its
directors and officers, their immediate family members, and
their affiliated entities, CIGNA has determined that, since the
beginning of 2008, it was not a party to any transaction in
which the amount involved exceeds $120,000 and in which any of
CIGNAs directors, executive officers or greater than five
percent stockholders, or any of their immediate family members
or affiliates, have a direct or indirect material interest.
Processes
and Procedures for Determining Executive and Director
Compensation
Executive Compensation. Pursuant to its
charter, the PRC oversees the compensation program for the
Companys executive officers. In fulfilling its
responsibilities, the PRC actively seeks to enhance its
effectiveness in reinforcing strong links between executive pay
and performance. Examples of actions that the PRC has taken
include:
|
|
|
|
|
annually reviewing the link between pay and performance;
|
|
|
|
hiring a compensation consultant to advise on executive
compensation issues;
|
|
|
|
establishing reviews of detailed compensation tally sheets for
all executive officers twice a year; and
|
|
|
|
holding executive sessions, without CIGNA management present, at
every PRC meeting, when they deem it appropriate.
|
The PRC regularly reviews CIGNAs compensation programs
against the Companys strategic goals, industry practices,
and emerging trends as well as to ensure alignment with
shareholder interests. The PRC retains the flexibility to modify
the programs to address changes in the competitive landscape. To
help it fulfill its responsibilities, the PRC has engaged Mercer
(the Compensation Consultant).
PRC Role
in Executive Compensation
The PRC, composed entirely of independent directors, administers
CIGNAs compensation program for the Companys
executive officers, including the named executive officers. As
directed by the PRCs charter, the PRC oversees
CIGNAs compensation and benefit plans and policies,
administers its stock plans (including reviewing and approving
equity awards to the named executive officers) and reviews and
approves all compensation decisions relating to executive
officers, including the named executive officers. The PRC
reports to the Board on all actions taken.
Beginning in 2009, given the current global economic and
financial situation, the PRC will enhance its review of
CIGNAs executive compensation program to further determine
that no components of CIGNAs compensation program are
designed to encourage or otherwise promote the taking of
inappropriate or unacceptable risks which could threaten the
long-term value of the Company. Specific measures the PRC will
take as part of this
16
enhanced risk assessment review include being briefed on the
Companys major risks and how the executives are managing
those risks. Further, the PRCs risk assessment review will
include the Management Incentive Plan, and Strategic Performance
Unit Plan performance goals established under CIGNAs
executive compensation program, and under which the executives
can benefit if such goals are met, to determine to the extent
possible, that the pursuit of such goals do not encourage
excessive risk taking.
Management
Role in Executive Compensation
The PRC has approved processes to support the independent
development and review of executive officer compensation as
described below.
Chief Executive Officer
Compensation. The PRC annually evaluates the
Chief Executive Officers performance and CIGNAs
established organizational goals in a session that, at the
PRCs request, is attended by the Executive Vice President,
Human Resources and Services and the Compensation Consultant.
The Chief Executive Officer is not present at this session.
Based on its review of the Chief Executive Officers
performance, the PRC makes recommendations to the independent
members of the Board of Directors regarding the Chief Executive
Officers compensation. The results of the evaluation are
shared with the Chief Executive Officer by the Chair of the PRC
after the compensation determinations are approved by the PRC
and the independent members of the Board of Directors.
Other Named Executive Officer
Compensation. The PRC, following review and
discussion, approves the compensation targets, base salaries,
annual incentives and long-term incentives and similar
arrangements for all named executive officers other than the
Chief Executive Officer, whose compensation is approved in the
manner set forth above. In order to determine total target
compensation for the named executive officers, the Compensation
Consultant presents to the PRC relevant market data, prepared by
CIGNAs compensation department and the Compensation
Consultant. This relevant market data relates to base salary,
annual incentive, long-term incentive compensation and
retirement programs relative to CIGNAs competitive peer
group and the broader industry (see page 32 for a
discussion of the peer group). The Executive Vice President,
Human Resources and Services presents any recommendations for
changes to named executive officers compensation targets
(excluding his own) for the PRCs consideration and
approval. For actual compensation decisions (payouts) regarding
the named executive officers, CIGNAs Chief Executive
Officer presents his recommendations to the PRC for their
consideration and, in making his recommendation, discusses
CIGNAs performance and the individual officers
performance. The Executive Vice President, Human Resources and
Services is generally invited to be present for the discussion
of compensation for named executive officers other than himself.
Compensation
Consultant Role in Executive Compensation
The PRC has the authority under its charter to engage the
services of outside advisors for assistance. The PRC directly
retains Mercer as its Compensation Consultant to advise the PRC
on CIGNAs executive compensation programs. The primary
role of the Compensation Consultant is to provide the PRC with
objective analysis, advice and information and to assist the PRC
in the performance of its duties. At the request of the PRC, one
or more representatives of the Compensation Consultant attended
all of the PRC meetings in 2008.
The PRC requests information and recommendations from the
Compensation Consultant as it deems appropriate in order to
structure and evaluate CIGNAs compensation programs,
practices and plans. In addition to its advice with respect to
particular compensation actions discussed in the Compensation
Discussion and Analysis (CD&A), during 2008, the
Compensation Consultant performed the following additional
duties:
|
|
|
|
|
evaluated the impact of CIGNAs equity programs on annual
share use, burn rate (the number of shares awarded per year
divided by the shares outstanding at the beginning of the year)
and total dilution (total number of stock options and restricted
stock outstanding, plus the number of shares available for
grants under the Long-Term Incentive Plan, divided by the total
number of shares of common stock outstanding), and advised the
PRC on a recommended maximum share limit for use in 2009;
|
|
|
|
reviewed tally sheets of total compensation developed by
CIGNAs internal compensation department;
|
17
|
|
|
|
|
Evaluated the reasonableness of the performance targets within
CIGNAs Management Incentive Plan from an external
perspective, considering historical performance for CIGNA and
the primary peer group as well as shareholder expectations; and
|
|
|
|
assisted with the preparation of the CD&A for the 2008
proxy statement.
|
The Compensation Consultant works with the Executive Vice
President, Human Resources and Services and CIGNAs
internal compensation department to obtain the information
necessary to carry out its assignments from the PRC.
In 2008, Mercers fees for providing services to the
Committees of the Board and to the Companys
U.S. operations were approximately $641,100; of which
$471,100 related exclusively to executive compensation
consulting to the PRC, $52,700 related exclusively to director
compensation consulting to the CGC and $117,300 related to
services used by management in support of executive compensation
work for the PRC, such as executive compensation advisory
services and compensation surveys as well as employee
compensation services. Mercer also provided compensation and
benefits services to CIGNA subsidiaries outside of the US, with
fees totaling $311,300.
In January 2009, CIGNA adopted a policy addressing compensation
consultant independence. The policy requires that the PRC will
use a compensation consultant who is independent of the Company
as assessed by the PRC annually. A compensation consultant will
be deemed independent under the policy if the compensation
consultant:
|
|
|
|
|
is retained by the PRC, and reports solely to the PRC for all
services related to executive compensation; and
|
|
|
|
does not provide any services or products to the Company and its
affiliates or management except with approval of the Chair of
the PRC.
|
In performing an assessment of the compensation
consultants independence, the PRC will consider the nature
and amount of work performed for the PRC during the year, the
nature of any non-executive compensation services performed for
the Company, and the amount of fees paid for those services in
relation to the compensation consultants total revenues.
The compensation consultant will annually prepare for the PRC an
independence letter providing appropriate assurances and
confirmation of the consultants independent status
pursuant to the policy.
Director Compensation. The charter of
the CGC provides that it will review the compensation of
non-employee directors periodically and recommend changes to the
Board and will assist in the administration of director
compensation plans as authorized by the Board. The CGC reviews
the non-employee director compensation program periodically for
competitiveness and appropriateness of compensation levels and
program design and may then make recommendations to the Board
for action.
To help it fulfill its responsibilities, the CGC from time to
time engages a compensation consultant. A compensation
consultant engaged by the CGC is directly responsible to the CGC
for advising it with respect to non-employee director
compensation and providing it with objective analysis and advice
about benchmarking, pay practices at competitors, tax,
compensation magnitude and mix, program structure, and alignment
with shareholder interests. In 2008, the CGC retained Mercer to
complete a competitive assessment of the director compensation
program; no changes were made to the program following that
review. The CGC may also engage a compensation consultant to
advise it on industry practices and emerging trends in director
compensation.
With respect to director compensation, the Compensation
Consultant contacts the Executive Vice President, Human
Resources and Services and members of his staff to obtain
information needed to carry out its assignments and contacts the
General Counsel and members of her staff regarding legal issues.
At the request of the CGC, one or more representatives of a
compensation consultant engaged by the CGC may attend certain
CGC meetings in order to present information and recommendations
and to be available to answer questions and advise the CGC.
18
INFORMATION
ABOUT ITEM 2. RATIFICATION OF APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS CIGNAS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee approved the appointment of
PricewaterhouseCoopers LLP as CIGNAs independent
registered public accounting firm for 2009. As a matter of good
corporate governance, the Board is seeking shareholder
ratification of the appointment even though ratification is not
legally required. If shareholders do not ratify this
appointment, the Audit Committee will reconsider
PricewaterhouseCoopers appointment.
PricewaterhouseCoopers LLP has served as the independent
registered public accounting firm for CIGNA and its subsidiaries
since 1983, and performed the same role for Connecticut General
Corporation, a predecessor company of CIGNA, and its
subsidiaries since 1967. A representative from
PricewaterhouseCoopers LLP will attend the annual meeting, may
make a statement, and will be available to respond to
appropriate questions.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS
LLP AS CIGNAS INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
Policy
for the Pre-Approval of Audit and Non-Audit Services
The Audit Committee pre-approves all audit services provided by
CIGNAs accounting firms and all non-audit services
provided by the Companys principal independent registered
public accounting firm. Specifically:
The full Audit Committee approves all audit, review and
attests services and their related fees.
|
|
|
|
|
At the first Audit Committee meeting of each calendar year, the
head of internal audit for the Company presents to the full
Audit Committee a schedule, accompanied by detailed
documentation, listing all permissible non-audit services
expected to be performed by the Companys independent
registered public accounting firm during the calendar year. In
the case of any additional non-audit services concerning
internal control over financial reporting and any tax service,
the independent registered public accounting firm includes a
written description of the scope of service and other
information about the proposed service required by the Public
Company Accounting Oversight Board rules. The Audit Committee
reviews the schedule and documentation, and pre-approves the
non-audit services it deems appropriate. For additional
permissible non-audit services that arise during the calendar
year, the head of internal audit presents an updated schedule
reflecting the additional services for review and consideration
for pre-approval by the Audit Committee. After the head of
internal audits presentation of the schedules as described
above and, if applicable, a discussion with the Companys
independent registered public accounting firm regarding the
potential effects of any permissible tax services on the
independence of the Companys independent registered public
accounting firm, the Audit Committee will approve those
non-audit services it deems appropriate and necessary.
|
|
|
|
The policy permits the pre-approval of additional permissible
non-audit services to be delegated to one or more Audit
Committee members so long as the proposed services do not exceed
$250,000, individually. Any services approved in this manner
must be reported to the full Audit Committee at its next
regularly scheduled meeting.
|
|
|
|
The head of internal audit reports to the Audit Committee at
each meeting on all non-audit services performed by the
independent registered public accounting firm and on fees
incurred for any services performed by the independent
registered public accounting firm. Annually, the head of
internal audit reports to the Audit Committee the projected
ratio between audit and non-audit fees of the independent
registered public accounting firm.
|
19
Fees
to Independent Registered Public Accounting Firm
Aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP for the audit of financial statements
for the fiscal years ended December 31, 2008 and
December 31, 2007, and fees billed for other services
rendered by PricewaterhouseCoopers LLP during those periods were
as follows:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit
Fees(1)
|
|
$
|
9,888,000
|
|
|
$
|
8,772,000
|
|
Audit-Related Fees
|
|
|
1,938,000
|
|
|
|
1,904,000
|
|
Tax Fees
|
|
|
48,000
|
|
|
|
62,000
|
|
All Other Fees
|
|
|
514,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
12,388,000
|
|
|
$
|
10,739,000
|
|
|
|
|
(1) |
|
Audit Fees for 2007 include fees
for audit of 2007 financial statements that had not yet been
billed at the time CIGNAs 2008 Proxy Statement was filed.
|
|
|
|
|
|
Audit fees include: the audit of annual financial statements;
the review of quarterly financial statements; the performance of
statutory audits; quarterly comfort letter work; and the
evaluation of managements assertions concerning the
effectiveness of internal controls over financial reporting, as
required by Section 404 of the Sarbanes-Oxley Act. The
primary sources of the increase in audit fees from 2007 to 2008
are (1) the addition of statutory and consolidated audit
fees related to the acquisition of Great-West Healthcare;
(2) an increase in PricewaterhouseCoopers LLP hourly fees;
and (3) pre-implementation testing and auditing of new
information technology systems.
|
|
|
|
Audit-related fees include assurance and related services that
were reasonably related to the audit of annual financial
statements and reviews of quarterly financial statements, but
not reported under Audit Fees. Audit-related fees
included employee benefit plan audits; internal control reviews
(e.g., Statement on Auditing Standards No. 70 reports);
consultation concerning financial accounting and reporting
standards; agreed upon procedures; due diligence purchase
accounting; and regulatory examinations.
|
|
|
|
Tax fees include tax recovery services, tax consulting and tax
compliance services.
|
|
|
|
All other fees include professional services rendered by
PricewaterhouseCoopers LLP not reported in any other category
and include pre-approved business process advisory and
consulting services.
|
20
Audit
Committee Report
CIGNA has maintained an independent Audit Committee for many
years. It operates under a written charter adopted by the Board
of Directors.
All of the members of the Audit Committee are independent (as
defined in the listing standards of the New York Stock Exchange
and applicable federal regulations, and CIGNAs
independence standards).
CIGNAs management has primary responsibility for preparing
CIGNAs financial statements and establishing and
maintaining financial reporting systems and internal controls.
Management is also responsible for reporting on the
effectiveness of CIGNAs internal controls over financial
reporting. The independent registered public accounting firm is
responsible for performing an independent audit of CIGNAs
consolidated financial statements and issuing a report on these
financial statements. The independent registered public
accounting firm is also responsible for, among other things,
issuing an attestation report on the effectiveness of
CIGNAs internal control over financial reporting based on
its audit. As provided in its charter, the Audit
Committees responsibilities include oversight of these
processes. As part of its oversight responsibilities, the Audit
Committee meets with CIGNAs head of internal audit, Chief
Accounting Officer and Controller, General Counsel and
independent registered public accounting firm, with and without
management present, to discuss the adequacy and effectiveness of
CIGNAs internal controls and the quality of the financial
reporting process.
In this context, before CIGNA filed its Annual Report on
Form 10-K
for the year ended December 31, 2008 with the Securities
and Exchange Commission, the Audit Committee:
|
|
|
|
|
Reviewed and discussed with CIGNAs management the audited
financial statements included in the
Form 10-K
and considered managements view that the financial
statements present fairly, in all material respects, the
financial condition and results of operations of CIGNA.
|
|
|
|
Reviewed and discussed with CIGNAs management and with the
independent registered public accounting firm,
PricewaterhouseCoopers LLP, the effectiveness of CIGNAs
internal controls over financial reporting as well as
managements report and PricewaterhouseCoopers LLPs
attestation on the subject.
|
|
|
|
Discussed with PricewaterhouseCoopers LLP, matters related to
the conduct of its audit that are required to be communicated by
auditors to audit committees and matters related to the fair
presentation of CIGNAs financial condition and results of
operations, including critical accounting estimates and
judgments.
|
|
|
|
Received the required communications from PricewaterhouseCoopers
LLP that discloses all relationships that may reasonably be
thought to bear on its independence and to confirm its
independence. Based on these communications, the Audit Committee
discussed with PricewaterhouseCoopers LLP its independence from
CIGNA.
|
|
|
|
Discussed with each of CIGNAs Chief Executive Officer and
Chief Financial Officer their required certifications contained
in CIGNAs Annual Report on
Form 10-K
for the year ended December 31, 2008.
|
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that such
audited financial statements be included in CIGNAs Annual
Report on
Form 10-K
for the year ended December 31, 2008 for filing with the
Securities and Exchange Commission.
Audit
Committee:
Robert H. Campbell, Chairman
Jane E. Henney, M.D.
John M. Partridge
Eric C. Wiseman
Donna F. Zarcone
21
DIRECTOR
COMPENSATION
Non-Employee
Director Compensation Program
The following chart summarizes the annual retainers of the
Non-Employee Director Compensation Program, more fully described
below:
|
|
|
|
|
|
|
|
|
|
Position
|
|
|
Annual Amount
|
|
|
Additional Information
|
|
|
Payment or Award Frequency
|
Board
|
|
|
$75,000 in cash
|
|
|
|
|
|
Paid quarterly
|
|
|
|
|
|
|
|
|
|
|
Retainer
|
|
|
$150,000 in
deferred stock units
|
|
|
Each unit provides for a future cash payment equal to the fair
market value of one share of CIGNA common stock, valued on a
specified date before payment, as well as any accumulated
dividend equivalents.
|
|
|
Awarded quarterly and paid in cash on the third anniversary of
the award or upon separation from service, if earlier.
|
|
|
|
|
|
|
|
|
|
|
Committee
Retainer
|
|
|
$10,000 in cash for
committee
membership
|
|
|
Members of the Executive Committee do not receive this retainer.
|
|
|
Paid quarterly
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional $5,000 in cash
for service as committee
chair
|
|
|
The chair of the Executive Committee does not receive this
retainer.
|
|
|
Paid quarterly
|
|
Board Retainer. Each director receives
an annual Board Retainer initially valued at $225,000. Of that
amount, $75,000 is fixed compensation paid in cash, and $150,000
is mandatorily deferred for three years in the form of deferred
stock units, whose value tracks that of CIGNA common stock.
The cash portion of the Board Retainer is payable in quarterly
installments of $18,750 ($75,000 annually). The stock unit
portion of the Board Retainer is paid through the quarterly
award of a number of deferred stock units with an initial value
of $37,500 ($150,000 annually). The number of deferred stock
units awarded to a director each quarter is determined based on
the closing price of CIGNA common stock on the last business day
of the second month of that quarter. Dividend equivalents are
credited on deferred stock units and treated as reinvested in
additional whole deferred stock units. Three years after the
original award, the payout per awarded stock unit is calculated
based on the closing price of CIGNA common stock on the last
business day of the second month of the quarter in which the
third anniversary of the grant date falls, and payment is made
in cash the following month. If service as a director ends
before completion of the three-year period, valuation and
payment are made in the quarter following separation from
service on the same basis as described above.
The deferred stock units awarded under the Non-Employee Director
Compensation Program are not subject to forfeiture and are a
general unsecured and unfunded obligation of the Company.
Committee Retainers. Each director
receives $10,000 annually for each committee membership
(excluding the Executive Committee for which there is no
retainer) and committee chairs receive an additional $5,000
annually for each committee chaired. These amounts are paid in
cash in quarterly installments at the same time that the cash
portion of the Board Retainer for the relevant quarter is paid.
Deferral of Payments. Directors may
elect to defer the payment of their Board and Committee
retainers beyond their designated payment date under the
Deferred Compensation Plan of 2005 for Directors of CIGNA
Corporation (Director Deferred Compensation Plan). Under the
Director Deferred Compensation Plan, any portion of the Board or
Committee retainers that is voluntarily deferred is credited to
a directors deferred compensation account. Directors are
offered a choice of hypothetical funds whose rates of return,
gains and losses are credited to that account. Subject to
limitations under Section 16 of the Securities Exchange Act
of 1934 and CIGNAs insider trading policy, directors who
participate in the Director Deferred Compensation Plan can make
deferral elections on an annual basis and change their
hypothetical investment allocations on deferrals once per
quarter. The funds offered to directors include a hypothetical
CIGNA stock fund and other funds that are selected from those
offered to all CIGNA employees under the CIGNA 401(k) Plan.
Directors
22
may elect to receive payments under the Director Deferred
Compensation Plan in a lump sum or in installments. The payments
are made (or, for installment method payment elections, begin)
in January of the year following separation from service as a
director.
Amounts deferred under the Director Deferred Compensation Plan
are not subject to forfeiture. Deferred compensation balances
are a general unsecured and unfunded obligation of the Company.
Amended
and Restated Restricted Share Equivalent Plan for Non-Employee
Directors
From 1989 to 2005, upon joining the Board of Directors,
non-employee directors were awarded either a one-time grant of
shares of CIGNA restricted common stock for directors who joined
the Board before October 1, 2004 or a grant of restricted
share equivalents for directors who joined the Board after
October 1, 2004, under the Amended and Restated Restricted
Share Equivalent Plan for Non-Employee Directors of CIGNA
Corporation (Restricted Share Equivalent Plan). Effective
January 16, 2006, the Restricted Share Equivalent Plan was
frozen and no new awards were made to individuals joining
CIGNAs Board of Directors after that date.
The Restricted Share Equivalent Plan has been amended from time
to time to, among other things, change the vesting periods and
eliminate the provisions related to restricted stock grants (as
those grants have all either vested or been forfeited). The
current provisions of the Restricted Share Equivalent Plan
provide for the vesting of restricted share equivalents issued
under the plan on the later of: (1) six months after the
date of grant; or (2) the earliest of nine years of
continuous service on the Board, attainment of age 65,
change of control, death or disability of the director. However,
in the event a directors resignation is accepted because
he or she failed to receive the required majority vote for
reelection and the directors restricted share equivalents
have not yet vested, then a pro-rated portion of the
directors restricted share equivalents, determined by the
number of complete months the director served on the Board,
shall vest effective as of the date of the directors
resignation. As a result of the resignation or any other
termination of service as a director prior to vesting, any
unvested restricted share equivalents are forfeited, except to
the extent that a majority of the Board of Directors (other than
the separating director) approves their vesting.
As of the end of 2008, Messrs. Harris, Martinez and
Zollars, Dr. Henney and Ms. Zarcone each have 13,500
unvested share equivalents under the Restricted Share Equivalent
Plan. Payment of the value of vested restricted share
equivalents is made in cash after a directors separation
from service. The payout is calculated based on the closing
price of CIGNA common stock on the directors last business
day of service with CIGNA and payment is made in cash within
45 days thereafter.
Each year that a restricted share equivalent is outstanding
under the Restricted Share Equivalent Plan, a director shall
receive a lump sum payment equal to the amount of any dividends
declared and paid on a share of CIGNA common stock during that
year (to the extent that the record date for any such dividend
occurs while the restricted share equivalent is outstanding).
Insurance
Coverage
CIGNA offers to each non-employee director, at no cost to him or
her, group term life insurance coverage in the amount of the
annual board retainer ($225,000), and business travel accident
insurance coverage in the amount of three times the annual board
retainer ($675,000). Directors may purchase or participate in,
through the payment of premiums on an after-tax basis,
additional life insurance, medical/dental care programs,
long-term care, property/casualty personal lines, and various
other insurance programs available on a broad basis to CIGNA
employees. In addition, directors may elect to be covered by
worldwide emergency assistance services. This program provides
international emergency medical, personal, travel and security
assistance, and is also currently available to CIGNA executive
officers and certain other CIGNA employees who frequently travel
abroad for business.
Each non-employee director who commenced service prior to
January 1, 2006 is eligible, upon separation from service
with at least nine years of Board service, to continue to
(1) participate for two years in the
23
medical/dental care programs offered by CIGNA to retired
employees, through the payment of premiums by the director on an
after-tax basis, and (2) use for one year, financial
planning and tax preparation services in the amount of up to
$5,000, paid by CIGNA. CIGNA will also provide eligible retired
directors, at no cost to the director, with $10,000 of group
term life insurance coverage for life. In addition, all
directors may, at their own expense and if otherwise eligible,
continue other life insurance, long-term care insurance and
property/casualty personal lines insurance pursuant to the terms
of the applicable policies. New directors who commenced service
on the Board after January 1, 2006 are not eligible for
these benefits.
Financial
Planning and Matching Charitable Gift Program
Non-employee directors may participate in the same financial
planning and tax preparation program available to CIGNA
executive officers. Under this program, CIGNA will make direct
payments or reimburse directors for financial planning services
that are provided by firms designated by CIGNA and for tax
preparation services. Non-employee directors may also
participate in the matching charitable gift program available to
CIGNA employees, under which CIGNA will make a matching
charitable gift of up to $5,000 annually.
Frozen
Retirement Plan
Before January 1, 1997, CIGNA maintained a retirement plan
for directors who terminated service after serving on the CIGNA
Board of Directors (or the Board of a predecessor company) for
at least five years and after reaching age 60. Under this
plan retired directors received, in a lump sum or in annual
installments, fees based upon their retainer and length of
service. Effective December 31, 1996, this retirement plan
was frozen. Payments are made under this plan only to eligible
directors who retired before 1997 and directors who had vested
in the plan as of December 31, 1996.
From January 1, 1997 to December 31, 2005, CIGNA
directors participated in a revised retirement plan under which
an annual credit was made to a restricted deferred compensation
account established for each director. This revised retirement
plan was available to directors who were not fully vested in the
former retirement plan when it was frozen on December 31,
1996 and to those who joined CIGNAs board after 1996. In
addition to the annual credit, a one-time credit equal to the
directors accumulated unvested benefits under the former
retirement plan was made in 1997 to those directors who had not
vested in the former plan. The amounts credited to a
directors restricted deferred compensation account under
the revised retirement plan were invested in hypothetical shares
of CIGNA common stock. The per share price for the one time
credit in 1997 was equal to the average closing price of CIGNA
common stock over the last ten business days of 1996.
For each hypothetical share in a directors restricted
deferred compensation account, hypothetical dividends equal to
the amount of actual dividends paid on shares of CIGNA common
stock are credited to a directors deferred compensation
account and are hypothetically reinvested in one or more of the
available hypothetical funds.
24
Director
Stock Ownership
Stock Ownership Guidelines. Directors
are expected to own $250,000 in any combination of CIGNA common
stock, deferred stock units, and restricted share equivalents
within three years of joining the Board. Because of their recent
election as directors and the decline in the Companys
stock price, Messrs. Partridge, Rogers and Wiseman will be
required to meet the directors ownership guidelines within
three years of their joining the Board.
Common Stock, Stock Unit, Share Equivalent and
Hypothetical Stock Ownership. The table below
shows the total ownership stake each of the Companys
directors has by providing the total holdings of CIGNA common
stock as well as share equivalents, stock units and hypothetical
shares of CIGNA stock credited to a directors deferred
compensation account on a mandatory or voluntary basis, as of
December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Share Equivalents,
|
|
|
|
|
|
|
Deferred Stock Units, and
|
|
Name
|
|
Common Stock
|
|
|
Hypothetical Shares of CIGNA
Stock(1)
|
|
|
Robert H. Campbell
|
|
|
4,261
|
|
|
|
56,269
|
|
Isaiah Harris, Jr.
|
|
|
|
|
|
|
31,843
|
|
Jane E. Henney, M.D.
|
|
|
|
|
|
|
32,481
|
|
Peter N. Larson
|
|
|
3,500
|
|
|
|
51,042
|
|
Roman Martinez IV
|
|
|
3,000
|
|
|
|
34,814
|
|
James E. Rogers
|
|
|
|
|
|
|
14,014
|
|
Carol Cox Wait
|
|
|
|
|
|
|
42,732
|
|
Eric C. Wiseman
|
|
|
|
|
|
|
7,853
|
|
Donna F. Zarcone
|
|
|
2,000
|
|
|
|
28,944
|
|
William D. Zollars
|
|
|
|
|
|
|
31,862
|
|
|
|
|
(1) |
|
Restricted share equivalents,
granted under the Restricted Share Equivalent Plan, are
described on page 23; deferred stock units, awarded as a
portion of the Board Retainer, are described on page 22;
and hypothetical shares of CIGNA common stock, credited to a
directors deferred compensation account under the Director
Deferred Compensation Plan are described on page 22.
|
25
Director
Compensation Table for Fiscal Year 2008
The table includes information about 2008 compensation for
non-employee members of CIGNAs Board of Directors, which
consisted of cash retainer payments, compensation cost incurred
by CIGNA for various share equivalent awards, matching
charitable awards and company-paid life insurance premiums. The
tables below include 2008 compensation for Mr. Wagner, who
retired from the Board effective April 23, 2008.
Mr. Partridge, who joined the Board in January 2009,
received no 2008 compensation from CIGNA, and therefore is not
included in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
All Other
|
|
|
Total
|
|
|
|
Paid in Cash
|
|
|
Stock Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Robert H. Campbell
|
|
|
100,000
|
|
|
|
150,000
|
|
|
|
4,514
|
|
|
|
254,514
|
|
Isaiah Harris, Jr.
|
|
|
98,750
|
|
|
|
150,000
|
|
|
|
1,382
|
|
|
|
250,132
|
|
Jane E. Henney, M.D.
|
|
|
95,000
|
|
|
|
150,000
|
|
|
|
6,681
|
|
|
|
251,681
|
|
Peter N. Larson
|
|
|
100,000
|
|
|
|
150,000
|
|
|
|
6,526
|
|
|
|
256,526
|
|
Roman Martinez IV
|
|
|
95,000
|
|
|
|
150,000
|
|
|
|
1,382
|
|
|
|
246,382
|
|
James E. Rogers
|
|
|
95,000
|
|
|
|
150,000
|
|
|
|
490
|
|
|
|
245,490
|
|
Harold A. Wagner
|
|
|
50,000
|
|
|
|
75,000
|
|
|
|
1,337
|
|
|
|
126,337
|
|
Carol Cox Wait
|
|
|
100,000
|
|
|
|
150,000
|
|
|
|
5,532
|
|
|
|
255,532
|
|
Eric C. Wiseman
|
|
|
95,000
|
|
|
|
150,000
|
|
|
|
450
|
|
|
|
245,450
|
|
Donna F. Zarcone
|
|
|
95,000
|
|
|
|
150,000
|
|
|
|
18,469
|
|
|
|
263,469
|
|
William D. Zollars
|
|
|
95,000
|
|
|
|
150,000
|
|
|
|
1,207
|
|
|
|
246,207
|
|
|
|
|
(b) |
|
Messrs. Campbell, Harris and
Larson, and Ms. Wait each serve as a committee chair and as
a member of another committee. Messrs. Martinez, Rogers,
Wiseman and Zollars, Dr. Henney and Ms. Zarcone each
serve as a member of two committees. See page 22 for
additional information regarding the Board Retainer.
|
|
(c) |
|
Compensation for non-employee
members of CIGNAs Board of Directors includes both cash
compensation and deferred stock units accounted for under
Statement of Financial Accounting Standards (SFAS)
No. 123(R), Share-Based Payment (SFAS 123R) based upon
the service period. See page 22 for additional information
about the portion of the Board Retainer granted in deferred
stock units.
|
|
(d) |
|
This column includes:
|
|
|
|
|
|
Reinvested dividends on mandatory deferrals of Deferred Stock
Units and other share equivalents, and dividends paid in cash on
Restricted Share Equivalents;
|
|
|
|
matching charitable awards made by CIGNA as part of its matching
gift program (also available on a broad basis to CIGNA
employees) of an aggregate of $5,000 each for Dr. Henney,
Mr. Larson and Ms. Zarcone; $3,450 for Ms. Wait;
and $2,000 for Mr. Campbell;
|
|
|
|
the dollar value of company-paid life insurance premiums (also
available on a broad basis to CIGNA employees) for
Messrs. Campbell, Harris, Martinez, Rogers, Wiseman and
Mses. Wait and Zarcone; and
|
|
|
|
for Ms. Zarcone, $11,980 in company-paid premiums for
family medical/dental insurance and business travel accident
insurance. These benefits are available on a broad basis to
CIGNA employees.
|
This column does not include the value of premiums, if any, paid
by the directors for additional life insurance, medical/dental
care programs, long-term care, property/casualty personal lines,
and various other insurance programs that are also available on
a broad basis to CIGNA employees and are described on
page 23.
26
Director
Aggregate Outstanding Equity Awards Table
This table lists each directors total number of share
equivalent awards outstanding on December 31, 2008. The
table does not include any CIGNA common stock purchased by a
director or any share equivalents resulting from voluntary
deferral of cash compensation invested in the CIGNA stock fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Required to be
|
|
|
Hypothetical
|
|
|
Deferred
|
|
|
|
Deferred
|
|
|
Restricted
|
|
|
Invested in
|
|
|
Shares of
|
|
|
Stock Units and
|
|
|
|
Stock
|
|
|
Share
|
|
|
Hypothetical
|
|
|
Common
|
|
|
Other Share
|
|
|
|
Units
|
|
|
Equivalents
|
|
|
Stock
|
|
|
Stock
|
|
|
Equivalents
|
|
Name
|
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
|
Robert H. Campbell
|
|
|
12,666
|
|
|
|
|
|
|
|
14,283
|
|
|
|
22,212
|
|
|
|
49,161
|
|
Isaiah Harris, Jr.
|
|
|
12,666
|
|
|
|
13,500
|
|
|
|
328
|
|
|
|
|
|
|
|
26,494
|
|
Jane E. Henney, M.D.
|
|
|
12,666
|
|
|
|
13,500
|
|
|
|
1,482
|
|
|
|
4,833
|
|
|
|
32,481
|
|
Peter N. Larson
|
|
|
12,666
|
|
|
|
|
|
|
|
8,459
|
|
|
|
14,220
|
|
|
|
35,345
|
|
Roman Martinez IV
|
|
|
12,666
|
|
|
|
13,500
|
|
|
|
328
|
|
|
|
|
|
|
|
26,494
|
|
James E. Rogers
|
|
|
8,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,643
|
|
Harold A. Wagner
|
|
|
|
|
|
|
|
|
|
|
4,180
|
|
|
|
14,904
|
|
|
|
19,084
|
|
Carol Cox Wait
|
|
|
12,666
|
|
|
|
|
|
|
|
9,774
|
|
|
|
18,063
|
|
|
|
40,503
|
|
Eric C. Wiseman
|
|
|
7,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,853
|
|
Donna F. Zarcone
|
|
|
12,666
|
|
|
|
13,500
|
|
|
|
720
|
|
|
|
2,058
|
|
|
|
28,944
|
|
William D. Zollars
|
|
|
12,666
|
|
|
|
13,500
|
|
|
|
720
|
|
|
|
2,058
|
|
|
|
28,944
|
|
|
|
|
(1) |
|
This column includes the equity
portion of the 2008 (and any previous years) Board
Retainer granted in CIGNA deferred stock units and any dividend
equivalents (see page 22 for additional information about
the Board Retainer).
|
|
(2) |
|
This column includes restricted
share equivalents granted pursuant to the Restricted Share
Equivalent Plan as well as any dividend equivalents. This column
does not include shares that were granted under the Restricted
Share Equivalent Plan as they have vested. See page 23 for
additional information about these grants.
|
|
(3) |
|
This column includes hypothetical
shares of CIGNA common stock acquired pursuant to a pre-2006
requirement that directors invest or defer a portion of their
Board Retainer in shares of hypothetical CIGNA common stock as
well as any hypothetical dividends earned on those hypothetical
shares.
|
|
(4) |
|
This column includes hypothetical
shares of CIGNA common stock credited to directors
restricted deferred compensation accounts under the terms of the
retirement plan in effect between 1997 and 2005 as described on
page 24.
|
|
(5) |
|
The value of the deferred stock
units and other share equivalents in this column decreased in
2008 due to a decline in the Companys stock price
resulting in lower compensation cost to the Company under
SFAS 123R.
|
All units and other share equivalents are fully vested with the
exception of the 13,500 restricted share equivalents granted
pursuant to the Restricted Share Equivalent Plan described on
page 23. The number of share equivalents resulting from
voluntary deferrals of cash compensation invested into the CIGNA
stock fund for Mr. Campbell equals 7,108; for
Mr. Harris equals 5,349; for Mr. Larson equals 15,697;
for Mr. Martinez equals 8,320; for Mr. Rogers equals
5,371; for Mr. Wagner equals 23,756; for Ms. Wait
equals 2,229; and for Mr. Zollars equals 2,918.
27
REPORT OF
THE PEOPLE RESOURCES COMMITTEE
The People Resources Committee of the Board of Directors (PRC)
reviewed and discussed with CIGNAs management the
following Compensation Discussion and Analysis (CD&A).
Based on this review and discussion, the PRC recommended to the
Board of Directors that the CD&A be included in this proxy
statement and be incorporated by reference in the Annual Report
on
Form 10-K
for the year ended December 31, 2008 filed with the
Securities and Exchange Commission. The Board accepted the
PRCs recommendation.
People
Resources Committee:
Isaiah Harris, Jr., Chairman
Roman Martinez IV
James E. Rogers
Carol Cox Wait
William D. Zollars
COMPENSATION
DISCUSSION & ANALYSIS
Overview
This Compensation Discussion and Analysis discusses and analyzes
CIGNAs executive compensation program and the amounts
shown in the executive compensation tables within the
Executive Compensation section.
2008The
Year In Review
2008 was a challenging year for CIGNA due to the
competitive market environment. Partly as a result of this tough
economic environment, the Companys performance in 2008 did
not meet its plans or expectations. Therefore, consistent with
CIGNAs rewards for performance philosophy that links and
aligns compensation to performance and in light of the tough
economic environment, the People Resources Committee (PRC), or
the Chairman of the PRC as designated, took the following
actions relating to the Companys named executive officers,
which includes the Chief Executive Officer, Chief Financial
Officer and CIGNAs three other most highly compensated
executive officers at the end of 2008.
|
|
|
|
|
No Annual Incentive Awards to the Chief Executive Officer,
the President and Chief Operating Officer and the Chief
Financial Officer. While CIGNAs ongoing
business did post year-over-year earnings growth despite a
difficult economic environment, the Companys earnings
growth was below its original full year earnings expectations
disclosed at the beginning of 2008 and below the adjusted net
income from continuing operations target the PRC approved in
February 2008. Because of the Companys 2008 earnings
results and the 69% decrease in total shareholder return in
2008, the PRC chose not to grant an annual incentive award to
these executive officers.
|
|
|
|
Reduction to the
Long-Term
Incentive Strategic Performance Unit (SPU)
payouts. For the
2006-2008
performance period, the PRC and the Board of Directors approved
a preliminary SPU payout for the named executive officers at a
per-unit
value of $70. The Company delivered results for the period that
could have delivered an above target payout under the SPU Plan.
However, while CIGNAs stock price saw strong appreciation
in the first two years of the performance period, significant
decline in the third year resulted in a negative return for
shareholders over the three year period. For that reason, the
PRC and the Board of Directors exercised downward discretion and
approved a preliminary SPU payout at less than the target value.
|
|
|
|
New Formula for Part A Pension Plan. In
April 2008, in order to better align the pension plan to the
marketplace, the prior formula was frozen and a new cash balance
formula under Part A was adopted which resulted in a
reduction in future benefit accruals and a reduction in
operating expenses. Two of the named executive officers,
Messrs. Hanway and Bell, were impacted by this change.
|
28
|
|
|
|
|
Reduction to Executive Post-Separation Benefits, including
Conditional Cutback on Golden Parachute Payments. To better
align CIGNAs post-separation executive benefits to the
marketplace, post-separation financial services and tax
preparation benefits for those terminated after a change of
control were eliminated. In addition, the golden parachute
excise tax
gross-up in
a
change-in-control
situation was made conditional. The excise tax
gross-up,
which is only available in a
change-in-control
situation, will be paid only if the total of an executives
payments subject to the excise tax exceeds the payment cap that
triggers the tax by more than 10%. If the payments exceed the
cap by less than 10%, the payment will be cut back to the level
of the payment cap to avoid application of the tax.
|
2009The
Year Ahead
The Company expects to continue to face a very challenging
economic environment throughout 2009 and it is difficult to
fully predict the effects that the unprecedented global
financial and economic crises will have on the Companys
financial performance in 2009. As a result, the PRC evaluated
compensation for 2009 with an eye toward balancing the
Companys 2008 performance with retention of key executive
officers, CIGNAs rewards for performance principles, costs
to the Company and creating shareholder value. With this in
mind, the PRC made the following determinations.
|
|
|
|
|
No Base Salary Merit Increases. None of the
Companys salaried employees who are not eligible for
overtime, including the named executive officers, will receive a
base salary increase in 2009.
|
|
|
|
Long-Term Incentive Targets. In light of the
stock price performance and potential dilution to the
Companys shareholders, long-term incentive targets
(meaning stock options and SPUs) were reduced by 20% for the
2009 annual long-term incentive grant. As a further measure, the
PRC set a limit on the maximum number of stock options that
could be granted to each executive officer in 2009 as part of
his or her annual long-term incentive award. This cap on stock
options further reduced the total dollar amount that each
executive officer could receive for their overall 2009 long-term
incentive award.
|
|
|
|
Reduction in CEOs Target
Compensation. The PRC adjusted the Chief
Executive Officers target compensation for 2009 from
$3,500,000 to $2,500,000 for his Management Incentive Plan (MIP)
target and from $11,000,000 to $8,800,000 (which includes the
additional 2009 long-term incentive target reduction of 20%
described above). As a result of these changes,
Mr. Hanways total target compensation was reduced
approximately 3.5% (or approximately 18%, for 2009 when
including the additional 2009 long-term incentive target
reduction).
|
|
|
|
Strategic Performance Unit Design. The PRC
approved the measures and goals for the 2009 SPU program at
their February 2009 meeting. The measures remain TSR and
absolute adjusted cumulative net income, each equally weighted.
However, the Committee added that in the event that the three
year TSR is negative regardless of the performance relative to
the peers, the PRC will consider a 50% reduction in the maximum
value for this component and will retain their discretion to
reduce the component by as much as 100%.
|
Executive
Compensation Program Objectives and Design
CIGNA operates in a very competitive market for executive talent
with the skill and experience to run its business. Accordingly,
to effectively compete in this environment and to drive results
and growth in CIGNAs business, CIGNAs executive
compensation program is designed to:
|
|
|
|
|
reward the creation of long-term value for CIGNA shareholders
and align the interests of the Companys executives with
those of its shareholders;
|
|
|
|
ensure effective implementation of the Companys business
strategy as well as to drive performance through a strong
emphasis on performance-based short-term and long-term
compensation;
|
|
|
|
motivate the executives to deliver superior results;
|
|
|
|
attract highly skilled executives to join CIGNA by offering
competitive compensation; and
|
29
|
|
|
|
|
reward the achievement of favorable long-term financial results
more heavily than the achievement of short-term results in order
to retain talented and skilled executives and promote the
Companys long-term financial health and growth.
|
Executive
Summary
CIGNAs executive compensation program consists of three
primary elements: base salary; annual incentives (bonus); and
long-term incentives, each of which is described in the
following summary. The program also includes a package of
competitive benefits, including health care, pension, and
deferred compensation, and other benefits, which are described
on page 42 of this CD&A. For named executive officers
and other eligible CIGNA employees, two steps are used to
determine base salary, annual incentives and long-term
incentives.
|
|
|
|
|
First, the PRC determines the total compensation target for each
named executive officer role by setting the individual targets
for each of the three primary compensation elements.
|
|
|
|
Targets are based on an assessment of relevant market data as
described under Relevant Market Data on page 32. CIGNA
generally uses the
50th percentile
of the relevant market data as a guide to determine the
compensation targets. For annual and long-term incentives, the
targets represent the award levels for achieving the target
levels of performance. If an executive changes roles or
responsibilities during the year, adjustments to base salary,
annual incentive targets and long-term incentive targets may be
made at that time.
|
|
|
|
Second, the PRC makes actual compensation decisions concerning
base salary and annual and long-term incentives; these decisions
are based upon organizational and individual performance and may
result in compensation that is below, at, or above the
respective target. Individual performance is measured by the
named executive officers accomplishments and contributions
towards the results of the organization during the year and the
demonstration of the skills and behaviors required for the role,
which are intended to support the Companys overall
business strategy. Overall business affordability is also
considered in making actual compensation decisions. For the
named executive officers, the Chief Executive Officer and the
PRC (and for the Chief Executive Officer, the PRC and the Board
of Directors) annually review the total compensation targets,
the relevant market data and organizational and individual
performance to make compensation determinations.
|
Below is an overview of each of the three primary compensation
elements:
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
Element
|
|
|
Objective
|
|
|
Key Feature
|
Base Salary
|
|
|
Fixed portion of the total compensation package.
|
|
|
Base salary levels are set based on both: (1) a competitive
range of the relevant market data; and (2) individual
performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The competitive range for the relevant market data is
recommended by the PRCs external compensation consultant,
Mercer (the Compensation Consultant), and is defined as within
15% of the
50th percentile.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named executive officers, like all employees, are assessed
annually and may receive merit increases to their salaries based
on business affordability, updated relevant market data and
individual performance assessments.
|
|
30
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
Element
|
|
|
Objective
|
|
|
Key Feature
|
|
|
|
|
|
|
|
Annual
Incentive
|
|
|
Annual incentives are considered performance-based compensation
and are used to recognize achievement of annual organizational
and business unit results, and for individual performance
accomplishments and contributions.
|
|
|
Annual incentives are administered primarily under the
Management Incentive Plan (MIP). The PRC annually approves:
(1) organizational performance measures and goals; and
(2) funding levels for actual awards under the MIP. The
performance measures and goals approved for 2008 are described
on page 36.
|
|
|
|
|
|
|
Subject to certain limits described below, the actual award for
an eligible employee can range from 0-200% of their individual
target and is paid in the first quarter following the end of the
performance year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total target cash compensation (base salary plus annual
incentives) is targeted at the
50th percentile
of the primary compensation reference (actual percentile may
vary based on annual performance and reasons described further
in Elements of Compensation).
|
|
|
|
|
|
|
|
|
Long-Term Incentives
|
|
|
CIGNAs long-term incentive (LTI) program, also considered
performance-based compensation, is designed to: (1) motivate and
reward executive behaviors and activities that lead to
CIGNAs long-term growth and profitability; (2) align the
interest of executives with shareholders through equity
compensation tied to CIGNA stock price performance; (3) align
with CIGNAs rewards for performance strategy; and (4)
attract and retain key executives critical to CIGNAs
business success by providing competitive LTI opportunities with
vesting over multiple years.
|
|
|
Stock Options Represents 50% of the long term incentive award for the executive officers in 2008.
The actual value of the options is dependent on the stock price appreciation over the term of the option, which is 10 years.
Stock Options generally vest in equal installments over three years beginning on the first anniversary of the grant. The annual grant is made in the first quarter.
An executive officer can receive between 0 and 200% of their individual target based on organizational and individual performance.
|
|
|
|
|
|
|
|
|
|
|
CIGNAs compensation strategy for its executives is that the predominant portion of their compensation opportunity be tied to the long-term success of the Company.
In February 2008, the executives received both stock options and SPUs as their annual long-term incentive awards.
|
|
|
Strategic Performance Units
Represents 50% of the long term incentive award for executive officers in 2008.
SPUs are performance awards denominated in units that may be paid in cash or shares of CIGNA common stock. SPU value is based on CIGNAs performance over a three year period measured against pre-established criteria including performance versus CIGNAs competitors.
An executive officer can receive an award between 0 and 200% of their individual target based on organizational and individual performance.
The target value is $75 per unit under the CIGNA Long-Term Incentive Plan. The actual payout level for SPUs is determined by the PRC by considering an overall assessment of CIGNA performance against the pre-established goals. The PRC always has the discretion to reduce the payout due to any unusual factors impacting reported financial results.
|
|
31
Oversight
of the Executive Compensation Program
For information on the oversight of the Executive Compensation
Program, see the section entitled Processes and Procedures
for Determining Executive and Director Compensation on
page 16.
Executive
Compensation Policies and Practices
Relevant
Market Data
The PRC establishes target and actual compensation levels for
the named executive officers based on a variety of factors
including the practices of organizations in the market in which
CIGNA competes for talent.
Generally, the companies that CIGNA considers its primary peer
group are a limited group of publicly-traded managed care
companies with which CIGNA competes most directly. Those
companies are:
|
|
|
|
|
Aetna;
|
|
|
|
Coventry Health Care;
|
|
|
|
HealthNet;
|
|
|
|
Humana;
|
|
|
|
UnitedHealth Group; and
|
|
|
|
WellPoint.
|
The primary peer group reflects the organizations with which
CIGNA competes for capital, customers and labor. The selection
process for CIGNAs primary peers involved a review of:
(1) companies in the Health Care Provider and Services and
Insurance Global Industry Classification System Code (GIC)
industry group with similar operating models that had revenue
levels from one third to three times that of CIGNA; (2) an
analysis of total shareholder return (TSR) movement that
signifies that investors view the proposed peer companies as
similar from an investment and capital markets perspective; and
(3) a final review of similarity of markets. The decision
was made to include some companies outside of the revenue levels
because of competitive relevance.
Publicly available proxy statement and other information
disclosed in filings with the Securities and Exchange Commission
(SEC), such as
8-K filings
pertaining to these companies compensation practices, are
used for benchmarking compensation levels, evaluating pay
practices and assessing the alignment of rewards and performance
for the named executive officers. In cases where the critical
skills and abilities CIGNA requires for executive talent are
either unique to another industry or applicable on a broader
all-industry basis, unique reference groups, rather than the
primary peer group, are used as an additional secondary
reference point for compensation target recommendations.
To determine executive officer compensation targets, the PRC
reviews relevant market data. Where there is a lack of publicly
available information for an executive officer role, the PRC
reviews published survey data issued by leading compensation
consulting firms and collected from among companies in the
health care and group insurance businesses, as well as companies
with similar revenue size. Survey data is reviewed for all named
executive officers roles but where publicly available
information for the primary peer group exists, that is used as
the primary market reference. The Compensation Consultant
generally assists the PRC by compiling and analyzing publicly
available information and published survey data for the Chief
Executive Officer role and by reviewing survey data for other
named executive officers compiled by CIGNAs internal
compensation department.
32
The primary market reference used by the PRC in determining
compensation for each of the named executive officers is set
forth below:
|
|
|
Named Executive Officer
|
|
Primary Market Reference
|
|
H. Edward Hanway
|
|
Primary Peer Group Proxy DataFunctional Role Match (CEO)
|
Michael W. Bell
|
|
Primary Peer Group Proxy DataFunctional Role Match (CFO)
|
David M. Cordani
|
|
Primary Peer Group Proxy DataFunctional Role Match
(President and COO)
|
John M. Murabito
|
|
Survey DataFunctional Role Match (Head of Human Resources
and Top Administration
Executive)(1)
|
Carol Ann Petren
|
|
Survey DataFunctional Role Match (General Counsel)
|
|
|
|
(1) |
|
For Mr. Murabito, the PRC also
uses a secondary relevant market reference, proxy data set of
Human Resources executives named in the proxy statements of
S&P 500 companies with revenue between $5 and
$35 billion.
|
CIGNA used multiple surveys and benchmarks within the surveys in
the development of the Survey Data that is used as the primary
market reference. Additional detail on those surveys is provided
in Appendix A, beginning on
page A-1.
The benchmarks are selected based on similarity to the
responsibilities inherent in the roles.
Factors
Considered in Determining Target Compensation and Target Pay
Mix
CIGNAs executive compensation programs are designed to:
(1) place greater emphasis on performance-based
compensation rather than fixed compensation; and (2) with
respect to the different types of performance-based
compensation, place more weight on long-term incentives than
annual incentives. Base salary is considered fixed compensation.
Annual incentives and long-term incentives are considered
performance-based compensation, because the actual annual
incentive award, stock option value or SPU payout is not known
until the end of a year, at the time of exercise, or the end of
the performance period and could vary depending upon a number of
factors including organizational and individual performance.
The following chart sets forth the target pay mix of
compensation elements in 2008 for each of the named executive
officers:
Total target compensation for Mr. Hanway is approximately
2.5 times that of the named executive officer with the next
highest total target compensation, reflecting both the breadth
of responsibility his position carries and his tenure as Chief
Executive Officer. In December 2008, Mr. Hanways
total target compensation was above the competitive range of the
relevant market data. Based on that analysis, the PRC decided to
reduce Mr. Hanways total target compensation to bring
it within the competitive range of the relevant market data.
The PRC approves targets for base salary, annual incentives and
long-term incentives for each named executive officer annually.
Based on the relevant market data included in the report
prepared by the Compensation Consultant for the PRCs
December 2008 meeting, the target total compensation for each of
the named
33
executive officers is generally within a competitive range
(within 15%) of the
50th percentile
of the primary market reference, with the exception of
Mr. Murabito and Ms. Petren. Mr. Murabitos
target total compensation is between a competitive range of the
75th percentile
of the primary and the
50th percentile
of the secondary market reference because
Mr. Murabitos responsibilities go beyond those of a
traditional human resources executive. For Ms. Petren, the
target total compensation is between the
50th percentile
and
75th percentile
of the primary market reference because of the intense
competition for attracting and hiring executives with the
necessary skills, talent, and leadership for this role. For each
of the named executive officers, there may be variation in the
target pay mix, such that target amounts for individual
compensation elements may be above or below the competitive
range of the
50th percentile
for the individual element.
Tally
Sheets
The PRC monitors the total level of compensation paid, or
expected to be paid, to the Companys named executive
officers through the review of tally sheets. Tally sheets
summarize current actual and target compensation, equity and SPU
holdings, retirement and deferred compensation values, and
potential payouts upon termination of employment for named
executive officers. The Company prepares tally sheets for all of
its executive officers for review by the PRC twice a year, when
targets are being reviewed and prior to annual compensation
award decisions, to assist in determining whether executive
compensation decisions are appropriate in the context of
CIGNAs compensation philosophy and performance.
When making decisions about each component of compensation, the
PRC considers the aggregate sum of base salary, annual
incentives and grant-date value of long-term incentives to
provide a level of total compensation deemed by it to be
appropriate. The PRC does not generally consider prior awards in
determining a subsequent performance periods awards. For
example, the number of stock options or SPUs previously awarded
does not necessarily affect new awards, which are made annually.
Further, prior awards generally are not considered when
determining actual awards tied to performance under the MIP
(described on pages 35 through 38) or the SPU program
(described on page 38). One situation in which prior awards
are considered in determining pay levels, however, is when CIGNA
identifies the potential risk of recruitment of its executives
by competitors (see Retention Actions on page 40). In that
case, CIGNA considers outstanding unvested awards to determine
existing retention incentive values. The PRC may also consider
prior awards when it determines the type of long-term incentive
to award.
Elements
of Compensation
Base
Salary
Base salary levels are reviewed annually and may be adjusted
based on relevant market data and an assessment of the
executives skills, role and performance contributions,
including the demonstration of CIGNA leadership behaviors and
core values.
The following base salary adjustments were made for the periods
indicated below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Annual Base Salary
|
|
|
2008 Annual Base Salary
|
|
|
|
|
Named Executive Officer
|
|
($)
|
|
|
($)
|
|
|
% Change
|
|
|
H. Edward Hanway
|
|
|
1,110,000
|
|
|
|
1,155,000
|
|
|
|
4.1
|
|
Michael W. Bell
|
|
|
610,000
|
|
|
|
640,000
|
|
|
|
4.9
|
|
David M.
Cordani(1)
|
|
|
635,000
|
|
|
|
750,000
|
|
|
|
18.1
|
|
John M. Murabito
|
|
|
575,000
|
|
|
|
592,250
|
|
|
|
3.0
|
|
Carol Ann Petren
|
|
|
540,000
|
|
|
|
565,000
|
|
|
|
4.6
|
|
|
|
|
(1) |
|
Mr. Cordani received a 5.5%
merit increase in April 2008 while in the President, CIGNA
HealthCare role. When he was promoted to President and Chief
Operating Officer in June 2008 his base salary was increased
11.9% to align with the market data for the new role.
|
The base salary amounts for each of the named executive officers
reflected in the table above are within a competitive range of
the primary market reference, with the exception of
Mr. Murabito who is above the
34
50th percentile,
but competitive with the
75th percentile
of the primary market reference. Decisions regarding each named
executive officers actual base salary are made by
referring to both relevant market data and the officers
individual performance, which is measured by the officers
accomplishments and contributions during the previous year, the
individuals skill proficiency for the role and the
individuals demonstrated leadership behaviors. In 2008,
the PRC made a determination that there will be no merit
increases to base salary amounts for the named executive
officers in 2009.
Annual
Incentives
Performance Measures, Goals and
Funding. Each year, the PRC sets
organizational performance measures and goals for annual
incentive awards based on CIGNAs business priorities. For
each measure, goals are set, meaning a target level of
performance is identified. The goals may identify threshold
(minimum), target, above target and superior levels of
performance. The actual organizational performance serves as the
basis for establishing the range of funding available for
awards, but the PRC exercises judgment to determine at which
point within the range actual funding will be set. The PRC uses
discretion within pre-established funding ranges to determine
aggregate MIP funding. In exercising its judgment to set funding
levels, the PRC considers CIGNAs performance as a whole
(both in absolute terms and relative to competitors) as well as
CIGNAs achievement of the goals within each performance
measure.
In addition, a specified threshold level of Adjusted Net Income
from Continuing Operations must be met for overall funding for
MIP awards. The purpose of the threshold is to reinforce the
fundamental importance of achieving CIGNAs profitability
goals. If the Adjusted Net Income threshold is met, the MIP
allows for payment of an incentive award even when overall
results may be below target. CIGNA believes it is important to
maintain this flexibility to retain key talent over the
long-term and encourage management to make decisions that could
yield lesser results in the short-term, but are in the best
interests of our shareholders over the long-term. If the
Adjusted Net Income threshold level is not achieved, no annual
incentive payouts will be made under the MIP to any employees,
including the named executive officers. However, in this
instance, a Chairmans Fund will be established in which
approximately
10-15% of
potential aggregate funding at target may be made available and
may be used to reward and retain key talent. The Chief Executive
Officer is not eligible for an award from this fund. During
years in which CIGNAs performance is below the minimum
threshold, the retention of key talent is even more critical.
Therefore, the PRC believes it is important to retain the
flexibility to pay some incentive awards in order to recognize
and retain key talent over the long-term.
Annual incentives are administered primarily under the MIP.
CIGNA determines the eligibility for the MIP based on role and
relevant market data. Each named executive officer is eligible
to participate in the MIP. The MIP governs the awards paid to
participating executives based on achievement of corporate
goals, business unit performance and individual contributions.
The performance measures and goals approved for 2008 are
described on page 36. Subject to certain limits described
below, the actual award for an eligible employee can range from
0-200% of the target and is paid in the first quarter following
the end of the performance year.
For named executive officers, annual incentives also are subject
to the Executive Incentive Plan (EIP), which operates in
conjunction with the MIP. The purpose of the EIP is to ensure
that annual incentive awards paid to certain executive officers
qualify for treatment as performance-based compensation and
remain fully tax deductible. Section 162(m) of the Internal
Revenue Code imposes a $1 million limit on the amount that
CIGNA may deduct for federal income tax purposes for
compensation paid to the Chief Executive Officer and each of the
three other most highly compensated executive officers, other
than the Chief Financial Officer, who are employed as of the end
of the year. This limitation does not apply to compensation that
meets the requirements under Section 162(m) for
qualifying performance-based compensation (i.e.,
compensation paid only if performance meets pre-established
objective goals based on performance criteria approved by
shareholders).
In accordance with Section 162(m) and pursuant to the terms
of the EIP, the PRC establishes objective corporate performance
goals for the named executive officers within the first
90 days of the beginning of each year. At year end, if the
PRC certifies that CIGNA has achieved these performance goals,
then each named executive officer is eligible to receive the
maximum annual incentive award for that performance year. The
35
maximum award each named executive officer is eligible to
receive is $3 million in cash and 225,000 shares of
CIGNA common stock.
CIGNAs achievement of the performance goals for a given
performance year does not assure that a named executive officer
will receive the maximum award or any award, because the PRC has
retained negative discretion to reduce the award
below the maximum amount. The PRC uses this discretion to reduce
the named executive officers annual award to an amount
determined in accordance with the individuals annual
incentive target by applying the assessment process under the
terms of the MIP, as described below. The PRC does not have
discretion to increase the size of the awards. The PRC has
consistently exercised its negative discretion to reduce the
size of annual incentive awards below the maximum.
For 2008, the PRC established the following organizational
performance measures and performance levels, which were used to
determine the range of potential aggregate funding for MIP
awards.
|
|
|
|
|
|
|
Measure
|
|
Weighting
|
|
|
Performance Levels
|
Adjusted Net Income from Continuing Operations
The target for this measure is set as a year over year
growth goal for CIGNAs three ongoing businesses (Health
Care, Disability & Life and International).
|
|
|
40
|
%
|
|
Superior
Above Target
Target
Threshold
|
|
|
Membership
The target for this measure is set as a year over year
growth goal for CIGNAs Health Care business.
|
|
|
20
|
%
|
|
Superior
Above Target
Target
Threshold
|
|
|
Operating Expense per Member
The target for this measure is based on CIGNAs plan to
improve core operating expenses per member in the Health Care
business.
|
|
|
20
|
%
|
|
Above Target
Target
Threshold
|
|
|
2008 Strategic Imperatives
Integration of Great-West Healthcare and strategic
investment in CIGNAs foundational service and technology
structure.
|
|
|
20
|
%
|
|
Funding is based
upon PRC evaluation
|
The goals that the PRC sets for target levels are rigorous and
challenging and at the time the PRC approved the performance
goals under the MIP for 2008, CIGNA believed that the
performance goals were attainable, but not certain to be met. In
setting the target performance levels within each performance
measure, the PRC considers CIGNAs earnings estimates for
the year, as publicly disclosed, historical company performance
and peer performance. To aid the PRC in setting performance
targets, the Compensation Consultant presents a comprehensive
report annually to the PRC with compensation and performance
information that includes historical performance information
about CIGNAs primary peer group.
CIGNAs full year 2008 adjusted net income from continuing
operations for the Companys three ongoing businesses was
$1.178 billion, which was below the estimate of
$1.188 billion to $1.242 billion disclosed by CIGNA in
February 2008, and was below the target performance level
established for the MIP. During the year as economic and
competitive challenges escalated, CIGNA revised its full year
projections; however, the goals the PRC set at the beginning of
the performance period for target levels remained unchanged.
Full year 2008 organic membership growth was approximately 1.3%
below year-end 2007 membership excluding the impact of the
Great-West Healthcare acquisition. This result was below the
full year estimates, as disclosed by CIGNA at the beginning of
2008, and was below the target performance level established for
the MIP.
The Health Care core operating expense per member was consistent
with the MIP target range. CIGNA performed better than its 2008
plan for Health Care core operating expense per member, which
increased 2% year-over-year due to planned strategic investment
in market-facing capabilities.
CIGNA also made strategic investments in infrastructure and made
good progress in improving foundational service levels and
integrating Great-West Healthcare.
36
2008 target levels for the adjusted net income from
continuing operations and membership were not met; the target
levels for operating expense per member and strategic
imperatives were met. Due to these results, the PRC approved
funding significantly below the target range for the enterprise.
The CIGNA businesses were funded based on enterprise results and
their respective business results.
For the 2008 performance year, MIP target levels were set as
follows for the following named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 MIP Target
|
|
|
2008 MIP Target
|
|
|
|
|
Named Executive Officer
|
|
($)
|
|
|
($)
|
|
|
% Change
|
|
|
H. Edward
Hanway(1)(2)
|
|
|
3,500,000
|
|
|
|
3,500,000
|
|
|
|
|
|
Michael W.
Bell(2)
|
|
|
800,000
|
|
|
|
800,000
|
|
|
|
|
|
David M.
Cordani(3)
|
|
|
575,000
|
|
|
|
700,000
|
|
|
|
21.7
|
|
John M.
Murabito(2)
|
|
|
425,000
|
|
|
|
425,000
|
|
|
|
|
|
Carol Ann
Petren(2)
|
|
|
600,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
(1) |
|
In December 2008, the PRC reduced
Mr. Hanways 2009 MIP target (eligible payout in
2010) from $3,500,000 to $2,500,000 to align with the
competitive market data.
|
|
(2) |
|
MIP targets for 2008 remained the
same for Messrs. Hanway, Bell, Murabito and for
Ms. Petren because their current MIP targets were
competitive with or exceeded the competitive range of the
primary market reference.
|
|
(3) |
|
Mr. Cordanis MIP target
was adjusted to align to the median of the competitive market
data for the President and Chief Operating Officer role.
|
For 2008 performance year, the PRC and the Board made annual
incentive awards to the named executive officers at a level of
0% to 63% of the target award value. Messrs. Hanway, Bell
and Cordani did not receive an annual incentive award for 2008
performance. The PRC and for the CEO, the Board of Directors,
determined the awards based on of the overall 2008 results of
the organization, individual business units and individual
performance contributions during 2008.
The decision to not award Messrs. Hanway, Bell and Cordani
an annual incentive award was a reflection of CIGNAs 2008
performance versus target performance levels and their
individual performance contributions. As the Chief Executive
Officer, the Chief Financial Officer and the President and Chief
Operating Officer, respectively, they are ultimately accountable
for the performance results of the organization. Consolidated
2008 earnings decreased 20% relative to 2007, including a
$267 million after-tax loss due to reserve strengthening in
our runoff reinsurance Guaranteed Minimum Death Benefits book of
business also known as Variable Annuity Death Benefits (VADBe).
Earnings for the Companys ongoing businesses grew 7%
relative to 2007 as earnings growth in Health Care (from the
Great-West Healthcare acquisition), Group Insurance and
International offset a decline in organic Health Care earnings.
Health Care medical membership decreased by 1.3% on an organic
basis and increased by 15% including the Great-West Healthcare
acquisition.
Total shareholder return for the entire industry and the overall
S&P 500 experienced significant pressure during 2008.
CIGNAs performance of -69% was close to the median of the
competitive peer group. Over the three-year period from 2006 to
2008, the Companys total shareholder return was down 23%,
which was better than the median of the competitive peer group.
CIGNAs three-year shareholder return was below that of the
S&P 500, which was down 8% over the same period.
Each of the following named executive officers received awards
that reflected the annual organization and business unit
results, adjusted for the assessment of each officers
performance throughout 2008.
Mr. Murabitos MIP award was 59% of target. Under
Mr. Murabitos leadership, the Human Resources and
Services organization successfully integrated Great-West
Healthcare from a people, services and culture perspective.
Mr. Murabito also led the advancement of CIGNAs
talent planning process and leadership development strategy,
enabling leaders to build strong teams and to focus on
development, particularly of their top talent. Also, in 2008
Mr. Murabito continued to drive a people strategy that is
directly aligned to CIGNAs enterprise business value
proposition and specific business unit imperatives, developed a
strategy for enhancing the physical work environment in a cost
effective manner and furthered the strategy to support and
encourage the health of the Companys employees through the
Healthy Life Strategy.
37
Ms. Petrens MIP award was 63% of target. Under
Ms. Petrens leadership the legal department provided
key support for the Great-West Healthcare acquisition, including
negotiating the acquisition agreement and obtaining regulatory
approvals. Additionally, Ms. Petren led litigation efforts,
securing favorable settlements in a number of major cases and
she implemented an enterprise-wide compliance model.
Ms. Petrens legal department continued to shape
CIGNAs public policy and advocacy and provide counsel for
business launches and expansions domestically and abroad.
Ms. Petren also developed and advocated the Companys
public policy position on both the federal and state fronts and
enhanced CIGNAs position as a thought leader in the
industry.
Performance Measure Design Changes. The
Compensation Consultant provides an annual review and ongoing
advice as needed on the design of CIGNAs annual and
long-term incentive programs and briefs the PRC on executive
compensation trends among CIGNAs peers and broader
industry. During the annual review process for the 2008 annual
incentive award program, the PRC approved the following changes
to the weighting of performance measures for the annual
incentive award program:
|
|
|
|
|
the weighting of the Adjusted Net Income from Continuing
Operations measure was changed from 50% to 40%. This change
maintained Adjusted Net Income as the measure with the most
significant weighting but allowed for an increase to the
weighting of the Strategic Imperatives measure for 2008; and
|
|
|
|
the weighting of the strategic imperative measure was changed
from 10% to 20%. This increase in the weighting was made to
reflect the importance of the integration of Great-West
Healthcare as well as the importance of strengthening
CIGNAs foundational service and technology structure.
|
In January 2009, the PRC approved a change to the 2009 annual
incentive award program that adjusted the weighting of the
Adjusted Net Income from Continuing Operations measure from 40%
to 50% and the weighting of Strategic Imperatives measure from
20% to 10%. As described above, the 2008 20% weighting of the
Strategic Imperatives measure was made to underscore the
importance of the integration of Great-West Healthcare to the
Companys performance. As the integration has progressed,
the PRC determined that the weighting should be shifted back to
focus more on the earnings measure in the 2009 program.
Long-Term
Incentives
Long-term incentives are administered under the CIGNA Long-Term
Incentive Plan. In February 2008, the executives received both
stock options and SPUs as their annual long-term incentive
awards. The long-term incentive target is expressed as a dollar
value and is determined based on the relevant market data for
the executives role. An executive can receive an award
between 0 and 200% of their individual target based on
organizational and individual performance. After the target
percentage is determined for an executives award, the
award is delivered in stock options
and/or SPUs.
CIGNA awards stock options under the Long-Term Incentive Plan in
order to:
|
|
|
|
|
strengthen the alignment between executives and CIGNA
shareholders by providing value to the executive only if CIGNA
stock price increases (CIGNAs ultimate objective is to
increase shareholder value, and stock options are the primary
vehicle for ensuring that CIGNAs executives are aligned
with that goal);
|
|
|
|
reinforce long-term shareholder value creation by providing a
10-year
stock option life; and
|
|
|
|
provide retention incentive to executives (options gradually
become exercisable over a three-year period, so an executive
cannot generally exercise all the options unless he or she has
remained in continuous employment with the Company for at least
three years).
|
CIGNAs SPU program, administered under the Long-Term
Incentive Plan, is designed to promote profitable growth and to
reinforce CIGNAs objective of having its shareholder
return outperform that of its peers. SPUs are performance awards
denominated in units that may be paid in cash or shares of CIGNA
common stock.
38
SPU value is based on CIGNAs performance over a three year
period measured against pre-established criteria including
performance versus CIGNAs competitors. The SPU program is
intended to:
|
|
|
|
|
reinforce the link between pay and performance both at the time
of award and payout. The target value for SPUs is $75 per unit
under the CIGNA Long-Term Incentive Plan. The value may increase
to as much as $200 per unit for superior performance results
over the three-year performance period and decrease to as low as
$0 for below threshold results;
|
|
|
|
give the PRC the flexibility to determine SPU payout levels
after evaluating the Companys overall performance.
Starting with awards of SPUs made in 2005 for the
2006-2008
awards cycle, even if CIGNA attains pre-established performance
goals based on a defined set of measures, the PRC still has the
flexibility to reduce payout below the maximum formula driven
SPU value;
|
|
|
|
align sustained superior financial performance and strategic
accomplishments over a three-year timeframe with above-market
rewards; and
|
|
|
|
encourage executive ownership of CIGNA stock. SPU payouts may be
made in shares of CIGNA stock instead of cash to those
executives who have not yet reached their required stock
ownership under CIGNAs executive ownership guidelines
described on page 41.
|
The SPU award performance cycles that include 2008 are listed
below and descriptions of how SPU payments are calculated appear
in the narratives to the Summary Compensation and Grants of
Plan-Based Awards Tables beginning on pages 46 and 49,
respectively.
|
|
|
|
|
Award Year
|
|
Performance Period
|
|
Scheduled Payout
|
|
2006
|
|
2006-2008
|
|
2009
|
2007
|
|
2007-2009
|
|
2010
|
2008
|
|
2008-2010
|
|
2011
|
At the time the PRC approved the performance measures and goals
for the
2006-2008,
2007-2009
and
2008-2010
performance cycles, the PRC anticipated that the achievement of
threshold levels of performance would be attainable, but not
certain, and that the achievement of superior levels of
performance would be unlikely.
The long-term incentive (LTI) targets in 2008 for each named
executive officer did not change from 2007 levels as shown in
the chart below. The PRC determined that no changes were
necessary as the targets were determined to be competitive with
desired market levels.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 Long-
|
|
|
|
|
|
|
2007 Long-term
|
|
|
term Incentive
|
|
|
|
|
|
|
Incentive Target
|
|
|
Target
|
|
|
|
|
Named Executive Officer
|
|
($)
|
|
|
($)
|
|
|
% Change
|
|
|
H. Edward
Hanway(1)
|
|
|
10,500,000
|
|
|
|
10,500,000
|
|
|
|
|
|
Michael W. Bell
|
|
|
3,160,000
|
|
|
|
3,160,000
|
|
|
|
|
|
David M.
Cordani(2)
|
|
|
3,560,000
|
|
|
|
3,560,000
|
|
|
|
|
|
John M. Murabito
|
|
|
900,000
|
|
|
|
900,000
|
|
|
|
|
|
Carol Ann Petren
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
(1) |
|
In December 2008, the PRC approved
an increase to Mr. Hanways LTI target for 2009 from
$10,500,000 to $11,000,000. This target amount does not include
the additional 2009 long-term incentive target reduction of 20%
which would decrease the 2009 LTI target to $8,800,000.
|
|
(2) |
|
In June 2008,
Mr. Cordanis LTI target for 2009 was changed from
$3,560,000 to $4,590,000 to align with the primary market data
for the President and Chief Operating Officer. Other than for
Messrs. Cordani and Hanway, the 2009 LTI targets for the
named executive officers did not change.
|
In 2008, LTI awards (grants of stock options and SPUs) were
approved for the named executive officers at a level of 110% to
122% of the target award value. The awards were made
above-target as a reflection of the strong performance year that
CIGNA had in 2007, including CIGNAs consolidated earnings
increasing approximately 7% relative to 2006 year-over-year
growth in the three ongoing businesses, earnings per share
increasing 26% and CIGNAs total shareholder return of
approximately 23%. Individual named executive
39
officer performance, retention considerations and changes in
roles or responsibilities also were considered in determining
award levels.
The PRC made the 2008 annual long-term incentive awards,
including stock options and SPUs, during the fourth week of
February 2008, after CIGNAs annual earnings release and
following the end of a quarterly blackout period. In 2008, the
LTI award for each named executive officer was awarded 50%
through stock options and 50% through SPUs. A factor in
determining the stock option award percentage, relative to the
total LTI award, is that CIGNA manages to an annual share usage
maximum. In 2008, CIGNA limited the total number of shares used
for equity awards in any year to all employees to no more than
2% of the number of shares of common stock outstanding. In 2009,
the PRC approved a 20% reduction in all long term incentive
targets and a cap on the maximum number of options that could be
awarded to each executive officer. These steps were taken to
manage the 2009 share usage in light of the stock price
depreciation. The number of stock options granted in 2008 and
SPUs awarded for the
2008-2010
performance cycle to each named executive officer is set forth
in the Grants of Plan Based Awards Table on page 49.
The actual payout level for SPUs is determined by the PRC by
considering an overall assessment of CIGNA performance against
the pre-established goals during the three-year performance
period. The PRC also has discretion to reduce the payout due to
any unusual factors impacting reported financial results. As
with the MIP program, this approach allows the PRC to consider
the totality of CIGNA performance in determining final awards,
rather than using a purely mechanical formula. In 2008, the PRC
elected to make SPU payouts in cash to the named executive
officers that had met their stock ownership guidelines at the
time of the awards. Messrs. Hanway, Bell, Cordani and
Murabito received the SPU payouts in cash and Ms. Petren
received half of her SPU payout in CIGNA common stock and half
in cash.
CIGNA may award transitional SPUs to newly-hired executives,
employees who first become eligible to receive SPUs in mid-year
due to a promotion and increased responsibilities, and
executives whose long-term incentive target is increased
mid-year with a resulting increase to
his/her SPU
target. Transitional SPU awards for executive officers are
recommended by the Chief Executive Officer and subject to the
PRCs approval. A typical award of transitional SPUs
includes SPUs for three performance periods, because three SPU
performance periods are running concurrently at any time.
Generally, the number of transitional SPUs awarded is based on
the difference between an executives current, if any,
long-term incentive target and the new target, prorated for the
number of months remaining in the respective performance periods.
All executives have accountability for achieving SPU goals.
Transitional SPUs are awarded to help retain executives and
support internal equity so that all executives have a meaningful
stake in attaining pre-established SPU performance goals. In
that way, executives who become newly eligible to participate in
the SPU program, or participate at a higher award level
mid-cycle, can be rewarded in the same way as other executives
who have already received SPU awards. Mr. Cordani was
awarded transitional SPUs in 2008 when he was promoted his LTI
target was adjusted to align with primary market data for the
President and Chief Operating Officer.
SPU payouts for the
2006-2008
period are disclosed in column (g) of the Summary
Compensation Table on page 46 and a summary of the SPU
program appears in the Summary Compensation Table Narrative on
page 48. Payouts for the
2007-2009
periods will be made in 2010. Awards for the
2008-2010
period are listed in the Grants of Plan-Based Awards Table on
page 49 and a summary of these SPU programs appears in the
narrative to the Grants of Plan-Based Awards Table on
page 50.
CIGNA calculates the SPU portion of the LTI award by dividing
the intended SPU dollar value by $75, the SPU target value.
Retention
Actions
Although the PRC does not generally consider prior awards in
determining a subsequent performance periods awards, it
may consider outstanding unvested awards in order to determine
existing retention incentive values when there is potential risk
of recruitment of the Companys key executives.
40
In January 2008, the PRC awarded off-cycle grants of
options to purchase 215,177 shares of CIGNA common stock to
Michael W. Bell, Executive Vice President and Chief Financial
Officer, and David M. Cordani, President and Chief Operating
Officer. The PRC approved these awards based on the
contributions of these officers and in order to reinforce their
long-term career potential at CIGNA. Because the awards were
approved during a quarterly blackout period, the grant date for
each stock option award was the first day following the end of
the blackout period.
Promotion
Mr. Cordani was promoted to President and Chief Operating
Officer in June 2008. As President and Chief Operating Officer,
Mr. Cordanis role is to lead all ongoing businesses.
Given his new role, Mr. Cordanis total compensation
was adjusted to align with the new primary market reference of
his position to reflect the change in his position and the value
he brings to the Company.
Executive
Stock Ownership
CIGNA believes that executive stock ownership is a critical tool
used to encourage strong alignment between management and
shareholder interests. CIGNA has adopted policies that require
named executive officers to have a meaningful economic stake in
CIGNA as shareholders. CIGNA believes that requiring executives
to meet ownership guidelines encourages them to act in the best
long-term interests of CIGNA shareholders.
In 2008, the Compensation Consultant compared CIGNAs stock
ownership guidelines to those of its peers and the broader
market and found that CIGNAs guidelines were aligned with
market practices. The Compensation Consultant also recommended
an increase to the stock ownership guidelines for the President
and Chief Operating Officer from three times base salary to four
times base salary. The PRC approved the change, effective
October 22, 2008. Consistent with market practice,
CIGNAs stock ownership guidelines have the following
features:
|
|
|
|
|
The Chief Executive Officer is required to own stock valued at
five times base salary, the President and Chief Operating
Officer is required to own stock valued at four times base
salary and other executive officers are required to own stock
valued at three times base salary.
|
|
|
|
Wholly-owned shares, restricted stock, stock equivalents and
shares owned through benefit plans (such as investments in the
CIGNA Stock Fund of the CIGNA 401(k) Plan) are counted towards
meeting guidelines. Unexercised stock options are not counted
toward these guidelines.
|
|
|
|
If a named executive officer has not met stock ownership
guideline targets, the PRC may require that the officers
SPU payouts be made in the form of shares of CIGNA common stock.
|
CIGNA evaluates situations in which executives are below their
guidelines on a
case-by-case
basis rather than setting a formal deadline for executives to
meet stock ownership guidelines. In general, however, CIGNA
expects executives to accumulate required shares as quickly as
practical.
CIGNA has other practices in place to encourage a long-term
ownership philosophy for executives including:
|
|
|
|
|
allowing executives to sell only shares that exceed ownership
guidelines;
|
|
|
|
requiring Chief Executive Officer approval of all sales by
executive officers;
|
|
|
|
requiring General Counsel approval of all sales by the Chief
Executive Officer; and
|
|
|
|
prohibiting the sale of more than 25% of the shares held above
guidelines in any single open period.
|
In January 2007, the PRC approved an additional stock ownership
practice that requires executive officers to retain, for at
least one year, a minimum of 50% of the shares acquired upon
exercise of any stock options and 50% of shares acquired upon
vesting of restricted stock grants. This mandatory holding
period is an additional measure to encourage share retention and
align executive officers interests with those of CIGNA
shareholders.
41
In addition, each of CIGNAs named executive officers is
prohibited from engaging in a short sale of CIGNA stock to hedge
the economic risk of owning CIGNA stock.
All of CIGNAs named executive officers were at or above
stock ownership guidelines with the exception of
Mr. Cordani who became President and Chief Operating
Officer in 2008 and whose ownership guideline was increased
subsequent to his promotion and Ms. Petren who joined CIGNA
in 2006.
Retirement
and Deferred Compensation
Defined
Benefit Pension Plans
CIGNA maintains the following defined benefit pension plans:
|
|
|
|
|
The CIGNA Pension Plan is a funded, tax-qualified plan for
U.S. employees. (Before 2000 several CIGNA subsidiaries in
the U.S. maintained separate pension plans. These plans
have been merged into the CIGNA Pension Plan.)
|
|
|
|
The CIGNA Supplemental Pension Plan is an unfunded, nonqualified
plan for U.S. employees. It provides benefits not payable
under the qualified plan because of limits imposed by federal
income tax laws. It is unfunded because there is no
advance funding of benefits through a trust fund or other pool
of assets. Benefits are paid when due out of the Companys
general assets.
|
All of these pension plans are intended to:
|
|
|
|
|
attract and retain qualified employees; and
|
|
|
|
provide a total compensation package that is competitive with
what CIGNAs peer group companies provide.
|
The CIGNA Pension Plan comprises Parts A and B. Part A
covers certain employees hired before 1989, while Part B
covers all other U.S. employees. The formulas apply equally
to named executive officers and other employees. Part A
includes a frozen formula based on credited service as of
March 31, 2008 and eligible earnings as of
December 31, 2009, and effective April 1, 2008 a new
cash balance formula that provides a reduced level of benefits.
Additional information about pension benefits can be found in
the Pension Benefits Table on page 55 and the Pension
Benefits Table Narrative beginning on page 55.
Nonqualified
Deferred Compensation Plan
CIGNA provides the named executive officers and certain other
employees with the opportunity to defer base salary and annual
incentive awards under the CIGNA Deferred Compensation Plan. The
purpose of this plan is to provide eligible employees an
opportunity to postpone both the receipt of compensation and the
income tax on that compensationtypically until after
termination of CIGNA employment. Participants elect when to
receive a payout and can choose to receive the deferred
compensation in a single lump sum or in annual installments. For
amounts deferred before 2004, participants can request an
accelerated payment of all or part of their account balance
subject to a 10% penalty. Otherwise, early withdrawals are
permitted only under financial hardship circumstances.
In prior years, the PRC also mandated deferral of certain
compensation by the Chief Executive Officer because immediate
payment of that compensation would not be deductible by CIGNA
due to limits imposed by Section 162(m) of the Internal
Revenue Code. In 2008 and 2009, the PRC did not mandate deferral
of non-performance-based compensation paid to any named
executive officer. In future years, the PRC may determine before
the beginning of the calendar year that it will mandate deferral
of some or all non-performance-based compensation based on an
evaluation of the projected amount of non-deductible
compensation and current Internal Revenue Code rules.
42
Additional information regarding deferred compensation can be
found in the Nonqualified Deferred Compensation Table on
page 58 and the Nonqualified Deferred Compensation Table
Narrative on page 58.
Other
Benefits and Perquisites
The named executive officers are eligible to receive all of the
benefits offered to CIGNA employees generally, including medical
benefits, other health and welfare benefits, participation in
the 401(k) Plan (including the Companys matching
contribution), the defined benefit pension plan (as described on
page 55) and other voluntary benefits.
Perquisites are not a major portion of CIGNAs total
executive compensation. In 2008, CIGNA provided the following
benefits and perquisites to its executives, primarily to attract
and retain key talent, but also to ensure the safety and
security of its executive officers: the use of corporate
aircraft; installation and maintenance of security alarm systems
at executive officers residences; the use of a company car
and driver by the Chief Executive Officer and other CIGNA
executive officers; payment of costs associated with an annual
physical and related tests; membership in an international
emergency medical, personal, travel and security assistance
program; in-office meals; relocation benefits, which are
available on a broad basis to all employees; tax reimbursement
for taxes associated with job-related relocation; financial
planning, tax preparation, and legal services related to estate
planning for executive officer level employees. In recognition
of the challenging economic and competitive environment,
management has made a decision to discontinue paying for
in-office meals.
These perquisites and the associated value and methodology for
valuation are described in the footnotes to the Summary
Compensation Table on page 46.
Relocation
Ms. Petren was hired as the Executive Vice President,
General Counsel and Public Affairs beginning May 15, 2006.
As part of the negotiated recruitment of a critical executive,
Ms. Petren received the following relocation benefits, the
value of which is disclosed in the Summary Compensation Table on
page 46:
|
|
|
|
|
temporary living costs;
|
|
|
|
title search and inspections;
|
|
|
|
storage of household goods; and
|
|
|
|
tax assistance.
|
Additional information about these benefits is included in
footnote (8) to the Summary Compensation Table on
page 47.
Employment
Arrangements and Post-Termination Payments
Consistent with its compensation philosophy, CIGNA generally
does not enter into employment contracts or other advance
arrangements with its executive officers that provide for the
payment of severance pay upon termination of employment (other
than for severance in the event of a termination following a
change of control). CIGNA does not provide any single-trigger
change in control benefits (that is, a mere change of control
itself does not trigger such benefits). As a result, executive
officers serve at the will of CIGNA and its Board of Directors
and their entitlement to base salary, annual incentives and
long-term incentives ceases at termination. Thus, other than
after a change of control as outlined below, the PRC has
discretion to determine whether to make any salary, bonus or SPU
payments to a terminated executive officer. The PRC addresses
situations on a
case-by-case
basis given individual circumstances.
CIGNA has also established policies related to the impact of
various termination events on stock option and restricted stock
awards. If a named executive officer terminates prior to
vesting, option and restricted stock awards are generally
forfeited subject to specific exceptions. These exceptions
include termination of
43
employment on account of death and disability. In these
exceptional cases, awards vest as of the termination date to
enable the executive or his or her estate to realize the equity
value that existed at the time of the termination event. In the
case of voluntary retirement, stock options vest on the date of
retirement so that an employees decision as to the
appropriate date of retirement is not influenced by potential
lost compensation. The intent of that arrangement is to avoid
discouraging retirement when the executive has reached
eligibility for early retirement. For restricted stock, the PRC
has the discretion to vest unvested awards at retirement which
allows a
case-by-case
examination of the particular set of circumstances. These
policies are designed to enable CIGNAs Board of Directors
or the PRC to remove an executive officer prior to retirement
whenever it is in the best interests of CIGNA and to give CIGNA
full discretion to develop an appropriate severance package on a
case-by-case
basis. When an executive officer is removed from his or her
position, the PRC exercises its business judgment in approving
an appropriate severance arrangement for the individual in light
of all relevant circumstances, including, but not limited to,
his or her term of employment, past accomplishments, reasons for
termination, opportunity for future employment and total
unvested compensation. Historically, the PRC has approved
varying amounts of severance pay for executive officers.
CIGNAs change of control policies are intended to provide
CIGNAs named executive officers with sufficient economic
value in the event of termination so that they are encouraged to
continue to act in the best interest of shareholders in
evaluating potential transactions. The PRC approved amendments
in April 2008 eliminating post-separation financial services and
tax preparation benefits for those terminated after a change of
control. This action was taken to better align post separation
executive benefits to the market place. In addition, the golden
parachute excise tax
gross-up in
a
change-in-control
situation was made conditional. The components of the change of
control payments are as follows:
|
|
|
|
|
Severance payments are made only upon a change of control of
CIGNA followed by the termination of an executive officer under
certain circumstances as described under Potential Payments upon
Termination or Change of Control beginning on page 58.
|
|
|
|
For named executive officers, cash severance is a specified
multiple of base salary plus a specified multiple of the higher
of the most recent annual incentive paid or the target annual
incentive paid in a lump sum.
|
|
|
|
Unvested stock options and restricted stock vest upon
termination of employment following a change of control. As a
result, if an executive is involuntarily terminated or resigns
for good reason (such as reduction in compensation or
responsibilities) after a change of control, the executive is
able to realize the shareholder value to which he or she
contributed while employed at CIGNA.
|
|
|
|
Unvested SPUs are paid at the highest of: (1) unit target
value; (2) value for any unit payments in the most recent
12 months; or (3) average of the values established by
the PRC for the most recent two SPU payouts. The intent of this
SPU payment formula is to provide executives with a reasonable
estimate of the potential payouts under the SPU program and to
avoid placing executives at a disadvantage as a result of a
change of control.
|
|
|
|
Tax reimbursements for Internal Revenue Code Section 4999
(golden parachute excise) taxes may be provided. It allows CIGNA
to be market competitive to attract and retain executive talent.
This tax reimbursement will be paid to an executive only if the
total payments subject to the excise tax exceed the payment cap
that triggers the tax by more than 10%. If payments exceed the
cap by less than 10%, they will be cut back to avoid application
of the excise tax.
|
Disgorgement
of Awards
As provided by its Board Practices, the Board of Directors has
the authority to make retroactive adjustments to any cash
incentive compensation paid to executive officers upon certain
terms in the event of a restatement of financial results. The
Board will, in all appropriate cases and to the full extent
permitted by governing law, require reimbursement of any bonus
or other cash incentive compensation awarded to an executive
officer or
44
effect the cancellation of unvested restricted or deferred stock
awards previously granted to the executive officer if:
|
|
|
|
|
the amount of the bonus or incentive compensation was calculated
based upon the achievement of certain financial results that
were subsequently the subject of a restatement;
|
|
|
|
the executive engaged in intentional misconduct that caused or
partially caused the need for the restatement; and
|
|
|
|
the amount of the bonus or incentive compensation that would
have been awarded to the executive had the financial results
been properly reported would have been lower than the amount
actually awarded.
|
In addition, pursuant to the terms and conditions of
CIGNAs stock option and restricted stock awards, a
restitution provision applies to any CIGNA employee, including
any named executive officer, who:
|
|
|
|
|
is terminated by CIGNA due to misconduct;
|
|
|
|
engages in behavior that would be considered grounds for
termination due to misconduct;
|
|
|
|
competes with CIGNA within one year following any voluntary
termination;
|
|
|
|
solicits a CIGNA employee or customer within one year following
any termination;
|
|
|
|
discloses CIGNA confidential information improperly; or
|
|
|
|
fails to assist CIGNA in the handling of investigations,
litigation, or agency matters with respect to which the employee
has relevant information.
|
If an executive engages in any of the above restitution
events, any option gains realized over the two years prior
to the restitution event and the value of any
restricted stock vesting over the year prior to the
restitution event are required to be paid back to
CIGNA. These provisions are designed to discourage executives
from engaging in activities that can cause CIGNA competitive
harm and to support retention.
45
EXECUTIVE
COMPENSATION
The following information describes how CIGNA compensates its
named executive officers.
Summary
Compensation Table
This table includes information regarding 2006, 2007 and 2008
compensation for each of the named executive officers. Other
tables in this proxy statement provide more detail about
specific types of compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
incentive
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
plan
|
|
|
Compensation
|
|
|
All other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Awards
|
|
|
compensation
|
|
|
Earnings
|
|
|
compensation
|
|
|
Total
|
|
Name and principal position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)(3)
|
|
|
(e)(4)
|
|
|
(f)(5)
|
|
|
(g)(6)
|
|
|
(h)(7)
|
|
|
(i)(8)
|
|
|
(j)
|
|
|
H. Edward Hanway
|
|
|
2008
|
|
|
|
1,142,885
|
|
|
|
|
|
|
|
0
|
|
|
|
3,601,966
|
|
|
|
6,650,000
|
|
|
|
820,097
|
|
|
|
21,792
|
|
|
|
12,236,740
|
|
Chairman and Chief
|
|
|
2007
|
|
|
|
1,110,000
|
|
|
|
|
|
|
|
452,886
|
|
|
|
4,626,316
|
|
|
|
17,999,970
|
|
|
|
1,618,584
|
|
|
|
38,704
|
|
|
|
25,846,460
|
|
Executive Officer
|
|
|
2006
|
|
|
|
1,101,923
|
|
|
|
|
|
|
|
1,994,708
|
|
|
|
5,977,793
|
|
|
|
11,249,389
|
|
|
|
626,756
|
|
|
|
63,917
|
|
|
|
21,014,486
|
|
Michael W. Bell
|
|
|
2008
|
|
|
|
631,923
|
|
|
|
|
|
|
|
0
|
|
|
|
1,868,002
|
|
|
|
1,493,450
|
|
|
|
235,228
|
|
|
|
6,945
|
|
|
|
4,235,548
|
|
Executive Vice President
|
|
|
2007
|
|
|
|
600,577
|
|
|
|
|
|
|
|
12,974
|
|
|
|
1,209,445
|
|
|
|
4,950,000
|
|
|
|
145,504
|
|
|
|
8,077
|
|
|
|
6,926,577
|
|
and Chief Financial Officer
|
|
|
2006
|
|
|
|
569,615
|
|
|
|
|
|
|
|
334,968
|
|
|
|
1,143,202
|
|
|
|
3,729,800
|
|
|
|
279,277
|
|
|
|
11,392
|
|
|
|
6,068,254
|
|
David M.
Cordani(1)
|
|
|
2008
|
|
|
|
701,500
|
|
|
|
|
|
|
|
0
|
|
|
|
1,882,495
|
|
|
|
1,583,960
|
|
|
|
135,966
|
|
|
|
17,240
|
|
|
|
4,321,161
|
|
President and Chief
|
|
|
2007
|
|
|
|
625,577
|
|
|
|
|
|
|
|
2,789
|
|
|
|
870,870
|
|
|
|
3,040,400
|
|
|
|
130,561
|
|
|
|
7,603
|
|
|
|
4,677,800
|
|
Operating Officer
|
|
|
2006
|
|
|
|
537,577
|
|
|
|
|
|
|
|
110,704
|
|
|
|
532,208
|
|
|
|
1,841,841
|
|
|
|
93,607
|
|
|
|
18,705
|
|
|
|
3,134,642
|
|
John M. Murabito
|
|
|
2008
|
|
|
|
587,606
|
|
|
|
|
|
|
|
110,006
|
|
|
|
399,824
|
|
|
|
763,450
|
|
|
|
82,791
|
|
|
|
7,411
|
|
|
|
1,951,088
|
|
Executive Vice President,
|
|
|
2007
|
|
|
|
552,692
|
|
|
|
|
|
|
|
27,501
|
|
|
|
409,849
|
|
|
|
1,980,000
|
|
|
|
79,074
|
|
|
|
8,176
|
|
|
|
3,057,292
|
|
Human Resources and
Services
|
|
|
2006
|
|
|
|
530,962
|
|
|
|
|
|
|
|
123,772
|
|
|
|
501,884
|
|
|
|
1,448,681
|
|
|
|
74,085
|
|
|
|
10,628
|
|
|
|
2,690,012
|
|
Carol Ann
Petren(2)
|
|
|
2008
|
|
|
|
558,269
|
|
|
|
|
|
|
|
20,434
|
|
|
|
411,924
|
|
|
|
1,075,000
|
|
|
|
98,973
|
|
|
|
20,074
|
|
|
|
2,184,674
|
|
Executive Vice President and
General Counsel
|
|
|
2007
|
|
|
|
535,962
|
|
|
|
|
|
|
|
770,432
|
|
|
|
184,362
|
|
|
|
1,425,002
|
|
|
|
87,650
|
|
|
|
107,688
|
|
|
|
3,111,096
|
|
|
|
|
(1) |
|
Mr. Cordani was promoted to
his position as President and Chief Operating Officer in June
2008.
|
|
(2) |
|
Ms. Petren did not become a
named executive officer until 2007 so information regarding 2006
was not included nor required. Ms. Petrens strategic
performance unit payout of $1,500,000 for the three-year
performance period ending December 31, 2007 was paid in
cash in the amount of $750,002 and in CIGNA common stock valued
at $749,998. Therefore, the amounts for 2007 listed in column
(e) and column (g) have been adjusted accordingly.
|
|
(3) |
|
In proxy statements prior to 2007,
CIGNA reported annual incentive payouts as bonus. CIGNA now
reports annual incentive payouts, including payouts for years
prior to 2007 in column (g) because they are governed by
the MIP and the EIP, which include established criteria, a risk
of forfeiture, and goals that are not certain to be met. As
reflected in column (g), Messrs Hanway, Bell and Cordani
received no annual incentive payout for 2008.
|
|
(4) |
|
Represents the compensation cost
incurred by CIGNA in 2008 computed in accordance with
SFAS 123R, applying the same assumptions as CIGNA applies
for financial statement reporting purposes as described in
Note 19 to CIGNAs consolidated financial statements
in the Company Annual Report on
Form 10-K
for the year ended December 31, 2008 (disregarding any
estimates for forfeitures) for the following awards made under
the Long-Term Incentive Plan: (1) a restricted stock grant
made to Mr. Murabito in 2007 for retention purposes; and
(2) a restricted stock grant made to Ms. Petren in
2006 as part of her offer of employment. For grants of
restricted stock, the value actually realized by an executive
officer is based on the fair market value on the date the
restriction lapses, per the terms of each respective grant.
|
|
(5) |
|
Represents the compensation cost
incurred by CIGNA in 2008 for stock option awards made under the
Long-Term Incentive Plan, computed in accordance with
SFAS 123R, applying the same valuation model and
assumptions as CIGNA applies for financial statement reporting
purposes as described in Note 19 to CIGNAs
consolidated financial statements in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2008 (disregarding any
estimates for forfeitures). Mr. Hanway was eligible for
early retirement in 2008 and Ms. Petren becomes eligible for
early retirement in June 2010. Because the Long-Term
Incentive Plan accelerates vesting of stock options upon early
retirement, the compensation cost for his stock option award
reflects this acceleration. The value actually realized by an
executive officer from a stock option award depends on the terms
of the award and upon increases in the price of CIGNAs
common stock.
|
|
(6) |
|
This column reflects
performance-based compensation described under the MIP beginning
on page 35 and Long-Term Incentives beginning on
page 38. The compensation delivered versus the targets is
based on individual, business unit and organization performance.
Specifically, the following 2008 awards are reflected:
|
46
|
|
|
|
|
estimated strategic performance
unit payouts for the three-year period ending December 31,
2008 in the amount of $6,650,000 for Mr. Hanway, $1,493,450
for Mr. Bell; $1,583,960 for Mr. Cordani; $513,450 for
Mr. Murabito; and $700,000 for Ms. Petren. The actual
unit value will be determined by the PRC no later than April
2009 and payouts made thereafter.
|
|
|
|
annual incentive payouts under the
MIP for the year ending December 31, 2008 determined by the
PRC and the Board in February 2009 and paid thereafter in the
amount of $0 for Mr. Hanway, $0 for Mr. Bell; $0 for
Mr. Cordani; $250,000 for Mr. Murabito; and $375,000
for Ms. Petren.
|
|
|
|
(7) |
|
This column includes the aggregate
changes in actuarial present value of accumulated benefits under
the pension plans, which value increases and decreases from
period to period and is subject to the assumptions discussed in
connection with the Pension Benefits Table on page 55.
During 2007, Mr. Hanway met the Pension Plans
eligibility requirements for additional benefits payable upon
his death; this additional value is included. Information
regarding the named executive officers accumulated
benefits under the pension plans is on page 55. The amounts
in this column do not include deferred compensation because the
Company does not provide above market earnings to executive
officers.
|
|
(8) |
|
This column includes:
|
|
|
|
|
|
CIGNAs matching contributions
to the named executive officers under its 401(k) Plan;
|
|
|
|
dividend earnings on the restricted
stock awards in 2008 of: $183 for Mr. Hanway; $45 for
Mr. Bell; $10 for Mr. Cordani; $511 for
Mr. Murabito; and $165 for Ms. Petren;
|
|
|
|
tax reimbursement in 2008 of $154
for Ms. Petren related to allowances associated with
relocation, which is further described in footnote
(ii) below.
|
|
|
|
2008 perquisites valued at
incremental cost (the cost incurred by CIGNA due to the named
executive officers personal use or benefit) as shown in
the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
Security Alarm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
Installation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services/Tax
|
|
|
|
|
|
and
|
|
|
Car and
|
|
|
In-Office
|
|
|
|
|
|
|
|
|
|
Preparation
|
|
|
Relocation
|
|
|
Maintenance
|
|
|
Driver
|
|
|
Meals
|
|
|
Other
|
|
|
Total
|
|
Name
|
|
($)(i)
|
|
|
($)(ii)
|
|
|
($)(iii)
|
|
|
($)(iv)
|
|
|
($)(v)
|
|
|
($)(vi)
|
|
|
($)
|
|
|
H. Edward Hanway
|
|
|
9,680
|
|
|
|
|
|
|
|
601
|
|
|
|
2,017
|
|
|
|
1,785
|
|
|
|
1,122
|
|
|
|
15,205
|
|
David M. Cordani
|
|
|
9,350
|
|
|
|
|
|
|
|
387
|
|
|
|
|
|
|
|
378
|
|
|
|
215
|
|
|
|
10,330
|
|
Carol Ann Petren
|
|
|
7,250
|
|
|
|
1,504
|
|
|
|
2,029
|
|
|
|
|
|
|
|
1,407
|
|
|
|
665
|
|
|
|
12,855
|
|
|
|
|
|
(i)
|
Represents the fees paid by the Company for financial planning,
tax preparation and legal services related to financial and
estate planning.
|
|
|
(ii)
|
Represents the following benefits and allowances related to Ms.
Petrens relocation package due to her assumption of the
duties as CIGNAs General Counsel: costs associated with
the title search and inspections of the former residence $1,158;
temporary living costs for Ms. Petrens spouse $243;
and storage of goods $103.
|
|
|
|
|
(iii)
|
Represents the cost to the Company of security alarm maintenance
as well as for Ms. Petren, installation.
|
|
|
(iv)
|
Represents the cost to the Company of mileage and maintenance
for personal use of the company-owned car and driver available
to all executives.
|
|
|
|
|
(v)
|
Represents cost to the Company of in-office meals. This
perquisite was discontinued in 2009.
|
|
|
|
|
(vi)
|
Represents cost to the Company of a membership fee for worldwide
emergency assistance services, and fees paid for an annual
medical examination and any related medical tests.
|
47
Summary
Compensation Table Narrative
Annual
Incentives
Annual incentives are paid in cash in the first quarter of the
calendar year following the close of the performance year. The
Executive Incentive Plan requires that any bonus award above
$3 million is to be made in shares of CIGNA common stock.
There were no bonus awards for the 2008 performance year above
$3 million.
Strategic
Performance Units (SPUs)
SPUs are performance-based long-term incentive awards
denominated in units that can be paid in cash
and/or
shares of CIGNA common stock. SPU value is based on CIGNAs
performance over a three-year period against pre-established
goals as described below. For more information about SPUs, see
Long-Term Incentives beginning on page 38.
2006-2008
SPUs. The PRC awarded SPUs for the
2006-2008
performance period in February 2006. Those awards reflect the
program design that was adopted in 2005. The PRC has established
specific goals with threshold, target and superior ranges of
performance and payouts for each level of performance versus the
goals within each performance measure.
For the
2006-2008
cycle, SPUs are valued based on: (1) CIGNAs Total
Shareholder Return (TSR) relative to that of its health care
peer group; and (2) CIGNAs absolute cumulative
adjusted net income for the three year period. The health care
peer group consists of the members of CIGNAs competitive
peer group (excluding Coventry which was added at the end of
2007), described on page 32. For the TSR performance
measure, the PRC approved three tiers of maximum SPU values
based on CIGNAs ranking relative to its peer group as well
as a bottom tier at which no amount will be paid. The PRC
approved four tiers of maximum SPU values for the absolute
cumulative adjusted net income performance measure as well as a
threshold value below which no awards would be paid. Estimated
SPU payouts are reported for year 2008 in column (g) of the
Summary Compensation Table for all named executive officers.
2007-2009 SPUs. The PRC awarded SPUs
for the
2007-2009
performance period in February 2007. Those awards reflect the
program design that was adopted in 2005. The PRC has established
specific goals with threshold, target and superior ranges of
performance and payouts for each level of performance versus the
goals within each performance measure.
The measures and the levels of performance as well as the peer
group are the same as those described for the
2006-2008
cycle.
CIGNA has structured the
2006-2008,
2007-2009
and
2008-2010
SPU programs for named executive officers to permit CIGNA to
deduct SPU payments to named executive officers as
performance-based compensation under Internal Revenue Code
Section 162(m). In order for named executive officers to
receive any SPU payouts, objective performance goals, set by the
PRC, must first be satisfied. The maximum payout per SPU is
$200. The PRC may exercise its discretion to reduce the size of
awards after applying the criteria described above under
2005-2007
SPUs,
2006-2008
SPUs and 2007-2009 SPUs to establish an appropriate unit value.
However, the PRC does not have the authority to increase the
size of any SPU awards.
48
Grants of
Plan-Based Awards in Fiscal Year 2008
This table provides information about annual incentive targets
for 2008 and grants of plan-based awards made in 2008 to the
named executive officers. Specifically, the following table
captures: (1) the 2008 annual incentive targets and maximum
values approved by the PRC for the named executive officers on
December 10, 2007 and for Mr. Cordani on June 25,
2008; (2) the stock options granted to the named executive
officers on February 27, 2008 by the PRC as part of the
annual long-term incentive awards; (3) for
Messrs. Bell and Cordani, stock option retention awards
granted by the PRC on February 8, 2008; (4) the SPUs
approved by the PRC for named executive officers on
February 27, 2008 by the PRC; and (5) for
Mr. Cordani, the transitional SPUs approved by the PRC on
June 25, 2008. The disclosed amounts do not necessarily
reflect the actual amounts that will be paid to the named
executive officers. Those amounts will be known only at the time
the awards vest or become payable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts under Non-Equity Incentive Plan
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Closing
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Number of
|
|
|
or Base
|
|
|
Market
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
Price on
|
|
|
Stock and
|
|
|
|
|
|
|
Committee
|
|
|
Units
|
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Options
|
|
|
Date of
|
|
|
Option
|
|
|
|
Grant
|
|
|
Approval
|
|
|
Awarded
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Grant
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)(5)
|
|
|
(j)(6)
|
|
|
(k)
|
|
|
(l)(7)
|
|
|
H. Edward Hanway
|
|
|
NA
|
|
|
|
12/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
3,500,000
|
(3)
|
|
|
7,000,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
2/27/2008
|
|
|
|
77,000
|
(1)
|
|
|
|
|
|
|
5,775,000
|
|
|
|
15,400,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2008
|
|
|
|
2/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,218
|
|
|
|
47.925
|
|
|
|
47.720
|
|
|
|
3,601,966
|
|
|
|
Michael W. Bell
|
|
|
NA
|
|
|
|
12/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
800,000
|
(3)
|
|
|
1,600,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2008
|
|
|
|
1/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,177
|
|
|
|
47.665
|
|
|
|
47.580
|
|
|
|
3,335,244
|
|
|
|
|
NA
|
|
|
|
2/27/2008
|
|
|
|
23,334
|
(1)
|
|
|
|
|
|
|
1,750,050
|
|
|
|
4,666,800
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2008
|
|
|
|
2/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,915
|
|
|
|
47.925
|
|
|
|
47.720
|
|
|
|
1,091,512
|
|
|
|
David M. Cordani
|
|
|
2/8/2008
|
|
|
|
1/22/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,177
|
|
|
|
47.665
|
|
|
|
47.580
|
|
|
|
3,335,244
|
|
|
|
|
NA
|
|
|
|
2/27/2008
|
|
|
|
28,667
|
(1)
|
|
|
|
|
|
|
2,150,025
|
|
|
|
5,733,400
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2008
|
|
|
|
2/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,038
|
|
|
|
47.925
|
|
|
|
47.720
|
|
|
|
1,340,994
|
|
|
|
|
|
|
|
|
6/25/2008
|
|
|
|
1,143
|
(2)
|
|
|
|
|
|
|
85,725
|
|
|
|
228,600
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/25/2008
|
|
|
|
3,430
|
(2)
|
|
|
|
|
|
|
257,250
|
|
|
|
686,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/25/2008
|
|
|
|
5,717
|
(2)
|
|
|
|
|
|
|
428,775
|
|
|
|
1,143,400
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
6/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
700,000
|
(3)
|
|
|
1,400,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Murabito
|
|
|
NA
|
|
|
|
12/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
425,000
|
(3)
|
|
|
850,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
2/27/2008
|
|
|
|
9,334
|
(1)
|
|
|
|
|
|
|
700,050
|
|
|
|
1,866,800
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2008
|
|
|
|
2/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,966
|
|
|
|
47.925
|
|
|
|
47.720
|
|
|
|
436,605
|
|
|
|
Carol Ann Petren
|
|
|
NA
|
|
|
|
12/10/2007
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
(3)
|
|
|
1,200,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NA
|
|
|
|
2/27/2008
|
|
|
|
12,000
|
(1)
|
|
|
|
|
|
|
900,000
|
|
|
|
2,400,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27/2008
|
|
|
|
2/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,528
|
|
|
|
47.925
|
|
|
|
47.720
|
|
|
|
561,353
|
|
|
|
|
(1) |
|
Represents SPUs awarded for the
2008-2010
performance period. The PRC will determine payout for these
SPUs, if any, in 2011.
|
|
(2) |
|
In June 2008, when Mr. Cordani
was promoted to President and COO, based on the new long-term
incentive target, he was awarded transitional SPUs for the
2006-2008
performance period to be paid in 2009 (1,143 SPUs), the
2007-2009
performance period to be paid in 2010 (3,430 SPUs) and
2008-2010
performance period to be paid in 2011 (5,717 SPUs). See
page 40 in the CD&A for additional information on
transitional SPUs.
|
|
(3) |
|
At its December 2007 meeting, the
PRC approved annual incentive targets for the 2008 performance
period, to be paid in 2009. In June 2008, the PRC approved a
mid-year adjustment to the annual incentive target for
Mr. Cordani based on his new role as President and COO.
Individual award values can range from 0% to 200% of target (as
shown in column g), subject to EIP limits. The actual awards are
in the non-stock incentive plan compensation column
of the Summary Compensation Table on page 46 of this proxy
statement. See page 36 in the CD&A for additional
information on the annual incentive targets.
|
|
(4) |
|
The maximum amount reflects payout
of SPUs at the maximum amount per unit of $200 under the
Long-Term Incentive Plan, which is subject to downward
discretion by the PRC.
|
49
|
|
|
(5) |
|
Represents the stock option awards
approved by the PRC at its February 2008 meeting as part of each
named executive officers annual long-term incentive awards
and the retention awards approved for Messrs. Cordani and
Bell at the January 2008 PRC meeting.
|
|
(6) |
|
The exercise price of CIGNA stock
options, pursuant to the Long-Term Incentive Plan, is the
average of the high and low trading price of CIGNA common stock
on the grant date.
|
|
(7) |
|
These amounts represents the grant
date fair value of option awards computed in accordance with
SFAS 123R applying the same model and assumption as CIGNA
applies for financial statement reporting purposes. Consistent
with market practice, CIGNA stock option awards are calculated
using a Black-Scholes value that assumes that all stock options
are held full-term. Primarily for this reason, target long-term
incentive values may differ from SFAS 123R values reported
in this table, which assumes a shorter term.
|
Grants of
Plan-Based Awards Narrative
In order to promote comparability across a broad range of
companies, the compensation data used in the market assessment
for Long-Term Incentive Plan awards is evaluated using standard
assumptions. For instance, the methodology used in the market
assessment assumes that all stock options are held for
6.5 years. This assumption is calculated using the
Securities and Exchange Commissions safe harbor
methodology and a three-year vesting period. When delivering
actual CIGNA common stock option awards, CIGNA uses a
Black-Scholes value that assumes that all options are held
full-term (10 years). This assumption is used in grant
calibration and for internal communication of long-term
incentive values to all Long-Term Incentive Plan participants,
including the named executive officers. When stock option awards
are delivered, the stock options exercise price is made
equal to the award date fair market value of CIGNA common stock,
that is, the average of the high and low stock price on the date
of award. This measure of fair market value is a long-standing
CIGNA practice, and setting the stock option price no lower than
the award date fair market value is required by the CIGNA
Long-Term Incentive Plan.
Strategic
Performance Units
The PRC awarded SPUs for the
2008-2010
performance period in February 2008. Those awards reflect the
program design that was adopted in 2005. The PRC has established
specific goals with threshold, target and superior ranges of
performance and payouts for each level of performance versus the
goals within each performance measure.
The measures and the levels of performance are the same as those
described for the
2007-2009
cycle, except that Coventry Healthcare was added to CIGNAs
primary peer group in 2007 and therefore also added to the peer
group for TSR within the 2008-2010 SPU performance period.
50
Outstanding
Equity Awards at Fiscal Year-End 2008
This table provides information about unexercised stock options
and unvested stock held by the named executive officers at the
end of 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market value
|
|
|
|
securities
|
|
|
securities
|
|
|
|
|
|
|
|
|
shares or
|
|
|
of shares or
|
|
|
|
underlying
|
|
|
underlying
|
|
|
|
|
|
|
|
|
units of
|
|
|
units of
|
|
|
|
unexercised
|
|
|
unexercised
|
|
|
Option
|
|
|
|
|
|
stock that
|
|
|
stock that
|
|
|
|
options
|
|
|
options
|
|
|
exercise
|
|
|
Option
|
|
|
have not
|
|
|
have not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
price
|
|
|
expiration
|
|
|
vested
|
|
|
vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
($)
|
|
|
date
|
|
|
(#)(1)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
H. Edward Hanway
|
|
|
197,484
|
|
|
|
|
|
|
|
25.1458
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
420,000
|
|
|
|
|
|
|
|
36.7916
|
|
|
|
2/28/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
63,546
|
|
|
|
|
|
|
|
37.1699
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
57,372
|
|
|
|
|
|
|
|
30.0549
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
750,000
|
|
|
|
|
|
|
|
31.4116
|
|
|
|
2/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
99,042
|
|
|
|
|
|
|
|
32.3749
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
409,290
|
|
|
|
|
|
|
|
29.8066
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
127,999
|
|
|
|
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,001
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
74,389
|
|
|
|
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
148,736
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,218
|
|
|
|
47.9250
|
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Edward Hanway Total:
|
|
|
2,199,122
|
|
|
|
459,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Bell
|
|
|
1,314
|
|
|
|
|
|
|
|
36.7916
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
78,000
|
|
|
|
|
|
|
|
36.7916
|
|
|
|
2/28/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
2,736
|
|
|
|
|
|
|
|
34.7699
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
36,361
|
|
|
|
|
|
|
|
29.8066
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
53,039
|
|
|
|
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,521
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
25,766
|
|
|
|
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,517
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,177
|
|
|
|
47.6650
|
|
|
|
2/8/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,915
|
|
|
|
47.9250
|
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael W. Bell Total:
|
|
|
197,216
|
|
|
|
368,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David M. Cordani
|
|
|
25,200
|
|
|
|
|
|
|
|
36.7916
|
|
|
|
2/28/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
23,340
|
|
|
|
|
|
|
|
31.4116
|
|
|
|
2/27/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12,729
|
|
|
|
|
|
|
|
29.8066
|
|
|
|
2/24/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
41,439
|
|
|
|
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,721
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
30,432
|
|
|
|
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,846
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,177
|
|
|
|
47.6650
|
|
|
|
2/8/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,038
|
|
|
|
47.9250
|
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David M. Cordani Total:
|
|
|
133,140
|
|
|
|
388,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
|
Stock awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market value
|
|
|
|
securities
|
|
|
securities
|
|
|
|
|
|
|
|
|
shares or
|
|
|
of shares or
|
|
|
|
underlying
|
|
|
underlying
|
|
|
|
|
|
|
|
|
units of
|
|
|
units of
|
|
|
|
unexercised
|
|
|
unexercised
|
|
|
Option
|
|
|
|
|
|
stock that
|
|
|
stock that
|
|
|
|
options
|
|
|
options
|
|
|
exercise
|
|
|
Option
|
|
|
have not
|
|
|
have not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
price
|
|
|
expiration
|
|
|
vested
|
|
|
vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
($)
|
|
|
date
|
|
|
(#)(1)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
John M. Murabito
|
|
|
40,920
|
|
|
|
|
|
|
|
29.8066
|
|
|
|
2/24/2015
|
|
|
|
10,216
|
|
|
|
172,140
|
|
|
|
|
18,239
|
|
|
|
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,121
|
|
|
|
40.5649
|
|
|
|
2/22/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
7,439
|
|
|
|
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,875
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,966
|
|
|
|
47.9250
|
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. Murabito Total:
|
|
|
66,598
|
|
|
|
53,962
|
|
|
|
|
|
|
|
|
|
|
|
10,216
|
|
|
|
172,140
|
|
Carol Ann Petren
|
|
|
8,745
|
|
|
|
|
|
|
|
30.9883
|
|
|
|
5/15/2016
|
|
|
|
3,297
|
|
|
|
55,554
|
|
|
|
|
|
|
|
|
4,371
|
|
|
|
30.9883
|
|
|
|
5/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
10,144
|
|
|
|
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,282
|
|
|
|
46.8833
|
|
|
|
2/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,528
|
|
|
|
47.9250
|
|
|
|
2/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carol Ann Petren Total:
|
|
|
18,889
|
|
|
|
63,181
|
|
|
|
|
|
|
|
|
|
|
|
3,297
|
|
|
|
55,554
|
|
|
|
|
(1) |
|
The following table shows the
vesting date of the stock options and restricted stock that have
not vested, held as of December 31, 2008 by the named
executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
stock options
|
|
|
|
|
|
shares or units
|
|
|
|
|
|
|
that have
|
|
|
|
|
|
that have not
|
|
|
|
|
|
|
not vested
|
|
|
Vesting Date
|
|
|
vested
|
|
|
Vesting Date
|
|
|
H. Edward Hanway
|
|
|
64,001
|
|
|
|
2/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
74,367
|
|
|
|
2/28/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
74,369
|
|
|
|
2/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
82,422
|
|
|
|
2/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
82,397
|
|
|
|
2/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
82,399
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
Michael W. Bell
|
|
|
26,521
|
|
|
|
2/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
25,758
|
|
|
|
2/28/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
25,759
|
|
|
|
2/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
53,794
|
|
|
|
2/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
53,794
|
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
53,794
|
|
|
|
2/8/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
53,795
|
|
|
|
2/8/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
24,976
|
|
|
|
2/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
24,969
|
|
|
|
2/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
24,970
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
stock options
|
|
|
|
|
|
shares or units
|
|
|
|
|
|
|
that have
|
|
|
|
|
|
that have not
|
|
|
|
|
|
|
not vested
|
|
|
Vesting Date
|
|
|
vested
|
|
|
Vesting Date
|
|
|
David M. Cordani
|
|
|
20,721
|
|
|
|
2/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
30,422
|
|
|
|
2/28/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
30,424
|
|
|
|
2/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
53,794
|
|
|
|
2/8/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
53,794
|
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
53,794
|
|
|
|
2/8/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
53,795
|
|
|
|
2/8/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
30,685
|
|
|
|
2/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
30,676
|
|
|
|
2/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
30,677
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
John M. Murabito
|
|
|
9,121
|
|
|
|
2/22/2009
|
|
|
|
5,108
|
|
|
|
9/14/2010
|
|
|
|
|
7,437
|
|
|
|
2/28/2009
|
|
|
|
2,554
|
|
|
|
9/14/2011
|
|
|
|
|
7,438
|
|
|
|
2/28/2010
|
|
|
|
2,554
|
|
|
|
9/14/2012
|
|
|
|
|
9,990
|
|
|
|
2/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
9,987
|
|
|
|
2/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
9,989
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
Carol Ann Petren
|
|
|
4,371
|
|
|
|
5/15/2009
|
|
|
|
1,653
|
|
|
|
5/15/2009
|
|
|
|
|
10,140
|
|
|
|
2/28/2009
|
|
|
|
822
|
|
|
|
5/15/2010
|
|
|
|
|
10,142
|
|
|
|
2/28/2010
|
|
|
|
822
|
|
|
|
5/15/2011
|
|
|
|
|
12,845
|
|
|
|
2/27/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
12,841
|
|
|
|
2/27/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
12,842
|
|
|
|
2/27/2011
|
|
|
|
|
|
|
|
|
|
53
Option
Exercises and Stock Vested in Fiscal Year 2008
This table provides information about the number of shares the
named executive officers acquired upon exercise of stock options
and vesting of restricted stock and the value they realized upon
exercise of those stock options and vesting of restricted stock
during 2008. For stock options, the realized value represents
the difference between the fair market value on the date of the
stock option award and the stock price at the time the option is
exercised multiplied by the number of options exercised. For
restricted stock, the realized value represents the fair market
value on the vesting date multiplied by the number of shares of
restricted stock. The amounts in this table reflect CIGNAs
strong emphasis on performance-based and long-term compensation,
appreciation of CIGNAs common stock price, and, for
certain employees, tenure with the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Value
|
|
|
Number of
|
|
|
Value
|
|
|
|
shares acquired
|
|
|
realized
|
|
|
Shares Acquired
|
|
|
Realized
|
|
|
|
on exercise
|
|
|
upon exercise
|
|
|
on Vesting
|
|
|
Upon Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
H. Edward Hanway
|
|
|
92,877
|
|
|
|
1,582,024
|
|
|
|
18,333
|
|
|
|
873,109
|
|
Michael W. Bell
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
214,313
|
|
David M. Cordani
|
|
|
|
|
|
|
|
|
|
|
966
|
|
|
|
46,006
|
|
John M. Murabito
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carol Ann Petren
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
Pension
Benefits for Fiscal Year 2008
This table shows the present value as of December 31, 2008
of the estimated retirement benefit payable to each of the named
executive officers assuming that they retire at normal
retirement age. The disclosed amounts are estimates only and do
not necessarily reflect the actual amounts that will be paid to
the named executive officers. Those amounts will be known only
at the time that they become payable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Normal
|
|
|
Present
|
|
|
|
|
|
|
|
|
Number of years
|
|
|
retirement
|
|
|
Value of
|
|
|
Payments
|
|
|
|
|
|
credited service
|
|
|
age
|
|
|
accumulated
|
|
|
during last
|
|
Name
|
|
Plan name
|
|
(#)
|
|
|
(#)
|
|
|
benefit ($)
|
|
|
fiscal year
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
H. Edward Hanway
|
|
CIGNA Pension Plan
|
|
|
30
|
|
|
|
65
|
|
|
|
821,787
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan
|
|
|
30
|
|
|
|
65
|
|
|
|
12,696,432
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan of 2005
|
|
|
30
|
|
|
|
65
|
|
|
|
2,774,456
|
|
|
|
|
|
Michael W. Bell
|
|
CIGNA Pension Plan
|
|
|
24
|
|
|
|
65
|
|
|
|
301,549
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan
|
|
|
24
|
|
|
|
65
|
|
|
|
961,769
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan of 2005
|
|
|
24
|
|
|
|
65
|
|
|
|
992,727
|
|
|
|
|
|
David M. Cordani
|
|
CIGNA Pension Plan
|
|
|
17
|
|
|
|
65
|
|
|
|
179,173
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan
|
|
|
17
|
|
|
|
65
|
|
|
|
104,893
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan of 2005
|
|
|
17
|
|
|
|
65
|
|
|
|
325,639
|
|
|
|
|
|
John M. Murabito
|
|
CIGNA Pension Plan
|
|
|
5
|
|
|
|
65
|
|
|
|
76,188
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan of 2005
|
|
|
5
|
|
|
|
65
|
|
|
|
284,872
|
|
|
|
|
|
Carol Ann Petren
|
|
CIGNA Pension Plan
|
|
|
3
|
|
|
|
65
|
|
|
|
49,606
|
|
|
|
|
|
|
|
CIGNA Supplemental Pension Plan of 2005
|
|
|
3
|
|
|
|
65
|
|
|
|
158,148
|
|
|
|
|
|
Messrs. Hanway and Bell participate in Part A of the
CIGNA Pension Plan, the CIGNA Supplemental Pension Plan, and the
CIGNA Supplemental Pension Plan of 2005. The new cash balance
formula for Part A effective April 1, 2008, is
included in the calculation of the present value of accumulated
benefit in the table above. Under the new Part A formula,
Mr. Hanways annual benefit credit percentage is
limited to 3% because he has 30 years of credited service.
See below for more information on the new Part A formula.
The actuarial present values of their accumulated benefits were
computed as a single life annuity payable from normal retirement
age and then discounted to the present value using the same
assumptions as those for CIGNAs financial reporting,
specifically an interest discount rate of 6.25% for the CIGNA
Pension Plan and 6.25% for the CIGNA Supplemental Pension Plan
and the CIGNA Supplemental Pension Plan of 2005 and the RP 2000
mortality table for those plans.
Mr. Cordani participates in Part B of the CIGNA
Pension Plan, the CIGNA Supplemental Pension Plan, and the CIGNA
Supplemental Pension Plan of 2005. Mr. Murabito and
Ms. Petren participate in Part B of the CIGNA Pension
Plan and the CIGNA Supplemental Pension Plan of 2005. The actual
Part B account balance, as of December 31, 2008, is
listed as the present value of accumulated benefits for each
named executive officer.
Pension
Benefits Table Narrative
CIGNA
Pension Plan
Since 2000 the CIGNA Pension Plan generally has covered all
U.S. based employees, including all named executive
officers. CIGNA makes all contributions required to meet the
minimum funding requirements for plan benefits. Contributions
are paid into a trust fund that pays benefits. Vested benefits
are not payable until after termination of an employees
service with CIGNA.
The CIGNA Pension Plan comprises Parts A and B, as described
below. Part A covers certain employees hired before 1989,
while Part B covers all other U.S. employees. The
formulas apply equally to named executive officers and other
employees. As explained below, Part A includes a frozen
formula based on credited service
55
as of March 31, 2008 and eligible earnings as of
December 31, 2009, and effective April 1, 2008 a new
cash balance formula that provides a reduced level of benefits.
Part B provides only a cash balance benefit.
Pension benefits under both formulas are based on years of
credited service and eligible earnings.
|
|
|
|
|
Credited service is generally limited to an
employees period of service with a CIGNA company while
that Company participates in the CIGNA Pension Plan. An employee
receives credit for one year of credited service for any
calendar year in which he or she is credited with at least
1,000 hours of service.
|
|
|
|
Eligible earnings includes base salary and annual
incentivebut not payments under any long-term incentive
compensation plans.
|
Part A. For credited service
before April 1, 2008, Part A provides an annual
retirement benefit stated in terms of a single life annuity
payable at age 65. That annual benefit equals:
|
|
|
|
|
the employees years of credited service (up to a maximum
of 30 years);
|
|
|
|
multiplied by 2% of the higher of the employees average
annual eligible earnings over (a) the final 36 months
of service, or (b) the three consecutive calendar years
with the highest eligible earnings;
|
|
|
|
minus an offset equal to approximately half of the
employees annual Social Security benefits.
|
On March 31, 2008, this formula was frozen so that credited
service after March 31, 2008 and eligible earnings after
December 31, 2009 are not counted.
Part A benefits under the frozen formula are generally
payable only in annuity form as early as age 55. An
actuarial reduction applies if benefit payments begin before
age 65. Part A benefits became 100% vested upon a
participants completion of five years of vesting service.
All Part A participants are 100% vested.
Effective April 1, 2008, CIGNA adopted a new cash balance
formula under Part A. For credited service on or after
April 1, 2008, the plan provides a retirement benefit
stated as a lump sum hypothetical account balance. That account
balance equals the sum of (1) the employees
accumulated annual benefit credits, and (2) quarterly
interest credits.
For each year that an employee earns a year of credited service,
the employees account receives annual benefit credits
equal to the following percentage of eligible earnings: 8% in
2008 (for eligible earnings after March 31, 2008); 9% for
2009; and 10% for 2010 and later. However, after employees have
earned 30 years of credited service, the percentage is 3%.
On the last day of each calendar quarter until an
employees benefit is paid, the employees account
also receives interest credits, which are based on an annual
rate equal to the lesser of 9% or the yield on the five-year
U.S. Treasury Constant Maturity Notes for the month of
November of the preceding calendar year, plus 25 basis
points. However, the annual rate will not be less than 4.5%.
The hypothetical account balance is payable as early as an
employees termination of employment. Payments may be made
in annuity form or lump sum, at the employees election.
Part B. Part B provides a
retirement benefit stated as a lump sum hypothetical account
balance. That account balance equals the sum of (1) the
employees accumulated annual benefit credits, and
(2) quarterly interest credits.
For each year that an employee is credited with a year of
credited service, the employees account receives annual
benefit credits. Annual benefit credits range from 3% to 8.5% of
eligible earnings, based on the employees age and
accumulated years of credited service.
On the last day of each calendar quarter until an
employees benefit is paid, the employees account
also receives interest credits, which are based on an annual
rate equal to the lesser of 9% or the yield on the five-year
U.S. Treasury Constant Maturity Notes for the month of
November of the preceding calendar year, plus 25 basis
points. However, the annual rate will not be less than 4.5%.
56
Part B benefits are payable as early as an employees
termination of employment. Payments may be made in annuity form
or lump sum, at the employees election.
As of January 1, 2008, an employee must have at least three
years of vesting service to be 100% vested with a right to a
Part B pension benefit. Vesting service is
service with any CIGNA company, even if the Company does not
participate in the CIGNA Pension Plan.
Change of Control. Any participants in
Part A or Part B of the CIGNA Pension Plan who are
terminated other than for cause, within three years after a
change of control of CIGNA would receive certain additional
benefits:
|
|
|
|
|
Part A would provide up to three years of additional
service credit and a floor amount of final average earnings
based on an employees level of earnings at the time of the
change of control; and
|
|
|
|
Part B would provide a special benefit credit for the year
of the participants termination equal to between 3% and
8.5% of the participants highest base salary in effect at
any time between the date of the change of control and the date
of termination, multiplied by the number of years between
January 1 of the year of termination and the third anniversary
of the change of control.
|
CIGNA
Supplemental Pension Plan and CIGNA Supplemental Pension Plan of
2005
The CIGNA Supplemental Pension Plan provides an additional
pension benefit to any employee whose CIGNA Pension Plan benefit
is limited by one or more federal income tax laws. The
additional benefit equals the amount by which those limits
reduce the pension benefit an employee would otherwise receive
under the qualified CIGNA Pension Plan.
The tax law limits in effect in 2008 were:
|
|
|
|
|
an annual limit of $185,000 on payments beginning at age 65
(the limit is actuarially reduced for payments beginning at an
earlier age);
|
|
|
|
an annual limit of $230,000 on annual compensation that can be
included in the CIGNA Pension Plans benefit
calculations; and
|
|
|
|
an exclusion from eligible earnings of any compensation deferred
under a nonqualified deferred compensation arrangement.
|
In calculating Supplemental Pension Plan benefits, the above
limits are ignored; otherwise, the regular CIGNA Pension Plan
formulas and other terms and conditions apply. Supplemental
Pension Plan benefits are paid in the year after an employee
reaches age 55 or separates from service with CIGNA,
whichever is later. Benefits are ordinarily paid in a lump sum,
but an employee who makes a timely election in compliance with
applicable tax law may have all or part of the benefit that was
earned and vested before 2005 paid in equivalent monthly
installments. Supplemental Pension Plan benefits earned after
2004 are covered under the Supplemental Pension Plan of 2005,
which provides for payments in a lump sum in the year following
separation from service or attaining age 55, whichever is
later.
All employees with compensation above the qualified plan limits,
including the named executive officers, participate and earn
benefits in these plans according to the same provisions of each
plan. Service and earnings definitions are no different for the
named executive officers and are described on page 56.
57
Nonqualified
Deferred Compensation for Fiscal Year 2008
This table provides information about the contributions,
earnings and balances of the named executive officers under
CIGNAs Deferred Compensation Plan as of and for the year
ended December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
contributions in
|
|
|
contributions
|
|
|
earnings in
|
|
|
withdrawal/
|
|
|
balance at last
|
|
|
|
last FY
|
|
|
in last FY
|
|
|
last FY
|
|
|
distributions
|
|
|
FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
H. Edward Hanway
|
|
|
|
|
|
|
|
|
|
|
(36,554,797
|
)
|
|
|
4,757,405
|
|
|
|
29,624,164
|
|
Michael W. Bell
|
|
|
|
|
|
|
|
|
|
|
(3,390,461
|
)
|
|
|
|
|
|
|
2,765,572
|
|
David M. Cordani
|
|
|
|
|
|
|
|
|
|
|
(185,211
|
)
|
|
|
378,332
|
|
|
|
256,182
|
|
John M. Murabito
|
|
|
|
|
|
|
|
|
|
|
(1,160,916
|
)
|
|
|
|
|
|
|
857,966
|
|
Carol Ann Petren
|
|
|
279,135
|
|
|
|
|
|
|
|
(40,108
|
)
|
|
|
|
|
|
|
239,027
|
|
Nonqualified
Deferred Compensation Narrative
CIGNA
Deferred Compensation Plan
CIGNA credits deferred compensation with hypothetical investment
earnings during the deferral period as follows:
|
|
|
|
|
Deferred cash compensation is credited with amounts that equal
the gains (or losses) on the actual investment options available
under the CIGNA 401(k) Plan. The 401(k) investment options
include a default fixed income fund with an annual interest rate
of 5.05% as of December 31, 2008, which is not considered
an above market interest rate as that term is
defined by the Securities and Exchange Commission. The fixed
income fund is the only hypothetical investment option available
to non-executive employees.
|
|
|
|
Deferred shares of CIGNA common stock are credited with amounts
equal to any dividends that are paid on actual shares of CIGNA
common stock. These hypothetical dividends are treated as
deferred cash compensation.
|
Subject to limitations under Section 16 of the Securities
Exchange Act of 1934 and under CIGNAs Insider Trading
policy, which prohibits trading by CIGNAs named executive
officers during blackout periods, executive officers who
participate in the Deferred Compensation Plan can defer up to
100% of their base salary and annual incentive award and change
their hypothetical investment allocations on deferrals once per
quarter.
Generally, payments of mandatory and voluntary deferrals after
2004 will be made during one of the following periods: seven
months after the named executive officers separation from
service; July of the year following the year of an
executives separation from service; the ninety day period
beginning January 1 of the year following the year of an
executives death; or a date specified by the officer or by
CIGNA. Deferred compensation balances represent a general
unsecured and unfunded obligation of the Company.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The tables below reflect the estimated amount of compensation
that would become payable to each of the named executive
officers under existing plans and arrangements if the named
executive officers employment had terminated
and/or a
change in control had occurred on December 31, 2008, given
the named executive officers compensation and service
levels as of such date and, if applicable, based on the
companys closing stock price on that date. All change of
control benefits are double-trigger (that is, are payable only
upon a change of control followed by termination of employment).
The value attributable to benefits available prior to the
occurrence of any termination of employment, including
then-exercisable stock options, and benefits available generally
to salaried employees, such as distributions under the
companys 401(k), deferred compensation and pension plans
are reflected in the aggregate in the tables under the heading
Payments to Executive Officers Upon Any Termination. In
addition, in connection with any actual termination of
58
employment or change of control transaction, the Company may
determine to enter into an agreement or to establish an
arrangement providing additional benefits or amounts, or
altering the terms of benefits described below, as the PRC
determines appropriate.
The amounts reflected in the tables below are estimates. The
actual amounts that would be paid upon a named executive
officers termination of employment or in connection with a
change in control can be determined only at the time of any such
event. The calculation of the hypothetical amounts paid to each
of the named executive officers in the circumstances described
below relies heavily on assumptions used in making the
calculations. Due to the number of factors that affect the
nature and amount of any benefits provided upon the events
discussed below, any actual amounts paid or distributed may be
higher or lower than those reported below. Factors that could
affect these amounts include the timing during the year of any
such event, the companys stock price, the named executive
officers age, and specific plan terms that govern
administration of payments.
For the purposes of calculating the hypothetical payment
amounts, all of the actions described below assume that, except
as noted below, (1) change of control and termination occur
as of the last business day of 2008; (2) payments of
benefits are made in lump sum on the last business day of 2008;
and (3) the value of stock options would be equal to the
value realized upon exercise of those options that were
in-the-money on the last business day of 2008; however because
the price of the Companys common stock on
December 31, 2008 was less than the exercise price of the
currently outstanding options for the named executive officers,
no value has been attributed to those options. However, the
actual exercise date of stock options is not known and payment
dates would vary because of Internal Revenue Code rules relating
to deferred compensation, and because of other considerations.
Messrs. Hanway and Bell participate in Part A of the
CIGNA Pension Plan. The present value of the benefit payments
are determined as of the earliest payment date for the plan for
all events except death (an annuity beginning immediately or
age 55, if later) using a 6.25% interest rate and the RP
2000 mortality table. The amounts reflected in the tables are
then the hypothetical present values as of January 2009 of these
amounts discounted at 6.25%.
Messrs. Hanway and Bell also participate in Part A of
the CIGNA Supplemental Pension Plans. The present value of the
benefit payments are determined as of the earliest payment date
for the plans for all events except death (expressed as an
annuity beginning immediately or age 55, if later) at
interest rates used by the Pension Benefit Guarantee
Corporation. The current rate of 3.00% is used for
Mr. Hanways calculation and the rate is assumed to be
5.00% for Mr. Bell; both use UP84 mortality table applied
post-commencement only. The amounts reflected in the tables are
then the hypothetical present values as of January 2009 of these
amounts discounted at 6.25%.
Benefits due to the death of Messrs. Hanway or Bell are
payable immediately per the terms of the CIGNA Pension Plan and
the CIGNA Supplemental Pension Plans. The present value of the
benefit payments are determined as described above for other
events.
Mr. Cordani participates in Part B of the CIGNA
Pension Plan and the CIGNA Supplemental Pension Plans.
Mr. Murabito and Ms. Petren participate in Part B
of the CIGNA Pension Plan and the CIGNA Supplemental Pension
Plan of 2005. Part B provides a retirement benefit stated
as a lump sum hypothetical account balance. The account balance
as of December 31, 2008 is the amount of payout reflected
in the tables.
Estimated payment amounts are rounded to the nearest thousand
and represent an approximation of what the payment could
potentially be.
59
Payments
to Executive Officers upon Any Termination
Upon termination for any reason, a named executive officer would
receive amounts already earned or contributed under the plans
described below. In addition, Mr. Hanway is eligible for
retiree medical benefits from the CIGNA Retiree Health Care
Plan, which have an approximate hypothetical present value of
$83,000.
|
|
|
|
|
Qualified and Supplemental Pension plans. For
information about payments under the pension plans see the
narrative descriptions following the Pension Benefits Table on
pages 55-57.
|
|
|
|
Vested amounts under the 401(k) plan.
|
|
|
|
Contributions and earnings under the Deferred Compensation Plan.
For information about payments under the Deferred Compensation
Plan, see the narrative descriptions following the Nonqualified
Deferred Compensation Table on page 58.
|
|
|
|
Vested, in-the-money optionsCIGNA assumes that, under any
termination scenario, a named executive officer would exercise
any vested, in-the-money options; however, because the price of
the Companys common stock on December 31, 2008 was
less than the exercise price of the currently outstanding
options for the named executive officers, no value has been
attributed to those options.
|
The aggregate amount of the above items is included in the
Payments to Executive Officers Upon Any Termination
in the following tables.
60
Hanway,
H. Edward
Contingent
Payments (000s)
All
actions assume a
12/31/08
Termination Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
|
Involuntary
|
|
|
upon a
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Change of
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
not for Cause
|
|
|
Control
|
|
|
Retirement
|
|
|
Death
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIGNA Pension Plan
|
|
|
1,317
|
|
|
|
1,317
|
|
|
|
1,330
|
|
|
|
1,317
|
|
|
|
744
|
|
CIGNA Supplemental Pension Plan(s)
|
|
|
29,276
|
|
|
|
29,276
|
|
|
|
29,361
|
|
|
|
29,276
|
|
|
|
16,098
|
|
Vested 401(k) Amount
|
|
|
800
|
|
|
|
800
|
|
|
|
800
|
|
|
|
800
|
|
|
|
800
|
|
Deferred Compensation Plan
|
|
|
29,624
|
|
|
|
29,624
|
|
|
|
29,624
|
|
|
|
29,624
|
|
|
|
29,624
|
|
In-the-money value of exercisable stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
61,017
|
|
|
|
61,017
|
|
|
|
61,115
|
|
|
|
61,017
|
|
|
|
47,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance)
|
|
|
|
|
|
|
1,155
|
|
|
|
3,465
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
3,500
|
|
|
|
10,500
|
|
|
|
3,500
|
|
|
|
|
|
Payment in lieu of unvested restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding SPUs
|
|
|
|
|
|
|
12,716
|
|
|
|
49,067
|
|
|
|
12,716
|
|
|
|
12,716
|
|
Accelerated equity vesting includes both stock options and
restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services and other benefits
|
|
|
|
|
|
|
19
|
|
|
|
19
|
|
|
|
25
|
|
|
|
|
|
Tax Reimbursement Payment
|
|
|
|
|
|
|
|
|
|
|
23,370
|
|
|
|
|
|
|
|
|
|
Change of Control Benefit Cut-Back
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments Subtotal
|
|
|
|
|
|
|
17,390
|
|
|
|
86,420
|
|
|
|
16,241
|
|
|
|
12,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
61,017
|
|
|
|
78,407
|
|
|
|
147,536
|
|
|
|
77,258
|
|
|
|
59,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
Bell,
Michael W.
Contingent
Payments (000s)
All actions assume a
12/31/08
Termination Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
|
Involuntary
|
|
|
upon a
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Change of
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
not for Cause
|
|
|
Control
|
|
|
Retirement
|
|
|
Death
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIGNA Pension Plan
|
|
|
502
|
|
|
|
502
|
|
|
|
510
|
|
|
|
502
|
|
|
|
494
|
|
CIGNA Supplemental Pension Plan(s)
|
|
|
2,784
|
|
|
|
2,784
|
|
|
|
2,839
|
|
|
|
2,784
|
|
|
|
3,027
|
|
Vested 401(k) Amount
|
|
|
190
|
|
|
|
190
|
|
|
|
190
|
|
|
|
190
|
|
|
|
190
|
|
Deferred Compensation Plan
|
|
|
2,766
|
|
|
|
2,766
|
|
|
|
2,766
|
|
|
|
2,766
|
|
|
|
2,766
|
|
In-the-money value of exercisable stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
6,242
|
|
|
|
6,242
|
|
|
|
6,305
|
|
|
|
6,242
|
|
|
|
6,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance)
|
|
|
|
|
|
|
640
|
|
|
|
1,920
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
800
|
|
|
|
2,850
|
|
|
|
800
|
|
|
|
|
|
Payment in lieu of unvested restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding SPUs
|
|
|
|
|
|
|
3,454
|
|
|
|
14,014
|
|
|
|
3,454
|
|
|
|
3,454
|
|
Accelerated equity vesting includes both stock options and
restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services and other benefits
|
|
|
|
|
|
|
19
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
Tax Reimbursement Payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control Benefit Cut-Back
|
|
|
|
|
|
|
|
|
|
|
(386
|
)
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments Subtotal
|
|
|
|
|
|
|
4,913
|
|
|
|
18,417
|
|
|
|
4,254
|
|
|
|
3,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,242
|
|
|
|
11,155
|
|
|
|
24,722
|
|
|
|
10,496
|
|
|
|
9,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
Cordani,
David M.
Contingent
Payments (000s)
All
actions assume a
12/31/08
Termination Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
|
Involuntary
|
|
|
upon a
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Change of
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
not for Cause
|
|
|
Control
|
|
|
Retirement
|
|
|
Death
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIGNA Pension Plan
|
|
|
179
|
|
|
|
179
|
|
|
|
229
|
|
|
|
179
|
|
|
|
179
|
|
CIGNA Supplemental Pension Plan(s)
|
|
|
431
|
|
|
|
431
|
|
|
|
491
|
|
|
|
431
|
|
|
|
431
|
|
Vested 401(k) Amount
|
|
|
288
|
|
|
|
288
|
|
|
|
288
|
|
|
|
288
|
|
|
|
288
|
|
Deferred Compensation Plan
|
|
|
256
|
|
|
|
256
|
|
|
|
256
|
|
|
|
256
|
|
|
|
256
|
|
In-the-money value of exercisable stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
1,154
|
|
|
|
1,154
|
|
|
|
1,264
|
|
|
|
1,154
|
|
|
|
1,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance)
|
|
|
|
|
|
|
750
|
|
|
|
2,250
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
700
|
|
|
|
2,400
|
|
|
|
700
|
|
|
|
|
|
Payment in lieu of unvested restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding SPUs
|
|
|
|
|
|
|
4,228
|
|
|
|
18,088
|
|
|
|
4,228
|
|
|
|
4,228
|
|
Accelerated equity vesting includes both stock options and
restricted stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services and other benefits
|
|
|
|
|
|
|
19
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
Tax Reimbursement Payment
|
|
|
|
|
|
|
|
|
|
|
10,218
|
|
|
|
|
|
|
|
|
|
Change of Control Benefit Cut-Back
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments Subtotal
|
|
|
|
|
|
|
5,697
|
|
|
|
32,975
|
|
|
|
4,928
|
|
|
|
4,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,154
|
|
|
|
6,851
|
|
|
|
34,239
|
|
|
|
6,082
|
|
|
|
5,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
Murabito,
John M.
Contingent
Payments (000s)
All actions assume a
12/31/08
Termination Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
|
Involuntary
|
|
|
upon a
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Change of
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
not for Cause
|
|
|
Control
|
|
|
Retirement
|
|
|
Death
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIGNA Pension Plan
|
|
|
76
|
|
|
|
76
|
|
|
|
119
|
|
|
|
76
|
|
|
|
76
|
|
CIGNA Supplemental Pension Plan(s)
|
|
|
285
|
|
|
|
285
|
|
|
|
325
|
|
|
|
285
|
|
|
|
285
|
|
Vested 401(k) Amount
|
|
|
75
|
|
|
|
75
|
|
|
|
75
|
|
|
|
75
|
|
|
|
75
|
|
Deferred Compensation Plan
|
|
|
858
|
|
|
|
858
|
|
|
|
858
|
|
|
|
858
|
|
|
|
858
|
|
In-the-money value of exercisable stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
1,294
|
|
|
|
1,294
|
|
|
|
1,376
|
|
|
|
1,294
|
|
|
|
1,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance)
|
|
|
|
|
|
|
592
|
|
|
|
1,777
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
425
|
|
|
|
1,440
|
|
|
|
425
|
|
|
|
|
|
Payment in lieu of unvested restricted stock
|
|
|
|
|
|
|
141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding SPUs
|
|
|
|
|
|
|
1,150
|
|
|
|
4,801
|
|
|
|
1,150
|
|
|
|
1,150
|
|
Accelerated equity vesting includes both stock options and
restricted stock
|
|
|
|
|
|
|
|
|
|
|
170
|
|
|
|
170
|
|
|
|
170
|
|
Outplacement Services and other benefits
|
|
|
|
|
|
|
19
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
Tax Reimbursement Payment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change of Control Benefit Cut-Back
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments Subtotal
|
|
|
|
|
|
|
2,326
|
|
|
|
8,206
|
|
|
|
1,745
|
|
|
|
1,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,294
|
|
|
|
3,620
|
|
|
|
9,582
|
|
|
|
3,038
|
|
|
|
2,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64
Petren,
Carol Ann
Contingent
Payments (000s)
All actions assume a
12/31/08
Termination Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
for Cause or
|
|
|
Involuntary
|
|
|
upon a
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Termination
|
|
|
Change of
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
not for Cause
|
|
|
Control
|
|
|
Retirement
|
|
|
Death
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIGNA Pension Plan
|
|
|
50
|
|
|
|
50
|
|
|
|
99
|
|
|
|
50
|
|
|
|
50
|
|
CIGNA Supplemental Pension Plan(s)
|
|
|
158
|
|
|
|
158
|
|
|
|
183
|
|
|
|
158
|
|
|
|
158
|
|
Vested 401(k) Amount
|
|
|
47
|
|
|
|
47
|
|
|
|
47
|
|
|
|
47
|
|
|
|
47
|
|
Deferred Compensation Plan
|
|
|
239
|
|
|
|
239
|
|
|
|
239
|
|
|
|
239
|
|
|
|
239
|
|
In-the-money value of exercisable stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to Executive Officers Upon Any Termination
|
|
|
494
|
|
|
|
494
|
|
|
|
568
|
|
|
|
494
|
|
|
|
494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary (Severance)
|
|
|
|
|
|
|
565
|
|
|
|
1,695
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
600
|
|
|
|
2,025
|
|
|
|
600
|
|
|
|
|
|
Payment in lieu of unvested restricted stock
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding SPUs
|
|
|
|
|
|
|
1,550
|
|
|
|
6,400
|
|
|
|
1,550
|
|
|
|
1,550
|
|
Accelerated equity vesting includes both stock options and
restricted stock
|
|
|
|
|
|
|
|
|
|
|
55
|
|
|
|
55
|
|
|
|
55
|
|
Outplacement Services and other benefits
|
|
|
|
|
|
|
19
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
Tax Reimbursement Payment
|
|
|
|
|
|
|
|
|
|
|
4,602
|
|
|
|
|
|
|
|
|
|
Change of Control Benefit Cut-Back
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Benefits and Payments Subtotal
|
|
|
|
|
|
|
2,779
|
|
|
|
14,796
|
|
|
|
2,204
|
|
|
|
1,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
494
|
|
|
|
3,272
|
|
|
|
15,365
|
|
|
|
2,698
|
|
|
|
2,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65
Termination
for Cause or Voluntary Termination
Generally, a named executive officer would receive limited
payments or benefits in the case of voluntary termination, or
termination for cause, such as after conviction of a felony
involving fraud or dishonesty directed against CIGNA. Restricted
stock, unvested and vested unexercised stock options and SPUs
would be forfeited or expire upon termination and generally, no
annual incentive or additional base salary would be paid.
Accordingly, CIGNA estimates that it would not make any payments
in the event of a termination for cause or voluntary
termination, other than those described under Payments to
Executive Officers upon Any Termination above.
Involuntary
Termination not for Cause
Severance benefits may be provided to named executive officers
whose employment is terminated because of job elimination,
permanent disability or any other reason. CIGNA does not
maintain any plan or formula to determine benefits that would be
provided in the event that a named executive officer was
terminated not for cause. Some of the benefits, such as
severance payment or payments in the amount of the value of
unvested restricted stock awards, would be subject to the
discretion of the PRC. The following factors are typically
considered in the exercise of such discretion: length of
service; the executives total compensation target; and the
executives career plans following termination of
employment with CIGNA.
From the range of possible decisions the PRC may make about
payments and benefits, for purposes of this estimate it is
assumed a named executive officer would receive as severance:
|
|
|
|
|
An amount equal to one year of base salary.
|
|
|
|
A pro-rated portion of that individuals annual incentive
target. The total amount of the annual incentive payout for 2008
was included in the estimate because it assumes termination at
year-end.
|
|
|
|
A lump sum payment equal to the value of unvested restricted
stock, calculated by multiplying the number of shares of
restricted stock forfeited upon termination, by the average
closing price (assumed to be $13.7557) over 30 trading days
ending on the assumed termination date at year-end.
|
|
|
|
Payout of a pro-rated portion of previously awarded SPUs (unit
value assumed to be target $75) based on the following formula:
33% of the
2008-2010
SPU awards, 67% of the
2007-2009
SPU awards and 100% of the
2006-2008
SPU awards, similar to what has been paid in previous instances.
|
Previous separation agreements with executive officers required
the terminated officer to make certain promises, covenants and
waivers, including those relating to non-competition and
non-solicitation, in exchange for the benefits and payments
provided by the Company.
In addition, each named executive officer would be entitled to
receive the amounts vested under CIGNAs pension plans,
401(k) plan, and accrued under the deferred compensation plan as
well as the value of vested, in-the-money options, as described
under Payments to Executive Officers upon Any
Termination on page 60. The calculation of estimated
payments assumes payment of approximately $19,000 for
outplacement services.
Termination
upon a Change of Control
The payments and benefits discussed are entirely hypothetical
and contingent in nature. However, if a change of control were
to occur, executive officers who are terminated (other than as
the result of conviction of a felony involving fraud or
dishonesty directed against CIGNA) within two years after a
change of control would receive the following payment or
benefits:
|
|
|
|
|
a payment equal to 156 weeks of pay, at the base salary
rate in effect at termination and the calculation is based upon
weekly base salary rates.
|
|
|
|
a payment equal to three times the greater of the last annual
incentive payment actually made or the amount of the annual
incentive target applicable to the employee under the applicable
annual incentive plan immediately before the change of control.
|
66
|
|
|
|
|
a payment equal to the number of outstanding SPUs multiplied by,
the greatest of: the target value ($75); the value for a unit
paid in the preceding twelve-month period ($200); or the average
of the unit values for the last two unit payments ($168.745).
|
In addition, and only upon termination within two years after a
change of control, restrictions on restricted stock awards would
lapse. The vesting of any unvested stock options would be
accelerated and the stock options would become exercisable at
such termination and would expire on the earlier of the original
expiration date or three months from the termination date.
For a three-year period following a change of control of CIGNA,
the CIGNA Pension Plan cannot be terminated, or benefit accruals
reduced. If Part A were to be terminated in the fourth or
fifth year following a change of control, additional benefits
would be provided to participants, including an immediate 10%
increase to persons receiving benefits and an annual 3% increase
in benefits beginning at age 65. In addition, participants
in Part A and Part B who are terminated, other than
for cause, within three years following a change of control
would receive certain benefits. Participants in Part A
would receive up to three years of additional credited service
and a floor amount of final average earnings based on their
level of earnings when a change of control occurred.
Participants in Part B would receive a special benefit
credit for the year of termination equal to between 3% and 8.5%
of the highest base salary in effect at any time between the
date of the change of control and the date of termination,
multiplied by the number of years between January 1 of the year
they terminate employment and the third anniversary of the
change of control. The calculation of estimated payments assumes
payment of approximately $19,000 for outplacement services. In
addition, under certain conditions (described below) the named
executive officers are eligible to receive a tax gross up
payment for the excise tax imposed on the officer as a result of
the payments received upon change of control. Specifically, the
excise tax
gross-up
will be paid only if the total of an executives payments
subject to the excise tax exceeds the payment cap that triggers
the tax by more than 10%. If the payments exceed the cap by less
than 10%, they will be cut back to the level of the payment cap
to avoid application of the tax. Mr. Bells
hypothetical termination upon change of control payment reflects
the application of the cut back. In this scenario, the cut back
would have saved the Company $6,596,000, reflecting the tax
gross up payment for the excise tax that would have been imposed
without the existence of a cut back provision. The calculation
of the excise tax and associated tax reimbursement assumes that
unvested stock options are cashed out and the associated tax
reimbursement assumes applicable state, local and federal tax
rates, net of federal tax deduction available for state and
local taxes. In addition, each named executive officer would be
entitled to receive the amounts vested under CIGNAs
pension plans, 401(k) plan, and accrued under the deferred
compensation plan as well as the value of vested, in-the-money
options, as described under Payments to Executive Officers
upon Any Termination on page 60. If within two years
after a change of control, any of the changes described in the
next sentence affect an executive level employee, and he or she
then resigns following written notification to CIGNA, the
resignation will be treated as a termination upon a change of
control. The covered changes are any reduction in compensation;
any material reduction in authority, duties or responsibilities;
or a relocation of the executives office more than
35 miles from its location on the date of the change of
control.
Retirement
Upon retirement, the amount of any benefits or payments to a
named executive officer is subject to the discretion of the PRC
and/or the
terms of any agreement executed by the Company and the retiring
named executive officer that has been approved by the PRC. From
the range of possible decisions the PRC may make about payments
and benefits, for purposes of this estimate it is assumed a
named executive officer would receive:
|
|
|
|
|
A pro-rated portion of that individuals annual incentive
target. The calculation includes the total annual incentive
target for 2008 because the estimate assumes termination at
year-end.
|
|
|
|
Payout of a pro-rated portion of previously awarded SPUs based
upon the following formula: 33% of the
2008-2010
SPU awards; 67% of the
2007-2009
SPU; awards and 100% of the
2006-2008
SPU awards. The value shown for each named executive officer
represents the target value ($75), however, actual value would
be determined at the end of each performance period.
|
67
|
|
|
|
|
Accelerated vesting of any unvested stock options that become
exercisable at retirement and expire on the original expiration
date, for which the calculation assumes the gain on in-the-money
exercisable options.
|
|
|
|
Restrictions on restricted stock awards would lapse upon
retirement with the PRCs approval.
|
For the Chief Executive Officer, the calculation includes the
incremental cost of providing office space and administrative
assistance for one year, which is estimated to be approximately
$20,000, and alarm maintenance for five years, which is
estimated to be approximately $5,000. In addition, each named
executive officer would be entitled to receive the amounts
vested under CIGNAs pension plans, 401(k) plan, and
accrued under the deferred compensation plan as well as the
value of vested, in-the-money options, as described under
Payments to Executive Officers upon Any Termination
on page 60.
Death
If a named executive officer dies while still an active
employee, certain benefits are available to that
individuals estate or surviving spouse. Payment of the
outstanding SPU awards is subject to the discretion of the PRC.
In accordance with past practice, the estimates assume that the
named executive officers estate or the surviving spouse
would receive payment of a prorated portion of the SPUs based
upon the following formula: 33% of the
2008-2010
SPU awards; 67% of the
2007-2009
SPU awards; and 100% of the
2006-2008
SPU awards. The value shown for each named executive officer
represents the target value ($75), however, actual value would
be determined at the end of each performance period.
Restrictions on restricted stock awards would lapse upon death.
In addition, vesting of any unvested stock options would be
accelerated and the stock option would become exercisable at
termination and expire on the original expiration date. However,
because the price of the Companys stock on
December 31, 2008 was less than the exercise price of the
currently outstanding options for the named executive officers,
no value has been attributed to those options. The calculation
of the pension plan payouts includes the amount of an estimated
survivor benefit which, along with other factors is based upon
the age of the deceased officers spouse. In addition, each
named executive officers estate would be entitled to
receive the amounts accrued under CIGNAs pension plans,
401(k) plan, and the deferred compensation plan as well as the
value of vested, in-the-money options, as described under
Payments to Executive Officers upon Any Termination
on page 60. In the event of death before employment
termination for a participant in Part A of CIGNAs
pension plan, payments to a surviving spouse are different, and
frequently less, than the payments described under
Payments to Executive Officers Upon Any Termination.
For this reason, the estimated payments in the tables for
Messrs. Hanway and Bell have been adjusted to reflect
reduced pension payment amounts to surviving spouses and the
estimated payments in the tables for Messrs. Hanway and
Bell have been adjusted to reflect an earlier commencement date.
68
STOCK
HELD BY DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table provides information as of January 31,
2009 regarding the amount of CIGNA common stock beneficially
owned by each director, nominee and executive officer named in
the Summary Compensation Table (named executive officers) and
the amount of CIGNA common stock beneficially owned by the
directors, nominees and named executive officers as a group. In
general, beneficial ownership includes those shares
a director, nominee or executive officer has the power to vote
or transfer (even if another person is the record owner), and
stock options that are exercisable currently or that become
exercisable within 60 days.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
|
|
Name
|
|
Beneficial
Ownership(1)
|
|
|
Percent of Class
|
|
|
Directors and Nominees
|
|
|
|
|
|
|
|
|
Robert H. Campbell
|
|
|
4,261
|
|
|
|
*
|
|
H. Edward Hanway
|
|
|
3,473,317
|
|
|
|
1.3
|
%
|
Isaiah Harris, Jr.
|
|
|
|
|
|
|
*
|
|
Jane E. Henney, M.D.
|
|
|
|
|
|
|
*
|
|
Peter N. Larson
|
|
|
3,500
|
|
|
|
*
|
|
Roman Martinez, IV
|
|
|
3,000
|
|
|
|
*
|
|
John M. Partridge
|
|
|
|
|
|
|
*
|
|
James E. Rogers
|
|
|
|
|
|
|
*
|
|
Carol Cox Wait
|
|
|
|
|
|
|
*
|
|
Eric C. Wiseman
|
|
|
|
|
|
|
*
|
|
Donna F. Zarcone
|
|
|
2,000
|
|
|
|
*
|
|
William D. Zollars
|
|
|
|
|
|
|
*
|
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
Michael W. Bell
|
|
|
397,030
|
|
|
|
*
|
|
David M. Cordani
|
|
|
328,722
|
|
|
|
*
|
|
John M. Murabito
|
|
|
191,606
|
|
|
|
*
|
|
Carol Ann Petren
|
|
|
61,086
|
|
|
|
*
|
|
All Directors, Nominees and Executive Officers as a
group including those named above (19 Persons)
|
|
|
4,656,690
|
|
|
|
1.7
|
%
|
|
|
|
|
|
shares of restricted common stock
in the amount of 10,216 for Mr. Murabito; and 3,297 for
Ms. Petren;
|
|
|
|
shares acquirable within
60 days of January 31, 2009 by exercising vested stock
options in the amount of 2,419,912 for Mr. Hanway; 328,265
for Mr. Bell; 268,762 for Mr. Cordani; 93,146 for
Mr. Murabito; and 41,874 for Ms. Petren; and an
aggregate of 78,125 for other executive officers; and
|
|
|
|
holdings in CIGNA Stock Funds of
401(k) Plans in the amount of 1,580 for Mr. Hanway; 9,964
for Mr. Bell; 1,483 for Mr. Cordani; 1,865 for
Mr. Murabito; and 126 for Ms. Petren.
|
Additional
Information about Stock Held by Directors and Executive
Officers
Directors, nominees, and named executive officers as a group
beneficially own approximately 1.7% of the outstanding common
stock. These beneficial ownership percentages do not include any
common stock equivalents and are based on
271,037,887 shares of common stock outstanding on
January 31, 2009.
On January 31, 2009, the CIGNA Stock Funds of CIGNAs
two 401(k) plans for employees held a total of
9,319,790 shares, or approximately 3.44% of the outstanding
common stock on that date. A CIGNA management advisory committee
determines how the shares held in the CIGNA Stock Funds will be
voted only to the extent the plans individual participants
do not give voting instructions.
The directors and named executive officers control the voting
and investment of all shares of common stock they own
beneficially.
69
Largest
Security Holders
This table lists one shareholder that filed a Schedule 13G
indicating that it beneficially owned more than five percent of
CIGNAs common stock as of December 31, 2008. We
prepared the table using information from the Schedule 13G
filed by the beneficial owner.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
|
|
|
|
Beneficial Ownership
|
|
|
Percent of Class
|
|
Name and Address of Beneficial
Owner
|
|
as of 12/31/2008
|
|
|
as of 12/31/2008
|
|
|
Wellington Management Company, LLP
75 State Street
Boston, MA 02109
|
|
|
15,267,274
|
|
|
|
5.62
|
%
|
Wellington Management Company, LLP reported on a
Schedule 13G filed on February 17, 2009, that it held
these shares clients in its capacity as investment adviser.
These clients have the right to receive dividends and any
proceeds from the sale of these shares. Wellington Management
Company, LLP reported it does not have sole power to vote or
direct to vote any of these shares; has shared power to vote or
to direct to vote 3,698,084 of these shares; and has sole
dispositive power for 15,237,874 of these shares. Wellington
Management Company, LLP reported to the Securities Exchange
Commission that it acquired its shares in the ordinary course of
business with no intention of influencing control of CIGNA.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
CIGNAs directors and executive officers are required to
file reports of their holdings and transactions in CIGNA
securities with the Securities and Exchange Commission. Based on
our records and representations from our executive officers and
directors, the Company believes that all reports due in 2008
were filed as required, except that, due to administrative
error: (1) a Form 4 was not filed within the required
period to report the acquisition of common stock by Mses. Petren
and Rohan and Mr. Woeller on April 22, 2008, pursuant
to the CIGNA Long-Term Incentive Plan; (2) a Form 4
was not filed within the required period to report the
disposition of units of phantom stock paid in cash to
Mr. Cordani, pursuant to the CIGNA Deferred Compensation
Plan; and (3) a Form 4 was not filed within the
required period to report an award of restricted stock grants
and options to Mr. Atwell on November 3, 2008,
pursuant to the CIGNA Long-Term Incentive Plan. Late
Forms 4 were promptly filed to report these transactions
when the errors were discovered.
HOUSEHOLDING
If you and other residents at your mailing address own shares of
CIGNA stock in street name, your broker or bank
should have notified you that your household will receive only
one proxy statement and annual report for each company in which
you hold stock through that broker or bank. This practice is
known as householding. Unless you responded that you
did not want to participate in householding, you
were deemed to have consented to the process. Your broker or
bank will send one copy of our proxy statement and annual report
to your address. Each shareholder will continue to receive a
separate proxy card or voting instruction card. Householding
benefits both you and CIGNA because it reduces the volume of
duplicate information received at your household and helps CIGNA
reduce expenses and conserve natural resources.
If you would like to receive your own set of CIGNAs annual
report and proxy statement in the future, or if you share an
address with another CIGNA shareholder and together both of you
would like to receive only a single set of CIGNA annual
disclosure documents, please contact Broadridge, Householding
Department, 51 Mercedes Way, Edgewood, NY 11717 or call them at
800.542.1061. The request must be made by each person in the
household. Be sure to indicate your name, the name of your
brokerage firm or bank, and your account number. The revocation
of your consent to householding will be effective 30 days
following its receipt.
If you did not receive an individual copy of this years
proxy statement or our annual report, we will send a copy to you
if you address a written request to CIGNA Corporation,
Shareholder Services, 1601 Chestnut Street, TL18, Philadelphia,
PA
19192-1550.
70
2010
ANNUAL MEETING
The 2010 Annual Meeting will be held Wednesday, April 28,
2010, at a time and location to be announced later. The Board
may change this date in its discretion.
ABOUT
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR OUR 2010 ANNUAL
MEETING
If you intend for your proposal to be included in next
years proxy statement pursuant to the Securities and
Exchange Commission
Rule 14a-8,
you must send it to the Corporate Secretary by the close of
business on Thursday, November 19, 2009. Submitting a
shareholder proposal does not guarantee that we will include it
in our proxy statement if it does not satisfy the standards set
forth in the rules of the Securities and Exchange Commission.
If you want to present your proposal at the 2010 annual meeting,
but are not proposing it pursuant to Securities and Exchange
Commission
Rule 14a-8,
your proposal must be received by the close of business on
Thursday, January 28, 2010 and must satisfy the
requirements set forth in Article II, Section 12 of
CIGNAs By-laws. Any shareholder who wishes to introduce a
proposal should consult CIGNAs By-laws and applicable
proxy rules of the Securities and Exchange Commission.
If you would like to nominate a candidate for director at the
2010 annual meeting, you must notify the Corporate Secretary by
the close of business on Thursday, January 28, 2010. The
notice must include certain information, specified in
CIGNAs By-laws, about you and your nominee(s). Each
nominee must also provide the Corporate Secretary with written
consent to serve if elected and a written statement indicating
whether the nominee intends to tender an irrevocable resignation
effective upon failure to receive the required number of votes
for election or reelection. If you would like to make
suggestions for Board nominees to the Corporate Governance
Committee of the Board of Directors (CGC), those suggestions
should be submitted by Thursday, October 1, 2009 to ensure
consideration by the CGC for the 2010 annual meeting.
NICOLE S.
JONES, Corporate Secretary
71
Survey
Data
Head of
Human Resources and Top Administration Executive
|
|
|
|
|
|
|
Survey
|
|
Benchmarks
|
|
Participants
|
|
|
|
Hewitt TCM Financial
Services Executive Total
Compensation
|
|
Administration
|
|
The survey includes financial services companies, representing
primarily the insurance, diversified financial and banking
sectors. Life and health participants include, but are not
limited to, Aetna, AFLAC, AIG, Blue Cross & Blue
Shield of Florida, Blue Cross & Blue Shield of
Arizona, CareFirst, Coventry, Cuna Mutual, Humana, Kaiser
Permanente, MetLife, New York Life, Protective, Swiss Re,
UnitedHealth Group and Wellpoint.
|
|
|
|
|
|
|
|
|
|
Hewitt TCM Executive
Total Compensation - All
Industry
|
|
Human Resources
|
|
This survey provides total compensation data for General
Industry and Retail executives in such organizations as
AT&T, Bristol-Myers Squibb, Campbell,
Coca-Cola,
Deliotte, FedEx, General Motors, Hershey, International Paper,
JC Penney, Medco Health Solutions, Nike, Pfizer, Tenet
Healthcare, Viacom, Waste Management and Yum!Brand.
|
|
|
|
|
|
|
|
|
|
Mercer US Global Premium
Executive Renumeration
Suite - Fortune 500
Organizations
|
|
Top Human
Resources
Management
Executive
|
|
Health and medical participants include AFLAC, Aetna, Coventry
Health Care, Express Scripts, Guardian, HCA, Health Net, Humana,
Kindred Healthcare, Principal Financial, Quest Diagnostics,
Tenet Healthcare, UnitedHealth Group and Wellpoint.
|
|
|
|
|
|
|
|
|
|
Mercer US Global Premium
Executive Renumeration
Suite - Fortune 500
Organizations
|
|
Top Administrative
Executive
|
|
Participants represent Fortune 500 Corporations and those
publicly traded organizations with corporate revenues between
$10 and $20 billion. Participants include, but not limited to,
Air Products, American Airlines, Baxter, Colgate Palmolive,
Corporate Express, Gap, International Paper, Kellogg, Kimberly
Clark, Marriott, RR Donnelly, Sara Lee, Staples, Textron, Waste
Management and Whirlpool.
|
|
|
|
|
|
|
|
|
|
Towers Perrin General
Industry Executive
Database
|
|
Top Administration
Executive (Major
Functions)
Top Human
Resources Executive
|
|
Includes over 780 participants across all industries.
Participants with global corporate revenues between $10 and $20
billion include, but not limited to, Air Products, ARAMARK,
Bristol-Myers Squibb, Emerson, General Mills, International
Paper, Kellogg, Marriott, Nike, Qwest Communications,
Rohm&Haas, Schering-Plough, Starbucks, Texas Instruments,
Tyco, Union Pacific, Viacom and Xerox.
|
|
|
A-1
General
Counsel
|
|
|
|
|
|
|
Survey
|
|
Benchmarks
|
|
Participants
|
|
|
|
|
|
|
|
|
|
|
Hewitt TCM Financial
Services Executive Total
Compensation
|
|
Law
|
|
The survey includes financial services companies, representing
primarily the insurance, diversified financial and banking
sectors. Life and health participants include, but are not
limited to, Aetna, AFLAC, AIG, Blue Cross & Blue Shield of
Florida, Blue Cross & Blue Shield of Arizona, CareFirst,
Coventry, Cuna Mutual, Humana, Kaiser Permanente, MetLife, New
York Life, Protective, Swiss Re, UnitedHealth Group and
Wellpoint.
|
|
|
|
|
|
|
|
|
|
Hewitt TCM Executive
Total Compensation - All
Industry
|
|
Law
|
|
This survey provides total compensation data for General
Industry and Retail executives in such organizations as
AT&T, Bristol-Myers Squibb, Campbell, Coca-Cola, Deliotte,
FedEx, General Motors, Hershey, International Paper, JC Penney,
Medco Health Solutions, Nike, Pfizer, Tenet Healthcare, Viacom,
Waste Management and Yum!Brand.
|
|
|
|
|
|
|
|
|
|
Hildebrandt Law
Department Survey
|
|
Chief Legal Officer
|
|
This is a survey of corporate law department compensation and
includes 174 participants across industries, including health
insurance and Fortune 100 companies. Participants with
corporate revenue between $10 and $20 billion include, but
are not limited to, AstraZeneca, Air Products, BASF, Duke
Energy, Exelon, General Mills, Health Care Services, Kimberly
Clark, Sony, Time Warner and Xerox.
|
|
|
|
|
|
|
|
|
|
Loma Executive
Compensation Survey
|
|
Top Legal Executive
|
|
Participants included 105 life, health and financial services
companies. Companies with assets greater than $30 billion
include, but are not limited to, Aetna, Allstate, AIG, AXA
Equitable, Conseco, Great West Life, Guardian, Hartford, HSBC,
ING, Lincoln National, MetLife, Nationwide, New York Life,
Principal Financial, Prudential, State Farm, Sun Life, Swiss Re
and Unum.
|
|
|
|
|
|
|
|
|
|
Mercer US Global Premium
Executive Renumeration
Suite -Fortune 500
Organizations
|
|
Top Legal
Executive/General
Counsel
|
|
Health and medical participants include AFLAC, Aetna, Coventry
Health Care, Express Scripts, Guardian, HCA, Health Net, Humana,
Kindred Healthcare, Principal Financial, Quest Diagnostics,
Tenet Healthcare, UnitedHealth Group and Wellpoint.
|
|
|
|
|
|
|
|
|
|
Mercer Integrated Health
Networks Compensation -
Health Plan Executives
|
|
Top Legal Executive
|
|
Eighty two (82) health care companies participate in this survey
including, but not limited to, Aetna, Blue Shield of California,
CareFirst, Coventry, Health Net, Health Partners, Highmark,
Humana, Independence Blue Cross, Kaiser Permanente, Magellan
Health Services, Medco Health Solutions, Regence Group, Sierra,
UnitedHealth Group, ValueOption, Wellmark, and Wellpoint.
|
|
|
A-2
Driving
Directions to Annual Meeting
From the
North via 1-95 South:
|
|
|
|
|
From South 1-95 follow signs to I-676. Take 676 to the Broad
Street exit, which will put you on 15th Street. Turn left
onto Race Street, then right onto Broad. The Academy is one
block down on the right.
|
From the
South via 1-95 North and I-76 (Schuylkill Expressway):
|
|
|
|
|
From I-95 North follow signs to I-76 West (Schuylkill
Expressway). Follow 76 West, and exit at I-676/Central
Philadelphia. Take 676 to the Broad Street exit, which will put
you on 15th Street. Turn left onto Race Street, then turn
right onto Broad. The Academy is one block down on the right.
|
From New
Jersey via the Ben Franklin and Vine Street:
|
|
|
|
|
After crossing the bridge, you will be on Vine Street. Continue
on Vine until it intersects with Broad Street. Turn left onto
Broad and the Academy is one block down on the right.
|
From New
Jersey via the Walt Whitman Bridge:
|
|
|
|
|
From the bridge follow I-76 West (Schuylkill Expressway).
Follow signs for Central Philadelphia and I-676. Take the exit
for I-676 and follow it until the Broad Street exit, which will
put you on 15th Street. Turn left onto Race Street, then
turn right onto Broad Street. The Academy is one block down on
the right.
|
From the
Pennsylvania Turnpike:
|
|
|
|
|
Take exit 362 (Valley Forge) from the turnpike. Follow the signs
to Philadelphia and Route I-76 East. Continue on I-76
(Schuylkill Expressway) following signs for I-676/Central Phila.
(It will be the left-hand fork). Continue on 676 until the Broad
Street Exit, which will put you on 15th Street. Turn left
onto Race Street, then turn right onto Broad Street. The Academy
is one block down on the right.
|
From the
New Jersey Turnpike: