(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

2006 Aetna Inc.

Notice of Annual Meeting and

Proxy Statement

To Our Shareholders:

Aetna Inc.’s 2006 Annual Meeting of Shareholders will be held on Friday, April 28, 2006, at 9:30 a.m. at The Conference Center located at Disney’s BoardWalk Inn Resort, 2101 North Epcot Resorts Boulevard, Lake Buena Vista, Florida, and we hope you will attend.

This booklet includes the Notice of the Annual Meeting and Aetna’s 2006 Proxy Statement. The Proxy Statement provides information about Aetna in addition to describing the business we will conduct at the meeting.

At the meeting, in addition to specific agenda items, we will discuss generally the operations of Aetna. We welcome any questions you have concerning Aetna and will provide time during the meeting for questions from shareholders.

If you are unable to attend the Annual Meeting, it is still important that your shares be represented. Please vote your shares promptly.

Notice of Annual Meeting of Shareholders of Aetna Inc.

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of Aetna Inc. will be held at The Conference Center located at Disney’s BoardWalk Inn Resort, 2101 North Epcot Resorts Boulevard, Lake Buena Vista, Florida, on Friday, April 28, 2006, at 9:30 a.m. for the following purposes:

The Board of Directors has fixed the close of business on February 24, 2006 as the record date for determination of the shareholders entitled to vote at the Annual Meeting or any adjournment thereof.

The Annual Meeting is open to all shareholders as of the close of business on the February 24, 2006 record date or their authorized representatives. Complimentary parking at The Conference Center located at Disney’s BoardWalk Inn Resort will be available for all persons to whom the Annual Meeting is open. See the reverse side of this page for directions to The Conference Center.

We ask that you signify your intention to attend the Annual Meeting by checking the appropriate box on your proxy card. In lieu of issuing an admission ticket, your name will be placed on a shareholder attendee list, and you will be asked to register and present government issued photo identification (e.g., a driver’s license or passport) before being admitted to the Annual Meeting. If you hold your shares through a broker, bank or other holder of record and plan to attend, you must send a written request to attend along with proof that you own the shares (such as a copy of your brokerage or bank account statement for the period including February 24, 2006) to Aetna’s Corporate Secretary at 151 Farmington Avenue, RE4K, Hartford, CT 06156. The Annual Meeting will be audiocast live on the Internet at www.aetna.com/investor.

It is important that your shares be represented and voted at the Annual Meeting. You can vote your shares by one of the following methods: vote over the Internet or by telephone using the instructions on the enclosed proxy card (if these options are available to you), or mark, sign, date and promptly return the enclosed proxy card in the postage-paid envelope furnished for that purpose. If you attend the Annual Meeting, you may vote in person if you wish, even if you have previously voted.

This Proxy Statement and the Company’s 2005 Annual Report, Financial Report to Shareholders and 2005 Annual Report are available on Aetna’s Internet site at www.aetna.com/investor/proxy.htm and www.aetna.com/investor/annualrept.htm, respectively.

By order of the Board of Directors,

Christopher M. Todoroff

Vice President and Corporate Secretary

March 21, 2006

From the Orlando International Airport Take 417 South (toll road — expect to pay about $3.00 in tolls) to Exit #3, Osceola Parkway. Turn right on Osceola Parkway, heading West. Pass under “Walt Disney World” sign, turn right at 1st light (Victory Way), left at second light (Buena Vista Drive), right at first light (Epcot Resorts Blvd), and then turn left into Disney’s BoardWalk. Present an ID to the security guard, and then proceed straight and take the second right. Disney’s BoardWalk Convention Center, the location for the Annual Meeting, will be on your left. Take the first right into the parking lot for the Convention Center.

From the South (Tampa) Take I-4 East, to Osceola Parkway exit. Take Osceola Parkway West. Pass under “Walt Disney World” sign, turn right at 1st light (Victory Way), left at second light (Buena Vista Drive), right at first light (Epcot Resorts Blvd), and then turn left into Disney’s BoardWalk. Present an ID to the security guard, and then proceed straight and take the second right. Disney’s BoardWalk Convention Center, the location for the Annual Meeting, will be on your left. Take the first right into the parking lot for the Convention Center.

From the South (Miami) Take I-95 North to Florida’s Turnpike North, to Exit #249, Osceola Parkway. Turn left on Osceola Parkway, heading West. Pass under “Walt Disney World” sign, turn right at 1st light (Victory Way), left at second light (Buena Vista Drive), right at first light (Epcot Resorts Blvd), and then turn left into Disney’s BoardWalk. Present an ID to the security guard, and then proceed straight and take the second right. Disney’s BoardWalk Convention Center, the location for the Annual Meeting, will be on your left. Take the first right into the parking lot for the Convention Center.

From the North (Jacksonville) Take I-95 South to I-4 West, to Osceola Parkway exit. Take Osceola Parkway West. Pass under “Walt Disney World” sign, turn right at 1st light (Victory Way), left at second light (Buena Vista Drive), right at first light (Epcot Resorts Blvd), and then turn left into Disney’s BoardWalk. Present an ID to the security guard, and then proceed straight and take the second right. Disney’s BoardWalk Convention Center, the location for the Annual Meeting, will be on your left. Take the first right into the parking lot for the Convention Center.

From the North (Gainesville) Take I-75 South to Florida’s Turnpike South to I-4 West, to Osceola Parkway exit. Take Osceola Parkway West. Pass under “Walt Disney World” sign, turn right at 1st light (Victory Way), left at second light (Buena Vista Drive), right at first light (Epcot Resorts Blvd), and then turn left into Disney’s BoardWalk. Present an ID to the security guard, and then proceed straight and take the second right. Disney’s BoardWalk Convention Center, the location for the Annual Meeting, will be on your left. Take the first right into the parking lot for the Convention Center.

From the East (Cocoa Beach) Take Highway 528 West to I-4 West, to Osceola Parkway exit. Take Osceola Parkway West. Pass under “Walt Disney World” sign, turn right at 1st light (Victory Way), left at second light (Buena Vista Drive), right at first light (Epcot Resorts Blvd), and then turn left into Disney’s BoardWalk. Present an ID to the security guard, and then proceed straight and take the second right. Disney’s BoardWalk Convention Center, the location for the Annual Meeting, will be on your left. Take the first right into the parking lot for the Convention Center.

Table of Contents

AETNA INC.

151 FARMINGTON AVENUE, HARTFORD, CONNECTICUT 06156

MARCH 21, 2006

PROXY STATEMENT

FOR THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON FRIDAY, APRIL 28, 2006

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND

THE ANNUAL MEETING

A: The Board of Directors (the “Board”) of Aetna Inc. (“Aetna”) is providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at Aetna’s Annual Meeting of Shareholders that will take place on April 28, 2006, and any adjournments or postponements of the Annual Meeting. You are invited to attend the Annual Meeting and are requested to vote on the proposals described in this Proxy Statement. These proxy materials and the enclosed proxy card are being mailed to shareholders on or about March 21, 2006.

A: This Proxy Statement provides you with information about Aetna’s governance structure, the nominating process, the proposals to be voted on at the Annual Meeting, the voting process, the compensation of Directors and our most highly paid executive officers, and certain other required information.

A: There are four proposals scheduled to be voted on at the Annual Meeting:

A: The Board recommends that you vote your shares FOR each of Aetna’s nominees to the Board, FOR the approval of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2006, FOR the approval of the Aetna Inc. 2006 Employee Stock Purchase Plan, and AGAINST the shareholder proposal.

A: You may vote all Aetna Inc. Common Shares, par value $.01 per share (“Common Stock”), you owned as of the close of business on February 24, 2006, the RECORD DATE. These shares include those (1) held directly in your name as the SHAREHOLDER OF RECORD, including shares purchased through Aetna’s DirectSERVICE Investment Program, and (2) held for you as the BENEFICIAL OWNER through a stockbroker, bank or other nominee.

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A: You will be entitled to vote the number of shares you held on the RECORD DATE, which will reflect the additional shares paid to you on February 17, 2006. All of the share-related information in this Proxy Statement is presented on a post-stock split basis because the payment date for the stock dividend that accomplished the stock split (February 17, 2006) occurred before the RECORD DATE for the Annual Meeting (February 24, 2006). For example, the Beneficial Ownership Table on page 27, the Summary Compensation Table on page 29 and the Stock Option Grants Table on page 31 were prepared on a post-stock split basis.

A: Many Aetna shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those owned beneficially:

Q: HOW CAN I VOTE MY SHARES BEFORE THE ANNUAL MEETING?

A: Whether you hold shares directly as the shareholder of record or beneficially in street name, you may vote before the Annual Meeting by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker or other nominee. Most shareholders have a choice of voting by using the Internet, by calling a toll-free telephone number or by completing a proxy or voting instruction card and mailing it in the postage-paid envelope provided. Please refer to the summary instructions below, and please follow carefully the instructions included on your proxy card or, for shares held in street name, the voting instruction card provided by your broker or other nominee.

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The Internet and telephone voting procedures are designed to authenticate shareholders and to allow shareholders to confirm that their instructions have been properly recorded. In order to provide shareholders of record with additional time to vote their shares while still permitting an orderly tabulation of votes, Internet and telephone voting for these shareholders will be available until 11:59 p.m. Eastern time on April 27, 2006.

A: Participants in the Aetna 401(k) Plan (the “401(k) Plan”) who receive this Proxy Statement in their capacity as participants in the 401(k) Plan will receive voting instruction cards in lieu of proxy cards. The voting instruction card directs the trustee of the 401(k) Plan how to vote the shares. Shares held in the 401(k) Plan may be voted by using the Internet, by calling a toll-free telephone number or by marking, signing and dating the voting instruction card and mailing it in the postage-paid envelope provided. Shares held in the 401(k) Plan for which no directions are received are voted by the trustee of the 401(k) Plan in the same percentage as the shares held in the 401(k) Plan for which directions are received.

A: You hold the Aetna Common Stock you acquired through Aetna’s Employee Stock Purchase Plan (the “ESPP”) as the beneficial owner of shares held in street name. You can vote these shares as described above under “HOW CAN I VOTE MY SHARES BEFORE THE ANNUAL MEETING?”

A: Yes. For shares you hold directly in your name, you may change your vote by (1) signing another proxy card with a later date and delivering it to us before the date of the Annual Meeting (or submitting revised votes over the Internet or by telephone before 11:59 p.m. Eastern time on April 27, 2006), or (2) attending the Annual Meeting in person and voting your shares at the Annual Meeting. The last-dated proxy card will be the only one that counts. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially, you may change your vote by submitting new voting instructions to your broker or other nominee in a manner that allows your broker or other nominee sufficient time to vote your shares.

A: Yes. You may vote your shares at the Annual Meeting if you attend in person. You may vote shares you hold directly in your name by completing a ballot at the Annual Meeting. You may only vote the shares you hold in street name at the Annual Meeting if you bring to the Annual Meeting a proxy, executed in your favor, from the shareholder of record. You may not vote shares you hold through the 401(k) Plan at the Annual Meeting.

A: In the election of Directors, you may vote FOR all of the nominees or you may WITHHOLD your vote with respect to one or more of the nominees. For all other proposals, you may vote FOR, AGAINST or

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ABSTAIN. A WITHHOLD vote on the election of Directors will have no effect on the outcome of the election, but if more WITHHOLD than FOR votes are cast for a Director nominee, he or she will be required to submit his or her resignation. Please see “Director Elections — Majority Voting Standard” on page 9. A vote to ABSTAIN on the other proposals will not have the effect of a vote AGAINST. If you vote to ABSTAIN, your shares will be counted as present for purposes of determining whether a majority of outstanding shares are present to hold the Annual Meeting.

A: All shares entitled to vote and represented by properly completed proxy cards received prior to the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with your instructions.

If you sign and date your proxy card with no further instructions, your shares will be voted (1) FOR the election of each of Aetna’s nominee Directors named on pages 16 through 22 of this Proxy Statement, (2) FOR the approval of KPMG LLP as the Company’s independent registered public accounting firm for 2006, (3) FOR the approval of the Aetna Inc. 2006 Employee Stock Purchase Plan, and (4) AGAINST the shareholder proposal.

If you sign and date your broker voting instruction card with no further instructions, your shares will be voted as described on your broker voting instruction card.

If you sign and date your 401(k) Plan voting instruction card with no further instructions, all shares you hold in the 401(k) Plan will be voted by the trustee of the 401(k) Plan in the same percentage as the shares held in the 401(k) Plan for which directions are received.

A: Shares that you hold directly in your name will not be voted at the Annual Meeting. Shares that you beneficially own that are held in the name of a brokerage firm or other nominee may be voted in certain circumstances even if you do not provide the brokerage firm with voting instructions. Under New York Stock Exchange (“NYSE”) rules, brokerage firms have the authority to vote shares for which their customers do not provide voting instructions on certain routine matters. The election of Directors and the approval of KPMG LLP as the Company’s independent registered public accounting firm for 2006 are considered routine matters for which brokerage firms may vote uninstructed shares. The approval of the Aetna Inc. 2006 Employee Stock Purchase Plan and the shareholder proposal to be voted on at the Annual Meeting are not considered routine under the applicable rules, and therefore brokerage firms may not vote unvoted shares on those proposals. Any unvoted shares you hold through Aetna’s 401(k) Plan will be voted by the trustee of the 401(k) Plan in the same percentage as the shares held in the 401(k) Plan for which directions are received.

A: It means your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.

A: The Annual Meeting is open to all shareholders as of the close of business on the February 24, 2006 RECORD DATE or their authorized representatives. We ask that you signify your intention to attend by checking the appropriate box on your proxy card. In lieu of issuing an admission ticket, your name will be placed on a shareholder attendee list, and you will be asked to register and present government issued photo identification (for example, a driver’s license or passport) before being admitted to the Annual

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Meeting. If your shares are held in street name and you plan to attend, you must send a written request to attend along with proof that you own the shares (such as a copy of your brokerage or bank account statement for the period including February 24, 2006) to Aetna’s Corporate Secretary at 151 Farmington Avenue, RE4K, Hartford, CT 06156.

A: Yes. You can listen to the live audio webcast of the Annual Meeting by logging on to Aetna’s Internet Web site at www.aetna.com/investor and then clicking on the link to the webcast.

A: We will publish the voting results of the Annual Meeting in a press release promptly after the votes are finalized and in our Quarterly Report on Form 10-Q for the period ended June 30, 2006.

A: Each share of Aetna’s Common Stock outstanding as of the close of business on February 24, 2006, the RECORD DATE, is entitled to one vote at the Annual Meeting. Shares of Common Stock distributed on February 17, 2006 as a result of the stock split are entitled to vote at the Annual Meeting. At the close of business on February 24, 2006, we had 567,539,739 shares of Common Stock outstanding.

A: A majority of the shares of Common Stock outstanding as of the close of business on February 24, 2006 must be present in person or by proxy for us to hold the Annual Meeting and transact business. This is referred to as a quorum. Both abstentions and broker nonvotes are counted as present for the purpose of determining the presence of a quorum. Generally, broker nonvotes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because the proposal is not a routine matter, and the broker has not received voting instructions from the beneficial owner of the shares.

A: Under Pennsylvania corporation law and Aetna’s Articles of Incorporation and By-Laws, the approval of any corporate action taken at a shareholder meeting is based on votes cast. “Votes cast” means votes actually cast “for” or “against” a particular proposal, whether by proxy or in person. Abstentions and broker nonvotes are not considered “votes cast.” Directors are elected by a plurality of votes cast. However, as described in more detail on page 9 under “Director Elections — Majority Voting Standard,” Aetna’s Corporate Governance Guidelines require any Director nominee who receives more “withhold” than “for” votes to submit his or her resignation for consideration by the Nominating and Corporate Governance Committee and the Board. Shareholder approval of each of the other three proposals to be considered at the Annual Meeting occurs if the votes cast in favor of the proposal exceed the votes cast against the proposal. If you are a beneficial owner and do not provide the shareholder of record with voting instructions, your shares may constitute broker nonvotes, as described above in “HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?”

A: Aetna will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials, except that you will pay certain expenses for Internet access if you choose to access these proxy materials over the Internet. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone, or by electronic communication by our Directors, officers and employees, none of whom will receive any additional compensation for such solicitation activities. We also

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have hired Georgeson Shareholder Communications Inc. to assist us in the distribution of proxy materials and the solicitation of votes for a fee of $17,500 plus reasonable out-of-pocket expenses for these services. We also will reimburse brokerage houses and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to beneficial owners of Aetna Common Stock and obtaining their voting instructions.

A: Yes. Aetna offers shareholders of record the option to view future annual reports to shareholders and proxy statements via the Internet instead of receiving paper copies of these documents in the mail. The 2006 Aetna Inc. Notice of Annual Meeting and Proxy Statement and 2005 Aetna Annual Report, Financial Report to Shareholders and 2005 Aetna Annual Report are available on Aetna’s Internet Web site at www.aetna.com/investor/proxy.htm and www.aetna.com/investor/annualrept.htm, respectively. Under Pennsylvania law, Aetna may provide shareholders who give the Company their e-mail addresses with electronic notice of its shareholder meetings as described below.

If you are a shareholder of record, you can choose to receive annual reports to shareholders and proxy statements via the Internet and save Aetna the cost of producing and mailing these documents in the future by following the instructions under “HOW DO I ELECT THIS OPTION?” below. If you hold your shares through a broker, bank or other holder of record, check the information provided by that entity for instructions on how to elect to view future notices of shareholder meetings, proxy statements and annual reports over the Internet.

If you are a shareholder of record and choose to receive future notices of shareholder meetings by e-mail and view future proxy statements and annual reports over the Internet, you must supply an e-mail address, and you will receive your notice of the meeting by e-mail when those materials are posted. That notice will include instructions and contain the Internet address of those materials.

Many shareholders who hold their shares through a broker, bank or other holder of record and who elect electronic access will receive an e-mail containing the Internet address to access Aetna’s notices of shareholder meetings, proxy statements and annual reports when those materials are posted.

A: If you are a shareholder of record and are interested in receiving future notices of shareholder meetings by e-mail and viewing future annual reports and proxy statements on the Internet, instead of receiving paper copies of these documents, please do the following:

A: The 2005 Aetna Annual Report, Financial Report to Shareholders is being mailed to shareholders in advance of or together with this Proxy Statement. If you hold Aetna shares in your own name and you received more than one copy of the 2005 Aetna Annual Report, Financial Report to Shareholders at your address and you wish to reduce the number of reports you receive and save Aetna the cost of producing and mailing these reports, you should contact Aetna’s Transfer Agent at 1-800-446-2617 to discontinue the mailing of reports on the accounts you select. At least one account at your address must continue to receive

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an annual report, unless you elect to review future annual reports over the Internet. Mailing of dividend, checks, dividend reinvestment statements, proxy materials and special notices will not be affected by your election to discontinue duplicate mailings of annual reports. Registered shareholders may resume the mailing of an annual report to an account by calling Aetna’s Transfer Agent at 1-800-446-2617. If you own shares through a broker, bank or other holder of record and received more than one 2005 Aetna Annual Report, Financial Report to Shareholders, please contact the holder of record to eliminate duplicate mailings.

“Householding” occurs when a single copy of our Annual Report and Proxy Statement is sent to any household at which two or more stockholders reside if they appear to be members of the same family. Although we do not “household” for registered shareholders, a number of brokerage firms have instituted householding for shares held in street name. This procedure reduces our printing and mailing costs and fees. Stockholders who participate in householding will continue to receive separate proxy cards, and householding will not affect the mailing of account statements or special notices in any way.

A: If for any unforeseen reason any of Aetna’s nominees is not available as a candidate for Director, the persons named as proxy holders on your proxy card may vote your shares for such other candidate or candidates as may be nominated by the Board, or the Board may reduce the number of Directors to be elected.

A: Other than the election of Directors and the three other proposals described in this Proxy Statement, Aetna has not received proper notice of, and is not aware of, any matters to be presented for a vote at the Annual Meeting. If you grant a proxy using the enclosed proxy card, the persons named as proxies on the enclosed proxy card, or any of them, will have discretion to, and intend to, vote your shares according to their best judgment on any additional proposals or other matters properly presented for a vote at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place.

A: Yes. You may submit proposals for consideration at future annual meetings, including Director nominations.

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A: Yes. You may ask questions regarding each of the items to be voted on when those items are discussed at the Annual Meeting. Also, shareholders will have an opportunity to ask questions of general interest at the end of the Annual Meeting.

A: Votes are counted by employees of Aetna’s Transfer Agent and certified by the judge of election for the Annual Meeting who is an employee of the Transfer Agent. The judge will determine the number of shares outstanding and the voting power of each share, determine the shares represented at the Annual Meeting, determine the existence of a quorum, determine the validity of proxies and ballots, count all votes and determine the results of the actions taken at the Annual Meeting.

A: Yes. The vote of each shareholder is held in confidence from Aetna’s Directors, officers and employees except (a) as necessary to meet applicable legal requirements (including stock exchange listing requirements) and to assert or defend claims for or against Aetna and/or one or more of its consolidated subsidiaries, (b) as necessary to assist in resolving any dispute about the authenticity or accuracy of a proxy card, consent, ballot, authorization or vote, (c) if there is a contested proxy solicitation, (d) if a shareholder makes a written comment on a proxy card or other means of voting or otherwise communicates the shareholder’s vote to management or (e) as necessary to obtain a quorum.

GOVERNANCE OF THE COMPANY

At Aetna, we believe sound corporate governance principles are good for our business, the industry, the competitive marketplace and for all of those who place their trust in us. We have embraced the principles behind the Sarbanes-Oxley Act of 2002, as well as the governance rules for companies listed on the NYSE. These principles are reflected in the structure and composition of our Board of Directors and in the charters of our Board Committees, and are reinforced through Aetna’s Code of Conduct, which applies to every employee and to our Directors.

Aetna’s Corporate Governance Guidelines

Aetna’s Corporate Governance Guidelines (the “Guidelines”) provide the framework for the governance of Aetna. The governance rules for companies listed on the NYSE and those contained in the Sarbanes-Oxley Act of 2002 are reflected in the Guidelines. The Guidelines address the role of the Board of Directors

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(including advising on key strategic, financial and business objectives); the composition and selection of Directors; the functioning of the Board (including its annual self-evaluation); the Committees of the Board; the compensation of Directors; and the conduct and ethics standards for Directors, including a prohibition against any nonmanagement Director having a direct economic relationship with the Company except as authorized by the Board, and a prohibition against Company loans to, or guarantees of obligations of, Directors and their family members. The Guidelines are attached to this Proxy Statement as Annex A and also are available at www.aetna.com/governance and in print to shareholders free of charge by calling 1-800-237-4273.

The Board reviews the Company’s corporate governance practices annually. In 2005, this review included a comparison of our current practices to those suggested by various groups or authorities active in corporate governance and to those of other public companies. Based on this review, the Board adopted changes it believes are best practices for Aetna, including implementing a majority voting standard in the election of Directors, which is described below under “Director Elections — Majority Voting Standard,” and confidential voting.

Director Elections — Majority Voting Standard

During 2005, the Board studied various alternatives to enhance shareholders’ direct participation in the election of Directors. The Nominating Committee, which consists entirely of independent Directors, considered these matters at two separate meetings in 2005, and the full Board considered them at three separate meetings in 2005. As a result of this review, the Board implemented governance enhancements that included a majority voting standard for Director elections.

The Guidelines now require any nominee for Director in an uncontested election who receives more “withhold” votes than “for” votes to promptly submit his or her resignation for consideration by the Nominating Committee. The Nominating Committee is then required to recommend to the Board the action to be taken with respect to the resignation, and the Board is required to act on the resignation, in each case within a reasonable period of time. Aetna will disclose promptly to the public each such resignation and decision by the Board.

Executive Sessions

Aetna’s nonmanagement Directors meet at regularly scheduled executive sessions, without management present. During 2005, the nonmanagement Directors met six times and the independent Directors met four times to discuss certain Board policies, processes and practices, the performance and proposed performance-based compensation of the Chief Executive Officer, management succession and other matters relating to the Company and the functioning of the Board.

Presiding Director

Michael H. Jordan, an independent Director, has been the Presiding Director since February of 2004. Generally, the Presiding Director is responsible for coordinating the activities of the independent Directors. Among other things, the Presiding Director sets the agenda for and leads the nonmanagement and independent Director sessions held by the Board regularly, and briefs the Chairman and the Chief Executive Officer on any issues arising from those sessions. The Presiding Director also acts as the principal liaison to the Chairman and the Chief Executive Officer for the views, and any concerns and issues, of the independent Directors, though all Directors continue to interact one-on-one with the Chairman and the Chief Executive Officer, as needed and as appropriate. The Chairman and the Chief Executive Officer consult with the Presiding Director for input in setting the agenda for Board meetings and the Board meeting schedule. The Presiding Director also consults with the other Directors and advises the Chairman and the Chief Executive Officer about the quality, quantity and timeliness of information provided to the Board and the Board’s decision-making processes.

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Communications with the Board

Anyone wishing to make their concerns known to Aetna’s nonmanagement Directors or to send a communication to the entire Board may contact Michael H. Jordan, the Presiding Director, by writing to Mr. Jordan at P.O. Box 370205, West Hartford, CT 06137-0205. All such communications will be kept confidential and forwarded directly to Mr. Jordan or the Board, as applicable. To contact Aetna’s management Directors, you may write to Dr. Rowe and Mr. Williams at Aetna Inc., 151 Farmington Avenue, Hartford, CT 06156. Communications sent to Aetna’s management Directors will be delivered directly to them.

Director Independence

The Board has established guidelines (“Director Independence Standards” or “Standards”) to assist it in determining Director independence. In accordance with the Standards, the Board must determine that each independent Director has no material relationship with the Company other than as a Director and/or a shareholder of the Company. Consistent with the NYSE listing standards, the Standards specify the criteria by which the independence of our Directors will be determined, including guidelines for Directors and their immediate family members with respect to past employment or affiliation with the Company or its external auditor. A copy of the Standards is attached to this Proxy Statement as Annex B and also is available at www.aetna.com/governance and in print to shareholders free of charge by calling 1-800-237-4273.

Pursuant to the Standards, the Board undertook its annual review of Director independence in February of 2006. During this review, the Board considered transactions and relationships between each Director and any member of his or her immediate family and the Company and its affiliates. The Board also considered whether there were any transactions or relationships between Directors or any member of their immediate family (or any entity of which a Director or an immediate family member is an executive officer, general partner or significant equity holder) and members of the Company’s senior management or their affiliates. As provided in the Standards, the purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that a Director is independent.

As a result of this review, the Board affirmatively determined in its business judgment that Betsy Z. Cohen, Molly J. Coye, M.D., Barbara Hackman Franklin, Jeffrey E. Garten, Earl G. Graves, Gerald Greenwald, Ellen M. Hancock, Michael H. Jordan, Edward J. Ludwig and Joseph P. Newhouse, each of whom is standing for election at the Annual Meeting, is independent as defined in the NYSE listing standards and under Aetna’s Director Independence Standards and that any relationship with the Company (either directly or as a partner, shareholder or officer of any organization that has a relationship with the Company) has been deemed to be categorically immaterial under the independence test thresholds contained in the NYSE listing standards and under Aetna’s Director Independence Standards.

In determining that each of the nonmanagement Directors is independent, the Board considered that the Company in the ordinary course of business sells products and services to, and/or purchases products and services from, companies at which some of our Directors or their immediate family members are or have been officers and/or significant equity holders. In each case, the amount paid to or received from these companies in each of the last three years did not approach the 2% of total revenue threshold in the Standards and/or was below $1 million. Finally, the Board considered charitable contributions to organizations with which Directors had relationships that are not covered by the Standards. The Board determined that none of these relationships impaired the independence of any Director.

All members of the Audit Committee, the Committee on Compensation and Organization (the “Compensation Committee”) and the Nominating Committee are, in the business judgment of the Board, independent Directors as defined in the NYSE listing standards and in Aetna’s Director Independence Standards.

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Meeting Attendance

The Board and its Committees meet throughout the year on a set schedule, and also hold special meetings from time to time, as appropriate. During 2005, the Board met nine times. The average attendance of Directors at all meetings during the year was 94%, and no Director attended less than 75% of the aggregate number of Board and Committee meetings that he or she was eligible to attend. It is the policy of the Board that all Directors should be present at Aetna’s Annual Meeting of Shareholders. Ten of the eleven Directors then in office and standing for election attended Aetna’s 2005 Annual Meeting of Shareholders.

Aetna’s Code of Conduct

Aetna’s Code of Conduct applies to every employee and to our Directors, and is available at www.aetna.com/governance and as an exhibit to Aetna’s 2002 Annual Report on Form 10-K. The Code of Conduct is designed with the goal of ensuring that Aetna’s business is conducted in a consistently legal and ethical manner. The Code of Conduct includes policies on employee conduct, conflicts of interest and the protection of confidential information and requires strict adherence to all laws and regulations applicable to the conduct of our business. Aetna will disclose any amendments to the Code of Conduct, or waivers of the Code of Conduct relating to Aetna’s Directors, executive officers and principal financial and accounting officers or persons performing similar functions, on its Web site at www.aetna.com/governance within four business days following the date of any such amendment or waiver. To date, no waivers have been requested or granted. The Code of Conduct also is available in print to shareholders free of charge by calling 1-800-237-4273.

Board and Committee Membership; Committee Descriptions

Aetna’s Board oversees and guides the Company’s management and its business. Committees support the role of the Board on issues that are better addressed by a smaller, more focused subset of Directors.

The following table presents, as of March 1, 2006, the key standing Committees of the Board, the membership of such Committees and the number of times each such Committee met in 2005. Board Committee Charters adopted by the Board for each of the six Committees listed below are available at www.aetna.com/governance and in print to shareholders free of charge by calling 1-800-237-4273.

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The functions and responsibilities of the key standing Committees of Aetna’s Board are described below.

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Consideration of Director Nominees

 Corporate Secretary

 Aetna Inc.

 151 Farmington Avenue, RE4K

 Hartford, CT 06156

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Stock Ownership Guidelines for Directors

Under the Board’s Director Stock Ownership Guidelines, each nonmanagement Director is required to own, within five years of joining the Board, shares of Aetna Common Stock or stock units having a dollar value equal to $400,000. As of February 24, 2006, all of Aetna’s nonmanagement Directors held Common Stock and stock units in excess of these guidelines, except Dr. Coye, who joined the Board on October 1, 2005. The Code of Conduct prohibits Directors from engaging in hedging strategies using puts, calls or other types of derivative securities based upon the value of Aetna stock.

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Stock Ownership Guidelines for Executive Officers

In furtherance of the Compensation Committee’s philosophy of the importance of using stock-based compensation to align the interests of executives with the interests of shareholders, the Chief Executive Officer and other senior executives are subject to minimum stock ownership requirements. The ownership requirements are based on the executive’s pay opportunities and position within the Company and must be met on the later of June 30, 2007 or the third anniversary of the executive’s first grant of a long-term compensation award. Those ownership levels (which include shares owned and vested stock units but not vested stock options or stock appreciation rights) are as follows: Chief Executive Officer — 5 times base salary; other members of senior management — 3 times base salary; and other executives — 1/2 to 2 times base salary. As of February 24, 2006, Messrs. Williams, Bennett and Holt each held Common Stock and vested stock units in excess of these requirements. Dr. Rowe, when Chief Executive Officer, held Common Stock in excess of 5 times his base salary and continues to do so as Chairman of the Company. Mr. Callen, who joined the Company in 2004, does not currently meet these requirements and has until June 30, 2007 to do so. The Code of Conduct prohibits executive officers and other senior management employees from engaging in hedging strategies using puts, calls or other types of derivative securities based upon the value of Aetna stock.

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I.       Election of Directors

Aetna will nominate 12 individuals for election as Directors at the Annual Meeting (the “Nominees”). The terms of office for the Directors elected at this meeting will run until the next Annual Meeting and until their successors are duly elected and qualified. The Nominating Committee recommended the 12 Nominees for nomination by the full Board. Based on that recommendation, the Board nominated each of the Nominees for election at the Annual Meeting. As previously disclosed, however, Dr. Rowe has announced that he will retire from Aetna and the Board by the end of 2006.

All Nominees are currently Directors of Aetna. The following pages list the names and ages of the Nominees as of the date of the Annual Meeting, the year each first became a Director of Aetna or one of its predecessors, the principal occupation, publicly traded company directorships and certain other directorships of each as of March 1, 2006, and a brief description of the business experience of each for at least the last five years.

The 12 individuals (or such lesser number if the Board has reduced the number of Directors to be elected at the Annual Meeting as described on page 7 under “WHAT IF A DIRECTOR NOMINEE IS UNWILLING OR UNABLE TO SERVE?”) receiving the greatest number of votes cast at the Annual Meeting will be elected Directors. However, as described in more detail on page 9 under “Director Elections — Majority Voting Standard,” Aetna’s Corporate Governance Guidelines require any nominee for Director in an uncontested election who receives more “withhold” votes than “for” votes to promptly submit his or her resignation for consideration by the Nominating Committee. The Nominating Committee and the Board are then required to act on the resignation, in each case within a reasonable period of time.

The Board recommends a vote FOR each of the 12 Nominees. If you complete the enclosed proxy card, unless you direct to the contrary on that card, the shares represented by that proxy card will be voted FOR the election of all 12 Nominees.

Nominees for Directorships

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Nonmanagement Director Compensation in 2005

The Nominating Committee reviews compensation for nonmanagement Directors annually. The Nominating Committee’s goal of attracting and retaining qualified Directors is supported through a competitive compensation program that provides remuneration for Directors’ contributions, while offering stock-based compensation alternatives that strengthen the Directors’ mutuality of interests with other shareholders. Directors who are officers of Aetna receive no additional compensation for membership on the Board or any of its Committees. The following table sets forth the cash and stock-based compensation Aetna paid to each Director who was a nonmanagement Director of Aetna in 2005.

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Nonmanagement Director Compensation in 2006

On December 2, 2005 the Board voted to approve the Director compensation package that will apply for nonmanagement Directors for 2006. The Board set the total value of target compensation at approximately $220,000, which is approximately equal to the average compensation for Aetna’s nonmanagement Directors for 2005, consisting of stock-based compensation, cash and benefits. Cash retainer and per meeting fees for Board and Committee service will remain at 2005 levels, although the retainer for service as Chair of both the Compensation Committee and the Nominating Committee was raised to $10,000. Total compensation for a nonmanagement Director may be higher or lower than the target level depending on the number of meetings held, the Committees on which the Director serves, the Director’s service as a Committee Chairman and the performance of Aetna’s stock.

Of total target compensation for 2006, approximately 59% will consist of stock-based compensation (restricted and deferred stock units), approximately 28% will consist of Board and Committee cash retainers

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and per meeting fees, approximately 11% will consist of benefits, primarily the estimated theoretical value of the Director Charitable Award Program described below under “Other Information Regarding Directors,” and approximately 2% will consist of deferred compensation.

The increase in Committee Chair retainer fees is designed to help Aetna continue to attract and retain highly qualified individuals to serve on the Board and to compensate them for the time commitments associated with their Board service. The level of target nonmanagement Director compensation for 2006 is approximately equal to the median nonmanagement Director compensation at a relevant comparative group of public companies based on benchmarking studies prepared for the Nominating Committee. Aetna’s annual cash retainer for Board service has been largely unchanged since 1990.

Additionally, the Board decided to set the size of the 2006 annual equity grants (both restricted and deferred stock units) to Directors using dollar-based values, totaling approximately $50,000 for each type of unit. Previously, deferred stock unit grants were set based on a fixed number of units. This change in stock unit grant calculation was made to better align the stock-based portion of nonmanagement Director compensation with the approach employed for management and to ensure greater predictability in determining the overall value of the nonmanagement Directors’ stock-based compensation.

On February 10, 2006, Aetna granted each nonmanagement Director then in office 1,004 restricted stock units. The restricted stock units will vest in three equal annual installments beginning February 10, 2007, and will be payable at vesting in shares of Common Stock. The restricted stock units granted to a nonmanagement Director will vest immediately if the Director ceases to be a Director because of death, disability, retirement or his or her acceptance of a position in government service. All restricted stock units granted to nonmanagement Directors also will vest immediately upon a change-in-control of Aetna (as defined in the Director Plan).

Other Information Regarding Directors

As part of its overall program of support for charitable institutions and in order to attract and retain qualified Directors in the increasingly competitive environment for talent, Aetna maintains the 1999 Director Charitable Award Program. Only nonmanagement Directors are eligible to participate in the program. The program may be funded by life insurance on the lives of the participating Directors. Each of the Directors other than Dr. Coye, Mr. Ludwig and Dr. Newhouse is fully vested in the program. Dr. Coye, Mr. Ludwig and Dr. Newhouse and each new Director who participates in the program will be fully vested in the program upon completion of five years of service as a Director or upon death or disability. Dr. Newhouse will vest in the program in September of 2006, Mr. Ludwig will vest in the program in July of 2008, and Dr. Coye will vest in the program in October of 2010. Under the program, Aetna intends to make a charitable contribution of $1 million in ten equal annual installments, with the first installment made following each participating Director’s retirement from the Board, allocated among up to five charitable organizations recommended by the Director. Beneficiary organizations recommended by Directors must be, among other things, tax exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Donations Aetna ultimately makes are expected to be deductible from taxable income for purposes of U.S. federal and other income taxes payable by Aetna. Directors derive no personal financial or tax benefit from the program, since all insurance proceeds and charitable deductions accrue solely to Aetna.

Aetna provides $150,000 of group life insurance for its nonmanagement Directors. Optional medical, dental and long-term care coverage for nonmanagement Directors and their eligible dependents is available to Directors at a cost similar to that charged to Company employees and may be continued into retirement by eligible Directors. Aetna also reimburses nonmanagement Directors for the out-of-pocket expenses they incur that are attendant to Board membership, including travel expenses incurred in connection with attending Board, Committee and shareholder meetings and for other Company-business related expenses (including the travel expenses of spouses if they are specifically invited to attend the event). From time to time, Aetna may also transport Directors to and from Board meetings on Aetna aircraft.

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Certain Transactions and Relationships

Mrs. Hancock resigned as Chairman of the Board and Chief Executive Officer of Exodus Communications, Inc. on September 4, 2001. Exodus filed a voluntary petition under Chapter 11 of the federal bankruptcy laws on September 26, 2001.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our Directors, our executive officers and certain other persons to file reports of holdings and transactions in Aetna Common Stock with the SEC and the NYSE. Based on our records and other information, we believe that during our fiscal year ended December 31, 2005, our Directors and executive officers timely met all applicable SEC filing requirements, except that one Form 4 filed on behalf of Dr. William C. Popik was amended after the filing date to correct the reported number of options granted.

Security Ownership of Certain Beneficial Owners, Directors, Nominees and Executive Officers

The following table presents, as of December 31, 2005, the names of the only persons known to Aetna to be the beneficial owners of more than 5% of the outstanding shares of its Common Stock. The information set forth in the table below and in the related footnotes was furnished by the identified persons to the SEC.

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Beneficial Ownership Table

The following table presents, as of February 24, 2006, the beneficial ownership of, and other interests in, shares of Common Stock of each current Director, each Nominee, each executive officer named in the Summary Compensation Table on page 29, and Aetna’s Directors and executive officers as a group. The information set forth in the table below and in the related footnotes has been furnished by the respective persons.

Unless noted in the footnotes below, each person currently has sole voting and investment powers over the shares set forth in the Beneficial Ownership Table.

Notes to Beneficial Ownership Table

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Executive Compensation

Summary Compensation Table

The following table sets forth for 2005 the compensation of the then Chairman and Chief Executive Officer and each of Aetna’s four other most highly compensated executive officers in 2005 (collectively, the “Named Executive Officers”).

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The 401(k) Plan is qualified under the Code. For 2005, Aetna matched 50% of the amount deferred by employees under the 401(k) Plan up to 6% of eligible pay. In addition, for performance years 2003 and 2004, employees were eligible to receive an additional performance-based 401(k) Plan contribution of up to 3% of eligible pay, not to exceed $6,000. For performance year 2004, the Company did not satisfy the performance criteria, and the performance-based contributions feature was eliminated in 2005. Performance-based contributions vest after the employee attains three years of service. Aetna has established the Supplemental 401(k) Plan to provide the deferral that would have been credited to the 401(k) Plan but for limits imposed by the Employee Retirement Income Security Act of 1971 and the Code. The Company provided limited matching contributions to the Supplemental 401(k) Plan in 2004 and ceased providing matching contributions to the Supplemental 401(k) Plan in 2005.

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Company employees, including the persons named in the Summary Compensation Table on page 29, may elect to participate in Aetna’s Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, which is a shareholder-approved, tax qualified stock purchase plan, eligible employees purchase Common Stock at a discount. In 2005, the purchase price was 90% of the lower of the fair market value of the Common Stock on the first or last day of a six-month offering period. For 2006, the purchase price is 95% of the fair market value of the Common Stock on the last day of the six-month offering period. The maximum value of shares that may be purchased in a calendar year is $25,000. Mr. Williams has participated in the ESPP since January 2003.

Stock Option Grants Table

The following table sets forth information concerning stock options granted by Aetna during 2005 to the persons listed in the Summary Compensation Table on page 29. The hypothetical grant date present values of stock options granted in 2005 shown below are presented pursuant to current SEC rules and are calculated under the modified Black-Scholes Model for pricing options.

There is no assurance that the hypothetical present values of stock options presented in the preceding table represent the actual values of such options. The hypothetical values shown should not be construed as predictions by Aetna as to the future value of its Common Stock.

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Stock Option Exercises and December 31, 2005 Stock Option Value Table

The following table sets forth information concerning stock options exercised during 2005 by the persons listed in the Summary Compensation Table on page 29 and the number and value of specified options held by those persons at December 31, 2005. The values of unexercised in-the-money stock options at December 31, 2005 shown below are presented pursuant to current SEC rules. There is no assurance that the values of unexercised in-the-money stock options reflected in this table will be realized.

Long-Term Incentive Plan Awards Table

The following table sets forth information concerning long-term incentive awards granted by Aetna during 2005 under the 2000 Stock Plan to the persons listed in the Summary Compensation Table on page 29.

2006 Stock Appreciation Right and Restricted Stock Unit Grants

On February 10, 2006, Aetna granted Dr. Rowe 1,000,000 stock appreciation rights (“SARs”), all of which will vest on February 10, 2007. On February 10, 2006, Aetna granted Messrs. Williams, Bennett, Callen and Holt 605,422, 127,140, 127,140 and 105,950 SARs, respectively; these SARs will vest in three substantially equal annual installments on February 10, 2007, February 10, 2008 and February 10, 2009. The strike price of all SARs granted on February 10, 2006 is $50.205, the closing price of Aetna Common Stock on February 10, 2006. When exercised, these SARs will be settled in stock.

Also on February 10, 2006, Aetna granted Messrs. Williams, Bennett, Callen and Holt 85,650, 17,928, 17,928 and 14,940 restricted stock units (“RSUs”), respectively. These RSUs will vest in a single installment on February 10, 2009. Each vested RSU represents one share of Aetna Common Stock and will

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be paid on the vesting date in shares of Common Stock net of applicable withholding taxes. These RSUs are not credited with dividend equivalents.

On February 14, 2006, Aetna granted Mr. Williams 150,000 RSUs. These RSUs will vest in three equal annual installments on February 14, 2007, February 14, 2008 and February 14, 2009. Each vested RSU represents one share of Aetna Common Stock and will be paid in shares of Common Stock net of applicable withholding taxes six months after Mr. Williams terminates his employment with Aetna. These RSUs will fully vest immediately if Mr. Williams’ employment is terminated by Aetna without cause, by Mr. Williams for “good reason” (as defined in his employment agreement) or as a result of Mr. Williams’ death or disability. These RSUs will be credited with dividend equivalents.

Pension Plan

Aetna provides for certain of its employees a noncontributory, defined benefit pension plan (the “Pension Plan”). Effective January 1, 1999, the Pension Plan was amended to convert the Plan’s final average pay benefit formula to a cash balance design. Under this design, the pension benefit is expressed as a cash balance account. Each year, a participant’s cash balance account is credited with (i) a pension credit based on the participant’s age, years of service and eligible pay for that year, and (ii) an interest credit based on the participant’s account balance as of the beginning of the year and an interest rate that equals the average 30-year U.S. Treasury bond rate for October of the prior calendar year. For 2005, the interest rate was 4.86%. For purposes of the Pension Plan, eligible pay is generally base pay and certain other forms of cash compensation, including annual performance bonuses, but excluding long-term incentive compensation and proceeds from stock option exercises.

Employees with pension benefits as of December 31, 1998, including Messrs. Bennett and Holt, are considered transition participants under the Pension Plan. Under the current plan design, transition participants continue to accrue benefits under the Pension Plan’s final average pay formula until December 31, 2006. Under the final average pay formula, retirement benefits are calculated on the basis of (i) the number of years of credited service (maximum credit is 35 years) and (ii) the employee’s average annual earnings during the 60 consecutive months out of the last 180 months of service that yield the highest annual compensation. On termination of employment, the value of the cash balance account is compared to the lump sum value of the benefit under the final average pay formula, and the greater of these two amounts becomes the cash balance account value. If a participant terminates employment after December 31, 2006, the value of the cash balance account as of December 31, 2006 (with interest through the termination date) is compared to the lump sum value of the benefit under the final average pay formula (determined at termination of employment), and the greater of these two amounts is added to the cash balance benefit earned after December 31, 2006.

The following table sets forth the estimated annual pension benefit expressed as a single life annuity and payable at age 65 for the persons listed in the Summary Compensation Table on page 29:

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The Code limits the maximum annual benefit that may be accrued under and paid from a tax-qualified plan such as the Pension Plan. As a result, Aetna has established a Supplemental Pension Plan to provide benefits (included in the amounts listed in the table above) that would exceed the Code limit. The Supplemental Pension Plan also is used to pay other pension benefits not otherwise payable under the Pension Plan, including additional years of credited service beyond years actually served, additional years of age, and covered compensation in excess of that permitted under the Pension Plan. As of January 1, 2007, no new benefits will accrue under the Supplemental Pension Plan.

Equity Compensation Plans

The following table gives information about Aetna’s Common Stock that may be issued upon the exercise of options, warrants and rights or otherwise is issuable under all of the Company’s equity compensation plans as of December 31, 2005.

The Aetna Inc. 2002 Stock Incentive Plan (the “2002 Plan”) is designed to promote the interests of the Company and its shareholders and to further align the interests of shareholders and employees by tying awards to total return to shareholders, enabling plan participants to acquire additional equity interests in the Company and providing compensation opportunities dependent upon the Company’s performance. The 2002 Plan has not been submitted to shareholders for approval.

Under the 2002 Plan, eligible participants may be granted stock options to purchase shares of Common Stock, stock appreciation rights, time vesting and/or performance vesting Incentive Stock or Incentive Units and other stock-based awards. As of December 31, 2005, the maximum number of shares of Common Stock that may be issued under the 2002 Plan in the future is approximately 21.6 million shares, subject to adjustment for corporate transactions. If an award is paid solely in cash, no shares shall be deducted from the number of shares available for issuance.

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The Director Plan permits eligible Directors of the Company to receive shares of Common Stock as part of their compensation. As of December 31, 2005, the maximum number of shares of Common Stock that may be issued under the Director Plan in the future is approximately 1.1 million shares, subject to adjustment for corporate transactions. The Director Plan has not been submitted to shareholders for approval.

Other Agreements

Aetna administers a Job Elimination Benefits Plan under which employees, including Aetna’s executive officers, terminated by Aetna due to re-engineering, reorganization or staff reduction efforts may receive a maximum of 52 weeks of continuing salary depending on years of service and pay level. Under certain circumstances, determined on a case-by-case basis, additional severance pay benefits may be granted for the purposes of inducing employment of senior officers or rewarding past service. Certain benefits continue for part of the severance period.

Aetna has entered into an employment agreement with Dr. Rowe. Under the agreement, which was amended effective January 3, 2006 and is for a remaining term ending December 31, 2006, Dr. Rowe is entitled to an annual salary of not less than $1,100,000, a target annual bonus opportunity of 150% of base salary and a maximum annual bonus opportunity of 300% of base salary. In addition to certain other benefits, Dr. Rowe will be entitled to a minimum annual pension of $750,000 (offset by Company contributions to the 401(k) Plan and the Supplemental 401(k) Plan) commencing at age 62 (which is fully vested) and will be credited with two years of service for each full year of service rendered for purposes of determining his eligibility for retiree medical benefits. If Aetna terminates Dr. Rowe’s employment other than for “cause” (as defined in the agreement), death or disability, or Dr. Rowe terminates his employment for “good reason” (as defined in the agreement), he will be entitled to 104 weeks (156 weeks if such termination is within two years following a change-in-control) of cash compensation (calculated as annual base salary and target annual bonus) and his pro rata bonus for the year of termination. Aetna has agreed generally to make Dr. Rowe whole for any excise taxes incurred as a result of payments made under his agreement or otherwise. The Compensation Committee has set Dr. Rowe’s 2006 salary at $1,100,000, the same as for 2005 and 2004. Following his retirement, Dr. Rowe will be subject to a longer, three-year non-compete/non-solicitation period in consideration of Aetna’s payment of $150,000 on each of the first, second and third anniversaries of his retirement. The non-compete/non-solicitation period could be extended, at Aetna’s request, for up to two additional one-year periods in consideration of Aetna’s payment of an additional $150,000 per year. In addition, upon the termination of Dr. Rowe’s employment agreement, Aetna will enter into a consulting agreement with him. Under the terms of the consulting agreement, which has an initial term of three years and can be renewed annually upon mutual agreement, Dr. Rowe will provide consulting services to Aetna for no more than 25 full days of consulting services per calendar quarter and will be paid $4,000 per full day and $2,000 per half day for such services.

Aetna entered into an amended and restated employment agreement with Mr. Williams on December 5, 2003. Under the agreement, which was amended effective January 27, 2006 and is for a remaining term ending December 31, 2008, with one-year extensions running through 2013, Mr. Williams is entitled to an annual salary of not less than $1,100,000, a target annual bonus opportunity of at least 150% of base salary and a maximum annual bonus opportunity of at least 300% of base salary. In addition to certain other benefits, Mr. Williams vested in a pension benefit in five equal annual installments beginning on April 2, 2001, and for calendar year 2005, Mr. Williams received, and for each of calendar years 2006 through 2010, Mr. Williams will receive, an additional fully vested pension accrual in an amount equal to his base salary for such year. This additional pension accrual will not be credited if Mr. Williams is not actively employed by Aetna and will be offset by the value of Mr. Williams’ vested benefit under his prior employer’s pension plan. If Aetna terminates Mr. Williams’ employment other than for “cause” (as defined in the agreement), death or disability, or Mr. Williams terminates his employment for “good reason” (as defined in the agreement), he will be entitled to 104 weeks (156 weeks if such termination is within two years

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following a change-in-control) of cash compensation (calculated as annual base salary and target annual bonus) and his pro rata bonus for the year of termination. Aetna has agreed generally to make Mr. Williams whole for certain excise taxes incurred as a result of payments made under his agreement or otherwise. The Compensation Committee has set Mr. Williams’ 2006 salary at $1,100,000.

Aetna has entered into an employment agreement and a retention arrangement with Mr. Bennett. Under his employment agreement, if Aetna terminates Mr. Bennett’s employment other than for cause, Mr. Bennett will be entitled to 78 weeks of cash compensation (calculated as base salary and target annual bonus). If Aetna notifies Mr. Bennett at the end of any severance period that he is unable to sell the underlying stock in an open market transaction due to access to material nonpublic information pertaining to the Company, Mr. Bennett will have an additional 90 days to exercise his options from the date the Company notifies him he is no longer precluded from selling such shares (but in no event may the options be exercised beyond the original term of the option). Under his retention arrangement, Mr. Bennett’s base salary was increased to $550,000 effective January 1, 2005, and he will receive an additional two years of service credit under Aetna’s defined benefit pension plans if (i) he remains actively employed by Aetna (as defined in the arrangement) on November 23, 2007, (ii) he executes a release of employment claims in customary form and (iii) Aetna has not been required to prepare an accounting restatement for any period beginning October 1, 2001 through November 23, 2007. The Compensation Committee has set Mr. Bennett’s 2006 salary at $575,000.

Aetna has entered into an agreement with Mr. Callen. Under the agreement, Mr. Callen was hired with an annual salary of $575,000. The agreement provided for an initial grant of 240,000 stock options, which include a one year post-employment termination exercise period, a target annual bonus opportunity of 80% of base salary, 14,000 performance units and a payment of $50,000 to defray his expenses of establishing a residence in the Hartford, Connecticut area. If Aetna terminates Mr. Callen’s employment other than for “cause” (as defined in the agreement), he will be entitled to 52 weeks of base salary continuation. Mr. Callen also was granted an additional 40,000 stock options during 2004. The Compensation Committee has set Mr. Callen’s 2006 salary at $620,000.

Under his agreements with Aetna, if Aetna involuntarily terminates Mr. Holt’s employment, he is entitled to 52 weeks of salary continuation (or such greater amount as may be provided under the Company’s severance program then in effect) and able to elect into the Company’s retiree medical and/or dental plans on a one-time basis. The Compensation Committee has set Mr. Holt’s 2006 salary at $475,000.

Annual bonuses paid to the Named Executive Officers are paid under Aetna’s 2001 Annual Incentive Plan (the “Annual Incentive Plan”). On February 24, 2006, the Compensation Committee set the 2006 performance goals under the Annual Incentive Plan. The primary goal is based on corporate net income, and the secondary goal is based on corporate revenue. The maximum bonus that may be paid to any Named Executive Officer under the Annual Incentive Plan is $3 million. The Compensation Committee will determine individual bonus amounts in early 2007 based on a review of the Company’s performance against the specified targets and a review of individual performance. The Compensation Committee has discretion to pay less than the maximum bonus permitted by the Annual Incentive Plan.

The Board has approved provisions for certain benefits of Company employees upon a change-in-control of Aetna (as defined). The provisions provide that the Job Elimination Benefits Plan shall provide an enhanced benefit and shall become noncancelable for a period of two years following a change-in-control. Upon a change-in-control, all previously granted stock options that have not yet vested will become vested and immediately exercisable, and bonuses payable under the Annual Incentive Plan will become payable based on the target award for participants. Outstanding long-term incentive awards also vest and become payable at the greater of the level that would be paid based on actual performance as of the date of the change-in-control or target. Provision also has been made to maintain the aggregate value of specified benefits for one year following a change-in-control.

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Report of the Committee on Compensation and Organization

What are the objectives of Aetna’s compensation program?

Aetna’s compensation program for executive officers is designed to attract, motivate and retain highly qualified executives. The Committee believes that Aetna’s total compensation program must support Aetna’s strategy, be competitive, and provide both significant rewards for outstanding financial performance and clear financial consequences for underperformance. The Committee also believes that a significant portion of an executive’s compensation should be “at risk” in the form of annual and long-term incentive awards that are paid, if at all, based on individual and Aetna performance and further believes that it is important to link a significant portion of an executive officer’s compensation to the value of Aetna’s Common Stock to align the interests of executives with the long-term interests of Aetna’s other shareholders.

In its compensation decisions the Committee considered the fact that under the leadership of Dr. Rowe and Mr. Williams, Aetna completed a significant financial turnaround. Aetna had 16 consecutive quarters of positive earnings through December 31, 2005, and in 2005 once again achieved significant profitable growth in membership. From January 1, 2004 through December 31, 2005, Aetna’s market capitalization increased by $16.7 billion, and through December 31, 2005, it had increased by more than $23 billion since its low point in March 2001. During 2005, Aetna’s stock price increased by 51.3%, surpassing its major competitors and outperforming major market indices. These strong financial results for shareholders and Aetna’s re-emergence as a key competitor in the health care industry and national leader in consumer directed health care has been a key driver of the value of compensation for Aetna’s senior executives.

What are the elements of Aetna’s executive compensation program?

The compensation program for executive officers for 2005 consisted of the following elements:

Executive officers also were eligible for other employee benefits. These are described in the Summary Compensation Table (see page 29) and elsewhere in this Proxy Statement.

For 2006, the Committee has modified the long-term incentive component of the compensation program to replace stock options and performance cash units with stock appreciation rights (70%) and restricted stock units (30%). The purpose of this change is to reduce shareholder dilution from equity awards and, given the financial success of Aetna, to aid in retention of senior executives. The decision to redesign the program took into account evolving practices at other major public corporations, as well as Aetna’s objective of enhancing the linkage between employee compensation and the creation of shareholder value. The Committee believes that the cash based performance units, which vested based on internal performance measures over a shorter time horizon, served Aetna well during its financial turn-around. However, now that Aetna is well beyond its turn-around and working to achieve profitable growth, the Committee believes that restricted stock units will provide a more direct and transparent link between executive compensation and the creation of shareholder value.

How are the total compensation amounts determined?

Aetna’s compensation program, in general, is designed to set total target compensation opportunity (salary, performance-based annual bonus and long-term incentive awards) at the median level of the total compensation paid to similarly positioned executives at companies in a comparison group selected for each executive officer position (the “Comparison Group”) at median performance. The program is designed to deliver above median compensation for above median performance and below median compensation for below median performance. The Comparison Group for each executive differs based on the executive’s

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position. The Comparison Group for each position is selected from publicly traded companies that are major competitors in the marketplace for talent for that position. For positions that are primarily health care related, the Comparison Group includes eight of the eleven companies in the Morgan Stanley Healthcare Payors Index (see the Corporate Performance Graph on page 43). The pay information for each Comparison Group is developed through market pay survey data collected and analyzed by an outside compensation consultant. The analysis, which is conducted by the compensation consultant and Aetna, includes a regression analysis (adjustment to market compensation data to account for company size and revenue) and a scenario analysis, which evaluates total compensation of an executive officer under various scenarios, including termination of employment. The Committee may approve an above median total target compensation opportunity when individual performance or other circumstances warrant.

In setting executive officer compensation, the Committee, with assistance from its outside consultant, reviews tally sheets that affix a dollar amount to each component of executive compensation, including salary, bonus and long-term incentives, realized and unrealized gains on stock options, dollar value of perquisites, projected benefits under Aetna’s retirement plan and under potential severance and change-in-control scenarios.

How were base salaries for executive officers determined?

The Committee generally reviews base salaries for executive officers annually. In making salary determinations, the Committee considers the terms of any employment contract with the executive, the recommendations of the Chief Executive Officer (as to other executive officers), salary norms for persons in comparable positions in the executive’s Comparison Group, the executive’s experience and scope of responsibility, and a subjective assessment of the executive’s individual past and potential future contribution to Aetna’s results. There were no salary increases for senior officers in 2004 (other than promotions and contractual requirements). During 2005, the salary increases for senior officers ranged from 2.6% to 3.8%.

How were annual performance-based bonuses determined?

The purpose of the annual bonus program is to align the interests of executive officers with Aetna’s shareholders by motivating executive officers to achieve superior financial and operational performance that increases shareholder value. Under the Annual Incentive Plan and Annual Bonus Plan (“ABP”), the Committee establishes specific financial and operational goals at the beginning of each performance year, and bonus funding is linked directly to achievement of those goals. The Annual Incentive Plan and ABP goals, described in more detail below, are directly aligned with Aetna’s strategic and business plans approved by the Board. Achievement of Aetna’s stretch financial operating plan approved by the Board is considered target financial performance under the ABP.

Annual Incentive Plan (162(m) qualified). The Annual Incentive Plan applies to the executives named in Aetna’s Proxy Statement. Under the Annual Incentive Plan, the target bonus opportunity for the CEO and the other Named Executive Officers for 2005 ranged from 80% to 150% of base salary. The two goals established for 2005 under the Annual Incentive Plan related to the achievement of specified levels of (i) corporate net income and (ii) revenue. If 100% of either goal is met, the maximum award permitted under the Plan (currently $3 million) may be paid. If neither of these goals is met at the 100% level, the maximum bonus payable is proportionately reduced. The Committee has discretion to pay less than the maximum amount permitted by the Plan. For 2005, Aetna’s net income of $1.63 billion and total revenues of $22.5 billion each exceeded the pre-established performance goals and permitted the payment of a maximum bonus. The actual bonus amounts paid to the Named Executive Officers were less than the maximum allowable amount. The Committee set the actual bonus amounts after consideration of the recommendations of the Chief Executive Officer (for other executive officers), a review of Aetna’s performance versus the ABP goals described below, and a subjective evaluation of each Named Executive Officer’s individual contributions to Aetna’s results. Actual awards to the Named Executive Officers under the

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Annual Incentive Plan ranged from 116.5% to 133.3% of target bonus opportunity depending on individual and business unit performance.

Annual Bonus Plan. Executive officers who do not participate in the Annual Incentive Plan participate in the ABP. For 2005, bonus pool funding under the ABP depended upon Aetna’s performance against the following measures (each weighted as noted):

Under the ABP, if 100% of the goals are met, in the aggregate, up to 100% of the target bonus pool is funded. If the goals are exceeded, in the aggregate, by a sufficient margin, up to a maximum of 200% of the bonus pool is funded. For 2005, under the ABP, the target bonus opportunity for senior officers ranged from 60% to 80% of base salary.

For 2005, Aetna reported operating earnings of $1.57 billion, which exceeded the targeted level of operating earnings, and the financial goals in the aggregate were met at just below the superior level. The health cost management goal was met at the above target level. With respect to the growth goals, Aetna’s dental and pharmacy businesses performed above the superior level. Performance relative to the constituent focus goals varied, and most were met at above target levels. However, despite growing membership by 1.1 million during 2005, the membership growth goal was not met. Based on this aggregate performance and after applying the weightings noted above, the Committee set the 2005 ABP bonus pool funding at 117.7% of target performance.

In the context of this bonus funding, the Committee determined the bonus amounts paid to individual executive officers after an evaluation of recommendations made by the Chief Executive Officer and a subjective assessment of individual contributions to Aetna’s results. Actual awards to senior officers under the ABP ranged from 92.2% to 138% of target bonus opportunity depending on individual and business unit performance.

What were the objectives of the 2005 long-term incentive awards (stock options and performance cash units)?

Aetna’s long-term incentives for 2005 were in the form of stock option and performance cash unit awards. The objective of these awards is to advance the longer-term interests of Aetna and its shareholders. They complement incentives tied to annual performance by providing incentives for executives to increase shareholder value over time. The amount of the long-term award (stock options and performance cash units) is determined to set total target compensation opportunity at the median level of the total compensation paid to similarly positioned executives at companies in the executive’s Comparison Group at median performance. In general, the theoretical value of the 2005 long-term incentive awards to participants at grant date was delivered 70% in stock options and 30% in performance cash units. As noted above, the components of Aetna’s long-term incentive program have changed for 2006.

Stock Options. The Committee believes that stock option awards further align the interests of executive officers with the interests of shareholders in increasing shareholder value. The Committee grants stock options at not less than 100% of the fair market value of the Common Stock on the date of grant. Because stock options (and stock appreciation rights) provide value only in the event of share price appreciation, the

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Committee believes these awards are, by their nature, performance-based and should be an important component of Aetna’s executive compensation program. The value of the stock option component of an executive officer’s compensation opportunity is converted into a specific number of shares subject to option by assigning each option an estimated realizable value using a modified Black-Scholes formula. In making stock option awards in 2005, the Committee considered overall share utilization and shareholder dilution. The Committee did not consider prior stock option grants or amounts realized on the exercise of prior stock option grants in determining the number of options to be granted.

Performance Cash Units Payout. In 2004, the Committee granted performance-based cash units to senior Company employees, including the Named Executive Officers. Each unit represented $100 at target performance. Under the award agreements, the units would vest and become payable in cash if Aetna met the specified performance goals set for the two-year performance period 2004-2005. The performance goals for the 2004-2005 award were based on Aetna’s performance against two internal financial measures (earnings per share growth (67%) and return on capital (33%)). Performance against the internal measures could be modified upwards or downwards by up to 30% based on Aetna’s total shareholder return versus its health care competitors. In January 2006, the Committee determined that Aetna had met the specified internal financial measures at above the superior level. Aetna’s total shareholder return over the performance period significantly exceeded all of its health care competitors, resulting in an upwards adjustment based on the total return to shareholders modifier. As a result, the units vested at a level of 158.7% (just under the maximum level).

Performance Cash Unit Award. In 2005, the Committee granted performance-based cash units to senior Company employees, including the Named Executive Officers. Each unit represents $100 at target performance. Under the award agreements, the units will vest and become payable in cash if Aetna meets the specified performance goals set for the two-year performance period 2005-2006. The performance goals for the 2005-2006 awards are based on the same measures used for the 2004-2005 performance-based cash unit awards described above.

How has Aetna responded to IRS limits on deductibility of compensation?

Section 162(m) of the Code limits the tax deductibility of compensation in excess of $1 million paid to certain executive officers, unless the payments are made under plans that satisfy the technical requirements of the Code. The Committee believes that pay over $1 million is, in some circumstances, necessary to attract and retain executives in a competitive marketplace. Stock options and performance units granted under the 2000 Stock Plan and annual bonuses paid under the Annual Incentive Plan are designed so that the compensation paid will be tax deductible by Aetna. The Committee believes that there are circumstances under which it is appropriate for the Committee to elect to forgo deductibility to maintain flexibility or to continue to pay competitive compensation.

What was the basis for Dr. Rowe’s 2005 compensation?

Overview. As in past years, the large majority of Dr. Rowe’s compensation was performance-based. Given Aetna’s success during his leadership, Dr. Rowe’s compensation opportunity at target performance is currently set above the median of chief executive officers at companies in his Comparison Group. Dr. Rowe’s Comparison Group is made up of five companies. All of these companies are included in the Morgan Stanley Healthcare Payors Index. His actual compensation for 2005 was above median due to Aetna’s superior financial performance. When compared to the compensation opportunity of the CEOs of Aetna’s top three competitors, Dr. Rowe’s 2005 actual compensation is slightly below the average.

Base Salary. During 2005, the Committee reviewed Dr. Rowe’s base salary and decided not to make any changes for 2005. To preserve the tax deductibility of Dr. Rowe’s salary under Section 162(m), Dr. Rowe’s annual salary in excess of $1,000,000 is subject to mandatory deferral and is payable to Dr. Rowe six

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months after termination of his employment. The deferred amount earns interest at the rate paid by the fixed interest rate fund option of Aetna’s 401(k) Plan (4.6% per year for the period January to June 2006).

2005 Annual Performance-based Bonus. As noted above, the Committee determined that the goals set under the Annual Incentive Plan, in which Dr. Rowe participates, were exceeded at the maximum level and that the ABP goals were met at a level of 117.7%. The Committee also established specific non-financial objectives for Dr. Rowe at the beginning of 2005. Aetna’s superior financial performance, as well as the Committee’s review of the overall quality of Dr. Rowe’s non-financial performance in leading the execution of Aetna’s strategy, achieving operational excellence, and cultural transformation, was the basis for the Committee’s decision to award Dr. Rowe a bonus of $2 million (121.2% of his target bonus opportunity) for 2005. Strategic accomplishments included Aetna’s significant progress in its quest for industry leadership and implementation of Aetna’s business development strategies and successful development of CEO succession plans. Operational accomplishments included profitable growth, with increases in all major metrics (membership, revenues, earnings and cross-selling of Aetna products), continued leadership in medical cost trend and progress in reduction of general and administrative expenses. Accomplishments related to cultural transformation included strengthening leadership capability throughout Aetna, leading Aetna’s focus on the Aetna Way, Aetna’s core values and business ethics program, and creating a high performance culture. The Committee also recognized Dr. Rowe’s role in positioning Aetna as a leader in influencing and establishing health care policy on national and state levels.

Long-term Incentive Awards. In 2005, consistent with the philosophy set forth above, Dr. Rowe was granted a stock option for 911,904 shares of Common Stock (grant date theoretical value of $9,804,006 determined using a modified Black-Scholes model) and 42,000 performance cash units (grant date theoretical value of $4,200,000 at target performance). The terms of the options and performance cash units are described above. The Committee set the amount of the stock option and performance cash unit awards after a review of competitive market pay data of the companies in Dr. Rowe’s Comparison Group and his performance. The 2005 award, which was delivered 70% in options and 30% in performance cash units, is designed to deliver a median pay opportunity for median performance and an above median pay opportunity for above median performance.

Long-term Incentive Award Payout. As mentioned above, the Committee determined that the 2004-2005 performance target for the performance cash units granted in 2004 had been exceeded. In accordance with the terms of the award, 158.7% of Dr. Rowe’s 2004-2005 performance cash units vested resulting in a payout of $4,522,950.

2006 Long-term Award. In 2006, the Committee granted Dr. Rowe a stock appreciation right on 1,000,000 shares of Common Stock (“SARs”) (grant date theoretical value of $16,517,445 determined using a modified Black-Scholes model). The SARs when exercised will be settled in stock and will vest one year from the date of grant. The amount of the SARs were determined by the Committee after a review of competitive market pay data of companies in Dr. Rowe’s Comparison Group and his past performance.

What was the basis for Mr. Williams’ 2005 compensation?

Overview. Mr. Williams’ 2005 compensation opportunity at target performance was set at the median of chief executive officers at companies in his Comparison Group. Mr. Williams’ Comparison Group is the same as Dr. Rowe’s Comparison Group. His actual 2005 compensation was above the median due to Aetna’s superior financial performance.

Base Salary. During 2005 the Committee did not increase Mr. Williams’ base salary. In connection with his appointment as CEO in 2006, Mr. Williams’ salary was increased to $1,100,000. To preserve the tax deductibility of Mr. Williams’ salary under Section 162(m), Mr. Williams’ salary in excess of $1,000,000 is subject to mandatory deferral and is payable to Mr. Williams six months after termination of his employment. The deferred amount earns interest at the rate paid by the fixed interest rate fund option of Aetna’s 401(k) plan (4.6% per year for the period January to June 2006).

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2005 Annual Performance-based Bonus. The Committee approved a 2005 annual performance-based bonus for Mr. Williams of $1,700,000 (125.9% of his target bonus opportunity). This bonus was determined based on Aetna’s superior financial performance (as described above), as well as the Committee’s review of Mr. Williams’ performance against specific strategic and operational objectives established at the beginning of 2005. The strategic and operational accomplishments for 2005 included the successful execution of Aetna’s business development strategies, which include the acquisition and integration of several niche-market businesses, the implementation of a new Medicare prescription drug plan, accelerated demand for Aetna’s suite of consumer directed health products, leadership in Aetna’s medical cost trend, the successful launch of Aetna’s provider price transparency initiative, achievement of better than plan results for constituent satisfaction survey results, leading Aetna’s focus on the Aetna Way, Aetna’s core values and business ethics program, creating a high-performance culture, and broadening influence with regulators and legislators.

Long-term Incentive Awards. In 2005, consistent with the philosophy set forth above, Mr. Williams was granted a stock option for 744,412 shares of Common Stock (grant date theoretical value of $8,003,276, determined using a modified Black-Scholes model) and 34,000 performance cash units (grant date theoretical value of $3,400,000 at target performance). The terms of the options and performance cash units are described above. The Committee set the amount of the stock option and performance cash unit awards after a review of competitive market pay data of companies in Mr. Williams’ Comparison Group and his performance. The 2005 award, which was delivered 70% in options and 30% in performance cash units, is designed to deliver a median pay opportunity for median performance and an above median pay opportunity for above median performance.

Long-term Incentive Award payout. In accordance with the terms of his prior award described above, 158.7% of Mr. Williams’ 2004-2005 performance cash units vested resulting in a payout of $4,126,200.

2006 Long-term Awards. In connection with Mr. Williams’ appointment to the additional position of Chief Executive Officer, in 2006 the Committee approved a grant of 150,000 restricted stock units (“RSUs”) (grant date value of $7,695,000). These restricted stock units will vest in three equal annual installments and will be paid in stock to Mr. Williams six months after termination of his employment with Aetna. The amount of this grant was determined by the Committee based on Mr. Williams’ past performance and expected future performance in leading Aetna. This grant will provide Mr. Williams with a significant compensation opportunity if he remains employed with Aetna and if Aetna continues its financial success. This award places Mr. Williams’ compensation opportunity at an above median level provided Aetna maintains above median performance.

In addition, in 2006, the Committee granted Mr. Williams 605,422 SARs (grant date theoretical value of $10,000,025 determined using modified Black-Scholes model) and 85,650 RSUs (grant date value of $4,300,058). The SARs (when exercised) and RSUs (when vested) will be settled in stock. The SARs will vest in three annual installments. The RSUs will vest three years from the date of grant. The Committee set the amount of these grants after a review of competitive market pay data of the companies in Mr. Williams’ Comparison Group and his performance. These awards provide Mr. Williams with an above median compensation opportunity when compared to the Comparison Group. When compared to the target compensation opportunity of the CEOs of Aetna’s top three competitors, however, Mr. Williams’ compensation opportunity remains below the average.

The Committee on Compensation and Organization

Michael H. Jordan, Chairman

Betsy Z. Cohen

Barbara Hackman Franklin

Gerald Greenwald

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Corporate Performance Graph

The following graph compares the cumulative total shareholder return on Aetna’s Common Stock (assuming reinvestment of dividends) with the cumulative total return on the published Standard & Poor’s 500 Stock Index (“S&P 500”) and the cumulative total return on the published Morgan Stanley Healthcare Payors Index (11 companies at March 1, 2006)* from December 31, 2000 through December 31, 2005. The graph assumes a $100 investment in shares of Aetna Common Stock on December 31, 2000.

CUMULATIVE TOTAL RETURN FROM DECEMBER 31, 2000 TO

SHAREHOLDER RETURNS OVER THE PERIOD SHOWN ON THE CORPORATE PERFORMANCE GRAPH SHOULD NOT BE CONSIDERED INDICATIVE OF FUTURE SHAREHOLDER RETURNS.

Report of the Audit Committee

The Board has determined in its business judgment that all members of the Audit Committee meet the independence, financial literacy and expertise requirements for audit committee members set forth in the NYSE listing standards. Additionally, the Board has determined in its business judgment that each Committee member, based on his/her background and experience (including that described in this Proxy Statement), has the requisite attributes of an “audit committee financial expert” as defined by the SEC.

The Committee assists the Board in its oversight of (1) the integrity of the financial statements of the Company, (2) the qualifications and independence of the Company’s independent registered public accounting firm (the “Independent Accountants”), (3) the performance of the Company’s internal audit

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function and the Independent Accountants, and (4) the compliance by the Company with legal and regulatory requirements. The Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the Independent Accountants and any other accounting firm engaged to perform audit, review or attest services (including the resolution of any disagreements between management and any auditor regarding financial reporting). The Independent Accountants and any other such accounting firm report directly to the Committee.

The Committee operates pursuant to a Charter that was last amended and restated by the Board on January 28, 2005. The Audit Committee Charter was attached as Annex A to the Company’s 2005 Proxy Statement and can also be found at www.aetna.com/governance.

As set forth in the Audit Committee Charter, Aetna’s management is responsible for the preparation, presentation and integrity of Aetna’s financial statements and management’s annual assessment of Aetna’s internal controls over financial reporting. Aetna’s management and Internal Audit Department are responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Independent Accountants are responsible for planning and carrying out proper annual audits and quarterly reviews of Aetna’s financial statements. The Independent Accountants express an opinion as to the conformity of Aetna’s annual financial statements with U.S. generally accepted accounting principles and also provide review reports regarding Aetna’s interim financial statements. The Independent Accountants also provide an attestation report regarding Aetna’s internal controls over financial reporting and management’s assessment of those controls.

In the performance of its oversight function, the Committee has reviewed and discussed the Company’s audited financial statements for 2005 with management and the Independent Accountants. The Committee has also discussed with the Independent Accountants the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as currently in effect. The Committee has also received the written disclosures and the letter from the Independent Accountants required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as currently in effect, including disclosures with respect to services provided by the Independent Accountants, and has discussed with them their independence.

Members of the Committee are not employees of Aetna and, as such, it is not the duty or responsibility of the Committee or its members to conduct auditing or accounting reviews or procedures. In performing their oversight responsibility, members of the Committee rely on information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by officers or employees of Aetna, legal counsel, the Independent Accountants or other persons with professional or expert competence. Accordingly, the Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles and policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Committee’s considerations and discussions referred to above do not assure that the audit of Aetna’s financial statements by the Independent Accountants has been carried out in accordance with auditing standards generally accepted in the United States of America, that the financial statements are presented in accordance with U.S. generally accepted accounting principles, that Aetna’s internal controls over financial reporting are effective or that the Independent Accountants are in fact “independent.”

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Based upon the reports, review and discussions described in this Report, and subject to the limitations on the role and responsibilities of the Committee, certain of which are referred to above and in its Charter, the Committee recommended to the Board that the audited financial statements be included in Aetna’s Annual Report on Form 10-K for the year ended December 31, 2005 filed with the SEC.

The Audit Committee

Edward J. Ludwig, Chairman

Jeffrey E. Garten

Earl G. Graves

Ellen M. Hancock

Joseph P. Newhouse

II.       Appointment of Independent Registered Public Accounting Firm

The Audit Committee has appointed KPMG LLP to audit the Company’s consolidated financial statements for 2006. The Audit Committee and the Board recommend shareholder approval of KPMG LLP as the Company’s independent registered public accounting firm (the “Independent Accountants”) for 2006. Representatives of the firm are expected to be available at the Annual Meeting to make a statement if the firm desires and to respond to appropriate questions.

Nonaudit Services and Other Relationships Between the Company and the Independent Accountants

The Company’s practice is not to have its independent auditing firm provide financial information systems design and implementation consulting services. Instead, these services are provided by other accounting or consulting firms. Other types of consulting services have been provided by the independent auditing firm or other accounting and consulting firms from time to time. All new services provided by the independent auditing firm must be approved in advance by the Audit Committee regardless of the size of the engagement. The Chairman of the Committee may approve any proposed engagements that arise between Committee meetings, provided that any such decision is presented to the full Committee at its next scheduled meeting.

In addition, management may not hire as an employee a person who within the last three years was an employee of the Independent Accountants and participated in the audit engagement of the Company’s financial statements if the Audit Committee determines that the hiring of such person would impair the independence of the Independent Accountants. The independence of the Independent Accountants also is considered annually by the Audit Committee and the full Board of Directors.

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Fees Incurred for 2005 and 2004 Services Performed by the Independent Accountants

The table below provides details of the fees paid to KPMG LLP by the Company for services rendered in 2005 and 2004. As shown in the table below, audit and audit-related fees totaled approximately 99% of the aggregate fees paid to KPMG LLP for both 2005 and 2004, and tax fees made up the remainder. There were no other fees paid to KPMG LLP in 2005 or 2004.

The affirmative vote of a majority of the votes cast is required for approval of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2006.

The Audit Committee and the Board recommend a vote FOR the approval of KPMG LLP as the Company’s independent registered public accounting firm for 2006. If you complete the enclosed proxy card, unless you direct to the contrary on that card, the shares represented by that proxy card will be voted FOR approval of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2006.

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III.       Approval of Aetna Inc. 2006 Employee Stock Purchase Plan

Introduction

Subject to the approval of the shareholders at the Annual Meeting, the Board, on the recommendation of the Compensation Committee, has unanimously adopted the Aetna Inc. 2006 Employee Stock Purchase Plan (the “2006 ESPP”). Aetna’s shareholders previously approved Aetna’s existing employee stock purchase plan at the 2002 Annual Meeting. No offering under the existing employee stock purchase plan may commence after July 1, 2006.

Summary of the Aetna Inc. 2006 Employee Stock Purchase Plan

The following summary of the 2006 ESPP is qualified in its entirety by reference to the complete text thereof, which is attached to this Proxy Statement as Annex C.

The purpose of the 2006 ESPP is to provide employment incentive through a capital accumulation opportunity, link employee and shareholder interests and provide an opportunity for employees to purchase Aetna Common Stock.

Under the 2006 ESPP, 6,500,000 shares of Aetna Common Stock are authorized for purchase.

Employees who are employed by Aetna or a participating subsidiary immediately prior to the first day of an offering under the 2006 ESPP are eligible for participation in such offering. It is anticipated that there will be approximately 27,000 employees eligible to participate in the 2006 ESPP.

The 2006 ESPP provides that the Compensation Committee may from time to time determine the date on which Aetna shall commence an offering to all eligible employees for the purchase of Common Stock. Each offering will provide that an eligible employee may elect to purchase a number of shares of Common Stock determined by the Compensation Committee. Notwithstanding the above, no employee may be eligible to receive rights to purchase shares in any single calendar year having an aggregate fair market value at the time of grant in excess of $25,000. Each offering shall have a stated term as determined by the Compensation Committee but not longer than 27 months and may have a purchase price of not less than the lesser of 85% of the fair market value of a share of Common Stock on the grant date of the purchase right or the last day of that offering.

A participant may not elect to purchase any portion of the shares covered by the employee’s purchase right prior to the end of any such purchase period. It is anticipated that cash proceeds received by Aetna from any sale of Common Stock under the 2006 ESPP will be used for general corporate purposes.

Under the terms of the 2006 ESPP, the shares of Common Stock authorized to be sold will be authorized and unissued Common Stock. The 2006 ESPP provides for adjustments in the number of shares which may be purchased and the purchase price in the case of certain changes in Aetna’s capital structure and other corporate events when the Compensation Committee deems such adjustments to be necessary in order to preserve the benefits or potential benefits to be made available under the 2006 ESPP. Upon a change-in-control of Aetna, the expiration date of the offering shall be deemed to have occurred and all the outstanding purchase rights will be deemed to have been exercised.

The Compensation Committee shall have sole discretion in determining when to make offers and which Aetna subsidiaries shall be eligible to participate in such offerings under the 2006 ESPP. In addition, each offering shall contain such terms and conditions not inconsistent with the 2006 ESPP as the Compensation Committee shall prescribe. The terms of each offering will be communicated to each eligible employee. The offerings made under the 2006 ESPP are subject to applicable tax withholding requirements and may not be assigned or transferred.

No offering may commence under the 2006 ESPP after July 1, 2011. The 2006 ESPP may be amended or terminated at any time by the Board (and in some circumstances, the Compensation Committee), except that no amendment may be made without shareholder approval if such approval is necessary to comply with any

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tax or regulatory requirement with which the Compensation Committee has determined it is necessary or desirable to have Aetna comply.

The 2006 ESPP is not subject to any of the provisions of ERISA and is not qualified under Section 401(a) of the Code.

United States Federal Income Tax Consequences

Under Section 423 of the Code, employees will not realize taxable income upon the grant of a purchase right under the 2006 ESPP or when they complete their purchase for cash and receive delivery of the stock which they are eligible to purchase, provided such purchase occurs while they are employed or within three months after termination of employment. If no disposition of such stock is made within two years after the date of grant or within one year after the date of acquisition, any gain or loss that may be realized on the ultimate sale will be treated as long term capital gain or loss. Notwithstanding the above, if the purchase price of the stock when acquired is less than 100% of the then fair market value, upon a subsequent disposition of the stock by the employee, including a disposition after the two-year and one-year periods referred to above, or the death of the employee while holding such stock, the employee will recognize compensation taxable as ordinary income in an amount equal to the discount at the time of the acquisition or, if less, the excess of the stock’s value at the time of such disposition or death, as the case may be, over the original purchase price. The amount of ordinary income recognized by the employee will decrease the capital gain or increase the capital loss recognized by the employee on the sale of the stock. The employer is not allowed a deduction for the compensation. However, if such stock is disposed of within such two-year or one-year periods, the difference between the market value of such stock at the time of purchase and the purchase price will be treated as income taxable to the employee at ordinary income rates in the year in which the disposition occurs, and the employer will be entitled to a deduction from income in the same amount in such year. The amount of ordinary income recognized by the employee will decrease the capital gain or increase the capital loss recognized by the employee on the sale of the stock.

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Participation; Initial Offering

It is not possible to determine at this time the extent to which, if at all, the executive officers named in the Summary Compensation Table on page 29 will elect to participate in the 2006 ESPP. Mr. Williams has participated in the existing ESPP since 2003. Set forth in the table below are the number of shares purchased under the existing ESPP in 2005 and the dollar value of the aggregate discount on such shares in 2005, in each case by the person or persons identified in the table.

NEW PLAN BENEFITS

It is anticipated that the initial offering under the 2006 ESPP, if approved by shareholders, will commence in July 2006 and terminate in December 2006, with a per share purchase price equal to 95% of the fair market value of a share of Aetna Common Stock on the termination date of the offering period.

The affirmative vote of a majority of the votes cast is required for approval of the proposal to adopt the Aetna Inc. 2006 Employee Stock Purchase Plan.

The Board recommends a vote FOR the approval of the Aetna Inc. 2006 Employee Stock Purchase Plan. If you complete the enclosed proxy card, unless you direct to the contrary on that card, the shares represented by that proxy card will be voted FOR approval of the Aetna Inc. 2006 Employee Stock Purchase Plan.

IV.       Shareholder Proposal to Implement Cumulative Voting

in the Election of Directors

Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave. N.W., Suite 215, Washington, D.C. 20037 (owner of 800 shares of Common Stock), has advised Aetna that she plans to present the following proposal at the Annual Meeting. The proposal is included in this Proxy Statement pursuant to the rules of the SEC.

“RESOLVED: That the stockholders of Aetna, assembled in Annual Meeting in person and by proxy, hereby request the Board of Directors to take the necessary steps to provide for cumulative voting in the election of directors, which means each stockholder shall be entitled to as many votes as shall equal the number of shares he or she owns multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single candidate, or any two or more of them as he or she may see fit.”

“REASONS: Many states have mandatory cumulative voting, so do National Banks.”

“In addition, many corporations have adopted cumulative voting.”

“Last year the owners of 59,318,870 shares, representing approximately 54.8% of shares voting, voted FOR this proposal.”

“If you AGREE, please mark your proxy FOR this resolution.”

The affirmative vote of a majority of the votes cast is required for approval of the foregoing proposal.

49

THE BOARD OF DIRECTORS WILL OPPOSE THIS PROPOSAL IF IT IS INTRODUCED AT THE 2006 ANNUAL MEETING AND RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:

The Board continues to believe that Aetna’s present system of voting for Directors provides the best assurance that the decisions of the Directors will be in the interests of all shareholders.

Many shareholders in corporate America want more say when it comes to electing directors. Following the 2005 Annual Meeting, the Board studied various alternatives for accomplishing this objective, including cumulative voting. The Nominating Committee, which consists entirely of independent Directors, considered these matters at two separate meetings in 2005, and the full Board considered them at three separate meetings in 2005. As a result of this review, the Board implemented a majority vote standard for Director elections, implemented confidential voting in uncontested solicitations and amended Aetna’s By-Laws to provide that the Board does not have the right to alter the size of the Board beyond a range established by Aetna’s shareholders. The Board decided that these changes most effectively responded to shareholder needs and strengthened the Board’s accountability to Aetna’s shareholders.

In addition, cumulative voting is one of those issues that may favor special interest groups. Cumulative voting could make it possible for such a group to elect one or more Directors beholden to the group’s narrow interests. This could increase the likelihood of factionalism and discord within the Board, which may undermine its ability to work effectively as a governing body on behalf of the common interests of all shareholders. The present system of voting utilized by Aetna and by most leading corporations prevents the “stacking” of votes behind potentially partisan Directors. The present system thus promotes the election of a more effective Board in which each Director represents the shareholders as a whole.

Finally, the Board alone would not be able to implement cumulative voting upon adoption of this proposal by the shareholders because cumulative voting is prohibited by Aetna’s Articles of Incorporation. Under Pennsylvania law and Aetna’s Articles of Incorporation, an amendment to Aetna’s Articles of Incorporation to delete this provision would require shareholder approval at a subsequent shareholder meeting, following adoption of a resolution by the Board approving the proposed amendment.

For these reasons, while the Board carefully considered cumulative voting as a part of its 2005 review of governance issues, the Board continues to believe that this proposal is not in the best interests of Aetna or its shareholders.

If you complete the enclosed proxy card, unless you direct to the contrary on that card, the shares represented by that proxy card will be voted AGAINST the foregoing proposal.

Additional Information

Contact Information

If you have questions or need more information about the Annual Meeting, write to:

Office of the Corporate Secretary

Aetna Inc.

151 Farmington Avenue, RE4K

Hartford, CT 06156

or call us at (860) 273-4970.

For information about your record holdings or DirectSERVICE Investment Program account, call Computershare Trust Company, N.A. at 1-800-446-2617 or access your account via the Internet at www.computershare.com/gateway. We also invite you to visit Aetna’s Web site at www.aetna.com. Web site addresses are included for reference only. The information contained on Aetna’s Web site is not part of this proxy solicitation and is not incorporated by reference into this Proxy Statement.

50

Financial Statements

The year 2005 consolidated financial statements and auditor’s report, management’s discussion and analysis of financial condition and results of operations, management’s report on internal control over financial reporting and the Independent Accountants’ report thereon, information concerning quarterly financial data for the past two fiscal years and other information are provided in the 2005 Aetna Annual Report, Financial Report to Shareholders.

SEC Form 10-K

Shareholders may obtain a copy of Aetna’s annual report filed with the SEC on Form 10-K, including the financial statements and the financial statement schedules, without charge by calling (1-800-237-4273) or by visiting Aetna’s Web site at www.aetna.com.

Incorporation by Reference

The sections of this Proxy Statement entitled “Report of the Committee on Compensation and Organization,” “Report of the Audit Committee,” and “Corporate Performance Graph” do not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates them by reference therein.

By order of the Board of Directors,

Christopher M. Todoroff

Vice President and Corporate Secretary

March 21, 2006

51

ANNEX A

AETNA INC.

CORPORATE GOVERNANCE GUIDELINES

Role of the Board of Directors

1. Management is responsible for the day-to-day business operations of Aetna Inc. (the “Company”). The Board of Directors (the “Board”) oversees and guides the Company’s management and its business. The basic responsibility of the Board is to exercise its business judgment to act in what it reasonably believes to be in the best interests of the Company and its shareholders. Within this framework, the Board also considers the Company’s ethical behavior and may consider the interests of other constituents, including the Company’s customers, employees and the communities in which it functions.

In discharging their obligations, Directors are entitled to rely on the honesty and integrity of the Company’s executives, and its outside advisors and auditors. The Directors also shall be entitled to have the Company purchase reasonable directors’ and officers’ liability insurance on their behalf, to the benefits of indemnification to the fullest extent permitted by law and the Company’s Articles of Incorporation and By-Laws, and to exculpation as provided by applicable state law and the Company’s Articles of Incorporation.

2. The Board provides oversight with respect to the strategic direction and key policies of the Company. It approves major initiatives, advises on key financial and business objectives, and monitors progress with respect to these matters.

3. The Board, directly and through its Audit Committee, provides oversight of the integrity of the financial statements of the Company; the independent accountants’ qualifications and independence; the performance of the Company’s internal audit function and independent accountants; and the compliance by the Company with legal and regulatory requirements.

4. The Board selects and annually evaluates the performance of the Chief Executive Officer. Directly and through its Committee on Compensation and Organization (the “Compensation Committee”), the Board also collaborates with the Chief Executive Officer in the selection of senior management. The Compensation Committee, on behalf of the Board, evaluates and determines the compensation of the Company’s Chief Executive Officer and its other executive officers; oversees compensation and benefits plans, policies and programs of the Company; administers the equity-based incentive compensation plans of the Company; and considers from time to time and, when appropriate, makes recommendations to the Board as to the development and succession plans for the senior management of the Company.

The Compensation Committee and the Board meet annually in full executive session, without management, to assess the performance of the Chief Executive Officer and consider the Chief Executive Officer’s compensation.

5. The Company’s By-Laws provide that the Chairman shall be the Chief Executive Officer, unless the Board vests this position in another officer. The Board may determine to separate these positions based on what is deemed to be in the Company’s best interest at any given point in time.

6. A Presiding Director is appointed by, and from, the independent Directors and serves for a period of time which enables the Presiding Director to perform his or her functions with continuity. Generally speaking, the Presiding Director is responsible for coordinating the activities of the independent Directors. Among other things, the Presiding Director sets the agenda for and leads the nonmanagement and independent Director sessions held by the Board regularly, and briefs the Chairman and the Chief Executive Officer on any issues arising out of these sessions. The Presiding Director also acts as the principal liaison to the Chairman and the Chief Executive Officer for the views, and any concerns and issues, expressed by the independent Directors, though all Directors continue to interact one-on-one with the Chairman and the Chief Executive Officer, as needed and as appropriate. The Chairman and the Chief Executive Officer consult with the Presiding Director for input in setting the agenda for Board meetings and the Board meeting schedule. The Presiding Director

consults with the other Directors and advises the Chairman about the quality, quantity and timeliness of Board information and the Board’s decision-making processes.

Composition of the Board and Selection of Directors

7. The size and composition of the Board should be appropriate for effective deliberation of issues relevant to the Company’s businesses and related interests. A substantial majority of the members of the Board shall be, in the business judgment of the Board, “independent” under the rules of the New York Stock Exchange, Inc.

8. The credentials of prospective director candidates are reviewed by the Nominating and Corporate Governance Committee (the “Nominating Committee”). Nominees are selected through a process based on criteria set with the concurrence of the full Board and re-evaluated periodically. The criteria weighed in the Director selection process include: the relevance of the candidate’s experience to the business of the Company; enhancing the diversity of the Board; the candidate’s independence from conflict or direct economic relationship with the Company; and the ability of the candidate to attend Board meetings regularly and devote an appropriate amount of effort in preparation for those meetings. It also is expected that outside Directors nominated by the Board shall be individuals who possess a reputation and hold positions or affiliations befitting a director of a large publicly held company, and are actively engaged in their occupations or professions or are otherwise regularly involved in the business, professional or academic community. Honorary Directors shall not be appointed.

In recommending Director nominees to the Board, the Nominating Committee solicits candidate recommendations from its own members, other Directors and management. It may also engage the services of a search firm to assist it in identifying potential Director nominees. The Nominating Committee will also consider suggestions made by shareholders for Director nominees who meet the established Director criteria.

All new Directors must participate in the Company’s Director Orientation Program. This orientation includes presentations by senior management to familiarize new Directors with the Company’s strategic plans, its significant financial, accounting and risk management issues, its compliance programs, its code of business conduct and ethics, its principal officers, and its internal and independent auditors. In addition, each Board Committee also provides new Committee members with appropriate background information about the workings of the Committee. The Board encourages formal Board continuing education.

9. The Nominating Committee annually reviews Director suitability and the continuing composition of the Board; it then recommends Director nominees who are voted on by the full Board. The Board believes that, if this evaluation is well done, it obviates the need for term limits, which could unnecessarily deprive the Company of experienced Directors. All Director nominees stand for election by the shareholders annually.

10. Any nominee for Director in an uncontested election who receives a greater number of votes “withheld” from his or her election than “for” such election promptly shall submit his or her resignation for consideration by the Nominating Committee. The Nominating Committee shall recommend to the Board the action to be taken with respect to such resignation and the Board shall act with respect to such resignation, in each case within a reasonable period of time. The Company promptly shall disclose to the public each such resignation and decision by the Board.

11. The Company will hold the vote of each shareholder in confidence from Directors, officers and employees except: (a) as necessary to meet applicable legal requirements (including stock exchange listing requirements) and to assert or defend claims for or against the Company and/or one or more of its consolidated subsidiaries; (b) as necessary to assist in resolving any dispute about the authenticity or accuracy of a proxy card, consent, ballot, authorization or vote; (c) if there is a contested proxy solicitation; (d) if a shareholder makes a written comment on a proxy card or other means of voting or otherwise communicates the shareholder’s vote to management; or (e) as necessary to obtain a quorum.

12. Any significant change in circumstances that may relate to a Director’s qualifications as a Director is considered in determining suitability for continued directorship. In addition, an analysis of potential conflicts and review by the Nominating Committee and the Board are conducted for proposed additional director

affiliations with a for-profit enterprise or for proposed transactions involving the Company (or a subsidiary of the Company) in which any Director would have a direct economic or beneficial interest. Directors shall give the Chairman of the Nominating Committee notice of any such significant change in circumstances, proposed additional for-profit or charitable director affiliation or proposed transaction involving the Company.

13. As a general matter, a retiring Chief Executive Officer (or other officer Director) will resign from the Board at the time of his/her retirement from the Company. Outside Directors resign no later than the Annual Shareholders Meeting coincident with or immediately following their 72nd birthdays.

Functioning of the Board

14. The Board sets the annual schedule of Board and Committee meetings. Committee schedules are recommended by each Committee in order to meet the responsibilities of that Committee. It is the policy of the Board that Directors should be present at the Company’s Annual Meeting of Shareholders.

15. Board agendas are generally set by the Chairman, in consultation with the Presiding Director, with ample opportunity for suggestions from other Directors.

16. The Board is provided, in advance of meetings, with agendas and written background information and data with respect to Board/ Committee agenda items, as well as other general information relevant to the Company’s businesses. The Board also receives regular updates between Board meetings.

17. The Chairman of the Company presides at Board meetings. In the event that the Chairman of the Company is unable to attend a meeting of the Board of Directors, the Presiding Director shall chair the meeting. In the event that both the Chairman of the Company and the Presiding Director are unable to attend a meeting of the Board of Directors, the most senior Director (in terms of current consecutive years of Board service) present shall, at the request of the Chairman of this Company or the Corporate Secretary of this Company, chair the meeting. Members of senior management are included in open sessions of Board and Committee meetings, as appropriate. The Board meets regularly in executive session with only Directors present. The nonmanagement Directors of the Company also meet at regularly scheduled executive sessions, without management Directors present. In addition, at least once per year, the Company’s independent Directors meet in executive session.

18. Board members have full access to Company management. In addition, the Board and any of its Committees have the authority to retain counsel and other independent experts or consultants, as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance.

19. The Board conducts a self-evaluation annually to determine whether it and its Committees are functioning effectively. This review is overseen by the Nominating Committee.

20. As a general matter, the Board believes that management speaks for the Company.

Committees of the Board

21. Committees support the role of the Board on issues that benefit from consideration by a smaller, more focused subset of Directors. The Board will have at all times an Audit Committee, a Compensation Committee and a Nominating Committee. All of the members of these Committees will, in the business judgment of the Board, be “independent” Directors under the rules of the New York Stock Exchange and meet any other standards of independence required under applicable law. The Board also has established an Investment and Finance Committee to assist the Board in reviewing the Company’s investment policies, strategies, transactions and performance, and in overseeing the Company’s capital and financial resources, and a Medical Affairs Committee to assist the Board in general oversight of policies and practices that relate to providing members with access to quality health care. The Board also has established an Executive Committee, which may act on behalf of the full Board between regularly scheduled Board meetings, usually when timing is critical. The Board may form other Committees from time to time to deal with special issues. One or more Board members also serve on the Board of the Aetna Foundation to oversee and coordinate the Company’s charitable giving programs.

22. The roles of the Committees are defined by the Company’s By-Laws and by Committee charters adopted by the Board.

23. At least annually, the Nominating Committee, in consultation with the Chairman and the Chief Executive Officer, reviews Committee assignments (members and chairs). In considering a Director for Committee membership, the Committee takes into consideration any factors it deems appropriate, including without limitation, the Director’s experience and background, and its relevance to the goals and responsibilities of the Committee and the Director’s Committee preferences. The Committee then makes Committee assignment recommendations on which the full Board votes. It is the sense of the Board that Committee members and Committee chairs should be rotated, where appropriate and practical, while providing overlap to prevent loss of expertise and experience and maintain continuity. Generally, consideration is given to rotating a Committee chair after approximately five years of service as chair. The Board strives to select new Committee chairs from Directors who have prior experience on the relevant Committee.

24. Committee agendas are set by the respective Committee chairs in consultation with management and other Committee members. Committee chairs report on each Committee meeting at the Board meeting following the Committee meeting. Minutes of Committee meetings also are provided to each Director. Each Committee chairman convenes, as appropriate, executive sessions of outside Directors of the Committee to discuss its operations and other related matters.

25. In the absence of a Committee chair, the most senior Committee member (in terms of Committee service) chairs the Committee meeting.

Compensation of Directors

26. At least annually, the Nominating Committee reviews competitive compensation survey information, and considers the appropriateness of the form and amount of Director compensation with a view toward attracting and retaining qualified Directors.

27. The Nominating Committee, with the concurrence of the full Board, has directed that a significant portion of Director compensation be delivered in stock-based forms. In addition, a deferred compensation plan also allows individual Directors voluntarily to defer cash compensation into deferred stock units. The Board of Directors also has adopted Stock Ownership Guidelines, whereby within five years of appointment to the Board, each Director should own stock of the Company having a value equal to $400,000. It is understood that if Directors temporarily do not meet this guideline because there has been a significant drop in the price of the Company’s stock, they would have a reasonable period of time to acquire additional shares of stock necessary to meet the guidelines.

Conduct and Ethics Standards for Directors

28. Directors are subject to applicable provisions of the Company’s Code of Conduct. Among other things, Directors must conduct themselves in a manner that avoids actual or apparent conflicts of interest and that protects the Company’s business reputation. A conflict of interest occurs when a Director’s private interest interferes in any way — or even appears to interfere — with the interest of the Company. Except as authorized by the Board of Directors, no outside Director shall have a direct economic relationship with the Company. Company loans to, or guarantees of obligations of, Directors and their family members are prohibited.

29. Directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. Accordingly, Directors are prohibited from taking for themselves personally business opportunities that are discovered through the use of Company property, information or position.

30. Directors, in the course of their Company duties, must comply fully with all federal and state laws applicable to the Company’s businesses, and with applicable Company policies (including policies relating to use of confidential information and insider trading).

ANNEX B

AETNA INC.

INDEPENDENCE STANDARDS FOR DIRECTORS

To be considered independent under the New York Stock Exchange, Inc. (“NYSE”) rules, the Board must determine that a Director has no material relationship with Aetna (either directly or as a partner, shareholder or officer of an organization that has a relationship with Aetna). The Board has established these guidelines to assist it in determining Director independence.

(a) An Aetna Director is not independent if:

(b) In addition, the following commercial or charitable relationships will not be considered to be material relationships that would impair a Director’s independence: (i) if an Aetna Director is an executive officer of another company that is indebted to Aetna, or to which Aetna is indebted, and the total amount of either company’s indebtedness to the other is less than five percent of the total consolidated assets of the company he or she serves as an executive officer; (ii) if an Aetna Director is an executive officer of another company in which Aetna owns a common stock interest, and the amount of the common stock interest is less than five percent of the total shareholders equity of the company he or she serves as an executive officer; and (iii) if an Aetna Director serves as an executive officer of a charitable organization, and Aetna’s discretionary charitable contributions to the organization are less than two percent of that organization’s annual revenue. (Aetna’s automatic matching of employee charitable contributions will not be included in the amount of Aetna’s contributions for this purpose.) A commercial relationship in which a Director is an executive officer of another company that owns a common stock interest in Aetna will not be considered to be a material relationship which would impair a Director’s independence. The Board will annually review commercial and charitable relationships of Directors.

(c) For relationships outside the safe-harbor guidelines in (b) above, the determinations 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 in (a) and (b) above. For example, if a Director is the executive officer of a charitable organization, and Aetna’s discretionary charitable contributions to the organization are more than two percent of that organization’s annual revenue, the independent Directors could determine, after considering all of the relevant circumstances, whether such a relationship was material or immaterial, and whether the Director should therefore be considered independent. Aetna would explain in its proxy statement the basis for any Board determination that a relationship was immaterial, despite the fact that it did not meet the safe-harbor for immateriality set forth in subsection (b) above.

In addition, members of certain Board Committees, such as the Audit Committee, are subject to heightened standards of independence under various rules and regulations.

December 3, 2004

ANNEX C

AETNA INC.

2006 EMPLOYEE STOCK PURCHASE PLAN

1. Purpose of the Plan. The purpose of the Plan is to provide employment incentive through a capital accumulation opportunity, link employee and shareholder interests, and provide an opportunity for employees of the Company and its Participating Subsidiaries to purchase Common Stock through payroll deductions.

2. Definitions.

“Board” means the Company’s Board of Directors.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Change-in-Control” means the happening of any of the following:

“Committee” means the Board’s Committee on Compensation and Organization or such other committee of the Board designated by the Board to administer the Plan.

“Common Stock” means the common shares, $.01 par value of the Company.

“Company” means Aetna Inc., a Pennsylvania corporation.

“Compensation” means annual base salary during a Purchase Period and does not include any bonus, severance or overtime payment, disability payment, contributions to an employee benefit plan or other similar payment or contribution.

“Continuous Status as an Employee” means the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of (i) sick leave, (ii) military leave, (iii) any other leave of absence approved by the Company, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time, or (iv) in the case of transfers between locations of the Company or between the Company and its Participating Subsidiaries.

“Employee” means any person, including an officer, who is an employee of the Company or one of its Participating Subsidiaries for tax purposes and who is employed at least twenty-one (21) days prior to the Grant Date of an Offering (or such shorter period as the Company, in its sole discretion, may determine).

“Expiration Date” means the last day of an Offering as designated by the Committee, which, in any event, shall not be more than twenty-seven (27) months after the Grant Date.

“Fair Market Value” shall mean on any date, with respect to a share of Common Stock, the closing price of a share of Common Stock as reported by the Consolidated Tape of New York Stock Exchange Listed Shares on such date, or, if no shares were traded on such Exchange on such date, on the next date on which the Common Stock is traded.

“Holding Company” means an entity that becomes a holding company for the Company or its business as part of any reorganization, merger, consolidation or other transaction, provided that the outstanding shares of common stock of such entity and the combined voting power of the then outstanding voting securities of such entity entitled to vote generally in the election of directors is, immediately after such reorganization, merger, consolidation or other transaction, beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the outstanding shares of common stock and the combined voting power of the outstanding voting securities, respectively, of the Company immediately prior to such reorganization, merger, consolidation or other transaction in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, consolidation or other transaction, of such outstanding voting stock.

“Grant Date” means the first business day of each Purchase Period of the Plan.

“Offering” means the grant of Purchase Rights under the Plan.

“Participating Subsidiary” means the Subsidiaries that have been designated by the Committee or the Board from time to time in its sole discretion as eligible to participate in one or more Offerings under the Plan; provided however that the Board shall only have the discretion to designate Subsidiaries if the grant of Purchase Rights to such Subsidiary Employees pursuant to the Plan would not cause the Company to incur material adverse accounting charges.

“Plan” means the Aetna Inc. 2006 Employee Stock Purchase Plan, a plan intended to qualify under Section 423 of the Code.

“Purchase Period” means the period of an Offering beginning on the Grant Date and ending on the Expiration Date.

“Purchase Rights” means rights to purchase shares of Common Stock under the Plan on the terms or conditions set forth herein and as determined by the Committee as provided hereunder.

“Subsidiary” means any company in an unbroken chain of companies beginning with (and including) the Company in which each company other than the last company in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other companies in such chain.

3. Administration of the Plan. The Committee shall administer the Plan. The Committee shall have full power and authority to construe and interpret the Plan and may from time to time adopt such rules and

regulations for carrying out the Plan, as it may deem best. Decisions of the Committee shall be final, conclusive and binding upon all parties, including the Company, its shareholders and its employees.

The Committee may in its sole discretion determine from time to time that the Company shall grant Purchase Rights under an Offering to all of the then eligible Employees, provided, however, that it shall be under no obligation to do so.

4. Participation in the Plan. The individuals who shall be eligible to receive grants of Purchase Rights under an Offering shall be all Employees of the Company or of any Participating Subsidiary who are so employed by the Company or Participating Subsidiary on the Grant Date of such Offering; provided, however, that no individual shall be eligible to effect a purchase under an Offering if immediately thereafter and after giving effect thereto, the aggregate value or voting power of all shares of stock of the Company and any Subsidiary then owned by such individual, either directly or indirectly, within the meaning of the applicable sections of the Code and including all shares of stock with respect to which such individual holds options, would equal or exceed in the aggregate 5% of the total value or combined voting power of all classes of stock of the Company or any Subsidiary.

5. Stock.

6. Number of Shares That an Employee May Purchase.

7. Participation.

8. Method of Payment of Contributions.

9. Exercise of Purchase Rights. Unless a participating Employee withdraws from the Plan as provided in Section 10, his or her right to purchase whole shares in any Offering will be exercised automatically on each Expiration Date of an Offering, and the maximum number of whole shares subject to the Purchase Right will be purchased at the applicable purchase price with the accumulated contributions in his or her account.

10. Voluntary Withdrawals; Termination of Employment.

11. Terms and Conditions of Offerings.

12. Term of Plan. No grant of Purchase Rights shall be made after July 1, 2011.

13. Amendments. The Plan is wholly discretionary in nature. As such, the Board may, in its sole discretion, from time to time alter, amend, suspend, or discontinue the Plan or alter or amend any and all Purchase Rights or terminate any Offering; provided, however, that no such action of the Board may, without the approval of the shareholders, make any amendment for which shareholder approval is necessary to

comply with any tax or regulatory requirement with which the Committee has determined it is necessary or advisable to have the Company comply. Subject to the limitations in this Section 13 relating to shareholder approval, the Committee may, in its sole discretion, make such amendment or modification to the Plan or any Purchase Rights granted hereunder as is necessary or desirable to comply with, or effectuate administration of, the Plan under the laws, rules or regulations of any foreign jurisdiction, the laws of which may be applicable to the Plan or its participants hereunder.

14. Application of Funds. The proceeds received by the Company from the sale of the Common Stock pursuant to an Offering will be used for general corporate purposes.

15. Governing Law. The Plan and all Offerings shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania without regard to the choice of law rules thereunder.

16. Additional Restrictions of Rule 16b-3. The terms and conditions of Purchase Rights granted hereunder to, and the purchase of shares of Common Stock by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3 thereunder. The Plan shall be deemed to contain, and such Purchase Rights shall contain, and the shares of Common Stock issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required by such Rule 16b-3 to qualify for the maximum exemption from such Section 16 with respect to Plan transactions.

151 Farmington Avenue

Hartford, Connecticut 06156

Printed on recycled paper

31.05.901.1-06 3/06