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☐ | Preliminary Proxy Statement | |
☐ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to §240.14a-12 |
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Humana Inc. 500 West Main Street Louisville, Kentucky 40202 |
(Top Photo: Kurt Hilzinger; Bottom Photo: Bruce Broussard)
| Dear Fellow Stockholders:
We would like to invite you to attend the Annual Meeting of Stockholders of Humana Inc., to be held on Thursday, April This proxy statement contains information about our Company and the
This year, we will once again be taking advantage of U.S. Securities and Exchange Commission (SEC) rules that allow us to furnish proxy materials to our stockholders on the Internet. These materials will be available on the Internet on or about March
We hope you can attend the meeting. However, even if you are unable to join us, we urge you to still exercise your right as a stockholder and vote by telephone, mail or using the Internet. The vote of every stockholder is important.
This proxy statement is being mailed or transmitted on or about March |
2022 Reflections
Value Creation Goal. We’re a customer-centric Company and our top priority is the health of the people we serve. This past year, thanks to the focus and dedication of our associates, we delivered on our $1 billion value creation goal designed to create the capacity to fund growth Membership Growth and Value-Based Care. We have a solid track record of achieving above industry MA membership growth, which is supported by our differentiated MA capabilities, including our industry leading value-based care portfolio, our superior clinical quality solutions, and our differentiated customer-centric operations. Fittingly, we’re pleased to be on track to grow individual MA membership by
CenterWell. As we evolve and accelerate our strategy for continued While we take inventory of our 2022 accomplishments, we are
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Kurt J. Hilzinger Chairman of the Board and Stockholder
March
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Bruce D. Broussard Director, President and Chief Executive Officer and Stockholder
March |
Notice of 20202023 Annual Meeting of Stockholders
Time and Date: | 9:30 a.m., Eastern Time, on Thursday, April | |
Location: | ||
Agenda: | 1. Elect the twelve (12) director nominees named in the proxy statement.
2. Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for
3. Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
4. Non-binding advisory vote regarding the frequency of the voting with respect to the compensation of the Company’s Named Executive Officers. 5. Consider any other business properly brought before the meeting. | |
Record Date: | February | |
Proxy Voting: | Your vote is important so that as many Shares as possible will be represented. Please vote by one of the following methods:
• BY INTERNET
• BY TELEPHONE
• BY RETURNING YOUR PROXY CARD (if you elected to receive printed materials)
• BY VOTING DURING THE ANNUAL MEETING (for in person attendance only) See instructions on your proxy card or at the voting site |
By Order of the Board of Directors,
Joseph M. Ruschell
Associate Vice President, AssistantAssociate General Counsel & Corporate Secretary
March 4, 20208, 2023
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Director Compensation | 37 | |||
Organization & Compensation Committee Report | 61 | |||
Executive Compensation | 62 | |||
Certain Transactions with Management and Others | ||||
Audit Committee Report | ||||
Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm
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Proposal Three:Non-Binding Advisory Vote with Respect to the Compensation of the Company’s Named Executive Officers
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Additional Information | 90 |
General Information
Meeting: | Place: | Humana Inc. Headquarters | ||||
Date: | Thursday, April | 500 West Main Street | ||||
Time: | 9:30 a.m., Eastern Time | |||||
Record Date: | February | Louisville, |
Voting OverviewHow to Vote Your Shares
Items of Business | Board Recommendation | Page Reference | ||||
1.
| Elect the twelve (12) director nominees named in the proxy statement.
| FOR
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2. | Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020.
| FOR | 71 | |||
3. | Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
| FOR | 72 | |||
4.
| Consider any other business properly brought before the meeting.
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Board NomineesYou may vote if you were a stockholder as of the close of business on February 28, 2023.
Online www.proxyvote.com | By Mail Complete, sign, date, and return your proxy card in the envelope provided | |||||
By Phone Call the phone number located on the top of your proxy card | During the Meeting Attend our annual meeting and cast your vote in person |
Voting Overview
Items of Business
| Board
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| Page Reference
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1.
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Elect the twelve (12) director nominees named in the proxy statement.
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FOR
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2. | Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2023.
| FOR | 80 | |||||
3. | Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
| FOR | 81 | |||||
4. | Non-binding advisory vote regarding the frequency of the voting with respect to the compensation of the Company’s Named Executive Officers.
| FOR EVERY YEAR | 82 | |||||
5.
| Consider any other business properly brought before the meeting.
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Board of Directors Nominees
Name | Position | Age | First Elected Director | |||
Kurt J. Hilzinger | Chairman of the Board, Independent Director |
| 07/2003 | |||
Bruce D. Broussard | Director, President and Chief Executive Officer |
| 01/2013 | |||
| Independent Director |
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Frank A. D’Amelio | Independent Director |
| 09/2003 | |||
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| Independent Director |
| 03/2022 | |||
Wayne A.I. Frederick, M.D. | Independent Director | 51 | 02/2020 | |||
John W. Garratt | Independent Director |
| 02/2020 | |||
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Karen W. Katz | Independent Director | 66 | 09/2019 | |||
Marcy S. Klevorn | Independent Director | 63 |
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William J. McDonald | Independent Director |
| 10/2007 | |||
| Independent Director |
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| Independent Director | 58 |
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Performance Highlight
Our EPS results for the year ended December 31, 2019 exceeded management’s expectations driven by continued outperformance in the Company’s Medicare Advantage business. We reported an EPS of $20.10, on a Generally Accepted Accounting Principles (GAAP) basis and an EPS of $17.87*on anon-GAAP basis (Adjusted EPS), an increase of 23% compared to Adjusted EPS of $14.55 in 2018. We paid $291 million in cash dividends to our stockholders during 2019 - having raised our quarterly dividend amount in February 2019 from $0.50 per share to $0.55 per share - resulting in an increase of $26 million over dividends paid in 2018. In addition, we returned $1.1 billion to stockholders over the course of 2019 primarily through an accelerated stock repurchase program. In a year-over-year comparison for 2019, the Company’s GAAP and Adjusted pretax income and EPS results were favorably impacted by the solid performance from both the Medicare Advantage business and the Healthcare Services segment, with further benefit from achieving significant operating cost efficiencies in 2019 as a result of previously implemented productivity initiatives. In addition to our individual MA membership growth, our Medicaid membership grew nearly 38 percent with our statewide Florida contract win for 2019, plus approximately 140,000 additional members on January 1, 2020 under our Kentucky Medicaid contract that was previously fully ceded to CareSource. We are pleased with our 2019 performance, particularly our success in balancing and executing multiple priorities as we grew membership, improved the quality and productivity of our operations, and continued to invest in the long term.
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Why am I receiving this Proxy Statement?
You are receiving a proxy statement because you owned Humana Inc. common stock, which we refer to as Shares, as of Monday, February 24, 2020, which we refer to as the Record Date, and that entitles you to vote at the Annual Meeting. Our Board of Directors has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies on behalf of the Company for use at our 2020 Annual Meeting of Stockholders. Your proxy will authorize specified people (proxies) to vote on your behalf at the Annual Meeting. By use of a proxy, you can vote, whether or not you attend the meeting.
This proxy statement describes the matters on which the Company would like you to vote, provides information on those matters, and provides information about the Company that we must disclose when we solicit your proxy.
Why did I receive aone-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. We believe that Internet delivery of our proxy materials allows us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice, to our stockholders and beneficial owners as of the Record Date. All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found on the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically bye-mail on an ongoing basis by calling Broadridge Financial Solutions, Inc., or Broadridge, at1-800-579-1639.
How can I get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to:
View our proxy materials for the Annual Meeting on the Internet; and
Instruct us to send our future proxy materials to you electronically bye-mail.
Choosing to receive your future proxy materials bye-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our Annual Meetings on the environment. If you choose to receive future proxy materials bye-mail, you will receive ane-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials bye-mail will remain in effect until you terminate it.
When and where is the Annual Meeting?
The Annual Meeting will be held on Thursday, April 23, 2020, at 9:30 a.m., Eastern Time, in the 25th floor Auditorium at the Company’s headquarters, located at 500 West Main Street, in Louisville, Kentucky.
Who is entitled to vote?
Anyone who owns Shares, as of the close of business on February 24, 2020, the Record Date, is entitled to vote at the Annual Meeting or at any later meeting should the scheduled Annual Meeting be adjourned or postponed for any reason. As of the Record Date, 132,123,850 Shares were outstanding and entitled to vote. Each Share is entitled to one vote on each of the matters to be considered at the Annual Meeting.
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What will I be voting on?
Election of the twelve (12) director nominees named in this proxy statement to serve on the Board of Directors of the Company;
Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020; and
Anon-binding, advisory vote to approve the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.
The Board of Directors is not aware of any other matters to be presented for action at the Annual Meeting. However, if other matters are properly presented for a vote, the proxies will be voted for these matters in accordance with the judgment of the persons acting under the proxies.
How does the Board recommend I vote on each proposal?
The Board recommends that you vote your Shares as follows:
FOR the election of each of the twelve (12) director nominees named in this proxy statement;
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020; and
FOR the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.
All Shares that are represented at the Annual Meeting by properly executed proxies received before or at the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with the instructions indicated in the proxies.
How will my Shares be voted if I do not specify how they should be voted?
If you sign and return your proxy card without indicating how you want your Shares to be voted, the persons acting under the proxies will vote your Shares as follows:
FOR the election of each of the twelve (12) director nominees named in this proxy statement;
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020; and
FOR the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.
What if my Shares are not registered in my name?
If you own your Shares in “street name,” meaning that your bank, broker or other nominee is actually the record owner, you should receive the Notice from your bank, broker or other nominee. In addition, stockholders may request, by calling Broadridge at1-800-579-1639, to receive proxy materials in printed form, by mail or electronically bye-mail, on an ongoing basis. When you own your Shares in street name, you are deemed a beneficial owner or holder for voting purposes.
If you hold Shares through an account with a bank, broker or other nominee and you do not provide voting instructions on your instruction form, your Shares may not be voted by the nominee with respect to certain proposals, including:
the election of directors;
the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement; and
the frequency with which futurenon-binding advisory stockholder votes on the compensation of the Company’s Named Executive Officers will be held.
Banks, brokers and other nominees have the authority under the regulations of the New York Stock Exchange, or the NYSE, to vote Shares for which their customers do not provide voting instructions only on certain “routine” matters, including the ratification of the appointment of the Company’s independent registered public accounting firm. However, the proposals listed above are not considered “routine” matters for this purpose, and therefore your Shares will not be voted with respect to such proposals if you do not provide voting instructions on your instruction form.
How many votes are required to approve each proposal, what are the effects of abstentions and unmarked proxy cards, and is broker discretionary voting allowed?
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What is a “brokernon-vote”?
A brokernon-vote occurs when a broker or other NYSE member organization holding Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner, but does have discretionary voting power over other items and submits votes for those matters. As discussed above, if you hold Shares through a broker or other NYSE member organization and do not provide voting instructions to your broker or other NYSE member organization, your Shares may not be voted with respect to certain proposals, including the proposals listed above that are not considered routine.
What is a “quorum”?
A “quorum” is a majority of the outstanding Shares. Shares may be voted at the Annual Meeting by a signed proxy card, by telephone instruction, or electronically on the Internet. There must be a quorum for the Annual Meeting to be held. Abstentions and brokernon-votes are counted as present and entitled to vote for purposes of determining whether a quorum exists.
How do I vote?
There are four ways that you can vote your Shares. Voting by any of these methods will supersede any prior vote you made regardless of how that vote was made.PLEASE CHOOSE ONLY ONE OF THE FOLLOWING:
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How do I vote the share equivalent units held in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan?
If you have an interest in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan on the Record Date, you may vote. Under the Humana Retirement Savings Plan and the Humana Puerto Rico Retirement Savings Plan, your voting rights are based on your interest, or the amount of money you and the Company have invested in your Humana Common Stock Fund.
You may exercise these voting rights in almost the same way that stockholders may vote their Shares, but you have an earlier deadline, and you should provide your voting instructions to Broadridge. Broadridge will aggregate the votes of all participants and provide voting information to the Trustee for the applicable plan. If your voting instructions are received by 11:59 p.m., Eastern Time, on Wednesday, April 15, 2020, the Trustee will submit a proxy that reflects your instructions. If you do not give voting instructions (or give them later than that time), the Trustee will vote your interest in the Humana Common Stock Fund in the same proportion as the Shares attributed to the Humana Retirement Savings Plan, or the Humana Puerto Rico Retirement Savings Plan, as applicable, are actually voted by the other participants in the applicable plan.
You must provide your instructions to Broadridge by using the Internet, registered holder telephone number(1-800-690-6903) or mail methods described above.Please note that you cannot vote in person at the Annual Meeting. Your voting instructions will be kept confidential under the terms of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan, as applicable.
Who will count the votes?
Broadridge will tabulate the votes cast by proxy, whether by proxy card, Internet or telephone. Additionally, the Company’s Inspectors of Election will tabulate the votes cast at the Annual Meeting together with the votes cast by proxy.
How do I revoke my proxy?
You have the right to revoke your proxy at any time before the Annual Meeting.
Your method of doing so will depend upon how you originally voted (a later vote will supersede any prior vote you made regardless of how that vote was made):
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What is the due date for stockholder proposals, including stockholder nominees for director, for inclusion in the Company’s proxy materials for the 2021 Annual Meeting?
Stockholder proposals, or stockholder nominees for director at the 2021 Annual Meeting, as permitted by SEC regulations for inclusion in our proxy materials relating to the 2021 Annual Meeting, must be submitted to the Corporate Secretary in writing no later than November 4, 2020. Proposals should be submitted to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202.
May a stockholder present a proposal not included in our Proxy Statement at the April 23, 2020, Annual Meeting?
A stockholder can present a proposal at the Annual Meeting (aso-called “floor resolution”) only if certain notice requirements are met. The SEC does not directly regulate meeting conduct. State law imposes only limited requirements, so meetings are governed by procedures set forth in our Amended and Restated Bylaws (the “Bylaws”). Humana’s Bylaws require that a stockholder provide written notice of intent to bring a proposal no less than 60 days or more than 90 days prior to the scheduled date of the Annual Meeting of stockholders. If less than 70 days’ notice of the Annual Meeting is given, written notice by a stockholder would be deemed timely if made no later than the 10th day following such notice of the Annual Meeting. A proposal must also meet other requirements as to form and content set forth in our Bylaws. Stockholder proposals should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202. A copy of our Bylaws is available on our website. From thewww.humana.comwebsite, click on “Investor Relations,” and then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.”
How will Humana solicit votes and who pays for the solicitation?
We have engaged D. F. King & Co., Inc. to assist in the distribution of proxy materials and solicitation of votes for approximately $12,000 plus expenses. We have also engaged Broadridge to assist in the distribution of proxy materials and the accumulation of votes through the Internet, telephone and coordination of mail votes for approximately $291,000 plus expenses. We will reimburse banks, brokers and other nominees for their reasonableout-of-pocket expenses for forwarding proxy and solicitation material to our stockholders.
How can I obtain additional information about the Company?
Included with this proxy statement (either in printed form or on the Internet) is a copy of our Annual Report on Form10-K for the year ended December 31, 2019, which also contains the information required in our Annual Report to Stockholders. Our Annual Report onForm 10-K and all our other filings with the SEC also may be accessed via the Investor Relations section on our website atwww.humana.com. We encourage you to visit our website. From thewww.humana.comwebsite, click on “Investor Relations,” and then click on the report you wish to review under the “SEC Filings and Financial Reports” subcategory.
Where can I find voting results for this Annual Meeting?
The voting results will be published in a current report on Form8-K which will be filed with the SEC no later than four business days after the Annual Meeting. The Form8-K will also be available on our website atwww.humana.com.
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What is “householding”?
“Householding” occurs when a single copy of our Annual Report, proxy statement and Notice 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 stockholders, 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. If you wish to receive separate copies of our Annual Report, proxy statement or Notice in the future, please contact the bank, broker or other nominee through which you hold your Shares.
Headquartered in Louisville, Kentucky, Humana Inc. (NYSE: HUM) is a leading (2019(2022 Fortune #56#40 ranking) health and well-being company focused on making it easy for people to achieve their best health with clinical excellence through coordinated care. Our strategy integrates care delivery, the member experience, and clinical and consumer insights to encourage engagement, behavior change, proactive clinical outreach and wellness for the millions of people we serve across the country. As of December 31, 2019,2022, we had approximately 16.717.1 million members in our medical benefit plans, as well as approximately 5.45.2 million members in our specialty products.
During December 2022, Humana realigned certain of its businesses among its previously reportable segments, Retail, Group and Specialty and Healthcare Services, into two distinct segments: Insurance and CenterWell. In addition to the new segment classifications being utilized to assess performance and allocate resources, we believe this simpler structure will create greater collaboration across the Insurance and CenterWell businesses and will accelerate work that is underway to centralize and integrate operations within the organization.
Our Strategy
We are committed to helpingaddressing the most important health needs of our millions of medical and specialty insurance members and health services patients. Our Insurance segment delivers products that aim to provide affordable, high-quality access to medical, dental, hearing, vision, and prescription drug care to our members. Our CenterWell segment delivers health services to customers from a variety of payors, including Humana, in what we consider the most significant areas of influence for managing chronic conditions and total cost of care. These include primary care, home health, and pharmacy solutions. Together these offerings, underpinned by leading data, analytics, clinical quality, and commercial capabilities, enable us to deliver solutions that promote wellness and advance population health.
The core franchise of our business is Medicare Advantage, which is one of the fastest growing and most attractive segments of healthcare. We aim to sustainably grow that business at or above market growth rates. We plan to achieve their best health. Our successfulthis attractive growth rate by leveraging several differentiated capabilities in our Insurance segment, including our leadership in value-based care arrangements, our leading clinical quality as evidenced by our consistently high Stars performance, our first-mover advantage in interoperability, data, and analytics solutions, and our award-winning customer experience. We also have an attractive diversification of insurance offerings across product offerings (medical, dental, vision, hearing, prescription drug), and customer segments (Medicare Advantage, Medicaid, and Military). We also realize that in our complex industry effective partnership is required to meet the needs of our diverse customers. We have a proud history inof partnering with multiple stakeholders, including our government partners at the Centers for Medicare & Medicaid Services (CMS), distribution and channel partners, care delivery providers, technology companies, and retailers to name just a few.
Our CenterWell segment includes health service offerings of significant scale and scope across primary care, home health, and pharmacy solutions. These businesses deliver healthy revenue, profit, and attractive growth rates that benefit from the overall growth of our Insurance segment. These businesses also expand our addressable market by serving patients from multiple health plans and Original Medicare in addition to Humana health plan administration is helpingmembers. And most importantly, these businesses enable us to participate directly in the areas of highest influence for successful proactive management of disease progression. As a result, we are able to lower avoidable hospital admissions (and readmissions) and lower inappropriate ER utilization while improving NPS and quality scores relative to competitive benchmarks.
While our businesses have attractive revenue, margin, and growth profiles in their own right, the collection of assets we’ve assembled at meaningful scale position us to create a new kind of integrated care delivery with the power to improve health and well-being and lower costs. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large. To accomplishaddress our customers’ most significant needs that we support physicians and otherimpede simpler health care professionals as they work to deliver the rightand better health by (i) making care in the right place for their patients,more predictable, understandable, and affordable, (ii) addressing medical, behavioral, and social needs, and (iii) delivering care whenever and wherever our members. Our range of clinical capabilities, resources and tools — such asin-home care, behavioral health, pharmacy services, data analytics and wellness solutions — combine to produce a simplified experience that makes health care easier to navigate and more effective.
Humana’s innovative strategy continues to capitalize on industry changes which continue to progress toward our goals of making benefits more affordable while improving the overall cost of care and consumer experience — through our integrated care delivery model.customers need it. We understand that healthcarehealth care is complicated and dealing with multiple physicians and other healthcare professionalsnavigating the system can be a confusing and daunting task. This is particularly true for vulnerable populations, which tend to over index in the markets we serve. That is one of the principal reasons why Humana continues to enhance its integrated care delivery strategy in key areas to enable a better and more seamless locally delivered health care experience for our members.
OneWe also understand we operate in an increasingly competitive environment, and as such, we are continually focused on better understanding and addressing the unmet needs that matter the most to our customers. We call this delivering “human care.” Human care separates Humana from other traditional healthcare companies, demonstrating that our approach is more caring, personalized, and simple. We do this by (i) listening to our customers, (ii) establishing strong partnerships with trusted individuals who are involved in their care, such as providers and caregivers, (iii) developing technologies and other solutions that offer convenient and easy ways for them to engage with their health, and (iv) leveraging data, analytics, and digital solutions to improve how they engage and interact with us.
Finally, we aim to be responsible stewards of capital with leading return on invested capital (ROIC) driven by sustainable organic growth and strategic M&A. We also plan to continue to innovate with our government partners to advance the Medicare Advantage and Medicaid programs to deliver great outcomes for our members and patients and great value to the taxpayer in one of the areasfinest examples of public/private partnership in which we strivethe country. And last, and most fundamental to improve is the health of seniors living with chronic conditions. Our integrated care delivery model brings simplicity and connectivity to the healthcare experience of our senior members. We thrive in this area by (i) partnering with providers to evolve incentives from treating health episodically to managing health holistically; (ii) integrating clinical programs that intersect healthcare and lifestyle- helping people at key moments of need; and (iii) by simplifying processes through leveraging technology, consumer segmentation and analytics.
We offer insurance andnon-insurance products to consumers through our various subsidiaries. Our medical and specialty insurance products allow members to access health care services primarily through our networks of health care providers with whom we have contracted. In addition, we offer services to our health plan members as well as to third parties including pharmacy solutions, provider services, and clinical programs, such as home health and other services and capabilities to promote wellness and advance population health. At the core of our strategy, is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics. Three core elementsthe continual focus on nurturing the culture of the model areCompany and engagement of our associates, which power all of our efforts to improvedeliver the consumerbest health and simplest experience by simplifying the interaction with us, engaging members in clinical programs, and offering assistance to providers in transitioning from afee-for-service to a value-based care arrangement. Our approach to primary, physician-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused. The model is designed to improve health outcomes and affordability for individuals andpossible for the health system as a whole, while offering our members a simple, seamless healthcare experience.and patients we are privileged to serve.
Company Overview• 2023 Proxy Statement | Humana | 1 |
Our Performance
Our Performance
With significant progress made on our strategic initiatives, 2019 was an extremely successful year during which we returned2022 financial results reflect strong financial performance, balanced against investing in transformative capabilities for the long-term sustainability of the Company:core performance.
We reported EPS of $20.10 and Adjusted EPS of $17.87*, exceeding both our initial GAAP EPS guidance of approximately $16.60 to $17.10 and Adjusted EPS guidance of approximately $17.00 to $17.50, as we increased our public Adjusted earnings estimate three times over the course of the year as a result of strong operating performance.
• | We reported diluted earnings per common share (EPS) of $22.08 on a Generally Accepted Accounting Principles (GAAP) basis and Adjusted EPS of $25.24.* |
Our 2019 earnings outperformance was fueled by continued strong Medicare Advantage results.
• | We returned approximately $2.5 billion to our stockholders in the form of dividends and stock repurchases,** with our dividend continuing to increase year-over-year. |
Stockholder Dividends | Cumulative Total Shareholder Return (TSR) | |
We returned over $1.3 billion to our stockholders in the form of share repurchases and in dividends, and also increased our quarterly dividend to $0.55 per share from $0.50 per share in February 2019 (with a further increase to $0.625 per share in February 2020).
* | Please refer to section entitled “Organization & Compensation Committee Report” in this proxy statement for a reconciliation ofnon-GAAP to GAAP financial measures. We encourage each stockholder to read the full financial analysis for year ended December 31, |
** | Stock repurchases includes $96 million in connection with employee stock plans. |
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Humana | 2023 Proxy Statement •Company Overview |
Proposal One
Corporate GovernanceElection of Directors
The Board of Directors of the Company, in accordance with the provisions of the Company’s Articles of Incorporation and Bylaws, has determined that the number of directors to be elected at the Annual Meeting of the Company shall be twelve (12). The directors are elected to hold office until the Annual Meeting of Stockholders in 2024 and until a qualified successor is elected.
Each of the nominees has consented to be named as a nominee and agreed to serve if elected. If any nominee becomes unable to serve for any reason (which is not anticipated), the Shares represented by the proxy granted to Messrs. Hilzinger and Broussard may be voted for the substituted nominee as may be designated by the Board of Directors.
The following table shows certain information concerning the nominees at March 1, 2023.
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62 | Chairman of the Board, Independent Director | |||||||||||||||||||||
07/2003 | ||||||||||||||||||||||
| 60 | Director, President and Chief Executive Officer |
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Raquel C. Bono, M.D. | 66 | Independent Director | 09/2020 | |||||||||||||||||||
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David T. Feinberg, M.D. | 60 | Independent Director | 03/2022 | |||||||||||||||||||
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John W. Garratt | 54 | Independent Director | 02/2020 | |||||||||||||||||||
Karen W. Katz | 66 | Independent Director | 09/2019 | |||||||||||||||||||
Marcy S. Klevorn | 63 | Independent Director | 02/2021 | |||||||||||||||||||
William J. McDonald | 66 | Independent Director | 10/2007 | |||||||||||||||||||
Jorge S. Mesquita | 61 | Independent Director | 02/2021 | |||||||||||||||||||
Brad D. Smith | 58 | Independent Director | 09/2022 |
The goal of these processes is to achieve seriousVote Required and thoughtful board-level attention to the Company’s risk management process and system, the nature of the material risks faced by the Company, and the adequacy of the Company’s risk management process and system designed to respond to and mitigate these risks.
Board Leadership
LeadershipRecommendation of the Board of Directors
A director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast against the nominee. Shares not present at the Annual Meeting and Shares voting “abstain” or broker non-votes have no effect on the election of directors. Under the Company’s Majority Vote Policy, following election to our Board of Directors, a director is essentialrequired to facilitatesubmit his or her irrevocable resignation to our Board of Directors, conditioned upon (i) the director not achieving the requisite stockholder vote at any future meeting at which they face re-election, and (ii) acceptance of the resignation by the Board acting effectively as a working group to the benefit of the Company and its performance. As Chairman of the Board and our lead independent director, Mr. Kurt J. Hilzinger assumes key duties to ensure effectiveness and collaboration in all aspects of the Board’s role.
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Directors following that election. The Board believes thatof Directors has 90 days to determine whether or not to accept the advisability of having separate or combined chairman and chief executive officer positions is dependent upon the strengths of the individual or individuals that hold these positions and the most effective means of leveraging these strengths, in light of the challenges and circumstances facing the Company, which may change over time. At this time, given the composition of the Company’s Board, the effective interaction between Mr. Hilzinger, as Chairman, and Mr. Broussard, as Chief Executive Officer, Mr. Hilzinger’s status as an independent director and previous service as our Lead Director, and the current challenges faced by the Company, the Board believes that separating the chief executive officer and board chairman positions provides the Company with the right foundation to pursue the Company’s strategic and operational objectives, while maintaining effective independent oversight and objective evaluation of the performance of the Company.
Board Engagement and Undertakings
The Board holds itself to a high standard of engagement, with ahands-on approach that leads to critical insights regarding our customers, operations and business and enhances their level of governance and oversight. An essential component to the Board’s engagement is communicating with the Company’s internal and external stakeholders. To accomplish this, meetings of the Board may be held in key Company markets where, together with management, the Board will personally meet with associates, customers, providers and other stakeholders to gain direct feedback into the Company’s operations, experiences and overall effectiveness.
Certain other engagement practices of our Board are described below.
Follows an annual topical calendar used to balance strategic, operational, compliance, and cultural matters, among others, and receives detailed reports on those topics, in addition to ad hoc subjects, throughout the year.
Utilizes clear and proactive Board meeting agendas to achieve high productivity at each meeting.
Holds executive sessions during every meeting, with the CEO present and then with only the independent directors. Relevant feedback is then reported to the CEO and the management team, creating a feedback loop from the Board to the management team.
Maintains regular communication with the CEO and management team, apart from formal Board meetings, to ensure consistent and continuous progress toward established goals.
Employs Board technology tools to review Board materialsdirector’s resignation and to remain informed of ongoing Company endeavors, to efficiently communicate with the management team and to take formal action when necessary.
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Hosts an annual succession dinner with rising leaders in the Company, whose leadership position is below management team level, to personally engage with them and allow an opportunity for those leaders to offer feedback directly to the Board.
Receives continued education from external consultants on a wide range of industry topics to keep them apprised of the latest trends and anticipated future trajectories. In additionreport this information to our director’s individual pursuits, Board education opportunities during 2019, included, (i) a formal education session with external consultants; (ii) guest speaker attendance during select meetings; and (iii) routine briefings on regulatory developments.stockholders.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL NOMINEES.
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Board Commitment to Corporate Social Responsibility
At Humana, our corporate social responsibility (CSR) efforts are driven by our goals to help our members and our associates achieve their best health and to improve the communities we serve byinspiring health and well-being for each person, each community and the future. From our Bold Goal, to our spirit of volunteerism and philanthropic partnerships, to our commitment to environmental sustainability, inclusion, diversity, and ethics, the Board and management team are committed to improving and advancing the Company’s CSR efforts and empowering our associates to be a positive influence in the workplace and in their communities. We are proud to share a few highlights below.
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The charts below represent our diverse workforce during 2019, based on the self-identified data of our associates.
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For our Company and the communities we serve, success with the Bold Goal means that our members are achieving lifelong well-being. We’re helping members to address loneliness, social isolation and food insecurity because we know that each of these factors has a direct impact on healthy days. We have developed social determinant predictive models for internal use and informative tool kits to help physician practices screen and refer their patients to community resources. In addition, we have neighborhood locations that offer classes and activities to promote health behaviors and peer engagements that directly address social determinants at a community level. Through community, clinical and business integration we are taking the Bold Goal beyond 2020 because we know that improving population health is a long-term commitment and takes all of us working together to reduce medical costs and improve health outcomes. Our community initiatives have also led to a strategic advantage in under-served markets and demographics.
Well-being for the Future
Environmental sustainability is important for our Company as environmental factors impact health outcomes for our customers. Because we provide services instead of products, the largest opportunity to decrease our environmental impact in areas of energy consumption, greenhouse gas (GHG) emissions, waste and water practices, is through our internal operations.
Additionally, climate change impacts, such as increased frequency of extreme weather events, higher costs of energy, and consumer and investor interest in our sustainability efforts, pose both risks and opportunities for our business. We manage these impacts by continually strengthening our already robust business continuity program, investing in energy management and efficiency projects, and pursuing financial incentives in support of efforts to reduce our environmental footprint. We set challenging environmental targets, collaborating with vendors and associates to achieve them; these efforts both mitigate risk and demonstrate our Company’s commitment to our members, associates and stockholders by validating the intrinsic link between environment and well-being.
Our future sustainability is also dependent upon our Company’s continued focus on ethics, regulatory compliance and data privacy, for each of which we currently have stringent controls in force. Through conducting business ethically and proactively managing toward environmental efficiency, our Company is positioned to offer reliable and cost-effective services to our customers.
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QualificationsDirector Attributes and Process for Nominating Directors
Identifying Nominees for Directors
Qualifications
The Board has delegated an established screening process for director nominees to the Nominating, Governance & Corporate GovernanceSustainability Committee (“Committee”), with counsel from our Chairman, our Chief Executive Officer, and outside consultants as appropriate. The goal of the screening process is to assemble a group of potential board members with deep, varied experience, sound judgment, and commitment to the Company’s success.
The Committee receives notice of potential candidates through any of the following avenues: (i) Board self-identification; (ii) third-party recommendations; and (iii) stockholder nominations. While director nominees may be presented to the Board for consideration by the Committee through any of these methods, the Board is ultimately responsible for selecting its own members — with annual stockholder voting thereafter for a director’s continued tenure on the Board. Once the Committee has compiled its group of suitable candidates and conducted appropriate diligence, it then meets with the Board to review the candidates for further consideration.
Board Self-Identification. The Committee regularly assesses the appropriate size of the Board, the areas of expertise requiredskills and experiences necessary to effectively contribute to the Board process, and whether any vacancies are anticipated. It also annually assesses the director qualification criteria to ensure that the Board has appropriate skill composition aimed atto oversee the Company’s long-term business strategy, operations, risks, thought and perspective. Asrisks. The Committee recognizes that our Board should represent a result, the Committee may recommend to the Boarddiverse group of individuals who bring a need for an additional director, Board refreshment for certain requisiterange of experience, skills and qualifications, and/or suggest the replacement of an existing director for other credible reasons. The self-identification process may also incorporate responses, as appropriate, from the Board’s annualattributes to their individual self-evaluations. Such evaluations require each director to honestly reflect upon and recount their personal contributions to the Board in the prior year and to provide feedback regarding their performance, the overall Board performance and the performance of certain other key Board positions. The self-evaluations are provided to the Chairman ofrole on the Board and to the CEOBoard as a collective group. On an annual basis, the Committee assesses each Board candidate to determine whether to recommend currently serving directors for their review.
Third-Party Recommendations. From timereelection to time, we engage a professional third-party search firm to assist the Board of Directors and the Committee in identifying and recruitingwhether to recommend candidates for Board membership. Under its charter, the Committee has committed to include, and requires any third-party search firm that it engages to include, candidates with diversity of race, ethnicity and gender in the pool considered by the Committee and/or the Board for nomination to the Board.
Stockholder Nominees. The policy of the Committee is to consider properly submitted stockholder nominations for candidates for membership on the Board as described above under “Identifying Nominees for Directors.” Stockholder nominations forinitial election to the Board of Directors are governed by specific provisions in our Bylaws, a copy of which is available on our website atwww.humana.com. From thewww.humana.com website, click on “Investor Relations,” and then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.” The Bylaws require that a stockholder provide written notice of intent to nominate a candidate for director no less than 60 days or more than 90 days prior to the scheduled date of the Annual Meeting of stockholders. If less than 70 days’ notice of the Annual Meeting is given, written notice by a stockholder would be deemed timely if made no later than the 10th day following such notice of the Annual Meeting. Any stockholder nominations proposed for consideration by the Committee should include, among other information required by the Bylaws, the nominee’s name, qualifications for Board membership and compliance with our Director Resignation Policy discussed in this proxy statement and should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202.
Director Skills and Qualifications
Board. In assessing a director nominee, the Committee considers the appropriate balance of experience, skills and other qualifications required for service on our Board, including (i) qualifications or characteristicscore attributes that are expected and befitting of allour directors, and (ii) specific skills, experience or qualifications most closely aligned to our strategic priorities that should be represented collectively on our Board. Our Guidelines contain Board membership criteria that apply to all nominees recommended for a position on the Board.
Our director nominee screening process is designed to ensure that the Board includes members with diverse backgrounds, including race, ethnicity, gender, skills, thought, perspective and experience, as well as appropriate financial and other expertise relevant to the Company’s business.
Core Director Attributes | Substantive Areas of Expertise | |||||
Independent under our Guidelines, as well as meeting the independence requirements of, as applicable, the NYSE, SEC, IRS; | Public company CEO, CFO or COO experience; | |||||
External public company board service is limited (maximum of three); | Financial oversight (including capital markets experience); | |||||
Risk oversight ability with respect to the particular skills of the individual director; | Corporate governance (including Board of Directors experience, sustainability, and environmental, social and related-governance (ESG)); | |||||
Understanding of and experience with complex public companies or like organizations; | Health care industry experience (including clinical practice); | |||||
Standing and reputation in the individual’s field; | Information technology and digital innovation; data privacy; and cybersecurity; | |||||
Ability to work collegially and collaboratively with other directors and our management team; | Marketing and consumer insights (including product design and growth models); | |||||
High integrity and ethical standards; and | Government relations, public policy and regulatory experience; and | |||||
A commitment to diversity, equity and inclusion (DEI). | Strategy development. |
The Committee further assesses each director nominee’s ability to devote sufficient time and effort to his or her duties as a potential director, his or her willingness to consider all strategic proposals, and any core competencies or technical expertise necessary to staff Board committees. This annual assessment may also incorporate responses, as appropriate, from the Board’s annual individual self-evaluations. More information about the Board self-evaluation process can be found in the section entitled “Board Evaluation Process.” The director nominee analysis also helps to determine whether a nominee would meet the criteria for independence set forth in the Guidelines established by the Board and in accordance with independence requirements of the NYSE and the SEC.
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Board CompositionThe following matrix summarizes the most significant skills, attributes and Refreshment
To meet the changing needsexperiences represented on our diverse, knowledgeable and strategic direction of our business, and as a result of certainexperienced Board. More information about each director departures, we changed our Board’s composition during 2019 and 2020. The charts below represent certain demographics representedcan be found in the current composition of our director nominees.
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Board Evaluation Practices
The Board is committed to a rigorous self-evaluation process. Through evaluation, directors annually review the Board’s performance and their own individual contributions, including areas where the Board feels it functions effectively, and most importantly, areas where the Board can improve. The Committee, with participation from our Chairman and Chief Executive Officer, initiates the annual Board evaluation process. We believe that having a review process for each group helps to (i) ensure an adequate representation of requisite skills; (ii) encourage high levels of engagement from directors; and (iii) strengthen the overall effectiveness of our Board. These evaluations may be in written or oral questionnaire form and may be administered by Board members, management or third-party consultants. Results of the evaluations are shared with the Chairman of the Board and the Chairman of the Nominating & Corporate Governance Committee and then later discussed with the entire Board in an aggregated manner.section entitled “Director Nominee Biographies.”
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The Guidelines contain standards to assist the Board in its determination of director independence. In addition, to qualify as independent under the Guidelines, the Board of Directors must affirmatively determine that a director has no material relationship with the Company, other than as a director.
Pursuant to the Guidelines, the Board undertakes an annual review of director independence. During this review, the Board considers transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates, including transactions or relationships that are reported under “Certain Transactions with Management and Others” in this proxy statement. As provided in the Guidelines, the purpose of this review is to determine whether any such transactions or relationships are inconsistent with a determination that a director is independent.
In the course of this review for the current year, the Board specifically analyzed and discussed several matters:
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Pfizer. The relationship between the Company, and Pfizer consists of a negotiated rebate based on the volume of prescriptions of Pfizer drugs obtained by Humana members, which volume includes claims paid by Humana for our members and theco-payments paid by our members. Payments to Humana from Pfizer result from activity with many intermediaries over whom Humana exercises no control (i.e., the providers who prescribe these medications, the distributors who sell to the retailers, and the retailers from which our members get prescriptions). In 2019, the Pfizer rebates amounted to approximately $227.1 million, substantially all of which were passed through to our members in the form of lower premiums and/or higher benefits. In addition, Pfizer is a contracted vendor of a certain Company subsidiary for which Pfizer provided prescription drug supplies and for which the subsidiary paid approximately $2.1 million during 2019. This amount is comparable to othernon-affiliated providers for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest for Mr. D’Amelio.
Chrysalis. In 2019, we contracted for services to be provided by certain companies in Chrysalis’ investment portfolio. In each case, the amounts paid under these arrangements were comparable to those for othernon-affiliated vendors, were not material to the Company, and did not represent a direct or indirect material interest for Mr. Jones.
Foundation Radiology Group PC.Foundation Radiology Group PC, a multi-institutional radiology services group, serves as a provider in our network, for which services we paid approximately $1.3 million in medical claims during 2019, which is an amount that is comparable to othernon-affiliated providers for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest for Mr. Jones.
JAPC. In 2019, we provided hangar space, pilot services and maintenance for an airplane owned by JAPC, for which we were fully reimbursed by JAPC in the aggregate amount of approximately $615,968, at a rate we believe to be at least as favorable to the Company as market rates.
Thomas Jefferson Health System. Thomas Jefferson Health System serves as a provider in our network, for which services during 2019 we paid approximately $18.7 million in medical claims related expenses. In addition, we paid Thomas Jefferson University, through its Jefferson College of Population Health, $100,000 as an annual retainer fee related to certain consulting services performed by Dr. Nash to the Company’s Chief Medical Officer. In each case, the amount is comparable to othernon-affiliated vendors for the provision of similar services, are not material to the Company, and do not represent a direct or indirect material interest for Dr. Nash. Dr. Nash was not a nominee forre-election to our Board in April 2019.
Fiserv. In 2019, we contracted for certain marketing and advertising services from Fiserv in connection with member communication materials for which we paid approximately $7.9 million, which is comparable to othernon-affiliated vendors for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest for Mr. Bisignano.
Trace3. In 2019, we contracted for certain information technology services, from Trace3, for which we paid approximately $1.8 million, which is comparable to othernon-affiliated vendors for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest for Mr. Mitchell. Mr. Mitchell was not a nominee forre-election to our Board in April 2019.
Veritiv. In 2019, we contracted for certain packaging and supply services from Veritiv in connection with our pharmacy business, for which we paid approximately $7.4 million, which is comparable to othernon-affiliated vendors for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest for Mr. Mitchell.
HealthcareCustomers.In 2019, we received health care premium payments, healthcare administration fee payments (associated with our self-funded ASO plan offerings) and/or made certain claims funding payments, from certain customers with whom one of our current directors or a relative of that director has a relationship. Under each such arrangement, the premiums or administrative fees charged and benefits provided, including claims funding arrangements, are comparable to those extended to our othernon-affiliated customers. The following relationships were included in this review:
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Public Company CEO, CFO, or |
At the conclusion of its review for the current year, the Board affirmatively determined that in each case the relationship between the Company or its affiliate and each director-related entity was not material, was below the thresholds for independence prescribed by the NYSE, and did not impact the independence of any of our directors. Each director recused themselves from the independence assessment relative to himself or herself. Consistent with these considerations, and based on its review of director independence in light of the standards contained in the Guidelines, the Board determined that each member of the Board of Directors (except Mr. Broussard, as a current employee of the Company) is independent.
Committee Membership and Attendance
The Board of Directors has the following standing committees: Audit; Organization & Compensation; Nominating & Corporate Governance; Executive; Technology and Investment. Only directors meeting the applicable SEC and NYSE director independence standards and Internal Revenue Code “outside director” criteria may serve on the Audit Committee, the Organization & Compensation Committee, and the Nominating & Corporate Governance Committee. Each standing Board committee operates pursuant to a charter, which may be viewed on our website atwww.humana.com. From thewww.humana.com website, click on “Investor Relations,” then click on “Corporate Governance,” and then you will see a link to the Committee Charters. The number of Board committee meetings (telephonic and in-person) held in 2019 and membership as of March 1, 2020, were as follows:
Director | Audit |
Organization & Compensation |
Nominating & | Executive | Technology | Investment | ||||||
Frank J. Bisignano |
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Bruce D. Broussard |
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Frank A. D’Amelio |
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W. Roy Dunbar |
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Wayne A.I. Frederick, M.D.1 | ||||||||||||
John W. Garratt2 | ||||||||||||
Kurt J. Hilzinger | | |||||||||||
David A. Jones, Jr. |
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Karen W. Katz3 | ||||||||||||
William J. McDonald |
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James J. O’Brien |
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Marissa T. Peterson |
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Number of Meetings in 2019
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= Chair = Member
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Financial Oversight | √ | √ | √ | √ | √ | √ | √ | √ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Governance | √ | √ | √ | √ | √ | √ | √ | √ | √ |
Committee Responsibilities
Pursuant to its charter, the Audit Committee:
assists the Board of Directors with the oversight of the integrity of our financial statements and disclosures and internal controls, our compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence and the performance of our internal audit function and the independent registered public accounting firm;
bears responsibility for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm engaged to prepare the audit report or perform other audit, review or attest services;
reviews with the independent registered public accounting firm, our internal audit department, and our financial and accounting personnel, the effectiveness of our accounting and financial controls and, where appropriate, makes recommendations for the improvement of these internal control procedures;
reviews the scope, funding and results of our internal audit function, including the independence and authority of our reporting obligations, the proposed audit plans for the year, and the coordination of these plans with the independent registered public accounting firm;
reviews the scope, funding and results of our Enterprise Risk Management program and compliance program, including receiving, at least quarterly, an update from our Chief Risk Office and internal compliance department regarding any significant matters regarding our risk management and compliance with regulatory requirements and contracts with government entities, respectively;
collaborates with the Technology Committee to regularly receive updates on risks, and risk mitigation measures, related to Company’s information technology, internal controls, information security, cyber security, business continuity and disaster recovery programs;
reviews the financial statements and other information contained in our Annual Report and other reports to stockholders with management and the independent registered public accounting firm to determine that the independent registered public accounting firm is satisfied with the disclosure and content of the financial statements to be presented to the stockholders and reviews any changes in accounting principles;
confers independently with our internal auditors, Chief Risk Officer, internal compliance department, key members of management, and the independent registered public accounting firm;
determines and approves the appropriateness of the fees for audit and permissiblenon-audit services performed by the independent registered public accounting firm;
discusses with management our compliance with applicable legal requirements and with our internal policies regarding related party transactions and conflicts of interest;
discusses our policies with respect to risk assessment and risk management;
maintains free and open means of communication between the members of our Board of Directors, the independent registered public accounting firm, our internal audit department, our Chief Risk Officer, our internal compliance department, and our financial management; and
annually evaluates its performance.
Corporate Governance Determinations
The Board of Directors has determined that each of the members of the Audit Committee at February 19, 2020 is independent according to SEC and NYSE requirements, and each is financially literate, as defined in the NYSE listing standards. The Board of Directors has determined further that Messrs. D’Amelio and O’Brien meet the definition of “audit committee financial expert.” PricewaterhouseCoopers LLP, our independent registered public accounting firm, reports directly to the Audit Committee. No member of the Board’s Audit Committee serves on the audit committees of more than three publicly traded companies. The Report of the Audit Committee for the year ended December 31, 2019, is set forth in this proxy statement under the caption “Audit Committee Report.”
Organization & Compensation Committee
Committee Responsibilities
Pursuant to its charter, the Organization & Compensation Committee:
reviews and approves our goals and objectives relevant to the compensation of our CEO, evaluates the CEO’s performance in light of those goals and objectives, and, either as a Committee or together with the other independent directors, determines and approves the CEO’s compensation level based on this evaluation;
Healthcare Industry
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review and approves all elements of compensation paid to our current or prospective executive officers, including without limitation, base compensation, incentive-compensation plans and equity-based plans, employment, change in control or severance programs and agreements, and any special compensation or benefits, including supplemental retirement benefits and any perquisites;
approves equity-based grants to our executive officers and other associates;
reviews and discusses with management the Company’s compensation plans and policies for all employees (including the Named Executive Officers) with respect to risk management and risk-inducing incentives;
ensures preparation of the Compensation Discussion and Analysis and the Compensation Committee Report as required by SEC regulations;
monitors compliance of executive officers andnon-employee directors with relevant stock ownership guidelines;
reviews with management periodically, as it deems appropriate, management succession and inclusion and diversity practices;
administers our Executive Management Incentive Compensation Plan and other substantially similar or successor incentive compensation plans; and
annually evaluates its performance.
Scope of Authority, Processes and Procedures
The Organization & Compensation Committee acts on behalf of the Board of Directors to establish the compensation of our executive officers and provides oversight of our compensation philosophy, as described in this proxy statement under the caption “Compensation Discussion and Analysis.” The role of the executive officers and the outside compensation consultant in establishing executive compensation is discussed in this proxy statement under the caption “Compensation Discussion and Analysis.” Other than routine administrative matters and the ability of our CEO to approve grants of equity awards subject to certain individual and annual thresholds, no executive compensation decisions are delegated to management.
Compensation Committee Interlocks and Insider Participation
No member of the Organization & Compensation Committee: (i) is or has ever been an officer or employee of the Company; or (ii) is or was, during the last fiscal year, a participant in a “related person” transaction requiring disclosure under Item 404 of the SEC’s regulations (see discussion in this proxy statement under the caption “Certain Transactions with Management and Others”); or (iii) is an executive officer of another entity at which one of our executive officers serves either as a director or on its compensation committee.
Corporate Governance Determinations
During 2019, W. Roy Dunbar (Chair), Frank J. Bisignano and David A. Jones, Jr. served as members of our Organization & Compensation Committee. Considering (i) the source of each director’s compensation, including any consulting, advisory or other compensatory fees paid by the Company; and (ii) whether each director has an affiliate relationship with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company, the Board has determined that each member of the Organization & Compensation Committee at February 19, 2020, is independent, as defined by the SEC and the NYSE, and is considered to be an “outside director” under Section 162(m) of the Internal Revenue Code.
Compensation Risk Determination
In 2019, the Organization & Compensation Committee reviewed management’s assessment of the risks associated with the Company’s compensation practices and policies for employees, including a consideration of the counterbalance of risk-taking incentives and risk-mitigating factors in Company practices and policies. Following a review of this assessment, the Organization & Compensation Committee determined that the risks arising from the Company’s compensation practices and policies are not reasonably likely to have a material adverse effect on the Company.
Nominating & Corporate Governance Committee
Committee Responsibilities
Pursuant to its charter, the Nominating & Corporate Governance Committee:
recommends to the full Board criteria for the selection and qualification of the members of the Board;
evaluates and recommends for nomination by the Board candidates to be proposed for election by the stockholders at each annual meeting;
seeks out and assists in the recruitment of highly qualified candidates to serve on the Board;
recommends for Board approval candidates to fill vacancies on the Board which occur between annual meetings;
develops, periodically reviews and recommends to the Board revisions to the Guidelines;
IT/Digital; Data Privacy; Cyber | ||
studies and reviews with management the overall effectiveness of the organization of the Board and the conduct of its business, and makes appropriate recommendations to the Board;
reviews the overall relationship of the Board and management;
reviews issues and developments pertaining to corporate governance;
reviews our public policy and political spending practices through regular reviews of our policy on political expenditures, expenditures and payments made with corporate funds, and overall political activity, including review of our Political Contributions and Related Activity Report; and
annually evaluates its performance.
Pursuant to its charter, the Executive Committee possesses the authority to exercise all the powers of the Board of Directors except as otherwise provided by Delaware law and our Bylaws during intervals between meetings of the Board. The Executive Committee does not have the power, to, among other things, declare a dividend, issue stock, adopt a certificate of merger or sell substantially all of the Company’s business.
Pursuant to its charter, the Investment Committee establishes investment objectives and policies for our various investment portfolios and investment options available under various employee benefit plans, reviews investment results, and annually evaluates its performance.
Pursuant to its charter, the Technology Committee represents and assists the Board of Directors with the oversight of:
our process, awareness, evaluation and perspective on potentially disruptive technologies and convergences that may represent threats or opportunities for our business operations;
our process and perspective on strategic technology capabilities that enable transformational business capabilities;
our process, execution roadmaps, requisite capital, progress in delivering technology-enabled transformational capabilities and their related outcomes; and
management’s focus on organizational, talent and cultural enablers required to ensure achievement of those outcomes.
The Technology Committee may also assist the Audit Committee in its oversight of our information technology internal controls, cyber security, business continuity and disaster recovery programs.
Majority Vote Policy
Under our Bylaws, a director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast against the nominee. In contested elections, those in which a stockholder has nominated a person for election to the Board, the voting standard is a plurality of votes cast. The Board has also adopted a policy to require the Board to nominate for election only nominees who agree that, if they are elected to the Board, they will tender an irrevocable resignation conditioned on, first, the failure to achieve the required vote forre-election at any future meeting at which they facere-election, and second, the Board’s acceptance of their resignation following that election. In addition, the Board may fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors, as described above. The Nominating & Corporate Governance Committee will submit a recommendation for prompt consideration by the Board whether to accept the resignation. Any director whose resignation is under consideration will abstain from participating in any decision regarding that resignation. The Bylaws also require stockholder nominees for director election to notify the Company whether or not such nominees intend to tender the same type of resignation required of the Board’s director nominees.
Change in Director’s Primary Position
The Board has adopted a policy requiring that a director whose primary position or affiliation changes must promptly notify the Board and the Nominating & Corporate Governance Committee of the change so that a determination may be made as to the value of his or her continued service on the Board.
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Marketing/Consumer
Insights
Government Relations/
Director Stock Ownership Policy
Our Board believes that directors should be stockholders and have a significant personal financial stake in the Company. Consequently, the Board has adopted the following stock ownership guidelines:
Eachnon-employee director must maintain a minimum equity ownership level of five times the annual cash retainer.
Shares deferred at the election of the director are considered owned for purposes of the calculation of the ownership requirement.
Any Shares owned by anon-employee director (or Shares received upon the exercise of options or vesting of restricted stock or restricted stock units, less an amount to cover the exercise price and/or current tax liabilities) must be held by the director until the minimum equity ownership level is reached and thereafter maintained.
Once the minimum equity ownership level has been achieved, any Shares received upon the vesting of restricted stock or restricted stock units, less an amount to cover current tax liabilities, must be held by the director until one year following the vesting date.
Compliance with these guidelines is monitored by the Organization & Compensation Committee.
Director Attendance
The Board has developed a number of specific expectations of directors to define their responsibilities and to promote the efficient conduct of the Board’s business. With respect to the level of commitment expected of directors and related attendance protocols, as part of the Guidelines, the Board formally adopted a policy that all directors should make every effort to attend all meetings of the Board and the Committees of which they are members, and the Company’s Annual Meeting of Stockholders. Attendance by telephone or video conference may be used to facilitate a Director’s attendance.
During 2019, apart from Committee meetings, the Board of Directors met 10 times. All directors attended at least 75% of the scheduled Board of Directors’ meetings and meetings held by Committees of which they were members. All director nominees serving as directors at that time attended the Annual Meeting of Stockholders held on April 18, 2019.
Executive Sessions ofNon-Management Directors
In 2019, ournon-management directors held regularly scheduled, formal executive meetings, separate from management and led by our Chairman. Additional executive sessions of the Board are held as necessary or appropriate or upon the request of the Chairman, the Nominating & Corporate Governance Committee or any two othernon-management directors. In addition, ournon-management directors who qualify as independent within the meaning of our director independence guidelines meet in executive session at least once annually, and, in fact, met in 2019 in connection with each regularly scheduled Board of Directors meeting.
Code of Ethics and Code of Business Conduct
The Company has adopted the “Code of Conduct for the Chief Executive Officer and Senior Financial Officers,” which we refer to as the Executive Code of Ethics, violations of which are reported to the Audit Committee. In addition, we operate under the omnibus Humana Inc. Ethics Every Day, which we refer to as the Code of Ethics, which applies to all associates (including executive officers) and directors. The Humana Ethics Office is responsible for the design and enforcement of our ethics policies, the goal of which is to create a workplace climate in which ethics is so integral today-to-day operations that ethical behavior is self-enforcing. All employees are required annually to review and affirm in writing their acceptance of the Code of Ethics. The Code of Ethics and the Executive Code of Ethics may be viewed on our website atwww.humana.com. Any waiver for directors or executive officers from the provisions of the Code of Ethics or the Executive Code of Ethics must be made by the Board of Directors, and will be disclosed within four days of the waiver on our website atwww.humana.com. To see either the Code of Ethics or the Executive Code of Ethics or any waivers to either policy, go towww.humana.com, then click on “Investor Relations,” then click on “Corporate Governance,” and then click on the relevant link.
Policy Regarding Employee, Officer and Director Hedging
The Company has a policy prohibiting all associates (including executive officers and independent directors) from hedging or pledging transactions using Company stock, including: (1) engaging in short sales of Company securities; (2) engaging in transactions in puts, calls or other derivative securities designed to hedge or offset any decrease in the market value of the Company’s equity securities, on an exchange or in any other organized market; or (3) engaging in certain monetization transactions, including holding Company securities in margin accounts or pledging Company securities as collateral.
Public Policy
Our Company has an active voice on healthcare policy issues that matter most to the people we serve. From Medicare, TRICARE and home health; to integrated care, Medicaid and healthcare reform – we are committed to advancing public policy that moves us toward a future in which everyone can enjoy lifelong health and well-being.
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4 | Humana | 2023 Proxy Statement •Proposal One |
Board Composition and Refreshment
The Committee and the Board follow a thoughtful refreshment process to ensure the Board composition best reflects the most appropriate mix of skills and experiences to perform strong oversight of the Company’s strategic priorities. The Committee and the Board strive to maintain a balance of tenure on the Board. Longer-serving directors bring valuable experience and a deep understanding of our complex business and industry, along with a historical perspective of our long-term successes, challenges and business cycles, and how these past experiences may inform our current strategy. Newer directors are also critical to the advancement of our strategy, bringing new skills and experiences and contributing fresh perspectives. The Board has established a policy that non-employee directors must retire at the first annual meeting following his or her seventy-third birthday. To encourage director refreshment, there are no exemptions or conditions in this policy.
As further shown below, our Board has undergone significant refreshment in recent years. Since January 2017, ten new directors have been appointed to our Board. Eight of those directors are standing for election this year, all of whom are independent and joined the Board since 2019, deepening the Board’s C-Suite experience, financial expertise, healthcare industry experience, technology expertise, consumer perspective, and public policy expertise while also building on the Board’s focus on diversity.
Regarding diversity, our Company and our Board actively promote and foster a culture of inclusion and diversity to enable an environment where the unique characteristics, backgrounds and beliefs of our teammates can drive the groundbreaking, strategic thinking that gives our Company its competitive edge in a diverse marketplace.
Our Board does not establish specific goals with respect to diversity; rather, the Board’s diversity is a consideration in the overall director nomination process and is a component of the overall assessment of the Board’s composition and effectiveness. Under the Nominating, Governance & Sustainability Committee Charter, the Board has further committed to include, and require any third-party search firm that it engages to include, candidates with diversity of race, ethnicity and gender in the slate of candidates considered by the Committee and/or the Board for nomination to the Board.
The illustrations below depict independence, age, tenure and diversity represented in the current composition of our director nominees.
Director Independence | Director Age Distribution | Board Tenure | ||
92% |
61 Years |
6.85 Years Average director tenure
67% Of directors have served < 5 years
33% Of directors have served 10+ years
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Of our directors are independent (11 of 12 directors) | Average age of director nominees (Age Range: 51 – 66) | |||
Gender Representation |
Race/Ethnicity Representation | |||
25% |
17% | |||
Of our directors are women (3 of 12 directors) | Of our directors are racially and/or ethnically diverse (2 of 12 directors) | (Based on service as of March 1, 2023) | ||
Proposal One• 2023 Proxy Statement | Humana | 5 |
Identifying Nominees for Directors
The Board has delegated an established screening process for director nominees to the Nominating, Governance & Sustainability Committee, with counsel from our Chairman, our Chief Executive Officer, and outside consultants as appropriate. The goal of the screening process is to assemble a group of potential board members with deep, varied experience, sound judgment, and commitment to the Company’s success.
The Committee receives notice of potential candidates through any of the following avenues: (i) Board self-identification; (ii) third-party recommendations; and (iii) stockholder nominations. While director nominees may be presented to the Board for consideration by the Committee through any of these methods, the Board is ultimately responsible for assessing the needs of the Board, appointing candidates to the Board, and nominating candidates for election by our stockholders at our annual meeting. Once the Committee has compiled its group of suitable candidates and conducted appropriate diligence, it then meets with the Board to review the candidates for further consideration.
Board Self-Identification. The Committee regularly assesses the appropriate size of the Board, the areas of expertise required to effectively contribute to the Board process, and whether any vacancies are anticipated. It also annually assesses the director qualification criteria to ensure the Board has appropriate skill composition aimed at the Company’s long-term business strategy, operations, risks, thought and perspective. As a result, the Committee may recommend to the Board a need for an additional director, Board refreshment for certain requisite skills and qualifications, and/or suggest the replacement of an existing director for other credible reasons.
Third-Party Recommendations. From time to time, the Committee engages a professional third-party search firm to assist the Board of Directors and the Committee in identifying and recruiting candidates for Board membership.
Stockholder Nominees. The policy of the Committee is to consider properly submitted stockholder nominations for candidates for membership on the Board as described above under “Identifying Nominees for Directors.” Stockholder nominations for election to the Board of Directors are governed by specific provisions in our Bylaws, a copy of which is available on our website at www.humana.com. From the www.humana.com website, click on “Investor Relations,” and then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.” The Bylaws require that a stockholder provide written notice of intent to nominate a candidate for director no less than 90 days or more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting of Stockholders. Any stockholder nominations proposed for consideration by the Committee should include, among other information required by the Bylaws, the nominee’s name, qualifications for Board membership and compliance with our Director Resignation Policy discussed in this proxy statement and should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202.
Board of Directors Nominee Determination
At the recommendation of the Nominating, Governance & Sustainability Committee, the Board has nominated twelve (12) individuals for this year’s election. The Board believes that each director nominee possesses and demonstrates the character, integrity, independence, business judgment and all other requisite skills, qualifications and attributes necessary to effectively (i) act in the best interests of the Company and its stockholders and (ii) exercise active and independent oversight of the of the Company’s management team, business affairs and assets. As a group, the director nominees’ create a diverse, knowledgeable and experienced Board with strong executive experience; financial expertise; knowledge and experience in healthcare; expertise in information systems; protection and digital innovation; and consumer orientation necessary to oversee the Company’s business and the execution of our strategy.
We believe that the current Board members have a deep commitment to the Company’s success, as evidenced by the key qualifications, skills, experiences and diversity of backgrounds of each director described below. The information given in this proxy statement concerning the nominees is based upon statements made or confirmed to the Company by or on behalf of the nominees.
6 | Humana | 2023 Proxy Statement •Proposal One |
Director Nominee Biographies
Kurt J. Hilzinger | Age 62 Director since 2003 | |||||||
Chairman of the Board Independent Director | Kurt J. Hilzinger was initially elected to the Board in July 2003, and was elected Chairman of the Board effective January 1, 2014. Mr. Hilzinger served as Lead Director from August 2010 until his appointment as Chairman. Mr. Hilzinger is a Partner at Court Square Capital Partners, an independent private equity firm, having held this position since November 2007. At Court Square, Mr. Hilzinger focuses principally on investments in the healthcare industry. Prior to that, he was a Director of AmerisourceBergen Corporation from March 2004 to November 2007; having previously served as President and Chief Operating Officer of AmerisourceBergen Corporation from October 2002 to November 2007, and as Executive Vice President and Chief Operating Officer from August 2001 to October 2002. Mr. Hilzinger also serves on the Board of Directors of Outlook Therapeutics, Inc. and several privately held companies. | |||||||
Committees | ||||||||
• Executive | ||||||||
The Company has also established and sponsors a Political Action Committee (PAC), for which Company associates may voluntarily contribute. The PAC is registered with the Federal Election Commission (FEC) and certain states nationwide as required by applicable law. As a matter of policy, all Company political activities must promote the interests of the Company, and must be made without regard for the private political preferences of Company officers or executives. Furthermore, Humana does not make independent expenditures nor does it contribute to ballot measure committees. Distributions from the PAC are made to election committees of federal and state office candidates or to other PACs on anon-partisan basis. While the PAC has its own separate board of directors to oversee its operations, the Company’s Board - through its Audit Committee - has responsibility for (i) reviewing the political contributions and political activities of the Company and the PAC and (ii) overseeing compliance with the overall policy, process and contribution criteria with respect to such contributions and activities. The Board reviews occur semi-annually, along with semi-annual publication of a Contributions and Related Activity Report (PAC Report). To learn more about our public policy and to review the most recent PAC Report, visit our web site atwww.humana.com, then click on “About Humana,” then click on “Public Policy.”
Communication with Directors
Stockholders and other interested parties may communicate directly with our Chairman,non-management directors as a group, or any other individual director by writing to the speciale-mail address published on our website atwww.humana.com. Specifically, interested parties may visit our website athttps://www.humana.com/about/contact-bod, where instructions for contacting these persons are available. All directors have access to thise-mail address. We use the staff of our Corporate Secretary to review correspondence received in this manner, and to filter advertisements, solicitations, spam, and other such items. Concerns related to accounting, internal controls or auditing matters are required to be brought immediately to the attention of our Chief Legal Officer and the Board and handled in accordance with procedures established by the Audit Committee with respect to such matters.
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Bruce D. Broussard
Age 60 Director since 2013
Director, President and
Chief Executive Officer
Bruce D. Broussard, President and CEO, joined Humana in 2011. Under his leadership, Humana has created an integrated care delivery model centered on improving health outcomes, driving lower costs, enhancing quality, and providing a simple and personalized member experience. With its holistic, human care approach, Humana is dedicated to improving the health of the communities it serves by making it easier for people to achieve their best health.
Bruce brings to Humana a wide range of executive leadership experience in publicly traded and private organizations within a variety of healthcare sectors, including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers and dental networks. Prior to joining Humana, Bruce was Chief Executive Officer of McKesson Specialty/US Oncology, Inc. US Oncology was purchased by McKesson in December 2010. At US Oncology, Bruce served in a number of senior executive roles, including Chief Financial Officer, President, Chief Executive Officer and Chairman of the Board.
Bruce plays a leadership role in key business advocacy organizations such as the Business Roundtable, the Business Council, and the American Heart Association CEO Roundtable. He is a member of the Board of Directors of the Company, in accordance with the provisionsHP Inc. and is a member and previous chair of the Company’s Articles of Incorporation and Bylaws, has determined that the number of directors to be elected at the Annual Meeting of the Company shall be twelve (12)America’s Health Insurance Plans (AHIP). The directors are elected to hold office until the Annual Meeting of Stockholders in 2021 and until a successor is elected and qualified.
Each of the nominees has consented to be named as a nominee and agreed to serve if elected. If any nominee becomes unable to serve for any reason (which is not anticipated), the Shares represented by the proxy granted to Messrs. Hilzinger and Broussard may be voted for the substituted nominee as may be designated byAdditionally, Bruce serves on the Board of Directors. the Trust for the National Mall, a nonprofit philanthropic partner of the National Park Service dedicated to restoring and preserving the National Mall.
Committees
• Executive
The Board has establishedbelieves that Mr. Broussard’s wide range of executive leadership experience in publicly traded and private organizations within a policy thatnon-employee directors must retire at the first annual meeting followingvariety of healthcare sectors, including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers, and dental networks, as well as his or her seventy-third birthday.
The following table shows certain information concerning the nominees at March 1, 2020.
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Board of Directors Nominee Determination
At the recommendation of the Nominating & Corporate Governance Committee, the Board has determined that each director nominee possesses and demonstrates the character, integrity, independence, business judgment and all other requisite skills, qualifications and attributes necessary to effectively (i) act in the best interests of the Company and its stockholders and (ii) exercise active and independent oversight of the of the Company’s management team, business affairs and assets.
We believe that the current Board members have a deep commitment to the Company’s success, as evidenced by the key qualifications, skills, experiences and diversity of backgrounds of each director described below. For additional information, please refer to the section entitled, “Qualifications and Process for Nominating Directors” in this proxy statement. The information given in this proxy statement concerning the nominees is based upon statements made or confirmed to the Company by or on behalf of the nominees.
Director Nominees’ Biographies
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Proposal One• 2023 Proxy Statement | Humana | 7 |
Raquel C. Bono, M.D. | Age 66 Director since 2020 | |||||
Independent Director | Raquel C. Bono, M.D., was initially elected to the Board in September 2020. She is a Principal at RCB Consulting having held this position since October 2019, as well as, Chief Health Officer at Viking having held this position since November 2020. Dr. Bono, a board-certified trauma surgeon and retired Vice Admiral, U.S. Navy Medical Corps, previously served as the Chief Executive Officer and Director for the Defense Health Agency (DHA). In this capacity, Dr. Bono led a joint, integrated combat support agency that enables all branches of the U.S. military medical services to provide health care services to combatant commands in times of both peace and war. Dr. Bono integrated an unprecedented $50 billion worldwide health care enterprise for the Army, Navy, Air Force, and Marine Corps, composed of 50 hospitals and 300 clinics that provide care to 9.5 million military personnel, oversaw the Department of Defense deployment of the electronic health record, and facilitated the collaboration between the largest federated health systems of the Department of Defense and Department of Veterans Affairs (VA). An American College of Surgeons (ACS) Fellow since 1991, Dr. Bono served on the ACS Board of Governors and the Governors Health Policy and Advocacy Workgroup. She has been honored with the Defense Distinguished Service Medal, three Defense Superior Service Medals, four Legion of Merit Medals, two Meritorious Service Medals, and two Navy and Marine Corps Commendation medals. Dr. Bono also serves on the Board of Alcon, Inc. | |||||
Committees | ||||||
• Audit • Technology | ||||||
The Board believes that Dr. Bono’s decorated military service and distinguished and successful career in trauma surgery and healthcare administration bring an important perspective to Humana’s Board and further contribute to its strategic composition. Dr. Bono’s extensive operational expertise and discipline in managing and advancing healthcare delivery systems will be vital as the Company continues to evolve its clinical and care delivery strategies. | ||||||
Frank A. D’Amelio | Age 65 Director since 2003 | |||||
Independent Director | Frank A. D’Amelio was initially elected to the Board in September 2003. Mr. D’Amelio was formerly Executive Vice President, Chief Financial Officer at Pfizer Inc. having held this position from January 2022 until May 2022. Mr. D’Amelio began his career at Pfizer in 2007 and since then has held various roles of increasing responsibility, including, SVP & Chief Financial Officer (September 2007-December 2010), Executive Vice President, Business Operations and Chief Financial Officer (January 2011-October 2018) and Chief Financial Officer and Executive Vice President, Global Supply (November 2018-December 2021). Prior to that, Mr. D’Amelio was Senior Executive Vice President of Integration and Chief Administrative Officer at Alcatel-Lucent from December 2006 to August 2007, and Chief Operating Officer of Lucent Technologies Inc. from February 2006 to November 2006. From May 2001 until January 2006, he was Executive Vice President, Administration and Chief Financial Officer of Lucent. Mr. D’Amelio also serves on the Board of Directors of Zoetis, Inc. and on the Board of Directors of Hewlett Packard Enterprises. | |||||
Committees | ||||||
• Audit (Chair) • Nominating, Governance & Sustainability | ||||||
The Board believes that Mr. D’Amelio’s skills, global experience and proven leadership in both financial and operational roles contribute greatly to the Board’s composition. As a senior executive at various global companies undergoing the kind of rapid and complex changes that the Company has undertaken in response to the rapidly changing markets and regulatory environment, Mr. D’Amelio has extensive knowledge of the capital markets as well as broad experience working with the investment community, regulatory bodies and rating agencies. | ||||||
8 | Humana | 2023 Proxy Statement •Proposal One |
David T. Feinberg, | Age 60 Director since 2022 | |||||
Independent Director | David T. Feinberg, M.D., was initially elected to the Board in March 2022. Dr. Feinberg is Chairman of Oracle Health, where he is committed to making healthcare more accessible, affordable, and equitable. His work advances thought leadership and strategy related to unleashing the healing power of data through an open and connected healthcare ecosystem. Previously, Dr. Feinberg served as President and Chief Executive Officer and member of the Board of Directors of Cerner Corporation (Cerner), which is now Oracle Health. In that role Dr. Feinberg focused on delivering tools and technology to help caregivers optimize the health of their patients and communities. Dr. Feinberg joined Cerner from Google, where he held the position of Vice President of Google Health since 2019 and led Google’s worldwide health efforts, bringing together groups from across Google and Alphabet that used artificial intelligence, product expertise and hardware to tackle some of healthcare’s biggest challenges, and was responsible for organizing and innovating Google’s various healthcare initiatives. Prior to Google, he served as President and CEO of Geisinger Health where he led an operational turnaround, and pushed the use of new platforms and tools, including an IT system called a Unified Data Architecture that allowed the company to integrate big data into existing data analytics and management systems. During his Geisinger tenure, Dr. Feinberg also introduced programs and services to put a greater focus on precision medicine and better patient care. Prior to Geisinger, Dr. Feinberg worked at UCLA for more than 20 years and served in a number of leadership roles, including President, CEO and Associate Vice Chancellor of UCLA Health Sciences, Vice Chancellor and CEO for the UCLA Hospital System, and CEO of UCLA’s Ronald Reagan Medical Center. Dr. Feinberg earned his undergraduate degree at the University of California, Berkeley. He graduated with distinction from the University of Health Sciences/Chicago Medical School. He completed an internship in pediatrics at Loyola University Medical Center, and residency and fellowship training in psychiatry, addiction psychiatry, and child and adolescent psychiatry at the UCLA School of Medicine. He earned a Master of Business Administration from Pepperdine University. Dr. Feinberg is a member of the Alpha Omega Alpha Medical Honor Society, a Distinguished Fellow of American Psychiatric Association and received the Cancro Academic Leadership Award from the American Academy of Child & Adolescent Psychiatry. Dr. Feinberg also serves on the Board of Directors of Douglas Emmett Inc. | |||||
Committees | ||||||
• No Current Committees | ||||||
The Board believes that Dr. Feinberg’s experience leading healthcare organizations focused on leveraging technology and digital innovation to improve clinical care, including public and private companies, brings valuable insights to the Board and further contribute to its strategic composition. Dr. Feinberg’s clinical background, patient-centric mindset, operating experience, and expertise in guiding systems transformations qualify him to offer key perspectives as the Company continues to advance the integration of its clinical systems and care models to improve the customer experience and reduce costs. | ||||||
Proposal One• 2023 Proxy Statement | Humana | 9 |
Wayne A. I. Frederick, | Age 51 Director since 2020 | |||||
Independent Director | Wayne A. I. Frederick, M.D., was initially elected to the Board in February 2020. He is the President of Howard University, having held this position since July 2014. Prior to that Dr. Frederick served as Howard University’s Interim President (elected October 2013) after serving as Provost and Chief Academic Officer for more than a year. Following his post-doctoral research and surgical oncology fellowships at the University of Texas MD Anderson Cancer Center, Dr. Frederick began his academic career as Associate Director of the Cancer Center at the University of Connecticut. Upon his return to Howard University, his academic positions included Associate Dean in the College of Medicine, Division Chief in the Department of Surgery, Director of the Cancer Center and Deputy Provost for Health Sciences. He also earned a Master of Business Administration degree from Howard University’s School of Business in 2011. Dr. Frederick continues to operate and lectures to the medical students and residents of Howard University’s College of Medicine. Dr. Frederick is a fellow of the American College of Surgeons (ACS) and belongs to numerous surgical and medical organizations, including, the ACS’ Academy of Master Surgeon Educators, the American Surgical Association and the National Academy of Medicine. Dr. Frederick also serves on the Board of Directors of Agostini Limited, Insulet Corporation, Workday, Inc. and Mutual of America Life Insurance Co. | |||||
Committees | ||||||
• Organization & Compensation • Technology | ||||||
The Board believes that Dr. Frederick’s exemplary career as a leader in medical research, healthcare academics and business administration brings valuable insights to the Board to assist in the advancement of its strategic healthcare goals. Dr. Frederick’s extensive healthcare and disease management background will be instrumental to our company’s relationships with our members and our physician partners, as Humana continues to innovate in the area of health data analytics. | ||||||
John W. Garratt | Age 54 Director since 2020 | |||||
Independent Director | John W. Garratt was initially elected to the Board in February 2020. He is the President and Chief Financial Officer of Dollar General Corporation, having held this position since September 1, 2022. Mr. Garratt joined Dollar General in October 2014 as Senior Vice President, Finance & Strategy and subsequently served as Interim Chief Financial Officer from July 2015 to December 2015 and most recently served as Executive Vice President and Chief Financial Officer from December 2015 to September 1, 2022. Prior to joining Dollar General, Mr. Garratt held various positions of increasing responsibility with Yum! Brands, Inc., one of the world’s largest restaurant companies, between May 2004 and October 2014, holding leadership positions in corporate strategy and financial planning. Mr. Garratt served as Vice President, Finance and Division Controller for the KFC division and earlier for the Pizza Hut division and for Yum Restaurants International between October 2013 and October 2014. Mr. Garratt also served as the Senior Director, Yum Corporate Strategy, from March 2010 to October 2013, reporting directly to the corporate Chief Financial Officer and leading corporate strategy as well as driving key cross-divisional initiatives. Mr. Garratt served in various other financial positions at Yum from May 2004 to March 2010. Prior to his career at Yum! Brands, Mr. Garratt served as Plant Controller for Alcoa Inc. between April 2002 and May 2004, and held various financial management positions at General Electric from March 1999 to April 2002. He began his career in May 1990 at Alcoa, where he served for approximately nine years. Mr. Garratt also serves as a Class B Director of the Federal Reserve Bank of Atlanta. | |||||
Committees | ||||||
• Investment (Chair) • Audit | ||||||
The Board believes that Mr. Garratt’s substantial executive leadership at large public companies, combined with his extensive experience in key areas of finance, accounting, strategic planning and business analytics, supplement existing expertise essential to the Board‘s oversight function as Humana continues to evolve its population health and care delivery strategies. Mr. Garratt’s contributions to organizations across varied consumer-based industries further qualifies him to offer key perspectives as the Company enhances products and capabilities for our members. | ||||||
10 | Humana | 2023 Proxy Statement •Proposal One |
Karen W. Katz | Age 66 Director since 2019 | |||||
Independent Director | Karen W. Katz was initially elected to the Board in September 2019. Ms. Katz was most recently the interim CEO of Intermix, LLC from June 2022 to December 2022. Prior to Intermix, Ms. Katz served as the President and CEO of Neiman Marcus Group LTD LLC from 2010 to February 2018. Neiman Marcus Group is an international multibrand omni-channel retailer whose portfolio of brands includes Neiman Marcus, Bergdorf Goodman and MyTheresa. Having joined Neiman Marcus in 1985, Ms. Katz served in key executive and leadership roles in the company’s merchant, stores and eCommerce organizations as Executive Vice President—Stores, a member of the Office of the Chairman of Neiman Marcus Group, and President, Neiman Marcus Online, and President and CEO, Neiman Marcus Stores. Ms. Katz currently serves on the Board of Directors of Under Armour, Inc. and The RealReal, Inc. | |||||
Committees | ||||||
• Nominating, Governance • Technology | ||||||
The Board believes that Ms. Katz is an extremely accomplished executive with deep experience and a demonstrated commitment to understanding, and meeting, the needs of customers by maintaining a personalized experience enabled by digital transformation. She brings a holistic approach to customer service, including acumen for employing technology to advance service delivery, combined with demonstrated success in growing business through forward thinking leadership, providing valuable perspective and expertise to the Board. | ||||||
Marcy S. Klevorn | Age 63 Director since 2021 | |||||
Independent Director | Marcy S. Klevorn was initially elected to the Board in February 2021. Ms. Klevorn was formerly the Chief Transformation Officer of Ford Motor Company (Ford) from May 2019 until her retirement in October 2019. In this role, she accelerated the company’s transformation by helping to refine its corporate governance systems, facilitate faster adoption of agile teams across the business and ensure process improvements across the enterprise. She also facilitated strategic partnerships with key technology partners and supported the company’s diversity efforts. Having joined Ford Motor Company in 1983, Ms. Klevorn served in key executive and leadership roles within the company’s information technology organization including Director of the Office of the Chief Information Officer and Group Vice President of Information Technology. Ms. Klevorn also served as Executive Vice President and President of Ford Smart Mobility LLC, a division of Ford Motor Company, where she oversaw certain acquisitions and other investments and helped to accelerate the company’s plans to design, build, grow and invest in emerging mobility services and global data insight and analytics. Ms. Klevorn currently serves on the Board of Directors of Northern Trust Corporation. | |||||
Committees | ||||||
• Technology (Chair) | ||||||
The Board believes that Ms. Klevorn’s extensive executive experience and leadership in digital innovation and systems transformation brings valuable insights to the Board as the Company continues to enhance its technology-driven platforms for members and providers. Ms. Klevorn’s deep understanding of information technology, cyber security, and systems management and infrastructure, combined with her proven ability to connect systems to strategy execution qualify her to provide key insights in the Company’s consumer-focused approach to care. | ||||||
Proposal One• 2023 Proxy Statement | Humana | 11 |
William J. McDonald | Age 66 Director since 2007 | |||||
Independent Director | William J. McDonald was initially elected to the Board in October 2007. Mr. McDonald is the managing partner of Wild Irishman Advisory, LLC, a marketing consulting firm. Prior to that, McDonald was Executive Vice President, Brand Management of Capital One Financial Corporation, having held that position from 1998 until his retirement in 2013. Prior to joining Capital One, he served as chief marketing officer for Boston Chicken, Inc. Previously, he was chief marketing officer for KFC and also served in marketing and branding leadership roles for Pizza Hut and PepsiCo. Mr. McDonald also serves on the advisory board of The University of Texas at Austin Longhorn Family Leadership Council. | |||||
Committees | ||||||
• Audit • Investment | ||||||
The Board believes that Mr. McDonald’s service in various senior executive marketing positions contributes significant experience and expertise in brand development, marketing and related disciplines. | ||||||
Jorge S. Mesquita | Age 61 Director since 2021 | |||||
Independent Director | Jorge S. Mesquita was initially elected to the Board in February 2021. Mr. Mesquita was formerly Chief Executive Officer of BlueTriton Brands from July 2021 until March 2022. In this role Mr. Mesquita led the company’s initiatives to expand market leadership, advance commitment to sustainability and environmental stewardship and to realize the potential of the company’s portfolio of water brands. Prior to joining BlueTriton Brands, Mr. Mesquita was formerly the Executive Vice President, Worldwide Chairman, Consumer of Johnson & Johnson (J&J) from December 2014 until February 2019, where he was responsible for increasing the competitiveness of J&J’s consumer business through a comprehensive transformational strategy. In this role, Mr. Mesquita served on J&J’s Executive Committee and led the Consumer Group Operating Committee. Prior to that, Mr. Mesquita spent 29 years with The Procter & Gamble Company (P&G), where he held various roles leading P&G consumer product business units. During his tenure at P&G, Mr. Mesquita served as Group President – New Business Creation and Innovation from March 2012 until June 2013, Group President – Special Assignment from January 2012 until March 2012, Group President, Global Fabric Care from 2007 to 2011 and President, Global Home Care from 2001 to 2007, also serving as President of Commercial Products and President of P&G Professional from 2006 to 2007. Mr. Mesquita currently serves on the Board of Directors of Mondelez International, Inc. | |||||
Committees | ||||||
• Organization & Compensation | ||||||
The Board believes that Mr. Mesquita’s proven experience in leading business units for significant global, consumer-oriented companies provides a valuable perspective to Humana’s Board and further contribute to its strategic composition. Mr. Mesquita’s forward-thinking, transformational mindset and strong track record of building and marketing global brands, developing consumer insight-driven innovation capabilities, and driving strong, profitable growth will be essential as the Company continues to create seamless consumer experiences and help its members achieve their best health. | ||||||
12 | Humana | 2023 Proxy Statement •Proposal One |
Brad D. Smith | Age 58 Director since 2022 | |||||
Independent Director | Brad D. Smith was initially elected to the Board in September 2022. Mr. Smith is the President of Marshall University, having held this position since January 2022. Prior to joining Marshall, Mr. Smith was Executive Chairman of the Board of Intuit Inc. from January 2019 until January 2022 and Chairman from January 2016 until January 2019, following 11 years as Intuit’s President and CEO from January 2008 until December 2018. Mr. Smith began his career at Intuit in February 2003, and prior to his time as President and CEO, he served in various leadership positions within the company. Prior to joining Intuit, Mr. Smith held several executive positions with ADP, where he served from 1996 to 2003. Mr. Smith holds a Bachelor of Business Administration degree from Marshall University and a Master’s degree in Management from Aquinas College. Mr. Smith currently serves on the Board of Directors of Intuit Inc. | |||||
Committees | ||||||
• No Current Committees | ||||||
The Board believes that Mr. Smith’s executive leadership experience and business acumen in driving transformation through data-driven decision making, rapid experimentation, and customer focus bring valuable perspectives to the Board. Mr. Smith’s deep operating experience and ability to innovate across all organizational layers, while also being mission driven and health equity oriented, will be vital as the Company continues to grow its core Medicare Advantage business, drive operational efficiencies, and mature and further integrate its healthcare services offerings. | ||||||
Proposal One• 2023 Proxy Statement | Humana | 13 |
Corporate Governance
Humana is committed to having sound corporate governance principles and operates within a comprehensive plan of governance for the purpose of defining responsibilities, setting high standards of professional and personal conduct, and ensuring compliance with such responsibilities and standards. Sound corporate governance is essential to running our business effectively and to maintaining our reputation of integrity in the marketplace. In addition, our Board of Directors has adopted Corporate Governance Guidelines, which we refer to as the Guidelines, intended to comply with the requirements of Section 303A.09 of the NYSE Listed Company Manual. The Guidelines may be viewed on our website at www.humana.com. From the www.humana.com website, click on “Investor Relations,” then click on “Corporate Governance” subcategory and then click on the link entitled “Corporate Governance Guidelines.”
Role of the Board and Board Leadership
Role of the Board
The business of the Company is managed under the direction of the Board, whose members are elected annually by the Company’s stockholders. The basic responsibility of the Board is to lead the Company by exercising its business judgment to act in what each director reasonably believes to be in the best interests of Humana and its stockholders, while engaging in active and independent oversight of the management of the Company’s business affairs and assets. In order to fulfill its responsibilities to the Company’s stockholders, the Board, both directly and through its committees, regularly engages with management to both evaluate the Company’s current operations and encourage the innovations and strategic imperatives that will drive our success in the future. The Board monitors management performance through reviews of the most critical issues facing the Company, including approval of the Company’s strategy and mission, execution of the Company’s financial and operational goals, oversight of risk management, succession planning, and determination of executive compensation. The Board plans for the future by ensuring management focuses on innovation in our strategy to meet the speed of change in our industry and monitoring the Company’s human capital management functions, working closely with the management team to ensure the Company has the correct levels of talent in place – within each business segment – for continued success in present and future states of the Company.
Board Oversight of Risk
While management is responsible for designing and implementing the Company’s risk management process, controls and oversight, the Board, both as a whole and through its committees, has overall responsibility for oversight of the Company’s risk management. The full Board regularly reviews risks that may be material to the Company, including those detailed in the Audit Committee’s reports and as disclosed in the Company’s quarterly and annual reports filed with the SEC. While the Board has established committees designated for various oversight functions, it is common practice for committees to collaborate on overlapping issues.
BOARD OF DIRECTORS Oversees Management of Major Risks | ||||||||
• Regulatory & Public Policy • Financial | • Succession Planning • Strategic Execution | •Brand & Reputation •Legal | • Cybersecurity • Data Governance | • Investment Objectives • Clinical Quality | ||||
Audit Committee | Organization & Compensation Committee | Nominating, Governance & Sustainability Committee | Technology Committee | Investment Committee | ||||
• Financial Statement integrity and reporting • Legal, regulatory and compliance • Internal controls • Cybersecurity risk oversight | • Executive compensation policies and practices • Non-executive compensation policies and practices • Succession planning • Human Capital Management | • Governance structure and processes • Legal and policy matters • Stockholder concerns • Board refreshment • Environmental, Social and related Governance (ESG) oversight | • Information security, technology and privacy & data protection • Company IT strategy and consumer facing technology | • Investment objectives and policies • Investment results and performance evaluation | ||||
Management Business units identify and manage business risks; Central functions design risk framework (setting boundaries and monitoring risk appetite); and Internal Audit provides independent assurance on design and effectiveness of internal controls and governance processes. |
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Humana | 2023 Proxy Statement •Corporate Governance
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The Company’s Enterprise Risk Management (ERM) governance structure consists of oversight from the Board and the Audit Committee (in collaboration with material risks overseen by other committees), and implementation through the Company’s management team utilizing a three lines of defense model to delegate responsibility for critical risk management processes across the business functions and operational areas, as well as risk management, compliance, and internal audit teams.
Humana’s first line of defense consists of business areas and operational teams across the Company, and is responsible for identifying, assessing, mitigating, monitoring, and managing risk within their respective areas. The Company’s Enterprise Risk Management and Regulatory Compliance departments represent the Company’s second line of defense. These teams are led by Humana’s Chief Legal Officer (CLO), to whom the Chief Risk Officer (CRO) and Chief Compliance Officer (CCO) each report and lead the Enterprise Risk Management and Regulatory Compliance functions, respectively. Humana’s Internal Audit Consulting Group (IACG) represents the third line of defense, which provides independent and objective assurance to senior management and the Board regarding first and second line risk management functions, internal control systems, and governance processes.
The Board and each Committee receive updates no less than quarterly, with the CRO, CCO, and IACG updating the Audit Committee on the assessment, monitoring and mitigation of risks material to the Company in the short, intermediate, and long-term, the effectiveness of the Company’s control environment in managing these risks, the functioning of the Company’s internal controls and procedures, and the identification and analysis of key emerging risks.
The goal of the Company’s ERM governance is to achieve robust and thoughtful board-level attention to the Company’s risk management process and system, the nature of the material risks faced by the Company, and the adequacy of the Company’s risk management process and system designed to respond to and mitigate these risks, each in a manner that closely aligns to the Company’s disclosure controls and procedures.
Board Leadership
Leadership of the Board is essential to facilitate the Board acting effectively as a working group to the benefit of the Company and its performance. As Chairman of the Board, Mr. Kurt J. Hilzinger assumes key duties to ensure effectiveness and collaboration in all aspects of the Board’s design, operations, and risk oversight function.
Age 60 Director since 2017
Duties of Our Chairman | ||
Serves as Chair of regular sessions of the Board and manages the overall Board process, including meeting design topics and agendas. Leads the Board in anticipating and responding to crises, including the ability to call special meetings for the consideration of risk oversight and other matters. Oversees and monitors Board engagement, participation and continued education to ensure our directors are in-tune with issues of our dynamic industry and the evolving landscape. Partners with and supports the Nominating, Governance & Sustainability Committee with the director selection process, as well as director on-boarding and orientation programs. Models culture, philosophy, inclusivity and values expected of all directors. Conducts individual meetings with other directors, including the CEO, and management team to encourage open communication, collaboration and differences in perspective. | Evaluates overall Board effectiveness, with emphasis on identifying areas of enhancement, development and/or furtherance and communicating these observances to the Board for discussion. Represents the Board on occasions where it is important for the Board to respond on matters independently from the Company’s management team. Provides guidance and direction to the CEO and management team. Engages with stockholders, through verbal or written communications, and presides over the Company’s Annual Meeting of Stockholders. Also recommends to the Board an agenda to be followed at the Annual Meeting. Works with the Organization & Compensation Committee to develop the process for CEO compensation evaluations. |
The Board believes the advisability of having separate or combined chairman and chief executive officer positions is dependent upon the strengths of the individual or individuals that hold these positions and the most effective means of leveraging these strengths, to lead the Board, set Board agendas, and identify and oversee key rights in light of the challenges and circumstances facing the Company, which may change over time. During a period in which the chairman and chief executive officer positions are combined, a Lead Director is appointed from our independent directors. The Lead Director sets agendas for and convenes meetings and executive sessions of the independent directors, approves Board meeting agendas, and otherwise represents the Board on occasions where it is important for the Board to respond independently from the Company’s management team. Our stockholders would be notified of a combination of the chairman and chief executive officer role promptly upon the Board’s decision to do so.
Independent Director
Committees:
• Technology
• Organization & Compensation
Frank J. Bisignano was initially elected to the Board in August 2017. He is the President, Chief Operating Officer and a Director of Fiserv, Inc., which acquired First Data Corporation Inc. in 2019, where Mr. Bisignano previously served as the Chairman of the Board and Chief Executive Officer. During his tenure at First Data, Mr. Bisignano transformed the48-year-old company from the world’s largest traditional payment processor into a technology innovator, industry collaborator, and commerce enabler for the 21st century. He also improved the company’s balance sheet, leading a $3.5 billion private placement in the company and its $2.6 billion initial public offering in 2015, the largest U.S. IPO of the year. Prior to joining First Data, Mr. Bisignano was theco-chief operating officer for J.P. Morgan Chase and the chief executive officer of its Mortgage Banking unit. Born and raised in Brooklyn, Mr. Bisignano serves on the Board of Directors of Fiserv, Inc. and several privately held companies and charitable organizations.
The Board believes that Mr. Bisignano is a proven business leader who understands the importance of technology as a solution to complex problems, which is a key part of the Company’s strategy to integrate a fragmented health care system through leveraging technology. This integration sits at the heart of a health care system that considers and cares for the ‘whole person’ while delivering true value, and the Board believes that the depth and breadth of Mr. Bisignano’s experiences and insights are valuable to the Board’s function.
Corporate Governance• 2023 Proxy Statement | Humana
| 15 |
At this time, given the composition of the Company’s Board, the effective interaction between Mr. Hilzinger, as Chairman, and Mr. Broussard, as Chief Executive Officer, Mr. Hilzinger’s status as an independent director and previous service as our Lead Director, and the current challenges faced by the Company, the Board believes that separating the chief executive officer and board chairman positions provides the Company with the right foundation to pursue the Company’s strategic and operational objectives, while maintaining effective independent oversight and objective evaluation of the performance of the Company.
Board Engagement and Undertakings
The Board holds itself to a high standard of engagement, with a hands-on approach that leads to critical insights regarding our customers, operations and business and enhances their level of governance and oversight. An essential component to the Board’s engagement is communicating with the Company’s internal and external stakeholders. To accomplish this, meetings of the Board may be held in key Company markets where, together with management, the Board will personally meet with associates, customers, providers and other stakeholders to gain direct feedback into the Company’s operations, experiences and overall effectiveness. The Board also holds virtual meetings to both increase the efficiency of the Board’s time, and expand its reach of engagement with Company personnel and other stakeholders.
Certain other engagement practices of our Board are described below.
• | Follows an annual topical calendar used to balance strategic, operational, compliance, and cultural matters, among others, and receives detailed reports on those topics, in addition to ad hoc subjects, throughout the year. |
• | Utilizes clear and proactive Board meeting agendas to achieve high productivity at each meeting. |
• | Holds executive sessions during every meeting, with the CEO present and then with only the independent directors. Relevant feedback is then reported to the CEO and the management team, creating a feedback loop from the Board to the management team. |
• | Maintains regular communication with the CEO and management team, apart from formal Board meetings, to ensure consistent and continuous progress toward established goals. |
• | Employs Board technology tools to review Board materials and to remain informed of ongoing Company endeavors, to efficiently communicate with the management team and to take formal action when necessary. |
• | Performs in-depth organizational structure reviews, through the Organization & Compensation Committee, of line and functional teams within the Company to assess leadership bench strength, culture, succession planning, diversity and related matters, and engages regularly with rising leaders within the Company. The Organization & Compensation Committee also regularly reviews associate engagement scores, and for 2022, 87% of associates were highly engaged, representing the 81st percentile. |
• | Receives continued education from external consultants on a wide range of industry topics to keep them apprised of the latest trends and anticipated future trajectories. In addition to our director’s individual pursuits, Board education opportunities during 2022, included, (i) a formal education session with external consultants; (ii) guest speaker attendance during select meetings; and (iii) briefings on regulatory developments. |
• | Participates in the Company’s robust stockholder engagement program. |
2022 Notable Board Actions • Appointed 2 new directors to the Board as part of Board refreshment practices. • Oversaw successful implementation of the Company’s $1 billion value creation initiative. • Oversaw development and execution on the Company’s mid-term Adjusted EPS target for 2025, as announced at the Company’s 2022 Investor Day. • Approved divestiture of a majority interest in Kindred at Home’s Hospice and Personal Care divisions (KAH Hospice). | 2022 Board and Committee Meetings 44 Videoconference / Teleconference 19 In-person 1 Annual Stockholder | 2022 Director Attendance Average 97% (Based on aggregated Board and Committee meeting attendance; includes all directors having served during 2022.) |
16 | Humana | 2023 Proxy Statement •Corporate Governance |
Board Evaluation Practices
The Board is committed to a rigorous self-evaluation process. Through evaluation, directors annually review the performance of the Board and each committee, as well as their own individual contributions, including areas where the Board feels it functions effectively, and most importantly, areas where the Board can improve. The Nominating, Governance & Sustainability Committee, with participation from our Chairman and Chief Executive Officer, initiates the annual Board evaluation process. We believe that having a review process for each group helps to (i) ensure an adequate representation of requisite skills; (ii) encourage high levels of engagement from directors; and (iii) strengthen the overall effectiveness of our Board. Results of the evaluations are shared with the Chairman of the Board and the Chairman of the Nominating, Governance & Sustainability Committee and then later discussed with the entire Board in an aggregated manner, with agreed upon actions and improvements then implemented and monitored for effectiveness.
Board Evaluation | ||||
The Board evaluation typically consists of a written questionnaire containing qualitative scaled and open-ended questions related to the effectiveness of the Board during the prior year. The questionnaire hones in on specific areas of responsibility and critical attributes of the Board in order to solicit candid feedback from each director. The questionnaire also seeks practical input as to what the Board is doing well, areas in which the Board could improve and any undertakings that the Board should commence or terminate. Every third year, this written evaluation process is supplemented by oral interviews and an analysis of Board and committee effectiveness conducted by an independent consultant. | ||||
Director Self-Evaluation | ||||
The director self-evaluation requires each director to honestly reflect upon and carefully consider his or her performance based on key characteristics that are expected of all board members. The self-evaluation also allows directors to provide additional or updated information regarding their skills and qualifications which in turn helps the Nominating, Governance & Sustainability Committee make future assessments and determinations regarding Board composition. The Company encourages directors to participate in continuing education programs focused on the Company’s business and industry, their committee roles and responsibilities, as well as legal and ethical matters. Annually, the Board will meet for purpose of furthering their education through external guest speakers to gain insights into key issues facing the industry and the Company, to supplement management’s views and perspectives. | ||||
Committee Evaluation | ||||
Each of our Board committees engages in an annual performance evaluation and a general charter adequacy review. Each committee is responsible for determining the manner of evaluation and for carrying out the evaluation. Further, the Board evaluation questionnaire includes a section specifically concerning Board committee structure and the performance and effectiveness of each committee, which is an opportunity for board members to provide feedback on each committee, regardless of their individual committee membership. | ||||
Director Independence
The Guidelines contain standards to assist the Board in its determination of director independence. In addition, to qualify as independent under the Guidelines, the Board of Directors must affirmatively determine that a director has no material relationship with the Company, other than as a director.
Pursuant to the Guidelines, the Board undertakes an annual review of director independence. During this review, the Board considers transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates, including transactions or relationships that are reported under “Certain Transactions with Management and Others” in this proxy statement. As provided in the Guidelines, the purpose of this review is to determine whether any such transactions or relationships are inconsistent with a determination that a director is independent.
In the course of this review for the current year, the Board specifically analyzed and discussed several matters:
(1) | a relationship between the Company and Pfizer Inc., or Pfizer, for which Frank A. D’Amelio, one of our current directors, served as an executive officer during part of 2022; |
(2) | a relationship between the Company and Oracle Health (formerly Cerner Corporation, or Cerner), for which David T. Feinberg, M.D., one of our current directors, serves as an executive officer (and formerly served during 2022 as both a director and executive officer at Cerner until Oracle Corporation’s acquisition of Cerner which closed in June 2022 resulting in Cerner/Oracle Health becoming a privately held entity); |
(3) | a relationship between the Company and Howard University and the Howard University Healthcare system, or Howard, for which Wayne A. I. Frederick, M.D., one of our current directors, serves as an executive officer; |
Corporate Governance• 2023 Proxy Statement | Humana | 17 |
(4) | a relationship between the Company and Chrysalis Ventures, LLC, or Chrysalis, for which David A. Jones, Jr., one of our current directors, serves as Chairman and Managing Partner and in which Mr. Jones, Jr. has a financial interest; |
(5) | a relationship between the Company and Warren Barr Liberman, at which a family member of William J. McDonald, one of our current directors, is an employee; and |
(6) | financing arrangements between the Company and companies that are affiliated with certain of our directors. |
Pfizer. The relationship between the Company and Pfizer includes a negotiated rebate based on the volume of prescriptions of Pfizer drugs obtained by Humana members, which volume includes claims paid by Humana for our members and the co-payments paid by our members. Payments to Humana from Pfizer result from activity with many intermediaries over whom Humana exercises no control (i.e., the providers who prescribe these medications, the distributors who sell to the retailers, and the retailers from which our members get prescriptions). In 2022, the Pfizer rebates amounted to approximately $61.1 million, substantially all of which were passed through to our members in the form of lower premiums and/or higher benefits. The relationship described herein did not represent a direct or indirect material interest for Mr. D’Amelio.
Oracle Health/Cerner. Oracle Health/Cerner has a license subscription contract with our subsidiary, Humana Digital Health and Analytics Platform Services, Inc., or HDH&A. In 2022, Oracle Health/Cerner paid HDH&A approximately $5.8 million in associated licensing, professional service and maintenance fees, which is comparable to other non-affiliated customers for the provision of similar services. Our various CenterWell Home Health™ companies have certain service arrangements with Oracle Health/Cerner for which it paid approximately $11,320 in associated fees during 2022, which is comparable to other non-affiliated customers for the provision of similar services. The relationships described herein are not material to the Company and do not represent a direct or indirect material interest for Dr. Feinberg.
Howard. The relationship between the Company and Howard includes arrangements between the Howard University healthcare system in which the Company paid approximately $469,013 in medical claims during 2022. The relationships described herein did not represent a direct or indirect material interest for Dr. Frederick.
Chrysalis. In 2022, we contracted for services to be provided by certain companies in Chrysalis’ investment portfolio. In each case, the amounts paid under these arrangements were comparable to those for other non-affiliated vendors, were not material to the Company, and did not represent a direct or indirect material interest for Mr. Jones, Jr.
Warren Barr Liberman. The relationship between the Company and Warren Barr Lieberman includes a provider arrangement in which the Company paid approximately $151,652 in medical claims during 2022. The relationship described herein did not represent a direct or indirect material interest for Mr. McDonald.
Financing Arrangements. Certain of our non-employee directors are partners, shareholders and/or officers of companies that have commercial paper programs or other financing arrangements in which we participate in the ordinary course of business. Payments to or from such companies constituted less than the greater of $200,000 or 1% of each of Humana’s and the recipient’s annual revenue, respectively, in each of the past three years.
At the conclusion of its review for the current year, the Board affirmatively determined that in each case the relationship between the Company or its affiliate and each director-related entity was not material, was below the thresholds for independence prescribed by the NYSE, and did not impact the independence of any of our directors. Directors recused themselves from the independence assessment as the matter was relative to himself or herself. Consistent with these considerations, and based on its review of director independence in light of the standards contained in the Guidelines, the Board determined that each member of the Board of Directors (except Mr. Broussard, as a current employee of the Company) is independent.
18 | Humana | 2023 Proxy Statement •Corporate Governance |
Committee Membership and Meetings
The Board of Directors has the following standing committees: Audit; Organization & Compensation; Nominating, Governance & Sustainability; Executive; Technology and Investment. Only directors meeting the applicable SEC and NYSE director independence standards and Internal Revenue Code “outside director” criteria may serve on the Audit Committee, the Organization & Compensation Committee, and the Nominating, Governance & Sustainability Committee. Each standing Board committee operates pursuant to a charter, which may be viewed on our website at www.humana.com. From the www.humana.com website, click on “Investor Relations,” then click on “Corporate Governance,” then click on the “Committee Charters” subcategory. The number of Board committee meetings (virtual and in-person) held in 2022 and membership as of March 1, 2023, were as follows:
Director
| Audit
|
Organization & Compensation
|
Nominating, Governance & Sustainability
| Executive
| Technology
| Investment
| ||||||
Kurt J. Hilzinger |
|
|
| |||||||||
Bruce D. Broussard |
| |||||||||||
Raquel C. Bono, M.D. |
|
|
| |||||||||
Frank A. D’Amelio |
|
|
|
| ||||||||
David T. Feinberg, M.D. |
|
| ||||||||||
Wayne A. I. Frederick, M.D. |
|
| ||||||||||
John W. Garratt |
|
| ||||||||||
David A. Jones, Jr. |
|
|
| |||||||||
Karen W. Katz |
| |||||||||||
Marcy S. Klevorn |
|
| ||||||||||
William J. McDonald |
|
| ||||||||||
Jorge S. Mesquita |
|
| ||||||||||
James J. O’Brien |
|
| ||||||||||
Brad D. Smith1 |
| |||||||||||
Number of Meetings in 2022
| 9 | 8 | 13 | 0 | 5 | 4 |
= Chair = Member
1 | Elected to the Board effective September 15, 2022. |
Audit Committee
Committee Responsibilities
Pursuant to its charter, the Audit Committee:
• | assists the Board of Directors with the oversight of the integrity of our financial statements and disclosures and internal controls, our compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence and the performance of our internal audit function and the independent registered public accounting firm; |
• | bears responsibility for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm engaged to prepare the audit report or perform other audit, review or attest services; |
• | reviews with the independent registered public accounting firm, our internal audit department, and our financial and accounting personnel, the effectiveness of our accounting and financial controls and, where appropriate, makes recommendations for the improvement of these internal control procedures; |
• | reviews the scope, funding and results of our internal audit function, including the independence and authority of our reporting obligations, the proposed audit plans for the year, and the coordination of these plans with the independent registered public accounting firm; |
• | reviews the scope, funding and results of our Enterprise Risk Management program and compliance program, including receiving, at least quarterly, an update from our Chief Risk Office and internal compliance department regarding any significant matters regarding our risk management and compliance with regulatory requirements and contracts with government entities, respectively; |
• | collaborates with the Technology Committee to regularly receive updates on risks, and risk mitigation measures, related to Company’s information technology, internal controls, information security, cyber security, business continuity and disaster recovery programs; |
Corporate Governance• 2023 Proxy Statement | Humana | 19 |
• | reviews the financial statements and other information contained in our Annual Report and other reports to stockholders with management and the independent registered public accounting firm to determine that the independent registered public accounting firm is satisfied with the disclosure and content of the financial statements to be presented to the stockholders and reviews any changes in accounting principles; |
• | confers independently with our internal auditors, Chief Risk Officer, internal compliance department, key members of management, and the independent registered public accounting firm; |
• | determines and approves the appropriateness of the fees for audit and permissible non-audit services performed by the independent registered public accounting firm; |
• | discusses with management our compliance with applicable legal requirements and with our internal policies regarding related party transactions and conflicts of interest; |
• | discusses our policies with respect to risk assessment and risk management; |
• | maintains free and open means of communication between the members of our Board of Directors, the independent registered public accounting firm, our internal audit department, our Chief Risk Officer, our internal compliance department, and our financial management; and |
• | annually evaluates its performance. |
Corporate Governance Determinations
The Board of Directors has determined that each of the members of the Audit Committee at February 15, 2023 is independent according to SEC and NYSE requirements, and each is financially literate, as defined in the NYSE listing standards. The Board of Directors has determined further that Messrs. D’Amelio and Garratt and Dr. Bono each meet the definition of “audit committee financial expert.” PricewaterhouseCoopers LLP, our independent registered public accounting firm, reports directly to the Audit Committee. No member of the Board’s Audit Committee serves on the audit committees of more than three publicly traded companies. The Report of the Audit Committee for the year ended December 31, 2022, is set forth in this proxy statement under the caption “Audit Committee Report.”
Organization & Compensation Committee
Committee Responsibilities
Pursuant to its charter, the Organization & Compensation Committee:
• | reviews and approves our goals and objectives relevant to the compensation of our CEO, evaluates the CEO’s performance in light of those goals and objectives, and, either as a Committee or together with the other independent directors, determines and approves the CEO’s compensation level based on this evaluation; |
• | reviews and approves all elements of compensation paid to our current or prospective executive officers, including without limitation, base compensation, incentive-compensation plans and equity-based plans, employment, change in control or severance programs and agreements, and any special compensation or benefits, including supplemental retirement benefits and any perquisites; |
• | approves equity-based grants to our executive officers and other associates; |
• | reviews and discusses with management the Company’s compensation plans and policies for all employees (including the Named Executive Officers) with respect to risk management and risk-inducing incentives; |
• | ensures preparation of the Compensation Discussion and Analysis and the Compensation Committee Report as required by SEC regulations; |
• | monitors compliance of executive officers and non-employee directors with relevant stock ownership guidelines; |
• | reviews with management periodically, as it deems appropriate, management succession and inclusion and diversity practices; |
• | administers our Executive Management Incentive Compensation Plan and other substantially similar or successor incentive compensation plans; and |
• | annually evaluates its performance. |
Scope of Authority, Processes and Procedures
The Organization & Compensation Committee acts on behalf of the Board of Directors to establish the compensation of our executive officers and provides oversight of our compensation philosophy, as described in this proxy statement under the caption “Compensation Discussion and Analysis.” The role of the executive officers and the outside compensation consultant in establishing executive compensation is discussed in this proxy statement under the caption “Compensation Discussion and Analysis.” Other than routine administrative matters and the ability of our CEO to approve grants of equity awards subject to certain individual and annual thresholds, no executive compensation decisions are delegated to management.
20 | Humana | 2023 Proxy Statement •Corporate Governance |
Compensation Committee Interlocks and Insider Participation
No member of the Organization & Compensation Committee: (i) is or has ever been an officer or employee of the Company; or (ii) is or was, during the last fiscal year, a participant in a “related person” transaction requiring disclosure under Item 404 of the SEC’s regulations (see discussion in this proxy statement under the caption “Certain Transactions with Management and Others”); or (iii) is an executive officer of another entity at which one of our executive officers serves either as a director or on its compensation committee.
Corporate Governance Determinations
During 2022, James J. O’Brien (Chair), Wayne A. I. Frederick, M.D., David A. Jones, Jr. and Jorge S. Mesquita served as members of our Organization & Compensation Committee. Considering (i) the source of each director’s compensation, including any consulting, advisory or other compensatory fees paid by the Company; and (ii) whether each director has an affiliate relationship with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company, the Board has determined that each member of the Organization & Compensation Committee at February 15, 2023, is independent, as defined by the SEC and the NYSE, and is considered to be an “outside director” under Section 162(m) of the Internal Revenue Code.
Compensation Risk Determination
In early 2023, the Organization & Compensation Committee reviewed management’s assessment of the risks associated with the Company’s compensation practices and policies for employees, including a consideration of the counterbalance of risk-taking incentives and risk-mitigating factors in Company practices and policies. Following a review of this assessment, the Organization & Compensation Committee determined that the risks arising from the Company’s compensation practices and policies are not reasonably likely to have a material adverse effect on the Company.
Nominating, Governance & Sustainability Committee
Committee Responsibilities
Pursuant to its charter, the Nominating, Governance & Sustainability Committee:
• | recommends to the full Board criteria for the selection and qualification of the members of the Board; |
• | evaluates and recommends for nomination by the Board candidates to be proposed for election by the stockholders at each annual meeting; |
• | seeks out and assists in the recruitment of highly qualified candidates to serve on the Board; |
• | recommends for Board approval candidates to fill vacancies on the Board which occur between annual meetings; |
• | develops, periodically reviews and recommends to the Board revisions to the Guidelines; |
• | studies and reviews with management the overall effectiveness of the organization of the Board and the conduct of its business, and makes appropriate recommendations to the Board; |
• | reviews the overall relationship of the Board and management; |
• | reviews issues and developments pertaining to corporate governance; |
• | reviews our public policy and political spending practices through regular reviews of our policy on political expenditures, expenditures and payments made with corporate funds, and overall political activity, including review of our Political Contributions and Related Activity Report; |
• | reviews the Company’s programs and policies relating to significant ESG and sustainability matters, and periodically receive updates from the Company’s management regarding significant ESG and sustainability undertakings; and |
• | annually evaluates its performance. |
Executive Committee
Pursuant to its charter, the Executive Committee possesses the authority to exercise all the powers of the Board of Directors except as otherwise provided by Delaware law and our Bylaws during intervals between meetings of the Board. The Executive Committee does not have the power, to, among other things, declare a dividend, issue stock, adopt a certificate of merger or sell substantially all of the Company’s business.
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Investment Committee
Pursuant to its charter, the Investment Committee establishes investment objectives and policies for our various investment portfolios and investment options available under various employee benefit plans, reviews investment results, and annually evaluates its performance.
Technology Committee
Pursuant to its charter, the Technology Committee represents and assists the Board of Directors with the oversight of:
• | our process, awareness, evaluation and perspective on potentially disruptive technologies and convergences that may represent threats or opportunities for our business operations; |
• | our process and perspective on strategic technology capabilities that enable transformational business capabilities; |
• | our process, execution roadmaps, requisite capital, progress in delivering technology-enabled transformational capabilities and their related outcomes; and |
• | management’s focus on organizational, talent and cultural enablers required to ensure achievement of those outcomes. |
Senior leadership also briefs the Technology Committee and board members on matters relating to the Company’s strategic technology capabilities, including information security capabilities. The Technology Committee may also assist the Audit Committee in its oversight of our information technology internal controls, cybersecurity, business continuity and disaster recovery programs. Senior leadership provides briefings to the Audit Committee and Technology Committee on information technology controls and risk as least once per year, and separately updates the full Board of Directors on cybersecurity matters at least once per year. Briefings are also provided as-needed in response to industry or company specific developments or material events.
Corporate Governance Policies
Majority Vote Policy
Under our Bylaws, a director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast against the nominee. In contested elections, those in which a stockholder has nominated a person for election to the Board, the voting standard is a plurality of votes cast. The Board has also adopted a policy to require the Board to nominate for election only nominees who agree that, if they are elected to the Board, they will tender an irrevocable resignation conditioned on, first, the failure to achieve the required vote for re-election at any future meeting at which they face re-election, and second, the Board’s acceptance of their resignation following that election. In addition, the Board may fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors, as described above. The Nominating, Governance & Sustainability Committee will submit a recommendation for prompt consideration by the Board whether to accept the resignation. Any director whose resignation is under consideration will abstain from participating in any decision regarding that resignation. The Bylaws also require stockholder nominees for director election to notify the Company whether or not such nominees intend to tender the same type of resignation required of the Board’s director nominees.
Change in Director’s Primary Position
The Board has adopted a policy requiring that a director whose primary position or affiliation changes must promptly notify the Board and the Nominating, Governance & Sustainability Committee of the change so that a determination may be made as to the value of his or her continued service on the Board.
Director Stock Ownership Policy
Our Board believes that directors should be stockholders and have a significant personal financial stake in the Company. Consequently, the Board has adopted the following stock ownership guidelines:
• | Each non-employee director must maintain a minimum equity ownership level of five times the annual cash retainer. |
• | Shares deferred at the election of the director are considered owned for purposes of the calculation of the ownership requirement. |
• | Any Shares owned by a non-employee director (or Shares received upon the exercise of options or vesting of restricted stock or restricted stock units, less an amount to cover the exercise price and/or current tax liabilities) must be held by the director until the minimum equity ownership level is reached and thereafter maintained. |
• | Once the minimum equity ownership level has been achieved, any Shares received upon the vesting of restricted stock or restricted stock units, less an amount to cover current tax liabilities, must be held by the director until one year following the vesting date. |
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Compliance with these guidelines is monitored by the Organization & Compensation Committee.
Director Attendance
The Board has developed a number of specific expectations of directors to define their responsibilities and to promote the efficient conduct of the Board’s business. With respect to the level of commitment expected of directors and related attendance protocols, as part of the Guidelines, the Board formally adopted a policy that all directors should make every effort to attend all meetings of the Board and the Committees of which they are members, and the Company’s Annual Meeting of Stockholders. Attendance by telephone or video conference may be used to facilitate a Director’s attendance.
During 2022, apart from Committee meetings, the Board of Directors met 24 times. All directors attended at least 75% of the scheduled Board of Directors’ meetings and meetings held by Committees of which they were members. All director nominees serving as directors at that time attended the Annual Meeting of Stockholders held on April 21, 2022.
Executive Sessions of Non-Management Directors
In 2022, our non-management directors held regularly scheduled, formal executive meetings, separate from management and were led by our Chairman. Additional executive sessions of the Board are held as necessary or appropriate or upon the request of the Chairman, the Nominating, Governance & Sustainability Committee or any two other non-management directors. In addition, our non-management directors who qualify as independent within the meaning of our director independence guidelines meet in executive session at least once annually, and, in fact, met in 2022 in connection with each regularly scheduled Board of Directors meeting.
Code of Ethics and Code of Business Conduct
The Company has adopted the “Code of Conduct for the Chief Executive Officer and Senior Financial Officers,” which we refer to as the Executive Code of Ethics, violations of which are reported to the Audit Committee. In addition, we operate under the omnibus Humana Inc. Ethics Every Day, which we refer to as the Code of Ethics, which applies to all associates (including executive officers) and directors. The Humana Ethics Office is responsible for the design and enforcement of our ethics policies, the goal of which is to create a workplace climate in which ethics is so integral to day-to-day operations that ethical behavior is self-enforcing. All employees are required annually to review and affirm in writing their acceptance of the Code of Ethics. The Code of Ethics and the Executive Code of Ethics may be viewed on our website at www.humana.com. Any waiver for directors or executive officers from the provisions of the Code of Ethics or the Executive Code of Ethics must be made by the Board of Directors and will be disclosed within four days of the waiver on our website at www.humana.com. To see either the Code of Ethics or the Executive Code of Ethics or any waivers to either policy, go to www.humana.com, then click on “Investor Relations,” then click on “Corporate Governance,” and then click on the relevant link.
Policy Regarding Employee, Officer and Director Hedging
The Company has a policy prohibiting all associates (including executive officers and independent directors) from hedging or pledging transactions using Company stock, including: (1) engaging in short sales of Company securities; (2) engaging in transactions in puts, calls or other derivative securities designed to hedge or offset any decrease in the market value of the Company’s equity securities, on an exchange or in any other organized market; or (3) engaging in certain monetization transactions, including holding Company securities in margin accounts or pledging Company securities as collateral.
Advocacy and Public Policy
With a focus on improving clinical outcomes and advancing affordability and access, our Company’s approach to advocacy and public policy is built around people (that is, the members, patients, providers, and communities we serve). To that end, our day to day efforts are centered around supporting policies that strengthen Medicare Advantage, accelerate value-based care in the home, expand opportunities to serve patients through primary and home-based care, integrate clinical solutions, create affordability for prescription drugs, and address barriers to care by addressing the root causes of poor health, as well as leveraging our capabilities to remove barriers to access and partnering with clinicians to improve quality. This focus raises the bar for the care we provide to help move toward a future in which everyone has a fair and just opportunity to be as healthy as possible.
The Company has also established and sponsors a Political Action Committee (PAC), for which Company associates may voluntarily contribute. The PAC is registered with the Federal Election Commission (FEC) and certain states nationwide as required by applicable law. As a matter of policy, all Company political activities must promote the interests of the Company and must be made without regard for the private political preferences of Company officers or executives. Furthermore, Humana does not make independent expenditures, nor does it contribute to ballot measure committees. Distributions from the PAC are made to federal and state office candidates (and related election committees) or to other PACs on a non-partisan basis when, like the Company, such persons are solution-oriented and believe in building a high-quality, accessible and affordable health care system. The PAC is also committed to supporting diverse candidates at the state and federal level. While the PAC has its own separate board of directors to oversee its operations, the Company’s Board—through its
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Nominating, Governance & Sustainability Committee—has responsibility for (i) reviewing the political contributions and political activities of the Company and the PAC and (ii) overseeing compliance with the overall policy, process and contribution criteria with respect to such contributions and activities. The Board reviews occur semi-annually, along with semi-annual publication of a Contributions and Related Activity Report (PAC Report). To learn more about our public policy and to review the most recent PAC Report, visit our website at www.humana.com, then click on “About Humana,” then click on “Public Policy.”
Communication with Directors
Stockholders and other interested parties may communicate directly with our Chairman, non-management directors as a group, or any other individual director by writing to the special e-mail address published on our website. Specifically, interested parties may visit our website at www.humana.com then click on “About Humana,” then click on “Board of Directors,” where instructions for contacting these persons are available. All directors have access to this e-mail address. We use the staff of our Corporate Secretary to review correspondence received in this manner and will filter advertisements, solicitations, spam, and other such items. Concerns related to accounting, internal controls or auditing matters are required to be brought immediately to the attention of our Chief Legal Officer and the Board and handled in accordance with procedures established by the Audit Committee with respect to such matters.
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Environmental, Social and Governance (ESG)
Board Oversight of Environmental, Social and Governance Matters
The Nominating, Governance & Sustainability Committee has responsibility for Board-level oversight of the Company’s ESG strategy, practices and reporting. The Nominating, Governance & Sustainability Committee receives formal ESG reports from management at least twice annually regarding the Company’s ESG initiatives, metrics and progress on established goals, as well as ad hoc ESG communications as necessary. The full Board is invited to attend and participate during these meetings and receives access to all ESG reporting. In addition, we have an internal ESG Steering Committee, overseen by our Chief Administrative Officer and Chief Legal Officer, to guide the integration of our ESG efforts with our long-term business strategy. This ESG governance structure complements the long-standing responsibility of our Board and each of our Board committees in overseeing various aspects of the Company’s ESG-related risks and practices, as illustrated below:
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Oversight | Management | Implementation |
Strategic Focus on ESG
We realize that the future of our business is linked with the well-being of our associates, members and patients, the communities we serve, the healthcare system, and the environment. It’s with our stakeholders in mind that we’ve established five key metrics categories (the “Categories”) of our ESG program that align to our strategic business goals, supporting our commitments to sustainable business and improving health outcomes. These Categories are the driving force behind our impact platform and guide our ESG program.
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We’ve developed quantitative and/or qualitative metrics within each Category to track, monitor, measure and report our performance. Transparent disclosures are a top priority, as such, we’ve mapped our ESG disclosures to frameworks established by the Sustainability Accounting Standards Board (SASB) Managed Care Standard, the Task Force on Climate-Related Financial Disclosures (TCFD), and the Global Reporting Initiative (GRI).
Our Impact Platform
We’ve set our intentions to have a positive well-being impact among all of our stakeholder groups and have developed a platform where we believe we can make the most difference. Our impact platform sets the direction for how we will advance health equity, address needs in our communities and drive sustainable change with shared value. The Categories may connect to one or more areas within the impact platform, reinforcing the interconnectedness of our holistic approach to ESG. We’ve highlighted below key elements of our ESG program along with some of our notable Category metrics.
For each person, we make it simpler for people to reach their best health. | For each community, we work to advance health equity and population health. | For the healthcare system, we help build more equitable business, governance and healthcare practices. | For the environment, we invest in the health and sustainability of our environment. | |||
We are all on a unique journey to our own best health, so through empathy and a personalized approach, we not only address medical needs, but meet people where they are by helping our customers, employees – everyone – address human needs, too. | Where people live, work and play are inextricable from their health outcomes, so we’re passionate about taking on the social determinants of health that impact their communities on a local level. | The future of health depends on the health of the collective system, so alongside our partners, we’re striving to create a more equitable health ecosystem that incorporates sustainable business practices, to better serve all of us, and the next generation. | The health of individuals is deeply tied to the health of their environments, so we do our part to invest in, protect and care for the places and planet all people depend on. |
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For Each Person
Human Capital Management For each person starts with each of our associates, approximately 67,100 as of December31, 2022, and our approach to human capital management. Not only are our associates intrinsically connected |
under each dimension of ESG, they’re also essential to our Company’s success in delivering on our core strategy, creating positive healthcare experiences and providing human care for our members. We are committed to recruiting, developing, and retaining strong, diverse teams, and activelypromoting a culture of inclusion and diversity within our workforce.
These efforts are overseen by our Board of Directors through the Organization & Compensation Committee, whose functions include oversight of the Company’s human capital management and inclusion and diversity policies and practices, which are implemented under the direction of our Chief Administrative Officer.
Our Culture, Engagement and Approach to Work
We believe that our members’ experience is linked to our associates’ experience—engaged, productive associates are the key to building a healthy company and caring environment where our associates go above and beyond for our members, driving innovation, and offering fulfilling experiences that incentivizes them to stay with us over the long-term. We provide opportunities for our associates to add to their personal well-being experiences that go beyond health to enhance their individual need for purpose, belonging and security. On average, our associates spend 7.5 years at our Company—a tenure testament to the culture of well-being we’re building.
Still, like many companies, we experienced lower engagement and higher turnover in 2021 and 2022 than in prior years. Our associate voluntary turnover rate (VTR) for 2022 was 17%, up from 15.1% in 2021. We measure VTR using data generated via Workday and include any full or part-time, regular associates who left voluntarily during each year; contractors and variable staffing pool (VSP) are excluded, as are associates resulting from 2022 acquisitions not yet transitioned to Humana’s Workday system at yearend (i.e. CenterWell Home Health).
However, associate engagement and well-being rates remained higher than average, despite challenges posed by the Great Resignation, COVID-19 and workforce optimization efforts to fulfill the Company’s commitment to execute on its $1 billion value creation initiative to allow for increased investment in our Medicare Advantage benefits and healthcare services capabilities.
87% Of associates would recommend Humana | 87% Of associates believe their leader really | 84% Of associates believe Humana is |
We regularly measure our success and opportunities to advance engagement through methods like a third-party administered Associate Experience Survey and continuous listening campaigns. Continuous listening involves our proactive solicitation, analysis and response to associate feedback. Pulse surveys are sent to associates throughout the year to get feedback on how we’re doing, allowing us to assess our approach to work and act when needed. We believe this helps to strengthen our culture and support associate engagement. We also provide survey results to our entire associate population and encourage leaders to use the information to create open, honest action plans with their teams to build upon and further deepen our collective engagement.
We believe strong Company culture starts with leadership at the top. Our CEO inspires Company culture by sending a weekly Company-wide email where he engages with associates on a variety of topics including business matters, current events, health and well-being, family and personal interests. A survey link is included within these communications encouraging associates to speak up and share their own experiences directly with our CEO, with assurance that their opinions will be held confidential and treated with respect.
Our culture is further strengthened by optimizing the well-being and effectiveness of our workforce. Through alternative work styles — home, hybrid home, office, hybrid office, and field — we help associates work more productively, communicate more easily and collaborate more freely. We encourage collaboration between leaders and their associates to identify and leverage the appropriate work style that both supports the achievement of business goals and personal work preferences. Alternate work styles enable associates to work from a job-appropriate location of their choice for all or some portion of their work schedule and to create a work schedule that better fits the diverse demands of today’s work environment. When managed effectively, alternate work styles can enhance a company’s employment brand, foster the development and effective delivery of innovative and diverse business solutions, right-size a company’s energy-consumption footprint, and increase associate engagement and well-being.
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Inclusion and Diversity The Company’s Office of Inclusion & Diversity (our “I&D Office”) efforts are led by our Chief Inclusion and Diversity Officer, who reports directly to the Chief Administrative Officer. The I&D Office connects to business groups across the enterprise to cultivate a diverse and inclusive culture that is representative of the communities we serve. By prioritizing I&D across our business, we enable associates to bring their whole selves to work, | 80% Of associates have a strong sense | |
30% Of associates participated in at least With nearly 9,200 members, the |
To help integrate inclusion and diversity into the fabric of the organization from the top down, the Council is led by our President and CEO, with top priorities consisting of (i) leading and informing the strategy to drive the hiring, development, promotion and retention of our full diverse workforce; (ii) creating and maintaining an inclusive culture; (iii) reviewing our supply base and spend for diversification opportunities; and (iv) improving transparency and accountability to sustain outcomes. The Council sets company-wide inclusion and diversity goals and objectives that complement our Talent & Diversity ESG Category metrics.
At our Company, we are committed to having balanced diversity at all levels and have developed a pathway for diverse talent within our recruiting initiatives. To achieve our recruiting and hiring goals we proudly partner with local and national advocacy groups, including the CEO Action for Diversity and Inclusion, the Catalyst CEO Champions for Change, and the OneTen Coalition, to provide information about open roles, assistance with resume preparation and application submission, and to design and execute other talent acquisition and development initiatives. We’re proud to be recognized as a Military Friendly employer. Under our Veterans Hiring Initiative, we partner with dozens of organizations for veteran recruitment, including the Wounded Warrior Project, United States Army Reserve, and Paralyzed Veterans of America, and have hired thousands of veterans and military spouses. We have also designed and implemented programs that enhance our hiring initiatives aimed toward women in technology, retiree/mature worker populations, and closing the hiring gap of persons with disabilities versus those without disabilities.
We’ve also incorporated balanced interview panels into our interview process, through which we strategically engage a broad spectrum of interviewers that bring greater diversity and perspective. This proven best practice strengthens the candidate experience and hiring of diverse talent, ensuring we get the right talent for any given role, and minimizes the potential for personal blind spots when evaluating candidates.
Our inclusion and diversity objectives also aim to build an awareness of biases and beliefs, identify differences and similarities of our multi-generational workforce and enable associates to leverage differences to drive innovation and create value. We are committed to growing our associates’ inclusion skills and diversity knowledge and provide a variety of associate training programs and workshop opportunities in areas of unconscious bias, disability awareness, cultural competency, racial equity, and social justice, among others. It is also our fundamental belief that every person has the right to a safe workplace. This includes having freedom of gender identity and expression, which we have included within our non-discrimination and anti-harassment policies. | 81% Of associates believe that in their organization, everyone has an equal chance to be successful regardless of individual differences (age, gender, ethnicity/race, religion, etc.). |
Building balanced diversity within our workforce is a priority that’s demonstrated in our leadership goals – hiring and promotion of diverse talent, retention of diverse senior leadership (VP and above), inclusion, mentoring and leaders participating in cultural competency training – with shared accountability focused on driving inclusion and diversity throughout the enterprise. We’ve employed an approach to address areas of improvement and goal achievement that is linked to executive compensation (refer to section entitled “Compensation Discussion and Analysis – Associate Incentive Plan” within this proxy statement for more information on executive compensation). We receive workforce demographic data within our Workday system through self-disclosure by our associates, allowing us to provide transparent disclosures. The charts below represent our workforce demographics as of December 31, 2022.
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Associate Demographics |
I&D isn’t a program or a leadership initiative, or just a business imperative. It is the way we work, each and every day to deliver on our purpose. It is who we are as an organization – and it is the responsibility of all of us. I&D is how we sustain human care. Our associates’ vast experiences and perceptions—their unique characteristics, backgrounds and beliefs—drive the groundbreaking, strategic thinking that gives our Company its competitive edge in a diverse marketplace. Our approach fosters innovative thinking and creativity, expands insights and generates better business outcomes.
Talent & Diversity Category Metric Representative Turnover Goal Equitable Exits Within Leadership Representation We’re working to ensure equitable exits among women and BIPOC in leadership levels of Director equivalent and above, as well as Associate Director/Lead positions and have set a goal of ≤ 0% difference within each demographic. 2022 Women Director Equivalent +: 6% 2022 Women Assoc. Director/Lead: 6% 2022 BIPOC Director Equivalent +: - 4% 2022 BIPOC Assoc. Director/Lead: 0% | Talent & Diversity Category Metric Representation in Requisition Hiring Leadership Representation in Requisition-based Hires We’re monitoring the percent of requisition-based hires reflecting representation among women and BIPOC in leadership levels of Director equivalent and above, as well as Associate Director/Lead positions. 2022 Women Director Equivalent +: 54% h 7% since 2021 2022 Women Assoc. Director/Lead: 54% i 1% since 2021 2022 BIPOC Director Equivalent +: 27% i 2% since 2021 2022 BIPOC Assoc. Director/Lead: 36% h 5% since 2021 |
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Pay and Benefits Philosophy, Compensation and Financial Security
We believe all of our associates have the right to receive a fair living wage and we are committed to maintaining a pay and benefits philosophy that is market-based and recognizes an associate’s contributions so that we can attract and retain an engaged, talented team. Our Company’s pay and benefits structure is designed to motivate, incentivize and reward our associates—at all levels of the organization—for their skill development, demonstration of our values and performance. While our programs vary by location, associate type and business, they generally include:
• Competitive Base Pay • Associate Incentive Plan (Annual Bonus) • Supplemental Pay (Including Overtime) • Recognition Pay and Service Awards • 401(k) Retirement Savings Plan with Company Match Program • Life Insurance • Short- and Long-Term Disability Insurance • Tuition Assistance Program | • Medical, Dental and Vision Benefits • Supplemental Health Benefits • Long-Term Care Insurance • Go365® Wellness and Rewards Program • Health Plan Incentives • On-site Health and Fitness Centers • On-site Health Screenings and Vaccinations | • Paid Time Off, Paid Holidays, Paid Volunteer Time Off and Jury Duty Pay • Adoption Assistance • Paid Parental Leave Program (6 Weeks) • Paid Caregiver Time Off Program (2 Weeks) • Employee Assistance Program • Associate Discount Programs and Services • Helping Hands Program • Transit Services |
Talent Development and Growth Opportunities
We champion the individual goals and development of our associates and provide a number of programs and resources to support their efforts. The Humana Learning Center gives our associates the opportunity to earn professional certifications through continued education programs and to participate in instructor-led and online courses designed to strengthen soft and hard-skills and enhance leadership development. Our Career Cultivation team sponsors workshops and events to promote associate accountability within their personal and professional growth as part of overall career development. In 2022, our associates averaged approximately 35 learning and development hours per active full-time associate. In addition, people leaders collectively spent over 145,000 total hours in learning and development; of which, over 25,000 hours (17%) were related to content specific to leadership development.
Our associates are also encouraged to participate in mentoring programs with people of various backgrounds and cultures. We view mentoring as an essential development tool for sharing skills and knowledge so we can all succeed. Our commitment to mentoring feeds the successful future of our Company and through our efforts 7,818 of associates engaged in mentoring relationships during 2022. We also utilize development programs to enhance talent within our business segments through targeted internal initiatives, where we aim to upskill and reskill existing associates for opportunities in new career pathways.
80% Of associates believe Humana provides them with opportunity for growth and development | 255,184 Volunteer hours tracked by 20,173 of our | $2.2 Million Total associate matching gift dollars made by The Humana Foundation in 2022 to 4,400 unique organizations |
A Workplace With Purpose
Having a purpose and a connection to a community improves well-being. That’s why we strive to make it easy for our associates to give back, either as individuals or a team, to causes that ignite their passion and sense of purpose. Volunteerism is a tangible way to impact the health and well-being of the communities we serve and enrich our workplace.
We’ve created programs and practices to make volunteering easier and more vibrant for associates.
• | Our full-time associates annually receive eight hours of paid Volunteer Time Off (VTO). |
• | We help associates discover and track volunteer opportunities through our Humana Together volunteer portal. |
• | We integrate volunteerism in our leadership development and team-building. |
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• | We offer a matching charitable gift program through The Humana Foundation. |
• | We feature associates sharing their volunteerism stories on our Intranet and social media sites to inspire others. |
• | We help our associates by reducing barriers in taking time away from work to get vaccinated, which in turn supports healthy communities. |
Addressing the Needs of Our Members and Patients
Helping each of our members and patients achieve their optimal whole-person health has long been a strategic imperative for Humana. Whether it’s by focusing on preventive and primary care, managing health conditions, setting and achieving health-related goals, or finding the right care in the right place – at home, in the community, or through telehealth – we help make the journey toward health simpler for our members.
We’re also continuously working to ensure that our health plan products and services are as affordable as possible, while also creating pathways for access to healthcare, addressing social determinants of health (SDoH) and health-related social needs. Our work in these areas is essential to advancing health equity and improving health outcomesso that all of our members can receive the care they need. Thanks to processes such as integrated care delivery and using health screenings that consider SDoH and health literacy, we have a clearer view of each member’s very personal barriers to their best health. Please refer to our Value-Based Care Report for more information on these efforts.
Access to Healthcare Category Metric Value-Based Primary Care Goal Expand Geographic Presence We’re working to grow and expand our geographic presence in value-based primary care to provide more access and high-quality care to patients, including those in underserved areas. We ended 2022 with 235 primary care centers, representing a 14% increase over the prior year. | Access to Healthcare Category Metric State Medicaid Goal Increase Medicaid Footprint We’re working to expand the number of our state-based Medicaid contracts to deliver care to more individuals of this vulnerable population. As of January 1, 2023 we have Medicaid contracts in seven states: FL, IL, KY, LA, OH, SC, and WI. |
For Each Community
We engage and partner with city-, state-, and nationwide organizations that are making a daily impact in the communities we serve. Through volunteering, monetary investment and strategic collaboration, we’re able to multiply the impact of those on the ground and transform care through our commitment to reducing health disparities and advancing health equity for our members and communities. |
Our Health Equity & Social Impact team is leading the way in addressing social needs and reducing health disparities to improve health outcomes for our members and communities. As part of their mission to establish health equity as a key business and culture driver, they offer insights to embed healthy living opportunities in our products and services, train employees and providers to help them offer more meaningful care and enable new insights through data-driven innovations. Their work centers on creating an equitable healthcare ecosystem so that every person has a fair, just and dignified opportunity to reach their full health potential. Additionally, this team continues to transform how our members are identified for and receive health need interventions. Through screenings during the new member onboarding process, we can identify what members need—and then connect them with resources and services to address those needs. Throughout these screenings, we leverage de-identified, population-level data analytics to measure our progress in offering meaningful interventions.
For over 41 years, The Humana Foundation has served as the philanthropic arm of Humana Inc. The Foundation is focused on health equity, which is the elimination of unjust, avoidable and unnecessary barriers in health and healthcare. The Foundation fosters evidence-based collaborations and investments that support seniors, Veterans, underrepresented populations and school-aged children in living connected, healthy lives.
$5.5 Million Invested by The Humana Foundation supporting 9 community-based projects aimed to address SDoH in our hometown Louisville, KY in 2022. | $7.5 Million Invested by The Humana Foundation to launch the Health Equity Innovation Fund, which will scale innovative solutions to disparities in mental health and nutrition. | 1.24 Million Medicare Advantage, Medicaid and Commercial members were screened for social health needs. |
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For the Healthcare System
Throughout our operations, we are dedicated to ensuring that every business decision we make reflects our commitment to improving the health and well-being of our members and patients, our associates, the communities we serve, and our environment. Our holistic, integrated approach to care and longstanding commitment to caring for vulnerable populations also afford us a unique opportunity to promote health equity |
and address the effects of health disparities in the U.S. healthcare system. We have established policies and programs that illustrate our commitment to responsible business practices that lead to a more efficient, equitable and sustainable healthcare system.
Supplier Diversity
Diversity, Equity, and Inclusion is integral to how we practice, deliver and sustain human care to the communities we proudly serve, which is why we incorporate ESG principles into our procurement strategy—ensuring a fair and equitable approach to procurement. We understand that partnering with diverse suppliers and small businesses, and engaging with them to support common ESG goals, can lead to future sustainability and a reduction in environmental costs. We also understand that inclusive procurement practices deliver broad societal benefits by creating economic opportunities for traditionally underserved or underrepresented groups. That’s why we’ve made it a priority and strive to attract qualified, certified suppliers who reflect our members, patients, associates and the communities we serve. Leveraging these suppliers now and in the future is a win-win for everyone.
Our Supplier Diversity Program promotes an inclusive approach to procurement that ensures we invest our dollars with a balance of partnerships with historically underutilized businesses. We also support the growth of small and diverse-owned businesses by being a resource partner for them, through initiatives like our Supplier Diversity Mentor-Protégé program. The program offers half-day, onsite seminars featuring leadership from across our organization exploring topics impacting business growth and operations of small and diverse businesses. The program is designed to identify and overcome barriers that typically inhibit or restrict the success of small and diverse businesses and better position them for growth, sustainability and inclusion.
We also survey suppliers annually through a sustainability scorecard that addresses sustainability, diversity practices and supplier performance. The scorecard is distributed at year-end to our top 50 Prime Suppliers (top spend suppliers) and we typically receive a 25-30% overall spend response rate. We also hold our suppliers accountable for complying with our Company’s Standard of Excellence and Ethics Every Day policy – to the same degree as our associates.
Governance and Accountability
Throughout our operations, we are dedicated to ensuring that every business decision we make reflects our Standards of Excellence, commitment to accountability, health equity and improving health and well-being. Our governance practices and policies reflect strong controls that provide a solid foundation for our continued success.
Quality Assurance. We are committed to supporting the delivery of consistent high-quality care, promoting efficient outcomes in the healthcare system and ensuring that healthcare remains affordable for all members and patients. Further, in a healthcare industry increasingly driven by quality, we have a corporate Quality Improvement (QI) program – with practicing network physicians as members of various quality subcommittees – to monitor, evaluate and facilitate improvement in the quality of health care services provided to our members. The QI program is overseen by our Corporate Quality Improvement Committee (CQIC), which among other things, promotes alignment to the third dimension of quality (experience and outcomes) through collaboration with stakeholders, personal accountability and speaking up when quality does not meet our standards.
Ethics and Compliance. Our associates are integral to responsibly running our company and key to our ethics and compliance practices. That’s why we require Humana’s independent directors, executive officers and all other associates, and contractors to complete an annual ethics and compliance training course, which includes detailed training in cybersecurity, whistleblowers, conflicts of interest and more. In addition to required annual training, our Enterprise Compliance team regularly communicates and engages with associates on ethics and compliance topics throughout the year. We also enforce Standards of Conduct and a separate Compliance Policy, which are specifically designed for our contracted healthcare providers and third parties in effort to deter fraud, waste and abuse.
Responsible Data Use and Data Privacy. As we evolve to deliver more services and goods through digital operations, we recognize our responsibility to protect member data and patient privacy, as well as use enterprise-level analytics to continue to equitably innovate for those we serve. Integrating digital capabilities across the organization will further accelerate our Company’s move toward differentiated experiences for our customers at the intersection of healthcare and lifestyle, tailored especially to the needs of seniors. We recognize that our emphasis on technology comes with great responsibility as our customers trust us with keeping their information safe. To that end, we are proud to be an industry leader in the adoption of principles and governance to guide our implementation of emerging technologies through interdisciplinary committees that establish governance over the deployment and quality of Artificial and Augmented Intelligence models. We have also signed the EqualAI pledge committing to ensuring our Artificial and Augmented Intelligence tools do not incorporate unintentional bias, and we require all of our Artificial or Augmented Intelligence models that inform decisions about individuals to be reviewed to detect inadvertent bias. We further ask our vendors who utilize Artificial and Augmented Intelligence tools to sign the EqualAI pledge or another similar pledge.
32 | Humana | 2023 Proxy Statement •Environmental, Social and Governance (ESG) |
Cybersecurity. We are committed to continuously enhancing and strengthening our technology infrastructure and security protocols to protect against security breaches. We employ best-practice precautions to safeguard information and protect our members’ data by deploying defensive practices against the ever-evolving cyber threat landscape. This involves routine measuring and maturing of our cybersecurity capabilities and actively monitoring risks posed by threat actors. Additionally, we have established formal data governance, which includes accountability, oversight, processes and controls to ensure our data usage transparency and non-repudiation and we refresh our data privacy and security policies at least annually. Our associates are provided annual cybersecurity training led by our Enterprise Information Protection team, on how to avoid security vulnerabilities and equip them with the necessary tools to protect sensitive data and to reduce risk. We also test our associates’ knowledge through internal phishing campaigns – tracking and reporting aggregated outcomes to leadership. To further reinforce our accountability in this area, we engage an independent third-party audit firm to perform an Annual Service Organizational Controls (SOC) 2 audit of enterprise claims platforms within the following Trust Services Criteria: availability, confidentiality, security and processing integrity. We report data breaches, as required by law, to the U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR); our reports are publicly available, free of charge, and can be obtained through the OCR Portal at https://ocrportal.hhs.gov/ocr/breach.
Associate Physical Safety and Security. We integrate a culture of safety and security into all aspects of our business to provide our associates, members, patients, contractor a safe and secure facility. We are committed to protecting people and safeguarding key assets, properties and information. We have an Enterprise Safety and Security Policy that applies to our associates, facilities (owned or leased), and anyone requesting facility admittance regardless of relationship. We also maintain and utilize Company established resources such as the Environmental Health and Safety Manual, Incident Reporting System, Associate Safety Handbook and Associate Emergency Preparedness Training to manage/mitigate occupational health and safety. Our safety and security team periodically performs on-site compliance audits to ensure safety plans and practices are implemented, in addition to providing training tools and information. | 92% Of associates trust Humana would take appropriate action if a physical safety or security concern/incident was reported | |||
Vote Required
93%
Of associates feel safe and Recommendationprotected from physical risks while working
Talent & Diversity Category Metric Diverse Supplier Spend Goal Increase Supplier Diversity We’re working to increase our diverse supplier base through an inclusive and equitable approach to procurement and set yearly goals to increase total diverse supplier spend among our Prime Suppliers. Our 2022 target increase was 9%. 2022 Total Diverse Spend: $408 million, or 8.85% of total supplier spend | Product Quality & Safety Category Metric Star Ratings Goal Continue Leadership of Members in MA Plans with 4+ Star Rating Our commitment to quality of care, patient-centered clinical outcomes and customer service is reflected in the consistent strength of our MA plan’s Star Ratings. Membership in MA plans with 4+ Star Rating***: 4.9 million members (2023); 100,000-member increase over 2022. |
*** | Membership totals in MA plans with 4+ Star Rating reflect membership as of October 2022 when Star Ratings were released by the Centers for Medicare & Medicaid Services (CMS). |
For the Environment
We know that transforming healthcare requires transforming the way we address environmental risks to health. Our commitment to the health of our planet is stronger than ever. We recognize there is an undeniable link between our physical and emotional well-being and the health of the |
We also understand that health is local, so we are engaged at a state and community level to address the health-related social needs of our members and communities, especially communities that have been historically underserved. Those same communities are often disproportionately affected by climate change, as evidenced in health outcomes and disaster recovery data, so we know our focus on these areas can have a significant impact.
As a services company, our direct environmental impacts are concentrated within our internal operations. As such, our focus is on areas where we feel we can make the most impact: reducing our greenhouse gas emissions (GHG) and waste from our operations; deploying water conservation efforts; and adopting renewable energy solutions. We understand that climate change impacts pose risks and opportunities for our business and seek to manage such impacts in several ways, including: continuous strengthening of our already robust business continuity program, investing in energy management and efficiency projects and applying financial incentives to support efforts toward reducing our environmental footprint. We also set challenging environmental targets, as shown below, that promote collaboration with vendors and associates to achieve them. These efforts mitigate risks and demonstrate our commitment by validating the intrinsic link between environment and health.
Environmental, Social and Governance (ESG)• 2023 Proxy Statement | Humana | 33 |
Our Workplace Solutions Environmental Sustainability (WSES) team, overseen by our Chief Administrative Officer, aims to support Humana’s lifelong well-being strategy by ensuring that we are doing our part to take on climate change, pollution and other environmental factors that impact our health. This team is responsible for day-to-day planning, coordination and implementation of the Company’s operational environmental sustainability policies, including those around energy management and climate-change mitigation/adaptation.
We provide a full report of our GHG emissions, energy consumption and water usage within our Impact Report, available on www.humana.com, refer to the “Environmental Year-over-year Data Inventory Table.” We also align our environmental reporting to the framework established by the Task Force on Climate-Related Disclosures (TCFD). We encourage you to review our Environmental Sustainability Policy Statement and our 2022 CDP Report to learn more about our sustainability efforts and areas of concentration.
Science-based Target
In 2021, we announced our intention to create a more robust next generation environmental goal to address climate change that would align with criteria established by the Science Based Targets initiative (SBTi). Since then, we’ve been developing a science-based target(SBT) that includes Scopes 1, 2 and 3 and have presented our proposal to SBTi for official validation. Among other strategies, our SBT will include continued investment and improvement in our facilities, which we know is critical to achieve energy-efficient buildings, to reduce the amount of energy we use, and the amount of waste generated.
This work is an expansion of goals that we set in 2018, to uphold our pledge to make the planet healthier. At that time, we introduced innovative programs and proven practices, such as centralizing office waste and recycling bins, reducing printers, and donating office furniture. Three years later, keeping in line with best practices around goal setting, we expanded our goal boundary to include certain additional Humana-owned and leased properties and recalculated our goal progression over the last five years. Now that we’ve surpassed our five-year objectives, we’re looking at the decade ahead. We will continue to invest in the health and sustainability of the environment around by tackling ambitious new goals that continue to reduce waste and pollution and mitigate other environmental factors that impact our health. Our SBT will expand on our efforts to reduce emissions and waste through Scope 1 and Scope 2 initiatives and it is designed to spur innovation and efficiency, boost investor confidence and align with national benchmarking. We understand that a path forward to net zero emissions is important to our collective future and we’re analyzing tactics, appropriate to our business, that allow us to utilize our SBT to contribute to future net zero goals.
Components of our near-term SBT—designed using climate science, SBTi’s methodology and SBTi’s official target setting tool—are illustrated below. We anticipate receiving SBTi’s validation of our SBT during Summer 2023 and will communicate accordingly.
Scope 1 and Scope 2 | Scope 3 | |||
Humana commits to reduce absolute Scope 1 and Scope 2 GHG emissions 54.6% by 2032 from a 2019 base year. | Humana commits to a 30% absolute reduction in Scope 3 GHG emissions covering purchased goods and services (PG&S) and upstream transportation by 2032 from a 2021 base year. |
Paper Reduction and Water Conservation
We are working to reduce waste in the materials we send to our customers, including focusing on paper reduction. When and where possible, we are recycling paper, cardboard, metals, plastics, glass and other types of materials and products. For many of our workspaces, we have adopted the use of centralized shared recycle and waste bins, replacing the need for desk-side bins.
We’re also maximizing technology to save paper. In our facilities, we have reduced the number of printers in our offices to adjust to the shift from paper printing to using the Cloud to store documents. In addition, we have implemented Cloud and access card printing and have defaulted our printers to do double-sided printing. Leveraging digital collaboration tools to house and share documents, which eliminates unnecessary printing and increases collaboration.
This focus on paper reduction is also helping to reduce the amount of paper mail received by our customers. We’re making it easier for them to sign-up for and receive paperless communications through our website, which has the added benefit of reducing print and postage costs.
We are also in the process of assessing water conservation efforts, beginning with our newer locations with future plans to roll these efforts out to all locations. At our facilities we offer water bottle filling stations to encourage the use of refillable water bottles and reduce single-use bottles. We also use low-flow and water-efficient fixtures as part of our design standards.
34 | Humana | 2023 Proxy Statement •Environmental, Social and Governance (ESG) |
Environmental Impact Category Metric Paper Reduction Goal Print and Postage Savings We’re working to reduce print and postage costs by making it easier to sign-up for and receive paperless communications in addition to transitioning more communications to digital channels. Our cumulative print and postage savings goal is $5MM by the end of
2022 Identified Savings: $2.4 million | Environmental Impact Category Metric Digital Adoption Rate Goal Increase Paperless Communications We are working to increase the digital adoption rate (DAR) of members who enroll for paperless communications by 15% by the end of 2025. DAR as of November 2022: 23% opt-in increase, or 106% of goal |
Renewable Energy
Much of our renewable energy effort has gone toward making Humana’s buildings more efficient, including making repairs and replacing equipment, resulting in a better associate experience and more energy-efficient buildings. Our headquarters in downtown Louisville, Kentucky has been retrofitted with solar panels on the rooftop, and we’re in the process evaluating the best sites to install renewable energy. As part of our efficiency work, we use certifications to benchmark how well our buildings are performing. Some certifications we are pursuing include:
• | ENERGY STAR Certification for Buildings. We’re continuing to replace all lights in all of our owned and leased facilities with LEDs and pursuing the goal of reaching ENERGY STAR certification in all eligible Humana locations. ENERGY STAR certified sites on average use 35% less energy than comparable sites, and Humana will continue to leverage ENERGY STAR as a key measuring stick to help achieve our science-based target. |
• | TRUE Zero Waste Certification. Last year we reported that our West Chester, Ohio, pharmacy distribution site was pursuing a subset goal of zero waste certification. The facility achieved designation as a TRUE certified facility in January 2023. |
We’re also working toward energy efficiencies within our mobile vehicles and aircrafts. For the past few years, we’ve been making our fleet of mobile marketing offices greener. These mobile marketing offices offer potential members the opportunity to talk 1-on-1 with a marketing agent and enroll in a plan by bringing the office to them. We’re pleased to report that all of our mobile marketing offices are now fitted with solar panels, which has allowed us to reduce the cost to power as well as the amount of times the battery needed to be recharged. Our Business Aviation team now seeks to measure their environmental footprint and has pursued the National Business Aviation Association (NBAA) Sustainable Flight Department Accreditation in four categories: Flight; Operations; Ground Support and Infrastructure.
Additional ESG Resources | ||||||||||||
Humana Impact Report https://www.humana Policy Statements https://humana.gcs-web.com - Environmental Sustainability Policy & Standard - Supplier Diversity Statement - Statement of AI Principles Ethics https://humana.gcs-web.com - Ethics Every Day - Anti-Corruption Statement Supplier Diversity Program https://www.humana | Value-Based Care Report https://www.humana Population Health https://populationhealth Data Privacy and Cybersecurity https://www.humana Standards of Excellence https://www.humana Public Policy https://policy.humana.com | Humana Healthcare Research https://research.humana The Humana Foundation https://www.humanafoun Fraud, Waste, and Abuse https://www.humana.com - Ethics Every Day for Contracted Healthcare Providers & Third Parties - Compliance Policy for Contracted Healthcare Providers & Third Parties | ||||||||||
Environmental, Social and Governance (ESG)• 2023 Proxy Statement | Humana | 35 |
Awards and Recognition
We are pleased to have received recognition for our 2022 ESG efforts and we appreciate the acknowledgement of our commitment to inspiring health and well-being. Highlighted below are just a few of our valued achievements, however a complete list of awards and recognition is available on our website at www.humana.com – from there click “Corporate Responsibility” and then click “See Our Awards.”
36 | Humana | 2023 Proxy Statement •Environmental, Social and Governance (ESG) |
Director Compensation
2022 Director Compensation Program
During 2022, our directors were compensated pursuant to the following schedule:
Annual Retainer (1) | $120,000 | |
Non-Employee Chairman of the Board Additional Annual Retainer | $240,000 | |
Committee Chairman fee per year: 1. Audit Committee Chair 2. Organization & Compensation Committee Chair 3. All other Committee Chairs | $25,000 $20,000 $15,000 | |
Executive Committee Member fee per year | $12,000 | |
Common Stock per year (1st Business Day of January)(2)(4)(5) | $190,000 in common stock (variable # of shares) | |
Charitable Contributions Annual Match | up to $40,000 | |
Group Life and Accidental Death Insurance — (except Chairman)(6) | $150,000 of coverage | |
Group Life and Accidental Death Insurance — Chairman | $400,000 of coverage | |
Business Travel Accident Insurance | $250,000 of coverage | |
Restricted Stock Units Granted Initial Date of Election(3) | Restricted Stock Unit grant equal to the dollar value of the then current annual stock grant for directors |
(1) | The annual cash retainer for each non-employee director |
(2) | The annual common stock retainer is paid in the
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Director Compensation• 2023 Proxy Statement | Humana | 37 |
2022 Compensation of Our Directors
The following table shows the compensation earned by our non-employee directors in connection with their service on our Board of Directors during all or a portion of the 2022 fiscal year:
Name(1)(2) (a)
| Fees Paid in Cash ($)(3) (b)
| Stock Awards ($)(3)(4)(5)
| Option Awards ($) (d)
| Non-Equity Incentive Plan Compensation ($) (e)
|
Change in Value and Compensation Earnings($)(7) (f)
| All Other Compensation ($)(8) (g)
| Total ($) (h)
| ||||||||||||||||||||||||||||
Raquel C. Bono, M.D. |
| 120,000 |
| 189,969 |
| — |
| — |
| — |
| 2,982 |
| 312,951 | |||||||||||||||||||||
Frank A. D’Amelio |
| 145,000 |
| 189,969 |
| — |
| — |
| — |
| 33,809 |
| 368,778 | |||||||||||||||||||||
David T. Feinberg, M.D. |
| 120,000 |
| 189,903 |
| — |
| — |
| — |
| 1,282 |
| 311,185 | |||||||||||||||||||||
Wayne A. I. Frederick, M.D. |
| 120,000 |
| 189,969 |
| — |
| — |
| — |
| 40,705 |
| 350,674 | |||||||||||||||||||||
John W. Garratt |
| 135,000 |
| 189,969 |
| — |
| — |
| — |
| 1,342 |
| 326,311 | |||||||||||||||||||||
Kurt J. Hilzinger |
| 372,000 |
| 189,969 |
| — |
| — |
| — |
| 43,296 |
| 605,265 | |||||||||||||||||||||
David A. Jones, Jr. |
| 147,000 |
| 189,969 |
| — |
| — |
| (94,279 | ) |
| 42,506 |
| 285,196 | ||||||||||||||||||||
Karen W. Katz |
| 120,000 |
| 189,969 |
| — |
| — |
| — |
| 34,298 |
| 344,267 | |||||||||||||||||||||
Marcy S. Klevorn |
| 130,000 |
| 189,969 |
| — |
| — |
| — |
| 22,456 |
| 342,425 | |||||||||||||||||||||
William J. McDonald |
| 120,000 |
| 189,969 |
| — |
| — |
| — |
| 45,877 |
| 355,846 | |||||||||||||||||||||
Jorge S. Mesquita |
| 120,000 |
| 189,969 |
| — |
| — |
| — |
| 2,440 |
| 312,409 | |||||||||||||||||||||
James J. O’Brien |
| 140,000 |
| 189,969 |
| — |
| — |
| — |
| 43,141 |
| 373,110 | |||||||||||||||||||||
Marissa T. Peterson | 45,000 | 63,169 | (6) | — | — | — | 21,256 | 129,425 | |||||||||||||||||||||||||||
Brad D. Smith |
| 120,000 |
| 190,157 |
| — |
| — |
| — |
| 194 |
| 310,351 |
(1) |
|
(2) | Ms. Peterson did not stand for re-election at the April 21, 2022 Annual Meeting of Stockholders. Compensation disclosed represents amounts earned for service during 2022 prior to her departure from our Board. |
(3) | Under the Humana Inc. Deferred Compensation Plan for Non-Employee Directors, which we refer to as the Deferred Compensation Plan, non-employee directors may make an irrevocable election each year to defer compensation paid to them by the Company in the form of cash or stock for services rendered as Board
Security Ownership of Directors and Executive |
(4) | On January 3, 2022, when the fair market value of our common stock was $461.09, each director in office at that time, other than Mr. Broussard, was granted a restricted stock unit award of 412 Shares, representing the annual grant of approximately $190,000 in common stock. Dr. Feinberg and Mr. Smith each received a restricted stock unit award representing approximately $190,000 upon their respective election dates, using the fair market value of our common stock on that date as follows: March 1, 2022 ($430.62) to determine the 441 Shares awarded to Dr. Feinberg and September 15, 2022 ($492.6365) to determine the 386 Shares awarded to Mr. Smith. The amount shown in column (c) (“Stock Awards”) above is the grant-date fair market value times the number of Shares awarded calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718. |
(5) | Vested restricted stock units with a payout deferral election made by the director accrue quarterly dividend equivalent rights that are reinvested into the director’s account as additional restricted stock units and will be included in the final restricted stock unit payment |
38 | Humana | 2023 Proxy Statement •Director Compensation |
when the Shares are issued in accordance with the director’s payout election. This column does not include dividend equivalent units that have accrued through December 31, 2022 nor includes dividend equivalent rights paid on any such deferred Shares. |
(6) | Pursuant to equity award agreements, unvested restricted stock units will be prorated upon vesting for any portion of the year that the director did not serve. Ms. Peterson received a prorated number of restricted stock units upon vesting. The |
(7) | Non-employee directors elected subsequent to 1997 do not receive any retirement benefits. As he was first elected to the board in 1993, Mr. Jones is the only director that will have retirement benefits under this former retirement policy, including: (A) at the director’s election, either: (x) an annual retirement benefit for the life of the director in the amount of $38,000, the annual retainer fee in effect for 1997; or (y) in lieu thereof, an actuarially equivalent joint and survivor annuity payment; and (B) an annual matching charitable contribution benefit of $19,000 for the life of the director. |
(8) | We pay for or reimburse our directors’ travel, lodging and other reasonable out-of-pocket expenses in connection with attendance at board, committee and stockholder meetings. From time to time, we may transport one or more directors and members of their immediate family to and from such meetings or other Company business on Company aircraft. Directors may elect to participate in the medical and dental benefit programs offered to all our employees at a rate comparable to the rate paid by |
Director | Matching ($) | Occupational Tax ($) | Life ($) | Other ($) |
Total – All Other ($) | ||||||||||||||||||||
Raquel C. Bono, M.D. |
| — |
| 296 |
| 2,286 |
| 400 |
| 2,982 | |||||||||||||||
Frank A. D’Amelio |
| 31,164 |
| 359 |
| 2,286 |
| — |
| 33,809 | |||||||||||||||
David T. Feinberg, M.D. |
| — |
| 292 |
| 990 |
| — |
| 1,282 | |||||||||||||||
Wayne A. I. Frederick, M.D. |
| 40,000 |
| 291 |
| 414 |
| — |
| 40,705 | |||||||||||||||
John W. Garratt |
| — |
| 838 |
| 414 |
| 90 |
| 1,342 | |||||||||||||||
Kurt J. Hilzinger |
| 40,000 |
| 8 |
| 3,168 |
| 120 |
| 43,296 | |||||||||||||||
David A. Jones, Jr. |
| 40,000 |
| 1,318 |
| 1,188 |
| — |
| 42,506 | |||||||||||||||
Karen W. Katz |
| 31,900 |
| 24 |
| 2,286 |
| 88 |
| 34,298 | |||||||||||||||
Marcy S. Klevorn |
| 20,500 |
| 768 |
| 1,188 |
| — |
| 22,456 | |||||||||||||||
William J. McDonald |
| 40,000 |
| 68 |
| 2,286 |
| 3,523 |
| 45,877 | |||||||||||||||
Jorge S. Mesquita |
| — |
| 1,252 |
| 1,188 |
| — |
| 2,440 | |||||||||||||||
James J. O’Brien |
| 40,000 |
| 855 |
| 2,286 |
| — |
| 43,141 | |||||||||||||||
Marissa T. Peterson |
| — |
| 20,860 |
| 396 |
| — |
| 21,256 | |||||||||||||||
Brad D. Smith |
| — |
| — |
| 194 |
| — |
| 194 |
Director Compensation• 2023 Proxy Statement | Humana | 39 |
Stock Ownership Information
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, or the Exchange Act, requires our directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities, to file with the SEC and the NYSE reports of ownership and reports of changes in ownership of our common stock and our other equity securities. These reports generally are due within two business days of the transaction. Executive officers, directors, and greater than ten percent stockholders are required to furnish us with copies of all the forms they file.
During the year ended December 31, 2022, based solely on a review of the reports furnished to the Company, or written representations by persons subject to Section 16(a), the Company believes that all executive officers, directors, and greater than ten percent beneficial owners of our common stock complied with Section 16(a) filing requirements applicable to us; except for the late filing of one report relating to four transactions by Mr. Huval that was caused by an administrative, electronic submission error through no fault of the reporting person. We have a program to oversee the compliance of our executive officers and directors in their reporting obligations, and following our becoming aware of this omission, we completed a review of our controls and procedures governing transactions in Company securities.
Security Ownership of Certain Beneficial Owners of Company Common Stock
We know of no person or entity that may be deemed to own beneficially more than 5% of our outstanding common stock except for:
Number of Shares | Percent of Class | |||||
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 11,628,073 Shares | 9.3%(2) | ||||
FMR LLC 245 Summer Street Boston, Massachusetts 02210 | 6,866,128 Shares | 5.5%(3) | ||||
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, Maryland 21202 | 7,623,150 Shares | 6.1%(4) | ||||
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 11,357,974 Shares | 9.1%(5) | ||||
Wellington Management Group LLP 280 Congress Street Boston, Massachusetts 02210 | 7,611,181 Shares | 6.1%(6) |
(1) | The percentage of ownership is based on 124,974,643 Shares of our common stock outstanding as of December 31, 2022. |
(2) | Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, BlackRock, Inc. reports that through various subsidiaries, it has sole power to vote 10,528,370 Shares and has sole dispositive power over 11,628,073 Shares. |
(3) | Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, FMR LLC reports that through various subsidiaries, it has sole power to dispose or to direct the disposition of 6,866,128 Shares. |
(4) | Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, T. Rowe Price Associates, Inc. reports that through various subsidiaries, it has sole power to vote 3,339,442 Shares and has sole dispositive power over 7,610,595 Shares. |
(5) | Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, The Vanguard Group reports that through various subsidiaries, it has shared power to vote 186,251 Shares, sole dispositive power over 10,829,960 Shares, and shared dispositive power over 528,014 Shares. |
40 | Humana | 2023 Proxy Statement •Stock Ownership Information |
(6) | Based upon a Schedule 13G jointly filed with the SEC for the period ended December 31, 2022, Wellington Management Group LLP, reports that it and each of |
Security Ownership of Directors and Executive Officers
The following table shows stock ownership as of January 15, 2023, by (i) each of our director nominees; (ii) Bruce D. Broussard, our President and Chief Executive Officer; (iii) Susan M. Diamond, our Chief Financial Officer; (iv) each of our three other highest compensated executive officers serving as of December 31, 2022, (we collectively refer to these officers in this proxy statement as our Named Executive Officers, or NEOs); and (v) by all our director nominees and executive officers as a group, including those named above.
Company Common Stock Beneficially Owned as of January 15, 2023 (1)(2) | Percent of Class as of | |||||||||
Raquel C. Bono, M.D. | 397 |
|
|
| ||||||
Frank A. D’Amelio | 20,634 |
|
|
| ||||||
David T. Feinberg, M.D. | 441 |
|
|
| ||||||
Wayne A.I. Frederick, M.D. | 440 |
|
|
| ||||||
John W. Garratt | 1,255 |
|
|
| ||||||
Kurt J. Hilzinger | 19,448 |
|
|
| ||||||
David A. Jones, Jr. | 43,240 |
|
|
| ||||||
Karen W. Katz | 590 |
|
|
| ||||||
Marcy S. Klevorn | 436 |
|
|
| ||||||
William J. McDonald | 2,276 |
|
|
| ||||||
Jorge S. Mesquita | 1,223 |
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|
| ||||||
James J. O’Brien | 1,414 |
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|
| ||||||
Brad D. Smith | 0 |
|
|
| ||||||
Bruce D. Broussard | 143,690 |
|
|
| ||||||
Susan M. Diamond | 18,935 |
|
|
| ||||||
T. Alan Wheatley | 20,328 |
|
|
| ||||||
Timothy S. Huval | 15,606 |
|
|
| ||||||
Joseph C. Ventura | 18,822 |
|
|
| ||||||
All directors and executive officers as a group (24 in number, including those named above) | 395,918 | 0.32% |
(1) | Beneficial ownership of Shares, for purposes of this proxy statement, includes Shares as to which a person has or shares voting and/or investment power. Therefore, any restricted stock for which a person has voting power and all share equivalents in the Humana Retirement Savings Plan are included. These footnotes describe whenever an individual Shares voting and/or investment power over the Shares beneficially owned by them. |
The number of Shares listed:
(a) | Includes certain Share equivalents held for the benefit of the individuals in the Humana Retirement Savings Plan as of December 31, 2022, over which the employee participant has voting power and investment power. As of December 31, 2022, our Named Executive Officers held 3,396 of such Share equivalents in the Humana Retirement Savings Plan, while all of our executive officers as a group (11 in number, including our NEOs) held 3,515 of such Share equivalents. |
(b) | Does not include the initial stock retainer of 386 restricted stock units granted to Mr. Smith on his September 15, 2022 election date pursuant to our 2022 director compensation program. The restricted stock units represent approximately $190,000 and |
Stock Ownership Information• 2023 Proxy Statement | Humana | 41 |
were determined using the grant date fair market value of our common stock. The restricted stock units are expected to vest in full on the first anniversary of the applicable election date, unless service on the Board is less than one year in which case the restricted stock units will be forfeited in their entirety. |
(c) | Includes unvested restricted stock unit awards of our directors and executive officers which are scheduled to vest within 60 days after January 15, 2023, as follows (performance-based restricted stock units are shown at the maximum level): |
David T. Feinberg, M.D. | 441 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bruce D. Broussard | 32,026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan M. Diamond | 7,504 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
T. Alan Wheatley | 7,246 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Timothy S. Huval | 5,306 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph C. Ventura | 5,306 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All directors and executive officers as a group (24 in number, including
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Say-on-Pay Support Our 2022 say-on-pay proposal maintained its typically high level of approval with 95% of our stockholders voting in favor of the Company’s compensation strategy. We believe that the result of our 2022 say-on-pay proposal indicates that stockholders are generally supportive of our executive compensation program, and therefore the Committee made no material changes to the executive compensation program as a result of this vote. Stockholder voting trend for the past three years is illustrated below. Peer Group Our peer group is used as a reference point in making compensation decisions, such as developing base salary ranges, developing short-term and long-term incentive award ranges, determining competitiveness of the total compensation package for our NEO’s and comparing our performance in order to validate if our compensation programs are informed by market practices. The Committee uses the framework below, in consultation with its independent compensation consultant, to filter and select a broad group of potential peers. This framework yields multiple perspectives that enrich our understanding of competitive executive pay practices while also ensuring that our peer group is comprised of companies with whom we may compete for talent and whose revenues, market capitalization, and business focus are similar to our own. For 2022 compensation decisions, based on its review along with advice from its independent compensation consultant, the Committee approved the following peer group (the “Peer Group”):
Humana’s 2022 Peer Group Financial Comparison Plan Design and Award Decisions Base Salary On an annual basis, the Committee, in consultation with its independent compensation consultant, reviews the market data and current base salaries for our executives, considering adjustments as deemed appropriate. Salary increases, if any, must receive advance approval from the Committee. During its review, the Committee determined that base salary increases were necessary for certain of our executives in 2022 in order to maintain competitive market pay levels. In addition to market pay analysis, the 2022 determinations considered demonstration of enterprise value along with certain expansions of responsibilities. To support the Company’s efforts to drive $1 billion of additional value during 2022, the Committee further determined to delay base salary increases for our executives from becoming effective on March 1, 2022 to instead become effective on July 1, 2022. Applicable pay increases for all of the Company’s associates were treated with this same delayed effective date. The table below represents base salaries for our CEO and other NEOs as of July 1, 2022, compared to March 1, 2021.
Short-Term Incentives Our enterprise short-term incentive (STI) is administered through the Associate Incentive Plan (AIP), a discretionary, annual cash-based incentive plan. The goal of our plan is to recognize and reward participating associates, including our executive officers, for their contributions to the Company’s overall performance, while also uniting associates around a common purpose for the year. Associate Incentive Plan The AIP plan year is effective January 1 through December 31 of each fiscal year. Associates who participate in other Company incentive plans, such as Sales Incentive/Commission Plans and Targeted Incentive Plans, are not dually eligible to participate in the AIP. Associates may not participate in more than one incentive plan. For our executive officers, the AIP is administered through the Executive Incentive Compensation Plan, as filed with the SEC on annual and quarterly reports on Form 10-K and Form 10-Q, respectively, and can be accessed on our website. From the www.humana.com website, click on “Investor Relations,” then click on “SEC Filings and Financial Reports,” and then click on “SEC Filings.”
AIP payout is calculated based on Annualized Base Salary during the AIP Performance Period, as defined under the AIP Plan Document. Annualized Base Salary under AIP excludes any unpaid leave or overtime and is pro-rated for the number of days eligible during the plan year. Refer to section entitled “2022 AIP Performance Results” for discussion of AIP payout of our Named Executive Officers. On an annual basis the Committee, in consultation with its independent compensation consultant, reviews and approves the AIP as outlined below:
The Committee selected the following performance measures for the 2022 AIP, aligning our executives to the key financial and operational objectives of our overall strategy:
The Committee approved the following 2022 stock-based compensation for the CEO and other NEOs:
Performance of our 2020-2022 Performance-Based Restricted Stock Units In 2020, the Committee granted performance-based stock unit awards to our then-serving NEOs, with performance criteria for these awards based on the Company’s average adjusted return on invested capital (Adjusted ROIC)(1) against an established set of targets over the three-year period beginning January 1, 2020 and ending December 31, 2022, referred to herein as our “2020-2022 PSU Awards.” The 2020-2022 PSU Awards also included a rTSR that could adjust final payout results up or down based on the Company’s TSR ranking against an approved comparator group.
The following discloses the three-year cumulative goals included in the 2020-2022 PSU Awards, which provide for incremental payout between steps:
When determining the vesting value of the 2020-2022 PSU Awards, the Committee reviewed final Company results showing a three-year cumulative Adjusted ROIC of 15.9% as determined under the terms of the 2020-2022 PSU Awards[, including certain automatic adjustments due to the impacts of acquisition activity and the extraordinary unusual and infrequent impacts experienced by the Company as a result of the COVID-19 pandemic during certain portions of the performance period, and a rTSR ranking in the 47.6th percentile of the comparator group. As part of this review, the Committee also noted that Adjusted ROIC and rTSR performance are a by-product of both the financial and operational performance of the Company over the three-year period. As such, the Committee took into account strong earnings, revenue and membership growth, TSR, and substantial progress made in executing on its long-term strategy over the performance period. This strategy includes moving from an insurance company with elements of health to a health company with elements of insurance. The Company took further steps to advance the quality of care delivered to the Company’s members, and significantly advanced its healthcare services platform through the expansion of its senior-focused, value-based primary care organization and the continued integration of its home health organization. During its February 2023 meeting, based on the review described above, the Committee approved an award payout at 177.7% of target amounts, as determined under the terms of the 2020-2022 PSU Awards, with no discretionary exceptions or adjustments, as shown below.
The Committee determined the above results were appropriate given the substantial progress made on long-term initiatives and the strong financial performance achieved during the 3-year performance period.
Other Benefits and Perquisites We operate in a highly competitive, complex and consolidating industry and offer certain benefits that we believe are critical to attract and retain talent. In general, our NEO’s are eligible for the same benefits as our associate population. We offer a limited number of perquisites to attract and retain our executives but we do not provide any tax reimbursements or “gross-ups” for these benefits.
Organization & Compensation Committee Report
The Organization & Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis for the year ended December 31, 2022 with management. In reliance on these reviews and discussions, the Organization & Compensation Committee recommended to the Company’s Board of Directors, and the Board of Directors has approved, the inclusion of this Compensation Discussion and Analysis in this proxy statement. All members of the Organization & Compensation Committee of the Company whose names follow submit the foregoing report: ORGANIZATION & COMPENSATION COMMITTEE James J. O’Brien, Chairman Wayne A. I. Frederick, M.D. David A. Jones, Jr. Jorge S. Mesquita
Executive Compensation Summary Compensation Table The following Summary Compensation Table shows the compensation earned for the time period served as a named executive officer during the last three fiscal years by (i) Bruce D. Broussard, our President and Chief Executive Officer; (ii) Susan M. Diamond, our Chief Financial Officer; and (iii) each of our three other highest compensated executive officers serving at December 31, 2022 (we collectively refer to these officers in this proxy statement as our “Named Executive Officers”).
Proposal Two Ratification of Appointment of Independent Registered Public Accounting Firm Background The Board of Directors, in accordance with the recommendation of its Audit Committee, believes that the continued retention of PwC as the Company’s independent registered public accounting firm is in the best interests of the Company and its stockholders, and therefore has appointed PwC to audit the consolidated financial statements of the Company for the year ending December 31, 2023. In making this appointment, the Board considered the performance and independence of PwC, including whether any non-audit services performed by PwC are compatible with maintaining independence. The Audit Committee and Board of Directors believe that PwC has invaluable long-term knowledge of Humana. While preserving that knowledge, partners and employees of PwC engaged in audits of Humana are periodically changed, giving Humana access to new expertise, experience and perspectives. We are asking our stockholders to ratify the appointment of PwC as our independent registered public accounting firm. Although ratification is not required by our Charter, Bylaws, Delaware law or otherwise, the Board is submitting the appointment of PwC to our stockholders for ratification because we value our stockholders’ views on our independent registered public accounting firm. If our stockholders fail to ratify the appointment, it will be considered as a non-binding recommendation to the Board and the Audit Committee to consider the appointment of a different firm for fiscal year 2024. Even if the appointment is ratified, the Board and the Audit Committee may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. We expect that representatives of PwC will be present at the Annual Meeting and will be afforded the opportunity to make a statement if they desire to do so and to respond to appropriate questions. Vote Required and Recommendation of the Board of Directors The affirmative vote of a majority of the votes present and entitled to vote with respect to the proposal is required for the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Shares not present at the meeting have no effect on the ratification of the appointment of PricewaterhouseCoopers LLP, while Shares voting “abstain” will be counted as “against” votes. Pursuant to NYSE regulations, brokers and other NYSE member organizations have discretionary voting power over the ratification of the appointment of the Company’s independent registered public accounting firm. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Proposal Three Non-Binding Advisory Vote with Respect to the Compensation of the Company’s Named Executive Officers Background The Dodd-Frank Act requires that we include in our proxy statement a non-binding advisory stockholder vote with respect to the frequency of future advisory votes regarding the compensation of our Named Executive Officers as described in the Compensation Discussion and Analysis section, the compensation tables and the accompanying narrative disclosure, set forth in this proxy statement (commonly referred to as “Say-on-Pay”). At our 2017 Annual Meeting, held on April 20, 2017, our stockholders recommended an annual Say-on-Pay vote, and our Board of Directors subsequently adopted that recommendation. In 2023, we are therefore asking our stockholders to vote on the following resolution: RESOLVED, that the stockholders of Humana Inc. approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as described in the Compensation Discussion and Analysis section, the compensation tables, and the accompanying narrative disclosure, set forth in the Company’s proxy statement. The compensation of our Named Executive Officers is disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related disclosures contained in this proxy statement. As discussed in those disclosures, our philosophy is that compensation should be market-based, competency-paced and contribution-driven. Our compensation programs are designed to challenge participants as well as reward them for superior performance for our Company and our stockholders, with an emphasis on pay for performance principles to align the interests of our Named Executive Officers with those of our stockholders. Our compensation practices and policies enable us to attract and retain talented and experienced executives to lead the Company successfully in a competitive environment. Your vote on this Proposal Three is an advisory one, and therefore is not binding on the Company, the Organization & Compensation Committee, or the Board. The vote will not be construed to create or imply any change to the fiduciary duties of the Company or the Board, or to create or imply any additional fiduciary duties for the Board. Nevertheless, our Board and our Organization & Compensation Committee value the opinions of our stockholders, and intend to consider any stockholder concerns evidenced by this vote. We will continue to evaluate and disclose whether any actions are necessary to address those concerns. Vote Required and Recommendation of the Board of Directors The affirmative vote of a majority of the votes present and entitled to vote with respect to the proposal is required for the approval of the non-binding advisory vote with respect to the compensation of the Company’s Named Executive Officers. Shares not present at the meeting and broker non-votes have no effect on the approval of this non-binding advisory vote, while abstentions will count as votes “against.” Pursuant to NYSE regulations, brokers do not have discretionary voting power over this proposal, and therefore, if you hold Shares through a broker or other NYSE member organization and do not provide voting instructions to your broker or other NYSE member organization, your Shares will not be voted with respect to this proposal. If you timely submit a signed proxy but fail to specify instructions to vote with respect to this proposal, the accompanying proxy will be voted FOR this proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS, THE COMPENSATION TABLES, AND THE RELATED DISCLOSURES CONTAINED IN THIS PROXY STATEMENT.
Proposal Four Non-Binding Advisory Vote Regarding the Frequency of the Voting with Respect to Compensation of the Company’s Named Executive Officers Background At our 2017 Annual Meeting, held on April 20, 2017, our stockholders recommended a Say-on-Pay vote once every year, and our Board of Directors subsequently adopted that recommendation. Since that vote occurred six years ago, the Dodd-Frank Act requires that we include in this proxy statement another non-binding advisory stockholder vote regarding the frequency with which the Company’s stockholders will have a future advisory vote with respect to the compensation of our Named Executive Officers, as provided for in Proposal 3 above. We are therefore asking our stockholders to vote on the following resolution: RESOLVED, that the stockholders of Humana Inc. determine, on an advisory basis, that the frequency with which the stockholders of the Company shall have a future advisory vote with respect to the compensation of the Company’s Named Executive Officers set forth in the Company’s proxy statement is: Choice 1 — every year; Choice 2 — every two years; Choice 3 — every three years; or Choice 4 — abstain from voting. The Company asks that you support a non-binding, advisory stockholder vote on the compensation of our Named Executive Officers once every year. In formulating its recommendation to continue with an annual advisory vote, our board of directors considered that an annual advisory vote on executive compensation allows our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. We believe that the advisory vote on executive compensation is, at its essence, a communication vehicle, and communication is most useful when it is received in a consistent manner. Furthermore, at this time, we believe that an annual advisory vote on executive compensation continues to provide the highest level of transparency, accountability and constructive communication by enabling the vote to correspond to the compensation information presented in the accompanying proxy statement for each annual stockholders’ meeting. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices. Finally, we believe that our executive compensation philosophy, policies and practices are consistent with the long-term objectives of our stockholders, and therefore welcome their views on a regular basis. As with your vote on Proposal 3 above, your vote on this Proposal 4 is advisory, and therefore not binding on the Company, our Organization & Compensation Committee, or our Board. The vote will not be construed to create or imply any change to the fiduciary duties of the Company or the Board, or to create or imply any additional fiduciary duties for the Company or the Board. Nevertheless, our Board and our Organization & Compensation Committee value the opinions of our stockholders, and, to the extent there is a significant vote in favor of one frequency over the other options, intends to consider our stockholders’ concerns in the evaluation of any appropriate next steps.
Vote Required and Recommendation of the Board of Directors The frequency (every one, two, or three years) receiving the highest number of votes will be deemed to be the choice of our stockholders with respect to the non-binding, advisory vote on the frequency of voting with respect to the compensation of the Company’s Named Executive Officers. Shares not present at the meeting and Shares voting “abstain” or broker non-votes have no effect on the approval of this non-binding advisory vote. Pursuant to current NYSE regulations, brokers and other NYSE member organizations do not have discretionary voting power over the approval of the non-binding, advisory vote on the frequency of voting with respect to the compensation of the Company’s Named Executive Officers. Therefore, if you hold Shares through a broker or other NYSE member organization and do not provide voting instructions to your, broker or other NYSE member organization, your Shares may not be voted with respect to this proposal. If you timely submit a signed proxy but fail to specify instructions to vote with respect to this proposal, the accompanying proxy will be voted FOR Choice 1. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR A NON-BINDING, ADVISORY SHAREHOLDER VOTE WITH RESPECT TO THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS ONCE EVERY YEAR.
Frequently Asked Questions Why am I receiving this Proxy Statement? You are receiving a proxy statement because you owned Humana Inc. common stock, which we refer to as Shares, as of Tuesday, February 28, 2023, which we refer to as the Record Date, and that entitles you to vote at the Annual Meeting. Our Board of Directors has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies on behalf of the Company for use at our 2023 Annual Meeting of Stockholders. Your proxy will authorize specified people (proxies) to vote on your behalf at the Annual Meeting. By use of a proxy, you can vote, whether or not you attend the meeting. This proxy statement describes the matters on which the Company would like you to vote, provides information on those matters, and provides information about the Company that we must disclose when we solicit your proxy. Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials? Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. We believe that Internet delivery of our proxy materials allows us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice, to our stockholders and beneficial owners as of the Record Date. All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found on the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis by calling Broadridge Financial Solutions, Inc., or Broadridge, at 1-800-579-1639. How can I get electronic access to the proxy materials? The Notice provides you with instructions regarding how to:
Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our Annual Meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. When and where is the Annual Meeting? The Annual Meeting will be held on Thursday, April 20, 2023, at 9:30 a.m., Eastern Time, at the Company’s headquarters, located at 500 West Main Street, 25th Floor Auditorium, in Louisville, Kentucky. Who is entitled to vote? Anyone who owns Shares, as of the close of business on February 28, 2023, the Record Date, is entitled to vote at the Annual Meeting or at any later meeting should the scheduled Annual Meeting be adjourned or postponed for any reason. As of the Record Date, 125,074,627 Shares were outstanding and entitled to vote. Each Share is entitled to one vote on each of the matters to be considered at the Annual Meeting.
What will I be voting on?
The Board of Directors is not aware of any other matters to be presented for action at the Annual Meeting. However, if other matters are properly presented for a vote, the proxies will be voted for these matters in accordance with the judgment of the persons acting under the proxies. How does the Board recommend I vote on each proposal? The Board recommends that you vote your Shares as follows:
All Shares that are represented at the Annual Meeting by properly executed proxies received before or at the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with the instructions indicated in the proxies. How do I participate in the Annual Meeting? This year’s Annual Meeting will be held in-person at the Company’s headquarters located at 500 West Main Street, 25th Floor Auditorium, in Louisville, Kentucky. The Company will also provide a live audio-only webcast of the Annual Meeting via the Internet on the Investor Relations section of the Company’s website (www.humana.com). You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on the Record Date, or hold a valid proxy for the meeting. If you decide to attend the Annual Meeting by webcast, you will be able to listen to the Annual Meeting but will not have the ability to vote your shares or ask questions during the Annual Meeting. Conversely, if you are attending in-person, you will have the ability to ask questions and vote your Shares during the Annual Meeting. The Company will provide Rules of Conduct for the Annual Meeting which can be obtained at www.proxyvote.com after logging in with your unique 16-digit control number provided on your Notice of Internet Availability of Proxy Materials, your proxy card or your voting instruction form that accompanied your proxy materials (your “Control Number”). The Rules of Conduct will be strictly adhered to during the Annual Meeting. If you are a beneficial stockholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your Control Number. Non-stockholders are welcome to attend the Annual Meeting, however guests will not be allowed to participate during the Annual Meeting except as listeners. A question and answer (Q&A) session will be available to stockholders during the Annual Meeting and will include questions submitted in advance of, and questions asked in person during, the Annual Meeting. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your Control Number. Questions may be submitted in person during the Q&A session of the Annual Meeting. The Company’s Corporate Secretary will review all questions submitted in advance to ensure that those presented for response are in accordance with the Rules of Conduct. How do I vote? There are four ways that you can vote your Shares. Voting by any of these methods will supersede any prior vote you made regardless of how that vote was made. PLEASE CHOOSE ONLY ONE OF THE FOLLOWING:
How will my Shares be voted if I do not specify how they should be voted? If you sign and return your proxy card without indicating how you want your Shares to be voted, the persons acting under the proxies will vote your Shares as follows:
What if my Shares are not registered in my name? If you own your Shares in “street name,” meaning that your bank, broker or other nominee is actually the record owner, you should receive the Notice and voting instruction card from your bank, broker or other nominee. In addition, stockholders may request, by calling Broadridge at 1-800-579-1639, to receive proxy materials in printed form, by mail or electronically by e-mail, on an ongoing basis. When you own your Shares in street name, you are deemed a beneficial owner or holder for voting purposes and you may not vote your Shares at the Annual Meeting unless you receive a valid proxy from your brokerage, firm, bank, broker-dealer or other nominee holder. If you hold Shares through an account with a bank, broker or other nominee and you do not provide voting instructions on your instruction form, your Shares may not be voted by the nominee with respect to certain proposals, including:
Banks, brokers and other nominees have the authority under the regulations of the New York Stock Exchange, or the NYSE, to vote Shares for which their customers do not provide voting instructions only on certain “routine” matters, including the ratification of the appointment of the Company’s independent registered public accounting firm. However, the proposals listed above are not considered “routine” matters for this purpose, and therefore your Shares will not be voted with respect to such proposals if you do not provide voting instructions on your instruction form.
How many votes are required to approve each proposal, what are the effects of abstentions and unmarked proxy cards, and is broker discretionary voting allowed?
What is a “broker non-vote”? A broker non-vote occurs when a broker or other NYSE member organization holding Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner, but does have discretionary voting power over other items and submits votes for those matters. As discussed above, if you hold Shares through a broker or other NYSE member organization and do not provide voting instructions to your broker or other NYSE member organization, your Shares may not be voted with respect to certain proposals, including the proposals listed above that are not considered routine. What is a “quorum”? A “quorum” is a majority of the issued and outstanding Shares entitled to vote at the Annual Meeting. Shares may be voted at the Annual Meeting by a signed proxy card, by telephone instruction, or electronically on the Internet. There must be a quorum for the Annual Meeting to be held. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining whether a quorum exists.
How do I vote the share equivalent units held in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan? If you have an interest in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan on the Record Date, you may vote. Under the Humana Retirement Savings Plan and the Humana Puerto Rico Retirement Savings Plan, your voting rights are based on your interest, or the amount of money you and the Company have invested in your Humana Common Stock Fund. You may exercise these voting rights in almost the same way that stockholders may vote their Shares, but you have an earlier deadline, and you should provide your voting instructions to Broadridge. Broadridge will aggregate the votes of all participants and provide voting information to the Trustee for the applicable plan. If your voting instructions are received by 11:59 p.m., Eastern Time, on Wednesday, April 12, 2023, the Trustee will submit a proxy that reflects your instructions. If you do not give voting instructions (or give them later than that time), the Trustee will vote your interest in the Humana Common Stock Fund in the same proportion as the Shares attributed to the Humana Retirement Savings Plan, or the Humana Puerto Rico Retirement Savings Plan, as applicable, are actually voted by the other participants in the applicable plan. You must provide your instructions to Broadridge by using the Internet, registered holder telephone number (1-800-690-6903) or mail methods described above. Please note that you cannot vote during the Annual Meeting. Your voting instructions will be kept confidential under the terms of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan, as applicable. Who will count the votes? Broadridge will tabulate the votes cast by proxy, whether by proxy card, Internet or telephone. Additionally, the Company’s Inspectors of Election will tabulate the votes cast at the Annual Meeting together with the votes cast by proxy. How do I change my vote or revoke my proxy? You have the right to change your vote or revoke your proxy at any time before the Annual Meeting. Your method of doing so will depend upon how you originally voted (a later vote will supersede any prior vote you made regardless of how that vote was made):
What is the due date for stockholder proposals, including stockholder nominees for director, for inclusion in the Company’s proxy materials for the 2024 Annual Meeting? Stockholder proposals, or stockholder nominees for director at the 2024 Annual Meeting, as permitted by SEC regulations for inclusion in our proxy materials relating to the 2023 Annual Meeting, must be submitted to the Corporate Secretary in writing no later than November 9, 2023. Proposals should be submitted to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202. Further, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act and the Company’s Bylaws no later than January 20, 2024.
May a stockholder present a proposal not included in our Proxy Statement at the April 20, 2023, Annual Meeting? A stockholder can present a proposal at the Annual Meeting (a so-called “floor resolution”) only if certain notice requirements are met. The SEC does not directly regulate meeting conduct. State law imposes only limited requirements, so meetings are governed by procedures set forth in our Amended and Restated Bylaws (the “Bylaws”). Humana’s Bylaws require that a stockholder provide written notice of intent to bring a proposal no less than 90 days or more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting of stockholders. A proposal must also meet other requirements as to form and content set forth in our Bylaws. Stockholder proposals should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202. A copy of our Bylaws is available on our website. From the www.humana.com website, click on “Investor Relations,” and then click on “Corporate Governance” subcategory and then click on the link entitled, “Bylaws.” How will Humana solicit votes and who pays for the solicitation? We have engaged D. F. King & Co., Inc. to assist in the distribution of proxy materials and solicitation of votes for approximately $15,000 plus expenses. We have also engaged Broadridge to assist in the distribution of proxy materials and the accumulation of votes through the Internet, telephone and coordination of mail votes for approximately $403,540 proxy and solicitation material to our stockholders. How can I obtain additional information about the Company? Included with this proxy statement (either in printed form or on the Internet) is a copy of our Annual Report on Form 10-K for the year ended December 31, 2022, which also contains the information required in our Annual Report to Stockholders. Our Annual Report on Form 10-K and all our other filings with the SEC also may be accessed via the Investor Relations section on our website at www.humana.com. We encourage you to visit our website. From www.humana.com click on “Investor Relations,” then click on the “SEC Filings and Financial Reports,” then click on the “Annual Reports” subcategory. Where can I find voting results for this Annual Meeting? The voting results will be published in a current report on Form 8-K which will be filed with the SEC no later than four business days after the Annual Meeting. The Form 8-K will also be available on our website. From the www.humana.com website, click on “Investor Relations,” then click on “SEC Filings and Financial Reports,” and then click on “SEC Filings” subcategory. What is “householding”? “Householding” occurs when a single copy of our Annual Report, proxy statement and Notice 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 stockholders, 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. If you wish to receive separate copies of our Annual Report, proxy statement or Notice in the future, please contact the bank, broker or other nominee through which you hold your Shares.
Incorporation by Reference The Organization & Compensation Committee Report and the Audit Committee Report (including the reference to the independence and financial expertise of the Audit Committee members), each contained in this proxy statement, are not deemed filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by Humana under the Securities Act of 1933, except to the extent that we specifically incorporate such information by reference into any of these future filings. Additional Information Our Annual Report on Form 10-K for the year ended December 31, 2022, excluding certain of its exhibits, is included with the transmittal of this proxy statement. We will provide a copy without charge to anyone who makes a written request to Humana Inc., Investor Relations Department, 500 West Main Street, Louisville, KY 40202. Our Annual Report on Form 10-K and all other filings with the SEC may also be accessed via the Investor Relations page on our website at www.humana.com. From the www.humana.com website, click on “Investor Relations,” and then click on the report you wish to review under the “SEC Filings and Financial Reports” subcategory. By Order of the Board of Directors,
Joseph M. Ruschell Vice President, Associate Corporate Secretary
DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. — — — — —— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — D96955-P84309
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