☒ | 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 |
☒ | No fee required. | |||
| ||||
| ||||
| ||||
| ||||
| ||||
☐ | Fee paid previously with preliminary | |||
☐ | ||||
| ||||
| ||||
| ||||
|
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 |
2023 Reflections
|
For our Company and our stakeholders, 2023 was a dynamic and challenging year as we found ourselves responding to significant and unanticipated increase in medical cost trends in the Medicare Advantage (MA) industry. Throughout the year, we leveraged our commitment to cost discipline, working tirelessly to offset the impact of these trends through areas such as administrative cost containment and productivity initiatives. Despite our efforts, we were ultimately unable to fully offset these trends as they continued to accelerate in the fourth quarter, resulting in 2023 earnings growth that failed to meet our expectations. Like you, we were disappointed in the Company’s closing financial performance. Still, we do not want this setback to overshadow the advancement of our long-term strategy in 2023 - achieving strong growth in our individual MA, Medicaid and CenterWell businesses, progress made across the enterprise to grow our industry leading MA and senior focused value-based care platforms and maintain our industry leading quality and customer satisfaction scores to name just a few.
Insurance. The strength of our core insurance operations remains clear. In 2023, we grew our individual MA membership by over 840,000, and continued our leadership in putting members first - evidenced again in our strong Star Ratings for 2024, with 94 percent of our members in plans rated 4 stars or higher, 61 percent in plans rated 4.5 or 5 stars, and 37 percent of all 5-star MA membership in a Humana plan. And our strong organic Medicaid growth continues - we implemented contracts in Ohio and Louisiana in 2023 and look forward to beginning to serve members in both Indiana and Oklahoma in 2024 - reflecting our strong operating model and ability to deliver unique value to communities.
CenterWell.The growth of both our primary care and value-based home health businesses continues. In primary care, we now operate nearly 300 centers serving over 294,000 patients, which represents year over year growth of 26 percent and 19 percent, respectively. And we have further expanded our value-based home care models, now covering 843,500 of our MA members under a value-based payment model covering home health, DME and infusion services. And with this growth, we continue to unlock opportunities for our health plan members to utilize our healthcare services assets, which leads to better outcomes, greater satisfaction, and higher customer retention.
As your Board of Directors, we take our responsibilities very seriously and are committed to representing our stockholder’s interests to deliver sustainable results over the long-term. As the Company continues to navigate a complex and dynamic period of change in the MA industry in the near-term, we still believe in the strong fundamentals and significant value proposition of MA and remain focused on both margin recovery and advancing our industry leading MA and senior focused value-based care platforms to position the Company for long-term success. At the same time, the Board continues to observe comprehensive corporate governance practices, working together closely as we execute on our CEO transition plan, engaging with stockholders to understand and be responsive to your perspectives, and providing active oversight to assist the Company in advancing its strategic vision.
On behalf of the Board, thank you for your investment and continued confidence in Humana’s success.
Kurt J. Hilzinger Chairman of the Board and Stockholder
March
|
Bruce D. Broussard Director, and Stockholder
March |
Notice of 20222024 Annual Meeting of Stockholders
Time and Date: | ||
Location: | ||
Agenda: | 1. Elect the
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. Approve amendment to the Company’s Restated Certificate of Incorporation to limit the liability of certain officers of the Company as permitted by Delaware law. 5. Approve amendment to the Company’s Restated Certificate of Incorporation to eliminate supermajority voting requirement in connection with certain transactions. 6. Consider and vote upon the stockholder proposal set forth in this proxy statement, if properly presented at the meeting. 7. 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
See instructions on your proxy card or at the voting site (www.proxyvote.com). |
By Order of the Board of Directors,
Joseph M. Ruschell
Associate Vice President, AssistantAssociate General Counsel & Corporate Secretary
March 9, 20228, 2024
i | ||||||
1 | ||||||
4 | ||||||
Corporate Governance | 15 | |||||
41 | ||||||
44 | ||||||
Organization & Compensation Committee Report | ||||||
66 | ||||||
Executive Compensation | 67 | |||||
Certain Transactions with Management and Others | ||||||
Audit Committee Report | ||||||
Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm
|
|
85 |
| |||
Proposal Three:Non-Binding Advisory Vote with Respect to the Compensation of the Company’s Named Executive Officers
|
|
86 |
| |||
87 | ||||||
89 | ||||||
91 | ||||||
Frequently Asked Questions | ||||||
Additional Information | 100 | |||||
Annex I | A-I-1 | |||||
Annex II | A-II-1 | |||||
Annex III | A-III-1 |
General Information
Meeting: | Place: | ||||||
Date: | Thursday, April | ||||||
Time: | |||||||
Record Date:
| February |
How to Vote Your Shares
You may vote if you were a stockholder as of the close of business on February 28, 2022.29, 2024.
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 virtual annual meeting and cast your vote |
Voting Overview
Items of Business
| ||||||||||||||
Items of Business
| ||||||||||||||
Items of Business | Items of Business | Board Recommendation | Page Reference | Board
|
| Page Reference
| ||||||||
1.
| Elect the thirteen (13) director nominees named in the proxy statement.
| FOR
| 30
|
Elect the eleven (11) director nominees named in the proxy statement.
|
FOR
| 4
| ||||||||
2. | Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2022.
| FOR | 82 | Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2024.
| FOR | 85 | ||||||||
3. | Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
| FOR | 83 | Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
| FOR | 86 | ||||||||
4.
| Consider any other business properly brought before the meeting.
| Approve amendment to the Company’s Restated Certificate of Incorporation to limit the liability of certain officers of the Company as permitted by Delaware law.
| FOR | 87 | ||||||||||
5.
| Approve amendment to the Company’s Restated Certificate of Incorporation to eliminate supermajority voting requirement in connection with certain transactions.
| FOR | 89 | |||||||||||
6.
| Consider and vote upon the stockholder proposal set forth in this proxy statement, if properly presented at the meeting.
| AGAINST | 91 | |||||||||||
7.
| Consider any other business properly brought before the meeting.
|
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, |
| 01/2013 | |||
Raquel C. Bono, M.D. | Independent Director |
| 09/2020 | |||
Frank A. D’Amelio | Independent Director |
| 09/2003 | |||
David T. Feinberg, M.D. | Independent Director |
| 03/2022 | |||
Wayne A.I. Frederick, M.D. | Independent Director |
| 02/2020 | |||
John W. Garratt | Independent Director |
| 02/2020 | |||
|
|
|
| |||
Karen W. Katz | Independent Director |
| 09/2019 | |||
Marcy S. Klevorn | Independent Director |
| 02/2021 | |||
|
|
|
| |||
Jorge S. Mesquita | Independent Director |
| 02/2021 | |||
| Independent Director |
|
|
i | Humana | |
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 28, 2022, 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 2022 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:
View our proxy materials for the Annual Meeting on the Internet; and
Instruct us to send our future proxy materials to you electronically by e-mail.
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 21, 2022, 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, 2022, 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, 126,743,282 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?
Election of the thirteen (13) 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 2022; and
A non-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 thirteen (13) 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 2022; 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 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:
FOR the election of each of the thirteen (13) 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 2022; 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 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:
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 future non-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?
|
|
|
|
| ||||
|
|
| ||||||
| ||||||||
|
|
|
|
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 13, 2022, 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 2023 Annual Meeting?
Stockholder proposals, or stockholder nominees for director at the 2023 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, 2022. 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 (once effective), 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 no later than February 20, 2023.
|
May a stockholder present a proposal not included in our Proxy Statement at the April 21, 2022, 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 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 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 $13,000 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 $321,350 plus expenses. We will reimburse banks, brokers and other nominees for their reasonable out-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 Form 10-K for the year ended December 31, 2021, 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.
|
Headquartered in Louisville, Kentucky, Humana Inc. (NYSE: HUM) is a leading (2021 Fortune #41 ranking) health and well-being company focused on making it easy for people to achieve their best health with clinical excellence through coordinated care. We operate under two distinct segments: Insurance and CenterWell – a simple structure that we believe creates greater collaboration across the Insurance and CenterWell businesses and will accelerate work to centralize and integrate operations within the organization. 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, 2021,2023, we had approximately 17.116.9 million members in our medical benefit plans, as well as approximately 5.34.9 million members in our specialty products.
Our Strategy
We are committed to addressing 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 to simplify achieving betterfrom 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 give our customers more healthy days. We offer insurancepharmacy solutions. Together these offerings, underpinned by leading data, analytics, clinical quality, and non-insurance productscommercial capabilities, enable us 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 pharmacydeliver solutions provider services, home solutions services and other services and capabilities tothat promote wellness and advance population health.
Our successfulThe 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 and profitably grow this business over the long-term 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 Star Ratings 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), state insurance and Medicaid administrations, 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 capabilities are poised to benefit from secular tailwinds and become an increasingly important piece of the enterprise’s overall revenue and profitability profile. 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 net promoter score (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 system with the power to address our customers’ most significant needs that impede simpler health care and better health by (i) making care more predictable, understandable, and affordable, (ii) addressing medical, behavioral, and social needs, and (iii) delivering care whenever and wherever our customers need it. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large. Humana’s innovative strategy continues to capitalize on industry changes by positioning ourselves as a partner in health and aging to our consumers. We understand that health care is complicated and dealing with multiple physicians and other health care 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.
We also understand we operate in an increasingly competitive environment, and as such, we are focusingcontinually focused on better understanding and addressing the unmet needs that matter the most to our customers, aligning our actions and behaviors to go above and beyond to solve those needs and deliver on a “more human” experience, so people get more than they expect, ultimately helping members achieve their best health.customers. We call this delivering “human care.” Human care separates Humana from other traditional insurancehealthcare companies, demonstrating that our approach is more caring, personalized, and easier.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 usus.
Finally, we aim to be responsible stewards, driven by personalizingsustainable organic growth, expense discipline, and accretive M&A. We also plan to continue to innovate with our government partners to advance the experience for how they want to interact with Humana.
Our ecosystem of value-based care delivery capabilities engages our customers clinically by focusing on the physical, mental,Medicare Advantage and preventative aspects of their health, and delivering better health outcomes. We activate a network of proprietary and partnered solutions, focusing specifically on the highest influence touchpoints of the health care delivery system, including primary care, home health, pharmacy, behavioral health, and social determinants of health. We support the integration of these touchpoints through robust data, analytics, and digital health capabilities that help us engage our customers in their health and get them the right care, in the right place, at the right time. This approach allows usMedicaid programs to deliver better quality and healthgreat outcomes while making the health care experience simpler for our members and patients.
Our Continued COVID-19 Response
Throughout 2021,patients and great value to the COVID-19 pandemic continued to present unique challenges that highlighted our commitment to quality, the strengthstaxpayer in one of the Medicare Advantage (MA) program,finest examples of public/private partnership in the country. And last, and the value that this enduring public-private partnership bringsmost fundamental to our nation’s seniors,strategy, is the disabled andcontinual focus on nurturing the healthcare system as a whole. Early in the year, we activated our teams to support our members in getting vaccinated, leveraging our data, analytics and clinical capabilities to engage in proactive outreach to help our members schedule appointments, partnering with retail organizations, providers and the communities we serve in setting up vaccine clinics, and ensuring that underserved populations had equal opportunities to access the vaccines. As the year progressed, we continued to adapt to address our members’ needs, providing resources regarding the safety and efficacyculture of the vaccines, reducing financial barriers to care, further improving access to telephonicCompany and in-home care and screening capabilities, supporting our members in receiving in-person care, and addressing social determinants of health needs that were exacerbated by the pandemic.
These efforts and our performance in 2021 were made possible by the ongoing, tireless effortsengagement of our associates, who continuedwhich power all of our efforts to put ourdeliver the best health and simplest experience possible for the members and patients at the front of everything we do while continuingare privileged to balance the daily challenges presented by the pandemic.serve.
Company Overview•
|
Our Values
As our industry has evolved, so has our Company, and our values reflect who we are today. While we have always been grounded in our purpose of helping people, we introduced “health first” in 2023 as our evolved purpose, unifying us in our mission of providing simple, personalized and integrated care to all those we serve. It guides our actions as we execute on our strategy and gives us an edge in a competitive environment. When we do it well, our business thrives, our associates are engaged and our customers experience human care.
Our purpose comes alive in clear and simple values that are expressed in unique ways each day. By being caring, curious and committed, our associates reflect who we are and how we show up each day. These values drive behaviors that help our associates put health first for themselves, each other and the people they serve.
Caring | Curious | Committed | ||||||
Create an environment where people feel valued, respected and are treated with kindness. | Work and learn together creating the best solutions for the people we serve. | To fulfill our purpose, take bold action to impact the lives of people and transform the healthcare industry. | ||||||
• Empathize and actively listen • Build trust, safety and equitable opportunities • Care for the whole person | • Pursue diverse perspectives • Create value through innovating simple, quality experiences • Integrate our work across the enterprise | • Deliver our commitments with excellence • Be a good steward of our resources and time • Elevate our agility |
2 | Humana | 2024 Proxy Statement •Company Overview |
Our Performance
Our 20212023 performance reflected the emergence of a complex and dynamic period of change in the Medicare Advantage industry. While we made strong progress in advancing our senior focused, value-based care platforms and positioning the Company for success over the long-term, we were also confronted with unprecedented increases in medical cost trends that we were ultimately unable to fully offset, resulting in final financial results reflect strong core performance:performance below our expectations.
2023 Business and Financial Performance Results
• |
|
We returned approximately $354 million to our stockholders in the form of dividends, representing an increase of $31 million over fiscal year 2020;
Over 97% of our Medicare Advantage members in 2021 were in a plan with a 4-Star rating or higher for 2022 and we’ve increased the number of contracts that received a 5-Star rating from 1 contract in 2021 to 4 contracts in 2022 - the most in our history;
We grew our Individual Medicare Advantage membership by 446,400 members, or 11.3%, in 2021, from 3,962,700 members as of December 31, 2020, to 4,409,100 members as of December 31, 2021, with enrollment in our dual eligible special needs plans (D-SNP) growing by more than 40% in 2021, and enrollment in our Humana Honor plan designed for Veterans, that is also available to all Medicare eligibles, growing by 80% in 2021;
We accelerated the growth of our senior-focused, value-based primary care organization, the largest in the nation, ending 2021 with more than 200 centers serving approximately 350,000 patients across 24 markets in 9 states;
We saw continued growth in our pharmacy business, with our Pharmacy Benefit Manager (PBM), the fourth largest in the country, processing 515 million 30-day equivalent scripts in 2021, an 8 percent increase year over year; and
We became the largest home health and hospice organization in the nation through the completion of our acquisition of Kindred at Home, and made substantial progress towards our goal of scaling and maturing a risk-bearing, value-based model that manages the provision of home health, durable medical equipment (DME) and home infusion services.
• | Returned approximately $2.0 billion to our stockholders in the form of dividends and stock repurchases.** |
• | Grew our individual Medicare Advantage membership by 843,300 members, representing 18.5% growth over fiscal year 2022. The Company continues to demonstrate individual MA membership growth above the industry average, with a three-year compound annual growth rate of 11%. |
• | Remained the industry-leader in Star Ratings among our publicly traded peers for the sixth consecutive year, with 94% of our Medicare Advantage members enrolled in 4-star and above contracts,*** 61% of members in 4.5 and 5-star contracts, and four of our contracts receiving a 5-star rating. |
Stockholder Dividends | 3-Year EPS Comparison | |
The footnotes below are referenced throughout this proxy statement.
* | Please refer to |
** | Stock repurchases includes $73 million in connection with employee stock plans. |
*** | Membership totals in MA plans with 4+ Star Rating reflect membership as of October 2023 when Star Ratings were released by the Centers for Medicare & Medicaid Services (CMS). |
|
|
| ||||||||||||||||
|
|
| ||||||||||||||
|
|
|
| |||||||||||||
|
|
|
|
| ||||||||||||
|
The goal of these processes is to achieve serious 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
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 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.
| ||
|
|
|
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, 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 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. Despite continued COVID-19 restrictions and the Company’s workforce having remained primarily work-from-home, the Board maintained its commitment to engagement and continued to meet with stakeholders virtually, by videoconference and teleconference.
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. In addition, the Organization & Compensation Committee regularly reviews associate engagement scores, which maintained momentum during 2021, with 89% of our associates saying that Humana is committed to their health and well-being.
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 2021, included, (i) a formal education session with external consultants; (ii) guest speaker attendance during select meetings; and (iii) routine briefings on regulatory developments.
|
|
|
|
Our associates are 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, activelypromoting a culture of inclusion and diversity to foster a workplace where all associates feel they can be authentic and bring their whole selves to work every day – cultivating uniqueness and thriving together.
These efforts are overseen by our Board of Directors – which has designated to our Organization & Compensation Committee the responsibility for Board-level oversight of the Company’s human capital management and inclusion and diversity policies and practices – and implemented under the direction of our Chief Administrative Officer. As of December 31, 2021, we had approximately 95,500 associates and approximately 1,400 additional medical professionals working under management agreements primarily between us and affiliated physician-owned associations.
|
| |||
| ||||
Listening to the voice of our associates reinforces our Value of Rethink Routine. We send pulse surveys to associates throughout the year to get feedback on how we’re doing, allowing us to assess our approach to work and take action when needed. We believe this helps to strengthen our culture and support associate engagement. It was through this process that WorkLife Reimagined was formed – our latest work style model that’s focused on flexibility and collaboration. We’ve learned that there isn’t just one way to operate or one way work gets done. That’s why WorkLife Reimagined includes work styles that benefit everyone and will continue to guide and shape our culture. As our associates transition to their new work style we’re equipping them with the tools they need to be successful – whether working at home, the office, in the field or a hybrid style – they’ll stay connected no matter where they sit.
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.
Inclusion and Diversity
Celebrating diverse backgrounds and creating an environment of inclusion is at the heart of Humana. We take intentional steps to nurture a culture where all employees, no matter who they are, feel like they can be their best selves and do their best work. Only then can we make the best decisions for our customers to ensure that they all have a fair and just opportunity to be as healthy as possible.
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.
We are committed to having balanced diversity at all levels of the Company and have developed a pathway for top, 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. Balanced interview panels enhance the experience of interviewees and demonstrate our Values in action.
|
|
|
|
We’re committed to building balanced diversity at all levels of the Company through a focused effort on supporting a pathway for top, diverse talent, strengthening current collaborations and forging new partnerships. Achievement in this area requires a mindset of shared accountability and commitment to enterprise outcomes. In 2020, Humana leaders aligned to high-level goals – hiring and promotion of diverse talent, retention of diverse senior leadership (VP and above), inclusion, mentoring and leaders participating in conscious inclusion training – with shared accountability focused on driving inclusion and diversity throughout the enterprise. We’ve employed a metrics-driven approach to address areas of improvement quickly and goal achievement is linked to executive compensation (refer to section entitled “Compensation Discussion & Analysis – Associate Incentive Plan” within this proxy statement for more information on executive compensation). Since introducing these shared accountability measures, we’ve seen year-over-year (YOY) improvements among our female associates and associates of color. Our workforce representation is tracked through self-disclosure by our associates, and are committed to transparent disclosure of our demographic data. The charts below represent our workforce demographics as of December 31, 2021.
| ||||
| ||||
|
|
|
|
Talent Development and Growth Opportunities
We champion the individual goals and development of our associates, and provide a number of programs to ensure that our associates have the resources and support they need to deliver on their passion. 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 2021, our associates averaged approximately 35 learning and development hours per active associate.
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. In 2021, our associates participated in more than 2,700 mentoring circles, underscoring the Company’s focus on creating a culture of mentoring and inclusion. 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.
|
|
|
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
We offer a matching charitable gift program through The Humana Foundation
We feature associates sharing their volunteerism stories on our Intranet to inspire others
We offer our associates paid time off to get vaccinated, including boosters, for COVID-19, helping to reduce barriers associates may have in taking time away from work to get vaccinated and supporting healthy communities
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. 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:
| ||||||||||||
| ||||||||||||
|
| |||||||||||
|
|
|
| |||||||||
| ||||||||||||
| ||||||||||||
|
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 pillars of our ESG program that align to our strategic business goals, supporting our commitments to sustainable business and improving health outcomes. These pillars – Access to Healthcare; Data Privacy & Protection; Environmental Impact; Product Quality & Safety; and Talent & Diversity – are the driving force behind our impact platform and will guide our ESG program.
We’ve developed quantitative and/or qualitative metrics within each pillar 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). We also support the United Nations Sustainable Development Goals, aligning our efforts to three goals where our Company can most contribute: Goal 3 – Good Health and Well-being; Goal 8 – Decent Work and Economic Growth; Goal 12 – Responsible Consumption and Production.
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 pillars may connect to one or more categories 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 pillar metrics.
|
|
|
| |||
For Each Person
Our members achieving their best health is at the top of our mind. We know that health is not linear. Every member is unique as are the communities we serve. That’s why we’re continuously working to ensure that our health plan products and services are as affordable as possible, as well as, addressing access to healthcare barriers so that all of our members can receive the care they need. As we cultivate our philosophy of whole-person health care, we’re addressing the most crucial needs of our members, which means truly caring about them, understanding what is important to them and finding ways to make it easy for them to live their best life. Thanks to processes such as integrated care delivery and using health screenings that consider social determinants of health, we have a clearer view of each member’s very personal barriers to their best health. Through our integrated approach, we are building the tools to address the physical, behavioral and social factors that all play such a critical role in promoting improved health outcomes. Please refer to our Value-Based Care Report for more information on these efforts.
|
Our associates are the driving force behind our Company’s well-being initiatives. We believe that when we invest in our associates they pay it forward by investing in others. In this effort we actively live out our Values, cultivating uniqueness and thriving together.
|
|
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, developing, promotion and retaining 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 pillar.
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.
|
KEY PILLAR METRICS
|
|
For Each Community
We recognize that we are part of a bigger community – one that is connected to our members, patients, employees and neighbors. We are dedicated to the holistic health of all people, and that is why we invest in communities across the country to advance health equity. Health equity is about making sure we all have a fair and just opportunity to be as healthy as possible. Helping communities and the people in them grow stronger benefits all of us, because where people live, work and play is inextricable from their health outcomes. We’re partnering with communities to advance health equity on a local level and take on the social determinants of health that impact all of us.
As our Company shifts from an insurance company with elements of health to a health company with elements of insurance, we are focused on five areas of influence to help improve health and aging: primary care, home health, pharmacy, behavioral health and social determinants of health. Championing this effort is our Bold Goal – a population health strategy launched in 2015 to improve the health of the people and communities we serve by creating solutions to address unmet social needs and making it easier to achieve their best health.
Since 2015 we’ve continued to adapt as we learned more about our communities and our members. We discovered how important it is to develop personalized solutions, determining how best to meet the needs of our members while striving to (i) help Humana and its partners understand social determinants of health and their prevalence in our communities; (ii) convey how such determinants actualize into social needs that limit or prevent health care; and (ii) create impactful care solutions that account for our members specific health-related social needs. That has meant getting to know our members better and the daily health-related challenges they’re facing in order to connect them to people and organizations who can support them – not only in their clinical needs, but also in their individual health-related social needs,
|
such as getting access to healthy food, helping to connect them socially and addressing their housing needs. With community-based organizations and healthcare practices, we are creating evidence-based, scalable and financially-sustainable solutions to improve population health at a local level. We’ve scaled social determinants of health screenings across our business, which has impacted millions – connecting those in need to community resources and support.
Because we know social determinants of health play a significant role in addressing health needs, we have developed a variety of programs, services, benefits and resources for members and the public. Our Far From Alone campaign, with many partners, strives to improve the mental health and wellness of others by increasing social connectedness and reducing feelings of loneliness. The campaign drives awareness, action, and advocacy in support of addressing this important social determinant of health. Learn more about our Far From Alone campaign, and how you can get involved, at its website https://farfromalone.com.
|
|
KEY PILLAR METRICS
|
|
For Our Business and the Collective 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.
Our suppliers are essential to delivering services within our business, 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 customers, associates and 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, and during 2021 we launched a Supplier Diversity Mentor-Protégé program. The program is a 12-month pilot with 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.
Our governance practices and policies reflect strong controls that provide a solid foundation for our continued success. 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.
Our associates are integral to running our Company responsibly and key to our ethics and compliance practices. That’s why all Humana associates and contractors are required to complete an annual ethics and compliance training, and why our Enterprise Compliance team places an emphasis on communicating about ethics, compliance and risk in an intentional way, throughout the year. Our Company is also committed to building digital care delivery operations and leveraging key insights from enterprise analytics. Integrating these critical 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.
KEY PILLAR METRICS
|
|
For the Environment
We know that a strategic focus on environmental sustainability is critical to fulfilling our mission of helping people achieve lifelong well- being. The better we do at protecting the health of our environments, including our operations, supply chain, and communities around us, the better we can do at positively supporting people on their health journeys. We believe that our demonstrated commitment to environmental sustainability not only positions us to offer reliable and cost-effective service to our customers, but also embodies the principle of an intrinsic link between the health of our planet, our business, and the services we provide.
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: energy, emissions, and waste. We augment these initiatives with a broader effort to conserve other resources such as water, manage our real estate footprint, and collaborate with our stakeholders – namely our associates – to actively embrace sustainability. 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 well-being.
Our Workplace Experience team, overseen by our Chief Administrative Officer, 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. The Workplace Experience team also leads initiatives toward achieving environmental targets in addition to tracking/reporting progress and assessing opportunity toward setting new climate-change mitigation/adaptation targets.
We are now working with a global leader in the digital transformation of energy management and automation, to create a more robust next generation goal that will align with the Science Based Targets initiative (SBTi) to address climate change. 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 contribute to net zero goals. We expect to publicly announce our new SBTi aligned environmental goal in late 2022. We encourage you to review our Environmental Sustainability Policy Statement and our 2021 CDP Report to learn more about our sustainability efforts and areas of concentration.
|
|
KEY PILLAR METRICS
|
|
ENVIRONMENTAL SUSTAINABILITY INITIATIVES
|
| |||||||||||
|
|
|
| ||||||||
| ||||||||
| ||||||||
|
|
Corporate Responsibility Awards and Recognition
We are pleased to have received recognition for our 2021 corporate responsibility and 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.”
|
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.
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
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:
|
|
|
|
|
|
|
|
Fiserv. In 2021, we contracted for certain marketing and advertising services from Fiserv in connection with member communication materials for which we paid approximately $12.15 million, which is comparable to other non-affiliated vendors for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest to Mr. Bisignano.
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 2021, the Pfizer rebates amounted to approximately $71.3 million, substantially all of which were passed through to our members in the form of lower premiums and/or higher benefits. Our subsidiary, Humana Healthcare Research, Inc. or HHR, has also contracted with Pfizer to complete various research studies at commercial rates and following our standard protocols; HHR received approximately $250,750 in fees from Pfizer for this service in 2021. The Company also received approximately $254,250 from Pfizer during 2021 related to hanger rental and other associated aircraft incidentals. The relationships described herein did not represent a direct or indirect material interest for Mr. D’Amelio.
Cerner. Cerner has a license subscription contract with our subsidiary, Humana Digital Health and Analytics Platform Services, Inc., or HDH&A. In 2021, Cerner paid HDH&A approximately $6.5 million in associated licensing, professional service and maintenance fees, which is comparable to other non-affiliated customers for the provision of similar services. Our subsidiary, Conviva Medical Center Management, LLC, has a database subscription contract with Cerner for which it paid Cerner approximately $7,000 in associated fees during 2021, 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 to Dr. Feinberg.
Howard. The relationship between the Company and Howard includes arrangements between the Howard University healthcare system in which the Company paid approximately $314,405 in medical claims during 2021. Additionally, the Company paid $25,000 to Howard’s School of Business, Career Services for participation in Howard’s career recruitment program and sponsorship of a Howard business conference. The relationships described herein did not represent a direct or indirect material interest for Dr. Frederick.
Chrysalis. In 2021, 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.
Foundation Radiology. Foundation Radiology, a multi-institutional radiology services group, serves as a provider in our network, for which we paid approximately $1.26 million medical claims during 2021, which is an amount that is comparable to other non-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.
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.
|
Committee Membership and Attendance
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 (telephonic and in-person) held in 2021 and membership as of March 1, 2022, 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.1 | ||||||||||||
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 |
|
| ||||||||||
Marissa T. Peterson |
|
| ||||||||||
Number of Meetings in 2021
| 9 | 6 | 4 | 0 | 5 | 4 |
= Chair = Member
|
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;
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 16, 2022 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, 2021, 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;
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;
|
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 2021, James J. O’Brien (Chair), Frank J. Bisignano (until April 2021), Wayne A. I. Frederick, M.D. 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 16, 2022, 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 2022, 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.
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.
The Technology Committee has five regular meetings each year, during which senior leadership briefs the 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, cyber security, 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 update the full Board of Directors on cyber security matters at least once per year. Briefings are also provided as-needed in response to industry or company specific developments or material events.
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.
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 2021, 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 22, 2021.
Executive Sessions of Non-Management Directors
In 2021, our non-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, 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 2021 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.
Public Policy
Our Company has an active voice on healthcare policy issues that matter most to the people we serve. From Medicare Advantage, 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.
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 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 “Contact the 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.
|
Election of Directors
The Board of Directors of the Company, in accordance with the provisions of the Company’s ArticlesRestated Certificate of Incorporation and Bylaws, has determined that the number of directors to be elected at the Annual Meeting of the Company shall be thirteen (13)eleven (11). The directors are elected to hold office until the Annual Meeting of Stockholders in 20232025 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 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.
The following charts and tables showtable shows certain information concerning the nominees at March 1, 2022.2024.
Name | Age | Position | First Elected Director | |||||||||||
Kurt J. Hilzinger |
| Chairman of the Board, Independent Director | 07/2003 | |||||||||||
Bruce D. Broussard |
| Director, | 01/2013 | |||||||||||
Raquel C. Bono, M.D. |
| Independent Director | 09/2020 | |||||||||||
Frank A. D’Amelio |
| Independent Director | 09/2003 | |||||||||||
David T. Feinberg, M.D. |
| Independent Director | 03/2022 | |||||||||||
Wayne A.I. Frederick, M.D. |
| Independent Director | 02/2020 | |||||||||||
John W. Garratt |
| Independent Director | 02/2020 | |||||||||||
|
|
|
| |||||||||||
Karen W. Katz |
| Independent Director | 09/2019 | |||||||||||
Marcy S. Klevorn |
| Independent Director | 02/2021 | |||||||||||
|
|
|
| |||||||||||
Jorge S. Mesquita |
| Independent Director | 02/2021 | |||||||||||
|
| Independent Director |
|
Vote Required and Recommendation 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 a director’s initial election to our Board of Directors, athe director is required to submit 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 of Directors following that election. The Board of Directors has 90 days to determine whether or not to accept the director’s resignation and to report this information to our stockholders.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL NOMINEES.
|
Humana |
|
Director SkillsAttributes and Qualifications
The Nominating, Governance & Sustainability Committee (“Committee”) regularly assessesevaluates the skills and experiences necessary to ensure that theour Board has appropriate skill compositionrepresents a diverse group of individuals with a range of skills, experiences and expertise to oversee the Company’s long-term business strategy, operations, and risks. The Committee recognizes that our Board should represent a diverse groupThis analysis includes the identification of individuals who bring a rangethe non-exhaustive list set forth below of experience, skills and other attributes to their individual role on the Board and to the Board as a collective group. On an annual basis, the Committee assesses each Board candidate to determine whether to recommend currently serving directors for reelection to the Board and whether to recommend candidates for initial election to the 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) core attributes that are expected of our directors, and (ii) substantive areas of expertise indicating specific skills, experience or qualifications most closely aligned to our strategic priorities. On an annual basis, the Committee holistically assesses each director nominee, and the Board as a whole, to ensure that should bean appropriate balance of skills, experiences, and backgrounds are represented collectively on our Board. Although not an exhaustive assignment of skills and attributes, we have highlighted for each director the substantive areas of expertise that they bring to the Board in the biography of each nominee located in the section entitled “Director Nominee Biographies.”
Core Director Attributes | Substantive Areas of Expertise | |||||||||||
●Independent under our Corporate Governance Guidelines, as well as meeting the independence requirements of, as applicable, the NYSE, SEC, |
| ● Public company experience in position of CEO, CFO or of persons in such positions) | ||||||||||
●External public company board service is limited (maximum of | ● Corporate governance (including Board of Directors experience, sustainability, and environmental, social and related-governance (ESG)) | |||||||||||
●Risk oversight ability with respect to the particular skills of the individual | ● Health care industry experience (including clinical practice) | |||||||||||
●Understanding of and experience with complex public companies or like | ●Information technology and digital innovation; data | |||||||||||
●Standing and reputation in the individual’s | ● Government relations, public policy and regulatory experience | |||||||||||
●Ability to work collegially and collaboratively with other directors and our management | ||||||||||||
|
growth models); | |||||||||||
●A commitment to diversity, equity and inclusion (DEI) |
|
| ||||||||||
● High integrity and ethical standards | ● Capital allocation and corporate transactions |
The Committee further assesses each director nominee’s ability to devote sufficient time and effort to his or her duties as a 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.Practices.” The director nominee analysis also helps to determine whether a nominee would meet the criteria for independence set forth in the Corporate Governance Guidelines established by the Board and in accordance with independence requirements of the NYSE and the SEC.
The Committee has determined thatfollowing matrix summarizes the most significant skills, attributes and experiences represented on our diverse, knowledgeable, and experienced Board. More information about each of our independent director nominees satisfies all ofcan be found in the core director attributes set forth above.section entitled “Director Nominee Biographies.”
Public Company CEO, CFO, or COO Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||||
Financial Oversight | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate Governance | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||||
Healthcare Industry Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||||||||||||
Capital Allocation and Corporate Transactions | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||||||||||||
IT/Digital; Data Privacy; Cyber | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Marketing/Consumer Insights | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||||||
Government Relations/ Public Policy | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||||||||||||||||||||||||
Strategy Development | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||||||||
Risk Assessment | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||||||||||||||||||||
Sustainability/ESG | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
Proposal One• 2024 Proxy Statement | Humana | 5 |
Board Composition and Refreshment
The Committee and the Board Tenurefollow a thoughtful refreshment process to ensure the Board composition best reflects the most appropriate mix of skills and Refreshment
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.
In addition, during 2022 and 2023 our Board refreshed the leadership and composition of our Nominating, Governance & Sustainability Committee, Organization & Compensation Committee, and Technology Committee. The Board also formed our Clinical Quality Committee, as the Board continues to adapt its work and oversight as we advance the Company’s strategy.
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.
6 | Humana | 2024 Proxy Statement •Proposal One |
The illustrations below depict independence, age, tenure and tenurediversity represented in the current composition of our director nominees.
|
Director Independence | Director Age Distribution | Board Tenure | ||
91% |
62 Years |
6.67 Years Average director tenure
73% Of directors have served < 5 years
27% Of directors have served 10 ≥ years,
| ||
Of our directors are independent and we have an independent Chairman of the Board (10 of 11 directors) | Average age of director nominees (Age Range: 52 – 67) | |||
Gender Representation |
Race/Ethnicity Representation | |||
27% |
18% | |||
Of our directors are women (3 of 11 directors) | Of our directors are racially and/or ethnically diverse (2 of 11 directors) | (Based on service as of March 1, 2024) | ||
|
|
|
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.recommendations. 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 nominationsrecommendations for candidates for membership on the Board as described above under “Identifying Nominees for Directors.” Stockholder nominationsIn addition, stockholders may nominate candidates for election to the Board of Directors are governed byin accordance with the specific provisions in our Bylaws, a copy of which is available on our website at www.humana.com. From the www.humana.com website, then click on “Investor Relations,“More Humana,” andthen click on “For Investors,” then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.” The Bylaws require that a stockholder provide written noticeA summary of intent to nominate a candidatethese provisions, which include customary provisions for director no less than 60 days or more than 90 days prior to the scheduled dateinclusion of candidates in our proxy statement (proxy access) is included in 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“Frequently Asked Questions” section within this proxy statement and should be sent tounder the attention ofcaption “What is the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202.due date for stockholder nominees for director for the Company’s 2025 Annual Meeting.”
Proposal One• 2024 Proxy Statement | Humana |
| 7 |
Board of Directors Nominee Determination
At the recommendation of the Nominating, Governance & Sustainability Committee, the Board has nominated 13eleven (11) 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’nominees create a diverse, knowledgeable and experienced Board with strong executive experience,experience; financial expertise,expertise; knowledge and experience in healthcare,healthcare; expertise in information systems; protection and digital innovation and technology,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.
8 | Humana | 2024 Proxy Statement •Proposal One |
Director Nominee Biographies
Kurt J. Hilzinger |
White Male, Age | ||||||||||||
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. | |||||||||||
Other Public Boards: 1 | |||||||||||||
Committees | |||||||||||||
• No Committee Roles |
The Board believes that Mr. Hilzinger is a strong operating executive with a finance and strategic background, whose operational experience and financial expertise in the health care sector contributes valuable insight to the Board.
| ||||||||||||
|
|
|
| ||||||||||
|
|
| |||||||||
Chief Executive Officer
Other Public Boards: 1 |
| Bruce D. Broussard,
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 | ||||||||
Committees | ||||||||||
• No Committee Roles | ||||||||||
The Board believes that Mr. Broussard’s 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, as well as his in-depth knowledge of the Company’s operations, finances and strategy, brings valuable insight to the Board.
| ||||||||||
|
|
| ||||||||
Proposal One• 2024 Proxy Statement | Humana | 9 |
Raquel C. Bono, M.D.
|
Asian Female, Age 67 Director since 2020 | |||||||||||
|
| ||||||||||
Independent Director
Other Public Boards: 1
|
| Raquel C. Bono, M.D., was initially elected to the Board in September 2020. | |||||||||
Committees | |||||||||||
• Audit • Clinical Quality | |||||||||||
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 | White Male, Age 66 Director since 2003 | |||||||||
|
|
|
| |||||||
|
| |||||||||
Independent Director
Other Public Boards: 3
|
| Frank A. D’Amelio was initially elected to the Board in September 2003. | ||||||||
Committees | ||||||||||
• Audit (Chair) | ||||||||||
• Nominating, Governance | ||||||||||
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.
| ||||||||||
10 | Humana | 2024 Proxy Statement •Proposal One |
|
|
|
| |||||||
|
|
| |||||||||||
Independent Director Other Public Boards: 1 |
| 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)
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 | ||||||||||||
• Clinical Quality (Chair) • Nominating, Governance | ||||||||||||
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• 2024 Proxy Statement | Humana |
| 11 |
Wayne A. I. Frederick, |
Black Male, Age | |||||||||
Independent Director Other Public Boards: 3
|
| Wayne A. I. Frederick, M.D., was initially elected to the Board in February 2020. | ||||||||
Committees | ||||||||||
• Organization & • Clinical Quality | ||||||||||
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.
| ||||||||||
|
|
| ||||||||
| White Male, Age | |||||||||
Independent Director Other Public Boards: 2
|
| John W. Garratt was initially elected to the Board in February 2020. | ||||||||
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.
| ||||||||||
12 | Humana | 2024 Proxy Statement •Proposal One |
|
|
|
| |||||||
|
|
| |||||||||||
Independent Director Other Public Boards: 2
|
|
| ||||||||||
|
|
|
| |||||||||
|
| |||||||||||
| Karen W. Katz was initially elected to the Board in September 2019. Ms. Katz was
| |||||||||||
Committees | ||||||||||||
• Nominating, Governance • Organization & | ||||||||||||
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.
| ||||||||||||
|
|
|
| |||||||
|
| White Female, Age | |||||||||
Independent Director Other Public Boards: 2
|
| Marcy S. Klevorn was initially elected to the Board in February 2021. Ms. Klevorn was formerly the Chief Transformation Officer of Ford Motor Company | ||||||||
Committees | ||||||||||
• Technology (Chair) • Audit | ||||||||||
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•
|
Jorge S. Mesquita |
White Male, Age | |||||||||
Independent Director
Other Public Boards: 1
|
| Jorge S. Mesquita was initially elected to the Board in February 2021.
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 | ||||||||||
• Investment • Technology | ||||||||||
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.
| ||||||||||
Brad D. Smith | White Male, Age 59 Director since 2022 | |||||||||
|
|
|
| |||||||
|
| |||||||||
Independent Director
Other Public Boards: 1
|
|
Brad D. Smith was initially elected to the Board in | ||||||||
| ||||||||||
• Organization & • Technology | ||||||||||
The Board believes that Mr. | ||||||||||
14 | Humana | 2024 Proxy Statement •Proposal One |
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 “More Humana,” then click on “For Investors,” 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 • Legal | • Succession Planning • Strategic Execution | • Brand Reputation • Investment Objectives | • Cybersecurity • Data Governance | • Financial • Clinical Quality |
Committees of the Board of Directors |
Audit • Financial Statement integrity and reporting • Legal, regulatory and compliance • Internal controls • Cybersecurity | Organization & Compensation • Executive and non-executive compensation policies and practices • Succession planning • Human capital management | Nominating, Governance & Sustainability | Technology • Information security, technology, privacy & data protection • Company IT strategy and consumer facing technology | Investment • Investment objectives and policies • Investment | Clinical Quality • Clinical management • Healthcare | |||||||||||||||
• Governance structure and processes • Legal and policy matters • Stockholder concerns • Board refreshment • ESG oversight |
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. |
Corporate Governance• 2024 Proxy Statement | Humana | 15 |
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 financial and non-financial risks material to the Company in the short, intermediate, and long-term, the effectiveness of the Company’s control environment in preparing for, stress testing, and managing these risks within the Company’s risk appetite statement, 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 prepare for, test and monitor, respond to and mitigate these risks, each in a manner that closely aligns to the Company’s risk appetite, 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, Kurt J. Hilzinger assumes key duties to ensure effectiveness and collaboration in all aspects of the Board’s design, operations, and risk oversight function.
Duties of Our Chairman
| ||||||||||
|
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, |
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. |
Our Board maintains the flexibility to choose the leadership structure that is in the best interests of our stockholders. When making this determination, the Board considers the recommendation of the Nominating, Governance & Sustainability Committee, the current circumstances and strategic priorities at the Company, and the skills and experiences of the individuals involved, among other considerations.
16 | Humana | 2024 Proxy Statement •Corporate Governance |
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.
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.
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 2023, 85% of associates were highly engaged, representing the 79.4th percentile. Refer to the section titled “Our Culture, Engagement and Approach to Work” in this proxy statement for a discussion of these results. |
• | 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 2023, 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. |
2023 Board and Committee Meetings 32 Videoconference / Teleconference 17 In-person 1 Annual Stockholder | 2023 Director Attendance 100% of our director nominees met NYSE attendance |
Corporate Governance• 2024 Proxy Statement | Humana | 17 |
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. Generally, the committee evaluations coincide with the annual Board evaluation and similarly, consist of a written questionnaire containing qualitative scaled and open-ended questions related to the effectiveness of the committee during the prior year. Further, the Board evaluation questionnaire includes a section specifically concerning Board committee structure which is an opportunity for board members to provide feedback regardless of their individual committee membership. | ||||
Director Independence
To qualify as independent under the Guidelines and the rules of the NYSE, the Board of Directors must affirmatively determine that a director has no material relationship with the Company, other than as a director (i.e., a relationship which could interfere with the director’s exercise of independent judgment). In addition, any relationships between the Company or any of its affiliates and any director or entity related to a director must be below the thresholds for independence prescribed by the NYSE.
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 Oracle Health, for which David T. Feinberg, M.D., one of our current directors, serves as an executive officer; |
(2) | 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, served as an executive officer during 2023; |
18 | Humana | 2024 Proxy Statement •Corporate Governance |
(3) | a relationship between the Company and Chrysalis Ventures, LLC, or Chrysalis, for which David A. Jones, Jr., one of our former directors, serves as Chairman and Managing Partner and in which Mr. Jones has a financial interest; |
(4) | a relationship between the Company and Warren Barr Lieberman, at which an immediate family member of William J. McDonald, one of our directors who is not standing for re-election at our Annual Meeting, is an employee; and |
(5) | financing arrangements between the Company and companies that are affiliated with certain of our directors. |
Oracle Health. Oracle Health has a license subscription contract with our subsidiary, Humana Digital Health and Analytics Platform Services, Inc., or HDH&A. In 2023, Oracle Health paid HDH&A approximately $5.7 million in associated licensing, professional service and maintenance fees, which is comparable to other non-affiliated customers for the provision of similar services. The relationship described herein is not material to the Company and does 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 $100,000 in medical claims during 2023. The relationship described herein did not represent a direct or indirect material interest for Dr. Frederick.
Chrysalis. In 2023, 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.
Warren Barr Lieberman. The relationship between the Company and Warren Barr Lieberman includes a provider arrangement in which the Company paid approximately $191,250 in medical claims during 2023. 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 and would not interfere with the director’s exercise of independent judgment. In addition, each of those relationships was below the thresholds for independence prescribed by the NYSE. 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.
Corporate Governance• 2024 Proxy Statement | Humana | 19 |
Committee Membership and Meetings
The Board of Directors has the following standing committees: Audit; Organization & Compensation; Nominating, Governance & Sustainability; Technology; Investment and Clinical Quality. 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 “More Humana,” then click on “For Investors,” then click on “Corporate Governance,” then click on the “Committee Charters” subcategory. The number of Board committee meetings (virtual and in-person) held in 2023 and membership as of March 1, 2024, were as follows:
Director
| Audit
|
Organization & Compensation
|
Nominating, Governance & Sustainability
| Technology
| Investment
| Clinical
| ||||||
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 |
|
| ||||||||||
Karen W. Katz |
|
| ||||||||||
Marcy S. Klevorn |
|
| ||||||||||
William J. McDonald |
|
| ||||||||||
Jorge S. Mesquita |
|
| ||||||||||
Brad D. Smith |
|
| ||||||||||
Number of Meetings in 2023
| 9 | 8 | 3 | 5 | 4 | 4 |
= Chair = Member
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; |
20 | Humana | 2024 Proxy Statement •Corporate Governance |
• | 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, 2024 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, 2023, 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.
Corporate Governance• 2024 Proxy Statement | Humana | 21 |
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 2023, James J. O’Brien (Chair until April 18, 2023), Wayne A. I. Frederick, M.D. (Chair effective April 18, 2023), David A. Jones, Jr. (until April 18, 2023), Karen W. Katz, Jorge S. Mesquita (until April 18, 2023), and Brad D. Smith 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, 2024, 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 2024, 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. |
Technology Committee
Committee Responsibilities
Pursuant to its charter, the Technology Committee:
• | receives, reviews and provides feedback on the Company’s annual IT strategy report which shall include a summary view of the strategic technology investments, execution roadmap and IT capital plan; |
22 | Humana | 2024 Proxy Statement •Corporate Governance |
• | receives, reviews and provides feedback on the Company’s Enabling Technologies Strategy which contemplates investments in technology capabilities which may be considered foundational investments that are non-specific to one or more business strategies, but create capabilities and conditions to enable business strategies; |
• | receives, reviews and provides feedback on certain High Impact Use Cases (i.e., purpose-driven applications of technology) which management considers highly representative of transformational business capabilities or consumer and provider experiences. Such use cases inform required investments in business and technology capabilities; |
• | receives, reviews and provides feedback on the Company’s annual scan, assessment and report on emerging technologies and innovations deemed likely to be relevant to the Company’s future competitiveness and which may represent opportunities or threats to the Company; |
• | receives, reviews and provides feedback on the Company’s Competitive Analysis of the technology capabilities and investments in industry-relevant capabilities being made by Healthcare IT companies, market moving “technology titans,” as well as traditional and non-traditional competitors; |
• | receives, reviews and provides feedback on the Company’s IT Operating Strategy, including governance models, operating model and talent assessment; and |
• | in conjunction with the Audit Committee, receives, reviews and provides feedback on the Company’s ongoing assessment and plan to address IT risks including cybersecurity, business continuity and disaster recovery risks. |
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.
Investment Committee
Committee Responsibilities
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.
Clinical Quality Committee
Committee Responsibilities
Pursuant to its charter, the Clinical Quality Committee:
• | in conjunction with the Company’s management, periodically evaluates new developments and current trends with respect to patient experience and quality care that may affect companies in the healthcare industry; |
• | receives, reviews and provides feedback on the Company’s efforts to integrate clinical experience and care models that: (a) positively impact member/patient health outcomes; (b) reduce the cost of care and improve health care affordability; (c) improve access to cost-effective, high-quality care; (d) address social determinants of health and reduce health disparities; and (e) improve member/patient experience and satisfaction; |
• | receives, reviews and provides feedback on the Company’s clinical practices, policies and innovations, including value-based care strategies, clinical and quality trends, and strategic priorities; |
• | receives, reviews and provides feedback on the quality of the Company’s healthcare services operations, including the quality of the Company’s pharmacy solutions, medical clinic operations and in-home care solutions; member/patient experience; and provider-led models for the delivery of care; and |
• | annually evaluates its performance. |
Corporate Governance• 2024 Proxy Statement | Humana | 23 |
Corporate Governance Policies
Majority Vote Policy for Director Elections
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.
Additional Public Company Board Service
As part of its commitment to ensuring that each of our directors have the capacity to devote sufficient time and effort to his or her duties as a director, the Board has adopted a policy under which (a) a director (other than a director who is the chief executive officer of a public company) may not be a director on more than four (4) public company boards (including the Company), and (b) a Director who is the chief executive officer of a public company may not be a member of more than two (2) public company boards (including the Company). All of our directors are currently in compliance with the policy.
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 for non-employee directors:
• | 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. |
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 2023, apart from Committee meetings, the Board of Directors met 16 times. All director nominees attended at least 75% of the scheduled Board of Directors’ meetings and meetings held by Committees of which they were members. Further, all director nominees serving as directors at that time attended the Annual Meeting of Stockholders held on April 20, 2023.
Executive Sessions of Non-Management Directors
In 2023, 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
24 | Humana | 2024 Proxy Statement •Corporate Governance |
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 2023 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 “More Humana,” then click on “For Investors,” 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. 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 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 either “Public Policy” or “Political Contributions.”
Communication with Directors and Management
Stockholders and other interested parties may communicate directly with our Chairman, non-management directors as a group, or any other individual director by using the “Contact the Board of Directors” form 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 correspondence received through this mechanism. Additionally, stakeholders can use this mechanism to direct questions or concerns to members of the Company’s management on topics such as the Company’s business operations, business conduct, business relationships and conduct of Company personnel.
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 received that are related to accounting, internal controls or auditing matters are required to be
Corporate Governance• 2024 Proxy Statement | Humana | 25 |
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. Other concerns may be escalated to our Executive Resolution team for review and that team will work with members of management to address the issue with the stakeholder.
Member complaints, appeals and/or grievances related to Medicare Advantage, Medicaid or prescription drug coverage provided by our Company should not be directed through the above mechanism. Instead, members are encouraged to call the Customer Care number located on their Humana ID card or submit an online request for appeal, grievance or exception. Instructions for online submissions are located on our website at www.humana.com then click on “Complaints & Appeals.”
26 | Humana | 2024 Proxy Statement •Corporate Governance |
Humana’s Impact
Board Oversight of Environmental, Social and Governance Matters
The Nominating, Governance & Sustainability Committee has responsibility for Board-level oversight of the Company’s environmental, social and governance (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:
BOARDOF DIRECTORS | ||||||||||||||||
Nominating, Governance & Sustainability Committee | ||||||||||||||||
Audit Committee | Organization & Compensation Committee | Technology Committee | Investment Committee | Clinical Quality Committee | ||||||||||||
• Risk Management • Cybersecurity | • Human Capital Management • Inclusion & Diversity Practices • Company Compensation Plans & Policies | • Privacy & Data Protection • Information Security | • Investment Portfolio • Investment Guidelines | • Member and Patient Experience • Clinical Management • Healthcare Quality | ||||||||||||
Chief Administrative Officer and Chief Legal Officer (In collaboration with members of the executive management team) | ||||||||||||||||
ESG Steering Committee | ||||||||||||||||
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 measure 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.
Humana’s Impact• 2024 Proxy Statement | Humana | 27 |
We’ve developed quantitative and/or qualitative factors 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 strategy along with noteworthy factors within certain Categories.
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, associates – 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. |
For Each Person
Human Capital Management For each person starts with each of our associates, approximately 67,600 as of December 31, 2023, 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, demonstrating our health first purpose 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.
28 | Humana | 2024 Proxy Statement •Humana’s Impact |
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 and patients, 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 years at our Company—a tenure testament to our commitment to their growth, well-being, and our culture. A culture that is further reinforced by our voluntary turnover rate (VTR), which we believe is an important indicator of workforce satisfaction as our associates continue to choose us over other opportunities. During 2023, our VTR was 13.4%, representing a decrease from 17% in 2022. 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 2023 acquisitions not yet transitioned to Humana’s Workday system at yearend.
82% Of associates would recommend Humana | 89% Of associates believe their leader really | 84% Of associates believe they have the |
We regularly measure our success and seek opportunities to advance engagement, through an Associate Experience Survey (AES) and continuous listening campaigns. Continuous listening involves our proactive solicitation, analysis and response to associate feedback throughout the year using pulse surveys. By regularly surveying samples of our workforce, we’re able to continuously assess our effectiveness and act when needed, which in turn helps to strengthen our culture and support associate engagement. We aim to conduct our confidential, third-party administered AES on an annual basis and encourage all of our associates to participate. The AES is an in-depth survey covering eighteen dimensions that align to the Company’s strategy and associate engagement. We aggregate survey results, provide them to our entire associate population and encourage leaders to use the information to create open, honest action plans with their teams to build upon our collective engagement.
We conducted the AES in 2023 and saw high participation, with 74% of associates completing the survey. While we would have liked to see our overall engagement score increase, we landed at 85% favorable this year, down from 91% favorable in 2021, when we last conducted the survey. In assessing these results it’s important to recognize that since 2021 we experienced dramatic scale and pace of change within our organization—notably the addition of CenterWell Home Health associates and others who joined our workforce following acquisitions. Given these events, along with the significant amount of transformation our Company experienced leading up to our survey, it is understandable that these changes measurably impacted our associate experience. It is also consistent with the feedback we’ve received from associates. Despite these results, there were some encouraging insights that make us optimistic about the future as we believe there’s opportunity for us to make adjustments that lead to better outcomes in the next survey.
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 effectively, 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—helping them to manage life’s competing demands. We view these workstyle offerings as a valuable benefit to our associates as well as a recruitment lever to attract top talent. It’s also clear that 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.
Humana’s Impact• 2024 Proxy Statement | Humana | 29 |
Diversity, Equity and Inclusion The Company’s Office of Diversity, Equity & Inclusion (our “DEI Office”) efforts are led by our Chief Diversity, Equity & Inclusion Officer, who reports directly to the Chief Administrative Officer. The DEI 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 DEI across our business, we enable associates to bring their whole selves to work, while also driving the innovation and insights needed to better serve our diverse members and communities. Together with key partners like our Chief Health Equity Officer, our Executive Diversity, Equity & Inclusion Council (the “Council”), our Network Resource Groups (NRGs), and Culture & Engagement professionals we strive to expand our culture of inclusion to build deep relationships and create simple, personalized experiences for all of our stakeholders. Our Council exists to help integrate inclusion, diversity and equity into the fabric of the organization from the top down—connecting activities to a broader business-driven, results oriented strategy, and leverages leadership to advance DEI into the fabric of Humana’s culture. The Council reflects the diversity of our associates and communities we serve. Chaired by Humana’s | 89% Of associates believe that people in | |
25% Of associates participated in at least With nearly 9,700 members, the |
CEO, the Council sets DEI objectives that complement our Talent & Diversity Measure Category and ensures transparency and accountability as they work towards them. Further, the Council has rotating service terms to ensure we empower the associate voice and increase diverse points of view from all levels of the organization.
At our Company, we are committed to having diversity represented at all levels and have developed a pathway for diverse talent within our recruiting initiatives. To support our hiring initiatives, we recruit professionals from organizations across the country that share our commitment to diversity, including national partnerships with Historically Black Colleges and Universities (HBCUs), the Divine Nine historically Black fraternities and sororities, Hispanic-Serving Institutions (HSIs) and professional associations supporting people from diverse backgrounds. In addition, through our Disability Hiring Program, Mature Workers Initiative, and Veterans Hiring Initiative, we connect with a wide array of recruitment sources to create pathways for these groups of professionals to join Humana. We’re proud to be recognized as a Military Friendly employer, and under our Veterans Hiring Initiative, we partner with dozens of organizations for recruitment and have hired thousands of veterans and military spouses.
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. While we have resources available to all hiring leaders to leverage, our initial focus is to implement balanced interview panels for director, director equivalent, and above requisitions across the enterprise.
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 knowledgeand provide a variety of associate training programs and workshop opportunities that utilize content developed in-house and through a third-party learning channel. 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. | 85% 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, inclusion, mentoring and leaders participating in inclusive leader training—with shared accountability focused on driving inclusion and diversity throughout the enterprise. We encourage our associates to self-identify so that we have a more complete picture of our diverse workforce, understand their experience and can care for their unique needs. This creates a culture where all associates can feel seen, respected, and valued.
30 | Humana | 2024 Proxy Statement •Humana’s Impact |
We leverage our Workday system to obtain voluntary self-disclosed demographic information of our associates, allowing us to provide transparent disclosures. The charts below represent our workforce demographics as of December 31, 2023, and use the acronym “BIPOC” to collectively include associates who identify as Black, Indigenous, and/or a Person of Color.
Associate Demographics |
DEI isn’t a program, a leadership initiative, or even a business imperative. It is simply the way we work, each and every day to deliver on our health first purpose, it’s who we are as an organization, and it’s 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 Measure Category Workforce Representation in Leadership We’re working to achieve greater BIPOC representation at leadership 2023 BIPOC Director Equivalent +: 22%h 2% |
Talent & Diversity Measure Category Equitable Exits Within Leadership Representation We’re working to ensure equitable exits among 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 level. 2023 BIPOC Director Equivalent +: 1.8% (positive retention) 2023 BIPOC Assoc. Director/Lead: 0.5% (positive retention) | Talent & Diversity Measure Category Leadership Representation in Hiring and Promotions We’re working to ensure the percent of requisition-based hires and internal promotions reflect representation among BIPOC in leadership levels of Director equivalent and above, as well as Associate Director/Lead positions. 2023 BIPOC Director Equivalent +: 26%h 2% since 2022 2023 BIPOC Assoc. Director/Lead: 35%h 1% since 2022 |
Humana’s Impact• 2024 Proxy Statement | Humana | 31 |
Pay and Benefits Philosophy, Compensation and Financial Security
We believe all of our associates have the right to receive a competitive 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. Further, we believe in fostering a fair and inclusive work environment—one where all associates receive equitable pay for their contributions. Each year, we conduct a comprehensive pay equity/gap analysis to identify and address potential pay disparities between associates performing similar work in similar capacities. 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:
Financial | • Competitive base pay, with additional incentive, supplemental, and/or recognition pay • 401(k) retirement savings plans with Company match program • Health savings account (HSA) and flexible savings account (FSA) contributions • Life Insurance • Short – and long-term disability insurance | • Tuition assistance program • Paid internships • Comprehensive financial well-being programs and support, including an employer-sponsored personal emergency savings account with matching funds from the Company • Charitable gift matching program | ||
Health | • Medical, dental and vision benefits • Supplemental health benefits • Long-term care insurance • Whole-person well-being and rewards programs and platform • Incentives for engaging in well-being programs | • Weekly paid well-being time • On-site health and fitness centers • On-site health screenings and vaccinations • On-demand fitness classes, nutritional education through teaching kitchens, and digital coaching apps | ||
Life | • 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) • Nursing moms program with on-site lactation rooms | • Mental health support, including our robust Employee Assistance Program and Work-Life Services • Employee discount programs and services • Helping Hands program • Transit services | ||
Learning & Development | • Diversity, equity, and inclusion training • Internal and external learning events • Access to degree and certification programs with tuition assistance |
Talent Development and Growth Opportunities
We champion the individual goals and development of our associates and provide many 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 2023, our associates averaged approximately 49 hours per active full-time associate in learning and development activities. In addition, people leaders collectively spent nearly 143,000 total hours in learning and development; of which, over 17,400 hours (12%) were related to content specific to leadership development. As a result, our Company spent approximately $193 per active full-time associate (or equivalent) toward our associates’ continued learning and development in 2023.
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 over 5,800 associates engaged in active mentoring relationships during 2023. 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.
We’re pleased that these initiatives are being embraced by our associates and that 83% of our associates reported that they believe their job makes good use of their talents, skills, and abilities.
32 | Humana | 2024 Proxy Statement •Humana’s Impact |
78% Of associates believe Humana provides | 281,132 Volunteer hours tracked by 20,996 of our | $2.4 Million Total associate matching gift dollars made |
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) and last year 123,809 VTO hours were used by 16,702 of our associates. |
• | We help associates discover and track volunteer opportunities through our Humana Together volunteer portal. |
• | We integrate volunteerism in our leadership development and team building. |
• | 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 of our members and patients. Our work in these areas is essential to advancing health equity, improving health outcomes, and delivering necessary care. 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 Measure Category Value-Based Primary Care 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 2023 with 296 primary care centers, representing a 26% increase over the prior year. | Access to Healthcare Measure Category State Medicaid 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, 2024 we have Medicaid contracts in nine states: FL, IL, IN, KY, LA, OH, OK, 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, patients and communities. | ||
$10 Million Invested by Humana Healthy | Our Health Equity & Social Impact team is working to address social needs and reduce 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 associates 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. By focusing on health equity, we work to bridge the gaps that have historically hindered access to and quality of care, while enabling our members and patients to receive the care they need, when and where they need it.
Humana’s Impact• 2024 Proxy Statement | Humana | 33 |
The Humana Foundation, the philanthropic arm of Humana Inc., launched a new strategy during 2023 that is focused on health equity, and fostering evidence-based collaborations and investments that support seniors, Veterans, underrepresented populations and school-aged children so that they may experience connected, healthy lives. The new approach also focuses on eliminating the social and structural barriers to good health and healthcare through evidence-based interventions and solutions. By partnering with local communities and trusted community organizations in Florida, Louisiana, Louisville, Kentucky, and Texas, The Humana Foundation works to create a network of support for people confronting life’s challenges, regardless of their age, race, ethnicity or gender identity.
$5.32 Million Donated in 2023 by The Humana Foundation to create healthy emotional connections for seniors, school-aged kids and veterans through partnerships and initiatives to address loneliness and prevent suicide such as reducing veteran suicide among diverse, underserved populations with the launch of the Face the Fight™ initiative. | $1.35 Million Awarded in 2023 by The Humana Foundation through its Health Equity Innovation Fund to identify and scale innovative solutions to disparities in mental health and nutrition, including awarding $250,000 to the Home of the Innocents in Louisville, Kentucky. |
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 has a 12-month term with half-day, onsite seminars that feature 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 to our 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.
Product Quality and Safety 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. As a services-focused healthcare company, we understand that our members and patients expect us to design high-quality service offerings with careful attention to safety measures. We believe that the quality of our services and health plan offerings are not only a factor in a person’s decision to both obtain and retain our services, but also set us apart as a leader in the industry. We have well-established and rigorous quality reviews and assessment processes for all our insurance and CenterWell offerings, and we’re proud that our efforts have been consistently proven with our CMS Star Ratings and other prominent accreditations.
34 | Humana | 2024 Proxy Statement •Humana’s Impact |
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. Through our comprehensive ethics and compliance training programs, we empower our associates to navigate the landscape of healthcare and corporate governance with a clear understanding of their roles and responsibilities, including our standard of conduct. That’s why we require Humana’s | 99.72% Of associates completed the 2023 |
independent directors, executive officers and all other associates, and contractors to complete an annual ethics andcompliance training course, which includes detailed training in cybersecurity, whistleblowers, conflicts of interest and more. Associates on an approved leave of absence are not required to complete the training until they return to work.* 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 a public Ethics Every Day policy as our standards of conduct, have an established Corporate Compliance Program, and adhere to a public set of Standards of Excellence. Additionally, we enforce Humana’s standards of conduct and compliance policies specifically designed for our contracted healthcare providers and third parties to deter fraud, waste and abuse. We require our contracted healthcare providers and third parties to uphold a similar commitment to ethical conduct and assure that they, their employees and downstream entities who support our Company comply with the guiding principles outlined in the compliance policy.
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.
Cybersecurity.Trust is the foundation of healthcare relationships, and we take our responsibility to protect sensitive information seriously. We adhere rigorously to the Health Insurance Portability and Accountability Act (HIPAA), a federal law designed to ensure the privacy of personal and health information. We are also committed to continuously enhancing and strengthening our technology infrastructure and security protocols to protect against security breaches. Further, we have established formal data governance, which includes accountability, oversight, processes and controls to ensure our data usage transparency and nonrepudiation, and we refresh our data privacy and security policies at least annually. We employ best-practice precautions to safeguard information and protect our members’ data by deploying defensive practices against the ever-evolving cyber threat landscape. Examples of these practices include:
• | Employing a qualified Chief Information Security Officer |
• | Maintaining tools to identify malicious cyber activity |
• | Monitoring risks posed by threat actors, including through partnerships with industry groups and government agencies. |
• | Providing annual cybersecurity training to our associates |
• | Testing our associates’ knowledge through internal phishing simulations |
• | Hosting a multi-day learning event annually during National Cyber Security Awareness Month, an opportunity for all of our associates and contractors to learn more about cybersecurity awareness, hear from industry and cyber-crime experts, and collaborate with colleagues |
• | Reporting data breaches, as required by law, to the U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR), and various state agencies; our reports are publicly available, free of charge, and can be obtained through the OCR Portal at https://ocrportal.hhs.gov/ocr/breach |
• | Maintaining a program to identify cybersecurity risks associated with certain third-party vendors, which is one component of an overall vendor risk management capability |
To further reinforce our accountability in this area and verify compliance with state laws and regulations, we engage independent third-party firms to perform annual audits of the Service Organizational Controls 2 (SOC 2) of enterprise claims platforms within the following Trust Services Criteria: availability, confidentiality, security and processing integrity.
Humana’s Impact• 2024 Proxy Statement | Humana | 35 |
Additionally, our IT infrastructure and information security management systems are both internally and externally audited. These audits have resulted in us receiving industry-recognized certifications from organizations such as the Health Information Trust Alliance (HITRUST certification), derived from the ISO/IEC 27000 family of standards; National Institute of Standards and Technology (NIST) compliance; and Payment Card Industry Data Security Standards (PCI-DSS) certification. These objective certifications and compliance standards provide transparency and substantiate the efficacy of our world-class security program.
Associate Physical Safety and Security.Health and safety are at the very core of our organization’s values and underscore our belief that health is holistic. Our commitment to health and safety extends beyond our patients and members and to our associates, where it is also our duty to ensure their safety and well-being at work. Our governance, policies and procedures—guided by Occupational Safety and Health Administration (OSHA) | 0.47 2023 OSHA Total Recordable Incident Rate for all Humana lines of business |
regulations—help protect the health and safety of our associates, contractors, members and visitors, providing each with a safe and secure work environment. We are dedicated to protecting people and safeguarding key assets, properties and information, understanding that a safe workplace is essential to fostering a culture of well-being and belonging.
We have an established occupational health and safety management system documented through our Environmental Health and Safety (EH&S) Manual. Created to reduce risk and loss associated with fire, disaster, workplace accidents, work-related illnesses and other occupational hazards, the EH&S Manual is owned and maintained by our Humana Safety and Security team, whose activities are overseen by Humana’s Senior Vice President of Enterprise Associate & Business Solutions, with ultimate accountability to Humana’s Chief Administrative Officer. Our Enterprise Safety and Security Policy applies to our associates, facilities (owned or leased) and anyone requesting facility admittance. All associates, contractors and vendors are expected to support our efforts in maintaining safe and secure facilities.
Talent & Diversity Measure Category Diverse Supplier Spend 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 2023 target increase was 9%. 2023 Total Diverse Spend: $357 million, or 6.5% of total supplier spend, representing a 2.4% decrease since 2022 | Product Quality & Safety Measure Category Star Ratings 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***: Nearly 5.5 million, or 94%, of members are enrolled in plans rated 4 stars and above for 2024 |
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 environment. To that end, we are continuing to invest our time and resources where it matters most—not just because it’s good business practice, but because we believe in a bright future. |
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.
Our Workplace Solutions (WPS) Environmental Sustainability 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.
36 | Humana | 2024 Proxy Statement •Humana’s Impact |
We provide a full report of our GHG emissions, energy consumption and water usage within our Impact Report, available on our website at www.humana.com, then click “Humana’s Impact,” and 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 Financial Disclosures (TCFD). We encourage you to review our Environmental Sustainability Policy Statement and our CDP Report to learn more about our sustainability efforts and areas of concentration.
Reducing Emissions Through Science-based Targets
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). In 2022, we presented our science-based targets (SBT) proposal to SBTi for official validation. In 2023, SBTi officially accepted and validated our SBT, recognizing that our submitted science-based greenhouse gas emissions reductions target(s) conform with the SBTi Criteria and Recommendations (Criteria version 5.0), and SBTi has classified our Company’s Scope 1 and Scope 2 target ambition as in-line with a 1.5°C trajectory.
Our near-term SBT expands on our efforts to reduce emissions and waste through Scope 1 and Scope 2 initiatives and is designed to spur innovation and efficiency, boost investor confidence and align with national benchmarking. Among other strategies, our efforts to reduce Scopes 1 and 2 greenhouse gas emissions include continued investment in and improvements to energy efficiencies and optimization of our portfolio. We are also maintaining focus on reducing the amount of waste generated.
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.
Our commitments to the environment encompass a comprehensive approach that not only addresses our direct impacts, but also our broader energy consumption. While we continue to refine the strategies and undertakings necessary for us to fully achieve our SBT, we have identified the groundwork initiatives below within each scope.
Scope 1 and Scope 2 Groundwork Initiatives | Scope 3 Groundwork Initiatives | |||
• Increase energy efficiency and optimization within our infrastructure: – Maintain progress with ENERGY STAR®certifications – Application of short- and long-term renewable energy procurement sources, beginning with the purchase of renewable energy credits (RECs) in deregulated markets in-line with our energy procurement strategy • Fleet transition from traditional to hybrid vehicles • Aviation emissions reduction targets associated with National Business Aviation Association (NBAA) Sustainable Flight Department Accreditation Program | • Engage and partner with our suppliers to encourage sustainability goals within our supply chain and connect them to resources to establish science-based targets for their organizations • Promote sustainable transportation choices and alternative workstyle opportunities available to our associates • Review and monitoring of investment portfolio to identify and reduce finance emissions |
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 of 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, including ENERGY STAR certification.
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 measure to help achieve our science-based target.
Humana’s Impact• 2024 Proxy Statement | Humana | 37 |
Fleet and Aviation
We’re also working toward energy efficiencies within our mobile vehicles and aircrafts. Our fleet inventory expanded due to the number of vehicles needed to accommodate the CenterWell Home Health business, especially clinicians visiting patients in their homes. These vehicles are essential as our clinicians deliver care to patients in their homes—as a means to expand access to care and for our patients’ convenience—and are necessary as part of our home health business model. We know that vehicle emissions have a negative effect on the environment, so we are making an effort to reduce our emissions footprint by transitioning our traditional vehicle fleet to hybrid vehicles. Our clinicians can continue using vehicles to meet with and deliver care to patients at their place of residence with peace of mind knowing that they are contributing to a positive impact on air quality around our patients’ homes and communities.
Our Aviation team applied for the National Business Aviation Association (NBAA) Sustainable Flight Department Accreditation Program and earned NBAA accreditation in Flight, Operations, Ground Support and Infrastructure. The team continues to work toward their goal of a 20% reduction in emissions over the 3-year certificate period. To contribute to this goal and identify practices that can be implemented to minimize the impact on the environment, the Aviation team has been exploring alternative jet fuel options, replacing diesel tugs (aircraft towing devices) with electric options, changing fluorescent bulbs with LEDs and using compostable containers, among other efforts.
Digital Adoption
Our dedication to reducing our environmental footprint includes the adoption of digital solutions and paperless communications. Core to this commitment is our drive to encourage email opt-ins and grow our digital marketing universe. By promoting electronic communication channels, we aim to minimize the need for print and postage, reducing waste and production costs associated with traditional mail. Our digital efforts also include investments in other online capabilities, providing members with faster and easier access to their benefits information, claims information, plan documents, ID cards and provider directories. These measures align to our broader sustainability goals and underscore our commitment to responsible, eco-conscious business practices. | Environmental Impact Measure Category Paper Reduction 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 was $5 million by the end of 2023. Cumulative Goal Achievement: $21.8 million, representing a $16.8 million increase over our initial $5 million goal | |||||
Environmental Impact Measure Category Digital Adoption Rate Increase Paperless Communications We are working to increase the digital adoption rate (DAR) of among members who enroll in paperless communications, our focus remains on email opt-in preference for contact versus standard mail. Our goal is to increase the number of members who enroll for paperless communications by 15% (from 11% to 13%) by 2025. 2023 Goal Progress: 15.7%, or 119% of goal | Environmental Impact Measure Category Digital Marketing Grow Digital Marketing Universe We’re working to grow our net digital marketing universe by 10% by the end of 2025 with an increase in the DAR among members who enroll in paperless communications and complete their MyHumana registration. 2023 Goal Progress: 14.2%, or 133% increase |
38 | Humana |
|
Additional ESG Resources | ||||||||||
Humana Impact Report https://www.humana.com/about/impact Policy Statements https://humana.gcs-web.com - Environmental Sustainability Policy & Standard - Supplier Diversity Statement - Statement of AI Principles Ethics https://humana.gcs-web.com/corporate-governance - Ethics Every Day - Anti-Corruption Statement Supplier Diversity Program https://www.humana.com/supplier-information/supplier-diversity | Value-Based Care Report https://www.humana.com/provider/news/value-based-care Health Equity https://healthequity.humana.com Data Privacy and Cybersecurity https://www.humana.com/legal/privacy-policy Standards of Excellence https://www.humana.com/about/standards-of-excellence Health Policy Center https://policy.humana.com | Humana Healthcare Research https://research.humana.com/ The Humana Foundation https://www.humanafoundation.org Fraud, Waste, and Abuse https://www.humana.com/legal/fraud-waste-and-abuse - Ethics Every Day for Contracted Healthcare Providers & Third Parties - Compliance Policy for Contracted Healthcare Providers & Third Parties | ||||||||
Humana’s Impact• 2024 Proxy Statement | Humana | 39 |
Awards and Recognition
Director CompensationWe are pleased to have received national recognition for our ESG efforts and we appreciate the acknowledgement of our commitment to inspiring health and well-being. Highlighted below are just a few of our notable achievements, however a complete list of awards and recognition is available on our website at www.humana.com – from there click on “About Humana,” and then click on “Awards and Recognition.”
2021
40 | Humana | 2024 Proxy Statement •Humana’s Impact |
Director Compensation
2023 Director Compensation Program
During 2021,2023, our non-employee directors were compensated pursuant to the following schedule:
Annual Retainer(1)(4) | $ 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) | $ (variable # of shares) | |
Charitable Contributions Annual Match | up to $40,000 | |
Group Life and Accidental Death Insurance — (except Chairman) | $150,000 of coverage | |
Group Life and Accidental Death Insurance — Chairman (6) | $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 is paid in equal amounts on a monthly basis during the service year. If a director ceases service on the Company’s Board of Directors during a year, the final cash retainer payment will be for the final month during any portion of which the director serves on the Company’s Board of Directors. A non-employee director will receive the full annual cash retainer amount for the initial year in which the director serves on the Company’s Board of Directors, regardless of the director’s initial date of election. |
(2) | The annual common stock retainer is paid in the form of restricted stock units, vests at the end of the year of service related to the retainer and will be pro-rated for any service of less than the full year in respect of which the award is granted. |
(3) | The initial award of restricted stock units is forfeited if the director serves less than one year on the Company’s Board of Directors. This initial award is in lieu of the annual common stock retainer for the year in which the director was first elected to the Board, but the director would receive the annual common stock retainer commencing in January of the year following election. |
(4) | Pursuant to our revised Directors Stock Retention Policy, each non-employee director must maintain a minimum equity ownership level of five times the annual cash retainer. For additional information, please refer to “Corporate Governance — Corporate Governance Policies — Director Stock Ownership Guidelines” in this proxy statement. |
(5) | Pursuant to the Company’s 2019 Amended and Restated Stock Incentive Plan, in no event shall any non-employee director of the Company be granted Awards that would result in total compensation for such director in connection with their service on the Company’s Board of Directors in excess of (a) with respect to a non-employee director, $1,000,000, and (b) with respect to a non-employee Chairman of the Board, $1,500,000, in each case, in any calendar year. |
(6) | Coverage amount decreases 50% at age 70. |
Director Compensation•
| 41 |
20212023 Compensation of Our Directors
The following table shows the compensation earned by our non-employee directors in connection with their service on our Board of Directors during all or a portion of the 20212023 fiscal year:
Name(1) (a) | Fees Paid in Cash ($)(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) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Frank J. Bisignano(2) |
| 38,333 |
|
| 54,838 | (6) |
| — |
|
| — |
|
| — |
|
| 40,183 |
|
| 133,354 |
| ||||||||||||||||||||||||||||||||||||||||||
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. |
| 115,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 1,188 |
|
| 281,112 |
|
| 124,000 |
| 190,129 |
| — |
| — |
| — |
| 30,900 |
| 345,029 | ||||||||||||||||||||||||||||
Frank A. D’Amelio |
| 140,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 2,288 |
|
| 307,212 |
|
| 145,000 |
| 190,129 |
| — |
| — |
| — |
| 28,421 |
| 363,550 | ||||||||||||||||||||||||||||
David T. Feinberg, M.D. |
| 130,000 |
| 190,129 |
| — |
| — |
| — |
| 1,388 |
| 321,517 | |||||||||||||||||||||||||||||||||||||||||||||||||
Wayne A. I. Frederick, M.D. |
| 115,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 40,414 |
|
| 320,338 |
|
| 133,300 |
| 190,129 |
| — |
| — |
| — |
| 41,445 |
| 364,874 | ||||||||||||||||||||||||||||
John W. Garratt |
| 130,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 8,414 |
|
| 303,338 |
|
| 135,000 |
| 190,129 |
| — |
| — |
| — |
| 904 |
| 326,033 | ||||||||||||||||||||||||||||
Kurt J. Hilzinger |
| 337,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 43,168 |
|
| 545,092 |
|
| 368,000 |
| 190,129 |
| — |
| — |
| — |
| 43,171 |
| 601,300 | ||||||||||||||||||||||||||||
David A. Jones, Jr. |
| 142,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| (13,552 | ) |
| 41,188 |
|
| 334,560 |
|
| 49,000 |
| 63,543 |
| — |
| — |
| 224,175 |
| 45,379 |
| 382,097 | ||||||||||||||||||||||||||||
Karen W. Katz |
| 115,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 19,938 |
|
| 299,862 |
|
| 130,000 |
| 190,129 |
| — |
| — |
| — |
| 26,425 |
| 346,554 | ||||||||||||||||||||||||||||
Marcy S. Klevorn |
| 115,000 |
|
| 164,843 |
|
| — |
|
| — |
|
| — |
|
| 20,990 |
|
| 300,833 |
|
| 135,000 |
| 190,129 |
| — |
| — |
| — |
| 26,811 |
| 351,940 | ||||||||||||||||||||||||||||
William J. McDonald |
| 115,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 42,268 |
|
| 322,192 |
|
| 120,000 |
| 190,129 |
| — |
| — |
| — |
| 46,030 |
| 356,159 | ||||||||||||||||||||||||||||
Jorge S. Mesquita |
| 115,000 |
|
| 164,843 |
|
| — |
|
| — |
|
| — |
|
| 990 |
|
| 280,833 |
|
| 120,000 |
| 190,129 |
| — |
| — |
| — |
| 41,456 |
| 351,585 | ||||||||||||||||||||||||||||
James J. O’Brien |
| 135,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 42,286 |
|
| 342,210 |
|
| 46,700 |
| 63,543 |
| — |
| — |
| — |
| 41,221 |
| 151,464 | ||||||||||||||||||||||||||||
Marissa T. Peterson |
| 130,000 |
|
| 164,924 |
|
| — |
|
| — |
|
| — |
|
| 774 |
|
| 295,698 |
| ||||||||||||||||||||||||||||||||||||||||||
Brad D. Smith |
(1) | During |
(2) |
|
(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 members. For |
(4) | On January |
(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 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, |
(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. |
42 | Humana |
|
(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 $19,000 for the life of the director. |
(8) | We pay for or reimburse our directors’ travel, lodging and other reasonable out-of-pocket expenses in connection with attendance at board, committee and stockholder meetings. From time to time, we may transport one or more directors and members of their immediate family to and from such meetings or other Company business on Company aircraft. Directors may elect to participate in the medical and dental benefit programs offered to all of our |
Director | Matching ($) | Occupational ($) | Life ($) | Other ($) | Total – All Other ($) | Matching Charitable Gift ($) | Matching Charitable Gift ($) | Occupational Tax ($) | Occupational Tax ($) | Life Insurance ($) | Life Insurance ($) | Other ($) | Other ($) |
Total – All Other ($) |
Total – All Other ($) | ||||||||||||||||||||||||||||||
Frank J. Bisignano |
| 39,787 |
|
| — |
|
| 396 |
|
| — |
|
| 40,183 |
| ||||||||||||||||||||||||||||||
Raquel C. Bono, M.D. |
| — |
|
| — |
|
| 1,188 |
|
| — |
|
| 1,188 |
|
| 28,500 |
| 114 |
| 2,286 |
| — |
| 30,900 | ||||||||||||||||||||
Frank A. D’Amelio |
| 1,100 |
|
| — |
|
| 1,188 |
|
| — |
|
| 2,288 |
|
| 26,000 |
| 135 |
| 2,286 |
| — |
| 28,421 | ||||||||||||||||||||
David T. Feinberg, M.D. |
| — |
| 200 |
| 1,188 |
| — |
| 1,388 | |||||||||||||||||||||||||||||||||||
Wayne A. I. Frederick, M.D. |
| 40,000 |
|
| — |
|
| 414 |
|
| — |
|
| 40,414 |
|
| 40,000 |
| 122 |
| 414 |
| 909 |
| 41,445 | ||||||||||||||||||||
John W. Garratt |
| 8,000 |
|
| — |
|
| 414 |
|
| — |
|
| 8,414 |
|
| — |
| 130 |
| 774 |
| — |
| 904 | ||||||||||||||||||||
Kurt J. Hilzinger |
| 40,000 |
|
| — |
|
| 3,168 |
|
| — |
|
| 43,168 |
|
| 40,000 |
| 3 |
| 3,168 |
| 43,171 | ||||||||||||||||||||||
David A. Jones, Jr. |
| 40,000 |
|
| — |
|
| 1,188 |
|
| — |
|
| 41,188 |
|
| 40,000 |
| 3,645 |
| 762 |
| 972 |
| 45,379 | ||||||||||||||||||||
Karen W. Katz |
| 18,750 |
|
| — |
|
| 1,188 |
|
| — |
|
| 19,938 |
|
| 22,500 |
| 11 |
| 2,286 |
| 1,628 |
| 26,425 | ||||||||||||||||||||
Marcy S. Klevorn |
| 20,000 |
|
| — |
|
| 990 |
|
| — |
|
| 20,990 |
|
| 25,500 |
| 123 |
| 1,188 |
| — |
| 26,811 | ||||||||||||||||||||
William J. McDonald |
| 40,000 |
|
| — |
|
| 2,286 |
|
| — |
|
| 42,286 |
|
| 40,000 |
| 19 |
| 2,286 |
| 3,725 |
| 46,030 | ||||||||||||||||||||
Jorge S. Mesquita |
| — |
|
| — |
|
| 990 |
|
| — |
|
| 990 |
|
| 40,000 |
| 268 |
| 1,188 |
| — |
| 41,456 | ||||||||||||||||||||
James J. O’Brien |
| 40,000 |
|
| — |
|
| 2,286 |
|
| — |
|
| 42,286 |
|
| 40,000 |
| 459 |
| 762 |
| — |
| 41,221 | ||||||||||||||||||||
Marissa T. Peterson |
| — |
|
| — |
|
| 774 |
|
| — |
|
| 774 |
| ||||||||||||||||||||||||||||||
Brad D. Smith |
| — |
| 167 |
| 774 |
| — |
| 941 |
Director Compensation•
| 43 |
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, 2023, 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.
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 Outstanding(1) | ||||||||||
BlackRock, Inc.
New York, New York 10001 | |||||||||||
| |||||||||||
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 9.1% |
(1) | The percentage of ownership is based on |
(2) | Based upon a Schedule 13G filed with the SEC for the period ended December 31, |
(3) | Based upon a Schedule 13G filed with the SEC for the period ended December |
|
|
44 | Humana |
|
Security Ownership of Directors and Executive Officers
The following table shows stock ownership as of January 15, 2022,2024, 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) Brian A. Kane, our former Chief Financial Officer; (v) each of our three other highest compensated executive officers serving as of December 31, 2021,2023, (we collectively refer to these officers in this proxy statement as our Named Executive Officers, or NEOs); and (vi)(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, 2022 (1)(2) | Percent of Class as of December 31, 2021(3) | Company Common Stock Beneficially Owned as of January 15, 2024 (1)(2) | Company Common Stock Beneficially Owned as of January 15, 2024 (1)(2) | Percent of Class as of | Percent of Class as of | |||||||||||
Raquel C. Bono, M.D. | 397 |
| 397 |
|
| |||||||||||
Frank A. D’Amelio | 20,634 |
| 20,634 |
|
| |||||||||||
David T. Feinberg, M.D. | 0 |
| 441 |
|
| |||||||||||
Wayne A.I. Frederick, M.D. | 440 |
| 440 |
|
| |||||||||||
John W. Garratt | 843 |
| 1,255 |
|
| |||||||||||
Kurt J. Hilzinger | 19,448 |
| 19,448 |
|
| |||||||||||
David A. Jones, Jr. | 69,128 |
| ||||||||||||||
Karen W. Katz | 590 |
| 590 |
|
| |||||||||||
Marcy S. Klevorn | 436 |
| 436 |
|
| |||||||||||
William J. McDonald | 2,276 |
| ||||||||||||||
Jorge S. Mesquita | 436 |
| 1,653 |
|
| |||||||||||
James J. O’Brien | 1,002 |
| ||||||||||||||
Brad D. Smith | 386 |
| ||||||||||||||
Bruce D. Broussard | 148,628 |
| 160,822 |
|
| |||||||||||
Susan M. Diamond(4) | 11,069 |
| ||||||||||||||
Susan M. Diamond | 18,630 |
| ||||||||||||||
Brian A. Kane(4) | 26,339 |
| ||||||||||||||
Sanjay K. Shetty, M.D. | 169 |
| ||||||||||||||
T. Alan Wheatley | 31,505 |
| ||||||||||||||
Joseph C. Ventura | 20,812 |
| ||||||||||||||
Timothy S. Huval | 20,176 |
| ||||||||||||||
George Renaudin II | 4,084 |
| ||||||||||||||
William K. Fleming | 25,291 |
| ||||||||||||||
All directors and executive officers as a group (24 in number, including those named above) | 495,990 | 0.39% | ||||||||||||||
All directors and executive officers as a group (21 in number, including those named above) |
(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, |
(b) |
|
|
Includes unvested restricted stock unit awards of our directors and executive officers which are scheduled to vest within 60 days after January 15, |
| ||||||
| ||||||
Bruce D. Broussard | ||||||
Susan M. Diamond | ||||||
| ||||||
| ||||||
| ||||||
| ||||||
All directors and executive officers as a group |
Stock Ownership Information• 2024 Proxy Statement | Humana | 45 |
(c) | Includes Shares which may be acquired by these individuals through the exercise of options, which are exercisable currently or within 60 days after January 15, |
Bruce D. Broussard | ||||||
Susan M. Diamond | ||||||
| ||||||
| ||||||
| ||||||
| ||||||
All executive officers as a group |
Does not include stock awards to certain of our directors that have been deferred pursuant to our Deferred Compensation Plan for Non-Employee |
Raquel C. Bono, M.D. | ||||||
Frank A. D’Amelio | ||||||
David T. Feinberg, M.D. | ||||||
Wayne A.I. Frederick, M.D. | ||||||
John W. Garratt | ||||||
Kurt J. Hilzinger | ||||||
| ||||||
Karen W. Katz | ||||||
Marcy S. Klevorn | ||||||
| ||||||
| ||||||
|
Does not include the January |
|
(2) | As of March 1, |
(3) | Based on |
|
46 | Humana | 2024 Proxy Statement •Stock Ownership Information
|
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) presents in detail our executive compensation policies and practices, describing each element of compensation and the decision-making process by our Organization & Compensation Committee (“Committee”) that supports it. We encourage you to read this CD&A in conjunction with the compensation tables that follow for additional context to the Committee’s decisions with respect to the 20212023 compensation of our Named Executive Officers (“NEOs”), as listed below.
Officers |
Bruce D. Broussard
| ||
Susan M. Diamond Chief Financial Officer | |||
| |||
| |||
| |||
|
|
|
2021 was another extraordinary and challenging year for our Company, members, associates, and stakeholders as the COVID-19 pandemic and the emergence of the Delta and Omicron variants continued to drive an uncertain environment for the healthcare system. The widespread adoption of vaccines allowed the healthcare system to remain open and our members resume routine interactions with their healthcare providers, while unanticipated surges in the pandemic led to increased hospitalizations, particularly among the unvaccinated. Nonetheless, our core operations remained strong as we maintained focus on ensuring our members and patients received the right care at the right time, providing the highest quality health care experience, advancing our strategy and delivering on our commitments to ESG.
To that end, we were pleased to be recognized by CMS for having 97% of our members in 2021 in 4-Star or higher contracts for 2022, and increasing the number of our contracts that received a 5-Star rating from 1 contract in 2021 to 4 contracts in 2022, the most in our history. This accomplishment further demonstrates our enterprise-wide focus on quality, clinical outcomes and best-in-class customer service, which has been recognized from notable organizations such as Forrester, J.D. Power and USAA. We also saw an improvement of 930 basis points in our Net Promoter Score this past year, reflecting our ongoing efforts to enhance the customer experience.
The year was also marked by significant progress in our strategy to advance our healthcare services platform. We accelerated the growth of our senior-focused, value-based primary care organization, the largest in the nation, through the opening of fifteen de novo senior-focused centers and the completion of nine strategic acquisitions, which brought an additional forty wholly-owned centers to our portfolio. We also completed the acquisition of Kindred at Home, the largest home health and hospice organization in the nation. Together with our acquisition in the first half of 2021 of One Homecare Solutions (onehome), we continue our efforts to transform home health to a value-based model and capture the meaningful opportunity for home health organizations to engage differently with patients and Medicare Advantage payers to more holistically address patient needs and improve health outcomes and reduce the total cost of care. We are excited about the continued progress of our strategy in both primary care and the home.
We also saw continued growth in our pharmacy business, with our PBM, the fourth largest in the country, processing 515 million 30-day equivalent scripts in 2021, an 8 percent increase year over year. In addition, our pharmacy dispensing business continues to deliver industry leading mail order penetration and we have successfully implemented tools to enhance our e-commerce experience, while expanding our mail order footprint to move us closer to the consumer.
We offer superior quality to our members, have a strong brand, and a long history of expertise in caring for people as they age. Additionally, our clinical focus and suite of Healthcare Services capabilities allows us to take a holistic approach to supporting members, ensuring they receive high quality, proactive and comprehensive care, which improves health outcomes. We will continue leveraging the strength of these core fundamentals to drive meaningful results for our Company and each of our stakeholders.
2021 Financial Performance Highlights
Our 2021 results demonstrate the continued strength of our core operations, and the commitment of the Board and executive management team to achieving strong operating results as we navigated through significant headwinds presented by the continued volatility and uncertainly of the COVID-19 pandemic, which ultimately had a more significant impact than we initially anticipated. Highlights of our fiscal year 2021 financial performance are illustrated below.
|
Executive Summary
We are a leading 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.
Our executive compensation program is designed to attract and retain highly qualified executives and focus, challenge and motivate these leaders by directly linking compensation to the achievement of our financial and strategic goals. The Organization & Compensation Committee believes that this is best accomplished when a significant portion of executive compensation is incentive based over the long-term, which aligns executive pay with stockholder interests, links pay to performance and the execution of enterprise-wide goals and incentivizes retention.
In evaluating 2023 compensation for our executive officers, the Organization & Compensation Committee considered the challenging environment facing the Company as the Medicare Advantage industry navigates a complex and dynamic period of change. The Company takes its commitments seriously, and the Committee was disappointed with our lower than anticipated financial results for 2023, and the expectation that higher medical cost trends will continue to impact our business in 2024. At the same time, the Company achieved strong growth in its Medicare Advantage membership and Medicaid and CenterWell businesses in 2023, continuing to advance its industry leading Medicare Advantage and senior focused value-based care platforms and positioning the Company for success over the long-term.
2023 Business and Financial Performance Results
• | Reported diluted earnings per common share (EPS) of $20.00 on a Generally Accepted Accounting Principles (GAAP) basis and Adjusted EPS of $26.09.* |
• | Grew our individual Medicare Advantage membership by 843,300 members, representing 18.5% growth over fiscal year 2022, meaningfully higher than industry growth. |
• | Remained the industry-leader in Star Ratings among our publicly traded peers for the sixth consecutive year, with 94% of our Medicare Advantage members enrolled in 4-star and above contracts,*** 61% of members in 4.5 and 5-star contracts, and four of our contracts receiving a 5-star rating. |
• | Advanced the organic growth of our Medicaid business, successfully implementing contracts in Ohio and Louisiana early in 2023 and being recommended to serve beneficiaries in Indiana and Oklahoma as the year progressed, with expected implementation in 2024. |
• | Added 61 net centers (26% growth) and 46,300 new patients (18.7% growth)—across 15 states, including new market entries in Indiana, Tennessee, Mississippi, and Virginia—to our CenterWell Primary Care platform through a combination of de novo builds and strategic M&A. |
• | Increased the number of Humana Medicare Advantage members covered by a value-based home care model to 843,500, growth of 82,900 members (10.9% growth) year-over-year. |
Returned to stockholders | Adjusted Return on Invested Capital (Adjusted ROIC) reflecting
| Stock Total Return Performance | ||
$2.0 Billion
through dividends and stock repurchases**
|
15.35%
average over the past 3-year period (2021, 2022 and 2023)
| |||
Delivered exceptional Star Ratings for our MA members with
|
Cumulative Total Stockholder
| |||
94% | 63.7% | |||
of our Medicare Advantage members enrolled in 4-star and above contracts*** | average over the past 5-year period (2019, 2020, 2021, 2022 and 2023)
| |||
48 | Humana | 2024 Proxy Statement •Compensation Discussion and Analysis |
Compensation Program Highlights
The Committee is dedicated to maintaining a robust, structured and balanced compensation program designed to motivate and reward the Company’s executives to drive Humana’s performance. Our maturing compensation program is a testament to the Committee’s thoughtful consideration and progressive approach to evolve and align with market best practices and stockholders’ interests. The chart below identifies certain elements of our compensation program.
PROGRAM SUMMARY
| |||
✓ | Incentive Plans. Our executive compensation program includes both short-term incentive (STI) and long-term incentive (LTI) plans. These plans are designed with the goal of balancing short-term decisions with creating long-term stockholder value; we aim to drive focus on achieving key short-term enablers that will lead to successful outcomes on long-term strategic initiatives. | ||
✓ | Equity Awards. We offer our executive officers a combination of incentive stock options (ISO), non-qualified stock options (NQ) and restricted stock units (RSU) that are both time-based and performance-based | ||
✓ | Vesting Periods. We offer time-based equity awards that vest annually in one-third increments over a three-year period, and performance-based equity awards that vest on the third anniversary of the grant date based on the achieved performance results against preset performance targets. | ||
✓ | Performance Measures. For our executive officers, at least | ||
✓ | Stock Ownership Guidelines. We require our CEO, executive officers and senior vice presidents to maintain minimum stock ownership levels (7x, 3x and 1x of base salary, respectively). These requirements illustrate our belief in aligning the interests of our executives with the interests of our stockholders. | ||
✓ | Market-based Compensation. We perform regular market compensation analysis to maintain competitiveness of our executive compensation program. | ||
✓ | Peer Group. We leverage a robust peer group comprised of companies in the managed care industry, health care services and facilities industry, and financial and other insurance-related industries to benchmark and assess our compensation programs and practices. | ||
✓ | Change in Control and Executive Severance Policies. We have a Severance Policy and Change in Control Policy, applicable to the CEO and other executive officers with restrictive covenants that align with the applicable severance period for any benefits. | ||
✓ | Clawback Policy. We maintain a clawback policy that compensation in connection with improper conduct. Our current policy was adopted by the Board of Directors effective October 2, 2023 (replacing our prior policy in its entirety). |
Compensation Discussion and Analysis• 2024 Proxy Statement | Humana |
| 49 |
Compensation Program Design Principles
Our executive compensation program is designed to attract, retain, focus and motivate leaders to achieve strategic milestones and performance objectives that advance and grow our integrated care-delivery model. We design our executive compensation programs to challenge participants as well as reward them for superior performance for our Company and our stockholders. Our compensation program is predicated on three interconnected design principles:
Key Compensation Program Governance Components
Our robust and structured compensation program reflects the Committee’s belief that strong corporate governance is imperative for prudent compensation decision-making. Below are key governance elements of our compensation programs. We also identify certain common pay practices that we do not follow because they do not align with the strict standard of governance that we apply to our compensation programs.
WHAT WE DO |
| WHAT WE DON’T DO | |||||||
✓ | Design incentive plans with the majority of executive pay at risk | × | No stock option repricing without stockholder approval | ||||||
✓ | Maintain aClawback Policythat | × | No single trigger vesting of equity or cash severance payments upon change in control | ||||||
✓ | Include double-trigger provisionsunder our Change in Control Policy and equity agreements applicable to our executive officers | × | No hedging or pledging of Humana securities by associates (including executive officers and directors) | ||||||
✓ | Require minimum stock ownership levels for senior leadership | × | Notax gross-ups for our NEOs or other executive officers | ||||||
✓ | Maintain commitment to stockholder engagement | × | Noexcessive perquisites for senior leaders; all perquisites require specific business rationale | ||||||
✓ | Conductanannual compensation risk assessment | × | No positive discretion for incentive-based awards | ||||||
✓ | Utilize an independent compensation consultant hired and overseen by the Committee | × | No dividends or dividend equivalents on unearned PSUs or RSUs | ||||||
× | No employment contracts with CEO, NEOs or other executive officers and senior leaders | ||||||||
50 | Humana | 2024 Proxy Statement •Compensation Discussion and Analysis
|
Overview of Compensation Elements
The material components of our executive compensation programs are: (i) base salary; (ii) short-term cash incentives; and (iii) long-term equity incentives. We believe that having a combination of pay elements motivates and challenges our executives to achieve positive results for our Company and our stockholders. Each element of compensation is summarized as follows:below.
Fixed Compensation | Base Salary | Cash | • Market competitive fixed compensation, reflecting executive’s scope of responsibility
• Annually reviewed for market alignment, with adjustments as appropriate | |||
At Risk Compensation | Short-Term Incentives | Cash |
• Cash-based incentive compensation to reward performance for achievement of short-term business objectives
• Measures aim to optimize the level of year-over-year profitability in the short-term while contributing to the long-term success of the organization | |||
Long-Term Incentives | Humana Equity |
• Promotes retention of our executive talent
• Motivates executives to optimize the long-term success of the organization
• Mitigates excessive risk taking by encouraging executives to act in the long-term interest of the organization |
Inputs Into Compensation Decisions
For 2021,2023, the Committee received input from a number of sources and reference points to guide its design of the Company’s executive compensation programs and individual pay decisions. These various perspectives allow the Committee to have visibility into our peer companies’ practices, investor viewpoints, changes in external market practices and each executive’s individual performance, as part of its review of compensation. The Committee regularly reviews input and data received from its independent compensation consultant, our stockholders, external market practice surveys and individual performance assessments to make informed compensation decisions for our NEOs. In addition, the Committee regularly reviews tally sheet information that provides a comprehensive look at total compensation for each of our NEO’s. The chartfigure below further describes the primary sources contributing to the Committee’s decision-making process.