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SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] | Preliminary Proxy Statement | |||||
[ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||
[X] | Definitive Proxy Statement | |||||
[ ] | Definitive Additional Materials | |||||
[ ] | Soliciting Material Pursuant to Section 240.14a-12 |
Aetna Inc.
Payment of Filing Fee (Check the appropriate box):
[X] | No fee required. |
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
1) | Title of each class of securities to which transaction applies: |
2) | Aggregate number of securities to which transaction applies: |
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
4) | Proposed maximum aggregate value of transaction: |
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[ ] | Fee paid previously with preliminary materials. | |
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: |
2) | Form, Schedule or Registration Statement No.: |
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4) | Date Filed: |
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Aetna Inc. 151 Farmington Avenue Hartford, Connecticut 06156 | John W. Rowe, M.D. Chairman and Chief Executive Officer |
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Aetna Inc. 151 Farmington Avenue Hartford, Connecticut 06156 | William J. Casazza Senior Vice President and Corporate Secretary |
1. | To elect the Board of Directors for the coming year; |
2. | To approve the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the current calendar year; |
3. | To approve the continued use of certain performance criteria under the Aetna Inc. 2000 Stock Incentive Plan; |
4. | To approve the continued use of certain performance criteria under the Aetna Inc. 2001 Annual Incentive Plan; |
5. | To consider and act on two shareholder proposals, if properly presented at the meeting; and |
6. | To transact any other business that may properly come before the meeting or any adjournment thereof. |
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Q: | WHY AM I RECEIVING THESE MATERIALS? |
Q: | WHAT INFORMATION IS CONTAINED IN THESE MATERIALS? |
Q: | WHAT PROPOSALS WILL BE VOTED ON AT THE ANNUAL MEETING? |
• | Election of Aetna’s Board of Directors for the coming year. | |
• | Approval of the appointment of KPMG LLP, independent registered public accounting firm, to audit the consolidated financial statements of Aetna and its subsidiaries (the “Company”) for the year 2005. | |
• | Approval of the continued use of certain performance criteria under the Aetna Inc. 2000 Stock Incentive Plan. | |
• | Approval of the continued use of certain performance criteria under the Aetna Inc. 2001 Annual Incentive Plan. | |
• | Consideration of a shareholder proposal relating to cumulative voting in the election of Directors, if properly presented at the Annual Meeting. | |
• | Consideration of a shareholder proposal relating to the expensing of stock options, if properly presented at the Annual Meeting. |
Q: | WHAT ARE AETNA’S VOTING RECOMMENDATIONS? |
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Q: | WHICH OF MY SHARES CAN I VOTE? |
Q: | HOW DOES THE TWO-FOR-ONE STOCK SPLIT AFFECT MY VOTING AND THE INFORMATION IN THIS PROXY STATEMENT? |
Q: | WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS A BENEFICIAL OWNER? |
• | SHAREHOLDER OF RECORD — If your shares are registered directly in your name with Aetna’s Transfer Agent, EquiServe Trust Company, N.A., you are considered the shareholder of record with respect to those shares, and Aetna is sending these proxy materials directly to you. As the shareholder of record, you have the right to grant your voting proxy to the persons appointed by Aetna or to vote in person at the Annual Meeting. Aetna has enclosed a proxy card for you to use. Any shares held for you under the DirectSERVICE Investment Program are included on the enclosed proxy card. | |
• | BENEFICIAL OWNER — If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker or nominee on how to vote your shares and are also invited to attend the Annual Meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you bring with you to the Annual Meeting a proxy, executed in your favor, from the shareholder of record. Your broker or nominee is obligated to provide you with a voting instruction card for you to use to direct them as to how to vote your shares. |
Q: | HOW CAN I VOTE MY SHARES BEFORE THE ANNUAL MEETING? |
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• | BY MAIL — You may vote by mail by signing and dating your proxy card or, for shares held in street name, the voting instruction card provided by your broker or nominee and mailing it in the enclosed, postage-paid envelope. If you provide specific voting instructions, your shares will be voted as you instruct.If you sign and date your proxy or voting instruction card, but do not provide instructions, your shares will be voted as described below in “WHAT IF I RETURN MY PROXY CARD OR VOTING INSTRUCTION CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?” | |
• | BY INTERNET — Go to www.eproxyvote.com/aet and follow the instructions. You will need to have your proxy card (or the e-mail message you receive with instructions on how to vote) in hand when you access the Web site. | |
• | BY TELEPHONE — Call toll free on a touchtone telephone 1-877-779-8683 inside the United States or 1-201-536-8073 outside the United States and follow the instructions. You will need to have your proxy card (or the e-mail message you receive with instructions on how to vote) in hand when you call. |
Q: | HOW CAN I VOTE THE SHARES I HOLD THROUGH THE 401(K) PLAN? |
Q: | HOW CAN I VOTE THE SHARES I HOLD THROUGH THE EMPLOYEE STOCK PURCHASE PLAN? |
Q: | CAN I CHANGE MY VOTE? |
Q: | CAN I VOTE AT THE ANNUAL MEETING? |
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Q: | HOW CAN I VOTE ON EACH PROPOSAL? |
Q: | WHAT IF I RETURN MY PROXY CARD OR VOTING INSTRUCTION CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS? |
Q: | WHAT IF I DON’T RETURN MY PROXY CARD OR VOTING INSTRUCTION CARD? |
Q: | WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION CARD? |
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Q: | WHAT SHOULD I DO IF I WANT TO ATTEND THE ANNUAL MEETING? |
Q: | CAN I LISTEN TO THE ANNUAL MEETING IF I DON’T ATTEND IN PERSON? |
Q: | WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING? |
Q: | WHAT CLASS OF SHARES IS ENTITLED TO BE VOTED? |
Q: | HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING? |
Q: | WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS AND HOW WILL VOTES BE COUNTED? |
Q: | WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING? |
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Q: | DOES AETNA OFFER SHAREHOLDERS THE OPTION OF VIEWING ANNUAL REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS VIA THE INTERNET? |
Q: | HOW DO I ELECT THIS OPTION? |
(1) | You will need your account number, which can be found above your name and address on your dividend check stub, and your Social Security number, if you have a Social Security number. |
Q: | WHAT IF I GET MORE THAN ONE COPY OF AETNA’S ANNUAL REPORT? |
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Q: | WHAT IF A DIRECTOR NOMINEE IS UNWILLING OR UNABLE TO SERVE? |
Q: | WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE MEETING? |
Q: | MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR’S ANNUAL MEETING OF SHAREHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS? |
• | SHAREHOLDER PROPOSALS: In order for a shareholder proposal to be considered for inclusion in Aetna’s proxy statement for next year’s Annual Meeting, the written proposal must be RECEIVED by the Corporate Secretary no later than November 22, 2005. SUCH PROPOSALS MUST BE SENT TO: CORPORATE SECRETARY, AETNA INC., 151 FARMINGTON AVENUE, RE4K, HARTFORD, CT 06156. Such proposals also will need to comply with Securities and Exchange Commission (“SEC”) regulations regarding the inclusion of shareholder proposals in Aetna sponsored proxy materials. |
• | NOMINATION OF DIRECTOR CANDIDATES: You may propose Director candidates for consideration by the Board’s Nominating and Corporate Governance Committee (the “Nominating Committee”). In addition, Aetna’s By-Laws permit shareholders to nominate Directors for consideration at a meeting of shareholders at which one or more Directors are to be elected. In order to make a Director nomination at next year’s Annual Meeting, the shareholder’s written notice must be RECEIVED by Aetna’s Corporate Secretary at least 90 calendar days before the date of next |
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year’s Annual Meeting and must contain the information required by Aetna’s By-Laws. (See also “Director Qualifications” on page 13 for a description of qualifications that the Board believes are required for Board nominees.) | ||
• | COPY OF BY-LAWS PROVISIONS: You may contact the Corporate Secretary at Aetna’s Headquarters for a copy of the relevant provisions of Aetna’s By-Laws regarding the requirements for making shareholder proposals and nominating Director candidates or visit Aetna’s Web site at www.aetna.com/governance for a copy of Aetna’s By-Laws. |
Q: | MAY SHAREHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? |
Q: | WHO COUNTS THE VOTES CAST AT THE ANNUAL MEETING? |
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Committee | ||||||||||||||||||||||||
Nominating | ||||||||||||||||||||||||
Compensation | Investment | and | ||||||||||||||||||||||
and | and | Medical | Corporate | |||||||||||||||||||||
Nominee/Director | Audit | Organization | Executive | Finance | Affairs | Governance | ||||||||||||||||||
Betsy Z. Cohen | X | X | X | |||||||||||||||||||||
Barbara Hackman Franklin | X | * | X | X | ||||||||||||||||||||
Jeffrey E. Garten | X | X | ||||||||||||||||||||||
Earl G. Graves | X | X | X | |||||||||||||||||||||
Gerald Greenwald | X | X | X | * | ||||||||||||||||||||
Ellen M. Hancock | X | X | ||||||||||||||||||||||
Michael H. Jordan | X | * | X | X | ||||||||||||||||||||
Jack D. Kuehler | X | X | X | * | ||||||||||||||||||||
Edward J. Ludwig | X | X | ||||||||||||||||||||||
Joseph P. Newhouse | X | X | ||||||||||||||||||||||
Judith Rodin | X | X | X | * | ||||||||||||||||||||
John W. Rowe, M.D. | X | * | X | |||||||||||||||||||||
Ronald A. Williams | X | |||||||||||||||||||||||
Number of Meetings in 2004 | 12 | 7 | 1 | 8 | 3 | 5 | ||||||||||||||||||
* | Committee Chairman |
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• | Audit Committee. The Board has determined in its business judgment that all members of the Audit Committee meet the independence, financial literacy and expertise requirements for audit committee members set forth in the NYSE listing standards. Additionally, the Board has determined in its business judgment that each Committee member, based on his/her background and experience (including that described in this Proxy Statement), has the requisite attributes of an “audit committee financial expert” as defined by the SEC. The Committee assists the Board in its oversight of (1) the integrity of the financial statements of the Company, (2) the qualifications and independence of the Company’s independent registered public accounting firm (the “Independent Accountants”), (3) the performance of the Company’s internal audit function and the Independent Accountants, and (4) the compliance by the Company with legal and regulatory requirements. The Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the Independent Accountants and any other accounting firm engaged to perform audit, review or attest services (including the resolution of any disagreements between management and any auditor regarding financial reporting). The Independent Accountants and any other such accounting firm report directly to the Committee. The Committee is empowered, to the extent it deems necessary or appropriate, to retain outside legal, accounting or other advisers having special competence as necessary to assist it in fulfilling its responsibilities and duties. The Committee has available from the Company such funding as the Committee determines for compensation to the Independent Accountants and any other accounting firm or other advisers engaged, and for the Committee’s ordinary administrative expenses. The Committee conducts an annual evaluation of its performance. For more information regarding the role, responsibilities and limitations of the Committee, please refer to the Report of the Audit Committee beginning on page 38. A copy of the Committee’s Charter is attached as Annex A to this Proxy Statement. |
The Audit Committee can be confidentially contacted by employees and others wishing to raise concerns or complaints about the Company’s accounting, internal accounting controls or auditing matters by calling AlertLine®, an independent toll-free service, at 1-888-891-8910 (available seven days a week, 24 hours a day), or by writing to: Audit Committee c/o Corporate Compliance, P.O. Box 370205, West Hartford, CT 06137-0205. | |
• | Committee on Compensation and Organization. The Board has determined in its business judgment that all members of the Compensation Committee meet the independence requirements set forth in the NYSE listing standards and in Aetna’s Director Independence Standards. The Committee has direct responsibility to review and approve corporate goals and objectives relevant to Chief Executive Officer and other executive officer compensation; evaluate the Chief Executive Officer’s and other executive officers’ performance in light of those goals and objectives; and determine and approve the Chief Executive Officer’s and other executive officers’ compensation levels based on this evaluation. The Chief Executive Officer’s compensation is determined after reviewing the Chief Executive Officer’s performance with the independent Directors. The Committee also evaluates and determines the compensation of the Company’s senior executives and oversees the compensation and benefit plans, policies and programs of the Company. The Committee also administers Aetna’s stock incentive plans and Aetna’s 2001 Annual Incentive Plan. The Committee reviews and makes recommendations, as appropriate, to the Board as to the development and succession plans for the senior management of the Company. The Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. |
Further, the Committee has the sole authority to select, retain and terminate any compensation consultant to be used to assist the Committee in the evaluation of Chief Executive Officer and senior executive |
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compensation and has the sole authority to approve each consultant’s fees and other retention terms. The Committee conducts an annual evaluation of its performance. The Committee’s report on executive compensation begins on page 33. | |
• | Executive Committee. This Committee is authorized to act on behalf of the full Board between regularly scheduled Board meetings, usually when timing is critical. The Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. |
• | Investment and Finance Committee. This Committee assists the Board in reviewing the Company’s investment policies, strategies, transactions and performance and in overseeing the Company’s capital and financial resources. The Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. The Committee conducts an annual evaluation of its performance. |
• | Medical Affairs Committee. This Committee provides general oversight of Company policies and practices that relate to providing Aetna’s members with access to cost-effective quality health care. The Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. The Committee conducts an annual evaluation of its performance. |
• | Nominating and Corporate Governance Committee. The Board has determined in its business judgment that all members of the Nominating Committee meet the independence requirements set forth in the NYSE listing standards and in Aetna’s Director Independence Standards. The Committee assists the Board in identifying individuals qualified to become Board members, consistent with criteria approved by the Board; oversees the organization of the Board to discharge the Board’s duties and responsibilities properly and efficiently; and identifies best practices and recommends to the Board corporate governance principles. Other specific duties and responsibilities of the Committee include: annually assessing the size and composition of the Board; annually reviewing and recommending Directors for continued service; reviewing the compensation of, and benefits for, Directors; recommending the retirement policy for Directors; coordinating and assisting management and the Board in recruiting new members to the Board; reviewing potential conflicts of interest or other issues arising out of other positions held or proposed to be held by, or any changes in circumstances of, a Director; recommending Board Committee assignments; overseeing the annual evaluation of the Board; conducting an annual performance evaluation of the Committee; conducting a preliminary review of Director independence and the financial literacy and expertise of Audit Committee members; and reviewing any waiver and interpretation of Aetna’s Code of Conduct, the code of business conduct and ethics applicable to Directors. The Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. Further, the Committee has the sole authority to select, retain and terminate any search firm to be used to identify Director candidates and to approve the search firm’s fees and other retention terms. |
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• | Shareholder Nominees. The Nominating Committee will consider properly submitted shareholder nominations for candidates for membership on the Board as described below under “Director Qualifications” and “Identifying and Evaluating Nominees for Directors.” Any shareholder nominations proposed for consideration by the Nominating Committee should include the nominee’s name and qualifications for Board membership, and otherwise comply with applicable rules and regulations, and should be addressed to: |
In addition, Aetna’s By-Laws permit shareholders to nominate Directors for consideration at a meeting of shareholders at which one or more Directors are to be elected. For a description of the process for nominating Directors in accordance with Aetna’s By-Laws, see “MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR’S ANNUAL MEETING OF SHAREHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?” on page 7. | |
• | Director Qualifications. The Nominating Committee Charter sets out the criteria weighed by the Committee in considering all Director candidates, including shareholder-identified candidates. The criteria are re-evaluated periodically and currently include: the relevance of the candidate’s experience to the business of the Company; enhancing the diversity of the Board; the candidate’s independence from conflict or direct economic relationship with the Company; and the ability of the candidate to attend Board meetings regularly and devote an appropriate amount of effort in preparation for those meetings. It also is expected that nonmanagement Directors nominated by the Board shall be individuals who possess a reputation and hold positions or affiliations befitting a director of a large publicly held company, and are actively engaged in their occupations or professions or are otherwise regularly involved in the business, professional or academic community. In evaluating Director nominations, the Committee seeks to achieve a balance of knowledge, experience and capability on the Board. |
• | Identifying and Evaluating Nominees for Directors. The Nominating Committee utilizes a variety of methods for identifying and evaluating nominees for Director. In recommending Director nominees to the Board, the Committee solicits candidate recommendations from its own members, other Directors and management. It also may engage the services and pay the fees of a professional search firm to assist it in identifying potential Director nominees. The Committee also reviews materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a shareholder. The Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, the Committee considers whether to fill those vacancies and, if so, considers various potential candidates for Director. These candidates are evaluated against the current criteria at regular or special meetings of the Committee, and may be considered at any point during the year. As described above, the Committee will consider properly submitted shareholder nominations for candidates for the Board. Following verification of the shareholder status of the person(s) proposing a candidate, a shareholder nominee will be considered by the Committee at a meeting of the Committee. If any materials are provided by a shareholder in connection with the nomination of a Director candidate, such materials are forwarded to the Committee. |
The Board and the Nominating Committee each assessed the characteristics and performance of the individual Directors standing for election to the Board at the 2005 Annual Meeting against the foregoing criteria, and, to the extent applicable, considered the impact of any change in the principal occupations of all Directors during the last year. Upon completion of this evaluation process, the Nominating Committee |
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reported to the full Board its conclusions and recommendations for nominations to the Board, and the Board nominated the 11 Director nominees named in this Proxy Statement based on that recommendation. |
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Director of Aetna or its predecessors since 1994 | Betsy Z. Cohen,age 63, is Chairman, Chief Executive Officer and a trustee of RAIT Investment Trust (real estate investment trust), a position she assumed in August 1997. Since September 2000, she also has served as Chief Executive Officer of The Bancorp, Inc. (holding company) and its subsidiary, The Bancorp Bank (Internet banking and financial services), and served as Chairman of The Bancorp Bank from November 2003 to February 2004. From 1999 to 2000, Mrs. Cohen also served as a director of Hudson United Bancorp (holding company), the successor to JeffBanks, Inc., where she had been Chairman and Chief Executive Officer since its inception in 1981 and also served as Chairman and Chief Executive Officer of its subsidiaries, Jefferson Bank (which she founded in 1974) and Jefferson Bank New Jersey (which she founded in 1987) prior to JeffBanks’ merger with Hudson United Bancorp in December 1999. From 1985 until 1993, Mrs. Cohen was a director of First Union Corp. of Virginia (bank holding company) and its predecessor, Dominion Bankshares, Inc. In 1969, Mrs. Cohen co-founded a commercial law firm and served as a Senior Partner until 1984. Mrs. Cohen also is a director of The Maine Merchant Bank, LLC and is a trustee of Corporate Office Properties Trust. |
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Director of Aetna or its predecessors from 1979 to 1992 and since 1993 | Barbara Hackman Franklin,age 65, is President and Chief Executive Officer of Barbara Franklin Enterprises (private investment and international trade consulting firm). From 1992 to 1993, she served as the 29th U.S. Secretary of Commerce. Before her appointment, Ms. Franklin was President and Chief Executive Officer of Franklin Associates (management consulting firm), which she founded in 1984. Ms. Franklin also served as Alternate Representative to the 44th Session of the United Nations General Assembly, and as a public member of the Board of the American Institute of Certified Public Accountants and of the Auditing Standards Board. She has received the John J. McCloy Award for contributions to audit excellence, Director of the Year Award from the National Association of Corporate Directors, and Outstanding Director Award fromBoard Alert. Ms. Franklin has served as Senior Fellow of The Wharton School of the University of Pennsylvania, an original Commissioner and Vice Chair of the U.S. Consumer Product Safety Commission, a Staff Assistant to the President of the United States, and an Assistant Vice President of Citibank, N.A. Ms. Franklin is a director of The Dow Chemical Company (chemicals, plastics and agricultural products), GenVec, Inc. (biotechnology company) and MedImmune, Inc. (biotechnology company). She also currently is a director of Milacron Inc. (plastics processing technologies and industrial products for metalworking) but will be resigning from the Milacron Board at the completion of her term in May 2005. She is also chairman of the Economic Club of New York, a trustee of the Financial Accounting Foundation, vice chair of the US China Business Council and a director of the National Association of Corporate Directors. Ms. Franklin is a regular commentator on PBS “Nightly Business Report.” | |
Director of Aetna or its predecessors since 2000 | Jeffrey E. Garten,age 58, is the Dean of the Yale School of Management, a position he assumed in 1995. Mr. Garten held senior posts on the White House Staff and at the U.S. Department of State from 1973 to 1979. He joined Shearson Lehman Brothers (investment banking) in 1979 and served as Managing Director from 1984 to 1987. In 1987, Mr. Garten founded Eliot Group, Inc. (investment banking) and served as President until 1990, when he became Managing Director of The Blackstone Group (private merchant bank). From 1992 to 1993, Mr. Garten was Professor of Finance and Economics at Columbia University’s Graduate School of Business. He was appointed U.S. Under Secretary of Commerce for International Trade in 1993 and served in that position until 1995. Mr. Garten is a director of Calpine Corporation (power company) and CarMax, Inc. (automotive retailer) and also a director of 40 Credit Suisse mutual funds. He is the author ofA Cold Peace: America, Japan, Germany and the Struggle for Supremacy; The Big Ten: Big Emerging Markets and How They Will Change Our Lives; The Mind of the CEO;andThe Politics of Fortune: A New Agenda for Business Leaders. Mr. Garten also writes a monthly column forBusiness Weekmagazine. He also serves on the Board of Directors of Aetna Foundation, Inc. |
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Director of Aetna or its predecessors since 1994 | Earl G. Graves,age 70, is Chairman and Chief Executive Officer of Earl G. Graves, Ltd. (a multifaceted communications company) and is the Publisher ofBlack Enterprisemagazine, which he founded in 1970. Additionally, since 1998, Mr. Graves has been a Managing Director of Black Enterprise/ Greenwich Street Corporate Growth Partners, L.P. Mr. Graves is a director of AMR Corporation and its subsidiary, American Airlines, Inc., Federated Department Stores Inc. (retailer) and Rohm and Haas Company (specialty chemicals and plastics) and is a member of the Supervisory Board of DaimlerChrysler AG (transportation products, financial and other services). Mr. Graves also is a trustee of Howard University and is a member of the Executive Board and Executive Committee of the National Office of the Boy Scouts of America. He also serves on the Board of Directors of Aetna Foundation, Inc. | |
Director of Aetna or its predecessors since 1993 | Gerald Greenwald,age 69, is a founding principal of the Greenbriar Equity Group (invests in the global transportation industry). Mr. Greenwald retired in July 1999 as Chairman and Chief Executive Officer of UAL Corporation and United Airlines (UAL), its principal subsidiary, having served in those positions since July 1994. Mr. Greenwald held various executive positions with Chrysler Corporation (automotive manufacturer) from 1979 to 1990, serving as Vice Chairman of the Board from 1989 to May 1990 and as Chairman of Chrysler Motors from 1985 to 1988. In 1990, Mr. Greenwald was selected to serve as Chief Executive Officer of United Employee Acquisition Corporation in connection with the proposed 1990 employee acquisition of UAL. From 1991 to 1992, he was a Managing Director of Dillon Read & Co., Inc. (investment banking) and, from 1992 to 1993, he was President and Deputy Chief Executive Officer of Olympia & York Developments Ltd. (Canadian real estate company). Mr. Greenwald then served as Chairman and Managing Director of Tatra Truck Company (truck manufacturer in the Czech Republic) from 1993 to 1994. Mr. Greenwald is a director of Calpine Corporation (power company) and Sentigen Holding Corp. (provides goods and services in the domestic biotechnology and pharmaceutical industries). He also is a trustee of the Aspen Institute. |
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Director of Aetna or its predecessors since 1995 | Ellen M. Hancock,age 62, is the former Chairman of the Board and Chief Executive Officer of Exodus Communications, Inc. (Internet system and network management services). Mrs. Hancock joined Exodus in March 1998 and served as Chairman from June 2000 to September 2001, Chief Executive Officer from September 1998 to September 2001, and President from March 1998 to June 2000. Mrs. Hancock held various staff, managerial and executive positions at International Business Machines Corporation (information-handling systems, equipment and services) from 1966 to 1995. She became a Vice President of IBM in 1985 and served as President, Communication Products Division, from 1986 to 1988, when she was named General Manager, Networking Systems. Mrs. Hancock was elected an IBM Senior Vice President in November 1992, and in 1993 was appointed Senior Vice President and Group Executive, which position she held until February 1995. Mrs. Hancock served as an Executive Vice President and Chief Operating Officer of National Semiconductor Corporation (semiconductors) from September 1995 to May 1996, and served as Executive Vice President for Research and Development and Chief Technology Officer of Apple Computer, Inc. (personal computers) from July 1996 to July 1997. Mrs. Hancock is a director of Colgate-Palmolive Company (consumer products), Electronic Data Systems Corporation (information technology services) and Watchguard Technologies, Inc. (Internet security solutions). | |
Director of Aetna or its predecessors since 1992 | Michael H. Jordan,age 68, became Chairman and Chief Executive Officer of Electronic Data Systems Corporation (information technology services) on March 20, 2003. He also serves as Chairman of the Board of eOriginal, Inc. (electronic document services). From 2002 to 2003, Mr. Jordan served as a General Partner of Global Asset Capital, LLC (private equity investment firm) and from September 1999 to May 2001, he served as Chairman of Luminant Worldwide Corporation (Internet and electronic commerce services). Mr. Jordan retired on December 31, 1998 as Chairman and Chief Executive Officer of CBS Corporation (media company), having assumed that position with CBS (then Westinghouse Electric Corporation) in 1993. He was a partner with Clayton, Dubilier & Rice, Inc. (private investing firm) from 1992 to 1993. Mr. Jordan retired in July 1992 as Chairman and Chief Executive Officer of the PepsiCo International Foods and Beverages Division of PepsiCo, Inc. (snack foods and beverages), having held various positions with PepsiCo since 1974. |
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Director since 2003 | Edward J. Ludwig,age 53, is Chairman of the Board, President and Chief Executive Officer of Becton, Dickinson and Company (global medical technology company). He was elected Chairman of the Board effective February 2002, Chief Executive Officer in January 2000 and President in May 1999. Since joining Becton Dickinson as a Senior Financial Analyst in 1979, Mr. Ludwig has served in positions of increasing responsibility in the areas of financial management, strategic planning and operations. His previous positions have included Vice President, Planning and Development from 1987 to 1989; President, Becton Dickinson Diagnostic Instrument Systems Division from 1988 to 1994; Vice President, Finance and Controller from 1994 to 1995; Senior Vice President and Chief Financial Officer from 1995 to June 1998; and Executive Vice President from July 1998 to May 1999 when he was elected President. Mr. Ludwig serves as a Johns Hopkins University trustee and chairs the Advisory Board for the Johns Hopkins Bloomberg School of Public Health. Additionally, he is a member of the Board of Directors of the U.S. Fund for UNICEF and the Advanced Medical Technology Association (AdvaMed), and chairs the AdvaMed Board’s Committee on Technology and Regulation. Mr. Ludwig also is Chairman of the HealthCare Institute of New Jersey, and is a trustee of the Hackensack University Medical Center. | |
Director since 2001 | Joseph P. Newhouse,age 63, is the John D. MacArthur Professor of Health Policy and Management at Harvard University, a position he assumed in 1988. At Harvard, he also is the Director of the Division of Health Policy Research and Education, the Director of the Interfaculty Initiative on Health Policy, Chair of the Committee on Higher Degrees in Health Policy and a member of the faculties of the John F. Kennedy School of Government, the Harvard Medical School, the Harvard School of Public Health and the Faculty of Arts and Sciences. Prior to joining Harvard, Dr. Newhouse held various positions at The RAND Corporation from 1968 to 1988, serving as a faculty member of the RAND Graduate School from 1972 to 1988, as Deputy Program Manager for Health Sciences Research from 1971 to 1988, Senior Staff Economist from 1972 to 1981, Head of the Economics Department from 1981 to 1985 and as a Senior Corporate Fellow from 1985 to 1988. Dr. Newhouse is the Editor of theJournal of Health Economics, which he founded in 1981. He is a Faculty Research Associate of the National Bureau of Economic Research, a member of the Institute of Medicine of the National Academy of Sciences, a member of theNew England Journal of MedicineEditorial Board, a fellow of the American Academy of Arts and Sciences, a director of the National Committee for Quality Assurance, and served as the Vice Chair of the Medicare Payment Advisory Commission. Dr. Newhouse is the author ofFree for All: Lessons from the RAND Health Insurance Experiment. He also serves on the Board of Directors of Aetna Foundation, Inc. |
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Director of Aetna or its predecessors since 2000 | John W. Rowe, M.D.,age 60, is Chairman and Chief Executive Officer of Aetna. He was appointed Chairman of Aetna on April 1, 2001 and was appointed President and Chief Executive Officer of Aetna on September 15, 2000. He served as President of Aetna until May 27, 2002. Before joining Aetna, Dr. Rowe served as President and Chief Executive Officer of Mount Sinai NYU Health (1998-2000), one of the nation’s largest academic health care organizations. Prior to the Mount Sinai NYU Health merger, Dr. Rowe was President of The Mount Sinai Hospital and the Mount Sinai School of Medicine (1988-1998). Before joining Mount Sinai, Dr. Rowe was a Professor of Medicine and the founding Director of the Division on Aging at Harvard Medical School, and Chief of Gerontology at Boston’s Beth Israel Hospital. He has authored over 200 scientific publications, mostly on the physiology of the aging process. Dr. Rowe was Director of the MacArthur Foundation Research Network on Successful Aging and is co-author, with Robert Kahn, Ph.D., ofSuccessful Aging. He is a member of the Institute of Medicine of the National Academy of Sciences and is Chairman of the Board of Trustees at the University of Connecticut. | |
Director since 2002 | Ronald A. Williams,age 55, became President of Aetna on May 27, 2002, having served as Executive Vice President and Chief of Health Operations of the Company since March 15, 2001. Prior to joining Aetna, Mr. Williams held various executive positions from 1987 to 2001 at WellPoint Health Networks Inc. and its Blue Cross of California subsidiary. From October 1995 to March 1999, he served as Executive Vice President of the Blue Cross of California Businesses of WellPoint and as President of its Blue Cross of California subsidiary and from April 1999 to March 2001, he served as Executive Vice President, Large Group Businesses, of WellPoint and as Group President of WellPoint’s Large Group Division. Mr. Williams is a director of Lucent Technologies Inc. (networks for communications service providers) and is a trustee of The Conference Board. He also serves on the Dean’s Advisory Council and the Corporate Visiting Committee at the Massachusetts Institute of Technology. |
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Cash | Stock | |||||||||||||||||||
Compensation(1) | Stock Units | Options | ||||||||||||||||||
Annual | Number of | Number | ||||||||||||||||||
Retainer | Meeting | Units | of Options | |||||||||||||||||
Name | Fees(2) | Fees(3) | Total | Granted(4) | Granted(5) | |||||||||||||||
Betsy Z. Cohen | $ | 37,000 | $ | 21,000 | $ | 58,000 | 350 | 3,500 | ||||||||||||
Barbara Hackman Franklin | 40,000 | 25,000 | 65,000 | 350 | 3,500 | |||||||||||||||
Jeffrey E. Garten | 37,000 | 20,000 | 57,000 | 350 | 3,500 | |||||||||||||||
Earl G. Graves | 41,000 | 27,000 | 68,000 | 350 | 3,500 | |||||||||||||||
Gerald Greenwald | 40,000 | 28,000 | 68,000 | 350 | 3,500 | |||||||||||||||
Ellen M. Hancock | 33,000 | 26,000 | 59,000 | 350 | 3,500 | |||||||||||||||
Michael H. Jordan | 40,000 | 23,000 | 63,000 | 350 | 3,500 | |||||||||||||||
Jack D. Kuehler | 40,000 | 24,000 | 64,000 | 350 | 3,500 | |||||||||||||||
Edward J. Ludwig | 32,334 | 27,000 | 59,334 | 350 | 3,500 | |||||||||||||||
Joseph P. Newhouse | 37,000 | 26,000 | 63,000 | 350 | 3,500 | |||||||||||||||
Judith Rodin | 40,000 | 16,000 | 56,000 | 350 | 3,500 |
(1) | The table above includes cash compensation that was deferred by Directors during 2004 under the Aetna Inc. Non-Employee Director Compensation Plan (the “Director Plan”). Under the Director Plan, nonmanagement Directors may defer payment of some or all of their annual retainer fees, meeting fees and dividend equivalents paid on stock units to an unfunded stock unit or unfunded interest account until after they have resigned or retired (as defined in the Director Plan) from the Board. During the period of deferral, amounts deferred to the stock unit account track the value of the Common Stock and earn dividend equivalents. Amounts deferred to the interest account accrue interest pursuant to a formula equal to the rate of interest paid from time to time under the fixed interest rate fund option of the 401(k) Plan (4.10% per year for the period January to June 2005). In 2004, eight Directors deferred all or a portion of their Director cash compensation to a stock unit account. Under the Director Plan, Directors within four years of retirement are allowed to make an annual election to diversify up to 100% of their voluntarily deferred stock unit account (annual cash retainer and meeting fees) out of stock units and into an interest account. During 2005, one Director made such a diversification election. Directors who make a diversification election remain subject to the Board’s Director Stock Ownership Guidelines. |
(2) | Aetna currently pays a retainer fee of $25,000 a year to nonmanagement Directors for Board membership. Aetna also pays a $4,000 retainer to such Directors for membership on Committees of the Board ($7,000 in the case of each Committee Chair except the Audit Committee Chair who receives $15,000). |
(3) | Aetna currently pays $1,000 to nonmanagement Directors for attendance at each Board or Committee meeting. |
(4) | Pursuant to the Director Plan, nonmanagement Directors, upon their initial election to the Board, receive a one-time grant of units convertible upon retirement from Board service into 1,500 shares of Common Stock (“Initial Units”). Additionally, on the date of each Annual Meeting during the term of the Director Plan, each nonmanagement Director will receive units convertible upon retirement from Board service into 350 shares of Common Stock (“Annual Units”). Generally, to become fully vested in the units, a Director must complete, in the case of the Initial Units, three years of service and, in the case of the Annual Units, one year of service following the grant of the units. If service is sooner |
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terminated by reason of death, disability, retirement or acceptance of a position in government service, a Director is entitled to receive the full grant if the Director has completed a minimum of six consecutive months of service as a Director since such grant. A Director’s right with respect to unvested units also will vest upon a change-in-control of Aetna (as defined in the Director Plan). If a Director terminates Board service prior to completion of three years or one year of service, as applicable, from the grant date of any units that have not otherwise vested under the terms of the Director Plan, the Director will be entitled to receive a pro rata portion of the award. Although Directors receive dividend equivalents, they have no voting rights with respect to the units granted. The units granted are not transferable. | |
(5) | In furtherance of the previously disclosed goal of increasing over time the proportional share of stock-based compensation that will be received by the Directors, nonmanagement Directors were granted stock options under the Director Plan during 2004. On February 13, 2004, each nonmanagement Director then in office was granted options to purchase 3,500 shares of Common Stock. The exercise price of the options was $77.50, the fair market value of Aetna Common Stock on the date of grant. The options have a ten year term and vested on December 31, 2004. |
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Name and Address of | Amount and Nature | |||||||
Beneficial Owner | of Beneficial Ownership | Percent | ||||||
Capital Research and Management Company 333 South Hope Street Los Angeles, California 90071 | 10,029,300 shares(1 | ) | 6.85% | |||||
Wellington Management Company, LLP 75 State Street Boston, Massachusetts 02109 | 9,028,745 shares(2 | ) | 6.16% | |||||
State Street Bank and Trust Company, Trustee 225 Franklin Street Boston, Massachusetts 02110 | 8,437,740 shares(3 | ) | 5.76% |
(1) | Of the reported shares, Capital Research and Management Company reports that it does not have sole or shared voting power with respect to any shares and that it has sole dispositive power with respect to 10,029,300 shares. |
(2) | Of the reported shares, Wellington Management Company, LLP reports that it does not have sole voting or dispositive power with respect to any shares, that it has shared voting power with respect to 3,266,595 shares and that it has shared dispositive power with respect to 9,028,745 shares. |
(3) | Of the reported shares, State Street Bank and Trust Company, Trustee reports that it has sole voting power with respect to 4,572,504 shares, shared voting power with respect to 3,865,236 shares and shared dispositive power with respect to 8,437,740 shares. Of the reported shares, 3,865,236 shares are held by State Street in its capacity as the trustee of the 401(k) Plan. |
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Amount and Nature of Beneficial Ownership | ||||||||||||||||||||
Common | ||||||||||||||||||||
Name of Beneficial | Common | Stock | ||||||||||||||||||
Owner and Position | Stock | Percent | Equivalents(1) | Total | ||||||||||||||||
Betsy Z. Cohen (current Director and Nominee) | 16,271 | (2) | * | 12,792 | 29,063 | |||||||||||||||
Barbara Hackman Franklin (current Director and Nominee) | 14,486 | (3) | * | 9,374 | 23,860 | |||||||||||||||
Jeffrey E. Garten (current Director and Nominee) | 7,133 | (3) | * | 5,634 | 12,767 | |||||||||||||||
Earl G. Graves (current Director and Nominee) | 12,700 | (2) | * | 13,515 | 26,215 | |||||||||||||||
Gerald Greenwald (current Director and Nominee) | 7,933 | (3)(4) | * | 12,157 | 20,090 | |||||||||||||||
Ellen M. Hancock (current Director and Nominee) | 9,558 | (5)(6) | * | 21,881 | 31,439 | |||||||||||||||
Michael H. Jordan (current Director and Nominee) | 15,200 | (2) | * | 17,463 | 32,663 | |||||||||||||||
Jack D. Kuehler (current Director) | 24,200 | (2)(6) | * | 23,293 | 47,493 | |||||||||||||||
Edward J. Ludwig (current Director and Nominee) | 5,500 | (6)(7) | * | 3,304 | 8,804 | |||||||||||||||
Joseph P. Newhouse (current Director and Nominee) | 12,700 | (2)(6) | * | 5,953 | 18,653 | |||||||||||||||
Judith Rodin (current Director) | 12,660 | (2) | * | 22,325 | 34,985 | |||||||||||||||
John W. Rowe, M.D. (Chairman and Chief Executive Officer, current Director and Nominee) | 1,841,939 | (8) | * | 51,362 | (14) | 1,893,301 | ||||||||||||||
Ronald A. Williams (named executive, current Director and Nominee) | 1,453,358 | (9) | * | 114,093 | (14) | 1,567,451 | ||||||||||||||
Alan M. Bennett (named executive) | 151,340 | (10) | * | 151,340 | ||||||||||||||||
Craig R. Callen (named executive) | 71,000 | (11) | * | 71,000 | ||||||||||||||||
Timothy A. Holt (named executive) | 291,894 | (12) | 291,894 | |||||||||||||||||
Directors and executive officers as a group (18 persons) | 4,167,831 | (13) | 2.76% | 313,146 | 4,480,977 |
* | Less than 1% |
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(1) | Except as set forth in Note 14, represents stock units issued under the Director Plan and plans of Aetna’s predecessors. Certain of the stock units are not fully vested — see description of the Director Plan on page 21. Stock units track the value of Aetna Common Stock and earn dividend equivalents that may be reinvested, but do not have voting rights. Also includes 390 restricted stock units granted to each nonmanagement Director on February 11, 2005 under the Director Plan which are payable in shares of Aetna Common Stock in three equal annual installments commencing February 11, 2006. |
(2) | Includes 12,200 shares that the Director has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options. |
(3) | Includes 6,933 shares that the Director has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options. |
(4) | Includes 1,000 shares held by his spouse, as to which Mr. Greenwald has no voting or investment power. |
(5) | Includes 7,558 shares that Mrs. Hancock has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options. |
(6) | Includes 2,000, 12,000, 2,000 and 500 shares held jointly with Mrs. Hancock’s, Mr. Kuehler’s, Mr. Ludwig’s and Dr. Newhouse’s respective spouses, as to which the Director shares voting and investment powers. |
(7) | Includes 3,500 shares that Mr. Ludwig has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options. |
(8) | Includes 483,333 shares that Dr. Rowe has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options and 1,347,461 shares that two Grantor Retained Annuity Trusts (“GRATs”) have the right to acquire currently upon the exercise of stock options. Dr. Rowe’s spouse is the sole trustee of the GRATs. Also includes 10,000 shares held by Dr. Rowe, 1,000 shares held jointly with his spouse as to which Dr. Rowe shares voting and investment powers, and 145 shares held under the 401(k) Plan as to which Dr. Rowe shares voting and investment powers. |
(9) | Includes 1,405,000 shares that Mr. Williams has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options. Also includes 15,858 shares held by Mr. Williams, 30,000 shares in a family trust of which Mr. Williams and his spouse are the sole trustees and beneficiaries, and 2,500 shares held in a Guaranteed Retained Annuity Trust of which Mr. Williams is the sole trustee. |
(10) | Includes 125,667 shares that Mr. Bennett has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options, 22,992 shares held by Mr. Bennett and 2,681 shares held under the 401(k) Plan as to which Mr. Bennett shares voting and investment powers. |
(11) | Includes 70,000 shares that Mr. Callen has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options. Also includes 1,000 shares held by Mr. Callen. |
(12) | Includes 267,453 shares that Mr. Holt has the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options, 22,848 shares held by Mr. Holt and 1,593 shares held under the 401(k) Plan as to which Mr. Holt shares voting and investment powers. |
(13) | Directors and executive officers as a group have sole voting and investment powers over 121,278 shares and share voting and investment powers with respect to 52,024 shares (including 4,524 shares held under the 401(k) Plan and beneficially owned by executive officers). Also includes 3,993,529 shares that Directors and executive officers have the right to acquire currently or within 60 days of February 25, 2005 upon the exercise of stock options. |
(14) | Fully vested deferred stock units which earn dividend equivalents that are reinvested in stock units. Stock units do not have voting rights. |
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Long-Term Compensation | ||||||||||||||||||||||||||||
Awards | Payouts(3) | |||||||||||||||||||||||||||
Annual Compensation | Securities | |||||||||||||||||||||||||||
Underlying | Long-Term | |||||||||||||||||||||||||||
Name and Principal | Other Annual | Stock | Incentive | All Other | ||||||||||||||||||||||||
Position in 2004 | Year | Salary(3) | Bonus(3) | Compensation(4) | Options(5) | Plan(6) | Compensation(5) | |||||||||||||||||||||
John W. Rowe, M.D. | 2004 | $ | 1,133,749 | $ | 2,500,000 | $ | 231,416 | 250,000 | $ | 0 | $ | 145,650 | ||||||||||||||||
Chairman and | 2003 | 1,042,146 | 2,200,000 | 210,312 | 350,000 | 7,000,000 | 185,765 | |||||||||||||||||||||
Chief Executive Officer | 2002 | 1,000,000 | 2,500,000 | 89,490 | 350,000 | 5,198,400 | 139,115 | |||||||||||||||||||||
Ronald A. Williams | 2004 | $ | 1,028,982 | $ | 2,000,000 | $ | 60,567 | 225,000 | $ | 0 | $ | 57,900 | ||||||||||||||||
President | 2003 | 914,943 | 1,800,000 | 6,353 | 270,000 | 6,300,000 | 79,195 | |||||||||||||||||||||
2002 | 848,077 | 1,500,000 | 41,541 | 200,000 | 3,465,600 | 299,442 | ||||||||||||||||||||||
Alan M. Bennett | 2004 | $ | 474,113 | $ | 550,000 | $ | 1,519 | 50,000 | $ | 0 | $ | 15,900 | ||||||||||||||||
Senior Vice President | 2003 | 439,464 | 400,000 | 3,500 | 70,000 | 1,715,000 | 32,684 | |||||||||||||||||||||
and Chief Financial Officer | 2002 | 425,000 | 450,000 | 5,000 | 60,000 | 996,360 | 121,262 | |||||||||||||||||||||
Craig R. Callen | 2004 | $ | 346,806 | $ | 620,000 | $ | 19,343 | 70,000 | $ | 0 | $ | 50,000 | ||||||||||||||||
Senior Vice President, Strategic Planning and Business Development(1) | ||||||||||||||||||||||||||||
Timothy A. Holt | 2004 | $ | 448,346 | $ | 520,000 | $ | 275 | 45,000 | $ | 0 | $ | 20,550 | ||||||||||||||||
Senior Vice President, | 2003 | 425,287 | 480,000 | 3,775 | 60,000 | 1,820,000 | 38,259 | |||||||||||||||||||||
Chief Investment Officer and Chief Enterprise Risk Officer(2) |
(1) | Mr. Callen was not an executive officer of Aetna at any time in 2002 or 2003. |
(2) | Mr. Holt was not an executive officer of Aetna at any time in 2002. |
(3) | The Salary, Bonus and Long-Term Compensation Payouts columns in the Summary Compensation Table include cash compensation that was deferred by the Named Executive Officers during the years presented. Depending on the type of compensation being deferred, deferred amounts may be credited to the 401(k) Plan and Aetna’s Supplemental 401(k) Plan, an unfunded stock unit account and/or an unfunded interest account until a date or dates selected by the Named Executive Officer. During the period of deferral, amounts deferred to the stock unit account track the value of the Common Stock and earn dividend equivalents. Amounts deferred to the interest account accrue interest pursuant to a formula equal to the rate of interest paid from time to time under the fixed interest rate fund option of the 401(k) Plan (4.10% per year for the period January to June 2005). In 2004, Dr. Rowe and Mr. Williams earned $2,054 and $4,560, respectively, in dividend equivalents on their deferred stock unit accounts, and Dr. Rowe and Messrs. Williams and Bennett accrued $4,152, $88,158 and $9,157, respectively, in interest on their interest accounts. At December 31, 2004, Mr. Bennett did not have a deferred stock unit account, and neither Mr. Callen nor Mr. Holt had a deferral account. |
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(4) | Other Annual Compensation consists of the following: |
Personal | Personal | Reimburse- | ||||||||||||||||||||||||||||||
Use of | Use of | ment for | Total Other | |||||||||||||||||||||||||||||
Corporate | Corporate | Financial | Professional | Club | Income | Annual | ||||||||||||||||||||||||||
Aircraft | Vehicles | Planning | Dues | Dues | Taxes | Compensation | ||||||||||||||||||||||||||
Dr. Rowe | 2004 | $ | 206,322 | $ | 6,935 | $ | $ | 15,276 | $ | 2,883 | $ | 0 | $ | 231,416 | ||||||||||||||||||
2003 | 198,015 | 5,870 | 3,326 | 2,831 | 270 | 210,312 | ||||||||||||||||||||||||||
2002 | 80,360 | 3,847 | 2,698 | 2,585 | 0 | 89,490 | ||||||||||||||||||||||||||
Mr. Williams | 2004 | 57,472 | 3,095 | 0 | 0 | 60,567 | ||||||||||||||||||||||||||
2003 | 2,094 | 524 | 3,500 | 235 | 6,353 | |||||||||||||||||||||||||||
2002 | 34,867 | 1,302 | 5,000 | 372 | 41,541 | |||||||||||||||||||||||||||
Mr. Bennett | 2004 | 554 | 0 | 965 | 1,519 | |||||||||||||||||||||||||||
2003 | 3,500 | 3,500 | ||||||||||||||||||||||||||||||
2002 | 5,000 | 5,000 | ||||||||||||||||||||||||||||||
Mr. Callen | 2004 | 18,660 | 683 | 19,343 | ||||||||||||||||||||||||||||
Mr. Holt | 2004 | 0 | 275 | 275 | ||||||||||||||||||||||||||||
2003 | 3,500 | 275 | 3,775 | |||||||||||||||||||||||||||||
(5) | Represents stock options granted under the Aetna Inc. 2000 Stock Incentive Plan (the “2000 Stock Plan”). |
(6) | Represents the value of previously awarded performance units that vested upon attainment of specified performance criteria. For performance year 2003, the amount of the award, after payment of taxes, in excess of 15,000 shares (20,000 shares in the case of Dr. Rowe) was paid in cash. |
(7) | All Other Compensation consists of the following: |
Matching | ||||||||||||||||||||||||||||
Contributions by | ||||||||||||||||||||||||||||
Life Insurance | Aetna under | Performance | ||||||||||||||||||||||||||
Premiums on | 401(k) Plan | Based | ||||||||||||||||||||||||||
Policies Owned | and/or | Contribution | ||||||||||||||||||||||||||
by Named | Retention | Supplemental | under | Relocation | Total All Other | |||||||||||||||||||||||
Executive | Bonus | 401(k) Plan | 401(k) Plan | Expenses | Compensation | |||||||||||||||||||||||
Dr. Rowe | 2004 | $ | 73,500 | $ | $ | 72,150 | $ | 0 | $ | $ | 145,650 | |||||||||||||||||
2003 | 73,500 | 106,265 | 6,000 | 185,765 | ||||||||||||||||||||||||
2002 | 73,500 | 59,615 | 6,000 | 139,115 | ||||||||||||||||||||||||
Mr. Williams | 2004 | 0 | 57,900 | 0 | 0 | 57,900 | ||||||||||||||||||||||
2003 | 0 | 72,448 | 6,000 | 747 | 79,195 | |||||||||||||||||||||||
2002 | 250,000 | 43,442 | 6,000 | 299,442 | ||||||||||||||||||||||||
Mr. Bennett | 2004 | 0 | 15,900 | 0 | 15,900 | |||||||||||||||||||||||
2003 | 0 | 26,684 | 6,000 | 32,684 | ||||||||||||||||||||||||
2002 | 100,000 | 15,262 | 6,000 | 121,262 | ||||||||||||||||||||||||
Mr. Callen | 2004 | 50,000 | 50,000 | |||||||||||||||||||||||||
Mr. Holt | 2004 | 20,550 | 0 | 20,550 | ||||||||||||||||||||||||
2003 | 32,259 | 6,000 | 38,259 | |||||||||||||||||||||||||
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Individual Grants(1) | ||||||||||||||||||||
Percent of | ||||||||||||||||||||
Number of | Total Stock | |||||||||||||||||||
Securities | Options | |||||||||||||||||||
Underlying | Granted to | Exercise | Grant Date | |||||||||||||||||
Stock Options | Employees in | Price Per | Expiration | Present | ||||||||||||||||
Name | Granted | 2004 | Share | Date | Value | |||||||||||||||
John W. Rowe, M.D. | 250,000 | (2) | 6.29 | % | $ | 77.50 | 02/13/14 | $ | 6,108,475 | (5) | ||||||||||
Ronald A. Williams | 225,000 | (2) | 5.66 | % | 77.50 | 02/13/14 | 5,497,628 | (5) | ||||||||||||
Alan M. Bennett | 50,000 | (2) | 1.26 | % | 77.50 | 02/13/14 | 1,221,695 | (5) | ||||||||||||
Craig R. Callen | 60,000 | (3) | 1.51 | % | 87.50 | 04/28/14 | 1,746,212 | (6) | ||||||||||||
10,000 | (4) | 0.25 | % | 82.75 | 04/30/14 | 274,842 | (7) | |||||||||||||
Timothy A. Holt | 45,000 | (2) | 1.13 | % | 77.50 | 02/13/14 | 1,099,526 | (5) | ||||||||||||
(1) | All options were granted under the 2000 Stock Plan. The 2000 Stock Plan permits participants to use shares of Aetna Common Stock to exercise options. The 2000 Stock Plan provides that the option price shall not be less than 100% of the fair market value of the Common Stock on the date the option is granted. Under the 2000 Stock Plan, options may be granted until November 30, 2010. |
(2) | Date of grant was February 13, 2004; initial exercise date was December 31, 2004; option vested December 31, 2004. |
(3) | Date of grant was April 28, 2004; initial exercise date was December 31, 2004; option vested December 31, 2004. |
(4) | Date of grant was April 30, 2004; initial exercise date was December 31, 2004; option vested December 31, 2004. |
(5) | The assumptions made and factors used by Aetna in the modified Black-Scholes Model calculation for the options granted February 13, 2004 were as follows: (i) a volatility factor of 34%, representing the Aetna and competitor market basket volatility value using a five-year historical daily volatility as of the date of the option grant; (ii) a risk-free rate of return of 3.01%, representing the five-year U.S. Treasury bond rate in effect on the date of the option grant; (iii) a dividend yield of 0.1%, representing Aetna’s then current annual dividend, divided by the Common Stock price on the date of the option grant; and (iv) a 4.1299-year option term, representing the historical average life of the options granted. No further discount of the option value calculated was taken to give effect to the risk of forfeiture or the fact that the options are not freely transferable. |
(6) | The assumptions made and factors used by Aetna in the modified Black-Scholes Model calculation for the options granted April 28, 2004 were as follows: (i) a volatility factor of 35%, representing the Aetna and competitor market basket volatility value using a five-year historical daily volatility as of the date of the option grant; (ii) a risk-free rate of return of 3.60%, representing the five-year U.S. Treasury bond rate in effect on the date of the option grant; (iii) a dividend yield of 0.1%, representing Aetna’s then current annual dividend, divided by the Common Stock price on the date of the option grant; and (iv) a 4.1299-year option term, representing the historical average life of the options granted. No further discount of the option value calculated was taken to give effect to the risk of forfeiture or the fact that the options are not freely transferable. |
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(7) | The assumptions made and factors used by Aetna in the modified Black-Scholes Model calculation for the options granted April 30, 2004 were as follows: (i) a volatility factor of 35%, representing the Aetna and competitor market basket volatility value using a five-year historical daily volatility as of the date of the option grant; (ii) a risk-free rate of return of 3.63%, representing the five-year U.S. Treasury bond rate in effect on the date of the option grant; (iii) a dividend yield of 0.1%, representing Aetna’s then current annual dividend, divided by the Common Stock price on the date of the option grant; and (iv) a 4.1299-year option term, representing the historical average life of the options granted. No further discount of the option value calculated was taken to give effect to the risk of forfeiture or the fact that the options are not freely transferable. |
Value of | ||||||||||||||||||||||||
Number of Securities | Unexercised | |||||||||||||||||||||||
Underlying | In-the-Money | |||||||||||||||||||||||
Shares | Unexercised Options at | Options at | ||||||||||||||||||||||
Acquired | Value | December 31, 2004 | December 31, 2004(1) | |||||||||||||||||||||
on | Realized on | |||||||||||||||||||||||
Name | Exercise | Exercise | Exercisable | Unexercisable(2) | Exercisable | Unexercisable(2) | ||||||||||||||||||
John W. Rowe, M.D. | 274,003 | $ | 18,208,281 | 1,597,461 | 350,000 | $ | 135,006,213 | $ | 29,716,169 | |||||||||||||||
Ronald A. Williams | 0 | 0 | 1,248,333 | 246,667 | 100,399,187 | 20,847,963 | ||||||||||||||||||
Alan M. Bennett | 50,000 | 2,399,915 | 120,611 | 66,666 | 8,519,562 | 5,646,611 | ||||||||||||||||||
Craig R. Callen | 0 | 0 | 70,000 | 0 | 2,640,000 | 0 | ||||||||||||||||||
Timothy A. Holt | 33,000 | 1,931,708 | 287,009 | 58,333 | 24,145,966 | 4,945,887 | ||||||||||||||||||
(1) | Based on the December 31, 2004 closing stock price of $124.75. |
(2) | Represents stock options that are not vested. |
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Performance | Estimated Future Payouts | |||||||||||||||||||
or Other | (in Cash) Under | |||||||||||||||||||
Number of | Period Until | Non-Stock Price Based Plans | ||||||||||||||||||
Units Granted | Maturation | |||||||||||||||||||
Name | in 2004(1) | or Payout | Threshold | Target | Maximum | |||||||||||||||
John W. Rowe, M.D. | 28,500 | 2004-2005 | $ | 2,137,500 | $ | 2,850,000 | $ | 4,631,250 | ||||||||||||
Ronald A. Williams | 26,000 | 2004-2005 | 1,950,000 | 2,600,000 | 4,225,000 | |||||||||||||||
Alan M. Bennett | 6,000 | 2004-2005 | 450,000 | 600,000 | 975,000 | |||||||||||||||
Craig R. Callen | 7,000 | 2004-2005 | 525,000 | 700,000 | 1,137,500 | |||||||||||||||
Timothy A. Holt | 6,000 | 2004-2005 | 450,000 | 600,000 | 975,000 | |||||||||||||||
(1) | The performance units will vest and become payable if the Company meets specified performance objectives set for the two year performance period 2004-2005. The performance goals for 2004-2005 are based on Company performance against two internal measures (earnings per share growth and return on capital) modified by an external measure (total shareholder return versus the Company’s health care competitors). The units are payable in cash. |
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• | evaluate and determine the compensation of executive officers and other key executives as identified by the Committee; |
• | oversee the Company’s compensation and benefits plans, policies and programs; |
• | administer the Company’s equity-based incentive compensation plans and executive bonus plans; and |
• | consider from time to time and, when appropriate, make recommendations to the Board as to the development and succession plans for the Company’s senior management. |
• | base salary; |
• | performance-based annual bonus; and |
• | performance-based long-term incentive awards (stock options and performance units). |
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DECEMBER 31, 2004 OF AETNA COMMON STOCK, | |
S&P 500 AND MORGAN STANLEY HEALTHCARE PAYORS INDEX |
* | At February 11, 2005, the companies included in the Morgan Stanley Healthcare Payors Index were: Aetna, Amerigroup Corporation, CIGNA Corporation, Coventry Health Care, Inc., Health Net, Inc., Humana Inc., Molina Healthcare, Inc., PacifiCare Health Systems, Inc., Sierra Health Services, Inc., UnitedHealth Group Incorporated, Wellchoice, Inc. and WellPoint, Inc. Cumulative total return calculations were provided by SNL Financial LC. |
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2004 | 2003 | ||||||||
Audit Fees(1) | $ | 7,545,000 | $ | 5,009,100 | |||||
Audit-Related Fees(2) | |||||||||
Servicing Reports | 380,000 | 552,000 | |||||||
Employee Benefit Plan Audits | 113,000 | 103,000 | |||||||
Audit/ Attest Services Not Required by Statute or Regulation | 7,000 | 7,000 | |||||||
500,000 | 662,000 | ||||||||
Tax Fees(3) | 50,000 | 368,500 | |||||||
All Other Fees | 0 | 0 | |||||||
Total Fees | $ | 8,095,000 | $ | 6,039,600 | |||||
(1) | Audit Fees include all services performed to comply with generally accepted auditing standards, and services that generally only the Independent Accountants can provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC. For the Company, these fees include the audit of the Company, the audit of management’s assessment of effective control over internal reporting, quarterly reviews, statutory audits, and actuarial and attest services required by applicable law. |
(2) | Audit-Related Fees are for audit and related attestation services that traditionally are performed by the Independent Accountants, and, for the Company, include servicing reports, employee benefit plan audits, and audit and attest services that are not required by applicable law. Servicing reports represent reviews of the Company’s claim administration functions that are provided to customers. |
(3) | Tax Fees include all services performed by professional staff in the Independent Accountants’ tax division, except for those services related to the audit. The substantial majority of Tax Fees for 2003 represents data computation services, not expected to recur, related to prior year tax return matters that were settled in 2003. |
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Dollar | ||||||||
Name and Position | Value ($)(1) | Number of Units | ||||||
John W. Rowe, M.D., Chairman and Chief Executive Officer | 4,200,000 | 42,000 | ||||||
Ronald A. Williams, President | 3,400,000 | 34,000 | ||||||
Alan M. Bennett, Senior Vice President and Chief Financial Officer | 860,000 | 8,600 | ||||||
Craig R. Callen, Senior Vice President, Strategic Planning and Business Development | 900,000 | 9,000 | ||||||
Timothy A. Holt, Senior Vice President, Chief Investment Officer and Chief Enterprise Risk Officer | 745,000 | 7,450 | ||||||
Executive Group (7 people) | 11,146,000 | 111,460 | ||||||
Non-Executive Director Group (11 people)(2) | 0 | 0 | ||||||
Non-Executive Officer Group (204 people) | 14,298,800 | 142,988 |
(1) | Dollar value at target; each unit represents $100 at target performance. The units will vest and become payable if the Company meets specified performance objectives set for the two year performance period 2005-2006. The performance targets were determined at the Compensation Committee’s February 25, 2005 meeting and are based on the Company’s growth in earnings per share, return on capital and total shareholder return relative to competitors. |
(2) | Non-Executive Directors are not eligible for awards under the 2000 Stock Plan. |
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Relationship with Independent Accountants |
a. The Committee will annually review the qualifications, performance and independence of the independent accountants. The Committee’s evaluation shall also include the review and evaluation of the lead partner of the independent accountants. In conducting this review, the Committee shall obtain and review a report from the independent accountants describing (a) the independent accountants’ internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues, (c) any significant litigation against the firm, and (d) all relationships between the independent accountants and the Company. The Committee will actively engage in a dialogue with the independent accountants with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent accountants. The Committee shall discuss with the independent accountants the rotation of the lead audit partner or other members of the independent accountants’ audit team. The Committee periodically shall consider whether it is appropriate to rotate the independent accountants. The Committee will also confer with management and the internal auditors in reviewing the qualifications, performance and independence of the independent accountants. The Committee shall present its conclusions to the Board. | |
b. The Committee shall pre-approve all audit engagement fees and terms and all non-audit engagements with the independent accountants. The Chairman of the Committee may pre-approve any proposed engagements that arise between Committee meetings, provided that any such decision is presented to the full Committee at its next scheduled meeting. |
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c. Meet in private session with the independent accountants at each regularly scheduled in-person meeting of the Committee. | |
d. Review with the independent accountants the planning, staffing and scope of their examination with emphasis on accounting and financial areas where the Committee, management or the accountants believe special attention should be directed. | |
e. Review with the independent accountants: |
1. results of their audit, including their opinion on the financial statements, | |
2. their consideration of the internal control structure and their evaluation regarding the adequacy of those controls over the financial reporting process, including computer controls and security, as well as special audit steps, if any, adopted in light of material control issues, | |
3. alternative GAAP methods discussed with management, ramifications of alternative disclosures and treatment preferred by the independent accountants, | |
4. critical accounting policies and practices, | |
5. any audit problems or difficulties and management’s response, including |
• | accounting adjustments noted or proposed by the independent accountants but not recorded, | |
• | issues discussed with the independent accountants’ national office, | |
• | any management or internal control letter issued or proposed by the independent accountants to the Company, | |
• | significant disagreements, if any, with management, | |
• | cooperation received from management in the conduct of the audit, | |
• | time constraints on the independent accountants, and | |
• | any restrictions on the scope of activities or on access to requested information, |
6. any other material written communication between the independent accountants and management, and | |
7. other matters related to the conduct of the annual audit or the review of quarterly financial results required to be communicated to the Committee under applicable law, auditing standards or other professional accounting standards. |
Relationship with Internal Audit Department |
a. Review and consult with management in management’s appointment, compensation, replacement, reassignment and dismissal of the Director of Internal Audit. | |
b. Meet in private session with the Director of Internal Audit at each regularly scheduled in-person meeting of the Committee. | |
c. Review the Internal Audit Department’s objectives, resources and effectiveness, its organizational position, objectivity and status within the Company, and its annual audit plan, including its coordination with the examination performed by the independent accountants. Also review such matters with the independent accountants. | |
d. Review the results of the Internal Audit activities for the year. Review their consideration of the internal control structure and their evaluation regarding the adequacy of those controls over the financial reporting process, including computer controls and security. | |
e. Review periodically the Internal Audit Department’s written Charter and inquire whether the Department is in compliance with relevant professional standards. |
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Relationship with Management |
a. Meet in private session with management at each regularly scheduled in-person meeting of the Committee; also meet in private session regularly with the General Counsel regarding legal compliance matters (including violations of law and breaches of fiduciary duties). | |
b. Review their consideration of the internal control structure and their evaluation regarding the adequacy of those controls over the financial reporting process, including computer controls and security. Review and discuss management’s annual report required by applicable law with respect to the Company’s internal controls, and the process by which the report is produced. | |
c. Before publication, meet to review and discuss with management and the independent accountants the annual financial statements and quarterly financial statements, related footnotes and related disclosures, including reviewing the specific disclosures under management’s discussion and analysis of financial condition and results of operations and to review management’s annual assessment of the Company’s internal controls over financial reporting and the independent accountant’s annual attestation thereof. Review and discuss the Chief Executive Officer’s and Chief Financial Officer’s quarterly certification required by applicable law with respect to the Company’s financial statements and reports and other matters filed with the SEC, as well as management’s annual certification required by NYSE rule with respect to compliance with listing standards, and the process by which these certifications are produced. Discuss earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. | |
d. Discuss all critical accounting policies and practices, and any significant changes in selection or application of accounting principles proposed by management. | |
e. Discuss significant accounting accruals, reserves or other estimates made by management, including reviewing the actuarial reports concerning the annual actuarial opinions. Discuss management’s medical cost forecasting, processes, management of medical costs and related product pricing issues. | |
f. Discuss any other analyses prepared by management and/or the independent accountants setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements. | |
g. Discuss with management and the independent accountants any correspondence with regulators or governmental agencies that raise material issues regarding the Company’s financial statements or accounting policies. | |
h. Discuss the significant accounting, reporting, regulatory and other developments affecting the Company’s annual and quarterly financial statements, related footnotes and related disclosures. | |
i. Review the effect of any off-balance sheet structures on the Company’s annual and quarterly financial statements, related footnotes and related disclosures. | |
j. Inquire whether a second opinion regarding a significant accounting matter had been sought and, if so, discuss the accounting method selected. | |
k. Review management letter comments received and management’s response to/implementation of those comments. | |
l. Periodically review with the General Counsel significant litigation and regulatory matters involving the Company and review with the General Counsel and independent accountants related disclosures made in the annual financial statements and related footnotes. |
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Other |
a. Discuss periodically management’s policies with respect to risk assessment and risk management, and discuss periodically with the independent accountants, management and Internal Audit Department significant financial risk exposures and the steps management has taken to monitor, control and report such exposures. Discuss periodically management’s procedures regarding disaster recovery and business continuity. Discuss periodically the company’s insurance programs. | |
b. Consider whether there are any emerging issues which the Committee should become involved with in the future. | |
c. Review transactions or courses of dealing with parties related to the Company which are significant in size or involve terms or other aspects that differ from those that would likely be negotiated with independent parties and that are relevant to an understanding of the Company’s financial statements. | |
d. Discuss periodically with management the program that management establishes to monitor compliance with the Company’s code of conduct and laws and regulations, and control systems related to compliance with internal policies. Review provider and other fraud activity. | |
e. Discuss periodically with management risks associated with significant outsourced projects. | |
f. Meet in executive session at each regularly scheduled in-person meeting of the Committee. | |
g. Establish Company policies for the hiring of employees or former employees of the independent accountants. | |
h. Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. | |
i. Evaluate the Committee’s performance annually. | |
j. Perform any other responsibilities delegated to the Committee by the Board from time to time. |
January 28, 2005 |
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(i) The Aetna Director is, or has been within the last three years, an employee of Aetna, or an immediate family member is, or has been within the last three years, an executive officer of Aetna. | |
(ii) The Aetna Director has received, or has an immediate family member who has received (other than in a non-executive officer employee capacity), during any twelve-month period within the last three years, more than $100,000 in direct compensation from Aetna, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). | |
(iii) The Aetna Director is a current partner or employee, or an immediate family member is a current partner, of Aetna’s internal or external auditor. | |
(iv) The Aetna Director has an immediate family member who is a current employee of Aetna’s internal or external auditor and who participates in such firm’s audit, assurance or tax compliance (but not tax planning) practice. | |
(v) The Aetna Director or an immediate family member was within the last three years (but is no longer) a partner or employee of Aetna’s internal or external auditor and personally worked on Aetna’s audit within that time. | |
(vi) The Aetna Director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of Aetna’s present executives at the same time serves or served on that company’s compensation committee. | |
(vii) The Aetna Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to or received payments from, Aetna for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or two percent of the other company’s consolidated gross revenue. |
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Amended 9/28/01 | ||
Amended 12/16/02 | ||
Amended 3/11/05 |
AMENDED TO REFLECT 2-for-1 STOCK SPLIT EFFECTIVE 3/11/05
AETNA INC.
2000 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE.
The purposes of this Plan are to promote the interests of the Company and its shareholders, and further align the interests of shareholders and Participants by:
(i) motivating Participants through Awards tied to total return to shareholders (i.e., stock price appreciation and dividends);
(ii) attracting and retaining outstanding individuals as Participants;
(iii) enabling Participants to acquire additional equity interests in the Company;
(iv) providing compensation opportunities dependent upon the Company’s performance relative to its competitors and changes in its own performance over time; and
(v) providing for the grant of Adjusted Options in connection with the transactions under the Merger Agreement pursuant to which the Company ceased to be a wholly-owned subsidiary of Aetna, Inc., a Connecticut corporation (the “Former Parent”).
SECTION 2. DEFINITIONS.
“ADJUSTED OPTION” shall mean an Option which is granted under Section 10 in substitution for an outstanding option previously granted by the Former Parent.
“AFFILIATE” shall mean any corporation or other entity (other than the Company or one of its Subsidiaries) in which the Company directly or indirectly owns at least twenty percent (20%) of the combined voting power of all classes of stock of such entity or at least twenty percent (20%) of the ownership interests in such entity.
“AWARD” shall mean a Adjusted Option and any other grant or award under the Plan, as evidenced in a written document delivered to a Participant as provided in Section 13(b).
“BOARD” shall mean the Board of Directors of the Company.
“CAUSE” shall mean (i) the willful failure by the Participant to perform substantially the Participants duties as an employee of the Company (other than due to physical or mental illness) after reasonable notice to the Participant, (ii) the Participants engaging in serious misconduct that is injurious to the Company, any Subsidiary or any Affiliate, (iii) the Participants having been convicted of, or entered a plea of nolo contendere to, a crime that constitutes a felony, (iv) the breach by the Participant of any written covenant or agreement not to compete with the Company, any Subsidiary or any Affiliate or (v) the breach by the Participant of his or her duty of loyalty to
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the Company which shall include, without limitation, (A) the disclosure by the Participant of any confidential information pertaining to the Company, any Subsidiary or any Affiliate, (B) the harmful interference by the Participant in the business or operations of the Company, any Subsidiary or any Affiliate, (C) any attempt by the Participant directly or indirectly to induce any employee, insurance agent, insurance broker or broker-dealer of the Company, any Subsidiary or
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any Affiliate to be employed or perform services elsewhere, (D) any attempt by the Participant directly or indirectly to solicit the trade of any customer or supplier, or prospective customer or supplier, of the Company or (E) any breach or violation of the Companys Code of Conduct.
“CODE” shall mean the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
“COMMITTEE” shall mean a committee of the Board as may be designated by the Board to administer the Plan, which, to the extent necessary to comply with Section 16 of the Exchange Act and Section 162 (m) of the Code, shall consist of at least two directors of the Company chosen by the Board each of whom is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and an “outside director” within the meaning of Section 162(m).
“COMMON STOCK” shall mean the common stock, $.01 par value, of the Company.
“COMPANY” shall mean Aetna Inc., a Pennsylvania corporation.
“ELIGIBLE EMPLOYEE” shall mean each employee of the Company, its Subsidiaries or its Affiliates, but shall not include directors who are not employees of such entities; provided that, in the case of the Adjusted Options, the term Eligible Employee shall mean each person who is eligible to receive an Adjusted Option. Any individual the Company designates as, or otherwise determines to be, an independent contractor shall not be considered an Eligible Employee, and such designation or determination shall govern regardless of whether such individual is ultimately determined to be an employee pursuant to the Code or any other applicable law.
“EMPLOYMENT” shall mean, for purposes of determining whether a termination of employment has occurred under the Plan, continuous and regular salaried employment with the Company, a Subsidiary or an Affiliate, which shall include (unless the Committee shall otherwise determine) any period of vacation, any approved leave of absence or any salary continuation or severance pay period and, at the discretion of the Committee, may include service with any former Subsidiary or Affiliate of the Company. For this purpose, regular salaried employment means scheduled employment of at least 20 hours per week.
“EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as amended from time to time.
“EXECUTIVE OFFICER” shall mean those persons who are officers of the Company within the meaning of Rule 16a-l(f) of the Exchange Act.
“FAIR MARKET VALUE” shall mean on any date, with respect to a share of Common Stock, the closing price of a share of Common Stock as reported by the Consolidated Tape of New York Stock Exchange Listed Shares on such date, or, if no shares were traded on such Exchange on such date, on the next date on which the Common Stock is traded.
“FUNDAMENTAL CORPORATE EVENT” shall mean any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, offering to purchase Common Stock at a price substantially below fair market value, or other similar event.
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“INCENTIVE STOCK” shall mean an Award of Common Stock granted under Section 7 which may become vested and nonforfeitable upon the passage of time and/or the attainment, in whole or in part, of performance objectives determined by the Committee.
“INCENTIVE STOCK OPTION” shall mean an option which is intended to meet the requirements of Section 422 of the Code.
“INCENTIVE UNIT” shall mean an Award of a contractual right granted under Section 7 to receive Common Stock (or, at the discretion of the Committee, cash based on the Fair Market Value of the Common Stock) which may become vested and nonforfeitable upon either the passage of time and/or the attainment, in whole or in part, of performance objectives determined by the Committee.
“MERGER AGREEMENT” shall mean the Agreement and Plan of Restructuring and Merger among ING America Insurance Holdings, Inc., ANB Acquisition Corp., the Former Parent and for limited purposes only, ING Groep N.V., dated as of July 19, 2000.
“MERGER DATE” shall mean the date of the closing of the transactions contemplated by the Merger Agreement.
“NONSTATUTORY STOCK OPTION” shall mean an Option which is not intended to be an Incentive Stock Option.
“OPTION” shall mean the right granted under Section 5 to purchase the number of shares of Common Stock specified by the Committee, at a price and for the term fixed by the Committee in accordance with the Plan and subject to any other limitations and restrictions as this Plan and the Committee shall impose, and shall include both Incentive Stock Options and Nonstatutory Stock Options.
“OTHER STOCK-BASED AWARD” shall mean any right granted under Section 8.
“PARTICIPANT” shall mean an Eligible Employee who is selected by the Committee to receive an Award under the Plan and any recipient of an (i) Adjusted Option granted under Section 10 or (ii) Substitute Award as contemplated under Section 4(c).
“PLAN” shall mean the Aetna Inc. 2000 Stock Incentive Plan, described herein, and as may be amended from time to time.
“PRIOR PLAN” shall mean, collectively, the Aetna Inc. 1996 Stock Incentive Plan and the Aetna Inc. 1998 Stock Incentive Plan.
“RESTRICTED PERIOD” shall mean the period during which a grant of Incentive Stock or Incentive Units is subject to forfeiture.
“STOCK APPRECIATION RIGHT” shall mean a right granted under Section 6.
“SUBSIDIARY” shall mean any entity of which the Company possesses directly or indirectly fifty percent (50%) or more of the total combined voting power of all classes of stock of such entity.
“SUBSTITUTE AWARDS” shall mean Awards granted in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by the Company or with which the Company combines.
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SECTION 3. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall have the responsibility of construing and interpreting the Plan and of establishing and amending such rules and regulations as it deems necessary or desirable for the proper administration of the Plan. Any decision or action taken or to be taken by the Committee, arising out of or in connection with the construction, administration, interpretation and effect of the Plan and of its rules and regulations, shall, to the maximum extent permitted by applicable law, be within its absolute discretion (except as otherwise specifically provided herein) and shall be conclusive and binding upon all Participants and any person claiming under or through any Participant.
Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards, if any, to be granted to an Eligible Employee: (iii) determine the number of shares of Common Stock to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards: (iv) determine the terms and conditions of any Award: (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Common Stock, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances, cash, Common Stock, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee: (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan: and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan (including authorizing another committee of the Board to designate Participants or make Awards under the Plan within limits prescribed by the Committee).
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) Shares Available for Issuance. The maximum number of shares of Common Stock in respect of which Awards may be made under the Plan shall be a total of 7,000,000 shares of Common Stock plus (i) the number of shares of Common Stock to be delivered upon exercise of the Adjusted Options and (ii) the number of shares required to satisfy any outstanding incentive unit awards under the Prior Plan. Notwithstanding the foregoing, but subject to the provisions of Section 4(b), in no event shall the number of shares of Common Stock issued under the Plan with respect to (x) Incentive Stock Options exceed 5,000,000, (y) Incentive Stock or Incentive Units exceed 2,235,000 or (z) Other Stock-Based Awards exceed 1,000,000. Shares of Common Stock may be made available from the authorized but unissued shares of the Company or from shares held in the Companys treasury and not reserved for some other purpose. In the event that any Award is paid solely in cash, no shares shall be deducted from the number of shares available for issuance by reason of such Award. Shares of Common Stock subject to Awards that are forfeited, terminated, canceled or settled without the delivery of Common Stock under the Plan will again be available for Awards under the Plan, as will (A) shares of Common Stock tendered (either actually or by attestation) to the Company in satisfaction or partial satisfaction of the exercise price of any Award under either the Plan and (B) shares of Common Stock repurchased on the open market with remittances from the exercise of options granted under the Plan (including authorizing another Committee of the Board to designate Participants or make Awards under the Plan within limits prescribed by the Committee).(As of 3/11/05 the remaining shares available for issuance were adjusted to reflect the Company’s 2-for-one stock split.)
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(b) Adjustment for Corporate Transactions. In the event that the Committee shall determine that any Fundamental Corporate Event affects the Common Stock such that an adjustment is required to preserve, or to prevent enlargement of, the benefits or potential benefits made available under this Plan, then the Committee may, in such manner as the Committee may deem equitable, adjust any or all of (i) the number and kind of shares which thereafter may be awarded or optioned and sold or made the subject of Awards under the Plan, (ii) the number and kinds of shares subject to outstanding Awards and (iii) the grant, exercise or conversion price with respect to any of the foregoing. Additionally, the Committee may make provisions for a cash payment to a Participant or a person who has an outstanding Award. However, the number of shares subject to any Award shall always be a whole number.
(c) Substitute Awards. Any shares of Common Stock underlying Substitute Awards shall not, except in the case of shares with respect to which Substitute Awards are granted to Participants who are officers or directors of the Company for purposes of Section 16 of the Exchange Act or any successor section thereto, be counted against the Shares available for Awards under the Plan.
SECTION 5. STOCK OPTIONS.
(a) Grant. Subject to the provisions of the Plan, the Committee shall have the authority to grant Options to an Eligible Employee and to determine (i) the number of shares to be covered by each Option, (ii) subject to Section 5(b), the exercise price of the Option and (iii) the conditions and limitations applicable to the exercise of the Option. Notwithstanding the foregoing, in no event shall the Committee grant any Participant Options (i) for more than 1,600,000 shares of Common Stock in respect of any year in which the Plan is in effect, as such number may be adjusted pursuant to Section 4(b). In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with Section 422 of the Code and the regulations thereunder.
(b) Exercise Price. Except in the case of Adjusted Options, Substitute Awards or Options granted in lieu of payment for compensation earned by an Eligible Employee of the Company, the exercise price of an Option shall not be less than 100% of the Fair Market Value on the date of grant.
(c) Exercise. Each Option shall be exercised at such times and subject to such-terms and conditions as the Committee may specify at the time of the applicable Award or thereafter. No shares shall be delivered pursuant to any exercise of an Option unless arrangements satisfactory to the Committee have been made to assure full payment of the exercise price therefor. Without limiting the generality of the foregoing, payment of the exercise price may be made in cash or its equivalent or, if and to the extent permitted by the Committee, by exchanging shares of Common Stock owned by the optionee (which are not the subject of any pledge or other security interest or which, in the case of Incentive Stock, are fully vested) either actually or by attestation, or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Common Stock so tendered to the Company, valued as of the date of such tender, is at least equal to such exercise price.
(d) Incentive Stock Option Annual Limit.The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year (counting Incentive Stock Options under this Plan and under any other stock option plan of the Company or a subsidiary) shall not exceed $100,000. If an Option intended to be an Incentive Stock Option is granted to an Eligible Employee and the Option may not be treated in whole or in part as an Incentive Stock Option pursuant to the $100,000 limitation, the Option shall be treated as an Incentive Stock Option to the extent it may be so treated under the limitation and as a Nonstatutory Stock Option as to the remainder. For purposes of determining whether an Incentive
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Stock Option would cause the limitation to be exceeded, Incentive Stock Options shall be taken into account in the order granted. The annual limit set forth above shall not apply to Nonstatutory Stock Options.
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SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant of Stock Appreciation Rights. The Committee shall have the authority to grant Stock Appreciation Rights in tandem with an Option, in addition to an Option, or freestanding and unrelated to an Option. Notwithstanding the foregoing, in no event shall the Committee grant any Participant Stock Appreciation Rights (i) for more than 1,000,000 shares of Common Stock in respect of any year in which the Plan is in effect, as such number may be adjusted pursuant to Section 4(b) and (ii) with a term exceeding 10 years (or the term of the underlying Incentive Stock Option in the case of a Stock Appreciation Right granted in tandem with an Incentive Stock Option). Stock Appreciation Rights granted in tandem with an option may be granted either at the same time as the Option or at a later time.
(b) Exercise Price. The exercise price of an SAR shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date the SAR was granted; provided that if an SAR is granted retroactively in tandem with or in substitution for an Option, the exercise price may be the exercise price of the Option to which it is related.
(c) Exercise of Stock Appreciation Rights. A Stock Appreciation Right shall entitle the Participant to receive from the Company an amount equal to the excess of the Fair Market Value of a share of Common Stock on the date of exercise of the Stock Appreciation Right over the base price thereof. The Committee shall determine the time or times at which or the event or events (including, without limitation, a change of control) upon which a Stock Appreciation Right may be exercised in whole or in part, the method of exercise and whether such Stock Appreciation Right shall be settled in cash, shares of Common Stock or a combination of cash and shares of Common Stock;provided,however, that unless otherwise specified by the Committee at or after grant, a Stock Appreciation Right granted in tandem with an Option shall be exercisable at the same time or times as the related option is exercisable.
SECTION 7. INCENTIVE AWARDS.
(a) Incentive Stock and Incentive Units. Subject to the provisions of the Plan, the Committee shall have the authority to grant time vesting and/or performance vesting Incentive Stock or Incentive Units to any Eligible Employee and to determine (i) the number of shares of Incentive Stock and the number of Incentive Units to be granted to each Participant and (ii) the other terms and conditions of such Awards; provided that, to the extent necessary to comply with applicable law, Incentive Stock shall only be awarded to an Eligible Employee who has been employed for such minimum period of time as shall be determined by the Committee. The Restricted Period related to Incentive Stock or Incentive Units shall lapse upon the passage of time and/or the determination by the Committee that the performance objectives established by the Committee have been attained, in whole or in part. The maximum number of shares of Common Stock that may be subject to any performance-based Awards of Incentive Stock and Incentive Units (whether payable in cash or shares) granted to an Executive Officer with respect to a Restricted Period shall not exceed 1,000,000 shares, as such number may be adjusted pursuant to Section 4(b). The performance objectives with respect to an Award made to an Executive officer shall be related to at least one of the following criteria, which may be determined solely by reference to the performance of the Company, a Subsidiary or an Affiliate (or any business unit thereof) or based on comparative performance relative to other companies: (i) net income, (ii) earnings before income taxes, (iii) earnings per share, (iv) return on shareholders equity, (v) expense management, (vi) profitability of an identifiable business unit or product, (vii) ratio of claims to revenues, (viii) revenue growth, (ix) earnings growth, (x) total shareholder return, (xi) cash flow, (xii) return on assets, (xiii) pretax operating income, (xiv) net economic profit (operating earnings minus a charge for capital), (xv) customer satisfaction, (xvi) provider satisfaction, (xvii) employee satisfaction, (xviii) quality of networks, (xix) strategic innovation or (xx) any combination of the foregoing.
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(b) Certificates. Any certificates issued in respect of Incentive Stock shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company. At the expiration of the Restricted Period with respect to any award of Incentive Stock, unless otherwise forfeited, the Company shall deliver such certificates to the Participant or to the Participants legal representative. Payment for Incentive Stock Units shall be made by the Company in shares of Common Stock, cash or in any combination thereof, as determined by the Committee.
SECTION 8. OTHER STOCK-BASED AWARDS.
The Committee shall have authority to grant to eligible Employees an “Other Stock-Based Award”, which shall consist of any right which is (i) not an Award described in Sections 5 through 7 above and (ii) an Award of Common Stock or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock (including, without limitation, securities convertible into Common Stock), as deemed by the Committee to be consistent with the purposes of the Plan;providedthat any such rights must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 under the Exchange Act and applicable law. Subject to the terms of the Plan and any applicable award agreement, the Committee shall determine the terms and conditions of any such Other Stock-Based Award.
SECTION 9. DIVIDENDS AND DIVIDEND EQUIVALENTS.
The Committee may provide that any Award shall include dividends or dividend equivalents, payable in cash, Common Stock, securities or other property on a current or deferred basis, including payment contingencies.
SECTION 10. ADJUSTED OPTIONS.
Effective as of the Merger Date, holders of options to purchase shares of common stock of the Former Parent may in substitution thereof, to the extent determined by the committee administering the Prior Plan and the Committee, be granted an option to purchase Common Stock in accordance with the provisions of the Merger Agreement and the Exhibits thereto. Except as modified by the Merger Agreement, such options shall be governed by the terms of the incentive plans and award agreements under which they were originally granted, which terms are incorporated herein by reference.
SECTION 11. STOCK IN LIEU OF CASH.
The Committee may grant Awards in lieu of all or a portion of compensation or an Award otherwise payable in cash to an Executive officer pursuant to any bonus or incentive compensation plan of the Company.
If shares are issued in lieu of cash, the number of shares of Common Stock to be issued shall be the greatest number of whole shares which has an aggregate Fair Market Value on the date the cash would otherwise have been payable pursuant to the terms of such other plan equal to or less than the amount of such cash.
SECTION 12. DEFERRAL.
The Committee shall have the discretion to determine whether, to what extent, and under what circumstances cash, shares of Common Stock, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee.
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SECTION 13. GENERAL PROVISIONS.
(a) Withholding. The Company shall have the right to deduct from all amounts paid to a Participant in cash (whether under this Plan or otherwise) any taxes required by law to be withheld in respect of Awards under this Plan. In the case of any Award satisfied in the form of Common Stock, no shares shall be issued unless and until arrangements satisfactory to the Company shall have been made to satisfy any withholding tax obligations applicable with respect to such Award. Without limiting the generality of the foregoing and subject to such terms and conditions as the Committee may impose, the Company shall have the right to retain, or the Committee may, subject to such terms and conditions as it may establish from time to time, permit Participants to elect to use shares of Common Stock (including Common Stock issuable in respect of an Award) to satisfy, in whole or in part, the amount required to be withheld.
(b) Award Agreement. Each Award hereunder shall be evidenced in writing. The written agreement shall be delivered to the Participant and shall incorporate the terms of the Plan by reference and specify the terms and conditions thereof and any rules applicable thereto.
(c) Nontransferability. Unless the Committee shall permit (on such terms and conditions as it shall establish) an Award to be transferred to a member of the Participants immediate family or to a trust or similar vehicle for the benefit of such immediate family members (collectively, the “Permitted Transferees”), no Award shall be assignable or transferable except by will or the laws of descent and distribution, and except to the extent required by law, no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant. All rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participants lifetime only by such Participant or, if applicable, the Permitted Transferees or the Participants legal representative.
(d) No Right to Employment. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company, any Subsidiary or any Affiliate. Further, the Company and each Subsidiary and Affiliate expressly reserves the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except asprovidedherein or in any agreement entered into with respect to an Award.
(e) No Rights to Awards, No Shareholder Rights. No Participant or Eligible Employee shall have any claim to be granted any Award under the Plan, and there is no obligation of uniformity of treatment of Participants and Eligible Employees. Subject to the provisions of the Plan and the applicable Award, no person shall have any rights as a shareholder with respect to any shares of Common Stock to be issued under the Plan prior to the issuance thereof.
(f) Construction of the Plan. The validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Connecticut.
(g) Effective Date. Subject to the approval of the Companys shareholders and the shareholders of the Former Parent, the Plan shall be effective on the Merger Date.
(h) Amendment or Termination of Plan. The Board or the Committee may terminate or suspend the Plan at any time, but the termination or suspension will not adversely affect any vested Awards then outstanding under the Plan. No Award may be granted under the Plan after November 30, 2010 or such earlier date as the Plan is terminated by action of the Board or the Committee, The Plan may be amended or terminated at any time by the Board, except that no amendment may be made without shareholder approval if the Committee determines that such approval is necessary to comply with any tax or regulatory requirement, including any approval requirement which is a prerequisite for exemptive relief from Section 16 of the Exchange Act, for
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which or with which the Committee determines that it is desirable to qualify or comply; and, provided further, that, except with respect to any action or adjustment taken in connection with a Fundamental Corporate Event, any amendment or action to reduce the exercise price of any option previously granted under the Plan shall be subject to the approval of the Companys shareholders. The Committee may amend the term of any Award or Option granted, retroactively or prospectively, but no amendment may adversely affect any vested Award or Option without the holders consent.
(i) Compliance with Legal and Exchange Requirements. The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the granting and exercising of Awards, the issuance or delivery of Common Stock under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or to otherwise sell or issue Common Stock in violation of any such laws, rules, or regulations; and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards, and neither the Company nor its directors or officers shall have any obligations or liability to the Participant with respect to any Award (or stock issuable thereunder) that shall lapse because of such postponement.
(j) Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included.
(k) Incapacity. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such persons guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge any liability or obligation of the Committee, the Board, the Company and all other parties with respect thereto.
(l) Headings and Captions. The headings and captions herein areprovidedfor reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan.
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FINAL
AETNA INC.
2001 ANNUAL INCENTIVE PLAN
(EFFECTIVE AS OF JANUARY 1, 2001)
SECTION 1. PURPOSE.
The purpose of this Plan is to provide a general incentive for designated key executive employees of the Companies in order to improve operating results of the Companies and to reward such employees for the accomplishment of financial and strategic objectives of the Companies.
SECTION 2. DEFINITIONS.
Unless the context requires otherwise, the following words as used in the Plan shall have the meanings ascribed to each below, it being understood that masculine, feminine and neuter pronouns are used interchangeably and that each comprehends the others.
(a) | “Aetna” means Aetna Inc., a Pennsylvania corporation. | |||
(b) | “Board” means the Board of Directors of Aetna. | |||
(c)�� | “Change in Control” means the happening of any of the following: |
(i) | When any “person” as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d) and 14 (d) thereof, including a “group” as defined in Section 13 (d) of the Exchange Act but excluding Aetna and any subsidiary thereof and any employee benefit plan sponsored or maintained by Aetna or any subsidiary (including any trustee of such plan acting as trustee), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, as amended from time to time), of securities of Aetna representing 20 percent or more of the combined voting power of Aetna’s then outstanding securities; | |||
(ii) | When, during any period of 24 consecutive months, the individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason other than death to constitute at least a majority thereof, provided that a director who was not a director at the beginning of such 24-month period shall be deemed to have satisfied such 24-month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually (because they were directors at the beginning of such 24-month period) or by prior operation of this paragraph (ii); or | |||
(iii) | The occurrence of a transaction requiring stockholder approval for the acquisition of Aetna by an entity other than Aetna or a Subsidiary through purchase of assets, or by merger, or otherwise. |
(d) | “Committee” means the Committee on Compensation and Organization of the Board (or such other committee of the Board that the Board shall designate from time to time) or any subcommittee thereof consisting of two or more directors each of whom is an “outside director” within the meaning of Section 162 (m) and a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. | |||
(e) | “Common Stock” means the common stock, $.01 par value, of Aetna. | |||
(f) | “Companies” means one or more of Aetna, any of Aetna’s affiliated companies, and any other entity as to which (i) Aetna or any of Aetna’s affiliated companies holds or is seeking to acquire an ownership interest, and (ii) has been included in the Plan by the Committee. |
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(g) | “Covered Employee” shall have the meaning set forth in Section 162(m). | |||
(h) | “Deferral Period” means the period of time during which payment of any amount otherwise payable under the Plan is deferred (i) at the direction of the Committee pursuant to Section 6(b) or (ii) at the election of a Participant pursuant to Section 6(c), but in either case subject to the right of the Committee to terminate the Deferral Period as provided in Section 6(g). | |||
(i) | “Disability” means the occurrence of an event that would entitle a Participant to the payment of disability income under a specific long-term disability income plan approved by the Companies and under which the Participant is enrolled, as such plan may be amended from time to time, or if such Participant is not enrolled in a specific plan, as defined in a plan covering similarly situated executive officers of Aetna. | |||
(j) | “Fair Market Value” means on any date, with respect to a share of Common Stock, the closing price of a share of Common Stock as reported by the Consolidated Tape of New York Stock Exchange Listed Shares on such date, or, if no shares were traded on such Exchange on such date, on the next date on which the Common Stock is traded. | |||
(k) | “Participant” means (i) each Covered Employee and (ii) each other executive officer of Aetna as defined in Rule 3b-7 of the Securities Exchange Act of 1934 whom Aetna designates as a participant under the Plan. | |||
(1) | “Performance Period” means the calendar year or such other period as may be designated by the Committee. | |||
(m) | “Plan” means the Aetna Inc. 2001 Annual Incentive Plan, as set forth herein and as may be amended from time to time. | |||
(n) | “Retirement” means the retirement of a Participant from active service with the Companies at or after the age at which full pension benefits are provided under a specific retirement plan maintained or contributed to by any of the Companies and under which the Participant has an accrued benefit, as such plan may be amended from time to time, or if such Participant does not have an accrued benefit under any such plan, the age at which full pension benefits are provided under a retirement plan covering similarly situated executive officers of Aetna. | |||
(o) | “Section 162(m)” means Section 162 (m) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. | |||
(p) | “Share” means a share of Common Stock. | |||
(q) | “Stock Unit” means a unit representing the contractual right to receive the value of one Share. | |||
(r) | “Stock Unit Account” means, with respect to any Participant who has elected to have deferred amounts deemed invested in Stock Units, a bookkeeping account established to record such Participant’s interest under the Plan related to such Stock Units. | |||
(s) | “Subsidiary” means any entity of which the Company possesses directly or indirectly fifty percent (50%) or more of the total combined voting power of all classes of stock of such entity. |
SECTION 3. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall have the responsibility of construing and interpreting the Plan, provided that, in no event, shall the Plan be interpreted in a manner which would cause any award to a Covered Employee to fail to qualify as performance-based compensation under Section 162(m). The Committee shall establish the performance objectives for any Performance Period in accordance with Section 5 and certify whether such performance objectives have been obtained. Any determination made or decision or action taken or to be taken by the Committee, arising out of or in connection with the construction, administration, interpretation and effect of the Plan and of its rules and regulations, shall, to the fullest extent permitted by law (but subject to the limitations on the discretion of the Committee applicable to awards intended to be qualified as performance-based compensation under Section 162(m)), be within the Committee’s absolute discretion and shall be conclusive and binding on any and all Participants, any person claiming under or through a Participant and each of
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the Companies. The Committee may employ such legal counsel, consultants and agents (including counsel or agents who are employees of any Company) as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant or agent and any computation received from such consultant or agent. All expenses incurred in the administration of the Plan, including, without limitation, for the engagement of any counsel, consultant or agent, shall be paid by the Companies. No member or former member of the Board or the Committee shall be liable for any act, omission, interpretation, construction or determination made in connection with the Plan other than as a result of such individual’s willful misconduct.
SECTION 4. DETERMINATION OF PARTICIPANTS.
In addition to the Covered Employees, the Committee may designate as a Participant in the Plan any executive officer of Aetna as defined in Rule 3b-7 of the Securities Exchange Act of 1934. Members of the Board who are not employees of any of the Companies shall not be eligible to participate in the Plan.
SECTION 5. BONUSES.
(a) Performance Criteria.On or before the end of the first 90 days of each Performance Period (or such other date as may be required or permitted under Section 162(m)), the Committee shall establish the performance objective or objectives that must be satisfied in order for a Participant to receive a bonus for such Performance Period. Any such performance objectives will be based upon the relative or comparative achievement of one or more of the following criteria, as determined by the Committee: (i) net income, (ii) earnings before income taxes, (iii) earnings per share, (iv) return on shareholders equity, (v) expense management, (vi) profitability of an identifiable business unit or product, (vii) ratio of claims to revenues, (viii) revenue growth, (ix) earnings growth, (x) total shareholder return, (xi) cash flow, (xii) return on assets, (xiii) pretax operating income, (xiv) net economic profit (operating earnings minus a charge for capital), (xv) customer satisfaction, (xvi) provider satisfaction, (xvii) employee satisfaction, (xviii) quality of networks, (xix) strategic innovation or (xx) any combination of the foregoing.
(b) Maximum Amount Payable. If the Committee certifies in writing that any one of the performance objectives established for the relevant Performance Period under Section 5(a) has been satisfied, each Participant who is employed by the Companies on the last day of the Performance Period for which the bonus is payable shall be entitled to receive a bonus in an amount not to exceed $3,000,000.
(c) Negative Discretion. Notwithstanding anything else contained in Section 5(b) to the contrary, the Committee shall have the right, in its discretion, (i) to reduce or eliminate the amount otherwise payable to any Participant under Section 5(b) and (ii) to establish rules or procedures that have the effect of limiting the amount payable to each Participant to an amount that is less than the maximum amount otherwise authorized under Section 5(b).
(d) Affirmative Discretion.Notwithstanding any other provision in the Plan to the contrary, (i) the Committee shall have the right, in its discretion, to pay to any Participant who is not a Covered Employee a bonus for a Performance Period in an amount up to the maximum bonus payable under Section 5(b), based on individual performance or any other criteria that the Committee, in its discretion, deems to warrant the payment of such a bonus, and (ii) in connection with the hiring of any person who is or becomes a Covered Employee, the Committee may provide for a minimum bonus amount for such Covered Employee with respect to the Performance Period in which such Covered Employee is hired and/or for the next following Performance Period, which would be payable to such Covered Employee regardless of whether the relevant performance objectives are attained with respect to the relevant Performance Period.
(e) Methodology for Determinations.In making any determination under Section 5(c) or 5(d), the Committee shall give consideration to such factors as it deems appropriate, including, without limitation, the degree to which the established performance objectives have been obtained and whether the Participant has materially contributed to the overall results of the Companies. To assist it in making its determination under such Sections, the Chairman of Aetna will furnish the Committee with specific recommendations (except with respect to the Chairman’s own award) and the Committee may request such other advice and recommendations as it deems appropriate.
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SECTION 6. PAYMENT OF AWARDS.
(a) General Rule.Except as otherwise expressly provided hereunder, payment of any bonus amount determined under Section 5 shall be made to each Participant as soon as practicable after the Committee certifies that one or more of the applicable performance objectives have been attained (or, in the case of any bonus payable under the provisions of Section 5(d), after the Committee determines the amount of any such bonus). Any such payments shall be made in cash or, at the discretion of the Committee in awards under the Aetna Inc. 2001 Stock Incentive Plan.
(b) Mandatory Deferral.Notwithstanding Section 6(a), the Committee may specify that a percentage of the bonus payable with respect to any Participant, all Participants or any class of Participants for any Performance Period be mandatorily deferred for a Deferral Period specified by the Committee. The percentage to be so deferred shall be determined by the Committee in its discretion. Unless otherwise determined by the Committee at or after the date of such deferral, any amount payable in respect of an amount mandatorily deferred pursuant to this Section 6(b) shall be forfeited by the Participant if
(i) | the Participant’s employment with each of the Companies is terminated for cause (as determined in the discretion of the Committee under the generally applicable practices and policies of whichever of the Companies employs the Participant); | |||
(ii) | the Participant voluntarily terminates employment, other than by reason of death, Disability or Retirement, prior to the end of the Deferral Period specified by the Committee with respect to such mandatorily deferred amount; or | |||
(iii) | the Participant engages in any activity or conduct which, in the reasonable opinion of the Committee, is inimical to the best interest of the Companies. |
(c) Voluntary Deferral. Notwithstanding Section 6(a), the Committee may permit a Participant to defer payment of any portion of an award that is not mandatorily deferred pursuant to Section 6(b) or to defer payment of an amount mandatorily deferred to a date or event later than that specified by the Committee. Any such election shall be made at such time or times, and subject to such terms and conditions, as the Committee shall determine.
(d) Accounting for Deferrals.Any amount deferred under this Section 6 shall be credited to one or more bookkeeping accounts for the benefit of such Participant on the books and records of whichever of the Companies employs the Participant. Unless a Participant otherwise elects to have such amounts deemed invested in Stock Units in accordance with Section 6(e), such amounts shall be deemed held in cash and shall be credited with such rate of interest or such deemed rate of earnings as the Committee shall specify from time to time; provided that, unless the Committee otherwise determines, no interest or earnings shall be credited during the Deferral Period specified by the Committee in respect of amounts mandatorily deferred.
(e) Stock Units.The Committee may permit any Participant, all Participants or any class of Participants to elect that any or all amounts deferred under the Plan (including amounts mandatorily deferred pursuant to Section 6(b)) be deemed invested, in whole or in part, in a number of whole or fractional Stock Units. Any such Stock Units shall be credited to a Stock Unit Account for the benefit of such Participant. The number of whole and fractional Stock Units credited to a Stock Unit Account in respect of any amount deferred under this Section 6 shall be equal to the quotient of (i) the amount deferred divided by (ii) the Fair Market Value of a Share on the date such amount would have been paid under the Plan but for such deferral. Whenever a dividend other than a dividend payable in the form of Shares is declared with respect to the Shares, the number of Stock Units in the Participant’s Stock Unit Account shall be increased by the number of Stock Units determined by dividing (i) the product of (A) the number of Stock Units in the Participant’s Stock Unit Account on the related dividend record date and (B) the amount of any cash dividend declared by the Company on a Share (or, in the case of any dividend distributable in property other than Shares, the per share value of such dividend, as determined by the Company for purposes of income tax reporting) by (ii) the Fair Market Value of a Share on the related dividend payment date. In the case of any dividend declared on Shares which is payable in Shares, each Participant’s Stock Unit Account shall be increased by the number of Stock Units equal to the product of (i) the number of Units credited to the Participant’s Stock Unit Account on the related dividend record date and (ii) the number of Shares (including any fraction thereof) distributable as a dividend on a Share. In the event of any stock split, recapitalization, reorganization or other corporate transaction affecting the capital structure of Aetna, the Committee shall make such adjustments to the
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number of Stock Units credited to each Participant’s Stock Unit Account as the Committee shall deem necessary or appropriate to prevent the dilution or enlargement of such Participant’s rights.
(f) Payment of Deferred Amounts. Amounts attributable to any amount deferred under the Plan, regardless of whether deferred pursuant to Section 6(b) or 6(c), shall be paid or commence to be paid, at the election of the Participant, at the end of the applicable Deferral Period or as of the first business day of the calendar year next following the end of the Deferral Period. Payment of such amounts shall be made, at the Participant’s election, in a lump sum or in five, ten or such other number of annual installments as shall be permitted by the Committee. If a Participant does not timely elect the time at which or the form in which such amounts shall be paid, such amounts shall be paid immediately following the end of the Deferral Period and in a lump sum, unless the Committee shall specify a different time or method of payment. The Committee may, in its discretion, accelerate the payment of all or any portion of any Participant’s deferred amounts (regardless of whether the applicable Deferral Period or period have terminated) in order to alleviate a financial hardship incurred by the Participant due to an unforeseeable emergency beyond the Participant’s control.
Any payment to be made in respect of deferred amounts shall be made in cash. For purposes of any cash distribution in respect of a Participant’s Stock Units, the cash payable shall equal the product of (i) the number of whole and fractional Stock Units being distributed and (ii) the Fair Market Value of a Share on the date as of which the distribution is to be made.
(g) Termination of Deferral Period. Notwithstanding anything else contained in the Plan to the contrary, the Committee may, in its discretion, terminate any Deferral Period in respect of any Participant. Such elective termination will be deemed to be the end of the Deferral Period for purposes of determining when payment of the Participant’s interest is to commence under Section 6(f).
(h) Change in Control.Upon the occurrence of a Change in Control, all performance objectives for the then current Performance Period shall be deemed to have been achieved at target levels of performance and the Committee shall cause each Participant to be paid an amount in cash based on such assumed performance for the entire Performance Period as soon as practicable but in no event later than 10 business days following the occurrence of such Change in Control.
SECTION 7. AMENDMENT AND TERMINATION.
Notwithstanding Section 8(a), the Board or the Committee may at any time amend, suspend, discontinue or terminate the Plan; provided, however, that no such action shall be effective without approval by the shareholders of Aetna to the extent necessary to continue to qualify the amounts payable to Covered Employees as performance-based compensation under Section 162(m). Notwithstanding the foregoing, no amendment, suspension, discontinuance or termination of the Plan shall adversely affect the rights of any Participant or beneficiary in respect of any award that the Committee has determined to be payable to a Participant in accordance with the terms hereof or as to any amounts awarded, but payment of which has been deferred, in accordance with Section 6.
SECTION 8. GENERAL PROVISIONS.
(a) Effectiveness of the Plan. Subject to the approval of Aetna’s shareholders and the shareholders of Aetna Inc., a Connecticut corporation, the Plan shall be effective with respect to calendar years beginning on or after January 1, 2001 and ending on or before December 31, 2010, unless the term hereof is extended by action of the Board or the Committee.
(b) Designation of Beneficiary. Each Participant may designate a beneficiary or beneficiaries (which beneficiary may be an entity other than a natural person) to receive any payments which may be made following the Participant’s death. Such designation may be changed or canceled at any time without the consent of any such beneficiary. Any such designation, change or cancellation must be made in a form approved by the Committee and shall not be effective until received by the Committee. If no beneficiary has been named, or the designated beneficiary or beneficiaries shall have predeceased the Participant, the beneficiary shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate. If a Participant designates more than one beneficiary, the rights of such beneficiaries shall be payable in equal shares, unless the Participant has designated otherwise.
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(c) No Right of Continued Employment.Nothing contained in this Plan shall create any rights of employment in any Participant or in any way affect the right and power of any of the Companies to discharge any Participant or otherwise terminate the Participant’s employment at any time with or without cause or to change the terms of employment in any way.
(d) No Limitation on Corporate Actions.Nothing contained in the Plan shall be construed to prevent any of the Companies from taking any corporate action (including, without limitation, making provision for the payment of other incentive compensation, whether payable in cash or otherwise, or whether pursuant to a plan or otherwise) which is deemed by it to be appropriate or in its best interest, whether or not such action would have an adverse effect on any awards made under the Plan. No employee, beneficiary or other person shall have any claim against any of the Companies as a result of any such action.
(e) No Right to Specific Assets. Nothing contained in the Plan (including, without limitation, the provisions of Section 6 hereof) shall be construed to create in any Participant or beneficiary any claim against, right to or lien on any particular assets of any of the Companies or to require any of the Companies to segregate or otherwise set aside any assets or create any fund to meet any of its obligations hereunder.
(f) No Contractual Right to Bonus.Nothing in this Plan shall be construed to give any Participant any right, whether contractual or otherwise, to receive any bonus with respect to any Performance Period unless and until the Committee shall have expressly determined that such a Participant is entitled to receive such an award pursuant to the terms of the Plan.
(g) Nonalienation of Benefits.Except as expressly provided herein, no Participant or beneficiary shall have the power or right to transfer, anticipate, or otherwise encumber the Participant’s interest under the Plan.
(h) Withholding.Any amount payable to a Participant or a beneficiary under this Plan shall be subject to any applicable Federal, state and local income and employment taxes and any other amounts that any of the Companies is required at law to deduct and withhold from such payment.
(i) Severability.If any provision of this Plan is held unenforceable, the remainder of the Plan shall continue in full force and effect without regard to such unenforceable provision and shall be applied as though the unenforceable provision were not contained in the Plan.
(j) Governing Law. The Plan shall be construed in accordance with and governed by the laws of the State of Connecticut, without reference to the principles of conflict of laws.
(k) Headings.Headings are inserted in this Plan for convenience of reference only and are to be ignored in a construction of the provisions of the Plan.
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AETNA INC.
P
R
O
X
Y
The undersigned hereby appoints Barbara Hackman Franklin, Gerald Greenwald and Michael H. Jordan, and each of them, the proxies of the undersigned, with full power of substitution, to vote the shares of the undersigned at the Annual Meeting of Shareholders of Aetna Inc. to be held April 29, 2005 and at any adjournment or postponement thereof, and directs said proxies to vote as specified herein on the six items specified in this Proxy, and in their discretion on any other matters that may properly come before the meeting or any adjournment or postponement thereof.
Nominees: | ||
01. Betsy Z. Cohen | 07. Michael H. Jordan | |
02. Barbara Hackman Franklin | 08. Edward J. Ludwig | |
03. Jeffrey E. Garten | 09. Joseph P. Newhouse | |
04. Earl G. Graves | 10. John W. Rowe, M.D. | |
05. Gerald Greenwald | 11. Ronald A. Williams | |
06. Ellen M. Hancock |
THIS PROXY IS SOLICITED ON BEHALF OF AETNA’S BOARD OF DIRECTORS.
SHAREHOLDER ACCOUNT INQUIRIES
Aetna Inc.’s Transfer Agent, EquiServe Trust Company, N.A., maintains a telephone response center to service shareholder accounts. Registered owners of Aetna shares may call the center at 1-800-446-2617 to inquire about replacement dividend checks, address changes, stock transfers and other account matters or to inquire about EquiServe’s DirectSERVICE Investment Program.
For direct deposit of dividends, registered shareholders may call EquiServe at 1-800-870-2340.
Registered shareholders with e-mail addresses can send account inquiries electronically to EquiServe at equiserve@equiserve.com.
Registered shareholders can also access their Aetna accounts via the Internet through EquiServe’s Web site at http://www.equiserve.com.
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x | Please mark your votes as in this example. |
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3 AND 4 AND AGAINST ITEMS 5 AND 6.
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4 | |||||||||||||||||||||||||||||||
FOR | WITHHELD | FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | ||||||||||||||||||||||||
1. | Election of Directors (See reverse side) | o | o | 2. | Approval of Independent Registered Public Accounting Firm | o | o | o | 4. | Approval of 2001 Annual Incentive Plan Performance Criteria | o | o | o | ||||||||||||||||||
For, except vote withheld from the following nominee(s): | 3. | Approval of 2000 Stock Incentive Plan Performance Criteria | o | o | o | ||||||||||||||||||||||||||
The Board of Directors recommends a vote AGAINST Items 5 and 6. | |||||||||||||||||||||||||||||||
5. | Shareholder Proposal on Cumulative Voting | o | o | o | |||||||||||||||||||||||||||
6. | Shareholder Proposal on Stock Option Expensing | o | o | o | |||||||||||||||||||||||||||
Mark this box if you plan to attend the Annual Meeting. | o | ||||||||||||||||||||||||||||||
Please mark here for comments. | o | ||||||||||||||||||||||||||||||
SIGNATURE(S) | DATE | |||||
NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, and returned your proxy card. To vote by phone or Internet, please follow these easy steps:
TO VOTE BY PHONE
Call toll free 1-877-PRX-VOTE (1-877-779-8683) on a touch tone telephone. Shareholders residing outside the United States, Canada and Puerto Rico should call 1-201-536-8073. Telephone voting will be available until 11:59 p.m., Eastern time, on April 28, 2005.
Have your proxy card in hand and follow the recorded instructions.
TO VOTE BY INTERNET
Log onto http://www.eproxyvote.com/aet which will be available until 11:59 p.m., Eastern time, on April 28, 2005.
Have your proxy card in hand and follow the instructions on the screen.
You can also elect to receive future shareholder materials electronically at this Web site.
TO ATTEND THE ANNUAL MEETING
If you plan to attend the Annual Meeting, you should either mark the box provided on the above proxy card or signify your intention to attend when you access the telephone or Internet voting system. In lieu of issuing an admission ticket, your name will be placed on a shareholder attendee list and you will be asked to register and present photo identification before being admitted to the Annual Meeting.
THANK YOU FOR VOTING!
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AETNA INC.
To: Participants in the Aetna 401(k) Plan
State Street Bank and Trust Company, the Trustee under the Aetna 401(k) Plan (the Plan), has been instructed to solicit your instructions on how to vote the Aetna Common Shares held by the Trustee on your behalf in accordance with the terms of the Plan and to vote those shares in accordance with your instructions at the Annual Meeting of Shareholders of Aetna Inc. to be held on April 29, 2005 and at any adjournment or postponement thereof. Please indicate by checking the appropriate box how you want these shares voted by the Trustee and return this card to the Trustee in the envelope provided. We would like to remind you that your individual voting instructions are heldin strictest confidenceand will not be disclosed to the Corporation.If you fail to provide voting instructions to the Trustee by 11:59 p.m., Eastern time, on April 22, 2005 by telephone, by Internet, or by completing, signing and returning this card, the Trustee will vote your shares in the same manner and proportion as those shares for which the Trustee receives proper and timely instructions.
Nominees: | ||
01. Betsy Z. Cohen | 07. Michael H. Jordan | |
02. Barbara Hackman Franklin | 08. Edward J. Ludwig | |
03. Jeffrey E. Garten | 09. Joseph P. Newhouse | |
04. Earl G. Graves | 10. John W. Rowe, M.D. | |
05. Gerald Greenwald | 11. Ronald A. Williams | |
06. Ellen M. Hancock |
To vote by telephone or Internet, please see the reverse side of this card. To vote by mail, please mark, sign and date this card on the reverse side, tear off at the perforation, and mail promptly in the enclosed postage-paid envelope.
VOTE BY PHONE OR INTERNET
Note: | Participants who received the Aetna Inc. 2005 Proxy Statement, the Aetna 2004 Annual Report and the Aetna Annual Report, Financial Report 2004, over the Internet and who would like a printed copy of these documents may call 1-800-237-4273. |
THANK YOU FOR VOTING.
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x | Please mark your votes as in this example. |
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4 | |||||||||||||||||||||||||||||||
FOR | WITHHELD | FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | ||||||||||||||||||||||||
1. | Election of Directors (See reverse side) | o | o | 2. | Approval of Independent Registered Public Accounting Firm | o | o | o | 4. | Approval of 2001 Annual Incentive Plan Performance Criteria | o | o | o | ||||||||||||||||||
For, except vote withheld from the following nominee(s): | 3. | Approval of 2000 Stock Incentive Plan Performance Criteria | o | o | o | ||||||||||||||||||||||||||
The Board of Directors recommends a vote AGAINST Items 5 and 6. | |||||||||||||||||||||||||||||||
5. | Shareholder Proposal on Cumulative Voting | o | o | o | |||||||||||||||||||||||||||
6. | Shareholder Proposal on Stock Option Expensing | o | o | o | |||||||||||||||||||||||||||
Mark this box if you plan to attend the Annual Meeting. | o | ||||||||||||||||||||||||||||||
This instruction card is solicited on | |||||||||||||||||||||||||||||||
behalf of State Street Bank and Trust Company |
SIGNATURE(S) | DATE | |||||
NOW YOU CAN VOTE BY TELEPHONE OR INTERNET!
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS A WEEK
Your telephone or Internet vote authorizes the Trustee to vote your shares in the same manner as if you marked, signed, and returned your voting instruction card. To vote by phone or Internet, please follow these easy steps:
TO VOTE BY PHONE
Call toll free 1-877-PRX-VOTE (1-877-779-8683) on a touch tone telephone. If you reside outside the United States, Canada and Puerto Rico, please call 1-201-536-8073. Telephone voting will be available until 11:59 p.m., Eastern time, on April 22, 2005.
Have your instruction card in hand and follow the recorded instructions.
TO VOTE BY INTERNET
Log onto http://www.eproxyvote.com/aet which will be available until 11:59 p.m., Eastern time, on April 22, 2005.
Have your instruction card in hand and follow the instructions on the screen.
TO ATTEND THE ANNUAL MEETING
If you plan to attend the Annual Meeting, you should either mark the box provided on the above instruction card or signify your intention to attend when you access the telephone or Internet voting system. In lieu of issuing an admission ticket, your name will be placed on an attendee list and you will be asked to register and present photo identification before being admitted to the Annual Meeting.
THANK YOU FOR VOTING!